SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 24, 2001
SPX CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-6948 38-1016240
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(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction Identification No.)
of Incorporation)
700 Terrace Point Drive
Muskegon, Michigan 49443-3301
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(Address of Principal Executive Offices)
(Zip Code)
(231) 724-5000
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former name or address, if changed from last report)
This report contains forward looking statements, within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and are subject to the safe harbor created thereby.
These forward looking statements, which reflect management's
current views with respect to future events and financial
performance, are subject to certain risks and uncertainties,
including but not limited to those matters discussed below. Due
to such uncertainties and risks, readers are cautioned not to
place undue reliance on such forward looking statements, which
speak only as of the date hereof. Reference is made to the
company's 2000 Annual Report on Form 10-K, as amended by Form
10-K/A, for additional cautionary statements and discussion of
certain important factors as they relate to forward looking
statements. In addition, management's estimates of future
operating results are based on the current complement of
businesses, which is constantly subject to change as management
implements its fix, sell or grow strategy.
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS (AMOUNTS IN MILLIONS)
On May 24, 2001, we completed the acquisition of United Dominion
Industries Limited ("UDI") in an all stock transaction valued at
$1,066.9. Shareholders of UDI received approximately 9.385
shares of SPX's common stock (3.889 from treasury) as
consideration for their shares of common stock of UDI. SPX also
assumed or refinanced $884.1 of UDI debt bringing the total
transaction to $1,951.0.
UDI's assets include plants, equipment and other physical
property. The business that UDI conducts is the manufacture of
proprietary engineered products for sale primarily to industrial
and commercial markets worldwide.
As part of the integration of UDI, we plan to focus on three key
areas: (1) manufacturing process and supply chain
rationalization, including plant closings, (2) elimination of
redundant administrative overhead and support activities, and (3)
restructuring and repositioning sales and marketing organizations
to eliminate redundancies in these activities. Anticipated
savings from these cost reduction and integration actions should
exceed $100.0 on an annualized basis. Certain aspects of the
integration plan will be refined as additional studies are
completed, including the evaluations of capacity of existing and
acquired facilities to accommodate new manufacturing and
administrative processes and the appropriate positioning of the
sales/marketing and research development organizations to serve
customer needs.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial statements of business acquired:
UDI's audited consolidated financial statements as at December
31, 2000 and 1999 and the related consolidated statements of
income, cash flow and changes in shareholders' equity for each of
the years in the three-year period ended December 31, 2000,
together with the report of KPMG LLP, independent auditors, on
such financial statements are incorporated by reference from
SPX's Current Report on Form 8-K filed on April 13, 2001.
(b) Pro Forma Financial Information
The unaudited pro forma combined condensed statement of income
and other financial data of SPX are attached hereto as Exhibit
99.2 and are incorporated herein by reference.
(c) Exhibits
The following Exhibits are included herein:
Exhibit 23.1 Consent of Arthur Andersen LLP
Exhibit 23.2 Consent of KPMG LLP
Exhibit 99.1 The press release of SPX Corporation dated
May 24, 2001 announcing the acquisition of
UDI.
Exhibit 99.2 Unaudited pro forma combined condensed
statement of income and other financial data
of SPX.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: August 6, 2001
SPX CORPORATION
By: /s/ Christopher J. Kearney
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Christopher J. Kearney
Vice President, Secretary
and General Counsel
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As Independent public accountants, we hereby consent to the incorporation
by reference in this Form 8-K of our report dated February 9, 2001, on the
Company's consolidated financial statements as of December 31, 2000 and
1999 and for each of the three years in the period ending on December 31,
2000 included in the Company's Form 10-K/A for the year ended December 31,
2000 into the Company's previously filed registration statements on Form
S-3 (File No. 333-56364) and on Form S-8 (File Nos. 33-24043, 333-29843,
333-29851, 333-29857, 333-29855, 333-38443, 333-70245, 333-82645 and
333-82647).
/s/ Arthur Andersen LLP
Chicago, Illinois
August 3, 2001
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
SPX Corporation
We consent to the incorporation by reference in the Registration Statements
on Form S-8 (Nos. 33-24043, 333-29843, 333-29851, 333-29857, 333-29855,
333-38443, 333-70245, 333-82645, and 333-82647) and Form S-3 (No.
333-56364) of SPX Corporation of our report dated January 25, 2001, except
as to note 14 which is as of March 11, 2001, with respect to the
consolidated statements of financial position of United Dominion Industries
Limited as at December 31, 2000 and 1999 and the related consolidated
statements of income, cash flows and changes in shareholders' equity for
each of the years in the three-year period ended December 31, 2000, which
report appears in the December 31, 2000 annual report on Form 40-F of
United Dominion Industries Limited, which report is incorporated by
reference in this Current Report on Form 8-K/A filed by SPX Corporation.
/s/ KPMG LLP
Chartered Accountants
Toronto, Canada
August 6, 2001
Exhibit 99.1 SPX COMPLETES ACQUISITION OF UNITED DOMINION INDUSTRIES MUSKEGON, Mich., May 24 -- SPX Corporation (NYSE: SPW) today announced that it has completed the previously announced acquisition of United Dominion Industries Limited (NYSE: UDI; TSE). John B. Blystone, Chairman, President and Chief Executive Officer of SPX Corporation said, "We are very excited about combining SPX and United Dominion Industries. The addition of these businesses broadens and strengthens SPX's portfolio of industrial and technical businesses and provides us with enhanced value-creation opportunities. We will apply our proven Value Improvement Process(R) to these new businesses to achieve operating efficiencies, enhance productivity, extend EVA-based compensation and improve customer quality and service. We're confident that we can achieve superior growth and profitability for the combined company and create value for our shareholders." SPX Corporation is a global provider of technical products and systems, industrial products and services, flow technology and service solutions. The Internet address for SPX Corporation's home page is www.spx.com.
Exhibit 99.2
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME AND DATA OF SPX
(unaudited)
(in millions, except per share data)
On May 24, 2001, we completed the acquisition of United Dominion Industries
Limited ("UDI") in an all-stock transaction valued at $1,066.9. A total of
9.385 shares were issued (3.889 from treasury) to complete the
transaction. SPX also assumed or refinanced $884.1 of UDI debt bringing the
total transaction value to $1,951.0.
The following present pro forma combined condensed statement of income and
financial data of SPX after giving effect to the acquisition. The
information is presented as if the acquisition had occurred on January 1,
2000 for the statement of income and related data. The pro forma statement
of income and data assume that the acquisition is effected by the exchange of
0.2353 of a share of SPX common stock for each UDI common share outstanding
and assumes that existing UDI stock options will be exchanged for options
of SPX. Additionally, the pro forma combined condensed statement of income
and financial data assume that existing UDI indebtedness was refinanced
or assumed by SPX on January 1, 2000 (the "Refinancing").
The acquisition was accounted for by the purchase method of accounting and,
accordingly, the statements of consolidated income include the results of
UDI beginning May 25, 2001. The assets acquired and liabilities assumed
were recorded at preliminary estimates of fair values as determined by
management and preliminary independent appraisals based on information
currently available and on current assumptions as to future operations. We
intend to complete our review and determination of the fair values of the
assets acquired and liabilities assumed before May 2002. Such review
includes finalizing any strategic reviews of the UDI businesses and our
plans to integrate the operations of UDI, evaluating the contingent and
actual liabilities assumed, and obtaining final appraisals of the tangible
and intangible assets acquired. As such, the allocation of the purchase
price is subject to revision, and such revision could be material. For
financial statement purposes the excess of cost over net assets acquired is
amortized by the straight-line method over 40 years.
A summary of the assets acquired and liabilities assumed in the acquisition
follows:
Estimated fair values
Assets acquired $ 1,841.0
Liabilities assurred (1,876.3)
Excess of cost over net assets acquired 1,102.2
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Purchase price $ 1,066.9
Less cash acquired (78.4)
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Net purchase price $ 988.5
===========
Of the total assets acquired, $256.7 is allocated to identifiable
intangible assets, including trademarks and patents, based on a preliminary
assessment of fair value. In addition, the preliminary allocation of
purchase price resulted in adjustments to reduce working capital by $132.4
primarily due to the restructuring initiatives described below and our
intended use of acquired assets; increase property, plant and equipment by
$83.0 based on the preliminary estimates of fair value; and increase other
long-term liabilities by $250.7 primarily to record deferred taxes on fair
market value adjustments increasing recorded long-lived assets other than
goodwill and record our intended settlement of acquired liabilities.
As a result of the acquisition of UDI, we have incurred to date integration
expenses for the incremental costs to exit and consolidate activities at
UDI locations, to involuntarily terminate UDI employees, and for other
costs to integrate operating locations and other activities of UDI with
SPX. Generally accepted accounting principles require that these
acquisition integration expenses, which are not associated with the
generation of future revenues and have no future economic benefit, be
reflected as assumed liabilities in the allocation of the purchase price to
the net assets acquired. On the other hand, these same principles require
that acquisition integration expenses associated with integrating SPX
operations into UDI locations must be recorded as expense. Accordingly,
these expenses are not included in the allocation of purchase price of UDI.
The components of the acquisition integration liabilities included in the
preliminary purchase price allocation for UDI include $46.4 related to
workforce reductions, $9.1 for noncancelable lease obligations and $20.6
other cash costs which primarily represent facility holding costs, supplier
cancellation fees, and the relocation of UDI personnel associated with
plant closings and product rationalization. We expect that the termination
of employees and consolidation of facilities will be substantially complete
within one year of the date of acquisition.
The acquisition integration liabilities are based on our current
integration plan which focuses on three key areas of integration: (1)
manufacturing process and supply chain rationalization, including plant
closings, (2) elimination of redundant administrative overhead and support
activities, and (3) restructuring and repositioning sales and marketing
organizations to eliminate redundancies in these activities. We expect that
additional charges associated with these actions will be incurred in the
third and fourth quarters of 2001. Anticipated savings from these cost
reduction and integration actions should exceed $100.0 on an annualized
basis. The pro forma combined statement of income and financial data do not
give effect to these or any cost savings that are expected to result from
the combination of the companies.
The pro forma combined condensed statement of income and data are intended
for information purposes only, and do not purport to represent what SPX's
results of continuing operations or financial position would actually have
been had the acquisition in fact occurred on January 1, 2000, or project
the results for any future date or period.
In the pro forma combined condensed statement of income and data, SPX's
historical information for the year ended December 31, 2000 was derived
from SPX's Annual Report on Form 10-K/A for the year ended December 31,
2000 as filed with the U.S. Securities and Exchange Commission. UDI's
historical information for the year ended December 31, 2000 was derived
from UDI's Form 40-F as filed with the U.S. Securities and Exchange
Commission for the year ended December 31, 2000.
In the pro forma combined condensed statement of income and data, SPX's
historical information for the six months ended June 30, 2001 was derived
from SPX's Quarterly Report on Form 10-Q for the six months ended June 30,
2001 as filed with the U.S. Securities and Exchange Commission. UDI's
historical information was derived by financial information prepared by UDI
management for the five month period ending May 24, 2001 which include the
adjustments (consisting only of normal and recurring items) necessary for
the fair presentation in conformity with generally accepted accounting
principles and consistently applied with the year end presentation. SPX's
statement of income and financial data include the results of UDI beginning
May 25, 2001.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME AND
OTHER FINANCIAL DATA OF SPX
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(unaudited)
(in millions of US dollars, except per share data)
UDI Adjust UDI
SPX Historical UDI to Historical Pro Forma
Historical (Canadian GAAP) U.S. GAAP(a) (U.S. GAAP) Adjustments Pro Forma
----------- --------------- ------------ ----------- ----------- ----------
STATEMENT OF INCOME DATA:
Revenues $ 1,590.5 $ 894.4 $ - $ 894.4 $ - $ 2,484.9
Cost of sales 1,086.7 651.7 - 651.7 1.8 (b) 1,740.2
Selling, general and administrative
expenses 300.3 205.8 (0.1) 205.7 0.3 (b) 506.3
Goodwill/intangible amortization 25.6 11.1 - 11.1 3.8 (b) 43.0
2.5 (b)
Restructuring and other charges 43.9 - - - - 43.9
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Operating income $ 134.0 $ 25.8 $ 0.1 $ 25.9 $ (8.4) $ 151.5
Interest expense - net (55.0) (20.8) - (20.8) (1.8)(c) (77.6)
Other income (expense) (8.7) 0.3 - 0.3 - (8.4)
Equity in earnings of affiliates 18.4 - - - - 18.4
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Income before income taxes $ 88.7 $ 5.3 $ 0.1 $ 5.4 $ (10.2) $ 83.9
Income tax (expense) benefit (39.9) (2.0) - (2.0) 1.0 (40.9)(d)
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Income before extraordinary item $ 48.8 $ 3.3 $ 0.1 $ 3.4 (9.2) $ 43.0
========== ============= ========== =========== ========= ==========
Basic earnings per common share:
Income before extraordinary item $ 1.47 $ 1.08
Diluted earnings per common share:
Income before extraordinary item $ 1.44 $ 1.06
Weighted average number of common
shares outstanding:
Basic 33.106 6.704 39.810
Diluted 33.944 6.770 40.714
OTHER FINANCIAL DATA:
Capital expenditures $ 70.2 $ 38.0 $ - $ 38.0 $ - $ 108.2
Depreciation and amortization 65.8 34.1 - 34.1 8.1 108.0
Note: The accompanying notes are an integral part of the pro forma combined
condensed statement of income and other financial data.
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME AND
OTHER FINANCIAL DATA OF SPX
FOR THE YEAR ENDED DECEMBER 31, 2000
(unaudited)
(in millions of US dollars, except per share data)
UDI Adjust UDI
SPX Historical UDI to Historical Pro Forma
Historical (Canadian GAAP) U.S. GAAP(a) (U.S. GAAP) Adjustments Pro Forma
----------- --------------- ------------ ----------- ----------- ----------
STATEMENT OF INCOME DATA:
Revenues $ 2,678.9 $ 2,366.2 $ - $ 2,366.2 $ - $ 5,045.1
Cost of sales 1,776.7 1,648.6 - 1,648.6 4.2 (b) 3,429.5
Selling, general and administrative expenses 495.2 492.4 (0.4) 492.0 0.6 (b) 983.5
(4.3)(e)
Goodwill/intangible amortization 40.0 27.7 - 27.7 9.1 (b) 82.7
5.9 (b)
Restructuring and other charges 90.9 43.8 - 43.8 - 134.7
--------- ------------ --------- ---------- --------- ---------
Operating income $ 276.1 $ 153.7 $ 0.4 $ 154.1 $ (15.5) $ 414.7
Interest expense - net (95.0) (50.0) - (50.0) (26.1)(c) (171.1)
Other income (expense) 22.2 (9.9) - (9.9) - 12.3
Gain on issuance of Inrange stock 98.0 - - - - 98.0
Equity in earnings of EGS 34.3 - - - - 34.3
--------- ------------ --------- ---------- --------- ---------
Income before income taxes $ 335.6 $ 93.8 $ 0.4 $ 94.2 $ (41.6) $ 388.2
Income tax (expense) benefit (137.3) (37.3) 2.4 (34.9) (2.5) (174.7)(d)
--------- ------------ --------- ---------- --------- ---------
Income before extraordinary item $ 198.3 $ 56.5 $ 2.8 $ 59.3 $ (44.1) $ 213.5
========= ============ ========= ========== ========== ==========
Basic earnings per common share:
Income before extraordinary item $ 6.44 $ 5.31
Diluted earnings per common share:
Income before extraordinary item $ 6.25 $ 5.18
Weighted average number of common shares
outstanding:
Basic 30.796 9.385 40.181
Diluted 31.751 9.478 41.229
OTHER FINANCIAL DATA:
Capital expenditures $ 123.3 $ 53.8 $ - $ 53.8 $ - $ 177.1
Depreciation and amortization 110.9 81.9 - 81.9 19.2 212.0
Note: The accompanying notes are an integral part of the pro forma combined
condensed statement of income and other financial data.
NOTES TO PRO FORMA COMBINED CONDENSED
STATEMENT OF INCOME AND OTHER FINANCIAL DATA OF SPX
(unaudited)
(in millions, except per share data)
(a) Reflects necessary adjustments to convert UDI's Canadian GAAP-based
financial statements to U.S. GAAP (see note 13 to UDI's Consolidated
Financial Statements).
(b) These pro forma adjustments reflect the impact of the preliminary
allocation of the excess purchase price to the assets and liabilities
of UDI. The following table reflects the pro forma impact of the
purchase accounting adjustments on the pro forma combined condensed
financial statements and data:
Cost of Selling,
of general & Intangible Goodwill
sales admin. amortization amortization
----- ------ ------------ ------------
Additional depreciation $ 4.2 $ - $ - $ -
Pension and other benefits
expense adjustment - 0.6 - -
Incremental intangible
amortization - - 9.1 -
Incremental goodwill
amortization - - - 5.9
----- ----- ------ ------
Pro forma adjustment year
ended December 31, 2000 $ 4.2 $ 0.6 $ 9.1 $ 5.9
===== ===== ====== ======
Pro forma adjustment six
ended June 30, 2001 $ 1.8 $ 0.3 $ 3.8 $ 2.5
===== ===== ====== ======
The pro forma assumes the following average lives for each of the
purchase accounting adjustments; fixed assets from 3 to 18 years,
intangible assets over 7 to 40 years, and goodwill as 40 years.
(c) This pro forma adjustment reflects the amount necessary to estimate
consolidated interest expense, net, as if the Refinancing and the
elimination of UDI's agreement to sell accounts receivable had
occurred as of January 1, 2000 and 2001.
(d) The pro forma consolidated effective income tax rate is estimated to
be 45%. The pro forma consolidated effective income tax rate is higher
than either of the combined companies due to the impact of estimated
non-deductible goodwill amortization and increases in foreign income
tax rates due to the acquisition. The effective income tax rate for the
first six months of 2001 was 48.8% compared to the estimated effective
tax rate due to lower marginal tax rates on special charges taken
during the period.
(e) This pro forma adjustment reflects the elimination in the Refinancing
of UDI's sale of certain qualifying accounts receivable to a financial
institution.