UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported):  February 27, 2008

 

SPX CORPORATION

(Exact Name of Registrant as specified in Charter)

 

Delaware

(State or Other Jurisdiction
of Incorporation)

 

1-6948

(Commission File Number)

 

38-1016240

(I.R.S. Employer
Identification No.)

 

 

13515 Ballantyne Corporate Place

Charlotte, North Carolina 28277

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code  (704) 752-4400

 

NOT APPLICABLE

(Former Name or Former Address if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02.  Results of Operations and Financial Condition.

 

On February 27, 2008, SPX Corporation (the “Company”) issued the press release attached as Exhibit 99.1 hereto and incorporated herein by reference.

 

The press release incorporated by reference into this Item 2.02 contains disclosure regarding free cash flow from continuing operations.  Free cash flow from continuing operations is defined, for purposes of this press release, as cash flow from continuing operations less capital expenditures from continuing operations. The Company’s management believes that free cash flow from continuing operations is a useful financial measure for investors in evaluating the cash flow performance of multi-industrial companies, since it provides insight into the cash flow available to fund such things as equity repurchases, dividends, mandatory and discretionary debt reduction and acquisitions or other strategic investments. In addition, although the use of free cash flow from continuing operations is limited by the fact that the measure can exclude certain cash items that are within management’s discretion, free cash flow from continuing operations is a factor used by the Company’s management in internal evaluations of the overall performance of its business.  Free cash flow from continuing operations is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”), and should not be considered a substitute for cash flows from operating activities as determined in accordance with GAAP, should be used in combination with cash flows from operating activities as determined in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.

 

The press release also contains disclosure regarding organic revenue growth (decline), which is defined, for purposes of this press release, as revenue growth (decline) excluding the effects of foreign currency fluctuations and acquisitions and divestitures.  The Company’s management believes that this metric is a useful financial measure for investors in evaluating its operating performance for the periods presented because excluding the effect of currency fluctuations and acquisitions and divestitures, when read in conjunction with the Company’s revenues, presents a useful tool to evaluate the Company’s ongoing operations and provides investors with a tool they can use to evaluate the Company’s management of assets held from period to period.  In addition, organic revenue growth (decline) is one of the factors the Company’s management uses in internal evaluations of the overall performance of its business. This metric, however, is not a measure of financial performance in accordance with GAAP and should not be considered a substitute for revenue growth (decline) as determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies.

 

The press release also contains disclosure of adjusted net income per share, which is defined, for purposes of this press release, as diluted net income per share from continuing operations excluding (1) tax benefits from the settlement of historical tax matters, statutory rate changes in some foreign jurisdictions that are not indicative of the Company’s normalized tax rate and other adjustments, (2) charges relating to legacy legal matters, and (3) a non-cash intangible impairment charge.  The Company’s management views the positive impact of the tax

 

2



 

benefits on the fourth quarter and full year 2007 results, resulting in an effective tax rate of 23% for the year, as not indicative of the Company’s ongoing operating performance.  Additionally, the Company’s management views the charges relating to legacy legal matters and the impairment to be items that are not indicative of the Company’s ongoing operating performance.  The Company’s management believes adjusted net income per share, when read in conjunction with diluted net income per share from continuing operations, gives investors a useful tool to assess and understand the Company’s overall financial performance, especially when comparing results with previous periods or forecasting performance for future periods, primarily because it excludes items of income that the Company believes are not reflective of its ongoing operating performance, allowing for a better period-to-period comparison of core operations and growth of the Company.  Additionally, the Company’s management uses adjusted net income per share exclusive of the items listed above as one measure of the Company’s performance.  The adjusted net income per share measure does not provide investors with an accurate measure of the actual earnings per share earned by the Company and should not be considered a substitute for diluted net income per share from continuing operations as determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies.

 

Refer to the tables included in the press release for the components of the Company’s free cash flow from continuing operations, organic revenue growth (decline), and adjusted net income per share, and for the reconciliations to their respective comparable GAAP measures.

 

The information in this Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

3



 

Item 9.01.              Financial Statements and Exhibits.

 

Exhibit
Number

 

Description

99.1

 

Press Release issued February 27, 2008, furnished solely pursuant to Item 2.02 of Form 8-K.

 

4



 

SIGNATURE

 

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.

 

 

SPX CORPORATION

 

 

 

Date: February 27, 2008

By:

/s/ Patrick J. O’Leary

 

 

Patrick J. O’Leary

 

 

Executive Vice President,

 

 

Treasurer and

 

 

Chief Financial Officer

 

 

S-1



 

EXHIBIT INDEX

 

Exhibit
Number

 

Description

99.1

 

Press Release issued February 27, 2008, furnished solely pursuant to Item 2.02 of Form 8-K.

 


 

 

Exhibit 99.1

 

NEWS RELEASE

 

SPX REPORTS FOURTH QUARTER 2007 RESULTS

 

Revenues up 11%, Segment Income up 16%

 

Meets Target for Earnings Per Share and Exceeds Free Cash Flow Target

 

                CHARLOTTE, NC — February 27, 2008 — SPX Corporation (NYSE:SPW) today reported results for the fourth quarter and year ended December 31, 2007:

 

Fourth Quarter Highlights:

 

·                  Revenues increased 11.1% to $1.35 billion from $1.22 billion in the year-ago quarter.  Organic revenue growth* was 3.8%, while completed acquisitions and the impact of currency fluctuations increased reported revenues by 3.9% and 3.4%, respectively.

 

·                  Segment income and margins were $197.0 million and 14.5%, compared with $170.5 million and 14.0% in the year-ago quarter.

 

·                  Diluted net income per share from continuing operations was $1.85, compared with $1.47 in the year-ago quarter.  Fourth quarter results were impacted by a number of items, including:

 

·                  A 2007 effective tax rate of 21.9%, which represents a benefit of $0.26 per share as compared to the expected 33.0% effective tax rate.

 

·                  2007 charges of $4.8 million, or $0.06 per share, related to legacy legal matters recorded in corporate expense.

 

·                  2007 non-cash charge of $4.0 million, or $0.05 per share, for impairment of intangible assets.

 

·                  Adjusted net income per share from continuing operations* was $1.70, excluding the impact of the three items above, as compared to the company’s guidance of $1.60 to $1.70.

 

·                  Net cash from continuing operations was $290.4 million, compared with $83.7 million in 2006. The fourth quarter 2006 results included an advance tax payment of $66.6 million, investments in working capital to support organic growth and a tax payment of $23.4 million relating to the retirement of the company’s convertible debt in the first quarter of 2006.

 



 

·                  Free cash flow from continuing operations* during the quarter was $247.0 million, compared with $68.8 million in the year-ago quarter.  The increase was due primarily to the items noted above, offset partially by increased capital expenditures in 2007 to support continued growth in the company.

 

Full Year 2007 Highlights:

 

·                  Revenues increased 15.7% to $4.82 billion from $4.17 billion in 2006.  Organic revenue growth* was 9.8%, while completed acquisitions and the impact of currency fluctuations increased reported revenues by 3.2% and 2.7%, respectively.

 

·                  Segment income and margins were $622.4 million and 12.9%, compared with $502.7 million and 12.1% in 2006.

 

·                  Diluted net income per share from continuing operations was $5.33, compared with $3.74 in 2006.  The primary drivers of the increase were the improvement in segment income, a reduced number of common shares outstanding and a lower effective tax rate in 2007.

 

·                  Adjusted net income per share from continuing operations* was $4.85 in 2007, as compared to the company’s guidance of $4.70 to $4.80.  This figure is adjusted to exclude the following items:

 

·                  Miscellaneous tax benefits totaling $0.59 per share as compared to the company’s expected 32.0% tax rate.

 

·                  2007 charges of $5.0 million, or $0.06 per share, related to legacy legal matters recorded in corporate expense.

 

·                  2007 non-cash charge of $4.0 million, or $0.05 per share, for impairment of intangible assets.

 

·                  Net cash from continuing operations was $404.2 million, compared with $48.6 million in 2006. The primary drivers of the increase were improved working capital performance and 2006 interest and tax payments totaling $175.2 million relating to the retirement of the company’s convertible debt in the first quarter of 2006.

 

·                  Free cash flow from continuing operations* was $313.3 million, compared with a cash use of $7.1 million in 2006. The increase was due to the items noted above, partially offset by increased capital expenditures in 2007 to support continued growth of the company.

 

Chris Kearney, Chairman, President and CEO said, “In 2007 SPX continued to grow and deliver strong financial results. Revenues for 2007 were $4.82 billion, an increase of

 



 

15.7% over 2006. Organic revenue growth was almost 10%, driven by strong demand in our infrastructure and energy markets.

 

“Our strategy of aligning the company around our three strategic growth markets of global infrastructure, process equipment and diagnostic tools is working. We have strong momentum and are well positioned for continued growth in 2008,” Kearney concluded.

 

FINANCIAL HIGHLIGHTS — CONTINUING OPERATIONS

 

Flow Technology

 

Revenues for the fourth quarter of 2007 were $323.1 million compared to $244.1 million in the fourth quarter of 2006, an increase of $79.0 million, or 32.4%.  The increase was due primarily to organic revenue growth* of 18.0% and the acquisition of Johnson Pump. The organic revenue growth related primarily to strong demand in the power, oil and gas, chemical, sanitary and dehydration markets, as well as pricing improvements and new product introductions.  The impact of currency fluctuations increased revenues by 3.1% from the year-ago quarter.

 

Segment income was $49.9 million, or 15.4% of revenues, in the fourth quarter of 2007 compared to $37.1 million, or 15.2% of revenues, in the fourth quarter of 2006.  The increase in segment income and margins was due primarily to the strong level of organic growth and manufacturing efficiencies achieved from continuous improvement initiatives, offset partially by the acquisition of Johnson Pump, which performed at lower margins than the segment.

 

Test and Measurement

 

                Revenues for the fourth quarter of 2007 were $340.8 million compared to $317.5 million in the fourth quarter of 2006, an increase of $23.3 million, or 7.3%.  The increase was due primarily to acquisitions completed in the second half of 2007. The impact of currency fluctuations increased reported revenues by 3.3%, offset partially by organic revenue decline* of 2.0% due primarily to reduced volumes in North American OEM tool programs.

 

                Segment income was $43.0 million, or 12.6% of revenues, in the fourth quarter of 2007 compared to $49.9 million, or 15.7% of revenues, in the fourth quarter of 2006.  The decline in segment income and margins was due primarily to the organic revenue decline

 



 

noted above, a less favorable product mix and the acquisitions noted above, which performed at lower margins than the segment.

 

Thermal Equipment and Services

 

Revenues for the fourth quarter of 2007 were $437.6 million compared to $430.6 million in the fourth quarter of 2006, an increase of $7.0 million, or 1.6%.  The impact of currency fluctuations increased reported revenues by 5.0% from the year-ago quarter, offset partially by organic revenue declines* of 3.4%. The organic revenue decline was primarily related to the timing of cooling system revenues.

 

Segment income was $52.3 million, or 12.0% of revenues, in the fourth quarter of 2007 compared to $50.2 million, or 11.7% of revenues, in the fourth quarter of 2006.  The increase in segment income and margins was due primarily to improved operating performance in the thermal equipment and heating product lines.

 

Industrial Products and Services

 

Revenues for the fourth quarter of 2007 were $253.1 million compared to $227.4 million in the fourth quarter of 2006, an increase of $25.7 million, or 11.3%.  The increase was due primarily to organic revenue growth* of 10.4%, related largely to increased demand for domestic power transformers.  The impact of currency fluctuations increased revenues by 0.9% from the year-ago quarter.

 

Segment income was $51.8 million, or 20.5% of revenues, in the fourth quarter of 2007 compared to $33.3 million, or 14.6% of revenues, in the fourth quarter of 2006.  The increase in segment income and margins was driven largely by the organic growth in power transformers from pricing and volume, in addition to manufacturing efficiencies achieved from continuous improvement initiatives across the segment.

 

OTHER ITEMS
 

Dividend:   On February 21, 2008, the Board of Directors announced a quarterly dividend of $0.25 per common share payable on April 1, 2008, to shareholders of record on March 14, 2008.  The fourth quarter 2007 dividend of $0.25 per common share was paid on January 2, 2008.

 



 

Acquisition:  On December 31, 2007, the company completed the acquisition of APV for $524.2 million. APV, a global manufacturer of process equipment and engineered solutions primarily for the sanitary market, had revenues of approximately $876.0 million in the twelve months prior to acquisition, and will be integrated into and reported in the Flow Technology segment.

 

Discontinued Operations:  During the fourth quarter of 2007, the company completed the divestitures of two product lines formerly reported in its Thermal Equipment and Services segment. These product lines were sold for combined cash proceeds of $18.4 million, and resulted in the recording of a combined gain on sale of $14.9 million, net of taxes.  For the full year 2007, these product lines had revenues of approximately $100.0 million.

 

Form 10-K:  The company expects to file its annual report on Form 10-K for the year ended December 31, 2007 with the Securities and Exchange Commission by February 29, 2008.  This press release should be read in conjunction with that filing, which will be available on the company’s website at www.spx.com, in the Investor Relations section.

 

SPX Corporation is a Fortune 500 multi-industry manufacturing leader. The company offers highly-specialized engineered solutions to solve critical problems for customers.

 

SPX is focused on providing solutions that support the expansion of global infrastructure, with particular emphasis on the growing worldwide demand for energy and power. Its innovative product portfolio, containing many environmentally friendly products, includes cooling systems for all types of power plants throughout the world; custom engineered pumps, valves and mixers that assist a variety of flow processes including oil and gas exploration, distribution and refinement; handheld diagnostic tools that aid in vehicle maintenance and repair; and power transformers that regulate voltage for electrical transmission and distribution by utility companies.

 

SPX is headquartered in Charlotte, North Carolina and employs over 17,000 people worldwide in over 35 countries. Visit www.spx.com. (NYSE: SPW)

 

* Non-GAAP number. See attached financial schedules for reconciliation to most comparable GAAP number.

 

Certain statements in this press release are 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.  Please read these results in conjunction with the company’s documents filed with the Securities and Exchange Commission, including the company’s quarterly report on Form 10-Q for the period ended September 30, 2007 and the company’s annual report on Form 10-K for the year ended December 31, 2007.  These filings identify important risk factors and other uncertainties that could cause actual results to differ from those contained in the forward-looking statements.  Actual results may differ

 



 

materially from these statements.  The words “believe,” “expect,” “anticipate,” “estimate,” “guidance,” “target” and similar expressions identify forward-looking statements.  Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.  In addition, estimates of future operating results are based on the company’s current complement of businesses, which is subject to change.

 

Contact:

 

Jeremy W. Smeltser (Investors)

 

Jennifer H. Epstein (Media)

704-752-4478

 

704-752-7403

E-mail: investor@spx.com

 

jennifer.epstein@spx.com

 

 



 

SPX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)

 

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,

 

December 31,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,354.6

 

$

1,219.6

 

$

4,822.3

 

$

4,167.6

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of products sold

 

939.7

 

874.9

 

3,429.2

 

2,998.2

 

Selling, general and administrative

 

263.2

 

219.3

 

937.5

 

830.5

 

Intangible amortization

 

5.1

 

4.0

 

18.4

 

14.1

 

Impairment of intangible assets

 

4.0

 

 

4.0

 

 

Special charges, net

 

3.5

 

(0.7

)

7.6

 

3.9

 

Operating income

 

139.1

 

122.1

 

425.6

 

320.9

 

 

 

 

 

 

 

 

 

 

 

Other expense, net

 

(1.7

)

(8.9

)

(4.6

)

(28.0

)

Interest expense

 

(24.3

)

(16.6

)

(76.9

)

(62.8

)

Interest income

 

2.8

 

3.5

 

9.1

 

12.6

 

Loss on early extinguishment of debt

 

 

 

(3.3

)

 

Equity earnings on joint ventures

 

10.8

 

12.5

 

39.9

 

40.8

 

Income from continuing operations before income taxes

 

126.7

 

112.6

 

389.8

 

283.5

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

(27.8

)

(25.7

)

(89.5

)

(57.8

)

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

98.9

 

86.9

 

300.3

 

225.7

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of tax

 

(1.8

)

(0.1

)

(2.6

)

0.8

 

Gain (loss) on disposition of discontinued operations, net of tax

 

11.1

 

 

(3.5

)

(55.8

)

Income (loss) from discontinued operations

 

9.3

 

(0.1

)

(6.1

)

(55.0

)

 

 

 

 

 

 

 

 

 

 

Net income

 

$

108.2

 

$

86.8

 

$

294.2

 

$

170.7

 

 

 

 

 

 

 

 

 

 

 

Basic income per share of common stock

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.90

 

$

1.51

 

$

5.47

 

$

3.87

 

Income (loss) from discontinued operations

 

0.18

 

 

(0.11

)

(0.94

)

Net income per share

 

$

2.08

 

$

1.51

 

$

5.36

 

$

2.93

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

51.973

 

57.440

 

54.842

 

58.254

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations for diluted income per share

 

$

98.9

 

$

86.9

 

$

300.3

 

$

226.8

 

Net income for diluted income per share

 

$

108.2

 

$

86.8

 

$

294.2

 

$

171.8

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share of common stock

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.85

 

$

1.47

 

$

5.33

 

$

3.74

 

Income (loss) from discontinued operations

 

0.17

 

 

(0.11

)

(0.91

)

Net income per share

 

$

2.02

 

$

1.47

 

$

5.22

 

$

2.83

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - diluted

 

53.438

 

58.944

 

56.307

 

60.724

 

 



 

SPX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions)

 

 

 

December 31,

 

December 31,

 

 

 

2007

 

2006

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and equivalents

 

$

354.1

 

$

476.9

 

Accounts receivable, net

 

1,299.9

 

1,103.1

 

Inventories, net

 

703.8

 

496.2

 

Other current assets

 

106.9

 

87.0

 

Deferred income taxes

 

60.0

 

55.4

 

Assets of discontinued operations

 

56.1

 

299.0

 

Total current assets

 

2,580.8

 

2,517.6

 

Property, plant and equipment

 

 

 

 

 

Land

 

43.0

 

29.4

 

Buildings and leasehold improvements

 

236.7

 

194.7

 

Machinery and equipment

 

628.5

 

518.3

 

 

 

908.2

 

742.4

 

Accumulated depreciation

 

(416.0

)

(383.3

)

Net property, plant and equipment

 

492.2

 

359.1

 

Goodwill

 

1,985.5

 

1,727.0

 

Intangibles, net

 

727.4

 

480.1

 

Other assets

 

407.5

 

353.3

 

TOTAL ASSETS

 

$

6,193.4

 

$

5,437.1

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

733.8

 

$

494.1

 

Accrued expenses

 

1,050.2

 

812.0

 

Income taxes payable

 

20.0

 

79.3

 

Short-term debt

 

255.4

 

168.0

 

Current maturities of long-term debt

 

79.0

 

42.3

 

Liabilities of discontinued operations

 

31.1

 

136.9

 

Total current liabilities

 

2,169.5

 

1,732.6

 

 

 

 

 

 

 

Long-term debt

 

1,240.7

 

753.5

 

Deferred and other income taxes

 

202.6

 

188.8

 

Other long-term liabilities

 

564.2

 

649.3

 

Total long-term liabilities

 

2,007.5

 

1,591.6

 

 

 

 

 

 

 

Minority interest

 

10.4

 

3.5

 

Shareholders’ equity:

 

 

 

 

 

Common stock

 

963.5

 

937.4

 

Paid-in capital

 

1,296.0

 

1,134.5

 

Retained earnings

 

2,045.9

 

1,754.2

 

Accumulated other comprehensive income (loss)

 

38.1

 

(86.6

)

Common stock in treasury

 

(2,337.5

)

(1,630.1

)

Total shareholders’ equity

 

2,006.0

 

2,109.4

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

6,193.4

 

$

5,437.1

 

 



 

SPX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

 

 

 

 

Year ended

 

 

 

December 31,

 

 

 

2007

 

2006

 

Cash flows from (used in) operating activities:

 

 

 

 

 

Net income

 

$

294.2

 

$

170.7

 

Less: Loss from discontinued operations, net of tax

 

(6.1

)

(55.0

)

Income from continuing operations

 

300.3

 

225.7

 

Adjustments to reconcile income from continuing operations to net cash from operating activities

 

 

 

 

 

Special charges, net

 

7.6

 

3.9

 

Impairment of intangible assets

 

4.0

 

 

Loss on early extinguishment of debt

 

3.3

 

 

Deferred and other income taxes

 

5.5

 

5.4

 

Depreciation and amortization

 

79.0

 

72.1

 

Accretion of LYONs

 

 

1.7

 

Pension and other employee benefits

 

58.0

 

62.3

 

Stock-based compensation

 

41.4

 

37.6

 

Other, net

 

6.6

 

(8.0

)

Changes in operating assets and liabilities, net of effects from acquisitions and divestitures

 

 

 

 

 

Accounts receivable and other

 

15.9

 

(206.7

)

Inventories

 

(42.5

)

(42.1

)

Accounts payable, accrued expenses and other

 

(69.6

)

81.0

 

Payments to terminate interest rate swap agreements

 

(0.4

)

 

Payments of LYONs tax recapture

 

 

(90.9

)

Accreted interest paid on LYONs repurchase (accreted since issuance date)

 

 

(84.3

)

Cash spending on restructuring actions

 

(4.9

)

(9.1

)

Net cash from continuing operations

 

404.2

 

48.6

 

Net cash from discontinued operations

 

35.4

 

11.4

 

Net cash from operating activities

 

439.6

 

60.0

 

 

 

 

 

 

 

Cash flows from (used in) investing activities:

 

 

 

 

 

Proceeds from asset sales

 

3.3

 

19.4

 

Business acquisitions and investments, net of cash acquired

 

(567.2

)

(169.4

)

Capital expenditures

 

(90.9

)

(55.7

)

Net cash used in continuing operations

 

(654.8

)

(205.7

)

Net cash from discontinued operations

 

126.1

 

101.4

 

Net cash used in investing activities

 

(528.7

)

(104.3

)

 

 

 

 

 

 

Cash flows from (used in) financing activities:

 

 

 

 

 

Borrowings under senior credit facilities

 

1,606.3

 

833.2

 

Repayments under senior credit facilities

 

(1,560.6

)

(15.0

)

Borrowings under senior notes

 

500.0

 

 

Repayment of LYONs principal

 

 

(576.0

)

Borrowings under trade receivables agreement

 

586.0

 

199.0

 

Repayments under trade receivables agreement

 

(517.0

)

(199.0

)

Net repayments under other financing arrangements

 

(21.9

)

(4.4

)

Purchases of common stock

 

(715.9

)

(436.3

)

Proceeds from the exercise of employee stock options

 

153.7

 

196.8

 

Financing fees paid

 

(15.1

)

(0.4

)

Dividends paid

 

(56.5

)

(59.9

)

Net cash used in continuing operations

 

(41.0

)

(62.0

)

Net cash used in discontinued operations

 

(5.8

)

(1.5

)

Net cash used in financing activities

 

(46.8

)

(63.5

)

Change in cash and equivalents due to changes in foreign currency exchange rates

 

12.8

 

4.8

 

Net change in cash and equivalents

 

(123.1

)

(103.0

)

Consolidated cash and equivalents, beginning of period

 

477.2

 

580.2

 

Consolidated cash and equivalents, end of period

 

$

354.1

 

$

477.2

 

 

 

 

 

 

 

Cash and equivalents of continuing operations

 

$

354.1

 

$

476.9

 

Cash and equivalents of discontinued operations

 

$

 

$

0.3

 

 



 

SPX CORPORATION AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT

(Unaudited; in millions)

 

 

 

Three months ended
December 31,

 

 

 

Year ended
December 31,

 

 

 

 

 

2007

 

2006

 

%

 

2007

 

2006

 

%

 

Flow Technology (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

323.1

 

$

244.1

 

32.4

%

$

1,121.3

 

$

865.7

 

29.5

%

Gross profit

 

107.9

 

78.6

 

 

 

385.8

 

287.9

 

 

 

Selling, general and administrative expense

 

56.6

 

41.0

 

 

 

203.8

 

153.8

 

 

 

Intangible amortization expense

 

1.4

 

0.5

 

 

 

4.8

 

0.9

 

 

 

Segment income

 

$

49.9

 

$

37.1

 

34.5

%

$

177.2

 

$

133.2

 

33.0

%

as a percent of revenues

 

15.4

%

15.2

%

 

 

15.8

%

15.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Test and Measurement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

340.8

 

$

317.5

 

7.3

%

$

1,174.1

 

$

1,137.5

 

3.2

%

Gross profit

 

107.4

 

104.2

 

 

 

357.9

 

375.6

 

 

 

Selling, general and administrative expense

 

62.4

 

52.8

 

 

 

225.1

 

211.0

 

 

 

Intangible amortization expense

 

2.0

 

1.5

 

 

 

6.4

 

5.5

 

 

 

Segment income

 

$

43.0

 

$

49.9

 

-13.8

%

$

126.4

 

$

159.1

 

-20.6

%

as a percent of revenues

 

12.6

%

15.7

%

 

 

10.8

%

14.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thermal Equipment and Services (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

437.6

 

$

430.6

 

1.6

%

$

1,560.5

 

$

1,327.7

 

17.5

%

Gross profit

 

117.6

 

104.3

 

 

 

376.5

 

309.1

 

 

 

Selling, general and administrative expense

 

63.8

 

52.4

 

 

 

207.5

 

191.1

 

 

 

Intangible amortization expense

 

1.5

 

1.7

 

 

 

6.3

 

6.6

 

 

 

Segment income

 

$

52.3

 

$

50.2

 

4.2

%

$

162.7

 

$

111.4

 

46.1

%

as a percent of revenues

 

12.0

%

11.7

%

 

 

10.4

%

8.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Products and Services (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

253.1

 

$

227.4

 

11.3

%

$

966.4

 

$

836.7

 

15.5

%

Gross profit

 

85.9

 

61.5

 

 

 

288.7

 

213.2

 

 

 

Selling, general and administrative expense

 

33.9

 

27.9

 

 

 

131.7

 

113.1

 

 

 

Intangible amortization expense

 

0.2

 

0.3

 

 

 

0.9

 

1.1

 

 

 

Segment income

 

$

51.8

 

$

33.3

 

55.6

%

$

156.1

 

$

99.0

 

57.7

%

as a percent of revenues

 

20.5

%

14.6

%

 

 

16.2

%

11.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total segment income

 

$

197.0

 

$

170.5

 

 

 

$

622.4

 

$

502.7

 

 

 

Corporate expenses

 

(30.4

)

(26.0

)

 

 

(100.3

)

(96.1

)

 

 

Pension and postretirement expense

 

(11.0

)

(10.4

)

 

 

(43.5

)

(44.2

)

 

 

Stock-based compensation expense

 

(9.0

)

(12.7

)

 

 

(41.4

)

(37.6

)

 

 

Special charges, net

 

(3.5

)

0.7

 

 

 

(7.6

)

(3.9

)

 

 

Impairment of intangible assets

 

(4.0

)

 

 

 

(4.0

)

 

 

 

Consolidated Operating Income (1)

 

$

139.1

 

$

122.1

 

 

 

$

425.6

 

$

320.9

 

 

 


(1) Excludes results of discontinued operations.

 



 

SPX CORPORATION AND SUBSIDIARIES

ORGANIC REVENUE GROWTH RECONCILIATION

(Unaudited)

 

 

 

 

Three months ended December 31, 2007

 

 

 

Net Revenue
Growth

 

Acquisitions and
Divestitures

 

Foreign
Currency

 

Organic Revenue
Growth

 

 

 

 

 

 

 

 

 

 

 

Flow Technology

 

32.4

%

11.3

%

3.1

%

18.0

%

 

 

 

 

 

 

 

 

 

 

Test and Measurement

 

7.3

%

6.0

%

3.3

%

(2.0

)%

 

 

 

 

 

 

 

 

 

 

Thermal Equipment and Services

 

1.6

%

%

5.0

%

(3.4

)%

 

 

 

 

 

 

 

 

 

 

Industrial Products and Services

 

11.3

%

%

0.9

%

10.4

%

 

 

 

 

 

 

 

 

 

 

Consolidated

 

11.1

%

3.9

%

3.4

%

3.8

%

 

 

 

Twelve months ended December 31, 2007

 

 

 

Net Revenue
Growth

 

Acquisitions and
Divestitures

 

Foreign
Currency

 

Organic Revenue
Growth

 

 

 

 

 

 

 

 

 

 

 

Flow Technology

 

29.5

%

13.1

%

2.4

%

14.0

%

 

 

 

 

 

 

 

 

 

 

Test and Measurement

 

3.2

%

1.9

%

2.9

%

(1.6

)%

 

 

 

 

 

 

 

 

 

 

Thermal Equipment and Services

 

17.5

%

%

4.0

%

13.5

%

 

 

 

 

 

 

 

 

 

 

Industrial Products and Services

 

15.5

%

%

0.7

%

14.8

%

 

 

 

 

 

 

 

 

 

 

Consolidated

 

15.7

%

3.2

%

2.7

%

9.8

%

 



 

SPX CORPORATION AND SUBSIDIARIES

ADJUSTED FREE CASH FLOW RECONCILIATION

(Unaudited; in millions)

 

 

 

Three months ended
December 31,

 

Twelve months ended
December 31,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

Net cash from continuing operations

 

$

290.4

 

$

83.7

 

$

404.2

 

$

48.6

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures - continuing operations

 

(43.4

)

(14.9

)

(90.9

)

(55.7

)

Free cash flow from (used in) continuing operations

 

$

247.0

 

$

68.8

 

$

313.3

 

$

(7.1

)

 



 

SPX CORPORATION AND SUBSIDIARIES

CASH AND DEBT RECONCILIATION

 (Unaudited; in millions)

 

 

 

Twelve months ended

 

 

 

December 31, 2007

 

 

 

 

 

Beginning cash

 

$

477.2

 

 

 

 

 

Operational cash flow

 

404.2

 

Business acquisitions and investments, net of cash acquired

 

(567.2

)

Capital expenditures

 

(90.9

)

Proceeds from asset sales

 

3.3

 

Borrowings under trade receivables agreement

 

586.0

 

Repayments under trade receivables agreement

 

(517.0

)

Borrowings under senior credit facilities

 

1,606.3

 

Repayments under senior credit facilities

 

(1,560.6

)

Borrowings under senior notes

 

500.0

 

Net repayments under other financing arrangements

 

(21.9

)

Purchases of common stock

 

(715.9

)

Proceeds from the exercise of employee stock options

 

153.7

 

Dividends paid

 

(56.5

)

Financing fees paid

 

(15.1

)

Cash from discontinued operations

 

155.7

 

Change in cash due to change in foreign currency exchange rates

 

12.8

 

Ending cash

 

$

354.1

 

 

 

 

Debt At

 

 

 

 

 

 

 

Debt At

 

 

 

12/31/2006

 

Borrowings

 

Repayments

 

Other

 

12/31/2007

 

Term loan

 

$

735.0

 

$

750.0

 

$

(735.0

)

$

 

$

750.0

 

Domestic revolving loan facility

 

 

757.0

 

(642.0

)

 

115.0

 

Global revolving loan facility

 

82.8

 

99.3

 

(183.6

)

1.5

 

 

7.625% senior notes

 

 

500.0

 

 

 

500.0

 

7.5% senior notes

 

28.2

 

 

 

 

28.2

 

6.25% senior notes

 

21.3

 

 

 

 

21.3

 

Trade receivables financing agreement

 

1.0

 

586.0

 

(517.0

)

 

70.0

 

Other

 

95.5

 

 

(21.9

)

17.0

 

90.6

 

Totals

 

$

963.8

 

$

2,692.3

 

$

(2,099.5

)

$

18.5

 

$

1,575.1

 

 



 

SPX CORPORATION AND SUBSIDIARIES

ADJUSTED EARNINGS PER SHARE RECONCILIATION

(Unaudited; in millions, except per share)

 

 

 

Three months ended

 

Year ended

 

 

 

December 31, 2007

 

December 31, 2007

 

 

 

 

 

 

 

Diluted net income per share of common stock from continuing operations

 

$

1.85

 

$

5.33

 

 

 

 

 

 

 

Third quarter tax benefits

 

 

(0.34

)

 

 

 

 

 

 

Fourth quarter tax benefits, net

 

(0.26

)

(0.25

)

 

 

 

 

 

 

Legacy legal matters

 

0.06

 

0.06

 

 

 

 

 

 

 

Impairment charge on intangible assets

 

0.05

 

0.05

 

 

 

 

 

 

 

Adjusted diluted net income per share of common stock from continuing operations

 

$

1.70

 

$

4.85