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): October 1, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction | (Commission | (IRS Employer | ||||||||||||
| of incorporation) | File Number) | Identification No.) | ||||||||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (980 ) 474-3700
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 obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.01. Completion of Acquisition or Disposition of Assets.
On October 1, 2021, SPX Corporation (the “Company”) completed the previously announced sale of SPX Transformer Solutions, Inc. (“Transformer Solutions”) pursuant to the terms of the Stock Purchase Agreement dated June 8, 2021 (the “Purchase Agreement”) with GE-Prolec Transformers, Inc. (the “Purchaser”) and Prolec GE Internacional, S. de R.L. de C.V. (the “Guarantor”). The Company has agreed to transfer all of the outstanding common stock of Transformer Solutions to the Purchaser for an aggregate cash purchase price of $645 million (the “Transaction”). The purchase price is subject to potential adjustment based on Transformer Solutions’ cash, debt and working capital on the date the Transaction was consummated, as well as for specified transaction expenses and other specified items.
As provided in the Purchase Agreement, the Company has agreed to indemnify the Purchaser for losses arising from certain breaches of the Purchase Agreement and other liabilities, subject to certain limitations. The Guarantor has provided a limited guarantee of certain obligations of the Purchaser under the Agreement. In connection with the closing of the Transaction, the parties also entered into certain ancillary agreements, including, among others, a transition services agreement.
The foregoing description of the Purchase Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the Purchase Agreement, which was filed as Exhibit 2.1 to the Company's Form 8-K filed on June 9, 2021 and is incorporated herein by reference.
2
Item 9.01. Financial Statements and Exhibits.
(b) Pro forma financial information.
Unaudited Pro Forma Condensed Consolidated Financial Information of the Company, which reflects the disposition described in Item 2.01, is filed as Exhibit 99.1 hereto and is incorporated herein by reference. Because the business of Transformer Solutions was classified as a discontinued operation in the Company's financial statements included in its Form 10-Q for the period ended July 3, 2021, a pro forma condensed consolidated statement of operations for the six months ended July 3, 2021 is not provided.
(d) Exhibits.
| Exhibit Number | Description | |||||||
| 2.1 | ||||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
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.
| SPX CORPORATION | ||||||||
| (Registrant) | ||||||||
| Date: October 7, 2021 | By: | /s/ James E. Harris | ||||||
| James E. Harris | ||||||||
| Vice President, Chief Financial Officer and Treasurer | ||||||||
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On October 1, 2021, SPX Corporation (the “Company”) completed its previously announced sale of SPX Transformer Solutions, Inc. (“Transformer Solutions”) pursuant to the terms of the Stock Purchase Agreement dated June 8, 2021 with GE-Prolec Transformers, Inc. (the “Purchaser”) and Prolec GE Internacional, S. de R.L. de C.V. The Company transferred all of the outstanding common stock of Transformer Solutions to the Purchaser for an aggregate cash purchase price of $645 million (the “Transaction”). The purchase price is subject to potential adjustment based on Transformer Solutions’ cash, debt and working capital on the date the Transaction was consummated, as well as for specified transaction expenses and other specified items.
The following unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018, as well as the pro forma condensed consolidated balance sheet as of July 3, 2021, have been derived from the Company’s historical consolidated financial information. The unaudited pro forma condensed consolidated statements of operations have been prepared as if the Transaction occurred on January 1, 2018 (the first day of fiscal year 2018), and does not assume any interest income on the cash proceeds during the years ended December 31, 2020, 2019 and 2018, while the unaudited pro forma condensed consolidated balance sheet has been prepared as if the Transaction occurred on July 3, 2021. The unaudited pro forma condensed consolidated financial statements (the “Pro Formas”) and the accompanying notes should be read together with the Company’s annual report on Form 10-K for the year ended December 31, 2020 and the Company’s quarterly report on Form 10-Q for the quarter ended July 3, 2021.
The Pro Formas do not purport to represent what the Company’s financial position and results of operations would have been had the Transaction occurred on the dates indicated or to project financial performance for any future period or as of a future date. In addition, the Pro Formas are based on currently available information and certain assumptions that the Company believes are reasonable, and are provided for illustrative and informational purposes only. The Pro Formas have been prepared to reflect adjustments to the Company’s historical consolidated financial statements that are (1) directly attributable to the Transaction; (2) factually supportable; and (3) with respect to the unaudited pro forma condensed consolidated statements of operations, expected to have a continuing impact on the Company’s results of operations. The Pro Formas include adjustments to reflect the elimination of the operating results of Transformer Solutions and the sale of Transformer Solutions, including the cash transferred with the business, estimated net cash consideration received on the sale and the resulting net gain on sale.
The Company believes the adjustments related to the Transaction presented in the following Pro Formas are consistent with the guidance for discontinued operations under U.S. generally accepted accounting principles. Specifically, the Company has presented certain general corporate expenses, which were previously allocated to Transformer Solutions, as part of continuing operations as these costs do not meet the requirements to be presented within discontinued operations. In addition, adjustments related to the Company's income taxes represent the Company’s current estimates, which could materially change as the Company finalizes its discontinued operations accounting. Assumptions underlying the pro forma adjustments are described in the accompanying notes.
| SPX CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||
| PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||||||||||
| (Unaudited; in millions, except per share amounts) | |||||||||||||||||||||||
| Year ended December 31, 2020 | |||||||||||||||||||||||
| Historical | Transaction Accounting Adjustments | Notes | Pro Forma | ||||||||||||||||||||
| Revenues | $ | 1,559.5 | $ | 427.4 | (a) | $ | 1,132.1 | ||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of products sold | 1,080.6 | 338.9 | (a) | 741.7 | |||||||||||||||||||
| Selling, general and administrative | 320.0 | 32.7 | (a) | 287.3 | |||||||||||||||||||
| Intangible amortization | 14.0 | — | 14.0 | ||||||||||||||||||||
| Impairment of intangible assets | 0.7 | — | 0.7 | ||||||||||||||||||||
| Special charges, net | 3.2 | — | 3.2 | ||||||||||||||||||||
| Other operating expenses, net | 9.0 | — | 9.0 | ||||||||||||||||||||
| Operating income | 132.0 | 55.8 | (a) | 76.2 | |||||||||||||||||||
| Other income, net | 2.7 | 0.9 | (a) | 1.8 | |||||||||||||||||||
| Interest expense | (18.4) | — | (18.4) | ||||||||||||||||||||
| Interest income | 0.2 | — | 0.2 | ||||||||||||||||||||
| Income from continuing operations before income taxes | 116.5 | 56.7 | (a) | 59.8 | |||||||||||||||||||
| Income tax provision | (15.8) | (13.9) | (a) | (1.9) | |||||||||||||||||||
| Net income from continuing operations | $ | 100.7 | $ | 42.8 | (a) | $ | 57.9 | ||||||||||||||||
| Earnings per share of common stock: | |||||||||||||||||||||||
| Basic - Net income from continuing operations | $ | 2.26 | $ | 1.30 | |||||||||||||||||||
| Diluted - Net income from continuing operations | $ | 2.20 | $ | 1.27 | |||||||||||||||||||
| Weighted-average number of common shares outstanding: | |||||||||||||||||||||||
| Basic | 44.628 | 44.628 | |||||||||||||||||||||
| Diluted | 45.766 | 45.766 | |||||||||||||||||||||
| SPX CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||
| PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||||||||||
| (Unaudited; in millions, except per share amounts) | |||||||||||||||||||||||
| Year ended December 31, 2019 | |||||||||||||||||||||||
| Historical | Transaction Accounting Adjustments | Notes | Pro Forma | ||||||||||||||||||||
| Revenues | $ | 1,520.9 | $ | 403.4 | (a) | $ | 1,117.5 | ||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of products sold | 1,078.2 | 334.1 | (a) | 744.1 | |||||||||||||||||||
| Selling, general and administrative | 317.6 | 30.2 | (a) | 287.4 | |||||||||||||||||||
| Intangible amortization | 8.9 | — | 8.9 | ||||||||||||||||||||
| Special charges, net | 4.4 | 0.3 | (a) | 4.1 | |||||||||||||||||||
| Other operating expenses, net | 1.8 | — | 1.8 | ||||||||||||||||||||
| Operating income | 110.0 | 38.8 | (a) | 71.2 | |||||||||||||||||||
| Other expense, net | (5.2) | 0.6 | (a) | (5.8) | |||||||||||||||||||
| Interest expense | (21.0) | — | (21.0) | ||||||||||||||||||||
| Interest income | 1.8 | — | 1.8 | ||||||||||||||||||||
| Loss on amendment/refinancing of senior credit agreement | (0.6) | — | (0.6) | ||||||||||||||||||||
| Income from continuing operations before income taxes | 85.0 | 39.4 | (a) | 45.6 | |||||||||||||||||||
| Income tax provision | (13.9) | (8.8) | (a) | (5.1) | |||||||||||||||||||
| Income from continuing operations | 71.1 | 30.6 | (a) | 40.5 | |||||||||||||||||||
| Net income attributable to redeemable noncontrolling interest | 5.6 | — | 5.6 | ||||||||||||||||||||
| Net income from continuing operations attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest | $ | 76.7 | $ | 30.6 | (a) | $ | 46.1 | ||||||||||||||||
| Earnings per share of common stock: | |||||||||||||||||||||||
| Basic - Net income from continuing operations attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest | $ | 1.75 | $ | 1.05 | |||||||||||||||||||
| Diluted - Net income from continuing operations attributable to SPX Corporation common shareholders after adjustment related to redeemable noncontrolling interest | $ | 1.71 | $ | 1.03 | |||||||||||||||||||
| Weighted-average number of common shares outstanding: | |||||||||||||||||||||||
| Basic | 43.942 | 43.942 | |||||||||||||||||||||
| Diluted | 44.957 | 44.957 | |||||||||||||||||||||
| SPX CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||
| PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||||||||||
| (Unaudited; in millions, except per share amounts) | |||||||||||||||||||||||
| Year ended December 31, 2018 | |||||||||||||||||||||||
| Historical | Transaction Accounting Adjustments | Notes | Pro Forma | ||||||||||||||||||||
| Revenues | $ | 1,512.6 | $ | 373.8 | (a) | $ | 1,138.8 | ||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of products sold | 1,102.6 | 316.5 | (a) | 786.1 | |||||||||||||||||||
| Selling, general and administrative | 289.1 | 27.0 | (a) | 262.1 | |||||||||||||||||||
| Intangible amortization | 4.1 | — | 4.1 | ||||||||||||||||||||
| Special charges, net | 3.7 | — | 3.7 | ||||||||||||||||||||
| Other operating expenses, net | 0.6 | — | 0.6 | ||||||||||||||||||||
| Operating income | 112.5 | 30.3 | (a) | 82.2 | |||||||||||||||||||
| Other expense, net | (7.6) | 0.5 | (a) | (8.1) | |||||||||||||||||||
| Interest expense | (21.5) | (0.1) | (a) | (21.4) | |||||||||||||||||||
| Interest income | 1.5 | — | 1.5 | ||||||||||||||||||||
| Loss on amendment/refinancing of senior credit agreement | (0.4) | — | (0.4) | ||||||||||||||||||||
| Income from continuing operations before income taxes | 84.5 | 30.7 | (a) | 53.8 | |||||||||||||||||||
| Income tax (provision) benefit | (2.6) | (7.1) | (a) | 4.5 | |||||||||||||||||||
| Net income from continuing operations | $ | 81.9 | $ | 23.6 | (a) | $ | 58.3 | ||||||||||||||||
| Earnings per share of common stock: | |||||||||||||||||||||||
| Basic - Net income from continuing operations | $ | 1.90 | $ | 1.35 | |||||||||||||||||||
| Diluted - Net income from continuing operations | $ | 1.83 | $ | 1.31 | |||||||||||||||||||
| Weighted-average number of common shares outstanding: | |||||||||||||||||||||||
| Basic | 43.054 | 43.054 | |||||||||||||||||||||
| Diluted | 44.660 | 44.660 | |||||||||||||||||||||
| SPX CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||
| PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET | |||||||||||||||||||||||
| (Unaudited; in millions) | |||||||||||||||||||||||
| July 3, 2021 | |||||||||||||||||||||||
| Historical | Transaction Accounting Adjustments | Notes | Pro Forma | ||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||
| Current assets: | |||||||||||||||||||||||
| Cash and equivalents | $ | 69.1 | $ | 616.9 | (b) | $ | 686.0 | ||||||||||||||||
| Accounts receivable, net | 212.5 | — | 212.5 | ||||||||||||||||||||
| Contract assets | 25.0 | — | 25.0 | ||||||||||||||||||||
| Inventories, net | 157.7 | — | 157.7 | ||||||||||||||||||||
| Other current assets | 104.2 | — | 104.2 | ||||||||||||||||||||
| Assets of discontinued operations | 332.9 | (332.9) | (a) | — | |||||||||||||||||||
| Total current assets | 901.4 | 284.0 | 1,185.4 | ||||||||||||||||||||
| Property, plant and equipment: | |||||||||||||||||||||||
| Land | 14.0 | — | 14.0 | ||||||||||||||||||||
| Buildings and leasehold improvements | 67.3 | — | 67.3 | ||||||||||||||||||||
| Machinery and equipment | 227.7 | — | 227.7 | ||||||||||||||||||||
| 309.0 | — | 309.0 | |||||||||||||||||||||
| Accumulated depreciation | (196.0) | (196.0) | |||||||||||||||||||||
| Property, plant and equipment, net | 113.0 | — | 113.0 | ||||||||||||||||||||
| Goodwill | 409.2 | — | 409.2 | ||||||||||||||||||||
| Intangibles, net | 325.8 | — | 325.8 | ||||||||||||||||||||
| Other assets | 609.4 | — | 609.4 | ||||||||||||||||||||
| Deferred income taxes | 51.7 | (26.1) | (e) | 25.6 | |||||||||||||||||||
| TOTAL ASSETS | $ | 2,410.5 | $ | 257.9 | $ | 2,668.4 | |||||||||||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||||
| Accounts payable | $ | 86.8 | $ | 2.1 | (c) | $ | 88.9 | ||||||||||||||||
| Contract liabilities | 49.5 | — | 49.5 | ||||||||||||||||||||
| Accrued expenses | 230.5 | 10.0 | (c) | 240.5 | |||||||||||||||||||
| Income taxes payable | 2.3 | 80.0 | (e) | 82.3 | |||||||||||||||||||
| Short-term debt | 168.3 | (0.1) | (d) | 168.2 | |||||||||||||||||||
| Current maturities of long-term debt | 10.4 | (0.5) | (d) | 9.9 | |||||||||||||||||||
| Liabilities of discontinued operations | 159.8 | (159.8) | (a) | — | |||||||||||||||||||
| Total current liabilities | 707.6 | (68.3) | 639.3 | ||||||||||||||||||||
| Long-term debt | 238.0 | (0.9) | (d) | 237.1 | |||||||||||||||||||
| Deferred and other income taxes | 19.1 | — | 19.1 | ||||||||||||||||||||
| Other long-term liabilities | 717.6 | — | 717.6 | ||||||||||||||||||||
| Total long-term liabilities | 974.7 | (0.9) | 973.8 | ||||||||||||||||||||
| Equity: | |||||||||||||||||||||||
| Common stock | 0.5 | — | 0.5 | ||||||||||||||||||||
| Paid-in capital | 1,321.2 | — | 1,321.2 | ||||||||||||||||||||
| Retained deficit | (399.8) | 327.5 | (f) | (72.3) | |||||||||||||||||||
| Accumulated other comprehensive income | 250.6 | (0.4) | (a) | 250.2 | |||||||||||||||||||
| Common stock in treasury | (444.3) | — | (444.3) | ||||||||||||||||||||
| Total equity | 728.2 | 327.1 | 1,055.3 | ||||||||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 2,410.5 | $ | 257.9 | $ | 2,668.4 | |||||||||||||||||
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(Amounts in millions)
Note 1 — Basis of presentation
The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed consolidated financial statements to give effect to pro forma adjustments. The pro forma condensed consolidated financial statements does not necessarily reflect what the Company’s financial condition or results of operations would have been had the Transaction occurred on the dates indicated. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
Note 2 — Pro Forma Adjustments
The Unaudited Pro Forma Condensed Consolidated Financial Statements reflect the effect of the following pro forma adjustments:
(a) Represents adjustments to eliminate the historical operating results, assets, liabilities and accumulated other comprehensive income of Transformer Solutions. Excluded from the historical operating results are certain general corporate overhead expenses that were allocated to Transformer Solutions’ operations, but are not specifically identifiable as costs of Transformer Solutions. Such general corporate overhead expenses, which totaled $4.7, $4.6 and $4.1 for the years ended December 31, 2020, 2019 and 2018, respectively, do not meet the criteria to be presented in discontinued operations and, thus, will be presented as part of SPX’s continuing operations.
(b) Represents cash proceeds from the Transaction of $645.0, less $28.1 for net adjustments related primarily to Transformer Solutions estimated cash, debt, and working capital as of July 3, 2021.
(c) Represents the recognition of liabilities for transaction costs not paid at the closing of the Transaction.
(d) Represents debt transferred to the Purchaser.
(e) Represents income taxes provided in connection with the gain on sale of Transformer Solutions.
(f) Represents the recognition of the estimated gain, net of taxes, related to the sale of Transformer Solutions. The amount of the gain could materially change as the Company finalizes its estimates to be reported in its Report on Form 10-Q for the period ended October 2, 2021.