spxf-20211002

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 2, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-37393

SPX FLOW, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		47-3110748
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
13320 Ballantyne Corporate Place		28277
Charlotte,	NC	(Zip Code)
(Address of Principal Executive Offices)

Registrant’s Telephone Number, Including Area Code (704) 752-4400

(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, Par Value $0.01	FLOW	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Common shares outstanding as of November 8, 2021 were 41,971,004.

SPX FLOW, INC. AND SUBSIDIARIES

FORM 10-Q INDEX


PART I - FINANCIAL INFORMATION
Item 1 – Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended October 2 , 2021 and September 2 6 , 2020 (Unaudited)			1
Condensed Consolidated Statements of Comprehensive Incom e for the Three and Nine Months Ended October 2, 2021 and September 26, 2020 (Unaudited)			2
Condensed Consolidated Balance Sheets as of Octo ber 2 , 2021 and December 31, 2020 (Unaudited)			3
Condensed Consolidated Statements of Equity for the Three and Nine Months Ended October 2, 2021 and September 26, 2020 (Unaudited)			4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 2 , 2021 and September 2 6 , 2020 (Unaudited)			6
Notes to Condensed Consolidated Financial Statements			8
Note 1 - Basis of Presentation			8
Note 2 - New Accounting Pronouncements			8
Note 3 - Business Acquisitions, Disposals and Discontinued Operations			9
Note 4 - Information on Reportable Segments, Corporate Expense and Other			14
Note 5 - Revenue from Contracts with Customers			15
Note 6 - Restructuring and Other Related Charges			17
Note 7 - Inventories, Net			18
Note 8 - Goodwill, Other Intangible Assets and Asset Impairment Charges			18
Note 9 - Employee Benefit Plans			20
Note 10 - Indebtedness			21
Note 11 - Derivative Financial Instruments			24
Note 12 - Equity and Stock-Based Compensation			25
Note 13 - Litigation, Contingent Liabilities and Other Matters			28
Note 14 - Income Taxes			28
Note 15 - Fair Value			30

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			33
Item 3 – Quantitative and Qualitative Disclosures About Market Risk			47
Item 4 – Controls and Procedures			47

PART II - OTHER INFORMATION
Item 1 – Legal Proceedings			48
Item 1A – Risk Factors			48
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			48
Item 6 – Exhibits			49

SIGNATURES			50

PART I—FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements

SPX FLOW, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues	$	389.6	$	356.9	$	1,135.0	$	954.5
Cost of products sold	250.6		230.8		735.8		613.8
Gross profit	139.0		126.1		399.2		340.7
Selling, general and administrative	93.3		89.9		277.5		265.9
Intangible amortization	5.9		2.8		13.6		8.5
Asset impairment charges	—		0.5		—		3.2
Restructuring and other related charges	0.6		1.3		14.1		8.7

Operating income	39.2		31.6		94.0		54.4

Other income, net	9.5		4.2		18.1		8.5
Interest expense, net	(4.2)		(7.4)		(14.0)		(24.9)
Loss on early extinguishment of debt	(12.4)		(11.0)		(12.4)		(11.0)
Income from continuing operations before income taxes	32.1		17.4		85.7		27.0
Income tax provision	(8.6)		(0.7)		(31.6)		(3.7)
Income from continuing operations	23.5		16.7		54.1		23.3
Income (loss) from discontinued operations, net of tax	0.1		(4.2)		(0.8)		(40.9)
Net income (loss)	23.6		12.5		53.3		(17.6)
Less: Net income attributable to noncontrolling interests	0.1		0.4		0.4		0.7
Net income (loss) attributable to SPX FLOW, Inc.	$	23.5	$	12.1	$	52.9	$	(18.3)

Amounts attributable to SPX FLOW, Inc. common shareholders:
Income from continuing operations, net of tax	$	23.4	$	16.3	$	53.7	$	22.5
Income (loss) from discontinued operations, net of tax	0.1		(4.2)		(0.8)		(40.8)
Net income (loss) attributable to SPX FLOW, Inc.	$	23.5	$	12.1	$	52.9	$	(18.3)

Basic income (loss) per share of common stock:
Income per share from continuing operations	$	0.56	$	0.39	$	1.28	$	0.53
Income (loss) per share from discontinued operations	—		(0.10)		(0.02)		(0.96)
Net income (loss) per share attributable to SPX FLOW, Inc.	0.56		0.29		1.26		(0.43)
Diluted income (loss) per share of common stock:
Income per share from continuing operations	$	0.56	$	0.39	$	1.28	$	0.53
Income (loss) per share from discontinued operations	—		(0.10)		(0.02)		(0.96)
Net income (loss) per share attributable to SPX FLOW, Inc.	0.56		0.29		1.26		(0.43)

Weighted average number of common shares outstanding - basic	41.952		42.127		41.924		42.425
Weighted average number of common shares outstanding - diluted	41.960		42.450		41.956		42.640

The accompanying notes are an integral part of these statements.

SPX FLOW, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; in millions)


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net income (loss)	$	23.6	$	12.5	$	53.3	$	(17.6)
Other comprehensive income (loss), net:
Net unrealized gains on qualifying cash flow hedges, net of tax provision of $— in the nine months ended September 26, 2020	—		—		—		0.2
Reclassification of discontinued operations foreign currency translation adjustments from accumulated other comprehensive loss	—		—		—		178.2
Foreign currency translation adjustments	(16.9)		20.5		(42.4)		(14.1)
Other comprehensive income (loss), net	(16.9)		20.5		(42.4)		164.3
Total comprehensive income	6.7		33.0		10.9		146.7
Less: Total comprehensive income attributable to noncontrolling interests	0.2		0.6		0.5		0.5
Total comprehensive income attributable to SPX FLOW, Inc.	$	6.5	$	32.4	$	10.4	$	146.2

The accompanying notes are an integral part of these statements.

SPX FLOW, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except share data)


	October 2, 2021		December 31, 2020
ASSETS
Current assets:
Cash and equivalents	$	313.6	$	441.5
Accounts receivable, net	241.2		232.6
Contract assets	27.7		24.4
Inventories, net	245.7		199.3
Other current assets	31.7		27.4
Total current assets	859.9		925.2
Property, plant and equipment:
Land	22.1		22.8
Buildings and leasehold improvements	171.7		176.8
Machinery and equipment	355.4		349.1
	549.2		548.7
Accumulated depreciation	(315.1)		(320.6)
Property, plant and equipment, net	234.1		228.1
Goodwill	595.2		569.7
Intangibles, net	227.9		206.0
Other assets	175.6		169.5
TOTAL ASSETS	$	2,092.7	$	2,098.5

LIABILITIES, MEZZANINE EQUITY AND EQUITY
Current liabilities:
Accounts payable	$	169.3	$	149.1
Contract liabilities	115.3		119.5
Accrued expenses	180.7		178.7
Income taxes payable	19.3		23.0
Short-term debt	15.4		12.5
Current maturities of long-term debt	20.0		0.1
Total current liabilities	520.0		482.9
Long-term debt	379.1		397.3
Deferred and other income taxes	35.7		36.6
Other long-term liabilities	114.5		117.5
Total long-term liabilities	529.3		551.4
Commitments and contingent liabilities (Note 13)
Mezzanine equity	3.3		3.4
Equity:
SPX FLOW, Inc. shareholders’ equity:
Preferred stock, no par value, 3,000,000 shares authorized, and no shares issued and outstanding	—		—
Common stock, par value $0.01 per share, 300,000,000 shares authorized, 43,927,252 issued and 41,971,004 outstanding at October 2, 2021, and 43,394,547 issued and 42,157,504 outstanding at December 31, 2020	0.4		0.4
Paid-in capital	1,723.8		1,696.9
Accumulated deficit	(321.8)		(363.3)
Accumulated other comprehensive loss	(268.9)		(226.4)
Common stock in treasury (1,956,248 shares at October 2, 2021, and 1,237,043 shares at December 31, 2020)	(92.7)		(46.2)
Total SPX FLOW, Inc. shareholders' equity	1,040.8		1,061.4
Noncontrolling interests	(0.7)		(0.6)
Total equity	1,040.1		1,060.8
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY	$	2,092.7	$	2,098.5

The accompanying notes are an integral part of these statements.

SPX FLOW, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; in millions)


	Three Months Ended October 2, 2021
	Common Stock			Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Common Stock in Treasury		Total SPX FLOW, Inc. Shareholders' Equity		Noncontrolling Interests		Total Equity
	Shares Outstanding	Par
Balance at July 3, 2021	42.1	$	0.4	$	1,720.2	$	(341.5)	$	(251.9)	$	(86.9)	$	1,040.3	$	(0.9)	$	1,039.4
Net income	—	—		—		23.5		—		—		23.5		0.1		23.6
Other comprehensive income (loss), net	—	—		—		—		(17.0)		—		(17.0)		0.1		(16.9)
Stock-based compensation expense	—	—		3.8		—		—		—		3.8		—		3.8

Restricted stock and restricted stock unit vesting, net of tax withholdings	—	—		(0.2)		—		—		(0.1)		(0.3)		—		(0.3)
Common stock repurchases	(0.1)	—		—		—		—		(5.7)		(5.7)		—		(5.7)
Dividends declared ($0.09 per share)	—	—		—		(3.8)		—		—		(3.8)		—		(3.8)

Balance at October 2, 2021	42.0	$	0.4	$	1,723.8	$	(321.8)	$	(268.9)	$	(92.7)	$	1,040.8	$	(0.7)	$	1,040.1


	Three months ended September 26, 2020
	Common Stock			Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Common Stock in Treasury		Total SPX FLOW, Inc. Shareholders' Equity		Noncontrolling Interests		Total Equity
	Shares Outstanding	Par
Balance at June 27, 2020	42.5	$	0.4	$	1,686.6	$	(399.6)	$	(282.3)	$	(32.4)	$	972.7	$	8.0	$	980.7
Net income	—	—		—		12.1		—		—		12.1		0.4		12.5
Other comprehensive income, net	—	—		—		—		20.3		—		20.3		0.2		20.5
Stock-based compensation expense	—	—		3.6		—		—		—		3.6		—		3.6
Restricted stock and restricted stock unit vesting, net of tax withholdings	—	—		(0.1)		—		—		—		(0.1)		—		(0.1)
Common stock repurchases	(0.3)	—		—		—		—		(10.7)		(10.7)		—		(10.7)
Adjustment from mezzanine equity	—	—		0.2		—		—		—		0.2		—		0.2
Settlement of mezzanine equity	—	—		8.2		—		—		—		8.2		—		8.2
Purchase of noncontrolling interest	—	—		(3.9)		—		—		—		(3.9)		(4.3)		(8.2)

Balance at September 26, 2020	42.2	$	0.4	$	1,694.6	$	(387.5)	$	(262.0)	$	(43.1)	$	1,002.4	$	4.3	$	1,006.7

SPX FLOW, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)

(Unaudited; in millions)


	Nine months ended October 2, 2021
	Common Stock			Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Common Stock in Treasury		Total SPX FLOW, Inc. Shareholders' Equity		Noncontrolling Interests		Total Equity
	Shares Outstanding	Par
Balance at December 31, 2020	42.2	$	0.4	$	1,696.9	$	(363.3)	$	(226.4)	$	(46.2)	$	1,061.4	$	(0.6)	$	1,060.8
Net income	—	—		—		52.9		—		—		52.9		0.4		53.3
Other comprehensive income (loss), net	—	—		—		—		(42.5)		—		(42.5)		0.1		(42.4)
Stock-based compensation expense	—	—		9.6		—		—		—		9.6		—		9.6
Exercise of stock options	0.3	—		17.6		—		—		—		17.6		—		17.6
Restricted stock and restricted stock unit vesting, net of tax withholdings	0.1	—		(0.3)		—		—		(6.3)		(6.6)		—		(6.6)
Common stock repurchases	(0.6)	—		—		—		—		(40.2)		(40.2)		—		(40.2)
Dividends declared ($0.27 per share)	—	—		—		(11.4)		—		—		(11.4)		—		(11.4)
Purchase of noncontrolling interest	—	—		—		—		—		—		—		(0.6)		(0.6)
Balance at October 2, 2021	42.0	$	0.4	$	1,723.8	$	(321.8)	$	(268.9)	$	(92.7)	$	1,040.8	$	(0.7)	$	1,040.1


	Nine months ended September 26, 2020
	Common Stock			Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Common Stock in Treasury		Total SPX FLOW, Inc. Shareholders' Equity		Noncontrolling Interests		Total Equity
	Shares Outstanding	Par
Balance at December 31, 2019	42.6	$	0.4	$	1,677.0	$	(369.2)	$	(426.5)	$	(19.3)	$	862.4	$	10.7	$	873.1
Net income (loss)	—	—		—		(18.3)		—		—		(18.3)		0.7		(17.6)
Other comprehensive income (loss), net	—	—		—		—		164.5		—		164.5		(0.2)		164.3
Stock-based compensation expense	—	—		11.4		—		—		—		11.4		—		11.4
Restricted stock and restricted stock unit vesting, net of tax withholdings	0.1	—		—		—		—		(6.9)		(6.9)		—		(6.9)
Common stock repurchases	(0.5)	—		—		—		—		(16.9)		(16.9)		—		(16.9)
Dividends attributable to noncontrolling interests	—	—		—		—		—		—		—		(1.4)		(1.4)
Adjustment from mezzanine equity	—	—		1.9		—		—		—		1.9		—		1.9
Settlement of mezzanine equity	—	—		8.2		—		—		—		8.2		—		8.2
Purchase of noncontrolling interest	—	—		(3.9)		—		—		—		(3.9)		(4.3)		(8.2)
Disposition of discontinued operations	—	—		—		—		—		—		—		(1.2)		(1.2)
Balance at September 26, 2020	42.2	$	0.4	$	1,694.6	$	(387.5)	$	(262.0)	$	(43.1)	$	1,002.4	$	4.3	$	1,006.7

The accompanying notes are an integral part of these statements.

SPX FLOW, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


	Nine months ended
	October 2, 2021		September 26, 2020
Cash flows from operating activities:
Net income (loss)	$	53.3	$	(17.6)
Less: Loss from discontinued operations, net of tax	(0.8)		(40.9)
Income from continuing operations	54.1		23.3
Adjustments to reconcile income from continuing operations to net cash from operating activities:
Restructuring and other related charges	14.1		8.7
Asset impairment charges	—		3.2
Deferred income taxes	2.5		18.9
Depreciation and amortization	35.3		30.2
Stock-based compensation	9.6		10.6
Pension and other employee benefits	0.8		1.0
Gains on asset sales and other, net	(7.8)		(0.9)
Gains on changes in fair value of investment in equity security	(9.1)		(7.4)
Losses on early extinguishment of debt	12.4		11.0
Changes in operating assets and liabilities, net of effects from business acquisitions and discontinued operations:
Accounts receivable and other assets	(9.6)		16.2
Contract assets and liabilities, net	(10.0)		4.4
Inventories	(37.8)		(11.2)
Accounts payable, accrued expenses and other	(2.1)		(68.9)
Cash spending on restructuring actions	(10.4)		(7.5)
Net cash from continuing operations	42.0		31.6
Net cash used in discontinued operations	(0.6)		(8.3)
Net cash from operating activities	41.4		23.3
Cash flows from (used in) investing activities:
Proceeds from asset sales and other, net	12.1		3.3

Capital expenditures	(23.5)		(17.3)
Business acquisitions, net of cash acquired of $4.5 in the nine months ended October 2, 2021 and of $— in the three and nine months ended September 26, 2020	(102.6)		(10.0)
Net cash used in continuing operations	(114.0)		(24.0)
Net cash from discontinued operations (includes proceeds from disposition of $406.2, less cash and restricted cash disposed of $7.3, in the three and nine months ended September 26, 2020)	—		393.4
Net cash from (used in) investing activities	(114.0)		369.4

SPX FLOW, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited; in millions)


	Nine months ended
	October 2, 2021		September 26, 2020
Cash flows used in financing activities:
Borrowings under amended senior credit facility	400.0		—
Repurchases of senior notes (includes premiums paid of $8.8 in the three and nine months ended October 2, 2021 and of $8.4 in the three and nine months ended September 26, 2020)	(308.8)		(308.4)
Repayments of former senior credit facility	(100.0)		—




Borrowings under (repayments of) purchase card program, net	2.9		(11.6)

Repayments of other financing arrangements	(1.7)		(0.3)
Financing fees paid	(2.9)		—
Purchases of common stock	(40.2)		(16.9)
Proceeds from the exercise of employee stock options	17.6		—
Minimum withholdings paid on behalf of employees for net share settlements, net	(6.6)		(6.9)
Dividends paid (includes noncontrolling interest distributions of $1.2 in the nine months ended September 26, 2020)	(7.6)		(1.2)
Purchases of noncontrolling interests	(0.6)		(8.2)
Net cash used in continuing operations	(47.9)		(353.5)
Net cash used in discontinued operations	—		(0.3)
Net cash used in financing activities	(47.9)		(353.8)
Change in cash, cash equivalents and restricted cash due to changes in foreign currency exchange rates	(7.4)		10.2
Net change in cash, cash equivalents and restricted cash	(127.9)		49.1
Consolidated cash, cash equivalents and restricted cash, beginning of period	441.6		303.4
Consolidated cash, cash equivalents and restricted cash, end of period	$	313.7	$	352.5


	October 2, 2021		September 26, 2020
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	$	313.6	$	352.3
Cash and cash equivalents included in assets of discontinued operations	—		0.2
Restricted cash included in other current assets	0.1		—

Consolidated cash, cash equivalents and restricted cash	$	313.7	$	352.5

The accompanying notes are an integral part of these statements.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; in millions, except per share data)

(1) BASIS OF PRESENTATION

SPX FLOW, Inc. and its consolidated subsidiaries (“SPX FLOW,” ‘‘the Company,’’ “we,” “us,” or “our”) operate in two reportable segments: the Nutrition and Health segment and the Precision Solutions segment. During the first quarter of 2021, the Company renamed its former "Food and Beverage" segment to the "Nutrition and Health" segment and, during the second quarter of 2021, the Company renamed its former "Industrial" segment to the "Precision Solutions" segment. Accordingly, all current and comparative period financial information for these segments has been presented as the Nutrition and Health segment and the Precision Solutions segment in this Quarterly Report on Form 10-Q. Other than the changes in name, there were no changes to the segments and there has been no change to prior period financial information of the segments. Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations only and are denoted in millions of U.S. dollars. See Note 3 for information on discontinued operations and Note 4 for information on our reportable segments.

We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information normally required by accounting principles generally accepted in the United States (“GAAP”) can be condensed or omitted. The financial statements represent our accounts after the elimination of intercompany transactions and, in our opinion, include the adjustments (consisting only of normal and recurring items) necessary for their fair presentation.

We experienced the adverse impacts of the novel coronavirus pandemic (“COVID-19” or the “COVID-19 pandemic”) beginning in the first quarter of 2020 and these adverse impacts are expected to continue, to a lesser degree, in the fourth quarter of 2021, and possibly longer. Despite the adverse impacts, there are no indications that the COVID-19 pandemic has resulted in a material decline in the carrying value of any assets or a material change in the estimate of any contingent amounts recorded in our condensed consolidated balance sheet as of October 2, 2021. However, there is uncertainty as to the duration and overall impact of the COVID-19 pandemic, which could result in an adverse material change in a future period to the estimates we have made related to the valuation of assets and contingent amounts, which could result in the impairment of certain assets or the recognition of costs due to increases in contingent amounts.

Preparing financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from these estimates. The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements contained in our 2020 Annual Report on Form 10-K. Interim results are not necessarily indicative of full year results and the condensed consolidated financial statements may not be indicative of the Company’s future performance.

We establish actual interim closing dates using a fiscal calendar, which requires our businesses to close their books on the Saturday closest to the end of the first calendar quarter, with the second and third quarters being 91 days in length. Our fourth quarter ends on December 31. The interim closing dates for the first, second and third quarters of 2021 were April 3, July 3, and October 2, compared to the respective March 28, June 27, and September 26, 2020 dates. We had five more days in the first quarter of 2021 and will have six fewer days in the fourth quarter of 2021 than in the respective 2020 periods.

(2) NEW ACCOUNTING PRONOUNCEMENTS

The following is a summary of new accounting pronouncements that apply or may apply to our business.

In December 2019, the Financial Accounting Standards Board (the "FASB") issued an amendment to simplify the accounting for income taxes by, among other matters, eliminating certain existing exceptions related to the general approach in Accounting Standards Codification ("ASC") 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for the step-up in the tax basis of goodwill. The transition requirements are primarily prospective and the effective date is for interim and annual reporting periods beginning after December 15, 2020. The adoption of this amendment by the Company on January 1, 2021 did not have a significant impact on our condensed consolidated financial statements.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

In March 2020, and as amended in January 2021, the FASB issued an amendment to provide optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting in connection with the future discontinuance of the London Interbank Offered Rate (“LIBOR”). The amended guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by the reference rate reform, including providing optional expedients and exceptions if certain criteria are met. This guidance generally can be applied from March 12, 2020 through December 31, 2022. We are currently assessing the impacts of the practical expedients provided in this guidance, and which, if any, we will adopt.

(3) BUSINESS ACQUISITIONS, DISPOSALS AND DISCONTINUED OPERATIONS

Business Acquisitions

On August 1, 2020, the Company completed the acquisition of POSI LOCK, Inc. ("POSI LOCK"), a manufacturer of hydraulic and mechanical pullers used to remove certain parts from equipment in a variety of industries ranging from power transmission and light to heavy industrial applications. We purchased substantially all of the assets, including net working capital, long-term and intangible assets, and assumed certain liabilities of the business, for a cash payment of $10.0. The assets acquired and liabilities assumed in the POSI LOCK acquisition are recorded at their fair values based on expert valuations and management estimates and its results are reported in the Company's Precision Solutions segment. Goodwill and intangible assets are expected to be fully deductible for tax purposes. The pro forma effects of the acquisition of POSI LOCK were not material to our condensed consolidated results of operations for the three and nine months ended September 26, 2020.

On January 18, 2021, the Company completed the acquisition of approximately 98% of the issued and outstanding shares of Plc Uutechnic Group Oyj ("UTG Mixing Group"), a public company listed on the Nasdaq Helsinki. Including an estimated payment for the approximately 2% of shares not acquired on that date, the cash payment was $38.0, net of cash acquired of $2.9. UTG Mixing Group is a producer of various mixing solutions for the chemical, food, metallurgical and fertilizer, environmental technology, water treatment and pharmaceuticals markets and its results are reported in the Company's Precision Solutions segment. The acquisition of UTG Mixing Group brings additional product, technology and technical expertise to the Company’s global portfolio of mixing products and process solutions, and will enable the Company to expand its sales network for existing mixer product lines and increase its European market presence with the addition of new mixer product brands. During the first quarter of 2021, the Company initiated a squeeze-out process prescribed by Finnish law pursuant to which the Company (a) acquired the remaining outstanding shares in UTG Mixing Group and (b) delisted the shares of UTG Mixing Group from the Nasdaq Helsinki. This process was finalized in the second quarter of 2021 (with nominal impact on the cash previously paid for the business as noted above), with the remaining shares of UTG Mixing Group being delisted from the Nasdaq Helsinki effective June 1, 2021. Transaction costs related to the UTG Mixing Group acquisition were $1.4 and were recognized as a component of "Selling, General and Administrative" expense in the accompanying condensed consolidated statements of operations.

Purchase accounting related to this acquisition was substantially completed during the second quarter of 2021. The assets acquired and liabilities assumed in the UTG Mixing Group acquisition are recorded at their fair values based on expert valuations and management estimates. The excess of the purchase price over the aggregate fair values of the net assets recognized was recorded as "Goodwill" in the accompanying condensed consolidated balance sheet as of October 2, 2021. Goodwill and intangible assets are not deductible for non-U.S. tax purposes. The Company intends to make an election under Internal Revenue Code Section 338, which will treat the purchase as an asset acquisition for U.S. tax purposes. As a result, the goodwill and intangibles will be deductible for computing the U.S. tax on the earnings of non-U.S. subsidiaries.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

On May 12, 2021, the Company completed the acquisition of Philadelphia Mixing Solutions, Ltd. ("Philadelphia Mixing"), a manufacturer of in-tank mixing solutions and provider of various technical services and field support, and its results are reported in the Company's Precision Solutions segment. The acquisition of Philadelphia Mixing brings additional opportunity for synergy and growth through broadening the Company's portfolio of comprehensive mixing solutions for customers in the chemical, water and wastewater, energy, and nutrition and health markets. Additionally, this acquisition will enable the Company to expand its sales network for existing mixer product lines and increase its overall market presence. We purchased substantially all of the assets, including net working capital, long-term and intangible assets, and assumed certain liabilities of the business, for a cash payment of $64.6, net of cash acquired of $1.6. In October 2021, we and the seller agreed on the final purchase price, which was subject to adjustment based on a customary period of review between the Company and seller of the levels of net working capital, cash and debt, and deductions, and we received $0.3 from the seller in connection with such agreement. Transaction costs related to the Philadelphia Mixing acquisition were $2.4 and were recognized as a component of "Selling, General and Administrative" expense in the accompanying condensed consolidated statements of operations.

The assets acquired and liabilities assumed in the Philadelphia Mixing acquisition are recorded at their fair values based on preliminary expert valuations and management estimates, and are subject to change when these estimates are finalized. Goodwill and intangible assets related to the U.S. business are expected to be fully deductible for U.S. tax purposes. However, goodwill and intangible assets related to the non-U.S. businesses are not deductible for non-U.S. tax purposes. Additionally, the Company intends to make an election under Internal Revenue Code Section 338, which will treat the purchase of the non-U.S. subsidiaries as an asset acquisition for U.S. tax purposes. As a result, the goodwill and intangibles will be deductible for computing the U.S. tax on the earnings of non-U.S. subsidiaries.

A summary of the purchase price paid for UTG Mixing Group and Philadelphia Mixing follows:


	UTG Mixing Group As of January 18, 2021		Philadelphia Mixing As of May 12, 2021
Assets acquired:
Current assets, including cash and equivalents of $2.9 and $1.6, respectively	$	9.7	$	21.8
Property, plant and equipment	2.5		5.4
Goodwill	23.4		25.0
Intangibles	14.3		24.9
Other assets	1.6		3.0
Total assets acquired	51.5		80.1

Liabilities assumed:
Current liabilities assumed	(5.4)		(11.6)
Long-term liabilities assumed	(5.2)		(2.3)
Total liabilities assumed	(10.6)		(13.9)

Net assets acquired	$	40.9	$	66.2

Pro Forma Financial Information

The following pro forma financial information presents the combined results of operations of the Company, UTG Mixing Group and Philadelphia Mixing for the three and nine months ended October 2, 2021 and September 26, 2020 as if the acquisitions had been completed on January 1, 2020. The pro forma financial information is not necessarily indicative of what the financial results would have been had the acquisitions been completed on this date. In addition, the pro forma financial information is not indicative of, nor does it purport to project, the Company's future financial results. The pro forma financial information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisitions.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues	$	389.6	$	371.8	$	1,153.9	$	996.8
Income from continuing operations before income taxes	32.1		13.9		77.4		12.7
Income from continuing operations, net of tax	23.5		13.9		47.5		11.9

The pro forma information presented above reflects the following adjustments related to UTG Mixing Group and Philadelphia Mixing results, prior to their respective dates of acquisition:

Fair Value Adjustments - Pre-tax costs related to (i) intangible amortization expense and (ii) amortization of the increase to fair value of acquired inventories, collectively, of $3.4, $3.4, $8.3 and $10.6 are reflected in the pro forma information for the three months ended October 2, 2021 and September 26, 2020, and the nine month periods then ended, respectively. Pre-tax effects related to fair value adjustments of the acquired businesses’ property, plant and equipment were not significant for the respective periods.

Acquisition-Related Costs - Pre-tax costs related to the acquisitions of $0.5 and $3.8 are reflected in the pro forma information for the three and nine months ended September 26, 2020.

Accounting Policy Adjustments - The primary effect of changes to accounting policies of the acquired businesses, which have been applied since their respective dates of acquisition, relates to the Company’s application of its revenue recognition policies, including primarily the accounting for certain customer contracts over time which were previously accounted for by the acquired businesses at a point in time. The effects of the application of revenue recognition and other accounting policies of the Company to the acquired businesses were not significant for any of the periods presented above.

Income Tax Considerations - Prior to its acquisition by SPX FLOW, the U.S. legal entity of Philadelphia Mixing was a qualified subchapter S subsidiary and its income (loss) was passed through to the owners of its former parent company. Under SPX FLOW's legal entity structure, the U.S. operations of Philadelphia Mixing are required to be tax-effected. In consideration of this, as well as SPX FLOW's applicable effective tax rates in the non-U.S. jurisdictions where Philadelphia Mixing operates, a blended 20.0% effective tax rate has been applied to Philadelphia Mixing's pro forma results for all periods prior to its acquisition by the Company.

Business Disposals

In November 2020, we completed the sale of a business in our Asia Pacific region, which had been included in the Precision Solutions reportable segment, to a third-party buyer for total proceeds of $4.7, net of cash disposed, which resulted in a pre-tax loss of $4.2 during the fourth quarter of 2020. During the first quarter of 2021, we substantially completed negotiations with the buyer related to the closing-date net-working-capital adjustment, which did not significantly impact our estimate of the pre-tax loss previously recorded. We finalized the agreement and paid the related purchase price adjustment in the second quarter of 2021.

Sale of a Product Line

On July 30, 2021, we completed the sale of the primary assets of a product line to a third-party buyer for cash proceeds of $8.0. Revenues associated with this product line were less than $4.0 in 2020, and the results of this product line are included in our Precision Solutions reportable segment. In connection with the sale, goodwill of $1.6, trademarks of $0.5 and inventories of $0.3 were disposed of, and we recorded a pre-tax gain of $5.6 as a component of “Other income, net” during our third quarter of 2021.

Discontinued Operations

We report businesses or asset groups as discontinued operations when, among other things, we commit to a plan to divest the business or asset group, we actively begin marketing the business or asset group, and when the sale of the business or asset group is deemed probable of occurrence within the next twelve months.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

On May 2, 2019, the Company announced that its Board of Directors had initiated a process to divest a substantial portion of the Company’s former Power and Energy reportable segment, excluding the Bran+Luebbe product line (collectively, the “Disposal Group”). In connection with this announcement and the continued development of the divestiture process thereafter, and in accordance with the criteria described above, we reported the Disposal Group as “held-for-sale”, and as discontinued operations, initially as of the end of our second quarter of 2019.

In November 2019, we entered into a Purchase and Sale Agreement (the “Sale Agreement”) with an affiliate of Apollo Global Management, LLC (the “Buyer”), pursuant to which the Company agreed, indirectly through certain of its subsidiaries, to sell the businesses reflected as discontinued operations in the accompanying condensed consolidated financial statements to the Buyer for a gross purchase price of $475.0 (the “Transaction”). The gross purchase price of $475.0, which included the purchase price for a business based in India, was subject to (i) reductions based upon the level of certain deductions of the Disposal Group at the closing date, and (ii) certain adjustments based upon the level of net working capital, cash and debt of the Disposal Group at the closing date. The deductions included, for example, components of the "Contract Liabilities" and certain other current and long-term liabilities of the Disposal Group, as well as deductions for budgeted but un-incurred capital expenditures and other business infrastructure costs measured over periods defined in the Sale Agreement, but in all cases which expired at the closing date.

Fiscal 2020 Discontinued Operations Developments and Sale Closure

We recorded a pre-tax loss on Disposal Group of $8.5 during our first quarter of 2020 to reduce the carrying value of the Disposal Group to our estimate of the net proceeds expected to be realized upon finalization of the purchase price with the Buyer (which was subject to a customary period of review between the parties as discussed below), less estimated costs to sell. This loss was attributable primarily to a reduction in the U.S. dollar-denominated proceeds expected to be received from the Buyer, relative to the translated U.S. dollar-equivalent carrying values of certain non-U.S. businesses of the Disposal Group, located primarily in the U.K. and Europe, due to a strengthening of the U.S. dollar against the currencies of those businesses during the first quarter of 2020.

On March 30, 2020, the Company completed the sale of substantially all Disposal Group businesses and received proceeds from the Buyer of $406.2, based on an estimate of certain adjustments to the gross purchase price as of the closing date as discussed further above and, to a lesser extent, certain fees. The consummation of the sale to the Buyer of a remaining business based in India remained subject to regulatory approvals at that time. As noted above, finalization of the purchase price with the Buyer remained subject to a customary period of review between the parties. We recorded a pre-tax loss on Disposal Group of $2.0 during our second quarter of 2020 related to estimated working capital adjustments and reflective of ongoing discussions with the Buyer at that time. The substantial portion of “Assets of Discontinued Operations” and “Liabilities of Discontinued Operations”, as well as cumulative foreign currency translation adjustment of $178.2 (previously included in the Company’s "Accumulated Other Comprehensive Loss" ("AOCL") balance) and “Noncontrolling Interests” of $1.2, which were removed from our consolidated balance sheet during the second quarter of 2020 in connection with completion of the sale, equaled the net proceeds received upon consummation of the Transaction.

During the third quarter of 2020, we finalized the levels of net working capital, cash and debt, and deductions as of the closing date with the Buyer, which resulted in an additional $1.2 pre-tax loss on Disposal Group being recorded in our third quarter of 2020. The determination of the final settlement with the Buyer involved resolution of certain estimates and judgments based on, among other items, the interpretation and application of key terms of the Sale Agreement. In addition, during our third quarter of 2020, we recorded a $0.4 pre-tax loss on Disposal Group to reduce the carrying value of the business based in India, the sale of which remained subject to regulatory approvals.

During the fourth quarter of 2020 and upon receiving relevant regulatory approvals, we completed the sale of the remaining net assets of the Disposal Group, based in India, to the Buyer for total proceeds of $6.3.

Other Sale Agreement Considerations

The Sale Agreement includes certain indemnification obligations which we believe are customary for transactions of this nature, including for certain tax obligations, to the extent such obligations relate to fiscal periods prior to the closing date and exceed amounts which were provided for in the balance sheet of the Disposal Group at closing.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

Concurrent with the closing of the Transaction, the parties entered into certain ancillary agreements including, among others, a Transition Services Agreement (the “TSA”). Under the TSA, SPX FLOW provides the Buyer with certain specified services for varying periods in order to ensure an orderly transition of the business following the closing at agreed-upon prices or rates, which we believe approximate fair market value for such services. These services include, among others, certain information technology, finance and human resources services. Income from such services of $0.2 and $1.7 during the three and nine months ended October 2, 2021, respectively, and of $1.3 and $2.8 during the three and nine months ended September 26, 2020, respectively, was recognized as a component of "Other income, net".

Results and Significant Non-cash Operating Items and Capital Expenditures of Discontinued Operations:

Income (loss) from discontinued operations for the three and nine months ended October 2, 2021 and September 26, 2020 were as follows:


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues	$	—	$	1.3	$	—	$	112.7
Cost of products sold(1)	—		0.8		—		76.6
Gross profit	—		0.5		—		36.1
Selling, general and administrative(1)	(0.1)		0.6		0.2		32.1

Loss on Disposal Group(2)	—		1.6		0.4		12.1
Restructuring and other related charges	—		—		—		0.3
Operating income (loss)	0.1		(1.7)		(0.6)		(8.4)

Other expense, net	—		—		—		(0.3)
Interest expense, net(3)	—		—		—		(1.6)
Income (loss) from discontinued operations before income taxes	0.1		(1.7)		(0.6)		(10.3)
Income tax provision(4)	—		(2.5)		(0.2)		(30.6)
Income (loss) from discontinued operations, net of tax	0.1		(4.2)		(0.8)		(40.9)
Less: Loss attributable to noncontrolling interests	—		—		—		(0.1)
Income (loss) from discontinued operations, net of tax and noncontrolling interests	$	0.1	$	(4.2)	$	(0.8)	$	(40.8)

(1)During the three and nine months ended September 26, 2020, there was no depreciation of property, plant and equipment or amortization of intangible assets, related to our discontinued operations, as the assets of the Disposal Group were classified as held-for-sale for the period.

(2)See previous paragraphs for further discussion regarding the loss on Disposal Group recognized during the three and nine months ended September 26, 2020.

(3)In addition to any business-specific interest expense and income, the interest expense, net, of discontinued operations reflects an allocation of interest expense, including the amortization of deferred financing fees, related to the Company’s former senior notes, former senior credit facilities and former trade receivables financing arrangement. Interest expense related to such debt instruments and allocated to discontinued operations was $1.6 for the nine months ended September 26, 2020. The allocation of the Company’s interest expense of these former debt instruments was determined based on the proportional amount of average net assets of the discontinued operations to the Company’s average net assets during each period, with the Company’s average net assets determined excluding the average outstanding borrowings under such former debt instruments during each period.

(4)During the three and nine months ended October 2, 2021, we recorded an income tax provision of $0.0 and $0.2, respectively, on $0.1 and $(0.6) of pre-tax income (loss) from discontinued operations. This compares to an income tax provision for the three and nine months ended September 26, 2020 of $2.5 and $30.6, respectively, on $1.7 and $10.3 of pre-tax loss from discontinued operations.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

Among other items, the income tax provision for the three months ended September 26, 2020 was impacted by income tax charges of (i) $1.7 related to a reduction in the benefit related to the loss for global intangible low-taxed income purposes and (ii) $0.4 resulting from adjustments to the U.S. tax liability for prior years. The income tax provision for the nine months ended September 26, 2020 was impacted by income tax charges of (i) $32.1 composed of the U.S. tax expense on the tax gain on sale of Disposal Group entities sold by the U.S. parent, (ii) $1.4 in reduction of the benefit to be realized through the disposition of held-for-sale assets and (iii) $0.4 resulting from adjustments to the U.S. tax liability for prior years, which were partially offset by an income tax benefit of $3.1 related to a loss for global intangible low-taxed income purposes on the sale of certain non-U.S. entities. The significant non-U.S. sales of Disposal Group entities were in locations where local law did not require any gain to be taxed or permit any loss to result in a future benefit. In addition to these, the income tax provision for the nine months ended September 26, 2020 also included the effect from the first quarter of 2020 where the majority of the pre-tax loss on Disposal Group was not deductible in the various jurisdictions where the sale of the Disposal Group was to be recognized. As such, only $1.2 of tax benefit was recognized on the $10.3 pre-tax loss on Disposal Group.

The following table summarizes the significant non-cash operating items and capital expenditures reflected in cash flows of discontinued operations for the nine months ended October 2, 2021 and September 26, 2020:


	Nine months ended
	October 2, 2021		September 26, 2020
Loss on Disposal Group(1)	$	0.4	$	12.1

Capital expenditures	—		(5.5)
Proceeds on disposition of Disposal Group (2)	—		398.9

(1)See previous paragraphs for further discussion regarding the loss on Disposal Group recognized during the nine months ended September 26, 2020.

(2)As noted above, proceeds of $406.2 were received from the Buyer during the nine months ended September 26, 2020. Net of cash and restricted cash of $7.3 included in the net assets of the Disposal Group which were sold as of March 30, 2020, cash flows of $398.9 were realized upon disposition of the Disposal Group (excluding consummation of the sale of a business based in India, as noted above).

(4) INFORMATION ON REPORTABLE SEGMENTS, CORPORATE EXPENSE AND OTHER

We improve the world through innovative and sustainable solutions with operations in over 30 countries and sales in over 140 countries around the world. The Company's product offering is concentrated in process technologies that perform mixing, blending, fluid handling, separation, thermal heat transfer and other activities that are integral to processes performed across a wide variety of nutrition, health and precision solutions markets.

In determining our reportable segments, we apply the threshold criteria of the Segment Reporting Topic of the Financial Accounting Standards Board Codification (the “Codification”) to operating income or loss of each segment before considering asset impairment charges, restructuring and other related charges, gains or losses on sales of businesses, pension and postretirement service costs and other indirect corporate expenses (including corporate stock-based compensation). This is consistent with the way our chief operating decision maker evaluates the results of each segment.

Nutrition and Health

The Nutrition and Health reportable segment operates in a regulated, global industry with customers who demand highly engineered process solutions. Key demand drivers include dairy consumption, emerging market capacity expansion, sustainability and productivity initiatives, customer product innovation and food safety. Key products for the segment include homogenizers, pumps, valves, separators and heat exchangers. We also design and assemble process systems that integrate many of these products for our customers. Key brands include APV, Gerstenberg Schroeder, Seital and Waukesha Cherry-Burrell.

Precision Solutions

The Precision Solutions reportable segment primarily serves customers in the chemical, air treatment, mining, pharmaceutical, marine, infrastructure construction, general industrial and water treatment industries. Key demand drivers of this segment are tied to macroeconomic conditions and growth in the respective end markets we serve. Key products for the segment are air dryers, filtration equipment, mixers, pumps, hydraulic technologies and heat exchangers. Key brands include Airpel, APV, Bolting Systems, Bran+Luebbe, Deltech, Hankison, Jamix, Jemaco, Johnson Pump, LIGHTNIN, Philadelphia Mixing Solutions, POSI LOCK, Power Team, Stelzer, Stone and Uutechnic.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

Corporate Expense

Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters and our Asia Pacific center in Shanghai, China. Corporate expense also reflects stock-based compensation costs associated with corporate employees.

Reportable Segment Financial Data

Financial data for our reportable segments for the three and nine months ended October 2, 2021 and September 26, 2020 were as follows:


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues:
Nutrition and Health	$	170.1	$	160.6	$	510.0	$	443.1
Precision Solutions	219.5		196.3		625.0		511.4
Total revenues	$	389.6	$	356.9	$	1,135.0	$	954.5

Income:
Nutrition and Health	$	24.6	$	24.2	$	79.6	$	62.7
Precision Solutions	31.4		28.6		76.4		57.9
Total income for reportable segments	56.0		52.8		156.0		120.6

Corporate expense	16.0		19.2		47.3		53.7
Pension and postretirement service costs	0.2		0.2		0.6		0.6
Asset impairment charges(1)	—		0.5		—		3.2
Restructuring and other related charges	0.6		1.3		14.1		8.7
Consolidated operating income	$	39.2	$	31.6	$	94.0	$	54.4

(1)Asset impairment charges of $0.5 during the three months ended September 26, 2020 resulted from management’s decision to consolidate and relocate the operations of a U.S. manufacturing facility within the Precision Solutions reportable segment to existing facilities in the U.S., as well as in our EMEA and Asia Pacific regions. Charges for the nine months ended September 26, 2020 included these charges, $0.8 of charges recorded during the second quarter of 2020 related to this action, and asset impairment charges of $1.9 which resulted from management's decision, during the first quarter of 2020, to discontinue a product line within the Precision Solutions reportable segment.

(5) REVENUE FROM CONTRACTS WITH CUSTOMERS

Information regarding the nature, amount, timing and uncertainty of revenue, and the related cash flows, is noted in further detail below.

Revenues Recognized Over Time

The following table provides revenues recognized over time by reportable segment for the three and nine months ended October 2, 2021 and September 26, 2020:


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues recognized over time:
Nutrition and Health	$	68.8	$	60.5	$	202.8	$	161.6
Precision Solutions	17.1		12.5		41.2		28.2
Total revenues recognized over time	$	85.9	$	73.0	$	244.0	$	189.8

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

Disaggregated Information about Revenues

Our aftermarket revenues generally include sales of parts and service/maintenance support, and original equipment (“OE”) revenues generally include all other revenue streams. The following tables provide disaggregated information about our OE and aftermarket revenues by reportable segment for the three and nine months ended October 2, 2021 and September 26, 2020:


	Three months ended October 2, 2021						Three months ended September 26, 2020
	Original Equipment		Aftermarket		Total Revenues		Original Equipment		Aftermarket		Total Revenues
Nutrition and Health	$	112.9	$	57.2	$	170.1	$	102.3	$	58.3	$	160.6
Precision Solutions	146.6		72.9		219.5		126.8		69.5		196.3
Total revenues	$	259.5	$	130.1	$	389.6	$	229.1	$	127.8	$	356.9


	Nine months ended October 2, 2021						Nine months ended September 26, 2020
	Original Equipment		Aftermarket		Total Revenues		Original Equipment		Aftermarket		Total Revenues
Nutrition and Health	$	329.7	$	180.3	$	510.0	$	272.3	$	170.8	$	443.1
Precision Solutions	421.3		203.7		625.0		325.7		185.7		511.4
Total revenues	$	751.0	$	384.0	$	1,135.0	$	598.0	$	356.5	$	954.5

Contract Balances

Our contract accounts receivable, assets and liabilities, and changes in such balances, were as follows:


	October 2, 2021		December 31, 2020		Change(1)
Contract accounts receivable(2)	$	233.2	$	219.8	$	13.4
Contract assets	27.7		24.4		3.3
Contract liabilities	(115.3)		(119.5)		4.2
Net contract balance	$	145.6	$	124.7	$	20.9

(1) The $20.9 increase in our net contract balance from December 31, 2020 to October 2, 2021 was primarily due to (i) an increase in volume of revenues recognized at a point in time, partially due to the reduced adverse effects of the COVID-19 pandemic on the business during the nine months ended October 2, 2021, (ii) the timing of advance and milestone payments received on certain Nutrition and Health contracts recognized over time, and of performance obligations satisfied and the related revenue recognized on such contracts, and (iii) an increase in net contract balance related to the acquisitions of UTG Mixing Group and Philadelphia Mixing during the nine months ended October 2, 2021.

(2) Included in “Accounts receivable, net” in our condensed consolidated balance sheets. Amounts are presented before consideration of the allowance for uncollectible accounts.

During the three months ended October 2, 2021 and September 26, 2020, we recognized revenues of $21.3 and $12.9 related to contract liabilities outstanding as of December 31, 2020 and 2019, respectively. During the nine months ended October 2, 2021 and September 26, 2020, we recognized revenues of $96.3 and $83.5 related to contract liabilities outstanding as of December 31, 2020 and 2019, respectively.

Contract Costs

As of October 2, 2021 and December 31, 2020, the Company recognized an asset related to the incremental costs of obtaining contracts with customers of $0.4, which is classified in “Other current assets” in the accompanying condensed consolidated balance sheets.

Remaining Performance Obligations

As of October 2, 2021 and September 26, 2020, the aggregate amount of our remaining performance obligations was $597.8 and $530.4, respectively. The Company expects to recognize revenue on approximately 94% and substantially all of our remaining performance obligations outstanding as of October 2, 2021 within the next 12 and 24 months, respectively.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

(6) RESTRUCTURING AND OTHER RELATED CHARGES

Fiscal 2021 Global Cost Productivity Program

In February 2021, we announced a global cost productivity program focused primarily on a reduction of our "Selling, general and administrative" ("SG&A") costs. The intent of this productivity initiative is to reduce our overall cost of doing business, including a plan to achieve $30.0 of annualized SG&A cost savings by the end of 2022 while simultaneously realigning our cost structure to support profitable growth. In connection with this program, we incurred $0.6 and $14.1 of restructuring and other related charges during the three and nine months ended October 2, 2021, respectively. Such charges related primarily to severance and other costs associated with commercial, engineering, and certain operational employees across both segments and across each region in which our segments operate, as well as certain functional support employees across most of our corporate functions.

Restructuring and other related charges (credits) for the three and nine months ended October 2, 2021 and September 26, 2020 were as follows:


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Nutrition and Health	$	0.1	$	0.4	$	5.4	$	2.4

Precision Solutions	1.2		0.5		6.3		5.1
Other	(0.7)		0.4		2.4		1.2
Total	$	0.6	$	1.3	$	14.1	$	8.7

Restructuring and Other Related Charges By Reportable Segment

Nutrition and Health — Charges for the three and nine months ended October 2, 2021 related primarily to costs associated with the global restructuring program described above.

Charges for the three months ended September 26, 2020 related primarily to severance and other costs associated with a reduction in force of certain engineering employees based in our EMEA region.

Charges for the nine months ended September 26, 2020 related primarily to a reduction in force of certain commercial employees based in our EMEA region and, to a lesser extent, severance and other costs associated primarily with reductions in force of certain engineering, commercial and other functional support employees within the segment, across all regions in which the segment operates.

Precision Solutions — Charges for the three and nine months ended October 2, 2021 related primarily to costs associated with the global restructuring program described above.

Charges for the three months ended September 26, 2020 related primarily to severance and other costs associated with reductions in force of (i) certain operations personnel based in EMEA and (ii) certain engineering employees based in the U.S.

Charges for the nine months ended September 26, 2020 related to the above costs as well as severance and other costs associated primarily with (i) the consolidation and relocation of the operations of a U.S. manufacturing facility to existing facilities in the U.S. as well as in our EMEA and Asia Pacific regions and (ii) reductions in force of certain engineering, commercial and other functional support employees within the segment, primarily in EMEA and, to a lesser extent, across the other regions in which the segment operates.

Other — The credit for the three months ended October 2, 2021 related primarily to a revision of estimates associated with previously recognized charges related to the global restructuring program described above. Charges for the nine months ended October 2, 2021 related primarily to costs associated with the global restructuring program.

Charges for the three and nine months ended September 26, 2020 related primarily to severance costs associated with (i) the rationalization and outsourcing of certain corporate support functions and (ii) a reduction in force of certain corporate support employees.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

The following is an analysis of our restructuring liabilities (included in “Accrued expenses” in our condensed consolidated balance sheets) for the nine months ended October 2, 2021 and September 26, 2020:


	Nine months ended
	October 2, 2021		September 26, 2020
Balance at beginning of year	$	7.3	$	7.6
Restructuring and other related charges(1)	13.7		8.1
Balance assumed in business acquisitions	0.2		—
Utilization — cash	(10.4)		(7.5)
Currency translation adjustment and other	(0.2)		—
Balance at end of period	$	10.6	$	8.2

(1)Amounts that impacted restructuring and other related charges but not the restructuring liabilities included $0.4 and $0.6 for the nine months ended October 2, 2021 and September 26, 2020, respectively.

(7) INVENTORIES, NET

Inventories at October 2, 2021 and December 31, 2020 comprised the following:


	October 2, 2021		December 31, 2020
Finished goods	$	98.8	$	86.1
Work in process	44.6		39.1
Raw materials and purchased parts	110.1		81.9
Total FIFO cost	253.5		207.1
Excess of FIFO cost over LIFO inventory value	(7.8)		(7.8)
Total inventories	$	245.7	$	199.3

Inventories include material, labor and factory overhead costs and are reduced, when necessary, to estimated net realizable values. Certain domestic inventories are valued using the last-in, first-out (“LIFO”) method. These inventories were approximately 13% and 11% of total inventory at October 2, 2021 and December 31, 2020, respectively. Other inventories are valued using the first-in, first-out (“FIFO”) method.

(8) GOODWILL, OTHER INTANGIBLE ASSETS AND ASSET IMPAIRMENT CHARGES

Goodwill

The changes in the carrying amount of goodwill by reportable segment during the nine months ended October 2, 2021 were as follows:


	December 31, 2020		Goodwill Resulting from Business Combinations(1)		Impairment		Foreign Currency Translation and Other(2)		October 2, 2021
Nutrition and Health	$	270.2	$	—	$	—	$	(13.6)	$	256.6

Precision Solutions(3)	299.5		48.4		—		(9.3)		338.6
Total	$	569.7	$	48.4	$	—	$	(22.9)	$	595.2

(1)Reflects goodwill that arose from the acquisitions of UTG Mixing Group and Philadelphia Mixing during the nine months ended October 2, 2021. See Note 3 for further discussion regarding the status of estimates of the fair values of assets acquired and liabilities assumed as of October 2, 2021 in connection with these acquisitions.

(2)During the nine months ended October 2, 2021, $1.6 of goodwill in the Precision Solutions reportable segment was disposed of in connection with the sale of a product line. See Note 3 for further information regarding this transaction.

(3)The carrying amount of goodwill included $133.6 and $134.6 of accumulated impairments as of October 2, 2021 and December 31, 2020, respectively.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

We completed our annual impairment testing of goodwill (and indefinite-lived intangible assets that are not amortized) during the fourth quarter of 2020. The annual goodwill impairment tests indicated significant excess fair value over the carrying value of both of our reporting units. In consideration of (i) the order trends, business performance and operating results of our reporting units during the third quarter of 2021, as well as (ii) generally favorable global developments associated with the COVID-19 pandemic during the first three quarters of 2021, we do not expect the ongoing adverse impacts of the COVID-19 pandemic to have significantly affected the assumptions underlying our long-term revenue and cash flow growth rates, operating models or business strategies that comprised the assumptions utilized in our fourth quarter of 2020 annual impairment tests.

We will perform our annual impairment testing of goodwill (and indefinite-lived intangible assets that are not amortized), during the fourth quarter of 2021 in conjunction with our annual financial planning process. In performing that annual impairment testing, we will assess, among other items, the effects of the COVID-19 pandemic, order trends and the operating cash flow performance of our reporting units.

Other Intangibles, Net

Identifiable intangible assets were as follows:


	October 2, 2021						December 31, 2020
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible assets with determinable lives:
Customer relationships	$	145.9	$	(112.3)	$	33.6	$	131.1	$	(108.5)	$	22.6
Technology	70.3		(52.7)		17.6		65.8		(52.4)		13.4
Patents	5.3		(4.7)		0.6		5.5		(4.6)		0.9
Other	13.7		(10.8)		2.9		8.7		(8.7)		—
	235.2		(180.5)		54.7		211.1		(174.2)		36.9
Trademarks with indefinite lives	173.2		—		173.2		169.1		—		169.1
Total	$	408.4	$	(180.5)	$	227.9	$	380.2	$	(174.2)	$	206.0

As of October 2, 2021, the net carrying value of intangible assets with determinable lives consisted of the following by reportable segment: $15.6 in Nutrition and Health and $39.1 in Precision Solutions. Trademarks with indefinite lives consisted of the following by reportable segment: $99.8 in Nutrition and Health and $73.4 in Precision Solutions.

The gross carrying values of identifiable intangible assets acquired in connection with the UTG Mixing Group and Philadelphia Mixing acquisitions consummated during the first half of 2021 included customer relationships of $19.0, technology of $7.4, other intangibles with determinable lives of $6.4 (consisting of backlog and noncompete agreements), and trademarks of $6.4. See Note 3 for further discussion regarding the status of our estimates of the fair values of identifiable intangible assets as of October 2, 2021 related to these acquisitions.

No intangible asset impairment charges were recorded during the nine months ended October 2, 2021 or September 26, 2020. During the nine months ended October 2, 2021, $0.5 of trademarks in the Precision Solutions reportable segment were disposed of in connection with the sale of a product line. See Note 3 for further information regarding this transaction. Other changes in the gross carrying values of trademarks and other identifiable intangible assets during the nine months ended October 2, 2021 related to foreign currency translation.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

Tangible Long-Lived Asset Impairment Charges

As discussed in Note 4, asset impairment charges of $0.5 during the three months ended September 26, 2020 resulted from management's decision to consolidate and relocate the operations of a U.S. manufacturing facility within the Precision Solutions reportable segment to existing facilities in the U.S. as well as in our EMEA and Asia Pacific regions. Such charges related to the real property and, to a lesser extent, certain machinery and equipment of the facility. Charges for the nine months ended September 26, 2020 include these charges, $0.8 of charges recorded during the second quarter related to this action and asset impairment charges of $1.9 incurred during the first quarter of 2020 which resulted from management's decision to discontinue a product line within the Precision Solutions reportable segment. Such charges related to certain machinery and equipment of the segment. No asset impairment charges were recorded during the three or nine months ended October 2, 2021.

(9) EMPLOYEE BENEFIT PLANS

SPX FLOW sponsors a number of defined benefit pension plans and a postretirement plan. For all of these plans, changes in the fair value of plan assets and actuarial gains and losses are recognized to earnings in the fourth quarter of each year, unless earlier remeasurement is required. The remaining components of pension and postretirement expense, primarily service and interest costs and expected return on plan assets, are recorded on a quarterly basis.

Components of Net Periodic Pension and Postretirement Benefit Expense

Net periodic benefit expense for our foreign pension plans and our domestic pension and postretirement plans for the three and nine months ended October 2, 2021 and September 26, 2020 included the following components:


	Foreign Pension Plans				Domestic Pension and Postretirement Plans				Total				Statement of Operations Caption in Which Expense is Reported
	Three months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Service cost	$	0.2	0.2		$	—	$	—	$	0.2	$	0.2	Selling, general and administrative
Interest cost	—		0.1		0.1		—		0.1		0.1		Other income, net


Total net periodic benefit expense	$	0.2	$	0.3	$	0.1	$	—	$	0.3	$	0.3


	Foreign Pension Plans				Domestic Pension and Postretirement Plans				Total				Statement of Operations Caption in Which Expense is Reported
	Nine Months Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Service cost	$	0.6	0.6		$	—	$	—	$	0.6	$	0.6	Selling, general and administrative
Interest cost	—		0.3		0.3		0.1		0.3		0.4		Other income, net


Total net periodic benefit expense	$	0.6	$	0.9	$	0.3	$	0.1	$	0.9	$	1.0

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

(10) INDEBTEDNESS

Debt at October 2, 2021 and December 31, 2020 was comprised of the following:


	October 2, 2021		December 31, 2020

Term loans, due in August 2026	$	400.0	$	—
Former term loan(1)	—		100.0
5.875% senior notes(2)	—		300.0

Other indebtedness(3)	15.6		13.0
Less: deferred financing fees(4)	(1.1)		(3.1)
Total debt	414.5		409.9
Less: short-term debt	15.4		12.5
Less: current maturities of long-term debt	20.0		0.1
Total long-term debt	$	379.1	$	397.3

(1)As discussed further below, on August 3, 2021, and as subsequently amended on August 16, 2021, we entered into amended and restated senior credit facilities with a syndicate of lenders. In connection with the amendment and restatement, our former term loan facility was extinguished and we entered into a new term loan facility. In connection with the amendment and extinguishment of the former term loan and other related facilities, we recorded a pre-tax charge of $1.1 to "Loss on early extinguishment of debt" during our third quarter of 2021 which was primarily related to the write-off of certain unamortized deferred financing fees.

(2)As discussed further below, on September 2, 2021, we redeemed our 5.875% Senior Notes due in 2026 (the "2026 Notes") in full, pursuant to the redemption provisions of the indenture governing the 2026 Notes for a total redemption price of $308.8, plus accrued and unpaid interest. As a result of the redemption, we recorded a pre-tax charge of $11.3 to "Loss on early extinguishment of debt" during our third quarter of 2021, which related to premiums paid to redeem the 2026 Notes of $8.8 and the write-off of unamortized deferred financing fees of $2.5.

(3)Primarily includes balances under a purchase card program of $15.4 and $12.5 and finance lease obligations of $0.2 and $0.5 as of October 2, 2021 and December 31, 2020, respectively. The purchase card program allows for payment beyond customary payment terms for goods and services acquired under the program. As this arrangement extends the payment of these purchases beyond their normal payment terms through third-party lending institutions, we have classified these amounts as short-term debt.

(4)Deferred financing fees were comprised of fees related to the term loans and, as of December 31, 2020, the senior notes.

Amendment and Restatement of Senior Credit Facilities

On August 3, 2021, and as amended on August 16, 2021, (the “Effective Date”), the Company amended and restated its senior credit facilities (which were previously amended and restated on June 27, 2019) with a syndicate of lenders, which provides for committed senior secured financing in an aggregate amount of $1,010.0, consisting of the following:

•a domestic revolving credit facility, available for loans and letters of credit, in an aggregate principal amount up to $200.0, with a final maturity of August 3, 2026;

•a global revolving credit facility, available for loans in Euros, Sterling, and other currencies, in an aggregate principal amount up to the equivalent of $300.0, with a final maturity of August 3, 2026;

•a bilateral foreign credit instrument facility, available for performance letters of credit and guarantees in Euros, Sterling, and other currencies, in an aggregate principal amount up to the equivalent of $110.0, with a final maturity of August 3, 2026; and

•term loan facilities in an aggregate principal amount of $400.0, with a final maturity of August 3, 2026.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

We also may seek additional commitments, without consent from the existing lenders, to add an incremental term loan facility, increase the commitments in respect of the domestic revolving credit facility, the global revolving credit facility, and/or the bilateral foreign credit instrument facility and/or incur certain other equivalent indebtedness by an aggregate principal amount not to exceed (x) the greater of (i) $275.0 and (ii) an amount equal to 100% of consolidated adjusted EBITDA for the four fiscal quarters ended most recently before such date plus (y) an unlimited amount so long as, immediately after giving effect thereto, our Consolidated Senior Secured Leverage Ratio (as defined in the credit agreement generally as the ratio of consolidated total debt (excluding the face amount of undrawn letters of credit, bank undertakings, or analogous instruments and net of cash and cash equivalents) at the date of determination secured by liens to consolidated adjusted EBITDA for the four fiscal quarters ended most recently before such date) does not exceed 2.75:1.00 plus (z) an amount equal to all voluntary prepayments of the term loan facilities and voluntary prepayments accompanied by permanent commitment reductions of the domestic revolving credit facility, the global revolving credit facility, and the bilateral foreign credit instrument facility.

The Company is the borrower under all of the senior credit facilities, and the Company may designate certain of its foreign subsidiaries to be co-borrowers under the global revolving credit facility and the bilateral foreign credit instrument facility.

All borrowings and other extensions of credit under our senior credit facilities are subject to the satisfaction of customary conditions, including absence of defaults and accuracy in material respects of representations and warranties.

The letters of credit under the domestic revolving credit facility are stand-by letters of credit requested by the Company on behalf of itself or any of its subsidiaries or certain joint ventures. The bilateral foreign credit instrument facility is used to issue foreign credit instruments, including bank undertakings to support our foreign operations.

The interest rates applicable to loans under our senior credit facilities are, at our option, equal to either (x) an alternate base rate (the highest of (a) the effective federal funds rate plus 0.5%, (b) the “prime rate” of Bank of America, N.A., and (c) the one-month LIBOR rate plus 1.0%), (y) a reserve-adjusted LIBOR rate for dollars (“Eurodollar”), or (z) certain alternative currency floating rates, plus, in each case, an applicable margin percentage, which varies based on our Consolidated Leverage Ratio (as defined in the credit agreement generally as the ratio of consolidated total debt (excluding the face amount of undrawn letters of credit, bank undertakings or analogous instruments and net of cash and cash equivalents) at the date of determination to consolidated adjusted EBITDA for the four fiscal quarters ended most recently before such date). We may elect interest periods of one, three, or six months (and, if consented to by all relevant lenders, twelve months or less) for Eurodollar rate borrowings and certain alternative currency rate borrowings. The per annum fees charged and the interest rate margins applicable to the loans are as follows:


Consolidated Leverage Ratio	Revolving Credit Facilities Commitment Fee	Financial Letter of Credit Fee	FCI Commitment Fee	FCI Fee and Non-Financial Letter of Credit Fee	Eurodollar / Alternative Currency Loans	ABR Loans
Greater than or equal to 3.00 to 1.0	0.275%	1.750%	0.275%	1.050%	1.750%	0.750%
Less than 3.00 to 1.0 but greater than or equal to 2.00 to 1.0	0.250%	1.500%	0.250%	0.900%	1.500%	0.500%
Less than 2.00 to 1.0 but greater than or equal to 1.50 to 1.0	0.225%	1.375%	0.225%	0.825%	1.375%	0.375%
Less than 1.50 to 1.0	0.200%	1.250%	0.200%	0.750%	1.250%	0.250%

The fees for bilateral foreign credit commitments are as specified above for foreign credit instrument commitments unless otherwise agreed with the bilateral foreign issuing lender. We also pay fronting fees on the outstanding amounts of financial letters of credit at the rate of 0.125% per annum and non-financial letters of credit at the rate of 0.250% per annum.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

Our senior credit facilities require mandatory prepayments in amounts equal to the net proceeds from the sale or other disposition of, including from any casualty to, or governmental taking of, property in excess of specified values (other than in the ordinary course of business and subject to other exceptions) by the Company or its subsidiaries. Mandatory prepayments will be applied to repay, first, amounts outstanding under any term loans and, then, amounts outstanding under the global revolving credit facility and the domestic revolving credit facility (without reducing the commitments thereunder). No prepayment is required generally to the extent the net proceeds are reinvested (or committed to be reinvested) in permitted acquisitions, permitted investments or assets to be used in our business within 360 days (and if committed to be reinvested, actually reinvested within 180 days after the end of such 360-day period) of the receipt of such proceeds.

We may voluntarily prepay loans under our senior credit facilities, in whole or in part, without premium or penalty. Any voluntary prepayment of loans will be subject to reimbursement of the lenders’ breakage costs in the case of a prepayment of Eurodollar rate or alternative currency term rate borrowings other than on the last day of the relevant interest period.

Indebtedness under our senior credit facilities is guaranteed by:

•each existing and subsequently acquired or organized domestic material subsidiary of the Company (with certain exceptions); and

•solely with respect to the obligations of our foreign borrower subsidiaries under the global revolving credit facility and the bilateral foreign credit instrument facility, the Company.

Indebtedness under our senior credit facilities is secured by (i) a first priority pledge and security interest in 100% of the capital stock of our domestic subsidiaries (with certain exceptions) held by the Company or the domestic subsidiary guarantors and 65% of the capital stock of our material first-tier foreign subsidiaries (with certain exceptions), (ii) first priority security interests and other liens on substantially all of the personal property of the Company and its domestic subsidiary guarantors (with certain exceptions), and (iii) a lien on our corporate headquarters. If the Company’s corporate credit rating is “Baa3” or better by Moody’s or “BBB-” or better by S&P and no defaults exist or would result therefrom, then all collateral security will be released and the indebtedness under our senior credit facilities will be unsecured.

Our senior credit facilities require that the Company maintains:

•a Consolidated Interest Coverage Ratio (as defined in the credit agreement generally as the ratio of consolidated adjusted EBITDA for the four fiscal quarters ended on such date to consolidated cash interest expense for such period) as of the last day of any fiscal quarter of at least 3.00 to 1.00; and

•a Consolidated Leverage Ratio as of the last day of any fiscal quarter of not more than 4.00 to 1.00.

Our senior credit facilities also contain covenants that, among other things, restrict our ability to incur additional indebtedness, grant liens, make investments, loans, guarantees, or advances, make restricted junior payments, including dividends, redemptions of capital stock, and voluntary prepayments or repurchase of certain other indebtedness, engage in mergers, acquisitions or sales of assets, or engage in certain transactions with affiliates, and otherwise restrict certain corporate activities. Our senior credit facilities contain customary representations, warranties, affirmative covenants and events of default.

We are permitted under our senior credit facilities to repurchase our capital stock and pay cash dividends in an unlimited amount if our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) less than 2.50 to 1.00. If our Consolidated Leverage Ratio is (after giving pro forma effect to such payments) greater than or equal to 2.50 to 1.00, the aggregate amount of such repurchases and dividend declarations cannot exceed (A) $100.0 in any fiscal year plus (B) an additional amount for all such repurchases and dividend declarations made after the Effective Date equal to the sum of (i) $300.0 plus (ii) a positive amount equal to 50% of cumulative Consolidated Net Income (as defined in the credit agreement generally as consolidated net income subject to certain adjustments solely for the purposes of determining this basket) during the period from the Effective Date to the end of the most recent fiscal quarter preceding the date of such repurchase or dividend declaration for which financial statements have been (or were required to be) delivered (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit) plus (iii) certain other amounts.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

The proceeds of the initial $100.0 borrowing were used in part to repay the term loan outstanding under our former senior credit facility and subsequent borrowings of $300.0 were issued in part to fund the redemption of the 2026 Notes. In connection with entering into the amended and restated senior credit facility in August 2021, we recorded a pre-tax charge of $1.1 to "Loss on early extinguishment of debt" during our third quarter of 2021, which was primarily related to the write-off of certain unamortized deferred financing fees resulting from the extinguishment of the term loan and other facilities of the former senior credit facility.

Redemption of 2026 Notes

On August 3, 2021, the Company issued an irrevocable notice of redemption (the “Notice”) with respect to the 2026 Notes. Pursuant to the Notice, the Company gave holders of the 2026 Notes notice that it would redeem all of the outstanding 2026 Notes on September 2, 2021 (the “Redemption Date”). On September 2, 2021, with a cash payment, we redeemed the 2026 Notes in full pursuant to the redemption provisions of the indenture governing the 2026 Notes for a total redemption price of $308.8, plus accrued and unpaid interest. As a result of the redemption, we recorded a pre-tax charge of $11.3 to "Loss on early extinguishment of debt" during our third quarter of 2021, which primarily consisted of premiums paid to redeem the 2026 Notes of $8.8 and the write-off of unamortized deferred financing fees of $2.5 associated with the 2026 Notes.

Other Indebtedness Matters

The weighted average interest rate of outstanding borrowings under our term loans, due August 2026, was approximately 1.5% at October 2, 2021. The interest rate of outstanding borrowings under our former term loan was approximately 1.5% at December 31, 2020.

At October 2, 2021, we had $494.7 of borrowing capacity under our revolving credit facilities after giving effect to $5.3 reserved for outstanding letters of credit. In addition, at October 2, 2021, we had $50.8 of available issuance capacity under our foreign credit instrument facilities after giving effect to $51.7 reserved for outstanding bank guarantees and $7.5 of outstanding bank guarantees that are in the process of being re-issued under the amended and restated foreign credit instrument facilities but which do not represent additional available capacity.

At October 2, 2021, in addition to the revolving lines of credit described above, we had approximately $10.9 of letters of credit outstanding under separate arrangements in China and India.

Certain of our current and future debt and derivative financial instruments have, or in the future, could have interest rates that are tied to reference rates, such as LIBOR. The volatility and availability of such reference rates, including establishment of alternative reference rates, is out of our control. Changes to or the unavailability of such rates or the manner for calculation of such reference rates, could result in increases to the cost of our debt.

At October 2, 2021, we were in compliance with all covenants of our senior credit facilities.

(11) DERIVATIVE FINANCIAL INSTRUMENTS

We manufacture and sell our products in a number of countries and, as a result, are exposed to movements in foreign currency (“FX”) exchange rates. Our objective is to preserve the economic value of non-functional currency-denominated cash flows and to minimize the impact of changes as a result of currency fluctuations. Our principal currency exposures relate to the Euro, Chinese Yuan and British Pound.

We had FX forward contracts with an aggregate notional amount of $32.4 and $40.7 outstanding as of October 2, 2021 and December 31, 2020, respectively, with all such contracts scheduled to mature within one year. We also had FX embedded derivatives with an aggregate notional amount of $0.0 and $5.5 at October 2, 2021 and December 31, 2020, respectively. There were no unrealized gains or losses recorded in accumulated other comprehensive loss related to FX forward contracts as of October 2, 2021 and December 31, 2020. The net gains (losses) recorded in “Other income, net” related to FX gains (losses) totaled $0.3 and $(0.4) for the three months ended October 2, 2021 and September 26, 2020, respectively, and $(0.3) and $(2.2) for the nine months then ended.

We enter into arrangements designed to provide the right of setoff in the event of counterparty default or insolvency, and have elected to offset the fair values of our FX forward contracts in our condensed consolidated balance sheets. The gross fair values of our FX forward contracts and FX embedded derivatives, in aggregate, were $0.0 and $0.2 (gross assets) and $0.0 and $0.0 (gross liabilities) at October 2, 2021 and December 31, 2020, respectively.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

(12) EQUITY AND STOCK-BASED COMPENSATION

Income (Loss) Per Share

The following table sets forth the number of weighted-average shares outstanding used in the computation of basic and diluted income (loss) per share:


	Three months ended		Nine months ended
	October 2, 2021	September 26, 2020	October 2, 2021	September 26, 2020
Weighted-average shares outstanding, basic	41.952	42.127	41.924	42.425
Dilutive effect of share-based awards	0.008	0.323	0.032	0.215
Weighted-average shares outstanding, dilutive(1)	41.960	42.450	41.956	42.640

(1)Unvested restricted stock shares/units not included in the computation of diluted income per share because required market thresholds for vesting (as discussed below) were not met, were 0.000 and 0.094 for the three months ended October 2, 2021 and September 26, 2020, respectively, and 0.000 and 0.102 for the nine months then ended, respectively. Unvested restricted stock shares/units not included in the computation of diluted income per share because required internal performance thresholds for vesting (as discussed below) were not met, were 0.060 and 0.207 for the three months ended October 2, 2021 and September 26, 2020, respectively, and 0.060 and 0.196 for the nine months then ended, respectively. Stock options outstanding excluded from the computation of diluted income per share because their exercise price was greater than the average market price of common shares were 0.342 for the three and nine months ended September 26, 2020, respectively. No stock options outstanding were excluded from the computation of diluted income per share for the three and nine months ended October 2, 2021.

Stock-Based Compensation

SPX FLOW stock-based compensation awards may be granted to certain eligible employees or non-employee directors under the SPX FLOW Stock Compensation Plan (the “Stock Plan”). Under the Stock Plan, up to 1.768 unissued shares of our common stock were available for future grant as of October 2, 2021. The Stock Plan permits the issuance of authorized but unissued shares or shares from treasury upon the vesting of restricted stock units, granting of restricted stock shares or exercise of stock options. Each restricted stock share, restricted stock unit and stock option granted reduces share availability under the Stock Plan by one share.

Restricted stock shares or restricted stock units may be granted to certain eligible employees or non-employee directors in accordance with the Stock Plan and applicable award agreements. Subject to participants' continued service and other award terms and conditions, the restrictions lapse and awards generally vest over a period of time, generally three years (or one year for awards to non-employee directors). In some instances, such as death, disability, or retirement, awards may vest concurrently with or following an employee's termination. Approximately half of such restricted stock shares and restricted stock unit awards vest based on performance thresholds, while the remaining portion vest based on the passage of time since grant date.

Eligible employees, including officers, were granted 2021 target performance awards, primarily during the three months ended April 3, 2021, that vest subject to attainment of certain performance vesting criteria. Such awards are generally subject to the employees’ continued employment during the three-year vesting period, and may be completely forfeited if the threshold performance criteria are not met. Vesting for the 2021 target performance awards is based on SPX FLOW shareholder return versus the performance of a composite group of companies, as established under the awards (the “Composite Group”), over the three-year period from January 1, 2021 through December 31, 2023. In the event of vesting, the 2021 target performance awards based on shareholder return performance generally restrict the recipient from selling, transferring, pledging or assigning the underlying shares for a one-year period, ending December 31, 2024, other than for tax withholding. These target performance awards were issued as restricted stock units to eligible employees, including officers.

In addition, certain eligible employees, including officers, were granted 2021 target performance awards primarily during the three months ended April 3, 2021 that vest subject to attainment of stated operating income margin threshold (as defined under the awards) measured at the conclusion of the measurement period ending December 31, 2023 (including eligible employees’ continued employment during the measurement period). These target performance awards were issued as restricted stock units to eligible employees, including officers.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

Eligible employees, including officers, also were granted 2021 awards, primarily during the three months ended April 3, 2021, that vest ratably over three years, subject to the passage of time and the employees’ continued employment during such period. In some instances, such as death, disability, or retirement, awards may vest concurrently with or following an employee's termination. These awards were issued as restricted stock units to eligible employees, including officers.

In accordance with terms of the Sale Agreement entered into with the Buyer, all awards granted to SPX FLOW employees who became employees of the Buyer upon closing of the Transaction on March 30, 2020, and that vest subject to the passage of time and the employees’ continued employment that would have otherwise vested within the twelve-month period following the closing date of the Transaction, vested as of March 30, 2020. Target performance awards granted in 2017 to such employees that vest subject to (i) SPX FLOW shareholder return versus the Composite Group or (ii) attainment of stated improvements in the three-year average annual return on invested capital, vested according to the terms of the underlying award agreements (including continued employment during the measurement period). All other outstanding share-based awards to SPX FLOW employees who became employees of the Buyer that did not vest under these conditions, were forfeited as of March 30, 2020.

Restricted stock unit awards granted to eligible employees, including officers, primarily during the three months ended April 3, 2021, include early retirement provisions which permit recipients to be eligible for vesting generally upon reaching the age of 60 and completing ten years of service (and, if applicable, subject to the attainment of performance measures).

Restricted stock units that do not vest within the applicable vesting period are forfeited.

Stock options may be granted to eligible employees in the form of incentive stock options or nonqualified stock options. The option price per share may be no less than the fair market value of our common stock at the close of business on the date of grant. Upon exercise, the employee has the option to surrender previously owned shares at current value in payment of the exercise price and/or for withholding tax obligations.

The recognition of compensation expense for share-based awards is based on their grant-date fair values. The fair value of each award is amortized over the lesser of the award's requisite or derived service period, which is generally up to three years as noted above. For the three and nine months ended October 2, 2021 and September 26, 2020, we recognized compensation expense related to share-based programs in “Selling, general and administrative” expense in the accompanying condensed consolidated statements of operations as follows:


	Three months ended				Nine months ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Stock-based compensation expense - continuing and discontinued operations	$	3.8	$	3.6	9.6		11.4
Less: stock-based compensation expense recognized in discontinued operations	—		—		—		0.8
Stock-based compensation expense recognized in continuing operations	3.8		3.6		9.6		10.6
Income tax benefit	(0.9)		(0.8)		(1.9)		(2.4)
Stock-based compensation expense, net of income tax benefit	$	2.9	$	2.8	$	7.7	$	8.2

Restricted Stock Unit Awards

The Monte Carlo simulation model valuation technique was used to determine the fair value of our 2021 restricted stock units that contain a “market condition.” The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award and calculates the fair value of each restricted stock unit award. The valuation of such 2021 awards also reflects an illiquidity discount of 14.6%, determined utilizing the Chafee model valuation technique, and related to the one-year period that recipients are restricted from selling, transferring, pledging or assigning the underlying shares, in the event of vesting and as discussed above.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

The following table summarizes the unvested restricted stock share and restricted stock unit activity for the nine months ended October 2, 2021:


	Unvested Restricted Stock Shares and Restricted Stock Units	Weighted-Average Grant-Date Fair Value Per Share
Outstanding at December 31, 2020	0.931	$37.03
Granted	0.329	67.16
Vested	(0.298)	39.62
Forfeited and other	(0.163)	43.57
Outstanding at October 2, 2021	0.799	$47.12

As of October 2, 2021, there was $24.1 of unrecognized compensation cost related to restricted stock share and restricted stock unit compensation arrangements. We expect this cost to be recognized over a weighted-average period of 1.9 years.

Stock Options

There were 0.016 and 0.301 of SPX FLOW stock options outstanding as of October 2, 2021 and December 31, 2020, respectively, all of which were exercisable as of October 2, 2021 and December 31, 2020. The decrease in the first nine months of 2021 was due to stock options exercised during the period. The weighted-average exercise price per share of the stock options is $61.29 and the weighted-average grant-date fair value per share is $19.33. The term of these options expires on January 2, 2025 (subject to earlier expiration upon a recipient's termination of service as provided under the awards). There was no unrecognized compensation cost related to these stock options as of October 2, 2021.

Accumulated Other Comprehensive Loss

Substantially all of accumulated other comprehensive loss (“AOCL”) as of October 2, 2021 and December 31, 2020 was foreign currency translation adjustment. See the condensed consolidated statements of comprehensive income for changes in AOCL for the three and nine months ended October 2, 2021 and September 26, 2020, and Note 3 for further discussion regarding amounts reclassified out of AOCL during the nine months ended September 26, 2020 in connection with the disposition of the Disposal Group.

Common Stock in Treasury

During the nine months ended October 2, 2021 and September 26, 2020, “Common stock in treasury” was increased by $6.3 and $6.9, respectively, for common stock that was surrendered by recipients of restricted stock as a means of funding the related applicable income tax withholding requirements.

During the three and nine months ended October 2, 2021, we repurchased 0.089 and 0.620 shares of our common stock for cash consideration of $5.7 and $40.2, respectively, in accordance with a share repurchase program authorized by our Board of Directors for the purchase of up to $150.0 shares of our common stock on or before December 31, 2021. As of October 2, 2021, there remained approximately $89.9 in shares available to be purchased by the Company under the share repurchase program.

Dividends

On September 17, 2021, we announced the declaration of a quarterly dividend on our common stock of $0.09 per share, paid on October 13, 2021 to stockholders of record as of the close of business on September 30, 2021. We previously paid quarterly dividends of $3.8 each in April and July 2021. The accrual of the dividend payable of $3.8 is reflected in "Accrued expenses" in our accompanying condensed consolidated balance sheet as of October 2, 2021.

Noncontrolling Interests

During the second quarter of 2021, the Company executed an agreement with noncontrolling interest shareholders in a joint venture wherein the Company acquired all outstanding noncontrolling shares for $0.6 in cash. The noncontrolling interest was reduced by the consideration paid for these shares during the nine months ended October 2, 2021.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

(13) LITIGATION, CONTINGENT LIABILITIES AND OTHER MATTERS

Various claims, complaints and proceedings arising in the ordinary course of business, including those relating to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property and competitive claims, and claims to certain indemnification obligations arising from previous acquisitions/dispositions), have been filed or are pending against us and certain of our subsidiaries. We believe these matters are either without merit or of a kind that should not have a material effect, individually or in the aggregate, on our financial position, results of operations or cash flows.

We are subject to domestic and international environmental protection laws and regulations with respect to our business operations and are operating in compliance with, or taking action aimed at ensuring compliance with, these laws and regulations. We believe our compliance obligations with environmental protection laws and regulations should not have a material effect, individually or in the aggregate, on our financial position, results of operations or cash flows.

Mezzanine Equity

Independent noncontrolling shareholders in certain foreign subsidiaries of the Company have put options under their respective joint venture operating agreements that allow them to sell their common stock to the controlling shareholders (wholly-owned subsidiaries of SPX FLOW) upon the satisfaction of certain conditions, including the passage of time. The respective carrying values presented in “Mezzanine equity” of our condensed consolidated balance sheets as of October 2, 2021 and December 31, 2020 are stated at the current exercise value of the put options, irrespective of whether the options are currently exercisable. To the extent the noncontrolling interests' put option price is correlated with the estimated fair value of the subsidiary, we have used the market method to estimate such fair values. This represents a Level 3 fair value measurement as described in Note 15.

During the first quarter of 2020, the noncontrolling interest shareholder of a joint venture exercised certain put options and, during the third quarter of 2020, the Company and such shareholder reached an agreement for the Company to purchase all noncontrolling interest shares in that joint venture at an agreed-upon price. In accordance with the agreement, we paid $15.0 during the year ended December 31, 2020 to purchase the shares. In connection with the share purchase of $15.0, we reduced “Noncontrolling interests” by $7.7 to reflect the reduction in the noncontrolling shareholder’s cumulative carrying value of ownership interest in the joint venture during 2020, with the remainder of the purchase price paid reflected as a reduction of “Paid-in capital”. In addition, as a result of the share purchase during the year ended December 31, 2020, we reflected the settlement of the related put options during the year as a reduction of “Mezzanine equity” of $15.0, with an increase of “Paid-in capital”.

We have $3.3 and $3.4, respectively, of current exercise value of put options outstanding as of October 2, 2021 and December 31, 2020 related to a different foreign subsidiary than that discussed above and all of which became exercisable during 2020. The carrying value of such put options is recorded based on our best estimate of the ultimate redemption value of the put options. If and when such options are exercised, we expect to settle the option value in cash.

(14) INCOME TAXES

Unrecognized Tax Benefits

As of October 2, 2021, we had gross unrecognized tax benefits of $16.9 (net unrecognized tax benefits of $16.0), of which $11.0, if recognized, would impact our effective tax rate from continuing operations.

We classify interest and penalties related to unrecognized tax benefits as a component of our income tax provision. As of October 2, 2021, gross accrued interest totaled $1.2 (net accrued interest of $1.1), and there was no accrual for penalties included in our unrecognized tax benefits.

Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by $0.5 to $1.0. The previously unrecognized tax benefits relate to transfer pricing matters.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

The unrecognized tax benefits described above represent amounts that were included in tax returns filed by the Company. Historically, a portion of the Company's operations were included in tax returns filed by SPX Corporation (the “former Parent”) or its subsidiaries that were not part of our spin-off from the former Parent effected on September 26, 2015 (the “Spin-Off”). As a result, some uncertain tax positions related to the Company's operations resulted in unrecognized tax benefits that are now potential obligations of the former Parent or its subsidiaries that were part of the Spin-Off. In addition, some of the Company's tax returns included the operations of the former Parent's subsidiaries that were not part of the Spin-Off. In certain of these cases, these subsidiaries' activities gave rise to unrecognized tax benefits for which the Company could be potentially liable. When required under the Income Taxes Topic of the Codification, we have recorded a liability for these uncertain tax positions within our condensed consolidated balance sheets.

Other Tax Matters

During the three months ended October 2, 2021, we recorded an income tax provision of $8.6 on $32.1 of pre-tax income, resulting in an effective tax rate of 26.8%. This compares to an income tax provision for the three months ended September 26, 2020 of $0.7 on $17.4 of pre-tax income, resulting in an effective tax rate of 4.0%.

The effective tax rate for the third quarter of 2020 was impacted by income tax benefits of (i) $2.5 resulting from the benefit of the reduction to the forecasted annual effective tax rate in the third quarter of 2020 applied to income in the first half of 2020, (ii) $1.6 related to the timing of the pretax results in certain jurisdictions where the tax expense is not expected to be realized due to the loss carryforward position, and (iii) $1.3 resulting from adjustments to the U.S tax liability for prior years.

During the nine months ended October 2, 2021, we recorded an income tax provision of $31.6 on $85.7 of pre-tax income, resulting in an effective tax rate of 36.9%. This compares to an income tax provision for the nine months ended September 26, 2020 of $3.7 on $27.0 of pre-tax income, resulting in an effective tax rate of 13.7%. The effective tax rate for the first nine months of 2021 was impacted by income tax charges of (i) $4.5 resulting from the disallowance of tax year 2020 interest deductions pursuant to the German Act Implementing the EU Anti-Tax Avoidance Directive, enacted June 30, 2021, (ii) $3.2 resulting from losses occurring in the first nine months of 2021 in certain jurisdictions where the tax benefit of those losses is not expected to be realized, and (iii) $1.0 related to transfer pricing adjustments.

The effective tax rate for the first nine months of 2020 was impacted by income tax benefits of (i) $7.2 resulting from adjustments to the deemed repatriation tax and certain additional foreign credits from the recharacterization of a prior outbound transfer of an affiliate to non-U.S. entities, (ii) $1.2 resulting from tax return adjustments for certain of the Company’s subsidiaries, and (iii) $1.2 resulting from adjustments to the U.S. tax liability for prior years, which were partially offset by income tax charges of (i) $4.8 resulting from losses occurring in the first nine months of 2020 in certain jurisdictions where the tax benefit of those losses is not expected to be realized and (ii) $1.6 related to the change in valuation allowance related to certain jurisdictions where the benefit of losses are no longer expected to be realized.

We review our income tax positions on a continuous basis and record unrecognized tax benefits for potential uncertain positions when we determine that an uncertain position meets the criteria of the Income Taxes Topic of the Codification. As events change and resolutions occur, adjustments are made to amounts previously provided, such as in the case of audit settlements with taxing authorities.

In connection with the Spin-Off, we and the former Parent entered into a Tax Matters Agreement which, among other matters, addresses the allocation of certain tax adjustments that might arise upon examination of the 2013, 2014 and the pre-Spin-Off portion of the 2015 federal income tax returns of the former Parent. The audit of the federal income tax returns for 2013, 2014 and the pre-Spin-Off portion of 2015 has now been concluded with an immaterial adjustment to the amounts previously reserved.

We have various non-U.S. income tax returns under examination. The most significant of these is the examination in Germany for the 2010 through 2014 tax years and the examination in China for the 2019 and 2020 tax years. We expect both of these examinations will conclude in 2021. We believe that any uncertain tax positions related to these examinations have been appropriately reflected as unrecognized tax benefits.

As discussed in Note 3, the Sale Agreement with the Buyer of the Company’s Disposal Group includes certain indemnification obligations which we believe are customary for transactions of this nature, including for certain tax obligations, to the extent such obligations relate to fiscal periods prior to the closing date and exceed amounts which are provided for in the balance sheet of the Disposal Group at closing.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

An unfavorable resolution of one or more of the above matters could have a material adverse effect on our results of operations or cash flows in the quarter and year in which an adjustment is recorded or the tax is due or paid. As audits and examinations are still in process or we have not yet reached the final stages of the appeals process, the timing of the ultimate resolution and any payments that may be required for the above matters cannot be determined at this time.

(15) FAIR VALUE

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair value hierarchy:

•Level 1 — Quoted prices for identical instruments in active markets.

•Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level 3 — Significant inputs to the valuation model are unobservable.

There were no changes during the periods presented to the valuation techniques we use to measure asset and liability fair values on a recurring basis. There were no transfers between the three levels of the fair value hierarchy during the periods presented.

The following section describes the valuation methodologies we use to measure different financial instruments at fair value on a recurring basis.

Derivative Financial Instruments

Our derivative financial assets and liabilities include FX forward contracts and FX embedded derivatives, valued using valuation models based on observable market inputs such as forward rates, interest rates, our own credit risk and the credit risk of our counterparties, which comprise investment-grade financial institutions. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. We have not made any adjustments to the inputs obtained from the independent sources. Based on our continued ability to enter into forward contracts, we consider the markets for our fair value instruments active. We primarily use the income approach, which uses valuation techniques to convert future amounts to a single present amount.

As of October 2, 2021 and December 31, 2020, the gross fair values of our derivative financial assets and liabilities, in aggregate, were $0.0 and $0.2 (gross assets) and $0.0 and $0.0 (gross liabilities), respectively. As of October 2, 2021, there had been no significant impact to the fair value of our derivative liabilities due to our own credit risk as the related instruments are collateralized under our senior credit facilities. Similarly, there had been no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties’ credit risks.

Equity Security Investment

We hold an investment in an equity security which is reflected at its net asset value in "Other assets" in our condensed consolidated balance sheets as of October 2, 2021 and December 31, 2020 and the change in our investment, based on the equity security's most recently determined net asset value, is reflected in "Other income, net" in our condensed consolidated statements of operations. The net asset value of our investment, utilizing a practical expedient under relevant accounting guidance, is based on our ownership percentage of approximately 19.7% and 18.9% at October 2, 2021 and December 31, 2020, respectively, applied to the equity security’s most recently determined net asset value. During the three and nine months ended October 2, 2021, we recorded a gain of $1.6 and $9.1, respectively, to “Other income, net” in our accompanying condensed consolidated statements of operations to reflect an increase in the estimated fair value of the equity security. As of October 2, 2021 and December 31, 2020, the equity security had an estimated fair value of $36.0 and $26.9, respectively. We are restricted from transferring this investment without approval of the manager of the investee.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

During the three and nine months ended September 26, 2020, we recorded a gain of $2.1 and $7.4, respectively, to “Other income, net” in our accompanying condensed consolidated statements of operations to reflect an increase in the estimated fair value of the equity security.

The COVID-19 pandemic has had an adverse impact on global economic conditions. A prolonged adverse impact of the COVID-19 pandemic could result in a decline in the equity security’s estimated fair value and, thus, a resulting charge to earnings in a future period.

Mezzanine Equity

To the extent the noncontrolling interests' put option price is correlated with the estimated fair value of the subsidiary, we use the market method to estimate the fair values of noncontrolling interest put options reported in “Mezzanine equity” using unobservable inputs (Level 3) on a recurring basis. Changes to the noncontrolling interest put option value are reflected as adjustments to “Mezzanine equity” and “Paid-In Capital.” Refer to Note 13 for further discussion.

Goodwill, Indefinite-Lived Intangible and Other Long-Lived Assets

Certain of our non-financial assets are subject to impairment analysis, including long-lived assets, indefinite-lived intangible assets and goodwill. We review the carrying amounts of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable or at least annually for indefinite-lived intangible assets and goodwill. Any resulting impairment would require that the asset be recorded at its fair value.

During the three and nine months ended September 26, 2020, the Company recorded pre-tax losses of $1.6 and $12.1, respectively, to reduce the carrying value of the net assets of its Disposal Group, including relevant foreign currency translation adjustment balances, to the net proceeds expected to be realized upon finalization of the purchase price with the Buyer (see Note 3 for further details regarding the Sale Agreement). The fair value of the Company’s Disposal Group reflected terms of the Sale Agreement with the Buyer as noted above and, as such, was valued using unobservable inputs (Level 3).

At October 2, 2021, no other significant non-financial assets or liabilities of the Company were required to be measured at fair value on a recurring or non-recurring basis. See Note 3 for further information regarding the losses on Disposal Group recognized during the three and nine months ended September 26, 2020, and Note 8 for further information regarding goodwill and indefinite-lived intangible assets, and the Company’s consideration of the effects of the COVID-19 pandemic on its evaluation of the carrying values of such long-lived assets as of October 2, 2021.

Acquisitions

For the POSI-LOCK acquisition, closed during the third quarter of 2020, the purchase price of $10.0 has been allocated to the assets acquired and liabilities assumed based on expert valuations and management’s estimates of their fair values as of the acquisition date. The excess of the purchase price over the aggregate fair values was recorded as "Goodwill" in the accompanying condensed consolidated balance sheets as of October 2, 2021 and December 31, 2020.

For the UTG Mixing Group acquisition, closed during the first quarter of 2021, the purchase price of $38.0 net of cash acquired of $2.9, has been allocated to the assets acquired and liabilities assumed based on expert valuations and management's estimates of their fair values as of the acquisition date. The excess of the purchase price over the aggregate fair values was recorded as "Goodwill" in the accompanying condensed consolidated balance sheet as of October 2, 2021.

For the Philadelphia Mixing acquisition, closed during the second quarter of 2021, the purchase price of $64.6, net of cash acquired of $1.6, has been allocated to the assets acquired and liabilities assumed based on management’s preliminary estimates of their fair values as of the acquisition date. The excess of the purchase price over the aggregate fair values was recorded as "Goodwill" in the accompanying condensed consolidated balance sheet as of October 2, 2021. The estimates of fair values recognized as of October 2, 2021 are preliminary management estimates and are subject to change when such estimates are finalized.

SPX FLOW, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited; in millions, except per share data)

Indebtedness and Other

The estimated fair values of other financial liabilities (excluding finance leases and deferred financing fees) not measured at fair value on a recurring basis as of October 2, 2021 and December 31, 2020 were as follows:


	October 2, 2021				December 31, 2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Term loans	$	400.0	$	400.0	$	—	$	—
Former term loan	—		—		100.0		100.0
5.875% senior notes(1)	—		—		300.0		313.5

Other indebtedness	15.4		15.4		12.5		12.5

(1)Carrying amount reflected herein excludes related deferred financing fees.

The following methods and assumptions were used in estimating the fair value of these financial instruments:

•The fair values of amounts outstanding under our term loans and former term loan approximated carrying values due primarily to the variable-rate nature and credit spread of these instruments, when compared to other similar instruments.

•The fair values of the former senior notes were determined using Level 2 inputs within the fair value hierarchy and were based on quoted market prices for the same or similar instruments or on current rates offered to us for debt with similar maturities, subordination and credit default expectations.

•The fair values of other indebtedness approximated carrying value due primarily to the short-term nature of these instruments.

The carrying amounts of cash and equivalents, receivables and contract assets reported in our condensed consolidated balance sheets as of October 2, 2021 and December 31, 2020 approximate fair value due to the short-term nature of those instruments.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (in millions, unless otherwise noted)

FORWARD-LOOKING STATEMENTS

Some of the statements in this document and any documents incorporated by reference, including any statements as to operational and financial projections, constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our businesses’ or our industries’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. Such statements may address our plans, our strategies, our prospects, or changes and trends in our business and the markets in which we operate under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) or in other sections of this document. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “project,” “potential” or “continue” or the negative of those terms or similar expressions. These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors, and forward-looking statements should not be relied upon as a prediction of actual results. Among other factors that may affect future performance are: the impact of the global outbreak of COVID-19 and governmental and other actions taken in response; cyclical changes and specific industry events in the company’s markets; changes in anticipated capital investment and maintenance expenditures by customers; availability, limitations or cost increases of raw materials, component products and/or commodities that cannot be recovered in product pricing; overruns, the incurrence of delays, penalties or liquidated damages with respect to long-term fixed-price contracts; international economic, political, legal, accounting and business developments adversely affecting the company’s ability to do business in emerging markets; ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions; inadequate performance by third-party suppliers and subcontractors for outsourced products; defects or errors in current or planned products; potential labor disputes, extreme weather conditions and natural and other disasters; compliance costs associated with environmental laws and regulations; threats associated with and efforts to combat terrorism and cyber-security risks; global competitive market conditions, including global reactions to U.S. trade policies, and resulting effects on sales and pricing; and global economic factors, including currency exchange rates, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates and credit availability. In addition, management’s estimates of future operating results are based on our current complement of continuing operations, which is subject to change as management selects strategic markets.

All the forward-looking statements in this document are qualified in their entirety by reference to the factors discussed herein and under the heading “Risk Factors” in our 2020 Annual Report on Form 10-K and in any other documents subsequently filed by us under the Exchange Act that describe risks and factors that could cause results to differ materially from those projected in these forward-looking statements. We caution you that these risk factors may not be exhaustive. We operate in a continually changing business environment and frequently enter into new businesses and product lines. We cannot predict these new risk factors, and we cannot assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, you should not rely on forward-looking statements as a prediction of actual results. We undertake no obligation to update or publicly revise any forward-looking statements to reflect events or circumstances that arise after the date of this document.

EXECUTIVE OVERVIEW

Impact of the COVID-19 Pandemic

As further discussed below, the COVID-19 pandemic had an adverse impact on our condensed consolidated financial results for the three and nine months ended October 2, 2021. These adverse impacts are expected to continue, to a lesser degree, in the fourth quarter of 2021, and possibly longer, but we are unable to determine the extent, duration, or nature at this time. Although certain of our product lines (e.g., shorter-cycle product lines within our Precision Solutions reportable segment) have been impacted more than others in our portfolio, we believe that our diverse set of products, along with our strong balance sheet position and available liquidity, position us well to mitigate further potential adverse impacts of the COVID-19 pandemic. For example, because we serve customers that produce food, beverages, personal care items, cleaning products, pharmaceuticals, and specialty chemicals, and serve critical infrastructure and industrial enablement functions, a majority, but not all, of our products, services and operations have been classified as “essential” under various governmental orders restricting business activities implemented in response to the COVID-19 pandemic. While we have temporarily closed certain of our offices and engineering, service and manufacturing centers during 2020 and 2021, and may be required to close additional facilities in the future in response to governmental orders, other COVID-19 pandemic safety-related concerns or in response to market conditions affected by COVID-19, our manufacturing facilities have not experienced significant interruptions in operations to date.

In terms of liquidity, as of October 2, 2021, we had over $310 of cash and equivalents on hand and, as discussed in Note 10 to the accompanying condensed consolidated financial statements, approximately $495 of borrowing capacity under our revolving credit facilities and debt repayments of $20 due annually under primary debt obligations until August 2026. During the past year, we have taken actions to manage costs and cash flows, including reducing discretionary spending, and will continue to assess the actual and expected impacts of the COVID-19 pandemic and any requirements for further actions.

Discontinued Operations

On May 2, 2019, the Company announced that its Board of Directors had initiated a process to divest a substantial portion of the Company’s former Power and Energy reportable segment, excluding the Bran+Luebbe product line (collectively, the “Disposal Group”). In connection with this announcement and the continued development of the divestiture process thereafter, we reported the Disposal Group as “held-for-sale”, and as discontinued operations, initially as of the end of our second quarter of 2019.

In November 2019, we entered into a Purchase and Sale Agreement (the “Sale Agreement”) with an affiliate of Apollo Global Management, LLC (the “Buyer”), pursuant to which the Company agreed, indirectly through certain of its subsidiaries, to sell the businesses reflected as discontinued operations in the accompanying condensed consolidated financial statements to the Buyer for a gross purchase price of $475.0 (the “Transaction”). The gross purchase price of $475.0 was subject to (i) reductions based upon the level of certain deductions of the Disposal Group at the closing date, and (ii) certain adjustments based upon the level of net working capital, cash and debt of the Disposal Group at the closing date. The deductions included, for example, components of the "Contract Liabilities" and certain other current and long-term liabilities of the Disposal Group, as well as deductions for budgeted but un-incurred capital expenditures and other business infrastructure costs measured over periods defined in the Sale Agreement, but in all cases which expired at the closing date. On March 30, 2020, we completed the sale of substantially all Disposal Group businesses and received proceeds from the Buyer of $406.2, based on an estimate of certain adjustments to the gross purchase price as of the closing date and as discussed further above and, to a lesser extent, certain fees.

Unless otherwise indicated, amounts provided in MD&A below pertain to continuing operations only.

Our Business

SPX FLOW operates in two reportable segments: the Nutrition and Health segment and the Precision Solutions segment. During the first quarter of 2021, the Company renamed its former "Food and Beverage" segment to the "Nutrition and Health" segment and, during the second quarter of 2021, the Company renamed its former "Industrial" segment to the "Precision Solutions" segment. Accordingly, all current and comparative period financial information for these segments has been presented as the Nutrition and Health segment and the Precision Solutions segment in this MD&A. Other than the changes in name, there were no changes to the segments and there has been no change to prior-period financial information of the segments.

Based in Charlotte, North Carolina, SPX FLOW improves the world through innovative and sustainable solutions. The product offering of the Company's continuing operations is concentrated in process technologies that perform mixing, blending, fluid handling, separation, thermal heat transfer and other activities that are integral to processes performed across a wide variety of nutrition, health and precision solution markets. SPX FLOW had approximately $1.4 billion in 2020 annual revenues, with approximately 36%, 37% and 27% from sales into the Americas, EMEA and Asia Pacific regions, respectively, and has continuing operations in more than 30 countries and sales in more than 140 countries.

Our product portfolio of pumps, valves, mixers, filters, air dryers, hydraulic tools, homogenizers, separators and heat exchangers, along with the related aftermarket parts and services, supports global industries, including nutrition and health, chemical processing, compressed air and mining. From an end-market perspective, in 2020, approximately 47% of our revenues were from sales into the nutrition and health end markets and approximately 53% were from sales into the precision solutions end markets. Our core strengths include expertise in rotating, actuating and hydraulic equipment, a highly skilled workforce, global capabilities, product breadth, and a deep application knowledge that enables us to optimize configuration and create custom-engineered solutions for diverse processes.

The following summary describes the products and services offered by our reportable segments:

Nutrition and Health: The Nutrition and Health reportable segment operates in a regulated, global industry with customers who demand highly engineered process solutions. Key demand drivers include dairy consumption, emerging market capacity expansion, sustainability and productivity initiatives, customer product innovation and food safety. Key products for the segment include homogenizers, pumps, valves, separators and heat exchangers. We also design and assemble process systems that integrate many of these products for our customers. Key brands include APV, Gerstenberg Schroeder, Seital and Waukesha Cherry-Burrell. The segment's primary competitors are Alfa Laval AB, Fristam Pumps, GEA Group AG, Krones AG, Südmo, Tetra Pak International S.A. and various regional companies.

Precision Solutions: The Precision Solutions reportable segment primarily serves customers in the chemical, air treatment, mining, pharmaceutical, marine, infrastructure construction, general industrial and water treatment industries. Key demand drivers of this segment are tied to macroeconomic conditions and growth in the respective end markets we serve. Key products for the segment are air dryers, filtration equipment, mixers, pumps, hydraulic technologies and heat exchangers. Key brands include Airpel, APV, Bolting Systems, Bran+Luebbe, Deltech, Hankison, Jamix, Jemaco, Johnson Pump, LIGHTNIN, Philadelphia Mixing Solutions, POSI LOCK, Power Team, Stelzer, Stone and Uutechnic. The segment's primary competitors are Alfa Laval AB, Chemineer Inc., EKATO, Enerpac, IDEX Viking Pump, KSB AG, Lewa, Milton Roy, Parker Domnick Hunter, Prominent and various regional companies.

Summary of Operating Results

Non-GAAP Measures - Throughout the following segment discussion, we use organic revenue growth (decline) to facilitate explanation of the operating performance of our segments. Organic revenue growth (decline) is a non-GAAP financial measure, and is not a substitute for net revenue growth (decline). Refer to the explanation of this measure and purpose of use by management under “Results of Continuing Operations-Non-GAAP Measures.”

The financial information discussed below and included in this Quarterly Report on Form 10-Q may not necessarily reflect what our financial condition, results of operations and cash flows may be in the future.

The following summary is intended to provide certain highlights of the discussion and analysis that follows (all comparisons are to the related period in the prior year):

Revenues — For the three and nine months ended October 2, 2021, revenues increased $32.7 (9.2%) and $180.5 (18.9%), respectively. For the three months ended October 2, 2021, the increase in revenues, compared to the respective 2020 period, was driven primarily by (i) revenues associated with businesses acquired in the first and second quarters of 2021, (ii) an increase in organic revenue, and, to a lesser extent, (iii) the weakening of the U.S. dollar against various foreign currencies during the periods. The increase in organic revenue was driven primarily by higher volumes of revenue from (i) Nutrition and Health segment components and aftermarket products and, to a lesser extent, systems, and (ii) broad-based strengthening across most short-cycle Precision Solutions segment product lines, attributable primarily to increased demand due to reduced adverse effects of the COVID-19 pandemic.

various foreign currencies during the periods and (iii) revenues associated with businesses acquired in the third quarter of 2020 and first and second quarters of 2021. The increase in organic revenue was driven primarily by higher volumes of revenue from (i) Nutrition and Health segment components and aftermarket products and, to a lesser extent, systems, and (ii) broad-based strengthening across most short-cycle Precision Solutions segment product lines, attributable primarily to increased demand due to reduced adverse effects of the COVID-19 pandemic.

Income before Income Taxes — Income before income taxes increased $14.7 (84.5%) and $58.7 (217.4%) in the three and nine months ended October 2, 2021, respectively. The increase in pre-tax income for the three months ended October 2, 2021, compared to the respective 2020 period, included primarily the effects of increases in other income, net (including primarily a gain on sale of a product line during the third quarter of 2021) and in segment income, combined with reductions in interest expense and corporate expense.

The increase in pre-tax income for the nine months ended October 2, 2021, compared to the respective 2020 period, included primarily the effects of an increase in segment income and, to a lesser extent, reductions in interest expense and corporate expense, as well as the benefits of an increase in gains on sales of certain assets (including the gain on sale of a product line as noted above).

Cash Flows from Operations — For the nine months ended October 2, 2021, cash flows from operations increased to $42.0 from $31.6 in the comparable prior year period, primarily as a result of increased cash flows from higher segment income.

RESULTS OF OPERATIONS

The unaudited information included in this Quarterly Report on Form 10-Q should be read in conjunction with our annual consolidated financial statements included in our 2020 Annual Report on Form 10-K. Interim results are not necessarily indicative of results for a full year. We establish actual interim closing dates using a fiscal calendar, which requires our businesses to close their books on the Saturday closest to the end of the first calendar quarter, with the second and third quarters being 91 days in length. Our fourth quarter ends on December 31. The interim closing dates for the first, second and third quarters of 2021 were April 3, July 3, and October 2, compared to the respective March 28, June 27, and September 26, 2020 dates. We had five more days in the first quarter of 2021 and will have six fewer days in the fourth quarter of 2021 than in the respective 2020 periods. It is not practicable to estimate the impact of the differential in number of days on our changes in revenues for the nine-month period ended October 2, 2021 compared to the prior-year period.

Cyclicality of End Markets, Seasonality and Competition - The financial results of many of our businesses closely follow changes in the industries and end markets they serve.

In our Nutrition and Health reportable segment, system revenues are highly correlated to timing on capital projects, which may cause significant fluctuations in our financial performance from period to period. Fluctuations in dairy commodity prices and production of dairy related products, particularly those aimed at serving the China market, can influence the timing of capital spending by many end customers in our Nutrition and Health reportable segment.

Although our businesses operate in highly competitive markets, our competitive position cannot be determined accurately in the aggregate or by segment since our competitors do not offer all the same product lines or serve all the same markets. In addition, specific reliable comparative figures are not available for many of our competitors. In most product groups, competition comes from numerous concerns, both large and small. The principal methods of competition are service, product performance, technical innovation and price. These methods vary with the type of product sold. We believe we compete effectively on the basis of each of these factors. See “Executive Overview - Our Business” for a discussion of our competitors.

Non-GAAP Measures - Organic revenue growth (decline) presented herein is defined as revenue growth (decline) excluding the effects of foreign currency fluctuations and business acquisitions which occurred in the third quarter of 2020 and first and second quarters of 2021. We believe this metric is a useful financial measure for investors in evaluating our operating performance for the periods presented as, when read in conjunction with our revenues, it presents a tool to evaluate our ongoing operations and provides investors with a metric they can use to evaluate our management of assets held from period to period. In addition, organic revenue growth (decline) is one of the factors we use in internal evaluations of the overall performance of our business. This metric, however, is not a measure of financial performance under accounting principles generally accepted in the United States (“GAAP”), should not be considered a substitute for net revenue growth (decline) as determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies.

The following table provides selected financial information for the three and nine months ended October 2, 2021 and September 26, 2020, respectively, including the reconciliation of organic revenue growth to net revenue growth:


	Three months ended							Nine months ended
	October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change
Revenues	$	389.6		$	356.9		9.2	$	1,135.0		$	954.5		18.9
Gross profit	139.0			126.1			10.2	399.2			340.7			17.2
% of revenues	35.7		%	35.3		%		35.2		%	35.7		%
Selling, general and administrative	93.3			89.9			3.8	277.5			265.9			4.4
% of revenues	23.9		%	25.2		%		24.4		%	27.9		%
Intangible amortization	5.9			2.8			110.7	13.6			8.5			60.0
Asset impairment charges	—			0.5			(100.0)	—			3.2			(100.0)
Restructuring and other related charges	0.6			1.3			(53.8)	14.1			8.7			62.1
Other income, net	9.5			4.2			126.2	18.1			8.5			112.9
Interest expense, net	(4.2)			(7.4)			(43.2)	(14.0)			(24.9)			(43.8)
Loss on early extinguishment of debt	(12.4)			(11.0)			12.7	(12.4)			(11.0)			12.7
Income from continuing operations before income taxes	32.1			17.4			84.5	85.7			27.0			*
Income tax provision	(8.6)			(0.7)			*	(31.6)			(3.7)			*
Income from continuing operations	23.5			16.7			40.7	54.1			23.3			132.2
Income (loss) from discontinued operations, net of tax	0.1			(4.2)			(102.4)	(0.8)			(40.9)			(98.0)
Net income (loss)	23.6			12.5			88.8	53.3			(17.6)			*
Less: Net income attributable to noncontrolling interests	0.1			0.4			(75.0)	0.4			0.7			(42.9)
Net income (loss) attributable to SPX FLOW, Inc.	23.5			12.1			94.2	52.9			(18.3)			*

Components of consolidated revenue growth:
Organic increase							3.3							11.4
Foreign currency							1.6							3.9
Business combinations							4.3							3.6
Net revenue increase							9.2							18.9
* Not meaningful for comparison purposes

For the nine months ended October 2, 2021, the increase in revenues, compared to the respective 2020 period, was driven primarily by (i) an increase in organic revenue and, to a lesser extent, (ii) the weakening of the U.S. dollar against various foreign currencies during the periods and (iii) revenues associated with businesses acquired in the third quarter of 2020 and first and second quarters of 2021. The increase in organic revenue was driven primarily by higher volumes of revenue from (i) Nutrition and Health segment components and aftermarket products and, to a lesser extent, systems, and (ii) broad-based strengthening across most short-cycle Precision Solutions segment product lines, attributable primarily to increased demand due to reduced adverse effects of the COVID-19 pandemic.

See “Results of Reportable Segments” for additional details.

Gross Profit - The increases in gross profit for the three and nine months ended October 2, 2021, compared to the respective 2020 periods, were driven primarily by the increased revenues as noted above, along with favorable price realization.

The increase in gross margin for the three months ended October 2, 2021, compared to the respective 2020 period, was driven primarily by the favorable impact on operating leverage of the higher volume of revenues, the benefits of favorable price realization, and an improved mix of higher-quality revenue in our Nutrition and Health segment, the effects of which were partially offset by inflationary pressures in certain operational areas such as freight and certain types of labor costs.

The decrease in gross margin for the nine months ended October 2, 2021, compared to the respective 2020 period, was primarily attributable to inflationary pressures in certain operational areas such as freight and certain types of labor costs, the effects of which were partially mitigated by the favorable impact on operating leverage of the higher volumes of revenues, favorable price realization, and an improved mix of higher-quality revenue in our Nutrition and Health segment.

See “Results of Reportable Segments” for additional details.

Selling, General and Administrative (“SG&A”) Expense - For the three and nine months ended October 2, 2021, the increases in SG&A expense, compared to the respective 2020 periods, were due primarily to the weakening of the U.S. dollar against various foreign currencies during the periods and, to a lesser extent, increases in variable incentive compensation. These increases in costs were partially offset by savings from (i) reductions in force associated with restructuring actions taken in 2020 as well as in connection with our global cost productivity program, initiated during the first quarter of 2021, and (ii) reductions in discretionary spending.

Intangible Amortization - The increases in intangible amortization for the three and nine months ended October 2, 2021, compared to the respective 2020 periods, were primarily due to amortization of intangible assets acquired in the POSI LOCK, UTG Mixing Group and Philadelphia Mixing acquisitions closed in the third quarter of 2020 and first and second quarters of 2021, respectively.

Asset Impairment Charges - Charges for the three months ended September 26, 2020 resulted from further management evaluation of certain assets during the third quarter of 2020 which were impacted by management’s decision during the second quarter of 2020 to consolidate and relocate the operations of a U.S. manufacturing facility within the Precision Solutions segment to existing facilities in the U.S. as well as in our EMEA and Asia Pacific regions. Charges for the nine months ended September 26, 2020 included these charges, $0.8 of charges recorded during the second quarter related to this action and charges of $1.9 which resulted from management’s decision, during the first quarter of 2020, to discontinue a product line within the Precision Solutions segment.

Restructuring and Other Related Charges - Charges for the three and nine months ended October 2, 2021 related to a global cost productivity program initiated during the first quarter of 2021. Such charges related primarily to severance and other costs associated with commercial, engineering and certain operational employees across both segments and across each region in which our segments operate, as well as certain functional support employees across most of our corporate functions.

See Note 6 to our condensed consolidated financial statements for further details of actions taken during the three and nine months ended October 2, 2021 and September 26, 2020.

Other Income, net - Other income, net, for the three months ended October 2, 2021 was composed of a gain on the sale of a product line of $5.6, other net gains on asset sales of $1.9, investment-related gains of $1.6, foreign currency (“FX”) gains of $0.3, and income from a transition services agreement (the "TSA") entered into in connection with the sale of our former Power and Energy segment of $0.2, partially offset by non-service-related pension and postretirement costs of $0.1. See Note 3 to the condensed consolidated financial statements for additional details regarding the sale of the product line, as well as the TSA. The investment-related gains related to an increase in the net asset value of our investment in an equity security (see Note 15 for additional details).

Other income, net, for the three months ended September 26, 2020 was composed of investment-related gains of $2.1, income from the TSA of $1.3, and net gains on asset sales and other of $1.3, partially offset by FX losses of $0.4 and non-service-related pension and postretirement costs of $0.1.

Other income, net, for the nine months ended October 2, 2021 was composed primarily of investment-related gains of $9.1, the gain on sale of a product line of $5.6, net gains on assets sales and other of $2.2, income from the TSA of $1.7, partially offset by FX losses of $0.3 and non-service-related pension and postretirement costs of $0.3.

Other income, net, for the nine months ended September 26, 2020 was composed of investment-related gains of $7.4, income from the TSA of $2.8, and net gains on asset sales and other of $0.9, partially offset by FX losses of $2.2 and non-service-related pension and postretirement costs of $0.4.

Interest Expense, net - Interest expense, net, for the three and nine months ended October 2, 2021 and September 26, 2020, was composed primarily of interest expense related to our senior credit facilities and former senior notes and, to a lesser extent, finance lease obligations and miscellaneous lines of credit, partially offset by interest income on cash and cash equivalents.

Interest expense, net, included interest expense of $4.9 and $8.3, and interest income of $0.7 and $0.9, respectively, during the three months ended October 2, 2021 and September 26, 2020. Interest expense, net, included interest expense of $16.7 and $27.9, and interest income of $2.7 and $3.0, respectively, during the nine months ended October 2, 2021 and September 26, 2020. The decreases in interest expense in 2021, compared to 2020, were due primarily to the early redemption of our 5.625% senior notes in August 2020 and 5.875% senior notes in September 2021.

See Note 10 to our condensed consolidated financial statements for additional details on our third-party debt and Note 3 for additional details regarding our allocation of certain interest expense to discontinued operations.

Loss on Early Extinguishment of Debt - On September 2, 2021, with a cash payment, we redeemed our 5.875% senior notes due in August 2026 (the "2026 Notes") in full, pursuant to the redemption provisions of the indenture governing the 2026 Notes. As a result of the redemption, we recorded a charge of $11.3 during the three and nine months ended October 2, 2021, which related to premiums paid to redeem the 2026 Notes of $8.8 and the write-off of unamortized deferred financing fees of $2.5. In addition, on August 3, 2021, we amended and restated our senior credit facilities, and recorded a charge of $1.1 during the three and nine months ended October 2, 2021, which related primarily to the write-off of unamortized deferred financing fees associated with the former senior credit facilities.

On August 15, 2020, with a cash payment, we redeemed our 5.625% senior notes due in August 2024 (the "2024 Notes) in full, pursuant to the redemption provisions of the indenture governing the 2024 Notes. As a result of the redemption, we recorded a charge of $11.0 during the three and nine months ended September 26, 2020, which related to premiums paid to redeem the 2024 Notes of $8.4, the write-off of unamortized deferred financing fees of $2.5, and other costs associated with the extinguishment of $0.1.

Income Tax Provision - During the three months ended October 2, 2021, we recorded an income tax provision of $8.6 on $32.1 of pre-tax income, resulting in an effective tax rate of 26.8%. This compares to an income tax provision for the three months ended September 26, 2020 of $0.7 on $17.4 of pre-tax income, resulting in an effective tax rate of 4.0%

The effective tax rate for the third quarter of 2020 was impacted by income tax benefits of (i) $2.5 resulting from the benefit of the reduction to the forecasted annual effective tax rate in the third quarter of 2020 applied to income in the first half of 2020, (ii) $1.6 related to the timing of the pre-tax results in certain jurisdictions where the tax expense is not expected to be realized due to the loss carryforward position, and (iii) $1.3 resulting from adjustments to the U.S tax liability for prior years.

Our future effective tax rate may vary, particularly during the first quarter of each year, based on tax charges or benefits that could result from potential future vestings of restricted stock shares and restricted stock units.

Income (Loss) from Discontinued Operations, Net of Tax - For the three and nine months ended October 2, 2021, the income (loss) from discontinued operations, net of tax, of $0.1 and $(0.8), respectively, related to certain trailing benefits realized (costs incurred) related to the sale of the Disposal Group.

For the three months ended September 26, 2020, the loss from discontinued operations, net of tax, of $4.2, was composed of an income tax provision of $2.5 on a pre-tax loss of $1.7. The pre-tax loss included a Loss on Disposal Group of $1.6, primarily related to the finalization of the purchase price with the Buyer. The income tax provision for the third quarter of 2020 was primarily impacted by income tax charges of (i) $1.7 related to a reduction in the benefit related to the loss for global intangible low-taxed income purposes and (ii) $0.4 resulting from adjustments to the U.S. tax liability for prior years.

For the nine months ended September 26, 2020, the loss from discontinued operations, net of tax, of $40.9, was composed of a pre-tax loss of $10.3 and an income tax provision of $30.6. The pre-tax loss included a Loss on Disposal Group of $12.1 to reduce the carrying value of the Disposal Group to our estimate, and the final negotiated amount, of the net proceeds to be realized upon finalization of the purchase price with the Buyer. The income tax provision for the first nine months of 2020 was impacted primarily by income tax charges of (i) $32.1 composed of the U.S. tax expense on the tax gain on sale of Disposal Group entities sold by the U.S. parent, (ii) $1.4 in reduction of the benefit to be realized through the disposition of held-for-sale assets and (iii) $0.4 resulting from adjustments to the U.S. tax liability for prior years, which were partially offset by an income tax benefit of $3.1 related to a loss for global intangible low-taxed income purposes on the sale of certain non-U.S. entities. The significant non-U.S. sales of Disposal Group entities were in locations where local law did not require any gain to be taxed or permit any loss to result in a future benefit. In addition to these, the income tax provision for the nine months ended September 26, 2020 also included the effect from the first quarter of 2020 where the majority of the pre-tax loss on Disposal Group was not deductible in the various jurisdictions where the sale of the Disposal Group was to be recognized. As such, only $1.2 of a tax benefit was recognized on the $10.3 pre-tax loss on Disposal Group.

RESULTS OF REPORTABLE SEGMENTS

The following information should be read in conjunction with our condensed consolidated financial statements and related notes.

Nutrition and Health


	As of and for the three months ended							As of and for the nine months ended
	October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change
Backlog	$	262.0		$	269.2		(2.7)	$	262.0		$	269.2		(2.7)
Orders	160.2			159.0			0.8	504.0			435.1			15.8

Revenues	170.1			160.6			5.9	510.0			443.1			15.1
Income	24.6			24.2			1.7	79.6			62.7			27.0
% of revenues	14.5		%	15.1		%		15.6		%	14.2		%
Components of revenue growth:
Organic increase							4.5							11.0
Foreign currency							1.4							4.1
Net revenue growth							5.9							15.1

Revenues - For the three and nine months ended October 2, 2021, the increases in revenues, compared to the respective 2020 periods, were driven primarily by increases in organic revenue and, to a lesser extent, a weakening of the U.S. dollar during the periods against various foreign currencies. The increases in organic revenue were due to higher volumes of components and aftermarket revenues and, to a lesser degree, of systems revenues, partially attributable to reduced adverse effects of the COVID-19 pandemic.

Income - For the three months ended October 2, 2021, income increased, compared to the respective 2020 period, driven primarily by higher volumes of revenues as discussed above and cost savings realized from our global cost productivity program announced during the first quarter of 2021. The decrease in margin in the three months ended October 2, 2021, compared to the respective 2020 period, primarily resulted from the effects of inflationary pressures in certain operational areas such as freight and certain types of labor costs, which more than offset the benefits of operating leverage on volume increases and cost savings from restructuring initiatives as previously noted.

For the nine months ended October 2, 2021, income and margin increased, compared to the respective 2020 period, driven primarily by the favorable impact on operating leverage of higher volumes of revenues, an improved mix of higher-quality revenue and cost savings from the global cost productivity program noted above, partially offset by the effects of inflationary pressures in certain operational areas such as freight and certain types of labor costs as noted above.

Backlog - The segment had backlog of $262.0 and $269.2 as of October 2, 2021 and September 26, 2020, respectively. Of the $7.2 year-over-year decrease in backlog, $11.6 resulted from an organic decline primarily due to the timing of systems orders received as well as increased revenue levels realized in the nine months ended October 2, 2021 which resulted partially from the reduced adverse effects of the COVID-19 pandemic, partially offset by an increase of $4.4 attributable to the favorable impact of fluctuations in foreign currencies relative to the U.S. dollar.

Precision Solutions


	As of and for the three months ended							As of and for the nine months ended
	October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change
Backlog	$	335.8		$	261.2		28.6	$	335.8		$	261.2		28.6
Orders	223.9			168.6			32.8	656.6			529.9			23.9

Revenues	219.5			196.3			11.8	625.0			511.4			22.2
Income	31.4			28.6			9.8	76.4			57.9			32.0
% of revenues	14.3		%	14.6		%		12.2		%	11.3		%
Components of revenue growth:
Organic increase							2.3							11.7
Business combinations							7.9							6.8
Foreign currency							1.6							3.7
Net revenue growth							11.8							22.2

Revenues - For the three months ended October 2, 2021, the increase in revenues, compared to the respective 2020 period, was driven primarily by (i) revenues associated with businesses acquired in the first and second quarters of 2021 and, to a lesser extent, (ii) an increase in organic revenue, and (iii) a weakening of the U.S. dollar during the periods against various foreign currencies. For the nine months ended October 2, 2021, the increase in revenues, compared to the respective 2020 period, was driven primarily by (i) an increase in organic revenue and, to a lesser extent, (ii) revenues associated with businesses acquired in the third quarter of 2020 and first and second quarters of 2021, and (iii) a weakening of the U.S. dollar during the periods against various foreign currencies. The increases in organic revenue were driven primarily by increased shipments across substantially all of our short-cycle Precision Solutions segment product lines and end markets, primarily associated with reduced adverse effects of the COVID-19 pandemic, partially offset by a decline in heat exchanger shipments due in part to an increased selectivity of heat exchanger orders accepted by the Company.

Income - For the three and nine months ended October 2, 2021, income increased, compared to the respective 2020 periods, driven primarily by higher volumes of revenues as discussed above, favorable impacts of price realization, and cost savings realized from our global cost productivity program announced during the first quarter of 2021.

For the three months ended October 2, 2021, margin decreased, compared to the respective 2020 period, primarily due to the effects of (i) inflationary pressures in certain operational areas such as elevated freight costs, incurred to support key customers, and in certain types of labor costs due to a large number of new employees, and (ii) increased intangible amortization expense as well as the amortization of fair value adjustments to inventory, directly attributable to the Company's acquisition strategy, which more than offset the benefits of improved operating leverage on volume increases, favorable impacts of price realization, and cost savings from restructuring initiatives as previously noted.

For the nine months ended October 2, 2021, margin increased, compared to the respective 2020 period, primarily driven by the improved operating leverage on higher volumes of revenues, favorable impacts of price realization, and cost savings from restructuring initiatives noted above, partially offset by the effects of cost increases in certain operational areas such as freight and certain types of labor costs, increased intangible amortization expense and amortization of fair value adjustments to inventory noted above.

Backlog - The segment had backlog of $335.8 and $261.2 as of October 2, 2021 and September 26, 2020, respectively. The $74.6 year-over-year increase in backlog was attributable to (i) a $42.1 increase in backlog associated with acquired businesses, (ii) a $25.1 increase in backlog related to legacy operations, reflecting organic order growth across substantially all of our short-cycle Precision Solutions segment product lines (partially offset by a decline in heat exchanger orders due in part to an increased selectivity of such orders accepted by the Company), and (iii) a $7.4 favorable impact of fluctuations in foreign currencies relative to the U.S. Dollar.

CORPORATE EXPENSE AND PENSION AND POSTRETIREMENT SERVICE COSTS


	Three months ended							Nine months ended
	October 2, 2021			September 26, 2020			% Change	October 2, 2021			September 26, 2020			% Change
Total consolidated revenues	$	389.6		$	356.9		9.2	$	1,135.0		$	954.5		18.9
Corporate expense	16.0			19.2			(16.7)	47.3			53.7			(11.9)
% of revenues	4.1		%	5.4		%		4.2		%	5.6		%
Pension and postretirement service costs	0.2			0.2			—	0.6			0.6			—

Corporate Expense - Corporate expense generally relates to the cost of our Charlotte, North Carolina corporate headquarters and our Asia Pacific center in Shanghai, China. Corporate expense also reflects stock-based compensation costs associated with corporate employees.

The decreases in corporate expense for the three and nine months ended October 2, 2021, compared to the respective 2020 periods, were due primarily to actions taken to manage costs on a year-over-year basis, including (i) reductions in force of certain functional support employees across most of our corporate functions and (ii) reductions in discretionary spending, related to our global cost productivity program announced during the first quarter of 2021, as well as in response to the ongoing effects of the COVID-19 pandemic.

See Note 12 to our condensed consolidated financial statements for further details regarding our stock-based compensation awards.

Pension and Postretirement Service Costs - SPX FLOW sponsors a number of defined benefit pension plans and a postretirement plan. For all of these plans, changes in the fair value of plan assets and actuarial gains and losses are recognized to earnings in the fourth quarter of each year as a component of net periodic benefit expense, unless earlier remeasurement is required. The remaining components of pension and postretirement expense, primarily service and interest costs and expected return on plan assets, are recorded on a quarterly basis. Non-service-related pension and postretirement costs are reported in “Other income, net.”

See Note 9 to our condensed consolidated financial statements for further details regarding our pension and postretirement plans.

LIQUIDITY AND FINANCIAL CONDITION

Listed below are the cash flows from (used in) operating, investing and financing activities, as well as the net change in cash, cash equivalents and restricted cash, for the nine months ended October 2, 2021 and September 26, 2020.

Cash Flow


	Nine months ended
	October 2, 2021		September 26, 2020
Cash flows from (used in) continuing operations:
Cash flows from operating activities	$	42.0	$	31.6
Cash flows used in investing activities	(114.0)		(24.0)
Cash flows used in financing activities	(47.9)		(353.5)
Cash flows from (used in) discontinued operations	(0.6)		384.8
Change in cash, cash equivalents and restricted cash due to changes in foreign currency exchange rates	(7.4)		10.2
Net change in cash, cash equivalents and restricted cash	$	(127.9)	$	49.1

Operating Activities - During the nine months ended October 2, 2021, the increase in cash flows from operating activities, compared to the same period in 2020, was primarily attributable to increased cash flows from higher segment income.

Investing Activities - During the nine months ended October 2, 2021, such cash flows were comprised primarily of cash paid for the acquisitions of UTG Mixing Group and Philadelphia Mixing and, to a lesser extent, capital expenditures associated generally with the upgrades of manufacturing facilities and information technology, partially offset by proceeds from certain asset sales. Cash flows for the nine months ended September 26, 2020, were comprised primarily of capital expenditures associated generally with the upgrades of manufacturing facilities and information technology and cash paid for the acquisition of POSI LOCK.

Financing Activities - During the nine months ended October 2, 2021, cash flows used in financing activities related primarily to (i) the redemption of the 2026 Notes, including premiums, of $308.8, (ii) the repayment and extinguishment of our former term loan of $100.0, (iii) purchases of common stock of $40.2 associated with a written trading plan under Rule 10b5-1(c) of the Securities and Exchange Act of 1934, as amended, (iv) dividend payments of $7.6, and (v) payments of minimum withholdings on behalf of employees in connection with net share settlements of $6.6, partially offset by borrowings under the term loan facilities of our amended senior credit facilities of $400.0 and proceeds received from the exercise of employee stock options of $17.6.

During the nine months ended September 26, 2020, cash flows used in financing activities related primarily to (i) the redemption of the 2024 Notes, including premiums, of $308.4, (ii) purchases of common stock of $16.9 associated with the written trading plan noted above, (iii) net repayments of purchase card program debt of $11.6, (iv) the purchase of certain noncontrolling interests in a subsidiary of $8.2, and (v) payments of minimum withholdings on behalf of employees in connection with net share settlements of $6.9.

Discontinued Operations - During the nine months ended September 26, 2020, cash flows from discontinued operations consisted primarily of proceeds from the disposition of the Disposal Group of $406.2, less cash and restricted cash disposed of $7.3, net cash used in operating activities of discontinued operations of $8.3 primarily related to the payment of professional fees associated with the disposition during the second quarter of 2020, and capital expenditures during the first quarter of 2020 of $5.5 related to the Disposal Group.

Change in Cash, Cash Equivalents and Restricted Cash due to Changes in Foreign Currency Exchange Rates - The increase (decrease) in cash, cash equivalents and restricted cash due to changes in foreign currency exchange rates of $(7.4) and $10.2, respectively, in the nine months ended October 2, 2021 and September 26, 2020, reflected primarily an increase (decrease) in U.S dollar equivalent balances of foreign-denominated cash, cash equivalents and restricted cash as a result of changes in the U.S. dollar against various foreign currencies during the respective periods.

Borrowings and Availability

Borrowings —Debt at October 2, 2021 and December 31, 2020 was comprised of the following:


	October 2, 2021		December 31, 2020
Term loans, due in August 2026	$	400.0	$	—
Former term loan(1)	—		100.0
5.875% senior notes(2)	—		300.0
Other indebtedness(3)	15.6		13.0
Less: deferred financing fees(4)	(1.1)		(3.1)
Total debt	414.5		409.9
Less: short-term debt	15.4		12.5
Less: current maturities of long-term debt	20.0		0.1
Total long-term debt	$	379.1	$	397.3

(1)On August 3, 2021, and as subsequently amended on August 16, 2021, we entered into amended and restated senior credit facilities with a syndicate of lenders. In connection with the amendment, our former term loan facility was extinguished and we entered into a new term loan facility. In connection with the amendment and extinguishment of the former term loan and other related facilities, we recorded a pre-tax charge of $1.1 to "Loss on early extinguishment of debt" during our third quarter of 2021 which was primarily related to the write-off of certain unamortized deferred financing fees.

(2)On September 2, 2021, we redeemed the 2026 Notes in full, pursuant to the redemption provisions of the indenture governing the 2026 Notes for a total redemption price of $308.8, plus accrued and unpaid interest. As a result of the redemption, we recorded a pre-tax charge of $11.3 to "Loss on early extinguishment of debt" during our third quarter of 2021, which related to premiums paid to redeem the 2026 Notes of $8.8 and the write-off of unamortized deferred financing fees of $2.5.

(4)Deferred financing fees were comprised of fees related to the term loans and, as of December 31, 2020, the senior notes.

Availability — At October 2, 2021, we had $494.7 of borrowing capacity under our revolving credit facilities after giving effect to $5.3 reserved for outstanding letters of credit. In addition, at October 2, 2021, we had $50.8 of available issuance capacity under our foreign credit instrument facilities after giving effect to $51.7 reserved for outstanding bank guarantees and $7.5 of outstanding bank guarantees that are in the process of being re-issued under the amended and restated foreign credit instrument facilities but which do not represent additional available capacity.

At October 2, 2021, in addition to the revolving lines of credit described above, we had approximately $10.9 of letters of credit outstanding under separate arrangements in China and India.

At October 2, 2021, we were in compliance with all covenants of our senior credit facilities.

See Note 10 to our accompanying condensed consolidated financial statements for additional information regarding certain events impacting the Company's indebtedness during the third quarter of 2021, including (i) our redemption of the full principal amount of the 2026 Notes, and (ii) the amendment and restatement of our senior credit facilities.

Financial Instruments

We measure our financial assets and liabilities on a recurring basis, and nonfinancial assets and liabilities on a non-recurring basis, at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that we believe market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2) or significant unobservable inputs (Level 3).

Our derivative financial assets and liabilities include FX forward contracts and FX embedded derivatives measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties' credit risks. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. Based on our continued ability to enter into forward contracts, we consider the markets for our fair value instruments active.

As of October 2, 2021, there had been no significant impact to the fair value of our derivative liabilities due to our own credit risk as the related instruments were collateralized under our senior credit facilities. Similarly, there had been no significant impact to the fair value of our derivative assets based on our evaluation of our counterparties' credit risks.

We primarily use the income approach, market approach, or both approaches, as appropriate. The income approach uses valuation techniques to convert future amounts to a single present amount. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Assets and liabilities measured at fair value on a recurring basis are further discussed below.

Currency Forward Contracts and Currency Forward Embedded Derivatives

We manufacture and sell our products in a number of countries and, as a result, are exposed to movements in foreign currency exchange rates. Our objective is to preserve the economic value of non-functional currency-denominated cash flows and to minimize the impact of changes as a result of currency fluctuations (see Note 11 to our condensed consolidated financial statements). Our principal currency exposures relate to the Euro, Chinese Yuan and British Pound.

The net fair values of our FX forward contracts and FX embedded derivatives were $0.0 and $0.2 (assets) at October 2, 2021 and December 31, 2020, respectively.

Other Fair Value Financial Assets and Liabilities

The carrying amounts of cash and equivalents, receivables and contract assets reported in our condensed consolidated balance sheets approximate fair value due to the short-term nature of those instruments.

The fair value of our debt instruments (excluding finance leases and deferred financing fees), based on borrowing rates available to us at October 2, 2021 for similar debt, was $415.4, equivalent to our carrying value of $415.4.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and equivalents, trade accounts receivable, contract assets and FX forward contracts. These financial instruments, other than trade accounts receivable and contract assets, are placed with high-quality financial institutions throughout the world. We periodically evaluate the credit standing of these financial institutions.

We maintain cash levels in bank accounts that, at times, may exceed federally-insured limits. We have not experienced, and believe we are not exposed to significant risk of, loss in these accounts.

We have credit loss exposure in the event of nonperformance by counterparties to the above financial instruments, but have no other off-balance-sheet credit risk of accounting loss. Except as is provided for in our accompanying condensed consolidated balance sheets through an allowance for uncollectible accounts for certain accounts receivable, we anticipate that counterparties will be able to fully satisfy their obligations under the contracts. We do not obtain collateral or other security to support financial instruments subject to credit risk, but we do monitor the credit standing of counterparties.

Concentrations of credit risk arising from trade accounts receivable and contract assets are due to selling to customers in a particular industry. Credit risks are mitigated by performing ongoing credit evaluations of our customers' financial conditions and obtaining collateral, advance payments, or other security when appropriate. No one customer, or group of customers that, to our knowledge, are under common control, accounted for more than 10% of our revenues for any period presented.

Other Matters

Contractual Obligations - As of October 2, 2021, there were no material changes in our contractual obligations from those disclosed in our 2020 Annual Report on Form 10-K, except as previously discussed under "Borrowings and Availability" and Note 10 to the accompanying condensed consolidated financial statements with respect to certain changes in the composition of the Company's debt facilities which became effective during the third quarter of 2021.

Our total net liabilities for unrecognized tax benefits including interest were $17.1 as of October 2, 2021. Of that amount, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits (including interest) could decrease by $0.5 to $1.0.

Contingencies and Other Matters - Various claims, complaints and proceedings arising in the ordinary course of business, including those relating to litigation matters (e.g., class actions, derivative lawsuits and contracts, intellectual property and competitive claims, and claims to certain indemnification obligations arising from previous acquisitions/dispositions), have been filed or are pending against us and certain of our subsidiaries. We believe these matters are either without merit or of a kind that should not have a material effect, individually or in the aggregate, on our financial position, results of operations or cash flows.

We are subject to domestic and international environmental protection laws and regulations with respect to our business operations and are operating in compliance with, or taking action aimed at ensuring compliance with, these laws and regulations. None of our compliance obligations with environmental protection laws and regulations, individually or in the aggregate, is expected to have a material adverse effect on our financial position, results of operations or cash flows.

Refer to Note 13 for discussion regarding amounts reported in “Mezzanine equity” on the condensed consolidated balance sheets as of October 2, 2021 and December 31, 2020 including discussion regarding the exercise of certain put options by a noncontrolling interest shareholder and an agreement reached with such shareholder during the year ended December 31, 2020 related to the Company's purchase of the shareholder's noncontrolling interest in the relevant subsidiary.

General - The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. The accounting policies that we believe are most critical to the portrayal of our financial condition and results of operations and that require our most difficult, subjective or complex judgments in estimating the effect of inherent uncertainties are discussed in our consolidated financial statements included in our 2020 Annual Report on Form 10-K.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk related to changes in interest rates, foreign currency exchange rates and commodity raw material prices, and we selectively use financial instruments to manage certain of these risks. We do not enter into financial instruments for speculative or trading purposes; however, these instruments may be deemed speculative if the future cash flows originally hedged are no longer probable of occurring as anticipated. Our currency exposures vary, but are primarily concentrated in the Euro, Chinese Yuan and British Pound. We generally do not hedge currency translation exposures. Our exposures for commodity raw materials vary, with the highest concentration relating to steel. See Note 11 to our condensed consolidated financial statements for further details.

The following table provides information, as of October 2, 2021, about our primary outstanding debt obligations and presents principal cash flows by contractual maturity dates, weighted-average interest rates and fair values.


	Due Within 1 Year		Due Within 2 Years		Due Within 3 Years		Due Within 4 Years		Due Within 5 Years		Thereafter		Total			Fair Value


Term loans(1)	$	20.0	$	20.0	$	20.0	$	20.0	$	320.0	$	—	$	400.0		$	400.0
Average interest rate													1.46		%

(1) See Note 10 to our accompanying condensed consolidated financial statements for information regarding certain events which impacted the Company's indebtedness, including (i) the redemption of the full principal amount of the 2026 Notes during the third quarter of 2021, and (ii) an amendment and restatement of our senior credit facilities executed during the third quarter of 2021.

We believe that cash and equivalents, cash flows from operations, and availability under revolving credit facilities will be sufficient to fund working capital needs, planned capital expenditures, dividend payments, other operational cash requirements and required debt service obligations for at least the next 12 months.

We had FX forward contracts with an aggregate notional amount of $32.4 outstanding as of October 2, 2021, with all such contracts scheduled to mature within one year. The gross fair values of our FX forward contracts were $0.0 (gross assets) and $0.0 (gross liabilities) as of October 2, 2021.

ITEM 4. Controls and Procedures

SPX FLOW management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of disclosure controls and procedures, pursuant to Exchange Act Rules 13a-15 and 15d-15, as of October 2, 2021. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of October 2, 2021.

No changes during the quarter ended October 2, 2021 were identified that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite many of our employees who are responsible for executing and administering such internal controls working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the effects of the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

PART II—OTHER INFORMATION

ITEM 1. Legal Proceedings

The information required by this Item is incorporated by reference from the footnotes to the condensed consolidated financial statements, specifically Note 13, “Litigation, Contingent Liabilities and Other Matters,” included under Part I of this Form 10-Q.

ITEM 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our 2020 Annual Report on Form 10-K, which could materially affect our business, financial condition, future results of operations or cash flows.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds (in millions, except share and per share amounts, unless otherwise noted)

Issuer Purchases of Equity Securities

The following table summarizes the repurchases of common stock during the three months ended October 2, 2021:


Period	Total Number of Shares Purchased(1)	Average Price Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program(2)	Maximum Approximate Dollar Value of Shares That May Yet be Purchased Under the Plan or Program(2)
7/4/21 - 7/31/21	89,399	$	64.00	88,800	$89.9
8/1/21 - 8/31/21	—	$	—	—	$89.9
9/1/21 - 10/2/21	1,358	$	82.33	—	$89.9
Total	90,757	$	64.00	88,800	$89.9

(1)Includes shares of common stock surrendered to us to satisfy tax withholding obligations in connection with the vesting of restricted stock shares and restricted stock units of 599 shares in the period from July 4, 2021 to July 31, 2021 and 1,358 shares in the period from September 1, 2021 to October 2, 2021.

(2)On March 30, 2020, we announced that our Board of Directors had authorized the Company to repurchase shares of our common stock up to $150 million over a period expiring at the earlier of December 31, 2021 or such earlier time determined by our Board of Directors in its sole discretion.

ITEM 6. Exhibits


Item No.						Description
2.1						Purchase and Sale Agreement dated as of November 24, 2019 between SPX FLOW, Inc. and Boardwalk Parent LLC, incorporated by reference from the Company’s Current Report on Form 8-K filed on November 25, 2019 (file no. 1-37393).
10.1						Second Amended and Restated Credit Agreement, dated as of August 3, 2021, among SPX FLOW, Inc., the foreign subsidiary borrowers from time to time party thereto, Bank of America, N.A., as Administrative Agent, Deutsche Bank AG Deutschlandgeschäft Branch, as Foreign Trade Facility Agent, and the other agents and lenders from time to time party thereto, incorporated by reference from the Company’s Current Report on Form 8-K filed on August 3, 2021 (file no. 1-37393)
10.2						Incremental Facility Activation Notice, New Lender Supplement and Amendment to Credit Agreement, dated as of August 16, 2021, among SPX FLOW, Inc., JPMorgan Chase Bank, N.A., Bank of America, N.A., as Administrative Agent, Bank of America, N.A., as an Issuing Lender and the Swingline Lender, and Deutsche Bank AG Deutschlandgeschäft Branch, as an Issuing Lender
31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in the Interactive Data Files submitted as Exhibits 101.*)

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 thereunto duly authorized.


		SPX FLOW, Inc.
		(Registrant)

Date: November 10, 2021	By		/s/ Marcus G. Michael
			President and Chief Executive Officer

Date: November 10, 2021	By		/s/ Jaime M. Easley
			Vice President, Chief Financial Officer and Chief Accounting Officer