SPX(SPXC) - 2020 Q4 - Annual Report

Part I Item 1. Business SPX Corporation, founded in 1912, strategically shifted its focus post-2015 spin-off to scalable growth businesses, expanding globally through strategic acquisitions Forward-Looking Information This section outlines forward-looking statements and the inherent risks, including economic, regulatory, and operational factors, that may cause actual results to differ from projections - The document contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from projections[10] - Key risks include economic, business, legal, regulatory, raw material costs, pricing pressures, IT/cybersecurity, acquisition integration, and impacts of the COVID-19 pandemic[10] Business Overview This section details SPX Corporation's post-2015 strategic shift to scalable growth businesses, including HVAC and Detection and Measurement, through key acquisitions and global operations - SPX Corporation completed the spin-off of SPX FLOW, Inc. in 2015, shifting its strategic focus away from power generation markets[14][15] - The company's current strategic focus is on scalable growth businesses in HVAC, detection and measurement, and power transformer and process cooling systems[15] - Recent acquisitions include Schonstedt (2018), Cues (2018), Sabik Marine (2019), SGS Refrigeration (2019), Patterson-Kelley (2019), ULC Robotics (2020), and Sensors & Software (2020), expanding its portfolio in HVAC and Detection and Measurement segments[17][18][19][20] - SPX is a diversified, global supplier of highly engineered infrastructure equipment, operating in over 15 countries with approximately 4,500 employees[22][55] Reportable Segments and Other Operating Segment SPX operates through three reportable segments: HVAC, Detection and Measurement, and Engineered Solutions, along with an 'Other' category for its DBT operating segment - SPX operates through three reportable segments: HVAC, Detection and Measurement, and Engineered Solutions, plus an 'Other' category for its DBT operating segment[27] HVAC Reportable Segment Performance (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------- | :-------- | :-------- | :-------- | | Revenues | 590.7 | 593.2 | 582.1 | | Backlog | 82.8 | 77.8 | N/A | Detection and Measurement Reportable Segment Performance (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------- | :-------- | :-------- | :-------- | | Revenues | 387.3 | 384.9 | 320.9 | | Backlog | 89.3 | 76.4 | N/A | Engineered Solutions Reportable Segment Performance (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------- | :-------- | :-------- | :-------- | | Revenues | 577.5 | 548.9 | 537.0 | | Backlog | 353.4 | 373.4 | N/A | Other (DBT) Operating Segment Performance (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------- | :-------- | :-------- | :-------- | | Revenues | 4.0 | (6.1) | 72.6 | | Backlog | 3.7 | 7.4 | N/A | Acquisitions This section details SPX's strategic acquisitions from 2018 to 2020, primarily bolstering its Detection and Measurement and HVAC segments - In 2020, SPX acquired ULC Robotics and Sensors & Software, Inc., both integrated into the Detection and Measurement segment[20][35] - In 2019, the company acquired Sabik Marine (Detection and Measurement), SGS Refrigeration Inc. (HVAC), and Patterson-Kelley, LLC (HVAC)[18][19][35] - In 2018, acquisitions included Schonstedt Instrument Company and Cues, Inc., both enhancing the Detection and Measurement segment[17][35] Divestitures This section confirms no business divestitures from 2018-2020, noting the completion of the Heat Transfer business wind-down - No business divestitures occurred in 2020, 2019, or 2018[37] - The wind-down of the Heat Transfer business was completed in Q4 2020, and it is now reported as a discontinued operation for all periods presented[15][37] International Operations SPX is a multinational corporation with operations in over 15 countries, detailing sales generated outside the United States Sales Outside the United States (2018-2020) | Year | Sales ($M) | | :--- | :--------- | | 2020 | 196.4 | | 2019 | 144.8 | | 2018 | 221.0 | - SPX is a multinational corporation with operations in over 15 countries[38] Research and Development The company actively engages in research and development to enhance existing products, improve manufacturing, and develop new offerings - The company actively engages in R&D programs to improve existing products, manufacturing methods, and develop new products, with a focus on compatibility with current capabilities[42] Patents/Trademarks SPX holds numerous domestic and foreign patents and registered trademarks, none of which are individually considered critical to the business - SPX holds 197 domestic and 214 foreign patents (186 patent families), including 23 issued in 2020, and numerous registered trademarks[44] - No single patent or trademark is considered critical enough that its absence would materially affect the business[44] Outsourcing and Raw Materials SPX outsources components, introducing supplier risks, and is exposed to raw material price volatility, which it actively manages - SPX outsources certain components and sub-assemblies for strategic and economic benefits, but this introduces risks of supplier failure and business interruption[46] - The company is exposed to price increases in key raw materials like petroleum-based products, steel, and copper, which it generally offsets and manages using forward contracts[47] Competition SPX operates in highly competitive markets, where competition is primarily based on service, product performance, technical innovation, and price - SPX operates in highly competitive markets, with competition based on service, product performance, technical innovation, and price[50] Environmental Matters Information regarding environmental matters is referenced in the MD&A, Risk Factors, and Note 15 to the consolidated financial statements - Information on environmental matters is referenced in MD&A, Risk Factors, and Note 15 to the consolidated financial statements[52] Human Capital Resources SPX employs approximately 4,500 individuals globally, focusing on talent attraction, retention, and fostering an inclusive environment through D&I programs - As of December 31, 2020, SPX had approximately 4,500 employees globally, with about 3,900 in the United States[55] - The company focuses on attracting and retaining skilled employees through a 'Total Rewards' program, career growth opportunities, and a talent management framework called RiSE[56][57] - In 2020, SPX enhanced its Diversity & Inclusion programs, forming a D&I Council and networking groups to foster an inclusive environment[58] Other Matters No single customer accounts for more than 10% of consolidated revenues, with business generally stronger in the second half of the year - No single customer or group of customers under common control accounted for more than 10% of consolidated revenues in any period presented[60] - The company's businesses generally experience stronger performance in the second half of the year due to seasonal fluctuations[61] - SPX Corporation completed the spin-off of SPX FLOW, Inc. on September 26, 2015, to focus on scalable growth businesses[14] - The company strategically reduced exposure to power generation markets through dispositions (dry cooling, Balcke Dürr) and the wind-down of the Heat Transfer business, completed in Q4 2020[15][37] - Key acquisitions include Schonstedt (2018), Cues (2018), Sabik Marine (2019), SGS Refrigeration (2019), Patterson-Kelley (2019), ULC Robotics (2020), and Sensors & Software (2020), primarily bolstering the Detection and Measurement and HVAC segments[17][18][19][20][35] - SPX is a diversified, global supplier of infrastructure equipment serving HVAC, detection and measurement, power transmission and generation, and industrial markets, with operations in over 15 countries and approximately 4,500 employees[22][55] Reportable Segment Revenues and Backlog (2018-2020) | Segment | 2020 Revenues ($M) | 2019 Revenues ($M) | 2018 Revenues ($M) | 2020 Backlog ($M) | 2019 Backlog ($M) | | :-------------------------- | :------------------- | :------------------- | :------------------- | :------------------ | :------------------ | | HVAC | 590.7 | 593.2 | 582.1 | 82.8 | 77.8 | | Detection and Measurement | 387.3 | 384.9 | 320.9 | 89.3 | 76.4 | | Engineered Solutions | 577.5 | 548.9 | 537.0 | 353.4 | 373.4 | | Other (DBT) | 4.0 | (6.1) | 72.6 | 3.7 | 7.4 | Item 1A. Risk Factors SPX Corporation faces diverse risks, including the COVID-19 pandemic, significant contingent liabilities, competitive market pressures, operational challenges, macroeconomic factors, and financial risks Risks Related to the COVID-19 Pandemic The COVID-19 pandemic had a modest adverse impact on 2020 results, with potential for continued disruptions to demand, supply chain, and operations - The COVID-19 pandemic had a modest adverse impact on consolidated financial results for 2020, primarily due to reduced customer demand and order delays[66] - Potential ongoing impacts include prolonged reduction in demand, facility shutdowns, supply chain disruptions, asset impairment charges, and increased cybersecurity risks[67] Risks Related to Contingent Liabilities SPX faces significant contingent liabilities from South African power projects and potential asbestos, environmental, and product liability claims - SPX is involved in various claims and disputes related to two large power projects in South Africa, which could result in significant adverse effects on financial position, results of operations, or cash flows[69] - The company faces potential liability from asbestos, environmental, and product liability claims, with liabilities based on subjective assumptions that may require future adjustments[71][72][73] Risks Related to our Markets and Customers SPX operates in cyclical and competitive markets, with demand for products and services dependent on customer capital investment and maintenance expenditures - Many of SPX's markets are cyclical or subject to industry-specific events, leading to potential fluctuations in revenues and profits[78][79] - Demand for products and services is dependent on customer capital investment and maintenance expenditures, which are influenced by economic conditions and commodity prices[81][82][83] - Operating in highly competitive markets can lead to pressure on profit margins and limit market share growth, requiring continuous investment in manufacturing, marketing, and distribution[84][85] Risks Related to our Suppliers and Vendors Volatility in raw material prices and reliance on third-party suppliers expose SPX to cost increases, shortages, and quality issues - Volatility in raw material and component prices (e.g., copper, steel, oil) and potential shortages can adversely affect the business if cost increases cannot be passed to customers[87] - Reliance on third-party suppliers and subcontractors for outsourced products and services exposes SPX to risks of quality issues, performance failures, and supply interruptions[88] Risks Related to Information, Technology and Cybersecurity Disruptions to IT systems, cyber-attacks, and inadequate intellectual property protection pose significant operational and financial risks - Disruptions to IT networks and systems, including cyber-attacks, could lead to operational shutdowns, theft of confidential information, and significant financial costs[90][91] - Failure to develop new products or invest in technology advancements may result in a loss of competitive advantage and negatively impact revenues and profitability[93] - Inadequate protection or unauthorized use of intellectual property, especially in foreign countries, could harm the business and incur material defense costs[94] Risks Related to Our Manufacturing and Operations Fixed-price contracts expose SPX to cost overruns and project delays, while product defects could harm reputation and lead to financial losses - Fixed-price contracts, particularly in the Engineered Solutions segment, expose the company to risks of cost overruns, inflation, and project delays, which can erode profit margins or lead to losses[96][98] - Products may contain defects or errors detected only after delivery, potentially harming reputation, leading to order cancellations, product returns, and legal actions[99] Risks Related to Macro-Economic, Domestic and World Political Events Changes in governmental regulations, global economic downturns, and political instability in non-U.S. operations pose significant business risks - Changes in governmental laws and regulations (e.g., customs, tariffs, trade restrictions, environmental, data privacy) could significantly increase costs or limit business operations[101][102] - Reliance on U.S. revenues and manufacturing bases exposes the company to domestic economic, political, and legal factors, while non-U.S. operations face risks from local conditions, political instability, and currency fluctuations[103][107] - Worldwide economic downturns can negatively impact businesses by affecting revenues, margins, profits, cash flows, and customer orders, as customers may delay capital projects[104][105] Risks Related to Acquisitions and Dispositions Acquisitions present integration challenges, increased expenses, and the risk that expected benefits may not be fully realized - Acquisitions present financial, managerial, and operational challenges, including integration difficulties, increased expenses, assumption of liabilities, and potential disputes with sellers[109] - There is no assurance that expected cost savings and other benefits from acquisitions will be realized, or that unforeseen factors will not offset anticipated gains[115] - Dispositions also involve risks such as diversion of management attention, increased expenses, potential disputes, and the retention of significant liabilities[116] Risks Related to Human Capital Resources The loss of key personnel, inability to attract and retain talent, and potential labor disputes could adversely affect operations - The loss of key personnel and the inability to attract and retain qualified employees could materially adversely affect operations[119] - SPX is subject to potential work stoppages, union negotiations, and labor disputes, with three collective bargaining agreements expiring in 2021[120] Risks Related to Financial Matters Financial risks include indebtedness, currency conversion fluctuations, changes in tax laws, and potential goodwill impairment charges - The company's indebtedness ($412.4 million at Dec 31, 2020) may limit its ability to obtain new financing, react to market changes, pay dividends, and meet debt service requirements[122][123] - Currency conversion risk can materially impact reported results, with a stronger U.S. dollar increasing product prices abroad and decreasing reported revenues/margins[127][128] - Changes in tax laws, regulations, or audit outcomes could increase income tax obligations, reducing net income and affecting cash flows[132][133] - A significant decrease in the fair value of reporting units could lead to material non-cash impairment charges for goodwill and other intangibles, which totaled $804.9 million at Dec 31, 2020[136] Risks Related to Ownership of Our Common Stock Provisions in corporate documents may hinder a change in control, while stock dilution and potential tax liabilities from the SPX FLOW spin-off pose risks - Provisions in corporate documents and Delaware law may delay or prevent a change in control, potentially hindering transactions favorable to stockholders[141][142] - Increases in outstanding common stock, through stock compensation plans or acquisitions, could adversely affect the stock price or dilute earnings per share[143] - The spin-off of SPX FLOW could result in substantial tax liability to SPX and its stockholders if the tax-free treatment is challenged by the IRS[144] - The COVID-19 pandemic has had a modest adverse impact on the business in 2020, with potential for continued adverse effects on customer demand, supply chain, liquidity, and operations in 2021[66] - SPX is subject to significant contingent liabilities, including claims and disputes related to two large power projects in South Africa and potential liabilities from asbestos, environmental, and product liability matters[69][71] - The company operates in highly competitive and cyclical markets, with demand dependent on customer capital investment and maintenance expenditures, which are sensitive to economic conditions and commodity prices[78][81][82][84] - Risks related to information technology and cybersecurity are increasing, posing threats of data corruption, cyber-attacks, and disruption to operations, which could harm reputation and financial results[90][91] - Acquisitions involve risks such as integration challenges, diversion of management attention, increased expenses, and the assumption of known and unknown liabilities, which may not yield expected cost savings or benefits[109][115] - The company's indebtedness ($412.4 million at Dec 31, 2020) may restrict operating flexibility, impact access to financing, and expose it to interest rate fluctuations[122] Item 1B. Unresolved Staff Comments There are no unresolved staff comments from the SEC - No unresolved staff comments were reported[150] Item 2. Properties As of December 31, 2020, SPX Corporation's principal properties included 40 facilities, totaling 3.1 million square feet owned and 1.9 million square feet leased, considered well-maintained and adequate Principal Properties as of December 31, 2020 | Segment | No. of Facilities | Square Footage Owned (millions) | Square Footage Leased (millions) | | :-------------------------- | :---------------- | :------------------------------ | :------------------------------- | | HVAC | 12 | 0.6 | 1.4 | | Detection and Measurement | 14 | 0.3 | 0.2 | | Engineered Solutions | 11 | 1.8 | 0.2 | | Other (including corporate) | 3 | 0.4 | 0.1 | | Total | 40 | 3.1 | 1.9 | - The company considers its properties, machinery, and equipment to be well maintained and suitable for their intended purposes[152] Item 3. Legal Proceedings SPX Corporation is subject to various legal proceedings and claims, generally believed to be immaterial, but with no guarantee against a material financial impact - Legal proceedings and claims arising in the normal course of business are not expected to have a material effect individually or in the aggregate[155] - Further discussion on legal proceedings is available in 'Risk Factors,' 'MD&A — Critical Accounting Estimates — Contingent Liabilities,' and Note 15 to the consolidated financial statements[154] Item 4. Mine Safety Disclosures This item is not applicable to SPX Corporation - Mine Safety Disclosures are not applicable to the registrant[157] Part II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities SPX Corporation's common stock trades on the NYSE under 'SPXC', with dividends discontinued in 2015 and no Q4 2020 repurchases, demonstrating significant outperformance against key indices over five years - SPX Corporation's common stock is traded on the New York Stock Exchange under the symbol 'SPXC'[159] - Dividend payments were discontinued in September 2015 following the Spin-off, with no dividends declared since[159] - There were no repurchases of common stock during the three months ended December 31, 2020[160] Five-Year Cumulative Total Returns (2015-2020) | Index | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | | :-------------------- | :----- | :----- | :----- | :----- | :----- | :----- | | SPX Corporation | $100.00 | $254.23 | $336.44 | $300.21 | $545.34 | $584.57 | | S&P 500 | $100.00 | $111.96 | $136.40 | $130.42 | $171.49 | $203.04 | | S&P 1500 Industrials | $100.00 | $120.41 | $145.77 | $126.27 | $163.90 | $183.06 | | S&P 600 | $100.00 | $124.75 | $139.38 | $125.79 | $152.02 | $166.57 | Item 6. Selected Financial Data SPX Corporation has elected early compliance with recent SEC changes, rendering the presentation of selected financial data under Item 6 not applicable - The company has elected early compliance with SEC Release No. 33-10890, making Item 6 (Selected Financial Data) not applicable[165] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations SPX Corporation's 2020 revenues increased to $1,559.5 million, with operating income rising to $132.0 million, while operating cash flows from continuing operations decreased to $131.1 million, with critical accounting estimates detailed Impact of the COVID-19 Pandemic The COVID-19 pandemic had a modest adverse impact on 2020 results, mitigated by SPX's strong liquidity and proactive cost management - The COVID-19 pandemic had a modest adverse impact on consolidated results in 2020, primarily affecting revenues due to reduced customer demand and order delays[170] - SPX's diverse businesses and strong liquidity ($350 million+ available at Dec 31, 2020) position it well to manage potential adverse impacts, with products/services deemed 'critical' or 'essential'[170] - Manufacturing facilities have not experienced material interruptions, and the company has taken actions to manage costs and address sourcing challenges[170] Executive Overview This section provides an executive overview of consolidated revenues, operating income, cash flows, and significant events including acquisitions and South Africa project adjustments Consolidated Revenues and Operating Income (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------------- | :-------- | :-------- | :-------- | | Revenues | 1,559.5 | 1,520.9 | 1,512.6 | | Operating Income | 132.0 | 110.0 | 112.5 | - Operating cash flows from continuing operations were $131.1 million in 2020, a decrease from $154.2 million in 2019, primarily due to timing of cash receipts in project-related businesses[175] - Key events in 2020 included the acquisitions of ULC Robotics ($89.2 million) and Sensors & Software ($15.2 million), completion of Heat Transfer wind-down, and $21.3 million in asbestos product liability charges[177] - In 2019, significant events included acquisitions of Sabik ($77.2 million), SGS ($11.5 million), and Patterson-Kelley ($59.9 million), and a $23.5 million reduction in revenues/profits on large power projects in South Africa[179] Results of Continuing Operations This section details consolidated financial performance, including revenues, gross profit, and effective income tax rates, highlighting drivers of change Consolidated Financial Performance (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | 2020 vs 2019 % | 2019 vs 2018 % | | :------------------------------------------ | :-------- | :-------- | :-------- | :--------------- | :--------------- | | Revenues | 1,559.5 | 1,520.9 | 1,512.6 | 2.5% | 0.5% | | Gross profit | 478.9 | 442.7 | 410.0 | 8.2% | 8.0% | | Gross profit % of revenues | 30.7% | 29.1% | 27.1% | | | | Selling, general and administrative expense | 320.0 | 317.6 | 289.1 | 0.8% | 9.9% | | Intangible amortization | 14.0 | 8.9 | 4.1 | 57.3% | 117.1% | | Income from continuing operations | 100.7 | 71.1 | 81.9 | 41.6% | (13.2)% | Components of Consolidated Revenue Increase (2019-2020) | Component | 2020 vs 2019 % | 2019 vs 2018 % | | :-------------------------- | :------------- | :------------- | | Organic | (3.1)% | (2.0)% | | Foreign currency | 0.2% | (0.9)% | | South Africa revenue adjustments | 1.6% | (1.4)% | | Acquisitions | 3.8% | 4.8% | | Net revenue increase | 2.5% | 0.5% | - Gross profit increased by 8.2% in 2020, with gross profit as a percentage of revenues rising to 30.7%, driven by the impact of South Africa project revenue reductions in 2019 and improved profitability in power transformer and cooling products[185][188] - The effective income tax rate was 13.6% in 2020, significantly impacted by tax benefits from audit settlements and stock-based compensation awards[204] Results of Discontinued Operations This section reports the completion of the Heat Transfer business wind-down and the financial results of discontinued operations, including the Balcke Dürr sale - The wind-down of the Heat Transfer business was completed in Q4 2020, with its results now reported as discontinued operations for all periods[210] - The sale of the Balcke Dürr business in 2018 resulted in a net gain of $3.8 million[211] Loss from Discontinued Operations, Net of Tax (2018-2020) | Year | Loss from Discontinued Operations, Net of Tax ($M) | | :--- | :------------------------------------------------- | | 2020 | (3.5) | | 2019 | (5.8) | | 2018 | (0.7) | Results of Reportable Segments and Other Operating Segment This section presents the detailed financial performance, including revenues and income, for the HVAC, Detection and Measurement, Engineered Solutions, and Other (DBT) segments HVAC Reportable Segment Performance (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------- | :-------- | :-------- | :-------- | | Revenues | 590.7 | 593.2 | 582.1 | | Income | 93.4 | 95.4 | 90.0 | | % of revenues | 15.8% | 16.1% | 15.5% | | Organic Revenue Change | (6.9)% | 0.5% | N/A | Detection and Measurement Reportable Segment Performance (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------- | :-------- | :-------- | :-------- | | Revenues | 387.3 | 384.9 | 320.9 | | Income | 69.1 | 81.7 | 72.4 | | % of revenues | 17.8% | 21.2% | 22.6% | | Organic Revenue Change | (4.4)% | 1.4% | N/A | Engineered Solutions Reportable Segment Performance (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------- | :-------- | :-------- | :-------- | | Revenues | 577.5 | 548.9 | 537.0 | | Income | 60.5 | 43.0 | 35.0 | | % of revenues | 10.5% | 7.8% | 6.5% | | Organic Revenue Change | 5.3% | 2.2% | N/A | Other (DBT) Operating Segment Performance (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------- | :-------- | :-------- | :-------- | | Revenues | 4.0 | (6.1) | 72.6 | | Loss | (19.3) | (43.6) | (16.0) | Corporate Expense and Other Expense This section details corporate expenses and long-term incentive compensation, noting the impact of lower incentive compensation and reduced travel Corporate Expense and Long-Term Incentive Compensation (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :-------------------------------- | :-------- | :-------- | :-------- | | Corporate expense | 44.8 | 46.7 | 49.1 | | % of revenues | 2.9% | 3.1% | 3.2% | | Long-term incentive compensation expense | 14.0 | 13.6 | 15.5 | - Corporate expense decreased in 2020 due to lower incentive compensation and reduced travel expenses resulting from the COVID-19 pandemic[234] Liquidity and Financial Condition This section outlines SPX's cash flows, total indebtedness, available credit facilities, and a summary of contractual obligations Cash Flows Summary (2018-2020) | Activity | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------------------------------------------ | :-------- | :-------- | :-------- | | Cash flows from operating activities (continuing) | 131.1 | 154.2 | 111.5 | | Cash flows used in investing activities (continuing) | (126.1) | (159.2) | (189.0) | | Cash flows from (used in) financing activities (continuing) | 15.9 | (11.1) | 16.8 | | Net change in cash and equivalents | 13.6 | (14.1) | (55.5) | - Total indebtedness was $412.4 million at December 31, 2020, with $302.9 million available under revolving credit facilities[122][251][264] - The Senior Credit Facilities provide $800.0 million in committed financing, maturing December 17, 2024, and include financial covenants for Consolidated Leverage Ratio and Consolidated Interest Coverage Ratio[253][257] Contractual Obligations as of December 31, 2020 ($M) | Obligation | Total | Due Within 1 Year | Due in 1-3 Years | Due in 3-5 Years | Due After 5 Years | | :------------------------------------------ | :---- | :---------------- | :--------------- | :--------------- | :---------------- | | Long-term debt obligations | 312.6 | 7.2 | 26.3 | 279.1 | — | | Pension and postretirement plan contributions | 212.4 | 13.2 | 24.1 | 20.9 | 154.2 | | Purchase and other contractual obligations | 115.0 | 99.3 | 14.8 | 0.9 | — | | Future minimum operating lease payments | 43.4 | 8.7 | 15.0 | 9.1 | 10.6 | | Interest payments | 30.5 | 7.8 | 15.2 | 7.5 | — | | Total contractual cash obligations | 713.9 | 136.2 | 95.4 | 317.5 | 164.8 | Critical Accounting Estimates This section details critical accounting estimates for contingent liabilities, revenue recognition, goodwill impairment, employee benefits, and income taxes, highlighting areas of significant judgment - Contingent liabilities totaled $575.7 million at December 31, 2020, primarily related to asbestos product liability matters ($535.2 million liabilities, $496.4 million insurance recovery assets) and large power projects in South Africa[298][301][607][609] - Revenue recognition for long-term contracts is based on the percentage of costs incurred to date, with estimates for variable consideration (e.g., change orders, claims) subject to significant judgment[319][320][323][327] - Goodwill and indefinite-lived intangible assets are tested annually for impairment; as of Dec 31, 2020, Cues and Patterson-Kelley reporting units had fair value exceeding carrying value by 12% and 3% respectively, indicating potential future impairment risk[334] - Employee benefit plans, including defined benefit pension and postretirement plans, involve critical assumptions like discount rates and healthcare cost projections, which can significantly impact costs and obligations[339][340][341] - Income tax accounting involves estimates for deferred tax assets and liabilities, valuation allowances, and uncertain tax positions, with $13.6 million in gross unrecognized tax benefits at Dec 31, 2020[343][344][345][557] New Accounting Pronouncements This section discusses the adoption of new accounting pronouncements, including ASC 606, ASC 842, and ASU 2016-13, and the evaluation of future standards - SPX adopted ASC 606 (Revenue Recognition) in 2018, resulting in a $4.0 million reduction to retained deficit[421] - ASC 842 (Leases) was adopted in 2019, with no significant impact on consolidated statements of operations or cash flows[423] - ASU 2016-13 (Credit Losses) was adopted in 2020, increasing retained deficit by $0.5 million[424] - The company is currently evaluating the impacts of ASU No. 2019-12 (Income Taxes) and the LIBOR transition guidance on its financial statements[431][432] Key Financial Highlights (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | 2020 vs 2019 % Change | 2019 vs 2018 % Change | | :------------------------------------------ | :-------- | :-------- | :-------- | :-------------------- | :-------------------- | | Revenues | 1,559.5 | 1,520.9 | 1,512.6 | 2.5% | 0.5% | | Operating Income | 132.0 | 110.0 | 112.5 | 20.0% | (2.2)% | | Income from Continuing Operations | 100.7 | 71.1 | 81.9 | 41.6% | (13.2)% | | Net Income Attributable to SPX Shareholders | 97.2 | 65.3 | 81.2 | 48.8% | (19.6)% | | Operating Cash Flows (Continuing Operations) | 131.1 | 154.2 | 111.5 | (14.9)% | 38.3% | | Basic EPS | 2.18 | 1.61 | 1.89 | 35.4% | (14.8)% | | Diluted EPS | 2.12 | 1.58 | 1.82 | 34.2% | (13.1)% | - Revenues in 2020 increased by 2.5% to $1,559.5 million, primarily due to acquisitions and adjustments related to South Africa power projects, partially offset by a 3.1% organic revenue decline[173][185][186] - Operating income increased by 20.0% to $132.0 million in 2020, driven by the impact of 2019 revenue reductions on South Africa projects and improved profitability in power transformer and cooling products[174][188] - Cash flows from operating activities for continuing operations decreased to $131.1 million in 2020 from $154.2 million in 2019, mainly due to the timing of cash receipts from project-related businesses[175][241] - Total debt stood at $412.4 million as of December 31, 2020, with $302.9 million of available borrowing capacity under revolving credit facilities[122][251][264] - Contingent liabilities, including asbestos claims ($535.2 million liabilities, $496.4 million insurance recovery assets) and South Africa power project disputes, remain significant areas of estimation and potential financial impact[298][301][607][609] Item 7A. Quantitative and Qualitative Disclosures About Market Risk SPX Corporation manages market risks from interest rates, foreign currency, and commodity prices using financial instruments, with primary exposures in South African Rand, British Pound Sterling, Euro, steel, copper, and oil - SPX is exposed to market risks from interest rates, foreign currency exchange rates, and commodity raw material prices, which it manages using financial instruments[351] - Primary currency exposures include the South African Rand, British Pound Sterling, and Euro, while commodity exposures are concentrated in steel, copper, and oil[351] Primary Outstanding Debt Obligations as of December 31, 2020 ($M) | Obligation | 2021 | 2022 | 2023 | 2024 | Thereafter | Total | Fair Value | | :----------------------- | :--- | :--- | :--- | :--- | :--------- | :---- | :--------- | | Senior Credit Facilities | $6.2 | $12.5 | $12.5 | $278.8 | — | $310.0 | $310.0 | | Average interest rate | | | | | | 1.6% | | - Interest rate swap agreements had an aggregate notional amount of $234.0 million (fixed 2.535%, maturing March 2021) and additional swaps of $248.4 million (fixed 1.061%, March 2021-November 2024), with a fair value of $7.8 million as a liability at Dec 31, 2020[354] - FX forward contracts had an aggregate notional amount of $6.3 million at December 31, 2020, all scheduled to mature in 2021[355] - Commodity contracts for copper had an outstanding notional amount of 3.2 million pounds at December 31, 2020, with a fair value of $2.4 million as a current asset[356] Item 8. Financial Statements And Supplementary Data This section presents SPX Corporation's audited consolidated financial statements for 2018-2020, including statements of operations, balance sheets, and cash flows, with an unqualified opinion from Deloitte & Touche LLP and detailed explanatory notes Index To Consolidated Financial Statements This index provides a comprehensive list of the Consolidated Statements of Operations, Comprehensive Income, Balance Sheets, Equity, Cash Flows, and accompanying notes - The index lists the Consolidated Statements of Operations, Comprehensive Income, Balance Sheets, Equity, Cash Flows, and Notes to Consolidated Financial Statements[359] Report of Independent Registered Public Accounting Firm — Deloitte & Touche LLP Deloitte & Touche LLP issued an unqualified opinion on the financial statements and internal controls, highlighting critical audit matters related to contingent liabilities - Deloitte & Touche LLP provided an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting for SPX Corporation as of December 31, 2020[361][362] - Critical Audit Matters included the evaluation of contingent liabilities related to large power projects in South Africa and the estimation of asbestos product liabilities and associated insurance recovery assets, due to significant management and auditor judgment involved[366][367][368][369] Consolidated Statements of Operations This section presents the Consolidated Statements of Operations, detailing revenues, costs, operating income, and net income for 2018-2020 Consolidated Statements of Operations (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------------------------------------------ | :-------- | :-------- | :-------- | | Revenues | 1,559.5 | 1,520.9 | 1,512.6 | | Cost of products sold | 1,080.6 | 1,078.2 | 1,102.6 | | Selling, general and administrative | 320.0 | 317.6 | 289.1 | | Operating income | 132.0 | 110.0 | 112.5 | | Income from continuing operations before income taxes | 116.5 | 85.0 | 84.5 | | Income tax provision | (15.8) | (13.9) | (2.6) | | Income from continuing operations | 100.7 | 71.1 | 81.9 | | Loss from discontinued operations, net of tax | (3.5) | (5.8) | (0.7) | | Net income attributable to SPX shareholders | 97.2 | 65.3 | 81.2 | | Basic income per share | 2.26 | 1.75 | 1.90 | | Diluted income per share | 2.20 | 1.71 | 1.83 | Consolidated Statements of Comprehensive Income This section presents the Consolidated Statements of Comprehensive Income, detailing net income and other comprehensive income for 2018-2020 Consolidated Statements of Comprehensive Income (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :---------------------------------------------------------------------------------------------------------------- | :-------- | :-------- | :-------- | | Net income | 97.2 | 65.3 | 81.2 | | Other comprehensive income (loss), net | 4.2 | (0.6) | (5.2) | | Total comprehensive income attributable to SPX Corporation common shareholders | 101.4 | 64.7 | 76.0 | Consolidated Balance Sheets This section presents the Consolidated Balance Sheets, detailing assets, liabilities, and equity as of December 31, 2020 and 2019 Consolidated Balance Sheets (2019-2020) | Asset/Liability/Equity | Dec 31, 2020 ($M) | Dec 31, 2019 ($M) | | :------------------------------------------ | :---------------- | :---------------- | | Cash and equivalents | 68.3 | 54.6 | | Accounts receivable, net | 271.8 | 264.8 | | Inventories, net | 162.0 | 154.9 | | Total current assets | 682.6 | 632.1 | | Property, plant and equipment, net | 189.7 | 179.1 | | Goodwill | 499.9 | 449.3 | | Intangibles, net | 305.0 | 251.7 | | Total Assets | 2,297.7 | 2,134.5 | | Accounts payable | 138.5 | 141.2 | | Short-term debt | 101.2 | 142.6 | | Current maturities of long-term debt | 7.2 | 1.0 | | Total current liabilities | 584.9 | 608.6 | | Long-term debt | 304.0 | 249.9 | | Other long-term liabilities | 755.8 | 747.1 | | Total Liabilities | 1,668.5 | 1,632.1 | | Total Equity | 629.2 | 502.4 | Consolidated Statements of Equity This section presents the Consolidated Statements of Equity, summarizing changes in total equity, retained deficit, and accumulated other comprehensive income Consolidated Statements of Equity Summary (2018-2020) | Metric | Dec 31, 2020 ($M) | Dec 31, 2019 ($M) | Dec 31, 2018 ($M) | | :------------------------------------------ | :---------------- | :---------------- | :---------------- | | Total Equity | 629.2 | 502.4 | 414.9 | | Retained Deficit | (488.1) | (584.8) | (650.1) | | Accumulated Other Comprehensive Income | 248.5 | 244.3 | 244.9 | | Common Stock in Treasury | (451.6) | (460.0) | (475.8) | - Total equity increased from $502.4 million in 2019 to $629.2 million in 2020, driven by net income and incentive plan activity[380] Consolidated Statements of Cash Flows This section presents the Consolidated Statements of Cash Flows, detailing cash flows from operating, investing, and financing activities for 2018-2020 Consolidated Statements of Cash Flows (2018-2020) | Activity | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :------------------------------------------ | :-------- | :-------- | :-------- | | Net cash from operating activities | 126.3 | 148.6 | 110.6 | | Net cash used in investing activities | (126.1) | (153.7) | (180.6) | | Net cash from (used in) financing activities | 15.9 | (11.1) | 16.8 | | Net change in cash and equivalents | 13.6 | (14.1) | (55.5) | | Consolidated cash and equivalents, end of period | 68.3 | 54.7 | 68.8 | - Net cash from operating activities decreased by 14.9% in 2020, while net cash used in investing activities decreased by 17.0%[383] Notes to Consolidated Financial Statements These notes provide detailed explanations of SPX Corporation's accounting policies, estimates, acquisitions, segment information, and financial instruments, supporting the consolidated financial statements Note 1: Basis of Presentation and Summary of Significant Accounting Policies This note outlines the basis of financial statement preparation, the post-2015 strategic shift, recent acquisitions, and key accounting policies for R&D - The consolidated financial statements are prepared in conformity with GAAP, eliminating intercompany transactions[387] - SPX completed the spin-off of SPX FLOW in 2015 and has since strategically shifted away from power generation markets through dispositions and the wind-down of the Heat Transfer business[388][389] - Recent acquisitions in 2020 include ULC Robotics ($89.2 million cash, $45.0 million contingent) and Sensors & Software Inc. ($15.2 million cash, $3.9 million contingent), both integrated into the Detection and Measurement segment[389][390] - Research and development costs are expensed as incurred, with capitalized software costs amortized over economic lives of related products[395] Note 2: Use of Estimates This note details the significant estimates and assumptions used in financial statement preparation, including the impact of COVID-19 and product warranty accruals - The preparation of financial statements requires significant estimates and assumptions, including those for accounts receivable allowances, inventory valuation, long-lived asset impairment, goodwill, accrued expenses, legal, environmental, risk management, and warranty costs[403][406][407][408][410][411][412][413][414][415] - The COVID-19 pandemic had a modest adverse impact in 2020, but there is uncertainty regarding its future duration and overall impact on asset valuations and contingent amounts[404] Product Warranty Accrual Activity (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :-------------------------- | :-------- | :-------- | :-------- | | Balance at beginning of year | 34.8 | 33.7 | 33.4 | | Provisions | 14.6 | 14.0 | 11.9 | | Usage | (12.8) | (13.2) | (12.9) | | Balance at end of year | 38.4 | 34.8 | 33.7 | | Current portion of warranty | 13.3 | 12.5 | 11.9 | | Non-current portion of warranty | 25.1 | 22.3 | 21.8 | Note 3: New Accounting Pronouncements This note discusses the adoption of new accounting pronouncements, including ASC 606, ASC 842, and ASU 2016-13, and the evaluation of future standards - SPX adopted ASC 606 (Revenue Recognition) in 2018, resulting in a $4.0 million reduction to retained deficit[421] - ASC 842 (Leases) was adopted in 2019, with no significant impact on consolidated statements of operations or cash flows[423] - ASU 2016-13 (Credit Losses) was adopted in 2020, increasing retained deficit by $0.5 million[424] - The company is evaluating the impacts of ASU No. 2019-12 (Simplifying the Accounting for Income Taxes) and the FASB's guidance on Reference Rate Reform (LIBOR transition)[431][432] Note 4: Acquisitions and Discontinued Operations This note details the Cues acquisition, the wind-down of the Heat Transfer business, the Balcke Dürr settlement, and the financial results of discontinued operations - The acquisition of Cues in 2018 for $164.4 million (net of cash) contributed $52.3 million in revenues and a net loss of $0.4 million for the period June 7 to December 31, 2018[434] - The wind-down of the Heat Transfer business was completed in Q4 2020, with its assets and liabilities classified as discontinued operations[438][440] - The settlement with the buyer of Balcke Dürr in 2018 resulted in a net payment of Euro 3.0 million ($3.6 million) and a gain of $3.8 million, net of tax[441] Loss from Discontinued Operations, Net of Tax (2018-2020) | Year | Loss from Discontinued Operations, Net of Tax ($M) | | :--- | :------------------------------------------------- | | 2020 | (3.5) | | 2019 | (5.8) | | 2018 | (0.7) | Note 5: Revenues from Contracts This note explains revenue recognition under ASC 606, treatment of variable consideration, and provides disaggregated revenues by product line and timing of recognition - Revenue is recognized in accordance with ASC 606, either at a point in time (e.g., equipment delivery) or over time (e.g., long-term contracts, services)[458][459][460][461] - Variable consideration, such as late delivery penalties, unapproved change orders, and claims, is estimated and included in the transaction price to the extent a significant revenue reversal is improbable[450] - In 2019, cumulative revenue associated with variable consideration on South Africa power projects was reduced by $23.5 million due to increased risk of reversal[452][453] Disaggregated Revenues by Major Product Line and Timing of Recognition (2020) | Segment/Product Line | Total Revenues ($M) | Recognized at a Point in Time ($M) | Recognized Over Time ($M) | | :------------------------------------------ | :------------------ | :--------------------------------- | :------------------------ | | HVAC | 590.7 | 590.7 | — | | Cooling | 297.0 | 297.0 | — | | Boilers, comfort heating, and ventilation | 293.7 | 293.7 | — | | Detection and Measurement | 387.3 | 341.9 | 45.4 | | Underground locators, inspection, rehab, robotics | 217.8 | 217.8 | — | | Signal monitoring, obstruction lighting, bus fare | 169.5 | 124.1 | 45.4 | | Engineered Solutions | 577.5 | 41.3 | 536.2 | | Power transformers | 427.4 | 41.3 | 386.1 | | Process cooling equipment and services | 150.1 | — | 150.1 | | Other (DBT) | 4.0 | 0.2 | 3.8 | | South African projects | 3.2 | 0.2 | 3.0 | | Process cooling equipment and services | 0.8 | — | 0.8 | | Total Consolidated Revenues | 1,559.5 | 974.1 | 585.4 | Note 6: Leases This note details the adoption of ASC 842, presenting right-of-use assets, lease liabilities, and lease expense components for operating and finance leases - SPX adopted ASC 842 (Leases) effective January 1, 2019, recognizing right-of-use (ROU) assets and lease liabilities for operating and finance leases[469][471] Lease Expense Components (2019-2020) | Lease Type | 2020 ($M) | 2019 ($M) | | :-------------------------- | :-------- | :-------- | | Operating lease cost | 13.2 | 13.4 | | Variable lease cost | 0.1 | — | | Finance lease cost | 1.3 | 1.3 | Lease Balance Sheet Information (Dec 31, 2019-2020) | Metric | Dec 31, 2020 ($M) | Dec 31, 2019 ($M) | | :-------------------------- | :---------------- | :---------------- | | Operating lease ROU assets | 41.3 | 30.6 | | Operating lease liabilities | 39.0 | 25.3 | | Finance Lease Assets | 2.5 | 2.5 | | Finance lease liabilities | 2.6 | 2.7 | - The weighted-average remaining lease terms for operating leases were 6.9 years and for finance leases were 3.2 years as of December 31, 2020[475] Note 7: Information on Reportable Segments and "Other" Operating Segment This note provides detailed financial information for SPX's reportable segments (HVAC, Detection and Measurement, Engineered Solutions) and the 'Other' (DBT) operating segment - SPX's reportable segments are HVAC, Detection and Measurement, and Engineered Solutions, with DBT (South Africa) reported in 'Other'[479] Segment Revenues and Income (2018-2020) | Segment | 2020 Revenues ($M) | 2019 Revenues ($M) | 2018 Revenues ($M) | 2020 Income ($M) | 2019 Income ($M) | 2018 Income ($M) | | :-------------------------- | :------------------- | :------------------- | :------------------- | :--------------- | :--------------- | :--------------- | | HVAC | 590.7 | 593.2 | 582.1 | 93.4 | 95.4 | 90.0 | | Detection and Measurement | 387.3 | 384.9 | 320.9 | 69.1 | 81.7 | 72.4 | | Engineered Solutions | 577.5 | 548.9 | 537.0 | 60.5 | 43.0 | 35.0 | | Other (DBT) | 4.0 | (6.1) | 72.6 | (19.3) | (43.6) | (16.0) | | Consolidated Total | 1,559.5 | 1,520.9 | 1,512.6 | 132.0 | 110.0 | 112.5 | Segment Capital Expenditures and Depreciation/Amortization (2018-2020) | Segment | 2020 CapEx ($M) | 2019 CapEx ($M) | 2018 CapEx ($M) | 2020 D&A ($M) | 2019 D&A ($M) | 2018 D&A ($M) | | :-------------------------- | :-------------- | :-------------- | :-------------- | :------------ | :------------ | :------------ | | HVAC | 4.9 | 5.9 | 2.7 | 9.4 | 6.9 | 5.4 | | Detection and Measurement | 2.7 | 2.3 | 1.9 | 17.6 | 13.2 | 8.4 | | Engineered Solutions | 8.3 | 7.0 | 6.9 | 11.1 | 10.7 | 10.6 | | Other | — | 0.1 | 0.1 | 0.3 | 0.4 | 0.5 | | General corporate | 5.6 | 2.5 | 0.8 | 3.3 | 3.0 | 3.0 | | Total | 21.5 | 17.8 | 12.4 | 41.7 | 34.2 | 27.9 | Note 8: Special Charges, Net This note details net special charges, primarily for restructuring initiatives including employee termination costs and facility consolidation activities - SPX recorded net special charges of $3.2 million in 2020, $4.4 million in 2019, and $3.7 million in 2018, primarily for restructuring initiatives[489][493] - These charges relate to employee termination costs, facility consolidation, other cash costs, and non-cash asset write-downs[493] - In 2020, charges included severance for HVAC and Detection & Measurement, wind-down activities at DBT, and asset impairment/legal entity reorganization at Corporate[494][495][496] Restructuring Liabilities Activity (2018-2020) | Metric | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :-------------------------- | :-------- | :-------- | :-------- | | Balance at beginning of year | 1.7 | 1.1 | 0.6 | | Special charges | 2.8 | 3.6 | 3.7 | | Utilization — cash | (2.8) | (2.9) | (3.2) | | Balance at the end of year | 1.5 | 1.7 | 1.1 | Note 9: Inventories, Net This note presents the components of inventories, net, and details the valuation methods used, including FIFO and LIFO Inventories, Net (Dec 31, 2019-2020) | Inventory Component | Dec 31, 2020 ($M) | Dec 31, 2019 ($M) | | :-------------------------- | :---------------- | :---------------- | | Finished goods | 52.9 | 57.6 | | Work in process | 22.3 | 19.3 | | Raw materials and purchased parts | 101.5 | 90.3 | | Total FIFO cost | 176.7 | 167.2 | | Excess of FIFO cost over LIFO inventory value | (14.7) | (12.3) | | Total inventories | 162.0 | 154.9 | - Inventories are valued using FIFO and LIFO methods, with approximately 38% of total inventory valued using LIFO at December 31, 2020[506] Note 10: Goodwill and Other Intangible Assets This note details goodwill by segment, identifiable intangible assets, amortization expense, and the results of annual goodwill impairment testing Goodwill by Reportable Segment (Dec 31, 2019-2020) | Segment | Dec 31, 2020 ($M) | Dec 31, 2019 ($M) | | :-------------------------- | :---------------- | :---------------- | | HVAC | 136.6 | 132.5 | | Detection and Measurement | 217.0 | 170.5 | | Engineered Solutions | 146.3 | 146.3 | | Total Goodwill | 499.9 | 449.3 | Identifiable Intangible Assets (Dec 31, 2019-2020) | Asset Type | Dec 31, 2020 Net Carrying Value ($M) | Dec 31, 2019 Net Carrying Value ($M) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | | Customer relationships | 87.2 | 68.7 | | Technology | 47.6 | 26.2 | | Other determinable lives | 6.3 | 3.4 | | Trademarks with indefinite lives | 163.9 | 153.4 | | Total Intangibles, net | 305.0 | 251.7 | - Amortization expense for intangible assets was $14.0 million in 2020, $8.9 million in 2019, and $4.1 million in 2018[511] - Annual goodwill impairment testing in Q4 2020 showed Cues and Patterson-Kelley had estimated fair values exceeding carrying values by approximately 12% and 3%, respectively, indicating lower headroom[514] - Impairment charges of $0.7 million related to certain trademarks were recorded in Q4 2020[516] Note 11: Employee Benefit Plans This note details SPX's defined benefit pension and postretirement plans, including funded status, key actuarial assumptions, and defined contribution plan information - SPX maintains defined benefit pension plans (domestic and foreign) and domestic postretirement plans, with actuarial gains and losses recognized in earnings annually[518][519][520] Pension Plans Funded Status (Dec 31, 2019-2020) | Metric | Domestic Pension Plans (2020, $M) | Domestic Pension Plans (2019, $M) | Foreign Pension Plans (2020, $M) | Foreign Pension Plans (2019, $M) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Projected benefit obligation — end of year | 364.7 | 348.2 | 192.2 | 175.0 | | Fair value of plan assets — end of year | 279.8 | 263.6 | 198.3 | 178.1 | | Funded status at year-end | (84.9) | (84.6) | 6.1 | 3.1 | - Estimated future benefit payments for domestic pension plans are $25.1 million in 2021, and for foreign pension plans are $5.0 million in 2021[534] - The weighted-average discount rate for domestic pension plans was 2.35% (2020) and 3.16% (2019), and for foreign pension plans was 1.76% (2020) and 2.27% (2019)[539] - SPX also maintains defined contribution retirement plans (401k and SRSP), contributing $11.3 million in 2020 to the 401k plan[544][545][547] Note 12: Income Taxes This note details income from continuing operations before taxes, effective tax rate reconciliation, deferred tax assets, unrecognized tax benefits, and CARES Act impacts Income from Continuing Operations Before Income Taxes (2018-2020) | Geographic Area | 2020 ($M) | 2019 ($M) | 2018 ($M) | | :---------------- | :-------- | :-------- | :-------- | | United States | 89.5 | 89.4 | 74.5 | | Foreign | 27.0 | (4.4) | 10.0 | | Total | 116.5 | 85.0 | 84.5 | Effective Income Tax Rate Reconciliation (2018-2020) | Item | 2020 | 2019 | 2018 | | :------------------------------------------ | :----- | :----- | :----- | | Tax at U.S. federal statutory rate | 21.0% | 21.0% | 21.0% | | State and local taxes, net of U.S. federal benefit | 3.2% | 3.2% | 2.9% | | U.S. credits and exemptions | (3.7)%