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SPX Corp. Reports Operating Results (10-Q)

August 05, 2010 | About:
10qk

10qk

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SPX Corp. (SPW) filed Quarterly Report for the period ended 2010-07-03.

Spx Corp. has a market cap of $3.07 billion; its shares were traded at around $61.5 with a P/E ratio of 17.6 and P/S ratio of 0.6. The dividend yield of Spx Corp. stocks is 1.7%. Spx Corp. had an annual average earning growth of 3.7% over the past 10 years.SPW is in the portfolios of Pioneer Investments, James Barrow of Barrow, Hanley, Mewhinney & Strauss, PRIMECAP Management, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

During the second quarter of 2010, we continued to see stabilization in a number of our businesses, as revenues and segment income for the quarter were comparable to the prior years second quarter (a year-over-year organic revenue decline of 2.0% and segment income of $135.5 and $135.9 in the second quarter of 2010 and 2009, respectively). Specifically, our early-cycle industrial businesses and our diagnostic service tools business have begun to improve, while our later-cycle businesses (e.g., our power transformer business and project related businesses within our Flow Technology segment) continue to be negatively impacted by the global economic recession. On a year-to-date basis compared to the prior year, organic revenue and segment income have declined 6.7% and 7.7%, respectively, while operating cash flows for the first six months of 2010 totaled $22.5 versus $26.9 for the same period of 2009. Other items of note that impacted operating results for the first six months of 2010 were as follows:

Other Expense, net Other expense, net, for the three months ended July 3, 2010 was composed primarily of charges associated with a net decline in fair value of our foreign currency protection agreements (FX forward contracts) and currency forward embedded derivatives (FX embedded derivatives) of $6.8 (see Note 11 to our condensed consolidated financial statements), partially offset by foreign currency transaction gains of $4.3 and investment income of $0.7. Other expense, net, for the three months ended June 27, 2009 was composed primarily of charges associated with a net decline in fair value of our FX forward contracts and FX embedded derivatives of $2.2 (see Note 11 to our condensed consolidated financial statements), partially offset by a gain of $1.4 associated with the final settlement of a product line sale that occurred in 2006.

Other expense, net, for the six months ended July 3, 2010 was composed primarily of charges associated with a net decline in fair value of our FX forward contracts and FX embedded derivatives of $19.1 (see Note 11 to our condensed consolidated financial statements), partially offset by foreign currency transaction gains of $3.7 and investment income of $1.5. Other expense, net, for the six months ended June 27, 2009 was composed primarily of charges associated with the net decline in fair value of our FX forward contracts and FX embedded derivatives of $9.2 (see Note 11 to our condensed consolidated financial statements) and foreign currency transaction losses of $5.1, partially offset by the gain of $1.4 noted above.

Income Tax Provision For the three months ended July 3, 2010, we recorded an income tax provision of $4.2 on $73.6 of pre-tax income from continuing operations, resulting in an effective tax rate of 5.7%. This compares to an income tax provision for the three months ended June 27, 2009 of $21.6 on $60.7 of pre-tax income from continuing operations, resulting in an effective tax rate of 35.6%. The effective income tax rate for the three months ended July 3, 2010 was impacted favorably by a tax benefit of $22.0 that was recorded during the period in connection with the completion of the field examinations of our 2006 and 2007 federal income tax returns.

For the six months ended July 3, 2010, we recorded an income tax provision of $15.9 on $103.0 of pre-tax income from continuing operations, resulting in an effective tax rate of 15.4%. This compares to an income tax provision for the six months ended June 27, 2009 of $33.9 on $111.3 of pre-tax income from continuing operations, resulting in an effective tax rate of 30.5%. The effective income tax rate for the six months ended July 3, 2010 was impacted favorably by the tax benefit of $22.0 noted above. This benefit was offset partially by a domestic charge of $6.2 associated with the taxation of prescription drug costs for retirees under Medicare Part D as a result of the first quarter 2010 enactment of the Patient Protection and Affordable Care Act. The low effective tax rate for the six months ended June 27, 2009 was due primarily to the favorable settlement of certain tax matters, which totaled $5.0.

Dezurik Sold for total consideration of $23.5, including $18.8 in cash and a promissory note of $4.7, resulting in a loss, net of taxes, of $1.0 during the first quarter of 2009. During the second quarter of 2009, we recorded a net charge of $0.2 in connection with adjustments to certain liabilities that we retained.

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