PART I—FINANCIAL INFORMATION

The accompanying notes are an integral part of these statements.

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The accompanying notes are an integral part of these statements.

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SPX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; in millions, except per share data)

(1)            BASIS OF PRESENTATION

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

Investments in unconsolidated companies where we exercise significant influence but do not have control are accounted for using the equity method. Our only significant investment reported under the equity method is our 44.5% interest in the EGS Electrical Group, LLC and Subsidiaries (“EGS”) joint venture, which we account for on a three-month lag. EGS’s revenues and our equity earnings from our investment in EGS totaled $99.0 and $5.1 and $140.1 and $11.1 for the three months ended June 27, 2009 and June 28, 2008, respectively. For the six months ended June 27, 2009 and June 28, 2008, EGS’s revenues and our equity earnings from our investment in EGS totaled $232.9 and $15.6 and $279.4 and $22.3, respectively.

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 2008 Annual Report on Form 10-K. Interim results are not necessarily indicative of expected results for a full year. We have reclassified certain prior year amounts to conform to the current year presentation, including the results of discontinued operations, the impact of the adoption of Statement of Financial Accounting Standard (“SFAS”) No. 160, “Noncontrolling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51” and the impact of adoption of Financial Accounting Standards Board (“FASB”) Staff Position (“FSP”) No. EITF 03-6-1. Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations (see Note 3 for information on discontinued operations).

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 calendar quarter. The interim closing dates for the first, second and third quarters of 2009 are March 28, June 27 and September 26, compared to March 29, June 28 and September 27 for 2008, respectively. This practice only impacts the quarterly reporting periods and not the annual reporting period. We had two fewer days in the first quarter of 2009 and will have one additional day in the fourth quarter of 2009 when compared to the respective 2008 periods.

We evaluated subsequent events (see Note 2) through July 29, 2009, the issuance date of our consolidated financial statements for the period ended June 27, 2009, as this is the date on which we filed such financial statements on Form 10-Q with the SEC.

(2)            NEW ACCOUNTING PRONOUNCEMENTS

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

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”), which replaces SFAS No. 141. SFAS No. 141(R) requires an acquiring entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. In addition, SFAS No. 141(R) will require acquisition costs to be expensed as incurred, acquired contingent liabilities will be recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies, in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date, restructuring costs associated with a business combination will be generally expensed subsequent to the acquisition date and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS No. 141(R) also includes a substantial number of new disclosure requirements. SFAS No. 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We adopted SFAS No. 141(R) on January 1, 2009, and we expect this statement will have an impact on our consolidated financial statements for acquisitions consummated after January 1, 2009, but the nature and magnitude of the specific effects will depend upon the terms and size of the acquisitions we consummate. In addition, during the first six months of 2009, there were no settlements of acquisition related liabilities for unrecognized tax benefits or reductions of acquisition-related valuation allowances.

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In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51.”  SFAS No. 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, SFAS No. 160 requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. In addition, SFAS No. 160 requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date. SFAS No. 160 also includes expanded disclosure requirements regarding the interests of the parent and the noncontrolling interest. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We adopted SFAS No. 160 on January 1, 2009. Upon adoption, we reclassified noncontrolling interest of $34.0 to a separate component of total equity within our condensed consolidated balance sheets.

In December 2007, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 07-01, “Accounting for Collaborative Arrangements.” EITF 07-01 defines a collaborative arrangement as a contractual arrangement in which the parties are (1) active participants to the arrangements and (2) exposed to significant risks and rewards that depend on the commercial success of the endeavor. EITF 07-01 requires that costs incurred and revenues generated from transactions with third parties be reported by the collaborators on the appropriate line item in their respective income statements. EITF 07-01 also states that the income statement characterization of payments between the participants to a collaborative arrangement should be based on other authoritative literature if the payments are within the scope of such literature. EITF 07-01 requires collaborators to disclose, in the footnotes to financial statements in the initial period of adoption and annually thereafter, (1) the income statement classification and amounts attributable to transactions arising from collaborative arrangements between participants for each period for which an income statement is presented and (2) information regarding the nature and purpose of the collaborative arrangement, the collaborators’ rights and obligations under the arrangement, and any accounting policies for the collaborative arrangement. EITF 07-01 is effective for fiscal years beginning after December 15, 2008. We adopted EITF 07-01 on January 1, 2009 with no material impact on our consolidated financial statements. See Note 13 for additional details on our consortium arrangements.

In February 2008, the FASB issued FSP No. FAS 157-2, “Effective Date of FASB Statement No. 157,” to defer the effective date of SFAS No. 157, “Fair Value Measurements,” for all nonfinancial assets and liabilities, except those items recognized or disclosed at fair value on an annual or more frequently recurring basis, until years beginning after November 15, 2008. We adopted FSP No. FAS 157-2 on January 1, 2009, with no material impact on our consolidated financial statements. See Note 15 for additional details on our fair value disclosures.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities - An Amendment of FASB Statement No. 133.” SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133 with the intent to provide users of financial statements with an enhanced understanding of (1)  how and why an entity uses derivative instruments; (2) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and (3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. To meet those objectives, SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS No. 161 is effective for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2008. We adopted SFAS No. 161 on January 1, 2009 with no material impact on our consolidated financial statements. See Note 11 for additional details on our derivative financial instruments.

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets.” FSP No. FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets.” The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other GAAP. FSP No. FAS 142-3 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2008. We adopted  FSP No. FAS 142-3 on January 1, 2009 with no material impact on our consolidated financial statements.

In June 2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” FSP No. EITF 03-6-1 states that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders and should be included in basic and diluted earnings per share calculations. FSP No. EITF 03-6-1 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2008. We adopted FSP No. EITF 03-6-1 on January 1, 2009. As of June 28, 2008, we had 0.548 outstanding restricted stock awards that contain rights to nonforfeitable dividends. The effect of including these awards increased the basic and dilutive shares for the three months

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ended June 28, 2008 by 0.561 and 0.260 shares, respectively, and for the six months ended June 28, 2008 by 0.571 and 0.274 shares, respectively.

In November 2008, the EITF reached a consensus on EITF Issue No. 08-6, “Equity Method Investment Accounting Considerations.” EITF 08-06 states that (1)  the determination of the initial carrying value of an equity method investment should be made by applying the cost accumulation model described in SFAS No. 141(R); (2) the other-than-temporary impairment model of APB Opinion No. 18 should be used when testing equity method investments for impairments; (3) share issuances by the investee should be accounted for as if the equity method investor had sold a proportionate share of its investment; and 4) when the investment is no longer within the scope of equity method accounting, the investor should prospectively apply the provisions of SFAS No. 115 and use the carrying amount of the investment as its initial cost. EITF 08-06 is effective for transactions occurring in fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We adopted EITF 08-06 on January 1, 2009 with no impact on our consolidated financial statements.

In December 2008, the FASB Issued FSP No. FAS 132(R)-1,”Employers’ Disclosures about Postretirement Benefit Plan Assets.”  The FSP amends SFAS No. 132(R) by providing guidance regarding employers’ disclosures about assets of a defined benefit pension or other postretirement plan.  The objective of the amended disclosures is to provide users of financial statements with an understanding of (1) how investment allocation decisions are made; (2) major categories of plan assets; (3) inputs and valuation techniques used to measure the fair value of plan assets; (4) the effect of fair value measurements using significant unobservable inputs on changes in plan assets for the period; and (5) significant concentration risks within plan assets.  FSP No. FAS 132(R)-1 is effective for fiscal years ending after December 15, 2009. We do not expect the adoption of FSP No. FAS 132(R)-1 to have a material impact on our consolidated financial statements.

In April 2009, the FASB Issued FSP No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.” This amendment clarifies requirements for the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination.  The FSP reiterates an asset acquired or a liability assumed in a business combination that arises from a contingency shall be recognized at fair value at the acquisition date during the measurement period.  However, in the event the fair value can not be determined during the measurement period, the SFAS No. 5 criteria shall be applied.  Contingent consideration arrangements of an acquiree assumed by the acquirer shall be recognized initially at fair value, and the acquirer shall develop a systematic and rational basis for subsequently measuring and accounting for assets and liabilities arising from contingencies.  In addition, the FSP states disclosed information shall enable users of its financial statements to evaluate the nature and financial effects of a business combination that occurs either during the current reporting period or after the reporting period but before the financial statements are issued. This FSP is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  We adopted FSP No. FAS 141(R)-1 on January 1, 2009 and we expect this FSP will have an impact on our consolidated financial statements for acquisitions consummated after January 1, 2009, but the nature and magnitude of the specific effects will depend upon the terms and size of the acquisitions we consummate.

In April 2009, the FASB issued FSP FAS No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly,” to provide additional guidance for estimating fair value in accordance with SFAS No. 157, “Fair Value Measurements.” The FSP identifies circumstances an entity must evaluate to assess whether a transaction is orderly or not orderly.  In addition, an entity must disclose within interim and annual periods the inputs and changes to valuation techniques used to measure fair value. The FSP also defines each major category for equity securities and debt securities to be major security types as described in SFAS No. 115.  The FSP is effective for interim and annual reporting periods ending after June 15, 2009.  We adopted FSP No. FAS 157-4 on June 27, 2009 with no material impact on our consolidated financial statements.

In April 2009, the FASB issued FSP FAS No. 115-2 and 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments,” which states an other-than-temporary impairment (“OTTI”) analysis is required to determine whether the holder of an investment in a debt or equity security, for which changes in fair value are not regularly recognized in earnings (such as securities classified as held-to-maturity or available-for-sale), should recognize a loss in earnings when the fair value of the investment is less than its amortized cost basis. The FSP requires the amount of the total OTTI related to credit issues to be recognized in earnings , while all other amounts of OTTI are recorded in other comprehensive income and amortized to earnings over the remaining life of the security. In addition, an entity is required to record the cumulative effect of the noncredit losses, previously recognized as OTTI, from retained earning into accumulated other comprehensive income as of the beginning of the current period. The FSP requires annual disclosures be made for interim periods, including the aging of unrealized losses. The FSP is effective for interim and annual reporting periods ending after June 15, 2009.  We adopted FSP No. 115-2 and 124-2 on June 27, 2009 with no impact on our consolidated financial statements.

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In April 2009, the FASB issued FSP FAS No. 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” to require disclosures about the fair value of financial instruments for interim reporting periods of publicly traded companies, as well as in annual financial statements. This FSP also amends APB Opinion No. 28, “Interim Financial Reporting,” to require those disclosures in summarized financial information at interim reporting periods. This FSP is effective for interim and annual reporting periods ending after June 15, 2009. We adopted FSP FAS No. 107-1 and APB 28-1 on June 27, 2009 with no material impact on our consolidated financial statements.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events,” which requires an entity to disclose the date through which it has evaluated subsequent events and the basis for that date, whether that date represents the date the financial statements were issued or were available to be issued.  The FSP is effective for interim and annual reporting periods ending after June 15, 2009. We adopted SFAS No. 165 on June 27, 2009 with no material impact on our consolidated financial statements (see Note 1).

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — An Amendment of FASB Statement No. 140.” The objective of SFAS No. 166 is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports regarding a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets. SFAS No. 166 requires enhanced disclosures to provide financial statement users with greater transparency about transfers of financial assets and a transferor’s continuing involvement with transfers of financial assets accounted for as sales. SFAS No. 166 is effective for interim and annual reporting periods beginning after November 15, 2009. We do not expect the adoption of SFAS No. 166 to have a material impact on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R).” The objective of SFAS No. 167 is to amend certain requirements of FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities,” (“FIN 46”) to improve financial reporting by enterprises involved with variable interest entities (“VIE”) and to provide more relevant and reliable information to users of financial statements. SFAS No. 167 no longer exempts qualifying special-purpose entities from the scope of FIN 46. In addition, the amended guidance requires the continuous reconsideration for determining whether an enterprise is the primary beneficiary of another entity, and ignores kick-out rights unless the rights are held by a single enterprise.  Consolidation is required if an entity has power and receives benefits or absorbs losses that are potentially significant to the VIE. However, consolidation is not necessary if power is shared amongst unrelated parties. SFAS No. 167 requires enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a VIE. SFAS No. 167 is effective for interim and annual reporting periods beginning after November 15, 2009. We do not expect the adoption of SFAS No. 167 to have a material impact on our consolidated financial statements.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles - A Replacement of FASB Statement No. 162.”  The objective is to replace SFAS No. 162 and to establish the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. SFAS No. 168 does not change GAAP. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  The adoption of SFAS No. 168 will have no material impact on our consolidated financial statements.

(3)            ACQUISITIONS AND DISCONTINUED OPERATIONS

Acquisitions

During September 2008, our Test and Measurement segment completed the acquisition of AutoBoss Tech Inc., a China-based manufacturer of diagnostic tools and equipment serving China’s vehicle maintenance and repair market, for a purchase price of $9.7. The acquired business had revenues of approximately $7.9 in the 12 months prior to its acquisition.

Discontinued Operations

As part of our operating strategy, we regularly review and negotiate potential divestitures, some of which are or may be material. As a result of this continuous review, we determined that certain of our businesses would be better strategic fits with other companies or investors. We report discontinued operations in accordance with the guidance of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Accordingly, 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 within the next 12 months. The following businesses, which have been sold, met these requirements, and therefore have been reported

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as discontinued operations for the periods presented:

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. During the fourth quarter of 2008, we recorded a net charge of $6.0 to “Gain (loss) on disposition of discontinued operations, net of tax” in order to reduce the carrying value of the net assets to be sold to their estimated net realizable value.

Scales — Sold for cash consideration of $16.8, resulting in a loss, net of taxes, of $1.2 and $3.5 during the third and fourth quarters of 2008, respectively.

LDS — Sold for cash consideration of $82.5, resulting in a gain, net of taxes, of $17.1 during the fourth quarter of 2008. During the first quarter of 2009, we recorded a net charge of $2.6 in connection with an adjustment to certain liabilities that we retained. In addition, during the second quarter of 2009, we recorded additional income tax expense of $1.6 related to the disposition.

Air Filtration — Sold for cash consideration of $38.5, resulting in an aggregate loss, net of taxes, of $0.8 during 2008, including a net charge during the first quarter of 2008 of $3.1 to “Gain (loss) on disposition of discontinued operations, net of tax” to adjust the deferred tax assets of the Air Filtration business to their estimated realizable value. During 2007, we recorded a net charge of $11.0 to “Gain (loss) on disposition of discontinued operations, net of tax” in order to reduce the carrying value of the net assets to be sold to their estimated net realizable value.

During the fourth quarter of 2008, we committed to a plan to divest a business within our Industrial Products and Services segment. As a result of this planned divestiture, during the fourth quarter of 2008 we recorded a net impairment charge of $23.0 attributable to SPX common shareholders in order to reduce the carrying value of the net assets to be sold to their estimated net realizable value. During the first quarter of 2009, we recorded an additional net charge of $8.5 based on indications of interest for the business. In addition, during the second quarter of 2009, we committed to a plan to divest another business within our Industrial Products and Services segment. As a result of this planned divestiture, we recorded a net charge of $7.3 during the second quarter of 2009 to “Gain (loss) on disposition of discontinued operations, net of tax” in order to reduce the carrying value of the net assets to be sold to their estimated net realizable value. We have reported, for all periods presented, the financial condition, results of operations, and cash flows of these businesses as discontinued operations in our condensed consolidated financial statements. We are actively pursuing the sale of these businesses and anticipate that the sales will be completed during the next twelve months.

In addition to the businesses discussed above, we recognized a net gain of $2.6 during the three and six months ended June 27, 2009 and a net gain of $0.1 during the three months ended June 28, 2008, resulting from net adjustments to gains (losses) on sales from previously discontinued businesses. Refer to the consolidated financial statements contained in our 2008 Annual Report on Form 10-K for the disclosure of all discontinued businesses for fiscal years 2006 through 2008.

The final sales price for certain of the divested businesses is subject to adjustment based on working capital existing at the respective closing dates. The working capital figures are subject to agreement with the buyers or if we cannot come to agreement, an arbitration process. Final agreement of the working capital figures for certain of these transactions has yet to occur.  In addition, changes in estimates associated with liabilities retained in connection with a business divestiture (e.g., income taxes) may occur. It is possible that the sales price and resulting gains (losses) on these, and other previous divestitures, may be materially adjusted in subsequent periods.

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For the three and six months ended June 27, 2009 and June 28, 2008, income (loss) from discontinued operations and the related income taxes are shown below:

For the three and six months ended June 27, 2009 and June 28, 2008, results of operations for our businesses reported as discontinued operations were as follows:

The major classes of assets and liabilities, excluding intercompany balances, of the businesses reported as discontinued operations included in the accompanying condensed consolidated balance sheets are shown below:

(4)            BUSINESS SEGMENT INFORMATION

We are a global provider of flow technology, test and measurement products and services, thermal equipment and services, and industrial products and services, with operations in over 40 countries. We offer a diverse collection of products, which include, among other things, valves, fluid handling equipment, metering and mixing solutions, specialty service tools, diagnostic systems, service equipment and technical information services, cooling, heating and ventilation products, power transformers, and television and radio broadcast antennas. Our products are used by a broad array of customers in various industries, including power generation, chemical processing, pharmaceuticals, infrastructure, mineral processing, petrochemical, automotive service, telecommunications and transportation.

We have aggregated our operating segments into four reportable segments in accordance with the criteria defined in SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” The segments are Flow Technology, Test and Measurement, Thermal Equipment and Services and Industrial Products and Services.  The factors considered in determining our aggregated segments are the economic similarity of the businesses, the nature of products sold or services provided, production processes, types of customers and distribution methods. In determining our segments, we apply the threshold criteria of SFAS No. 131 to operating income or loss of each segment before considering impairment and special charges, pension and postretirement expenses, stock-based compensation and other indirect corporate expense. This is consistent with the way our chief operating decision maker evaluates the results of each segment.

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Flow Technology

Our Flow Technology segment designs, manufactures, and markets solutions and products that are used to blend, meter and transport fluids, as well as air and gas filtration and dehydration products.  Our Flow Technology businesses focus on innovative, highly engineered new product introductions and expansion from products to systems and services to create total customer solutions. Products for the segment include high-integrity pumps, valves, heat exchangers, fluid mixers, agitators, metering systems, filters and dehydration equipment for the food and beverage and pharmaceutical processing, power generation, general industrial, chemical processing, oil and gas processing, air dehydration and mining markets.

Test and Measurement

Our Test and Measurement segment engineers and manufactures branded, technologically advanced test and measurement products used on a global basis across the transportation, telecommunications and utility industries. Our technology supports the introduction of new systems, expanded services and sophisticated testing and validation. Products for the segment include specialty automotive diagnostic service tools, fare-collection systems and portable cable and pipe locators. The segment continues to focus on initiatives such as lean manufacturing, expanding its commercialization of the European and Chinese markets and leveraging its outsourcing model.

Thermal Equipment and Services

Our Thermal Equipment and Services segment engineers, manufactures and services cooling, heating and ventilation products for markets throughout the world. Products for the segment include dry, wet and hybrid cooling systems for the power generation, refrigeration, HVAC and industrial markets, as well as hydronic and heating and ventilation products for the commercial and residential markets. This segment also provides thermal components for power and steam generation plants and engineered services to maintain, refurbish, upgrade and modernize power stations. The segment continues to focus on expanding its global reach, as well as increasing thermal components and service offerings, particularly in South Africa, Europe, and Asia Pacific. The segment’s South African subsidiary has a Black Economic Empowerment minority shareholder, which holds a 25.1% interest.

Industrial Products and Services

Our Industrial Products and Services segment comprises businesses that design, manufacture and market power systems, industrial tools and hydraulic units, precision machine components for the aerospace industry, crystal growing machines for the solar power generation market, and television and radio broadcast antenna systems. This segment continues to focus on lean initiatives and global expansion opportunities.

Corporate Expense

Corporate expense generally relates to the cost of our Charlotte, NC corporate headquarters and our Asia-Pacific center in Shanghai, China.

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Financial data for our business segments, including the results of businesses acquired from the respective dates of acquisition, were as follows:

(1)            Under the percentage of completion method, we recognized revenues of $323.4 and $359.7 in the three months ended June 27, 2009 and June 28, 2008, respectively. For the six months ended June 27, 2009 and June 28, 2008, revenues under the percentage of completion method were $627.3 and $687.0, respectively. Costs and estimated earnings in excess of billings on contracts accounted for under the percentage of completion method were $259.4 and $195.7 as of June 27, 2009 and December 31, 2008, respectively, and were classified as a component of “Accounts receivable, net” in the condensed consolidated balance sheets. Billings in excess of costs and estimated earnings on uncompleted contracts accounted for under the percentage of completion method were $338.2 and $337.6 as of June 27, 2009 and December 31, 2008, respectively. The June 27, 2009 balance includes $319.0 reported as a component of “Accrued expenses” and $19.2 as a component of “Other long-term liabilities” in the condensed consolidated balance sheet. The December 31, 2008 balance includes $323.4 reported as a component of “Accrued expenses” and $14.2 as a component of “Other long-term liabilities” in the condensed consolidated balance sheet.

Flow Technology Segment — Charges for the three and six months ended June 27, 2009 related primarily to exit costs for locations in Orebro, Sweden; Mexico City, Mexico; Rochester, New York; and Buffalo, NY, as well as additional integration costs associated with the December 31, 2007 acquisition of APV. The charges for the three and six months ended June 28, 2008 related primarily to the relocation of the segment’s headquarters from Delavan, WI to Charlotte, NC.

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Test and Measurement Segment – Charges for the three and six months ended June 27, 2009 related to costs associated with headcount reductions and integration activities that impacted facilities in North America, Europe and Asia- Pacific, primarily in response to the continued difficulties being experienced by the global vehicle manufacturers and their dealer service networks. The charges for the three and six months ended June 28, 2008 related primarily to costs associated with a plan to consolidate distribution activities within the segment, as well as costs associated with the closure of a manufacturing facility in Owatonna, MN.

Thermal Equipment and Services Segment – Charges for the three and six months ended June 27, 2009 related primarily to costs associated with headcount reductions at facilities in Ratingen, Germany; Gallarate, Italy; Guangzhou, China; Worcester, UK; Michigan City, IN; and Eden, NC. The charges for the three and six months ended June 28, 2008 related primarily to costs associated with the shut-down of a facility in Houston, TX.

Industrial Products and Services Segment – Charges for the three and six months ended June 27, 2009 related primarily to costs associated with headcount reductions at facilities in Rockford, IL and Waukesha, WI.

Corporate – Charges for the three and six months ended June 27, 2009 related primarily to our legal entity reduction initiative and the closure of our information technology data center in Horsham, P.A. The charges for the three and six months ended June 28, 2008 related primarily to a second quarter impairment charge of $1.0 and costs associated with our legal entity reduction initiative.

The following is an analysis of our restructuring and integration liabilities for the six months ended June 27, 2009 and June 28, 2008:

(1)            For the six months ended June 27, 2009 and June 28, 2008 excluded $2.4 and $1.2, respectively, of non-cash special charges relating to asset impairments that had an impact on special charges but not the related liabilities.

(2)            The balance at June 27, 2009 was composed of $14.8 relating to acquisition integration plans and $20.5 for various restructuring plans.

Inventories include material, labor and factory overhead costs and are reduced, when necessary, to estimated realizable values. Approximately 39% and 36% of the total inventory at June 27, 2009 and December 31, 2008, respectively, were domestic inventories valued using the last-in, first-out (“LIFO”) method. Other inventories are valued using the first-in, first-out (“FIFO”) method. Progress payments, which are netted against work in process, were $2.6 and $4.1 at June 27, 2009 and December 31, 2008, respectively.

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(1)            Represents adjustments to acquisition accounting related to recent acquisitions and changes from foreign currency translation of $7.2 and $(4.7), respectively.

Estimated annual amortization expense related to these intangible assets is $21.3 in 2009, $21.1 in 2010, $20.0 in 2011, $19.1 in 2012 and $18.5 in 2013.

At June 27, 2009, the net carrying value of net intangible assets with determinable lives consisted of $146.8 in the Flow Technology segment, $75.8 in the Test and Measurement segment, and $25.3 in the Thermal Equipment and Services segment. Trademarks with indefinite lives were associated with $204.9 in the Flow Technology segment, $53.7 in the Test and Measurement segment, $114.6 in the Thermal Equipment and Services segment, and $15.0 in the Industrial Products and Services segment.

Consistent with the requirements of SFAS No. 142, we annually test the recoverability of our indefinite-lived intangible assets during the fourth quarter based on a measurement date as of the end of the third quarter and continually monitor impairment indicators across all our reporting units. Any significant change in market conditions and estimates or judgments used to determine expected future cash flows that indicate a reduction in carrying value may give rise to impairment in the period that the change becomes known.

The estimated fair value of our Service Solutions reporting unit (our specialty diagnostic service tools business in our Test and Measurement segment) exceeds the carrying value of its net assets by approximately 2%. Any unfavorable changes in assumptions used in determining the estimated fair value of Service Solutions could result in its estimated fair value falling below the carrying value of its net assets. The aggregate goodwill and indefinite-lived intangible asset balance for Service Solutions was $383.2 at June 27, 2009.  We will continue to monitor impairment indicators across our reporting units, including Service Solutions.

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(9)            EMPLOYEE BENEFIT PLANS

Net periodic benefit expense for our pension and postretirement plans includes the following components: