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SPX Corporation 2nd Quarter 2008 Results

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  • 1. 2008 Second Quarter Results July 30, 2008
  • 2. Forward-Looking Statements Certain statements contained in this presentation that are not historical facts, including any statements as to future market conditions, results of operations and financial projections, are forward-looking statements and are thus prospective. These forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Particular risks facing SPX include economic, business and other risks stemming from our international operations, legal and regulatory risks, cost of raw materials, pricing pressures, pension funding requirements, integration of acquisitions and changes in the economy. More information regarding such risks can be found in SPX’s SEC filings. Although SPX believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. In addition, estimates of future operating results are based on the company’s current complement of businesses, which is subject to change. Statements in this presentation are only as of the time made and SPX does not intend to update any statements made in this presentation except as required by regulatory authorities. This presentation includes non-GAAP financial measures. A copy of this presentation, including a reconciliation of the non-GAAP financial measures with the most comparable measures calculated and presented in accordance with GAAP, is available on our website at www.spx.com. PAGE 2
  • 3. Introduction PAGE 3
  • 4. Q2 Financial Highlights ($ millions, except per share data) Comments Q2 2008 Earnings Per Share $1.70 +37% Revenue $1,556 +29% Organic Growth 4% Strong Process Equipment Demand Segment Income Margin 13.4% +100 points Free Cash Flow $22 On track operationally Note: Data from continuing operations, see appendix for non-GAAP reconciliations 37% Earnings Growth in Q2 2008; Raising 2008 Full Year EPS Guidance 20 Cents to $6.40 to $6.60 PAGE 4
  • 5. Q2 Financial Results ($ millions) Segment Income Revenue & Margin $1,556 29% 40% $209 29% 40% $149 $1,208 13.4% 12.4% Q2 2007 Q2 2008 Q2 2007 Q2 2008 40% increase in segment income 21% acquisition growth 100 points of margin expansion: 4% organic growth + Power market strength 5% benefit from foreign currency + Lean and Supply-Chain improvements – APV Dilution Note: Data from continuing operations; see appendix for non-GAAP reconciliations 4% Organic Growth; 100 Points of Segment Margin Expansion PAGE 5
  • 6. Q2 Earnings Per Share Year-Over-Year Changes to Earnings Per Share Earnings Per Share 37% 37% Q2 2007 EPS $1.24 $1.70 Segment income +$0.74 $1.24 Interest expense ($0.15) Tax rate ($0.15) Other items $0.02 Q2 2008 EPS $1.70 Q2 2007 Q2 2008 Note: Data from continuing operations Improved Operating Performance and 2007 Acquisitions Were the Primary Drivers of Increased Earnings PAGE 6
  • 7. Balance Sheet ($ millions) Key Balance Sheet Debt to Capital Accounts at, 44.0% 41.0% 12/31/07 6/30/08 Cash $354 $420 Other Current Assets 2,342 2,607 Total Assets 6,237 6,645 Q4 2007 Q2 2008 Debt to EBITDA (1) 2.3x Total Debt $1,569 $1,596 2.0x Other Current Liabilities 1,837 1,936 1.8x 1.5x Shareholders' Equity 2,006 2,312 Q4 2007 Q2 2008 Net Leverage Gross Leverage Consolidated leverage ratios; Net and Gross Debt to EBITDA as defined in the credit facility (1) Balance Sheet Generally In-Line with 12/31/2007; Gross Leverage Ratio at the Top End of Target Range PAGE 7
  • 8. SPX Global End Markets 2007 Pro Forma 2008E Market Trends Revenue by End Market Power & Energy Global Infrastructure 53% Sanitary HVAC, Telecom, Other General Industrial Power & 20% Energy 33% Tools & HVAC, Telecom, Other Diagnostics 20% Tools & Diagnostics Sanitary 14% General Industrial 13% Mid/High Double-Digit Flat / Single Digit Growth Modest Decline Growth Note: Data from continuing operations, pro forma for APV acquisition Order Trends Remain Positive in Most Key End Markets PAGE 8
  • 9. 2008 First Half Overview ($ millions) 2H 2008 1H 2008 Revenue and Key Initiatives Segment Margins 33% 33% Organic growth $2,949 Free Cash Flow conversion $2,223 APV integration 12.6% Capital allocation 11.4% 1st Half 2007 1st Half 2008 63% Year-Over-Year Earnings Growth in 1H 2008; 2H 2008 Focus on Operating Execution and APV Integration PAGE 9
  • 10. 2008 Full Year Guidance ($ millions, except per share data) Previous Updated Mid-Point Guidance Range Guidance Range Increase 2008E EPS $6.20 to $6.40 $6.40 to $6.60 +$0.20 2008E Free Cash Flow: $260 to $300 $300 to $320 +$30 Note: Data from continuing operations; See appendix for non-GAAP reconciliations Raising 2008 EPS from Continuing Operations Guidance Range 20 Cents to $6.40 to $6.60 PAGE 10
  • 11. Q2 Segment Analysis PAGE 11
  • 12. Flow Technology: Q2 Financial Results ($ millions) Q2 Revenue Q2 Segment Income & Margin $70 $547 97% 97% $45 $278 17.4% 16.0% APV Dilution: ~460 points 12.8% 10.8% Q2 2007 Q2 2008 Q2 2007 Q2 2008 79% acquisition growth from APV Excluding APV Including APV 14% organic growth: 58% increase in segment income Demand in power, oil and gas and sanitary markets 140 points of margin expansion in core business 4% foreign exchange benefit APV operating profit: 6% Note: Data from continuing operations; see appendix for non-GAAP reconciliations Strong Global Demand for Process Equipment; Core Margin Expansion Offset by APV Dilution PAGE 12
  • 13. Flow Technology: Full Year Analysis ($ millions) Full Year Revenue & Segment Margin Key 2008 Drivers: + 91% to 93% APV Integration APV Revenue: $885 to $900m Global energy infrastructure development: $1,121 Power, oil & gas, sanitary 16.5% to 17.0% APV Dilution: 15.8% ~470 points Leverage on organic growth 11.8% to 12.3% 11.3% 2007 2008E Excluding APV Including APV Note: Data from continuing operations; see appendix for non-GAAP reconciliations Targeting 7% to 8% Organic Growth in 2008 PAGE 13
  • 14. Thermal Equipment and Services: Q2 Financial Results ($ millions) Q2 Revenue Q2 Segment Income & Margin 6% 6% $409 $46 $388 $38 11.1% 9.7% Q2 2007 Q2 2008 Q2 2007 Q2 2008 2% organic decline: 21% increase in segment income Increased local Chinese competitors 140 points of margin expansion: Uneven nature of infrastructure projects Improved contract execution 7% foreign exchange benefit Operating improvements across all the product lines Backlog increased 43% to $2b Note: Data from continuing operations; see appendix for non-GAAP reconciliations 21% Increase in Segment Income; 140 Points of Segment Margin Expansion PAGE 14
  • 15. Thermal Equipment and Services: Full Year Analysis ($ millions) Key 2008 Drivers: Full Year Revenue & Segment Margin Global demand for power and energy infrastructure +11 to 13% $100m Qatar contract: $1,561 Dry cooling system for Linde/Shell Pearl petrochemical complex 10.6% to 11.1% 10.4% Majority of work expected to be completed in 2008 Discipline on project bids Operating improvements 2007 2008E Note: Data from continuing operations; see appendix for non-GAAP reconciliations Expect 11% to 13% Total Revenue Growth; Expect Margins Between 10.6% and 11.1% PAGE 15
  • 16. Test and Measurement: Q2 Financial Results ($ millions) Q2 Revenue Q2 Segment Income & Margin 12% 12% $324 $37 $289 $33 11.4% 11.3% Q2 2007 Q2 2008 Q2 2007 Q2 2008 11% acquisition growth: 13% increase in segment income JCD & Matra 10 points of margin expansion: 3% organic decline + Strong European OEM + U.S. manufacturing integration 5% foreign exchange benefit – Reduced U.S. aftermarket volume Note: Data from continuing operations; see appendix for non-GAAP reconciliations Growth in Europe and Integration Actions, Offset Soft U.S. Aftermarket Demand PAGE 16
  • 17. Test and Measurement: Full Year Analysis ($ millions) Full Year Revenue & Key 2008 Drivers: Segment Margin Integration of European +9 to acquisitions 11% North American aftermarket $1,098 remains challenging Focus on long-term strategy: 10.5% to 10.9% Global expansion into Europe 11.0% and Asia Integration of U.S. manufacturing New product development 2007 2008E Note: Data from continuing operations; see appendix for non-GAAP reconciliations Challenging N.A. Aftermarket in 2008; Focused on Long-Term Strategy for Global Expansion PAGE 17
  • 18. Industrial Products and Services: Q2 Financial Results ($ millions) Q2 Revenue Q2 Segment Income & Margin $57 9% 9% $276 $253 $34 20.5% 13.5% Q2 2007 Q2 2008 Q2 2007 Q2 2008 8% organic growth 65% increase in segment income Strong demand for Broadcast and Solar 700 points of margin expansion: equipment Pricing Midwest flooding caused timing delays on Leverage on organic growth transformer shipments Lean and supply chain improvements Note: Data from continuing operations; see appendix for non-GAAP reconciliations Strong Demand and Margin Expansion Continued in Q2 PAGE 18
  • 19. Industrial Products and Services: Full Year Analysis ($ millions) Full Year Revenue & Key 2008 Drivers: Segment Margin U.S. investment in transmission +18% to and distribution infrastructure 20% Strong backlog $966 Positive growth in aerospace, 20.2% to broadcast, hydraulic tools and 20.7% solar equipment 16.2% Pricing strength Lean process improvements and capacity expansion 2007 2008E Note: Data from continuing operations; see appendix for non-GAAP reconciliations Strong U.S. Demand for T&D Infrastructure Driving Margin Expansion and Double-Digit Organic Growth PAGE 19
  • 20. Free Cash Flow and Capital Allocation PAGE 20
  • 21. Free Cash Flow ($ millions) 1H Free Cash Flow 1H 2008 Key Drivers Improved free cash flow performance $62 from base businesses Increased capital spending APV working capital investments ($3) Increased interest and tax payments ($37) $25m reclass of employee income tax 1H 2006 1H 2007 1H 2008 withholding on vested restricted stock awards from operating to financing $23m related to Q1 Note: See appendix for non-GAAP reconciliations Improved 1H Free Cash Flow Performance from Base Businesses, Offset by Interest and Tax Payments, APV and Capital Investments PAGE 21
  • 22. Free Cash Flow ($ millions) 2H Free Cash Flow Full Year Free Cash Flow $303m $300m to to $323m $320m $313 $287 $251 $250 (1) (1) (2) 2H 2006 2H 2007 2H 2008E 2006 2007 2008 (1) Excludes a $67m tax payment made in Q4 2006 (2) Includes $30m to $50m of cash restructuring for the APV acquisition and elevated capital spending of $140m to $150m Note: See appendix for non-GAAP reconciliations Strong Second Half Expectations Consistent with Prior Years; On Track for 2008 Free Cash Flow Target of $300m to $320m PAGE 22
  • 23. Capital Allocation Methodology Target Leverage Range: 1.5x to 2.0x Gross Debt to EBITDA (1) Gross Debt to EBITDA (1) Excess Capital Usage Debt reduction > 2.0x Strategic acquisitions < 2.0x Share repurchases Consolidated leverage ratios; Gross Debt to EBITDA as defined in the credit facility (1) 6/30/2008 Gross Debt to EBITDA at 2.0x PAGE 23
  • 24. 2008 Financial Targets PAGE 24
  • 25. 2008 Q3 Targets Q3 2007 Q3 2008E Excluding APV ($ millions, except per share data) Revenue $1,190 +34% to 36% +15% to 17% Segment Income $ $168 $207 to $212 +23% to 26% +23% to 26% Segment Income % 14.2% 12.9% to 13.1% 13.8% to 14.0% (110) to (130) bps (110) to (130) bps EPS $1.38 (1) $1.58 - $1.65 (1) Adjusted EPS, see appendix for reconciliation +15% to 20% +15% to 20% Note: Data from continuing operations 15% to 20% Earnings Growth Expected in Q3 PAGE 25
  • 26. 2008 Financial Targets 2008 Target Range ($ millions, except per share data) Comments +30% to 33% Organic: 7% to 8% Revenue 12.8% to 13.3% ~flat Segment Income Margin 13.9% to 14.4% +90 to 140 bps Excluding APV 32% to 36% (1) $6.40 to $6.60 Earnings Per Share $300 to $320 85% to 90% of NI Free Cash Flow $140 to $150 Capacity, Lean Capital Spending & IT Investments As compared to 2007 adjusted EPS (1) Note: Data from continuing operations; see appendix for non-GAAP reconciliations Targeting Over 30% Revenue and Earnings Growth in 2008 PAGE 26
  • 27. 2008 Potential Upsides & Downsides Upside Potentials Downside Potentials Stronger organic growth End market slowdown Speed/cost of APV integration Speed/cost of APV integration Acquisitions Disposals Foreign currency impacts Increasing raw material costs Lower tax rate Foreign currency impacts Certain Events Could Influence Actual Earnings Per Share PAGE 27
  • 28. Summary PAGE 28
  • 29. Backlog Development ($ millions) 62% $2,003 $782 $721 62% Q2 2008 $1,401 $799 $696 Q1 2008 $1,254 $731 $640 Q4 2007 $1,201 $365 $568 Q2 2007 $0 $1,000 $2,000 $3,000 $4,000 Thermal Flow Industrial SPX’s Total Backlog Has Grown 62 Percent Since Q2 2007; Power and Energy and Process Equipment Markets Have Driven Growth PAGE 29
  • 30. Thermal Equipment Orders SPX Dry Cooling ACC System SPX Geothermal Example in Iceland Customer: Alstom Customer: Orkuveita Reykjavikur Project: Provide Dry Cooling System Project: Provide cold-end solution and feedwater heaters for coal-fired for 5 geothermal plants in Iceland power plants in South Africa Order size: ~$100m Order size: ~$500m SPX Now has More Than $700m of Backlog in South Africa PAGE 30
  • 31. Global, Special Service Tools and Equipment Order JOHN DEERE Customer: Project: Provide all special service tools used throughout John Deere’s complete global network Order length: 5-year, renewable contract 5 Year Contract With John Deere Demonstrates SPX’s Global Capability and Increases SPX’s Exposure to Non-Automotive OEM’s PAGE 31
  • 32. SPX Earnings Growth …Driving Earnings Growth* Three Global Growth Markets… 17% 58% ~34% 17% 58% ~34% $6.40 to $6.60 e Pr ur oc ct ru es st s ra Eq nf $4.85 u lI ip ba m en lo G t Tools & Diagnostics $3.07 $2.62 2005 2006 2007 2008E *2005 – 2007 adjusted for certain items, see appendix for reconciliations SPX Well Positioned for Future Growth in Global Infrastructure, Process Equipment and Tools & Diagnostics Markets PAGE 32
  • 33. Questions PAGE 33
  • 34. Appendix PAGE 34
  • 35. Balance Sheet ($ millions) 12/31/07 6/30/08 Change Cash $354 $420 $66 Other Current Assets 2,342 2,607 265 Goodwill 1,944 1,991 47 Other Assets 1,597 1,627 30 Total Assets $6,237 $6,645 $407 Other Current Liabilities $1,838 $1,936 $98 Total Debt 1,569 1,596 28 Long-Term Liabilities 825 801 (24) Shareholders' Equity 2,006 2,312 306 Total Liabilities and Shareholders' $6,237 $6,645 $407 Equity Debt / Capital Ratio 44% 41% (1) LTM EBITDA $663 $779 (1) Net Debt / EBITDA 1.83x 1.50x Gross Debt / EBITDA (1) 2.29x 1.98x (1) As defined in the SPX credit facility PAGE 35
  • 36. Full Year Financial Model 2008E ($ millions, except per share data) Guidance 2007 Mid-Point Revenue $4,747 $6,260 Segment Income Margin 13.0% 13.1% Corporate overhead (95) (102) Pension / PRHC (44) (39) Stock-based compensation (41) (46) Special charges (8) (20) Operating Income $428 $615 % of revenues 9.0% 9.8% Equity Earnings in J/V 40 46 Other Income/(Expense) (5) (10) Interest Expense (71) (110) Pre-Tax Income from Continuing Operations $392 $542 Tax Provision (126) (186) Income from Continuing Operations $266.3 $356 Tax Rate 32% 34% Weighted Average Dilutive Shares Outstanding 56 55 EPS from continuing operations $ 4.73 $ 6.50 EPS from businesses discontinued in 2008 $ 0.12 Adjusted EPS $ 4.85 (1) Guidance Range $6.40 to $6.60 EBITDA $ 663 $ 850 Note: Data from continuing operations Adjusted EPS, includes businesses discontinued in 2008, see appendix for reconciliation (1) 2008E Mid-Point EPS Guidance is $6.50 Per Share PAGE 36
  • 37. Expected APV Impact 2008E APV Financial Modeling Targets Revenue: ~3-5% revenue growth ($885m to $900m) Operating margin: ~5% Interest expense: ~$40m Cash restructuring $30m to $50m Capital spending: ~$15m Depreciation expense: ~$15m Note: Quarterly results may vary Expect APV Acquisition to Dilute Consolidated Margin Performance; Neutral to Slightly Accretive Impact to EPS PAGE 37
  • 38. Pro Forma APV Calculation Pro Forma Base Flow Flow Segment APV Segment Q2 2007 Revenue $278 $192 $470 Segment Income $45 $6 $51 Segment Margin 16.0% 3.1% 10.8% Q2 2008 Revenue $329 $217 $547 Segment Income $57 $13 $70 Segment Margin 17.4% 5.9% 12.8% Note: Data from continuing operations PAGE 38
  • 39. Pro Forma Calculation Segm ent Segm ent Revenue Incom e Margin 2007 SP X $ 4,747 $ 616 13.0% APV $ 876 $19 2.2% P ro Fo rma SP X $ 5,623 $ 635 1 .3% 1 2008E SP X $ 5,285 - $ 5,410 13.9% to 14.4% APV $ 885 - $ 900 ~5% To tal SP X $ 6,1 - $ 6,330 90 12.8% to 13.3% 2008E SP X Flo w Techno lo gy 16.5% to 17.0% APV ~5% To tal SP X Flo w Technlo gy 1 .8% to 1 1 2.3% Note: Data from continuing operations PAGE 39
  • 40. Re-Stated Quarterly Segment Data First Quarter Second Quarter Third Quarter Fourth Quarter Full Year 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 Flow Technology Revenue $194 $251 $215 $278 $212 $269 $244 $323 $866 $1,121 Segment Income $28 $38 $34 $45 $34 $45 $37 $50 $133 $177 Segment Margins 14.3% 15.0% 15.9% 16.0% 16.2% 16.8% 15.2% 15.4% 15.4% 15.8% Test and Measurement Revenue $242 $240 $270 $289 $260 $250 $296 $320 $1,067 $1,098 Segment Income $22 $24 $40 $33 $42 $23 $46 $41 $150 $120 Segment Margins 9.3% 9.9% 14.7% 11.3% 16.3% 9.2% 15.6% 12.7% 14.1% 10.9% Thermal Equipment and Services Revenue $275 $313 $300 $388 $322 $422 $431 $438 $1,328 $1,561 Segment Income $12 $16 $15 $38 $34 $57 $50 $52 $111 $163 Segment Margins 4.4% 5.2% 4.9% 9.8% 10.7% 13.4% 11.7% 12.0% 8.4% 10.4% Industrial Products and Services Revenue $196 $212 $207 $253 $206 $249 $227 $253 $837 $966 Segment Income $19 $26 $22 $34 $25 $44 $33 $52 $99 $156 Segment Margins 9.6% 12.3% 10.8% 13.5% 11.9% 17.7% 14.6% 20.5% 11.8% 16.2% Note: Data from continuing operations PAGE 40
  • 41. Non-GAAP Reconciliations PAGE 41
  • 42. Q2 2008 Organic Revenue Growth Reconciliation Quarter Ended June 30, 2008 Net Revenue Acquisitions/ Organic Foreign Growth Divestitures Growth Currency Flow 96.5% 78.6% 3.5% 14.4% Test 12.4% 10.5% 4.7% -2.8% Thermal 5.5% 0.0% 7.1% -1.6% Industrial 9.0% 0.0% 1.2% 7.8% Consolidated 28.8% 20.6% 4.5% 3.7% Note: Data from continuing operations PAGE 42
  • 43. Q2 Free Cash Flow Reconciliation to GAAP Financial Measures SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) Q2 2006 Q2 2007 Q2 2008 Net cash from continuing operations $ (28) $ 81 $ 48 Capital expenditures $ (14) $ (17) $ (26) Free cash flow from continuing operations $ (42) $ 64 $ 22 Taxes paid on LYONs tax recapture $ 45 Adjusted free cash flow from continuing operations $ 3 PAGE 43
  • 44. 1H Free Cash Flow Reconciliation to GAAP Financial Measures SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) 1H 2006 1H 2007 1H 2008 Net cash from continuing operations $ (142) $ 90 $ 43 Capital expenditures $ (24) $ (28) $ (46) Free cash flow from continuing operations $ (166) $ 62 $ (3) Interest paid on LYONS repurchase $ 84 Taxes paid on LYONs tax recapture $ 45 Adjusted free cash flow from continuing operations $ (37) PAGE 44
  • 45. Full Year Free Cash Flow Reconciliation to GAAP Financial Measures SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) 2006 2007 Net cash from continuing operations $ 49 $ 404 Capital expenditures $ (56) $ (91) Free cash flow from continuing operations $ (7) $ 313 Interst paid on LYONS repurchase $ 84 Taxes paid on LYONs tax recapture $ 91 Adjusted free cash flow from continuing operations $ 168 FCF from operations discontinued in 2007 $ 15 Adjusted free cash flow as reported 2/28/2007 $ 183 PAGE 45
  • 46. 2008E Free Cash Flow Reconciliation to GAAP Financial Measures SPX Corporation and Subsidiaries Free Cash Flow Reconciliation (unaudited) ($ millions) 2008E Guidance Range Net cash from continuing operations $ 440 $ 470 Capital expenditures $ (140) $ (150) Free cash flow from continuing operations $ 300 $ 320 PAGE 46
  • 47. EBITDA Reconciliations ($ millions) 2006 2007 2008E Revenues $4,313 $4,822 $6,260 Net Income $171 $294 $356 Income tax provision (benefit) 56 90 186 Interest expense 50 77 110 Income before interest and taxes $277 $461 $652 Depreciation and intangible amortization expense 90 83 112 EBITDA from continuing operations $367 $544 $764 Adjustments: Non-cash compensation expense 38 41 46 Extraordinary non-cash charges 41 14 0 Extraordinary non-recurring cash charges 27 7 20 Excess of JV distributions over JV income (12) 2 12 Loss (Gain) on disposition or assets 56 4 0 Pro Forma effect of acquisitions and divestitures 53 6 Other 8 0 3 Adjusted LTM EBITDA from continuing operations $525 $663 $850 Note: EBITDA as defined in the credit facility PAGE 47
  • 48. Debt Reconciliations ($ millions) 12/31/2007 6/30/2008 Short-term debt $ 255 $ 305 Current maturities of long-term debt 79 79 Long-term debt 1,235 1,213 Gross Debt $ 1,569 $ 1,596 Less: Puchase card program and extended A/P programs $ (58) $ (55) Adjusted Gross Debt $ 1,511 $ 1,542 Less: Cash in excess of $50m $ (304) $ (370) Adjusted Net Debt $ 1,207 $ 1,172 Note: Debt as defined in the credit facility PAGE 48
  • 49. Q3 2007 Adjusted Earnings Per Share Q3 2007 GAAP EPS from continuing operations $1.73 Q3 Tax Benefits (0.35) Adjusted EPS from continuing operations $1.38 Note: Data from continuing operations PAGE 49
  • 50. 2007 Adjusted Earnings Per Share FY 2007 GAAP EPS from continuing operations $5.33 Q3 Tax Benefits (0.34) Q4 Tax Benefits (0.25) Q4 Asset Impairment 0.05 Q4 Legacy Legal Matters (Corporate Expense) 0.06 Adjusted EPS from continuing operations $4.85 Note: Data from continuing operations Adjusted EPS Presented Consistent with 2007 EPS Guidance PAGE 50
  • 51. 2006 Adjusted Earnings Per Share FY 2006 GAAP EPS from continuing operations $3.65 Q2 Tax Accrual Reversal (0.57) Q2 VSI Legal Settlement 0.20 Q4 Miscellaneous Tax Benefits (0.28) Q4 Charges for Legacy Legal Matters 0.07 Adjusted EPS from continuing operations $3.07 PAGE 51
  • 52. 2005 Adjusted EPS Reconciliation Year ended, Dec 31, 2005 GAAP net income per share $15.33 Income from discontinued operations (15.61) SFAS 142 asset impairment 0.96 Loss on early extinguishment of debt 0.96 Normalized tax rate (40%) 0.41 Projected share count (64m) 0.26 Normalized interest expense ($37m) 0.12 Other (1) 0.19 Adjusted earnings per share $2.62 (1) Includes income from businesses discontinued in the second half of 2005, other expense relating to FX losses on the repatriation of cash, a one-time legal settlement at our EGS joint venture and a one-time gain on the sale of property. Note: The model above has been presented on the same basis as the annual earnings per share model presented in SPX’s March 3, 2005 investor presentation PAGE 52

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