Post on 19-May-2015
transcript
2009 guidance presentation h d h t h ll
1January 21, 2009
where a sound approach meets new challenges
1
global infrastructure x process equipment x diagnostic tools
Introductions
Chris Kearney Chairman, President and Chief Executive Officer
Patrick O’Leary EVP and Chief Financial OfficerPatrick O Leary EVP and Chief Financial Officer
J S lt VP f FiJeremy Smeltser VP of Finance
Ryan Taylor Manager of Investor Relations
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 changes in the economy, our international operations, legal and regulatory risks, cost of raw materials, pricing pressures, pension funding requirements, and integration of acquisitions. More information regarding such risks can be found in SPX’s SEC filings.
Except as specifically noted otherwise, the fiscal year 2008 financial data are the estimates presented by SPX on October 29, 2008, and are presented here only for comparison purposes. SPX’s inclusion of earlier estimates in the presentation is not an update, confirmation, affirmation, or disavowal of the estimates. In keeping with its past practice, SPX will only disclose actual fiscal year 2008 and fourth quarter numbers in its fourth quarter earnings release, expected to be issued on February 25, 2009.
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 statementsStatements 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
3
GAAP, is available on our website at www.spx.com.
Agenda
1) SPX Overview and 2009 Guidance
2) Update on Key End Markets
3) Update on Financial Reporting Segments
4) 2009 Full Year and Q1 Financial Targets4) 2009 Full Year and Q1 Financial Targets
5) Capital Structure and Liquidity
6) Summary and Questions
4
SPX Overviewglobal infrastructure x process equipment x diagnostic tools
COMPANY CONFIDENTIAL
Strategic Transformation
9 Pl tf i 2004
Fundamental Long-TermMarket Drivers
Specialty Engineered
Products
Service Solutions
Fluid Systems
9 Platforms in 2004…
Growing world population
Ad t f d l i
Market DriversProducts
L b d Lif
Broadcast
CoolingPower
Systems
Advancement of developing countries and emerging middle class
CompactionSecurityLab and Life
Sciences
Infrastructure
…3 Core, Global End Markets in 2008E
Aging Western world power and energy infrastructure
Increased electricity demand
Infrastructure56%
Tools & Diagnostics
Power &Energy
41%
HVAC / Other 16%
Increased electricity demand
Increased demand for processed dairy, food and
General Industrial
Food & Beverage
%
Diagnostics17%
66
p y,beverages14% 13%
SPX Has Undergone a Significant Transformation;Long-Term Strategy is Focused on 3 Core, Global End Markets
Note: 2004 data as reported and includes the discontinued revenue of EST, Kendro and BomagNote: Data from continuing operations; 2008E estimated as of 1/21/2009
Business Disposals
~Annual Revenue*
~GrossProceeds# of Disposals
From 2005 through today:
($ millions)
7 $1,440 $2,751
3 $300 $123
From 2005 through today:– 16 total disposals
– $2.3b of revenue sold
2005
2006 3 $300 $123
3 $350 $129
– $3.1b of gross proceeds
2 disposals in process:Flow product line
2006
2007 3 $350 $129
2 $160 $125
– Flow product line discontinued in Q3 2008
– Industrial product line discontinued in Q4 2008
2007
2008
1 $20 $162009
77Consistent Seller of Non-Core Assets;
Increased Focus on 3 Core, Global End Markets
*At the time of disposal
Capital Structure
Reduced outstanding debt by
September 29, 2008Capital Structure
Equity61%
Debt39%
g y$1.7b in 2005
Simplified debt structure in 2007:Re-financed global credit facility in
Gross Debt to EBITDA
September 2007Issued bonds in December 2007 to finance the APV acquisition
$ fGross Debt to EBITDA $1.3b of total debt outstanding at 12/31/2008E
Required debt payments of $75m in 2009 and 2010
2.6x
1.8x1.6x
2.2x
1.6x2009 and 2010
2009E available liquidity: > $1b
2004 2006 2008E*
88Solid Financial Position and > $1b of Available Liquidity
2004 2006 2008E*
*2008E based on EBITDA as of October 29, 2008 and December Balance Sheet
Disciplined Capital Allocation
Gross Debt to EBITDA Excess Capital Usage
> 2.0x Debt reduction
< 2 0x Strategic acquisitions< 2.0x Strategic acquisitions
Share repurchases
9Target Gross Debt to EBITDA of 1.5x to 2.0x
Share Repurchases
Cumulative Share Repurchases
Dilutive Common Shares Outstanding
Total cumulative cost: $1.9b74m
32m
23m
35m
50m
15m
2005 2005 - 2006 2005 - 2007 2005 - 2008*
2005 2006 2007 2008
12/31/2004 2009E
10Repurchased ~35m Shares or 45% of the Ending 2004 Share Count;
Additional 3m Share Repurchase Plan Announced December 18, 2008
*As of December 18th, 2008
Acquisitions
$800m
~Annual Revenue*
Primary End Market
Allocated ~$800m towards i iti f 2005 t 2008
$100m
acquisitions from 2005 to 2008
~$1.1b of revenue acquiredFood & Beverage
$80mJohnson Controls European Diagnostics
Acquisition criteria:
Strategic to three core end
$50mmarkets
Accretive to earnings within the first 12 monthsTools & Diagnostics
$25m
$10m
Generate returns above SPX’s cost of capital within a short time frame
1111Disciplined Acquisitions Strategic to Core End Markets
$10m*At the time of acquisition
Globalization
2004 SPX Revenueby Geography
2008E SPX Revenue by Geography
North America48%
North America70%
Europe28%
Asia Pacific14%
Africa2% South
AmericaMiddle
EastEurope
20%Asia7%
ROW3%
14%3%
East5%
20%7%
12Increased Global Revenue Base;
Greater Than 50% of Sales Outside North America
Note: Data from continuing operations; 2008E estimated as of January 21, 2009
Backlog
Year-End Backlog12/31/2008* Backlog
by Geography$3.4
($ billions)Europe
30%Americas38%
$2.0
$2.6
Asia Pacific
$1.3
$
9%
South Africa21%
ROW2%
N t D t f ti i ti T t d M t’ b kl i i t i l d t t d bli l
2005 2006 2007 2008*
Thermal Flow Industrial
1321% of the Consolidated 2008 Year End Backlog is
Multi-Year Power Projects in South Africa
Note: Data from continuing operations; Test and Measurement’s backlog is immaterial and not reported publicly*12/31/2008 backlog estimated as of January 21, 2009
Backlog
Year-End Backlog Backlog Aging$3.4
2009E66%
($ billions)
$2.0
$2.6
$1.3
$
2010E & Beyond
34%
N t D t f ti i ti T t d M t’ b kl i i t i l d t t d bli l
2005 2006 2007 2008*
Thermal Flow Industrial
14Starting 2009 with a Total Backlog of $3.4b;
Approximately 66% Expected to be Delivered in 2009
Note: Data from continuing operations; Test and Measurement’s backlog is immaterial and not reported publicly*12/31/2008 backlog estimated as of January 21, 2009
Operating Initiatives and Financial Results
Revenue & Segment
Operating Initiatives: 6% 10% ~7-8%10%Organic growth
Revenue & SegmentIncome Margins
Emerging and developing markets
N d t d l t$4.8
~$6.0($ billions)
New product development
Continuous Lean improvements
$3.7$4.1
12.1%
12.9%
13.0% to 13.2%
Efficient supply-chain management
IT infrastructure improvement
11.1%
IT infrastructure improvement
Organizational and talent development2005 2006 2007 2008E
Revenue
– Segment Income Margin
15
– Segment Income Margin
Strategic Transformation and Operating Initiatives Have Contributed to Revenue Growth and Margin Improvement
Note: 2005 – 2007 data as restated in 2007 10-K; 2008E as of October 29, 2008
SPX Today
Adjusted EPS$6 40 t
Global, multi-industrial provider of $6.40 to
$6.50
$4.85
engineered solutions to three core, global end markets
Annual Revenue: ~$6b
$2.62$3.07
$4.85 Annual Revenue: $6b
Solid financial position
Disciplined capital allocation
Continuous improvement culture
2005 2006 2007 2008E$3.4b backlog
1616Strategic Transformation Has SPX Well-Positioned to Manage Through an Uncertain Economic Environment
Note: As reported and adjusted for certain items; see appendix for reconciliations; 2008E as of October 29, 2008
Uncertain Economic Environment
Banking failures and consolidations have impacted credit availability for 2008E Revenue Splitmany companies
Global credit crisis has created an
2008E Revenue Split
Long Cycle40%
uncertain economic environment…
…as a result, capital spending for many companies for 2009 is uncertain
V l til f i h tShort Cycle
Volatile foreign exchange rates
Volatile commodity pricing
60%
1760% of SPX’s Revenue is Short Cycle;
Slowing Global Economy Impacting SPX’s Outlook for 2009
SPX Global End MarketsOrganic Revenue
2009E
Power & Energy (3%) to +1% 5%+
Long-Term2008E Revenue by End Market
I f t t
Organic Revenue
Power & Energy (3%) to +1% 5%+
Other Infrastructure (5%) to flat 3% to 5%HVAC &
Other15%Power &
Energ
Infrastructure56%
Tools & Diagnostics (12%) to (7%) 3% to 5%Tools &
Diagnostics17%
Energy41%
Food & Beverage flat to +4% 3% to 5%
General Industrial (5%) to flat 3% to 5%
Food & Beverage
13%General
Industrial14%
General Industrial (5%) to flat 3% to 5%
Total (5%) to flat 4% to 6%
18Current Economic Environment Impacting 2009 Expectations;
Long-Term Organic Growth Target is 4% to 6%
Note: Data from continuing operations; 2008E estimated as of 1/21/2009
Focused Restructuring in 2009
Reporting Segment Restructuring Expectations
Fl T h l APV i t tiFlow Technology APV integration
Cost controls in response to slower revenue growth
Thermal Equipment & Services Rationalization of package coolingThermal Equipment & Services Rationalization of package cooling business in China
Continued headcount reduction and outsourcing at Guangzhou China facilityoutsourcing at Guangzhou, China facility
Concentration of resources in centers of excellence in Germany, U.S., Belgium and Hungary
19Targeting $65m of Restructuring Actions in 2009;2008 & 2009 Actions Expected to Reduce Global Workforce by ~10%
Hungary
Focused Restructuring in 2009
Reporting Segment Restructuring Expectations
T t & M t U S k t ti li tiTest & Measurement U.S. market rationalization
European acquisition integration
Rationalization of Chinese operations post
Industrial Products & Services
p pAutoboss acquisition
Business by business measuredIndustrial Products & Services Business by business measured response to changing environment
20Targeting $65m of Restructuring Actions in 2009;2008 & 2009 Actions Expected to Reduce Global Workforce by ~10%
2009 Guidance
2009 Guidance
Global economic recession:
2009 Macro-EconomicAssumptions
Earnings Per Share:
Global economic recession:– 1% global GDP growth
Transformer shipments decline $5.40 to $5.80 in 2H of 2009
Continued order decline in U S for vehicle repair toolsFree Cash Flow:
$230m to $270m
U.S. for vehicle repair tools and diagnostics
Mid-January exchange rates
N t D t f ti i ti di f GAAP ili ti
Raw material costs remain stable with existing estimates
21Prudent Management Through Difficult Economic Environment;Maintaining Commitment to Long-Term Strategy
Note: Data from continuing operations; see appendix for non-GAAP reconciliations
Global Power & Energy Market22
January 21, 2009
Global Power & Energy Market
22
global infrastructure x process equipment x diagnostic tools
SPX Power & Energy Technology Examples
Transmission & Distribution
Pumps & Valves22%Cooling
2008E Power & Energy Revenue by Product
2008E Power & Energy Revenue by Market
Distribution21%
Power Generation
54%
22%gSystems
32%(US market only)
Oil & Gas19%
Mining6%
Heat Exchangers &
Filters22%
Transformers21%
Solar Crystal Growers
3%
CoalNatural GasNuclear GeothermalSolar 21%
Cooling SystemsHeat ExchangersMoisture Separator ReheaterPumps and Valves
23Diverse Technology Offerings Provide Efficient Solutions for Customers
and Responds to Many Environmental Challenges
Note: Data from continuing operations; 2008E estimated as of 1/21/2009
Global Energy Infrastructure Investment
Coal
Cumulative Expected Investment in Energy Infrastructure, 2007 - 2030
Coal3%
Power
Gas21% $5 5
Power Generation
50%52%
$6.3
$13.6 trillion
$5.5 trillion
50%
$6.8 trillion
Oil24%
trillion$6.8
trillion
Transmission/ Distribution
50%
24$26 Trillion Estimated to be Spent on
Energy Infrastructure From 2007 Through 2030
Source: WEO 2008 Copyright OECD/IEA, 2008; Figure 2.6, page 89 , as modified by SPX Corporation
Investment in Power Infrastructure by Region
Cumulative Energy-Supply Infrastructure Investment by Region, 2007 - 2030
($ billions)
Key Market Drivers
China
North America
($ billions)
Advancement of developing economies in Asia and South Africa
Latin America
Africa
Middle East
E. Europe / Eurasia
Europe
Developing Countries:
Aging US and Western European infrastructure
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000
Developed Pacific
Rest of Asia
India
Latin America
Developed Countries:
37% of world total
63% of world totalDemand for higher efficiency products
St i t l t i tStricter regulatory environment
Increasing project size
2525Global Demand Fueled by Aging US and European Infrastructure
And New Power Capacity Expansion in Developing Regions
Source: WEO 2008 Copyright OECD/IEA, 2008; Table 2.4, page 88, as modified by SPX Corporation
Installed Power Capacity by Region
Middle East6%
Africa8% W Europe
Australia4%
India10%
EMEA (746 GW)Asia (852 GW)
8% W. Europe45%
E. Europe19%
China55%
10%
Other Asia
Russia22%
Other Asia31%
Americas (676 GW)S. America
5%
26
N. America95%
Asia, EMEA and the Americas Have Significant Installed Bases of Power Generation Infrastructure
Source: Platt's Global Power Database January 2008; Limited to SPX addressable markets
Aging of Power Fleet
Percent of Installed Capacity (GW)Reaching 40 Years of Age by Year
45%
50%
35%40%
45% 2007 2011 2015
20%
25%
30%
5%
10%
15%
0%Americas Russia Rest of
EMEAIndia China
27The Aging of Existing Infrastructure Provides an Attractive Opportunity for Retrofit and Rebuild
Source: Platt's Global Power Database January 2008; Limited to SPX addressable markets
Installed Power Capacity by Major Fuel
CoalNuclear
Nuclear10%
EMEA (746 GW)Asia (852 GW)
43%25%Gas13%
Gas32%
Coal77%
Americas (676 GW)
Coal53%
Nuclear18%
Gas29%
28The Majority of Existing Capacity is Coal Based
Source: Platt's Global Power Database January 2008; Limited to SPX addressable markets
Overview of Coal-Fired Installed Base
Coal Plants 1 580 1 190
United States Western Europe
Coal Plants 1,580 1,190
Average Size (MW) 225 MW 185 MWAverage Size (MW) 225 MW 185 MW
Average Age (years) 34 29g g (y )
Average Efficiency 35% 36%
Note: efficiency = electricity producedenergy input
29
Source: IEA, Platts and Alliance Bernstein
New Power Plants Operate in the 40% to 48% Efficiency Range;Significant Opportunity to Improve Efficiency in the Installed Base
Typical Coal-Fired Power Plant
Thermal SegmentFlow SegmentIndustrial Segment
30
New Power Plant Opportunities
800 MW 1 000 MW
($ millions)
800 MWCoal Plant
1,000 MWNuclear Plant
$120$140$160
Pumps & Valves
Filters
SPX Potential Revenue~$150m
~$100m
$80$100$120 Filters
Heat Exchangers
Cooling Systems
~$80m
$20$40$60 Cooling Systems
$0Coal Coal Nuclear
(w / dry cooling) (w / wet cooling) (wet cooling only)
31
Source: SPX management estimates. Actual results may vary based on project specifications, raw material prices and competitive dynamics
Attractive Revenue Opportunities for New Power Plant Projects
Power Projects in China
SPX began selling dry cooling systems in China in 2002
2 d li f t i l tX 2 dry cooling manufacturing plants:– Zhangjiakou
– Tianjin
X
Awarded 8 contracts in 2008
Awarded 2 contracts YTD 2009
X
Awarded 2 contracts YTD 2009
In total, awarded 47 total projects from 2002 to today:
SPX cooling system in Zenglan, China
from 2002 to today:– 32 completed
– 7 under construction
8 i i i /d i
32
– 8 in engineering/design
Steady Orders for Dry Cooling Systems in Competitive Chinese Market;Average Dry Cooling Contract Size is $15m to $25m
Power Projects in South Africa
Current ProjectsCurrent Projects
SPX awarded contracts to supplySPX awarded contracts to supply critical components on two 4.8GW coal-fired mega-projects:
– Medupi
Boiler Island Turbine Island
– Kusile
Multi-year construction projects
T t l l f t t i SPX’
Jet fabric filters Air cooled condenser
Total value of contracts in SPX’s December backlog: ~$725m
Collected cash deposits between 5% d 15% h t tJet fabric filters
Air preheatersBoiler pressure parts
Air cooled condenser (dry cooling)*Feedwater heaters
5% and 15% on each contract
2009E revenue: $50m to $60m
3333South African Contracts Expected to Contribute to
Revenue and Earnings from 2009 through 2012
*Kusile contract only
Kendall Power Station
Kendall Power Station
The Kendall power station’s installed capacity is 4 116 GWinstalled capacity is 4,116 GW
Construction by Eskom was started in 1982 and completed in 1993, no major plants have been added since
Cooled by SPX’s dry cooling y y gtechnology which uses significantly less water in the cooling process than wet cooled power stationsp
Six of SPX’s natural draft, dry cooling towers are used to cool the Kendall Power station
3434The Kendall Power Station was the Last Major Project in South Africa
Presence in South Africa
Established in South AfricaKusile
Power StationMedupi Established in South Africa
in 1970 as DB Thermal
Currently 300k square feet
Medupi Power Station
Currently ~300k square feet of manufacturing capacity in Nigel, South Africa
Employing local labor for manufacturing
25.1% Black Economic Empowerment minority shareholder
3535SPX is Committed to Providing Critical Components to
Help South Africa Expand its Power Capacity
shareholder
Power Project in Iceland
Geothermal plants require a d d li t
SPX was awarded a $100m contract in June 2008 to provide a cold end solution on 5 power plants for Orkuveitacondenser and a cooling tower
Integration of condenser and wet cooling tower (cold end)
on 5 power plants for Orkuveita Reykajavikur
offers unique value proposition
Iceland’s Svartsengi power plant g p pwith SPX’s cold end solution
36Geothermal Power is an Attractive Niche Market Opportunity
Financing for South Africa & Iceland
South AfricaCustomer deposits receivedCustomer deposits received
Customer commitments remain intact
Eskom has increased electricity rates 27% to fund its capital spending program
remain intact
Progress has been made on fi i
The World Bank has indicated a commitment to loan Eskom $5b
Icelandfinancing
Governmental backing Reykjavik received a 170m Euro loan appears firmfrom a European investment bank
3737Financing Appears to be Secure at this Point;
We Will Continue to Monitor Each Situation as Projects Progress
Solar Opportunity
SPX designs crystal growing technology used by solar panel suppliers
Solar concentrator plants require stationary heat exchangers and cooling towerstowers
Emerging market opportunityN d S l O i l d bNevada Solar One is cooled by
SPX cooling technologies
3838Solar is Another Attractive Niche Market Opportunity
Power Transformers: US MarketCustomer Landscape
Investor Owned Utilities:
Power TransformerCustomer Landscape
– 200 Accounts
Public Power:Public Power:
– 3,000 Accounts
Independent Power Producers (IPPs)
Industrial / Commercial: – Automotive, Petroleum & Refining,
Chemical, Pulp & Paper, Etc.
39SPX Custom-Engineers Power Transformers for the
Transmission and Distribution of Electricity in the United States
Power Transformers: US Market
Q4 2008 orders down 27% f Q3
Power Transformer Revenuefrom Q3
Customer sentiment underlying this change:$420
~$500
(20%) to
($ millions)
y g g
– Uncertainty regarding the availability of capital in the current economic environment
$290
$420 (25%)
– The cost of long-term capital needed to fund capital projects
– Uncertainty as to what effect a slowing economy could have on electricity demand in the near-term
2006 2007 2008E 2009E
4040Transformer Orders Slowed During the Latter Part of 2008
Due to Customer Concerns Over the Cost and Availability of Capital
Note: 2008E as of 10/29/2008
Aging US Transformers
100
120
140
160
180
200
A In
stal
led
Increased Electricity Demand (1):
Demand Drivers
0
20
40
60
80
100
Tran
sfor
mer
GVA – Demand for electricity expected to
increase on average 1% per year from 2006 through 2030
90%100%
1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996
Year
Heightened Regulatory Standards:– Energy Policy Act of 2005
30%40%50%60%70%
80%
Haz
ard
Func
tion – Electric Reliability Organization
A i I f t t0%
10%20%
2 8 14 20 26 32 38 44 50 56 62 68 74
Age
Aging Infrastructure: – Average transformer age is 25 years
or greater
41Fundamental Long-Term Demand Drivers Have Not Changed;Need for Infrastructure Replacement is Still Significant
Source: Hartford Steam Boiler(1) WEO 2008 Copyright OECD/IEA, 2008; Table 6.1, page 88, as modified by SPX Corporation
Regulatory Influences on Investment
Federal regulation has increased since the last investment interruption
Current regulatory factors may limit the length of time that investment is deferred:
M d li bili d d– Mandatory reliability standards:• Potential fines up to $1m per day
– FERC incentives:• Capacity margins, transmission
constraints
– State requirements and regulation
– Homeland security
42Investment Decisions May be Influenced by Regulatory Standards
Global Tools & Diagnosticsglobal infrastructure x process equipment x diagnostic tools
Global Tools & Diagnostics
COMPANY CONFIDENTIAL January 21, 2009 43
Primary Tools And Diagnostics Offerings
Repair Labor Time Studies & Warranty Reduction I iti ti
Aftermarket Specialty Tools & EquipmentOEM
Electronic Diagnostic T l
VehicleRepair Manuals,
Initiatives Technology Based Applications for Content Creation Management & Delivery
OEM E ti l
Aftermarket Electronic Diagnostic Tools
Tools ToolsTechnical
Information
Wiring Diagrams
Training Development& DeliveryDealer Equipment
OEM Essential Service Tool Programs
Field Surveys, Investigations & Training P
and Services
Managed Program Provider to Support Customer Service ReadinessDES
Programs
Dealer Facility Design
44Only Global Provider with a Full Line of
Products and Services for the Transportation Industry
Tools & Diagnostics Market Drivers
2008E R b P d t
Key Market Drivers:
2008E Revenue by Product
Electronic Diagnostics
42%
New model introductions
Hard Tools33%
Increasing electronic complexity of vehicles
2008E Revenue by Market
Information & Services
25%
Environmental regulations
OEM outsourcing initiativesAftermarket
32% OEM OEM outsourcing initiatives32% OEM68%
4545New Model Introductions and Increased Vehicle Complexity Drive
Growth Opportunities for Diagnostic Platforms and Service Offerings
Note: Data from continuing operations; 2008E estimated as of January 21, 2009
Strategic Transformation
2005 US B d B i
2008E revenue: ~$1b
2005: US Based Business w/ European Presence
North America
78%
Globalized business model:– Increased presence in
Europe and Asia– Restructured U.S. footprint
2008E: Global Business
Europe18%
Asia Pacific4%
Expanded relationships with European customers:
– Less dependent on U.S. big three
w/ Regional InfrastructureNorth America
54%
three
Investing for growth in Asian markets
ROW2%
Europe
Asia Pacific5%
4646
markets
Strategically Globalized Tools & Diagnostics Business
Europe39%
Note: Data from continuing operations; 2008E estimated as of January 21, 2009
International Acquisitions
Annual Key CustomerYear AnnualRevenue* Location
Key CustomerRelationships
~$70m Germany BMW, Volkwagen
Year Acquired
2005
Johnson ControlsJohnson Controls European Diagnostics ~$80m France Renault, Peugeot2007
~$25m Germany Volkswagen2007
~$10m Shenzhen, China
A leading Chinese diagnostic supplier
2008* At the time acquired
47International Acquisitions have Increased Technical Capabilities
and Expanded Global Presence by Region or OEM
At the time acquired
Customer Evolution
2005 Revenue 2008E Revenue
GM, Chrysler, Ford29%
Aftermarket41%
GM, Chrysler, Ford23%
Aftermarket32%
BMW, VW,
Other OEMs30%
Other OEMs29%
, ,Renault-Nissan
16%
48Increased Presence with Leading European OEMs;
Decreased Dependence on US OEMs
Note: Data for Service Solutions business unit; 2008E estimated as of January 21, 2009
Evolving Footprint
2007 & 2008 restructuring Service SolutionsPlant Locations
8
gfocused on reducing U.S. cost base:
– Reduced footprint to one f t i l t d
21
3 3
manufacturing plant and one distribution center
– Headcount reduced by ~225
0
2003 2008
2009 restructuring focus:U.S. market rationalizationIntegrating European and
North American locationsEuropean locationsAsian locations
Integrating European and Asian acquisitions
4949Continuing to Shift Resources to Overseas
Chinese Vehicle Market
Projected New Car Sales in China
China car parc lags well
$16$18$20
($ billions)
China car parc lags well behind Europe and the Americas
$8$10$12$14
Overtake US SalesSignificant increase in new car sales expected
$2$4$6$8
Overtake Japan Sales
Dealer count expected to expand significantly
– ~7% growth in the near term$0
1995 2000 2005 2010 2015 2020 2025 2030
Source: WEO 2007 Copyright OECD/IEA, 2007; Figure 9.6, page 300, as modified by SPX Corporation
g
5050China is Expected to be a Significant Growth Opportunity
Asia-Pacific Expansion
Investing in R&D:Asia-Pacific Revenue*
$58 $59
$65
– ~85 engineers
Expanding OEM customer base:– 30 global OEM customers
$48
$58 – 30 global OEM customers– 29 independent Chinese OEMs
Acquired Autoboss in 2008
Honda order:Selected to design and deliver H d ’ 3rd ti
2005 2006 2007 2008EHonda’s 3rd generation diagnostics system
*Includes Asia, the Middle East and Australia
5151Technology and Expertise Driving Asia-Pacific Expansion
,
New Product Development
Wireless vehicle ti
Next Generation Global Diagnostic Tool Launched in Q4 2008
connection
Speed scroll control
A di & idAudio & video
Information at the fender
1980 to 2007 vehicle coverage
I t t ti itInternet connectivity
Touch screen selection
High speed scope
5252Continue to Focus on New Product Development to
Serve a Global Customer Base
High speed scope
Global Food & Beverage Marketglobal infrastructure x process equipment x diagnostic tools
Global Food & Beverage Market
COMPANY CONFIDENTIAL January 21, 2009 53
Key Food & Beverage Market Drivers
Enhanced hygienic standards and regulatory controlsand regulatory controls
Economic expansion in developing regions
Process optimization
Energy efficiency and waste gy yreduction
Production of higher quality productsproducts
Demand for new plants
5454SPX Serves the Global Food & Beverage Market
Food Processing Market Characteristics
Food Processing Machinery and Equipment Global Forecast
Attractive End MarketCharacteristics
$40 7
$43.0
$45.4($ billions)
Regulated market6% CAGR
$38.6
$40.7
Stable, less cyclical
Consistent gro thConsistent growth
Developing market opportunities2008E 2009E 2010E 2011E
Source: Global Industry Analysts’ Food Processing Machinery and Equipment Report, 2007
55Global Food Processing Market is Steadyand Less Cyclical than Most Markets
Expected Growth by Region
2007 to 2010E Investmentfor Food Processing Machinery and
Equipment by Region 2007 Global FPME Spend by RegionEquipment by Region
Region
A i P
’07 – ’10ECAGR7 1%
EMEA30%
A i P ifi
2007 Global FPME Spend by Region
Asia-Pac
Latin America
US
7.1%
5.6%
3 6%
Asia-Pacific35%
US
Europe
3.6%
3.3%North America
18% Latin America
Source: Global Industry Analysts’ Food Processing Machinery and Equipment Report, 2007
18% Latin America10%ROW
7%
56Investment in Food Processing Machinery
Expected to be Higher in Developing Countries
Typical Food & Beverage Customers
Power
57Global Customer Base Including Many
Leading Food and Beverage Manufacturers
Food & Beverage Components
Positive Displacement Pumps: Pump viscous products such as tomato paste, chocolate
Centrifugal Pumps: Pump thin fluids for beverage or clean in place systems
Heat Exchangers: Temperature control for mechanically separated meats, margarines, icings, fondants
Valves: Process flow diversion & shut offValves: Process flow diversion & shut off
Mixers: Dispersion & solid suspension
58
Mixers: Dispersion & solid suspension
Diverse Product Portfolio of Custom Engineered Solutions
Food & Beverage Product Offerings
2008E Revenue by Type ~70% engineered components for niche end markets:
Engineered Components
70%
– Built to order
~30% full-line and skidded process systems:
– Engineered, designed and installed
Process Systems
30%
59SPX Offers Customers Engineered Components,
Skidded Sub-Systems and Full-Line Systems
Note: Data from continuing operations; 2008E estimated as of January 21, 2009
Food & Beverage Presence Before APV
Strong Presence
Growing Presence
60Global Expansion of Manufacturing, Sales and Distribution Presence Underway Prior to APV Acquisition…
Food & Beverage Presence Including APV
Strong Presence
Growing Presence
Key APV Additions
APV has increased SPX’s presence in developing growth markets:
– China
– Eastern Europe
S th A i– South America
– Middle East
– Russia
– South Africa
61…Addition of APV’s Global Platform is Expected to Accelerate SPX Flow Technology’s Global Expansion
South Africa
APV Integration Update
Streamline combined global presence:– Targeting headcount reduction of ~500 people
Leverage SPX operating initiatives:
– Implementation of “Lean”p
– Leverage global supply base
– IT consolidation
Increased localization of manufacturing
Leverage respective distribution markets globally
– Product “pull-through” from combined distribution channels
62Expect Integration to be Completed in 2010
Projected Annualized Savings of $60m to $80m
Update on Reporting Segmentsglobal infrastructure x process equipment x diagnostic tools
Update on Reporting Segments
COMPANY CONFIDENTIAL January 21, 2009 64
Financial Reporting Segments
Th l E i tFlow Technology Thermal Equipment & Services Test & Measurement Industrial Products &
Services
Food & beverage Power generation Vehicle tools & di ti
Power transmission & di t ib ti
End Markets ServedEnd Markets Served
Power generation
General industrial
Chemical
HVAC
General industrial
diagnostics
Telecom
Transportation
& distribution
Solar power generation
General industrialOil & gas
Air dehydration
General industrial
Aerospace
Broadcast
Automotive
64Financial Results Reported in Four Segments
Automotive
Financial Reporting Segment
2008E Revenue by Segment
Thermal
Flow Technology
34%
Thermal Equipment &
Services29%
Test & MeasurementIndustrial easu e e t
19%Products and Services
18%
65
Note: Data from continuing operations; 2008E as of 10/29/2008
Flow Technology Contributed 34% of Consolidated Revenue in 2008E
Flow Technology Product Overview
2008E Revenue by Product
Engineered gComponents
85%
Pumps Valves
Skidded and
MixersHomogenizers
Full-Line Systems
15%
66Diverse Offering of Branded, Custom-Engineered Processing Solutions
Dryers Heat ExchangersNote: Data from continuing operations; 2008E estimated as of January 21, 2009
Flow Technology Revenue Breakdown
2008E Revenue by End Market
2008E Revenueby Geography
Power Oil & Gas
12%North AmericaEurope
35%
27%Power & Energy
Generation8%
Food & Beverage
36%Mining
7%
26%
Air Dehydration8%
General Industrial
20%Chemical
Africa3%
South America
7%Middle East
7%
Asia-Pacific22%
8% Chemical9%
7% 7%
67Significant Global Presence;
Food & Beverage is Primary End Market
Note: Data from continuing operations; 2008E estimated as of January 21, 2009
Flow Technology Backlog and Revenue($ millions)
2008 Quarterly Backlog
Q4 b kl d li 15%
$799 $782 $763
$646
($ millions)
Q4 backlog decline: 15%– 9% due to foreign exchange
fluctuations
$646
FX translation impact: (~7%)
Li it d d i ibilit t Q1
Q1 Q2 Q3 Q4*
Annual Revenue
2009 Drivers
Limited order visibility past Q1
End market trends:– Oil & gas and power markets steady$1,070
~$2,000$1,875 to
$1,975
+3% to5%
– Food & beverage markets steady
– General industrial, chemical and dehydration markets softening due to economic slowdown2007 2008E 2009E LT
6868Targeting Low Single Digit Organic Growth in 2009
Note: Data from continuing operations; 2008E as of 10/29/2008*12/31/2008 backlog estimated as of January 21, 2009
Flow Technology Segment Margins
Annual Segment Margins 2009 Drivers
APV Integration:– Facility consolidations
H d t d ti f 500
16.4%13.7% to
14 7%
14% to 16%
– Headcount reduction of ~500
End market trends:Prepared for cost reductions if
12.0% to 12.2%
14.7%
– Prepared for cost reductions if orders decline as the year progresses
2007 2008E 2009E LT
69692009E Margin Improvement Driven by APV Integration
Note: Data from continuing operations; 2008E as of 10/29/2008
Flow Technology Strategic Focus
APV integration
Globalizing sales channels to leverage niche products
Increasing presence in developing economies
New product development in food & beverage and power markets
Potential acquisitions
70Focus on Continued Globalization and Expansion in Key End Markets
Potential acquisitions
Thermal Product Overview
Personal Comfort Heating
2008E Revenue by Product
Cooling Systems
59%
18%
Dry Systems48%
Wet Systems33%
Heat Exchangers and Filters
23% Parts2%
Package Systems
17%
Feedwater Heaters
Dry Cooling SystemWet Cooling SystemRotating Heat Exchangers
71A Leading Global Provider of Cooling Systems
And Heat Exchange Technologies
Note: Data from continuing operations; 2008E estimated as of January 21, 2009
Thermal Revenue Breakdown
2008E Revenue by End Market
2008E Revenueby Geography
North America47%
Power Generation
59%
Europe28%
Petrochemcal10%
Africa4% Asia Pacific
14%Middle East7%
HVAC28%
Industrial3%
72Significant Global Presence;
Power Generation is Largest End Market
Note: Data from continuing operations; 2008E estimated as of January 21, 2009
Thermal Backlog & Revenue ($ millions)
2008 Quarterly Backlog
$2,003 $2,002 $2,084
($ millions)
Q4 backlog increase: 4%$$1,401 – ~$125m order in South Africa
– 2 dry cooling contracts in China– 6% decline due to foreign exchange
fluctuations
Q1 Q2 Q3 Q4*
Annual Revenue5%+
2009 Drivers
FX translation impact: (~4%)
$1,561
~$1,700$1,695 to
$1,775
5%+ p ( )
Good visibility to 2009E bookings
End market trends:Power generation markets steady
2007 2008E 2009E LT
– Power generation markets steady
– HVAC market steady
– Industrial market for package equipment softening
7373
2007 2008E 2009E LT
Targeting Mid Single Digit Organic Growth in 2009
Note: Data from continuing operations; 2008E as of 10/29/2008*12/31/2008 backlog estimated as of January 21, 2009
Thermal Segment Margins
Annual Segment Margins 2009 Drivers
High return on sales petrochemical project in 2008
11.7% to 11 9% 10.4% to
11% to 13%
Project management and execution
Lean initiatives
10.4%11.9% 10.4% to
11.4%13%
Lean initiatives
Rationalization of package cooling business in China
2007 2008E 2009E LT
7474Margin Decline in 2009E Due Primarily to Lower ROS Project Mix
Note: Data from continuing operations; 2008E as of 10/29/2008
Thermal Strategic Focus
New product development, particularly around energy efficient offeringsgy g
Globalizing historically regional products
South African project execution
Margin expansion
Working capital improvement
75Focus on Product Development and Improved Project Execution
Test & Measurement Product Overview
2008E Revenue by Product
Diagnostic Tools39%
Hard Tools35%
Fare Box Collection Systems
6%
Information & Services
20%
76Providing Process Solutions to
Global, Diverse Markets
Note: Data from continuing operations; 2008E estimated as of January 21, 2009
Test & Measurement Revenue Breakdown
2008E Revenue by End Market
2008E Revenueby Geography
Americas57%
Vehicle Tools & Diagnostics
86%
Europe35%
Asia Pacific7%
ROW1%
Telecom8%
Transportation6%
8%
77Leading Global Provider of Essential Tools and Diagnostic Systems for New Vehicle Platforms
Note: Data from continuing operations; 2008E estimated as of January 21, 2009
Test & Measurement RevenueAnnual Revenue
($ millions)
Annual Revenue
$1,081 ~$1,100 $920 to$980
+3% to 5%
2009 Drivers
FX translation impact: (~5%)
Short cycle business
End market trends:Declining US market:
2007 2008E 2009E LT
– Declining US market: • No significant new model launches
• Dealership consolidation
• “Big 3” financial difficultiesAnnual Segment Margins11% to
– Europe and Asia steady
Significant U.S. restructuring:– Targeting headcount reduction of
11.0%10.5% to
10.7% 8.3% to 9.3%
11% to 13%
– Targeting headcount reduction of ~400 employees
Integration of European and Asian acquisitions2007 2008E 2009E LT
7878Expecting 2009E Organic Decline of ~10%;Significant Restructuring Actions Planned
q2007 2008E 2009E LT
Note: Data from continuing operations; 2008E as of 10/29/2008
Industrial Products OverviewH d li T lP T f
2008E Revenue by Product
Hydraulic ToolsPower Transformers
Power Transformers
43%
Helicopter
Hydraulic Tools13%
Transmission Filters
Helicopter Rotary Parts
10%
Broadcast AntennasAerospace Components
Other11%
BroadcastAntennas
7%
Crystal Growers
8%
8% Broadcast AntennasAerospace Components
79Power Transformer Sales Represent 43% of Total Revenue
Note: 2008E estimated as of January 21, 2009
Industrial Revenue Breakdown
2008E Revenue by End Market
2008E Revenueby Geography
North America82%
Power Generation
7%
Hydraulic Tools
Power Transmission &
Distribution43%
13%
Broadcast10%
Europe8%
Asia Pacific8%
ROW2%
General Industrial
8%
Automotive9%
Aerospace10%
10%
8%
8082% North American Revenue Base;
Power and Energy Infrastructure is Most Significant End Market
Note: 2008E estimated as of January 21, 2009
Industrial Backlog & Revenue ($ millions)
2008 Quarterly Backlog
$686 $711$639
$550
($ millions)
Q4 backlog decrease: 14%
2009 Drivers
– Transformer orders down 27%– No new solar orders
Q1 Q2 Q3 Q4*
Annual Revenue
2009 Drivers
FX translation impact: (~1%)
Good visibility to 1H of 2009
$865
~$1,050
$790 to $850
3% to 5% Key product line trends:
– Transformer shipments expected to decline significantly in 2H
2007 2008E 2009E LT
– Expect slowdown in solar orders
– Expect less discretionary spending on hydraulic tools
Conversion to HD broadcast
8181Credit Crisis Significantly Impacting Industrial Businesses;
Expecting Organic Decline Greater than 20%
2007 2008E 2009E LT – Conversion to HD broadcast required by FebruaryNote: Data from continuing operations; 2008E as of 10/29/2008
*12/31/2008 backlog estimated as of January 21, 2009
Industrial Segment Margins
Annual Segment Margins 2009 Drivers
Stronger 1H as we execute on the transformer backlog
Expect margins to decline in the
20.6% to 20.8% 18.5% to
19.5%~20%
Expect margins to decline in the 2H of 2009
Business by business measured restructuring response to changing
17.4%
restructuring response to changing environment
2007 2008E 2009E LT
8282Targeting 2009 Margins Between 18.5% and 19.5%
Note: Data from continuing operations; 2008E as of 10/29/2008
EGS Electrical Group Joint Venture($ millions)
Equity Earnings
($ millions)
EGS 2008E Revenueby End Market
$45$43
Infrastructure47%
General
$39$43General
Industrial28%
2007 2008E 2009E
Aerospace2%
Auto
Agriculture3% Chemical
Sanitary9% 2007 2008E 2009EAuto
5%6%9%
N t 2008E f 10/29/2008
8344.5% Interest in EGS Joint Venture with Emerson Electric;
Solid Earnings and Cash Contributor
Note: 2008E as of 10/29/2008
2009 Financial Targetsglobal infrastructure x process equipment x diagnostic tools
g
COMPANY CONFIDENTIAL
2009 Financial Targets
20092009 Target Range
Revenue
Comments$5,280 to $5,580 Organic: flat to (5%)
($ millions, except per share data)
Revenue
Segment Income Margin
FX: (~5%)Discontinued: (~2%)
12.5% to 13.5%
Earnings Per Share $5.40 to $5.80 (10%) to (16%) (1)
Free Cash Flow $230 to $270 85% to 95% of NI
Capital Spending
N t D t f ti i ti
~$100
(1) As compared to 2008E adjusted EPS; see appendix for non-GAAP reconciliations
852009E EPS Between $5.40 and $5.80
Note: Data from continuing operations
Full Year Mid-Point Target Financial Model($ millions except per share data) 2008E 2009E ($ millions, except per share data)
Guidance Mid-Point
Guidance Mid-Point
Revenue $6,000 $5,435Segment Income Margin 13.3% 13.0%
Corporate overhead (107) (95) Pension / PRHC (37) (36) Stock-based compensation (43) (28) Special charges (16) (65) Operating Income $598 $482
% of revenues 10 0% 8 9% % of revenues 10.0% 8.9%
Equity Earnings in J/V 46 43 Other Income/(Expense) (7) (7) Interest Expense (107) (95) Pre-Tax Income from Continuing Operations $530 $423
(1 8) (1 2)Tax Provision (178) (142) Income from Continuing Operations $352 $281
Tax Rate 34% 34%Weighted Average Dilutive Shares Outstanding 55 50
(1) EPS Mid-Point from continuing operations 6.45$ 5.60$
EPS Guidance Range $6.40 to $6.50 $5.40 to $5.80
EBITDA 800$ 725$
(1)
86
(1) Adjusted EPS, see appendix for reconciliationNote: Data from continuing operations, 2008E targets as of October 29, 2008
Mid-Point EPS Guidance at $5.60
2009 EPS Bridge
2008E Adjusted EPS Guidance Range $6.40 - $6.50
EPS
Segment Income ($0.75) to ($0.95)
Foreign currency translation ($0.30) to ($0.40)
Increased special charges ($0.60)
Reduced share count $0.45
Reduced stock compensation expense $0.20
Reduced corporate expense $0.15
Reduced interest expense $0.15
2009E EPS Guidance Range $5.40 - $5.80
87(10%) to (16%) Decline in Earnings Per Share Expected in 2009
Note: Data from continuing operations, 2008E as of 10/29/2008
2009 Full Year Guidance
Stronger organic growthAdditional share repurchases
High-End Potentials
Additional share repurchasesAcquisitionsLower tax rateForeign exchange fluctuations
Earnings Per Share:
$5.40 to $5.80 g gRaw material cost changes
Low-End PotentialsFree Cash Flow:
Lower organic growthContinued disruption in credit marketsDisposals
$230m to $270mp
Foreign exchange fluctuationsRaw material cost changes
N t D t f ti i ti S di f GAAP ili ti
88Certain Events Could Influence Earnings Per Share
Note: Data from continuing operations; See appendix for non-GAAP reconciliations
2009 Q1 Targets
($ millions, except per share data)Q1 2009E
R $1 350 (5%) t (8%)
Q1 2008
Revenue $1,350 (5%) to (8%)
Segment Income $ $160 $130 to $135
(16%) to (19%)(16%) to (19%)
Segment Income % 11.9% 10.3% to 10.7%
(120) to (160) bps(120) to (160) bps
EPS $1.15 $0.75 - $0.85
Note: Data from continuing operations (25%) to (35%)(25%) to (35%)
89Expect Decline in Q1 EPS of 25% to 35%
g p ( ) ( )( ) ( )
Capital Structure and Liquidityglobal infrastructure x process equipment x diagnostic tools
p q y
COMPANY CONFIDENTIAL
Financial Position
December Balance Sheet:Debt to EBITDA*
($ millions)
– $477 of cash on hand
– $1,310 of total debt
2.3x
1.6x
Improving leverage ratios
$
1.8x
1.1xRequired debt payments of $75 in 2009 and 2010
2007 2008E*
Net Leverage Gross Leverage
9191Solid Financial Position and Improving Leverage Ratios
*2008E based on EBITDA as of October 29, 2008 and December Balance Sheet
Projected Liquidity
($ millions)
Amount2008
E ti t d h h d t 12/31/2008 $477Estimated cash on hand at 12/31/2008 $477Available, committed credit lines 543
Total Estimated Availability as of 12/31/08 $1,02020092009
Projected FCF $250
Proceeds from closed asset disposals 20
Minimum remaining debt payments (75)Minimum remaining debt payments (75)
Expected dividend payments (50)
Projected 12 Month Liquidity Situation $1,165
Note: Our ability to access these sources under our various facilities may be limited by the terms of
92Projected Available Liquidity of Over $1b;
Will Focus on Maintaining Liquidity As 2009 Progresses
Note: Our ability to access these sources under our various facilities may be limited by the terms of our credit facility and by certain tax regulations that pertain to cash in overseas locations
Executive Summaryglobal infrastructure x process equipment x diagnostic tools
y
COMPANY CONFIDENTIAL
Current SPX Situation
2009 EPS Guidance: $5.40 to $5.80 per share
Solid financial position and liquidity:Solid financial position and liquidity:– Additional 3m share repurchase plan active
– >$1b of available liquidity
– Significant flexibility in uncertain economic environment
APV integration and other restructuring actions aligning cost structure with d i fl ibili f h frevenue stream and creating flexibility for the future
Continue to focus on executing long-term strategy:– 3 core, global end markets
– Fundamental demand for SPX technologies unchanged
– Long-term organic growth target 4% to 6%
94
g g g g
Carefully Monitoring Risks In Uncertain Economic Environment;Continue to Drive Long-Term Strategy
Questionsglobal infrastructure x process equipment x diagnostic tools
Q
COMPANY CONFIDENTIAL
Re-Stated Quarterly Segment Data
Fourth Quarter Full Year200 2008 200 2008 200 2008 200 200First Quarter Second Quarter Third Quarter
2007 2008 2007 2008 2007 2008 2007 2007
Flow Technology Revenue $237 $492 $266 $535 $256 $493 $311 $1,070 Segment Income $37 $47 $44 $70 $44 $56 $51 $175 Segment Margins 15.4% 9.5% 16.5% 13.1% 17.2% 11.3% 16.4% 16.4%
Test and Measurement Revenue $236 $270 $284 $320 $245 $260 $315 $1,080 Segment Income $24 $24 $32 $37 $22 $30 $41 $118 Segment Margins 10.0% 8.9% 11.2% 11.4% 9.0% 11.7% 13.0% 11.0%
Thermal Equipment and Services Revenue $313 $347 $388 $409 $422 $437 $438 $1,561 Segment Income $16 $36 $38 $46 $57 $52 $52 $163 Segment Margins 5.2% 10.5% 9.8% 11.1% 13.4% 12.0% 12.0% 10.4%
Industrial Products and Services Revenue $187 $241 $228 $248 $224 $296 $226 $865 Segment Income $25 $53 $33 $55 $42 $69 $50 $150 Segment Margins 13.6% 22.2% 14.4% 22.1% 18.8% 23.5% 22.1% 17.4%
Note: Data from continuing operations
96
g p
Non-GAAP Reconciliationsglobal infrastructure x process equipment x diagnostic tools
COMPANY CONFIDENTIAL
2009E Free Cash Flow Reconciliation
Free Cash Flow Reconciliation(unaudited)
SPX Corporation and Subsidiaries
($ millions)
Net cash from continuing operations 330$ 370$
2009E Guidance Range
Net cash from continuing operations 330$ 370$ Capital expenditures (100)$ (100)$
Free cash flow from continuing operations 230$ 270$
98
EBITDA Reconciliations
($ millions) 2008E 2009E
Revenues $6,000 $5,435Revenues $6,000 $5,435
Net Income $352 $280Income tax provision (benefit) 178 142Interest expense 113 103Income before interest and taxes $643 $525
Depreciation and intangible amortization expense 114 105EBITDA from continuing operations $757 $630
Adjustments:Non-cash compensation expense 43 28Extraordinary non-cash charges (10) 0y g ( )Extraordinary non-recurring cash charges 11 65Excess of JV distributions over JV income 12 0Loss (Gain) on disposition of assets (14) 5Pro Forma effect of acquisitions and divestitures (2) 0Other 4 (3)
Adjusted LTM EBITDA from continuing operations $800 $725
99
Note: EBITDA as defined in the credit facility; 2008E as of 10/29/2008
Organic Revenue Growth Reconciliation
Net Revenue Acquisitions Organic G h/(D li ) d O h G h/(D li )
Foreign Growth/(Decline) and Other Growth/(Decline)
2005 6.2% 0.5% 0.0% 5.7%
Currency
2006 11.8% 1.4% 0.7% 9.7%
2007 15.7% 3.2% 2.7% 9.8%
2008E 28% - 29% 18% - 20% 1% - 2% 7% - 8%
Note: Data from continuing operations; 2008E as of 10/29/2008
100
2007 & 2008 Adjusted Earnings Per Share
2007 2008E
GAAP EPS from continuing operations $5.33 $6.76 $6.86
Q3 Tax Benefits (0 34) (0 47) (0 47)Q3 Tax Benefits (0.34) (0.47) (0.47)
Q3 Legal Settlement (Other Expense) 0.11 0.11
Q4 Tax Benefits (0.25)
Q4 Asset Impairment 0.05p
Q4 Legacy Legal Matters (Corporate Expense) 0.06
Adjusted EPS from continuing operations $4.85 $6.40 - $6.50
101
Note: Data from continuing operations; 2008E as of 10/29/2008
2006 Adjusted Earnings Per Share
FY 2006
GAAP EPS from continuing operations $3.74
Q2 Tax Accrual Reversal (0 57)Q2 Tax Accrual Reversal (0.57)
Q2 VSI Legal Settlement 0.20
Q4 Miscellaneous Tax Benefits (0.28)
Q4 Charges for Legacy Legal Matters 0.07Q g g y g
Loss from operations discontinued in 2007 (0.08)
Adjusted EPS from continuing operations $3.07
102
Note: Data from continuing operations
2005 Adjusted EPS Reconciliation
GAAP net income per share $15.33
Year ended, Dec 31, 2005
Income from discontinued operations (15.61)SFAS 142 asset impairment 0.96Loss on early extinguishment of debt 0.96Normalized tax rate (40%) 0 41Normalized tax rate (40%) 0.41Projected share count (64m) 0.26Normalized interest expense ($37m) 0.12Other (1) 0.19
Adjusted earnings per share $2.62
(1) Includes income from businesses discontinued in the second half of 2005,
Note: The model above has been presented on the same basis as the annual earnings per share
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.
103
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