Good day ladies and gentleman, and welcome to the second quarter 2010 SPX Earnings Conference Call. My name is Ann and I will be your coordinator for today's call. As a reminder, this conference is being recorded for replay purposes. At this time all participants are in a listen-only mode. (Operator instructions). We will be facilitating a question and answer session following the presentation. I would now like to turn the presentation over to Mr. Ryan Taylor, Director of Investor Relations. Please proceed, sir.

Thank you, Ann, and good morning every one. Thank you for joining us today. With me on the call this morning are Chris Kearney, Chairman, President and CEO of SPX, and Patrick O'Leary, our Chief Financial Officer. This morning's call is being webcast with a slide presentation which can be accessed in the invest relations section of our website spx.com. This webcast will be available until August 18 and I encourage you to follow along with the webcast as we reference the detailed information on the slides. Please note that the slide presentation also includes supplemental schedules which provide reconciliations for all non-GAAP financial measures discussed today. Our earnings press released was issued this morning and also be found on our website. Before we continue I would like to point out that portions of our presentation and comments are forward looking and subject to Safe Harbor provisions. The updated 2010 EPS guidance we just discuss today is on an adjusted basis and from continuing operation. Please note the risk factors in our most recent SCC filings. With that, I will turn the call over to Chris.

Thanks Ryan. Good morning everyone. Thanks for joining us on the call. Market trends in first half of 2010 progressed much as we had anticipated. We have seen improvement in many of our early cycle businesses while conditions in our mid to late cycle businesses have remained depressed. Our focus on globalization has been a significant contributor to our financial performance to the first half of this year. Growth in emerging regions has helped to mitigate continue softness in certain developed markets. As expected weakness in the United States power transformer market weighed on our second quarter performance. Despite this headwind, our second quarter earnings per share increased over last year and we have also exceeded our guidance. This is the first time in six quarters that our earnings have increased over the prior year period. We’re pleased with the half earnings result in the quarter, which were particularly strong in our Thermal and Test & Measurement segments. We’re encouraged by the benefits we have realized from the restructuring action taken over the past two years. These actions significantly reduced our cost base and we’re seeing the positive impact in our operating results. Looking our consolidated results for the second quarter, we reported revenue of $1.2 billion about the same as last year, as acquisition growth offset a 2% of organic decline and a 2% headwind from currency. Entering the quarter we had anticipated a slight year-over-year benefit from currency. That did not materialize as revenue declined $18 million due to the weakening of the Euro and other currency rates during the quarter. Sales into emerging markets accounted for 26% of our total revenue, largely driven by China, where revenue increased more that 50% year-over-year. Total sales into Asia Pacific were up 37%. In the Americas revenue declined by 2%,…

Thanks Chris. Good morning everyone. I will begin this morning with the review of the Q2 earnings per share. We reported Q2 earnings from continuing operations of a $1.40 per share. This included $0.40 of tax benefits related to audits of our 2006 and 2007 US income tax returns. Excluding these benefits our EPS was $1.00 per share versus our guidance range of $0.65 to $0.75 per share. We exceeded our guidance primarily due to better than expected operating performance in our Thermal and Test & Measurement segments. Additionally, the timing of certain restructuring actions that we had anticipated incurring the second quarter shifted to the second half of this year. Looking at the year-over-year comparison, on an adjusted basis Q2 EPS increased 25%. Consolidated segment income was flat year-over-year as operating improvement in many of our businesses offset $0.46 earnings per share decline from the power transformer business. The most notable improvement within our thermal segment, where increased operating income contributed $0.28 per share to year-over year-earnings. Our test and measurements income increased $0.14 per share. We benefited from reduced restructuring expense which increased EPS $0.25 compared to last year. Reported revenue for the quarter was $1.2 billion flat to the prior year, growth from acquisitions of 3% was offset by 2% organic decline and about 2% currency impact. Segment income was about $136 million, 11.4% revenue both flat with the prior year. Looking at the results by segment beginning with Flow Technology, Flow reported revenue of $383 million in Q2 down 3% from last year. The Gerstenberg acquisition increased revenue 4% and this was offset by 6% organic decline. Currency changes decreased revenue by 1%. The year-over-year organic decline was primarily due to reduced sales in the oil and gas sector. Additionally, revenues from large scale food and…

Thank you, Patrick. We remain confident in our long-term strategy and we continue to invest in future growth opportunities both organically and through acquisitions. Since our last earnings call, we have executed several strategic actions that we believe improve our competitive position across our three key end markets. In Q2, we now plan to expand our transformer manufacturing facility in Waukesha, Wisconsin. The plant expansion will add 140,000 square feet of manufacturing space, an increase of about 50%. Once completed we expect that Waukesha Electric will be able to offer the broadest array of power transformers of any domestic transformer producer. Our net investment is expected to be approximately $45 million with a very attractive return on capital estimated at greater than 20%. The feedback we've got from our customers had been positive and several of them have made inquiries and requested quotes. We are currently participating in bids on large power transformers that we intend to manufacture in the expanded facility. We expect to complete the land purchase and permitting in the coming months and we are on track to start construction by the end of this year. The construction is expected to be completed by the end of next year and we expect to ship our first unit in 2012. Just a few weeks ago we completed the acquisition of Anhydro, a leading global supplier of custom engineered food and beverage processing systems. Last year 72% of its revenue was generated from sales into the food and beverage market. It also serves chemical and pharmaceutical markets. Annual revenue was approximately $100 million and we expect the acquisition to be accretive to earnings within the first 12 months. Anhydro was based in Denmark where they have a state-of-the-art facility dedicated to application development and customer trials. Its core competency…

(Operator instructions). Our first question comes from the line of Bob Cornell with Barclays Capital. Please proceed. Bob Cornell – Barclays Capital: Since I am first up I will ask the obvious question. I mean, transformers had a tough quarter, you're talking about expanding order volume but a weak second half, maybe just give us a better view of that picture from your mind?

Yeah, sure, Bob, we would be happy to. Again to reiterate our prepared comments, we remain bullish on the long-term attractiveness of this market, medium and long-term and that hasn't changed nor really has our view on 2010 changed. Our financial targets for the transformer business for this year haven't changed. We are still targeting about $250 million of revenue from our transformer business this year and that's down a little more than 30% from last year. That decline as we mentioned before Bob is about half price and half volume. So our guidance assumes that pricing remains challenged in that business throughout the balance of the year. So, there haven't been any meaningful changes to conditions in that medium power transformer market in the US since our Q1 call. We did, as Patrick mentioned, in his remarks we did see some modest increase sequentially in order volume most likely reflecting those customers using their capital budgets for the remainder of the year. Historically in that business what we've seen is volume increases preceding price movement. So it is also important to remember that at this point in the cycle our visibility on transformer shipments is really only about four months and with that level of visibility it is really difficult for us to predict when we will see a recovery in that market. So, its premature I think for anybody to say that we have seen a bottom in this market. We have seen rolled on electricity grid increased due to the summer heat and partly due to some increased economic activity, but again at this point it is really unclear as to what levels of impact that increased demand is having exactly on our business. So again to reiterate, we think increased electricity demand will be a key driver for recovery. In the medium and long term we have confidence in the dynamics of this market. We still think it's an attractive place to be and we have validated obviously that confidence by the investment we have chosen to make in Waukesha both to expand our capacity and to expand our technical reach in that business. So medium to long term we like the dynamics of our business. Bob Cornell – Barclays Capital: Do you have a comment on the price embedded in the backlog relative to the price embedded in the Q2 shipments?

Obviously, at the time we have been shipping orders that were taken at higher prices. We went into the year with a lot of pre-recession orders and so, throughout the last over year we have had this dynamic of shipping orders that were taken significantly before. That will mitigate as we come through the tail end of this year. Basically, if you look at the pricing over time, it has come down and at this level it's a $250 million business with single digit margins. Bob Cornell – Barclays Capital: Okay, follow up from me, I mean thermal had a great quarter, I mean maybe a little more color on what's rolled out and what the outlook is

Yeah, what we saw about was, a couple of things one a better mix of business with more of a dry cooling mix in the quarter. In addition to that we had some recon business which tends to bring with it better margins. In terms of project execution, what we have seen consistently over the last couple of years with Drew and his team is much better performance in terms of execution on these projects; we have talked in the past about better contract instruction. So as a whole that business continue to improve in the way they run it and manage to continues to improve. Then on some of those recon projects we are incentivised to move efficiently and to complete the jobs early and there are incentive payments that come with the early completion of those projects and some of that was in the mix as well.

Obviously that segment has been and will continue to be lumpy based on the timing of these large orders. So, you are going to continue to see fluctuations quarterly both in terms of the top line and in terms of the margin delivery.

Our next question comes from the line of Nigel Coe of Deutsche Bank. Please proceed.

Just wanted to dig into the second outlook a little bit more. A couple of things jump out of me. The first is the big pick up from 2Q to 3Q on the revenue line, just wonder if you could maybe provide a little more color on the moving parts between 2Q and 3Q?

Yeah, it's really relating to some timing issues and what we are seeing is that the timing of restructuring action impact, the move from Q2 to Q3. As we mentioned on the call some of the restructuring actions that we expected in Q2 have shifted into Q3 that accounts for about $0.09.

Right, but more on the top line, Chris.

Sure. If you look at the thermal segment as I discussed I'm saying it's obviously project driven and lumpy. If you look at flow, it has been sequentially improving. We have the dip in margins in Q2 that's largely driven by dilution from the Gerstenberg acquisition and obviously the absolute OP dollars there were brought down by the organic strength. So, in terms of first half to second half, we are showing little over $2 in the second half versus about $1.37 in the first. The big changes are in between the first half and the second half are in thermal and flow.

So this sounds like that the Q2 to Q3 revenue pick up driven more by thermal than anything else.

Project I mean.

Right, okay and then just to look at the flow margins, it looks like you got into low 13% to 14% margins in second half. We have seen sub 12% margins year to date, margins that bump around 12% in 2009. What gives you the confidence that you are going to get that raise in the second half of the year, particularly given Anhydro is going to come in 3Q and seems that's going to be dilutive?

Yeah, it is. I mean, at the start we'll be going through the post accounting effect with the Anhydro. If you look at business volumes we do have one large project that's scheduled in the second half. You can tell from the comments that we had two quarters now where the backlog has improved and so the early short cycle trends are actually pretty decent and fairly stabile there. So, it is fair to say that we're expecting sequentially ramped up performance. Then you look at the margins compare to history they are actually very doable.

Okay. And then finally from me, you gave some color on Waukesha margins in the second half of the year, I don't think you've ever given that kind of color before. Can you maybe put that in context where they are running year-to-date turns and may be 2009?

I am not going to go into the financial statement to the transformer business, but you know relative to history, at the bottom of the cycle we tend to come down to low single digit margins. So, just really what we're trying to do that with give an indication about kind of where the business is operating. You can tell in terms of the way the backlog is developing that the rest of the businesses which are mostly shorter early cycle businesses are kind of holding there own against the transformer business in terms of development at the backlog. Just I want people to understand a lot of the pain that we dealt within this business was from the middle of last year to the middle of this year. So we got this continuing impact that we just discussed about the rolling effect of declining pricing in the back log and how that actually gets delivered out in revenue. As we said we expect the business to just stay at this kind of level as we develop up the year.

One more crack. Just to understand the first half and the second half swing in the industrial segment, can you just provide any color whatsoever on Waukesha margins being, I thought, in mid to upper single digit, is that through similar range?

Yes.

Yeah, in the first half of the year they were in, and then as we moved to the second half and we're working off a lower price backlog you move to double digit this thing.

Our next question comes from line of John Inch with Merrill Lynch. Please proceed.

Firstly Chris or Patrick, what is your expectation of deal related cost, I guess, for the quarter and then for 2010 as part of your guidance given the acquisitions you have this far?

Well, with respect to the restructuring it includes about $5 million to $10 million of costs related to acquisition integration. With respect to, what I would call direct deal cost, they are in the range of $3 million to $5 million for the full year. Those are some external costs, lawyers, etc and some sort of T&E type costs. So those are really the two buckets, John.

As we roll into 2011, Patrick, if you were to kind of with the three primary deals what would be a rough estimate of the magnitude of accretion from these transaction? So, I guess you have the cost of voidance and accretion prospects?

No, it's really premature to give that. You could look at the revenues. There is another factor that takes place and that is in the first period for a full inventory turn there's no there's no manufacturing profit allowed to come to the income statement. So, you've got a period of time on these acquisitions where you've got a quarter or so where there isn’t any contribution. Most of these acquisitions that we've done in the last 18 months they've got a profile that looks like they would ultimately come up to the average margins for the segment and you could take those revenues and give the teams some integration time 12 to 18 months and then stop modeling the revenues at those at those levels.

The other thing, John, that's challenging in terms of integrating particularly the board acquisitions that we do it it's some times difficult to accurately predict the pace of restructuring because of the issues that you have to deal with in terms of the changes that go along with that working with accounts and things like that. So, with any of these obviously we try to effect the integration plan as quickly as possible, but sometimes to those restructuring costs do get pushed depending on how quickly we're able effect the changes we need and go through the appropriate works account.

Yeah, now I understand. I think you said, Chris, Anhydro is expected or maybe Patrick said, expected to be accretive. If you start at $0.10 to $0.15 cents dilution at 2010, it sounds like it could be sort of comparable amount of accretions of maybe towards the back half of the ’11 although sequel. It’s that’s sort of fair?

We'll give a more definitive indication (inaudible) when we do guidance for 2011 but the actual amount and timing restructuring is, as Chris mentioned, quiet volatile. The level of restructuring under the new accounting going forward relating to acquisition will obviously be variable and we’ll do our best to give an indication of that, but with $35 million of restructuring embedded in this year's guidance obviously the level of overall restructuring both operational and acquisition related in 2011 will have a fairly significant impact on the earnings.

Yeah, I know that’s fair. Chris, I think was that a conference you were asked about your thoughts on South Africa, and obviously there is still that sort of funding question looking ahead. I think, the fact that your project are continuing is a pretty good sign and some people make conjecture that South Africa will find the money. All that said, what potentially is the variable kind of revenue deferral, if you want to call it that, that could impact 2011? Again I know it's premature, but if you had just sort of sized the risk, I don’t think its high but it's probably a deferral, how would you frame it at this point based on everything you understand to be in place?

I can't really comment on 2011. What I can tell you, John, is that you know as this year has progressed. We've clearly become more confident with respect to our views regarding the risk of cancellation. We've taken about $180 million of progress payment so far, we’re producing as required and as scheduled. So, those projects are moving along just fine and that the real risk of delay that we see in South Africa is really no different than we see in any of these other large projects that are more construction related than anything. Having said that, the pace of our project thus far in South Africa has moved along as anticipated. With respect to Ascom and their funding challenge, they still do have a funding gap going forward. We don’t see that impacting also other suppliers in the short-term. That’s something that they’ve made progress thus far in resolving both through additional loans and through significant rate increases over the last two years. As we look at 2010, what we said so far about that with respect to South Africa is that we’re looking at about another $250 million of revenue coming out of those projects, which is how we pace it for you when we talked about before.

Which is not just significantly about the 2010, John

Yeah, I understand. Actually it almost sounds like you’re a little bit more confident about next year anyway. Do you guys have any kind of an update on India? I mean, the power market there when you read the various headlines suggested that markets really beginning to pickup here on several different fronts, I guess from a generation standpoint. What’s going on your Thermax business? Are you thinking about perhaps expanding your footprint in any kind of a more tangible way to kind of capture opportunity in the Indian market?

Yeah, we continue to see in the John has a very attractive market for us. I think with great opportunity not only in our power-related businesses, but across really all of our major end markets and so, it’s a focus of significant development opportunity for us. In fact, we just hired a new Country Manager for India who will start shortly for us. With respect to our Thermax joint venture, I had occasion to meet our joint venture partners a few weeks ago. As we said before Thermax is a very impressive company and a great partner. We continue to see opportunity to leverage that relationship to help us even beyond the scope of the intended joint venture. So, the joint venture and our relationship with Thermax is progressing as we hoped and as we planned, but there are, we think, just enormous opportunities for SPX in India. We are going to continue to work with Thermax and we are going to continue to work now under the leadership of our new Country Manager who is going to bring our businesses together in a more coordinated way to try and get those opportunities. It will be important.

Do you have any financial targets in mind, Chris, over time may be not necessarily near term?

No, in the near term we will talk about that, when we talk about when we talk about guidance on 2011 in January.

Over time how big could SPX be in India do you think?

Well, I think, it's hard to predict that. If you want to use China as a proxy, I mean you look at the rate of growth for us in China over last eight years, it has been pretty dramatic. As you know, John, I mean it's gone from basically no presence to now a significant presence and significant revenue. We think that India affords the same kind of opportunity. It has been a little more challenging to get at it as other Western companies that have experience. We think particularly in basic infrastructure and basic process equipment needs and also with respect to automotive diagnostics. We have got great customer contacts there, and there is good opportunity. So, it's going to be the focus of development for us for sure.

Our next question comes from the line of Phil Gresh with JPMorgan. Please proceed Phil Gresh – JPMorgan: Just on the transformer businesses trying to get a sense you obviously sound incrementally more positive here. Do you feel like Q2 here, I mean is the inflection point and even if the recovery is gradual or is it? I am trying to get sense of that versus budget plus comment.

It's really too early to say that. The comments coming out of our customers which you can see a lot of those publicly are I would describe as cautious. Really how they set the 2011 capital spending budgets I think would be more of a factor. We do see some order taking for 2011 and we have a number of reasons for that one might be that our customers see pricing right now as attractive and maybe kind of as good as they get but you really can’t say. We really haven’t seen a significant change in that market. It is fair to say there was a slight improvement in demand. I think there are a number of factors for that. Typically, our customers will move to use all of their 2010 capital budget. The load is a little different obviously regionally based on the way the weather has been. So, I would say that we haven’t changed our view for this year and that we are still in a very cautious mode with respect for that business. Our medium to long term view obviously supported by the significant investment we are making in large power is still that the drivers of recovery are all basically there. We just honestly cannot tell you. If you look at the top of the cycle we consider it a long cycle business, but at this point in the cycle we consider it a short cycle business and visibility is limited with us basically participating more in the open market than with direct customer negotiations. So, I think its going to be a while before we know where the exact inflection point has been. The business is operating right now at kind of a operating level it came to at the last point of the cycle, but obviously we have a little more volatility when you get down to low single digit margins. Phil Gresh – JPMorgan: The second question and is just on the guidance the math around it. I mean I think in the past couple of years you said the average Q4 earnings are about 36% of the total year and this year if you kind of back into it it's more like high 20s. Is there something specific going on in the Q4 that lead you to say that or is it kind of conservative at this point in the cycle?

Yeah, it is a little bit unusual given our historic trends in the business, but as we have mentioned before Phil its really a mixture of things its in project timing in our thermal segment where we see more projects weighted in the middle of the year and then seeing them drop off in Q4. We have got the sequential decline in the pricing of transformers in Q4 and which is going to be the least profitable for our industrial segment. It's just also important to remember that two thirds of our business is short cycle and so we don’t have great visibility to book and turn orders towards the end of the year. So, I think given the economic conditions that we are all working our way through I think we have been appropriate and appropriately cautious in terms of how we looked at the second half of the year and particularly Q4. The other thing I would mention is it's important to remember that restructuring is expected to be significantly higher in the second half 24 million versus a 11 in the first half of the year.

Our final question today comes from the line of Ajay Kejriwal with FBR Capital Markets & Co. Please proceed. Ajay Kejriwal - FBR Capital Markets & Co: Nice margin performance in thermal and you touched on mix and execution. Maybe talk about the currency dynamics a little bit. If I recall correctly you do a lot of designing engineering work in Europe and your costs are in Euro, but you are selling in South Africa and emerging markets. So, as the Euro has depreciated versus the dollar how has that helped you? I know, you talked about the top line.

Yeah. Honestly, Ajay, its not that significant because the funding in South Africa is actually coming from a quasi-governmental entity, there is a substantial local requirement. In fact there is black empowerment legislation and so, we are helping our immediate customers meet those local requirements through local manufacturing. So, while it is true that small portion of the contract is actually being engineered outside of South Africa, in Belgium, in Germany, the reality is that most of the cost is taking place locally. So, with respect to volatility from the actual movement between the currencies we do have some banker evidence in place to eliminate that volatility. So, with respect to currency at this point for the South African activity I don’t honestly expect it to be significant on the full recovery horizon. Ajay Kejriwal - FBR Capital Markets & Co: It was not a meaningful for number helping increment margin in the quarter?

No. Ajay Kejriwal - FBR Capital Markets & Co: On test and measurement, nice improvement in segment performance. So, how should we think in about revenues in this business and I don’t care much backlog in the business but to the extent you have visibility on new platform launches and pending expectation with auto dealers?

It's really our shorter cycle business and there is some seasonal elements for this year that’s a little different. I mentioned the concentration of air conditioning sales in the second quarter, some projects (inaudible). So, I think over time for the segment we would expect to see the segment normalize and looking forward certainly we look for the breaking through the double digit marginal performance. It's got a significantly lower US cost price from the restructuring that we have done. Try to get some regional color on the call today. Obliviously, from those remarks you heard the Europe is flat and so, the overall environment for spending is somewhat uncertain but Asia much smaller, moving forward, a lot of activity. So, I think the real move in that business relates to 2011 and 2012 changes in the overall market. It's obviously too soon to give numbers for them but certainly expect the test and measurement segment to recover.

Yeah, what we have said all year, Ajay, is that we expect to receive the recovery this year. As Patrick just outlined, and we are seeing but really beyond this year when more and more of those new platforms roll out that’s what really drives growth in that business. I think from a cost position and from a technology position globally that business is better positioned today that it’s ever been. So, that's what give us confidence in that segment going forward. Ajay Kejriwal - FBR Capital Markets & Co: I have not heard you call out fare collection systems in a while, but sounds like that was positive you have got some order in the quarter. So, maybe some color on what you’re seeing the business and expectations?

Yeah, what we’re seeing in that business just we’ve seen some short-term benefit from a lot of the stimulus dollar spending in the United States and that is a US business almost entirely. So, they have seen the benefit from some of the local cities getting funding to upgrade the systems on their busses.

Frankly, longer-term we see the market there quite positive. We expect the better government to continue funding transportation quite heavily over the next couple of years.

Thanks Ajay. That concludes our call for today. I’ll in the office most of the day if you have follow up questions. We thank you for joining us on the call today. Operator Ladies and gentlemen, we thank you for your participation in today’s conference. This concludes the presentation and you may disconnect. Have a good day.