SPX CORP, 10-K405, 1996-03-27

SPX CORP
10-K405, 1996-03-27
METALWORKG MACHINERY & EQUIPMENT

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995, OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO .

COMMISSION FILE NUMBER: 1-6948

SPX CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 38-1016240
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

700 TERRACE POINT DRIVE, MUSKEGON, MICHIGAN 49443-3301
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 616-724-5000
Securities registered pursuant to Section 12(b) of the Act:
</TABLE>

<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- ----------------------------------------- -------------------------
<C> <S>
COMMON NEW YORK STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
11 3/4% SENIOR SUBORDINATED NOTES, DUE 2002 NEW YORK STOCK EXCHANGE

</TABLE>

Securities registered pursuant to Section 12(g) of the Act:

NONE
(Title of Class)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS TO
BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENT FOR THE PAST 90 DAYS. /X/

STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
OF THE REGISTRANT.

$230,996,000 AS OF MARCH 5, 1996

------------------------

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

14,325,318 SHARES AS OF MARCH 5, 1996

------------------------

DOCUMENTS INCORPORATED BY REFERENCE: REGISTRANT'S PROXY STATEMENT FOR ITS
ANNUAL MEETING ON APRIL 24, 1996 IS INCORPORATED BY REFERENCE INTO PART III.

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. /X/

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<PAGE> 2

PART I

ITEM 1. BUSINESS

SPX Corporation ("SPX" or the "company") is a global participant in the
design, manufacture and marketing of products for the motor vehicle industry.
Its operations are focused on the markets for specialty service tools and
equipment used in vehicular repair and maintenance, and original equipment
components for the manufacture and repair of motor vehicles.

The company was organized in 1911 under the laws of Michigan, and
reincorporated in Delaware in 1968. It was known as The Piston Ring Company
until 1931, when it changed its name to Sealed Power Corporation. The name was
changed again in 1988, when it became SPX Corporation. Today, SPX Corporation is
a multi-national corporation with operations in 14 nations. The corporate
headquarters is located in Muskegon, Michigan.

RECENT DEVELOPMENTS

During 1995, the following significant events and initiatives were
undertaken:

- During the second quarter, the Board of Directors accepted Dale A.
Johnson's resignation and began the search for a permanent Chief
Executive. Charles E. Johnson II, a member of the board, became Chairman
and Chief Executive Officer on an interim basis. At the December meeting,
the board elected John B. Blystone as the company's new Chairman,
President and Chief Executive Officer.

- At the end of the first quarter, the company reduced the cost structure
at the Automotive Diagnostics division by reducing headcount by
approximately 140 people. This resulted in a severance charge of
approximately $1.1 million, but generated an estimated $7 million in
annual savings.

- The company completed the sale of SPX Credit Corporation in the third
quarter. The buyer will continue to provide the company's customers with
a lease financing option for the company's products. The company believes
it has a strong relationship with the buyer. Additionally, proceeds from
this sale, over $70 million, were used to reduce the company's debt.

- During the fourth quarter, the company initiated a significant
restructuring within the Specialty Service Tool segment that consolidated
five divisions into two divisions. The company combined the Kent-Moore
division, the Dealer Equipment Service division and the program tool
portion of the OTC division to form the OE Tool and Equipment division
and combined the Automotive Diagnostics division, the Robinair division
and the aftermarket tool portion of the OTC division to form the
Aftermarket Tool and Equipment division. The restructuring includes
closing two manufacturing facilities, a distribution facility and an
operation in Europe. Additionally, the restructuring will combine sales,
marketing, engineering and administrative functions at these units. The
estimated overall cost of this restructuring is approximately $18
million, and annual savings are estimated to be $23 million by 1998.

- During the fourth quarter, the company decided to close its unprofitable
foundry operation at SP Europe Germany. The company recorded a $3.7
million restructuring charge to accrue for termination benefits for the
200 employees that are affected by the closing. The company obtained
significant wage concessions and improved work rule flexibility from the
employees that will continue to produce piston rings and cylinder sleeves
at this plant. Additionally, the company obtained a reduction in the cost
of utilities and other locally provided services to the plant. The
company anticipates that the cumulative effect of these actions will
improve this operation in the future.

BUSINESS SEGMENTS

The company is comprised of two business segments. Specialty Service Tools
includes operations that design, manufacture and market a wide range of
specialty service tools and diagnostic equipment, primarily to the global motor
vehicle industry. Original Equipment Components includes operations that design,
manufacture and market component parts for light and heavy duty vehicle markets.

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Previously, SPX Credit Corporation was reported as a segment, but was
discontinued in 1995 and is now presented as a discontinued operation on the
company's financial statements. SPX Credit Corporation provided Specialty
Service Tool customers with a leasing option for purchasing higher dollar value
diagnostic testing, emission testing and wheel service equipment.

The following table summarizes revenue by segment for the last three years.
Revenues for 1995 and 1994 are actual revenues for the company and its
consolidated subsidiaries. Unaudited proforma revenues for 1993 reflect the
acquisition of Allen Testproducts, the divestiture of the Sealed Power
Replacement and Truth divisions, the acquisition of Sealed Power Technologies
Limited Partnership ("SPT") and the consolidation of Sealed Power Europe Limited
Partnership ("SP Europe") as if they had occurred at the beginning of 1993.
Please refer to Note 6 to the consolidated financial statements for further
explanation of the 1993 proforma revenues.

<TABLE>
<CAPTION>
PROFORMA
1995 1994 1993
-------------- -------------- ------------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Specialty Service Tools................ $ 572.3 52% $ 550.6 51% $529.2 54%
Original Equipment Components.......... 525.8 48 529.3 49 458.8 46
-------- --- -------- --- ------ ---
$1,098.1 100 $1,079.9 100% $988.0 100%
======== === ======== === ====== ===
</TABLE>

SPECIALTY SERVICE TOOLS

Over the past 12 years, the company has made significant investments in the
specialty service tool market. The company acquired Kent-Moore and Robinair in
1982, OTC and Power Team in 1985, VL Churchill (United Kingdom) in 1985, and
Bear Automotive in 1988. It created Dealer Equipment and Services in 1989,
acquired Miller Special Tools in 1991, and acquired Allen Testproducts and
Lowener (Germany) in 1993. The specialty service tool market continues to be a
source of opportunity due to the increasing complexity of repairing motor
vehicles.

The Specialty Service Tools segment includes three operating divisions that
design, manufacture and market a wide range of specialty service tools and
diagnostic equipment primarily to the worldwide motor vehicle industry.
Approximately 18% of revenues are to non-North American customers.

The company competes with numerous companies that specialize in certain
lines of its Specialty Service Tools. The company believes it is the world
leader in offering specialty service tools for motor vehicle manufacturers'
dealership networks. The company is a major producer of electronic engine
diagnostic equipment, emissions testing equipment and wheel service equipment in
North America and Europe. The key competitive factors influencing the sale of
Specialty Service Tools are design expertise, timeliness of delivery, quality,
service and price. Sales of specialty service tools essential to dealerships
tend to vary with changes in vehicle design and the number of dealerships and
are not directly dependent on the volume of vehicles that are produced by the
motor vehicle manufacturers.

Design of specialty service tools is critical to their functionality and
generally requires close coordination with either the motor vehicle
manufacturers or with the ultimate users of the tools or instruments. These
products are marketed as solutions to service problems and as aids to
performance improvements. After the design is completed, the company
manufactures, assembles or outsources these products. The company also markets a
broad line of equipment of other manufacturers through dealership equipment
programs coordinated with certain motor vehicle manufacturers and aftermarket
service organizations.

OE Tool and Equipment -- This division provides automotive and heavy
duty vehicle, agricultural and construction dealerships of motor vehicle
manufacturers with essential program and general specialty service tools,
dealer equipment and other services. These products and services are sold
or provided using the brands and trade names of Kent-Moore, OTC, VL
Churchill, Lowener, Miller Special Tools, Jurubatech, Dealer Equipment and
Services, and, in some cases, the motor vehicle manufacturer's identity.

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Essential program and general specialty service tools include
specialty hand-held mechanical tools and specialty handheld electronic
diagnostic instruments and related software. These products are based on
customer needs, primarily to perform warranty and other service work at
franchised dealers. The division's technical product development and sales
staff works closely with the original equipment manufacturers to design
tools to meet the exacting needs of specialty repair work. Products are
sold to franchised dealers under both essential and general programs.
Essential programs are those in which the motor vehicle manufacturer
requires its dealers to purchase and maintain the tools for warranty and
service work.

Additionally, the division administers seventeen dealer equipment
programs in North America and Europe. Included are programs for General
Motors, Chrysler, Saturn, Opel, Nissan, Toyota and Hyundai. Under the motor
vehicle manufacturer's identity, the division supplies service equipment
and support material to dealerships, develops and distributes equipment
catalogues, and helps dealerships assess and meet their service equipment
needs.

The division has manufacturing operations in the United States and
Spain. Sales and marketing operations exist in the United States,
Switzerland, the United Kingdom, France, Australia, Spain, and Brazil. The
division also manages the company's 50% interest in JATEK, a Japanese
company that markets specialty service tools and equipment in the Pacific
Rim.

Aftermarket Tool and Equipment -- This division provides the motor
vehicle service aftermarket with a wide range of specialty service tools.
These products are marketed under the name brands of Allen Testproducts,
Bear, Litchfield, OTC, Robinair, and V.L. Churchill. Certain of the
division's products are marketed to the company's OE Tool and Equipment
division, which in turn markets these products to dealers of motor vehicle
manufacturers. The division also markets a portion of its products to the
appliance, refrigeration, and non-vehicular service repair market.

Products include specialized mechanical, electronic, and hydraulic
service tools, electronic diagnostic equipment, refrigeration vacuum pumps,
recharging equipment and leak detection equipment, refrigerant and engine
coolant recovery and recycling equipment, vehicle emissions testing
equipment, wheel service equipment and shop equipment. The division
distributes its products through warehouse distributors and jobbers, a
direct salesforce, OEM distribution and independent distributorships,
primarily in foreign countries. In-house sales and technical staffs support
these various types of distribution. In North America, the division is
supported by a network of distribution and service centers.

The division's manufacturing facilities are located in the United
States. Sales and marketing operations exist in the United States, Canada,
Germany, the United Kingdom, Italy, Switzerland, Spain, and Australia.

Power Team -- This division is a leading producer and marketer of
precision quality high-pressure hydraulic pumps, rams, valves, pullers and
other equipment. The division markets these products through industrial
distributors, its own sales force and independent agents. The sales and
marketing effort is supported by a strong technical support staff as
products must be designed to exacting specifications to meet the multitude
of applications for these products. Approximately three-fourths of the
division's sales are related to the motor vehicle service industry, while
the balance of sales are made in non-transportation markets such as
construction, aerospace and industrial maintenance.

The division has sales, marketing and manufacturing operations in the
United States. Additionally, sales and marketing offices are located in
Australia, The Netherlands, and Singapore.

The company is one of two major producers in this marketplace, which
is also supplied by many niche companies.

ORIGINAL EQUIPMENT COMPONENTS

During 1993, the company implemented its strategy to focus on its position
as an original equipment component supplier. As of December 31, 1993, the
purchase of Riken Corporation's 49% interest in SPT

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provided the company with control and ownership of SPT's four original equipment
divisions. Combined with the company's Acutex division and SP Europe, the
company has a broad range of products for both original equipment manufacturers
and aftermarket customers. Each of the Original Equipment Components segment's
operating divisions has achieved various OEM customer quality recognition and
awards.

The Original Equipment Components segment includes five operating divisions
that design, manufacture and market component parts for light and heavy duty
vehicle markets. The component parts for the light and heavy duty vehicle market
are composed of two primary sectors: (i) the OEM sector and (ii) the vehicle
maintenance and repair sector, the so-called replacement market or aftermarket.
The U.S. - Canadian - European OEM sector is composed primarily of four classes
of customers: (a) U.S. manufacturers, dominated by General Motors, Ford and
Chrysler, but including other vehicle manufacturers such as Navistar
International and Mack Trucks; (b) foreign companies producing vehicles in North
America and Europe ("transplants"); (c) European vehicle manufacturers,
sometimes sourcing the company's products through assemblies; and (d) vehicle
manufacturers producing vehicles outside the U.S., Canada and Europe.
Aftermarket customers include the service organizations of OEMs, automotive
parts manufacturers and distributors and private brand distributors such as
Federal-Mogul and Allied Signal.

OEM contracts typically are from one to five years in length with the one
year contracts typically being renewed or renegotiated, depending on part
changes, in the ordinary course of business and the longer term contracts
typically containing material cost pass-through and productivity improvement
clauses. Sales of products to OEMs are affected, to a large extent, by vehicle
production which, in turn, is dependent on general economic conditions.
Historically, global vehicle production has been cyclical.

Aftermarket sales are tied to the age of vehicles in service and the need
for replacement parts. Sales of products to the aftermarket historically have
been less affected by general economic conditions than OEM sales since vehicle
owners are more likely to repair vehicles than purchase new ones during
recessionary periods.

In its main product areas, the company competes with a small number of
principal competitors (including the OEMs in certain product categories), some
of which are larger in size and have greater financial resources than the
company. Competitive factors influencing sales include quality, technology,
service and price.

Acutex -- This division produces solenoid valves and related
assemblies for major vehicle and transmission manufacturers around the
world. Acutex's proprietary solenoid valve products interface between the
electronic signals of a vehicle's on-board computer and the vehicle's
hydraulic systems. The company is using this technology in designing and
manufacturing solenoid valves for electronically controlled automatic
transmissions.

Contech -- This division produces precision aluminum and magnesium die
cast parts for automotive steering and air conditioning systems, and other
assorted automotive/light truck uses. Primary products in this area include
steering column parts, rack-and-pinion components and other castings such
as components for air conditioning compressors, fuel systems, clutches, and
transmissions. Approximately one-half of the castings are machined by the
division prior to delivery to customers.

Products are sold almost exclusively to automotive OEMs through the
division's marketing and sales personnel who are assisted by an outside
sales organization. The market is driven primarily by major OEM model and
assembly programs.

The division has recently completed a major investment in magnesium
die casting. The benefits of magnesium, including less weight and higher
strength-to-weight ratio, will increase the division's proportion of future
sales that are magnesium die castings.

Filtran -- This division is a leading producer of automatic
transmission filters and other filter products and has a leading position
in the U.S. and Canadian OEM market and aftermarket. A typical transmission
filter product consists of a composite plastic/metal or all metal housing
which contains a

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highly specialized non-woven felt, polymesh, or metal screen filter element
designed to capture foreign particles.

The division sells filters directly to the worldwide OEM market and
aftermarket. Approximately two-thirds of sales are to the aftermarket which
includes the OEM parts and service organizations as well as private brand
manufacturers and assorted transmission rebuilders, repackagers, and "quick
lube" shops.

The division participates in the worldwide OEM market in two different
arenas. In Europe, the company's 50% owned joint venture, IBS Filtran,
manufactures and distributes filters to OEM customers. In the Pacific Rim,
the division exports filters to OEM manufacturers in Japan, Korea and
Australia.

Hy-Lift -- This division is a domestic supplier of a variety of valve
train components, including tappets, lash adjusters and roller rocker arms.
Sales are made to both the domestic OEM market and the domestic
aftermarket. Sales to the aftermarket, comprising approximately one-third
of total sales, are made through several channels, including direct sales
to the OEM parts and service organizations and sales to private brand
customers.

Sealed Power Division -- The division is the leading North American
producer of automotive piston rings and among the largest independent
producers of cylinder liners for automotive and heavy duty engines. The
division also produces sealing rings for automatic transmissions.

There is a continuing trend in the automotive industry to reduce the
weight of vehicles, which increases gas mileage. This trend has resulted in
the development of aluminum engine blocks that require cast iron cylinder
liners. Automotive engine blocks made of cast iron do not require a
cylinder liner. The division has been successful in obtaining contracts
from the OEMs for these high volume automotive cylinder liner applications.
In 1994, the division invested heavily in cylinder liner automated casting
equipment and machining cells to support increases in customer demand for
cylinder liners. The level of investment continued into 1995.

The division's products are purchased by both automotive/light truck
and heavy duty engine OEMs. The division utilizes a technical sales force
that works with OEM engine and transmission designers to provide high
quality rings and cylinder liners.

Approximately one-fourth of the division's sales are to the
aftermarket. In addition to OEM parts and service organizations, the
division supplies the aftermarket through private brand organizations,
which sell these products under various private labels.

SP Europe, like its North American counterpart, Sealed Power division,
is a designer, producer and distributor of automotive and heavy duty piston
rings and cylinder liners. Its sales are predominately to European OEMs and
to the European aftermarket. SP Europe's primary European customers are VW,
Federal-Mogul, Mahle, Kolbenschmidt, Alcan, Audi, Volvo and Mercedes Benz.
SP Europe was created by the company in June of 1991 after acquiring the
European piston ring and cylinder liner manufacturing business of TRW, Inc.
In October of 1992, Mahle GmbH contributed its Spanish piston ring
operation to SP Europe in exchange for a 30% ownership interest in SP
Europe. The Sealed Power division has managed SP Europe since its
inception.

The division manages a 50% owned investment in Allied Ring
Corporation, a U.S. joint venture with Riken, which manufactures and
distributes piston rings primarily to foreign companies producing engines
in North America ("transplants").

The division is also responsible for managing the company's 40% equity
investment in Promec, a Mexican company that manufactures and distributes
piston rings and cylinder liners in Mexico.

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INTERNATIONAL OPERATIONS

The company has wholly owned operations located in Australia, Brazil,
Canada, France, Germany, Italy, The Netherlands, Singapore, Spain, Switzerland
and the United Kingdom. The company also has a 70% ownership in SP Europe,
located in France, Germany and Spain.

Additionally, the company has the following non U.S. equity investments:

JATEK (50%). A Japanese company that sells various products into the
Asia Pacific Rim market, including many of the company's specialty service
tool products.

Promec (40%). A Mexican company which, through its subsidiaries,
manufactures and distributes piston ring and cylinder liner products in
Mexico.

IBS Filtran (50%). A German company that manufacturers and distributes
automotive transmission filters to the European market.

During the fourth quarter, the company sold its 50% interest in RSV, a
Japanese company that utilizes the company's technology to develop and
manufacture solenoid valves for the Pacific Rim markets, to the joint venture
partner. The company maintains a royalty arrangement to license its solenoid
valve technology to RSV.

The company has a cross-licensing agreement for piston rings with Riken
Corporation.

The company's international operations are subject to the risk of possible
currency devaluation and blockage, nationalization or restrictive legislation
regulating foreign investments and other risks attendant to the countries in
which they are located.

The company's total export sales, to both affiliated and unaffiliated
customers, from the United States, were as follows:

<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Export sales:
To unaffiliated customers................................ $ 83.0 $ 95.7 $ 74.4
To affiliated customers.................................. 27.9 26.9 34.9
------ ------ ------
Total.................................................. $110.9 $122.6 $109.3
====== ====== ======
</TABLE>

1993 export sales do not include export sales of SPT as it was not
consolidated until December 31, 1993. Historically, SPT's export sales were less
than 10% of its total sales.

RESEARCH AND DEVELOPMENT

The company is actively engaged in research and development programs
designed to improve existing products and manufacturing methods and to develop
new products. These engineering efforts encompass all of the company's products
with divisional engineering teams coordinating their resources.

Particular emphasis has been placed on the development of new products that
are compatible with, and build upon, the manufacturing and marketing
capabilities of the company. To assist the company in meeting customer
requirements, computer aided design (CAD) systems, that provide rapid
integration of computers in mechanical design, model testing and manufacturing
control, are used extensively.

The company expended approximately $26.3 million on research activities
relating to the development and improvement of its products in 1995, $26.4
million in 1994 and $17.6 million in 1993. There was no customer sponsored
research activity in these years. Research and development expenditures for 1993
do not include SPT as it was not consolidated until December 31, 1993. SPT's
research and development expenditures were $3.4 million in 1993.

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PATENTS/TRADEMARKS

The company owns numerous domestic and foreign patents covering a variety
of its products and methods of manufacture and owns a number of registered
trademarks. Although in the aggregate its patents and trademarks are of
considerable importance in the operation of its businesses, the company does not
consider any single patent or trademark to be of such material importance that
its absence would adversely affect the company's ability to conduct its
businesses as presently constituted.

RAW MATERIALS

The company's manufactured products are made predominately from iron,
steel, aluminum, magnesium, plastics and electronic components. These raw
materials are generally purchased from multiple sources of supply and the
company has not experienced any significant disruptions in its businesses due to
shortages.

OTHER MATTERS

At the end of 1995, the company's employment was 8,296 persons.
Approximately one-third of the company's 3,927 U.S. production and maintenance
employees are covered by collective bargaining agreements with various unions.
These agreements expire at different times over the next several years. The
company's collective bargaining agreement with Local 473 of the International
Association of Bridge, Structural and Ornamental Iron Workers covering
approximately 218 employees expires in April 1996. In addition, the company's
collective bargaining agreement with Local 2492 of the International Association
of Machinists and Aerospace Workers covering approximately 88 employees expires
in September 1996. Also, the company's collective bargaining agreement with
Local 7629 of the United Paperworkers International covering approximately 164
employees expiring in June 1996 has been extended until the plant is closed.
Management believes it has generally good relations with its employees and
anticipates that all of its collective bargaining agreements will be extended or
renegotiated in the ordinary course of business. Certain contracts with OEM
customers require the company to build inventories of critical components prior
to the expiration of collective bargaining agreements.

Approximately 20% in 1995, 16% in 1994 and 9% in 1993 of the company's
consolidated sales were made to General Motors Corporation and its various
divisions, dealers and distributors. Approximately 12% in 1995, 12% in 1994 and
2% in 1993 of the company's consolidated sales were made to Ford Motor Company
and its various divisions, dealers and distributors. Approximately 5% in 1995,
7% in 1994 and 6% in 1993 of the company's consolidated sales were made to
Chrysler Corporation and its various divisions, dealers and distributors. No
other customer or group of customers under common control accounted for more
than 10% of consolidated sales for any of these years. On a proforma basis,
approximately 17%, 10% and 8% of consolidated sales were to General Motors, Ford
and Chrysler in 1993, respectively.

The company does not believe that order backlog is a significant factor in
the specialty service tools segment. Within the original equipment components
segment, long term contracts and the related level of new vehicle production are
significant to future sales.

All of the company's businesses are required to maintain sufficient levels
of working capital to support customer requirements, particularly inventory.
Sales terms and payment terms are in line with the practices of the industries
in which they compete, none of which are unusual.

The majority of the company's businesses tend to be nonseasonal and closely
follow changes in vehicle design, vehicle production, and general economic
conditions. However, specific markets such as air conditioning service and
repair follow the seasonal trends associated with the weather (sales are
typically higher in spring and summer). Government regulations, such as the
Clean Air Act, can also impact the timing and level of certain specialty service
tool sales.

ITEM 2. PROPERTIES

UNITED STATES -- The principal properties used by the company for
manufacturing, administration and warehousing consist of 46 separate facilities
totaling approximately 3.8 million square feet. These facilities are

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located in Georgia, Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri,
Ohio, and Pennsylvania. All facilities are owned, except for 9, which are leased
(all non manufacturing). These leased facilities aggregate 361,000 square feet
and have an average lease term of 4+ years.

The company also has 30 distribution and service centers located throughout
the United States for distribution and servicing of its Specialty Service Tools.
These distribution and service centers aggregate 126,000 square feet and all are
leased. No single distribution and service center is of material significance to
the company's business.

INTERNATIONAL -- The company owns approximately 113,000 square feet and
leases approximately 944,000 square feet of manufacturing, administration and
distribution facilities in Australia, Brazil, Canada, France, Germany, Italy,
The Netherlands, Singapore, Spain, Switzerland and the United Kingdom.

The company's properties used for manufacturing, administration and
warehousing are adequate to meet its needs as of December 31, 1995. The company
configures and maintains these facilities as required by their business use. At
December 31, 1995, the company believes that it does not have significant excess
capacity at any of its major facilities. Three facilities are directly affected
by the current restructuring process. Two of these facilities in Michigan, a
110,000 square foot manufacturing plant and a 98,000 square foot distribution
center, will be closed during 1996 as activity will be combined with other
facilities. Both of these facilities are owned and the company believes that the
facilities can be readily sold. The other facility, a 157,000 square foot
manufacturing plant in Pennsylvania, will be closed in late 1996 or early 1997
as activity will be combined with another facility. This facility is not
considered to be readily marketable and its carrying value has been reserved for
as part of the restructuring charge.

ITEM 3. LEGAL PROCEEDINGS

Certain claims, including environmental matters, suits and complaints
arising in the ordinary course of business, have been filed or are pending
against the company. In the opinion of management, all such matters are without
merit or are of such kind, or involve such amounts, as would not have a
significant effect on the financial position or results of operations of the
company if disposed of unfavorably.

The company has, for at least the last two and one-half years, been engaged
in discussions with Snap-on Corporation regarding claims which the company has
against Snap-on and which Snap-on believes it has against the company. As of
August 26, 1993, the company had asserted a number of patent infringement claims
against Snap-on, relating to products marketed either by Snap-on or by Sun
Electric Corporation, a company whose stock Snap-on purchased in 1992. As of
August 26, 1993, Snap-on had asserted claims of violation of securities laws
against one of its executives arising out of his former employment with Sun
Electric and against the company as an aider and abettor of those violations. On
that date, a Standstill Agreement was executed between the parties which
preserved the parties' rights while permitting settlement discussions. Since
that time, Snap-on has raised patent infringement claims against the company
which, by agreement, are covered by the August 26, 1993 Standstill Agreement, as
well as another independent patent infringement claim for which a lawsuit was
filed in California in late December 1995. On January 8, 1996, after extensive
but unsuccessful negotiations to resolve all asserted claims, Snap-on
Corporation and Sun Electric Corporation notified the company of the termination
of the Standstill Agreement. Under the terms of that Agreement, the standstill
will terminate March 8, 1996. The company has been advised that after that date,
Snap-on and Sun will initiate litigation and assert their claims. If they do not
do so, the company intends to begin litigation of its claims against Snap-on and
Sun. The company has what it believes to be meritorious defenses as well as
counterclaims which it will raise and intends to vigorously prosecute any
litigation. The asserted value of the claims against the company and those to be
brought by the company are in the multiple millions of dollars. It is not,
however, possible to assess the ultimate outcome of the claims at this point.

8
<PAGE> 10

regulations and the company is not aware of any violation that could have a
material adverse effect on the business, financial conditions, results of
operations, or cash flows of the company. There can be no assurance, however,
that currently unknown matters, new laws and regulations, or stricter
interpretations of existing laws and regulations will not materially affect the
company's business or operations in the future.

In addition, it is the company's practice to reduce use of environmentally
sensitive materials as much as possible. First, it reduces the risk to the
environment in that such use could result in adverse environmental affects
either from operations or utilization of the end product. Second, a reduction in
environmentally sensitive materials reduces the ongoing burden and resulting
cost of handling, controlling emissions, and disposing of wastes that may be
generated from such materials.

The company is also subject to potential liability for the costs of
environmental remediation. This liability may be based upon the ownership or
operation of industrial facilities where contamination may be found as well as
contribution to contamination existing at offsite, non-owned facilities. These
offsite remediation costs cannot be quantified with any degree of certainty. At
this time, management can estimate the environmental remediation costs only in
terms of possibilities and probabilities based on available information.

The company is involved as a potentially responsible party ("PRP") under
the Comprehensive, Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), as amended, or similar state superfund statutes in ten
proceedings involving off-site waste disposal facilities. At seven of these
sites it has been established that the company is a de minimis contributor. A
determination has not been made with respect to the remaining three sites, but
the company believes that it will be found to be a de minimis contributor at two
of them. Of these remaining sites, one is approaching settlement with the
Environmental Protection Agency with an expected cost to the company of
approximately $200,000, another is expected to be resolved at a cost not to
exceed $50,000, and the final site is under investigation with an expected cost
of approximately $150,000. Based on information available to the company, which
in most cases includes estimates from PRPs and/or federal or state regulatory
agencies for the investigation, clean up costs at those sites, and data related
to the quantities and characteristics of materials generated at or shipped to
each site, the company believes that the costs for each site are not material
and in total the anticipated clean up costs of current PRP actions would not
have a material adverse effect on the company's business, financial condition,
results of operations, or cash flows.

In the case of contamination existing upon properties owned or controlled
by the company, the company has established reserves which it deems adequate to
meet its current remediation obligations.

There can be no assurance that the company will not be required to pay
environmental compliance costs or incur liabilities that may be material in
amount due to matters which arise in the future or are not currently known to
the company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

9
<PAGE> 11

ITEM -- EXECUTIVE OFFICERS OF REGISTRANT

The following table sets forth with respect to each executive officer or
other significant employee of the company, his name, age, all positions and
offices with the company held by him, the term during which he has been an
officer of the company and, if he has been an officer of the company for less
than five years, his business experience during the past five years.

<TABLE>
<CAPTION>
EXECUTIVE
OFFICE
NAME AND AGE OFFICER SINCE
- ------------------------------------- ------------------------------------------- ---------
<S> <C> <C>
John B. Blystone (42)................ Chairman, President and Chief Executive
Officer 1995(1)
Robert C. Huff (46).................. Vice President, Procurement 1994(2)
Stephen A. Lison (55)................ Vice President, Human Resources 1989
James M. Sheridan (55)............... Vice President, Administration and General
Counsel and Secretary 1976
William L. Trubeck (49).............. Senior Vice President, Finance, Treasurer
and Chief Financial Officer 1994(3)
John D. Tyson (58)................... Vice President, Corporate Relations 1988
Albert A. Zagotta (61)............... Executive Vice President 1994(4)
</TABLE>

- ---------------

See page 58 for a complete list of all executive compensation plans and
arrangements.

(1) Effective November 1995, Mr. Blystone was elected Chairman, President and
Chief Executive Officer. From September 1994 through November 1995, he
served as President and Chief Executive Officer, Nuovo Pignone, an 80% owned
subsidiary of General Electric Company. From November 1991 through August
1994 he served as Vice President, General Manager, Superabrasives of General
Electric Company. From October 1988 though November 1991 he served as Senior
Vice President, Components Division of J.I. Case Division, Tenneco, Inc.

(2) Effective February 1996, Mr. Huff was appointed Vice President, Procurement.
From February 1994 through February of 1996, he was Treasurer. From April
1989 through February of 1994, he was Vice President, Finance of SPT.

(3) Effective November 1994, Mr. Trubeck was elected Senior Vice President
Finance, Chief Financial Officer. In February of 1996, he assumed the
additional position as Treasurer. From June 1993 through October 1994, he
served as Senior Vice President and Chief Financial Officer at Honeywell,
Inc. From February 1991 through May 1993 he served as Chief Financial
Officer at White & Case, a New York law firm. From March 1989 through
October 1990 he served as Executive Vice President, Finance and Chief
Financial Officer of NWA, Inc. and Northwest Airlines.

(4) Effective February 1994, Mr. Zagotta was elected Executive Vice President.
From October 1991 through February 1994, he served as President and Chief
Executive Officer of SPT. Prior to October 1991, he served as Vice
President, General Manager of the Sealed Power Division.

10
<PAGE> 12

PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The company's common stock is traded on the New York Stock Exchange and
Pacific Stock Exchange under the symbol "SPW".

Set forth below are the high and low sales prices for the company's common
stock as reported on the New York Stock Exchange composite transaction reporting
system and dividends paid per share for each quarterly period during the past
two years:

<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW PER SHARE
---- --- ----------
<S> <C> <C> <C>
1995
4th Quarter................................... $17 $14 1/8 $.10
3rd Quarter................................... 16 11 1/8 .10
2nd Quarter................................... 15 1/8 10 3/4 .10
1st Quarter................................... 17 3/8 14 1/4 .10
1994
4th Quarter................................... $18 1/2 $14 1/8 $.10
3rd Quarter................................... 18 15 1/8 .10
2nd Quarter................................... 16 3/4 13 7/8 .10
1st Quarter................................... 18 15 1/4 .10
</TABLE>

The approximate number of record holders of the company's Common Stock as
of December 31, 1995 was 7,592.

The company is subject to a number of restrictive covenants under various
debt agreements. Please see Note 18 to the consolidated financial statements for
further discussion.

Future dividends will depend upon the earnings and financial condition of
the company and other relevant factors. The revolving credit agreement includes
a covenant that limits dividends. Please see Note 18 to the consolidated
financial statements for further explanation. The company has no present
intention to discontinue its dividend policy and believes that dividends will
continue at current levels during 1996.

11
<PAGE> 13

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- -------- ------ ------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Revenues.......................... $1,098.1 $1,079.9 $ 747.2(2) $801.2 $673.5
Operating income (loss)........... 34.1(1) 57.4 (48.3)(3) 49.1 (11.9)(5)
Interest expense, net............. (35.7) (35.2) (15.9) (15.1) (16.9)
Gain on sale of businesses........ -- -- 105.4(4) -- --
-------- -------- -------- ------ ------
Income (loss) before income
taxes........................... (1.6) 22.2 41.2 34.0 (28.8)
Income taxes...................... 0.2 (9.1) (28.1) (13.4) 7.2
-------- -------- -------- ------ ------
Income (loss) from continuing
operations...................... $ (1.4) $ 13.1 $ 13.1 $ 20.6 $(21.6)
======== ======== ======== ====== ======
Per share of common stock:
Income (loss) from continuing
operations................... $ (0.10) $ 1.02 $ 1.04 $ 1.48 $(1.56)
Weighted average number of common
shares outstanding.............. 13.2 12.8 12.6 13.9 13.8
Dividends paid.................... $ 0.40 $ 0.40 $ 0.40 $ 0.40 $ 0.70
Other Financial Data:
Working capital................. $ 152.5 $ 151.9 $ 119.4 $182.2 $195.1
Total assets.................... 831.4 929.0 1,024.4 560.3 579.3
Long-term debt.................. 318.9 414.1 336.2 160.3 199.7
Shareholders' equity............ 162.2 158.7 145.4 185.5 180.7
Capital expenditures............ 31.0 48.5 15.1 20.4 19.4
Depreciation and amortization... 43.5 38.5 24.4 25.3 23.8
</TABLE>

- ---------------

(1) Includes a restructuring charge of $10.7 million. Refer to Note 7 to the
consolidated financial statements for explanation.

(2) In 1993, the company acquired Allen Testproducts and Sealed Power
Technologies Limited Partnership and divested the Sealed Power Replacement
and Truth divisions. Refer to Note 5 to the consolidated financial
statements for explanation.

(3) Includes a restructuring charge of $27.5 million. Refer to Note 7 to the
consolidated financial statements for explanation.

(4) Reflects the gain on the divestitures of the Sealed Power Replacement and
Truth divisions. Refer to Note 5 to the consolidated financial statements
for explanation.

(5) Includes a restructuring charge of $18.2 million.

12
<PAGE> 14

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following should be read in conjunction with the company's consolidated
financial statements and the related footnotes.

OVERVIEW

Significant 1995 Events and Initiatives

During 1995, the following significant events and initiatives were
undertaken:

- During the fourth quarter, the company decided to close its unprofitable
foundry operation at SP Europe Germany. The company recorded a $3.7
million restructuring charge to accrue for termination benefits for the
200 employees that are affected by the closing. The company obtained
significant wage concessions and improved work rule flexibility from the
employees that will continue to produce piston rings and cylinder liners
at this plant. Additionally, the company obtained a reduction in the cost
of utilities and other locally provided services to the plant. The
company anticipates that the cumulative effect of these actions will
improve this operation in the future.

Revenues

Overall revenues for 1995, while up 1.7% from 1994, reflect mixed strengths
and weakness. The market for Specialty Service Tools was solid for essential
program tools, dealer equipment, aftermarket tools and high-pressure hydraulics.
However, sales of environmentally driven products did not reach expectations.
Uncertainties in implementation of various state auto emission programs and
limited enforcement of environmental laws led to lower sales of gas emission
testing equipment and refrigerant recovery and recycling equipment. Revenues of
Original Equipment Components suffered from lower production volumes (especially
in the last half of 1995), softness in the replacement aftermarket and delays in
replacing significant lost valve train component business.

Current prospects for 1996 look sound for most of the company's business
lines. Program tool sales will be down slightly from 1995 due to fewer new model
introductions. U.S. vehicle production forecasts anticipate slightly lower
levels from 1995. Market indications include improvements in the component
aftermarket. Of course, this presumes a continuing stable U.S. economy. Upsides
to 1996 revenues include the realization of replacement business for valve train
components and increased dealer equipment business due to new customers. The
realization of environment related equipment sales remains a major uncertainty.
While several

13
<PAGE> 15

states and regions still indicate initiation of enhanced gas emissions testing
programs in 1996, previous experience indicates that this could change.

Operating Income from Continuing Operations

Operating income from continuing operations in 1995 was $31.1 million
compared to $57.4 million in 1994. Without the $10.7 million restructuring
charge, the 1995 operating income would have been $41.8 million. This still
falls $15.6 million short of 1994 operating income. This shortfall was primarily
attributable to lower production volume for the original equipment market, and
softness in the aftermarket. Additionally, continued pricing pressures by
original equipment manufacturers and the lost valve train business contributed
to the reduced operating income from 1994.

1996 operating income will be significantly impacted by additional
incremental costs to be recorded for the Specialty Service Tool restructuring,
which are currently estimated at $11 million.

Cash Flow and Debt Levels

During 1995, the company reduced its total debt levels by $95.4 million and
cash balances increased by $7.2 million. The majority of the reduction in total
debt was a result of the proceeds from the sale of SPX Credit Corporation and
receipt of tax refunds. Cash generated by operations was approximately $66.4
million, which included approximately $28 million in tax refunds. Capital
expenditures were approximately $31 million, which was slightly less than
depreciation. No significant cash expenditures related to the restructurings
were made in 1995.

1996 cash flow will be impacted as expenditures related to the
restructurings are made. Management is closely monitoring planned 1996 capital
expenditures which are anticipated to be approximately $30 million.

14
<PAGE> 16

RESULTS OF OPERATIONS -- COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 1995,
1994 AND 1993

In the following discussion, references to 1993 "proforma" information are
included in certain instances to enhance the comparative discussion. This
proforma information refers to unaudited 1993 proforma financial information and
is based upon the assumption that certain transactions occurred as of the
beginning of 1993. Please refer to Note 6 to the consolidated financial
statements for further explanation of the proforma financial information.

CONSOLIDATED

<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues:
Specialty Service Tools............................ $ 572.3 $ 550.6 $ 503.6
Original Equipment Components...................... 525.8 $ 529.3 $ 26.7
Businesses sold in 1993............................ -- -- 216.9
-------- -------- --------
Total...................................... $1,098.1 $1,079.9 $ 747.2
======== ======== ========
Operating income (loss):
Specialty Service Tools............................ $ 24.4 $ 29.4 $ (10.9)
Original Equipment Components...................... 26.2 48.0 (46.8)
Businesses sold in 1993............................ -- -- 25.2
General Corporate expenses......................... (19.5) (20.0) (13.3)
-------- -------- --------
Total...................................... $ 31.1 $ 57.4 $ (45.8)
Other expense (income), net.......................... (3.0) 0.0 2.5
Interest expense, net................................ 35.7 35.2 15.9
(Gain) on sale of businesses......................... -- -- (105.4)
-------- -------- --------
Income (loss) before income taxes.................... $ (1.6) $ 22.2 $ 41.2
Provision (benefit) for income taxes................. (.2) 9.1 28.1
-------- -------- --------
Income (loss) from continuing operations............. $ (1.4) $ 13.1 $ 13.1
Income (loss) from discontinued operation............ $ (2.8) $ 1.0 $ 2.1
-------- -------- --------
Income (loss) before cumulative effect of change in
accounting methods and extraordinary loss.......... $ (4.2) $ 14.1 $ 15.2
Cumulative effect of change in accounting methods,
net of taxes....................................... -- -- (31.8)
Extraordinary loss, net of taxes..................... (1.1) -- (24.0)
-------- -------- --------
Net income (loss).................................... $ (5.3) $ 14.1 $ (40.6)
======== ======== ========
Capital expenditures................................. $ 31.0 $ 48.5 $ 15.1
Depreciation and amortization........................ 43.5 38.5 24.4
Identifiable assets.................................. 831.4 929.0 1,024.4
</TABLE>

On the following pages, revenues, operating income (loss) and related items
are discussed by segment. The following provides an explanation of general
corporate expenses and other consolidated items that are not allocated to the
segments.

General Corporate expense (SG&A) -- These expenses represent general
unallocated expenses. 1995 expenses included a $1.8 million charge related to
the early retirement costs of three officers and severance costs associated with
six employees at the corporate office. The 1995 expense was reduced due to lower
incentive compensation and the impact of cost reductions. 1994 expenses
increased over 1993 primarily as a result of additional corporate expenses
resulting from the consolidation of SPT. 1993 also included favorable long-term
employee benefit adjustments.

Other expense (income), net -- Represents expenses not included in the
determination of operating results, including gains or losses on currency
exchange, translation gains or losses due to translation of financial

15
<PAGE> 17

statements in highly inflationary countries, the fees incurred on the sale of
accounts receivable under the company's accounts receivable securitization
program, gains or losses on the sale of fixed assets and unusual non-operational
gains or losses.

1995 reflects a $1.5 million gain on the sale of the company's aftermarket
export distribution business, a $.9 million gain on the sale of the company's
50% investment in RSV, and a $.6 million gain on the sale of a company airplane.
1994 included a $2.1 million charge for the settlement of a dispute regarding
the sale of a non-core business in 1989.

Interest expense, net -- A portion of interest expense has been allocated
to the discontinued operation, SPX Credit Corporation, for all years. 1995
interest expense was comparable to 1994 and reflects the debt structure in place
after the early 1994 refinancing. 1994 interest expense, net was substantially
higher than 1993 due to the higher debt levels associated with the purchase of
SPT and Allen Testproducts in 1993. The increase in debt levels was partially
offset by the proceeds from the sales of the Sealed Power Replacement and Truth
divisions in 1993.

Gain on Sale of Businesses -- A $105.4 million pretax gain on the sale of
the Sealed Power Replacement ($52.4 million) and the Truth ($53.0 million)
divisions was recorded in 1993. The results of these units were included through
their divestitures in the fourth quarter of 1993.

Provision (benefit) for income taxes -- The 1995 effective income tax rate
of 14.4% was impacted by a $1.3 million benefit recorded on the sale of the
company's 50% interest in RSV and by not being able to tax benefit the minority
interest charge of $4.8 million recorded in the fourth quarter. Without these
unusual items, the 1995 effective income tax rate would have been approximately
41%, which was comparable to the 1994 effective income tax rate. The 1995
effective income tax rate, before the unusual items, and the 1994 effective
income tax rate of approximately 41%, exceed the 35% U.S. federal income tax
rate due primarily to the effect of non-deductible goodwill and intangibles
amortization and the net effect of not being able to tax benefit certain foreign
losses because certain foreign operations are in net operating loss carryforward
positions. The 1993 effective income tax rate of 68.2% was high due to the
inability to tax benefit the $21.5 million of SP Europe's equity losses as its
foreign subsidiaries were in net operating loss carryforward positions, because
certain items within the Automotive Diagnostics restructuring charge were not
tax benefited, and because of the cumulative effect of adjusting net deferred
tax liabilities for the change in the U.S. federal income tax rate from 34% to
35% in 1993.

Income (loss) from discontinued operations -- The results of operations of
SPX Credit Corporation, net of allocated interest and income taxes, are
presented as a discontinued operation. In 1995, the company recorded a loss on
the sale and on costs to close the operation of $4.8 million.

Cumulative effect of change in accounting methods, net of tax -- In 1993,
the company adopted two new accounting methods relating to its ESOP and
postretirement benefits other than pensions. See Note 2 to the Consolidated
Financial Statements for a detailed explanation of these changes.

Extraordinary loss, net of taxes -- During 1995, the company purchased
$31.7 million of its 11 3/4% senior subordinated notes. These notes were
repurchased in the market at a premium of $1.1 million, net of income taxes.

During the fourth quarter of 1993, the company decided to refinance both
SPX and SPT debt. As a result, the company recorded an extraordinary charge of
$37.0 million ($24.0 million after-tax) for costs associated with the early
retirement of approximately $400 million (principal amount) of debt.

16
<PAGE> 18

SPECIALTY SERVICE TOOLS

<TABLE>
<CAPTION>
PROFORMA
1995 1994 1993 1993
------ ------ ------ --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Revenues....................................... $572.3 $550.6 $503.6 $529.2
Gross Profit................................... 183.6 181.3 165.1 183.4
% of Revenues................................ 32.1% 32.9% 32.8% 34.7%
Selling, general & administration.............. 147.1 146.8 144.4 151.5
% of Revenues................................ 25.7% 26.7% 28.7% 28.6%
Goodwill/intangible amortization............... 5.3 5.2 5.0 5.3
(Earnings) from equity interests............... (.2) (.1) (.9) (.9)
Restructuring charge........................... 7.0 -- 27.5 27.5
------ ------ ------ ------
Operating income (loss)........................ $ 24.4 $ 29.4 $(10.9) $ --
====== ====== ====== ======
Capital expenditures........................... $ 7.4 $ 10.6 $ 7.5 $ 7.5
Depreciation and amortization.................. $ 14.9 $ 14.4 $ 14.5 $ 14.8
Identifiable assets............................ $390.3 $397.9 $409.2 N/A
</TABLE>

Revenues

1995 revenues were up $21.7 million, or 3.9%, over 1994 revenues, primarily
from increased program service tool, high-pressure hydraulics and refrigeration
related tool sales. However, sales of electronic diagnostic equipment and
service tools to the aftermarket were down from 1994.

1994 revenues were up $47 million, or 9.3%, over 1993 revenues, principally
due to the inclusion of a full year of Allen Testproducts revenues in 1994,
whereas, 1993 included only seven months of revenues. Allen Testproducts was
acquired in June of 1993. 1994 revenues also increased over 1993 revenues due to
overall improved revenues of specialty service tools, particularly dealer
equipment programs and high-pressure hydraulics.

1994 revenues show general improvements over proforma 1993 revenues due to
the improvement in essential tool programs, electronic hand-held diagnostics,
mechanical tools, and hydraulics sales. These improved sales have been offset,
however, by gradually declining sales of higher priced electronic diagnostic
equipment.

Gross Profit

1995 gross profit as a percentage of revenues ("gross margin") of 32.1% was
slightly lower than the 32.9% in 1994. This decrease was attributable to a
higher portion of revenues consisting of product purchased for resale in 1995.
Such purchased product tends to carry lower gross margin than manufactured
product. 1994 gross margin of 32.9% was comparable to 1993 gross margin of
32.8%.

1994 gross margin of 32.9% was less than proforma 1993 gross margin of
34.7%. The decrease in 1994 was principally due to the higher portion of
revenues represented by dealer equipment programs than in proforma 1993. Note
that the proforma 1993 gross margin includes estimates of cost reductions from
the combination of Bear Automotive and Allen Testproducts.

Selling, General and Administrative Expense ("SG&A")

1995 SG&A was 25.7% of revenues compared to 26.7% in 1994. This decrease
resulted from the effect of lower sales of electronic diagnostic equipment which
have higher proportionate selling costs and from cost reductions in 1995. 1994
SG&A was 26.7% of revenues compared to 28.7% in 1993. This decrease from 1993
was primarily the result of increased dealer equipment program sales which have
lower SG&A as a percentage of revenues and the impact of cost reductions
achieved through the combination of Bear Automotive and Allen Testproducts.
Also, 1994 SG&A included a full year of Allen Testproducts' SG&A, whereas 1993
only

17
<PAGE> 19

included seven months. Allen Testproducts' SG&A as a percentage of revenues was
higher than overall historical percentages.

1994 SG&A as a percentage of revenues compares favorably to proforma 1993
due to higher dealer equipment revenues in 1994 and due to general cost
reductions. Note that the proforma 1993 SG&A includes estimates of cost
reductions from the combination of Bear Automotive and Allen Testproducts.

Goodwill/Intangible amortization

Noncash goodwill and intangible amortization generally results from excess
purchase price over fair value of assets in acquisition. The increase in 1995
and 1994 amortization over 1993 was the effect of additional goodwill recorded
to acquire Allen Testproducts in June 1993.

Earnings from Equity Interests

Included in this segment are the equity earnings of JATEK, a 50% owned
joint venture in Japan. JATEK's 1995 and 1994 earnings were negatively impacted
by economic conditions in the Pacific Rim, particularly Japan.

Restructuring Charge

In the fourth quarter of 1995, the company initiated the aforementioned
restructuring of its Specialty Service Tool segment. The charge included $7.0
million of restructuring costs to recognize severance and benefits for the
employees to be terminated ($4.4 million), estimated holding costs of vacated
facilities ($1.1 million), and to reflect the estimated fair market value of one
manufacturing facility ($1.5 million).

In the third quarter of 1993, the company recorded a $27.5 million
restructuring charge to combine the existing Bear Automotive division with Allen
Testproducts into the new Automotive Diagnostics division. The restructuring
charge included approximately $16.0 million for work force reductions and
related costs. The restructuring charge also included approximately $9.3 million
of facility duplication and shutdown costs, including the writedown of excess
assets of $4.2 million (non-cash).

Operating Income (Loss)

1995 operating income of $31.4 million (excluding the $7.0 restructuring
charge) was up over 1994 operating income of $29.4 million. The improvement was
primarily attributable to the higher revenue.

1994 operating income of $29.4 million was up significantly over 1993
operating income of $16.6 million (excluding the $27.5 million restructuring
charge). This improvement was attributable to increased revenues and associated
gross profit levels, while holding SG&A at comparable levels to 1993. The cost
reductions associated with the combination of Bear Automotive and Allen
Testproducts contributed to achieving the SG&A levels in 1994.

1994 operating income of $29.4 million was comparable to proforma 1993
operating income of $27.5 million (excluding the $27.5 million restructuring
charge).

Capital Expenditures

Capital expenditures for 1995 of $7.4 million were approximately $3 million
lower than in 1994 due to incremental spending to improve manufacturing
capability and systems to better support customers in 1994. Management estimates
that annual capital expenditures of approximately $5 million are required to
maintain the company's specialty service tool operations. 1996 capital
expenditures are expected to approximate $10 million which will include
approximately $2 million of incremental spending to support the restructuring.

Identifiable Assets

Identifiable assets decreased in 1995 from 1994 levels as a result of
inventory reductions and capital expenditures being less than depreciation and
amortization. The company believes that additional working

18
<PAGE> 20

capital reductions, particularly inventory, are available and will continue to
pursue programs to enhance working capital utilization.

ORIGINAL EQUIPMENT COMPONENTS:

<TABLE>
<CAPTION>
PROFORMA
1995 1994 1993 1993
------ ------ ------ --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Revenues....................................... $525.8 $529.3 $ 26.6 $458.8
Gross Profit................................... 61.0 77.1 4.2 51.9
% of Revenues................................ 11.6% 14.6% 15.8% 11.3%
Selling, general & administration.............. 27.8 31.3 1.9 36.9
% of Revenues................................ 5.3% 5.9% 7.1% 8.0%
Goodwill/intangible amortization............... 3.6 2.6 -- 1.5
Minority interest (income)..................... 3.3 (2.2) -- (4.3)
(Earnings) from equity interests............... (3.6) (2.6) .7 .4
Restructuring charge........................... 3.7 -- -- --
SPT equity losses.............................. -- -- 26.9 --
SP Europe equity losses........................ -- -- 21.5 --
------ ------ ------ ------
Operating income (loss)........................ $ 26.2 $ 48.0 $(46.8) $ 17.4
====== ====== ====== ======
Capital expenditures........................... $ 23.2 $ 35.9 $ 1.0 $ 23.0
Depreciation and amortization.................. $ 26.3 $ 22.8 $ 1.8 $ 23.1
Identifiable assets............................ $361.8 $367.9 $343.8 N/A
</TABLE>

Revenues

Revenues for 1995 were down $3.5 million from 1994 revenues principally due
to the significant loss of hydraulic valve train business with a major customer.
Mitigating this significant loss of revenue, were higher European revenues and
increased metal costs passed on to customers. Revenues for 1994 were up
significantly over 1993 revenues due to the inclusion of SPT and SP Europe
revenues in 1994 (SPT and SP Europe were consolidated as of December 31, 1993).
1993 revenues include the company's solenoid valve operation.

1994 revenues were up significantly over proforma 1993 revenues (which
include SPT and SP Europe). The significant increase was attributable to strong
increases in sales to original equipment manufacturers as vehicle production
increased significantly in 1994. Revenues from sales to aftermarket customers
also increased in 1994.

Gross Profit

1995 gross profit as a percentage of revenues ("gross margin") was 11.6%
compared to 14.6% in 1994. Several factors contributed to this decrease as
follows:

- The valve train business reduced production and incurred downsizing costs
due to the loss of business with a major customer.

- The die-cast metal cost pass through to customers reduced gross margin
percentage as the increase in revenues equaled the increase in cost.

- During the first quarter of 1995, the company purchased approximately $6
million of inventory from an aftermarket customer and began to package
this inventory for the customer. A $1.2 million charge was taken in
connection with this purchase to reduce the inventory to cost.

- SP Europe incurred approximately $1 million in severance costs, incurred
additional costs associated with the ongoing process to achieve
profitability, and realized poor efficiencies and increased costs while
rumors regarding the closure of the German plant circulated during the
last two months of 1995.

19
<PAGE> 21

1994 gross margin was not comparable to 1993 gross margin as 1994 includes
SPT and SP Europe while 1993 does not include SPT and SP Europe.

1994 gross margin of 14.6% was significantly higher than proforma 1993
gross margin of 11.3%. The primary reason for this increase was the significant
increase in production volumes and productivity associated with the higher
revenues. Proforma 1993 gross margin was negatively impacted by $5 million or
1.1% of revenues due to costs relating to a strike at a foundry, costs
associated with closing that foundry and an adjustment to writedown
manufacturing assets used in the production of a product line that was
discontinued.

Selling, General, & Administrative Expense

1995 SG&A of $27.8 million, or 5.3% of revenues, compares to 1994 SG&A of
$31.3 million, or 5.9% of revenues. The reduction reflects continuing cost
controls. 1994 SG&A as a percentage of revenues decreased from proforma 1993
levels due primarily to the increased revenues.

Goodwill and Intangible Amortization

1995 and 1994 goodwill and intangible amortization was a result of the
excess purchase price over fair value of the assets recorded upon the
acquisition of 51% of SPT at the end of 1993. 1994 amortization was lower than
1995 as the company was recording income related to negative goodwill associated
with SP Europe. The recognition of negative goodwill amortization was completed
during the second quarter of 1994.

Minority Interest (Income)

1995 and 1994 results reflect the 30% partner's minority interest in SP
Europe. SP Europe incurred significant losses in 1995, 1994 and proforma 1993.
In the fourth quarter of 1995, the company's partner in SP Europe stated that it
will limit its participation by not fully funding its 30% share of this
partnership. Due to this limited participation, the company recorded a $4.8
million charge for the cumulative losses previously attributed to this partner
to minority interest. Prospectively, the company will record 100% of SP Europe's
income or loss.

Earnings from Equity Interests

Earnings from equity interests includes the company's equity share of
earnings or losses in RSV, Promec, IBS Filtran and Allied Ring Corporation
("ARC"). Promec, IBS Filtran and ARC interests were acquired as part of the
company's purchase of 51% of SPT at the end of 1993. Through the end of 1993,
RSV and ARC were in various stages of development and were incurring losses. In
1995 and 1994, ARC generated operating profits. In December of 1995, the
company's 50% interest in RSV was sold to the joint venture partner.

Restructuring Charge

During the fourth quarter of 1995, the company initiated the aforementioned
restructuring at SP Europe. The $3.7 million restructuring charge accrued
severance that will be paid to affected employees. Additional costs to complete
this restructuring in 1996 are not expected to be significant.

SPT Equity Losses and SP Europe Equity Losses

SPT and SP Europe were consolidated as of December 31, 1993. The 1993
amounts reflect the company's equity losses in these units prior to the
consolidation.

Operating Income (Loss)

1995 operating income of $26.2 million was down significantly from 1994
operating income of $48.0 million. The reduction was a result of the lower gross
margins, recording of $3.3 million of minority interest loss in 1995 compared to
$2.2 of minority interest income in 1994, and the $3.7 million restructuring
charge.

20
<PAGE> 22

1994 operating income exceeds proforma 1993 operating income principally from
the significant increase in revenues. Additionally, cost reduction efforts,
including the charges in proforma 1993 to writeoff nonproductive capacity,
benefited 1994.

Capital Expenditures

Capital expenditures for 1995 of $23.2 million were approximately $12.7
million lower than in 1994 as 1994 included the purchase of an additional
solenoid valve assembly line, additional die-casting capacity for high strength
heat treated aluminum die-castings for air bag steering columns, additional
hydraulic lash adjuster capacity, significant additional automated cylinder
liner casting and machining capacity to meet the demand for aluminum block
engines and productivity enhancing equipment. Management estimates that annual
capital expenditures of approximately $15 million are required to maintain the
company's original equipment component operations. 1996 capital expenditures are
expected to approximate $20 million and will be focused upon cost reductions and
maintenance of the operations.

Identifiable Assets

1995 identifiable assets decreased approximately $6 million over 1994 due
principally to decreases in accounts receivable. The decrease in accounts
receivable was due to lower revenue activity in the fourth quarter of 1995 when
compared to the fourth quarter of 1994.

BUSINESSES SOLD IN 1993:

<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues......................................... $ -- $ -- $216.9
Operating income................................. $ -- $ -- $ 25.2
Capital expenditures............................. $ -- $ -- $ 6.4
Depreciation and amortization.................... $ -- $ -- $ 7.5
Identifiable assets.............................. $ -- $ -- $ --
</TABLE>

During the fourth quarter of 1993, the company recorded a $105.4 million
pretax gain on the sale of the SPR and Truth divisions. The results of these
operations are included in the consolidated results of operations through their
dates of divestiture.

FACTORS THAT MAY AFFECT FUTURE RESULTS

General Business Conditions -- The company operates within the motor
vehicle industry and future results may be affected by a number of factors
including industry conditions, economic conditions in principally the U.S. and
Europe, and the economic strength of motor vehicle dealerships. The majority of
the company's revenues are not subject to seasonal variation. Revenues within
the Original Equipment Component segment are predominantly dependent upon
domestic and foreign motor vehicle production which is cyclical and dependent on
general economic conditions and other factors. Revenues within the Specialty
Service Tool segment are dependent upon new vehicle introductions, environmental
regulations, and the general economic status of motor vehicle dealerships and
aftermarket maintenance facilities. These factors can, therefore, affect the
company's working capital requirements. However, as the company receives
production forecasts from original equipment manufacturers and is knowledgeable
about new vehicle introductions, it is able to anticipate and manage these
requirements.

Automotive Diagnostics Goodwill -- At December 31, 1995, $69.2 million of
goodwill relates to the Automotive Diagnostics operating unit. This operating
unit has incurred significant operating losses in 1995 and in prior years. The
company projects that, in the near future, the cost savings, market synergies
and other factors which, in part, will be realized from the Bear Automotive and
Allen Testproducts combination and the 1995 restructuring described in Note 7
will result in non-discounted operating income sufficient to exceed goodwill
amortization.

21
<PAGE> 23

The market for certain portions of the Automotive Diagnostics operating
unit's products is highly cyclical. The demand for vehicle emissions test
equipment is significantly impacted by changes in U.S. federal and state
government regulations designed to improve air quality by imposing more
stringent limitations on emissions and discharges to the environment from motor
vehicles. Management also believes that these regulations have a related impact
on the market for engine performance testing equipment. Certain of the company's
products perform tests of both engine performance and emissions.

The company's projections for this operating unit over the near term (after
1996) include significant incremental revenues, operating profit and cash flows
associated with market opportunities that will be created by enacted federal and
state regulations mandated by the 1990 Clean Air Act Amendment (the "Act"). Over
the longer term, the company's projections include the cyclical impact of
further legislation in the U.S. and in certain international markets in which
the company participates. As a result of the Act, certain geographic regions
were designated as "enhanced emissions areas." Areas so designated are required
to implement more rigorous testing standards. This change creates additional
market opportunity for the company, in particular, for testing equipment capable
of testing for nitrites of oxygen. However, due to politically driven factors,
various states have delayed implementation of the provisions of the Act in these
"enhanced emissions areas." To date, no changes have been made to the Act for
implementation or enforcement. Further, the company expects debate to continue
during 1996 at both the federal and state level over the merits of this
legislation. Future changes in legislation could significantly diminish or
eliminate these incremental market opportunities for motor vehicle gas emissions
testing equipment.

It is not possible to predict the extent to which the company or the market
for motor vehicle gas emissions testing equipment in general might be affected
by the matters described above. However, should the company's projections
require downward revisions based upon changed events, circumstances or
legislation, this operating unit's goodwill may require writedown. Although
having no cash flow impact, the resulting charge, if any, could materially
reduce the company's future reported results of operations and shareholders'
equity. At this time, based upon present information, projections and strategic
plans, the company has concluded that there has been no permanent impairment of
the Automotive Diagnostics operating unit's tangible or intangible assets.

Financial Leverage of the Company -- The company is highly levered with
indebtedness. Should economic and general business conditions deteriorate and
impact the company's business activity, thereby creating increased borrowing
costs, the company might not be able to adequately service its indebtedness or
maintain current dividend levels.

Impact of Inflation -- The company believes that inflation has not had a
significant impact on operations during the period 1993 through 1995 in any of
the countries in which the company operates.

Environmental -- The company's operations and properties are subject to
federal, state, local, and foreign regulatory requirements relating to
environmental protection. It is the company's policy to comply fully with all
such applicable requirements. As part of its effort to comply, management has
established an ongoing internal compliance auditing program which has been in
place since 1989. Based on current information, management believes that the
company's operations are in substantial compliance with applicable environmental
laws and regulations and the company is not aware of any violation that could
have a material adverse effect on the business, financial condition, or results
of operations of the company. There can be no assurance, however, that currently
unknown matters, new laws and regulations, or stricter interpretations of
existing laws and regulations will not materially affect the company's business
or operations in the future. See Note 17 of the consolidated financial
statements for further discussion.

Accounting Pronouncements -- As of the beginning of 1996, the company must
adopt Statement of Financial Accounting Standards, No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
This standard requires long-lived assets to be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
assets may not be recoverable. The effect of adopting this statement is not
expected to have a significant impact on the company's consolidated financial
position or results of operations.

22
<PAGE> 24

LIQUIDITY AND FINANCIAL CONDITION

The company's liquidity needs arise primarily from capital investment in
new equipment, funding working capital requirements and to meet interest costs.

The company is highly levered with indebtedness. This financial leverage
requires management to focus on cash flows to meet interest costs and to
maintain dividends. Management believes that operations and the credit
arrangements will be sufficient to supply funds needed by the company in 1996.

Cash Flow

<TABLE>
<CAPTION>
YEAR
-----------------------------
1995 1994 1993
------ ------- ------
(IN MILLIONS)
<S> <C> <C> <C>
Cash flows from operating activities.................... $ 66.3 $ 34.5 $ 25.0
Cash flows from investing activities.................... 43.0 (85.0) 44.3
Cash flows from financing activities.................... (101.5) (54.5) 39.2
Effect of exchange rate changes......................... (.6) (3.0) (.4)
------- ------- ------
Net cash flow................................. $ 7.2 $(108.0) $108.1
======= ======= ======
</TABLE>

1995 operating cash flow was positively impacted by $28 million of federal
income tax refunds received, reductions in accounts receivable and inventory,
and the non-cash (in current year) unusual items included in the net loss,
principally the restructuring charges and the minority interest loss. Negatively
impacting 1995 operating cash flow was the reduction in accounts payable as the
ending 1994 balance was high due to significant capital expenditures.

1994 operating cash flow was positively impacted by the improved operating
income, inventory reductions of $10.7 million principally from inventory
consolidation at Automotive Diagnostics, and significantly higher accounts
payable levels due to year-end purchasing activity (particularly capital
expenditures). 1994 operating cash flow was reduced due to the $7 million
(including interest) settlement with the U.S. Internal Revenue Service to
resolve a dispute regarding the company's tax deferred treatment of the 1989
transaction in which several operating units were contributed to SPT. 1994
operating cash flow was also reduced due to cash outflows related to the
restructuring combination of Bear Automotive and Allen Testproducts ($12.5
million).

1995 cash flows from investing activities include the $73.2 million
received from the sale of SPX Credit Corporation and $31.0 million of capital
expenditures. The 1995 capital expenditures were $17.5 million less than 1994 as
1994 included significant investments made to expand manufacturing capacity,
including cylinder liners, die-casting, and other new business opportunities.
Planned 1996 capital expenditures are expected to be approximately $30 million.

1994 cash flows from investing activities reflect high capital expenditures
and a $39 million payment to Riken to purchase the additional ownership of SPT.
1993 cash flows from investing activities reflect the net proceeds from the
divestiture of SPR and Truth of approximately $189 million and the purchase of
Allen Testproducts and Allen Group Leasing for approximately $102 million. In
addition, 1993 includes $19.9 million of advances to SP Europe prior to it being
consolidated into the balance sheet.

1995 cash flows from financing activities principally reflect the reduction
of debt by approximately $95 million. This reduction was made possible by the
proceeds from the sale of SPX Credit Corporation and cash from operations. 1994
cash flows from financing activities reflect the changes in the company's debt

23
<PAGE> 25

structure resulting from the debt refinancing that occurred in the first half of
1994, including the payment of approximately $34 million in fees related to the
restructuring.

Capitalization

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1995 1994 1993
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Notes payable and current maturities of long-term debt... $ .9 $ 1.1 $ 94.0
Long-term debt........................................... 318.9 414.1 336.2
------ ------ ------
Total Debt............................................. $319.8 $415.2 $430.2
Shareholders' equity..................................... 162.2 158.7 145.4
------ ------ ------
Total Capitalization..................................... $482.0 $573.9 $575.6
====== ====== ======
Total debt to capitalization ratio....................... 66.3% 72.3% 74.7%
</TABLE>

At December 31, 1995, the company's total debt was comprised primarily of
borrowings on its $225 million revolving credit facility obtained in March of
1994 and on its $228.3 million of 11-3/4% senior subordinated notes issued
during the second quarter of 1994. At December 31, 1995, the weighted average
interest rate on outstanding revolving credit borrowing was 7.0%. The company
has three interest rate cap agreements which entitle the company to receive the
amounts, if any, by which LIBOR exceeds 8.5% on $25 million and 9.0% on $75
million. These agreements expire in 1997 and 1998.

As of December 31, 1995, the following summarizes the debt outstanding and
unused credit availability:

<TABLE>
<CAPTION>
TOTAL AMOUNT UNUSED CREDIT
COMMITMENT OUTSTANDING AVAILABILITY
---------- ----------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
Revolving credit.............................. $225.0 $ 60.0 $ 147.5(a)
Swingline loan facility....................... 5.0 2.0 3.0
Senior Subordinated Notes..................... 228.3 228.3 --
Industrial Revenue Bonds...................... 15.1 15.1 --
Other......................................... 18.7 14.4 4.3
------ ------ ------
Total............................... $492.1 $ 319.8 $ 154.8
====== ====== ======
</TABLE>

- ---------------

(a) Decreased by $17.5 million of facility letters of credit outstanding at
December 31, 1995 which reduce the unused credit availability.

At December 31, 1995, the company was in compliance with all restrictive
covenants contained in the revolving credit agreement, as amended, and the
senior subordinated note indenture. Under the most restrictive of these
covenants, the company was required to:

- Maintain a leverage ratio, as defined, of 78% or less, declining on a
graduated scale to 65% in 1999. The leverage ratio at December 31, 1995
was 69%.

- Maintain an interest expense coverage ratio, as defined, of 1.70:1 or
greater in 1995 rising on a graduated scale to 3.50:1 or greater in 1998
and thereafter. The interest expense coverage ratio as of December 31,
1995 was 2.13:1.

- Maintain a fixed charge coverage ratio, as defined, of 1.50:1 or greater
in 1995 and 1996, and 2:1 or greater thereafter. The fixed charge
coverage ratio as of December 31, 1995 was 1.78:1.

- Limit dividends paid during the preceding twelve months to 10% of
operating income plus depreciation and amortization (EBITDA) for the
twelve month period. Dividends paid for the twelve month period ended
December 31, 1995 were $5.3 million and 10% of EBITDA for the period was
$7.6 million.

24
<PAGE> 26

notes to $15 million. The company is currently negotiating an amendment with the
revolving credit facility lenders to increase the amount of notes that can be
purchased to $50 million. These negotiations also include the reduction of the
revolving credit facility's commitment from $225 million to $175 million. It is
anticipated that this amendment will be obtained by mid to late March 1996.

Management believes that the unused credit availability is sufficient to
meet operating cash needs including working capital requirements and capital
expenditures planned for 1996. Aggregate future maturities of total debt are not
material for 1996 through 1998 (see Note 18 to the consolidated financial
statements). In 1999, the revolving credit agreement expires and borrowings on
the revolver would become due, however, management believes that the revolving
credit agreement would likely be extended or that alternate financing will be
available to the company.
------------------------

The foregoing discussion in "Management's Discussion and Analysis of
Financial Conditions and Results of Operations" contains forward-looking
statements which reflect management's current views with respect to future
events and financial performance. These forward-looking statements are subject
to certain risks and uncertainties, including but not limited to those matters
discussed under the caption "Factors That may Affect Future Results" above and
under Part I, Item 3, "Legal Proceedings." Due to such uncertainties and risks,
readers are cautioned not to place undue reliance on such forward-looking
statements, which speak only as of the date hereof.

25
<PAGE> 27

ITEM 8.

SPX CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.............................................. 27
Consolidated Financial Statements --
Consolidated Balance Sheets -- December 31, 1995 and 1994........................... 28
Consolidated Statements of Income for the three years ended December 31, 1995....... 29
Consolidated Statements of Shareholders' Equity for the three years ended December
31, 1995......................................................................... 30
Consolidated Statements of Cash Flows for the three years ended December 31, 1995... 31
Notes to Consolidated Financial Statements.......................................... 32
Schedules omitted
No schedules are submitted because they are not applicable or not required or
because the required information is included in the consolidated financial
statements or notes thereto.
</TABLE>

26
<PAGE> 28

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of
SPX Corporation:

We have audited the accompanying consolidated balance sheets of SPX
CORPORATION (a Delaware corporation) AND SUBSIDIARIES as of December 31, 1995
and 1994, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SPX Corporation and
subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, effective
January 1, 1993, the company changed its method of Employee Stock Ownership Plan
(ESOP) accounting and Sealed Power Technologies Limited Partnership changed its
method of accounting for postretirement benefits other than pensions.

ARTHUR ANDERSEN LLP

Chicago, Illinois,
February 9, 1996

27
<PAGE> 29

SPX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1995 1994
-------- --------
(IN THOUSANDS, EXCEPT
SHARE AND PER SHARE
AMOUNTS)
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary investments....................................... $ 17,069 $ 9,859
Receivables (Note 10)................................................ 130,171 128,529
Inventories (Note 11)................................................ 150,851 151,821
Deferred income tax asset and refunds (Note 12)...................... 47,246 55,843
Prepaid and other current assets..................................... 18,191 25,148
-------- --------
Total current assets......................................... $363,528 $371,200
NET ASSETS OF DISCONTINUED OPERATION................................... -- 79,596
INVESTMENTS (Note 13).................................................. 18,885 16,363
PROPERTY, PLANT AND EQUIPMENT, at cost (Note 14)....................... $425,636 $408,236
Less: Accumulated depreciation....................................... 212,672 193,450
-------- --------
Net property, plant and equipment................................. $212,964 $214,786
OTHER ASSETS........................................................... 43,647 47,954
COSTS IN EXCESS OF NET ASSETS OF BUSINESSES ACQUIRED (Note 15)......... 192,334 199,145
-------- --------
TOTAL ASSETS........................................................... $831,358 $929,044
======== ========
CURRENT LIABILITIES:
Notes payable and current maturities of long-term debt (Note 18)..... $ 893 $ 1,133
Accounts payable..................................................... 71,379 82,947
Accrued liabilities (Note 16)........................................ 135,387 132,073
Income taxes payable (Note 12)....................................... 3,352 3,100
-------- --------
Total current liabilities.................................... $211,011 $219,253
LONG-TERM LIABILITIES (Note 9)......................................... 113,737 120,641
DEFERRED INCOME TAXES (Note 12)........................................ 25,489 16,376
COMMITMENTS AND CONTINGENCIES (Note 17)................................ -- --
LONG-TERM DEBT (Note 18)............................................... 318,894 414,082
SHAREHOLDERS' EQUITY:
Preferred stock, no par value, authorized 3,000,000 shares; no shares
issued (Note 20).................................................. -- --
Common stock, $10 par value, authorized 50,000,000 shares; issued
15,947,893 in 1995 and 15,647,799 in 1994 (Note 20)............... 159,474 156,478
Paid in capital...................................................... 57,668 58,072
Retained earnings.................................................... 18,997 29,411
-------- --------
$236,139 $243,961
Less: Common stock held in treasury (Note 20)........................ 50,000 50,000
Unearned compensation (Notes 9 and 20)........................ 26,888 31,073
Minority interest (Note 13)................................... -- 3,278
Cumulative translation adjustments............................ (2,976) 918
-------- --------
Total shareholders' equity........................................... $162,227 $158,692
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................. $831,358 $929,044
======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

28
<PAGE> 30

SPX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------------------
1995 1994 1993
---------- ---------- ---------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
REVENUES (Note 3)...................................... $1,098,103 $1,079,870 $ 747,171
COSTS AND EXPENSES:
Cost of products sold................................ 853,537 821,505 508,032
Selling, general and administrative.................. 194,485 198,032 204,116
Goodwill/intangibles amortization.................... 8,824 7,767 5,168
Minority interest (income) loss...................... 3,278 (2,198) --
Earnings from equity interests....................... (3,836) (2,692) (178)
Restructuring charge (Note 7)........................ 10,724 -- 27,500
SPT equity losses (Note 5)........................... -- -- 26,845
SP Europe equity loss (Note 13)...................... -- -- 21,500
---------- ---------- ---------
OPERATING INCOME (LOSS)................................ $ 31,091 $ 57,456 $ (45,812)
Other expense (income), net.......................... (3,060) 32 2,534
Interest expense, net................................ 35,729 35,220 15,877
(Gain) on sale of businesses (Note 5)................ -- -- (105,400)
---------- ---------- ---------
INCOME (LOSS) BEFORE INCOME TAXES...................... $ (1,578) $ 22,204 $ 41,177
PROVISION (BENEFIT) FOR INCOME TAXES
(Note 12)............................................ (227) 9,121 28,063
---------- ---------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS............... $ (1,351) $ 13,083 $ 13,114
DISCONTINUED OPERATION (Note 4):
Income from discontinued operation, net of tax....... $ 140 $ 1,017 $ 2,086
Loss on sale, net of tax............................. (2,987) -- --
---------- ---------- ---------
Income (loss) from discontinued operation, net of
tax............................................... $ (2,847) $ 1,017 $ 2,086
---------- ---------- ---------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING METHODS AND EXTRAORDINARY LOSS............ $ (4,198) $ 14,100 $ 15,200
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING METHODS, NET
OF TAXES (Note 2).................................... -- -- (31,800)
EXTRAORDINARY LOSS, NET OF TAXES (Note 8).............. (1,078) -- (24,000)
---------- ---------- ---------
NET INCOME (LOSS)...................................... $ (5,276) $ 14,100 $ (40,600)
========== ========== =========
INCOME (LOSS) PER SHARE OF COMMON STOCK:
From continuing operations........................... $ (0.10) $ 1.02 $ 1.04
From discontinued operation.......................... (0.22) 0.08 0.16
Cumulative effect of change in accounting methods,
net of taxes...................................... -- -- (2.52)
Extraordinary loss, net of taxes..................... (0.08) -- (1.90)
---------- ---------- ---------
Net income (loss).................................... $ (0.40) $ 1.10 $ (3.22)
========== ========== =========
Weighted average number of common shares outstanding
(Notes 1 and 20)..................................... 13,174 12,805 12,604
</TABLE>

The accompanying notes are an integral part of these statements.

29
<PAGE> 31

SPX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON
STOCK - $10 PAID IN RETAINED OTHER
PAR VALUE CAPITAL EARNINGS ACCOUNTS
----------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992..................... $ 155,360 $60,199 $ 65,732 $(95,801)
Net loss..................................... -- -- (40,600) --
Cash dividends ($.40 per share).............. -- -- (5,040) --
Net shares sold under stock option plans..... 198 82 -- --
Earned ESOP shares........................... -- (1,355) -- 3,046
Tax benefit on dividends paid to ESOP
trust..................................... -- -- 190 --
Minority interest in SP Europe............... -- -- -- (1,080)
Translation adjustment....................... -- -- -- (779)
Cumulative effect of change in ESOP
accounting method, net of taxes (Note
2)........................................ -- -- -- 5,100
Vesting of restricted stock.................. -- -- -- 135
-------- ------- -------- --------
BALANCE, DECEMBER 31, 1993..................... $ 155,558 $58,926 $ 20,282 $(89,379)
Net income................................... -- -- 14,100 --
Cash dividends ($.40 per share).............. -- -- (5,131) --
Net shares sold under stock option plans..... 920 390 -- --
Earned ESOP shares........................... -- (1,244) -- 4,692
Tax benefit on dividends paid to ESOP
trust..................................... -- -- 160 --
Minority interest in SP Europe............... -- -- -- (2,198)
Translation adjustment....................... -- -- -- 1,481
Vesting of restricted stock.................. -- -- -- 135
-------- ------- -------- --------
BALANCE, DECEMBER 31, 1994..................... $ 156,478 $58,072 $ 29,411 $(85,269)
Net loss..................................... -- -- (5,276) --
Cash dividends ($.40 per share).............. -- -- (5,274) --
Net shares sold under stock option plans..... 1,061 374 -- --
Earned ESOP shares........................... -- (1,977) -- 6,065
Tax benefit on dividends paid to ESOP
trust..................................... -- -- 136 --
Minority interest in SP Europe............... -- -- -- 3,278
Translation adjustment....................... -- -- -- 3,894
Issuance of stock under incentive program.... 685 480 -- --
Issuance of restricted stock 1,250 719 -- (1,969)
Vesting of restricted stock.................. -- -- -- 89
-------- ------- -------- --------
BALANCE, DECEMBER 31, 1995..................... $ 159,474 $57,668 $ 18,997 $(73,912)
======== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

30
<PAGE> 32

SPX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------
1995 1994 1993
--------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) from operating activities........................ $ (5,276) $ 14,100 $(40,600)
Adjustments to reconcile net income (loss) to net cash provided
(used) by operating activities--
Cumulative effect of change in accounting methods................ -- -- 31,800
Extraordinary loss............................................... 1,078 -- 24,000
Depreciation and amortization.................................... 43,522 38,515 24,370
(Earnings) loss from equity interests............................ (3,836) (2,692) 48,167
(Income) loss applicable to minority interest.................... 3,278 (2,198) --
Increase (decrease) in deferred income tax assets, refunds and
liabilities.................................................... 18,773 (5,765) (15,306)
Decrease (increase) in receivables............................... 5,303 (2,430) (15,639)
Decrease in inventories.......................................... 2,761 10,743 11,609
Decrease in prepaid assets....................................... 7,211 975 2,212
Decrease (increase) in net assets of discontinued operation...... 1,276 1,157 (5,114)
Increase (decrease) in accounts payable.......................... (12,268) 20,123 (2,568)
Increase (decrease) in accrued liabilities....................... (7,209) (27,305) (10,385)
Increase (decrease) in income taxes payable...................... (58) (9,247) 4,529
(Increase) decrease in other assets.............................. 866 (2,550) (2,479)
Gain on sale of businesses, net of taxes......................... -- -- (64,200)
Restructuring charges............................................ 10,724 -- 27,500
Increase (decrease) in long-term liabilities..................... (6,904) (2,594) 6,803
Compensation recognized under employee stock plan................ 3,026 2,778 1,925
Other, net....................................................... 4,105 873 (1,619)
--------- --------- --------
Net cash provided by operating activities........................ $ 66,372 $ 34,483 $ 25,005
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in affiliates......................................... $ -- $ -- $(19,900)
Payments for purchase of businesses.............................. -- (39,000) (108,971)
Net proceeds from sale of businesses............................. 73,183 -- 189,078
Capital expenditures............................................. (31,009) (48,451) (15,116)
Sale of property, plant and equipment, net....................... 801 2,422 (797)
--------- --------- --------
Net cash provided (used) by investing activities................. $ 42,975 $ (85,029) $ 44,294
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) borrowings -- revolving credit agreement.......... $ (63,000) $ 95,000 $(17,000)
Long-term debt borrowings........................................ -- 260,000 19,937
Long-term debt payments.......................................... (32,621) (278,272) (12,207)
Increase (decrease) in notes payable and current maturities of
long-term debt................................................. (266) (93,214) 53,283
Payment of fees related to debt restructuring.................... (1,797) (34,170) --
Net shares sold under stock option plans......................... 1,435 1,310 280
Dividends paid................................................... (5,274) (5,131) (5,040)
--------- --------- --------
Net cash provided (used) by financing activities $(101,523) $ (54,477) $ 39,253
EFFECT OF EXCHANGE RATE CHANGES ON CASH............................ (614) (2,961) (438)
--------- --------- --------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS.......... $ 7,210 $(107,984) $108,114
CASH AND TEMPORARY INVESTMENTS, BEGINNING OF PERIOD................ $ 9,859 $ 117,843 $ 9,729
--------- --------- --------
CASH AND TEMPORARY INVESTMENTS, END OF PERIOD...................... $ 17,069 $ 9,859 $117,843
========= ========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash payments for interest....................................... $ 40,237 $ 40,260 $ 18,347
Cash payments (refunds), net, for income taxes................... $ (21,631) $ 23,992 $ 40,454
</TABLE>

The accompanying notes are an integral part of these statements.

31
<PAGE> 33

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995

(1) SUMMARY OF ACCOUNTING POLICIES

All dollar amounts in the Notes to Consolidated Financial Statements are in
thousands, except per share amounts.

The accounting and financial policies which affect significant elements of
the consolidated financial statements of SPX Corporation (the "company") and
which are not apparent on the face of the statements, or in other notes to the
consolidated financial statements, are described below.

Basis of Presentation -- The preparation of the company's consolidated
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Consolidation -- The consolidated financial statements include the accounts
of the company and all of its majority-owned subsidiaries after the
elimination of all significant intercompany accounts and transactions.
Amounts representing the company's percentage interest in the underlying
net assets of less than majority-owned companies in which a significant
equity ownership interest is held are included in "Investments."

Foreign Currency Translation -- Translation of the company's subsidiaries
results in unrealized translation adjustments being reflected as cumulative
translation adjustment in shareholders' equity.

Revenue Recognition -- The company recognizes revenues from product sales
upon shipment to the customer. Revenue from service contracts and long-term
maintenance arrangements is deferred and is recognized as revenue on a pro
rata basis over the agreement periods.

Research and Development Costs -- The company expenses currently all costs
for development of products. Research and development costs were $26,300 in
1995, $26,400 in 1994, and $17,600 in 1993.

Environmental Remediation Costs -- Costs incurred to investigate and
remediate environmental conservation issues are expensed unless the costs
incurred extend the economic useful life of related assets employed by the
company. Liabilities are recorded and expenses are reported when it is
probable that an obligation has been incurred and the amounts can be
reasonably estimated.

Earnings Per Share -- Primary earnings per share is computed by dividing
net income by the weighted average number of common shares outstanding.
Common shares outstanding includes issued shares less shares held in
treasury and unallocated and uncommitted shares held by the ESOP trust. The
potential dilutive effect from the exercise of stock options is not
material.

Property, Plant and Equipment -- The company uses principally the straight
line method for computing depreciation expense over the useful lives of the
property, plant and equipment. For income tax purposes, the company uses
accelerated methods where permitted. Asset additions and improvements are
added to the property accounts while maintenance and repairs, which do not
renew or extend the lives of the respective assets, are expensed currently.
Upon sale or retirement of depreciable properties, the related cost and
accumulated depreciation are removed from the property accounts. The net
gain or loss on disposition of property is reflected in income.

Derivatives -- Premiums paid for purchased interest rate cap agreements are
amortized to interest expense over the terms of the caps. Unamortized
premiums are included in other assets in the consolidated balance sheets.
Amounts receivable under cap agreements, if any, are accrued as a reduction
of interest expense. Gains and losses related to qualifying hedges of firm
commitments or anticipated

32
<PAGE> 34

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

transactions are deferred and are recognized in income or as adjustments of
carrying amounts when the hedged transaction occurs.

Reclassifications -- Certain 1994 and 1993 amounts have been reclassified
to conform to the 1995 presentation. This reclassification had no effect on
net income for any period.

(2) CHANGES IN ACCOUNTING METHODS

In 1993, the company adopted two new accounting methods relating to its
Employee Stock Ownership Plan ("ESOP") and postretirement benefits. The effect
of the change to these new accounting methods have been reflected in the
consolidated statements of income as "Cumulative effect of change in accounting
methods."

Effective January 1, 1993, the company elected to adopt new accounting for
its ESOP in accordance with Statement of Position 93-6 of the Accounting
Standards Division of the American Institute of Certified Public Accountants,
issued in November of 1993. As part of this change, the company recorded a
cumulative charge of $5,100 pretax, or $3,300 after-tax. This charge recognizes
the cumulative difference of expense since the inception of the ESOP until
January 1, 1993 to reflect the shares allocated method of accounting for ESOPs.

Effective January 1, 1993, Sealed Power Technologies Limited Partnership
adopted Statement of Financial Accounting Standards (SFAS) No.
106 -- "Employers' Accounting for Postretirement Benefits Other Than Pensions,"
using the immediate recognition transition option. SFAS No. 106 requires
recognition, during the employees' service with the company, of the cost of
their retiree health and life insurance benefits. At that date, the full
accumulated postretirement benefit obligation was $89,500 pretax. The company
recorded its 49% share of this transition obligation, $28,500, net of deferred
taxes of $15,400 in the first quarter.

As of the beginning of 1996, the company must adopt Statement of Financial
Accounting Standards, No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." This standard requires
long-lived assets to be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be
recoverable. The effect of adopting this statement is not expected to have a
significant impact on the company's consolidated financial position or results
of operations.

As of the beginning of 1996, the company must adopt Statement of Financial
Accounting Standards, No. 123, "Accounting for Stock-Based Compensation." This
standard recommends the adoption of the fair value based method for stock-based
compensation. The standard allows the company to continue to measure stock-based
compensation cost using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." The company has elected to continue to measure stock-based
compensation cost using APB No. 25, as such, the effect of this new statement
will be limited to additional required disclosures beginning in 1996.

(3) BUSINESS DESCRIPTION

The company is comprised of two business segments. Specialty Service Tools
includes operations that design, manufacture and market a wide range of
specialty service tools and diagnostic equipment primarily to the motor vehicle
industry, principally in North America and Europe. Major customers of this
segment are franchised dealerships of motor vehicle original equipment
manufacturers, aftermarket vehicle service facilities, and independent
distributors. Original Equipment Components includes operations that design,
manufacture and market engine, transmission and steering component parts for
light and heavy duty vehicle markets, principally in North America and Europe.
Major customers of this segment are vehicle manufacturers and aftermarket
private brand distributors.

33
<PAGE> 35

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

Revenues by business segment represent sales to unaffiliated customers.
Intercompany sales between segments are not significant. Operating income (loss)
by segment does not include general unallocated corporate expense, other expense
(income), net, interest expense, income taxes and extraordinary items.

Identifiable assets by business segment are those used in company
operations in each segment. General corporate assets are principally cash,
deferred tax assets, and certain prepaid expenses.

<TABLE>
<CAPTION>
BUSINESS SEGMENTS 1995 1994 1993
- ------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Specialty Service Tools.............................. $ 572,270 $ 550,557 $ 503,600
Original Equipment Components........................ 525,833 529,313 26,657
Businesses sold in 1993.............................. -- -- 216,914
---------- ---------- ----------
Total........................................ $1,098,103 $1,079,870 $ 747,171
========== ========== ==========
Operating income (loss):
Specialty Service Tools(a)........................... $ 24,364 $ 29,408 $ (10,913)
Original Equipment Components(b)..................... 26,158 48,038 (46,816)
Businesses sold in 1993.............................. -- -- 25,249
General Corporate expenses........................... (19,431) (19,990) (13,332)
---------- ---------- ----------
Total........................................ $ 31,091 $ 57,456 $ (45,812)
========== ========== ==========
Capital expenditures:
Specialty Service Tools.............................. $ 7,385 $ 10,616 $ 7,479
Original Equipment Components........................ 23,193 35,856 1,014
Businesses sold in 1993.............................. -- -- 6,439
General Corporate.................................... 431 1,979 184
---------- ---------- ----------
Total........................................ $ 31,009 $ 48,451 $ 15,116
========== ========== ==========
Depreciation and amortization:
Specialty Service Tools.............................. $ 14,884 $ 14,420 $ 14,485
Original Equipment Components........................ 26,336 22,760 1,796
Businesses sold in 1993.............................. -- -- 7,462
General Corporate.................................... 2,302 1,335 627
---------- ---------- ----------
Total........................................ $ 43,522 $ 38,515 $ 24,370
========== ========== ==========
Identifiable assets:
Specialty Service Tools.............................. $ 390,332 $ 397,920 $ 409,237
Original Equipment Components........................ 361,782 367,871 343,816
Discontinued operation............................... -- 79,596 85,165
General Corporate(c)................................. 79,244 83,657 186,183
---------- ---------- ----------
Total........................................ $ 831,358 $ 929,044 $1,024,401
========== ========== ==========
</TABLE>

- ---------------

(a) 1995 includes a $7,000 restructuring charge to combine five divisions into
two divisions. 1993 includes a $27,500 restructuring charge to merge Allen
Testproducts and Bear Automotive into Automotive Diagnostics.

(b) 1995 includes a $3,724 restructuring charge to close a foundry operation in
Germany. 1993 includes $26,845 of SPT equity losses and $21,500 of SP Europe
equity losses.

(c) Decrease in 1994 was primarily due to the use of $108,100 in cash to
purchase SPT and to complete the debt refinancing in 1994.

34
<PAGE> 36

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

<TABLE>
<CAPTION>
GEOGRAPHIC AREAS 1995 1994 1993
- ------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Revenues -- Unaffiliated customers:
United States(a)..................................... $ 915,717 $ 915,071 $ 628,169
Other North America.................................. 15,096 11,444 21,719
Other................................................ 167,290 153,355 97,283
---------- ---------- ----------
Total $1,098,103 $1,079,870 $ 747,171
========== ========== ==========
Revenues -- Between affiliated customers:
United States........................................ $ 27,886 $ 26,903 $ 34,934
Other North America.................................. 128 134 --
Other................................................ 91 817 1,708
Eliminations......................................... (28,105) (27,854) (36,642)
---------- ---------- ----------
Total........................................ $ -- $ -- $ --
========== ========== ==========
Operating income (loss):
United States(b)..................................... $ 39,409 $ 57,828 $ (22,466)
Other North America.................................. 683 464 (224)
Other(c)............................................. (9,001) (836) (23,122)
---------- ---------- ----------
Total........................................ $ 31,091 $ 57,456 $ (45,812)
========== ========== ==========
Total assets:
United States........................................ $ 661,722 $ 783,446 $ 893,172
Other North America.................................. 8,161 7,875 8,591
Other................................................ 161,475 137,723 122,638
---------- ---------- ----------
Total........................................ $ 831,358 $ 929,044 $1,024,401
========== ========== ==========
</TABLE>

- ---------------

(a) Included in the United States revenues are export sales to unconsolidated
customers of $83,000 in 1995, $95,700 in 1994 and $74,400 in 1993.

(b) 1995 includes a $7,000 restructuring charge to merge five specialty service
tool divisions into two divisions. 1993 includes a $27,500 restructuring
charge to merge Allen Testproducts and Bear Automotive into Automotive
Diagnostics and $26,845 of SPT equity losses.

(c) 1995 includes a $3,724 restructuring charge to close a foundry operation in
Germany. 1993 includes $21,500 of SP Europe equity losses.

Approximately 20% in 1995, 16% in 1994 and 9% in 1993 of the company's
consolidated sales were made to General Motors Corporation and its various
divisions, dealers and distributors. Approximately 12% in 1995, 12% in 1994 and
2% in 1993 of the company's consolidated sales were made to Ford Motor Company
and its various divisions, dealers and distributors. Approximately 5% in 1995,
7% in 1994 and 6% in 1993 of the company's consolidated sales were made to
Chrysler Corporation and its various divisions, dealers and distributors. No
other customer or group of customers under common control accounted for more
than 10% of consolidated sales for any of these years. On a proforma 1993 basis,
approximately 17%, 10% and 8% of consolidated sales were to General Motors, Ford
and Chrysler, respectively.

(4) DISCONTINUED OPERATION

On September 29, 1995, the company sold the majority of its SPX Credit
Corporation operations and lease financing receivables to Textron Financial
Corporation ("TFC"), a subsidiary of Textron Inc. The sales

35
<PAGE> 37

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

proceeds were $73,183. The company recorded a $2,987 after-tax loss ($4,817
pretax) on the sale on costs associated with closing the remaining leasing
operation. Proceeds from the sale were used to reduce a portion of the company's
debt. TFC will provide SPX customers with financing previously provided by SPX
Credit Corporation. SPX's agreement with TFC includes provisions for the company
to repurchase equipment resulting from future lease defaults. See Note 19 for
further explanation of repurchase and recourse provisions of this agreement.

The results of operations, net of taxes, and the net assets of SPX Credit
Corporation are presented in the accompanying consolidated financial statements
as a discontinued operation through the end of the third quarter of 1995.
Consolidated interest expense has been allocated based upon the ratio of the net
assets of the discontinued operation to the consolidated capitalization of the
company. Income taxes have been allocated to the discontinued operation at
approximately 41% of pretax income. No general corporate expenses have been
allocated to the discontinued operation. The results of the discontinued
operation are not necessarily indicative of the results of operations which may
have been obtained had continuing and discontinued operations been operating
independently.

The following summarizes the results of operations for the nine months
ended September 29, 1995 and the twelve months ended December 31, 1994 and 1993
and net assets of SPX Credit Corporation at December 31, 1994:

<TABLE>
<CAPTION>
1995 1994 1993
------ ------- ------
<S> <C> <C> <C>
Revenues........................................ $9,163 $12,877 $8,974
Operating income................................ 4,622 7,361 5,483
Interest expense................................ 4,391 5,665 2,005
------ ------- ------
Income before income taxes...................... $ 231 $ 1,696 $3,478
Provision for income taxes...................... 91 679 1,392
------ ------- ------
Income from operations.......................... $ 140 $ 1,017 $2,086
====== ======= ======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Lease finance receivables -- current............................ $ 35,026
Other current assets............................................ 55
Lease finance receivables -- long-term.......................... 47,042
Other noncurrent assets......................................... 92
Current liabilities............................................. (2,619)
-------
Net assets............................................ $ 79,596
=======
</TABLE>

(5) ACQUISITIONS AND DIVESTITURES

ACQUISITIONS

Allen Testproducts ("ATP") and Allen Group Leasing ("AGL") -- On June 10,
1993, the company acquired ATP and its related leasing company, AGL, from the
Allen Group, Inc. for $102,000. ATP is a manufacturer and marketer of vehicular
test and service equipment. This acquisition was recorded using the purchase
method of accounting, and the results of ATP and AGL have been included in the
company's consolidated statements of income since June 10, 1993.

Sealed Power Technologies Limited Partnership ("SPT") -- Effective December
31, 1993, the company acquired Riken Corporation's 49% and management's 2%
interests in SPT for $39,000 and $2,700,

36
<PAGE> 38

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

respectively. The company previously owned 49% of SPT. Accordingly, the net
assets of SPT have been included in the accompanying consolidated balance sheet
as of December 31, 1993. Prior to this acquisition, the company accounted for
its investment using the equity method. Beginning in the first quarter of 1994,
results of operations of SPT are reflected in the consolidated statements of
income and cash flows. Prior to 1994, the pro rata share of earnings or losses
and the amortization of the company's investment in SPT is reflected as "SPT
equity losses" on the consolidated statements of income.

DIVESTITURES

Sealed Power Replacement ("SPR") -- On October 22, 1993, the company sold
SPR to Federal-Mogul Corporation for approximately $141,000 in cash. SPR
distributed engine and undervehicle parts into the U.S. and Canadian
aftermarket. Net proceeds, after income taxes, were approximately $117,500. The
company recorded a pretax gain of $52,400 after transaction and facility
reduction expenses, or $32,400 after-tax.

Truth -- On November 5, 1993, the company sold Truth to Danks America
Corporation, an affiliate of FKI Industries, Inc. for approximately $92,500 in
cash. In addition, the company will receive an annual royalty ranging from 1.0%
to 1.5% of Truth's annual sales for a five year period following the closing
(cumulatively not to exceed $7,500) which will be recorded as other income as
received. Truth manufactures and markets window and door hardware primarily in
the U.S. and Canada. Net proceeds, after income taxes, were approximately
$71,600. The company recorded a pretax gain of $53,000 after transaction
expenses, or $31,800 after-tax.

(6) PROFORMA RESULTS OF OPERATIONS (UNAUDITED)

The following 1993 unaudited proforma selected financial data reflects the
acquisition of Allen Testproducts and related restructuring, the divestiture of
the SPR and Truth divisions, the acquisition of 51% of SPT, and the
consolidation of SP Europe as if they had occurred as of January 1, 1993.

<TABLE>
<S> <C>
Revenues......................................................... $ 988,000
Costs and expenses
Cost of products............................................... 752,700
SG&A........................................................... 204,700
Goodwill/intangibles amortization.............................. 6,800
Minority interest (income)..................................... (4,300)
Earnings from equity interest.................................. (500)
Restructuring charge........................................... 27,500
----------
Operating income................................................. $ 1,100
Other expense (income),net....................................... 2,200
Interest, net.................................................... 34,700
----------
Income before income taxes....................................... $ (35,800)
Provision (benefit) for income taxes............................. (7,400)
----------
Income (loss) from continuing operations......................... $ (28,400)
==========
Income (loss) per share.......................................... $ (2.25)
Weighted average number of common shares outstanding............. 12,604,000
</TABLE>

The unaudited proforma selected results of operations does not purport to
represent what the company's results of continuing operations would actually
have been had the above transactions in fact occurred as of January 1, 1993 or
project the results of operations for any future date or period.

37
<PAGE> 39

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

(7) RESTRUCTURING CHARGES

1995 RESTRUCTURING CHARGE

During the fourth quarter of 1995, management authorized and committed the
company to undertake two significant restructurings and recorded a combined
restructuring charge of $10,724. The first restructuring plan will consolidate
five Specialty Service Tool divisions into two divisions. The second
restructuring plan will close SP Europe's German foundry operation and transfer
certain piston ring operations to other manufacturing facilities.

Specialty Service Tool Restructuring -- In order to improve customer
service, reduce costs and improve productivity and asset utilization, the
company decided to consolidate five existing Specialty Service Tool divisions
into two divisions. This restructuring plan involves closing two company owned
manufacturing facilities, a company owned distribution facility, four leased
service centers and a leased sales facility in France. Additionally, the plan
includes combining selling, engineering and administrative functions. This
restructuring plan is expected to be completed by the end of 1996. The plan
includes the termination of approximately 570 employees which will result in a
net reduction of approximately 310 employee positions after considering staffing
requirements at remaining facilities.

The company recorded a $7,000 restructuring charge to recognize severance
and benefits for the employees to be terminated ($4,400), estimated holding
costs of vacated facilities ($1,100), and to reflect the fair market value of
one manufacturing facility to be closed ($1,500). The other company owned
manufacturing facility and the distribution facility are expected to be sold at
prices in excess of their net carrying value ($3,000). Also, the charge for
severance and benefits for the employees to be terminated is net of a $3,127
curtailment gain for pension and postretirement health care benefits. At
December 31, 1995, no costs have been charged against these restructuring
accruals.

The company is also estimating that approximately $11,000 of incremental
costs associated with this restructuring will be incurred in 1996. These
incremental costs will benefit future operations and do not qualify for accrual
in 1995. Examples of these incremental costs include machinery and equipment and
inventory moving costs, employee relocation costs, etc. Also, the company will
record an approximate $1,000 restructuring charge in the first quarter of 1996
to reflect incremental early retirement costs for 55 of these employees who
elected (in January 1996) to participate in an early retirement program.

SP Europe Restructuring -- German Plant -- The company will close its
unprofitable foundry operations at SP Europe and transfer certain piston ring
operations to other facilities. This closing will result in the elimination of
approximately 200 employees and is planned to be completed by the end of the
third quarter of 1996. The company recorded a $3,724 restructuring charge to
accrue severance that will be paid to these affected employees. Additional costs
to complete this restructuring in 1996 are not expected to be significant. At
December 31, 1995, no costs have been charged against this restructuring
accrual.

1993 RESTRUCTURING CHARGE

In the third quarter of 1993, the company initiated the merger of Allen
Testproducts (acquired in June of 1993) with the company's Bear Automotive
division to form a single business unit called Automotive Diagnostics. The
company recorded a pretax $27,500 restructuring charge ($18,500 after-tax) to
provide for substantial reduction in workforce and facilities related to the
merger. Of the $27,500 restructuring charge, approximately $16,000 related to
workforce reduction of approximately 600 employees and associated costs. The
charge also included $9,300 of facility duplication and shutdown costs,
including the write down of excess assets of $4,200 (non-cash).

38
<PAGE> 40

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

(8) EXTRAORDINARY LOSS

1995 -- Beginning in the first quarter of 1995, the company began to
purchase some of its 11 3/4% senior subordinated notes. As of December 31, 1995,
$31,690 of these notes had been purchased at a premium of $1,797. This premium,
net of income taxes of $719, has been recorded as the extraordinary loss.

1993 -- In the fourth quarter of 1993, the company recorded an
extraordinary charge of $37,000 ($24,000 after-tax) for early retirement
extinguishment costs associated with debt refinanced in 1994. During the first
half of 1994, approximately $400,000 (December 31, 1993 principal amount) of
debt was refinanced. As of the end of the second quarter of 1994, the
refinancing was completed and all costs to extinguish this debt were charged to
the reserve established at the end of 1993.

(9) EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT PENSION PLANS

The company has defined benefit pension plans which cover substantially all
domestic employees. These plans provide pension benefits that are principally
based on the employees' years of credited service and levels of earnings.
Contributions in excess of pension expense are considered prepayments for
financial accounting purposes. The company has determined that foreign defined
benefit pension plans are immaterial to the consolidated financial statements.
Net periodic pension cost (benefit) included the following components:

<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost-benefits earned during the period..... $ 7,711 $ 7,906 $ 4,585
Interest cost on projected benefit obligation...... 16,738 14,920 6,852
Actual (gain) loss on assets....................... (64,439) 1,069 (19,633)
Net amortization and deferral...................... 42,294 (23,973) 8,440
-------- -------- --------
Net periodic pension cost (benefit)................ $ 2,304 $ (78) $ 244
======== ======== ========
Actuarial assumptions used:
Discount rate...................................... 7.5% 8.25% 7.5%
Rate of increase in compensation levels............ 5.0 5.5 5.0
Expected long-term rate of return on assets........ 9.5 9.5 9.5
</TABLE>

39
<PAGE> 41

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

Plan assets principally consist of equity and fixed income security
investments. The following table sets forth the plans' funded status and amounts
recognized in the company's consolidated balance sheets as Other Assets for its
U.S. pension plans:

<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------- -------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation............. $ 184,953 $ 1,866 $ 147,551 $ 6,866
======== ======= ======== =======
Accumulated benefit obligation........ $ 203,980 $ 2,276 $ 162,811 $ 7,476
======== ======= ======== =======
Projected benefit obligation.......... $ 230,085 $ 2,276 $ 193,562 $ 7,476
Plan assets at fair value............... 283,191 1,826 227,137 6,552
-------- ------- -------- -------
Projected benefit obligation less
(greater) than plan assets............ $ 53,106 $ (450) $ 33,575 $ (924)
Unrecognized net (gain) loss............ (39,417) (137) (16,248) (5)
Prior service cost not yet recognized in
net periodic pension cost............. 9,146 327 6,421 556
Remaining unamortized net (asset)
liability at transition............... (2,637) -- (3,220) 28
-------- ------- -------- -------
Prepaid pension cost recognized in the
consolidated balance sheets........... $ 20,198 $ (260) $ 20,528 $ (345)
======== ======= ======== =======
</TABLE>

In the fourth quarter of 1995, the company recorded a curtailment gain of
$1,853 associated with employee terminations included in the Specialty Service
Tool restructuring and the gain has been included in the restructuring charge.
As part of the 1993 divestitures of the SPR and Truth divisions, the company
recorded curtailment gains of $4,100 and the gain was included in the gain
recognized on the sale of these divisions.

POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE

Postretirement health and life insurance expense was as follows:

<TABLE>
<CAPTION>
1995 1994 1993
------- ------- ------
<S> <C> <C> <C>
Benefit cost for service during the year -- net
of employee contributions.................... $ 1,096 $ 1,472 $ 317
Net amortization and deferral.................. (2,709) (2,057) (64)
Actual return on assets........................ (148) -- --
Interest cost on accumulated postretirement
benefit obligation........................... 6,261 6,674 1,338
------- ------- ------
Postretirement benefit cost.................... $ 4,500 $ 6,089 $1,591
======= ======= ======
</TABLE>

The accumulated postretirement benefit obligation was actuarially
determined based on assumptions regarding the discount rate and health care
trend rates. The health care trend assumption applies to postretirement medical
and dental benefits. Different trend rates are used for pre-age 65 and post-age
65 medical claims and for expected dental claims. The trend rate used for the
medical plan was 13% in 1995, grading to a 6% ultimate rate by 1% each year for
pre-65 claims; and 9.5% in 1995 grading to 6% by .5% each year for post-age 65
claims. The trend rate for the dental plan was 6% each year. The liability was
discounted using the pension rates. Increasing the health care trend rate by one
percentage point would increase the

40
<PAGE> 42

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

accumulated postretirement benefit obligation by $4,700 and would increase the
1995 postretirement benefit cost by $400.

The following table summarizes the accumulated benefit obligation (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
Accumulated postretirement benefits obligation ("APBO")
Retirees............................................. $ 56,605 $ 52,314
Actives fully eligible............................... 9,131 10,871
------- -------
APBO fully eligible.................................. 65,736 63,185
Actives not fully eligible........................... 18,692 22,049
------- -------
Total APBO........................................... $ 84,428 $ 85,234
Assets................................................. (1,024) (943)
------- -------
Unfunded status........................................ $ 83,404 84,291
Unrecognized:
Net reduction in prior service costs................. 27,044 26,075
Net gain (loss)...................................... 1,764 3,902
------- -------
Accrued APBO included in long-term liabilities......... $112,212 $114,268
======= =======
</TABLE>

In the fourth quarter of 1995, the company recorded a curtailment gain of
$1,274 associated with employee terminations included in the Specialty Service
Tool restructuring and the gain has been included in the restructuring charge.

RETIREMENT SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN ("KSOP")

Beginning in 1994, the company combined its former Retirement Savings Plan
and its Employee Stock Ownership Plan ("ESOP") into a single plan, the KSOP. The
plan provides benefits to approximately 3,000 domestic employees. These
employees can contribute up to 15% of their earnings. The company matches a
portion of the employee's contribution with shares from the plan's trust. In
1995 and 1994, 211,882 and 163,908 shares, respectively, were allocated to
employees under the plan. In 1993, 114,588 shares were allocated to eligible
employees under the ESOP plan and cash contributions to the participants of the
former Retirement Savings Plan were $875. Compensation expense is recorded based
upon the market value of shares as the shares are allocated to the employees. In
1995, 1994 and 1993, $3,027, $2,778 and $1,925 was recorded as compensation
expense, respectively.

The ESOP was established in 1989 when the ESOP borrowed $50,000, which was
guaranteed by the company, and used the proceeds to purchase 1,746,725 shares of
common stock issued directly by the company. Employees may vote allocated shares
directly, while the ESOP trustee will vote the unallocated shares proportionally
on the same basis as the allocated shares were voted. At December 31, 1995,
there were 870,555 unallocated shares in the ESOP trust. The fair market value
of the unallocated shares was $13,800 at December 31, 1995. Also, the company
recorded third party interest expense incurred by the ESOP trust for third party
borrowings of $950 in 1994 and $3,902 in 1993. The third party borrowings of the
ESOP trust were extinguished during the first half of 1994 and replaced by a
loan from the company to the ESOP trust.

OTHER

The company provides defined contribution pension plans for substantially
all employees not covered by defined benefit pension plans. Collectively, the
company's contributions to these plans were $1,519 in 1995, $1,308 in 1994 and
$683 in 1993.

41
<PAGE> 43

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

The company provides a Retirement Savings Plan for certain eligible
domestic employees that are not included in the KSOP. These employees can
contribute up to 15% of their earnings. The company matches a portion of the
employee's contribution with cash. The company's cash contribution to this plan
was $1,033 in 1995 and $1,019 in 1994.

(10) RECEIVABLES

Changes in the reserve for losses on receivables were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year.................. $ 7,968 $ 9,177 $10,789
Recorded in acquisition of SPT and due to
consolidation of SP Europe.................. -- -- 747
Amount charged to income...................... 1,614 3,358 3,609
Accounts written off, net of recoveries....... (1,981) (2,000) (2,398)
Reduction resulting from sale of SPR and Truth
divisions................................... -- -- (3,588)
Reclassifications and other................... 757 (2,567) 18
------- ------- -------
Balance at end of year........................ $ 8,358 $ 7,968 $ 9,177
======= ======= =======
</TABLE>

(11) INVENTORIES

Domestic inventories, amounting to $111,300 and $116,100 at December 31,
1995 and 1994, respectively, are based on the last-in, first-out (LIFO) method.
Such inventories, if priced on the first-in, first-out (FIFO) method, would have
been approximately $18,900 and $18,200 greater at December 31, 1995 and 1994,
respectively. During 1995, 1994 and 1993, certain inventory quantities were
reduced resulting in liquidations of LIFO inventory quantities carried at lower
costs prevailing in prior years. The effect was to increase net income in 1995
by $173, in 1994 by $223 and in 1993 by $455. Substantially all foreign
inventories are valued at FIFO costs. Inventories include material, labor and
factory overhead costs. None of the inventories exceed realizable values.

The components of inventory at year-end were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
Finished products...................................... $ 87,235 $ 83,332
Work in process........................................ 28,711 32,820
Raw materials and supplies............................. 34,905 35,669
-------- --------
$150,851 $151,821
======== ========
</TABLE>

42
<PAGE> 44

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

(12) INCOME TAXES

Income (loss) before income taxes and the related provision (benefit) for
income taxes from continuing operations consists of the following:

<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- --------
<S> <C> <C> <C>
Income (loss) before income taxes
Domestic.................................... $ 10,136 $25,135 $ 64,776
Foreign..................................... (11,714) (2,931) (23,599)
-------- ------- --------
Total............................. $ (1,578) $22,204 $ 41,177
======== ======= ========
Provision (benefit) for income taxes
U.S. Federal:
Current................................... $ 4,329 $10,535 $ 31,425
Deferred.................................. (1,896) (2,981) (9,521)
State....................................... 290 1,967 4,411
Foreign..................................... (2,950) (400) 1,748
-------- ------- --------
Total............................. $ (227) $ 9,121 $ 28,063
======== ======= ========
</TABLE>

A reconciliation of the effective rate for income taxes shown in the
consolidated statements of income with the U.S. statutory rate of 35% is shown
below:

<TABLE>
<CAPTION>
1995 1994 1993
----- ---- ----
<S> <C> <C> <C>
Amount computed at statutory rate..................... (35.0)% 35.0% 35.0%
Increase (decrease) in taxes resulting from:
U.S. rate change on net deferred taxes................ -- -- 2.0
Tax credits and incentives............................ -- (1.1) (0.5)
Net effect of foreign operations...................... 72.9 2.8 21.0
State income taxes, net of federal income tax
benefit............................................. 11.9 5.8 5.8
Amortization of goodwill and other acquisition
costs............................................... 99.0 6.9 3.6
Capital loss on sale of investment in RSV............. (82.1) -- --
Tax benefit of the Foreign Sales Corporation.......... (32.3) (2.2) (2.0)
Earnings from equity interests........................ (70.4) (3.0) (0.1)
Other, net............................................ 21.6 (3.1) 3.4
----- ---- ----
(14.4)% 41.1% 68.2%
===== ==== ====
</TABLE>

No provision has been made for income and withholding taxes which would
become payable upon distribution of the undistributed earnings of foreign
subsidiaries and affiliates. It is the company's present intention to
permanently reinvest these earnings in its foreign operations. The amount of
undistributed earnings which have been reinvested in foreign subsidiaries and
affiliates at December 31, 1995, was $31,700. It is not practical to determine
the hypothetical U.S. federal income tax liability if all such earnings were
remitted, but distribution as dividends at the end of 1995 would have resulted
in payment of withholding taxes of approximately $2,100.

43
<PAGE> 45

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

The components of the net deferred income tax assets (liabilities) were as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
Deferred income tax asset:
Receivables reserve.................................. $ 7,566 $ 6,883
Inventory............................................ 6,007 5,938
Compensation and benefit-related..................... 9,644 10,362
Restructuring reserves............................... 3,738 627
Warranty reserve..................................... 1,069 1,916
Other liabilities.................................... 8,952 11,108
-------- --------
Current deferred tax asset............................. $ 36,976 $ 36,834
-------- --------
Non-current deferred tax:
Depreciation......................................... $(28,553) $(27,670)
Postretirement health and life....................... 39,893 40,436
Book basis investment greater than tax basis
investment in affiliates.......................... (37,802) (30,195)
Other................................................ 973 1,053
Net operating loss carryforwards..................... 8,200 17,400
Valuation allowance.................................. (8,200) (17,400)
-------- --------
Non-current deferred tax liability..................... $(25,489) $(16,376)
-------- --------
Net deferred tax asset................................. $ 11,487 $ 20,458
======== ========
</TABLE>

Included on the consolidated balance sheets are U.S. federal income tax
refunds and receivables of $10,270 in 1995 and $19,009 in 1994.

At December 31, 1995, the company has net operating loss carryforwards
attributable to foreign operations of $18,200 available to offset future taxable
income. These loss carryforwards expire as follows: $0 in 1996, $600 in 1997,
$2,400 in 1998, $100 in 1999, $300 in 2000 and $14,800 thereafter. During 1995,
the company utilized $2,600 of net operating loss carryforwards attributable to
foreign operations, resulting in tax benefits of $1,000. The deferred tax asset
related to the net operating loss carryforwards has been reserved in the
valuation allowance.

(13) INVESTMENTS AND SP EUROPE

INVESTMENTS

As of December 31, 1995, investments, as shown on the consolidated balance
sheet, include equity investments in non-majority owned subsidiaries. These
investments include the company's 50% owned interest in a U.S. joint venture, a
50% owned interest in a joint venture in Japan, a 40% interest in a Mexican
company and a 50% interest in a German company. All of these investments are
accounted for using the equity method. These investments, both individually and
collectively, are not material to the company's consolidated financial
statements.

In the fourth quarter of 1995, the company sold its 50% ownership in RSV, a
Japanese joint venture, to the joint venture partner. The company recorded a
gain of $950, which represented equity losses previously recorded in excess of
the original investment. Additionally, the company recorded a $1,295 tax benefit
to reflect the utilization of the capital loss generated by selling the
investment.

44
<PAGE> 46

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

SP EUROPE

In the fourth quarter of 1995, the company's partner in SP Europe announced
its decision to limit its participation by not fully funding its 30% share of
this partnership. The company had accounted for this minority partner's 30%
share of SP Europe's losses as minority interest income and recorded the
cumulative losses attributed to the partner as "minority interest" in the equity
section of the consolidated balance sheets. Although the company's partner in SP
Europe currently retains a 30% interest in this partnership, the company will
receive 100% of the income or losses of SP Europe until such time as the deficit
in the partners' capital accounts is recovered. Due to the partner's decision to
not fully fund its 30% share and inherent uncertainties associated with the
future recovery of this deficit, the company recorded a $4,767 charge for the
cumulative losses previously attributed to this partner to minority interest
(income) loss.

Until December 31, 1993, the company reported that it held a 50% interest
in SP Europe. As of December 31, 1993, Riken's pending 20% participation in SP
Europe reverted to the company in connection with the transaction to acquire
Riken's 49% in SPT. SP Europe had not been previously consolidated due to the
company's deemed temporary control and because nonrecourse (to the partners)
financing was being pursued. Up to December 31, 1993, the company carried its
investment in SP Europe at zero. Due to the resulting 70% ownership, the company
recorded its share of cumulative losses since the partnership formation in
mid-1991 of $21,500. As of December 31, 1993, the balance sheet of this
partnership is included in the consolidated financial statements, reflecting the
company's 70% ownership and Mahle GmbH's 30% minority interest. Beginning in the
first quarter of 1994, results of operations of SP Europe are reflected in the
consolidated statements of income and cash flows.

(14) PROPERTY, PLANT AND EQUIPMENT

The major classes are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Land................................................. $ 10,064 $ 9,715
Buildings............................................ 91,916 86,740
Machinery and Equipment.............................. 314,618 286,298
Construction in Progress............................. 9,038 25,483
--------- ---------
Total................................................ $ 425,636 $ 408,236
Less: Accumulated Depreciation....................... (212,672) (193,450)
--------- ---------
Net.................................................. $ 212,964 $ 214,786
========= =========
</TABLE>

(15) COSTS IN EXCESS OF NET ASSETS OF BUSINESSES ACQUIRED

At December 31, 1995 and 1994, total costs in excess of net assets of
businesses acquired was $224,291, and accumulated amortization of costs in
excess of net assets of businesses acquired was $31,957 and $25,146,
respectively. Amortization was $6,811 in 1995, $6,007 in 1994 and $3,382 in
1993.

The company amortizes costs in excess of the net assets of businesses
acquired ("goodwill") on a straight-line method over the estimated periods
benefited, not to exceed 40 years. After an acquisition, the company continually
reviews whether subsequent events and circumstances have occurred that indicate
the remaining estimated useful life of goodwill may warrant revision or that the
remaining balance of goodwill may not be recoverable. If events and
circumstances indicate that goodwill related to a particular business should be
reviewed for possible impairment, the company uses projections to assess whether
future operating income on a non-discounted basis (before goodwill amortization)
of the unit is likely to exceed the goodwill

45
<PAGE> 47

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

amortization over the remaining life of the goodwill, to determine whether a
writedown of goodwill to recoverable value is appropriate.

At December 31, 1995, $69,217 of goodwill relates to the Automotive
Diagnostics operating unit. This operating unit has incurred significant
operating losses in 1995 and in prior years. The company projects that, in the
near future, the cost savings, market synergies and other factors which, in
part, will be realized from the Bear Automotive and Allen Testproducts
combination and the 1995 restructuring described in Note 7 will result in
non-discounted operating income sufficient to exceed goodwill amortization.

46
<PAGE> 48

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

(16) ACCRUED LIABILITIES

Details of accrued liabilities is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
Accrued payroll and benefits........................... $ 55,082 $ 53,175
Warranty reserves...................................... 4,270 5,218
Restructuring reserve.................................. 12,629 1,992
Interest payable....................................... 2,597 3,836
Deferred revenue -- service contracts.................. 12,338 9,028
Repossession reserves.................................. 1,664 6,475
Other.................................................. 46,807 52,349
-------- --------
$135,387 $132,073
======== ========
</TABLE>

(17) COMMITMENTS AND CONTINGENT LIABILITIES

OPERATING LEASES

The company leases certain offices, warehouses and equipment under lease
agreements which expire at various dates through 2007. Future minimum rental
commitments under non-cancelable operating leases are $12,100 for 1996, $8,900
for 1997, $6,200 for 1998, $4,800 for 1999, $3,700 for 2000 and aggregate
$11,100 thereafter. Rentals on these leases were $14,800 in 1995, $11,400 in
1994 and $12,900 in 1993.

GENERAL

47
<PAGE> 49

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

During the first quarter of 1995, the company reached agreement to settle a
dispute involving a non-core business sold in 1989. As of December 31, 1994, the
company recorded a $2,100 charge for this settlement. The company expects this
agreement to resolve all issues pertaining to the sale of this business.

ENVIRONMENTAL

The company's operations and properties are subject to federal, state,
local, and foreign regulatory requirements relating to environmental protection.
It is the company's policy to comply fully with all such applicable
requirements. As part of its effort to comply, management has established an
ongoing internal compliance auditing program which has been in place since 1989.
Based on current information, management believes that the company's operations
are in substantial compliance with applicable environmental laws and regulations
and the company is not aware of any violation that could have a material adverse
effect on the business, financial conditions, results of operations, or cash
flows of the company. There can be no assurance, however, that currently unknown
matters, new laws and regulations, or stricter interpretations of existing laws
and regulations will not materially affect the company's business or operations
in the future.

The company is involved as a potentially responsible party ("PRP") under
the Comprehensive, Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), as amended, or similar state superfund statutes in ten
proceedings involving off-site waste disposal facilities. At seven of these
sites it has been established that the company is a de minimis contributor. A
determination has not been made with respect to the remaining three sites, but
the company believes that it will be found to be a de minimis contributor at two
of them. Of these remaining sites, one is approaching settlement with the
Environmental Protection Agency with an expected cost to the company of
approximately $200, another is expected to be resolved at a cost not to exceed
$50, and the final site is under investigation with an expected cost of
approximately $150. Based on information available to the company, which in most
cases includes estimates from PRPs and/or federal or state regulatory agencies
for the investigation, clean up costs at those sites, and data related to the
quantities and characteristics of materials generated at or shipped to each
site, the company believes that the costs for each site are not material and in
total the anticipated clean up costs of current PRP actions would not have a
material adverse effect on the company's business, financial condition, results
of operations, or cash flows.

In the case of contamination existing upon properties owned or controlled
by the company, the company has established reserves which it deems adequate to
meet its current remediation obligations.

EXECUTIVE SEVERANCE AGREEMENTS

During 1988, the company's Board of Directors adopted executive severance
agreements which create certain liabilities in the event of the termination of
the covered executives following a change of control of the company. The
aggregate commitment under these executive severance agreements should all eight
covered employees be terminated is approximately $12,800. Additionally, should a
change in control occur, restrictions

48
<PAGE> 50

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

on any outstanding restricted stock and stock options granted under the 1992
Stock Compensation Plan would lapse.

(18) NOTES PAYABLE AND DEBT

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
Revolving Credit Agreement............................. $ 60,000 $125,000
Swingline loan facility................................ 2,000 --
Senior Subordinated Notes, 11.75%...................... 228,310 260,000
Industrial Revenue Bonds, with interest rates
established monthly based on an index of short-term
municipal bond interest rates, due 2010 to 2025...... 15,100 15,100
Other.................................................. 14,377 15,115
-------- --------
Total Consolidated debt................................ $319,787 $415,215
Less -- Notes payable and current maturities of
long-term debt.................................... 893 1,133
-------- --------
Total Long-Term Debt................................... $318,894 $414,082
======== ========
</TABLE>

Aggregate maturities of total debt are $893 in 1996, $9,017 in 1997, $3,393
in 1998, $62,000 in 1999, $0 in 2000 and $244,484 thereafter.

REVOLVING CREDIT AGREEMENT -- The company has a credit agreement, as
amended, with a syndicate of banks which provides unsecured revolving credit
commitments in an aggregate amount not to exceed $225,000. The agreement, dated
March 24, 1994, has a termination date of March 15, 1999 with mandatory
revolving credit commitment reductions of $12,500 in June and December of 1997
and 1998, respectively. At the option of the company, revolving credit advances
may be Floating rate advances or Eurodollar advances. Floating rate advances
bear interest at the prime rate, and Eurodollar advances bear interest at LIBOR
plus 1.0% for an interest period of one, two, three or six months, selected by
the company prior to each Eurodollar advance. At December 31, 1995, the weighted
average interest rate on outstanding revolving credit borrowings was 7.0%.

The agreement also provides a letter of credit facility, which is available
for the issuance of standby letters of credit in an aggregate amount of $35,000.
Standby letters of credit issued under this facility reduce the aggregate amount
available under the revolving credit commitment.

The company must pay a commitment fee of .375% per annum on the aggregate
revolving credit commitment, minus the sum of the outstanding balance of the
revolving credit loans and the letter of credit facility obligations.

The company also has a $5,000 swingline loan facility to assist in managing
daily cash requirements. Loans under the swingline bear interest at the prime
rate and are due in 90 days.

SENIOR SUBORDINATED NOTES -- In May 1994, the company issued $260,000 of
senior subordinated notes which bear interest of 11.75%, payable semi-annually
and are due June 1, 2002. The notes are redeemable at the option of the company
after June 1, 1998 at a premium which declines to par in the year 2000. In
addition, up to $78,000 of the notes are redeemable prior to June 1, 1996, at
the option of the company, within 45 days of the sale of capital stock in a
public equity offering from the net proceeds of such sale at a redemption price
equal to 110.75% of the principal amount to be redeemed, together with accrued
and unpaid interest, if any, thereon to the date of redemption.

49
<PAGE> 51

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

RESTRICTIVE COVENANTS -- The company's revolving credit agreement and
senior subordinated note indenture contain covenants. Late in 1995 and in the
first quarter of 1996, the revolving credit agreement was amended to adjust
certain covenants. At December 31, 1995, the company was in compliance with such
amended covenants. Under the most restrictive of these covenants, the company
was required to:

- Maintain a leverage ratio, as defined, of 78% or less, declining on a
graduated scale to 65% in 1999. The leverage ratio at December 31, 1995
was 69%.

- Maintain a fixed charge coverage ratio, as defined, of 1.50:1 or greater
in 1995 and 1996, and 2:1 or greater thereafter. The fixed charge
coverage ratio as of December 31, 1995 was 1.78:1.

Covenants also limit capital expenditures, investments and transactions
with affiliates. The amended revolving credit agreement also limits the
company's prospective purchase of 11-3/4% senior subordinated notes to $15
million. The company is currently negotiating an amendment with the revolving
credit facility lenders to increase the amount of notes that can be purchased to
$50 million. These negotiations also include the reduction of the revolving
credit facility's commitment from $225 million to $175 million. It is
anticipated that this amendment will be obtained by mid to late March 1996.

(19) FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

The company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to manage
well-defined interest rate and transaction specific foreign exchange risks.

Interest rate cap agreements are used to reduce the potential impact of
increases in interest rates on floating rate long-term debt. At December 31,
1995, the company was party to three interest rate cap agreements which expire
in 1997 and 1998. The agreements entitle the company to receive from the
counterparties on a quarterly basis the amounts, if any, by which LIBOR exceeds
8.5% on $25,000 and 9.0% on $75,000.

The company enters into foreign exchange contracts to hedge specific
purchase and sale transactions involving more than one currency. The company's
forward exchange contracts and futures hedge transactions are principally
denominated in European currencies. Some of the contracts involve the exchange
of two foreign currencies, according to local needs in foreign subsidiaries. The
term of the currency derivatives is rarely more than six months. The purpose of
the company's foreign currency hedging activities is to protect the company from
the risk that the eventual total dollar net cash inflows resulting from
transactions will be adversely affected by changes in exchange rates. At
December 31, 1995, the company had no foreign exchanges contracts outstanding.
At December 31, 1994, the company had foreign exchange contracts maturing during
1995 to sell the equivalent of $718 and to purchase the equivalent of $718 in
foreign currency.

50
<PAGE> 52

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

OFF-BALANCE SHEET RISK

As collateral for performance on contracts and as credit guarantees to
banks and insurers, the company is contingently liable under standby letters of
credit in the amount of $22,467 and $26,406 at December 31, 1995 and 1994,
respectively. These standby letters of credit are generally in force for one
year, for which the company pays fees to various banks that generally range from
0 to 1.25 percent per annum of their face value. If the company was required to
obtain replacement standby letters of credit as of December 31, 1995 for those
currently outstanding, it is the company's opinion that the replacement costs
for such standby letters of credit would not significantly vary from the present
fee structure.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the company's financial instruments
at December 31 are as follows:

<TABLE>
<CAPTION>
1995 1994
--------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash and temporary investments.......... $ 17,069 17,069 $ 9,859 $ 9,859
Receivables............................. 130,171 130,171 128,544 128,544
Other assets (derivative)............... 159 11 431 950
Notes payable and current maturities of
long-term debt and Long-term debt..... (319,787) (336,376) (415,215) (413,915)
Off-Balance Sheet Financial Instruments:
Letters of Credit..................... -- (22,467) -- (26,406)
</TABLE>

The following methods and assumptions were used by the company in
estimating its fair value disclosures:

- Cash and temporary investments, and receivables: The carrying amount
reported on the consolidated balance sheet approximates its fair value
because of the short maturity of those instruments.

- Other assets (derivatives): The amount reported relates to the interest
rate cap agreements. The carrying amount comprises the unamortized
premiums paid for the contracts. The fair value is estimated using option
pricing models and essentially values the potential for the cap to become
in-the-money through changes in interest rates during the remaining term.

- Notes payable and current maturities of long-term debt and Long-term
debt: The fair value of the company's debt either approximates its
carrying value or is estimated based on quoted market prices.

- Letters of credit: The company utilizes letters of credit to back certain
financing instruments and insurance policies. The letters of credit
reflect fair value as a condition of their underlying purpose and are
subject to fees competitively determined in the marketplace.

RECEIVABLES SOLD WITH REPURCHASE AND RECOURSE PROVISIONS

The company retained certain repurchase and recourse liability related to
lease receivables sold to Textron Financial Corporation ("TFC"). As of December
31, 1995, approximately $12,000 of lease receivables held by TFC are subject to
recourse equal to their net lease balance. The company's allowance for this
recourse liability, net of the estimated recoverable value, was $3,200 at
December 31, 1995. Additionally, as of December 31, 1995, TFC holds
approximately $55,500 of net lease receivables that provide for limited

51
<PAGE> 53

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

repurchase liability to the company. The company's analysis indicates that this
limited repurchase liability approximates the estimated recoverable value.

The company retained limited recourse liability related to certain lease
receivables which were sold to financial institutions prior to 1994. In the
event of default by a lessee, the financial institution has recourse equal to
their net lease receivable. In return, the company receives the collateralized
lease equipment. At December 31, 1995 and 1994, financial institutions held
lease receivables, which are subject to limited recourse, of $7,586 and $20,365,
respectively. Correspondingly, allowances for recourse liabilities, net of
recoverable value, were $455 and $1,470 at December 31, 1995 and 1994.

The company has a three year agreement, expiring in April 1997, with a
financial institution whereby the company agreed to sell undivided fractional
interests in designated pools of domestic trade accounts receivable, in an
amount not to exceed $30,000. In order to maintain the balance in the designated
pools of trade accounts receivable sold, the company sells participating
interests in new receivables as existing receivables are collected. At December
31, 1995 and 1994, the company had sold $25,950 of trade accounts receivable
under this and previous programs. Under the terms of this agreement, the company
is obligated to pay fees which approximate the purchasers' cost of issuing a
like amount in commercial paper plus certain administrative costs. The amount of
such fees in 1995, 1994 and 1993 were $1,860, $1,390 and $1,215 respectively and
are included in other expense, net.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the company to significant
concentrations of credit risk consist principally of cash and temporary
investments, trade accounts receivable and its interest rate cap agreements.

Cash and temporary investments are placed with various high credit quality
financial institutions throughout the world and exposure is limited at any one
institution. The company periodically evaluates the relative credit standing of
these financial institutions.

Concentrations of credit risk arising from trade accounts receivable are
due to the company selling to a large number of customers operating in the motor
vehicle industry, particularly in the United States. The company performs
ongoing credit evaluations of its customers' financial conditions and does
obtain collateral or other security when appropriate. The company's three
largest customers including their divisions, dealers and distributors, General
Motors Corporation, Ford Motor Company and Chrysler Corporation, accounted for
approximately 37% of sales in 1995.

The company is exposed to credit losses in the event of nonperformance by
counterparties to its interest rate cap agreements, but has no off-balance-sheet
credit risk of accounting loss. The company anticipates, however, that
counterparties will be able to fully satisfy their obligations under the
contracts. The company does not obtain collateral or other security to support
financial instruments subject to credit risk but monitors the credit standing of
counterparties.

52
<PAGE> 54

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

(20) CAPITAL STOCK

Authorized shares of common stock (par value $10.00) total 50,000,000
shares. Common shares issued and outstanding are summarized in the table below.

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994 1993
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Issued........................................... 15,948 15,648 15,556
In treasury...................................... (1,633) (1,633) (1,633)
------ ------ ------
Outstanding...................................... 14,315 14,015 13,923
====== ====== ======
ESOP trust -- unallocated........................ 871 1,082 1,246
</TABLE>

The company's treasury stock was purchased in 1989 at an average cost of
$30 5/8 per share. The company has 3,000,000 shares of preferred stock, no par
value, authorized, but no shares have been issued.

In June 1989, the company established an employee stock ownership plan
(ESOP). 1,746,725 shares of common stock were issued to the ESOP trust in
exchange for $50,000. These shares were issued at market value ($28 5/8 per
share) and are included in common stock and paid in capital.

The company restated, amended and renamed its 1982 Stock Option Plan to the
1992 Stock Compensation Plan, effective December 15, 1992. Under the new Stock
Compensation Plan, up to 700,000 shares of the company's common stock may be
granted to key employees with those shares still available for use under the
1982 Stock Option Plan being carried forward and forming a part of the 700,000
shares. Awards of incentive stock options, nonqualified stock options, stock
appreciation rights (SAR's), performance units and restricted stock may be made
under the Plan although no more than 200,000 shares may be granted in the form
of restricted stock. The Plan also authorizes the granting of stock options to
directors.

Stock options may be granted to key employees in the form of incentive
stock options or nonqualified stock options at an option price per share of no
less than the fair market value of the common stock of the company on the date
of grant. The options become exercisable six months after the date of the grant
and expire no later than 10 years from the date of grant (or 10 years and 1 day
with respect to nonqualified stock options).

SAR's may be granted to key employees either in conjunction with the
awarding of nonqualified stock options or on a stand-alone basis. The SAR's
entitle the holder to receive a cash payment equal to the excess of the fair
market value of a share of common stock of the company over the exercise price
of the right at the date of exercise of the right.

Performance units, which are equivalent to a share of common stock, may be
granted to key employees and may be earned, in whole or in part, dependent upon
the attainment of performance goals established at the time of grant.

Restricted stock may be granted to key individuals to recognize or foster
extraordinary performance, promotion, recruitment or retention. At the time of
the grant, restrictions are placed on ownership of the shares for a stated
period of time during which a participant will not be able to dispose of the
restricted shares. Upon lapse of the restriction period, complete ownership is
vested in the participant and the shares become freely transferable.

53
<PAGE> 55

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

A summary of common stock options and restricted stock issued under the
company's stock compensation plans is as follows:

<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Stock Options:
Outstanding at beginning of year................. 1,080,225 924,300 877,140
Granted.......................................... 13,800 258,600 148,400
Exercised........................................ (111,025) (93,850) (21,903)
Surrendered/canceled............................. (96,800) (8,825) (79,337)
--------- --------- -------
Outstanding at end of year....................... 886,200 1,080,225 924,300
========= ========= =======
Price of options exercised and outstanding per
share......................................... $11.38- 11.38- 11.38-
28.00 28.00 28.00
Restricted Stock granted under 1992 Stock
Compensation Plan................................ 68,835 -- --
Shares reserved and available for future grants.... 206,777 192,612 442,387
</TABLE>

All options outstanding at December 31, 1995 can be exercised.

In 1995, the Board of Directors awarded the Chairman, President, and Chief
Executive Officer of the company, as part of his employment agreement, a ten
year non-qualified option to purchase 125,000 shares of common stock of the
company at a price equal to the closing price on the New York Stock Exchange on
the date of grant ($15.75 per share). The options, which are not a part of the
1992 Stock Compensation Plan, cannot be exercised until May 1996.

The company issued 125,000 shares of restricted common stock to the
Chairman, President, and Chief Executive Officer of the company, as part of his
employment agreement, in November 1995. The restricted shares will vest twenty
percent per year beginning December 1, 1996. These shares carry voting and
dividend rights; however, sale of the shares is restricted prior to vesting. The
restricted shares were recorded at their fair market value on the date of grant
with a corresponding charge to shareholders' equity representing the unearned
portion of the award. The unearned portion is being amortized as compensation
expense on a straight-line basis over the vesting period. The shares are not a
part of the 1992 Stock Compensation Plan.

Preferred stock is issuable in series with the Board of Directors having
the authority to determine, among other things, the stated value of each series,
dividend rate, conversion rights and preferences in liquidation or redemption.

On June 25, 1986, the company entered into a Rights Agreement which was
amended and restated as of October 20, 1988. Pursuant to the Rights Agreement,
in July 1986, the company issued a dividend of one preferred stock purchase
right on each outstanding share of common stock. Each right entitles the holder,
upon the occurrence of certain events, to purchase one one-hundredth of a share
of a new series of junior participating preferred stock for $100. Furthermore,
if the company is involved in a merger or other business combination at any time
after the rights become exercisable, the rights will entitle the holder to buy
the number of shares of common stock of the acquiring company having a market
value of twice the then current exercise price of each right. Alternatively, if
a 20% or more shareholder acquires the company by means of a reverse merger in
which the company and its stock survive, or engages in self-dealing transactions
with the company, or if any person acquires 20% or more of the company's common
stock, then each right not owned by a 20% or more shareholder will become
exercisable for the number of shares of common stock of the company having a
market value of twice the then current exercise price of each right. The rights,
which do not have voting rights, expire on July 15, 1996, and may be redeemed by
the company at a price of $.05 per right at any time prior to their expiration.

54
<PAGE> 56

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

(21) SPT AND SP EUROPE

The company consolidated SPT and SP Europe (unaudited) at December 31,
1993. Selected 1993 financial information on these entities was as follows:

<TABLE>
<CAPTION>
SP
SPT EUROPE
-------- --------
<S> <C> <C>
Revenues............................................... $391,600 $ 40,600
Gross profit........................................... 53,800 (4,000)
Selling, general & admin. expense...................... 28,200 9,100
Other (income), net.................................... (2,000) 500
-------- --------
Earnings before interest............................... $ 27,600 $(13,600)
Interest expense, net.................................. 27,100 900
-------- --------
Income (loss) before cumulative effect of change in
accounting method.................................... $ 500 $(14,500)
Cumulative effect of change in accounting method for
postretirement benefits.............................. (89,500) --
-------- --------
Income (loss).......................................... $(89,000) $(14,500)
======== ========
Depreciation and amortization.......................... 20,400 (1,000)
Capital expenditures, net.............................. 17,800 4,200
</TABLE>

(22) QUARTERLY RESULTS (UNAUDITED)

<TABLE>
<CAPTION>
1995
--------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Revenues........................... $275,769 $293,376 $268,790 $260,168 $1,098,103
Gross profit....................... 58,556 68,490 63,752 53,768 244,566
Income (loss) from continuing
operations....................... 201 3,572 4,204 (9,328)* (1,351)
Income (loss) from discontinued
operation........................ 121 63 (3,031) -- (2,847)
Extraordinary loss................. (72) (206) (471) (329) (1,078)
Net income (loss).................. 250 3,429 702 (9,657) (5,276)
Income (loss) per share:
Continuing operations............ $ .01 $ .28 $ .32 $ (.70) $ (.10)
Discontinued operation........... .01 .00 (.23) .00 (.22)
Extraordinary loss............... .00 (.02) (.04) (.03) (.08)
Net income (loss)................ .02 .26 .05 (.73) (.40)
</TABLE>

- ---------------

* Includes a pretax restructuring charge of $10,724 ($6,972 after-tax).

55
<PAGE> 57

SPX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995

<TABLE>
<CAPTION>
1994
--------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Revenues........................... $274,084 $285,807 $249,805 $270,174 $1,079,870
Gross profit....................... 64,749 70,013 62,658 60,945 258,365
Income from continuing
operations....................... 2,675 6,651 3,032 725 13,083
Income from discontinued
operation........................ 425 249 168 175 1,017
Net income......................... 3,100 6,900 3,200 900 14,100
Income per share:
Continuing operations............ $ .21 $ .52 $ .24 $ .06 $ 1.02
Discontinued operation........... .03 .02 .01 .01 .08
Net income....................... .24 .54 .25 .07 1.10
</TABLE>

<TABLE>
<CAPTION>
1993
--------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Revenues........................... $178,682 $210,760 $191,786 $165,943 $ 747,171
Gross profit....................... 56,906 69,060 61,972 51,201 239,139
Income (loss) from continuing
operations....................... 283 4,875 (20,811)* 28,767** 13,114
Income from discontinued
operation........................ 74 553 555 904 2,086
Cumulative effect of change in
accounting methods............... (31,800) -- -- -- (31,800)
Extraordinary loss................. -- -- -- (24,000) (24,000)
Net income (loss).................. (31,443) 5,428 (20,256) 5,671 (40,600)
Income (loss) per share:
Continuing operations............ $ .02 $ .39 $ (1.65) $ 2.27 $ 1.04
Discontinued operation........... .00 .04 .04 .07 .16
Cumulative effect of change in
accounting methods............ (2.52) -- -- -- (2.52)
Extraordinary loss............... -- -- -- (1.90) (1.90)
Net income (loss)................ (2.50) .43 (1.61) .44 (3.22)
</TABLE>

- ---------------

* Includes a pretax restructuring charge of $27,500 ($18,500 after-tax).

** Includes SP Europe equity losses, $21,500 after-tax, and a pretax gain on the
sale of businesses of $105,400 ($64,200 after-tax).

56
<PAGE> 58

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

(a) Directors of the company.

See the company's Proxy Statement, incorporated by reference as Part
III of this Form 10-K, under the caption "Election of Directors".

(b) Executive Officers of the company.

See Part I of this Form 10-K at page 10.

ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS

See the company's Proxy Statement, incorporated by reference as Part III of
this Form 10-K, under the headings "Compensation of Executive Officers" and
"Directors' Compensation".

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

See the company's Proxy Statement, incorporated by reference as Part III of
this Form 10-K, under the caption "Stock Ownership of Management and Certain
Beneficial Owners".

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Peter H. Merlin, a Director of the company, is a Partner of the law firm of
Gardner, Carton & Douglas which the company has retained in 1995 and many prior
years and anticipates retaining in 1996 and thereafter.

Albert A. Zagotta and Robert C. Huff were elected executive officers of the
company in 1994 as part of the transactions in which the company acquired full
ownership of Sealed Power Technologies Limited Partnership ("SPT") from Riken
Corporation. In April 1995, the company made payments for the shares of SPT
owned by Mr. Zagotta and Mr. Huff, who were formerly executive officers of SPT,
as well as four other managers of the former SPT businesses all as part of the
reacquisition transactions. Mr. Zagotta received $242,760.00, and Mr. Huff
received $277,440.00. The amounts were determined on the same basis per share as
was paid to Riken Corporation for its interests in SPT.

57
<PAGE> 59

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed, or incorporated by reference, as
part of this Form 10-K:

1. All financial statements. See Index to Consolidated Financial
Statements on page 26 of this Form 10-K.

2. Financial Statement Schedules. None required. See page 26 of this
Form 10-K.

3. Exhibits

<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION
-------- ----------------------------------------------------------------------
<C> <S>
2 Acquisition Agreement between SPX Corporation and Riken Corporation,
incorporated herein by reference from the company's Annual Report on
Form 10-K, file No. 1-6948, for the year ended December 31, 1993.
3(i) Restated Certificate of Incorporation, incorporated herein by
reference from the company's Annual Report on Form 10-K, file No.
1-6948, for the year ended December 31, 1987.
(ii) Certificate of Ownership and Merger dated April 25,1988, incorporated
herein by reference from the company's Annual Report on Form 10-K,
file No. 1-6948, for the year ended December 31, 1988.
(iii) By-Laws as amended through October 25, 1995, incorporated herein by
reference from the company's Quarterly Report on Form 10-Q, file No.
1-6948, for the quarter ended September 30, 1995.
4(i) Credit Agreement between SPX Corporation and The First National Bank
of Chicago, as agent for the banks named therein, dated as of March
24, 1994, incorporated herein by reference from the company's Annual
Report on Form 10-K, file No. 1-6948, for the year ended December 31,
1993.
(ii) 11 3/4% Senior Subordinated Notes due 2002, incorporated herein by
reference from the company's Amendment No. 2 to Form S-3 Registration
Statement 33-52833, filed on May 27, 1994.
(iii) Indenture, dated as of June 6, 1994, between the company and The Bank
of New York, as trustee, relating to the 11 3/4% Senior Subordinated
Notes due 2002, incorporated herein by reference from the company's
Amendment No. 2 to Form S-3 Registration Statement 33-52833, filed on
May 27, 1994.
(iv) Waiver and amendment No. 1 to Credit Agreement between SPX Corporation
and The First National Bank of Chicago, as agent for the banks named
therein, dated as of June 3, 1994, incorporated herein by reference
from the company's Quarterly Report on Form 10-Q, file No. 1-6948, for
the quarter ended March 31, 1995.
(v) Waiver and amendment No. 2 to Credit Agreement between SPX Corporation
and The First National Bank of Chicago, as agent for the banks named
therein, dated as of April 20, 1995, incorporated herein by reference
from the company's Quarterly Report on Form 10-Q, file No. 1-6948, for
the quarter ended March 31, 1995.
(vi) Waiver and amendment No. 3 to Credit Agreement between SPX Corporation
and The First National Bank of Chicago, as agent for the banks named
therein, dated as of December 12, 1995.
(vii) Waiver and amendment No. 4 to Credit Agreement between SPX Corporation
and The First National Bank of Chicago, as agent for the banks named
therein, dated as of February 28, 1996.
10(i) Sealed Power Corporation Executive Performance Unit Plan, incorporated
herein by reference from the company's Amendment No. 1 on Form 8 to
the Annual Report on Form 10-K, file No. 1-6948, for the year ended
December 31, 1988.
</TABLE>

58
<PAGE> 60

<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION
-------- ----------------------------------------------------------------------
<C> <S>
(ii) SPX Corporation Retirement Plan for Directors, as amended and
restated, incorporated herein by reference from the company's
Amendment No. 1 on Form 8 to the Annual Report on Form 10-K, file No.
1-6948, for the year ended December 31, 1988.
(iii) SPX Corporation Supplemental Retirement Plan for Top Management, as
amended and restated, incorporated herein by reference from the
company's Amendment No. 1 on Form 8 to the Annual Report on Form 10-K,
file No. 1-6948, for the year ended December 31, 1988.
(iv) SPX Corporation Excess benefit Plan No. 3, as amended and restated,
incorporated herein by reference from the company's Amendment No. 1 on
Form 8 to the Annual Report on Form 10-K, file No. 1-6948, for the
year ended December 31, 1988.
(v) SPX Corporation Executive Severance Agreement, incorporated herein by
reference from the company's Amendment No. 1 on Form 8 to the Annual
Report on Form 10-K, file No. 1-6948, for the year ended December 31,
1988.
(vi) SPX Corporation Trust Agreement for Supplemental Retirement Plan for
Top Management, Excess Benefit Plan No. 3, and Retirement Plan for
Directors, incorporated herein by reference from the company's
Amendment No. 1 on Form 8 to the Annual Report on Form 10-K, file No.
1-6948, for the year ended December 31, 1988.
(vii) SPX Corporation Trust Agreement for Participants in Executive
Severance Agreements, Special Separation Pay Plan for Corporate Staff
Executive Personnel Agreements and Special Separation Pay Plan for
Corporate Staff Management and Administrative Personnel Agreements,
incorporated herein by reference from the company's Amendment No. 1 on
Form 8 to the Annual Report on Form 10-K, file No. 1-6948, for the
year ended December 31, 1988.
(viii) SPX Corporation Stock Compensation Plan Limited Stock Appreciation
Rights Award, incorporated herein by reference from the company's
Amendment No. 1 on Form 8 to the Annual Report on Form 10-K, file No.
1-6948, for the year ended December 31, 1988.
(ix) SPX Corporation Stock Ownership Plan, incorporated herein by reference
from the company's Current Report on Form 8-K, file No. 1-6948, filed
on July 26, 1989.
(x) SPX Corporation Stock Ownership Trust, incorporated herein by
reference from the company's Current Report on Form 8-K, file No.
1-6948, filed on July 26, 1989.
(xi) SPX Corporation 1992 Stock Compensation Plan, incorporated herein by
reference from Exhibit 10(iii)(n) to the company's Annual Report on
Form 10-K, file No. 1-6948, for the year ended December 31, 1992.
(xii) SPX Corporation Supplemental Employee Stock Ownership Plan,
incorporated herein by reference from the company's Annual Report on
Form 10-K, file No. 1-6948, for the year ended December 31, 1990.
(xiii) Sealed Power Technologies L.P. Retirement Fund, incorporated herein by
reference from Exhibit 10(viii) to SPT's and SPT Corp.'s Annual Report
on Form 10-K, file No. 33-27994, for the year ended December 31, 1989.
(xiv) Sealed Power Technologies L.P. Pension Plan No. 302, incorporated
herein by reference from Exhibit 4(ix) to SPT's and SPT Corp.'s Annual
Report on Form 10-K, file No. 33-27994, for the year ended December
31, 1989.
(xv) Employment agreement, and related Nonqualified Stock Option Agreement
and Restricted Shares Agreement, between SPX Corporation and John B.
Blystone dated as of November 24, 1995.
11 Statement regarding computation of earnings per share. See
Consolidated Statements of Income, page 29 of this Form 10-K.
21 Subsidiaries.
</TABLE>

59
<PAGE> 61

<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION
-------- ----------------------------------------------------------------------
<C> <S>
23 Consent of Independent Public Accountants.
27 Financial data schedule.
99 Consolidated Financial Statements of SPT and SPT Corp., incorporated
herein by reference from SPT's and SPT Corp.'s Annual Report on Form
10-K, file No. 33-27994, for the year ended December 31, 1993.
</TABLE>

(b) Reports on Form 8-K.

The Company, on October 11, 1995, filed Form 8-K which provided the
information regarding the sale of SPX Credit Corporation.

60
<PAGE> 62

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 27th day of
March, 1996.

SPX CORPORATION
(Registrant)

By /s/ WILLIAM L. TRUBECK
------------------------------------
William L. Trubeck
Senior Vice President, Finance,
Chief Financial Officer and
Accounting Officer

POWER OF ATTORNEY

The undersigned officers and directors of SPX Corporation hereby severally
constitute John B. Blystone, James M. Sheridan or William L. Trubeck and each of
them singly our true and lawful attorneys, with full power to them and each of
them singly, to sign for us in our names in the capacities indicated below the
Annual Report on Form 10-K filed herewith and any and all amendments thereto,
and generally to do all such things in our name and on our behalf in our
capacities as officers and directors to enable SPX Corporation to comply with
the provisions of the Securities Exchange Act of 1934, as amended, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any
one of them, on the Annual Report on Form 10-K and any and all amendments
thereto.

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the undersigned have signed this report on this 27th day
of March, 1996.

/s/ JOHN B. BLYSTONE /s/ WILLIAM L. TRUBECK
- -------------------------------------- --------------------------------------
John B. Blystone William L. Trubeck
Chairman, President and Senior Vice President,
Chief Executive Officer Finance, Chief Financial
Director and Accounting Officer

/s/ J. KERMIT CAMPBELL /s/ SARAH R. COFFIN
- -------------------------------------- --------------------------------------
J. Kermit Campbell Sarah R. Coffin
Director Director

/s/ FRANK A. EHMANN /s/ EDWARD D. HOPKINS
- -------------------------------------- --------------------------------------
Frank A. Ehmann Edward D. Hopkins
Director Director

/s/ CHARLES E. JOHNSON II /s/ RONALD L. KERBER
- -------------------------------------- --------------------------------------
Charles E. Johnson II Ronald L. Kerber
Director Director

/s/ PETER H. MERLIN /s/ DAVID P. WILLIAMS
- -------------------------------------- --------------------------------------
Peter H. Merlin David P. Williams
Director Director

<PAGE> 1
EXHIBIT 3.4(vi)

AMENDMENT NO. 3 TO CREDIT AGREEMENT

This Amendment No. 3 to Credit Agreement ("Amendment No. 3") dated as
of December 12, 1995 is made by and among SPX Corporation, a Delaware
corporation (the "Borrower"), each of the Lenders and The First National Bank
of Chicago, individually and as agent for the Lenders.

RECITALS
A. The parties hereto are party to a certain Credit Agreement dated
as of March 24, 1994 (as heretofore amended, the "Credit Agreement"). Each
capitalized term used but not otherwise defined herein shall have the meaning
ascribed to such term in the Credit Agreement.

B. The parties hereto desire to enter into this Amendment No. 3
in order to give effect to and permit certain restructuring changes
contemplated by the Borrower.

NOW, THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the Agent,the Lenders and the Borrower
agree as follows:

1. AMENDMENTS.

1.1 Amendment of Section 6.29.2. Section 6.29.2(b) of the Credit
Agreement is amended by deleting the ratio of 2.5 to 1.0 set forth therein
opposite the period "as of the end of the fourth fiscal quarter in fiscal year
1995, for the trailing four fiscal quarter period then ended" and inserting in
lieu thereof the ratio "1.70 to 1.0."

1.2 Amendment of Section 6.29.3. Section 6.29.3(b) of the Credit
Agreement is deleted in its entirety and the following is added in substitution
therefor:

"(b) During the Alternate Permanent Facility Term, maintain a Fixed
Charge Coverage Ratio of not less than the following for the following
respective periods:

Period Ratio
------ -----
<S> <C>
As of the end of the fourth fiscal quarter
in fiscal year 1995, for the trailing four fiscal
quarter period then ended 1.50 to 1.0

As of the end of each fiscal quarter in fiscal
year 1996, for the trailing four fiscal quarter
period then ended 2.0 to 1.0."

</TABLE>

1.3 Amendment of Section 6.32. Section 6.32 of the Credit
Agreement is deleted in its entirety and the following is added in substitution
therefor:

"6.32. Subordinated Debt Documents. The Borrower will not make any
amendment or modification of any Subordinated Debt Documents, nor shall the
Borrower, on or after December 12, 1995, directly or indirectly voluntarily
prepay, defease, or in substance defease, purchase, redeem, retire, or
otherwise acquire any of the Indebtedness evidenced by the Subordinated Notes in
an aggregate amount exceeding $15,000,000."

2. Representations and Warranties. The Borrower represents and
warrants that: (a) this Amendment No. 3 is a legal, valid and binding
obligation of the Borrower enforceable against it in accordance with its terms,
except as the enforcement thereof may be subject to (i) the effect of any
<PAGE> 2
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors, rights generally, and (ii) general principals of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law); and (b) after giving effect to the execution of this Amendment No. 3,
no Default or Unmatured Default has occurred and is continuing.

3. Effective Date. The amendments contained in this
Amendment No. 3 shall become effective only upon receipt by the Agent (with
sufficient copies for the Lenders) of written agreement thereto by the Agent,
the Required Lenders and the Borrower.

4. Effect of Amendment. Upon execution of this Amendment No. 3,
each reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof," "herein," or words like import, and each reference to the Credit
Agreement in any of the other Loan Documents shall mean and be a reference to
the Credit Agreement as amended hereby. Except as specifically set forth
above, the Credit Agreement, the Exhibits and Schedules thereto and the Notes
shall remain unaltered and in full force and effect and the respective terms,
conditions or covenants thereof are hereby in all respects ratified and
confirmed.

5. Counterparts. This Amendment No. 3 may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one instrument.

6. Governing Law. This Amendment No. 3 shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts) of
the State of Illinois, but giving effect to federal laws applicable to national
banks.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3
to be executed by their duly authorized representatives as of the date first
written above.

SPX CORPORATION

By: W. L. Trubeck
---------------------------

Title: Sr. Vice President, Finance
---------------------------
and Chief Financial Officer
---------------------------
THE FIRST NATIONAL BANK OF
CHICAGO, individually as a Lender and
as Agent

By: Patricia N. Besser
----------------------------

Title: Vice President
-----------------------------
<PAGE> 3
THE BANK OF NEW YORK,
as Lender

By: John M. Lokay, Jr.
--------------------------

Title: Vice President
-----------------------

NBD BANK, N.A., as Lender

By: William C. Goodhue
--------------------------

Title: Vice President
-----------------------

THE BANK OF NOVA SCOTIA,
as Lender

By: F.C.H. Ashby
--------------------------

Title: Senior Manager
Loan Operations
-----------------------

MICHIGAN NATIONAL BANK,
as Lender

By: Joseph M. Redoutey
--------------------------

Title: Vice President
-----------------------

SUMITOMO BANK, as Lender

By: H. Iwami
--------------------------

Title: Joint General Manager
-----------------------

THE YASUDA TRUST & BANKING
CO., LTD., as Lender

By: Joseph C. Meek
--------------------------

Title: First Vice President
& Manager Corporate
Finance Department
-----------------------

MITSUBISHI TRUST & BANKING
CORPORATION, as Lender

By: Akira Suzuki
--------------------------

Title: General Manager
-----------------------

<PAGE> 4

COMERICA BANK,as Lender

By: Renee D. Weinman
-------------------
Title: Vice President
-----------------

OLD KENT BANK & TRUST
COMPANY, as Lender

By: Richard K. Russo
--------------------
Title: Vice President
-----------------

BANK OF TOKYO TRUST, as
Lender

By: Friedrich N. Wilms
--------------------
Title: Vice President
-----------------

<PAGE> 1
EXHIBIT 3.4(vii)

AMENDMENT NO. 4 TO CREDIT AGREEMENT

This Amendment No. 4 to Credit Agreement ("Amendment No. 4") dated as
of February 28, 1996 is made by and among SPX Corporation, a Delaware
corporation (the "Borrower"), each of the undersigned Lenders and The First
National Bank of Chicago, individually and as agent for the Lenders.

RECITALS

A. The parties hereto are party to a certain Credit Agreement
dated as of March 24, 1994 (as heretofore amended, the "Credit Agreement").
Each capitalized term used but not otherwise defined herein shall have the
meaning ascribed to such term in the Credit Agreement.

B. The parties hereto desire to enter into this Amendment No. 4 in
order to give effect to and permit certain restructuring changes contemplated
by the Borrower.

NOW, THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the Agent, the Required Lenders and the
Borrower agree as follows:

1. Amendments.

1.1 Amendment of Section 6.29.2. Section 6.29.2(b) of the Credit
Agreement is deleted in its entirety and the following is added in substitution
therefor:

"(b) During the Alternate Permanent Facility Term, maintain an Interest
Expense Coverage Ratio of not less than the following for the following
respective periods:

Period Ratio

As of the end of each of the first three fiscal
quarters ending in fiscal year 1996,
for the trailing four fiscal quarter
period then ended 1.75 to 1.0

As of the end of the fiscal quarter ending
December 31, 1996, for the trailing four
fiscal quarter period then ended 2.25 to 1.0

As of the end of each fiscal quarter
ending thereafter 3.0 to 1.0"

1.2 Amendment of Section 6.29.3. Section 6.29.3(b) of the Credit
Agreement is deleted in its entirety and the following is added in substitution
therefor:

"(b) During the Alternate Permanent Facility Term, maintain a Fixed
Charge Coverage Ratio of not less than the following for the following
respective periods:

Period Ratio

As of the end of each of the fiscal
quarters ending in fiscal year 1996,
for the trailing four fiscal quarter
period then ended 1.5 to 1.0
<PAGE> 2
As of the end of each fiscal quarter
ending thereafter 2.0 to 1.0"

2. Representations and Warranties. The Borrower represents and
warrants that: (a) this Amendment No. 4 is a legal, valid and binding
obligation of the Borrower enforceable against it in accordance with its terms,
except as the enforcement thereof may be subject to (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally, and (ii) general principals of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law); and (b) after giving effect to the execution of this Amendment No. 4,
no Default or Unmatured Default has occurred and is continuing.

3. Effective Date. The amendments contained in this Amendment No. 4
shall become effective only upon receipt by the Agent (with sufficient copies
for the Lenders) of written agreement thereto by the Agent, the Required
Lenders and the Borrower.

4. Effect of Amendment. Upon execution of this Amendment No. 4, each
reference in the Credit Agreement to "this Agreement," "hereunder," "hereof,"
"herein," or words like import, and each reference to the Credit Agreement in
any of the other Loan Documents shall mean and be a reference to the Credit
Agreement as amended hereby. Except as specifically set forth above, the
Credit Agreement, the Exhibits and Schedules thereto and the Notes shall remain
unaltered and in full force and effect and the respective terms, conditions or
covenants thereof are hereby in all respects ratified and confirmed.

5. Counterparts. This Amendment No. 4 may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute one instrument.

6. Governing Law. This Amendment No. 4 shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts)
of the State of Illinois, but giving effect to federal laws applicable to
national banks.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4
to be executed by their duly authorized representatives as of the date first
written above.

SPX CORPORATION

By: W.L. Trubeck
------------------------------

Title: Sr. Vice President, Finance
and Chief Financial Officer
---------------------------

THE FIRST NATIONAL BANK OF
CHICAGO, individually as a
Lender and as Agent

By: Patricia H. Besser
------------------------------

Title: Vice President
---------------------------
<PAGE> 3

THE BANK OF NEW YORK, as Lender

By: John M. Lokay, Jr.
---------------------------
Title: Vice President
------------------------

NBD BANK, N.A., as Lender

By: William C. Goodhue
---------------------------------

Title: Vice President
------------------------------

THE BANK OF NOVA SCOTIA,
as Lender

By: F.C.H. Ashby
---------------------------------

Title: Senior Manager Loan Operations
------------------------------

MICHIGAN NATIONAL BANK,
as Lender

By: Joseph M. Redoutey
---------------------------------

Title: Vice President
------------------------------

SUMITOMO BANK, as Lender

By: James W. Semonchik
--------------------------------
Title: Senior Vice President
-----------------------------

THE YASUDA TRUST & BANKING
CO., LTD., as Lender

By: ________________________________

Title: _____________________________

MITSUBISHI TRUST & BANKING
CORPORATION, as Lender

By: Masaaki Yamagishi
---------------------------------
Title: Chief Manager
------------------------------

<PAGE> 4

COMERICA BANK, as Lender

By: James R. Grossett
---------------------------
Title: Vice President
------------------------

OLD KENT BANK & TRUST
COMPANY, as Lender

By: ___________________________

Title: ________________________

BANK OF TOKYO TRUST,
as Lender

By: Friedrich N. Wilms
---------------------------
Title: Vice President
------------------------

<PAGE> 1
SPX CORPORATION 700 Terrace Point Drive Phone 616-724-5000
P.O. Box 3301 Fax 616-724-5720
Muskegon, MI 49443-3301

Exhibit 10 (xv)

November 24, 1995

CONFIDENTIAL

Mr. John B. Blystone
Largo Olgista, 15
Isola 80/C1
00123 Olgista (Rome) Italy

Dear John:

On behalf of the Board of Directors of SPX Corporation, I am pleased to offer
you the Chief Executive Officer position at SPX. The following are the
specifics:

I. Title

Chairman, President and Chief Executive Officer and member of the Board
of Directors

II. Base Salary

$450,000; reviewed annually with any increase to become part of base
salary.

III. Annual Bonus and Long-Term Incentives

The Company will be implementing the EVA (Economic Value Added)
Performance Measurement System. The concept was approved by the Board
of Directors at its November 15, 1995 meeting. Now, the senior
management team will be responsible for developing the details of the
plan that will affect you, as the new CEO, and other key executives
of the Company. It is anticipated that the target pay-out for the CEO
will be approximately $500,000 annually paid in cash, stock options
and/or restricted stock. For the year ending December 31, 1996, we will
guarantee you a minimum $250,000 cash award that will be paid during the
first quarter of 1997.

IV. Stock Options

125,000 shares of common stock with an option price set at 100 percent
of the fair market value on the date of the grant (the day you accept in
writing this offer). The total option is exercisable any time after six
months and will expire ten years from the date of the option grant.

<PAGE> 2
Mr. John B. Blystone
November 24, 1995
Page 2

V. Restricted Stock

125,000 shares of common stock that vest 20 percent per year on
December 1, 1996 and each successive anniversary date. Therefore, 25,000
shares will vest December 1, 1996, another 25,000 shares on December 1,
1997, etc. Further, you will receive all dividends on all restricted
shares as dividends are paid to all shareholders.

VI. Additional Benefits

You will receive a "make-whole" payment, in addition to the initial
restricted stock award described above, of $500,000 in cash; $80,000 of
this cash payment will not be paid if your current employer pays the
forfeitable deferred bonus of $80,000. Therefore, $420,000 will be paid
when you begin employment with SPX (anticipated to be December 18, 1995).
If your current employer does not pay the $80,000, it will be paid to you
on February 29, 1996.

VII. Fringe Benefits

Effective with the date of your employment, you and your family will
immediately enroll in all SPX fringe benefit programs, with no waiting
periods under the company's health insurance programs.

VIII. Special Retirement Plans

A. Defined Benefit Qualified Plan plus Supplemental Executive Retirement
Plan (SERP)

SERP provides opportunity to earn double years of service for up to 15
years (30 years of plan service for 15 years of actual service).
Pension benefit for 30 years of plan service is 58 percent of final
average pay less; Social Security, benefit from the SPX Qualified Plan
and benefits (if any) from another employer's plan. Final average pay
includes salary plus annual bonus (highest three years in last ten).
Your SERP will vest after five years of plan service.

B. Retirement Savings Plan (RSP) plus Supplemental Retirement Savings Plan

* Company match on first 6 percent of savings is 4.5 percent.

* An additional 9 percent of savings (unmatched) allowed.

<PAGE> 3
Mr. John B. Blystone
November 24, 1995
Page 3

* Supplemental Plan allows tax-deferred savings and company match to
continue even when annual Qualified Plan limits are reached in the
Qualified Plan.

IX. Perquisites

* Company leased automobile.

* Country Club membership (50 percent of full membership dues and full
initiation fee).

* Annual physical examination.

* Officer vacation policy.

X. Termination Agreement

Mr. Blystone's employment may be terminated by SPX if the Board
determines that "cause" for such termination exists, and SPX furnishes
30 days' prior written notice of such termination. The term "cause"
refers only to any one or more of the following grounds:

* Commission of an act materially and demonstrably detrimental to the
good will of SPX or any subsidiary of SPX, which act constitutes
gross negligence or willful misconduct by Mr. Blystone in the
performance of his material duties to SPX;

* Commission of any material act of dishonesty or breach of trust
resulting or intending to result in material personal gain or
enrichment of Mr. Blystone at the expense of SPX, or any subsidiary
of SPX;

* Mr. Blystone's conviction of a felony;

Mr. Blystone's employment may be terminated by SPX without cause and
for any reason after January 31, 1999 subject to any then existing
employment contract or other agreement covering his employment or his
termination.

Mr. Blystone's employment may be terminated by him at any time prior to
January 31, 1999 if he determines that "good reason" for such
termination exists and he furnishes 30 days' prior written notice of
such termination to SPX. The term "good reason" refers to any one or
more of the following grounds:
<PAGE> 4
Mr. John B. Blystone
November 24, 1995
Page 4

* Substantial reduction by SPX (over the objection of Mr. Blystone) in
Mr. Blystone's duties, authority, title, status, or a reduction in
Mr. Blystone's base salary.

* The failure by SPX to pay the base salary, bonus or other
compensation required hereunder.

* The failure of SPX and Mr. Blystone to reach by October 31, 1998 a
mutually satisfactory agreement with respect to the terms and
conditions of his employment subsequent to January 31, 1999.

* For any reason (or no reason) during the sixty-day period following
the date of a "change of control" of SPX occurs. "Change of control"
shall be deemed to have occurred if:

a) Any "person" (as defined in Section 13(d) and 14(d) of the
Exchange Act), excluding for this purpose, the Company or any
subsidiary of the Company, or any employee benefit plan of the
Company or any subsidiary of the Company, or any person or
entity organized, appointed or established by the Company for
or pursuant to the terms of such plan which acquires beneficial
ownership of voting securities of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly of securities of the
Company representing twenty percent (20%) or more of the
combined voting power of the Company's then outstanding
securities;

b) During any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement),
individuals who at the beginning of such two-year period
constitute the Board of Directors of the Company and any new
director (except for a director designated by a person who
has entered into an agreement with the Company to effect a
transaction described elsewhere in this section) whose election
by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors
at the beginning of the period or whose election or nomination
for election was previously approved, cease for any reason to
constitute at least a majority thereof; or

c) The shareholders of the Company approve a plan of complete
liquidation of the Company, an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets, or a plan of merger or consolidation of the
Company with any other corporation, except for a merger or
consolidation in which the security owners of the Company
immediately prior to the merger or consolidation continue to
own at least eighty percent (80%) of the voting securities of
the new (or continued) entity immediately after such merger or
consolidation;

<PAGE> 5
Mr. John B. Blystone
November 24, 1995
Page 5

d) Any person, other than the Company, purchases securities
pursuant to an exchange or tender offer for securities of
the Company representing twenty-five percent (25%) or
more of the combined voting power of the Company's then
outstanding securities.

If Mr. Blystone's employment is terminated for other than "cause" or if
Mr. Blystone terminates his employment for "good reason," Mr. Blystone
will

* be paid a target bonus for the year of termination prorata
through the date of termination;

* be paid his base salary as then in effect for a three-year
period;

* be paid three times Mr. Blystone's target bonus for the year
of termination payable prorata at the times bonuses are
customarily paid;

* immediately be fully vested in all unvested options to
purchase shares of SPX stock which options shall be
exercisable by Mr. Blystone for a period of two years after
such date;

* immediately be fully vested in all shares of restricted SPX
stock and all restrictions shall terminate;

* immediately be fully vested in any other equity or incentive
compensation awards;

* immediately be fully vested in his SERP benefits;

* will during the three-year period following his termination
continue to receive health, life and disability insurance
benefits, but only to the extent that he does not obtain
similar benefits paid by a third party;

* will be provided with outplacement services from a provider
reasonably selected by Mr. Blystone as are then customarily
provided by other companies to their similarly situated
executives.

SPX shall reimburse Mr. Blystone for the amount of any excise taxes
paid by Mr. Blystone (net of any tax benefits received) pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended, which
taxes are so paid as respects payments to Mr. Blystone under the
"change of control" provisions, including this provision.
<PAGE> 6
Mr. John B. Blystone
November 24, 1995
Page 6

XI. Death or Disability

If Mr. Blystone dies or becomes totally and permanently disabled, he will:

* Immediately be fully vested in all unvested options to purchase shares
of SPX stock which options shall be exercisable by Mr. Blystone or his
estate for a period of two years after such date;

* immediately be fully vested in all shares of restricted SPX stock and
all restrictions shall terminate;

* immediately be fully vested in any other equity or incentive
compensation awards.

XII. Other

Mr. Blystone's salary, benefits and other terms and conditions of
employment will not be less favorable than other executives at the time of
this agreement. In no event will Mr. Blystone have less than 90 days
following the termination of his employment (regardless of the reason) to
exercise any stock options which were vested on the date of termination.

XIII. Relocation

SPX will pay all of the costs of relocating Mr. Blystone and his family to
a new home in the greater Muskegon, Michigan area. (However, if his
current employer pays all or part of the costs, SPX will pay only the
difference.) Relocation is generally defined as the packing and shipping
of household goods, the payment of real estate fees/commissions, as well
as legal fees in the purchase of a new home in the greater Muskegon area.
Before Mr. Blystone's family moves to the Muskegon area, interim housing
will be provided by SPX. During this time, reasonable trips to Rome to be
with his family will also be included.

John, while this letter is a little bit lengthy, I want to make sure that the
details of our understanding are spelled out. Please sign a copy of this letter
indicating that you accept our offer, and return it to me by fax.

Sincerely

/s/ Charles E. Johnson, II
---------------------------
Charles E. Johnson, II
Chief Executive Officer

ACCEPTED

/s/ John B. Blystone
- -----------------------
John B. Blystone
Nov. 24, 1995
<PAGE> 7
SPX CORPORATION/JOHN B. BLYSTONE
NONQUALIFIED STOCK OPTION AGREEMENT

THIS AGREEMENT is made as of December 18, 1995, by and between SPX
CORPORATION ("SPX") and JOHN B. BLYSTONE ("Executive").

1. Grant of Option. As an inducement to secure Executive's
acceptance of the position of Chairman, president and Chief Executive Officer,
SPX hereby grants to Executive an option (the "Option") to purchase 125,000
shares of its common stock, $10 par value (the "Common Stock") at the purchase
price of $15.75 per share (the "Purchase Price"), in the manner and subject to
the conditions hereinafter provided. The Compensation Committee of the Board of
Directors (the "Committee") may make such determinations and reasonable
interpretations with respect to this Option as it deems necessary or advisable.

2. Time of Exercise of Option. This Option may be exercised in
whole or in part at any time and from time to time after June 18, 1996 and
prior to its expiration date of December 17, 2005.

3. Manner of Exercise. The Option may be exercised by written
notice which shall:

(a) state the election to exercise the Option and the
number of shares in respect of which it is being exercised;

(b) be signed by Executive or such other person or persons
entitled to exercise the Option;

(d) be accompanied by payment in full of the Purchase Price
for the shares to be purchased. Payment may be made by (i) check, bank draft,
money order or other cash payment, or (ii) delivery of previously-acquired
shares of Common Stock with a fair market value as of the exercise date equal
to the Purchase Price (or a combination of (i) and (ii)). The fair market value
of the Common Stock for this purpose shall be the closing price of a share of
Common Stock as reported in the "NYSE-Composite Transactions" section of the
Midwest Edition of The Wall Street Journal for the exercise date or, if no
prices are quoted for such date, on the next preceding date on which such
prices of Common Stock are so quoted.

4. Termination of Option. This Option shall terminate immediately
if Executive's employment with SPX is terminated for cause as defined in
Paragraph X of the letter agreement dated November 24, 1995. Any unexercised
portion of this Option that has not terminated pursuant to the preceding
sentences may be exercised by Executive within 24 months after the date on which
Executive's employment relationship terminates, provided that in the event of
Executive's death the Option may be exercised only by Executive's
legally-appointed executor or administrator or other legal representative.
<PAGE> 8
5. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option may not be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. The Option shall be
exercisable during the Executive's lifetime only by him. No person shall have
any rights as a stockholder with respect to the shares of Common Stock until
exercise of the Option and delivery of the shares as herein provided.

6. ADJUSTMENT IN EVENT OF HAPPENING OF CONDITION. In the event of any
change in the outstanding shares of Common Stock that occurs by reason of a
stock dividend or split, recapitalization, merger, consolidation, combination,
exchange of shares, or other similar corporate change, the aggregate number of
shares of Common Stock subject to the Option, and the Purchase Price, shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive; provided, however, that fractional shares shall be rounded to the
nearest whole share.

7. NO CONTRACT OF EMPLOYMENT. Nothing contained in this Agreement shall
be construed as a contract of employment between SPX and Executive, or as a
right of Executive to be continued in the employment of SPX or as a limitation
of SPX's right to discharge Executive with or without cause. Except as
expressly provided herein, this Agreement shall not be construed as a term or
condition of his employment and, in particular, it shall neither confer upon
Executive any additional rights or privileges over his existing terms and
conditions of employment nor shall it entitle Executive to additional
compensation or damages upon termination of employment.

8. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective executors, administrators,
legal representatives, successors and assigns. This Agreement may be amended
only by mutual agreement of the Committee and Executive.

9. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Michigan.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
<TABLE>
<S> <C>
SPX CORPORATION EXECUTIVE

/s/ James M. Sheridan /s/ John B. Blystone
- ---------------------------------- -----------------------------
James M. Sheridan John B. Blystone

Title: Vice President/Secretary
---------------------------
</TABLE>
<PAGE> 9
SPX / BLYSTONE
RESTRICTED SHARES AGREEMENT

AGREEMENT entered into December 18, 1995 by and between SPX
CORPORATION, a Delaware corporation ("SPX") and John B. Blystone, hereinafter
called "Blystone", and premised upon the following circumstances:

As an inducement to secure Blystone's acceptance of the position of
Chairman, President and Chief Executive Officer of SPX Corporation, the Board
of Directors has determined to award Blystone 125,000 shares of SPX Common
Stock, $10.00 par value, upon the terms and conditions set forth in this
Agreement.

NOW, THEREFORE, in consideration of the premises set forth above and of
the mutual covenants of the parties hereinafter set forth, the adequacy of
which is acknowledged, the parties agree as follows:

1. GRANT

SPX grants to Blystone 125,000 shares of common stock of SPX
Corporation, $10,00 par value, effective December 18, 1995, subject to
the conditions hereinafter set forth.

2. VESTING PERIOD

Blystone's right, title and interest in the Restricted Shares shall
become vested only as to, and to the extent, such Restricted Shares
become distributable pursuant to Paragraph 6.

3. RESTRICTED PERIOD

The Restricted Shares held by the Secretary of SPX, as provided in
Paragraph 5, and not yet distributed to Blystone, as provided in
Paragraph 6, may not be sold, assigned, transferred, pledged or
otherwise encumbered by Blystone.

4. RIGHTS TO RECEIVE DIVIDENDS AND TO VOTE SHARES

Notwithstanding the restrictions on the transfer provided for in
Paragraph 3 and the vesting requirements under Paragraph 2, Blystone,
as owner of such Restricted Shares, shall have all the rights of a
holder of SPX Common Stock, including, but not limited to the right to
receive dividends paid on such Restricted Shares and the right to vote
such Restricted Shares.

<PAGE> 10
SPX/Blystone
Restricted Share Agreement Page 2

5. DEPOSIT OF RESTRICTED SHARES WITH SPX

Each certificate issued in respect to the Restricted Shares granted
under Paragraph 1 shall be registered in the name of Blystone and
deposited by him, together with a stock power endorsed in blank, with
the Secretary of SPX and shall bear the following legend:

"The transferability of this certificate and these shares
of stock represented hereby are subject to the terms and
conditions (including forfeiture) contained in an
Agreement entered into between the registered owner and
SPX dated December 18, 1995. A copy of the Agreement is
on file in the office of the Secretary of SPX."

6. DISTRIBUTION OF RESTRICTED SHARES

The Restricted Shares held by SPX pursuant to Paragraph 5 shall be
distributed to Blystone or his legal representative as follows:

25,000 shares on December 1, 1996
25,000 shares on December 1, 1997
25,000 shares on December 1, 1998
25,000 shares on December 1, 1999
25,000 shares on December 1, 2000

provided, that all or any portion of such installment shall be deferred
until the immediately following January 1 to the extent that the
Company determines that the deferral, in and of itself, would reduce
the amount of Blystone's compensation that would otherwise be
nondeductible by the Company under Internal Revenue Code Section 162(m),
or any successor provision.

Notwithstanding the provisions of Paragraphs 2 and 6, all Restricted
Shares heretofore granted and not previously distributed shall become
fully vested and shall be distributed immediately in the event of:

(i) Blystone's employment is terminated prior to January 31,
1999 without "cause" as defined in Paragraph X of the
letter agreement of November 24, 1995, a copy of which
is attached hereto as "Exhibit A"; or

(ii) Blystone elects to terminate his employment prior to
January 31, 1999 for "good reason" as defined in
Paragraph X of the letter agreement of November 24,
1995 (Exhibit A); or

(iii) Blystone elects to terminate his employment at any time
during the sixty-day period following the date a
"change of control" of SPX as defined in Paragraph X of
the letter agreement of November 24, 1995 (Exhibit A).

<PAGE> 11
SPX/Blystone
Restricted Share Agreement Page 3

7. CONTINUED EMPLOYMENT

Except as set forth in Paragraph 6, in the event that Blystone's employment
with SPX terminates for a reason other than Total and Permanent Disability
(as defined by the SPX Corporation Long-Term Disability Plan) or death, all
Restricted Shares heretofore granted to him and not previously distributed
pursuant to Paragraph 6 shall be forfeited and returned to SPX for
cancellation on the date of termination.

8. TOTAL AND PERMANENT DISABILITY OR DEATH

Notwithstanding any other provision of the Agreement to the contrary, in the
event that Blystone, while an active employee of SPX, sustains a Total and
Permanent Disability (as defined by the SPX Corporation Long-Term Disability
Plan) or dies prior to the end of the Distribution Period described in
Paragraph 6, the Restricted Shares not previously distributed shall be
promptly distributed to Blystone, his legal representative or his estate.

9. GENERAL PROVISIONS

(a) This Agreement is subject to all applicable securities and tax laws of
the United States.

(b) SPX shall have the right to deduct and withhold from all payments
pursuant to this Agreement any amount required by law to satisfy all
taxes with respect to such payments.

IN WITNESS WHEREOF, SPX has caused this Agreement to be executed by its
duly authorized officers and Blystone has hereunto set his hand and seal the
day and year first above set forth.

SPX CORPORATION

By: /s/ James M. Sheridan
---------------------------
Vice President, Secretary
and General Counsel

ATTEST:

/s/ Majorie M. Stauffer
- ------------------------------
Assistant Secretary

/s/ John B. Blystone
-------------------------------
John B. Blystone
<PAGE> 12
EXHIBIT A

APPLICABLE PORTION OF PARAGRAPH X OF THE LETTER

AGREEMENT DATED NOVEMBER 24, 1995 BETWEEN SPX

CORPORATION AND JOHN B. BLYSTONE FOR PURPOSES OF

THIS "SPX/BLYSTONE RESTRICTED SHARE AGREEMENT"

X. Termination Agreement

Mr. Blystone's employment may be terminated by SPX if the Board
determines that "cause" for such termination exists, and SPX
furnishes 30 days' prior written notice of such termination. The term
"cause" refers only to any one or more of the following grounds:

- Commission of an act materially and demonstrably detrimental to the
good will of SPX or any subsidiary of SPX, which act constitutes
gross negligence or willful misconduct by Mr. Blystone in the
performance of his material duties to SPX;

- Commission of any material act of dishonesty or breach of trust
resulting or intending to result in material personal gain or
enrichment of Mr. Blystone at the expense of SPX, or any subsidiary
of SPX;

- Mr. Blystone's conviction of a felony;

Mr. Blystone's employment may be terminated by SPX without cause and for
any reason after January 31, 1999 subject to any then existing
employment contract or other agreement covering his employment or his
termination.

Mr. Blystone's employment may be terminated by him at any time prior
to January 31, 1999 if he determines that "good reason" for such
termination exists and he furnishes 30 days' prior written notice of
such termination to SPX. The term "good reason" refers to any one or
more of the following grounds:
<PAGE> 13
EXHIBIT A
Page 2

- Substantial reduction by SPX (over the objection of Mr.
Blystone) in Mr. Blystone's duties, authority, title,
status, or a reduction in Mr. Blystone's base salary.

- The failure by SPX to pay the base salary, bonus or other
compensation required hereunder.

- The failure of SPX and Mr. Blystone to reach by October 31,
1998 a mutually satisfactory agreement with respect to the
terms and conditions of his employment subsequent to
January 31, 1999.

- For any reason (or no reason) during the sixty-day period
following the date of a "change of control" of SPX occurs.
"Change of control" shall be deemed to have occurred if:

a) Any "person" (as defined in Section 13(d) and 14(d) of
the Exchange Act), excluding for this purpose, the
Company or any subsidiary of the Company, or any
employee benefit plan of the Company or any subsidiary
of the Company, or any person or entity organized,
appointed or established by the Company for or pursuant
to the terms of such plan which acquires beneficial
ownership of voting securities of the Company, is or
becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly
of securities of the Company representing twenty percent
(20%) or more of the combined voting power of the
Company's then outstanding securities;

b) During any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such two-
year period constitute the Board of Directors of the
Company and any new director (except for a director
designated by a person who has entered into an
agreement with the Company to effect a transaction
described elsewhere in this section) whose election by
the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-
thirds of the directors then still in office who either
were directors at the beginning of the period or whose
election or nomination for election was previously
approved, cease for any reason to constitute at least a
majority thereof, or

c) The shareholders of the Company approve a plan of
complete liquidation of the Company, an agreement for
the sale or disposition by the Company of all or
substantially all of the Company's assets, or a plan of
merger or consolidation of the Company with any other
corporation, except for a merger or consolidation in
which the security owners of the Company immediately
prior to the merger or consolidation continue to own at
least eighty percent (80%) of the voting securities of
the new (or continued) entity immediately after such
merger or consolidation;

d) Any person, other than the Company, purchases securities
pursuant to an exchange or tender offer for securities
of the Company representing twenty-five (25%) or more
of the combined voting power of the Company's then
outstanding securities.

<PAGE> 1
EXHIBIT 21

SUBSIDIARIES OF SPX CORPORATION

NAME OF SUBSIDIARY STATE OR PERCENTAGE
AND NAME UNDER WHICH JURISDICTION OWNED
IT DOES BUSINESS OF INCORPORATION BY REGISTRANT
-------------------- ---------------- -------------
<S> <C> <C>
SPX Canada, Inc. .................................................... Canada-Dominion 100%

SPX Australia Pty. Ltd. ............................................. Australia 100%

SPX Europe AG ....................................................... Switzerland 100%

SPX U.K. Ltd. ....................................................... United Kingdom 100%

SPX Deutschland GmbH ................................................ Germany 100%

SPX Italiana, S.R.L. ................................................ Italy 100%

Bear Automotive, S.A. ............................................... Switzerland 100%

Bear France S.A. .................................................... France 100%

SPX Netherlands, B.V. ............................................... The Netherlands 100%

Kent-Moore Do Brasil Industria & Commerce, Ltda. .................... Brazil 100%

Sealed Power Europe Limited Partnership ............................. Delaware 70%

Sealed Power Technologies Limited Partnership ....................... Delaware 100%

JATEK, Limited ...................................................... Japan 50%

SPX Credit Corporation .............................................. Delaware 100%

SPX Iberica, S.A. ................................................... Spain 100%

Lowener GmbH ........................................................ Germany 100%

SPX de Mexico, S.A. de C.V. ......................................... Mexico 100%

Promec .............................................................. Mexico 40%

</TABLE>

<PAGE> 1
EXHIBIT 23

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of
our report dated February 9, 1996, included in this Form 10-K for the year
ended December 31, 1995, into the Company's previously filed registration
statement on Form S-8 (File No. 33-24043).

Arthur Andersen LLP

ARTHUR ANDERSEN LLP

Chicago, Illinois,
March 27, 1996

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SPX CORPORATION FOR THE YEAR ENDED DECEMBER 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 17,069
<SECURITIES> 0
<RECEIVABLES> 138,529
<ALLOWANCES> (8,358)
<INVENTORY> 150,851
<CURRENT-ASSETS> 363,528
<PP&E> 425,636
<DEPRECIATION> (212,672)
<TOTAL-ASSETS> 831,358
<CURRENT-LIABILITIES> 211,011
<BONDS> 228,310
0
0
<COMMON> 159,474
<OTHER-SE> 2,753
<TOTAL-LIABILITY-AND-EQUITY> 831,358
<SALES> 1,098,103
<TOTAL-REVENUES> 1,098,103
<CGS> 853,537
<TOTAL-COSTS> 1,067,012
<OTHER-EXPENSES> (3,060)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,729
<INCOME-PRETAX> (1,578)
<INCOME-TAX> (227)
<INCOME-CONTINUING> (1,351)
<DISCONTINUED> (2,847)
<EXTRAORDINARY> (1,078)
<CHANGES> 0
<NET-INCOME> (5,276)
<EPS-PRIMARY> (.40)
<EPS-DILUTED> (.40)

</TABLE>