10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended March 31, 2022 or 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-07283

REGAL REXNORD CORPORATION

(Exact name of registrant as specified in its charter)

Wisconsin	39-0875718
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

200 State Street, Beloit, Wisconsin 53511

(Address of principal executive office)

(608) 364-8800

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	RRX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required 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 requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated filer	☐	Smaller Reporting Company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No  ☒

On May 3, 2022 the registrant had outstanding 67,004,382 shares of common stock, $0.01 par value per share.

REGAL REXNORD CORPORATION

INDEX

		Page
PART I — FINANCIAL INFORMATION
Item 1 —	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Statements of Income	5
	Condensed Consolidated Statements of Comprehensive Income	6
	Condensed Consolidated Balance Sheets	7
	Condensed Consolidated Statements of Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2 —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3 —	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4 —	Controls and Procedures	42
PART II — OTHER INFORMATION
Item 1 —	Legal Proceedings	42
Item 1A —	Risk Factors	42
Item 2 —	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 6 —	Exhibits	44
Signature		45

2

CAUTIONARY STATEMENT

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company’s current estimates, expectations and projections about the Company’s future results, performance, prospects and opportunities. Such forward-looking statements may include, among other things, statements relating to the merger with the Rexnord Process & Motion Control business (the "Rexnord PMC business") (the "Rexnord Transaction") or the acquisition of Arrowhead Systems, LLC ("Arrowhead") (the "Arrowhead Transaction" and, together with the Rexnord Transaction, the "Transactions"), and the benefits and synergies of the Transactions, future opportunities for the Company, and any other statements regarding the Company’s future operations, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competition and other expectations and estimates for future periods. Forward-looking statements include statements that are not historical facts and can be identified by forward-looking words such as “anticipate,” “believe,” “confident,” “estimate,” “expect,” “intend,” “plan,” “may,” “will,” “project,” “forecast,” "would," "could," "should," and similar expressions. These forward-looking statements are based upon information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause actual results, performance, prospects, or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Important factors that could cause actual results to differ materially from the results referred to in the forward-looking statements the Company makes in this report include:

•dependence on key suppliers and the potential effects of supply disruptions;

•fluctuations in commodity prices and raw material costs;

•any unforeseen changes to or the effects on liabilities, future capital expenditures, revenue, expenses, synergies, indebtedness, financial condition, losses and future prospects;

•the possibility that the Company may be unable to achieve expected synergies and operating efficiencies in connection with the Transactions within the expected time-frames or at all and to successfully integrate the Rexnord PMC and Arrowhead businesses;

•expected or targeted future financial and operating performance and results;

•operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) being greater than expected following the Transactions;

•the Company's ability to retain key executives and employees;

•the continued financial and operational impacts of and uncertainties relating to the COVID-19 pandemic on customers and suppliers and the geographies in which they operate;

•uncertainties regarding the ability to execute restructuring plans within expected costs and timing;

•challenges to the tax treatment that was elected with respect to the Rexnord Transaction and related transactions;

•requirements to abide by potentially significant restrictions with respect to the tax treatment of the Rexnord Transaction which could limit the Company’s ability to undertake certain corporate actions that otherwise could be advantageous;

•actions taken by competitors and their ability to effectively compete in the increasingly competitive global electric motor, drives and controls, power generation and power transmission industries;

•the ability to develop new products based on technological innovation, such as the Internet of Things, and marketplace acceptance of new and existing products, including products related to technology not yet adopted or utilized in geographic locations in which the Company does business;

•dependence on significant customers;

•seasonal impact on sales of products into HVAC systems and other residential applications;

•risks associated with global manufacturing, including risks associated with public health crises and political, societal or economic instability, including instability caused by the recent conflict between Russia and Ukraine;

•issues and costs arising from the integration of acquired companies and businesses and the timing and impact of purchase accounting adjustments;

•the Company's overall debt levels and its ability to repay principal and interest on its outstanding debt;

3

•prolonged declines in one or more markets, such as heating, ventilation, air conditioning, refrigeration, power generation, oil and gas, unit material handling, water heating and aerospace;

•economic changes in global markets, such as reduced demand for products, currency exchange rates, inflation rates, interest rates, recession, government policies, including policy changes affecting taxation, trade, tariffs, immigration, customs, border actions and the like, and other external factors that the Company cannot control;

•product liability, asbestos and other litigation, or claims by end users, government agencies or others that products or customers' applications failed to perform as anticipated, particularly in high volume applications or where such failures are alleged to be the cause of property or casualty claims;

•unanticipated liabilities of acquired businesses;

•unanticipated adverse effects or liabilities from business exits or divestitures;

•unanticipated costs or expenses that may be incurred related to product warranty issues;

•infringement of intellectual property by third parties, challenges to intellectual property and claims of infringement on third party technologies;

•effects on earnings of any significant impairment of goodwill;

•losses from failures, breaches, attacks or disclosures involving information technology infrastructure and data;

•cyclical downturns affecting the global market for capital goods;

•and other risks and uncertainties including, but not limited, to those described in the section entitled "Risk Factors" elsewhere in this report, in the Company's Annual Report on Form 10-K on file with the SEC and from time to time in other filed reports including the Company's Quarterly Reports on Form 10-Q. For a more detailed description of the risk factors associated with the Company, please refer to the section entitled "Risk Factors" elsewhere in this report, the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2022 on file with the SEC and subsequent SEC filings.

Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this report are made only as of the date of this report, and the Company undertakes no obligation to update any forward-looking information contained in this report to reflect subsequent events or circumstances. 

4

PART I—FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

REGAL REXNORD CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Amounts in Millions, Except Per Share Data)

	Three Months Ended
	March 31, 2022		April 3, 2021
Net Sales	$	1,298.5	$	814.1
Cost of Sales	876.6		564.3
Gross Profit	421.9		249.8
Operating Expenses	252.0		148.3
Income from Operations	169.9		101.5
Other Income, Net	(1.3)		(1.2)
Interest Expense	9.0		12.6
Interest Income	(1.1)		(1.5)
Income before Taxes	163.3		91.6
Provision for Income Taxes	36.2		21.3
Net Income	127.1		70.3
Less: Net Income Attributable to Noncontrolling Interests	1.5		1.4
Net Income Attributable to Regal Rexnord Corporation	$	125.6	$	68.9
Earnings Per Share Attributable to Regal Rexnord Corporation:
Basic	$	1.86	$	1.70
Assuming Dilution	$	1.85	$	1.68
Weighted Average Number of Shares Outstanding:
Basic	67.4		40.6
Assuming Dilution	67.9		41.0

See Accompanying Notes to Condensed Consolidated Financial Statements

5

REGAL REXNORD CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in Millions)

	Three Months Ended
	March 31, 2022		April 3, 2021
Net Income	$	127.1	$	70.3
Other Comprehensive Income (Loss) Net of Tax:
Foreign Currency Translation Adjustments	(0.4)		(21.7)
Hedging Activities:
Increase (Decrease) in Fair Value of Hedging Activities, Net of Tax Effects of $8.3 Million and $4.6 Million for the Three Months Ended March 31, 2022 and April 3, 2021, Respectively	26.1		14.6
Reclassification of (Gains) Losses included in Net Income, Net of Tax Effects of $(2.0) Million and $(2.8) Million for the Three Months Ended March 31, 2022 and April 3, 2021, Respectively	(6.0)		(8.7)
Pension and Post Retirement Plans:
Reclassification Adjustments for Pension and Post Retirement Benefits included in Net Income, Net of Tax Effects of zero and $0.1 Million for the Three Months Ended March 31, 2022 and April 3, 2021, Respectively	0.2		0.3
Other Comprehensive Income (Loss)	19.9		(15.5)
Comprehensive Income	147.0		54.8
Less: Comprehensive Income Attributable to Noncontrolling Interests	1.9		1.1
Comprehensive Income Attributable to Regal Rexnord Corporation	$	145.1	$	53.7

See Accompanying Notes to Condensed Consolidated Financial Statements

6

REGAL REXNORD CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in Millions, Except Per Share Data)

	March 31, 2022		January 1, 2022
ASSETS
Current Assets:
Cash and Cash Equivalents	$	624.7	$	672.8
Trade Receivables, Less Allowances of $18.6 Million and $18.7 Million in 2022 and 2021, Respectively	832.2		785.8
Inventories	1,336.9		1,192.4
Prepaid Expenses and Other Current Assets	166.9		145.1
Assets Held for Sale	11.7		12.5
Total Current Assets	2,972.4		2,808.6
Net Property, Plant and Equipment	852.7		908.5
Operating Lease Assets	116.5		112.4
Goodwill	4,051.3		4,039.2
Intangible Assets, Net of Amortization	2,402.7		2,429.2
Deferred Income Tax Benefits	35.7		35.7
Other Noncurrent Assets	39.8		33.8
Total Assets	$	10,471.1	$	10,367.4
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	$	641.3	$	643.8
Dividends Payable	22.1		22.3
Accrued Compensation and Employee Benefits	124.5		143.9
Other Accrued Expenses	238.0		253.2
Current Operating Lease Liabilities	27.5		27.2
Current Maturities of Long-Term Debt	3.2		4.9
Total Current Liabilities	1,056.6		1,095.3
Long-Term Debt	2,057.4		1,913.6
Deferred Income Taxes	661.7		679.7
Pension and Other Post Retirement Benefits	108.0		111.7
Noncurrent Operating Lease Liabilities	91.5		89.5
Other Noncurrent Liabilities	72.1		69.4
Contingencies (see Note 12)
Equity:
Regal Rexnord Corporation Shareholders' Equity:
Common Stock, $0.01 par value, 100.0 Million Shares Authorized, 67.0 Million and 67.6 Million Shares Issued and Outstanding for 2022 and 2021, Respectively	0.7		0.7
Additional Paid-In Capital	4,631.1		4,651.8
Retained Earnings	1,927.5		1,912.6
Accumulated Other Comprehensive Loss	(175.6)		(195.1)
Total Regal Rexnord Corporation Shareholders' Equity	6,383.7		6,370.0
Noncontrolling Interests	40.1		38.2
Total Equity	6,423.8		6,408.2
Total Liabilities and Equity	$	10,471.1	$	10,367.4

See Accompanying Notes to Condensed Consolidated Financial Statements.

7

REGAL REXNORD CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(Dollars in Millions, Except Per Share Data)

	Three Months Ended
	Common Stock $0.01 Par Value		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Equity
January 1, 2022	$	0.7	$	4,651.8	$	1,912.6	$	(195.1)	$	38.2	$	6,408.2
Net Income	—		—		125.6		—		1.5		127.1
Other Comprehensive Income	—		—		—		19.5		0.4		19.9
Dividends Declared ($0.33 Per Share)	—		—		(22.1)		—		—		(22.1)
Stock Options Exercised	—		(1.4)		—		—		—		(1.4)
Stock Repurchase	—		(25.6)		(88.6)		—		—		(114.2)
Share-Based Compensation	—		6.3		—		—		—		6.3
March 31, 2022	$	0.7	$	4,631.1	$	1,927.5	$	(175.6)	$	40.1	$	6,423.8
January 2, 2021	$	0.4	$	696.6	$	2,049.1	$	(163.3)	$	32.6	$	2,615.4
Net Income	—		—		68.9		—		1.4		70.3
Other Comprehensive Loss	—		—		—		(15.2)		(0.3)		(15.5)
Dividends Declared ($0.30 Per Share)	—		—		(12.2)		—		—		(12.2)
Stock Options Exercised	—		(1.8)		—		—		—		(1.8)
Share-Based Compensation	—		3.3		—		—		—		3.3
April 3, 2021	$	0.4	$	698.1	$	2,105.8	$	(178.5)	$	33.7	$	2,659.5

See Accompanying Notes to Condensed Consolidated Financial Statements.

8

REGAL REXNORD CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in Millions)

	Three Months Ended
	March 31, 2022		April 3, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	127.1	$	70.3
Adjustments to Reconcile Net Income to Net Cash (Used in) Provided by Operating Activities (Net of Acquisitions and Divestitures):
Depreciation and Amortization	77.9		31.8
Noncash Lease Expense	9.9		6.1
(Gain) Loss on Sale or Disposition of Assets, Net	(0.3)		0.6
Share-Based Compensation Expense	6.3		3.3
Financing Fees Amortization	0.9		4.8
Change in Operating Assets and Liabilities	(227.7)		(67.4)
Net Cash (Used in) Provided by Operating Activities	(5.9)		49.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant and Equipment	(13.4)		(10.7)
Proceeds Received from Sales of Property, Plant and Equipment	1.4		0.9
Business Acquisitions, Net of Cash Acquired	(35.0)		(1.9)
Net Cash Used in Investing Activities	(47.0)		(11.7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings Under Revolving Credit Facility	1,340.5		140.7
Repayments Under Revolving Credit Facility	(1,122.2)		(140.7)
Proceeds from Short-Term Borrowings	5.1		5.4
Repayments of Short-Term Borrowings	(7.0)		(5.6)
Proceeds from Long-Term Borrowings	1,036.8		—
Repayments of Long-Term Borrowings	(1,107.5)		(50.1)
Dividends Paid to Shareholders	(22.3)		(12.2)
Shares Surrendered for Taxes	(2.8)		(1.9)
Proceeds from the Exercise of Stock Options	1.8		0.1
Repurchase of Common Stock	(114.2)		—
Financing Fees Paid	(4.5)		(12.4)
Net Cash Provided by (Used in) Financing Activities	3.7		(76.7)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	1.1		(6.0)
Net Decrease in Cash and Cash Equivalents	(48.1)		(44.9)
Cash and Cash Equivalents at Beginning of Period	672.8		611.3
Cash and Cash Equivalents at End of Period	$	624.7	$	566.4
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid For:
Interest	$	10.1	$	12.6
Income taxes	$	18.8	$	15.8

See Accompanying Notes to Condensed Consolidated Financial Statements.

9

REGAL REXNORD CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying (a) Condensed Consolidated Balance Sheet of Regal Rexnord Corporation (the “Company”), as of January 1, 2022, which has been derived from audited Consolidated Financial Statements, and (b) unaudited interim Condensed Consolidated Financial Statements as of March 31, 2022 and for the three months ended March 31, 2022 and April 3, 2021, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the Consolidated Financial Statements and the Notes thereto included in the Company’s 2021 Annual Report on Form 10-K filed on March 2, 2022.

In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Except as otherwise discussed, such adjustments consist of only those of a normal recurring nature. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2022.

The Condensed Consolidated Financial Statements have been prepared in accordance with GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Condensed Consolidated Financial Statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. The Company uses estimates in accounting for, among other items, allowance for doubtful accounts; excess and obsolete inventory; share-based compensation; acquisitions; product warranty obligations; pension and post retirement assets and liabilities; derivative fair values; goodwill and other asset impairments; health care reserves; retirement benefits; rebates and incentives; litigation claims and contingencies, including environmental matters; and income taxes. The Company accounts for changes to estimates and assumptions when warranted by factually based experience.

Effective for fiscal year 2022, the Company approved a change in the fiscal year end from a 52-53 week year ending on the Saturday closest to December 31 to a calendar year ending on December 31. The Company made the fiscal year change on a prospective basis and did not adjust operating results for prior periods. While this change will impact the comparability of future results with each of the fiscal quarters and the annual fiscal period in 2022, the impact is not expected to be material to our quarterly or annual results.

Change in Accounting Principle

As of January 2, 2022, the Company changed its methodology for valuing certain inventories to the first-in, first-out ("FIFO") cost method from the last-in, first-out ("LIFO") cost method. The effects of this change have been retrospectively applied to all periods presented. See Note 2 for additional information.

Recently Issued Accounting Standards

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU improves the accounting for acquired revenue contracts with customers in a business combination. This ASU becomes effective for fiscal years beginning after December 31, 2022, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance.

10

2. OTHER FINANCIAL INFORMATION

Inventories

As of January 2, 2022, the Company changed its method for valuing certain inventories to the FIFO cost method from the LIFO cost method. The Company believes that this change in accounting is preferable as it provides a better matching of costs and revenues, more closely resembles the physical flow of inventory, better reflects acquisition cost of inventory on the balance sheet, conforms the Company's method of inventory valuation to a single method, results in improved comparability with industry peers and reduces the administrative burden of determining the LIFO valuation.

The effects of this change have been retrospectively applied to all periods presented. This change resulted in an increase to retained earnings of $38.4 million as of January 2, 2021.

In addition, certain financial statement line items in our Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for the three months ended April 3, 2021 and our Condensed Consolidated Balance Sheet as of January 1, 2022, were adjusted as follows (dollars in millions):

	As Originally Reported		Effect of Change		As Adjusted
Condensed Consolidated Statement of Operations for the three months ended April 3, 2021
Cost of Sales	$	568.7	$	(4.4)	$	564.3
Provision for Income Taxes	$	20.2	$	1.1	$	21.3
Net income attributable to Regal Rexnord Corporation	$	65.6	$	3.3	$	68.9
Earnings Per Share Attributable to Regal Rexnord Corporation:
Basic	$	1.62	$	0.08	$	1.70
Assuming Dilution	$	1.60	$	0.08	$	1.68
Condensed Consolidated Balance Sheet as of January 1, 2022
Inventories	$	1,106.6	$	85.8	$	1,192.4
Deferred Income Taxes	$	652.0	$	27.7	$	679.7
Retained Earnings	$	1,854.5	$	58.1	$	1,912.6
Condensed Consolidated Statement of Cash Flows for the three months ended April 3, 2021
Net Income	$	67.0	$	3.3	$	70.3
Change in Operating Assets and Liabilities	$	(64.1)	$	(3.3)	$	(67.4)
Condensed Consolidated Statement of Comprehensive Income for the three months ended April 3, 2021
Comprehensive income attributable to Regal Rexnord Corporation	$	50.4	$	3.3	$	53.7

The following table presents approximate percentage distribution between major classes of inventories inclusive of the accounting method change discussed above:

	March 31, 2022	January 1, 2022
Raw Material and Work in Process	47.8%	43.4%
Finished Goods and Purchased Parts	52.2%	56.6%

Inventories are stated at cost, which is not in excess of market. All inventory is valued using the FIFO cost method.

11

Property, Plant, and Equipment

The following table presents property, plant, and equipment by major classification (dollars in millions):

	Useful Life in Years	March 31, 2022		January 1, 2022
Land and Improvements		$	108.7	$	109.1
Buildings and Improvements	3 - 50	420.9		449.6
Machinery and Equipment	3 - 15	1,162.9		1,164.8
Property, Plant and Equipment		1,692.5		1,723.5
Less: Accumulated Depreciation		(839.8)		(815.0)
Net Property, Plant and Equipment		$	852.7	$	908.5

For the three months ended March 31, 2022 and April 3, 2021, the Company recognized no material asset impairments.

Revenue Recognition

The Company recognizes revenue from the sale of electric motors, electrical motion controls, power generation and power transmission products. The Company recognizes revenue when control of the product passes to the customer or the service is provided and is recognized at an amount that reflects the consideration expected to be received in exchange for such goods or services.

Nature of Goods and Services

The Company sells products with multiple applications as well as customized products that have a single application such as those manufactured for its OEM customers. The Company reports in four operating segments: Commercial Systems, Industrial Systems, Climate Solutions and Motion Control Solutions. See Note 6 for a description of the different segments.

Nature of Performance Obligations

The Company’s contracts with customers typically consist of purchase orders, invoices and master supply agreements. At contract inception, across all four segments, the Company assesses the goods and services promised in its sales arrangements with customers and identifies a performance obligation for each promise to transfer to the customer a good or service that is distinct. The Company’s primary performance obligations consist of product sales and customized system/solutions.

Product:

The nature of products varies from segment to segment but across all segments, individual products are not integrated and represent separate performance obligations.

Customized system/solutions:

The Company provides customized system/solutions which consist of multiple products engineered and designed to specific customer specification, combined or integrated into one combined solution for a specific customer application. The goods are transferred to the customer and revenue is typically recognized over time as the performance obligations are satisfied.

When Performance Obligations are Satisfied

For performance obligations related to substantially all of the Company's product sales, the Company determines that the customer obtains control upon shipment and recognizes revenue accordingly. Once a product has shipped, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from the asset. The Company considers control to have transferred upon shipment because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset, and the customer has significant risks and rewards of ownership of the asset.

For a limited number of contracts, the Company transfers control and recognizes revenue over time. The Company satisfies its performance obligations over time and the Company uses a cost-based input method to measure progress. In applying the cost-based method of revenue recognition, the Company uses actual costs incurred to date relative to the total estimated costs for the contract in conjunction with the customer's commitment to perform in determining the amount of revenue and cost to recognize. The Company has determined that the cost-based input method provides a faithful depiction of the transfer of goods to the customer.

12

Payment Terms

The arrangement with the customer states the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payment terms vary by customer but typically range from due upon delivery to 120 days after delivery. For contracts recognized at a point in time, revenue and billing typically occur simultaneously. The Company generally has payment terms with its customers of one year or less and has elected the practical expedient applicable to such contracts not to consider the time value of money. For contracts recognized using the cost-based input method, revenue recognized in excess of customer billings and billings in excess of revenue recognized are reviewed to determine the net asset or net liability position and classified as such on the Condensed Consolidated Balance Sheets.

Returns, Refunds, and Warranties

The Company’s contracts do not explicitly offer a “general” right of return to its customers (e.g., customers ordered excess products and return unused items). Warranties are classified as either assurance type or service type warranties. A warranty is considered an assurance type warranty if it provides the customer with assurance that the product will function as intended. A warranty that goes above and beyond ensuring basic functionality is considered a service type warranty. The Company generally only offers limited warranties which are considered to be assurance type warranties and are not accounted for as separate performance obligations. Customers generally receive repair or replacement on products that do not function to specification. Estimated product warranties are provided for specific product groups and the Company accrues for estimated future warranty cost in the period in which the sale is recognized. The Company estimates the accrual requirements based on historical warranty loss experience and the cost is included in Cost of Sales.

Volume Rebates

In some cases, the nature of the Company’s contract may give rise to variable consideration including volume based sales incentives. If the customer achieves specific sales targets, they are entitled to rebates. The Company estimates the projected amount of the rebates that will be achieved and recognizes the estimated costs as a reduction to Net Sales as revenue is recognized.

Disaggregation of Revenue

The following tables presents the Company’s revenues disaggregated by geographical region (in millions):

	Three Months Ended
March 31, 2022	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Total
North America	$	205.9	$	82.4	$	238.5	$	408.5	$	935.3
Asia	42.2		39.4		8.2		34.4		124.2
Europe	32.7		12.3		13.6		98.1		156.7
Rest-of-World	12.5		10.6		13.6		45.6		82.3
Total	$	293.3	$	144.7	$	273.9	$	586.6	$	1,298.5
April 3, 2021	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Total
North America	$	154.1	$	71.1	$	209.7	$	163.8	$	598.7
Asia	46.0		43.2		9.3		6.9		105.4
Europe	24.7		11.6		9.5		23.5		69.3
Rest-of-World	12.2		10.5		10.6		7.4		40.7
Total	$	237.0	$	136.4	$	239.1	$	201.6	$	814.1

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3. HELD FOR SALE, DIVESTITURES AND ACQUISITIONS

Assets Held for Sale

The balances that were classified as Assets Held for Sale as of March 31, 2022 and January 1, 2022 were $11.7 million and $12.5 million, respectively.

2021 Acquisitions

Rexnord Transaction

On October 4, 2021, in accordance with the terms and conditions of the Agreement and Plan of Merger, dated as of February 15, 2021 (the “Merger Agreement”), the Company completed its combination with the Rexnord Process & Motion Control business (“Rexnord PMC business”) of Rexnord Corporation (which changed its name on October 4, 2021 to Zurn Water Solutions Corporation) (“Zurn”) in a Reverse Morris Trust transaction (the “Rexnord Transaction”). Pursuant to the Rexnord Transaction, (i) Zurn transferred to its then-subsidiary Land Newco, Inc. (“Land”) substantially all of the assets, and Land assumed substantially all of the liabilities, of the Rexnord PMC business (the “Reorganization”), (ii) after which all of the issued and outstanding shares of common stock, $0.01 par value per share, of Land (“Land common stock”) held by a subsidiary of Zurn were distributed in a series of distributions to Zurn’s stockholders (the “Distributions”, and the final distribution of Land common stock from Zurn to Zurn’s stockholders, which was made pro rata for no consideration, the “Spin-Off”) and (iii) immediately after the Spin-Off, a subsidiary of the Company (“Merger Sub”) merged with and into Land (the “Merger”) and all shares of Land common stock (other than those held by Zurn, Land, the Company, Merger Sub or their respective subsidiaries) were converted as of the effective time of the Merger (the “Effective Time”) into the right to receive 0.22296103 shares of common stock, $0.01 par value per share, of the Company (“Company common stock”), as calculated in the Merger Agreement.

As of the Effective Time, Land, which held the Rexnord PMC business, became a wholly owned subsidiary of the Company.

Pursuant to the Merger, the Company issued approximately 27,055,945 shares of Company common stock to holders of Land common stock, which represents approximately 39.9% of the approximately 67,756,732 outstanding shares of Company common stock immediately following the Effective Time. In addition, holders of record of Company common stock as of October 1, 2021 received $6.99 per share of Company common stock pursuant to a previously announced special dividend in connection with the Transactions (the “Special Dividend”).

In connection with the Rexnord Transaction, two directors designated by Zurn were appointed to the Company's Board of Directors. The current chief executive officer of the Company continued as the chief executive officer of the combined company after the Rexnord Transaction and a majority of the senior management of the Company immediately prior the consummation of the Rexnord Transaction remained executive officers of the Company immediately after the Rexnord Transaction. The Company's management determined that the Company is the accounting acquirer in the Rexnord Transaction based on the facts and circumstances noted within this section and other relevant factors. As such, the Company applied the acquisition method of accounting to the identifiable assets and liabilities of Rexnord PMC business, which have been measured at estimated fair value as of the date of the business combination.

In connection with the Rexnord Transaction, the Company entered into certain financing arrangements, which are described in Note 7.

The tax matters agreement the Company entered into in connection with the Rexnord Transaction imposes certain restrictions on the Company, Land and Zurn during the two-year period following the Spin-Off, subject to certain exceptions, with respect to actions that could cause the Reorganization and the Distributions to fail to qualify for the intended tax treatment. As a result of these restrictions, the Company's and Land’s ability to engage in certain transactions, such as the issuance or purchase of stock or certain business combinations, may be limited.

The total consideration transferred for the acquisition of Land was approximately $4.0 billion subject to finalization of purchase accounting adjustments. The total assets and liabilities assumed will be adjusted, based on the final balances per the terms included within the Separation and Distribution Agreement.

The preliminary purchase price of the Rexnord PMC business consisted of the following (in millions):

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	As Reported as of January 1, 2022		Measurement period adjustments		As Reported as of March 31, 2022
Fair value of Company common stock issued to Zurn (a)	$	3,896.3	$	—	$	3,896.3
Stock based compensation (b)	47.1		—		47.1
Adjustment amount (c)	30.9		4.1		35.0
Land Financing Fees paid by the Company (d)	3.9		—		3.9
Preexisting Relationships (e)	(0.8)		—		(0.8)
Preliminary purchase price	$	3,977.4	$	4.1	$	3,981.5

(a) Represents approximately 27 million new shares of Company common stock issued to Zurn stockholders in the exchange offer, based on the Company's October 4, 2021, closing share price of $151.00, less the Special Dividend amount of $6.99, which the Zurn stockholders were not entitled to receive.

(b) Represents fair value of replacement equity-based awards and Company common stock issued in settlement of other Zurn share based awards. The portion of the fair value attributable to pre-Merger service was recorded as part of the consideration transferred in the Merger - see Note 10.

(c) Represents working capital adjustment pursuant to the terms of the purchase agreement. The entire amount was settled and paid in cash by the Company as of March 31, 2022.

(d) Represents financing fees paid by the Company for the Bridge Facility and Land Term Facility (as defined in Note 7) that were determined to be costs of Zurn.

(e) Represents effective settlement of outstanding payables and receivables between the Company and the Rexnord PMC business. No gain or loss was recognized on this settlement.

Purchase Price Allocation

The Rexnord PMC business’s assets and liabilities were measured at estimated fair values at October 4, 2021, primarily using Level 3 inputs. Estimates of fair value represent management’s best estimate of assumptions about future events and uncertainties, including significant judgments related to future cash flows, discount rates, competitive trends, margin and revenue growth assumptions including royalty rates and customer attrition rates and others. Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates expected as of the acquisition date.

Due to the timing of the business combination and the nature of the net assets acquired, at March 31, 2022, the valuation process to determine the fair values is not complete and further adjustments are expected during the measurement period. The Company has estimated the preliminary fair value of net assets acquired based on information currently available and will continue to adjust those estimates as additional information becomes available, including the refinement of market participant assumptions. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price allocation adjustments will be recorded during the measurement period, but no later than one year from the date of the acquisition. The Company will reflect measurement period adjustments in the period in which the adjustments are determined.

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The preliminary fair value and subsequent measurement period adjustments of the assets acquired and liabilities and noncontrolling interests assumed were as follows (in millions):

	As Reported as of January 1, 2022		Measurement period adjustments		As Reported as of March 31, 2022
Cash and Cash Equivalents	$	192.8	$	—	$	192.8
Trade Receivables	186.9		(3.5)		183.4
Inventories	262.5		(1.0)		261.5
Prepaid Expenses and Other Current Assets	21.0		—		21.0
Assets Held for Sale	1.4		—		1.4
Deferred Income Tax Benefits	8.8		(7.7)		1.1
Property, Plant and Equipment	412.3		(38.4)		373.9
Operating Lease Assets	46.4		—		46.4
Intangible Assets	1,831.0		23.0		1,854.0
Other Noncurrent Assets	12.3		3.7		16.0
Accounts Payable	(121.1)		—		(121.1)
Accrued Compensation and Benefits	(44.0)		2.6		(41.4)
Other Accrued Expenses	(55.7)		(4.0)		(59.7)
Current Operating Lease Liabilities	(8.1)		—		(8.1)
Current Maturities of Long-Term Debt	(2.5)		—		(2.5)
Long-Term Debt	(558.2)		—		(558.2)
Deferred Income Taxes	(508.2)		12.1		(496.1)
Pension and Other Post Retirement Benefits	(75.1)		—		(75.1)
Noncurrent Operating Lease Liabilities	(38.0)		—		(38.0)
Other Noncurrent Liabilities	(17.0)		—		(17.0)
Total Identifiable Net Assets	1,547.5		(13.2)		1,534.3
Goodwill	2,433.2		17.3		2,450.5
Noncontrolling Interests	(3.3)		—		(3.3)
Preliminary purchase price	$	3,977.4	$	4.1	$	3,981.5

During three months ended March 31, 2022, the Company made a cash payment of $35.0 million to Zurn in connection with finalizing the acquisition date trade working capital. The preliminary purchase price allocations were also adjusted by the refinement of the estimated fair value of the assets received and liabilities assumed. The cumulative impact of the adjustments during the three months ended March 31, 2022 resulted in $17.3 million of additional goodwill.

Results of the Rexnord PMC business Subsequent to the Acquisition

The financial results of the Rexnord PMC business have been included in the Company's Motion Control Solutions segment from the date of acquisition.

Arrowhead Transaction

On November 23, 2021, the Company acquired all of the outstanding equity interests of Arrowhead Systems, LLC, ("Arrowhead") (the "Arrowhead Transaction"), for $315.6 million in cash, net of $1.1 million of cash acquired. Arrowhead is a global leader in providing industrial process automation solutions including conveyors and (de)palletizers to the food & beverage, aluminum can, and consumer staples end markets, among others. Arrowhead is now part of the Automation Solutions division of the Company's Motion Control Solutions segment.

The Consolidated Statements of Income include the results of operations of Arrowhead since the date of acquisition, and such results are reflected in the Motion Control Solutions segment.

Purchase Price Allocation

Arrowhead's assets and liabilities were measured at estimated fair values at November 23, 2021. Estimates of fair value represent management’s best estimate of assumptions about future events and uncertainties, including significant judgments related to future cash flows, discount rates, competitive trends, margin and revenue growth assumptions including royalty rates

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and customer attrition rates and others. Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates expected as of the acquisition date.

The preliminary fair value of the assets acquired and liabilities assumed were as follows (in millions):

	As Reported as of January 1, 2022
Cash and Cash Equivalents	$	1.1
Trade Receivables	19.1
Inventories	12.8
Prepaid Expenses and Other Current Assets	7.6
Property, Plant and Equipment	3.7
Intangible Assets(1)	160.0
Accounts Payable	(4.7)
Accrued Compensation and Benefits	(2.6)
Other Accrued Expenses	(25.0)
Total Identifiable Net Assets	172.0
Goodwill	143.6
Preliminary purchase price	$	315.6

(1) Includes $124.0 million related to Customer Relationships, $18.0 million related to Trademarks and $18.0 million related to Technology.

The allocation of purchase price is subject to finalization during a period not to exceed one year from the acquisition date. Adjustments to the preliminary allocation of purchase price may occur related to finalization of the working capital adjustment, finalization of the valuation of intangibles and other long-lived assets, adjustment to income tax assets and liabilities and other changes related to the valuation of assets acquired and liabilities assumed. No adjustments to the preliminary allocation of purchase price were made during the three months ended March 31, 2022.

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4. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustments, hedging activities and pension and post-retirement benefit adjustments are included in Accumulated Other Comprehensive Income (Loss) ("AOCI") a component of Total Equity.

The following tables present changes in AOCI by component for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
March 31, 2022	Hedging Activities		Pension and Post Retirement Benefit Adjustments		Foreign Currency Translation Adjustments		Total
Beginning Balance	$	21.0	$	(14.3)	$	(201.8)	$	(195.1)
Other Comprehensive Income (Loss) before Reclassifications	34.4		0.2		(1.0)		33.6
Tax Impact	(8.3)		—		—		(8.3)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(8.0)		0.2		—		(7.8)
Tax Impact	2.0		—		—		2.0
Net Current Period Other Comprehensive Income (Loss)	20.1		0.4		(1.0)		19.5
Ending Balance	$	41.1	$	(13.9)	$	(202.8)	$	(175.6)
April 3, 2021	Hedging Activities		Pension and Post Retirement Benefit Adjustments		Foreign Currency Translation Adjustments		Total
Beginning Balance	$	23.5	$	(31.1)	$	(155.7)	$	(163.3)
Other Comprehensive Income (Loss) before Reclassifications	19.2		—		(21.4)		(2.2)
Tax Impact	(4.6)		—		—		(4.6)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(11.5)		0.4		—		(11.1)
Tax Impact	2.8		(0.1)		—		2.7
Net Current Period Other Comprehensive Income (Loss)	5.9		0.3		(21.4)		(15.2)
Ending Balance	$	29.4	$	(30.8)	$	(177.1)	$	(178.5)

The Condensed Consolidated Statements of Income line items affected by the hedging activities reclassified from AOCI in the tables above are disclosed in Note 13.

The reclassification amounts for pension and post-retirement benefit adjustments in the tables above are part of net periodic benefit costs recorded in Other Income, Net (see also Note 8).

5. GOODWILL AND INTANGIBLE ASSETS

Goodwill

As required, the Company performs an annual impairment test of goodwill as of the end of the October fiscal month or more frequently if events or circumstances change that would more likely than not reduce the fair value of its reporting units below their carrying value.

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The following table presents changes to goodwill during the three months ended March 31, 2022 (in millions):

	Total		Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions
Balance as of January 1, 2022	$	4,039.2	$	428.9	$	128.8	$	330.5	$	3,151.0
Acquisition and Valuation Adjustments	17.3		—		—		—		17.3
Translation Adjustments	(5.2)		—		(0.1)		(0.1)		(5.0)
Balance as of March 31, 2022	$	4,051.3	$	428.9	$	128.7	$	330.4	$	3,163.3
Cumulative Goodwill Impairment Charges	$	328.7	$	183.2	$	105.1	$	17.2	$	23.2

Intangible Assets

The following table presents intangible assets (in millions):

		March 31, 2022				January 1, 2022
	Weighted Average Amortization Period (Years)	Gross Value		Accumulated Amortization		Gross Value		Accumulated Amortization
Amortizable Intangible Assets:
Customer Relationships	16	$	2,355.6	$	438.6	$	2,335.4	$	405.0
Technology	13	250.1		117.3		250.1		114.1
Trademarks	10	399.6		46.7		400.0		37.2
Patent and Engineering Drawings	5	16.6		16.6		16.6		16.6
		$	3,021.9	$	619.2	$	3,002.1	$	572.9
Intangible Assets, Net of Amortization		$	2,402.7			$	2,429.2

Amortization expense recorded for the three months ended March 31, 2022 was $47.3 million. Amortization expense recorded for the three months ended April 3, 2021 was $11.2 million. Amortization expense for fiscal year 2022 is estimated to be $187.0 million. There were no intangible asset impairments during the three months ended March 31, 2022 and April 3, 2021, respectively.

The following table presents future estimated annual amortization for intangible assets (in millions):

Year	Estimated Amortization
2023	$	187.0
2024	186.3
2025	184.2
2026	180.7
2027	145.8

6. SEGMENT INFORMATION

The Company is comprised of four operating segments: Commercial Systems, Industrial Systems, Climate Solutions and Motion Control Solutions.

Commercial Systems segment designs and produces fractional to approximately 5 horsepower AC and DC motors, electronic variable speed controls, fans, and blowers for commercial applications. These products serve markets including commercial building ventilation and HVAC, pool and spa, irrigation, dewatering, agriculture, and general commercial equipment.

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Industrial Systems segment designs and produces integral motors, automatic transfer switches, alternators and switchgear for industrial applications, along with aftermarket parts and kits to support such products. These products serve markets including agriculture, marine, mining, oil and gas, food and beverage, data centers, healthcare, prime and standby power, and general industrial equipment.

Climate Solutions segment designs and produces small motors, electronic variable speed controls and air moving solutions serving markets including residential and light commercial HVAC, water heaters and commercial refrigeration.

Motion Control Solutions segment designs, produces and services mounted and unmounted bearings, conveyor products, conveying automation solutions, couplings, mechanical power transmission drives and components, gearboxes and gear motors, aerospace components, special components products and industrial powertrain components and solutions serving a broad range of markets including food and beverage, bulk handling, eCommerce/warehouse distribution, energy, aerospace and general industrial.

The Company evaluates performance based on the segment's income from operations. Corporate costs have been allocated to each segment based on the net sales of each segment. The reported external net sales of each segment are from external customers.

The following sets forth certain financial information attributable to the Company's operating segments for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
March 31, 2022	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Eliminations		Total
External Sales	$	293.3	$	144.7	$	273.9	$	586.6	$	—	$	1,298.5
Intersegment Sales	28.2		7.3		4.8		1.9		(42.2)		—
Total Sales	321.5		152.0		278.7		588.5		(42.2)		1,298.5
Gross Profit	94.3		31.3		83.2		213.1		—		421.9
Operating Expenses	41.4		23.4		31.7		155.5		—		252.0
Total Operating Expenses	41.4		23.4		31.7		155.5		—		252.0
Income from Operations	52.9		7.9		51.5		57.6		—		169.9
Depreciation and Amortization	7.7		3.6		4.4		62.2		—		77.9
Capital Expenditures	3.6		1.5		4.3		4.0		—		13.4
April 3, 2021
External Sales	$	237.0	$	136.4	$	239.1	$	201.6	$	—	$	814.1
Intersegment Sales	17.5		3.7		4.3		0.7		(26.2)		—
Total Sales	254.5		140.1		243.4		202.3		(26.2)		814.1
Gross Profit*	66.8		28.0		75.4		79.6		—		249.8
Operating Expenses	38.0		23.1		30.7		56.5		—		148.3
Total Operating Expenses	38.0		23.1		30.7		56.5		—		148.3
Income from Operations*	28.8		4.9		44.7		23.1		—		101.5
Depreciation and Amortization	7.8		5.9		4.5		13.6		—		31.8
Capital Expenditures	3.3		2.4		3.2		1.8		—		10.7

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The following table presents identifiable assets information attributable to the Company's operating segments as of March 31, 2022 and January 1, 2022 (in millions):

	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Total
Identifiable Assets as of March 31, 2022	$	1,306.1	$	874.1	$	1,006.0	$	7,284.9	$	10,471.1
Identifiable Assets as of January 1, 2022*	1,264.0		859.9		982.7		7,260.8		10,367.4

*Includes the retrospective effect of changing accounting methods for valuing certain inventories to the FIFO cost method from the LIFO cost method. See Note 2 for additional information.

7. DEBT AND BANK CREDIT FACILITIES

The following table presents the Company’s indebtedness as of March 31, 2022 and January 1, 2022 (in millions):

	March 31, 2022		January 1, 2022
Term Facility	$	550.0	$	620.0
Land Term Facility	486.8		486.8
Multicurrency Revolving Facility	955.0		736.7
Other	76.2		78.7
Less: Debt Issuance Costs	(7.4)		(3.7)
Total	2,060.6		1,918.5
Less: Current Maturities	3.2		4.9
Long-Term Debt	$	2,057.4	$	1,913.6

Credit Agreement

On March 28, 2022, the Company entered into a Second Amended and Restated Credit Agreement with the Company's lenders (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders named therein. The Credit Agreement (i) replaces in its entirety the Amended and Restated Credit Agreement, dated as of August 27, 2018, as amended by that First Amendment, dated March 17, 2021, among the Company and other parties thereto and (ii) amends and restates in its entirety the Amended and Restated Credit Agreement, dated as of October 4, 2021, among Land and the other parties thereto (collectively, the “Former Credit Agreements”).

The Credit Agreement provides for, among other things, an extension of the maturity date of the revolving credit facility and term loans provided under the Former Credit Agreements. The credit facilities extended under the Credit Agreement consist of (i) an unsecured term loan facility in the initial principal amount of up to $550,000,000, maturing on March 28, 2027 (the "Term Facility"); (ii) an unsecured term loan facility in the initial principal amount of $486,827,669, under which Land remains the sole borrower, maturing on March 28, 2027 (the "Land Term Facility"); and (iii) an unsecured revolving loan in the initial principal amount of up to $1,000,000,000, maturing on March 28, 2027 (the "Multicurrency Revolving Facility"). Interest for benchmark rate loans is calculated based on a SOFR benchmark rate, plus a margin spread to be adjusted quarterly based on the Company’s funded debt to EBITDA ratio. The Credit Agreement is subject to customary and market provisions. The subsidiaries of the Company that provided a guaranty of the Company's and Land's obligations under the Former Credit Agreement also entered into subsidiary guaranty agreements with respect to the obligations under the Credit Agreement.

The Term Facility was drawn in full on March 28, 2022 to refinance the Former Credit Agreements, pay fees, costs, and other expenses incurred therewith, to fund working capital needs and for general corporate purposes of the Company and its subsidiaries. The Term Facility requires quarterly amortization at 5.0% per annum, unless previously prepaid. Per the terms of the Credit Agreement, prepayments can be made without penalty and be applied to the next payment due. After the prepayment is considered, the next payment in the amortization schedule is not due within one year and therefore no current maturities of debt will be recognized for this agreement.

The weighted average interest rate on the Term Facility for the three months ended March 31, 2022 and April 3, 2021 was 2.0% and 1.5%, respectively. The Credit Agreement requires that the Company prepay the loans under the Term Facility with 100% of the net cash proceeds received from specified asset sales and borrowed money indebtedness, subject to certain exceptions.

At March 31, 2022, the Company had $955.0 million of borrowings under the Multicurrency Revolving Facility, $0.1 million of standby letters of credit issued under the facility, and $44.9 million of available borrowing capacity. For the three months ended March 31, 2022 and April 3, 2021 under the Multicurrency Revolving Facility, the average daily balance in borrowings

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was $773.7 million and $7.4 million, respectively, and the weighted average interest rate was 1.7% and 1.4%, respectively. The Company pays a non-use fee on the aggregate unused amount of the Multicurrency Revolving Facility at a rate determined by reference to its consolidated funded debt to consolidated EBITDA ratio.

As of March 31, 2022, the Company had $486.8 million of borrowings under the Land Term Facility. The Land Term Facility has no required amortization. The weighted average interest rate on the Land Term Facility for three months ended March 31, 2022 was 1.7%.

In connection with the Rexnord Transaction, on February 15, 2021, the Company entered into a debt commitment letter (the “Bridge Commitment Letter”) and related fee letters with Barclays Bank PLC (“Barclays”), pursuant to which, and subject to the terms and conditions set forth therein, Barclays committed to provide approximately $2.1 billion in an aggregate principal amount of senior bridge loans under a 364-day senior bridge loan credit facility (the “Bridge Facility”). As the Rexnord Transaction was consummated and the payments of amounts in connection therewith occurred without the use of the Bridge Facility, the commitments under the Bridge Commitment Letter were terminated in connection with the closing of the Rexnord Transaction.

Compliance with Financial Covenants

The Credit Agreement requires the Company to meet specified financial ratios and to satisfy certain financial condition tests. The Company was in compliance with all financial covenants contained in the Credit Agreement as of March 31, 2022.

Other Notes Payable

At March 31, 2022, other notes payable of approximately $76.2 million were outstanding with a weighted average interest rate of 5.1%. At January 1, 2022, other notes payable of approximately $78.7 million were outstanding with a weighted average rate of 5.2%.

Other Disclosures

Based on rates for instruments with comparable maturities and credit quality, which are classified as Level 2 inputs (see also Note 14), the approximate fair value of the Company's total debt was $2,060.6 million and $1,918.5 million as of March 31, 2022 and January 1, 2022, respectively.

8. RETIREMENT AND POST RETIREMENT HEALTH CARE PLANS

The following table presents the Company’s net periodic benefit cost (income) components (in millions):

	Three Months Ended
	March 31, 2022		April 3, 2021
Service Cost	$	0.3	$	0.3
Interest Cost	3.6		1.5
Expected Return on Plan Assets	(5.1)		(3.1)
Amortization of Prior Service Cost and Net Actuarial Loss	0.2		0.4
Net Periodic Benefit Income	$	(1.0)	$	(0.9)

The service cost component is included in Cost of Sales and Operating Expenses. All other components of net periodic benefit costs are included in Other Income, Net on the Company's Condensed Consolidated Statements of Income.

For the three months ended March 31, 2022 and April 3, 2021, the Company contributed $1.7 million and $1.2 million, respectively, to post retirement plans. The Company expects to make total contributions of $7.6 million in 2022. The Company contributed a total of $6.0 million in fiscal 2021.

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9. SHAREHOLDERS’ EQUITY

Repurchase of Common Stock

At a meeting of the Board of Directors on October 26, 2021, the Company's Board of Directors approved the authorization to purchase up to $500.0 million of shares. During the three months ended March 31, 2022, the Company purchased 731,194 shares or $114.2 million of common stock. The Company did not repurchase and retire any common stock during the three months ended April 3, 2021.

As of March 31, 2022, there was approximately $320.0 million in common stock available for repurchase under the October 2019 program.

Share-Based Compensation

The Company recognized approximately $6.3 million and $3.3 million in share-based compensation expense for the three months ended March 31, 2022 and April 3, 2021, respectively. The total income tax benefit recognized in the Condensed Consolidated Statements of Income for share-based compensation expense was $1.5 million and $0.6 million for the three months ended March 31, 2022 and April 3, 2021, respectively. The Company recognizes compensation expense on grants of share-based compensation awards on a straight-line basis over the vesting period of each award.

During the three months ended March 31, 2022, the Company granted the following share-based incentive awards:

Award Type	Number of Awards	Weighted Average Grant-Date Fair Value
Options and SARs	135,816	$	42.21
Restricted Stock Units	76,962	$	151.36
Performance Share Units	40,763	$	174.91

See Note 9, Shareholders' Equity, to the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended January 1, 2022, for further information regarding share-based compensation.

10. INCOME TAXES

The effective tax rate for the three months ended March 31, 2022 was 22.2% versus 23.3% for the three months ended April 3, 2021. The effective tax rate for the three months ended March 31, 2022 was lower than the same period in the prior year due to additional tax reserves in the three months ended April 3, 2021 for the repatriation of foreign earnings. The reduction in the effective rate for the three months ended March 31, 2022 was partially offset by the impacts of the Rexnord Transaction in fiscal 2021.

As of March 31, 2022 and January 1, 2022, the Company had approximately $9.1 million and $8.8 million of unrecognized tax benefits, all of which would impact the effective income tax rate if recognized. Potential interest and penalties related to unrecognized tax benefits are recorded in income tax expense. The Company had approximately $1.4 million and $1.3 million of accrued interest as of March 31, 2022 and January 1, 2022, respectively.

With few exceptions, the Company is no longer subject to US Federal and state/local income tax examinations by tax authorities for years prior to 2018, and the Company is no longer subject to non-US income tax examinations by tax authorities for years prior to 2015.

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11. EARNINGS PER SHARE

Diluted earnings per share is calculated based upon earnings applicable to common shares divided by the weighted-average number of common shares outstanding during the period adjusted for the effect of other dilutive securities. The amount of the anti-dilutive shares were 0.1 million and zero for the three months ended March 31, 2022 and April 3, 2021, respectively. The following table reconciles the basic and diluted shares used in earnings per share calculations for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
	March 31, 2022	April 3, 2021
Denominator for Basic Earnings Per Share	67.4	40.6
Effect of Dilutive Securities	0.5	0.4
Denominator for Diluted Earnings Per Share	67.9	41.0

12. CONTINGENCIES

One of the Company's subsidiaries that it acquired in 2007 is subject to numerous claims filed in various jurisdictions relating to certain sub-fractional motors that were primarily manufactured through 2004 and that were included as components of residential and commercial ventilation units manufactured and sold in high volumes by a third party. These ventilation units are subject to product safety requirements and other potential regulation of their performance by government agencies such as the US Consumer Product Safety Commission (“CPSC”). The claims generally allege that the ventilation units were the cause of fires. The Company has recorded an estimated liability for incurred claims. Based on the current facts, the Company cannot assure that these claims, individually or in the aggregate, will not have a material adverse effect on its subsidiary's financial condition. The Company's subsidiary cannot reasonably predict the outcome of these claims, the nature or extent of any CPSC or other remedial actions, if any, that the Company's subsidiary may need to undertake with respect to motors that remain in the field, or the costs that may be incurred, some of which could be significant.

As a result of the Company's acquisition of the Rexnord PMC business, it is entitled to indemnification from third parties to agreements with the Rexnord PMC business against certain contingent liabilities of the Rexnord PMC business, including certain pre-closing environmental liabilities.

The Company believes that, pursuant to the transaction documents related to the Rexnord PMC business' acquisition of the Stearns business from Invensys plc ("Invensys"), Invensys (now known as Schneider Electric) is obligated to defend and indemnify us with respect to the matters described below relating to the Ellsworth Industrial Park Site and to various asbestos claims. The indemnity obligations relating to the matters described below are subject, together with indemnity obligations relating to other matters, to an overall dollar cap equal to the purchase price, which is an amount in excess of $900 million. In the event that the Company is unable to recover from Invensys with respect to the matters below, it may be entitled to indemnification from Zurn, subject to certain limitations. The following paragraphs summarize the most significant actions and proceedings:

•In 2002, the Company's subsidiary, Rexnord Industries, LLC ("Rexnord Industries") was named as a potentially responsible party ("PRP"), together with at least ten other companies, at the Ellsworth Industrial Park Site, Downers Grove, DuPage County, Illinois (the "Site"), by the United States Environmental Protection Agency ("USEPA"), and the Illinois Environmental Protection Agency ("IEPA"). Rexnord Industries' Downers Grove property is situated within the Ellsworth Industrial Complex. The USEPA and IEPA allege there have been one or more releases or threatened releases of chlorinated solvents and other hazardous substances, pollutants or contaminants at the Site, allegedly including but not limited to a release or threatened release on or from Rexnord Industries' property. The relief sought by the USEPA and IEPA includes further investigation and potential remediation of the Site and reimbursement of USEPA's past costs. In early 2020, Rexnord Industries entered into an administrative order with the USEPA to do remediation work on its Downers Grove property. Rexnord Industries' allocated share of past and future costs related to the Site, including for investigation and/or remediation, could be significant. All previously pending property damage and personal injury lawsuits against Rexnord Industries related to the Site have been settled or dismissed. Pursuant to its indemnity obligation, Invensys continues to defend Rexnord Industries in known matters related to the Site, including the costs of the remediation work pursuant to the 2020 administrative order, and has paid 100% of the costs to date. This indemnification right would not protect Rexnord Industries against liabilities related to environmental conditions that were unknown to Invensys at the time of the acquisition of the Stearns business from Invensys.

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•Multiple lawsuits (with approximately 300 claimants) are pending in state or federal court in numerous jurisdictions relating to alleged personal injuries due to the alleged presence of asbestos in certain brakes and clutches previously manufactured by the Rexnord PMC business' Stearns brand of brakes and clutches and/or its predecessor owners. Invensys and FMC, prior owners of the Stearns business, have paid 100% of the costs to date related to the Stearns lawsuits. Similarly, the Rexnord PMC business' Prager subsidiary is the subject of claims by multiple claimants alleging personal injuries due to the alleged presence of asbestos in a product allegedly manufactured by Prager. However, all these claims are currently on the Texas Multi-district Litigation inactive docket, and the Company does not believe that they will become active in the future. To date, the Rexnord PMC business' insurance providers have paid 100% of the costs related to the Prager asbestos matters. We believe that the combination of the Company's insurance coverage and the Invensys indemnity obligations will cover any future costs of these matters.

In connection with the Company's acquisition of the Rexnord PMC business, transaction documents related to the Rexnord PMC business’ acquisition of The Falk Corporation from Hamilton Sundstrand Corporation were assigned to Rexnord Industries, and provide Rexnord Industries with indemnification against certain products related asbestos exposure liabilities. The Company believes that, pursuant to such indemnity obligations, Hamilton Sundstrand is obligated to defend and indemnify Rexnord Industries with respect to asbestos claims described below, and that, with respect to these claims, such indemnity obligations are not subject to any time or dollar limitations.

The following paragraph summarizes the most significant actions and proceedings for which Hamilton Sundstrand has accepted responsibility:

•Rexnord Industries is a defendant in multiple lawsuits pending in state or federal court in numerous jurisdictions relating to alleged personal injuries due to the alleged presence of asbestos in certain clutches and drives previously manufactured by The Falk Corporation. The ultimate outcome of these lawsuits cannot presently be determined. Hamilton Sundstrand is defending Rexnord Industries in these lawsuits pursuant to its indemnity obligations and has paid 100% of the costs to date.

The Company is, from time to time, party to litigation and other legal or regulatory proceedings that arise in the normal course of its business operations and the outcomes of which are subject to significant uncertainty, including product warranty and liability claims, contract disputes and environmental, asbestos, intellectual property, employment and other litigation matters. The Company's products are used in a variety of industrial, commercial and residential applications that subject the Company to claims that the use of its products is alleged to have resulted in injury or other damage. Many of these matters will only be resolved when one or more future events occur or fail to occur. Management conducts regular reviews, including updates from legal counsel, to assess the need for accounting recognition or disclosure of these contingencies, and such assessment inherently involves an exercise in judgment. The Company accrues for exposures in amounts that it believes are adequate, and the Company does not believe that the outcome of any such lawsuit individually or collectively will have a material effect on the Company's financial position, its results of operations or its cash flows.

The Company recognizes the cost associated with its standard warranty on its products at the time of sale. The amount recognized is based on historical experience. The following table presents a reconciliation of the changes in accrued warranty costs for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
	March 31, 2022		April 3, 2021
Beginning Balance	$	23.0	$	15.5
Less: Payments	(5.6)		(4.5)
Provisions	6.0		5.4
Translation Adjustments	—		(0.1)
Ending Balance	$	23.4	$	16.3

These liabilities are included in Other Accrued Expenses and Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets.

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13. DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are commodity price risk, currency exchange risk, and interest rate risk. Forward contracts on certain commodities are entered into to manage the price risk associated with forecasted purchases of materials used in the Company's manufacturing process. Forward contracts on certain currencies are entered into to manage forecasted cash flows in certain foreign currencies. Interest rate swaps are utilized to manage interest rate risk associated with the Company's floating rate borrowings.

The Company is exposed to credit losses in the event of non-performance by the counterparties to various financial agreements, including its commodity hedging transactions, foreign currency exchange contracts and interest rate swap agreements. Exposure to counterparty credit risk is managed by limiting counterparties to major international banks and financial institutions meeting established credit guidelines and continually monitoring their compliance with the credit guidelines. The Company does not obtain collateral or other security to support financial instruments subject to credit risk. The Company does not anticipate non-performance by its counterparties, but cannot provide assurances.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheets. The Company designates commodity forward contracts as cash flow hedges of forecasted purchases of commodities, currency forward contracts as cash flow hedges of forecasted foreign currency cash flows and interest rate swaps as cash flow hedges of forecasted SOFR-based interest payments. There were no significant collateral deposits on derivative financial instruments as of March 31, 2022 or April 3, 2021.

Cash Flow Hedges

The effective portion of the gain or loss on the derivative is reported as a component of AOCI and reclassified into the same line within the Condensed Consolidated Statement of Income as the earnings effect of the hedged item in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or changes in market value of derivatives not designated as hedges are recognized in current earnings.

At March 31, 2022, the Company had $18.2 million, net of tax, of derivative gains on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings. At January 1, 2022, the Company had $5.6 million, net of tax, of derivative gains on closed hedge instruments in AOCI that was subsequently realized in earnings when the hedged items impacted earnings.

As of March 31, 2022, the Company had the following currency forward contracts outstanding (with maturities extending through December 2022) to hedge forecasted foreign currency cash flows (in millions):

	Notional Amount (in US Dollars)
Chinese Renminbi	$	264.0
Mexican Peso	210.4
Euro	209.3
Indian Rupee	59.7
Canadian Dollar	0.1
Australian Dollar	16.4
British Pound	2.0
Thai Baht	1.5

As of March 31, 2022, the Company had the following commodity forward contracts outstanding (with maturities extending through December 2022) to hedge forecasted purchases of commodities (notional amounts expressed in terms of the dollar value of the hedged item (in millions)):

	Notional Amount
Copper	$	158.6
Aluminum	7.9

The Company entered into two receive variable/pay-fixed forward starting non-amortizing interest rate swaps in June 2020, with a total notional amount of $250.0 million. The cash proceeds of $16.2 million received to settle the terminated swaps in

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March 2022 will be recognized as a reduction of interest expense via the effective interest rate method through July 2025 when the terminated swaps were scheduled to expire.

The following table presents the fair values of derivative instruments as of March 31, 2022 and January 1, 2022 (in millions):

	March 31, 2022
	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Other Accrued Expenses		Other Noncurrent Liabilities
Designated as Hedging Instruments:
Currency Contracts	$	13.5	$	1.7	$	0.5	$	—
Commodity Contracts	13.8		1.7		0.1		0.1
Not Designated as Hedging Instruments:
Currency Contracts	0.6		—		0.2		—
Commodity Contracts	0.8		0.1		—		—
Total Derivatives	$	28.7	$	3.5	$	0.8	$	0.1

	January 1, 2022
	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Other Accrued Expenses		Other Noncurrent Liabilities
Designated as Hedging Instruments:
Interest Rate Swap Contracts	$	—	$	5.3	$	—	$	—
Currency Contracts	8.3		0.7		1.3		—
Commodity Contracts	8.9		0.1		1.2		0.5
Not Designated as Hedging Instruments:
Currency Contracts	0.3		—		0.4		—
Commodity Contracts	0.4		—		—		0.1
Total Derivatives	$	17.9	$	6.1	$	2.9	$	0.6

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The following table presents the effect of derivative instruments on the Condensed Consolidated Statements of Income and Condensed Consolidated Statement of Comprehensive Income (pre-tax) (in millions):

Derivatives Designated as Cash Flow Hedging Instruments

	Three Months Ended
	March 31, 2022								April 3, 2021
	Commodity Forwards		Currency Forwards		Interest Rate Swaps		Total		Commodity Forwards		Currency Forwards		Interest Rate Swaps		Total
Gain Recognized in Other Comprehensive Income (Loss)	$	13.4	$	10.4	$	10.6	$	34.4	$	14.1	$	0.2	$	4.9	$	19.2
Amounts Reclassified from Other Comprehensive Income (Loss):
Gain recognized in Net Sales	—		0.1		—		0.1		—		0.1		—		0.1
Gain Recognized in Cost of Sales	5.2		3.0		—		8.2		5.2		2.6		—		7.8
Gain Recognized in Operating Expenses	—		—		—		—		—		3.5		—		3.5
(Loss) Gain Recognized in Interest Expense	—		—		(0.3)		(0.3)		—		—		0.1		0.1

Derivatives Not Designated as Cash Flow Hedging Instruments (in millions):

	Three Months Ended
	March 31, 2022				April 3, 2021
	Commodity Forwards		Currency Forwards		Commodity Forwards		Currency Forwards
Gain recognized in Cost of Sales	$	0.6	$	—	$	0.2	$	—
Gain recognized in Operating Expenses	—		1.5		—		5.8

The net AOCI hedging component balance of a $41.1 million gain at March 31, 2022 includes $28.6 million of net current deferred gain expected to be realized in the next twelve months. The gain/loss reclassified from AOCI into earnings on such derivatives will be recognized in the same period in which the related item affects earnings.

The Company's commodity and currency derivative contracts are subject to master netting agreements with the respective counterparties which allow the Company to net settle transactions with a single net amount payable by one party to another party. The Company has elected to present the derivative assets and derivative liabilities on the Condensed Consolidated Balance Sheets on a gross basis for the periods ended March 31, 2022 and January 1, 2022.

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The following table presents the derivative assets and derivative liabilities presented on a net basis under enforceable master netting agreements (in millions):

	March 31, 2022
	Gross Amounts as Presented in the Condensed Consolidated Balance Sheet		Derivative Contract Amounts Subject to Right of Offset		Derivative Contracts as Presented on a Net Basis
Prepaid Expenses and Other Current Assets:
Derivative Currency Contracts	$	14.1	$	(0.7)	$	13.4
Derivative Commodity Contracts	14.6		(0.1)		14.5
Other Noncurrent Assets:
Derivative Currency Contracts	1.7		—		1.7
Derivative Commodity Contracts	1.8		(0.1)		1.7
Other Accrued Expenses:
Derivative Currency Contracts	0.7		(0.7)		—
Derivative Commodity Contracts	0.1		(0.1)		—
Other Noncurrent Liabilities:
Derivative Commodity Contracts	0.1		(0.1)		—

	January 1, 2022
	Gross Amounts as Presented in the Condensed Consolidated Balance Sheet		Derivative Contract Amounts Subject to Right of Offset		Derivative Contracts as Presented on a Net Basis
Prepaid Expenses and Other Current Assets:
Derivative Currency Contracts	$	8.6	$	(1.7)	$	6.9
Derivative Commodity Contracts	9.3		(1.2)		8.1
Other Noncurrent Assets:
Derivative Currency Contracts	0.7		—		0.7
Derivative Commodity Contracts	0.1		(0.1)		—
Other Accrued Expenses:
Derivative Currency Contracts	1.7		(1.7)		—
Derivative Commodity Contracts	1.2		(1.2)		—
Other Noncurrent Liabilities:
Derivative Commodity Contracts	0.6		(0.1)		0.5

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14. FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or
	Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
	Inputs other than quoted prices that are observable for the asset or liability
Level 3	Unobservable inputs for the asset or liability

The Company uses the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The fair values of cash equivalents and short-term deposits approximate their carrying values as of March 31, 2022 and January 1, 2022, due to the short period of time to maturity and are classified using Level 1 inputs. The fair values of trade receivables and accounts payable approximate the carrying values due to the short period of time to maturity. See Note 7 for disclosure of the approximate fair value of the Company's debt at March 31, 2022 and January 1, 2022.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2022 and January 1, 2022 (in millions):

	March 31, 2022		January 1, 2022		Classification
Assets:
Prepaid Expenses and Other Current Assets:
Derivative Currency Contracts	$	14.1	$	8.6	Level 2
Derivative Commodity Contracts	14.6		9.3		Level 2
Other Noncurrent Assets:
Assets Held in Rabbi Trust	6.7		6.8		Level 1
Derivative Currency Contracts	1.7		0.7		Level 2
Derivative Commodity Contracts	1.8		0.1		Level 2
Interest Rate Swap	—		5.3		Level 2
Liabilities:
Other Accrued Expenses:
Derivative Currency Contracts	0.7		1.7		Level 2
Derivative Commodity Contracts	0.1		1.2		Level 2
Other Noncurrent Liabilities:
Derivative Commodity Contracts	0.1		0.6		Level 2

Level 1 fair value measurements for assets held in a Rabbi Trust are unadjusted quoted prices.

Level 2 fair value measurements for derivative assets and liabilities are measured using quoted prices in active markets for similar assets and liabilities. Interest rate swaps are valued based on the discounted cash flows for the LIBOR forward yield curve for a swap with similar contractual terms. Foreign currency forwards are valued based on exchange rates quoted by domestic and foreign banks for similar instruments. Commodity forwards are valued based on observable market transactions of forward commodity prices.

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15. RESTRUCTURING ACTIVITIES

The Company incurred restructuring and restructuring-related costs on projects during fiscal 2022 and 2021. In conjunction with the Rexnord Transaction, the Company initiated a restructuring plan to achieve cost synergies from procurement, distribution efficiencies, footprint rationalization and other general cost savings measures. Restructuring costs include employee termination and plant relocation costs. Restructuring-related costs also include costs directly associated with actions resulting from the Company's simplification initiatives, such as asset write-downs or accelerated depreciation due to shortened useful lives in connection with site closures, discretionary employment benefit costs and other facility rationalization costs. Restructuring costs for employee termination expenses are generally recognized when the severance liability is determined to be probable of being paid and reasonably estimable while plant relocation costs and related costs are generally required to be expensed as incurred.

The following table presents a reconciliation of provisions and payments for the restructuring projects for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
	March 31, 2022		April 3, 2021
Beginning Balance	$	5.0	$	2.0
Provision	16.8		1.7
Less: Payments/ Other	7.3		1.0
Ending Balance	$	14.5	$	2.7

The following table presents a reconciliation of restructuring and restructuring-related costs for restructuring projects for the three months ended March 31, 2022 and April 3, 2021, respectively (in millions):

	Three Months Ended
	March 31, 2022						April 3, 2021
Restructuring Costs:	Cost of Sales		Operating Expenses		Total		Cost of Sales		Operating Expenses		Total
Employee Termination Expenses	$	4.8	$	3.6	$	8.4	$	0.2	$	0.4	$	0.6
Facility Related Costs	8.0		0.4		8.4		0.8		0.2		1.0
Other Expenses	—		—		—		0.1		—		0.1
Total Restructuring Costs	$	12.8	$	4.0	$	16.8	$	1.1	$	0.6	$	1.7

The following table presents the allocation of restructuring and restructuring-related costs by segment for the three months ended March 31, 2022 and April 3, 2021 (in millions):

Restructuring Costs - Three Months Ended	Total		Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions
March 31, 2022	$	16.8	$	0.7	$	—	$	0.3	$	15.8
April 3, 2021	$	1.7	$	0.2	$	0.5	$	0.3	$	0.7

The Company's current restructuring activities are expected to continue through 2023. The Company expects to record aggregate future charges of approximately $43.3 million in 2022. The Company continues to evaluate operating efficiencies and anticipates incurring additional costs in future periods in connection with these activities.

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16. SUBSEQUENT EVENT

The Company has evaluated subsequent events since March 31, 2022, the date of these financial statements, and is aware of the following event to disclose.

On April 7, 2022, the Company entered into a Note Purchase Agreement with certain institutional accredited investors (the “Note Purchase Agreement”) governing the issuance and sale of $500,000,000 aggregate principal amount of 3.90% senior notes due April 7, 2032 (the “Senior Notes”), in an offering exempt from the registration requirements of the Securities Act of 1933, as amended. The Company expects to use the net proceeds from the offering for general corporate purposes. The Note Purchase Agreement contains customary representations, warranties and covenants of the Company. The Company may, at its option, prepay at any time all, or from time to time any part of, the Senior Notes, in an amount not less than 5% of the aggregate principal amount of the Senior Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and a make-whole amount determined as provided in the Note Purchase Agreement for the prepayment date with respect to such principal amount. The Company's obligations under the Note Purchase Agreement and Senior Notes are unconditionally guaranteed by certain subsidiary guarantors.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context requires otherwise, references in this Item 2 to “we,” “us,” “our” or the “Company” refer collectively to Regal Rexnord Corporation and its subsidiaries.

Overview

Regal Rexnord Corporation (NYSE: RRX), based in Beloit, Wisconsin (USA), is a global leader in the engineering and manufacturing of industrial powertrain solutions, power transmission components, electrical motors and electronic controls, air moving products and specialty electrical components and systems, serving customers around the world. Through longstanding technology leadership and an intentional focus on producing more energy-efficient products and systems, we help create a better tomorrow – for our customers and for the planet.

Operating Segments

Our company is comprised of four operating segments: Commercial Systems, Industrial Systems, Climate Solutions and Motion Control Solutions.

A description of our four operating segments is as follows:

•Commercial Systems segment designs and produces fractional to approximately 5 horsepower AC and DC motors, electronic variable speed controls, fans, and blowers for commercial applications. These products serve markets including commercial building ventilation and HVAC, pool and spa, irrigation, dewatering, agriculture, and general commercial equipment.

•Industrial Systems segment designs and produces integral motors, automatic transfer switches, alternators and switchgear for industrial applications, along with aftermarket parts and kits to support such products. These products serve markets including agriculture, marine, mining, oil and gas, food and beverage, data centers, healthcare, prime and standby power, and general industrial equipment.

•Climate Solutions segment designs and produces small motors, electronic variable speed controls and air moving solutions serving markets including residential and light commercial HVAC, water heaters and commercial refrigeration.

•Motion Control Solutions segment designs, produces and services mounted and unmounted bearings, conveyor products, conveying automation solutions, couplings, mechanical power transmission drives and components, gearboxes and gear motors, aerospace components, special components products and industrial powertrain components and solutions serving a broad range of markets including food and beverage, bulk handling, eCommerce/warehouse distribution, energy, aerospace and general industrial.

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Components of Profit and Loss

Net Sales. We sell our products to a variety of manufacturers, distributors and end users. Our customers consist of a large cross-section of businesses, ranging from Fortune 100 companies to small businesses. A number of our products are sold to Original Equipment Manufacturers ("OEMs"), who incorporate our products, such as electric motors, into products they manufacture, and many of our products are built to the requirements of our customers. The majority of our sales derive from direct sales to customers by sales personnel employed by the Company, however, a significant portion of our sales are derived from sales made by manufacturer’s representatives, who are paid exclusively on commission. Our product sales are made via purchase order, long-term contract, and, in some instances, one-time purchases. Many of our products have broad customer bases, with the levels of concentration of revenues varying from business unit to business unit.

Our level of net sales for any given period is dependent upon a number of factors, including (i) the demand for our products; (ii) the strength of the economy generally and the end markets in which we compete; (iii) our customers’ perceptions of our product quality at any given time; (iv) our ability to timely meet customer demands; (v) the selling price of our products; and (vi) the weather. As a result, our total revenue has tended to experience quarterly variations and our total revenue for any particular quarter may not be indicative of future results.

We use the term “organic sales" to refer to sales from existing operations excluding (i) sales from acquired businesses recorded prior to the first anniversary of the acquisition (“Acquisition Sales”), (ii) less the amount of sales attributable to any businesses divested/to be exited, and (iii) the impact of foreign currency translation. The impact of foreign currency translation is determined by translating the respective period’s organic sales using the same currency exchange rates that were in effect during the prior year periods. We use the term “organic sales growth” to refer to the increase in our sales between periods that is attributable to organic sales. We use the term “acquisition growth” to refer to the increase in our sales between periods that is attributable to Acquisition Sales.

Gross Profit. Our gross profit is impacted by our levels of net sales and cost of sales. Our cost of sales consists of costs for, among other things (i) raw materials, including copper, steel and aluminum; (ii) components such as castings, bars, tools, bearings and electronics; (iii) wages and related personnel expenses for fabrication, assembly and logistics personnel; (iv) manufacturing facilities, including depreciation on our manufacturing facilities and equipment, insurance and utilities; and (v) shipping. The majority of our cost of sales consists of raw materials and components. The price we pay for commodities and components can be subject to commodity price fluctuations. We attempt to mitigate this through fixed-price agreements with suppliers and our hedging strategies. When we experience commodity price increases, we have tended to announce price increase to our customers who purchase via purchase order, with such increases generally taking effect a period of time after the public announcements. For those sales we make under long-term contracts, we tend to include material price formulas that specify quarterly or semi-annual price adjustments based on a variety of factors, including commodity prices.

Outside of general economic cyclicality, our business units experience different levels of variation in gross profit from quarter to quarter based on factors specific to each business. For example, a portion of our Climate Solutions segment manufactures products that are used in air conditioning applications. As a result, our sales for that business tend to be lower in the first and fourth quarters and higher in the second and third quarters. In contrast, our Commercial Systems segment, Industrial Systems segment and Motion Control Solutions segment have a broad customer base and a variety of applications, thereby helping to mitigate large quarter-to-quarter fluctuations outside of general economic conditions.

Operating Expenses. Our operating expenses consist primarily of (i) general and administrative expenses; (ii) sales and marketing expenses; (iii) general engineering and research and development expenses; and (iv) handling costs incurred in conjunction with distribution activities. Personnel related costs are our largest operating expense.

Our general and administrative expenses consist primarily of costs for (i) salaries, benefits and other personnel expenses related to our executive, finance, human resource, information technology, legal and operations functions; (ii) occupancy expenses; (iii) technology related costs; (iv) depreciation and amortization; and (v) corporate-related travel. The majority of our general and administrative costs are for salaries and related personnel expenses. These costs can vary by business given the location of our different manufacturing operations.

Our sales and marketing expenses consist primarily of costs for (i) salaries, benefits and other personnel expenses related to our sales and marketing function; (ii) internal and external sales commissions and bonuses; (iii) travel, lodging and other out-of-pocket expenses associated with our selling efforts; and (iv) other related overhead.

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Our general engineering and research and development expenses consist primarily of costs for (i) salaries, benefits and other personnel expenses; (ii) the design and development of new energy efficiency products and enhancements; (iii) quality assurance and testing; and (iv) other related overhead. Our research and development efforts tend to be targeted toward developing new products that would allow us to maintain or gain additional market share, whether in new or existing applications. In particular, a large driver of our research and development efforts in those three segments is energy efficiency, which generally means using less electrical power to produce more mechanical power.

Operating Profit. Our operating profit consists of the segment gross profit less the segment operating expenses. In addition, there are shared operating costs that cover corporate and information technology expenses that are consistently allocated to the operating segments and are included in the segment operating expenses. Operating profit is a key metric used to measure year over year improvement of the segments.

Restructuring and Restructuring Related Costs. We incurred restructuring-related costs on employee termination and plant relocation costs including cost synergies related to the Rexnord Transaction. Restructuring related costs includes costs directly associated with actions resulting from our simplification initiatives, such as asset write-downs or accelerated depreciation due to shortened useful lives in connection with site closures, discretionary employment benefit costs and other facility rationalization costs. Restructuring costs for employee termination expenses are generally recognized when the severance liability is determined to be probable of being paid and reasonably estimable while plant relocation costs and related costs are generally required to be expensed as incurred.

COVID-19 Pandemic

COVID-19 evolved during 2020 into a global pandemic, resulting in a severe global health crisis that drove a dramatic slowdown in global economic and social activity. As the COVID-19 pandemic continues, health risks remain.

In the face of this global crisis, our first priority has been the health and safety of our associates. In response, we implemented a host of measures to help our associates stay safe, measures that have been enhanced and refined as impacts from COVID-19 evolved, and as our knowledge about how to enhance their effectiveness improved.

Factors deriving from the COVID-19 response that have or may negatively impact sales and operating profit in the future include, but are not limited to: limitations on the ability of our suppliers to manufacture, or procure from manufacturers, components and raw materials used in our products, or to meet delivery requirements and commitments; limitations on the ability of our employees to perform their work due to illness caused by the pandemic or local, state, or federal orders requiring employees to remain at home; inconsistent criteria in certain international jurisdictions for establishing the essentiality of our business; limitations on the ability of carriers to deliver our products to customers; limitations on the ability of our customers to conduct their business and purchase our products and services; reductions in demands of our customers; and limitations on the ability of our customers to pay us on a timely basis.

We continue to monitor the pandemic and make adjustments to the business as necessary to address any limitations or negative impacts.

Rexnord and Arrowhead Transactions

On October 4, 2021, in accordance with the terms and conditions of the Agreement and Plan of Merger, dated February 15, 2021 (the “Merger Agreement”), we completed our combination with the Rexnord PMC business of Zurn Water Solutions Corporation (formerly known as Rexnord Corporation) (“Zurn”) in a Reverse Morris Trust transaction (the “Rexnord Transaction”). Pursuant to the Rexnord Transaction, (1) Zurn transferred to its then-subsidiary Land Newco, Inc. (“Land”) substantially all of the assets, and Land assumed substantially all of the liabilities, of the Rexnord PMC business (the “Reorganization”), (2) after which, all of the issued and outstanding shares of common stock, $0.01 par value per share, of Land (“Land common stock”) held by a subsidiary of Zurn were distributed in a series of distributions to Zurn’s stockholders (the distributions, and the final distribution of Land common stock from Zurn to Zurn’s stockholders, which was made pro rata for no consideration, the “Spin-Off”) and (3) immediately after the Spin-Off, one of our subsidiaries (“Merger Sub”) merged with and into Land (the “Merger”) and all shares of Land common stock (other than those held by Zurn, Land, the Company, Merger Sub or their respective subsidiaries) were converted into the right to receive 0.22296103 shares of our common stock, $0.01 par value per share(“Company common stock”), as calculated in the Merger Agreement. When the Merger was completed, Land which held the Rexnord PMC business, became our wholly owned subsidiary.

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Pursuant to the Merger, we issued 27,055,945 shares of common stock to holders of Land common stock, which represented approximately 39.9% of the 67,756,732 outstanding shares of Company common stock immediately following the completion of the Merger.

In addition, shareholders of record as of October 1, 2021 received a special dividend of $6.99 per share (or approximately $284.4 million in aggregate) pursuant to a special dividend in connection with the Rexnord Transaction.

In connection with the Rexnord Transaction, we entered into certain financing arrangements, which are described below under “Liquidity and Capital Resources”.

On November 23, 2021, we acquired Arrowhead Systems, LLC, ("Arrowhead") for $315.6 million in cash, net of $1.1 million of cash acquired (the "Arrowhead Transaction"). Arrowhead is a global leader in providing industrial process automation solutions, including conveyors and (de)palletizers to the food & beverage, aluminum can, and consumer staples end markets, among others. Arrowhead is a division of our Motion Control Solutions segment, and its financials have been included in results for that segment from the date of acquisition.

Change in Fiscal Year End

At a meeting of the Board of Directors of Regal Rexnord Corporation on October 26, 2021, the Board approved a change in the fiscal year end from a 52-53 week year ending on the Saturday closest to December 31 to a calendar year ending on December 31, effective beginning with fiscal year 2022. We made the fiscal year change on a prospective basis and will not adjust operating results for prior periods. However, the change will impact the prior year comparability of each of the fiscal quarters and the annual period in 2022 and in future filings. We believe this change will provide numerous benefits, including aligning its reporting periods to be more consistent with peer companies.

Change in Accounting Principle

As of January 2, 2022, we changed our methodology for valuing certain inventories to the first-in, first-out ("FIFO") cost method from the last-in, first-out ("LIFO") cost method. The effects of this change have been retrospectively applied to all periods presented.

Outlook

We are forecasting mid-single digit to high-single digit sales growth. We expect to see positive impact from our transactions and new products.

Results of Operations

Three Months Ended March 31, 2022 Compared to April 3, 2021

Net sales increased $484.4 million or 59.5% for the first quarter 2022 compared to the first quarter 2021. The increase consisted of positive impact from acquisitions of 45.1% and positive organic sales of 15.2% offset by negative foreign currency translation of 0.8%. The increase was primarily driven by sales increases in North American markets and the acquisitions of the Rexnord PMC and Arrowhead businesses. Gross profit increased $172.1 million or 68.9% for the first quarter 2022 as compared to the first quarter 2021. The increase in gross profit was driven by increase in volume and the acquisitions of the Rexnord PMC and Arrowhead businesses, partially offset by increased freight and material costs. Total operating expenses for the first quarter 2022 increased $103.7 million or 69.9% as compared to the first quarter 2021. The increase was primarily driven by the acquisitions of the Rexnord PMC and Arrowhead businesses, higher employee related wage and benefit costs and transaction costs.

Commercial Systems segment net sales for the first quarter 2022 were $293.3 million, an increase of $56.3 million or 23.8% as compared to the first quarter 2021. The increase consisted of positive organic sales of 24.8% offset by negative foreign currency translation of 1.0%. The increase was primarily driven by strong growth in general industry in North America as well as solid gains in the pool pump business. Gross profit increased $27.5 million or 41.2% as compared to the first quarter 2021. The increase in gross profit was primarily driven by the increase in price, volume and favorable product mix, partially offset by higher material costs due to inflation. Total operating expenses for the first quarter 2022 were $41.4 million compared to $38.0 million in the first quarter 2021. The $3.4 million or 8.9% increase was primarily driven by higher employee related wage and benefit costs as well as inflation.

Industrial Systems segment net sales for the first quarter 2022 were $144.7 million, an increase of $8.3 million or 6.1% as compared to the first quarter 2021. The increase consisted of positive organic sales of 7.1% offset by negative foreign currency

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translation of 1.0%. The increase was primarily driven by strength in the data center market for generators and demand for industrial motors in North America. Gross profit increased $3.3 million or 11.8% as compared to the first quarter 2021. The increase in gross profit was primarily driven by the increase in volume and price realization, partially offset by material inflation. Total operating expenses for the first quarter 2022 and 2021 were $23.4 million and $23.1 million, respectively. The slight increase in operating expenses was due to employee related wage and benefit costs, higher variable selling costs on stronger sales volume, and increased administrative costs.

Climate Solutions segment net sales were $273.9 million, an increase of $34.8 million or 14.6% as compared to the first quarter 2021. The increase consisted of positive organic sales of 14.9% offset by negative foreign currency translation of 0.3%. The increase was primarily due to continued strong demand in North American residential HVAC and combustion markets and recovering demand in EMEA. Gross profit increased $7.8 million or 10.3% compared to the first quarter 2021. The increase in gross profit was primarily driven by increased volume, favorable mix and 80/20 actions, partially offset by material and freight inflation. Total operating expenses for the first quarter 2022 were $31.7 million compared to $30.7 million in the first quarter 2021. The slight increase was primarily due to higher expenses related to commissions (higher volume), travel, compensation and benefits.

Motion Control Solutions segment net sales for the first quarter 2022 were $586.6 million, an increase of $385.0 million or 191.0% compared to first quarter 2021 net sales of $201.6 million. The increase consisted of positive impact from acquisitions of 182.1% and positive organic sales of 9.9% offset by negative foreign currency of 1.0%. The increase was primarily driven by the acquisitions of the Rexnord PMC and Arrowhead businesses in addition to strength in alternative energy, the North America general industrial market, the conveying business, and improving demand in Europe in addition to meaningful share gains tied to our industrial powertrain offering. Gross profit for the first quarter 2022 increased $133.5 million or 167.7%. The increase was driven by the acquisitions of the Rexnord PMC and Arrowhead businesses, higher sales volume with favorable mix and lower overhead cost driven by cost reduction initiatives. Total operating expenses for the first quarter 2022 increased $99.0 million as compared to the first quarter 2021, primarily due to the acquisitions of the Rexnord PMC and Arrowhead businesses.

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	Three Months Ended
	March 31, 2022			April 3, 2021
(Dollars in Millions)
Net Sales:
Commercial Systems	$	293.3		$	237.0
Industrial Systems	144.7			136.4
Climate Solutions	273.9			239.1
Motion Control Solutions	586.6			201.6
Consolidated	$	1,298.5		$	814.1
Gross Profit as a Percent of Net Sales:
Commercial Systems	32.2		%	28.2		%
Industrial Systems	21.6		%	20.5		%
Climate Solutions	30.4		%	31.5		%
Motion Control Solutions	36.3		%	39.5		%
Consolidated	32.5		%	30.7		%
Operating Expenses as a Percent of Net Sales:
Commercial Systems	14.1		%	16.0		%
Industrial Systems	16.2		%	16.9		%
Climate Solutions	11.6		%	12.8		%
Motion Control Solutions	26.5		%	28.0		%
Consolidated	19.4		%	18.2		%
Income from Operations as a Percent of Net Sales:
Commercial Systems	18.0		%	12.2		%
Industrial Systems	5.5		%	3.6		%
Climate Solutions	18.8		%	18.7		%
Motion Control Solutions	9.8		%	11.5		%
Consolidated	13.1		%	12.5		%
Income from Operations	$	169.9		$	101.5
Other Income, Net	(1.3)			(1.2)
Interest Expense	9.0			12.6
Interest Income	(1.1)			(1.5)
Income before Taxes	163.3			91.6
Provision for Income Taxes	36.2			21.3
Net Income	127.1			70.3
Less: Net Income Attributable to Noncontrolling Interests	1.5			1.4
Net Income Attributable to Regal Rexnord Corporation	$	125.6		$	68.9

    

The effective tax rate for the three months ended March 31, 2022 was 22.2% versus 23.3% for the three months ended April 3, 2021. The effective tax rate for the three months ended March 31, 2022 was lower than the same period in the prior year due to additional tax reserves in the three months ended April 3, 2021 for the repatriation of foreign earnings. The reduction in the effective rate for the three months ended March 31, 2022 was partially offset by the impacts of the Rexnord Transaction in fiscal 2021.

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Liquidity and Capital Resources

General

Our principal source of liquidity is cash flow provided by operating activities. In addition to operating income, other significant factors affecting our cash flow include working capital levels, capital expenditures, dividends, share repurchases, acquisitions and divestitures, availability of debt financing and the ability to attract long-term capital at acceptable terms.

Cash flow used in operating activities was $5.9 million for the three months ended March 31, 2022, a $55.4 million decrease from the three months ended April 3, 2021. The change is a result of an increase in working capital which is partially offset by proceeds received from the early termination of interest rate swaps for the three months ended March 31, 2022 compared to the three months ended April 3, 2021.

Cash flow used in investing activities was $47.0 million for the three months ended March 31, 2022 as compared to cash flow used in investing activities of $11.7 million for the three months ended April 3, 2021. The change was driven primarily by higher cash used for capital purchases and business acquisitions in the current year compared to the prior year.

Cash flow provided by financing activities was $3.7 million for the three months ended March 31, 2022, compared to $76.7 million used in financing activities for the three months ended April 3, 2021. We had net debt borrowings of $145.7 million during the three months ended March 31, 2022, compared to net debt repayments of $50.3 million during the three months ended April 3, 2021. There were $114.2 million share repurchases for the three months ended March 31, 2022, compared to no shares repurchases for the three months ended April 3, 2021. There were $22.3 million of dividends paid for the three months ended March 31, 2022, compared to $12.2 million of dividends in the prior year. There were $4.5 million in financing fees paid for the three months ended March 31, 2022, compared to $12.4 million of fees in the prior year.

Our working capital was $1,915.8 million at March 31, 2022, compared to $1,713.3 million at January 1, 2022. At March 31, 2022 and January 1, 2022, our current ratio (which is the ratio of our current assets to current liabilities) was 2.8:1 and 2.6:1, respectively. Our working capital increased primarily due to the increase in accounts receivables and inventory offset by an increase in accounts payable and decrease in cash.

The following table presents selected financial information and statistics as of March 31, 2022 and January 1, 2022 (in millions):

	March 31, 2022		January 1, 2022
Cash and Cash Equivalents	$	624.7	$	672.8
Trade Receivables, Net	832.2		785.8
Inventories	1,336.9		1,192.4
Working Capital	1,915.8		1,713.3
Current Ratio	2.8:1		2.6:1

As of March 31, 2022, $580.8 million of our cash was held by foreign subsidiaries and could be used in our domestic operations if necessary. We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations. We regularly assess our cash needs and the available sources to fund these needs which includes repatriation of foreign earnings which may be subject to withholding taxes. Under current law, we do not expect restrictions or taxes on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition or the results of operations for the foreseeable future.

We will, from time to time, maintain excess cash balances which may be used to (i) fund operations, (ii) repay outstanding debt, (iii) fund acquisitions, (iv) pay dividends, (v) make investments in new product development programs, (vi) repurchase our common stock, or (vii) fund other corporate objectives.

Credit Agreement

On March 28, 2022, we entered into a Second Amended and Restated Credit Agreement with our lenders (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders named therein. The Credit Agreement (i) replaces in its entirety the Amended and Restated Credit Agreement, dated as of August 27, 2018, as amended by that First Amendment, dated March 17, 2021, among the Company and other parties thereto and (ii) amends and restates in its entirety the Amended and Restated Credit Agreement, dated as of October 4, 2021, among Land and the other parties thereto (collectively, the “Former Credit Agreements”).

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The Credit Agreement provides for, among other things, an extension of the maturity date of the revolving credit facility and term loans provided under the Former Credit Agreements. The credit facilities extended under the Credit Agreement consist of (i) an unsecured term loan facility in the initial principal amount of up to $550,000,000, maturing on March 28, 2027 (the "Term Facility"); (ii) an unsecured term loan facility in the initial principal amount of $486,827,669, under which Land remains the sole borrower, maturing on March 28, 2027 (the "Land Term Facility"); and (iii) an unsecured revolving loan in the initial principal amount of up to $1,000,000,000, maturing on March 28, 2027 (the "Multicurrency Revolving Facility"). Interest for benchmark rate loans is calculated based on a SOFR benchmark rate, plus a margin spread to be adjusted quarterly based on our funded debt to EBITDA ratio. The Credit Agreement is subject to customary and market provisions. Our subsidiaries that provide a guaranty of our and Land's obligations under the Former Credit Agreements also entered into subsidiary guaranty agreements with respect to the obligations under the Credit Agreement.

The Term Facility was drawn in full on March 28, 2022 to refinance the Former Credit Agreements, pay fees, costs, and other expenses incurred therewith, to fund working capital needs and for our general corporate purposes. The Term Facility requires quarterly amortization at 5.0% per annum, unless previously prepaid. Per the terms of the Credit Agreement, prepayments can be made without penalty and be applied to the next payment due. After the prepayment is considered, the next payment in the amortization schedule is not due within one year and therefore no current maturities of debt will be recognized for this agreement.

The Credit Agreement requires that we prepay the loans under the Term Facility with 100% of the net cash proceeds received from specified asset sales and borrowed money indebtedness, subject to certain exceptions.

At March 31, 2022, we had $955.0 million of borrowings under the Multicurrency Revolving Facility, $0.1 million of standby letters of credit issued under the facility, and $44.9 million of available borrowing capacity. For the three months ended March 31, 2022 and April 3, 2021 under the Multicurrency Revolving Facility, the average daily balance in borrowings was $773.7 million and $7.4 million, respectively, and the weighted average interest rate was 1.7% and 1.4%, respectively. We pay a non-use fee on the aggregate unused amount of the Multicurrency Revolving Facility at a rate determined by reference to its consolidated funded debt to consolidated EBITDA ratio.

As of March 31, 2022, we had $486.8 million of borrowings under the Land Term Facility. The Land Term Facility has no required amortization. The weighted average interest rate on the Land Term Facility for three months ended March 31, 2022 was 1.7%.

In connection with the Rexnord Transaction, on February 15, 2021, we entered into a debt commitment letter (the “Bridge Commitment Letter”) and related fee letters with Barclays Bank PLC (“Barclays”), pursuant to which, and subject to the terms and conditions set forth therein, Barclays committed to provide approximately $2.1 billion in an aggregate principal amount of senior bridge loans under a 364-day senior bridge loan credit facility (the “Bridge Facility”). As the Rexnord Transaction was consummated and the payments of amounts in connection therewith occurred without the use of the Bridge Facility, the commitments under the Bridge Commitment Letter were terminated in connection with the closing of the Rexnord Transaction.

Compliance with Financial Covenants

The Credit Agreement require us to meet specified financial ratios and to satisfy certain financial condition tests. We were in compliance with all financial covenants contained in the Credit Agreement as of March 31, 2022.

Other Notes Payable

At March 31, 2022, other notes payable of approximately $76.2 million were outstanding with a weighted average interest rate of 5.1%. At January 1, 2022, other notes payable of approximately $78.7 million were outstanding with a weighted average rate of 5.2%.

Other Disclosures

Based on rates for instruments with comparable maturities and credit quality, which are classified as Level 2 inputs (see also Note 14 of Notes to the Condensed Consolidated Financial Statements), the approximate fair value of our total debt was $2,060.6 million and $1,918.5 million as of March 31, 2022 and January 1, 2022, respectively.

Critical Accounting Policies

Our disclosures of critical accounting policies, which are contained in our Annual Report on Form 10-K for the year ended January 1, 2022, have not materially changed since that report was filed.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk relating to our operations due to changes in interest rates, foreign currency exchange rates and commodity prices of purchased raw materials. We manage the exposure to these risks through a combination of normal operating and financing activities and derivative financial instruments such as interest rate swaps, commodity cash flow hedges and foreign currency forward exchange contracts. All hedging transactions are authorized and executed pursuant to clearly defined policies and procedures, which prohibit the use of financial instruments for speculative purposes.

Generally hedges are recorded on the balance sheet at fair value and are accounted for as cash flow hedges, with changes in fair value recorded in Accumulated Other comprehensive Income (Loss) (“AOCI”) in each accounting period. An ineffective portion of the hedges change in fair value, if any, is recorded in earnings in the period of change.

Interest Rate Risk

We are exposed to interest rate risk on certain of our outstanding debt obligations used to finance our operations and acquisitions. Loans under the Credit Agreement bear interest at variable rates plus a margin, based on our consolidated net leverage ratio. At March 31, 2022, excluding the impact of interest rate swaps, we had $76.0 million of fixed rate debt and $1,992.0 million of variable rate debt. We utilize interest rate swaps to manage fluctuations in cash flows resulting from exposure to interest rate risk on forecasted variable rate interest payments.

We have floating rate borrowings, which expose us to variability in interest payments due to changes in interest rates. A hypothetical 10% change in our weighted average borrowing rate on outstanding variable rate debt at March 31, 2022 would result in a $3.5 million change in after-tax annualized earnings. We entered into two forward starting pay fixed/receive floating non-amortizing interest rate swaps in June 2020, with a total notional amount of $250.0 million to manage fluctuations in cash flows from interest rate risk related to floating rate interest. These swaps were terminated in March 2022 upon closing the Credit Agreement. The cash proceeds of $16.2 million received to settle the terminated swaps will be recognized into interest expense via the effective interest rate method through July 2025 when the terminated swaps were scheduled to expire. Upon inception, the swaps were designated as a cash flow hedges against forecasted interest payments with gains and losses, net of tax, measured on an ongoing basis, recorded in AOCI.

As of March 31, 2022, the interest rate swaps were settled. At January 1, 2022, a $5.3 million interest rate swap was included in Other Noncurrent Assets. There was an unrealized gain of $12.3 million and $4.0 million, net of tax, at March 31, 2022 and January 1, 2022, respectively, that was recorded in AOCI for the effective portion of the hedge.

Foreign Currency Risk

We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances of foreign subsidiaries, intercompany loans with foreign subsidiaries and transactions denominated in foreign currencies. Our objective is to minimize our exposure to these risks through a combination of normal operating activities and the utilization of foreign currency exchange contracts to manage our exposure on the forecasted transactions denominated in currencies other than the applicable functional currency. Contracts are executed with credit worthy banks and are denominated in currencies of major industrial countries. We do not hedge our exposure to the translation of reported results of foreign subsidiaries from local currency to United States dollars.

As of March 31, 2022, derivative currency assets (liabilities) of $14.1 million, $1.7 million and $(0.7) million, are recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets and Other Accrued Expenses, respectively. As of January 1, 2022, derivative currency assets (liabilities) of $8.6 million, $0.7 million and $(1.7) million, are recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets and Other Accrued Expenses, respectively. The unrealized gains on the effective portions of the hedges of $11.2 million net of tax, and $5.8 million net of tax, as of March 31, 2022 and January 1, 2022 respectively, were recorded in AOCI. At March 31, 2022, we had $2.0 million, net of tax, of derivative currency gains on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings. At January 1, 2022, we had $1.9 million, net of tax, currency gains on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings.

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The following table quantifies the outstanding foreign exchange contracts intended to hedge non-US dollar denominated receivables and payables and the corresponding impact on the value of these instruments assuming a hypothetical 10% appreciation/depreciation of their counter currency on March 31, 2022 (in millions):

					Gain (Loss) From
Currency	Notional Amount		Fair Value		10% Appreciation of Counter Currency		10% Depreciation of Counter Currency
Chinese Renminbi	$	264.0	$	4.8	$	26.4	$	(26.4)
Mexican Peso	210.4		10.0		21.0		(21.0)
Euro	209.3		0.1		20.9		(20.9)
Indian Rupee	59.7		0.3		6.0		(6.0)
Canadian Dollar	0.1		—		—		—
Australian Dollar	16.4		—		1.6		(1.6)
British Pound	2.0		—		0.2		(0.2)
Thai Baht	1.5		(0.1)		0.2		(0.2)

Gains and losses indicated in the sensitivity analysis would be offset by gains and losses on the underlying forecasted non-US dollar denominated cash flows.

Commodity Price Risk

We periodically enter into commodity hedging transactions to reduce the impact of changing prices for certain commodities such as copper and aluminum based upon forecasted purchases of such commodities. The contract terms of commodity hedge instruments generally mirror those of the hedged item, providing a high degree of risk reduction and correlation.

Derivative commodity assets (liabilities) of $14.6 million, $1.8 million, $(0.1) million, $(0.1) million were recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets, Other Accrued Expenses and Other Noncurrent Liabilities at March 31, 2022. Derivative commodity assets of $9.3 million, $0.1 million, $(1.2) million and $(0.6) million were recorded in Prepaid Expenses and Other Current Assets, Other Noncurrent Assets, Other Accrued Expenses and Other Noncurrent Liabilities, respectively as of at January 1, 2022. The unrealized gain on the effective portion of the hedges of $11.7 million net of tax and $5.6 million net of tax, as of March 31, 2022 and January 1, 2022, respectively, was recorded in AOCI. At March 31, 2022, we had $3.9 million, net of tax, of derivative commodity gains on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings. At January 1, 2022, there was an additional $3.7 million, net of tax, of derivative commodity gain on closed hedge instruments in AOCI that were realized into earnings when the hedged items impacted earnings.

The following table quantifies the outstanding commodity contracts intended to hedge raw material commodity prices and the corresponding impact on the value of these instruments assuming a hypothetical 10% appreciation/depreciation of their prices on March 31, 2022 (in millions):

					Gain (Loss) From
Commodity	Notional Amount		Fair Value		10% Appreciation of Commodity Prices		10% Depreciation of Commodity Prices
Copper	$	158.6	$	14.1	$	15.9	$	(15.9)
Aluminum	7.9		2.1		0.8		(0.8)

Gains and losses indicated in the sensitivity analysis would be offset by the actual prices of the commodities.

The net AOCI hedging component balance of a $41.1 million gains at March 31, 2022 includes $28.6 million of net current deferred gains expected to be realized in the next twelve months. The gain/loss reclassified from AOCI into earnings on such derivatives will be recognized in the same period in which the related item affects earnings.

41

Counterparty Risk

We are exposed to credit losses in the event of non-performance by the counterparties to various financial agreements, including our interest rate swap agreements, foreign currency exchange contracts and commodity hedging transactions. We manage exposure to counterparty credit risk by limiting our counterparties to major international banks and financial institutions meeting established credit guidelines and continually monitoring their compliance with the credit guidelines. We do not obtain collateral or other security to support financial instruments subject to credit risk. We do not anticipate non-performance by our counterparties, but cannot provide assurances.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective to ensure that (a) information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and (b) information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material changes in the legal matters described in Part I, Item 3 in our Annual Report on Form 10-K for the year ended January 1, 2022, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

Our business and financial results are subject to numerous risks and uncertainties. The following amended risk factor supplements those reported in Part 1, Item 1A in our 2021 Annual Report on Form 10-K for the year ended January 1, 2022, which is incorporated herein by reference. For additional information regarding risks and uncertainties facing the Company, please also see the information provided under the header “Cautionary Statement” contained in this Quarterly Report on Form 10-Q.

We manufacture a significant portion of our products outside the US, and political, societal or economic instability or public health crises may present additional risks to our business.

Approximately 24,000 of our approximate 30,000 total associates and 61 of our principal manufacturing and warehouse facilities are located outside the U.S. International operations generally are subject to various risks, including political, societal and economic instability, local labor market conditions, public health crises, breakdowns in trade relations, the imposition of tariffs and other trade restrictions, lack of reliable legal systems, ownership restrictions, the impact of government regulations, the effects of income and withholding taxes, governmental expropriation or nationalization, and differences in business practices. We may incur increased costs and experience delays or disruptions in product deliveries and payments in connection with international manufacturing and sales that could cause loss of revenue.

Unfavorable changes in the political, regulatory and business climates in countries where we have operations could have a material adverse effect on our financial condition, results of operations and cash flows.

For example, the recent conflict between Russia and Ukraine has negatively impacted the global economy and led to various economic sanctions being imposed by the U.S., United Kingdom, European Union, and other countries against Russia. While

42

the impacts of the conflict have not been material on our operating results to date, it is not possible to predict the broader or longer-term consequences of this conflict. Further sanctions as well as steps taken by our customers, suppliers or other stakeholders may disrupt our ability to continue to operate in Russia. Continued escalation of geopolitical tensions related to the conflict could also result in the loss of property, supply chain disruptions, significant inflationary pressure on raw material prices and cost and supply of other resources (such as energy and natural gas), fluctuations in our customers’ buying patterns, credit and capital market disruption which could impact our ability to obtain financing, increase in interest rates and adverse foreign exchange impacts. These broader consequences could have a material adverse effect on our financial condition, results of operations and cash flows. In addition, the effects of the ongoing conflict could intensify many of our other known risks described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended January 1, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table contains detail related to the repurchase of our common stock based on the date of trade during the quarter ended March 31, 2022.

2022 Fiscal Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Value of Shares Purchased as a Part of Publicly Announced Plans or Programs		Maximum Value of Shares that May be Purchased Under the Plans or Programs
Jan 2 to Jan 31	108,867	$	153.64	$	16,725,882	$	417,496,489
Feb 1 to Feb 28	224,970	156.62		35,234,491		382,261,998
Mar 1 to Mar 31	397,357	156.73		62,279,145		319,982,853
	731,194			$	114,239,518

Under our equity incentive plans, participants may pay the exercise price or satisfy all or a portion of the federal, state and local withholding tax obligations arising in connection with plan awards by electing to (a) have the Company withhold shares of common stock otherwise issuable under the award, (b) tender back shares received in connection with such award or (c) deliver other previously owned shares of common stock, in each case having a value equal to the exercise price or the amount to be withheld. During the quarter ended March 31, 2022, we purchased 731,194 shares or $114.2 million in shares pursuant to the October 26, 2021 repurchase authorization.

At a meeting of the Board of Directors on October 26, 2021, the Company's Board of Directors approved the authorization to purchase up to $500.0 million of shares under the Company's share repurchase program. The new authorization has no expiration date.

43

ITEM 6. EXHIBITS

Exhibit Number	Exhibit Description
4.1	Second Amended and Restated Credit Agreement, dated March 28, 2022, among Regal Rexnord Corporation, Land Newco, Inc., the other subsidiary borrowers party thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent. [Incorporated by reference to Exhibit 10.1 to Regal Rexnord Corporation’s Current Report on Form 8-K filed on March 31, 2022]
18.1	Preferability Letter for Change in Accounting Principle
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
101.INS	XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).

44

SIGNATURE

Pursuant to the requirements 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.

	REGAL REXNORD CORPORATION (Registrant)
	/s/ Robert J. Rehard
	Robert J. Rehard Vice President Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
Date: May 5, 2022

45

EX-18.1

Exhibit 18.1

May 5, 2022

To the Board of Directors and Shareholders of

Regal Rexnord Corporation

200 State Street

Beloit, WI 53511

Dear Sirs/Madams:

At your request, we have read the description included in your Quarterly Report on Form 10-Q to the Securities and Exchange Commission for the quarter ended March 31, 2022, of the facts relating to the change in accounting principle for certain inventory from the last in, first-out method (“LIFO”) to the first-in, first-out method (“FIFO”) for inventories that were previously accounted for under the LIFO method. We believe, on the basis of the facts so set forth and other information furnished to us by appropriate officials of Regal Rexnord Corporation, that the accounting change described in your Form 10-Q is to an alternative accounting principle that is preferable under the circumstances.

We have not audited any consolidated financial statements of Regal Rexnord Corporation and its subsidiaries as of any date or for any period subsequent to January 1, 2022. Therefore, we are unable to express, and we do not express, an opinion on the facts set forth in the above-mentioned Form 10-Q, on the related information furnished to us by officials of the Regal Rexnord Corporation, or on the financial position, results of operations, or cash flows of Regal Rexnord Corporation and its subsidiaries as of any date or for any period subsequent to January 1, 2022.

Yours truly,

/s/ Deloitte & Touche LLP

Milwaukee, WI

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Louis V. Pinkham, certify that:

1 I have reviewed this quarterly report on Form 10-Q of Regal Rexnord Corporation;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4 The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5 The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Louis V. Pinkham

Louis V. Pinkham
Chief Executive Officer

Date: May 5, 2022

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Robert J. Rehard, certify that:

1 I have reviewed this quarterly report on Form 10-Q of Regal Rexnord Corporation;

2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4 The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5 The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Robert J. Rehard

Robert J. Rehard
Vice President
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

Date: May 5, 2022

EX-32.1

EXHIBIT 32.1

CERTIFICATIONS of the

Chief Executive Officer and Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350

Solely for the purposes of complying with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we, the undersigned Chief Executive Officer and Chief Financial Officer of Regal Rexnord Corporation (the “Company”), hereby certify, based on our knowledge, that the Quarterly Report on Form 10-Q of the Company for the three months ended March 31, 2022 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Louis V. Pinkham

Louis V. Pinkham

Chief Executive Officer

/s/ Robert J. Rehard

Robert J. Rehard

Vice President
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

Date: May 5, 2022

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2022	May 03, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	001-07283
Entity Registrant Name	REGAL REXNORD CORP
Entity Incorporation, State or Country Code	WI
Entity Tax Identification Number	39-0875718
Entity Address, Address Line One	200 State Street
Entity Address, City or Town	Beloit
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	53511
City Area Code	608
Local Phone Number	364-8800
Title of 12(b) Security	Common Stock
Trading Symbol	RRX
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		67,004,382
Entity Central Index Key	0000082811
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Income Statement [Abstract]
Net Sales	$ 1,298.5	$ 814.1
Cost of Sales	876.6	564.3
Gross Profit	421.9	249.8
Operating Expenses	252.0	148.3
Income from Operations	169.9	101.5
Other Income, Net	(1.3)	(1.2)
Interest Expense	9.0	12.6
Interest Income	(1.1)	(1.5)
Income before Taxes	163.3	91.6
Provision for Income Taxes	36.2	21.3
Net Income	127.1	70.3
Less: Net Income Attributable to Noncontrolling Interests	1.5	1.4
Net Income Attributable to Regal Rexnord Corporation	$ 125.6	$ 68.9
Earnings Per Share Attributable to Regal Rexnord Corporation:
Basic (in dollars per share)	$ 1.86	$ 1.70
Assuming Dilution (in dollars per share)	$ 1.85	$ 1.68
Weighted Average Number of Shares Outstanding:
Basic (in shares)	67.4	40.6
Assuming Dilution (in shares)	67.9	41.0

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Statement of Comprehensive Income [Abstract]
Net Income	$ 127.1	$ 70.3
Other Comprehensive Income (Loss) Net of Tax:
Foreign Currency Translation Adjustments	(0.4)	(21.7)
Hedging Activities:
Increase (Decrease) in Fair Value of Hedging Activities, Net of Tax Effects of $8.3 Million and $4.6 Million for the Three Months Ended March 31, 2022 and April 3, 2021, Respectively	26.1	14.6
Reclassification of (Gains) Losses included in Net Income, Net of Tax Effects of $(2.0) Million and $(2.8) Million for the Three Months Ended March 31, 2022 and April 3, 2021, Respectively	(6.0)	(8.7)
Pension and Post Retirement Plans:
Reclassification Adjustments for Pension and Post Retirement Benefits included in Net Income, Net of Tax Effects of zero and $0.1 Million for the Three Months Ended March 31, 2022 and April 3, 2021, Respectively	0.2	0.3
Other Comprehensive Income (Loss)	19.9	(15.5)
Comprehensive Income	147.0	54.8
Less: Comprehensive Income Attributable to Noncontrolling Interests	1.9	1.1
Comprehensive Income Attributable to Regal Rexnord Corporation	$ 145.1	$ 53.7

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Statement of Comprehensive Income [Abstract]
Increase (Decrease) in fair value of hedging activities, tax effects	$ 8.3	$ 4.6
Reclassification of losses (gains) included in net income, tax effects	(2.0)	(2.8)
Reclassification adjustments for pension and post retirement benefits included in net income, tax effects	$ 0.0	$ 0.1

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Mar. 31, 2022	Jan. 01, 2022
Current Assets:
Cash and Cash Equivalents	$ 624.7	$ 672.8
Trade Receivables, Less Allowances of $18.6 Million and $18.7 Million in 2022 and 2021, Respectively	832.2	785.8
Inventories	1,336.9	1,192.4
Prepaid Expenses and Other Current Assets	166.9	145.1
Assets Held for Sale	11.7	12.5
Total Current Assets	2,972.4	2,808.6
Net Property, Plant and Equipment	852.7	908.5
Operating Lease Assets	116.5	112.4
Goodwill	4,051.3	4,039.2
Intangible Assets, Net of Amortization	2,402.7	2,429.2
Deferred Income Tax Benefits	35.7	35.7
Other Noncurrent Assets	39.8	33.8
Total Assets	10,471.1	10,367.4
Current Liabilities:
Accounts Payable	641.3	643.8
Dividends Payable	22.1	22.3
Accrued Compensation and Employee Benefits	124.5	143.9
Other Accrued Expenses	238.0	253.2
Current Operating Lease Liabilities	27.5	27.2
Current Maturities of Long-Term Debt	3.2	4.9
Total Current Liabilities	1,056.6	1,095.3
Long-Term Debt	2,057.4	1,913.6
Deferred Income Taxes	661.7	679.7
Pension and Other Post Retirement Benefits	108.0	111.7
Noncurrent Operating Lease Liabilities	91.5	89.5
Other Noncurrent Liabilities	72.1	69.4
Contingencies (see Note 12)
Regal Rexnord Corporation Shareholders' Equity:
Common Stock, $0.01 par value, 100.0 Million Shares Authorized, 67.0 Million and 67.6 Million Shares Issued and Outstanding for 2022 and 2021, Respectively	0.7	0.7
Additional Paid-In Capital	4,631.1	4,651.8
Retained Earnings	1,927.5	1,912.6
Accumulated Other Comprehensive Loss	(175.6)	(195.1)
Total Regal Rexnord Corporation Shareholders' Equity	6,383.7	6,370.0
Noncontrolling Interests	40.1	38.2
Total Equity	6,423.8	6,408.2
Total Liabilities and Equity	$ 10,471.1	$ 10,367.4

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2022	Jan. 01, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 18.6	$ 18.7
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000.0	100,000,000.0
Common stock, shares issued (in shares)	67,000,000.0	67,600,000
Common stock, shares outstanding (in shares)	67,000,000.0	67,600,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Millions	Total	Common Stock $0.01 Par Value	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests
Beginning Balance at Jan. 02, 2021	$ 2,615.4	$ 0.4	$ 696.6	$ 2,049.1	$ (163.3)	$ 32.6
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	70.3			68.9		1.4
Other Comprehensive Income (Loss)	(15.5)				(15.2)	(0.3)
Dividends Declared	(12.2)			(12.2)
Stock Options Exercised	(1.8)		(1.8)
Share-Based Compensation	3.3		3.3
Ending Balance at Apr. 03, 2021	2,659.5	0.4	698.1	2,105.8	(178.5)	33.7
Beginning Balance at Jan. 01, 2022	6,408.2	0.7	4,651.8	1,912.6	(195.1)	38.2
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	127.1			125.6		1.5
Other Comprehensive Income (Loss)	19.9				19.5	0.4
Dividends Declared	(22.1)			(22.1)
Stock Options Exercised	$ (1.4)		$ (1.4)
Stock Repurchase (in shares)	(731,194)		(25,600,000)
Stock Repurchase	$ (114.2)			(88.6)
Share-Based Compensation	6.3		$ 6.3
Ending Balance at Mar. 31, 2022	$ 6,423.8	$ 0.7	$ 4,631.1	$ 1,927.5	$ (175.6)	$ 40.1

XML

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Statement of Stockholders' Equity [Abstract]
Dividends declared, per share (in dollars per share)	$ 0.33	$ 0.30

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$ 127.1	$ 70.3
Adjustments to Reconcile Net Income to Net Cash (Used in) Provided by Operating Activities (Net of Acquisitions and Divestitures):
Depreciation and Amortization	77.9	31.8
Noncash Lease Expense	9.9	6.1
(Gain) Loss on Sale or Disposition of Assets, Net	(0.3)	0.6
Share-Based Compensation Expense	6.3	3.3
Financing Fees Amortization	0.9	4.8
Change in Operating Assets and Liabilities	(227.7)	(67.4)
Net Cash (Used in) Provided by Operating Activities	(5.9)	49.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant and Equipment	(13.4)	(10.7)
Proceeds Received from Sales of Property, Plant and Equipment	1.4	0.9
Business Acquisitions, Net of Cash Acquired	(35.0)	(1.9)
Net Cash Used in Investing Activities	(47.0)	(11.7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings Under Revolving Credit Facility	1,340.5	140.7
Repayments Under Revolving Credit Facility	(1,122.2)	(140.7)
Proceeds from Short-Term Borrowings	5.1	5.4
Repayments of Short-Term Borrowings	(7.0)	(5.6)
Proceeds from Long-Term Borrowings	1,036.8	0.0
Repayments of Long-Term Borrowings	(1,107.5)	(50.1)
Dividends Paid to Shareholders	(22.3)	(12.2)
Shares Surrendered for Taxes	(2.8)	(1.9)
Proceeds from the Exercise of Stock Options	1.8	0.1
Repurchase of Common Stock	(114.2)	0.0
Financing Fees Paid	(4.5)	(12.4)
Net Cash Provided by (Used in) Financing Activities	3.7	(76.7)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	1.1	(6.0)
Net Decrease in Cash and Cash Equivalents	(48.1)	(44.9)
Cash and Cash Equivalents at Beginning of Period	672.8	611.3
Cash and Cash Equivalents at End of Period	624.7	566.4
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest	10.1	12.6
Income taxes	$ 18.8	$ 15.8

XML

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying (a) Condensed Consolidated Balance Sheet of Regal Rexnord Corporation (the “Company”), as of January 1, 2022, which has been derived from audited Consolidated Financial Statements, and (b) unaudited interim Condensed Consolidated Financial Statements as of March 31, 2022 and for the three months ended March 31, 2022 and April 3, 2021, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the Consolidated Financial Statements and the Notes thereto included in the Company’s 2021 Annual Report on Form 10-K filed on March 2, 2022.

In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Except as otherwise discussed, such adjustments consist of only those of a normal recurring nature. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2022.

The Condensed Consolidated Financial Statements have been prepared in accordance with GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Condensed Consolidated Financial Statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. The Company uses estimates in accounting for, among other items, allowance for doubtful accounts; excess and obsolete inventory; share-based compensation; acquisitions; product warranty obligations; pension and post retirement assets and liabilities; derivative fair values; goodwill and other asset impairments; health care reserves; retirement benefits; rebates and incentives; litigation claims and contingencies, including environmental matters; and income taxes. The Company accounts for changes to estimates and assumptions when warranted by factually based experience.

Effective for fiscal year 2022, the Company approved a change in the fiscal year end from a 52-53 week year ending on the Saturday closest to December 31 to a calendar year ending on December 31. The Company made the fiscal year change on a prospective basis and did not adjust operating results for prior periods. While this change will impact the comparability of future results with each of the fiscal quarters and the annual fiscal period in 2022, the impact is not expected to be material to our quarterly or annual results.

Change in Accounting Principle

As of January 2, 2022, the Company changed its methodology for valuing certain inventories to the first-in, first-out ("FIFO") cost method from the last-in, first-out ("LIFO") cost method. The effects of this change have been retrospectively applied to all periods presented. See Note 2 for additional information.

Recently Issued Accounting Standards

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU improves the accounting for acquired revenue contracts with customers in a business combination. This ASU becomes effective for fiscal years beginning after December 31, 2022, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance.

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OTHER FINANCIAL INFORMATION

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

OTHER FINANCIAL INFORMATION

OTHER FINANCIAL INFORMATION

Inventories

As of January 2, 2022, the Company changed its method for valuing certain inventories to the FIFO cost method from the LIFO cost method. The Company believes that this change in accounting is preferable as it provides a better matching of costs and revenues, more closely resembles the physical flow of inventory, better reflects acquisition cost of inventory on the balance sheet, conforms the Company's method of inventory valuation to a single method, results in improved comparability with industry peers and reduces the administrative burden of determining the LIFO valuation.

The effects of this change have been retrospectively applied to all periods presented. This change resulted in an increase to retained earnings of $38.4 million as of January 2, 2021.

In addition, certain financial statement line items in our Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for the three months ended April 3, 2021 and our Condensed Consolidated Balance Sheet as of January 1, 2022, were adjusted as follows (dollars in millions):

	As Originally Reported		Effect of Change		As Adjusted
Condensed Consolidated Statement of Operations for the three months ended April 3, 2021
Cost of Sales	$	568.7	$	(4.4)	$	564.3
Provision for Income Taxes	$	20.2	$	1.1	$	21.3
Net income attributable to Regal Rexnord Corporation	$	65.6	$	3.3	$	68.9
Earnings Per Share Attributable to Regal Rexnord Corporation:
Basic	$	1.62	$	0.08	$	1.70
Assuming Dilution	$	1.60	$	0.08	$	1.68
Condensed Consolidated Balance Sheet as of January 1, 2022
Inventories	$	1,106.6	$	85.8	$	1,192.4
Deferred Income Taxes	$	652.0	$	27.7	$	679.7
Retained Earnings	$	1,854.5	$	58.1	$	1,912.6
Condensed Consolidated Statement of Cash Flows for the three months ended April 3, 2021
Net Income	$	67.0	$	3.3	$	70.3
Change in Operating Assets and Liabilities	$	(64.1)	$	(3.3)	$	(67.4)
Condensed Consolidated Statement of Comprehensive Income for the three months ended April 3, 2021
Comprehensive income attributable to Regal Rexnord Corporation	$	50.4	$	3.3	$	53.7

The following table presents approximate percentage distribution between major classes of inventories inclusive of the accounting method change discussed above:

	March 31, 2022	January 1, 2022
Raw Material and Work in Process	47.8%	43.4%
Finished Goods and Purchased Parts	52.2%	56.6%

Inventories are stated at cost, which is not in excess of market. All inventory is valued using the FIFO cost method.

Property, Plant, and Equipment

The following table presents property, plant, and equipment by major classification (dollars in millions):

	Useful Life in Years	March 31, 2022		January 1, 2022
Land and Improvements		$	108.7	$	109.1
Buildings and Improvements	3 - 50	420.9		449.6
Machinery and Equipment	3 - 15	1,162.9		1,164.8
Property, Plant and Equipment		1,692.5		1,723.5
Less: Accumulated Depreciation		(839.8)		(815.0)
Net Property, Plant and Equipment		$	852.7	$	908.5

For the three months ended March 31, 2022 and April 3, 2021, the Company recognized no material asset impairments.

Revenue Recognition

The Company recognizes revenue from the sale of electric motors, electrical motion controls, power generation and power transmission products. The Company recognizes revenue when control of the product passes to the customer or the service is provided and is recognized at an amount that reflects the consideration expected to be received in exchange for such goods or services.

Nature of Goods and Services

The Company sells products with multiple applications as well as customized products that have a single application such as those manufactured for its OEM customers. The Company reports in four operating segments: Commercial Systems, Industrial Systems, Climate Solutions and Motion Control Solutions. See Note 6 for a description of the different segments.

Nature of Performance Obligations

The Company’s contracts with customers typically consist of purchase orders, invoices and master supply agreements. At contract inception, across all four segments, the Company assesses the goods and services promised in its sales arrangements with customers and identifies a performance obligation for each promise to transfer to the customer a good or service that is distinct. The Company’s primary performance obligations consist of product sales and customized system/solutions.

Product:

The nature of products varies from segment to segment but across all segments, individual products are not integrated and represent separate performance obligations.

Customized system/solutions:

The Company provides customized system/solutions which consist of multiple products engineered and designed to specific customer specification, combined or integrated into one combined solution for a specific customer application. The goods are transferred to the customer and revenue is typically recognized over time as the performance obligations are satisfied.

When Performance Obligations are Satisfied

For performance obligations related to substantially all of the Company's product sales, the Company determines that the customer obtains control upon shipment and recognizes revenue accordingly. Once a product has shipped, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from the asset. The Company considers control to have transferred upon shipment because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset, and the customer has significant risks and rewards of ownership of the asset.

For a limited number of contracts, the Company transfers control and recognizes revenue over time. The Company satisfies its performance obligations over time and the Company uses a cost-based input method to measure progress. In applying the cost-based method of revenue recognition, the Company uses actual costs incurred to date relative to the total estimated costs for the contract in conjunction with the customer's commitment to perform in determining the amount of revenue and cost to recognize. The Company has determined that the cost-based input method provides a faithful depiction of the transfer of goods to the customer.

Payment Terms

The arrangement with the customer states the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payment terms vary by customer but typically range from due upon delivery to 120 days after delivery. For contracts recognized at a point in time, revenue and billing typically occur simultaneously. The Company generally has payment terms with its customers of one year or less and has elected the practical expedient applicable to such contracts not to consider the time value of money. For contracts recognized using the cost-based input method, revenue recognized in excess of customer billings and billings in excess of revenue recognized are reviewed to determine the net asset or net liability position and classified as such on the Condensed Consolidated Balance Sheets.

Returns, Refunds, and Warranties

The Company’s contracts do not explicitly offer a “general” right of return to its customers (e.g., customers ordered excess products and return unused items). Warranties are classified as either assurance type or service type warranties. A warranty is considered an assurance type warranty if it provides the customer with assurance that the product will function as intended. A warranty that goes above and beyond ensuring basic functionality is considered a service type warranty. The Company generally only offers limited warranties which are considered to be assurance type warranties and are not accounted for as separate performance obligations. Customers generally receive repair or replacement on products that do not function to specification. Estimated product warranties are provided for specific product groups and the Company accrues for estimated future warranty cost in the period in which the sale is recognized. The Company estimates the accrual requirements based on historical warranty loss experience and the cost is included in Cost of Sales.

Volume Rebates

In some cases, the nature of the Company’s contract may give rise to variable consideration including volume based sales incentives. If the customer achieves specific sales targets, they are entitled to rebates. The Company estimates the projected amount of the rebates that will be achieved and recognizes the estimated costs as a reduction to Net Sales as revenue is recognized.

Disaggregation of Revenue

The following tables presents the Company’s revenues disaggregated by geographical region (in millions):

	Three Months Ended
March 31, 2022	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Total
North America	$	205.9	$	82.4	$	238.5	$	408.5	$	935.3
Asia	42.2		39.4		8.2		34.4		124.2
Europe	32.7		12.3		13.6		98.1		156.7
Rest-of-World	12.5		10.6		13.6		45.6		82.3
Total	$	293.3	$	144.7	$	273.9	$	586.6	$	1,298.5
April 3, 2021	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Total
North America	$	154.1	$	71.1	$	209.7	$	163.8	$	598.7
Asia	46.0		43.2		9.3		6.9		105.4
Europe	24.7		11.6		9.5		23.5		69.3
Rest-of-World	12.2		10.5		10.6		7.4		40.7
Total	$	237.0	$	136.4	$	239.1	$	201.6	$	814.1

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HELD FOR SALE, DIVESTITURES AND ACQUISITIONS

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

HELD FOR SALE, DIVESTITURES AND ACQUISITIONS

HELD FOR SALE, DIVESTITURES AND ACQUISITIONS

Assets Held for Sale

The balances that were classified as Assets Held for Sale as of March 31, 2022 and January 1, 2022 were $11.7 million and $12.5 million, respectively.

2021 Acquisitions

Rexnord Transaction

On October 4, 2021, in accordance with the terms and conditions of the Agreement and Plan of Merger, dated as of February 15, 2021 (the “Merger Agreement”), the Company completed its combination with the Rexnord Process & Motion Control business (“Rexnord PMC business”) of Rexnord Corporation (which changed its name on October 4, 2021 to Zurn Water Solutions Corporation) (“Zurn”) in a Reverse Morris Trust transaction (the “Rexnord Transaction”). Pursuant to the Rexnord Transaction, (i) Zurn transferred to its then-subsidiary Land Newco, Inc. (“Land”) substantially all of the assets, and Land assumed substantially all of the liabilities, of the Rexnord PMC business (the “Reorganization”), (ii) after which all of the issued and outstanding shares of common stock, $0.01 par value per share, of Land (“Land common stock”) held by a subsidiary of Zurn were distributed in a series of distributions to Zurn’s stockholders (the “Distributions”, and the final distribution of Land common stock from Zurn to Zurn’s stockholders, which was made pro rata for no consideration, the “Spin-Off”) and (iii) immediately after the Spin-Off, a subsidiary of the Company (“Merger Sub”) merged with and into Land (the “Merger”) and all shares of Land common stock (other than those held by Zurn, Land, the Company, Merger Sub or their respective subsidiaries) were converted as of the effective time of the Merger (the “Effective Time”) into the right to receive 0.22296103 shares of common stock, $0.01 par value per share, of the Company (“Company common stock”), as calculated in the Merger Agreement.

As of the Effective Time, Land, which held the Rexnord PMC business, became a wholly owned subsidiary of the Company.

Pursuant to the Merger, the Company issued approximately 27,055,945 shares of Company common stock to holders of Land common stock, which represents approximately 39.9% of the approximately 67,756,732 outstanding shares of Company common stock immediately following the Effective Time. In addition, holders of record of Company common stock as of October 1, 2021 received $6.99 per share of Company common stock pursuant to a previously announced special dividend in connection with the Transactions (the “Special Dividend”).

In connection with the Rexnord Transaction, two directors designated by Zurn were appointed to the Company's Board of Directors. The current chief executive officer of the Company continued as the chief executive officer of the combined company after the Rexnord Transaction and a majority of the senior management of the Company immediately prior the consummation of the Rexnord Transaction remained executive officers of the Company immediately after the Rexnord Transaction. The Company's management determined that the Company is the accounting acquirer in the Rexnord Transaction based on the facts and circumstances noted within this section and other relevant factors. As such, the Company applied the acquisition method of accounting to the identifiable assets and liabilities of Rexnord PMC business, which have been measured at estimated fair value as of the date of the business combination.

In connection with the Rexnord Transaction, the Company entered into certain financing arrangements, which are described in Note 7.

The tax matters agreement the Company entered into in connection with the Rexnord Transaction imposes certain restrictions on the Company, Land and Zurn during the two-year period following the Spin-Off, subject to certain exceptions, with respect to actions that could cause the Reorganization and the Distributions to fail to qualify for the intended tax treatment. As a result of these restrictions, the Company's and Land’s ability to engage in certain transactions, such as the issuance or purchase of stock or certain business combinations, may be limited.

The total consideration transferred for the acquisition of Land was approximately $4.0 billion subject to finalization of purchase accounting adjustments. The total assets and liabilities assumed will be adjusted, based on the final balances per the terms included within the Separation and Distribution Agreement.

The preliminary purchase price of the Rexnord PMC business consisted of the following (in millions):

	As Reported as of January 1, 2022		Measurement period adjustments		As Reported as of March 31, 2022
Fair value of Company common stock issued to Zurn (a)	$	3,896.3	$	—	$	3,896.3
Stock based compensation (b)	47.1		—		47.1
Adjustment amount (c)	30.9		4.1		35.0
Land Financing Fees paid by the Company (d)	3.9		—		3.9
Preexisting Relationships (e)	(0.8)		—		(0.8)
Preliminary purchase price	$	3,977.4	$	4.1	$	3,981.5

(a) Represents approximately 27 million new shares of Company common stock issued to Zurn stockholders in the exchange offer, based on the Company's October 4, 2021, closing share price of $151.00, less the Special Dividend amount of $6.99, which the Zurn stockholders were not entitled to receive.

(b) Represents fair value of replacement equity-based awards and Company common stock issued in settlement of other Zurn share based awards. The portion of the fair value attributable to pre-Merger service was recorded as part of the consideration transferred in the Merger - see Note 10.

(c) Represents working capital adjustment pursuant to the terms of the purchase agreement. The entire amount was settled and paid in cash by the Company as of March 31, 2022.

(d) Represents financing fees paid by the Company for the Bridge Facility and Land Term Facility (as defined in Note 7) that were determined to be costs of Zurn.

(e) Represents effective settlement of outstanding payables and receivables between the Company and the Rexnord PMC business. No gain or loss was recognized on this settlement.

Purchase Price Allocation

The Rexnord PMC business’s assets and liabilities were measured at estimated fair values at October 4, 2021, primarily using Level 3 inputs. Estimates of fair value represent management’s best estimate of assumptions about future events and uncertainties, including significant judgments related to future cash flows, discount rates, competitive trends, margin and revenue growth assumptions including royalty rates and customer attrition rates and others. Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates expected as of the acquisition date.

Due to the timing of the business combination and the nature of the net assets acquired, at March 31, 2022, the valuation process to determine the fair values is not complete and further adjustments are expected during the measurement period. The Company has estimated the preliminary fair value of net assets acquired based on information currently available and will continue to adjust those estimates as additional information becomes available, including the refinement of market participant assumptions. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price allocation adjustments will be recorded during the measurement period, but no later than one year from the date of the acquisition. The Company will reflect measurement period adjustments in the period in which the adjustments are determined.

The preliminary fair value and subsequent measurement period adjustments of the assets acquired and liabilities and noncontrolling interests assumed were as follows (in millions):

	As Reported as of January 1, 2022		Measurement period adjustments		As Reported as of March 31, 2022
Cash and Cash Equivalents	$	192.8	$	—	$	192.8
Trade Receivables	186.9		(3.5)		183.4
Inventories	262.5		(1.0)		261.5
Prepaid Expenses and Other Current Assets	21.0		—		21.0
Assets Held for Sale	1.4		—		1.4
Deferred Income Tax Benefits	8.8		(7.7)		1.1
Property, Plant and Equipment	412.3		(38.4)		373.9
Operating Lease Assets	46.4		—		46.4
Intangible Assets	1,831.0		23.0		1,854.0
Other Noncurrent Assets	12.3		3.7		16.0
Accounts Payable	(121.1)		—		(121.1)
Accrued Compensation and Benefits	(44.0)		2.6		(41.4)
Other Accrued Expenses	(55.7)		(4.0)		(59.7)
Current Operating Lease Liabilities	(8.1)		—		(8.1)
Current Maturities of Long-Term Debt	(2.5)		—		(2.5)
Long-Term Debt	(558.2)		—		(558.2)
Deferred Income Taxes	(508.2)		12.1		(496.1)
Pension and Other Post Retirement Benefits	(75.1)		—		(75.1)
Noncurrent Operating Lease Liabilities	(38.0)		—		(38.0)
Other Noncurrent Liabilities	(17.0)		—		(17.0)
Total Identifiable Net Assets	1,547.5		(13.2)		1,534.3
Goodwill	2,433.2		17.3		2,450.5
Noncontrolling Interests	(3.3)		—		(3.3)
Preliminary purchase price	$	3,977.4	$	4.1	$	3,981.5

During three months ended March 31, 2022, the Company made a cash payment of $35.0 million to Zurn in connection with finalizing the acquisition date trade working capital. The preliminary purchase price allocations were also adjusted by the refinement of the estimated fair value of the assets received and liabilities assumed. The cumulative impact of the adjustments during the three months ended March 31, 2022 resulted in $17.3 million of additional goodwill.

Results of the Rexnord PMC business Subsequent to the Acquisition

The financial results of the Rexnord PMC business have been included in the Company's Motion Control Solutions segment from the date of acquisition.

Arrowhead Transaction

On November 23, 2021, the Company acquired all of the outstanding equity interests of Arrowhead Systems, LLC, ("Arrowhead") (the "Arrowhead Transaction"), for $315.6 million in cash, net of $1.1 million of cash acquired. Arrowhead is a global leader in providing industrial process automation solutions including conveyors and (de)palletizers to the food & beverage, aluminum can, and consumer staples end markets, among others. Arrowhead is now part of the Automation Solutions division of the Company's Motion Control Solutions segment.

The Consolidated Statements of Income include the results of operations of Arrowhead since the date of acquisition, and such results are reflected in the Motion Control Solutions segment.

Purchase Price Allocation

Arrowhead's assets and liabilities were measured at estimated fair values at November 23, 2021. Estimates of fair value represent management’s best estimate of assumptions about future events and uncertainties, including significant judgments related to future cash flows, discount rates, competitive trends, margin and revenue growth assumptions including royalty rates

and customer attrition rates and others. Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates expected as of the acquisition date.

The preliminary fair value of the assets acquired and liabilities assumed were as follows (in millions):

	As Reported as of January 1, 2022
Cash and Cash Equivalents	$	1.1
Trade Receivables	19.1
Inventories	12.8
Prepaid Expenses and Other Current Assets	7.6
Property, Plant and Equipment	3.7
Intangible Assets(1)	160.0
Accounts Payable	(4.7)
Accrued Compensation and Benefits	(2.6)
Other Accrued Expenses	(25.0)
Total Identifiable Net Assets	172.0
Goodwill	143.6
Preliminary purchase price	$	315.6

(1) Includes $124.0 million related to Customer Relationships, $18.0 million related to Trademarks and $18.0 million related to Technology.

The allocation of purchase price is subject to finalization during a period not to exceed one year from the acquisition date. Adjustments to the preliminary allocation of purchase price may occur related to finalization of the working capital adjustment, finalization of the valuation of intangibles and other long-lived assets, adjustment to income tax assets and liabilities and other changes related to the valuation of assets acquired and liabilities assumed. No adjustments to the preliminary allocation of purchase price were made during the three months ended March 31, 2022.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustments, hedging activities and pension and post-retirement benefit adjustments are included in Accumulated Other Comprehensive Income (Loss) ("AOCI") a component of Total Equity.

The following tables present changes in AOCI by component for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
March 31, 2022	Hedging Activities		Pension and Post Retirement Benefit Adjustments		Foreign Currency Translation Adjustments		Total
Beginning Balance	$	21.0	$	(14.3)	$	(201.8)	$	(195.1)
Other Comprehensive Income (Loss) before Reclassifications	34.4		0.2		(1.0)		33.6
Tax Impact	(8.3)		—		—		(8.3)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(8.0)		0.2		—		(7.8)
Tax Impact	2.0		—		—		2.0
Net Current Period Other Comprehensive Income (Loss)	20.1		0.4		(1.0)		19.5
Ending Balance	$	41.1	$	(13.9)	$	(202.8)	$	(175.6)
April 3, 2021	Hedging Activities		Pension and Post Retirement Benefit Adjustments		Foreign Currency Translation Adjustments		Total
Beginning Balance	$	23.5	$	(31.1)	$	(155.7)	$	(163.3)
Other Comprehensive Income (Loss) before Reclassifications	19.2		—		(21.4)		(2.2)
Tax Impact	(4.6)		—		—		(4.6)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(11.5)		0.4		—		(11.1)
Tax Impact	2.8		(0.1)		—		2.7
Net Current Period Other Comprehensive Income (Loss)	5.9		0.3		(21.4)		(15.2)
Ending Balance	$	29.4	$	(30.8)	$	(177.1)	$	(178.5)

The Condensed Consolidated Statements of Income line items affected by the hedging activities reclassified from AOCI in the tables above are disclosed in Note 13.

The reclassification amounts for pension and post-retirement benefit adjustments in the tables above are part of net periodic benefit costs recorded in Other Income, Net (see also Note 8).

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GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

Goodwill

As required, the Company performs an annual impairment test of goodwill as of the end of the October fiscal month or more frequently if events or circumstances change that would more likely than not reduce the fair value of its reporting units below their carrying value.

The following table presents changes to goodwill during the three months ended March 31, 2022 (in millions):

	Total		Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions
Balance as of January 1, 2022	$	4,039.2	$	428.9	$	128.8	$	330.5	$	3,151.0
Acquisition and Valuation Adjustments	17.3		—		—		—		17.3
Translation Adjustments	(5.2)		—		(0.1)		(0.1)		(5.0)
Balance as of March 31, 2022	$	4,051.3	$	428.9	$	128.7	$	330.4	$	3,163.3
Cumulative Goodwill Impairment Charges	$	328.7	$	183.2	$	105.1	$	17.2	$	23.2

Intangible Assets

The following table presents intangible assets (in millions):

		March 31, 2022				January 1, 2022
	Weighted Average Amortization Period (Years)	Gross Value		Accumulated Amortization		Gross Value		Accumulated Amortization
Amortizable Intangible Assets:
Customer Relationships	16	$	2,355.6	$	438.6	$	2,335.4	$	405.0
Technology	13	250.1		117.3		250.1		114.1
Trademarks	10	399.6		46.7		400.0		37.2
Patent and Engineering Drawings	5	16.6		16.6		16.6		16.6
		$	3,021.9	$	619.2	$	3,002.1	$	572.9
Intangible Assets, Net of Amortization		$	2,402.7			$	2,429.2

Amortization expense recorded for the three months ended March 31, 2022 was $47.3 million. Amortization expense recorded for the three months ended April 3, 2021 was $11.2 million. Amortization expense for fiscal year 2022 is estimated to be $187.0 million. There were no intangible asset impairments during the three months ended March 31, 2022 and April 3, 2021, respectively.

The following table presents future estimated annual amortization for intangible assets (in millions):

Year	Estimated Amortization
2023	$	187.0
2024	186.3
2025	184.2
2026	180.7
2027	145.8

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company is comprised of four operating segments: Commercial Systems, Industrial Systems, Climate Solutions and Motion Control Solutions.

Commercial Systems segment designs and produces fractional to approximately 5 horsepower AC and DC motors, electronic variable speed controls, fans, and blowers for commercial applications. These products serve markets including commercial building ventilation and HVAC, pool and spa, irrigation, dewatering, agriculture, and general commercial equipment.

Industrial Systems segment designs and produces integral motors, automatic transfer switches, alternators and switchgear for industrial applications, along with aftermarket parts and kits to support such products. These products serve markets including agriculture, marine, mining, oil and gas, food and beverage, data centers, healthcare, prime and standby power, and general industrial equipment.

Climate Solutions segment designs and produces small motors, electronic variable speed controls and air moving solutions serving markets including residential and light commercial HVAC, water heaters and commercial refrigeration.

Motion Control Solutions segment designs, produces and services mounted and unmounted bearings, conveyor products, conveying automation solutions, couplings, mechanical power transmission drives and components, gearboxes and gear motors, aerospace components, special components products and industrial powertrain components and solutions serving a broad range of markets including food and beverage, bulk handling, eCommerce/warehouse distribution, energy, aerospace and general industrial.

The Company evaluates performance based on the segment's income from operations. Corporate costs have been allocated to each segment based on the net sales of each segment. The reported external net sales of each segment are from external customers.

The following sets forth certain financial information attributable to the Company's operating segments for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
March 31, 2022	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Eliminations		Total
External Sales	$	293.3	$	144.7	$	273.9	$	586.6	$	—	$	1,298.5
Intersegment Sales	28.2		7.3		4.8		1.9		(42.2)		—
Total Sales	321.5		152.0		278.7		588.5		(42.2)		1,298.5
Gross Profit	94.3		31.3		83.2		213.1		—		421.9
Operating Expenses	41.4		23.4		31.7		155.5		—		252.0
Total Operating Expenses	41.4		23.4		31.7		155.5		—		252.0
Income from Operations	52.9		7.9		51.5		57.6		—		169.9
Depreciation and Amortization	7.7		3.6		4.4		62.2		—		77.9
Capital Expenditures	3.6		1.5		4.3		4.0		—		13.4
April 3, 2021
External Sales	$	237.0	$	136.4	$	239.1	$	201.6	$	—	$	814.1
Intersegment Sales	17.5		3.7		4.3		0.7		(26.2)		—
Total Sales	254.5		140.1		243.4		202.3		(26.2)		814.1
Gross Profit*	66.8		28.0		75.4		79.6		—		249.8
Operating Expenses	38.0		23.1		30.7		56.5		—		148.3
Total Operating Expenses	38.0		23.1		30.7		56.5		—		148.3
Income from Operations*	28.8		4.9		44.7		23.1		—		101.5
Depreciation and Amortization	7.8		5.9		4.5		13.6		—		31.8
Capital Expenditures	3.3		2.4		3.2		1.8		—		10.7

The following table presents identifiable assets information attributable to the Company's operating segments as of March 31, 2022 and January 1, 2022 (in millions):

	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Total
Identifiable Assets as of March 31, 2022	$	1,306.1	$	874.1	$	1,006.0	$	7,284.9	$	10,471.1
Identifiable Assets as of January 1, 2022*	1,264.0		859.9		982.7		7,260.8		10,367.4

*Includes the retrospective effect of changing accounting methods for valuing certain inventories to the FIFO cost method from the LIFO cost method. See Note 2 for additional information.

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DEBT AND BANK CREDIT FACILITIES

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

DEBT AND BANK CREDIT FACILITIES

DEBT AND BANK CREDIT FACILITIES

The following table presents the Company’s indebtedness as of March 31, 2022 and January 1, 2022 (in millions):

	March 31, 2022		January 1, 2022
Term Facility	$	550.0	$	620.0
Land Term Facility	486.8		486.8
Multicurrency Revolving Facility	955.0		736.7
Other	76.2		78.7
Less: Debt Issuance Costs	(7.4)		(3.7)
Total	2,060.6		1,918.5
Less: Current Maturities	3.2		4.9
Long-Term Debt	$	2,057.4	$	1,913.6

Credit Agreement

On March 28, 2022, the Company entered into a Second Amended and Restated Credit Agreement with the Company's lenders (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent and the lenders named therein. The Credit Agreement (i) replaces in its entirety the Amended and Restated Credit Agreement, dated as of August 27, 2018, as amended by that First Amendment, dated March 17, 2021, among the Company and other parties thereto and (ii) amends and restates in its entirety the Amended and Restated Credit Agreement, dated as of October 4, 2021, among Land and the other parties thereto (collectively, the “Former Credit Agreements”).

The Credit Agreement provides for, among other things, an extension of the maturity date of the revolving credit facility and term loans provided under the Former Credit Agreements. The credit facilities extended under the Credit Agreement consist of (i) an unsecured term loan facility in the initial principal amount of up to $550,000,000, maturing on March 28, 2027 (the "Term Facility"); (ii) an unsecured term loan facility in the initial principal amount of $486,827,669, under which Land remains the sole borrower, maturing on March 28, 2027 (the "Land Term Facility"); and (iii) an unsecured revolving loan in the initial principal amount of up to $1,000,000,000, maturing on March 28, 2027 (the "Multicurrency Revolving Facility"). Interest for benchmark rate loans is calculated based on a SOFR benchmark rate, plus a margin spread to be adjusted quarterly based on the Company’s funded debt to EBITDA ratio. The Credit Agreement is subject to customary and market provisions. The subsidiaries of the Company that provided a guaranty of the Company's and Land's obligations under the Former Credit Agreement also entered into subsidiary guaranty agreements with respect to the obligations under the Credit Agreement.

The Term Facility was drawn in full on March 28, 2022 to refinance the Former Credit Agreements, pay fees, costs, and other expenses incurred therewith, to fund working capital needs and for general corporate purposes of the Company and its subsidiaries. The Term Facility requires quarterly amortization at 5.0% per annum, unless previously prepaid. Per the terms of the Credit Agreement, prepayments can be made without penalty and be applied to the next payment due. After the prepayment is considered, the next payment in the amortization schedule is not due within one year and therefore no current maturities of debt will be recognized for this agreement.

The weighted average interest rate on the Term Facility for the three months ended March 31, 2022 and April 3, 2021 was 2.0% and 1.5%, respectively. The Credit Agreement requires that the Company prepay the loans under the Term Facility with 100% of the net cash proceeds received from specified asset sales and borrowed money indebtedness, subject to certain exceptions.

At March 31, 2022, the Company had $955.0 million of borrowings under the Multicurrency Revolving Facility, $0.1 million of standby letters of credit issued under the facility, and $44.9 million of available borrowing capacity. For the three months ended March 31, 2022 and April 3, 2021 under the Multicurrency Revolving Facility, the average daily balance in borrowings

was $773.7 million and $7.4 million, respectively, and the weighted average interest rate was 1.7% and 1.4%, respectively. The Company pays a non-use fee on the aggregate unused amount of the Multicurrency Revolving Facility at a rate determined by reference to its consolidated funded debt to consolidated EBITDA ratio.

As of March 31, 2022, the Company had $486.8 million of borrowings under the Land Term Facility. The Land Term Facility has no required amortization. The weighted average interest rate on the Land Term Facility for three months ended March 31, 2022 was 1.7%.

In connection with the Rexnord Transaction, on February 15, 2021, the Company entered into a debt commitment letter (the “Bridge Commitment Letter”) and related fee letters with Barclays Bank PLC (“Barclays”), pursuant to which, and subject to the terms and conditions set forth therein, Barclays committed to provide approximately $2.1 billion in an aggregate principal amount of senior bridge loans under a 364-day senior bridge loan credit facility (the “Bridge Facility”). As the Rexnord Transaction was consummated and the payments of amounts in connection therewith occurred without the use of the Bridge Facility, the commitments under the Bridge Commitment Letter were terminated in connection with the closing of the Rexnord Transaction.

Compliance with Financial Covenants

The Credit Agreement requires the Company to meet specified financial ratios and to satisfy certain financial condition tests. The Company was in compliance with all financial covenants contained in the Credit Agreement as of March 31, 2022.

Other Notes Payable

At March 31, 2022, other notes payable of approximately $76.2 million were outstanding with a weighted average interest rate of 5.1%. At January 1, 2022, other notes payable of approximately $78.7 million were outstanding with a weighted average rate of 5.2%.

Other Disclosures

Based on rates for instruments with comparable maturities and credit quality, which are classified as Level 2 inputs (see also Note 14), the approximate fair value of the Company's total debt was $2,060.6 million and $1,918.5 million as of March 31, 2022 and January 1, 2022, respectively.

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RETIREMENT AND POST RETIREMENT HEALTH CARE PLANS

3 Months Ended

Mar. 31, 2022

Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]

RETIREMENT AND POST RETIREMENT HEALTH CARE PLANS

RETIREMENT AND POST RETIREMENT HEALTH CARE PLANS

The following table presents the Company’s net periodic benefit cost (income) components (in millions):

	Three Months Ended
	March 31, 2022		April 3, 2021
Service Cost	$	0.3	$	0.3
Interest Cost	3.6		1.5
Expected Return on Plan Assets	(5.1)		(3.1)
Amortization of Prior Service Cost and Net Actuarial Loss	0.2		0.4
Net Periodic Benefit Income	$	(1.0)	$	(0.9)

The service cost component is included in Cost of Sales and Operating Expenses. All other components of net periodic benefit costs are included in Other Income, Net on the Company's Condensed Consolidated Statements of Income.

For the three months ended March 31, 2022 and April 3, 2021, the Company contributed $1.7 million and $1.2 million, respectively, to post retirement plans. The Company expects to make total contributions of $7.6 million in 2022. The Company contributed a total of $6.0 million in fiscal 2021.

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SHAREHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2022

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

SHAREHOLDERS’ EQUITY

Repurchase of Common Stock

At a meeting of the Board of Directors on October 26, 2021, the Company's Board of Directors approved the authorization to purchase up to $500.0 million of shares. During the three months ended March 31, 2022, the Company purchased 731,194 shares or $114.2 million of common stock. The Company did not repurchase and retire any common stock during the three months ended April 3, 2021.

As of March 31, 2022, there was approximately $320.0 million in common stock available for repurchase under the October 2019 program.

Share-Based Compensation

The Company recognized approximately $6.3 million and $3.3 million in share-based compensation expense for the three months ended March 31, 2022 and April 3, 2021, respectively. The total income tax benefit recognized in the Condensed Consolidated Statements of Income for share-based compensation expense was $1.5 million and $0.6 million for the three months ended March 31, 2022 and April 3, 2021, respectively. The Company recognizes compensation expense on grants of share-based compensation awards on a straight-line basis over the vesting period of each award.

During the three months ended March 31, 2022, the Company granted the following share-based incentive awards:

Award Type	Number of Awards	Weighted Average Grant-Date Fair Value
Options and SARs	135,816	$	42.21
Restricted Stock Units	76,962	$	151.36
Performance Share Units	40,763	$	174.91

See Note 9, Shareholders' Equity, to the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended January 1, 2022, for further information regarding share-based compensation.

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INCOME TAXES

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The effective tax rate for the three months ended March 31, 2022 was 22.2% versus 23.3% for the three months ended April 3, 2021. The effective tax rate for the three months ended March 31, 2022 was lower than the same period in the prior year due to additional tax reserves in the three months ended April 3, 2021 for the repatriation of foreign earnings. The reduction in the effective rate for the three months ended March 31, 2022 was partially offset by the impacts of the Rexnord Transaction in fiscal 2021.

As of March 31, 2022 and January 1, 2022, the Company had approximately $9.1 million and $8.8 million of unrecognized tax benefits, all of which would impact the effective income tax rate if recognized. Potential interest and penalties related to unrecognized tax benefits are recorded in income tax expense. The Company had approximately $1.4 million and $1.3 million of accrued interest as of March 31, 2022 and January 1, 2022, respectively.

With few exceptions, the Company is no longer subject to US Federal and state/local income tax examinations by tax authorities for years prior to 2018, and the Company is no longer subject to non-US income tax examinations by tax authorities for years prior to 2015.

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Diluted earnings per share is calculated based upon earnings applicable to common shares divided by the weighted-average number of common shares outstanding during the period adjusted for the effect of other dilutive securities. The amount of the anti-dilutive shares were 0.1 million and zero for the three months ended March 31, 2022 and April 3, 2021, respectively. The following table reconciles the basic and diluted shares used in earnings per share calculations for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
	March 31, 2022	April 3, 2021
Denominator for Basic Earnings Per Share	67.4	40.6
Effect of Dilutive Securities	0.5	0.4
Denominator for Diluted Earnings Per Share	67.9	41.0

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CONTINGENCIES

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

CONTINGENCIES

CONTINGENCIES

One of the Company's subsidiaries that it acquired in 2007 is subject to numerous claims filed in various jurisdictions relating to certain sub-fractional motors that were primarily manufactured through 2004 and that were included as components of residential and commercial ventilation units manufactured and sold in high volumes by a third party. These ventilation units are subject to product safety requirements and other potential regulation of their performance by government agencies such as the US Consumer Product Safety Commission (“CPSC”). The claims generally allege that the ventilation units were the cause of fires. The Company has recorded an estimated liability for incurred claims. Based on the current facts, the Company cannot assure that these claims, individually or in the aggregate, will not have a material adverse effect on its subsidiary's financial condition. The Company's subsidiary cannot reasonably predict the outcome of these claims, the nature or extent of any CPSC or other remedial actions, if any, that the Company's subsidiary may need to undertake with respect to motors that remain in the field, or the costs that may be incurred, some of which could be significant.

As a result of the Company's acquisition of the Rexnord PMC business, it is entitled to indemnification from third parties to agreements with the Rexnord PMC business against certain contingent liabilities of the Rexnord PMC business, including certain pre-closing environmental liabilities.

The Company believes that, pursuant to the transaction documents related to the Rexnord PMC business' acquisition of the Stearns business from Invensys plc ("Invensys"), Invensys (now known as Schneider Electric) is obligated to defend and indemnify us with respect to the matters described below relating to the Ellsworth Industrial Park Site and to various asbestos claims. The indemnity obligations relating to the matters described below are subject, together with indemnity obligations relating to other matters, to an overall dollar cap equal to the purchase price, which is an amount in excess of $900 million. In the event that the Company is unable to recover from Invensys with respect to the matters below, it may be entitled to indemnification from Zurn, subject to certain limitations. The following paragraphs summarize the most significant actions and proceedings:

•In 2002, the Company's subsidiary, Rexnord Industries, LLC ("Rexnord Industries") was named as a potentially responsible party ("PRP"), together with at least ten other companies, at the Ellsworth Industrial Park Site, Downers Grove, DuPage County, Illinois (the "Site"), by the United States Environmental Protection Agency ("USEPA"), and the Illinois Environmental Protection Agency ("IEPA"). Rexnord Industries' Downers Grove property is situated within the Ellsworth Industrial Complex. The USEPA and IEPA allege there have been one or more releases or threatened releases of chlorinated solvents and other hazardous substances, pollutants or contaminants at the Site, allegedly including but not limited to a release or threatened release on or from Rexnord Industries' property. The relief sought by the USEPA and IEPA includes further investigation and potential remediation of the Site and reimbursement of USEPA's past costs. In early 2020, Rexnord Industries entered into an administrative order with the USEPA to do remediation work on its Downers Grove property. Rexnord Industries' allocated share of past and future costs related to the Site, including for investigation and/or remediation, could be significant. All previously pending property damage and personal injury lawsuits against Rexnord Industries related to the Site have been settled or dismissed. Pursuant to its indemnity obligation, Invensys continues to defend Rexnord Industries in known matters related to the Site, including the costs of the remediation work pursuant to the 2020 administrative order, and has paid 100% of the costs to date. This indemnification right would not protect Rexnord Industries against liabilities related to environmental conditions that were unknown to Invensys at the time of the acquisition of the Stearns business from Invensys.

•Multiple lawsuits (with approximately 300 claimants) are pending in state or federal court in numerous jurisdictions relating to alleged personal injuries due to the alleged presence of asbestos in certain brakes and clutches previously manufactured by the Rexnord PMC business' Stearns brand of brakes and clutches and/or its predecessor owners. Invensys and FMC, prior owners of the Stearns business, have paid 100% of the costs to date related to the Stearns lawsuits. Similarly, the Rexnord PMC business' Prager subsidiary is the subject of claims by multiple claimants alleging personal injuries due to the alleged presence of asbestos in a product allegedly manufactured by Prager. However, all these claims are currently on the Texas Multi-district Litigation inactive docket, and the Company does not believe that they will become active in the future. To date, the Rexnord PMC business' insurance providers have paid 100% of the costs related to the Prager asbestos matters. We believe that the combination of the Company's insurance coverage and the Invensys indemnity obligations will cover any future costs of these matters.

In connection with the Company's acquisition of the Rexnord PMC business, transaction documents related to the Rexnord PMC business’ acquisition of The Falk Corporation from Hamilton Sundstrand Corporation were assigned to Rexnord Industries, and provide Rexnord Industries with indemnification against certain products related asbestos exposure liabilities. The Company believes that, pursuant to such indemnity obligations, Hamilton Sundstrand is obligated to defend and indemnify Rexnord Industries with respect to asbestos claims described below, and that, with respect to these claims, such indemnity obligations are not subject to any time or dollar limitations.

The following paragraph summarizes the most significant actions and proceedings for which Hamilton Sundstrand has accepted responsibility:

•Rexnord Industries is a defendant in multiple lawsuits pending in state or federal court in numerous jurisdictions relating to alleged personal injuries due to the alleged presence of asbestos in certain clutches and drives previously manufactured by The Falk Corporation. The ultimate outcome of these lawsuits cannot presently be determined. Hamilton Sundstrand is defending Rexnord Industries in these lawsuits pursuant to its indemnity obligations and has paid 100% of the costs to date.

The Company is, from time to time, party to litigation and other legal or regulatory proceedings that arise in the normal course of its business operations and the outcomes of which are subject to significant uncertainty, including product warranty and liability claims, contract disputes and environmental, asbestos, intellectual property, employment and other litigation matters. The Company's products are used in a variety of industrial, commercial and residential applications that subject the Company to claims that the use of its products is alleged to have resulted in injury or other damage. Many of these matters will only be resolved when one or more future events occur or fail to occur. Management conducts regular reviews, including updates from legal counsel, to assess the need for accounting recognition or disclosure of these contingencies, and such assessment inherently involves an exercise in judgment. The Company accrues for exposures in amounts that it believes are adequate, and the Company does not believe that the outcome of any such lawsuit individually or collectively will have a material effect on the Company's financial position, its results of operations or its cash flows.

The Company recognizes the cost associated with its standard warranty on its products at the time of sale. The amount recognized is based on historical experience. The following table presents a reconciliation of the changes in accrued warranty costs for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
	March 31, 2022		April 3, 2021
Beginning Balance	$	23.0	$	15.5
Less: Payments	(5.6)		(4.5)
Provisions	6.0		5.4
Translation Adjustments	—		(0.1)
Ending Balance	$	23.4	$	16.3

These liabilities are included in Other Accrued Expenses and Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets.

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DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are commodity price risk, currency exchange risk, and interest rate risk. Forward contracts on certain commodities are entered into to manage the price risk associated with forecasted purchases of materials used in the Company's manufacturing process. Forward contracts on certain currencies are entered into to manage forecasted cash flows in certain foreign currencies. Interest rate swaps are utilized to manage interest rate risk associated with the Company's floating rate borrowings.

The Company is exposed to credit losses in the event of non-performance by the counterparties to various financial agreements, including its commodity hedging transactions, foreign currency exchange contracts and interest rate swap agreements. Exposure to counterparty credit risk is managed by limiting counterparties to major international banks and financial institutions meeting established credit guidelines and continually monitoring their compliance with the credit guidelines. The Company does not obtain collateral or other security to support financial instruments subject to credit risk. The Company does not anticipate non-performance by its counterparties, but cannot provide assurances.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheets. The Company designates commodity forward contracts as cash flow hedges of forecasted purchases of commodities, currency forward contracts as cash flow hedges of forecasted foreign currency cash flows and interest rate swaps as cash flow hedges of forecasted SOFR-based interest payments. There were no significant collateral deposits on derivative financial instruments as of March 31, 2022 or April 3, 2021.

Cash Flow Hedges

The effective portion of the gain or loss on the derivative is reported as a component of AOCI and reclassified into the same line within the Condensed Consolidated Statement of Income as the earnings effect of the hedged item in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or changes in market value of derivatives not designated as hedges are recognized in current earnings.

At March 31, 2022, the Company had $18.2 million, net of tax, of derivative gains on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings. At January 1, 2022, the Company had $5.6 million, net of tax, of derivative gains on closed hedge instruments in AOCI that was subsequently realized in earnings when the hedged items impacted earnings.

As of March 31, 2022, the Company had the following currency forward contracts outstanding (with maturities extending through December 2022) to hedge forecasted foreign currency cash flows (in millions):

	Notional Amount (in US Dollars)
Chinese Renminbi	$	264.0
Mexican Peso	210.4
Euro	209.3
Indian Rupee	59.7
Canadian Dollar	0.1
Australian Dollar	16.4
British Pound	2.0
Thai Baht	1.5

As of March 31, 2022, the Company had the following commodity forward contracts outstanding (with maturities extending through December 2022) to hedge forecasted purchases of commodities (notional amounts expressed in terms of the dollar value of the hedged item (in millions)):

	Notional Amount
Copper	$	158.6
Aluminum	7.9

The Company entered into two receive variable/pay-fixed forward starting non-amortizing interest rate swaps in June 2020, with a total notional amount of $250.0 million. The cash proceeds of $16.2 million received to settle the terminated swaps in

March 2022 will be recognized as a reduction of interest expense via the effective interest rate method through July 2025 when the terminated swaps were scheduled to expire.

The following table presents the fair values of derivative instruments as of March 31, 2022 and January 1, 2022 (in millions):

	March 31, 2022
	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Other Accrued Expenses		Other Noncurrent Liabilities
Designated as Hedging Instruments:
Currency Contracts	$	13.5	$	1.7	$	0.5	$	—
Commodity Contracts	13.8		1.7		0.1		0.1
Not Designated as Hedging Instruments:
Currency Contracts	0.6		—		0.2		—
Commodity Contracts	0.8		0.1		—		—
Total Derivatives	$	28.7	$	3.5	$	0.8	$	0.1

	January 1, 2022
	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Other Accrued Expenses		Other Noncurrent Liabilities
Designated as Hedging Instruments:
Interest Rate Swap Contracts	$	—	$	5.3	$	—	$	—
Currency Contracts	8.3		0.7		1.3		—
Commodity Contracts	8.9		0.1		1.2		0.5
Not Designated as Hedging Instruments:
Currency Contracts	0.3		—		0.4		—
Commodity Contracts	0.4		—		—		0.1
Total Derivatives	$	17.9	$	6.1	$	2.9	$	0.6

The following table presents the effect of derivative instruments on the Condensed Consolidated Statements of Income and Condensed Consolidated Statement of Comprehensive Income (pre-tax) (in millions):

Derivatives Designated as Cash Flow Hedging Instruments

	Three Months Ended
	March 31, 2022								April 3, 2021
	Commodity Forwards		Currency Forwards		Interest Rate Swaps		Total		Commodity Forwards		Currency Forwards		Interest Rate Swaps		Total
Gain Recognized in Other Comprehensive Income (Loss)	$	13.4	$	10.4	$	10.6	$	34.4	$	14.1	$	0.2	$	4.9	$	19.2
Amounts Reclassified from Other Comprehensive Income (Loss):
Gain recognized in Net Sales	—		0.1		—		0.1		—		0.1		—		0.1
Gain Recognized in Cost of Sales	5.2		3.0		—		8.2		5.2		2.6		—		7.8
Gain Recognized in Operating Expenses	—		—		—		—		—		3.5		—		3.5
(Loss) Gain Recognized in Interest Expense	—		—		(0.3)		(0.3)		—		—		0.1		0.1

Derivatives Not Designated as Cash Flow Hedging Instruments (in millions):

	Three Months Ended
	March 31, 2022				April 3, 2021
	Commodity Forwards		Currency Forwards		Commodity Forwards		Currency Forwards
Gain recognized in Cost of Sales	$	0.6	$	—	$	0.2	$	—
Gain recognized in Operating Expenses	—		1.5		—		5.8

The net AOCI hedging component balance of a $41.1 million gain at March 31, 2022 includes $28.6 million of net current deferred gain expected to be realized in the next twelve months. The gain/loss reclassified from AOCI into earnings on such derivatives will be recognized in the same period in which the related item affects earnings.

The Company's commodity and currency derivative contracts are subject to master netting agreements with the respective counterparties which allow the Company to net settle transactions with a single net amount payable by one party to another party. The Company has elected to present the derivative assets and derivative liabilities on the Condensed Consolidated Balance Sheets on a gross basis for the periods ended March 31, 2022 and January 1, 2022.

The following table presents the derivative assets and derivative liabilities presented on a net basis under enforceable master netting agreements (in millions):

	March 31, 2022
	Gross Amounts as Presented in the Condensed Consolidated Balance Sheet		Derivative Contract Amounts Subject to Right of Offset		Derivative Contracts as Presented on a Net Basis
Prepaid Expenses and Other Current Assets:
Derivative Currency Contracts	$	14.1	$	(0.7)	$	13.4
Derivative Commodity Contracts	14.6		(0.1)		14.5
Other Noncurrent Assets:
Derivative Currency Contracts	1.7		—		1.7
Derivative Commodity Contracts	1.8		(0.1)		1.7
Other Accrued Expenses:
Derivative Currency Contracts	0.7		(0.7)		—
Derivative Commodity Contracts	0.1		(0.1)		—
Other Noncurrent Liabilities:
Derivative Commodity Contracts	0.1		(0.1)		—

	January 1, 2022
	Gross Amounts as Presented in the Condensed Consolidated Balance Sheet		Derivative Contract Amounts Subject to Right of Offset		Derivative Contracts as Presented on a Net Basis
Prepaid Expenses and Other Current Assets:
Derivative Currency Contracts	$	8.6	$	(1.7)	$	6.9
Derivative Commodity Contracts	9.3		(1.2)		8.1
Other Noncurrent Assets:
Derivative Currency Contracts	0.7		—		0.7
Derivative Commodity Contracts	0.1		(0.1)		—
Other Accrued Expenses:
Derivative Currency Contracts	1.7		(1.7)		—
Derivative Commodity Contracts	1.2		(1.2)		—
Other Noncurrent Liabilities:
Derivative Commodity Contracts	0.6		(0.1)		0.5

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FAIR VALUE

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or
	Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
	Inputs other than quoted prices that are observable for the asset or liability
Level 3	Unobservable inputs for the asset or liability

The Company uses the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The fair values of cash equivalents and short-term deposits approximate their carrying values as of March 31, 2022 and January 1, 2022, due to the short period of time to maturity and are classified using Level 1 inputs. The fair values of trade receivables and accounts payable approximate the carrying values due to the short period of time to maturity. See Note 7 for disclosure of the approximate fair value of the Company's debt at March 31, 2022 and January 1, 2022.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2022 and January 1, 2022 (in millions):

	March 31, 2022		January 1, 2022		Classification
Assets:
Prepaid Expenses and Other Current Assets:
Derivative Currency Contracts	$	14.1	$	8.6	Level 2
Derivative Commodity Contracts	14.6		9.3		Level 2
Other Noncurrent Assets:
Assets Held in Rabbi Trust	6.7		6.8		Level 1
Derivative Currency Contracts	1.7		0.7		Level 2
Derivative Commodity Contracts	1.8		0.1		Level 2
Interest Rate Swap	—		5.3		Level 2
Liabilities:
Other Accrued Expenses:
Derivative Currency Contracts	0.7		1.7		Level 2
Derivative Commodity Contracts	0.1		1.2		Level 2
Other Noncurrent Liabilities:
Derivative Commodity Contracts	0.1		0.6		Level 2

Level 1 fair value measurements for assets held in a Rabbi Trust are unadjusted quoted prices.

Level 2 fair value measurements for derivative assets and liabilities are measured using quoted prices in active markets for similar assets and liabilities. Interest rate swaps are valued based on the discounted cash flows for the LIBOR forward yield curve for a swap with similar contractual terms. Foreign currency forwards are valued based on exchange rates quoted by domestic and foreign banks for similar instruments. Commodity forwards are valued based on observable market transactions of forward commodity prices.

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RESTRUCTURING ACTIVITIES

3 Months Ended

Mar. 31, 2022

Restructuring and Related Activities [Abstract]

RESTRUCTURING ACTIVITIES

RESTRUCTURING ACTIVITIES

The Company incurred restructuring and restructuring-related costs on projects during fiscal 2022 and 2021. In conjunction with the Rexnord Transaction, the Company initiated a restructuring plan to achieve cost synergies from procurement, distribution efficiencies, footprint rationalization and other general cost savings measures. Restructuring costs include employee termination and plant relocation costs. Restructuring-related costs also include costs directly associated with actions resulting from the Company's simplification initiatives, such as asset write-downs or accelerated depreciation due to shortened useful lives in connection with site closures, discretionary employment benefit costs and other facility rationalization costs. Restructuring costs for employee termination expenses are generally recognized when the severance liability is determined to be probable of being paid and reasonably estimable while plant relocation costs and related costs are generally required to be expensed as incurred.

The following table presents a reconciliation of provisions and payments for the restructuring projects for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
	March 31, 2022		April 3, 2021
Beginning Balance	$	5.0	$	2.0
Provision	16.8		1.7
Less: Payments/ Other	7.3		1.0
Ending Balance	$	14.5	$	2.7

The following table presents a reconciliation of restructuring and restructuring-related costs for restructuring projects for the three months ended March 31, 2022 and April 3, 2021, respectively (in millions):

	Three Months Ended
	March 31, 2022						April 3, 2021
Restructuring Costs:	Cost of Sales		Operating Expenses		Total		Cost of Sales		Operating Expenses		Total
Employee Termination Expenses	$	4.8	$	3.6	$	8.4	$	0.2	$	0.4	$	0.6
Facility Related Costs	8.0		0.4		8.4		0.8		0.2		1.0
Other Expenses	—		—		—		0.1		—		0.1
Total Restructuring Costs	$	12.8	$	4.0	$	16.8	$	1.1	$	0.6	$	1.7

The following table presents the allocation of restructuring and restructuring-related costs by segment for the three months ended March 31, 2022 and April 3, 2021 (in millions):

Restructuring Costs - Three Months Ended	Total		Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions
March 31, 2022	$	16.8	$	0.7	$	—	$	0.3	$	15.8
April 3, 2021	$	1.7	$	0.2	$	0.5	$	0.3	$	0.7

The Company's current restructuring activities are expected to continue through 2023. The Company expects to record aggregate future charges of approximately $43.3 million in 2022. The Company continues to evaluate operating efficiencies and anticipates incurring additional costs in future periods in connection with these activities.

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SUBSEQUENT EVENT

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENT

SUBSEQUENT EVENT

The Company has evaluated subsequent events since March 31, 2022, the date of these financial statements, and is aware of the following event to disclose.

On April 7, 2022, the Company entered into a Note Purchase Agreement with certain institutional accredited investors (the “Note Purchase Agreement”) governing the issuance and sale of $500,000,000 aggregate principal amount of 3.90% senior notes due April 7, 2032 (the “Senior Notes”), in an offering exempt from the registration requirements of the Securities Act of 1933, as amended. The Company expects to use the net proceeds from the offering for general corporate purposes. The Note Purchase Agreement contains customary representations, warranties and covenants of the Company. The Company may, at its option, prepay at any time all, or from time to time any part of, the Senior Notes, in an amount not less than 5% of the aggregate principal amount of the Senior Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and a make-whole amount determined as provided in the Note Purchase Agreement for the prepayment date with respect to such principal amount. The Company's obligations under the Note Purchase Agreement and Senior Notes are unconditionally guaranteed by certain subsidiary guarantors.

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BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Change in Accounting Principle

Change in Accounting Principle

As of January 2, 2022, the Company changed its methodology for valuing certain inventories to the first-in, first-out ("FIFO") cost method from the last-in, first-out ("LIFO") cost method. The effects of this change have been retrospectively applied to all periods presented. See Note 2 for additional information.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU improves the accounting for acquired revenue contracts with customers in a business combination. This ASU becomes effective for fiscal years beginning after December 31, 2022, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance.

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OTHER FINANCIAL INFORMATION (Tables)

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Accounting Standards Update and Change in Accounting Principle

In addition, certain financial statement line items in our Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for the three months ended April 3, 2021 and our Condensed Consolidated Balance Sheet as of January 1, 2022, were adjusted as follows (dollars in millions):

	As Originally Reported		Effect of Change		As Adjusted
Condensed Consolidated Statement of Operations for the three months ended April 3, 2021
Cost of Sales	$	568.7	$	(4.4)	$	564.3
Provision for Income Taxes	$	20.2	$	1.1	$	21.3
Net income attributable to Regal Rexnord Corporation	$	65.6	$	3.3	$	68.9
Earnings Per Share Attributable to Regal Rexnord Corporation:
Basic	$	1.62	$	0.08	$	1.70
Assuming Dilution	$	1.60	$	0.08	$	1.68
Condensed Consolidated Balance Sheet as of January 1, 2022
Inventories	$	1,106.6	$	85.8	$	1,192.4
Deferred Income Taxes	$	652.0	$	27.7	$	679.7
Retained Earnings	$	1,854.5	$	58.1	$	1,912.6
Condensed Consolidated Statement of Cash Flows for the three months ended April 3, 2021
Net Income	$	67.0	$	3.3	$	70.3
Change in Operating Assets and Liabilities	$	(64.1)	$	(3.3)	$	(67.4)
Condensed Consolidated Statement of Comprehensive Income for the three months ended April 3, 2021
Comprehensive income attributable to Regal Rexnord Corporation	$	50.4	$	3.3	$	53.7

Schedule of Percentage Distribution between Major Classes of Inventory

The following table presents approximate percentage distribution between major classes of inventories inclusive of the accounting method change discussed above:

	March 31, 2022	January 1, 2022
Raw Material and Work in Process	47.8%	43.4%
Finished Goods and Purchased Parts	52.2%	56.6%

Schedule of Property, Plant, and Equipment by Major Classification

The following table presents property, plant, and equipment by major classification (dollars in millions):

	Useful Life in Years	March 31, 2022		January 1, 2022
Land and Improvements		$	108.7	$	109.1
Buildings and Improvements	3 - 50	420.9		449.6
Machinery and Equipment	3 - 15	1,162.9		1,164.8
Property, Plant and Equipment		1,692.5		1,723.5
Less: Accumulated Depreciation		(839.8)		(815.0)
Net Property, Plant and Equipment		$	852.7	$	908.5

Schedule of Disaggregation of Revenue

The following tables presents the Company’s revenues disaggregated by geographical region (in millions):

	Three Months Ended
March 31, 2022	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Total
North America	$	205.9	$	82.4	$	238.5	$	408.5	$	935.3
Asia	42.2		39.4		8.2		34.4		124.2
Europe	32.7		12.3		13.6		98.1		156.7
Rest-of-World	12.5		10.6		13.6		45.6		82.3
Total	$	293.3	$	144.7	$	273.9	$	586.6	$	1,298.5
April 3, 2021	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Total
North America	$	154.1	$	71.1	$	209.7	$	163.8	$	598.7
Asia	46.0		43.2		9.3		6.9		105.4
Europe	24.7		11.6		9.5		23.5		69.3
Rest-of-World	12.2		10.5		10.6		7.4		40.7
Total	$	237.0	$	136.4	$	239.1	$	201.6	$	814.1

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HELD FOR SALE, DIVESTITURES AND ACQUISITIONS (Tables)

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of Business Acquisitions

The preliminary purchase price of the Rexnord PMC business consisted of the following (in millions):

	As Reported as of January 1, 2022		Measurement period adjustments		As Reported as of March 31, 2022
Fair value of Company common stock issued to Zurn (a)	$	3,896.3	$	—	$	3,896.3
Stock based compensation (b)	47.1		—		47.1
Adjustment amount (c)	30.9		4.1		35.0
Land Financing Fees paid by the Company (d)	3.9		—		3.9
Preexisting Relationships (e)	(0.8)		—		(0.8)
Preliminary purchase price	$	3,977.4	$	4.1	$	3,981.5

(a) Represents approximately 27 million new shares of Company common stock issued to Zurn stockholders in the exchange offer, based on the Company's October 4, 2021, closing share price of $151.00, less the Special Dividend amount of $6.99, which the Zurn stockholders were not entitled to receive.

(b) Represents fair value of replacement equity-based awards and Company common stock issued in settlement of other Zurn share based awards. The portion of the fair value attributable to pre-Merger service was recorded as part of the consideration transferred in the Merger - see Note 10.

(c) Represents working capital adjustment pursuant to the terms of the purchase agreement. The entire amount was settled and paid in cash by the Company as of March 31, 2022.

(d) Represents financing fees paid by the Company for the Bridge Facility and Land Term Facility (as defined in Note 7) that were determined to be costs of Zurn.

(e) Represents effective settlement of outstanding payables and receivables between the Company and the Rexnord PMC business. No gain or loss was recognized on this settlement.

Schedule of Assets Acquired and Liabilities Assumed

The preliminary fair value and subsequent measurement period adjustments of the assets acquired and liabilities and noncontrolling interests assumed were as follows (in millions):

	As Reported as of January 1, 2022		Measurement period adjustments		As Reported as of March 31, 2022
Cash and Cash Equivalents	$	192.8	$	—	$	192.8
Trade Receivables	186.9		(3.5)		183.4
Inventories	262.5		(1.0)		261.5
Prepaid Expenses and Other Current Assets	21.0		—		21.0
Assets Held for Sale	1.4		—		1.4
Deferred Income Tax Benefits	8.8		(7.7)		1.1
Property, Plant and Equipment	412.3		(38.4)		373.9
Operating Lease Assets	46.4		—		46.4
Intangible Assets	1,831.0		23.0		1,854.0
Other Noncurrent Assets	12.3		3.7		16.0
Accounts Payable	(121.1)		—		(121.1)
Accrued Compensation and Benefits	(44.0)		2.6		(41.4)
Other Accrued Expenses	(55.7)		(4.0)		(59.7)
Current Operating Lease Liabilities	(8.1)		—		(8.1)
Current Maturities of Long-Term Debt	(2.5)		—		(2.5)
Long-Term Debt	(558.2)		—		(558.2)
Deferred Income Taxes	(508.2)		12.1		(496.1)
Pension and Other Post Retirement Benefits	(75.1)		—		(75.1)
Noncurrent Operating Lease Liabilities	(38.0)		—		(38.0)
Other Noncurrent Liabilities	(17.0)		—		(17.0)
Total Identifiable Net Assets	1,547.5		(13.2)		1,534.3
Goodwill	2,433.2		17.3		2,450.5
Noncontrolling Interests	(3.3)		—		(3.3)
Preliminary purchase price	$	3,977.4	$	4.1	$	3,981.5

The preliminary fair value of the assets acquired and liabilities assumed were as follows (in millions):

	As Reported as of January 1, 2022
Cash and Cash Equivalents	$	1.1
Trade Receivables	19.1
Inventories	12.8
Prepaid Expenses and Other Current Assets	7.6
Property, Plant and Equipment	3.7
Intangible Assets(1)	160.0
Accounts Payable	(4.7)
Accrued Compensation and Benefits	(2.6)
Other Accrued Expenses	(25.0)
Total Identifiable Net Assets	172.0
Goodwill	143.6
Preliminary purchase price	$	315.6

(1) Includes $124.0 million related to Customer Relationships, $18.0 million related to Trademarks and $18.0 million related to Technology.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Schedule of Changes In Accumulated Other Comprehensive Loss By Component, Net Of Tax

The following tables present changes in AOCI by component for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
March 31, 2022	Hedging Activities		Pension and Post Retirement Benefit Adjustments		Foreign Currency Translation Adjustments		Total
Beginning Balance	$	21.0	$	(14.3)	$	(201.8)	$	(195.1)
Other Comprehensive Income (Loss) before Reclassifications	34.4		0.2		(1.0)		33.6
Tax Impact	(8.3)		—		—		(8.3)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(8.0)		0.2		—		(7.8)
Tax Impact	2.0		—		—		2.0
Net Current Period Other Comprehensive Income (Loss)	20.1		0.4		(1.0)		19.5
Ending Balance	$	41.1	$	(13.9)	$	(202.8)	$	(175.6)
April 3, 2021	Hedging Activities		Pension and Post Retirement Benefit Adjustments		Foreign Currency Translation Adjustments		Total
Beginning Balance	$	23.5	$	(31.1)	$	(155.7)	$	(163.3)
Other Comprehensive Income (Loss) before Reclassifications	19.2		—		(21.4)		(2.2)
Tax Impact	(4.6)		—		—		(4.6)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(11.5)		0.4		—		(11.1)
Tax Impact	2.8		(0.1)		—		2.7
Net Current Period Other Comprehensive Income (Loss)	5.9		0.3		(21.4)		(15.2)
Ending Balance	$	29.4	$	(30.8)	$	(177.1)	$	(178.5)

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GOODWILL AND INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes to Goodwill

The following table presents changes to goodwill during the three months ended March 31, 2022 (in millions):

	Total		Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions
Balance as of January 1, 2022	$	4,039.2	$	428.9	$	128.8	$	330.5	$	3,151.0
Acquisition and Valuation Adjustments	17.3		—		—		—		17.3
Translation Adjustments	(5.2)		—		(0.1)		(0.1)		(5.0)
Balance as of March 31, 2022	$	4,051.3	$	428.9	$	128.7	$	330.4	$	3,163.3
Cumulative Goodwill Impairment Charges	$	328.7	$	183.2	$	105.1	$	17.2	$	23.2

Schedule of Finite-Lived Intangible Assets

The following table presents intangible assets (in millions):

		March 31, 2022				January 1, 2022
	Weighted Average Amortization Period (Years)	Gross Value		Accumulated Amortization		Gross Value		Accumulated Amortization
Amortizable Intangible Assets:
Customer Relationships	16	$	2,355.6	$	438.6	$	2,335.4	$	405.0
Technology	13	250.1		117.3		250.1		114.1
Trademarks	10	399.6		46.7		400.0		37.2
Patent and Engineering Drawings	5	16.6		16.6		16.6		16.6
		$	3,021.9	$	619.2	$	3,002.1	$	572.9
Intangible Assets, Net of Amortization		$	2,402.7			$	2,429.2

Schedule of Indefinite-Lived Intangible Assets

The following table presents intangible assets (in millions):

		March 31, 2022				January 1, 2022
	Weighted Average Amortization Period (Years)	Gross Value		Accumulated Amortization		Gross Value		Accumulated Amortization
Amortizable Intangible Assets:
Customer Relationships	16	$	2,355.6	$	438.6	$	2,335.4	$	405.0
Technology	13	250.1		117.3		250.1		114.1
Trademarks	10	399.6		46.7		400.0		37.2
Patent and Engineering Drawings	5	16.6		16.6		16.6		16.6
		$	3,021.9	$	619.2	$	3,002.1	$	572.9
Intangible Assets, Net of Amortization		$	2,402.7			$	2,429.2

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The following table presents future estimated annual amortization for intangible assets (in millions):

Year	Estimated Amortization
2023	$	187.0
2024	186.3
2025	184.2
2026	180.7
2027	145.8

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Schedule Of Reportable Segments

The following sets forth certain financial information attributable to the Company's operating segments for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
March 31, 2022	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Eliminations		Total
External Sales	$	293.3	$	144.7	$	273.9	$	586.6	$	—	$	1,298.5
Intersegment Sales	28.2		7.3		4.8		1.9		(42.2)		—
Total Sales	321.5		152.0		278.7		588.5		(42.2)		1,298.5
Gross Profit	94.3		31.3		83.2		213.1		—		421.9
Operating Expenses	41.4		23.4		31.7		155.5		—		252.0
Total Operating Expenses	41.4		23.4		31.7		155.5		—		252.0
Income from Operations	52.9		7.9		51.5		57.6		—		169.9
Depreciation and Amortization	7.7		3.6		4.4		62.2		—		77.9
Capital Expenditures	3.6		1.5		4.3		4.0		—		13.4
April 3, 2021
External Sales	$	237.0	$	136.4	$	239.1	$	201.6	$	—	$	814.1
Intersegment Sales	17.5		3.7		4.3		0.7		(26.2)		—
Total Sales	254.5		140.1		243.4		202.3		(26.2)		814.1
Gross Profit*	66.8		28.0		75.4		79.6		—		249.8
Operating Expenses	38.0		23.1		30.7		56.5		—		148.3
Total Operating Expenses	38.0		23.1		30.7		56.5		—		148.3
Income from Operations*	28.8		4.9		44.7		23.1		—		101.5
Depreciation and Amortization	7.8		5.9		4.5		13.6		—		31.8
Capital Expenditures	3.3		2.4		3.2		1.8		—		10.7

Schedule of Reconciliation of Segment Assets

The following table presents identifiable assets information attributable to the Company's operating segments as of March 31, 2022 and January 1, 2022 (in millions):

	Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions		Total
Identifiable Assets as of March 31, 2022	$	1,306.1	$	874.1	$	1,006.0	$	7,284.9	$	10,471.1
Identifiable Assets as of January 1, 2022*	1,264.0		859.9		982.7		7,260.8		10,367.4

*Includes the retrospective effect of changing accounting methods for valuing certain inventories to the FIFO cost method from the LIFO cost method. See Note 2 for additional information.

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DEBT AND BANK CREDIT FACILITIES (Tables)

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Schedule of Indebtedness

The following table presents the Company’s indebtedness as of March 31, 2022 and January 1, 2022 (in millions):

	March 31, 2022		January 1, 2022
Term Facility	$	550.0	$	620.0
Land Term Facility	486.8		486.8
Multicurrency Revolving Facility	955.0		736.7
Other	76.2		78.7
Less: Debt Issuance Costs	(7.4)		(3.7)
Total	2,060.6		1,918.5
Less: Current Maturities	3.2		4.9
Long-Term Debt	$	2,057.4	$	1,913.6

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RETIREMENT AND POST RETIREMENT HEALTH CARE PLANS (Tables)

3 Months Ended

Mar. 31, 2022

Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]

Schedule of Net Periodic Defined Benefit Pension Cost

The following table presents the Company’s net periodic benefit cost (income) components (in millions):

	Three Months Ended
	March 31, 2022		April 3, 2021
Service Cost	$	0.3	$	0.3
Interest Cost	3.6		1.5
Expected Return on Plan Assets	(5.1)		(3.1)
Amortization of Prior Service Cost and Net Actuarial Loss	0.2		0.4
Net Periodic Benefit Income	$	(1.0)	$	(0.9)

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SHAREHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2022

Stockholders' Equity Note [Abstract]

Schedule of Share-Based Incentive Plan Grant Activity For SAR's

During the three months ended March 31, 2022, the Company granted the following share-based incentive awards:

Award Type	Number of Awards	Weighted Average Grant-Date Fair Value
Options and SARs	135,816	$	42.21
Restricted Stock Units	76,962	$	151.36
Performance Share Units	40,763	$	174.91

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Schedule Of Reconciliation Of Basic And Diluted Shares Used in EPS

The following table reconciles the basic and diluted shares used in earnings per share calculations for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
	March 31, 2022	April 3, 2021
Denominator for Basic Earnings Per Share	67.4	40.6
Effect of Dilutive Securities	0.5	0.4
Denominator for Diluted Earnings Per Share	67.9	41.0

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CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Schedule Of Accrued Warranty Costs

The following table presents a reconciliation of the changes in accrued warranty costs for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
	March 31, 2022		April 3, 2021
Beginning Balance	$	23.0	$	15.5
Less: Payments	(5.6)		(4.5)
Provisions	6.0		5.4
Translation Adjustments	—		(0.1)
Ending Balance	$	23.4	$	16.3

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Forward Contracts

As of March 31, 2022, the Company had the following currency forward contracts outstanding (with maturities extending through December 2022) to hedge forecasted foreign currency cash flows (in millions):

	Notional Amount (in US Dollars)
Chinese Renminbi	$	264.0
Mexican Peso	210.4
Euro	209.3
Indian Rupee	59.7
Canadian Dollar	0.1
Australian Dollar	16.4
British Pound	2.0
Thai Baht	1.5

As of March 31, 2022, the Company had the following commodity forward contracts outstanding (with maturities extending through December 2022) to hedge forecasted purchases of commodities (notional amounts expressed in terms of the dollar value of the hedged item (in millions)):

	Notional Amount
Copper	$	158.6
Aluminum	7.9

Schedule of Fair Values of Derivative Instruments

The following table presents the fair values of derivative instruments as of March 31, 2022 and January 1, 2022 (in millions):

	March 31, 2022
	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Other Accrued Expenses		Other Noncurrent Liabilities
Designated as Hedging Instruments:
Currency Contracts	$	13.5	$	1.7	$	0.5	$	—
Commodity Contracts	13.8		1.7		0.1		0.1
Not Designated as Hedging Instruments:
Currency Contracts	0.6		—		0.2		—
Commodity Contracts	0.8		0.1		—		—
Total Derivatives	$	28.7	$	3.5	$	0.8	$	0.1

	January 1, 2022
	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Other Accrued Expenses		Other Noncurrent Liabilities
Designated as Hedging Instruments:
Interest Rate Swap Contracts	$	—	$	5.3	$	—	$	—
Currency Contracts	8.3		0.7		1.3		—
Commodity Contracts	8.9		0.1		1.2		0.5
Not Designated as Hedging Instruments:
Currency Contracts	0.3		—		0.4		—
Commodity Contracts	0.4		—		—		0.1
Total Derivatives	$	17.9	$	6.1	$	2.9	$	0.6

Schedule of Cash Flow Hedging Instruments

The following table presents the effect of derivative instruments on the Condensed Consolidated Statements of Income and Condensed Consolidated Statement of Comprehensive Income (pre-tax) (in millions):

Derivatives Designated as Cash Flow Hedging Instruments

	Three Months Ended
	March 31, 2022								April 3, 2021
	Commodity Forwards		Currency Forwards		Interest Rate Swaps		Total		Commodity Forwards		Currency Forwards		Interest Rate Swaps		Total
Gain Recognized in Other Comprehensive Income (Loss)	$	13.4	$	10.4	$	10.6	$	34.4	$	14.1	$	0.2	$	4.9	$	19.2
Amounts Reclassified from Other Comprehensive Income (Loss):
Gain recognized in Net Sales	—		0.1		—		0.1		—		0.1		—		0.1
Gain Recognized in Cost of Sales	5.2		3.0		—		8.2		5.2		2.6		—		7.8
Gain Recognized in Operating Expenses	—		—		—		—		—		3.5		—		3.5
(Loss) Gain Recognized in Interest Expense	—		—		(0.3)		(0.3)		—		—		0.1		0.1

Derivatives Not Designated as Cash Flow Hedging Instruments (in millions):

	Three Months Ended
	March 31, 2022				April 3, 2021
	Commodity Forwards		Currency Forwards		Commodity Forwards		Currency Forwards
Gain recognized in Cost of Sales	$	0.6	$	—	$	0.2	$	—
Gain recognized in Operating Expenses	—		1.5		—		5.8

Schedule of Derivatives Under Enforceable Master Netting Agreements

The following table presents the derivative assets and derivative liabilities presented on a net basis under enforceable master netting agreements (in millions):

	March 31, 2022
	Gross Amounts as Presented in the Condensed Consolidated Balance Sheet		Derivative Contract Amounts Subject to Right of Offset		Derivative Contracts as Presented on a Net Basis
Prepaid Expenses and Other Current Assets:
Derivative Currency Contracts	$	14.1	$	(0.7)	$	13.4
Derivative Commodity Contracts	14.6		(0.1)		14.5
Other Noncurrent Assets:
Derivative Currency Contracts	1.7		—		1.7
Derivative Commodity Contracts	1.8		(0.1)		1.7
Other Accrued Expenses:
Derivative Currency Contracts	0.7		(0.7)		—
Derivative Commodity Contracts	0.1		(0.1)		—
Other Noncurrent Liabilities:
Derivative Commodity Contracts	0.1		(0.1)		—

	January 1, 2022
	Gross Amounts as Presented in the Condensed Consolidated Balance Sheet		Derivative Contract Amounts Subject to Right of Offset		Derivative Contracts as Presented on a Net Basis
Prepaid Expenses and Other Current Assets:
Derivative Currency Contracts	$	8.6	$	(1.7)	$	6.9
Derivative Commodity Contracts	9.3		(1.2)		8.1
Other Noncurrent Assets:
Derivative Currency Contracts	0.7		—		0.7
Derivative Commodity Contracts	0.1		(0.1)		—
Other Accrued Expenses:
Derivative Currency Contracts	1.7		(1.7)		—
Derivative Commodity Contracts	1.2		(1.2)		—
Other Noncurrent Liabilities:
Derivative Commodity Contracts	0.6		(0.1)		0.5

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FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Schedule Of Financial Assets And Liabilities At Fair Value

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2022 and January 1, 2022 (in millions):

	March 31, 2022		January 1, 2022		Classification
Assets:
Prepaid Expenses and Other Current Assets:
Derivative Currency Contracts	$	14.1	$	8.6	Level 2
Derivative Commodity Contracts	14.6		9.3		Level 2
Other Noncurrent Assets:
Assets Held in Rabbi Trust	6.7		6.8		Level 1
Derivative Currency Contracts	1.7		0.7		Level 2
Derivative Commodity Contracts	1.8		0.1		Level 2
Interest Rate Swap	—		5.3		Level 2
Liabilities:
Other Accrued Expenses:
Derivative Currency Contracts	0.7		1.7		Level 2
Derivative Commodity Contracts	0.1		1.2		Level 2
Other Noncurrent Liabilities:
Derivative Commodity Contracts	0.1		0.6		Level 2

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RESTRUCTURING ACTIVITIES (Tables)

3 Months Ended

Mar. 31, 2022

Restructuring and Related Activities [Abstract]

Schedule Of Restructuring Reserve

The following table presents a reconciliation of provisions and payments for the restructuring projects for the three months ended March 31, 2022 and April 3, 2021 (in millions):

	Three Months Ended
	March 31, 2022		April 3, 2021
Beginning Balance	$	5.0	$	2.0
Provision	16.8		1.7
Less: Payments/ Other	7.3		1.0
Ending Balance	$	14.5	$	2.7

Schedule of Reconciliation Of Expenses By Type

The following table presents a reconciliation of restructuring and restructuring-related costs for restructuring projects for the three months ended March 31, 2022 and April 3, 2021, respectively (in millions):

	Three Months Ended
	March 31, 2022						April 3, 2021
Restructuring Costs:	Cost of Sales		Operating Expenses		Total		Cost of Sales		Operating Expenses		Total
Employee Termination Expenses	$	4.8	$	3.6	$	8.4	$	0.2	$	0.4	$	0.6
Facility Related Costs	8.0		0.4		8.4		0.8		0.2		1.0
Other Expenses	—		—		—		0.1		—		0.1
Total Restructuring Costs	$	12.8	$	4.0	$	16.8	$	1.1	$	0.6	$	1.7

The following table presents the allocation of restructuring and restructuring-related costs by segment for the three months ended March 31, 2022 and April 3, 2021 (in millions):

Restructuring Costs - Three Months Ended	Total		Commercial Systems		Industrial Systems		Climate Solutions		Motion Control Solutions
March 31, 2022	$	16.8	$	0.7	$	—	$	0.3	$	15.8
April 3, 2021	$	1.7	$	0.2	$	0.5	$	0.3	$	0.7

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OTHER FINANCIAL INFORMATION (Narrative) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2022 USD ($) segment	Jan. 01, 2022 USD ($)	Jan. 02, 2021 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments | segment	4
Payment terms	Payment terms vary by customer but typically range from due upon delivery to 120 days after delivery. For contracts recognized at a point in time, revenue and billing typically occur simultaneously.
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained Earnings	$ 1,927.5	$ 1,912.6
Effect of Change | Change In Inventory Valuation
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained Earnings		$ 58.1	$ 38.4

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OTHER FINANCIAL INFORMATION (Condensed Financial Statements) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021	Jan. 01, 2022	Jan. 02, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cost of Sales	$ 876.6	$ 564.3
Provision for Income Taxes	36.2	21.3
Net income attributable to Regal Rexnord Corporation	$ 125.6	$ 68.9
Earnings Per Share Attributable to Regal Rexnord Corporation:
Basic (in dollars per share)	$ 1.86	$ 1.70
Assuming Dilution (in dollars per share)	$ 1.85	$ 1.68
Inventories	$ 1,336.9		$ 1,192.4
Deferred Income Taxes	661.7		679.7
Retained Earnings	1,927.5		1,912.6
Net Income	127.1	$ 70.3
Change in Operating Assets and Liabilities	(227.7)	(67.4)
Comprehensive income attributable to Regal Rexnord Corporation	$ 145.1	53.7
As Originally Reported | Change In Inventory Valuation
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cost of Sales		568.7
Provision for Income Taxes		20.2
Net income attributable to Regal Rexnord Corporation		$ 65.6
Earnings Per Share Attributable to Regal Rexnord Corporation:
Basic (in dollars per share)		$ 1.62
Assuming Dilution (in dollars per share)		$ 1.60
Inventories			1,106.6
Deferred Income Taxes			652.0
Retained Earnings			1,854.5
Net Income		$ 67.0
Change in Operating Assets and Liabilities		(64.1)
Comprehensive income attributable to Regal Rexnord Corporation		50.4
Effect of Change | Change In Inventory Valuation
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cost of Sales		(4.4)
Provision for Income Taxes		1.1
Net income attributable to Regal Rexnord Corporation		$ 3.3
Earnings Per Share Attributable to Regal Rexnord Corporation:
Basic (in dollars per share)		$ 0.08
Assuming Dilution (in dollars per share)		$ 0.08
Inventories			85.8
Deferred Income Taxes			27.7
Retained Earnings			$ 58.1	$ 38.4
Net Income		$ 3.3
Change in Operating Assets and Liabilities		(3.3)
Comprehensive income attributable to Regal Rexnord Corporation		$ 3.3

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OTHER FINANCIAL INFORMATION (Percentage Distribution Between Major Classes of Inventory) (Details) - Inventory Concentration Risk - Inventories	3 Months Ended	6 Months Ended
	Mar. 31, 2022	Jul. 03, 2021
Raw Material and Work in Process
Inventory [Line Items]
Percentage of total Inventory	47.80%	43.40%
Finished Goods and Purchased Parts
Inventory [Line Items]
Percentage of total Inventory	52.20%	56.60%

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OTHER FINANCIAL INFORMATION (Property, Plant, And Equipment By Major Classification) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021	Jan. 01, 2022
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment	$ 1,692,500,000		$ 1,723,500,000
Less: Accumulated Depreciation	(839,800,000)		(815,000,000.0)
Net Property, Plant and Equipment	852,700,000		908,500,000
Asset Impairments	0	$ 0
Land and Improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment	108,700,000		109,100,000
Buildings and Improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment	$ 420,900,000		449,600,000
Buildings and Improvements | Minimum
Property, Plant and Equipment [Line Items]
Useful life	3 years
Buildings and Improvements | Maximum
Property, Plant and Equipment [Line Items]
Useful life	50 years
Machinery and Equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment	$ 1,162,900,000		$ 1,164,800,000
Machinery and Equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful life	3 years
Machinery and Equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful life	15 years

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OTHER FINANCIAL INFORMATION (Disaggregation of Revenue) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Disaggregation of Revenue [Line Items]
Net Sales	$ 1,298.5	$ 814.1
Commercial Systems
Disaggregation of Revenue [Line Items]
Net Sales	293.3	237.0
Industrial Systems
Disaggregation of Revenue [Line Items]
Net Sales	144.7	136.4
Climate Solutions
Disaggregation of Revenue [Line Items]
Net Sales	273.9	239.1
Motion Control Solutions
Disaggregation of Revenue [Line Items]
Net Sales	586.6	201.6
North America
Disaggregation of Revenue [Line Items]
Net Sales	935.3	598.7
North America | Commercial Systems
Disaggregation of Revenue [Line Items]
Net Sales	205.9	154.1
North America | Industrial Systems
Disaggregation of Revenue [Line Items]
Net Sales	82.4	71.1
North America | Climate Solutions
Disaggregation of Revenue [Line Items]
Net Sales	238.5	209.7
North America | Motion Control Solutions
Disaggregation of Revenue [Line Items]
Net Sales	408.5	163.8
Asia
Disaggregation of Revenue [Line Items]
Net Sales	124.2	105.4
Asia | Commercial Systems
Disaggregation of Revenue [Line Items]
Net Sales	42.2	46.0
Asia | Industrial Systems
Disaggregation of Revenue [Line Items]
Net Sales	39.4	43.2
Asia | Climate Solutions
Disaggregation of Revenue [Line Items]
Net Sales	8.2	9.3
Asia | Motion Control Solutions
Disaggregation of Revenue [Line Items]
Net Sales	34.4	6.9
Europe
Disaggregation of Revenue [Line Items]
Net Sales	156.7	69.3
Europe | Commercial Systems
Disaggregation of Revenue [Line Items]
Net Sales	32.7	24.7
Europe | Industrial Systems
Disaggregation of Revenue [Line Items]
Net Sales	12.3	11.6
Europe | Climate Solutions
Disaggregation of Revenue [Line Items]
Net Sales	13.6	9.5
Europe | Motion Control Solutions
Disaggregation of Revenue [Line Items]
Net Sales	98.1	23.5
Rest-of-World
Disaggregation of Revenue [Line Items]
Net Sales	82.3	40.7
Rest-of-World | Commercial Systems
Disaggregation of Revenue [Line Items]
Net Sales	12.5	12.2
Rest-of-World | Industrial Systems
Disaggregation of Revenue [Line Items]
Net Sales	10.6	10.5
Rest-of-World | Climate Solutions
Disaggregation of Revenue [Line Items]
Net Sales	13.6	10.6
Rest-of-World | Motion Control Solutions
Disaggregation of Revenue [Line Items]
Net Sales	$ 45.6	$ 7.4

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HELD FOR SALE, DIVESTITURES AND ACQUISITIONS (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions				3 Months Ended
	Nov. 23, 2021	Oct. 04, 2021	Oct. 01, 2021	Mar. 31, 2022	Apr. 03, 2021	Jan. 01, 2022
Business Acquisition [Line Items]
Assets Held for Sale				$ 11.7		$ 12.5
Common stock, par value (in dollars per share)				$ 0.01		$ 0.01
Common stock, shares outstanding (in shares)				67,000,000.0		67,600,000
Additional goodwill				$ 17.3
Net of cash acquired				35.0	$ 1.9
Merger Agreement
Business Acquisition [Line Items]
Common stock, par value (in dollars per share)		$ 0.01
Right to receive (in shares)		0.22296103
Shares issued (in shares)		27,055,945
Equity method investment percentage		39.90%
Common stock, shares outstanding (in shares)		67,756,732
Consideration transferred		$ 4,000.0
Cash payment				35.0
Additional goodwill				$ 17.3
Arrowhead Systems, LLC
Business Acquisition [Line Items]
Net of cash acquired	$ 315.6
Cash acquired	$ 1.1
Rexnord | Merger Agreement
Business Acquisition [Line Items]
Common stock, par value (in dollars per share)		$ 0.01
Common stock, dividends, per share, cash paid (in dollars per share)			$ 6.99

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HELD FOR SALE, DIVESTITURES AND ACQUISITIONS (Preliminary Purchase Price) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions				3 Months Ended
	Mar. 31, 2022	Jan. 01, 2022	Oct. 04, 2021	Mar. 31, 2022	Apr. 03, 2021
Business Acquisition [Line Items]
Compensation expense				$ 6.3	$ 3.3
Land financing fees paid by the company				$ 4.5	$ 12.4
Merger Agreement
Business Acquisition [Line Items]
Consideration transferred			$ 4,000.0
Stock issued (in shares)				27
Share price (in dollars per share)			$ 151.00
Dividends amount (in dollars per share)		$ 6.99
Merger Agreement | Zurn
Business Acquisition [Line Items]
Fair value of company common stock issued to zurn	$ 3,896.3
Compensation expense	47.1
Adjustment amount	35.0
Land financing fees paid by the company	3.9
Preexisting relationships	(0.8)
Consideration transferred	$ 3,981.5
Merger Agreement | Zurn | As Originally Reported
Business Acquisition [Line Items]
Fair value of company common stock issued to zurn		$ 3,896.3
Compensation expense		47.1
Adjustment amount		30.9
Land financing fees paid by the company		3.9
Preexisting relationships		(0.8)
Consideration transferred		$ 3,977.4
Merger Agreement | Zurn | Measurement period adjustments
Business Acquisition [Line Items]
Fair value of company common stock issued to zurn				$ 0.0
Compensation expense				0.0
Adjustment amount				4.1
Land financing fees paid by the company				0.0
Preexisting relationships				0.0
Consideration transferred				$ 4.1

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HELD FOR SALE, DIVESTITURES AND ACQUISITIONS (Fair Values of Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Millions	Mar. 31, 2022	Jan. 01, 2022	Nov. 23, 2021
Business Acquisition [Line Items]
Goodwill	$ 4,051.3	$ 4,039.2
Merger Agreement
Business Acquisition [Line Items]
Cash and Cash Equivalents	192.8
Trade Receivables	183.4
Inventories	261.5
Prepaid Expenses and Other Current Assets	21.0
Assets Held for Sale	1.4
Deferred Income Tax Benefits	1.1
Property, Plant and Equipment	373.9
Operating Lease Assets	46.4
Intangible Assets	1,854.0
Other Noncurrent Assets	16.0
Accounts Payable	(121.1)
Accrued Compensation and Benefits	(41.4)
Other Accrued Expenses	(59.7)
Current Operating Lease Liabilities	(8.1)
Current Maturities of Long-Term Debt	(2.5)
Long-Term Debt	(558.2)
Deferred Income Taxes	(496.1)
Pension and Other Post Retirement Benefits	(75.1)
Noncurrent Operating Lease Liabilities	(38.0)
Other Noncurrent Liabilities	(17.0)
Total Identifiable Net Assets	1,534.3
Goodwill	2,450.5
Noncontrolling Interests	(3.3)
Preliminary purchase price	$ 3,981.5
Merger Agreement | As Originally Reported
Business Acquisition [Line Items]
Cash and Cash Equivalents		192.8
Trade Receivables		186.9
Inventories		262.5
Prepaid Expenses and Other Current Assets		21.0
Assets Held for Sale		1.4
Deferred Income Tax Benefits		8.8
Property, Plant and Equipment		412.3
Operating Lease Assets		46.4
Intangible Assets		1,831.0
Other Noncurrent Assets		12.3
Accounts Payable		(121.1)
Accrued Compensation and Benefits		(44.0)
Other Accrued Expenses		(55.7)
Current Operating Lease Liabilities		(8.1)
Current Maturities of Long-Term Debt		(2.5)
Long-Term Debt		(558.2)
Deferred Income Taxes		(508.2)
Pension and Other Post Retirement Benefits		(75.1)
Noncurrent Operating Lease Liabilities		(38.0)
Other Noncurrent Liabilities		(17.0)
Total Identifiable Net Assets		1,547.5
Goodwill		2,433.2
Noncontrolling Interests		(3.3)
Preliminary purchase price		3,977.4
Merger Agreement | Measurement period adjustments
Business Acquisition [Line Items]
Cash and Cash Equivalents		0.0
Trade Receivables		(3.5)
Inventories		(1.0)
Prepaid Expenses and Other Current Assets		0.0
Assets Held for Sale		0.0
Deferred Income Tax Benefits		(7.7)
Property, Plant and Equipment		(38.4)
Operating Lease Assets		0.0
Intangible Assets		23.0
Other Noncurrent Assets		3.7
Accounts Payable		0.0
Accrued Compensation and Benefits		2.6
Other Accrued Expenses		(4.0)
Current Operating Lease Liabilities		0.0
Current Maturities of Long-Term Debt		0.0
Long-Term Debt		0.0
Deferred Income Taxes		12.1
Pension and Other Post Retirement Benefits		0.0
Noncurrent Operating Lease Liabilities		0.0
Other Noncurrent Liabilities		0.0
Total Identifiable Net Assets		(13.2)
Goodwill		17.3
Noncontrolling Interests		0.0
Preliminary purchase price		4.1
Arrowhead Systems, LLC | As Originally Reported
Business Acquisition [Line Items]
Cash and Cash Equivalents		1.1
Trade Receivables		19.1
Inventories		12.8
Prepaid Expenses and Other Current Assets		7.6
Property, Plant and Equipment		3.7
Intangible Assets		160.0
Accounts Payable		(4.7)
Accrued Compensation and Benefits		(2.6)
Other Accrued Expenses		(25.0)
Total Identifiable Net Assets		172.0
Goodwill		143.6
Preliminary purchase price		$ 315.6
Arrowhead Systems, LLC | Customer Relationships
Business Acquisition [Line Items]
Intangible Assets			$ 124.0
Arrowhead Systems, LLC | Trademarks
Business Acquisition [Line Items]
Intangible Assets			18.0
Arrowhead Systems, LLC | Technology
Business Acquisition [Line Items]
Intangible Assets			$ 18.0

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	$ 6,408.2	$ 2,615.4
Other Comprehensive Income (Loss) before Reclassifications	33.6	(2.2)
Tax Impact	(8.3)	(4.6)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(7.8)	(11.1)
Tax Impact	2.0	2.7
Net Current Period Other Comprehensive Income (Loss)	19.5	(15.2)
Ending Balance	6,423.8	2,659.5
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(195.1)	(163.3)
Ending Balance	(175.6)	(178.5)
Hedging Activities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	21.0	23.5
Other Comprehensive Income (Loss) before Reclassifications	34.4	19.2
Tax Impact	(8.3)	(4.6)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	(8.0)	(11.5)
Tax Impact	2.0	2.8
Net Current Period Other Comprehensive Income (Loss)	20.1	5.9
Ending Balance	41.1	29.4
Pension and Post Retirement Benefit Adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(14.3)	(31.1)
Other Comprehensive Income (Loss) before Reclassifications	0.2	0.0
Tax Impact	0.0	0.0
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	0.2	0.4
Tax Impact	0.0	(0.1)
Net Current Period Other Comprehensive Income (Loss)	0.4	0.3
Ending Balance	(13.9)	(30.8)
Foreign Currency Translation Adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(201.8)	(155.7)
Other Comprehensive Income (Loss) before Reclassifications	(1.0)	(21.4)
Tax Impact	0.0	0.0
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	0.0	0.0
Tax Impact	0.0	0.0
Net Current Period Other Comprehensive Income (Loss)	(1.0)	(21.4)
Ending Balance	$ (202.8)	$ (177.1)

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GOODWILL AND INTANGIBLE ASSETS (Schedule Of Changes To Goodwill) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2022 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 4,039.2
Acquisition and Valuation Adjustments	17.3
Translation Adjustments	(5.2)
Ending balance	4,051.3
Cumulative Goodwill Impairment Charges	328.7
Commercial Systems
Goodwill [Roll Forward]
Beginning balance	428.9
Acquisition and Valuation Adjustments	0.0
Translation Adjustments	0.0
Ending balance	428.9
Cumulative Goodwill Impairment Charges	183.2
Industrial Systems
Goodwill [Roll Forward]
Beginning balance	128.8
Acquisition and Valuation Adjustments	0.0
Translation Adjustments	(0.1)
Ending balance	128.7
Cumulative Goodwill Impairment Charges	105.1
Climate Solutions
Goodwill [Roll Forward]
Beginning balance	330.5
Acquisition and Valuation Adjustments	0.0
Translation Adjustments	(0.1)
Ending balance	330.4
Cumulative Goodwill Impairment Charges	17.2
Motion Control Solutions
Goodwill [Roll Forward]
Beginning balance	3,151.0
Acquisition and Valuation Adjustments	17.3
Translation Adjustments	(5.0)
Ending balance	3,163.3
Cumulative Goodwill Impairment Charges	$ 23.2

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GOODWILL AND INTANGIBLE ASSETS (Schedule Of Intangible Assets) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Jan. 01, 2022
Finite-Lived Intangible Assets [Line Items]
Accumulated Amortization	$ 619.2	$ 572.9
Intangible Assets	3,021.9	3,002.1
Intangible Assets, Net of Amortization	$ 2,402.7	2,429.2
Customer Relationships
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (Years)	16 years
Gross Value	$ 2,355.6	2,335.4
Accumulated Amortization	$ 438.6	405.0
Technology
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (Years)	13 years
Gross Value	$ 250.1	250.1
Accumulated Amortization	$ 117.3	114.1
Trademarks
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (Years)	10 years
Gross Value	$ 399.6	400.0
Accumulated Amortization	$ 46.7	37.2
Patent and Engineering Drawings
Finite-Lived Intangible Assets [Line Items]
Weighted Average Amortization Period (Years)	5 years
Gross Value	$ 16.6	16.6
Accumulated Amortization	$ 16.6	$ 16.6

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GOODWILL AND INTANGIBLE ASSETS (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Goodwill [Line Items]
Amortization of intangible assets	$ 47,300,000	$ 11,200,000
Estimated amortization expense remainder of year	187,000,000.0
Customer Relationships | Disposed of by sale | Hermetic Climate
Goodwill [Line Items]
Impairment of intangible assets	$ 0	$ 0

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GOODWILL AND INTANGIBLE ASSETS (Schedule Of Estimated Amortization) (Details) $ in Millions	Mar. 31, 2022 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Estimated Amortization, 2023	$ 187.0
Estimated Amortization, 2024	186.3
Estimated Amortization, 2025	184.2
Estimated Amortization, 2026	180.7
Estimated Amortization, 2027	$ 145.8

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SEGMENT INFORMATION (Details) $ in Millions	3 Months Ended
	Mar. 31, 2022 USD ($) segment	Apr. 03, 2021 USD ($)	Jan. 01, 2022 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment	4
Total Sales	$ 1,298.5	$ 814.1
Gross Profit	421.9	249.8
Operating Expenses	252.0	148.3
Total Operating Expenses	252.0	148.3
Income from Operations	169.9	101.5
Depreciation and Amortization	77.9	31.8
Capital Expenditures	13.4	10.7
Assets	10,471.1		$ 10,367.4
Commercial Systems
Segment Reporting Information [Line Items]
Total Sales	293.3	237.0
Industrial Systems
Segment Reporting Information [Line Items]
Total Sales	144.7	136.4
Climate Solutions
Segment Reporting Information [Line Items]
Total Sales	273.9	239.1
Motion Control Solutions
Segment Reporting Information [Line Items]
Total Sales	586.6	201.6
Intersegment Eliminations
Segment Reporting Information [Line Items]
Total Sales	42.2	26.2
Intersegment Eliminations | Commercial Systems
Segment Reporting Information [Line Items]
Total Sales	(28.2)	(17.5)
Intersegment Eliminations | Industrial Systems
Segment Reporting Information [Line Items]
Total Sales	(7.3)	(3.7)
Intersegment Eliminations | Climate Solutions
Segment Reporting Information [Line Items]
Total Sales	(4.8)	(4.3)
Intersegment Eliminations | Motion Control Solutions
Segment Reporting Information [Line Items]
Total Sales	(1.9)	(0.7)
Operating Segments
Segment Reporting Information [Line Items]
Assets	10,471.1		10,367.4
Operating Segments | Commercial Systems
Segment Reporting Information [Line Items]
Total Sales	321.5	254.5
Gross Profit	94.3	66.8
Operating Expenses	41.4	38.0
Total Operating Expenses	41.4	38.0
Income from Operations	52.9	28.8
Depreciation and Amortization	7.7	7.8
Capital Expenditures	3.6	3.3
Assets	1,306.1		1,264.0
Operating Segments | Industrial Systems
Segment Reporting Information [Line Items]
Total Sales	152.0	140.1
Gross Profit	31.3	28.0
Operating Expenses	23.4	23.1
Total Operating Expenses	23.4	23.1
Income from Operations	7.9	4.9
Depreciation and Amortization	3.6	5.9
Capital Expenditures	1.5	2.4
Assets	874.1		859.9
Operating Segments | Climate Solutions
Segment Reporting Information [Line Items]
Total Sales	278.7	243.4
Gross Profit	83.2	75.4
Operating Expenses	31.7	30.7
Total Operating Expenses	31.7	30.7
Income from Operations	51.5	44.7
Depreciation and Amortization	4.4	4.5
Capital Expenditures	4.3	3.2
Assets	1,006.0		982.7
Operating Segments | Motion Control Solutions
Segment Reporting Information [Line Items]
Total Sales	588.5	202.3
Gross Profit	213.1	79.6
Operating Expenses	155.5	56.5
Total Operating Expenses	155.5	56.5
Income from Operations	57.6	23.1
Depreciation and Amortization	62.2	13.6
Capital Expenditures	4.0	$ 1.8
Assets	$ 7,284.9		$ 7,260.8

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DEBT AND BANK CREDIT FACILITIES (Schedule Of Indebtedness) (Details) - USD ($) $ in Millions	Mar. 31, 2022	Jan. 01, 2022
Debt Instrument [Line Items]
Less: Debt Issuance Costs	$ (7.4)	$ (3.7)
Total	2,060.6	1,918.5
Less: Current Maturities	3.2	4.9
Long-Term Debt	2,057.4	1,913.6
Line of Credit | Term Facility
Debt Instrument [Line Items]
Long-term debt, gross	550.0	620.0
Line of Credit | Land Term Facility
Debt Instrument [Line Items]
Long-term debt, gross	486.8	486.8
Line of Credit | Multicurrency Revolving Facility
Debt Instrument [Line Items]
Long-term debt, gross	955.0	736.7
Other
Debt Instrument [Line Items]
Long-term debt, gross	$ 76.2	$ 78.7

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DEBT AND BANK CREDIT FACILITIES (Narrative) (Details) - USD ($)			3 Months Ended
	Feb. 15, 2021	Aug. 27, 2018	Mar. 31, 2022	Apr. 03, 2021	Mar. 28, 2022	Jan. 01, 2022
Debt Instrument [Line Items]
Fair value of debt						$ 1,918,500,000
Bridge Loan
Debt Instrument [Line Items]
Principal amount	$ 2,100,000,000
Debt instrument term	364 days
Other
Debt Instrument [Line Items]
Long-term debt, gross			$ 76,200,000			$ 78,700,000
Weighted average interest rate			5.10%			5.20%
Land Commitment Letter | Bridge Loan
Debt Instrument [Line Items]
Available borrowing capacity			$ 486,800,000
Debt, weighted average interest rate			1.70%
Term Facility
Debt Instrument [Line Items]
Amortization rate per annum		5.00%
Weighted average interest rate, over time			2.00%	1.50%
Percent of certain cash proceeds received for required prepayment		100.00%
Term Facility | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity					$ 550,000,000
Long-term debt, gross			$ 550,000,000.0			$ 620,000,000.0
Land Term Facility | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity					486,827,669
Long-term debt, gross			$ 486,800,000			486,800,000
Multicurrency Revolving Facility | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity					$ 1,000,000,000
Weighted average interest rate, over time			1.70%	1.40%
Borrowings under line of credit			$ 955,000,000
Available borrowing capacity			44,900,000
Average daily balance			773,700,000	$ 7,400,000
Long-term debt, gross			955,000,000.0			$ 736,700,000
Multicurrency Revolving Facility | Letter of Credit
Debt Instrument [Line Items]
Borrowings under line of credit			$ 100,000

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RETIREMENT AND POST RETIREMENT HEALTH CARE PLANS (Schedule Of Net Periodic Defined Benefit Pension Cost) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]
Service Cost	$ 0.3	$ 0.3
Interest Cost	3.6	1.5
Expected Return on Plan Assets	(5.1)	(3.1)
Amortization of Prior Service Cost and Net Actuarial Loss	0.2	0.4
Net Periodic Benefit Income	$ (1.0)	$ (0.9)

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RETIREMENT AND POST RETIREMENT HEALTH CARE PLANS (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Apr. 03, 2021	Jan. 01, 2022
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]
Contribution to defined benefit pension plans	$ 1.7	$ 1.2	$ 6.0
Expected total contribution to defined benefit pension plans	$ 7.6

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SHAREHOLDERS' EQUITY (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021	Oct. 26, 2021
Stockholders' Equity Note [Abstract]
Stock repurchase program, authorized amount			$ 500.0
Stock Repurchase (in shares)	731,194
Stock Repurchase	$ 114.2
Remaining shares to be repurchased (in shares)	320,000,000
Compensation expense	$ 6.3	$ 3.3
Excess income tax benefit recognized related to share-based compensation	$ 1.5	$ 0.6

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SHAREHOLDERS' EQUITY (Summary Of Share-Based Incentive Plan Grant Activity For Options and SAR's) (Details)	3 Months Ended
	Mar. 31, 2022 $ / shares shares
Options and SARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares) | shares	135,816
Options granted, weighted average exercise price (in dollars per share) | $ / shares	$ 42.21
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards other than options granted (in shares) | shares	76,962
Awards other than options granted, weighted average fair value at grant date (in dollars per share) | $ / shares	$ 151.36
Performance Share Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards other than options granted (in shares) | shares	40,763
Awards other than options granted, weighted average fair value at grant date (in dollars per share) | $ / shares	$ 174.91

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INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021	Jan. 01, 2022
Income Tax Disclosure [Abstract]
Effective tax rate	22.20%	23.30%
Unrecognized tax benefits	$ 9.1		$ 8.8
Accrued interest	$ 1.4		$ 1.3

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EARNINGS PER SHARE (Details) - shares	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Earnings Per Share [Abstract]
Shares excluded from the calculation of the effect of dilutive securities (in shares)	100,000	0
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
Denominator for Basic Earnings Per Share (in shares)	67,400,000	40,600,000
Effect of Dilutive Securities (in shares)	500,000	400,000
Denominator for Diluted Earnings Per Share (in shares)	67,900,000	41,000,000.0

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CONTINGENCIES - Narrative (Details) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2022 USD ($) subsidiary inventory_pool	Jan. 02, 2021
Commitments and Contingencies Disclosure [Abstract]
Number of subsidiaries involved in litigation | subsidiary	1
Long-term purchase commitment | $	$ 900
Loss contingency, full amount paid	100.00%	100.00%
Loss contingency, claims settled and dismissed, number | inventory_pool	300

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CONTINGENCIES - Changes in Accrued Warranty (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning Balance	$ 23.0	$ 15.5
Less: Payments	(5.6)	(4.5)
Provisions	6.0	5.4
Translation Adjustments	0.0	(0.1)
Ending Balance	$ 23.4	$ 16.3

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DERIVATIVE FINANCIAL INSTRUMENTS (Narrative) (Details)	1 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2022 USD ($)	Mar. 31, 2022 USD ($)	Jan. 01, 2022 USD ($)	Jun. 30, 2020 USD ($) derivative_instrument
Derivative [Line Items]
Derivative gains, net of tax		$ 18,200,000	$ 5,600,000
Net AOCI hedging component	$ 41,100,000	41,100,000
Net current deferred gain expected to be realized in the next twelve months		$ 28,600,000
Forward Contracts
Derivative [Line Items]
Number of derivative instruments | derivative_instrument				2
Notional amount of instrument				$ 250,000,000
Proceeds from derivative instrument	$ 16,200,000

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DERIVATIVE FINANCIAL INSTRUMENTS (Schedule Of Notional Amounts Of Forward Contracts) (Details) - USD ($)	Mar. 31, 2022	Jun. 30, 2020
Forward Contracts
Derivative [Line Items]
Notional Amount (in US Dollars)		$ 250,000,000
Forward Contracts | Chinese Renminbi
Derivative [Line Items]
Notional Amount (in US Dollars)	$ 264,000,000.0
Forward Contracts | Mexican Peso
Derivative [Line Items]
Notional Amount (in US Dollars)	210,400,000
Forward Contracts | Euro
Derivative [Line Items]
Notional Amount (in US Dollars)	209,300,000
Forward Contracts | Indian Rupee
Derivative [Line Items]
Notional Amount (in US Dollars)	59,700,000
Forward Contracts | Canadian Dollar
Derivative [Line Items]
Notional Amount (in US Dollars)	100,000
Forward Contracts | Australian Dollar
Derivative [Line Items]
Notional Amount (in US Dollars)	16,400,000
Forward Contracts | British Pound
Derivative [Line Items]
Notional Amount (in US Dollars)	2,000,000.0
Forward Contracts | Thai Baht
Derivative [Line Items]
Notional Amount (in US Dollars)	1,500,000
Commodity Contracts | Copper
Derivative [Line Items]
Notional Amount (in US Dollars)	158,600,000
Commodity Contracts | Aluminum
Derivative [Line Items]
Notional Amount (in US Dollars)	$ 7,900,000

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DERIVATIVE FINANCIAL INSTRUMENTS (Schedule Of Fair Values Of Derivative Instruments) (Details) - USD ($) $ in Millions	Mar. 31, 2022	Jan. 01, 2022
Prepaid Expenses and Other Current Assets
Derivative [Line Items]
Derivative asset	$ 28.7	$ 17.9
Prepaid Expenses and Other Current Assets | Currency Contracts
Derivative [Line Items]
Derivative asset	14.1	8.6
Prepaid Expenses and Other Current Assets | Commodity Contracts
Derivative [Line Items]
Derivative asset	14.6	9.3
Other Noncurrent Assets
Derivative [Line Items]
Derivative asset	3.5	6.1
Other Noncurrent Assets | Currency Contracts
Derivative [Line Items]
Derivative asset	1.7	0.7
Other Noncurrent Assets | Commodity Contracts
Derivative [Line Items]
Derivative asset	1.8	0.1
Other Accrued Expenses
Derivative [Line Items]
Derivative liability	0.8	2.9
Other Accrued Expenses | Currency Contracts
Derivative [Line Items]
Derivative liability	0.7	1.7
Other Accrued Expenses | Commodity Contracts
Derivative [Line Items]
Derivative liability	0.1
Other Noncurrent Liabilities
Derivative [Line Items]
Derivative liability	0.1	0.6
Other Noncurrent Liabilities | Commodity Contracts
Derivative [Line Items]
Derivative liability	0.1	0.6
Designated as Hedging Instruments: | Prepaid Expenses and Other Current Assets | Currency Contracts
Derivative [Line Items]
Derivative asset	13.5	8.3
Designated as Hedging Instruments: | Prepaid Expenses and Other Current Assets | Commodity Contracts
Derivative [Line Items]
Derivative asset	13.8	8.9
Designated as Hedging Instruments: | Prepaid Expenses and Other Current Assets | Interest Rate Swap Contracts
Derivative [Line Items]
Derivative asset		0.0
Designated as Hedging Instruments: | Other Noncurrent Assets | Currency Contracts
Derivative [Line Items]
Derivative asset	1.7	0.7
Designated as Hedging Instruments: | Other Noncurrent Assets | Commodity Contracts
Derivative [Line Items]
Derivative asset	1.7	0.1
Designated as Hedging Instruments: | Other Noncurrent Assets | Interest Rate Swap Contracts
Derivative [Line Items]
Derivative asset		5.3
Designated as Hedging Instruments: | Other Accrued Expenses | Currency Contracts
Derivative [Line Items]
Derivative liability	0.5	1.3
Designated as Hedging Instruments: | Other Accrued Expenses | Commodity Contracts
Derivative [Line Items]
Derivative liability	0.1	1.2
Designated as Hedging Instruments: | Other Accrued Expenses | Interest Rate Swap Contracts
Derivative [Line Items]
Derivative liability		0.0
Designated as Hedging Instruments: | Other Noncurrent Liabilities | Currency Contracts
Derivative [Line Items]
Derivative liability	0.0	0.0
Designated as Hedging Instruments: | Other Noncurrent Liabilities | Commodity Contracts
Derivative [Line Items]
Derivative liability	0.1	0.5
Designated as Hedging Instruments: | Other Noncurrent Liabilities | Interest Rate Swap Contracts
Derivative [Line Items]
Derivative liability		0.0
Not Designated as Hedging Instruments: | Prepaid Expenses and Other Current Assets | Currency Contracts
Derivative [Line Items]
Derivative asset	0.6	0.3
Not Designated as Hedging Instruments: | Prepaid Expenses and Other Current Assets | Commodity Contracts
Derivative [Line Items]
Derivative asset	0.8	0.4
Not Designated as Hedging Instruments: | Other Noncurrent Assets | Currency Contracts
Derivative [Line Items]
Derivative asset	0.0	0.0
Not Designated as Hedging Instruments: | Other Noncurrent Assets | Commodity Contracts
Derivative [Line Items]
Derivative asset	0.1	0.0
Not Designated as Hedging Instruments: | Other Accrued Expenses | Currency Contracts
Derivative [Line Items]
Derivative liability	0.2	0.4
Not Designated as Hedging Instruments: | Other Accrued Expenses | Commodity Contracts
Derivative [Line Items]
Derivative liability	0.0	0.0
Not Designated as Hedging Instruments: | Other Noncurrent Liabilities | Currency Contracts
Derivative [Line Items]
Derivative liability	0.0	0.0
Not Designated as Hedging Instruments: | Other Noncurrent Liabilities | Commodity Contracts
Derivative [Line Items]
Derivative liability	$ 0.0	$ 0.1

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DERIVATIVE FINANCIAL INSTRUMENTS (Schedule Of Cash Flow Hedging Instruments) (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Apr. 03, 2021	Jan. 01, 2022
Derivative [Line Items]
Gain Recognized in Other Comprehensive Income (Loss)	$ 18.2		$ 5.6
Cash Flow Hedging | Designated as Hedging Instruments:
Derivative [Line Items]
Gain Recognized in Other Comprehensive Income (Loss)	34.4	$ 19.2
Cash Flow Hedging | Designated as Hedging Instruments: | Net sales
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.1	0.1
Cash Flow Hedging | Designated as Hedging Instruments: | Cost of Sales
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	8.2	7.8
Cash Flow Hedging | Designated as Hedging Instruments: | Operating expense
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	3.5
Cash Flow Hedging | Designated as Hedging Instruments: | Interest expense
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	(0.3)	0.1
Cash Flow Hedging | Designated as Hedging Instruments: | Commodity Forwards
Derivative [Line Items]
Gain Recognized in Other Comprehensive Income (Loss)	13.4	14.1
Cash Flow Hedging | Designated as Hedging Instruments: | Commodity Forwards | Net sales
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	0.0
Cash Flow Hedging | Designated as Hedging Instruments: | Commodity Forwards | Cost of Sales
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	5.2	5.2
Cash Flow Hedging | Designated as Hedging Instruments: | Commodity Forwards | Operating expense
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	0.0
Cash Flow Hedging | Designated as Hedging Instruments: | Commodity Forwards | Interest expense
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	0.0
Cash Flow Hedging | Designated as Hedging Instruments: | Currency Forwards
Derivative [Line Items]
Gain Recognized in Other Comprehensive Income (Loss)	10.4	0.2
Cash Flow Hedging | Designated as Hedging Instruments: | Currency Forwards | Net sales
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.1	0.1
Cash Flow Hedging | Designated as Hedging Instruments: | Currency Forwards | Cost of Sales
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	3.0	2.6
Cash Flow Hedging | Designated as Hedging Instruments: | Currency Forwards | Operating expense
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	3.5
Cash Flow Hedging | Designated as Hedging Instruments: | Currency Forwards | Interest expense
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	0.0
Cash Flow Hedging | Designated as Hedging Instruments: | Interest Rate Swaps
Derivative [Line Items]
Gain Recognized in Other Comprehensive Income (Loss)	10.6	4.9
Cash Flow Hedging | Designated as Hedging Instruments: | Interest Rate Swaps | Net sales
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	0.0
Cash Flow Hedging | Designated as Hedging Instruments: | Interest Rate Swaps | Cost of Sales
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	0.0
Cash Flow Hedging | Designated as Hedging Instruments: | Interest Rate Swaps | Operating expense
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	0.0
Cash Flow Hedging | Designated as Hedging Instruments: | Interest Rate Swaps | Interest expense
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	(0.3)	0.1
Cash Flow Hedging | Not Designated as Hedging Instruments: | Commodity Forwards | Cost of Sales
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.6	0.2
Cash Flow Hedging | Not Designated as Hedging Instruments: | Commodity Forwards | Operating expense
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	0.0
Cash Flow Hedging | Not Designated as Hedging Instruments: | Currency Forwards | Cost of Sales
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	0.0	0.0
Cash Flow Hedging | Not Designated as Hedging Instruments: | Currency Forwards | Operating expense
Derivative [Line Items]
Amounts Reclassified from Other Comprehensive Income (Loss):	$ 1.5	$ 5.8

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DERIVATIVE FINANCIAL INSTRUMENTS (Schedule Of Derivatives Under Enforceable Master Netting Agreements) (Details) - USD ($) $ in Millions	Mar. 31, 2022	Jan. 01, 2022
Prepaid Expenses and Other Current Assets
Derivative [Line Items]
Derivative Asset, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	$ 28.7	$ 17.9
Prepaid Expenses and Other Current Assets | Currency Contracts
Derivative [Line Items]
Derivative Asset, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	14.1	8.6
Derivative Asset, Derivative Contract Amounts Subject to Right of Offset	(0.7)	(1.7)
Derivative Asset, Derivative Contracts as Presented on a Net Basis	13.4	6.9
Prepaid Expenses and Other Current Assets | Commodity Contracts
Derivative [Line Items]
Derivative Asset, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	14.6	9.3
Derivative Asset, Derivative Contract Amounts Subject to Right of Offset	(0.1)	(1.2)
Derivative Asset, Derivative Contracts as Presented on a Net Basis	14.5	8.1
Other Noncurrent Assets
Derivative [Line Items]
Derivative Asset, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	3.5	6.1
Other Noncurrent Assets | Currency Contracts
Derivative [Line Items]
Derivative Asset, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	1.7	0.7
Derivative Asset, Derivative Contract Amounts Subject to Right of Offset	0.0	0.0
Derivative Asset, Derivative Contracts as Presented on a Net Basis	1.7	0.7
Other Noncurrent Assets | Commodity Contracts
Derivative [Line Items]
Derivative Asset, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	1.8	0.1
Derivative Asset, Derivative Contract Amounts Subject to Right of Offset	(0.1)	(0.1)
Derivative Asset, Derivative Contracts as Presented on a Net Basis	1.7	0.0
Other Accrued Expenses
Derivative [Line Items]
Derivative Liability, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	0.8	2.9
Other Accrued Expenses | Currency Contracts
Derivative [Line Items]
Derivative Liability, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	0.7	1.7
Derivative Liability, Derivative Contract Amounts Subject to Right of Offset	(0.7)	(1.7)
Derivative Liability, Derivative Contracts as Presented on a Net Basis	0.0	0.0
Other Accrued Expenses | Commodity Contracts
Derivative [Line Items]
Derivative Liability, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	0.1
Derivative Liability, Derivative Contract Amounts Subject to Right of Offset	(0.1)
Derivative Liability, Derivative Contracts as Presented on a Net Basis	0.0
Other Accrued Expenses | Commodity Contracts
Derivative [Line Items]
Derivative Liability, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet		1.2
Derivative Liability, Derivative Contract Amounts Subject to Right of Offset		(1.2)
Derivative Liability, Derivative Contracts as Presented on a Net Basis		0.0
Other Noncurrent Liabilities
Derivative [Line Items]
Derivative Liability, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	0.1	0.6
Other Noncurrent Liabilities | Commodity Contracts
Derivative [Line Items]
Derivative Liability, Gross Amounts as Presented in the Condensed Consolidated Balance Sheet	0.1	0.6
Derivative Liability, Derivative Contract Amounts Subject to Right of Offset	(0.1)	(0.1)
Derivative Liability, Derivative Contracts as Presented on a Net Basis	$ 0.0	$ 0.5

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FAIR VALUE (Details) - USD ($) $ in Millions	Mar. 31, 2022	Jan. 01, 2022
Prepaid Expenses and Other Current Assets
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	$ 28.7	$ 17.9
Prepaid Expenses and Other Current Assets | Commodity Contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	14.6	9.3
Prepaid Expenses and Other Current Assets | Derivative Currency Contracts | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	14.1	8.6
Prepaid Expenses and Other Current Assets | Commodity Contracts | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	14.6	9.3
Other Noncurrent Assets
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	3.5	6.1
Other Noncurrent Assets | Commodity Contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	1.8	0.1
Other Noncurrent Assets | Derivative Currency Contracts | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	1.7	0.7
Other Noncurrent Assets | Commodity Contracts | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	1.8	0.1
Other Noncurrent Assets | Assets Held in Rabbi Trust | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	6.7	6.8
Other Noncurrent Assets | Interest Rate Swaps | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative asset	0.0	5.3
Other Accrued Expenses
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability	0.8	2.9
Other Accrued Expenses | Commodity Contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability	0.1
Other Accrued Expenses | Derivative Currency Contracts | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability	0.7	1.7
Other Accrued Expenses | Commodity Contracts | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability	0.1	1.2
Other Noncurrent Liabilities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability	0.1	0.6
Other Noncurrent Liabilities | Commodity Contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability	0.1	0.6
Other Noncurrent Liabilities | Commodity Contracts | Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative liability	$ 0.1	$ 0.6

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RESTRUCTURING ACTIVITIES (Schedule Of Restructuring Reserve) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Restructuring Reserve [Roll Forward]
Beginning Balance	$ 5.0	$ 2.0
Provision	16.8	1.7
Less: Payments/ Other	7.3	1.0
Ending Balance	$ 14.5	$ 2.7

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RESTRUCTURING ACTIVITIES (Reconciliation Of Expenses By Type) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Apr. 03, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 16.8	$ 1.7
Total restructuring and restructuring-related costs	16.8	1.7
Commercial Systems
Restructuring Cost and Reserve [Line Items]
Total restructuring and restructuring-related costs	0.7	0.2
Industrial Systems
Restructuring Cost and Reserve [Line Items]
Total restructuring and restructuring-related costs	0.0	0.5
Climate Solutions
Restructuring Cost and Reserve [Line Items]
Total restructuring and restructuring-related costs	0.3	0.3
Motion Control Solutions
Restructuring Cost and Reserve [Line Items]
Total restructuring and restructuring-related costs	15.8	0.7
Employee Termination Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring costs	8.4	0.6
Facility Related Costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	8.4	1.0
Other Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring costs	0.0	0.1
Cost of Sales
Restructuring Cost and Reserve [Line Items]
Restructuring costs	12.8	1.1
Cost of Sales | Employee Termination Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring costs	4.8	0.2
Cost of Sales | Facility Related Costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	8.0	0.8
Cost of Sales | Other Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring costs	0.0	0.1
Operating Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring costs	4.0	0.6
Operating Expenses | Employee Termination Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring costs	3.6	0.4
Operating Expenses | Facility Related Costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	0.4	0.2
Operating Expenses | Other Expenses
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 0.0	$ 0.0

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RESTRUCTURING ACTIVITIES (Narrative) (Details) $ in Millions	Mar. 31, 2022 USD ($)
Restructuring and Related Activities [Abstract]
Expected future restructuring charges	$ 43.3

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SUBSEQUENT EVENT (Details) - Subsequent Event - Senior Notes due 2032 - Senior Notes	Apr. 07, 2022 USD ($)
Subsequent Event [Line Items]
Principal amount	$ 500,000,000
Debt instrument interest rate	3.90%
Prepayment threshold, percentage	5.00%
Principal amount prepayment, percentage	100.00%