What changed in this filing

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Item 1. Financial Statements

2021-11-02 compared with 2021-08-04 · 145 added, 132 removed, 881 unchanged (24% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions, except per share data) 2021 2020 2021 2020

31 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions) 2021 2020 2021 2020

3 unchanged sentences

Changes in pension and postretirement plan assets and benefit obligation, net of tax 5.2 3.4 15.3 10.4

Other comprehensive income (loss), net of tax 12.8 20.8 ( 17.2 ) ( 20.9 )

Other comprehensive (loss) income, net of tax ( 19.6 ) 44.4 ( 36.8 ) 23.6

Comprehensive income before allocation to noncontrolling interests 97.0 101.0 326.5 157.8

4 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions) June 30,

(in millions) September 30,

2021 December 31,

26 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except per share and per share data) June 30,

(in millions, except per share and share data) September 30,

2021 December 31,

34 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2021 2020

26 unchanged sentences

Repayments of commercial paper with maturities greater than 90 days ( 27.1 ) ( 188.6 )

Net proceeds (repayments) from issuance of commercial paper with maturities of 90 days or less 15.0 ( 62.8 )

Repayments from issuance of commercial paper with maturities of 90 days or less — ( 76.8 )

Proceeds from revolving credit facility — 77.2

13 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2021 2020

53 unchanged sentences

We believe that our previous methodology to calculate credit losses is generally consistent with the new expected credit loss model and did not result in a material adjustment upon adoption.

The allowance for doubtful accounts was $ 8.3 million and $ 10.9 million as of June 30, 2021 and December 31, 2020, respectively.

The allowance for doubtful accounts was $ 9.5 million and $ 10.9 million as of September 30, 2021 and December 31, 2020, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

57 unchanged sentences

Acquisition-related costs are expensed as incurred.

For the three and six months ended June 30, 2020, we recorded $ 2.3 million and $ 7.5 million, respectively, of integration and transaction costs in our Condensed Consolidated Statements of Operations.

For the three and nine months ended September 30, 2020, we recorded $ 2.7 million and $ 10.3 million, respectively, of integration and transaction costs in our Condensed Consolidated Statements of Operations.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8 unchanged sentences

This change was applied on a retrospective basis.

We reasonably expect to close on this transaction within one year from the date of our entry into the agreement, and therefore have presented the assets and liabilities as current as of June 30, 2021.

Financial results from discontinued operations:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions) 2021 2020 2021 2020

4 unchanged sentences

Income from discontinued operations $ 6.6 $ 9.0 $ 20.7 $ 17.7

Income tax (benefit) provision 1

Income tax provision (benefit) 1

1.4 1.8 ( 17.1 ) 3.8

Income from discontinued operations, net of tax $ 5.2 $ 7.2 $ 37.8 $ 13.9

1 Includes $ 21.5 million of deferred tax benefit in 2021 associated with the pending disposition of the Engineered Materials segment.

1 The nine-month period ended September 30, 2021 includes $ 21.5 million of deferred tax benefit associated with the pending disposition of the Engineered Materials segment.

Major classes of assets and liabilities to be transferred in the transaction:

(in millions) June 30, 2021 December 31, 2020

(in millions) September 30, 2021 December 31, 2020

Accounts receivable, net $ 18.2 $ 8.8

38 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions) 2021 2020 2021 2020

13 unchanged sentences

Income from continuing operations before income taxes $ 131.0 $ 66.5 $ 397.4 $ 156.9

For the three and six month periods ended June 30, 2021, operating profit includes net restructuring gains of $ 0.2 million and $ 13.3 million, respectively.

For the three and six month periods ended June 30, 2020, operating profit includes acquisition-related and integration charges of $ 2.3 million and $ 7.5 million, respectively, and net restructuring charges of $ 23.2 million and $ 22.0 million, respectively.

For the three and nine month periods ended September 30, 2021, operating profit includes net restructuring gains of $ 1.1 million and $ 14.3 million, respectively.

For the three and nine month periods ended September 30, 2020, operating profit includes acquisition-related and integration charges of $ 2.7 million and $ 10.3 million, respectively.

For the three and nine month periods ended September 30, 2020, operating profit includes net restructuring charges of $ 0.0 million and $ 22.0 million, respectively.

See Note 2, “Acquisitions” and Note 15, “Restructuring” for further discussion.

(in millions) June 30, 2021 December 31, 2020

(in millions) September 30, 2021 December 31, 2020

Aerospace & Electronics $ 618.5 $ 593.9

4 unchanged sentences

Total $ 4,474.5 $ 4,615.0

(in millions) June 30, 2021 December 31, 2020

(in millions) September 30, 2021 December 31, 2020

Aerospace & Electronics $ 202.5 $ 202.5

6 unchanged sentences

The following table presents net sales disaggregated by product line for each segment:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions) 2021 2020 2021 2020

12 unchanged sentences

Payment Acceptance and Dispensing Products $ 206.0 $ 161.6 $ 588.3 $ 505.7

$ 197.3 $ 140.9 $ 382.3 $ 344.1

Banknotes and Security Products 159.8 115.6 443.1 316.4

1 unchanged sentence

Net sales $ 833.5 $ 686.5 $ 2,409.5 $ 2,077.6

1 As a result of the third quarter 2020 internal merger of the Crane Merchandising Systems (“CMS”) business into the vending vertical of the CPI business, Payment Acceptance and Dispensing Products now includes Merchandising Equipment.

The prior period has been reclassified to conform to the current period presentation.

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations represents the transaction price of firm orders which have not yet been fulfilled, which we also refer to as total backlog.

As of June 30, 2021, total backlog was $ 1,191.7 million.

As of September 30, 2021, total backlog was $ 1,217.8 million.

We expect to recognize approximately 52 % of our remaining performance obligations as revenue in 2021, an additional 44 % in 2022 and the balance thereafter.

8 unchanged sentences

Net contract assets and contract liabilities consisted of the following:

(in millions) June 30, 2021 December 31, 2020

(in millions) September 30, 2021 December 31, 2020

Contract assets $ 74.6 $ 66.7

Contract liabilities $ 87.5 $ 103.0

We recognized revenue of $ 13.5 million and $ 46.9 million during the three- and six-month periods ended June 30, 2021 related to contract liabilities as of December 31, 2020.

We recognized revenue of $ 8.9 million and $ 55.8 million during the three- and nine-month periods ended September 30, 2021 related to contract liabilities as of December 31, 2020.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4 unchanged sentences

Diluted earnings per share gives effect to all potentially dilutive common shares outstanding during the period.

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions, except per share data) 2021 2020 2021 2020

13 unchanged sentences

Earnings per diluted share $ 1.96 $ 0.97 $ 6.14 $ 2.28

The computation of diluted earnings per share excludes the effect of the potentially anti-dilutive securities which was 1.3 million and 2.2 million for the three months ended June 30, 2021 and 2020, respectively, and 1.5 million and 1.8 million for the six months ending June 30, 2021 and 2020, respectively.

The computation of diluted earnings per share excludes the effect of the potentially anti-dilutive securities which was 1.0 million and 2.6 million for the three months ended September 30, 2021 and 2020, respectively, and 1.4 million and 2.0 million for the nine months ending September 30, 2021 and 2020, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Changes in Equity and Accumulated Other Comprehensive Loss

A summary of changes in equity for the year-to-date interim periods ended June 30, 2021 and 2020 is provided below:

A summary of changes in equity for the year-to-date interim periods ended September 30, 2021 and 2020 is provided below:

(in millions, except share data) Common

24 unchanged sentences

BALANCE JUNE 30, 2021 72.4 $ 348.4 $ 2,389.3 $ ( 484.3 ) $ ( 600.6 ) $ 1,725.2 $ 2.9 $ 1,728.1

Net income — — 116.6 — — 116.6 — 116.6

Cash dividends ($ 0.43 per share)

— — ( 25.3 ) — — ( 25.3 ) — ( 25.3 )

Impact from settlement of share-based awards, net of shares acquired — 2.0 — — 2.6 4.6 — 4.6

Stock-based compensation expense — 6.0 — — — 6.0 — 6.0

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 5.2 — 5.2 — 5.2

Currency translation adjustment — — — ( 24.7 ) — ( 24.7 ) ( 0.1 ) ( 24.8 )

BALANCE SEPTEMBER 30, 2021 72.4 $ 356.4 $ 2,480.6 $ ( 503.8 ) $ ( 598.0 ) $ 1,807.6 $ 2.8 $ 1,810.4

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share data) Common

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Cash dividends ($ 0.43 per share)

— — ( 24.9 ) — — ( 24.9 ) — ( 24.9 )

Impact from settlement of share-based awards, net of shares acquired — ( 1.4 ) — — 1.9 0.5 — 0.5

3 unchanged sentences

BALANCE JUNE 30, 2020 72.4 $ 318.7 $ 2,139.4 $ ( 504.5 ) $ ( 604.9 ) $ 1,421.1 $ 2.5 $ 1,423.6

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Net income — — 56.6 — — 56.6 — 56.6

Cash dividends ($ 0.43 per share)

— — ( 24.9 ) — — ( 24.9 ) — ( 24.9 )

Impact from settlement of share-based awards, net of shares acquired — 0.1 — — 3.5 3.6 3.6

Stock-based compensation expense — 5.7 — — — 5.7 — 5.7

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 3.4 — 3.4 — 3.4

Currency translation adjustment — — — 41.0 — 41.0 0.1 41.1

BALANCE SEPTEMBER 30, 2020 72.4 $ 324.5 $ 2,171.1 $ ( 460.1 ) $ ( 601.4 ) $ 1,506.5 $ 2.6 $ 1,509.1

The table below provides the accumulated balances for each classification of accumulated other comprehensive income (loss), as reflected on our Condensed Consolidated Balance Sheets.

4 unchanged sentences

Net period other comprehensive income (loss) 15.3 ( 52.7 ) ( 37.4 )

Balance as of June 30, 2021 $ ( 387.8 ) $ ( 96.5 ) $ ( 484.3 )

Net of tax benefit of $ 150.6 million and $ 148.2 million as of June 30, 2021 and December 31, 2020, respectively.

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three and six month periods ended June 30, 2021 and 2020.

Balance as of September 30, 2021 $ ( 382.6 ) $ ( 121.2 ) $ ( 503.8 )

Net of tax benefit of $ 151.5 million and $ 148.2 million as of September 30, 2021 and December 31, 2020, respectively.

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three and nine month periods ended September 30, 2021 and 2020.

Amortization of pension and postretirement components has been recorded within “Miscellaneous income, net” on our Condensed Consolidated Statements of Operations.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2021 2020 2021 2020

9 unchanged sentences

Note 8 - Defined Benefit and Postretirement Benefits

For all plans, the components of net periodic benefit for the three months ended June 30, 2021 and 2020 are as follows:

For all plans, the components of net periodic benefit for the three months ended September 30, 2021 and 2020 are as follows:

Pension Postretirement

6 unchanged sentences

Net periodic benefit $ ( 1.6 ) $ ( 1.8 ) $ — $ —

For all plans, the components of net periodic benefit for the six months ended June 30, 2021 and 2020 are as follows:

For all plans, the components of net periodic benefit for the nine months ended September 30, 2021 and 2020 are as follows:

Pension Postretirement

12 unchanged sentences

Expected contributions in 2021 $ 20.7 $ 2.6

Amounts contributed during the six months ended June 30, 2021 $ 16.9 $ 0.3

Amounts contributed during the nine months ended September 30, 2021 $ 20.4 $ 2.4

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

Our effective tax rates are as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Effective Tax Rate 15.0 % 25.7 % 18.1 % 23.3 %

Our effective tax rates attributable to continuing operations for the three and six months ended June 30, 2021 are lower than the prior year’s comparable periods primarily due to higher tax credit utilization, partially offset by the reversal of tax accruals in the prior year related to an audit settlement.

Our effective tax rates attributable to continuing operations for the three and six months ended June 30, 2021 are lower than the statutory U.S.

federal tax rate of 21% primarily due to excess share-based compensation benefits, partially offset by state taxes .

Our effective tax rate attributable to continuing operations for the three months ended September 30, 2021 is lower than the prior year’s comparable period primarily due to higher foreign tax credits utilized, partially offset by a lower amount of U.S.

federal research credits generated.

Our effective tax rate attributable to continuing operations for the nine months ended September 30, 2021 is lower than the prior year’s comparable period primarily due to higher foreign tax credits utilized, partially offset by a lower reversal of tax accruals.

Our effective tax rates attributable to continuing operations for the three and nine months ended September 30, 2021 are lower than the statutory U.S.

federal tax rate of 21% primarily due to tax credit utilization, partially offset by state taxes net of federal benefit, statutory inclusions, and nondeductible expenses.

Unrecognized Tax Benefits

During the three and six months ended June 30, 2021, our gross unrecognized tax benefits, excluding interest and penalties, increased by $ 0.5 million and $ 0.4 million, respectively, primarily due to increases in tax positions taken in the current and prior periods, partially offset by reductions from expiration of statutes of limitations.

During the three and six months ended June 30, 2021, the total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate increased by $ 0.6 million and $ 0.6 million, respectively.

During the three months ended September 30, 2021, our gross unrecognized tax benefits, excluding interest and penalties, decreased by $ 0.1 million, primarily as a result of decreases due to expiration of statues of limitations in the current year, partially offset by increases in tax positions taken in the current and prior periods.

During the nine months ended September 30, 2021, our gross unrecognized tax benefits, excluding interest and penalties, increased by $ 0.3 million primarily as a result of tax positions taken in the current and prior periods.

During the three and nine months ended September 30, 2021, the total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate decreased by $ 2.0 million and $ 1.4 million, respectively.

The difference between these amounts relates to (1) offsetting tax effects from other tax jurisdictions, and (2) interest expense, net of deferred taxes.

During the three and six months ended June 30, 2021, we recognized $ 0.2 million of interest and penalty expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations.

As of June 30, 2021 and December 31, 2020, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in our Condensed Consolidated Balance Sheets was $ 7.8 million and $ 7.5 million, respectively.

During the three and nine months ended September 30, 2021, we recognized $ 2.5 million and $ 2.2 million, respectively, of interest income related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations.

September 30, 2021, and December 31, 2020, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in our Condensed Consolidated Balance Sheets was $ 5.3 million and $ 7.5 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by $ 5.0 million due to expiration of statutes of limitations and settlements with tax authorities.

9 unchanged sentences

A reporting unit is an operating segment unless discrete financial information is prepared and reviewed by segment management for businesses one level below that operating segment (a “component”), in which case the component would be the reporting unit.

As of June 30, 2021, we had seven reporting units.

As of September 30, 2021, we had seven reporting units.

In the second quarter of 2021, the assets and liabilities of our Engineered Materials segment (which was a separate reportable segment and reporting unit) were classified as held for sale.

10 unchanged sentences

Currency translation — ( 7.7 ) ( 12.0 ) ( 19.7 )

Balance at June 30, 2021 $ 202.5 $ 356.0 $ 867.5 $ 1,426.0

For the six months ended June 30, 2021, adjustments of $ 0.1 million represent the finalization of the purchase price allocation for the acquisition of I&S.

Balance at September 30, 2021 $ 202.5 $ 352.2 $ 863.2 $ 1,417.9

For the nine months ended September 30, 2021, adjustments of $ 0.1 million represent the finalization of the purchase price allocation for the acquisition of I&S.

See a discussion in Note 2, “Acquisitions” for further details.

As of June 30, 2021, we had $ 491.3 million of net intangible assets, of which $ 71.2 million were intangibles with indefinite useful lives.

As of September 30, 2021, we had $ 478.7 million of net intangible assets, of which $ 70.8 million were intangibles with indefinite useful lives.

As of December 31, 2020, we had $ 519.1 million of net intangible assets, of which $ 70.9 million were intangibles with indefinite useful lives.

Changes to intangible assets are as follows:

(in millions) Six Months Ended

June 30, 2021 Year Ended December 31, 2020

(in millions) Nine Months Ended

September 30, 2021 Year Ended December 31, 2020

Balance at beginning of period, net of accumulated amortization $ 519.1 $ 503.7

7 unchanged sentences

A summary of intangible assets follows:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in millions) Weighted Average

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Accrued liabilities consist of:

(in millions) June 30,

(in millions) September 30,

2021 December 31,

7 unchanged sentences

Warranty provision is included within “Cost of sales” in our Condensed Consolidated Statements of Operations.

The following table summarizes warranty activity recorded during the three and six months ended June 30, 2021 and 2020.

Three Months Ended June 30, Six Months Ended June 30,

The following table summarizes warranty activity recorded during the three and nine months ended September 30, 2021 and 2020.

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

9 unchanged sentences

Information Regarding Claims and Costs in the Tort System

As of June 30, 2021, we were a defendant in cases filed in numerous state and federal courts alleging injury or death as a result of exposure to asbestos.

As of September 30, 2021, we were a defendant in cases filed in numerous state and federal courts alleging injury or death as a result of exposure to asbestos.

Activity related to asbestos claims during the periods indicated was as follows:

Three Months Ended Six Months Ended Year Ended

June 30, June 30, December 31,

Three Months Ended Nine Months Ended Year Ended

September 30, September 30, December 31,

2021 2020 2021 2020 2020

4 unchanged sentences

Ending claims 29,926 29,308 29,926 29,308 29,138

Of the 29,788 pending claims as of June 30, 2021, approximately 18,000 claims were pending in New York of which approximately 16,000 are non-malignancy claims that were filed over 15 years ago and have been inactive under New York court orders.

Of the 29,926 pending claims as of September 30, 2021, approximately 18,000 claims were pending in New York of which approximately 16,000 are non-malignancy claims that were filed over 15 years ago and have been inactive under New York court orders.

We have tried several cases resulting in defense verdicts by the jury or directed verdicts for the defense by the court.

1 unchanged sentence

We have also tried several other cases resulting in plaintiff verdicts which we paid or settled after unsuccessful appeals.

The gross settlement and defense costs incurred (before insurance recoveries and tax effects) by us for the six months ended June 30, 2021 and 2020 totaled $ 21.3 million and $ 23.9 million, respectively.

The gross settlement and defense costs incurred (before insurance recoveries and tax effects) by us for the nine months ended September 30, 2021 and 2020 totaled $ 35.7 million and $ 30.2 million, respectively.

In contrast to the recognition of settlement and defense costs, which reflect the current level of activity in the tort system, cash payments and receipts generally lag the tort system activity by several months or more, and may show some fluctuation from period to period.

Cash payments of settlement amounts are not made until all releases and other required documentation are received by us, and reimbursements of both settlement amounts and defense costs by insurers may be uneven due to insurer payment practices, transitions from one insurance layer to the next excess layer and the payment terms of certain reimbursement agreements.

Our total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the six months ended June 30, 2021 and, 2020 totaled $ 20.2 million and $ 19.2 million, respectively.

Our total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the nine months ended September 30, 2021 and, 2020 totaled $ 29.6 million and $ 23.7 million, respectively.

Detailed below are the comparable amounts for the periods indicated.

Three Months Ended Six Months Ended Year Ended

(in millions) June 30, June 30, December 31,

2021 2020 2021 2020 2020

Three Months Ended Nine Months Ended Year Ended

September 30, September 30, December 31,

(in millions) 2021 2020 2021 2020 2020

Settlement / indemnity costs incurred (1)

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The amounts shown for settlement and defense costs incurred, and cash payments, are not necessarily indicative of future period amounts, which may be higher or lower than those reported.

Cumulatively through June 30, 2021, we have resolved (by settlement or dismissal) approximately 142,000 claims.

Cumulatively through September 30, 2021, we have resolved (by settlement or dismissal) approximately 143,000 claims.

The related settlement costs incurred by us and our insurance carriers is approximately $ 703 million, for an average settlement cost per resolved claim of approximately $ 4,900 .

The average settlement cost per claim resolved during the years ended December 31, 2020, 2019 and 2018 was $ 13,900 , $ 15,800 , and $ 11,300 , respectively.

Because claims are sometimes dismissed in large

Because claims are sometimes

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

groups, the average cost per resolved claim, as well as the number of open claims, can fluctuate significantly from period to period.

dismissed in large groups, the average cost per resolved claim, as well as the number of open claims, can fluctuate significantly from period to period.

In addition to large group dismissals, the nature of the disease and corresponding settlement amounts for each claim resolved will also drive changes from period to period in the average settlement cost per claim.

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The liability is reduced when cash payments are made in respect of settled claims and defense costs.

The liability was $ 643 million and $ 670 million as of June 30, 2021 and December 31, 2020, respectively.

The liability was $ 630 million and $ 670 million as of September 30, 2021 and December 31, 2020, respectively.

It is not possible to forecast when cash payments related to the asbestos liability will be fully expended;

1 unchanged sentence

None of these estimated costs have been discounted to present value due to the inability to reliably forecast the timing of payments.

The current portion of the total estimated liability at June 30, 2021 and December 31, 2020 is $ 66.5 million and represents our best estimate of total asbestos costs expected to be paid during the twelve-month period.

The current portion of the total estimated liability at September 30, 2021 and December 31, 2020 is $ 66.5 million and represents our best estimate of total asbestos costs expected to be paid during the twelve-month period.

Such amount is based upon the actuarial model together with our prior year payment experience for both settlement and defense costs.

We have made our best estimate of the costs through 2059.

Through June 30, 2021, our actual experience during the updated reference period for mesothelioma claims filed and dismissed generally approximated the assumptions in our liability estimate.

Through September 30, 2021, our actual experience during the updated reference period for mesothelioma claims filed and dismissed generally approximated the assumptions in our liability estimate.

In addition to this claims experience, we considered additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values.

Based on this evaluation, we determined that no change in the estimate was warranted for the period ended June 30, 2021.

Based on this evaluation, we determined that no change in the estimate was warranted for the period ended September 30, 2021.

Insurance Coverage and Receivables.

24 unchanged sentences

The asset is reduced as reimbursements and other payments from insurers are received.

The asset was $ 80 million and $ 87 million as of June 30, 2021 and December 31, 2020, respectively.

The asset was $ 77 million and $ 87 million as of September 30, 2021 and December 31, 2020, respectively.

We review the estimated reimbursement rate with our insurance consultants on a periodic basis in order to confirm overall consistency with our established reserves.

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Generally, third party specialists assist in the estimation of remediation costs.

The environmental remediation liability as of June 30, 2021 is substantially related to the former manufacturing site in Goodyear, Arizona (the “Goodyear Site”) discussed below.

The environmental remediation liability as of September 30, 2021 is substantially related to the former manufacturing site in Goodyear, Arizona (the “Goodyear Site”) discussed below.

On June 21, 2021, we completed the sale of substantially all of the property associated with what we have historically called the Goodyear Site for $ 8.7 million, retaining only a small parcel on which our remediation and treatment systems are located.

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Accordingly, in 2019, we recorded a pre-tax charge of $ 18.9 million, net of reimbursements, to extend our forecast period through 2027 and reflect our revised workplan.

The total estimated gross liability was $ 35.5 million and $ 39.8 million as of June 30, 2021 and December 31, 2020, respectively and as described below, a portion is reimbursable by the U.S.

The current portion of the total estimated liability was $ 10.9 million as of June 30, 2021 and December 31, 2020 and represents our best estimate, in consultation with our technical advisors, of total remediation costs expected to be paid during the twelve-month period.

The total estimated gross liability was $ 33.5 million and $ 39.8 million as of September 30, 2021 and December 31, 2020, respectively and as described below, a portion is reimbursable by the U.S.

The current portion of the total estimated liability was $ 10.9 million as of September 30, 2021 and December 31, 2020 and represents our best estimate, in consultation with our technical advisors, of total remediation costs expected to be paid during the twelve-month period.

It is not possible at this point to reasonably estimate the amount of any obligation in excess of our current accruals through the 2027 forecast period because of the aforementioned uncertainties, in particular, the continued significant changes in the Goodyear Site conditions and additional expectations of remediation activities experienced in recent years.

2 unchanged sentences

Government reimburses us for 21 % of qualifying costs of investigation and remediation activities at the Goodyear Site.

As of June 30, 2021 and December 31, 2020, we recorded a receivable of $ 7.3 million and $ 7.8 million, respectively, for the expected reimbursements from the U.S.

As of September 30, 2021 and December 31, 2020, we recorded a receivable of $ 7.3 million and $ 7.8 million, respectively, for the expected reimbursements from the U.S.

Government in respect of the aggregate liability as at that date.

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The first phase of the mediation, involving certain former munitions or ordnance storage areas, began in November 2017, but did not result in a multi-party settlement agreement.

Subsequently, we entered into discussions directly with GD-OTS and reached an agreement-in-principle with GD-OTS to contribute toward GD-OTS’s past RI-FS costs associated with the first-phase areas for a non-material amount.

Subsequently, we entered into discussions directly with GD-OTS and reached an agreement, as of July 13, 2021, to contribute toward GD-OTS’s past RI-FS costs associated with the first-phase areas for a non-material amount.

We have also agreed to pay a modest percentage of future RI-FS costs and the United States’ claimed past response costs relative to the first-phase areas, a sum that we expect in the aggregate to be immaterial.

21 unchanged sentences

If there is a reasonable possibility that a loss or additional loss may have been incurred for such matters, we disclose the estimate of the amount of loss or range of loss, disclose that the amount is immaterial, or disclose that an estimate of loss cannot be made, as applicable.

We believe that as of June 30, 2021, there was no reasonable possibility that a material loss, or any additional material losses, may have been incurred for such matters, and that adequate provision has been made in our financial statements for the potential impact of all such matters.

We believe that as of September 30, 2021, there was no reasonable possibility that a material loss, or any additional material losses, may have been incurred for such matters, and that adequate provision has been made in our financial statements for the potential impact of all such matters.

Note 13 - Financing

Our debt consisted of the following:

(in millions) June 30,

(in millions) September 30,

2021 December 31,

8 unchanged sentences

Total long-term debt $ 842.2 $ 842.9

Debt discounts and debt issuance costs totaled $ 6.0 million and $ 6.6 million million as of each of June 30, 2021 and December 31, 2020, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.

As of June 30, 2021 and December 31, 2021, there was $ 15.0 million and $ 27.2 million of outstanding borrowings under the commercial paper program (the “CP Program”), respectively.

Debt discounts and debt issuance costs totaled $ 5.8 million and $ 6.6 million as of each of September 30, 2021 and December 31, 2020, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.

On July 28, 2021, we increased the size of the commercial paper program (“CP Program”) to permit the issuance of short-term, unsecured commercial paper notes in an aggregate principal amount not to exceed $ 650 million at any time outstanding.

Prior to this increase, the CP Program permitted us to issue commercial paper notes in an aggregate principal amount not to exceed $ 550 million at any time outstanding.

The other terms and conditions of the CP program remain the same.

Amounts available under the CP Program may be borrowed, repaid and re-borrowed from time to time.

The notes will have maturities of up to 397 days from date of issue.

As of September 30, 2021 and December 31, 2020, there was $ 0.0 million and $ 27.2 million of outstanding borrowings under the commercial paper program, respectively.

We issued commercial paper of $ 100 million in January 2020 and $ 150 million in December 2019 to fund the acquisitions of I&S and Cummins-Allison Corp.

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See discussion in Note 2, “Acquisitions” for further details.

Amounts available under the commercial paper program may be borrowed, repaid and re-borrowed from time to time, with the aggregate principal amount of the notes outstanding under the commercial paper program at any time not to exceed $ 550 million as of June 30, 2020.

See discussion in Note 16, “Subsequent Events” for further details regarding the CP Program.

We also have a revolving credit agreement permitting borrowings of up to $ 550 million which expires in December 2022.

The undrawn portion of this revolving credit agreement is also available to serve as a backstop facility for the issuance of

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

commercial paper.

In the first half of 2020, we repaid the outstanding amounts related to borrowings of $ 67 million used to fund the I&S acquisition in January 2020.

On July 28, 2021, we also entered into a $ 650 million, 5 -year Revolving Credit Agreement (the “2021 Facility”), which replaced the existing $ 550 million revolving credit facility.

The 2021 Facility allows us to borrow, repay, or to the extent permitted by the agreement, prepay and re-borrow funds at any time prior to the stated maturity date.

Interest on loans made under the 2021 Facility accrues, at our option, at a rate per annum equal to (1) a base rate, plus a margin ranging from 0.00 % to 0.50 % depending upon the ratings by S&P and Moody’s of our senior unsecured long-term debt (the "Index Debt Rating"), or (2) an adjusted LIBO rate or the applicable replacement rate (determined based on “hardwired” LIBOR transition provisions consistent with those published by the Alternative References Rates Committee) for an interest period to be selected by us, plus a margin ranging from 0.805 % to 1.50 % depending upon the Index Debt Rating.

The 2021 Facility contains customary affirmative and negative covenants for credit facilities of this type, including limitations on us and our subsidiaries with respect to indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of all or substantially all assets, transactions with affiliates and hedging arrangements.

We must also maintain a debt to capitalization ratio not to exceed 0.65 to 1.00 at all times.

The 2021 Facility also provides for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by us or any of our material subsidiaries being false in any material respect, default under certain other material indebtedness, certain insolvency or receivership events affecting us and our material subsidiaries, certain ERISA events, material judgments and a change in control of us.

The undrawn portion of this revolving credit agreement is also available to serve as a backstop facility for the issuance of commercial paper.

In 2020, we repaid the outstanding amounts related to borrowings of $ 67 million used to fund the I&S acquisition.

See discussion in Note 2, “Acquisitions” for further details.

As of June 30, 2021 and December 31, 2020, there were no outstanding borrowings.

See discussion in Note 16, “Subsequent Events” for further details regarding our new revolving credit agreement.

As of September 30, 2021 and December 31, 2020, there were no outstanding borrowings.

In April 2020, to enhance financial flexibility and maintain maximum liquidity in response to the uncertainty in the global markets resulting from the COVID-19 pandemic, we entered into a senior unsecured 364 -day credit facility (the “ 364 -Day Credit Agreement”).

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The carrying value of our financial assets and liabilities, including cash and cash equivalents, accounts receivable and accounts payable approximate fair value, without being discounted, due to the short periods during which these amounts are outstanding.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We are exposed to certain risks related to our ongoing business operations, including market risks related to fluctuation in currency exchange.

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We do not hold or issue derivative financial instruments for trading or speculative purposes.

Foreign exchange contracts are not designated as hedging instruments and had a notional value of $ 33.0 million and $ 34.2 million as of June 30, 2021 and December 31, 2020, respectively.

Foreign exchange contracts are not designated as hedging instruments and had a notional value of $ 31.9 million and $ 34.2 million as of September 30, 2021 and December 31, 2020, respectively.

Our derivative assets and liabilities include foreign exchange contract derivatives that are measured at fair value using internal models based on observable market inputs such as forward rates and interest rates.

Based on these inputs, the derivatives are classified within Level 2 of the valuation hierarchy.

Such derivative receivable amounts are recorded within “Other current assets” on our Condensed Consolidated Balance Sheets and were $ 0.2 million and less than $ 0.1 million as of June 30, 2021 and December 31, 2020, respectively.

Such derivative liability amounts are recorded within “Accrued liabilities” on our Condensed Consolidated Balance Sheets and were $ 0.0 million and $ 0.1 million as of June 30, 2021 and December 31, 2020, respectively.

Such derivative receivable amounts are recorded within “Other current assets” on our Condensed Consolidated Balance Sheets and were $ 0.3 million and less than $ 0.1 million as of September 30, 2021 and December 31, 2020, respectively.

Such derivative liability amounts are recorded within “Accrued liabilities” on our Condensed Consolidated Balance Sheets and were $ 0.0 million and $ 0.1 million as of September 30, 2021 and December 31, 2020, respectively.

Available-for-sale securities consist of marketable debt securities and rabbi trust investments.

Marketable debt securities consist of commercial paper which are measured at fair value using prices for comparable securities in active markets, and are therefore classified within Level 2 of the valuation hierarchy.

The fair value of the commercial paper was $ 0.0 million and $ 30.0 million as of June 30, 2021 and December 31, 2020, respectively.

The fair value of the commercial paper was $ 0.0 million and $ 30.0 million as of September 30, 2021 and December 31, 2020, respectively.

These investments are included in “Other current assets” on our Condensed Consolidated Balance Sheets.

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These investments are measured at fair value using quoted market prices in an active market, and are therefore classified within Level 1 of the valuation hierarchy.

The fair value of available-for-sale securities was $ 1.5 million as of June 30, 2021 and December 31, 2020.

The fair value of available-for-sale securities was $ 1.5 million as of September 30, 2021 and December 31, 2020.

These investments are included in “Other assets” on our Condensed Consolidated Balance Sheets.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Long-term debt rates currently available to us for debt with similar terms and remaining maturities are used to estimate the fair value for debt issues that are not quoted on an exchange.

The estimated fair value of total debt, measured using Level 2 inputs, was $ 986.6 million and $ 954.8 million as of June 30, 2021 and December 31, 2020, respectively.

The estimated fair value of total debt, measured using Level 2 inputs, was $ 983.1 million and $ 954.8 million as of September 30, 2021 and December 31, 2020, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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We recorded restructuring (gains) charges, net which are reflected in the Condensed Consolidated Statements of Operations, as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

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$ ( 1.1 ) $ — $ ( 14.3 ) $ 22.0

1 We also recorded related costs of $ 2.4 million and $ 0.5 million for the three months ended June 30, 2021 and 2020, respectively, and $ 3.8 million and $ 1.9 million for the six months ended June 30, 2021 and 2020, respectively.

1 We also recorded related costs of $ 1.9 million and $ 1.2 million for the three months ended September 30, 2021 and 2020, respectively, and $ 5.7 million and $ 3.0 million for the nine months ended September 30, 2021 and 2020, respectively.

These costs are recorded within Cost of sales and Selling, general and administrative.

2 We also recorded related costs of $ 0.8 million for the three months ended June 30, 2020 and $ 0.7 million for the six months ended June 30, 2020.

2 We also recorded related costs of $ 0.2 million for the three months ended September 30, 2020 and $ 1.0 million for the nine months ended September 30, 2020.

These costs are recorded within Cost of sales and Selling, general and administrative.

3 We also recorded related costs of $ 2.4 million and $ 1.3 million for the three months ended June 30, 2021 and 2020, respectively, and $ 3.8 million and $ 2.6 million for the six months ended June 30, 2021 and 2020, respectively.

3 We also recorded related costs of $ 1.9 million and $ 1.4 million for the three months ended September 30, 2021 and 2020, respectively, and $ 5.7 million and $ 4.0 million for the nine months ended June 30, 2021 and 2020, respectively.

These costs are recorded within Cost of sales and Selling, general and administrative.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes our restructuring (gains) charges, net by program, cost type and segment for the three months ended June 30, 2021 and 2020:

Three months ended June 30, 2021 Three months ended June 30, 2020

The following table summarizes our restructuring gains, net by program, cost type and segment for the three months ended September 30, 2021 and 2020:

Three months ended

September 30, 2021 Three months ended

September 30, 2020

(in millions) Severance Other Total Severance Other Total

Aerospace & Electronics $ — $ — $ — $ 4.7 $ — $ 4.7

Process Flow Technologies — — — 4.7 — 4.7

Payment & Merchandising Technologies $ ( 0.3 ) $ ( 0.8 ) $ ( 1.1 ) $ — $ — $ —

2020 Repositioning $ ( 0.3 ) $ ( 0.8 ) $ ( 1.1 ) $ — $ — $ —

Payment & Merchandising Technologies ( 0.2 ) — ( 0.2 ) ( 1.0 ) — ( 1.0 )

2017 Repositioning $ ( 0.2 ) $ — $ ( 0.2 ) $ ( 1.0 ) $ — $ ( 1.0 )

Total $ ( 0.3 ) $ ( 0.8 ) $ ( 1.1 ) $ — $ — $ —

The following table summarizes our restructuring (gains) charges, net by program, cost type and segment for the six months ended June 30, 2021 and 2020:

Six months ended June 30, 2021 Six months ended June 30, 2020

The following table summarizes our restructuring (gains) charges, net by program, cost type and segment for the nine months ended September 30, 2021 and 2020:

Nine months ended September 30, 2021 Nine months ended September 30, 2020

(in millions) Severance Other Total Severance Other Total

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the cumulative restructuring costs, net incurred through June 30, 2021.

We do not expect to incur additional facility consolidation costs to complete these actions as of June 30, 2021.

The following table summarizes the cumulative restructuring costs, net incurred through September 30, 2021.

We do not expect to incur additional facility consolidation costs to complete these actions as of September 30, 2021.

Cumulative Restructuring Costs, Net

(in millions) Severance Other Total

Aerospace & Electronics $ 6.5 $ — $ 6.5

Process Flow Technologies 3.8 — 3.8

Payment & Merchandising Technologies 15.8 3.8 19.6

Aerospace & Electronics 6.5 — 6.5

2020 Repositioning $ 26.1 $ 3.8 $ 29.9

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Utilization ( 3.0 ) ( 6.1 ) ( 0.3 ) ( 9.4 )

Balance at June 30, 2021 (b)

Balance at September 30, 2021 (b)

$ 0.5 $ 10.0 $ 4.2 $ 14.7

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(b) Included within Accrued Liabilities in the Condensed Consolidated Balance Sheets

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 16- Subsequent Event

On July 28, 2021, we entered into a $ 650 million, 5 -year Revolving Credit Agreement (the “2021 Facility”), which replaced the existing $ 550 million revolving credit facility.

The 2021 Facility allows us to borrow, repay, or to the extent permitted by the agreement, prepay and re-borrow funds at any time prior to the stated maturity date.

We must also maintain a debt to capitalization ratio not to exceed 0.65 to 1.00 at all times.

On July 28, 2021, we increased the size of the CP Program to permit the issuance of short-term, unsecured commercial paper notes in an aggregate principal amount not to exceed $ 650 million at any time outstanding.

Prior to this increase, the CP Program permitted us to issue commercial paper notes in an aggregate principal amount not to exceed $ 550 million at any time outstanding.

The other terms and conditions of the CP program remain the same.

Amounts available under the CP Program may be borrowed, repaid and re-borrowed from time to time.

The notes will have maturities of up to 397 days from date of issue.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements