What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-28 compared with 2021-02-23 · 447 added, 513 removed, 1393 unchanged (41% of the section changed)

22 unchanged sentences

We have audited the accompanying consolidated balance sheets of Crane Co.

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, cash flows, and changes in equity, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").

& subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, cash flows, and changes in equity, for each of the three years in the period ended December 31, 2021 and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

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• Evaluated the reasonableness of the underlying methodology for estimating the liability.

• Tested the completeness and accuracy of underlying source data that served as the basis for the actuarial analysis and estimates to the underlying source database, including historical claims, to test that the inputs to the actuarial estimate were reasonable.

• Tested the completeness and accuracy of underlying source data that served as the basis for the actuarial analysis and estimates, including historical claims, to test that the inputs to the actuarial estimate were reasonable.

• Compared management’s prior-year assumptions of expected development and ultimate loss to actual incurred during the current year to identify potential bias in the determination of the liability.

• We assessed the reasonableness of the forecast period used by the Company to estimate the liability.

• Developed a range of independent estimates based on loss information and historical and industry claim development factors and compared our estimates to the Company’s estimates.

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• We evaluated management’s ability to accurately estimate the future liability by comparing actual results to management’s historical estimates.

• We assessed the reasonableness of the forecast period used by the Company to estimate the liability.

/s/ Deloitte & Touche LLP

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Selling, general and administrative 755.6 680.3 678.6

Restructuring (gains) charges, net ( 16.9 ) 31.7 17.5

Acquisition-related and integration charges — 12.9 5.2

Asbestos provision, net — — 229.0

Environmental provision, net — — 18.9

Restructuring charges, net 32.3 17.5 7.2

Acquisition-related and integration charges 12.9 5.2 28.9

Operating profit 502.3 240.2 183.1

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Miscellaneous income, net 20.5 14.9 4.9

( 38.4 ) ( 39.7 ) ( 29.9 )

Income before income taxes 224.5 170.7 411.4

Total other expense ( 25.1 ) ( 38.4 ) ( 39.2 )

Income from continuing operations before income taxes 477.2 201.8 143.9

Provision for income taxes 82.9 38.6 31.3

Net income before allocation to noncontrolling interests 181.1 133.6 335.5

Noncontrolling interest in subsidiaries’ earnings (loss) 0.1 0.3 ( 0.1 )

Net income from continuing operations before allocation to noncontrolling interests 394.3 163.2 112.6

Noncontrolling interest in subsidiaries’ earnings — 0.1 0.3

Net income from continuing operations attributable to common shareholders 394.3 163.1 112.3

Income from discontinued operations, net of tax (Note 3) 41.1 17.9 21.0

Net income attributable to common shareholders $ 435.4 $ 181.0 $ 133.3

Basic earnings per share $ 3.10 $ 2.23 $ 5.63

Weighted average basic shares outstanding 58.3 59.8 59.6

Diluted earnings per share $ 3.08 $ 2.20 $ 5.50

Weighted average diluted shares outstanding 58.8 60.6 61.0

Earnings per basic share:

Earnings per basic share from continuing operations $ 6.76 $ 2.79 $ 1.88

Earnings per basic share from discontinued operations 0.70 0.31 0.35

Earnings per basic share $ 7.46 $ 3.10 $ 2.23

Earnings per diluted share:

Earnings per diluted share from continuing operations $ 6.66 $ 2.77 $ 1.85

Earnings per diluted share from discontinued operations 0.70 0.31 0.35

Earnings per diluted share $ 7.36 $ 3.08 $ 2.20

Average shares outstanding:

Basic 58.4 58.3 59.8

Diluted 59.2 58.8 60.6

See Notes to Consolidated Financial Statements

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Net income before allocation to noncontrolling interests $ 435.4 $ 181.1 $ 133.6

Other comprehensive income (loss), net of tax

Components of other comprehensive income (loss), net of tax

Currency translation adjustment ( 69.2 ) 70.4 11.5

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Comprehensive income before allocation to noncontrolling interests 462.2 197.9 97.4

Noncontrolling interests in comprehensive income ( 0.5 ) ( 0.1 ) ( 0.3 )

Noncontrolling interests in comprehensive income (loss) 0.6 ( 0.5 ) ( 0.1 )

Comprehensive income attributable to common shareholders $ 461.6 $ 198.4 $ 97.5

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Other current assets 118.1 137.3

Current assets held for sale 220.5 17.4

Total current assets 1,744.2 1,573.7

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Other assets 259.0 197.4

Long-term assets held for sale — 199.9

Total assets $ 4,486.6 $ 4,615.0

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and foreign taxes on income 10.6 0.1

Current liabilities held for sale 44.9 27.4

Total current liabilities 795.2 1,056.6

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Other liabilities 161.1 171.3

Long-term liabilities held for sale — 26.2

Commitments and contingencies (Note 13)

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For year ended December 31,

For the year ended December 31,

(in millions) 2021 2020 2019

Operating activities:

Net income attributable to common shareholders $ 181.0 $ 133.3 $ 335.6

Noncontrolling interest in subsidiaries' earnings (loss) 0.1 0.3 ( 0.1 )

Net income before allocation to noncontrolling interests $ 181.1 $ 133.6 $ 335.5

Operating activities from continuing operations:

Net income from continuing operations attributable to common shareholders $ 394.3 $ 163.1 $ 112.3

Asbestos provision, net — — 229.0

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Realized gain on marketable securities — — ( 1.1 )

Gain on sale of property ( 18.5 ) — —

Depreciation and amortization 119.5 123.8 107.9

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Other ( 5.5 ) ( 7.6 ) 1.0

Total provided by operating activities 309.5 393.9 413.8

Investing activities:

Payments for acquisitions, net of cash acquired ( 169.5 ) ( 156.2 ) ( 648.0 )

Total provided by operating activities from continuing operations $ 466.7 $ 284.1 $ 370.4

Investing activities from continuing operations:

Payment for acquisition - net of cash acquired — ( 169.5 ) ( 156.2 )

Proceeds from disposition of capital assets 23.6 4.4 3.1

Capital expenditures ( 51.7 ) ( 32.9 ) ( 64.4 )

Impact of deconsolidation of joint venture — ( 0.2 ) 2.6

Purchase of marketable securities ( 10.0 ) ( 90.0 ) ( 8.8 )

Proceeds from sale of marketable securities 40.0 60.0 9.9

Total used for investing activities ( 229.1 ) ( 221.0 ) ( 752.3 )

Financing activities:

Impact of deconsolidation of joint venture — — ( 0.2 )

Total provided by (used for) investing activities from continuing operations $ 1.9 $ ( 228.0 ) $ ( 216.6 )

Financing activities from continuing operations:

Dividends paid ( 100.6 ) ( 100.4 ) ( 93.2 )

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Proceeds from issuance of long-term debt — — 3.0

Proceeds from issuance of short-term debt — — 100.0

Proceeds from issuance of commercial paper with maturities greater than 90 days — 251.3 25.0

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Proceeds from term loan — 343.9 —

Total provided by (used for) financing activities 55.1 ( 124.6 ) ( 7.9 )

Repayment of term loan ( 348.1 ) — —

Total (used for) provided by financing activities from continuing operations $ ( 557.9 ) $ 55.1 $ ( 124.6 )

Discontinued operations:

Total provided by operating activities 31.8 25.4 23.4

Total used for investing activities ( 2.2 ) ( 1.1 ) ( 4.4 )

Increase in cash and cash equivalents from discontinued operations $ 29.6 $ 24.3 $ 19.0

For the year ended December 31,

(in millions) 2021 2020 2019

Effect of exchange rates on cash and cash equivalents $ ( 12.7 ) $ 21.6 $ 2.3

Increase (decrease) in cash and cash equivalents 157.1 50.5 ( 362.8 )

(Decrease) increase in cash and cash equivalents ( 72.4 ) 157.1 50.5

Cash and cash equivalents at beginning of period 551.0 393.9 343.4

Cash and cash equivalents at end of period $ 478.6 $ 551.0 $ 393.9

Detail of cash provided by (used for) operating working capital:

Detail of cash provided by (used for) operating working capital from continuing operations:

Accounts receivable $ ( 57.0 ) $ 139.2 $ 1.9

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— — — — ( 79.9 ) ( 79.9 ) — ( 79.9 )

Cumulative effect of adoption of ASC 606 — — 6.7 — — 6.7 — 6.7

Exercise of stock options, net of shares reacquired of 218,540

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Impact from settlement of share-based awards, net of shares acquired — ( 10.2 ) — — 1.8 ( 8.4 ) — ( 8.4 )

Deconsolidation of a joint venture — — — — — — ( 0.5 ) ( 0.5 )

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — ( 47.7 ) — ( 47.7 ) — ( 47.7 )

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Impact from settlement of share-based awards, net of shares acquired — ( 7.2 ) — — 3.3 ( 3.9 ) — ( 3.9 )

Deconsolidation of a joint venture — — — — — — ( 0.5 ) ( 0.5 )

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — ( 53.6 ) — ( 53.6 ) — ( 53.6 )

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— — — — ( 96.3 ) ( 96.3 ) — ( 96.3 )

Exercise of stock options, net of shares reacquired of 183,320

Exercise of stock options, net of shares reacquired of 553,655 shares

— — — — 16.5 16.5 — 16.5

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We are a diversified manufacturer of highly engineered industrial products comprised of four reporting segments:

Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials.

Process Flow Technologies, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials.

Our primary end markets include process industries (chemical production, oil & gas, power, and general industrial), non-residential and municipal construction, payment automation solutions, banknote design and production, aerospace, defense and space, along with a wide range of general industrial and certain consumer related end markets.

See Note 4, “Segment Information” for the relative size of these segments in relation to the total company (both net sales and total assets).

Discontinued Operations.

On May 16, 2021, we entered into an agreement to sell the Engineered Materials segment to Grupo Verzatec S.A.

for $ 360 million on a cash-free and debt-free basis.

The sale is subject to customary closing conditions and regulatory approvals.

We determined that the Engineered Materials segment met the criteria of being reported as a discontinued operation as of June 30, 2021.

As a result, the related assets, liabilities and operating results of Engineered Materials are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented.

Throughout this Annual Report on Form 10-K, unless otherwise indicated, amounts and activity are presented on a continuing operations basis.

See Item 8 under Note 3, “Discontinued Operations,” in the Notes to Consolidated Financial Statements for additional details.

Process Flow Technologies.

In the second quarter of 2021, we changed the name of our 'Fluid Handling' segment to 'Process Flow Technologies'.

This new name better conveys the key strengths and core competencies of the segment;

providing proprietary and highly engineered process flow technology solutions to its customers.

Due to rounding, numbers presented throughout this report may not add up precisely to totals we provide, and percentages may not precisely reflect the absolute figures.

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Use of Estimates.

These accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.

Our accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.

Actual results may differ from those estimated.

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When shipping and handling activities are performed after the customer obtains control of product, we elect to account for shipping and handling as activities to fulfill the promise to transfer the product.

In determining the transaction price of a contract, we exercise judgment to determine the total transaction price when it includes estimates of variable consideration, such as rebates and milestone payments.

In determining the transaction price of a contract, we exercise judgment to determine the total transaction price when it includes estimates of variable consideration,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

such as rebates and milestone payments.

We generally estimate variable consideration using the expected value method and consider all available information (historical, current, and forecasted) in estimating these amounts.

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Each product within a contract generally represents a separate performance obligation, as we do not provide a significant service of integrating or installing the products, the products do not customize each other, and the products can function independently of each other.

Control of products generally transfers to the customer at a point in time, as the customer does not control the products as

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

they are manufactured.

Control of products generally transfers to the customer at a point in time, as the customer does not control the products as they are manufactured.

We exercise judgment and consider the timing of right to payment, transfer of risk and rewards, transfer of title, transfer of physical possession, and customer acceptance when determining when control transfers to the customer.

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Cost of goods sold includes the costs of inventory sold and the related purchase and distribution costs.

In addition to material, labor and direct overhead and inventoried cost, cost of goods sold include allocations of other expenses that are part of the production process, such as inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs, amortization of production related intangible assets and depreciation expense.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

warehousing costs, amortization of production related intangible assets and depreciation expense.

We also include costs directly associated with products sold, such as warranty provisions.

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We account for income taxes in accordance with ASC Topic 740 “Income Taxes” (“ASC 740”) which requires an asset and liability approach for the financial accounting and reporting of income taxes.

Under this method, deferred income

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

taxes are recognized for the expected future tax consequences of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements.

Under this method, deferred income taxes are recognized for the expected future tax consequences of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements.

These balances are measured using the enacted tax rates expected to apply in the year(s) in which these temporary differences are expected to reverse.

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We recognize interest and penalties related to unrecognized tax benefits within the income tax expense line of our Consolidated Statement of Operations, while accrued interest and penalties are included within the related tax liability line of our Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share.

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(in millions, except per share data) For the year ended December 31, 2021 2020 2019

Net income from continuing operations attributable to common shareholders $ 394.3 $ 163.1 $ 112.3

Income from discontinued operations, net of tax (Note 3) 41.1 17.9 21.0

Net income attributable to common shareholders $ 435.4 $ 181.0 $ 133.3

Weighted average basic shares outstanding 58.3 59.8 59.6

Effect of dilutive shared-based awards 0.5 0.8 1.4

Weighted average diluted shares outstanding 58.8 60.6 61.0

Basic earnings per share $ 3.10 $ 2.23 $ 5.63

Diluted earnings per share $ 3.08 $ 2.20 $ 5.50

Average basic shares outstanding 58.4 58.3 59.8

Effect of dilutive share-based awards 0.8 0.5 0.8

Average diluted shares outstanding 59.2 58.8 60.6

Earnings per basic share:

Earnings per basic share from continuing operations $ 6.76 $ 2.79 $ 1.88

Earnings per basic share from discontinued operations 0.70 0.31 0.35

Earnings per basic share $ 7.46 $ 3.10 $ 2.23

Earnings per diluted share:

Earnings per diluted share from continuing operations $ 6.66 $ 2.77 $ 1.85

Earnings per diluted share from discontinued operations 0.70 0.31 0.35

Earnings per diluted share $ 7.36 $ 3.08 $ 2.20

The computation of diluted earnings per share excludes the effect of the potential exercise of stock options when the average market price of the common stock is lower than the exercise price of the related stock options.

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As a result, the carrying amount of cash and cash equivalents approximates fair value.

A ccounts Receivable, Net.

Accounts Receivable, Net.

Accounts receivable are carried at net realizable value.

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We periodically evaluate the financial strength of our customers and believe that our credit risk exposure is limited.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventories, net.

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The LIFO method is not being used at our foreign locations as such a method is not allowable for tax purposes.

Changes in the levels of LIFO inventories have increased cost of sales by $ 2.3 million and $ 6.7 million for the years ended December 31, 2020 and 2019, respectively, and reduced cost of sales by $ 2.5 million for the year ended December 31, 2018.

The portion of inventories costed using the LIFO method was 30.7 % and 27.7 % of consolidated inventories as of December 31, 2020 and 2019, respectively.

Changes in the levels of LIFO inventories have increased (reduced) cost of sales by $ 2.1 million, $ 2.3 million and $( 1.9 ) million for the years ended December 31, 2021, 2020 and 2019, respectively.

The portion of inventories costed using the LIFO method was 28.5 % and 29.3 % of consolidated inventories as of December 31, 2021

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and 2020, respectively.

If inventories that were valued using the LIFO method had been valued under the FIFO method, they would have been higher by $ 28.2 million and $ 26.2 million as of December 31, 2021 and 2020, respectively.

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Depreciation expense was $ 73.6 million, $ 73.7 million and $ 68.1 million for the years ended December 31, 2021, 2020 and 2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Other Intangible Assets.

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Impairment testing takes place more often than annually if events or circumstances indicate a change in status that would indicate a potential impairment.

During 2020, we observed a significant decline in the market valuation of our common shares as a result of the COVID-19 pandemic.

As such, we performed sensitivity analyses based on more recent assumptions, including entity-specific and macroeconomic factors resulting from the COVID-19 pandemic during the interim periods.

We concluded that it was not more likely than not that the fair values of the reporting units and indefinite-lived intangible assets were below their carrying values.

We also performed our annual impairment assessment (as described below) and concluded that no impairment charges have been required during 2020.

We believe that there have been no other events or circumstances which would more likely than not reduce the fair value of our reporting units below its carrying value.

1 unchanged sentence

As of December 31, 2021, we had seven reporting units.

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

See Note 3, “Discontinued Operations” for additional details.

When performing our annual impairment assessment, we compare the fair value of each of our reporting units to our respective carrying value.

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Profit margin assumptions are projected by each reporting unit based on the current cost structure and anticipated net cost increases/reductions.

There are inherent uncertainties related to these assumptions, including changes in market conditions, and management judgment is necessary in applying them to the analysis of goodwill impairment.

There are inherent

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

uncertainties related to these assumptions, including changes in market conditions, and management judgment is necessary in applying them to the analysis of goodwill impairment.

In addition to the foregoing, for each reporting unit, market multiples are used to corroborate discounted cash flow results where fair value is estimated based on earnings multiples determined by available public information of comparable businesses.

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Changes to goodwill are as follows:

(in millions) Fluid Handling Payment & Merchandising Technologies Aerospace & Electronics Engineered Materials Total

(in millions) Aerospace & Electronics Process Flow Technologies Payment & Merchandising Technologies Total

Balance as of December 31, 2019 $ 202.4 $ 240.9 $ 857.8 $ 1,301.1

Additions — 106.1 — 106.1

Adjustments to purchase price allocations — — 5.6 5.6

Currency translation 0.1 13.0 11.8 24.9

Balance as of December 31, 2020 $ 202.5 $ 360.0 $ 875.2 $ 1,437.7

Additions 106.1 — — — 106.1

Adjustments to purchase price allocations — ( 0.1 ) — ( 0.1 )

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Balance as of December 31, 2021 $ 202.5 $ 349.4 $ 860.6 $ 1,412.5

For the year ended December 31, 2020, additions to goodwill within the Fluid Handling segment were $ 106.1 million.

For the year ended December 31, 2020, additions to goodwill within the Process Flow Technologies segment were $ 106.1 million.

These additions represent the preliminary purchase price allocation for the acquisition of CIRCOR International, Inc.’s Instrumentation & Sampling Business (“I&S”).

2 unchanged sentences

("Cummins-Allison").

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2019, additions to goodwill within the Payment & Merchandising Technologies segment were $ 63.4 million.

These additions represent the preliminary purchase price allocation related to the acquisition of Cummins-Allison of $ 54.7 million and the finalization of the purchase price allocation of the January 2018 acquisition of Crane & Co., Inc.

(“Crane Currency”) of $ 8.7 million.

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

For the year ended December 31, 2021, adjustments within the Process Flow Technologies segment 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.

Intangibles with indefinite useful lives are tested annually for impairment, or when events or changes in circumstances indicate the potential for impairment.

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We amortize the cost of definite-lived intangibles over their estimated useful lives.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition to annual testing for impairment of indefinite-lived intangible assets, we review all of our definite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

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Historical results to date have generally approximated expected cash flows for the identifiable cash flow generating level.

During 2020, we observed a significant decline in the market valuation of our common shares as a result of the COVID-19 pandemic.

As such, we performed sensitivity analyses based on more recent assumptions, including entity-specific and macroeconomic factors resulting from the COVID-19 pandemic during the interim periods.

We concluded that it was not more likely than not that the fair values of our indefinite-lived intangible assets were below their carrying values.

We believe there have been no other events or circumstances which would more likely than not reduce the fair value of our indefinite-lived or definite-lived intangible assets below their carrying value.

As of December 31, 2021, we had $ 465.9 million of net intangible assets, of which $ 70.6 million were intangibles with indefinite useful lives, consisting of trade names.

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For the year ended December 31, 2020, additions to intangible assets represent the preliminary purchase price allocation related to the January 2020 acquisition of I&S.

For the year ended December 31, 2019, additions to intangible assets represent the purchase price allocation related to the acquisition of Cummins-Allison.

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

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The tables below provide the accumulated balances for each classification of accumulated other comprehensive loss, as reflected on the Consolidated Balance Sheets.

(in millions) Defined Benefit Pension and Other Postretirement Items Currency Translation Adjustment Total (c)

Balance as of December 31, 2017 $ ( 270.4 ) (a)

$ ( 109.7 ) (a)

Other comprehensive (loss) income before reclassifications ( 36.2 ) (b)

( 41.3 ) ( 77.5 )

Amounts reclassified from accumulated other comprehensive loss 10.0 (b)

Net period other comprehensive (loss) income ( 26.2 ) ( 41.3 ) ( 67.5 )

Balance as of December 31, 2018 ( 296.6 ) (a)

( 151.0 ) (a)

Other comprehensive (loss) income before reclassifications ( 58.4 ) (b)

11.6 ( 46.8 )

Amounts reclassified from accumulated other comprehensive loss 10.7 (b)

(in millions) Defined Benefit Pension and Other Postretirement Items Currency Translation Adjustment Total (a)

Balance as of December 31, 2018 $ ( 296.6 ) $ ( 151.0 ) $ ( 447.6 )

Other comprehensive (loss) income before reclassifications ( 58.4 ) 11.6 ( 46.8 )

Amounts reclassified from accumulated other comprehensive loss 10.7 — 10.7

Net period other comprehensive (loss) income ( 47.7 ) 11.6 ( 36.1 )

Balance as of December 31, 2019 ( 344.3 ) (a)

( 139.4 ) (a)

Balance as of December 31, 2019 ( 344.3 ) ( 139.4 ) ( 483.7 )

Other comprehensive (loss) income before reclassifications ( 67.4 ) 70.9 3.5

2 unchanged sentences

Balance as of December 31, 2020 ( 397.9 ) ( 68.5 ) ( 466.4 )

(a) Balance has been revised to correct a $ 21.7 million misclassification between previously reported amounts, which resulted in a decrease in previously reported Defined Benefit Pension and Other Postretirement Items as of December 31, 2017, 2018 and 2019 from $( 292.1 ) million, $( 318.3 ) million and $( 366.0 ) million, respectively, to $( 270.4 ) million,$( 296.6 ) million and $( 344.3 ) million, respectively, and an increase in previously reported Currency Translation Adjustment as of December 31, 2017, 2018 and 2019 from $( 88.0 ) million, $( 129.3 ) million and $( 117.7 ) million, respectively, to $( 109.7 ) million, $( 151.0 ) million and $( 139.4 ) million, respectively.

This correction had no effect on the Company’s previously reported consolidated financial statements as of and for the years ended December 31, 2019, 2018 and 2017.

(b) Balance has been revised to correct a $ 9.6 million and $ 15.5 million misclassification between previously reported amounts, which resulted in a decrease in previously reported Other comprehensive (loss) income before reclassifications for the years ended December 31, 2018 and 2019 from $( 45.8 ) million and $( 73.9 ) million, respectively to $( 36.2 ) million and $( 58.4 ) million, respectively, and a decrease in previously reported Amounts reclassified from accumulated other comprehensive loss for the years ended December 31, 2018 and 2019 from $ 19.6 million and $ 26.2 million, respectively, to $ 10.0 million and $ 10.7 million, respectively.

This correction had no effect on the Company’s previously reported consolidated financial statements as of and for the years ended December 31, 2019 and 2018.

Other comprehensive income (loss) before reclassifications 78.0 ( 69.8 ) 8.2

Amounts reclassified from accumulated other comprehensive loss 18.0 — 18.0

Net period other comprehensive income (loss) 96.0 ( 69.8 ) 26.2

Balance as of December 31, 2021 $ ( 301.9 ) $ ( 138.3 ) $ ( 440.2 )

(a) Net of tax benefit of $ 117.9 million, $ 148.2 million and $ 135.4 million for 2021, 2020, and 2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Total before tax $ 22.2 $ 17.7 $ 13.6

Tax impact 3.9 2.9 (a)

Tax impact 4.2 3.9 2.9

Total reclassifications for the period $ 18.0 $ 13.8 $ 10.7

(a) Balance has been revised to correct a misclassification between previously reported amounts of $ 15.5 million and $ 9.6 million for the years ended December 31, 2019 and 2018, respectively, which resulted in an increase in previously reported Tax impact from $( 12.6 ) million and $( 7.1 ) million, respectively, to $ 2.9 million and $ 2.5 million, respectively.

This correction had no effect on the Company’s previously reported consolidated financial statements as of and for the years ended December 31, 2019 and 2018.

Recent Accounting Pronouncements - Not Yet Adopted as of December 31, 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements - Adopted

Simplifying the Accounting for Income Taxes

1 unchanged sentence

The guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

Early adoption is permitted.

Certain amendments should be applied prospectively, while other amendments should be applied retrospectively to all periods presented.

We do not expect that the amended guidance will have a material effect on our consolidated financial statements and related disclosures when we adopt this standard effective January 1, 2021.

Recent Accounting Pronouncements - Adopted

Certain amendments are to be applied prospectively, while other amendments are to be applied retrospectively to all periods presented.

We have adopted this standard effective January 1, 2021.

The adoption of this new standard did not impact our consolidated financial statements.

Disclosure Requirements for Defined Benefit Plans

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On January 1, 2020, we adopted the new CECL standard and developed an expected impairment model based on our historical loss experience.

We believe that our previous methodology to calculate credit losses is generally consistent with the new

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

expected credit loss model and did not result in a material adjustment upon adoption.

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 $ 10.4 million and $ 10.9 million as of December 31, 2021 and 2020, respectively.

In February 2016, the FASB issued amended guidance on accounting for leases.

The amended guidance requires the recognition of a right-of-use asset and a lease liability for all leases by lessees and amends disclosure requirements associated

with leasing arrangements.

On January 1, 2019, we adopted ASC 842, “Leases” (“the new standard” or “ASC 842”) using the modified retrospective method.

Under this method, we elected to apply the new standard as of the application date.

Results for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts continue to be reported under ASC 840, “Leases” (“ASC 840”).

We elected to adopt certain of the optional practical expedients, including the package of practical expedients, which, among other things, gives us the option to not reassess:

(1) whether expired or existing contracts are or contain leases;

(2) the lease classification for expired or existing leases;

and (3) initial direct costs for existing leases.

We also elected the practical expedient to not separate lease and non-lease components, which allows us to account for lease and nonlease components as a single lease component.

We did not elect the (1) hindsight practical expedient in our determination of the lease term for our existing leases;

and (2) the short-term practical expedient to exclude short-term leases from our right-of-use assets and lease liabilities.

We implemented a new system, processes, and controls to enable the preparation of financial information upon adoption.

The adoption of the new standard primarily impacted our accounting for operating leases which resulted in the recognition of right-of-use assets and corresponding lease liabilities.

The accounting for finance leases did not substantially change under the new standard, and we do not have significant finance leases.

Upon adoption, we established a right-of-use asset of $ 109.1 million (included in Other assets) and a lease liability of $ 110.4 million (included in Accrued liabilities and Other liabilities) at January 1, 2019.

Our prospective adoption of this new standard did not result in a cumulative-effect adjustment to retained earnings.

The new standard did not impact our Consolidated Statements of Operations or Consolidated Statements of Cash Flows.

Note 2 – Acquisitions

10 unchanged sentences

Use of different estimates and judgments could yield different results.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Instrumentation & Sampling Business Acquisition

3 unchanged sentences

I&S designs, engineers and manufactures a broad range of critical fluid control instrumentation and sampling solutions used in severe service environments which complements our existing portfolio of chemical, refining, petrochemical and upstream oil and gas applications.

I&S has been integrated into the Fluid Handling segment.

I&S has been integrated into the Process Flow Technologies segment.

The amount allocated to goodwill reflects the expected sales synergies, manufacturing efficiency and procurement savings.

Goodwill from this acquisition is not deductible for tax purposes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allocation of Consideration Transferred to Net Assets Acquired

The following amounts represent the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed from our acquisition of I&S.

The final determination of the fair value of certain assets and liabilities will be completed within the one-year measurement period as required by ASC 805.

We have not yet completed our evaluation and determination of certain assets acquired and liabilities assumed, primarily related to the final assessment and valuation of certain tax amounts.

Any potential adjustments made could be material in relation to the preliminary values presented below:

The following amounts represent the determination of the fair value of identifiable assets acquired and liabilities assumed from our acquisition of I&S.

The fair value of certain assets and liabilities has been completed as required by ASC 805.

Net assets acquired (in millions)

24 unchanged sentences

Both the amount and the duration of the cash flows are considered from a market participant perspective.

Our estimates of market participant net cash flows considered historical and projected pricing, operational performance including market participant synergies, aftermarket retention, product life cycles, material and labor pricing, and other relevant customer, contractual and market factors.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

customer, contractual and market factors.

Where appropriate, the net cash flows were adjusted to reflect the potential attrition of existing customers in the future, as existing customers are expected to decline over time.

1 unchanged sentence

The customer relationship asset is being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 14 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Pro Forma Data

34 unchanged sentences

The fair values of the trademark and trade name intangible assets were determined by using an “income approach,” specifically the relief-from-royalty approach, which is a commonly accepted valuation approach.

This approach is based on the assumption that in lieu of ownership, a firm would be willing to pay a royalty in order to exploit the related benefits of this asset.

This approach is based on the assumption that in lieu of ownership, a firm would be willing to pay a royalty in order to exploit the related benefits of this

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Therefore, a portion of Cummins-Allison’s earnings, equal to the after-tax royalty that would have been paid for the use of the asset, can be attributed to the firm’s ownership.

1 unchanged sentence

The fair values of the customer relationships intangible assets were determined by using an “income approach” which is a commonly accepted valuation approach.

Under this approach, the net earnings attributable to the asset or liability being

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

measured are isolated using the discounted projected net cash flows.

Under this approach, the net earnings attributable to the asset or liability being measured are isolated using the discounted projected net cash flows.

These projected cash flows are isolated from the projected cash flows of the combined asset group over the remaining economic life of the intangible asset or liability being measured.

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The following unaudited pro forma combined information assumes that the acquisition was completed on January 1, 2019.

The unaudited pro forma consolidated net sales for 2019 and 2018 would have been $ 3,475.2 million and $ 3,531.1 million, respectively.

The unaudited pro forma consolidated net sales for 2019 would have been $ 3,266.6 million.

The unaudited pro forma consolidated net sales are provided for illustrative purposes only and are not indicative of our actual consolidated results of operations or consolidated financial position.

Consolidated pro forma net income attributable to common shareholders has not been presented since the impact is not material to our financial results in any of the periods.

Crane Currency Acquisition

On January 10, 2018, we completed the acquisition of Crane Currency.

The base purchase price of the acquisition was $ 800 million on a cash-free, debt-free basis, subject to a later adjustment reflecting Crane Currency’s net working capital, cash, the assumption of certain debt-like items, and Crane Currency’s transaction expenses.

The amount paid, net of cash acquired, was $ 672.3 million.

In July 2018, we received $ 24.3 million related to the final working capital adjustment of the Crane Currency acquisition, resulting in net cash paid of $ 648.0 million.

To finance the acquisition, we issued commercial paper under our commercial paper program and utilized proceeds from term loans that we issued at the closing of the acquisition, as well as available cash on hand.

At the closing, the transitory subsidiary of Crane Co.

merged with and into Crane Currency, with Crane Currency surviving as a wholly owned subsidiary of Crane Co.

Crane Currency is a supplier of banknotes and highly engineered banknote security features which complement the existing portfolio of currency and payment products within the Payment & Merchandising Technologies segment.

As such, Crane Currency has been integrated into the Payment & Merchandising Technologies segment.

The amount allocated to goodwill reflects the benefits we expect to realize from the acquisition, as the acquisition is expected to strengthen and broaden our product offering within the currency and payment markets.

Goodwill from this acquisition is not deductible for tax purposes.

Acquisition-Related Costs

Acquisition-related costs are being expensed as incurred.

For the years ended December 31, 2020 and 2019, we recorded $ 12.9 million and $ 5.2 million, respectively, of integration and transaction costs.

Acquisition-related costs are recorded within “Acquisition-related and integration charges” in our Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allocation of Consideration Transferred to Net Assets Acquired

The following amounts represent the determination of the fair value of identifiable assets acquired and liabilities assumed from our acquisition of Crane Currency.

The fair value of certain assets and liabilities has been completed as required by ASC 805.

Net assets acquired (in millions)

Total current assets $ 199.6

Property, plant and equipment 298.0

Note 3 - Discontinued Operations

A business is classified as held for sale when management having the authority to approve the action commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value and certain other criteria are met.

A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell.

When the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized and updated each reporting period as appropriate.

Executing on our strategy to focus our growth investments on our three remaining segments, on May 16, 2021, we entered into an agreement to sell our Engineered Materials segment to Grupo Verzatec S.A.

for $ 360 million on a cash-free and debt-free basis.

The sale is subject to customary closing conditions and regulatory approvals.

In the second quarter of 2021, the assets and liabilities of the segment were classified as held for sale, and the segment’s results are presented as discontinued operations.

This change was applied on a retrospective basis.

The following represents financial results from discontinued operations:

For the year ended December 31,

(in millions) 2021 2020 2019

Net sales $ 228.0 $ 175.6 $ 208.6

Cost of sales 181.3 134.5 161.9

Selling, general and administrative 19.8 17.8 19.4

Restructuring charges — 0.6 —

Operating profit $ 26.9 $ 22.7 $ 27.3

Miscellaneous expense, net ( 1.3 ) — ( 0.5 )

Income from discontinued operations $ 25.6 $ 22.7 $ 26.8

Income tax (benefit) provision (a)

( 15.5 ) 4.8 5.8

Income from discontinued operations, net of tax $ 41.1 $ 17.9 $ 21.0

(a) The period ended December 31, 2021 includes $ 20.6 million of deferred tax benefit associated with the pending disposition of the Engineered Materials segment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following represents m ajor classes of assets and liabilities to be disposed of in the transaction:

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

Accounts receivable, net $ 10.6 $ 8.8

Inventories, net 8.2 8.5

Other current assets 0.6 0.1

Current assets held for sale (a)

Property, plant and equipment, net 28.3 26.8

Other assets 0.3 0.6

Intangible assets 252.8

Intangible assets, net 1.2 1.2

Goodwill 171.3 171.3

Total assets acquired $ 972.8

Total current liabilities $ 107.2

Long-term debt 97.3

Long-term assets held for sale (a)

Assets held for sale $ 220.5 $ 217.3

Accounts payable $ 27.0 $ 19.5

Accrued liabilities 12.0 7.9

Current liabilities held for sale (a)

Long-term deferred tax liability 5.8 26.1

Other liabilities 0.1 0.1

Total assumed liabilities $ 324.8

Net assets acquired $ 648.0

The amounts allocated to acquired intangible assets, and their associated weighted-average useful lives which were determined based on the period in which the assets are expected to contribute directly or indirectly to our future cash flows, consist of the following:

Intangible Assets (dollars in millions) Intangible Fair Value Weighted Average Life

Trademarks/trade names $ 42.0 indefinite

Customer relationships 135.8 23.1

Product technology 74.0 8.4

Backlog 1.0 1.0

Total acquired intangible assets $ 252.8

This approach is based on the assumption that in lieu of ownership, a firm would be willing to pay a royalty in order to exploit the related benefits of this asset.

Therefore, a portion of Crane Currency’s earnings, equal to the after-tax royalty that would have been paid for the use of the asset, can be attributed to the firm’s ownership.

The trademark and trade names, Crane Currency and Crane are assigned an indefinite life and therefore will not be amortized.

The fair values of the customer relationships and backlog intangible assets were determined by using an “income approach” which is a commonly accepted valuation approach.

Under this approach, the net earnings attributable to the asset or liability being measured are isolated using the discounted projected net cash flows.

These projected cash flows are isolated from the projected cash flows of the combined asset group over the remaining economic life of the intangible asset or liability being measured.

Both the amount and the duration of the cash flows are considered from a market participant perspective.

Where appropriate, the net cash flows were adjusted to reflect the potential attrition of existing customers in the future, as existing customers are a “wasting” asset and are expected to decline over time.

The attrition-adjusted future cash flows are then discounted to present value using an appropriate discount rate.

The customer relationship is being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 18 to 24 years.

The fair values of the product technology intangible assets were also determined by the relief-from-royalty approach.

Similarly, this approach is based on the assumption that in lieu of ownership, a firm would be willing to pay a royalty in order to exploit the related benefits of the technology.

Therefore, a portion of Crane Currency’s earnings, equal to the after-tax royalty that would have been paid for the use of the technology, can be attributed to the firm’s ownership of the technology.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

technology assets are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 7 to 11 years.

Supplemental Pro Forma Data

Crane Currency’s results of operations have been included in our financial statements for the period subsequent to the completion of the acquisition on January 10, 2018.

The pro forma impact for the stub period (January 1, 2018 through January 9, 2018) is not material.

Crane Currency contributed sales of $ 458.2 million resulting in an operating profit of approximately $ 33.8 million for the period from the completion of the acquisition through December 31, 2018.

Acquisition-Related Costs

Acquisition-related costs are being expensed as incurred.

For the years ended December 31, 2020, 2019 and 2018, we recorded $ 12.9 million, $ 5.2 million and $ 28.9 million, respectively, of integration and transaction costs.

Acquisition-related costs for the years ended December 31, 2020 and 2018 included $ 5.6 million and $ 9.1 million, respectively of inventory step-up and backlog amortization.

Acquisition-related costs are recorded within “Acquisition-related and integration charges” in our Consolidated Statements of Operations.

Long-term liabilities held for sale (a)

Liabilities held for sale $ 44.9 $ 53.6

(a) 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 December 31, 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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We have four reporting segments:

Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials.

A brief description of each of our segments are as follows:

Fluid Handling

The Fluid Handling segment is a provider of highly engineered fluid handling equipment for critical performance applications that require high reliability.

Process Flow Technologies, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials.

A brief description of each of our segments is as follows:

Aerospace & Electronics

The Aerospace & Electronics segment supplies critical components and systems, including original equipment and aftermarket parts, primarily for the commercial aerospace and military aerospace and defense markets.

Its brands have decades of proven experience, and in many cases invented the critical technologies in their respective markets.

The business designs and delivers proven systems, reliable components, and flexible power solutions that excel in tough and mission-critical environments.

Products and services are organized into six integrated solutions:

Sensing Components & Systems, Electrical Power Solutions, Fluid Management Solutions, Landing & Control Systems, and Microwave Solutions.

Process Flow Technologies

The Process Flow Technologies segment is a provider of highly engineered Process Flow Technologies equipment for critical performance applications that require high reliability.

The segment is comprised of Process Valves and Related Products, Commercial Valves, and Pumps and Systems.

2 unchanged sentences

Pumps and Systems include pumps and related products primarily for water and wastewater applications in the industrial, municipal, commercial and military markets.

The acquisition of I&S has been integrated into Process Valves and Related Products business.

See discussion in Note 2,

“Acquisitions” for further details.

Payment & Merchandising Technologies

2 unchanged sentences

Crane Currency is a supplier of banknotes and highly engineered banknote security features.

In the third quarter of 2020, we completed an internal merger to consolidate the Crane Merchandising Systems (“CMS”) business into the vending vertical within the CPI business.

This internal merger will enable improved coordination and collaboration while delivering increasingly integrated connectivity solutions to our customers.

The acquisition of Cummins-Allison has been integrated into our CPI business.

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

Aerospace & Electronics

Aerospace & Electronics segment supplies critical components and systems, including original equipment and aftermarket parts, primarily for the commercial aerospace and military aerospace and defense markets.

Engineered Materials

Engineered Materials segment manufactures fiberglass-reinforced plastic ("FRP") panels and coils, primarily for use in the manufacturing of recreational vehicles ("RVs"), truck bodies and trailers (Transportation), with additional applications in commercial and industrial buildings (Building Products).

For the year ended December 31, 2020, operating profit included acquisition-related and integration charges and restructuring charges, net.

For the year ended December 31, 2019, operating profit included an asbestos provision, net;

an environmental provision, net;

acquisition-related and integration charges and restructuring charges, net.

For the year ended December 31, 2018, operating profit included acquisition-related and integration charges and restructuring charges, net.

See Note 2, “Acquisitions” for discussion on the acquisition-related costs.

See Note 15, “Restructuring Charges, Net” for discussion of the restructuring charges, net.

See Note 12, “Commitments and Contingencies” for discussion of the asbestos provision, net and environmental provision, net.

The Engineered Materials segment manufactures fiberglass-reinforced plastic ("FRP") panels and coils, primarily for use in the manufacturing of recreational vehicles ("RVs"), truck bodies and trailers (Transportation), with additional applications in commercial and industrial buildings (Building Products).

In the second quarter of 2021, the assets and liabilities of the Engineered Materials segment were reclassified as held for sale and results are presented as discontinued operations and, therefore, not included in the tables below.

This change was applied on a retrospective basis.

See Note 3, “Discontinued Operations” for further details.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(in millions) December 31, 2021 2020 2019

Fluid Handling

Net sales $ 1,005.8 $ 1,117.4 $ 1,101.8

Operating profit 97.7 131.7 118.8

Assets 1,106.1 941.6 878.2

Goodwill 360.0 240.9 240.8

Capital expenditures 13.7 23.4 19.9

Depreciation and amortization 21.6 14.2 15.2

Aerospace & Electronics $ 638.3 $ 650.7 $ 798.8

Process Flow Technologies 1,196.6 1,005.8 1,117.4

Payment & Merchandising Technologies 1,345.1 1,104.8 1,158.3

Net sales $ 1,104.8 $ 1,158.3 $ 1,257.0

TOTAL NET SALES $ 3,180.0 $ 2,761.3 $ 3,074.5

Operating profit:

Assets 2,215.3 2,303.4 2,074.4

Goodwill 875.2 857.8 789.2

Capital expenditures 9.3 20.6 57.5

Depreciation and amortization 85.9 77.1 82.4

Aerospace & Electronics $ 110.0 $ 100.7 $ 189.4

Net sales $ 650.7 $ 798.8 $ 743.5

Operating profit

100.7 189.4 164.2

Assets 593.9 638.1 603.9

Goodwill 202.5 202.4 202.4

Capital expenditures 9.8 20.0 20.6

Depreciation and amortization 14.2 13.5 13.0

Engineered Materials

Net sales $ 175.6 $ 208.6 $ 243.2

Operating profit 22.7 26.8 37.8

Assets 217.3 219.6 222.1

Goodwill 171.3 171.3 171.3

Capital expenditures 1.2 4.4 10.3

Depreciation and amortization 3.7 5.6 6.4

TOTAL NET SALES $ 2,936.9 $ 3,283.1 $ 3,345.5

Operating profit (loss)

Reporting segments $ 321.7 $ 525.2 $ 506.8

Process Flow Technologies 182.5 97.7 131.7

Payment & Merchandising Technologies 307.5 100.6 177.3

Corporate expense — before asbestos and environmental provisions ( 97.7 ) ( 58.8 ) ( 67.4 )

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TOTAL OPERATING PROFIT $ 502.3 $ 240.2 $ 183.1

Interest income 2.0 2.7 2.3

Interest expense ( 55.3 ) ( 46.8 ) ( 50.9 )

Miscellaneous income, net 14.9 4.4 18.7

INCOME BEFORE INCOME TAXES $ 224.5 $ 170.7 $ 411.4

Reporting segments $ 4,132.6 $ 4,102.7 $ 3,778.6

Corporate 456.3 321.0 264.1

TOTAL ASSETS $ 4,588.9 $ 4,423.7 $ 4,042.7

TOTAL GOODWILL (Reporting segments) $ 1,609.0 $ 1,472.4 $ 1,403.7

Capital expenditures:

Reporting segments $ 34.0 $ 68.4 $ 108.3

Aerospace & Electronics $ 14.1 $ 9.8 $ 20.0

Process Flow Technologies 18.8 13.7 23.4

Payment & Merchandising Technologies 18.6 9.3 20.6

Corporate 0.2 0.1 0.4

1 unchanged sentence

Depreciation and amortization:

Reporting segments $ 125.4 $ 110.4 $ 117.0

Aerospace & Electronics $ 14.7 $ 14.2 $ 13.5

Process Flow Technologies 22.0 21.6 14.2

Payment & Merchandising Technologies 81.3 85.9 77.1

Corporate 1.5 2.1 3.1

TOTAL DEPRECIATION AND AMORTIZATION $ 119.5 $ 123.8 $ 107.9

For the year ended December 31, 2021, operating profit included a restructuring gain of $ 16.9 million.

For the year ended December 31, 2020, operating profit included acquisition-related and integration charges of $ 12.9 million and net restructuring charges of $ 31.7 million.

For the year ended December 31, 2019, operating profit included a net asbestos provision of $ 229.0 million, a net environmental provision of $ 18.9 million, acquisition-related and integration charges of $ 5.2 million and net restructuring charges of $ 17.5 million.

See Note 2, “Acquisitions” for discussion on the acquisition-related costs.

See Note 16, “Restructuring Charges” for discussion of the restructuring charges.

See Note 13, “Commitments and Contingencies” for discussion of the asbestos provision and environmental provision.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information by geographic region:

Net sales by geographic region:

(in millions) December 31, 2021 2020 2019

6 unchanged sentences

TOTAL NET SALES $ 3,180.0 $ 2,761.3 $ 3,074.5

(a) Net sales by geographic region are based on the destination of the sale.

Balance sheet items by reportable segment is set forth below:

(in millions) December 31, 2021 2020

Long-lived assets (a) (b)

Aerospace & Electronics $ 202.5 $ 202.5

Process Flow Technologies 349.4 360.0

Payment & Merchandising Technologies 860.6 875.2

TOTAL GOODWILL $ 1,412.5 $ 1,437.7

Aerospace & Electronics $ 604.7 $ 593.9

Process Flow Technologies 1,240.4 1,106.1

Payment & Merchandising Technologies 2,096.5 2,215.3

Corporate 324.5 482.4

Assets held for sale 220.5 217.3

TOTAL ASSETS $ 4,486.6 $ 4,615.0

Long-lived assets by geographic region:

(in millions) December 31, 2021 2020

Long-lived assets (a)

United States $ 295.8 $ 311.9

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TOTAL LONG-LIVED ASSETS $ 623.7 $ 677.4

(a) Net sales and Long-lived assets, net by geographic region are based on the location of the business unit.

(b) Long-lived assets consist of property, plant and equipment, net in 2020, 2019 and 2018 and right-of-use assets, net in 2020 and 2019.

There were no right-of-use assets in 2018 due to the adoption of ASC 842 on January 1, 2019.

(a) Long-lived assets, net by geographic region are based on the location of the business unit.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

(in millions) December 31, 2021 2020 2019

Fluid Handling

Aerospace & Electronics

Commercial Original Equipment $ 229.4 $ 226.4 $ 357.2

Military Original Equipment 239.7 258.7 217.2

Commercial Aftermarket Products 104.5 93.0 161.4

Military Aftermarket Products 64.7 72.6 63.0

Total Aerospace & Electronics $ 638.3 $ 650.7 $ 798.8

Process Flow Technologies

Process Valves and Related Products $ 717.1 $ 631.6 $ 685.1

1 unchanged sentence

Pumps and Systems 105.3 87.9 100.2

Total Fluid Handling $ 1,005.8 $ 1,117.4 $ 1,101.8

Total Process Flow Technologies $ 1,196.6 $ 1,005.8 $ 1,117.4

Payment & Merchandising Technologies

Payment Acceptance and Dispensing Products (a)

Payment Acceptance and Dispensing Products

$ 805.7 $ 670.8 $ 805.5

1 unchanged sentence

Total Payment & Merchandising Technologies $ 1,345.1 $ 1,104.8 $ 1,158.3

Aerospace & Electronics

Commercial Original Equipment $ 226.4 $ 357.2 $ 343.4

Military Original Equipment 258.7 217.2 195.7

Commercial Aftermarket Products 93.0 161.4 150.5

Military Aftermarket Products 72.6 63.0 53.9

Total Aerospace & Electronics $ 650.7 $ 798.8 $ 743.5

Engineered Materials

FRP - Recreational Vehicles $ 68.9 $ 84.5 $ 119.0

FRP - Building Products 83.1 91.9 92.2

FRP - Transportation 23.6 32.2 32.0

Total Engineered Materials $ 175.6 $ 208.6 $ 243.2

Total Net Sales $ 3,180.0 $ 2,761.3 $ 3,074.5

(a) As a result of an internal merger of the CMS business into the vending vertical of the CPI business, Payment Acceptance and Dispensing Products now includes Merchandising Equipment (See Note 3).

Prior periods have been reclassified to conform to the current year presentation.

Remaining Performance Obligations

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(in millions) December 31, 2021 2020 2019

Research and Development Costs $ 74.6 $ 74.7 (a)

(a) The Company revised the fiscal year 2019 and 2018 amounts reported above to increase certain research and development costs that were excluded from the previously reported amounts by $ 27.2 million and $ 30.7 million, respectfully.

This correction had no effect on the Company’s previously reported consolidated financial statements as of and for the years ended December 31, 2019 and 2018.

Research and Development Costs $ 81.4 $ 74.1 $ 74.0

Note 7 – Pension and Postretirement Benefits

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employees of Crane Currency.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the projected benefit obligations, fair value of plan assets and funded status is as follows:

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Amendments ( 0.7 ) ( 0.2 ) — —

Actuarial loss 94.8 131.3 2.0 1.8

Actuarial (gain) loss ( 64.8 ) 94.8 ( 0.2 ) 2.0

Settlements ( 6.1 ) ( 9.3 ) — —

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Funded status $ ( 70.7 ) $ ( 235.7 ) $ ( 28.1 ) $ ( 30.0 )

In the U.S., 2020 actuarial losses in the projected benefit obligation were primarily the result of a decrease in the discount rate.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In the U.S., 2021 actuarial gains in the projected benefit obligation were primarily the result of an increase in the discount rate.

Other sources of gains or losses such as plan experience, updated census data and minor adjustments to actuarial assumptions generated combined losses of less than 1 % of expected year end obligations.

In the Non-U.S.

countries, 2020 actuarial losses in the projected benefit obligation were primarily the result of decreases in discount rates.

Other sources of gains or losses such as plan experience, updated census data, changes to forecast inflation and minor adjustments to actuarial assumptions generated combined gains of 5 % of expected year end obligations.

countries, 2021 actuarial gains in the projected benefit obligation were primarily the result of increases in discount rates.

Other sources of gains or losses such as plan experience, updated census data, changes to forecast inflation, mortality table updates and minor adjustments to other actuarial assumptions generated combined gains of 2 % of expected year end obligations.

In the U.S., 2020 actuarial losses in the projected benefit obligation were primarily the result of a decrease in the discount rate.

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countries, 2020 actuarial losses in the projected benefit obligation were primarily the result of decreases in discount rates.

Other sources of gains or losses such as plan experience, updated census data and minor adjustments to actuarial assumptions generated combined gains of 1 % of expected year end obligations.

Amounts recognized on our Consolidated Balance Sheets consist of:

5 unchanged sentences

Funded status $ ( 70.7 ) $ ( 235.7 ) $ ( 28.1 ) $ ( 30.0 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts recognized in accumulated other comprehensive loss consist of:

16 unchanged sentences

Fair value of plan assets $ 525.2 $ 762.5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Components of net periodic (benefit) cost are as follows:

8 unchanged sentences

Recognized curtailment (gain) loss ( 1.3 ) ( 2.3 ) — — — —

Settlement costs 1.7 — 0.3 — — —

Settlement loss 1.4 1.7 — — — —

Net periodic (benefit) cost $ ( 6.8 ) $ ( 6.8 ) $ ( 0.6 ) $ ( 0.2 ) $ 0.1 $ —

5 unchanged sentences

Interest credit rate 1.47 % 0.93 % 2.83 % N/A N/A N/A

Discount rate 1.07 % 1.70 % 2.42 % N/A N/A 3.30 %

Discount rate 1.58 % 1.07 % 1.70 % N/A N/A N/A

Rate of compensation increase 3.08 % 3.10 % 2.89 % N/A N/A N/A

Interest credit rate 0.33 % 0.29 % 0.22 % N/A N/A N/A

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The weighted-average assumptions used to determine net periodic benefit cost are as follows:

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plans, the 4.45 % expected rate of return on assets assumption for 2021 reflected a weighted average of the long-term asset allocation targets for our various non-U.S.

As of December 31, 2020, the actual weighted average asset allocation for the non-U.S.

As of December 31, 2021, the actual weighted average asset

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

allocation for the non-U.S.

plans was 24.9 % equity securities, 39.8 % fixed income securities, 30.5 % alternative assets/other and 4.8 % cash and cash equivalents.

16 unchanged sentences

We periodically review investment managers and their performance in relation to our plans’ investment objectives.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The primary investment objective of our various pension trusts is to maximize the value of plan assets, focusing on capital preservation, current income and long-term growth of capital and income.

4 unchanged sentences

Equity securities include Crane Co.

common stock, which represents 4 % and 5 % of plan assets as of December 31, 2020 and 2019, respectively.

common stock, which represents 4 % of plan assets as of December 31, 2021 and 2020.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of our pension plan assets as of December 31, 2021, by asset category, are as follows:

7 unchanged sentences

Equities 112.8 — — — 112.8

Fixed Income Bonds and Notes — 0.1 — — 0.1

Commingled and Mutual Funds

6 unchanged sentences

International Balanced Funds — — — 2.1 2.1

Property Funds 29.0 — — — 29.0

Alternative Investments

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Total Fair Value $ 398.7 $ 14.3 $ 22.8 $ 588.3 $ 1,024.1

(a) Investments are measured at fair value using the net asset value per share practical expedient, and therefore, are not classified in the fair value hierarchy.

In 2020, the pension plan's asset classified as Level 3 constitutes an insurance contract valued annually on an actuarial basis

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Immediate None None None

Hedge Funds (e)

Quarterly None None 65 days written

Hedge Funds (e)

Quarterly None None 30 days written

Hedge Funds (e)

Quarterly None None 30 days written

International Property Funds (f)

International Property Funds (e)

Immediate None None None

Hedge Funds and LDI (g)

Hedge Funds and LDI (f)

Immediate None None None

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(d) These funds are managed in a collective trust under Australia's Superannuation plan structure.

(e) These funds are direct investment alternative investments/hedge funds that deploy a multi-strategy approach to investing (e.g., long/short, event-driven, credit, etc.)

(f) These funds invest in real property outside the United States.

(g) These funds invest in strategies that seek to add diversification to a portfolio with uncorrelated risk profiles or are designed to track the duration of all or part of the underlying liability.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(e) These funds invest in real property outside the United States.

(f) These funds invest in strategies that seek to add diversification to a portfolio with uncorrelated risk profiles or are designed to track the duration of all or part of the underlying liability.

We expect, based on current actuarial calculations, to contribute cash of approximately $ 18.9 million to our defined benefit pension plans during 2022.

Cash contributions in subsequent years will depend on a number of factors including the investment performance of plan assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Estimated Future Benefit Payments

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Benefit amounts are based upon years of service and compensation of the participating employees.

There were no pre-tax settlement gains recorded in 2020.

We recorded a pre-tax settlement gain of $ 0.1 million and $ 0.4 million in 2019 and 2018, respectively.

There were no pre-tax settlement gains recorded in 2021 or 2020.

We recorded a pre-tax settlement gain of $ 0.1 million in 2019.

Accrued SERP benefits were $ 3.7 million and $ 3.9 million as of December 31, 2021 and 2020, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Leases

Arrangements that explicitly or implicitly relate to property, plant and equipment are assessed at inception to determine if the arrangement is or contains a lease.

Generally, we enter into operating leases as the lessee and recognize right-of-use assets and lease liabilities based on the present value of future lease payments over the lease term.

We lease certain vehicles, equipment, manufacturing facilities, and non-manufacturing facilities.

We have leases with both lease components and non-lease components, such as common area maintenance, utilities, or other repairs and maintenance.

For all asset classes, we applied the practical expedient to account for each separate lease component and its associated non-lease component(s) as a single lease component.

We identify variable lease payments, such as maintenance payments based on actual activities performed or costs incurred, at lease commencement by assessing the nature of the payment provisions, including whether the payments are subject to a minimum.

Certain leases include options to renew for an additional term or company-controlled options to terminate.

We generally determine it is not reasonably certain to assume the exercise of renewal options because there is no economic incentive to renew.

As termination options often include penalties, we generally determine it is reasonably certain that termination options will not be exercised because there is an economic incentive not to terminate.

Therefore, these options generally do not impact the lease term or the determination or classification of the right-of-use asset and lease liability.

In the third quarter of 2017, we entered into a seven-year lease for a used airplane which includes a maximum residual value guarantee of $ 11.1 million if the fair value of the airplane is less than $ 14.4 million at the end of the lease term.

We do not believe it is probable that any amount will be owed under this guarantee.

Therefore, no amount related to the residual value guarantee is included in the lease payments used to measure the right-of-use asset and lease liability.

We have not entered into any other leases where a residual value guarantee is provided to the lessor.

Rental expense was $ 40.3 million, $ 34.8 million and $ 33.8 million for 2020, 2019 and 2018, respectively.

We do not enter into arrangements where restrictions or covenants are imposed by the lessor that, for example, relate to incurring additional financial obligations.

Furthermore, we also have not entered into any significant sublease arrangements.

We use our collateralized incremental borrowing rate based on the information available at commencement date to determine the present value of future payments and the appropriate lease classification.

The rate implicit in the lease is generally unknown, as we generally operate in the capacity of the lessee.

Our Consolidated Balance Sheet includes the following related to leases:

(in millions) December 31, Classification 2020 2019

Operating right-of-use assets Other assets $ 104.2 $ 112.6

Current lease liabilities Accrued liabilities $ 23.4 $ 24.0

Long-term lease liabilities Other liabilities 86.5 91.5

Total lease liabilities $ 109.9 $ 115.5

The components of lease cost were as follows:

(in millions) December 31, 2020 2019

Operating lease cost $ 33.1 $ 32.6

Variable lease cost $ 7.2 $ 2.2

The weighted average remaining lease terms and discount rates for our operating leases were as follows:

December 31, 2020 2019

Weighted-average remaining lease term - operating leases 9.8 9.7

Weighted-average discount rate - operating leases 3.8 % 3.9 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental cash flow information related to our operating leases was as follows for periods ended December 31, 2020 and 2019:

(in millions) December 31, 2020 2019

Cash paid for amounts included in measurement of operating lease liabilities - operating cash flows $ 26.5 $ 24.3

Right-of-use assets obtained in exchange for new operating lease liabilities $ 10.0 $ 21.0

Future minimum operating lease payments are as follows:

(in millions) December 31, 2020

Thereafter 52.4

Total future minimum operating lease payments $ 145.4

Imputed interest 35.5

Present value of lease liabilities reported $ 109.9

Note 8 – Stock-Based Compensation Plans

At December 31, 2021, we had stock-based compensation awards outstanding under the following shareholder-approved plans:

the 2013 Stock Incentive Plan (the "2013 Plan") and 2018 Stock Incentive Plan (the "2018 Plan"), applicable to employees and non-employee directors.

the 2013 Stock Incentive Plan (the "2013 Plan"), 2018 Stock Incentive Plan (the "2018 Plan") and 2018 Amended and Restated Stock Incentive Plan (the “2018 Amended & Restated Plan”), applicable to employees and non-employee directors.

The 2013 Plan was approved by the Board of Directors and stockholders at the annual meeting in 2013.

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In 2018, in view of the limited number of shares remaining available under the 2013 Plan, the Board of Directors and stockholders approved the adoption of the 2018 Plan which authorized the issuance of up to 6,500,000 shares of Crane Co.

No further awards will be made under the 2013 Plan.

In 2021, the Board of Directors and stockholders approved the adoption of the 2018 Amended and Restated Stock Incentive Plan which authorized the issuance of up to 4,710,000 shares of Crane Co.

No further awards will be made under the 2013 Plan or 2018 Plan.

The stock incentive plans are used to provide long-term incentive compensation through stock options, restricted share units, performance-based restricted share units and deferred stock units.

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Expected stock volatility was determined based upon the historical volatility for the four-year period preceding the date of grant.

The risk-free interest rate was based on the yield curve in effect

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

at the time the options were granted, using U.S.

The risk-free interest rate was based on the yield curve in effect at the time the options were granted, using U.S.

constant maturities over the expected life of the option.

The expected lives of the awards represents the period of time that options granted are expected to be outstanding.

The expected lives of the awards represent the period of time that options granted are expected to be outstanding.

Activity in our stock option plans for the year ended December 31, 2021 were as follows:

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The total intrinsic value of options exercised during 2021, 2020 and 2019 was $ 36.4 million, $ 4.1 million and $ 6.8 million, respectively.

The aggregate intrinsic value of exercisable options was $ 33.9 million, $ 29.5 million and $ 39.4 million

as of December 31, 2021, 2020 and 2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The total cash received from these option exercises during 2021, 2020 and 2019 was $ 26.4 million, $ 8.9 million and $ 11.4 million, respectively.

The tax benefit realized for the tax deductions from option exercises and vesting of restricted share units was $ 0.6 million and $ 3.8 million as of December 31, 2020 and 2019, respectively.

The aggregate intrinsic value of exercisable options was $ 29.5 million, $ 39.4 million and $ 16.7 million as of December 31, 2020, 2019 and 2018, respectively.

The tax benefit realized for the tax deductions from these option exercises was $ 5.5 million, $ 0.5 million and $ 0.8 million as of December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021, there was $ 8.5 million of total future compensation cost related to unvested share-based awards to be recognized over a weighted-average period of 1.67 years.

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Included in our share-based compensation was expense recognized for our restricted share unit and performance-based restricted share unit awards of $ 18.3 million, $ 15.1 million and $ 15.6 million in 2021, 2020 and 2019, respectively.

The tax (detriment) benefit for the vesting of the restricted share units was $( 0.1 ) million, $( 0.1 ) million and $ 2.8 million as of December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021, there was $ 27.1 million of total future compensation cost related to restricted share unit and performance-based restricted share unit awards, to be recognized over a weighted-average period of 1.98 years.

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Performance-based restricted share units vested ( 67 ) 88.66

Performance-based restricted share units forfeited ( 21 ) 97.98

Restricted share units as of December 31, 2021 548 $ 82.84

Note 9 - Leases