What changed in this filing

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Item 1. Financial Statements

2022-05-04 compared with 2021-11-02 · 140 added, 334 removed, 692 unchanged (41% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions, except per share data) 2022 2021

3 unchanged sentences

Selling, general and administrative 193.7 182.2

Acquisition-related and integration charges — 2.7 — 10.3

Restructuring (gains) charges, net — ( 13.1 )

25 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions) 2022 2021

3 unchanged sentences

Changes in pension and postretirement plan assets and benefit obligation, net of tax 3.3 4.9

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

Other comprehensive loss, net of tax ( 18.3 ) ( 30.0 )

Comprehensive income before allocation to noncontrolling interests 86.7 78.4

4 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions) September 30,

(in millions) March 31,

2022 December 31,

1 unchanged sentence

Cash and cash equivalents $ 307.2 $ 478.6

Accounts receivable, net 512.7 423.9

Accounts receivable, net of allowance for doubtful accounts of $ 9.3 as of March 31, 2022 and $ 10.4 as of December 31, 2021

Current insurance receivable - asbestos 13.7 13.7

17 unchanged sentences

Goodwill 1,402.7 1,412.5

Long-term assets held for sale — 199.9

Total assets $ 4,353.2 $ 4,486.6

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in millions, except per share and share data) March 31,

2022 December 31,

13 unchanged sentences

Other liabilities 155.6 161.1

Long-term liabilities held for sale — 26.2

Total liabilities 2,627.0 2,651.5

18 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(in millions) 2022 2021

11 unchanged sentences

Other 3.8 1.2

Total provided by operating activities from continuing operations 311.7 197.0

Total (used for) provided by operating activities from continuing operations ( 49.3 ) 47.6

Investing activities from continuing operations:

Payment for acquisition - net of cash acquired — ( 169.2 )

Proceeds from disposition of capital assets — 14.5

2 unchanged sentences

Proceeds from sale of marketable securities — 30.0

Total provided by (used for) investing activities from continuing operations 28.0 ( 245.3 )

Total (used for) provided by investing activities from continuing operations ( 12.5 ) 29.8

Financing activities from continuing operations:

2 unchanged sentences

Stock options exercised, net of shares reacquired 0.7 7.3

Debt issuance costs — ( 1.3 )

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

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

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

Proceeds from revolving credit facility — 77.2

Repayments of revolving credit facility — ( 77.2 )

Proceeds from term loan — 343.9

Repayment of term loan ( 348.1 ) —

Total (used for) provided by financing activities from continuing operations ( 440.8 ) 187.3

Net borrowings from issuance of commercial paper with maturities of 90 days or less 104.0 —

Total used for financing activities from continuing operations ( 97.8 ) ( 44.8 )

Discontinued operations:

Total provided by operating activities 15.3 11.1

Total (used for) provided by operating activities ( 6.2 ) 2.6

Total used for investing activities ( 0.5 ) ( 0.3 )

Increase in cash and cash equivalents from discontinued operations 13.9 10.5

(Decrease) increase in cash and cash equivalents from discontinued operations ( 6.7 ) 2.3

Effect of exchange rates on cash and cash equivalents ( 5.1 ) ( 7.5 )

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(in millions) 2022 2021

18 unchanged sentences

Certain amounts in the prior periods’ condensed consolidated financial statements have been reclassified to conform to the current period presentation.

Pending Separation

On March 30, 2022, Crane Co.

announced that its Board of Directors unanimously approved a plan to pursue a separation into two independent, publicly-traded companies (the “Separation”).

The Separation is expected to occur through a tax-free distribution and is expected to be completed within approximately 12 months, subject to the satisfaction of customary conditions and final approval by Crane Co.’s Board of Directors.

Discontinued Operations

4 unchanged sentences

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

Please see Note 3 for additional details.

Process Flow Technologies.

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.

Please see Note 2, “Discontinued Operations” for additional details.

Recent Accounting Pronouncements - Adopted

5 unchanged sentences

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

Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued amended guidance to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans.

The amended guidance removes the requirements to disclose:

amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year;

the amount and timing of plan assets expected to be returned to the entity;

and the effects of a one-percentage point change in assumed health care cost trend r ates.

The amended guidance requires disclosure of an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period.

This guidance is effective for fiscal years ending after December 15, 2020.

Effective December 31, 2020, we adopted the amended guidance and applied the disclosure requirements on a retrospective basis to all periods presented.

This amended guidance did not have a material effect on our disclosures.

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued amended guidance that changes the impairment model for most financial assets and certain other instruments.

For trade receivables, contract assets and other receivables, held-to-maturity debt securities, loans and other instruments, entities are required to use a current expected credit loss (“CECL”) model that will immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables.

For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance.

The CECL model is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect collectability.

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

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

Note 2 - Acquisitions

Acquisitions are accounted for in accordance with ASC Topic 805, “Business Combinations” (“ASC 805”).

Accordingly, we make an initial allocation of the purchase price at the date of acquisition based upon our understanding of the fair value of the acquired assets and assumed liabilities.

We obtain this information during due diligence and through other sources.

In the months after closing, as we obtain additional information about these assets and liabilities, including through tangible and intangible asset appraisals, we are able to refine estimates of fair value and more accurately allocate the purchase price.

Only items identified as of the acquisition date are considered for subsequent adjustment to the purchase price allocation.

We will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.

In order to allocate the consideration transferred for our acquisitions, the fair values of all identifiable assets and liabilities must be established.

For accounting and financial reporting purposes, fair value is defined under ASC Topic 820, “Fair Value Measurement and Disclosure” as the price that would be received upon sale of an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability.

Additionally, fair value measurements for an asset assume the highest and best use of that asset by market participants.

Use of different estimates and judgments could yield different results.

Instrumentation & Sampling Business Acquisition

On January 31, 2020, we completed the acquisition of CIRCOR International, Inc.’s Instrumentation & Sampling business (“I&S”) for $ 172.3 million on a cash-free and debt-free basis, subject to a later adjustment reflecting I&S' net working capital, cash, the assumption of certain debt-like items, and I&S' transaction expenses.

We funded the acquisition through short-term borrowings consisting of $ 100 million of commercial paper and $ 67 million from our revolving credit facility, and cash on hand.

In August 2020, we received $ 3.1 million related to the final working capital adjustment which resulted in net cash paid of $ 169.2 million.

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 Process Flow Technologies segment.

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

Goodwill from this acquisition is not deductible for tax purposes.

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 I&S.

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

Net assets acquired (in millions)

Total current assets $ 21.0

Property, plant and equipment 11.0

Other assets 6.0

Intangible assets 52.5

Goodwill 106.0

Total assets acquired $ 196.5

Total current liabilities $ 8.1

Other liabilities 19.2

Total assumed liabilities $ 27.3

Net assets acquired $ 169.2

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 $ 2.6 13

Customer relationships 49.0 14

Backlog 0.9 1

Total acquired intangible assets $ 52.5

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.

Therefore, a portion of I&S’ earnings, equal to the after-tax royalty that would have been paid for the use of the asset, can be attributed to our ownership.

The trade names are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 13 years.

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.

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.

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.

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

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.

Supplemental Pro Forma Data

I&S’ results of operations have been included in our financial statements for the period subsequent to the completion of the acquisition on January 31, 2020.

Consolidated pro forma revenue and net income attributable to common shareholders has not been presented since the impact was not material to our financial results.

Acquisition-Related Costs

Acquisition-related costs are expensed as incurred.

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

Note 2 - Discontinued Operations

5 unchanged sentences

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.

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

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 September 30, 2021.

On March 17, 2022, the Department of Justice (DOJ) filed a complaint to enjoin the sale transaction.

The parties are responding to the complaint and engaging with the DOJ in the normal course to address the DOJ’s antitrust concerns regarding a minor overlap in a narrow range of material used in certain commercial building applications.

We believe that the sale is probable of closing and, as such, continue to present the segment’s results as discontinued operations as of March 31, 2022.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Financial results from discontinued operations:

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions) 2022 2021

2 unchanged sentences

Selling, general and administrative 4.6 4.4

Restructuring charges — — — 0.6

Income from discontinued operations $ 13.4 $ 6.4

Income tax provision (benefit) 1

1.4 1.8 ( 17.1 ) 3.8

Income tax provision 3.1 1.4

Income from discontinued operations, net of tax $ 10.3 $ 5.0

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) September 30, 2021 December 31, 2020

(in millions) March 31, 2022 December 31, 2021

Accounts receivable, net $ 20.7 $ 10.6

1 unchanged sentence

Other current assets 0.8 0.6

Current assets held for sale (a)

Property, plant and equipment, net 28.8 28.3

2 unchanged sentences

Goodwill 171.3 171.3

Long-term assets held for sale (a)

Assets held for sale $ 234.1 $ 220.5

1 unchanged sentence

Accrued liabilities 6.7 12.0

Current liabilities held for sale (a)

Long-term deferred tax liability 5.8 5.8

Other liabilities 0.1 0.1

Long-term liabilities held for sale (a)

Liabilities held for sale $ 41.5 $ 44.9

(a) We reasonably expect to close on this transaction within one year and therefore have presented the assets and liabilities as current as of March 31, 2022.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7 unchanged sentences

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.

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

Products include a wide range of custom designed, highly engineered products used in landing systems, sensing and utility systems, fluid management, seat actuation, power and microelectronic applications, and microwave systems.

Process Flow Technologies

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

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

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

Process Valves and Related Products include on/off valves and related products for critical and demanding applications in the chemical, oil & gas, power, and general industrial end markets globally.

Commercial Valves includes the manufacturing and distribution of valves and related products for the non-residential construction, general industrial, and to a lesser extent, municipal markets.

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

Process Valves and Related Products manufactures on/off isolation valves, instrumentation and controls, and related products for critical and demanding applications primarily in the chemical and petrochemical, general industrial, energy- related and pharmaceutical end markets globally.

Commercial Valves is engaged primarily in the manufacturing of valves and related products for the non-residential construction, general industrial, and municipal markets, and the distribution of pipe, valves and fittings (PVF) for the non-residential construction market.

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

On April 8, 2022, the Company entered into an agreement to sell Crane Supply for CAD 380 million on a cash-free and debt-free basis.

The sale is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2022.

Payment & Merchandising Technologies

1 unchanged sentence

CPI provides high technology payment acceptance and dispensing products to original equipment manufacturers, and for certain vertical markets, it also provides currency handling and processing systems, complete cash and cashless payment and merchandising solutions, equipment service solutions, and fully connected managed service solutions.

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

Crane Currency is a supplier of banknotes and highly engineered banknote security features as well as a provider of security features for product authentication.

A pioneer in advanced micro-optics technology, Crane Currency provides a wide range of engaging visual effects in features that increase the level of security and public trust in banknotes and for the product brand authentication market.

Crane Currency offers uniquely designed banknotes, substrate (paper) and printing capabilities for over 50 central banks around the world.

Engineered Materials

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

The Engineered Materials segment manufactures fiberglass-reinforced plastic panels and coils, primarily for use in the manufacturing of recreational vehicles ("RVs"), and in commercial and industrial buildings applications, with some additional applications including trailers and other transportation-related products.

Engineered Materials sells the majority of its products directly to RV, trailer, and truck manufacturers, and it uses distributors and retailers to serve the commercial and industrial construction markets.

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.

Please see Note 3 for additional details.

Please see Note 2, “Discontinued Operations” for additional details.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions) 2022 2021

13 unchanged sentences

Income from continuing operations before income taxes $ 126.3 $ 130.7

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) September 30, 2021 December 31, 2020

(in millions) March 31, 2022 December 31, 2021

Aerospace & Electronics $ 625.6 $ 604.7

4 unchanged sentences

Total $ 4,353.2 $ 4,486.6

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

(in millions) March 31, 2022 December 31, 2021

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 Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions) 2022 2021

17 unchanged sentences

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

As of March 31, 2022, total backlog was $ 1,309.8 million.

We expect to recognize approximately 85 % of our remaining performance obligations as revenue in 2022, an additional 13 % in 2023 and the balance thereafter.

8 unchanged sentences

Net contract assets and contract liabilities consisted of the following:

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

(in millions) March 31, 2022 December 31, 2021

Contract assets $ 78.0 $ 73.0

Contract liabilities $ 96.5 $ 101.1

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.

We recognized revenue of $ 32.3 million during the three-month period ended March 31, 2022 related to contract liabilities as of December 31, 2021.

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 Nine Months Ended

September 30, September 30,

Three Months Ended

(in millions, except per share data) 2022 2021

13 unchanged sentences

Earnings per diluted share $ 1.81 $ 1.84

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.

The computation of diluted earnings per share excludes the effect of the potentially anti-dilutive securities which was 0.3 million and 1.8 million for the three months ended March 31, 2022 and 2021, respectively .

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Changes in Equity and Accumulated Other Comprehensive Loss

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

A summary of changes in equity for the year-to-date interim periods ended March 31, 2022 and 2021 is provided below:

(in millions, except share data) Common

11 unchanged sentences

— — ( 26.4 ) — — ( 26.4 ) — ( 26.4 )

Impact from settlement of share-based awards, net of shares acquired — ( 2.3 ) — — 9.5 7.2 — 7.2

Stock-based compensation expense — 6.3 — — — 6.3 — 6.3

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 4.9 — 4.9 — 4.9

Currency translation adjustment — — — ( 35.7 ) — ( 35.7 ) 0.8 ( 34.9 )

BALANCE MARCH 31, 2021 72.4 $ 334.7 $ 2,276.2 $ ( 497.2 ) $ ( 591.1 ) $ 1,595.0 $ 3.0 $ 1,598.0

Net income — — 138.3 — — 138.3 — 138.3

Cash dividends ($ 0.43 per share)

Reacquisition on open market of 1,699,949 shares

— — — — ( 175.8 ) ( 175.8 ) — ( 175.8 )

Impact from settlement of share-based awards, net of shares acquired — 7.6 — — ( 9.5 ) ( 1.9 ) — ( 1.9 )

Stock-based compensation expense — 6.1 — — — 6.1 — 6.1

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

Currency translation adjustment — — — 7.7 — 7.7 ( 0.1 ) 7.6

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)

Exercise of stock options, net of shares reacquired of 79,214 shares

— — — — 6.1 6.1 — 6.1

3 unchanged sentences

Currency translation adjustment — — — ( 21.7 ) — ( 21.7 ) 0.1 ( 21.6 )

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

Par Value Capital

Surplus Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Share- holders’

Equity Non-controlling

Interest Total

BALANCE MARCH 31, 2022 72.4 $ 364.7 $ 2,605.9 $ ( 458.6 ) $ ( 861.1 ) $ 1,723.3 $ 2.9 $ 1,726.2

BALANCE DECEMBER 31, 2020 72.4 $ 330.7 $ 2,192.8 $ ( 466.4 ) $ ( 600.6 ) $ 1,528.9 $ 2.2 $ 1,531.1

2 unchanged sentences

— — ( 25.0 ) — — ( 25.0 ) — ( 25.0 )

Reacquisition on open market of 1,221,233 shares

— — — — ( 70.0 ) ( 70.0 ) — ( 70.0 )

Impact from settlement of share-based awards, net of shares acquired — ( 2.3 ) — — 9.5 7.2 — 7.2

3 unchanged sentences

BALANCE MARCH 31, 2021 72.4 $ 334.7 $ 2,276.2 $ ( 497.2 ) $ ( 591.1 ) $ 1,595.0 $ 3.0 $ 1,598.0

Net income — — 14.8 — — 14.8 — $ 14.8

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

Stock-based compensation expense — 4.7 — — — 4.7 — 4.7

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 3.6 — 3.6 — 3.6

Currency translation adjustment — — — 17.2 — 17.2 0.2 17.4

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

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) 3.3 ( 21.7 ) ( 18.4 )

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.

Balance as of March 31, 2022 $ ( 298.6 ) $ ( 160.0 ) $ ( 458.6 )

Net of tax benefit of $ 119.1 million and $ 117.9 million as of March 31, 2022 and December 31, 2021, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three month periods ended March 31, 2022 and 2021.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2022 2021

Amortization of pension items:

Prior service costs $ ( 0.1 ) $ ( 0.1 ) $ ( 0.2 ) $ ( 0.2 )

Net loss $ 4.8 $ 6.5

6 unchanged sentences

Note 7 - Defined Benefit and Postretirement Benefits

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

Pension Postretirement

(in millions) 2021 2020 2021 2020

Service cost $ 1.6 $ 1.6 $ 0.1 $ 0.1

Interest cost 5.2 6.6 0.2 0.2

Expected return on plan assets ( 14.8 ) ( 14.7 ) — —

Amortization of prior service cost ( 0.1 ) ( 0.1 ) ( 0.3 ) ( 0.3 )

Amortization of net loss 6.5 4.8 — —

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

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

For all plans, the components of net periodic benefit for the three months ended March 31, 2022 and 2021 are as follows:

Pension Postretirement

12 unchanged sentences

Expected contributions in 2022 $ 18.9 $ 2.6

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

Amounts contributed during the three months ended March 31, 2022 $ 2.8 $ —

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

Our effective tax rates are as follows:

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

2021 2020 2021 2020

Three Months Ended March 31,

Effective Tax Rate 25.0 % 20.9 %

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.

Our effective tax rate attributable to continuing operations for the three months ended March 31, 2022 is higher than the prior year’s comparable period primarily due to higher non-U.S.

taxes, partially offset by a greater benefit related to share-based compensation.

Our effective tax rate attributable to continuing operations for the three months ended March 31, 2022 is higher than the statutory U.S.

federal tax rate of 21% primarily due to earnings in jurisdictions with statutory tax rates higher than the U.S., expenses that are statutorily non-deductible for income tax purposes and U.S.

state taxes, partially offset by excess share-based compensation benefits, tax credit utilization, and the statutory U.S.

deduction related to our non-U.S.

subsidiaries’ income.

Unrecognized Tax Benefits

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.

During the three months ended March 31, 2022, our gross unrecognized tax benefits, excluding interest and penalties, increased by $ 0.4 million, primarily due to increases in tax positions taken in the current period, partially offset by reductions from expiration of statutes of limitations.

During the three months ended March 31, 2022, the total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate increased by $ 0.6 million.

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 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 three months ended March 31, 2022, we recognized $ 0.3 million of interest expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations.

As of March 31, 2022, and December 31, 2021, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in our Condensed Consolidated Balance Sheets was $ 5.2 million and $ 4.9 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by $ 6.6 million due to expiration of statutes of limitations and settlements with tax authorities.

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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 September 30, 2021, we had seven reporting units.

As of March 31, 2022, 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.

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

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

Currency translation — ( 3.3 ) ( 6.5 ) ( 9.8 )

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

Balance at March 31, 2022 $ 202.5 $ 346.1 $ 854.1 $ 1,402.7

As of March 31, 2022, we had $ 452.1 million of net intangible assets, of which $ 70.4 million were intangibles with indefinite useful lives.

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.

Changes to intangible assets are as follows:

(in millions) Nine Months Ended

September 30, 2021 Year Ended December 31, 2020

(in millions) Three Months Ended

March 31, 2022 Year Ended December 31, 2021

Balance at beginning of period, net of accumulated amortization $ 465.9 $ 519.1

Additions — 52.5

Amortization expense ( 10.6 ) ( 44.5 )

Currency translation ( 6.8 ) 11.2

Currency translation and other ( 3.2 ) ( 8.7 )

Balance at end of period, net of accumulated amortization $ 452.1 $ 465.9

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

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of intangible assets follows:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in millions) Weighted Average

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Accrued liabilities consist of:

(in millions) September 30,

(in millions) March 31,

2022 December 31,

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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 nine months ended September 30, 2021 and 2020.

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

The following table summarizes warranty activity recorded during the three months ended March 31, 2022 and 2021.

Three Months Ended March 31,

(in millions) 2022 2021

1 unchanged sentence

Expense 1.0 3.1

Changes due to acquisitions — 0.3 — 0.3

Payments / deductions ( 0.8 ) ( 0.9 )

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Information Regarding Claims and Costs in the Tort System

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.

As of March 31, 2022, 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 Nine Months Ended Year Ended

September 30, September 30, December 31,

Three Months Ended Year Ended

March 31, December 31,

2022 2021 2021

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Ending claims 30,312 29,407 29,958

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.

Of the 30,312 pending claims as of March 31, 2022, 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.

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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 nine months ended September 30, 2021 and 2020 totaled $ 35.7 million and $ 30.2 million, respectively.

The gross settlement and defense costs incurred (before insurance recoveries and tax effects) by us for the three months ended March 31, 2022 and 2021 totaled $ 13.0 million and $ 9.1 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 nine months ended September 30, 2021 and, 2020 totaled $ 29.6 million and $ 23.7 million, respectively.

Our total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the three months ended March 31, 2022 and, 2021 totaled $ 7.5 million and $ 10.8 million, respectively.

Detailed below are the comparable amounts for the periods indicated.

Three Months Ended Nine Months Ended Year Ended

September 30, September 30, December 31,

Three Months Ended Year Ended

March 31, December 31,

(in millions) 2022 2021 2021

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Defense costs incurred (1)

3.8 3.5 11.2 11.6 15.6

Total costs incurred $ 13.0 $ 9.1 $ 55.2

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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 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 .

Cumulatively through March 31, 2022, we have resolved (by settlement or dismissal) approximately 144,000 claims.

The related settlement cost incurred by us and our insurance carriers is approximately $ 730 million, for an average settlement cost per resolved claim of approximately $ 5,100 .

The average settlement cost per claim resolved during the years ended December 31, 2021, 2020 and 2019 was $ 18,800 , $ 13,900 , and $ 15,800 , respectively.

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Accordingly, the average cost per resolved claim is not considered in our periodic review of our estimated asbestos liability.

For a discussion regarding the four most significant factors affecting the liability estimate, see “Effects on the Condensed Consolidated Financial Statements.”

Effects on the Condensed Consolidated Financial Statements

For a discussion regarding the four most significant factors affecting the liability estimate, see “Effects on the Consolidated Financial Statements.”

Effects on the Consolidated Financial Statements

We have retained an independent actuarial firm to assist management in estimating our asbestos liability in the tort system.

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Based on this estimate, we recorded an additional liability of $ 255 million as of December 31, 2019.

An aggregate liability of $ 712 million is recorded as of December 31, 2019 to cover the estimated cost of asbestos claims now pending or subsequently asserted through 2059, of which approximately 85 % is attributable to settlement and defense costs for future claims projected to be filed through 2059.

An aggregate liability of $ 712 million was recorded as of December 31, 2019 to cover the estimated cost of asbestos claims now pending or subsequently asserted through 2059, of which approximately 85 % is attributable to settlement and defense costs for future claims projected to be filed through 2059.

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

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

The liability was $ 600 million and $ 612 million as of March 31, 2022 and December 31, 2021, respectively.

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

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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 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.

The current portion of the total estimated liability at March 31, 2022 and December 31, 2021 is $ 62.3 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 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.

Through March 31, 2022, 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 September 30, 2021.

Based on this evaluation, we determined that no change in the estimate was warranted for the period ended March 31, 2022.

Insurance Coverage and Receivables.

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

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

The asset was $ 70 million and $ 74 million as of March 31, 2022 and December 31, 2021, 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 September 30, 2021 is substantially related to the former manufacturing site in Goodyear, Arizona (the “Goodyear Site”) discussed below.

The environmental remediation liability as of March 31, 2022 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 $ 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.

The total estimated gross liability was $ 30.6 million and $ 32.3 million as of March 31, 2022 and December 31, 2021, respectively and as described below, a portion is reimbursable by the U.S.

The current portion of the total estimated liability was $ 7.8 million and $ 7.1 million as of March 31, 2022 and December 31, 2021, respectively, 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.

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

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.

As of March 31, 2022 and December 31, 2021, we recorded a receivable of $ 6.6 million and $ 7.3 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, 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.

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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 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.

We believe that as of March 31, 2022, 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 12 - Financing

Our debt consisted of the following:

(in millions) September 30,

(in millions) March 31,

2022 December 31,

Commercial paper $ 104.0 $ —

364-Day Credit Agreement — 348.5

Total short-term borrowings $ 104.0 $ —

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Total long-term debt $ 842.7 $ 842.4

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.

Debt discounts and debt issuance costs totaled $ 5.6 million and $ 5.7 million as of each of March 31, 2022 and December 31, 2021, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.

Commercial paper program - 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.

2 unchanged sentences

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.

(“Cummins-Allison”), respectively.

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

The notes rank at least pari passu with all of our other unsecured and unsubordinated indebtedness.

As of March 31, 2022 and December 31, 2021, there was $ 104.0 million and $ 0.0 million , respectively, of outstanding borrowings under the commercial paper program.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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”).

On April 15, 2021, we repaid the amount outstanding under the 364-Day Credit Agreement with cash on hand and the issuance of commercial paper.

As of December 31, 2020, there was $ 348.5 million outstanding under the 364 -Day Credit Agreement.

Note 13 - Fair Value Measurements

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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.

1 unchanged sentence

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 $ 31.9 million and $ 34.2 million as of September 30, 2021 and December 31, 2020, respectively.

Foreign exchange contracts not designated as hedging instruments had a notional value of $ 94.0 million and $ 3.0 million as of March 31, 2022 and December 31, 2021, 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 $ 0.3 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 September 30, 2021 and December 31, 2020, respectively.

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

We also have two rabbi trusts that hold marketable securities for the benefit of participants in our Supplemental Executive Retirement Plan.

Such derivative receivable amounts are recorded within “Other current assets” on our Condensed Consolidated Balance Sheets and were $ 1.6 million and $ 0.0 million as of March 31, 2022 and December 31, 2021, respectively.

Such derivative liability amounts are recorded within “Accrued liabilities” on our Condensed Consolidated Balance Sheets and were $ 0.0 million and less than $ 0.1 million as of March 31, 2022 and December 31, 2021, respectively.

Available-for-sale securities consist of rabbi trust investments that hold marketable securities for the benefit of participants in our Supplemental Executive Retirement Plan.

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 September 30, 2021 and December 31, 2020.

The fair value of available-for-sale securities was $ 0.6 million and $ 1.6 million as of March 31, 2022 and December 31, 2021, respectively.

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

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 $ 983.1 million and $ 954.8 million as of September 30, 2021 and December 31, 2020, respectively.

The estimated fair value of total debt, measured using Level 2 inputs, was $ 881.2 million and $ 984.9 million as of March 31, 2022 and December 31, 2021, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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These actions include workforce reductions of approximately 1,200 employees, or about 11 % of our global workforce, and the exiting of two leased office facilities and one leased warehouse facility.

We have completed this program and do not expect to incur additional restructuring charges.

2019 Repositioning - In the fourth quarter of 2019, we initiated actions to consolidate two manufacturing operations in Europe within our Process Flow Technologies segment.

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These actions, taken together, included workforce reductions of approximately 180 employees, or less than 1 % of our global workforce.

We expect to complete the program in the fourth quarter of 2023.

2017 Repositioning - In the fourth quarter of 2017, we initiated broad-based repositioning actions designed to improve profitability.

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In 2021, we recorded a gain on sale of real estate related to these actions.

Other Restructuring - In the second quarter of 2020, we recorded other restructuring costs within our Payment & Merchandising Technologies segment.

We do not expect to incur additional restructuring charges.

We expect to complete the program in the first quarter of 2023.

Restructuring (gains) charges, net

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

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

Three Months Ended March 31,

(in millions) 2022 2021

Aerospace & Electronics $ — $ — $ — $ 4.7

Process Flow Technologies $ — $ ( 12.6 )

— — ( 12.6 ) 4.7

Payment & Merchandising Technologies — ( 0.5 )

( 1.1 ) — ( 1.7 ) 12.6

Total restructuring (gains) charges, net $ — $ ( 13.1 )

$ ( 1.1 ) $ — $ ( 14.3 ) $ 22.0

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 $ 0.2 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 $ 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, net by program, cost type and segment for the three months ended September 30, 2021 and 2020:

The following table summarizes our restructuring gains, net by program, cost type and segment for the three months ended March 31, 2022 and 2021:

Three months ended

September 30, 2021 Three months ended

September 30, 2020

(in millions) Severance Other Total Severance Other Total

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

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

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

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

March 31, 2022 Three months ended

March 31, 2021

(in millions) Severance Other Total Severance Other Total

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

Process Flow Technologies — — — 4.7 — 4.7

Payment & Merchandising Technologies $ — $ — $ — $ ( 0.5 ) $ — $ ( 0.5 )

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$ — $ — $ — $ — $ ( 12.7 ) $ ( 12.7 )

Payment & Merchandising Technologies 2

( 0.2 ) — ( 0.2 ) ( 1.0 ) ( 1.5 ) ( 2.5 )

2017 Repositioning $ — $ — $ — $ — $ ( 12.7 ) $ ( 12.7 )

Payment & Merchandising Technologies $ — $ — $ — $ 0.3 $ — $ 0.3

Other Restructuring $ — $ — $ — $ 0.3 $ — $ 0.3

Total $ — $ — $ — $ ( 0.4 ) $ ( 12.7 ) $ ( 13.1 )

1 Reflects a pre-tax gain related to the sale of real estate in 2021

2 Reflects a pre-tax gain related to the sale of real estate in 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

The following table summarizes the cumulative restructuring costs, net incurred through March 31, 2022.

We do not expect to incur additional facility consolidation costs to complete these actions as of March 31, 2022.

Cumulative Restructuring Costs, Net

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2019 Repositioning 16.1 — 16.1

Aerospace & Electronics 1.3 ( 1.4 ) ( 0.1 )

Process Flow Technologies 13.1 ( 12.7 ) 0.4

Payment & Merchandising Technologies 11.5 0.7 12.2

Aerospace & Electronics 1.3 ( 1.4 ) ( 0.1 )

2017 Repositioning $ 25.9 $ ( 13.4 ) $ 12.5

Restructuring Liability

The following table summarizes the accrual balances related to these restructuring (gains) charges by program:

(in millions) 2020 Repositioning 2019 Repositioning 2017 Repositioning Total

Balance at December 31, 2020 (b)

$ 4.2 $ 16.0 $ 4.7 $ 24.9

Adjustments (a)

The following table summarizes the accrual balances related to each restructuring program:

(in millions) 2019 Repositioning 2017 Repositioning Total

Balance at December 31, 2021 (a)

$ 11.5 $ 0.7 $ 12.2

Utilization ( 4.4 ) ( 0.6 ) ( 5.0 )

Balance at September 30, 2021 (b)

Balance at March 31, 2022 (a)

$ 7.1 $ 0.1 $ 7.2

(a) Included within Restructuring (gains) charges, net in the Condensed Consolidated Statements of Operations and reflects changes in estimates for increases and decreases in costs related to our restructuring programs

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

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 15- Subsequent Event

On April 8, 2022, the Company entered into an agreement to sell Crane Supply for CAD 380 million on a cash-free and debt-free basis.

The sale is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2022.

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