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Item 1. Financial Statements

2022-11-01 compared with 2022-08-03 · 249 added, 262 removed, 578 unchanged (47% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions, except per share data) 2022 2021 2022 2021

3 unchanged sentences

Selling, general and administrative 198.3 193.8 600.8 567.8

Restructuring (gains) charges, net — ( 0.2 ) — ( 13.3 )

Operating profit 124.4 144.6 271.4 291.0

Other income (expense):

Loss on divestiture of asbestos-related assets and liabilities 162.4 — 162.4 —

Restructuring gains, net — ( 1.1 ) — ( 14.3 )

Operating (loss) profit ( 31.2 ) 144.8 240.2 435.8

Other (expense) income:

Interest income 1.4 0.2 2.3 1.1

2 unchanged sentences

Miscellaneous income, net 4.5 3.6 22.8 17.2

Total other income (expense) 232.7 ( 1.3 ) 225.4 ( 10.5 )

Income before income taxes 357.1 143.3 496.8 280.5

Total other (expense) income ( 3.8 ) ( 7.2 ) 221.6 ( 17.7 )

(Loss) Income before income taxes ( 35.0 ) 137.6 461.8 418.1

Provision for income taxes 24.3 21.0 157.9 54.8

Net income attributable to common shareholders $ 258.2 $ 138.3 $ 363.2 $ 246.7

Earnings per share:

Net (loss) income attributable to common shareholders $ ( 59.3 ) $ 116.6 $ 303.9 $ 363.3

(Loss) earnings per share:

Basic $ ( 1.06 ) $ 1.99 $ 5.38 $ 6.21

7 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

June 30, June 30,

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions) 2022 2021 2022 2021

Net income before allocation to noncontrolling interests $ 258.2 $ 138.3 $ 363.2 $ 246.7

Net (loss) income before allocation to noncontrolling interests $ ( 59.3 ) $ 116.6 $ 303.9 $ 363.3

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

2 unchanged sentences

Other comprehensive (loss) income, net of tax ( 75.4 ) ( 19.6 ) ( 166.1 ) ( 36.8 )

Comprehensive income before allocation to noncontrolling interests 185.8 151.1 272.5 229.5

Noncontrolling interests in comprehensive income ( 0.1 ) ( 0.1 ) — 0.7

Comprehensive income attributable to common shareholders $ 185.9 $ 151.2 $ 272.5 $ 228.8

Comprehensive (loss) income before allocation to noncontrolling interests ( 134.7 ) 97.0 137.8 326.5

Noncontrolling interests in comprehensive (loss) income ( 0.3 ) ( 0.1 ) ( 0.3 ) 0.6

Comprehensive (loss) income attributable to common shareholders $ ( 134.4 ) $ 97.1 $ 138.1 $ 325.9

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions) June 30,

(in millions) September 30,

2022 December 31,

1 unchanged sentence

Cash and cash equivalents $ 438.6 $ 478.6

Accounts receivable, net of allowance for doubtful accounts of $ 10.0 as of June 30, 2022 and $ 10.4 as of December 31, 2021

Accounts receivable, net of allowance for doubtful accounts of $ 11.2 as of September 30, 2022 and $ 10.4 as of December 31, 2021

Current insurance receivable - asbestos — 13.7

21 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

2022 December 31,

33 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2022 2021

1 unchanged sentence

Net income attributable to common shareholders $ 303.9 $ 363.3

Loss on divestiture of asbestos-related assets and liabilities 148.9 —

Gain on sale of business ( 232.5 ) —

8 unchanged sentences

Asbestos related payments, net of insurance recoveries ( 29.3 ) ( 29.6 )

Divestiture of asbestos-related assets and liabilities ( 550.0 ) —

Other 23.4 0.5

Total provided by operating activities 49.0 206.7

Total (used for) provided by operating activities ( 378.0 ) 327.0

Investing activities:

10 unchanged sentences

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

Net borrowings from issuance of commercial paper with maturities of 90 days or less 119.4 15.0

Proceeds from term loan 399.4 —

Repayment of term loan — ( 348.1 )

Total used for financing activities ( 135.6 ) ( 405.2 )

Total provided by (used for) financing activities 119.3 ( 440.8 )

Effect of exchange rates on cash and cash equivalents ( 62.7 ) ( 13.0 )

Increase (decrease) in cash and cash equivalents 172.0 ( 164.3 )

Decrease in cash and cash equivalents ( 40.0 ) ( 100.2 )

Cash and cash equivalents at beginning of period 478.6 551.0

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2022 2021

16 unchanged sentences

These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021.

As used in these notes, the terms "we," "us," "our," "Crane" and the "Company" mean Crane Holdings, Co.

and our subsidiaries unless the context specifically states or implies otherwise.

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.

6 unchanged sentences

Following the Reorganization Merger, on May 16, 2022, Crane Co.

(which, as a result of the Reorganization Merger, became a wholly-owned subsidiary of Crane Holdings) converted from a Delaware corporation into a Delaware limited liability company named “Crane LLC” (such conversion, together with the Reorganization Merger, the “Reorganization”).

Following the Reorganization, substantially all of the assets of Crane LLC were distributed, assigned, transferred, conveyed and delivered to, and related liabilities of Crane LLC were assumed by, Crane Holdings.

converted from a Delaware corporation into a Delaware limited liability company named “Crane LLC” (such conversion, together with the Reorganization Merger, the “Reorganization”).

Following the Reorganization, substantially all of the assets of Crane LLC were distributed, assigned, transferred, conveyed and delivered to, and certain non-asbestos related liabilities of Crane LLC were assumed by, Crane Holdings.

On May 17, 2022, Crane LLC converted from a Delaware limited liability company to a Delaware corporation named “Crane Co.” Subsequently, on May 26, 2022, Crane Co.

filed a Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary of State of the State of Delaware, which became effective upon filing, pursuant to which the Company officially changed its name from “Crane Co.” to “Redco Corporation”.

officially changed its name from “Crane Co.” to “Redco Corporation”.

The “Crane Co.” name has been reserved for future use by Crane Holdings.

Sale of business

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 closed on May 31, 2022.

Divestiture of asbestos-related assets and liabilities

On August 12, 2022, Crane Holdings, Co., Crane Company, a wholly-owned subsidiary of Crane Holdings, Co., and Redco Corporation (“Redco”), then a wholly-owned subsidiary of Crane Company that held liabilities including asbestos liabilities and related insurance assets, entered into a Stock Purchase Agreement (the “Redco Purchase Agreement”) with Spruce Lake Liability Management Holdco LLC (“Redco Buyer”), an unrelated third party and long-term liability management company specializing in the acquisition and management of legacy corporate liabilities whereby Crane Company transferred to Redco Buyer all of the issued and outstanding shares of Redco (the “Redco Sale”).

In connection with the Redco Sale, Crane Holdings, Co., on behalf of Crane Company, contributed approximately $ 550 million in cash to Redco, which was funded by a combination of short-term borrowings and cash on hand.

As a result of the Redco Sale, all asbestos obligations and liabilities, related insurance assets and associated deferred tax assets have been removed from Crane Holdings, Co.’s condensed consolidated balance sheets effective August 12, 2022.

A loss on the divestiture of asbestos-related assets and liabilities of $ 162.4 million was recognized in the condensed consolidated statements of operations for the nine months ended September 30, 2022.

Sale of Crane Supply

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

Subsequent to net working capital and other closing adjustments, the sale closed on May 31, 2022 for CAD 402 million.

In August 2022, the Company received CAD 5 million related to a final working capital adjustment.

The Company recognized a total gain on sale of $ 232.5 million.

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

On March 30, 2022, the Company announced that its Board of Directors unanimously approved a plan to pursue a separation into two independent, publicly-traded companies (the “Separation”).

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Termination of Agreement to Sell Engineered Materials

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.

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.

On May 26, 2022, Verzatec terminated the sale agreement and paid $ 7.5 million to the Company in termination fees.

As such, the results of the Engineered Materials segment are presented as continuing operations as of June 30, 2022.

In the second quarter of 2021, the assets and liabilities of the segment were classified as held for sale.

On May 26, 2022, Verzatec terminated the sale agreement and paid $ 7.5 million to the Company in termination fees, which is presented within Miscellaneous income, net on the Condensed Statements of Operations.

As such, as of June 30, 2022 the Engineered Materials segment is no longer classified as assets held for sale and is presented herein as continuing operations for all periods presented.

Recent Accounting Pronouncements - Adopted

5 unchanged sentences

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Segment Results

11 unchanged sentences

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

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.

4 unchanged sentences

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

3 unchanged sentences

Financial information by reportable segment is set forth below.

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions) 2022 2021 2022 2021

4 unchanged sentences

Total $ 815.1 $ 893.8 $ 2,550.8 $ 2,582.8

Operating profit:

Operating profit (loss):

Aerospace & Electronics $ 28.2 $ 32.5 $ 84.4 $ 89.3

8 unchanged sentences

Miscellaneous income, net 4.5 3.6 22.8 17.2

Income before income taxes $ 357.1 $ 143.3 $ 496.8 $ 280.5

(in millions) June 30, 2022 December 31, 2021

(Loss) income before income taxes $ ( 35.0 ) $ 137.6 $ 461.8 $ 418.1

(in millions) September 30, 2022 December 31, 2021

Aerospace & Electronics $ 642.0 $ 604.7

4 unchanged sentences

Total $ 4,132.4 $ 4,486.6

(in millions) June 30, 2022 December 31, 2021

(in millions) September 30, 2022 December 31, 2021

Aerospace & Electronics $ 202.2 $ 202.5

7 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions) 2022 2021 2022 2021

22 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 June 30, 2022, total backlog was $ 1,387.0 million.

We expect to recognize approximately 69 % of our remaining performance obligations as revenue in 2022, an additional 29 % in 2023 and the balance thereafter.

As of September 30, 2022, total backlog was $ 1,463.6 million.

We expect to recognize approximately 40 % of our remaining performance obligations as revenue in the fourth quarter of 2022, an additional 53 % in 2023 and the balance thereafter.

Contract Assets and Contract Liabilities

7 unchanged sentences

Net contract assets and contract liabilities consisted of the following:

(in millions) June 30, 2022 December 31, 2021

(in millions) September 30, 2022 December 31, 2021

Contract assets $ 85.9 $ 73.0

1 unchanged sentence

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We recognized revenue of $ 30.3 million and $ 62.4 million during the three-and six-month periods ended June 30, 2022, respectively, related to contract liabilities as of December 31, 2021.

We recognized revenue of $ 19.4 million and $ 74.4 million during the three-and nine-month periods ended September 30, 2022, respectively, related to contract liabilities as of December 31, 2021.

Note 4 - Earnings Per Share

3 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Potentially dilutive common shares are excluded from the computations of diluted earnings per share if their effect would be anti-dilutive.

For the three months ended September 30, 2022, the Company had a net loss attributable to common shareholders which causes all potentially dilutive securities to be anti-dilutive and are therefore not included in the calculation of earnings per share.

Three Months Ended Nine Months Ended

September 30, September 30,

(in millions, except per share data) 2022 2021 2022 2021

Net income attributable to common shareholders $ 258.2 $ 138.3 $ 363.2 $ 246.7

Net (loss) income attributable to common shareholders $ ( 59.3 ) $ 116.6 $ 303.9 $ 363.3

Average basic shares outstanding 56.1 58.7 56.5 58.5

1 unchanged sentence

Average diluted shares outstanding 56.1 59.5 57.3 59.2

Earnings per basic share $ 4.60 $ 2.36 $ 6.41 $ 4.22

Earnings per diluted share $ 4.54 $ 2.33 $ 6.32 $ 4.17

The computation of diluted earnings per share excludes the effect of the potentially anti-dilutive securities which was 0.4 million and 1.3 million for the three months ended June 30, 2022, and 2021, respectively and 0.3 million and 1.5 million for the six months ending June 30, 2022 and 2021 , respectively.

(Loss) earnings per basic share $ ( 1.06 ) $ 1.99 $ 5.38 $ 6.21

(Loss) earnings per diluted share $ ( 1.06 ) $ 1.96 $ 5.30 $ 6.14

The computation of diluted earnings per share excludes the effect of the potentially anti-dilutive securities which was 1.2 million and 1.0 million for the three months ended September 30, 2022, and 2021, respectively, and 0.4 million and 1.4 million for the nine months ending September 30, 2022 and 2021, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 5 - Changes in Equity and Accumulated Other Comprehensive Loss

A summary of changes in equity for the year-to-date interim periods ended June 30, 2022 and 2021 is provided below:

A summary of changes in equity for the year-to-date interim periods ended September 30, 2022 and 2021 is provided below:

(in millions, except share data) Common

32 unchanged sentences

BALANCE JUNE 30, 2022 72.4 $ 369.3 $ 2,837.7 $ ( 530.9 ) $ ( 886.7 ) $ 1,861.8 $ 2.8 $ 1,864.6

Net loss — — ( 59.3 ) — — ( 59.3 ) — ( 59.3 )

Cash dividends ($ 0.47 per share)

— — ( 26.4 ) — — ( 26.4 ) — ( 26.4 )

Exercise of stock options, net of shares reacquired of 81,642 shares

— — — — 1.5 1.5 — 1.5

Impact from settlement of share-based awards, net of shares acquired — ( 7.0 ) — — 6.9 ( 0.1 ) — ( 0.1 )

Stock-based compensation expense — 5.9 — — — 5.9 — 5.9

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — 2.3 — 2.3 — 2.3

Currency translation adjustment — — — ( 77.4 ) — ( 77.4 ) ( 0.3 ) ( 77.7 )

BALANCE SEPTEMBER 30, 2022 72.4 $ 368.2 $ 2,752.0 $ ( 606.0 ) $ ( 878.3 ) $ 1,708.3 $ 2.5 $ 1,710.8

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share data) Common

24 unchanged sentences

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Net income — — 116.6 — — 116.6 — 116.6

Cash dividends ($ 0.43 per share)

— — ( 25.3 ) — — ( 25.3 ) — ( 25.3 )

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

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

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

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

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

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) 9.1 ( 174.9 ) ( 165.8 )

Balance as of June 30, 2022 $ ( 295.1 ) $ ( 235.8 ) $ ( 530.9 )

Net of tax benefit of $ 120.1 million and $ 117.9 million as of June 30, 2022 and December 31, 2021, respectively.

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three- and six-month periods ended June 30, 2022, and 2021.

Balance as of September 30, 2022 $ ( 292.8 ) $ ( 313.2 ) $ ( 606.0 )

Net of tax benefit of $ 120.8 million and $ 117.9 million as of September 30, 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 and nine month periods ended September 30, 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 June 30, Six Months Ended June 30,

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

(in millions) 2022 2021 2022 2021

9 unchanged sentences

Note 6 - Defined Benefit and Postretirement Benefits

For all plans, the components of net periodic benefit for the three months ended June 30, 2022 and 2021 are as follows:

For all plans, the components of net periodic benefit for the three months ended September 30, 2022, and 2021 are as follows:

Pension Postretirement

3 unchanged sentences

Expected return on plan assets ( 15.7 ) ( 14.8 ) — —

Recognized curtailment gain — — — —

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

1 unchanged sentence

Net periodic benefit $ ( 3.8 ) $ ( 1.6 ) $ ( 0.1 ) $ —

For all plans, the components of net periodic benefit for the six months ended June 30, 2022, and 2021 are as follows:

For all plans, the components of net periodic benefit for the nine months ended September 30, 2022, and 2021 are as follows:

Pension Postretirement

12 unchanged sentences

Expected contributions in 2022 $ 20.1 $ 2.6

Amounts contributed during the six months ended June 30, 2022 $ 8.6 $ —

Amounts contributed during the nine months ended September 30, 2022 $ 19.3 $ —

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Effective Tax Rates

Our quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented.

Our quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the periods presented.

Our effective tax rates are as follows:

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

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

2022 2021 2022 2021

Effective Tax Rate ( 69.4 )% 15.3 % 34.2 % 13.1 %

Our effective tax rates for the three and six months ended June 30, 2022, are higher than the prior year’s comparable periods primarily due to the reversal of a deferred tax asset established in a prior period that relates to the sale of a subsidiary, partially offset by earnings in jurisdictions with statutory tax rates lower than the United States.

Our effective tax rate for the three and six months ended June 30, 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 United States., 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.

During the third quarter of 2022, the Company divested its asbestos-related assets and liabilities and recorded a pre-tax loss of $ 162.4 million.

Based on existing U.S.

income tax guidance, the Company did not record an income tax benefit related to this transaction.

However, the Company released a valuation allowance previously recorded against certain state deferred tax assets based on available evidence indicating it to be more likely than not the Company will realize a state income tax benefit for certain non-asbestos related future tax deductions.

Specifically, the Company considered the impact of the lack of future asbestos settlement and defense payments on state taxable income, projected future state taxable income exclusive of reversing deferred taxes, the Company’s U.S.

business resulting net deferred tax liability position after the asbestos-related transaction, and the lack of separate state income tax filings.

The combination of a loss on the asbestos-related transaction and the lack of a related tax benefit resulted in the Company’s negative tax rate for the three months ended September 30, 2022.

This negative tax rate represents a tax expense recorded against a book loss.

In this context, the Company’s tax rate for the three months ended September 30, 2022 is higher than the prior year’s comparable period primarily due to the absence of a tax benefit recorded against the asbestos-related transaction as well as higher non-U.S.

taxes, partially offset by the aforementioned release of a valuation allowance and the statutory U.S.

deduction related to our non-U.S.

subsidiaries’ income.

Our effective tax rate for the nine months ended September 30, 2022 is higher than the prior year’s comparable periods primarily due to the absence of a tax benefit recorded against the asbestos-related transaction and the reversal of a deferred tax asset established in a prior period that relates to the sale of a subsidiary, partially offset by the aforementioned release of a valuation allowance and statutory U.S.

tax credits and a deduction related to our non-U.S.

subsidiaries’ income.

Our effective tax rates for the three and nine months ended September 30, 2022 are higher than the statutory U.S.

federal tax rate of 21% primarily due to the absence of a tax benefit recorded against the asbestos-related transaction, earnings in jurisdictions with statutory tax rates higher than the United States, expenses that are statutorily non-deductible for income tax purposes and U.S.

state taxes, partially offset by the aforementioned release of valuation allowance, 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 June 30, 2022, our gross unrecognized tax benefits, excluding interest and penalties, decreased by $ 0.3 million, primarily as a result of decreases due to expiration of statutes of limitations in the current year and tax positions taken in the current period, partially offset by increases in tax positions taken in the current year.

During the six months ended June 30, 2022, our gross unrecognized tax benefits, excluding interest and penalties, increased by $ 0.2 million primarily as a result of tax positions taken in the current year, partially offset by reductions from expirations of statutes of limitations and tax positions taken during the prior period.

During the three and six months ended June 30, 2022, the total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate (decreased)/increased by $( 0.3 ) million and $ 0.3 million respectively.

During the three and nine months ended September 30, 2022, our gross unrecognized tax benefits, excluding interest and penalties, increased by $ 0.1 million and $ 0.2 million, respectively, primarily due to increases in tax positions taken in the current periods, partially offset by tax positions taken during prior period and reductions from expirations of statues of limitations.

During the three and nine months ended September 30, 2022, the total amount of unrecognized tax benefits that, if recognized, would cause our effective tax rate to increase by $ 0.3 million and $ 0.6 million, respectively.

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

During the three and six months ended June 30, 2022, we recognized $( 0.1 ) million and $ 0.2 million, respectively, of interest and penalty (income) / expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations.

As of June 30, 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 $ 5.1 million and $ 4.9 million, respectively.

During the three and nine months ended September 30, 2022, we recognized $ 0.3 million and $ 0.5 million, respectively, of interest and penalty expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations.

As of September 30, 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 $ 5.4 million and $ 4.9 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by $ 6.8 million due to expiration of statutes of limitations and settlements with tax authorities.

9 unchanged sentences

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

As of June 30, 2022, we had seven reporting units.

As of September 30, 2022, we had six reporting units.

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

8 unchanged sentences

Disposal on sale of business — ( 22.3 ) — — ( 22.3 )

Balance at June 30, 2022 $ 202.3 $ 315.1 $ 835.0 $ 171.3 $ 1,523.7

As of June 30, 2022, we had $ 435.8 million of net intangible assets, of which $ 69.5 million were intangibles with indefinite useful lives.

Balance as of September 30, 2022 $ 202.2 $ 305.3 $ 818.4 $ 171.2 $ 1,497.1

As of September 30, 2022, we had $ 419.9 million of net intangible assets, of which $ 68.5 million were intangibles with indefinite useful lives.

As of December 31, 2021, we had $ 467.1 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) Six Months Ended

June 30, 2022 Year Ended December 31, 2021

(in millions) Nine Months Ended

September 30, 2022 Year Ended December 31, 2021

Balance at beginning of period, net of accumulated amortization $ 467.1 $ 520.3

4 unchanged sentences

A summary of intangible assets follows:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(in millions) Weighted Average

15 unchanged sentences

Accrued liabilities consist of:

(in millions) June 30,

(in millions) September 30,

2022 December 31,

7 unchanged sentences

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

The following table summarizes warranty activity recorded during the three and six months ended June 30, 2022, and 2021.

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

The following table summarizes warranty activity recorded during the three and nine months ended September 30, 2022, and 2021.

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

(in millions) 2022 2021 2022 2021

7 unchanged sentences

Asbestos Liability

Information Regarding Claims and Costs in the Tort System

As of June 30, 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 Six Months Ended Year Ended

June 30, June 30, December 31,

2022 2021 2022 2021 2021

Beginning claims 30,312 29,407 29,958 29,138 29,138

New claims 646 772 1,303 1,505 2,975

Settlements ( 347 ) ( 176 ) ( 548 ) ( 336 ) ( 980 )

Dismissals ( 512 ) ( 215 ) ( 614 ) ( 519 ) ( 1,175 )

Ending claims 30,099 29,788 30,099 29,788 29,958

Of the 30,099 pending claims as of June 30, 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.

We further have pursued appeals of certain adverse jury verdicts that have resulted in reversals in favor of the defense.

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

The gross settlement and defense costs incurred (before insurance recoveries and tax effects) by us for the six months ended June 30, 2022 and 2021 totaled $ 28.5 million and $ 21.3 million, respectively.

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

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

Our total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the six months ended June 30, 2022 and 2021 totaled $ 23.5 million and $ 20.2 million, respectively.

Detailed below are the comparable amounts for the periods indicated.

Three Months Ended Six Months Ended Year Ended

June 30, June 30, December 31,

On August 12, 2022, Crane Holdings, Co., Crane Company, a wholly-owned subsidiary of Crane Holdings, Co., and Redco, then a wholly-owned subsidiary of Crane Company that held liabilities including asbestos liabilities and related insurance assets, entered into the Redco Purchase Agreement with Redco Buyer, an unrelated third party and long-term liability management company specializing in the acquisition and management of legacy corporate liabilities, whereby Crane Company transferred to Redco Buyer all of the issued and outstanding shares of Redco.

Concurrent with the completion of the Redco Sale, Redco Buyer contributed $ 83 million in cash to Redco.

Pursuant to the terms of the Redco Purchase Agreement, Crane Company and Redco Buyer will each indemnify the other for breaches of representations and warranties, breaches of covenants and obligations and certain liabilities, subject to the terms of the Redco Purchase Agreement.

While indemnification by each of Crane Company and Redco Buyer to the other party for breach of representations and warranties is capped at $ 83 million, in each case, based on the terms and subject to certain limitations as set forth in the Redco Purchase Agreement, liability of each of Crane Company and Redco Buyer for breaches of covenants and obligations and for indemnified liabilities is generally uncapped.

Such covenants and obligations include that Redco has agreed to indemnify Crane Company and its affiliates for all claims arising out of asbestos liabilities, and Crane Company has agreed to indemnify Redco and its affiliates for all other historical liabilities of Redco, which include certain potential environmental liabilities.

Crane Holdings, Co.

has guaranteed the full payment and performance of Crane Company’s indemnification obligations under the Redco Purchase Agreement.

Upon consummation of the previously announced separation transaction pursuant to which, among other things, all outstanding shares of Crane Company will be distributed to Crane Holdings, Co.’s stockholders, Crane Holdings, Co.

will be released from its guarantee of Crane Company’s indemnification obligations under the Redco Purchase Agreement.

As a result of the Redco Sale, all asbestos obligations and liabilities, related insurance assets and associated deferred tax assets of Redco have been removed from Crane Holdings, Co.’s consolidated balance sheets effective August 12, 2022 and the Company no longer has any obligation with respect to pending and future asbestos claims.

As such, Redco has been deconsolidated from our 2022 financial results, as we no longer maintain control of the entity.

Therefore, for the period ending September 30, 2022, all asbestos obligations and liabilities, related insurance assets and associated deferred tax assets of Redco are no longer reported on the condensed consolidated balance sheet.

The Company recorded a loss on the divestiture of asbestos-related assets and liabilities of $ 162.4 million in the third quarter of 2022, including transaction expenses of $ 13.5 million.

The following is a summary of the loss on divestiture of asbestos-related assets and liabilities:

(in millions)

Cash $ ( 550.0 )

Current insurance receivable ( 13.8 )

Long-term insurance receivable ( 49.4 )

Deferred tax asset ( 107.9 )

Current asbestos liability 62.5

Long-term asbestos liability 509.7

Loss on divestiture of asbestos-related assets and liabilities, before transaction costs ( 148.9 )

Transaction costs ( 13.5 )

Loss on divestiture of asbestos-related assets and liabilities $ ( 162.4 )

The gross settlement and defense costs incurred (before insurance recoveries and tax effects) by us as of August 11, 2022 and reflected in the nine-month period ended September 30, 2021 totaled $ 35.8 million and $ 35.7 million, respectively.

Our total pre-tax payments for settlement and defense costs, net of funds received from insurers, as of August 11, 2022 and reflected in

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the nine-month period ended September 30, 2021 totaled $ 29.3 million and $ 29.6 million, respectively.

Detailed below are the comparable amounts for the periods indicated.

Quarter-to-Date Period Ended Year-to-Date Period Ended

(in millions) August 11, 2022 September 30, 2021 August 11, 2022 September 30, 2021

Settlement / indemnity costs incurred (1)

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(1) Before insurance recoveries and tax effects.

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

Cumulatively through June 30, 2022, we have resolved (by settlement or dismissal) approximately 145,000 claims.

The related settlement cost incurred by us and our insurance carriers is approximately $ 742 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.

Because claims are sometimes dismissed in large

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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 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.

The actuarial consultants review information provided by us concerning claims filed, settled and dismissed, amounts paid in settlements and relevant claim information such as the nature of the asbestos-related disease asserted by the claimant, the jurisdiction where filed and the time lag from filing to disposition of the claim.

The methodology used by the actuarial consultants to project future asbestos costs is based on our recent historical experience for claims filed, settled and dismissed during a base reference period.

Our experience is then compared to estimates of the number of individuals likely to develop asbestos-related diseases determined based on widely used previously conducted epidemiological studies augmented with current data inputs.

Those studies were undertaken in connection with national analyses of the population of workers believed to have been exposed to asbestos.

Using that information, the actuarial consultants estimate the number of future claims that would be filed against us and estimates the aggregate settlement or indemnity costs that would be incurred to resolve both pending and future claims based upon the average settlement costs by disease during the reference period.

This methodology has been accepted by numerous courts.

After discussions with us, the actuarial consultants augment our liability estimate for the costs of defending asbestos claims in the tort system using a forecast from us which is based upon discussions with our defense counsel.

Based on this information, the actuarial consultants compile an estimate of our asbestos liability for pending and future claims using a range of reference periods based on claim experience and claims expected to be filed through the indicated forecast period.

The most significant factors affecting the liability estimate are (1) the number of new mesothelioma claims filed against us, (2) the average settlement costs for mesothelioma claims, (3) the percentage of mesothelioma claims dismissed against us and (4) the aggregate defense costs incurred by us.

These factors are interdependent, and no one factor predominates in determining the liability estimate.

In our view, the forecast period used to provide the best estimate for asbestos claims and related liabilities and costs is a judgment based upon a number of trend factors, including the number and type of claims being filed each year;

the jurisdictions where such claims are filed, and the effect of any legislation or judicial orders in such jurisdictions restricting the types of claims that can proceed to trial on the merits;

and the likelihood of any comprehensive asbestos legislation at the federal level.

In addition, the dynamics of asbestos litigation in the tort system have been significantly affected by the substantial number of companies that have filed for bankruptcy protection, thereby staying any asbestos claims against them until the conclusion of such proceedings, and the establishment of a number of post-bankruptcy trusts for asbestos claimants, which have been estimated to provide $ 36 billion for payments to current and future claimants.

These trend factors have both positive and negative effects on the dynamics of asbestos litigation in the tort system and the related best estimate of our asbestos liability, and these effects do not move in a linear fashion but rather change over multi-year periods.

Accordingly, management continues to monitor these trend factors over time and periodically assesses whether an alternative forecast period is appropriate.

Each quarter, the actuarial consultants compile an update based upon our experience in claims filed, settled and dismissed as well as average settlement costs by disease category (mesothelioma, lung cancer, other cancer, and non-malignant conditions including asbestosis).

In addition to this claims experience, we also consider 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.

As part of this process, we also consider trends in the tort system such as those enumerated above.

Management considers all these factors in conjunction with the liability estimate of the actuarial consultants and determines whether a change in the estimate is warranted.

Liability Estimate.

In June 2016, the New York State Court of Appeals issued its opinion in Dummitt v.

Crane Co ., affirming a 2012 verdict for $ 4.9 million against us.

In that opinion, the court ruled that in certain circumstances we are legally responsible for asbestos-containing materials made and sold by third parties that others attached post-sale to our equipment.

This decision provided clarity regarding the nature of claims that may proceed to trial in New York and greater predictability regarding future claim activity.

We also reflected the impact of the Dummitt decision on our expected settlement values.

Accordingly, on December 31, 2016, we updated and extended our asbestos liability estimate through 2059, the generally accepted end point.

Following our experience in the tort system post the Dummitt decision, we entered into several, increasingly similar, group settlements with various plaintiff firms and we expect this new trend of these types of group settlements to continue.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accordingly, effective as of December 31, 2019, we updated our estimate of the asbestos liability, including revised costs of settlement or indemnity payments and defense costs relating to currently pending claims and future claims projected to be filed against us through the same expected end point of 2059.

Our estimate of the asbestos liability for pending and future claims through 2059 is based on the projected future asbestos costs resulting from our experience using a range of reference periods for claims filed, settled and dismissed.

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

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 $ 580 million and $ 612 million as of June 30, 2022 and December 31, 2021, respectively.

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

however, it is expected such cash payments will continue for a number of years past 2059, due to the significant proportion of future claims included in the estimated asbestos liability and the lag time between the date a claim is filed and when it is resolved.

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

The current portion of the total estimated liability at June 30, 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 June 30, 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 June 30, 2022.

Insurance Coverage and Receivables.

Prior to 2005, a significant portion of our settlement and defense costs were paid by our primary insurers.

With the exhaustion of that primary coverage, we began negotiations with our excess insurers to reimburse us for a portion of our settlement and/or defense costs as incurred.

To date, we have entered into agreements providing for such reimbursements, known as “coverage-in-place,” with eleven of our excess insurer groups.

Under such coverage-in-place agreements, an insurer’s policies remain in force and the insurer undertakes to provide coverage for our present and future asbestos claims on specified terms and conditions that address, among other things, the share of asbestos claims costs to be paid by the insurer, payment terms, claims handling procedures and the expiration of the insurer’s obligations.

Similarly, under a variant of coverage-in-place, we have entered into an agreement with a group of insurers confirming the aggregate amount of available coverage under the subject policies and setting forth a schedule for future reimbursement payments to us based on aggregate indemnity and defense payments made.

In addition, with ten of our excess insurer groups, we entered into agreements settling all asbestos and other coverage obligations for an agreed sum and received a total of $ 82.5 million in aggregate as a result of those settlements.

Reimbursements from insurers for past and ongoing settlement and defense costs allocable to their policies have been made in accordance with these coverage-in-place and other agreements.

All these agreements include provisions for mutual releases, indemnification of the insurer and, for coverage-in-place, claims handling procedures.

With the agreements referenced above, we have concluded settlements with all but two of our solvent excess insurers with policies expected to respond to the aggregate costs included in the liability estimate.

The first such insurer, which issued a single applicable policy, has been paying for many years the shares of defense and indemnity costs we have allocated to it, subject to a reservation of rights.

The second insurer issued a single applicable policy in a layer of coverage that we do not anticipate reaching until many years from now, and, prior to the policy being reached, we anticipate opening a dialogue with that insurer about the execution of a suitable agreement.

There are no pending legal proceedings between us and any insurer contesting our asbestos claims under our insurance policies.

In conjunction with developing the aggregate updated liability estimate referenced above, we also developed an updated estimate of probable insurance recoveries for our asbestos liabilities.

In developing this estimate, we considered our coverage-in-place and other settlement agreements described above, as well as several additional factors.

These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits.

In addition, the timing and amount of reimbursements will vary because our insurance coverage for asbestos claims involves multiple insurers, with different policy terms and certain gaps in coverage.

In addition to consulting with legal counsel on these insurance matters, we retained insurance consultants to assist management in the estimation of probable insurance recoveries based upon the aggregate liability estimate described above and assuming the continued viability of all solvent insurance carriers.

Based upon the analysis of policy terms and other factors noted above by our legal counsel, and incorporating risk mitigation judgments by us

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

where policy terms or other factors were not certain, our insurance consultants compiled a model indicating how our historical insurance policies would respond to varying levels of asbestos settlement and defense costs and the allocation of such costs between such insurers and us.

Using the estimated liability as of December 31, 2019 (for claims filed or expected to be filed through 2059), the insurance consultant’s model forecasted that approximately 14 % of the liability would be reimbursed by our insurers.

While there are overall limits on the aggregate amount of insurance available to us with respect to asbestos claims, certain limits were not reached by the total estimated liability currently recorded by us, and such overall limits did not influence our determination of the asset amount to record.

We allocate to ourselves the amount of the asbestos liability (for claims filed or expected to be filed through 2059) that is in excess of available insurance coverage allocated to such years.

An asset of $ 98 million was recorded as of December 31, 2019 representing the probable insurance reimbursement for claims expected through 2059.

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

The asset was $ 65 million and $ 74 million as of June 30, 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.

The reviews encompass consideration of the performance of the insurers under coverage-in-place agreements and the effect of any additional lump-sum payments under other insurer agreements.

Actual insurance reimbursements vary from period to period, and will decline over time, for the reasons cited above.

Uncertainties.

Estimation of our ultimate exposure for asbestos-related claims is subject to significant uncertainties, as there are multiple variables that can affect the timing, severity and quantity of claims and the manner of their resolution.

We caution that our estimated liability is based on assumptions with respect to future claims, settlement and defense costs based on past experience that may not prove reliable as predictors;

the assumptions are interdependent and no single factor predominates in determining the liability estimate.

A significant upward or downward trend in the number of claims filed, depending on the nature of the alleged injury, the jurisdiction where filed and the quality of the product identification, or a significant upward or downward trend in the costs of defending claims, could change the estimated liability, as would substantial adverse verdicts at trial that withstand appeal.

A legislative solution, structured settlement transaction, or significant change in relevant case law could also change the estimated liability.

The same factors that affect developing estimates of probable settlement and defense costs for asbestos-related liabilities also affect estimates of the probable insurance reimbursements, as do a number of additional factors.

In addition, due to the uncertainties inherent in litigation matters, no assurances can be given regarding the outcome of any litigation, if necessary, to enforce our rights under our insurance policies or settlement agreements.

Many uncertainties exist surrounding asbestos litigation, and we will continue to evaluate our estimated asbestos-related liability and corresponding estimated insurance reimbursement as well as the underlying assumptions and process used to derive these amounts.

These uncertainties may result in our incurring future charges or increases to income to adjust the carrying value of recorded liabilities and assets, particularly if the number of claims and settlement and defense costs change significantly, or if there are significant developments in the trend of case law or court procedures, or if legislation or another alternative solution is implemented.

Although the resolution of these claims will likely take many years, the effect on the results of operations, financial position, and cash flow in any given period from a revision to these estimates could be material.

Other Contingencies

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

The environmental remediation liability as of June 30, 2022 is substantially related to the former manufacturing site in Goodyear, Arizona (the “Goodyear Site”) discussed below.

The environmental remediation liability as of September 30, 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.

We will continue to be responsible for all remediation costs associated with the Goodyear Site.

As a preliminary matter, we note that on August 12, 2022, Crane Holdings, Co., Crane Company, a wholly-owned subsidiary of Crane Holdings, Co., and Redco Corporation (f/k/a Crane Co., (“Redco”) a wholly-owned subsidiary of Crane Company that holds liabilities including asbestos liabilities and related insurance assets, entered into the Redco Purchase Agreement with Redco Buyer, an unrelated third party and a long-term liability management company specializing in the acquisition and management of legacy corporate liabilities, whereby Crane Company transferred to Redco Buyer all of the issued and outstanding shares of Redco (the “Redco Sale”).

Such covenants and obligations include that Crane Company has agreed to indemnify Redco and its affiliates for all other historical liabilities of Redco, which include certain potential environmental liabilities.

Crane Holdings, Co.

has guaranteed the full payment and performance of Crane Company’s indemnification obligations under the Redco Purchase Agreement.

will be released from its guarantee of Crane Company’s indemnification obligations under the Redco Purchase Agreement.

Prior to the effective date of the Redco Sale, the U.S.

Department of Justice agreed that Crane Holdings, Co.

and ultimately Crane Company will be primarily liable for the Goodyear Site.

The New Jersey Department of Environmental Protection agreed to transfer the liability of the Roseland Site to Crane Holdings, Co., and a further transfer of this environmental liability to Crane Company upon effectiveness of the separation transaction is expected.

The potential liability for the Crab Orchard Site referenced below remains a direct obligation of Redco.

As noted above, however, Crane Company, and Crane Holdings, Co.

(as guarantor until the time of the separation transaction), have agreed to indemnify Redco Buyer against the Goodyear, Roseland, and Crab Orchard environmental liabilities.

Thus, references below to “we”, and “us” refer to Crane Holdings, Co.

in its capacity as the primarily responsible party for the Goodyear and Roseland Sites, and as indemnitor to the Redco Buyer on the Crab Orchard Site.

Goodyear Site

The Goodyear Site was operated by Unidynamics/Phoenix, Inc.

(“UPI”), which became an indirect subsidiary in 1985 when we acquired UPI’s parent company, UniDynamics Corporation.

(“UPI”), which became an indirect subsidiary in 1985 when Crane Co.

(n/k/a Redco) acquired UPI’s parent company, UniDynamics Corporation.

UPI is now an indirect subsidiary of Crane Holdings, Co.

UPI manufactured explosive and pyrotechnic compounds, including components for critical military programs, for the U.S.

government at the Goodyear Site from 1962 to 1993, under

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

contracts with the Department of Defense and other government agencies and certain of their prime contractors.

Government at the Goodyear Site from 1962 to 1993, under contracts with the U.S.

Department of Defense and other government agencies and certain of their prime contractors.

In 1990, the U.S.

Environmental Protection Agency (“EPA”) issued administrative orders requiring UPI to design and carry out certain remedial actions, which UPI has done.

Environmental Protection Agency (“EPA”)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

issued administrative orders requiring UPI to design and conduct certain remedial actions, which UPI has done.

Groundwater extraction and treatment systems have been in operation at the Goodyear Site since 1994.

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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 $ 27.1 million and $ 32.3 million as of June 30, 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 June 30, 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.

The total estimated gross liability was $ 26.0 million and $ 32.3 million as of September 30, 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 September 30, 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 June 30, 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.

As of September 30, 2022 and December 31, 2021, we recorded a receivable of $ 5.7 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.

2 unchanged sentences

Other Environmental Matters

Roseland, NJ Site

The Roseland Site was operated by Resistoflex Corporation (“Resistoflex”), which became an indirect subsidiary of ours in 1985 when we acquired Resistoflex’s parent company, UniDynamics Corporation.

Resistoflex manufactured specialty lined pipe and fittings at the site from the 1950s until it was closed in the mid-1980s.

We undertook an extensive soil remediation effort at the Roseland Site following our closure and had been monitoring the Site’s condition in the years that followed.

In response to changes in remediation standards, in 2014 we began to conduct further site characterization and delineation studies at the Site.

We are in the late stages of our remediation activities at the Site, which include a comprehensive delineation of contaminants of concern in soil, groundwater, surface water, sediment, and indoor air testing, all in accordance with the New Jersey Department of Environmental Protection guidelines and directives.

Marion, IL Site

We have been identified as a potentially responsible party (“PRP”) with respect to environmental contamination at the Crab Orchard National Wildlife Refuge Superfund Site (the “Crab Orchard Site”).

(n/k/a Redco) has been identified as a potentially responsible party (“PRP”) with respect to environmental contamination at the Crab Orchard National Wildlife Refuge Superfund Site (the “Crab Orchard Site”).

The Crab Orchard Site is located near Marion, Illinois, and consists of approximately 55,000 acres.

1 unchanged sentence

In 1947, about half of the Crab Orchard Site was leased to a variety of industrial tenants whose activities (which continue to this day) included manufacturing ordnance and explosives.

A predecessor of us formerly leased portions of the Crab Orchard Site and conducted manufacturing operations at the Crab Orchard Site from 1952 until 1964.

Unidynamics Corporation of us formerly leased portions of the Crab Orchard Site and conducted manufacturing operations at the Crab Orchard Site from 1952 until 1964.

General Dynamics Ordnance and Tactical Systems, Inc.

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It is unclear when the final feasibility study will be completed, or when a final Record of Decision may be issued.

GD-OTS has asked us to participate in a voluntary, multi-party mediation exercise with respect to response costs it has incurred or will incur with respect to the AUS-OU.

We and other PRPs executed a non-binding mediation agreement on March 16, 2015, and the U.S.

government executed the mediation agreement on August 6, 2015.

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 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 an immaterial 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.

We understand that GD-OTS has also reached agreements-in-principle with the U.S.

As noted above, we have agreed to indemnify Redco Buyer against the Crab Orchard environmental liabilities, and accordingly we act as Redco’s agent with respect to such liabilities.

GD-OTS asked Crane Co.

(n/k/a Redco) to participate in a voluntary, multi-party mediation exercise with respect to response costs that GD-OTS has incurred or will incur with respect to the AUS-OU, and Crane Co.

(n/k/a Redco), the U.S.

Government, and other PRPs entered into a non-binding mediation agreement in 2015.

We have stepped into Redco’s position as a participant in the mediation.

The first phase of the mediation, involving certain former munitions or ordnance storage areas,

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

began in November 2017, but did not result in a multi-party settlement agreement.

Subsequently, Redco entered 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 an immaterial amount.

We, as indemnitor, 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 has proven to be and we expect to continue to be, in the aggregate, an immaterial amount.

We understand that GD-OTS has also reached agreements with the U.S.

Government and the other participating PRPs related to the first-phase areas of concern.

Negotiations between GD-OTS and the U.S.

Government are underway with respect to resolution of the remaining areas of the site, including those portions of the Crab Orchard Site where our predecessor conducted manufacturing and research activities.

We at present cannot predict whether these further negotiations will result in an agreement, or when any determination of the ultimate allocable shares of the various PRPs, including the U.S.

Government, is likely to be completed.

Negotiations between GD-OTS, the U.S.

Government and remaining participants are underway with respect to resolution of the U.S.

Government’s liability for, and contribution claims with respect to, the remaining areas of the site, including those portions of the Crab Orchard Site where Redco’s predecessor conducted manufacturing and research activities.

We at present cannot predict whether these further negotiations will result in a definitive agreement, or when any determination of the ultimate allocable shares of GD-OTS and U.S.

Government response costs for which we may be liable is likely to be completed.

It is not possible at this time to reasonably estimate the total amount of any obligation for remediation of the Crab Orchard Site as a whole because the allocation among PRPs, selection of remediation alternatives, and concurrence of regulatory authorities have not yet advanced to the stage where a reasonable estimate can be made.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

notified our insurers of this potential liability and have obtained defense and indemnity coverage, subject to reservations of rights, under certain of our insurance policies.

Roseland, NJ Site

Resistoflex manufactured specialty lined pipe and fittings at the site from the 1950s until it was closed in the mid-1980s.

We undertook an extensive soil remediation effort at the Roseland Site following our closure and had been monitoring the Site’s condition in the years that followed.

In response to changes in remediation standards, in 2014 we began to conduct further site characterization and delineation studies at the Site.

Insurers with contractual coverage obligations for this site have been notified of this potential liability and have been providing defense and indemnity coverage, subject to reservations of rights.

Other Proceedings

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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 June 30, 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.

We believe that as of September 30, 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 11 - Financing

Our debt consisted of the following:

(in millions) June 30,

(in millions) September 30,

2022 December 31,

Commercial paper $ 119.4 $ —

364-Day Credit Agreement 399.5 —

Total short-term borrowings $ 399.5 $ —

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Total long-term debt $ 843.2 $ 842.4

Debt discounts and debt issuance costs totaled $ 5.5 million and $ 5.7 million as of each of June 30, 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.

Debt discounts and debt issuance costs totaled $ 5.9 million and $ 5.7 million as of September 30, 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.

364-Day Credit Agreement - On August 11, 2022, the Company entered into a new senior unsecured 364 -day credit facility (the “ 364 -Day Credit Agreement”) under which it borrowed term loans denominated in U.S.

dollars (the “Term Loans”) in an aggregate principal amount of $ 400 million.

Interest on the Term Loans accrues at a rate per annum equal to, at the Company’s option, (a) a base rate (determined in a customary manner), plus a margin of 0.25 % or 0.50 % that is determined based upon the ratings by S&P and Moody’s of the Company’s senior unsecured long-term debt (the “Index Debt Rating”) or (b) an adjusted Term SOFR (determined in a customary manner) for an interest period to be selected by the Company, plus a

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

margin of 1.25 % or 1.50 % that is determined based upon the Index Debt Rating.

The 364 -Day Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type.

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.

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

As of June 30, 2022 and December 31, 2021, there was $ 119.4 million and $ 0.0 million , respectively, of outstanding borrowings under the commercial paper program.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2022 and December 31, 2021, there were no outstanding borrowings under the commercial paper program.

Note 12 - Fair Value Measurements

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

Foreign exchange contracts not designated as hedging instruments had a notional value of $ 87.5 million and $ 3.0 million as of June 30, 2022 and December 31, 2021, respectively.

Foreign exchange contracts not designated as hedging instruments had a notional value of $ 81.6 million and $ 3.0 million as of September 30, 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 $ 7.9 million and $ 0.0 million as of June 30, 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 June 30, 2022 and December 31, 2021, respectively.

Such derivative receivable amounts are recorded within “Other current assets” on our Condensed Consolidated Balance Sheets and were $ 13.8 million and $ 0.0 million as of September 30, 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 $ 0.5 million and $ 1.6 million as of June 30, 2022 and December 31, 2021, respectively.

The fair value of available-for-sale securities was $ 0.4 million and $ 1.6 million as of September 30, 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 $ 825.5 million and $ 984.9 million as of June 30, 2022 and December 31, 2021, respectively.

The estimated fair value of total debt, measured using Level 2 inputs, was $ 757.8 million and $ 984.9 million as of September 30, 2022 and December 31, 2021, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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2020 Repositioning - In the second quarter of 2020, we initiated actions in response to the adverse economic impact of COVID-19 and integration actions related to the Cummins-Allison acquisition.

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.

These actions included 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.

We recorded restructuring gains of $1.1 million and $1.5 million in the three month and nine month periods ended September 30, 2021, respectively.

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

There were no charges recorded in the three month periods ended June 30, 2022 or 2021 related to these actions.

There were no charges recorded in the three month periods ended September 30, 2022 or 2021 related to these actions.

We recorded a charge of $ 0.1 million in the nine months ended September 30, 2021 related to these actions.

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

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

We recorded $ 0.0 and $( 0.2 ) in the three month periods ended June 30, 2022 and 2021 related to these actions.

There were no charges recorded in the three month periods ended September 30, 2022 or 2021 related to these actions.

We recorded a gain of $ 12.9 million in the nine months ended September 30, 2021 related to these actions.

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 June 30, Six Months Ended June 30,

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

(in millions) 2022 2021 2022 2021

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Total restructuring (gains) charges, net $ — $ ( 1.1 ) $ — $ ( 14.3 )

The following table summarizes our restructuring gains, net by program, cost type and segment for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,2022 Six Months Ended June 30,2021

The following table summarizes our restructuring gains, net by program, cost type and segment for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,2022 Nine Months Ended September 30,2021

(in millions) Severance Other Total Severance Other Total

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the cumulative restructuring costs, net incurred through June 30, 2022.

We do not expect to incur additional facility consolidation costs to complete these actions as of June 30, 2022.

The following table summarizes the cumulative restructuring costs, net incurred through September 30, 2022.

We do not expect to incur additional facility consolidation costs to complete these actions as of September 30, 2022.

Cumulative Restructuring Costs, Net

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(in millions) 2019 Repositioning 2017 Repositioning Total

Balance at December 31, 2021 (a)

Balance as of December 31, 2021 (a)

$ 11.5 $ 0.7 $ 12.2

Utilization ( 7.1 ) ( 0.6 ) ( 7.7 )

Balance at June 30, 2022 (a)

Balance as of September 30, 2022 (a)

$ 4.4 $ 0.1 $ 4.5

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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