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Item 8. Financial Statements and Supplementary Data

2023-03-01 compared with 2022-02-28 · 338 added, 581 removed, 1259 unchanged (42% of the section changed)

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MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements of Crane Co.

The accompanying consolidated financial statements of Crane Holdings, Co.

and subsidiaries have been prepared by management in conformity with accounting principles generally accepted in the United States of America and, in the judgment of management, present fairly and consistently the Company’s financial position and results of operations and cash flows.

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/s/ Richard A.

Senior Vice President and Chief Financial Officer

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Crane Co.

To the Shareholders and the Board of Directors of Crane Holdings, Co.

Opinion on the Financial Statements

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

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

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

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, cash flows, and changes in equity, for each of the three years in the period ended December 31, 2022 and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Asbestos Liability — Refer to Note 13, Commitments and Contingencies, to the financial statements

Critical Audit Matter Description

The Company is a defendant in cases filed in numerous state and federal courts alleging injury or death of exposure to asbestos.

The Company records an estimated liability related to the resolution cost of pending and future claims projected to be filed against the Company for which management believes are probable of occurring and reasonably estimable.

The model utilized by the Company to estimate its asbestos liability has several factors that involve the application of significant judgement and estimates with a significant measurement of uncertainty.

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

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

Changes in these estimates and assumptions could have a significant impact on the asbestos liability.

The current and non-current liability as of December 31, 2021 was $62.3 million and $549.8 million, respectively.

Given the subjectivity of estimating the asbestos liability, future claims, and underlying assumptions utilized by management, auditing management’s judgments regarding the significant factors listed above involved especially subjective auditor judgment, including the need to involve our actuarial specialists.

Revenue – Over-Time Basis — Refer to Note 1 to the financial statements

Audit Matter Description

The Company recognizes revenue as they fulfill their performance obligations and transfer control of products to their customers.

The Company has certain revenue contracts with the U.S.

government or indirectly to the U.S.

government through subcontracts.

The clauses of those contracts stipulate that any amounts included in work-in-progress are the property of the U.S.

government as they own any work-in progress as the contracted product is being built.

The Company uses the cost-to-cost method of determining their progress, measuring progress by comparing costs incurred to date to the total estimated costs to provide the performance obligation.

In 2022, the Company recognized approximately $120 million in revenue over time related to contracts in progress as of December 31, 2022.

We identified revenue recognized over time as a critical audit matter because of the judgments necessary for management to determine the margin to be used to estimate revenue for the overtime revenue.

This required a high degree of auditor judgment when performing audit procedures to audit management’s estimates of margin at completion used to recognize revenue over time and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures performed on the recorded asbestos liability included the following, among others:

• We tested the design and effectiveness of controls over the asbestos liability, including those over the projection of settlement value of current and future claims.

• We obtained the System and Organization Control Report (SOC) 1 reports for the outside service providers to evaluate the processes and controls relevant to the Company’s asbestos claims administration.

• With the assistance of our internal actuarial specialists, we:

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

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

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

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

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

• We considered the impact of changes in the regulatory and litigation environments on management’s assumptions by performing corroborating inquires with the Company’s internal and external legal counsel.

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

Our audit procedures performed related to the recognition of revenue recognized over-time included the following, among others:

• We tested the effectiveness of controls related to the revenue recognized over-time, including management’s controls over costs incurred to date and estimates of margin at completion, as well as the accurate classification of contracts in the system during the order entry process.

• We selected a sample of contracts with customers that were recognized over time and we performed the following:

◦ Evaluated whether the contracts were properly included in management’s calculation of long-term contract revenue based on the terms and conditions of each contract, including whether continuous transfer of control to the customer occurred as progress was made toward fulfilling the performance obligation.

◦ Evaluated the appropriateness and consistency of the methods of calculation and assumptions used by management to develop the margin at completion applied to determine the revenue recognized.

• We tested the mathematical accuracy of management’s calculation of revenue recognized.

• We observed the Company’s physical inventory counts to test the existence of inventory related to contracts with the U.S.

• We evaluated management’s ability to estimate future costs and margins at completion accurately by comparing actual costs and margins at completion for similar contracts that were previously completed to management’s historical estimates for such contracts.

/s/ Deloitte & Touche LLP

Stamford, Connecticut

February 28, 2022

March 1, 2023

We have served as the Company's auditor since 1979.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENT OF OPERATIONS

For the year ended December 31,

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Selling, general and administrative 797.5 775.4 698.1

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

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

Restructuring charges (gains), net 10.4 ( 16.9 ) 32.3

Acquisition-related and integration charges — — 12.9

Asbestos provision, net — — 229.0

Environmental provision, net — — 18.9

Operating profit 369.5 529.2 262.9

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Interest expense ( 52.2 ) ( 46.9 ) ( 55.3 )

Gain on sale of business 232.5 — —

Miscellaneous income, net 9.8 19.1 14.9

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

Income from continuing operations before income taxes 477.2 201.8 143.9

Total other income (expense) 193.5 ( 26.4 ) ( 38.4 )

Income before income taxes 563.0 502.8 224.5

Provision for income taxes 161.9 67.4 43.4

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

Net income before allocation to noncontrolling interests 401.1 435.4 181.1

Noncontrolling interest in subsidiaries’ earnings — — 0.1

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

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

Net income attributable to common shareholders $ 401.1 $ 435.4 $ 181.0

Earnings per basic share:

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

Earnings per basic share from discontinued operations 0.70 0.31 0.35

Earnings per basic share $ 7.46 $ 3.10 $ 2.23

Earnings per diluted share:

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

Earnings per diluted share from discontinued operations 0.70 0.31 0.35

Earnings per diluted share $ 7.36 $ 3.08 $ 2.20

Earnings per share:

Basic $ 7.11 $ 7.46 $ 3.10

Diluted $ 7.01 $ 7.36 $ 3.08

Average shares outstanding:

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Net income before allocation to noncontrolling interests $ 401.1 $ 435.4 $ 181.1

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

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

Currency translation adjustment ( 93.3 ) ( 69.2 ) 70.4

Changes in pension and postretirement plan assets and benefit obligation, net of tax 30.0 96.0 ( 53.6 )

Other comprehensive income (loss), net of tax 26.8 16.8 ( 36.2 )

Other comprehensive (loss) income, net of tax ( 63.3 ) 26.8 16.8

Comprehensive income before allocation to noncontrolling interests 337.8 462.2 197.9

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

Noncontrolling interests in comprehensive (loss) income ( 0.2 ) 0.6 ( 0.5 )

Comprehensive income attributable to common shareholders $ 338.0 $ 461.6 $ 198.4

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Other current assets 179.8 118.7

Current assets held for sale 220.5 17.4

Total current assets 1,751.9 1,543.1

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Other assets 176.0 259.3

Long-term assets held for sale — 199.9

Total assets $ 4,390.2 $ 4,486.6

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and foreign taxes on income 38.1 10.6

Current liabilities held for sale 44.9 27.4

Total current liabilities 1,488.2 789.3

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Other liabilities 138.7 161.2

Long-term liabilities held for sale — 26.2

Commitments and contingencies (Note 12)

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(in millions) 2022 2021 2020

Operating activities from continuing operations:

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

Asbestos provision, net — — 229.0

Environmental provision, net — — 18.9

Loss on deconsolidation of joint venture — — 1.2

Realized gain on marketable securities — — ( 1.1 )

Operating activities:

Net income before allocations to noncontrolling interests $ 401.1 $ 435.4 $ 181.1

Non-cash loss on divestiture of asbestos-related assets and liabilities 148.9 — —

Gain on sale of business ( 232.5 ) — —

Gain on sale of property ( 2.8 ) ( 18.5 ) —

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Deferred income taxes ( 17.6 ) ( 9.6 ) 18.1

Cash provided by (used for) operating working capital 29.7 37.8 ( 33.2 )

Cash (used for) provided by operating working capital ( 2.2 ) 38.0 39.1

Defined benefit plans and postretirement contributions ( 21.8 ) ( 29.4 ) ( 28.4 )

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Asbestos related payments, net of insurance recoveries ( 29.3 ) ( 44.9 ) ( 31.1 )

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

Other 18.6 ( 4.7 ) ( 7.8 )

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

Investing activities from continuing operations:

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

Total (used for) provided by operating activities $ ( 151.6 ) $ 498.5 $ 309.5

Investing activities:

Proceeds from disposition of capital assets $ 4.3 $ 23.6 $ 4.5

Capital expenditures ( 58.4 ) ( 53.9 ) ( 34.1 )

Proceeds from sale of business 318.1 — —

Purchase of marketable securities — ( 10.0 ) ( 90.0 )

Proceeds from sale of marketable securities — 40.0 60.0

Impact of deconsolidation of joint venture — — ( 0.2 )

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

Financing activities from continuing operations:

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

Total provided by (used for) investing activities $ 264.0 $ ( 0.3 ) $ ( 229.1 )

Financing activities:

Dividends paid $ ( 105.9 ) $ ( 100.6 ) $ ( 100.4 )

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Debt issuance costs — — ( 1.3 )

Repayment of long-term debt — — ( 99.4 )

Repayment of short-term debt — — ( 7.4 )

Proceeds from issuance of long-term debt — — 3.0

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 ) ( 296.7 )

Net (repayments) proceeds from issuance of commercial paper with maturities of 90 days or less — ( 76.8 ) 124.4

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

Proceeds from revolving credit facility — — 77.2

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Repayment of term loan — ( 348.1 ) —

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

Discontinued operations:

Total provided by operating activities 31.8 25.4 23.4

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

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

Total provided by (used for) financing activities $ 106.0 $ ( 557.9 ) $ 55.1

For the year ended December 31,

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Effect of exchange rates on cash and cash equivalents $ ( 39.4 ) $ ( 12.7 ) $ 21.6

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

Increase (decrease) in cash and cash equivalents 179.0 ( 72.4 ) 157.1

Cash and cash equivalents at beginning of period 478.6 551.0 393.9

Cash and cash equivalents at end of period $ 657.6 $ 478.6 $ 551.0

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

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

Accounts receivable $ ( 46.8 ) $ ( 58.8 ) $ 138.5

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

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

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

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Nature of Operations

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

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

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

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

Our primary end markets include commercial and military aerospace, defense and space, chemical production, pharmaceutical production, water and wastewater, non-residential and municipal construction, energy, banknote design and production, payment automation solutions, along with a wide range of general industrial and certain consumer related end markets.

See Note 3, “Segment Information” for the relative size of these segments in relation to the total company (both net sales and total assets).

Discontinued Operations.

Holding Company Reorganization

On May 16, 2022, Crane Co., a Delaware corporation (“Crane Co.”), completed its previously announced reorganization merger pursuant to the Agreement and Plan of Merger, dated as of February 28, 2022 (the “Reorganization Agreement”), by and among Crane Co., Crane Holdings, Co., a Delaware corporation (“Crane Holdings”), and Crane Transaction Company, LLC, a Delaware limited liability company and, as of immediately prior to the consummation of such merger, a wholly-owned subsidiary of Crane Holdings (“Merger Sub”).

The Reorganization Agreement provided for the merger of Crane Co.

and Merger Sub, with Crane Co.

surviving the merger as a wholly-owned subsidiary of Crane Holdings (the “Reorganization Merger”).

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

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 Crane Co.

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

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

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 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 consolidated statements of operations for the year ended December 31, 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, the Company 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 in April, 2023, subject to the satisfaction of customary conditions and final approval by Crane Holdings, Co.’s Board of Directors.

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.

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

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

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

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

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

Process Flow Technologies.

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

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

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

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

(“Verzatec”) 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.

On May 26, 2022, Verzatec terminated the sale agreement and paid $ 7.5 million to the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company in termination fees, which is presented within Miscellaneous income on the Consolidated 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.

Significant Accounting Policies

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Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

The consolidated financial statements include the accounts of Crane Co.

The consolidated financial statements include the accounts of Crane Holdings, Co.

and our subsidiaries.

All intercompany balances and transactions have been eliminated upon consolidation.

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

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.

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Certain amounts in the prior years’ consolidated financial statements have been reclassified to conform to the current year presentation.

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.

Use of Estimates.

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Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the financial statements in the period in which they are determined to be necessary.

Estimates are used when accounting for such items as asset valuations, allowance for doubtful accounts, depreciation and amortization, impairment assessments, reserve for excess and obsolete inventory, reserve for warranty provision, restructuring provisions, employee benefits, taxes, asbestos liability and related insurance receivable, environmental liability and contingencies.

Currency Translation.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

such as rebates and milestone payments.

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

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

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Under this method, we measure progress by comparing costs incurred to date to the total estimated costs to provide the performance obligation.

This method effectively reflects our progress toward completion, as this methodology includes any work-in-process amounts as part of the measure of progress.

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method effectively reflects our progress toward completion, as this methodology includes any work-in-process amounts as part of the measure of progress.

Costs incurred represent work performed, which corresponds with, and thereby depicts, the transfer of control to the customer.

Total revenue recognized and cost estimates are updated on a monthly basis.

In 2022, the Company recognized approximately $ 120 million in revenue over time related to contracts in progress as of December 31, 2022.

When there are multiple performance obligations in a single contract, the total transaction price is allocated to each performance obligation based on their relative standalone selling prices.

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Revenue recognized from performance obligations satisfied in previous periods (for example, due to changes in the transaction price or estimates), was not material in any period.

Payment for products is due within a limited time period after shipment or delivery, and we do not offer extended payment terms.

Payment for products is due within a limited time period after shipment or delivery, and we generally do not offer extended payment terms.

Payment is typically due within 30-90 calendar days of the respective invoice dates.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Selling, General and Administrative Expenses.

Selling, general and administrative expenses are charged to income as incurred.

Selling, general and administrative expenses are recognized as incurred.

Such expenses include the costs of promoting and selling products and include such items as compensation, advertising, sales commissions and travel.

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Where, based on the weight of all available evidence, it is more likely than not that some amount of a deferred tax asset will not be realized, we establish a valuation allowance for the amount that, in management's judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized.

The evidence we consider in reaching such conclusions includes, but is not limited to, (1) future reversals of existing taxable temporary differences, (2) future taxable income exclusive of reversing taxable temporary differences, (3) taxable income in prior carryback year(s) if carryback is permitted under the tax law, (4) cumulative losses in recent years, (5) a history of tax losses or credit carryforwards expiring unused, (6) a carryback or carryforward period that is so brief it limits realization of tax benefits, and (7) a strong earnings history exclusive of the loss that created the carryforward and support showing that the loss is an aberration rather than a continuing condition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and (7) a strong earnings history exclusive of the loss that created the carryforward and support showing that the loss is an aberration rather than a continuing condition.

We account for unrecognized tax benefits in accordance with ASC 740, which prescribes a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share.

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(in millions, except per share data) For the year ended December 31, 2022 2021 2020

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

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

Net income attributable to common shareholders $ 401.1 $ 435.4 $ 181.0

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Average diluted shares outstanding 57.2 59.2 58.8

Earnings per basic share:

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

Earnings per basic share from discontinued operations 0.70 0.31 0.35

Earnings per basic share $ 7.46 $ 3.10 $ 2.23

Earnings per diluted share:

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

Earnings per diluted share from discontinued operations 0.70 0.31 0.35

Earnings per diluted share $ 7.36 $ 3.08 $ 2.20

Basic earnings per share $ 7.11 $ 7.46 $ 3.10

Diluted earnings per share $ 7.01 $ 7.36 $ 3.08

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

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

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

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

Changes in the levels of LIFO inventories have increased cost of sales by $ 8.4 million, $ 3.6 million and $ 2.3 million for the years ended December 31, 2022, 2021 and 2020 respectively.

The portion of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and 2020, respectively.

inventories costed using the LIFO method was 37.2 % and 30.1 % of consolidated inventories as of December 31, 2022, and 2021, respectively.

If inventories that were valued using the LIFO method had been valued under the FIFO method, they would have been higher by $ 38.8 million and $ 30.4 million as of December 31, 2022 and 2021, respectively.

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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 December 31, 2021, we had seven reporting units.

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

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

As of December 31, 2022, we had six reporting units.

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

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

There are inherent

There are inherent uncertainties related to these assumptions, including changes in market conditions, and management judgment is necessary in

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

applying them to the analysis of goodwill impairment.

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

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Changes to goodwill are as follows:

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

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

Balance as of December 31, 2020 $ 202.5 $ 360.0 $ 875.2 $ 171.3 $ 1,609.0

Additions — 106.1 — 106.1

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

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Balance as of December 31, 2021 $ 202.5 $ 349.4 $ 860.6 $ 171.3 $ 1,583.8

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

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

Currency translation ( 0.2 ) ( 9.8 ) ( 24.0 ) — $ ( 34.0 )

Balance as of December 31, 2022 $ 202.3 $ 317.3 $ 836.6 $ 171.3 $ 1,527.5

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

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

For the year ended December 31, 2020, adjustments to goodwill within the Payment & Merchandising Technologies segment were $ 5.6 million.

These adjustments represent the finalization of the purchase price allocation for the acquisition of Cummins-Allison Corp.

("Cummins-Allison").

For the year ended December 31, 2021, adjustments within the Process Flow Technologies segment of $ 0.1 million represent the finalization of the purchase price allocation for the acquisition of I&S.

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

For the year ended December 31, 2022, adjustments within the Process Flow Technologies segment of $ 22.3 million relate to the disposition of the Crane Supply business.

For the year ended December 31, 2021, adjustments within the Process Flow Technologies segment of $ 0.1 million represent the finalization of the purchase price allocation for the acquisition of CIRCOR International, Inc.’s Instrumentation & Sampling Business (“I&S”).

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022, we had $ 416.6 million of net intangible assets, of which $ 67.3 million were intangibles with indefinite useful lives, consisting of trade names.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of intangible assets follows:

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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(a) Net of tax benefit of $ 106.6 million , $ 117.9 million and $ 148.2 million for 2022, 2021, and 2020, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the years ended December 31, 2022, 2021 and 2020.

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Prior service costs ( 1.1 ) ( 1.1 ) ( 1.1 )

Net gain — — ( 0.3 )

Total before tax $ 14.0 $ 22.2 $ 17.7

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements - Adopted

Simplifying the Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board (“FASB”) issued amended guidance to simplify the accounting for income taxes.

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

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

We have adopted this standard effective January 1, 2021.

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

Disclosure Requirements for Defined Benefit Plans

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

Recent Accounting Pronouncements

The Company considered the applicability and impact of all Accounting Standards Updates issued by the Financial Accounting Standards Board (FASB) and determined them to be either not applicable or are not expected to have a material impact on the Company's Consolidated Statement of Operations, Balance Sheets and Cash Flows.

Note 2 – Acquisitions

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Use of different estimates and judgments could yield different results.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Instrumentation & Sampling Business Acquisition

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Net assets acquired $ 169.2

NOTES TO 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:

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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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

customer, contractual and market factors.

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

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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 is not material to our financial results for either prior period.

Cummins-Allison Acquisition

On December 31, 2019 we completed the acquisition of Cummins-Allison.

The base purchase price of the acquisition was $ 160 million on a cash-free, debt-free basis, subject to a later adjustment reflecting Cummins-Allison’s net working capital, cash, and Cummins-Allison’s transaction expenses.

The amount paid, net of cash acquired, was $ 156.2 million.

We issued $ 150 million of commercial paper and used cash on hand to fund the acquisition.

In November 2020, we paid $ 0.2 million related to the final working capital adjustment which resulted in net cash paid of $ 156.4 million.

Cummins-Allison is a leading provider of high speed, cash and coin counting and sorting machines and retail cash office solutions which are primarily used in back-office applications.

Cummins-Allison has been integrated into our Payment & Merchandising Technologies segment.

Cummins-Allison also has a nationwide service network to support these hardware sales.

The amount allocated to goodwill reflects the expected synergies related to material costs, supply chain manufacturing productivity and research and development.

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 Cummins-Allison.

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

Net assets acquired (in millions)

Total current assets $ 91.6

Property, plant and equipment 26.3

Other assets 9.1

Intangible assets 66.0

Goodwill 60.3

Total assets acquired $ 253.3

Total current liabilities $ 71.6

Other liabilities 25.3

Total assumed liabilities $ 96.9

Net assets acquired $ 156.4

Intangible Assets (dollars in millions)

Intangible Fair Value Weighted Average Life

Trademarks/trade names $ 3.0 7

Customer relationships 54.5 18

Product technology 8.5 10

Total acquired intangible assets $ 66.0

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The trade name Cummins Allison is being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of seven years .

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

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

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

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

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

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

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

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

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

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

The technology assets are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 10 years.

Supplemental Pro Forma Data

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

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

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

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

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

Acquisition-Related Costs

Acquisition-related costs are being expensed as incurred.

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

For the year ended December 31, 2020, we recorded $ 12.9 million of integration and transaction costs.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Discontinued Operations

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

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

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

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

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

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

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

This change was applied on a retrospective basis.

The following represents financial results from discontinued operations:

For the year ended December 31,

(in millions) 2021 2020 2019

Net sales $ 228.0 $ 175.6 $ 208.6

Cost of sales 181.3 134.5 161.9

Selling, general and administrative 19.8 17.8 19.4

Restructuring charges — 0.6 —

Operating profit $ 26.9 $ 22.7 $ 27.3

Miscellaneous expense, net ( 1.3 ) — ( 0.5 )

Income from discontinued operations $ 25.6 $ 22.7 $ 26.8

Income tax (benefit) provision (a)

( 15.5 ) 4.8 5.8

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Accounts receivable, net $ 10.6 $ 8.8

Inventories, net 8.2 8.5

Other current assets 0.6 0.1

Current assets held for sale (a)

Property, plant and equipment, net 28.3 26.8

Other assets 0.3 0.6

Intangible assets, net 1.2 1.2

Goodwill 171.3 171.3

Long-term assets held for sale (a)

Assets held for sale $ 220.5 $ 217.3

Accounts payable $ 27.0 $ 19.5

Accrued liabilities 12.0 7.9

Current liabilities held for sale (a)

Long-term deferred tax liability 5.8 26.1

Other liabilities 0.1 0.1

Long-term liabilities held for sale (a)

Liabilities held for sale $ 44.9 $ 53.6

(a) We reasonably expect to close on this transaction within one year from the date of our entry into the agreement, and therefore have presented the assets and liabilities as current as of December 31, 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 – Segment Information

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Our segments are reported on the same basis used internally for evaluating performance and for allocating resources.

We have four reporting segments:

We currently have four reporting segments:

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

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

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

Aerospace & Electronics

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

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.

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

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Process Flow Technologies

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

The 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.

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The Payment & Merchandising Technologies segment consists of Crane Payment Innovations (“CPI”) and Crane Currency.

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.

CPI provides electronic equipment and associated software leveraging extensive and proprietary core capabilities with various detection and sensing technologies for applications including verification and authentication of payment transactions.

CPI also provides advanced automation solutions, and processing systems, field service solutions, and remote diagnostics and productivity software solutions.

Crane Currency provides advance security solutions based on proprietary micro-optic technology for the global banknote industry.

Engineered Materials

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

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

This change was applied on a retrospective basis.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Payment & Merchandising Technologies 1,339.9 1,345.1 1,104.8

Engineered Materials 258.3 228.0 175.6

TOTAL NET SALES $ 3,374.9 $ 3,408.0 $ 2,936.9

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Payment & Merchandising Technologies 333.1 307.5 100.6

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

Corporate expense — asbestos provision, net — — ( 229.0 )

Corporate expense — environmental provision, net — — ( 18.9 )

TOTAL OPERATING PROFIT $ 502.3 $ 240.2 $ 183.1

Engineered Materials 32.6 26.9 22.7

Corporate ( 284.7 ) ( 97.7 ) ( 58.8 )

TOTAL OPERATING PROFIT (a)

$ 369.5 $ 529.2 $ 262.9

Capital expenditures:

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Payment & Merchandising Technologies 21.3 18.6 9.3

Engineered Materials 3.8 2.2 1.2

Corporate 0.1 0.2 0.1

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Payment & Merchandising Technologies 78.2 81.3 85.9

Engineered Materials 5.8 1.6 3.7

Corporate 1.3 1.5 2.1

TOTAL DEPRECIATION AND AMORTIZATION $ 118.9 $ 121.1 $ 127.5

(a) For the year ended December 31, 2022, operating profit includes a loss on divestiture of asbestos-related assets and liabilities of $ 162.4 million and net restructuring charges of $ 10.4 million.

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

For the year ended December 31, 2020, operating profit included acquisition-related and integration charges of $ 12.9 million and net restructuring charges of $ 32.3 million.

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

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

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Payment & Merchandising Technologies 836.6 860.6

Engineered Materials 171.3 171.3

TOTAL GOODWILL $ 1,527.5 $ 1,583.8

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Payment & Merchandising Technologies 2,125.9 2,096.5

Engineered Materials 218.6 220.5

Corporate 317.7 324.5

Assets held for sale 220.5 217.3

TOTAL ASSETS $ 4,390.2 $ 4,486.6

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Total Payment & Merchandising Technologies $ 1,339.9 $ 1,345.1 $ 1,104.8

Engineered Materials

FRP- Recreational Vehicles $ 111.9 $ 102.5 $ 68.9

FRP- Building Products 112.5 94.9 83.1

FRP- Transportation 33.9 30.6 23.6

Total Engineered Materials $ 258.3 $ 228.0 $ 175.6

Total Net Sales $ 3,374.9 $ 3,408.0 $ 2,936.9

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Note 5 – Research and Development

Research and development costs are expensed when incurred.

Research and development costs are expensed when incurred and are included in “Selling, general and administrative” in our Consolidated Statements of Operations.

(in millions) December 31, 2022 2021 2020

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Most of these plans are funded by company contributions to pension funds, which are held for the sole benefit of plan participants and beneficiaries.

In December 2022, we settled the pension plan for the salaried non-bargaining employees of Crane Canada Co.

and recognized a loss of $ 7.0 million, net of tax.

Excess plan assets have been reclassified to current receivables and will be recognized upon final approval from regulatory authorities which is expected in 2023.

We estimate that the Company will receive a distribution of approximately $ 43 million after distributions to plan participants.

Postretirement Plans

Postretirement health care and life insurance benefits are provided for certain employees hired before January 1, 1990, who meet minimum age and service requirements.

As a result of the acquisition of Crane Currency, we also have postretirement medical and Medicare supplement that cover substantially all former full-time U.S.

We also have postretirement medical and Medicare supplement that cover substantially all former full-time U.S.

employees of Crane Currency.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Funded status $ ( 76.1 ) $ ( 70.7 ) $ ( 19.6 ) $ ( 28.1 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In the U.S., 2022 actuarial gains in the projected benefit obligation were primarily the result of an increase in the discount rate.

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countries, 2022 actuarial gains in the projected benefit obligation were primarily the result of increases in discount rates.

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

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

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

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

In the Non-U.S.

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

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts recognized on our Consolidated Balance Sheets consist of:

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Fair value of plan assets $ 404.5 $ 525.2

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Net periodic (benefit) cost $ ( 2.3 ) $ ( 6.8 ) $ ( 6.8 ) $ ( 0.2 ) $ ( 0.2 ) $ 0.1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The weighted average assumptions used to determine benefit obligations are as follows:

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plans, the 4.50 % expected rate of return on assets assumption for 2022 reflected a weighted average of the long-term asset allocation targets for our various non-U.S.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

allocation for the non-U.S.

As of December 31, 2022, the actual weighted average asset allocation for the non-U.S.

plans was 15.3 % equity securities, 33.2 % fixed income securities, 45.4 % alternative assets/other and 6.2 % cash and cash equivalents.

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Assumed health care cost trend rates have a significant effect on the amounts reported for our health care plans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our pension plan target allocations and weighted-average asset allocations by asset category are as follows:

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Alternative assets include investments in real estate and hedge funds employing a wide variety of strategies.

Equity securities include Crane Co.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In 2021, equity securities included Crane Holdings, Co.

common stock, which represented 4 %of plan assets as of December 31, 2021.

There were no holdings of Crane Holdings, Co.

common stock in 2022.

The fair value of our pension plan assets as of December 31, 2022, by asset category, are as follows:

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Equities 112.8 — — — 112.8

Fixed Income Bonds and Notes — 0.1 — — 0.1

Commingled and Mutual Funds

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International Balanced Funds — — — 2.1 2.1

Property Funds 29.0 — — — 29.0

Alternative Investments

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Total Fair Value $ 545.3 $ 14.7 $ 21.7 $ 499.7 $ 1,081.4

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

In 2021, the pension plan's asset classified as Level 3 constitutes an insurance contract valued annually on an actuarial basis.

The following table sets forth a summary of pension plan assets valued using NAV or its equivalent as of December 31, 2021 and December 31, 2020:

Frequency Unfunded

Commitment Other

Restrictions Redemption Notice Period

Equity Funds (a)

Immediate None None None

Fixed Income, Government and Corporate (b)

Immediate None None None

International Balanced Funds (c)

Immediate None None None

Collective Trust Fund (d)

Immediate None None None

International Property Funds (e)

Immediate None None None

Hedge Funds and LDI (f)

Immediate None None None

(a) These funds invest in corporate equity securities outside the United States.

(b) These funds invest in corporate and government fixed income securities outside the United States.

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

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

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

We expect, based on current actuarial calculations, to contribute cash of approximately $ 20.0 million to our defined benefit pension plans during 2023.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Estimated Future Benefit Payments

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Total payments $ 539.6 $ 18.0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Executive Retirement Plan

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

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

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

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

Employer contributions made to the SERP were $ 0.2 million, $ 0.2 million and $ 2.2 million in 2021, 2020 and 2019, respectively.

We recorded a pre-tax settlement loss of $ 0.1 million in 2022.

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

Accrued SERP benefits, which were recorded in Accrued liabilities and Accrued pension and postretirement benefits in the Consolidated Balance Sheets, were $ 2.2 million and $ 3.7 million as of December 31, 2022 and 2021, respectively.

Employer contributions made to the SERP, which were recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations, were $ 1.0 million, $ 0.2 million and $ 0.2 million in 2022, 2021 and 2020, respectively.

Defined Contribution Plans

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The 2013 Plan originally authorized the issuance of up to 9,500,000 shares of stock pursuant to awards under the plan.

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

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

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

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

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Unless otherwise determined by the Compensation Committee which administers the plan, options become exercisable at a rate of 25 % after the first year, 50 % after the second year, 75 % after the third year and 100 % after the fourth year from the date of grant.

Options granted to officers and employees from 2004 to 2013 expire six years after the date of grant.

All options granted to directors and options granted to officers and employees after 2014 expire 10 years after the date of grant.

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Restricted share units vest at a rate of 25 % after the first year, 50 % after the second year, 75 % after the third year and 100 % after the fourth year from the date of grant and are subject to forfeiture restrictions which lapse over time.

The vesting of performance-based restricted share units is determined in three years based on relative total shareholder return for Crane Co.

The vesting of performance-based restricted share units is determined in three years based on relative total shareholder return for Crane Holdings, Co.

compared to the S&P Midcap 400 Capital Goods Group, with payout potential ranging from 0 % to 200 % but capped at 100 % if our three year total shareholder return is negative.

Included in our share-based compensation was expense recognized for our restricted share unit and performance-based restricted share unit awards of $ 19.1 million, $ 18.7 million and $ 15.7 million in 2022, 2021 and 2020, respectively.

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

The tax benefit (detriment) for the vesting of the restricted share units was $ 1.2 million, $( 0.1 ) million and $( 0.1 ) million as of December 31, 2022, 2021 and 2020, respectively.

As of December 31, 2022, there was $ 30.3 million of total future compensation cost related to restricted share unit and performance-based restricted share unit awards, to be recognized over a weighted-average period of 1.94 years.

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Performance-based restricted share units vested ( 64 ) 93.05

Performance-based restricted share units forfeited ( 13 ) 92.24

Restricted share units as of December 31, 2022 529 $ 92.96

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

believe it is probable that any amount will be owed under this guarantee.

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

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

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

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

Rental expense was $ 37.4 million, $ 39.5 million and $ 34.0 million for 2021, 2020 and 2019, respectively.

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

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

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

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

11 unchanged sentences

Variable lease cost 6.9 6.3 7.2

Total lease cost $ 36.0 $ 38.2 $ 40.3

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

2 unchanged sentences

Weighted-average discount rate - operating leases 3.9 % 3.6 %

Supplemental cash flow information related to our operating leases was as follows for periods ended December 31, 2021 and 2020:

Supplemental cash flow information related to our operating leases were as follows:

(in millions) December 31, 2022 2021 2020

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Total provision for income taxes * $ 161.9 $ 67.4 $ 43.4

* Included in the above amounts are excess tax benefits from share-based compensation of $ 5.4 millions $ 0.4 millions and $ 3.6 millions in 2021, 2020 and 2019, respectively, which were reflected as reductions in our provision for income taxes in 2021, 2020 and 2019.

* Included in the above amounts are excess tax benefits from share-based compensation of $ 3.0 million $ 5.5 million and $ 0.6 million in 2022, 2021 and 2020, respectively, which were reflected as reductions in our provision for income taxes in 2022, 2021 and 2020.

A reconciliation of the statutory U.S.

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deduction for foreign - derived intangible income ( 1.3 ) % ( 1.0 ) % ( 0.5 ) %

Deferred tax asset related to the sale of a subsidiary 3.7 % ( 4.1 ) % — %

Nondeductible loss due to Asbestos Divestiture 6.4 % — % — %

Other 1.2 % ( 0.9 ) % 1.4 %

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Tax Related to Comprehensive Income

During 2021, 2020 and 2019, tax (benefit) provision of $ 29.9 million, $( 13.5 ) million and $( 12.6 ) million, respectively, related to changes in pension and post-retirement plan assets and benefit obligations, were recorded to accumulated other comprehensive loss.

During 2022, 2021 and 2020, tax provision (benefit) of $ 12.7 million, $ 29.9 million and $( 13.5 ) million, respectively, related to changes in pension and post-retirement plan assets and benefit obligations, were recorded to accumulated other comprehensive loss.

Deferred Taxes and Valuation Allowances

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Tax loss and credit carryforwards 97.7 111.2

Pension and post-retirement benefits 24.1 66.0

Inventories 31.9 29.3

Deferred tax asset related to the sale of a subsidiary — 20.6

Capitalized Research and Development 17.8 —

Pension and Post Retirement Benefits 8.4 24.1

Accrued Bonuses and Stock Based Compensation 10.2 10.4

Other 32.4 25.5

5 unchanged sentences

Basis difference in intangible assets ( 198.2 ) ( 208.2 )

Deferred Tax on Non-U.S.

Unremitted Earnings ( 15.3 ) ( 14.3 )

Other — ( 7.8 )

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As a result, we recorded a valuation allowance against these deferred tax assets.

We also determined that it is more likely than not that a portion of the benefit related to U.S.

We also determined that it is more likely than not that a

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

portion of the benefit related to U.S.

state and non-U.S.

4 unchanged sentences

Our total valuation allowance as of December 31, 2022 and 2021 was $ 99.7 million and $ 141.5 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unrecognized Tax Benefits

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Balance of liability as of December 31, $ 28.2 $ 31.6 $ 34.0

As of December 31, 2021, 2020 and 2019, the amount of our unrecognized tax benefits that, if recognized, would affect our effective tax rate were $ 33.5 million, $ 32.6 million and $ 43.8 million, respectively.

The difference between these amounts and those reflected in the table above relates to (1) offsetting tax effects from other tax jurisdictions, and (2) interest expense, net of deferred taxes and (3) unrecognized tax benefits whose reversals would be recorded to goodwill.

As of December 31, 2022, 2021 and 2020, the amount of our unrecognized tax benefits that, if recognized, would affect our effective tax rate was $ 30.3 million, $ 33.5 million and $ 32.6 million, respectively.

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

We recognize interest and penalties related to unrecognized tax benefits as a component of our income tax expense.

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Currently, we and our subsidiaries are under examination in various jurisdictions, including Germany (2016 through 2019), Canada (2013 through 2018) and Luxembourg (2017 through 2018).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 – Accrued Liabilities

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Warranty provision is included in "Cost of sales" in our Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the warranty liabilities is as follows:

(in millions) December 31, 2021 2020 2019

Balance at beginning of period $ 8.1 $ 9.8 $ 17.2

Expense 7.6 8.0 8.5

Changes due to acquisitions/divestitures — 0.3 —

Payments / deductions ( 8.4 ) ( 10.1 ) ( 15.8 )

Currency translation — 0.1 ( 0.1 )

Balance at end of period $ 7.3 $ 8.1 $ 9.8

Note 11 – Other Liabilities

A summary of the other liabilities is as follows:

(in millions) December 31, 2022 2021

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Asbestos Liability

Information Regarding Claims and Costs in the Tort System

As of December 31, 2021, we were a defendant in cases filed in numerous state and federal courts alleging injury or death as a result of exposure to asbestos.

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

For the year ended December 31, 2021 2020 2019

Beginning claims 29,138 29,056 29,089

New claims 2,975 2,620 2,848

Settlements ( 980 ) ( 885 ) ( 983 )

Dismissals ( 1,175 ) ( 1,653 ) ( 1,898 )

Ending claims 29,958 29,138 29,056

Of the 29,958 pending claims as of December 31, 2021, approximately 18,000 claims were pending in New York of which approximately 16,000 are non-malignancy claims that were filed over 15 years ago and have been inactive under New York court orders.

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

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.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 year ended December 31, 2022, all asbestos obligations and liabilities, related insurance assets and associated deferred tax assets of Redco are no longer reported on the 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 for the years ended December 31, 2022, 2021 and 2020 totaled $ 35.8 million, $ 55.2 million and $ 50.9 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 years ended December 31, 2022, 2021 and 2020 totaled $ 29.3 million, $ 44.9 million and $ 31.1 million, respectively.

Detailed below are the comparable amounts for the periods indicated.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions)

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(a) 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 December 31, 2021, we have resolved (by settlement or dismissal) approximately 143,000 claims.

The related settlement cost incurred by us and our insurance carriers is approximately $ 720 million, for an average settlement cost per resolved claim of approximately $ 5,000 .

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 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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 $ 612 million and $ 670 million as of December 31, 2021 and 2020, 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 December 31, 2021 and 2020 is $ 62.3 million and $ 66.5 million, respectively 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 December 31, 2021, our actual experience during the updated reference period for mesothelioma claims filed and dismissed generally approximated the assumptions in our liability estimate.

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

Based on this evaluation, we determined that no change in the estimate was warranted for the period ended December 31, 2021.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 $ 74 million and $ 87 million as of December 31, 2021 and 2020, respectively.

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

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

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

Pursuant to the terms of the Redco Purchase Agreement (referenced above), 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.

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.

Upon consummation of the previously announced

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

Department of Justice agreed that Crane Holdings, Co.

and ultimately Crane Company following the above-referenced separation transaction, 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.

and will become an indirect subsidiary of Crane Company following the separation transaction.

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 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”) 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.

On July 26, 2006, we entered into a consent decree with the EPA with respect to the Goodyear Site providing for, among other things, a work plan for further investigation and remediation activities (inclusive of a supplemental remediation investigation and feasibility study).

On July 26, 2006, we entered a consent decree with the EPA with respect to the Goodyear Site providing for, among other things, a work plan for further investigation and remediation activities (inclusive of a supplemental remediation investigation and feasibility study).

During the third quarter of 2014, the EPA issued a Record of Decision (“ROD”) amendment permitting, among other things, additional source area remediation resulting in us recording a charge of $ 49.0 million, extending the accrued costs through 2022.

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Government are received.

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Other Environmental Matters

Roseland, NJ Site

The Roseland Site was operated by Resistoflex Corporation (“Resistoflex”), which became an indirect subsidiary in 1985 when Crane Co.

(n/k/a Redco) 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 in certain buildings, all in accordance with the New Jersey Department of Environmental Protection guidelines and directives.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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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 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.

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, 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.

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

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.

The participants have reached agreement in principle on a framework for resolving the U.S.

Government’s share of response costs, subject to consummation of a mutually-agreeable consent decree, but we at present cannot predict whether or when these 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.

We 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

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.

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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(in millions) December 31, 2022 2021

Commercial paper $ — $ 27.2

364 -Day Credit Agreement

4.45 % notes due December 2023

Total short-term borrowings $ 699.3 $ —

4.45 % notes due December 2023

$ 299.4 $ 299.1

6.55 % notes due November 2036

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Debt discounts and debt issuance costs totaled $ 5.6 million and $ 5.7 million as of December 31, 2022 and 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 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 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 December 31, 2021 and 2020, there was $ 0.0 million and $ 27.2 million of outstanding borrowings, respectively.

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

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

364-Day Credit Agreement - On April 16, 2020, we entered into a new senior unsecured 364 -day credit facility (the “ 364 -Day Credit Agreement”).

We borrowed term loans denominated in dollars (the “Dollar Term Loans”) in an aggregate principal amount equal to $ 300 million, and term loans denominated in euros (the “Euro Term Loans”) in an aggregate principal amount equal to € 40 million under the 364 -Day Credit Agreement.

Interest on the Dollar Term Loans accrues at a rate per annum equal to (a) a base rate (determined in a customary manner), plus a margin dependent upon ratings of our senior unsecured long-term debt (the “Index Debt Rating”) or (2) an adjusted LIBO rate (determined in a customary manner) for an interest period to be selected by us, plus a margin dependent upon the Index Debt Rating.

Interest on the Euro Term Loans accrues at an adjusted LIBO rate (determined in a customary manner) for an interest period to be selected by us, plus a margin.

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

As of December 31, 2020, there was $ 348.5 million outstanding under 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, 2022 and 2021, there was no outstanding borrowings, respectively.

4.45% notes due December 2023 - In December 2013, we issued 10 year notes having an aggregate principal amount of $ 300 million.

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6.55% notes due November 2036 - In November 2006, we issued 30 year notes having an aggregate principal amount of $ 200 million.

The notes are unsecured, senior obligations of us that mature on November 15, 2036 and bear interest at 6.55 % per

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

annum, payable semi-annually on May 15 and November 15 of each year.

The notes are unsecured, senior obligations of us that mature on November 15, 2036 and bear interest at 6.55 % per annum, payable semi-annually on May 15 and November 15 of each year.

The notes have no sinking fund requirement, but may be redeemed, in whole or in part, at the option of us.

These notes do not contain any material debt covenants or cross default provisions.

If there is a change in control of the Company, and if as a consequence, the notes are rated below investment grade by both Moody’s Investors Service and Standard & Poor’s, then holders of the notes may require us to repurchase them, in whole or in part, for 101 % of the principal amount plus accrued and unpaid interest.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

repurchase them, in whole or in part, for 101 % of the principal amount plus accrued and unpaid interest.

Debt issuance costs are deferred and included in long-term debt and are amortized as a component of interest expense over the term of the notes.

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(in millions)

Total long-term debt $ 842.4

Total shareholders’ equity 1,832.3

Total debt $ 1,243.0

Equity 1,904.0

Capitalization $ 3,147.0

Total indebtedness to capitalization 39.5 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14 - Fair Value Measurements

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Fair value measurements are to be considered from the perspective of a market participant that holds the asset or owes the liability.

The standards also establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standards also establish a fair value

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standards describe three levels of inputs that may be used to measure fair value:

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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 Consolidated Balance Sheets and were $ 0.0 million and less than $ 0.1 million as of the years ended December 31, 2020 and 2019, respectively.

Such derivative liability amounts are recorded within “Accrued liabilities” on our Consolidated Balance Sheets and were less than $ 0.1 million and $ 0.1 million for the years ended December 31, 2021 and 2020, respectively.

Available-for-sale securities consist of marketable debt securities and rabbi trusts 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 $ 30.0 million as of December 31, 2020.

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

We also have two rabbi trusts that hold marketable securities for the benefit of participants in the SERP.

Such derivative receivable amounts are recorded within “ Other current assets ” on our Consolidated Balance Sheets and were $ 5.9 million and $ 0.0 million as of the years ended December 31, 2022 and 2021, respectively.

Such derivative liability amounts are recorded within “Accrued liabilities” on our Consolidated Balance Sheets and there were no derivative liabilities for the years ended December 31, 2022 and 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.

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Note 15 – Restructuring

2022 Repositioning - In the fourth quarter of 2022, in response to economic uncertainty, we initiated modest workforce reductions of approximately 300 employees, or about 3 % of our global workforce.

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

We recorded a charge of $ 14.4 million for the year ended December 31, 2022.

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.

We do not expect to incur additional restructuring charges.

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

We recorded restructuring gain of $ 3.7 million for the year ended December 31, 2021.

We recorded a charge of $ 32.1 million for the year ended December 31, 2020.

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.

We recorded a gain of $ 4.0 million in 2022.

We recorded charges of $ 0.1 million and $ 6.1 million for the years ended December 31, 2021 and 2020, respectively.

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.

We expect to complete the program in the first quarter of 2022.

Acquisition-Related Restructuring - In the third quarter of 2018, we initiated actions within our Payment & Merchandising Technologies segment related to the closure of Crane Currency’s printing operations in Sweden, which were transitioned to a new print facility in Malta.

These actions included workforce reductions of approximately 170 employees, or less than 2 % of our global workforce.

We do not expect to incur additional restructuring charges.

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

We recorded a restructuring gain of $ 13.3 million and $ 6.2 million for the years ended December 31, 2021 and 2020 respectively.

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.

Restructuring (Gains) Charges, Net

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

Restructuring Charges (Gains), Net

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

(in millions) For the year ended December 31, 2022 2021 2020

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Payment & Merchandising Technologies 6.2 ( 3.7 ) 19.1

Total restructuring (gains) charges, net $ ( 16.9 ) $ 31.7 $ 17.5

Engineering Materials 0.4 — 0.6

Total restructuring charges (gains), net $ 10.4 $ ( 16.9 ) $ 32.3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes our restructuring (gains) charges by program, cost type and segment for the years ended December 31, 2021, 2020 and 2019:

The following table summarizes our restructuring charges (gains) by program, cost type and segment for the years ended December 31, 2022, 2021 and 2020:

December 31, 2022 December 31, 2021 December 31, 2020

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Aerospace & Electronics $ 1.5 $ — $ 1.5 $ — $ — $ — $ — $ — $ —

Process Flow Technologies 6.3 $ — 6.3 — — — — — —

Payment & Merchandising Technologies 5.7 $ 0.5 6.2 — — — — — —

Engineered Materials 0.4 $ — 0.4 — — — — — —

2022 Repositioning 13.9 0.5 14.4 —

Aerospace & Electronics $ — $ — $ — $ — $ — $ — $ 6.5 $ — $ 6.5

Process Flow Technologies — — — ( 0.1 ) (a)

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( 2.8 ) ( 3.6 ) 16.6 4.6 (b)

Engineered Materials — — — — — — 0.6 — 0.6

2020 Repositioning — — — ( 0.9 ) (a)

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Process Flow Technologies $ ( 1.2 ) (a)

$ ( 2.8 ) (c)

$ ( 4.0 ) $ 0.1 $ — $ 0.1 $ 6.1 $ — $ 6.1

2019 Repositioning 0.1 — 0.1 6.1 — 6.1 9.9 — 9.9

Aerospace & Electronics — — — — — — — ( 0.4 ) ( 0.4 )

2019 Repositioning ( 1.2 ) (a)

( 4.0 ) 0.1 — 0.1 6.1 — 6.1

Process Flow Technologies $ — $ — $ — $ ( 0.4 ) (a)

( 13.1 ) ( 3.8 ) (a)

$ ( 12.7 ) (c)

$ ( 13.1 ) $ ( 3.8 ) $ — $ ( 3.8 )

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

— ( 0.2 ) ( 0.9 ) (a)

( 2.4 ) 0.3 1.8 2.1

— ( 0.2 ) ( 0.9 ) ( 1.5 ) (c)

2017 Repositioning — — — ( 0.6 ) (a)

( 13.3 ) ( 4.7 ) (a)

( 6.2 ) 0.9 1.4 2.3

Payment & Merchandising Technologies — — — — — — 1.7 3.6 5.3

Acquisition-Related Restructuring — — — — — — 1.7 3.6 5.3

( 13.3 ) ( 4.7 ) ( 1.5 ) (c)

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

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(b) Primarily reflects non-cash charges related to the impairment of ROU assets and leasehold improvements associated with the exit of the three leased facilities in 2020.

(d) Reflects a pre-tax gain related to the sale of a facility in 2020.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6 unchanged sentences

Payment & Merchandising Technologies 5.7 0.5 6.2

Engineered Materials 0.4 — 0.4

2022 Repositioning 13.9 0.5 14.4

Aerospace & Electronics $ 6.5 $ — $ 6.5

Process Flow Technologies 3.7 — 3.7

Payment & Merchandising Technologies 15.8 1.8 17.6

Engineered Materials 0.6 — 0.6

2020 Repositioning 26.6 1.8 28.4

Process Flow Technologies 14.9 ( 2.8 ) 12.1

2019 Repositioning 14.9 ( 2.8 ) 12.1

Aerospace & Electronics 1.3 ( 1.4 ) ( 0.1 )

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

(in millions) 2020 Repositioning 2019 Repositioning 2017 Repositioning Other Restructuring Total

Balance at December 31, 2019 $ — $ 9.9 $ 12.5 $ — $ 22.4

(in millions) 2022 Repositioning 2020 Repositioning 2019 Repositioning 2017 Repositioning Total

Balance as of December 31, 2020 (c)

$ — $ 4.2 $ 16.0 $ 4.7 $ 24.9

— — 0.1 — 0.1

Adjustments (b)

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Utilization — ( 3.3 ) ( 4.6 ) ( 3.5 ) ( 11.4 )

Balance at December 31, 2020 (c)

Balance as of December 31, 2021 (c)

$ — $ — $ 11.5 $ 0.7 $ 12.2

Charges (Gain) (a)

14.4 — ( 1.2 ) — 13.2

Adjustments (b)

( 0.9 ) — ( 0.5 ) — ( 1.4 )

Utilization ( 0.2 ) — ( 7.9 ) ( 0.7 ) ( 8.8 )

Balance at December 31, 2021 (c)

Balance as of December 31, 2022 (c)

$ 14.2 $ — $ 2.4 $ — $ 16.6

(a) Included within “Restructuring (gains) charges, net” in the Consolidated Statements of Operations

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

(a) Included within “Restructuring charges (gains), net” in the Consolidated Statements of Operations

(b) Included within “Restructuring charges (gains), net” in the Consolidated Statements of Operations and reflects changes in estimates for increases and decreases in costs

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 17 – Quarterly Results (Unaudited)

(in millions, except per share data)

For year ended December 31, First Quarter Second Quarter Third Quarter Fourth Quarter Full Year

Net sales $ 779.6 $ 796.4 $ 833.5 $ 770.5 $ 3,180.0

Cost of sales 470.5 476.8 509.1 482.5 1,939.0

Gross profit 309.0 319.6 324.4 288.0 1,241.0

Operating profit 140.1 136.9 138.2 87.1 502.3

Net income from continuing operations attributable to common shareholders 103.4 110.7 111.4 68.8 394.3

Income from discontinued operations, net of tax 5.0 27.6 5.2 3.3 41.1

Net income attributable to common shareholders 108.4 138.3 116.6 72.1 435.4

Earnings per basic share:

Earnings per basic share from continuing operations $ 1.78 $ 1.89 $ 1.90 $ 1.19 $ 6.76

Earnings per basic share from discontinued operations 0.08 0.47 0.09 0.06 0.70

Earnings per basic share $ 1.86 $ 2.36 $ 1.99 $ 1.25 $ 7.46

Earnings per diluted share:

Earnings per diluted share from continuing operations $ 1.76 $ 1.87 $ 1.87 $ 1.16 $ 6.66

Earnings per diluted share from discontinued operations 0.08 0.46 0.09 0.06 0.70

Earnings per diluted share $ 1.84 $ 2.33 $ 1.96 $ 1.22 $ 7.36

Net sales $ 746.9 $ 644.3 $ 686.5 $ 683.6 $ 2,761.3

Cost of sales 471.9 424.8 443.3 456.2 1,796.2

Gross profit 275.0 219.5 243.2 227.4 965.1

Operating profit 81.7 28.7 75.9 53.9 240.2

Net income from continuing operations attributable to common shareholders 57.7 13.4 49.4 42.6 163.1

Income from discontinued operations, net of tax 5.0 1.4 7.2 4.3 17.9

Net income attributable to common shareholders 62.7 14.8 56.6 46.9 181.0

Earnings per basic share:

Earnings per basic share from continuing operations $ 0.98 $ 0.23 $ 0.85 $ 0.73 $ 2.79

Earnings per basic share from discontinued operations 0.09 0.03 0.12 0.07 0.31

Earnings per basic share $ 1.07 $ 0.26 $ 0.97 $ 0.80 $ 3.10

Earnings per diluted share:

Earnings per diluted share from continuing operations $ 0.96 $ 0.23 $ 0.84 $ 0.73 $ 2.77

Earnings per diluted share from discontinued operations 0.09 0.02 0.13 0.07 0.31

Earnings per diluted share $ 1.05 $ 0.25 $ 0.97 $ 0.80 $ 3.08

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data