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Item 1. Financial Statements

2023-08-07 compared with 2023-05-10 · 332 added, 392 removed, 282 unchanged (72% of the section changed)

FINANCIAL STATEMENTS

CRANE HOLDINGS, CO.

CRANE NXT, CO.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended Six Months Ended

June 30, June 30,

(in millions, except per share data) 2023 2022 2023 2022

4 unchanged sentences

Operating profit 68.8 73.4 134.7 150.3

Other (expense) income:

Other income (expense):

Interest income 0.2 0.1 0.4 0.1

Interest expense ( 14.1 ) ( 10.5 ) ( 24.5 ) ( 21.0 )

Miscellaneous (expense) income, net ( 2.4 ) 3.5

Related party interest expense — ( 3.6 ) ( 2.5 ) ( 7.3 )

Miscellaneous income, net 1.0 2.1 2.4 2.9

Total other expense, net ( 12.9 ) ( 11.9 ) ( 24.2 ) ( 25.3 )

8 unchanged sentences

Diluted 57.4 56.7 57.4 56.7

Dividends per share $ 0.47 $ 0.47

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO.

Dividends per share $ 0.14 n/a $ 0.14 n/a

See Notes to Unaudited Consolidated and Combined Condensed Financial Statements.

CRANE NXT, CO.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

June 30, June 30,

(in millions) 2023 2022 2023 2022

Net income before allocation to noncontrolling interests $ 105.7 $ 105.0

Net income attributable to common shareholders $ 43.2 $ 48.8 $ 86.9 $ 98.3

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

2 unchanged sentences

Other comprehensive income (loss), net of tax ( 3.6 ) ( 46.3 ) 0.8 ( 62.6 )

Comprehensive income before allocation to noncontrolling interests 121.1 86.7

Noncontrolling interests in comprehensive income ( 0.1 ) 0.1

Comprehensive income attributable to common shareholders $ 39.6 $ 2.5 $ 87.7 $ 35.7

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO.

See Notes to Unaudited Consolidated and Combined Condensed Financial Statements.

CRANE NXT, CO.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions) March 31,

CONSOLIDATED AND COMBINED CONDENSED BALANCE SHEETS

(in millions) June 30,

2023 December 31,

1 unchanged sentence

Cash and cash equivalents $ 276.9 $ 230.7

Accounts receivable, net of allowance for doubtful accounts of $ 16.9 as of March 31, 2023 and $ 14.1 as of December 31, 2022

Accounts receivable, net of allowance for credit losses of $ 6.5 as of June 30, 2023 and $ 6.1 as of December 31, 2022

Inventories, net:

15 unchanged sentences

Total assets $ 2,195.0 $ 2,129.4

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO.

See Notes to Unaudited Consolidated and Combined Condensed Financial Statements.

CRANE NXT, CO.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

CONSOLIDATED AND COMBINED CONDENSED BALANCE SHEETS

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

2023 December 31,

18 unchanged sentences

Retained earnings 35.3 —

Crane Net Investment — 915.3

Accumulated other comprehensive loss ( 130.7 ) ( 131.5 )

Treasury stock ( 844.4 ) —

Total shareholders’ equity 2,015.2 1,901.4

Noncontrolling interests 2.5 2.6

Total equity 855.2 783.8

Total liabilities and equity $ 2,195.0 $ 2,129.4

Common shares issued 72,440,983 72,426,389

Common shares held in treasury 15,715,676 16,101,007

Common shares outstanding 56,725,307 56,325,382

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO.

Common shares issued 72,441,647 n/a

Common shares held in treasury 15,647,379 n/a

Common shares outstanding 56,794,268 n/a

See Notes to Unaudited Consolidated and Combined Condensed Financial Statements.

CRANE NXT, CO.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF CASH FLOWS

Six Months Ended

(in millions) 2023 2022

1 unchanged sentence

Net income attributable to common shareholders $ 86.9 $ 98.3

Adjustments to reconcile net income to net cash flows provided by operating activities:

Depreciation and amortization 38.5 39.9

3 unchanged sentences

Cash used for operating working capital ( 36.7 ) ( 35.9 )

Defined benefit plans and postretirement contributions ( 1.8 ) ( 2.8 )

Environmental payments, net of reimbursements ( 1.3 ) ( 1.3 )

Asbestos related payments, net of insurance recoveries — ( 7.5 )

Other ( 2.8 ) 6.8

Total used for operating activities ( 70.8 ) ( 55.5 )

Total provided by operating activities 95.0 121.1

Investing activities:

Proceeds from disposition of capital assets 0.1 —

Capital expenditures ( 8.5 ) ( 7.6 )

2 unchanged sentences

Dividends paid ( 7.9 ) —

Reacquisition of shares on open market — ( 175.8 )

Stock options exercised, net of shares reacquired 1.9 —

Debt issuance costs ( 5.2 ) —

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

Repayment of long-term debt ( 300.0 ) —

Proceeds from term loan 350.0 —

Repayment of term loan ( 50.0 ) —

Net transfers to Crane ( 32.5 ) ( 72.9 )

Total used for financing activities ( 43.7 ) ( 72.9 )

Effect of exchange rates on cash and cash equivalents 3.4 ( 12.6 )

Decrease in cash and cash equivalents ( 147.4 ) ( 171.4 )

Increase in cash and cash equivalents 46.2 28.0

Cash and cash equivalents at beginning of period 230.7 101.2

Cash and cash equivalents at end of period $ 276.9 $ 129.2

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO.

See Notes to Unaudited Consolidated and Combined Condensed Financial Statements.

CRANE NXT, CO.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF CASH FLOWS

Six Months Ended

(in millions) 2023 2022

Detail of cash used for operating working capital:

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

Accounts receivable $ 5.9 $ ( 1.5 )

8 unchanged sentences

Income taxes paid $ 28.9 $ 19.0

See Notes to Condensed Consolidated Financial Statements.

CRANE HOLDINGS, CO.

See Notes to Unaudited Consolidated and Combined Condensed Financial Statements.

CRANE NXT, CO.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF CHANGES IN EQUITY

(in millions, except share data) Common

4 unchanged sentences

Loss Treasury

Share- holders’

Equity Non-controlling

Interest Total

Stock Crane Net Investment Total

BALANCE December 31, 2022

$ — $ — $ — $ ( 131.5 ) $ — $ 915.3 $ 783.8

Net income — — — — — 43.7 43.7

Net transfers to Crane — — — — — ( 393.1 ) ( 393.1 )

Stock-based compensation expense — — — — — 2.3 2.3

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — ( 0.5 ) — — ( 0.5 )

Currency translation adjustment — — — 4.9 — 4.9

BALANCE March 31, 2023 $ — $ — $ — $ ( 127.1 ) $ — $ 568.2 $ 441.1

Net income — — 43.2 — — — 43.2

Cash dividends ($ 0.14 per share)

— — ( 7.9 ) — — — ( 7.9 )

Dividend from Crane — — — — 275.0 275.0

Net transfers from Crane — — — — — 103.9 103.9

Reclassification of Crane Net Investment to Common Stock, Treasury Stock and Capital Surplus 72.4 1,722.8 — — ( 848.1 ) ( 947.1 ) —

Exercise of stock options, net of shares reacquired of 64,105 shares

2 unchanged sentences

Stock-based compensation expense — 1.9 — — — — 1.9

Stock-based compensation reclassification 1

— ( 0.3 ) — — — — ( 0.3 )

Changes in pension and postretirement plan assets and benefit obligation, net of tax — — — ( 0.5 ) — — ( 0.5 )

Currency translation adjustment — — — ( 3.1 ) — — ( 3.1 )

BALANCE MARCH 31, 2023 72.4 $ 376.8 $ 2,901.9 $ ( 487.8 ) $ ( 848.1 ) $ 2,015.2 $ 2.5 $ 2,017.7

(in millions, except share data) Common

Par Value Capital

Surplus Retained

Earnings Accumulated

BALANCE June 30, 2023 $ 72.4 $ 1,722.6 $ 35.3 $ ( 130.7 ) $ ( 844.4 ) $ — $ 855.2

1 Reclassification of stock-based compensation due to modification resulting from equity award conversions.

See Note 1, “Organization and Basis of Presentation” for additional information.

(in millions) Crane Net Investment Accumulated

Comprehensive

Loss Treasury

Share- holders’

Equity Non-controlling

Interest Total

BALANCE December 31, 2021 $ 836.1 $ ( 72.3 ) $ 763.8

Net income 49.5 — 49.5

Cash dividends ($ 0.47 per share)

— — ( 26.4 ) — — ( 26.4 ) — ( 26.4 )

Reacquisition on open market of 1,699,949 shares

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

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

— — — — 6.1 6.1 — 6.1

Impact from settlement of share-based awards, net of shares acquired — ( 5.1 ) — — ( 0.3 ) ( 5.4 ) — ( 5.4 )

Stock-based compensation expense 2.1 — 2.1

1 unchanged sentence

Currency translation adjustment — ( 16.1 ) ( 16.1 )

Net transfers to Crane ( 22.9 ) — ( 22.9 )

BALANCE March 31, 2022 $ 864.8 $ ( 88.6 ) $ 776.2

See Notes to Condensed Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and the instructions to Form 10-Q and, therefore, reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented.

Net income 48.8 — 48.8

Stock-based compensation expense 2.4 — 2.4

Changes in pension and postretirement plan assets and benefit obligation, net of tax — ( 0.2 ) ( 0.2 )

Currency translation adjustment — ( 46.1 ) ( 46.1 )

Net transfers to Crane ( 50.0 ) — ( 50.0 )

BALANCE June 30, 2022 $ 866.0 $ ( 134.9 ) $ 731.1

See Notes to Unaudited Consolidated and Combined Condensed Financial Statements.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Note 1 - Organization and Basis of Presentation

Crane NXT, Co.

is a leading provider of trusted technology solutions to secure, detect, and authenticate our customers’ most valuable assets.

We are comprised of two reporting segments:

Crane Payment Innovations (“CPI”) and Crane Currency.

Our primary end markets include governments and a wide range of consumer related end markets including retail and gaming.

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

References herein to “Crane NXT,” “we,” “us” and “our” refer to Crane NXT, Co.

and its subsidiaries, including when Crane NXT, Co.

was named “Crane Holdings, Co.” unless the context implies otherwise.

References to the “Business” refer to our business, including prior to the Separation (as defined below) when it was a business of Crane Holdings, Co.

References herein to “Holdings” refer to Crane Holdings, Co.

and its subsidiaries prior to the consummation of the Separation unless the context implies otherwise.

On April 3, 2023, Holdings was separated (the “Separation”) into two independent, publicly-traded companies, Crane NXT, Co.

and Crane Company (“SpinCo”) through a pro-rata distribution (the “Distribution”) of all the issued and outstanding common stock of SpinCo to the stockholders of Holdings.

As part of the Separation, the Aerospace & Electronics, Process Flow Technologies and Engineered Materials businesses of Holdings were spun off to SpinCo.

Also, as part of the Separation, Holdings retained the Payment and Merchandising Technologies business and was renamed “Crane NXT, Co.” on April 3, 2023.

Following the consummation of the Separation, our common stock is listed under the symbol “CXT” on the New York Stock Exchange.

Due to SpinCo’s larger operations, greater tangible assets, greater fair value and greater net sales, in each case, relative to ours, among other factors, SpinCo was considered to be the “accounting spinnor” and therefore will be the “accounting successor” to Holdings for accounting purposes, notwithstanding the legal form of the Separation.

Therefore, following the Separation, our historical financial statements are comprised solely of combined carve-out financial statements representing only our operations, assets, liabilities and equity on a stand-alone basis derived from the consolidated financial statements and accounting records of Holdings.

In connection with the Separation, we entered into a $ 350 million, 3-year term loan facility, and, on April 3, 2023, prior to the Separation, SpinCo paid a one-time cash dividend in the amount of $ 275 million to Holdings.

See Note 12, “Financing” and Note 2, “Related Parties" for additional information.

In addition, Holdings transferred $ 84 million of cash to us as part of the Separation.

In connection with the Separation, we established our common stock and treasury stock as part of the distribution from SpinCo.

As of June 30, 2023, we reflected $ 72.4 million of common stock at par value and $ 844.4 million of treasury stock at market value on the Unaudited Consolidated and Combined Condensed Financial Statements.

Stock-based Compensation

Prior to the Separation, Crane NXT employees participated in Holdings equity incentive plans, including equity awards of stock options, restricted share units, performance-based and time-based restricted share units and deferred stock units in respect of Holdings common shares.

Crane NXT Unaudited Consolidated and Combined Condensed Financial Statements reflect compensation expense for these stock-based plans associated with the portion of the Holdings equity incentive plans in which Crane NXT employees and directors participated.

A s a result of the Separation, all outstanding stock-based compensation awards of Holdings were exchanged for similarly valued stock-based compensation awards of either SpinCo, Crane NXT or both.

The exchanged awards are subject to the same service vesting requirements as the original awards.

At June 30, 2023, there are 0.5 million options outstanding related to Crane NXT associates and 0.6 million options outstanding related to SpinCo associates.

There was no significant incremental stock-based compensation expense recorded as a result of the equity award conversions.

The modification of the performance-based restricted share units resulted in a $ 0.8 million liability as of June 30, 2023, which is included in “Accrued liabilities” in our Unaudited Consolidated and Combined Condensed Financial Statements.

Separation Agreements

On April 3, 2023, we entered into definitive agreements with SpinCo in connection with the Separation.

The agreements set forth the terms and conditions of the Separation and provide a framework for Crane NXT’s relationship with SpinCo following

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

the Separation, including the allocation between Crane NXT and SpinCo of Crane NXT’s and SpinCo’s assets, liabilities and obligations attributable to periods prior to, at and after the Separation.

These agreements include the Separation and Distribution Agreement (as described below), which contains certain key provisions related to the Separation, as well as a Transition Services Agreement, a Tax Matters Agreement, an Employee Matters Agreement and an Intellectual Property Matters Agreement (each, as described below).

Separation and Distribution Agreement

The Separation and Distribution Agreement sets forth, among other things, the agreements between us and SpinCo regarding the principal transactions necessary to effect the Separation.

It also sets forth other agreements that govern certain aspects of our ongoing relationship with SpinCo after the completion of the Separation.

Transition Services Agreement

The Transition Services Agreement provides for the transition of Holdings into two independent, publicly-traded companies following the consummation of the Separation, and provides each party time to replace certain assets and employees that have been allocated to the other party.

Under the Transition Services Agreement, we and SpinCo each have agreed to provide transition service support to the other for various periods of time of up to 18 months in the areas of finance, tax, human resources, legal and information technology.

Such services are provided on customary commercial terms, and each such service can be terminated prior to the expected termination date of such service if it is no longer required.

The Transition Services Agreement was negotiated in the context of a parent-subsidiary relationship and in the context of the Separation.

Tax Matters Agreement

The Tax Matters Agreement, among other things, governs our and SpinCo’s respective rights, responsibilities and obligations after the Separation with respect to tax liabilities and benefits (including any taxes imposed that are attributable to the failure of the Distribution and certain related transactions to qualify as a transaction that is tax-free for U.S.

federal income tax purposes), tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes.

Although enforceable as between the parties, the Tax Matters Agreement will not be binding on the Internal Revenue Service or other tax authorities.

Employee Matters Agreement

The Employee Matters Agreement, among other things, governs Crane NXT’s, SpinCo’s and their respective subsidiaries’ rights, responsibilities and obligations after the Separation with respect to the following matters:

(i) employees and former employees (and their respective dependents and beneficiaries) who are or were employed with Crane NXT, SpinCo or their respective subsidiaries, (ii) the allocation of assets and liabilities generally relating to employees, employment or service-related matters and employee benefit plans, (iii) employee compensation plans and director compensation plans, including equity plans, and (iv) other human resources, employment and employee benefits matters.

Intellectual Property Matters Agreement

The Intellectual Property Matters Agreement, among other things, governs the continued ownership and use by Crane NXT and SpinCo of their respective trademarks and trade names that include or are comprised of the term “Crane” in their respective businesses.

Basis of Presentation

The accompanying Unaudited Consolidated and Combined Condensed Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and, therefore, reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented.

All such adjustments are of a normal recurring nature.

These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022.

As used in these notes, the terms "we," "us," "our," and the "Company" mean Crane Holdings, Co., which was renamed “Crane NXT, Co.” on April 3, 2023.

These Unaudited Consolidated and Combined Condensed Financial Statements should be read in conjunction with the Crane NXT Combined Financial Statements and Notes to Combined Financial Statements for the year ended December 31, 2022, previously filed on Form 8-K on April 3, 2023, and the Crane NXT Condensed Combined Financial Statements and Notes to the Condensed Combined Financial Statements for the quarter ended March 31, 2023 filed on Form 8-K on May 10, 2023.

The Business' financial statements for periods prior to the Separation are prepared on a "carve-out" basis, as described below.

Crane NXT 's financial statements for the period from April 3, 2023 through June 30, 2023 is the Business’ first consolidated financial statements based on the reported results of Crane NXT as a stand-alone company.

Basis of Presentation Prior to the Separation

Prior to the Separation, the Business operated as Holdings’ Payment & Merchandising Technologies (“P&MT”) segment;

consequently, stand-alone financial statements prior to the Separation have not been prepared for the Business.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

The Unaudited Consolidated and Combined Condensed Financial Statements of Operations include all revenues and costs directly attributable to the Business, including costs for facilities, functions and services used by the Business.

Prior to the Separation, costs for certain functions and services performed by centralized Holdings organizations were directly charged to the Business based on specific identification when possible or reasonable allocation methods such as net sales, headcount, usage or other allocation methods.

The results of operations include allocations of costs for administrative functions and services performed on behalf of the Business by centralized groups within Holdings (see Note 2, “Related Parties” for a description of the allocation methodologies).

All charges and allocations for facilities, functions and services performed by Holdings have been deemed settled in cash by the Business to Holdings in the period in which the cost was recorded in the Unaudited Consolidated and Combined Condensed Statements of Operations.

Current and deferred income taxes have been determined based on the stand-alone results of the Business.

However, because the Business filed group tax returns as part of Holdings in certain jurisdictions, the Business’ actual tax balances may differ from that reported.

The Business’ portion of income taxes for certain jurisdictions is deemed to have been settled in the period the related tax expense was recorded.

Prior to the Separation, Holdings used a centralized approach to cash management and financing its operations.

Accordingly, none of the cash of Holdings has been allocated to the Business in the Unaudited Consolidated and Combined Condensed Financial Statements.

However, cash balances primarily associated with certain of our foreign entities that did not participate in Holdings’ cash management program have been included in the Unaudited Consolidated and Combined Condensed Financial Statements.

Transactions between Holdings and the Business are deemed to have been settled immediately through “Crane Net Investment.” The net effect of the deemed settled transactions is reflected in the Unaudited Consolidated and Combined Condensed Statements of Cash Flows as “Net transfers to Crane” within financing activities and in the Unaudited Consolidated and Combined Condensed Balance Sheets as “Crane Net Investment.” Other transactions, which have historically been cash-settled, are reflected in the Unaudited Consolidated and Combined Condensed Balance Sheets within “Accounts receivable, net” and “Accounts payable.”

All intercompany accounts and transactions within the Business have been eliminated in the preparation of the Unaudited Consolidated and Combined Condensed Financial Statements.

The Unaudited Consolidated and Combined Condensed Financial Statements of the Business include assets and liabilities that have been determined to be specifically identifiable or otherwise attributable to the Business.

All allocations and estimates in the Unaudited Consolidated and Combined Condensed Financial Statements are based on assumptions that management believes are reasonable.

However, for the periods prior to the Separation, the Unaudited Consolidated and Combined Condensed Financial Statements included herein may not be indicative of the financial position, results of operations and cash flows of the Business in the future, or if the Business had been a separate, stand-alone entity during the periods presented.

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.

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

On April 3, 2023, the Company, was separated into two independent, publicly-traded companies, in a transaction in which the Company retained its Payment & Merchandising Technologies segment and spun off its Aerospace & Electronics, Process Flow Technologies and Engineered Materials segments to the Company’s stockholders (the “Separation”).

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 Condensed Consolidated Statement of Operations, Balance Sheets and Cash Flows.

We 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 our Unaudited Consolidated and Combined Condensed Statements of Operations, Balance Sheets and Cash Flows.

Note 2 - Related Parties

Prior to the Separation, the Business was managed and operated in the normal course of business with other affiliates of Holdings.

Accordingly, certain shared costs were allocated to the Business and are reflected as expenses in the Unaudited Consolidated and Combined Condensed Financial Statements.

Allocated Centralized Costs.

The Unaudited Consolidated and Combined Condensed Financial Statements were prepared on a stand-alone basis and were derived from the consolidated financial statements and accounting records of Holdings for the periods prior to the Separation.

Prior to the Separation, Holdings incurred corporate costs for services provided to the Business as well as other Holdings businesses.

These services included treasury, tax, accounting, human resources, audit, legal, purchasing, information technology and other such services.

The costs associated with these services generally included all payroll and benefit costs, as well as overhead costs related to the support functions.

Holdings also allocated costs associated with corporate insurance coverage and medical, pension, post-retirement and other health plan costs for employees participating in Holdings sponsored plans.

Allocations were based on several utilization measures including headcount, proportionate usage and

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

relative net sales.

All such amounts were deemed incurred and settled by the Business in the period in which the costs were recorded.

The allocated centralized costs for the Business prior to the Separation were $ 13.5 million for the three months ended March 31, 2023, and were $ 7.3 million and $ 14.6 million for the three-and-six-months ended June 30, 2022.

They are included in “Selling, general and administrative” in the Unaudited Consolidated and Combined Condensed Statements of Operations.

In the opinion of our management, the expense and cost allocations have been determined on a basis considered to be a reasonable reflection of the utilization of services provided to or for the benefit received by the Business during 2023 and 2022 prior to the Separation.

The amounts that would have been, or will be incurred, on a stand-alone basis could differ from the amounts allocated due to economies of scale, difference in management judgment, a requirement for more or fewer employees or other factors.

Management does not believe, however, that it is practicable to estimate what these expenses would have been had the Business operated as an independent entity, including any expenses associated with obtaining any of these services from unaffiliated entities.

In addition, the future results of operations, financial position and cash flows could differ materially from the historical results presented herein.

Separation Costs .

In connection with the Separation, we have incurred transaction related expenses of $ 15.2 million and $ 17.0 million for the three-and-six-months ended June 30, 2023, respectively, recorded in “Selling, general and administrative” in the Unaudited Consolidated and Combined Condensed Statements of Operations.

Expenses primarily consist of professional service fees.

Crane NXT did no t incur costs in relation to the Separation for the three-and-six-months ended June 30, 2022.

Cash Management and Financing.

Prior to the Separation, the Business participated in Holdings’ centralized cash management and daily cash sweeps.

Disbursements were made through centralized accounts payable systems which were operated by Holdings.

Cash receipts were transferred to centralized accounts, which were also maintained by Holdings.

As cash was received and disbursed by Holdings, it was accounted for by the Business through “Crane Net Investment.” Historically, Holdings had centrally managed and swept cash for most domestic and certain European entities.

However, certain legal entities did not participate in Holdings’ centralized cash management program for a variety of reasons.

As such, the Business’ cash that was not included in the centralized cash management and financing programs is classified as “Cash and cash equivalents” on our Unaudited Consolidated and Combined Condensed Balance Sheets.

During the three months ended June 30, 2023, net assets of $ 379 million were contributed to the Business.

Included in the net assets was a one-time cash dividend of $ 275 million issued on April 3, 2023, prior to the Separation, from SpinCo to Holdings, as well as a cash transfer of $ 84 million from Holdings to us.

These contributions of net assets are recorded as “Dividend from Crane” and “Net transfers from Crane”, respectively, on the Unaudited Consolidated and Combined Condensed Statements of Changes in Equity through “Crane Net Investment”.

Accounts Receivable and Payable.

Certain related party transactions between the Business and Holdings have been included within “Crane Net Investment” in the Unaudited Consolidated and Combined Condensed Balance Sheets in the historical periods presented when the related party transactions were not settled in cash.

Prior to the Separation, “Crane Net Investment” included related party loans receivable due from Holdings and its affiliates of $ 0.0 million and $ 27.2 million as of March 31, 2023, and December 31, 2022, respectively.

“Crane Net Investment” included related party loans payable due to Holdings and its affiliates of $ 242.9 million and $ 232.1 million as of March 31, 2023, and December 31, 2022, respectively.

We recorded related party interest expense related to the loan activity with Holdings and its affiliates of $ 2.5 million for the three months ended March 31, 3023;

and $ 3.6 million and $ 7.3 million for the three-and-six-months ended June 30, 2022, respectively, which are included in the Business’ results as “Related party interest expense” in the Unaudited Consolidated and Combined Condensed Statements of Operations.

The total effect of the settlement of these related party transactions is reflected with “Net transfers to Crane” as a financing activity in the Unaudited Consolidated and Combined Condensed Statements of Cash Flows.

Additionally, prior to the Separation, certain transactions between the Business and other Holdings affiliates were cash-settled on a current basis and, therefore, are reflected in the Unaudited Consolidated and Combined Condensed Balance Sheets.

Accounts receivable, net includes $ 0.1 million and $ 0.1 million as of March 31, 2023, and December 31, 2022, respectively, and Accounts payable includes $ 1.2 million and $ 1.7 million as of March 31, 2023, and December 31, 2022, respectively, related to such transactions.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Note 3 - Segment Results

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

As of March 31, 2023, we had four reportable segments:

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

Assets of the reportable segments exclude general corporate assets, which principally consist of cash, deferred tax assets, insurance receivables, certain property, plant and equipment, and certain other assets.

As of June 30, 2023, we had two reportable segments:

Crane Payment Innovations and Crane Currency.

Assets of the reportable segments exclude general corporate assets, which principally consist of cash, deferred tax assets, certain property, plant and equipment, and certain other assets.

Corporate consists of corporate office expenses including compensation and benefits for corporate employees, occupancy, depreciation, and other administrative costs.

A brief description of each of our segments as of March 31, 2023 are 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 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.

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

Products and services are organized into six integrated solutions:

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

Process Flow Technologies

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

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

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

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

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

Payment & Merchandising Technologies

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

A brief description of each of our segments as of June 30, 2023, is as follows:

Crane Payment Innovations

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.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 2022, Engineered Materials segment was no longer classified as held for sale and as such, the results of Engineered Materials segment are presented as continuing operations from second quarter of 2022.

This change was applied on retroactive basis.

Key research and development and manufacturing facilities are located in the United States, the United Kingdom, Mexico, Japan, Switzerland and Germany, with additional sales offices across the world.

Crane Currency

Crane Currency provides advanced security solutions based on proprietary technology for securing physical products, including banknotes, consumer goods and industrial products.

Facilities are located in the United States, Sweden and Malta.

Financial information by reportable segment is set forth below.

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in millions) 2023 2022 2023 2022

Aerospace & Electronics $ 180.1 $ 157.2

Process Flow Technologies 271.4 311.3

Payment & Merchandising Technologies 329.1 332.6

Engineered Materials 62.3 70.4

Crane Payment Innovations $ 225.9 $ 211.4 $ 449.7 $ 422.4

Crane Currency 126.5 122.6 231.8 244.2

Total $ 352.4 $ 334.0 $ 681.5 $ 666.6

Operating profit:

Aerospace & Electronics $ 37.7 $ 28.1

Process Flow Technologies 63.3 49.0

Payment & Merchandising Technologies 79.4 84.2

Engineered Materials 11.4 13.4

Crane Payment Innovations $ 64.8 $ 51.3 $ 126.6 $ 100.3

Crane Currency 34.7 29.4 52.3 64.6

Corporate ( 30.7 ) ( 7.3 ) ( 44.2 ) ( 14.6 )

2 unchanged sentences

Interest expense ( 14.1 ) ( 10.5 ) ( 24.5 ) ( 21.0 )

Miscellaneous (expense) income, net ( 2.4 ) 3.5

Related party interest expense — ( 3.6 ) ( 2.5 ) ( 7.3 )

Miscellaneous income, net 1.0 2.1 2.4 2.9

Income before income taxes $ 55.9 $ 61.5 $ 110.5 $ 125.0

(in millions) March 31, 2023 December 31, 2022

Aerospace & Electronics $ 698.9 $ 663.3

Process Flow Technologies 1,073.3 1,064.7

Payment & Merchandising Technologies 2,103.5 2,125.9

Engineered Materials 231.2 218.6

(in millions) June 30, 2023 December 31, 2022

Crane Payment Innovations $ 1,325.9 $ 1,266.1

Crane Currency 812.5 863.3

Corporate 56.6 —

Total $ 2,195.0 $ 2,129.4

(in millions) March 31, 2023 December 31, 2022

Aerospace & Electronics $ 202.3 $ 202.3

Process Flow Technologies 319.5 317.3

Payment & Merchandising Technologies 837.8 836.6

Engineered Materials 171.3 171.3

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

(in millions) June 30, 2023 December 31, 2022

Crane Payment Innovations $ 621.3 $ 622.4

Crane Currency 214.0 214.2

Total $ 835.3 $ 836.6

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Revenue

1 unchanged sentence

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in millions) 2023 2022 2023 2022

Aerospace & Electronics

Commercial Original Equipment $ 68.4 $ 58.7

Military and Other Original Equipment 61.9 57.4

Commercial Aftermarket Products 37.9 28.6

Military Aftermarket Products 11.9 12.5

Total Aerospace & Electronics $ 180.1 $ 157.2

Process Flow Technologies

Process Valves and Related Products $ 202.9 $ 182.9

Commercial Valves 30.6 98.2

Pumps and Systems 37.9 30.2

Total Process Flow Technologies $ 271.4 $ 311.3

Payment & Merchandising Technologies

Payment Acceptance and Dispensing Products $ 223.8 $ 211.0

Crane Payment Innovations

Products $ 193.1 $ 181.3 $ 385.8 $ 363.0

Services 32.8 30.1 63.9 59.4

Total Crane Payment Innovations $ 225.9 $ 211.4 $ 449.7 $ 422.4

Crane Currency

Banknotes and Security Products 126.5 122.6 231.8 244.2

Total Payment & Merchandising Technologies $ 329.1 $ 332.6

Engineered Materials

FRP - Recreational Vehicles $ 20.3 $ 35.7

FRP - Building Products 32.3 27.4

FRP - Transportation 9.7 7.3

Total Engineered Materials $ 62.3 $ 70.4

Total Crane Currency $ 126.5 $ 122.6 231.8 244.2

Net sales $ 352.4 $ 334.0 $ 681.5 $ 666.6

Remaining Performance Obligations

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

As of March 31, 2023, total backlog was $ 1,580.5 million.

We expect to recognize approximately 84 % of our remaining performance obligations as revenue in 2023, an additional 14 % in 2024 and the balance thereafter.

The transaction price allocated to remaining performance obligations represents the transaction price of firm orders which have not yet been fulfilled.

As of June 30, 2023, our performance obligations were $ 485.1 million.

We expect to recognize approximately 83 % of our remaining performance obligations as revenue in 2023, and the remainder in 2024.

Contract Assets and Contract Liabilities

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Revenue related to contract liabilities is recognized when control is transferred to the customer.

We report contract assets, which are included within “Other current assets” in our Condensed Consolidated Balance Sheets, and contract liabilities, which are included within “Accrued liabilities” on our Condensed Consolidated Balance Sheets, on a contract-by-contract net basis at the end of each reporting period.

We report contract assets, which are included within “Other current assets” in our Unaudited Consolidated and Combined Condensed Balance Sheets, and contract liabilities, which are included within “Accrued liabilities” on our Unaudited Consolidated and Combined Condensed Balance Sheets, on a contract-by-contract net basis at the end of each reporting period.

Net contract assets and contract liabilities consisted of the following:

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

Contract assets $ 32.7 $ 31.8

Contract liabilities $ 93.9 $ 93.6

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We recognized revenue of $ 38.1 million during the three-month period ended March 31, 2023, related to contract liabilities as of December 31, 2022.

We recognized revenue of $ 29.0 million and $ 56.3 million during the three-and-six-months ended June 30, 2023, related to contract liabilities as of December 31, 2022.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Note 5 - Earnings Per Share

Our basic earnings per share calculations are based on the weighted average number of common shares outstanding during the period.

Potentially dilutive securities include outstanding stock options, restricted share units, deferred stock units and performance-based restricted share units.

Potentially dilutive securities include outstanding stock options, restricted share units, deferred stock units and performance-based restricted share units that were issued to Crane NXT and SpinCo employees.

The effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury method.

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

Three Months Ended

On April 3, 2023, 56.7 million shares of our common stock, par value $ 1.00 per share, were distributed to Holdings stockholders of record as of March 23, 2023.

This share amount is utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation and such shares are treated as issued and outstanding for purposes of calculating historical earnings per share.

For periods prior to the Separation, it is assumed that there are no dilutive equity instruments as there were no Crane NXT stock-based awards outstanding prior to the Separation.

The weighted average number of common shares outstanding during the three-and-six-months ended June 30, 2023 was based on the weighted average number of common shares after the Separation.

Three Months Ended Six Months Ended

June 30, June 30,

(in millions, except per share data) 2023 2022 2023 2022

5 unchanged sentences

Earnings per diluted share $ 0.75 $ 0.86 $ 1.51 $ 1.73

Stock options, restricted share units, deferred stock units and performance-based restricted share units that were excluded from the calculation of diluted earnings per share because their effect is anti‑dilutive was 0.4 million and 0.3 million for the three months ended March 31, 2023, and 2022, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock options, restricted share units, deferred stock units and performance-based restricted share units that were excluded from the calculation of diluted earnings per share because their effect is anti‑dilutive were 0.5 million for the three months ended June 30, 2023.

Note 6 - Changes in Accumulated Other Comprehensive Loss

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

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

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

(in millions) Pension and Postretirement Plan a

Currency Translation Adjustment Total

Balance as of December 31, 2022 $ 9.0 $ ( 140.5 ) $ ( 131.5 )

Other comprehensive income (loss) before reclassifications — 12.8 12.8

Other comprehensive income before reclassifications — 1.8 1.8

Amounts reclassified from accumulated other comprehensive loss ( 1.0 ) — ( 1.0 )

Net period other comprehensive income (loss) 2.7 12.8 15.5

Balance as of March 31, 2023 $ ( 269.2 ) $ ( 218.6 ) $ ( 487.8 )

Net of tax benefit of $ 107.3 million and $ 106.6 million as of March 31, 2023 and December 31, 2022, respectively.

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three month ended March 31, 2023, and 2022.

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

Three Months Ended March 31,

Net period other comprehensive (loss) income ( 1.0 ) 1.8 0.8

Balance as of June 30, 2023 $ 8.0 $ ( 138.7 ) $ ( 130.7 )

Net of tax detriment of $ 1.9 million and $ 2.1 million as of June 30, 2023 and December 31, 2022, respectively.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three-and-six - month periods ended June 30, 2023, and 2022.

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

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

(in millions) 2023 2022 2023 2022

Amortization of pension items:

Prior service costs $ ( 0.2 ) $ ( 0.2 ) $ ( 0.4 ) $ ( 0.4 )

Net loss — 0.2 — 0.4

5 unchanged sentences

Total reclassifications for the period $ ( 0.5 ) $ ( 0.2 ) $ ( 1.0 ) $ ( 0.4 )

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Defined Benefit and Postretirement Benefits

For all plans, the components of net periodic benefit for the three months ended March 31, 2023, and 2022 are as follows:

For all plans, the components of net periodic benefit for the three months ended June 30, 2023, and 2022 are as follows:

Pension Postretirement

4 unchanged sentences

Amortization of prior service cost ( 0.2 ) ( 0.2 ) ( 0.2 ) ( 0.2 )

Amortization of net (gain) loss 3.8 4.8 ( 0.2 ) —

Settlement loss 1.8 — — —

Curtailment loss 1.1 — — —

Net periodic loss (benefit) $ 5.3 $ ( 2.6 ) $ ( 0.2 ) $ —

The components of net periodic benefit, other than the service cost component, are included in “Miscellaneous (expense) income, net” in our Condensed Consolidated Statements of Operations.

Service cost is recorded within “Cost of sales” and “Selling, general and administrative” in our Condensed Consolidated Statements of Operations.

Amortization of net loss — 0.2 ( 0.2 ) —

Net periodic benefit $ — $ — $ ( 0.2 ) $ ( 0.1 )

For all plans, the components of net periodic benefit for the six months ended June 30, 2023, and 2022 are as follows:

Pension Postretirement

(in millions) 2023 2022 2023 2022

Service cost $ 0.9 $ 1.1 $ — $ 0.1

Interest cost 1.1 0.4 0.4 0.3

Expected return on plan assets ( 1.6 ) ( 1.5 ) — —

Amortization of prior service cost ( 0.4 ) ( 0.4 ) ( 0.5 ) ( 0.5 )

Amortization of net loss — 0.4 ( 0.3 ) —

Net periodic benefit $ — $ — $ ( 0.4 ) $ ( 0.1 )

The components of net periodic benefit, other than the service cost component, are included in “Miscellaneous income, net” in our Unaudited Consolidated and Combined Condensed Statements of Operations.

Service cost is recorded within “Cost of sales” and “Selling, general and administrative” in our Unaudited Consolidated and Combined Condensed Statements of Operations.

We expect to contribute the following to our pension and postretirement plans:

1 unchanged sentence

Expected contributions in 2023

Amounts contributed during the three months ended March 31, 2023 $ 0.3 $ 1.5

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Amounts contributed during the six months ended June 30, 2023 $ 1.2 $ 1.7

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Note 8 - Income Taxes

2 unchanged sentences

Our effective tax rates are as follows:

Three Months Ended March 31,

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

2023 2022 2023 2022

Effective Tax Rate 22.7 % 20.6 % 21.4 % 21.4 %

Our effective tax rate for the three months ended March 31, 2023 is lower than the prior year’s comparable period primarily due to the greater benefit related to share-based compensation partially offset by higher non-U.S.

Our effective tax rate attributable to continuing operations for the three months ended March 31, 2023 is equal to the statutory U.S.

federal tax rate of 21%.

The effective tax rate is the result of permanent increases and decreases that net against each other and offset.

Unrecognized Tax Benefits

During the three months ended March 31, 2023, our gross unrecognized tax benefits, excluding interest and penalties, increased by $ 0.5 million, primarily due to increases in tax positions taken in the current periods, partially offset by reductions as a result of positions taken during prior period.

During the three months ended March 31, 2023, the total amount of unrecognized tax benefits that, if recognized, would cause our effective tax rate to increase by $ 0.8 million .

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

During the three months ended March 31, 2023, we recognized $ 0.5 million of interest expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations.

As of March 31, 2023 and December 31, 2022, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in our Condensed Consolidated Balance Sheets was $ 5.3 million and $ 4.8 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by $ 13.4 million due to expiration of statutes of limitations and settlements with tax authorities.

However, if the ultimate resolution of income tax examinations results in amounts that differ from this estimate, we will record additional income tax expense or benefit in the period in which such matters are effectively settled.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our effective tax rate for the three months ended June 30, 2023, is higher than the prior year’s comparable period primarily due to transaction related expenses to support the Separation, partially offset by foreign tax credits.

Our effective tax rate for the six months ended June 30, 2023, is consistent with the prior year’s comparable period.

Our effective tax rates for the three-and-six-months ended June 30, 2023, are higher than the statutory U.S.

federal tax rate of 21% primarily due to net permanent increases that impact the statutory tax rate.

The Tax Matters Agreement specifies the rights, responsibilities, and obligations after the Separation with respect to tax liabilities and benefits.

The agreement specifies the portion, if any, of this tax liability for which we and SpinCo will bear responsibility, and we and SpinCo agreed to indemnify each other against any amounts for which they are not responsible.

The change from a “carve-out” basis to a stand-alone entity basis resulted in an increase in uncertain tax positions of $ 15.6 million and a related $ 8.5 million tax indemnification receivable from SpinCo adjusted through “Net transfers from Crane” in our Unaudited Consolidated and Combined Condensed Statements of Changes in Equity through “Crane Net Investment”.

As of June 30, 2023, we had gross unrecognized tax benefits of $ 23.9 million included in “Other liabilities” in our Unaudited Consolidated and Combined Condensed Balance Sheets.

The balances computed on a stand-alone entity basis resulted in a decrease in Accrued Income Tax liabilities of approximately $ 10.2 million adjusted through “Net transfers from Crane” in our Unaudited Consolidated and Combined Condensed Statements of Changes in Equity through “Crane Net Investment”.

As of June 30, 2023, we had a future tax obligation of $ 8.2 million included in “U.S.

and foreign taxes on income” in our Unaudited Consolidated and Combined Condensed Balance Sheets.

Note 9 - Goodwill and Intangible Assets

Our business acquisitions have typically resulted in the recognition of goodwill and other intangible assets.

We follow the provisions under ASC Topic 350, “Intangibles – Goodwill and Other” as it relates to the accounting for goodwill in our condensed consolidated financial statements.

These provisions require that we, on at least an annual basis, evaluate the fair value of the reporting units to which goodwill is assigned and attributed and compare that fair value to the carrying value of the reporting unit to determine if an impairment has occurred.

We perform our annual impairment testing during the fourth quarter.

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

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

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 March 31, 2023, we had six reporting units.

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

If the carrying amount of an indefinite lived intangible asset exceeds its fair value, the intangible asset is written down to its fair value.

Fair value is calculated using relief from royalty method.

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

We also 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.

Changes to goodwill are as follows:

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

(in millions) Crane Payment Innovations Crane Currency Total

Balance as of December 31, 2022

$ 622.4 $ 214.2 $ 836.6

Currency translation ( 1.1 ) ( 0.2 ) ( 1.3 )

Balance as of March 31, 2023 $ 202.3 $ 319.5 $ 837.8 $ 171.3 $ 1,530.9

As of March 31, 2023, we had $ 406.5 million of net intangible assets, of which $ 67.4 million were intangibles with indefinite useful lives.

Balance as of June 30, 2023

$ 621.3 $ 214.0 $ 835.3

As of June 30, 2023, we had $ 325.0 million of net intangible assets, of which $ 45.5 million were intangibles with indefinite useful lives.

As of December 31, 2022, we had $ 344.9 million of net intangible assets, of which $ 45.5 million were intangibles with indefinite useful lives.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Changes to intangible assets are as follows:

(in millions) Three Months Ended

March 31, 2023 Year Ended December 31, 2022

(in millions) Six Months Ended June 30, 2023 Year Ended December 31, 2022

Balance at beginning of period, net of accumulated amortization $ 344.9 $ 388.5

2 unchanged sentences

Balance at end of period, net of accumulated amortization $ 325.0 $ 344.9

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of intangible assets are as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(in millions) Weighted Average

6 unchanged sentences

Customer relationships and backlog 18.8 500.6 254.4 246.2 502.9 242.0 260.9

Drawings 40.0 11.1 10.7 0.4 11.1 10.7 0.4

Other 10.0 98.9 67.7 31.2 98.7 62.7 36.0

6 unchanged sentences

Accrued liabilities consist of:

(in millions) March 31,

(in millions) June 30,

2023 December 31,

Contract liabilities $ 93.9 $ 93.6

Employee related expenses 44.9 56.3

Warranty 8.7 7.4

Accrued interest 10.1 6.5

Current lease liabilities 6.7 7.4

Contract liabilities 150.4 142.9

Warranty 6.4 4.4

Other 36.5 36.0

Total $ 198.5 $ 204.2

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Note 11 - Commitments and Contingencies

Environmental Matters

For environmental matters , we record a liability for estimated remediation costs when it is probable that we will be responsible for such costs and they can be reasonably estimated.

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

The environmental remediation liability as of March 31, 2023 is substantially related to the former manufacturing site in Goodyear, Arizona (the “Goodyear Site”) discussed below.

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

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

On August 12, 2022, Crane Holdings, Co., Crane Company, a then wholly-owned subsidiary of Crane Holdings, Co., and Redco Corporation (f/k/a Crane Co., (“Redco”) a then wholly-owned subsidiary of Crane Company that held liabilities including asbestos liabilities and related insurance assets, entered into the a Stock Purchase Agreement (the “Redco Purchase Agreement”) with Spruce Lake Liability Management Holdco LLC (“Redco Buyer”), an unrelated third party 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”).

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.

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

Crane Holdings, Co.

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

On April 3, 2023, Crane Holdings, Co.

completed the Separation, pursuant to which, among other things, all outstanding shares of Crane Company were distributed to Crane Holdings, Co.’s stockholders.

Upon completion of the Separation, pursuant to the terms of the Redco Purchase Agreement, Crane Holdings, Co was 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, following completion of the Separation, Crane Company will be primarily liable for the Goodyear Site.

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

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 completion of the Separation), agreed to indemnify Redco Buyer against the Goodyear, Roseland, and Crab Orchard environmental liabilities.

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

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

UPI was an indirect subsidiary of Crane Holdings, Co.

pre-Separation and became an indirect subsidiary of Crane Company following completion of the Separation.

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 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 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 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.

Following the 2014 ROD amendment, we continued our remediation activities and explored an alternative strategy to accelerate remediation of the site.

During the fourth quarter of 2019, we received conceptual agreement from the EPA on our alternative remediation strategy which is expected to further reduce the contaminant plume.

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

The total estimated gross liability was $ 23.7 million and $ 24.8 million as of March 31, 2023 and December 31, 2022, respectively and as described below, a portion is reimbursable by the U.S.

The current portion of the total estimated liability was $ 7.8 million and $ 7.7 million as of March 31, 2023 and December 31, 2022, respectively, and represents our best estimate, in consultation with our technical advisors, of total remediation costs expected to be paid during the next twelve-month period.

It is not possible at this point to reasonably estimate the amount of any obligation in excess of our current accruals through the 2027 forecast period because of the aforementioned uncertainties, in particular,

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the continued significant changes in the Goodyear Site conditions and additional expectations of remediation activities experienced in recent years.

On July 31, 2006, we entered into a consent decree with the U.S.

Department of Justice on behalf of the Department of Defense and the Department of Energy pursuant to which, among other things, the U.S.

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

As of March 31, 2023 and December 31, 2022, we recorded a receivable of $ 4.7 million and $ 4.8 million, respectively, for the expected reimbursements from the U.S.

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

The receivable is reduced as reimbursements and other payments from the U.S.

Government are received.

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.

Marion, IL 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.

Beginning in 1941, the United States used the Crab Orchard Site for the production of ordnance and other related products for use in World War II.

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.

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.

(“GD-OTS”) is in the process of conducting a remedial investigation and feasibility study (“RI-FS”) for a portion of the Crab Orchard Site (the “AUS-OU”), which includes an area where we maintained operations, pursuant to an Administrative Order on Consent (the “AOC”).

A remedial investigation report was approved in February 2015, and work on the feasibility study is underway.

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

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, 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, 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, RI/FS costs associated with 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 RI/FS 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.

Further, negotiations are ongoing between us and GD-OTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

regarding a potential resolution of GD-OTS’ claim for costs that it has incurred in performing its obligations under the AOC.

We at present cannot predict 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.

None of these discussions address responsibility for the performance of, or payment of costs incurred in connection with, any remedial design or remedial action that may be required pursuant to the ROD (when it is ultimately issued).

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.

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

Asbestos Liability

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

The gross settlement and defense costs incurred for the periods presented was as follows:

Three Months Ended

(in millions) 2023 2022

Settlement / indemnity costs incurred $ — $ 10.5

Defense costs incurred — 2.5

Total costs incurred $ — $ 13.0

The total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the periods presented was as follows:

Three Months Ended

(in millions) 2023 2022

Settlement / indemnity payments $ — $ 9.6

Defense payments — 2.1

Insurance receipts — ( 4.2 )

Pre-tax cash payments, net $ — $ 7.5

Other Proceedings

We regularly review the status of lawsuits, claims and proceedings that have been or may be asserted against us relating to the conduct of our business, including those pertaining to product liability, patent infringement, commercial, employment, employee benefits, environmental and stockholder matters.

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These provisions, if any, are reviewed quarterly and adjusted as additional information becomes available.

If either or both of the criteria are not met, we assess whether there is at least a reasonable possibility that a loss, or additional losses, may have been incurred.

If either or both criteria are not met, we assess whether there is at least a reasonable possibility that a loss, or additional losses, may have been incurred.

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

We believe that as of March 31, 2023, there was no reasonable possibility that a material loss, or any additional material losses, may have been incurred for such matters, and that adequate provision has been made in our financial statements for the potential impact of all such matters.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We believe that as of June 30, 2023, there was no reasonable possibility that a material loss, or any additional material losses, may have been incurred for such matters.

On April 3, 2023, Crane NXT and SpinCo entered into a Tax Matters Agreement which, among other things, governs our and SpinCo’s respective rights, responsibilities and obligations after the Separation with respect to tax liabilities and benefits.

The agreement specifies the allocation of tax liabilities between us and SpinCo, and we and SpinCo agreed to indemnify each other for any amounts for which they are not responsible.

As of June 30, 2023, there were no amounts owing to SpinCo pursuant to this agreement.

The Tax Matters Agreement also specifies allocation of tax liabilities in the event that the Distribution is determined not to be tax-free.

We believe that as of June 30, 2023, there was no reasonable possibility that such a tax liability will be incurred in connection with the Distribution.

Note 12 - Financing

Our debt consisted of the following:

(in millions) March 31,

(in millions) June 30,

2023 December 31,

Term Facility (a)

4.45 % notes due December 2023 (a)

$ 299.8 $ 299.7

Term Facility 8.7 —

364 -Day Credit Agreement

Total short-term borrowings $ 9.4 $ 299.7

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Total long-term debt $ 829.6 $ 545.1

(a) Debt discounts and debt issuance costs totaled $ 7.1 million and $ 5.6 million as of March 31, 2023 and December 31, 2022, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.

Credit Facilities – On March 17, 2023, the Company entered into a new senior secured credit agreement (the “Credit Agreement”), which provides for (i) a $ 500 million, 5 -year revolving credit facility (the “Revolving Facility”) and (ii) a $ 350 million, 3 -year term loan facility (the “Term Facility”), funding under each of which became available in connection with the Separation, upon the satisfaction of customary conditions of facilities of this type.

On March 31, 2023, the Company borrowed the full amount of the Term Facility.

(a) Debt discounts and debt issuance costs totaled $ 11.0 million and $ 5.6 million as of June 30, 2023, and December 31, 2022, respectively, and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.

4.45 % notes due December 2023 - On March 3, 2023, Holdings notified bondholders of its intent to redeem all its outstanding $ 300 million aggregate principal amount of its 4.45 % senior notes due 2023 on April 4, 2023.

We completed the redemption on April 4, 2023.

Credit Faciliti es - We are party to a senior secured credit agreement (the “Credit Agreement”) entered into on March 17, 2023, which provides for (i) a $ 500 million, 5 -year revolving credit facility (the “Revolving Facility”) and (ii) a $ 350 million, 3-year term loan facility (the “Term Facility”), funding under each of which became available in connection with the Separation, upon the satisfaction of customary conditions of facilities of this type.

On March 31, 2023, we borrowed the full amount of the Term Facility.

On June 30, 2023, we repaid $ 50 million on the Term Facility.

The Revolving Facility allows us to borrow, repay and re-borrow funds from time to time prior to the maturity of the Revolving Facility without any penalty or premium, subject to customary borrowing conditions for facilities of this type and the reimbursement of breakage costs.

Borrowings under the Term Facility are prepayable without premium or penalty, subject to customary reimbursement of breakage costs.

Interest on loans advanced under the Credit Agreement accrues, at our option, at a rate per annum equal to (1) adjusted term SOFR plus a credit spread adjustment of 0.10 % for the applicable interest period plus a margin ranging from 1.50 % to 2.25 % or (2) a base rate plus a margin ranging from 0.50 % to 1.25 %, in each case, with such margin determined based on the lower of the ratings of our senior, unsecured long-term debt (the “Ratings”) and our total net leverage ratio.

Interest on loans advanced under the Credit Agreement accrues, at our option, at a rate per annum equal to (1) adjusted term Secured Overnight Financing Rate (SOFR) plus a credit spread adjustment of 0.10 % for the applicable interest period plus a margin ranging from 1.50 % to 2.25 % or (2) a base rate plus a margin ranging from 0.50 % to 1.25 %, in each case, with such margin determined based on the lower of the ratings of our senior, unsecured long-term debt (the “Ratings”) and our total net leverage ratio.

We are required to pay a fee on undrawn commitments under the Revolving Facility at a rate per annum that ranges from 0.20 % to 0.35 %, based on the lower of the Ratings and our total net leverage ratio.

The Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations on our and our subsidiaries with respect to indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of all or substantially all assets, transactions with affiliates, hedging arrangements and amendments to our organizational documents or to certain subordinated debt agreements.

The Credit Agreement contains customary affirmative and negative covenants for credit facilities of this

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

type, including limitations on our and our subsidiaries with respect to indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of all or substantially all assets, transactions with affiliates, investments, hedging arrangements and amendments to our organizational documents or to certain subordinated debt agreements.

As of the last day of each fiscal quarter, our total net leverage ratio cannot exceed 3.50 to 1.00 (provided that, at our election, such maximum ratio may be increased to 4.00 to 1.00 for specified periods following our consummation of certain material acquisitions) and our minimum interest coverage ratio must be at least 3.00 to 1.00.

The Credit Agreement also includes customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by us or any of our material subsidiaries being false in any material respect, default under certain other material indebtedness, certain insolvency or receivership events affecting us and our material subsidiaries, certain ERISA events, material judgments and a change in control, in each case, subject to cure periods and thresholds where customary.

The $ 650 million revolving credit facility and commercial paper program disclosed below were replaced by commitments under the new $ 500 million, 5 -year Revolving Credit Agreement, with funding available upon Separation, subject to customary conditions precedent for facilities of this type.

The commercial paper program will no longer be available upon Separation.

364-Day Credit Agreement - On August 11, 2022, the Company entered into a 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 accrued 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 was 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 was determined based upon the Index Debt Rating.

During the first quarter of 2023, the Company repaid the remaining principal of $ 400 million under the 364 -Day Credit Agreement.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

As of March 31, 2023 and December 31, 2022, there were no outstanding borrowings under the commercial paper program.

R evolving Credit Facility - On July 28, 2021, we entered into a $ 650 million, 5 -year Revolving Credit Agreement (the “2021 Facility”).

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

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

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

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

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

As of March 31, 2023 and December 31, 2022, there were no outstanding borrowings under the 2021 Facility.

Note 13 - Fair Value Measurements

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1 unchanged sentence

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

Foreign exchange contracts not designated as hedging instruments had a notional value of $ 4.9 million and $ 89.7 million as of March 31, 2023 and December 31, 2022, respectively.

Foreign exchange contracts not designated as hedging instruments had a notional value $ 85.7 million as of December 31, 2022.

We had no such hedging instruments as of June 30, 2023.

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

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

Such derivative receivable amounts are recorded within “Other current assets” on our Condensed Consolidated Balance Sheets and were $ 0.1 million and $ 5.9 million as of March 31, 2023 and December 31, 2022, respectively.

Such derivative liability amounts are recorded within “Accrued liabilities” on our Condensed Consolidated Balance Sheets and there were no derivative liabilities as of March 31, 2023 and December 31, 2022, respectively.

Such derivative receivable amounts are recorded within “Other current assets” on our Unaudited Consolidated and Combined Condensed Balance Sheets and were $ 5.8 million as of December 31, 2022.

We had no such derivative receivables as of June 30, 2023.

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

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

The fair value of available-for-sale securities was $ 0.4 million and $ 0.4 million as of March 31, 2023 and December 31, 2022, respectively.

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

During Q2 2023, the rabbi trust investments were distributed to the beneficiaries and the rabbi trust investment account was closed.

The fair value of available-for-sale securities was $ 0.4 million as of December 31, 2022 and is recorded within “Other assets” on our Unaudited Consolidated and Combined Condensed Balance Sheets.

We had no such fair value of available-for-sale securities as of June 30, 2023.

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

The estimated fair value of total debt, measured using Level 2 inputs, was $ 779.0 million and $ 753.1 million as of March 31, 2023 and December 31, 2022, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The estimated fair value of notes due, measured using Level 2 inputs, was $ 445.0 million and $ 753.1 million as of June 30, 2023, and December 31, 2022, respectively.

NOTES TO THE UNAUDITED CONSOLIDATED AND COMBINED CONDENSED FINANCIAL STATEMENTS

Note 14 - 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 first quarter of 2024.

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

In 2020, we recorded additional severance costs related to the final negotiation with the works council/union at both locations.

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

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

The following table summarizes the cumulative restructuring costs, net incurred through March 31, 2023.

As of March 31, 2023, we do not expect to incur additional facility consolidation costs to complete these actions.

Cumulative Restructuring Costs, Net

(in millions) Severance Other Total

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

Process Flow Technologies $ 14.9 $ ( 2.8 ) $ 12.1

2019 Repositioning $ 14.9 $ ( 2.8 ) $ 12.1

Restructuring Liability

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

(in millions) 2022 Repositioning 2019 Repositioning Total

2022 Restructuring - In the fourth quarter of 2022, in response to economic uncertainty, we initiated modest workforce reductions in CPI of approximately 140 employees, or about 4 % of our global workforce.

We expect to substantially complete the program in the first quarter of 2024.

We did no t incur significant restructuring costs during the six months ended June 30, 2023, or June 30, 2022.

We have incurred $ 6.2 million of cumulative restructuring costs, net through June 30, 2023, of which $ 5.7 million related to severance and $ 0.5 million related to other costs.

We do no t expect to incur additional costs to complete these actions.

The following table summarizes the accrual balances related to the 2022 restructuring program:

(in millions) 2022 Restructuring

Balance as of December 31, 2022 (a)

$ 14.2 $ 2.4 $ 16.6

Utilization ( 4.5 )

Balance as of March 31, 2023 (a)

$ 10.1 $ 1.4 $ 11.5

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 14- Subsequent Event

Dividend from Crane Company

Prior to the consummation of the Separation, the Board of Directors of Crane Company declared a one-time cash dividend in the amount of $ 275 million to Crane Holdings, Co., its sole stockholder at that time, and paid such dividend on April 3, 2023, prior to the consummation of the Separation.

The Separation and Distribution

On April 3, 2023, the Separation was completed.

In connection with the Separation, Crane Holdings, Co., which was renamed “Crane NXT, Co.,” and Crane Company entered into various agreements to effect the Separation and provide a framework for their relationship after the Separation, including a separation and distribution agreement, a transition services agreement, an employee matters agreement, a tax matters agreement and an intellectual property matters agreement.

These agreements provide for the allocation between Crane NXT, Co.

and Crane Company of assets, employees, liabilities and obligations (including property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at, and after the consummation of the Separation and govern certain relationships between Crane NXT, Co.

and Crane Company after the Separation.

4.45% Senior Notes due 2023

On April 4, 2023, the Company redeemed all of its outstanding 4.45 % senior notes due 2023, of which $ 300 million aggregate principal amount was outstanding upon redemption.

Balance as of June 30, 2023 (a)

Included within “Accrued Liabilities” in the Unaudited Consolidated and Combined Condensed Balance Sheets.

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

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

What changed 10-Q

Item 1. Financial Statements