UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Mark One:
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2017March 31, 2023
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from              to             
Commission File Number: 1-1657
CRANE NXT, CO.
(Exact name of registrant as specified in its charter)
Delaware88-0706021
Delaware13-1952290
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
100 First Stamford Place, Stamford, CT950 Winter Street 4th FloorWaltham06902MA02451
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: 203-363-7300610-430-2510
(Not Applicable)
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $1.00 CXTNew York Stock Exchange

 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒    No  o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x☒    No  o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non –acceleratednon–accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
(check one):
Large accelerated filerx☒Accelerated filero☐
Non-accelerated filer
o (Do not check if a smaller reporting company)
☐		Smaller reporting companyo☐
Emerging growth company

o☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o☐    No  x☒
The number of shares outstanding of the issuer’s classes of common stock, as of October 31, 2017April 30, 2023
Common stock, $1.00 Par Value – 59,349,88156,730,163 shares

1


Crane NXT, Co.
IndexTable of Contents
Form 10Q
10-Q
Page
Part I - Financial Information
Condensed Consolidated Statements of Operations
Page 24
Condensed Consolidated Statements of Comprehensive Income
Page 35
Condensed Consolidated Balance Sheets
Page 46
Condensed Consolidated Statements of Cash Flows
Page 68
Consolidated Statements of Changes in Equity
Page 10
Notes to Condensed Consolidated Financial Statements
Page 711
Page 3128
Page 4338
Page 4338
Part II - Other Information
Page 4439
Page 4439
Page 4439
Page 39
Page 4439
Page 4439
Page 4540
Page 4641


2


EXPLANATORY NOTE

As used in this Quarterly Report on Form 10-Q, the terms "we," "us," "our," "Crane Holdings, Co." and the "Company" mean Crane NXT, Co. and our subsidiaries. Prior to April 3, 2023, Crane NXT, Co. was named “Crane Holdings, Co.” Accordingly, we refer to Crane NXT, Co. as “Crane Holdings, Co.” in certain disclosures that are as of dates or related to periods ended prior to April 3, 2023.
3

PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CRANE CO. CRANE HOLDINGS, CO. AND SUBSIDIARIES SUBSIDIARIES
CONDENSEDCONDENSED CONSOLIDATEDSTATEMENTSOF OPERATIONS OPERATIONS
(INMILLIONS, EXCEPTPERSHAREDATA)(UNAUDITED)
(UNAUDITED)

Three Months Ended
March 31,
(in millions, except per share data)(in millions, except per share data)20232022
Net salesNet sales$842.9 $871.5 
Operating costs and expenses:Operating costs and expenses:
Cost of salesCost of sales481.3 526.2 
Selling, general and administrativeSelling, general and administrative209.4 198.3 
Operating profitOperating profit152.2 147.0 
Other (expense) income:Other (expense) income:
Interest incomeInterest income1.0 0.3 
Interest expenseInterest expense(17.0)(11.1)
Miscellaneous (expense) income, netMiscellaneous (expense) income, net(2.4)3.5 
Total other expense, netTotal other expense, net(18.4)(7.3)
Income before income taxesIncome before income taxes133.8 139.7 
Provision for income taxesProvision for income taxes28.1 34.7 
Net income attributable to common shareholdersNet income attributable to common shareholders$105.7 $105.0 
Earnings per share:Earnings per share:
BasicBasic$1.87 $1.84 
DilutedDiluted$1.84 $1.81 
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net sales$695.9
 $694.2
 $2,071.8
 $2,066.5
Operating costs and expenses:       
Cost of sales441.5
 449.2
 1,315.3
 1,324.5
Selling, general and administrative148.5
 141.2
 442.4
 450.5
Restructuring gain—
 —
 —
 (0.4)
Transaction related charges0.5
 —
 3.1
 —
Operating profit105.4
 103.8
 311.0
 291.9
Other income (expense):      
Interest income0.7
 0.5
 1.8
 1.4
Interest expense(9.3) (9.2) (27.3) (27.5)
Miscellaneous, net0.2
 (0.1) (0.8) (0.6)

(8.4) (8.8) (26.3) (26.7)
Income before income taxes97.0
 95.0
 284.7
 265.2
Provision for income taxes28.5
 31.3
 83.6
 77.9
Net income before allocation to noncontrolling interests68.5
 63.7
 201.1
 187.3
Less: Noncontrolling interest in subsidiaries’ earnings0.3
 0.2
 0.6
 0.5
Net income attributable to common shareholders$68.2
 $63.5
 $200.5
 $186.8
Earnings per share:       
Basic$1.15
 $1.09
 $3.38
 $3.20
Diluted$1.13
 $1.07
 $3.32
 $3.16
Average shares outstanding:       Average shares outstanding:
Basic59.5
 58.5
 59.4
 58.3
Basic56.5 57.1 
Diluted60.4
 59.4
 60.4
 59.2
Diluted57.3 57.9 
       
Dividends per share$0.33
 $0.33
 $0.66
 $0.99
Dividends per share$0.47 $0.47 
 
See Notes to Condensed Consolidated Financial Statements.

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Page 2

CRANE CO. AND SUBSIDIARIES
CONDENSEDCONSOLIDATEDSTATEMENTSOF COMPREHENSIVE INCOME
(INMILLIONS)
(UNAUDITED)

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Net income before allocation to noncontrolling interests$68.5
 $63.7
 $201.1
 $187.3
Other comprehensive income (loss), net of tax       
Currency translation adjustment24.6
 (5.2) 83.2
 11.6
Changes in pension and postretirement plan assets and benefit obligation, net of tax2.3
 1.8
 6.9
 5.6
Other comprehensive income (loss), net of tax26.9
 (3.4) 90.1
 17.2
Comprehensive income before allocation to noncontrolling interests95.4
 60.3
 291.2
 204.5
Less: Noncontrolling interests in comprehensive income(1.4) 0.2
 (0.7) 0.5
Comprehensive income attributable to common shareholders$96.8
 $60.1
 $291.9
 $204.0
CRANE HOLDINGS, CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended
March 31,
(in millions)20232022
Net income before allocation to noncontrolling interests$105.7 $105.0 
Components of other comprehensive income (loss), net of tax
Currency translation adjustment12.7 (21.6)
Changes in pension and postretirement plan assets and benefit obligation, net of tax2.7 3.3 
Other comprehensive income (loss), net of tax15.4 (18.3)
Comprehensive income before allocation to noncontrolling interests121.1 86.7 
Less: Noncontrolling interests in comprehensive income(0.1)0.1 
Comprehensive income attributable to common shareholders$121.2 $86.6 
See Notes to Condensed Consolidated Financial Statements.

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Page 3

CRANE CO. AND SUBSIDIARIES
CONDENSEDCONSOLIDATED BALANCE SHEETS
(INMILLIONS)
(UNAUDITED) 

 September 30,
2017		 December 31,
2016
Assets   
Current assets:   
Cash and cash equivalents$572.2
 $509.7
Accounts receivable, net437.3
 396.4
Current insurance receivable - asbestos18.0
 18.0
Inventories, net:   
Finished goods107.1
 97.7
Finished parts and subassemblies45.1
 38.2
Work in process59.7
 56.0
Raw materials164.3
 150.6
Inventories, net376.2
 342.5
Current deferred tax asset—
 29.6
Other current assets19.1
 19.5
Total current assets1,422.8
 1,315.7
Property, plant and equipment:   
Cost876.1
 826.9
Less: accumulated depreciation584.1
 548.0
Property, plant and equipment, net292.0
 278.9
Long-term insurance receivable - asbestos106.0
 125.2
Long-term deferred tax assets191.5
 181.8
Other assets104.2
 95.0
Intangible assets, net284.7
 282.2
Goodwill1,205.9
 1,149.2
Total assets$3,607.1
 $3,428.0
CRANE HOLDINGS, CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) 
(in millions)March 31,
2023		December 31,
2022
Assets
Current assets:
Cash and cash equivalents$510.2 $657.6 
Accounts receivable, net of allowance for doubtful accounts of $16.9 as of March 31, 2023 and $14.1 as of December 31, 2022499.5 474.7 
Inventories, net:
Finished goods106.0 83.3 
Finished parts and subassemblies74.5 70.7 
Work in process42.3 39.9 
Raw materials270.1 245.9 
Inventories, net492.9 439.8 
Other current assets193.2 179.8 
Total current assets1,695.8 1,751.9 
Property, plant and equipment:
Cost1,268.9 1,250.8 
Less: accumulated depreciation760.9 740.9 
Property, plant and equipment, net508.0 509.9 
Long-term deferred tax assets9.9 8.3 
Other assets184.9 176.0 
Intangible assets, net406.5 416.6 
Goodwill1,530.9 1,527.5 
Total assets$4,336.0 $4,390.2 
See Notes to Condensed Consolidated Financial Statements.

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Page 4


CRANE HOLDINGS, CO. AND SUBSIDIARIES
CRANE CO. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED BALANCE SHEETS
(INMILLIONS, EXCEPTSHAREANDPERSHAREDATA)
(UNAUDITED)(UNAUDITED)
 
September 30,
2017		 December 31,
2016
(in millions, except per share and share data)(in millions, except per share and share data)March 31,
2023		December 31,
2022
Liabilities and equity   Liabilities and equity
Current liabilities:   Current liabilities:
Short-term borrowingsShort-term borrowings$308.5 $699.3 
Accounts payable$210.0
 $223.2
Accounts payable247.1 286.6 
Current asbestos liability71.0
 71.0
Accrued liabilities240.5
 223.1
Accrued liabilities395.9 464.2 
U.S. and foreign taxes on income13.7
 3.5
U.S. and foreign taxes on income23.0 38.1 
Total current liabilities535.2
 520.8
Total current liabilities974.5 1,488.2 
Long-term debt745.9
 745.3
Long-term debt880.7 543.7 
Accrued pension and postretirement benefits237.7
 249.1
Accrued pension and postretirement benefits153.9 153.2 
Long-term deferred tax liability43.3
 42.4
Long-term deferred tax liability161.1 162.4 
Long-term asbestos liability558.9
 624.9
Other liabilities95.8
 99.8
Other liabilities148.1 138.7 
Total liabilities2,216.8
 2,282.3
Total liabilities2,318.3 2,486.2 
Commitments and contingencies (Note 8)
 
Commitments and contingencies (Note 10)Commitments and contingencies (Note 10)
Equity:   Equity:
Preferred shares, par value $0.01; 5,000,000 shares authorized—
 —
Preferred shares, par value $0.01; 5,000,000 shares authorized— — 
Common shares, par value $1.00; 200,000,000 shares authorized, 72,426,139 shares issued72.4
 72.4
Common shares, par value $1.00; 200,000,000 shares authorized, 72,440,983 shares issuedCommon shares, par value $1.00; 200,000,000 shares authorized, 72,440,983 shares issued72.4 72.4 
Capital surplus286.5
 276.9
Capital surplus376.8 373.8 
Retained earnings1,861.6
 1,719.9
Retained earnings2,901.9 2,822.8 
Accumulated other comprehensive loss(384.6) (476.1)Accumulated other comprehensive loss(487.8)(503.3)
Treasury stock(456.8) (459.3)Treasury stock(848.1)(864.3)
Total shareholders’ equity1,379.1
 1,133.8
Total shareholders’ equity2,015.2 1,901.4 
Noncontrolling interests11.2
 11.9
Noncontrolling interests2.5 2.6 
Total equity1,390.3
 1,145.7
Total equity2,017.7 1,904.0 
Total liabilities and equity$3,607.1
 $3,428.0
Total liabilities and equity$4,336.0 $4,390.2 
Share Data:   
Share data:Share data:
Common shares issued72,426,139
 72,426,139
Common shares issued72,440,983 72,426,389 
Less: Common shares held in treasury(13,105,905) (13,461,280)Less: Common shares held in treasury15,715,676 16,101,007 
Common shares outstanding59,320,234
 58,964,859
Common shares outstanding56,725,307 56,325,382 
See Notes to Condensed Consolidated Financial Statements.

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Page 5


CRANE HOLDINGS, CO. AND SUBSIDIARIES
CRANE CO. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
CONDENSEDCONSOLIDATEDSTATEMENTSOF CASH FLOWS(UNAUDITED)
(INMILLIONS)
Three Months Ended
March 31,
(in millions)20232022
Operating activities:
Net income attributable to common shareholders$105.7 $105.0 
Depreciation and amortization28.6 28.6 
Stock-based compensation expense6.3 5.9 
Defined benefit plans and postretirement credit5.3 (2.7)
Deferred income taxes(0.1)(0.9)
Cash used for operating working capital(215.0)(183.7)
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)
Other1.5 3.9 
Total used for operating activities(70.8)(55.5)
Investing activities:
Proceeds from disposition of capital assets0.1 — 
Capital expenditures(12.9)(13.0)
Total used for investing activities(12.8)(13.0)
Financing activities:
Dividends paid(26.6)(26.7)
Reacquisition of shares on open market—(175.8)
Stock options exercised, net of shares reacquired12.80.7
Debt issuance costs(4.0)—
Net borrowings from issuance of commercial paper with maturities of 90 days or less—104.0
Proceeds from term loan350.0—
Repayment of term loan(400.0)—
Total used for financing activities(67.8)(97.8)
Effect of exchange rates on cash and cash equivalents4.0 (5.1)
Decrease in cash and cash equivalents(147.4)(171.4)
Cash and cash equivalents at beginning of period657.6 478.6 
Cash and cash equivalents at end of period$510.2 $307.2 
(UNAUDITED)
 Nine Months Ended
 September 30,
 2017 2016
Operating activities:   
Net income attributable to common shareholders$200.5
 $186.8
Noncontrolling interests in subsidiaries’ earnings0.6
 0.5
Net income before allocation to noncontrolling interests201.1
 187.3
Depreciation and amortization54.0
 50.8
Stock-based compensation expense16.5
 16.8
Defined benefit plans and postretirement credit(6.3) (7.3)
Deferred income taxes16.0
 16.1
Cash used for operating working capital(38.0) (34.4)
Defined benefit plans and postretirement contributions(9.9) (6.4)
Environmental payments - net of reimbursements(4.4) (8.2)
Asbestos related payments - net of insurance recoveries(46.8) (41.5)
Other(8.0) (4.8)
Total provided by operating activities174.2
 168.4
Investing activities:   
Capital expenditures(34.3) (38.5)
Proceeds from disposition of capital assets—
 0.8
Payments for acquisitions - net of cash acquired(54.8) —
Total used for investing activities(89.1) (37.7)
Financing activities:   
Dividends paid(58.8) (57.8)
Reacquisition of shares on open market(25.0) —
Stock options exercised - net of shares reacquired20.7
 9.6
Repayment of commercial paper—
 (15.6)
 Total used for financing activities(63.1) (63.8)
Effect of exchange rates on cash and cash equivalents40.5
 5.9
Increase in cash and cash equivalents62.5
 72.8
Cash and cash equivalents at beginning of period509.7
 363.5
Cash and cash equivalents at end of period$572.2
 $436.3
Detail of cash used for working capital:   
Accounts receivable$(22.0) $(32.9)
Inventories(17.2) 1.2
Other current assets1.2
 (2.1)
Accounts payable(22.7) (21.4)
Accrued liabilities10.9
 12.6
U.S. and foreign taxes on income11.8
 8.2
Total$(38.0) $(34.4)
Supplemental disclosure of cash flow information:   
Interest paid$18.7
 $19.1
Income taxes paid$55.8
 $53.6
See Notes to Condensed Consolidated Financial Statements.



Page 6
8

CRANE HOLDINGS, CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
(in millions)20232022
Detail of cash used for operating working capital:
Accounts receivable$(22.4)$(52.0)
Inventories(50.3)(35.2)
Other current assets(16.5)(5.9)
Accounts payable(40.7)(9.3)
Accrued liabilities(69.9)(100.1)
U.S. and foreign taxes on income(15.2)18.8 
Total$(215.0)$(183.7)
Supplemental disclosure of cash flow information:
Interest paid$14.3 $7.4 
Income taxes paid$42.3 $13.7 
See Notes to Condensed Consolidated Financial Statements.

9




CRANE HOLDINGS, CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
(in millions, except share data)Common
Shares
Issued at
Par Value		Capital
Surplus		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Treasury
Stock		Total
Share- holders’
Equity		Non-controlling
Interest		Total
Equity
BALANCE DECEMBER 31, 202272.4 $373.8 $2,822.8 $(503.3)$(864.3)$1,901.4 $2.6 $1,904.0 
Net income— — 105.7 — — 105.7 — 105.7 
Cash dividends ($0.47 per share)— — (26.6)— — (26.6)— (26.6)
Exercise of stock options, net of shares reacquired of 297,539 shares— — — — 19.8 19.8 — 19.8 
Impact from settlement of share-based awards, net of shares acquired— (3.3)— — (3.6)(6.9)— (6.9)
Stock-based compensation expense— 6.3 — — — 6.3 — 6.3 
Changes in pension and postretirement plan assets and benefit obligation, net of tax— — — 2.7 — 2.7 — 2.7 
Currency translation adjustment— — — 12.8 — 12.8 (0.1)12.7 
BALANCE MARCH 31, 202372.4 $376.8 $2,901.9 $(487.8)$(848.1)$2,015.2 $2.5 $2,017.7 
(in millions, except share data)Common
Shares
Issued at
Par Value		Capital
Surplus		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Treasury
Stock		Total
Share- holders’
Equity		Non-controlling
Interest		Total
Equity
BALANCE DECEMBER 31, 202172.4 $363.9 $2,527.3 $(440.2)$(691.1)$1,832.3 $2.8 $1,835.1 
Net income— — 105.0 — — 105.0 — 105.0 
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— 5.9 — — — 5.9 — 5.9 
Changes in pension and postretirement plan assets and benefit obligation, net of tax— — — 3.3 — 3.3 — 3.3 
Currency translation adjustment— — — (21.7)— (21.7)0.1 (21.6)
BALANCE MARCH 31, 202272.4 $364.7 $2,605.9 $(458.6)$(861.1)$1,723.3 $2.9 $1,726.2 
See Notes to Condensed Consolidated Financial Statements.
10
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. 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 the Company’sour Annual Report on Form 10-K for the year ended December 31, 2016.2022.
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.
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.
Separation
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 - Not Yet Adopted
PresentationThe Company considered the applicability and impact of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
In March 2017,all Accounting Standards Updates issued by the Financial Accounting StandardStandards Board (“FASB”) issued amended guidance(FASB) and determined them to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The amended guidance requires the disaggregation of the service cost component from the other components of net periodic benefit costs and present it with other current compensation costs for related employees in the income statement, and present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. This amended guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company doesbe either not expect the adoption of the amended guidanceapplicable or are not expected to have a material impact on its consolidated statementsthe Company's Condensed Consolidated Statement of operationsOperations, Balance Sheets and related disclosures.Cash Flows.

Restricted Cash
In November 2016, the FASB issued amended guidance to address diversity in the classification and presentation of changes in restricted cash on the statement of cash flows. The amended guidance requires restricted cash and restricted cash equivalents to be classified in the statements of cash flows as cash and cash equivalents. This amended guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, using a retrospective transition method. The Company does not expect the adoption of the amended guidance to have a material impact on its consolidated statements of cash flows.
Income Taxes on Intra-Entity Transfers of Assets
In October 2016, the FASB issued amended guidance related to the recognition of income taxes resulting from intra-entity transfers of assets other than inventory. The guidance requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Income tax effects of intra-entity transfers of inventory will continue to be deferred until the inventory has been sold to a third party. This amended guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, using a modified retrospective approach, with the cumulative effect recognized through retained earnings at the date of adoption. Early adoption is permitted. The Company does not expect the adoption of the amended guidance to have a material impact on its consolidated financial statements and related disclosures.
Cash Flow Simplification
In August 2016, the FASB issued amended guidance that clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. The amended guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. Upon adoption, entities must apply the guidance retrospectively to all periods presented. The Company is currently evaluating the impact that the amended guidance will have on its consolidated statements of cash flows.

Page 7


Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued amended guidance that changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model and generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. This amended guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company does not expect that the amended guidance will have a material effect on its consolidated financial statements and related disclosures.
Leases
In February 2016, the FASB issued amended guidance on accounting for leases.  The amended guidance requires the recognition of a right-of-use asset and a lease liability for all leases by lessees with the exception of short-term leases and amends disclosure requirements associated with leasing arrangements.  The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018 using a modified retrospective transition approach.  Early adoption is permitted.  The Company is currently evaluating the impact that the amended guidance will have on its consolidated financial statements and related disclosures.
Revenue Recognition
In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all current industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB agreed to a one-year deferral of the effective date; the new standard is now effective for reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption of the new revenue standard is permitted; however, entities reporting under U.S. GAAP were not permitted to adopt the standard earlier than the original effective date, which was for years beginning after December 15, 2016. The new standard can be applied either retrospectively to each prior period presented (full retrospective method) or retrospectively with a cumulative-effect adjustment as of the date of initial application (modified retrospective method).
The Company developed a project plan and established a cross-functional implementation team consisting of representatives from across all of its business segments. The project plan includes analyzing the impact of the standard on its contract portfolio by reviewing its current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to its revenue contracts. The Company has made significant progress on its contract reviews and continues to evaluate the impact of the adoption of this standard on its consolidated financial statements, and related disclosures. While the Company anticipates potentially increased over time revenue recognition for certain revenue contracts, the Company does not believe the standard will have a material effect on its consolidated financial statements. The Company will adopt the standard as of January 1, 2018, under the modified retrospective method.
Recent Accounting Pronouncements - Adopted
Balance Sheet Classification of Deferred Taxes
In November 2015, the FASB issued amended guidance to simplify the presentation of deferred income taxes. The amendments require deferred tax liabilities and assets to be classified as noncurrent. The amended guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted this guidance on a prospective basis in the first quarter of 2017. Prior periods in its consolidated financial statements were not retrospectively adjusted.
Inventory
In July 2015, the FASB issued amended guidance, which changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. The guidance defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new guidance must be applied on a prospective basis and is effective for fiscal years beginning after December 15, 2016, and interim

Page 8


periods within those years. The Company adopted the guidance in the first quarter of 2017. The adoption of the guidance did not have a material impact on its consolidated financial statements.

Share-Based Payments
In March 2016, the FASB issued amended guidance related to employee share-based payment accounting. The amended guidance simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes, statutory tax withholding requirements, forfeitures and classification on the statement of cash flows. This amended guidance was effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company elected to early adopt this guidance in the fourth quarter of 2016. The primary impact of adoption was the recognition of excess tax benefits in the provision for income taxes, rather than paid-in capital, of $0.4 million for the year ended December 31, 2016. Cash flows related to excess tax benefits for share-based payments are now included in the consolidated statements of cash flows as net operating activities rather than net financing activities. The changes have been applied prospectively and prior periods have not been adjusted. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented on the consolidated statement of cash flows since such cash flows have historically been presented as a financing activity. Furthermore, the Company elected to continue to estimate expected forfeitures of employee equity awards to determine the amount of compensation expense to be recognized in each period.



Page 9


Note 2 - Acquisitions
In April 2017, the Company acquired all of the outstanding stock of Westlock Controls (“Westlock”) from Emerson Electric Co. for cash consideration of $40 million. Westlock is a global leader in the manufacturing and sale of switchboxes, position transmitters and other solutions for networking, monitoring and controlling process valves, a new product space which is closely adjacent to the Company’s existing operations in its Fluid Handling segment. With primary operations located in Saddle Brook, New Jersey, Westlock had 2016 sales of approximately $32 million. Allocation of the purchase price resulted in the Company recording goodwill of $22.6 million. This acquisition is being integrated into the Company’s Fluid Handling segment, and the pro-forma impact is not material.

In June 2017, the Company acquired all of the outstanding stock of Microtronic AG (“Microtronic”) for cash consideration of approximately $18 million. With operations in Oensingen, Switzerland, Microtronic develops and manufactures closed electronic payment systems, primarily for the European vending market, strengthening the Company’s portfolio of cashless solutions. Allocation of the purchase price resulted in the Company recording goodwill of $8.9 million. This acquisition is being integrated into the Company’s Payment & Merchandising Technologies segment, and the pro-forma impact is not material.

Note 3 - Segment Results
The Company’sOur segments are reported on the same basis used internally for evaluating performance and for allocating resources. The Company hasAs of March 31, 2023, we had four reportable segments: Fluid Handling,Aerospace & Electronics, Process Flow Technologies, Payment & Merchandising Technologies Aerospace & Electronics 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. 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:
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017 2016 2017 2016
Net sales       
Fluid Handling$266.9
 $245.1
 $770.3
 $759.1
Payment & Merchandising Technologies188.6
 186.7
 582.3
 551.2
Aerospace & Electronics172.0
 198.2
 506.5
 559.2
Engineered Materials68.4
 64.2
 212.7
 197.0
Total$695.9
 $694.2
 $2,071.8
 $2,066.5
Operating profit (loss)       
Fluid Handling$32.6
 $30.7
 $91.3
 $91.5
Payment & Merchandising Technologies41.4
 34.7
 123.0
 97.1
Aerospace & Electronics34.8
 38.9
 104.8
 110.6
Engineered Materials12.2
 11.4
 39.5
 38.6
Corporate *(15.6) (11.9) (47.6) (45.9)
Total105.4
 103.8
 311.0
 291.9
Interest income0.7
 0.5
 1.8
 1.4
Interest expense(9.3) (9.2) (27.3) (27.5)
Miscellaneous - net0.2
 (0.1) (0.8) (0.6)
Income before income taxes$97.0
 $95.0
 $284.7
 $265.2
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.
* IncludesProcess Flow Technologies
The Process Flow Technologies segment is a $5 million legal settlement chargeprovider 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 nine months ended September 30, 2016.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. 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.
Page 10
11

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.
 As of
(in millions)September 30, 2017 December 31, 2016
Assets   
Fluid Handling$962.5
 $845.9
Payment & Merchandising Technologies1,235.7
 1,188.9
Aerospace & Electronics564.9
 555.5
Engineered Materials227.8
 224.7
Corporate616.2
 613.0
Total$3,607.1
 $3,428.0
Financial information by reportable segment is set forth below.

Three Months Ended
March 31,
(in millions)20232022
Net sales:
Aerospace & Electronics$180.1 $157.2 
Process Flow Technologies271.4 311.3 
Payment & Merchandising Technologies329.1 332.6 
Engineered Materials62.3 70.4 
Total$842.9 $871.5 
Operating profit:
Aerospace & Electronics$37.7 $28.1 
Process Flow Technologies63.3 49.0 
Payment & Merchandising Technologies79.4 84.2 
Engineered Materials11.4 13.4 
Corporate(39.6)(27.7)
Total$152.2 $147.0 
Interest income1.0 0.3 
Interest expense(17.0)(11.1)
Miscellaneous (expense) income, net(2.4)3.5 
Income before income taxes$133.8 $139.7 

(in millions)March 31, 2023December 31, 2022
Assets:
Aerospace & Electronics$698.9 $663.3 
Process Flow Technologies1,073.3 1,064.7 
Payment & Merchandising Technologies2,103.5 2,125.9 
Engineered Materials231.2 218.6 
Corporate229.1 317.7 
Total$4,336.0 $4,390.2 
 
(in millions)March 31, 2023December 31, 2022
Goodwill:
Aerospace & Electronics$202.3 $202.3 
Process Flow Technologies319.5 317.3 
Payment & Merchandising Technologies837.8836.6
Engineered Materials171.3 171.3 
Total$1,530.9 $1,527.5 

12
 As of
(in millions)September 30, 2017 December 31, 2016
Goodwill   
Fluid Handling$244.3
 $212.3
Payment & Merchandising Technologies587.8
 563.3
Aerospace & Electronics202.4
 202.3
Engineered Materials171.4
 171.3
Total$1,205.9
 $1,149.2


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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Revenue
Disaggregation of Revenues
The following table below presents net sales disaggregated by product line for each segment:
Three Months Ended
March 31,
(in millions)20232022
Aerospace & Electronics
Commercial Original Equipment$68.4 $58.7 
Military and Other Original Equipment61.9 57.4 
Commercial Aftermarket Products37.9 28.6 
Military Aftermarket Products11.9 12.5 
Total Aerospace & Electronics$180.1 $157.2 
Process Flow Technologies
Process Valves and Related Products$202.9 $182.9 
Commercial Valves30.6 98.2 
Pumps and Systems37.9 30.2 
Total Process Flow Technologies$271.4 $311.3 
Payment & Merchandising Technologies
Payment Acceptance and Dispensing Products$223.8 $211.0 
Banknotes and Security Products105.3 121.6 
Total Payment & Merchandising Technologies$329.1 $332.6 
Engineered Materials
FRP - Recreational Vehicles$20.3 $35.7 
FRP - Building Products32.3 27.4 
FRP - Transportation9.7 7.3 
Total Engineered Materials$62.3 $70.4 
Net sales$842.9 $871.5 
  Three Months Ended Nine Months Ended
  September 30, September 30,
(in millions) 2017 2016 2017 2016
Fluid Handling        
Process Valves and Related Products $157.7
 $148.1
 $472.2
 $469.1
Commercial Valves 85.7
 75.2
 230.2
 224.1
Other Products 23.5
 21.8
 67.9
 65.9
Total Fluid Handling $266.9
 $245.1
 $770.3
 $759.1
         
Payment & Merchandising Technologies        
Payment Acceptance and Dispensing Products $136.7
 $123.7
 $431.1
 $373.7
Merchandising Equipment 51.9
 63.0
 151.2
 177.5
Total Payment & Merchandising Technologies $188.6
 $186.7
 $582.3
 $551.2
         
Aerospace & Electronics        
Commercial Original Equipment $90.1
 $88.4
 $259.9
 $270.6
Military and Other Original Equipment 37.4
 63.3
 116.3
 152.9
Commercial Aftermarket Products 32.3
 31.9
 96.0
 96.3
Military Aftermarket Products 12.2
 14.6
 34.3
 39.4
Total Aerospace & Electronics $172.0
 $198.2
 $506.5
 $559.2
         
Engineered Materials        
FRP - Recreational Vehicles $37.2
 $32.6
 $116.9
 $99.8
FRP - Building Products 23.7
 22.9
 72.1
 68.3
FRP - Transportation 7.5
 8.7
 23.7
 28.9
Total Engineered Materials $68.4
 $64.2
 $212.7
 $197.0
         
Total Net Sales $695.9
 $694.2
 $2,071.8
 $2,066.5
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.

Contract Assets and Contract Liabilities

Contract assets represent unbilled amounts that typically arise from contracts for customized products or contracts for products sold directly to the U.S. government or indirectly to the U.S. government through subcontracts, where revenue recognized using the cost-to-cost method exceeds the amount billed to the customer. Contract assets are assessed for impairment and recorded at their net realizable value. Contract liabilities represent advance payments from customers. 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. Net contract assets and contract liabilities consisted of the following:
(in millions)March 31, 2023December 31, 2022
Contract assets$97.0 $88.6 
Contract liabilities$150.4 $142.9 
Page 12
13
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.
Note 4 - Earnings Per Share
The Company’sOur basic earnings per share calculations are based on the weighted average number of common shares outstanding during the period. Shares of restricted stock are included in the computation of both basic and diluted earnings per share. Potentially dilutive securities include outstanding stock options, restricted share units, deferred stock units and performance-based restricted share units. 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
March 31,
(in millions, except per share data)20232022
Net income attributable to common shareholders$105.7 $105.0 
Average basic shares outstanding56.5 57.1 
Effect of dilutive share-based awards0.8 0.8 
Average diluted shares outstanding57.3 57.9 
Earnings per basic share$1.87 $1.84 
Earnings per diluted share$1.84 $1.81 
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions, except per share data)2017 2016 2017 2016
Net income attributable to common shareholders$68.2
 $63.5
 $200.5
 $186.8
        
Average basic shares outstanding59.5
 58.5
 59.4
 58.3
Effect of dilutive stock options0.9
 0.9
 1.0
 0.9
Average diluted shares outstanding60.4
 59.4
 60.4
 59.2
        
Earnings per basic share$1.15
 $1.09
 $3.38
 $3.20
Earnings per diluted share$1.13
 $1.07
 $3.32
 $3.16


The computationStock options, restricted share units, deferred stock units and performance-based restricted share units that were excluded from the calculation of diluted earnings per share excludes thebecause their effect of the potential exercise of stock options when the average market price of the common stock is lower than the exercise price of the related stock options. During the period, 0.6 million and 0.7 million average options were excluded for the third quarter of 2017 and 2016, respectively, andanti‑dilutive was 0.4 million and 1.10.3 million average options were excluded for the first ninethree months of 2017ended March 31, 2023, and 2016,2022, respectively.





Page 13
14
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 5 - Changes in Equity and Accumulated Other Comprehensive Loss
A summary of changes in equity for the nine months ended September 30, 2017 and 2016 is provided below:
 Nine Months Ended September 30,
 2017 2016
(in millions)
Total
Shareholders’
Equity
 
Noncontrolling
Interests
 Total Equity 
Total
Shareholders’
Equity
 
Noncontrolling
Interests
 Total Equity
Balance, beginning of period$1,133.8
 $11.9
 $1,145.7
 $1,139.4
 $11.4
 $1,150.8
Dividends(58.8) —
 (58.8) (57.8) —
 (57.8)
Reacquisition on open market(25.0) —
 (25.0) —
 —
 —
Exercise of stock options, net of shares reacquired20.7
 —
 20.7
 9.6
 —
 9.6
Stock compensation expense16.5
 —
 16.5
 16.8
 —
 16.8
Excess tax shortfall from stock based compensation—
 —
 —
 0.1
 —
 0.1
Net income200.5
 0.6
 201.1
 186.8
 0.5
 187.3
Other comprehensive income91.4
 (1.3) 90.1
 17.2
 —
 17.2
Comprehensive income291.9
 (0.7) 291.2
 204.0
 0.5
 204.5
Balance, end of period$1,379.1
 $11.2
 $1,390.3
 $1,312.1
 $11.9
 $1,324.0
The table below provides the accumulated balances for each classification of accumulated other comprehensive loss,income (loss), as reflected on theour Condensed Consolidated Balance Sheets.
(in millions)Defined Benefit Pension and Postretirement Items Currency Translation Adjustment
 Total a
Balance as of December 31, 2022$(271.9)$(231.4)$(503.3)
Other comprehensive income (loss) before reclassifications— 12.8 12.8 
Amounts reclassified from accumulated other comprehensive loss2.7 — 2.7 
Net period other comprehensive income (loss)2.7 12.8 15.5 
Balance as of March 31, 2023$(269.2)$(218.6)$(487.8)
 (in millions)Defined Benefit Pension and Other Postretirement Items*  Currency Translation Adjustment  Total
       
Balance as of December 31, 2016$(301.3) $(174.8) $(476.1)
 Other comprehensive income before reclassifications0.1
 84.6
 84.7
 Amounts reclassified from accumulated other comprehensive income6.8
 —
 6.8
Net current-period other comprehensive income6.9
 84.6
 91.5
Balance as of September 30, 2017$(294.4) $(90.2) $(384.6)
a Net of tax benefit of $107.3 million and $106.6 million as of March 31, 2023 and December 31, 2022, respectively.

* Net of tax benefit of $117.0 million and $119.8 million as of September 30, 2017 and December 31, 2016, respectively.


Page 14

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three month periods ended September 30, 2017March 31, 2023, and 2016.2022. 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,
(in millions)20232022
Amortization of pension items:
Net loss3.8 4.8 
Amortization of postretirement items:
Prior service costs(0.2)(0.3)
Net gain(0.2)— 
Total before tax$3.4 $4.5 
Tax impact0.7 1.2 
Total reclassifications for the period$2.7 $3.3 

15
Details of Accumulated Other Comprehensive Income Components (in millions)
 Amounts Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statements of Operations
  Three Months Ended September 30,  
  2017 2016  
Amortization of defined benefit pension items:      
Prior-service costs $(0.1) $(0.2) $(0.1) and $(0.3) has been recorded within Cost of sales for the three months ended September 30, 2017 and 2016, respectively, and $0 and $0.1 has been recorded within Selling, general & administrative for the three months ended September 30, 2017 and 2016, respectively.
Net loss 3.5
 2.9
 $4.7 and $3.9 has been recorded within Cost of sales for the three months ended September 30, 2017 and 2016, respectively, and $(1.2) and $(1.0) has been recorded within Selling, general & administrative for the three months ended September 30, 2017 and 2016, respectively.
Amortization of other postretirement items:      
Prior-service costs —
 (0.1) Recorded within Selling, general & administrative
Net gain (0.1) (0.1) Recorded within Selling, general & administrative
  $3.3
 $2.5
 Total before tax
  1.0
 0.9
 Tax benefit
Total reclassifications for the period $2.3
 $1.6
 Net of tax
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - 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:
PensionPostretirement
(in millions)2023202220232022
Service cost$1.3 $1.3 $— $0.1 
Interest cost9.5 5.2 0.2 0.2 
Expected return on plan assets(12.2)(13.9)— — 
Amortization of prior service cost— — (0.2)(0.3)
Amortization of net (gain) loss3.8 4.8 (0.2)— 
Settlement loss1.8 — — — 
Curtailment loss1.1 — — — 
Net periodic loss (benefit)$5.3 $(2.6)$(0.2)$— 

The table below illustratescomponents of net periodic benefit, other than the amounts reclassified outservice cost component, are included in “Miscellaneous (expense) income, net” in our Condensed Consolidated Statements of each componentOperations. Service cost is recorded within “Cost of accumulated other comprehensive losssales” and “Selling, general and administrative” in our Condensed Consolidated Statements of Operations.

We expect to contribute the following to our pension and postretirement plans:
(in millions)PensionPostretirement
Expected contributions in 2023$20.0 $2.3 
Amounts contributed during the three months ended March 31, 2023$0.3 $1.5 
16
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - Income Taxes
Effective Tax Rates
Our quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the periods presented.
Our effective tax rates are as follows:
Three Months Ended March 31,
20232022
Effective Tax Rate21.0%25.0%

Our effective tax rate for the nine monththree 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. taxes.
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 September 30, 2017March 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 2016.(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.

17
Details of Accumulated Other Comprehensive Income Components (in millions)
 Amounts Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement of Operations
  Nine Months Ended September 30,  
  2017 2016  
Amortization of defined benefit pension items:      
Prior-service costs $(0.3) $(0.6) $(0.4) and $(0.8) has been recorded within Cost of sales for the nine months ended September 30, 2017 and 2016, respectively, and $0.1 and $0.2 has been recorded within Selling, general & administrative for the nine months ended September 30, 2017 and 2016, respectively.
Net loss 10.5
 8.7
 $14.2 and $11.8 has been recorded within Cost of sales for the nine months ended September 30, 2017 and 2016, respectively, and ($3.7) and ($3.1) has been recorded within Selling, general & administrative for the nine months ended September 30, 2017 and 2016, respectively.
Amortization of other postretirement items:      
Prior-service costs (0.1) (0.3) Recorded within Selling, general & administrative
Net gain (0.3) (0.3) Recorded within Selling, general & administrative
  $9.8
 $7.5
 Total before tax
  3.0
 2.3
 Tax benefit
Total reclassifications for the period $6.8
 $5.2
 Net of tax


Page 15
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 68 - Goodwill and Intangible Assets
The Company’sOur business acquisitions have typically resulted in the recognition of goodwill and other intangible assets. The Company followsWe follow the provisions under ASC Topic 350, “Intangibles – Goodwill and Other” (“ASC 350”) as it relates to the accounting for goodwill in the Condensed Consolidated Financial Statements.our condensed consolidated financial statements. These provisions require that the Company,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. The Company performs itsWe 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. The Company believesWe believe that there have been no events or circumstances which would more likely than not reduce the fair value for itsour 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 September 30, 2017, the CompanyMarch 31, 2023, we had sevensix reporting units.
When performing its annual impairment assessment, the Company compares the fair value of each of its reporting units to its respective carrying value. Goodwill is considered to be potentially impaired when the net book value of the reporting unit exceeds its estimated fair value. Fair values are established primarily by discounting estimated future cash flows at an estimated cost of capital which varies for each reporting unit and which, as of the Company’s most recent annual impairment assessment, ranged between 9.0% and 12.0% (a weighted average of 10.5%), reflecting the respective inherent business risk of each of the reporting units tested. This methodology for valuing the Company’s reporting units (commonly referred to as the Income Method) has not changed since the adoption of the provisions under ASC 350. The determination of discounted cash flows is based on the businesses’ strategic plans and long-range planning forecasts, which change from year to year. The revenue growth rates included in the forecasts represent best estimates based on current and forecasted market conditions. Profit margin assumptions are projected by each reporting unit based on the current cost structure and anticipated net cost increases/reductions. There are inherent uncertainties related to these assumptions, including changes in market conditions, and management judgment is necessary in applying them to the analysis of goodwill impairment. In addition to the foregoing, for each reporting unit, market multiples are used to corroborate its discounted cash flow results where fair value is estimated based on earnings multiples determined by available public information of comparable businesses. While the Company believes it has made reasonable estimates and assumptions to calculate the fair value of its reporting units, it is possible a material change could occur. If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may then be determined to be overstated and a charge would need to be taken against net earnings. Furthermore, in order to evaluate the sensitivity of the fair value calculations on the goodwill impairment test performed during the fourth quarter of 2016, the Company applied a hypothetical, reasonably possible 10% decrease to the fair values of each reporting unit. The effects of this hypothetical 10% decrease would still result in the fair value calculation exceeding the carrying value for each reporting unit.

Changes to goodwill are as follows:
(in millions)Fluid HandlingPayment & Merchandising TechnologiesAerospace & ElectronicsEngineered MaterialsTotal
Balance as of December 31, 2015$218.7
$575.2
$202.6
$171.4
$1,167.9
Currency translation(6.4)(11.9)(0.3)(0.1)(18.7)
Balance at December 31, 2016$212.3
$563.3
$202.3
$171.3
$1,149.2
Additions22.6
8.9
—
—
31.5
Currency translation9.4
15.6
0.1
0.1
25.2
Balance as of September 30, 2017$244.3
$587.8
$202.4
$171.4
$1,205.9
For the nine month period ended September 30, 2017, additions to goodwill represent the purchase price allocation related to the April 2017 acquisition of Westlock and the June 2017 acquisition of Microtronic. See discussion in Note 2, "Acquisitions" for further details.
As of September 30, 2017, the Company had $284.7 million of net intangible assets, of which $28.5 million were intangiblesIntangibles with indefinite useful lives, consisting of trade names. Intangibles with indefinite useful livesnames, 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. The Company amortizesWe amortize the cost of definite-lived intangibles over their estimated useful lives.

Page 16

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

Changes to goodwill are as follows:
(in millions)Aerospace & ElectronicsProcess Flow TechnologiesPayment & Merchandising TechnologiesEngineered MaterialsTotal
Balance as of December 31, 2022$202.3 $317.3 $836.6 $171.3 $1,527.5 
Currency translation— 2.2 1.2 — 3.4 
Balance as of March 31, 2023$202.3 $319.5 $837.8 $171.3 $1,530.9 
As of events or changes in circumstances could include, but are not limited to, a prolonged economic downturn, current period operating or cash flow losses combined with a historyMarch 31, 2023, we had $406.5 million of losses or a forecast of continuing losses associated with the use of an asset or asset group, or a current expectation that an asset or asset group will be sold or disposed of before the end of its previously estimated useful life. Recoverability is based upon projections of anticipated future undiscounted cash flows associated with the use and eventual disposal of the definite-lived intangible asset (or asset group), as well as specific appraisal in certain instances. Reviews occur at the lowest level for which identifiable cash flows are largely independent of cash flows associated with other long-lived assets or asset groups and include estimated future revenues, gross profit margins, operating profit margins and capital expenditures which are based on the businesses’ strategic plans and long-range planning forecasts, which change from year to year. The revenue growth rates included in the forecasts represent the Company's best estimates based on current and forecasted market conditions, and the profit margin assumptions are based on the current cost structure and anticipated net cost increases/reductions. There are inherent uncertainties related to these assumptions, including changes in market conditions, and management’s judgment in applying them to the analysis. If the future undiscounted cash flows are less than the carrying value, then the definite-lived intangible asset is considered impaired and a charge would be taken against net earnings based on the amount by which the carrying amount exceeds the estimated recoverable amount. Judgments that the Company makes which impact these assessments relate to the expected useful lives of definite-lived assets and its ability to realize any undiscounted cash flows in excess of the carrying amounts of such assets, and are affected primarily by changes in the expected use of the assets, changes in technology or development of alternative assets, changes in economic conditions, changes in operating performance and changes in expected future cash flows. Since judgment is involved in determining the recoverable amount of definite-lived intangible assets, there is risk that the carrying value of the Company's definite-livedwhich $67.4 million were intangibles with indefinite useful lives. As of December 31, 2022, we had $416.6 million of net intangible assets, may require adjustment in future periods. Historical results to date have generally approximated expected cash flows for the identifiable cash flow generating level. The Company believes there have been no events or circumstancesof which would more likely than not reduce the fair value of its indefinite-lived or definite-lived intangible assets below their carrying value.$67.3 million were intangibles with indefinite useful lives.
Changes to intangible assets are as follows:
(in millions)Three Months Ended
March 31, 2023		Year Ended December 31, 2022
Balance at beginning of period, net of accumulated amortization$416.6 $467.1 
Amortization expense(10.4)(41.7)
Currency translation and other0.3 (8.8)
Balance at end of period, net of accumulated amortization$406.5 $416.6 


18
(in millions)Nine Months Ended September 30, 2017 Year Ended December 31, 2016
Balance at beginning of period, net of accumulated amortization$282.2
 $317.1
Additions18.2
 —
Amortization expense(22.8) (30.7)
Currency translation and other7.1
 (4.2)
Balance at end of period, net of accumulated amortization$284.7
 $282.2
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the nine month period ended September 30, 2017, additions to intangible assets represent the purchase price allocation related to the April 2017 acquisition of Westlock and the June 2017 acquisition of Microtronic. See discussion in Note 2, "Acquisitions" for further details.

A summary of intangible assets are as follows:
 
Weighted Average
Amortization Period of Finite Lived Assets (in years)
            
  September 30, 2017 December 31, 2016
(in millions) 
Gross
Asset
 
Accumulated
Amortization
 Net 
Gross
Asset
 
Accumulated
Amortization
 Net
Intellectual property rights16.5 $89.7
 $54.6
 $35.1
 $86.4
 $52.1
 $34.3
Customer relationships and backlog15.6 413.5
 175.2
 238.3
 388.9
 153.4
 235.5
Drawings37.9 11.1
 10.3
 0.8
 11.1
 10.3
 0.8
Other12.8 63.3
 52.8
 10.5
 60.3
 48.7
 11.6
Total15.9 $577.6
 $292.9
 $284.7
 $546.7
 $264.5
 $282.2



Page 17

March 31, 2023December 31, 2022
(in millions)Weighted Average
Amortization Period of Finite Lived Assets (in years)		Gross
Asset		Accumulated
Amortization		NetGross
Asset		Accumulated
Amortization		Net
Intellectual property rights15.1$132.4 $59.5 $72.9 $132.1 $59.1 $73.0 
Customer relationships and backlog18.4636.2 338.3 297.9 635.5 329.8 305.7 
Drawings40.011.1 10.7 0.4 11.1 10.7 0.4 
Other11.7141.8 106.5 35.3 141.3 103.8 37.5 
Total18.0$921.5 $515.0 $406.5 $920.0 $503.4 $416.6 
Future amortization expense associated with intangiblesintangible assets is expected to be:
(in millions)
Remainder of 2023$31.4 
202441.1 
202535.7 
202635.5 
202734.9 
2028 and after160.5 
Year (in millions) 
2017$7.8
201829.1
201926.4
202022.0
2021 and after170.9
Note 79 - Accrued Liabilities
Accrued liabilities consist of:
(in millions)March 31,
2023		December 31,
2022
Employee related expenses$86.3 $156.6 
Warranty8.7 7.4 
Current lease liabilities16.2 19.0 
Contract liabilities150.4 142.9 
Other134.3 138.3 
Total$395.9 $464.2 


 
19
(in millions)September 30,
2017		 December 31,
2016
Employee related expenses$97.1
 $95.4
Warranty15.1
 15.5
Advanced payment from customers26.7
 19.0
Other101.6
 93.2
Total$240.5
 $223.1
The Company accrues warranty liabilities when it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Warranty provision is included in Cost of sales in the Condensed Consolidated Statements of Operations.
A summary of the warranty liabilities is as follows:
(in millions)Nine Months Ended September 30, 2017 Year Ended December 31, 2016
Balance at beginning of period$15.5
 $15.1
Expense11.1
 14.5
Changes due to acquisitions0.2
 —
Payments / deductions(11.9) (13.4)
Currency translation0.2
 (0.7)
Balance at end of period$15.1
 $15.5

Page 18
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 810 - Commitments and Contingencies
Asbestos Liability
Information Regarding Claims and Costs in the Tort System
As of September 30, 2017, the Company was a defendant in cases filed in numerous state and federal courts alleging injury or death as a result of exposure to asbestos. Activity related to asbestos claims during the periods indicated was as follows:
 Three Months Ended Nine Months Ended Year Ended
 September 30, September 30, December 31,
 2017 2016 2017 2016 2016
Beginning claims31,980
 38,664
 36,052
 41,090
 41,090
New claims667
 611
 2,169
 2,239
 2,826
Settlements(278) (187) (906) (728) (924)
Dismissals(294) (2,638) (5,240) (6,151) (6,940)
Ending claims32,075
 36,450
 32,075
 36,450
 36,052
Of the 32,075 pending claims as of September 30, 2017, approximately 18,200 claims were pending in New York, approximately 700 claims were pending in Texas, approximately 1,500 claims were pending in Mississippi, and approximately 200 claims were pending in Ohio, all jurisdictions in which legislation or judicial orders restrict the types of claims that can proceed to trial on the merits.
The Company has tried several cases resulting in defense verdicts by the jury or directed verdicts for the defense by the court. The Company further has pursued appeals of certain adverse jury verdicts that have resulted in reversals in favor of the defense.
On March 23, 2010, a Philadelphia, Pennsylvania, state court jury found the Company responsible for a 1/11th share of a $14.5 million verdict in the James Nelson claim. On February 23, 2011, the court entered judgment on the verdict in the amount of $4.0 million, jointly, against the Company and two other defendants, with additional interest in the amount of $0.01 million being assessed against the Company, only. All defendants, including the Company, and the plaintiffs took timely appeals of certain aspects of those judgments. On September 5, 2013, a panel of the Pennsylvania Superior Court, in a 2-1 decision, vacated the Nelson verdict against all defendants, reversing and remanding for a new trial. Plaintiffs requested a rehearing in the Superior Court and by order dated November 18, 2013, the Superior Court vacated the panel opinion, and granted en banc reargument. On December 23, 2014, the Superior Court issued a second opinion reversing the jury verdict. Plaintiffs sought leave to appeal to the Pennsylvania Supreme Court, which defendants have opposed. By order dated June 21, 2017, the Supreme Court of Pennsylvania denied plaintiffs’ petition for leave to appeal. The case may be set for a new trial in 2018.
On August 17, 2011, a New York City state court jury found the Company responsible for a 99% share of a $32 million verdict on the Ronald Dummitt claim. The Company filed post-trial motions seeking to overturn the verdict, to grant a new trial, or to reduce the damages, which the Company argued were excessive under New York appellate case law governing awards for non-economic losses. The Court held oral argument on these motions on October 18, 2011 and issued a written decision on August 21, 2012 confirming the jury’s liability findings but reducing the award of damages to $8 million. At plaintiffs’ request, the Court entered a judgment in the amount of $4.9 million against the Company, taking into account settlement offsets and accrued interest under New York law. The Company appealed, and the judgment was affirmed in a 3-2 decision and order dated July 3, 2014. The Company appealed to the New York Court of Appeals. The court heard oral arguments on May 3, 2016 and affirmed the judgment in a decision dated June 28, 2016. The judgment, with interest, in the amount of $6.6 million was paid in the third quarter 2016.
On October 23, 2012, the Company received an adverse verdict in the Gerald Suttner claim in Buffalo, New York. The jury found that the Company was responsible for four percent (4%) of plaintiffs’ damages of $3 million. The Company filed post-trial motions requesting judgment in the Company’s favor notwithstanding the jury’s verdict, which were denied. The court entered a judgment of $0.1 million against the Company. The Company appealed, and the judgment was affirmed by order dated March 21, 2014. The Company sought reargument of this decision, which was denied. The Company sought review before the New York Court of Appeals, which was accepted in the fourth quarter of 2014. The court heard oral arguments on May 3, 2016 and affirmed the judgment in a decision dated June 28, 2016. The judgment, with interest, in the amount of $0.2 million was paid in the third quarter 2016.

Page 19

On November 28, 2012, the Company received an adverse verdict in the James Hellam claim in Oakland, CA. The jury found that the Company was responsible for seven percent (7%) of plaintiffs’ non-economic damages of $4.5 million, plus a portion of their economic damages of $0.9 million. Based on California court rules regarding allocation of damages, judgment was entered against the Company in the amount of $1.282 million. The Company filed post-trial motions requesting judgment in the Company’s favor notwithstanding the jury’s verdict and also requesting that settlement offsets be applied to reduce the judgment in accordance with California law. On January 31, 2013, the court entered an order disposing partially of that motion. On March 1, 2013, the Company filed an appeal regarding the portions of the motion that were denied. The court entered judgment against the Company in the amount of $1.1 million. The Company appealed. By opinion dated April 16, 2014, the Court of Appeal affirmed the finding of liability against the Company, and the California Supreme Court denied review of this ruling. The Court of Appeal reserved the arguments relating to recoverable damages to a subsequent appeal that remains pending. On August 21, 2015, the Court of Appeal reversed the trial court with respect to a $20,000 damages item, but affirmed the trial court in all other respects. The Company sought review of that ruling before the Supreme Court of California, which was denied. The Company settled the matter in December 2015.  The settlement was reflected in the fourth quarter 2015 indemnity amount.
On February 25, 2013, a Philadelphia, Pennsylvania, state court jury found the Company responsible for a 1/10th share of a $2.5 million verdict in the Thomas Amato claim and a 1/5th share of a $2.3 million verdict in the Frank Vinciguerra claim, which were consolidated for trial. The Company filed post-trial motions requesting judgments in the Company’s favor notwithstanding the jury’s verdicts or new trials, and also requesting that settlement offsets be applied to reduce the judgment in accordance with Pennsylvania law. These motions were denied. The Company appealed, and on April 17, 2015, a panel of the Superior Court of Pennsylvania affirmed the trial court’s ruling. The Supreme Court of Pennsylvania accepted the Company’s petition for review and heard oral arguments on September 13, 2016. On November 22, 2016, the Court dismissed the Company’s appeal as improvidently granted. The Company paid the Vinciguerra judgment in the amount of $0.6 million in the fourth quarter 2016. The Company paid the Amato judgment, with interest, in the amount of $0.3 million in the second quarter of 2017.
On March 1, 2013, a New York City state court jury entered a $35 million verdict against the Company in the Ivo Peraica claim. The Company filed post-trial motions seeking to overturn the verdict, to grant a new trial, or to reduce the damages, which the Company argues were excessive under New York appellate case law governing awards for non-economic losses and further were subject to settlement offsets. After the trial court remitted the verdict to $18 million, but otherwise denied the Company’s post-trial motion, judgment was entered against the Company in the amount of $10.6 million (including interest). The Company appealed. The Company took a separate appeal of the trial court’s denial of its summary judgment motion. The Court consolidated the appeals, which were heard in the fourth quarter of 2014. In July 2016 the Company supplemented its briefing based on the New York Court of Appeals Dummitt/Suttner decision. On October 6, 2016, a panel of the Appellate Division, First Department, affirmed the rulings of the trial court on liability issues but further reduced the damages award to $4.25 million, which after settlement offsets is calculated to be $1.94 million. Plaintiff has the option of accepting the reduced amount or having a new trial on damages. The Company filed a motion with the Appellate Division requesting a rehearing on liability issues. The motion was denied. The New York Court of Appeals also denied review. The Company paid in the first quarter of 2017 the Peraica plaintiffs $2.7 million, which was the amount owed under the judgment.
On July 31, 2013, a Buffalo, New York state court jury entered a $3.1 million verdict against the Company in the Lee Holdsworth claim. The Company filed post-trial motions seeking to overturn the verdict, to grant a new trial, or to reduce the damages, which the Company argues were excessive under New York appellate case law governing awards for non-economic losses and further were subject to settlement offsets. Post-trial motions were denied, and the court entered judgment in the amount of $1.7 million. On June 12, 2015, the Appellate Division, Fourth Department, affirmed the trial court���s ruling denying the Company’s motion for summary judgment. The court denied reargument of that ruling. The Company pursued a further appeal of the trial court rulings and judgment, which was argued on May 16, 2016. On July 8, 2016, the Court vacated the judgment and granted the Company a new trial on the issue of whether the Company is subject to joint-and-several liability under New York law. Plaintiff filed a motion to enter judgment in the trial court in the amount allegedly unaffected by the appellate ruling, approximately $1.0 million, and the Company opposed the motion. The Company settled the matter. The settlement was reflected in the fourth quarter 2016 indemnity amount.
On September 11, 2013, a Columbia, South Carolina state court jury in the Lloyd Garvin claim entered an $11 million verdict for compensatory damages against the Company and two other defendants jointly, and also awarded exemplary damages against the Company in the amount of $11 million. The jury also awarded exemplary damages against both other defendants. The Company filed post-trial motions seeking to overturn the verdict, which were denied, except that the Court remitted the compensatory damages award to $2.5 million and exemplary damages award to $3.5 million. Considering settlement offsets, the Court further reduced the total damages award to $3.5 million. The Company settled the matter. The settlement is reflected in the first quarter 2015 indemnity amount.

Page 20

On September 17, 2013, a Fort Lauderdale, Florida state court jury in the Richard DeLisle claim found the Company responsible for 16 percent of an $8 million verdict. The trial court denied all parties’ post-trial motions, and entered judgment against the Company in the amount of $1.3 million. The Company has appealed. Oral argument on the appeal took place on February 16, 2016. On September 14, 2016 a panel of the Florida Court of Appeals reversed and entered judgment in favor of the Company. Plaintiff filed with the Court of Appeals a motion for rehearing and/or certification of an appeal to the Florida Supreme Court, which the Court denied on November 9, 2016. Plaintiffs have subsequently requested review by the Supreme Court of Florida. Plaintiffs' motion was granted on July 11, 2017. The briefing in this matter remains ongoing.
On June 16, 2014, a New York City state court jury entered a $15 million verdict against the Company in the Ivan Sweberg claim and a $10 million verdict against the Company in the Selwyn Hackshaw claim. The two claims were consolidated for trial. The Company filed post-trial motions seeking to overturn the verdicts, to grant new trials, or to reduce the damages, which were denied, except that the Court reduced the Sweberg award to $10 million, and reduced the Hackshaw award to $6 million. Judgments have been entered in the amount of $5.3 million in Sweberg and $3.1 million in Hackshaw. The Company appealed. Oral argument on Sweberg took place on February 16, 2016, and oral argument on Hackshaw took place on March 9, 2016. On October 6, 2016, two panels of the Appellate Division, First Department, affirmed the rulings of the trial court on liability issues but further reduced the Sweberg damages award to $9.5 million and further reduced the Hackshaw damages award to $3 million, which after settlement offsets are calculated to be $4.73 million in Sweberg and $0 in Hackshaw. Plaintiffs were given the option of accepting the reduced awards or having new trials on damages. Plaintiffs subsequently brought an appeal in Hackshaw before the New York Court of Appeals, which the Court denied. The Company filed a motion with the Appellate Division requesting a rehearing on liability issues in Sweberg. That motion was denied. The New York Court of Appeals also denied review. The Company paid in the first quarter of 2017 the Sweberg plaintiffs $5.7 million, which was the amount owed under this judgment. No damages are owed in Hackshaw.
On July 2, 2015, a St. Louis, Missouri state court jury in the James Poage claim entered a $1.5 million verdict for compensatory damages against the Company. The jury also awarded exemplary damages against the Company in the amount of $10 million. The Company filed a motion seeking to reduce the verdict to account for the verdict set-offs. That motion was denied, and judgment was entered against the Company in the amount of $10.8 million. The Company initiated an appeal. Oral argument was held on December 13, 2016. In an opinion dated May 2, 2017, a Missouri Court of Appeals panel affirmed the judgment in all respects.  The Court of Appeals denied the Company’s motion to transfer the case to the Supreme Court of Missouri. The Company sought leave to appeal before the Supreme Court of Missouri, which denied that request. The Company plans to seek further review of that ruling by the Supreme Court of the United States.
On February 9, 2016, a Philadelphia, Pennsylvania, federal court jury found the Company responsible for a 30 percent share of a $1.085 million verdict in the Valent Rabovsky claim. The court ordered briefing on the amount of the judgment. The Company argued, among other things, that settlement offsets reduce the award to plaintiff under Pennsylvania law. A further hearing was held April 26, 2016, after which the court denied the Company’s request and entered judgment in the amount of $0.4 million. The Company filed post-trial motions, which were denied in two decisions issued on August 26, 2016 and September 28, 2016. The Company is pursuing an appeal to the Third Circuit Court of Appeals, which was argued on June 12, 2017. On September 27, 2017, the Court entered an order asking the Supreme Court of Pennsylvania to decide one of the issues raised in the Company’s appeal. The Supreme Court of Pennsylvania has yet to rule on their request.
On April 22, 2016, a Phoenix, Arizona federal court jury found the Company responsible for a 20 percent share of a $9 million verdict in the George Coulbourn claim, and further awarded exemplary damages against the Company in the amount of $5 million.  The jury also awarded compensatory and exemplary damages against the other defendant present at trial.  The court entered judgment against the Company in the amount of $6.8 million. The Company filed post-trial motions, which were denied on September 20, 2016. The Company is pursuing an appeal to the Ninth Circuit Court of Appeals. Briefing is ongoing.
On June 30, 2017, a New York City state court jury entered a $20 million verdict against the Company in the Geoffrey Anisansel claim. The Company settled the matter in August 2017. The settlement is reflected in the third quarter 2017 indemnity amount.
Such judgment amounts are not included in the Company’s incurred costs until all available appeals are exhausted and the final payment amount is determined.
The gross settlement and defense costs incurred (before insurance recoveries and tax effects) for the Company for the nine-month periods ended September 30, 2017 and 2016 totaled $75.5 million and $57.5 million, respectively. In contrast to the recognition of settlement and defense costs, which reflect the current level of activity in the tort system, cash payments and receipts generally lag the tort system activity by several months or more, and may show some fluctuation from quarter to quarter. Cash payments of settlement amounts are not made until all releases and other required documentation are received by

Page 21

the Company, and reimbursements of both settlement amounts and defense costs by insurers may be uneven due to insurer payment practices, transitions from one insurance layer to the next excess layer and the payment terms of certain reimbursement agreements. The Company’s total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the nine-month periods ended September 30, 2017 and 2016 totaled $46.8 million and $41.5 million, respectively. Detailed below are the comparable amounts for the periods indicated.

 Three Months Ended Nine Months Ended Year Ended
(in millions)September 30, September 30, December 31,
 2017 2016 2017 2016 2016
Settlement / indemnity costs incurred (1)$21.0
 $9.6
 $46.8
 $25.3
 $30.5
Defense costs incurred (1)9.7
 10.1
 28.7
 32.2
 43.0
Total costs incurred$30.7
 $19.7
 $75.5
 $57.5
 $73.5
          
Settlement / indemnity payments$13.9
 $14.4
 $37.3
 $28.0
 $32.4
Defense payments9.5
 10.6
 28.7
 31.0
 43.7
Insurance receipts(4.8) (9.3) (19.2) (17.4) (20.1)
Pre-tax cash payments$18.6
 $15.8
 $46.8
 $41.5
 $56.0
(1)Before insurance recoveries and tax effects.
The amounts shown for settlement and defense costs incurred, and cash payments, are not necessarily indicative of future period amounts, which may be higher or lower than those reported.
Cumulatively through September 30, 2017, the Company has resolved (by settlement or dismissal) approximately 130,000 claims. The related settlement cost incurred by the Company and its insurance carriers is approximately $530 million, for an average settlement cost per resolved claim of approximately $4,100. The average settlement cost per claim resolved during the years ended December 31, 2016, 2015 and 2014 was $3,900, $3,100 and $3,800, respectively. Because claims are sometimes dismissed in large groups, the average cost per resolved claim, as well as the number of open claims, can fluctuate significantly from period to period. In addition to large group dismissals, the nature of the disease and corresponding settlement amounts for each claim resolved will also drive changes from period to period in the average settlement cost per claim. Accordingly, the average cost per resolved claim is not considered in the Company’s periodic review of its estimated asbestos liability. For a discussion regarding the four most significant factors affecting the liability estimate, see “Effects on the Condensed Consolidated Financial Statements”.
Effects on the Condensed Consolidated Financial Statements
The Company has retained the firm of Hamilton, Rabinovitz & Associates, Inc. (“HR&A”), a nationally recognized expert in the field, to assist management in estimating the Company’s asbestos liability in the tort system. HR&A reviews information provided by the Company concerning claims filed, settled and dismissed, amounts paid in settlements and relevant claim information such as the nature of the asbestos-related disease asserted by the claimant, the jurisdiction where filed and the time lag from filing to disposition of the claim. The methodology used by HR&A to project future asbestos costs is based on the Company’s recent historical experience for claims filed, settled and dismissed during a base reference period. The Company’s experience is then compared to estimates of the number of individuals likely to develop asbestos-related diseases determined based on widely used previously conducted epidemiological studies augmented with current data inputs. Those studies were undertaken in connection with national analyses of the population of workers believed to have been exposed to asbestos. Using that information, HR&A estimates the number of future claims that would be filed against the Company and estimates the aggregate settlement or indemnity costs that would be incurred to resolve both pending and future claims based upon the average settlement costs by disease during the reference period. This methodology has been accepted by numerous courts. After discussions with the Company, HR&A augments its liability estimate for the costs of defending asbestos claims in the tort system using a forecast from the Company which is based upon discussions with its defense counsel. Based on this information, HR&A compiles an estimate of the Company’s asbestos liability for pending and future claims using a range of reference periods based on claim experience and covering claims expected to be filed through the indicated forecast period. The most significant factors affecting the liability estimate are (1) the number of new mesothelioma claims filed against the Company, (2) the average settlement costs for mesothelioma claims, (3) the percentage of mesothelioma claims dismissed against the Company and (4) the aggregate defense costs incurred by the Company. These factors are interdependent, and no one factor predominates in determining the liability estimate.

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In the Company’s view, the forecast period used to provide the best estimate for asbestos claims and related liabilities and costs is a judgment based upon a number of trend factors, including the number and type of claims being filed each year; the jurisdictions where such claims are filed, and the effect of any legislation or judicial orders in such jurisdictions restricting the types of claims that can proceed to trial on the merits; and the likelihood of any comprehensive asbestos legislation at the federal level. In addition, the dynamics of asbestos litigation in the tort system have been significantly affected by the substantial number of companies that have filed for bankruptcy protection, thereby staying any asbestos claims against them until the conclusion of such proceedings, and the establishment of a number of post-bankruptcy trusts for asbestos claimants, which have been estimated to provide $36 billion for payments to current and future claimants. These trend factors have both positive and negative effects on the dynamics of asbestos litigation in the tort system and the related best estimate of the Company’s asbestos liability, and these effects do not move in a linear fashion but rather change over multi-year periods. Accordingly, the Company’s management continues to monitor these trend factors over time and periodically assesses whether an alternative forecast period is appropriate.
Each quarter, HR&A compiles an update based upon the Company’s experience in claims filed, settled and dismissed as well as average settlement costs by disease category (mesothelioma, lung cancer, other cancer, and non-malignant conditions including asbestosis). In addition to this claims experience, the Company also considers additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. As part of this process, the Company also takes into account trends in the tort system such as those enumerated above. Management considers all these factors in conjunction with the liability estimate of HR&A and determines whether a change in the estimate is warranted.
Liability Estimate. With the assistance of HR&A, effective as of December 31, 2016, the Company extended its estimate of the asbestos liability, including the costs of settlement or indemnity payments and defense costs relating to currently pending claims and future claims projected to be filed against the Company through the generally accepted end point of such claims in 2059. The Company’s previous estimate was for asbestos claims filed or projected to be filed through 2021. The Company’s estimate of the asbestos liability for pending and future claims through 2059 is based on the projected future asbestos costs resulting from the Company’s experience using a range of reference periods for claims filed, settled and dismissed. Based on this estimate, the Company recorded an additional liability of $227 million as of December 31, 2016. This action was based on several factors which contribute to the Company’s ability to reasonably estimate this liability through 2059. First, the number of mesothelioma claims (which although constituting approximately 10% of the Company’s total pending asbestos claims, have consistently accounted for approximately 90% of the Company’s aggregate settlement and defense costs) being filed against the Company and associated settlement costs have stabilized. Second, there have been generally favorable developments in the trend of case law which has been a contributing factor in stabilizing the asbestos claims activity and related settlement costs. Third, there have been significant actions taken by certain state legislatures and courts that have reduced the number and types of claims that can proceed to trial, which has been a significant factor in stabilizing the asbestos claims activity. Fourth, recent court decisions in certain jurisdictions have provided additional clarity regarding the nature of claims that may proceed to trial in those jurisdictions and greater predictability regarding future claim activity. Fifth, the Company has coverage-in-place agreements with almost all of its excess insurers, which enables the Company to project a stable relationship between settlement and defense costs paid by the Company and reimbursements from its insurers. Sixth, annual settlements with respect to groups of cases with certain plaintiff firms have helped to stabilize indemnity payments and defense costs. Taking these factors into account, the Company believes that it can reasonably estimate the asbestos liability for pending claims and future claims to be filed through 2059.
Management has made its best estimate of the costs through 2059 based on the analysis by HR&A completed in January 2017. Through September 30, 2017, the Company’s actual experience during the updated reference period for mesothelioma claims filed and dismissed generally approximated the assumptions in the Company’s liability estimate. In addition to this claims experience, the Company considered additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. Based on this evaluation, the Company determined that no change in the estimate was warranted for the period ended September 30, 2017.
A liability of $696 million was recorded as of December 31, 2016 to cover the estimated cost of asbestos claims now pending or subsequently asserted through 2059, of which approximately 80% is attributable to settlement and defense costs for future claims projected to be filed through 2059. The liability is reduced when cash payments are made in respect of settled claims and defense costs. The liability was $630 million as of September 30, 2017. It is not possible to forecast when cash payments related to the asbestos liability will be fully expended; however, it is expected such cash payments will continue for a number of years past 2059, due to the significant proportion of future claims included in the estimated asbestos liability and the lag time between the date a claim is filed and when it is resolved. None of these estimated costs have been discounted to present value due to the inability to reliably forecast the timing of payments. The current portion of the total estimated liability at September

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30, 2017 was $71 million and represents the Company’s best estimate of total asbestos costs expected to be paid during the twelve-month period. Such amount is based upon the HR&A model together with the Company’s prior year payment experience for both settlement and defense costs.
Insurance Coverage and Receivables. Prior to 2005, a significant portion of the Company’s settlement and defense costs were paid by its primary insurers. With the exhaustion of that primary coverage, the Company began negotiations with its excess insurers to reimburse the Company for a portion of its settlement and/or defense costs as incurred. To date, the Company has entered into agreements providing for such reimbursements, known as “coverage-in-place”, with eleven of its excess insurer groups. Under such coverage-in-place agreements, an insurer’s policies remain in force and the insurer undertakes to provide coverage for the Company’s present and future asbestos claims on specified terms and conditions that address, among other things, the share of asbestos claims costs to be paid by the insurer, payment terms, claims handling procedures and the expiration of the insurer’s obligations. Similarly, under a variant of coverage-in-place, the Company has entered into an agreement with a group of insurers confirming the aggregate amount of available coverage under the subject policies and setting forth a schedule for future reimbursement payments to the Company based on aggregate indemnity and defense payments made. In addition, with ten of its excess insurer groups, the Company entered into agreements settling all asbestos and other coverage obligations for an agreed sum, totaling $82.5 million in aggregate. Reimbursements from insurers for past and ongoing settlement and defense costs allocable to their policies have been made in accordance with these coverage-in-place and other agreements. All of these agreements include provisions for mutual releases, indemnification of the insurer and, for coverage-in-place, claims handling procedures. With the agreements referenced above, the Company has concluded settlements with all but one of its solvent excess insurers whose policies are expected to respond to the aggregate costs included in the liability estimate. That insurer, which issued a single applicable policy, has been paying the shares of defense and indemnity costs the Company has allocated to it, subject to a reservation of rights. There are no pending legal proceedings between the Company and any insurer contesting the Company’s asbestos claims under its insurance policies.
In conjunction with developing the aggregate liability estimate referenced above, the Company also developed an estimate of probable insurance recoveries for its asbestos liabilities. In developing this estimate, the Company considered its coverage-in-place and other settlement agreements described above, as well as a number of additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. In addition, the timing and amount of reimbursements will vary because the Company’s insurance coverage for asbestos claims involves multiple insurers, with different policy terms and certain gaps in coverage. In addition to consulting with legal counsel on these insurance matters, the Company retained insurance consultants to assist management in the estimation of probable insurance recoveries based upon the aggregate liability estimate described above and assuming the continued viability of all solvent insurance carriers. Based upon the analysis of policy terms and other factors noted above by the Company’s legal counsel, and incorporating risk mitigation judgments by the Company where policy terms or other factors were not certain, the Company’s insurance consultants compiled a model indicating how the Company’s historical insurance policies would respond to varying levels of asbestos settlement and defense costs and the allocation of such costs between such insurers and the Company. Using the estimated liability as of December 31, 2016 (for claims filed or expected to be filed through 2059), the insurance consultant’s model forecasted that approximately 21% of the liability would be reimbursed by the Company’s insurers. While there are overall limits on the aggregate amount of insurance available to the Company with respect to asbestos claims, those overall limits were not reached by the total estimated liability currently recorded by the Company, and such overall limits did not influence the Company in its determination of the asset amount to record. The proportion of the asbestos liability that is allocated to certain insurance coverage years, however, exceeds the limits of available insurance in those years. The Company allocates to itself the amount of the asbestos liability (for claims filed or expected to be filed through 2059) that is in excess of available insurance coverage allocated to such years. An asset of $143 million was recorded as of December 31, 2016 representing the probable insurance reimbursement for such claims expected through 2059. The asset is reduced as reimbursements and other payments from insurers are received. The asset was $124 million as of September 30, 2017.
The Company reviews the aforementioned estimated reimbursement rate with its insurance consultants on a periodic basis in order to confirm its overall consistency with the Company’s established reserves. The reviews encompass consideration of the performance of the insurers under coverage-in-place agreements and the effect of any additional lump-sum payments under other insurer agreements. Actual insurance reimbursements vary from period to period, and will decline over time, for the reasons cited above.
Uncertainties. Estimation of the Company’s ultimate exposure for asbestos-related claims is subject to significant uncertainties, as there are multiple variables that can affect the timing, severity and quantity of claims and the manner of their resolution. The Company cautions that its estimated liability is based on assumptions with respect to future claims, settlement and defense costs based on past experience that may not prove reliable as predictors; the assumptions are interdependent and no single

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factor predominates in determining the liability estimate. A significant upward or downward trend in the number of claims filed, depending on the nature of the alleged injury, the jurisdiction where filed and the quality of the product identification, or a significant upward or downward trend in the costs of defending claims, could change the estimated liability, as would substantial adverse verdicts at trial that withstand appeal. A legislative solution, structured settlement transaction, or significant change in relevant case law could also change the estimated liability.
The same factors that affect developing estimates of probable settlement and defense costs for asbestos-related liabilities also affect estimates of the probable insurance reimbursements, as do a number of additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. In addition, due to the uncertainties inherent in litigation matters, no assurances can be given regarding the outcome of any litigation, if necessary, to enforce the Company’s rights under its insurance policies or settlement agreements.
Many uncertainties exist surrounding asbestos litigation, and the Company will continue to evaluate its estimated asbestos-related liability and corresponding estimated insurance reimbursement as well as the underlying assumptions and process used to derive these amounts. These uncertainties may result in the Company incurring future charges or increases to income to adjust the carrying value of recorded liabilities and assets, particularly if the number of claims and settlement and defense costs change significantly, or if there are significant developments in the trend of case law or court procedures, or if legislation or another alternative solution is implemented. Although the resolution of these claims will likely take many years, the effect on the results of operations, financial position and cash flow in any given period from a revision to these estimates could be material.

Other Contingencies
Environmental Matters


For environmental matters the Company records, we record a liability for estimated remediation costs when it is probable that the Companywe 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 September 30, 2017March 31, 2023 is substantially related to the former manufacturing sitessite 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 of the Company in 1985 when the CompanyCrane Co. (n/k/a Redco) acquired UPI’s parent company, UnidynamicsUniDynamics 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. governmentGovernment at the Goodyear Site from 1962 to 1993, under contracts with the U.S. Department of Defense and other government agencies and certain of their prime contractors. In 1990, the U.S. Environmental Protection Agency (“EPA”) issued administrative orders requiring UPI to design and carry outconduct 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, the Companywe entered into a consent decree with the EPA with respect to the Goodyear Site providing for, among other things, a work plan for further investigation and remediation activities (inclusive of a supplemental remediation investigation and feasibility study). 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 the Companyus 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 $43.1$23.7 million and $24.8 million as of September 30, 2017,March 31, 2023 and December 31, 2022, respectively and as described below, a portion is reimbursable by the U.S. Government. The current portion of the total estimated liability was approximately $10$7.8 million and $7.7 million as of March 31, 2023 and December 31, 2022, respectively, and represents the Company’sour best estimate, in consultation with itsour technical advisors, of total remediation costs expected to be paid during the twelve monthnext twelve-month period.

It is not possible at this point to reasonably estimate the amount of any obligation in excess of the Company’sour current accruals through the 20222027 forecast period because of the aforementioned uncertainties, in particular,
20
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, the Companywe 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 the Companyus for 21% of qualifying costs of investigation and remediation activities at the Goodyear Site. As of September 30, 2017, the Company hasMarch 31, 2023 and December 31, 2022, we recorded a receivable of $8.5$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.

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Other Environmental Matters
Roseland, NJ Site
The CompanyRoseland 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
Crane Co. (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. A predecessor to the CompanyUnidynamics 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 (referred to as the(the “AUS-OU”), which includes an area where the Companywe maintained operations, pursuant to an Administrative Order on Consent.Consent (the “AOC”). A remedial investigation report was approved in February 2015, and work on the feasibility study is underway. TheIt is unclear when the final feasibility study is projected towill be completed, in the first quarter of 2018. The proposed Remedial Plan is projected to be submitted in late 2017, andor when a final Record of Decision is projected(“ROD”) may be issued.As noted above, we have agreed to be issued in April 2018.indemnify Redco Buyer against the Crab Orchard environmental liabilities, and accordingly we act as Redco’s agent with respect to such liabilities.


GD-OTS has asked the CompanyCrane Co. (n/k/a Redco) to participate in a voluntary, cost allocation/multi-party mediation exercise with respect to response costs itthat GD-OTS has incurred or will incur with respect to the AUS-OU. The Company, along with AUS-OU, and Crane Co. (n/k/a number ofRedco), the U.S. Government, and other PRPs that were contacted, initially declined, but in light of the ongoing investigative activities, and the apparent willingness of the U.S. government to participate in a mediation proceeding, the Company and a number of PRPs have agreed to participate inentered into a non-binding mediation process. The Company and other PRPs executedagreement in 2015. We have stepped into Redco’s position as a mediation agreement on March 16, 2015, andparticipant in the U.S. government, following the resolution of an inter-agency dispute, executed the mediation agreement on August 6, 2015. The participants have selected a mediator, are exchanging relevant information, and have agreed upon a framework for the mediation to address the numerous sub-areas at the Site in a coherent fashion. mediation.The first phase of the mediation, involving certain former munitions or ordnance storage areas, is presently scheduledbegan 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 November 2017. The Companyprinciple 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 this mediation proceedingor whenthese negotiations will result in an agreement, ora definitive agreement. Further, negotiations are ongoing between us and GD-OTS
21
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 shareshares of the various PRPs, including theGD-OTS and U.S. Government response costs for which we may be liable is likely to be completed. Although a lossNone 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 probable, itultimately 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 extent of the environmental impact, 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. The CompanyInsurers with contractual coverage obligations for this site have been notified its insurers of this potential liability and has obtainedhave been providing coverage, subject to reservations of rights, under certain of its insurance policies.rights.


Other ProceedingsAsbestos Liability
The Company was named as a defendant in a suit filed in June 2015 by a small group of homeowners in Missoula, Montana, whose homes are near the site of a former lumber mill and wood processing facility (the “White Pine Site”) that operated from approximately 1920 to 1996.  The suit alleges that the homeowners’ property was damaged by coming into contact with certain hazardous substances that migrated from the White Pine Site. The White Pine Site was owned and operated by a predecessor to Huttig Building Products, Inc. (“Huttig”), which was a subsidiary of the Company from 1968 until Huttig’s shares were distributed to the Company’s shareholders in 1999. Under the terms of the distribution agreement, Huttig retained the liability for its prior operations. The Company tendered the defense of this matter to Huttig, and Huttig agreed to defend and indemnify the Company. That matter was resolved through a settlement agreement reached between Huttig and the individual plaintiffs, and the case was dismissed as against the Company. In a related matter, Huttig filed suit against certain insurers who Huttig claimed were obligated to provide insurance coverage for the environmental remediation costs and other damages caused by the operations at the White Pine Site. The Company was brought into that case in October 2015 as a third party defendant by two of the insurers seeking declaratory relief that no coverage obligations are owed to Huttig or the Company with respect to the White Pine Site. In late 2015, Huttig notified the Company of its intention to pursue an action against the Company for damages related to Huttig’s environmental liability at the White Pine Site and the scope of coverage under the Company’s historical insurance policies available to Huttig for such liability. The Company settled its dispute with Huttig in exchange for a complete release by Huttig of all claims against the Company in connection with the distribution agreement, and a release by Huttig of any and all rights it has or may have had under any of the Company’s insurance policies. As a result of this settlement,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 recorded a $5 million net pre-tax charge in the second quarter of 2016. In addition, Huttig retained all of its indemnity obligationsno longer has any obligation with respect to the Company as set forth in the distribution agreement, including its indemnity obligations relating to the White Pine Site.

pending and future asbestos claims.
The Companygross settlement and defense costs incurred for the periods presented was as follows:
Three Months Ended
March 31,
 (in millions)20232022
Settlement / indemnity costs incurred$— $10.5 
Defense costs incurred— 2.5 
Total costs incurred$— $13.0 
The total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the periods presented was as follows:
Three Months Ended
March 31,
 (in millions)20232022
Settlement / indemnity payments$— $9.6 
Defense payments— 2.1 
Insurance receipts— (4.2)
Pre-tax cash payments, net$— $7.5 

Other Proceedings
We regularly reviewsreview the status of lawsuits, claims and proceedings that have been or may be asserted against the Companyus relating to the conduct of itsour business, including those pertaining to product liability, patent infringement, commercial, employment, employee benefits, environmental and stockholder matters. The Company recordsWe record a provision for a liability for such matters when it is considered probable that a liability has been incurred and the amount of the loss can be

Page 26

reasonably estimated. These provisions, if any, are reviewed quarterly and adjusted as additional information becomes available. If either or both of the criteria are not met, the Company assesseswe 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, the Company discloseswe disclose the estimate of the amount of loss or range of loss, disclosesdisclose that the amount is immaterial, or disclosesdisclose that an estimate of loss cannot be made, as applicable. The Company believesWe believe that as of September 30, 2017,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 itsour financial statements for the potential impact of all such matters.
Other Commitments
22
In
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 11 - Financing
Our debt consisted of the third quarter of 2017,following:
(in millions)March 31,
2023		December 31,
2022
4.45% notes due December 2023 a
$299.8 $299.7 
Term Facility8.7 — 
364-Day Credit Agreement
— 399.6 
Total short-term borrowings$308.5 $699.3 
Term Facility a
$339.3 $— 
6.55% notes due November 2036 a
198.6 198.6 
4.20% notes due March 2048 a
346.5 346.5 
Other deferred financing costs associated with credit facilities(3.7)(1.4)
Total long-term debt$880.7 $543.7 
(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 seven year leasenew senior secured credit agreement (the “Credit Agreement”), which provides for (i) a used airplane$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 includes a maximum residual value guaranteebecame available in connection with the Separation, upon the satisfaction of $11.1 million bycustomary conditions of facilities of this type. On March 31, 2023, the Company ifborrowed the fair valuefull amount of the airplane is less than $14.4 million atTerm Facility.

The Revolving Facility allows us to borrow, repay and re-borrow funds from time to time prior to the endmaturity of the lease term.  InRevolving Facility without any penalty or premium, subject to customary borrowing conditions for facilities of this type and the third quarterreimbursement of 2017,breakage costs. Borrowings under the Company made paymentsTerm Facility are prepayable without premium or penalty, subject to customary reimbursement of $6.7 million relatedbreakage 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 termination and residual value guarantee ofapplicable interest period plus a previous airplane lease.  These payments were previously accrued, overmargin 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 lifelower of the former leaseratings of our senior, unsecured long-term debt (the “Ratings”) and reported within “Other” inour total net leverage ratio. We are required to pay a fee on undrawn commitments under the “Total provided by operating activities”Revolving Facility at a rate per annum that ranges from 0.20% to 0.35%, based on the Consolidated Statementlower of Cash Flows.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. 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.

Note 9 - Pension Benefits


The components of net periodic cost (benefit) are as follows:
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017 2016 2017 2016
Service cost$1.2
 $1.2
 $3.6
 $3.5
Interest cost7.2
 8.2
 21.6
 24.5
Expected return on plan assets(13.9) (14.5) (41.7) (43.3)
Amortization of prior service cost(0.1) (0.2) (0.3) (0.5)
Amortization of net loss3.5
 2.9
 10.5
 8.7
Net periodic benefit$(2.1) $(2.4) $(6.3) $(7.1)
The Company expects, based on current actuarial calculations, to contribute approximately $12.0$650 million to its defined benefit plans, of which $5.4revolving credit facility and commercial paper program disclosed below were replaced by commitments under the new $500 million, has been contributed during the first nine months of 2017. The Company contributed $8.3 million to its defined benefit plans in 2016. Cash contributions for subsequent years will depend on a number of factors, including the impact of the Pension Protection Act signed into law in 2006, changes in minimum5-year Revolving Credit Agreement, with funding requirements, long-term interest rates, the investment performance of plan assets and changes in employee census data affecting the Company’s projected benefit obligations.

Note 10 - Income Taxes
The Company’s quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented.
Effective Tax Rates
The Company’s effective tax rates are as follows:
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017 2016 2017 2016
Effective Tax Rate29.4% 33.0% 29.4% 29.4%

The Company’s effective tax rate for the three months ended September 30, 2017 is lower than the prior year’s comparable period primarily due to the favorable effect of share-based compensation, favorable return-to-provision adjustments, and a reduction in tax accruals due to lapses in the statutes of limitation, partially offset by a higher amount of income earned in jurisdictions with higher statutory tax rates.

Page 27


The Company’s effective tax rate for the nine months ended September 30, 2017 is approximately equal to the prior year’s comparable period.

The Company’s effective tax rates for both the three and nine months ended September 30, 2017 are lower than the statutory U.S. federal tax rate of 35% primarily due to the favorable impact of income earned in jurisdictions with tax rates lower than the U.S. statutory rate, the U.S. federal tax benefit for domestic manufacturing activities, U.S. federal research credit, and the benefit recorded for excess tax benefits associated with share-based payments. These items are partially offset by the unfavorable impacts of U.S. state taxes and certain expenses that are statutorily non-deductible for income tax purposes.

Unrecognized Tax Benefits
During the three months ended September 30, 2017, the Company's gross unrecognized tax benefits, excluding interest and penalties, decreased by less than $0.1 million. During the nine months ended September 30, 2017 the Company’s gross unrecognized tax benefits increased by $2.7 million, primarily as a result of tax positions taken in both current and prior periods, partially offset by reductions resulting from the expiration of statutes of limitations. During the three months and nine months ended September 30, 2017, the total amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate increased by $0.1 million and $2.7 million, respectively. The difference between these amounts relates to (1) offsetting effects from other tax jurisdictions, and (2) interest expense, net of deferred taxes.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of its income tax expense. During the three and nine months ended September 30, 2017, the Company recognized $0.1 million and $0.6 million, respectively, of interest and penalty expense related to unrecognized tax benefits in its Condensed Consolidated Statement of Operations. At September 30, 2017 and December 31, 2016, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in the Company’s Consolidated Balance Sheets was $6.8 million and $6.2 million, respectively.

During the next twelve months, it is reasonably possible that the Company's unrecognized tax benefits may decrease by $7.7 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, the Company will record additional income tax expense or benefit in the period in which such matters are effectively settled.

Income Tax Examinations
The Company's income tax returns areavailable upon Separation, subject to examination by the U.S. federal, U.S. state and local, and non-U.S. tax authorities.

customary conditions precedent for facilities of this type. The Company’s consolidated federal income tax returns for the years 2014 through 2016 remain subject to examination by the Internal Revenue Service (“IRS”). In addition, acquired subsidiaries’ federal tax carryforwards (2007 through 2012) remain subject to IRS examination.

With few exceptions, the Company iscommercial paper program will no longer subject to U.S. state and local or non-U.S. income tax examinations for years before 2011. Currently the Company and its subsidiaries are under examination in various jurisdictions, including Germany (2010 through 2012), Canada (2013 through 2015) and the state of California (2012 and 2013).be available upon Separation.



Page 28

Note364-Day Credit Agreement- On August 11, - Long-Term Debt and Short-Term Borrowings
The following table summarizes the Company’s debt as of September 30, 2017 and December 31, 2016:
(in millions)September 30,
2017		 December 31,
2016
Long-term debt consists of:   
2.75% notes due December 2018   
Principal amount$250.0
 $250.0
Less debt issuance costs(0.5) (0.8)
Carrying Value$249.5
 $249.2
    
4.45% notes due December 2023   
Principal amount$300.0
 $300.0
Less debt issuance costs(1.7) (1.9)
Carrying Value$298.3
 $298.1
    
6.55% notes due November 2036   
Principal Amount$200.0
 $200.0
Less unamortized discount(0.6) (0.7)
Less debt issuance costs(1.3) (1.3)
Carrying Value$198.1
 $198.0
    
Total long-term debt$745.9
 $745.3
For additional details regarding the Company’s debt financing, reference is made to Note 7, “Long-Term Debt and Notes Payable” of the Company’s financial statements as of and for the year ended December 31, 2016 included in the Company’s 2016 Annual Report on Form 10-K.
Commercial Paper program - On March 2, 2015,2022, 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.
23
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Commercial paper program - On July 28, 2021, we increased the size of the commercial paper program (the “CP(“CP Program”) pursuant to which it may issuepermit the issuance of short-term, unsecured commercial paper notes (the “Notes”) pursuantin an aggregate principal amount not to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. Amounts available underexceed $650 million at any time outstanding. Prior to this increase, the CP Program may be borrowed, repaid and re-borrowed from timepermitted us to time, with theissue commercial paper notes in an aggregate principal amount of the Notes outstanding under the CP Programnot to exceed $550 million at any time not to exceed $500 million.outstanding. The Notes will have maturities of up to 397 days from date of issue. The Notes will ranknotes ranked at least pari passu with all of the Company'sour other unsecured and unsubordinated indebtedness. As of September 30, 2017,March 31, 2023 and December 31, 2022, there were no outstanding borrowings under the CP Program. commercial paper program.
RevolvingRevolving Credit Facility - In May 2012, the CompanyOn July 28, 2021, we entered into a five year, $300$650 million, Amended and Restated5-year Revolving Credit Agreement (as subsequently amended in March 2013 and increased to $500 million (the “Facility”)“2021 Facility”). The 2021 Facility allows the Companyallowed 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. The loan proceeds may be used for general corporate purposes including financing for acquisitions. Interest is based on loans made under the 2021 Facility accrued, at itsour option, at a rate per annum equal to (1) a LIBOR-based formula that is dependent in part onbase rate, plus a margin ranging from 0.00% to 0.50% depending upon the Company's credit rating (LIBOR plus 105 basis points asratings by S&P and Moody’s of the date of this report; up to a maximum of LIBOR plus 147.5 basis points)our senior unsecured long-term debt (the "Index Debt Rating"), or (2) the greatest of (i) the JPMorgan Chase Bank, N.A.'s prime rate, (ii) the Federal Funds rate plus 50 basis points, or (iii) an adjusted LIBO rate or the applicable replacement rate (determined based on “hardwired” LIBOR rate plus 100 basis points,transition provisions consistent with those published by the Alternative References Rates Committee) for an interest period to be selected by us, plus a spread dependent onmargin ranging from 0.805% to 1.50% depending upon the Company’sIndex Debt Rating. The 2021 Facility contained customary affirmative and negative covenants for credit rating (5 basis points as of the datefacilities of this report; uptype, 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 maximumdebt to capitalization ratio not to exceed 0.65 to 1.00 at all times. The 2021 Facility also provided for customary events of 47.5 basis points). In May 2015, the Company entered into an amendment ("Amendment No. 2")default, including failure to the Facility. Amendment No. 2, amongpay 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 things, (i) extends the maturity date under the Facility to May 2020material indebtedness, certain insolvency or receivership events affecting us and (ii) amends the feeour material subsidiaries, certain ERISA events, material judgments and applicable margins on the revolving loans made pursuant to the Facility. Therea change in control of us. As of March 31, 2023 and December 31, 2022, there were no outstanding borrowings under the Facility as of September 30, 2017.2021 Facility.


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Note 12 - Derivative Instruments and Hedging Activities
The Company is exposed to certain risks related to its ongoing business operations, including market risks related to fluctuation in currency exchange. The Company uses foreign exchange contracts to manage the risk of certain cross-currency business relationships to minimize the impact of currency exchange fluctuations on the Company’s earnings and cash flows. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. As of and for the nine month period ended September 30, 2017, the foreign exchange contracts designated as hedging instruments did not have a material impact on the Company’s condensed consolidated statements of operations, balance sheet or cash flows. Foreign exchange contracts not designated as hedging instruments, which primarily pertain to foreign exchange fluctuation risk of intercompany positions, had a notional value of $5 million and $8 million as of September 30, 2017 and December 31, 2016, respectively. As of each of the periods ended September 30, 2017 and December 31, 2016, the Company's receivable position for the foreign exchange contracts was less than $0.1 million. As of September 30, 2017 and December 31, 2016, the Company’s payable position for the foreign exchange contracts was $0.3 million and $0.1 million, respectively.
Note 1312 - Fair Value Measurements
Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are to be considered from the perspective of a market participant that holds the asset or owes the liability. The standards also establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The standards describe three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices in active markets for identical or similar assets and liabilities.
Level 2: Quoted prices for identical or similar assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical or similar assets and liabilities. Level 2 assets and liabilities include over-the-counter derivatives, principally forward foreign exchange contracts, whose value is determined using pricing models with inputs that are generally based on published foreign exchange rates and exchange traded prices, adjusted for other specific inputs that are primarily observable in the market or can be derived principally from or corroborated by observable market data.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Valuation Technique-
The Company’scarrying 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.
24
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. We use foreign exchange contracts to manage the risk of certain cross-currency business relationships to minimize the impact of currency exchange fluctuations on our earnings and cash flows. 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. 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“Other current assetsassets” on our Condensed Consolidated Balance Sheets and were less than $0.1 million and $5.9 million as of each of the periods ending September 30, 2017March 31, 2023 and December 31, 2016,2022, respectively. DerivativeSuch derivative liability amounts are recorded within accrued“Accrued liabilities” on our Condensed Consolidated Balance Sheets and there were no derivative liabilities as of March 31, 2023 and were $0.3December 31, 2022, respectively.
Available-for-sale securities consist of rabbi trust investments that hold marketable securities for the benefit of participants in our Supplemental Executive Retirement Plan. These investments are measured at fair value using quoted market prices in an active market and are therefore classified within Level 1 of the valuation hierarchy. The fair value of available-for-sale securities was $0.4 million and $0.1$0.4 million as of September 30, 2017March 31, 2023 and December 31, 2016,2022, respectively. These investments are included in “Other assets” on our Condensed Consolidated Balance Sheets.
The carrying value of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and short-term loans payable approximate fair value, without being discounted, due to the short periods during which these amounts are outstanding. Long-term debt rates currently available to the Companyus 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 long-termtotal debt, is measured using Level 2 inputs, and was $814.4$779.0 million and $801.8$753.1 million at September 30, 2017as of March 31, 2023 and December 31, 2016,2022, respectively.

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25
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 13 - Restructuring

Overview
Part I – Financial Information2022 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)SeveranceOtherTotal
Aerospace & Electronics$1.5 $— $1.5 
Process Flow Technologies6.3 — 6.3 
Payment & Merchandising Technologies5.7 0.5 6.2 
Engineered Materials0.4 — 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 Repositioning2019 RepositioningTotal
Severance:
Balance as of December 31, 2022 (a)
$14.2 $2.4 $16.6 
Utilization(4.1)(1.0)(5.1)
Balance as of March 31, 2023 (a)
$10.1 $1.4 $11.5 
(a)Included within Accrued Liabilities in the Condensed Consolidated Balance Sheets.

26
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.



27
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains information about Crane Holdings, Co. (which was renamed to Crane NXT, Co. effective as of immediately following the consummation of the Separation on April 3, 2023), some of which includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical information or statements about our current condition. You can identify forward-looking statements by the use of terms such as “believes,” “contemplates,” “expects,” “may,” “could,” “should,” “would,” or “anticipates,” other similar phrases, or the negatives of these terms.
Reference
References herein to “Crane”, “the Company”, “we”, “us”“we,” “us,” “our,” “Crane Holdings, Co.” and “our”the “Company” refer to Crane NXT, Co. and its subsidiaries unless the context specifically statesour subsidiaries. Prior to April 3, 2023, Crane NXT, Co. was named “Crane Holdings, Co.” Accordingly, we refer to Crane NXT, Co.as “Crane Holdings, Co.” in certain disclosures that are as of dates or implies otherwise.related to periods ended prior to April 3, 2023. References to “core business” or “core sales” in this report include sales from acquired businesses starting from and after the first anniversary of the acquisition but exclude currency effects. Amounts in the following discussion are presented in millions, except employee, share and per share data, or unless otherwise stated.

We have based the forward-looking statements relating to our operations on our current expectations, estimates and projections about us and the markets we serve. We caution you that these statements are not guarantees of future performance and involve risks and uncertainties. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. There are a number of other factors, including risks and uncertainties related to the ongoing effects of the COVID-19 pandemic, that could cause actual results or outcomes to differ materially from those addressedexpressed or implied in the forward-looking statements. TheSuch factors also include, among others: changes in global economic conditions (including inflationary pressures) and geopolitical risks, including macroeconomic fluctuations that may harm our business, results of operations and stock price; the effects of the ongoing coronavirus pandemic on our business and the global and U.S. economies generally; information systems and technology networks failures and breaches in data security, personally identifiable and other information, non-compliance with our contractual or other legal obligations regarding such information; our ability to source components and raw materials from suppliers, including disruptions and delays in our supply chain; demand for our products, which is variable and subject to factors beyond our control; governmental regulations and failure to comply with those regulations; fluctuations in the prices of our components and raw materials; loss of personnel or being able to hire and retain additional personnel needed to sustain and grow our business as planned; risks from environmental liabilities, costs, litigation and violations that could adversely affect our financial condition, results of operations, cash flows and reputation; risks associated with conducting a substantial portion of our business outside the United States; being unable to identify or complete acquisitions, or to successfully integrate the businesses we acquire, or complete dispositions; adverse impacts from intangible asset impairment charges; potential product liability or warranty claims; being unable to successfully develop and introduce new products, which would limit our ability to grow and maintain our competitive position and adversely affect our financial condition, results of operations and cash flow; significant competition in our markets; additional tax expenses or exposures that could affect our financial condition, results of operations and cash flows; inadequate or ineffective internal controls; specific risks relating to our reportable segments, including Aerospace & Electronics, Process Flow Technologies, Payment & Merchandising Technologies and Engineered Materials (as a result of the Separation, Crane Holdings, Co. retained its Payment & Merchandising Technologies segment and spun-off its Aerospace & Electronics, Process Flow Technologies and Engineered Materials segments to Crane Holdings, Co.’s stockholders); the ability and willingness of Crane NXT, Co. and Crane Company to meet and/or perform their obligations under any contractual arrangements entered into among the parties in connection with the Separation and any of their obligations to indemnify, defend and hold the other party harmless from and against various claims, litigation and liabilities; our ability to achieve some or all the benefits that we currently believeexpect to be material are detailedachieve from the Separation; and other risks noted in Part II, Item 1A of this Quarterly Report on Form 10-Qreports that we file with the Securities and inExchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 20162022, and subsequent reports and other documents filed by us with the Securities and Exchange Commission, and are incorporated by reference herein.including any registration statement relating to our business separation. We do not undertake any obligation to update or revise any forward-looking statements to reflect any future events or circumstances.




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28

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

Recent Transactions
OUTLOOKSeparation
Overall
Our sales depend heavily on industries that are cyclicalOn April 3, 2023, Crane Holdings, Co., was separated into two independent, publicly-traded companies in nature or are subject to market conditionsa transaction in which may cause customer demand for our products to be volatile and unpredictable. Demand in these industries is affected by fluctuations in domestic and international economic conditions, as well as currency fluctuations, commodity costs, and a variety of other factors.
For 2017, we expect total sales to increase slightly compared to 2016, with acquisition related revenue, net of divestitures, and slight core growth partially offset by slightly unfavorable foreign exchange. We expect a substantial improvement in operating profit and operating margins, driven primarily by the absence of an asbestos provision, along with improved productivity, favorable product mix, and a reduction in engineering expense in our Aerospace & Electronics segment.
Fluid Handling
In 2017, we expect Fluid Handling sales to increase modestly compared to 2016, driven by an acquisition benefit of approximately 2.5% and slightly positive core growth.
We expect Process Valves and Related Products sales to increase in the low single-digit range compared to 2016, driven primarily by a low to mid single-digit increase in acquisition related sales and slightly favorable foreign exchange, partially offset by slightly negative core growth. Excluding foreign exchange, we expect order rates in 2017 to increase modestly compared to 2016 as our end markets continue to stabilize. However, given weak order activity in 2016, the backlog entering the year was lower than it was at the beginning of the prior year, limiting core sales growth in 2017.
We expect Commercial Valves sales to increase modestly compared to 2016, with unfavorable foreign exchange more than offset by core growth.
Our Other Products sales are expected to increase slightly compared to 2016, with modest growth in the U.S. municipal market.
For the segment, we expect a modest increase in operating profit compared to 2016, as productivity, leverage on core sales growth, and acquisition benefits more than offset transaction related costs.
Payment & Merchandising Technologies
We expectCrane Holdings, Co. retained its Payment & Merchandising Technologies sales to increase in the low to mid single-digit range compared to 2016, with a mid single-digit improvement in core sales, partially offset by unfavorable foreign currency translationsegment and a divestiture impact, net of acquisitions. We expect core sales to improve at CPI, with Merchandising Systems sales declining compared to 2016. At CPI, we expect core sales improvement to be driven by vertical end markets including financial services and gaming, although the most significant growth is expected from the retail vertical. We expect the segment’s operating profit to increase substantially compared to 2016, driven by the higher core sales and productivity, partially offset by unfavorable product mix and unfavorable foreign currency.
Aerospace & Electronics
We expectspun-off its Aerospace & Electronics, core salesProcess Flow Technologies and Engineered Materials segments to decrease in the mid single-digit range compared to 2016. For 2017, we expect that commercial market conditions will remain generally positive, and we expect sales growth from our commercial original equipment manufacturer business. However, military original equipment sales are expected to decline substantially given the completion of a large military program in 2016 that will not repeat in 2017. We also expect aftermarket sales to decline, primarily as a result of lower modernization and upgrade sales. Despite the reduction in sales, we expect segment operating profit in 2017 approximately flat compared to 2016 driven by favorable product mix associated with the completionCrane Holdings, Co. stockholders. Upon consummation of the large military program, strong productivity and lower engineering expense.Separation, each of our stockholders received one share of Crane Company common stock for every one share of our common stock held on March 23, 2023, the record date for the distribution.
Engineered Materials
In 2017, we expect the Engineered Materials segment sales will increase compared to the prior year, driven by continued strong demand of product shipments to the recreational vehicle (“RV”) market. Segment operating profit is expected to be approximately flat compared to 2016.



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29
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results from Operations – Three Month Periods Ended September 30
All comparisons below refer to the third quarter 2017 versus the third quarter 2016, unless otherwise specified.
 Third Quarter Change
(dollars in millions)2017 2016 $ %
Net sales$695.9
 $694.2
 $1.7
 0.2 %
Operating profit105.4
 103.8
 1.6
 1.5 %
Transaction related charges *0.5
 —
 0.5
 NM
Operating margin15.1% 15.0% 

 

Other income (expense):    
 
Interest income0.7
 0.5
 0.2
 40.0 %
Interest expense(9.3) (9.2) (0.1) (1.1)%
Miscellaneous, net0.2
 (0.1) 0.3
 300.0 %
 (8.4) (8.8) 0.4
 4.5 %
Income before income taxes97.0
 95.0
 2.0
 2.1 %
Provision for income taxes28.5
 31.3
 (2.8) (8.9)%
Net income before allocation to noncontrolling interests68.5
 63.7
 4.8
 7.5 %
Less: Noncontrolling interest in subsidiaries’ earnings0.3
 0.2
 0.1
 50.0 %
Net income attributable to common shareholders$68.2
 $63.5
 $4.7
 7.4 %
* Transaction related charges are included in operating profit and operating margin.
  

Sales increased by $1.7 million, or 0.2%, to $695.9 million in 2017. Net sales related to operations outside the United States were 37.8% and 35.3% of total net sales for the quarters ended September 30, 2017 and 2016, respectively. The year-over-year change in sales included:
an increase related to a net acquisition/divestiture impact of $7.3 million, or 1.1%;
favorable foreign currency translation of $4.5 million, or 0.7%; and
a decrease in core sales of $10.1 million, or 1.6%.
Operating profit increased by $1.6 million, or 1.5%, to $105.4 million in 2017. The increase in operating profit reflected the higher operating profit in our Payment & Merchandising Technologies, Fluid Handling and Engineered Materials segments, partially offset by lower operating profit in our Aerospace & Electronics segment and higher corporate costs. Operating profit in the third quarter of 2017 included transaction related charges of $0.5 million in connection with the acquisitions of Westlock and Microtronic.
Our effective tax rate is affected by a number of items, both recurring and discrete, including the amount of income we earn in different jurisdictions and their respective statutory tax rates, acquisitions and dispositions, changes in the valuation of our deferred tax assets and liabilities, changes in tax laws, regulations and accounting principles, the continued availability of statutory tax credits and deductions, the continued reinvestment of our overseas earnings, and examinations initiated by tax authorities around the world.

Our effective tax rate for the three months ended September 30, 2017 is lower than the prior year’s comparable period primarily due to the favorable effect of share-based compensation, favorable return-to-provision adjustments, and a reduction in tax accruals due to lapses in the statutes of limitation, partially offset by a higher amount of income earned in jurisdictions with higher statutory tax rates.


Page 33


 Three Months Ended
 September 30,
 2017 2016
Net income before allocation to noncontrolling interests$68.5
 $63.7
Other comprehensive income (loss), net of tax   
Currency translation adjustment24.6
 (5.2)
Changes in pension and postretirement plan assets and benefit obligation, net of tax2.3
 1.8
Other comprehensive income (loss), net of tax26.9
 (3.4)
Comprehensive income before allocation to noncontrolling interests95.4
 60.3
Less: Noncontrolling interests in comprehensive income(1.4) 0.2
Comprehensive income attributable to common shareholders$96.8
 $60.1
For the three months ended September 30, 2017, comprehensive income before allocations to noncontrolling interests was $95.4 million compared to $60.3 million in the same period of 2016. The $35.1 million increase was primarily driven by a $29.8 million favorable impact of foreign currency translation adjustments year over year including fluctuations in the British pound, Canadian dollar, euro and Japanese yen.
Segment Results of Operations - Three Month Periods Ended September 30March 31,
The following information should be read in conjunction with our condensed consolidated financial statements and related notes. All comparisons below refer to the first quarter 2023 versus the first quarter 2022, unless otherwise specified.

 First QuarterFavorable/(Unfavorable) Change
(dollars in millions)20232022$%
Net sales$842.9 $871.5 $(28.6)(3.3)%
Cost of sales481.3 526.2 44.9 8.5 %
as a percentage of sales57.1 %60.4 %
Selling, general and administrative209.4 198.3 (11.1)(5.6)%
as a percentage of sales24.8 %22.8 %
Operating profit152.2 147.0 5.2 3.5 %
Operating margin18.1 %16.9 %
Other income (expense):
Interest income1.0 0.3 0.7 233.3 %
Interest expense(17.0)(11.1)(5.9)(53.2)%
Miscellaneous (expense) income, net(2.4)3.5 (5.9)(168.6)%
Total other expense(18.4)(7.3)(11.1)152.1 %
Income before income taxes133.8 139.7 (5.9)(4.2)%
Provision for income taxes28.1 34.7 6.6 19.0 %
Net income attributable to common shareholders$105.7 $105.0 $0.7 0.7 %
Fluid Handling
 Third Quarter Change
(dollars in millions)2017 2016 $ %
Net sales by product line:    

 

Process Valves and Related Products$157.7
 $148.1
 $9.6
 6.5%
Commercial Valves85.7
 75.2
 10.5
 14.0%
Other Products23.5
 21.8
 1.7
 7.8%
Total net sales266.9
 245.1
 21.8
 8.9%
Operating profit32.6
 30.7
 1.9
 6.2%
Transaction related charges*0.5
 —
 0.5
 NM
Operating margin12.2% 12.5%    
* Transaction related charges are included in operating profit and operating margin.      
Fluid Handling sales increasedSales decreased by $21.8$28.6 million, or 8.9%3.3%, to $266.9$842.9 million driven by in 2023. The year-over-year change in sales included:
•an increase in core sales of $9.2$54.2 million, or 3.7%6.2%, an increasewhich was driven primarily by higher pricing;
•unfavorable foreign currency translation of $21.0 million, or 2.4%; and
•a decrease in sales related to an acquisitionthe May 2022 divestiture of $8.0Crane Supply of $61.7 million, or 7.1%.
Cost of sales decreased by $44.9 million, or 8.5%, to $481.3 million in 2023. The decrease is primarily related to the impact of the sale of Crane Supply of $46.0 million, or 8.7%, strong productivity gains of $17.2 million, or 3.3%, favorable foreign currency translation of $12.0 million, or 2.3%, the impact of lower volumes of $9.6 million, or 1.8%, partially offset by unfavorable mix of $23.9 million, or 4.5%, and an increase in material, labor and other manufacturing costs of $17.6 million, or 3.3%.
Selling, general and administrative expenses increased by $11.1 million, or 5.6%, to $209.4 million in 2023 primarily related to a $19.9 million, or 10.0%, increase in administrative expenses, including transaction related expenses of $11.7 million, or 5.9%, partially offset by the impact of the sale of Crane Supply of $6.0 million, or 3.0%, and favorable foreign currency translation of $4.0 million, or 2.0%.
Operating profit increased by $5.2 million, or 3.5%, to $152.2 million in 2023. The increase primarily reflected higher pricing net of inflation, and productivity, of $43.9 million, or 29.9%, partially offset by unfavorable mix of $23.9 million, or 16.3%, the impact of the sale of Crane Supply of $9.7 million, or 6.6%, and unfavorable foreign currency translation of $5.1 million, or 3.5%.
Our effective tax rate for the three months ended March 31, 2023 is lower than the prior year’s comparable period primarily due to a greater benefit related to share-based compensation.

Our effective tax rate 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.


30
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Comprehensive Income
Three Months Ended
March 31,
(in millions)20232022
Net income before allocation to noncontrolling interests$105.7 $105.0 
Components of other comprehensive income (loss), net of tax
Currency translation adjustment12.7 (21.6)
Changes in pension and postretirement plan assets and benefit obligation, net of tax2.7 3.3 
Other comprehensive income (loss), net of tax15.4 (18.3)
Comprehensive income before allocation to noncontrolling interests121.1 86.7 
Less: Noncontrolling interests in comprehensive income(0.1)0.1 
Comprehensive income attributable to common shareholders$121.2 $86.6 
For the three months ended March 31, 2023, comprehensive income before allocation to noncontrolling interests was $121.1 million compared to $86.7 million in the same period of 2022. The $34.4 million increase was primarily driven by a $34.3 million year-over-year favorable impact of foreign currency translation, primarily related to the British pound and euro.
31
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Segment Results of Operations - Three Month Periods Ended March 31,
Aerospace & Electronics
 First QuarterFavorable/(Unfavorable) Change
(dollars in millions)20232022$%
Net sales by product line:
Commercial Original Equipment$68.4 $58.7 $9.7 16.5 %
Military Original Equipment61.9 57.4 4.5 7.8 %
Commercial Aftermarket Products37.9 28.6 9.3 32.5 %
Military Aftermarket Products11.9 12.5 (0.6)(4.8)%
Total net sales$180.1 $157.2 $22.9 14.6 %
Cost of sales$111.0 $97.4 $(13.6)(14.0)%
as a percentage of sales61.6 %62.0 %
Selling, general and administrative$31.4 $31.7 $0.3 0.9 %
as a percentage of sales17.4 %20.2 %
Operating profit$37.7 $28.1 $9.6 34.2 %
Operating margin20.9 %17.9 %
Supplemental Data:
Backlog$644.8 $508.4 $136.4 26.8 %
Sales increased $22.9 million, or 14.6%, to $180.1 million in 2023, primarily due to higher volumes and strong pricing.
•Sales of Commercial Original Equipment increased $9.7 million, or 16.5%, to $68.4 million in 2023, reflecting strong demand from aircraft manufacturers as the industry aircraft build rates continue to recover from the COVID-19 related slowdown, partially offset by material availability constraints.
•Sales of Military Original Equipment increased $4.5 million, or 7.8%, to $61.9 million in 2023, primarily reflecting strong demand from defense and space customers.
•Sales of Commercial Aftermarket Products increased $9.3 million, or 32.5%, to $37.9 million in 2023, reflecting continued strong demand from the airlines due to improving air traffic.
•Sales of Military Aftermarket Products decreased $0.6 million, or 4.8%, to $11.9 million in 2023, primarily reflecting timing of government orders for certain programs.
Cost of sales increased by $13.6 million, or 14.0%, to $111.0 million in 2023, primarily reflecting an unfavorable mix of $9.7 million, or 10.0%, increased volumes of $5.7 million, or 5.9%, partially offset by $3.1 million, or 3.2%, of productivity gains.
Operating profit increased by $9.6 million, or 34.2%, to $37.7 million in 2023. The increase primarily reflected higher pricing net of inflation and productivity of $12.0 million, or 42.7%, coupled with the impact from higher volumes of $6.2 million, or 22%, partially offset by an unfavorable mix of $9.7 million, or 34.5%.


32
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Process Flow Technologies
First QuarterFavorable/(Unfavorable) Change
(dollars in millions)20232022$%
Net sales by product line:
Process Valves and Related Products$202.9 $182.9 $20.0 10.9 %
Commercial Valves30.6 98.2 (67.6)(68.8)%
Pumps and Systems37.9 30.2 7.7 25.5 %
Total net sales$271.4 $311.3 $(39.9)(12.8)%
Cost of sales$150.1 $196.8 $46.7 23.7 %
as a percentage of sales55.3 %63.2 %
Selling, general and administrative$58.0 $65.5 $7.5 11.5 %
as a percentage of sales21.4 %21.0 %
Operating profit$63.3 $49.0 $14.3 29.2 %
Operating margin23.3 %15.7 %
Supplemental Data:
Backlog$363.0 $372.4 $(9.4)(2.5)%
Sales decreased by $39.9 million, or 12.8%, to $271.4 million in 2023, driven by a $61.7 million, or 19.8%, impact from the sale of Crane Supply and $8.3 million, or 2.7%, of unfavorable foreign currency translation, partially offset by core sales growth of $30.2 million, or 9.7%. Core sales growth was driven by higher pricing and volumes.
•Sales of Process Valves and Related Products increased by $20.0 million, or 10.9%, to $202.9 million in 2023, reflecting an increase in core sales, partially offset by unfavorable foreign currency translation as the euro weakened against the U.S. dollar. Sales growth was driven primarily by strength in the Chemical vertical.
•Sales of Commercial Valves decreased by $67.6 million, or 68.8%, to $30.6 million in 2023, primarily driven by the impact of the divestiture of Crane Supply of $61.7 million, or 62.8%, and, to a lesser extent, unfavorable foreign currency translation as the British pound weakened against the U.S. dollar.
•Sales of Pumps & Systems increased by $7.7 million, or 25.5%, to $37.9 million in 2023, reflecting an increase in core sales primarily driven by higher volumes across all key end markets.
Cost of sales decreased by $46.7 million, or 23.7%, to $150.1 million, primarily related to the impact of the sale of Crane Supply of $46.0 million, or 23.4%, productivity gains of $4.9 million, or 2.5%, and favorable foreign currency translation of $4.6 million, or 1.9%.

Sales2.3%, partially offset by increased material, labor and other manufacturing costs and of Process Valves and Related Products increased by $9.6$5.4 million, or 6.5%2.7%, and the impact of the higher volumes of $4.0 million, or 2.0%.
Selling, general and administrative expense decreased by $7.5 million, or 11.5%, to $157.7$58.0 million in 2017 primarily related to a $8.0the impact of the sale of Crane Supply of $6.0 million, or 5.4%, increase in sales related to an acquisition and, to a lesser extent, favorable foreign currency translation of $2.8 million, or 1.9%, as the euro strengthened against the U.S. dollar. These increases were partially offset by a core sales decline of $1.2 million, or 0.8%.

Sales of Commercial Valves increased by $10.5 million, or 14.0%, to $85.7 million in 2017, primarily reflecting an increase in core sales of $8.8 million, or 11.7%9.2%, and favorable foreign currency translation of $1.7$1.8 million, or 2.3%2.7%.
Operating profit increased by $14.3 million, or 29.2%, as the Canadian dollar strengthened against the U.S. dollar. to $63.3 million in 2023. The increase in core sales is primarily relateddue to better demand in the Canadian non-residential construction market.
Saleshigher pricing net of Other Products increased by $1.7inflation and productivity of $18.6 million, or 7.8%38%, to $23.5 million in 2017.
Fluid Handling operating profit increased by $1.9the impact of higher volumes of $6.2 million, or 6.2%12.7%, to $32.6 million in 2017. The increase was driven by productivity initiatives, higher volume and contribution from an acquisition, partially offset by unfavorable mix and higher material costs.the impact from the sale of Crane Supply of $9.7 million, or 19.8%.


Page 34
33

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

The Fluid Handling segment backlog was $269 million (which includes $3.5 million pertaining to the Westlock business acquired in April 2017) as of September 30, 2017, compared with $228 million as of December 31, 2016 and $242 million as of September 30, 2016.


Payment & Merchandising Technologies
First QuarterFavorable/(Unfavorable) Change
(dollars in millions)20232022$%
Net sales by product line:
Payment Acceptance and Dispensing Products$223.8 $211.0 $12.8 6.1 %
Banknotes and Security Products105.3 121.6 (16.3)(13.4)%
Total net sales$329.1 $332.6 $(3.5)(1.1)%
Cost of sales$174.4 $179.1 $4.7 2.6 %
as a percentage of sales53.0 %53.8 %
Selling, general and administrative$75.3 $69.3 $(6.0)(8.7)%
as a percentage of sales22.9 %20.8 %
Operating profit$79.4 $84.2 $(4.8)(5.7)%
Operating margin24.1 %25.3 %
Supplemental Data:
Backlog$556.0 $429.0 $127.0 29.6 %
 Third Quarter Change
(dollars in millions)2017 2016 $ %
Net sales by product line:       
Payment Acceptance and Dispensing Products$136.7
 $123.7
 $13.0
 10.5 %
     Merchandising Equipment51.9
 63.0
 (11.1) (17.6)%
Total net sales188.6
 186.7
 1.9
 1.0 %
Operating profit41.4
 34.7
 6.7
 19.3 %
Operating margin22.0% 18.6%    
Payment & Merchandising Technologies sales increased $1.9Sales decreased $3.5 million, or 1.0%1.1%, to $188.6$329.1 million in 2017, reflecting a2023, driven by unfavorable foreign currency translation of $12.4 million, or 3.7%, partially offset by higher core sales increase of $2.8$8.9 million, or 1.5%2.7%. The higher core sales reflected higher pricing, largely offset by lower volumes.
•Sales of Payment Acceptance and Dispensing Products increased $12.8 million, or 6.1%, to $223.8 million in 2023. The increase reflected higher core sales of $21.7 million, or 10.3%, partially offset by unfavorable foreign currency translation of $0.2$8.9 million, or 0.1%4.2%, and a net acquisition/divestiture impact of $0.7 million, or 0.4%. 
Sales of Payment Acceptance and Dispensing Products increased $13.0 million, or 10.5%,primarily due to $136.7 million in 2017, reflecting a core sales increase of $13.9 million, or 11.3%, partially offset by unfavorable foreign currency translation of $0.2 million, or 0.2%, and a net divestiture/acquisition impact of $0.7 million, or 0.6%. The increase in core sales primarily reflects growth in the retail vertical market, as well as growth in the gaming market.
Sales of Merchandising Equipment decreased $11.1 million, or 17.6%, to $51.9 million in 2017, reflecting a core sales decrease of $11.1 million, or 17.6%. The decrease in core sales was driven by weaker capital spending by large bottler and full-line operator customers.
Payment & Merchandising Technologies operating profit increased by $6.7 million, or 19.3%, to $41.4 million in 2017. The increase was primarily driven by the impact of productivity and higher core sales.
The Payment & Merchandising Technologies segment backlog was $88 million (which includes $0.2 million pertaining to the Microtronic business acquired in June 2017) as of September 30, 2017, compared with $94 million as of December 31, 2016 and $66 million as of September 30, 2016.


Page 35


Aerospace & Electronics
 Third Quarter Change
(dollars in millions)2017 2016 $ %
Net sales by product line:    

 

Commercial Original Equipment$90.1
 $88.4
 $1.7
 1.9 %
Military Original Equipment37.4
 63.3
 (25.9) (40.9)%
Commercial Aftermarket Products32.3
 31.9
 0.4
 1.3 %
Military Aftermarket Products12.2
 14.6
 (2.4) (16.4)%
Total net sales172.0
 198.2
 (26.2) (13.2)%
Operating profit34.8
 38.9
 (4.1) (10.5)%
Operating margin20.2% 19.6%    
Aerospace & Electronics sales decreased $26.2 million, or 13.2%, to $172.0 million in 2017.
Sales of Commercial Original Equipment increased by $1.7 million, or 1.9%, to $90.1 million in 2017. The increase was driven primarily by funded engineering programs.
Sales of Military Original Equipment decreased by $25.9 million, or 40.9%, to $37.4 million in 2017. The sales decrease primarily reflected the non-repeat of a large military program shipped in 2016.
Sales of Commercial Aftermarket products increased by $0.4 million, or 1.3%, to $32.3 million in 2017.
Sales of Military Aftermarket products decreased by $2.4 million, or 16.4%, to $12.2 million in 2017. The sales decrease primarily reflected a difficult comparison related to modernization & upgrade projects in 2016.
Aerospace & Electronics operating profit decreased by $4.1 million, or 10.5%, to $34.8 million in 2017, driven primarily by the lower volumes, partially offset by productivity.
The Aerospace & Electronics segment backlog was $348 million as of September 30, 2017, compared with $353 million as of December 31, 2016 and $377 million as of September 30, 2016.
Engineered Materials
 Third Quarter Change
(dollars in millions)2017 2016 $ %
Net sales by product line:       
FRP- Recreational Vehicles$37.2
 $32.6
 $4.6
 14.1 %
FRP- Building Products23.7
 22.9
 0.8
 3.5 %
FRP- Transportation7.5
 8.7
 (1.2) (13.8)%
Total net sales68.4
 64.2
 4.2
 6.5 %
Operating profit12.2
 11.4
 0.8
 7.0 %
Operating margin17.8%
17.7%    

Engineered Materials sales increased by $4.2 million, or 6.5%, to $68.4 million in 2017 resulting from higher sales to RV and, to a lesser extent, building products end markets, partially offset by lower sales to transportation end markets. Higher sales to the RV market primarily reflect market share gains and underlying market growth. Engineered Materials operating profit increased by $0.8 million, or 7.0%, to $12.2 million in 2017.
The Engineered Materials segment backlog was $14 million as of September 30, 2017, compared with $16 million as of December 31, 2016 and $12 million as of September 30, 2016.




Page 36

Results from Operations – Nine Month Periods Ended September 30
The following information should be read in conjunction with our condensed consolidated financial statements and related notes.
 Year-to-Date Change
(dollars in millions)2017 2016 $ %
Net sales$2,071.8
 $2,066.5
 5.3
 0.3 %
Operating profit311.0
 291.9
 19.1
 6.5 %
Transaction related charges*3.1
 —
 3.1
 NM
Restructuring related charges *—
 (0.4) 0.4
 NM
Operating margin15.0% 14.1% 

 

Other income (expense):    
 
Interest income1.8
 1.4
 0.4
 28.6 %
Interest expense(27.3) (27.5) 0.2
 0.7 %
Miscellaneous, net(0.8) (0.6) (0.2) (33.3)%
 (26.3) (26.7) 0.4
 1.5 %
Income before income taxes284.7
 265.2
 19.5
 7.4 %
Provision for income taxes83.6
 77.9
 5.7
 7.3 %
Net income before allocation to noncontrolling interests201.1
 187.3
 13.8
 7.4 %
Less: Noncontrolling interest in subsidiaries’ earnings0.6
 0.5
 0.1
 20.0 %
Net income attributable to common shareholders$200.5
 $186.8
 $13.7
 7.3 %
* Transaction related and restructuring related charges are included in operating profit and operating margin.
  
        

Sales increased by $5.3 million, or 0.3%, to $2,071.8 million in 2017. Net sales related to operations outside the United States were 36.5% and 36.0% of total net sales for the nine months ended September 30, 2017 and 2016, respectively. The year-over-year change in sales included:
an increase in core sales of $17.9 million, or 0.9%;
an increase related to a net acquisition/divestiture impact of $8.6 million, or 0.4%; and
unfavorable foreign currency translation of $21.2 million, or 1.0%.
Operating profit increased by $19.1 million, or 6.5%, to $311.0 million in 2017. The increase in operating profit reflected the higher operating profit in our Payment & Merchandising Technologies and Engineered Materials segments, partially offset by lower operating profit in our Aerospace & Electronics and Fluid Handling segments and higher corporate costs. In the nine months ended September 30, 2016, corporate costs included a $5.0 million legal settlement charge. Operating profit for the nine months ended September 30, 2017 included transaction related charges of $3.1 million in connection with the acquisitions of Westlock and Microtronic.
Our effective tax rate is affected by a number of items, both recurring and discrete, including the amount of income we earn in different jurisdictions and their respective statutory tax rates, acquisitions and dispositions, changes in the valuation of our deferred tax assets and liabilities, changes in tax laws, regulations and accounting principles, the continued availability of statutory tax credits and deductions, the continued reinvestment of our overseas earnings, and examinations initiated by tax authorities around the world.

Our effective tax rate for the nine months ended September 30, 2017 is approximately equal to the prior year’s comparable period.



Page 37

 Nine Months Ended
 September 30,
 2017 2016
Net income before allocation to noncontrolling interests$201.1
 $187.3
Other comprehensive income (loss), net of tax   
Currency translation adjustment83.2
 11.6
Changes in pension and postretirement plan assets and benefit obligation, net of tax6.9
 5.6
Other comprehensive income (loss), net of tax90.1
 17.2
Comprehensive income before allocation to noncontrolling interests291.2
 204.5
Less: Noncontrolling interests in comprehensive income(0.7) 0.5
Comprehensive income attributable to common shareholders$291.9
 $204.0
For the nine months ended September 30, 2017, comprehensive income before allocations to noncontrolling interests was $291.2 million compared to $204.5 million in the same period of 2016. The $86.7 million increase was primarily driven by a $71.6 million favorable impact of foreign currency translation adjustments year over year including fluctuations in the British pound Canadian dollar, euro and Japanese yen.




Page 38

Segment Results of Operations - Nine Month Periods Ended September 30
The following information should be read in conjunction with our condensed consolidated financial statements and related notes.
Fluid Handling
 Year-To-Date Change
(dollars in millions)2017 2016 $ %
Net sales by product line:    

 

Process Valves and Related Products$472.2
 $469.1
 $3.1
 0.7 %
Commercial Valves230.2
 224.1
 6.1
 2.7 %
Other Products67.9
 65.9
 2.0
 3.0 %
Total net sales770.3
 759.1
 11.2
 1.5 %
Operating profit91.3
 91.5
 (0.2) (0.2)%
Transaction related charges*2.5
 —
 2.5
 NM
Operating margin11.9% 12.1%    
* Transaction related charges are included in operating profit and operating margin.      
Fluid Handling sales increased by $11.2 million, or 1.5%, to $770.3 million, driven by a $13.7 million, or 1.8%, increase in sales related to an acquisition and an increase in core sales of $6.7 million, or 0.9%, partially offset by unfavorable foreign currency translation of $9.2 million, or 1.2%.

Sales of Process Valves and Related Products increased by $3.1 million, or 0.7%, to $472.2 million in 2017, including a $13.7 million, or 3.0%, increase in sales related to an acquisition. The increase was partially offset by a core sales decline of $9.3 million, or 2.0%, related to weaker process end markets, and unfavorable foreign currency translation of $1.3 million, or 0.3%.
Sales of Commercial Valves increased by $6.1 million, or 2.7%, to $230.2 million in 2017, reflecting an increase in core sales of $13.8 million, or 6.1%, partially offset by unfavorable foreign currency translation of $7.7 million, or 3.4%.yen weakening against the U.S. dollar. The core sales increase primarily reflected stronger sales to the U.K. and Canadian non-residential construction markets. Unfavorable foreign currency translation primarily reflected the British pound weakening against the U.S. dollar.higher component sales.
•Sales of OtherBanknotes and Security Products increased by $2.0decreased $16.3 million, or 3.0%13.4%, to $67.9$105.3 million in 2017.
Fluid Handling operating profit decreased by $0.22023. The decrease primarily related to lower core sales of $12.8 million, or 0.2%, to $91.3 million in 2017. The decrease was driven by the impact of unfavorable mix and transaction related expenses, almost equally offset by productivity.


Page 39

Payment & Merchandising Technologies
 Year-To-Date Change
(dollars in millions)2017 2016 $ %
Net sales by product line:       
Payment Acceptance and Dispensing Products$431.1
 $373.7
 $57.4
 15.4 %
     Merchandising Equipment151.2
 177.5
 (26.3) (14.8)%
Total net sales582.3
 551.2
 31.1
 5.6 %
Operating profit123.0
 97.1
 25.9
 26.7 %
Transaction related charges*0.6
 —
 0.6
 NM
Restructuring gain*—
 (0.4) 0.4
 NM
Operating margin21.1% 17.6%    
* Transaction related charges and the restructuring gain is included in operating profit and operating margin.
Payment & Merchandising Technologies sales increased $31.1 million, or 5.6%, to $582.3 million in 2017, reflecting a core sales increase of $48.2 million, or 8.7%, partially offset by unfavorable foreign currency translation of $12.0 million, or 2.2%, and a net acquisition/divestiture impact of $5.1 million, or 0.9%.
Sales of Payment Acceptance and Dispensing Products increased $57.4 million, or 15.4%, to $431.1 million in 2016, reflecting a core sales increase of $72.5 million, or 19.5%, partially offset by unfavorable foreign currency translation of $10.0 million, or 2.7%, and a net acquisition/divestiture impact of $5.1 million, or 1.4%. The increase in core sales reflects higher sales to the retail and gaming verticals. Unfavorable foreign currency translation reflected the British pound weakening against the U.S. dollar.
Sales of Merchandising Equipment decreased $26.3 million, or 14.8%, to $151.2 million in 2017, reflecting a core sales decrease of $24.3 million, or 13.7%10.5%, and unfavorable foreign currency translation of $2.0$3.5 million, or 1.1% reflecting2.9%, as the weakening of the British poundeuro weakened against the U.S. dollar. The decrease in core sales was primarily related to lower sales to our large bottler customers.
Payment & Merchandising Technologies operating profit increased by $25.9 million, or 26.7%, to $123.0 million in 2017. The increase was primarily driven by the impact of the higher core sales and productivity, partially offset by unfavorable mix.
Aerospace & Electronics
 Year-To-Date Change
(dollars in millions)2017 2016 $ %
Net sales by product line:    

 

Commercial Original Equipment$259.9
 $270.6
 $(10.7) (4.0)%
Military Original Equipment116.3
 152.9
 (36.6) (23.9)%
Commercial Aftermarket96.0
 96.3
 (0.3) (0.3)%
Military Aftermarket34.3
 39.4
 (5.1) (12.9)%
Total net sales506.5
 559.2
 (52.7) (9.4)%
Operating profit104.8
 110.6
 (5.8) (5.2)%
Operating margin20.7% 19.8%    
Aerospace & Electronics sales decreased $52.7 million, or 9.4%, to $506.5 million in 2017.
Sales of Commercial Original Equipment decreased by $10.7 million, or 4.0%, to $259.9 million in 2017. The sales decrease was driven by weaker sales of business jet, cabin, and modular power products.
Sales of Military Original Equipment decreased by $36.6 million, or 23.9%, to $116.3 million in 2017. The sales decrease primarily reflected lower sales to the non-repeatU.S. Government.
Cost of a large military program shipped in 2016.
Sales of Commercial Aftermarket productssales decreased by $0.3$4.7 million, or 0.3%2.6%, to $96.0$174.4 million, primarily reflecting lower volumes of $9.0 million, or 5.0%, strong productivity of $8.5 million, or 4.7%, and favorable foreign currency translation of $7.4 million, or 4.1%, partially offset by an unfavorable mix $14.2 million, or 7.9%, and increased in material, labor and other manufacturing costs of $6.0 million, or 3.4%.
Selling, general and administrative expense increased by $6.0 million, or 8.7%, to $75.3 million, primarily due to higher selling and administrative expenses of $9.1 million, or 13.1%, partially offset by favorable currency translation of $2.1 million, or 3.0%.
Operating profit decreased by $4.8 million, or 5.7%, to $79.4 million in 2017.
Sales of Military Aftermarket decreased by $5.1 million, or 12.9%, to $34.3 million in 2017.2023. The sales decrease primarily reflected a difficult comparison related to modernization & upgrade projects in 2016.
Aerospace & Electronics operating profit decreased by $5.8an unfavorable mix of $14.2 million, or 5.2%16.9%, lower volumes of $12.0 million, or 14.3%, and unfavorable foreign currency translation of $2.9 million, or 3.4%, partially offset by higher pricing net of inflation and productivity gains of $24.7 million, or 29.3%.









34
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Engineered Materials
First QuarterFavorable/(Unfavorable) Change
(dollars in millions)20232022$%
Net sales by product line:
FRP - Recreational Vehicles$20.3 $35.7 $(15.4)(43.1)%
FRP - Building Products32.3 27.4 4.9 17.9 %
FRP - Transportation9.7 7.3 2.4 32.9 %
Total net sales$62.3 $70.4 $(8.1)(11.5)%
Cost of sales$45.8 $52.4 $6.6 12.6 %
as a percentage of sales73.5 %74.4 %
Selling, general and administrative$5.1 $4.6 $(0.5)(10.9)%
as a percentage of sales8.2 %6.5 %
Operating profit$11.4 $13.4 $(2.0)(14.9)%
Operating margin18.3 %19.0 %
Supplemental Data:
Backlog$16.8 $30.4 $(13.6)(44.7)%
Sales decreased $8.1 million, or 11.5%, to $104.8$62.3 million in 2017, primarily as a result of the2023, reflecting lower volumes, partially offset by productivity and improved mix.

Page 40

Engineered Materials
 Year-To-Date Change
(dollars in millions)2017 2016 $ %
Net sales by product line:       
FRP- Recreational Vehicles$116.9
 $99.8
 $17.1
 17.1 %
FRP- Building Products72.1
 68.3
 3.8
 5.6 %
FRP- Transportation23.7
 28.9
 (5.2) (18.0)%
Total net sales212.7
 197.0
 15.7
 8.0 %
Operating profit39.5
 38.6
 0.9
 2.3 %
Operating margin18.6% 19.6%    

Engineered Materials sales increased by $15.7 million, or 8.0%, to $212.7 million in 2017 resulting from higher sales to RV and building products end markets, partially offsetpricing. The decrease was driven by lower sales to transportation end markets. Higherrecreational vehicle manufacturers, offset by higher sales to the RV market primarily reflect market share gainsbuilding products customers and underlying market growth. Engineered Materials operating profit increased by $0.9transportation customers.

Cost of sales decreased $6.6 million, or 2.3%12.6%, to $39.5$45.8 million in 2017.2023, primarily related to lower volumes of $10.3 million, or 19.7%, partially offset by higher raw materials, labor, and other manufacturing costs of $5.0 million, or 9.5%.


Operating profit decreased by $2.0 million, or 14.9%, to $11.4 million in 2023, reflecting the impact from the lower volumes offset by higher pricing, net of inflation.
Page 41
35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources
Three Months Ended
March 31,
(in millions)20232022
Net cash (used for) provided by:
Operating activities$(70.8)$(55.5)
Investing activities(12.8)(13.0)
Financing activities(67.8)(97.8)
Effect of exchange rates on cash and cash equivalents4.0(5.1)
Decrease in cash and cash equivalents$(147.4)$(171.4)
  Nine Months Ended
  September 30,
(in millions) 2017 2016
Net cash provided by (used in):    
Operating activities $174.2
 $168.4
Investing activities (89.1) (37.7)
Financing activities (63.1) (63.8)
Effect of foreign currency exchange rate changes on cash and cash equivalents 40.5
 5.9
Increase in cash and cash equivalents $62.5
 $72.8

Our operating philosophy is to deploy cash provided byfrom operating activities, when appropriate, to provide value to shareholders by reinvesting in existing businesses, by making acquisitions that will strengthen and complement our portfolio, ofby divesting businesses that are no longer strategic or aligned with our portfolio and where such divestitures can generate capacity for strategic investments and initiatives that further optimize our portfolio, and by paying dividends and/or repurchasing shares. At any given time, and from time to time, we may be evaluating one or more of these opportunities, although we cannot assure you if or when we will consummate any such transactions.
Our current cash balance, together with cash we expect to generate from future operations along with the $500 million available under our Commercial Paper Program (the “CP Program”) or borrowings available under our revolving credit facility is expected to be sufficient to finance our short- and long-term capital requirements, as well as to fund payments associated with our asbestos and environmental liabilities and expected pension contributions.
In addition,July 2021, we believe our investment gradeentered a $650 million, 5-year Revolving Credit Agreement, which replaced the existing $550 million revolving credit ratings afford us adequate access to publicfacility. The $650 million revolving credit facility and private debt markets. We have no borrowings outstanding under ourthe CP Program as of September 30, 2017. There are no other significant debt maturities coming due until December 2018.
In the fourth quarter of 2016, we extended our estimatewere replaced by commitments under a new $500 million, 5-year Revolving Credit Agreement that was entered into on March 17, 2023, with funding available upon consummation of the asbestos liability, including the costsSeparation, subject to customary conditions precedent for facilities of settlement or indemnity payments and defense costs relating to currently pending claims and future claims projected to be filed against us through the generally accepted end point of such claims in 2059. Our estimatethis type. As of the asbestos liability for pending and future claims through 2059Separation, the CP Program is based on the projected future asbestos costs resulting from our experience usingno longer available.
We also entered into a range of reference periods for claims filed, settled and dismissed. Based on this estimate, we recorded a $227$350 million, additional liability in the fourth quarter of 2016. The aggregate asbestos liability is $630 million as of September 30, 2017. We continue to monitor trend factors, such as the number and type of claims being filed3-year term loan facility. Funding under each year, case management orders and legislation restricting the types of claims that can proceed to trial, significant appellate rulings and developments affecting the post-bankruptcy trusts for asbestos claimants to assess whether a change in the estimate is warranted. On a quarterly basis, we review significant changes to these factors in assessing the adequacy of our asbestos liability. Similarly, we have an estimated liability of $43.1 million related to environmental remediation costs projected through 2022 related to our Goodyear Site.
As of September 30, 2017, our non-U.S. subsidiaries held approximately $529 million of cash, which would be subject to additional tax upon repatriation to the U.S. Our current plans do not anticipate that we will need funds generated from our non-U.S. operations to fund our U.S. operations. In the event we were to repatriate the cash balances of our non-U.S. subsidiaries, we would provide for and pay additional U.S. and non-U.S. taxesfacility became available in connection with such repatriation.the Separation, upon the satisfaction of customary conditions of facilities of this type. On March 31, 2023, Crane Holdings, Co. borrowed the full amount of the Term Facility.
In August 2022, we entered into a $400 million senior unsecured 364-day Credit Agreement. The proceeds were used to partially fund the $550 million contribution related to the Redco Sale. See Note 10 and Note 11 to our Condensed Consolidated Financial Statements for additional details. On March 31, 2023, we repaid the amount outstanding under the 364-Day Credit Agreement.

On April 3, 2023, prior to the consummation of the Separation, Crane Company paid a dividend to Crane Holdings, Co. in the amount of $275 million.

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

Operating Activities
Cash provided byused for operating activities was $174.2$70.8 million in the first ninethree months of 2017,2023, as compared to $168.4$55.5 million during the same period last year.  The increase in cash generated resultedused for operating activities was primarily from higher net income and lower environmental payments, partially offsetdriven by higherincreased working capital requirements,investments supporting higher defined benefit plan and postretirement plan contributions and higher net asbestos-related payments. Net asbestos-related payments in the first nine monthslevels of 2017 and 2016 were $46.8 million and $41.5 million, respectively. We expect to make payments related to asbestos settlement and defense costs, net of related insurance recoveries, of approximately $60 million, environmental payments of approximately $13 million and contributions to our defined benefit plans of approximately $12 million in 2017.demand across most businesses.
Investing Activities
Cash flows relating to investing activities consist primarily of cash used for capital expenditures and cash provided by divestitures of businesses or assets and cash used for acquisitions and capital expenditures.assets. Cash used for investing activities was $89.1$12.8 million in the first ninethree months of 2017,2023, as compared to $37.7 million$13.0 in the comparable period of 2016. The increase in cash used for investing activities was driven by cash paid of $58 million for the acquisitions of Westlock and Microtronic during the first nine months of 2017. This was slightly offset by lower capital expenditures year over year.2022. Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development, and improving information systems. We expect our capital expenditures to approximate $50 million in 2017, reflecting continued investments in new product development initiatives, primarily in our Aerospace & Electronics, Payment and Merchandising Technologies and Fluid Handling segments.

Page 42

Financing Activities
Financing cash flows consist primarily of dividend payments to shareholders, share repurchases and repayments of indebtedness, proceeds from the issuance of long-term debt and commercial paper and proceeds from the issuance of common stock. Cash used for financing activities was $63.1$67.8 million during the first ninethree months of 2017,2023 compared to $63.8$97.8 million duringin the first nine monthscomparable period of 2016.2022. The higher levels ofdecreased in cash used for financing activities was primarily due todriven by the absence of $175.8 million in cash used for open market share repurchases (we repurchased 331,632 shares of our common stock at a cost of $25 million in the first nine months of 2017), the absence of proceeds received from the issuance of commercial paper, partially offset by higher proceeds from stock options exercised.prior year.

36




Recent Accounting Pronouncements
Information regarding new accounting pronouncements is included in Note 1 to theour Condensed Consolidated Financial Statements.



37

Item 3. Quantitative and Qualitative Disclosures About Market Risk


There have been no material changes in the information called for by this item since the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2016.2022.


Item 4. Controls and Procedures
Disclosure Controls and Procedures. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that the information is accumulated and communicated to the Company’s Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that these controls are effective as of the end of the period covered by this quarterly report.
Changes in Internal Control over Financial Reporting. During the fiscal quarter ended September 30, 2017,March 31, 2023, there have been no changes in the Company’s internal control over financial reporting, identified in connection with our evaluation thereof, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.



Page 43
38


Part II :II: Other Information


Item 1. Legal Proceedings
Discussion of legal matters is incorporated by reference from Part 1, Item 1, Note 8,10, “Commitments and Contingencies”, of this Quarterly Report on Form 10-Q, and should be considered an integral part of Part II, Item 1, “Legal Proceedings”.Proceedings.”


Item 1A. Risk Factors

Information regarding risk factors appears in Part I, Item 1A of Crane Co.’sour Annual Report on Form 10-K for the fiscal year ended December 31, 2016.  There were no material changes during the quarter ended September 30, 2017 to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2022.




Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


(a) Not applicable


(b) Not applicable


(c) Share Repurchases
The following table summarizes our
We did not make any open-market share repurchases during the quarter ended September 30, 2017:
  
Total number
of shares
purchased

 
Average
price paid per
share

 
Total number of
shares purchased
as part of publicly
announced plans
or programs

 
Maximum number
(or approximate
dollar value) of
shares  that may yet
be purchased under
the plans or
programs

July 1-31 —
 —
 —
 —
August 1-31 331,632
 $75.45
 —
 —
September 1-30 —
 —
 —
 —
Total July 1 — September 30, 2017 331,632
 $75.45
 —
 —
The table above only includes the open-market repurchases of our common stock during the quarter ended September 30, 2017.March 31, 2023. We routinely receive shares of our common stock as payment for stock option exercises and the withholding taxes due on stock option exercises and the vesting of restricted stock awardsshare units from stock-based compensation program participants.


Item 3. Defaults Upon Senior Securities
Not applicable.

Item 4. Mine Safety Disclosures
Not applicable
 
Item 5. Other Information
Not applicable

39
Page 44


Item 6. Exhibits
Exhibit 2.1
Exhibit 10.1
Exhibit 10.2
Amendment, dated August 31, 2017, to Time Sharing Agreement with M. Mitchell filed as Exhibit 10.1 to the Company’s Form 8-K filed on January 31, 2014.April 3, 2023).
Exhibit 3.1
Exhibit 31.13.2
Exhibit 3.3
Exhibit 10.1*
Exhibit 10.2*
Exhibit 10.3*
Exhibit 10.4*
Exhibit 10.5*
Exhibit 10.6*
Exhibit 10.7
Exhibit 10.8
Exhibit 10.9
Exhibit 10.10
Exhibit 10.11
Exhibit 10.12
Exhibit 31.1*
Exhibit 31.2*
Exhibit 31.2
Exhibit 32.1**
Exhibit 32.1
Exhibit 32.2**
Exhibit 32.2
101.INS
Exhibit 101.INSXBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Exhibit 101.SCHInline XBRL Taxonomy Extension Schema Document(filed herewith)
101.CALInline XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
Exhibit 101.CAL101.DEFXBRL Taxonomy Calculation Linkbase Document
Exhibit 101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document(filed herewith)
101.LABInline XBRL Taxonomy Extension Label Linkbase (filed herewith)
Exhibit 101.LAB101.PREInline XBRL Taxonomy LabelExtension Presentation Linkbase Document(filed herewith)
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.PRE101)XBRL Taxonomy Presentation Linkbase Document
Notes to Exhibits List:* Filed with this report
Attached as Exhibit 101 to** Furnished with this Quarterly Report on Form 10-Q are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016, respectively; (ii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016, respectively; (iii) the Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016; and (iv) the Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2017 and 2016, respectively and v) Notes to Condensed Consolidated Financial Statements. Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is not deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.report


 


 

40
Page 45


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
CRANE NXT, CO.
REGISTRANT
DateCRANE CO.
May 10, 2023ByREGISTRANT/s/ Aaron Saak
Aaron Saak
Date
November 6, 2017By/s/ Max H. Mitchell
Max H. Mitchell
President and Chief Executive Officer
DateBy/s/ Richard A. MaueChristina Cristiano
November 6, 2017May 10, 2023Richard A. MaueChristina Cristiano
Senior Vice President Finance and
Chief Financial Officer
 

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