PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

C~~RANE~~ CO. ~~AND~~ S~~UBSIDIARIES~~

C~~ONDENSEDCONSOLIDATEDSTATEMENTS~~OF O~~PERATIONS~~CRANE CO. AND SUBSIDIARIES

(INM~~ILLIONS~~, ~~EXCEPTPERSHAREDATA~~)CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U~~NAUDITED~~)(UNAUDITED)

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Net sales $ 677.9
$ 841.6
$ 1,475.7
$ 1,673.3
Operating costs and expenses:
Cost of sales 451.7
535.0
962.5
1,063.0
Selling, general and administrative 169.6
179.8
364.0
365.8
Acquisition-related and integration charges 2.3
2.4
7.5
3.5
Restructuring charges, net 23.8
1.6
22.6
4.5
Operating profit 30.5
122.8
119.1
236.5
Other income (expense):
Interest income 0.3
0.7
0.7
1.3
Interest expense (14.4 ) (11.4 ) (26.9 ) (23.3 )
Miscellaneous income, net 2.5
6.4
6.3
8.4

(11.6 ) (4.3 ) (19.9 ) (13.6 )
Income before income taxes 18.9
118.5
99.2
222.9
Provision for income taxes 4.1
27.5
21.6
49.4
Net income before allocation to noncontrolling interests 14.8
91.0
77.6
173.5
Less: Noncontrolling interest in subsidiaries’ earnings —
—
—
0.1
Net income attributable to common shareholders $ 14.8
$ 91.0
$ 77.6
$ 173.4
Earnings per share:
Basic $ 0.26
$ 1.52
$ 1.33
$ 2.90
Diluted $ 0.25
$ 1.50
$ 1.31
$ 2.85
Average shares outstanding:
Basic 58.0
59.9
58.5
59.8
Diluted 58.5
60.8
59.1
60.8

Dividends per share $ 0.43
$ 0.39
$ 0.86
$ 0.78

~~See Notes to Condensed Consolidated Financial Statements.~~

C~~RANE~~ CO. ~~AND~~ S~~UBSIDIARIES~~

C~~ONDENSEDCONSOLIDATEDSTATEMENTS~~OF C~~OMPREHENSIVE~~ I~~NCOME~~

(INM~~ILLIONS~~)

(U~~NAUDITED~~)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions, except per share data)	2021		2020		2021		2020
Net sales	$	796.4	$	644.3	$	1,575.9	$	1,391.1
Operating costs and expenses:
Cost of sales	476.8		424.8		947.3		896.6
Selling, general and administrative	182.9		165.3		365.0		354.6
Acquisition-related and integration charges	0		2.3		0		7.5
Restructuring (gains) charges, net	(0.2)		23.2		(13.3)		22.0
Operating profit	136.9		28.7		276.9		110.4
Other income (expense):
Interest income	0.4		0.3		0.9		0.7
Interest expense	(11.4)		(14.4)		(25.0)		(26.9)
Miscellaneous income, net	9.7		2.4		13.6		6.2
Total other expense	(1.3)		(11.7)		(10.5)		(20.0)
Income from continuing operations before income taxes	135.6		17.0		266.4		90.4
Provision for income taxes	24.9		3.6		52.3		19.3


Net income from continuing operations attributable to common shareholders	110.7		13.4		214.1		71.1
Income from discontinued operations, net of tax (Note 3)	27.6		1.4		32.6		6.5
Net income attributable to common shareholders	$	138.3	$	14.8	$	246.7	$	77.6

Earnings per basic share:
Earnings per basic share from continuing operations	$	1.89	$	0.23	$	3.67	$	1.22
Earnings per basic share from discontinued operations	0.47		0.03		0.55		0.11
Earnings per basic share	$	2.36	$	0.26	$	4.22	$	1.33

Earnings per diluted share:
Earnings per diluted share from continuing operations	$	1.87	$	0.23	$	3.62	$	1.20
Earnings per diluted share from discontinued operations	0.46		0.02		0.55		0.11
Earnings per diluted share	$	2.33	$	0.25	$	4.17	$	1.31

Average shares outstanding:
Basic	58.5		58.0		58.4		58.5
Diluted	59.3		58.5		59.1		59.1

Dividends per share	$	0.43	$	0.43	$	0.86	$	0.86

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Net income before allocation to noncontrolling interests $ 14.8
$ 91.0
$ 77.6
$ 173.5
Components of other comprehensive income (loss), net of tax
Currency translation adjustment 17.2
4.7
(28.0 ) 3.9
Changes in pension and postretirement plan assets and benefit obligation, net of tax 3.6
1.9
7.1
4.8
Other comprehensive income (loss), net of tax 20.8
6.6
(20.9 ) 8.7
Comprehensive income before allocation to noncontrolling interests 35.6
97.6
56.7
182.2
Less: Noncontrolling interests in comprehensive income 0.2
—
(0.1 ) (0.1 )
Comprehensive income attributable to common shareholders $ 35.4
$ 97.6
$ 56.8
$ 182.3

~~See Notes to Condensed Consolidated Financial Statements.~~

C~~RANE~~ CO. ~~AND~~ S~~UBSIDIARIES~~

C~~ONDENSEDCONSOLIDATED~~ B~~ALANCE~~ S~~HEETS~~

(INM~~ILLIONS~~)

(U~~NAUDITED~~)

June 30,
2020 December 31,
2019
Assets
Current assets:
Cash and cash equivalents $ 592.1
$ 393.9
Accounts receivable, net 444.8
555.1
Current insurance receivable - asbestos 14.1
14.1
Inventories, net:
Finished goods 141.7
130.6
Finished parts and subassemblies 67.8
66.1
Work in process 53.8
47.7
Raw materials 211.8
212.9
Inventories, net 475.1
457.3
Other current assets 103.2
79.5
Total current assets 1,629.3
1,499.9
Property, plant and equipment:
Cost 1,246.6
1,256.9
Less: accumulated depreciation 648.7
640.6
Property, plant and equipment, net 597.9
616.3
Long-term insurance receivable - asbestos 77.4
83.6
Long-term deferred tax assets 7.0
35.1
Other assets 206.5
211.3
Intangible assets, net 534.4
505.1
Goodwill 1,577.8
1,472.4
Total assets $ 4,630.3
$ 4,423.7

~~See Notes to Condensed Consolidated Financial Statements.~~

C~~RANE~~ CO. ~~AND~~ S~~UBSIDIARIES~~

C~~ONDENSED~~ C~~ONSOLIDATED~~ B~~ALANCE~~ S~~HEETS~~

(INM~~ILLIONS~~, ~~EXCEPTSHAREANDPERSHAREDATA~~)

(U~~NAUDITED~~)

June 30,
2020 December 31,
2019
Liabilities and equity
Current liabilities:

Short-term borrowings $ 585.3
$ 149.4
Accounts payable 226.4
311.1
Current asbestos liability 65.0
65.0
Accrued liabilities 339.6
378.2
U.S. and foreign taxes on income 10.9
13.0
Total current liabilities 1,227.2
916.7
Long-term debt 842.5
842.0
Accrued pension and postretirement benefits 285.8
298.4
Long-term deferred tax liability 51.1
55.8
Long-term asbestos liability 621.2
646.6
Other liabilities 178.9
187.9
Total liabilities 3,206.7
2,947.4
Commitments and contingencies (Note 11)

Equity:

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 issued 72.4
72.4
Capital surplus 318.7
315.6
Retained earnings 2,139.4
2,112.2
Accumulated other comprehensive loss (504.5 ) (483.7 )
Treasury stock (604.9 ) (542.8 )
Total shareholders’ equity 1,421.1
1,473.7
Noncontrolling interests 2.5
2.6
Total equity 1,423.6
1,476.3
Total liabilities and equity $ 4,630.3
$ 4,423.7
Share data:
Common shares issued 72,426,139
72,426,139
Less: Common shares held in treasury 14,400,638
13,423,934
Common shares outstanding 58,025,501
59,002,205

~~See Notes to Condensed Consolidated Financial Statements.~~

C~~RANE~~ CO. ~~AND~~ S~~UBSIDIARIES~~

C~~ONDENSEDCONSOLIDATEDSTATEMENTS~~OF C~~ASH~~ F~~LOWS~~

(INM~~ILLIONS~~)

(U~~NAUDITED~~)

Six Months Ended
June 30,
2020 2019
Operating activities:
Net income attributable to common shareholders $ 77.6
$ 173.4
Noncontrolling interests in subsidiaries’ earnings —
0.1
Net income before allocation to noncontrolling interests 77.6
173.5
Loss on deconsolidation of joint venture —
1.2
Unrealized gain on marketable securities —
(3.1 )
Depreciation and amortization 62.9
56.3
Stock-based compensation expense 10.5
11.2
Defined benefit plans and postretirement credit (2.7 ) (4.0 )
Deferred income taxes 7.5
10.8
Cash used for operating working capital (54.1 ) (171.4 )
Defined benefit plans and postretirement contributions (2.3 ) (5.1 )
Environmental payments, net of reimbursements (3.7 ) (4.0 )
Asbestos related payments, net of insurance recoveries (19.2 ) (17.9 )
Other 0.1
5.0
Total provided by operating activities 76.6
52.5
Investing activities:
Payment for acquisition - net of cash acquired (172.3 ) —
Proceeds from disposition of capital assets 2.7
0.9
Capital expenditures (13.5 ) (36.1 )
Purchase of marketable securities —
(8.8 )
Impact of deconsolidation of joint venture —
(0.2 )
Total used for investing activities (183.1 ) (44.2 )
Financing activities:
Dividends paid (50.4 ) (46.7 )
Reacquisition of shares on open market (70.0 ) —
Stock options exercised - net of shares reacquired 0.6
1.2
Debt issuance costs (1.2 ) —
Proceeds received from issuance of long-term debt —
3.0
Repayment of long-term debt —
(2.8 )
Proceeds from issuance of commercial paper with maturities greater than 90 days 251.3
—
Repayments of commercial paper with maturities greater than 90 days (96.5 ) —
Net repayments from issuance of commercial paper with maturities of 90 days or less (62.8 ) —
Proceeds from revolving credit facility 77.2
—
Repayments from revolving credit facility (77.2 ) —
Proceeds from term loan 343.9
—
Total provided by (used for) financing activities 314.9
(45.3 )
Effect of exchange rates on cash and cash equivalents (10.2 ) 0.6
Increase (decrease) in cash and cash equivalents 198.2
(36.4 )
Cash and cash equivalents at beginning of period 393.9
343.4
Cash and cash equivalents at end of period $ 592.1
$ 307.0
Detail of cash used for operating working capital:
Accounts receivable $ 117.9
$ (29.9 )
Inventories (19.6 ) (26.3 )
Other current assets (23.5 ) (6.7 )
Accounts payable (86.8 ) (54.2 )
Accrued liabilities (37.6 ) (70.1 )
U.S. and foreign taxes on income (4.5 ) 15.8
Total $ (54.1 ) $ (171.4 )
Supplemental disclosure of cash flow information:
Interest paid $ 23.8
$ 24.0
Income taxes paid $ 18.6
$ 24.1

See Notes to Condensed Consolidated Financial Statements.

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)	2021		2020		2021		2020
Net income before allocation to noncontrolling interests	$	138.3	$	14.8	$	246.7	$	77.6
Components of other comprehensive income (loss), net of tax
Currency translation adjustment	7.6		17.2		(27.3)		(28.0)
Changes in pension and postretirement plan assets and benefit obligation, net of tax	5.2		3.6		10.1		7.1
Other comprehensive income (loss), net of tax	12.8		20.8		(17.2)		(20.9)
Comprehensive income before allocation to noncontrolling interests	151.1		35.6		229.5		56.7
Less: Noncontrolling interests in comprehensive income	(0.1)		0.2		0.7		(0.1)
Comprehensive income attributable to common shareholders	$	151.2	$	35.4	$	228.8	$	56.8

See Notes to Condensed Consolidated Financial Statements.

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in millions)	June 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	386.7	$	551.0
Accounts receivable, net	458.6		423.9
Current insurance receivable - asbestos	14.4		14.4
Inventories, net:
Finished goods	154.5		125.4
Finished parts and subassemblies	57.1		54.5
Work in process	43.4		45.1
Raw materials	201.9		204.7
Inventories, net	456.9		429.7
Other current assets	129.8		137.3
Current assets held for sale	225.9		17.4
Total current assets	1,672.3		1,573.7
Property, plant and equipment:
Cost	1,173.4		1,191.9
Less: accumulated depreciation	635.2		618.2
Property, plant and equipment, net	538.2		573.7
Long-term insurance receivable - asbestos	65.8		72.5
Long-term deferred tax assets	33.1		41.0
Other assets	196.5		197.4
Intangible assets, net	491.3		519.1
Goodwill	1,426.0		1,437.7
Long-term assets held for sale	0		199.9
Total assets	$	4,423.2	$	4,615.0

See Notes to Condensed Consolidated Financial Statements.

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in millions, except per share and per share data)	June 30, 2021		December 31, 2020
Liabilities and equity
Current liabilities:
Short-term borrowings	$	15.0	$	375.7
Accounts payable	242.2		198.9
Current asbestos liability	66.5		66.5
Accrued liabilities	388.4		388.0
U.S. and foreign taxes on income	8.8		0.1
Current liabilities held for sale	37.9		27.4
Total current liabilities	758.8		1,056.6
Long-term debt	843.4		842.9
Accrued pension and postretirement benefits	297.4		329.7
Long-term deferred tax liability	54.1		53.6
Long-term asbestos liability	576.7		603.6
Other liabilities	164.7		171.3
Long-term liabilities held for sale	0		26.2
Total liabilities	2,695.1		3,083.9
Commitments and contingencies (Note 12)	0		0
Equity:
Preferred shares, par value $0.01; 5,000,000 shares authorized	0		0
Common shares, par value $1.00; 200,000,000 shares authorized, 72,426,139 shares issued	72.4		72.4
Capital surplus	348.4		330.7
Retained earnings	2,389.3		2,192.8
Accumulated other comprehensive loss	(484.3)		(466.4)
Treasury stock	(600.6)		(600.6)
Total shareholders’ equity	1,725.2		1,528.9
Noncontrolling interests	2.9		2.2
Total equity	1,728.1		1,531.1
Total liabilities and equity	$	4,423.2	$	4,615.0
Share data:
Common shares issued	72,426,139		72,426,139
Less: Common shares held in treasury	13,801,550		14,298,191
Common shares outstanding	58,624,589		58,127,948

See Notes to Condensed Consolidated Financial Statements.

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended
	June 30,
(in millions)	2021		2020
Operating activities from continuing operations:
Net income from continuing operations attributable to common shareholders	$	214.1	$	71.1
Gain on sale of property	(18.5)		0
Depreciation and amortization	60.8		61.1
Stock-based compensation expense	12.4		10.2
Defined benefit plans and postretirement credit	(4.2)		(2.7)
Deferred income taxes	0.1		7.5
Cash used for operating working capital	(25.7)		(46.5)
Defined benefit plans and postretirement contributions	(17.2)		(2.3)
Environmental payments, net of reimbursements	(3.6)		(3.7)
Asbestos related payments, net of insurance recoveries	(20.2)		(19.2)
Other	(0.5)		0.1
Total provided by operating activities from continuing operations	197.5		75.6
Investing activities from continuing operations:
Payment for acquisition - net of cash acquired	0		(172.3)
Proceeds from disposition of capital assets	23.4		2.7
Capital expenditures	(13.9)		(13.3)
Purchase of marketable securities	(10.0)		0
Proceeds from sale of marketable securities	40.0		0
Total provided by (used for) investing activities from continuing operations	39.5		(182.9)
Financing activities from continuing operations:
Dividends paid	(50.2)		(50.4)
Reacquisition of shares on open market	0		(70.0)
Stock options exercised, net of shares reacquired	5.2		0.6
Debt issuance costs	0		(1.2)
Proceeds from issuance of commercial paper with maturities greater than 90 days	0		251.3
Repayments of commercial paper with maturities greater than 90 days	(27.1)		(96.5)
Net proceeds (repayments) from issuance of commercial paper with maturities of 90 days or less	15.0		(62.8)
Proceeds from revolving credit facility	0		77.2
Repayments of revolving credit facility	0		(77.2)
Proceeds from term loan	0		343.9
Repayment of term loan	(348.1)		0
Total (used for) provided by financing activities from continuing operations	(405.2)		314.9
Discontinued operations:
Total provided by operating activities	9.2		1.0
Total used for investing activities	(0.8)		(0.2)
Increase in cash and cash equivalents from discontinued operations	8.4		0.8
Effect of exchange rates on cash and cash equivalents	(4.5)		(10.2)
(Decrease) increase in cash and cash equivalents	(164.3)		198.2
Cash and cash equivalents at beginning of period	551.0		393.9
Cash and cash equivalents at end of period	$	386.7	$	592.1

CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended
	June 30,
(in millions)	2021		2020
Detail of cash used for operating working capital from continuing operations:
Accounts receivable	$	(36.7)	$	120.0
Inventories	(29.0)		(22.1)
Other current assets	(22.2)		(23.2)
Accounts payable	44.2		(79.6)
Accrued liabilities	2.9		(37.1)
U.S. and foreign taxes on income	15.1		(4.5)
Total	$	(25.7)	$	(46.5)

Supplemental disclosure of cash flow information:
Interest paid	$	23.8	$	23.8
Income taxes paid	$	37.0	$	46.4

See Notes to Condensed Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and the instructions to Form 10-Q and, therefore, reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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.

Discontinued Operations. On May 16, 2021, we entered into an agreement to sell the Engineered Materials segment to Grupo Verzatec S.A. de C.V. for $360 million on a cash-free and debt-free basis. The sale is subject to customary closing conditions and regulatory approvals. The historical results of Engineered Materials are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Throughout this Quarterly Report on Form 10-Q, unless otherwise indicated, amounts and activity are presented on a continuing operations basis. Please see Note 3 for additional details.

Process Flow Technologies. We changed the name of our 'Fluid Handling' segment to 'Process Flow Technologies'. This new name better conveys the key strengths and core competencies of the segment; providing proprietary and highly engineered process flow technology solutions to its customers.

Recent Accounting Pronouncements - ~~Not Yet~~ Adopted

Simplifying the Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board ~~(“FASB”~~(“FASB”) issued amended guidance to simplify the accounting for income taxes. The guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. ~~Early adoption is permitted.~~ Certain amendments ~~should~~are to be applied prospectively, while other amendments ~~should~~are to be applied retrospectively to all periods presented. We ~~are currently evaluating the timing and~~have adopted this standard effective January 1, 2021. The adoption of this new standard did not impact ~~of the amended guidance on~~ our consolidated financial statements.

Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued amended guidance to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The amended guidance removes the requirements to disclose: amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year; the amount and timing of plan assets expected to be returned to the entity; and the effects of a one-percentage point change in assumed health care cost trend ~~rates.~~rates. The amended guidance requires disclosure of an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. This guidance is effective for fiscal years ending after December 15, 2020. Effective December 31, 2020, ~~with early adoption permitted. The~~we adopted the amended guidance ~~is required to be~~and applied the disclosure requirements on a retrospective basis to all periods presented. ~~We are currently evaluating this~~This amended guidance ~~to determine the impact~~did not have a material effect on our disclosures.

~~Recent Accounting Pronouncements - Adopted~~

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued amended guidance that changes the impairment model for most financial assets and certain other instruments. For trade receivables, contract assets and other receivables, held-to-maturity debt securities, loans and other instruments, entities are required to use a current expected credit loss ~~("CECL"~~(“CECL”) model that will immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. The CECL model is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect collectability.

On January 1, 2020, we adopted the new CECL standard and developed an expected impairment model based on our historical loss experience. We believe that our previous methodology to calculate credit losses is generally consistent with the new expected credit loss model and did not result in a material adjustment upon adoption. The allowance for doubtful accounts was ~~$16.6~~$8.3 million and ~~$7.2~~$10.9 million as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Acquisitions

Acquisitions are accounted for in accordance with ASC Topic 805, ~~“Business Combinations” (“~~“Business Combinations” (“ASC ~~805”~~805”). Accordingly, we make an initial allocation of the purchase price at the date of acquisition based upon our understanding of the fair value of the acquired assets and assumed liabilities. We obtain this information during due diligence and through other sources. In the months after closing, as we obtain additional information about these assets and liabilities, including through tangible and intangible asset appraisals, we are able to refine estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment to the purchase price allocation. We will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

In order to allocate the consideration transferred for our acquisitions, the fair values of all identifiable assets and liabilities must be established. For accounting and financial reporting purposes, fair value is defined under ASC Topic 820, ~~“Fair~~“Fair Value Measurement and ~~Disclosure”~~Disclosure” as the price that would be received upon sale of an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, fair value measurements for an asset assume the highest and best use of that asset by market participants. Use of different estimates and judgments could yield different results.

~~Cummins-Allison~~Instrumentation & Sampling Business Acquisition

On ~~December~~January 31, ~~2019,~~2020, we completed the acquisition of ~~Cummins-Allison Corp. (“Cummins-Allison”~~CIRCOR International, Inc.’s Instrumentation & Sampling Business (“I&S”)~~. The base purchase price of the acquisition was $160~~ for $172.3 million on a cash-free and debt-free basis, subject to a later adjustment reflecting ~~Cummins-Allison’s~~I&S' net working capital, cash, the assumption of certain debt-like items, and ~~Cummins-Allison’s~~I&S' transaction expenses. ~~The amount paid, net of cash acquired, was $156.2 million.~~ We funded the acquisition through short-term borrowings consisting of ~~$150~~$100 million of commercial paper and $67 million from our revolving credit facility, and cash on hand. In August 2020, we received $3.1 million related to the final working capital adjustment which resulted in net cash paid of $169.2 million.

~~Cummins-Allison is~~

I&S designs, engineers and manufactures a ~~leading provider~~broad range of ~~high speed, cash~~critical fluid control instrumentation and ~~coin counting and sorting machines and retail cash office~~sampling solutions ~~which are primarily~~ used in ~~back-office~~severe service environments which complements our existing portfolio of chemical, refining, petrochemical and upstream oil and gas applications. ~~Cummins-Allison also~~I&S has ~~a nationwide service network to support these hardware sales. Cummins-Allison was~~been integrated into the ~~Payment & Merchandising~~Process Flow Technologies segment. The amount allocated to goodwill reflects the expected synergies, ~~related to material costs, supply chain~~ manufacturing ~~productivity~~efficiencies and ~~research and development.~~procurement savings. Goodwill from this acquisition is not deductible for tax purposes.

Allocation of Consideration Transferred to Net Assets Acquired

The following amounts represent the ~~preliminary~~ determination of the fair value of identifiable assets acquired and liabilities assumed from our acquisition of ~~Cummins-Allison.~~I&S. The ~~final determination of the~~ fair value of certain assets and liabilities ~~will be~~has been completed ~~within the one year measurement period~~ as required by ASC 805. The changes to the preliminary purchase price allocation primarily relate to the valuation of inventory. We have not yet completed our evaluation and determination of certain assets acquired and liabilities assumed, primarily related to the final assessment and valuation of certain tax amounts. Therefore, the final fair values of the assets acquired and liabilities assumed may vary from our preliminary estimates presented below:


Net assets acquired(in millions)
Total current assets	$	21.0
Property, plant and equipment	11.0
Other assets	6.0
Intangible assets	52.5
Goodwill	106.0
Total assets acquired	$	196.5

Total current liabilities	$	8.1
Other liabilities	19.2
Total assumed liabilities	$	27.3
Net assets acquired	$	169.2

Net assets acquired (in millions)

Total current assets $ 87.4
Property, plant and equipment 26.4
Other assets 12.0
Intangible assets 66.0
Goodwill 58.7
Total assets acquired $ 250.5

Total current liabilities $ 66.9
Other liabilities 27.4
Total assumed liabilities $ 94.3
Net assets acquired $ 156.2

⁴We also recorded related costs of $1.3 million and $4.8 million for the three months ended June 30, 2020 and 2019, respectively, and $2.6 million and $7.2 million for the six months ended June 30, 2020 and 2019, respectively. These costs are recorded within Cost of sales and Selling, general and administrative.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes our restructuring (gains) charges, net by program, cost type and segment for the three months ended June 30, ~~2020~~2021 and ~~2019:~~2020:


	Three months ended June 30, 2021						Three months ended June 30, 2020
(in millions)	Severance		Other		Total		Severance		Other		Total
Aerospace & Electronics	$	0	$	0	$	0	$	4.7	$	0	$	4.7
Process Flow Technologies	0		0		0		4.7		0		4.7
Payment & Merchandising Technologies	0		0		0		13.8		1.0		14.8
2020 Repositioning	$	0	$	0	$	0	$	23.2	$	1.0	$	24.2






Payment & Merchandising Technologies	(0.2)		0		(0.2)		(1.0)		0		(1.0)
2017 Repositioning	$	(0.2)	$	0	$	(0.2)	$	(1.0)	$	0	$	(1.0)

Total	$	(0.2)	$	0	$	(0.2)	$	22.2	$	1.0	$	23.2

Three months ended June 30, 2020 Three months ended June 30, 2019
(in millions) Severance Other Total Severance Other Total
Fluid Handling $ 4.7
$ —
$ 4.7
$ —
$ —
$ —
Payment & Merchandising Technologies 13.8
1.0
14.8
—
—
—
Aerospace & Electronics 4.7
—
4.7
—
—
—
Engineered Materials 0.6
—
0.6
—
—
—
2020 Repositioning $ 23.8
$ 1.0
$ 24.8
$ —
$ —
$ —

Fluid Handling $ —
$ —
$ —
$ 0.2
$ —
$ 0.2
Payment & Merchandising Technologies (1.0 ) —
(1.0 ) 0.2
0.6
0.8
Aerospace & Electronics —
—
—
—
—
—
2017 Repositioning $ (1.0 ) $ —
$ (1.0 ) $ 0.4
$ 0.6
$ 1.0

Payment & Merchandising Technologies $ —
$ —
$ —
$ 0.2
$ 0.4
$ 0.6
Acquisition-Related Restructuring $ —
$ —
$ —
$ 0.2
$ 0.4
$ 0.6

Total $ 22.8
$ 1.0
$ 23.8
$ 0.6
$ 1.0
$ 1.6

The following table summarizes our restructuring (gains) charges, net by program, cost type and segment for the six months ended June 30, ~~2020~~2021 and ~~2019:~~2020:

Six months ended June 30, 2020 Six months ended June 30, 2019
(in millions) Severance Other Total Severance Other Total
Fluid Handling $ 4.7
$ —
$ 4.7
$ —
$ —
$ —
Payment & Merchandising Technologies 13.8
1.0
14.8
—
—
—
Aerospace & Electronics 4.7
—
4.7
—
—
—
Engineered Materials 0.6
—
0.6
—
—
—
2020 Repositioning $ 23.8
$ 1.0
$ 24.8
$ —
$ —
$ —

Fluid Handling $ —
$ —
$ —
$ 0.8
$ —
$ 0.8
Payment & Merchandising Technologies ¹
(1.0 ) (1.5 ) (2.5 ) 0.2
0.8
1.0
Aerospace & Electronics —
—
—
—
(0.1 ) (0.1 )
2017 Repositioning $ (1.0 ) $ (1.5 ) $ (2.5 ) $ 1.0
$ 0.7
$ 1.7

Payment & Merchandising Technologies $ —
$ —
$ —
$ 0.4
$ 2.4
$ 2.8
Acquisition-Related Restructuring $ —
$ —
$ —
$ 0.4
$ 2.4
$ 2.8

Payment & Merchandising Technologies $ 0.3
$ —
$ 0.3
$ —
$ —
$ —
Other Restructuring $ 0.3
$ —
$ 0.3
$ —
$ —
$ —

Total $ 23.1
$ (0.5 ) $ 22.6
$ 1.4
$ 3.1
$ 4.5


	Six months ended June 30, 2021						Six months ended June 30, 2020
(in millions)	Severance		Other		Total		Severance		Other		Total
Aerospace & Electronics	$	0	$	0	$	0	$	4.7	$	0	$	4.7
Process Flow Technologies	0		0		0		4.7		0		4.7
Payment & Merchandising Technologies	(0.5)		0		(0.5)		13.8		1.0		14.8
2020 Repositioning	$	(0.5)	$	0	$	(0.5)	$	23.2	$	1.0	$	24.2

Process Flow Technologies	$	0.1	0		$	0.1	$	0	$	0	$	0
2019 Repositioning	$	0.1	$	0	$	0.1	$	0	$	0	$	0


Process Flow Technologies 1	$	0	$	(12.7)	$	(12.7)	$	0	$	0	$	0
Payment & Merchandising Technologies 2	(0.2)		0		(0.2)		(1.0)		(1.5)		(2.5)
2017 Repositioning	$	(0.2)	$	(12.7)	$	(12.9)	$	(1.0)	$	(1.5)	$	(2.5)

Payment & Merchandising Technologies	$	0	$	0	$	0	$	0.3	$	0	$	0.3
Other Restructuring	$	0	$	0	$	0	$	0.3	$	0	$	0.3

Total	$	(0.6)	$	(12.7)	$	(13.3)	$	22.5	$	(0.5)	$	22.0

¹~~We recorded~~Reflects a pre-tax gain ~~of $1.5 million~~ related to the sale of ~~a facility~~real estate in ~~the first six months of 2020.~~2021

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the cumulative restructuring costs, net incurred through June 30, ~~2020 and the remaining~~2021. We do not expect to incur additional facility consolidation costs ~~expected~~ to complete these actions as of June 30, ~~2020:~~

Cumulative Restructuring Costs Remaining Costs
(in millions) Severance Other Total 2020 2021 Total
Fluid Handling $ 4.7
$ —
$ 4.7
$ —
$ —
$ —
Payment & Merchandising Technologies 13.8
1.0
14.8
—
—
—
Aerospace & Electronics 4.7
—
4.7
—
—
—
Engineered Materials 0.6
—
0.6
—
—
—
2020 Repositioning $ 23.8
$ 1.0
$ 24.8
$ —
$ —
$ —

Fluid Handling $ 9.9
$ —
$ 9.9
$ 4.5
$ 4.2
$ 8.7
2019 Repositioning $ 9.9
$ —
$ 9.9
$ 4.5
$ 4.2
$ 8.7

Fluid Handling $ 17.3
$ —
$ 17.3
$ 0.8
$ —
$ 0.8
Payment & Merchandising Technologies 11.6
0.7
12.3
—
—
—
Aerospace & Electronics 1.3
(1.4 ) (0.1 ) —
—
—
2017 Repositioning $ 30.2
$ (0.7 ) $ 29.5
$ 0.8
$ —
$ 0.8

2021.


	Cumulative Restructuring Costs, Net
(in millions)	Severance		Other		Total
Process Flow Technologies	$	3.8	$	0	$	3.8
Payment & Merchandising Technologies	16.1		4.6		20.7
Aerospace & Electronics	6.5		0		6.5
2020 Repositioning	$	26.4	$	4.6	$	31.0

Process Flow Technologies	$	16.1	$	0	$	16.1
2019 Repositioning	$	16.1	$	0	$	16.1

Process Flow Technologies	$	13.5	$	(12.7)	$	0.8
Payment & Merchandising Technologies	11.5		0.7		12.2
Aerospace & Electronics	1.3		(1.4)		(0.1)
2017 Repositioning	$	26.3	$	(13.4)	$	12.9

Restructuring Liability

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


(in millions)	2020 Repositioning		2019 Repositioning		2017 Repositioning		Total
Severance:
Balance at December 31, 2020 (b)	$	4.2	$	16.0	$	4.7	$	24.9
Expense (a)	0		0.1		0		0.1
Adjustments (a)	(0.5)		0		(0.2)		(0.7)
Utilization	(3.1)		(2.7)		(0.3)		(6.1)
Balance at June 30, 2021 (b)	$	0.6	$	13.4	$	4.2	$	18.2



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

(in millions) 2020 Repositioning 2019 Repositioning 2017 Repositioning Other Restructuring Total
Severance:
Balance at December 31, 2019 $ —
$ 9.9
$ 12.5
$ —
$ 22.4
Expense (Gain)¹
23.8
—
(1.0 ) 0.3
23.1
Utilization (13.1 ) (0.1 ) (1.6 ) (0.3 ) (15.1 )
Balance at June 30, 2020²
$ 10.7
$ 9.8
$ 9.9
$ —
$ 30.4

Other Restructuring Costs:
Balance at December 31, 2019 $ —
$ —
$ 0.2
$ —
$ 0.2
Expense (Gain)¹
1.0
—
(1.5 ) —
(0.5 )
Utilization (1.0 ) —
1.3
—
0.3
Balance at June 30, 2020²
$ —
$ —
$ —
$ —
$ —

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

¹Note 16- Subsequent Event ~~Reflected in the Condensed Consolidated Statements of Operations as “Restructuring charges, net”~~

~~Included within Accrued Liabilities~~On July 28, 2021, we entered into a $650 million, 5-year Revolving Credit Agreement (the “2021 Facility”), which replaced the existing $550 million revolving credit facility. The 2021 Facility allows us to borrow, repay, or to the extent permitted by the agreement, prepay and re-borrow funds at any time prior to the stated maturity date. Interest on loans made under the 2021 Facility accrues, at our option, at a rate per annum equal to (1) a base rate, plus a margin ranging from 0.00% to 0.50% depending upon the ratings by S&P and Moody’s of our senior unsecured long-term debt (the "Index Debt Rating"), or (2) an adjusted LIBO rate or the applicable replacement rate (determined based on “hardwired” LIBOR transition provisions consistent with those published by the Alternative References Rates Committee) for an interest period to be selected by us, plus a margin ranging from 0.805% to 1.50% depending upon the Index Debt Rating. The 2021 Facility contains customary affirmative and negative covenants for credit facilities of this type, including limitations on us and our subsidiaries with respect to indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of all or substantially all assets, transactions with affiliates and hedging arrangements. We must also maintain a debt to capitalization ratio not to exceed 0.65 to 1.00 at all times. The 2021 Facility also provides for customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, any representation or warranty made by us or any of our material subsidiaries being false in ~~the Condensed Consolidated Balance Sheets~~any material respect, default under certain other material indebtedness, certain insolvency or receivership events affecting us and our material subsidiaries, certain ERISA events, material judgments and a change in control of us.

On July 28, 2021, we increased the size of the CP Program to permit the issuance of short-term, unsecured commercial paper notes in an aggregate principal amount not to exceed $650 million at any time outstanding. Prior to this increase, the CP Program permitted us to issue commercial paper notes in an aggregate principal amount not to exceed $550 million at any time outstanding. The other terms and conditions of the CP program remain the same. Amounts available under the CP Program may be borrowed, repaid and re-borrowed from time to time. The notes will have maturities of up to 397 days from date of issue.

~~MANAGEMENT’S~~

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

Item 2. ~~Management’s~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains information about Crane Co., some of which includes ~~“forward-looking statements”~~“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,”~~“believes,” “contemplates,” “expects,” “may,” “could,” “should,” “would,” or ~~“anticipates,”~~“anticipates,” other similar phrases, or the negatives of these terms.

Reference herein to ~~“Crane,” “the~~“Crane,” “the Company,~~” “we,” “us”~~” “we,” “us” and ~~“our”~~“our” refer to Crane Co. and its subsidiaries unless the context specifically states or implies otherwise. References to ~~“core business”~~“core business” or ~~“core sales”~~“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 COVID-19 pandemic, that could cause actual results or outcomes to differ materially from those ~~addressed~~expressed or implied in the forward-looking statements. Such factors also include, among others: uncertainties regarding the extent and duration of the impact of the COVID-19 pandemic on many aspects of our business, operations and financial performance, as detailed in Part II, Item 1A of this Quarterly Report on Form 10-Q; changes in economic, financial and end-market conditions in the markets in which we operate; fluctuations in raw material prices; the financial condition of our customers and suppliers; economic, social and political instability, currency fluctuation and other risks of doing business outside of the United States; competitive pressures, including the need for technology improvement, successful new product development and introduction and any inability to pass increased costs of raw materials to customers; our ability to value and successfully integrate acquisitions and to realize synergies and opportunities for growth and innovation, and to attract and retain highly qualified personnel and key management; the risks that any regulatory approval that may be required for the Engineered Materials divestiture is delayed or is not obtained, that the Engineered Materials divestiture does not close or that the related transaction agreement is terminated, or that the benefits expected from the Engineered Materials divestiture will not be realized or will not be realized within the expected time period; a reduction in congressional appropriations that affect defense spending and our ability to predict the timing and award of substantial contracts in our banknote business; adverse effects on our business and results of operations, as a whole, as a result of increases in asbestos claims or the cost of defending and settling such claims; adverse effects as a result of environmental remediation activities, costs, liabilities and related claims; investment performance of our pension plan assets and fluctuations in interest rates, which may affect the amount and timing of future pension plan contributions; and other risks noted in reports that we file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019, which is incorporated by reference herein.~~2020, and subsequent reports filed with the Securities and Exchange Commission. We do not undertake any obligation to update or revise any forward-looking statements.

~~MANAGEMENT’S~~

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

OUTLOOK - CONTINUING OPERATIONS

~~OUTLOOK~~

~~In March 2020, the World Health Organization categorized the novel coronavirus (“COVID-19”) as a pandemic, and it~~

~~continues~~Our sales depend heavily on industries that are cyclical in nature or are subject to spread throughout the United States and other countries across the world. The COVID-19 pandemic has resulted, and is likely to continue to result, in significant economic disruption and has and will likely continue to adversely affect our business. Significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic. While all our facilities are operating as essential businesses, some of our facilities have reduced operating levels and shifts, and further reductionsmarket conditions which may ~~occur as the impacts from COVID-19 and related responses continue to develop.~~

Factors deriving from the COVID-19 response that have or may negatively impact sales and operating profit in the future include, but are not limited to: limitations on the ability of our suppliers to manufacture, or procure from manufacturers, the products we sell, or to meet delivery requirements and commitments; limitations on the ability of our employees to perform their work due to illness caused by the pandemic or local, state, or federal orders requiring employees to remain at home; limitations on the ability of carriers to delivercause customer demand for our products to ~~customers; limitations on the ability~~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 ~~our customers to conduct their business and purchase our products and services; and limitations on the ability of our customers to pay us on a timely basis.~~other factors.

~~Given the dynamic nature of these circumstances, while~~For 2021, we expect a ~~significant unfavorable impact,~~total year-over-year sales increase of approximately 12%, driven by high-single digit core growth following the ~~full extent of~~substantial core sales decline in 2020 attributable to the COVID-19 pandemic, an approximate 3.5% benefit from favorable foreign exchange, and a slight acquisition benefit. We expect an improvement in operating profit of approximately two times greater than 2020, driven by a combination of operating leverage on ~~our ongoing business, results of operations~~higher volumes, restructuring and ~~overall financial performance is very difficult to forecast. For 2020,~~acquisition related charges recorded last year that will not repeat in 2021 and carry-over savings associated with COVID-19 related repositioning actions.

Aerospace & Electronics

In 2021, we expect Aerospace & Electronics core sales to decline ~~significantly driven by~~in the ~~economic impacts of~~low- to mid-single digit range compared to 2020 as the COVID-19 pandemic ~~partially offset by benefits from~~had a major impact on business and leisure air travel beginning in the ~~I&S and Cummins-Allison acquisitions. At this time,~~early part of the second quarter of last year which has only recently began to recover. Accordingly, we expect ~~sales~~a decline in our commercial OEM business driven by lower aircraft build rates, and we expect a decline in our commercial aftermarket business given lower airline flight hours. We expect a decline in our defense OEM and aftermarket businesses given very challenging comparisons to ~~be $2.8 billion to $3.0 billion, reflecting a core sales decline of 17% to 22%. While~~2020 where these markets exhibited very strong growth. We expect the segment’s operating profit into increase slightly compared to 2020 ~~will benefit from~~driven primarily by the carry-over savings associated with COVID-19 related repositioning actions and the absence of ~~the 2019 asbestos and environmental provisions which totaled $247.9 million, as well as benefits from incremental cost reduction actions of approximately $100 million, it will be substantially~~restructuring related costs, partially offset by the impact ~~from~~of the lower sales ~~volumes related to COVID-19.~~volume.

~~Fluid Handling~~Process Flow Technologies

In ~~2020,~~2021, we expect ~~Fluid Handling~~Process Flow Technologies sales to ~~decline significantly~~increase in the mid-teens range compared to ~~2019,~~2020, driven by ~~lower demand~~core sales growth in the high-single digit range following the substantial core sales decline in 2020 attributable to the COVID-19 pandemic; favorable foreign exchange of approximately 5%; and ~~supply chain disruptions related to COVID-19, which will only be partially offset by benefits~~a small benefit from the I&S&S acquisition. ~~These factors will result in lower sales at~~

We expect Process Valves and Related Products sales to increase in the low-teens digit range compared to 2020, driven by high-single digit core sales growth, an approximate 3% benefit from favorable foreign exchange, and a small benefit from the I&S acquisition. We expect Commercial Valves sales to increase more than 20% compared to 2020 driven by favorable foreign exchange and atcore sales growth, both in the low double digit range. We expect Pumps and ~~Systems.~~Systems sales to increase in the low-teens range compared to 2020, driven by growth in the U.S. municipal, non-residential construction and military end markets.

~~For~~We expect an improvement in the segment ~~we expect a corresponding decline in~~’s operating profit and operating margin compared to ~~2019, with~~2020, driven by the impact ~~from~~of the higher sales, lower ~~sales volumes more than offsetting productivity, cost reduction actions and~~ restructuring and acquisition related charges, and carry-over savings ~~net.~~primarily associated with COVID-19 related repositioning actions.

Payment && Merchandising Technologies

In ~~2020,~~2021, we expect Payment && Merchandising Technologies sales to ~~decline modestly~~increase in the mid- to high-teens range compared to ~~2019,~~2020, driven primarily by mid-teens core sales growth, and an approximate 4% benefit from favorable foreign exchange.

At Crane Payment Innovations, we expect core sales growth in the low double digit range, driven by ~~lower demand for Payment and Vending equipment related~~broad-based strength across most vertical end markets following the substantial core sales decline in 2020 attributable to the COVID-19 ~~pandemic, largely offset by benefits from the Cummins-Allison acquisition and sales growth at Crane Currency.~~

~~In 2020, we expect both Crane Payment Innovations and Crane Merchandising Systems core sales will decline significantly compared to 2019 due to COVID-19 related factors.~~pandemic. At Crane Currency, we expect core sales to increase more than 20% compared to ~~2019~~2020 primarily driven ~~primarily~~ by ~~growth in~~higher sales to the U.S. Government, and to a lesser extent, by higher sales to international customers.

We expect the segment’s operating profit to decline compared to 2019, driven by lower sales volume and acquisition-related charges, partially offset by productivity, cost reduction actions and restructuring and related savings, net.

~~Aerospace & Electronics~~

In 2020, we expect Aerospace & Electronics sales to decline significantly compared to 2019. We expect declines from our commercial OEM customers in response to COVID-19 related factors, as well as the temporary impact of Boeing halting production of the 737 MAX for a portion of 2020. We also expect a significant decline in our commercial aftermarket business driven by substantially reduced airline flight schedules related to COVID-19. We expect growth in our defense OEM and aftermarket businesses driven by continued government investment in military applications. We expect a corresponding decline in segment’s operating profit and operating margin to increase substantially compared to ~~2019~~2020, driven by the impact offrom the ~~lower volumes, partially offset by~~higher sales volume, favorable product mix, productivity, ~~and cost reduction actions.~~

~~Engineered Materials~~

~~In 2020, we expect Engineered Materials sales to decline significantly compared to 2019, driven by lower recreational vehicle industry build rates resulting from~~carry-over savings primarily associated with COVID-19 related ~~factors; as a result, inclusive~~repositioning actions, and the absence of ~~cost reduction actions, segment operating profit~~restructuring and ~~operating margin will decline compared to 2019.~~acquisition-related costs.

~~MANAGEMENT’S~~

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

Results from Continuing Operations –– Three Month Periods Ended June 30

The following information should be read in conjunction with our condensed consolidated financial statements and related notes. All comparisons below refer to the second quarter ~~2020~~2021 versus the second quarter ~~2019,~~2020, unless otherwise specified.


	Second Quarter						Change
(dollars in millions)	2021			2020			$		%
Net sales	$	796.4		$	644.3		$	152.1	23.6	%
Operating profit	136.9			28.7			108.2		377.0	%
Acquisition-related and integration charges 1	—			2.3			(2.3)		NM
Restructuring and related charges, net 1	2.2			24.5			(22.3)		(91.0)	%
Operating margin	17.2		%	4.5		%
Other income (expense):
Interest income	0.4			0.3			0.1		33.3	%
Interest expense	(11.4)			(14.4)			3.0		20.8	%
Miscellaneous income, net	9.7			2.4			7.3		304.2	%
Total other expense	(1.3)			(11.7)			10.4		88.9	%
Income from continuing operations before income taxes	135.6			17.0			118.6		697.6	%
Provision for income taxes	24.9			3.6			21.3		591.7	%


Net income from continuing operations attributable to common shareholders	$	110.7		$	13.4		$	97.3	726.1	%


1Acquisition-related and integration charges and restructuring and related (gains) charges, net are included in operating profit and operating margin.

Second Quarter Change
(dollars in millions) 2020 2019 $ %
Net sales $ 677.9
$ 841.6
$ (163.7 ) (19.5 )%
Operating profit 30.5
122.8
(92.3 ) (75.2 )%
Acquisition-related and integration charges * 2.3
2.4
(0.1 ) (4.2 )%
Restructuring and related charges, net * 25.1
6.4
18.7
292.2 %
Operating margin 4.5 % 14.6 %

Other income (expense):

Interest income 0.3
0.7
(0.4 ) (57.1 )%
Interest expense (14.4 ) (11.4 ) (3.0 ) (26.3 )%
Miscellaneous income, net 2.5
6.4
(3.9 ) (60.9 )%
(11.6 ) (4.3 ) (7.3 ) (169.8 )%
Income before income taxes 18.9
118.5
(99.6 ) (84.1 )%
Provision for income taxes 4.1
27.5
(23.4 ) (85.1 )%
Net income before allocation to noncontrolling interests 14.8
91.0
(76.2 ) (83.7 )%
Less: Noncontrolling interest in subsidiaries’ earnings —
—
—
— %
Net income attributable to common shareholders $ 14.8
$ 91.0
$ (76.2 ) (83.7 )%
* Acquisition-related and integration charges and restructuring and related charges are included in operating profit and operating margin.

Sales ~~decreased~~increased by ~~$163.7~~$152.1 million, or ~~19.5%~~23.6%, to ~~$677.9~~$796.4 million in ~~2020.~~2021. Net sales related to operations outside the United States were ~~36.8%~~38.8% and ~~35.4%~~36.8% of total net sales for the quarters ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The year-over-year change in sales included:

~~a decrease~~•an increase in core sales of ~~$203.2~~$120.4 million, or ~~24.1%, driven by lower demand related to COVID-19;~~18.7%; and

~~unfavorable~~•favorable foreign currency translation of ~~$7.5~~$31.7 million, or ~~1.0%; and~~4.9%.

~~an increase in sales related to a benefit from acquisitions of $47.0~~Operating profit increased by $108.2 million, or ~~5.6%.~~

~~Operating profit decreased by $92.3 million, or 75.2%~~377.0%, to ~~$30.5~~$136.9 million in ~~2020.~~2021. The ~~decrease~~increase in operating profit reflected ~~lower~~higher operating profit ~~across all segments.~~in our Payment & Merchandising Technologies, Process Flow Technologies and Aerospace & Electronics segments, partially offset by higher corporate costs. Operating profit in the second quarter of 2021 included restructuring and related charges of $2.2 million and disposition costs of $0.8 million. Operating profit in the second quarter of 2020 included restructuring and related charges of ~~$25.1~~$24.5 million, primarily relating to workforce reductions initiated in response to COVID-19 and integration actions related to the Cummins-Allison acquisition. We expect recurring annualized pre-tax savings to approximate $80 million from these actions. Please refer to Part I, Note 14, “Restructuring” in the Notes to Consolidated Financial Statements for further discussion. We also recorded acquisition-related and integration charges of $2.3 million related to the Cummins-Allison and I&S&S acquisitions in the second quarter of 2020. ~~Operating profit in the second quarter of 2019 included restructuring and related charges of $6.4 million and acquisition-related and integration charges of $2.4 million.~~

Other ~~income (expense) increased $7.3~~expense decreased $10.4 million, or ~~169.8%~~88.9%, primarily reflecting ~~higher~~a gain on sale of property and lower interest expense ~~and~~resulting from the absence of ~~unrealized gains recognized~~interest paid for the 364-day credit facility that was paid in ~~2019 on marketable securities of $3.1 million.~~April 2021.

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 attributable to continuing operations for the three months ended June 30, ~~2020~~2021 is lower than the prior ~~year’s~~year’s comparable period primarily due to ~~the settlement of income~~higher tax ~~audits,~~credit utilization, partially offset by ~~a lower foreign~~the reversal of tax ~~credit utilization.~~accruals in the prior year related to an audit settlement.

Our effective tax ~~rate~~rates attributable to continuing operations for the three months ended June 30, ~~2020~~2021 is ~~higher~~lower than the statutory U.S. federal tax rate of 21% primarily due to ~~earnings in jurisdictions with statutory tax rates higher than the U.S. and certain expenses that are statutorily non-deductible for income tax purposes,~~excess share-based compensation benefits, partially offset by ~~the statutory U.S. deduction related to our non-U.S. subsidiaries’ income.~~state taxes.

~~MANAGEMENT’S~~

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

Comprehensive Income


	Three Months Ended
	June 30,
(in millions)	2021		2020
Net income before allocation to noncontrolling interests	$	138.3	$	14.8
Components of other comprehensive income, net of tax
Currency translation adjustment	7.6		17.2
Changes in pension and postretirement plan assets and benefit obligation, net of tax	5.2		3.6
Other comprehensive income, net of tax	12.8		20.8
Comprehensive income before allocation to noncontrolling interests	151.1		35.6
Less: Noncontrolling interests in comprehensive income	(0.1)		0.2
Comprehensive income attributable to common shareholders	$	151.2	$	35.4

Three Months Ended
June 30,
(in millions) 2020 2019
Net income before allocation to noncontrolling interests $ 14.8
$ 91.0
Components of other comprehensive income (loss), net of tax
Currency translation adjustment 17.2
4.7
Changes in pension and postretirement plan assets and benefit obligation, net of tax 3.6
1.9
Other comprehensive income (loss), net of tax 20.8
6.6
Comprehensive income before allocation to noncontrolling interests 35.6
97.6
Less: Noncontrolling interests in comprehensive income 0.2
—
Comprehensive income attributable to common shareholders $ 35.4
$ 97.6

For the three months ended June 30, ~~2020,~~2021, comprehensive income before allocations to noncontrolling interests was ~~$35.6~~$151.1 million compared to ~~$97.6~~$35.6 million in the same period of ~~2019.~~2020. The ~~$62.0~~$115.5 million ~~decrease~~increase was driven by ~~lower~~higher net income before allocation to noncontrolling interests of ~~$76.2~~$123.5 million, partially offset by a ~~$12.5~~$9.6 million year over year ~~favorable~~unfavorable impact of foreign currency translation adjustments, primarily related to the ~~British pound.~~

euro and Japanese yen.

~~MANAGEMENT’S~~

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

Segment Results of Operations - Three Month Periods Ended June 30

~~Fluid Handling~~Aerospace & Electronics


	Second Quarter						Change
(dollars in millions)	2021			2020			$		%
Net sales by product line:
Commercial Original Equipment	$	53.7		$	51.9		$	1.8	3.5	%
Military Original Equipment	62.8			65.5			(2.7)		(4.1)	%
Commercial Aftermarket Products	25.3			20.3			5.0		24.6	%
Military Aftermarket Products	15.7			19.7			(4.0)		(20.3)	%
Total net sales	$	157.5		$	157.4		$	0.1	0.1	%
Operating profit	$	30.8		$	19.5		$	11.3	57.9	%
Restructuring and related charges1	$	—		$	4.7		$	(4.7)	NM
Backlog	$	472.9		$	505.7		$	(32.8)	(6.5)	%
Operating margin	19.6		%	12.4		%
1 Restructuring and related charges are included in operating profit and operating margin.

Second Quarter Change
(dollars in millions) 2020 2019 $ %
Net sales by product line:

Process Valves and Related Products $ 160.8
$ 182.4
$ (21.6 ) (11.8 )%
Commercial Valves 58.3
83.6
(25.3 ) (30.3 )%
Pumps and Systems 20.2
24.6
(4.4 ) (17.9 )%
Total net sales $ 239.3
$ 290.6
$ (51.3 ) (17.7 )%
Operating profit $ 20.2
$ 37.3
$ (17.1 ) (45.8 )%
Acquisition-related and integration charges * $ 1.3
$ —
$ 1.3
NM
Restructuring and related charges * $ 5.2
$ 2.5
$ 2.7
108.0 %
Operating margin 8.4 % 12.8 %
* Acquisition-related and integration charges and restructuring and related charges are included in operating profit and operating margin.

~~Fluid Handling~~Aerospace & Electronics sales ~~decreased by $51.3~~increased $0.1 million, or ~~17.7%~~0.1%, to ~~$239.3~~$157.5 million in 2020, driven by lower core sales of $61.9 million, or 21.4%, and unfavorable foreign currency translation of $4.5 million, or 1.5%, partially offset by a benefit from an acquisition of $15.1 million, or 5.2%.2021.

Sales of Process Valves and Related Products decreased by $21.6 million, or 11.8%, to $160.8 million in 2020. The decrease reflected lower core sales of $34.4 million, or 18.8%, and unfavorable foreign currency translation of $2.3 million, or 1.3%, primarily due to the euro weakening against the U.S. dollar, partially offset by a benefit from the acquisition of I&S of $15.1 million, or 8.3%. The core sales decline primarily reflected a broad-based decline in demand related to impacts from COVID-19, including sharply lower oil and gas prices.

•Sales of Commercial ~~Valves~~Original Equipment increased $1.8 million, or 3.5%, to $53.7 million in 2021, reflecting higher shipments as the industry begins to recover from the COVID-19 related slowdown.

•Sales of Military Original Equipment decreased by$2.7 million, or 4.1%, to $62.8 million in 2021, primarily reflecting challenging comparisons to particularly strong sales in the same period last year.

•Sales of Commercial Aftermarket Products increased $5.0 million, or 24.6%, to $25.3 million in 2021, reflecting demand from improving air traffic as the airline industry begins to recover from the COVID-19 related slowdown.

•Sales of Military Aftermarket Products decreased $4.0 million, or ~~30.3%~~20.3%, to ~~$58.3~~$15.7 million in ~~2020,~~2021, primarily ~~driven~~reflecting challenging comparisons to particularly strong sales in the same period last year.

Aerospace & Electronics operating profit increased by ~~a core sales decrease of $23.1~~$11.3 million, or 27.7%, and unfavorable foreign currency translation of $2.2 million, or 2.6%, as the Canadian dollar and British pound weakened against the U.S. dollar. The core sales decline reflected a broad-based decline in demand related to COVID-19 across all geographies.

~~Sales of Pumps & Systems decreased by $4.4 million, or 17.9%~~57.9%, to ~~$20.2~~$30.8 million in ~~2020. The decrease~~2021, primarily ~~reflected~~as a ~~broad-based decline across end markets related to COVID-19.~~result of restructuring savings from 2020 repositioning actions and the non-recurrence of repositioning charges.

~~Fluid Handling operating profit decreased by $17.1 million, or 45.8%, to $20.2 million in 2020. The decrease primarily reflected lower volumes, partially offset by productivity.~~

~~The Fluid Handling segment backlog was $298.6 million as of June 30, 2020, compared with $267.0 million as of December 31, 2019 and $274.9 million as of June 30, 2019.~~

~~MANAGEMENT’S~~

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

Process Flow Technologies

~~Payment & Merchandising Technologies~~


	Second Quarter						Change
(dollars in millions)	2021			2020			$		%
Net sales by product line:
Process Valves and Related Products	$	184.3		$	160.8		$	23.5	14.6	%
Commercial Valves	98.2			58.3			39.9		68.4	%
Pumps and Systems	28.2			20.2			8.0		39.6	%
Total net sales	$	310.7		$	239.3		$	71.4	29.8	%
Operating profit	$	46.5		$	20.2		$	26.3	130.2	%
Acquisition-related and integration charges 1	$	—		$	1.3		$	(1.3)	NM
Restructuring and related charges, net 1	$	2.4		$	5.2		$	(2.8)	(53.8)	%
Backlog	$	344.1		$	298.6		$	45.5	15.2	%
Operating margin	15.0		%	8.4		%
1 Acquisition-related and integration charges and restructuring and related charges, net are included in operating profit and operating margin.

Second Quarter Change
(dollars in millions) 2020 2019 $ %
Net sales by product line:
Payment Acceptance and Dispensing Products $ 113.5
$ 154.0
$ (40.5 ) (26.3 )%
Banknotes and Security Products 106.7
88.5
18.2
20.6 %
Merchandising Equipment 27.4
48.5
(21.1 ) (43.5 )%
Total net sales 247.6
$ 291.0
(43.4 ) (14.9 )%
Operating profit $ 2.0
$ 46.5
$ (44.5 ) (95.7 )%
Acquisition-related and integration charges * $ 1.0
$ 0.4
$ 0.6
150.0 %
Restructuring and related charges, net * $ 14.6
$ 2.2
$ 12.4
563.6 %
Operating margin 0.8 % 16.0 %
* Acquisition-related and integration charges and restructuring and related charges, net are included in operating profit and operating margin.

~~Payment & Merchandising~~Process Flow Technologies sales ~~decreased $43.4~~increased by $71.4 million, or ~~14.9%~~29.8%, to ~~$247.6~~$310.7 million in ~~2020, reflecting lower~~2021, driven by higher core sales of ~~$72.3~~$52.7 million, or ~~24.8%~~22.0%, and ~~unfavorable~~favorable foreign currency translation of ~~$2.9~~$18.7 million, or ~~1.0%~~7.8%.

•Sales of Process Valves and Related Products increased by $23.5 million, or 14.6%, ~~partially offset~~to $184.3 million in 2021. The increase reflected higher core sales of $16.4 million, or 10.2%, and favorable foreign currency translation of $7.1 million, or 4.4%, primarily due to the euro strengthening against the U.S. dollar. The higher core sales primarily reflected the timing of services provided to support nuclear outages compared to the prior year, and improving demand across Chemical and General Industrial end markets.

•Sales of Commercial Valves increased by $39.9 million, or 68.4%, to $98.2 million in 2021, primarily driven by a ~~benefit from an acquisition,~~core sales increase of ~~$31.8~~$28.6 million, or ~~10.9%.~~49.0%, and favorable foreign currency translation of $11.3 million, or 19.4%, as the Canadian dollar and British pound strengthened against the U.S. dollar. The higher core sales reflected broad-based improvement in demand across Canadian, U.K. and Middle East non-residential construction markets.

•Sales of Pumps & Systems increased by $8.0 million, or 39.6%, to $28.2 million in 2021, reflecting broad-based improvement in demand across municipal, non-residential construction, and military end markets.

Process Flow Technologies operating profit increased by $26.3 million, or 130.2%, to $46.5 million in 2021. The increase primarily reflected the impact of higher sales volumes.

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

Payment & Merchandising Technologies


	Second Quarter						Change
(dollars in millions)	2021			2020			$		%
Net sales by product line:
Payment Acceptance and Dispensing Products 1	$	197.3		$	140.9		$	56.4	40.0	%
Banknotes and Security Products	130.9			106.7			24.2		22.7	%
Total net sales	$	328.2		$	247.6		$	80.6	32.6	%
Operating profit	$	77.9		$	2.0		$	75.9	NM
Acquisition-related and integration charges 2	$	—		$	1.0		$	(1.0)	NM

Restructuring and related (gains) charges, net 2	$	(0.2)		$	14.6		$	(14.8)	NM
Backlog	$	374.7		$	285.5		$	89.2	31.2	%
Operating margin	23.7		%	0.8		%
1 As a result of the third quarter 2020 internal merger of the CMS business into the vending vertical of the CPI business, Payment Acceptance and Dispensing Products now includes Merchandising Equipment. The prior period has been reclassified to conform to the current period presentation.
2 Acquisition-related and integration charges and restructuring and related (gains) charges, net are included in operating profit and operating margin.

Payment & Merchandising Technologies sales increased $80.6 million, or 32.6%, to $328.2 million in 2021, driven by higher core sales of $67.9 million, or 27.5%, and favorable foreign currency translation of $12.7 million, or 5.1%.

•Sales of Payment Acceptance and Dispensing Products ~~decreased $40.5~~increased $56.4 million, or ~~26.3%~~40.0%, to ~~$113.5~~$197.3 million in 2020. The decrease reflected lower core sales of $71.6 million, or 46.4%, and unfavorable foreign currency translation of $0.7 million, or 0.5%. The core sales decrease reflected lower sales to all vertical markets driven largely by COVID-19 related demand impacts. The decreases were partially offset by the benefit of the December 2019 acquisition of Cummins-Allison of $31.8 million, or 20.6%.

~~Sales of Banknotes and Security Products increased $18.2 million, or 20.6%, to $106.7 million.~~2021. The increase reflected higher core sales of ~~$20.2~~$50.9 million, or ~~22.9%~~36.1%, ~~partially offset by unfavorable~~and favorable foreign currency translation of ~~$2.0~~$5.5 million, or ~~2.3%~~3.9%, asprimarily due to the ~~euro weakened~~British pound strengthening against the U.S. dollar. The core sales increase primarily reflected higher sales to ~~international~~Gaming, Retail and Vending customers.

•Sales of ~~Merchandising Equipment decreased $21.1~~Banknotes and Security Products increased $24.2 million, or ~~43.5%~~22.7%, to ~~$27.4~~$130.9 million in ~~2020, reflecting lower~~2021. The increase reflected higher core sales ~~related~~of $17.0 million, or 16.0%, and favorable foreign currency translation of $7.2 million, or 6.7%, as the euro strengthened against the U.S. dollar. The core sales increase primarily reflected higher sales to ~~demand impacts from COVID-19.~~the U.S. Government, and to a lesser extent, higher sales to international customers.

Payment && Merchandising Technologies operating profit ~~decreased~~increased by ~~$44.5~~$75.9 million ~~or 95.7%,~~ to ~~$2.0~~$77.9 million in ~~2020.~~2021. The ~~decrease was driven~~increase primarily ~~by lower~~reflected the impact of higher sales volumes, and to a lesser extent, ~~unfavorable~~favorable mix, the non-recurrence of repositioning charges and ~~higher~~ restructuring ~~costs, partially offset by productivity.~~savings from 2020 repositioning actions.

~~The Payment & Merchandising Technologies segment backlog was $285.5 million as of June 30, 2020, compared with $311.4 million as of December 31, 2019 and $286.8 million as of June 30, 2019.~~

~~MANAGEMENT’S~~

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

~~Aerospace & Electronics~~

Second Quarter Change
(dollars in millions) 2020 2019 $ %
Net sales by product line:

Commercial Original Equipment $ 51.9
$ 91.3
$ (39.4 ) (43.2 )%
Military Original Equipment 65.5
55.4
10.1
18.2 %
Commercial Aftermarket Products 20.3
41.4
(21.1 ) (51.0 )%
Military Aftermarket Products 19.7
16.4
3.3
20.1 %
Total net sales $ 157.4
$ 204.5
$ (47.1 ) (23.0 )%
Operating profit $ 19.5
$ 49.4
$ (29.9 ) (60.5 )%
Restructuring and related charges* $ 4.7
$ 1.7
$ 3.0
176.5 %
Operating margin 12.4 % 24.2 %
* Restructuring and related charges are included in operating profit and operating margin.

~~Aerospace & Electronics sales decreased $47.1 million, or 23.0%, to $157.4 million in 2020.~~

~~Sales of Commercial Original Equipment decreased by $39.4 million, or 43.2%, to $51.9 million in 2020, primarily reflecting lower aircraft build rates as a result of COVID-19.~~

~~Sales of Military Original Equipment increased by $10.1 million, or 18.2%, to $65.5 million in 2020, reflecting broad-based military demand strength across solutions.~~

Sales of Commercial Aftermarket Products decreased by $21.1 million, or 51.0%, to $20.3 million in 2020, reflecting lower sales of commercial spares as airlines reduced flight schedules in response to COVID-19.

~~Sales of Military Aftermarket Products increased by $3.3 million, or 20.1%, to $19.7 million in 2020, primarily reflecting higher demand for military spares.~~

~~Aerospace & Electronics operating profit decreased by $29.9 million, or 60.5%, to $19.5 million in 2020, primarily as a result of lower volumes, partially offset by productivity.~~

~~The Aerospace & Electronics segment backlog was $505.7 million as of June 30, 2020, compared with $567.4 million as of December 31, 2019 and $502.8 million as of June 30, 2019.~~

~~Engineered Materials~~

Second Quarter Change
(dollars in millions) 2020 2019 $ %
Net sales by product line:
FRP- Recreational Vehicles $ 9.7
$ 22.2
$ (12.5 ) (56.3 )%
FRP- Building Products 19.4
24.0
(4.6 ) (19.2 )%
FRP- Transportation 4.5
9.3
(4.8 ) (51.6 )%
Total net sales $ 33.6
$ 55.5
$ (21.9 ) (39.5 )%
Operating profit $ 1.8
$ 7.5
$ (5.7 ) (76.0 )%
Restructuring and related charges* $ 0.6
$ —
$ 0.6
NM
Operating margin 5.4 %
13.5 %
* Restructuring and related charges are included in operating profit and operating margin.

Engineered Materials sales decreased by $21.9 million, or 39.5%, to $33.6 million in 2020, primarily resulting from lower sales to recreational vehicle, transportation and building products customers primarily reflecting COVID-19 related factors. Engineered Materials operating profit decreased by $5.7 million, or 76.0%, to $1.8 million in 2020, primarily reflecting the impact from lower sales volumes.

~~The Engineered Materials segment backlog was $10.1 million as of June 30, 2020, compared with $9.4 million as of December 31, 2019 and $11.5 million as of June 30, 2019.~~

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

Results from Continuing Operations –– Six Month Periods Ended June 30

The following information should be read in conjunction with our condensed consolidated financial statements and related notes. All comparisons below refer to the first six months of ~~2020~~2021 versus the first six months of ~~2019,~~2020, unless otherwise specified.


	Year-to-Date						Change
(dollars in millions)	2021			2020			$		%
Net sales	$	1,575.9		$	1,391.1		$	184.8	13.3	%
Operating profit	276.9			110.4			166.5		150.8	%
Acquisition-related and integration charges 1	—			7.5			(7.5)		NM
Restructuring and related (gains) charges, net 1	(9.5)			24.6			(34.1)		(138.6)	%
Operating margin	17.6		%	7.9		%
Other income (expense):
Interest income	0.9			0.7			0.2		28.6	%
Interest expense	(25.0)			(26.9)			1.9		7.1	%
Miscellaneous income, net	13.6			6.2			7.4		119.4	%
Total other expense	(10.5)			(20.0)			9.5		47.5	%
Income from continuing operations before income taxes	266.4			90.4			176.0		194.7	%
Provision for income taxes	52.3			19.3			33.0		171.0	%


Net income from continuing operations attributable to common shareholders	$	214.1		$	71.1		$	143.0	201.1	%


1Acquisition-related and integration charges and restructuring and related (gains) charges, net are included in operating profit and operating margin.

Year-to-Date Change
(dollars in millions) 2020 2019 $ %
Net sales $ 1,475.7
$ 1,673.3
$ (197.6 ) (11.8 )%
Operating profit 119.1
236.5
(117.4 ) (49.6 )%
Acquisition-related and integration charges * 7.5
3.5
4.0
114.3 %
Restructuring and related charges, net * 25.2
11.7
13.5
115.4 %
Operating margin 8.1 % 14.1 %

Other income (expense):

Interest income 0.7
1.3
(0.6 ) (46.2 )%
Interest expense (26.9 ) (23.3 ) (3.6 ) (15.5 )%
Miscellaneous income, net 6.3
8.4
(2.1 ) (25.0 )%
(19.9 ) (13.6 ) (6.3 ) (46.3 )%
Income before income taxes 99.2
222.9
(123.7 ) (55.5 )%
Provision for income taxes 21.6
49.4
(27.8 ) (56.3 )%
Net income before allocation to noncontrolling interests 77.6
173.5
(95.9 ) (55.3 )%
Less: Noncontrolling interest in subsidiaries’ earnings —
0.1
(0.1 ) NM
Net income attributable to common shareholders $ 77.6
$ 173.4
$ (95.8 ) (55.2 )%
* Acquisition-related and integration charges and restructuring and related charges, net are included in operating profit and operating margin.

Sales ~~decreased~~increased by ~~$197.6~~$184.8 million, or ~~11.8%~~13.3%, to ~~$1,475.7~~$1,575.9 million in ~~2020.~~2021. Net sales related to operations outside the United States were ~~36.3%~~39.4% and ~~35.2%~~36.3% of total net sales for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The year-over-year change in sales included:

~~a decrease~~•an increase in core sales of ~~$283.5~~$123.0 million, or ~~16.9%, primarily due to lower demand related to COVID-19;~~8.8%;

~~unfavorable~~•favorable foreign currency translation of ~~$14.6~~$56.8 million, or ~~0.9%~~4.1%; and

•an increase in sales related to a benefit from ~~acquisitions~~the January 2020 I&S acquisition of ~~$100.5~~$5.0 million, or ~~6.0%~~0.4%.

Operating profit ~~decreased~~increased by ~~$117.4~~$166.5 million, or ~~49.6%~~150.8%, to ~~$119.1~~$276.9 million in ~~2020.~~2021. The ~~decrease~~increase in operating profit ~~primarily~~ reflected ~~the lower~~higher operating profit in ~~each~~our Payment & Merchandising Technologies and Process Flow Technologies segments, partially offset by Aerospace & Electronics segment and higher corporate costs. Operating profit in the first six months of ~~our segments.~~2021 included net restructuring and related gains of $9.5 million and disposition costs of $0.8 million. Operating profit in the first six months of 2020 included restructuring and related charges ~~net~~ of ~~$25.2~~$24.6 million and acquisition-related and integration charges of $7.5 million. ~~Operating profit in the first six months of 2019 included restructuring and related charges of $11.7 million and acquisition-related and integration charges of $3.5 million.~~

Other ~~income (expense)~~expense decreased ~~$6.3~~$9.5 million, or ~~46.3%~~47.5%, primarily reflecting ~~higher~~a gain on sale of a property, a curtailment gain related to our pension plan and lower interest expense ~~and~~resulting from the absence of ~~$3.1 million of unrealized gains recognized~~interest paid for the 364-day credit facility that was paid in ~~2019 on marketable securities.~~April 2021.

Our effective tax rate attributable to continuing operations for the six months ended June 30, ~~2020~~2021 is lower than the prior ~~year’s~~year’s comparable period primarily due to ~~the settlement of income~~higher tax ~~audits,~~credit utilization, partially offset by ~~a lower foreign~~the reversal of tax ~~credit utilization.~~accruals in the prior year related to an audit settlement.

Our effective tax rate attributable to continuing operations for the six months ended June 30, ~~2020~~2021 is ~~higher~~lower than the statutory U.S. federal tax rate of 21% primarily due to ~~earnings in jurisdictions with statutory tax rates higher than the U.S. and certain expenses that are statutorily non-deductible for income tax purposes, partially offset by~~ excess share-based compensation benefits, ~~and the statutory U.S. deduction related to our non-U.S. subsidiaries’ income.~~

partially offset by state taxes.

~~MANAGEMENT’S~~

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

Comprehensive Income


	Six Months Ended
	June 30,
(in millions)	2021		2020
Net income before allocation to noncontrolling interests	$	246.7	$	77.6
Components of other comprehensive income (loss), net of tax
Currency translation adjustment	(27.3)		(28.0)
Changes in pension and postretirement plan assets and benefit obligation, net of tax	10.1		7.1
Other comprehensive loss, net of tax	(17.2)		(20.9)
Comprehensive income before allocation to noncontrolling interests	229.5		56.7
Less: Noncontrolling interests in comprehensive income	0.7		(0.1)
Comprehensive income attributable to common shareholders	$	228.8	$	56.8

Six Months Ended
June 30,
(in millions) 2020 2019
Net income before allocation to noncontrolling interests $ 77.6
$ 173.5
Components of other comprehensive income (loss), net of tax
Currency translation adjustment (28.0 ) 3.9
Changes in pension and postretirement plan assets and benefit obligation, net of tax 7.1
4.8
Other comprehensive income (loss), net of tax (20.9 ) 8.7
Comprehensive income before allocation to noncontrolling interests 56.7
182.2
Less: Noncontrolling interests in comprehensive income (0.1 ) (0.1 )
Comprehensive income attributable to common shareholders $ 56.8
$ 182.3

For the six months ended June 30, ~~2020,~~2021, comprehensive income before allocations to noncontrolling interests was ~~$56.7~~$229.5 million compared to ~~$182.2~~$56.7 million in the same period of ~~2019.~~2020. The ~~$125.5~~$172.8 million ~~decrease~~increase was primarily driven by ~~lower~~higher net income before allocation to noncontrolling interests of ~~$95.9 million and a $31.9 million unfavorable impact of foreign currency translation adjustments primarily related to the British pound and Canadian dollar.~~$169.1 million.

~~MANAGEMENT’S~~

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

Segment Results of Operations - Six Month Periods Ended June 30

~~Fluid Handling~~Aerospace & Electronics


	Year-to-Date						Change
(dollars in millions)	2021			2020			$		%
Net sales by product line:
Commercial Original Equipment	$	108.3		$	132.5		$	(24.2)	(18.3)	%
Military Original Equipment	125.6			125.9			(0.3)		(0.2)	%
Commercial Aftermarket Products	44.8			54.2			(9.4)		(17.3)	%
Military Aftermarket Products	32.8			37.7			(4.9)		(13.0)	%
Total net sales	$	311.5		$	350.3		$	(38.8)	(11.1)	%
Operating profit	$	56.8		$	63.3		$	(6.5)	(10.3)	%
Restructuring and related charges1	$	—		$	4.7		$	(4.7)	NM
Operating margin	18.2		%	18.1		%
1 Restructuring and related charges are included in operating profit and operating margin.

Year-to-Date Change
(dollars in millions) 2020 2019 $ %
Net sales by product line:

Process Valves and Related Products $ 317.9
$ 350.4
$ (32.5 ) (9.3 )%
Commercial Valves 134.1
164.4
(30.3 ) (18.4 )%
Pumps and Systems 43.9
49.5
(5.6 ) (11.3 )%
Total net sales $ 495.9
$ 564.3
$ (68.4 ) (12.1 )%
Operating profit $ 48.2
$ 71.4
$ (23.2 ) (32.5 )%
Acquisition-related and integration charges * $ 3.2
$ —
$ 3.2
NM
Restructuring and related charges * $ 6.6
$ 4.7
$ 1.9
40.4 %
Operating margin 9.7 % 12.7 %
* Acquisition-related and integration charges and restructuring and related charges are included in operating profit and operating margin.

Fluid Handling sales decreased by $68.4 million, or 12.1%, to $495.9 million, driven by lower core sales of $85.5 million, or 15.2%, and unfavorable foreign currency translation of $7.5 million, or 1.3%, partially offset by a benefit from an acquisition of $24.6 million, or 4.4%.

Sales of Process Valves and Related Products decreased by $32.5 million, or 9.3%, to $317.9 million in 2020. The decrease reflected lower core sales of $52.7 million, or 15.0%, and unfavorable foreign currency translation of $4.4 million, or 1.3%, primarily due to the euro weakening against the U.S. dollar, partially offset by a benefit from the acquisition of I&S of $24.6 million, or 7.0%. The core sales decline reflected a broad-based decline in demand related largely to impacts from COVID-19, including sharply lower oil and gas prices, and to a lesser extent, the impact of supply chain disruptions related to COVID-19.

Sales of Commercial Valves decreased by $30.3 million, or 18.4%, to $134.1 million in 2020, primarily driven by a core sales decrease of $27.1 million, or 16.6%, and unfavorable foreign currency translation of $3.1 million, or 1.9%, as the Canadian dollar and British pound weakened against the U.S. dollar. The core sales decline reflected a broad-based decline in demand related to COVID-19 across all geographies.

~~Sales of Pumps and Systems decreased by $5.6 million, or 11.3%, to $43.9 million in 2020. The decrease primarily reflected lower sales to military customers.~~

~~Fluid Handling operating profit decreased by $23.2 million, or 32.5%, to $48.2 million in 2020. The decrease primarily reflected lower volumes, partially offset by productivity.~~

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

~~Payment & Merchandising Technologies~~

Year-to-Date Change
(dollars in millions) 2020 2019 $ %
Net sales by product line:
Payment Acceptance and Dispensing Products $ 280.2
$ 312.7
$ (32.5 ) (10.4 )%
Banknotes and Security Products 200.8
187.1
13.7
7.3 %
Merchandising Equipment 63.9
95.0
(31.1 ) (32.7 )%
Total net sales $ 544.9
$ 594.8
$ (49.9 ) (8.4 )%
Operating profit $ 28.4
$ 89.7
$ (61.3 ) (68.3 )%
Acquisition-related and integration charges * $ 4.1
$ 1.5
$ 2.6
173.3 %
Restructuring and related charges, net * $ 13.3
$ 4.8
$ 8.5
177.1 %
Operating margin 5.2 % 15.1 %
* Acquisition-related and integration charges and restructuring and related charges, net are included in operating profit and operating margin.

Payment & Merchandising Technologies sales decreased $49.9 million, or 8.4%, to $544.9 million in 2020, reflecting lower core sales of $119.0 million, or 20.0%, and unfavorable foreign currency translation of $6.9 million, or 1.2%, partially offset by a benefit from an acquisition, of $76.0 million, or 12.8%.

Sales of Payment Acceptance and Dispensing Products decreased $32.5 million, or 10.4%, to $280.2 million in 2020. The decrease reflected lower core sales of $107.0 million, or 34.2%, and unfavorable foreign currency translation of $1.5 million, or 0.5%, as the British pound weakened against the U.S. dollar, partially offset by a benefit from the December 2019 acquisition of Cummins-Allison of $76.0 million, or 24.3%. The core sales decrease reflected lower sales to all vertical markets driven largely by COVID-19 related demand impacts.

Sales of Banknotes and Security Products increased $13.7 million, or 7.3%, to $200.8 million. The increase reflected higher core sales of $18.8 million, or 10.0%, and unfavorable foreign currency translation of $5.1 million, or 7.3%, as the euro weakened against the U.S. dollar. The core sales increase primarily reflected higher sales to international customers, partially offset by lower sales to the U.S. Government.

~~Sales of Merchandising Equipment decreased $31.1 million, or 32.7%, to $63.9 million in 2020, reflecting lower sales largely related to demand impacts of COVID-19.~~

Payment & Merchandising Technologies operating profit decreased by $61.3 million, or 68.3%, to $28.4 million in 2020.The decrease was driven primarily by lower volumes and, to a lesser extent, unfavorable mix, partially offset by strong productivity.

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

Aerospace ~~& Electronics~~

Year-to-Date Change
(dollars in millions) 2020 2019 $ %
Net sales by product line:

Commercial Original Equipment $ 132.5
$ 181.7
$ (49.2 ) (27.1 )%
Military Original Equipment 125.9
106.9
19.0
17.8 %
Commercial Aftermarket 54.2
79.6
(25.4 ) (31.9 )%
Military Aftermarket 37.7
30.9
6.8
22.0 %
Total net sales $ 350.3
$ 399.1
$ (48.8 ) (12.2 )%
Operating profit $ 63.3
$ 94.2
$ (30.9 ) (32.8 )%
Restructuring and related charges* $ 4.7
$ 2.2
$ 2.5
113.6 %
Operating margin 18.1 %
23.6 %
* Restructuring and related charges are included in operating profit and operating margin.

~~Aerospace &~~& Electronics sales decreased ~~$48.8~~$38.8 million, or ~~12.2%~~11.1%, to ~~$350.3~~$311.5 million in ~~2020.~~2021.

•Sales of Commercial Original Equipment decreased ~~by $49.2~~$24.2 million, or ~~27.1%~~18.3%, to ~~$132.5~~$108.3 million in ~~2020, primarily~~2021, reflecting lower aircraft build rates as a result of ~~COVID-19, and to a lesser extent, the impact of Boeing’s 737 MAX production pause.~~COVID-19.

•Sales of Military Original Equipment ~~increased by $19.0~~decreased $0.3 million, or ~~17.8%~~0.2%, to ~~$125.9~~$125.6 million in ~~2020, primarily reflecting higher sales of power products.~~2021.

•Sales of Commercial Aftermarket ~~products~~Products decreased ~~by $25.4~~$9.4 million, or ~~31.9%~~17.3%, to ~~$54.2~~$44.8 million in ~~2020,~~2021, reflecting lower sales of commercial spares as airlines reduced flight schedules in response to COVID-19.

•Sales of Military Aftermarket ~~increased by $6.8~~Products decreased $4.9 million, or ~~22.0%~~13.0%, to ~~$37.7~~$32.8 million in ~~2020,~~2021, primarily reflecting ~~higher~~challenging comparisons to particularly strong sales ~~of military spares.~~in the same period last year.

Aerospace && Electronics operating profit decreased by ~~$30.9~~$6.5 million, or ~~32.8%~~10.3%, to ~~$63.3~~$56.8 million in ~~2020,~~2021, primarily as a result of lower ~~volumes.~~sales volumes, partially offset by savings from 2020 repositioning actions.

~~Engineered Materials~~

Year-to-Date Change
(dollars in millions) 2020 2019 $ %
Net sales by product line:
FRP- Recreational Vehicles $ 28.5
$ 48.7
$ (20.2 ) (41.5 )%
FRP- Building Products 44.3
47.7
(3.4 ) (7.1 )%
FRP- Transportation 11.8
18.7
(6.9 ) (36.9 )%
Total net sales $ 84.6
$ 115.1
$ (30.5 ) (26.5 )%
Operating profit $ 8.7
$ 16.9
$ (8.2 ) (48.5 )%
Restructuring and related charges* $ 0.6
$ —
$ 0.6
NM
Operating margin 10.3 % 14.7 %
* Restructuring and related charges are included in operating profit and operating margin.

Engineered Materials sales decreased by $30.5 million, or 26.5%, to $84.6 million in 2020 primarily resulting from lower sales to recreational vehicle, transportation and building products customers primarily reflecting COVID-19 related factors. Engineered Materials operating profit decreased by $8.2 million, or 48.5%, to $8.7 million in 2020, primarily reflecting lower sales volume.

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

Process Flow Technologies


	Year-to-Date						Change
(dollars in millions)	2021			2020			$		%
Net sales by product line:
Process Valves and Related Products	$	358.6		$	317.9		$	40.7	12.8	%
Commercial Valves	187.7			134.1			53.6		40.0	%
Pumps and Systems	52.5			43.9			8.6		19.6	%
Total net sales	$	598.8		$	495.9		$	102.9	20.8	%
Operating profit	$	96.6		$	48.2		$	48.4	100.4	%
Acquisition-related and integration charges 1	$	—		$	3.2		$	(3.2)	NM
Restructuring and related (gains) charges 1	$	(8.8)		$	6.6		$	(15.4)	NM
Operating margin	16.1		%	9.7		%
1 Acquisition-related and integration charges and restructuring and related (gains) charges are included in operating profit and operating margin.

Process Flow Technologies sales increased by $102.9 million, or 20.8%, to $598.8 million in 2021, driven by higher core sales of $67.4 million, or 13.6%, favorable foreign currency translation of $30.5 million, or 6.2%, and a benefit from the January 2020 acquisition of I&S of $5.0 million, or 1.0%.

•Sales of Process Valves and Related Products increased by $40.7 million, or 12.8%, to $358.6 million in 2021. The increase reflected higher core sales of $22.3 million, or 7.0%, favorable foreign currency translation of $13.4 million, or 4.2%, primarily due to the euro strengthening against the U.S. dollar, and a benefit from the acquisition of I&S of $5.0 million, or 1.6%. The higher core sales primarily reflected the timing of services provided to support nuclear outages compared to the prior year.

•Sales of Commercial Valves increased by $53.6 million, or 40.0%, to $187.7 million in 2021, primarily driven by a core sales increase of $36.9 million, or 27.5%, and favorable foreign currency translation of $16.7 million, or 12.5%, as the Canadian dollar and British pound strengthened against the U.S. dollar. The higher core sales primarily reflected higher demand in Canadian, and, to a lesser extent, U.K., non-residential construction markets.

•Sales of Pumps & Systems increased by $8.6 million, or 19.6%, to $52.5 million in 2021, primarily reflecting higher demand from municipal and non-residential construction end markets.

Process Flow Technologies operating profit increased by $48.4 million, or 100.4%, to $96.6 million in 2021. The increase primarily reflected the impact of higher sales volumes, a gain on the sale of real estate related to prior repositioning actions, productivity benefits, and savings from 2020 repositioning actions.

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

Payment & Merchandising Technologies


	Year-to-Date						Change
(dollars in millions)	2021			2020			$		%
Net sales by product line:
Payment Acceptance and Dispensing Products 1	$	382.3		$	344.1		$	38.2	11.1	%
Banknotes and Security Products	283.3			200.8			82.5		41.1	%
Total net sales	$	665.6		$	544.9		$	120.7	22.2	%
Operating profit	$	163.7		$	28.4		$	135.3	NM
Acquisition-related and integration charges 2	$	—		$	4.1		$	(4.1)	NM
Restructuring and related (gains) charges, net 2	$	(0.7)		$	13.3		$	(14.0)	NM

Operating margin	24.6		%	5.2		%
1 As a result of the third quarter 2020 internal merger of the CMS business into the vending vertical of the CPI business, Payment Acceptance and Dispensing Products now includes Merchandising Equipment. The prior period has been reclassified to conform to the current period presentation.
2 Acquisition-related and integration charges and restructuring and related (gains) charges, net are included in operating profit and operating margin.

Payment & Merchandising Technologies sales increased $120.7 million, or 22.2%, to $665.6 million in 2021, driven by higher core sales of $94.7 million, or 17.4%, and favorable foreign currency translation of $26.0 million, or 4.8%.

•Sales of Payment Acceptance and Dispensing Products increased $38.2 million, or 11.1%, to $382.3 million in 2021. The increase reflected higher core sales of $28.8 million, or 8.4%, and favorable foreign currency translation of $9.4 million, or 2.7%, primarily reflecting the strengthening of the British pound against the U.S. dollar. The core sales increase primarily reflected higher sales to gaming and retail customers.

•Sales of Banknotes and Security Products increased $82.5 million, or 41.1%, to $283.3 million in 2021. The increase reflected higher core sales of $65.9 million, or 32.8%, and favorable foreign currency translation of $16.6 million, or 8.3%, as the euro strengthened against the U.S. dollar. The core sales increase reflected substantially higher sales to the U.S. Government, and to a lesser extent, to international customers.

Payment & Merchandising Technologies operating profit increased by $135.3 million to $163.7 million in 2021. The increase primarily reflected the impact of higher sales volumes, favorable mix and restructuring savings from 2020 repositioning actions.

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

Liquidity and Capital Resources


	Six Months Ended
	June 30,
(in millions)	2021		2020
Net cash (used for) provided by:
Operating activities from continuing operations	$	197.5	$	75.6
Investing activities from continuing operations	39.5		(182.9)
Financing activities from continuing operations	(405.2)		314.9
Discontinued operations	8.4		0.8
Effect of foreign currency exchange rate changes on cash and cash equivalents	(4.5)		(10.2)
(Decrease) increase in cash and cash equivalents	$	(164.3)	$	198.2

Six Months Ended
June 30,
(in millions) 2020 2019
Net cash provided by (used for):
Operating activities $ 76.6
$ 52.5
Investing activities (183.1 ) (44.2 )
Financing activities 314.9
(45.3 )
Effect of foreign currency exchange rate changes on cash and cash equivalents (10.2 ) 0.6
Increase (decrease) in cash and cash equivalents $ 198.2
$ (36.4 )

Our operating philosophy is to deploy cash provided from operating activities, when appropriate, to provide value to shareholders by reinvesting in existing businesses, by making acquisitions that will strengthen and complement our portfolio, by 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 transaction.

On April 16, 2020, to enhance financial flexibility and maintain maximum liquidity in response to the uncertainty in the global markets resulting from the COVID-19 pandemic, we entered into a senior unsecured 364-day credit facility (the “364-Day Credit Agreement”). We borrowed term loans denominated in dollars in an aggregate principal amount equal to $300 million, and term loans denominated in euros in an aggregate principal amount equal to €40 million under the 364-Day Credit Agreement. Our current cash balance, together with cash we expect to generate from future operations ~~(inclusive of actions we are taking to reduce costs and spending across our organization in response to the COVID-19 pandemic)~~ along with our commercial paper program or borrowings available under our revolving credit facility ~~and 364-Day Credit Agreement,~~ 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, we believe our investment grade credit ratings afford us adequate access to public and private debt markets.

In July 2021, we entered into a $650 million, 5-year Revolving Credit Agreement, which replaced the existing $550 million revolving credit facility. We also increased the size of our Commercial Paper Program (“CP Program”) to permit the issuance of short-term, unsecured commercial paper notes in an aggregate principal amount outstanding not to exceed $650 million at any time (up from $550 million, previously). Please see Note 16 for additional details.

In April 2020, to enhance financial flexibility and maintain maximum liquidity in response to the uncertainty in the global markets resulting from the COVID-19 pandemic, we entered into a senior unsecured 364-day credit facility (the “364-Day Credit Agreement”). On April 15, 2021, we repaid the amount outstanding under the 364-Day Credit Agreement with cash on hand and the issuance of commercial paper.

Operating Activities

Cash provided by operating activities from continuing operations was ~~$76.6~~$197.5 million in the first six months of ~~2020,~~2021, compared to ~~$52.5~~$75.6 million during the same period last year. The increase in cash provided by operating activities from continuing operations was primarily driven by higher net income and lower working capital ~~requirements due to lower sales,~~levels, partially offset by ~~lower net income.~~higher pension contributions. Net asbestos-related payments in the first six months of 2021 and 2020 ~~and 2019~~ were ~~$19.2~~$20.2 million and ~~$17.9~~$19.2 million, respectively. In ~~2020,~~2021, we expect to make payments related to asbestos settlement and defense costs, net of related insurance recoveries, of approximately ~~$50~~$45 million. We have chosen to defer contributions to our U.S. pension plans of $18.2 million until January 1, 2021 as permitted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020.

Investing Activities

Cash flows relating to investing activities from continuing operations consist primarily of cash used for acquisitions, capital expenditures and ~~capital expenditures.~~cash provided by divestitures of businesses or assets. Cash ~~used for~~provided by investing activities from continuing operations was ~~$183.1~~$39.5 million in the first six months of ~~2020,~~2021, compared to ~~$44.2~~cash used for investing activities from continuing operations of $182.9 million in the comparable period of ~~2019.~~2020. The increase in cash ~~used for~~provided by investing activities from continuing operations was driven by the absence of cash paid for the acquisition of I&S&S of $172.3 million, ~~partially offset by lower capital expenditures compared to~~net cash proceeds from the ~~same period last year.~~sale of marketable securities of $30.0 million and proceeds from the sale of real estate. Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information systems. ~~As it relates to COVID-19, we are deferring certain~~We expect capital expenditures ~~and expect to spend $45~~of approximately $70.0 million in ~~2020 from the previously disclosed projected amount of approximately $75 million.~~2021.

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

Financing Activities

Financing cash flows consist primarily of dividend payments to shareholders, share repurchases, repayments of indebtedness, proceeds from the issuance of long-term debt and commercial paper and proceeds from the issuance of common stock. Cash ~~provided by~~used for financing activities from continuing operations was ~~$314.9~~$405.2 million during the first six months of ~~2020,~~2021, compared to cash ~~used for~~provided by financing activities from continuing operations of ~~$45.3~~$314.9 million in the comparable period of ~~2019.~~2020. The increase in cash ~~provided by~~used for financing activities from continuing operations was driven by the $348.1 million repayment of the 364-Day Credit Agreement in the first six months of 2021 compared to the proceeds from the 364-Day Credit Agreement of $343.9 million in the first six months of 2020. In addition there was $12.1 million of net repayments of commercial paper in the first six months of 2021 compared to $92.0 million of net proceeds received from the issuance of commercial paper ~~and $343.9 million~~in the first six months of ~~borrowings under the 364-day credit facility,~~2020. This was partially offset by the absence of $70.0 million of cash used for the repurchase of shares in the first ~~quarter~~six months of 2020.

Recent Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note 1 to our Condensed Consolidated Financial Statements.

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, ~~2019.~~2020.

Item 4. Controls and Procedures

Disclosure Controls and Procedures. The ~~Company’s~~Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the ~~Company’s~~Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report. The ~~Company’s~~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~~Commission’s rules and forms and that the information is accumulated and communicated to the ~~Company’s~~Company’s Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. Based on this evaluation, the ~~Company’s~~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 June 30, ~~2020,~~2021, there have been no changes in the ~~Company’s~~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.

Part II: Other Information

Item 1. Legal Proceedings

Discussion of legal matters is incorporated by reference from Part 1, Item 1, Note 11, ~~“Commitments~~“Commitments and ~~Contingencies”~~Contingencies”, of this Quarterly Report on Form 10-Q, and should be considered an integral part of Part II, Item 1, ~~“Legal~~“Legal Proceedings.””

Item 1A. Risk Factors

~~The following represents a material change in our~~Information regarding risk factors ~~from those disclosed~~appears in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

~~Our financial condition and results of operations are expected to continue to be adversely affected by the recent coronavirus pandemic.~~

The novel strain of the coronavirus (“COVID-19”) pandemic is expected to continue to have an adverse impact on our operations and financial performance, as well as on the operations and financial performance of many of the customers and suppliers in industries that we serve. It is very difficult to predict the extent to which the pandemic and related impacts will have on our business operations, financial performance, results of operations, and financial position.

We believe our operations and financial performance will be negatively impacted by the COVID-19 pandemic which has and will continue to cause a global slowdown of economic activity (including a decrease in demand for a broad variety of goods and services), disruptions in global supply chains and significant volatility and disruption of financial markets. Because the severity, magnitude and duration of the COVID-19 pandemic and its economic consequences remain uncertain and rapidly changing, it is difficult to predict the extent of the pandemic’s impact on our operations and financial performance. Further, the ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to: governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic (including shutdown orders, border closings, restrictions on travel and transport and workforce pressures); the impact of the pandemic and actions taken in response on global and regional economies, travel, and economic activity; general economic uncertainty in key global markets and financial market volatility; global economic conditions and levels of economic growth; commodity prices such as oil and gas, and the pace of recovery when the COVID-19 pandemic subsides.

We continue to expect lower demand and volume for products and services, customer requests for payment deferrals and other contract modifications including price concessions, supply chain disruptions, delays of deliveries and other factors related directly and indirectly to the COVID-19 pandemic. We expect that the longer the period of economic and global supply chain and disruption continues, the more adverse the impact will be on our business operations, financial performance and results of operations.

As the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. A continued worldwide disruption could materially affect our future access to our sources of liquidity, particularly our cash flows from operations and access to credit markets, which could impact our financial condition, capitalization, and capital investments. In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions. Additionally, a prolonged period of generating lower cash flows from operations could adversely affect our financial condition and the achievement of our strategic objectives. Conditions in the financial and credit markets may also limit the availability of funding or increase the cost of funding, which could adversely affect our business, financial position and results of operations.

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

(a) Not applicable

(b) Not applicable

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

We did not make any open-market share repurchases of our common stock during the quarter ended June 30, ~~2019.~~2021. 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 share 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

Item 6. Exhibits



Exhibit 10.1						Crane Co. Amended & Restated 2018 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed April 26, 2021).
Exhibit 10.2						$650 million 5-Year Revolving Credit Agreement, dated as of July 28, 2021 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed July 28, 2021).
Exhibit 31.1*						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)
Exhibit 31.2*						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)
Exhibit 32.1**						Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or 15d-14(b)
Exhibit 32.2**						Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b)
101.INS						XBRL 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						Inline XBRL Taxonomy Extension Schema (filed herewith)
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase (filed herewith)
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase (filed herewith)
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase (filed herewith)
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed with this report

** Furnished with this report

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 CO.
				REGISTRANT

Date				~~CRANE CO.~~
August 4, 2021			By	~~REGISTRANT~~

~~Date~~
~~July 29, 2020~~	By	/s/ Max H. Mitchell
				Max H. Mitchell
				President and Chief Executive Officer

Date			By	/s/ Richard A. Maue
~~July 29, 2020~~August 4, 2021				Richard A. Maue
				Senior Vice President and Chief Financial Officer

~~Page 47~~



Delaware		13-1952290
~~Delaware~~	~~13-1952290~~
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



100 First Stamford Place	Stamford	CT	06902
(Address of principal executive offices)			(Zip Code)




Title of each class	Trading Symbol		Name of each exchange on which registered
Common Stock, par value $1.00		CR		New York Stock Exchange



Intangible Assets (dollars in millions)	Intangible Fair Value		Weighted Average Life
Trademarks/trade names	$	3.0	7
Customer relationships	54.5		18
Product technology	8.5		10
Total acquired intangible assets	$	66.0


(in millions)	June 30, 2021		December 31, 2020
Assets:
Aerospace & Electronics	$	609.9	$	593.9
Process Flow Technologies	1,165.8		1,106.1
Payment & Merchandising Technologies	2,149.0		2,215.3
Corporate	272.6		482.4
Assets held for sale	225.9		217.3
Total	$	4,423.2	$	4,615.0



☒☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐☐			TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	592.1	$	393.9
Accounts receivable, net	444.8		555.1
Current insurance receivable - asbestos	14.1		14.1
Inventories, net:
Finished goods	141.7		130.6
Finished parts and subassemblies	67.8		66.1
Work in process	53.8		47.7
Raw materials	211.8		212.9
Inventories, net	475.1		457.3
Other current assets	103.2		79.5
Total current assets	1,629.3		1,499.9
Property, plant and equipment:
Cost	1,246.6		1,256.9
Less: accumulated depreciation	648.7		640.6
Property, plant and equipment, net	597.9		616.3
Long-term insurance receivable - asbestos	77.4		83.6
Long-term deferred tax assets	7.0		35.1
Other assets	206.5		211.3
Intangible assets, net	534.4		505.1
Goodwill	1,577.8		1,472.4
Total assets	$	4,630.3	$	4,423.7



Net assets acquired (in millions)
Total current assets	$	87.4
Property, plant and equipment	26.4
Other assets	12.0
Intangible assets	66.0
Goodwill	58.7
Total assets acquired	$	250.5

Total current liabilities	$	66.9
Other liabilities	27.4
Total assumed liabilities	$	94.3
Net assets acquired	$	156.2



(in millions)	June 30, 2020		December 31, 2019
Assets
Fluid Handling	$	1,092.3	$	941.6
Payment & Merchandising Technologies	2,192.3		2,303.4
Aerospace & Electronics	629.0		638.1
Engineered Materials	217.7		219.6
Corporate	499.0		321.0
Total	$	4,630.3	$	4,423.7


(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, 2020	72.4	$	330.7	$	2,192.8	$	(466.4)	$	(600.6)	$	1,528.9	$	2.2	$	1,531.1
Net income	—	—		108.4		—		—		108.4		0		108.4
Cash dividends ($0.43 per share)	—	—		(25.0)		—		—		(25.0)		—		(25.0)

Impact from settlement of share-based awards, net of shares acquired	—	(2.3)		—		—		9.5		7.2		—		7.2
Stock-based compensation expense	—	6.3		—		—		—		6.3		—		6.3
Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		4.9		—		4.9		—		4.9
Currency translation adjustment	—	—		—		(35.7)		—		(35.7)		0.8		(34.9)
BALANCE MARCH 31, 2021	72.4	$	334.7	$	2,276.2	$	(497.2)	$	(591.1)	$	1,595.0	$	3.0	$	1,598.0
Net income	—	—		138.3		—		—		138.3		0		138.3
Cash dividends (0.43 per share)	—	—		(25.2)		—		—		(25.2)		—		(25.2)

Impact from settlement of share-based awards, net of shares acquired	—	7.6		—		—		(9.5)		(1.9)		—		(1.9)
Stock-based compensation expense	—	6.1		—		—		—		6.1		—		6.1
Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		5.2		—		5.2		—		5.2
Currency translation adjustment	—	—		—		7.7		—		7.7		(0.1)		7.6
BALANCE JUNE 30, 2021	72.4	$	348.4	$	2,389.3	$	(484.3)	$	(600.6)	$	1,725.2	$	2.9	$	1,728.1


(in millions)		Defined Benefit Pension and Postretirement Items		Currency Translation Adjustment		Total a
Balance as of December 31, 2020		$	(397.9)	$	(68.5)	$	(466.4)
	Other comprehensive income (loss) before reclassifications	—		(28.0)		(28.0)
	Amounts reclassified from accumulated other comprehensive loss	10.1		—		10.1
Net period other comprehensive income (loss)		10.1		(28.0)		(17.9)
Balance as of June 30, 2021		$	(387.8)	$	(96.5)	$	(484.3)


a			Net of tax benefit of $150.6 million and $148.2 million as of June 30, 2021 and December 31, 2020, respectively.


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2021		2020		2021		2020
Amortization of pension items:
Prior-service costs	$	(0.1)	$	(0.1)	$	(0.1)	$	(0.1)
Net loss	6.5		4.9		13.1		9.7
Amortization of postretirement items:
Prior-service costs	(0.3)		(0.3)		(0.5)		(0.5)

Total before tax	$	6.1	$	4.5	$	12.5	$	9.1
Tax impact	1.1		0.9		2.4		2.0
Total reclassifications for the period	$	5.0	$	3.6	$	10.1	$	7.1



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2020			2019			2020			2019
Amortization of pension items:
Prior-service costs	$	(0.1	)	$	(0.2	)	$	(0.1	)	$	(0.3	)
Net loss	4.9			3.3			9.7			6.7
Amortization of postretirement items:
Net gain	(0.3		)	(0.1		)	(0.5		)	(0.2		)
Total before tax	$	4.5		$	3.0		$	9.1		$	6.2
Tax impact	0.9			0.6			2.0			1.4
Total reclassifications for the period	$	3.6		$	2.4		$	7.1		$	4.8


	Pension				Postretirement
(in millions)	2021		2020		2021		2020
Service cost	$	1.7	$	1.6	$	0.1	$	0.1
Interest cost	5.2		6.6		0.2		0.2
Expected return on plan assets	(15.7)		(14.0)		0		0

Amortization of prior service cost	(0.1)		(0.1)		(0.3)		(0.3)
Amortization of net loss	6.5		4.9		0		0
Net periodic benefit	$	(2.4)	$	(1.0)	$	0	$	0


(in millions)	Six Months Ended June 30, 2021		Year Ended December 31, 2020
Balance at beginning of period, net of accumulated amortization	$	519.1	$	503.7
Additions	0		52.5

Amortization expense	(22.6)		(48.3)
Currency translation	(5.2)		11.2
Balance at end of period, net of accumulated amortization	$	491.3	$	519.1



(in millions)	Six Months Ended June 30, 2020			Year Ended December 31, 2019
Balance at beginning of period, net of accumulated amortization	$	505.1		$	481.8
Additions	52.5			66.0
Amortization expense	(23.7		)	(40.0		)
Currency translation	0.5			(2.7		)
Balance at end of period, net of accumulated amortization	$	534.4		$	505.1



(in millions)
Remainder of 2020	$	22.5
2021	42.2
2022	41.8
2023	41.6
2024 and after	316.6


(in millions)
Remainder of 2021	$	22.2
2022	42.8
2023	42.8
2024	41.8
2025 and after	270.5



	Three Months Ended				Six Months Ended				Year Ended
	June 30,				June 30,				December 31,
	2020		2019		2020		2019		2019
Beginning claims	29,162		28,498		29,056		29,089		29,089
New claims	577		769		1,258		1,444		2,848
Settlements	(264	)	(178	)	(429	)	(586	)	(983	)
Dismissals	(548	)	(238	)	(958	)	(1,096	)	(1,898	)
Ending claims	28,927		28,851		28,927		28,851		29,056



	Three months ended June 30, 2020								Three months ended June 30, 2019
(in millions)	Severance			Other		Total			Severance		Other		Total
Fluid Handling	$	4.7		$	—	$	4.7		$	—	$	—	$	—
Payment & Merchandising Technologies	13.8			1.0		14.8			—		—		—
Aerospace & Electronics	4.7			—		4.7			—		—		—
Engineered Materials	0.6			—		0.6			—		—		—
2020 Repositioning	$	23.8		$	1.0	$	24.8		$	—	$	—	$	—

Fluid Handling	$	—		$	—	$	—		$	0.2	$	—	$	0.2
Payment & Merchandising Technologies	(1.0		)	—		(1.0		)	0.2		0.6		0.8
Aerospace & Electronics	—			—		—			—		—		—
2017 Repositioning	$	(1.0	)	$	—	$	(1.0	)	$	0.4	$	0.6	$	1.0

Payment & Merchandising Technologies	$	—		$	—	$	—		$	0.2	$	0.4	$	0.6
Acquisition-Related Restructuring	$	—		$	—	$	—		$	0.2	$	0.4	$	0.6

Total	$	22.8		$	1.0	$	23.8		$	0.6	$	1.0	$	1.6



	Six months ended June 30, 2020									Six months ended June 30, 2019
(in millions)	Severance			Other			Total			Severance		Other			Total
Fluid Handling	$	4.7		$	—		$	4.7		$	—	$	—		$	—
Payment & Merchandising Technologies	13.8			1.0			14.8			—		—			—
Aerospace & Electronics	4.7			—			4.7			—		—			—
Engineered Materials	0.6			—			0.6			—		—			—
2020 Repositioning	$	23.8		$	1.0		$	24.8		$	—	$	—		$	—

Fluid Handling	$	—		$	—		$	—		$	0.8	$	—		$	0.8
Payment & Merchandising Technologies ¹	(1.0		)	(1.5		)	(2.5		)	0.2		0.8			1.0
Aerospace & Electronics	—			—			—			—		(0.1		)	(0.1		)
2017 Repositioning	$	(1.0	)	$	(1.5	)	$	(2.5	)	$	1.0	$	0.7		$	1.7

Payment & Merchandising Technologies	$	—		$	—		$	—		$	0.4	$	2.4		$	2.8
Acquisition-Related Restructuring	$	—		$	—		$	—		$	0.4	$	2.4		$	2.8

Payment & Merchandising Technologies	$	0.3		$	—		$	0.3		$	—	$	—		$	—
Other Restructuring	$	0.3		$	—		$	0.3		$	—	$	—		$	—

Total	$	23.1		$	(0.5	)	$	22.6		$	1.4	$	3.1		$	4.5



	Cumulative Restructuring Costs								Remaining Costs
(in millions)	Severance		Other			Total			2020		2021		Total
Fluid Handling	$	4.7	$	—		$	4.7		$	—	$	—	$	—
Payment & Merchandising Technologies	13.8		1.0			14.8			—		—		—
Aerospace & Electronics	4.7		—			4.7			—		—		—
Engineered Materials	0.6		—			0.6			—		—		—
2020 Repositioning	$	23.8	$	1.0		$	24.8		$	—	$	—	$	—

Fluid Handling	$	9.9	$	—		$	9.9		$	4.5	$	4.2	$	8.7
2019 Repositioning	$	9.9	$	—		$	9.9		$	4.5	$	4.2	$	8.7

Fluid Handling	$	17.3	$	—		$	17.3		$	0.8	$	—	$	0.8
Payment & Merchandising Technologies	11.6		0.7			12.3			—		—		—
Aerospace & Electronics	1.3		(1.4		)	(0.1		)	—		—		—
2017 Repositioning	$	30.2	$	(0.7	)	$	29.5		$	0.8	$	—	$	0.8