SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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



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

(Former name, former address and former fiscal year, if changed since last report)



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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a ~~non –accelerated~~non–accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

(check one):

Large accelerated filer

x☒

Accelerated filer

o☐

Non-accelerated filer

o ~~(Do not check if a smaller reporting company)~~

☐

Smaller reporting company

o☐

Emerging growth company

o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒

The number of shares outstanding of the issuer’s classes of common stock, as of ~~October 31, 2017~~April 30, 2021

Common stock, $1.00 Par Value – ~~59,349,881~~58,408,535 shares

Crane Co.

~~Index~~Table of Contents

Form ~~10Q~~

10-Q

Page

~~Page~~

Part I - Financial Information

Item 1.

Financial Statements

Condensed Consolidated Statements of Operations

Page 2 1

Condensed Consolidated Statements of Comprehensive Income

Page 3 2

Condensed Consolidated Balance Sheets

Page 4 3

Condensed Consolidated Statements of Cash Flows

Page 6 5

Notes to Condensed Consolidated Financial Statements

Page 7 6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Page 31 29

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Page 43 38

Item 4.

Controls and Procedures

Page 43 38

Part II - Other Information

Unregistered Sales of Equity Securities and Use of Proceeds

Page 44 39

Item 3.

Defaults Upon Senior Securities

Page 39

Item 4.

Mine Safety Disclosures

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

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

C~~ONDENSED~~CONDENSED CONSOLIDATEDSTATEMENTSOF O~~PERATIONS~~ OPERATIONS

(INM~~ILLIONS~~, ~~EXCEPTPERSHAREDATA~~)(UNAUDITED)

(U~~NAUDITED~~)


														Three Months Ended
	Three Months Ended						Nine Months Ended							March 31,
	September 30,						September 30,
	2017			2016			2017			2016
(in millions, except per share data)													(in millions, except per share data)	2021		2020
Net sales	$	695.9		$	694.2		$	2,071.8		$	2,066.5		Net sales	$	833.5	$	797.9
Operating costs and expenses:													Operating costs and expenses:
Cost of sales	441.5			449.2			1,315.3			1,324.5			Cost of sales	513.6		510.8
Selling, general and administrative	148.5			141.2			442.4			450.5			Selling, general and administrative	186.6		194.5
Restructuring gain	—			—			—			(0.4		)
Transaction related charges	0.5			—			3.1			—
Acquisition-related and integration charges													Acquisition-related and integration charges	0		5.2
Restructuring gain, net													Restructuring gain, net	(13.1)		(1.2)
Operating profit	105.4			103.8			311.0			291.9			Operating profit	146.4		88.6
Other income (expense):													Other income (expense):
Interest income	0.7			0.5			1.8			1.4			Interest income	0.4		0.4
Interest expense	(9.3		)	(9.2		)	(27.3		)	(27.5		)	Interest expense	(13.6)		(12.5)
Miscellaneous, net	0.2			(0.1		)	(0.8		)	(0.6		)
	(8.4		)	(8.8		)	(26.3		)	(26.7		)
Miscellaneous income, net													Miscellaneous income, net	3.9		3.8
Total other expense													Total other expense	(9.3)		(8.3)
Income before income taxes	97.0			95.0			284.7			265.2			Income before income taxes	137.1		80.3
Provision for income taxes	28.5			31.3			83.6			77.9			Provision for income taxes	28.7		17.5
Net income before allocation to noncontrolling interests	68.5			63.7			201.1			187.3
Less: Noncontrolling interest in subsidiaries’ earnings	0.3			0.2			0.6			0.5

Net income attributable to common shareholders	$	68.2		$	63.5		$	200.5		$	186.8		Net income attributable to common shareholders	$	108.4	$	62.8
Earnings per share:													Earnings per share:
Basic	$	1.15		$	1.09		$	3.38		$	3.20		Basic	$	1.86	$	1.07
Diluted	$	1.13		$	1.07		$	3.32		$	3.16		Diluted	$	1.84	$	1.05
Average shares outstanding:													Average shares outstanding:
Basic	59.5			58.5			59.4			58.3			Basic	58.2		58.8
Diluted	60.4			59.4			60.4			59.2			Diluted	58.9		59.6

Dividends per share	$	0.33		$	0.33		$	0.66		$	0.99		Dividends per share	$	0.43	$	0.43

See Notes to Condensed Consolidated Financial Statements.

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net income before allocation to noncontrolling interests $ 68.5
$ 63.7
$ 201.1
$ 187.3
Other comprehensive income (loss), net of tax
Currency translation adjustment 24.6
(5.2 ) 83.2
11.6
Changes in pension and postretirement plan assets and benefit obligation, net of tax 2.3
1.8
6.9
5.6
Other comprehensive income (loss), net of tax 26.9
(3.4 ) 90.1
17.2
Comprehensive income before allocation to noncontrolling interests 95.4
60.3
291.2
204.5
Less: Noncontrolling interests in comprehensive income (1.4 ) 0.2
(0.7 ) 0.5
Comprehensive income attributable to common shareholders $ 96.8
$ 60.1
$ 291.9
$ 204.0
CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months Ended
	March 31,
(in millions)	2021		2020
Net income before allocation to noncontrolling interests	$	108.4	$	62.8
Components of other comprehensive income (loss), net of tax
Currency translation adjustment	(34.9)		(45.2)
Changes in pension and postretirement plan assets and benefit obligation, net of tax	4.9		3.6
Other comprehensive loss, net of tax	(30.0)		(41.6)
Comprehensive income before allocation to noncontrolling interests	78.4		21.2
Less: Noncontrolling interests in comprehensive income	0.8		(0.3)
Comprehensive income attributable to common shareholders	$	77.6	$	21.5

See Notes to Condensed Consolidated Financial Statements.

September 30,
2017 December 31,
2016
Assets
Current assets:
Cash and cash equivalents $ 572.2
$ 509.7
Accounts receivable, net 437.3
396.4
Current insurance receivable - asbestos 18.0
18.0
Inventories, net:
Finished goods 107.1
97.7
Finished parts and subassemblies 45.1
38.2
Work in process 59.7
56.0
Raw materials 164.3
150.6
Inventories, net 376.2
342.5
Current deferred tax asset —
29.6
Other current assets 19.1
19.5
Total current assets 1,422.8
1,315.7
Property, plant and equipment:
Cost 876.1
826.9
Less: accumulated depreciation 584.1
548.0
Property, plant and equipment, net 292.0
278.9
Long-term insurance receivable - asbestos 106.0
125.2
Long-term deferred tax assets 191.5
181.8
Other assets 104.2
95.0
Intangible assets, net 284.7
282.2
Goodwill 1,205.9
1,149.2
Total assets $ 3,607.1
$ 3,428.0
CRANE CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


(in millions)	March 31, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	578.4	$	551.0
Accounts receivable, net	483.4		432.7
Current insurance receivable - asbestos	14.4		14.4
Inventories, net:
Finished goods	139.0		130.5
Finished parts and subassemblies	50.4		54.5
Work in process	45.6		45.2
Raw materials	201.9		208.0
Inventories, net	436.9		438.2
Other current assets	129.3		137.4
Total current assets	1,642.4		1,573.7
Property, plant and equipment:
Cost	1,280.8		1,295.8
Less: accumulated depreciation	706.3		695.4
Property, plant and equipment, net	574.5		600.4
Long-term insurance receivable - asbestos	70.0		72.5
Long-term deferred tax assets	6.4		14.9
Other assets	195.1		198.1
Intangible assets, net	503.0		520.3
Goodwill	1,595.1		1,609.0
Total assets	$	4,586.5	$	4,588.9

See Notes to Condensed Consolidated Financial Statements.

CRANE CO. AND SUBSIDIARIES

C~~RANE~~ CO. ~~AND~~ S~~UBSIDIARIES~~CONDENSED CONSOLIDATED BALANCE SHEETS

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

See Notes to Condensed Consolidated Financial Statements.

CRANE CO. AND SUBSIDIARIES

C~~RANE~~ CO. ~~AND~~ S~~UBSIDIARIES~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

C~~ONDENSEDCONSOLIDATEDSTATEMENTS~~OF C~~ASH~~ F~~LOWS~~(UNAUDITED)

Nine Months Ended
September 30,
2017 2016
Operating activities:
Net income attributable to common shareholders $ 200.5
$ 186.8
Noncontrolling interests in subsidiaries’ earnings 0.6
0.5
Net income before allocation to noncontrolling interests 201.1
187.3
Depreciation and amortization 54.0
50.8
Stock-based compensation expense 16.5
16.8
Defined benefit plans and postretirement credit (6.3 ) (7.3 )
Deferred income taxes 16.0
16.1
Cash used for operating working capital (38.0 ) (34.4 )
Defined benefit plans and postretirement contributions (9.9 ) (6.4 )
Environmental payments - net of reimbursements (4.4 ) (8.2 )
Asbestos related payments - net of insurance recoveries (46.8 ) (41.5 )
Other (8.0 ) (4.8 )
Total provided by operating activities 174.2
168.4
Investing activities:
Capital expenditures (34.3 ) (38.5 )
Proceeds from disposition of capital assets —
0.8
Payments for acquisitions - net of cash acquired (54.8 ) —
Total used for investing activities (89.1 ) (37.7 )
Financing activities:
Dividends paid (58.8 ) (57.8 )
Reacquisition of shares on open market (25.0 ) —
Stock options exercised - net of shares reacquired 20.7
9.6
Repayment of commercial paper —
(15.6 )
Total used for financing activities (63.1 ) (63.8 )
Effect of exchange rates on cash and cash equivalents 40.5
5.9
Increase in cash and cash equivalents 62.5
72.8
Cash and cash equivalents at beginning of period 509.7
363.5
Cash and cash equivalents at end of period $ 572.2
$ 436.3
Detail of cash used for working capital:
Accounts receivable $ (22.0 ) $ (32.9 )
Inventories (17.2 ) 1.2
Other current assets 1.2
(2.1 )
Accounts payable (22.7 ) (21.4 )
Accrued liabilities 10.9
12.6
U.S. and foreign taxes on income 11.8
8.2
Total $ (38.0 ) $ (34.4 )
Supplemental disclosure of cash flow information:
Interest paid $ 18.7
$ 19.1
Income taxes paid $ 55.8
$ 53.6

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and the instructions to Form 10-Q and, therefore, reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. These interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements in ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2016~~.2020.

Recent Accounting Pronouncements - ~~Not Yet~~ Adopted

~~Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~Simplifying the Accounting for Income Taxes

In ~~March 2017,~~December 2019, the Financial Accounting ~~Standard~~Standards Board (“FASB”) issued amended guidance to ~~improve~~simplify the ~~presentation of net periodic pension cost and net periodic postretirement benefit cost.~~accounting for income taxes. The amended guidance requires the disaggregation of the service cost component from the other components of net periodic benefit costs and present it with other current compensation costs for related employees in the income statement, and present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. This amended guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of the amended guidance to have a material impact on its consolidated statements of operations and related disclosures.

In November 2016, the FASB issued amended guidance to address diversity in the classification and presentation of changes in restricted cash on the statement of cash flows. The amended guidance requires restricted cash and restricted cash equivalents to be classified in the statements of cash flows as cash and cash equivalents. This amended guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, using a retrospective transition method. The Company does not expect the adoption of the amended guidance to have a material impact on its consolidated statements of cash flows.

~~Income Taxes on Intra-Entity Transfers of Assets~~

In October 2016, the FASB issued amended guidance related to the recognition of income taxes resulting from intra-entity transfers of assets other than inventory. The guidance requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Income tax effects of intra-entity transfers of inventory will continue to be deferred until the inventory has been sold to a third party. This amended guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, using a modified retrospective approach, with the cumulative effect recognized through retained earnings at the date of adoption. Early adoption is permitted. The Company does not expect the adoption of the amended guidance to have a material impact on its consolidated financial statements and related disclosures.

~~Cash Flow Simplification~~

In August 2016, the FASB issued amended guidance that clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. The amended guidance is effective for fiscal years beginning after December 15, 2017,2020, including interim periods within those fiscal years. ~~Early adoption is permitted. Upon adoption, entities must apply the guidance~~Certain amendments are to be applied prospectively, while other amendments are to be applied retrospectively to all periods presented. We have adopted this standard effective January 1, 2021. The ~~Company~~adoption of this new standard did not impact our consolidated financial statements.

Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued amended guidance to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The amended guidance removes the requirements to disclose: amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year; the amount and timing of plan assets expected to be returned to the entity; and the effects of a one-percentage point change in assumed health care cost trend 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 ~~currently evaluating the impact that~~effective for fiscal years ending after December 15, 2020. Effective December 31, 2020, we adopted the amended guidance ~~will~~and applied the disclosure requirements on a retrospective basis to all periods presented. This amended guidance did not have a material effect on ~~its consolidated statements of cash flows.~~

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 ~~will be~~are required to use a ~~new forward-looking “expected loss”~~current expected credit loss (“CECL”) model that will ~~replace today’s “incurred loss” model and generally will result~~immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the ~~earlier recognition~~scope of ~~allowances for losses.~~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. ~~This amended guidance~~The CECL model is ~~effective~~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 fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earningsdoubtful accounts was $9.3 million and $10.9 million as of ~~the beginning of the first effective reporting period. The Company does not expect that the amended guidance will have a material effect on its consolidated financial statements~~March 31, 2021 and ~~related disclosures.~~December 31, 2020, respectively.

In February 2016, the FASB issued amended guidance on accounting for leases. The amended guidance requires the recognition of a right-of-use asset and a lease liability for all leases by lessees with the exception of short-term leases and amends disclosure requirements associated with leasing arrangements. The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018 using a modified retrospective transition approach. Early adoption is permitted. The Company is currently evaluating the impact that the amended guidance will have on its consolidated financial statements and related disclosures.

~~Revenue Recognition~~

In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all current industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB agreed to a one-year deferral of the effective date; the new standard is now effective for reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption of the new revenue standard is permitted; however, entities reporting under U.S. GAAP were not permitted to adopt the standard earlier than the original effective date, which was for years beginning after December 15, 2016. The new standard can be applied either retrospectively to each prior period presented (full retrospective method) or retrospectively with a cumulative-effect adjustment as of the date of initial application (modified retrospective method).

The Company developed a project plan and established a cross-functional implementation team consisting of representatives from across all of its business segments. The project plan includes analyzing the impact of the standard on its contract portfolio by reviewing its current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to its revenue contracts. The Company has made significant progress on its contract reviews and continues to evaluate the impact of the adoption of this standard on its consolidated financial statements, and related disclosures. While the Company anticipates potentially increased over time revenue recognition for certain revenue contracts, the Company does not believe the standard will have a material effect on its consolidated financial statements. The Company will adopt the standard as of January 1, 2018, under the modified retrospective method.

~~Recent Accounting Pronouncements - Adopted~~

~~Balance Sheet Classification of Deferred Taxes~~

In November 2015, the FASB issued amended guidance to simplify the presentation of deferred income taxes. The amendments require deferred tax liabilities and assets to be classified as noncurrent. The amended guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted this guidance on a prospective basis in the first quarter of 2017. Prior periods in its consolidated financial statements were not retrospectively adjusted.

In July 2015, the FASB issued amended guidance, which changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. The guidance defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new guidance must be applied on a prospective basis and is effective for fiscal years beginning after December 15, 2016, and interim

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

~~Share-Based Payments~~

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

Note 2 - Acquisitions

~~In April 2017, the Company acquired all of the outstanding stock of Westlock Controls~~Acquisitions are accounted for in accordance with ASC Topic 805, “Business Combinations” (“~~Westlock”~~ASC 805”) from Emerson Electric Co. for cash consideration of $40 million. Westlock is a global leader in the manufacturing and sale of switchboxes, position transmitters and other solutions for networking, monitoring and controlling process valves, a new product space which is closely adjacent to the Company’s existing operations in its Fluid Handling segment. With primary operations located in Saddle Brook, New Jersey, Westlock had 2016 sales of approximately $32 million. Allocation. 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.

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 Value Measurement and 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.

Instrumentation & Sampling Business Acquisition

Allocation of Consideration Transferred to Net Assets Acquired


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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The amounts allocated to acquired intangible assets, and their associated weighted-average useful lives which were determined based on the period in which the assets are expected to contribute directly or indirectly to our future cash flows, consist of the following:

The fair values of the trademark and trade name intangible assets were determined by using an income approach, specifically the relief-from-royalty approach, which is a commonly accepted valuation approach. This approach is based on the assumption that in lieu of ownership, a firm would be willing to pay a royalty in order to exploit the related benefits of this asset. Therefore, a portion of I&S’ earnings, equal to the after-tax royalty that would have been paid for the use of the asset, can be attributed to our ownership. The trade names are being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 13 years.

The fair values of the customer relationships and backlog intangible assets were determined by using an income approach which is a commonly accepted valuation approach. Under this approach, the net earnings attributable to the asset or liability being measured are isolated using the discounted projected net cash flows. These projected cash flows are isolated from the projected cash flows of the combined asset group over the remaining economic life of the intangible asset or liability being measured. Both the amount and the ~~pro-forma~~duration of the cash flows are considered from a market participant perspective. Our estimates of market participant net cash flows considered historical and projected pricing, operational performance including market participant synergies, aftermarket retention, product life cycles, material and labor pricing, and other relevant customer, contractual and market factors. Where appropriate, the net cash flows were adjusted to reflect the potential attrition of existing customers in the future, as existing customers are expected to decline over time. The attrition-adjusted future cash flows are then discounted to present value using an appropriate discount rate. The customer relationship asset is being amortized on a straight-line basis (which approximates the economic pattern of benefits) over the estimated economic life of 14 years.

Supplemental Pro Forma Data

I&S’ results of operations have been included in our financial statements for the period subsequent to the completion of the acquisition on January 31, 2020. Consolidated pro forma revenue and net income attributable to common shareholders has not been presented since the impact is not ~~material.~~material to our financial results.

Acquisition-Related Costs

~~In June 2017,~~Acquisition-related costs are expensed as incurred. For the ~~Company acquired all~~three months ended March 31, 2020, we recorded $5.2 million of ~~the outstanding stock~~integration and transaction costs in our Condensed Consolidated Statements of Microtronic AG (“Microtronic”) for cash consideration of approximately $18 million. With operations in Oensingen, Switzerland, Microtronic develops and manufactures closed electronic payment systems, primarily for the European vending market, strengthening the Company’s portfolio of cashless solutions. Allocation of the purchase price resulted in the Company recording goodwill of $8.9 million. This acquisition is being integrated into the Company’s Payment & Merchandising Technologies segment, and the pro-forma impact is not material.Operations.

Note 3 - Segment Results

~~The Company’s~~Our segments are reported on the same basis used internally for evaluating performance and for allocating resources. ~~The Company has four~~We have 4 reportable segments: Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials. Assets of the reportable segments exclude general corporate assets, which principally consist of cash, deferred tax assets, insurance receivables, certain property, plant and equipment, and certain other assets. Corporate consists of corporate office expenses including compensation and benefits for corporate employees, occupancy, depreciation, and other administrative costs.

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

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2017 2016 2017 2016
Net sales
Fluid Handling $ 266.9
$ 245.1
$ 770.3
$ 759.1
Payment & Merchandising Technologies 188.6
186.7
582.3
551.2
Aerospace & Electronics 172.0
198.2
506.5
559.2
Engineered Materials 68.4
64.2
212.7
197.0
Total $ 695.9
$ 694.2
$ 2,071.8
$ 2,066.5
Operating profit (loss)
Fluid Handling $ 32.6
$ 30.7
$ 91.3
$ 91.5
Payment & Merchandising Technologies 41.4
34.7
123.0
97.1
Aerospace & Electronics 34.8
38.9
104.8
110.6
Engineered Materials 12.2
11.4
39.5
38.6
Corporate * (15.6 ) (11.9 ) (47.6 ) (45.9 )
Total 105.4
103.8
311.0
291.9
Interest income 0.7
0.5
1.8
1.4
Interest expense (9.3 ) (9.2 ) (27.3 ) (27.5 )
Miscellaneous - net 0.2
(0.1 ) (0.8 ) (0.6 )
Income before income taxes $ 97.0
$ 95.0
$ 284.7
$ 265.2
Fluid Handling

* IncludesThe Fluid Handling segment is a ~~$5 million legal settlement charge~~provider of highly engineered fluid handling equipment for critical performance applications that require high reliability. The segment is comprised of Process Valves and Related Products, Commercial Valves, and Pumps and Systems. Process Valves and Related Products include on/off valves and related products for critical and demanding applications in the ~~nine~~chemical, oil & gas, power, and general industrial end markets globally. Commercial Valves includes the manufacturing and distribution of valves and related products for the non-residential construction, general industrial, and to a lesser extent, municipal markets. Pumps and Systems include pumps and related products primarily for water and wastewater applications in the industrial, municipal, commercial and military markets.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Payment & Merchandising Technologies

The Payment & Merchandising Technologies segment consists of Crane Payment Innovations (“CPI”) and Crane Currency. CPI provides high technology payment acceptance and dispensing products to original equipment manufacturers, and for certain vertical markets, it also provides currency handling and processing systems, complete cash and cashless payment and merchandising solutions, equipment service solutions, and fully connected managed service solutions. Crane Currency is a supplier of banknotes and highly engineered banknote security features.

Aerospace & Electronics

The Aerospace & Electronics segment supplies critical components and systems, including original equipment and aftermarket parts, primarily for the commercial aerospace and military aerospace and defense markets. Products include a wide range of custom designed, highly engineered products used in landing systems, sensing and utility systems, fluid management, seat actuation, power and microelectronic applications, and microwave systems.

Engineered Materials

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


	Three Months Ended
	March 31,
(in millions)	2021		2020
Net sales:
Fluid Handling	$	288.0	$	256.7
Payment & Merchandising Technologies	337.5		297.4
Aerospace & Electronics	154.1		192.9
Engineered Materials	53.9		50.9
Total	833.5		797.9

Operating profit:
Fluid Handling	49.9		28.0
Payment & Merchandising Technologies	85.9		26.4
Aerospace & Electronics	26.0		43.8
Engineered Materials	6.4		6.9
Corporate	(21.8)		(16.5)
Total	146.4		88.6
Interest income	0.4		0.4
Interest expense	(13.6)		(12.5)
Miscellaneous income, net	3.9		3.8
Income before income taxes	$	137.1	$	80.3

For the three months ended ~~September 30, 2016.~~March 31, 2021, operating profit includes a net restructuring gain of $13.1 million. For the three months ended March 31, 2020, operating profit includes acquisition-related and integration charges $5.2 million and a net restructuring gain of $1.2 million. See Note 2, “Acquisitions” and Note 14, “Restructuring” for further discussion.


(in millions)	March 31, 2021		December 31, 2020
Assets:
Fluid Handling	$	1,135.5	$	1,106.1
Payment & Merchandising Technologies	2,146.9		2,215.3
Aerospace & Electronics	612.4		593.9
Engineered Materials	223.2		217.3
Corporate	468.5		456.3
Total	$	4,586.5	$	4,588.9

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(in millions)	March 31, 2021		December 31, 2020
Goodwill:
Fluid Handling	$	355.0	$	360.0
Payment & Merchandising Technologies	866.3		875.2
Aerospace & Electronics	202.5		202.5
Engineered Materials	171.3		171.3
Total	$	1,595.1	$	1,609.0

As of
(in millions) September 30, 2017 December 31, 2016
Goodwill
Fluid Handling $ 244.3
$ 212.3
Payment & Merchandising Technologies 587.8
563.3
Aerospace & Electronics 202.4
202.3
Engineered Materials 171.4
171.3
Total $ 1,205.9
$ 1,149.2

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Disaggregation of Revenues

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


	Three Months Ended
	March 31,
(in millions)		2021		2020
Fluid Handling
Process Valves and Related Products		$	174.5	$	157.2
Commercial Valves		89.2		75.9
Pumps and Systems		24.3		23.6
Total Fluid Handling		$	288.0	$	256.7

Payment & Merchandising Technologies
Payment Acceptance and Dispensing Products 1		$	185.0	$	203.2
Banknotes and Security Products		152.5		94.2

Total Payment & Merchandising Technologies		$	337.5	$	297.4

Aerospace & Electronics
Commercial Original Equipment		$	54.7	$	80.6
Military and Other Original Equipment		62.8		60.4
Commercial Aftermarket Products		19.5		33.9
Military Aftermarket Products		17.1		18.0
Total Aerospace & Electronics		$	154.1	$	192.9

Engineered Materials
FRP - Recreational Vehicles		$	24.3	$	18.8
FRP - Building Products		21.8		24.9
FRP - Transportation		7.8		7.2
Total Engineered Materials		$	53.9	$	50.9
Net sales		$	833.5	$	797.9

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2017 2016 2017 2016
Fluid Handling
Process Valves and Related Products $ 157.7
$ 148.1
$ 472.2
$ 469.1
Commercial Valves 85.7
75.2
230.2
224.1
Other Products 23.5
21.8
67.9
65.9
Total Fluid Handling $ 266.9
$ 245.1
$ 770.3
$ 759.1

Payment & Merchandising Technologies
Payment Acceptance and Dispensing Products $ 136.7
$ 123.7
$ 431.1
$ 373.7
Merchandising Equipment 51.9
63.0
151.2
177.5
Total Payment & Merchandising Technologies $ 188.6
$ 186.7
$ 582.3
$ 551.2

Aerospace & Electronics
Commercial Original Equipment $ 90.1
$ 88.4
$ 259.9
$ 270.6
Military and Other Original Equipment 37.4
63.3
116.3
152.9
Commercial Aftermarket Products 32.3
31.9
96.0
96.3
Military Aftermarket Products 12.2
14.6
34.3
39.4
Total Aerospace & Electronics $ 172.0
$ 198.2
$ 506.5
$ 559.2

Engineered Materials
FRP - Recreational Vehicles $ 37.2
$ 32.6
$ 116.9
$ 99.8
FRP - Building Products 23.7
22.9
72.1
68.3
FRP - Transportation 7.5
8.7
23.7
28.9
Total Engineered Materials $ 68.4
$ 64.2
$ 212.7
$ 197.0

Total Net Sales $ 695.9
$ 694.2
$ 2,071.8
$ 2,066.5
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.

Remaining Performance Obligations

The transaction price allocated to remaining performance obligations represents the transaction price of firm orders which have not yet been fulfilled, which we also refer to as total backlog. As of March 31, 2021, total backlog was $1,161.0 million. We expect to recognize approximately 87% of our remaining performance obligations as revenue in 2021, an additional 10% in 2022 and the balance thereafter.

Contract Assets and Contract Liabilities

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(in millions)	March 31, 2021		December 31, 2020
Contract assets	$	80.2	$	66.7
Contract liabilities	$	95.5	$	103.0

Note 45 - Earnings Per Share

~~The Company’s~~Our basic earnings per share calculations are based on the weighted average number of common shares outstanding during the period. ~~Shares of restricted stock are included in the computation of both basic and diluted earnings per share.~~ Potentially dilutive securities include outstanding stock options, restricted share units, deferred stock units and performance-based restricted share units. The effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury method. Diluted earnings per share gives effect to all potentially dilutive common shares outstanding during the period.


	Three Months Ended
	March 31,
(in millions, except per share data)	2021		2020
Net income attributable to common shareholders	$	108.4	$	62.8

Average basic shares outstanding	58.2		58.8
Effect of dilutive share-based awards	0.7		0.8
Average diluted shares outstanding	58.9		59.6

Earnings per basic share	$	1.86	$	1.07
Earnings per diluted share	$	1.84	$	1.05

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except per share data) 2017 2016 2017 2016
Net income attributable to common shareholders $ 68.2
$ 63.5
$ 200.5
$ 186.8

Average basic shares outstanding 59.5
58.5
59.4
58.3
Effect of dilutive stock options 0.9
0.9
1.0
0.9
Average diluted shares outstanding 60.4
59.4
60.4
59.2

Earnings per basic share $ 1.15
$ 1.09
$ 3.38
$ 3.20
Earnings per diluted share $ 1.13
$ 1.07
$ 3.32
$ 3.16

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 56 - Changes in Equity and Accumulated Other Comprehensive Loss

A summary of changes in equity for the ~~nine months~~year-to-date interim periods ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 is provided below:


(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

Nine Months Ended September 30,
2017 2016
(in millions)
Total
Shareholders’
Equity

Noncontrolling
Interests
Total Equity
Total
Shareholders’
Equity

Noncontrolling
Interests
Total Equity
Balance, beginning of period $ 1,133.8
$ 11.9
$ 1,145.7
$ 1,139.4
$ 11.4
$ 1,150.8
Dividends (58.8 ) —
(58.8 ) (57.8 ) —
(57.8 )
Reacquisition on open market (25.0 ) —
(25.0 ) —
—
—
Exercise of stock options, net of shares reacquired 20.7
—
20.7
9.6
—
9.6
Stock compensation expense 16.5
—
16.5
16.8
—
16.8
Excess tax shortfall from stock based compensation —
—
—
0.1
—
0.1
Net income 200.5
0.6
201.1
186.8
0.5
187.3
Other comprehensive income 91.4
(1.3 ) 90.1
17.2
—
17.2
Comprehensive income 291.9
(0.7 ) 291.2
204.0
0.5
204.5
Balance, end of period $ 1,379.1
$ 11.2
$ 1,390.3
$ 1,312.1
$ 11.9
$ 1,324.0


(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, 2019	72.4	$	315.6	$	2,112.2	$	(483.7)	$	(542.8)	$	1,473.7	$	2.6	$	1,476.3
Net income	—	—		62.8		—		—		62.8		0		62.8
Cash dividends ($0.43 per share)	—	—		(25.5)		—		—		(25.5)		—		(25.5)
Reacquisition on open market of 1,221,233 shares	—	—		—		—		(70.0)		(70.0)		—		(70.0)
Impact from settlement of share-based awards, net of shares acquired	—	(6.0)		—		—		6.0		0		—		0
Stock-based compensation expense	—	5.8		—		—		—		5.8		—		5.8
Changes in pension and postretirement plan assets and benefit obligation, net of tax	—	—		—		3.6		—		3.6		—		3.6
Currency translation adjustment	—	—		—		(45.2)		—		(45.2)		(0.3)		(45.5)
BALANCE MARCH 31, 2020	72.4	$	315.4	$	2,149.5	$	(525.3)	$	(606.8)	$	1,405.2	$	2.3	$	1,407.5

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


(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	—		(35.7)		(35.7)
	Amounts reclassified from accumulated other comprehensive loss	4.9		—		4.9
Net period other comprehensive income (loss)		4.9		(35.7)		(30.8)
Balance as of March 31, 2021		$	(393.0)	$	(104.2)	$	(497.2)

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

Balance as of December 31, 2016 $ (301.3 ) $ (174.8 ) $ (476.1 )
Other comprehensive income before reclassifications 0.1
84.6
84.7
Amounts reclassified from accumulated other comprehensive income 6.8
—
6.8
Net current-period other comprehensive income 6.9
84.6
91.5
Balance as of September 30, 2017 $ (294.4 ) $ (90.2 ) $ (384.6 )


a			Net of tax benefit of $149.5 million and $148.2 million as of March 31, 2021 and December 31, 2020, respectively.

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

~~Page 14~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the three month periods ended~~ ~~September 30, 2017~~ ~~and 2016.~~

Details of Accumulated Other Comprehensive Income Components (in millions)
Amounts Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statements of Operations
Three Months Ended September 30,
2017 2016
Amortization of defined benefit pension items:
Prior-service costs $ (0.1 ) $ (0.2 ) $(0.1) and $(0.3) has been recorded within Cost of sales for the three months ended September 30, 2017 and 2016, respectively, and $0 and $0.1 has been recorded within Selling, general & administrative for the three months ended September 30, 2017 and 2016, respectively.
Net loss 3.5
2.9
$4.7 and $3.9 has been recorded within Cost of sales for the three months ended September 30, 2017 and 2016, respectively, and $(1.2) and $(1.0) has been recorded within Selling, general & administrative for the three months ended September 30, 2017 and 2016, respectively.
Amortization of other postretirement items:
Prior-service costs —
(0.1 ) Recorded within Selling, general & administrative
Net gain (0.1 ) (0.1 ) Recorded within Selling, general & administrative
$ 3.3
$ 2.5
Total before tax
1.0
0.9
Tax benefit
Total reclassifications for the period $ 2.3
$ 1.6
Net of tax

The table below illustrates the amounts reclassified out of each component of accumulated other comprehensive loss for the ~~nine month~~three-month periods ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020. Amortization of pension and postretirement components have been recorded within “Miscellaneous income, net” on our Condensed Consolidated Statements of Operations.


	Three Months Ended March 31,
(in millions)		2021		2020
Amortization of pension items:
Prior-service costs		$	0	$	(0.1)
Net loss		6.5		4.8
Amortization of postretirement items:
Prior-service costs		(0.3)		(0.3)

Total before tax		6.2		4.4
Tax impact		1.3		1.0
Total reclassifications for the period		$	4.9	$	3.4

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Defined Benefit and Postretirement Benefits

For all plans, the components of net periodic benefit for the three months ended March 31, 2021 and 2020 are as follows:


	Pension				Postretirement
(in millions)	2021		2020		2021		2020
Service cost	$	1.5	$	1.6	$	0.1	$	0.1
Interest cost	5.1		6.6		0.2		0.2
Expected return on plan assets	(14.1)		(14.7)		0		0
Recognized curtailment gain	(0.7)		—		—		—
Amortization of prior service cost	0		(0.1)		(0.3)		(0.3)
Amortization of net loss	6.5		4.8		0		0
Net periodic benefit	$	(1.7)	$	(1.8)	$	0	$	0

The components of net periodic benefit, other than the service cost component, are included in “Miscellaneous income, net” in our Condensed Consolidated Statements of Operations. Service cost is recorded within “Cost of sales” and “Selling, general and administrative” in our Condensed Consolidated Statements of Operations.

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


(in millions)	Pension		Postretirement
Expected contributions in 2021	$	20.7	$	2.6
Amounts contributed during the three months ended March 31, 2021	$	15.7	$	0.1

~~Page 15~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Income Taxes

Effective Tax Rates

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

Our effective tax rates are as follows:


	Three Months Ended March 31,
	2021	2020
Effective Tax Rate	20.9%	21.8%

Our tax rate for the three months ended March 31, 2021 is lower than the prior year’s comparable period primarily due to higher tax credit utilization, partially offset by a lower statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

Our tax rate for the three months ended March 31, 2021 is approximately equal to the statutory U.S. federal tax rate of 21%.

Unrecognized Tax Benefits

During the three months ended March 31, 2021, our gross unrecognized tax benefits, excluding interest and penalties, decreased by $0.1 million, primarily as a result of decreases due to settlements and expiration of statutes of limitations in the current year, partially offset by increases in tax positions taken in the current and prior periods. During the three months ended March 31, 2021, the total amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate decreased by $0.1 million. The difference between these amounts relates to (1) offsetting tax effects from other tax jurisdictions, and (2) interest expense, net of deferred taxes.

During the three months ended March 31, 2021, we recognized $0.1 million of interest and penalty expense related to unrecognized tax benefits in our Condensed Consolidated Statement of Operations. As of March 31, 2021 and December 31, 2020, the total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in our Condensed Consolidated Balance Sheets was $7.6 million and $7.5 million, respectively.

During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by $9.4 million due to expiration of statutes of limitations and settlements with tax authorities. However, if the ultimate resolution of income tax examinations results in amounts that differ from this estimate, we will record additional income tax expense or benefit in the period in which such matters are effectively settled.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 69 - Goodwill and Intangible Assets

~~The Company’s~~Our business acquisitions have typically resulted in the recognition of goodwill and other intangible assets. ~~The Company follows~~We follow the provisions under ASC Topic 350, “Intangibles – Goodwill and Other” ~~(“ASC 350”)~~ as it relates to the accounting for goodwill in ~~the Condensed Consolidated Financial Statements.~~our condensed consolidated financial statements. These provisions require that ~~the Company,~~we, on at least an annual basis, evaluate the fair value of the reporting units to which goodwill is assigned and attributed and compare that fair value to the carrying value of the reporting unit to determine if an impairment has occurred. ~~The Company performs its~~We perform our annual impairment testing during the fourth quarter. Impairment testing takes place more often than annually if events or circumstances indicate a change in status that would indicate a potential impairment. ~~The Company believes~~We believe that there have been no events or circumstances which would more likely than not reduce the fair value for ~~its~~our reporting units below its carrying value. A reporting unit is an operating segment unless discrete financial information is prepared and reviewed by segment management for businesses one level below that operating segment (a “component”), in which case the component would be the reporting unit. As of ~~September 30, 2017, the Company~~March 31, 2021, we had ~~seven~~7 reporting units.

When performing its annual impairment assessment, the Company compares the fair value of each of its reporting units to its respective carrying value. Goodwill is considered to be potentially impaired when the net book value of the reporting unit exceeds its estimated fair value. Fair values are established primarily by discounting estimated future cash flows at an estimated cost of capital which varies for each reporting unit and which, as of the Company’s most recent annual impairment assessment, ranged between 9.0% and 12.0% (a weighted average of 10.5%), reflecting the respective inherent business risk of each of the reporting units tested. This methodology for valuing the Company’s reporting units (commonly referred to as the Income Method) has not changed since the adoption of the provisions under ASC 350. The determination of discounted cash flows is based on the businesses’ strategic plans and long-range planning forecasts, which change from year to year. The revenue growth rates included in the forecasts represent best estimates based on current and forecasted market conditions. Profit margin assumptions are projected by each reporting unit based on the current cost structure and anticipated net cost increases/reductions. There are inherent uncertainties related to these assumptions, including changes in market conditions, and management judgment is necessary in applying them to the analysis of goodwill impairment. In addition to the foregoing, for each reporting unit, market multiples are used to corroborate its discounted cash flow results where fair value is estimated based on earnings multiples determined by available public information of comparable businesses. While the Company believes it has made reasonable estimates and assumptions to calculate the fair value of its reporting units, it is possible a material change could occur. If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may then be determined to be overstated and a charge would need to be taken against net earnings. Furthermore, in order to evaluate the sensitivity of the fair value calculations on the goodwill impairment test performed during the fourth quarter of 2016, the Company applied a hypothetical, reasonably possible 10% decrease to the fair values of each reporting unit. The effects of this hypothetical 10% decrease would still result in the fair value calculation exceeding the carrying value for each reporting unit.

~~Changes to goodwill are as follows:~~

(in millions) Fluid Handling Payment & Merchandising Technologies Aerospace & Electronics Engineered Materials Total
Balance as of December 31, 2015 $ 218.7
$ 575.2
$ 202.6
$ 171.4
$ 1,167.9
Currency translation (6.4 ) (11.9 ) (0.3 ) (0.1 ) (18.7 )
Balance at December 31, 2016 $ 212.3
$ 563.3
$ 202.3
$ 171.3
$ 1,149.2
Additions 22.6
8.9
—
—
31.5
Currency translation 9.4
15.6
0.1
0.1
25.2
Balance as of September 30, 2017 $ 244.3
$ 587.8
$ 202.4
$ 171.4
$ 1,205.9

For the nine month period ended September 30, 2017, additions to goodwill represent the purchase price allocation related to the April 2017 acquisition of Westlock and the June 2017 acquisition of Microtronic. See discussion in Note 2, "Acquisitions" for further details.

~~As of~~ ~~September 30, 2017, the Company had $284.7 million of net intangible assets, of which $28.5 million were intangibles~~Intangibles with indefinite useful lives, consisting of trade ~~names. Intangibles with indefinite useful lives~~names are tested annually for impairment, or when events or changes in circumstances indicate the potential for impairment. If the carrying amount of an indefinite lived intangible asset exceeds its fair value, the intangible asset is written down to its fair value. Fair value is calculated using relief from royalty method. ~~The Company amortizes~~We amortize the cost of definite-lived intangibles over their estimated useful lives.

~~Page 16~~

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

Changes to goodwill are as follows:


(in millions)	Fluid Handling		Payment & Merchandising Technologies		Aerospace & Electronics		Engineered Materials		Total
Balance as of December 31, 2020	$	360.0	$	875.2	$	202.5	$	171.3	$	1,609.0

Adjustments to purchase price allocations	(0.1)		—		—		—		(0.1)
Currency translation	(4.9)		(8.9)		—		—		(13.8)
Balance at March 31, 2021	$	355.0	$	866.3	$	202.5	$	171.3	$	1,595.1

For the three months ended March 31, 2021, adjustments of events or changes in circumstances could include, but are not limited to, a prolonged economic downturn, current period operating or cash flow losses combined with a history of losses or a forecast of continuing losses associated with$0.1 million represent the use of an asset or asset group, or a current expectation that an asset or asset group will be sold or disposed of before the end of its previously estimated useful life. Recoverability is based upon projections of anticipated future undiscounted cash flows associated with the use and eventual disposalfinalization of the ~~definite-lived intangible asset (or asset group), as well as specific appraisal~~purchase price allocation for the acquisition of I&S. See a discussion in ~~certain instances. Reviews occur at the lowest level~~Note 2, “Acquisitions” for ~~which identifiable cash flows are largely independent~~further details.

As of cash flows associated with other long-lived assets or asset groups and include estimated future revenues, gross profit margins, operating profit margins and capital expenditures which are based on the businesses’ strategic plans and long-range planning forecasts, which change from year to year. The revenue growth rates included in the forecasts represent the Company's best estimates based on current and forecasted market conditions, and the profit margin assumptions are based on the current cost structure and anticipatedMarch 31, 2021, we had $503.0 million of net cost increases/reductions. There are inherent uncertainties related to these assumptions, including changes in market conditions, and management’s judgment in applying them to the analysis. If the future undiscounted cash flows are less than the carrying value, then the definite-lived intangible asset is considered impaired and a charge would be taken against net earnings based on the amount by which the carrying amount exceeds the estimated recoverable amount. Judgments that the Company makes which impact these assessments relate to the expected useful lives of definite-lived assets and its ability to realize any undiscounted cash flows in excess of the carrying amounts of such assets, and are affected primarily by changes in the expected use of the assets, changes in technology or development of alternative assets, changes in economic conditions, changes in operating performance and changes in expected future cash flows. Since judgment is involved in determining the recoverable amount of definite-lived intangible assets, ~~there is risk that the carrying value~~ of ~~the Company's definite-lived~~which $71.0 million were intangibles with indefinite useful lives. As of December 31, 2020, we had $520.3 million of net intangible assets, may require adjustment in future periods. Historical results to date have generally approximated expected cash flows for the identifiable cash flow generating level. The Company believes there have been no events or circumstancesof which ~~would more likely than not reduce the fair value of its indefinite-lived or definite-lived intangible assets below their carrying value.~~$70.9 million were intangibles with indefinite useful lives.

Changes to intangible assets are as follows:


(in millions)	Nine Months Ended September 30, 2017			Year Ended December 31, 2016			(in millions)	Three Months Ended March 31, 2021		Year Ended December 31, 2020
Balance at beginning of period, net of accumulated amortization	$	282.2		$	317.1		Balance at beginning of period, net of accumulated amortization	$	520.3	$	505.1
Additions	18.2			—			Additions	0		52.5

Amortization expense	(22.8		)	(30.7		)	Amortization expense	(11.5)		(48.4)
Currency translation and other	7.1			(4.2		)
Currency translation							Currency translation	(5.8)		11.1
Balance at end of period, net of accumulated amortization	$	284.7		$	282.2		Balance at end of period, net of accumulated amortization	$	503.0	$	520.3

For the ~~nine month period~~year ended ~~September 30, 2017,~~December 31, 2020, additions to intangible assets represent the purchase price allocation related to the ~~April 2017~~January 2020 acquisition of ~~Westlock and the June 2017 acquisition of Microtronic.~~I&S. See discussion in Note 2, ~~"Acquisitions"~~“Acquisitions” for further details.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of intangible assets follows:

Weighted Average
Amortization Period of Finite Lived Assets (in years)

September 30, 2017 December 31, 2016
(in millions)
Gross
Asset

Accumulated
Amortization
Net
Gross
Asset

Accumulated
Amortization
Net
Intellectual property rights 16.5 $ 89.7
$ 54.6
$ 35.1
$ 86.4
$ 52.1
$ 34.3
Customer relationships and backlog 15.6 413.5
175.2
238.3
388.9
153.4
235.5
Drawings 37.9 11.1
10.3
0.8
11.1
10.3
0.8
Other 12.8 63.3
52.8
10.5
60.3
48.7
11.6
Total 15.9 $ 577.6
$ 292.9
$ 284.7
$ 546.7
$ 264.5
$ 282.2

~~Page 17~~


		March 31, 2021						December 31, 2020
(in millions)	Weighted Average Amortization Period of Finite Lived Assets (in years)	Gross Asset		Accumulated Amortization		Net		Gross Asset		Accumulated Amortization		Net
Intellectual property rights	15.2	$	137.7	$	58.6	$	79.1	$	138.2	$	58.4	$	79.8
Customer relationships and backlog	18.4	656.2		287.8		368.4		663.6		280.6		383.0
Drawings	40	11.1		10.5		0.6		11.1		10.5		0.6
Other	11.7	143.5		88.6		54.9		144.9		88.0		56.9
Total	17.8	$	948.5	$	445.5	$	503.0	$	957.8	$	437.5	$	520.3

Future amortization expense associated with ~~intangibles~~intangible assets is expected to be:


(in millions)
Remainder of 2021	$	33.3
2022	42.9
2023	42.8
2024	42.0
2025 and after	271.0

Year (in millions)
2017 $ 7.8
2018 29.1
2019 26.4
2020 22.0
2021 and after 170.9

Note 710 - Accrued Liabilities

Accrued liabilities consist of:


(in millions)	March 31, 2021		December 31, 2020
Employee related expenses	$	107.3	$	124.3
Warranty	11.5		9.4
Current lease liabilities	23.5		23.4
Contract liabilities	95.5		103.0
Other	136.9		135.8
Total	$	374.7	$	395.9

(in millions) September 30,
2017 December 31,
2016
Employee related expenses $ 97.1
$ 95.4
Warranty 15.1
15.5
Advanced payment from customers 26.7
19.0
Other 101.6
93.2
Total $ 240.5
$ 223.1

~~The Company accrues~~We accrue warranty liabilities when it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Warranty provision is included within “Cost of sales” in ~~Cost of sales in the~~our Condensed Consolidated Statements of Operations.

~~A summary of~~The following table summarizes warranty activity recorded during the ~~warranty liabilities is as follows:~~three months ended March 31, 2021 and 2020.


(in millions)	2021		2020
Balance at beginning of period	$	9.4	$	11.0
Expense	3.2		2.6
Changes due to acquisitions	0		0.3
Payments / deductions	(1.0)		(3.0)
Currency translation	(0.1)		(0.1)
Balance at end of period	$	11.5	$	10.8

(in millions) Nine Months Ended September 30, 2017 Year Ended December 31, 2016
Balance at beginning of period $ 15.5
$ 15.1
Expense 11.1
14.5
Changes due to acquisitions 0.2
—
Payments / deductions (11.9 ) (13.4 )
Currency translation 0.2
(0.7 )
Balance at end of period $ 15.1
$ 15.5

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 811 - Commitments and Contingencies

Asbestos Liability

Information Regarding Claims and Costs in the Tort System

As of ~~September 30, 2017, the Company was~~March 31, 2021, we were a defendant in cases filed in numerous state and federal courts alleging injury or death as a result of exposure to asbestos. Activity related to asbestos claims during the periods indicated was as follows:


	Three Months Ended		Year Ended
	March 31,		December 31,
	2021	2020		2020
Beginning claims	29,138	29,056		29,056
New claims	733	681		2,620
Settlements	(160)	(165)		(885)
Dismissals	(304)	(410)		(1,653)

Ending claims	29,407	29,162		29,138

Three Months Ended Nine Months Ended Year Ended
September 30, September 30, December 31,
2017 2016 2017 2016 2016
Beginning claims 31,980
38,664
36,052
41,090
41,090
New claims 667
611
2,169
2,239
2,826
Settlements (278 ) (187 ) (906 ) (728 ) (924 )
Dismissals (294 ) (2,638 ) (5,240 ) (6,151 ) (6,940 )
Ending claims 32,075
36,450
32,075
36,450
36,052

Of the ~~32,075~~29,407 pending claims as of ~~September 30, 2017~~,March 31, 2021, approximately ~~18,200~~18,000 claims were pending in New York of which approximately 700 claims were pending in Texas, approximately 1,500 claims were pending in Mississippi, and approximately 200 claims were pending in Ohio, all jurisdictions in which legislation or judicial orders restrict the types of16,000 are non-malignancy claims that ~~can proceed to trial on the merits.~~were filed over 15 years ago and have been inactive under New York court orders.

~~The Company has~~We have tried several cases resulting in defense verdicts by the jury or directed verdicts for the defense by the court. ~~The Company~~We further ~~has~~have pursued appeals of certain adverse jury verdicts that have resulted in reversals in favor of the defense.

~~On March 23, 2010, a Philadelphia, Pennsylvania, state court jury found the Company responsible for a 1/11th share of a $14.5 million verdict~~ We have also tried several other cases resulting in ~~the~~ ~~James Nelson~~ claim. On February 23, 2011, the court entered judgment on the verdict in the amount of $4.0 million, jointly, against the Company and two other defendants, with additional interest in the amount of $0.01 million being assessed against the Company, only. All defendants, including the Company, and the plaintiffs took timely appeals of certain aspects of those judgments. On September 5, 2013, a panel of the Pennsylvania Superior Court, in a 2-1 decision, vacated the ~~Nelson~~ verdict against all defendants, reversing and remanding for a new trial. Plaintiffs requested a rehearing in the Superior Court and by order dated November 18, 2013, the Superior Court vacated the panel opinion, and granted en banc reargument. On December 23, 2014, the Superior Court issued a second opinion reversing the jury verdict. Plaintiffs sought leave to appeal to the Pennsylvania Supreme Court,plaintiff verdicts which ~~defendants have opposed. By order dated June 21, 2017, the Supreme Court of Pennsylvania denied plaintiffs’ petition for leave to appeal. The case may be set for a new trial in 2018.~~

~~On August 17, 2011, a New York City state court jury found the Company responsible for a 99% share of a $32 million verdict on the~~ ~~Ronald Dummitt~~ ~~claim. The Company filed post-trial motions seeking to overturn the verdict, to grant a new trial,~~we paid or to reduce the damages, which the Company argued were excessive under New York appellate case law governing awards for non-economic losses. The Court held oral argument on these motions on October 18, 2011 and issued a written decision on August 21, 2012 confirming the jury’s liability findings but reducing the award of damages to $8 million. At plaintiffs’ request, the Court entered a judgment in the amount of $4.9 million against the Company, taking into account settlement offsets and accrued interest under New York law. The Company appealed, and the judgment was affirmed in a 3-2 decision and order dated July 3, 2014. The Company appealed to the New York Court of Appeals. The court heard oral arguments on May 3, 2016 and affirmed the judgment in a decision dated June 28, 2016. The judgment, with interest, in the amount of $6.6 million was paid in the third quarter 2016.

~~On October 23, 2012, the Company received an adverse verdict in the~~ ~~Gerald Suttner~~ claim in Buffalo, New York. The jury found that the Company was responsible for four percent (4%) of plaintiffs’ damages of $3 million. The Company filed post-trial motions requesting judgment in the Company’s favor notwithstanding the jury’s verdict, which were denied. The court entered a judgment of $0.1 million against the Company. The Company appealed, and the judgment was affirmed by order dated March 21, 2014. The Company sought reargument of this decision, which was denied. The Company sought review before the New York Court of Appeals, which was accepted in the fourth quarter of 2014. The court heard oral arguments on May 3, 2016 and affirmed the judgment in a decision dated June 28, 2016. The judgment, with interest, in the amount of $0.2 million was paid in the third quarter 2016.

~~Page 19~~

~~On November 28, 2012, the Company received an adverse verdict in the~~ ~~James Hellam~~ claim in Oakland, CA. The jury found that the Company was responsible for seven percent (7%) of plaintiffs’ non-economic damages of $4.5 million, plus a portion of their economic damages of $0.9 million. Based on California court rules regarding allocation of damages, judgment was entered against the Company in the amount of $1.282 million. The Company filed post-trial motions requesting judgment in the Company’s favor notwithstanding the jury’s verdict and also requesting that settlement offsets be applied to reduce the judgment in accordance with California law. On January 31, 2013, the court entered an order disposing partially of that motion. On March 1, 2013, the Company filed an appeal regarding the portions of the motion that were denied. The court entered judgment against the Company in the amount of $1.1 million. The Company appealed. By opinion dated April 16, 2014, the Court of Appeal affirmed the finding of liability against the Company, and the California Supreme Court denied review of this ruling. The Court of Appeal reserved the arguments relating to recoverable damages to a subsequent appeal that remains pending. On August 21, 2015, the Court of Appeal reversed the trial court with respect to a $20,000 damages item, but affirmed the trial court in all other respects. The Company sought review of that ruling before the Supreme Court of California, which was denied. The Company settled ~~the matter in December 2015. The settlement was reflected in the fourth quarter 2015 indemnity amount.~~

~~On February 25, 2013, a Philadelphia, Pennsylvania, state court jury found the Company responsible for a 1/10th share of a $2.5 million verdict in the~~ ~~Thomas Amato~~ ~~claim and a 1/5th share of a $2.3 million verdict in the~~ ~~Frank Vinciguerra~~ claim, which were consolidated for trial. The Company filed post-trial motions requesting judgments in the Company’s favor notwithstanding the jury’s verdicts or new trials, and also requesting that settlement offsets be applied to reduce the judgment in accordance with Pennsylvania law. These motions were denied. The Company appealed, and on April 17, 2015, a panel of the Superior Court of Pennsylvania affirmed the trial court’s ruling. The Supreme Court of Pennsylvania accepted the Company’s petition for review and heard oral arguments on September 13, 2016. On November 22, 2016, the Court dismissed the Company’s appeal as improvidently granted. The Company paid the ~~Vinciguerra~~ ~~judgment in the amount of $0.6 million in the fourth quarter 2016. The Company paid the~~ ~~Amato~~ ~~judgment, with interest, in the amount of $0.3 million in the second quarter of 2017.~~

~~On March 1, 2013, a New York City state court jury entered a $35 million verdict against the Company in the~~ ~~Ivo Peraica~~ claim. The Company filed post-trial motions seeking to overturn the verdict, to grant a new trial, or to reduce the damages, which the Company argues were excessive under New York appellate case law governing awards for non-economic losses and further were subject to settlement offsets. After the trial court remitted the verdict to $18 million, but otherwise denied the Company’s post-trial motion, judgment was entered against the Company in the amount of $10.6 million (including interest). The Company appealed. The Company took a separate appeal of the trial court’s denial of its summary judgment motion. The Court consolidated the appeals, which were heard in the fourth quarter of 2014. In July 2016 the Company supplemented its briefing based on the New York Court of Appeals ~~Dummitt/Suttner~~ decision. On October 6, 2016, a panel of the Appellate Division, First Department, affirmed the rulings of the trial court on liability issues but further reduced the damages award to $4.25 million, which after settlement offsets is calculated to be $1.94 million. Plaintiff has the option of accepting the reduced amount or having a new trial on damages. The Company filed a motion with the Appellate Division requesting a rehearing on liability issues. The motion was denied. The New York Court of Appeals also denied review. The Company paid in the first quarter of 2017 the ~~Peraica~~ ~~plaintiffs $2.7 million, which was the amount owed under the judgment.~~

~~On July 31, 2013, a Buffalo, New York state court jury entered a $3.1 million verdict against the Company in the~~ ~~Lee Holdsworth~~ claim. The Company filed post-trial motions seeking to overturn the verdict, to grant a new trial, or to reduce the damages, which the Company argues were excessive under New York appellate case law governing awards for non-economic losses and further were subject to settlement offsets. Post-trial motions were denied, and the court entered judgment in the amount of $1.7 million. On June 12, 2015, the Appellate Division, Fourth Department, affirmed the trial court��s ruling denying the Company’s motion for summary judgment. The court denied reargument of that ruling. The Company pursued a further appeal of the trial court rulings and judgment, which was argued on May 16, 2016. On July 8, 2016, the Court vacated the judgment and granted the Company a new trial on the issue of whether the Company is subject to joint-and-several liability under New York law. Plaintiff filed a motion to enter judgment in the trial court in the amount allegedly unaffected by the appellate ruling, approximately $1.0 million, and the Company opposed the motion. The Company settled the matter. The settlement was reflected in the fourth quarter 2016 indemnity amount.

~~On September 11, 2013, a Columbia, South Carolina state court jury in the~~ ~~Lloyd Garvin~~ claim entered an $11 million verdict for compensatory damages against the Company and two other defendants jointly, and also awarded exemplary damages against the Company in the amount of $11 million. The jury also awarded exemplary damages against both other defendants. The Company filed post-trial motions seeking to overturn the verdict, which were denied, except that the Court remitted the compensatory damages award to $2.5 million and exemplary damages award to $3.5 million. Considering settlement offsets, the Court further reduced the total damages award to $3.5 million. The Company settled the matter. The settlement is reflected in the first quarter 2015 indemnity amount.

~~Page 20~~

~~On September 17, 2013, a Fort Lauderdale, Florida state court jury in the~~ ~~Richard DeLisle~~ claim found the Company responsible for 16 percent of an $8 million verdict. The trial court denied all parties’ post-trial motions, and entered judgment against the Company in the amount of $1.3 million. The Company has appealed. Oral argument on the appeal took place on February 16, 2016. On September 14, 2016 a panel of the Florida Court of Appeals reversed and entered judgment in favor of the Company. Plaintiff filed with the Court of Appeals a motion for rehearing and/or certification of an appeal to the Florida Supreme Court, which the Court denied on November 9, 2016. Plaintiffs have subsequently requested review by the Supreme Court of Florida. Plaintiffs' motion was granted on July 11, 2017. The briefing in this matter remains ongoing.

~~On June 16, 2014, a New York City state court jury entered a $15 million verdict against the Company in the~~ ~~Ivan Sweberg~~ ~~claim and a $10 million verdict against the Company in the~~ ~~Selwyn Hackshaw~~ claim. The two claims were consolidated for trial. The Company filed post-trial motions seeking to overturn the verdicts, to grant new trials, or to reduce the damages, which were denied, except that the Court reduced the Sweberg award to $10 million, and reduced the ~~Hackshaw~~ ~~award to $6 million. Judgments have been entered in the amount of $5.3 million in~~ ~~Sweberg~~ ~~and $3.1 million in~~ ~~Hackshaw. The Company appealed. Oral argument on~~ ~~Sweberg~~ ~~took place on February 16, 2016, and oral argument on~~ ~~Hackshaw~~ ~~took place on March 9, 2016. On October 6, 2016, two panels of the Appellate Division, First Department, affirmed the rulings of the trial court on liability issues but further reduced the~~ ~~Sweberg~~ ~~damages award to $9.5 million and further reduced the~~ ~~Hackshaw~~ ~~damages award to $3 million, which after settlement offsets are calculated to be $4.73 million in~~ ~~Sweberg~~ ~~and $0 in~~ ~~Hackshaw. Plaintiffs were given the option of accepting the reduced awards or having new trials on damages. Plaintiffs subsequently brought an appeal in~~ ~~Hackshaw~~ ~~before the New York Court of Appeals, which the Court denied. The Company filed a motion with the Appellate Division requesting a rehearing on liability issues in~~ ~~Sweberg. That motion was denied. The New York Court of Appeals also denied review. The Company paid in the first quarter of 2017 the~~ ~~Sweberg~~ ~~plaintiffs $5.7 million, which was the amount owed under this judgment. No damages are owed in~~ ~~Hackshaw~~.

~~On July 2, 2015, a St. Louis, Missouri state court jury in the~~ ~~James Poage~~ claim entered a $1.5 million verdict for compensatory damages against the Company. The jury also awarded exemplary damages against the Company in the amount of $10 million. The Company filed a motion seeking to reduce the verdict to account for the verdict set-offs. That motion was denied, and judgment was entered against the Company in the amount of $10.8 million. The Company initiated an appeal. Oral argument was held on December 13, 2016. In an opinion dated May 2, 2017, a Missouri Court of Appeals panel affirmed the judgment in all respects. The Court of Appeals denied the Company’s motion to transfer the case to the Supreme Court of Missouri. The Company sought leave to appeal before the Supreme Court of Missouri, which denied that request. The Company plans to seek further review of that ruling by the Supreme Court of the United States.

~~On February 9, 2016, a Philadelphia, Pennsylvania, federal court jury found the Company responsible for a 30 percent share of a $1.085 million verdict in the~~ ~~Valent Rabovsky~~ claim. The court ordered briefing on the amount of the judgment. The Company argued, among other things, that settlement offsets reduce the award to plaintiff under Pennsylvania law. A further hearing was held April 26, 2016, after which the court denied the Company’s request and entered judgment in the amount of $0.4 million. The Company filed post-trial motions, which were denied in two decisions issued on August 26, 2016 and September 28, 2016. The Company is pursuing an appeal to the Third Circuit Court of Appeals, which was argued on June 12, 2017. On September 27, 2017, the Court entered an order asking the Supreme Court of Pennsylvania to decide one of the issues raised in the Company’s appeal. The Supreme Court of Pennsylvania has yet to rule on their request.

~~On April 22, 2016, a Phoenix, Arizona federal court jury found the Company responsible for a 20 percent share of a $9 million verdict in the~~ ~~George Coulbourn~~ claim, and further awarded exemplary damages against the Company in the amount of $5 million. The jury also awarded compensatory and exemplary damages against the other defendant present at trial. The court entered judgment against the Company in the amount of $6.8 million. The Company filed post-trial motions, which were denied on September 20, 2016. The Company is pursuing an appeal to the Ninth Circuit Court of Appeals. Briefing is ongoing.

~~On June 30, 2017, a New York City state court jury entered a $20 million verdict against the Company in the~~ ~~Geoffrey Anisansel~~ ~~claim. The Company settled the matter in August 2017. The settlement is reflected in the third quarter 2017 indemnity amount.~~

~~Such judgment amounts are not included in the Company’s incurred costs until all available appeals are exhausted and the final payment amount is determined.~~unsuccessful appeals.

The gross settlement and defense costs incurred (before insurance recoveries and tax effects) by us for the ~~Company for the nine-month periods~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 totaled ~~$75.5~~$9.1 million and ~~$57.5~~$12.6 million, respectively. In contrast to the recognition of settlement and defense costs, which reflect the current level of activity in the tort system, cash payments and receipts generally lag the tort system activity by several months or more, and may show some fluctuation from ~~quarter~~period to ~~quarter.~~period. Cash payments of settlement amounts are not made until all releases and other required documentation are received by

~~Page 21~~

~~the Company,~~ us, and reimbursements of both settlement amounts and defense costs by insurers may be uneven due to insurer payment practices, transitions from one insurance layer to the next excess layer and the payment terms of certain reimbursement agreements. ~~The Company’s~~Our total pre-tax payments for settlement and defense costs, net of funds received from insurers, for the ~~nine-month periods~~three months ended ~~September 30, 2017~~March 31, 2021 and, ~~2016~~2020 totaled ~~$46.8~~$10.8 million and ~~$41.5~~$11.7 million, respectively. Detailed below are the comparable amounts for the periods indicated.


	Three Months Ended				Year Ended
(in millions)	March 31,				December 31,
	2021		2020			2020
Settlement / indemnity costs incurred (1)	$	5.5	$	8.2		$	35.3
Defense costs incurred (1)	3.6		4.4			15.6
Total costs incurred	$	9.1	$	12.6		$	50.9

Settlement / indemnity payments	$	10.1	$	11.0		$	24.7
Defense payments	3.2		4.3			16.7
Insurance receipts	(2.5)		(3.6)			(10.3)
Pre-tax cash payments, net	$	10.8	$	11.7		$	31.1

(1) Before insurance recoveries and tax effects.

Three Months Ended Nine Months Ended Year Ended
(in millions) September 30, September 30, December 31,
2017 2016 2017 2016 2016
Settlement / indemnity costs incurred (1) $ 21.0
$ 9.6
$ 46.8
$ 25.3
$ 30.5
Defense costs incurred (1) 9.7
10.1
28.7
32.2
43.0
Total costs incurred $ 30.7
$ 19.7
$ 75.5
$ 57.5
$ 73.5

Settlement / indemnity payments $ 13.9
$ 14.4
$ 37.3
$ 28.0
$ 32.4
Defense payments 9.5
10.6
28.7
31.0
43.7
Insurance receipts (4.8 ) (9.3 ) (19.2 ) (17.4 ) (20.1 )
Pre-tax cash payments $ 18.6
$ 15.8
$ 46.8
$ 41.5
$ 56.0


~~(1)~~	~~Before insurance recoveries and tax effects.~~

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

Cumulatively through ~~September 30, 2017, the Company has~~March 31, 2021, we have resolved (by settlement or dismissal) approximately ~~130,000~~142,000 claims. The related settlement cost incurred by ~~the Company~~us and ~~its~~our insurance carriers is approximately ~~$530~~$684 million, for an average settlement cost per resolved claim of approximately ~~$4,100.~~$4,800. The average settlement cost per claim resolved during the years ended December 31, ~~2016, 2015~~2020, 2019 and ~~2014~~2018 was ~~$3,900, $3,100~~$13,900, $15,800, and ~~$3,800,~~$11,300, respectively. Because claims are sometimes

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

dismissed in large groups, the average cost per resolved claim, as well as the number of open claims, can fluctuate significantly from period to period. In addition to large group dismissals, the nature of the disease and corresponding settlement amounts for each claim resolved will also drive changes from period to period in the average settlement cost per claim. Accordingly, the average cost per resolved claim is not considered in ~~the Company’s~~our periodic review of ~~its~~our estimated asbestos liability. For a discussion regarding the four most significant factors affecting the liability estimate, see “Effects on the Condensed Consolidated Financial ~~Statements”.~~Statements.”

Effects on the Condensed Consolidated Financial Statements

~~The Company has~~We have retained ~~the~~an independent actuarial firm ~~of Hamilton, Rabinovitz & Associates, Inc. (“HR&A”), a nationally recognized expert in the field,~~ to assist management in estimating ~~the Company’s~~our asbestos liability in the tort system. ~~HR&A reviews~~The actuarial consultants review information provided by ~~the Company~~us concerning claims filed, settled and dismissed, amounts paid in settlements and relevant claim information such as the nature of the asbestos-related disease asserted by the claimant, the jurisdiction where filed and the time lag from filing to disposition of the claim. The methodology used by ~~HR&A~~the actuarial consultants to project future asbestos costs is based on ~~the Company’s~~our recent historical experience for claims filed, settled and dismissed during a base reference period. ~~The Company’s~~Our experience is then compared to estimates of the number of individuals likely to develop asbestos-related diseases determined based on widely used previously conducted epidemiological studies augmented with current data inputs. Those studies were undertaken in connection with national analyses of the population of workers believed to have been exposed to asbestos. Using that information, ~~HR&A estimates~~the actuarial consultants estimate the number of future claims that would be filed against ~~the Company~~us and estimates the aggregate settlement or indemnity costs that would be incurred to resolve both pending and future claims based upon the average settlement costs by disease during the reference period. This methodology has been accepted by numerous courts. After discussions with us, the ~~Company, HR&A augments its~~actuarial consultants augment our liability estimate for the costs of defending asbestos claims in the tort system using a forecast from ~~the Company~~us which is based upon discussions with ~~its~~our defense counsel. Based on this information, ~~HR&A compiles~~the actuarial consultants compile an estimate of ~~the Company’s~~our asbestos liability for pending and future claims using a range of reference periods based on claim experience and ~~covering~~ claims expected to be filed through the indicated forecast period. The most significant factors affecting the liability estimate are (1) the number of new mesothelioma claims filed against ~~the Company,~~us, (2) the average settlement costs for mesothelioma claims, (3) the percentage of mesothelioma claims dismissed against ~~the Company~~us and (4) the aggregate defense costs incurred by ~~the Company.~~us. These factors are interdependent, and no one factor predominates in determining the liability estimate.

~~Page 22~~

In ~~the Company’s~~our view, the forecast period used to provide the best estimate for asbestos claims and related liabilities and costs is a judgment based upon a number of trend factors, including the number and type of claims being filed each year; the jurisdictions where such claims are filed, and the effect of any legislation or judicial orders in such jurisdictions restricting the types of claims that can proceed to trial on the merits; and the likelihood of any comprehensive asbestos legislation at the federal level. In addition, the dynamics of asbestos litigation in the tort system have been significantly affected by the substantial number of companies that have filed for bankruptcy protection, thereby staying any asbestos claims against them until the conclusion of such proceedings, and the establishment of a number of post-bankruptcy trusts for asbestos claimants, which have been estimated to provide $36 billion for payments to current and future claimants. These trend factors have both positive and negative effects on the dynamics of asbestos litigation in the tort system and the related best estimate of ~~the Company’s~~our asbestos liability, and these effects do not move in a linear fashion but rather change over multi-year periods. Accordingly, ~~the Company’s~~ management continues to monitor these trend factors over time and periodically assesses whether an alternative forecast period is appropriate.

Each quarter, ~~HR&A compiles~~the actuarial consultants compile an update based upon ~~the Company’s~~our experience in claims filed, settled and dismissed as well as average settlement costs by disease category (mesothelioma, lung cancer, other cancer, and non-malignant conditions including asbestosis). In addition to this claims experience, ~~the Company~~we also ~~considers~~consider additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. As part of this process, ~~the Company~~we also ~~takes into account~~consider trends in the tort system such as those enumerated above. Management considers all these factors in conjunction with the liability estimate of ~~HR&A~~the actuarial consultants and determines whether a change in the estimate is warranted.

Liability Estimate. ~~With~~In June 2016, the ~~assistance~~New York State Court of ~~HR&A,~~Appeals issued its opinion in Dummitt v. Crane Co., affirming a 2012 verdict for $4.9 million against us. In that opinion, the court ruled that in certain circumstances we are legally responsible for asbestos-containing materials made and sold by third parties that others attached post-sale to our equipment. This decision provided clarity regarding the nature of claims that may proceed to trial in New York and greater predictability regarding future claim activity. We also reflected the impact of the Dummitt decision on our expected settlement values. Accordingly, on December 31, 2016, we updated and extended our asbestos liability estimate through 2059, the generally accepted end point.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Following our experience in the tort system post the Dummitt decision, we entered into several, increasingly similar, group settlements with various plaintiff firms and we expect this new trend of these types of group settlements to continue. Accordingly, effective as of December 31, ~~2016, the Company extended its~~2019, we updated our estimate of the asbestos liability, including ~~the~~revised costs of settlement or indemnity payments and defense costs relating to currently pending claims and future claims projected to be filed against ~~the Company~~us through the ~~generally accepted~~same expected end point of ~~such claims in~~ 2059. ~~The Company’s previous estimate was for asbestos claims filed or projected to be filed through 2021. The Company’s~~Our estimate of the asbestos liability for pending and future claims through 2059 is based on the projected future asbestos costs resulting from ~~the Company’s~~our experience using a range of reference periods for claims filed, settled and dismissed. Based on this estimate, ~~the Company~~we recorded an additional liability of ~~$227~~$255 million as of December 31, 2016. This action was based on several factors which contribute to the Company’s ability to reasonably estimate this liability through 2059. First, the number of mesothelioma claims (which although constituting approximately 10% of the Company’s total pending asbestos claims, have consistently accounted for approximately 90% of the Company’s2019.

An aggregate settlement and defense costs) being filed against the Company and associated settlement costs have stabilized. Second, there have been generally favorable developments in the trend of case law which has been a contributing factor in stabilizing the asbestos claims activity and related settlement costs. Third, there have been significant actions taken by certain state legislatures and courts that have reduced the number and types of claims that can proceed to trial, which has been a significant factor in stabilizing the asbestos claims activity. Fourth, recent court decisions in certain jurisdictions have provided additional clarity regarding the nature of claims that may proceed to trial in those jurisdictions and greater predictability regarding future claim activity. Fifth, the Company has coverage-in-place agreements with almost all of its excess insurers, which enables the Company to project a stable relationship between settlement and defense costs paid by the Company and reimbursements from its insurers. Sixth, annual settlements with respect to groups of cases with certain plaintiff firms have helped to stabilize indemnity payments and defense costs. Taking these factors into account, the Company believes that it can reasonably estimate the asbestos liability for pending claims and future claims to be filed through 2059.

Management has made its best estimate of the costs through 2059 based on the analysis by HR&A completed in January 2017. Through September 30, 2017, the Company’s actual experience during the updated reference period for mesothelioma claims filed and dismissed generally approximated the assumptions in the Company’s liability estimate. In addition to this claims experience, the Company considered additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. Based on this evaluation, the Company determined that no change in the estimate was warranted for the period ended September 30, 2017.

A liability of ~~$696~~$712 million ~~was~~is recorded as of December 31, ~~2016~~2019 to cover the estimated cost of asbestos claims now pending or subsequently asserted through 2059, of which approximately ~~80%~~85% is attributable to settlement and defense costs for future claims projected to be filed through 2059. The liability is reduced when cash payments are made in respect of settled claims and defense costs. The liability was ~~$630~~$657 million and $670 million as of ~~September 30, 2017.~~March 31, 2021 and December 31, 2020, respectively. It is not possible to forecast when cash payments related to the asbestos liability will be fully expended; however, it is expected such cash payments will continue for a number of years past 2059, due to the significant proportion of future claims included in the estimated asbestos liability and the lag time between the date a claim is filed and when it is resolved. None of these estimated costs have been discounted to present value due to the inability to reliably forecast the timing of payments. The current portion of the total estimated liability at ~~September~~

~~Page 23~~

~~30, 2017 was $71~~March 31, 2021 and December 31, 2020 is $66.5 million, respectively and represents ~~the Company’s~~our best estimate of total asbestos costs expected to be paid during the twelve-month period. Such amount is based upon the ~~HR&A~~actuarial model together with ~~the Company’s~~our prior year payment experience for both settlement and defense costs.

We have made our best estimate of the costs through 2059. Through March 31, 2021, our actual experience during the updated reference period for mesothelioma claims filed and dismissed generally approximated the assumptions in our liability estimate. In addition to this claims experience, we considered additional quantitative and qualitative factors such as the nature of the aging of pending claims, significant appellate rulings and legislative developments, and their respective effects on expected future settlement values. Based on this evaluation, we determined that no change in the estimate was warranted for the period ended March 31, 2021.

Insurance Coverage and Receivables. Prior to 2005, a significant portion of ~~the Company’s~~our settlement and defense costs were paid by ~~its~~our primary insurers. With the exhaustion of that primary coverage, ~~the Company~~we began negotiations with ~~its~~our excess insurers to reimburse ~~the Company~~us for a portion of ~~its~~our settlement and/or defense costs as incurred. To date, ~~the Company has~~we have entered into agreements providing for such reimbursements, known as ~~“coverage-in-place”,~~“coverage-in-place,” with eleven of ~~its~~our excess insurer groups. Under such coverage-in-place agreements, an insurer’s policies remain in force and the insurer undertakes to provide coverage for ~~the Company’s~~our present and future asbestos claims on specified terms and conditions that address, among other things, the share of asbestos claims costs to be paid by the insurer, payment terms, claims handling procedures and the expiration of the insurer’s obligations. Similarly, under a variant of coverage-in-place, ~~the Company has~~we have entered into an agreement with a group of insurers confirming the aggregate amount of available coverage under the subject policies and setting forth a schedule for future reimbursement payments to ~~the Company~~us based on aggregate indemnity and defense payments made. In addition, with ten of ~~its~~our excess insurer groups, ~~the Company~~we entered into agreements settling all asbestos and other coverage obligations for an agreed sum ~~totaling~~and received a total of $82.5 million in ~~aggregate.~~aggregate as a result of those settlements. Reimbursements from insurers for past and ongoing settlement and defense costs allocable to their policies have been made in accordance with these coverage-in-place and other agreements. All of these agreements include provisions for mutual releases, indemnification of the insurer and, for coverage-in-place, claims handling procedures. With the agreements referenced above, ~~the Company has~~we have concluded settlements with all but ~~one~~two of ~~its~~our solvent excess insurers ~~whose~~with policies ~~are~~ expected to respond to the aggregate costs included in the liability estimate. ~~That~~The first such insurer, which issued a single applicable policy, has been paying for many years the shares of defense and indemnity costs ~~the Company has~~we have allocated to it, subject to a reservation of rights. The second insurer issued a single applicable policy in a layer of coverage that we do not anticipate reaching until many years from now, and, prior to the policy being reached, we anticipate opening a dialogue with that insurer about the execution of a suitable agreement. There are no pending legal proceedings between ~~the Company~~us and any insurer contesting ~~the Company’s~~our asbestos claims under ~~its~~our insurance policies.

In conjunction with developing the aggregate updated liability estimate referenced above, ~~the Company~~we also developed an updated estimate of probable insurance recoveries for ~~its~~our asbestos liabilities. In developing this estimate, ~~the Company~~we considered ~~its~~our coverage-in-place and other settlement agreements described above, as well as ~~a number of~~several additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and ~~limits and their interrelationships.~~limits. In addition, the timing and amount of reimbursements will vary because ~~the Company’s~~our insurance coverage for asbestos claims involves multiple insurers, with different policy terms and certain gaps in coverage. In addition to consulting with legal counsel on these insurance matters, ~~the Company~~we retained insurance consultants to assist management in the estimation of probable insurance recoveries based upon the aggregate

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

liability estimate described above and assuming the continued viability of all solvent insurance carriers. Based upon the analysis of policy terms and other factors noted above by ~~the Company’s~~our legal counsel, and incorporating risk mitigation judgments by ~~the Company~~us where policy terms or other factors were not certain, ~~the Company’s~~our insurance consultants compiled a model indicating how ~~the Company’s~~our historical insurance policies would respond to varying levels of asbestos settlement and defense costs and the allocation of such costs between such insurers and ~~the Company.~~us. Using the estimated liability as of December 31, ~~2016~~2019 (for claims filed or expected to be filed through 2059), the insurance consultant’s model forecasted that approximately ~~21%~~14% of the liability would be reimbursed by ~~the Company’s~~our insurers. While there are overall limits on the aggregate amount of insurance available to ~~the Company~~us with respect to asbestos claims, ~~those overall~~certain limits were not reached by the total estimated liability currently recorded by ~~the Company,~~us, and such overall limits did not influence ~~the Company in its~~our determination of the asset amount to record. ~~The proportion of the asbestos liability that is allocated~~We allocate to ~~certain insurance coverage years, however, exceeds the limits of available insurance in those years. The Company allocates to itself~~ourselves the amount of the asbestos liability (for claims filed or expected to be filed through 2059) that is in excess of available insurance coverage allocated to such years. An asset of ~~$143~~$98 million was recorded as of December 31, ~~2016~~2019 representing the probable insurance reimbursement for ~~such~~ claims expected through 2059. The asset is reduced as reimbursements and other payments from insurers are received. The asset was ~~$124~~$84 million and $87 million as of ~~September 30, 2017.~~March 31, 2021 and December 31, 2020, respectively.

~~The Company reviews~~We review the ~~aforementioned~~ estimated reimbursement rate with ~~its~~our insurance consultants on a periodic basis in order to confirm ~~its~~ overall consistency with ~~the Company’s~~our established reserves. The reviews encompass consideration of the performance of the insurers under coverage-in-place agreements and the effect of any additional lump-sum payments under other insurer agreements. Actual insurance reimbursements vary from period to period, and will decline over time, for the reasons cited above.

Uncertainties. Estimation of ~~the Company’s~~our ultimate exposure for asbestos-related claims is subject to significant uncertainties, as there are multiple variables that can affect the timing, severity and quantity of claims and the manner of their resolution. ~~The Company cautions~~We caution that ~~its~~our estimated liability is based on assumptions with respect to future claims, settlement and defense costs based on past experience that may not prove reliable as predictors; the assumptions are interdependent and no single

~~Page 24~~

factor predominates in determining the liability estimate. A significant upward or downward trend in the number of claims filed, depending on the nature of the alleged injury, the jurisdiction where filed and the quality of the product identification, or a significant upward or downward trend in the costs of defending claims, could change the estimated liability, as would substantial adverse verdicts at trial that withstand appeal. A legislative solution, structured settlement transaction, or significant change in relevant case law could also change the estimated liability.

The same factors that affect developing estimates of probable settlement and defense costs for asbestos-related liabilities also affect estimates of the probable insurance reimbursements, as do a number of additional factors. These additional factors include the financial viability of the insurance companies, the method by which losses will be allocated to the various insurance policies and the years covered by those policies, how settlement and defense costs will be covered by the insurance policies and interpretation of the effect on coverage of various policy terms and limits and their interrelationships. In addition, due to the uncertainties inherent in litigation matters, no assurances can be given regarding the outcome of any litigation, if necessary, to enforce ~~the Company’s~~our rights under ~~its~~our insurance policies or settlement agreements.

Many uncertainties exist surrounding asbestos litigation, and ~~the Company~~we will continue to evaluate ~~its~~our estimated asbestos-related liability and corresponding estimated insurance reimbursement as well as the underlying assumptions and process used to derive these amounts. These uncertainties may result in ~~the Company~~our incurring future charges or increases to income to adjust the carrying value of recorded liabilities and assets, particularly if the number of claims and settlement and defense costs change significantly, or if there are significant developments in the trend of case law or court procedures, or if legislation or another alternative solution is implemented. Although the resolution of these claims will likely take many years, the effect on the results of operations, financial position and cash flow in any given period from a revision to these estimates could be material.

Other Contingencies

Environmental Matters

For environmental matters, ~~the Company records~~we record a liability for estimated remediation costs when it is probable that ~~the Company~~we will be responsible for such costs and they can be reasonably estimated. Generally, third party specialists assist in the estimation of remediation costs. The environmental remediation liability as of ~~September 30, 2017~~March 31, 2021 is substantially related to the former manufacturing ~~sites~~site in Goodyear, Arizona (the “Goodyear Site”) discussed below.

Goodyear Site

The Goodyear Site was operated by Unidynamics/Phoenix, Inc. (“UPI”), which became an indirect subsidiary ~~of the Company~~ in 1985 when ~~the Company~~we acquired UPI’s parent company, ~~Unidynamics~~UniDynamics Corporation. UPI manufactured explosive and pyrotechnic compounds, including components for critical military programs, for the U.S. government at the Goodyear Site from 1962 to 1993, under contracts with the Department of Defense and other government agencies and certain of their prime contractors. In 1990, the U.S. Environmental Protection Agency (“EPA”) issued administrative orders requiring UPI to design and carry out certain

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

remedial actions, which UPI has done. Groundwater extraction and treatment systems have been in operation at the Goodyear Site since 1994. On July 26, 2006, ~~the Company~~we entered into a consent decree with the EPA with respect to the Goodyear Site providing for, among other things, a work plan for further investigation and remediation activities (inclusive of a supplemental remediation investigation and feasibility study). During the third quarter of 2014, the EPA issued a Record of Decision (“ROD”) amendment permitting, among other things, additional source area remediation resulting in ~~the Company~~us recording a charge of $49.0 million, extending the accrued costs through 2022. Following the 2014 ROD amendment, we continued our remediation activities and explored an alternative strategy to accelerate remediation of the site. During the fourth quarter of 2019, we received conceptual agreement from the EPA on our alternative remediation strategy which is expected to further reduce the contaminant plume. Accordingly, in 2019, we recorded a pre-tax charge of $18.9 million, net of reimbursements, to extend our forecast period through 2027 and reflect our revised workplan. The total estimated gross liability was ~~$43.1~~$37.5 million and $39.8 million as of ~~September 30, 2017,~~March 31, 2021 and December 31, 2020, respectively and as described below, a portion is reimbursable by the U.S. Government. The current portion of the total estimated liability was ~~approximately $10~~$10.9 million as of March 31, 2021 and December 31, 2020 and represents ~~the Company’s~~our best estimate, in consultation with ~~its~~our technical advisors, of total remediation costs expected to be paid during the ~~twelve month~~twelve-month period.

It is not possible at this point to reasonably estimate the amount of any obligation in excess of ~~the Company’s~~our current accruals through the ~~2022~~2027 forecast period because of the aforementioned uncertainties, in particular, the continued significant changes in the Goodyear Site conditions and additional expectations of remediation activities experienced in recent years.

On July 31, 2006, ~~the Company~~we entered into a consent decree with the U.S. Department of Justice on behalf of the Department of Defense and the Department of Energy pursuant to which, among other things, the U.S. Government reimburses ~~the Company~~us for 21% of qualifying costs of investigation and remediation activities at the Goodyear Site. As of ~~September 30, 2017, the Company has~~March 31, 2021 and December 31, 2020, we recorded a receivable of ~~$8.5~~$7.3 million and $7.8 million, respectively for the expected reimbursements from the U.S. Government in respect of the aggregate liability as at that date. The receivable is reduced as reimbursements and other payments from the U.S. Government are received.

~~Page 25~~

Other Environmental Matters

~~The Company has~~Marion, IL Site

We have been identified as a potentially responsible party (“PRP”) with respect to environmental contamination at the Crab Orchard National Wildlife Refuge Superfund Site (the “Crab Orchard Site”). The Crab Orchard Site is located near Marion, Illinois, and consists of approximately 55,000 acres. Beginning in 1941, the United States used the Crab Orchard Site for the production of ordnance and other related products for use in World War II. In 1947, about half of the Crab Orchard Site was leased to a variety of industrial tenants whose activities (which continue to this day) included manufacturing ordnance and explosives. A predecessor ~~to the Company~~of us formerly leased portions of the Crab Orchard Site and conducted manufacturing operations at the Crab Orchard Site from 1952 until 1964. General Dynamics Ordnance and Tactical Systems, Inc. (“GD-OTS”) is in the process of conducting a remedial investigation and feasibility study for a portion of the Crab Orchard Site ~~(referred to as the~~(the “AUS-OU”), which includes an area where ~~the Company~~we maintained operations, pursuant to an Administrative Order on Consent. A remedial investigation report was approved in February 2015, and work on the feasibility study is underway. ~~The~~It is unclear when the final feasibility study ~~is projected to~~will be completed, ~~in the first quarter of 2018. The proposed Remedial Plan is projected to be submitted in late 2017, and~~or when a final Record of Decision ~~is projected to~~may be ~~issued in April 2018.~~

issued.

GD-OTS has asked ~~the Company~~us to participate in a voluntary, ~~cost allocation/~~multi-party mediation exercise with respect to response costs it has incurred or will incur with respect to the AUS-OU. The Company, along with a number of other PRPs that were contacted, initially declined, but in light of the ongoing investigative activities, and the apparent willingness of the U.S. government to participate in a mediation proceeding, the Company and a number of PRPs have agreed to participate in a non-binding mediation process. The CompanyWe and other PRPs executed a non-binding mediation agreement on March 16, 2015, and the U.S. government ~~following the resolution of an inter-agency dispute,~~ executed the mediation agreement on August 6, 2015. The ~~participants have selected a mediator, are exchanging relevant information, and have agreed upon a framework for the mediation to address the numerous sub-areas at the Site in a coherent fashion. The~~ first phase of the mediation, involving certain former munitions or ordnance storage areas, ~~is presently scheduled~~began in November 2017, but did not result in a multi-party settlement agreement. Subsequently, we entered into discussions directly with GD-OTS and reached an agreement-in-principle with GD-OTS to contribute toward GD-OTS’s past RI-FS costs associated with the first-phase areas for a non-material amount. We have also agreed to pay a modest percentage of future RI-FS costs and the United States’ claimed past response costs relative to the first-phase areas, a sum that we expect in the aggregate to be immaterial. We understand that GD-OTS has also reached agreements-in-principle with the U.S. Government and the other participating PRPs related to the first-phase areas of concern. Negotiations between GD-OTS and the U.S. Government are underway with respect to resolution of the remaining areas of the site, including those portions of the Crab Orchard Site where our predecessor conducted ~~in November 2017. The Company~~manufacturing and research activities. We at present cannot predict whether ~~this mediation proceeding~~these further negotiations will result in an agreement, or when any determination of the ultimate allocable ~~share~~shares of the various PRPs, including the U.S. Government, is likely to be completed. ~~Although a loss is probable, it~~It is not possible at this time to reasonably estimate the total amount of any obligation for remediation of the Crab Orchard Site as a whole because the ~~extent of the environmental impact,~~ allocation among PRPs, selection of remediation alternatives, and concurrence of regulatory authorities have not yet advanced to the stage where a reasonable estimate can be made. ~~The Company~~We notified ~~its~~our insurers of this potential liability and ~~has~~have obtained defense and indemnity coverage, subject to reservations of rights, under certain of ~~its~~our insurance policies.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Other Proceedings~~

Roseland, NJ Site

The Company was named as a defendant in a suit filed in June 2015 by a small group of homeowners in Missoula, Montana, whose homes are near the site of a former lumber mill and wood processing facility (the “White Pine Site”) that operated from approximately 1920 to 1996. The suit alleges that the homeowners’ property was damaged by coming into contact with certain hazardous substances that migrated from the White Pine Site. The White PineRoseland Site was ~~owned and~~ operated by ~~a predecessor to Huttig Building Products, Inc.~~Resistoflex Corporation (“~~Huttig”~~Resistoflex”), which ~~was a~~became an indirect subsidiary of the Company in 1985 when the Company acquired Resistoflex’s parent company, UniDynamics Corporation. Resistoflex manufactured specialty lined pipe and fittings at the site from ~~1968~~the 1950s until ~~Huttig’s shares were distributed to~~it was closed in the ~~Company’s shareholders in 1999. Under the terms of the distribution agreement, Huttig retained the liability for its prior operations.~~mid-1980s. The Company tendered the defense of this matter to Huttig, and Huttig agreed to defend and indemnify the Company. That matter was resolved through a settlement agreement reached between Huttig and the individual plaintiffs, and the case was dismissed as against the Company. In a related matter, Huttig filed suit against certain insurers who Huttig claimed were obligated to provide insurance coverage for the environmentalundertook an extensive soil remediation ~~costs and other damages caused by the operations~~effort at the ~~White Pine~~Roseland Site following its closure and had been monitoring the Site’s condition in the years that followed. In response to changes in remediation standards, in 2014 the Company began to conduct further site characterization and delineation studies at the Site. The Company ~~was brought into that case~~is in ~~October 2015 as a third party defendant by two of~~ the ~~insurers seeking declaratory relief that no coverage obligations are owed to Huttig or the Company with respect to the White Pine Site. In~~ late ~~2015, Huttig notified the Company~~stages of its ~~intention to pursue an action against the Company for damages related to Huttig’s environmental liability~~remediation activities at the ~~White Pine~~ Site, which includes a comprehensive delineation of contaminants of concern in soil, groundwater, surface water, sediment, and ~~the scope of coverage under the Company’s historical insurance policies available to Huttig for such liability. The Company settled its dispute with Huttig~~indoor air testing, all in ~~exchange for a complete release by Huttig of all claims against the Company in connection~~accordance with the ~~distribution agreement,~~New Jersey Department of Environmental Protection guidelines and a release by Huttig of any and all rights it has or may have had under any of the Company’s insurance policies. As a result of this settlement, the Company recorded a $5 million net pre-tax charge in the second quarter of 2016. In addition, Huttig retained all of its indemnity obligations to the Company as set forth in the distribution agreement, including its indemnity obligations relating to the White Pine Site.directives.

~~The Company~~Other Proceedings

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

~~Page 26~~

reasonably estimated. These provisions, if any, are reviewed quarterly and adjusted as additional information becomes available. If either or both of the criteria are not met, ~~the Company assesses~~we assess whether there is at least a reasonable possibility that a loss, or additional losses, may have been incurred. If there is a reasonable possibility that a loss or additional loss may have been incurred for such matters, ~~the Company discloses~~we disclose the estimate of the amount of loss or range of loss, ~~discloses~~disclose that the amount is immaterial, or ~~discloses~~disclose that an estimate of loss cannot be made, as applicable. ~~The Company believes~~We believe that as of ~~September 30, 2017,~~March 31, 2021, there was no reasonable possibility that a material loss, or any additional material losses, may have been incurred for such matters, and that adequate provision has been made in ~~its~~our financial statements for the potential impact of all such matters.

~~Other Commitments~~

~~In the third quarter of 2017, the Company entered into a seven year lease for a used airplane which includes a maximum residual value guarantee of $11.1 million by the Company if the fair value~~Note 12 - Financing

Our debt consisted of the ~~airplane is less than $14.4 million at~~following:


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

Commercial paper	$	0	$	27.2
364-Day Credit Agreement	346.9		348.5

Total short-term borrowings	$	346.9	$	375.7

4.45% notes due December 2023	$	299.2	$	299.1
6.55% notes due November 2036	198.5		198.4
4.20% notes due March 2048	346.2		346.2
Other deferred financing costs associated with credit facilities	(0.7)		(0.8)
Total long-term debt	$	843.2	$	842.9


Debt discounts and debt issuance costs totaled $6.2 and $6.6 as of each of March 31, 2021 and December 31, 2020, respectively and have been netted against the aggregate principal amounts of the related debt in the components of the debt table above.

As of March 31, 2021, there were no outstanding borrowings under the end of the lease term. In the third quarter of 2017, the Company made payments of $6.7 million related to the termination and residual value guarantee of a previous airplane lease. These payments were previously accrued, over the life of the former lease and reported within “Other” in the “Total provided by operating activities” on the Consolidated Statement of Cash Flows.

~~Note 9 - Pension Benefits~~

~~The components of net periodic cost (benefit) are as follows:~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2017 2016 2017 2016
Service cost $ 1.2
$ 1.2
$ 3.6
$ 3.5
Interest cost 7.2
8.2
21.6
24.5
Expected return on plan assets (13.9 ) (14.5 ) (41.7 ) (43.3 )
Amortization of prior service cost (0.1 ) (0.2 ) (0.3 ) (0.5 )
Amortization of net loss 3.5
2.9
10.5
8.7
Net periodic benefit $ (2.1 ) $ (2.4 ) $ (6.3 ) $ (7.1 )

The Company expects, based on current actuarial calculations, to contribute approximately $12.0 million to its defined benefit plans, of which $5.4 million has been contributed during the first nine months of 2017. The Company contributed $8.3 million to its defined benefit plans in 2016. Cash contributions for subsequent years will depend on a number of factors, including the impact of the Pension Protection Act signed into law in 2006, changes in minimum funding requirements, long-term interest rates, the investment performance of plan assets and changes in employee census data affecting the Company’s projected benefit obligations.

~~Note 10 - Income Taxes~~

~~The Company’s quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented.~~

~~Effective Tax Rates~~

~~The Company’s effective tax rates are as follows:~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Effective Tax Rate 29.4% 33.0% 29.4% 29.4%

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

~~Page 27~~

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

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

~~Unrecognized Tax Benefits~~

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

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of its income tax expense. During the three and nine months ended September 30, 2017, the Company recognized $0.1 million and $0.6 million, respectively, of interest and penalty expense related to unrecognized tax benefits in its Condensed Consolidated Statement of Operations.commercial paper program. At ~~September 30, 2017 and~~ December 31, ~~2016,~~2020, there was $27.2 million of outstanding borrowings under the ~~total amount of accrued interest and penalty expense related to unrecognized tax benefits recorded in the Company’s Consolidated Balance Sheets was $6.8 million and $6.2 million, respectively.~~

During the next twelve months, it is reasonably possible that the Company's unrecognized tax benefits may decrease by $7.7 million due to expiration of statutes of limitations and settlements with tax authorities. However, if the ultimate resolution of income tax examinations results in amounts that differ from this estimate, the Company will record additional income tax expense or benefit in the period in which such matters are effectively settled.

~~Income Tax Examinations~~

~~The Company's income tax returns are subject to examination by the U.S. federal, U.S. state and local, and non-U.S. tax authorities.~~

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

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

~~Page 28~~

~~Note 11 - Long-Term Debt and Short-Term Borrowings~~

~~The following table summarizes the Company’s debt as of September 30, 2017 and December 31, 2016:~~

(in millions) September 30,
2017 December 31,
2016
Long-term debt consists of:
2.75% notes due December 2018
Principal amount $ 250.0
$ 250.0
Less debt issuance costs (0.5 ) (0.8 )
Carrying Value $ 249.5
$ 249.2

4.45% notes due December 2023
Principal amount $ 300.0
$ 300.0
Less debt issuance costs (1.7 ) (1.9 )
Carrying Value $ 298.3
$ 298.1

6.55% notes due November 2036
Principal Amount $ 200.0
$ 200.0
Less unamortized discount (0.6 ) (0.7 )
Less debt issuance costs (1.3 ) (1.3 )
Carrying Value $ 198.1
$ 198.0

Total long-term debt $ 745.9
$ 745.3

For additional details regarding the Company’s debt financing, reference is made to Note 7, “Long-Term Debt and Notes Payable” of the Company’s financial statements as of and for the year ended December 31, 2016 included in the Company’s 2016 Annual Report on Form 10-K.

~~Commercial Paper program~~ - ~~On March 2, 2015, the Company entered into a~~ commercial paper ~~program (the “CP Program”) pursuant to which it may issue short-term, unsecured~~program. We issued commercial paper ~~notes (the “Notes”) pursuant~~of $100 million in January 2020 and $150 million in December 2020 to fund the ~~exemption from registration contained~~acquisitions of I&S and Cummins-Allison, respectively. See discussion in ~~Section 4(a)(2) of the Securities Act of 1933, as amended.~~Note 2, “Acquisitions” for further details. Amounts available under the ~~CP Program~~commercial paper program may be borrowed, repaid and re-borrowed from time to time, with the aggregate principal amount of the ~~Notes~~notes outstanding under the ~~CP Program~~commercial paper program at any time not to exceed ~~$500~~$550 million. ~~The Notes will~~

We also have ~~maturities~~a revolving credit agreement permitting borrowings of up to ~~397 days from date~~$550 million which expires in December 2022. The undrawn portion of ~~issue. The Notes will rank at least~~ ~~pari passu~~ ~~with all~~this revolving credit agreement is also available to serve as a backstop facility for the issuance of commercial paper. In the ~~Company's other unsecured and unsubordinated indebtedness.~~first half of 2020, we repaid the outstanding amounts related to borrowings of $67 million used to fund the I&S acquisition in January 2020. See discussion in Note 2, “Acquisitions” for further details. As of ~~September 30, 2017,~~March 31, 2021 and December 31, 2020, there were no0 outstanding ~~borrowings under~~borrowings.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In April 2020, to enhance financial flexibility and maintain maximum liquidity in response to the ~~CP Program.~~

~~Revolving Credit Facility~~ - ~~In May 2012,~~uncertainty in the ~~Company~~global markets resulting from the COVID-19 pandemic, we entered into a ~~five year, $300 million Amended and Restated~~senior unsecured 364-day credit facility (the “364-Day Credit ~~Agreement (as subsequently amended in March 2013 and increased to $500 million (the “Facility”)~~Agreement”). The Facility allows the Company to borrow, repay, or to the extent permitted by the agreement, prepay and re-borrow funds at any time prior to the stated maturity date. The loan proceeds may be used for general corporate purposes including financing for acquisitions. Interest is based on, at its option, (1) a LIBOR-based formula that is dependent in part on the Company's credit rating (LIBOR plus 105 basis points as of the date of this report; up to a maximum of LIBOR plus 147.5 basis points), or (2) the greatest of (i) the JPMorgan Chase Bank, N.A.'s prime rate, (ii) the Federal Funds rate plus 50 basis points, or (iii) an adjusted LIBOR rate plus 100 basis points, plus a spread dependent on the Company’s credit rating (5 basis points as of the date of this report; up to a maximum of 47.5 basis points). In May 2015, the Company entered into an amendment ("Amendment No. 2") to the Facility. Amendment No. 2, among other things, (i) extends the maturity date under the Facility to May 2020 and (ii) amends the fee and applicable margins on the revolving loans made pursuant to the Facility. There were no outstanding borrowings under the Facility as of September 30, 2017.

~~Page 29~~

~~Note 12 - Derivative Instruments and Hedging Activities~~

The Company is exposed to certain risks related to its ongoing business operations, including market risks related to fluctuation in currency exchange. The Company uses foreign exchange contracts to manage the risk of certain cross-currency business relationships to minimize the impact of currency exchange fluctuations on the Company’s earnings and cash flows. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. As of and for the nine month period ended September 30, 2017, the foreign exchange contracts designated as hedging instruments did not have a material impact on the Company’s condensed consolidated statements of operations, balance sheet or cash flows. Foreign exchange contracts not designated as hedging instruments, which primarily pertain to foreign exchange fluctuation risk of intercompany positions, had a notional value of $5 million and $8 million as of September 30, 2017March 31, 2021 and December 31, ~~2016, respectively. As of each of the periods ended September 30, 2017 and December 31, 2016, the Company's receivable position for the foreign exchange contracts~~2020, there was ~~less than $0.1 million. As of September 30, 2017 and December 31, 2016, the Company’s payable position for the foreign exchange contracts was $0.3~~$346.9 million and ~~$0.1~~$348.5 million outstanding under the 364-Day Credit Agreement, respectively. 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.

Note 13 - Fair Value Measurements

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are to be considered from the perspective of a market participant that holds the asset or owes the liability. The standards also establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

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

Level 1: Quoted prices in active markets for identical or similar assets and liabilities.

Level 2: Quoted prices for identical or similar assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical or similar assets and liabilities. Level 2 assets and liabilities include over-the-counter derivatives, principally forward foreign exchange contracts, whose value is determined using pricing models with inputs that are generally based on published foreign exchange rates and exchange traded prices, adjusted for other specific inputs that are primarily observable in the market or can be derived principally from or corroborated by observable market data.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Valuation Technique-

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

We are exposed to certain risks related to our ongoing business operations, including market risks related to fluctuation in currency exchange. We use foreign exchange contracts to manage the risk of certain cross-currency business relationships to minimize the impact of currency exchange fluctuations on our earnings and cash flows. We do not hold or issue derivative financial instruments for trading or speculative purposes. Foreign exchange contracts are not designated as hedging instruments and had a notional value of $44.2 million and $34.2 million as of March 31, 2021 and December 31, 2020, respectively. Our derivative assets and liabilities include foreign exchange contract derivatives that are measured at fair value using internal models based on observable market inputs such as forward rates and interest rates. Based on these inputs, the derivatives are classified within Level 2 of the valuation hierarchy. Such derivative receivable amounts are recorded within ~~other~~“Other current ~~assets~~assets” on our Condensed Consolidated Balance Sheets and were $0.6 million and less than $0.1 million as of ~~each of the periods ending September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, respectively. ~~Derivative~~Such derivative liability amounts are recorded within ~~accrued liabilities~~“Accrued liabilities” on our Condensed Consolidated Balance Sheets and were ~~$0.3~~and $0.0 million and $0.1 million as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, respectively.

Available-for-sale securities consist of marketable debt securities and rabbi trust investments. Marketable debt securities consist of commercial paper which are measured at fair value using prices for comparable securities in active markets, and are therefore classified within Level 2 of the valuation hierarchy. The ~~carrying~~fair value of the ~~Company’s financial assets~~commercial paper was $10.0 million and ~~liabilities, including cash~~$30 million as of March 31, 2021 and ~~cash equivalents, accounts receivable, accounts payable and short-term loans payable approximate~~December 31, 2020, respectively. These investments are included in “Other current assets” on our Condensed Consolidated Balance Sheets. We also have two rabbi trusts that hold marketable securities for the benefit of participants in our Supplemental Executive Retirement Plan. These investments are measured at fair value ~~without being discounted, due to~~using quoted market prices in an active market, and are therefore classified within Level 1 of the ~~short periods during which these amounts~~valuation hierarchy. The fair value of available-for-sale securities was $1.5 million as of March 31, 2021 and December 31, 2020. These investments are ~~outstanding.~~ included in “Other assets” on our Condensed Consolidated Balance Sheets.

Long-term debt rates currently available to ~~the Company~~us for debt with similar terms and remaining maturities are used to estimate the fair value for debt issues that are not quoted on an exchange. The estimated fair value of ~~long-term~~total debt, is measured using Level 2 inputs, ~~and~~ was ~~$814.4~~$913.4 million and ~~$801.8~~$954.8 million ~~at September 30, 2017~~as of March 31, 2021 and December 31, ~~2016~~,2020, respectively.

~~Page 30~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 14 - Restructuring

Overview

2020 Repositioning - In the second quarter of 2020, we initiated actions in response to the adverse economic impact of COVID-19 and integration actions related to the Cummins-Allison acquisition. These actions include workforce reductions of approximately 1,200 employees, or about 11% of our global workforce, and the exiting of two leased office facilities and one leased warehouse facility.

2019 Repositioning - In the fourth quarter of 2019, we initiated actions to consolidate two manufacturing operations in Europe within our Fluid Handling segment. In 2020, we recorded additional severance costs related to the final negotiation with the works council/union at both locations. These actions, taken together, included workforce reductions of approximately 180 employees, or less than 1% of our global workforce.

2017 Repositioning - In the fourth quarter of 2017, we initiated broad-based repositioning actions designed to improve profitability. These actions included headcount reductions of approximately 300 employees, or about 3% of our global workforce, and select facility consolidations in North America and Europe. In 2020, we adjusted the estimate downward to reflect the impact of employees that chose to voluntarily terminate prior to receiving severance at the conclusion of the actions in North America. In 2021, we recorded a gain on sale of real estate related to these actions.

Other Restructuring - In the second quarter of 2020, we recorded other restructuring costs within our Payment & Merchandising Technologies segment. We do not expect to incur additional restructuring charges.

Restructuring gain, net

During the three-month periods ended March 31, 2021 and 2020, we recorded a net restructuring gain of $13.1 million and $1.2 million, respectively, primarily related to the 2017 repositioning actions described above. These gains are reflected in the Condensed Consolidated Statements of Operations as “Restructuring gain, net.”

Restructuring gain, net by segment are as follows:


	Three Months Ended March 31,
(in millions)	2021		2020
Fluid Handling 1	$	(12.6)	$	0
Payment & Merchandising Technologies	(0.5)		(1.2)


Total restructuring gain, net 1	$	(13.1)	$	(1.2)

1 We also recorded related costs of $1.4 million and $1.3 million for the three months ended March 31, 2021 and 2020, respectively. These costs primarily relate to facility consolidations and are recorded within Cost of sales and Selling, general and administrative.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes our restructuring (gain) charges, net by program, cost type and segment for the three months ended March 31, 2021 and 2020:


	Three months ended March 31, 2021						Three months ended March 31, 2020
(in millions)	Severance		Other		Total		Severance		Other		Total

Payment & Merchandising Technologies	$	(0.5)	$	0	$	(0.5)	$	0	$	0	$	0


2020 Repositioning	$	(0.5)	$	0	$	(0.5)	$	0	$	0	$	0

Fluid Handling	$	0.1	$	0	$	0.1	$	0	$	0	$	0
2019 Repositioning	$	0.1	$	0	$	0.1	$	0	$	0	$	0

Fluid Handling 1	$	0	$	(12.7)	$	(12.7)	$	0	$	0	$	0
Payment & Merchandising Technologies 1	0		0		0		0		(1.5)		(1.5)

2017 Repositioning	$	0	$	(12.7)	$	(12.7)	$	0	$	(1.5)	$	(1.5)




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

Total	$	(0.4)	$	(12.7)	$	(13.1)	$	0.3	$	(1.5)	$	(1.2)

1 Reflects a pre-tax gain related to the sale of real estate in both 2021 and 2020

~~Part I – Financial Information~~

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the cumulative restructuring costs, net incurred through March 31, 2021 and the remaining costs related to facility consolidations expected to complete these actions as of March 31, 2021:


	Cumulative Restructuring Costs, Net						Remaining Costs
(in millions)	Severance		Other		Total		2021
Fluid Handling	$	3.8	$	0	$	3.8	$	0
Payment & Merchandising Technologies	16.1		4.6		20.7		0
Aerospace & Electronics	6.5		0		6.5		0
Engineered Materials	0.6		0		0.6		0
2020 Repositioning	$	27.0	$	4.6	$	31.6	$	0

Fluid Handling	$	16.1	$	0	$	16.1	$	2.1
2019 Repositioning	$	16.1	$	0	$	16.1	$	2.1

Fluid Handling	$	13.5	$	(12.7)	$	0.8	$	0
Payment & Merchandising Technologies	11.7		0.7		12.4		0
Aerospace & Electronics	1.3		(1.4)		(0.1)		0
2017 Repositioning	$	26.5	$	(13.4)	$	13.1	$	0

Restructuring Liability

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


(in millions)	2020 Repositioning		2019 Repositioning		2017 Repositioning		Total
Severance:
Balance at December 31, 2020 (c)	$	4.2	$	16.0	$	4.7	$	24.9
Expense (a)	0		0.1		0		0.1
Adjustments (b)	(0.5)		0		0		(0.5)
Utilization	(2.4)		(2.6)		(0.1)		(5.1)
Balance at March 31, 2021 (c)	$	1.3	$	13.5	$	4.6	$	19.4


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

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

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

This Quarterly Report on Form 10-Q contains information about Crane Co., some of which includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical information or statements about our current condition. You can identify forward-looking statements by the use of terms such as “believes,” “contemplates,” “expects,” “may,” “could,” “should,” “would,” or “anticipates,” other similar phrases, or the negatives of these terms.

Reference herein to ~~“Crane”,~~“Crane,” “the ~~Company”, “we”,~~Company,” “we,” “us” and “our” refer to Crane Co. and its subsidiaries unless the context specifically states or implies otherwise. References to “core business” or “core sales” in this report include sales from acquired businesses starting from and after the first anniversary of the acquisition, but exclude currency effects. Amounts in the following discussion are presented in millions, except employee, share and per share data, or unless otherwise stated.

We have based the forward-looking statements relating to our operations on our current expectations, estimates and projections about us and the markets we serve. We caution you that these statements are not guarantees of future performance and involve risks and uncertainties. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. There are a number of other factors, including risks and uncertainties related to the ongoing COVID-19 pandemic, that could cause actual results or outcomes to differ materially from those ~~addressed~~expressed or implied in the forward-looking statements. ~~The~~Such factors ~~that we currently believe to be material are~~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~~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; 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, ~~2016~~2020, and subsequent reports filed with the Securities and Exchange ~~Commission and are incorporated by reference herein.~~Commission. We do not undertake any obligation to update or revise any forward-looking statements.

~~Page 31~~

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

OUTLOOK

~~Overall~~

Our sales depend heavily on industries that are cyclical in nature or are subject to market conditions which may cause customer demand for our products to be volatile and unpredictable. Demand in these industries is affected by fluctuations in domestic and international economic conditions, as well as currency fluctuations, commodity costs, and a variety of other factors.

For ~~2017,~~2021, we expect a total year-over-year sales to increase ~~slightly compared to 2016, with acquisition related revenue, net~~ of ~~divestitures, and slight~~approximately 8%, driven by mid-single digit core growth ~~partially offset by slightly unfavorable~~following the substantial core sales decline in 2020 attributable to the COVID-19 pandemic, an approximate 2.5% benefit from favorable foreign ~~exchange.~~exchange, and a slight acquisition benefit. We expect ~~a substantial~~an improvement in operating profit of more than 70%, driven by a combination of operating leverage on higher volumes, restructuring and ~~operating margins, driven primarily by the absence of an asbestos provision, along~~acquisition related charges recorded in 2020 that will not repeat in 2021, productivity and carry-over savings associated with ~~improved productivity, favorable product mix, and a reduction in engineering expense in our Aerospace & Electronics segment.~~COVID-19 related repositioning actions.

Fluid Handling

In ~~2017,~~2021, we expect Fluid Handling sales to increase ~~modestly~~in the high-single digit range compared to ~~2016,~~2020, driven by ~~an acquisition benefit~~core sales growth in the mid-single digit range following the substantial core sales decline in 2020 attributable to the COVID-19 pandemic; favorable foreign exchange of approximately ~~2.5%~~4%; and ~~slightly positive core growth.~~a small benefit from the I&S acquisition.

We expect Process Valves and Related Products sales to increase in the ~~low single-digit~~high-single digit range compared to ~~2016,~~2020, driven ~~primarily~~ by ~~a low to mid single-digit increase in acquisition related~~mid-single digit core sales ~~and slightly~~growth, an approximate 3% benefit from favorable foreign exchange, partially offset by slightly negative core growth. Excluding foreign exchange, we expect order rates in 2017 to increase modestly compared to 2016 as our end markets continue to stabilize. However, given weak order activity in 2016,and a small benefit from the ~~backlog entering the year was lower than it was at the beginning of the prior year, limiting core sales growth in 2017.~~

I&S acquisition. We expect Commercial Valves sales to increase ~~modestly~~in the low double-digit range compared to ~~2016, with unfavorable~~2020 driven by favorable foreign exchange ~~more than offset by~~in the mid- to high-single digit range, and low- to mid-single digit core ~~growth.~~

~~Our Other Products~~ sales ~~are expected~~growth. We expect Pumps and Systems sales to increase ~~slightly~~in the mid- to high-single digit range compared to ~~2016, with modest~~2020, driven by growth in the U.S. municipal ~~market.~~markets and military.

~~For~~We expect an improvement in the ~~segment, we expect a modest increase in~~segment’s operating profit and operating margin compared to ~~2016, as productivity, leverage on core~~2020, driven by the impact of higher sales ~~growth,~~volume, lower restructuring and acquisition ~~benefits more than offset transaction~~ related ~~costs.~~charges, and carry-over savings primarily associated with COVID-19 related repositioning actions.

Payment & Merchandising Technologies

WeIn 2021, we expect Payment & Merchandising Technologies sales to increase in the ~~low to mid single-digit~~low-double digit range compared to ~~2016, with a mid single-digit improvement in~~2020, driven primarily by high-single digit core sales ~~partially offset~~growth, and an approximate 3% benefit from favorable foreign exchange.

At Crane Payment Innovations, we expect core sales growth in the high-single digit range, driven by ~~unfavorable foreign currency translation and a divestiture impact, net of acquisitions. We~~broad-based strength across vertical markets following the substantial core sales decline in 2020 attributable to the COVID-19 pandemic. At Crane Currency, we expect core sales to ~~improve at CPI, with Merchandising Systems sales declining~~increase in the high-single digit range compared to ~~2016. At CPI, we expect core sales improvement to be~~2020 primarily driven by ~~vertical end markets including financial services and gaming, although~~higher sales to the ~~most significant growth is expected from the retail vertical.~~ U.S. Government.

We expect the segment’s operating profit to increase substantially compared to ~~2016,~~2020, driven by the impact from the higher ~~core~~ sales ~~and productivity, partially offset by unfavorable~~volume, favorable product mix, productivity, carry-over savings primarily associated with COVID-19 related repositioning actions, and ~~unfavorable foreign currency.~~the absence of restructuring and acquisition-related costs.

Aerospace & Electronics

WeIn 2021, we expect Aerospace & Electronics core sales to ~~decrease~~decline in the ~~mid single-digit~~mid-single digit range compared to ~~2016. For 2017,~~2020 as the COVID-19 pandemic continues to depress business and leisure air travel. Accordingly, we expect ~~that~~a decline in our commercial ~~market conditions will remain generally positive,~~OEM business driven by lower aircraft build rates, and we expect ~~sales growth from~~a decline in our commercial ~~original equipment manufacturer business. However, military original equipment sales are expected~~aftermarket business given continued lower airline flight hours. We expect a decline in our defense OEM and aftermarket businesses given very challenging comparisons to ~~decline substantially given~~2020 where these markets exhibited very strong growth. We expect the completion of a large military program in 2016 that will not repeat in 2017. We also expect aftermarket sales to decline, primarily as a result of lower modernization and upgrade sales. Despite the reduction in sales, we expect segmentsegment’s operating profit ~~in 2017 approximately flat~~to decrease compared to ~~2016~~2020 driven primarily by ~~favorable product mix~~the impact of the lower sales volume, partially offset by carry-over savings associated with COVID-19 related repositioning actions, and the ~~completion~~absence of ~~the large military program, strong productivity and lower engineering expense.~~restructuring related costs.

Engineered Materials

In ~~2017,~~2021, we expect ~~the~~ Engineered Materials ~~segment~~ sales ~~will~~to increase approximately 20% compared to 2020 driven primarily by substantially stronger recreational vehicle industry build rates in response to increasing consumer preference for RV lifestyle and RV vacations, higher trailer industry build rates, and a recovery in certain building products end markets. Segment operating profit and operating margin are expected to increase compared to 2020 driven primarily by the ~~prior year, driven by continued strong demand~~impact of ~~product shipments to~~ the ~~recreational vehicle (“RV”) market. Segment operating profit is expected to be approximately flat compared to 2016.~~higher sales volume.

~~Page 32~~

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

Results from Operations – Three Month Periods Ended ~~September 30~~March 31

The following information should be read in conjunction with our condensed consolidated financial statements and related notes. All comparisons below refer to the ~~third~~first quarter ~~2017~~2021 versus the ~~third~~first quarter ~~2016,~~2020, unless otherwise specified.


	First Quarter						Change
(dollars in millions)	2021			2020			$		%
Net sales	$	833.5		$	797.9		$	35.6	4.5	%
Operating profit	146.4			88.6			57.8		65.2	%
Acquisition-related and integration charges *	—			5.2			(5.2)		NM
Restructuring and related (gain) charges, net *	(11.7)			0.1			(11.8)		NM
Operating margin	17.6		%	11.1		%
Other income (expense):
Interest income	0.4			0.4			—		—
Interest expense	(13.6)			(12.5)			(1.1)		(8.8)	%
Miscellaneous income, net	3.9			3.8			0.1		2.6	%
Total other expense	(9.3)			(8.3)			(1.0)		(12.0)	%
Income before income taxes	137.1			80.3			56.8		70.7	%
Provision for income taxes	28.7			17.5			11.2		64.0	%


Net income attributable to common shareholders	$	108.4		$	62.8		$	45.6	72.6	%
* Acquisition-related and integration charges and restructuring and related (gain) charges, net are included in operating profit and operating margin.

Third Quarter Change
(dollars in millions) 2017 2016 $ %
Net sales $ 695.9
$ 694.2
$ 1.7
0.2 %
Operating profit 105.4
103.8
1.6
1.5 %
Transaction related charges * 0.5
—
0.5
NM
Operating margin 15.1 % 15.0 %

Other income (expense):

Interest income 0.7
0.5
0.2
40.0 %
Interest expense (9.3 ) (9.2 ) (0.1 ) (1.1 )%
Miscellaneous, net 0.2
(0.1 ) 0.3
300.0 %
(8.4 ) (8.8 ) 0.4
4.5 %
Income before income taxes 97.0
95.0
2.0
2.1 %
Provision for income taxes 28.5
31.3
(2.8 ) (8.9 )%
Net income before allocation to noncontrolling interests 68.5
63.7
4.8
7.5 %
Less: Noncontrolling interest in subsidiaries’ earnings 0.3
0.2
0.1
50.0 %
Net income attributable to common shareholders $ 68.2
$ 63.5
$ 4.7
7.4 %
* Transaction related charges are included in operating profit and operating margin.

Sales increased by ~~$1.7~~$35.6 million, or ~~0.2%~~4.5%, to ~~$695.9~~$833.5 million in ~~2017.~~2021. Net sales related to operations outside the United States were 37.8% and ~~35.3%~~35.9% of total net sales for the quarters ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively. The year-over-year change in sales included:

~~an increase related to a net acquisition/divestiture impact of $7.3 million, or 1.1%;~~

•favorable foreign currency translation of ~~$4.5~~$25.2 million, or 3.2%.

•an increase in core sales of $5.4 million, or 0.7%; and

•an increase in sales related to a ~~decrease in core sales~~benefit from the January 2020 I&S acquisition of ~~$10.1~~$5.0 million, or ~~1.6%.~~0.6%

Operating profit increased by ~~$1.6~~$57.8 million, or ~~1.5%~~65.2%, to ~~$105.4~~$146.4 million in ~~2017.~~2021. The increase in operating profit reflected ~~the~~ higher operating profit in our Payment & Merchandising Technologies and Fluid Handling ~~and Engineered Materials~~ segments, partially offset by lower operating profit in our Aerospace & Electronics ~~segment~~and Engineered Materials segments, and higher corporate costs. Operating profit in the ~~third~~first quarter of ~~2017~~2021 included ~~transaction~~a net restructuring and related ~~charges~~gain of ~~$0.5~~$11.7 million primarily related to prior repositioning actions. Operating profit in ~~connection with~~ the ~~acquisitions~~first quarter of ~~Westlock~~2020 included acquisition-related and ~~Microtronic.~~integration costs of $5.2 million related to the I&S and Cummins-Allison acquisitions.

Other expense increased $1.0 million, or 12.0%, primarily reflecting higher interest expense resulting from the 364-day credit facility entered into in April 2020.

Our effective tax rate is affected by a number of items, both recurring and discrete, including the amount of income we earn in different jurisdictions and their respective statutory tax rates, acquisitions and dispositions, changes in the valuation of our deferred tax assets and liabilities, changes in tax laws, regulations and accounting principles, the continued availability of statutory tax credits and deductions, the continued reinvestment of our overseas earnings, and examinations initiated by tax authorities around the world.

Our ~~effective~~ tax rate for the three months ended ~~September 30, 2017~~March 31, 2021 is lower than the prior year’s comparable period primarily due to ~~the favorable effect of share-based compensation, favorable return-to-provision adjustments, and a reduction in~~higher tax ~~accruals due to lapses in the statutes of limitation,~~credit utilization, partially offset by a ~~higher amount~~lower statutory U.S. deduction related to our non-U.S. subsidiaries’ income.

Our tax rate for the three months ended March 31, 2021 is approximately equal to the statutory U.S. federal tax rate of ~~income earned in jurisdictions with higher statutory tax rates.~~

21%.

~~Page 33~~

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

Comprehensive Income


								Three Months Ended
	Three Months Ended							March 31,
	September 30,
	2017			2016
(in millions)							(in millions)	2021		2020
Net income before allocation to noncontrolling interests	$	68.5		$	63.7		Net income before allocation to noncontrolling interests	$	108.4	$	62.8
Other comprehensive income (loss), net of tax
Components of other comprehensive income (loss), net of tax							Components of other comprehensive income (loss), net of tax
Currency translation adjustment	24.6			(5.2		)	Currency translation adjustment	(34.9)		(45.2)
Changes in pension and postretirement plan assets and benefit obligation, net of tax	2.3			1.8			Changes in pension and postretirement plan assets and benefit obligation, net of tax	4.9		3.6
Other comprehensive income (loss), net of tax	26.9			(3.4		)	Other comprehensive income (loss), net of tax	(30.0)		(41.6)
Comprehensive income before allocation to noncontrolling interests	95.4			60.3			Comprehensive income before allocation to noncontrolling interests	78.4		21.2
Less: Noncontrolling interests in comprehensive income	(1.4		)	0.2			Less: Noncontrolling interests in comprehensive income	0.8		(0.3)
Comprehensive income attributable to common shareholders	$	96.8		$	60.1		Comprehensive income attributable to common shareholders	$	77.6	$	21.5

For the three months ended ~~September 30, 2017,~~March 31, 2021, comprehensive income before allocations to noncontrolling interests was ~~$95.4~~$78.4 million compared to ~~$60.3~~$21.2 million in the same period of ~~2016.~~2020. The ~~$35.1~~$57.2 million increase was ~~primarily~~ driven by higher net income before allocation to noncontrolling interests of $45.6 million and a ~~$29.8~~$10.3 million year over year favorable impact of foreign currency translation adjustments, ~~year over year including fluctuations in~~primarily related to the ~~British pound, Canadian dollar,~~ euro and Japanese yen.

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

Segment Results of Operations - Three Month Periods Ended ~~September 30~~March 31

~~The following information should be read in conjunction with our condensed consolidated financial statements and related notes.~~

Fluid Handling


	Third Quarter						Change					First Quarter						Change
(dollars in millions)	2017			2016			$		%		(dollars in millions)	2021			2020			$		%
Net sales by product line:											Net sales by product line:
Process Valves and Related Products	$	157.7		$	148.1		$	9.6	6.5	%	Process Valves and Related Products	$	174.5		$	157.2		$	17.3	11.0	%
Commercial Valves	85.7			75.2			10.5		14.0	%	Commercial Valves	89.2			75.9			13.3		17.5	%
Other Products	23.5			21.8			1.7		7.8	%
Pumps and Systems											Pumps and Systems	24.3			23.6			0.7		3.0	%
Total net sales	266.9			245.1			21.8		8.9	%	Total net sales	$	288.0		$	256.7		$	31.3	12.2	%
Operating profit	32.6			30.7			1.9		6.2	%	Operating profit	$	49.9		$	28.0		$	21.9	78.2	%
Transaction related charges*	0.5			—			0.5		NM
Acquisition-related and integration charges *											Acquisition-related and integration charges *	$	—		$	2.0		$	(2.0)	NM
Restructuring and related (gain) charges, net *											Restructuring and related (gain) charges, net *	$	(11.2)		$	1.3		$	(12.5)	NM
Backlog											Backlog	$	325.4		$	293.4		$	32.0	10.9	%
Operating margin	12.2		%	12.5		%					Operating margin	17.4		%	10.9		%
* Transaction related charges are included in operating profit and operating margin.
* Acquisition-related and integration charges and restructuring and related (gain) charges, net are included in operating profit and operating margin.											* Acquisition-related and integration charges and restructuring and related (gain) charges, net are included in operating profit and operating margin.

Fluid Handling sales increased by ~~$21.8~~$31.3 million, or ~~8.9%~~12.2%, to ~~$266.9~~$288.0 million in 2021, driven by ~~an increase in~~higher core sales of ~~$9.2~~$14.6 million, or ~~3.7%~~5.7%, ~~an increase in sales related to an acquisition of $8.0 million, or 3.3%, and~~ favorable foreign currency translation of ~~$4.6~~$11.7 million, or 4.6%, and a benefit from the January 2020 acquisition of I&S of $5.0 million, or 1.9%.

•Sales of Commercial Valves increased by $13.3 million, or 17.5%, to $89.2 million in 2021, primarily driven by a core sales increase of $8.0 million, or 10.5%, and favorable foreign currency translation of $5.3 million, or 7.0%, as the Canadian dollar and British pound strengthened against the U.S. dollar. The higher core sales primarily reflected higher demand in Canadian non-residential construction markets.

Fluid Handling operating profit increased by $21.9 million, or 78.2%, to $49.9 million in 2021. The increase primarily reflected a gain on the sale of real estate related to prior repositioning actions, productivity benefits, restructuring savings from 2020 repositioning actions and the impact of higher sales volumes.

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


	First Quarter						Change
(dollars in millions)	2021			2020			$		%
Net sales by product line:
Payment Acceptance and Dispensing Products 1	$	185.0		$	203.2		$	(18.2)	(9.0)	%
Banknotes and Security Products	152.5			94.2			58.3		61.9	%
Total net sales	$	337.5		$	297.4		$	40.1	13.5	%
Operating profit	$	85.9		$	26.4		$	59.5	225.4	%
Acquisition-related and integration charges *	$	—		$	3.1		$	(3.1)	NM

Restructuring and related gain, net *	$	(0.5)		$	(1.2)		$	0.7	NM
Backlog	$	337.0		$	326.3		$	10.7	3.3	%
Operating margin	25.4		%	8.9		%
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.
* Acquisition-related and integration charges and restructuring and related gain, net are included in operating profit and operating margin.

Payment & Merchandising Technologies sales increased $40.1 million, or 13.5%, to $337.5 million in 2021, driven by higher core sales of $26.8 million, or 9.0%, and favorable foreign currency translation of $13.3 million, or 4.5%.

Fluid Handling operating profit increased by $1.9 million, or 6.2%, to $32.6 million in 2017. The increase was driven by productivity initiatives, higher volume and contribution from an acquisition, partially offset by unfavorable mix and higher material costs.

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

~~Payment & Merchandising Technologies~~

~~Payment & Merchandising Technologies sales increased $1.9 million, or 1.0%, to $188.6 million in 2017, reflecting a~~ core sales increase ~~of $2.8 million, or 1.5%, partially offset by unfavorable foreign currency translation of $0.2 million, or 0.1%,~~reflected substantially higher sales to both the U.S. Government and ~~a net acquisition/divestiture impact of $0.7 million, or 0.4%.~~

Payment & Merchandising Technologies operating profit increased by ~~$6.7~~$59.5 million, or ~~19.3%~~225.4%, to ~~$41.4~~$85.9 million in ~~2017.~~2021. The increase ~~was~~ primarily ~~driven by~~reflected favorable mix, productivity benefits, restructuring savings from 2020 repositioning actions and the impact of ~~productivity and~~ higher ~~core sales.~~

The Payment & Merchandising Technologies segment backlog was $88 million (which includes $0.2 million pertaining to the Microtronic business acquired in June 2017) as of September 30, 2017, compared with $94 million as of December 31, 2016 and $66 million as of September 30, 2016.

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

~~The Aerospace & Electronics segment backlog was $348 million as of September 30, 2017, compared with $353 million as of December 31, 2016 and $377 million as of September 30, 2016.~~

Engineered Materials

Engineered Materials sales increased by ~~$4.2~~$3.0 million, or ~~6.5%~~5.9%, to ~~$68.4~~$53.9 million in ~~2017 resulting from~~2021. The increase reflected higher sales to ~~RV and, to a lesser extent, building products end markets,~~recreational vehicle manufacturers, partially offset by lower sales to ~~transportation end markets. Higher sales to the RV market primarily reflect market share gains and underlying market growth.~~building products customers. Engineered Materials operating profit ~~increased~~decreased by ~~$0.8~~$0.5 million, or ~~7.0%~~7.2%, to ~~$12.2~~$6.4 million in ~~2017.~~

~~The Engineered Materials segment backlog was $14 million as of September 30, 2017, compared with $16 million as of December 31, 2016 and $12 million as of September 30, 2016.~~

~~Results from Operations – Nine Month Periods Ended September 30~~

~~The following information should be read in conjunction with our condensed consolidated financial statements and related notes.~~

Sales increased by $5.3 million, or 0.3%, to $2,071.8 million in 2017. Net sales related to operations outside the United States were 36.5% and 36.0% of total net sales for the nine months ended September 30, 2017 and 2016, respectively. The year-over-year change in sales included:

~~Operating profit increased by $19.1 million, or 6.5%, to $311.0 million in 2017. The increase in operating profit reflected the~~2021, primarily reflecting higher ~~operating profit in our Payment & Merchandising Technologies and Engineered Materials segments,~~material costs, partially offset by lower operating profit in our Aerospace & Electronics and Fluid Handling segments and higher corporate costs. In the nine months ended September 30, 2016, corporate costs included a $5.0 million legal settlement charge. Operating profit for the nine months ended September 30, 2017 included transaction related charges of $3.1 million in connection with the acquisitions of Westlock and Microtronic.

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

Nine Months Ended
September 30,
2017 2016
Net income before allocation to noncontrolling interests $ 201.1
$ 187.3
Other comprehensive income (loss), net of tax
Currency translation adjustment 83.2
11.6
Changes in pension and postretirement plan assets and benefit obligation, net of tax 6.9
5.6
Other comprehensive income (loss), net of tax 90.1
17.2
Comprehensive income before allocation to noncontrolling interests 291.2
204.5
Less: Noncontrolling interests in comprehensive income (0.7 ) 0.5
Comprehensive income attributable to common shareholders $ 291.9
$ 204.0

For the nine months ended September 30, 2017, comprehensive income before allocations to noncontrolling interests was $291.2 million compared to $204.5 million in the same period of 2016. The $86.7 million increase was primarily driven by a $71.6 million favorable impact of foreign currency translation adjustments year over year including fluctuations in the British pound, Canadian dollar, euro and Japanese yen.

~~Segment Results of Operations - Nine Month Periods Ended September 30~~

~~The following information should be read in conjunction with our condensed consolidated financial statements and related notes.~~

Fluid Handling sales increased by $11.2 million, or 1.5%, to $770.3 million, driven by a $13.7 million, or 1.8%, increase in sales related to an acquisition and an increase in core sales of $6.7 million, or 0.9%, partially offset by unfavorable foreign currency translation of $9.2 million, or 1.2%.

~~Fluid Handling operating profit decreased by $0.2 million, or 0.2%, to $91.3 million in 2017. The decrease was driven~~ by the impact of ~~unfavorable mix and transaction related expenses, almost equally offset by productivity.~~

~~Payment & Merchandising Technologies~~

Payment & Merchandising Technologies operating profit increased by $25.9 million, or 26.7%, to $123.0 million in 2017. The increase was primarily driven by the impact of the higher core sales and productivity, partially offset by unfavorable mix.

~~Aerospace & Electronics~~volumes.

Year-To-Date Change
(dollars in millions) 2017 2016 $ %
Net sales by product line:

Commercial Original Equipment $ 259.9
$ 270.6
$ (10.7 ) (4.0 )%
Military Original Equipment 116.3
152.9
(36.6 ) (23.9 )%
Commercial Aftermarket 96.0
96.3
(0.3 ) (0.3 )%
Military Aftermarket 34.3
39.4
(5.1 ) (12.9 )%
Total net sales 506.5
559.2
(52.7 ) (9.4 )%
Operating profit 104.8
110.6
(5.8 ) (5.2 )%
Operating margin 20.7 % 19.8 %

~~Aerospace & Electronics sales decreased $52.7 million, or 9.4%, to $506.5 million in 2017.~~

~~Aerospace & Electronics operating profit decreased by $5.8 million, or 5.2%, to $104.8 million in 2017, primarily as a result of the lower volumes, partially offset by productivity and improved mix.~~

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

~~Engineered Materials~~

Year-To-Date Change
(dollars in millions) 2017 2016 $ %
Net sales by product line:
FRP- Recreational Vehicles $ 116.9
$ 99.8
$ 17.1
17.1 %
FRP- Building Products 72.1
68.3
3.8
5.6 %
FRP- Transportation 23.7
28.9
(5.2 ) (18.0 )%
Total net sales 212.7
197.0
15.7
8.0 %
Operating profit 39.5
38.6
0.9
2.3 %
Operating margin 18.6 % 19.6 %

Engineered Materials sales increased by $15.7 million, or 8.0%, to $212.7 million in 2017 resulting from higher sales to RV and building products end markets, partially offset by lower sales to transportation end markets. Higher sales to the RV market primarily reflect market share gains and underlying market growth. Engineered Materials operating profit increased by $0.9 million, or 2.3%, to $39.5 million in 2017.

~~Page 41~~

Liquidity and Capital Resources


	Three Months Ended
	March 31,
(in millions)	2021		2020
Net cash provided by (used for):
Operating activities	$	50.2	$	(35.5)
Investing activities	29.6		(177.4)
Financing activities	(44.9)		134.3
Effect of foreign currency exchange rate changes on cash and cash equivalents	(7.5)		(12.5)
Increase (decrease) in cash and cash equivalents	$	27.4	$	(91.1)

Nine Months Ended
September 30,
(in millions) 2017 2016
Net cash provided by (used in):
Operating activities $ 174.2
$ 168.4
Investing activities (89.1 ) (37.7 )
Financing activities (63.1 ) (63.8 )
Effect of foreign currency exchange rate changes on cash and cash equivalents 40.5
5.9
Increase in cash and cash equivalents $ 62.5
$ 72.8

Our operating philosophy is to deploy cash provided byfrom operating activities, when appropriate, to provide value to shareholders by reinvesting in existing businesses, by making acquisitions that will strengthen and complement our portfolio, ofby divesting businesses that are no longer strategic or aligned with our portfolio and where such divestitures can generate capacity for strategic investments and initiatives that further optimize our portfolio, and by paying dividends and/or repurchasing shares. At any given time, and from time to time, we may be evaluating one or more of these opportunities, although we cannot assure you if or when we will consummate any such transaction.

Our current cash balance, together with cash we expect to generate from future operations along with ~~the $500 million available under~~ our ~~Commercial Paper Program (the “CP Program”)~~commercial paper program or borrowings available under our revolving credit facility is expected to be sufficient to finance our short- and long-term capital requirements, as well as to fund payments associated with our asbestos and environmental liabilities and expected pension contributions. In addition, we believe our investment grade credit ratings afford us adequate access to public and private debt markets. ~~We have no borrowings~~

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 ~~our CP Program as~~the 364-Day Credit Agreement with cash on hand and the issuance of ~~September 30, 2017. There are no other significant debt maturities coming due until December 2018.~~

In the fourth quarter of 2016, we extended our estimate of the asbestos liability, including the costs of settlement or indemnity payments and defense costs relating to currently pending claims and future claims projected to be filed against us through the generally accepted end point of such claims in 2059. Our estimate of the asbestos liability for pending and future claims through 2059 is based on the projected future asbestos costs resulting from our experience using a range of reference periods for claims filed, settled and dismissed. Based on this estimate, we recorded a $227 million additional liability in the fourth quarter of 2016. The aggregate asbestos liability is $630 million as of September 30, 2017. We continue to monitor trend factors, such as the number and type of claims being filed each year, case management orders and legislation restricting the types of claims that can proceed to trial, significant appellate rulings and developments affecting the post-bankruptcy trusts for asbestos claimants to assess whether a change in the estimate is warranted. On a quarterly basis, we review significant changes to these factors in assessing the adequacy of our asbestos liability. Similarly, we have an estimated liability of $43.1 million related to environmental remediation costs projected through 2022 related to our Goodyear Site.

As of September 30, 2017, our non-U.S. subsidiaries held approximately $529 million of cash, which would be subject to additional tax upon repatriation to the U.S. Our current plans do not anticipate that we will need funds generated from our non-U.S. operations to fund our U.S. operations. In the event we were to repatriate the cash balances of our non-U.S. subsidiaries, we would provide for and pay additional U.S. and non-U.S. taxes in connection with such repatriation.commercial paper.

Operating Activities

Cash provided by operating activities was ~~$174.2~~$50.2 million in the first ~~nine~~three months of ~~2017,~~2021, compared to ~~$168.4~~cash used for operating activities of $35.5 million during the same period last year. The increase in cash ~~generated resulted~~provided by operating activities was primarily ~~from~~driven by higher net income and lower ~~environmental payments,~~working capital levels, partially offset by higher ~~working capital requirements, higher defined benefit plan and postretirement plan contributions and higher net asbestos-related payments.~~pension contributions. Net asbestos-related payments in the first ~~nine~~three months of ~~2017~~2021 and ~~2016~~2020 were ~~$46.8~~$10.8 million and ~~$41.5~~$11.7 million, respectively. WeIn 2021, we expect to make payments related to asbestos settlement and defense costs, net of related insurance recoveries, of approximately ~~$60 million, environmental payments of approximately $13 million and contributions to our defined benefit plans of approximately $12 million in 2017.~~$45 million.

Investing Activities

Cash flows relating to investing activities consist primarily of cash used for acquisitions, capital expenditures and cash provided by divestitures of businesses or ~~assets and~~assets. Cash provided by investing activities was $29.6 million in the first three months of 2021, compared to cash ~~used for acquisitions and capital expenditures. Cash~~ used for investing activities ~~was $89.1 million in the first nine months~~ of ~~2017, compared to $37.7~~$177.4 million in the comparable period of ~~2016.~~2020. The increase in cash ~~used for~~provided by investing activities was driven by the absence of cash paid ~~of $58 million~~ for the ~~acquisitions~~acquisition of ~~Westlock~~I&S of $172.0 million, net cash proceeds from the sale of marketable securities of $20 million and ~~Microtronic during~~proceeds from the ~~first nine months~~sale of ~~2017. This was slightly offset by lower capital expenditures year over year.~~real estate related to prior repositioning actions. Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information systems. We expect ~~our~~ capital expenditures ~~to approximate $50~~of approximately $75 million in ~~2017, reflecting continued investments in new product development initiatives, primarily in our Aerospace & Electronics, Payment and Merchandising Technologies and Fluid Handling segments.~~

~~Page 42~~

2021.

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 used for financing activities was ~~$63.1~~$44.9 million during the first ~~nine~~three months of ~~2017,~~2021, compared to ~~$63.8~~cash provided by financing activities of $134.3 million ~~during~~in the ~~first nine months~~comparable period of ~~2016.~~2020. The ~~higher levels of~~increase in cash used for financing activities was ~~primarily due to cash used for open market share repurchases (we repurchased 331,632 shares~~driven by $27.1 million of ~~our common stock at a cost~~repayments of ~~$25 million~~commercial paper in the first ~~nine months~~quarter of ~~2017), the absence~~2021 compared to $184.5 million of net proceeds received from the issuance of commercial paper in the first quarter of 2020. This was partially offset by ~~higher proceeds from stock options exercised.~~the absence of $70.0 million of cash used for the repurchase of shares in the first quarter of 2020.

Recent Accounting Pronouncements

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Information regarding new accounting pronouncements is included in Note 1 to ~~the~~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, ~~2016.~~2020.

Item 4. Controls and Procedures

Disclosure Controls and Procedures. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that the information is accumulated and communicated to the Company’s Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that these controls are effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting. During the fiscal quarter ended ~~September 30, 2017,~~March 31, 2021, there have been no changes in the Company’s internal control over financial reporting, identified in connection with our evaluation thereof, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

~~Page 43~~

Part ~~II :~~II: Other Information

Item 1. Legal Proceedings

Discussion of legal matters is incorporated by reference from Part 1, Item 1, Note 8,11, “Commitments and Contingencies”, of this Quarterly Report on Form 10-Q, and should be considered an integral part of Part II, Item 1, “Legal ~~Proceedings”.~~Proceedings.”

Item 1A. Risk Factors

Information regarding risk factors appears in Part I, Item 1A of ~~Crane Co.’s~~our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016. There were no material changes during the quarter ended September 30, 2017 to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.~~2020.

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

(a) Not applicable

(b) Not applicable

~~The following table summarizes our~~

We did not make any open-market share ~~repurchases during the quarter ended September 30, 2017:~~

Total number
of shares
purchased

Average
price paid per
share

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

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

July 1-31 —
—
—
—
August 1-31 331,632
$ 75.45
—
—
September 1-30 —
—
—
—
Total July 1 — September 30, 2017 331,632
$ 75.45
—
—

~~The table above only includes the open-market~~ repurchases of our common stock during the quarter ended ~~September 30, 2017.~~ March 31, 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 ~~stock awards~~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

~~Page 44~~

Item 6. Exhibits




Exhibit 10.1		~~Amendment, dated August 31, 2017,~~Crane Co. Amended & Restated 2018 Stock Incentive Plan (incorporated by reference to ~~Time Sharing Agreement with R. S. Evans filed as~~ Exhibit 10.1 to the ~~Company’s 2009 Annual~~Registrant’s Current Report on Form ~~10-K~~8-K filed ~~on February 25, 2010.~~April 26, 2021).
Exhibit 31.1*
~~Exhibit 10.2~~	~~Amendment, dated August 31, 2017, to Time Sharing Agreement with M. Mitchell filed as Exhibit 10.1 to the Company’s Form 8-K filed on January 31, 2014.~~

~~Exhibit 31.1~~	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)
Exhibit 31.2*
~~Exhibit 31.2~~	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)
Exhibit 32.1**
~~Exhibit 32.1~~	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or 15d-14(b)
Exhibit 32.2**
~~Exhibit 32.2~~	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b)
101.INS
~~Exhibit 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
~~Exhibit 101.SCH~~		Inline XBRL Taxonomy Extension Schema ~~Document~~(filed herewith)
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase (filed herewith)
~~Exhibit 101.CAL~~101.DEF			~~XBRL Taxonomy Calculation Linkbase Document~~

~~Exhibit 101.DEF~~	Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~(filed herewith)
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase (filed herewith)
~~Exhibit 101.LAB~~101.PRE			Inline XBRL Taxonomy ~~Label~~Extension Presentation Linkbase ~~Document~~(filed herewith)
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit ~~101.PRE~~		~~XBRL Taxonomy Presentation Linkbase Document~~101)

~~Notes to Exhibits List:~~* Filed with this report

~~Attached as Exhibit 101 to~~** Furnished with this Quarterly Report on Form 10-Q are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations for the three and nine months ended ~~September 30, 2017~~ and 2016, respectively; (ii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016, respectively; (iii) the Condensed Consolidated Balance Sheets at ~~September 30, 2017~~ ~~and December 31, 2016; and (iv) the Condensed Consolidated Statements of Cash Flows for the three and nine months ended~~ ~~September 30, 2017~~ and 2016, respectively and v) Notes to Condensed Consolidated Financial Statements. Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is not deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.report

~~Page 45~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


				CRANE CO.
				REGISTRANT

Date				~~CRANE CO.~~
May 5, 2021			By	~~REGISTRANT~~

~~Date~~
~~November 6, 2017~~	By	/s/ Max H. Mitchell
				Max H. Mitchell
				President and Chief Executive Officer

Date			By	/s/ Richard A. Maue
~~November 6, 2017~~May 5, 2021				Richard A. Maue
				Senior Vice President ~~Finance~~ and
		Chief Financial Officer

~~Page 46~~



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


	September 30, 2017			December 31, 2016
(in millions, except per share and per share data)							(in millions, except per share and per share data)	March 31, 2021		December 31, 2020
Liabilities and equity							Liabilities and equity
Current liabilities:							Current liabilities:
Short-term borrowings							Short-term borrowings	$	346.9	$	375.7
Accounts payable	$	210.0		$	223.2		Accounts payable	233.6		218.4
Current asbestos liability	71.0			71.0			Current asbestos liability	66.5		66.5
Accrued liabilities	240.5			223.1			Accrued liabilities	374.7		395.9
U.S. and foreign taxes on income	13.7			3.5			U.S. and foreign taxes on income	12.9		0.1
Total current liabilities	535.2			520.8			Total current liabilities	1,034.6		1,056.6
Long-term debt	745.9			745.3			Long-term debt	843.2		842.9
Accrued pension and postretirement benefits	237.7			249.1			Accrued pension and postretirement benefits	305.3		329.7
Long-term deferred tax liability	43.3			42.4			Long-term deferred tax liability	49.1		53.6
Long-term asbestos liability	558.9			624.9			Long-term asbestos liability	590.3		603.6
Other liabilities	95.8			99.8			Other liabilities	166.0		171.4
Total liabilities	2,216.8			2,282.3			Total liabilities	2,988.5		3,057.8
Commitments and contingencies (Note 8)
Commitments and contingencies (Note 11)							Commitments and contingencies (Note 11)	0
Equity:							Equity:
Preferred shares, par value $0.01; 5,000,000 shares authorized	—			—			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			Common shares, par value $1.00; 200,000,000 shares authorized, 72,426,139 shares issued	72.4		72.4
Capital surplus	286.5			276.9			Capital surplus	334.7		330.7
Retained earnings	1,861.6			1,719.9			Retained earnings	2,276.2		2,192.8
Accumulated other comprehensive loss	(384.6		)	(476.1		)	Accumulated other comprehensive loss	(497.2)		(466.4)
Treasury stock	(456.8		)	(459.3		)	Treasury stock	(591.1)		(600.6)
Total shareholders’ equity	1,379.1			1,133.8			Total shareholders’ equity	1,595.0		1,528.9
Noncontrolling interests	11.2			11.9			Noncontrolling interests	3.0		2.2
Total equity	1,390.3			1,145.7			Total equity	1,598.0		1,531.1
Total liabilities and equity	$	3,607.1		$	3,428.0		Total liabilities and equity	$	4,586.5	$	4,588.9
Share Data:
Share data:							Share data:
Common shares issued	72,426,139			72,426,139			Common shares issued	72,426,139		72,426,139
Less: Common shares held in treasury	(13,105,905		)	(13,461,280		)	Less: Common shares held in treasury	14,048,660		14,298,191
Common shares outstanding	59,320,234			58,964,859			Common shares outstanding	58,377,479		58,127,948


Intangible Assets (dollars in millions)	Intangible Fair Value		Weighted Average Life
Trademarks/trade names	$	2.6	13
Customer relationships	49.0		14
Backlog	0.9		1
Total acquired intangible assets	$	52.5



	As of
(in millions)	September 30, 2017		December 31, 2016
Assets
Fluid Handling	$	962.5	$	845.9
Payment & Merchandising Technologies	1,235.7		1,188.9
Aerospace & Electronics	564.9		555.5
Engineered Materials	227.8		224.7
Corporate	616.2		613.0
Total	$	3,607.1	$	3,428.0



	Nine Months Ended September 30,
	2017									2016
(in millions)	Total Shareholders’ Equity			Noncontrolling Interests			Total Equity			Total Shareholders’ Equity			Noncontrolling Interests		Total Equity
Balance, beginning of period	$	1,133.8		$	11.9		$	1,145.7		$	1,139.4		$	11.4	$	1,150.8
Dividends	(58.8		)	—			(58.8		)	(57.8		)	—		(57.8		)
Reacquisition on open market	(25.0		)	—			(25.0		)	—			—		—
Exercise of stock options, net of shares reacquired	20.7			—			20.7			9.6			—		9.6
Stock compensation expense	16.5			—			16.5			16.8			—		16.8
Excess tax shortfall from stock based compensation	—			—			—			0.1			—		0.1
Net income	200.5			0.6			201.1			186.8			0.5		187.3
Other comprehensive income	91.4			(1.3		)	90.1			17.2			—		17.2
Comprehensive income	291.9			(0.7		)	291.2			204.0			0.5		204.5
Balance, end of period	$	1,379.1		$	11.2		$	1,390.3		$	1,312.1		$	11.9	$	1,324.0



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

Balance as of December 31, 2016		$	(301.3	)	$	(174.8	)	$	(476.1	)
	Other comprehensive income before reclassifications	0.1			84.6			84.7
	Amounts reclassified from accumulated other comprehensive income	6.8			—			6.8
Net current-period other comprehensive income		6.9			84.6			91.5
Balance as of September 30, 2017		$	(294.4	)	$	(90.2	)	$	(384.6	)



Details of Accumulated Other Comprehensive Income Components (in millions)	Amounts Reclassified from Accumulated Other Comprehensive Income						Affected Line Item in the Statements of Operations
	Three Months Ended September 30,
	2017			2016
Amortization of defined benefit pension items:
Prior-service costs	$	(0.1	)	$	(0.2	)	$(0.1) and $(0.3) has been recorded within Cost of sales for the three months ended September 30, 2017 and 2016, respectively, and $0 and $0.1 has been recorded within Selling, general & administrative for the three months ended September 30, 2017 and 2016, respectively.
Net loss	3.5			2.9			$4.7 and $3.9 has been recorded within Cost of sales for the three months ended September 30, 2017 and 2016, respectively, and $(1.2) and $(1.0) has been recorded within Selling, general & administrative for the three months ended September 30, 2017 and 2016, respectively.
Amortization of other postretirement items:
Prior-service costs	—			(0.1		)	Recorded within Selling, general & administrative
Net gain	(0.1		)	(0.1		)	Recorded within Selling, general & administrative
	$	3.3		$	2.5		Total before tax
	1.0			0.9			Tax benefit
Total reclassifications for the period	$	2.3		$	1.6		Net of tax



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



Year (in millions)
2017	$	7.8
2018	29.1
2019	26.4
2020	22.0
2021 and after	170.9



	Year-to-Date						Change
(dollars in millions)	2017			2016			$			%
Net sales	$	2,071.8		$	2,066.5		5.3			0.3	%
Operating profit	311.0			291.9			19.1			6.5	%
Transaction related charges*	3.1			—			3.1			NM
Restructuring related charges *	—			(0.4		)	0.4			NM
Operating margin	15.0		%	14.1		%
Other income (expense):
Interest income	1.8			1.4			0.4			28.6	%
Interest expense	(27.3		)	(27.5		)	0.2			0.7	%
Miscellaneous, net	(0.8		)	(0.6		)	(0.2		)	(33.3	)%
	(26.3		)	(26.7		)	0.4			1.5	%
Income before income taxes	284.7			265.2			19.5			7.4	%
Provision for income taxes	83.6			77.9			5.7			7.3	%
Net income before allocation to noncontrolling interests	201.1			187.3			13.8			7.4	%
Less: Noncontrolling interest in subsidiaries’ earnings	0.6			0.5			0.1			20.0	%
Net income attributable to common shareholders	$	200.5		$	186.8		$	13.7		7.3	%
* Transaction related and restructuring related charges are included in operating profit and operating margin.



	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
July 1-31	—	—		—	—
August 1-31	331,632	$	75.45	—	—
September 1-30	—	—		—	—
Total July 1 — September 30, 2017	331,632	$	75.45	—	—