What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-11-19 compared with 2020-11-19 · 485 added, 413 removed, 1331 unchanged (40% of the section changed)

5 unchanged sentences

Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial reporting during the quarter ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During the quarter ended September 30, 2021, we continued our multi-year implementation of upgrades to our enterprise resource planning (“ERP”) system.

Aside from the above, there were no changes in internal control over financial reporting during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

10 unchanged sentences

The effectiveness of our internal control over financial reporting at September 30, 2021 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included in this Annual Report.

OTHER INFORMATION

Not applicable.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

Index to Financial Statements

6 unchanged sentences

Cofield 62 Senior Vice President, Operations & Supply Chain

Floyd 52 Senior Vice President, Infrastructure

Helms 54 Senior Vice President, Chief Human Resource Officer

Mize 45 Senior Vice President, Sales and Marketing

Kenji Takeuchi 49 Senior Vice President, Technology Solutions

Feyerherm 50 Vice President, Operations Controller

Nancarrow 46 Vice President and Chief Accounting Officer

Smith 54 Vice President and Chief Accounting Officer

O’Brien 78 Non-Executive Chairman of the Board of Directors

Franklin 76 Director

1 unchanged sentence

Kolb 85 Director

O’Brien 77 Director

Christine Ortiz 51 Director

Rethore 80 Director

Sharritts 53 Director

Thomas 77 Director

8 unchanged sentences

Hall ran General Cable’s Canadian businesses before taking over responsibility for General Cable’s global Communications business.

Hall earned his Bachelor of Commerce degree from Memorial University of Newfoundland and his MBA from the University of Western Ontario Ivey School of Business.

Hall earned his Bachelor of Commerce degree from Memorial University of Newfoundland and a Master of Business Administration from the University of Western Ontario Ivey School of Business.

Heinrichs has served as our Executive Vice President, Chief Legal and Compliance Officer and Secretary since August 2018.

7 unchanged sentences

Heinrichs engaged in the private practice of law with Skadden, Arps, Slate, Meagher and Flom LLP and Shuttleworth, Smith, McNabb and Williams PLLC from 1994 through 1998.

Heinrichs earned his MBA from the Kellogg School of Management at Northwestern University in 2008, his law degree from Tulane University in 1994, and his Bachelor of Arts degree from the University of Virginia.

Heinrichs earned a Master of Business Administration from the Kellogg School of Management at Northwestern University in 2008, his law degree from Tulane University in 1994, and his Bachelor of Arts degree from the University of Virginia.

Index to Financial Statements

Marietta Edmunds Zakas has served as our Executive Vice President and Chief Financial Officer since January 2018.

5 unchanged sentences

Zakas is a director of Atlantic Capital Bank and Atlantic Capital Bancshares.

Index to Financial Statements

Cofield has served as our Senior Vice President, Operations & Supply Chain since January 2018.

5 unchanged sentences

Cofield achieved the rank of Major before resigning his commission.

Floyd has served as our Senior Vice President, Water Flow Solutions since October 2021.

He served as Senior Vice President, Infrastructure from June 2020 to September 2021;

Vice President and General Manager - Specialty Valves from February 2019 to May 2020;

Plant Manager of our Cleveland, Tennessee facility from October 2007 to February 2019;

Plant Manager of our Brownsville, Texas facility from March 2016 to February 2019;

and Operations Manager of our Cleveland, Tennessee facility from September 1998 to October 2007.

Helms has served as our Senior Vice President and Chief Human Resources Officer since February 2020.

Previously, Mr.

Helms held the position of Executive Vice President and Chief Human Resource Officer at Synovus Financial Corporation and of Senior Vice President, Human Resources at Genuine Parts Company.

Helms held the position of Executive Vice President and Chief Human Resource Officer at Synovus Financial Corporation and as Senior Vice President, Human Resources at Genuine Parts Company.

Helms earned a Bachelor of Science degree from King College, a Bachelor of Mechanical Engineering from Georgia Institute of Technology and a Master of Business Administration from Ohio University.

8 unchanged sentences

Mize earned a Bachelor of Science degree from Illinois State University and a Master of Business Administration from Millikin University.

Kenji Takeuchi has served as our Senior Vice President, Water Management Solutions since October 2021.

He served as Senior Vice President, Technology Solutions from October 2019 to September 2021.

Previously, Mr.

Takeuchi served as a Startup Catalyst at the Advanced Technology Development Center at Georgia Tech, Georgia’s technology incubator.

Prior to that, he served as Chief Technology Officer and Vice President of Engineering of Honeywell International Inc.

and held various executive-level positions at Flextronics, culminating in his role as Vice President, Products and Technology.

Takeuchi earned a Bachelor of Mechanical Engineering from Georgia Institute of Technology and a Master of Engineering from the University of California at Berkeley and completed the Executive Education Program at Stanford University’s Graduate School of Business.

Feyerherm has served as our Vice President, Operations Controller since November 2019.

3 unchanged sentences

Feyerherm earned her Bachelor of Science degree from the State University of New York and is a certified public accountant.

Nancarrow has served as our Vice President and Chief Accounting Officer since January 2018.

He served as our Senior Director, Financial Reporting and Assistant Controller since December 2014 and our Director of Financial Reporting since September 2006.

Nancarrow earned a Bachelor of Science degree from The Ohio State University and is a certified public accountant.

Smith has served as our Vice President and Chief Accounting Officer since January 2021.

Previously, Ms.

Smith served as Chief Accounting Officer for ModivCare Inc, from February 2019 through November 2020 and for Cumulus Media from May 2017 through February 2019 and served as Vice President and Corporate Controller for EmployBridge Holdings from 2015 to 2017.

Ms Smith is a certified public accountant, and she earned a Bachelor of Science degree from The Ohio State University and a Master of Business Administration from Georgia State University.

Index to Financial Statements

O’Brien has been a member of our Board of Directors since April 2006 and has served as our Non-Executive Chairman since January 2018.

He served as Chairman of Walter Investment Management Corp.

(formerly Walter Industries’ Homes Business), a mortgage portfolio owner and mortgage originator and servicer, from 2009 through December 2015, and he served as its Chief Executive Officer from 2009 to October 2015.

O’Brien has been President and Chief Executive Officer of Brier Patch Capital and Management, Inc., a real estate management and investment firm, since 2004.

He served in various executive capacities at Pulte Homes, Inc., a home building company, for 21 years, retiring as President and Chief Executive Officer in 2003.

O’Brien earned a Bachelor of Arts degree in history from the University of Miami.

Franklin has been a member of our Board of Directors since November 2010.

Franklin serves as Executive Chair of the board of directors of Purpose Built Communities, Inc., a national non-profit organization established to transform struggling neighborhoods into sustainable communities.

She also serves as Co-Chair of the Atlanta Regional Commission on Homelessness and as Chair of the board of directors of the National Center for Civil and Human Rights.

Franklin serves as the President of Clarke Franklin Associates, a management consulting firm.

In addition, Ms.

Franklin serves as Chair of the board of directors of the National Center for Civil and Human Rights and is a board member of the Paul Volcker Alliance, both non-profit organizations dedicated to public service missions.

From 2002 to 2010, Ms.

Franklin was mayor of Atlanta, Georgia.

Franklin earned a Bachelor of Science degree in sociology from Howard University and a Master’s degree in sociology from the University of Pennsylvania.

Franklin earned a Bachelor of Arts degree in sociology from Howard University and a Master’s degree in sociology from the University of Pennsylvania.

Hansen has been a member of our Board of Directors since October 2011.

11 unchanged sentences

Kolb is a certified public accountant.

Index to Financial Statements

O’Brien has been a member of our board of directors since April 2006 and has served as our Non-Executive Chairman since January 2018.

He served as Chairman of Walter Investment Management Corp.

O’Brien has been President and Chief Executive Officer of Brier Patch Capital and Management, Inc., a real estate management and investment firm, since 2004.

He served in various executive capacities at Pulte Homes, Inc., a home building company, for 21 years, retiring as President and Chief Executive Officer in 2003.

O’Brien earned a Bachelor of Arts degree in history from the University of Miami.

Christine Ortiz has been a member of our Board of Directors since November 2018.

3 unchanged sentences

She is also the founder of an innovative, nonprofit, post-secondary educational institution, Station1.

Ortiz earned a B.S.

from Rensselaer Polytechnic Institute and an M.S.

from Cornell University, all in the field of materials science and engineering.

Ortiz earned a Bachelor of Science degree from Rensselaer Polytechnic Institute and a Master of Science degree and a Doctor of Philosophy degree from Cornell University, each in the field of materials science and engineering.

Rethore has been a member of our Board of Directors since April 2006.

Rethore has served as Chairman Emeritus of Flowserve Corporation, a manufacturer of pumps, valves, seals and components, since 2000.

From January 2000 to April 2000, he served as Flowserve’s Chairman.

Rethore had previously served as its Chairman, President and Chief Executive Officer.

From January 2000 to April 2000, he served as Flowserve’s Chairman and previously served as its Chairman, President and Chief Executive Officer.

Rethore was honored by the Outstanding Directors Exchange as an Outstanding Director of the Year, and in 2012, he was designated a Board Leadership Fellow by the National Association of Corporate Directors.

1 unchanged sentence

Wharton Scholar and Fellow.

Sharritts has been a member of our Board of Directors since March 2021.

Sharritts is the Senior Vice President of the Americas at Cisco.

Sharritts has previously served as its Senior Vice President, U.S.

Commercial Sales from 2014 to 2018.

Mr Sharritts holds Advisory Board Member positions with the Georgia Chamber of Commerce and Metro Atlanta Chamber of Commerce.

Sharritts earned a Bachelor of Science degree in Business Administration from The Ohio State University.

Thomas has been a member of our Board of Directors since January 2008.

4 unchanged sentences

She earned a Bachelor of Science degree in zoology from Howard University, a Master of Science degree in microbiology from American University and a Doctor of Philosophy degree in cytology from Howard University.

Index to Financial Statements

Tokarz has been a member of our Board of Directors since April 2006.

15 unchanged sentences

He is a certified public accountant.

Index to Financial Statements

Additional Information

1 unchanged sentence

Our website address is www.muellerwaterproducts.com .

You may read and print our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and all amendments to those reports from the investor relations section of our website free of charge.

You may read and print our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to those reports from the investor relations section of our website free of charge.

These reports are available on our website soon after we file them with or furnish them to the SEC.

2 unchanged sentences

Our Code of Business Conduct and Ethics is available in the corporate governance section of our website.

In the event that we make changes in, or provide waivers from, the provisions of this Code of Business Conduct and Ethics that the SEC requires us to disclose, we will disclose these events in the corporate governance section of our website.

In the event that we make changes in, or provide waivers from, the provisions of this Code of Business Conduct and Ethics for which SEC disclosure is required, we will make such disclose in the corporate governance section of our website.

We have adopted corporate governance guidelines.

6 unchanged sentences

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES,” the information required by this item will be contained in our definitive proxy statement issued in connection with the 2022 Annual Meeting of Stockholders and is incorporated herein by reference.

Index to Financial Statements

Securities Authorized for Issuance under Equity Compensation Plans

4 unchanged sentences

2006 Stock Incentive Plan (“2006 Plan”) was approved by our sole stockholder in May 2006 and amended by our stockholders in January 2008, January 2009 and January 2012.

Index to Financial Statements

The following table sets forth certain information relating to these equity compensation plans at September 30, 2021.

9 unchanged sentences

Equity compensation plans approved by stockholders:

1,807,482 (1)

6,575,797 (3)

2006 Plan 2,195,769 (1)

5,806,070 (3)

ESPP 33,381 — 2,254,023 (4)

Total 2,229,150 8,060,093

(1) Consists of the maximum number of shares that could be earned upon exercise or vesting of outstanding stock-based awards granted under the 2006 Plan.

This includes 1,070,877 shares associated with share-settled performance units that may not be earned, depending on Company performance or stock market performance, as described in Note 12.

This includes 1,199,873 shares associated with share-settled performance units that may or may not be earned, depending on Company performance or stock market performance, as described in Note 12.

of the Notes to the Consolidated Financial Statements.

(2) Weighted average exercise price of options to acquire 328,099 shares of our common stock.

(3) The number of securities remaining available for future issuance under the 2006 Plan is 20,500,000 shares less the cumulative number of shares granted under the plan, assuming maximum payout of all share-settled performance units for which performance goals have not yet been set, plus the cumulative number of awards canceled under the plan and, after January 25, 2012, shares surrendered upon issuance to cover employees’ related tax liability.

(4) The number of securities remaining available for future issuance under the ESPP Plan is 5,800,000 shares less the cumulative number of shares that have been issued under the plan.

(2) Weighted-average exercise price of 599,799 options.

(3) The number of securities initially available for issuance under the 2006 Plan was 20,500,000 shares.

(4) The number of securities initially available for issuance under the ESPP Plan was 5,800,000 shares.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

14 unchanged sentences

(b) Financial Statement Schedules

Except for Schedule II, Valuation and Qualifying Accounts, the schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and, therefore, have been omitted.

The information required by Schedule II is included in the Notes to Consolidated Financial Statements.

All other schedules required by Item 15(b) are not applicable or not required.

2.1 Agreement and Plan of Merger dated as of June 17, 2005 among Mueller Water Products, Inc., Walter Industries, Inc., JW MergerCo, Inc.

25 unchanged sentences

001-32892) filed on January 25, 2012.

4.1 Indenture, dated June 12, 2018, among Mueller Water Products, Inc., the guarantors named on the signature pages thereto and Wells Fargo Bank, National Association, as trustee (including form of global notes).

Incorporated by reference to Exhibit 4.1 to Mueller Water Products, Inc.

Form 8-K (File no.

001-32892) filed on June 12, 2018.

4.2 Description of Securities registered under Section 12 of the Securities Exchange Act of 1934.

104 unchanged sentences

10.31.2* Executive Change-in-Control Severance Agreement, dated September 30, 2019 by and between Mueller Water Products and Steven S.

10.32 ** Mueller Water Products, Inc.

Form of Performance Restricted Stock Unit Award Agreement

10.33 ** Mueller Water Products, Inc.

Form of Restricted Stock Unit Award Agreement

10.34 ** Mueller Water Products, Inc.

Form of Stock Option Grant Award Agreement

14.1* Code of Business Conduct and Ethics for Mueller Water Products, Inc.

2 unchanged sentences

00132892) filed on February 7, 2014.

Index to Financial Statements

21.1** Subsidiaries of Mueller Water Products, Inc.

3 unchanged sentences

32.1** Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Index to Financial Statements

32.2** Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

14 unchanged sentences

Marietta Edmunds Zakas

/s/ Michael S.

Nancarrow Vice President and Chief Accounting Officer (principal accounting officer) November 18, 2020

/s/ Suzanne G.

Smith Vice President and Chief Accounting Officer (principal accounting officer) November 18, 2021

O’Brien Non-Executive Chairman of the Board of Directors November 18, 2021

/s/ Shirley C.

3 unchanged sentences

Kolb Director November 18, 2021

O’Brien Director November 18, 2020

/s/ Christine Ortiz Director November 18, 2021

2 unchanged sentences

Rethore Director November 18, 2021

/s/ Jeffery S.

Sharritts Director November 18, 2021

Director November 18, 2021

28 unchanged sentences

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

Valuation of Goodwill - Krausz Reporting Unit

Valuation of Goodwill - Krausz Industries Reporting Unit

Description of the Matter As described in Note 6 to the consolidated financial statements, goodwill is tested at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

11 unchanged sentences

In addition, we performed a sensitivity analysis on the significant assumptions to evaluate the potential change in the fair value of the reporting unit that would result from the changes in assumptions.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2007.

26 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Atlanta, Georgia

7 unchanged sentences

Cash and cash equivalents $ 227.5 $ 208.9

Receivables, net 180.8 172.8

Inventories 162.5 191.4

Receivables, net of allowance for credit losses of $ 3.5 million and $ 2.5 million

Inventories, net 184.7 162.5

Other current assets 29.3 29.0

1 unchanged sentence

Property, plant and equipment, net 283.4 253.8

Intangible assets 408.9 433.7

Intangible assets, net 392.5 408.9

Goodwill 115.1 99.8

1 unchanged sentence

Total assets $ 1,518.0 $ 1,395.0

Liabilities and equity:

Liabilities and stockholders’ equity:

Current portion of long-term debt $ 1.0 $ 1.1

13 unchanged sentences

Accumulated other comprehensive loss ( 5.0 ) ( 24.7 )

Total Company stockholders’ equity 640.7 590.1

Noncontrolling interest — 2.2

Total equity 640.7 592.3

Total liabilities and equity $ 1,395.0 $ 1,337.3

Total stockholders’ equity 694.9 640.7

Total liabilities and stockholders’ equity $ 1,518.0 $ 1,395.0

The accompanying notes are an integral part of the consolidated financial statements.

12 unchanged sentences

Gain on sale of idle property — — ( 2.4 )

Other charges 13.0 16.3 10.5

Strategic reorganization and other charges 8.0 13.0 16.3

Total operating expenses 226.8 211.4 196.6

Operating income 131.7 116.8 124.3

Pension costs (benefits) other than service ( 3.0 ) 0.4 1.0

Pension (benefit) cost other than service ( 3.3 ) ( 3.0 ) 0.4

Interest expense, net 23.4 25.5 19.8

Loss on early extinguishment of debt 16.7 — —

Gain on settlement of interest rate swap contracts — — ( 2.4 )

Walter Energy accrual — 0.2 22.0

Income before income taxes 94.9 94.1 82.1

Income tax expense (benefit) 22.1 18.3 ( 9.9 )

Income tax expense 24.5 22.1 18.3

Net income $ 70.4 $ 72.0 $ 63.8

16 unchanged sentences

Other comprehensive income (loss):

Pension liability 4.4 ( 13.3 ) 27.4

Pension 14.1 4.4 ( 13.3 )

Income tax effects ( 3.6 ) ( 1.1 ) 3.8

Foreign currency translation 9.2 8.0 6.3

Derivative instruments — — 2.4

Income tax effects — — ( 0.9 )

11.3 ( 3.2 ) 19.0

Comprehensive income $ 83.3 $ 60.6 $ 124.6

Total other comprehensive income (loss) 19.7 11.3 ( 3.2 )

Total comprehensive income $ 90.1 $ 83.3 $ 60.6

The accompanying notes are an integral part of the consolidated financial statements.

8 unchanged sentences

comprehensive

loss Non-controlling interest Total

(loss) income Non-controlling interest Total

(in millions)

6 unchanged sentences

Stock repurchased under buyback program — ( 10.0 ) — — — ( 10.0 )

Other comprehensive income, net of tax — — — 19.0 — 19.0

Other comprehensive loss, net of tax — — — ( 3.2 ) — ( 3.2 )

Balance at September 30, 2019 1.6 1,410.7 ( 786.2 ) ( 36.0 ) 2.2 592.3

5 unchanged sentences

Stock repurchased under buyback program — ( 5.0 ) — — — ( 5.0 )

Acquisition of joint venture partner’s interest — ( 2.5 ) — — ( 2.2 ) ( 4.7 )

Other comprehensive income, net of tax — — — 11.3 — 11.3

2 unchanged sentences

Dividends declared — ( 34.8 ) — — — ( 34.8 )

Cumulative effect of accounting change (Note 2.) — — ( 0.1 ) — — ( 0.1 )

Stock-based compensation — 8.1 — — — 8.1

2 unchanged sentences

Stock repurchased under buyback program — ( 10.0 ) — — — ( 10.0 )

Acquisition of joint venture partner’s interest — ( 2.5 ) — — ( 2.2 ) ( 4.7 )

Other comprehensive loss, net of tax — — — 11.3 — 11.3

Other comprehensive income, net of tax — — — 19.7 — 19.7

Balance at September 30, 2021 $ 1.6 $ 1,342.2 $ ( 643.9 ) $ ( 5.0 ) $ — $ 694.9

12 unchanged sentences

Amortization 28.2 28.2 27.0

Retirement plans 2.8 2.0 2.8

Deferred income taxes 7.2 1.3 ( 43.3 )

Stock-based compensation 5.3 4.3 5.2

Loss on early extinguishment of debt 16.7 — —

Stock-based compensation 8.1 5.3 4.3

Pension (benefit) cost ( 1.9 ) 2.8 2.0

Deferred income taxes ( 5.3 ) 7.2 1.3

Inventory reserves provision 3.1 4.3 2.4

Gain on disposal of assets — — ( 2.5 )

1 unchanged sentence

Changes in assets and liabilities, net of acquisitions:

Receivables ( 7.5 ) ( 1.4 ) ( 18.9 )

Inventories 24.9 ( 17.4 ) ( 18.4 )

Receivables, net ( 29.9 ) ( 7.5 ) ( 1.4 )

Inventories, net ( 23.5 ) 24.9 ( 19.8 )

Other assets ( 4.9 ) 0.9 ( 7.4 )

Accounts payable 23.0 ( 17.6 ) ( 11.0 )

Walter Energy accrual (payment) ( 22.0 ) 22.0 —

Walter Energy accrual — ( 22.0 ) 22.0

Other current liabilities 37.5 6.6 ( 6.1 )

Pension obligations, related to contributions — — ( 0.7 )

Long-term liabilities 1.9 ( 9.8 ) 17.1

Other noncurrent liabilities 2.5 1.9 ( 9.8 )

Net cash provided by operating activities

2 unchanged sentences

Capital expenditures ( 62.7 ) ( 67.7 ) ( 86.6 )

Business acquisitions, net of cash acquired — ( 127.5 ) —

Acquisitions, net of cash acquired ( 19.7 ) — ( 127.5 )

Proceeds from sales of assets 0.7 0.2 2.3

1 unchanged sentence

Financing activities:

Repayment of 5.5% Senior Notes ( 462.4 ) — —

Issuance of 4.0% Senior Notes 450.0 — —

Dividends paid ( 34.8 ) ( 33.1 ) ( 32.0 )

Deferred financing costs paid ( 6.0 ) ( 1.1 ) —

Proceeds from financing transaction 3.9 — —

Acquisition of joint venture partner’s interest — ( 5.2 ) —

Stock repurchased under buyback program ( 5.0 ) ( 10.0 ) ( 30.0 )

Common stock issued 3.5 5.2 7.3

Employee taxes related to stock-based compensation ( 1.0 ) ( 0.9 ) ( 1.3 )

Repayment of debt — — ( 486.3 )

Common stock issued 1.9 3.5 5.2

Stock repurchased under buyback program ( 10.0 ) ( 5.0 ) ( 10.0 )

Repayment of Krausz debt — — ( 13.2 )

Issuance of debt — — 450.0

Deferred financing costs paid ( 1.1 ) — ( 6.9 )

Other ( 0.4 ) 0.4 0.4

3 unchanged sentences

Cash and cash equivalents at beginning of year 208.9 176.7 347.1

The accompanying notes are an integral part of the consolidated financial statements.

Index to Financial Statements

Cash and cash equivalents at end of year $ 227.5 $ 208.9 $ 176.7

Supplemental cash flow information:

Cash paid for interest $ 25.3 $ 24.3 $ 22.2

Cash paid for income taxes $ 16.8 $ 15.3 $ 29.1

The accompanying notes are an integral part of the consolidated financial statements.

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE YEARS ENDED SEPTEMBER 30, 2020

Mueller Water Products, Inc., a Delaware corporation, together with its consolidated subsidiaries, operates in two business segments:

Infrastructure and Technologies.

Infrastructure (previously referred to as “Mueller Co.”) manufactures valves for water and gas systems, including butterfly, iron gate, tapping, check, knife, plug, automatic control and ball valves, as well as dry-barrel and wet-barrel fire hydrants and pipe repair products.

Technologies (previously referred to as “Mueller Technologies”) offers metering systems, leak detection, pipe condition assessment and other products and services for the water infrastructure industry.

Infrastructure manufactures valves for water and gas systems, including butterfly, iron gate, tapping, check, knife, plug, automatic control and ball valves, as well as dry-barrel and wet-barrel fire hydrants and pipe repair products.

Technologies offers metering systems, leak detection, pipe condition assessment and other products and services for the water infrastructure industry.

The “Company,” “we,” “us” or “our” refer to Mueller Water Products, Inc.

1 unchanged sentence

With regard to the Company’s segments, “we,” “us” or “our” may also refer to the segment being discussed.

We sold our Anvil segment on January 6, 2017 and our U.S.

Pipe segment on April 1, 2012.

We have approximately 3,400 employees globally, of which 66% of our hourly workers are covered by collective bargaining agreements.

In July 2014, Infrastructure acquired a 49 % ownership in an industrial valve joint-venture for $ 1.7 million.

Due to substantive control features in the joint-venture agreement, all of the joint venture’s assets, liabilities and results of operations were included in our consolidated financial statements.

We included an adjustment for the income attributable to noncontrolling interest in selling, general and administrative expenses.

As a result of substantive control features in the joint-venture agreement, all of the joint venture’s assets, liabilities and results of operations were included in our consolidated financial statements.

The noncontrolling interest portion was included in selling, general and administrative expenses.

Noncontrolling interest was recorded at its carrying value, which approximated fair value.

Infrastructure acquired the noncontrolling interest on October 3, 2019.

On December 3, 2018, we completed our acquisition of Krausz Development Ltd.

Infrastructure acquired the remaining 51% noncontrolling interest on October 3, 2019.

On December 3, 2018, we completed our acquisition of Krausz Industries Development Ltd.

and subsidiaries (“Krausz”).

We include the financial statements of Krausz in our consolidated financial statements on a one-month lag.

During our 2020 and 2019 fiscal years, we included the financial statements of Krausz on a one-month lag.

Refer to Note 5.

for additional disclosures.

During the three months ended March 31, 2021, we aligned the consolidation of the financial statements of Krausz in the Company’s consolidated financial statements, eliminating the previous inclusion of Krausz financial statements with a one-month reporting lag.

In accordance with applicable accounting literature, the elimination of the one-month reporting lag is considered to be a change in accounting principle.

We believe this change in accounting principle is preferable as the financial statements of all of our subsidiaries are now reported on the same basis, providing the most current information available.

The effect of the elimination of the reporting lag during the year ended September 30, 2021 resulted in an increase of $6.0 million to net sales and an increase of $1.4 million to operating income.

We concluded that the effect of this change is not material to the balance sheets, statements of operations, statements of cash flows, net income and earnings per share and therefore have not retrospectively applied this change.

On June 14, 2021, we acquired all the outstanding capital stock of i2O Water Ltd (“i2O”) a provider of pressure management solutions to more than 100 water companies in 45 countries.

The consolidated balance sheet at September 30, 2021 includes the preliminary estimated fair values of the net assets of i2O.

The Company is still reviewing the impact of taxes and certain other items.

The results of i2O’s operations and cash flows for the period subsequent to the acquisition are included in the consolidated statement of operations and consolidated statement of cash flows, respectively.

Refer to Note 5.

for additional disclosures related to the acquisition.

4 unchanged sentences

Unless the context indicates otherwise, whenever we refer to a particular year, we mean our fiscal year ended or ending September 30 in that particular calendar year.

New Markets Tax Credit Program On December 22, 2020, we entered into a financing transaction with Wells Fargo Community Investment Holdings, LLC (“Wells Fargo”) related to our brass foundry construction project in Decatur, Illinois under a qualified New Markets Tax Credit program (“NMTC”).

The NMTC is a federal program intended to encourage capital investment in qualified lower income communities.

Under the NMTC, investors claim federal income tax credits over a period of seven years in connection with qualified investments in the equity of community development entities (“CDE”s), which are privately managed investment institutions that are certified to make qualified low-income community investments, such as in our foundry project.

Under the NMTC, Wells Fargo contributed capital of $ 4.8 million to an investment fund and we loaned $ 12.2 million to the fund.

Wells Fargo is entitled to the associated tax credits, which are subject to 100% recapture if we do not comply with various regulations and contractual provisions surrounding the foundry project.

We have indemnified Wells Fargo for any loss

Index to Financial Statements

or recapture of tax credits related to the transaction until the seven-year period elapses.

We do not anticipate any credit recaptures will be required in connection with this arrangement.

The investment fund contributed $ 16.5 million cash for a 99.99% stake in a joint venture (“Sub-CDE”) with a CDE.

The Sub-CDE then loaned $ 16.2 million to us, with the use of the loan proceeds restricted to foundry project expenditures.

This transaction also includes a put/call provision under which we may be obligated or entitled to repurchase Wells Fargo’s interest in the investment fund.

We believe that Wells Fargo will exercise its put option in December 2027 for nominal consideration, resulting in our becoming the sole owner of the investment fund, cancelling the related loans, and recognizing an estimated gain of $ 3.9 million.

We determined that the investment fund and the Sub-CDE are variable interest entities (“VIEs”) and that we are the primary beneficiary of the VIEs.

The ongoing activities of the VIEs, namely collecting and remitting interest and fees and administering NMTC compliance, were contemplated in the initial design of the transaction and are not expected to significantly affect economic performance throughout the life of the VIEs.

Additionally, we are obligated to deliver tax benefits and provide various other guarantees to Wells Fargo and to absorb the losses of the VIEs.

Wells Fargo does not have a material interest in the underling economics of the project.

Consequently, we have included the financial statements of the VIEs in our consolidated financial statements.

Intercompany transactions between us and the VIEs have been eliminated in consolidation.

Wells Fargo’s contribution to the investment fund is consolidated in our financial statements as an Other noncurrent liability as a result of its redemption features.

Direct costs associated with Wells Fargo’s capital contribution have been netted against the recorded proceeds, resulting in a net cash contribution of $ 3.9 million.

Other direct costs associated with the transaction were capitalized and will be recognized as interest expense over the seven-year tax credit period.

Incremental costs to maintain the structure during the compliance period are expensed as incurred.

Summary of Significant Accounting Policies

Cash and Cash Equivalents- All highly liquid investments with remaining maturities of 90 days or less when purchased are classified as cash equivalents.

Cash and Cash Equivalents.

All highly liquid investments with remaining maturities of 90 days or less when purchased are classified as cash equivalents.

Where there is no right of offset against cash balances, outstanding checks are included in accounts payable.

Receivables- Receivables are amounts due from customers.

Receivables, net.

Receivables are amounts due from customers.

To reduce credit risk, credit investigations are generally performed prior to accepting orders from new customers and, when necessary, letters of credit, bonds or other instruments are required to ensure payment.

We present trade receivables net of an allowance for credit losses.

We present trade receivables net of customer discounts and an allowance for credit losses.

Our consolidated statements of operations reflect the measurement of credit losses for newly recognized trade receivables, as well as the expected increases or decreases of expected credit losses that have taken place during the period.

1 unchanged sentence

Our periodic evaluations of expected credit losses are based upon our judgments regarding prior collection experience, specific customer creditworthiness, other current conditions, and forecasts of current economic trends within the industries served that may affect the collectability of the reported amounts.

Significantly weaker than anticipated industry or economic conditions could impact customers’ ability to pay such that actual credit losses may be greater than the amounts provided for in this allowance.

Index to Financial Statements

During 2016, FASB issued standard ASC 326 - Current Expected Credit Losses to replace the existing GAAP “incurred loss” impairment approach with an approach intended to reflect “expected credit losses,” which will require consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

We will be required to use a forward-looking expected credit loss model for receivables.

While we are in process of completing our analysis, we do not expect the effect of this adoption on October 1, 2020 on our financial statements to be material.

Significantly weaker than anticipated industry or economic conditions could impact our customers’ ability to pay such that actual credit losses may be greater than the amounts provided for in this allowance.

The following table summarizes information concerning our allowance for credit losses.

3 unchanged sentences

Provision charged to expense 1.1 1.1 0.3

Balances written off, net of recoveries — ( 0.2 ) ( 0.7 )

Reclassification due to adoption of revenue accounting standard

Other ( 0.1 ) ( 0.1 ) ( 0.2 )

Balance at end of year $ 3.5 $ 2.5 $ 1.5

Inventories- Inventories are recorded at the lower of first-in, first-out method cost or estimated net realizable value.

Inventories, net.

Inventories are recorded at the lower of first-in, first-out method cost or estimated net realizable value.

We evaluate our inventory in terms of excess and obsolete exposures.

This evaluation includes such factors as anticipated usage, inventory turnover, inventory levels and ultimate product sales value.

Inventory cost includes an overhead component that is affected by levels of production and actual costs incurred.

Inventory cost includes an overhead component

Index to Financial Statements

that is affected by levels of production and actual costs incurred.

We periodically evaluate the effects of production levels and costs capitalized as part of inventory.

7 unchanged sentences

Balance at end of year $ 14.8 $ 11.7 $ 7.5

Other Current Assets- Other current assets include maintenance supplies and tooling costs.

Maintenance and repair supplies and tooling.

Maintenance and repair supplies and tooling is included in Other current assets and Other noncurrent assets.

Costs for perishable tools and maintenance items are expensed when put into service.

Costs for more durable items are amortized over their estimated useful lives, ranging from 3 to 10 years.

Property, Plant and Equipment- Property, plant and equipment is recorded at cost, less accumulated depreciation.

Property, Plant and Equipment, net.

Property, plant and equipment is recorded at cost, less accumulated depreciation.

Depreciation is recorded using the straight-line method over the estimated useful lives of the assets.

3 unchanged sentences

Direct internal and external costs to implement computer systems and internal-use software are capitalized.

Capitalized costs are depreciated over the estimated useful life of the system or software, generally 6 years, beginning when software is complete and ready for its intended use.

Liabilities are recognized at fair value for asset retirement obligations related to plant and landfill closures in the period in which they are reasonably estimable and the carrying amounts of the related long-lived assets are correspondingly increased.

Capitalized costs are depreciated over the estimated useful life of the system or software, generally six years, beginning when software is ready for its intended use.

Over time, the liabilities are accreted to their estimated future values.

At September 30, 2020 and 2019, asset retirement obligations were $ 3.8 million and $ 4.5 million, respectively.

Leases- Refer to Note 4.

At September 30, 2021 and 2020, asset retirement obligations were $ 3.8 million.

Refer to Note 4.

for information regarding our leases.

Accounting for the Impairment of Long-Lived Assets- We test indefinite-lived intangible assets and goodwill for impairment annually (or more frequently if events or circumstances indicate possible impairment.) We perform our annual impairment testing at September 1.

We amortize finite-lived intangible assets over their respective estimated useful lives and review for impairment if events or circumstances indicate possible impairment.

Accounting for the Impairment of Long-Lived Assets.

We test indefinite-lived intangible assets and goodwill for impairment annually or more frequently if events or circumstances indicate impairment is possible.

We perform our annual impairment testing at September 1.

We amortize finite-lived intangible assets over their respective estimated useful lives and review for impairment if events or circumstances indicate impairment is possible.

Refer to Note 6.

for information regarding our impairment testing.

Index to Financial Statements

Workers Compensation- Our exposure to workers compensation claims is generally limited to $ 1 million per incident.

Workers’ Compensation.

Our exposure to workers’ compensation claims is generally limited to $ 0.8 million per incident.

Liabilities, including those related to claims incurred but not reported, are recorded principally using annual valuations based on discounted future expected payments and using historical data combined with insurance industry data when historical data is limited.

We are indemnified under an agreement with a predecessor to Tyco for all Mueller Co.

and Anvil workers compensation liabilities related to incidents that occurred prior to August 16, 1999.

We retained U.S.

Pipe workers compensation liabilities related to incidents that occurred prior to the segment’s April 1, 2012 sale date, but the purchaser agreed to reimburse us for up to $ 11.8 million in payments we make related to these liabilities.

At September 30, 2020, the remaining discounted reimbursement receivable may be up to $ 2.3 million, which we have recorded as $ 0.4 million in other current assets and $ 1.9 million in other noncurrent assets.

On an undiscounted basis, workers compensation liabilities were $ 7.2 million and $ 8.7 million at September 30, 2020 and 2019, respectively.

For purposes of discounting these liabilities, we apply a risk-free discount rate, generally a U.S.

Treasury bill rate, for each policy period.

We apply the rate with a duration that corresponds to the weighted average expected payout period for each policy period.

Once a discount rate is applied to a policy period, it remains the discount rate for that policy period until all claims are paid.

On a discounted basis, workers compensation liabilities were $ 6.2 million and $ 7.6 million at September 30, 2020 and 2019, respectively.

Warranty Costs- We accrue for warranty expenses, which can include costs of repair and/or replacement, including labor, materials, equipment, freight and reasonable overhead costs.

Our gross workers’ compensation liabilities were $ 10.5 million as of September 30, 2021, and we expect to recover $ 3.5 million in insurance which is included as a receivable in Other current assets and Other noncurrent assets as of September 30, 2021.

As of September 30, 2020, our net worker’s compensation liability was $ 6.2 million.

Warranty Costs.

We accrue for warranty expenses, which include costs of repair and/or replacement, including labor, materials, equipment, freight and reasonable overhead costs.

We accrue for the estimated cost of product warranties at the time of sale if such costs are determined to be probable and reasonably estimable at that time.

1 unchanged sentence

Critical factors in our accrual analyses include warranty terms, specific claim situations, general incurred and projected failure rates, the nature of product failures, product and labor costs, and general business conditions.

We recognized $ 14.1 million of Technologies’ warranty expense during the year ended September 30, 2018 related to certain radios and other products sold in prior periods.

Activity in accrued warranty, reported as part of both other current liabilities and other noncurrent liabilities, is presented below.

Activity in our accrued warranty, reported as part of both other current liabilities and other noncurrent liabilities, is presented below.

Index to Financial Statements

2021 2020 2019

4 unchanged sentences

Balance at end of year $ 9.7 $ 14.4 $ 17.1

Deferred Financing Costs- Costs of debt financing are charged to expense over the lives of the related financing agreements.

Remaining costs and the future period over which they would be charged to expense are reassessed when amendments to the related financing agreements or prepayments occur.

ABL Agreement deferred financing costs are included in other noncurrent assets and other deferred financing costs are offset against long-term debt in the accompanying consolidated balance sheets.

Deferred Financing Costs.

Costs to finance debt are charged to expense over the lives of the debt agreements.

Remaining costs and the future period over which financing costs would be charged to expense are reassessed when amendments to the related financing agreements or prepayments occur.

Deferred financing costs are offset against the underlying long-term debt in the accompanying consolidated balance sheets.

Deferred financing costs under agreements that do not have outstanding debt and in other instances, such as our ABL Agreement and with regard to our NMTC transaction, are included in Other noncurrent assets consistent with the life of the instrument.

Deferred financing costs of $ 6.6 million at September 30, 2021 are scheduled to amortize as follows:

$ 1.3 million related to the ABL Agreement amortizes on a straight-line basis;

$ 4.9 million related to the Senior Unsecured Notes amortizes using the effective-interest rate method.

$ 1.0 million related to the ABL Agreement and $0.3 million related to the NMTC transaction which are amortized on a straight-line basis and;

$ 5.3 million related to the 4.0% Senior Unsecured Notes (“4.0% Senior Notes”) which is amortized using the effective interest rate method.

All such amortization will be over the remaining term of the respective debt.

Refer to Note 8.

for disclosures related to our ABL agreement.

Derivative Instruments and Hedging Activities- Prior to June 30, 2018, we managed interest rate risk to some extent using derivative instruments.

We had designated our interest rate swap contracts as cash flow hedges of interest payments.

As a result, the changes in the fair value of these contracts prior to settlement were reported as a component of accumulated other comprehensive loss and were reclassified into earnings in the periods during which the hedged transactions affected earnings.

We recorded a cash gain of $ 2.4 million in the quarter ended June 30, 2018 upon termination of the interest rate swaps.

for disclosures related to our borrowing arrangements.

Derivative Instruments and Hedging Activities.

We manage U.S.

1 unchanged sentence

As a result, the changes in the fair value of these contracts are reported currently in earnings.

Index to Financial Statements

Income Taxes- Deferred tax liabilities and deferred tax assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns.

The values of our currency swap contracts were liabilities of $ 1.1 million and $ 0.2 million as of September 30, 2021 and 2020, respectively, and are included in Other current liabilities and Other noncurrent liabilities, respectively, in our consolidated balance sheets.

The currency swap contracts expire in February 2022.

Income Taxes.

Deferred tax liabilities and deferred tax assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns.

Such liabilities and assets are determined based on the differences between the financial statement basis and the tax basis of assets and liabilities, using tax rates in effect for the years in which the differences are expected to reverse.

2 unchanged sentences

The amount of tax benefit recognized for any position that meets the more-likely-than-not threshold is the largest amount of the tax benefit that we believe is greater than 50 % likely of being realized.

On December 22, 2017, HR-1, commonly referred to as the Tax Cuts and Jobs Act (“Act”), was enacted, which made significant revisions to federal income tax laws, including lowering the corporate income tax rate to 21% from 35% effective January 1, 2018, overhauling the taxation of income earned outside the United States and eliminating or limiting certain deductions.

The Act subjects us to current tax on global intangible low-taxed income (“GILTI”) earned by certain of our foreign subsidiaries.

The Act states that we can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred.

We have elected to recognize the tax on GILTI as a period expense in the period the tax is incurred.

In September 2018, we adopted Accounting Standards Update 2018-02 Income Statement—Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which permits, but does not require, companies to reclassify from accumulated other comprehensive loss to retained earnings any “stranded tax effects” caused by the Act.

We have elected to not make such a reclassification.

Environmental Expenditures- We capitalize environmental expenditures that increase the life or efficiency of noncurrent assets or that reduce or prevent environmental contamination.

Environmental Expenditures.

We capitalize environmental expenditures that increase the life or efficiency of noncurrent assets or that reduce or prevent environmental contamination.

We accrue for environmental expenses resulting from existing conditions that relate to past operations when the costs are probable and reasonably estimable.

2 unchanged sentences

for additional disclosures regarding our environmental liabilities.

Revenue Recognition -Refer to Note 3.

Revenue Recognition.

Refer to Note 3.

for disclosures regarding our revenues.

Stock-based Compensation- Compensation expense for stock-based awards granted to employees and directors is based on the fair value at the grant dates for our stock-settled share awards and is based on the fair value at each reporting date for our cash-settled share awards.

Stock-based Compensation.

Compensation expense for stock-based awards granted to employees and directors is based on the fair value at the grant dates for our stock-settled share awards and is based on the fair value at each reporting date for our cash-settled share awards.

Refer to Note 12.

for more information regarding our stock-based compensation.

Stock-based compensation expense is a component of selling, general and administrative expenses.

Research and Development- Research and development costs are expensed as incurred.

Advertising- Advertising costs are expensed as incurred.

Translation of Foreign Currency- Assets and liabilities of our businesses whose functional currencies are other than the U.S.

dollar are translated into U.S.

dollars using currency exchange rates at the balance sheet date.

Stock-based compensation expense is included within Selling, general and administrative expenses.

Research and Development.

Research and development costs are expensed as incurred.

Advertising costs are expensed as incurred.

Translation of Foreign Currency.

Assets and liabilities of our businesses whose functional currencies are not denominated in the United States dollar are translated into United States dollars using currency exchange rates at the balance sheet date.

Revenues and expenses are translated at average currency exchange rates during the period.

Foreign currency translation gains and losses are reported as a component of accumulated other comprehensive loss.

Foreign currency translation gains

Index to Financial Statements

and losses are reported as a component of accumulated other comprehensive income (loss).

Gains and losses resulting from foreign currency transactions are included in earnings as incurred.

Recently Adopted Accounting Pronouncements

During 2016, the Financial Accounting Standards Board (“FASB”) issued standard Accounting Standard Codification (“ASC”) 326 - Current Expected Credit Losses (“ASC 326”) to replace the “incurred loss” impairment approach with an “expected loss” approach.

This requires consideration of a broader range of reasonable and supportable information to estimate credit losses.

We have completed historical and forward-looking analyses for receivables and adopted this guidance effective October 1, 2020.

Upon adoption, there was an immaterial impact of $0.1 million to our retained earnings.

Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued Accounting Standards Update (“ASU”) No.

2019-12, "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes” (“ASU 2019-12”).

ASU 2019-12 simplifies the accounting for income taxes by clarifying and amending existing guidance related to the recognition of franchise tax, the evaluation of a step up in the tax basis of goodwill, and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications.

ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year, with early adoption permitted.

We will adopt this standard on October 1, 2021 and it is not expected to have a material impact on our financial statements.

In March 2020, the FASB issued ASU No.

2020-04, "Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (“ASU 2020-04”).

The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts and hedging relationships that reference the London Inter Bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform.

ASU 2020-04 is effective from March 12, 2020, but can be adopted prospectively from a date within an interim period subsequent to March 12, 2020.

We are currently evaluating our contracts and the optional expedients provided by ASU 2020-04.

We will adopt this standard on October 1, 2021 and it is not expected to have a material impact on our financial statements.

Revenue from Contracts with Customers

6 unchanged sentences

Geographical region represents the location of the customer.

Index to Financial Statements

Contract Asset and Liability Balances

3 unchanged sentences

Advance payments and billings in excess of revenue are recognized and recorded as deferred revenue, the majority of which is classified as current based on the timing when we expect to recognize revenue.

We include current deferred revenue as part of our accrued expenses.

We include current deferred revenue within Other current liabilities in the accompanying consolidated balance sheets.

Deferred revenues represent contract liabilities and are recorded when customers remit cash payments in advance of our satisfaction of performance obligations under contractual arrangements.

Contract liabilities are reversed when the performance obligation is satisfied and revenue is recognized.

Index to Financial Statements

The table below represents the balances of our customer receivables and deferred revenues.

9 unchanged sentences

Performance obligations are supported by customer contracts, which provide frameworks for the nature of the distinct products or services.

We allocate the transaction price of each contract to the performance obligations on the basis of standalone selling price and recognize revenue when, or as, control of the performance obligation transfers to the customers.

We allocate the transaction price of each contract to the performance obligations on the basis of standalone selling price and recognize revenue when control of the performance obligation transfers to the customer.

The transaction price is adjusted for our estimate of variable consideration which may include discounts, and rebates.

To estimate variable consideration, we apply the expected value or the most likely amount method, based on whichever method most appropriately predicts the amount of consideration we expect to receive.

The method applied is typically based on historical experience and known trends.

We constrain the amounts of variable consideration that are included in the transaction price, to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur or when uncertainties around the variable consideration are resolved.

We exclude from the measurement of the transaction price all taxes assessed by a governmental authority.

We classify shipping and handling costs, such as freight to our customers’ destinations, as a component of cost of goods sold.

We have elected to use the practical expedient to not adjust the transaction price of a contract for the effects of a significant financing component if, at the inception of the contract, we expect that the period between when we transfer a product or service to a customer and when a customer remits payment will be one year or less.

Revenues from products and services transferred to customers at a point in time represented 99 % of our revenues in the year ended September 30, 2020.

The revenues recognized at a point in time related to the sale of our products and was recognized when the obligations of the terms of our contract were satisfied, which generally occurs upon shipment, when control of the product transfers to the customer.

Revenues from products and services transferred to customers over time represented 1 % of our revenues in the year ended September 30, 2020.

Revenues from products and services transferred to customers at a point in time represented 98 % , 99 % and 98 % of our revenues in the years ended September 30, 2021, 2020 and 2019, respectively.

The revenues recognized at a point in time related to the sale of our products are recognized when the obligations of the terms of our contract are satisfied, which generally occurs upon shipment when control of the product transfers to the customer.

Revenues from products and services transferred to customers over time represented 2 %, 1 % and 2 % of our revenues in the years ended September 30, 2021, 2020 and 2019, respectively.

We offer warranties to our customers in the form of assurance-type warranties, which provide assurance that the products provided will function as intended and comply with any agreed-upon specifications.

3 unchanged sentences

Our commissions are paid based on a combination of orders and shipments, and we reserve the right to claw back any commissions in case of product returns or lost collections.

As the expected benefit associated with these incremental costs is generally one year or less based on the nature of the product sold and benefits received, we have applied a practical expedient and therefore do not capitalize the related costs and expense them as incurred, consistent with our previous accounting treatment.

Index to Financial Statements

We adopted the new leasing standard utilizing the modified retrospective approach on October 1, 2019.

Adoption of the new standard resulted in an increase to total assets and liabilities due to the recording of lease right-of-use assets (“ROU”) and lease liabilities related to our operating lease portfolio.

We elected the package of three practical expedients for transition, which include the carry forward of our leases without reassessing whether any contracts are leases or contain leases, lease classification and initial direct costs and applying hindsight when determining the lease term and when assessing impairment of right-of-use assets at the adoption date.

On October 1, 2019, we adopted ASC 842 - Leases utilizing the modified retrospective approach.

Adoption of the new standard resulted in an increase to total assets and liabilities as a result of recording lease right-of-use assets (“ROU”) and lease liabilities related to our operating lease portfolio.

We elected three practical expedients for transition, which include the carry forward of our leases without reassessing whether any contracts are leases or contain leases, lease classification and initial direct costs as well as applying hindsight when determining the lease term and when assessing impairment of ROU assets at the adoption date.

This allows us to update our assessments according to new information and changes in facts and circumstances that have occurred since lease inception.

12 unchanged sentences

We recognize short-term lease expense in our condensed consolidated statements of operations on a straight-line basis over the lease term.

Our short-term lease expense for the year ended September 30, 2020 and short-term lease commitments at September 30, 2020 are immaterial.

Our short-term lease expense for the years ended September 30, 2021 and 2020 and short-term lease commitments at September 30, 2021 are immaterial.

We have certain lease contracts with terms and conditions that provide for variability in the payment amount based on changes in facts or circumstances occurring after the commencement date.

These variable lease payments are recognized in our condensed consolidated statements of operations as the obligation is incurred.

These variable lease payments are recognized in our consolidated statements of operations as the obligation is incurred.

Index to Financial Statements

At September 30, 2021, any legally-binding minimum lease payments for operating leases signed but not yet commenced, subleases, leases that imposed significant restrictions or covenants, related party leases or sale-leaseback arrangements were immaterial.

6 unchanged sentences

Total lease expense $ 7.3 $ 7.6 $ 6.8

Supplemental cash flow information related to leases for the year ended September 30, 2020 is presented below, in millions.

Supplemental cash flow information related to leases are presented below, in millions.

Year ended September 30,

Operating cash used for operating leases $ 6.1 $ 6.1

Financing cash used for finance leases $ 1.2 $ 1.3

Index to Financial Statements

Supplemental information describing where lease-related assets and liabilities are reflected in the Condensed Consolidated Balance Sheet at September 30, 2020 is presented below, in millions.

Supplemental information regarding our lease assets and liabilities is below.

September 30,

(in millions)

Right-of-use assets:

8 unchanged sentences

Total lease liabilities $ 30.8 $ 29.8

Supplemental information related to lease terms and discount rates at September 30, 2020 is presented below.

Supplemental information related to lease terms and discount rates are presented below.

Year ended September 30,

Weighted-average remaining lease term (years):

5 unchanged sentences

Total lease liabilities at September 30, 2021 have scheduled maturities as follows:

Index to Financial Statements

Operating Leases Finance Leases

5 unchanged sentences

Present value of lease liabilities $ 28.6 $ 2.2

Acquisitions and Divestitures

Divestiture of Burlington plant

On December 4, 2017, we sold an idle property in Burlington, New Jersey that had previously been a plant in our former U.S.

Pipe segment and recorded a gain of $ 9.0 million in our Corporate segment.

We received $ 7.4 million, recorded net current assets of $ 0.8 million and conveyed plant, property and equipment with a net carrying value of $ 0.4 million, and the buyer assumed related environmental liabilities with a carrying value of $ 1.2 million.

Acquisition of Krausz

2 unchanged sentences

We believe that the Krausz product line is complementary to our existing Infrastructure products and will improve our positioning in the pipe repair market.

Index to Financial Statements

We have recognized the assets acquired and liabilities assumed at their estimated acquisition date fair values, with the excess of the purchase price over the estimated fair values of the identifiable net assets acquired recorded as goodwill.

2 unchanged sentences

The results of Krausz, including net sales of $ 37.2 million for 2019, are included within our Infrastructure segment for all periods following the acquisition date.

The goodwill below is attributable to the strategic opportunities and synergies that we expect to arise from the acquisition of Krausz and the value of its workforce.

The goodwill is nondeductible for income tax purposes.

The goodwill below is attributable to the strategic opportunities and synergies that we expect to arise from the acquisition of Krausz and the value of its workforce and is nondeductible for income tax purposes.

Identified intangible assets consist of patents, customer relationships and favorable leasehold interests with an estimated weighted-average useful life of approximately 12 years and trade names with an indefinite life.

Values of intangible assets were determined using a discounted cash flow method.

Index to Financial Statements

The following is a summary of the estimated fair values of the net assets acquired (in millions):

17 unchanged sentences

Consideration paid included in net cash used in investing activities $ 127.5

Acquisition of i2O Water Ltd

On June 14, 2021, we acquired all of the outstanding capital stock of i2O Water Ltd for $19.7 million, net of cash acquired.

The purchase agreement provides for customary final adjustments, including a net working capital adjustment, which we expect to occur during the calendar year 2021.

The accounting for the business combination is considered to be preliminary.

We are still reviewing the impact of taxes and other certain items.

The results of i2O are included within our Technologies segment.

The goodwill below is attributable to the strategic opportunities and synergies that we expect to arise from the acquisition of i2O and the value of its workforce.

The goodwill is nondeductible for income tax purposes.

Identified intangible assets consist of customer relationships, non-compete agreements and developed technology with an estimated weighted-average useful life of approximately 12 years and trade names with an indefinite life.

Values of intangible assets were determined using a discounted cash flow method.

Index to Financial Statements

The following is a summary of the preliminary estimated fair values of the net assets acquired (in millions):

Assets, net of cash:

Receivables $ 0.5

Inventories 0.6

Other current assets 0.9

Identified intangible assets:

Tradename 1.8

Customer relationships 2.1

Non-compete agreements 0.1

Developed technology 3.5

Goodwill 12.1

Accounts payable ( 0.8 )

Other current liabilities ( 1.1 )

Fair value of net assets acquired, net of cash $ 19.7

Intangible Assets and Goodwill

At March 31, 2020, as a result of the COVID-19 pandemic, we performed a quantitative interim impairment assessment for goodwill and indefinite-lived intangible assets associated with the Krausz acquisition and concluded that these assets were not impaired.

We completed our annual goodwill impairment test and determined th ere were no impairments at September 1, 2020.

Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis each September 1 st and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

We completed our annual impairment tests of intangible assets and goodwill as of September 1, 2021, and determined th ere were no impairments.

Our goodwill primarily relates to the Krausz reporting unit which was $ 91.2 million as of September 1, 2021.

Intangible Assets

Direct internal and external costs to develop software licensed by Technologies’ customers are capitalized.

Capitalized costs are amortized over the 6 -year estimated useful life of the software, beginning when the software is complete and ready for its intended use.

Direct internal and external costs to develop software licensed by Technologies’ customers are capitalized and amortized over the 6 -year estimated useful life of the software, beginning when the software is ready for its intended use.

At September 30, 2021, the remaining weighted-average amortization period for this software was 1.8 years.

Amortization expense related to such software assets was $ 3.3 million, $ 3.3 million and $ 2.9 million for 2020, 2019 and 2018, respectively.

Amortization expense related to such software assets was $ 3.3 million in each of our 2021, 2020 and 2019 fiscal years.

Amortization expense for each of the next five years is scheduled to be $ 3.5 million in 2022, $ 2.7 million in 2023, $ 2.1 million in 2024, $ 1.1 million in 2025 and $ 0.5 million in 2026.

Index to Financial Statements

At September 30, 2020, the remaining weighted-average amortization period for the business combination-related finite-lived customer relationship and technology intangible assets were 4.2 years and 3.9 years, respectively.

At September 30, 2021, the remaining weighted-average amortization period for business combination-related finite-lived customer relationships and technology intangible assets were 4.4 years and 4.5 years, respectively.

Amortization expense related to these assets was $ 25.2 million, $ 24.9 million and $ 23.7 million for 2021, 2020 and 2019, respectively.

Amortization expense for each of the next five years is scheduled to be $ 25.4 million in 2022, $ 24.8 million in 2023, $ 24.8 million in 2024, $ 5.2 million in 2025 and $ 4.4 million in 2026.

Index to Financial Statements

Intangible assets are presented below.

4 unchanged sentences

Accumulated amortization ( 24.1 ) ( 20.8 )

Net book value 10.7 12.7

Capitalized internal-use software, net $ 10.0 $ 10.7

Business combination-related:

4 unchanged sentences

Trade names and trademarks 273.8 271.6

$ 770.3 $ 760.4

Accumulated amortization:

2 unchanged sentences

( 387.8 ) ( 362.2 )

Net book value 398.2 421.0

Total intangible assets net book value $ 408.9 $ 433.7

Business combination-related intangible assets, net 382.5 398.2

Intangible assets, net $ 392.5 $ 408.9

Our goodwill balance by reportable segment is as follows:

(i) Infrastructure balance of $ 103.0 million and (ii) Technologies balance of $ 12.1 million.

Changes in the carrying amount of goodwill were as follows:

3 unchanged sentences

Acquisition of Krausz — 0.3

Acquisition of i2O Water Ltd 12.1 —

Change in foreign currency exchange rates 3.2 3.8

Balance at end of year $ 115.1 $ 99.8

Index to Financial Statements

The components of income before income taxes from continuing operations are presented below.

The components of income before income taxes are presented below.

2021 2020 2019

1 unchanged sentence

$ 94.0 $ 89.7 $ 78.4

4.4 3.7 ( 1.6 )

Income before income taxes $ 94.9 $ 94.1 $ 82.1

On December 22, 2017, HR-1, commonly referred to as the Tax Cuts and Jobs Act (“Act”), was enacted, which made significant revisions to federal income tax laws, including lowering the corporate income tax rate to 21 % from 35 % effective January 1, 2018, overhauling the taxation of income earned outside the United States and eliminating or limiting certain deductions.

Our deferred tax assets and liabilities are recorded at the enacted tax rates in effect when we expect to recognize the related tax expenses or benefits.

The average of these rates varies slightly from year to year but historically had been approximately 39 %.

With the legislation changing rates taking place in the quarter ended December 31, 2017, we remeasured our deferred tax items at an average rate of approximately 25 % and recorded an income tax benefit of $ 42.5 million.

The Act also imposed a one-time transition tax on the undistributed, previously-untaxed, post-1986 foreign “earnings and profits” (as defined by the IRS) of certain U.S.-owned corporations.

In 2018, we recorded a provisional transition tax of $ 7.5 million for the one-time deemed repatriation tax on accumulated foreign earnings of our foreign subsidiaries.

We finalized our calculation of this transition tax liability during 2019 and reduced our initial provision by $0.6 million.

Index to Financial Statements

The Tax Cuts and Jobs Act (the “Act”) imposed a one-time transition tax on the undistributed, previously untaxed, post-1986 foreign “earnings and profits” (as defined by the IRS) of certain United States-owned corporations.

At September 30, 2021, the remaining balance of our transition obligation is $ 4.7 million, which will be paid annually through January 2026, as provided in the Act.

Other than for Krausz’s investment in its U.S.

subsidiary, we have not provided income taxes for unrepatriated foreign earnings that may be subject to withholding tax or any outside basis differences inherent in our foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations.

We have a foreign tax credit carryforward of $ 4.5 million, which we have not recognized because we do not expect to utilize it prior to expiration.

Other than for Krausz’s investment in its United States subsidiary, we have not recorded income taxes for unrepatriated foreign earnings that may be subject to withholding tax or any outside cost basis differences inherent in our foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations.

We have a foreign tax credit carryforward of $ 4.5 million, for which we have recorded a valuation allowance as we do not expect to utilize it prior to expiration.

The federal income tax returns for Mueller Co.

and Anvil are closed for years prior to 2005 and for Mueller Water Products, Inc.

are closed for years prior to 2005 and for Mueller Water Products, Inc.

for 2007 and 2008.

5 unchanged sentences

We do not have any material unpaid assessments.

The components of income tax (benefit) expense are presented below.

Index to Financial Statements

The components of income tax expense are as follows:

2021 2020 2019

2 unchanged sentences

state and local 6.3 2.7 3.9

14.9 17.0 33.4

Total current income tax expense 29.8 14.9 17.0

federal ( 4.7 ) 5.6 2.5

1 unchanged sentence

0.7 ( 0.4 ) ( 0.8 )

7.2 1.3 ( 43.3 )

Income tax (benefit) expense $ 22.1 $ 18.3 $ ( 9.9 )

Index to Financial Statements

The reconciliation between income tax expense at the U.S.

federal statutory income tax rate and reported income tax expense is presented below.

Total deferred income tax (benefit) expense ( 5.3 ) 7.2 1.3

Income tax expense $ 24.5 $ 22.1 $ 18.3

The reconciliation between income tax expense at the United States federal statutory income tax rate and reported income tax expense is presented below.

2021 2020 2019

10 unchanged sentences

Foreign income taxes ( 1.2 ) — 0.1

Domestic production activities deduction — — ( 2.4 )

Federal tax rate change — — ( 42.5 )

Federal transition tax — — ( 0.6 )

2 unchanged sentences

Other 2.0 ( 0.9 ) 0.1

Income tax expense (benefit) $ 22.1 $ 18.3 $ ( 9.9 )

Income tax expense $ 24.5 $ 22.1 $ 18.3

The following table summarizes information concerning our gross unrecognized tax benefits.

1 unchanged sentence

Balance at beginning of year $ 4.5 $ 3.3

Increases related to current year positions 1.5 0.4

Increases related to prior year positions — 2.0

Decreases due to lapse in statute of limitations ( 0.3 ) ( 2.4 )

Increase related to current year positions 0.6 1.5

Decrease as a result of statute of limitations lapse ( 0.3 ) ( 0.3 )

Balance at end of year $ 4.8 $ 4.5

9 unchanged sentences

Lease liabilities 8.2 7.3

Inventory 4.6 11.7

Inventories 6.1 4.6

State net operating losses 2.8 3.0

Federal credit carryovers 3.0 2.8

Net operating losses and credit carryovers 14.8 3.0

Stock-based compensation 3.8 2.6

1 unchanged sentence

Other 2.9 1.1

Total deferred income tax assets 51.3 34.0

Valuation allowance ( 13.6 ) ( 2.9 )

4 unchanged sentences

Basis difference in foreign investment 6.8 5.0

Pension 3.9 —

Property, plant and equipment 27.4 25.1

Other 0.5 0.5

2 unchanged sentences

We reevaluate the need for a valuation allowance against our deferred tax assets each quarter considering results to date, projections of taxable income, tax planning strategies and reversing taxable temporary differences.

Our state net operating loss carryforwards, which expire between years 2024 and 2032, remain available to offset future taxable earnings.

Our state net operating loss carryforwards, which expire between the years 2024 and 2032, remain available to offset future taxable earnings.

Borrowing Arrangements

The components of our long-term debt are presented below.

The components of our long-term debt are as follows:

September 30,

1 unchanged sentence

4.0% Senior Notes $ 450.0 $ —

5.5% Senior Notes — 450.0

ABL Agreement — —

3 unchanged sentences

Long-term debt $ 445.9 $ 446.5

The scheduled maturities of all borrowings outstanding at September 30, 2020 for each of the following years are $ 1.1 million in 2021, $ 0.9 million in 2022, $ 0.5 million in 2023, $ 0.1 million in 2024 and zero in 2025.

ABL Agreement .

Our asset based lending agreement (“ABL Agreement”) consists of a revolving credit facility for up to $ 175 million of revolving credit borrowings, swing line loans and letters of credit.

On July 30, 2020, we amended the ABL Agreement.

The amendment, among other things, (i) extended the termination date of the facility, (ii) established a LIBOR “floor” of 75 basis points, (iii) increased interest rates on borrowings, (iv) increased the rate of unused commitment fee, and (v) increased our ability to pay cash dividends.

The scheduled maturities of all borrowings outstanding at September 30, 2021 for each of the following years are $ 1.0 million in 2022, $ 0.7 million in 2023, $ 0.3 million in 2024, $ 0.1 million in 2025 and $ 0.1 million in 2026.

Index to Financial Statements

The amended ABL Agreement permits us to increase the size of the credit facility by an additional $ 150 million in certain circumstances subject to adequate borrowing base availability.

We may borrow up to $ 25 million through swing line loans and may have up to $ 60 million of letters of credit outstanding.

Borrowings under the amended ABL Agreement bear interest at a floating rate equal to LIBOR plus a margin ranging from 200 to 225 basis points, or a base rate, as defined in the ABL Agreement, plus a margin ranging from 100 to 125 basis points.

At September 30, 2020 the applicable rate was LIBOR plus 200 basis points.

The amended ABL Agreement terminates on July 29, 2025 and requires a commitment fee for any unused borrowing capacity under the ABL Agreement of 37.5 basis points per annum.

Our obligations under the ABL agreement are secured by a first-priority perfected lien on all of our U.S.

receivables and inventories, certain cash and other supporting obligations.

Borrowings are not subject to financial maintenance covenants unless excess availability is less than the greater of $ 17.5 million and 10 % of the Loan Cap as defined in the ABL Agreement.

Excess availability based on September 30, 2020 data, as reduced by outstanding letters of credit and accrued fees and expenses of $ 14.1 million, was $ 133.9 million.

ABL Agreement .

Our ABL Agreement consists of a revolving credit facility for up to $ 175 million that includes up to $ 25 million through swing line loans and may have up to $ 60 million of letters of credit.

The ABL Agreement permits us to increase the size of the credit facility by an additional $ 150 million in certain circumstances subject to adequate borrowing base availability.

Borrowings under the amended ABL Agreement bear interest at a floating rate equal to LIBOR plus an applicable margin range of 200 to 225 basis points, or a base rate, as defined in the ABL Agreement, plus an applicable margin range of from 100 to 125 basis points.

At September 30, 2021 the applicable margin was LIBOR plus 200 basis points.

The ABL Agreement is subject to mandatory prepayments if total outstanding borrowings under the ABL Agreement are greater than the aggregate commitments under the revolving credit facility or if we dispose of overdue accounts receivable in certain circumstances.

The borrowing base under the ABL Agreement is equal to the sum of (a) 85% of the value of eligible accounts receivable and (b) the lesser of (i) 70% of the value of eligible inventory or (ii) 85% of the net orderly liquidation value of the value of eligible inventory, less certain reserves.

Prepayments can be made at any time without penalty.

Substantially all of our United States subsidiaries are borrowers under the ABL Agreement and are jointly and severally liable for any outstanding borrowings.

Our obligations under the ABL Agreement are secured by a first-priority perfected lien on all of our United States inventory, accounts receivable, certain cash and other supporting obligations.

The ABL Agreement terminates on July 29, 2025 and includes a commitment fee for any unused borrowing capacity of 37.5 basis points per annum.

Borrowings are not subject to any financial maintenance covenants unless excess availability is less than the greater of $ 17.5 million and 10 % of the Loan Cap as defined in the ABL Agreement.

Excess availability based on September 30, 2021 data was $ 158.7 million, as reduced by $ 15.0 million of outstanding letters of credit and $ 1.3 million of accrued fees and expenses.

4.0% Senior Unsecured Notes.

On June 12, 2018, we privately issued $ 450.0 million of 5.5% Senior Unsecured Notes (“Notes”), which mature in June 2026 and bear interest at 5.5 %.

We capitalized $ 6.6 million of financing costs, which are being amortized over the term of the Notes using the effective interest rate method.

Proceeds from the Notes, along with other cash, were used to repay our Term Loan.

Substantially all of our U.S.

Subsidiaries guarantee the Notes, which are subordinate to borrowings under the ABL.

Based on quoted market prices, the outstanding Notes had a fair value of $ 465.8 million at September 30, 2020.

An indenture securing the Notes (“Indenture”) contains customary covenants and events of default, including covenants that limit our ability to incur debt, pay dividends, and make investments.

We believe we were compliant with these covenants at September 30, 2020 and expect to remain in compliance through September 30, 2021.

We may redeem some or all of the Notes at any time or from time to time prior to June 15, 2021 at certain “make-whole” redemption prices (as set forth in the Indenture) and on or after June 15, 2021 at specified redemption prices (as set forth in the Indenture).

Additionally, we may redeem up to 40% of the aggregate principal amount of the Notes at any time or from time to time prior to June 15, 2021 with the net proceeds of specified equity offerings at specified redemption prices (as set forth in the Indenture).

Upon a change of control (as defined in the Indenture), we will be required to make an offer to purchase the Notes at a price equal to 101% of the outstanding principal amount of the Notes.

We had a $ 500.0 million senior secured term loan (“Term Loan”), which accrued interest at a floating rate equal to LIBOR, subject to a floor of 0.75 %, plus 250 basis points.

We repaid the Term Loan on June 15, 2018 with the proceeds from the issuance of the Notes and cash on hand.

We wrote-off the associated deferred debt issuance costs and recorded a loss on the early extinguishment of debt of $ 6.2 million.

On May 28, 2021, we privately issued $ 450.0 million of 4.0% Senior Notes, which mature on June 15, 2029 and bear interest at 4.0 %, paid semi-annually in June and December.

We capitalized $ 5.5 million of financing costs, which are being amortized over the term of the 4.0% Senior Notes using the effective interest method.

Proceeds from the 4.0% Senior Notes, along with cash on hand were used to redeem our previously existing 5.5% Senior Notes.

Substantially all of our United States subsidiaries guarantee the 4.0% Senior Notes, which are subordinate to borrowings under our ABL Agreement.

Based on quoted market prices, which is a Level 1 measurement, the outstanding 4.0% Senior Notes had a fair value of $ 467.3 million as of September 30, 2021.

An indenture securing the 4.0% Senior Notes (“Indenture”) contains customary covenants and events of default, including covenants that limit our ability to incur certain debt and liens.

There are no financial maintenance covenants associated with the Indenture.

We believe we were in compliance with these covenants at September 30, 2021.

As set forth in the Indenture, we may redeem some or all of the 4.0% Senior Notes at any time or from time to time prior to June 15, 2024 at certain “make-whole” redemption prices and on or after June 15, 2024 at specified redemption prices.

Additionally, we may redeem up to 40% of the aggregate principal amount of the 4.0% Senior Notes at any time or from time to time prior to June 15, 2024 with the net proceeds of specified equity offerings at specified redemption prices.

Upon a change of control, we would be required to offer to purchase the 4.0% Senior Notes at a price equal to 101% of the outstanding principal amount of the 4.0% Senior Notes.

5.5% Senior Unsecured Notes.

On June 12, 2018, we privately issued $ 450.0 million of 5.5% Senior Notes, which were set to mature in June 2026 and bore interest at 5.5 %, paid semi-annually.

We called the 5.5% Senior Notes effective June 17, 2021 and redeemed the 5.5% Senior Notes with the proceeds from the 4.0% Senior Notes and cash on hand.

As a result, we incurred $ 16.7 million in loss on extinguishment of debt, comprised of a $ 12.4 million call premium and a $ 4.3 million write-off of the remaining deferred debt issuance costs.

Derivative Financial Instruments

Prior to the June 15, 2018 retirement of our Term Loan, we were exposed to interest rate risk that we managed to some extent using derivative instruments.

We terminated these instruments in conjunction with the retirement of the Term Loan.

Under our interest rate swap contracts, we received interest calculated using 3-month LIBOR, subject to a floor of 0.750 %, and paid fixed interest at 2.341 %, on an aggregate notional amount of $ 150.0 million.

These swap contracts effectively had fixed the cash interest rate on $ 150.0 million of our borrowings under the Term Loan at 4.841 % through September 30, 2021 .

We had designated our interest rate swap contracts as cash flow hedges of our future interest payments and elected to apply the “shortcut” method of assessing hedge effectiveness.

As a result, the gains and losses on the swap contracts had been reported as a component of other comprehensive loss and were reclassified into interest expense as the related interest payments were made.

Upon termination of the interest rate swaps, we reclassified all associated amounts from accumulated other comprehensive loss to earnings, which resulted in a cash gain of $ 2.4 million in June 2018.

In connection with the acquisition of Singer Valve in 2017, we loaned funds to one of our Canadian subsidiaries.

Although this intercompany loan has no direct effect on our consolidated financial statements, it creates exposure to currency risk for the Canadian subsidiary.

To reduce this exposure, we entered into a U.S.

dollar-Canadian dollar swap contract with the Canadian subsidiary and an offsetting Canadian dollar-U.S.

dollar swap with a domestic bank.

To reduce this exposure, we entered into a United States dollar-Canadian dollar swap contract with the Canadian subsidiary and an offsetting Canadian dollar-United States dollar swap with a domestic bank.

We have not designated these swaps as hedges and the changes in their fair value are included in earnings, where they offset the currency gains and losses associated with the intercompany loan.

Index to Financial Statements

The values of our currency swap contracts were liabilities of $ 0.2 million and $ 0.3 million as of September 30, 2020 and 2019, respectively, and are included in other noncurrent liabilities in our Consolidated Balance Sheets.

The currency swap contracts expire in February 2022.

Retirement Plans

3 unchanged sentences

The annual measurement date for all Pension Plans was September 30.

After September 30, 2019, our only remaining defined benefit plan was our U.S.

Pension Plan (“Plan”).

After September 30, 2019, our only remaining defined benefit plan was our United States Pension Plan (“Plan”).

During 2019, we settled our obligations to our Canadian pension plan participants through a combination of lump-sum payments and purchases of annuities.

3 unchanged sentences

The affected employees are now participants in our defined contribution retirement plan with an employer match and one-time contribution of $ 0.4 million, which vested through 2020.

During 2019, we recorded and paid an estimated settlement liability for exiting this plan, which resulted in an expense of $ 1.1 million, which we included in other charges.

During 2019, we recorded and paid an estimated settlement liability for exiting this plan, which resulted in an expense of $ 1.1 million, which we included in Strategic reorganization and other charges.

As a result, we no longer have any plan assets or obligation in connection with any multi-employer pension plan.

A summary of key assumptions for the valuations of our Pension Plans is below.

A summary of key assumptions for the valuations of our Pension Plans is as follows

2021 2020 2019

22 unchanged sentences

Benefits paid ( 23.3 ) ( 23.5 )

Currency translation — ( 0.1 )

Decrease in obligation due to curtailment / settlement — ( 6.5 )

End of year $ 336.8 $ 359.5

3 unchanged sentences

Employer contributions — 0.1

Currency translation — ( 0.5 )

Benefits paid ( 23.3 ) ( 23.5 )

Settlements — ( 6.5 )

Other — ( 0.2 )

End of year $ 353.5 $ 360.4

Accrued benefit cost at end of year:

Funded (unfunded) status $ 0.9 $ ( 5.0 )

Funded status $ 16.8 $ 0.9

Recognized on balance sheet:

Other noncurrent assets $ 16.8 $ 0.9

Other noncurrent liabilities — ( 5.0 )

$ 0.9 $ ( 5.0 )

Recognized in accumulated other comprehensive loss, before tax:

Recognized in accumulated other comprehensive income (loss), before tax:

Net actuarial loss 59.9 74.0

10 unchanged sentences

Other — ( 0.1 ) 0.1

Pension costs (benefit) other than service ( 3.0 ) 0.4 1.0

Net periodic benefit cost (benefit) $ ( 1.5 ) $ 2.0 $ 2.8

Pension (benefit) cost other than service ( 3.3 ) ( 3.0 ) 0.4

Net periodic benefit (benefit) cost $ ( 1.8 ) $ ( 1.5 ) $ 2.0

Index to Financial Statements

6 unchanged sentences

Actuarial gains and losses are amortized using a corridor approach.

The gain/loss corridor is equal to ten percent of the greater of the benefit obligation and the market-related value of assets.

The gain/loss corridor is equal to 10% of the greater of the benefit obligation and the market-related value of assets.

Gains and losses in excess of the corridor are generally amortized over the average remaining lifetime of the plan participants.

We expect to amortize $ 1.7 million of unrecognized loss into net periodic benefit cost from accumulated other comprehensive loss in 2022.

We maintain a single trust that holds the assets of the Plan.

Near the end of 2020, we directed our investment manager to adjust the asset allocation from about 20 % equity investments to about 30 % equity investments in 2021.

This trust’s strategic asset allocations, tactical range at September 30, 2020 and actual asset allocations are presented below.

S trategic asset allocations, tactical range at September 30, 2021 and actual asset allocations are as follows:

Strategic asset allocation Actual asset allocations at

6 unchanged sentences

Assets of the Plan are allocated to various investments to attain diversification and reasonable risk-adjusted returns while also managing the exposure to asset and liability volatility.

These ranges are targets and deviations may occur from time to time due to market fluctuations.

These ranges are targets and deviations may occur from time to time as a result of market fluctuations.

Portfolio assets are typically rebalanced to the allocation targets at least annually.

6 unchanged sentences

Index to Financial Statements

The assets of the Plan by level within the fair value hierarchy are presented below.

The assets of the Plan by level within the fair value hierarchy are as follows:

September 30, 2021

3 unchanged sentences

Large cap index funds 52.1 — 52.1

Mid cap index funds — 13.5 13.5

Small cap growth funds — 12.7 12.7

International stocks:

Mutual funds 7.4 — 7.4

International funds 52.5 — 52.5

17 unchanged sentences

2027-2031 $ 104.7

Defined Contribution Retirement Plans- Certain of our employees participate in defined contribution 401(k) plans or similar non-U.S plans.

We make matching contributions as a function of employee contributions.

Matching contributions were $5.3 million, $5.5 million and $4.7 million during 2020, 2019 and 2018, respectively.

Defined Contribution Retirement Plans.

Certain of our employees participate in defined contribution 401(k) plans or similar plans outside of the United States.

We make matching contributions as a function of employee contributions which were $ 5.9 million, $ 5.3 million and $ 5.5 million during 2021, 2020 and 2019, respectively.

Index to Financial Statements

7 unchanged sentences

Stock repurchased under buyback program ( 1,074,234 )

Other ( 6,475 )

Shares outstanding at September 30, 2019 157,462,140

12 unchanged sentences

Stock-based Compensation Plans

The effect of stock-based compensation on our statements of operations is presented below.

The effect of stock-based compensation on our consolidated statements of operations is presented below.

2021 2020 2019

13 unchanged sentences

This total assumes that the maximum number of shares will be earned for awards for which the final number of shares to be earned has not yet been determined.

An award granted under the 2006 Plan vests at such times and in such installments as set by the Compensation and Human Resources Committee of the board of directors (“Comp.

Committee”), but no award will be exercisable after the 10 -year anniversary of the date on which it is granted.

An award granted under the 2006 Plan vests at such times and in such installments as set by the Compensation and Human Resources Committee of our Board of Directors (“Compensation Committee”), but no award will be exercisable after the 10 -year anniversary of the date on which it is granted.

Management expects some instruments will be forfeited prior to vesting.

Grants to members of our board of the directors are expected to vest fully.

Grants to members of our Board of Directors are expected to vest fully.

Based on historical forfeitures, we expect grants to others to be forfeited at an annual rate of 2 %.

1 unchanged sentence

Restricted Stock Units.

Depending on the specific terms of each award, restricted stock units generally vest ratably over the life of the award, usually 3 years, on each anniversary date of the original grant.

Depending on the specific terms of each award, restricted stock units generally vest ratably over the life of the award, usually three years, on each anniversary date of the original grant.

Compensation expense for restricted stock units is recognized between the grant date and the vesting date (or the date on which a participant becomes Retirement-eligible, if sooner) on a straight-line basis for each tranche of each award.

22 unchanged sentences

Settlement will range from zero to two times the number of PRSUs granted, depending on our financial performance against predetermined targets.

The grant date for each year’s performance period is set when the Comp.

Committee establishes performance goals for the period, normally within 90 days of the beginning of each performance period.

At the end of each annual performance period, the Comp.

Committee confirms performance against the applicable performance targets.

The grant date for each year’s performance period is set when the Compensation Committee establishes performance goals for the period, normally within 90 days of the beginning of each performance period.

At the end of each annual performance period, the Compensation Committee confirms performance against the applicable performance targets.

PRSUs do not convey voting rights or earn dividends.

PRSUs vest on the last day of an award cycle, unless vested sooner due to a “Change of Control” of the Company, or the death, disability or Retirement of a participant.

PRSUs vest on the last day of an award cycle, unless vested sooner as a result of a “Change of Control” of the Company, or the death, disability or Retirement of a participant.

We recognize compensation expense for stock-settled PRSUs starting on the first day of the applicable performance period and ending on the respective vesting dates.

5 unchanged sentences

awarded Units forfeited Net units Performance factor Shares

December 1, 2015 2019 2016 $ 9.38 77,823 ( 3,998 ) 73,825 1.021 75,375

2017 13.26 77,824 ( 3,997 ) 73,827 1.000 73,827

2018 12.50 77,824 ( 61,841 ) 15,983 1.357 21,689

November 29, 2016 2020 2017 $ 13.26 59,285 ( 5,279 ) 54,006 1.000 54,006

18 unchanged sentences

The fair values of MRSUs are fixed at the date of grant and the related expense is recognized ratably over the vesting period, which is roughly three years from the date of grant.

The table below provides information regarding MRSU awards, which were valued using Monte Carlo simulations on the dates the units were granted.

December 3, 2019 January 28, 2020 February 24, 2020

The table below provides information regarding MRSU awards, which were valued using Monte Carlo simulations on the grant date.

January 27, 2021 December 2, 2020 February 24, 2020 January 28, 2020 December 3, 2019

Fair value at grant date $ 14.26 $ 15.39 $ 18.17 $ 16.76 $ 14.94

5 unchanged sentences

Stock Options.

Stock options generally vest ratably over 3 years on each anniversary date of the original grant.

Stock options granted since November 2007 also vest upon the Retirement of a participant.

Compensation expense for stock options is recognized between the grant date and the vesting date (or the date on which a participant becomes Retirement-eligible, if sooner) on a straight-line basis for each tranche of each award.

No stock options were granted since 2015.

Stock options generally vest on each anniversary date of the original grant ratably over three years.

Compensation expense attributed to stock options is based on the fair value of the awards on their respective grant dates, as determined using a Black-Scholes model.

Index to Financial Statements

The assumptions used to determine the grant date fair value are indicated below for grants issued during our 2021 fiscal year.

January 27, 2021 December 2, 2020

Variables used in determining grant date fair value:

Dividend yield 2.01 % 2.01 %

Risk-free rate 0.66 % 0.66 %

Expected term (in years) 6.0 6.0

The expected dividend yield is based on our estimated annual dividend and our stock price history at the grant date.

The risk-free interest rate is based on the United States Treasury zero-coupon yield in effect at the grant date with a term equal to the expected term.

The expected term represents the average period of time the options are expected to be outstanding.

Stock option activity under the 2006 Plan is summarized below.

9 unchanged sentences

Outstanding at September 30, 2020 328,099 $ 6.11 2.3 $ 1.4

Granted 431,520 11.86

Exercised ( 151,399 ) 4.09 1.7

11 unchanged sentences

$ 10.00 - $ 14.99 423,099 $ 11.86 10.2 — $ —

599,799 $ 10.67 7.8 176,700 $ 7.83

Employee Stock Purchase Plan.

5 unchanged sentences

At September 30, 2021, 2,254,023 shares were available for issuance under the ESPP.

Index to Financial Statements

Phantom Plan.

2 unchanged sentences

A phantom unit settles in cash equal to the price of one share of our common stock on the vesting date.

Phantom units vest ratably over 3 years on each anniversary date of the original grant.

Phantom units vest ratably over three years on each anniversary date of the original grant.

We recognize compensation expense for phantom units on a straight-line basis for each tranche of each award based on the closing price of our common stock at each balance sheet date.

The outstanding phantom units had a fair value of $ 15.22 per unit at September 30, 2021 and our accrued liability for such units was $ 3.5 million.

Index to Financial Statements

Phantom Plan activity is summarized below.

20 unchanged sentences

(in millions)

Purchased components and raw material $ 87.3 $ 95.2

Inventories, net:

Purchased components and raw materials $ 100.9 $ 87.3

Work in process 41.6 32.4

Finished goods 42.2 42.8

$ 162.5 $ 191.4

Total inventories, net $ 184.7 $ 162.5

Other current assets:

2 unchanged sentences

Income taxes 0.2 5.5

Maintenance and repair tooling 3.7 4.2

Other 0.4 1.2

$ 29.0 $ 26.0

Property, plant and equipment:

Maintenance and repair supplies and tooling 2.9 3.7

Workers’ compensation reimbursement receivable 0.8 —

Other current assets 1.9 2.5

Total other current assets $ 29.3 $ 29.0

Property, plant and equipment, net:

Land $ 6.1 $ 6.2

2 unchanged sentences

Construction in progress 83.7 57.4

$ 550.3 $ 485.0

Total property, plant and equipment $ 607.7 $ 550.3

Accumulated depreciation ( 324.3 ) ( 296.5 )

$ 253.8 $ 217.1

Total property, plant and equipment, net $ 283.4 $ 253.8

Other noncurrent assets:

Operating lease right of use asset $ 25.6 $ —

Operating lease right-of-use assets $ 27.1 $ 25.6

Maintenance and repair supplies and tooling 19.3 17.5

1 unchanged sentence

Note receivable 1.8 1.8

Pension asset 0.9 —

Other 3.4 2.6

$ 51.3 $ 23.9

Pension assets 16.8 0.9

Deferred financing fees 1.3 1.3

Other noncurrent assets 4.3 2.1

Total noncurrent assets $ 73.3 $ 51.3

Index to Financial Statements

5 unchanged sentences

Customer rebates 19.6 9.6

Interest 7.3 7.3

Warranty 7.2 6.5

Interest payable 6.2 7.3

Warranty accrual 6.7 7.2

Deferred revenues 5.4 5.6

2 unchanged sentences

Taxes other than income taxes 4.4 3.9

Restructuring and severance 2.8 1.7

Environmental 1.2 1.2

Income taxes 0.2 0.6

Accrued settlements 0.2 0.2

Walter tax liability — 22.0

Other 4.8 5.0

$ 86.6 $ 93.0

Restructuring liabilities 3.1 2.8

Environmental liabilities 1.2 1.2

Income taxes payable 8.5 0.2

Workers’ compensation accrual 2.6 2.7

CARES Act payroll tax liabilities 3.6 —

Other current liabilities 11.2 5.0

Total current liabilities $ 127.1 $ 86.6

Other noncurrent liabilities:

Operating lease liabilities $ 24.6 $ 23.3

Warranty 7.2 10.7

Transition tax 5.2 5.8

Unrecognized income tax benefits 4.5 3.3

Workers compensation 3.8 1.9

Warranty accrual 3.0 7.2

Transition tax liability 4.7 5.2

Uncertain tax position liability 4.8 4.5

Workers' compensation accrual 7.9 3.8

NMTC liability 3.9 —

Asset retirement obligation 3.6 3.5

CARES Act deferred tax liabilities 3.3 —

CARES Act payroll tax liabilities 3.6 3.3

Deferred development grant 2.5 2.5

Pension — 5.0

Other 3.0 2.9

$ 56.3 $ 33.2

Other noncurrent liabilities 3.4 3.0

Total noncurrent liabilities $ 62.0 $ 56.3

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law.

The CARES Act is a relief package intended to assist in many aspects of the American economy through direct secured loans and deferrals of the employer portion of social security taxes through the end of calendar year 2020, with 50% of the deferral due December 31, 2021 and the remainder due December 31, 2022.

For the fiscal year ended, September 30, 2020, we have elected these tax deferrals, which are approximately $3.3 million as shown above.

Supplemental Statement of Operations Information

During October 2018, we announced the move of our Middleborough, Massachusetts facility to Atlanta, which will allow us to consolidate our resources and accelerate product innovation through creation of a research and development center of excellence for software and electronics in Atlanta, Georgia.

We incurred expenses of $ 0.5 million and $ 4.3 million as of September 30, 2020 and 2019, respectively, related to this reorganization, which are included in other charges, and it was essentially completed in 2020.

For the fiscal year ended September 30, 2021, we have elected to defer these obligations, which are approximately $7.2 million as shown above.

Index to Financial Statements

During November 2019, we announced the purchase of a new facility in Kimball, Tennessee, which will allow us to support and enhance our investment in our Chattanooga large casting foundry.

As a result of this reorganization, we announced the subsequent closures of our facilities in Hammond, Indiana and Woodland, Washington.

We have incurred expenses of $ 2.5 million related to this reorganization in fiscal 2020, which is included in other charges.

On February 15, 2019, we experienced a mass shooting tragedy at our Henry Pratt facility in Aurora, Illinois.

The event resulted in the deaths of five employees and injuries to one employee and six law enforcement officials.

For the years ended September 30, 2020 and September 30, 2019, we incurred expenses of $ 0.9 million and $ 5.1 million, respectively, related to this tragedy, which are included in other charges.

Supplemental Statement of Operations Information

Between November 2019 and March 2021, we announced the purchase and closure of several facilities.

We purchased a new facility in Kimball, Tennessee, to support and enhance our investment in our Chattanooga, Tennessee large casting foundry and closed our facilities in Hammond, Indiana and Woodland, Washington.

We also announced the planned closures of our facilities in Aurora, Illinois and Surrey, British Columbia, Canada.

The majority of the activities from these plants will be transferred to our Kimball, Tennessee facility.

We expect to substantially complete the Aurora and Surrey facility closures by the third quarter of fiscal year 2022 and expect to incur total expenses related to this restructuring of approximately $ 14.0 million, including termination benefit costs of approximately $ 4.8 million and other associated costs of $ 9.2 million.

Of the total $ 14.0 million estimated costs, approximately $ 3.6 million are expected to be non-cash charges.

Expenses incurred during the years ended September 30, 2021 and September 30, 2020 were approximately $ 5.6 million and $ 2.5 million, respectively.

The $ 5.6 million incurred during fiscal 2021 included approximately $ 3.2 million of termination benefit costs which are included in Strategic reorganization and other charges and approximately $ 2.4 million in inventory write-downs which are included in Cost of sales.

On June 15, 2021, we experienced a mass shooting tragedy at our Mueller Co.

facility in Albertville, Alabama.

The event resulted in the deaths of two employees and injuries to two employees.

For the year ended September 30, 2021, we incurred expenses of $ 2.1 million related to this tragedy, which are included in Strategic reorganization and other charges.

These amounts are net of anticipated insurance recoveries.

Activity in accrued restructuring, reported as part of other current liabilities, is presented below.

2021 2020 2019

(in millions)

Beginning balance $ 2.8 $ 1.7 $ 0.9

Expenses incurred $ 5.4 $ 4.8 $ 6.6

Amounts paid $ ( 5.1 ) $ ( 3.7 ) $ ( 5.8 )

Ending balance $ 3.1 $ 2.8 $ 1.7

Selected supplemental statement of operations information is presented below.

6 unchanged sentences

5.5% Senior Notes $ 17.6 $ 24.8 $ 24.8

4.0% Senior Notes 6.2 — —

Deferred financing costs amortization 1.1 1.2 1.2

ABL Agreement 0.9 0.6 0.6

Interest rate swap contracts — — 0.6

Term Loan — — 14.4

Capitalized interest ( 2.3 ) ( 0.3 ) ( 3.0 )

3 unchanged sentences

$ 23.4 $ 25.5 $ 19.8

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is presented below.

Index to Financial Statements

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) is as follows:

Foreign currency translation Pension liability, net of tax Total

5 unchanged sentences

Balance at September 30, 2021 $ 17.2 $ ( 22.2 ) $ ( 5.0 )

Supplemental Cash Flow Information

Supplemental cash flow information is presented below.

2020 2019 2018

(in millions)

Cash paid, net:

Interest $ 24.3 $ 22.2 $ 8.9

Income taxes $ 15.3 $ 29.1 $ 10.7

Index to Financial Statements

Segment Information

7 unchanged sentences

Infrastructure personnel provide certain administrative services, including management of accounts payable and accounts receivable, without any allocation of cost to Technologies.

We do not believe the costs of such administrative services are material to the segments’ results.

We do not believe the costs of such administrative services are material to the segment’s results.

The determination of segment results excludes certain expenses designated as Corporate because they are not directly attributable to segment operations.

18 unchanged sentences

Infrastructure 20 % 19 % 18 %

Index to Financial Statements

September 30,

3 unchanged sentences

Ferguson 32.1 26.1

Index to Financial Statements

Geographical area information is presented below.

5 unchanged sentences

September 30,

2021 2020 2019

(in millions)

31 unchanged sentences

2019 44.8 7.9 0.3 53.0

Other charges:

Strategic reorganization and other charges:

2021 $ ( 0.3 ) $ — $ 8.3 $ 8.0

5 unchanged sentences

2019 80.4 5.5 0.7 86.6

Total assets:

Intangible assets, net and goodwill

September 30, 2021 $ 473.2 $ 34.4 $ — $ 507.6

September 30, 2020 490.8 17.9 — 508.7

Intangible assets, net:

Inventories, net:

September 30, 2021 162.0 22.7 — 184.7

7 unchanged sentences

We accrue for environmental expenses resulting from existing conditions that relate to past operations when the costs are probable and reasonably estimable.

In the acquisition agreement pursuant to which a predecessor to Tyco sold our businesses to a previous owner in August 1999, Tyco agreed to indemnify us and our affiliates, among other things, for all “Excluded Liabilities.” Excluded Liabilities include, among other things, substantially all liabilities relating to the time prior to August 1999, including environmental liabilities.

Under the terms of the acquisition agreement relating to the August 1999 sale by Tyco of businesses which make up certain of the companies within Mueller Water Products, Inc., we are indemnified by certain Tyco entities for, among other things, all “Excluded Liabilities.” Excluded Liabilities include, among other things, substantially all liabilities relating to the time prior to August 1999, including environmental liabilities.

The indemnity survives indefinitely.

1 unchanged sentence

Since 2007, Tyco has engaged in multiple corporate restructurings, split-offs and divestitures.

While none of these transactions directly affects the indemnification obligations of the Tyco indemnitors under the 1999 acquisition agreement, the result of such transactions is that the assets of, and control over, such Tyco indemnitors has changed.

Should any of these Tyco indemnitors become financially unable or fail to comply with the terms of the indemnity, we may be responsible for such obligations or liabilities.

Index to Financial Statements

over, such Tyco indemnitors has changed.

Should any of these Tyco indemnitors become financially unable or fail to comply with the terms of the indemnity, we may be responsible for such obligations or liabilities.

On July 13, 2010, Rohcan Investments Limited, the former owner of property leased by Mueller Canada Ltd.

15 unchanged sentences

We were a member of the Walter Energy, Inc (“Walter Energy”) federal tax consolidated group through December 14, 2006, at which time the Company was spun-off from Walter Energy.

Until our spin-off from Walter Energy, we joined in the filing of Walter Energy’s consolidated federal income tax return for each taxable year during which we were a member of the consolidated group.

As a result, we were jointly and severally liable for the federal income tax liability, if any, of the consolidated group for each of those years.

In July 2015, Walter Energy filed for bankruptcy protection under Chapter 11 of the U.S.

Bankruptcy Code in the Northern District of Alabama (“Bankruptcy Case”).

The IRS alleged that Walter Energy owed substantial amounts (“Walter Tax Liability”), and on January 11, 2016, the IRS filed a proof of claim in the Bankruptcy Case, alleging that Walter Energy owed taxes, interest and penalties in an aggregate amount of $554.3 million.

In the proof of claim, the IRS included an alternative calculation in an aggregate amount of $860.4 million.

At September 30, 2019, we had accrued a current liability of $ 22.0 million in connection with this matter.

On November 18, 2019, we paid $22.2 million, including additional accrued interest, to the IRS in final settlement of this tax dispute.

Accordingly, we were jointly and severally liable for the federal income tax liability, if any, of the consolidated group for each of those years.

As a result of a proof of claim filed by the IRS against Walter Energy in its 2015 bankruptcy case, we paid $ 22.2 million, including additional accrued interest, to the IRS in final settlement of this tax dispute.

All appeal periods have expired, and our liabilities with respect to the Walter Tax Liability have been fully resolved.

City of Jackson, MS v.

Siemens Industry, Inc., et al.

On or about August 22, 2013, Mueller Systems, LLC (“Mueller Systems”) entered into an agreement with Siemens Industries, Inc (“Siemens”) to provide advanced metering infrastructure (“AMI”) products and services to Siemens as part of Siemens’ project for the City of Jackson, MS (the “City”).

This project included products and services, which were provided by parties other than Mueller Systems, for the City’s water treatment plants, sewer lines and billing system (the “Project”).

On June 11, 2018, the City filed a lawsuit against Siemens and several of its contractors (excluding Mueller Systems) for multiple claims related to the Project, including claims for fraud, negligence, breach of implied warranty of good workmanship, negligent representation, civil conspiracy, unjust enrichment, breach of contract and breach of covenant of good faith and fair dealing (“Siemens Lawsuit”).

In the Siemens Lawsuit, the City alleged damages in excess of $450.0 million.

On November 12, 2019, the City filed an amended complaint, adding Mueller Systems as a defendant in the Siemens Lawsuit.

In February 2020, the City dismissed all claims against Mueller Systems in the Siemens Lawsuit.

On March 27, 2020, the City and Siemens executed a settlement agreement whereby Siemens agreed to pay the City $89.8 million (“Settlement Amount”) in order to settle the Siemens Lawsuit (the “Settlement”).

Following the Settlement, Siemens sought to recover a portion of the Settlement Amount from Mueller Systems, and the parties entered negotiations to resolve the matter.

In September 2020, we resolved the matter, paid Siemens approximately $ 10 million, and recovered $ 5.0 million from insurance.

The COVID-19 Pandemic.

The pandemic has caused, and is likely to continue to cause, severe economic, market and other disruptions to the U.S.

and global economies.

The pandemic has caused, and is likely to continue to cause, severe economic, market and other disruptions to the United States and global economies.

As a result of the pandemic, we experienced adverse business conditions during the year, including significant costs to mitigate the pandemic effects.

We have taken and continue to take steps to maximize liquidity by limiting cash expenditures, including furloughing significant numbers of our employees, implementing temporary shutdowns of our manufacturing facilities or portions of our manufacturing facilities, implementing temporary salary reductions for our senior leadership team, deferral of capital expenditures, reduced fees for our Board of Directors and aggressively reducing general and administrative spending.

During the course of the pandemic, we have taken steps, as reasonably necessary, to maximize liquidity by limiting cash expenditures, including furloughing significant numbers of our employees, implementing temporary shutdowns of our manufacturing facilities or portions of our manufacturing facilities, implementing temporary salary reductions for our senior leadership team, deferral of capital expenditures, reduced fees for our Board of Directors and aggressively reducing general and administrative spending.

We will continue to take steps as necessary.

We are uncertain of the potential full magnitude or duration of the business and economic impacts from the unprecedented public health effort to contain and combat the spread of COVID-19, and while the extent to which the pandemic affects our results will depend on future developments, the outbreak could result in material effects to our future financial position, results of operations, cash flows and liquidity.

Index to Financial Statements

Mass Shooting Event at our Henry Pratt Facility in Aurora, Illinois.

On February 15, 2019, we experienced a mass shooting event at our Henry Pratt facility in Aurora, Illinois, in which five employees were killed and one employee and six law enforcement officers were injured.

Mass Shooting Event at our Mueller Co.

Facility in Albertville, Alabama .

On June 15, 2021, we experienced a mass shooting event at our Mueller Co.

facility in Albertville, Alabama, in which two employees were killed and two employees were injured.

Various workers’ compensation claims arising from the event have been made to date, and we anticipate that additional claims may be made, and that liability under such claims, if any, is not expected to have a material adverse effect on our results of operations or cash flows.

8 unchanged sentences

Indemnities related to pre-closing operations generally include certain environmental and tax liabilities and other liabilities not assumed by these parties in the transaction.

Index to Financial Statements

Indemnities related to the pre-closing operations of sold assets or businesses normally do not represent additional liabilities to us, but simply serve to protect these parties from potential liability associated with our obligations existing at the time of the sale.

4 unchanged sentences

Critical factors in our reserve analyses include warranty terms, specific claim situations, incurred and projected failure rates, the nature of product failures, product and labor costs, and general business conditions.

During 2018, our warranty analysis identified that certain other Technologies products had been failing at higher-than-expected rates, and that the average cost to repair or replace certain products under warranty was higher than previously estimated.

As a result, we recorded an additional warranty expense of $ 14.1 million associated with such products.

We are party to a number of other lawsuits arising in the ordinary course of business, including product liability cases for products manufactured by us or third parties.

1 unchanged sentence

Subsequent Events

On October 23, 2020 , our board of directors declared a dividend of $ 0.0550 per share on our common stock, a 5 percent increase from the prior quarter, payable on or about November 20, 2020 to stockholders of record at the close of business on November 10, 2020 .

Index to Financial Statements

Quarterly Consolidated Financial Information (Unaudited)

Fourth Third Second First

(in millions, except per share amounts)

Net sales $ 265.3 $ 228.5 $ 257.7 $ 212.6

Gross profit 93.9 75.7 86.0 72.6

Operating income 40.7 20.0 35.8 20.3

Net income $ 26.7 $ 11.2 $ 23.8 $ 10.3

Earnings per basic share (1)

$ 0.17 $ 0.07 $ 0.15 $ 0.07

Earnings per diluted share (1)

$ 0.17 $ 0.07 $ 0.15 $ 0.06

Net sales $ 266.9 $ 274.3 $ 234.0 $ 192.8

Gross profit 88.8 97.2 74.8 60.1

Operating income 39.0 47.2 22.2 15.9

Net income (loss) $ 40.2 $ 33.7 $ 10.9 $ ( 21.0 )

Earnings (loss) per basic share (1)

$ 0.26 $ 0.21 $ 0.07 $ ( 0.13 )

Earnings (loss) per diluted share (1)

$ 0.25 $ 0.21 $ 0.07 $ ( 0.13 )

(1) The sum of the quarterly amounts may not equal the full year amount due to rounding.

On October 22, 2021 , our Board of Directors declared a dividend of $ 0.0580 per share on our common stock, a 5.5% increase from the prior quarter, payable on or about November 22, 2021 to stockholders of record at the close of business on November 10, 2021 .

Additionally, we announced a new management structure effective October 1, 2021.

The new structure is designed to increase revenue growth, drive operational excellence, accelerate new product development and enhance profitability.

We anticipate the reorganization will strengthen the alignment of products, solutions and services with customer needs, accelerate new product introductions and improve product life cycle management.

The two newly named business units are Water Flow Solutions and Water Management Solutions.

• Water Flow Solutions’ product portfolio includes iron gate valves, specialty valves and service brass products.

Net sales of products in the Water Flow Solutions business unit were approximately 60% of fiscal 2021 consolidated net sales.

• Water Management Solutions’ product and service portfolio includes fire hydrants, repair and installation, natural gas, metering, leak detection, pressure control and software products.

Net sales of products in the Water Management Solutions business unit were approximately 40% of fiscal 2021 consolidated net sales.

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

What changed 10-K

Item 9A. Controls and Procedures