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Item 8. Financial Statements and Supplementary Data

2022-02-09 compared with 2020-05-12 · 684 added, 1158 removed, 902 unchanged (67% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The consolidated financial statements included in this Form 10-K include the accounts of Rexnord Corporation and subsidiaries (collectively, the "Company").

The consolidated financial statements included in this Form 10-K include the accounts of Zurn Water Solutions Corporation and subsidiaries (collectively, the "Company").

Index to Financial Statements

Rexnord Corporation and Subsidiaries

Zurn Water Solutions Corporation and Subsidiaries

Consolidated Financial Statements

As of March 31, 2020 and 2019 and

for the years ended March 31, 2020, 2019, and 2018

Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm

As of December 31, 2021 and 2020 and for the year ended December 31, 2021,

the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020

Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Rexnord Corporation

To the Stockholders and the Board of Directors of Zurn Water Solutions Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Rexnord Corporation and subsidiaries (the Company) as of March 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended March 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2020, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Zurn Water Solutions Corporation and Subsidiaries (the Company) as of December 31, 2021 and December 31, 2020, the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for the year ended December 31, 2021, nine months ended December 31, 2020 and the year ended March 31, 2020 and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2021, nine months ended December 31, 2020 and the year ended March 31, 2020, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 12, 2020 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 9, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of acquired intangible assets

Description of the Matter

As described in Note 3 to the consolidated financial statements, during the year ended March 31, 2020, the Company completed the acquisitions of East Creek Corporation (d/b/a StainlessDrains.com) and Just Manufacturing Company for cash purchase prices of $24.8 million, and $59.4 million, respectively.

The Company’s accounting for these acquisitions included determining the fair value of the intangible assets acquired, which primarily included customer relationships, with residual value recorded as goodwill.

Auditing the Company's accounting for its acquisitions of StainlessDrains.com and Just Manufacturing Company was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of identified intangible assets of $40.9 million, which principally consisted of customer relationships.

The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired businesses.

The Company used a discounted cash flow model to measure the customer relationship assets.

The significant assumptions used to estimate the value of the intangible assets included discount rates and certain other assumptions that form the basis of the forecasted results (e.g., revenue growth rates and estimated future cash flows).

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for acquisitions.

For example, our tests included controls over the estimation process supporting the recognition and measurement of consideration transferred and customer relationships.

We also tested management’s review of the valuation models and significant assumptions used in the valuations.

To test the estimated fair value of the customer relationship intangible assets, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used by management, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.

We involved our valuation specialists to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates.

We evaluated the reasonableness of management’s forecasts of future cash flows by comparing the projections to historical results and certain peer companies.

We also performed sensitivity analyses of significant assumptions to evaluate the changes in fair value of the acquired customer relationship intangible assets that would result from changes in the assumptions.

Valuation allowances and uncertain tax positions

Description of the Matter As described in Notes 2 and 17 to the consolidated financial statements, at March 31, 2020, the Company had gross deferred tax assets of $145.8 million, $45.9 million of which relate to net operating losses, capital losses and credit carryforwards, reduced by a $39.4 million valuation allowance.

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 allowances

Description of the Matter As described in Notes 2 and 17 to the consolidated financial statements, at December 31, 2021, the Company had gross deferred tax assets of $80.3 million, $39.4 million of which relate to net operating losses, capital losses and credit carryforwards, reduced by a $35.1 million valuation allowance.

Deferred tax assets are reduced by a valuation allowance if, based upon the consideration of all positive and negative evidence, the Company determines that it is more-likely-than-not that a portion or all of the deferred tax assets will ultimately not be realized in future tax periods.

As further described in Note 17, at March 31, 2020, the Company had a liability for uncertain tax positions of $14.8 million.

The Company’s uncertain tax positions are subject to audit by federal, state and foreign taxing authorities, and the resolution of such audits may span multiple years.

Management’s analysis of the realizability of its net operating loss, capital loss and credit carryforward deferred tax assets and of the extent to which its tax positions in certain jurisdictions are more-likely-than-not to be sustained was significant to our audit because the amounts are material to the financial statements and the related assessment process is complex and involves significant judgments.

Such judgments included anticipated future earnings, the time period over which the temporary differences and carryforwards are anticipated to reverse and evaluation of feasible, prudent tax planning strategies and interpretation of laws, regulations, and tax rulings related to uncertain tax positions.

Management’s analysis of the realizability of its net operating loss, capital loss and credit carryforward deferred tax assets was significant to our audit because the amounts are material to the financial statements and the related assessment process is complex and involves significant judgments.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the realizability of deferred tax assets.

For example, we tested controls over management’s review of projections of future earnings, the time period over which temporary differences and carryforwards are anticipated to reverse, and management’s identification and evaluation of feasible, prudent tax planning strategies.

We also obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to assess whether tax positions are more-likely-than-not to be sustained upon examination.

For example, we tested controls over management’s identification of uncertain tax positions and its application of the recognition and measurement principles, including management’s review of the inputs and calculations of unrecognized tax benefits resulting from uncertain tax positions.

To test management’s assessment of the realizability of its deferred tax assets related to net operating losses, capital losses and credit carryforwards, our audit procedures included, among others, evaluation of the assumptions used by the Company to develop tax planning strategies and projections of anticipated future earnings by jurisdiction and testing the completeness and accuracy of the underlying data used in those projections.

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We also evaluated the Company’s considerations related to the reversal of temporary differences.

To test management’s recognition and measurement of liabilities associated with uncertain tax positions, our audit procedures included, among others, evaluation of the status of open income tax examinations and the potential implications of those examinations on the current year income tax provision based on the application of domestic and international income tax laws.

We also tested the technical merits of existing positions, including an evaluation of whether the positions are more-likely-than-not to be sustained in an examination and the statute of limitations assumptions related to the Company’s calculation of liabilities for uncertain tax positions.

We involved our tax professionals to assist in the evaluation of tax law relative to the Company’s available tax planning strategies, projections of future taxable income and open income tax examinations.

We involved our tax professionals to assist in the evaluation of tax law relative to the Company’s available tax planning strategies and projections of future taxable income.

/s/ Ernst & Young LLP

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Milwaukee, Wisconsin

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Rexnord Corporation

February 9, 2022

To the Stockholders and the Board of Directors of Zurn Water Solutions Corporation

Opinion on Internal Control over Financial Reporting

We have audited Rexnord Corporation and subsidiaries’ internal control over financial reporting as of March 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Rexnord Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated May 12, 2020 expressed an unqualified opinion thereon.

We have audited Zurn Water Solutions Corporation and Subsidiaries’ internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Zurn Water Solutions Corporation and Subsidiaries’ (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and December 31, 2020, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for the year ended December 31, 2021, nine months ended December 31, 2020 and the year ended March 31, 2020 , and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February 9, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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Milwaukee, Wisconsin

Rexnord Corporation and Subsidiaries

February 9, 2022

Zurn Water Solutions Corporation and Subsidiaries

Consolidated Balance Sheets

(in Millions, except share amounts)

March 31, 2020 March 31, 2019

December 31, 2021 December 31, 2020

Current assets:

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Inventories 184.5 136.1

Income taxes receivable 33.1 8.5

Other current assets 16.5 11.3

Current assets of discontinued operation — 585.9

Total current assets 474.8 907.7

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Goodwill 254.1 244.8

Insurance for asbestos claims 66.0 59.0

Other assets 39.3 37.6

Non-current assets of discontinued operation — 1,882.1

Total assets $ 1,077.7 $ 3,401.1

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Other current liabilities 106.4 60.5

Current liabilities of discontinued operation — 200.9

Total current liabilities 240.4 317.5

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Deferred income taxes 3.1 8.0

Operating lease liability 8.9 13.4

Reserve for asbestos claims 66.0 59.0

Other liabilities 41.7 18.7

Non-current liabilities of discontinued operation — 346.8

Total liabilities 951.3 1,961.8

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shares issued and outstanding:

119,718,631 at March 31, 2020 and 104,842,299 at March 31, 2019

Preferred stock, $ 0.01 par value;

10,000,000 shares authorized;

shares of 5.75% Series A Mandatory Convertible Preferred Stock issued and outstanding:

0 at March 31, 2020 and 402,500 at March 31, 2019

125,720,068 at December 31, 2021 and 119,549,735 at December 31, 2020

Additional paid-in capital 1,436.9 1,392.9

Retained earnings 85.9 30.7

Retained (deficit) earnings ( 1,236.9 ) 116.0

Accumulated other comprehensive loss ( 74.9 ) ( 73.8 )

Total Rexnord stockholders' equity 1,311.0 1,228.6

Total Zurn stockholders' equity 126.4 1,436.3

Non-controlling interest — 3.0

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See notes to consolidated financial statements.

Rexnord Corporation and Subsidiaries

Zurn Water Solutions Corporation and Subsidiaries

Consolidated Statements of Operations

(in Millions, except share and per share amounts)

March 31, 2020 March 31, 2019 March 31, 2018

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Net sales $ 910.9 $ 562.7 $ 710.1

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Interest expense, net ( 34.7 ) ( 33.3 ) ( 56.6 )

Gain (loss) on the extinguishment of debt 1.0 4.3 ( 11.9 )

Actuarial (loss) gain on pension and postretirement benefit obligations ( 36.6 ) 0.4 3.3

Other (expense) income, net ( 3.8 ) ( 1.6 ) 4.4

Loss on the extinguishment of debt ( 20.4 ) — ( 2.0 )

Actuarial gain (loss) on pension and postretirement benefit obligations 1.2 ( 0.3 ) ( 20.9 )

Other expense, net ( 0.7 ) ( 1.9 ) ( 1.2 )

Income from continuing operations before income taxes 52.4 45.5 23.4

(Provision) benefit for income taxes ( 54.1 ) ( 53.4 ) 19.5

Equity method investment income — 3.6 —

Provision for income taxes ( 2.7 ) ( 10.5 ) ( 4.4 )

Net income from continuing operations 49.7 35.0 19.0

Loss from discontinued operations, net of tax ( 1.8 ) ( 154.7 ) ( 130.6 )

Income from discontinued operations, net of tax 71.2 83.2 161.1

Net income 120.9 118.2 180.1

Non-controlling interest income 0.3 — 0.1

Net income attributable to Rexnord 180.1 34.3 75.9

Dividends on preferred stock — — ( 14.4 )

Net income attributable to Rexnord common stockholders $ 165.7 $ 11.1 $ 52.7

Basic net income (loss) per share attributable to Rexnord common stockholders:

Net income attributable to Zurn common stockholders $ 120.9 $ 118.2 $ 165.7

Basic net income per share attributable to Zurn common stockholders:

Continuing operations $ 0.41 $ 0.29 $ 0.04

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Net income $ 1.00 $ 0.98 $ 1.48

Diluted net income (loss) per share attributable to Rexnord common stockholders:

Diluted net income per share attributable to Zurn common stockholders:

Continuing operations $ 0.40 $ 0.28 $ 0.04

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See notes to consolidated financial statements.

Rexnord Corporation and Subsidiaries

Zurn Water Solutions Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(in Millions)

March 31, 2020 March 31, 2019 March 31, 2018

Net income attributable to Rexnord $ 180.1 $ 34.3 $ 75.9

Other comprehensive (loss) income:

Foreign currency translation adjustments ( 24.5 ) ( 17.9 ) 57.1

Net change in unrealized losses on interest rate derivatives, net of tax — 4.5 5.8

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Net income attributable to Zurn $ 120.9 $ 118.2 $ 180.1

Other comprehensive income (loss):

Foreign currency translation and other adjustments ( 4.2 ) 37.8 ( 24.5 )

Change in pension and other postretirement defined benefit plans, net of tax 18.4 12.8 ( 3.3 )

Other comprehensive (loss) income, net of tax ( 27.8 ) ( 22.5 ) 62.9

Non-controlling interest income 0.3 — 0.1

Other comprehensive income (loss), net of tax 14.2 50.6 ( 27.8 )

Total comprehensive income $ 135.1 $ 168.8 $ 152.3

See notes to consolidated financial statements.

Rexnord Corporation and Subsidiaries

Zurn Water Solutions Corporation and Subsidiaries

Consolidated Statements of Stockholders’ Equity

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Comprehensive

(Loss) Income Non-controlling interest (2) Total

Stockholders’

(Deficit) Equity

(Loss) Income Non-controlling interest (2) Total Stockholders’ Equity

Balance at March 31, 2019 $ 1.0 $ — $ 1,293.5 $ 30.7 $ ( 96.6 ) $ 2.4 $ 1,231.0

Net income $ — $ — $ — $ 180.1 $ — $ 0.3 $ 180.4

Foreign currency translation adjustments — — — — 57.1 — 57.1

Change in unrealized loss on interest rate derivatives, net of $ 3.9 million income tax expense

— — — — 5.8 — 5.8

Foreign currency translation and other adjustments — — — — ( 24.5 ) — ( 24.5 )

Change in pension and other postretirement defined benefit plans, net of $ 1.5 million income tax expense

— — — — ( 3.3 ) — ( 3.3 )

Total comprehensive income — — — 75.9 62.9 0.1 138.9

Total comprehensive income (loss) — — — 180.1 ( 27.8 ) 0.3 152.6

Acquisition of non-controlling interest — — ( 0.3 ) — — ( 0.3 )

Stock-based compensation expense — — 26.9 — — — 26.9

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Taxes withheld and paid on employees' share-based payment awards — — ( 7.6 ) — — — ( 7.6 )

Mandatory conversion of preferred stock to common stock (1) 0.2 — ( 0.2 ) — — — —

Repurchase of common stock (3) — — — ( 100.7 ) — — ( 100.7 )

Common stock dividends ($ 0.08 per share)

— — — ( 9.8 ) — — ( 9.8 )

Preferred stock dividends ($ 35.78 per share)

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Net income $ — $ — $ — $ 118.2 $ — $ 0.4 $ 118.6

Foreign currency translation adjustments — — — — ( 17.9 ) — ( 17.9 )

Change in unrealized loss on interest rate derivatives, net of $ 1.2 million income tax expense

— — — — 4.5 — 4.5

Change in pension and other postretirement defined benefit plans, net of $ 2.8 million income tax expense

Foreign currency translation and other adjustments — — — — 37.8 — 37.8

Change in pension and other postretirement defined benefit plans, net of $ 3.6 million income tax benefit

— — — — 12.8 — 12.8

Total comprehensive income (loss) — — — 34.3 ( 22.5 ) — 11.8

Total comprehensive income — — — 118.2 50.6 0.4 169.2

Acquisition of non-controlling interest — — ( 0.2 ) — — ( 0.1 ) ( 0.3 )

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Taxes withheld and paid on employees' share-based payment awards — — ( 9.4 ) — — — ( 9.4 )

Preferred stock dividends ($ 57.50 per share)

Repurchase of common stock (3) — — — ( 59.3 ) — — ( 59.3 )

Common stock dividends ($ 0.24 per share)

— — — ( 28.8 ) — — ( 28.8 )

Balance at March 31, 2019 $ 1.0 $ — $ 1,293.5 $ 30.7 $ ( 96.6 ) $ 2.4 $ 1,231.0

Balance at December 31, 2020 $ 1.2 $ — $ 1,392.9 $ 116.0 $ ( 73.8 ) $ 3.0 $ 1,439.3

Net income $ — $ — $ — $ 120.9 $ — $ — 120.9

Foreign currency translation adjustments — — — — ( 24.5 ) — ( 24.5 )

Change in pension and other postretirement defined benefit plans, net of $ 1.5 million income tax benefit

Foreign currency translation and other adjustments — — — — ( 4.2 ) — ( 4.2 )

Change in pension and other postretirement defined benefit plans, net of $ 5.6 million income tax provision

— — — — 18.4 — 18.4

Total comprehensive income (loss) — — — 180.1 ( 27.8 ) 0.3 152.6

Acquisition of non-controlling interest — — ( 0.3 ) — — ( 0.3 )

Total comprehensive income — — — 120.9 14.2 — 135.1

Stock-based compensation expense — — 51.4 — — — 51.4

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Taxes withheld and paid on employees' share-based payment awards — — ( 32.3 ) — — — ( 32.3 )

Mandatory conversion of preferred stock to common stock (3) 0.2 — ( 0.2 ) — — — —

Repurchase of common stock (3) — — — ( 0.9 ) — — ( 0.9 )

Dividend received from Spin-Off Transaction — — — 486.8 — — 486.8

Distribution of the net assets of the PMC business — — — ( 1,923.3 ) ( 15.3 ) ( 3.0 ) ( 1,941.6 )

Common stock dividends ($ 0.30 per share)

— — — ( 36.4 ) — — ( 36.4 )

Preferred stock dividends ($35.78 per share)

— — — ( 14.4 ) — — ( 14.4 )

Balance at March 31, 2020 $ 1.2 $ — $ 1,348.3 $ 85.9 $ ( 124.4 ) $ 2.7 $ 1,313.7

Balance at December 31, 2021 $ 1.3 $ — $ 1,436.9 $ ( 1,236.9 ) $ ( 74.9 ) $ — $ 126.4

____________________

(1) On December 7, 2016, the Company issued 8.1 million depository shares, each of which represented a 1/20th interest in a share of 5.75 % Series A Mandatory Convertible Preferred Stock (the "Series A Preferred Stock"), for an offering price of $ 50 per depository share.

Shares of Series A Preferred Stock had a par value of $ 0.01 per share.

(2) During fiscal 2018, represents a 30 % non-controlling interest in two Process & Motion Control controlled subsidiaries.

During fiscal 2019, represents a 30 % non-controlling interest in two Process & Motion Control controlled subsidiaries and a 5 % non-controlling interest in another Process & Motion Control joint venture relationship.

During the second quarter of fiscal 2020, the Company acquired the remaining 30 % non-controlling interest associated with one of the aforementioned Process & Motion Control joint ventures for a cash purchase price of $ 0.3 million.

As a result of this transaction, fiscal 2020 represents a 30 % non-controlling interest in the remaining Process & Motion Control controlled subsidiary and a 5 % non-controlling interest in another Process & Motion Control joint venture relationship.

Refer to Note 3, Acquisitions for further detail.

(3) During the third quarter of fiscal 2020, the Company issued 16.0 million shares of common stock upon the mandatory conversion of the Series A Preferred Stock;

see Note 19 Common Stock Purchases and Public Offerings for additional information.

(4) During fiscal 2020, the Company repurchased and canceled 3.6 million shares of common stock at a total cost of $ 100.7 million at a weighted average price of $ 27.94 per share.

See Note 19 Common Stock Purchases and Public Offerings for additional information .

(1) See Note 19 Public Offering and Common Stock Repurchases for additional information related to the mandatory conversion of Series A Preferred Stock.

(2) During fiscal 2020, represents a 30 % non-controlling interest in a PMC controlled subsidiary and a 5 % non-controlling interest in another PMC joint venture relationship.

During the Transition Period, the Company acquired the remaining 30 % non-controlling interest associated with the aforementioned PMC joint ventures for a cash purchase price of $ 0.3 million.

From the time of this transaction through the Spin-Off Transaction, non-controlling interest represents a 5 % non-controlling interest in the remaining PMC joint venture relationship.

The Company has no remaining non-controlling interest subsequent to the Spin-Off Transaction.

(3) During the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and fiscal year ended March 31, 2020, the Company repurchased and canceled 22,300 shares, 1.7 million shares and 3.6 million shares of common stock at a total cost of $ 0.9 million, $ 59.3 million and $ 100.7 million at a weighted average price of $ 39.27 , $ 34.97 and $ 27.94 per share, respectively.

See Note 19 Public Offering and Common Stock Repurchases for additional information .

See notes to consolidated financial statements.

Rexnord Corporation and Subsidiaries

Zurn Water Solutions Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in Millions)

March 31, 2020 March 31, 2019 March 31, 2018

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Operating activities

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Amortization of intangible assets 33.4 27.0 35.4

Amortization of deferred financing costs 2.1 1.5 1.9

Non-cash discontinued operations asset impairment — 126.0 111.2

Non-cash loss on sale of discontinued operations — 22.5 —

Non-cash asset impairment — 0.3 0.8

(Gain) loss on dispositions of property, plant and equipment ( 0.7 ) 0.5 0.9

Gain on dispositions of assets ( 10.1 ) ( 1.1 ) ( 0.7 )

Deferred income taxes ( 12.1 ) ( 7.0 ) ( 2.8 )

Actuarial loss (gain) on pension and postretirement benefit obligations 36.6 ( 0.4 ) ( 3.3 )

Actuarial loss on pension and postretirement benefit obligations 3.6 1.6 36.6

Other non-cash charges ( 3.6 ) 0.2 4.0

(Gain) loss on extinguishment of debt ( 1.0 ) ( 4.3 ) 11.9

Loss (gain) on extinguishment of debt 20.4 — ( 1.0 )

Stock-based compensation expense 51.4 36.6 26.9

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Proceeds from dispositions of long-lived assets 14.3 7.8 4.1

Cash dividend from equity method investment — 1.3 —

Net (payment) proceeds from divestiture of discontinued operations ( 1.3 ) 9.0 —

Net proceeds (payments) from divestiture of discontinued operations - VAG 4.2 — ( 1.3 )

Cash used for investing activities ( 21.9 ) ( 122.5 ) ( 123.1 )

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Repayments of debt ( 1,126.7 ) ( 336.4 ) ( 835.6 )

Dividend received from Spin-Off Transaction of PMC 486.8 — —

Cash transferred to PMC related to Spin-Off Transaction ( 192.8 ) — —

Payment of debt issuance costs ( 28.8 ) — —

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Taxes withheld and paid on employees' share-based payment awards ( 32.3 ) ( 9.4 ) ( 7.6 )

Proceeds from financing lease obligations — — 5.8

Cash provided by (used for) financing activities 114.9 ( 116.7 ) ( 308.8 )

Cash (used for) provided by financing activities ( 356.2 ) ( 409.6 ) 114.9

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 4.5 ) 18.0 ( 9.5 )

Increase (decrease) in cash, cash equivalents and restricted cash 280.9 74.9 ( 272.5 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 159.0 ) ( 317.8 ) 280.9

Cash, cash equivalents and restricted cash at beginning of period (1) 255.6 573.4 292.5

Cash, cash equivalents and restricted cash at end of period (1) $ 96.6 $ 255.6 $ 573.4

____________________

(1) The Company has combined cash flows from discontinued operations with cash flows from continuing operations within operating, investing and financing categories.

As such cash and cash equivalents and restricted cash include $ 193.3 million and $ 162.9 million of cash and cash equivalents from the discontinued operation that are reflected in current assets of discontinued operation on the consolidated balance sheets as of December 31, 2020 and March 31, 2020 respectively.

See notes to consolidated financial statements.

Rexnord Corporation and Subsidiaries

Zurn Water Solutions Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2020

December 31, 2021

Basis of Presentation and Description of Business

The consolidated financial statements included herein have been prepared by Rexnord Corporation ("Rexnord" or the "Company"), in accordance with accounting principles generally accepted in the United States ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission.

The consolidated financial statements included herein have been prepared by Zurn Water Solutions Corporation ("Zurn" or the "Company"), in accordance with accounting principles generally accepted in the United States ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission.

The consolidated financial statements include the accounts of the Company and its subsidiaries.

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In the opinion of management, the consolidated financial statements include all adjustments necessary for a fair presentation of the financial position and the results of operations for the periods presented.

Rexnord is a growth-oriented, multi-platform industrial company with what it believes to be leading market shares and highly-trusted brands that serve a diverse array of global end markets.

The Company's heritage of innovation and specification have allowed it to provide highly-engineered, mission-critical solutions to customers for decades and affords the privilege of having long-term, valued relationships with market leaders.

The Company operates in a disciplined way and its Rexnord Business System ("RBS") is the operating philosophy.

Grounded in the spirit of continuous improvement, RBS creates a scalable, process-based framework that focuses on driving superior customer satisfaction and financial results by targeting world-class operating performance throughout all aspects of its business.

The Company currently operates its business in two platforms — Process & Motion Control and Water Management.

The Process & Motion Control platform designs, manufactures, markets and services a comprehensive range of specified, highly-engineered mechanical components used within complex systems where our customers' reliability requirements and costs of failure or downtime are high.

The Process & Motion Control portfolio includes motion control products, shaft management products, aerospace components and related value-added services.

The Water Management platform designs, procures, manufactures and markets products that provide and enhance water quality, safety, flow control and conservation.

The Water Management product portfolio includes professional grade water control and safety, water distribution and drainage, finish plumbing and site works products for primarily nonresidential buildings and flow control products for water and wastewater treatment infrastructure markets.

During fiscal 2019, the Company sold the net assets of the VAG business included within the Water Management platform.

As a result, in accordance with the authoritative guidance, the operating results of the VAG business are reported as discontinued operations in the consolidated statements of operations for all periods presented.

Following the end of the Company's fiscal year ended March 31, 2020, the Company transitioned to a December 31 fiscal year-end date.

As a result, this Form 10-K includes financial information for the nine-month period from April 1, 2020 to December 31, 2020 (the "Transition Period").

Prior to the Transition Period, the Company’s fiscal year ended on March 31 of each year.

For example, fiscal 2020 represents the period from April 1, 2019, to March 31, 2020.

See Note 12, Comparative Twelve and Nine Month Financial Information for additional information.

Spin-Off of Process & Motion Control Segment

As previously disclosed, on October 4, 2021, the Company completed a Reverse Morris Trust tax-free spin-off transaction (the “Spin-off Transaction”) in which (i) substantially all the assets and liabilities of the Company's PMC business were transferred to a newly created subsidiary, Land Newco, Inc.

(“Land”), (ii) the shares of Land were distributed to the Company's stockholders pro rata, and (iii) Land was merged with a subsidiary of Regal Rexnord Corporation (formerly known as Regal Beloit Corporation), in which the stock of Land was converted into a specified number of shares of Regal Rexnord Corporation in accordance with the exchange ratio.

Following completion of the Spin-Off Transaction, the Company's name was changed to “Zurn Water Solutions Corporation” and the ticker symbol for its shares of common stock trading on the New York Stock Exchange was changed to “ZWS”.

As a result of the Spin-Off Transaction, in accordance with the authoritative guidance, the operating results of PMC are reported as discontinued operations in the consolidated statements of operations for all periods presented.

The consolidated statements of cash flows for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 have not been adjusted to separately disclose cash flows related to the discontinued operations.

See Note 4, Discontinued Operations for additional information.

In connection with the Spin-Off Transaction, the Company separated certain defined benefit pension and other post-employment benefit plans, and adjusted its employee share-based compensation awards.

See Note 15 Stock-Based Compensation and Note 16 Retirement Benefits, respectively, for additional information.

Zurn Water Solutions Corporation is a growth-oriented, pure-play water management business that designs, procures, manufactures, and markets what the Company believes to be the broadest sustainable product portfolio of specification-driven water management solutions to improve health, human safety and the environment.

The Company's product portfolio includes professional grade water safety and control, flow systems and hygienic and environmental products for public and private spaces that deliver superior value to building owners, positively impact the environment and human hygiene and reduce product installation time.

The Company's heritage of innovation and specification have allowed Zurn to provide highly-engineered, mission-critical solutions to customers for decades and affords Zurn the privilege of having long-term, valued relationships with market leaders.

The Company operates in a disciplined way and the Zurn Business System (“ZBS”), described below, is its operating philosophy.

Grounded in the spirit of continuous improvement, ZBS creates a scalable, process-based framework that focuses on driving superior customer satisfaction and financial results by targeting world-class operating performance throughout all aspects of the Company's business.

Significant Accounting Policies

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Reclassifications

Certain prior year amounts have been reclassified to conform to the fiscal 2020 presentation.

As of result of the Spin-Off Transaction certain prior year amounts primarily related to discontinued operations have been reclassified to conform to presentation used for the year ending December 31, 2021.

Revenue Recognition

See Note 6, Revenue Recognition for the Company's policy for recognizing revenue under Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606") as well as the various other disclosures required by ASC 606.

Prior to fiscal year 2019, net sales were recorded upon transfer of title and risk of product loss to the customer.

Net sales relating to any particular shipment are based upon the amount invoiced for the delivered goods less estimated future rebate payments and sales returns which are based upon historical experience.

Revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.

Other than a standard product warranty, there are no other significant post-shipment obligations.

The Company determines if an arrangement is a lease, or contains a lease, at the inception of the arrangement and determines whether it is an operating or financing lease.

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Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet and are instead recognized on a straight-line basis over the lease term.

See Note 14, Leases, for additional discussion about the Company's policy for accounting for leases and other required disclosures.

Stock-Based Compensation

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The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents.

Receivables are stated net of allowances for doubtful accounts of $ 3.4 million at March 31, 2020, and $ 3.1 million at March 31, 2019.

We evaluate future expected credit losses on our receivables to establish the allowance for doubtful accounts based on a combination of specific customer circumstances and historical write-off experience.

Credit is extended to customers based upon an evaluation of their financial position.

Receivables are stated net of allowances for doubtful accounts of $ 1.2 million at December 31, 2021, and $ 0.8 million at December 31, 2020.

The Company assesses the collectability of customer receivables based on the credit worthiness of a customer as determined by credit checks and analysis, as well as the customer’s payment history.

In determining the allowance for doubtful accounts, the Company also considers various factors including the aging of customer accounts and historical write-offs.

In addition, the Company monitors other risk factors, including forward-looking information when establishing adequate allowances for doubtful accounts, which reflects the current estimate of credit losses expected to be incurred over the life of the receivables.

Generally, advance payment is not required.

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Significant Customers

The Company’s largest customer accounted for less than 10% of consolidated net sales for the years ended March 31, 2020, 2019 and 2018, respectively.

The Company’s largest customer accounted for 23 %, 24 % and 23 % of consolidated net sales for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, respectively.

No other customers account for more than 10% of consolidated net sales for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 or the fiscal year ended March 31, 2020.

Inventories are comprised of material, direct labor and manufacturing overhead, and are stated at the lower of cost or market.

Market is determined based on estimated net realizable values.

The Company’s total inventories valued using the "last-in, first-out" (LIFO) method was 61 % and 62 % at March 31, 2020 and 2019, respectively.

The Company’s total inventories valued using the "last-in, first-out" (LIFO) method was 84 % and 75 % at December 31, 2021 and 2020, respectively.

All remaining inventories are valued using the "first-in, first-out" (FIFO) method.

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If actual market conditions are less favorable than those projected by management, adjustments to established inventory reserves may be required.

The total write-down of inventories charged to expense was $ 4.6 million, $ 3.1 million and $ 4.3 million, during fiscal 2020, 2019 and 2018, respectively.

The total write-down of inventories charged to expense was $ 0.9 million, $ 1.5 million and $ 2.2 million, during the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, respectively.

Property, Plant and Equipment

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Where appropriate, the depreciable lives of certain assets may be adjusted to reflect a change in the use of those assets, or depreciation may be accelerated in the case of an eventual asset disposal.

The Company recognized accelerated depreciation of $ 2.5 million, $ 3.9 million, and $ 2.3 million during fiscal 2020, 2019, and 2018, respectively.

Accelerated depreciation is recorded within Cost of sales in the consolidated statements of operations.

Maintenance and repair costs are expensed as incurred.

Goodwill and Intangible Assets

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However, the goodwill and intangible assets are tested annually for impairment, and may be tested more frequently if any triggering events occur that would reduce the recoverability of the asset.

The Company performs its impairment test by comparing the fair value of a reporting unit, utilizing both an income valuation model (discounted cash flow) and market approach (guideline public company comparables), with its carrying amount.

If the carrying amount exceeds the fair value of the reporting unit, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value.

In conducting the annual impairment test for goodwill, the Company has the option to first assess qualitative factors to determine whether it is more likely than not (> 50% likelihood) the fair value of any reporting unit is less than its carrying amount.

If a qualitative assessment determines an impairment is more likely than not, the Company is required to perform a quantitative impairment test.

Otherwise, no further analysis is required.

Alternatively, the Company may elect to proceed directly to the quantitative impairment test.

In conducting a qualitative assessment, the Company utilizes a discounted cash flow methodology based on future business projections and a market value approach (guideline public company comparables).

The Company performs the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

If the carrying amount exceeds the fair value of the reporting unit, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value up to the amount of the recorded goodwill.

During the fourth quarter of the year ended December 31, 2021, the Company completed its annual goodwill impairment tests and elected to perform a qualitative assessment.

No goodwill impairment charges were recorded during the year ended December 31, 2021, the nine month transition period ended December 31, 2020 and the fiscal year ended March 31, 2020.

Impairment of Long-Lived Assets

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If impairment is identified, a loss is recorded equal to the excess of the asset's net book value over its fair value, and the cost basis is adjusted accordingly.

The Company did not recognize any impairment charges during fiscal 2020.

During fiscal years 2019 and 2018, the Company recognized impairment charges in the amount of $ 0.3 million and $ 0.8 million, respectively.

The impairment was determined utilizing Level 3 inputs within the Fair Value hierarchy, and the Company reviewed and considered input from outside specialists, when appropriate.

The Company recognized no impairment charges of tangible fixed assets during the during the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, respectively.

Impairments are determined utilizing Level 3 inputs within the Fair Value hierarchy, and the Company reviews and considers input from outside specialists, when appropriate.

Actual results could vary from these estimates.

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The following table presents changes in the Company’s product warranty liability during each of the periods presented (in millions):

Year Ended March 31, 2020 Year Ended March 31, 2019 Year Ended March 31, 2018

Year Ended December 31, 2021 Nine Month Transition Period Ended December 31, 2020 Year Ended March 31, 2020

Balance at beginning of period $ 1.2 $ 1.4 $ 1.4

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Balance at end of period $ 1.3 $ 1.2 $ 1.4

The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes (“ASC 740”) .

Deferred income taxes are provided for future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating losses, tax credits and other applicable carryforwards.

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Accruals for unrecognized tax benefits are provided for in accordance with the requirements of ASC 740.

An unrecognized tax benefit

represents the difference between the recognition of benefits related to uncertain tax positions for income tax reporting purposes and financial reporting purposes.

An unrecognized tax benefit represents the difference between the recognition of benefits related to uncertain tax positions for income tax reporting purposes and financial reporting purposes.

The Company has established a reserve for interest and penalties, as applicable, for uncertain tax positions and it is recorded as a component of the overall income tax provision.

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Per Share Data

Basic net income per share from continuing and discontinued operations attributable to Rexnord common stockholders is computed by dividing net income from continuing operations and loss from discontinued operations attributable to Rexnord common stockholders, respectively, by the corresponding weighted average number of common shares outstanding for the period.

Diluted net income (loss) per share from continuing and discontinued operations attributable to Rexnord common stockholders is computed based on the weighted average number of common shares outstanding, increased by the number of incremental shares that would have been outstanding if the potential dilutive shares were issued through the exercise of outstanding stock options to purchase common shares, except when the effect would be anti-dilutive.

Additionally, following the issuance of the Series A Preferred Stock in fiscal 2017, the Company’s diluted net income per share is computed using the "if-converted" method.

During the third quarter of fiscal 2020, the Company issued 16.0 million shares of common stock upon the mandatory conversion of the Series A Preferred Stock.

Basic net income per share from continuing and discontinued operations attributable to Zurn common stockholders is computed by dividing net income from continuing operations and income from discontinued operations attributable to Zurn common stockholders, respectively, by the corresponding weighted average number of common shares outstanding for the period.

Diluted net income per share from continuing and discontinued operations attributable to Zurn common stockholders is computed based on the weighted average number of common shares outstanding, increased by the number of incremental shares that would have been outstanding if the potential dilutive shares were issued through the exercise of outstanding stock options to purchase common shares, except when the effect would be anti-dilutive.

Additionally, following the issuance of the Series A Preferred Stock during the fiscal year ended March 31, 2017, the Company’s diluted net income per share was computed using the "if-converted" method.

During the fiscal year ended March 31, 2020, the Company issued 16.0 million shares of common stock upon the mandatory conversion of the Series A Preferred Stock.

The "if-converted" method is utilized only when such calculation is dilutive to earnings per share using the treasury stock method.

Under the "if-converted" method, diluted net income per share is calculated under the assumption that the shares of Series A Preferred Stock were converted into shares of the Company’s common stock as of the beginning of the respective period, and therefore no dividends were provided to holders of the Series A Preferred Stock.

The computation for diluted net income per share for the fiscal years ended March 31, 2020, 2019 and 2018 excludes 0.9 million, 1.0 million and 2.6 million shares due to their anti-dilutive effects, respectively.

Under the "if-converted" method, diluted net income per share is calculated under the assumption that the shares

of Series A Preferred Stock were converted into shares of the Company’s common stock as of the beginning of the respective period, and therefore no dividends were provided to holders of the Series A Preferred Stock.

The computation for diluted net income per share for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 excludes 0.7 million, 0.5 million and 0.9 million common shares due to their anti-dilutive effects, respectively.

In addition, during the fiscal year ended March 31, 2020, the computation of diluted net income per share does not include shares of preferred stock that are convertible into a weighted average of 10.0 million shares of common stock due to their anti-dilutive effects.

The following table presents the basis for income per share computations (in millions, except share amounts, which are in thousands):

March 31, 2020 March 31, 2019 March 31, 2018

Basic net income per share attributable to Rexnord common stockholders

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Basic net income per share attributable to Zurn common stockholders

Net income from continuing operations $ 49.7 $ 35.0 $ 19.0

Non-controlling interest income 0.3 — 0.1

Dividends on preferred stock — — 14.4

Net income from continuing operations attributable to Rexnord common stockholders $ 167.5 $ 165.8 $ 183.3

Loss from discontinued operations, net of tax $ ( 1.8 ) $ ( 154.7 ) $ ( 130.6 )

Net income attributable to Rexnord common stockholders $ 165.7 $ 11.1 $ 52.7

Net income from continuing operations attributable to Zurn common stockholders 49.7 35.0 4.6

Income from discontinued operations, net of tax 71.2 83.2 161.1

Net income attributable to Zurn common stockholders $ 120.9 $ 118.2 $ 165.7

Weighted-average common shares outstanding, basic 121,493 120,428 111,689

Diluted net income per share attributable to Rexnord common stockholders

Diluted net income per share attributable to Zurn common stockholders

Net income from continuing operations $ 49.7 $ 35.0 $ 19.0

Non-controlling interest income 0.3 — 0.1

Dividends on preferred stock (1) — — 14.4

Net income from continuing operations attributable to Rexnord common stockholders $ 181.9 $ 189.0 $ 206.5

Loss from discontinued operations, net of tax $ ( 1.8 ) $ ( 154.7 ) $ ( 130.6 )

Net income attributable to Rexnord common stockholders 165.7 11.1 52.7

Net income from continuing operations attributable to Zurn common stockholders 49.7 35.0 4.6

Income from discontinued operations, net of tax 71.2 83.2 161.1

Net income attributable to Zurn common stockholders 120.9 118.2 165.7

Dividends on preferred stock (1) — — —

Net income attributable to Rexnord common stockholders $ 180.1 $ 34.3 $ 75.9

Net income attributable to Zurn common stockholders $ 120.9 $ 118.2 $ 165.7

Weighted-average common shares outstanding, basic 121,493 120,428 111,689

Effect of dilutive equity awards 3,621 2,771 2,576

Preferred stock under the "if-converted" method (2) 9,998 15,979 15,985

Weighted-average common shares outstanding, diluted 125,114 123,199 114,265

____________________

(1) The "if-converted" method was dilutive for the fiscal years ended March 31, 2020, 2019 and 2018.

(2) During the third quarter of fiscal 2020, the Company issued 16.0 million shares of common stock upon the mandatory conversion of Series A Preferred Stock;

see Note 19, Common Stock Purchases and Public Offerings for additional information.

(1) The "if-converted" method was anti-dilutive for the fiscal year ended March 31, 2020.

(2) See Note 19, Public Offering and Common Stock Repurchases and Public Offerings for additional information related to the mandatory conversion of Series A Preferred Stock.

Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of tax, for the fiscal years ending March 31, 2020, 2019 and 2018 are as follows (in millions):

Interest Rate Derivatives Foreign Currency Translation Pension and Postretirement Plans Total

Balance at March 31, 2017 $ ( 9.5 ) $ ( 99.3 ) $ ( 28.2 ) $ ( 137.0 )

Other comprehensive income before reclassifications — 57.1 1.4 58.5

Amounts reclassified from accumulated other comprehensive income (loss) 5.8 — ( 1.4 ) 4.4

Net current period other comprehensive income 5.8 57.1 — 62.9

Balance at March 31, 2018 $ ( 3.7 ) $ ( 42.2 ) $ ( 28.2 ) $ ( 74.1 )

Other comprehensive loss before reclassifications — ( 39.4 ) ( 8.5 ) ( 47.9 )

Amounts reclassified from accumulated other comprehensive income (loss) 4.5 21.5 ( 0.6 ) 25.4

Net current period other comprehensive income (loss) 4.5 ( 17.9 ) ( 9.1 ) ( 22.5 )

The changes in accumulated other comprehensive loss, net of tax, for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 are as follows (in millions):

Foreign Currency Translation and Other Pension and Postretirement Plans Total

Balance at March 31, 2019 $ ( 59.3 ) $ ( 37.3 ) $ ( 96.6 )

Other comprehensive loss before reclassifications ( 24.5 ) ( 3.6 ) ( 28.1 )

Amounts reclassified from accumulated other comprehensive income (loss) — — 0.3 0.3

Net current period other comprehensive loss — ( 24.5 ) ( 3.3 ) ( 27.8 )

Amounts reclassified from accumulated other comprehensive loss — 0.3 0.3

Balance at March 31, 2020 $ ( 83.8 ) $ ( 40.6 ) $ ( 124.4 )

The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income during the fiscal years ending March 31, 2020, 2019 and 2018 (in millions):

Pension and postretirement plans Year Ending March 31, 2020 Year Ending March 31, 2019 Year Ending March 31, 2018 Income Statement Line Item

Amortization of prior service credit $ ( 0.3 ) $ ( 1.5 ) $ ( 1.9 ) Other (expense) income, net

Lump sum settlement 0.8 0.6 — Actuarial (loss) gain on pension and postretirement benefit obligations

Curtailment — — ( 0.3 ) Actuarial (loss) gain on pension and postretirement benefit obligations

Other comprehensive income before reclassifications 37.8 13.0 50.8

Amounts reclassified from accumulated other comprehensive loss — ( 0.2 ) ( 0.2 )

Balance at December 31, 2020 $ ( 46.0 ) $ ( 27.8 ) $ ( 73.8 )

Other comprehensive (loss) income before reclassifications ( 4.2 ) 14.9 10.7

Amounts reclassified from accumulated other comprehensive loss — 3.5 3.5

PMC Spin-Off Transaction ( 20.7 ) 5.4 ( 15.3 )

Balance at December 31, 2021 $ ( 70.9 ) $ ( 4.0 ) $ ( 74.9 )

The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income during the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the year ended March 31, 2020 (in millions):

Pension and postretirement plans Year Ended December 31, 2021 Nine Month Transition Period Ended December 31, 2020 Year Ended March 31, 2020 Income Statement Line Item

Amortization of prior service credit $ ( 0.2 ) $ ( 0.2 ) $ ( 0.3 ) Other income (expense), net

Lump sum settlement — — 0.8 Discontinued operations, net of tax

PMC Spin-Off Transaction settlement 4.8 — — Discontinued operations, net of tax

Provision for income taxes ( 1.1 ) — ( 0.2 )

Total, net of income taxes $ 3.5 $ ( 0.2 ) $ 0.3

Interest rate derivatives

Net realized losses on interest rate derivatives $ — $ 5.7 $ 9.7 Interest expense, net

Benefit for income taxes — ( 1.2 ) ( 3.9 )

Total, net of income taxes $ — $ 4.5 $ 5.8

Foreign Currency Translation

Reclassification on sale of business $ — $ 19.7 $ — Loss from discontinued operations, net of tax

Reclassification on acquisition of equity method investment — 1.8 — Other (expense) income, net

Total $ — $ 21.5 $ —

Derivative Financial Instruments

The Company is exposed to certain financial risks relating to fluctuations in foreign currency exchange rates and interest rates.

In the past, the Company selectively utilized foreign currency forward contracts and interest rate derivatives to manage its foreign currency and interest rate risks.

All hedging transactions are authorized and executed pursuant to defined policies and procedures which prohibit the use of financial instruments for speculative purposes.

For the derivative instruments designated and qualifying as effective hedging instruments under ASC 815, Accounting for Derivative Instruments and Hedging Activities ("ASC 815"), the changes in the fair value of the effective portion of the instrument are recognized in accumulated other comprehensive loss whereas any changes in the fair value of a derivative instrument that is not designated or does not qualify as an effective hedge are recorded in other non-operating expense.

Note 12, Derivative Financial Instruments for further information regarding the classification and accounting of such instruments.

Financial Instrument Counterparties

The Company is exposed to credit losses in the event of non-performance by counterparties to its financial instruments.

The Company anticipates, however, that counterparties will be able to fully satisfy their obligations under these instruments.

The Company places cash and temporary investments and foreign currency and interest rate swap and cap contracts with various high-quality financial institutions.

Although the Company does not obtain collateral or other security to support these financial instruments, it does periodically evaluate the credit-worthiness of each of its counterparties.

Foreign Currency Translation

Assets and liabilities of subsidiaries operating outside of the United States with a functional currency other than the U.S.

dollar are translated into U.S.

dollars using

exchange rates at the end of the respective period.

dollars using exchange rates at the end of the respective period.

Revenues and expenses of such entities are translated at average exchange rates in effect during the respective period.

Foreign currency translation adjustments are included as a component of accumulated other comprehensive loss.

The Company periodically enters into foreign currency forward contracts to mitigate foreign currency volatility on certain intercompany and external cash flows expected to occur.

See Note 12, Derivative Financial Instruments for additional information.

Currency transaction losses are included in other expense (income), net in the consolidated statements of operations and totaled $ 3.9 million, $ 1.9 million and $ 0.2 million for the years ended March 31, 2020, 2019 and 2018, respectively.

Currency transaction (gains) losses are included in other expense, net in the consolidated statements of operations and totaled $ 0.4 million, $( 0.4 ) million and $ 0.4 million for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, respectively.

Advertising Costs

Advertising costs are charged to selling, general and administrative expenses on the consolidated statements of operations as incurred and amounted to $ 13.3 million, $ 11.9 million and $ 10.7 million for the years ended March 31, 2020, 2019 and 2018, respectively.

Advertising costs are charged to selling, general and administrative expenses on the consolidated statements of operations as incurred and amounted to $ 8.2 million, $ 5.5 million and $ 9.2 million for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, respectively.

Research, Development and Engineering Costs

Research, development and engineering costs are charged to selling, general and administrative expenses on the consolidated statements of operations as incurred and for the years ended March 31, 2020, 2019 and 2018 amounted to the following (in millions):

Year Ended March 31, 2020 Year Ended March 31, 2019 Year Ended March 31, 2018

Research and development costs $ 16.2 $ 16.3 $ 13.3

Engineering costs 24.3 25.4 22.5

Total $ 40.5 $ 41.7 $ 35.8

Research, development and engineering costs are charged to selling, general and administrative expenses on the consolidated statements of operations as incurred and amounted to $ 14.0 million, $ 9.6 million and $ 13.2 million for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, respectively.

Business Segment and Geographic Areas

The Company is a pure-play water management business that designs, procures, manufactures, and markets specification-driven water management solutions to improve health, human safety and the environment, which comprises one reportable segment.

The Company manages and evaluates its operations as one segment primarily due to similarities in the nature of its products, production process, customers and methods of distribution.

Net sales to third parties and long-lived assets by geographic region are as follows (in millions):

Net Sales Long-lived Assets

Year Ended December 31, 2021 Nine Month Transition Period Ended December 31, 2020 Year Ended March 31, 2020 December 31, 2021 December 31, 2020 March 31, 2020

United States 792.8 517.3 651.5 $ 51.6 $ 56.3 $ 46.7

Canada 113.3 32.9 42.6 12.7 13.3 1.4

Rest of World 4.8 12.5 16.0 0.1 — —

$ 910.9 $ 562.7 $ 710.1 $ 64.4 $ 69.6 $ 48.1

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates.

Amounts attributed to the geographic regions for long-lived assets are based on the location of the entity that holds such assets.

In accordance with ASC 280, Segment Reporting , long-lived assets includes movable assets and excludes net intangible assets and goodwill.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and temporary investments, forward currency contracts and trade accounts receivable.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash and temporary investments and trade accounts receivable.

Recent Accounting Pronouncements

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The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022.

The Company did not modify any material contracts due to reference rate reform during fiscal 2020.

The Company did not modify any material contracts due to reference rate reform during the year ended December 31, 2021.

The Company will continue to evaluate the impact this guidance will have on its consolidated financial statements for all future transactions affected by reference rate reform during the time permitted.

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The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and also improve consistent application of other areas by clarifying and amending existing guidance.

ASU 2019-12 is effective for the Company in fiscal 2022 and early adoption is permitted.

Certain amendments of this ASU may be adopted on a retrospective basis, modified retrospective basis or prospective basis.

The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.

In June 2016, the FASB issued ASU No.

2016-13, Measurement of Credit Losses on Financial Instruments, which establishes ASC 326, Financial Instruments - Credit Losses .

The ASU revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology.

The ASU affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash.

Additional disclosures about significant estimates and credit quality are also required.

In November 2018, the FASB issued ASU No.

2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses.

This ASU clarifies that receivables from operating leases are accounted for using the lease guidance and not as financial instruments.

In May 2019, the FASB issued ASU No.

2019-05, Targeted Transition Relief, which amends ASC 326.

This ASU provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost.

The Company adopted this ASU on April 1, 2020 using a modified-retrospective approach.

There was no significant impact to the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20):

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14"), which updates the standard to remove disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant.

ASU 2018-14 is effective for the Company in fiscal 2021 on a retroactive basis.

This guidance will have no impact on the Company's consolidated financial statements upon adoption other than with respect to the updated disclosure requirements.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), which modifies the disclosure requirements in ASC 820, Fair Value Measurement ("ASC 820").

The Company adopted this ASU on April 1, 2019.

There was no impact to the Company's consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .

This ASU was issued following the enactment of the U.S.

Tax Cuts and Jobs Act of 2017 ("Tax Act") and permits entities to elect a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act.

The Company adopted the standard effective April 1, 2019, and did not reclassify tax effects stranded in accumulated other comprehensive loss.

As such, there was no impact to the Company’s consolidated financial statements as a result of the adoption of the ASU.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"), which expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements.

The Company adopted this ASU on April 1, 2019.

There was no impact to the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) .

In July 2018, the FASB issued ASU No.

2018-10, Codification Improvements to Topic 842, Leases , which provides narrow amendments to clarify how to apply certain aspects of the new lease standard, and ASU 2018-11, Leases (Topic 842):

Targeted Improvements , which addressed implementation issues related to the new lease standard.

These and certain other lease-related ASUs have generally been codified in ASC 842, Leases (“ASC 842”).

ASC 842 supersedes the lease accounting requirements in ASC 840, Leases (“ASC 840”).

ASC 842 establishes a right-of-use model that requires a lessee to record a right-of-use (“ROU”) asset and a lease liability on the balance sheet for all leases.

Under ASC 842, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

The standard also requires disclosures around the amount, timing and uncertainty of cash flows arising from leases.

The Company adopted ASC 842 effective April 1, 2019, using a modified retrospective approach.

Prior period financial statements continue to be presented under ASC 840 based on the accounting standards originally in effect for such periods.

The Company elected certain practical expedients permitted under the transition guidance within ASC 842 to leases that commenced before April 1, 2019, including the package of practical expedients that resulted in the Company not reassessing its prior conclusions under ASC 840 related to lease identification, lease terms, lease classification and initial direct costs for expired and existing leases prior to April 1, 2019, and therefore there was no adjustment to the opening balance of retained earnings.

The Company also elected the practical expedient to combine lease and non-lease components for all asset classes, and has made a policy election not to capitalize leases with an initial term of 12 months or less.

Upon adoption, the Company recognized ROU assets and lease liabilities of approximately $ 70.8 million and $ 73.0 million, respectively, as of April 1, 2019.

Adoption of the new standard did not have a significant impact on the Company’s consolidated results of operations or cash flows.

See Note 14, Leases for additional information.

Fiscal Year 2020

On January 28, 2020, the Company acquired substantially all of the assets of Just Manufacturing Company ("Just Manufacturing") for a total preliminary cash purchase price of $ 59.4 million, excluding transaction costs and net of cash acquired.

The preliminary purchase price is subject to customary post-closing adjustments for variances between estimated asset and liability targets and actual acquisition date net assets acquired.

Just Manufacturing, based in Franklin Park, Illinois, manufactures stainless steel sinks and plumbing fixtures primarily used in institutional and commercial end markets and complements the Company's existing Water Management platform.

The Company adopted this ASU on January 1, 2021, using a retrospective, modified retrospective or prospective basis for certain amendments.

There was no impact to the consolidated financial statements.

Year Ended December 31, 2021

On November 17, 2021, the Company completed the acquisition of the Wade Drains business ("Wade Drains") from McWane, Inc.

for a preliminary cash purchase price of $ 13.7 million, excluding transaction costs and net of cash acquired.

The preliminary purchase price is subject to customary post-closing adjustments.

Wade Drains manufactures a wide range of specified commercial plumbing products for customers across North America and complements the Company's existing flow systems product portfolio.

On April 16, 2021, the Company acquired substantially all of the assets of Advance Technology Solutions, LLC (d/b/a ATS GREASEwatch) ("ATS GREASEwatch") for a cash purchase price of $ 4.5 million, excluding transaction costs and net of cash acquired.

The Company paid $ 3.8 million to the sellers at closing, with the remaining $ 0.7 million payable to the sellers upon settlement of certain indemnities within two years of closing, ATS GREASEwatch develops, manufactures and markets remote tank monitoring devices, alarms, software and services for various applications and provides technology to enhance and expand our current product offerings.

The acquisitions have been accounted for as business combinations and were recorded by allocating the purchase prices to the fair value of assets acquired and liabilities assumed at the acquisition dates.

The excess of the purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded as goodwill.

The preliminary purchase price allocations associated with these acquisitions resulted in tax deductible goodwill of $ 8.8 million, customer relationship intangibles assets of $ 1.6 million, trade working capital of $ 9.0 million and $( 1.1 ) million of other net liabilities.

The preliminary purchase price allocations will be completed within the one-year period following the acquisition dates.

The Company's results of operations include the acquired operations subsequent to the acquisition dates.

Pro-forma results of operations and certain other U.S.

GAAP disclosures related to these acquisitions have not been presented because the acquisitions did not significantly impact the Company's consolidated statements of operations or financial position.

Nine Month Transition Period Ended December 31, 2020

On December 11, 2020, the Company acquired substantially all of the assets of Hadrian Manufacturing Inc.

and 100 % of the stock of Hadrian Inc.

(collectively "Hadrian") for a cash purchase price of $ 101.3 million, excluding transaction costs and net of cash acquired.

During the year ended December 31, 2021, the Company received a $ 0.4 million cash payment from the sellers in connection with finalizing the acquisition date trade working capital, which is included in the total cash purchase price above.

Hadrian, based in Burlington, Ontario, Canada, manufactures washroom partitions and lockers primarily used in institutional and commercial end markets and complements the Company's existing product portfolio.

The acquisition has been accounted for as a business combination and was recorded by allocating the preliminary purchase price to the fair value of assets acquired and liabilities assumed at the acquisition date.

The excess of the purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded as goodwill.

The purchase price allocations associated with the acquisition resulted in goodwill of $ 43.0 million ($ 36.9 million tax deductible), other intangible assets of $ 32.4 million (including tradenames of $ 0.8 million and $ 31.6 million of customer relationships), $ 17.1 million of fixed assets, $ 9.7 million of trade working capital and other net liabilities of $ 0.9 million.

The purchase price allocations for Hadrian were adjusted during the year ended December 31, 2021, resulting in $ 0.3 million increase in goodwill related to final working capital adjustments and the refinement of the estimated fair value of the liabilities assumed.

The Company's results of operations include the acquired operations subsequent to the acquisition date.

Pro-forma results of operations and certain other U.S.

GAAP disclosures related to the acquisition have not been presented because they are not significant to the Company's consolidated statements of operations or financial position.

Year Ended March 31, 2020

On January 28, 2020, the Company acquired substantially all of the assets of Just Manufacturing Company ("Just Manufacturing") for a total cash purchase price of $ 59.4 million, excluding transaction costs and net of cash acquired.

On May 10, 2019, the Company acquired substantially all of the assets of StainlessDrains.com, a manufacturer of stainless steel drains, grates and accessories for industrial and commercial end markets, for a cash purchase price of $ 24.8 million, excluding transaction costs and net of cash acquired.

StainlessDrains.com, headquartered in Greenville, Texas, added complementary product lines to the Company's existing Water Management platform.

StainlessDrains.com, headquartered in Greenville, Texas, added complementary product lines to the Company's existing product portfolio.

The Company's results of operations include the acquired operations subsequent to the aforementioned acquisitions dates.

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GAAP disclosures related to these acquisitions have not been presented because they are not significant to the Company's consolidated statements of operations or financial position.

The fiscal 2020 acquisitions have been accounted for as business combinations and were recorded by allocating the purchase price to the fair value of assets acquired and liabilities assumed at the acquisition date.

These acquisitions have been accounted for as business combinations and were recorded by allocating the purchase price to the fair value of assets acquired and liabilities assumed at the acquisition date.

The excess of the purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded as goodwill.

The purchase price allocations associated with these acquisitions resulted in tax deductible goodwill of $ 27.3 million, other intangible assets of $ 40.9 million (including tradenames of $ 2.2 million and $ 38.7 million of customer relationships), $ 8.4 million of fixed assets, $ 9.1 million of trade working capital and other net liabilities of $ 1.5 million.

The purchase price allocations for StainlessDrains.com, which were finalized during the third quarter of fiscal 2020, were adjusted during fiscal 2020, resulting in a reduction of goodwill of $ 1.2 million, related to the refinement of the estimated fair value of intangible assets acquired.

The Company is continuing to evaluate the preliminary purchase price allocations for Just Manufacturing related to the fair values assigned to intangible assets and net working capital acquired, which will be completed within the one year period following its acquisition date.

During fiscal 2020, the Company acquired the remaining non-controlling interest in a Process and Motion Control joint venture for a cash purchase price of $ 0.3 million.

The acquisition of the remaining minority interest was not material to the Company's consolidated statements of operations or financial position.

Fiscal Year 2019

On January 23, 2019, the Company acquired an additional 47.5 % interest in Centa China a joint venture in which the Company previously maintained a 47.5 % non-controlling interest, for $ 21.4 million, net of cash held by the former joint venture.

The acquisition of the additional interest in Centa China, a manufacturer and distributor of premium flexible couplings and drive shafts for industrial, marine, rail and power generation applications within the Company's Process & Motion Control platform, provides the Company with the opportunity to expand its product offerings within its Asia Pacific end markets.

Prior to this transaction, the Company accounted for its non-controlling interest in Centa China as an equity method investment.

The acquisition of the additional 47.5 % interest was considered to be an acquisition achieved in stages, whereby the Company remeasured the previously held equity method investment to fair value.

The Company considered multiple factors in determining the fair value of the previously held equity method investment, including (i) the price negotiated with the selling shareholder for the 47.5 % equity interest in Centa China, (ii) an income valuation model (discounted cash flow), and (iii) current trading multiples for comparable companies.

Based on this analysis, the Company recognized a $ 0.2 million gain on the remeasurement of the previously held equity method investment.

In addition, in accordance with the authoritative guidance, the Company reclassified the historical foreign currency translation adjustments associated with the equity method investment into the statement of operations, which resulted in the recognition of a $ 1.8 million loss within other (expense) income, net, on the consolidated statements of operations for fiscal 2019.

The final purchase price for this business combination is as follows (in millions):

Fair value of consideration transferred:

Cash paid, net of cash acquired $ 21.4

Other items to be allocated to identifiable assets acquired and liabilities assumed

Book value of investment in Centa China at the acquisition date 21.8

Gain recognized from step acquisition 0.2

Fair value of remaining non-controlling interest 2.3

The Company allocated the purchase price to the fair value of assets acquired and liabilities assumed at the acquisition date.

The excess of the acquisition purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded as goodwill.

The purchase price allocation associated with this acquisition resulted in non-tax deductible goodwill of $ 20.5 million, other intangible assets of $ 20.1 million (including tradenames of $ 1.3 million and $ 18.8 million of customer relationships), $ 7.1 million of trade working capital and other net liabilities of $ 2.0 million.

The preliminary purchase price allocations, which were finalized during the fourth quarter of fiscal 2020, were adjusted during fiscal 2020 primarily related to the refinement of the estimated fair value of intangible assets and other working capital acquired.

The Company's results of operations include the acquired operations subsequent to the respective acquisition dates.

Pro-forma results of operations and certain other U.S.

GAAP disclosures related to the acquisitions during the fiscal year ended March 31, 2019 have not been presented because they are not significant to the Company's consolidated statements of operations or financial position.

On September 24, 2018, the Company acquired certain assets associated with the design and distribution of various roof drains, spouts and flow sensors for institutional, commercial and industrial buildings for $ 2.0 million.

The acquisition of these assets added complementary product lines to the Company's existing Water Management platform and was accounted for as a business combination.

This acquisition did not materially affect the Company's consolidated statements of operations or financial position.

Fiscal Year 2018

On February 9, 2018, the Company acquired Centa Power Transmission (Centa Antriebe Kirschey GmbH) ("Centa"), a leading manufacturer of premium flexible couplings and drive shafts for industrial, marine, rail and power generation applications.

The purchase price was $ 129.7 million plus assumed debt.

Centa, headquartered in Haan, Germany, added complementary product lines to the Company's existing Process & Motion Control platform.

On October 4, 2017, the Company acquired World Dryer Corporation ("World Dryer") for a cash purchase price of $ 50.0 million, excluding transaction costs and net of cash acquired.

World Dryer is a leading global manufacturer of commercial electric hand dryers.

This acquisition added complementary product lines to the Company's existing Water Management platform.

The Company's results of operations include the acquired operations subsequent to the respective acquisition dates.

Pro-forma results of operations and certain other U.S.

GAAP disclosures related to the acquisitions during the fiscal year ended March 31, 2018, have not been presented because they are not significant to the Company's consolidated statements of operations or financial position.

The fiscal 2018 acquisitions were accounted for as business combinations and recorded by allocating the purchase price to the fair value of assets acquired and liabilities assumed at the acquisition date.

The excess of the acquisition purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded as goodwill.

The purchase price allocations, which were finalized during the fourth quarter of fiscal 2019, were adjusted during fiscal 2019 primarily in connection with determining the fair value of fixed assets acquired and acquisition date trade working capital.

The purchase price allocation associated with the fiscal 2018 acquisitions resulted in non-tax deductible goodwill of $ 63.5 million, other intangible assets of $ 44.9 million (includes tradenames of $ 9.9 million, $ 29.4 million of customer relationships and $ 5.6 million of patents), $ 37.5 million of trade working capital, $ 52.7 million of fixed assets, $ 16.6 million of long-term debt and other net liabilities of $ 2.3 million.

The purchase price allocations for StainlessDrains.com, which were finalized and adjusted during the year ended March 31, 2020, resulted in a reduction of goodwill of $ 1.2 million, related to the refinement of the estimated fair value of intangible assets acquired.

The purchase price allocations for Just Manufacturing were adjusted and finalized during the nine month Transition Period ended December 31, 2020, resulting in $ 0.8 million increase in goodwill related to the refinement of the estimated fair value of the liabilities assumed as of the acquisition date.

Discontinued Operations

During fiscal 2019, the Company completed the sale of the VAG business, which was previously included within the Water Management platform.

The operating results of the VAG business are reported as discontinued operations in the consolidated statements of operations for all periods presented, as the sale of VAG represented a strategic shift that had a major impact on operations and financial results.

The sale price was subject to customary working capital and cash balance adjustments, which were finalized in fiscal 2020.

As a result of these adjustments and other related costs, the Company recognized an additional $ 1.8 million loss on the sale of discontinued operations for the year ended March 31, 2020.

The major components of the Loss from discontinued operations, net of tax presented in the consolidated statements of operations during the fiscal years ended March 31, 2020, 2019 and 2018 are included in the table below (in millions):

Fiscal Years Ended

March 31, 2020 March 31, 2019 (2) March 31, 2018

During the year ended December 31, 2021, the Company completed the Spin-Off Transaction of PMC.

The operating results of PMC are reported as discontinued operations in the consolidated statements of operations for all periods presented, as the Spin-Off Transaction of PMC represented a strategic shift that had a major impact on operations and financial results.

The terms of the Spin-Off Transaction agreement included targeted working capital and cash balances at closing of the Spin-Off Transaction, which are subject to adjustment after determining final working capital and cash balances held by PMC at the Spin-Off Transaction date.

As of the date of this filing, no such adjustments have been made or asserted.

In connection with the Spin-Off Transaction, the Company incurred approximately $ 60 million in separation costs during the year ended December 31, 2021, which are included within earnings from discontinued operations, net of income taxes in the accompanying consolidated statements of operations.

These costs primarily related to professional fees associated with planning the Spin-Off Transaction, as well as Spin-Off Transaction activities within finance, tax, legal and information system functions and certain investment banking fees incurred upon completion of the Spin-Off Transaction.

The major components of the Income from discontinued operations, net of tax presented in the consolidated statements of operations during the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 are included in the table below (in millions):

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 (1) December 31, 2020 March 31, 2020

Net sales $ 973.0 $ 870.4 $ 1,358.2

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Amortization of intangible assets 9.9 10.1 14.5

Non-cash asset impairments (1) — 126.0 111.2

Loss on sale of discontinued operations 1.8 22.5 —

Other non-operating expenses, net — 3.2 4.7

Loss from discontinued operations before income tax ( 1.8 ) ( 157.7 ) ( 130.6 )

Income tax benefit — 3.0 —

Loss from discontinued operations, net of tax $ ( 1.8 ) $ ( 154.7 ) $ ( 130.6 )

Interest expense, net 4.1 3.3 2.0

Gain on extinguishment of debt — — ( 3.0 )

Actuarial loss on pension and postretirement benefit obligations 4.8 1.3 15.7

Other non-operating (income) expenses, net ( 5.6 ) ( 6.4 ) 4.4

Income from discontinued operations before income tax 99.1 109.2 211.1

Income tax provision ( 28.0 ) ( 25.8 ) ( 49.7 )

Equity method investment income 0.3 0.2 —

Non-controlling interest income ( 0.2 ) ( 0.4 ) ( 0.3 )

Income from discontinued operations, net of tax $ 71.2 $ 83.2 $ 161.1

____________________

(1) The Company recorded non-cash impairments of $ 126.0 million during the year ended March 31, 2019 to reflect the Company's estimated fair value less costs to sell the VAG business based on the value of the preliminary bids received at that time.

(2) Results of operations in fiscal 2019 reflect the period through November 26, 2018, the date on which the sale of the VAG business was completed.

(1) Results of operations during the year ended December 31, 2021 reflect the period from January 1, 2021 through October 4, 2021, the date on which the Spin-Off Transaction of PMC was completed.

The carrying amounts of major classes of assets and liabilities associated with PMC included as part of discontinued operations presented in the consolidated balance sheets as of December 31, 2020 are as follows (in millions):

December 31, 2020

Cash and cash equivalents $ 193.3

Receivables, net 171.2

Inventories 194.0

Other current assets 27.4

Total non-current assets of discontinued operation $ 585.9

Property, plant and equipment, net $ 365.2

Intangible assets, net 324.3

Goodwill 1,125.3

Other assets 67.3

Total non-current assets of discontinued operation $ 1,882.1

Current maturities of debt $ 2.1

Trade payables 88.1

Compensation and benefits 43.9

Current portion of pension and postretirement benefit obligations 1.7

Other current liabilities 65.1

Total current liabilities of discontinued operation $ 200.9

Long-term debt $ 71.2

Pension and postretirement benefit obligations 91.0

Deferred income taxes 111.4

Other liabilities 73.2

Total non-current liabilities of discontinued operation $ 346.8

The consolidated statements of cash flows for the prior periods presented have not been adjusted to separately disclose cash flows related to discontinued operations.

However, the significant investing cash flows and other significant non-cash operating items associated with the discontinued operations were as follows (in millions):

Fiscal Years Ended

March 31, 2020 March 31, 2019 March 31, 2018

However, the significant investing and financing cash flows and other significant non-cash operating items associated with the discontinued operations were as follows (in millions):

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 (1) December 31, 2020 March 31, 2020

Depreciation $ 34.9 $ 33.7 $ 44.3

Amortization of intangible assets 9.9 10.1 14.4

Non-cash discontinued operations asset impairments — 126.0 111.2

Non-cash loss on sale of discontinued operations — 22.5 —

Gain on disposition of assets ( 10.1 ) ( 1.3 ) ( 0.3 )

Deferred income taxes 0.5 ( 3.8 ) 0.7

Actuarial loss on pension and postretirement benefit obligations 4.8 1.3 1.5

Other non-cash charges ( 0.3 ) 1.4 1.7

Gain on extinguishment of debt — — ( 3.0 )

Stock-based compensation 13.9 13.7 7.4

Capital expenditures — 2.4 2.7

Net (payments) proceeds from divestiture of discontinued operations ( 1.3 ) 9.0 —

Expenditures for property, plant and equipment ( 17.5 ) ( 23.5 ) ( 33.7 )

Acquisitions, net of cash acquired — ( 0.3 ) ( 0.3 )

Proceeds from dispositions of long-lived assets 14.3 7.2 2.9

Repayments of debt ( 1.6 ) ( 5.4 ) ( 9.9 )

Proceeds from exercise of stock options 12.8 9.5 13.0

Taxes withheld and paid on employees' shared-based payment awards ( 0.5 ) ( 0.4 ) —

Net payments from divestiture of discontinued operations 4.2 — ( 1.3 )

___________________

(1) Results of operations during the year ended December 31, 2021 reflect the period from January 1, 2021 through October 4, 2021, the date on which the Spin-Off Transaction of PMC was completed.

During the year ended March 31, 2019, the Company completed the sale of the VAG business, which was previously included within the Water Management platform.

The sale price was subject to customary working capital and cash balance adjustments, which were finalized in the year ended March 31, 2020.

As a result of these adjustments and other related costs, the Company recognized an additional $ 1.8 million loss on the sale of discontinued operations for the year ended March 31, 2020.

The terms of the sale agreement provided the Company to receive contingent consideration, based on, and subject to, the VAG business attainment of Earn-out EBITDA, as defined in the sale agreement.

During the year ended December 31, 2021, the Company received a $ 4.2 million cash payment as a result of the VAG businesses performance in its fiscal year ending March 31, 2021, which represented the final period of the earn-out, and was recorded within income from discontinued operations, net of tax in its consolidated statements of operations.

Restructuring and Other Similar Charges

During fiscal 2020, the Company continued to execute various restructuring actions.

During the year ended December 31, 2021, the Company continued to execute various restructuring actions.

These initiatives were implemented to drive efficiencies and reduce operating costs while also modifying the Company's footprint to reflect changes in the markets it serves, the impact of acquisitions on the Company's overall manufacturing capacity and the refinement of its overall product portfolio.

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Management expects to continue executing similar initiatives to optimize its operating margin and manufacturing footprint.

As the Company continues to evaluate the impact of COVID-19 and the resulting economic slowdown, the Company may also execute additional restructuring actions.

As such, the Company expects further expenses related to workforce reductions, potential impairment or accelerated depreciation of assets, lease termination costs and other facility rationalization costs.

The Company's restructuring plans are preliminary and the full extent of related expenses are not yet estimable.

The following table summarizes the Company's restructuring and other similar costs incurred during the years ended March 31, 2020, 2019 and 2018 by classification of operating segment (in millions):

Year Ended March 31, 2020

Process & Motion Control Water Management Corporate Consolidated

Employee termination benefits $ 12.7 $ 0.5 $ 0.1 $ 13.3

Contract termination and other associated costs 1.6 0.5 0.1 2.2

Total restructuring and other similar costs $ 14.3 $ 1.0 $ 0.2 $ 15.5

Year Ended March 31, 2019

Process & Motion Control Water Management Corporate Consolidated

Employee termination benefits $ 5.6 $ 0.9 $ 0.6 $ 7.1

Asset impairment charges (1) 0.3 — — 0.3

Contract termination and other associated costs 2.0 0.3 2.4 4.7

Total restructuring and other similar costs $ 7.9 $ 1.2 $ 3.0 $ 12.1

Year Ended March 31, 2018

Process & Motion Control Water Management Corporate Consolidated

The following table summarizes the Company's restructuring and other similar costs incurred during the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 (in millions):

Year Ended December 31, 2021 Nine Month Transition Period Ended December 31, 2020 Year Ended March 31, 2020

Employee termination benefits $ 3.7 $ 1.8 $ 0.6

Asset impairment charges (1) 0.8 — — 0.8

Contract termination and other associated costs — ( 0.1 ) 0.6

Total restructuring and other similar costs $ 3.7 $ 1.7 $ 1.2

Restructuring Costs To-date (Period from April 1, 2011 to March 31, 2020)

Process & Motion Control Water Management Corporate Consolidated

Restructuring Costs To-date (Period from April 1, 2011 to December 31, 2021) Restructuring Costs To-date (Period from April 1, 2011 to December 31, 2021)

Employee termination benefits $ 16.8

Asset impairment charges 3.6 — — 3.6

Contract termination and other associated costs 7.3

Total restructuring and other similar costs $ 24.1

____________________

(1) In connection with the ongoing supply chain optimization and footprint repositioning initiatives, the Company has taken several actions to consolidate existing manufacturing facilities and rationalize its product offerings.

These actions require the Company to assess whether the carrying amount of impacted long-lived assets will be recoverable as well as whether the remaining useful lives require adjustment.

The impairment charges associated with these assets recognized during fiscal 2019 and 2018 were determined utilizing independent appraisals of the assets and were classified as Level 3 inputs within the Fair Value hierarchy.

Refer to Note 13, Fair Value Measurements for additional information.

The following table summarizes the activity in the Company's accrual for restructuring and other similar costs for the fiscal years ended March 31, 2020 and 2019 (in millions):

Employee termination benefits Asset impairment charges Contract termination and other associated costs Total

The following table summarizes the activity in the Company's accrual for restructuring and other similar costs for the year ended December 31, 2021, and the nine month Transition Period ended December 31, 2020 (in millions):

Employee termination benefits Contract termination and other associated costs Total

Accrued Restructuring Costs, March 31, 2020 (1) $ 0.1 $ 1.1 $ 1.2

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Cash payments ( 1.4 ) ( 1.0 ) ( 2.4 )

Non-cash charges — ( 0.3 ) — ( 0.3 )

Accrued Restructuring Costs, March 31, 2019 (2) $ 2.4 $ — $ 1.9 $ 4.3

Accrued Restructuring Costs, December 31, 2020 (1) $ 0.5 $ — $ 0.5

Charges 3.7 — 3.7

Cash payments ( 1.8 ) — ( 1.8 )

Accrued Restructuring Costs, March 31, 2020 (2) $ 8.3 $ — $ 1.5 $ 9.8

Accrued Restructuring Costs, December 31, 2021 (1) $ 2.4 $ — $ 2.4

____________________

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Revenue by Category

The Company has two business segments, Process & Motion Control and Water Management.

The following tables present our revenue disaggregated by customer type and geography (in millions):

March 31, 2020 March 31, 2019 March 31, 2018

Original equipment manufacturers/end users $ 766.8 $ 768.5 $ 690.5

Maintenance, repair, and operations 591.4 612.1 550.7

Total Process & Motion Control $ 1,358.2 $ 1,380.6 $ 1,241.2

Water safety, quality, flow control and conservation $ 661.0 $ 624.4 $ 566.9

Water infrastructure 49.1 45.9 43.5

Total Water Management $ 710.1 $ 670.3 $ 610.4

Year Ended March 31, 2020 Year Ended March 31, 2019 Year Ended March 31, 2018

Process & Motion Control Water Management Process & Motion Control Water Management Process & Motion Control Water Management

United States and Canada $ 870.6 $ 694.1 $ 898.7 $ 654.5 $ 848.3 $ 598.4

Europe 298.9 — 327.5 — 255.5 —

The following tables present our revenue disaggregated by customer type and customer geography (in millions):

Year Ended Nine Month Transition Period Ended Year Ended

Customer Type December 31, 2021 December 31, 2020 March 31, 2020

Institutional $ 334.8 $ 221.6 $ 269.8

Commercial 286.7 170.7 215.2

All other 289.4 170.4 225.1

Total $ 910.9 $ 562.7 $ 710.1

Year Ended Nine Month Transition Period Ended Year Ended

Geography December 31, 2021 December 31, 2020 March 31, 2020

United States $ 819.9 $ 512.6 $ 639.6

Canada 67.4 31.0 41.7

Rest of world 23.6 19.1 28.8

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Contract Balances

For substantially all of the Company's Process & Motion Control and Water Management product sales, the customer is billed 100% of the contract value when the product ships and payment is generally due 30 days from shipment.

For substantially all of the Company's product sales, the customer is billed 100 % of the contract value when the product ships and payment is generally due 30 days from shipment.

Certain contracts include longer payment periods;

however, the Company has elected to utilize the practical expedient in which the Company will only recognize a financing component to the sale if payment is due more than one year from the date of shipment.

The Company receives payment from customers based on the contractual billing schedule and specific performance requirements established in the contract.

Billings are recorded as accounts receivable when an unconditional right to the contractual consideration exists.

Contract assets arise when the Company performs by transferring goods or services to a

customer before the customer pays consideration, or before the customer’s payment is due.

Contract assets arise when the Company performs by transferring goods or services to a customer before the customer pays consideration, or before the customer’s payment is due.

A contract liability exists when the Company has received consideration or the amount is due from the customer in advance of revenue recognition.

Contract liabilities and contract assets are recognized in Other current liabilities and Receivables, net, respectively, in the Company's consolidated balance sheets.

The following table presents changes in the Company’s contract assets and liabilities during the year ended March 31, 2020 (in millions):

Balance Sheet Classification March 31, 2019 Additions Deductions March 31, 2020

Contract Assets Receivables, net $ 2.6 $ 1.6 $ ( 3.7 ) $ 0.5

Contract Liabilities (1) Other current liabilities $ 5.1 $ 21.4 $ ( 19.2 ) $ 7.3

____________________

(1) Contract liabilities are reduced when revenue is recognized.

The Company has backlog of $ 380.7 million and $ 372.5 million as of March 31, 2020 and March 31, 2019, respectively, which represents the most likely amount of consideration expected to be received in satisfying the remaining backlog under open contracts.

Contract liabilities and contract assets as of December 31, 2021 and December 31, 2020 were not material.

The Company had backlog of $ 69.9 million and $ 36.3 million as of December 31, 2021, and December 31, 2020, respectively, which represents the most likely amount of consideration expected to be received in satisfying the remaining backlog under open contracts.

The Company has elected to use the optional exemption provided by ASC 606-10-50-14A for variable consideration, and has not included estimated rebates in the amount of unsatisfied performance obligations.

The Company expects to recognize approximately 89 % of the backlog as revenue in fiscal 2021 and the remaining 11 % in fiscal 2022 and beyond.

The Company expects to recognize approximately 100 % of the backlog as revenue in the year ending December 31, 2022.

Timing of Performance Obligations Satisfied at a Point in Time

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If the amortization period of these costs is expected to be greater than one year, the costs would be subject to capitalization.

As of March 31, 2020 and March 31, 2019, respectively, the contract assets capitalized, as well as amortization recognized in fiscal 2020 and 2019, are not significant and there have been no impairment losses recognized.

As of December 31, 2021 and December 31, 2020, the contract assets capitalized are not significant.

During the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020, and the fiscal year ended March 31, 2020, contract asset amortization was not significant and no impairment losses were recognized.

The major classes of inventories are summarized as follows (in millions):

December 31, December 31,

Finished goods $ 169.1 $ 111.9

Work in progress 5.1 2.5

Purchased components 70.4 76.7

Raw materials 14.6 11.8

4 unchanged sentences

Property, plant and equipment, net is summarized as follows (in millions):

December 31, December 31,

Land $ 7.4 $ 7.3

6 unchanged sentences

Goodwill and Intangible Assets

The changes in the net carrying value of goodwill for the years ended March 31, 2020 and 2019 by operating segment, consisted of the following (in millions):

Process & Motion Control Water Management Consolidated

The changes in the net carrying value of goodwill for the year ended December 31, 2021, and nine month Transition Period ended December 31, 2020, consisted of the following (in millions):

Net carrying amount as of March 31, 2020 $ 200.5

2 unchanged sentences

Currency translation adjustments 0.7

Net carrying amount as of March 31, 2019 $ 1,125.2 $ 174.5 $ 1,299.7

Net carrying amount as of December 31, 2020 $ 244.8

Acquisitions (1) 8.8

Purchase accounting adjustments (1) 0.3

Currency translation adjustments ( 4.2 ) ( 0.5 ) ( 4.7 )

Net carrying amount as of March 31, 2020 $ 1,121.4 $ 200.5 $ 1,321.9

Currency translation and other adjustments 0.2

Net carrying amount as of December 31, 2021 $ 254.1

______________________

(1) Refer to Note 3, Acquisitions for additional information regarding acquisitions.

Total cumulative goodwill impairment charges as of March 31, 2020 and 2019 was $ 434.6 million.

The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of March 31, 2020 and March 31, 2019 consisted of the following (in millions):

March 31, 2020

Total cumulative goodwill impairment charges as of December 31, 2021 and 2020 was $ 337.1 million and $ 337.1 million, respectively.

The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of December 31, 2021 and December 31, 2020 consisted of the following (in millions):

December 31, 2021

Weighted Average Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount

5 unchanged sentences

Total intangible assets, net 15 years $ 474.6 $ ( 295.5 ) $ 179.1

March 31, 2019

December 31, 2020

Weighted Average Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount

5 unchanged sentences

Total intangible assets, net 15 years $ 472.5 $ ( 272.2 ) $ 200.3

Intangible asset amortization expense totaled $ 35.4 million, $ 34.0 million and $ 32.2 million for the years ended March 31, 2020, 2019 and 2018, respectively.

Tradenames, and customer relationships acquired during fiscal 2020 were assigned a weighted-average useful life of 14 years and 19 years, respectively.

Tradenames, and customer relationships acquired during fiscal 2019 were assigned a weighted-average useful life of 15 years and 18 years, respectively.

The Company expects to recognize amortization expense on the intangible assets subject to amortization of $ 35.5 million in fiscal year 2021, $ 31.2 million in fiscal year 2022, $ 16.9 million in fiscal year 2023, $ 16.1 million in fiscal year 2024, and $ 15.8 million in fiscal year 2025.

The Company evaluates the carrying value of goodwill and indefinite-lived intangible assets annually as of October 1 during the third quarter of each fiscal year, and more frequently if events or changes in circumstances indicate that an impairment may exist.

The Company completed the testing of indefinite-lived intangible assets (tradenames) and goodwill for impairment as of October 1, 2019, using primarily an income valuation model (discounted cash flow) and market approach (guideline public company comparables), which indicated that the fair value of the Company's indefinite-lived intangible assets and all reporting units exceeded their carrying value;

therefore, no impairment was present.

Intangible asset amortization expense totaled $ 23.5 million, $ 16.9 million and $ 20.9 million for the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, respectively.

Customer relationships acquired during the year ended December 31, 2021 were assigned a weighted-average useful life of 10 years.

Tradenames, and customer relationships acquired during the nine month Transition Period ended December 31, 2020 were assigned a weighted-average useful life of 5 years and 18 years, respectively.

The Company expects to recognize amortization expense on the intangible assets subject to amortization of $ 7.9 million in 2022, $ 6.5 million in 2023, $ 6.5 million in 2024, $ 6.4 million in 2025, and $ 6.3 million in 2026.

Other Current Liabilities

Other current liabilities are summarized as follows (in millions):

March 31, 2020 March 31, 2019

Contract liabilities $ 7.3 $ 5.1

December 31, 2021 December 31, 2020

Sales rebates $ 38.6 $ 28.0

5 unchanged sentences

Taxes, other than income taxes 1.8 0.6

Taxes payable on behalf of PMC 21.9 —

Income taxes payable 2.1 2.4

10 unchanged sentences

Long-term debt is summarized as follows (in millions):

March 31, 2020 March 31, 2019

December 31, 2021 December 31, 2020

Term loan (1) $ 539.2 $ 621.5

4.875 % Senior Notes due 2025 (2)

Revolving credit facility (3) 249.2 —

Securitization facility borrowings (4) 74.9 —

Finance leases and other subsidiary debt (3) 0.3 0.5

3 unchanged sentences

____________________

(1) Includes unamortized debt issuance costs of $ 4.2 million and $ 6.6 million at March 31, 2020 and March 31, 2019, respectively.

(2) Includes unamortized debt issuance costs of $ 4.3 million and $ 5.0 million at March 31, 2020 and March 31, 2019, respectively.

(3) Includes unamortized debt issuance costs of $ 0.8 million at March 31, 2020.

(4) Includes unamortized debt issuance costs of $ 0.1 million at March 31, 2020.

(1) Includes unamortized debt issuance costs of $ 10.8 million and $ 3.5 million at December 31, 2021 and December 31, 2020, respectively.

(2) Includes unamortized debt issuance costs of $ 0.0 million and $ 3.7 million at December 31, 2021 and December 31, 2020, respectively.

(3) See more information related to finance leases within Note 14 , Leases.

Senior Secured Credit Facility

At March 31, 2020, the Company’s Third Amended and Restated First Lien Credit Agreement, as amended (the “Credit Agreement”), is funded by a syndicate of banks and other financial institutions and provides for (i) a $ 725.0 million term loan facility (which was reduced to $ 625.0 million as a result of a December 2019 voluntary prepayment, as discussed below) and (ii) a $ 264.0 million revolving credit facility.

As of March 31, 2020 , the Company was in compliance with all applicable covenants under the Credit Agreement, including compliance with a maximum permitted total net leverage ratio (the Company's sole financial maintenance covenant under the revolving credit facility discussed below) of 6.75 to 1.0.

The Company's total net leverage ratio was 2.1 to 1.0 as of March 31, 2020 .

On November 21, 2019, the Company entered into an Incremental Assumption Agreement (the “Amendment”) with Credit Suisse AG, Cayman Islands Branch, as administrative agent and as the refinancing term lender, relating to the Credit Agreement.

Prior to the Amendment, the term loan facility under the Credit Agreement, which was originally issued in an aggregate principal amount of $ 800.0 million, had a principal balance of $ 725.0 million on account of a $ 75.0 million voluntary prepayment by the Company in fiscal 2019 ("Prior Term Loan").

The Amendment provided for the issuance of a term loan facility in an aggregate principal amount of $ 725.0 million ("Term Refinancing Loan") and the proceeds were used to repay in full the aggregate principal amount of the Prior Term Loan.

The Term Refinancing Loan has a maturity date of August 21, 2024, and there are no required principal payments due or scheduled under the term debt until the maturity date.

Borrowings under the Term Refinancing Loan, as amended, bear interest at either (i) an Adjusted LIBOR Rate (subject to a 0 % floor) plus an applicable margin of 1.75 % (which was reduced from 2.0 %) or at an alternative base rate plus an applicable margin of 0.75 % (which was reduced from 1.00 %).

At March 31, 2020 and 2019, the borrowings under the Term Refinancing Loan and Prior Term Loan had weighted-average effective interest rates of 2.74 % and 4.49 %, respectively.

During the years ended March 31, 2020 and 2019, the borrowings under the Term Refinancing Loan and Prior Term Loan had weighted-average effective interest rates of 3.96 % and 4.30 %, respectively.

During fiscal 2020, the Company recognized a $ 1.5 million loss on the debt extinguishment in connection with the aforementioned Amendment, which was comprised of $ 0.7 million of refinancing related costs, as well as a non-cash write-off of debt issuance costs associated with previously outstanding debt of $ 0.8 million.

Additionally, the Company capitalized $ 0.1 million of direct costs associated with the Term Refinancing Loan, which will be amortized over the life of the loan as interest expense using the effective interest method.

Following the Amendment, t he Company made a voluntary prepayment on its Term Refinancing Loan of $ 100.0 million in the third quarter of fiscal 2020.

In connection with this prepayment, the Company recognized an additional $ 0.7 million loss on debt extinguishment to write-off a portion of the unamortized debt issuance costs.

During fiscal 2019, the Company made a voluntary prepayment on its Prior Term Loan of $ 75.0 million.

In connection with this prepayment, the Company recognized a $ 0.7 million loss on debt extinguishment to write off a portion of the unamortized debt issuance costs.

During fiscal 2018, the Company recognized an $ 11.9 million loss on the debt extinguishment associated with the Prior Term Loan, which was comprised of $ 3.9 million of refinancing-related costs, as well as a non-cash write-off of unamortized debt issuance costs of $ 8.0 million.

Additionally, the Company capitalized $ 0.8 million and $ 6.0 million of direct costs associated with the Prior Term Loan, which are being amortized over the life of the loans as interest expense using the effective interest method.

On October 4, 2021, ZBS Global, Inc.

(“Holdings”), Zurn Holdings, Inc., Zurn LLC (together, the “Borrowers”), the lenders from time to time party thereto, and Credit Suisse AG, Cayman Islands Branch, as administrative agent for the lenders (in such capacity, the “Administrative Agent”) entered into a Fourth Amended and Restated First Lien Credit Agreement (the “Credit Agreement”).

The Credit Agreement is funded by a syndicate of banks and other financial institutions and provides for (i) a $ 550.0 million term loan facility (the “Term Loan”) and (ii) a $ 200.0 million revolving credit facility (the “Revolving Credit Facility”).

The obligations under the Credit Agreement and related documents are secured by liens on substantially all of the assets of Holdings, the Borrowers, and certain subsidiaries of the Borrowers pursuant to a Third Amended and Restated Guarantee and Collateral Agreement, dated as of October 4, 2021, among Holdings, the Borrowers, the subsidiaries of the Borrowers party thereto, and the Administrative Agent, and certain other collateral documents.

The Credit Agreement contains representations, warranties, covenants and events of default, including, without limitation, a financial covenant under which the Borrowers are, if certain conditions are met, obligated to maintain on a consolidated basis, as of the end of each fiscal quarter, a certain maximum Net First Lien Leverage Ratio (as defined in the Credit Agreement).

As of December 31, 2021, the Borrowers were in compliance with all applicable covenants under the Credit Agreement.

The Credit Agreement amended and restated in its entirety the Company’s Third Amended and Restated First Lien Credit Agreement, as amended (the “Prior Credit Agreement”).

At December 31, 2020, the Prior Credit Agreement was funded by a syndicate of banks and other financial institutions and provided for (i) a $ 625.0 million term loan facility (the “Prior Term Loan”) and (ii) a $ 264.0 million revolving credit facility (the “Prior Revolving Credit Facility”).

In connection with the amendment of the Credit Agreement, the Company recognized a $ 20.4 million loss on the extinguishment of debt, comprised of refinancing-related costs incurred and a non-cash write-off of debt issuance costs associated with the previous debt outstanding.

The Credit Agreement provided for the issuance of a term loan facility in an aggregate principal amount of $ 550.0 million.

The proceeds of the Term Loan were, together with the Land Newco Dividend and cash on hand, used to (i) repay in full the aggregate principal amount outstanding of the Prior Term Loan, together with accrued interest thereon, (ii) redeem the $ 500 million of outstanding principal amount of the Notes, as described below, and (iii) pay related fees and expenses.

The Term Loan has a maturity date of October 4, 2028.

Commencing on March 31, 2022, the Borrowers are required to make quarterly payments of principal in an amount equal to $ 1.4 million on each quarter until the maturity date.

The Term Loan bears interest at the Borrowers’ option, by reference to a base rate or a rate based on LIBOR, in either case, plus an applicable margin determined quarterly based on the Borrowers’ Net First Lien Leverage Ratio as of the last day of each fiscal quarter.

If the Net First Lien Leverage Ratio is greater than 1.80 to 1.00, the applicable margin shall equal 1.25 %

in the case of base rate borrowings and 2.25 % in the case of LIBOR borrowings.

In the event the Borrowers’ Net First Lien Leverage Ratio is less than or equal to 1.80 to 1.0, the applicable margin on both base rate and LIBOR borrowings would decrease by 0.25 %.

The Borrowers’ Net First Lien Leverage Ratio was 2.35 to 1.0 as of December 31, 2021.

Certain prepayments of the Term Loan occurring on or prior to April 4, 2022 are subject to a 1.00 % prepayment penalty.

At December 31, 2021 and December 31, 2020, the borrowings under the Term Loan and Prior Term Loan had weighted-average effective interest rates of 2.75 % and 1.89 %, respectively.

During the year ended December 31, 2021 and the nine months ended December 31, 2020, the borrowings under the Term Loan and Prior Term Loan had weighted-average effective interest rates of 2.07 % and 2.02 %, respectively.

Revolving Credit Facility

The Credit Agreement includes a $ 264.0 million revolving credit facility that has a maturity date of March 15, 2023.

For revolving commitments, the Company's applicable margin above the base rate is 2.00 % in the case of ABR borrowings and 3.00 % in the case of Eurocurrency borrowings, subject to a net first lien leverage test.

In the event the Company's net first lien leverage ratio is less than 1.5 to 1.0, its applicable margin on both ABR and Eurocurrency borrowings would decrease by twenty-five (25) basis points.

The Company's net first lien leverage ratio was 2.1 to 1.0 as of March 31, 2020.

In addition to paying interest on outstanding principal, the Company is subject to a commitment fee to the lenders under the revolving credit facility with respect to the unutilized commitments thereunder at a rate equal to 0.50 % per annum.

At March 31, 2020, $ 250.0 million was borrowed under the revolving credit facility.

No amount was borrowed under the revolving credit facility at March 31, 2019.

As of and during the year ended March 31, 2020 borrowings under the revolving credit facility had weighted-average effective interest rate s of 4.00 %.

As of March 31, 2020 and 2019, $ 4.7 million and $ 5.6 million of the revolving credit facility were considered utilized in connection with outstanding letters of credit, respectively.

The Credit Agreement includes a $ 200.0 million revolving credit facility that has a maturity date of October 2, 2026.

Borrowings under the Revolving Credit Facility bear interest at the Borrowers’ option, by reference to a base rate or a rate based on LIBOR, in either case, plus an applicable margin determined quarterly based on the Borrowers’ Net First Lien Leverage Ratio as of the last day of each fiscal quarter.

If the Net First Lien Leverage Ratio is greater than 2.00 to 1.00, the applicable margin shall equal 1.00 % in the case of base rate borrowings and 2.00 % in the case of LIBOR borrowings.

In the event the Borrowers' Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the applicable margin on both base rate and LIBOR borrowings would decrease by 0.25 %.

The Borrowers’ Net First Lien Leverage Ratio was 2.35 to 1.0 as of December 31, 2021.

The Borrowers are also required to pay a quarterly commitment fee on the average daily unused portion of the Revolving Credit Facility for each fiscal quarter and fees in connection with the issuance of letters of credit.

If the Net First Lien Leverage Ratio is greater than 2.00 to 1.00, the commitment fee shall equal 0.50 %, and if the Company's Net First Lien Leverage Ratio is less than or equal to 2.00 to 1.00, the commitment fee shall equal 0.375 %

At December 31, 2021 and December 31, 2020, the amounts borrowed under the Revolving Credit Facility and Prior Revolving Credit Facility were zero , respectively.

As of December 31, 2021 and December 31, 2020, $ 6.1 million and $ 3.0 million of the Revolving Credit Facility and Prior Revolving Credit Facility, as applicable, were considered utilized in connection with outstanding letters of credit, respectively.

4.875 % Senior Notes due 2025

On December 7, 2017, the Company issued $ 500.0 million aggregate principal amount of 4.875 % senior notes due December 15, 2025 (the “Notes”).

The Notes were issued by RBS Global, Inc.

and Rexnord LLC (Company subsidiaries;

The Notes were issued by ZBS Global, Inc.

(f/k/a RBS Global, Inc.) and Zurn LLC (f/k/a Rexnord LLC) (Company subsidiaries;

collectively, the “Issuers”) pursuant to an Indenture, dated as of December 7, 2017 (the “Indenture”), by and among the Issuers, the domestic subsidiaries of the Company (with certain exceptions) as guarantors named therein (the “Subsidiary Guarantors”) and Wells Fargo Bank, National Association (the “Trustee”).

The Notes are general senior unsecured obligations of the Issuers.

Rexnord Corporation separately entered into a Parent Guarantee with the Trustee whereby it guaranteed certain obligations of the Issuers under the Indenture.

The Notes pay interest semi-annually on June 15 and December 15.

The Notes were not and

will not be registered under the Securities Act of 1933 or any state securities laws.

Debt issuance costs associated with the Notes are being amortized over the life of the Notes as interest expense using the effective interest method.

The Issuers may redeem some or all of the Notes at any time or from time to time prior to December 15, 2020 at certain "make-whole" redemption prices (as set forth in the Indenture) and after December 15, 2020 at specified redemption prices (as set forth in the Indenture).

Additionally, the Issuers may redeem up to 40 % of the aggregate principal amount of the Notes at any time or from time to time prior to December 15, 2020 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), the Issuers will be required to make an offer to purchase the Notes at a price equal to 101 % of the principal amount of the Notes on the date of purchase plus accrued interest.

The Indenture contains customary covenants, such as restrictions on the Issuers and its restricted subsidiaries (but not on Rexnord Corporation) incurring or guaranteeing additional indebtedness or issuing certain preferred shares, paying dividends and making other restricted payments and creating or incurring certain liens.

The Notes and Indenture do not contain any financial covenants.

The Notes and Indenture contain customary events of default, including the failure to pay principal or interest when due, breach of covenants, cross-acceleration to other debt of the Issuers or restricted subsidiaries in excess of $ 50 million and bankruptcy events, all subject to terms, including notice and cure periods, as set forth in the Indenture.

The Notes were general senior unsecured obligations of the Issuers.

The Company separately entered into a Parent Guarantee with the Trustee whereby it guaranteed certain obligations of the Issuers under the Indenture.

The Notes paid interest semi-annually on June 15 and December 15.

The Notes were not registered under the Securities Act of 1933 or any state securities laws.

Debt issuance costs associated with the Notes were being amortized over the life of the Notes as interest expense using the effective interest method.

The Issuers redeemed the Notes on October 4, 2021, at a redemption price equal to 102.438 % of the principal amount thereof plus accrued and unpaid interest.

Accounts Receivable Securitization Program

The Company has an amended accounts receivable securitization facility (the "Securitization") with Wells Fargo & Company ("Wells Fargo").

Pursuant to the agreements evidencing the Securitization, Rexnord Funding LLC ("Rexnord Funding") (a wholly owned bankruptcy-remote special purpose subsidiary) has granted Wells Fargo a security interest in all of its current and future receivables and related assets in exchange for a credit facility permitting borrowings of up to a maximum aggregate amount of $ 100.0 million outstanding from time to time.

Such borrowings are used by Rexnord Funding to finance purchases of accounts receivable.

The amount of advances available will be determined based on advance rates relating to the eligibility of the receivables held by Rexnord Funding at that time.

Advances bear interest based on LIBOR plus 1.20 %.

The last date on which advances may be made is December 30, 2020, unless the maturity of the Securitization is otherwise accelerated.

In addition to other customary fees associated with financings of this type, Rexnord Funding pays an unused line fee to Wells Fargo based on any unused portion of the Securitization facility.

If the average daily outstanding principal amount during a calendar month is less than 50 % of the average daily aggregate commitment in effect during such month, the unused line fee is 0.50 % per annum;

otherwise, it is 0.375 % per annum.

The Securitization constitutes a "Permitted Receivables Financing" under the Credit Agreement and does not qualify for sale accounting under ASC 860, Transfers and Servicing .

Any borrowings under the Securitization are accounted for as secured borrowings on the Company's consolidated balance sheets.

Financing costs associated with the Securitization are recorded within "Interest expense, net" in the consolidated statements of operations if revolving loans or letters of credit are obtained under the facility.

At both March 31, 2020 and March 31, 2019 , the Company's borrowing capacity under the Securitization was $ 100.0 , respectively, based on the current accounts receivables balance.

As of March 31, 2020 and 2019, $ 75.0 million and $ 0.0 million was borrowed under the Securitization, respectively.

In addition, $ 5.7 million and $ 7.1 million of available borrowing capacity under the Securitization was considered utilized in connection with outstanding letters of credit at March 31, 2020 and March 31, 2019 , respectively.

As of and during the year ended March 31, 2020, borrowings under the Securitization had weighted-average effective interest rate s of 2.19 % and 2.09 %, respectively.

As of March 31, 2020, the Company was in compliance with all applicable covenants and performance ratios contained in the Securitization.

On September 25, 2020, certain subsidiaries of the Company entered into a $ 100 million accounts receivable securitization facility (the “Securitization”) with Mizuho Bank, Ltd.

(“Mizuho”) to replace the Company’s previous $ 100.0 million accounts receivable securitization facility with Wells Fargo & Company, which was scheduled to expire in December 2020.

On May 17, 2021, the Company terminated the Securitization.

Other Subsidiary Debt

Prior to 2016, the Company received an aggregate of $ 9.8 million in net proceeds from financing agreements related to facility modernization projects at two North American manufacturing facilities.

These financing agreements were structured with unrelated third party financial institutions (the "Investors") and their wholly-owned community development entities in connection with the Company's participation in transactions qualified under the federal New Market Tax Credit program pursuant to Section 45D of the Internal Revenue Code of 1986, as amended.

Upon closing of these transactions, the Company provided an aggregate of $ 27.6 million to the Investor, in the form of loans receivable, with a term of 30 years bearing an interest rate of approximately 2.0 % per annum.

Under the terms of the financing agreements and upon meeting certain conditions, both the Investors and the Company have the ability to trigger forgiveness of the net debt.

During fiscal year 2019, $ 23.4 million of the associated loans and $ 17.9 million of the related loans receivable were forgiven by both the Investors and the Company resulting in a non-cash gain on debt extinguishment of $ 5.0 million, net of the write-off of $ 0.5 million of unamortized debt issuance costs associated with the forgiven debt.

During fiscal 2020, the remaining $ 14.0 million of aggregate loans and $ 9.7 million of loans receivable remaining were also jointly forgiven by the Company and the Investors, resulting in a non-cash gain on debt extinguishment of $ 3.2 million.

As of March 31, 2020, there are no outstanding balances related to the New Market Tax Credit related debt.

At March 31, 2020 and 2019, in addition to the aforementioned New Market Tax Credit, various wholly owned subsidiaries had additional debt of $ 32.8 million and $ 10.6 million, respectively, comprised primarily of borrowings held by various foreign subsidiaries and finance lease obligations.

At December 31, 2021 and 2020, various wholly owned subsidiaries had additional debt of $ 0.3 million and $ 0.5 million, respectively, comprised primarily of finance lease obligations.

For more information related to finance leases, see Note 14, Leases.

Future Debt Maturities

Future maturities of debt as of March 31, 2020, excluding the unamortized debt issuance costs of $ 9.4 million, were as follows (in millions):

Years ending March 31:

Future maturities of debt and financing lease obligations as of December 31, 2021, excluding the unamortized debt issuance costs of $ 10.8 million, were as follows (in millions):

Years ending December 31:

Thereafter 522.5

Cash interest paid for the fiscal years ended March 31, 2020, 2019 and 2018 was $ 55.9 million, $ 63.8 million and $ 69.9 million, respectively.

Derivative Financial Instruments

The Company is exposed to certain financial risks relating to fluctuations in foreign currency exchange rates and interests rates.

All hedging transactions are authorized and executed pursuant to defined policies and procedures that prohibit the use of financial instruments for speculative purposes.

Foreign Exchange Contracts

The Company periodically entered into foreign currency forward contracts to mitigate the foreign currency volatility relative to certain intercompany and external cash flows expected to occur.

These foreign currency forward contracts were not accounted for as cash flow hedges in accordance with ASC 815, and as such were marked to market through earnings.

Interest Rate Derivatives

Prior to fiscal 2020, the Company utilized interest rate swaps and interest rate caps to hedge the variability in future cash flows associated with the Company's variable-rate term loans, all of which matured during fiscal 2019.

During fiscal 2019, the critical terms of the interest rate derivatives no longer matched the outstanding debt and no longer qualified as effective hedges resulting in the unrealized losses associated with the interest rate derivatives remaining in accumulated other comprehensive loss to be reclassified into interest expense over the remaining term of the interest rate derivatives.

Changes in fair values of the interest rate derivatives qualifying as effective hedges were recognized within the consolidated statements of operations.

The amounts recorded on the consolidated balance sheets related to the Company's derivative instruments as of March 31, 2020 and 2019 were not material.

The following table segregates the location and the amount of gains or losses associated with the changes in the fair value of the Company's derivative instruments recognized within the consolidated statements of operations (for non-qualifying, non-designated derivative instruments):

Amount of gain recognized in accumulated other comprehensive loss

Derivative instruments no longer qualifying for hedge accounting under ASC 815 (in millions)

March 31, 2020 March 31, 2019

Interest rate derivatives $ ( 0.8 ) $ ( 0.8 )

Amount recognized as (income) expense

Non-qualifying, non-designated derivative instruments (in millions) Consolidated Statements of Operations Classification Fiscal Years Ended

March 31, 2020 March 31, 2019 March 31, 2018

Foreign currency forward contracts Other expense, net $ — $ 0.2 $ —

Interest rate derivatives Interest expense, net $ — $ ( 0.8 ) $ ( 5.0 )

During fiscal 2020, the Company did not reclassify any accumulated other comprehensive loss related to interest rate derivatives into earnings.

During fiscal 2019 and 2018, the Company reclassified $ 5.7 million, and $ 9.7 million of accumulated other comprehensive loss into earnings as interest expense related to interest rate derivatives, respectively.

Cash interest paid for the year ended December 31, 2021, the nine months ended December 31, 2020 and the fiscal year ended March 31, 2020 was $ 34.7 million, $ 39.8 million and $ 54.9 million, respectively.

Comparative Twelve and Nine Month Financial Information

As discussed in Note 1, Basis of Presentation and Description of Business, this Form 10-K includes financial information for the Transition Period.

Consolidated Statements of Operations and Cash Flows for the twelve months ended December 31, 2021 and 2020 and nine months ended December 31, 2020 and 2019 are summarized below.

All data for the twelve months ended December 31, 2020 and nine months ended December 31, 2019, are derived from the Company's unaudited condensed consolidated financial statements.

Consolidated Statements of Operations

(in millions)

Year Ended Nine Months Ended

December 31, 2021 December 31, 2020 December 31, 2020 December 31, 2019

(Unaudited) (Unaudited)

Net sales $ 910.9 $ 746.1 $ 562.7 526.7

Cost of sales 537.7 407.9 309.4 289.0

Gross profit 373.2 338.2 253.3 237.7

Selling, general and administrative expenses 239.0 206.1 153.7 144.0

Restructuring and other similar charges 3.7 2.0 1.7 0.9

Amortization of intangible assets 23.5 22.4 16.9 15.4

Income from operations 107.0 107.7 81.0 77.4

Non-operating (expense) income:

Interest expense, net ( 34.7 ) ( 45.9 ) ( 33.3 ) ( 44.0 )

Loss on the extinguishment of debt ( 20.4 ) — — ( 2.0 )

Actuarial gain (loss) on pension and postretirement benefit obligations 1.2 ( 21.2 ) ( 0.3 ) —

Other expense, net ( 0.7 ) ( 2.5 ) ( 1.9 ) ( 0.6 )

Income from continuing operations before income taxes 52.4 38.1 45.5 30.8

Provision for income taxes ( 2.7 ) ( 9.5 ) ( 10.5 ) ( 5.4 )

Net income from continuing operations 49.7 28.6 35.0 25.4

Income from discontinued operations, net of tax 71.2 118.1 83.2 126.2

Net income 120.9 146.7 118.2 151.6

Dividends on preferred stock — — — ( 14.4 )

Net income attributable to Zurn common stockholders $ 120.9 $ 146.7 $ 118.2 $ 137.2

Basic net income per share attributable to Zurn common stockholders:

Continuing operations $ 0.41 $ 0.24 $ 0.29 $ 0.10

Discontinued operations $ 0.59 $ 0.98 $ 0.69 $ 1.17

Net income $ 1.00 $ 1.21 $ 0.98 $ 1.27

Diluted net income per share attributable to Zurn common stockholders:

Continuing operations $ 0.40 $ 0.23 $ 0.28 $ 0.10

Discontinued operations $ 0.57 $ 0.96 $ 0.68 $ 1.14

Net income $ 0.97 $ 1.19 $ 0.96 $ 1.24

Weighted-average number of common shares outstanding (in thousands):

Basic 121,493 120,764 120,428 108,250

Effect of dilutive equity awards 3,621 2,688 2,771 2,253

Diluted 125,114 123,452 123,199 110,503

Consolidated Statements of Cash Flows

(in millions)

Year Ended Nine Months Ended

December 31, 2021 December 31, 2020 December 31, 2020 December 31, 2019

(Unaudited) (Unaudited)

Operating activities

Net income $ 120.9 $ 146.7 $ 118.2 $ 151.6

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

Depreciation 44.1 53.2 40.0 38.0

Amortization of intangible assets 33.4 36.1 27.0 26.3

Gain on dispositions of property, plant and equipment ( 10.1 ) ( 1.8 ) ( 1.1 ) —

Deferred income taxes ( 12.1 ) ( 14.7 ) ( 7.0 ) 4.9

Actuarial loss on pension and postretirement benefit obligations 3.6 37.4 1.6 0.8

Other non-cash charges ( 3.6 ) 3.5 0.2 0.7

Gain on extinguishment of debt 20.4 — — ( 1.0 )

Stock-based compensation expense 51.4 44.8 36.6 18.7

Changes in operating assets and liabilities:

Receivables ( 66.6 ) 10.8 65.1 34.4

Inventories ( 79.5 ) 35.0 0.5 ( 34.4 )

Other assets ( 7.7 ) 23.8 2.4 ( 18.2 )

Accounts payable 99.1 ( 56.4 ) ( 65.1 ) ( 12.4 )

Accruals and other 30.3 1.8 ( 22.1 ) ( 34.7 )

Cash provided by operating activities 223.6 320.2 196.3 174.7

Investing activities

Expenditures for property, plant and equipment ( 23.3 ) ( 44.2 ) ( 28.3 ) ( 25.5 )

Acquisitions, net of cash acquired ( 17.1 ) ( 161.4 ) ( 102.0 ) ( 25.1 )

Proceeds from dispositions of long-lived assets 14.3 9.0 7.8 2.9

Net proceeds (payment) from divestiture of discontinued operations - VAG 4.2 — — ( 1.3 )

Cash used for investing activities ( 21.9 ) ( 196.6 ) ( 122.5 ) ( 49.0 )

Financing activities

Proceeds from borrowings of debt 550.0 331.0 6.0 725.0

Repayments of debt ( 1,126.7 ) ( 336.7 ) ( 336.4 ) ( 835.3 )

Dividend received from Spin-Off Transaction of PMC 486.8 — — —

Cash transferred to PMC related to Spin-Off Transaction ( 192.8 ) — — —

Payment of debt issuance costs ( 28.8 ) — — —

Repurchase of common stock ( 0.9 ) ( 140.0 ) ( 59.3 ) ( 20.0 )

Payment of common stock dividends ( 36.4 ) ( 38.6 ) ( 28.8 ) —

Payment of preferred stock dividends — — — ( 17.4 )

Proceeds from exercise of stock options 24.9 37.5 18.3 16.8

Taxes withheld and paid on employees' share-based payment awards ( 32.3 ) ( 9.4 ) ( 9.4 ) ( 7.6 )

Cash used for financing activities ( 356.2 ) ( 156.2 ) ( 409.6 ) ( 138.5 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 4.5 ) 11.2 18.0 ( 2.7 )

Decrease in cash, cash equivalents and restricted cash ( 159.0 ) ( 21.4 ) ( 317.8 ) ( 15.5 )

Cash, cash equivalents and restricted cash at beginning of period 255.6 277.0 573.4 292.5

Cash, cash equivalents and restricted cash at end of period (1)

$ 96.6 $ 255.6 $ 255.6 $ 277.0

____________________

(1) The Company has combined cash flows from discontinued operations with cash flows from continuing operations within operating, investing and financing categories.

As such cash and cash equivalents and restricted cash include $ 193.3 million and $ 136.4 million of cash and cash equivalents from the discontinued operation as of December 31, 2020 and December 31, 2019, respectively.

Fair Value Measurements

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Fair Value of Non-Derivative Financial Instruments

The carrying amounts of cash, receivables, payables and accrued liabilities approximated fair value at March 31, 2020 and March 31, 2019 due to the short-term nature of those instruments.

The fair value of long-term debt recorded on the consolidated balance sheets as of March 31, 2020 and March 31, 2019 was approximately $ 1,398.1 million and $ 1,238.1 million, respectively.

The carrying amounts of cash, receivables, payables and accrued liabilities approximated fair value at December 31, 2021 and December 31, 2020 due to the short-term nature of those instruments.

The fair value of long-term debt recorded on the consolidated balance sheets as of December 31, 2021 and December 31, 2020 was approximately $ 552.4 million and $ 1,209.3 million, respectively.

The fair value is based on quoted market prices for the same issues.

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For real estate, cash flow estimates are based on current market estimates that reflect current and projected lease profiles and available industry information about expected trends in rental, occupancy and capitalization rates.

Additionally, as discussed in Note 5, Restructuring and Other Similar Charges, in connection with the ongoing supply chain optimization and footprint repositioning initiatives, the Company has taken several actions to consolidate existing manufacturing facilities and rationalize its product offerings.

These actions required the Company to assess whether the carrying amount of impacted long-lived assets will be recoverable as well as whether the remaining useful lives require adjustment.

The Company determines if a contract is (or contains) a lease at inception by evaluating whether the contract conveys the right to control the use of an identified asset.

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ROU assets and lease liability balances recorded on the consolidated balance sheets are summarized as follows (in millions):

Leases Classification March 31, 2020

Leases Classification December 31, 2021 December 31, 2020

Operating ROU assets Other assets $ 14.1 $ 18.1

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Finance Current maturities of debt 0.1 0.1

Operating Other liabilities 63.1

Operating Operating lease liability 8.9 13.4

Finance Long-term debt 0.2 0.1

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____________________

(1) Finance lease assets are recorded net of accumulated amortization of $ 1.0 million as of March 31, 2020.

(1) Finance lease assets are recorded net of accumulated amortization of $ 0.2 million and $ 0.1 million as of December 31, 2021 and December 31, 2020, respectively.

The components of lease expense reported in the consolidated statements of operations are as follows (in millions):

Twelve Months Ended

March 31, 2020

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Operating lease expenses (1) $ 6.1 $ 4.2 $ 5.0

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(2) Included in interest expense, net.

Lease expense under operating leases totaled $ 18.3 million and $ 18.9 million for the fiscal years ended March 31, 2019 and 2018, respectively.

Future minimum lease payments under operating and finance leases as of March 31, 2020 are as follows (in millions):

Years ending March 31, Operating Leases (1)

Future minimum lease payments under operating and finance leases as of December 31, 2021 are as follows (in millions):

Years ending December 31, Operating Leases (1)

Finance Leases (1)

2022 $ 6.5 $ 0.1

2022 14.6 2.0

2023 14.3 2.0

2024 11.3 2.0

Thereafter — —

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The weighted-average remaining lease terms and discount rates for leases are as follows:

Lease Term and Discount Rate March 31, 2020

Year Ended Nine Month Transition Period Ended Year Ended

Lease Term and Discount Rate December 31, 2021 December 31, 2020 March 31, 2020

Weighted-average remaining lease terms (years):

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Cash paid for amounts included in the measurement of lease liabilities are as follows (in millions):

Twelve Months Ended

March 31, 2020

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Operating cash flows from operating leases $ 6.4 $ 4.2 $ 4.6

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ROU assets obtained in exchange for lease liabilities are as follows (in millions):

Twelve Months Ended

March 31, 2020

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Operating leases $ 1.9 $ 2.8 $ 12.0

Finance leases 0.1 0.1 —

Sale-Leaseback Transaction:

During fiscal 2018, the Company entered into a sale-leaseback arrangement for an owned facility in Downers Grove, Illinois.

In accordance with the sale-leaseback guidance of ASC 840, the property did not qualify for sale accounting and as a result was accounted for as a financing transaction.

No gain or loss was recognized in connection with this transaction.

Upon the Company's adoption of ASC 842 on April 1, 2019, this financing transaction did not qualify for sale-leaseback accounting under the requirements of ASC 842 and, accordingly, continued to be accounted for as a financing obligation.

The financing obligation and related asset of $ 4.6 million and $ 3.0 million, respectively, are recorded in Property, plant and equipment, net and Other liabilities in the consolidated balance sheet as of March 31, 2020.

Prior to the adoption of ASC 842, the Company was considered, for accounting purposes only, the owner of the new facility due to the Company's continuing involvement with the new manufacturing facility during the construction period and accordingly recorded the construction asset and financing obligation within its consolidated balance sheets.

Upon the adoption of ASC 842 on April 1, 2019, the Company derecognized approximately $ 23.0 million of the construction asset and financing obligation recorded as of March 31, 2019, and has accounted for the new facility as a finance lease in accordance with ASC 842.

Stock-Based Compensation

In accordance with ASC 718, the Company recognizes compensation costs related to share-based payment transactions.

Generally, compensation cost is measured based on the grant-date fair value of the equity instruments issued.

Generally, compensation cost associated with share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued.

Compensation cost is recognized over the requisite service period, generally as the awards vest.

The Rexnord Corporation Performance Incentive Plan, which was last approved by stockholders in fiscal 2020 (the "Plan"), is utilized to provide performance incentives to the Company's officers, employees, directors and certain others by permitting grants of equity awards (for common stock), as well as performance-based cash awards, to such persons, to encourage them to maximize Rexnord's performance and create value for Rexnord's stockholders.

The Zurn Water Solutions Corporation Performance Incentive Plan, which was last approved by stockholders in fiscal 2020 (the "Plan"), is utilized to provide performance incentives to the Company's officers, employees, directors and certain others by permitting grants of equity awards (for common stock), as well as performance-based cash awards, to such persons, to encourage them to maximize Zurn's performance and create value for Zurn's stockholders.

To date, equity awards consisting of stock options, Restricted Stock Units ("RSUs") and Performance Stock Units ("PSUs") have been issued under the Plan.

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Options and RSUs granted since fiscal 2016 generally vest ratably over 3 years.

Options and RSUs granted during the Transition Period vested in two equal installments, with the first installment vesting on the first anniversary of the grant date and the second installment vesting on December 31, 2021.

During the year ended December 31, 2021, RSUs were granted to certain employees that vest ratably over 2 years.

RSUs granted to nonemployee directors vest immediately, but shares are not issued until six months after the director's cessation of service.

PSUs granted cliff vest after 3 years.

Other than the PSUs granted during the Transition Period, PSUs generally cliff vest after 3 years.

PSUs granted during the Transition Period cliff vested based on performance in the period from April 1, 2020, through December 31, 2021.

The vesting of the PSUs granted during the Transition Period was accelerated in connection with the Spin-Off Transaction based on performance achieved through, and as of the Spin-Off Transaction date.

The Plan permits the grant of awards that may deliver up to an aggregate of 19,665,489 shares of common stock.

The Plan is administered by the Compensation Committee.

During fiscal 2020, 2019 and 2018, the Company recorded $ 26.9 million, $ 22.6 million and $ 20.0 million of stock-based compensation expense, respectively (the related tax benefit on these amounts was $ 6.3 million for fiscal 2020, $ 5.2 million for fiscal 2019 and $ 6.5 million for fiscal 2018).

During fiscal 2020, 2019 and 2018, the Company also recorded $ 5.4 million, $ 1.9 million and $ 1.3 million, respectively, of an excess tax benefit related to stock options exercised during each fiscal year.

As of March 31, 2020, there was $ 28.1 million of total unrecognized compensation cost related to non-vested stock options, RSUs and PSUs granted under the Plan.

In connection with the Spin-Off Transaction, the Company made adjustments to the number of unvested stock options, RSUs and PSUs with the intention of preserving the intrinsic value of the recipient's awards prior to the Spin-Off.

Accordingly, the number of stock options, RSUs and PSUs outstanding as of the date of the Spin-Off Transaction was multiplied by a factor of 2.03446 , and the related grant date fair value was divided by a factor of 2.03446 , which resulted in no increase in the intrinsic value of awards outstanding.

Stock options and RSU's continue to vest in accordance with their original vesting period.

The vesting of PSU's granted prior to the beginning of 2021 was accelerated and all outstanding awards became fully vested and were released at the time of the Spin-Off Transaction based on performance achieved through, and as of the Spin-Off

Transaction date.

PSUs granted during 2021 continue to vest in accordance with their original vesting period.

These adjustments to the Company’s share-based compensation awards were deemed to be a modification of the awards and resulted in approximately $ 4.9 million expense, of which $ 4.5 million was recognized during the year ended December 31, 2021.

The remaining $ 0.4 million will be recognized over the 24 months following the completion of the Spin-Off Transaction.

Stock options and RSUs outstanding that were held by employees who transferred to Regal Rexnord Corporation in connection with the Spin-Off Transaction were canceled and replaced by awards issued by Regal Rexnord Corporation.

Employees remaining with the Company did not receive share-based compensation awards of Regal Rexnord Corporation as a result of the Spin-Off Transaction.

Except for the conversion of awards, the material terms of the awards held by employees who transferred to Regal Rexnord Corporation remained unchanged.

During the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, the Company recorded $ 37.5 million, $ 22.9 million and $ 19.5 million of stock-based compensation expense from continuing operations, respectively (the related tax benefit on these amounts was $ 9.2 million for the year ended December 31, 2021, $ 5.3 million for the nine month Transition Period ended December 31, 2020 and $ 4.8 million for the fiscal year ended March 31, 2020).

During the year ended December 31, 2021, nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, the Company also recorded $ 18.6 million, $ 0.4 million and $ 5.1 million, respectively, of an excess tax benefit related to stock options exercised during each period.

As of December 31, 2021, there was $ 29.0 million of total unrecognized compensation cost related to non-vested stock options, RSUs and PSUs granted under the Plan.

That cost is expected to be recognized over a weighted-average period of 2.3 years.

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The fair value of each option granted under the Plan was estimated on the date of grant using the Black-Scholes valuation model that uses the following weighted-average assumptions:

March 31, 2020 March 31, 2019 March 31, 2018

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Expected option term (in years) 6.5 6.5 6.5

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The Company uses the simplified method to determine the expected term, as management does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.

The Company’s expected volatility assumption for options granted is based on the historical volatility of the Company's common stock price.

The Company’s expected volatility assumption for all options granted prior to the Spin-Off Transaction is based on the historical volatility of the Company's common stock price.

The expected volatility assumption for all options granted after the Spin-Off Transaction is based on the historical volatility of the common stock prices of a peer group.

The weighted average risk free interest rate is based on the U.S.

Treasury yield curve in effect at the date of grant.

The weighted-average grant date fair value of options granted under the Plan during fiscal 2020, 2019 and 2018 was $ 9.50 , $ 10.59 and $ 8.12 , respectively.

The total fair value of options vested during fiscal 2020, 2019 and 2018 was $ 10.2 million, $ 12.3 million and $ 16.0 million, respectively.

A summary of stock option activity during fiscal 2020, 2019 and 2018 is as follows:

March 31, 2020 March 31, 2019 March 31, 2018

The weighted-average grant date fair value of options granted under the Plan during the year ended December 31, 2021, nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 was $ 13.54 , $ 7.69 and $ 9.50 , respectively.

The total fair value of options vested during the year ended December 31, 2021, nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 was $ 3.6 million, $ 4.6 million and $ 10.2 million, respectively.

A summary of stock option activity during the year ended December 31, 2021, nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 is as follows:

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Shares Weighted Avg.

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Exercised (1) ( 3,260,839 ) 14.24 ( 1,780,068 ) 20.92 ( 2,398,363 ) 16.65

Spin-off Transaction conversion 2,413,727 10.98 — — — —

Canceled/Forfeited ( 604,126 ) 32.04 ( 67,831 ) 26.90 ( 87,326 ) 25.69

2 unchanged sentences

______________________

(1) The total intrinsic value of options exercised during fiscal 2020, 2019 and 2018 was $ 35.1 million, $ 9.9 million and $ 6.4 million, respectively.

(2) The weighted average remaining contractual life of options outstanding was 5.4 years at March 31, 2020, 5.5 years at March 31, 2019 and 6.1 years at March 31, 2018.

The aggregate intrinsic value of options outstanding at March 31, 2020 was $ 10.7 million.

(3) The weighted average remaining contractual life of options exercisable was 4.9 years at March 31, 2020, 4.6 years at March 31, 2019 and 4.7 years at March 31, 2018.

The aggregate intrinsic value of options exercisable at March 31, 2020 was $ 10.7 million.

(1) The total intrinsic value of options exercised during the year ended December 31, 2021, nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 was $ 90.4 million, $ 19.9 million and $ 35.1 million, respectively.

(2) The weighted average remaining contractual life of options outstanding was 5.1 years at December 31, 2021, 5.6 years at December 31, 2020 and 5.4 years at March 31, 2020.

The aggregate intrinsic value of options outstanding at December 31, 2021 was $ 65.3 million.

(3) The weighted average remaining contractual life of options exercisable was 4.6 years at December 31, 2021, 5.3 years at December 31, 2020 and 4.9 years at March 31, 2020.

The aggregate intrinsic value of options exercisable at December 31, 2021 was $ 63.3 million.

Shares Weighted Avg.

2 unchanged sentences

Granted 432,478 39.79

Spin-off Transaction conversion 72,976 17.70

Vested ( 322,037 ) 25.31

2 unchanged sentences

Restricted Stock Units

During fiscal 2020, 2019 and 2018 the Company granted RSU to certain of its officers, directors, and employees.

During the year ended December 31, 2021, nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 the Company granted RSUs to certain of its officers, directors, and employees.

The fair value of each award is determined based on the Company's closing stock price on the date of grant.

A summary of RSU activity during fiscal 2020, 2019 and 2018 is as follows:

March 31, 2020 March 31, 2019 March 31, 2018

A summary of RSU activity during the year ended December 31, 2021, nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 is as follows:

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Units Weighted Avg.

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Granted 483,067 38.56 430,646 25.56 422,707 27.52

Spin-off conversion Transaction 227,058 16.54 — — — —

Vested ( 501,902 ) 22.49 ( 287,696 ) 26.90 ( 253,831 ) 24.90

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Performance Stock Units

During fiscal 2020, 2019 and 2018, the Company granted PSU's to certain of its officers and employees.

Those PSUs have a three -year performance period, and are earned and vest, subject to continued employment, based on performance relative to metrics determined by the Compensation Committee.

The number of performance share awards earned, which can range between 0 % and 200 % of the target awards granted depending on the Company's actual performance during the three -year performance period, will be satisfied with Rexnord common stock.

A summary of PSU activity during fiscal 2020, 2019 and 2018 is as follows:

March 31, 2020 March 31, 2019 March 31, 2018

During the year ended December 31, 2021, nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, the Company granted PSU's to certain of its officers and employees.

The PSUs granted during the nine month Transition Period ended December 31, 2020, had a 21 month performance period (April 1, 2020, to December 31, 2021) while the PSUs granted during the years ended December 31, 2021 and March 31, 2020 have a three-year performance period, and are earned and vest, subject to continued employment, based on performance relative to metrics determined by the Compensation Committee.

The number of performance share awards earned, which can range between 0 % and 200 % of the target awards granted depending on the Company's actual performance during the respective performance period, will be satisfied with Zurn common stock.

A summary of PSU activity during the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 is as follows:

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Units Weighted Avg.

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Granted 1,559,795 30.93 547,374 25.52 324,619 27.50

Spin-Off conversion Transaction 1,986,910 14.12 — — — —

Vested ( 3,739,235 ) 14.39 — — ( 169,748 ) 23.13

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Nonvested PSUs at end of period 777,374 $ 26.27 1,022,985 $ 26.68 480,186 $ 28.01

In fiscal 2020 and 2019, PSUs were granted with vesting based on goals related to free cash flow conversion and return on invested capital.

In fiscal 2018, PSUs were granted with vesting based on goals related to free cash flow conversion and relative total shareholder return.

During the nine month Transition Period ended December 31, 2020, PSUs were granted with vesting based on goals related to free cash flow conversion.

During the year ended December 31, 2021 and the fiscal year ended March 31, 2020, PSUs were granted with vesting based on goals related to free cash flow conversion and return on invested capital.

The fair value of the portion of PSUs with vesting based on free cash flow conversion and return on invested capital is determined based on the Company's closing stock price on the date of grant.

The fair value of PSUs with vesting based on relative total shareholder return is determined utilizing the Monte Carlo simulation model.

The following weighted-average assumptions were used in the Monte Carlo simulation model, which were based on historical data and standard industry valuation practices and methodology:

March 31, 2018

Expected volatility factor 31 %

Weighted-average risk-free interest rate 1.45 %

Expected dividend rate 0.0 %

PSU fair value per share $ 31.25

Retirement Benefits

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The service cost component of net periodic benefit cost is presented within Cost of sales and Selling, general and administrative expenses in the statements of operations while the other components of net periodic benefit cost are presented within Other expense (income), net.

The Company recognizes the net actuarial gains or losses in excess of the corridor in operating results during the fourth quarter of each fiscal year (or upon any required re-measurement event).

Amounts disclosed within this note include amounts attributable to the Company's discontinued operations, unless otherwise noted.

Refer to Note 4 Discontinued Operations for further detail.

The Company recognizes the net actuarial gains or losses in excess of the corridor in operating results during the final quarter of each fiscal year (or upon any required re-measurement event).

The corridor is 10% of the greater of the projected benefit obligation or the fair value of the plan assets.

In connection with this accounting policy, the Company recognized a non-cash actuarial (losses) gains of $( 36.6 ) million, $ 0.4 million, and $ 3.3 million, during the fiscal years ended March 31, 2020, 2019 and 2018, respectively.

In connection with this accounting policy, the Company recognized non-cash actuarial gain (loss) of $ 1.2 million, $( 0.3 ) million, and $( 20.9 ) million within the consolidated statements of operations from continuing operations, during the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, respectively.

These amounts are recorded within Actuarial (loss) gain on pension and postretirement benefit obligations in the consolidated statements of operations.

During fiscal 2019, the Company offered participants in the defined benefit plan of Cambridge International Holdings Corp., which was acquired by the Company in fiscal 2017, the opportunity to receive a lump sum settlement as part of the termination process for that plan.

During the first quarter of fiscal 2020, the obligations associated with the individuals that did not accept the lump sum settlement offer were transferred to an insurance company through the purchase of an annuity.

In addition, the Company recognized non-cash actuarial losses associated PMC plans of $ 4.8 million, $ 1.3 million and $ 15.7 million during the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020, respectively, which is recorded in income from discontinued operations, net of tax in the consolidated statements of operations.

On October 4, 2021, the Company completed the Spin-Off Transaction of the PMC business.

In accordance with the terms of the Spin-Off Transaction agreements, the net assets associated with the PMC business included in the Spin-Off Transaction included unfunded pension and post retirement benefit obligations of $ 80.4 million.

The transfer of these obligations affiliated with certain defined benefit plans was accounted for as a settlement in accordance with the authoritative guidance, which required the Company to perform an interim remeasurement of certain plans.

In connection with the remeasurement, the Company recognized pre-tax non-cash actuarial losses of $ 4.8 million, which is recognized within income from discontinued operations, net of tax.

During the fiscal year ended March 31, 2019, the Company offered participants in a PMC defined benefit plan the opportunity to receive a lump sum settlement as part of the termination process for that plan.

During the fiscal year ended March 31, 2020, the obligations associated with the individuals that did not accept the lump sum settlement offer were transferred to an insurance company through the purchase of an annuity.

The Company's cash contribution to purchase the annuity contract was $ 3.9 million.

Following the purchase of the annuity contract, the Company has no remaining obligations to participants of this plan.

The termination of this plan resulted in the recognition of $ 0.8 million non-cash pre-tax losses during the first quarter of fiscal 2020.

The termination of this plan resulted in the recognition of $ 0.8 million non-cash pre-tax losses within discontinued operations during the fiscal year ended March 31, 2020.

The components of net periodic benefit cost reported in the consolidated statements of operations are as follows (in millions):

March 31, 2020 March 31, 2019 March 31, 2018

Year Ended Nine Month Transition Period Ended Year Ended

December 31, 2021 December 31, 2020 March 31, 2020

Pension Benefits:

2 unchanged sentences

Expected return on plan assets ( 17.3 ) ( 13.9 ) ( 22.5 )

Benefit cost (income) associated with special events:

Curtailment (1) — — ( 0.3 )

Benefit cost associated with special events:

Settlement — — 0.8

Recognition of actuarial losses (gains) 35.9 0.7 ( 1.1 )

Net periodic benefit cost (income) $ 36.6 $ 0.6 $ ( 2.8 )

PMC Spin-Off 5.7 — —

Recognition of actuarial losses — 1.6 35.9

Net periodic benefit (income) expense $ 2.1 $ 2.0 $ 36.6

Other Postretirement Benefits

The other postretirement benefit obligation was determined using an assumed health care cost trend rate of 6.5 % in fiscal 2021 grading down to 5.0 % in fiscal 2026 and thereafter.

The other postretirement benefit obligation was determined using an assumed health care cost trend rate of 6.0 % in 2022 grading down to 5.0 % in 2026 and thereafter.

The discount rate, compensation rate increase and health care cost trend rate assumptions are determined as of the measurement date.

Assumed health care cost trend rates have a significant effect on amounts reported for the retiree medical plans.

A one-percentage point change in assumed health care cost trend rates would have the following effect (in millions):

One Percentage Point Increase One Percentage Point Decrease

Years Ended March 31, Years Ended March 31,

2020 2019 2018 2020 2019 2018

Increase (decrease) in total of service and interest cost components $ — $ 0.1 $ 0.1 $ — $ — $ ( 0.1 )

Increase (decrease) in postretirement benefit obligation 1.1 1.2 1.5 ( 1.0 ) ( 1.0 ) ( 1.3 )

Defined Contribution Savings Plans

The Company sponsors certain defined-contribution savings plans for eligible employees.

Expense recognized related to these plans was $ 7.7 million, $ 15.5 million and $ 15.0 million for the years ended March 31, 2020, 2019 and 2018 , respectively.

Expense recognized related to these plans was $ 5.5 million, $ 5.7 million and $ 7.7 million during the year ended December 31, 2021, nine months ended December 31, 2020 and for the year ended March 31, 2020 , respectively.

and During the year ended December 31, 2021, the Company utilized 107,113 shares of its common stock with a weighted average fair value of $ 51.67 per share in funding the cost.

During the nine month Transition Period ended December 31, 2020, the Company utilized 156,316 shares of its common stock with a weighted average fair value of $ 30.38 per share in funding the cost.

Deferred Compensation Plan

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Assets are invested primarily in mutual funds and corporate-owned life insurance contracts held in a Rabbi trust and restricted for payments to participants of the plan.

The assets and liabilities are classified in Other assets and Other liabilities, respectively, on the consolidated balance sheets.

Changes in the values of the assets held by the rabbi trust and changes in the value of the deferred compensation liability are recorded in Other expense (income), net in the consolidated statements of operations.

The assets and liabilities are classified in Other assets and Other liabilities,

respectively, on the consolidated balance sheets.

Changes in the values of the assets held by the rabbi trust and changes in the value of the deferred compensation liability are recorded in Other expense, net in the consolidated statements of operations.

The fair values of the Company’s deferred compensation plan assets and liability are included in the table below (in millions).

For additional information on the fair value hierarchy and the inputs used to measure fair value, see Note 13, Fair Value Measurements.

Fair Value as of March 31, 2020

Fair Value as of December 31, 2021

Quoted Prices in

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$ 16.3 $ — $ — $ 16.3

Fair Value as of March 31, 2019

Fair Value as of December 31, 2020

Quoted Prices in

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state NOL carryforwards.

On December 22, 2017, the U.S.

enacted the Tax Cuts and Jobs Act (“U.S.

Tax Reform”).

Tax Reform incorporated significant changes to U.S.

corporate income tax laws including, among other items, a reduction in the statutory federal corporate income tax rate from 35% to 21%, an exemption for dividends received from certain foreign subsidiaries, a one-time repatriation tax on deemed repatriated earnings from foreign subsidiaries, immediate taxation of deemed low-taxed

“intangible” income earned in foreign jurisdictions (referred to as global intangible low-taxed income or “GILTI”), immediate expensing of certain depreciable tangible assets, limitations on the deduction for net interest expense and certain executive compensation and the repeal of the Domestic Production Activities Deduction (“DPAD”).

In acknowledgment of the substantial and substantive changes incorporated in U.S.

Tax Reform, in conjunction with the timing of the enactment being just weeks before the majority of the provisions became effective, the SEC staff issued Staff Accounting Bulletin (“SAB”) 118 to provide certain guidance in determining the accounting for income tax effects of the legislation in the accounting period of enactment as well as provide a measurement period (similar to that used when accounting for business combinations) within which to finalize and reflect such final effects associated with U.S.

Further, SAB 118 summarized a three-step approach to be applied each reporting period within the overall measurement period:

(1) amounts should be reflected in the period including the date of enactment for those items which are deemed to be complete (i.e.

all information is available and appropriately analyzed to determine the applicable financial statement impact), (2) to the extent the effects of certain changes due to U.S.

Tax Reform for which the accounting is not deemed complete but for which a reasonable estimate can be determined, such provisional amount(s) should be reflected in the period so determined and adjusted in subsequent periods as such effects are finalized and (3) to the extent a reasonable estimate cannot be determined for a specific effect of the tax law change associated with U.S.

Tax Reform, no provisional amount should be recorded but rather, continue to apply ASC 740, based upon the tax law in effect prior to the enactment of U.S.

Such measurement period is deemed to end when all necessary information has been obtained, prepared and analyzed such that a final accounting determination can be concluded, but in no event should the period extend beyond one year.

In consideration of this guidance, the Company obtained, prepared and analyzed various information associated with the enactment of U.S.

Tax Reform (including subsequent Internal Revenue Service (“IRS”) Notices, etc.).

Based upon this review, the Company recognized an estimated net income tax benefit with respect to U.S.

Tax Reform for fiscal 2018 of $ 66.5 million (including amounts relating to the VAG business).

This net income tax benefit reflects a $ 66.5 million net estimated income tax benefit associated with the remeasurement of the Company’s net U.S.

deferred tax liability (including consideration of executive compensation limitations under U.S.

Tax Reform), with no net tax impact associated with the one-time repatriation tax.

Due to the timing and complexity of the various technical provisions provided for under U.S.

Tax Reform, the financial statement impacts recorded for fiscal 2018 relating to U.S.

Tax Reform were not deemed to be complete but rather were deemed to be reasonable, provisional estimates based upon the current available information and related interpretations.

For example, the Company was required to use estimates for earnings and profits and taxes in conjunction with determining the impact of the one-time repatriation tax.

In addition, in relation to the remeasurement of the Company’s net U.S.

deferred tax liability (as well as numerous other aspects of U.S.

Tax Reform), the Company had to use judgment based upon available guidance and interpretations of such guidance at that time.

Future guidance could result in changes to the Company’s interpretation, and as such, result in changes to previously recorded amounts.

Such changes were required to be reflected as discrete items in the applicable period.

The Company had continued to review and analyze various IRS Notices, proposed regulations and other pertinent information that became available during fiscal 2019.

Based upon that review and analysis as well as updates to certain financial information, the Company had determined the net impact of U.S.

Tax Reform for fiscal 2018 to be a net income tax benefit of $ 65.9 million.

The $ 0.6 million reduction from the $ 66.5 million net income tax benefit originally recorded in fiscal 2018 was recorded as a discrete item in the third quarter of fiscal 2019.

This reduction consisted of a $ 0.8 million adjustment to the Company’s net U.S.

deferred tax liability as of March 31, 2018, partially offset with a $ 0.2 million net income tax benefit associated with the one-time repatriation tax.

The Company determined the adjusted net tax benefit recorded for U.S.

Tax Reform to be complete as of December 31, 2018.

In addition, the Company had been evaluating the potential impact of the GILTI provisions of U.S.

In accordance with U.S.

GAAP, any potential impacts of GILTI can either be treated as a period expense in the period incurred or considered in the determination of the Company’s deferred tax balances.

The Company had not initially finalized its accounting policy for GILTI, and upon further analysis, including consideration of proposed regulations relating to the GILTI tax provisions and potential future changes to the Company’s existing legal structure, the Company had made the final accounting policy decision to report this item as a period expense in the year the tax is incurred.

Although none of the Company’s material foreign subsidiaries operate within tax jurisdictions that would otherwise meet the definition of “low-taxed” as outlined in the GILTI tax rules, the Company is nevertheless subject to the GILTI tax as a result of one particular aspect of the U.S.

foreign income tax credit limitation rules requiring the allocation of U.S.

interest expense against GILTI.

Such allocation effectively results in the allocated interest expense being non-deductible for U.S.

federal income tax purposes.

Were it not for this specific requirement, the Company would generally not recognize a significant GILTI tax liability.

Income Tax Provision (Benefit)

The components of the provision (benefit) for income taxes are as follows (in millions):

Year ended March 31,

Income Tax Provision

The components of the provision for income taxes are as follows (in millions):

Year Ended December 31, Nine Month Transition Period Ended December 31, Year Ended March 31,

2021 2020 2020

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Total deferred ( 8.2 ) ( 5.1 ) 2.9

Provision (benefit) for income taxes $ 54.1 $ 53.4 $ ( 19.5 )

The provision (benefit) for income taxes differs from the United States statutory income tax rate due to the following items (in millions):

Year ended March 31,

Provision for income taxes $ 2.7 $ 10.5 $ 4.4

The provision for income taxes differs from the United States statutory income tax rate due to the following items (in millions):

Year Ended December 31, Nine Month Transition Period Ended December 31, Year Ended March 31,

2021 2020 2020

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Net effects of foreign operations 0.8 0.3 0.5

Net effect to deferred taxes for changes in tax rates ( 1.1 ) ( 2.6 ) ( 0.3 )

Net effect to deferred taxes for U.S.

Tax Reform — 0.8 ( 67.1 )

Net effect of U.S.

Tax Reform transition tax — ( 0.1 ) 0.2

Net effects of GILTI inclusion — ( 0.2 ) 0.3

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Unrecognized tax benefits, net of federal benefit 1.0 2.0 ( 1.2 )

Domestic production activities deduction — — ( 3.2 )

Research and development credit ( 0.2 ) ( 0.2 ) ( 0.4 )

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Other 0.1 ( 0.4 ) ( 0.2 )

Provision (benefit) for income taxes $ 54.1 $ 53.4 $ ( 19.5 )

The provision (benefit) for income taxes was calculated based upon the following components of income from continuing operations before income taxes (in millions):

Year ended March 31,

Provision for income taxes $ 2.7 $ 10.5 $ 4.4

The provision for income taxes was calculated based upon the following components of income from continuing operations before income taxes (in millions):

Year Ended December 31, Nine Month Transition Period Ended December 31, Year Ended March 31,

2021 2020 2020

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Deferred income taxes consist of the tax effects of the following temporary differences (in millions):

March 31, 2020 March 31, 2019

December 31, 2021 December 31, 2020

Deferred tax assets:

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Federal and state capital loss carryforwards 17.7 18.2

Foreign net operating loss and interest carryforwards 5.2 6.7

Foreign net operating loss carryforwards 2.7 1.5

Total deferred tax assets before valuation allowance 80.3 83.3

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Total deferred tax liabilities 43.9 48.7

Net deferred tax liabilities $ 107.4 $ 111.2

Net deferred tax assets (liabilities) $ 1.3 $ ( 2.2 )

Net amount on Consolidated Balance Sheets consists of:

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Deferred income taxes ( 3.1 ) ( 8.0 )

Net long-term deferred tax liabilities $ ( 107.4 ) $ ( 111.2 )

Management has reviewed its deferred tax assets and has analyzed the uncertainty with respect to ultimately realizing the related tax benefits associated with such assets.

Based upon this analysis, management has determined that a valuation allowance should be established for the federal and state capital loss carryforwards, state credit carryforwards, certain foreign NOL carryforwards and related deferred tax assets, as well as certain state NOL carryforwards as of March 31, 2020.

Net long-term deferred tax assets (liabilities) $ 1.3 $ ( 2.2 )

Management has reviewed the deferred tax assets and has analyzed the uncertainty with respect to ultimately realizing the related tax benefits associated with such assets.

Significant factors considered by management in this determination included the historical operating results of the Company, as well as anticipated reversals of future taxable temporary differences.

The increase in the valuation allowance presented above was generally due to the finalization of the federal and state capital loss carryforwards resulting from the sale of the VAG business, which management has deemed the realization of such assets as not being more-likely-than-not.

Capital losses may generally only be used to offset available capital gains.

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States generally follow federal law with respect to capital losses;

however, those that do have a modification, such modification (in most cases) is to deny any carryback period.

however, for those that do have a modification, such modification (in most cases) is to deny any carryback period.

The carryforward periods for the state NOLs range from five to twenty years.

The state credit carryforwards expire over a period of ten years.

The majority of the foreign NOL carryforwards are generally subject to an indefinite expiration period, with the remaining being subject to either a five, nine or twenty year expiration period.

At March 31, 2020, the Company had approximately $ 464.1 million of state NOL carryforwards, expiring over various years ending through March 31, 2034.

The Company has a valuation allowance of $ 17.6 million recorded against the related deferred tax asset.

In addition, at March 31, 2020, the Company had approximately $ 26.0 million of foreign NOL carryforwards in which the majority of these losses can be carried forward indefinitely.

There exists a valuation allowance of $ 2.2 million against the foreign NOL carryforwards as well as certain related deferred tax assets.

The Company previously considered the earnings in all of its foreign subsidiaries as permanently reinvested;

and as such, had not recorded deferred income taxes with respect to such earnings.

However, in consideration of the current economic environment due to COVID-19 and in light of favorable changes incorporated in U.S.

Tax Reform with respect to repatriation of foreign earnings, the Company has determined effective as of the fourth quarter ending March 31, 2020 that certain unremitted earnings of approximately $ 44.4 million existing in Germany, Italy, the Netherlands and the United Kingdom are no longer permanently reinvested.

As a result of U.S.

Tax Reform, unremitted earnings can generally be remitted to the U.S.

without incurring additional U.S.

federal income taxation.

In addition, earnings repatriated from the jurisdictions noted above,

based upon our current legal structure, can generally be repatriated without incurring any withholding tax liability.

Accordingly, the Company has determined that the deferred tax liability associated with the repatriation of the undistributed earnings from the applicable subsidiaries located in these tax jurisdictions would be minimal, if any.

No provision has been made for United States federal income taxes related to approximately $ 98.8 million of the remaining undistributed earnings of foreign subsidiaries considered to be permanently reinvested.

Tax Reform, the additional income tax liability that would result if such earnings were repatriated to the U.S., other than potential out-of-pocket withholding taxes of approximately $ 5.5 million, would not be expected to be significant to the Company’s consolidated financial statements.

The Company’s total liability for net accrued income taxes as of March 31, 2020 and 2019 was $ 6.5 million and $ 17.0 million, respectively.

This net amount was presented in the consolidated balance sheets as Income taxes payable (separately disclosed in Other current liabilities) of $ 9.9 million and $ 20.3 million as of March 31, 2020 and 2019, respectively;

and as Income taxes receivable presented in Other current assets in the consolidated balance sheets of $ 3.4 million and $ 3.3 million as of March 31, 2020 and 2019, respectively.

Net cash paid for income taxes to governmental tax authorities for the years ended March 31, 2020, 2019 and 2018 was $ 72.5 million, $ 64.7 million and $ 59.4 million, respectively.

The state credit carryforwards expire over a period of 15 years.

The foreign NOL carryforwards are subject to a twenty-year expiration period.

At December 31, 2021, the Company had approximately $ 377.4 million of state NOL carryforwards, expiring over various years ending through December 31, 2033.

The Company has a tax effected valuation allowance of $ 14.5 million recorded against the related deferred tax asset.

In addition, at December 31, 2021, the Company had approximately $ 10.6 million of foreign NOL carryforwards, of which there is a recorded tax effected valuation allowance of $ 1.0 million.

No provision has been made for U.S.

federal income taxes related to approximately $ 13.9 million of undistributed earnings of foreign subsidiaries considered to be permanently reinvested.

The additional income tax liability that would result if such earnings were repatriated to the U.S., other than potential out-of-pocket withholding taxes of approximately $ 0.6 million, would not be expected to be significant to the Company’s consolidated financial statements.

The Company’s total receivable for net accrued income taxes as of December 31, 2021 and 2020 was $ 31.0 million and $ 6.1 million, respectively.

This net amount is presented in the consolidated balance sheets as income taxes payable (separately disclosed in other current liabilities) of $ 2.1 million and $ 2.4 million as of December 31, 2021 and 2020, respectively;

and as income taxes receivable in the consolidated balance sheets of $ 33.1 million and $ 8.5 million as of December 31, 2021 and 2020, respectively.

Net cash paid for income taxes to governmental tax authorities for the year ended

December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31,2020 was $ 57.8 million, $ 44.9 million and $ 72.5 million, respectively.

Liability for Unrecognized Tax Benefits

The Company's total liability for net unrecognized tax benefits as of March 31, 2020 and March 31, 2019 was $ 14.8 million and $ 21.8 million, respectively.

The following table represents a reconciliation of the beginning and ending amount of the gross unrecognized tax benefits, excluding interest and penalties, for the fiscal years ended March 31, 2020 and March 31, 2019 (in millions):

Year Ended March 31,

The Company's total liability for net unrecognized tax benefits as of December 31, 2021 and 2020 was $ 5.9 million and $ 4.7 million, respectively.

The following table represents a reconciliation of the beginning and ending amount of the gross unrecognized tax benefits, excluding interest and penalties, for the year ended December 31, 2021 and the nine month Transition Period ended December 31, 2020 (in millions):

Year Ended December 31, Nine Month Transition Period Ended December 31,

Balance at beginning of period $ 4.7 $ 2.4

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The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.

As of March 31, 2020 and March 31, 2019, the total amount of unrecognized tax benefits includes $ 1.5 million and $ 4.3 million of gross accrued interest and penalties, respectively.

The amount of interest and penalties recorded as income tax (benefit) expense during the fiscal years ended March 31, 2020, 2019, and 2018 was $( 1.2 ) million, $( 1.0 ) million, and $ 1.0 million, respectively.

As of December 31, 2021 and 2020, the total amount of unrecognized tax benefits includes $ 0.5 million and $ 0.2 million of gross accrued interest and penalties, respectively.

The amount of interest and penalties recorded as income tax expense (benefit) during the year ended December 31, 2021, the nine month Transition Period ended December 31, 2020 and the fiscal year ended March 31, 2020 was $ 0.2 million, $ 0.0 million , and $( 0.6 ) million, respectively.

The Company conducts business in multiple locations within and outside the U.S.

Consequently, the Company is subject to periodic income tax examinations by domestic and foreign income tax authorities.

Currently, the Company is undergoing routine, periodic income tax examinations in both domestic and foreign jurisdictions.

The Company is currently undergoing an income tax examination by the IRS of the Company’s U.S.

Currently, the Company is undergoing routine, periodic income tax examinations in foreign jurisdictions.

During the nine month Transition Period ended December 31, 2020, the Internal Revenue Service (the “IRS”) completed an income tax examination of the Company’s U.S.

consolidated federal income tax returns for the tax years ended March 31, 2016 and 2017.

During the fourth quarter of fiscal 2020, the German tax authorities concluded an examination of the corporate income and trade tax returns for the Company’s CENTA German subsidiary for the tax years ended December 31, 2014 through December 31, 2017.

The conclusion of the tax examination resulted in additional tax liabilities of approximately $ 1.7 million, all of which is subject to indemnification under the terms of the applicable purchase agreement or otherwise appropriately accrued in the financial statements.

Also during the fourth quarter of fiscal 2020, the Italian tax authorities began conducting an income tax examination of one of the Company’s Italian subsidiary’s income tax returns for the tax year ended March 31, 2018.

In addition, certain of the Company’s German subsidiaries were notified by the German tax authorities of their intention to conduct an income tax examination of such subsidiaries’ German corporate income and trade tax returns for the tax years or period ended March 31, 2015 through March 31, 2018.

The Company anticipates the related fieldwork will begin during the quarter ending September 30, 2020.

In addition, in accordance with the terms of the VAG sale agreement, the Company is required to indemnify the purchaser for any future income tax liabilities associated with all open tax years ending prior to, and including, the short period ended on the date of the Company's sale of VAG.

The Company paid approximately $ 1.5 million upon the conclusion of such examination, all of which was previously accrued in the Company's financial statements.

During the fiscal year ended March 31, 2020, the German tax authorities concluded an examination of the corporate income and trade tax returns for the Company’s CENTA German subsidiary for the tax years ended December 31, 2014 through December 31, 2017.

The conclusion of the tax examination resulted in additional tax liabilities of approximately $ 1.7 million, all of which was subject to indemnification under the terms of the applicable purchase agreement or otherwise appropriately accrued in the Company’s financial statements.

In accordance with the terms of the VAG sale agreement, the Company is required to indemnify the purchaser for any future income tax liabilities associated with all open tax years ending prior to, and including, the short period ended on the date of the Company's sale of VAG.

VAG was notified by the German tax authorities of its intention to conduct an income tax examination of the VAG German entities’ corporate income and trade tax returns for the tax years ended March 31, 2014 through 2019.

The Company anticipates the related fieldwork will begin during the quarter ending December 31, 2020.

During the second quarter of fiscal 2019, the IRS completed an income tax examination of the Company’s amended U.S.

consolidated federal income tax return for the tax year ended March 31, 2015 and the Company paid approximately $ 0.4 million upon conclusion of such examination.

It appears reasonably possible that the amounts of unrecognized income tax benefits could change in the next twelve months upon

conclusion of the Company’s current ongoing examinations;

Similarly, in accordance with the Spin-Off Transaction of PMC, the Company is required to indemnify Regal for any future income tax liabilities associated with PMC entities relating to all open tax years ending prior to, and including, the short period ended on the date of the Spin-Off Transaction.

During the fiscal year ended March 31, 2020, the Italian tax authorities began conducting an income tax examination of the income tax return of one of PMC’s Italian subsidiaries for the tax year ended March 31, 2018.

In addition, certain of the PMC German subsidiaries are currently undergoing a corporate income and trade tax examination by the German tax authorities for the tax years or period ended March 31, 2015 through March 31, 2018.

It appears reasonably possible that the amounts of unrecognized income tax benefits and indemnification liabilities could change in the next twelve months upon conclusion of the current ongoing examinations;

however, any potential payments of income tax, interest and penalties are not expected to be significant to the Company's consolidated financial statements.

With certain exceptions, the Company is no longer subject to U.S.

federal income tax examinations for tax years ending prior to March 31, 2016, state and local income tax examinations for years ending prior to fiscal 2016 or significant foreign income tax examinations for years ending prior to fiscal 2015.

federal income tax examinations for tax years ending prior to March 31, 2019, state and local income tax examinations for years ending prior to March 31, 2018 or significant foreign income tax examinations for years ending prior to March 31, 2017.

Commitments and Contingencies

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Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss or recovery, based upon current information, management believes the eventual outcome of these unresolved legal actions, either individually or in the aggregate, will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.

In connection with its sale, Invensys plc ("Invensys") provided the Company with indemnification against certain contingent liabilities, including certain pre-closing environmental liabilities.

The Company believes that, pursuant to such indemnity obligations, Invensys is obligated to defend and indemnify the Company with respect to the matters described below relating to the Ellsworth Industrial Park Site and to various asbestos claims.

The indemnity obligations relating to the matters described below are subject, together with indemnity obligations relating to other matters, to an overall dollar cap equal to the purchase price, which is an amount in excess of $ 900 million.

The following paragraphs summarize the most significant actions and proceedings:

• In 2002, Rexnord Industries, LLC ("Rexnord Industries") was named as a potentially responsible party ("PRP"), together with at least ten other companies, at the Ellsworth Industrial Park Site, Downers Grove, DuPage County, Illinois (the "Site"), by the United States Environmental Protection Agency ("USEPA"), and the Illinois Environmental Protection Agency ("IEPA").

Rexnord Industries' Downers Grove property is situated within the Ellsworth Industrial Complex.

The USEPA and IEPA allege there have been one or more releases or threatened releases of chlorinated solvents and other hazardous substances, pollutants or contaminants, allegedly including but not limited to a release or threatened release on or from the Company's property, at the Site.

The relief sought by the USEPA and IEPA includes further investigation and potential remediation of the Site and reimbursement of USEPA's past costs.

In early 2020, Rexnord Industries entered into an administrative order with the USEPA to do remediation work on its Downers Grove property.

Rexnord Industries' allocated share of past and future costs related to the Site, including for investigation and/or remediation, could be significant.

All previously pending property damage and personal injury lawsuits against the Company related to the Site have been settled or dismissed.

Pursuant to its indemnity obligation, Invensys continues to defend the Company in known matters related to the Site, including the costs of the remediation work pursuant to the 2020 administrative order, and has paid 100 % of the costs to date.

• Multiple lawsuits (with approximately 300 claimants) are pending in state or federal court in numerous jurisdictions relating to alleged personal injuries due to the alleged presence of asbestos in certain brakes and clutches previously manufactured by the Company's Stearns division and/or its predecessor owners.

Invensys and FMC, prior owners of the Stearns business, have paid 100 % of the costs to date related to the Stearns lawsuits.

Similarly, the Company's Prager subsidiary is the subject of claims by multiple claimants alleging personal injuries due to the alleged presence of asbestos in a product allegedly manufactured by Prager.

However, all these claims are currently on the Texas Multi-district Litigation inactive docket, and the Company does not believe that they will become active in the future.

To date, the Company's insurance providers have paid 100 % of the costs related to the Prager asbestos matters.

The Company believes that the combination of its insurance coverage and the Invensys indemnity obligations will cover any future costs of these matters.

In connection with the Company's acquisition of The Falk Corporation ("Falk"), Hamilton Sundstrand provided the Company with indemnification against certain products-related asbestos exposure liabilities.

The Company believes that, pursuant to such indemnity obligations, Hamilton Sundstrand is obligated to defend and indemnify the Company with respect to the asbestos claims described below, and that, with respect to these claims, such indemnity obligations are not subject to any time or dollar limitations.

The following paragraph summarizes the most significant actions and proceedings for which Hamilton Sundstrand has accepted responsibility:

• Falk, through its successor entity, is a defendant in multiple lawsuits pending in state or federal court in numerous jurisdictions relating to alleged personal injuries due to the alleged presence of asbestos in certain clutches and drives previously manufactured by Falk.

There are approximately 100 claimants in these suits.

The ultimate outcome of these lawsuits cannot presently be determined.

Hamilton Sundstrand is defending the Company in these lawsuits pursuant to its indemnity obligations and has paid 100 % of the costs to date.

Certain Water Management subsidiaries are also subject to asbestos litigation.

As of March 31, 2020, Zurn and numerous other unrelated companies were defendants in approximately 6,000 asbestos related lawsuits representing approximately 7,000 claims.

Certain Company subsidiaries are subject to asbestos litigation.

As of December 31, 2021, Zurn and numerous other unrelated companies were defendants in approximately 6,000 asbestos related lawsuits representing approximately 7,000 claims.

Plaintiffs' claims allege personal injuries caused by exposure to asbestos used primarily in industrial boilers formerly manufactured by a segment of Zurn.

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These claims are being handled pursuant to a defense strategy funded by insurers.

As of March 31, 2020, the Company estimates the potential liability for the asbestos-related claims described above, as well as the claims expected to be filed in the next ten years , to be approximately $ 50.0 million, of which Zurn expects its insurance carriers to pay approximately $ 38.0 million in the next ten years on such claims, with the balance of the estimated liability being paid in subsequent years.

As of December 31, 2021, the Company estimates the potential liability for the asbestos-related claims described above, as well as the claims expected to be filed in the next ten years , to be approximately $ 66.0 million, of which Zurn expects its insurance carriers to pay approximately $ 49.0 million in the next ten years on such claims, with the balance of the estimated liability being paid in subsequent years.

The $ 66.0 million was developed based on actuarial studies and represents the projected indemnity payout for current and future claims.

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As a result, actual liability could differ from the estimate described herein and could be substantial.

The liability for the asbestos-related claims is recorded in Other liabilities within the consolidated balance sheets.

Management estimates that its available insurance to cover this potential asbestos liability as of March 31, 2020, is in excess of the ten year estimated exposure, and accordingly, believes that all current claims are covered by insurance.

As of March 31, 2020, the Company had a recorded receivable from its insurance carriers of $ 50.0 million, which corresponds to the amount of this potential asbestos liability that is covered by available insurance and is currently determined to be probable of recovery.

The liability for the asbestos-related claims is recorded in reserve for asbestos claims within the consolidated balance sheets.

Management estimates that its available insurance to cover this potential asbestos liability as of December 31, 2021, is in excess of the ten year estimated exposure, and accordingly, believes that all current claims are covered by insurance.

As of December 31, 2021, the Company had a recorded receivable from its insurance carriers of $ 66.0 million, which corresponds to the amount of this potential asbestos liability that is covered by available insurance and is currently determined to be probable of recovery.

However, there is no assurance the Company's current insurance coverage will ultimately be available or that this asbestos liability will not ultimately exceed the Company's coverage limits.

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changes in law governing the policies, potential disputes and settlements with the carriers regarding the scope of coverage, and insolvencies of one or more of the Company's carriers.

The receivable for probable asbestos-related recoveries is recorded in Other assets within the consolidated balance sheets.

The receivable for probable asbestos-related recoveries is recorded in insurance for asbestos claims within the consolidated balance sheets.

Certain Company subsidiaries were named as defendants in a number of individual and class action lawsuits in various United States courts claiming damages due to the alleged failure or anticipated failure of Zurn brass fittings on the PEX plumbing systems in homes and other structures.

In fiscal 2013, the Company reached a court-approved agreement to settle the liability underlying this litigation.

The settlement is designed to resolve, on a national basis, the Company's overall exposure for both known and unknown claims related to the alleged failure or anticipated failure of such fittings, subject to the right of eligible class members to opt-out of the settlement and pursue their claims independently.

The settlement utilizes a seven year claims fund, which is capped at $ 20.0 million, and is funded in installments over the seven year period based on claim activity and minimum funding criteria.

The settlement also covers class action plaintiffs' attorneys' fees and expenses.

Historically, the Company's insurance carrier had funded the Company's defense in the above referenced proceedings.

The Company, however, reached a settlement agreement with its insurer, whereby the insurer paid the Company a lump sum in exchange for a release of future exposure related to this liability.

The Company has recorded an accrual related to this brass fittings liability, which takes into account, in pertinent part, the insurance carrier contribution, as well as exposure from the claims fund and the waiver of future insurance coverage.

The settlement was designed to resolve, on a national basis, the Company's overall exposure for both known and unknown claims related to the alleged failure or anticipated failure of such fittings, subject to the right of eligible class members to opt-out of the settlement and pursue their claims independently.

The settlement utilized a seven year claims fund, which was capped at $ 20.0 million, and was funded in installments over the seven year period based on claim activity and minimum funding criteria.

The seven year filing period expired on April 1, 2020.

Any claims after April 1, 2020 are time barred.

As of December 31, 2021, the Company had made payment on all remaining timely filed claims and closed the settlement fund.

Public Offering and Common Stock Repurchases

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The Company issued an aggregate of 402,500 shares of Series A Preferred Stock in connection therewith.

During fiscal 2020, 402,500 shares of Series A Preferred Stock automatically converted into 16.0 million shares of the Company's common stock.

The number of shares of common stock issued upon conversion was determined based on a defined average volume weighted average price per share of the Company’s common stock.

During the year ended March 31, 2020, 402,500 shares of Series A Preferred Stock automatically converted into 16.0 million shares of the Company's common stock.

The number of

shares of common stock issued upon conversion was determined based on a defined average volume weighted average price per share of the Company’s common stock.

Upon conversion, there were no shares of Series A Preferred Stock outstanding.

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The final dividend payment was made on November 15, 2019.

During fiscal 2020, fiscal 2019 and fiscal 2018, the Company accrued $ 14.4 million, $ 23.2 million and $ 23.2 million of dividends and paid $ 17.4 million, $ 23.2 million and $ 23.2 million of dividends on the Series A Preferred Stock, respectively.

During the fiscal year ended March 31, 2020, the Company accrued $ 14.4 million of dividends and paid $ 17.4 million of dividends on the Series A Preferred Stock, respectively.

Issuer Repurchases of Equity Securities

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however, the program will continue until the maximum amount of dollars authorized have been expended or until it is modified or terminated by the Board.

During fiscal 2020, the Company repurchased 3.6 million shares of common stock at a total cost of $ 100.7 million at a weighted average price of $ 27.94 per share.

During the year ended December 31, 2021, the Company repurchased 22,300 shares of common stock at a total cost of $ 0.9 million at a weighted average price of $ 39.27 per share.

During the nine month Transition Period ended December 31, 2020, the Company repurchased 1.7 million shares of common stock at a total cost of $ 59.3 million at a weighted average price of $ 34.97 per share.

During the fiscal year ended March 31, 2020, the Company repurchased 3.6 million shares of common stock at a total cost of $ 100.7 million at a weighted average price of $ 27.94 per share.

The repurchased shares were canceled by the Company upon receipt.

No shares of common stock were repurchased in fiscal 2019 or 2018.

At March 31, 2020, a total of approximately $ 223.0 million of repurchase authority remained under the Repurchase Program.

On April 8, 2020, the Company announced the temporary suspension of share repurchases as a result of the uncertainty caused by the COVID-19 pandemic.

Business Segment Information

The Company's results of operations are reported in two business segments, consisting of the Process & Motion Control platform and the Water Management platform.

The Process & Motion Control platform designs, manufactures, markets and services a comprehensive range of specified, highly-engineered mechanical components used within complex systems where customers' reliability requirements and costs of failure or downtime are high.

The Process & Motion Control portfolio includes motion control products, shaft management products, aerospace components, and related value-added services.

Products and services are marketed and sold globally under widely recognized brand names, including Rexnord®, Rex®, Addax®, Euroflex®, Falk®, FlatTop®, Cambridge®, Link-Belt®, Omega®, PSI®, Shafer®, Stearns®, Highfield®, Thomas®, Centa®, and Tollok TM .

Process & Motion Control products and services are sold into a diverse group of attractive end markets, including food and beverage, aerospace, mining, petrochemical, energy and power generation, cement and aggregates, forest and wood products, agriculture, and general industrial and automation applications.

The Water Management platform designs, procures, manufactures, and markets products that provide and enhance water quality, safety, flow control and conservation.

The Water Management product portfolio includes professional grade water control and safety, water distribution and drainage, finish plumbing, and site works products for primarily nonresidential buildings.

Products are marketed and sold under widely recognized brand names, including Zurn®, Wilkins®, Green Turtle®, World Dryer®, StainlessDrains.com TM and JUST®.

The financial information of the Company's segments is regularly evaluated by the chief operating decision maker in determining resource allocation and assessing performance.

Management evaluates the performance of each business segment based on its operating results.

The same accounting policies are used throughout the organization.

See Note 1, Basis of Presentation and Significant Accounting Policies for further information.

During fiscal 2019, the Company sold its VAG business included within the Water Management platform and in accordance with the authoritative guidance, the operating results of the VAG business are reported as discontinued operations in all periods presented.

See Note 4, Discontinued Operations, for further information.

Business Segment Information:

(in Millions)

March 31, 2020 March 31, 2019 March 31, 2018

Net sales by product

Process & Motion Control:

Original equipment manufacturers/ end-users $ 766.8 $ 768.5 $ 690.5

Maintenance, repair, and operations 591.4 612.1 550.7

Total Process & Motion Control 1,358.2 1,380.6 1,241.2

Water Management:

Water safety, quality, flow control and conservation 661.0 624.4 566.9

Water infrastructure 49.1 45.9 43.5

Total Water Management 710.1 670.3 610.4

Consolidated net sales 2,068.3 2,050.9 1,851.6

Income (loss) from operations

Process & Motion Control 228.4 226.1 191.3

Water Management 163.1 139.7 125.7

Corporate ( 57.2 ) ( 60.2 ) ( 50.6 )

Consolidated income from operations 334.3 305.6 266.4

Non-operating expense:

Interest expense, net ( 58.6 ) ( 69.9 ) ( 75.1 )

Gain (loss) on the extinguishment of debt 1.0 4.3 ( 11.9 )

Actuarial (loss) gain on pension and postretirement benefit obligations ( 36.6 ) 0.4 3.3

Other (expense) income, net ( 3.8 ) ( 1.6 ) 4.4

Income from continuing operations before income taxes 236.3 238.8 187.1

(Provision) benefit for income taxes ( 54.1 ) ( 53.4 ) 19.5

Equity method investment income — 3.6 —

Net income from continuing operations 182.2 189.0 206.6

Loss from discontinued operations, net of tax ( 1.8 ) ( 154.7 ) ( 130.6 )

Net income 180.4 34.3 76.0

Non-controlling interest income 0.3 — 0.1

Net income attributable to Rexnord 180.1 34.3 75.9

Dividends on preferred stock ( 14.4 ) ( 23.2 ) ( 23.2 )

Net income attributable to Rexnord common stockholders $ 165.7 $ 11.1 $ 52.7

Depreciation and Amortization

Process & Motion Control $ 59.6 $ 63.0 $ 56.0

Water Management 26.5 24.9 23.7

Corporate 0.5 — —

Consolidated $ 86.6 $ 87.9 $ 79.7

Capital Expenditures

Process & Motion Control $ 34.6 $ 36.3 $ 34.2

Water Management 6.8 6.2 3.8

Consolidated $ 41.4 $ 42.5 $ 38.0

March 31, 2020 March 31, 2019 March 31, 2018

Process & Motion Control $ 2,953.0 $ 2,677.7 $ 2,598.8

Water Management 656.7 576.8 820.9

Corporate 17.4 5.2 4.0

Consolidated $ 3,627.1 $ 3,259.7 $ 3,423.7

Net sales to third parties and long-lived assets by geographic region are as follows (in millions):

Net Sales Long-lived Assets

Year Ended March 31, 2020 Year Ended March 31, 2019 Year Ended March 31, 2018 March 31, 2020 March 31, 2019 March 31, 2018

United States 1,472.7 1,460.6 1,361.6 $ 264.7 $ 260.7 $ 260.9

Europe 298.9 327.5 255.5 72.9 78.9 91.2

Rest of World 296.7 262.8 234.5 41.2 43.4 44.4

$ 2,068.3 $ 2,050.9 $ 1,851.6 $ 378.8 $ 383.0 $ 396.5

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates.

Amounts attributed to the geographic regions for long-lived assets are based on the location of the entity that holds such assets.

In accordance with ASC 280, Segment Reporting , long-lived assets includes movable assets and excludes net intangible assets and goodwill.

At December 31, 2021, a total of approximately $ 162.8 million of repurchase authority remained under the Repurchase Program.

Quarterly Results of Operations (unaudited)

(in millions, except per share amounts)

Year Ended December 31, 2021

First Quarter Second Quarter Third Quarter Fourth Quarter

2 unchanged sentences

Net income from continuing operations 10.0 20.5 16.3 2.9 49.7

Loss from discontinued operations, net of tax ( 1.8 ) — — — ( 1.8 )

Net income 46.7 56.7 48.4 28.6 180.4

Non-controlling interest income (loss) 0.2 0.1 ( 0.1 ) 0.1 0.3

Net income attributable to Rexnord 46.5 56.6 48.5 28.5 180.1

Dividends on preferred stock ( 5.8 ) ( 5.8 ) ( 2.8 ) — ( 14.4 )

Net income attributable to Rexnord common stockholders $ 40.7 $ 50.8 $ 45.7 $ 28.5 $ 165.7

Basic net income (loss) per share attributable to Rexnord common stockholders

Income (loss) from discontinued operations, net of tax 40.0 52.6 47.9 ( 69.3 ) 71.2

Net income (loss) 50.0 73.1 64.2 ( 66.4 ) 120.9

Net income (loss) attributable to Zurn common stockholders $ 50.0 $ 73.1 $ 64.2 $ ( 66.4 ) $ 120.9

Basic net income (loss) per share attributable to Zurn common stockholders

Continuing operations $ 0.08 $ 0.17 $ 0.13 $ 0.02 $ 0.41

Discontinued operations $ 0.33 $ 0.44 $ 0.39 $ ( 0.56 ) $ 0.59

Net income $ 0.39 $ 0.48 $ 0.40 $ 0.23 $ 1.48

Diluted net income (loss) per share attributable to Rexnord common stockholders

Net income (loss) $ 0.42 $ 0.61 $ 0.53 $ ( 0.53 ) $ 1.00

Diluted net income (loss) per share attributable to Zurn common stockholders

Continuing operations $ 0.08 $ 0.16 $ 0.13 $ 0.02 $ 0.40

Discontinued operations $ 0.32 $ 0.42 $ 0.38 $ ( 0.54 ) $ 0.57

Net income $ 0.38 $ 0.46 $ 0.39 $ 0.23 $ 1.45

Net income (loss) $ 0.40 $ 0.59 $ 0.51 $ ( 0.52 ) $ 0.97

______________________

(1) The fourth quarter of fiscal 2020 included the recognition of a $ 35.8 million non-cash actuarial loss in connection with performing the annual re-measurement of the Company's pension and other post-retirement obligations.

Refer to Note 16, Retirement Benefits for additional information.

First Quarter

(1) Second Quarter (2) Third Quarter (3) Fourth Quarter Total

(1) The fourth quarter of the year ended December 31, 2021 includes the recognition of a $ 20.4 million loss on extinguishment of debt following the refinancing of the Company's debt in connection with the Spin-Off Transaction.

Refer to Note 11, Long-Term Debt for additional information.

In addition, the Company recognized approximately $ 60.0 million of separation costs in connection with the Spin-Off Transaction that was recorded within the loss from discontinued operations, net of tax.

Refer to Note 4, Discontinued Operations for additional information.

Nine Month Transition Period Ended December 31, 2020

Three Months Ended June 30, 2020 Three Months Ended September 30, 2020 Three Months Ended December 31, 2020 Total

Net sales $ 174.7 $ 199.7 $ 188.3 $ 562.7

1 unchanged sentence

Net income from continuing operations 10.6 18.8 5.6 35.0

Loss from discontinued operations, net of tax ( 42.8 ) ( 83.7 ) ( 27.8 ) ( 0.4 ) ( 154.7 )

Net (loss) income ( 0.6 ) ( 37.5 ) 25.1 47.3 34.3

Non-controlling interest income (loss) 0.1 0.1 ( 0.3 ) 0.1 —

Net (loss) income attributable to Rexnord ( 0.7 ) ( 37.6 ) 25.4 47.2 34.3

Dividends on preferred stock ( 5.8 ) ( 5.8 ) ( 5.8 ) ( 5.8 ) ( 23.2 )

Net (loss) income attributable to Rexnord common stockholders $ ( 6.5 ) $ ( 43.4 ) $ 19.6 $ 41.4 $ 11.1

Basic net income (loss) per share attributable to Rexnord common stockholders

Income from discontinued operations, net of tax 25.0 26.6 31.6 83.2

Net income attributable to Zurn common stockholders $ 35.6 $ 45.4 $ 37.2 $ 118.2

Basic net income per share attributable to Zurn common stockholders

Continuing operations $ 0.09 $ 0.16 $ 0.05 $ 0.29

Discontinued operations $ 0.21 $ 0.22 $ 0.26 $ 0.69

Net (loss) income $ ( 0.06 ) $ ( 0.42 ) $ 0.19 $ 0.39 $ 0.11

Diluted net income (loss) per share attributable to Rexnord common stockholders

Net income $ 0.30 $ 0.38 $ 0.31 $ 0.98

Diluted net income per share attributable to Zurn common stockholders

Continuing operations $ 0.09 $ 0.15 $ 0.05 $ 0.28

Discontinued operations $ 0.21 $ 0.22 $ 0.26 $ 0.68

Net (loss) income $ ( 0.06 ) $ ( 0.30 ) $ 0.21 $ 0.38 $ 0.28

______________________

(1) The first quarter of fiscal 2019 included a $ 44.0 million non-cash asset impairment to reduce the carrying amount of the then-held-for-sale VAG business to its estimated fair value less costs to sell.

Refer to Note 4, Discontinued Operations for additional information.

(2) The second quarter of fiscal 2019 included an $ 82.0 million non-cash asset impairment charge to reduce the carrying amount of the then-held-for-sale VAG business to its estimated fair value less costs to sell.

Refer to Note 4, Discontinued Operations for additional information.

(3) The third quarter of fiscal 2019 included a $ 19.7 million non-cash pre-tax loss on the sale of the VAG business, which was completed during the quarter.

Refer to Note 4, Discontinued Operations for additional information.

Guarantor Subsidiaries

The following schedules present condensed consolidating financial information of the Company as of March 31, 2020 and 2019, and for the twelve-month periods ended March 31, 2020, 2019 and 2018, for (a) Rexnord Corporation, the parent company (the "Parent") (b) RBS Global, Inc.

and its wholly-owned subsidiary Rexnord LLC, which together are co-issuers (the "Issuers") of the outstanding Notes;

(c) on a combined basis, the domestic subsidiaries of the Company, all of which are wholly-owned by the Issuers (collectively, the "Guarantor Subsidiaries") and guarantors of those Notes;

and (d) on a combined basis, the foreign subsidiaries of the Company (collectively, the "Non-Guarantor Subsidiaries").

Separate financial statements of the Guarantor Subsidiaries are not presented because their guarantees of the Notes are full, unconditional and joint and several, and the Company believes separate financial statements and other disclosures regarding the Guarantor Subsidiaries are not material to investors.

Condensed Consolidating Balance Sheets

March 31, 2020

(in millions)

Parent Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated

Current assets:

Cash and cash equivalents $ 11.0 $ 0.4 $ 383.9 $ 178.1 $ — $ 573.4

Receivables, net — — 223.5 111.2 — 334.7

Inventories — — 224.8 92.7 — 317.5

Other current assets — — 20.5 18.2 — 38.7

Total current assets 11.0 0.4 852.7 400.2 — 1,264.3

Property, plant and equipment, net — — 256.1 122.7 — 378.8

Intangible assets, net — — 424.8 89.4 — 514.2

Goodwill — — 1,043.6 278.3 — 1,321.9

Investment in:

Issuer subsidiaries 1,381.1 — — — ( 1,381.1 ) —

Guarantor subsidiaries — 3,324.9 — — ( 3,324.9 ) —

Non-guarantor subsidiaries — — 621.1 — ( 621.1 ) —

Other assets — — 88.7 59.2 — 147.9

Total assets $ 1,392.1 $ 3,325.3 $ 3,287.0 $ 949.8 $ ( 5,327.1 ) $ 3,627.1

Liabilities and stockholders' equity

Current liabilities:

Current maturities of debt $ — $ — $ 75.4 $ 1.0 $ — $ 76.4

Trade payables — — 123.9 61.7 — 185.6

Compensation and benefits — — 42.4 19.4 — 61.8

Current portion of pension and postretirement benefit obligations — — 1.8 1.4 — 3.2

Other current liabilities — 7.9 79.9 40.7 — 128.5

Total current liabilities — 7.9 323.4 124.2 — 455.5

Long-term debt — 1,290.9 101.8 4.3 — 1,397.0

Note payable to (receivable from) affiliates, net 77.9 645.4 ( 795.9 ) 72.6 — —

Pension and postretirement benefit obligations — — 142.8 46.8 — 189.6

Deferred income taxes — — 98.6 22.4 — 121.0

Other liabilities 0.5 — 91.4 58.4 — 150.3

Total liabilities 78.4 1,944.2 ( 37.9 ) 328.7 — 2,313.4

Total stockholders' equity 1,313.7 1,381.1 3,324.9 621.1 ( 5,327.1 ) 1,313.7

Total liabilities and stockholders' equity $ 1,392.1 $ 3,325.3 $ 3,287.0 $ 949.8 $ ( 5,327.1 ) $ 3,627.1

Condensed Consolidating Balance Sheets

March 31, 2019

(in millions)

Parent Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated

Current assets:

Cash and cash equivalents $ 1.4 $ 0.2 $ 107.7 $ 183.2 $ — $ 292.5

Receivables, net — — 219.6 114.7 — 334.3

Inventories — — 214.3 102.2 — 316.5

Other current assets — — 13.0 26.6 — 39.6

Total current assets 1.4 0.2 554.6 426.7 — 982.9

Property, plant and equipment, net — — 251.2 131.8 — 383.0

Intangible assets, net — — 411.6 99.9 — 511.5

Goodwill — — 1,017.1 282.6 — 1,299.7

Investment in:

Issuer subsidiaries 1,212.1 — — — ( 1,212.1 ) —

Guarantor subsidiaries — 3,146.0 — — ( 3,146.0 ) —

Non-guarantor subsidiaries — — 547.4 — ( 547.4 ) —

Other assets — 1.1 63.1 18.4 — 82.6

Total assets $ 1,213.5 $ 3,147.3 $ 2,845.0 $ 959.4 $ ( 4,905.5 ) $ 3,259.7

Liabilities and stockholders' equity

Current liabilities:

Current maturities of debt $ — $ — $ 0.1 $ 1.1 $ — $ 1.2

Trade payables — — 129.7 62.0 — 191.7

Compensation and benefits — — 42.4 21.3 — 63.7

Current portion of pension and postretirement benefit obligations — — 1.9 1.4 — 3.3

Other current liabilities 3.0 7.5 90.3 36.3 — 137.1

Total current liabilities 3.0 7.5 264.4 122.1 — 397.0

Long-term debt — 1,213.4 14.4 9.0 — 1,236.8

Note (receivable from) payable to affiliates, net ( 20.7 ) 714.3 ( 879.0 ) 185.4 — —

Pension and postretirement benefit obligations — — 112.9 45.1 — 158.0

Deferred income taxes — — 98.8 27.1 — 125.9

Other liabilities 0.2 — 87.4 23.4 — 111.0

Total liabilities ( 17.5 ) 1,935.2 ( 301.1 ) 412.1 — 2,028.7

Total stockholders' equity 1,231.0 1,212.1 3,146.1 547.3 ( 4,905.5 ) 1,231.0

Total liabilities and stockholders' equity $ 1,213.5 $ 3,147.3 $ 2,845.0 $ 959.4 $ ( 4,905.5 ) $ 3,259.7

Condensed Consolidating Statements of Operations

For the Year Ended March 31, 2020

(in millions)

Parent Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated

Net sales $ — $ — $ 1,568.4 $ 661.0 $ ( 161.1 ) $ 2,068.3

Cost of sales — — 944.7 466.7 ( 161.1 ) 1,250.3

Gross profit — — 623.7 194.3 — 818.0

Selling, general and administrative expenses — — 331.3 101.5 — 432.8

Restructuring and other similar charges — — 8.8 6.7 — 15.5

Amortization of intangible assets — — 28.1 7.3 — 35.4

Income from operations — — 255.5 78.8 — 334.3

Non-operating (expense) income:

Interest income (expense), net:

To third parties — ( 56.7 ) ( 2.7 ) 0.8 — ( 58.6 )

To affiliates 10.3 41.3 ( 16.4 ) ( 35.2 ) — —

(Loss) gain on the extinguishment of debt — ( 2.1 ) 3.3 ( 0.2 ) — 1.0

Actuarial loss on pension and postretirement benefit obligations — — ( 35.7 ) ( 0.9 ) — ( 36.6 )

Other income (expense), net — 0.1 ( 1.1 ) ( 2.8 ) — ( 3.8 )

Income (loss) from continuing operations before income taxes 10.3 ( 17.4 ) 202.9 40.5 — 236.3

Provision for income taxes — ( 0.5 ) ( 38.3 ) ( 15.3 ) — ( 54.1 )

Income (loss) before equity in income of subsidiaries 10.3 ( 17.9 ) 164.6 25.2 — 182.2

Equity in earnings of subsidiaries 170.1 188.0 23.4 — ( 381.5 ) —

Net income from continuing operations 180.4 170.1 188.0 25.2 ( 381.5 ) 182.2

Loss from discontinued operations, net of tax — — — ( 1.8 ) — ( 1.8 )

Net income $ 0.29 $ 0.37 $ 0.30 $ 0.96

Non-controlling interest income — — — 0.3 — 0.3

Net income attributable to Rexnord 180.4 170.1 188.0 23.1 ( 381.5 ) 180.1

Dividends on preferred stock ( 14.4 ) — — — — ( 14.4 )

Net income attributable to Rexnord common stockholders 166.0 170.1 188.0 23.1 ( 381.5 ) 165.7

Comprehensive income (loss) $ 180.4 $ 167.9 $ 186.3 $ ( 0.5 ) $ ( 381.5 ) $ 152.6

Condensed Consolidating Statements of Operations

For the Year Ended March 31, 2019

(in millions)

Parent Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated

Net sales $ — $ — $ 1,565.0 $ 672.6 $ ( 186.7 ) $ 2,050.9

Cost of sales — — 977.1 475.7 ( 186.7 ) 1,266.1

Gross profit — — 587.9 196.9 — 784.8

Selling, general and administrative expenses — — 328.8 104.3 — 433.1

Restructuring and other similar charges — 7.6 4.5 — 12.1

Amortization of intangible assets — — 27.5 6.5 — 34.0

Income from operations — — 224.0 81.6 — 305.6

Non-operating (expense) income:

Interest income (expense), net:

To third parties — ( 68.2 ) ( 2.0 ) 0.3 — ( 69.9 )

To affiliates 2.0 61.7 ( 53.2 ) ( 10.5 ) — —

Loss (gain) on the extinguishment of debt — ( 0.7 ) 5.0 — — 4.3

Actuarial gain (loss) on pension and postretirement benefit obligations — — 1.0 ( 0.6 ) — 0.4

Other income (expense), net — 0.3 3.1 ( 5.0 ) — ( 1.6 )

Income (loss) from continuing operations before income taxes 2.0 ( 6.9 ) 177.9 65.8 — 238.8

Provision for income taxes — — ( 44.5 ) ( 8.9 ) — ( 53.4 )

Equity method investment income — — — 3.6 — 3.6

Income (loss) before equity in income of subsidiaries 2.0 ( 6.9 ) 133.4 60.5 — 189.0

Equity in earnings (loss) of subsidiaries 32.3 39.2 ( 51.9 ) — ( 19.6 ) —

Net income from continuing operations 34.3 32.3 81.5 60.5 ( 19.6 ) 189.0

Loss from discontinued operations, net of tax — — ( 42.3 ) ( 112.4 ) — ( 154.7 )

Net income (loss) 34.3 32.3 39.2 ( 51.9 ) ( 19.6 ) 34.3

Non-controlling interest income — — — — — —

Net income (loss) attributable to Rexnord 34.3 32.3 39.2 ( 51.9 ) ( 19.6 ) 34.3

Dividends on preferred stock ( 23.2 ) — — — — ( 23.2 )

Net income (loss) attributable to Rexnord common stockholders 11.1 32.3 39.2 ( 51.9 ) ( 19.6 ) 11.1

Comprehensive income (loss) $ 34.3 $ 22.5 $ 34.1 $ ( 59.5 ) $ ( 19.6 ) $ 11.8

Condensed Consolidating Statements of Operations

For the Year Ended March 31, 2018

(in millions)

Parent Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated

Net sales $ — $ — $ 1,457.3 $ 566.9 $ ( 172.6 ) $ 1,851.6

Cost of sales — — 910.3 407.4 ( 172.6 ) 1,145.1

Gross profit — — 547.0 159.5 — 706.5

Selling, general and administrative expenses — — 310.5 83.3 — 393.8

Restructuring and other similar charges — — 12.8 1.3 — 14.1

Amortization of intangible assets — — 26.6 5.6 — 32.2

Income from operations — — 197.1 69.3 — 266.4

Non-operating (expense) income:

Interest income (expense), net:

To third parties — ( 75.3 ) ( 0.4 ) 0.6 — ( 75.1 )

To affiliates 3.0 27.4 ( 13.1 ) ( 17.3 ) — —

Loss on the extinguishment of debt — ( 11.9 ) — — — ( 11.9 )

Actuarial gain on pension and postretirement benefit obligations — — 1.8 1.5 — 3.3

Other (expense) income, net — — ( 3.1 ) 7.5 — 4.4

Income (loss) from continuing operations before income taxes 3.0 ( 59.8 ) 182.3 61.6 — 187.1

Benefit (provision) for income taxes — — 39.7 ( 20.2 ) — 19.5

Income (loss) before equity in income of subsidiaries 3.0 ( 59.8 ) 222.0 41.4 — 206.6

Equity in earnings of subsidiaries 73.0 132.8 30.7 — ( 236.5 ) —

Net income from continuing operations 76.0 73.0 252.7 41.4 ( 236.5 ) 206.6

Loss from discontinued operations, net of tax — — ( 119.9 ) ( 10.7 ) — ( 130.6 )

Net income 76.0 73.0 132.8 30.7 ( 236.5 ) 76.0

Non-controlling interest income — — — 0.1 — 0.1

Net income attributable to Rexnord 76.0 73.0 132.8 30.6 ( 236.5 ) 75.9

Dividends on preferred stock ( 23.2 ) — — — — ( 23.2 )

Net income attributable to Rexnord common stockholders 52.8 73.0 132.8 30.6 ( 236.5 ) 52.7

Comprehensive income $ 76.0 $ 89.2 $ 135.6 $ 74.6 $ ( 236.5 ) $ 138.9

Condensed Consolidating Statements of Cash Flows

For the Year Ended March 31, 2020

(in millions)

Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated

Operating activities

Cash provided by (used for) operating activities $ 109.1 $ ( 149.2 ) $ 314.0 $ 24.7 $ — $ 298.6

Investing activities

Expenditures for property, plant and equipment — — ( 30.0 ) ( 11.4 ) — ( 41.4 )

Acquisitions, net of cash acquired — — ( 84.2 ) ( 0.3 ) — ( 84.5 )

Proceeds from dispositions of long-lived assets — — 2.8 1.3 — 4.1

Net payments from divestiture of discontinued operations — — — ( 1.3 ) — ( 1.3 )

Cash used for investing activities — — ( 111.4 ) ( 11.7 ) — ( 123.1 )

Financing activities

Proceeds from borrowings of debt — 975.0 75.0 — — 1,050.0

Repayments of debt — ( 825.7 ) ( 1.3 ) ( 8.6 ) — ( 835.6 )

Repurchase of common stock ( 100.7 ) — — — — ( 100.7 )

Payment of common stock dividends ( 9.8 ) — — — — ( 9.8 )

Payment of preferred stock dividends ( 17.4 ) — — — ( 17.4 )

Proceeds from exercise of stock options 36.0 — — — — 36.0

Taxes withheld and paid on employees' share-based payment awards ( 7.6 ) — — — — ( 7.6 )

Cash (used for) provided by financing activities ( 99.5 ) 149.3 73.7 ( 8.6 ) — 114.9

Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — ( 9.5 ) — ( 9.5 )

Increase (decrease) in cash, cash equivalents and restricted cash 9.6 0.1 276.3 ( 5.1 ) — 280.9

Cash, cash equivalents and restricted cash at beginning of period 1.4 0.2 107.7 183.2 — 292.5

Cash, cash equivalents and restricted cash at end of period $ 11.0 $ 0.3 $ 384.0 $ 178.1 $ — $ 573.4

Condensed Consolidating Statements of Cash Flows

For the Year Ended March 31, 2019

(in millions)

Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated

Operating activities

Cash provided by operating activities $ 19.9 $ 75.2 $ 112.9 $ 50.1 $ — $ 258.1

Investing activities

Expenditures for property, plant and equipment — — ( 33.0 ) ( 11.9 ) — ( 44.9 )

Acquisitions, net of cash acquired — — ( 2.0 ) ( 21.4 ) — ( 23.4 )

Proceeds from dispositions of long-lived assets — — 4.7 — — 4.7

Cash dividend from equity method investment — — — 1.3 — 1.3

Net proceeds from divestiture of discontinued operations — — 3.0 6.0 — 9.0

Cash used for investing activities — — ( 27.3 ) ( 26.0 ) — ( 53.3 )

Financing activities

Proceeds from borrowings of debt — — 268.0 2.8 — 270.8

Repayments of debt — ( 75.0 ) ( 286.8 ) ( 7.2 ) — ( 369.0 )

Payment of preferred stock dividends ( 23.2 ) — — — — ( 23.2 )

Proceeds from exercise of stock options 7.9 — — — — 7.9

Taxes withheld and paid on employees' share-based payment awards ( 3.2 ) — — — — ( 3.2 )

Cash used for financing activities ( 18.5 ) ( 75.0 ) ( 18.8 ) ( 4.4 ) — ( 116.7 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — ( 13.2 ) — ( 13.2 )

Increase in cash, cash equivalents and restricted cash 1.4 0.2 66.8 6.5 — 74.9

Cash, cash equivalents and restricted cash at beginning of period — — 40.9 176.7 — 217.6

Cash, cash equivalents and restricted cash at end of period $ 1.4 $ 0.2 $ 107.7 $ 183.2 $ — $ 292.5

Condensed Consolidating Statements of Cash Flows

For the Year Ended March 31, 2018

(in millions)

Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated

Operating activities

Cash provided by (used for) operating activities $ 12.3 $ 313.4 $ ( 161.2 ) $ 64.0 $ — $ 228.5

Investing activities

Expenditures for property, plant and equipment — — ( 28.4 ) ( 12.3 ) — ( 40.7 )

Acquisitions, net of cash — — ( 50.0 ) ( 123.6 ) — ( 173.6 )

Proceeds from dispositions of long-lived assets — — 5.3 0.2 — 5.5

Cash used for investing activities — — ( 73.1 ) ( 135.7 ) — ( 208.8 )

Financing activities

Proceeds from borrowings of debt — 1,324.0 205.8 — — 1,529.8

Repayments of debt — ( 1,626.5 ) ( 189.7 ) — — ( 1,816.2 )

Payment of debt issuance costs — ( 11.0 ) — — — ( 11.0 )

Payment of preferred stock dividends ( 23.2 ) — — — — ( 23.2 )

Proceeds from exercise of stock options 7.2 — — — — 7.2

Taxes withheld and paid on employees' share-based payment awards ( 1.2 ) — — — — ( 1.2 )

Proceeds from financing lease obligations — — 5.8 — — 5.8

Cash (used for) provided by financing activities ( 17.2 ) ( 313.5 ) 21.9 — — ( 308.8 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — 16.6 — 16.6

(Decrease) increase in cash, cash equivalents and restricted cash ( 4.9 ) ( 0.1 ) ( 212.4 ) ( 55.1 ) — ( 272.5 )

Cash, cash equivalents and restricted cash at beginning of period 4.9 0.1 253.3 231.8 — 490.1

Cash, cash equivalents and restricted cash at end of period $ — $ — $ 40.9 $ 176.7 $ — $ 217.6

Subsequent Event

On May 5, 2020, the Company's Board of Directors declared a quarterly cash dividend on the Company's common stock of $ 0.08 per-share to be paid on June 8, 2020, to stockholders of record as of May 20, 2020.

On May 5, 2020, the Company’s Board of Directors approved a change in the Company’s fiscal year end from March 31 to December 31.

This change in fiscal year end from March 31 to December 31 is being made to better align the Company’s reporting calendar with other NYSE listed companies.

The Company’s next fiscal year will end on December 31, 2020, resulting in a 9-month transition period from April 1, 2020 to December 31, 2020.

The Company will report one-time, 9-month transitional financial statements for the period from April 1, 2020 through December 31, 2020 in February 2021.

On May 12, 2020, the Company announced its plan to transition to a December 31 fiscal year-end in 2020.

On February 3, 2022, the Company's Board of Directors declared a quarterly cash dividend on the Company's common stock of $ 0.03 per-share to be paid on March 7, 2022, to stockholders of record as of February 18, 2022.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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 8. Financial Statements and Supplementary Data