UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


(Mark one)

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

For the ~~fiscal~~ quarter ended ~~December~~March 31, ~~2019~~2021


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

For the transition period from to


Commission File Number:			001-35475


REXNORD CORPORATION
(Exact name of registrant as specified in its charter)

Delaware

20-5197013

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

511 W. Freshwater Way

53204

Milwaukee,

Wisconsin

(Zip Code)

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (414) 643-3739

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $.01 par value	RXN	The New York Stock Exchange
~~Depositary Shares, each representing a 1/20th interest in a share of 5.75% Series A Mandatory Convertible Preferred Stock, $.01 par value~~	~~RXN.PRA~~	As of November 15, 2019, there were not any Depositary Shares outstanding, and on that date a Form 25 was filed by the New York Stock Exchange related to such securities. The Depositary Shares were removed from listing on the New York Stock Exchange on November 26, 2019.

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

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Class						Outstanding at ~~January 24, 2020~~April 23, 2021
Rexnord Corporation Common Stock, $0.01 par value per share						~~121,809,025~~119,721,060 shares

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TABLE OF CONTENTS

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Private Securities Litigation Reform Act Safe Harbor Statement

Our disclosure and analysis in this report concerning our operations, cash flows and financial position, including, in particular, the likelihood of our success in developing and expanding our business and the realization of sales from our backlog, include forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” and similar expressions are forward-looking statements. Although these statements are based upon reasonable assumptions, including projections of orders, sales, operating margins, earnings, cash flows, research and development costs, working capital and capital expenditures, they are subject to risks and uncertainties that are described more fully herein and in our ~~Annual~~Transition Report on Form 10-K for the ~~year~~transition period ended ~~March~~December 31, ~~2019~~2020, in Part I, Item 1A, “Risk Factors” and in Part I under the heading "Cautionary Notice Regarding Forward-Looking ~~Statements."~~Statements", as well as in our other filings with the Securities and Exchange Commission. In addition, our previously announced transaction with Regal Beloit Corporation is subject to various risks, uncertainties and factors including, among others: the inability to complete the transaction; the inability to recognize the anticipated benefits of the proposed transaction, including due to the failure to receive required security holder approvals, or the failure of other closing conditions; and costs related to the proposed transaction; see also Part II, Item 1A, "Risk Factors" herein. Accordingly, we can give no assurance that we will achieve the results anticipated or implied by our forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. In addition, the effects of the ongoing COVID-19 pandemic on our employees, customers and supply chain, including those related to governmental actions, all of which are uncertain at this time, may, among other impacts, heighten the effects on our business, results of operations and financial condition of the risk factors identified in our Transition Report on Form 10-K.

General

~~Our~~Following the end of our fiscal year isended March 31, 2020, we transitioned to a December 31 fiscal year-end date. The nine-month period from April 1, 2020, to December 31, 2020, served as a transition period, and we provided one-time, nine-month transitional financial statements for the transition period in a Transition Report on Form 10-K on February 16, 2021. Prior to the transition period, our fiscal year was the year ending on March 31 of the corresponding calendar year. For example, our fiscal year 2020, or fiscal 2020, ~~means~~was the period from April 1, 2019, to March 31, ~~2020, and the third quarter of~~2020. Our fiscal ~~2020 and 2019 means the fiscal quarters ended December 31, 2019 and December 31, 2018, respectively.~~year 2021 commenced on January 1, 2021.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Rexnord Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(in Millions, except share amounts)

(Unaudited)


		December 31, 2019		March 31, 2019			March 31, 2021		December 31, 2020
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	277.0	$	292.5	Cash and cash equivalents	$	307.3	$	255.6
Receivables, net	Receivables, net	283.1		334.3		Receivables, net	310.2		274.8
Inventories	Inventories	349.3		316.5		Inventories	348.4		330.1
Income tax receivable	Income tax receivable	11.2		3.3		Income tax receivable	1.4		9.8
Other current assets	Other current assets	48.0		36.3		Other current assets	45.7		37.4

Total current assets	Total current assets	968.6		982.9		Total current assets	1,013.0		907.7
Property, plant and equipment, net	Property, plant and equipment, net	372.8		383.0		Property, plant and equipment, net	426.1		434.8
Intangible assets, net	Intangible assets, net	492.5		511.5		Intangible assets, net	516.0		524.6
Goodwill	Goodwill	1,311.4		1,299.7		Goodwill	1,371.4		1,370.1
Other assets	Other assets	116.3		82.6		Other assets	160.8		163.9

Total assets	Total assets	$	3,261.6	$	3,259.7	Total assets	$	3,487.3	$	3,401.1
Liabilities and stockholders' equity	Liabilities and stockholders' equity					Liabilities and stockholders' equity
Current liabilities:	Current liabilities:					Current liabilities:
Current maturities of debt	Current maturities of debt	$	1.4	$	1.2	Current maturities of debt	$	2.5	$	2.4
Trade payables	Trade payables	178.4		191.7		Trade payables	179.0		129.4
Compensation and benefits	Compensation and benefits	47.4		63.7		Compensation and benefits	41.9		57.0
Current portion of pension and postretirement benefit obligations	Current portion of pension and postretirement benefit obligations	3.3		3.3		Current portion of pension and postretirement benefit obligations	3.1		3.1
Other current liabilities	Other current liabilities	116.8		137.1		Other current liabilities	129.8		125.6

Total current liabilities	Total current liabilities	347.3		397.0		Total current liabilities	356.3		317.5

Long-term debt	Long-term debt	1,147.2		1,236.8		Long-term debt	1,189.3		1,189.2
Pension and postretirement benefit obligations	Pension and postretirement benefit obligations	150.5		158.0		Pension and postretirement benefit obligations	167.9		171.4
Deferred income taxes	Deferred income taxes	130.2		125.9		Deferred income taxes	118.0		119.4
Other liabilities	Other liabilities	118.2		111.0		Other liabilities	162.9		164.3

Total liabilities	Total liabilities	1,893.4		2,028.7		Total liabilities	1,994.4		1,961.8

Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; shares issued and outstanding: 121,855,827 at December 31, 2019 and 104,842,299 at March 31, 2019		1.2		1.0
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 December 31, 2019 and 402,500 at March 31, 2019		0.0		0.0
Common stock, $0.01 par value; 200,000,000 shares authorized; shares issued and outstanding: 119,717,064 at March 31, 2021 and 119,549,735 at December 31, 2020						Common stock, $0.01 par value; 200,000,000 shares authorized; shares issued and outstanding: 119,717,064 at March 31, 2021 and 119,549,735 at December 31, 2020	1.2		1.2

Additional paid-in capital	Additional paid-in capital	1,320.9		1,293.5		Additional paid-in capital	1,409.9		1,392.9
Retained earnings	Retained earnings	147.9		30.7		Retained earnings	154.3		116.0
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(104.4)		(96.6)		Accumulated other comprehensive loss	(75.6)		(73.8)

Total Rexnord stockholders' equity	Total Rexnord stockholders' equity	1,365.6		1,228.6		Total Rexnord stockholders' equity	1,489.8		1,436.3
Non-controlling interest	Non-controlling interest	2.6		2.4		Non-controlling interest	3.1		3.0
Total stockholders' equity	Total stockholders' equity	1,368.2		1,231.0		Total stockholders' equity	1,492.9		1,439.3
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,261.6	$	3,259.7	Total liabilities and stockholders' equity	$	3,487.3	$	3,401.1

See notes to the condensed consolidated financial statements.

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Rexnord Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(in Millions, except share and per share amounts)

(Unaudited)

Third Quarter Ended Nine Months Ended
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Net sales $ 491.7 $ 485.0 $ 1,521.3 $ 1,513.4
Cost of sales 300.0 300.7 919.8 930.4
Gross profit 191.7 184.3 601.5 583.0
Selling, general and administrative expenses 101.7 102.4 320.0 323.8
Restructuring and other similar charges 3.6 2.6 8.9 9.4
Amortization of intangible assets 8.8 8.4 26.3 25.4
Income from operations 77.6 70.9 246.3 224.4
Non-operating expense:
Interest expense, net (14.4) (16.8) (45.2) (54.1)
(Loss) gain on the extinguishment of debt (2.2) 5.0 1.0 5.0
Other income (expense), net 0.8 1.6 (1.0) 3.3
Income before income taxes 61.8 60.7 201.1 178.6
Provision for income taxes (13.4) (9.1) (47.7) (40.8)
Equity method investment income — 1.3 0.2 3.5
Net income from continuing operations 48.4 52.9 153.6 141.3
Loss from discontinued operations, net of tax — (27.8) (1.8) (154.3)
Net income (loss) 48.4 25.1 151.8 (13.0)
Non-controlling interest (loss) income (0.1) (0.3) 0.2 (0.1)
Net income (loss) attributable to Rexnord 48.5 25.4 151.6 (12.9)
Dividends on preferred stock (2.8) (5.8) (14.4) (17.4)
Net income (loss) attributable to Rexnord common stockholders $ 45.7 $ 19.6 $ 137.2 $ (30.3)
Basic net income (loss) per share attributable to Rexnord common stockholders:
Continuing operations $ 0.40 $ 0.45 $ 1.28 $ 1.19
Discontinued operations $ — $ (0.27) $ (0.02) $ (1.48)
Net income (loss) $ 0.40 $ 0.19 $ 1.27 $ (0.29)
Diluted net income (loss) per share attributable to Rexnord common stockholders:
Continuing operations $ 0.39 $ 0.43 $ 1.24 $ 1.15
Discontinued operations $ — $ (0.23) $ (0.01) $ (1.25)
Net income (loss) $ 0.39 $ 0.21 $ 1.22 $ (0.10)
Weighted-average number of shares outstanding (in thousands):
Basic 113,448 104,777 108,250 104,562
Effect of dilutive equity securities 10,235 18,268 15,560 18,773
Diluted 123,683 123,045 123,810 123,335


	Three Months Ended
	March 31, 2021		March 31, 2020
Net sales	$	526.1	$	547.0
Cost of sales	318.2		330.5
Gross profit	207.9		216.5
Selling, general and administrative expenses	119.3		112.8
Restructuring and other similar charges	0.6		6.6
Amortization of intangible assets	9.4		9.1
Income from operations	78.6		88.0
Non-operating expense:
Interest expense, net	(11.0)		(13.4)

Actuarial loss on pension and postretirement benefit obligations	0		(35.8)
Other expense, net	(0.4)		(3.6)
Income before income taxes	67.2		35.2
Provision for income taxes	(17.2)		(6.4)
Equity method investment income (loss)	0.1		(0.2)


Net income	50.1		28.6
Non-controlling interest income	0.1		0.1
Net income attributable to Rexnord	$	50.0	$	28.5



Net income per share attributable to Rexnord:


Basic	$	0.42	$	0.23



Diluted	$	0.40	$	0.23

Weighted-average number of shares outstanding (in thousands):
Basic	119,808		121,783
Effect of dilutive equity awards	3,829		2,562
Diluted	123,637		124,345

See notes to the condensed consolidated financial statements.

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Rexnord Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~

(in Millions)

(Unaudited)

Third Quarter Ended Nine Months Ended
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Net income (loss) attributable to Rexnord $ 48.5 $ 25.4 $ 151.6 $ (12.9)
Other comprehensive income (loss):
Foreign currency translation adjustments 7.3 (10.4) (8.2) (47.0)
Reclassification of foreign currency translation adjustments upon sale of business — 19.7 — 19.7
Net change in unrealized losses on interest rate derivatives, net of tax — 0.3 — 4.3
Change in pension and postretirement defined benefit plans, net of tax — (0.2) 0.4 —
Other comprehensive income (loss), net of tax 7.3 9.4 (7.8) (23.0)
Non-controlling interest (loss) income (0.1) (0.3) 0.2 (0.1)
Total comprehensive income (loss) $ 55.7 $ 34.5 $ 144.0 $ (36.0)


	Three Months Ended
	March 31, 2021		March 31, 2020
Net income attributable to Rexnord	$	50.0	$	28.5
Other comprehensive loss:
Foreign currency translation adjustments	(1.7)		(16.3)


Change in pension and postretirement defined benefit plans, net of tax	(0.1)		(3.7)
Other comprehensive loss, net of tax	(1.8)		(20.0)
Non-controlling interest income	0.1		0.1
Total comprehensive income	$	48.3	$	8.6

See notes to the condensed consolidated financial statements.

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Rexnord Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in Millions)

(Unaudited)


		Nine Months Ended							Three Months Ended
		December 31, 2019		December 31, 2018			March 31, 2021		March 31, 2020
Operating activities	Operating activities					Operating activities
Net income (loss)		$	151.8	$	(13.0)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Net income						Net income	$	50.1	$	28.6
Adjustments to reconcile net income to cash provided by operating activities:						Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	Depreciation	38.0		44.7		Depreciation	14.1		13.2
Amortization of intangible assets	Amortization of intangible assets	26.3		25.7		Amortization of intangible assets	9.4		9.1

Non-cash discontinued operations asset impairment		—		126.0
Non-cash loss on sale of discontinued operations		—		19.7

Deferred income taxes	Deferred income taxes	4.9		(19.1)		Deferred income taxes	(1.3)		(7.7)
Other non-cash charges		1.3		6.6
Gain on the extinguishment of debt		(1.0)		(5.0)
Other non-cash expenses						Other non-cash expenses	0.6		2.5
Actuarial loss on pension and postretirement benefit obligations						Actuarial loss on pension and postretirement benefit obligations	0		35.8

Stock-based compensation expense	Stock-based compensation expense	18.7		17.3		Stock-based compensation expense	14.8		8.2
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables	Receivables	34.4		16.7		Receivables	(36.9)		(54.3)
Inventories	Inventories	(34.4)		(53.4)		Inventories	(19.9)		34.5
Other assets	Other assets	(18.2)		3.0		Other assets	3.1		21.4
Accounts payable	Accounts payable	(12.4)		(21.0)		Accounts payable	50.7		8.7
Accruals and other	Accruals and other	(34.7)		(2.9)		Accruals and other	(13.4)		23.9
Cash provided by operating activities	Cash provided by operating activities	174.7		145.3		Cash provided by operating activities	71.3		123.9

Investing activities	Investing activities					Investing activities
Expenditures for property, plant and equipment	Expenditures for property, plant and equipment	(25.5)		(26.5)		Expenditures for property, plant and equipment	(9.2)		(15.9)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(25.1)		(2.0)		Acquisitions, net of cash acquired	0.4		(59.4)
Proceeds from dispositions of long-lived assets	Proceeds from dispositions of long-lived assets	2.9		3.5		Proceeds from dispositions of long-lived assets	0.7		1.2
Cash dividend from equity method investment		—		1.3

Net (payments) proceeds associated with divestiture of discontinued operations		(1.3)		9.0

Cash used for investing activities	Cash used for investing activities	(49.0)		(14.7)		Cash used for investing activities	(8.1)		(74.1)

Financing activities	Financing activities					Financing activities
Proceeds from borrowings of debt	Proceeds from borrowings of debt	725.0		249.8		Proceeds from borrowings of debt	0		325.0
Repayments of debt	Repayments of debt	(835.3)		(272.7)		Repayments of debt	(0.5)		(0.3)

Proceeds from exercise of stock options	Proceeds from exercise of stock options	16.8		6.6		Proceeds from exercise of stock options	2.8		19.2
Taxes withheld and paid on employees' share-based payment awards		(7.6)		(3.2)

Repurchase of common stock	Repurchase of common stock	(20.0)		—		Repurchase of common stock	(0.9)		(80.7)
Payments of preferred stock dividends		(17.4)		(17.4)
Cash used for financing activities		(138.5)		(36.9)
Effect of exchange rate changes on cash and cash equivalents		(2.7)		(14.2)
(Decrease) increase in cash and cash equivalents		(15.5)		79.5
Payment of common stock dividends						Payment of common stock dividends	(10.8)		(9.8)

Cash (used for) provided by financing activities						Cash (used for) provided by financing activities	(9.4)		253.4
Effect of exchange rate changes on cash, cash equivalents and restricted cash						Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2.1)		(6.8)
Increase in cash, cash equivalents and restricted cash						Increase in cash, cash equivalents and restricted cash	51.7		296.4
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	292.5		217.6		Cash, cash equivalents and restricted cash at beginning of period	255.6		277.0
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	277.0	$	297.1	Cash, cash equivalents and restricted cash at end of period	$	307.3	$	573.4

See notes to the condensed consolidated financial statements.

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Rexnord Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~December~~March 31, ~~2019~~2021

(Unaudited)

1. Basis of Presentation and Significant Accounting Policies

The unaudited condensed 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 ("U.S. GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of management, the condensed consolidated financial statements include all adjustments necessary for a fair presentation of the results of operations for the interim periods. Following the end of the Company's fiscal year ended March 31, 2020, the Company transitioned to a December 31 fiscal year-end date. Results for the interim periods are not necessarily indicative of results that may be expected for the ~~fiscal~~ year ending ~~March~~December 31, ~~2020.~~2021. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's ~~fiscal 2019 Annual~~Transition Report on Form ~~10-K.~~10-K for the nine-month transition period ended December 31, 2020 (the "Transition Period").

The Company

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 it the privilege of having long-term, valued relationships with market leaders. The Company operates in a disciplined way and the Rexnord Business System (“RBS”) is its 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 Process & Motion Control platform designs, manufactures, markets and services a comprehensive range of specified, highly-engineered mechanical components used within complex systems where the Company's 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.

Expected Spin-Off of Process & Motion Control Segment

On February 15, 2021, Rexnord and Regal Beloit Corporation (“Regal”) entered into definitive agreements whereby Rexnord will separate its Process & Motion Control segment by way of a tax-free spin-off to Rexnord’s stockholders and then immediately combine it with Regal in a Reverse Morris Trust (“RMT”) transaction. Closing of this transaction is subject to various closing conditions, including the receipt of regulatory approvals, receipt of the approval of Regal and Rexnord stockholders (which each of Regal and Rexnord will solicit at special meetings of their respective stockholders at a later date), and other customary closing conditions. This transaction is expected to close in the fourth quarter of 2021.

Recent Accounting Pronouncements

In ~~December 2019,~~March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate that is expected to be discontinued because of reference rate reform. The amendments in this update provide optional expedients and exceptions for applying GAAP to instruments affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in this ASU are effective for all entities as of March 12, 2020,

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through December 31, 2022. The Company did not modify any material contracts due to reference rate reform during the three months ended March 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 period referenced above.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The FASB issued this update as part of its initiative to reduce complexity in accounting standards. 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~~public business entities with fiscal ~~2022~~years beginning after December 15, 2020, and early adoption is permitted. ~~Certain amendments of~~The Company adopted this ASU ~~may be adopted~~ on January 1, 2021, using a retrospective, ~~basis,~~ modified retrospective ~~basis~~ or prospective ~~basis. The Company is currently evaluating~~basis for certain amendments. There was no impact to the ~~impact this guidance will have on its~~ condensed consolidated financial statements.

~~In June 2016, the FASB ASU No. 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments, which establishes Accounting Standards Codification (“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. ASU 2016-13 is effective for the Company in fiscal 2021. The Company expects that it will adopt the ASU using a modified-retrospective approach. The Company is currently evaluating the impact this guidance will have on its condensed consolidated

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~~financial statements and does not anticipate that the guidance will materially impact its condensed 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 condensed 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 condensed 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 on the Company’s condensed consolidated financial position, results of operations, and cash flows 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 condensed 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 18, Leases for additional information.

~~Reclassifications~~

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

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2. Acquisitions and Divestiture

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 total cash purchase price of $101.3 million, excluding transaction costs and net of cash acquired. During the three months ended March 31, 2021, the Company received a cash payment of $0.4 million from the sellers in connection with finalizing the acquisition date trade working capital, which is included in the total cash purchase price mentioned 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 Water Management platform.

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 preliminary purchase price allocations associated with the acquisition resulted in goodwill of $43.0 million ($37.0 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 preliminary purchase price allocations for Hadrian were adjusted during the three months ended March 31, 2021, resulting in a $0.2 million increase in goodwill related to aforementioned cash payment received, partially offset by the refinement of the estimated fair value of the liabilities assumed. The Company is continuing to evaluate the preliminary purchase price allocations for Hadrian related to the fair values assigned to fixed assets and net working capital acquired, which will be completed within the one year period following its acquisition date.

On October 1, 2020, the Company completed the sale of its gearbox product line in China within its Process & Motion Control platform for aggregate cash consideration of $5.8 million. The gearbox product line was not material to the Company's consolidated statements of operations or financial position and did not meet the criteria to be presented as discontinued operations. In completing the sale, the Company sold inventory, fixed assets and other intellectual property associated with the business with a carrying value of $5.0 million. In addition, the Company allocated $1.8 million of goodwill from the Process & Motion Control platform that was included in the calculation of the gain on sale of the business. The Company recognized a gain of $0.8 million within other income (expense), net in the condensed consolidated statements of operations during the nine months ended December 31, 2020.

On November 24, 2020, the Company acquired the remaining non-controlling interest in a Process & 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 condensed consolidated statements of operations or financial position.

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 condensed consolidated statements of operations or financial position.

Fiscal 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 cash purchase price of $59.4 million, excluding transaction costs and net of cash 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.

On May 10, 2019, the Company acquired substantially all of the assets of ~~East Creek Corporation (d/b/a StainlessDrains.com),~~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.

The Company's results of operations include the acquired operations subsequent to the aforementioned ~~acquisition date.~~acquisitions dates. Pro-forma results of operations and certain other U.S. GAAP disclosures related to ~~this acquisition~~these acquisitions have not been presented because they are not significant to the Company's condensed consolidated statements of operations or financial position. ~~The acquisition of StainlessDrains.com has~~

These acquisitions have been accounted for as a business ~~combination~~combinations and ~~was~~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 ~~allocation~~allocations associated with ~~this acquisition~~these acquisitions resulted in tax deductible goodwill of ~~$12.7~~$27.3 million, other intangible assets of ~~$8.0~~$40.9 million ~~(including~~

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(including tradenames of ~~$0.7~~$2.2 million and ~~$7.3~~$38.7 million of customer relationships), ~~$1.9~~$8.4 million of fixed assets, $9.1 million of trade working capital and other net ~~assets~~liabilities of ~~$2.2~~$1.5 million. The purchase price allocation was adjusted during the third quarter of fiscal 2020, resulting in a reduction to goodwill of $1.2 million, related to the refinement of the estimated fair value of intangible assets acquired.

During the ~~second quarter of~~ fiscal year ended March 31, 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 condensed consolidated statements of operations or financial position.

~~Fiscal Year 2019~~

On January 23, 2019, the Company acquired an additional 47.5% interest in Centa MP (Hong Kong) Co., Limited ("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. 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, during the fourth quarter of fiscal 2019, the Company recognized a $0.2 million gain on the remeasurement of the previously held equity method investment and a $1.8 million loss associated with the historical foreign currency translation adjustments associated with the equity method investment. The purchase price for this business combination is estimated 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~~
~~Total~~	$	~~45.7~~

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 preliminary purchase price allocation was adjusted during the first nine months of fiscal 2020, resulting in an increase to goodwill of $0.4 million, primarily related to the refinement of the estimated fair value of intangible assets and other working capital acquired. As of December 31, 2019, the preliminary 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 allocation will be completed within the one year period following the acquisition date.

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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 condensed consolidated statements of operations or financial position.

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 fiscal 2020 and 2019 acquisitions have not been presented because they are not significant to the Company's condensed consolidated statements of operations or financial position.

3. Restructuring and Other Similar Charges

During ~~fiscal 2020,~~the three months ended March 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. These restructuring actions primarily resulted in workforce reductions, lease termination costs, and other facility rationalization costs. Management expects to continue executing initiatives and select product-line rationalizations to optimize its operating margin and manufacturing footprint. As the Company continues to evaluate the impact of the ongoing COVID-19 pandemic and the resulting effects on the global economy, 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~~Since the Company’s evaluation of the impact of COVID-19 and other potential restructuring ~~plans~~actions are ~~preliminary and~~in process, related restructuring expenses, if any, are not yet estimable.

The following table summarizes the Company's restructuring and other similar charges during the three ~~and nine~~ months ended ~~December~~March 31, ~~2019~~2021 and ~~December~~March 31, ~~2018~~2020, by classification of operating segment (in millions):


		Restructuring and Other Similar Charges Three Months Ended December 31, 2019															Restructuring and Other Similar Charges Three Months Ended March 31, 2021
		Process & Motion Control		Water Management		Corporate		Consolidated			Process & Motion Control		Water Management		Corporate		Consolidated
Employee termination benefits	Employee termination benefits	$	3.0	$	—	$	—	$	3.0	Employee termination benefits	$	(0.1)	$	0.6	$	0	$	0.5

Contract termination and other associated costs	Contract termination and other associated costs	0.2		0.4		—		0.6		Contract termination and other associated costs	0.1		0		0		0.1
Total restructuring and other similar costs	Total restructuring and other similar costs	$	3.2	$	0.4	$	—	$	3.6	Total restructuring and other similar costs	$	0	$	0.6	$	0	$	0.6


		Restructuring and Other Similar Charges Nine Months Ended December 31, 2019															Restructuring and Other Similar Charges Three Months Ended March 31, 2020
		Process & Motion Control		Water Management		Corporate		Consolidated			Process & Motion Control		Water Management		Corporate		Consolidated
Employee termination benefits	Employee termination benefits	$	7.4	$	0.4	$	—	$	7.8	Employee termination benefits	$	5.3	$	0.1	$	0.1	$	5.5

Contract termination and other associated costs	Contract termination and other associated costs	0.7		0.4		—		1.1		Contract termination and other associated costs	0.9		0.1		0.1		1.1
Total restructuring and other similar costs	Total restructuring and other similar costs	$	8.1	$	0.8	$	—	$	8.9	Total restructuring and other similar costs	$	6.2	$	0.2	$	0.2	$	6.6

Restructuring and Other Similar Charges
Three Months Ended December 31, 2018
Process & Motion Control Water Management Corporate Consolidated
Employee termination benefits $ 0.2 $ 0.3 $ — $ 0.5
Contract termination and other associated costs 0.6 0.2 1.3 2.1
Total restructuring and other similar costs $ 0.8 $ 0.5 $ 1.3 $ 2.6

Restructuring and Other Similar Charges
Nine Months Ended December 31, 2018
Process & Motion Control Water Management Corporate Consolidated
Employee termination benefits $ 3.9 $ 0.6 $ 0.6 $ 5.1
Contract termination and other associated costs 1.6 0.3 2.4 4.3
Total restructuring and other similar costs $ 5.5 $ 0.9 $ 3.0 $ 9.4

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The following table summarizes the activity in the Company's restructuring accrual for the ~~nine~~three months ended ~~December~~March 31, ~~2019~~2021 (in millions):


		Employee termination benefits		Contract termination and other associated costs		Total			Employee termination benefits		Contract termination and other associated costs		Total
Restructuring accrual, March 31, 2019 (1)		$	2.4	$	1.9	$	4.3
Restructuring accrual, December 31, 2020 (1)								Restructuring accrual, December 31, 2020 (1)	$	6.1	$	0.7	$	6.8
Charges	Charges	7.8		1.1		8.9		Charges	0.5		0.1		0.6
Cash payments	Cash payments	(5.6)		(1.6)		(7.2)		Cash payments	(2.7)		(0.7)		(3.4)

Restructuring accrual, December 31, 2019 (1)		$	4.6	$	1.4	$	6.0
Restructuring accrual, March 31, 2021 (1)								Restructuring accrual, March 31, 2021 (1)	$	3.9	$	0.1	$	4.0

____________________

(1)The restructuring accrual is included in other current liabilities in the condensed consolidated balance sheets.

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. As a result, the Company recognized accelerated depreciation of ~~$0.7 million~~0 and ~~$2.0~~

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$0.6 million during the three ~~and nine~~ months ended ~~December~~March 31, ~~2019,~~2021 and ~~$1.2 million and $3.7 million during the three and nine months ended December 31, 2018.~~2020, respectively. Accelerated depreciation is recorded within Cost of sales in the condensed consolidated statements of operations.

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4. ~~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 condensed 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 during the nine months ended December 31, 2019.

~~The major components of Loss from discontinued operations, net of tax presented in the condensed consolidated statements of operations consisted of the following (in millions):~~

Three months ended Nine months ended
December 31, 2019 December 31, 2018 (2) December 31, 2019 December 31, 2018 (2)
Net sales $ — $ 27.3 $ — $ 124.3
Cost of sales — 20.2 — 94.9
Selling, general and administrative expenses — 10.3 — 35.0
Amortization of intangible assets — — — 0.3
Non-cash asset impairment (1) — — — 126.0
Loss on sale of discontinued operations — 19.7 1.8 19.7
Other non-operating expenses, net — 0.7 — 3.2
Loss from discontinued operations before income tax — (23.6) (1.8) (154.8)
Income tax (expense) benefit — (4.2) — 0.5
Loss from discontinued operations, net of tax $ — $ (27.8) $ (1.8) $ (154.3)

~~____________________~~

(1) The Company recorded non-cash impairments of $126.0 million during the nine months ended December 31, 2018, to reflect the Company's estimated fair value less costs to sell the VAG business based on the value of preliminary bids received at that time.

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

The condensed consolidated statements of cash flows for the prior period presented has not been adjusted to separately disclose cash flows related to discontinued operations. However, the capital expenditures, depreciation, amortization and other significant non-cash amounts associated with the discontinued operations were as follows (in millions):


	~~Nine Months Ended~~
	~~December 31, 2018~~
~~Depreciation~~	$	~~4.1~~
~~Amortization of intangible assets~~	~~0.3~~
~~Non-cash asset impairment~~	~~126.0~~
~~Loss on sale of discontinued operations~~	~~19.7~~

~~Capital expenditures~~	~~2.4~~
~~Net proceeds from divestiture of discontinued operations~~	~~9.0~~

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5. Revenue Recognition

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606, Revenue from Contracts with Customers ("ASC 606"). A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when obligations under the terms of a contract with the customer are satisfied. For the majority of the Company's product sales, revenue is recognized at a point-in-time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company's manufacturing facility to the customer.

When contracts include multiple products to be delivered to the customer, generally each product is separately priced and is determined to be distinct within the context of the contract. Other than a standard assurance-type warranty that the product will conform to agreed-upon specifications, there are generally no other significant post-shipment obligations. The expected costs associated with standard warranties continues to be recognized as an expense when the products are sold. When the contract provides the customer the right to return eligible products or when the customer is part of a sales rebate program, the Company reduces revenue at the point of sale using current facts and historical experience by using an estimate for expected product returns and rebates associated with the transaction. The Company adjusts these estimates at the earlier of when the most likely amount of consideration that is expected to be received changes or when the consideration becomes fixed. Accordingly, an increase or decrease to revenue is recognized at that time.

Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue. The Company has elected to recognize the cost for freight and shipping when control of products has transferred to the customer as a component of cost of sales in the condensed consolidated statements of operations. The Company classifies shipping and handling fees billed to customers as net sales and the corresponding costs are classified as Cost of sales in the condensed consolidated statements of operations.

Revenue by Category

The Company has 2 business segments, Process & Motion Control and Water Management. The following tables present our revenue disaggregated by customer type and originating geography (in millions):

Three Months Ended Nine Months Ended
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Original equipment manufacturers/end users $ 186.4 $ 183.6 $ 566.0 $ 561.6
Maintenance, repair, and operations 141.1 143.1 428.6 446.2
Total Process & Motion Control $ 327.5 $ 326.7 $ 994.6 $ 1,007.8
Water safety, quality, flow control and conservation $ 153.4 $ 148.3 $ 490.1 $ 471.2
Water infrastructure 10.8 10.0 36.6 34.4
Total Water Management $ 164.2 $ 158.3 $ 526.7 $ 505.6


	Three Months Ended
	March 31, 2021		March 31, 2020
Original equipment manufacturers/end users	$	180.3	$	216.6
Maintenance, repair, and operations	140.6		147.0
Total Process & Motion Control	$	320.9	$	363.6

Water safety, quality, flow control and conservation	$	189.8	$	170.9
Water infrastructure	15.4		12.5
Total Water Management	$	205.2	$	183.4

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Three Months Ended December 31, 2019 Nine Months Ended
December 31, 2019
Process & Motion Control Water Management Process & Motion Control Water Management
United States and Canada $ 207.3 $ 159.5 $ 638.3 $ 514.7
Europe 71.0 — 216.7 —
Rest of world 49.2 4.7 139.6 12.0
Total $ 327.5 $ 164.2 $ 994.6 $ 526.7


	Three Months Ended March 31, 2021
	Process & Motion Control		Water Management
United States and Canada	$	190.9	$	203.8
Europe	79.6		0
Rest of world	50.4		1.4
Total	$	320.9	$	205.2


		Three Months Ended December 31, 2018						Nine Months Ended December 31, 2018							Three Months Ended March 31, 2020
		Process & Motion Control		Water Management		Process & Motion Control		Water Management			Process & Motion Control		Water Management
United States and Canada	United States and Canada	$	214.5	$	154.5	$	655.3	$	494.2	United States and Canada	$	232.3	$	179.4
Europe	Europe	75.6		—		242.5		—		Europe	82.3		0
Rest of world	Rest of world	36.6		3.8		110.0		11.4		Rest of world	49.1		4.0
Total	Total	$	326.7	$	158.3	$	1,007.8	$	505.6	Total	$	363.6	$	183.4

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. 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. 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 condensed consolidated balance sheets.

The following table presents changes in the Company’s contract assets and liabilities during the ~~nine~~three months ended ~~December~~March 31, ~~2019~~2021 (in millions):


		Balance Sheet Classification	March 31, 2019		Additions		Deductions		December 31, 2019			Balance Sheet Classification	December 31, 2020		Additions		Deductions		March 31, 2021
Contract assets	Contract assets	Receivables, net	$	2.6	$	1.4	$	(3.3)	$	0.7	Contract assets	Receivables, net	$	0.1	$	0	$	(0.1)	$	0
Contract liabilities (1)	Contract liabilities (1)	Other current liabilities	$	5.1	$	14.3	$	(14.5)	$	4.9	Contract liabilities (1)	Other current liabilities	$	4.0	$	0.3	$	(0.9)	$	3.4

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

Backlog

The Company has a backlog of ~~$389.5~~$373.4 million as of ~~December~~March 31, ~~2019,~~2021, 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 ~~61%~~88% of the unsatisfied performance obligations as revenue in ~~fiscal 2020~~the remaining nine months of the year ending December 31, 2021, and the remaining approximately ~~39%~~12% in ~~fiscal 2021~~2022 and beyond.

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Timing of Performance Obligations Satisfied at a Point in Time

The Company determined that the customer is able to control the product when it is delivered to them; thus, depending on the shipping terms, control will transfer at different points between the Company's manufacturing facility or warehouse and the customer’s location. The Company considers control to have transferred upon shipment or delivery because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset, and the customer has significant risks and rewards of ownership of the asset.

Variable Consideration

The Company provides volume-based rebates and the right to return product to certain customers, which are accrued for based on current facts and historical experience. Rebates are paid either on an annual or quarterly basis. There are no other significant variable consideration elements included in the Company's contracts with customers.

Contract Costs

The Company has elected to expense contract costs as incurred if the amortization period is expected to be one year or less. If the amortization period of these costs is expected to be greater than one year, the costs would be subject to capitalization. As of ~~December~~March 31, ~~2019,~~2021, the contract assets capitalized, as well as amortization recognized in ~~fiscal 2020,~~the three months ended March 31, 2021, are not significant and there have been 0 impairment losses recognized.

Allowance for Doubtful Accounts

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.

6.5. Income Taxes

The provision for income taxes for all periods presented is based on an estimated effective income tax rate for the respective ~~full~~ fiscal years. The estimated annual effective income tax rate is determined excluding the effect of significant discrete items or items that are reported net of their related tax effects. The tax effect of significant discrete items is reflected in the period in which they occur. The Company's income tax expense is impacted by a number of factors, including the amount of taxable earnings derived in foreign jurisdictions with tax rates that are generally higher than the U.S. federal statutory rate, state tax rates in the jurisdictions where the Company does business and the Company's ability to utilize various tax credits, capital loss and net operating loss (“NOL”) carryforwards.

The Company regularly reviews its deferred tax assets for recoverability and valuation allowances are established based on historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences, as deemed appropriate.In addition, all other available positive and negative evidence is taken into consideration for purposes of determining the proper balances of such valuation allowances. As a result of this review, the Company continues to maintain a full valuation allowance against U.S. federal and state capital loss carryforwards and a partial valuation allowance against certain foreign NOL carryforwards and other related foreign deferred tax assets, as well as certain U.S. state NOL carryforwards. Future changes to the balances of these valuation allowances, as a result of this continued review and analysis by the Company, could result in a material impact to the financial statements for such period of change.

The income tax provision was ~~$13.4~~$17.2 million in the ~~third quarter of fiscal 2020,~~three months ended March 31, 2021, compared to ~~$9.1~~$6.4 million in the ~~third quarter of fiscal 2019.~~three months ended March 31, 2020. The effective income tax rate for the ~~third quarter of fiscal 2020~~three months ended March 31, 2021, was ~~21.7%~~25.6% versus ~~15.0%~~18.2% in the ~~third quarter of fiscal 2019.~~three months ended March 31, 2020. The effective income tax rate for the ~~third quarter of fiscal 2020~~three months ended March 31, 2021 was ~~slightly~~ above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of unrecognized income tax benefits in which such realization is not deemed more-likely-than-not, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code and the accrual of various state income taxes, partially offset by the recognition of a discrete foreign financing-related income tax benefit, as well as the recognition of income tax benefits associated with foreign-derived intangible income (“FDII”). The effective income tax rate for the three months ended March 31, 2020 was below the U.S. federal statutory rate of 21% primarily due to the recognition of certain previously unrecognized tax benefits due to the lapse of the applicable statutes of limitations and the recognition of income tax benefits associated with FDII, partially offset by the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with global intangible low-taxed income (“GILTI”) and the accrual of various state income taxes, substantially offset by the recognition of certain previously unrecognized tax benefits generally due to the lapse of the applicable statutes of limitations, the recognition of income tax benefits associated with share-based payments, net income tax benefits recognized in association with changes to certain foreign income tax rates and the recognition of income tax benefits associated with foreign-derived intangible income (“FDII”). The effective income tax rate for the third quarter of fiscal 2019 was below the U.S. federal statutory rate of 21% primarily due to the recognition of certain previously unrecognized tax benefits due to the lapse of applicable statutes of limitations partially offset by the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional taxes associated with GILTI and the accrual of various state income taxes.

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tax rate for the first nine months of fiscal 2019 was slightly above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional taxes associated with GILTI and the accrual of various state income taxes substantially offset by the recognition of certain previously unrecognized tax benefits due to the lapse of applicable statutes of limitations, the recognition of excess tax benefits associated with share-based payments and the recognition of a tax benefit associated with a foreign country enacted rate reduction.

The Company’s total liability for net unrecognized tax benefits as of March 31, 2021 and December 31, ~~2019 and March 31, 2019,~~2020, was ~~$17.9~~$18.5 million and ~~$21.8~~$18.6 million, respectively. The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in income tax expense. As of March 31, 2021 and December 31, ~~2019 and March 31, 2019,~~2020, the total amount of gross, unrecognized income tax benefits included ~~$2.1 million and $4.3~~$1.6 million of accrued interest and ~~penalties, respectively.~~penalties. The Company recognized ~~$0.7~~$0.2 million and ~~$0.4~~$(0.5) million of net interest and penalties as income tax ~~benefit~~expense (benefit) during the ~~nine~~three months ended ~~December~~March 31, ~~2019~~2021 and ~~December~~March 31, ~~2018,~~2020, 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~~During the three months ended June 30, 2020, the Internal Revenue Service (the “IRS”) completed an income tax examination ~~by the U.S. Internal Revenue Service (IRS)~~ of the Company’s U.S. consolidated federal income tax returns for the tax years ended March 31, 2016 and 2017. 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 three months 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 is subject to indemnification under the terms of the applicable purchase agreement or otherwise appropriately accrued in the Company’s financial statements. During the three months ended March 31, 2020, the Italian tax authorities began conducting an income tax examination of the income tax return of one of the Company’s Italian subsidiaries for the tax year ended March 31, 2018. In addition, certain of the Company’s 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. 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.~~During the first quarter of fiscal 2020,~~ The VAG ~~was notified~~German entities are currently undergoing a corporate income and trade tax examination by the German tax authorities ~~of its intention to conduct an income tax examination of the VAG German entities’ income tax returns~~ for the tax years ended March 31, 2014 through 2017. The Company anticipates the related fieldwork will begin during the fourth quarter of fiscal 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.2019. 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; 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,~~2018, state and local income tax examinations for years ending prior to ~~fiscal 2016~~March 31, 2017 or significant foreign income tax examinations for years ending prior to ~~fiscal 2015.~~March 31, 2016.

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7.6. Earnings per Share

~~The following table presents the basis for~~ Basic net income per share ~~computations (in millions, except share amounts):~~

Three Months Ended Nine Months Ended
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Basic net income (loss) per share attributable to Rexnord common stockholders
Numerator:
Net income from continuing operations $ 48.4 $ 52.9 $ 153.6 $ 141.3
Less: Non-controlling interest (loss) income (0.1) (0.3) 0.2 (0.1)
Less: Dividends on preferred stock 2.8 5.8 14.4 17.4
Net income from continuing operations attributable to Rexnord common stockholders $ 45.7 $ 47.4 $ 139.0 $ 124.0
Loss from discontinued operations, net of tax $ — $ (27.8) $ (1.8) $ (154.3)
Net income (loss) attributable to Rexnord common stockholders $ 45.7 $ 19.6 $ 137.2 $ (30.3)
Denominator:
Weighted-average common shares outstanding, basic 113,448 104,777 108,250 104,562
Diluted net income (loss) per share attributable to Rexnord common stockholders
Numerator:
Net income from continuing operations $ 48.4 $ 52.9 $ 153.6 $ 141.3
Less: Non-controlling interest (loss) income (0.1) (0.3) 0.2 (0.1)
Less: Dividends on preferred stock — — — —
Net income from continuing operations attributable to Rexnord common stockholders $ 48.5 $ 53.2 $ 153.4 $ 141.4
Loss from discontinued operations, net of tax $ — $ (27.8) $ (1.8) $ (154.3)
Net income (loss) attributable to Rexnord common stockholders $ 45.7 $ 19.6 $ 137.2 $ (30.3)
Plus: Dividends on preferred stock 2.8 5.8 14.4 17.4
Net income (loss) attributable to Rexnord common stockholders $ 48.5 $ 25.4 $ 151.6 $ (12.9)
Denominator:
Weighted-average common shares outstanding, basic 113,448 104,777 108,250 104,562
Effect of dilutive equity securities 2,246 2,289 2,253 2,794
Preferred stock under the "if-converted" method (1) 7,989 15,979 13,307 15,979
Weighted-average common shares outstanding, diluted 123,683 123,045 123,810 123,335

~~____________________~~

~~(1)During~~is computed by dividing net income by the ~~third quarter of fiscal 2020, the Company issued 15,980,050 shares~~corresponding weighted average number of common shares outstanding for the period. Diluted net income per share is computed based on the weighted average 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 ~~upon~~options or release of outstanding restricted stock units and performance stock units to purchase common shares, except when the ~~mandatory conversion of Preferred stock; see Note 8, Stockholders' Equity for additional information.~~

effect would be anti-dilutive. The computation of diluted net income per share for the three months ~~and nine months~~ ended ~~December~~March 31, ~~2019~~2021, excludes ~~0.7 million and 1.1~~0.2 million shares ~~respectively,~~ related to equity awards due to their anti-dilutive effects. The computation of diluted net income ~~(loss)~~ per share for the three months ~~and nine months~~ ended ~~December~~March 31, ~~2018~~2020 excludes ~~2.3~~0.6 million ~~and 1.0 million shares, respectively,~~ related to equity awards due to their anti-dilutive effects.

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8.7. Stockholders' Equity

Stockholders' equity consists of the following (in millions):

Common stock Preferred stock Additional
paid-in
capital Retained
earnings (deficit) Accumulated
other
comprehensive
(loss) income Non-controlling interest (2) Total
stockholders’
equity
Balance at March 31, 2018 $ 1.0 $ — $ 1,277.8 $ 8.0 $ (74.1) $ 0.1 $ 1,212.8
Total comprehensive (loss) income — — — (0.7) (33.9) 0.1 (34.5)
Stock-based compensation expense — — 6.0 — — — 6.0
Proceeds from exercise of stock options — — 2.9 — — — 2.9
Taxes withheld and paid on employees' share-based payment awards — — (0.4) — — — (0.4)
Preferred stock dividends ($14.375 per share) — — — (5.8) — — (5.8)
Balance at June 30, 2018 $ 1.0 $ — $ 1,286.3 $ 1.5 $ (108.0) $ 0.2 $ 1,181.0
Total comprehensive (loss) income — — — (37.6) 1.5 0.1 (36.0)
Stock-based compensation expense — — 5.8 — — — 5.8
Proceeds from exercise of stock options — — 2.1 — — — 2.1
Taxes withheld and paid on employees' share-based payment awards — — (2.8) — — — (2.8)
Preferred stock dividends ($14.375 per share) — — (5.8) — — — (5.8)
Balance at September 30, 2018 $ 1.0 $ — $ 1,285.6 $ (36.1) $ (106.5) $ 0.3 $ 1,144.3
Total comprehensive income (loss) — — — 25.4 9.4 (0.3) 34.5
Stock-based compensation expense — — 5.5 — — — 5.5
Proceeds from exercise of stock options — — 1.6 — — — 1.6
Preferred stock dividends ($14.375 per share) — — (5.8) — — — (5.8)
Balance at December 31, 2018 $ 1.0 $ — $ 1,286.9 $ (10.7) $ (97.1) $ — $ 1,180.1


	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest (2)		Total stockholders’ equity
Balance at December 31, 2019	$	1.2	$	1,320.9	$	147.9	$	(104.4)	$	2.6	$	1,368.2
Total comprehensive income (loss)	—		—		28.5		(20.0)		0.1		8.6
Stock-based compensation expense	—		8.2		—		—		—		8.2
Proceeds from exercise of stock options	—		19.2		—		—		—		19.2


Repurchase of common stock	—		—		(80.7)		—		—		(80.7)
Common stock dividends ($0.08 per share)	—		—		(9.8)		—		—		(9.8)

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

Common stock (1) Preferred stock Additional
paid-in
capital Retained
earnings Accumulated
other
comprehensive
loss 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
Total comprehensive income — — — 46.5 — 0.2 46.7
Stock-based compensation expense — — 6.9 — — — 6.9
Proceeds from exercise of stock options — — 4.8 — — — 4.8
Taxes withheld and paid on employees' share-based payment awards — — (5.7) — — — (5.7)
Preferred stock dividends ($14.375 per share) — — — (5.8) — — (5.8)
Balance at June 30, 2019 $ 1.0 $ — $ 1,299.5 $ 71.4 $ (96.6) $ 2.6 $ 1,277.9
Total comprehensive income (loss) — — — 56.6 (15.1) 0.1 41.6
Stock-based compensation expense — — 5.9 — — — 5.9
Proceeds from exercise of stock options — — 2.1 — — — 2.1
Acquisition of non-controlling interest — — (0.3) — — — (0.3)
Preferred stock dividends ($14.375 per share) — — — (5.8) — — (5.8)
Balance at September 30, 2019 $ 1.0 $ — $ 1,307.2 $ 122.2 $ (111.7) $ 2.7 $ 1,321.4
Total comprehensive income (loss) — — — 48.5 7.3 (0.1) 55.7
Stock-based compensation expense — — 5.9 — — — 5.9
Proceeds from exercise of stock options — — 9.9 — — — 9.9
Mandatory conversion of preferred stock to common stock (3) 0.2 — (0.2) — — — —
Taxes withheld and paid on employees' share-based payment awards — — (1.9) — — — (1.9)
Repurchase of common stock (4) — — — (20.0) — — (20.0)
Preferred stock dividends ($14.375 per share) — — — (2.8) — — (2.8)
Balance at December 31, 2019 $ 1.2 $ — $ 1,320.9 $ 147.9 $ (104.4) $ 2.6 $ 1,368.2

~~Table of Contents~~


	Common stock (1)		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interest (2)		Total stockholders’ equity
Balance at December 31, 2020	$	1.2	$	1,392.9	$	116.0	$	(73.8)	$	3.0	$	1,439.3
Total comprehensive income (loss)	—		—		50.0		(1.8)		0.1		48.3
Stock-based compensation expense	—		14.2		—		—		—		14.2
Proceeds from exercise of stock options	—		2.8		—		—		—		2.8

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

Common stock dividends ($0.09 per share)	—		—		(10.8)		—		—		(10.8)

Balance at March 31, 2021	$	1.2	$	1,409.9	$	154.3	$	(75.6)	$	3.1	$	1,492.9

____________________

(1)For the three ~~and nine~~ months ended ~~December~~March 31, ~~2019,~~2021, the Company issued ~~563,779 and 1,672,978~~189,629 shares of common stock ~~respectively,~~ upon the exercise of stock options, ~~and~~ vesting of restricted stock units, and ~~performance~~for other common stock ~~units.~~awards.

(2)~~During fiscal 2019, represents a 30% non-controlling interest in two Process & Motion Control controlled subsidiaries. During the second quarter of fiscal~~On November 24, 2020, the Company acquired the remaining 30% non-controlling interest associated with ~~one of the aforementioned~~in 1 Process & Motion Control joint ~~ventures~~venture for a cash purchase price of $0.3 million. Following this transaction, represents a ~~30%~~5% non-controlling interest in ~~the~~1 remaining Process & Motion Control controlled ~~subsidiary and a 5% non-controlling interest in another Process & Motion Control joint venture relationship.~~subsidiary.

(3)During the ~~third quarter of fiscal 2020, the Company issued 15,980,050 shares of common stock upon the mandatory conversion of preferred stock; see "Preferred Stock" below.~~

~~(4)During fiscal 2020,~~three months ended March 31, 2021, the Company repurchased and canceled ~~639,500~~22,300 shares of common stock at a total cost of ~~$20.0~~$0.9 million at a weighted average price of ~~$31.30~~$39.27 per share. See "Share Repurchase Program" below.

~~Preferred Stock~~

During the third quarter of fiscal 2020, 402,500 shares of 5.75% Series A Mandatory Convertible Preferred Stock (the "Series A Preferred Stock") automatically converted into 15,980,050 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 0 shares of Series A Preferred Stock outstanding.

Dividends were paid on the Series A Preferred Stock quarterly. The final dividend payment was made on November 15, 2019. During the three and nine months ended December 31, 2019, the Company paid $5.8 million and $17.4 million of dividends on the Series A Preferred Stock, respectively.

Share Repurchase Program

During fiscal 2015, the Company's Board of Directors approved a common stock repurchase program (the "Repurchase Program") authorizing the repurchase of up to $200.0 million of the Company's common stock from time to time on the open market or in privately negotiated transactions. On January 27, 2020, the Company's Board of Directors approved increasing the remaining share repurchase authority under the Repurchase Program to $300.0 million. The Repurchase Program does not require the Company to acquire any particular amount of common stock and does not specify the timing of purchases or the prices to be paid. During the ~~third quarter of fiscal 2020,~~three months ended March 31, 2021, the Company repurchased ~~639,500~~22,300 shares of common stock for a total cost of ~~$20.0~~$0.9 million at a weighted average price of ~~$31.30~~$39.27 per share. During the three months ended March 31, 2020, the Company repurchased 3.0 million shares of common stock at a total cost of $80.7 million at a weighted average price of $27.22 per share. The repurchased shares were canceled by the Company upon receipt. A total of approximately ~~$140.0~~$162.8 million of the existing authority remained under the Repurchase Program at ~~December~~March 31, ~~2019.~~2021.

~~For more information related to the Repurchase Program, see Note 22, Subsequent Events.~~

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8. Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of tax, for the ~~nine~~three months ended ~~December~~March 31, ~~2019~~2021, are as follows (in millions):

Interest Rate Derivatives Foreign Currency Translation Pension and Postretirement Plans Total
Balance at March 31, 2019 $ 0.8 $ (60.1) $ (37.3) $ (96.6)
Other comprehensive loss before reclassifications — (8.2) — (8.2)
Amounts reclassified from accumulated other comprehensive loss — — 0.4 0.4
Net current period other comprehensive (loss) income — (8.2) 0.4 (7.8)
Balance at December 31, 2019 $ 0.8 $ (68.3) $ (36.9) $ (104.4)


	Foreign Currency Translation		Pension and Postretirement Plans		Total
Balance at December 31, 2020	$	(46.0)	$	(27.8)	$	(73.8)
Other comprehensive loss before reclassifications	(1.7)		0		(1.7)
Amounts reclassified from accumulated other comprehensive loss	0		(0.1)		(0.1)
Net current period other comprehensive loss	(1.7)		(0.1)		(1.8)
Balance at March 31, 2021	$	(47.7)	$	(27.9)	$	(75.6)

~~Table of Contents~~

The following table summarizes the amounts reclassified from accumulated other comprehensive loss to net income during the three ~~and nine~~ months ended ~~December~~March 31, ~~2019~~2021 and ~~December~~March 31, ~~2018~~2020 (in millions):

Three Months Ended Nine Months Ended
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 Income Statement Line
Pension and other postretirement plans
Amortization of prior service credit $ — $ (0.3) $ (0.2) $ (0.9) Other (expense) income, net
Settlement — — 0.8 — Other (expense) income, net
Provision (benefit) for income taxes — 0.1 (0.2) 0.3
Total net of tax $ — $ (0.2) $ 0.4 $ (0.6)
Interest rate derivatives
Net realized losses on interest rate hedges $ — $ 0.4 $ — $ 5.7 Interest expense, net
Benefit for income taxes — (0.1) — (1.4)
Total net of tax $ — $ 0.3 $ — $ 4.3


	Three Months Ended
	March 31, 2021		March 31, 2020		Income Statement Line
Pension and other postretirement plans
Amortization of prior service credit	$	(0.1)	$	(0.1)	Other expense, net

Provision for income taxes	0		0
Total net of tax	$	(0.1)	$	(0.1)

~~10.~~9. Inventories

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


		December 31, 2019		March 31, 2019			March 31, 2021		December 31, 2020
Finished goods	Finished goods	$	164.8	$	147.3	Finished goods	$	173.7	$	164.6
Work in progress	Work in progress	46.6		39.8		Work in progress	39.7		38.6
Purchased components	Purchased components	77.3		76.7		Purchased components	73.4		70.6
Raw materials	Raw materials	59.6		53.9		Raw materials	60.6		53.4
Inventories at First-in, First-Out ("FIFO") cost	Inventories at First-in, First-Out ("FIFO") cost	348.3		317.7		Inventories at First-in, First-Out ("FIFO") cost	347.4		327.2
Adjustment to state inventories at Last-in, First-Out ("LIFO") cost	Adjustment to state inventories at Last-in, First-Out ("LIFO") cost	1.0		(1.2)		Adjustment to state inventories at Last-in, First-Out ("LIFO") cost	1.0		2.9
		$	349.3	$	316.5		$	348.4	$	330.1

~~11.~~10. Goodwill and Intangible Assets

The changes in the net carrying value of goodwill for the ~~nine~~three months ended ~~December~~March 31, ~~2019~~2021, by operating segment are presented below (in millions):

Process & Motion Control Water Management Consolidated
Net carrying amount as of March 31, 2019 $ 1,125.2 $ 174.5 $ 1,299.7
Currency translation adjustments (1.6) 0.2 (1.4)
Acquisition (1)
— 12.7 12.7
Purchase accounting adjustments 0.4 — 0.4
Net carrying amount as of December 31, 2019 $ 1,124.0 $ 187.4 $ 1,311.4


	Process & Motion Control		Water Management		Consolidated
Net carrying amount as of December 31, 2020	$	1,125.3	$	244.8	$	1,370.1
Currency translation adjustments	0.2		0.9		1.1

Purchase accounting adjustments (1)	0		0.2		0.2
Net carrying amount as of March 31, 2021	$	1,125.5	$	245.9	$	1,371.4

____________________

(1) Refer to Note 2, Acquisitions and Divestiture for additional information regarding acquisitions.

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The gross carrying amount and accumulated amortization for each major class of identifiable intangible assets as of March 31, 2021 and December 31, ~~2019 and March 31, 2019~~2020 are as follows (in millions):


			December 31, 2019												March 31, 2021
		Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:	Intangible assets subject to amortization:								Intangible assets subject to amortization:
Patents	Patents	10 years	$	51.1	$	(40.9)	$	10.2	Patents	10 years	$	52.0	$	(42.4)	$	9.6
Customer relationships (including distribution network)	Customer relationships (including distribution network)	13 years	719.7		(545.7)		174.0		Customer relationships (including distribution network)	14 years	785.8		(586.5)		199.3
Tradenames	Tradenames	13 years	41.0		(13.6)		27.4		Tradenames	13 years	44.1		(17.9)		26.2
Intangible assets not subject to amortization - tradenames	Intangible assets not subject to amortization - tradenames		280.9		—		280.9		Intangible assets not subject to amortization - tradenames		280.9		—		280.9
Total intangible assets, net	Total intangible assets, net	13 years	$	1,092.7	$	(600.2)	$	492.5	Total intangible assets, net	13 years	$	1,162.8	$	(646.8)	$	516.0

			March 31, 2019												December 31, 2020
		Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:	Intangible assets subject to amortization:								Intangible assets subject to amortization:
Patents	Patents	10 years	$	50.9	$	(39.8)	$	11.1	Patents	10 years	$	52.0	$	(42.2)	$	9.8
Customer relationships (including distribution network)	Customer relationships (including distribution network)	13 years	713.5		(523.1)		190.4		Customer relationships (including distribution network)	14 years	784.9		(578.0)		206.9
Tradenames	Tradenames	13 years	40.4		(11.3)		29.1		Tradenames	13 years	44.1		(17.1)		27.0
Intangible assets not subject to amortization - tradenames	Intangible assets not subject to amortization - tradenames		280.9		—		280.9		Intangible assets not subject to amortization - tradenames		280.9		—		280.9
Total intangible assets, net	Total intangible assets, net	13 years	$	1,085.7	$	(574.2)	$	511.5	Total intangible assets, net	13 years	$	1,161.9	$	(637.3)	$	524.6

Intangible asset amortization expense totaled ~~$8.8 million and $26.3~~$9.4 million for the three ~~and nine~~ months ended ~~December~~March 31, ~~2019.~~2021. Intangible asset amortization expense totaled ~~$8.4 million and $25.4~~$9.1 million for the three ~~and nine~~ months ended ~~December~~March 31, ~~2018. Tradenames and customer relationship~~2020. NaN intangible assets were acquired during ~~fiscal 2020 were assigned a weighted average useful life of 15 years and 14 years, respectively.~~the three months ended March 31, 2021.

The Company expects to recognize amortization expense on the intangible assets subject to amortization of ~~$35.1~~$36.7 million in ~~fiscal~~the year ~~2020~~ending December 31, 2021 (inclusive of ~~$26.3~~$9.4 million of amortization expense recognized in the ~~nine~~three months ended ~~December~~March 31, ~~2019)~~2021), ~~$34.0~~$21.0 million in ~~fiscal year 2021, $29.7~~2022, $18.5 million in ~~fiscal year 2022, $15.4~~2023, $18.4 million in ~~fiscal year 2023, $14.6~~2024, $17.3 million in ~~fiscal year 2024~~2025 and ~~$14.3~~$16.3 million in ~~fiscal year 2025.~~

The Company evaluates the carrying value of goodwill 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.2026.

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~~12.~~11. Other Current Liabilities

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


		December 31, 2019		March 31, 2019			March 31, 2021		December 31, 2020
Contract liabilities	Contract liabilities	$	4.9	$	5.1	Contract liabilities	$	3.4	$	4.0
Sales rebates	Sales rebates	38.2		35.3		Sales rebates	27.3		35.7
Commissions	Commissions	5.3		6.8		Commissions	7.6		5.9
Restructuring and other similar charges (1)	Restructuring and other similar charges (1)	6.0		4.3		Restructuring and other similar charges (1)	4.0		6.8
Product warranty (2)	Product warranty (2)	6.3		7.2		Product warranty (2)	8.5		8.9
Risk management (3)	Risk management (3)	10.6		10.5		Risk management (3)	10.1		10.5
Legal and environmental	Legal and environmental	2.0		2.6		Legal and environmental	3.8		2.4
Taxes, other than income taxes	Taxes, other than income taxes	7.3		7.8		Taxes, other than income taxes	9.6		7.7
Income tax payable	Income tax payable	10.8		20.3		Income tax payable	20.3		14.5
Interest payable	Interest payable	2.0		7.7		Interest payable	7.4		1.4
Current portion of operating lease liability ~~(4)~~	Current portion of operating lease liability ~~(4)~~	11.2		—		Current portion of operating lease liability ~~(4)~~	13.4		13.3
Other	Other	12.2		29.5		Other	14.4		14.5
		$	116.8	$	137.1		$	129.8	$	125.6

____________________

(1)See more information related to the restructuring obligations within Note 3, Restructuring and Other Similar Charges.

(2)See more information related to the product warranty obligations within Note ~~16,~~14, Commitments and Contingencies.

(3)Includes projected liabilities related to losses arising from automobile, general and product liability claims.

~~(4)See more information related to leases within Note 18, Leases.~~

~~13.~~

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12. Long-Term Debt

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


		December 31, 2019		March 31, 2019			March 31, 2021		December 31, 2020
Term loan (1)	Term loan (1)	$	620.6	$	718.4	Term loan (1)	$	621.7	$	621.5
4.875% Senior Notes due 2025 (2)	4.875% Senior Notes due 2025 (2)	495.5		495.0		4.875% Senior Notes due 2025 (2)	496.5		496.3

Finance leases and other subsidiary debt (3)		32.5		24.6

Finance leases and other subsidiary debt						Finance leases and other subsidiary debt	73.6		73.8
Total	Total	1,148.6		1,238.0		Total	1,191.8		1,191.6
Less current maturities	Less current maturities	1.4		1.2		Less current maturities	2.5		2.4
Long-term debt	Long-term debt	$	1,147.2	$	1,236.8	Long-term debt	$	1,189.3	$	1,189.2

____________________

(1)Includes unamortized debt issuance costs of ~~$4.4~~$3.3 million and ~~$6.6~~$3.5 million at March 31, 2021 and December 31, ~~2019 and March 31, 2019,~~2020, respectively.

(2)Includes unamortized debt issuance costs of ~~$4.5~~$3.5 million and ~~$5.0~~$3.7 million at March 31, 2021 and December 31, ~~2019 and March 31, 2019,~~2020, respectively.

~~(3)See more information related to finance leases within Note 18, Leases.~~

Senior Secured Credit Facility

At ~~December~~March 31, ~~2019,~~2021, 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~~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.

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~~ The term loan facility has a maturity date of August 21, 2024, and there are no required principal payments due or scheduled under the ~~Credit Agreement, which was originally issued in an aggregate principal amount~~term debt until the maturity date. As 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 the fourth quarter of fiscal 2019 ("Prior Term Loan"). The Amendment providedMarch 31, 2021 and 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.

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

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~~applicable margin of 0.75% (which was reduced from 1.00%).~~ three month period then ended~~At December 31, 2019,~~, the borrowings under the Term ~~Refinancing~~ Loan had a weighted-average effective interest rate of 3.51%. The weighted-average interest rate for the nine months ended December 31, 2019, was 4.15%. The Amendment did not change the maturity date or interest rate with respect to the revolving credit facility under the Credit Agreement.1.86% and 1.88%, respectively. NaN ~~NaN~~ amounts were borrowed under the revolving credit facility at March 31, 2021 or December 31, ~~2019 or March 31, 2019;~~2020; however, ~~$5.1~~$0.7 million and ~~$5.6~~$3.0 million of the revolving credit facility were considered utilized in connection with outstanding letters of credit at March 31, 2021 and December 31, ~~2019, and~~ 2020, respectively.

As of March 31, ~~2019, respectively.~~2021

In connection with the above transaction, the Company recognized a $1.5 million loss on the debt extinguishment in the third quarter of fiscal 2020, 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.

~~As of December 31, 2019,~~, 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 ~~2.0~~2.2 to 1.0 as of ~~December~~March 31, ~~2019.~~

~~On December 6, 2019, the Company made a voluntary prepayment on its Term Refinancing Loan of $100.0 million. In connection with this prepayment, the Company recognized a~~ 2021~~$0.7 million~~ ~~loss on debt extinguishment to write off a portion of the unamortized debt issuance costs.~~.

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 2025 (the “Notes”). The Notes were issued by RBS Global, Inc. and 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.~~

Accounts Receivable Securitization Program

~~The~~On September 25, 2020, certain subsidiaries of the Company ~~has~~entered into an ~~amended~~ accounts receivable securitization facility (the ~~"Securitization"~~“New Securitization”) with Mizuho Bank, Ltd. (“Mizuho”) to replace the Company’s previous $100.0 million accounts receivable securitization facility with Wells Fargo & Company ~~("Wells Fargo"~~(the “Previous Securitization” and, collectively with the New Securitization, referred to as the “Securitization”).

As part of the New Securitization, Rexnord Industries, LLC, Zurn Industries, LLC, Zurn PEX, Inc., Precision Gear LLC, Centa Corporation and Cambridge International, Inc. (collectively, the “Originators”) agreed, pursuant to an Amended and Restated Receivables Sale and Servicing Agreement, dated as of September 25, 2020 (the “Sale Agreement”), to sell all of their existing and future accounts receivable and related assets to Rexnord Funding LLC (“Rexnord Funding”), a bankruptcy-remote special purpose entity, in exchange for cash, subordinated notes and letters of credit. The Originators and Rexnord Funding intend for the transactions contemplated by the Sale Agreement to constitute true sales to Rexnord Funding by the respective Originators. In addition to being an Originator, Rexnord Industries, LLC is also the current servicer under the Sale Agreement.

Concurrently with the execution of the Sale Agreement, Rexnord Funding entered into a Receivables Funding and Administration Agreement (the “Funding Agreement”) with Mizuho, as a lender and administrative agent. Pursuant to the ~~agreements evidencing the Securitization,~~

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Funding Agreement, Rexnord Funding ~~LLC ("Rexnord Funding") (a wholly owned bankruptcy-remote special purpose subsidiary) has~~ granted ~~Wells Fargo~~Mizuho 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 being used by Rexnord Funding to finance purchases of accounts ~~receivable.~~receivable from the Originators pursuant to the Sale Agreement. The amount of advances available ~~will be~~is 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%.~~1.30% per annum. The last date on which advances may be made is ~~December 30, 2020,~~September 24, 2021, with a six-month extension option, unless the maturity of the New Securitization is otherwise accelerated. In addition to other customary fees associated with financings of this type, Rexnord Funding pays an unused line fee of 0.40% per annum to ~~Wells Fargo~~Mizuho 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.New Securitization.

The Securitization constitutes a ~~"Permitted~~“Permitted Receivables ~~Financing"~~Financing” under the ~~Credit Agreement~~Company’s existing credit agreement and a “Qualified Receivables Financing” under the indenture governing the Company’s outstanding senior notes. The Securitization does not qualify for sale accounting under ~~ASC~~Accounting Standards Codification Topic 860, Transfers and ~~Servicing~~.Servicing. Any borrowings under the New Securitization are accounted for as secured borrowings on the ~~Company's condensed~~Company’s consolidated balance sheets. Financing costs associated with the Securitization are recorded within ~~"Interest~~“Interest expense, ~~net"~~net” in the ~~condensed~~ consolidated statements of operations if revolving loans or letters of credit are obtained under the ~~facility.~~Securitization.

At March 31, 2021 and December 31, ~~2019 and March 31, 2019,~~2020, the Company's total borrowing capacity under the Securitization was ~~$89.1~~$100.0 million and ~~$100.0~~$85.7 million, respectively, based on the ~~current~~then-current accounts receivables ~~balance. NaN amount was~~balances. As of both March 31, 2021 and December 31, 2020, 0 amounts were borrowed under the ~~Securitization as of December 31, 2019 or March 31, 2019.~~Securitization. In addition, ~~$6.9 million and $7.1~~$7.5 million of available borrowing capacity under the Securitization was considered utilized in connection with outstanding letters of credit at both March 31, 2021 and December 31, ~~2019 and~~2020. As of March 31, ~~2019, respectively. As of December 31, 2019,~~2021, the Company was in compliance with all applicable covenants and performance ratios contained in the Securitization.

~~Other Subsidiary Debt~~

~~Prior to 2016,~~On April 16, 2021, the Company ~~received an aggregate~~provided notice to Mizuho of ~~$9.8 million in net proceeds from financing agreements~~its election to terminate the Funding Agreement, and other documentation related to ~~facility modernization projects at 2 North American manufacturing facilities. These financing agreements were structured~~

~~Table~~the Securitization, effective as of ~~Contents~~

~~with unrelated third party financial institutions (the "Investors") and their wholly-owned community development entities in~~May 17, 2021. 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,termination, the Company ~~provided an aggregate~~must reduce any outstanding principal to 0 on or prior to May 17, 2021 (the outstanding principal amount was 0 as 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~~April 16, 2021), and make all other payments and pay any other fees that are due and payable under the terms of an existing fee letter between the ~~financing agreements~~parties, including customary commitment and upon meeting certain conditions, both the Investors and the Company have the ability to trigger forgiveness of the net debt. During the third quarter of 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 the second quarter of fiscal year 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 December 31, 2019, there are no outstanding balances related to the New Market Tax Credit related debt.

~~For more information related to finance leases, see Note 18, Leases.~~program fees.

See Note 11, Long-Term Debt to the audited consolidated financial statements of the Company's ~~fiscal 2019 Annual~~Transition Report on Form 10-K for the Transition Period ended December 31, 2020 for further information regarding long-term debt.

Debt Commitment Letters related to Transaction with Regal

~~14. Derivative Financial Instruments~~

~~The~~In connection with the Company’s proposed transaction with Regal discussed in Note 1, on February 14, 2021, the Company is exposed to certain financial risks relating to fluctuations in foreign currency exchange rates. The Company currently selectively uses foreign currency forward exchange contracts to manage its foreign currency risk. All hedging transactions are authorizedentered into a debt commitment letter (the “Debt Commitment Letter”) and ~~executed~~related fee letters with Credit Suisse AG, Cayman Islands Branch (“CS”) and Credit Suisse Loan Funding LLC, pursuant to ~~defined policies~~which, and ~~procedures that prohibit the use of financial instruments for speculative purposes.~~

~~Foreign Exchange Contracts~~

The Company periodically enters 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, ~~Derivatives and Hedging~~ (“ASC 815”), and as such were marked to market through earnings. The amounts recorded on the condensed consolidated balance sheets and recognized within the condensed consolidated statements of operations relatedsubject to the ~~Company's foreign currency forward contracts~~terms and conditions set forth therein, CS committed to provide up to $708.0 million in an aggregate principal amount of senior term loans under a senior secured term loan facility (“Term Loan Facility”) and up to $200.0 million in an aggregate principal amount of senior revolving loans under a senior secured revolving credit facility. The proceeds of the loans under the Term Loan Facility may be used by the Company, together with a dividend from Land Newco, Inc., a wholly-owned indirect subsidiary of the Company (“Land”) and cash on RBS Global, Inc.’s balance sheet, (a) to redeem or prepay in full (i) all obligations currently outstanding under the Credit Agreement and (ii) the 4.875% senior unsecured notes due 2025; (b) to pay fees and expenses in connection with the transactions; and (c) for general corporate purposes.

In connection with the ~~three~~proposed transaction, Land also entered into a debt commitment letter (the “Land Commitment Letter”) and ~~nine months ended December 31, 2019~~related fee letters with Barclays Bank PLC (“Barclays”), pursuant to which, and ~~2018 were not material.~~subject to the terms and conditions set forth therein, Barclays committed to provide bridge loans of up to approximately $486.8 million under a 364-day senior bridge loan facility to be used to pay the dividend required in connection with the transaction. If the proposed transaction with Regal is consummated, the indebtedness contemplated by the Land Commitment Letter will become indebtedness of a wholly-owned subsidiary of Regal.

~~15.~~13. Fair Value Measurements

ASC 820,Fair Value Measurement (“ASC 820”) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed assumptions about the assumptions a market participant would use.

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In accordance with ASC 820, fair value measurements are classified under the following hierarchy:

•Level 1 - Quoted prices for identical instruments in active markets.

•Level 2 - Quoted prices for similar instruments; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable.

•Level 3 - Model-derived valuations in which one or more inputs or value-drivers are both significant to the fair value measurement and unobservable.

If applicable, the Company uses quoted market prices in active markets to determine fair value, and therefore classifies such measurements within Level 1. In some cases where market prices are not available, the Company makes use of observable market based inputs to calculate fair value, in which case the measurements are classified within Level 2. If quoted or observable market prices are not available, fair value is based upon internally developed models that use, where possible, current market-based parameters. These measurements are classified within Level 3 if they use significant unobservable inputs.

Fair Value of Financial Instruments

~~There were no transfers of assets between levels at December 31, 2019 and March 31, 2019, respectively.~~

~~As of December 31, 2019 and March 31, 2019, the fair value of foreign currency forward contract assets classified within Level 2 was immaterial.~~

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The Company has a nonqualified deferred compensation plan where assets are invested in mutual funds and corporate-owned life insurance contracts held in a rabbi trust, which is restricted for payments to participants of the plan. The Company has elected to use the fair value option for the mutual funds, which are measured using quoted prices of identical instruments in active markets categorized as Level 1. Corporate-owned life insurance contracts are recorded at cash surrender value, which is provided by a third party and reflects the net asset value of the underlying publicly traded mutual funds categorized as Level 2. The deferred compensation assets are classified within other assets on the condensed consolidated balance sheets. Deferred compensation liabilities are measured at fair value based on quoted prices of identical instruments to the investment vehicles selected by the participants categorized as Level 1. Deferred compensation liabilities are classified within other liabilities on the condensed consolidated balance sheets.

The following table provides a summary of the Company's assets and liabilities that were recognized at fair value on a recurring basis as of March 31, 2021 and December 31, ~~2019 and March 31, 2019~~2020 (in millions):


		Fair Value as of December 31, 2019															Fair Value as of March 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Deferred compensation assets	Deferred compensation assets	$	1.3	$	6.8	$	—	$	8.1	Deferred compensation assets	$	2.5	$	10.8	$	0	$	13.3
Deferred compensation liabilities	Deferred compensation liabilities	8.3		—		—		8.3		Deferred compensation liabilities	13.7		0		0		13.7


		Fair Value as of March 31, 2019															Fair Value as of December 31, 2020
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Deferred compensation assets	Deferred compensation assets	$	2.3	$	3.7	$	—	$	6.0	Deferred compensation assets	$	1.0	$	10.7	$	0	$	11.7
Deferred compensation liabilities	Deferred compensation liabilities	6.1		—		—		6.1		Deferred compensation liabilities	11.9		0		0		11.9

There were no transfers of assets between levels at March 31, 2021 and December 31, 2020, respectively.

Fair Value of Non-Derivative Financial Instruments

The carrying amounts of cash, receivables, payables and accrued liabilities approximated fair value at March 31, 2021 and December 31, ~~2019 and March 31, 2019~~2020, due to the short-term nature of those instruments. The fair value of long-term debt as of March 31, 2021 and December 31, ~~2019 and March 31, 2019~~2020, was approximately ~~$1,176.2~~$1,209.7 million and ~~$1,238.1~~$1,209.3 million, respectively. The fair value is based on quoted market prices for the same instruments.

~~16.~~

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14. Commitments and Contingencies

Warranties:

The Company offers warranties on the sales of certain products and records an accrual for estimated future claims. Such accruals are based upon historical experience and management's estimate of the level of future claims. The following table presents changes in the Company's product warranty liability (in millions):


		Nine Months Ended							Three Months Ended
		December 31, 2019		December 31, 2018			March 31, 2021		March 31, 2020
Balance at beginning of period	Balance at beginning of period	$	7.2	$	7.7	Balance at beginning of period	$	8.9	$	6.3

Acquired obligations						Acquired obligations	0.3		0
Charged to operations	Charged to operations	2.2		1.5		Charged to operations	0.6		1.2
Claims settled	Claims settled	(3.1)		(1.8)		Claims settled	(1.3)		(0.8)
Balance at end of period	Balance at end of period	$	6.3	$	7.4	Balance at end of period	$	8.5	$	6.7

Contingencies:

The Company's subsidiaries are involved in various unresolved legal actions, administrative proceedings and claims in the ordinary course of business involving, among other things, product liability, commercial, employment, workers' compensation, intellectual property claims and environmental matters. The Company establishes accruals in a manner that is consistent with accounting principles generally accepted in the United States for costs associated with such matters when liability is probable and those costs are capable of being reasonably estimated. 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.

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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 10 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 1 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. The remediation work started in 2020 and is on-going. 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.

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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 ~~December~~March 31, ~~2019,~~2021, Zurn and numerous other unrelated companies were defendants in approximately ~~5,000~~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. Zurn did not manufacture asbestos or asbestos components. Instead, Zurn purchased them from suppliers. These claims are being handled pursuant to a defense strategy funded by insurers.

As of ~~December~~March 31, ~~2019,~~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 ~~$40.0~~$59.0 million, of which Zurn expects its insurance carriers to pay approximately ~~$30.0~~$42.0 million in the next ten years on such claims, with the balance of the estimated liability being paid in subsequent years. The ~~$40.0~~$59.0 million was developed based on actuarial studies and represents the projected indemnity payout for current and future claims. There are inherent uncertainties involved in estimating the number of future asbestos claims, future settlement costs, and the effectiveness of defense strategies and settlement initiatives. 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 condensed consolidated balance sheets.

~~Table of Contents~~

Management estimates that its available insurance to cover this potential asbestos liability as of ~~December~~March 31, ~~2019,~~2021, is in excess of the 10 year estimated exposure, and accordingly, believes that all current claims are covered by insurance.

As of ~~December~~March 31, ~~2019,~~2021, the Company had a recorded receivable from its insurance carriers of ~~$40.0~~$59.0 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. Factors that could cause a decrease in the amount of available coverage or create gaps in coverage include: changes in law governing the policies, potential disputes and settlements with the carriers regarding the scope of coverage, and insolvencies of 1 or more of the Company's carriers. The receivable for probable asbestos-related recoveries is recorded in Other assets within the condensed 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 iswas 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. The settlement ~~utilizes~~utilized a seven year claims fund, which iswas capped at $20.0 million, and iswas 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.~~seven year filing period expired on April 1, 2020. Any claims after April 1, 2020 are time barred. The Company ~~however, reached a~~expects to make payment on any remaining timely filed claims and close out the 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.~~fund. The Company has recorded an accrual ~~related to~~for the balance of 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~~liability.

Table of ~~future insurance coverage.~~Contents

~~17.~~15. Retirement Benefits

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


		Three Months Ended						Nine Months Ended							Three Months Ended
		December 31, 2019		December 31, 2018		December 31, 2019		December 31, 2018			March 31, 2021		March 31, 2020
Pension Benefits:	Pension Benefits:									Pension Benefits:
Service cost	Service cost	$	0.2	$	0.1	$	0.4	$	0.3	Service cost	$	0.1	$	0.1
Interest cost	Interest cost	5.5		5.8		16.5		17.4		Interest cost	3.7		5.4
Expected return on plan assets	Expected return on plan assets	(5.7)		(6.6)		(17.0)		(19.8)		Expected return on plan assets	(4.9)		(5.5)

Settlement		—		—		0.8		—

Net periodic benefit (credit) cost		$	—	$	(0.7)	$	0.7	$	(2.1)
Recognition of actuarial losses										Recognition of actuarial losses	0		35.9
Net periodic benefit cost										Net periodic benefit cost	$	(1.1)	$	35.9
Other Postretirement Benefits:	Other Postretirement Benefits:									Other Postretirement Benefits:
Interest cost	Interest cost	$	0.2	$	0.2	$	0.5	$	0.6	Interest cost	$	0.1	$	0.2
Amortization:	Amortization:									Amortization:
Prior service credit	Prior service credit	—		(0.3)		(0.2)		(0.9)		Prior service credit	(0.1)		(0.1)
Net periodic benefit cost (credit)		$	0.2	$	(0.1)	$	0.3	$	(0.3)
Recognition of actuarial gains										Recognition of actuarial gains	0		(0.1)
Net periodic benefit cost										Net periodic benefit cost	$	0	$	0

The service cost component of net periodic benefits is presented within Cost of sales and Selling, general and administrative expenses in the condensed consolidated 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 final quarter of each fiscal year (or upon any required re-measurement event). During the three months ended March 31, 2020, the Company performed its annual remeasurement as of the fiscal year ended March 31, 2020, which resulted in the recognition of a $35.8 million non-cash actuarial loss. This amount is recorded within Actuarial loss on pension and postretirement benefit obligations in the condensed consolidated statements of operations.

During the ~~first nine~~three months ~~of fiscal~~ended March 31, 2021 and March 31, 2020, ~~and 2019,~~ the Company made contributions of ~~$0.2~~$0.1 million and ~~$1.1~~$0.1 million, respectively, to its U.S. qualified pension plan trusts.

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. 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.

See Note 16, Retirement Benefits, to the audited consolidated financial statements of the Company's ~~fiscal 2019 Annual~~December 31, 2020 Transition Report on Form 10-K for further information regarding retirement benefits.

~~Table of Contents~~

~~18. Leases~~

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. The Company has operating and finance leases primarily associated with real estate, automobiles and manufacturing and office equipment.

The Company has lease agreements that include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of the underlying assets. The term of the Company’s leases generally reflects the non-cancellable period of the lease. Some of the Company’s lease agreements include options to extend or terminate the lease, which are excluded from the minimum lease terms unless the Company is reasonably certain the option will be exercised. Lease expense for operating leases and amortization expense for finance leases is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets and are instead recognized on a straight-line basis over the lease term

Right-of-use (“ROU”) assets and liabilities are recognized in the condensed consolidated balance sheets based on the present value of remaining lease payments over the lease term. Additionally, ROU assets include any lease payments made at or before the lease commencement date, any initial direct costs incurred, and are reduced by lease incentives received. As most of the Company’s leases do not provide an implicit rate, the present value of lease payments is determined using the Company’s incremental borrowing rate at the commencement date of the lease. Lease payments included in the measurement of the lease liabilities are comprised of fixed payments, variable payments that depend on an index or rate, and amounts probable to be paid if an option is reasonably certain to be exercised. Variable lease payments, typically based on usage of the asset or changes in an index or rate, are excluded from the lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

~~Table of Contents~~

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

~~Leases~~

~~Classification~~

~~December 31, 2019~~

~~Assets:~~

~~Operating ROU assets~~

~~Other assets~~

~~45.6~~

~~Finance ROU assets~~

~~Property, plant and equipment, net (1)~~

~~26.7~~

~~Total ROU assets~~

~~72.3~~

~~Liabilities:~~

~~Current~~

~~Operating~~

~~Other current liabilities~~

~~11.2~~

~~Finance~~

~~Current maturities of debt~~

~~0.4~~

~~Non-current~~

~~Operating~~

~~Other liabilities~~

~~36.7~~

~~Finance~~

~~Long-term debt~~

~~26.8~~

~~Total lease liabilities~~

~~75.1~~

~~____________________~~

~~(1)Finance lease assets are recorded net of accumulated amortization of $0.8 million as of December 31, 2019.~~

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

Three Months Ended Nine Months Ended
December 31, 2019
Operating lease expenses (1) $ 3.9 $ 11.2
Finance lease expenses:
Depreciation of finance ROU assets (1) 0.3 0.8
Interest on lease liabilities (2) 0.5 1.2
Total finance lease expense 0.8 2.0
Variable and short-term lease expense (1) 1.0 3.3
Total lease expense $ 5.7 $ 16.5

~~____________________~~

~~(1)Included in cost of sales and selling, general and administrative expenses.~~

~~(2)Included in interest expense, net.~~

~~Future minimum lease payments under operating and finance leases as of December 31, 2019 are as follows (in millions):~~

Years ending March 31,
Operating Leases ⁽¹⁾
Finance Leases ⁽¹⁾
2020 (excluding the nine months ended December 31, 2019) $ 3.2 $ 0.5
2021 12.6 1.9
2022 10.4 1.9
2023 9.1 1.9
2024 6.5 1.9
Thereafter 11.4 46.2
Total future minimum lease payments 53.2 54.3
Less: Imputed interest (5.3) (27.1)
Total lease liabilities $ 47.9 $ 27.2

~~____________________~~

~~(1)Excludes legally binding minimum lease payments for leases signed but not yet commenced.~~

~~Table of Contents~~

~~Future minimum rental payments for leases with initial terms in excess of one year as of March 31, 2019 are as follows (in millions):~~

Years ending March 31:
2020 $ 14.6
2021 11.8
2022 9.6
2023 8.7
2024 6.4
Thereafter 56.3
Total future minimum lease payments $ 107.4

~~The weighted-average remaining lease terms and discount rates for leases are as follows:~~


~~Lease Term and Discount Rate~~	~~December 31, 2019~~
~~Weighted-average remaining lease terms (years):~~
~~Operating leases~~	~~5.0~~
~~Finance leases~~	~~28.6~~
~~Weighted-average discount rate:~~
~~Operating leases~~	~~3.9~~	%
~~Finance leases~~	~~5.7~~	%

~~Cash paid for amounts included in the measurement of lease liabilities are as follows (in millions):~~


	~~Nine Months Ended~~
	~~December 31, 2019~~
~~Operating cash flows from operating leases~~	$	~~10.8~~
~~Operating cash flows from finance leases~~	~~1.2~~
~~Financing cash flows from finance leases~~	~~0.3~~

~~ROU assets obtained in exchange for lease liabilities are as follows (in millions):~~


	~~Nine Months Ended~~
	~~December 31, 2019~~
~~Operating leases~~	$	~~12.0~~

~~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 condensed consolidated balance sheet as of December 31, 2019.

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.

~~Table of Contents~~

~~19.~~16. Stock-Based Compensation

The Rexnord Corporation Performance Incentive Plan (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. For the three ~~and nine~~ months ended ~~December~~March 31, ~~2019,~~2021, the Company recognized ~~$5.9 million and $18.7~~$14.8 million of stock-based compensation ~~expense, respectively.~~expense. For the three ~~and nine~~ months ended ~~December~~March 31, ~~2018,~~2020, the Company recognized ~~$5.7~~$8.2 million ~~and $17.3 million, respectively,~~ of stock-based compensation expense.

During the ~~nine~~three months ended ~~December~~March 31, ~~2019,~~2021, the Company granted the following stock options, restricted stock units, ~~and~~ performance stock units and common stock to directors, executive officers, and certain other employees:


Award Type	Award Type	Number of Awards	Weighted Average Grant-Date Fair Value		Award Type	Number of Awards	Weighted Average Grant-Date Fair Value
Stock options	Stock options	154,934	$	9.50	Stock options	241,547	$	15.39
Restricted stock units	Restricted stock units	421,697	$	27.51	Restricted stock units	258,054	$	45.09
Performance stock units	Performance stock units	324,619	$	27.50	Performance stock units	258,206	$	45.10
Common stock					Common stock	42,227	$	47.76

See Note 15, Stock-Based Compensation, to the audited consolidated financial statements ofincluded in the Company's ~~fiscal 2019 Annual~~Transition Report on Form 10-K for the Transition Period ended December 31, 2020, for further information regarding stock-based compensation.

~~20.~~

Table of Contents

17. Business Segment Information

The Company's results of operations are reported in 2 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®~~TollokTM. 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.comTM, JUST® and ~~StainlessDrains.com®~~Hadrian®. 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~~ Business Segment Information:

(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.Millions)


	Three Months Ended
	March 31, 2021		March 31, 2020
Net sales
Process & Motion Control	$	320.9	$	363.6
Water Management	205.2		183.4
Consolidated net sales	526.1		547.0
Income from operations
Process & Motion Control	55.0		61.4
Water Management	40.6		41.8
Corporate	(17.0)		(15.2)
Consolidated income from operations	78.6		88.0
Non-operating expense:
Interest expense, net	(11.0)		(13.4)

Actuarial loss on pension and postretirement benefit obligations	0		(35.8)
Other expense, net	(0.4)		(3.6)
Income before income taxes	67.2		35.2
Provision for income taxes	(17.2)		(6.4)
Equity method investment income (loss)	0.1		(0.2)


Net income	50.1		28.6
Non-controlling interest income	0.1		0.1
Net income attributable to Rexnord	$	50.0	$	28.5



Depreciation and amortization
Process & Motion Control	$	15.2	$	15.1
Water Management	8.3		7.0
Corporate	0		0.2
Consolidated	$	23.5	$	22.3
Capital expenditures
Process & Motion Control	$	8.2	$	14.6
Water Management	1.0		1.3

Consolidated	$	9.2	$	15.9

3225

Table of Contents

~~Business Segment Information:~~

~~(in Millions)~~

Three Months Ended Nine Months Ended
December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Net sales
Process & Motion Control $ 327.5 $ 326.7 $ 994.6 $ 1,007.8
Water Management (1) 164.2 158.3 526.7 505.6
  Consolidated net sales 491.7 485.0 1,521.3 1,513.4
Income from operations
Process & Motion Control 53.6 53.4 167.0 159.7
Water Management (1) 37.6 33.1 121.3 110.9
Corporate (13.6) (15.6) (42.0) (46.2)
  Consolidated income from operations 77.6 70.9 246.3 224.4
Non-operating expense:
Interest expense, net (14.4) (16.8) (45.2) (54.1)
(Loss) gain on the extinguishment of debt (2.2) 5.0 1.0 5.0
Other income (expense), net 0.8 1.6 (1.0) 3.3
Income before income taxes 61.8 60.7 201.1 178.6
Provision for income taxes (13.4) (9.1) (47.7) (40.8)
Equity method investment income — 1.3 0.2 3.5
Net income from continuing operations 48.4 52.9 153.6 141.3
Loss from discontinued operations, net of tax — (27.8) (1.8) (154.3)
Net income (loss) 48.4 25.1 151.8 (13.0)
Non-controlling interest (loss) income (0.1) (0.3) 0.2 (0.1)
Net income (loss) attributable to Rexnord 48.5 25.4 151.6 (12.9)
Dividends on preferred stock (2.8) (5.8) (14.4) (17.4)
Net income (loss) attributable to Rexnord common stockholders $ 45.7 $ 19.6 $ 137.2 $ (30.3)
Depreciation and amortization
Process & Motion Control $ 14.9 $ 15.7 $ 44.5 $ 47.4
Water Management (1) 6.6 6.2 19.5 18.6
Corporate 0.1 — 0.3 —
  Consolidated $ 21.6 $ 21.9 $ 64.3 $ 66.0
Capital expenditures
Process & Motion Control $ 9.6 $ 6.8 $ 20.0 $ 20.1
Water Management (1) 2.7 1.2 5.5 4.0
  Consolidated $ 12.3 $ 8.0 $ 25.5 $ 24.1

~~____________________~~

~~(1)Amounts reflect Water Management continuing operations.~~

~~Table of Contents~~

~~21.~~18. Guarantor Subsidiaries

The following schedules present condensed consolidating financial information ~~of the Company~~ as of March 31, 2021 and December 31, ~~2019 and March 31, 2019,~~2020, and for the three ~~and nine~~ month periods ended ~~December~~March 31, ~~2019~~2021 and ~~2018~~2020 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 senior notes and senior subordinated 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

~~December~~March 31, ~~2019~~2021

(in millions)


		Parent		Issuers		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated			Parent		Issuers		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets	Assets													Assets
Current assets:	Current assets:													Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	—	$	—	$	117.4	$	159.6	$	—	$	277.0	Cash and cash equivalents	$	0	$	0.2	$	96.4	$	210.7	$	0	$	307.3
Receivables, net	Receivables, net	—		—		181.0		102.1		—		283.1		Receivables, net	0		0		185.1		125.1		0		310.2
Inventories	Inventories	—		—		242.8		106.5		—		349.3		Inventories	0		0		232.6		115.8		0		348.4
Income tax receivable	Income tax receivable	—		—		9.6		1.6		—		11.2		Income tax receivable	0		0		0.5		0.9		0		1.4
Other current assets	Other current assets	—		—		18.0		30.0		—		48.0		Other current assets	0		0		21.2		24.5		0		45.7
Total current assets	Total current assets	—		—		568.8		399.8		—		968.6		Total current assets	0		0.2		535.8		477.0		0		1,013.0
Property, plant and equipment, net	Property, plant and equipment, net	—		—		247.7		125.1		—		372.8		Property, plant and equipment, net	0		0		285.3		140.8		0		426.1
Intangible assets, net	Intangible assets, net	—		—		399.0		93.5		—		492.5		Intangible assets, net	0		0		396.0		120.0		0		516.0
Goodwill	Goodwill	—		—		1,029.8		281.6		—		1,311.4		Goodwill	0		0		1,050.1		321.3		0		1,371.4
Investment in:	Investment in:													Investment in:
Issuer subsidiaries	Issuer subsidiaries	1,373.8		—		—		—		(1,373.8)		—		Issuer subsidiaries	1,602.8		—		—		—		(1,602.8)		—
Guarantor subsidiaries	Guarantor subsidiaries	—		3,305.2		—		—		(3,305.2)		—		Guarantor subsidiaries	—		3,579.1		—		—		(3,579.1)		—
Non-guarantor subsidiaries	Non-guarantor subsidiaries	—		—		539.1		—		(539.1)		—		Non-guarantor subsidiaries	—		—		697.9		—		(697.9)		—
Other assets	Other assets	—		0.9		73.8		41.6		—		116.3		Other assets	0		0.5		100.0		60.3		—		160.8
Total assets	Total assets	$	1,373.8	$	3,306.1	$	2,858.2	$	941.6	$	(5,218.1)	$	3,261.6	Total assets	$	1,602.8	$	3,579.8	$	3,065.1	$	1,119.4	$	(5,879.8)	$	3,487.3
Liabilities and stockholders' equity	Liabilities and stockholders' equity													Liabilities and stockholders' equity
Current liabilities:	Current liabilities:													Current liabilities:
Current maturities of debt	Current maturities of debt	$	—	$	—	$	0.5	$	0.9	$	—	$	1.4	Current maturities of debt	$	0	$	0	$	2.4	$	0.1	$	0	$	2.5
Trade payables	Trade payables	—		—		120.4		58.0		—		178.4		Trade payables	0		0		109.2		69.8		0		179.0
Compensation and benefits	Compensation and benefits	—		—		28.5		18.9		—		47.4		Compensation and benefits	0		0		22.7		19.2		0		41.9
Current portion of pension and postretirement benefit obligations	Current portion of pension and postretirement benefit obligations	—		—		1.9		1.4		—		3.3		Current portion of pension and postretirement benefit obligations	0		0		1.7		1.4		0		3.1
Other current liabilities	Other current liabilities	0.3		1.9		77.8		36.8		—		116.8		Other current liabilities	0		7.2		73.1		49.5		0		129.8
Total current liabilities	Total current liabilities	0.3		1.9		229.1		116.0		—		347.3		Total current liabilities	0		7.2		209.1		140.0		0		356.3

Long-term debt	Long-term debt	—		1,116.2		26.9		4.1		—		1,147.2		Long-term debt	0		1,118.2		70.4		0.7		0		1,189.3
Note payable to (receivable from) affiliates, net														Note payable to (receivable from) affiliates, net	109.4		851.6		(1,109.4)		148.4		0		0
Pension and postretirement benefit obligations	Pension and postretirement benefit obligations	—		—		106.9		43.6		—		150.5		Pension and postretirement benefit obligations	0		0		117.7		50.2		0		167.9
Deferred income taxes	Deferred income taxes	—		—		106.3		23.9		—		130.2		Deferred income taxes	0		0		96.4		21.6		0		118.0
Other liabilities	Other liabilities	0.3		—		76.6		41.3		—		118.2		Other liabilities	0.5		0		101.8		60.6		0		162.9
Total liabilities	Total liabilities	0.6		1,118.1		545.8		228.9		—		1,893.4		Total liabilities	109.9		1,977.0		(514.0)		421.5		0		1,994.4
Note payable to (receivable from) affiliates, net		5.0		814.2		(992.8)		173.6		—		—

Total stockholders' equity	Total stockholders' equity	1,368.2		1,373.8		3,305.2		539.1		(5,218.1)		1,368.2		Total stockholders' equity	1,492.9		1,602.8		3,579.1		697.9		(5,879.8)		1,492.9
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	1,373.8	$	3,306.1	$	2,858.2	$	941.6	$	(5,218.1)	$	3,261.6	Total liabilities and stockholders' equity	$	1,602.8	$	3,579.8	$	3,065.1	$	1,119.4	$	(5,879.8)	$	3,487.3

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Condensed Consolidating Balance Sheets

~~March~~December 31, ~~2019~~2020

(in millions)


		Parent		Issuers		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated			Parent		Issuers		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets	Assets													Assets
Current assets:	Current assets:													Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1.4	$	0.2	$	107.7	$	183.2	$	—	$	292.5	Cash and cash equivalents	$	0.5	$	0.2	$	46.7	$	208.2	$	0	$	255.6
Receivables, net	Receivables, net	—		—		219.6		114.7		—		334.3		Receivables, net	0		0		165.5		109.3		0		274.8
Inventories	Inventories	—		—		214.3		102.2		—		316.5		Inventories	0		0		221.8		108.3		0		330.1
Income tax receivable	Income tax receivable	—		—		0.5		2.8		—		3.3		Income tax receivable	0		0		8.5		1.3		0		9.8
Other current assets	Other current assets	—		—		12.5		23.8		—		36.3		Other current assets	0		0		18.6		18.8		0		37.4

Total current assets	Total current assets	1.4		0.2		554.6		426.7		—		982.9		Total current assets	0.5		0.2		461.1		445.9		0		907.7
Property, plant and equipment, net	Property, plant and equipment, net	—		—		251.2		131.8		—		383.0		Property, plant and equipment, net	0		0		292.8		142.0		0		434.8
Intangible assets, net	Intangible assets, net	—		—		411.6		99.9		—		511.5		Intangible assets, net	0		0		403.0		121.6		0		524.6
Goodwill	Goodwill	—		—		1,017.1		282.6		—		1,299.7		Goodwill	0		0		1,050.3		319.8		0		1,370.1
Investment in:	Investment in:													Investment in:
Issuer subsidiaries	Issuer subsidiaries	1,212.1		—		—		—		(1,212.1)		—		Issuer subsidiaries	1,552.6		—		—		—		(1,552.6)		—
Guarantor subsidiaries	Guarantor subsidiaries	—		3,146.0		—		—		(3,146.0)		—		Guarantor subsidiaries	—		3,532.2		—		—		(3,532.2)		—
Non-guarantor subsidiaries	Non-guarantor subsidiaries	—		—		547.4		—		(547.4)		—		Non-guarantor subsidiaries	—		—		691.8		—		(691.8)		—
Other assets	Other assets	—		1.1		63.1		18.4		—		82.6		Other assets	0		0.7		100.7		62.5		—		163.9
Total assets	Total assets	$	1,213.5	$	3,147.3	$	2,845.0	$	959.4	$	(4,905.5)	$	3,259.7	Total assets	$	1,553.1	$	3,533.1	$	2,999.7	$	1,091.8	$	(5,776.6)	$	3,401.1
Liabilities and stockholders' equity	Liabilities and stockholders' equity													Liabilities and stockholders' equity
Current liabilities:	Current liabilities:													Current liabilities:
Current maturities of debt	Current maturities of debt	$	—	$	—	$	0.1	$	1.1	$	—	$	1.2	Current maturities of debt	$	0	$	0	$	2.3	$	0.1	$	0	$	2.4
Trade payables	Trade payables	—		—		129.7		62.0		—		191.7		Trade payables	0		0		72.2		57.2		0		129.4
Compensation and benefits	Compensation and benefits	—		—		42.4		21.3		—		63.7		Compensation and benefits	0		0		36.6		20.4		0		57.0
Current portion of pension and postretirement benefit obligations	Current portion of pension and postretirement benefit obligations	—		—		1.9		1.4		—		3.3		Current portion of pension and postretirement benefit obligations	0		0		1.7		1.4		0		3.1
Other current liabilities	Other current liabilities	3.0		7.5		90.3		36.3		—		137.1		Other current liabilities	0		1.2		77.8		46.6		0		125.6
Total current liabilities	Total current liabilities	3.0		7.5		264.4		122.1		—		397.0		Total current liabilities	0		1.2		190.6		125.7		0		317.5

Long-term debt	Long-term debt	—		1,213.4		14.4		9.0		—		1,236.8		Long-term debt	0		1,117.8		70.7		0.7		0		1,189.2
Note payable to (receivable from), net														Note payable to (receivable from), net	113.1		861.5		(1,111.6)		137.0		0		0
Pension and postretirement benefit obligations	Pension and postretirement benefit obligations	—		—		112.9		45.1		—		158.0		Pension and postretirement benefit obligations	0		0		119.2		52.2		0		171.4
Deferred income taxes	Deferred income taxes	—		—		98.8		27.1		—		125.9		Deferred income taxes	0		0		96.8		22.6		0		119.4
Other liabilities	Other liabilities	0.2		—		87.4		23.4		—		111.0		Other liabilities	0.7		0		101.8		61.8		0		164.3
Total liabilities	Total liabilities	3.2		1,220.9		577.9		226.7		—		2,028.7		Total liabilities	113.8		1,980.5		(532.5)		400.0		0		1,961.8
Note (receivable from) payable to affiliates, net		(20.7)		714.3		(879.0)		185.4		—		—

Total stockholders' equity	Total stockholders' equity	1,231.0		1,212.1		3,146.1		547.3		(4,905.5)		1,231.0		Total stockholders' equity	1,439.3		1,552.6		3,532.2		691.8		(5,776.6)		1,439.3
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	1,213.5	$	3,147.3	$	2,845.0	$	959.4	$	(4,905.5)	$	3,259.7	Total liabilities and stockholders' equity	$	1,553.1	$	3,533.1	$	2,999.7	$	1,091.8	$	(5,776.6)	$	3,401.1

~~Table of Contents~~

~~Condensed Consolidating Statements of Operations~~

~~For the Nine Months Ended December 31, 2019~~

~~(in millions)~~

Parent Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net sales $ — $ — $ 1,155.9 $ 487.9 $ (122.5) $ 1,521.3
Cost of sales — — 698.5 343.8 (122.5) 919.8
Gross profit — — 457.4 144.1 — 601.5
Selling, general and administrative expenses — — 242.4 77.6 — 320.0
Restructuring and other similar charges — — 5.7 3.2 — 8.9
Amortization of intangible assets — — 20.8 5.5 — 26.3
Income from operations — — 188.5 57.8 — 246.3
Non-operating (expense) income:
     Interest (expense) income, net:
          To third parties — (44.0) (2.1) 0.9 — (45.2)
          To affiliates 0.5 25.2 (11.3) (14.4) — —
(Loss) gain on the extinguishment of debt — (2.1) 3.3 (0.2) — 1.0
Other expense, net — — (0.9) (0.1) — (1.0)
Income (loss) before income taxes 0.5 (20.9) 177.5 44.0 — 201.1
Provision for income taxes — — (32.8) (14.9) — (47.7)
Equity method investment income — — — 0.2 — 0.2
Income (loss) before equity in earnings of subsidiaries 0.5 (20.9) 144.7 29.3 — 153.6
Equity in income of subsidiaries 151.3 172.2 27.5 — (351.0) —
Net income from continuing operations 151.8 151.3 172.2 29.3 (351.0) 153.6
Loss from discontinued operations, net of tax — — — (1.8) — (1.8)
Net income 151.8 151.3 172.2 27.5 (351.0) 151.8
Non-controlling interest income — — — 0.2 — 0.2
Net income attributable to Rexnord 151.8 151.3 172.2 27.3 (351.0) 151.6
Dividends on preferred stock (14.4) — — — — (14.4)
Net income attributable to Rexnord common stockholders $ 137.4 $ 151.3 $ 172.2 $ 27.3 $ (351.0) $ 137.2
Comprehensive income $ 151.8 $ 149.5 $ 172.3 $ 21.4 $ (351.0) $ 144.0

3627

Table of Contents

Condensed Consolidating Statements of Operations

For the Three Months Ended ~~December~~March 31, ~~2019~~2021

(in millions)


		Parent		Issuers		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated			Parent		Issuers		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net sales	Net sales	$	—	$	—	$	368.0	$	160.0	$	(36.3)		$	491.7	Net sales	$	0	$	0	$	380.0	$	196.7	$	(50.6)	$	526.1
Cost of sales	Cost of sales	—		—		222.2		114.1		(36.3)			300.0		Cost of sales	0		0		231.4		137.4		(50.6)		318.2
Gross profit	Gross profit	—		—		145.8		45.9		—			191.7		Gross profit	0		0		148.6		59.3		0		207.9
Selling, general and administrative expenses	Selling, general and administrative expenses	—		—		76.3		25.4		—			101.7		Selling, general and administrative expenses	0		0		90.6		28.7		0		119.3
Restructuring and other similar charges	Restructuring and other similar charges	—		—		3.0		0.6		—			3.6		Restructuring and other similar charges	0		0		0.5		0.1		0		0.6
Amortization of intangible assets	Amortization of intangible assets	—		—		7.0		1.8		—			8.8		Amortization of intangible assets	0		0		7.3		2.1		0		9.4
Income from operations	Income from operations	—		—		59.5		18.1		—			77.6		Income from operations	0		0		50.2		28.4		0		78.6
Non-operating (expense) income:
Interest (expense) income, net:
Non-operating income (expense):															Non-operating income (expense):
Interest income (expense), net:															Interest income (expense), net:
To third parties	To third parties	—		(13.8)		(0.8)		0.2		—			(14.4)		To third parties	0		(9.6)		(1.4)		0		0		(11.0)
To affiliates	To affiliates	0.1		8.1		2.4		(10.6)		—			—		To affiliates	10.8		5.3		(15.1)		(1.0)		0		0
(Loss) gain on the extinguishment of debt		—		(2.1)		0.1		(0.2)		—			(2.2)
Other (income) expense, net		—		(0.1)		0.3		0.6		—		��	0.8

Other income (expense), net															Other income (expense), net	0		0		1.1		(1.5)		0		(0.4)
Income (loss) before income taxes	Income (loss) before income taxes	0.1		(7.9)		61.5		8.1		—			61.8		Income (loss) before income taxes	10.8		(4.3)		34.8		25.9		0		67.2
Provision for income taxes	Provision for income taxes	—		—		(9.7)		(3.7)		—			(13.4)		Provision for income taxes	0		0		(11.7)		(5.5)		0		(17.2)
Equity method investment income	Equity method investment income	—		—		—		—		—			—		Equity method investment income	0		0		0		0.1		0		0.1
Income (loss) before equity in earnings of subsidiaries	Income (loss) before equity in earnings of subsidiaries	0.1		(7.9)		51.8		4.4		—			48.4		Income (loss) before equity in earnings of subsidiaries	10.8		(4.3)		23.1		20.5		0		50.1
Equity in income of subsidiaries	Equity in income of subsidiaries	48.3		56.2		4.4		—		(108.9)			—		Equity in income of subsidiaries	39.3		43.6		20.5		0		(103.4)		0
Net income															Net income	50.1		39.3		43.6		20.5		(103.4)		50.1

Net income		48.4		48.3		56.2		4.4		(108.9)			48.4
Non-controlling interest loss		—		—		—		(0.1)		—			(0.1)
Non-controlling interest income															Non-controlling interest income	0		0		0		0.1		0		0.1

Net income attributable to Rexnord	Net income attributable to Rexnord	48.4		48.3		56.2		4.5		(108.9)			48.5		Net income attributable to Rexnord	$	50.1	$	39.3	$	43.6	$	20.4	$	(103.4)	$	50.0
Dividends on preferred stock		(2.8)		—		—		—		—			(2.8)
Net income attributable to Rexnord common stockholders		$	45.6	$	48.3	$	56.2	$	4.5	$	(108.9)		$	45.7
Comprehensive income	Comprehensive income	$	48.4	$	50.2	$	56.2	$	9.8	$	(108.9)		$	55.7	Comprehensive income	$	50.1	$	37.3	$	44.7	$	19.6	$	(103.4)	$	48.3

~~Table of Contents~~

~~Condensed Consolidating Statements of Operations~~

~~For the Nine Months Ended December 31, 2018~~

~~(in millions)~~

Parent Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net sales $ — $ — $ 1,157.8 $ 497.6 $ (142.0) $ 1,513.4
Cost of sales — — 716.1 356.3 (142.0) 930.4
Gross profit — — 441.7 141.3 — 583.0
Selling, general and administrative expenses — — 244.6 79.2 — 323.8
Restructuring and other similar charges — — 6.3 3.1 — 9.4
Amortization of intangible assets — — 20.6 4.8 — 25.4
Income from continuing operations — — 170.2 54.2 — 224.4
Non-operating (expense) income:
     Interest (expense) income, net:
          To third parties — (52.8) (1.6) 0.3 — (54.1)
          To affiliates 1.6 28.6 (21.4) (8.8) — —
Gain on extinguishment of debt — — 5.0 — — 5.0
Other income (expense), net — 0.2 3.9 (0.8) — 3.3
Income (loss) before income taxes from continuing operations 1.6 (24.0) 156.1 44.9 — 178.6
Provision for income taxes — — (35.4) (5.4) — (40.8)
Equity method investment income — — — 3.5 — 3.5
Income (loss) before equity in earnings of subsidiaries 1.6 (24.0) 120.7 43.0 — 141.3
Equity in (loss) income of subsidiaries (14.6) 9.4 (66.5) — 71.7 —
Net (loss) income from continuing operations (13.0) (14.6) 54.2 43.0 71.7 141.3
Loss from discontinued operations, net of tax — — (44.8) (109.5) — (154.3)
Net (loss) income (13.0) (14.6) 9.4 (66.5) 71.7 (13.0)
Non-controlling interest loss — — — (0.1) — (0.1)
Net (loss) income attributable to Rexnord (13.0) (14.6) 9.4 (66.4) 71.7 (12.9)
Dividends on preferred stock (17.4) — — — — (17.4)
Net (loss) income attributable to Rexnord common stockholders $ (30.4) $ (14.6) $ 9.4 $ (66.4) $ 71.7 $ (30.3)
Comprehensive (loss) income $ (13.0) $ (23.6) $ 8.5 $ (79.6) $ 71.7 $ (36.0)

3828

Table of Contents

Condensed Consolidating Statements of Operations

For the Three Months Ended ~~December~~March 31, ~~2018~~2020

(in millions)

Parent Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net sales $ — $ — $ 371.8 $ 156.8 $ (43.6) $ 485.0
Cost of sales — — 236.3 108.0 (43.6) 300.7
Gross profit — — 135.5 48.8 — 184.3
Selling, general and administrative expenses — — 76.5 25.9 — 102.4
Restructuring and other similar charges — — 2.1 0.5 — 2.6
Amortization of intangible assets — — 6.8 1.6 — 8.4
Income from continuing operations — — 50.1 20.8 — 70.9
Non-operating (expense) income:
     Interest (expense) income, net:
          To third parties — (16.2) (0.8) 0.2 — (16.8)
          To affiliates 0.5 9.0 (7.2) (2.3) — —
Gain on extinguishment of debt — — 5.0 — — 5.0
Other income, net — 0.1 1.4 0.1 — 1.6
Income (loss) before income taxes from continuing operations 0.5 (7.1) 48.5 18.8 — 60.7
(Provision) benefit for income taxes — — (9.4) 0.3 — (9.1)
Equity method investment income — — — 1.3 — 1.3
Income (loss) before equity in earnings of subsidiaries 0.5 (7.1) 39.1 20.4 — 52.9
Equity in income of subsidiaries 24.7 31.8 33.7 — (90.2) —
Net income from continuing operations 25.2 24.7 72.8 20.4 (90.2) 52.9
(Loss) income from discontinued operations, net of tax — — (41.1) 13.3 — (27.8)
Net income 25.2 24.7 31.7 33.7 (90.2) 25.1
Non-controlling interest loss — — — (0.3) — (0.3)
Net income attributable to Rexnord 25.2 24.7 31.7 34.0 (90.2) 25.4
Dividends on preferred stock (5.8) — — — — (5.8)
Net income attributable to Rexnord common stockholders $ 19.4 $ 24.7 $ 31.7 $ 34.0 $ (90.2) $ 19.6
Comprehensive income $ 25.1 $ 19.5 $ 29.0 $ 51.1 $ (90.2) $ 34.5


	Parent		Issuers		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net sales	$	0	$	0	$	412.5	$	173.1	$	(38.6)	$	547.0
Cost of sales	0		0		246.2		122.9		(38.6)		330.5
Gross profit	0		0		166.3		50.2		0		216.5
Selling, general and administrative expenses	0		0		88.9		23.9		0		112.8
Restructuring and other similar charges	0		0		3.1		3.5		0		6.6
Amortization of intangible assets	0		0		7.3		1.8		0		9.1
Income from operations	0		0		67.0		21.0		0		88.0
Non-operating (expense) income:
Interest income (expense), net:
To third parties	0		(12.7)		(0.6)		(0.1)		0		(13.4)
To affiliates	9.8		16.1		(5.1)		(20.8)		0		0

Actuarial loss on pension and postretirement benefit obligations	0		0		(34.9)		(0.9)		0		(35.8)
Other income (expense), net	0		0.1		(1.0)		(2.7)		0		(3.6)
Income (loss) before income taxes	9.8		3.5		25.4		(3.5)		0		35.2
Provision for income taxes	0		(0.5)		(5.5)		(0.4)		0		(6.4)
Equity method investment loss	0		0		0		(0.2)		0		(0.2)
Income (loss) before equity in earnings of subsidiaries	9.8		3.0		19.9		(4.1)		0		28.6
Equity in income (loss) of subsidiaries	18.8		15.8		(4.1)		0		(30.5)		0


Net income (loss)	28.6		18.8		15.8		(4.1)		(30.5)		28.6
Non-controlling interest income	0		0		0		0.1		0		0.1
Net income (loss) attributable to Rexnord	$	28.6	$	18.8	$	15.8	$	(4.2)	$	(30.5)	$	28.5


Comprehensive income (loss)	$	28.6	$	18.4	$	14.0	$	(21.9)	$	(30.5)	$	8.6

3929

Table of Contents

Condensed Consolidating Statements of Cash Flows

For the ~~Nine~~Three Months Ended ~~December~~March 31, ~~2019~~2021

(in millions)


		Parent		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated			Parent		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Operating activities	Operating activities													Operating activities
Cash provided by operating activities	Cash provided by operating activities	$	26.8	$	100.5	$	52.2	$	(4.8)	$	—	$	174.7	Cash provided by operating activities	$	8.4	$	0	$	54.4	$	8.5	$	0	$	71.3
Investing activities	Investing activities													Investing activities
Expenditures for property, plant and equipment	Expenditures for property, plant and equipment	—		—		(18.1)		(7.4)		—		(25.5)		Expenditures for property, plant and equipment	0		0		(5.3)		(3.9)		0		(9.2)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	—		—		(24.8)		(0.3)		—		(25.1)		Acquisitions, net of cash acquired	0		0		0.4		0		0		0.4
Proceeds from dispositions of long-lived assets	Proceeds from dispositions of long-lived assets	—		—		1.6		1.3		—		2.9		Proceeds from dispositions of long-lived assets	0		0		0.7		0		0		0.7
Net payments associated with divestiture of discontinued operations		—		—				(1.3)		—		(1.3)

Cash used for investing activities	Cash used for investing activities	—		—		(41.3)		(7.7)		—		(49.0)		Cash used for investing activities	0		0		(4.2)		(3.9)		0		(8.1)
Financing activities	Financing activities													Financing activities
Proceeds from borrowings of debt		—		725.0		—		—		—		725.0

Repayments of debt	Repayments of debt	—		(825.7)		(1.2)		(8.4)		—		(835.3)		Repayments of debt	0		0		(0.5)		0		0		(0.5)

Proceeds from exercise of stock options	Proceeds from exercise of stock options	16.8		—		—		—		—		16.8		Proceeds from exercise of stock options	2.8		0		0		0		0		2.8
Taxes withheld and paid on employees' share-based payment awards		(7.6)		—		—		—		—		(7.6)

Repurchase of common stock	Repurchase of common stock	(20.0)		—		—		—		—		(20.0)		Repurchase of common stock	(0.9)		0		0		0		0		(0.9)
Payments of preferred stock dividends		(17.4)		—		—		—		—		(17.4)
Payment of common stock dividend														Payment of common stock dividend	(10.8)		0		0		0		0		(10.8)

Cash used for financing activities	Cash used for financing activities	(28.2)		(100.7)		(1.2)		(8.4)		—		(138.5)		Cash used for financing activities	(8.9)		0		(0.5)		0		0		(9.4)
Effect of exchange rate changes on cash and cash equivalents		—		—		—		(2.7)		—		(2.7)
(Decrease) increase in cash and cash equivalents		(1.4)		(0.2)		9.7		(23.6)		—		(15.5)
Effect of exchange rate changes on cash, cash equivalents and restricted cash														Effect of exchange rate changes on cash, cash equivalents and restricted cash	0		0		0		(2.1)		0		(2.1)
(Decrease) increase in cash, cash equivalents and restricted cash														(Decrease) increase in cash, cash equivalents and restricted cash	(0.5)		0		49.7		2.5		0		51.7
Cash, cash equivalents and restricted cash at beginning of period	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 beginning of period	0.5		0.2		46.7		208.2		0		255.6
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	—	$	—	$	117.4	$	159.6	$	—	$	277.0	Cash, cash equivalents and restricted cash at end of period	$	0	$	0.2	$	96.4	$	210.7	$	0	$	307.3

4030

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Condensed Consolidating Statements of Cash Flows

For the ~~Nine~~Three Months Ended ~~December~~March 31, ~~2018~~2020

(in millions)


		Parent		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated			Parent		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Operating activities	Operating activities													Operating activities
Cash provided by operating activities		$	15.9	$	19.0	$	103.0	$	7.4	$	—	$	145.3
Cash provided by (used for) operating activities														Cash provided by (used for) operating activities	$	82.3	$	(249.7)	$	261.8	$	29.5	$	0	$	123.9
Investing activities	Investing activities													Investing activities
Expenditures for property, plant and equipment	Expenditures for property, plant and equipment	—		—		(19.1)		(7.4)		—		(26.5)		Expenditures for property, plant and equipment	0		0		(11.9)		(4.0)		0		(15.9)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	—		—		(2.0)		—		—		(2.0)		Acquisitions, net of cash acquired	0		0		(59.4)		0		0		(59.4)

Proceeds from dispositions of long-lived assets	Proceeds from dispositions of long-lived assets	—		—		3.5		—		—		3.5		Proceeds from dispositions of long-lived assets	0		0		1.2		0		0		1.2
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	Cash used for investing activities	—		—		(14.6)		(0.1)		—		(14.7)		Cash used for investing activities	0		0		(70.1)		(4.0)		0		(74.1)
Financing activities	Financing activities													Financing activities
Proceeds from borrowings of long-term debt	Proceeds from borrowings of long-term debt	—		247.0		—		2.8		—		249.8		Proceeds from borrowings of long-term debt	0		250.0		75.0		0		0		325.0
Repayments of debt	Repayments of debt	—		(265.8)		—		(6.9)		—		(272.7)		Repayments of debt	0		0		(0.1)		(0.2)		0		(0.3)
Repurchase of common stock														Repurchase of common stock	(80.7)		0		0		0		0		(80.7)
Payment of common stock dividends														Payment of common stock dividends	(9.8)		0		0		0		0		(9.8)

Proceeds from exercise of stock options														Proceeds from exercise of stock options	19.2		0		0		0		0		19.2

Proceeds from exercise of stock options		6.6		—		—		—		—		6.6
Taxes withheld and paid on employees' share-based payment awards		(3.2)		—		—		—		—		(3.2)
Payments of preferred stock dividends		(17.4)		—		—		—		—		(17.4)
Cash used for by financing activities		(14.0)		(18.8)		—		(4.1)		—		(36.9)
Effect of exchange rate changes on cash and cash equivalents		—		—		—		(14.2)		—		(14.2)
Increase (decrease) in cash and cash equivalents		1.9		0.2		88.4		(11.0)		—		79.5
Cash (used for) provided by financing activities														Cash (used for) provided by financing activities	(71.3)		250.0		74.9		(0.2)		0		253.4
Effect of exchange rate changes on cash, cash equivalents and restricted cash														Effect of exchange rate changes on cash, cash equivalents and restricted cash	0		0		0		(6.8)		0		(6.8)
Increase in cash, cash equivalents and restricted cash														Increase in cash, cash equivalents and restricted cash	11.0		0.3		266.6		18.5		0		296.4
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	—		—		40.9		176.7		—		217.6		Cash, cash equivalents and restricted cash at beginning of period	0		0		117.4		159.6		0		277.0
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	1.9	$	0.2	$	129.3	$	165.7	$	—	$	297.1	Cash, cash equivalents and restricted cash at end of period	$	11.0	$	0.3	$	384.0	$	178.1	$	0	$	573.4

~~22.~~19. Subsequent Events

On ~~January 28, 2020,~~April 16, 2021, the Company acquired substantially all of the assets of ~~Just Manufacturing Company~~Advance Technology Solutions, LLC (d/b/a ATS GREASEwatch) ("~~Just Manufacturing"~~ATS GREASEwatch") for a total preliminary cash purchase price of approximately ~~$60.0~~$4.5 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~~ATS GREASEwatch, headquartered in ~~Franklin Park, Illinois,~~Saginaw, Michigan, develops, manufactures ~~stainless steel sinks~~ and ~~plumbing fixtures primarily used in institutional~~markets remote tank monitoring devices, alarms, software and ~~commercial end markets~~services for grease interceptors and ~~complements~~separators and provides technology to enhance the Zurn Environmental Solution within the Company's existing Water Management platform. The Company's financial position and results from operations will include ~~Just Manufacturing~~ATS GREASEwatch subsequent to ~~January 28, 2020.~~April 16, 2021. As of the date of this filing, the Company has not completed the preliminary allocation of the purchase price to the assets acquired and liabilities assumed. This acquisition is not expected to have a material impact on the Company's condensed consolidated financial statements.

On January 27, 2020, the Company's Board of Directors declared an initial quarterly cash dividend on the Company's common stock of $0.08 per-share to be paid on March 6, 2020, to stockholders of record as of February 21, 2020. In addition, the Board of Directors approved increasing the Company’s existing share repurchase authority to $300.0 million of available capacity under the Repurchase Program. See Note 8, Stockholders’ Equity, for additional information about the Repurchase Program.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Rexnord is a growth-oriented, multi-platform industrial company with what we believe are leading market shares and highly-trusted brands that serve a diverse array of global end markets. Our heritage of innovation and specification have allowed us to provide highly-engineered, mission-critical solutions to customers for decades and affords us the privilege of having long-term, valued relationships with market leaders. We operate our Company in a disciplined way and the Rexnord Business System (“RBS”) is our 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 our business.

The following information should be read in conjunction with the audited consolidated financial statements and notes thereto, along with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), in our ~~Annual~~Transition Report on Form 10-K for the ~~fiscal year~~nine month transition period ended ~~March~~December 31, ~~2019.~~2020 (the "Transition Period").

Fiscal Year

~~Our~~Following the end of our fiscal ~~year ends on~~2020, we transitioned from a March ~~31.~~31 fiscal year-end date to a December 31 fiscal year-end date. Throughout this MD&A, we refer to the period from ~~October~~January 1, ~~2019~~2020 through ~~December~~March 31, ~~2019~~2020, as the ~~“third quarter of fiscal~~“three months ended March 31, 2020” or the ~~“third quarter~~“quarter ended ~~December~~March 31, ~~2019.~~2020.” ~~Similarly, we~~We refer to the period from ~~October~~January 1, ~~2018~~2021 through ~~December~~March 31, ~~2018~~2021, as the ~~“third~~"three months ended March 31, 2021" or the “quarter ended March 31, 2021.”

Expected Spin-Off of Process & Motion Control Segment

On February 15, 2021, Rexnord and Regal entered into definitive agreements whereby Rexnord will separate its Process & Motion Control segment by way of a tax-free spin-off to Rexnord’s stockholders and then immediately combine it with Regal in a RMT transaction. Closing of this transaction is subject to various closing conditions, including the receipt of regulatory approvals, receipt of the approval of Regal and Rexnord stockholders (which each of Regal and Rexnord will solicit at special meetings of their respective stockholders at a later date), and other customary closing conditions. This transaction is expected to close in the fourth quarter of ~~fiscal 2019” or the “third quarter ended December 31, 2018.”~~2021.

Critical Accounting Policies and Estimates

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"), which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Refer to Item 7, MD&A of our ~~Annual~~Transition Report on Form 10-K for the ~~fiscal year ended March 31, 2019,~~Transition Period for information with respect to our critical accounting policies, which we believe could have the most significant effect on our reported results and require subjective or complex judgments by management. Except for the items reported below, management believes that as of ~~December~~March 31, ~~2019~~2021, and during the period from ~~April~~January 1, ~~2019~~2021 through ~~December~~March 31, ~~2019,~~2021, there has been no material change to this information.

Recent Accounting Pronouncements

See Item 1, Note 1, Basis of Presentation and Significant Accounting Policies regarding recent accounting pronouncements.

COVID-19 Pandemic

The ongoing coronavirus ("COVID-19") pandemic and the actions taken by various governments and third parties to combat the spread of COVID-19 (including, in some cases, mandatory quarantines and other suspensions of non-essential business operations) have led to disruptions in our manufacturing and distribution operations and supply chains, including temporary reductions or suspensions of operations at some of our manufacturing and distribution locations around the world. In addition, our suppliers, business partners and customers have also experienced similar negative impacts from the COVID-19 pandemic. However, as of March 31, 2021, essentially all of our global facilities were operating with only intermittent interruptions and we are not currently experiencing any significant issues with respect to our distribution operations and supply chains. We remain focused on the health and well-being of our associates and have undertaken numerous actions within our offices and manufacturing sites that are intended to minimize the spread of COVID-19, including implementing work from home policies, establishing social distancing protocols for associates while at work and providing associates with access to numerous collaboration and productivity tools to facilitate communication in lieu of travel and face-to-face meetings.

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In order to reduce our cash outflows during this period of uncertainty and economic volatility, we implemented workforce reductions in 2020 and reductions of non-essential spending. Our objective with respect to these actions is to attempt to control the downside risk to our financial results, while ensuring that we maintain the capacity and flexibility to fully participate in the expected eventual recovery. While the duration of the COVID-19 pandemic is currently unknown and it is not possible at this time to estimate the scope and severity of the impact that the pandemic could have on our operations, the measures taken, and those that may be taken in the future, by the governments of countries affected, actions taken to protect employees, actions taken to shutdown or temporarily discontinue operations in certain locations, changes in customer buying patterns and the impact of the pandemic on various business activities in affected countries and the economy generally, it could continue to adversely affect our financial condition, results of operations and cash flows.

Acquisitions and Divestiture

On December 11, 2020, we acquired substantially all of the assets of Hadrian Manufacturing Inc. and 100% of the stock of Hadrian, Inc. (collectively, "Hadrian") for a total cash purchase price of $101.3 million. Hadrian, based in Burlington, Ontario, Canada, manufactures washroom partitions and lockers primarily used in institutional and commercial end markets and complements our existing Water Management platform.

On November 24, 2020, we acquired the remaining non-controlling interest in a 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.

On October 1, 2020, we completed the sale of our gearbox product line in China within our Process & Motion Control platform for aggregate cash consideration of $5.8 million. The gearbox product line was not material to the Company's consolidated statements of operations or financial position and did not meet the criteria to be presented as discontinued operations.

On January 28, 2020, we acquired substantially all of the assets of Just Manufacturing Company ("Just Manufacturing") for a ~~total preliminary~~ cash purchase price of ~~approximately $60.0~~$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 our existing Water Management platform.

On May 10, 2019, we acquired substantially all of the assets of ~~East Creek Corporation (d/b/a StainlessDrains.com),~~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.~~million. StainlessDrains.com, headquartered in Greenville, Texas, added complementary product lines to our existing Water Management platform.

On January 23, 2019, we acquired an additional 47.5% interest in Centa MP (Hong Kong) Co., Limited ("Centa China"), a joint venture in which we 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 our existing Process & Motion Control platform, provides us with the opportunity to expand our product offerings within our Asia Pacific end markets.

~~Discontinued Operations~~

During fiscal 2019, we completed the sale of our VAG business, which was previously included within our Water Management platform. As a result, 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 our operations and financial results. The sale price was subject to customary working capital and cash balance

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adjustments, which were finalized during the first quarter of fiscal 2020. As a result of these adjustments and other related costs, we recognized an additional $1.8 million loss on the sale of discontinued operations during the first quarter of fiscal 2020.

During the nine months ended December 31, 2018, we recorded non-cash impairment charges of $126.0 million, to reflect the estimated fair value less costs to sell the VAG business based on the value of preliminary bids received at that time. For other elements of the loss from discontinued operations during the three and nine months ended December 31, 2019, refer to Item 1, Note 4, Discontinued Operations for further information. The analysis of our results of operations below focuses on our results from continuing operations.

Restructuring

During ~~fiscal 2020,~~the three months ended March 31, 2021, we ~~have~~ continued to execute various restructuring initiatives focused on driving efficiencies, reducing operating costs by modifying our footprint to reflect changes in the markets we serve and the impact of acquisitions on our overall manufacturing capacity and ~~refining~~the refinement of our overall product portfolio. These restructuring actions primarily resulted in workforce reductions, impairment of related manufacturing facilities, equipment and intangible assets, lease termination costs, and other facility rationalization costs. We expect ~~these~~to continue executing similar initiatives to optimize our operating margin and manufacturing footprint. As we continue ~~which~~to evaluate the impact of the ongoing COVID-19 pandemic and the resulting effects on the global economy, we may ~~result in~~also execute additional restructuring actions. As such, we expect further expenses related to workforce reductions, lease termination costs, and other facility rationalization costs ~~including the impairment or accelerated depreciation of assets. At this time,~~on our ~~full repositioning plan is preliminary~~overall manufacturing capacity, and ~~related expenses are not yet estimable.~~refining our overall product portfolio. For the three ~~and nine~~ months ended ~~December~~March 31, ~~2019,~~2021, restructuring charges totaled ~~$3.6 million and $8.9 million, respectively.~~$0.6 million. For the three ~~and nine~~ months ended ~~December~~March 31, ~~2018,~~2020, restructuring charges totaled ~~$2.6 million and $9.4 million, respectively.~~$6.6 million. Refer to Item 1, Note 3, Restructuring and Other Similar Charges for further information.

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Results of Operations

~~Third Quarter~~Three Months Ended ~~December~~March 31, ~~2019~~2021 compared with the ~~Third Quarter~~Three Months Ended ~~December~~March 31, ~~2018:~~2020:

Net sales

(Dollars in Millions)


		Quarter Ended											Three Months Ended
		December 31, 2019		December 31, 2018		Change		% Change			March 31, 2021		March 31, 2020		Change		% Change
Process & Motion Control	Process & Motion Control	$	327.5	$	326.7	$	0.8	0.2	%	Process & Motion Control	$	320.9	$	363.6	$	(42.7)	(11.7)	%
Water Management	Water Management	164.2		158.3		5.9		3.7	%	Water Management	205.2		183.4		21.8		11.9	%
Consolidated	Consolidated	$	491.7	$	485.0	$	6.7	1.4	%	Consolidated	$	526.1	$	547.0	$	(20.9)	(3.8)	%

Process & Motion Control

Process & Motion Control net sales were ~~$327.5~~$320.9 million ~~and $326.7 million in~~during the ~~third quarter~~three months ended March 31, 2021, a decrease of ~~fiscal 2020 and fiscal 2019, respectively.~~12% as compared to the prior year. Excluding a 1%2% increase into net sales associated with ~~the acquisition of Centa China~~foreign currency translation and a 1% ~~unfavorable impact~~decrease from ~~foreign currency translation,~~a small divestiture, core sales ~~were flat~~decreased by 13% year over year as a result of the lower level of order backlog entering the quarter and changes in customer buying patterns given the COVID-19 pandemic. Net sales ~~growth~~decreased by 5% year over year in our non-aerospace markets and by 46% in our aerospace ~~and consumer-facing end markets was offset by softer demand across several of our industrial process end markets, coupled with the impact of our ongoing product line simplification initiatives.~~markets.

Water Management

Water Management net sales were ~~$164.2~~$205.2 million induring the ~~third quarter of fiscal 2020,~~three months ended March 31, 2021, an increase of 4%12% year over year. Excluding ~~a 1%~~an 8% year over year increase in net sales resulting from our ~~acquisition~~prior-year acquisitions of ~~Stainlessdrains.com,~~Just Manufacturing and Hadrian, core sales increased ~~3% in the third quarter of fiscal 2020 as a result of~~4% driven by increased demand across several product lines including our ~~North American building construction end markets, partially offset by a modest impact of our ongoing product line simplification initiatives.~~hygienic and environmental solutions.

Income from operations

(Dollars in Millions)

Quarter Ended
December 31, 2019 December 31, 2018 Change % Change
Process & Motion Control $ 53.6 $ 53.4 $ 0.2 0.4 %
    % of net sales 16.4 % 16.3 % 0.1 %
Water Management 37.6 33.1 4.5 13.6 %
    % of net sales 22.9 % 20.9 % 2.0 %
Corporate (13.6) (15.6) 2.0 12.8 %
    Consolidated $ 77.6 $ 70.9 $ 6.7 9.4 %
        % of net sales 15.8 % 14.6 % 1.2 %

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	Three Months Ended
	March 31, 2021			March 31, 2020			Change			% Change
Process & Motion Control	$	55.0		$	61.4		$	(6.4)		(10.4)	%
% of net sales	17.1		%	16.9		%	0.2		%
Water Management	40.6			41.8			(1.2)			(2.9)	%
% of net sales	19.8		%	22.8		%	(3.0)		%
Corporate	(17.0)			(15.2)			(1.8)			(11.8)	%
Consolidated	$	78.6		$	88.0		$	(9.4)		(10.7)	%
% of net sales	14.9		%	16.1		%	(1.2)		%

Process & Motion Control

Process & Motion Control income from operations ~~for~~during the ~~third quarter of fiscal 2020~~three months ended March 31, 2021 was ~~$53.6~~$55.0 million, or ~~16.4%~~17.1% of net sales. Income from operations as a percentage of net sales increased by 1020 basis points year over year ~~as higher year over year~~due to benefits from cost reduction and productivity initiatives and lower year-over-year restructuring ~~costs were~~expense, which combined to more than offset ~~by RBS-led productivity gains and benefits from our completed footprint repositioning actions.~~the impact of lower sales as compared to the prior year.

Water Management

Water Management income from operations was ~~$37.6~~$40.6 million ~~for~~during the ~~third quarter of fiscal 2020,~~three months ended March 31, 2021, or ~~22.9%~~19.8% of net sales. Income from operations as a percentage of net sales ~~increased~~decreased by ~~200~~300 basis points year over year ~~primarily due to~~as the ~~increase~~favorable impact of higher sales growth year over year was more than offset by increases in ~~sales~~restructuring, non-cash stock compensation and ~~benefits associated with ongoing cost reduction~~amortization expenses, the mix impact of the Hadrian acquisition and ~~productivity initiatives and a reduction~~the year-over-year change in the adjustment to state inventories at last-in-first-out cost.

Corporate

Corporate expenses were ~~$13.6~~$17.0 million inand $15.2 million during the ~~third quarter of fiscal~~three months ended March 31, 2021 and 2020, ~~and $15.6 million in the third quarter of fiscal 2019.~~respectively. The ~~decrease~~increase in corporate expenses during the three months ended March 31, 2021, is primarily ~~associated with~~ the ~~recognition~~result of ~~lease facility termination costs during the third quarter~~higher year over year non-cash stock compensation expense.

Table of ~~fiscal 2019 in connection with our ongoing footprint optimization actions.~~Contents

Interest expense, net

Interest expense, net was ~~$14.4~~$11.0 million induring the ~~third quarter of fiscal 2020~~three months ended March 31, 2021, compared to ~~$16.8~~$13.4 million induring the ~~third quarter of fiscal 2019.~~three months ended March 31, 2020. The decrease in interest expense as compared to the prior year's period is primarily a result of the impact of lower outstanding borrowings ~~in the third quarter of fiscal 2020 following $75.0~~ and $100.0 million voluntary prepayments on our term loan during the fourth quarter of fiscal 2019 and the third quarter of fiscal 2020, respectively. In addition, year-over-year interest expense decreased as a result of the lower average interest ~~rate on our term loan following the refinancing of our term loan, which was completed during the third quarter of fiscal 2020.~~rates. See Item 1, Note 1312 Long-Term Debt for more information.

~~(Loss) gain on extinguishment of debt~~

~~During the third quarter of fiscal 2020, we recognized a $2.2 million~~Actuarial loss on pension and postretirement benefit obligations

There was no actuarial loss on pension and postretirement benefit obligations recognized in the ~~extinguishment~~three months ended March 31, 2021. Actuarial loss on pension and postretirement benefit obligations in the three months ended March 31, 2020, was $35.8 million. The non-cash actuarial loss recognized during the three months ended March 31, 2020, was primarily the result of ~~debt~~decreases in discount rates coupled with lower-than-expected asset returns, partially offset by decreases in life expectancy assumptions utilized within the remeasurement of our defined benefit plans in connection with ~~both the refinancing of~~ our ~~term loan and a $100 million voluntary prepayment on our term loan. During the third quarter of~~previous March 31st fiscal 2019, we recognized a $5.0 million gain on the extinguishment of debt in connection with the forgiveness of the net debt associated with the New Market Tax Credit program. See Item 1, Note 13 Long-Term Debt for more information.year end.

Other ~~income,~~expense, net

Other ~~income,~~expense, net ~~for~~during the ~~third quarter of fiscal~~three months ended March 31, 2021 and 2020, was ~~$0.8~~$0.4 million ~~compared to $1.6~~and $3.6 million, ~~for the third quarter of fiscal 2019.~~respectively. Other ~~income,~~expense, net consists primarily of foreign currency transaction gains and losses and the non-service cost components associated with our defined benefit plans. The year-over-year change is primarily driven by changes in foreign currency rates.

Provision for income taxes

The income tax provision was ~~$13.4~~$17.2 million during the three months ended March 31, 2021, compared to $6.4 million in the ~~third quarter of fiscal 2020, compared to $9.1 million in the third quarter of fiscal 2019.~~three months ended March 31, 2020. The effective income tax rate for the ~~third quarter of fiscal 2020~~three months ended March 31, 2021 was ~~21.7%~~25.6% versus ~~15.0%~~18.2% in the ~~third quarter of fiscal 2019.~~three months ended March 31, 2020. The effective income tax rate for the ~~third quarter of fiscal 2020~~three months ended March 31, 2021 was ~~slightly~~ above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of unrecognized income tax benefits in which such realization is not deemed more-likely-than-not, the accrual of additional income taxes associated with compensation deduction limitations under Section 162(m) of the Internal Revenue Code and the accrual of various state income taxes, partially offset by the recognition of a discrete foreign financing-related income tax benefit, as well as the recognition of income tax benefits associated with foreign-derived intangible income (“FDII”). The effective income tax rate for the three months ended March 31, 2020 was below the U.S. federal statutory rate of 21% primarily due to the recognition of certain previously unrecognized tax benefits due to the lapse of the applicable statutes of limitations and the recognition of income tax benefits associated with FDII, partially offset by the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with global intangible low-taxed income (“GILTI”) and the accrual of various state income taxes, substantially offset by the recognition of certain previously unrecognized tax benefits generally due to the lapse of the applicable statutes of limitations, the recognition of income tax benefits associated with share-based payments, net income tax benefits recognized in association with changes to certain foreign income tax rates and the recognition of income tax benefits associated with foreign-derived intangible income (“FDII”). The effective income tax rate for the third quarter of fiscal 2019 was below the U.S. federal statutory rate of 21% primarily due to the recognition of certain previously unrecognized tax benefits due to the lapse of applicable statutes of limitations partially offset by the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional taxes associated with GILTI and the accrual of various state income taxes.

On a quarterly basis, we review and analyze our valuation allowances associated with deferred tax assets relating to certain foreign and state net operating loss carryforwards as well as U.S. federal and state capital loss carryforwards.In conjunction with this analysis, we weigh both positive and negative evidence for purposes of determining the proper balances of such valuation allowances. Future changes to the balances of these valuation allowances, as a result of our continued review and analysis, could result in a material impact to the financial statements for such period of change.

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Net income ~~from continuing operations~~

Net income ~~from continuing operations for~~during the ~~third quarter of fiscal~~three months ended March 31, 2021 and 2020, was ~~$48.4~~$50.1 million ~~compared to net income from continuing operations of $52.9~~and $28.6 million, ~~in the third quarter of fiscal 2019,~~respectively, as a result of the factors described above. Diluted net income per share ~~from continuing operations~~ was ~~$0.39 in~~$0.40 during the ~~third quarter of fiscal 2020,~~three months ended March 31, 2021, as compared to diluted net income per share ~~from continuing operations~~ of ~~$0.43 in~~$0.23 during the ~~third quarter of fiscal 2019.~~three months ended March 31, 2020.

Net income attributable to Rexnord ~~common stockholders~~

Net income attributable to Rexnord ~~common stockholders for~~during the ~~third quarter of fiscal 2020~~three months ended March 31, 2021, was ~~$45.7~~$50.0 million compared to ~~$19.6~~$28.5 million induring the ~~third quarter of fiscal 2019.~~three months ended March 31, 2020. Diluted net income per share attributable to Rexnord ~~common stockholders~~ for the three months ended ~~December~~March 31, ~~2019~~2021 and ~~December~~March 31, 2018 was $0.39 and $0.21, respectively. The year-over-year change is primarily a result of the $27.8 million, or $0.23 per diluted share, loss from discontinued operations, net of tax, in the third quarter of fiscal 2019, and the other factors described above.

~~Nine Months Ended December 31, 2019 Compared with the Nine Months Ended December 31, 2018:~~

~~Net sales~~

~~(Dollars in Millions)~~

Nine Months Ended
December 31, 2019 December 31, 2018 Change % Change
Process & Motion Control $ 994.6 $ 1,007.8 $ (13.2) (1.3) %
Water Management 526.7 505.6 21.1 4.2 %
Consolidated $ 1,521.3 $ 1,513.4 $ 7.9 0.5 %

~~Process & Motion Control~~

Process & Motion Control net sales decreased 1% year over year to $994.6 million in the first nine months of fiscal 2020. Excluding a 1% increase in sales from the acquisition of Centa China and a 2% unfavorable impact from foreign currency translation, core net sales were flat year over year. Core sales growth in our aerospace and consumer-facing end-markets was offset by the impact of our ongoing product line simplification initiatives as well as softer demand across several of our industrial process end markets.

~~Water Management~~

Water Management net sales were $526.7 million in the first nine months of fiscal 2020, a 4% increase year over year. Excluding a 1% increase in net sales associated with our acquisition of Stainlessdrains.com, core net sales increased 3% during the first nine months of fiscal 2020. The increase in core net sales is primarily the result of increased demand across our North American building construction end markets, partially offset by a modest impact of our ongoing product line simplification initiatives.

~~Income (loss) from operations~~

~~(Dollars in Millions)~~

Nine Months Ended
December 31, 2019 December 31, 2018 Change % Change
Process & Motion Control $ 167.0 $ 159.7 $ 7.3 4.6 %
    % of net sales 16.8 % 15.8 % 1.0 %
Water Management 121.3 110.9 10.4 9.4 %
    % of net sales 23.0 % 21.9 % 1.1 %
Corporate (42.0) (46.2) 4.2 9.1 %
    Consolidated $ 246.3 $ 224.4 $ 21.9 9.8 %
        % of net sales 16.2 % 14.8 % 1.4 %

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~~Process & Motion Control~~

~~Process & Motion Control income from operations for the first nine months of fiscal~~ 2020, was $167.0 million or 16.8% of net sales. Income from operations as a percentage of net sales increased by 100 basis points year over year in the first nine months of fiscal 2020 primarily due to RBS-led productivity gains, benefits from our completed footprint repositioning actions$0.40 and lower year-over-year acquisition-related fair value adjustments that were partially offset by higher restructuring-related costs recognized in fiscal 2020 in connection with our ongoing footprint repositioning initiatives.

~~Water Management~~

Water Management income from operations was $121.3 million for the first nine months of fiscal 2020, or 23.0% of net sales. Income from operations as a percentage of net sales increased 110 basis points in the first nine months of fiscal 2020 compared to the first nine months of fiscal 2019 primarily due to the increase in sales and benefits associated with our ongoing cost reduction and productivity initiatives and a reduction in the adjustment to state inventories at last-in-first-out cost.

~~Corporate~~

Corporate expenses were $42.0 million in the first nine months of fiscal 2020 compared to $46.2 million in the first nine months of fiscal 2019. The decrease in corporate expenses is primarily the result of the prior year recognition of lease facility termination costs incurred in connection with our ongoing footprint optimization actions.

~~Interest expense, net~~

Interest expense, net was $45.2 million in the first nine months of fiscal 2020 compared to $54.1 million in the first nine months of fiscal 2019. The decrease in interest expense as compared to the prior year's period is primarily a result of the impact of lower outstanding borrowings in the first nine months of fiscal 2020 following $75.0 and $100.0 million voluntary prepayments on our term loan during the fourth quarter of fiscal 2019 and the third quarter of fiscal 2020, respectively. In addition, year-over-year interest expense decreased as a result of the lower average interest rate on our term loan following the refinancing of our term loan, which was completed during the third quarter of fiscal 2020. In addition, the first nine months of fiscal 2019 included the amortization of unrealized losses associated with the interest rate derivatives that matured during fiscal 2019. See Item 1, Note 13 Long-Term Debt for more information.

~~Gain on extinguishment of debt~~

During the first nine months of fiscal 2020, we recognized a $1.0 million gain on the extinguishment of debt, consisting of a $3.2 million gain in connection with the forgiveness of the remaining net debt associated with the New Market Tax Credit program, partially offset by a $2.2 million loss in connection with the fiscal 2020 refinancing of our term loan and a $100.0 million voluntary prepayment made on our term loan. During the first nine months of fiscal 2019, we recognized a $5.0 million gain in connection with the forgiveness of the net debt associated with the New Market Tax Credit program.

~~Other expense (income), net~~

Other expense, net for the first nine months of fiscal 2020 was $1.0 million compared to other income, net of $3.3 million for the first nine months of fiscal 2019. Other (expense) income, net consists primarily of gains and losses from foreign currency transactions, the non-service cost components of net periodic benefit costs associated with our defined benefit plans and actuarial gains and losses incurred in connection with defined benefit plan remeasurements.The year-over-year change is primarily driven by foreign currency transaction losses and the recognition of actuarial losses in connection with the termination of a domestic defined benefit plan during the first nine months of fiscal 2020.

~~Provision for income taxes~~

The income tax provision recorded in the first nine months of fiscal 2020 was $47.7 million, compared to $40.8 million recorded in the first nine months of fiscal 2019. The effective income tax rate for the first nine months of fiscal 2020 was 23.7% versus 22.8% in the first nine months of fiscal 2019. The effective income tax rate for the first nine months of fiscal 2020 was above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional income taxes associated with GILTI and the accrual of various state income taxes, partially offset by the recognition of certain previously unrecognized tax benefits generally due to the lapse of the applicable statutes of limitations, the recognition of income tax benefits associated with share-based payments, net income tax benefits recognized in association with changes to certain foreign income tax rates and FDII. The effective income tax rate for the first nine months of fiscal 2019 was slightly above the U.S. federal statutory rate of 21% primarily due to the accrual of foreign income taxes, which are generally above the U.S. federal statutory rate, the accrual of additional taxes associated with GILTI and the accrual of various state income taxes substantially offset by the recognition of certain previously unrecognized tax benefits due to the lapse of applicable statutes of limitations, the recognition of excess tax benefits associated with share-based payments and the recognition of a tax benefit associated with a foreign country enacted rate reduction.

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~~Net income from continuing operations~~

Net income from continuing operations for the first nine months of fiscal 2020 was $153.6 million, compared to net income from continuing operations of $141.3 million in the first nine months of fiscal 2019,$0.23, respectively, as a result of the factors described above. Diluted net income per share from continuing operations was $1.24 in the first nine months of fiscal 2020, as compared to diluted net income per share from continuing operations of $1.15 in the first nine months of fiscal 2019.

~~Net income (loss) attributable to Rexnord common stockholders~~

Our net income attributable to Rexnord common stockholders for the first nine months of fiscal 2020 was $137.2 million, compared to a net loss attributable to Rexnord common stockholders of $30.3 million for the first nine months of fiscal 2019. Diluted net income per share attributable to Rexnord common stockholders was $1.22 in the first nine months of fiscal 2020, as compared to a diluted net loss per share attributable to Rexnord common stockholders of $0.10 per share in the first nine months of fiscal 2019. The year-over-year change is primarily a result of the $154.3 million, or $1.25 per diluted share, loss from discontinued operations, net of tax, in the first nine months of fiscal 2019, and the other factors described above.

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Non-GAAP Financial Measures

Non-GAAP financial measures are intended to supplement and not replace financial measures prepared in accordance with GAAP.

Core sales

Core sales excludes the impact of acquisitions (such as the ~~Centa China~~Hadrian and ~~StainlessDrains.com~~Just Manufacturing acquisitions), divestitures ~~(such as the VAG business)~~ and foreign currency translation. Management believes that core sales facilitates easier and more meaningful comparisons of our net sales performance with prior and future periods and to our peers. We exclude the effect of acquisitions and divestitures because the nature, size and number of acquisitions and divestitures can vary dramatically from period to period and between us and our peers, and can also obscure underlying business trends and make comparisons of long-term performance difficult. We exclude the effect of foreign currency translation from this measure because the volatility of currency translation is not under management's control.

EBITDA

EBITDA represents earnings from continuing operations before interest and other debt related activities, taxes, depreciation and amortization. EBITDA is presented because it is an important supplemental measure of performance and it is frequently used by analysts, investors and other interested parties in the evaluation of companies in our industry. EBITDA is also presented and compared by analysts and investors in evaluating our ability to meet debt service obligations. Other companies in our industry may calculate EBITDA differently. EBITDA is not a measurement of financial performance under U.S. GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of operating performance or any other measures of performance derived in accordance with U.S. GAAP. Because EBITDA is calculated before recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a measure of discretionary cash available to invest in the growth of the business.

Adjusted EBITDA

Adjusted EBITDA (as described below in “Covenant Compliance”) is an important measure because, under our credit agreement, our ability to incur certain types of acquisition debt and certain types of subordinated debt, make certain types of acquisitions or asset exchanges, operate our business and make dividends or other distributions, all of which will impact our financial performance, is impacted by our Adjusted EBITDA, as our lenders measure our performance with a net first lien leverage ratio by comparing our senior secured bank indebtedness to our Adjusted EBITDA (see “Covenant Compliance” for additional discussion of this ratio, including a reconciliation to our net income). We reported net income attributable to Rexnord ~~common stockholders~~ in the ~~nine~~three months ended ~~December~~March 31, ~~2019~~2021, of ~~$137.2~~$50.0 million and Adjusted EBITDA for the same period of ~~$336.2~~$120.2 million. See “Covenant Compliance” for a reconciliation of Adjusted EBITDA to net income attributable to ~~Rexnord common stockholders.~~Rexnord.

Covenant Compliance

Our credit agreement, which governs our senior secured credit facilities, contains, among other provisions, restrictive covenants regarding indebtedness, payments and distributions, mergers and acquisitions, asset sales, affiliate transactions, capital expenditures and the maintenance of certain financial ratios. Payment of borrowings under the credit agreement may be accelerated if there is an event of default. Events of default include the failure to pay principal and interest when due, a material breach of a representation or warranty, certain non-payments or defaults under other indebtedness, covenant defaults, events of bankruptcy and a change of control. Certain covenants contained in the credit agreement restrict our ability to take certain

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actions, such as incurring additional debt or making acquisitions, if we are unable to meet a maximum total net leverage ratio of 6.75 to 1.0 as of the end of each fiscal quarter. At ~~December~~March 31, ~~2019,~~2021, our net leverage ratio was ~~2.0~~2.2 to 1.0. Failure to comply with these covenants could limit our long-term growth prospects by hindering our ability to borrow under the revolver, to obtain future debt and/or to make acquisitions.

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“Adjusted EBITDA” is the term we use to describe EBITDA as defined and adjusted in our credit agreement, which is net income, adjusted for the items summarized in the table below. Adjusted EBITDA is intended to show our unleveraged, pre-tax operating results and therefore reflects our financial performance based on operational factors, excluding non-operational, non-cash or non-recurring losses or gains. In view of our debt level, it is also provided to aid investors in understanding our compliance with our debt covenants. Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA varies from others in our industry. This measure should not be considered as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted EBITDA does not reflect: (a) our capital expenditures, future requirements for capital expenditures or contractual commitments; (b) changes in, or cash requirements for, our working capital needs; (c) the significant interest expenses, or the cash requirements necessary to service interest or principal payments, on our debt; (d) tax payments that represent a reduction in cash available to us; (e) any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; or (f) the impact of earnings or charges resulting from matters that we and the lenders under our credit agreement may not consider indicative of our ongoing operations. In particular, our definition of Adjusted EBITDA allows us to add back certain non-cash, non-operating or non-recurring charges that are deducted in calculating net income, even though these are expenses that may recur, vary greatly and are difficult to predict and can represent the effect of long-term strategies as opposed to short-term results.

In addition, certain of these expenses can represent the reduction of cash that could be used for other corporate purposes. Further, although not included in the calculation of Adjusted EBITDA below, the measure may at times allow us to add estimated cost savings and operating synergies related to operational changes ranging from acquisitions or dispositions to restructuring, and/or exclude one-time transition expenditures that we anticipate we will need to incur to realize cost savings before such savings have occurred.

The calculation of Adjusted EBITDA under our credit agreement as of ~~December~~March 31, ~~2019,~~2021, is presented in the table below. However, the results of such calculation could differ in the future based on the different types of adjustments that may be included in such respective calculations at the time.

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Set forth below is a reconciliation of net income attributable to Rexnord common stockholders to Adjusted EBITDA for the periods indicated below.


(in millions)	(in millions)	Nine months ended December 31, 2018		Year ended March 31, 2019		Nine months ended December 31, 2019		Twelve months ended December 31, 2019		(in millions)	Nine months ended December 31, 2020		Three months ended March 31, 2021		Twelve months ended March 31, 2021
Net (loss) income attributable to Rexnord common stockholders		$	(30.3)	$	11.1	$	137.2	$	178.6
Dividends on preferred stock		17.4		23.2		14.4		20.2
Non-controlling interest (loss) income		(0.1)		—		0.2		0.3
Loss from discontinued operations, net of tax		154.3		154.7		1.8		2.2
Net income attributable to Rexnord										Net income attributable to Rexnord	$	118.2	$	50.0	$	168.2

Non-controlling interest income										Non-controlling interest income	0.4		0.1		0.5

Equity method investment income	Equity method investment income	(3.5)		(3.6)		(0.2)		(0.3)		Equity method investment income	(0.2)		(0.1)		(0.3)
Income tax provision	Income tax provision	40.8		53.4		47.7		60.3		Income tax provision	36.3		17.2		53.5
Actuarial loss on pension and postretirement benefit obligations										Actuarial loss on pension and postretirement benefit obligations	1.6		—		1.6
Other (income) expense, net (1)	Other (income) expense, net (1)	(3.3)		1.2		1.0		5.5		Other (income) expense, net (1)	(4.5)		0.4		(4.1)
Gain on the extinguishment of debt		(5.0)		(4.3)		(1.0)		(0.3)

Interest expense, net	Interest expense, net	54.1		69.9		45.2		61.0		Interest expense, net	36.6		11.0		47.6
Depreciation and amortization	Depreciation and amortization	66.0		87.9		64.3		86.2		Depreciation and amortization	67.0		23.5		90.5
EBITDA	EBITDA	$	290.4	$	393.5	$	310.6	$	413.7	EBITDA	255.4		102.1		357.5
Adjustments to EBITDA:	Adjustments to EBITDA:									Adjustments to EBITDA:
Restructuring and other similar charges (2)	Restructuring and other similar charges (2)	9.4		12.1		8.9		11.6		Restructuring and other similar charges (2)	14.6		0.6		15.2

Stock-based compensation expense	Stock-based compensation expense	17.3		22.6		18.7		24.0		Stock-based compensation expense	36.6		14.8		51.4
Last-in first-out inventory adjustments (3)	Last-in first-out inventory adjustments (3)	0.8		6.7		(2.2)		3.7		Last-in first-out inventory adjustments (3)	—		1.9		1.9
Acquisition-related fair value adjustment	Acquisition-related fair value adjustment	3.5		3.6		0.7		0.8		Acquisition-related fair value adjustment	1.2		0.6		1.8
Other, net (4)	Other, net (4)	1.5		4.3		(0.5)		2.3		Other, net (4)	(0.3)		0.2		(0.1)
Subtotal of adjustments to EBITDA	Subtotal of adjustments to EBITDA	$	32.5	$	49.3	$	25.6	$	42.4	Subtotal of adjustments to EBITDA	52.1		18.1		70.2
Adjusted EBITDA	Adjusted EBITDA	$	322.9	$	442.8	$	336.2	$	456.1	Adjusted EBITDA	$	307.5	$	120.2	$	427.7
Pro forma adjustment for acquisitions (5)	Pro forma adjustment for acquisitions (5)							$	2.2	Pro forma adjustment for acquisitions (5)					5.1
Pro forma Adjusted EBITDA	Pro forma Adjusted EBITDA							$	458.3	Pro forma Adjusted EBITDA					432.8
Consolidated indebtedness (6)	Consolidated indebtedness (6)							$	924.0	Consolidated indebtedness (6)					$	957.6
Total net leverage ratio (7)	Total net leverage ratio (7)							2.0		Total net leverage ratio (7)					2.2

(1)Other (income) expense, net for the periods indicated, consists primarily of gains and losses from foreign currency transactions and the non-service cost components of net periodic benefit costs associated with our defined benefit ~~plans and other actuarial gains and losses.~~plans.

(2)Restructuring and other similar charges is comprised of costs associated with workforce reductions, ~~impairment of related manufacturing facilities, equipment and intangible assets,~~ lease termination costs and other facility rationalization costs. See Item 1, Note 3, Restructuring and Other Similar Charges for more information.

(3)Last-in first-out (LIFO) inventory adjustments are excluded in calculating Adjusted EBITDA as defined in our credit agreement.

(4)Other, net for the periods indicated, consists primarily of gains and losses on the disposition of long-lived ~~assets and cash dividends received from our equity method investment.~~assets.

(5)Represents a pro forma adjustment to include Adjusted EBITDA related to the ~~acquisitions~~acquisition of ~~Centa China and StainlessDrains.com, as~~Hadrian, which was permitted by our credit agreement. The pro forma adjustment includes the period from ~~January~~April 1, ~~2019~~2020, through the ~~dates~~date of the ~~Centa China and StainlessDrains.com acquisitions.~~Hadrian acquisition. See Item 1, Note 2, Acquisitions and Divestiture for more information.

(6)Our credit agreement defines our consolidated indebtedness as the sum of all indebtedness (other than letters of credit or bank guarantees, to the extent undrawn) consisting of indebtedness for borrowed money and capitalized lease obligations, less unrestricted cash, which was ~~$224.5~~$234.2 million (as defined by the credit agreement) at ~~December~~March 31, ~~2019.~~2021.

(7)Our credit agreement defines the total net leverage ratio as the ratio of consolidated indebtedness (as described above) to Adjusted EBITDA for the trailing four fiscal quarters.

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Liquidity and Capital Resources

Our primary sources of liquidity are available cash and cash equivalents, cash flow from operations, and borrowing availability of up to $264.0 million under our revolving credit ~~facility and~~facility. As of March 31, 2021, we also had availability of up to $100.0 million under our accounts receivable securitization ~~program.~~program; however, on April 16, 2021, we provided notice of our election to terminate this program as of May 17, 2021.

As of ~~December~~March 31, ~~2019,~~2021, we had ~~$277.0~~$307.3 million of cash and cash equivalents and ~~$348.0~~$355.8 million of additional borrowing capacity ($~~258.9~~263.3 million of available borrowings under our revolving credit facility and ~~$89.1~~$92.5 million available under our accounts receivable securitization program). As of ~~December~~March 31, ~~2019,~~2021, the available borrowings under our credit facility and accounts receivable securitization were reduced by ~~$12.0~~$8.2 million due to outstanding letters of credit. As of ~~March~~December 31, ~~2019,~~2020, we had ~~$292.5~~$255.6 million of cash and cash equivalents and approximately ~~$351.3~~$339.2 million of additional borrowing capacity ($~~258.4~~261.0 million of available borrowings under our revolving credit facility and ~~$92.9~~$78.2 million available under our accounts receivable securitization program).

On January 27, 2020, our Board of Directors declared an initial quarterly cash dividend on our common stock of $0.08 per-share to be paid on March 6, 2020, to stockholders of record as of February 21, 2020. In addition, the Board of Directors approved increasing our existing share repurchase authority to $300.0 million of available capacity under the Repurchase Program. See Note 8, Stockholders’ Equity, for additional information about the Repurchase Program.

~~Both our~~Our revolving credit facility ~~and accounts receivable securitization program are~~is available to fund our working capital requirements, capital expenditures and for other general corporate purposes.

In the three months ended March 31, 2021, the Company and Land Newco, Inc., a wholly-owned indirect subsidiary of the Company (“Land”), each entered into a debt commitment letter with various lenders in connection with the proposed transaction with Regal disclosed in Item 1, Note 1, Basis of Presentation and Significant Accounting Policies. The lenders committed to provide us with up to $708.0 million in an aggregate principal amount of senior term loans under a senior secured term loan facility and up to $200.0 million in an aggregate principal amount of senior revolving loans under a senior secured revolving credit facility. The lenders committed to provide bridge loans of up to approximately $486.8 million under a 364-day senior bridge loan facility to Land to be used to pay the dividend required in connection with the transaction. If the proposed transaction with Regal is consummated, the indebtedness contemplated by the commitment letter with Land will become indebtedness of a wholly-owned subsidiary of Regal.

Cash Flows

~~Net cash~~Cash provided by operating activities was ~~$174.7~~$71.3 million and ~~$145.3~~$123.9 million induring the ~~first nine~~three months ~~of fiscal~~ended March 31, 2021 and 2020, ~~and 2019,~~ respectively. ~~Incremental profit generated in the first nine months of fiscal 2020 and lower~~Higher trade working capital ~~were partially offset by~~and the impact of timing of payments on accrued ~~expenses.~~expenses were partially offset by higher net income generated during the three months ended March 31, 2021.

Cash used for investing activities was ~~$49.0~~$8.1 million induring the ~~first nine~~three months ~~of fiscal 2020~~ended March 31, 2021 compared to ~~$14.7~~$74.1 million induring the ~~first nine~~three months ~~of fiscal 2019.~~ended March 31, 2020. Investing activities induring the ~~first nine~~three months ~~of fiscal 2020~~ended March 31, 2021, primarily included ~~$25.5~~$9.2 million of capital expenditures, ~~and $25.1 million in connection with acquisitions,~~ partially offset by the receipt of ~~$2.9~~$0.7 million in connection with the sale of certain long-lived assets. Investing activities during the ~~first nine~~three months ~~of fiscal 2019~~ended March 31, 2020, included ~~$26.5~~$15.9 million of capital expenditures and ~~$2.0~~$59.4 million for anthe acquisition of ~~assets,~~Just Manufacturing, partially offset by the receipt of ~~$3.5~~$1.2 million in connection with the sale of certain long-lived assets.

Cash used for financing activities was ~~$138.5~~$9.4 million induring the ~~first nine~~three months ~~of fiscal 2020~~ended March 31, 2021, compared to ~~$36.9~~cash provided by financing activities of $253.4 million induring the ~~first nine~~three months ~~of fiscal 2019.~~ended March 31, 2020. During the ~~first nine~~three months ~~of fiscal 2020,~~ended March 31, 2021, we utilized ~~a net $110.3~~$0.5 million of cash for payments on outstanding debt, (including $100.0 million for a voluntary prepayment on our term loan in the third quarter of fiscal 2020), $20.0 million for repurchases of our common stock (see Item 1, Note 8 Stockholders' Equity for additional details) and $17.4$10.8 million for the payment of ~~preferred~~common stock ~~dividends.~~dividends and $0.9 million to repurchase shares of common stock. The ~~first nine~~three months ~~of fiscal 2020~~ended March 31, 2021, also includes ~~$16.8~~$2.8 million of cash proceeds associated with stock option ~~exercises, partially offset by $7.6 million of cash used for the payment of withholding taxes on employees' share-based payment awards.~~exercises. During the ~~first nine~~three months ~~of fiscal 2019,~~ended March 31, 2020, we borrowed a net $324.7 million under our credit facilities and we utilized ~~a net $22.9 million of cash for the payment of outstanding debt and $17.4~~$9.8 million for the payment of ~~preferred~~common stock ~~dividends.~~dividends and $80.7 million to repurchase common stock. The ~~first nine~~three months ~~of fiscal 2019~~ended March 31, 2020, also includes ~~$6.6~~$19.2 million of cash proceeds associated with stock option ~~exercises, partially offset by $3.2 million of cash used for the payment of withholding taxes on employees' share-based payment awards.~~exercises.

Indebtedness

As of ~~December~~March 31, ~~2019,~~2021, we had ~~$1,148.6~~$1,191.8 million of total indebtedness outstanding as follows (in millions):


		Total Debt at December 31, 2019		Current Maturities of Debt		Long-term Portion			Total Debt at March 31, 2021		Current Maturities of Debt		Long-term Portion
Term loan (1)	Term loan (1)	$	620.6	$	—	$	620.6	Term loan (1)	$	621.7	$	—	$	621.7
4.875% Senior Notes due 2025 (2)	4.875% Senior Notes due 2025 (2)	495.5		—		495.5		4.875% Senior Notes due 2025 (2)	496.5		—		496.5

Finance leases and other subsidiary debt	Finance leases and other subsidiary debt	32.5		1.4		31.1		Finance leases and other subsidiary debt	73.6		2.5		71.1
Total	Total	$	1,148.6	$	1.4	$	1,147.2	Total	$	1,191.8	$	2.5	$	1,189.3

(1)Includes unamortized debt issuance costs of ~~$4.4~~$3.3 million at ~~December~~March 31, ~~2019.~~2021.

(2)Includes unamortized debt issuance costs of ~~$4.5~~$3.5 million at ~~December~~March 31, ~~2019.~~2021.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk during the normal course of business from changes in foreign currency exchange rates and interest rates. The exposure to these risks is managed through a combination of normal operating and financing activities and derivative financial instruments in the form of foreign currency forward contracts, interest rate swaps and interest rate caps to cover certain known foreign currency transactional risks, as well as identified risks due to interest rate fluctuations. There have been no material changes in market risk from the information provided in "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in our Transition Report on Form ~~10-K.~~10-K for the Transition Period ended December 31, 2020.

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ITEM 4. CONTROLS AND PROCEDURES

We maintain a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.

We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Based on that evaluation as of ~~December~~March 31, ~~2019,~~2021, the Chief Executive Officer and Chief Financial Officer concluded that, as of such date, the Company's disclosure controls and procedures are adequate and effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and that such information is accumulated and communicated to the Company's management, including the Chief Executive Officer and Chief Financial Officer, in a manner allowing timely decisions regarding required disclosure. As such, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the period covered by this report.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of the changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See the information under the heading "Commitments and Contingencies" in Note 1614 to the condensed consolidated financial statements contained in Part I, Item 1 of this report, which is incorporated in this Part II, Item 1 by reference.

ITEM 1A. RISK FACTORS

In addition to the risks and uncertainties discussed in this quarterly report on Form 10-Q, particularly those disclosed in the MD&A, see Part I, Item 1A, “Risk Factors,” in the Company’s Transition Report on Form 10-K for the Transition Period ended December 31, 2020. There have been no material changes to the Risk Factors except as set forth below:

Risks Related to the Transactions with Regal Beloit Corporation

We and Regal may be unable to satisfy the conditions or obtain the approvals required to complete the expected spin-off of the Process & Motion Control segment (the “Spin-Off”) and related transactions (collectively, the “Transactions”).

The consummation of the Transactions is subject to numerous conditions, including consummation of certain transactions contemplated by the Agreement and Plan of Merger, dated as of February 15, 2021 (the “Merger Agreement”) and the Separation and Distribution Agreement, dated as of February 15, 2021 (the “Separation Agreement”), the receipt of the approval of our stockholders and Regal’s shareholders, the receipt of regulatory approvals, and other closing conditions. Neither we nor Regal can make any assurances that the Transactions will be consummated on the terms or timeline currently contemplated, or at all. Both we and Regal have and will continue to expend time and resources and incur expenses related to the Transactions.

Governmental agencies may not approve the Transactions or may impose conditions to the approval of the Transactions or require changes to the terms of the Transactions. Any such conditions or changes could have the effect of delaying completion of the Transactions, imposing costs on or limiting the revenues of the combined company following the completion of the Transactions or otherwise reducing the anticipated benefits of the Transactions. Certain conditions or changes might cause us and/or Regal to restructure or terminate the Transactions.

Both Regal and Land Newco, Inc., a wholly-owned indirect subsidiary of the Company (“Land”), are expected to need to obtain debt financing to complete the Transactions. Although commitment letters have been obtained from various lenders, the obligations of the lenders under the commitment letters are subject to the satisfaction or waiver of customary conditions, including, among others, the absence of any material adverse effect. Accordingly, there can be no assurance that these conditions will be satisfied or, if not satisfied, waived by the lenders. If Regal or Land is not able to obtain alternative financing on commercially reasonable terms, it could prevent the consummation of the Transactions.

We will incur significant costs related to the Transactions that could have an adverse effect on our liquidity, cash flows and operating results.

We expect to incur significant one-time costs in connection with the Transactions, including the cost of financing and other transaction costs, integration costs, and other costs that our management team believes are necessary to realize the anticipated synergies from the Transactions. In connection with the termination of the Merger Agreement under certain specified circumstances, we may be required to pay Regal a termination fee of $150 million. The incurrence of these costs could have a material adverse effect on our liquidity, cash flows and operating results in the periods in which they are incurred.

The market price of our common stock may decline as a result of the Transactions and the market price of our common stock after the consummation of the Transactions may be affected by factors different from those affecting the price of our common stock before the Transactions.

The market price of our common stock may decline as a result of the Transactions if we do not achieve the perceived benefits of the Transactions or if the effect of the Transactions on our financial results are not consistent with the expectations of financial or industry analysts. Our results of operations, as well as the market price of our common stock after the Transactions, may be affected by factors in addition to those currently affecting our results of operations and the market price of our common stock and other differences in assets and capitalization. Accordingly, our historical market price and financial results may not be indicative of these matters after the consummation of the Transactions.

The pendency of the Transactions could adversely affect our business and operations.

In connection with the pending Transactions, some of our current or prospective customers, borrowers, managers or vendors may delay or defer decisions related to their business dealings with us, which could negatively impact our revenues, earnings, cash flows and expenses, regardless of whether the Transactions are consummated. In addition, under the Merger Agreement, we and Regal with respect to the Process & Motion Control business are each subject to certain restrictions on the

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conduct of our respective business prior to completing the Transactions. These restrictions may prevent us from taking certain actions with respect to capital stock or equity awards, amending organizational documents, taking certain actions with respect to material contracts and benefit plans, pursuing certain strategic transactions, acquiring and disposing assets, undertaking certain capital projects, undertaking certain financing transactions or incurring certain indebtedness, changing accounting or tax filing practices, settling certain legal proceedings, failing to maintain insurance, abandoning or selling certain material intellectual property and otherwise pursuing other actions that are not in the ordinary course of business, even if such actions could prove beneficial. These restrictions may impede our growth which could negatively impact our revenue, earnings and cash flows. Additionally, the pendency of the Transactions may make it more difficult for us to effectively retain and incentivize key personnel.

If the Reorganization and the Distributions do not qualify as tax-free under Sections 355 and 368(a) of the Internal Revenue Code (the “Code”), including as a result of an error in the determination of overlap shareholders or subsequent acquisitions of our common stock, then our stockholders may be required to pay substantial U.S. federal income taxes, and Land (guaranteed by Regal) may be obligated to indemnify us for such taxes imposed on us.

The obligation of us and Land to complete the Transactions is conditioned on receipt of a tax opinion , which will include an opinion to the effect that our transfer to Land of substantially all of the assets, and Land’s assumption from Rexnord of substantially all of the liabilities, of the Process & Motion Control business (the “Reorganization”), together with the series of distributions of all of the issued and outstanding shares of Land common stock from an indirect subsidiary of Rexnord to our stockholders.(the “Distributions”), will qualify as tax-free to us, Land and our stockholders, as applicable, for U.S. federal income tax purposes (collectively, the “Rexnord Tax Opinion”). The Rexnord Tax Opinion will be based on, among other things, certain representations and assumptions as to factual matters and certain covenants made by us, Regal and Land. The failure of any factual representation, assumption or covenant to be true, correct and complete in all material respects could adversely affect the validity of the opinion of counsel. An opinion of counsel represents counsel’s best legal judgment, is not binding on the Internal Revenue Service (the “IRS”) or the courts, and the IRS or the courts may not agree with the opinion. In addition, the opinion will be based on current law, and cannot be relied upon if current law changes with retroactive effect.

The Spin-Off will be taxable to us pursuant to Section 355(e) of the Code if there is a 50% or greater change in ownership of either us or Land, directly or indirectly, as part of a plan or series of related transactions that include the Spin-Off. For this purpose, any acquisitions of our, Land’s or Regal’s stock within the period beginning two years before the Spin-Off and ending two years after the Spin-Off are presumed to be a part of such plan, although we and Regal may be able to rebut that presumption. We have requested a private letter ruling from the IRS with respect to certain tax aspects of the Transactions, including matters relating to the nature and extent of shareholders who may be counted for tax purposes as overlap shareholders (i.e., investors who are both Rexnord stockholders and Regal shareholders immediately prior to the Transactions) for purposes of determining the exchange ratio in the Merger Agreement (the “IRS Ruling”). Assuming the IRS Ruling is received, the Merger Agreement provides that the number of shares of Regal common stock that may be issued in the Transactions is subject to increase at closing such that the former stockholders of Land (taking into account the overlap shareholders) own at least 50.8% of the outstanding Regal common stock for tax purposes immediately following the closing of the merger of Phoenix 2021, Inc., a wholly-owned subsidiary of Regal (“Merger Sub”) with and into Land, with Land surviving as a wholly-owned subsidiary of Regal (the “Merger”). This percentage is reduced to 50.1% if the IRS Ruling is not received or in certain other circumstances in which overlap shareholders are not counted for this purpose. If the IRS Ruling is received, the continuing validity of such ruling will be subject to the accuracy of factual representations and assumptions made in the ruling request. Moreover, the IRS Ruling, if received, will only describe the time, manner and methodology for measuring Overlap Shareholders and may be subject to varying interpretations. The actual determination and calculation of Overlap Shareholders will be made by us, Regal and each of our respective advisors based on the IRS Ruling, but no assurance can be given that the IRS will agree with these determinations or calculations. If the IRS were to determine that the Merger, as a result of an error in the determination of Overlap Shareholders, or other acquisitions of our, Land’s or Regal’s stock, either before or after the Spin-Off, resulted in a 50% or greater change in ownership and were part of a plan or series of related transactions that included the Spin-Off, such determination could result in significant tax to us. In certain circumstances and subject to certain limitations, under the Tax Matters Agreement, dated as of February 15, 2021 (the “Tax Matters Agreement”), Land (then a subsidiary of Regal) is required to indemnify us if the Distributions become taxable as a result of certain actions by Land or Regal or as a result of a miscalculation of the Overlap Shareholders. If this occurs and Land is required to indemnify us, this indemnification obligation could be substantial and could have a material adverse effect on Land and Regal, including with respect to financial condition and results of operations given that Regal has guaranteed the indemnification obligations of Land.

If the Merger does not qualify as a tax-free reorganization under Section 368(a) of the Code, our stockholders may be required to pay substantial U.S. federal income taxes.

The obligations of Land and Regal to consummate the Merger are conditioned, respectively, on our receipt of the Rexnord Tax Opinion and Regal’s receipt of the Regal Tax Opinion, in each case to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. These opinions will be based upon, among other things,

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certain representations and assumptions as to factual matters and certain covenants made by us, Regal, Land and Merger Sub. The failure of any factual representation, assumption or covenant to be true, correct and complete in all material respects could adversely affect the validity of the opinions. An opinion of counsel represents counsel’s best legal judgment, is not binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the opinions will be based on current law, and cannot be relied upon if current law changes with retroactive effect. If the Merger were taxable, U.S. holders, as defined below, of Land would be considered to have made a taxable sale of their Land common stock to Regal, and such U.S. holders of Land would generally recognize taxable gain or loss on their receipt of Regal common stock in the Merger. Under the Tax Matters Agreement, Land is required to indemnify us if the Distributions become taxable as a result of certain actions by Land or Regal or as a result of a miscalculation of the overlap shareholders.

If the Merger is not completed by the outside date specified in the Merger Agreement, we or Regal may terminate the Merger Agreement.

Either we or Regal may terminate the Merger Agreement under certain circumstances, including if the Merger has not been consummated by November 15, 2021 (or any extensions of such date pursuant to the Merger Agreement). However, this termination right will not be available to a party if that party failed to fulfill its obligations under the Merger Agreement and that failure was the primary cause of the failure to consummate the Merger. If all other conditions to closing have been satisfied other than the receipt of the required regulatory and governmental approvals, the absence of certain pending legal proceedings with any governmental body in connection with the Merger, and the absence of certain restraints in connection with the Transactions, then either we or Regal may extend the required timing for the Transactions to February 14, 2022, and subsequently to May 14, 2022, by written notice to the other party. If either party terminates the Merger Agreement, this could result in a material adverse impact on our results of operations.

Following consummation of the Transaction, we, Regal and Land will each be required to abide by potentially significant restrictions which could limit each company’s ability to undertake certain corporate actions (such as the issuance of common stock or the undertaking of certain business combinations) that otherwise could be advantageous.

The Tax Matters Agreement will impose certain restrictions on us, Regal and Land during the two-year period following the Spin-Off, subject to certain exceptions, with respect to actions that could cause the Reorganization and the Distributions to fail to qualify for their intended tax treatment. As a result of these restrictions, our, Regal’s and Land’s ability to engage in certain transactions, such as the issuance or purchase of stock or certain business combinations, may be limited.

If we, Regal or Land take any enumerated actions or omissions, or if certain events relating to us, Land or Regal occur that would cause the Reorganization or the Distributions to become taxable, the party whose actions or omissions (or event relating to) generally will be required to bear the cost of any resulting tax liability of ours (but not our stockholders). If the Reorganization or the Distributions became taxable, we would be expected to recognize a substantial amount of gain, which would result in a material amount of taxes. Any such taxes would be expected to be material to us or Regal, as applicable, and could cause its business, financial condition and operating results to suffer. These restrictions may reduce our and Regal’s ability to engage in certain business transactions that otherwise might be advantageous to them, which could adversely affect our or Regal’s respective business, results of operations, or financial condition.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In fiscal 2015, the Company's Board of Directors approved a stock repurchase program (the "Repurchase Program") authorizing the repurchase of up to $200.0 million of the Company's common stock from time to time on the open market or in privately negotiated transactions. On January 27, 2020, the Company's Board of Directors increased the remaining share repurchase authority under the Repurchase Program to $300.0 million. The Repurchase Program does not require the Company to acquire any particular amount of common stock and does not specify the timing of purchases or the prices to be paid; 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 the ~~third quarter of fiscal 2020,~~three months ended March 31, 2021, the Company repurchased ~~639,500~~22,300 shares of common stock atfor a total cost of ~~$20.0~~$0.9 million at a weighted average price of ~~$31.30~~$39.27 per share. The repurchased shares were canceled by the Company upon receipt. A total of approximately ~~$140.0~~$162.8 million of the existing repurchase authority remained under the Repurchase Program at ~~December~~March 31, 2019. As discussed in Note 22 to the condensed consolidated financial statements contained in Part I, Item 1 of this report, on January 27, 2020, the Board of Directors approved increasing the Company’s existing share repurchase authority to $300.0 million of available capacity under the Repurchase Program.2021.

ISSUER PURCHASES OF EQUITY SECURITIES
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Approximate Dollar Value that may yet be Purchased Under the Plans or Programs (1)
Period
October 1 - October 31, 2019 — $ — — $ 160,002,485
November 1 - November 30, 2019 335,300 $ 30.72 335,300 $ 149,702,658
December 1 - December 31, 2019 304,200 $ 31.94 304,200 $ 139,985,852


ISSUER PURCHASES OF EQUITY SECURITIES
	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Approximate Dollar Value that may yet be Purchased Under the Plans or Programs (1)
Period
January 1 - January 31, 2021	22,300	$	39.27	22,300	$	162,792,403
February 1 - February 28, 2021	—	$	—	—	$	162,792,403
March 1 - March 31, 2021	—	$	—	—	$	162,792,403
Total/Average	22,300			22,300

(1) See explanation of the Repurchase Program above.

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ITEM 6. EXHIBITS

Exhibit
No.

Description

Filed
Herewith

~~10.1~~

2.1

~~Incremental Assumption~~ Agreement and Plan of Merger, dated as of ~~November 21, 2019,~~February 15, 2021, by and among ~~Chase Acquisition I, Inc., RBS Global, Inc.,~~ Rexnord, ~~LLC, certain domestic subsidiaries of Rexnord LLC, Credit Suisse AG, Cayman Islands Branch as the refinancing term lender~~Land, Regal and ~~Credit Suisse AG, Cayman Islands Branch as administrative agent. (Incorporated by reference to Exhibit 10.1 filed with the Form 8-K, dated November 21, 2019.)~~Merger Sub*

2.2

Separation and Distribution Agreement, dated as of February 15, 2021, by and among Rexnord, Land and Regal*

10.1

Tax Matters Agreement, dated as of February 15, 2021, by and among Rexnord, Land and Regal*

10.2

Employee Matters Agreement, dated as of February 15, 2021, by and among Rexnord, Land and Regal*

10.3

Real Estate Matters Agreement, dated as of February 15, 2021, by and among Rexnord, Land and Regal*

10.4

Intellectual Property Matters Agreement, dated as of February 15, 2021, by and among Rexnord, Land and Regal*

10.5

Commitment Letter, dated as of February 14, 2021, by and between Rexnord, Credit Suisse AG, Cayman Islands Branch and Credit Suisse Loan Funding LLC *

10.5 (a)

Amended and Restated Commitment Letter, dated as of February 18, 2021, by and between Rexnord, Credit Suisse AG, Cayman Islands Branch and Credit Suisse Loan Funding LLC

10.6

Bridge Facility Commitment Letter, dated as of February 15, 2021, by and between Land and Barclays Bank PLC*

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

101.INS

Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Inline XBRL data (contained in Exhibit 101)

*Incorporated by reference to the same exhibit number in the Company's Current Report on Form 8-K, dated February 14, 2021.

5346

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SIGNATURE

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

REXNORD CORPORATION

Date:

~~January 28, 2020~~April 27, 2021

By:

/S/ MARK W. PETERSON

Name:

Mark W. Peterson

Title:

Senior Vice President and Chief Financial Officer

5547


	Third Quarter Ended						Nine Months Ended
	December 31, 2019		December 31, 2018		December 31, 2019		December 31, 2018
Net sales	$	491.7	$	485.0	$	1,521.3	$	1,513.4
Cost of sales	300.0		300.7		919.8		930.4
Gross profit	191.7		184.3		601.5		583.0
Selling, general and administrative expenses	101.7		102.4		320.0		323.8
Restructuring and other similar charges	3.6		2.6		8.9		9.4
Amortization of intangible assets	8.8		8.4		26.3		25.4
Income from operations	77.6		70.9		246.3		224.4
Non-operating expense:
Interest expense, net	(14.4)		(16.8)		(45.2)		(54.1)
(Loss) gain on the extinguishment of debt	(2.2)		5.0		1.0		5.0
Other income (expense), net	0.8		1.6		(1.0)		3.3
Income before income taxes	61.8		60.7		201.1		178.6
Provision for income taxes	(13.4)		(9.1)		(47.7)		(40.8)
Equity method investment income	—		1.3		0.2		3.5
Net income from continuing operations	48.4		52.9		153.6		141.3
Loss from discontinued operations, net of tax	—		(27.8)		(1.8)		(154.3)
Net income (loss)	48.4		25.1		151.8		(13.0)
Non-controlling interest (loss) income	(0.1)		(0.3)		0.2		(0.1)
Net income (loss) attributable to Rexnord	48.5		25.4		151.6		(12.9)
Dividends on preferred stock	(2.8)		(5.8)		(14.4)		(17.4)
Net income (loss) attributable to Rexnord common stockholders	$	45.7	$	19.6	$	137.2	$	(30.3)

Basic net income (loss) per share attributable to Rexnord common stockholders:
Continuing operations	$	0.40	$	0.45	$	1.28	$	1.19
Discontinued operations	$	—	$	(0.27)	$	(0.02)	$	(1.48)
Net income (loss)	$	0.40	$	0.19	$	1.27	$	(0.29)
Diluted net income (loss) per share attributable to Rexnord common stockholders:
Continuing operations	$	0.39	$	0.43	$	1.24	$	1.15
Discontinued operations	$	—	$	(0.23)	$	(0.01)	$	(1.25)
Net income (loss)	$	0.39	$	0.21	$	1.22	$	(0.10)
Weighted-average number of shares outstanding (in thousands):
Basic	113,448		104,777		108,250		104,562
Effect of dilutive equity securities	10,235		18,268		15,560		18,773
Diluted	123,683		123,045		123,810		123,335


	Three Months Ended December 31, 2019						Nine Months Ended December 31, 2019
	Process & Motion Control		Water Management		Process & Motion Control		Water Management
United States and Canada	$	207.3	$	159.5	$	638.3	$	514.7
Europe	71.0		—		216.7		—
Rest of world	49.2		4.7		139.6		12.0
Total	$	327.5	$	164.2	$	994.6	$	526.7


	Common stock		Preferred stock		Additional paid-in capital		Retained earnings (deficit)		Accumulated other comprehensive (loss) income		Non-controlling interest (2)		Total stockholders’ equity
Balance at March 31, 2018	$	1.0	$	—	$	1,277.8	$	8.0	$	(74.1)	$	0.1	$	1,212.8
Total comprehensive (loss) income	—		—		—		(0.7)		(33.9)		0.1		(34.5)
Stock-based compensation expense	—		—		6.0		—		—		—		6.0
Proceeds from exercise of stock options	—		—		2.9		—		—		—		2.9
Taxes withheld and paid on employees' share-based payment awards	—		—		(0.4)		—		—		—		(0.4)
Preferred stock dividends ($14.375 per share)	—		—		—		(5.8)		—		—		(5.8)
Balance at June 30, 2018	$	1.0	$	—	$	1,286.3	$	1.5	$	(108.0)	$	0.2	$	1,181.0
Total comprehensive (loss) income	—		—		—		(37.6)		1.5		0.1		(36.0)
Stock-based compensation expense	—		—		5.8		—		—		—		5.8
Proceeds from exercise of stock options	—		—		2.1		—		—		—		2.1
Taxes withheld and paid on employees' share-based payment awards	—		—		(2.8)		—		—		—		(2.8)
Preferred stock dividends ($14.375 per share)	—		—		(5.8)		—		—		—		(5.8)
Balance at September 30, 2018	$	1.0	$	—	$	1,285.6	$	(36.1)	$	(106.5)	$	0.3	$	1,144.3
Total comprehensive income (loss)	—		—		—		25.4		9.4		(0.3)		34.5
Stock-based compensation expense	—		—		5.5		—		—		—		5.5
Proceeds from exercise of stock options	—		—		1.6		—		—		—		1.6

Preferred stock dividends ($14.375 per share)	—		—		(5.8)		—		—		—		(5.8)
Balance at December 31, 2018	$	1.0	$	—	$	1,286.9	$	(10.7)	$	(97.1)	$	—	$	1,180.1


	Interest Rate Derivatives		Foreign Currency Translation		Pension and Postretirement Plans		Total
Balance at March 31, 2019	$	0.8	$	(60.1)	$	(37.3)	$	(96.6)
Other comprehensive loss before reclassifications	—		(8.2)		—		(8.2)
Amounts reclassified from accumulated other comprehensive loss	—		—		0.4		0.4
Net current period other comprehensive (loss) income	—		(8.2)		0.4		(7.8)
Balance at December 31, 2019	$	0.8	$	(68.3)	$	(36.9)	$	(104.4)


Years ending March 31,	Operating Leases ⁽¹⁾		Finance Leases ⁽¹⁾
2020 (excluding the nine months ended December 31, 2019)	$	3.2	$	0.5
2021	12.6		1.9
2022	10.4		1.9
2023	9.1		1.9
2024	6.5		1.9
Thereafter	11.4		46.2
Total future minimum lease payments	53.2		54.3
Less: Imputed interest	(5.3)		(27.1)
Total lease liabilities	$	47.9	$	27.2


Years ending March 31:
2020	$	14.6
2021	11.8
2022	9.6
2023	8.7
2024	6.4
Thereafter	56.3
Total future minimum lease payments	$	107.4