Mueller Water Products, Inc. and Subsidiaries
Condensed Consolidated Pro Forma Financial Statements - Unaudited
This unaudited pro forma financial information should be read in conjunction with the consolidated financial statements of Mueller Water Products, Inc. (the "Company") included in its annual report on Form 10-K for the year ended September 30, 2011 and its unaudited condensed consolidated financial statements included in its quarterly report on Form 10-Q for the quarter ended December 31, 2011.
On April 2, 2012, the Company completed the sale of its United States Pipe and Foundry Company, LLC and Fast Fabricators, LLC (together, "U.S. Pipe") business units to an affiliate of Wynnchurch Capital, Ltd. for a purchase price of $89.8 million in cash, plus $4.2 million for estimated net working capital and estimated net indebtedness adjustments subject to post-closing adjustments. Wynnchurch also agreed to reimburse the Company for certain liabilities, currently estimated at $10.2 million.
The following condensed consolidated pro forma financial statements have been prepared to give effect to the sale of U.S. Pipe as if the sale had occurred at earlier dates such that the assets, liabilities, sales and expenses of U.S. Pipe are not reflected in these financial statements. The resulting financial information of the continuing operations of the Company are not necessarily indicative of future results. Also, the amount of net proceeds that will ultimately be realized by the Company will likely change as will the loss that will ultimately be recognized by the Company from the sale of U.S. Pipe.
| Mueller Water Products, Inc. and Subsidiaries | |||||||||||||||
| Condensed Consolidated Pro Forma Balance Sheet - Unaudited | |||||||||||||||
| December 31, 2011 | |||||||||||||||
| Pro forma adjustments | |||||||||||||||
| Previously | U.S. Pipe | Proceeds | |||||||||||||
| reported | items | and other | Pro forma | ||||||||||||
| (in millions) | |||||||||||||||
| Assets: | |||||||||||||||
| Cash and cash equivalents | $ | 39.6 | $ | 0.2 | $ | 87.5 | (a) | $ | 127.3 | ||||||
| Receivables, net | 197.8 | (75.7 | ) | — | 122.1 | ||||||||||
| Inventories | 250.6 | (60.5 | ) | — | 190.1 | ||||||||||
| Deferred income taxes | 29.3 | — | — | 29.3 | |||||||||||
| Other current assets | 56.7 | (7.3 | ) | 2.8 | (b) | 52.2 | |||||||||
| Total current assets | 574.0 | (143.3 | ) | 90.3 | 521.0 | ||||||||||
| Property, plant and equipment, net | 239.4 | (98.3 | ) | — | 141.1 | ||||||||||
| Identifiable intangible assets | 603.3 | (8.2 | ) | — | 595.1 | ||||||||||
| Other noncurrent assets | 30.3 | (1.0 | ) | 7.4 | (b) | 36.7 | |||||||||
| Total assets | $ | 1,447.0 | $ | (250.8 | ) | $ | 97.7 | $ | 1,293.9 | ||||||
| Liabilities and stockholders' equity: | |||||||||||||||
| Current portion of long-term debt | $ | 0.9 | $ | — | $ | — | $ | 0.9 | |||||||
| Accounts payable | 97.2 | (32.0 | ) | — | 65.2 | ||||||||||
| Other current liabilities | 74.8 | (5.8 | ) | — | 69.0 | ||||||||||
| Total current liabilities | 172.9 | (37.8 | ) | — | 135.1 | ||||||||||
| Long-term debt | 677.6 | — | — | 677.6 | |||||||||||
| Deferred income taxes | 153.2 | — | — | 153.2 | |||||||||||
| Other noncurrent liabilities | 75.8 | — | — | 75.8 | |||||||||||
| Total liabilities | 1,079.5 | (37.8 | ) | — | 1,041.7 | ||||||||||
| Commitments and contingencies | |||||||||||||||
| Common stock | 1.6 | — | — | 1.6 | |||||||||||
| Additional paid-in capital | 1,591.8 | — | — | 1,591.8 | |||||||||||
| Accumulated deficit | (1,173.5 | ) | (213.0 | ) | (c) | 97.7 | (c) | (1,288.8 | ) | ||||||
| Accumulated other comprehensive loss | (52.4 | ) | — | — | (52.4 | ) | |||||||||
| Total stockholders' equity | 367.5 | (213.0 | ) | 97.7 | 252.2 | ||||||||||
| Total liabilities and stockholders' equity | $ | 1,447.0 | $ | (250.8 | ) | $ | 97.7 | $ | 1,293.9 | ||||||
| (a) Net proceeds, including estimated purchase price adjustments, selling and other expenses. | |||||||||||||||
| (b) Cost reimbursements due from Purchaser. | |||||||||||||||
| (c) Collectively, the estimated loss related to the sale of U.S. Pipe. | |||||||||||||||
| Mueller Water Products, Inc. and Subsidiaries | |||||||||||||||
| Condensed Consolidated Pro Forma Statement of Operations from Continuing Operations - Unaudited | |||||||||||||||
| Three Months Ended December 31, 2011 | |||||||||||||||
| Pro forma adjustments | |||||||||||||||
| Previously | U.S. Pipe | ||||||||||||||
| reported | items | Other | Pro forma | ||||||||||||
| (in millions, except per share amounts) | |||||||||||||||
| Net sales | $ | 311.5 | $ | (96.1 | ) | — | $ | 215.4 | |||||||
| Cost of sales | 259.7 | (97.1 | ) | — | 162.6 | ||||||||||
| Gross profit | 51.8 | 1.0 | — | 52.8 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general and administrative | 53.4 | (6.9 | ) | (0.2 | ) | (b) | 46.3 | ||||||||
| Restructuring | 1.3 | (0.9 | ) | — | 0.4 | ||||||||||
| Total operating expenses | 54.7 | (7.8 | ) | (0.2 | ) | 46.7 | |||||||||
| Operating income (loss) from continuing operations | (2.9 | ) | 8.8 | 0.2 | 6.1 | ||||||||||
| Interest expense, net | 15.7 | (0.1 | ) | — | 15.6 | ||||||||||
| Income (loss) from continuing operations | |||||||||||||||
| before income taxes | (18.6 | ) | 8.9 | 0.2 | (9.5 | ) | |||||||||
| Income tax expense (benefit) | (6.7 | ) | 3.0 | (a) | — | (a) | (3.7 | ) | |||||||
| Income (loss) from continuing operations | $ | (11.9 | ) | $ | 5.9 | $ | 0.2 | $ | (5.8 | ) | |||||
| Weighted average shares outstanding | 156.0 | 156.0 | |||||||||||||
| Loss from continuing operations per share | $ | (0.08 | ) | $ | (0.04 | ) | |||||||||
| (a) Income taxes have been provided at the U.S. federal statutory rate of 35%. | |||||||||||||||
| (b) Corporate professional fees related to the sale of U.S. Pipe and items related to retained liabilities. | |||||||||||||||
| Mueller Water Products, Inc. and Subsidiaries | |||||||||||||||
| Condensed Consolidated Pro Forma Statement of Operations from Continuing Operations - Unaudited | |||||||||||||||
| Year Ended September 30, 2011 | |||||||||||||||
| Pro forma adjustments | |||||||||||||||
| Previously | U.S. Pipe | ||||||||||||||
| reported | items | Other | Pro forma | ||||||||||||
| (in millions, except per share amounts) | |||||||||||||||
| Net sales | $ | 1,339.2 | $ | (374.6 | ) | — | $ | 964.6 | |||||||
| Cost of sales | 1,105.1 | (388.7 | ) | — | 716.4 | ||||||||||
| Gross profit | 234.1 | 14.1 | — | 248.2 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general and administrative | 219.9 | (28.0 | ) | (1.0 | ) | (b) | 190.9 | ||||||||
| Restructuring | 7.5 | (3.9 | ) | — | 3.6 | ||||||||||
| Total operating expenses | 227.4 | (31.9 | ) | (1.0 | ) | 194.5 | |||||||||
| Operating income from continuing operations | 6.7 | 46.0 | 1.0 | 53.7 | |||||||||||
| Interest expense, net | 65.6 | 0.1 | — | 65.7 | |||||||||||
| Income (loss) from continuing operations | |||||||||||||||
| before income taxes | (58.9 | ) | 45.9 | 1.0 | (12.0 | ) | |||||||||
| Income tax expense (benefit) | (20.8 | ) | 16.1 | (a) | 0.3 | (a) | (4.4 | ) | |||||||
| Income (loss) from continuing operations | $ | (38.1 | ) | $ | 29.8 | $ | 0.7 | $ | (7.6 | ) | |||||
| Weighted average shares outstanding | 155.3 | 155.3 | |||||||||||||
| Loss from continuing operations per share | $ | (0.25 | ) | $ | (0.05 | ) | |||||||||
| (a) Income taxes have been provided at the U.S. federal statutory rate of 35%. | |||||||||||||||
| (b) Corporate professional fees related to the sale of U.S. Pipe and items related to retained liabilities. | |||||||||||||||
| Mueller Water Products, Inc. and Subsidiaries | |||||||||||||||
| Condensed Consolidated Pro Forma Statement of Operations from Continuing Operations - Unaudited | |||||||||||||||
| Three Months Ended December 31, 2010 | |||||||||||||||
| Pro forma adjustments | |||||||||||||||
| Previously | U.S. Pipe | ||||||||||||||
| reported | items | Other | Pro forma | ||||||||||||
| (in millions, except per share amounts) | |||||||||||||||
| Net sales | $ | 287.6 | $ | (74.4 | ) | — | $ | 213.2 | |||||||
| Cost of sales | 238.0 | (76.8 | ) | — | 161.2 | ||||||||||
| Gross profit | 49.6 | 2.4 | — | 52.0 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general and administrative | 52.0 | (7.0 | ) | (0.6 | ) | (b) | 44.4 | ||||||||
| Restructuring | 1.9 | (0.9 | ) | — | 1.0 | ||||||||||
| Total operating expenses | 53.9 | (7.9 | ) | (0.6 | ) | 45.4 | |||||||||
| Operating income (loss) from | |||||||||||||||
| continuing operations | (4.3 | ) | 10.3 | 0.6 | 6.6 | ||||||||||
| Interest expense, net | 15.9 | — | — | 15.9 | |||||||||||
| Income (loss) from continuing operations | |||||||||||||||
| before income taxes | (20.2 | ) | 10.3 | 0.6 | (9.3 | ) | |||||||||
| Income tax expense (benefit) | (8.1 | ) | 3.6 | (a) | 0.2 | (a) | (4.3 | ) | |||||||
| Income (loss) from continuing operations | $ | (12.1 | ) | $ | 6.7 | $ | 0.4 | $ | (5.0 | ) | |||||
| Weighted average shares outstanding | 154.9 | 154.9 | |||||||||||||
| Loss from continuing operations per share | $ | (0.08 | ) | $ | (0.03 | ) | |||||||||
| (a) Income taxes have been provided at the U.S. federal statutory rate of 35%. | |||||||||||||||
| (b) Corporate professional fees related to the sale of U.S. Pipe and items related to retained liabilities. | |||||||||||||||