Delaware | 20-3547095 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Item 1. | Financial Statements |
March 31, | September 30, | ||||||
2012 | 2011 | ||||||
(in millions) | |||||||
Assets: | |||||||
Cash and cash equivalents | $ | 34.3 | $ | 61.0 | |||
Receivables, net | 151.0 | 147.4 | |||||
Inventories | 190.8 | 175.9 | |||||
Deferred income taxes | 20.0 | 28.7 | |||||
Other current assets | 46.5 | 43.8 | |||||
Current assets held for sale | 156.6 | 142.0 | |||||
Total current assets | 599.2 | 598.8 | |||||
Property, plant and equipment, net | 141.3 | 145.7 | |||||
Identifiable intangible assets | 587.8 | 602.4 | |||||
Other noncurrent assets | 26.9 | 30.4 | |||||
Noncurrent assets held for sale | — | 107.7 | |||||
Total assets | $ | 1,355.2 | $ | 1,485.0 | |||
Liabilities and stockholders’ equity: | |||||||
Current portion of long-term debt | $ | 0.9 | $ | 0.9 | |||
Accounts payable | 73.4 | 59.1 | |||||
Other current liabilities | 77.9 | 77.9 | |||||
Current liabilities held for sale | 45.1 | 56.9 | |||||
Total current liabilities | 197.3 | 194.8 | |||||
Long-term debt | 691.6 | 677.4 | |||||
Deferred income taxes | 136.9 | 154.2 | |||||
Other noncurrent liabilities | 70.2 | 79.6 | |||||
Total liabilities | 1,096.0 | 1,106.0 | |||||
Commitments and contingencies (Note 12) | |||||||
Common stock: | |||||||
Series A common stock: 600,000,000 shares authorized;156,668,730 and 155,793,612 shares outstanding at March 31, 2012 and September 30, 2011, respectively | 1.6 | 1.6 | |||||
Additional paid-in capital | 1,590.6 | 1,593.2 | |||||
Accumulated deficit | (1,283.3 | ) | (1,161.6 | ) | |||
Accumulated other comprehensive income (loss) | (49.7 | ) | (54.2 | ) | |||
Total stockholders’ equity | 259.2 | 379.0 | |||||
Total liabilities and stockholders’ equity | $ | 1,355.2 | $ | 1,485.0 |
Three months ended | Six months ended | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(in millions, except per share amounts) | |||||||||||||||
Net sales | $ | 251.5 | $ | 235.5 | $ | 466.9 | $ | 448.7 | |||||||
Cost of sales | 189.4 | 177.4 | 352.0 | 338.6 | |||||||||||
Gross profit | 62.1 | 58.1 | 114.9 | 110.1 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 50.6 | 47.2 | 97.1 | 92.2 | |||||||||||
Restructuring | 0.9 | 1.1 | 1.3 | 2.1 | |||||||||||
Total operating expenses | 51.5 | 48.3 | 98.4 | 94.3 | |||||||||||
Operating income | 10.6 | 9.8 | 16.5 | 15.8 | |||||||||||
Interest expense, net | 15.6 | 16.3 | 31.2 | 32.2 | |||||||||||
Income (loss) before income taxes | (5.0 | ) | (6.5 | ) | (14.7 | ) | (16.4 | ) | |||||||
Income tax expense (benefit) | 3.9 | (1.1 | ) | 0.7 | (5.3 | ) | |||||||||
Income (loss) from continuing operations | (8.9 | ) | (5.4 | ) | (15.4 | ) | (11.1 | ) | |||||||
Income (loss) from discontinued operations, net of tax | (100.9 | ) | (8.3 | ) | (106.3 | ) | (14.7 | ) | |||||||
Net income (loss) | (109.8 | ) | (13.7 | ) | (121.7 | ) | (25.8 | ) | |||||||
Other comprehensive income (loss): | |||||||||||||||
Natural gas hedges | — | — | (0.3 | ) | — | ||||||||||
Income tax effects | — | — | 0.1 | — | |||||||||||
Interest rate swap contracts | 1.6 | 2.0 | 3.0 | 3.9 | |||||||||||
Income tax effects | (0.7 | ) | (0.8 | ) | (1.2 | ) | (1.5 | ) | |||||||
Foreign currency translation | 1.4 | 1.5 | 2.0 | 3.2 | |||||||||||
Minimum pension liability | 0.6 | 33.3 | 1.3 | 34.4 | |||||||||||
Income tax effects | (0.2 | ) | (13.0 | ) | (0.4 | ) | (13.4 | ) | |||||||
Other | — | — | — | (0.3 | ) | ||||||||||
2.7 | 23.0 | 4.5 | 26.3 | ||||||||||||
Comprehensive income (loss) | $ | (107.1 | ) | $ | 9.3 | $ | (117.2 | ) | $ | 0.5 | |||||
Net income (loss) per basic share: | |||||||||||||||
Continuing operations | $ | (0.06 | ) | (0.04 | ) | $ | (0.10 | ) | $ | (0.07 | ) | ||||
Discontinued operations | (0.64 | ) | (0.05 | ) | (0.68 | ) | (0.10 | ) | |||||||
Net income (loss) per basic share | $ | (0.70 | ) | $ | (0.09 | ) | $ | (0.78 | ) | $ | (0.17 | ) | |||
Net income (loss) per diluted share: | |||||||||||||||
Continuing operations | $ | (0.06 | ) | $ | (0.04 | ) | $ | (0.10 | ) | (0.07 | ) | ||||
Discontinued operations | (0.64 | ) | (0.05 | ) | (0.68 | ) | (0.10 | ) | |||||||
Net income (loss) per diluted share | $ | (0.70 | ) | $ | (0.09 | ) | $ | (0.78 | ) | $ | (0.17 | ) | |||
Weighted average shares outstanding: | |||||||||||||||
Basic | 156.5 | 155.4 | 156.2 | 155.1 | |||||||||||
Diluted | 156.5 | 155.4 | 156.2 | 155.1 | |||||||||||
Dividends declared per share | $ | 0.0175 | $ | 0.0175 | $ | 0.0350 | $ | 0.0350 |
Six months ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
(in millions) | |||||||
Operating activities: | |||||||
Net income (loss) | $ | (121.7 | ) | $ | (25.8 | ) | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Loss (income) from discontinued operations, net of tax | 106.3 | 14.7 | |||||
Income (loss) from continuing operations | (15.4 | ) | (11.1 | ) | |||
Depreciation | 15.5 | 17.0 | |||||
Amortization | 14.7 | 14.5 | |||||
Stock-based compensation | 2.6 | 3.6 | |||||
Deferred income taxes | 11.4 | (7.2 | ) | ||||
Retirement plans | 1.8 | 2.5 | |||||
Interest rate swap contracts | 3.0 | 3.9 | |||||
Other, net | 1.5 | 0.2 | |||||
Changes in assets and liabilities, net of acquisitions: | |||||||
Receivables | (3.3 | ) | (4.6 | ) | |||
Inventories | (14.5 | ) | 1.6 | ||||
Other assets | 1.7 | 0.7 | |||||
Liabilities | 1.5 | (34.5 | ) | ||||
Net cash provided by (used in) operating activities from continuing operations | 20.5 | (13.4 | ) | ||||
Investing activities: | |||||||
Capital expenditures | (12.1 | ) | (10.0 | ) | |||
Acquisitions | 0.5 | (7.9 | ) | ||||
Proceeds from sales of assets | 3.1 | 0.9 | |||||
Net cash provided by (used in) investing activities from continuing operations | (8.5 | ) | (17.0 | ) | |||
Financing activities: | |||||||
Debt borrowings | 14.0 | 0.1 | |||||
Common stock issued | 0.1 | 0.3 | |||||
Deferred financing fees paid | — | (0.3 | ) | ||||
Dividends paid | (5.5 | ) | (5.4 | ) | |||
Other | (0.4 | ) | 0.2 | ||||
Net cash provided by (used in) financing activities from continuing operations | 8.2 | (5.1 | ) | ||||
Net cash flows from discontinued operations: | |||||||
Operating activities | (44.8 | ) | (1.8 | ) | |||
Investing activities | (3.1 | ) | (4.2 | ) | |||
Net cash provided by (used in) discontinued operations | (47.9 | ) | (6.0 | ) | |||
Effect of currency exchange rate changes on cash | 1.0 | 1.3 | |||||
Net change in cash and cash equivalents | (26.7 | ) | (40.2 | ) | |||
Cash and cash equivalents at beginning of period | 61.0 | 84.0 | |||||
Cash and cash equivalents at end of period | $ | 34.3 | $ | 43.8 |
Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive income (loss) | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Balance at September 30, 2011 | $ | 1.6 | $ | 1,593.2 | $ | (1,161.6 | ) | $ | (54.2 | ) | $ | 379.0 | |||||||
Net income (loss) | — | — | (121.7 | ) | — | (121.7 | ) | ||||||||||||
Dividends declared | — | (5.5 | ) | — | — | (5.5 | ) | ||||||||||||
Stock-based compensation | — | 2.8 | — | — | 2.8 | ||||||||||||||
Stock issued under stock compensation plans | — | 0.1 | — | — | 0.1 | ||||||||||||||
Derivative instruments | — | — | — | 1.6 | 1.6 | ||||||||||||||
Foreign currency translation | — | — | — | 2.0 | 2.0 | ||||||||||||||
Minimum pension liability | — | — | — | 0.9 | 0.9 | ||||||||||||||
Balance at March 31, 2012 | $ | 1.6 | $ | 1,590.6 | $ | (1,283.3 | ) | $ | (49.7 | ) | $ | 259.2 |
Note 1. | Organization |
Note 2. | Acquisition |
Assets: | ||||
Receivables | $ | 0.3 | ||
Inventories | 0.1 | |||
Other current assets | 0.2 | |||
Property, plant and equipment | 0.1 | |||
Identifiable intangible assets | 7.3 | |||
Liabilities: | ||||
Accounts payable and other current liabilities | (0.2 | ) | ||
Deferred income taxes | (0.4 | ) | ||
$ | 7.4 |
Note 3. | Discontinued Operations and Assets Held for Sale |
The table below presents the components of the balance sheet accounts classified as assets and liabilities held for sale. | |||||||
March 31, | September 30, | ||||||
2012 | 2011 | ||||||
(in millions) | |||||||
Assets: | |||||||
Cash | $ | — | $ | 0.2 | |||
Receivables, net | 82.6 | 73.4 | |||||
Inventories | 67.4 | 61.8 | |||||
Other current assets | 6.6 | 6.6 | |||||
Total current assets held for sale | $ | 156.6 | $ | 142.0 | |||
Property, plant and equipment, net | $ | — | $ | 98.1 | |||
Identifiable intangible assets | — | 8.5 | |||||
Other noncurrent assets | — | 1.1 | |||||
Total noncurrent assets held for sale | $ | — | $ | 107.7 | |||
Liabilities: | |||||||
Accounts payable | $ | 38.9 | $ | 48.5 | |||
Other current liabilities | 6.2 | 8.4 | |||||
Total current liabilities held for sale | $ | 45.1 | $ | 56.9 |
Three months ended | Six months ended | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(in millions) | |||||||||||||||
Net sales | $ | 100.9 | $ | 75.8 | $ | 197.0 | $ | 150.2 | |||||||
Cost of sales | 100.8 | 83.9 | 197.9 | 160.7 | |||||||||||
Gross profit (loss) | 0.1 | (8.1 | ) | (0.9 | ) | (10.5 | ) | ||||||||
Operating expenses | 2.9 | 8.6 | 10.7 | 16.5 | |||||||||||
Operating income (loss) | (2.8 | ) | (16.7 | ) | (11.6 | ) | (27.0 | ) | |||||||
Interest expense | 0.2 | — | 0.3 | — | |||||||||||
Loss (gain) on sale of discontinued operations | 116.5 | — | 116.5 | — | |||||||||||
Income tax expense (benefit) | (18.6 | ) | (8.4 | ) | (22.1 | ) | (12.3 | ) | |||||||
Income (loss) from discontinued operations, net of tax | $ | (100.9 | ) | $ | (8.3 | ) | $ | (106.3 | ) | $ | (14.7 | ) |
Note 4. | Income Taxes |
The components of income tax expense (benefit) are provided below. | |||||||||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||||||||
March 31, 2012 | March 31, 2012 | ||||||||||||||||||||||
Continuing operations | Discontinued operations | Total | Continuing operations | Discontinued operations | Total | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Benefit from operations | $ | (2.0 | ) | $ | (47.1 | ) | $ | (49.1 | ) | $ | (6.2 | ) | $ | (50.6 | ) | $ | (56.8 | ) | |||||
Valuation allowance-related expense | 5.9 | 28.5 | 34.4 | 5.9 | 28.5 | 34.4 | |||||||||||||||||
Other discrete items | — | — | — | 1.0 | — | 1.0 | |||||||||||||||||
Income tax expense (benefit) | $ | 3.9 | $ | (18.6 | ) | $ | (14.7 | ) | $ | 0.7 | $ | (22.1 | ) | $ | (21.4 | ) |
Note 5. | Borrowing Arrangements |
March 31, | September 30, | ||||||
2012 | 2011 | ||||||
(in millions) | |||||||
ABL Agreement | $ | 48.0 | $ | 34.0 | |||
8.75% Senior Unsecured Notes | 221.9 | 221.7 | |||||
7.375% Senior Subordinated Notes | 420.0 | 420.0 | |||||
Other | 2.6 | 2.6 | |||||
692.5 | 678.3 | ||||||
Less current portion | (0.9 | ) | (0.9 | ) | |||
Long-term debt | $ | 691.6 | $ | 677.4 |
Note 6. | Derivative Financial Instruments |
Fair value | |||||||||
Balance sheet location | March 31, 2012 | September 30, 2011 | |||||||
(in millions) | |||||||||
Liability derivatives: | |||||||||
Derivatives designated as hedging instruments: | |||||||||
Natural gas swap contracts | Other current liabilities | $ | (0.3 | ) | $ | — |
March 31, | September 30, | |||||
Rate benchmark | 2012 | 2011 | ||||
(MMBtu) | ||||||
NYMEX natural gas | 191,000 | 406,000 |
Three months ended | Six months ended | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(in millions) | |||||||||||||||
Gain (loss) recognized in other comprehensive income (loss) | $ | (0.2 | ) | $ | (0.1 | ) | $ | (0.5 | ) | $ | (0.1 | ) | |||
Gain reclassified from accumulated other comprehensive income (loss) into income | 0.2 | 0.1 | 0.2 | 0.1 | |||||||||||
Ineffectiveness gain (loss) recognized in income | — | (0.1 | ) | — | (0.1 | ) |
Note 7. | Retirement Plans |
Three months ended | Six months ended | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(in millions) | |||||||||||||||
Service cost | $ | 0.3 | $ | 0.1 | $ | 0.6 | $ | 0.5 | |||||||
Interest cost | 2.6 | 3.8 | 5.2 | 5.3 | |||||||||||
Expected return on plan assets | (2.9 | ) | (4.2 | ) | (5.8 | ) | (5.8 | ) | |||||||
Amortization of prior service cost (gain) | 0.1 | 0.1 | 0.2 | 0.2 | |||||||||||
Amortization of net loss (gain) | 0.8 | 0.7 | 1.6 | 1.6 | |||||||||||
Loss due to settlement or curtailment | — | 0.7 | — | 0.7 | |||||||||||
Net periodic benefit cost (gain) | $ | 0.9 | $ | 1.2 | $ | 1.8 | $ | 2.5 |
March 31, 2012 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Equity: | |||||||||||||||
International | $ | — | $ | 11.6 | $ | — | $ | 11.6 | |||||||
Large cap growth funds | — | 8.4 | — | 8.4 | |||||||||||
Large cap value funds | — | 38.8 | — | 38.8 | |||||||||||
Midcap index funds | — | 5.1 | — | 5.1 | |||||||||||
Smallcap index funds | — | 26.4 | — | 26.4 | |||||||||||
Mutual funds | 135.8 | — | 135.8 | ||||||||||||
Total equity | 135.8 | 90.3 | — | 226.1 | |||||||||||
Bond funds | — | 140.2 | — | 140.2 | |||||||||||
Cash | 0.2 | 2.7 | — | 2.9 | |||||||||||
Other | — | — | 1.5 | 1.5 | |||||||||||
Total | $ | 136.0 | $ | 233.2 | $ | 1.5 | $ | 370.7 |
September 30, 2011 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Equity: | |||||||||||||||
Large cap growth funds | $ | — | $ | 7.5 | $ | — | $ | 7.5 | |||||||
Large cap value funds | — | 7.3 | — | 7.3 | |||||||||||
Midcap index funds | — | 2.2 | — | 2.2 | |||||||||||
Mutual funds | 137.1 | — | — | 137.1 | |||||||||||
Total equity | 137.1 | 17.0 | — | 154.1 | |||||||||||
Bond funds | — | 172.7 | — | 172.7 | |||||||||||
Cash | 0.2 | 3.3 | — | 3.5 | |||||||||||
Other | — | — | 1.5 | 1.5 | |||||||||||
Total | $ | 137.3 | $ | 193.0 | $ | 1.5 | $ | 331.8 |
Note 8. | Stock-based Compensation Plans |
Number of instruments | Weighted average grant date fair value per instrument | Total grant date fair value | ||||||||
(in millions, except per instrument value) | ||||||||||
Quarter ended December 31, 2011: | ||||||||||
Restricted stock units | 1.2 | $ | 2.04 | $ | 2.4 | |||||
Non-qualified stock options | 0.6 | 1.23 | 0.7 | |||||||
Employee stock purchase plan instruments | 0.1 | 1.95 | 0.3 | |||||||
Phantom Plan awards | 0.4 | 2.03 | 0.7 | |||||||
Quarter ended March 31, 2012 | ||||||||||
Restricted stock units | 0.1 | 2.79 | 0.4 | |||||||
Non-qualified stock options | 0.1 | 1.67 | 0.1 | |||||||
Employee stock purchase plan instruments | 0.1 | 2.14 | 0.2 | |||||||
$ | 4.8 |
Note 9. | Accumulated Other Comprehensive Loss |
March 31, | September 30, | ||||||
2012 | 2011 | ||||||
(in millions) | |||||||
Net unrecognized loss on derivatives | $ | (1.4 | ) | $ | (3.0 | ) | |
Foreign currency translation | 8.3 | 6.3 | |||||
Minimum pension liability | (56.6 | ) | (57.5 | ) | |||
$ | (49.7 | ) | $ | (54.2 | ) |
Note 10. | Supplemental Balance Sheet Information |
March 31, | September 30, | ||||||
2012 | 2011 | ||||||
(in millions) | |||||||
Inventories: | |||||||
Raw materials and purchased parts | $ | 72.1 | $ | 56.2 | |||
Work in process | 28.3 | 34.9 | |||||
Finished goods | 90.4 | 84.8 | |||||
$ | 190.8 | $ | 175.9 | ||||
Other current assets: | |||||||
Prepaid income taxes | $ | 16.1 | $ | 12.6 | |||
Maintenance and repair tooling | 23.9 | 24.2 | |||||
Other | 6.5 | 7.0 | |||||
$ | 46.5 | $ | 43.8 | ||||
Property, plant and equipment: | |||||||
Land | $ | 12.3 | $ | 13.5 | |||
Buildings | 68.8 | 70.2 | |||||
Machinery and equipment | 279.6 | 273.1 | |||||
Construction in progress | 13.7 | 10.4 | |||||
374.4 | 367.2 | ||||||
Accumulated depreciation and amortization | (233.1 | ) | (221.5 | ) | |||
$ | 141.3 | $ | 145.7 | ||||
Other current liabilities: | |||||||
Compensation and benefits | $ | 30.1 | $ | 31.6 | |||
Customer rebates | 10.1 | 13.2 | |||||
Interest | 12.9 | 13.0 | |||||
Taxes other than income taxes | 4.3 | 3.5 | |||||
Warranty | 1.7 | 2.0 | |||||
Severance | 1.1 | 1.5 | |||||
Income taxes | 1.8 | 1.9 | |||||
Restructuring | 1.2 | 1.4 | |||||
Environmental | 0.6 | 0.3 | |||||
Other | 14.1 | 9.5 | |||||
$ | 77.9 | $ | 77.9 |
Note 11. | Segment Information |
Three months ended | Six months ended | ||||||||||||||
March 31, | March 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(in millions) | (in millions) | ||||||||||||||
Net sales, excluding intersegment sales: | |||||||||||||||
Mueller Co. | $ | 154.5 | $ | 148.9 | $ | 282.6 | $ | 278.7 | |||||||
Anvil | 97.0 | 86.6 | 184.3 | 170.0 | |||||||||||
$ | 251.5 | $ | 235.5 | $ | 466.9 | $ | 448.7 | ||||||||
Intersegment sales: | |||||||||||||||
Mueller Co. | $ | 2.1 | $ | 2.5 | $ | 3.8 | $ | 4.6 | |||||||
Anvil | — | 0.1 | — | 0.1 | |||||||||||
$ | 2.1 | $ | 2.6 | $ | 3.8 | $ | 4.7 | ||||||||
Operating income (loss): | |||||||||||||||
Mueller Co. | $ | 8.2 | $ | 9.9 | $ | 12.9 | $ | 18.3 | |||||||
Anvil | 9.9 | 6.4 | 17.6 | 12.3 | |||||||||||
Corporate | (7.5 | ) | (6.5 | ) | (14.0 | ) | (14.8 | ) | |||||||
$ | 10.6 | $ | 9.8 | $ | 16.5 | $ | 15.8 | ||||||||
Depreciation and amortization: | |||||||||||||||
Mueller Co. | $ | 11.6 | $ | 12.2 | $ | 22.8 | $ | 23.9 | |||||||
Anvil | 3.5 | 3.5 | 7.1 | 7.2 | |||||||||||
Corporate | 0.1 | 0.2 | 0.3 | 0.4 | |||||||||||
$ | 15.2 | $ | 15.9 | $ | 30.2 | $ | 31.5 | ||||||||
Restructuring: | |||||||||||||||
Mueller Co. | $ | 0.8 | $ | 0.6 | $ | 1.2 | $ | 1.0 | |||||||
Anvil | 0.1 | 0.5 | 0.2 | 1.1 | |||||||||||
Corporate | — | — | (0.1 | ) | — | ||||||||||
$ | 0.9 | $ | 1.1 | $ | 1.3 | $ | 2.1 | ||||||||
Capital expenditures: | |||||||||||||||
Mueller Co. | $ | 3.8 | $ | 3.7 | $ | 7.2 | $ | 6.9 | |||||||
Anvil | 3.0 | 1.2 | 4.9 | 2.6 | |||||||||||
Corporate | — | 0.1 | — | 0.5 | |||||||||||
$ | 6.8 | $ | 5.0 | $ | 12.1 | $ | 10.0 |
Note 13. | Subsequent Events |
Note 14. | Consolidating Guarantor and Non-Guarantor Financial Information |
Name | State of incorporation or organization | |
Anvil 1, LLC | Delaware | |
Anvil 2, LLC | Delaware | |
Anvil International Holdings, LLC | Delaware | |
Anvil International, LLC | Delaware | |
AnvilStar, LLC | Delaware | |
Echologics, LLC | Delaware | |
Henry Pratt Company, LLC | Delaware | |
Henry Pratt International, LLC | Delaware | |
Hunt Industries, LLC | Delaware | |
Hydro Gate, LLC | Delaware | |
J.B. Smith Mfg. Co., LLC | Delaware | |
James Jones Company, LLC | Delaware | |
MCO 1, LLC | Alabama | |
MCO 2, LLC | Alabama | |
Milliken Valve, LLC | Delaware | |
Mueller Co. International Holdings, LLC | Delaware | |
Mueller Co. LLC | Delaware | |
Mueller Financial Services, LLC | Delaware | |
Mueller Group Co-Issuer, Inc. | Delaware | |
Mueller Group, LLC | Delaware | |
Mueller International, LLC | Delaware | |
Mueller Service California, Inc. | Delaware | |
Mueller Service Co., LLC | Delaware | |
Mueller Systems, LLC | Delaware | |
U.S. Pipe Valve & Hydrant, LLC | Delaware |
Issuer | Guarantor companies | Non- guarantor companies | Eliminations | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 10.9 | $ | (3.1 | ) | $ | 26.5 | $ | — | $ | 34.3 | ||||||||
Receivables, net | — | 136.6 | 14.4 | — | 151.0 | ||||||||||||||
Inventories | — | 174.9 | 15.9 | — | 190.8 | ||||||||||||||
Deferred income taxes | 19.4 | — | 0.6 | — | 20.0 | ||||||||||||||
Other current assets | 18.3 | 26.9 | 1.3 | — | 46.5 | ||||||||||||||
Current assets held for sale | 156.6 | — | — | — | 156.6 | ||||||||||||||
Total current assets | 205.2 | 335.3 | 58.7 | — | 599.2 | ||||||||||||||
Property, plant and equipment, net | 2.5 | 130.0 | 8.8 | — | 141.3 | ||||||||||||||
Identifiable intangible assets | — | 586.3 | 1.5 | — | 587.8 | ||||||||||||||
Other noncurrent assets | 24.6 | 0.9 | 1.4 | — | 26.9 | ||||||||||||||
Investment in subsidiaries | (36.2 | ) | 37.2 | — | (1.0 | ) | — | ||||||||||||
Total assets | $ | 196.1 | $ | 1,089.7 | $ | 70.4 | $ | (1.0 | ) | $ | 1,355.2 | ||||||||
Liabilities and stockholders' equity: | |||||||||||||||||||
Current portion of long-term debt | $ | — | $ | 0.9 | $ | — | $ | — | $ | 0.9 | |||||||||
Accounts payable | 7.5 | 61.5 | 4.4 | — | 73.4 | ||||||||||||||
Other current liabilities | 37.2 | 38.5 | 2.2 | — | 77.9 | ||||||||||||||
Current liabilities held for sale | 45.1 | — | — | — | 45.1 | ||||||||||||||
Total current liabilities | 89.8 | 100.9 | 6.6 | — | 197.3 | ||||||||||||||
Long-term debt | 690.2 | 1.4 | — | — | 691.6 | ||||||||||||||
Deferred income taxes | 136.5 | — | 0.4 | — | 136.9 | ||||||||||||||
Other noncurrent liabilities | 61.2 | 8.3 | 0.7 | — | 70.2 | ||||||||||||||
Intercompany accounts | (1,040.8 | ) | 1,015.3 | 25.5 | — | — | |||||||||||||
Total liabilities | (63.1 | ) | 1,125.9 | 33.2 | — | 1,096.0 | |||||||||||||
Stockholders' equity | 259.2 | (36.2 | ) | 37.2 | (1.0 | ) | 259.2 | ||||||||||||
Total liabilities and stockholders' equity | $ | 196.1 | $ | 1,089.7 | $ | 70.4 | $ | (1.0 | ) | $ | 1,355.2 |
Issuer | Guarantor companies | Non- guarantor companies | Eliminations | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 36.2 | $ | (3.8 | ) | $ | 28.6 | $ | — | $ | 61.0 | ||||||||
Receivables, net | — | 131.8 | 15.6 | — | 147.4 | ||||||||||||||
Inventories | — | 163.4 | 12.5 | — | 175.9 | ||||||||||||||
Deferred income taxes | 28.1 | — | 0.6 | — | 28.7 | ||||||||||||||
Other current assets | 15.4 | 27.3 | 1.1 | — | 43.8 | ||||||||||||||
Current assets held for sale | 142.0 | — | — | — | 142.0 | ||||||||||||||
Total current assets | 221.7 | 318.7 | 58.4 | — | 598.8 | ||||||||||||||
Property, plant and equipment, net | 3.9 | 132.7 | 9.1 | — | 145.7 | ||||||||||||||
Identifiable intangible assets | — | 600.9 | 1.5 | — | 602.4 | ||||||||||||||
Other noncurrent assets | 27.6 | 0.9 | 1.9 | — | 30.4 | ||||||||||||||
Noncurrent assets held for sale | 107.7 | — | — | — | 107.7 | ||||||||||||||
Investment in subsidiaries | (23.9 | ) | 23.8 | — | 0.1 | — | |||||||||||||
Total assets | $ | 337.0 | $ | 1,077.0 | $ | 70.9 | $ | 0.1 | $ | 1,485.0 | |||||||||
Liabilities and stockholders' equity: | |||||||||||||||||||
Current portion of long-term debt | $ | — | $ | 0.9 | $ | — | $ | — | $ | 0.9 | |||||||||
Accounts payable | 6.1 | 49.3 | 3.7 | — | 59.1 | ||||||||||||||
Other current liabilities | 30.1 | 44.9 | 2.9 | — | 77.9 | ||||||||||||||
Current liabilities held for sale | 56.9 | — | — | — | 56.9 | ||||||||||||||
Total current liabilities | 93.1 | 95.1 | 6.6 | — | 194.8 | ||||||||||||||
Long-term debt | 676.0 | 1.4 | — | — | 677.4 | ||||||||||||||
Deferred income taxes | 153.8 | — | 0.4 | — | 154.2 | ||||||||||||||
Other noncurrent liabilities | 71.0 | 7.9 | 0.7 | — | 79.6 | ||||||||||||||
Intercompany accounts | (1,035.9 | ) | 996.5 | 39.4 | — | — | |||||||||||||
Total liabilities | (42.0 | ) | 1,100.9 | 47.1 | — | 1,106.0 | |||||||||||||
Stockholders' equity | 379.0 | (23.9 | ) | 23.8 | 0.1 | 379.0 | |||||||||||||
Total liabilities and stockholders' equity | $ | 337.0 | $ | 1,077.0 | $ | 70.9 | $ | 0.1 | $ | 1,485.0 |
Issuer | Guarantor companies | Non- guarantor companies | Eliminations | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Net sales | $ | — | $ | 227.8 | $ | 23.7 | $ | — | $ | 251.5 | |||||||||
Cost of sales | — | 170.3 | 19.1 | — | 189.4 | ||||||||||||||
Gross profit | — | 57.5 | 4.6 | — | 62.1 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Selling, general and administrative | 7.3 | 39.5 | 3.8 | — | 50.6 | ||||||||||||||
Restructuring | — | 0.9 | — | — | 0.9 | ||||||||||||||
Total operating expenses | 7.3 | 40.4 | 3.8 | — | 51.5 | ||||||||||||||
Operating income (loss) | (7.3 | ) | 17.1 | 0.8 | — | 10.6 | |||||||||||||
Interest expense, net | 15.7 | — | (0.1 | ) | — | 15.6 | |||||||||||||
Income (loss) from before income taxes | (23.0 | ) | 17.1 | 0.9 | — | (5.0 | ) | ||||||||||||
Income tax expense (benefit) | 3.5 | — | 0.4 | — | 3.9 | ||||||||||||||
Equity in income (loss) of subsidiaries | 17.6 | 0.5 | — | (18.1 | ) | — | |||||||||||||
Income (loss) from continuing operations | (8.9 | ) | 17.6 | 0.5 | (18.1 | ) | (8.9 | ) | |||||||||||
Income (loss) from discontinued operations, net of tax | (100.9 | ) | — | — | — | (100.9 | ) | ||||||||||||
Net income (loss) | (109.8 | ) | 17.6 | 0.5 | (18.1 | ) | (109.8 | ) | |||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Natural gas hedges, net of tax | — | — | — | — | — | ||||||||||||||
Interest rate swap contracts, net of tax | 0.9 | — | — | — | 0.9 | ||||||||||||||
Foreign currency translation | — | — | 1.4 | — | 1.4 | ||||||||||||||
Minimum pension liability, net of tax | 0.4 | — | — | — | 0.4 | ||||||||||||||
1.3 | — | 1.4 | — | 2.7 | |||||||||||||||
Comprehensive income (loss) | $ | (108.5 | ) | $ | 17.6 | $ | 1.9 | $ | (18.1 | ) | $ | (107.1 | ) |
Issuer | Guarantor companies | Non- guarantor companies | Eliminations | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Net sales | $ | — | $ | 209.2 | $ | 26.3 | $ | — | $ | 235.5 | |||||||||
Cost of sales | — | 154.2 | 23.2 | — | 177.4 | ||||||||||||||
Gross profit | — | 55.0 | 3.1 | — | 58.1 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Selling, general and administrative | 6.7 | 37.4 | 3.1 | — | 47.2 | ||||||||||||||
Restructuring | — | 0.9 | 0.2 | — | 1.1 | ||||||||||||||
Total operating expenses | 6.7 | 38.3 | 3.3 | — | 48.3 | ||||||||||||||
Operating income (loss) | (6.7 | ) | 16.7 | (0.2 | ) | — | 9.8 | ||||||||||||
Interest expense, net | 16.3 | — | — | — | 16.3 | ||||||||||||||
Income (loss) before income taxes | (23.0 | ) | 16.7 | (0.2 | ) | — | (6.5 | ) | |||||||||||
Income tax expense (benefit) | (5.2 | ) | 4.3 | (0.2 | ) | — | (1.1 | ) | |||||||||||
Equity in income (loss) of subsidiaries | 12.4 | — | — | (12.4 | ) | — | |||||||||||||
Income (loss) from continuing operations | (5.4 | ) | 12.4 | — | (12.4 | ) | (5.4 | ) | |||||||||||
Income (loss) from discontinued operations, net of tax | (8.3 | ) | — | — | $ | — | (8.3 | ) | |||||||||||
Net income (loss) | (13.7 | ) | 12.4 | — | (12.4 | ) | (13.7 | ) | |||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Natural gas hedges, net of tax | — | — | — | — | — | ||||||||||||||
Interest rate swap contracts, net of tax | 1.2 | — | — | — | 1.2 | ||||||||||||||
Foreign currency translation | — | — | 1.5 | — | 1.5 | ||||||||||||||
Minimum pension liability, net of tax | 20.3 | — | — | — | 20.3 | ||||||||||||||
21.5 | — | 1.5 | — | 23.0 | |||||||||||||||
Comprehensive income (loss) | $ | 7.8 | $ | 12.4 | $ | 1.5 | $ | (12.4 | ) | $ | 9.3 |
Issuer | Guarantor companies | Non- guarantor companies | Eliminations | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Net sales | $ | — | $ | 422.1 | $ | 44.8 | $ | — | $ | 466.9 | |||||||||
Cost of sales | — | 315.4 | 36.6 | — | 352.0 | ||||||||||||||
Gross profit | — | 106.7 | 8.2 | — | 114.9 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Selling, general and administrative | 13.7 | 76.8 | 6.6 | — | 97.1 | ||||||||||||||
Restructuring | (0.1 | ) | 1.4 | — | — | 1.3 | |||||||||||||
Total operating expenses | 13.6 | 78.2 | 6.6 | — | 98.4 | ||||||||||||||
Operating income (loss) | (13.6 | ) | 28.5 | 1.6 | — | 16.5 | |||||||||||||
Interest expense, net | 31.3 | 0.1 | (0.2 | ) | — | 31.2 | |||||||||||||
Income (loss) before income taxes | (44.9 | ) | 28.4 | 1.8 | — | (14.7 | ) | ||||||||||||
Income tax expense (benefit) | (9.8 | ) | 9.9 | 0.6 | — | 0.7 | |||||||||||||
Equity in income (loss) of subsidiaries | 19.7 | 1.2 | — | (20.9 | ) | — | |||||||||||||
Income (loss) from continuing operations | (15.4 | ) | 19.7 | 1.2 | (20.9 | ) | (15.4 | ) | |||||||||||
Income (loss) from discontinued operations, net of tax | (106.3 | ) | — | — | — | (106.3 | ) | ||||||||||||
Net income (loss) | (121.7 | ) | 19.7 | 1.2 | (20.9 | ) | (121.7 | ) | |||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Natural gas hedges, net of tax | (0.2 | ) | — | — | — | (0.2 | ) | ||||||||||||
Interest rate swap contracts, net of tax | 1.8 | — | — | — | 1.8 | ||||||||||||||
Foreign currency translation | — | — | 2.0 | — | 2.0 | ||||||||||||||
Minimum pension liability, net of tax | 0.9 | — | — | — | 0.9 | ||||||||||||||
2.5 | — | 2.0 | — | 4.5 | |||||||||||||||
Comprehensive income (loss) | $ | (119.2 | ) | $ | 19.7 | $ | 3.2 | $ | (20.9 | ) | $ | (117.2 | ) |
Issuer | Guarantor companies | Non- guarantor companies | Eliminations | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Net sales | $ | — | $ | 396.0 | $ | 52.7 | $ | — | $ | 448.7 | |||||||||
Cost of sales | (0.1 | ) | 292.2 | 46.5 | — | 338.6 | |||||||||||||
Gross profit | 0.1 | 103.8 | 6.2 | — | 110.1 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Selling, general and administrative | 14.9 | 72.0 | 5.3 | — | 92.2 | ||||||||||||||
Restructuring | — | 1.8 | 0.3 | — | 2.1 | ||||||||||||||
Total operating expenses | 14.9 | 73.8 | 5.6 | — | 94.3 | ||||||||||||||
Operating income (loss) | (14.8 | ) | 30.0 | 0.6 | — | 15.8 | |||||||||||||
Interest expense, net | 32.2 | 0.1 | (0.1 | ) | — | 32.2 | |||||||||||||
Income (loss) before income taxes | (47.0 | ) | 29.9 | 0.7 | — | (16.4 | ) | ||||||||||||
Income tax expense (benefit) | (15.1 | ) | 9.6 | 0.2 | — | (5.3 | ) | ||||||||||||
Equity in income (loss) of subsidiaries | 20.8 | 0.5 | — | (21.3 | ) | — | |||||||||||||
Income (loss) from continuing operations | (11.1 | ) | 20.8 | 0.5 | (21.3 | ) | (11.1 | ) | |||||||||||
Income (loss) from discontinued operations, net of tax | (14.7 | ) | $ | — | $ | — | $ | — | (14.7 | ) | |||||||||
Net income (loss) | (25.8 | ) | 20.8 | 0.5 | (21.3 | ) | (25.8 | ) | |||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Natural gas hedges, net of tax | — | — | — | — | — | ||||||||||||||
Interest rate swap contracts, net of tax | 2.4 | — | — | — | 2.4 | ||||||||||||||
Foreign currency translation | — | — | 3.2 | — | 3.2 | ||||||||||||||
Minimum pension liability, net of tax | 20.7 | — | — | — | 20.7 | ||||||||||||||
23.1 | — | 3.2 | — | 26.3 | |||||||||||||||
Comprehensive income (loss) | $ | (2.7 | ) | $ | 20.8 | $ | 3.7 | $ | (21.3 | ) | $ | 0.5 |
Issuer | Guarantor companies | Non- guarantor companies | Eliminations | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Operating activities: | |||||||||||||||||||
Net cash provided by (used in) operating activities from continuing operations | $ | 14.0 | $ | 9.5 | $ | (3.0 | ) | $ | — | $ | 20.5 | ||||||||
Investing activities: | |||||||||||||||||||
Capital expenditures | — | (11.5 | ) | (0.6 | ) | — | (12.1 | ) | |||||||||||
Acquisitions | — | — | 0.5 | — | 0.5 | ||||||||||||||
Proceeds from sales of assets | — | 3.1 | — | — | 3.1 | ||||||||||||||
Net cash provided by (used in) investing activities from continuing operations | — | (8.4 | ) | (0.1 | ) | — | (8.5 | ) | |||||||||||
Financing activities: | |||||||||||||||||||
Debt borrowings | 14.0 | — | — | 14.0 | |||||||||||||||
Common stock issued | 0.1 | — | — | — | 0.1 | ||||||||||||||
Dividends paid | (5.5 | ) | — | — | — | (5.5 | ) | ||||||||||||
Other | — | (0.4 | ) | — | — | (0.4 | ) | ||||||||||||
Net cash provided by (used in) financing activities from continuing operations | 8.6 | (0.4 | ) | — | — | 8.2 | |||||||||||||
Net cash flows from discontinued operations: | |||||||||||||||||||
Operating activities | (44.8 | ) | — | — | — | (44.8 | ) | ||||||||||||
Investing activities | (3.1 | ) | — | — | — | (3.1 | ) | ||||||||||||
Net cash provided by (used in) discontinued operations | (47.9 | ) | — | — | — | (47.9 | ) | ||||||||||||
Effect of currency exchange rate changes on cash | — | — | 1.0 | — | 1.0 | ||||||||||||||
Net change in cash and cash equivalents | (25.3 | ) | 0.7 | (2.1 | ) | — | (26.7 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 36.2 | (3.8 | ) | 28.6 | — | 61.0 | |||||||||||||
Cash and cash equivalents at end of period | $ | 10.9 | $ | (3.1 | ) | $ | 26.5 | $ | — | $ | 34.3 |
Issuer | Guarantor companies | Non- guarantor companies | Eliminations | Total | |||||||||||||||
(in millions) | |||||||||||||||||||
Operating activities: | |||||||||||||||||||
Net cash provided by (used in) operating activities from continuing operations | $ | (6.8 | ) | $ | 7.9 | $ | (14.5 | ) | $ | — | $ | (13.4 | ) | ||||||
Investing activities: | |||||||||||||||||||
Capital expenditures | (0.5 | ) | (9.3 | ) | (0.2 | ) | — | (10.0 | ) | ||||||||||
Acquisitions | — | (7.9 | ) | (7.9 | ) | ||||||||||||||
Proceeds from sales of assets | — | 0.9 | — | — | 0.9 | ||||||||||||||
Net cash provided by (used in) investing activities from continuing operations | (0.5 | ) | (8.4 | ) | (8.1 | ) | — | (17.0 | ) | ||||||||||
Financing activities: | |||||||||||||||||||
Debt borrowings | — | 0.1 | — | — | 0.1 | ||||||||||||||
Common stock issued | 0.3 | — | — | — | 0.3 | ||||||||||||||
Deferred financing fees paid | (0.3 | ) | — | — | — | (0.3 | ) | ||||||||||||
Dividends paid | (5.4 | ) | — | — | — | (5.4 | ) | ||||||||||||
Other | — | 0.2 | — | — | 0.2 | ||||||||||||||
Net cash provided by (used in) financing activities from continuing operations | (5.4 | ) | 0.3 | — | — | (5.1 | ) | ||||||||||||
Net cash flows from discontinued operations: | |||||||||||||||||||
Operating activities | (1.8 | ) | — | — | — | (1.8 | ) | ||||||||||||
Investing activities | (4.2 | ) | — | — | — | (4.2 | ) | ||||||||||||
Net cash provided by (used in) discontinued operations | (6.0 | ) | — | — | — | (6.0 | ) | ||||||||||||
Effect of currency exchange rate changes on cash | — | — | 1.3 | — | 1.3 | ||||||||||||||
Net change in cash and cash equivalents | (18.7 | ) | (0.2 | ) | (21.3 | ) | — | (40.2 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 51.3 | (2.1 | ) | 34.8 | — | 84.0 | |||||||||||||
Cash and cash equivalents at end of period | $ | 32.6 | $ | (2.3 | ) | $ | 13.5 | $ | — | $ | 43.8 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
• | the spending level for water and wastewater infrastructure; |
• | the level of manufacturing and construction activity; |
• | our ability to service our debt obligations; and |
• | the other factors that are described in the section entitled “RISK FACTORS” in Item 1A. of annual report on Form 10-K for the year ended September 30, 2011 ("Annual Report") . |
2012 | |||||||||||||||
Mueller Co. | Anvil | Corporate | Total | ||||||||||||
(in millions) | |||||||||||||||
Net sales | $ | 154.5 | $ | 97.0 | $ | — | $ | 251.5 | |||||||
Gross profit | $ | 33.6 | $ | 28.5 | $ | — | $ | 62.1 | |||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 24.6 | 18.5 | 7.5 | 50.6 | |||||||||||
Restructuring | 0.8 | 0.1 | — | 0.9 | |||||||||||
Total operating expenses | 25.4 | 18.6 | 7.5 | 51.5 | |||||||||||
Operating income (loss) | $ | 8.2 | $ | 9.9 | $ | (7.5 | ) | 10.6 | |||||||
Interest expense, net | 15.6 | ||||||||||||||
Income (loss) before income taxes | (5.0 | ) | |||||||||||||
Income tax expense (benefit) | 3.9 | ||||||||||||||
Income (loss) from continuing operations | (8.9 | ) | |||||||||||||
Income (loss) from discontinued operations, net of tax | (100.9 | ) | |||||||||||||
Net income (loss) | $ | (109.8 | ) | ||||||||||||
2011 | |||||||||||||||
Mueller Co. | Anvil | Corporate | Total | ||||||||||||
(in millions) | |||||||||||||||
Net sales | $ | 148.9 | $ | 86.6 | $ | — | $ | 235.5 | |||||||
Gross profit | $ | 33.8 | $ | 24.4 | $ | (0.1 | ) | $ | 58.1 | ||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 23.3 | 17.5 | 6.4 | 47.2 | |||||||||||
Restructuring | 0.6 | 0.5 | — | 1.1 | |||||||||||
Total operating expenses | 23.9 | 18.0 | 6.4 | 48.3 | |||||||||||
Operating income (loss) | $ | 9.9 | $ | 6.4 | $ | (6.5 | ) | 9.8 | |||||||
Interest expense, net | 16.3 | ||||||||||||||
Income (loss) before income taxes | (6.5 | ) | |||||||||||||
Income tax expense (benefit) | (1.1 | ) | |||||||||||||
Income (loss) from continuing operations | (5.4 | ) | |||||||||||||
Income (loss) from discontinued operations, net of tax | (8.3 | ) | |||||||||||||
Net income (loss) | $ | (13.7 | ) |
The components of interest expense, net are detailed below. | |||||||
Three months ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
(in millions) | |||||||
7.375% Senior Subordinated Notes | $ | 7.8 | $ | 7.8 | |||
8.75% Senior Unsecured Notes | 5.0 | 5.0 | |||||
Interest rate swap contracts | 1.6 | 2.0 | |||||
ABL Agreement borrowings | 0.5 | 0.4 | |||||
Deferred financing fees amortization | 0.6 | 0.6 | |||||
Other interest expense | 0.2 | 0.5 | |||||
15.7 | 16.3 | ||||||
Interest income | (0.1 | ) | — | ||||
$ | 15.6 | $ | 16.3 |
The components of income tax expense (benefit) are provided below. | |||||||||||
Three months ended | |||||||||||
March 31, 2012 | |||||||||||
Continuing operations | Discontinued operations | Total | |||||||||
(in millions) | |||||||||||
Benefit from operations | $ | (2.0 | ) | $ | (47.1 | ) | $ | (49.1 | ) | ||
Valuation allowance-related expense | 5.9 | 28.5 | 34.4 | ||||||||
Income tax expense (benefit) | $ | 3.9 | $ | (18.6 | ) | $ | (14.7 | ) |
2012 | |||||||||||||||
Mueller Co. | Anvil | Corporate | Total | ||||||||||||
(in millions) | |||||||||||||||
Net sales | $ | 282.6 | $ | 184.3 | $ | — | $ | 466.9 | |||||||
Gross profit | $ | 62.1 | $ | 52.8 | $ | — | $ | 114.9 | |||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 48.0 | 35.0 | 14.1 | 97.1 | |||||||||||
Restructuring | 1.2 | 0.2 | (0.1 | ) | 1.3 | ||||||||||
Total operating expenses | 49.2 | 35.2 | 14.0 | 98.4 | |||||||||||
Operating income (loss) | $ | 12.9 | $ | 17.6 | $ | (14.0 | ) | 16.5 | |||||||
Interest expense, net | 31.2 | ||||||||||||||
Income (loss) before income taxes | (14.7 | ) | |||||||||||||
Income tax expense (benefit) | 0.7 | ||||||||||||||
Income (loss) from continuing operations | (15.4 | ) | |||||||||||||
Income (loss) from discontinued operations, net of tax | (106.3 | ) | |||||||||||||
Net income (loss) | $ | (121.7 | ) | ||||||||||||
2011 | |||||||||||||||
Mueller Co. | Anvil | Corporate | Total | ||||||||||||
(in millions) | |||||||||||||||
Net sales | $ | 278.7 | $ | 170.0 | $ | — | $ | 448.7 | |||||||
Gross profit | $ | 63.0 | $ | 46.8 | $ | 0.3 | $ | 110.1 | |||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 43.7 | 33.4 | 15.1 | 92.2 | |||||||||||
Restructuring | 1.0 | 1.1 | — | 2.1 | |||||||||||
Total operating expenses | 44.7 | 34.5 | 15.1 | 94.3 | |||||||||||
Operating income (loss) | $ | 18.3 | $ | 12.3 | $ | (14.8 | ) | 15.8 | |||||||
Interest expense, net | 32.2 | ||||||||||||||
Income (loss) before income taxes | (16.4 | ) | |||||||||||||
Income tax expense (benefit) | (5.3 | ) | |||||||||||||
Income (loss) from continuing operations | (11.1 | ) | |||||||||||||
Income (loss) from discontinued operations, net of tax | (14.7 | ) | |||||||||||||
Net income (loss) | $ | (25.8 | ) |
The components of interest expense, net are detailed below. | |||||||
Six months ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
(in millions) | |||||||
7.375% Senior Subordinated Notes | $ | 15.5 | $ | 15.5 | |||
8.75% Senior Unsecured Notes | 10.0 | 10.0 | |||||
Interest rate swap contracts | 3.0 | 3.9 | |||||
ABL Agreement borrowings | 0.9 | 0.8 | |||||
Deferred financing fees amortization | 1.2 | 1.2 | |||||
Other interest expense | 0.8 | 0.9 | |||||
31.4 | 32.3 | ||||||
Interest income | (0.2 | ) | (0.1 | ) | |||
$ | 31.2 | $ | 32.2 |
The components of income tax expense (benefit) are provided below. | |||||||||||
Six months ended | |||||||||||
March 31, 2012 | |||||||||||
Continuing operations | Discontinued operations | Total | |||||||||
(in millions) | |||||||||||
Benefit from operations | $ | (6.2 | ) | $ | (50.6 | ) | $ | (56.8 | ) | ||
Valuation allowance-related expense | 5.9 | 28.5 | 34.4 | ||||||||
Other discrete items | 1.0 | — | 1.0 | ||||||||
Income tax expense (benefit) | $ | 0.7 | $ | (22.1 | ) | $ | (21.4 | ) |
Six months ended | ||||||||
March 31, | ||||||||
2012 | 2011 | |||||||
(in millions) | ||||||||
Collections from customers | $ | 463.7 | $ | 443.0 | ||||
Disbursements other than interest and income taxes | (423.8 | ) | (424.9 | ) | ||||
Interest payments, net | (27.1 | ) | (27.3 | ) | ||||
Income tax refunds (payments), net | 7.7 | (4.2 | ) | |||||
Cash provided by (used in) operating activities from continuing operations | $ | 20.5 | $ | (13.4 | ) |
• | limitations on other debt, liens, investments and guarantees; |
• | restrictions on dividends and redemptions of our capital stock and prepayments and redemptions of debt; and |
• | restrictions on mergers and acquisition, sales of assets and transaction with affiliates. |
Our corporate credit rating and the credit rating for our debt are presented below. | |||||||
Moody’s | Standard & Poor's | ||||||
March 31, 2012 | September 30, 2011 | March 31, 2012 | September 30, 2011 | ||||
Corporate credit rating | B3 | B3 | B | B | |||
ABL Agreement | Not rated | Not rated | Not rated | Not rated | |||
8.75% Senior Unsecured Notes | B2 | B2 | B+ | B+ | |||
7.375% Senior Subordinated Notes | Caa2 | Caa2 | CCC+ | CCC+ | |||
Outlook | Stable | Stable | Stable | Stable |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total number of shares purchased (1) | Average price paid per share | Total number of shares purchased as part of publically announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs | |||||||||
January 1-31, 2012 | 2,643 | $ | 2.77 | — | — | ||||||||
February 1-29, 2012 | 2,641 | 3.02 | — | — | |||||||||
March 1-31, 2012 | 14,309 | 3.33 | — | — | |||||||||
Total | 19,593 | $ | 3.04 | — | — |
Item 6. | Exhibits |
Exhibit No. | Document | |
2.3 | Purchase Agreement, dated March 7, 2012, among Mueller Water Products, Inc., Mueller Group, LLC and USP Holdings Inc. Incorporated by reference to Exhibit 2.3 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on March 8, 2012. | |
10.11.5* | Fourth Amendment to Employment Agreement, dated March 1, 2012, between Mueller Water Products, Inc. and Gregory E. Hyland. | |
10.14.2* | Third Amendment to Employment Agreement, dated March 1, 2012, between Mueller Water Products, Inc. and Evan L. Hart. | |
10.15.3* | Amendment to Employment Agreement, dated March 1, 2012, between Mueller Water Products, Inc. and Thomas E. Fish. | |
10.31.3* | Assignment and Assumption Agreement, dated April 2, 2012, between Mueller Water Products, Inc. and United States Pipe and Foundry Company, LLC. Incorporated by reference to Exhibit 10.21.3 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on April 4, 2012. | |
10.24.3* | Second Amendment to Employment Agreement, dated March 1, 2012, between Mueller Water Products, Inc. and Gregory S. Rogowski. | |
31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1* | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2* | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101* | The following financial information from the Quarterly Report on Form 10-Q for the quarter ended December 31, 2011, formatted in XBRL (Extensible Business Reporting Language), (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Stockholders' Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements. | |
* | Filed with this quarterly report |
MUELLER WATER PRODUCTS, INC. | |||
Date: | May 10, 2012 | By: | /s/ Evan L. Hart |
Evan L. Hart | |||
Chief Financial Officer |
1. | Capitalized terms used in this Fourth Amendment shall have the meanings assigned to such terms in the Agreement. |
2. | The reference in Section 5(iii) to “sixty (60)” shall be replaced by “seventy-five (75)”. |
3. | Section 5(iv) shall be deleted in its entirety and replaced with the following: |
iv. | The Company will allow Executive to continue medical and dental coverage for Executive and Executive's eligible dependents (as provided to its active employees) for up to 18 months following the date of termination of employment, but only if the Executive pays the COBRA rate for such coverage (“Extended Coverage”). If Executive declines Extended Coverage or becomes eligible for medical and/or dental coverage through another employer (including an employer of the Executive's spouse), such Extended Coverage will cease. The COBRA election period and COBRA maximum period of coverage will begin on the date the Extended Coverage ceases, subject to the rules and limitations that apply to COBRA coverage. |
4. | A new Section 5(vii) shall be added and shall state in its entirety: |
vii. | The Company will cover reasonable expenses related to outplacement services, the cost and duration of which shall be determined by the Company in its sole discretion; provided, however, the outplacement assistance is intended to be exempt from Code Section 409A under the exemption in Treas. Reg. § 1.409A-1(b)(9)(v)(A) and, thus, (i) the services will be limited as necessary to be “reasonable” under Code Section 409A, (ii) the services shall be provided by no later than the last day of the second calendar year following the year in which the Executive's date of termination of employment occurs, and (iii) no related payments will be paid beyond the third calendar year after the year in which the Executive's date of termination of employment occurs. |
5. | The Agreement, as expressly amended by this Fourth Amendment, shall remain in full force and effect in accordance with its terms and continue to bind the parties. This Fourth Amendment supersedes and amends any other agreements between the Company and/or any subsidiary or division and Employee, and any policy applicable to the Employee. Any disputes under this Fourth Amendment shall be resolved as provided in the Agreement. |
6. | This Fourth Amendment shall be effective as of the date first set forth above. |
1. | Capitalized terms used in this Third Amendment shall have the meanings assigned to such terms in the Agreement. |
2. | The reference in Section 5(i) of the Agreement to “255%” shall be replaced by a reference to “262.5%”. |
3. | Section 5(iii) shall be deleted in its entirety and replaced with the following: |
iii. | The Company will allow Executive to continue medical and dental coverage for Executive and Executive's eligible dependents (as provided to its active employees) for up to 18 months following the date of termination of employment, but only if the Executive pays the COBRA rate for such coverage (“Extended Coverage”). If Executive declines Extended Coverage or becomes eligible for medical and/or dental coverage through another employer (including an employer of the Executive's spouse), such Extended Coverage will cease. The COBRA election period and COBRA maximum period of coverage will begin on the date the Extended Coverage ceases, subject to the rules and limitations that apply to COBRA coverage. |
4. | The section heading for Section 5(vi) shall be replaced by a section heading for Section 5(v) to correct an administrative error. |
5. | A new Section 5(vi) shall be added and shall state in its entirety: |
vi. | Notwithstanding contrary provisions in an executive incentive bonus plan or in Section 3.b of this Article I, Executive will be paid an annual bonus for the fiscal year in which the termination of employment occurs determined and paid in the same manner as for all other executive participants in the annual bonus program except that the bonus will be pro rated for the portion of the fiscal year during which Executive was actively employed and will be paid within seventy-five (75) days after the end of such fiscal year. |
6. | A new Section 5(vii) shall be added and shall state in its entirety: |
vii. | The Company will cover reasonable expenses related to outplacement services, the cost and duration of which shall be determined by the Company in its sole discretion; provided, however, the outplacement assistance is intended to be exempt from Code Section 409A under the exemption in Treas. Reg. § 1.409A-1(b)(9)(v)(A) and, thus, (i) the services will be limited as necessary to be “reasonable” under Code Section 409A, (ii) the services shall be provided by no later than the last day of the second calendar year following the year in which the Executive's date of termination of employment occurs, and (iii) no related payments will be paid beyond the third calendar year after the year in which the Executive's date of termination of employment occurs. |
7. | The Agreement, as expressly amended by this Third Amendment, shall remain in full force and effect in accordance with its terms and continue to bind the parties. This Third Amendment supersedes and amends any other agreements between the Company and/or any subsidiary or division and Employee, and any policy applicable to the Employee. Any disputes under this Third Amendment shall be resolved as provided in the Agreement. |
8. | This Third Amendment shall be effective as of the date first set forth above. |
1. | Capitalized terms used in this Amendment shall have the meanings assigned to such terms in the Agreement. |
2. | Section 5(iii) shall be deleted in its entirety and replaced with the following: |
iii. | The Company will allow Executive to continue medical and dental coverage for Executive and Executive's eligible dependents (as provided to its active employees) for up to 18 months following the date of termination of employment, but only if the Executive pays the COBRA rate for such coverage (“Extended Coverage”). If Executive declines Extended Coverage or becomes eligible for medical and/or dental coverage through another employer (including an employer of the Executive's spouse), such Extended Coverage will cease. The COBRA election period and COBRA maximum period of coverage will begin on the date the Extended Coverage ceases, subject to the rules and limitations that apply to COBRA coverage. |
3. | A new Section 5(vi) shall be added and shall state in its entirety: |
vi. | Notwithstanding contrary provisions in an executive incentive bonus plan or in Section 3.b of this Article I, Executive will be paid an annual bonus for the fiscal year in which the termination of employment occurs determined and paid in the same manner as for all other executive participants in the annual bonus program except that the bonus will be pro rated for the portion of the fiscal year during which Executive was actively employed and will be paid within seventy-five (75) days after the end of such fiscal year. |
4. | A new Section 5(vii) shall be added and shall state in its entirety: |
vii. | The Company will cover reasonable expenses related to outplacement services, the cost and duration of which shall be determined by the Company in its sole discretion; provided, however, the outplacement assistance is intended to be exempt from Code Section 409A under the exemption in Treas. Reg. § 1.409A-1(b)(9)(v)(A) and, thus, (i) the services will be limited as necessary to be “reasonable” under Code Section 409A, (ii) the services shall be provided by no later than the last day of the second calendar year following the year in which the Executive's date of termination of employment occurs, and (iii) no related payments will be paid beyond the third calendar year after the year in which the Executive's date of termination of employment occurs. |
5. | The Agreement, as expressly amended by this Amendment, shall remain in full force and effect in accordance with its terms and continue to bind the parties. This Amendment supersedes and amends any other agreements between the Company and/or any subsidiary or division and Employee, and any policy applicable to the Employee. Any disputes under this Amendment shall be resolved as provided in the Agreement. |
6. | This Amendment shall be effective as of the date first set forth above. |
1. | Capitalized terms used in this Second Amendment shall have the meanings assigned to such terms in the Agreement. |
2. | Section 5(iii) shall be deleted in its entirety and replaced with the following: |
iii. | The Company will allow Executive to continue medical and dental coverage for Executive and Executive's eligible dependents (as provided to its active employees) for up to 18 months following the date of termination of employment, but only if the Executive pays the COBRA rate for such coverage (“Extended Coverage”). If Executive declines Extended Coverage or becomes eligible for medical and/or dental coverage through another employer (including an employer of the Executive's spouse), such Extended Coverage will cease. The COBRA election period and COBRA maximum period of coverage will begin on the date the Extended Coverage ceases, subject to the rules and limitations that apply to COBRA coverage. |
3. | The section heading for Section 5(vi) shall be replaced by a section heading for Section 5(v) to correct an administrative error. |
4. | A new Section 5(vi) shall be added and shall state in its entirety: |
vi. | Notwithstanding contrary provisions in an executive incentive bonus plan or in Section 3.b of this Article I, Executive will be paid an annual bonus for the fiscal year in which the termination of employment occurs determined and paid in the same manner as for all other executive participants in the annual bonus program except that the bonus will be pro rated for the portion of the fiscal year during which Executive was actively employed and will be paid within seventy-five (75) days after the end of such fiscal year. |
5. | A new Section 5(vii) shall be added and shall state in its entirety: |
vii. | The Company will cover reasonable expenses related to outplacement services, the cost and duration of which shall be determined by the Company in its sole discretion; provided, however, the outplacement assistance is intended to be exempt from Code Section 409A under the exemption in Treas. Reg. § 1.409A-1(b)(9)(v)(A) and, thus, (i) the services will be limited as necessary to be “reasonable” under Code Section 409A, (ii) the services shall be provided by no later than the last day of the second calendar year following the year in which the Executive's date of termination of employment occurs, and (iii) no related payments will be paid beyond the third calendar year after the year in which the Executive's |
6. | The Agreement, as expressly amended by this Second Amendment, shall remain in full force and effect in accordance with its terms and continue to bind the parties. This Second Amendment supersedes and amends any other agreements between the Company and/or any subsidiary or division and Employee, and any policy applicable to the Employee. Any disputes under this Second Amendment shall be resolved as provided in the Agreement. |
7. | This Second Amendment shall be effective as of the date first set forth above. |
1. | I have reviewed this annual report on Form 10-K of Mueller Water Products, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Gregory E. Hyland |
Gregory E. Hyland |
Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Mueller Water Products, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Evan L. Hart |
Evan L. Hart, |
Senior Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Gregory E. Hyland |
Gregory E. Hyland, |
Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Evan L. Hart |
Evan L. Hart, |
Senior Vice President and Chief Financial Officer |
Derivative Financial Instruments (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Mar. 31, 2012
|
Mar. 31, 2011
|
|
Pre-tax expense of interest rate swap | $ 1.6 | $ 2.0 | $ 3.0 | $ 3.9 |
Interest Rate Swap Contracts [Member]
|
||||
Pre-tax expense of interest rate swap | 1.6 | 2.0 | 3.0 | 3.9 |
Interest rate swap contract unamortized portion remaining in accumulated other comprehensive loss | $ 1.2 |
Acquisition (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 31, 2011
|
Dec. 31, 2011
Echologics Engineering, Inc. [Member]
|
Sep. 30, 2011
Echologics Engineering, Inc. [Member]
|
Dec. 14, 2010
Echologics Engineering, Inc. [Member]
|
Mar. 31, 2012
Trade Names And Trade Marks[Member]
Echologics Engineering, Inc. [Member]
|
Mar. 31, 2011
Technology [Member]
Echologics Engineering, Inc. [Member]
years
|
|
Business Acquisition [Line Items] | ||||||
Cash paid for acquisition | $ 7.9 | |||||
Escrow deposit related to seller indemnifications | 1.5 | |||||
Reduction of Indemnification | 0.5 | |||||
Goodwill | 0 | 0.5 | ||||
Funds released from escrow | 0.5 | |||||
Identifiable intangible assets, indefinite lived | 0.6 | |||||
Identifiable intangible assets, finite lived | $ 6.7 | |||||
Identifiable intangible assets, estimated useful life (in years) | 15 |
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