Business Context and Reporting Period
This Form 8-K is filed by Mueller Water Products, Inc. on November 19, 2012. The report addresses a restatement of previously issued financial statements regarding the classification of cash flows for the six months ended March 31, 2011, and the nine months ended June 30, 2011.
Key Financial Metrics and Material Changes
The filing identifies errors in the classification of cash flows between continuing and discontinued operations related to the U.S. Pipe business segment. Specifically:
- Cash Flow from Continuing Operations: Was understated by $8.0 million for the six months ended March 31, 2011, and by $10.0 million for the nine months ended June 30, 2011.
- Cash Flow from Discontinued Operations: Was overstated by the same amounts ($8.0 million and $10.0 million, respectively) for the periods noted above.
- Impact on Other Metrics: The errors had no impact on consolidated balance sheets, statements of operations, statements of changes in stockholders' equity, debt compliance covenants, or employee compensation metrics.
Corrected unaudited condensed consolidated statements of cash flows are provided in Exhibit 99.1 of this filing.
Management Commentary and Risks
The Audit Committee, upon management's recommendation, concluded that the previously filed statements should no longer be relied upon. The errors stemmed from the classification of deferred income taxes and retirement plan adjustments when designating the U.S. Pipe segment as discontinued operations. The Committee discussed these matters with Ernst & Young LLP, the company's independent registered public accounting firm. Corrected data will also be presented in Note 22 of the upcoming Form 10-K for the year ended September 30, 2012.
Investor Verification Checklist
- Review Exhibit 99.1 for the corrected condensed consolidated statements of cash flows.
- Verify that the restatement does not affect debt covenants or executive compensation metrics as stated.
- Monitor the upcoming Form 10-K filing (expected by November 29, 2012) for the inclusion of these corrections in Note 22.
- Confirm that no other periods or financial statements are affected by this classification error.