10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2008
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-32892

MUELLER WATER PRODUCTS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	20-3547095
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

1200 Abernathy Road N.E.

Suite 1200

Atlanta, GA 30328

(Address of Principal Executive Offices)

Registrant’s telephone number: (770) 206-4200

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

Title of Each Class	Name of Each Exchange on Which Registered
Series A Common Stock, par value $0.01	New York Stock Exchange
Series B Common Stock, par value $0.01	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
x Yes     o No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
o Yes     x No

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.
x Yes     o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

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

x Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company

(Do not check if a smaller reporting company)

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

There were 115,433,798 shares of common stock of the registrant outstanding at November 14, 2008, composed of 29,588,878 shares of Series A common stock and 85,844,920 shares of Series B common stock. At March 31, 2008, the aggregate market value of the voting and non-voting common stock held by nonaffiliates was approximately $0.9 billion based on the closing prices per share as reported on the New York Stock Exchange.

DOCUMENTS INCORPORATED BY REFERENCE

Applicable portions of the Proxy Statement for the Annual Meeting of Stockholders of the Company to be held January 28, 2009 are incorporated by reference into Part III of this Form 10-K.

Introductory Note

In this annual report on Form 10-K (the “annual report”), the “Company,” “we,” “us” or “our” refer to Mueller Water Products, Inc. and subsidiaries or their management. With regard to the Company’s segments, “we,” “us” or “our” may also refer to the segment being discussed or its management.

Certain of the titles and logos of our products referenced in this annual report are our intellectual property. Each trade name, trademark or servicemark of any other company appearing in this annual report is the property of its holder.

Unless the context indicates otherwise, whenever we refer in this annual report to a particular fiscal year, we mean the fiscal year ending September 30 in that particular calendar year. We manage our businesses and report operations through three segments: Mueller Co., U.S. Pipe and Anvil, based largely on the products sold and the customers served.

Industry and Market Data

In this annual report, we rely on and refer to information and statistics regarding economic conditions and trends, the demand for our water infrastructure, flow control and piping component system products and the competitive conditions we face in serving our customers and end users.

Some, but not all of the companies that compete in our particular industry segments are publicly traded as of the date of this annual report. Accordingly, other than certain data with respect to fire hydrants, ductile iron pipe and water valves, no current public information is available with respect to the size of such markets or our relative strength or competitive position. Our statements in this annual report about our relative market strength and competitive position with respect to other products are based on our beliefs, internal studies and our judgments concerning industry trends.

Forward-Looking Statements

This annual report contains certain statements that may be deemed “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). All statements, other than statements of historical fact, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by us in light of our experience and our perception of historical trends, current conditions and expected future developments. Actual results and the timing of events may differ significantly from those projected in such forward-looking statements due to a number of factors, including those set forth in the section entitled “RISK FACTORS” in Item 1A of Part I of this annual report.

TABLE OF CONTENTS

			Page
PART I
	Item 1.	BUSINESS		1
		Our Company		1
		The Initial Public Offering and the Spin-Off		2
		Business Strategy		3
		Description of Products		3
		Sales, Marketing and Distribution		5
		Backlog		7
		Manufacturing		7
		Raw Materials and Purchased Components		8
		Research and Development		8
		Patents, Licenses and Trademarks		9
		Seasonality		9
		Competition		9
		Environmental Matters		9
		Safety		11
		Regulatory Matters		11
		Employees		12
		Geographic Information		12
	Item 1A.	RISK FACTORS		12
		Risks Relating to Our Business		12
		Risks Relating to Our Relationship with Walter Industries		20
	Item 1B.	UNRESOLVED STAFF COMMENTS		20
	Item 2.	PROPERTIES		21
	Item 3.	LEGAL PROCEEDINGS		22
	Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		24
PART II
	Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		24
		Equity Compensation Plan Information		24
		Sale of Unregistered Securities		24
		Issuer Purchases of Equity Securities		25
		Stock Price Performance Graphs		25
	Item 6.	SELECTED FINANCIAL DATA		28
	Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		29
		Overview		29
		Results of Operations		31
		Financial Condition		38
		Liquidity and Capital Resources		39
		Off-Balance Sheet Arrangements		40
		Contractual Obligations		41
		Effect of Inflation; Seasonality		41
		Critical Accounting Estimates		41
		Recently Issued Accounting Standards		43
	Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK		44
	Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		46
	Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		46
	Item 9A.	CONTROLS AND PROCEDURES		46
	Item 9B.	OTHER INFORMATION		47

			Page
PART III
	Item 10*	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		48
	Item 11*	EXECUTIVE COMPENSATION		52
	Item 12*	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		52
	Item 13*	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE		53
	Item 14*	PRINCIPAL ACCOUNTANT FEES AND SERVICES		53
PART IV
	Item 15	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES		53
EX-10.5
EX-12.1
EX-14.1
EX-21.1
EX-23.1
EX-23.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2

* All or a portion of the referenced sections have been incorporated by reference from our definitive proxy statement issued in connection with the Annual Meeting of Stockholders to be held on January 28, 2009.

PART I

Item 1.   BUSINESS

Our Company

We are a leading North American manufacturer and marketer of a broad range of water infrastructure, flow control and piping component system products for use in water distribution networks and treatment facilities. We also act as a distributor, especially in Canada, for our products and products that are manufactured by other companies. Our broad product portfolio includes engineered valves, fire hydrants, pipe fittings, water meters and ductile iron pipe, which are used by municipalities, as well as the non-residential and residential construction, heating, ventilation and air conditioning (“HVAC”), fire protection and oil & gas industries. Our products enjoy leading positions due to their broad brand recognition and a reputation for quality and service for the customers we serve. We believe we have one of the largest installed bases of iron gate valves and fire hydrants in the United States, and, as of September 30, 2008, our installed products included approximately three million fire hydrants and approximately nine million iron gate valves. Because of the strength of our brands and products, our products are specified for use in all of the top 50 metropolitan areas in the United States. Our large installed base, broad product range and well-known brands have led to long-standing relationships with the key distributors of our products. Approximately 75% of our net sales during fiscal 2008 came from products for which we believe we have a leadership position. For fiscal 2008, our net sales were $1,859.3 million and income from operations was $146.1 million.

We manage our businesses and report operations through three business segments, based largely on the products they sell and the customers they serve: Mueller Co., U.S. Pipe and Anvil.

Mueller Co.

Sales of Mueller Co. products are driven principally by spending on water and wastewater infrastructure upgrade, repair and replacement and new water and wastewater infrastructure, which is typically associated with new residential construction. We estimate that a majority of Mueller Co.’s fiscal 2008 sales were for infrastructure upgrade, repair and replacement, with the remainder for new infrastructure.

U.S. Pipe

U.S. Pipe products are sold primarily to waterworks distributors, contractors, municipalities, utilities and other governmental agencies. A substantial percentage of ductile iron pipe orders result from contracts that are bid by contractors or directly issued by municipalities or utilities. We estimate that a majority of U.S. Pipe’s fiscal 2008 sales were for new infrastructure, with the remainder for infrastructure upgrade, repair and replacement. In January 2007, U.S. Pipe acquired the assets of Fast Fabricators, Inc. (“Fast Fabricators”).

Anvil

Anvil sells products it manufactures and products it sources from outside parties to a wide variety of end users through a network of distributors. These distributors are serviced primarily through distribution centers located in the United States and Canada. We believe Anvil’s network of distributors is the largest such distribution network serving similar end users. One of Anvil’s Canadian divisions also sells directly to contractors.

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The table below illustrates each segment’s net sales during fiscal 2008, major product lines, product positions, selected brand names and primary end users.

	Mueller Co.	U.S. Pipe	Anvil
Net sales (in millions)	$718.1	$546.0	$595.2
Major product lines (product position in U.S. and Canada*)	Fire hydrants (#1) Iron gate valves (#1) Butterfly and ball   valves (#1) Plug valves (#2) Brass water   products (#2)	Ductile iron pipe (#1)	Pipe fittings and  couplings (#1) Grooved products (#2) Pipe hangers (#2)
Selected brand names	Mueller® Pratt® Millikentm Jones® Hersey® HydroGate® Canada Valvetm Mueller Servicetm	U.S. PIPE® TYTON® TYTON JOINT® TR FLEX® USIFLEX® FIELD LOK® MJ FIELD LOK® HP LOK® FAST FAB Catawissatm TRIM TYTON®	Anvil® AnvilStar® SPF® Merit® Gruvlok® Becktm Picomatm J.B. Smithtm Anvil-Strut®
Primary end users	Water and wastewater   infrastructure	Water and wastewater  infrastructure	HVAC, fire protection,  industrial, energy and  oil & gas

* Product position information is based on our estimates of our sales compared to the sales of our principal competitors for these product categories. Our estimates were based on internal analyses and information from trade associations and our distributor networks.

The Initial Public Offering and the Spin-off

Mueller Water Products, Inc. is a Delaware corporation that was incorporated on September 22, 2005 under the name Mueller Holding Company, Inc., and is the surviving corporation of the merger on February 2, 2006 of Mueller Water Products, LLC and Mueller Water Products Co-Issuer, Inc. with and into Mueller Holding Company, Inc. We changed our name to Mueller Water Products, Inc. on February 2, 2006. On June 1, 2006, the Company completed an initial public offering of its Series A common stock.

On December 14, 2006, Walter Industries, Inc. (“Walter Industries”) distributed to its shareholders all of the outstanding shares of the Company’s Series B common stock (the “Spin-off”). Prior to the Spin-off, the Series B common stock represented approximately 75% of our economic value and approximately 96% of the combined voting power of our common stock.

Our principal executive offices are located at 1200 Abernathy Road N.E., Suite 1200, Atlanta, Georgia 30328, and our main telephone number at that address is (770) 206-4200.

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Business Strategy

Our business strategy is focused on maintaining our market leadership and competitive differentiation, while growing revenues and enhancing profitability. Key elements of our strategy follow.

We will maintain our leadership positions with our customers and end users.

We will maintain our leadership positions with our customers and end users by leveraging our large installed base, the specification of our products as accepted for use in a majority of metropolitan areas, our established and extensive distribution channels and our broad range of leading water infrastructure, flow control and piping component system products, as well as by developing and introducing additional products and services.

We will continue to enhance operational excellence.

We will continue to pursue superior product engineering, design and manufacturing by investing in technologically advanced manufacturing processes such as lost foam casting and automated molding machinery. We will also seek opportunities to improve manufacturing efficiency safely, such as through the completion of a new automated ductile iron pipe operation, increased utilization of our manufacturing facility in China to produce additional high quality and cost-effective products and continuing our cost-reduction and efficiency initiatives. We will expand our number of LEAN Manufacturing specialists and use of Six Sigma business improvement methodologies to capture higher levels of operational efficiencies. We will also continue to evaluate sourcing products wherever doing so will lower our costs while maintaining quality.

We will increase the breadth and depth of our products and services.

We will continue to seek to provide value to our customers and end users by increasing the breadth and depth of our products and services. Further, though acquisition and internal development, we will continue to develop products and services recognized for their quality and reliability for our customers and end users. For example, Mueller Co. has introduced a new product that blocks reverse flows of water-borne contaminants from a fire hydrant into a water main. Additionally, with the acquisition of Fast Fabricators, U.S. Pipe expanded its product offerings to include fabricated, coated and lined pipe products. We will continue to seek to add value to our customers and end users through attractive acquisitions and internal development.

We will expand internationally.

We will selectively pursue attractive international acquisitions that enhance our existing product offerings, strengthen our current competitive positions, enable us to enter new markets, expand our technological capabilities or provide synergy opportunities.

Description of Products

We offer a full line of water infrastructure, flow control and piping component system products in the United States and Canada. Our principal products are ductile iron pipe, water and gas valves, fire hydrants and a complete range of pipe fittings, couplings, hangers and nipples. Our products are generally designed, manufactured and tested in compliance with industry standards.

Mueller Co.

Water and Gas Valves and Related Products.  Mueller Co. manufactures valves for water and gas systems, including butterfly, iron gate, tapping, check, plug and ball valves. Water and gas valves and related products accounted for approximately $470.5 million, $503.5 million and $545.7 million of our gross sales during fiscal 2008, 2007 and 2006, respectively. All of our valve products are used to control transmission of potable (drinkable) water, non-potable water or gas. Water valve products typically range in size from 3/4 inch to 36 inches, but we also manufacture significantly larger valves as custom orders. Most of these valves are used in water distribution and water treatment.

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We also produce small iron valves, meter bars and line stopper fittings for use in gas systems, and we manufacture machines and tools for tapping, drilling, extracting, installing and stopping-off. These machines and tools are designed to work with our water and gas fittings and valves as an integrated system.

Fire Hydrants.  Mueller Co. manufactures dry-barrel and wet-barrel fire hydrants. Fire hydrants and fire hydrant parts sales accounted for approximately $175.4 million, $193.1 million and $197.0 million of our gross sales in fiscal 2008, 2007 and 2006, respectively. We sell fire hydrants for new water infrastructure development, fire protection systems and water infrastructure repair and replacement projects.

Our fire hydrants consist of an upper barrel and nozzle section and a lower barrel and valve section that connects to a water main. In dry-barrel hydrants, the valve connecting the barrel of the hydrant to the water main is located below ground at or below the frost line, which keeps the hydrant upper barrel “dry”. We sell dry-barrel fire hydrants with the Mueller and U.S. Pipe brand names in the United States and the Mueller and Canada Valve brand names in Canada. We also make a limited number of wet-barrel hydrants, where the valves are located in the hydrant nozzles and the barrel contains water at all times. Wet-barrel hydrants are made for warm weather climates in locations such as California and Hawaii and sold under the Jones brand name.

Most municipalities have a limited number of hydrant brands that are approved for installation within their system due to the need to minimize inventories of spare parts for repairs and the desire to ensure a uniform system. We believe that our large installed base of hydrants throughout the United States and Canada and our reputation for superior quality and performance, together with our incumbent specification position, have contributed to the leading positions of our key products. Our large installed base of approximately three million hydrants also leads to recurring sales as components of an installed hydrant are replaced from time to time.

Other Products and Services.  Mueller Co. manufactures a full line of metering products for the water industry, marketed under the Hersey brand name. These products have the capability to measure water from small residential flows to fire and master meter applications. Other products include pipe repair products, such as clamps and couplings used to repair leaks in water and gas distribution systems and municipal castings, such as manhole covers and street drain grates. We sell these products under the Mueller and Jones brand names. We also provide installation, replacement and maintenance services on new and existing valves, hydrants and service lines under the Mueller Service brand name. Services include wet taps, dry installs, line stops and main-to-meter connections with full excavation and refurbishment.

U.S. Pipe

U.S. Pipe manufactures a broad line of ductile iron pipe, restraint joint products, fittings and other ductile cast iron products. Ductile iron is a cast iron that is heat-treated to make it less brittle. U.S. Pipe’s net sales were $546.0 million, $537.1 million and $594.7 million during fiscal 2008, 2007 and 2006, respectively. Net sales in fiscal 2006 include a small amount of sales from valve and hydrant product lines that were transferred to Mueller Co. in January 2006.

Our ductile iron pipe typically ranges from 4 inches to 64 inches in diameter and up to 20 feet in length. Most of our pipe is sold in 18 feet lengths. Ductile iron pipe is used primarily for potable water distribution systems, small water system grids, reinforcing distribution systems (including looping grids and supply lines), major water transmission mains, wastewater collection systems, sewer force mains and water and wastewater treatment plants. We believe ductile iron pipe is preferred for most municipal uses because of its strength, ductility and long-lasting life.

Fast Fabricators also manufactures and sells a broad line of fabricated pipe, coated pipe and lined pipe products used primarily in wastewater treatment facilities.

Anvil

Anvil products include a variety of fittings, couplings, hangers, nipples, valves and related pipe products. Anvil’s net sales were $595.2 million, $555.8 million and $534.6 million in fiscal 2008, 2007 and 2006, respectively. Approximately $229.7 million, $200.4 million and $179.4 million, respectively, of these net

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sales were of purchased products. Our products are principally used in fire protection systems, oilfield and HVAC applications.

The majority of Anvil products are not specified by an architect or an engineer, but are required to be manufactured to industry specifications, which could include material composition, tensile strength and various other requirements. Many products carry the Underwriters Laboratory (“UL”), Factory Mutual (“FM”) or other approval ratings.

Fittings and Couplings.  Anvil manufactures threaded and grooved pipe fittings. Pipe fittings and couplings join two pieces of pipe together. Listed below are the four primary categories of pipe fittings and couplings that we manufacture.

•  Cast Iron Fittings.  Cast iron is the most economical threaded fittings material and is the standard used in the United States for low pressure applications such as sprinkler systems and other fire protection systems. We believe that the substantial majority of our cast iron products are is used in the fire protection industry, with the remainder used in steam and other HVAC applications.

•  Malleable Iron Fittings and Unions.  Malleable iron is a cast iron that is heat-treated to make it stronger, allowing a thinner wall and a lighter product. Malleable iron is primarily used to join pipe in various gas, plumbing and HVAC applications.

•  Grooved Fittings, Couplings and Valves.  Unlike typical pipe connections where pipes are connected by screwing them into a fitting or welding them together, grooved products use a threadless pipe-joining method that does not require welding. We purchase products, such as grooved copper and stainless steel fittings, to complement our grooved product offerings to enable us to better serve our customers’ project requirements.

•  Threaded Steel Pipe Couplings.  Threaded steel pipe couplings are used by plumbing and electrical end users to join pipe and conduit and by pipe mills as threaded end protectors.

Hangers.  Anvil manufactures a broad array of pipe hangers and supports. Standard pipe hangers and supports are used in fire sprinkler systems and HVAC applications where the objective is to provide rigid support from the building structure. Special order, or engineered, pipe supports are used in nuclear and fossil power plants and petrochemical plants and refineries where the objective is to support a piping system that is subject to thermal, dynamic or seismic movement.

Nipples.  Anvil manufactures pipe nipples, which are used to expand or compress the flow between pipes of different diameters. The pipe nipple product line is a complementary product offering and is packaged with cast iron for fire protection products, with malleable iron for industrial applications, with our forged steel products for oil & gas and chemical applications and as a general plumbing item.

Other Products.  Anvil also distributes other products including (a) forged steel pipe fittings, hammer unions, bull plugs and swage nipples which are used to connect pipe in oil & gas applications and (b) standard steel and polyvinyl chloride (“PVC”) conduit couplings and elbows used to carry wire and cable in electrical applications.

Sales, Marketing and Distribution

Mueller Co.

Mueller Co. sells its products to a wide variety of customers, including municipalities, water and wastewater utilities, gas utilities, fire protection and construction contractors. These products are usually sold to our distributors, who then sell them to end users working to construct, replace or upgrade a water, wastewater, gas or fire protection system. In limited cases, end users of our products, including municipalities and utilities, buy products directly from us, most often as part of a program to repair, replace or upgrade existing infrastructure. Sales of our products are heavily influenced by the specifications for the underlying projects. Approximately 19%, 16% and 12% of Mueller Co.’s net sales were to Canadian customers in fiscal 2008, 2007 and 2006 respectively.

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At September 30, 2008, Mueller Co. had 99 sales representatives in the field and 116 inside marketing and sales professionals, as well as 50 non-employee manufacturers’ representatives. In addition to calling on distributors, these representatives also call on municipalities, water companies and other end users to ensure that the products specified for their projects are comparable to our products, or our products are specifically specified. Municipalities often require contractors to use the same products that have been historically used by that municipality.

Mueller Co.’s large installed base, broad product range and well-known brands have led to our long-standing relationships with all of the leading distributors in the industries we serve. We generally ship our products directly to distributors from our plants. Our distribution network covers all of the major locations for our products in the United States and Canada. Although we have long-term relationships with most of our top distributors, we typically do not have long-term contracts with our distributors and we do not have written contracts with our two largest distributors. These top two distributors accounted for approximately 36%, 41% and 44% of Mueller Co.’s net sales in fiscal 2008, 2007 and 2006, respectively. The loss of either of these distributors could have a material adverse effect on our businesses. See “Item 1A. RISK FACTORS—We depend on a group of major distributors for a significant portion of our sales; any loss of these distributors could reduce our sales and continuing consolidation could cause price pressure.”

U.S. Pipe

U.S. Pipe products are sold primarily to waterworks distributors, contractors, municipalities, utilities and other governmental agencies. A substantial percentage of ductile iron pipe orders result from contracts that are bid by contractors or directly issued by municipalities or utilities. An increasing portion of ductile iron pipe sales is made through independent waterworks distributors. We maintain numerous supply depots in leased space throughout the United States.

At September 30, 2008, U.S. Pipe had a sales force of 51 sales representatives in the field and in-house and sales engineers who sell our products throughout the United States. We have divided the United States into four geographic territories, each managed by a regional sales manager. Non-U.S. orders are taken by our in-house sales personnel and through third-party representatives.

U.S. Pipe’s top customer, a distributor with whom we do not have a written contract, represented approximately 17%, 24% and 29% of U.S. Pipe’s net sales in fiscal 2008, 2007 and 2006, respectively. We believe the loss of this customer could have a material adverse effect on our businesses. See “Item 1A. RISK FACTORS— We depend on a group of major distributors for a significant portion of our sales; any loss of these distributors could reduce our sales and continuing consolidation could cause price pressure.”

Anvil

Approximately 71%, 72% and 74% of Anvil’s net sales were to customers in the United States during fiscal 2008, 2007 and 2006, respectively. Approximately 26% of Anvil’s net sales were to Canadian customers during fiscal 2008, 2007 and 2006.

Anvil’s sales in the United States are primarily to distributors who then sell the products to a wide variety of end users including commercial contractors. At September 30, 2008, Anvil’s sales force in the United States consisted of 157 sales and customer service representatives and 15 independent sales representatives. Anvil products are shipped primarily from four major regional distribution centers from which we are generally able to provide 24-hour turnaround, as typically required by our customers.

In Canada, approximately 80% of Anvil’s net sales are directly to contractors and, through Anvil’s Mueller Flow Control division, approximately 20% of Anvil’s net sales are to distributors. Canadian end users are similar to those in the United States. Anvil’s Canadian sales force consists of 100 sales and customer service employees. Products sold to contractors are shipped from 18 branch locations throughout Canada. Each of Canada’s five major provinces has at least one branch location for sales to distributors.

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Anvil generally does not have written contracts with its distributors, although we have long-term relationships with most of our top distributors. Our top three distributors together accounted for approximately 13% of our net sales in each of fiscal 2008, 2007 and 2006. The loss of any one of these distributors could have a material adverse effect on our businesses. See “Item 1A. RISK FACTORS — We depend on a group of major distributors for a significant portion of our sales; any loss of these distributors could reduce our sales and continuing consolidation could cause price pressure.”

Backlog

Backlog is not significant for the Company, except for U.S. Pipe and the Henry Pratt division of Mueller Co. Other Mueller Co. divisions and Anvil generally manufacture products from raw materials in stock and deliver them to customers typically within two to four weeks from receipt of the order, depending upon customer delivery specifications. Henry Pratt manufactures parts for large projects that typically require design and build specifications. The delivery lead time for parts used for these projects can be as long as nine months. Backlog for U.S. Pipe and Henry Pratt is presented below.

	September 30,
	2008		2007
	(in millions)
U.S. Pipe	$	67.1	$	67.4
Henry Pratt		81.5		74.8

Manufacturing

See “Item 2. PROPERTIES” for a description of our principal manufacturing facilities.

Mueller Co.

Mueller Co. operates 13 manufacturing facilities in the United States, Canada and China. Our manufacturing operations include foundry, machining, fabrication, assembly, testing and painting operations. Not all facilities perform each of these operations. Our existing manufacturing capacity is sufficient for near-term requirements. We have no current plans to expand capacity. We plan to continue to maximize operational efficiencies throughout all of our plants through the use of LEAN Manufacturing techniques, which is a methodology that focuses on improving process, cost, quality, and safety.

Mueller Co. foundries use two casting techniques, lost foam and green sand. We utilize lost foam technology for fire hydrant production in our Albertville, Alabama facility and for iron gate valve production in our Chattanooga, Tennessee facility. The lost foam process has several advantages over the green sand process for high-volume products, including a reduction in the number of manual finishing operations, lower scrap levels and the ability to reuse some of the materials. The selection of the appropriate casting method, pattern, core-making equipment, sand and other raw materials depends on the final product and its complexity, specifications, function and intended production volume.

U.S. Pipe

U.S. Pipe operates three facilities in the United States for manufacturing ductile iron pipe. We utilize the DeLavaud centrifugal casting process, which consists of introducing molten iron into a rapidly turning steel mold and relying on the centrifugal force to distribute molten iron around the inner surface of the mold to produce ductile iron pipe of uniform quality. Construction and testing of U.S. Pipe’s new state-of-the-art ductile iron pipe manufacturing operation in Bessemer, Alabama is complete. We plan to continue to expand our use of LEAN Manufacturing and Six Sigma techniques to improve process, cost, quality, and safety.

In November 2007, we announced our intent to cease our ductile iron pipe manufacturing operations in Burlington, New Jersey. These manufacturing operations ceased during the year ended September 30, 2008. This facility continues to be used as a full-service distribution center for customers in the Northeast.

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Fast Fabricators operates a small number of relatively small facilities throughout the United States that primarily fabricate, coat and line ductile iron pipe.

Anvil

Anvil operates 11 manufacturing facilities in the United States and Canada. Our manufacturing operations include foundry, heat treating, machining, fabricating, assembling, testing and painting operations. Not all facilities perform each of these operations. Our foundry operations employ automated vertical and horizontal green sand molding equipment. Our products are made in a high volume production environment using high-speed computer controlled machines and other automated equipment. We expect to continue to invest in modern manufacturing technology to maintain our competitiveness in quality and productivity.

Raw Materials and Purchased Components

Our products are made using several basic raw materials, including scrap steel and iron, sand, resin, brass ingot, steel pipe, coke and various purchased components. These materials have been and are expected to be readily available and competitively priced.

We generally do not hedge our exposure to raw material price changes. Our businesses have been and could continue to be adversely affected by increases in the cost of our raw materials, as we may not be able to fully or timely pass cost increases on to our customers. We estimate that raw materials and purchased components used in manufacturing processes as a percentage of cost of sales for fiscal 2008 were 13% and 43%, respectively, for Mueller Co., 23% and 44%, respectively, for Anvil and 46% and 8%, respectively, for U.S. Pipe. For the purpose of these estimates, raw materials exclude electricity, natural gas, water, oxygen and other ancillary items.

Scrap iron prices paid by U.S. Pipe peaked in July 2008 and were approximately 240% of July 2007 prices. Prices paid throughout fiscal 2008 were higher than corresponding prices paid 12 months earlier. Scrap iron prices have since decreased significantly. The price paid by U.S. Pipe in October 2008 was approximately 60% lower than the price paid in July 2008 and approximately 20% lower than the price paid in October 2007.

Brass prices have moved directionally similar to scrap iron prices, but brass price changes have not been as extreme as scrap iron price changes since the beginning of fiscal 2008. For example, brass prices did not increase as much as scrap iron and decreased approximately 20% during October 2008 compared to July 2008.

We can give no assurances that the price of raw materials will remain at current levels or that we will be able to increase prices to our customers to offset any future cost increases. See “Item 1A. RISK FACTORS—Our businesses are subject to risk of price increases and fluctuations and delay in the delivery of raw materials and purchased components.”

Research and Development

Our research and development (“R&D”) facilities are located in Smithfield, Rhode Island and Bessemer, Alabama. The primary focus of these groups is to develop new products, improve and refine existing products, and obtain and assure compliance with industry approval certifications or standards (such as American Water Works Association, UL, FM and NSF International). At September 30, 2008, we employed 38 people dedicated to R&D activities, of which 20 were degreed engineers. We actively seek patent protection where possible to prevent copying of our proprietary products.

Ideas are generated by manufacturing, marketing or R&D personnel. In order for development of a project to begin, all three of these disciplines must agree on the suitability of the project and determine an estimated return on investment. After approval, it typically takes 6 to 12 months to tool, test and start production. The R&D team typically works on various products simultaneously.

R&D expenses were $5.7 million, $4.6 million and $5.7 million during fiscal 2008, 2007 and 2006, respectively.

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Patents, Licenses and Trademarks

We have active patents and trademarks relating to the design of our products and trademarks for our brands and products. Most of the patents for technology underlying our products have been in the public domain for many years, and existing third-party patents are not considered, either individually or in the aggregate, to be material to our businesses. However, the pool of proprietary information, consisting of know-how and trade secrets relating to the design, manufacture and operations of our products is considered particularly important and valuable. We generally own the rights to the products that we manufacture and sell and are not dependent in any material way upon any license or franchise to operate. U.S. Pipe has granted numerous trademark licenses around the world with respect to its uniform family of ductile iron pipe accessories, such as joint restraint systems.

Seasonality

See “Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Effect of Inflation; Seasonality.”

Competition

The U.S. and non-U.S. markets for water infrastructure, flow control and piping component system products are competitive. However, for most of our product offerings, there are only a few competitors. Although many of our competitors are well-established companies with strong brand recognition, we believe that each of our key product offerings is competitive. We consider our installed base, product quality, service, brand recognition, price, effectiveness of distribution and technical support to be primary competitive factors.

The competitive environment for Mueller Co. products is mature and most end users are slow to transition to brands other than the historically preferred brand. It is difficult to increase market share in this environment. We believe that Mueller Co. fire hydrants and valves enjoy strong competitive positions based largely on their quality, dependability and strong brand names. The principal competitors for hydrants and iron gate valves are McWane, Inc. and American Cast Iron Pipe Company. The primary competitors for our brass products are The Ford Meter Box Company, Inc. and A.Y. McDonald Mfg. Co. Many brass valves are interchangeable among different manufacturers.

The ductile iron pipe industry is highly competitive with a small number of manufacturers of ductile iron pipe and fittings. Our major competitors are McWane, Inc., Griffin Ductile Iron Pipe Company and American Cast Iron Pipe Company. Additional competition for ductile iron pipe comes from pipe composed of other materials, such as PVC, high-density polyethylene (“HDPE”), concrete, fiberglass, reinforced plastic and steel. Although ductile iron pipe is typically more expensive to purchase than competing forms of pipe, ductile iron pipe has the advantages of longevity, strength, ease of installation, lack of maintenance problems and environmental sustainability.

The competitive environment for Anvil’s products is highly competitive, price sensitive and vulnerable to the increased acceptance of products produced in perceived low-cost countries, such as China and India. We compete primarily on the basis of availability, service and price. Our primary competitors in the United States are Ward Manufacturing L.L.C. for cast iron and malleable iron fittings, Victaulic Company and the Tyco Engineered Products and Services segment of Tyco International Ltd. for ductile grooved fittings and ERICO International Corporation, NIBCO INC. and Carpenter & Paterson, Inc. for pipe hangers. Our mechanical and industrial customers have been slower to accept products manufactured outside the United States than our fire protection customers.

Environmental Matters

We are subject to a wide variety of laws and regulations concerning the protection of the environment, both with respect to the construction and operation of many of our plants and with respect to remediating environmental conditions that may exist at our own and other properties. We strive to maintain substantial compliance with federal, state and local environmental laws and regulations. We accrue for environmental expenses resulting from existing conditions that relate to past operations when the costs are probable and

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reasonably estimable. These expenses were $6.8 million, $8.0 million and $2.3 million during fiscal 2008, 2007 and 2006, respectively. We capitalize environmental expenditures that increase the life or efficiency of property or reduce or prevent environmental contamination. Capital expenditures for environmental requirements are anticipated to be approximately $3.2 million during fiscal 2009. Capitalized environmental-related expenditures were $2.9 million, $16.2 million and $4.7 million during fiscal 2008, 2007 and 2006, respectively.

In September 1987, we implemented an Administrative Consent Order (“ACO”) for our Burlington, New Jersey plant that was required under the New Jersey Environmental Cleanup Responsibility Act (now known as the Industrial Site Recovery Act). The ACO required soil and ground water cleanup, and we have completed, and have received final approval on, the soil cleanup required by the ACO. U.S. Pipe continues to pump and treat ground water at this site. Further remediation could be required. We expect any such remediation costs to be minimal. Long-term ground water monitoring is also required to verify natural attenuation. We do not know how long ground water monitoring will be required, and do not believe monitoring or further cleanup costs, if any, will have a material adverse effect on our financial condition or results of operations.

In June 2003, Solutia, Inc. and Pharmacia Corporation (collectively “Solutia”) filed suit against U.S. Pipe and a number of co-defendant foundry-related companies in the U.S. District Court for the Northern District of Alabama for contribution and cost recovery allegedly incurred and to be incurred by Solutia in performing remediation of polychlorinated biphenyls (“PCBs”) and heavy metals in Anniston, Alabama, pursuant to a partial consent degree with the Environmental Protection Agency (“EPA”). U.S. Pipe and certain co-defendants subsequently reached a settlement with the EPA concerning their liability for certain contamination in and around Anniston, which was memorialized in an Administrative Order and Order on Consent (“AOC”) that became effective in January 2006. U.S. Pipe has reached a settlement agreement whereby Phelps Dodge Industries, Inc., a co-defendant and co-respondent on the AOC, has assumed U.S. Pipe’s obligation to perform the work required under the AOC.

U.S. Pipe and the other settling defendants contend that the legal effect of the AOC extinguishes Solutia’s claims and they filed a motion for summary judgment to that effect. Discovery in this matter was stayed while the motion for summary judgment was pending. The court recently issued a summary judgment order, holding that plaintiffs’ claims for contribution are barred by the AOC but giving plaintiffs the right to seek to recover cleanup costs they voluntarily incurred. The court granted a motion for immediate appeal to the Eleventh Circuit Court of Appeals, but the Eleventh Circuit Court of Appeals declined to take the appeal. We currently have no basis to form a view with respect to the probability or amount of liability in this matter.

U.S. Pipe and a number of co-defendant foundry-related companies were named in a putative civil class action case originally filed in April 2005 in the Circuit Court of Calhoun County, Alabama, and removed by defendants to the U.S. District Court for the Northern District of Alabama under the Class Action Fairness Act. The putative plaintiffs in the case filed an amended complaint with the U.S. District Court in December 2006. The amended complaint alleged state law tort claims (negligence, failure to warn, wantonness, nuisance, trespass and outrage) arising from the creation and disposal of “foundry sand” alleged to contain harmful levels of PCBs and other toxins, including arsenic, cadmium, chromium, lead and zinc. The plaintiffs originally sought damages for real and personal property and for other unspecified personal injury. On June 4, 2007, a motion to dismiss was granted to U.S. Pipe and certain co-defendants as to the claims for negligence, failure to warn, nuisance, trespass and outrage. The remainder of the complaint was dismissed with leave to file an amended complaint. On July 6, 2007, plaintiffs filed a second amended complaint, which dismissed prior claims relating to U.S. Pipe’s former facility located at 2101 West 10^th Street in Anniston, Alabama and no longer alleges personal injury claims. Plaintiffs filed a third amended complaint on July 27, 2007. U.S. Pipe and the other defendants have moved to dismiss the third amended complaint. On September 24, 2008, the court issued an order on the motion, dismissing the claims for trespass and permitting the plaintiffs to move forward with their claims of nuisance, wantonness and negligence. We believe that numerous procedural and substantive defenses are available. At present, we have no reasonable basis to form a view with respect to the probability or amount of liability in this matter.

Environmental advocacy groups, relying on standards established by California’s Proposition 65, are seeking to eliminate or reduce the content of lead in water infrastructure products offered for sale in California and other jurisdictions. Some of our subsidiaries previously entered into settlement agreements with these environmental

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advocacy groups to modify products or offer substitutes for sale in California. California recently passed Assembly Bill No. 1953 that redefines, as of January 1, 2010, the term “lead free” to refer to a weighted average lead content
of the wetted surface area of the pipes, fittings and fixtures of not more than 0.25%. Mueller Co. intends to reduce shipments of brass products containing lead to customers in California in fiscal 2009. Legislation to substantially restrict lead content in water infrastructure products also has been introduced in the U.S. Congress. Congress or state jurisdictions may enact similar legislation to restrict the content of lead in water products. Although Mueller Co. now produces no-lead brass products, most of Mueller Co.’s brass valve products contain small amounts of lead.

In March 2004, Anvil entered into a Consent Order with the Georgia Department of Natural Resources regarding alleged hazardous waste violations at Anvil’s former foundry facility in Statesboro, Georgia. Pursuant to the Consent Order, we agreed to pay a monetary fine of $50,000 and pay an additional $50,000 to fund a supplemental environmental project. We have also agreed to perform various investigatory and remedial actions at our foundry and landfill. These total estimated costs have been accrued.

During fiscal 2008 and 2007, we incurred a total of approximately $1.0 million and $10.4 million, respectively, of capital expenditures at our iron foundries to comply with the EPA’s National Emissions Standards for Hazardous Air Pollutants, which were issued in April 2004.

Although no assurances can be given that we will not be required in the future to make material expenditures relating to environmental laws or legally mandated site cleanup, we do not believe at this time that the compliance and cleanup costs, if any, associated with the current laws and sites for which we have cleanup liability or any other future sites will have a material adverse effect on our financial condition or results of operations.

In fiscal 2007 and 2005, we entered into settlement and release agreements with a former insurer whereby the former insurer agreed to pay $1.6 million and $5.1 million, respectively, net of legal fees, to us for historical insurance claims we had previously expensed as incurred. Such claims had not previously been submitted to the insurance company for reimbursement. We released the insurer of both past and future claims.

In the acquisition agreement pursuant to which a predecessor to Tyco International Ltd. (“Tyco”) sold our Mueller Co. and Anvil businesses to the prior owners of these businesses in August 1999, Tyco agreed to indemnify us and our affiliates, among other things, for all “Excluded Liabilities.” Excluded Liabilities include, among other things, substantially all liabilities relating to the time prior to August 1999. The indemnity survives indefinitely. However, we may be responsible for these liabilities in the event that Tyco ever becomes financially unable to or otherwise fails to comply with the terms of the indemnity. In addition, Tyco’s indemnity does not cover liabilities to the extent caused by us or the operation of our businesses after August 1999, nor does it cover liabilities arising with respect to businesses or sites acquired after August 1999. In June 2007, Tyco was separated into three separate publicly traded companies. Should the entity or entities that assumed Tyco’s obligations under the acquisition agreement ever become financially unable or fail to comply with the terms of the indemnity, we may be responsible for such obligations or liabilities.

See “Item 3. LEGAL PROCEEDINGS”.

Safety

We continuously strive to improve on injury reduction to reduce recordable injuries and days away from work injuries. In fiscal 2008, our total recordable injury rate decreased by 36% to 4.3 injuries per 100 employees and our days away from work rate decreased by 43% to 0.80 cases per 100 employees compared to fiscal 2007. This translates into 191 fewer total cases and 46 fewer days away from work cases in fiscal 2008 compared to fiscal 2007. We estimate that our injury and illness prevention programs saved us approximately $0.8 million of costs in fiscal 2008 compared to our costs in fiscal 2007.

Regulatory Matters

The production and marketing of our products is subject to the rules and regulations of various federal, state and local agencies, including laws governing our relationships with distributors. Regulatory compliance has not had a material effect on our results to date. We are not aware of any pending legislation that is likely to have a material adverse effect on our operations. See “Item 3. LEGAL PROCEEDINGS,” and “Item 1A. RISK FACTORS—Our brass valve products contain lead, which may be replaced in the future”.

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Employees

At September 30, 2008, we employed approximately 6,500 people, of whom approximately 90% work in the United States, and approximately 72% of our hourly workforce was covered by collective bargaining agreements. Our locations with employees covered by such agreements are presented below.

	Expiration of
Location	current agreement(s)
Albertville, AL	September 2011
Bessemer, AL	October 2010
North Birmingham, AL	January 2009
Union City, CA	January 2011
Aurora, IL	August 2011
Decatur, IL	June 2012
University Park, IL	April 2010
Bloomington, MN	March 2009
Cincinnati, OH	June 2011
Columbia, PA	May 2011
Chattanooga, TN	September 2010, July 2011 and October 2011
Henderson, TN	December 2011
Houston, TX	January 2009
St. Jerome, Canada	November 2011
Simcoe, Canada	November 2009
British Columbia, Canada	December 2008
Montreal, Quebec, Canada	November 2007*

* Employees continue working under the terms of this agreement in lieu of a new agreement.

We believe that relations with our employees, including those represented by unions, are good.

Geographic Information

Geographic net sales information is presented below.

	United
	States		Canada		Other		Total
	(in millions)
Net sales:
Year ended September 30, 2008	$	1,543.8	$	292.3	$	23.2	$	1,859.3
Year ended September 30, 2007		1,560.4		265.4		23.2		1,849.0

Item 1A.   RISK FACTORS

Risks Relating to Our Business

Our businesses may suffer as a result of the downturn in new residential construction.

New water and wastewater infrastructure spending, which is dependent upon residential construction, is important to our businesses. Since January 2006, there have been steep declines in the construction of new homes, which have adversely impacted our volume in recent periods. Although residential construction activity is cyclical, it is unclear when the current decline will subside. An extended downtown in residential construction activity will negatively affect our sales, profitability and cash flows and could impair our ability to conduct our businesses as they have historically been conducted.

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A portion of our business relies on local, state and federal spending related to infrastructure upgrade, repair and replacement.

A portion of our business depends on local, state and federal spending on water and wastewater infrastructure upgrade, repair and replacement. A significant percentage of our products are ultimately used by municipalities or other governmental agencies in water transmission and collection systems. As a result, our sales could decline as a result of declines in the number of projects planned by water agencies, government spending cuts, general budgetary constraints, difficulty in obtaining necessary permits or the inability of customers or end users to obtain financing. It is not unusual for water projects to be delayed and rescheduled for a number of reasons, including changes in project priorities and difficulties in complying with environmental and other government regulations. Spending growth in the infrastructure upgrade, repair and replacement sector may slow in the future if state and local governments’ budgets are negatively impacted by downturns in the economy. Even if favorable economic conditions exist, state and local governments may choose not to address deferred infrastructure needs among competing budget priorities. A decline in local, state and federal spending on infrastructure could lead to a further decline in our sales, profitability and cash flows.

A recent report of the U.S. Conference of Mayors estimates that state and local government funding generally provides 99% and 95% of the investment in drinking water and wastewater infrastructure, respectively. Funds for water infrastructure repair and replacement typically come from taxes or water rates. The ability of state and local governments to increase taxes or water rates may be limited. In addition, state and local governments that do not budget for capital depreciation in setting tax rates and water rates may be unable to pay for water infrastructure repair and replacement if they do not have other funding sources.

A portion of our business relies on cyclical non-residential construction.

A portion of our business depends on non-residential construction. Non-residential construction activity is cyclical and may lag general market downturns. We expect decreased non-residential construction activity in fiscal 2009 compared to fiscal 2008, especially in the latter part of the year. Independent forecasts of 2009 non-residential construction activity indicated a decline of 5% to 6% compared to 2008. Our products are used typically towards the end of a construction project, so the demand for our products in the earlier part of fiscal 2009 will be influenced by projects already underway at the end of fiscal 2008 that will be completed in fiscal 2009.

Our business is subject to risk of cost increases and fluctuations and delays in the delivery of raw materials and purchased components.

Our business is subject to the risk of cost increases and fluctuations and periodic delays in the timely delivery of raw materials and purchased components that are beyond our control. During fiscal 2008, we experienced unprecedented increases in scrap metal costs. Our operations require substantial amounts of raw materials or purchased components, such as scrap steel and iron, brass ingot, sand, resin, steel pipe and coke, as well as purchased components. Management estimates that raw materials and purchased components used in the manufacturing processes as a percentage of cost of sales for fiscal 2008 were 13% and 43%, respectively, for Mueller Co., 23% and 44%, respectively, for Anvil and 46% and 8%, respectively, for U.S. Pipe. For the purposes of these estimates, raw materials exclude electricity, natural gas, water, oxygen, and other ancillary items. In addition, if any of our supply arrangements cannot be continued, the availability of raw materials could be reduced or the price of raw materials could increase.

The availability and cost of certain raw materials, such as brass ingot and scrap steel, as well as purchased components are subject to economic forces largely beyond our control, including North American and international demand, freight costs, speculation and foreign currency exchange rates. We generally purchase raw materials at current market costs and do not hedge our exposure to cost changes. We are not always able, and may not be able
in the future, to pass on increases in the cost of these raw materials to our customers. In particular, when raw material costs increase rapidly or to significantly higher than normal levels, we may not be able to pass cost increases through to our customers on a timely basis, if at all, which could lead to reductions of our income from operations, operating margins and cash flows. Any increases in the cost of raw materials and purchased components or decreases in their availability could impair our profitability.

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We depend on a group of major distributors for a significant portion of our sales; any loss of these distributors could reduce our sales and continuing consolidation could cause price pressure.

Approximately 31% of our fiscal 2008 net sales were to our ten largest distributors, and approximately 24% of our fiscal 2008 net sales were to our three largest distributors: HDS IP Holding, LLC (“HD Supply”), Ferguson Enterprises, Inc. and American Water Works Supply. HD Supply accounted for 20% and 17% of net sales for Mueller Co. and U.S. Pipe, respectively. We do not have written contracts with any of our major distributors.

While our relationships with our ten largest distributors have been long-lasting, distributors in our industry have experienced consolidation in recent years. For example, The Home Depot, Inc. acquired National Waterworks Holdings, Inc. in 2005 and then acquired Hughes Supply, Inc. in March 2006. These acquired businesses along with the related business from The Home Depot Inc. have been merged into one entity operating as HD Supply, which became an independent company in August 2007. As a result, two of our three historically largest distributors have been combined under common control. In addition, our distributors could be acquired by other distributors who buy products from our competitors. If consolidation among distributors continues, pricing pressure may result, which could lead to a decline in our sales and profitability. Further, our ability to retain our customers in the face of competition generally depends on a variety of factors, including the quality and price of our products and services and our ability to market our products effectively. The loss of any one of our top distributors could reduce our levels of sales and profitability.

Our industry is very competitive and some of our products are similar to those manufactured by our competitors.

The U.S. and non-U.S. markets for water infrastructure, flow control and piping component system products are competitive. While there are only a few competitors for most of our product offerings, many of our competitors are well-established companies with strong brand recognition. Anvil’s products in particular compete on the basis of price and are sold in fragmented markets with low barriers to entry. Also, competition for ductile iron pipe sold by U.S. Pipe comes not only from ductile iron pipe produced by a concentrated number of manufacturers, but also from pipe composed of other materials, such as polyvinyl chloride (“PVC”), high-density polyethelyne (“HDPE”), concrete, fiberglass, reinforced plastic and steel.

Competition from non-U.S. companies could increase and could harm our sales, profitability and cash flows.

In addition to competition from U.S. companies, we face the threat of competition from non-U.S. companies. The intensity of competition from non-U.S. companies is affected by fluctuations in the value of the U.S. dollar against their local currencies, by the cost to ship competitive products into North America and by the availability of trade remedies. Competition may also increase as a result of U.S. competitors shifting their operations or otherwise reducing their expenses by utilizing non-U.S. facilities or suppliers.

Interruption of normal operations at our key manufacturing facilities may impair our production capabilities.

Some of our key products, including fire hydrants, valves and ductile iron pipe, are manufactured at large manufacturing facilities. The operations at our major manufacturing facilities may be impaired by various operating risks, including, but not limited to:

•  catastrophic events such as fires, explosions, floods, earthquakes or other similar occurrences;

•  interruptions in raw materials or other manufacturing inputs;

•  adverse government regulations;

•  equipment breakdowns or failures;

•  violations of our permit requirements or revocation of permits;

•  releases of pollutants and hazardous substances to air, soil, surface water or ground water;

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•  shortages of equipment or spare parts; and

•  labor disputes.

The occurrence of any of these events could impair our cash flows and results of operations.

Our brass valve products contain lead, which may be replaced in the future.

Environmental advocacy groups, relying on standards established by California’s Proposition 65, are seeking to eliminate or reduce the content of lead in water infrastructure products offered for sale in California and other jurisdictions. Some of our subsidiaries previously have entered into settlement agreements with these environmental advocacy groups to modify products or offer substitutes for sale in California. California recently passed Assembly Bill No. 1953 that redefines, as of January 1, 2010, the term “lead free” to refer to a weighted average lead content of the wetted surface area of the pipes, fittings and fixtures of not more than 0.25%. Mueller Co. intends to reduce shipments of brass products containing lead to customers in California in fiscal 2009. Legislation to substantially restrict lead content in water infrastructure products also has been introduced in the U.S. Congress. Congress or state jurisdictions may enact similar legislation to restrict the content of lead in water products. Although Mueller Co. now produces no-lead brass products, most of Mueller Co.’s brass valve products contain small amounts of lead.

We have limited experience operating as a stand-alone company.

We became a stand-alone publicly-traded company as a result of Walter Industries, Inc (“Walter Industries”) distributing our Series B common stock to the shareholders of Walter Industries on December 14, 2006 (the “Spin-off”). Our operating as a stand-alone publicly-traded company may place significant demands on our management, operational and technical resources. Our successful future performance will depend on our ability to function as a stand-alone publicly-traded company, to finance our operations and to adapt our information systems to changes in our businesses. Some of the financial information included in this annual report for the period prior to the Spin-off may not reflect what the operating results would have been had we been a stand-alone publicly-traded company.

We are subject to certain risks inherent in managing a decentralized organization.

We currently have three distinct business segments and operate under a decentralized organizational structure. The application of consistent accounting policies, internal controls, procedures and compliance programs across all of our operations may enhance efficiency and operating effectiveness and improve corporate information flows. We continue to communicate such policies, controls, procedures and programs and it could take time for such implementation to be complete. Further, we may need to modify existing compliance programs and processes to increase efficiency and operating effectiveness and improve corporate visibility into our decentralized operations and it could take time for any such modifications to be implemented across our operations. During the implementation periods, our decentralized operating approach could result in inconsistent management practices and procedures, which could adversely affect our businesses.

The financial and credit liquidity crisis may adversely affect our ability to borrow money or raise capital.

If the financial and credit liquidity crisis were to continue or become more severe it may impact our ability to obtain money under our credit facility. Although our lenders have made commitments to make funds available to us in a timely fashion, if the current financial and credit liquidity crisis continues or worsens, our lenders may be unable or unwilling to lend money pursuant to our line of credit. In addition, if we determine that it is appropriate or necessary to raise capital in the future, the future cost of raising funds through the debt or equity markets may be more expensive or those markets may be unavailable. If we were unable to use our line of credit or raise funds through debt or equity markets, it could materially and adversely affect our liquidity or our ability to follow our key growth strategies.

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We may be unsuccessful in identifying, acquiring or integrating suitable acquisitions.

A part of our growth strategy depends on expansion, which we expect to occur primarily through acquisitions of businesses that can be successfully integrated into our existing businesses and that will provide us with complementary manufacturing capabilities, products, services, customers or end users. However, we may be unable to identify targets that will be suitable for acquisition. In addition, if we identify a suitable acquisition candidate, our ability to complete the acquisition will depend on a variety of factors, including our ability to finance the acquisition. Our ability to finance our acquisitions is subject to a number of factors, including the availability of adequate cash, cash flows from operations or acceptable financing terms and the terms of our debt instruments. In addition, there are many challenges to integrating acquired companies and businesses in our Company, including eliminating redundant operations, facilities and systems, coordinating management and personnel, retaining key employees, managing different corporate cultures and achieving cost reductions and cross-selling opportunities. We may not be able to meet these challenges in the future.

Our goodwill and identifiable intangible assets are subject to possible impairment charges.

At September 30, 2008, we had $871.5 million of goodwill and $789.8 million of identifiable intangible assets on our balance sheet. Goodwill and certain identifiable intangible assets are reviewed at least annually for impairment. Impairment may result from, among other things, deterioration in our performance, adverse market conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of or affect the products and services sold by our businesses, and a variety of other factors. Any identified impairment must be expensed immediately as a charge to results of operations.

We have substantial debt and we may incur additional debt in the future.

At September 30, 2008, our total debt was $1,095.5 million. The level of our debt could have important consequences, including:

•  making it more difficult for us to satisfy our obligations under our debt instruments;

•  limiting cash flow available for general corporate purposes, including capital expenditures and acquisitions, because a substantial portion of our cash flows from operations must be dedicated to servicing our debt;

•  limiting our ability to obtain additional debt financing in the future for working capital, capital expenditures or acquisitions;

•  limiting our flexibility to react to competitive and other changes in our industry and economic conditions generally; and

•  exposing us to risks inherent in interest rate fluctuations because a substantial portion of our borrowings is at variable rates of interest, which could result in higher interest expense in the event of increases in interest rates.

We may not be able to generate sufficient cash to service all of our debt and may be forced to take other actions to satisfy our obligations under our debt, which may not be successful.

Our ability to pay or to refinance our debt will depend upon our future operating performance, which will be affected by our ability to succeed in carrying out our business plans and by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. Our businesses may not generate sufficient cash flows from operations or future borrowings may not be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We cannot assure that we will maintain a level of liquidity from operating activities sufficient to permit us to pay the principal and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce investments, dividends and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. However, we may not be able to accomplish these actions on satisfactory terms, or at all. In addition, these actions, if accomplished, could affect the operation and growth of our businesses and may not permit us to meet our debt service obligations.

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We may not be able to satisfy our debt covenants.

Our senior credit facilities require the maintenance of specified financial ratios on a quarterly basis. In addition, our debt instruments require us to provide regular financial information to our lenders and bondholders. Such requirements generally may be satisfied by our timely filing with the Securities and Exchange Commission (“SEC”) of periodic reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our ability to satisfy those financial ratios or covenants can be affected by events beyond our control, and there is a risk that we will not meet those tests. A breach of any of these covenants could result in a default under our debt instruments. If an event of default is not remedied after the delivery of notice of default and lapse of any relevant grace period, the holders of our debt would be able to declare it immediately due and payable. Upon the occurrence of an event of default under our senior credit facilities, the lenders could also terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders could proceed against the collateral granted to them to secure the indebtedness under our senior credit facilities. We have pledged substantially all of our assets (including our intellectual property), other than the assets of our foreign subsidiaries, as security under the senior credit facilities. If the lenders under our senior credit facilities or holders of our outstanding notes accelerate the repayment of borrowings, we may not have sufficient assets to repay our senior credit facilities and our other indebtedness, which could negatively impact the value of our common stock and our ability to operate as a going concern. Further, the covenants in our debt instruments could limit our ability to engage in certain transactions.

Our business may be harmed by work stoppages and other labor relations matters.

We are subject to a risk of work stoppages and other labor relations matters because a large portion of our hourly workforce is represented by collective bargaining agreements. At September 30, 2008, approximately 72% of our hourly workforce was covered by these agreements. These employees are represented by locals from six different unions, including the Glass, Molders, Pottery, Plastics and Allied Workers International Union, which represents the largest number of our employees. Our labor agreements will be negotiated as they expire at various times through June 2012. Work stoppages for an extended period of time could impair our businesses. Labor costs are a significant element of the total costs involved in our manufacturing process, and an increase in the costs of labor could therefore harm our businesses. In addition, the freight companies that deliver our products to our customers generally use truck drivers represented by collective bargaining agreements, and our businesses could suffer if these truck drivers face work stoppages or support other work stoppages.

If the Employee Free Choice Act is adopted, it would be easier for our employees to obtain union representation and our businesses could suffer.

In 2007, the Employee Free Choice Act of 2007: H.R. 800 (“EFCA”) was passed in the U.S. House of Representatives. This bill or a variation of it could be enacted in the future and could have an adverse impact on our businesses. The EFCA aims to amend the National Labor Relations Act, by making it easier for workers to obtain union representation and increasing the penalties employers may incur if they engage in labor practices in violation of the National Labor Relations Act. The EFCA requires the National Labor Relations Board (“NLRB”) to review petitions filed by employees for the purpose of creating a labor organization and to certify a bargaining representative without directing an election if a majority of the bargaining unit employees have authorized designation of the representative. The EFCA also requires the parties to begin bargaining within 10 days of the receipt of the petition, or longer time if mutually agreed upon. In addition, if the union and employer cannot agree upon the terms of a first collective bargaining agreement within 90 days, which can be extended by mutual agreement, either party can request federal mediation, which could lead to binding arbitration if an agreement still cannot be reached after an additional 30 days which can be extended by mutual agreement. EFCA would also require the NLRB to seek a federal injunction against an employer whenever there is reasonable cause to believe that the employer has discharged or discriminated against an employee to encourage or discourage membership in the labor organization, threatened to discharge or otherwise discriminate against an employee in order to interfere with, restrain, or coerce employees in the exercise of guaranteed collective bargaining rights, or engaged in any other related unfair labor practice that significantly interferes with, restrains, or coerces employees in the exercise of such guaranteed rights. The EFCA adds additional remedies for such violations, including back pay plus liquidated damages and civil penalties to be determined by the NLRB not to exceed $20,000 per infraction.

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Our sales are influenced by weather conditions and the level of construction activity at different times of the year; we may not be able to generate sales that are sufficient to cover our expenses during certain periods of the year.

Some of our products, including ductile iron pipe, are moderately seasonal, with lower sales in our first and second quarters when weather conditions throughout most of North America tend to be cold or wet resulting in lower levels of construction activity. This seasonality in demand has resulted in fluctuations in our sales and operating results. In order to satisfy demand during peak periods, we may incur costs associated with inventory build-up, and there can be no assurance that our projections as to future needs will be accurate. We have a backlog of orders for some products for which we have inadequate inventories, or which are made-to-order. Because many of our expenses are fixed, seasonal trends can cause reductions in our income from operations, profit margins and deterioration of our financial condition during periods of lower production or sales activity.

We may be subject to product liability or warranty claims that could require us to make significant payments.

We are exposed to product liability claims in the event that the use of our products results, or is alleged to result, in bodily injury or property damage. There is a risk that we will experience product liability or warranty losses in the future or that we will incur expenses to defend such claims. Such losses and expenses may be material. While we currently have product liability insurance, our product liability insurance coverage may not be adequate for any liabilities that may ultimately be incurred or the coverage may not continue to be available on terms acceptable to us. A successful claim brought against us in excess of our available insurance coverage could require us to make significant payments or a requirement to participate in a product recall may harm our reputation or profitability. Any such product claims can include costs to access and repair installed products, which can exceed our sales related to these products.

We rely on a predecessor to Tyco International Ltd. (“Tyco”) to indemnify us for certain liabilities and there is a risk that Tyco may become unable or fail to fulfill its obligations.

Under the terms of the acquisition agreement relating to the August 1999 sale by Tyco of the Mueller Co. and Anvil businesses to the prior owner of these businesses, we are indemnified by Tyco for all liabilities arising in connection with the operation of these businesses prior to their sale by Tyco, including with respect to products manufactured or sold prior to the closing of that transaction. The indemnity survives forever and is not subject to any dollar limits. In the past, Tyco has made substantial payments and/or assumed defense of claims pursuant to this indemnification provision. However, we may be responsible for these liabilities in the event that Tyco ever becomes financially unable or fails to comply with, the terms of the indemnity. In addition, Tyco’s indemnity does not cover product liabilities to the extent caused by our products manufactured after that transaction. In June 2007, Tyco was separated into three separate publicly traded companies. Should the entity or entities that assumed Tyco’s obligations under the acquisition agreement ever become financially unable or fail to comply with the terms of the indemnity, we may be responsible for such obligations or liabilities. For more information about our potential product liabilities, see “Item 3. LEGAL PROCEEDINGS”.

We are subject to environmental, health and safety laws and regulations that could subject us to liability for fines, clean-ups and other damages, require us to incur significant costs to modify our operations and increase our manufacturing costs.

We are subject to various laws and regulations relating to the protection of the environment and human health and safety and must incur capital and other expenditures to comply with these requirements. Failure to comply with any environmental, health or safety requirements could result in the assessment of damages, or imposition of penalties, suspension of production, a required upgrade or change to equipment or processes or a cessation of operations at one or more of our facilities. Because these laws are complex, constantly changing and may be applied retroactively, there is a risk that these requirements, in particular as they change in the future, may impair our businesses profitability and results of operations.

In addition, we incurred costs to comply with the National Emissions Standards for Hazardous Air Pollutants for iron and steel foundries and for our foundries’ painting operations issued by the Environmental Protection Agency (“EPA”). See “Item 1. BUSINESS—Environmental Matters”. We may be required to

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conduct investigations and perform remedial activities that could require us to incur material costs in the future. Our operations involve the use of hazardous substances and the disposal of hazardous wastes. We may incur costs to manage these substances and wastes and may be subject to claims for damage for personal injury, property damages or damage to natural resources.

Our U.S. Pipe segment has been identified as a potentially responsible party liable under federal environmental laws for a portion of the cleanup costs with regard to two sites, one in Alabama and one in California, and is currently subject to an administrative consent order requiring certain monitoring and cleanup with regard to a New Jersey facility. Such cleanup costs could be substantial and could have a negative effect on our profitability and cash flows in any given reporting period. For more information about our environmental compliance and potential environmental liabilities, see “Item 1. BUSINESS—Environmental Matters.”

Compliance with the securities laws and regulations is likely to make it more difficult and expensive for us to maintain directors and officers liability insurance and to attract and retain qualified members of our Board of Directors.

We expect the Sarbanes-Oxley Act and the rules and regulations subsequently implemented by the SEC and the Public Company Accounting Oversight Board to continue to impose compliance burdens and costs on us. Those rules and regulations may make it more difficult and expensive for us to maintain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to maintain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committee, and executive officers.

Our businesses and ability to compete could suffer if we fail to protect our intellectual property.

Our businesses depend upon our technology and know-how, which is largely developed internally. While we believe that none of our operating units is substantially dependent on any single patent, trademark, copyright or other form of intellectual property, we rely on a combination of patent protection, copyright and trademark laws, trade secrets protection, employee and third party confidentiality and nondisclosure agreements and technical measures to protect our intellectual property rights. There is a risk that the measures we take to protect our intellectual property rights may not be adequate to deter infringement, misappropriation or independent third-party development of our technology or to prevent an unauthorized third party from obtaining or using information or intellectual property that we regard as proprietary or to keep others from using brand names similar to our own. The disclosure, misappropriation or infringement of our intellectual property could harm our competitive position. In addition, our actions to enforce our rights may result in substantial costs and diversion of management and other resources. We may also be subject to intellectual property infringement claims from time to time, which may result in our incurring additional expenses and diverting our resources to respond to these claims.

Our ability to sell our products could suffer if transportation for our products becomes unavailable or uneconomic for our customers.

Transportation costs are a critical factor in a customer’s purchasing decision. Increases in transportation costs could make our ductile iron pipe and other products less competitive with the same or alternative products from competitors.

We typically depend upon rail, barge and trucking systems to deliver our products to customers. While our customers typically arrange and pay for transportation from our factory to the point of use, disruption of these transportation services because of weather-related problems, strikes, lock-outs or other events could temporarily impair our ability to supply our products to our customers thereby resulting in lost sales and reduced profitability.

Our required pension contributions may increase.

A significant portion of the assets invested in our defined benefit pension plans are invested in equity securities. A large majority of equity securities have declined in value during the general timeframe of late September through the latter part of November 2008 in response to general economic turmoil and the credit crisis in particular. The level of pension plan assets compared to pension plan liabilities at various

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measurement dates influences the level of future contributions to be made to these pension plans. The reduced value of pension plan assets could increase future pension plan contributions.

Risks Relating to Our Relationship with Walter Industries

We may have substantial additional liability for federal income tax allegedly owed by Walter Industries.

Each member of a consolidated group for federal income tax purposes is severally liable for the federal income tax liability of each other member of the consolidated group for any year in which it is a member of the group at any time during such year. Each member of the Walter Industries consolidated group, which included us (including our subsidiaries) through December 14, 2006, is also jointly and severally liable for pension and benefit funding and termination liabilities of other group members, as well as certain benefit plan taxes. Accordingly, we could be liable under such provisions in the event any such liability is incurred, and not discharged, by any other member of the Walter Industries consolidated group for any period during which we were included in the Walter Industries consolidated group.

A dispute exists with regard to federal income taxes for fiscal years 1980 to 1994 and 1999 to 2001 allegedly owed by the Walter Industries consolidated group, which included U.S. Pipe during these periods. According to Walter Industries’ quarterly report on Form 10-Q for the period ended September 30, 2008, Walter Industries’ management estimates that the amount of tax claimed by the IRS is approximately $34.0 million for issues currently in dispute in bankruptcy court for matters unrelated to us. This amount is subject to interest and penalties. In addition, the Internal Revenue Service has issued a Notice of Proposed Deficiency assessing additional tax of $82.2 million for the Walter Industries tax years ended May 31, 2000, December 31, 2000 and December 31, 2001. As a matter of law, we are jointly and severally liable for any final tax determination, which means that in the event Walter Industries is unable to pay any amounts owed, we would be liable. Walter Industries disclosed in the above mentioned Form 10-Q that they believe their filing positions have substantial merit and that they intend to defend vigorously any claims asserted.

The tax allocation agreement between us and Walter Industries allocates to us certain tax risks associated with the Spin-off.

Walter Industries effectively controlled all of our tax decisions for periods during which we were a member of the Walter Industries consolidated federal income tax group and certain combined, consolidated or unitary state and local income tax groups. Under the terms of the income tax allocation agreement between Walter Industries and us dated May 26, 2006, we generally compute our tax liability on a stand-alone basis, but Walter Industries has sole authority to respond to and conduct all tax proceedings (including tax audits) relating to our federal income and combined state returns, to file all such returns on behalf of us and to determine the amount of our liability to (or entitlement to payment from) Walter Industries for such periods. This arrangement may result in conflicts of interests between us and Walter Industries. In addition, the tax allocation agreement provides that if the Spin-off is determined not to be tax-free pursuant to Section 355 of the Internal Revenue Code of 1986, as amended, we generally will be responsible for any taxes incurred by Walter Industries or its shareholders if such taxes result from certain of our actions or omissions and for a percentage of any such taxes that are not a result of our actions or omissions or Walter Industries’ actions or omissions or taxes based upon our market value relative to Walter Industries’ market value. Additionally, to the extent that Walter Industries was unable to pay taxes, if any, attributable to the Spin-off and for which it is responsible under our tax allocation agreement, we could be liable for those taxes as a result of being a member of the Walter Industries consolidated group for the year in which the Spin-off occurred.

Item 1B.   UNRESOLVED STAFF COMMENTS

None.

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Item 2.   PROPERTIES

Our principal properties are listed below.

		Size		Owned or
Location	Activity	(sq. ft.)		leased
Mueller Co.:
Albertville, AL	Manufacturing		422,481	Leased
Aurora, IL	Manufacturing		146,880	Owned
Decatur, IL	Manufacturing and selling, general and   administration		467,044	Owned
Hammond, IN	Manufacturing		51,160	Owned
Cleveland, NC	Manufacturing		190,000	Owned
Bethlehem, PA	Manufacturing		104,000	Leased
Chattanooga, TN	Manufacturing		525,000	Owned
Cleveland, TN	Manufacturing		40,000	Owned
Murfreesboro, TN	Manufacturing		11,400	Owned
Murfreesboro, TN	Manufacturing		12,000	Leased
Brownsville, TX	Manufacturing		50,000	Leased
Calgary, Alberta	Distribution		11,000	Leased
Barrie, Ontario	Distribution		50,000	Leased
St. Jerome, Quebec	Manufacturing		55,000	Owned
Jingmen, China	Manufacturing		154,377	Owned
U.S. Pipe:
Bessemer, AL	Manufacturing		962,000	Owned
Birmingham, AL	Selling, general and administration		66,000	Owned
North Birmingham, AL	Manufacturing		360,000	Owned
Union City, CA	Manufacturing		139,000	Owned
Burlington, NJ	Distribution		329,000	Owned
Anvil:
Santa Fe Springs, CA	Distribution		37,815	Leased
University Park, IL	Distribution		192,000	Leased
Sparks, NV	Distribution		124,500	Leased
Portsmouth, NH	Selling, general and administration		13,740	Leased
Aurora, OH	Manufacturing		39,650	Leased
Columbia, PA	Manufacturing and distribution		663,000	Owned
Greencastle, PA	Manufacturing		132,743	Owned
Pottstown, PA	Manufacturing		46,000	Owned
Waynesboro, PA	Manufacturing		53,051	Owned
North Kingstown, RI	Manufacturing		136,868	Leased
Henderson, TN	Manufacturing		167,700	Owned
Grand Prairie, TX	Distribution		167,375	Leased
Houston, TX	Manufacturing and distribution		57,600	Owned
Houston, TX	Manufacturing		45,988	Owned
Longview, TX	Manufacturing		114,000	Owned
Simcoe, Ontario	Manufacturing and distribution		145,000	Owned
Corporate
Atlanta, GA	Corporate headquarters		24,728	Leased

We consider our facilities to be well-maintained and believe we have sufficient capacity to meet our anticipated needs through fiscal 2009. All of our U.S. facility leases and leasehold interests are encumbered by liens securing our obligations under our senior credit facilities. Our leased properties have terms expiring at various dates through September 2017.

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Item 3.   LEGAL PROCEEDINGS

We are involved in various legal proceedings that have arisen in the normal course of operations, including the proceedings summarized below. The effect of the outcome of these matters on our future results of operations cannot be predicted with certainty as any such effect depends on future results of operations and the amount and timing of the resolution of such matters. Other than the litigation described below, we do not believe that any of our outstanding litigation would have a material adverse effect on our businesses, operations or prospects.

Environmental.  We are subject to a wide variety of laws and regulations concerning the protection of the environment, both with respect to the construction and operation of many of our plants and with respect to remediating environmental conditions that may exist at our own and other properties. We strive to maintain substantial compliance with federal, state and local environmental laws and regulations. We accrue for environmental expenses resulting from existing conditions that relate to past operations when the costs are probable and reasonably estimable. These expenses were $6.8 million, $8.0 million and $2.3 million during fiscal 2008, 2007 and 2006, respectively. We capitalize environmental expenditures that increase the life or efficiency of property or reduce or prevent environmental contamination. Capital expenditures for environmental requirements are anticipated to be approximately $3.2 million during fiscal 2009. Capitalized environmental-related expenditures were $2.9 million, $16.2 million and $4.7 million during fiscal 2008, 2007 and 2006, respectively.

In September 1987, we implemented an Administrative Consent Order (“ACO”) for our Burlington, New Jersey plant that was required under the New Jersey Environmental Cleanup Responsibility Act (now known as the Industrial Site Recovery Act). The ACO required soil and ground water cleanup, and we have completed, and have received final approval on, the soil cleanup required by the ACO. U.S. Pipe continues to pump and treat ground water at this site. Further remediation could be required. We expect any such remediation costs to be minimal. Long-term ground water monitoring is also required to verify natural attenuation. We do not know how long ground water monitoring will be also required, and do not believe monitoring or further cleanup costs, if any, will have a material adverse effect on our financial condition or results of operations.

In June 2003, Solutia Inc. and Pharmacia Corporation (collectively, “Solutia”) filed suit against U.S. Pipe and a number of co-defendant foundry-related companies in the U.S. District Court for the Northern District of Alabama for contribution and cost recovery allegedly incurred and to be incurred by Solutia in performing remediation of polychlorinated biphenyls (“PCBs”) and heavy metals in Anniston, Alabama, pursuant to a partial consent degree with the Environmental Protection Agency (“EPA”). U.S. Pipe and certain co-defendants subsequently reached a settlement with the EPA concerning their liability for certain contamination in and around Anniston, which was memorialized in an AOC that became effective in January 2006. U.S. Pipe has reached a settlement agreement whereby Phelps Dodge Industries, Inc., a co-defendant and co-respondent on the AOC, has assumed U.S. Pipe’s obligation to perform the work required under the AOC.

U.S. Pipe and the other settling defendants contend that the legal effect of the Administrative Order and Order on Consent (“AOC”) extinguishes Solutia’s claims and they filed a motion for summary judgment to that effect. Discovery in this matter was stayed while the motion for summary judgment was pending. The court recently issued a summary judgment order, holding that plaintiffs’ claims for contribution are barred by the AOC but giving plaintiffs the right to seek to recover cleanup costs they voluntarily incurred. The court granted a motion for immediate appeal to the Eleventh Circuit Court of Appeals, but the Eleventh Circuit Court of Appeals declined to take the appeal. We currently have no basis to form a view with respect to the probability or amount of liability in this matter.

U.S. Pipe and a number of co-defendant foundry-related companies were named in a putative civil class action case originally filed in April 2005 in the Circuit Court of Calhoun County, Alabama, and removed by defendants to the U.S. District Court for the Northern District of Alabama under the Class Action Fairness Act. The putative plaintiffs in the case filed an amended complaint with the U.S. District Court in December 2006. The amended complaint alleged state law tort claims (negligence, failure to warn, wantonness, nuisance, trespass and outrage) arising from the creation and disposal of “foundry sand” alleged to contain harmful levels of PCBs and other toxins, including arsenic, cadmium, chromium, lead and zinc. The plaintiffs originally sought damages for real and personal property and for other unspecified personal injury. On June 4, 2007, a motion to dismiss was granted to U.S. Pipe and certain co-defendants as to the claims for

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negligence, failure to warn, nuisance, trespass and outrage. The remainder of the complaint was dismissed with leave to file an amended complaint. On July 6, 2007, plaintiffs filed a second amended complaint, which dismissed prior claims relating to U.S. Pipe’s former facility located at 2101 West 10^th Street in Anniston, Alabama and no longer alleges personal injury claims. Plaintiffs filed a third amended complaint on July 27, 2007. U.S. Pipe and the other defendants have moved to dismiss the third amended complaint. On September 24, 2008, the court issued an order on the motion, dismissing the claims for trespass and permitting the plaintiffs to move forward with their claims of nuisance, wantonness and negligence. We believe that numerous procedural and substantive defenses are available. At present, we have no reasonable basis to form a view with respect to the probability or amount of liability in this matter.

Environmental advocacy groups, relying on standards established by California’s Proposition 65, are seeking to eliminate or reduce the content of lead in water infrastructure products offered for sale in California and other jurisdictions. Some of our subsidiaries previously entered into settlement agreements with these environmental advocacy groups to modify products or offer substitutes for sale in California. California recently passed Assembly Bill No. 1953 that redefines, as of January 1, 2010, the term “lead free” to refer to a weighted average lead content of the wetted surface area of the pipes, fittings and fixtures of not more than 0.25%. Legislation to substantially restrict lead content in water infrastructure products also has been introduced in the U.S. Congress. Congress or state jurisdictions may enact similar legislation to restrict the content of lead in water products. Although Mueller Co. now produces no-lead brass products, most of Mueller Co.’s brass valve products contain small amounts of lead.

In March 2004, Anvil entered into a Consent Order with the Georgia Department of Natural Resources regarding alleged hazardous waste violations at Anvil’s former foundry facility in Statesboro, Georgia. Pursuant to the Consent Order, we agreed to pay a monetary fine of $50,000 and pay an additional $50,000 to fund a supplemental environmental project. We have also agreed to perform various investigatory and remedial actions at our foundry and landfill. These total estimated costs have been accrued.

During fiscal 2008 and 2007, we incurred a total of approximately $11.4 million of capital expenditures at our iron foundries to comply with the EPA’s National Emissions Standards for Hazardous Air Pollutants, which were issued in April 2004.

Although no assurances can be given that we will not be required in the future to make material expenditures relating to environmental laws or legally mandated site cleanup, we do not believe at this time that the compliance and cleanup costs, if any, associated with the current laws and sites for which we have cleanup liability or any other future sites will have a material adverse effect on our financial condition or results of operations.

In fiscal 2007 and 2005, we entered into settlement and release agreements with a former insurer whereby the former insurer agreed to pay $1.6 million and $5.1 million, respectively, net of legal fees, to us for historical insurance claims we had previously expensed as incurred. Such claims had not previously been submitted to the insurance company for reimbursement. We released the insurer of both past and future claims.

In the acquisition agreement pursuant to which a predecessor to Tyco International Ltd. (“Tyco”) sold our Mueller Co. and Anvil businesses to the prior owners of these businesses in August 1999, Tyco agreed to indemnify us and our affiliates, among other things, for all “Excluded Liabilities.” Excluded Liabilities include, among other things, substantially all liabilities relating to the time prior to August 1999. The indemnity survives indefinitely and is not subject to any deductibles or caps. However, we may be responsible for these liabilities in the event that Tyco ever becomes financially unable to or otherwise fails to comply with the terms of the indemnity. In addition, Tyco’s indemnity does not cover liabilities to the extent caused by us or the operation of our businesses after August 1999, nor does it cover liabilities arising with respect to businesses or sites acquired after August 1999. In June 2007, Tyco was separated into three separate publicly traded companies. Should the entity or entities that assumed Tyco’s obligations under the acquisition agreement ever become financially unable or fail to comply with the terms of the indemnity, we may be responsible for such obligations or liabilities.

Other Litigation.  We are parties to a number of other lawsuits arising in the ordinary course of our businesses, including product liability cases for products manufactured by us or third parties. We provide for costs relating to these matters when a loss is probable and the amount is reasonably estimable. Administrative costs related to these matters are expensed as incurred. The effect of the outcome of these matters on our

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future results of operations cannot be predicted with certainty as any such effect depends on future results of operations and the amount and timing of the resolution of such matters. While the results of litigation cannot be predicted with certainty, we believe that the final outcome of such other litigation is not likely to have a materially adverse effect on our consolidated financial statements.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the quarter ended September 30, 2008.

PART II

Item 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Series A common stock has been listed on the New York Stock Exchange under the trading symbol MWA since May 26, 2006. Our Series B common stock has been listed on the New York Stock Exchange under the trading symbol MWA.B since December 14, 2006. Covenants contained in certain of the debt instruments referred to in Note 7 of “Notes to Consolidated Financial Statements” may restrict the amount we can pay in cash dividends. Future dividends will be declared at the discretion of our Board of Directors and will depend on our future earnings, financial condition and other factors.

The shares of Series A and Series B common stock have identical rights except that the Series A common stock has one vote per share and the Series B common stock has eight votes per share. The range of high and low sales prices of the Series A and Series B common stock and the dividends declared per share is presented below.

	Series A				Series B				Dividends
	High		Low		High		Low		per share
Year ended September 30, 2008:
4th quarter	$	12.71	$	7.12	$	11.71	$	5.48	$	0.0175
3rd quarter		10.53		7.50		10.05		7.32		0.0175
2nd quarter		9.60		6.64		10.12		7.50		0.0175
1st quarter		14.18		8.98		11.98		8.35		0.0175
Year ended September 30, 2007:
4th quarter	$	16.73	$	11.77	$	15.00	$	10.47	$	0.0175
3rd quarter		19.35		13.56		15.99		13.25		0.0175
2nd quarter		16.06		13.63		15.87		13.39		0.0175
1st quarter		16.34		13.16		15.03		14.61		0.0175

At September 30, 2008, there were 23 stockholders of record for our Series A common stock and 122 stockholders of record for our Series B common stock.

Equity Compensation Plan Information

The information regarding our compensation plans under which equity securities are authorized for issuance is set forth in “Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCHOLDER MATTERS”.

Sale of Unregistered Securities

We did not issue any unregistered securities during the year ended September 30, 2008.

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Issuer Purchases of Equity Securities

During the three months ended September 30, 2008, we repurchased shares of our Series A common stock as presented below.

					Total number		Maximum
					of shares		number of
					purchased as		shares that may
	Number of		Average		part of publicly		yet be purchased
	shares		price paid		announced plans		under the plans
Period	purchased (1)		per share		or programs		or programs
July 1-31, 2008		774	$	9.10		-		-
August 1-31, 2008		-		-		-		-
September 1-30, 2008		-		-		-		-

(1) Consists of shares surrendered to the Company to pay the tax withholding obligations in connection with the vesting of restricted stock units issued to employees.

Stock Price Performance Graphs

The following line graphs compare the cumulative quarterly stock market performance of our Series A common stock and our Series B common stock with the Russell 2000 Stock Index (“Russell 2000”) and the Dow Jones U.S. Building Materials & Fixtures Index (“DJ Building Materials & Fixtures”). Our Series A common stock first traded on May 30, 2006 and our Series B common stock first traded on December 15, 2006.

Total return values were calculated based on cumulative total return assuming (i) the investment of $100 in our common stock, the Russell 2000 and the DJ Building Materials & Fixtures on the dates indicated and (ii) reinvestment of all dividends.

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Comparison of Cumulative Total Returns

Assumes Initial Investment of $100

Total Return since May 26, 2006

Series A Common Stock

26

Comparison of Cumulative Total Returns

Assumes Initial Investment of $100

Total Return since December 14, 2006

Series B Common Stock

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Item 6.   SELECTED FINANCIAL DATA

On October 3, 2005, Walter Industries Inc. (“Walter Industries”) acquired all outstanding shares of capital stock representing the Mueller Co. and Anvil businesses and contributed its U.S. Pipe business to form the Company as it currently exists. U.S. Pipe was deemed the acquirer of Mueller Co. and Anvil. Accordingly, U.S. Pipe’s historical financial information is used for the Company prior to October 3, 2005. The Company’s results of operations include Mueller Co. and Anvil beginning October 3, 2005. Net income (loss) per share was determined using 85.8 million shares outstanding for all periods prior to our initial public offering in June 2006. Effective September 30, 2005, the Company changed its fiscal year end to September 30. This change resulted in a nine month fiscal period in 2005. The nine months ended September 30, 2004 (unaudited) are shown for comparative purposes only. The selected financial and other data presented below should be read in conjunction with, and are qualified by reference to, “Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” and the consolidated financial statements and notes thereto included elsewhere in this annual report.

										Nine months ended					Year ended
	Year ended September 30,									September 30,					Dec. 31,
	2008		2007		2006		2005			2005		2004			2004
	(in millions, except per share data)
Statement of operations data:
Net sales	$	1,859.3	$	1,849.0	$	1,933.4	$	598.1		$	456.9	$	437.2		$	578.4
Cost of sales (a)		1,420.3		1,385.8		1,525.7		530.7			402.2		402.9			531.4
Gross profit		439.0		463.2		407.7		67.4			54.7		34.3			47.0
Selling, general and administrative expenses (b)		274.6		253.2		250.1		46.4			31.3		30.7			45.9
Restructuring charges (c)		18.3		-		28.6		-			-		0.1			0.1
Income from operations		146.1		210.0		129.0		21.0			23.4		3.5			1.0
Interest expense, net		72.4		86.8		107.4		0.4			0.3		0.4			0.5
Interest expense due to Walter Industries		-		-		-		21.1			15.2		13.0			18.9
Loss on early extinguishment of debt		-		36.5		8.5		-			-		-			-
Income (loss) before income taxes		73.7		86.7		13.1		(0.5	)		7.9		(9.9	)		(18.4	)
Income tax expense (benefit)		31.7		38.5		8.0		3.9			2.8		(3.9	)		(2.9	)
Net income (loss)	$	42.0	$	48.2	$	5.1	$	(4.4	)	$	5.1	$	(6.0	)	$	(15.5	)
Basic and diluted net income (loss) per share	$	0.36	$	0.42	$	0.05	$	(0.05	)	$	0.06	$	(0.07	)	$	(0.18	)
Other data:
Depreciation and amortization	$	93.1	$	101.4	$	96.9	$	25.9		$	19.4	$	20.0		$	26.5
Capital expenditures		88.1		88.3		71.1		24.4			16.5		12.4			20.4
Balance sheet data (at September 30):
Cash and cash equivalents (d)		183.9		98.9		81.4		-					0.1			-
Working capital		755.6		709.7		680.0		188.7					176.6			163.5
Property, plant and equipment, net		356.8		351.8		337.0		149.2					152.2			152.9
Total assets		3,090.2		3,009.2		2,989.9		514.7					491.6			473.5
Amount due to Walter Industries		-		-		3.6		443.6					435.4			422.8
Total liabilities		1,761.3		1,698.2		1,762.9		669.9					626.7			618.6
Total equity (deficit)		1,328.9		1,311.0		1,227.0		(155.2	)				(135.1	)		(145.1	)

(a)	The year ended September 30, 2006 includes $70.2 million of adjustments related to valuing Mueller Co. and Anvil inventory acquired on October 3, 2005 at fair value and $21.3 million of inventory write-offs and higher per unit overhead costs resulting from the closure of U.S. Pipe’s Chattanooga, Tennessee plant.
(b)	Includes:
	- Credits for environmental-related insurance settlement benefits of $1.6 million during the year ended September 30, 2007, $5.1 million during the year and nine months ended September 30, 2005 and $1.9 million during the year ended December 31, 2004;
	- Accrued expenses of $4.0 million relating to environmental liabilities during the year ended December 31, 2004 and a reversal of $1.0 million of that accrual during the year ended September 30, 2006; and
	- Related party corporate charges from Walter Industries of $1.6 million, $8.0 million, $7.3 million, $5.4 million, $5.7 million, and $7.7 million during the years ended September 30, 2007, 2006, and 2005, the nine months ended September 30, 2005 and 2004, and the year ended December 31, 2004, respectively.
(c)	The year ended September 30, 2008 includes $18.3 million to cease manufacturing operations at U.S. Pipe’s Burlington, New Jersey facility. The year ended September 30, 2006 includes $28.6 million to close U.S. Pipe’s Chattanooga, Tennessee plant and transfer the valve and fire hydrant production of that plant to Mueller Co.’s Chattanooga, Tennessee and Albertville, Alabama plants.
(d)	Prior to October 3, 2005, the Company’s cash and cash equivalents were transferred daily to Walter Industries, effectively reducing the Company’s cash to virtually zero on a daily basis. Subsequent to October 3, 2005, daily cash transfers to Walter Industries ceased.

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Item 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto that appear elsewhere in this annual report. This report contains certain statements that may be deemed “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. All statements, other than statements of historical fact, that address activities, events or developments that the Company’s management intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by management in light of their experience and their perception of historical trends, current conditions and expected future developments. Actual results and the timing of events may differ significantly from those projected in such forward-looking statements due to a number of factors, including those set forth in the section entitled “RISK FACTORS” in Item 1A of Part I of this annual report.

Overview

Organization

On October 3, 2005, Walter Industries Inc. (“Walter Industries”) acquired all outstanding shares of capital stock representing the Mueller Co. and Anvil businesses and contributed them to its U.S. Pipe business to form the Company as it currently exists. In December 2006, Walter Industries distributed to its shareholders all of its equity interests in the Company, consisting of all of the Company’s outstanding shares of Series B common stock.

References to a fiscal year refer to the 12 months ended September 30 of that calendar year.

Business

The Company is a leading North American manufacturer and marketer of a broad range of water infrastructure, flow control and piping component system products for use in water distribution networks and treatment facilities. We manage our businesses and report operations through three segments based largely on the products they sell and the customers they serve: Mueller Co., U.S. Pipe and Anvil.

Mueller Co.  Mueller Co. produces and sells valves, fire hydrants and related products primarily to the water and wastewater infrastructure markets. Mueller Co.’s sales are driven principally by spending on water and wastewater infrastructure upgrade, repair and replacement and new water and wastewater infrastructure. Effective January 1, 2006, U.S. Pipe transferred its valve and hydrant business to Mueller Co. Management estimates that a majority of Mueller Co.’s fiscal 2008 sales was for infrastructure upgrade, repair and replacement and the remainder for new infrastructure. A significant portion of Mueller Co.’s sales are made through its distributors. For most of Mueller Co.’s products, end-users choose the brand or establish product specifications. Management believes Mueller Co.’s reputation for quality, extensive distributor relationships, brand, installed base and coordinated marketing approach have helped Mueller Co. products to be “specified” as an approved product for use in most major metropolitan areas throughout the United States. Approximately 19%, 16% and 12% of Mueller Co.’s net sales were to Canadian customers in fiscal 2008, 2007 and 2006 respectively.

U.S. Pipe.  U.S. Pipe produces ductile iron pipe, restraint joints and related products and sells these products and fittings to water infrastructure and wastewater customers. U.S. Pipe products are sold primarily to waterworks distributors, contractors, municipalities, utilities and other governmental agencies. A substantial percentage of ductile iron pipe orders result from contracts that are bid by contractors or directly issued by municipalities or utilities. To support its customers’ inventory and delivery requirements, U.S. Pipe uses numerous storage depots throughout the country. Management estimates that a majority of U.S. Pipe’s fiscal 2008 sales were for new infrastructure, with the remainder for infrastructure upgrade, repair and replacement. U.S. Pipe acquired the assets of Fast Fabricators, Inc. (“Fast Fabricators”) in January 2007.

Anvil.  Anvil produces or sources pipe, fittings, pipe hangers and pipe nipples and a variety of related products and sells these products to a wide variety of end users, including non-residential construction contractors,

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municipalities, water and wastewater utilities and gas utilities. Sales of Anvil products are driven principally by spending on non-residential construction, including commercial, industrial, institutional and energy projects. Approximately 71%, 72% and 74% of Anvil’s net sales were to customers in the United States during fiscal 2008, 2007 and 2006, respectively. Approximately 26% of Anvil’s net sales were to Canadian customers during fiscal 2008, 2007 and 2006.

Developments and Trends

We have identified the following significant developments, trends and factors that may impact our future results:

•  We anticipate residential construction conditions will continue to be poor. New privately-owned housing starts declined 31% in fiscal 2008 compared to fiscal 2007. A continued downturn in new residential construction is likely to impact our operations negatively.

•  We believe we will benefit from projected spending increases for water infrastructure repair and replacement. A survey conducted by the American Water Works Association indicated that utility capital spending to replace or upgrade infrastructure will increase 17% in 2009. This survey was conducted prior to the economic turmoil in the fall of 2008, so it may be unreliable. However, we believe this survey is indicative of the long-term growth prospects for water infrastructure repair and replacement spending. Several states and other local jurisdictions have recently passed referendums that could result in increased funding for water infrastructure spending.

•  A portion of our business depends on non-residential construction. Non-residential construction activity is cyclical. We expect decreased non-residential construction activity in fiscal 2009 compared to fiscal 2008 especially in the latter part of the year. Our products are typically used towards the completion of a construction project, so the demand for our products in the earlier part of fiscal 2009 will be influenced by projects already underway at the end of fiscal 2008 that will be completed in fiscal 2009.

•  Anvil’s management expects to continue to increase sourcing of products from outside the United States and Canada. These sourced products typically have lower gross margins.

•  As a result of reduced demand for our products, many manufacturing facilities are operating at volumes less than their optimal capacity. These and similar inefficiencies result in higher per unit labor and overhead costs than under optimal operating conditions. These higher per unit costs adversely affect gross profit amounts and gross margin rates. These conditions may continue until there is significant improvement in demand for our products or we take further steps to reduce capacity. In November 2008, we announced reductions in our workforce at the fire hydrant and valve manufacturing facilities in Albertville, Alabama and Chattanooga, Tennessee.

•  The average costs of scrap iron and brass ingot were significantly higher in fiscal 2008 compared to fiscal 2007 and we implemented several price increases during fiscal 2008 in an attempt to recover higher raw material and purchased component costs. Only in the fourth quarter of fiscal 2008 did sales price increases exceed higher raw material and purchased component costs. Toward the end of fiscal 2008, scrap iron prices in particular began declining. This may put downward pressure on sales prices despite higher cost scrap iron still in inventory. We intend to maintain the sales price increases realized during fiscal 2008. Raw material costs are expected to remain volatile. The timing and extent to which we maintain our sales prices and how these sales prices react to changing raw material costs will be important factors to our future financial performance.

•  A significant portion of the assets invested in our defined benefit pension plans are invested in equity securities. A large majority of equity securities have declined in value during the general timeframe of late September through the latter part of November 2008 in response to general economic turmoil and the credit crisis in particular. The level of pension plan assets compared to pension plan liabilities at various measurement dates influences the level of future contributions to be made to these pension plans. The reduced value of pension plan assets could increase future pension plan contributions.

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•  California has passed legislation that redefines the term “lead free” related to the sale of certain Mueller Co. products in California beginning in 2010. Mueller Co. intends to reduce shipments of brass products not meeting this new standard to customers in California in fiscal 2009. The federal government or other states may enact similar legislation to restrict the content of lead in water products. Although Mueller Co. now produces no-lead brass products, most of Mueller Co.’s brass valve products contain small amounts of lead.

Results of Operations

Year Ended September 30, 2008 Compared to Year Ended September 30, 2007

	Year ended September 30, 2008
	Mueller Co.		U.S. Pipe			Anvil		Corporate			Total
	(in millions)
Net sales	$	718.1	$	546.0		$	595.2	$	-		$	1,859.3
Gross profit	$	218.4	$	43.8		$	176.2	$	0.6		$	439.0
Operating expenses:
Selling, general and administrative		90.0		42.9			102.1		39.6			274.6
Restructuring		-		18.3			-		-			18.3
		90.0		61.2			102.1		39.6			292.9
Income (loss) from operations	$	128.4	$	(17.4	)	$	74.1	$	(39.0	)		146.1
Interest expense, net												72.4
Income before income taxes												73.7
Income tax expense												31.7
Net income											$	42.0

	Year ended September 30, 2007
	Mueller Co.		U.S. Pipe		Anvil		Corporate			Total
	(in millions)
Net sales	$	756.1	$	537.1	$	555.8	$	-		$	1,849.0
Gross profit	$	235.8	$	78.0	$	149.6	$	(0.2	)	$	463.2
Operating expenses:
Selling, general and administrative		81.1		44.6		92.2		35.3			253.2
Restructuring		-		-		-		-			-
		81.1		44.6		92.2		35.3			253.2
Income (loss) from operations	$	154.7	$	33.4	$	57.4	$	(35.5	)		210.0
Interest expense, net											86.8
Loss on early extinguishment of debt											36.5
Income before income taxes											86.7
Income tax expense											38.5
Net income										$	48.2

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Consolidated Analysis

Net Sales.  Net sales were $1,859.3 million for the year ended September 30, 2008, an increase of $10.3 million, or 0.6%, from $1,849.0 million during fiscal 2007. Net sales increased principally due to approximately $82 million of higher pricing and approximately $21 million due to the favorable impact of Canadian foreign currency exchange rates that essentially offset approximately $104 million due to reduced volumes. Several price increases were implemented during fiscal 2008 affecting all of our principal products in response to higher raw material and purchased component costs. As a whole, higher sales prices did not offset higher raw material and purchased component costs until the fourth quarter of fiscal 2008. Approximately 15% of our net sales during fiscal 2008 and fiscal 2007 were denominated in Canadian dollars. The Canadian dollar was stronger than the U.S. dollar during fiscal 2008 compared to fiscal 2007. Sales volumes were lower during fiscal 2008 compared to fiscal 2007 principally due to continued weakness in residential construction. Volume declines particularly affected our Mueller Co. and U.S. Pipe businesses.

Gross Profit.  Gross profit was $439.0 million for the year ended September 30, 2008, a decrease of $24.2 million, or 5.2%, compared to $463.2 million during fiscal 2007. Gross margin was 23.6% for fiscal 2008 compared to 25.1% for fiscal 2007. Gross profit declined approximately $41 million due to lower volumes. Cost reductions of approximately $43 million more than offset approximately $35 million of higher per unit overhead costs due to reduced production volumes. Gross margin was diluted to the extent sales price increases were offset by increased costs for raw materials and purchased components.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses were $274.6 million for the year ended September 30, 2008, an increase of $21.4 million, or 8.5%, compared to $253.2 million for fiscal 2007. These expenses as a percentage of net sales were 14.8% for fiscal 2008 compared to 13.7% for fiscal 2007. Mueller Co. expenses increased approximately $9 million, most of which was due to higher compensation and other employee-related expenses. Anvil expenses increased approximately $10 million due mostly to higher commissions and costs associated with a realignment of Canadian distribution operations.

Restructuring Charges.  In November 2007, we announced our intention to close U.S. Pipe’s manufacturing operations in Burlington, New Jersey while retaining the facility as a full-service distribution facility for customers in the Northeast. In connection with this action, we also announced our intention to record restructuring charges of approximately $19.0 million. During fiscal 2008, we recorded $18.3 million of these restructuring charges, of which $14.8 million were asset impairment charges and $3.5 million were charges related to employee severance and other closure costs. We expect to record the remaining charges in early fiscal 2009.

Interest Expense, Net.  The components of interest expense, net for the years ended September 30, 2008 and 2007 are presented below.

	Year ended
	September 30,
	2008			2007
	(in millions)
Interest expense on debt obligations, including interest rate swap contracts	$	74.2		$	86.4
Other, net		2.3			3.6
		76.5			90.0
Interest income		(4.1	)		(3.2	)
	$	72.4		$	86.8

We benefited for the entirety of fiscal 2008 from our debt refinancing activities in May 2007. The debt structure following this refinancing has lower interest rates than the previous structure, and market interest rates were generally lower during fiscal 2008 than they were during fiscal 2007. Interest rates earned on invested cash were also lower in fiscal 2008 than fiscal 2007, but the level of invested cash was higher during fiscal 2008 than fiscal 2007. Other, net includes interest on tax-related matters, amortization of deferred financing fees and capitalized interest.

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Loss on Early Extinguishment of Debt.  Loss on early extinguishment of debt was from retiring our outstanding senior subordinated notes and senior discount notes primarily with the proceeds from the issuance of $425.0 million of 73/8% Senior Subordinated Notes and amending our credit agreement in May 2007.

Income Tax Expense.  Income tax expense was $31.7 million for the year ended September 30, 2008 compared to $38.5 million during fiscal 2007. The effective tax rates for fiscal 2008 and fiscal 2007 were 43.0% and 44.4%, respectively. The effective tax rates differ from the U.S. statutory rate of 35% primarily due to nondeductible interest, nondeductible compensation, manufacturing production deductions and state income taxes. In addition, fiscal 2007 included $1.1 million of state income tax expense related to periods prior to fiscal 2007 with respect to certain matters associated with the acquisition of Mueller Co. and Anvil.

Segment Analysis

Mueller Co.  Net sales were $718.1 million for the year ended September 30, 2008, a decrease of $38.0 million, or 5.0%, compared to $756.1 million during fiscal 2007. This decline was primarily due to approximately $72 million of lower volumes partially offset by approximately $27 million of higher prices and approximately $7 million due to the favorable impact of Canadian foreign currency exchange rates. Lower volumes were principally due to continued weakness in residential construction. Higher prices resulted from efforts to offset higher raw material and purchased component costs.

Gross profit was $218.4 million for the year ended September 30, 2008, a decrease of $17.4 million, or 7.4%, compared to $235.8 million during fiscal 2007. Gross margin was 30.4% during fiscal 2008 compared to 31.2% during fiscal 2007. Gross profit declined approximately $28 million due to lower volumes, approximately $24 million due to higher raw material and purchased component costs and approximately $18 million due to higher per unit overhead costs, which were partially offset by sales price increases and net cost savings.

Income from operations was $128.4 million for the year ended September 30, 2008, a decrease of $26.3 million, or 17.0%, compared to $154.7 million during fiscal 2007. In addition to the decline in gross profit discussed above, selling, general and administrative expenses were $8.9 million higher in fiscal 2008 than fiscal 2007. Approximately $5 million of these costs were due to higher compensation and other employee-related expenses.

U.S. Pipe.  Net sales were $546.0 million for the year ended September 30, 2008, an increase of $8.9 million, or 1.7%, compared to $537.1 million during fiscal 2007. Net sales increased primarily due to approximately $33 million of higher pricing, which was partially offset by approximately $35 million of lower volumes. Higher prices resulted from efforts to offset significantly higher scrap iron costs during fiscal 2008 compared to fiscal 2007.

Gross profit was $43.8 million for the year ended September 30, 2008, a decrease of $34.2 million, or 43.8%, compared to $78.0 million during fiscal 2007. Gross profit decreased approximately $18 million due to increased costs for raw materials in excess of realized sales price increases and decreased approximately $15 million due to lower volumes. Higher per unit overhead costs due to lower production volumes were offset by cost savings. Gross margin was 8.0% during fiscal 2008 compared to 14.5% during fiscal 2007. The decrease in gross margin was primarily attributable to increases in raw material costs exceeding sales price increases. Excluding these increases, gross margin for fiscal 2008 would have been 13.0%.

Loss from operations was $17.4 million for the year ended September 30, 2008, a decrease of $50.8 million, compared to income from operations of $33.4 million during fiscal 2007. In addition to the $34.2 million decline in gross profit discussed above, $18.3 million of restructuring charges were also recorded during fiscal 2008 related to ceasing manufacturing operations in Burlington, New Jersey.

Anvil.  Net sales were $595.2 million for the year ended September 30, 2008, an increase of $39.4 million, or 7.1%, compared to $555.8 million during fiscal 2007. This increase was due primarily to approximately $22 million of higher sales prices and approximately $14 million due to the favorable impact of Canadian currency exchange rates. Higher prices resulted from efforts to offset higher raw material and purchased component costs. Approximately 26% of Anvil’s fiscal 2008 and fiscal 2007 net sales were denominated in Canadian dollars. The Canadian dollar was stronger than the U.S. dollar during fiscal 2008 compared to fiscal 2007.

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Gross profit was $176.2 million for the year ended September 30, 2008, an increase of $26.6 million, or 17.8%, compared to $149.6 million during fiscal 2007. Gross margin was 29.6% during fiscal 2008 compared to 26.9%
during fiscal 2007. The increase in both gross profit and gross margin was primarily attributable to higher sales prices.

Income from operations was $74.1 million for the year ended September 30, 2008, an increase of $16.7 million, or 29.1%, compared to $57.4 million during fiscal 2007. This increase was attributable to increased gross profit of $26.6 million partially offset by $9.9 million of higher selling, general and administrative expenses. These expenses were 17.2% of net sales during fiscal 2008 compared to 16.6% of net sales during fiscal 2007. Higher selling, general and administrative expenses during fiscal 2008 were attributable to higher commissions and certain administrative costs associated with a realignment of Canadian distribution operations.

Corporate.  Corporate general and administrative expenses were $39.6 million for the year ended September 30, 2008, an increase of $4.3 million, or 12.2%, compared to $35.3 million during fiscal 2007. The increase was due to approximately $2 million of additional compensation expense attributable to stock-based awards and higher overall costs associated with the Company establishing itself as a stand-alone publicly-traded company.

Year Ended September 30, 2007 Compared to Year Ended September 30, 2006

	Year ended September 30, 2007
	Mueller Co.		U.S. Pipe		Anvil		Corporate			Total
	(in millions)
Net sales	$	756.1	$	537.1	$	555.8	$	-		$	1,849.0
Gross profit	$	235.8	$	78.0	$	149.6	$	(0.2	)	$	463.2
Operating expenses:
Selling, general and administrative		81.1		44.6		92.2		35.3			253.2
Restructuring		-		-		-		-			-
		81.1		44.6		92.2		35.3			253.2
Income (loss) from operations	$	154.7	$	33.4	$	57.4	$	(35.5	)		210.0
Interest expense, net											86.8
Loss on early extinguishment of debt											36.5
Income before income taxes											86.7
Income tax expense											38.5
Net income										$	48.2

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	Year ended September 30, 2006
	Mueller Co.		U.S. Pipe			Anvil		Corporate			Total
	(in millions)
Net sales	$	804.1	$	594.7		$	534.6	$	-		$	1,933.4
Gross profit	$	223.0	$	62.5		$	122.6	$	(0.4	)	$	407.7
Operating expenses:
Selling, general and administrative		78.3		50.9			90.8		30.1			250.1
Restructuring		-		28.6			-		-			28.6
		78.3		79.5			90.8		30.1			278.7
Income (loss) from operations	$	144.7	$	(17.0	)	$	31.8	$	(30.5	)		129.0
Interest expense, net												107.4
Loss on early extinguishment of debt												8.5
Income before income taxes												13.1
Income tax expense												8.0
Net income											$	5.1

Consolidated Analysis

Net Sales.  Consolidated net sales for the year ended September 30, 2007 were $1,849.0 million, a decrease of $84.4 million, or 4.4%, from $1,933.4 million in fiscal 2006. Net sales decreases were principally caused by a downturn in residential construction demand. While volume related to repair and replacement work in the municipal sector increased year-over-year, it did not offset weakness in residential construction. Volume declines of approximately $204.0 million were partially offset by higher pricing of approximately $120.0 million and net sales from Fast Fabricators, which was acquired in January 2007. The prior year includes approximately $30.0 million of ductile iron pipe sales resulting from contractors substituting ductile iron pipe for plastic pipe in certain construction projects that were underway immediately after Hurricane Katrina due to the limited availability of plastic pipe.

Gross Profit.  Consolidated gross profit for the year ended September 30, 2007 was $463.2 million, an increase of $55.5 million, or 13.6% compared to $407.7 million in the prior year. Gross margin increased to 25.0% in fiscal 2007 compared to 21.1% in fiscal 2006. Excluding $91.7 million of prior year costs associated with the closure of U.S. Pipe’s Chattanooga, Tennessee plant and purchase accounting adjustments related to valuing Mueller Co. and Anvil inventory acquired October 3, 2005 at fair value, gross margin would have been 25.8% in the prior year.

The decline in margin excluding these adjustments is due primarily to reduced production and lower shipments of higher-margin water infrastructure products such as hydrants and valves, lower ductile iron pipe shipments and increased raw material and purchased component costs. A decline in sales volume and an initiative to lower inventory levels drove a decision to reduce production during the fourth quarter of fiscal 2007. Overall results were partially offset by higher pricing and synergy related cost savings associated with plant consolidations and other expense reduction initiatives.

Selling, General and Administrative Expenses.  Consolidated selling, general and administrative expenses for the year ended September 30, 2007 were $253.2, an increase of $3.1 million, or 1.2%, compared to $250.1 million in the prior year. Expenses as a percentage of net sales increased to 13.7% in fiscal 2007 compared to 12.9% fiscal 2006. The increase is due to higher overall costs associated with operating the Company on a stand-alone basis as a public company.

Facility Rationalization, Restructuring and Related Charges.  Restructuring costs of $28.6 million for the year ended September 30, 2006 were due to the closure of U.S. Pipe’s Chattanooga, Tennessee plant. These costs are comprised of fixed asset impairments of $21.5 million, severance for terminated hourly and salaried employees of $3.8 million, and other post-employment benefit costs of $3.3 million.

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Interest Expense, Net of Interest Income.  Interest expense, net of interest income for the year ended September 30, 2007 was $86.8 million, compared to $107.4 million for the year ended September 30, 2006, as follows.

	Year ended
	September 30,
	2007			2006
	(in millions)
Interest expense on debt obligations	$	86.4		$	109.5
Other, net		3.6			5.7
		90.0			115.2
Interest income		(3.2	)		(7.8	)
	$	86.8		$	107.4

Interest expense on the Company’s outstanding debt obligations was $86.4 million, net of interest rate swap gains of $2.2 million in fiscal 2007, compared to $109.5 million, net of interest rate swap gains of $0.4 million in fiscal 2006. The Company refinanced its debt in May 2007 with lower interest rate debt and repaid $40.0 million of that debt in July 2007. In the prior year, the Company used proceeds from its June 2006 initial public offering to reduce debt. These actions contributed to lower interest expense in fiscal 2007 as compared to fiscal 2006. Other, net in fiscal 2007 includes $1.9 million related to certain state income tax exposure, partially offset by $0.8 million of capitalized interest. Other, net for fiscal 2006 was comprised primarily of a $2.5 million bridge loan fee incurred in connection with financing the October 2005 acquisition of Mueller Co. and Anvil. Interest income for fiscal 2006 includes a $2.9 million prepayment penalty and $1.8 million in interest income earned on a loan to the Company’s former parent.

Loss on Early Extinguishment of Debt.  Loss on early extinguishment of debt for the fiscal year ended September 30, 2007 was $36.5 million compared to $8.5 million in the prior year. In May 2007, the Company retired its outstanding senior subordinated notes and senior discount notes primarily with the proceeds from the issuance of $425.0 million of 73/8% Senior Subordinated Notes and amended its credit agreement. During fiscal 2006, the Company partially redeemed outstanding debt using the net proceeds from its initial public offering.

Income Tax Expense.  Income tax expense for fiscal 2007 was $38.5 million as compared to $8.0 million in fiscal 2006. The effective tax rates for fiscal year 2007 and fiscal year 2006 were 44.4% and 61.1%, respectively. The estimated effective tax rates differ from the statutory rate primarily due to non-deductible interest, non-deductible compensation, manufacturing production deductions and state income taxes. In addition, fiscal 2007 included $1.1 million of state income tax expense with respect to certain state income tax matters associated with the October 2005 acquisition of Mueller Co. and Anvil.

Segment Analysis

Mueller Co.  Mueller Co. segment net sales for the year ended September 30, 2007 were $756.1 million, a decrease of $48.0 million, or 6.0% from $804.1 million in the prior year. This decline is primarily due to lower volumes of iron gate valves, hydrants, and brass products partially offset by the effect of price increases. These reduced unit volumes were the result of continuing weakness in residential construction. Distributor orders that were placed before the effective dates of May and June 2006 price increases also contributed to an overall higher level of shipments in the fourth quarter of fiscal 2006.

Mueller Co. segment gross profit for the year ended September 30, 2007 was $235.8 million, an increase of $12.8 million, or 5.7% compared to $223.0 million in the prior year. Gross margin increased to 31.2% in the current year compared to 27.7% in the prior year. Included in cost of sales in the prior year were $53.1 million of purchase accounting adjustments related to valuing Mueller Co.’s inventory acquired in October 2005 at fair value. Excluding the impact of these adjustments, gross margin would have been 34.3%. The decline in margin excluding these adjustments is due primarily to volume declines in higher-margin iron gate valves and hydrants, higher raw material and purchased component costs, and reduced manufacturing production that led to higher per unit overhead costs. The effects of these items were partially offset by higher pricing.

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Mueller Co. segment income from operations for the year ended September 30, 2007 was $154.7 million, an increase of $10.0 million compared to $144.7 million in the prior year. Excluding $53.1 million of purchase accounting adjustments discussed above, and the causes of the changes in gross profit, there was an increase in certain administrative costs, primarily related to personnel costs that were previously reported as Corporate costs prior to being a stand-alone public company.

U.S. Pipe.  U.S. Pipe segment net sales for the year ended September 30, 2007 were $537.1 million, a decrease of $57.6 million, or 9.7% from $594.7 million in the prior year. Net sales decreased primarily due to volume declines during the current year of approximately $101.0 million, partially offset by higher selling prices, sales of higher margin products and sales resulting from the acquisition of Fast Fabricators, which was acquired in January 2007. Volume declines were attributable to a weak residential construction market and were partially offset by increased sales for repair and replacement products. The prior year includes approximately $30.0 million of sales of ductile iron pipe that customers substituted for unavailable PVC pipe as a result of Hurricane Katrina and approximately $15.4 million of net sales from valves and hydrants manufactured at U.S. Pipe’s Chattanooga, Tennessee plant. Effective January 1, 2006, U.S. Pipe branded valve and hydrant manufacturing was transferred to the Mueller Co. segment.

U.S. Pipe segment gross profit for the year ended September 30, 2007 was $78.0 million, an increase of $15.5 million, or 24.8%, compared to $62.5 million in the prior year. Gross margin increased to 14.5% in the current year compared to 10.5% in the prior year. Excluding $21.3 million of Chattanooga closure-related costs included in cost of sales, the prior year gross margin would have been 14.1%. Increased pricing offset higher raw material costs.

U.S. Pipe segment income from operations for the year ended September 30, 2007 was $33.4 million, an increase of $50.4 million compared to a loss from operations of $17.0 million in the prior year. The current year includes the result of the Fast Fabricators acquisition completed in January 2007, as well as certain cost reductions in selling, general and administrative costs. The prior year included $49.9 million of Chattanooga restructuring and closure-related costs and an additional $4.2 million in related party corporate charges.

Anvil.  Anvil segment net sales for the year ended September 30, 2007 were $555.8 million, an increase of $21.2 million, or 4.0%, from $534.6 million in the prior year. The increase was due primarily to higher selling prices.

Anvil segment gross profit for the year ended September 30, 2007 was $149.6 million, an increase of $27.0 million, or 22.0%, compared to $122.6 million in the prior year. Gross margin increased to 26.9% in the current year compared to 22.9% in the prior year. Excluding $17.3 million of prior year purchase accounting adjustments related to the fair value of Anvil’s inventory acquired in October 2005, gross margin in the prior year would have been 26.2%. The increase in margin excluding these costs is due primarily to higher selling prices.

Anvil segment income from operations for the fiscal year ended September 30, 2007 was $57.4 million compared to $31.8 million in the prior year. The current year includes approximately $2.7 million of anti-dumping duties received from the federal government. The remaining increase is primarily related to the $17.3 million of prior year purchase accounting adjustments discussed above and increased selling prices.

Corporate.  Corporate expenses for the year ended September 30, 2007 were $35.3 million compared to $30.1 million in the prior year. The increase is due to higher overall costs associated with operating the Company on a stand-alone basis as a public company. On December 14, 2006, the remaining 75% of the Company not already publicly traded was distributed in a tax-free spin-off from its former parent company. As a result, a separate corporate headquarters office was created and established in Atlanta, Georgia during the first quarter of fiscal 2007. This corporate office provides functions including, but not limited to, treasury, risk, management, legal, accounting, human resources, investor relations, and business planning and analysis. The costs of these functions as well as costs related to Sarbanes-Oxley compliance and the annual audit of our consolidated financial statements are reported as corporate items. Fiscal 2006 expenses of $8.0 million for services previously provided by its former parent were recorded by U.S. Pipe. These charges were discontinued in conjunction with our separation

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from our former parent in December 2006. The only costs we incur that are allocated to our segments are personnel and benefit costs directly attributable to segment employees.

Financial Condition

Cash and cash equivalents were $183.9 million at September 30, 2008 compared to $98.9 million at September 30, 2007. Cash and cash equivalents increased during fiscal 2008 as a result of cash provided by operating activities of $182.0 million exceeding the cash used in investing activities and financing activities of $78.5 million and $18.1 million, respectively. Cash and cash equivalents decreased $0.4 million during fiscal 2008 due to changes in currency exchange rates. Other than commitments in the normal course of business, which are relatively minor, all of the cash and cash equivalents at September 30, 2008 can be considered available for general corporate purposes.

Receivables, net were $298.2 million at September 30, 2008 compared to $302.1 million at September 30, 2007. Receivables at September 30, 2008 represented approximately 54.6 days sales compared to September 30, 2007 receivables representing approximately 57.9 days sales, each calculated using the respective fourth quarter sales. Management considers this variation in days sales in receivables normal as this measure has typically been in the mid-50s in recent years.

Inventories were $459.4 million at September 30, 2008 compared to $453.5 million at September 30, 2007. Raw material costs were higher at the end of fiscal 2008 compared to fiscal 2007. Although inventory dollar balances were greater at the end of fiscal 2008, quantities were lower. There was slightly over three months sales in inventory near the end of fiscal 2008 compared to approximately four months sales in inventory at the end of September 2007. Inventory turns near the end of fiscal 2008 were generally at their highest level over the past several years as we began tighter management of our inventory levels in the latter part of fiscal 2007.

Property, plant and equipment, net were $356.8 million at September 30, 2008 compared to $351.8 million at September 30, 2007. Capital expenditures were $88.1 million during fiscal 2008 compared to depreciation of $62.3 million (depreciation related to other current assets was $1.3 million) and asset impairment charges of $11.8 million. Other activity during fiscal 2008 included some minor disposals and currency translation adjustments. The majority of capital expenditures during fiscal 2008 were related to the construction of a new automated ductile iron pipe manufacturing operation in Bessemer, Alabama. Capital expenditures for fiscal 2009 are expected to be between $50 million and $60 million.

Goodwill was $871.5 million at September 30, 2008 compared to $871.1 million at September 30, 2007. The change during fiscal 2008 resulted from the adoption of new income tax accounting rules on October 1, 2007. Goodwill is not amortized. It is reviewed at least annually for possible impairment. We concluded from our annual review at September 1, 2008 that the carrying amount of goodwill had not been impaired. We also concluded that no events occurred during fiscal 2008 requiring testing for possible impairment at any other date.

Identifiable intangible assets were $789.8 million at September 30, 2008 compared to $819.3 million at September 30, 2007. Finite-lived intangible assets, $385.3 million of net book value at September 30, 2008, are amortized over their estimated useful lives. Such amortization expense was $29.5 million during fiscal 2008 and is expected to be a similar amount for each of the next five years. Indefinite-lived identifiable intangible assets, $404.5 million at September 30, 2008, are not amortized, but tested at least annually for possible impairment. We concluded from our annual review at September 1, 2008 that the carrying amount of its indefinite-life identifiable intangible assets had not been impaired. We also concluded that no events occurred during fiscal 2008 requiring testing for possible impairment at any other date.

Accounts payable and other current liabilities were $285.0 million at September 30, 2008 compared to $234.1 million at September 30, 2007. Compared to quarterly spending activity, these amounts represented approximately 56 days of purchases at September 30, 2008 compared to approximately 54 days of purchases at September 30, 2007, each of which is consistent with recent historical trends. Inventory purchases were significantly higher during the fourth quarter of fiscal 2008 compared to fiscal 2007. There is significant variability regarding the payment patterns for various purchases, ranging from payroll which is very fast to incentive compensation and customer rebates that might only be paid once per year.

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Outstanding borrowings were $1,095.5 million at September 30, 2008 compared to $1,100.5 million at September 30, 2007. The decrease of $5.0 million during fiscal 2008 was essentially the quarterly payments due on the Term Loan B under the 2007 Credit Agreement. Principal payments due during fiscal 2009 are $9.7 million.

Deferred income taxes were net liabilities of $247.6 million at September 30, 2008 compared to net liabilities of $278.1 million at September 30, 2007. Deferred tax liabilities related to property, plant and equipment, goodwill and identifiable intangible assets were $322.2 million and $332.7 million at September 30, 2008 and 2007, respectively.

Liquidity and Capital Resources

We had cash and cash equivalents of $183.9 million at September 30, 2008 and $261.9 million of borrowing capacity under the revolving credit facility component of our 2007 Credit Agreement. Our operating activities generated $182.0 million, $155.1 million and $107.6 million of cash during fiscal 2008, 2007 and 2006, respectively.

We anticipate that our existing cash, cash equivalents and borrowing capacity combined with our expected operating cash flows will be sufficient to meet our anticipated operating expenses, capital expenditures, pension contributions and debt service obligations as they become due for at least the next twelve months. However, our ability to make scheduled payments of principal of, to pay interest on or to refinance our debt and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control.

The 2007 Credit Agreement includes a Term Loan A, a Term Loan B and a revolving credit facility. The Term Loan A, $141.6 million owed at September 30, 2008, accrues interest at LIBOR plus a margin of up to 175 basis points and is payable $3.5 million per quarter beginning September 2009 with the balance due May 2012. The Term Loan B, $526.7 million owed at September 30, 2008, accrues interest at LIBOR plus 175 basis points and is payable $1.3 million per quarter with the balance due May 2014. The revolving credit facility provides for borrowings of up to $300 million, including letters of credit and terminates in May 2012. At September 30, 2008, letters of credit outstanding under the revolving credit facility were $38.1 million. Borrowings under the revolving credit facility bear interest at LIBOR plus a margin of up to 175 basis points. The margin on Term Loan A borrowings and the revolving credit facility was 150 basis points at September 30, 2008.

We pay a commitment fee on the unused portion of the revolving credit facility. This fee is payable quarterly in arrears and upon the maturity or termination of the revolving credit facility. The fee is subject to adjustment based on the leverage ratio. The fee was 0.375% at September 30, 2008.

The 2007 Credit Agreement is subject to mandatory prepayment with the net cash proceeds from the sale or other disposition of any property or assets, subject to permitted reinvestments and other specified exceptions. All mandatory prepayment amounts are applied to the prepayment of the term loans pro rata between the Term Loan A and the Term Loan B to reduce the remaining amortization payments of each term loan.

All of our material direct and indirect U.S. restricted subsidiaries are guarantors of the 2007 Credit Agreement. Our obligations under the 2007 Credit Agreement are secured by:

•  a first priority perfected lien on substantially all of our existing and after-acquired personal property, a pledge of all of the stock or membership interest of all of our existing or future U.S. restricted subsidiaries (including of each guarantor), a pledge of no more than 65% of the voting stock of any first-tier non-U.S. restricted subsidiary held by us or a guarantor and a pledge of all intercompany indebtedness in favor of us or any guarantor;

•  first-priority perfected liens on all of our material existing and after-acquired real property fee interests, subject to customary permitted liens described in the 2007 Credit Agreement; and

•  a negative pledge on all of our assets, including our intellectual property.

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The 2007 Credit Agreement contains customary negative covenants and restrictions on our ability to engage in specified activities and contains financial covenants requiring us to maintain a specified consolidated leverage ratio decreasing over time and an interest charge coverage ratio on a quarterly basis. Borrowings under the revolving credit facility are subject to significant conditions, including compliance with the financial ratios included in the 2007 Credit Agreement and the absence of any material adverse change.

We were in compliance with all applicable debt covenants at September 30, 2008 and anticipate maintaining such compliance.

We also owed $425.0 million of principal of 73/8% Senior Subordinated Notes (“Senior Notes”) at September 30, 2008. Interest on the Senior Notes is payable semi-annually and the principal is due June 2017. We may redeem any portion of the of the Senior Notes after May 2012 at specified redemption prices or prior to June 2010 we may redeem up to 35% of the Senior Notes at a redemption price of 107.375% of the principal amount, plus accrued and unpaid interest with the net cash proceeds of certain equity offerings. Upon the occurrence of a change in control, we must offer to repurchase the Senior Notes at 101% of their principal amount, plus accrued and unpaid interest. The Senior Notes are secured by the guarantees of essentially all of our U.S. subsidiaries, but are subordinate to the borrowings under the 2007 Credit Agreement.

At September 30, 2008, our credit ratings issued by Moody’s and Standard & Poor’s were as follows. Any changes from the ratings at September 30, 2007 have been noted.

				Standard &
	Moody’s			Poor’s
Corporate credit rating		B1			BB-
2007 Credit Agreement		Ba3			BB+
73/8% Senior Subordinated Notes		B3			B
Outlook		Stable	(1)		Stable

(1) “Positive” at September 30, 2007

A significant portion of the assets invested in our defined benefit pension plans are invested in equity securities. A large majority of equity securities have declined in value during the general timeframe of late September through the latter part of November 2008 in response to general economic turmoil and the credit crisis in particular. The level of pension plan assets compared to pension plan liabilities at various measurement dates influences the level of future contributions to be made to these pension plans. The reduced value of pension plan assets could increase future pension plan contributions. Our upcoming pension plan contribution requirements will be determined by an analysis at January 1, 2009, which will not be concluded until later in 2009. As a result of the general decline in equity values and credit crisis, there may be legislative changes that occur that may change or otherwise provide relief for pension plan contributions that might otherwise become due relatively soon. We believe pension plan contributions to be made during fiscal 2009 will be at least $7.3 million but may exceed that amount due to both required minimum contributions and additional voluntary contributions. We anticipate the total pension plan contributions for fiscal 2009 will be approximately $20 million.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not have any undisclosed borrowings or debt or any derivative contracts other than those described in “Item 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK” or synthetic leases. Therefore, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if it had engaged in such relationships.

We use letters of credit and surety bonds in the ordinary course of business to ensure its performance of contractual obligations. At September 30, 2008, we had $38.1 million of letters of credit and $18.9 million of surety bonds outstanding.

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Contractual Obligations

Our contractual obligations at September 30, 2008 are presented below.

	Less than		1-3		4-5		After
	1 year		years		years		5 years		Total
	(in millions)
Long-term debt:
Principal payments	$	9.7	$	40.0	$	120.5	$	925.3	$	1,095.5
Interest (1)		70.3		137.9		126.4		144.4		479.0
Operating leases		8.7		14.5		6.8		3.3		33.3
Unconditional purchase obligations (2)		4.7		0.5		-		-		5.2
Other noncurrent liabilities (3)		8.0		-		-		-		8.0
	$	101.4	$	192.9	$	253.7	$	1,073.0	$	1,621.0

(1)	Interest on the 2007 Credit Facility is calculated using LIBOR of 4.05%, the rate in effect on September 30, 2008 and assumes only scheduled principal payments. Actual interest payments will likely be different. Interest payments do not include any amounts that will be paid or received under interest rate swap contracts. These amounts will be dependent on future interest rates and the extent to which interest rate swap contracts are utilized in the future. At September 30, 2008, we had a liability of $11.6 million related to interest rate swap contracts. Each increase or decrease in LIBOR of 0.125% would result in an increase or decrease in annual interest payments under the 2007 Credit Facility of less than $1 million.
(2)	Includes contractual obligations for purchases of raw materials and capital expenditures.
(3)	Other noncurrent liabilities consist of pension plans and other postretirement benefit plans and represents the estimated minimum payments required by law for fiscal 2009. Actual payments may differ.

Effect of Inflation; Seasonality

We experience changing price levels related to purchases of raw materials and purchased components. The average purchased costs of scrap iron at U.S. Pipe and brass ingot at Mueller Co. in fiscal 2008 were 42% and 11%, respectively, higher than in fiscal 2007. We do not believe that changing prices for other goods had a material impact on our financial position or results of operations.

Our business is dependent upon the construction industry, which is seasonal due to the impact of cold and wet weather conditions. Net sales and operating income have historically been lowest in the three month periods ending December 31 and March 31 when the northern United States and all of Canada generally face weather conditions that restrict significant construction activity. Inventory levels tend to be highest in the three month periods ending March 31 and June 30 as we prepare for our peak selling periods. Receivables tend to be highest in the three month periods ending June 30 and September 30 as these are also the highest sales periods.

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. These estimates are based upon experience and on various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ from these estimates. We consider an accounting estimate to be critical if changes in the estimate that are reasonably likely to occur over time or the use of reasonably different estimates could have a material impact on our financial condition or results of operations. We consider the accounting topics presented below to include our critical accounting estimates.

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Revenue Recognition

We recognize revenue when delivery of a product has occurred and there is persuasive evidence of a sales arrangement, sales prices are fixed and determinable and collectability from the customers is reasonably assured. Sales are recorded net of estimated cash discounts and rebates.

Receivables

The estimated allowance for doubtful receivables is based upon judgments and estimates of expected losses and specific identification of problem accounts. Significantly weaker than anticipated industry or economic conditions could impact customers’ ability to pay such that actual losses may be greater than the amounts provided for in this allowance. The periodic evaluation of the adequacy of the allowance for doubtful receivables is based on an analysis of prior collection experience, specific customer creditworthiness and current economic trends within the industries served. In circumstances where a specific customer’s inability to meet its financial obligation is known to us (e.g., bankruptcy filings or substantial downgrading of credit ratings), we record a specific allowance to reduce the receivable to the amount we reasonably believe will be collected.

Inventories

We record inventories at the lower of cost using the first-in, first-out method or market value. Inventory cost includes an overhead component that can be affected by levels of production and actual costs incurred. We evaluate the need to record adjustments for impairment of inventory at least quarterly. This evaluation includes such factors as anticipated usage, inventory turnover, inventory levels and ultimate product sales value. Inventory that, in the judgment of management, is obsolete or in excess of our normal usage is written-down to its estimated market value, if less than its cost. Significant judgments must be made when establishing the reserve for obsolete and excess inventory.

Income Taxes

We recognize deferred tax liabilities and deferred tax assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the differences between the financial statements and the tax basis of assets and liabilities, using tax rates in effect for the years in which the differences are expected to reverse. A valuation allowance is provided to offset any net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. If we were to reduce our estimates of future taxable income, we could be required to record additional valuation allowances against our deferred tax assets. Our tax balances are based on our expectations of future operating performance, tax planning strategies, interpretation of the tax regulations currently enacted and rulings in numerous tax jurisdictions.

We only record tax benefits for positions that we believe are more likely than not of being sustained under audit examination based solely on the technical merits of the associated tax position. The amount of tax benefit recognized for any position that meets the more likely than not threshold is the largest amount of the tax benefit that we believe is greater than 50% likely of being realized.

Accounting for the Impairment of Long-Lived Assets Including Goodwill and Other Intangible Assets

We test long-lived assets, including goodwill and intangible assets that have an indefinite life, for impairment annually (or more frequently if events or circumstances indicate possible impairments). Finite-lived intangible assets are amortized over their respective estimated useful lives and reviewed if events or circumstances indicate possible impairment. We perform our annual impairment testing at September 1.

We test goodwill for possible impairment by first determining the fair value of the related reporting unit and comparing this value to the recorded net assets of the reporting unit, including goodwill. Fair value is determined using a combination of a discounted cash flow model and stock market comparable valuations for a peer group of companies. Significant judgments and estimates must be made when estimating

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future cash flows, determining the appropriate discount rate and identifying appropriate stock market comparable companies. We concluded that our goodwill had not been impaired at September 1, 2008.

We also evaluated the reasonableness of our determination of fair values for our reporting units compared to our the stock market capitalization at September 1, 2008 and during the period thereafter. These stock market capitalizations were significantly lower than the fair values determined by management. The fair value of an entity can be greater than its market capitalization for various reasons, one of which is the concept of a control premium. Substantial value may arise from the ability to take advantages of synergies and other benefits that flow from control over another entity. We also believe the general downturn in U.S. equity markets resulting from the recent credit and liquidity crisis, which we believe has also affected our stock market valuation, is not representative of any fundamental change in our businesses. We cannot predict with any reasonable degree of confidence when the effects of these recent economic events will subside or when the price of our common stock will be more representative of what we believe to be the Company’s fair value. Changes in our assumptions underlying our estimates of fair value, which will be a function of our future financial performance and changes in economic conditions, could result in a future impairment charge.

Litigation, Investigations and Claims

We are involved in litigation, investigations and claims arising out of the normal conduct of its business. We estimate and accrue liabilities resulting from such matters based on a variety of factors, including outstanding legal claims and proposed settlements; assessments by internal counsel of pending or threatened litigation; and assessments of potential environmental liabilities and remediation costs. We believe we have adequately accrued for these potential liabilities; however, facts and circumstances may change and could cause the actual liability to exceed the estimates, or may require adjustments to the recorded liability balances in the future.

Workers Compensation, Defined Benefit Pension and Other Postretirement Benefits, Environmental and Other Long-term Liabilities

We are obligated for various liabilities that will ultimately be determined over what could be a very long future time period. We established the recorded liabilities for such items at September 30, 2008 using estimates for when such amounts will be paid and what the amounts of such payments will be. These estimates are subject to change based on numerous factors, including among others, regulatory changes, technology changes, the investment performance of related assets, the lifespan of plan participants and other individuals and changes to plan designs.

Recently Issued Accounting Standards

The items discussed below are not all-inclusive of standards required to be adopted by us after September 30, 2008. Only such standards reasonably expected to have a material impact on our accounting or financial reporting are discussed below.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. We do not believe the adoption of this standard, which became effective for us on October 1, 2008, will have a material impact on our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which permits entities to elect to measure many financial instruments and certain other items at fair value. Since we have elected not to apply the fair value measurement option, we do not believe the adoption of this standard, which became effective for us on October 1, 2008, will have a material impact on our consolidated financial statements.

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In March 2008, the SFAS issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, which requires enhanced disclosures about an entity’s derivative and hedging activities. Entities will be required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. Adoption of this standard will be required by us effective January 1, 2009.

Item 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are exposed to various market risks, which are potential losses arising from adverse changes in market rates and prices, such as interest rates and foreign exchange fluctuations. We do not enter into derivatives or other financial instruments for trading or speculative purposes.

Our primary financial instruments are cash and cash equivalents. This includes cash in banks and highly rated, liquid money market investments. We believe that those instruments are not subject to material potential near-term losses in future earnings from reasonably possible near-term changes in market rates or prices.

Interest Rate Risk

At September 30, 2008, we had fixed rate debt, including the effect of interest rate swap agreements, of $900.0 million and variable rate debt of $195.5 million. The pre-tax earnings and cash flow impact resulting from a 100 basis point increase in interest rates on variable rate debt, holding other variables constant would be approximately $2.0 million per year.

We use interest rate swap contracts to hedge against cash-flow variability arising from changes in LIBOR rates in conjunction with its LIBOR-indexed variable rate borrowings. We also had forward-starting swap contracts that will replace existing swap contracts upon their expiration. These swap contracts were accounted for as effective cash flow hedges. We recorded an unrealized loss from our swap contracts, net of tax, of $5.9 million at September 30, 2008 in accumulated other comprehensive income. These swap contracts had a liability fair value of $11.6 million at September 30, 2008, which was included in other noncurrent liabilities. Details regarding the outstanding swap contracts at September 30, 2008 are presented below.

Hedged amount	Maturity date	Receive	Pay
$50 million	October 2008	LIBOR	4.740%
$50 million	June 2009	LIBOR	2.983%
$50 million	October 2009	LIBOR	4.800%
$50 million	June 2010	LIBOR	3.398%
$100 million	October 2010	LIBOR	4.815%
$50 million	June 2011	LIBOR	3.719%
$50 million	October 2011	LIBOR	4.915%
$50 million	*          May 2012	LIBOR	4.993%
$50 million	*          May 2012	LIBOR	5.134%
$100 million	*      May 2012	LIBOR	5.039%
$75 million	September 2012	LIBOR	4.960%

* Denotes forward-starting swap contract.

We regularly evaluate the desirability of entering into additional interest rate swap contracts or other interest rate hedging instruments to protect against interest rate fluctuations on our variable rate debt.

Currency Risk

We maintain assets and operations in Canada and, to a much lesser extent, China and Europe. The functional currency for these operations is their local currency. The assets and liabilities of non-U.S. subsidiaries are translated into U.S. dollars at currency exchange rates in effect at the end of each period, with the effect of such translation reflected in other comprehensive income. Our stockholders’ equity will fluctuate

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depending upon the weakening or strengthening of the U.S. dollar against these non-U.S. currencies. Net sales and expenses of non-U.S. subsidiaries are translated into U.S. dollars at the average currency exchange rate during the period. At September 30, 2008, $113.1 million of our net assets were denominated in Canadian dollars.

We have receivables and payables denominated in currencies other than an entity’s functional currency. Changes in currency exchange rates between when these balances originate and when they are settled result in foreign exchange gains and losses.

We have entered into Canadian dollar forward exchange contracts to reduce its exposure to currency fluctuations from its Canadian dollar-denominated intercompany loans. Gains and losses on these contracts are included in selling, general and administrative expenses. We recorded a net gain of $1.3 million in fiscal year 2008 on foreign currency exchange contracts; this gain was offset by transaction losses on the intercompany loans themselves.

Raw Materials Risk

Our products are made using several basic raw materials, including scrap steel and iron, brass ingot, sand, resin, steel pipe, coke and various purchased components. Product margins and the level of profitability can fluctuate if we do not pass changes in raw material and purchased component costs to its customers.

We estimate that raw materials and purchased components, as a percentage of cost of sales for fiscal 2008, were 13% and 43%, respectively, for Mueller Co., 23% and 44%, respectively, for Anvil and 46% and 8% respectively for U.S. Pipe. For the purpose of these estimates, raw materials exclude electricity, natural gas, water, oxygen and other ancillary items. Historically, we have been able to obtain an adequate supply of raw materials and purchased components and management does not anticipate any shortage of these materials, which are generally purchased at market prices.

The average purchase costs of scrap iron at U.S. Pipe and brass ingot at Mueller Co. were 42% and 11% higher in fiscal 2008 than in fiscal 2007, respectively. These prices are expected to fluctuate based on marketplace demand. Mueller Co. and Anvil were generally able to pass increased costs of raw materials and purchased components to their customers during fiscal 2008. U.S. Pipe did not pass all of its increased raw material costs to its customers during fiscal 2008.

Commodities Risk

We use natural gas to fuel some of our ductile iron pipe foundries. Natural gas is generally purchased at prices fixed each month based on NYMEX market rates for specified volumes. We are exposed to price changes from month to month.

We use natural gas swap contracts to hedge against cash flow variability arising from changes in natural gas prices for our anticipated purchases of natural gas. These contracts fix our purchase price for a portion of our natural gas purchases at prices between $9.235 and $10.040 per MMBtu through September 2009. All of the above swap contracts are accounted for as effective hedges and have a total liability fair value of $1.2 million at September 30, 2008, which is included in other noncurrent liabilities. We recorded an unrealized loss from our swap contracts, net of tax, of $0.6 million at September 30, 2008 in accumulated other comprehensive income.

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Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements and supplementary data are filed as part of this annual report beginning on page F-1 and incorporated by reference in this Item 8.

Index to Financial Statements	Reference
Reports of Independent Registered Public Accounting Firms		F-1
Consolidated Balance Sheets at September 30, 2008 and 2007		F-4
Consolidated Statements of Operations for the years ended September 30, 2008, 2007 and 2006		F-5
Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2008, 2007 and 2006		F-6
Consolidated Statements of Cash Flows for the years ended September 30, 2008, 2007 and 2006		F-7
Notes to Consolidated Financial Statements		F-8

Item 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

Item 9A.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”) and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this annual report. Based on this evaluation, those officers have concluded that our disclosure controls and procedures were effective at September 30, 2008.

Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial reporting during the quarter ended September 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). Internal control over financial reporting is designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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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 changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We assessed the effectiveness of our internal control over financial reporting at September 30, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Management has concluded that, at September 30, 2008, our internal control over financial reporting was effective.

Our assessment of the effectiveness of our internal control over financial reporting at September 30, 2008, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included in this annual report on Form 10-K.

Item 9B.  OTHER INFORMATION

None

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PART III

Item 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The name, age as of November 25, 2008 and position of each of our executive officers and directors are presented below.

Name	Age		Position
Gregory E. Hyland		57	Chairman of the Board of Directors, President and Chief Executive Officer
Robert Barker		51	Executive Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary
Robert D. Dunn		51	Senior Vice President, Human Resources
Thomas E. Fish		54	President, Anvil
Evan L. Hart		43	Senior Vice President and Chief Financial Officer
Robert P. Keefe		54	Senior Vice President and Chief Information Officer
Robert G. Leggett		49	Chief Operating Officer
Kevin G. McHugh		50	Vice President and Controller
Dale B. Smith		63	Chief Executive Officer, Mueller Co.
Raymond P. Torok		62	President, U.S. Pipe
Marietta Edmunds Zakas		49	Senior Vice President, Strategic Planning and Investor Relations
Donald N. Boyce		70	Director
Howard L. Clark		64	Director
Jerry W. Kolb		72	Director
Joseph B. Leonard		65	Director
Mark J. O’Brien		65	Director
Bernard G. Rethore		67	Director
Neil A. Springer		70	Director
Lydia W. Thomas		64	Director
Michael T. Tokarz		58	Director

Gregory E. Hyland has served as Chairman of the Board of Directors since October 2005 and as President and Chief Executive Officer since January 2006. Mr. Hyland served as Chairman, President and Chief Executive Officer of Walter Industries, Inc. (“Walter Industries“) a homebuilding, financial services and natural resources company, from September 2005 to December 2006. Prior to that time, Mr. Hyland served as President, U.S. Fleet Management Solutions of Ryder System, Inc. (“Ryder“), a transportation and logistics company, from June 2005 to September 2005. He served as Executive Vice President, U.S. Fleet Management Solutions of Ryder from October 2004 to June 2005. From December 2003 to September 2004, Mr. Hyland was not employed. He was President of the Industrial Products Segment for Textron, Inc., a multi-industry company, from February 2002 to August 2003 and Chairman and Chief Executive Officer of Textron Golf, Turf and Specialty Products from January 2001 to January 2002. From September 1997 to December 2000, Mr. Hyland served as President of the Engineered Products Group, Flow Control Division of Tyco International Ltd (“Tyco”), a diversified manufacturing conglomerate. Mr. Hyland earned Bachelor and Master of Business Administration degrees from the University of Pittsburgh,.

Robert Barker has served as our Executive Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer since November 2006. Previously, he was a partner with the law firm of Powell Goldstein LLP in Atlanta, Georgia since August 2001. Mr. Barker earned an A.B. in History and Political Science from Stanford University and earned a Juris Doctor from the University of Virginia School of Law.

Robert D. Dunn has served as our Senior Vice President, Human Resources since November 2007. Previously, he served as Senior Vice President, Human Resources of Dean Foods Company (formerly Suiza Foods Corporation), a dairy processor and organic food manufacturer, since 1999. From 1979 to 1984, Mr. Dunn was an officer in the United States Army. Mr. Dunn earned a Bachelor of Science degree from Murray State University and a Master of Business Administration degree from Embry Riddle Aeronautical University.

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Thomas E. Fish has served as President of our Anvil segment since 2000. From January 2005 through November 2005, Mr. Fish served as Mueller Co.’s Interim Chief Financial Officer. Mr. Fish served as Vice President of Manufacturing for Grinnell Corp. (a predecessor of Anvil), a manufacturer of threaded and grooved pipe fittings, pipe hangers and sprinkler heads, from 1996 to 1999, Vice President of Finance and Administration for Grinnell Corp. from 1992 to 1996, Corporate Controller for Grinnell Corp. from 1984 to 1992 and Director of Internal Audit for Grinnell Fire Protection Systems, a manufacturer of fire protection systems, from 1982 to 1984. Mr. Fish was employed by Price Waterhouse & Co. from 1976 to 1982. Mr. Fish earned a Bachelor of Science degree in Accounting and is a certified public accountant.

Evan L. Hart has served as our Senior Vice President and Chief Financial Officer since July 2008, as our Controller from December 2007 to July 2008 and as Vice President of Financial Planning and Analysis from September 2006 to December 2007. Previously, Mr. Hart had been Vice President, Controller and Treasurer for Unisource Worldwide, Inc., a marketer and distributor of commercial printing & business imaging papers, packaging systems and facility supplies and equipment from 2002 to 2006. He served in such roles as Division Controller, Senior Manager of Financial Reporting and Internal Audit Supervisor with Georgia-Pacific Corporation from 1992 to 2002. Mr. Hart began his career with Price Waterhouse & Co. in Birmingham, Alabama and Atlanta, Georgia where he served audit clients in the manufacturing and health care industries. Mr. Hart earned a Bachelor of Science degree in Accounting and Economics from Birmingham-Southern College and is a certified public accountant.

Robert P. Keefe has served as our Senior Vice President and Chief Information Officer since March 2007. Previously, Mr. Keefe was Corporate Vice President and Chief Information Officer at Russell Corporation, an athletic apparel, footwear and equipment company, from August 2002 to August 2006. Prior to that, Mr. Keefe was Vice President and Chief Information Officer for ConAgra Refrigerated Foods, a processor and marketer of refrigerated food products, from 1996 to 2002. He also held progressively responsible systems positions with Kraft Foods Inc. and Wyeth Pharmaceuticals, a pharmaceutical and health care products company. Mr. Keefe is a director of the Society for Information Management, International (SIM), a non-profit trade organization. Mr. Keefe earned a Bachelor degree from the State University of New York at Oswego and a Master of Business Administration degree from Pace University.

Robert G. Leggett has served as our Chief Operating Officer since September 2008. Mr. Leggett served from 2002 to 2008 as a Senior Vice President for Armstrong World Industries, a global leader in the design manufacture of floors, ceilings, and cabinets, primarily leading the America’s Building Products business. From 2000 to 2002, Mr. Leggett was President and Chief Operating Officer for AIFOtec Inc., a fiber-optic start-up company. From 1999 to 2000, Mr. Leggett served as Vice President of the Fiber Optic Division of Tyco Electronics Corp. From 1981 to 1999, Mr. Leggett held various engineering and leadership positions at AMP Inc., a global leader of electrical devices and systems. Mr. Leggett earned a Bachelor of Science degree in mechanical engineering from the Pennsylvania State University.

Kevin G. McHugh has served as our Vice President and Controller since July 2008 and our Vice President, Financial Reporting from January 2008 to July 2008. Previously, he was Corporate Controller at Unisource Worldwide, Inc. from 2003 to 2007. He was Corporate Controller of Roper Industries, Inc., a provider of engineered products and solutions for global niche markets, including water, energy, radio frequency, research/medical and general industry applications from 1997 to 2002. Mr. McHugh earned a Bachelor of Business Administration degree from the University of Notre Dame and is a certified public accountant.

Dale B. Smith has been Chief Executive Officer of Mueller Co. since November 2007. From August 1999 to October 2007, he was Chief Executive Officer of Mueller Group. He was also Chief Operating Officer of the Company from January 2006 to October 2007. Mr. Smith served as Executive Vice President of Mueller Co. from June 1994 to August 1999, Executive Vice President of Finance for Tyco Europe from 1992 to 1994, Director of Mergers and Acquisitions for Tyco from 1988 to 1992, Director of Mergers and Acquisitions for Grinnell Corp. from 1986 to 1988, Chief Financial Officer of Ludlow Corp. (a Tyco Company) from 1983 to 1986 and Corporate Controller for Grinnell Corp. from 1981 to 1983. From 1971 to 1981, Mr. Smith was employed by Price Waterhouse & Co. Mr. Smith earned an A.B. in Economics from Middlebury College and

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received a Master of Business Administration degree in Finance and Accounting from the University of Rochester. Mr. Smith is a certified public accountant.

Raymond P. Torok has been President of our U.S. Pipe segment since July 2004. Previously he was interim President at Golden Casting Corporation, a foundry operation producing highly engineered precision castings from May 2003 to December 2003, and he was President and Chief Executive Officer of Cold Metal Products, a steel production company from October 1998 to February 2003. Mr. Torok earned a Bachelor degree from John Carroll University and a Master of Business Administration degree from Butler University.

Marietta Edmunds Zakas has been Senior Vice President, Strategic Planning and Investor Relations, since November 2006. Previously Ms. Zakas served in various positions at Russell Corporation, an athletic apparel, footwear and equipment company from September 2001 to August 2006, culminating in her role as Corporate Vice President, Chief of Staff, Business Development and Treasurer. Ms. Zakas served as Corporate Vice President, Director of Investor Relations, Corporate Secretary and Treasurer, as well as Executive Assistant to the Chairman and CEO for Equifax, Inc., a consumer and commercial credit reporting agency, from 1993 to 2000. Ms. Zakas earned a Bachelor degree from Randolph-Macon Woman’s College, a Master of Business Administration degree from the Colgate-Darden Graduate School of Business Administration at the University of Virginia, and a Juris Doctor from the University of Virginia School of Law.

Donald N. Boyce has been a member of our Board of Directors since April 2006. He was a director of Walter Industries, from August 1998 to April 2006. Mr. Boyce served as Chairman of the Board of Walter Industries from November, 2000 to March, 2002 and as Chairman of the Board, President and Chief Executive Officer of Walter Industries from August, 2000 to November, 2000. During this time, Walter Industries owned U.S. Pipe. Mr. Boyce was Chairman of the Board of Directors of IDEX Corporation, a proprietary engineered industrial products manufacturing company, from April 1999 to March 2000, Chairman of the Board of Directors and Chief Executive Officer of IDEX Corporation from March 1998 to March 1999, and Chairman of the Board of Directors, President and Chief Executive Officer of IDEX Corporation from January 1988 to March 1998.

Howard L. Clark, Jr. has been a member of our Board of Directors since April 2006. He has been a director of Walter Industries since March 1995. Mr. Clark has been a Vice Chairman in the Investment Banking Division at Barclays Capital, an investment banking firm, since September 2008. He previously served as Vice Chairman of Lehman Brothers Inc., an investment banking firm, from February 1993 to September 2008 and, before that, as Chairman and Chief Executive Officer of Shearson Lehman Brothers Inc. Mr. Clark also is a director of United Rentals, Inc., an equipment rental company, and White Mountains Insurance Group, Ltd., a financial services holding company.

Jerry W. Kolb has been a member of our Board of Directors since April 2006. He has been a director of Walter Industries since June 2003. Mr. Kolb previously served as a Vice Chairman of Deloitte & Touche LLP, a registered public accounting firm, since 1986.

Joseph B. Leonard has been a member of our Board of Directors since April 2006. He has been a director of Walter Industries since June 2005. Mr. Leonard was Chairman of AirTran Holdings, Inc., from November 2007 to June 2008, Chairman and Chief Executive Officer of AirTran Holdings, Inc. from January 1999 to November 2007 and President of AirTran Holdings, Inc. from January 1999 to January 2001. Previously, Mr. Leonard served in various executive capacities for AlliedSignal, Inc., an aerospace, automotive and engineering company, and its aerospace division. Mr. Leonard previously served in various executive positions for Eastern Airlines, Inc. and prior to that he served maintenance and quality control positions for Northwest Airlines, Inc. and American Airlines. Mr. Leonard is a director of Air Canada, a full service airline company

Mark J. O’Brien has been a member of our Board of Directors since April 2006. He has been a director of Walter Industries since June 2005. Since March 2006, Mr. O’Brien has served as Chairman and Chief Executive Officer of Walter Industries’ Homes and Finance Business. Mr. O’Brien has served as President and Chief Executive Officer of Brier Patch Capital and Management, Inc., a real estate investment firm, since September 2004. Mr. O’Brien served in various executive capacities at Pulte Homes, Inc., a home building company, for 21 years, retiring as President and Chief Executive Officer in June 2003.

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Bernard G. Rethore has been a member of our Board of Directors since April 2006. He has been a director of Walter Industries since March 2002. He has been Chairman of the Board Emeritus of Flowserve Corporation, a manufacturer of pumps, valves, seals and components, since April 2000. From January 2000 to April 2000, he served as Flowserve Corporation’s Chairman. He had previously served as Chairman, Chief Executive Officer and President of Flowserve Corporation. Mr. Rethore is a director of Belden, Inc., a manufacturer of specialty signal-transmission products, and Dover Corp., a diversified manufacturer of a wide range of proprietary products.

Neil A. Springer has been a member of our Board of Directors since April 2006. He was a director of Walter Industries from August 2000 to April 2006. Mr. Springer has been managing director of Springer & Associates LLC, a board consulting and executive recruitment company, since 1994. Mr. Springer is also a director of IDEX Corporation.

Lydia W. Thomas has been a member of our Board of Directors since January 2008. She served as President and Chief Executive Officer of Mitretek Systems, Inc., a public interest research and development company, from 1996 to September 2007. She was previously with The MITRE Corporation, Center for Environment, Resources and Space, serving as Senior Vice President and General Manager from 1992 to 1996, Vice President from 1989 to 1992 and Technical Director from 1982 to 1989. She is a director of Cabot Corporation.

Michael T. Tokarz has been a member of our Board of Directors since April 2006. He has served as non-executive Chairman of the Board of Walter Industries since December 2006. In 2006, Mr. Tokarz established Tokarz Group Advisers, an investment advisory firm. Since February 2002, he has been a member of the Tokarz Group, LLC, a venture capital investment company. From January 1996 to February 2002, Mr. Tokarz was a member of the limited liability company that serves as the general partner of Kohlberg Kravis Roberts & Co. L.P., a private equity company. Mr. Tokarz also is a director of IDEX Corporation, Conseco, Inc., an insurance provider, and MVC Capital, Inc., a registered investment company.

Additional Information

Except for the information disclosed above and below, the information required by this item will be contained in our definitive proxy statement issued in connection with the 2009 annual meeting of stockholders filed with the Securities and Exchange Commission (“SEC”) within 120 days after September 30, 2008 and is incorporated herein by reference.

Our website address is www.muellerwaterproducts.com. You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports from the investors section of our website. These reports are available on our website as soon as reasonably practicable after we electronically file them with the SEC. These reports should also be available through the SEC’s website at www.sec.gov.

We have adopted a written code of conduct that applies to all directors, officers and employees, including a separate code that applies only to our principal executive officer and senior financial officers in accordance with Section 406 of the Sarbanes-Oxley Act of 2002 and the rules of the SEC promulgated thereunder. Our Code of Business Conduct and Ethics is available in the corporate governance section of our website. In the event that we make changes in, or provide waivers from, the provisions of this Code of Business Conduct and Ethics that the SEC requires us to disclose, we intend to disclose these events on the corporate governance section of our website.

We have adopted corporate governance guidelines. The guidelines and the charters of our board committees are available in the corporate governance section of our website. Copies of the Code of Business Conduct and Ethics, corporate governance guidelines and board committee charters are also available in print upon written request to the Corporate Secretary, Mueller Water Products, Inc., 1200 Abernathy Road NE, Suite 1200, Atlanta, GA 30328.

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Item 11.   EXECUTIVE COMPENSATION

The information required by this item will be contained in our definitive proxy statement issued in connection with the 2009 annual meeting of stockholders is incorporated herein by reference.

Item 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Except for the information set forth below and the information set forth in Part II, Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES, the information required by this item will be contained in our definitive proxy statement issued in connection with the 2009 annual meeting of stockholders and is incorporated herein by reference.

Securities Authorized for Issuance under Equity Compensation Plans

We have two compensation plans under which our equity securities are authorized for issuance. The 2006 Employee Stock Purchase Plan was approved by our sole stockholder in May 2006 and the 2006 Stock Incentive Plan was approved by our stockholders in January 2008. The following table sets forth certain information relating to these equity compensation plans, which relate only to Series A common stock, at September 30, 2008.

	Number of
	securities to be			Weighted
	issued upon			average		Number of
	exercise of			exercise price of		securities
	outstanding			outstanding		remaining
	options,			options,		available
	warrants			warrants		for future
	and rights			and rights		issuance
Equity compensation plans approved by stockholders:
Mueller Water Products, Inc.
2006 Stock Incentive Plan		3,946,709	(1)	$	12.37		3,593,927	(2)
Mueller Water Products, Inc.
2006 Employee Stock Purchase Plan		60,115	(3)		5.95		3,588,128	(4)
Total		4,006,824					7,182,055
Equity compensation plans not approved by stockholders		-			-		-

(1)	Consists of shares to be issued upon exercise of outstanding options granted under the Mueller Water Products, Inc. 2006 Stock Incentive Plan. Excludes phantom shares issuable to non-employee directors pursuant to the Mueller Water Products, Inc. Directors’ Deferred Fee Plan.
(2)	The number of shares available for future issuance under the Mueller Water Products, Inc. 2006 Stock Incentive Plan is equal to 8,000,000 shares authorized for issuance under the plan less the cumulative number of awards granted under the plan plus the cumulative number of awards cancelled under the plan.
(3)	Consists of shares issued on October 31, 2008 for which employee contributions in the form of payroll deductions were made from August 1, 2008 to October 31, 2008.
(4)	The number of shares available for future issuance under the Mueller Water Products, Inc. 2006 Stock Purchase Plan is equal to 4,000,000 shares authorized for issuance under the plan less the cumulative number of shares issued under the plan through October 31, 2008.

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Item 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item will be contained in our definitive proxy statement issued in connection with the 2009 annual meeting of stockholders is incorporated herein by reference.

Item 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item will be contained in our definitive proxy statement issued in connection with the 2009 annual meeting of stockholders is incorporated herein by reference.

PART IV

Item 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)  Financial Statements

	Page
Index to Financial Statements	Number
Reports of Independent Registered Public Accounting Firms		F-1
Consolidated Balance Sheets at September 30, 2008 and 2007		F-4
Consolidated Statements of Operations for the years ended September 30, 2008, 2007 and 2006		F-5
Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2008, 2007 and 2006		F-6
Consolidated Statements of Cash Flows for the years ended September 30, 2008, 2007 and 2006		F-7
Notes to Consolidated Financial Statements		F-8

(b)  Financial Statement Schedules

Except for Schedule II, Valuation and Qualifying Accounts, the schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. The information required by Schedule II is included in the notes to the consolidated financial statements.

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(c)  Exhibits

Exhibit
No.			Document
	2	.1	Agreement and Plan of Merger dated as of June 17, 2005 among Mueller Water Products, Inc., Walter Industries, Inc., JW MergerCo, Inc. and DLJ Merchant Banking II, Inc., as stockholders’ representative. Incorporated by reference to Exhibit 2.1 to Mueller Water Products Form 8-K (File no. 333-116590) filed on June 21, 2005.
	2	.1.1	Letter Agreement dated as of February 23, 2006 between Walter Industries, Inc. and Mueller Water Products, Inc. Incorporated by reference to Exhibit 10.1 to Mueller Water Products, Inc. Form 8-K (File no. 333-131521) filed February 27, 2006.
	2	.2	Agreement and Plan of Merger, dated as of January 31, 2006, by and among Mueller Holding Company, Inc., Mueller Water Products, LLC and Mueller Water Products Co-Issuer, Inc. Incorporated by reference to Exhibit 2.1 Mueller Water Products Form 8-K (File no. 333-116590) filed on February 3, 2006.
	3	.1	Restated Certificate of Incorporation of Mueller Water Products, Inc. Incorporated by reference to Exhibit 3.1 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on May 30, 2006.
	3	.1.1	Certificate of Merger, dated February 2, 2006, of Mueller Water Products, LLC and Mueller Water Products Co-Issuer, Inc. with and into Mueller Holding Company, Inc. Incorporated by reference to Exhibit 3.1.2 to Mueller Water Products Inc. Form 8-K (File no. 333-116590) filed on February 3, 2006.
	3	.2	Amended and Restated Bylaws of Mueller Water Products, Inc. Incorporated by reference to Exhibit 3.1 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on August 22, 2008.
	4	.1	Indenture, dated as of April 29, 2004, between Mueller Holdings (N.A.), Inc. and Law Debenture Trust Company of New York for the 14.75% Senior Discount Notes due 2014. Incorporated by reference to Exhibit 4.1 to Mueller Water Products, LLC Registration Statement on Form S-1 (File no. 333-116590) filed on June 17, 2004.
	4	.1.1	Supplemental Indenture, dated as of October 3, 2005, by and among Mueller Water Products, LLC, Mueller Water Products Co-Issuer, Inc. and Law Debenture Trust Company of New York. Incorporated by reference to Exhibit 4.1 to Mueller Water Products, Inc. Form 10-Q (File no. 333-131521) filed on February 22, 2006.
	4	.1.2	Second Supplemental Indenture, dated as of February 2, 2006, between, by and among Mueller Holding Company, Inc., Mueller Water Products, LLC, Mueller Water Products Co-Issuer, Inc. and Law Debenture Trust Company of New York. Incorporated by reference to Exhibit 10.1 to Mueller Water Products, Inc. Form 8-K (File no. 333-116590) filed on February 3, 2006.
	4	.1.3	Third Supplemental Indenture, dated as of May 14, 2007, to the Indenture dated as of April 29, 2004 among Mueller Water Products, Inc. and Law Debenture Trust Company of New York, as trustee. Incorporated by reference to Exhibit 4.1.3 to Mueller Water Products Form 8-K (File no. 001-32892) filed on May 17, 2007.
	4	.2	Indenture, dated as of April 23, 2004, among Mueller Group, Inc., the Guarantors party thereto and Law Debenture Trust Company of New York for the 10% Senior Subordinated Notes due 2012. Incorporated by reference to Exhibit 4.3 to Mueller Water Products, LLC Registration Statement on Form S-1 (File no. 333-116590) filed on June 17, 2004.
	4	.2.1	Supplemental Indenture, dated as of October 3, 2005, among Mueller Group Co-Issuer, Inc., Mueller Group, LLC, the certain guarantors defined therein and Law Debenture Trust Company of New York for the 10% Senior Subordinated Notes due 2012. Incorporated by reference to Exhibit 10.6 to Mueller Water Products, LLC Registration Statement on Form S-1 (File no. 333-116590) filed on February 3, 2006.

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Exhibit
No.			Document
	4	.2.2	Second Supplemental Indenture, dated as of May 14, 2007, to the Indenture dated as of April 23, 2004, among Mueller Group, LLC (formerly Mueller Group, Inc.) and Mueller Group Co-Issuer, Inc., the guarantors listed on the signature pages thereto and Law Debenture Trust Company of New York, as trustee. Incorporated by reference to Exhibit 4.7 to Mueller Water Products Form 8-K (File no. 001-32892) filed on May 17, 2007.
	4	.3	Indenture dated as of May 24, 2007 among Mueller Water Products, Inc., the guarantors named on the signature pages thereto and The Bank of New York (including form of global notes). Incorporated by reference to Exhibit 4.6 to Mueller Water Products Inc. Form 8-K (File no. 001-32892) filed on May 30, 2007.
	10	.1	Amended and Restated Credit Agreement among Mueller Water Products, Inc., as Borrower, Mueller Group, LLC, as prior borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender, and an L/C Issuer, JPMorgan Chase Bank, N.A., as Syndication Agent, and an L/C Issuer and the lenders named on the signature pages thereto. Incorporated by reference to Exhibit 10.17 to Mueller Water Products Inc. Form 8-K (File no. 001-32892) filed on May 30, 2007.
	10	.1.1	Amendment No. 1 to Amended and Restated Credit Agreement, dated as of June 21, 2007, among Mueller Water Products, Inc., Bank of America, N.A., and each of the guarantors named on the signature pages thereto. Incorporated by reference to Exhibit 10.20 to Mueller Water Products Inc. Form 10-Q (File no. 001-32892) for the quarter ended June 30, 2007.
	10	.2	Corporate Agreement by and between Walter Industries, Inc. and Mueller Water Products, Inc. Incorporated by reference to Exhibit 10.1 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on May 30, 2006.
	10	.3	Income Tax Allocation Agreement by and among Walter Industries, Inc., the Walter Affiliates (as defined therein), Mueller Water Products, Inc. and the Mueller Affiliates (as defined therein). Incorporated by reference to Exhibit 10.2 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on May 30, 2006.
	10	.4	Transition Services Agreement by and between Walter Industries, Inc. and Mueller Water Products, Inc. Incorporated by reference to Exhibit 10.3 to Mueller Water Products, Inc. 8-K (File no. 001-32892) filed on May 30, 2006.
	10	.5**	Mueller Water Products, Inc. Amended and Restated 2006 Stock Incentive Plan.
	10	.6	Mueller Water Products, Inc. Form of Notice of Stock Option Grant. Incorporated by reference to Exhibit 10.5.2 to Mueller Water Products, Inc. Form 10-Q for the quarter ended December 31, 2007 (File no. 001-32892) filed on February 11, 2008.
	10	.7	Mueller Water Products, Inc. Form of Restricted Stock Unit Award Agreement. Incorporated by reference to Exhibit 10.5.3 to Mueller Water Products, Inc. Form 10-Q for the quarter ended December 31, 2007 (File no. 001-32892) filed on February 11, 2008.
	10	.8	Mueller Water Products, Inc. 2006 Employee Stock Purchase Plan, as amended September 27, 2006. Incorporated by reference to Exhibit 10.5 to Mueller Water Products, Inc. Form 10-K (File no. 001-32892) filed on December 21, 2006.
	10	.9	Mueller Water Products, Inc. Directors’ Deferred Fee Plan. Incorporated by reference to Exhibit 10.7 to Mueller Water Products, Inc. 8-K (File no. 001-32892) filed on May 30, 2006.
	10	.10	Form of Mueller Water Products, Inc. Director Indemnification Agreement. Incorporated by reference to Exhibit 99.2 to Mueller Water Products, Inc. 8-K (File no. 001-32892) filed on October 31, 2008.
	10	.11	Executive Incentive Plan of Mueller Water Products, Inc. Incorporated by reference to Exhibit 10.6 to Mueller Water Products, Inc. 8-K (File no. 001-32892) filed on May 30, 2006.
	10	.12	Mueller Water Products, Inc. Executive Deferred Compensation Plan. Incorporated by reference to Exhibit 99.3 to Mueller Water Products, Inc. 8-K (File no. 001-32892) filed on October 31, 2008.
	10	.13	Employment Agreement, dated September 15, 2008 between Mueller Water Products, Inc. and Gregory E. Hyland. Incorporated by reference to Exhibit 99.1 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on October 6, 2008.

55

Exhibit
No.			Document
	10	.13.1	Amendment, dated as of March 2, 2006, to Executive Employment Agreement dated September 9, 2005 between Walter Industries, Inc. and Gregory E. Hyland. Incorporated by reference to Exhibit 10.1 to Mueller Water Products, Inc. Form 8-K (File no. 333-131521) filed on March 3, 2006.
	10	.13.2	Mueller Water Products, Inc. Supplemental Defined Contribution Plan, effective April 1, 2007. Incorporated by reference to Exhibit 10.01 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on March 27, 2007.
	10	.14	Executive Employment Agreement, dated January 23, 2006, between Mueller Holding Company, Inc. and Dale B. Smith. Incorporated by reference to Exhibit 10.2 to Mueller Water Products, LLC Form 8-K (File no. 333-116590) filed on January 27, 2006.
	10	.14.1	Amendment dated as of November 1, 2007 to Employment Agreement with Dale B. Smith dated January 23, 2006. Incorporated by reference to Exhibit 99.2 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on November 2, 2007.
	10	.14.2	Amendment No. 2 dated as of October 1, 2008 to Employment Agreement with Dale B. Smith dated January 23, 2006. Incorporated by reference to Exhibit 99.1 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on October 31, 2008.
	10	.15	Employment Agreement, dated as of September 15, 2008, between Mueller Water Products, Inc. and Robert Leggett. Incorporated by reference to Exhibit 99.1 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on September 30, 2008.
	10	.16	Executive Employment Agreement, dated as of July 16, 2008, between Mueller Water Products, Inc. and Evan L. Hart. Incorporated by reference to Exhibit 10.18 to Mueller Water Products, Inc. Form 10-Q for the quarter ended June 30, 2008 (File 001-32892) filed on August 11, 2008.
	10	.17	Employment Agreement, dated as of July 31, 2006, between Mueller Water Products, Inc. and Thomas E. Fish. Incorporated by reference to Exhibit 10.2 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on August 3, 2006.
	10	.17.1	Mueller Water Products, Inc. Special Bonus, Incentive Award and Termination Protection Program. Incorporated by reference to Exhibit 10.18 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on December 14, 2007.
	10	.18	Employment Agreement, dated September 15, 2008, between Mueller Water Products, Inc and Raymond P. Torok. Incorporated by reference to Exhibit 99.2 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892 filed on October 6, 2008.
	10	.19	Joint Litigation Agreement dated December 14, 2006 between Walter Industries, Inc. and Mueller Water Products, Inc. Incorporated by reference to Exhibit 10.3 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on December 19, 2006.
	10	.20	Form of Executive Change-in-Control Severance Agreement. Incorporated by reference to Exhibit 99.3 to Mueller Water Products, Inc. Form 8-K (File no. 001-32892) filed on October 6, 2008.
	12	.1**	Computation of Ratio of Earnings to Fixed Charges.
	14	.1**	Code of Business Conduct and Ethics for Mueller Water Products, Inc.
	21	.1**	Subsidiaries of Mueller Water Products, Inc.
	23	.1**	Consent of Ernst & Young LLP.
	23	.2**	Consent of PricewaterhouseCoopers LLP.
	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.

** Filed with this report

56

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 25, 2008

MUELLER WATER PRODUCTS, INC.

By:  /s/  Gregory E. Hyland

Name:     Gregory E. Hyland

Title:  Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Gregory E. Hyland Gregory E. Hyland	Chairman of the Board of Directors, President and Chief Executive Officer (principal executive officer)	November 25, 2008
/s/  Evan L. Hart Evan L. Hart	Senior Vice President and Chief Financial Officer (principal financial officer)	November 25, 2008
/s/  Kevin G. Mchugh Kevin G. McHugh	Vice President and Controller (principal accounting officer)	November 25, 2008
/s/  Donald N. Boyce Donald N. Boyce	Director	November 25, 2008
/s/  Howard L. Clark Howard L. Clark	Director	November 25, 2008
/s/  Jerry W. Kolb Jerry W. Kolb	Director	November 25, 2008
/s/  Joseph B. Leonard Joseph B. Leonard	Director	November 25, 2008
/s/  Mark J. O’brien Mark J. O’Brien	Director	November 25, 2008
/s/  Bernard G. Rethore Bernard G. Rethore	Director	November 25, 2008
/s/  Neil A. Springer Neil A. Springer	Director	November 25, 2008
/s/  Lydia W. Thomas Lydia W. Thomas	Director	November 25, 2008
/s/  Michael T. Tokarz Michael T. Tokarz	Director	November 25, 2008

57

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Mueller Water Products, Inc.

We have audited the accompanying consolidated balance sheet of Mueller Water Products, Inc. and subsidiaries as of September 30, 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Mueller Water Products, Inc. and subsidiaries as of September 30, 2008, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

As discussed in Note 6 to the consolidated financial statements, on October 1, 2007, the Company adopted FASB Interpretation No. 48 related to the accounting for uncertain tax positions. Also, as discussed in Note 10 to the consolidated financial statements, in fiscal year 2008 the Company adopted the measurement date related provisions of Statement of Financial Accounting Standards No. 158 related to its defined benefit pension and other postretirement plans.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Mueller Water Products, Inc.’s internal control over financial reporting as of September 30, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 25, 2008 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Atlanta, Georgia

November 25, 2008

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Mueller Water Products, Inc.

We have audited Mueller Water Products, Inc.’s internal control over financial reporting as of September 30, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Mueller Water Products, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assumed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

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 changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Mueller Water Products, Inc. maintained, in all material respects, effective internal control over financial reporting as of September 30, 2008, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Mueller Water Products, Inc. as of September 30, 2008 and the related consolidated statements of operations, stockholders’ equity and cash flows for the period ended September 30, 2008 of Mueller Water Products, Inc. and our report dated November 25, 2008 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Atlanta, Georgia

November 25, 2008

F-2

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Mueller Water Products, Inc.

In our opinion, the accompanying consolidated balance sheet as of September 30, 2007 and the related consolidated statements of operations, of stockholders’ equity and of cash flows for each of the two years in the period ended September 30, 2007 present fairly, in all material respects, the financial position of Mueller Water Products, Inc. and its subsidiaries at September 30, 2007, and the results of their operations and their cash flows for each of the two years in the period ended September 30, 2007, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 10 to the consolidated financial statements, the Company changed the manner in which it accounts for defined benefit pension and other postretirement benefit plans as of September 30, 2007.

/s/  PricewaterhouseCoopers LLP

Atlanta, Georgia

November 28, 2007

F-3

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	September 30,
	2008			2007
	(in millions)
Assets:
Cash and cash equivalents	$	183.9		$	98.9
Receivables, net		298.2			302.1
Inventories		459.4			453.5
Deferred income taxes		48.2			29.2
Other current assets		60.6			66.3
Total current assets		1,050.3			950.0
Property, plant and equipment, net		356.8			351.8
Goodwill		871.5			871.1
Identifiable intangible assets		789.8			819.3
Other noncurrent assets		21.8			17.0
Total assets	$	3,090.2		$	3,009.2
Liabilities and stockholders’ equity:
Current portion of long-term debt	$	9.7		$	6.2
Accounts payable		156.0			112.3
Other current liabilities		129.0			121.8
Total current liabilities		294.7			240.3
Long-term debt		1,085.8			1,094.3
Deferred income taxes		295.8			307.3
Other noncurrent liabilities		85.0			56.3
Total liabilities		1,761.3			1,698.2
Commitments and contingencies (Note 19)
Common stock:
Series A: 400,000,000 shares authorized, 29,528,763 shares and 29,006,267 shares outstanding at September 30, 2008 and 2007, respectively		0.3			0.2
Series B: 200,000,000 shares authorized; 85,844,920 shares outstanding at September 30, 2008 and 2007		0.9			0.9
Additional paid-in capital		1,428.9			1,422.0
Accumulated deficit		(81.6	)		(124.8	)
Accumulated other comprehensive income (loss)		(19.6	)		12.7
Total stockholders’ equity		1,328.9			1,311.0
Total liabilities and stockholders’ equity	$	3,090.2		$	3,009.2

The accompanying notes are an integral part of the consolidated financial statements.

F-4

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	Year ended September 30,
	2008		2007		2006
	(in millions, except per share amounts)
Net sales	$	1,859.3	$	1,849.0	$	1,933.4
Cost of sales		1,420.3		1,385.8		1,525.7
Gross profit		439.0		463.2		407.7
Operating expenses:
Selling, general and administrative		274.6		253.2		250.1
Restructuring		18.3		-		28.6
Total operating expenses		292.9		253.2		278.7
Income from operations		146.1		210.0		129.0
Interest expense, net		72.4		86.8		107.4
Loss on early extinguishment of debt		-		36.5		8.5
Income before taxes		73.7		86.7		13.1
Income taxes		31.7		38.5		8.0
Net income	$	42.0	$	48.2	$	5.1
Basic and diluted net income per share	$	0.36	$	0.42	$	0.05
Weighted average shares outstanding:
Basic		115.1		114.7		95.5
Diluted		115.5		115.3		95.5
Dividends declared per share	$	0.07	$	0.07	$	*

* During the year ended September 30, 2006, the Company declared dividends of $456.5 million to its owner at that time, Walter Industries, Inc.

The accompanying notes are an integral part of the consolidated financial statements.

F-5

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

									Accumulated
			Additional						other
	Common		paid-in			Accumulated			comprehensive
	stock		capital			deficit			income (loss)			Total
	(in millions)
Balance at September 30, 2005	$	-	$	68.3		$	(178.1	)	$	(45.4	)	$	(155.2	)
Net income		-		-			5.1			-			5.1
Walter Industries, Inc. investment in subsidiary		-		932.1			-			-			932.1
Dividends to Walter Industries, Inc.		-		(456.5	)		-			-			(456.5	)
Forgiveness of payable to Walter Industries, Inc.		-		443.6			-			-			443.6
Sale of common stock in initial public offering		1.1		427.8			-			-			428.9
Stock-based compensation		-		2.2			-			-			2.2
Net unrealized gain on derivatives		-		-			-			1.0			1.0
Foreign currency translation		-		-			-			1.8			1.8
Minimum pension liability		-		-			-			24.0			24.0
Balance at September 30, 2006		1.1		1,417.5			(173.0	)		(18.6	)		1,227.0
Net income		-		-			48.2			-			48.2
Dividends declared		-		(8.0	)		-			-			(8.0	)
Stock-based compensation		-		10.7			-			-			10.7
Stock issued under stock compensation plans		-		1.8			-			-			1.8
Net unrealized loss on derivatives		-		-			-			(2.1	)		(2.1	)
Foreign currency translation		-		-			-			8.2			8.2
Minimum pension liability		-		-			-			10.0			10.0
Adjustment to initially apply SFAS No. 158, net of tax		-		-			-			15.2			15.2
Balance at September 30, 2007		1.1		1,422.0			(124.8	)		12.7			1,311.0
Adjustment to adopt FASB Interpretation No. 48		-		-			0.6			-			0.6
Balance at October 1, 2007		1.1		1,422.0			(124.2	)		12.7			1,311.6
Net income		-		-			42.0			-			42.0
Effect of changing pension plans’ and other postretirement benefit plans’ measurement dates pursuant to SFAS No. 158, net of tax		-		-			0.6			-			0.6
Dividends declared		-		(8.1	)		-			-			(8.1	)
Stock-based compensation		-		13.2			-			-			13.2
Stock issued under stock compensation plans		0.1		1.8			-			-			1.9
Net unrealized loss on derivatives		-		-			-			(6.5	)		(6.5	)
Foreign currency translation		-		-			-			(2.7	)		(2.7	)
Minimum pension liability		-		-			-			(23.1	)		(23.1	)
Balance at September 30, 2008	$	1.2	$	1,428.9		$	(81.6	)	$	(19.6	)	$	1,328.9

The accompanying notes are an integral part of the consolidated financial statements.

F-6

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year ended September 30,
	2008			2007			2006
	(in millions)
Operating activities:
Net income	$	42.0		$	48.2		$	5.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		63.6			72.3			68.8
Amortization		29.5			29.1			28.1
Provision for doubtful receivables		3.7			0.8			1.8
Write-off of premium on notes		-			(22.8	)		(14.3	)
Write-off of deferred financing fees		-			11.1			4.1
Stock-based compensation expense		13.2			10.7			3.1
Accretion on debt		-			7.1			12.9
Deferred income taxes (benefit)		(4.2	)		29.6			(9.5	)
Amortization of deferred financing fees		1.7			2.5			3.1
Loss (gain) on disposal of property, plant and equipment		(0.9	)		2.6			2.1
Asset impairments		14.8			-			21.5
Other, net		1.2			(5.5	)		(3.2	)
Changes in assets and liabilities, net of acquisitions:
Receivables		(11.3	)		28.1			(27.0	)
Inventories		(18.2	)		15.0			70.4
Other assets		11.4			(0.4	)		(1.3	)
Accounts payable and other liabilities		35.5			(73.3	)		(58.1	)
Net cash provided by operating activities		182.0			155.1			107.6
Investing activities:
Capital expenditures		(88.1	)		(88.3	)		(71.1	)
Proceeds from sale of property, plant and equipment		9.6			0.8			3.6
Acquisitions of businesses, net of cash acquired		-			(26.2	)		(15.6	)
Increase in amounts due Walter Industries, Inc.		-			-			1.7
Net cash used in investing activities		(78.5	)		(113.7	)		(81.4	)
Financing activities:
Increase (decrease) in outstanding checks		(6.9	)		3.1			10.0
Debt borrowings		-			1,140.0			1,105.9
Debt payments		(5.0	)		(1,151.1	)		(1,087.8	)
Common stock issuance		1.9			1.8			428.9
Deferred financing fee payments		-			(11.4	)		(21.6	)
Dividend payments		(8.1	)		(8.0	)		(456.5	)
Contribution from Walter Industries, Inc.		-			-			76.3
Net cash provided by (used in) financing activities		(18.1	)		(25.6	)		55.2
Effect of currency exchange rate changes on cash		(0.4	)		1.7			-
Net change in cash and cash equivalents		85.0			17.5			81.4
Cash and cash equivalents at beginning of year		98.9			81.4			-
Cash and cash equivalents at end of year	$	183.9		$	98.9		$	81.4

The accompanying notes are an integral part of the consolidated financial statements.

F-7

MUELLER WATER PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

Note 1.   Organization

Mueller Water Products, Inc., a Delaware corporation, together with its consolidated subsidiaries (the “Company”) operates in three business segments: Mueller Co., U.S. Pipe and Anvil. Mueller Co. manufactures and sells fire hydrants, valves and related products used in residential water and gas systems. U.S. Pipe manufactures and sells a broad line of ductile iron pipe, restrained joint products, fittings and other products. Anvil manufactures and sells a variety of pipe fittings, couplings, pipe hangers, pipe nipples and related products.

On October 3, 2005, Walter Industries, Inc. (“Walter Industries”) acquired all outstanding shares of a predecessor company comprising the current Mueller Co. and Anvil businesses (the “Mueller Acquisition”) and contributed them to its U.S. Pipe business to form the Company as it currently exists. The acquired businesses are included in the Consolidated Results of Operations beginning October 3, 2005. The Company completed an initial public offering of its Series A common stock (NYSE: MWA) on June 1, 2006 and on December 14, 2006, Walter Industries, Inc. (“Walter Industries”) distributed all of the Company’s outstanding Series B common stock (NYSE: MWA.B) to the shareholders of Walter Industries (the “Spin-off”).

The Company completed several other business acquisitions since the beginning of fiscal 2006, each of which has been included in the Consolidated Results of Operations as of its respective acquisition date.

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses and the disclosure of contingent assets and liabilities for the reporting periods. Actual results could differ from those estimates. All significant intercompany balances and transactions have been eliminated. Certain reclassifications have been made to previously reported amounts to conform to the current year presentation.

Note 2.   Summary of Significant Accounting Policies

Revenue Recognition—The Company recognizes revenue when delivery of products has occurred or services have been rendered and there is persuasive evidence of a sales arrangement, selling prices are fixed or determinable and collectibility from the customer is reasonably assured. Revenue is recorded net of estimated cash discounts and rebates.

Shipping and Handling—Costs to ship products to customers are included in cost of sales in the accompanying Consolidated Statements of Operations. Amounts billed to customers, if any, to cover shipping and handling costs are included in net sales.

Stock-based Compensation—The Company records compensation expense for stock-based awards granted to employees based on the fair value at the grant dates. The Company records stock-based compensation expense as a selling, general and administrative expense.

Cash and Cash Equivalents—The Company considers all highly liquid investments with original maturities of 90 days or less when purchased to be cash equivalents. Outstanding checks are netted against cash when there is a sufficient balance of cash available in the Company’s accounts at the bank to cover the outstanding checks and the right of offset exists. Where there is no right of offset against cash balances, outstanding checks are included in accounts payable. At September 30, 2008 and 2007, checks issued but not yet presented to the banks for payment (i.e., the net dollar value of bank checks outstanding) were $6.2 million and $13.1 million, respectively, and were included in accounts payable.

F-8

Receivables—Receivables relate primarily to amounts due from customers located in North America. To reduce credit risk, credit investigations are generally performed prior to accepting orders from new customers and, when necessary, letters of credit are required to ensure payment.

The estimated allowance for doubtful receivables is based upon judgments and estimates of expected losses and specific identification of problem accounts. Significantly weaker than anticipated industry or economic conditions could impact customers’ ability to pay such that actual losses may be greater than the amounts provided for in this allowance. The periodic evaluation of the adequacy of the allowance for doubtful receivables is based on an analysis of prior collection experience, specific customer creditworthiness and current economic trends within the industries served. In circumstances where a specific customer’s inability to meet its financial obligation is known to the Company (e.g., bankruptcy filings or substantial downgrading of credit ratings), the Company records a specific allowance to reduce the receivable to the amount management reasonably believes will be collected.

The following table summarizes information concerning the Company’s allowance for doubtful receivables.

	Year ended September 30,
	2008			2007			2006
	(in millions)
Balance at beginning of year	$	4.9		$	4.8		$	0.9
Balance of acquired businesses		-			-			5.0
Provision charged to expense		3.7			0.8			1.8
Balances written off, net of recoveries		(1.9	)		(0.7	)		(2.9	)
Balance at end of year	$	6.7		$	4.9		$	4.8

Inventories—Inventories are recorded at the lower of cost (first-in, first-out method) or market value. Additionally, the Company evaluates its inventory in terms of excess and obsolete exposures. This evaluation includes such factors as anticipated usage, inventory turnover, inventory levels and ultimate product sales value. Inventory cost includes an overhead component that is affected by levels of production and actual costs incurred. Management periodically evaluates the effects of production levels and costs capitalized as part of inventory.

The following table summarizes information concerning the Company’s reserves for excess and obsolete inventories and to reduce inventory balances to the lower of cost or market.

	Year ended September 30,
	2008			2007			2006
	(in millions)
Balance at beginning of year	$	32.3		$	29.0		$	4.3
Balance of acquired businesses		-			-			22.8
Provision charged to expense		3.3			9.4			16.1
Amounts written off		(3.4	)		(10.1	)		(14.7	)
Other adjustments		(0.2	)		4.0			0.5
Balance at end of year	$	32.0		$	32.3		$	29.0

Prepaid Expenses—Prepaid expenses include maintenance supplies and tooling inventory costs. Costs for perishable tools and maintenance items are expensed when put into service. Costs for more durable items are amortized over their estimated useful lives, ranging from 3 to 10 years.

Property, plant and equipment—Property, plant and equipment is recorded at cost, less accumulated depreciation and amortization. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets. Estimated useful lives are 10 to 20 years for land improvements, 10 to 40 years for buildings and 3 to 15 years for machinery and equipment. Leasehold improvements are amortized using the

F-9

straight-line method over the lesser of the useful life of the improvement or the remaining lease term. Gains and losses upon disposition are reflected in operating results in the period of disposition.

The Company capitalizes interest costs associated with large asset construction projects. Capitalized interest is treated as a component of the related asset’s cost and depreciated accordingly.

Direct internal and external costs to implement computer systems and software are capitalized as incurred. Capitalized costs are depreciated over the estimated useful life of the system or software, generally 3 to 5 years, beginning when site installation or module development is complete and ready for use.

Liabilities are recognized at fair value for asset retirement obligations related to plant and landfill closures in the period in which they are incurred and the carrying amounts of the related long-lived assets are correspondingly increased. Over time, the liabilities are accreted to their estimated future values. At September 30, 2008 and 2007, asset retirement obligations were $3.0 million and $4.0 million, respectively.

Accounting for the Impairment of Long-Lived Assets—Management tests long-lived assets, including goodwill and intangible assets that have an indefinite life, for impairment annually (or more frequently if events or circumstances indicate possible impairments). Finite-lived intangible assets are amortized over their respective estimated useful lives and reviewed if events or circumstances indicate possible impairment. We perform our annual impairment testing at September 1.

Management tests goodwill for possible impairment by first determining the fair value of the related reporting unit and comparing this value to the recorded net assets of the reporting unit, including goodwill. Fair value is determined using a combination of a discounted cash flow model and stock market comparable valuations for a peer group of companies. Significant judgments and estimates must be made when estimating future cash flows, determining the appropriate discount rate and identifying appropriate stock market comparable companies. Management concluded that the Company’s goodwill had not been impaired at September 1, 2008.

Management also evaluated the reasonableness of its determination of fair values for the Company’s reporting units compared to the stock market capitalization at September 1, 2008 and during the period thereafter. These stock market capitalizations were significantly lower than the fair values determined by management. The fair value of an entity can be greater than its market capitalization for various reasons, one of which is the concept of a control premium. Substantial value may arise from the ability to take advantages of synergies and other benefits that flow from control over another entity. Management also believes the general downturn in U.S. equity markets resulting from the recent credit and liquidity crisis, which management believes has also affected the Company’s stock market valuation, is not representative of any fundamental change in the Company’s businesses. Management cannot predict with any reasonable degree of confidence when the effects of these recent economic events will subside or when the price of the Company’s common stock will be more representative of what management believes to be the Company’s fair value. Changes in management’s assumptions underlying its estimates of fair value, which will be a function of the Company’s future financial performance and changes in economic conditions, could result in a future impairment charge.

Workers Compensation—The Company’s exposure to workers compensation claims is generally limited to $1 million per incident. Liabilities, including those related to claims incurred but not reported, are recorded principally using annual valuations based on discounted future expected payments and using historical data or combined with insurance industry data when historical data is limited. The Company is indemnified by a predecessor to Tyco International Ltd. (“Tyco”) for all workers compensation liabilities related to incidents that occurred prior to August 16, 1999. See Note 19. On an undiscounted basis, workers compensation liabilities were $25.4 million and $25.2 million at September 30, 2008 and 2007, respectively. On a discounted basis, workers compensation liabilities were $22.2 million and $21.8 million at September 30, 2008 and 2007, respectively.

The Company applies a discount rate at a risk-free interest rate, generally a U.S. Treasury bill rate, for each policy year. The rate used is one with a duration that corresponds to the weighted average expected payout period for each policy year. Once a discount rate is applied to a policy year, it remains the discount

F-10

rate for that policy year until all claims are paid. The use of this method decreases the volatility of the liability related solely to changes in the discount rate.

Warranty Costs—The Company accrues for warranty expenses that can include customer costs of repair and/or replacement, including labor, materials, equipment, freight and reasonable overhead costs. The Company accrues for the estimated cost of product warranties at the time of sale if such costs are determined to be reasonably estimable at that time. Warranty cost estimates are revised throughout applicable warranty periods as better information regarding warranty costs becomes available.

Activity in accrued warranty, reported as part of other current liabilities, is presented below.

	Year ended September 30,
	2008			2007			2006
	(in millions)
Balance at beginning of year	$	3.7		$	2.7		$	4.7
Balance at acquired businesses		-			-			1.6
Warranty expense		8.2			6.3			3.1
Warranty payments		(5.4	)		(5.3	)		(6.7	)
Balance at end of year	$	6.5		$	3.7		$	2.7

Deferred Financing Fees—Costs of debt financing are charged to expense over the life of the related financing agreements, which range from 5 to 10 years. Remaining costs and the future period over which they would be charged to expense are reassessed when amendments to the related financing agreements or prepayments occur.

Derivative Instruments and Hedging Activities—Changes in the fair value of derivative instruments that are accounted for as effective hedges are recorded to accumulated other comprehensive income and changes in the fair value of derivative instruments that are not accounted for as effective hedges are recorded to operating results as incurred.

The Company uses interest rate swap agreements, natural gas swap contracts and foreign currency forward contracts to hedge against certain risks. The interest rate and natural gas contracts are accounted for as effective cash flow hedges.

Income Taxes—Deferred tax liabilities and deferred tax assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Such liabilities and assets are determined based on the differences between the financial statement basis and the tax basis of assets and liabilities, using tax rates in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

In accordance with Financial Accounting Standards Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes – an Interpretation of SFAS No. 109 (“FIN 48”), the Company only records tax benefits for positions that management believes are more likely than not of being sustained under audit examination based solely on the technical merits of the associated tax position. The amount of tax benefit recognized for any position that meets the more likely than not threshold is the largest amount of the tax benefit that we believe is greater than 50% likely of being realized. The Company includes any related interest as interest expense, net and any penalties are recorded as income tax expense.

Environmental Expenditures—The Company capitalizes environmental expenditures that increase the life or efficiency of property or that reduce or prevent environmental contamination. The Company accrues for environmental expenses resulting from existing conditions that relate to past operations when the costs are probable and reasonably estimable. The Company is indemnified by Tyco for all environmental liabilities that existed at August 16, 1999. See Note 19.

Research and Development—Research and development costs are expensed as incurred.

Advertising—Advertising costs are expensed as incurred.

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Translation of Foreign Currency—Assets and liabilities of the Company’s businesses whose functional currency is other than the U.S. dollar are translated into U.S. dollars using year end currency exchange rates. Revenues and expenses are translated at average currency exchange rates during the year. Foreign currency translation gains and losses are reported as a component of accumulated other comprehensive income. Gains and losses resulting from foreign currency transactions are included in operating results as incurred.

Related Party Transactions—The Company purchases foundry coke from Sloss Industries, Inc. (“Sloss”), which was an affiliate of the Company until the Spin-off. Purchases from Sloss were $4.5 million during the portion of the year ended September 30, 2007 through the date of the Spin-off and were $21.2 million for the year ended September 30, 2006.

Sloss also provided other services to the Company, including the delivery of electrical power to one of the Company’s facilities, rail car switching and the leasing of a distribution facility. Income from operations includes expenses of $0.3 million for the portion of the year ended September 30, 2007 through the date of the Spin-off and $1.9 million for the year ended September 30, 2006 related to these other services provided by Sloss.

Walter Industries allocated $0.5 million and $2.0 million for the years ended September 30, 2007 and 2006, respectively, for certain costs such as insurance, executive salaries, professional service fees, human resources, transportation, healthcare and other centralized business functions to U.S. Pipe. Walter Industries allocated other indirect costs of $1.6 million and $8.0 million during the years ended September 30, 2007 and 2006, respectively, to U.S. Pipe. All of these allocations from Walter Industries were recorded in selling, general and administrative expenses. Subsequent to the Spin-off, Walter Industries was no longer considered a related party and the allocation of these costs to the Company ceased.

Certain of the Company’s employees had been granted Walter Industries restricted stock units and stock options under Walter Industries’ share-based compensation plans. The Company had $0.6 million and $0.8 million in expenses related to this stock-based compensation allocated from Walter Industries for the years ended September 30, 2007 and 2006, respectively. In connection with the Spin-off, Walter Industries cancelled these instruments and the Company replaced them with restricted stock units and options to acquire shares of the Company’s Series A common stock under a predecessor to the Mueller Water Products, Inc. Amended and Restated 2006 Stock Incentive Plan.

Note 3.   Acquisitions

Year ended September 30, 2007

Fast Fabricators, Inc. — On January 4, 2007, the Company acquired the net assets of Fast Fabricators, Inc. (“Fast Fabricators”), a ductile iron pipe fabricator based in Connecticut, for $23.0 million in cash, net of cash acquired. The purchase price was subject to an earnout adjustment based on calendar 2007 operating results. None of the earnout amount was earned. The identifiable intangible assets acquired represented customer relationships, which are amortized over a 12-year life and a trade name and trademark, which has an indefinite life.

Star Pipe, Inc. — As part of the January 2004 acquisition of Star Pipe, Inc. (“Star”), the purchase price was subject to an earnout adjustment based on a target gross profit amount. During the year ended September 30, 2007, $3.7 million was paid as the final payment for the earnout adjustment.

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The purchase price allocations for these acquisitions are presented below.

	Estimated fair values
	of net assets acquired
	Fast
	Fabricators			Star
	(in millions)
Current assets	$	10.5		$	-
Property, plant and equipment		1.8			-
Goodwill		0.5			3.7
Identifiable intangible assets		13.1			-
Current liabilities		(2.9	)		-
Net assets acquired	$	23.0		$	3.7

Year ended September 30, 2006

CCNE, L.L.C. — On January 27, 2006, the Company acquired the operating assets of CCNE, L.L.C. (“CCNE”), a manufacturer of check valves based in Connecticut, for $8.8 million in cash. The identifiable intangible assets acquired represented purchased technology and are being amortized over an estimated useful life of 55 months.

Hunt Industries, Inc. — On January 4, 2006, the Company acquired Hunt Industries, Inc. (“Hunt”), a manufacturer of meter pits and meter yokes based in Tennessee, for $6.8 million in cash.

Mueller Acquisition — On October 3, 2005, Walter Industries completed the Mueller Acquisition by paying $944.0 million in cash and assuming $1.05 billion of indebtedness. Transaction costs included in the acquisition price were $15.4 million. In February 2006, Walter Industries received $10.5 million based on the final closing cash and working capital, adjusting the total purchase price to $933.5 million.

The purchase price allocations for these acquisitions are presented below.

	Estimated fair values of
	net assets acquired
						Mueller
	CCNE		Hunt			Acquisition
	(in millions)
Current assets	$	2.1	$	0.2		$	550.6
Property, plant and equipment		-		-			214.2
Goodwill		-		6.8			802.1
Identifiable intangible assets		6.7		-			856.9
Other assets		-		-			350.7
Current liabilities		-		(0.2	)		-
Debt		-		-			(1,572.7	)
Deferred tax liabilities		-		-			(268.3	)
Net assets acquired	$	8.8	$	6.8		$	933.5

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Note 4.   Goodwill and Identifiable Intangible Assets

Goodwill activity is presented below.

	Year ended September 30,
	2008		2007
	(in millions)
Balance at beginning of year	$	871.1	$	866.0
Acquisition of Fast Fabricators		-		0.5
Earnout payment from acquisition of Star Pipe		-		3.7
Reversal of restructuring accruals		-		(1.2	)
Adoption of FIN 48		0.4		-
Other tax adjustments		-		2.1
Balance at end of year	$	871.5	$	871.1

Other tax adjustments of $2.1 million during the year ended September 30, 2007 primarily represented state tax matters that related to periods prior to the Mueller Acquisition.

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Identifiable intangible assets are presented below.

	September 30,
	2008		2007
	(in millions)
Cost:
Finite lived intangible assets:
Technology	$	63.0	$	63.0
Customer relationships		409.2		409.2
Indefinite-lived intangible assets:
Trade names and trademarks		404.5		404.5
		876.7		876.7
Accumulated amortization:
Technology		20.9		13.8
Customer relationships		66.0		43.6
		86.9		57.4
Net book value	$	789.8	$	819.3

At September 30, 2008, the remaining weighted-average amortization period for the finite-lived intangible assets was 17.2 years. Amortization expense related to finite-lived intangible assets was $29.5 million, $29.1 million and $28.1 million for the years ended September 30, 2008, 2007 and 2006, respectively. Amortization expense for each of the next five years ending September 30 is scheduled to be $29.6 million in 2009, $29.6 million in 2010, $29.3 million in 2011, $28.1 million in 2012 and $28.1 million in 2013.

Note 5.   Restructuring Activities

Activity in accrued restructuring is presented below.

	Year ended September 30,
	2008			2007			2006
	(in millions)
Balance at beginning of year	$	0.9		$	3.1		$	-
Additions charged against operations		18.3			-			28.6
Additions (reductions) charged to goodwill		-			(0.6	)		9.0
Reductions credited against operations		(0.3	)		-			-
Reductions credited against assets		(14.8	)		-			(21.5	)
Payments		(3.2	)		(1.6	)		(13.0	)
Balance at end of year	$	0.9		$	0.9		$	3.1

In November 2007, the Company announced its intent to cease U.S. Pipe’s ductile iron pipe manufacturing operations in Burlington, New Jersey, eliminating approximately 180 jobs. These manufacturing operations ceased during the year ended September 30, 2008. This facility continues to be used as a full-service distribution center for customers in the Northeast. In connection with this action, total restructuring charges of approximately $19 million are expected, consisting of approximately $15 million of asset impairment charges and approximately $4 million of employee-related and other charges. The $18.3 million in restructuring charges recorded during the year ended September 30, 2008 consisted of $14.8 million of asset impairment charges and $3.5 million of employee-related and other charges, $2.8 million of which was paid during the year ended September 30, 2008. Future related restructuring charges are not expected to be material.

F-15

In November 2006, the Company announced its intent to relocate Anvil’s pipe nipple and merchant coupling production in its Canvil manufacturing facility in Ontario, Canada to its Beck facility in Pennsylvania, eliminating approximately 90 jobs. The consolidation of these product lines in the Beck facility was completed during the year ended September 30, 2007. Severance of $1.8 million was recorded as an adjustment to goodwill during the year ended September 30, 2006. During the year ended September 30, 2007, the Company revised its estimate of severance and decreased goodwill and accrued severance by $0.6 million. The Company paid $0.4 million and $0.9 million of the above-mentioned severance during the years ended September 30, 2008 and 2007, respectively.

In October 2006, the Company announced its intent to close Mueller Co.’s James Jones manufacturing facility in El Monte, California, eliminating approximately 155 jobs. This facility’s production of brass products and hydrants was transferred to Decatur, Illinois and Albertville, Alabama plants during the year ended September 30, 2007. Total costs related to this closure were $2.5 million, of which $0.2 million of severance and $0.5 million of asset impairment charges were recorded as adjustments to goodwill during the year ended September 30, 2006. Other costs of approximately $1.8 million associated with relocating the El Monte inventory and equipment were expensed as incurred.

In April 2006, the Company announced its intent to close Mueller Co.’s valve and hydrant manufacturing facility in Milton, Ontario, Canada. This facility closed during the year ended September 30, 2006, resulting in the elimination of approximately 130 jobs. Total costs related to this closure were $4.5 million, including $2.5 million of severance, $0.2 million of asset impairment charges and $0.6 million of lease run-out costs recorded as adjustments to goodwill during the year ended September 30, 2006. Other costs of $1.2 million to relocate the Milton inventory and equipment were expensed as incurred.

In January 2006, the Company announced its intent to close Mueller Co.’s Henry Pratt valve manufacturing facility in Dixon, Illinois. This facility was closed during the year ended September 30, 2007. Total costs related to this closure were $3.7 million, including $1.0 million of severance and $1.7 million of asset impairment charges recorded as adjustments to goodwill during the year ended September 30, 2006. Other costs of $1.0 million to relocate equipment and temporary outsourcing of manufacturing were expensed as incurred. The Company paid $0.5 million of the above-mentioned severance during the year ended September 30, 2007.

In October 2005, Walter Industries announced its intent to close U.S. Pipe’s Chattanooga, Tennessee plant and transfer the valve and hydrant production of that plant to Mueller Co.’s Chattanooga, Tennessee and Albertville, Alabama plants. This facility was closed during the year ended September 30, 2006, resulting in the elimination of approximately 340 jobs. Total costs related to this closure were $49.9 million of which $28.6 million for severance and asset impairment charges were reported as restructuring charges during the year ended September 30, 2006. Other costs of $21.3 million included $11.4 million of inventory write-downs, $9.0 million of unabsorbed overhead costs written off and $0.9 million of other costs and were reported as cost of sales during the year ended September 30, 2006. The Company paid $0.5 million of the above-mentioned severance during the year ended September 30, 2007.

Note 6.   Income Taxes

The components of income before taxes are presented below.

	Year ended September 30,
	2008		2007		2006
	(in millions)
U.S.	$	68.7	$	83.4	$	6.8
Non-U.S.		5.0		3.3		6.3
Income before taxes	$	73.7	$	86.7	$	13.1

F-16

Income tax expense (benefit) is presented below.

	Year ended September 30,
	2008			2007		2006
	(in millions)
Current:
U.S.:
Federal	$	25.3		$	5.5	$	23.6
State and local		4.8			2.2		7.0
Non-U.S.		5.8			1.2		2.3
		35.9			8.9		32.9
Deferred:
U.S.:
Federal		(4.4	)		24.7		(19.0	)
State and local		2.6			4.9		(5.7	)
Non-U.S.		(2.4	)		-		(0.2	)
		(4.2	)		29.6		(24.9	)
Income taxes	$	31.7		$	38.5	$	8.0

The reconciliation between the U.S. federal statutory income tax rate and the effective tax rate is presented below.

	Year ended September 30,
	2008			2007			2006
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Adjustments to reconcile to the effective tax rate:
State income taxes, net of federal benefit		6.5			5.3			6.4
Nondeductible interest		-			1.6			20.3
Nondeductible compensation		2.0			3.1			-
U.S. manufacturing deduction		(2.3	)		(0.6	)		(7.8	)
Foreign income taxes		1.6			0.4			2.5
Other nondeductible expenses		1.0			-			4.3
Other		(0.8	)		(0.4	)		0.4
Effective tax rate		43.0	%		44.4	%		61.1	%

F-17

Deferred income tax assets (liabilities) are presented below.

	September 30,
	2008			2007
	(in millions)
Deferred income tax assets:
Allowances for losses on receivables	$	3.7		$	1.8
Inventories		16.0			18.1
Accrued expenses		24.6			23.8
Pension and other postretirement benefits		16.3			10.9
Stock compensation		8.7			-
All other		10.1			-
		79.4			54.6
Valuation allowance		(4.3	)		-
Total deferred income tax assets		75.1			54.6
Deferred income tax liabilities:
Identifiable intangible assets		(282.0	)		(288.6	)
Property, plant and equipment		(40.2	)		(44.1	)
Other		(0.5	)		-
Total deferred income tax liabilities		(322.7	)		(332.7	)
Net deferred income tax liabilities	$	(247.6	)	$	(278.1	)

A valuation allowance has been provided on deferred tax assets at September 30, 2008 since management believes it is more likely than not that a portion of the Company’s deferred tax asset associated with the Mueller Water Products, Inc. Amended and Restated 2006 Stock Incentive Plan will not be realized due to limitation on deductibility of executive compensation provided in Internal Revenue Code Section 162(m). Management has estimated that $4.3 million of the stock compensation deferred tax asset will be subject to this limitation based on projected executive compensation subject to the annual limitation and the restricted stock unit vesting schedule. Management believes that it will be able to recover all other deferred tax assets through taxable earnings from operations.

Activity in the valuation allowance for deferred tax assets is described below.

	September 30,
	2008		2007
	(in millions)
Balance at beginning of year	$	-	$	-
Additions		4.3		-
Deductions		-		-
Balance at end of year	$	4.3	$	-

For federal income tax purposes, through December 15, 2006, the Company was included in the consolidated income tax return with Walter Industries and its subsidiaries. The income tax provision for the year ended September 30, 2007 has been presented as if the Company filed on a stand alone basis for the period included in the Walter Industries returns. For the year ended September 30, 2008, the Company will file a consolidated U.S. corporate income tax return, combined or unitary state income tax returns where required, and separate company income tax returns in Canada, China and most U.S. states.

The Company has state net operating loss carryforwards of approximately $81.7 million expiring beginning 2010. These loss carryforwards are subject to limitations in certain jurisdictions under Section 382 of the Internal Revenue Code. State net operating loss carryforwards of $73.3 million expire after 2012, and management believes that all net operating loss carryforwards will be utilized before they expire.

The cumulative amount of undistributed earnings of foreign subsidiaries for which United States income taxes have not been provided was approximately $103.5 million at September 30, 2008. It is not currently practical to

F-18

estimate the amount of unrecognized deferred United States income taxes that might be payable on the repatriation of these earnings.

On October 1, 2007, the Company adopted the provisions FIN 48. As a result, the Company recorded a net increase of $1.0 million in the liability for unrecognized income tax benefits, a $0.6 million increase in the accumulated deficit and an increase of $0.4 million to goodwill.

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits is presented below.

	September 30,
	2008
	(in millions)
Balance at October 1, 2007	$	22.3
Increases related to prior year positions		3.4
Decreases related to prior year positions		(0.1	)
Increases related to current year positions		0.7
Payments		(4.0	)
Balance at end of year	$	22.3

The gross amount of unrecognized tax benefits at September 20, 3008 includes $9.3 million of gross unrecognized tax benefit that, if recognized, would impact the effective tax rate.

The Company is in the process of filing prior year state income tax returns and expects to settle certain state tax audits within the next 12 months. Management believes it is reasonably possible that these filings and audit settlements will reduce the gross unrecognized tax benefits by approximately $10.0 million within the next 12 months.

The Company recognizes interest related to uncertain tax positions as interest expense and would recognize any penalties that may be incurred as a component of selling, general, and administrative expenses. At September 30, 2008, the Company had approximately $3.2 million of accrued interest related to unrecognized tax benefits, of which $1.4 million was accrued during the year ended September 30, 2008.

Mueller Co. and Anvil are currently under audit by the Internal Revenue Service for tax years ended September 30, 2005 and October 3, 2005. Federal income tax returns for Mueller Co. and Anvil are closed for years prior to 2005. U.S. Pipe is not currently under audit by the Internal Revenue Service, but remains subject to statute extension agreements that may be applicable to Walter Industries.

The Company’s state income tax returns are generally closed for years prior to 2005, except for those states in which prior year returns are currently being filed. Those state returns remain open for years back to 2003. The Company’s Canadian income tax returns are generally closed for years prior to 2003.

F-19

Note 7.   Borrowing Arrangements

Outstanding borrowings are presented below.

	September 30,
	2008			2007
	(in millions)
2007 Credit Agreement:
Term Loan A	$	141.6		$	141.6
Term Loan B		526.7			532.1
73/8% Senior Subordinated Notes		425.0			425.0
Other		2.2			1.8
		1,095.5			1,100.5
Less current portion		(9.7	)		(6.2	)
Long-term debt	$	1,085.8		$	1,094.3

2007 Credit Agreement—On May 24, 2007, the Company entered into a credit agreement (the “2007 Credit Agreement”) consisting of a $300 million senior secured revolving credit facility (the “Revolver”), a $150 million term loan (the “Term A Loan”) and a $565 million term loan (the “Term B Loan”). The 2007 Credit Agreement contains customary covenants and events of default, including covenants that limit the Company’s ability to incur debt, pay dividends and make investments. Management believes the Company is compliant with these covenants at September 30, 2008 and expects to remain in compliance for the foreseeable future. Substantially all of the Company’s real and personal property has been pledged as collateral under the 2007 Credit Agreement.

The Revolver terminates in May 2012 and bears interest at a floating rate equal to LIBOR plus a margin ranging from 1.0% to 1.75% depending on the Company’s leverage ratio as defined in the 2007 Credit Agreement. For any unused portion of the Revolver, the Company also pays a commitment fee ranging from 0.2% to 0.5% (0.375% at September 30, 2008), depending on the Company’s leverage ratio as defined in the 2007 Credit Agreement. There were no outstanding borrowings under the Revolver at September 30, 2008 or 2007.

The Term A Loan matures in May 2012 and bears interest at a floating rate equal to LIBOR plus a margin ranging from 1.0% to 1.75% (1.5% at September 30, 2008) depending on the Company’s leverage ratio. The principal balance is scheduled to be repaid with quarterly payments of $3.5 million commencing September 2009 with the remaining balance paid at maturity. At September 30, 2008, the weighted-average effective interest rate was 4.86%, including the margin and the effects of interest rate swap contracts. Since the Term A Loan is not traded and has different terms and cash flows than the Term B Loan, management concludes it is not practicable to calculate a meaningful fair value of the Term A Loan.

The Term B Loan matures in May 2014 and bears interest at a floating rate equal to LIBOR plus a margin of 1.75%. The principal balance is being repaid in quarterly payments of approximately $1.3 million with the remaining balance paid at maturity. At September 30, 2008, the weighted-average effective interest rate was 6.38%, including the margin and the effects of interest rate swap contracts. Based on information provided by an external source, management estimates the fair value of the Term B Loan was $472.3 million at September 30, 2008.

73/8% Senior Subordinated Notes — On May 24, 2007, the Company completed a private placement of $425.0 million principal face amount of senior subordinated notes maturing June 1, 2017. On October 1, 2007, the Company exchanged these notes for notes registered with the Securities and Exchange Commission with substantially identical terms (the “Senior Notes”). The Senior Notes bear interest at 7.375%, paid semi-annually. Based on quoted market prices, the Senior Notes had a fair market value of $335.7 million at September 30, 2008.

The indenture securing the Senior Notes contains customary covenants and events of default, including covenants that limit the Company’s ability to incur debt, pay dividends and make investments. Management believes the Company is compliant with these covenants at September 30, 2008 and expects to remain in compliance for the foreseeable future. Substantially all of the Company’s United States subsidiaries guarantee the Senior Notes.

Future maturities of outstanding borrowings at September 30, 2008 for each of the years ending September 30 are $9.7 million during 2009, $20.1 million during 2010, $19.9 million during 2011, $115.2 million during 2012, $5.3 million during 2013 and $925.3 million after 2013.

F-20

Note 8.   Derivative Financial Instruments

The Company is exposed to certain risks relating to its ongoing business operations that it manages to some extent using derivative instruments. These are derivative instruments are interest rate risk, foreign exchange risk and commodity price risk. The Company enters into interest rate swap contracts to manage interest rate risk associated with the Company’s variable-rate borrowings. The Company enters into natural gas swap contracts to manage the price risk associated with future purchases of natural gas used in the Company’s manufacturing processes. The Company enters into foreign currency forward exchange contracts to manage foreign currency exchange risk associated with the Company’s Canadian-dollar denominated intercompany loans.

The Company has designated its interest rate swap contracts and natural gas swap contracts as cash flow hedges of its future interest payments and purchases of natural gas, respectively. As a result, the effective portion of the gain or loss on these contracts is reported as a component of other comprehensive income and reclassified into earnings in the same periods during which the hedged transactions affect earnings. Gains and losses on those contracts representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

The Company’s interest rate swap contracts result in payments of interest at fixed rates ranging from 3.0% to 5.1%, and expire at various dates from October 2008 to September 2012. The Company’s outstanding interest rate swap contracts at September 30, 2008 and 2007 are presented below.

	Hedged loan principal
	September 30,
Rate benchmark	2008		2007
	(in millions)
90-day LIBOR	$	475.0	$	325.0

The effects of the Company’s interest rate swap contracts on the consolidated statements of operations are presented below.

	Year ended September 30,
	2008			2007			2006
	(in millions)
Gain (loss) recognized in other comprehensive income	$	(14.0	)	$	(1.2	)	$	1.6
Gain (loss) reclassified from accumulated other comprehensive income into income		(4.1	)		2.2			0.4
Ineffectiveness gain (loss) recognized in income		-			-			0.9

The Company’s natural gas swap contracts result in fixed natural gas purchase prices ranging from $9.235 per MMBtu to $10.040 per MMBtu through September 2009. The Company’s outstanding natural gas swap contracts at September 30, 2008 and 2007 are presented below.

	Hedged MMBtu
	September 30,
Commodity index	2008		2007
NYMEX natural gas		669,000		476,000

The effects of the Company’s natural gas swap contracts on the consolidated statements of operations are presented below.

	Year ended September 30,
	2008			2007			2006
	(in millions)
Loss recognized in other comprehensive income	$	(1.8	)	$	(0.2	)	$	-
Gain (loss) reclassified from accumulated other comprehensive income into income		0.9			-			-
Ineffectiveness loss recognized in income		(0.1	)		-			-

F-21

The Company’s outstanding foreign currency forward contracts at September 30, 2008 and 2007 are presented below.

	Hedged loan principal
	September 30,
Currency	2008		2007
	(in millions)
Canadian dollar	$	27.6	$	34.2

The Company recorded net gains of $1.3 million for the year ended September 30, 2008 and net losses of $3.2 million and $1.3 million for the years ended September 30, 2007 and 2006, respectively, in connection with these contracts, which are included in selling, general, and administrative expenses, where they offset the transaction losses and gains recorded in connection with the intercompany loans.

The fair values of the Company’s derivative contracts are presented below (in millions).

	September 30, 2008			September 30, 2007
		Fair			Fair
	Balance sheet location	value		Balance sheet location	value
Asset derivatives:
Derivatives not designated as hedging instruments:
Foreign currency forwards	Other noncurrent assets	$	1.2		$	-
Liability derivatives:
Derivatives designated as hedging instruments:
Interest rate swaps	Other noncurrent liabilities	$	11.6	Other noncurrent liabilities	$	1.7
Natural gas swaps	Other noncurrent liabilities		1.2	Other noncurrent liabilities		0.2
			12.8			1.9
Derivatives not designated as hedging instruments:
Foreign currency forwards			-	Other noncurrent liabilities		4.0
		$	12.8		$	5.9

Note 9.   Deferred Financing Fees

In connection with its debt refinancing in May 2007, the Company wrote off $11.1 million of deferred financing fees related to a previous credit agreement and capitalized additional financing fees of $11.5 million related to the 2007 Credit Agreement and the senior subordinated notes that became the Senior Notes. The amortization of deferred financing fees is charged to interest expense over the terms of the related debt agreements. At September 30, 2008, unamortized deferred financing fees were $10.7 million, and are scheduled to be amortized over the next five years ending September 30 as follows: $1.7 million during 2009, $1.7 million during 2010, $1.7 million during 2011, $1.4 million during 2012 and $1.0 million during 2013.

During the year ended September 30, 2006, the Company wrote off $4.1 million of deferred financing fees pursuant to the partial early redemption of outstanding borrowings under a then-existing credit agreement.

F-22

Note 10.   Retirement Plans

The Company has various pension and profit sharing plans covering substantially all employees (the “Plans”). The Company funds its retirement and employee benefit plans in accordance with the requirements of the Plans and, where applicable, in amounts sufficient to satisfy the minimum funding requirements of applicable law. The Plans provide benefits based on years of service and compensation or at stated amounts for each year of service.

The Company also provides certain postretirement benefits other than pensions, primarily healthcare, to eligible retirees. The Company’s postretirement benefit plans are funded as benefits are paid.

During the three months ended March 31, 2008, the Company’s actuary revised its analysis to account for the shutdown of manufacturing operations at U.S. Pipe’s Burlington facility. The revised analysis resulted in a decrease in the funded status of the plan of $7.7 million and an after-tax decrease in accumulated other comprehensive income of $4.6 million. The Company recorded pension plan curtailment expense of $1.2 million, partially offset by an other postretirement benefit plan curtailment gain of $0.8 million, which were included in restructuring charges for the year ended September 30, 2008.

During the three months ended December 31, 2007, the Company amended a retiree medical coverage plan for U.S. Pipe employees to eliminate the payment of benefits beyond age 65. This amendment decreased the Company’s liability to the plan by $8.8 million and resulted in an after-tax increase in accumulated other comprehensive income of $5.4 million. The Company also amended another plan for employees at its Decatur, Illinois facility. This amendment provided additional employee benefits and, as a result, the Company recorded a decrease in the funded status of the plan of $2.4 million and an after-tax decrease in accumulated other comprehensive income of $1.5 million.

For the year ended September 30, 2008, the measurement date for all Plans and other postretirement plans was September 30. For years ended September 30, 2007 and 2006, the measurement date for the U.S. Pipe pension plans and all other non-pension postretirement benefit plans was June 30, and the measurement date for all other pension plans was September 30. The Company recorded an adjustment to retained earnings of $0.6 million to account for the change in measurement date pursuant the adoption of FASB No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (“SFAS 158”).

Information for pension plans with accumulated benefit obligations in excess of plan assets is presented below.

	September 30,
	2008		2007
	(in millions)
Projected benefit obligations	$	307.0	$	239.8
Accumulated benefit obligations		300.1		223.7
Fair value of plan assets		271.9		212.0

Information for pension plans with accumulated benefit obligations less than plan assets is presented below.

	September 30,
	2008		2007
	(in millions)
Projected benefit obligations	$	10.9	$	110.9
Accumulated benefit obligations		9.6		109.8
Fair value of plan assets		12.7		116.0

F-23

Amounts recognized for the Company’s pension and other postretirement benefit plans are presented below.

	Year ended September 30,
	Pension plans						Other plans
	2008			2007			2008			2007
	(in millions)
Projected benefit obligations:
Beginning of year	$	350.7		$	349.5		$	20.4		$	22.3
Service cost		5.5			6.1			0.4			0.5
Interest cost		24.9			20.7			1.0			1.3
Amendments		2.6			1.0			(8.8	)		-
Actuarial gain		(32.8	)		(7.2	)		(3.4	)		(1.7	)
Benefits paid		(26.1	)		(20.7	)		(1.6	)		(2.0	)
Employee contributions		0.1			0.1			-			-
Currency translation		(0.5	)		1.7			-			-
Settlement payments		(2.4	)		-			-			-
Special termination benefits		0.8			-			-			-
Curtailment gain		(4.9	)		(0.5	)		-			-
End of year	$	317.9		$	350.7		$	8.0		$	20.4
Accumulated benefit obligations at end of year	$	309.7		$	333.5		$	8.0		$	20.4
Plan assets:
Beginning of year	$	328.0		$	289.6		$	-		$	-
Actual return on plan assets		(50.2	)		44.5			-			-
Employer contributions		35.9			12.8			1.6			2.0
Employee contributions		0.1			0.1			-			-
Currency translation		(0.6	)		1.9			-			-
Benefits paid		(26.1	)		(20.7	)		(1.6	)		(2.0	)
Settlement payments		(2.4	)		-			-			-
Other		(0.1	)		(0.2	)		-			-
End of year	$	284.6		$	328.0		$	-		$	-
Accrued benefit cost at end of year:
Unfunded status	$	(33.3	)	$	(22.7	)	$	(8.0	)	$	(20.4	)
Contributions after measurement date		-			15.6			-			-
	$	(33.3	)	$	(7.1	)	$	(8.0	)	$	(20.4	)
Recognized on balance sheet:
Other noncurrent assets	$	2.0		$	4.8		$	-		$	-
Other current liabilities		-			-			(0.7	)		(2.1	)
Other noncurrent liabilities		(35.3	)		(11.9	)		(7.3	)		(18.3	)
	$	(33.3	)	$	(7.1	)	$	(8.0	)	$	(20.4	)
Recognized in accumulated other comprehensive income before taxes:
Prior year service cost (credit)	$	4.3		$	3.0		$	(12.8	)	$	(8.8	)
Net actuarial loss (gain)		51.2			8.2			(15.5	)		(13.4	)
	$	55.5		$	11.2		$	(28.3	)	$	(22.2	)

F-24

The components of net periodic benefit cost (gain) are presented below.

	Year ended September 30,
	Pension plans									Other benefit plans
	2008			2007			2006			2008			2007			2006
	(in millions)
Service cost (gain)	$	4.9		$	6.1		$	8.1		$	0.4		$	(0.5	)	$	(0.7	)
Interest cost (gain)		21.3			20.6			20.3			0.8			(1.3	)		(1.4	)
Expected return on plan assets		(27.2	)		(23.8	)		(20.5	)		-			-			-
Amortization of prior service cost (gain)		0.8			0.3			0.3			(3.2	)		2.5			2.5
Amortization of net loss (gain)		0.7			2.1			3.9			(1.0	)		1.6			0.9
Curtailment/special settlement loss (gain)		1.4			(0.3	)		5.0			(0.8	)		-			1.7
Other		0.1			0.2			0.2			-			-			-
Net periodic benefit cost (gain)	$	2.0		$	5.2		$	17.3		$	(3.8	)	$	2.3		$	3.0

Activity in accumulated other comprehensive income, before taxes in the year ended September 30, 2008, is presented below.

	Pension			Other
	plans			benefit plans
	(in millions)
Balance at beginning of year	$	11.2		$	(22.2	)
Amounts reclassified as amortization of net periodic cost:
Gain or loss amortization		(0.7	)		(3.2	)
Prior year service cost amortization		(0.8	)		(1.0	)
Losses during the year		37.6			(2.7	)
Curtailment/special settlement loss		(0.5	)		0.8
Change in prior service cost during the year		(0.4	)		-
Effect of currency exchange on amounts included in accumulated other comprehensive income		14.0			-
Change in projected benefit obligation due to plan amendments		(2.7	)		-
Change in projected benefit obligation due to Burlington shutdown		(2.2	)		-
Balance at end of year	$	55.5		$	(28.3	)

The components of accumulated other comprehensive income that management expects to be reclassified into income in the year ending September 30, 2009 are presented below.

			Other
	Pension		postretirement
	benefits		benefits
	(in millions)
Amounts expected to be amortized out of accumulated other comprehensive income into net periodic benefit cost in fiscal 2009:
Amortization of unrecognized prior year service cost		$       0.8		$       (3.3	)
Amortization of unrecognized gain/loss		3.3		(1.6	)
		$       4.1		$       (4.9	)

The discount rates were selected using a “yield curve” approach, which management believes to approximate the construction of a hypothetical board portfolio that matches the Plans’ cash flows. The discount rates are the equivalent rates that produce the same present value as discounting the projected plan cash flows at anticipated market rates for each future payment date. These anticipated market rates are based on yields for high quality fixed income investments. The Company relies on the Plans’ investment advisors to assist in the use of the discount rate model.

F-25

Separate discount rates were selected for different Plans due to differences in the timing of future cash flows. The discount rate model for Plans covering participants in Canada reflected yields available investments in Canada, while Plans covering participants in the United States reflected yields available on investments there.

Management’s expected returns on plan assets and assumed healthcare cost trend rates were determined with the assistance of the Plans’ investment consultants.

F-26

A summary of key assumptions for the Company’s pension and other postretirement benefit plans is below.

	Plan measurement date
	Pension plans									Other plans
	2008			2007			2006			2008			2007			2006
	(in millions)
U.S. Pipe pension plans:
Weighted average used to determine benefit obligations:
Discount rate		7.60	%		6.25	%		6.25	%
Rate of compensation increases		3.50	%		3.50	%		3.50	%
Weighted average used to determine net periodic cost:
Discount rate		6.25	%		6.25	%		5.00	%
Expected return on plan assets		8.90	%		8.90	%		8.90	%
Rate of compensation increases		3.50	%		3.50	%		3.50	%
Mueller Co. and Anvil pension plans:
Weighted average used to determine benefit obligations:
Discount rate		7.49	%		6.27	%		5.69	%
Rate of compensation increases		3.50	%		3.50	%		3.50	%
Weighted average used to determine net periodic cost:
Discount rate		6.27	%		5.68	%		5.22	%
Expected return on plan assets		8.55	%		8.55	%		7.66	%
Rate of compensation increases		3.50	%		3.50	%		3.50	%
Other plans:
Weighted average used to determine benefit obligations:
Discount rate											7.60	%		6.25	%		6.25	%
Weighted average used to determine net periodic cost:
Discount rate											6.25	%		6.25	%		5.00	%
Assumed healthcare cost trend rates:
Next year – pre-65											9.90	%		9.00	%		10.00	%
Next year – post-65											N/A			11.00	%		12.00	%
Ultimate trend rate – pre-65											5.50	%		5.00	%		5.00	%
Ultimate trend rate – post-65											N/A			7.00	%		7.00	%
Year ultimate trend rate achieved											2015			2015			2014

F-27

Assumed healthcare cost trend rates, discount rates, expected return on plan assets and salary increases have a significant effect on the amounts reported for the pension and healthcare plans. A one-percentage-point change in the trend rate for these assumptions would have the following effects (in millions):

	1 Percentage			1 Percentage
	point increase			point decrease
U.S. Pipe pension plans:
Discount rate:
Effect on pension service and interest cost components	$	0.1		$	(0.2	)
Effect on pension benefit obligations		(19.5	)		23.2
Effect on current year pension expense		(1.3	)		1.5
Expected return on plan assets:
Effect on current year pension expense		(1.6	)		1.6
Rate of compensation increase:
Effect on pension service and interest cost components		0.3			(0.3	)
Effect on pension benefit obligations		2.3			(2.1	)
Effect on current year pension expense		0.4			(0.4	)
Mueller Co. and Anvil pension plans:
Discount rate:
Effect on pension service and interest cost components		(0.1	)		(0.2	)
Effect on pension benefit obligations		(9.5	)		11.5
Effect on current year pension expense		(1.0	)		0.9
Expected return on plan assets:
Effect on current year pension expense		1.2			(1.2	)
Rate of compensation increase:
Effect on pension service and interest cost components		-			-
Effect on pension benefit obligations		0.2			(0.2	)
Effect on current year pension expense		-			-
Other plans:
Health care cost trend:
Effect on total of service and interest cost components		0.1			(0.1	)
Effect on postretirement benefit obligations		0.2			(0.2	)
Discount rate:
Effect on postretirement service and interest cost components		-			-
Effect on postretirement benefit obligations		(0.6	)		0.7
Effect on current year postretirement benefits expense		(0.1	)		0.1

F-28

The Company maintains a single trust to hold all of the Plans’ assets. This trust’s strategic asset allocations, tactical range at September 30, 2008 and actual asset allocations at September 30 (unless otherwise noted) are presented below.

					Actual asset allocation
	Strategic		Tactical						June 30,
	allocation		range		2008		2007		2007		2006
Equity investments:
Large capitalization stocks		45%		40-50%
Mid capitalization stocks		10%		8-12%
Small capitalization stocks		0%		0%
International stocks		15%		12-18%
		70%		65-70%		61%		68%		72%		56%
Fixed income investments		30%		25-35%		35%		27%		28%		23%
Cash		0%		0-2%		4%		5%		0%		21%
		100%				100%		100%		100%		100%

These ranges are targets and deviations may occur from time to time due to market fluctuations. Portfolio assets are typically rebalanced to the allocation targets at least annually.

The Company’s minimum pension plan funding requirement for the year ending September 30, 2009 is $7.3 million, which the Company expects to fully fund. The Company also expects to contribute $0.7 million to its other postretirement benefit plans for the year ending September 30, 2009. The estimated benefit payments, which reflect expected future service, as appropriate, are presented below.

			Other
			postretirement
			benefits
			before
	Pension		Medicare
	benefits		subsidy
	(in millions)
2009		$    23.5		$     0.7
2010		23.8		0.8
2011		24.1		0.8
2012		24.6		0.9
2013		25.0		0.9
Years 2014-2018		133.3		5.0

Of the total pension plan obligations at September 30, 2008, 96% relate to plans for participants in the United States.

Defined Contribution Retirement Plan — Certain U.S. employees participate in defined contribution 401(k) plans. The Company makes matching contributions as a function of employee contributions. Matching contributions were $7.6 million, $6.3 million and $5.8 million during the years ended September 30, 2008, 2007 and 2006, respectively.

F-29

Note 11.   Capital Stock

On June 1, 2006, the Company completed an initial public offering of 28,750,000 shares of its Series A common stock at $16.00 per share. The gross proceeds of $460.0 million were partially offset by $27.6 million in underwriter fees and $3.5 million of other costs associated with the initial public offering. The remaining proceeds were used to pay down the Company’s then-existing debt. Holders of Series A common stock are entitled to one vote per share.

Immediately prior to the initial public offering, the Company issued 85,844,920 shares of its Series B common stock to Walter Industries in exchange for all prior equity ownership interests in the Company. Holders of Series B common stock are entitled to eight votes per share.

Holders of Series A common stock and Series B common stock otherwise have identical ownership rights.

Series A common stock and Series B common stock share activity is presented below.

	Series A		Series B
Shares outstanding at September 30, 2005		-		-
Shares exchanged for prior equity ownership interests		-		85,844,920
Shares sold in initial public offering		28,750,000		-
Shares outstanding at September 30, 2006		28,750,000		85,844,920
Exercise of stock options		50,799		-
Exercise of employee stock purchase plan instruments		141,465
Vesting of restricted stock units, net of shares withheld		64,003		-
Shares outstanding at September 30, 2007		29,006,267		85,844,920
Exercise of stock options		12,470		-
Exercise of employee stock purchase plan instruments		210,292
Vesting of restricted stock units, net of shares withheld		299,734		-
Shares outstanding at September 30, 2008		29,528,763		85,944,920

Note 12.   Stock-based Compensation Plans

The Mueller Water Products, Inc. Amended and Restated 2006 Stock Incentive Plan (the “2006 Plan”) authorizes an aggregate of 8.0 million shares of the Company’s Series A common stock that may be granted through the issuance of stock-based awards. Any awards cancelled are available for reissuance. Generally, all of the Company’s employees and members of the Board of Directors are eligible to participate in the 2006 Plan.

An award granted under the 2006 Plan becomes exercisable at such times and in such installments as set by the Compensation and Human Resources Committee of the Board of Directors, but no award will be exercisable after the tenth anniversary of the date on which it is granted. Stock option exercise prices generally equal the closing stock price on the grant date.

Outstanding stock options generally vest on each anniversary date of the original grant on a pro rata basis based on the total number of years until all awards are vested, generally three years. Outstanding restricted stock units generally vest either on each anniversary date of the original grant on a pro rata basis based on the total number of years until all awards are vested, generally three years, or cliff vest after either three years or seven years from the grant date. Awards that cliff vest after seven years generally provide for an acceleration of vesting if certain stock price performance targets are met.

Certain of the Company’s employees held Walter Industries restricted stock units or stock options when the Spin-off occurred. After the Spin-off, Walter Industries cancelled these outstanding awards and the Company

F-30

replaced them with restricted stock units or stock options to acquire shares of the Company’s Series A common stock under the 2006 Plan. These equity awards were designed to provide intrinsic value and terms equal to the Walter Industries awards that were cancelled.

Stock option activity under the 2006 Plan is summarized below.

				Weighted		Weighted
				average		average		Aggregate
				exercise		remaining		intrinsic
				price		contractual		value
	Shares			per share		term (years)		(millions)
Outstanding at September 30, 2005		-		$	-
Granted		112,694			16.11
Exercised		-			-
Cancelled		-			-
Outstanding at September 30, 2006		112,694			16.11		9.7	$	-
Granted		946,975			14.15
Exercised		(50,799	)		5.81				0.5
Cancelled		(12,610	)		15.22
Outstanding at September 30, 2007		996,260			14.78		8.6		0.7
Granted		1,147,419			10.39
Exercised		(12,470	)		3.65				0.1
Cancelled		(180,424	)		13.72
Outstanding at September 30, 2008		1,950,785		$	12.37		8.5	$	0.4
Vested at or expected to vest after September 30, 2008		1,930,252		$	12.25		8.3	$	0.4
Exercisable at September 30, 2008		658,793		$	14.09		7.5	$	0.3

The exercise prices for stock options outstanding at September 30, 2008 range from $2.05 to $20.56.

F-31

Restricted stock and restricted stock unit activity under the 2006 Plan is summarized below.

				Weighted		Weighted
				average		average		Aggregate
				grant date		remaining		intrinsic
				fair value		contractual		value
	Shares			per share		term (years)		(millions)
Outstanding at September 30, 2005		-		$	-
Granted		1,165,116			16.02
Vested		-			-
Cancelled		-			-
Outstanding at September 30, 2006		1,165,116			16.02		2.8	$	17.0
Granted		909,275			15.04
Vested		(84,230	)		14.95				1.2
Cancelled		(93,593	)		15.85
Outstanding at September 30, 2007		1,896,568			15.61		2.9		23.5
Granted		645,271			10.43
Vested		(311,865	)		14.86				2.7
Cancelled		(234,050	)		15.00
Outstanding at September 30, 2008		1,995,924		$	14.12		2.0	$	17.9
Expected to vest after September 30, 2008		1,968,946		$	13.74		2.0	$	17.7

Compensation expense attributed to stock awards is based on the fair value of the awards on the date granted. Compensation expense is recognized between the grant date and the vesting date on a straight-line basis for each individual award share granted with cliff-vesting provisions, and on an accelerated basis for each individual award granted with ratable vesting provisions. Fair values of stock option awards are determined using a Black-Scholes model. The weighted average grant-date fair values of stock options granted and the weighted average assumptions used to determine these fair values are indicated below.

	Year ended September 30,
	2008			2007			2006
Grant-date fair value		$  3	.76		$  3	.60		$  6	.54
Risk-free interest rate		3	.54%		4	.54%		4	.97%
Dividend yield		0	.48%		0	.43%		0	.44%
Expected life (years)		6	.00		5	.44		6	.38
Expected annual volatility		0	.3231		0	.3267		0	.3228

The risk-free interest rate is based on the U.S. Treasury zero-coupon yield in effect at the grant date with a term equal to the expected life. The expected dividend yield is based on the Company’s estimated annual dividend and stock price history at the grant date. The expected term represents the period of time the awards are expected to be outstanding. Expected volatility was calculated using data from comparable companies because the Company has limited historical price information for its own shares going back only to its initial public offering.

The number of instruments expected to vest is less than the number outstanding because management expects some instruments will be forfeited by employees prior to vesting. Grants to Company officers and members of the Board of the Directors are expected to vest fully. Grants to others are expected to be forfeited at annual rates of 2.0% for stock options and 4.0% for restricted stock units.

The Mueller Water Products, Inc. 2006 Employee Stock Purchase Plan (the “ESPP”) authorizes the sale of up to 4.0 million shares of the Company’s Series A common stock to employees. Employees may designate up to the lesser of $25,000 or 20% of their annual compensation for the purchase of stock. The price for shares purchased

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under the ESPP is the lower of 85% of closing price on the first day or the last day of the offering period. Generally, all full-time, active employees are eligible to participate in the ESPP.

Compensation expense under the ESPP is equal to the sum of (1) 15% of the fair value of Series A common stock on the first day of the offering period and (2) the fair value of 85% of a Series A common stock call option at the first day of the offering period and 15% of a Series A common stock put option at the first day of the offering period. Fair values of these call and put options were determined using a Black-Scholes model. The weighted average weighted average grant-date fair values of ESPP instruments granted and the assumptions used to determine these fair values are indicated below.

	Year ended September 30,
	2008			2007			2006
Grant-date fair value		$    2	.73		$    3	.25		$    4	.20
Risk-free interest rate		1	.96%		5	.05%		5	.20%
Dividend yield		0	.58%		0	.43%		0	.43%
Expected life (months)		3	.00		3	.00		3	.00
Expected annual volatility		0	.6875		0	.4640		0	.6033

The risk-free interest rate is based on the U.S. Treasury zero-coupon yield on the first day of the offering period with a term equal to the expected life. The expected dividend yield is based on the Company’s estimated annual dividend and stock price history at the grant date. The expected term of the instruments represents the period of time they are expected to be outstanding. The expected volatility is deemed to be equal to the historical volatility over a three month period ending on the date of grant.

Under the ESPP, employees purchased 226,304 shares, 154,420 shares and 31,235 shares of the Company’s Series A common stock during the years ended September 30, 2008, 2007 and 2006, respectively. At September 30, 2008, 3,588,128 shares are available for issuance under the ESPP.

The Company recorded stock-based compensation expense of $13.2, million, $11.0 million and $3.1 million during the years ended September 30, 2008, 2007 and 2006, respectively. This includes allocations of stock-based compensation expense from Walter Industries of $0.6 million and $0.8 million for the years ended September 30, 2007 and 2006, respectively.

At September 30, 2008, there was approximately $13.7 million of unrecognized compensation expense related to stock awards not yet vested. This expense is expected to be recognized over a weighted average life of approximately 1.25 years.

The effect of stock-based compensation on the financial performance of the Company is presented below.

	Year ended September 30,
	2008		2007		2006
	(in millions, except per share data)
Decrease in income from operations	$	13.2	$	11.0	$	3.1
Decrease in net income		7.5		6.1		1.2
Decrease in basic and diluted net income per share		0.07		0.05		0.01

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Note 13.   Supplemental Balance Sheet Information

Selected supplemental balance sheet information is presented below.

	September 30,
	2008			2007
	(in millions)
Inventories:
Purchased materials and manufactured parts	$	64.9		$	67.4
Work in process		117.7			116.7
Finished goods		276.8			269.4
	$	459.4		$	453.5
Property, plant and equipment:
Land	$	25.7		$	28.6
Buildings		97.4			91.3
Machinery and equipment		623.0			556.3
Construction in progress		23.9			35.7
Other		6.1			5.4
		776.1			717.3
Accumulated depreciation		(419.3	)		(365.5	)
	$	356.8		$	351.8
Other current liabilities:
Cash discounts and rebates	$	21.3		$	22.6
Payroll and bonus		20.1			19.9
Taxes other than income taxes		19.0			16.7
Interest		14.2			15.5
Vacation and holidays		11.8			12.1
Workers compensation		7.1			6.5
Warranty		6.5			3.7
Income taxes		6.2			-
Sales commissions		4.6			4.3
Medical and other employee welfare plans		4.5			5.4
Payroll withholdings		1.5			1.6
Severance		1.4			1.1
Restructuring		0.9			0.9
Environmental		0.5			0.6
Other		9.4			10.9
	$	129.0		$	121.8

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Note 14.   Supplemental Income Statement Information

Selected supplemental income statement information is presented below.

	Year ended September 30,
	2008			2007			2006
	(in millions)
Included in selling, general and administrative:
Research and development	$	5.7		$	4.6		$	5.7
Advertising		7.3			6.9			4.4
Interest expense, net:
Debt obligations		74.2			86.4			109.5
Financing fees		1.7			2.5			5.6
Income taxes issues		1.4			1.9			-
Capitalized interest		(1.0	)		(0.8	)		-
Other		0.2			-			0.1
Interest expense		76.5			90.0			115.2
Interest income - Walter Industries		-			-			(1.8	)
Interest income - other		(4.1	)		(3.2	)		(6.0	)
Interest expense, net	$	72.4		$	86.8		$	107.4

Note 15.   Comprehensive Income

Comprehensive income is presented below.

	Year ended September 30,
	2008			2007			2006
	(in millions)
Net income	$	42.0		$	48.2		$	5.1
Adjustments, tax:
Net unrealized gain (loss) on derivative instruments net of taxes of $4.3 million, $1.4 million and $0.6 million respectively		(6.5	)		(2.1	)		1.0
Foreign currency translation		(2.7	)		8.2			1.8
Minimum pension liability net of taxes of $14.9 million, $6.5 million and $15.5 million, respectively		(23.1	)		10.0			24.0
Comprehensive income	$	9.7		$	64.3		$	31.9

Accumulated other comprehensive income is presented below.

	September 30,
	2008			2007
	(in millions)
Net unrealized loss on derivatives	$	(7.6	)	$	(1.1	)
Foreign currency translation		7.4			10.1
Minimum pension liability		(19.4	)		3.7
Accumulated other comprehensive income	$	(19.6	)	$	12.7

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Note 16.   Net Income Per Share

Net income per share information is presented below.

	Year ended September 30,
	2008		2007		2006
	(in millions, except per share amounts)
Net income	$	42.0	$	48.2	$	5.1
Weighted average common shares outstanding		115.1		114.7		95.5
Effect of dilutive stock options and restricted stock units		0.4		0.6		-
		115.5		115.3		95.5
Net income per share (basic and diluted)	$	0.36	$	0.42	$	0.05

The effect of dilutive stock options and restricted stock units is determined using the treasury stock method. The weighted average number of shares outstanding during the year ended September 30, 2006 includes the number of shares of Series B common stock issued to Walter Industries immediately prior to the Company’s initial public offering as if they had been outstanding during the entire year. During the years ended September 30, 2008 and 2007, 1.8 million and 1.0 million, respectively, of outstanding stock options and 0.3 million and an immaterial number, respectively, of restricted stock units were excluded from the determination of the weighted average outstanding shares since their inclusion would have been antidilutive. Outstanding shares of Series A common stock and Series B common stock are combined in this determination since their ownership rights with regard to distributions are identical.

Note 17.   Supplemental Cash Flow Information

During the year ended September 30, 2008, the Company amended a retiree medical coverage plan and a defined benefit pension plan, as well as recorded noncash activity adopting the measurement date provisions of SFAS 158. See Note 10. Effective October 1, 2007, the Company adopted the provisions of FIN 48. See Note 6. In the year ended September 30, 2007, the Company adopted certain provisions of SFAS 158 (see Note 10), acquired the assets of Fast Fabricators and made an earnout payment as part of the January 2004 acquisition of Star Pipe, Inc. (see Note 3). In the year ended September 30, 2006, Walter Industries contributed Mueller Co. and Anvil to the Company. See Note 1.

The impacts these transactions had on the Company’s consolidated balance sheets are presented below.

	Year ended September 30,
	2008			2007			2006
	(in millions)
Employee benefit plan amendments and Burlington curtailment:
Increase in current assets	$	3.1		$	-		$	-
Decrease in other noncurrent assets		(2.3	)		-			-
Increase in other noncurrent liabilities		(1.5	)		-			-
Decrease in accumulated other comprehensive income		0.7			-			-
	$	-		$	-		$	-
SFAS 158:
Increase (decrease) in other noncurrent assets	$	(5.3	)	$	2.5		$	-
Decrease (increase) in other current liabilities		1.2			(1.8	)		-
Decrease (increase) in other noncurrent liabilities		(15.9	)		14.5			-
Decrease in retained earnings		(0.6	)		-			-
Decrease (increase) in accumulated other comprehensive income		20.6			(15.2	)		-
	$	-		$	-		$	-

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	Year ended September 30,
	2008			2007			2006
	(in millions)
Adoption of FIN 48:
Increase in goodwill	$	0.4		$	-		$	-
Increase in other noncurrent assets		8.7			-			-
Decrease in other current liabilities		4.3			-			-
Decrease in deferred income taxes		3.7			-			-
Increase in other noncurrent liabilities		(16.5	)		-			-
Increase in accumulated deficit		(0.6	)		-			-
	$	-		$	-		$	-
Acquisition of Fast Fabricators:
Increase in current assets	$	-		$	10.5		$	-
Increase in identifiable intangible assets		-			13.1			-
Increase in goodwill		-			0.5			-
Increase in property, plant and equipment		-			1.8			-
Increase in current liabilities		-			(2.9	)		-
Purchase price paid, net of cash acquired		-			(23.0	)	$	-
	$	-		$	-		$	-
Acquisition of Star Pipe, Inc.:
Increase in goodwill	$	-		$	3.7		$	-
Purchase price paid, net of cash acquired		-			(3.7	)		-
	$	-		$	-		$	-
Contribution of Mueller Co. and Anvil:
Net assets of Mueller Co. and Anvil	$	-		$	-		$	856.6
Equity in Mueller Co. and Anvil		-			-			(856.6	)
	$	-		$	-		$	-
Cash paid, net of cash received:
Interest	$	70.5		$	69.4		$	116.7
Income taxes		7.7			45.0			49.2

Note 18.   Segment Information

The Company’s operations consist of three segments: Mueller Co., U.S. Pipe and Anvil. These segments are organized based on products and are consistent with how the segments are managed, how resources are allocated and how information is used by the chief operating decision maker. Mueller Co. manufactures valves for residential water and gas systems including butterly, iron gate, tapping, check, plug and ball valves, dry-barrell and wet-barrel fire hydrants, meters and related products and services. U.S. Pipe manufactures a broad line of ductile iron pipe, restraint joint products, fittings and other ductile cast iron products. Through Fast Fabricators, U.S. Pipe manufactures a broad line of fabricated pipe, coated pipe and lined pipe products. Anvil products include a variety of fittings, couplings, hangers, nipples, valves and related pipe products.

Intersegment sales and transfers are made at established intersegment selling prices generally intended to cover costs. The determination of segment earnings does not reflect allocations of certain corporate expenses not directly attributable to segment operations and intersegment eliminations, which are designated as Corporate. Interest and income taxes are not allocated to business segments. Corporate expenses include those costs incurred by the Company’s corporate function, such as finance, treasury, risk management, human resources, legal, tax and other administrative functions. Therefore, segment earnings are not reflective of their results on a stand-alone basis. Corporate assets include cash, deferred tax assets and deferred financing fees.

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Segment assets consist primarily of accounts receivable, inventories, property, plant and equipment, goodwill, and identifiable intangible assets. Summarized financial information for the Company’s segments is presented below.

	Mueller Co.		U.S. Pipe			Anvil		Corporate			Total
	(in millions)
Net sales, excluding intercompany:
Year ended September 30, 2008	$	718.1	$	546.0		$	595.2	$	-		$	1,859.3
Year ended September 30, 2007		756.1		537.1			555.8		-			1,849.0
Year ended September 30, 2006		804.1		594.7			534.6		-			1,933.4
Intercompany sales:
Year ended September 30, 2008	$	21.8	$	2.8		$	0.7	$	-		$	25.3
Year ended September 30, 2007		18.9		6.4			0.8		-			26.1
Year ended September 30, 2006		17.1		3.8			0.6		-			21.5
Income (loss) from operations:
Year ended September 30, 2008	$	128.4	$	(17.4	)	$	74.1	$	(39.0	)	$	146.1
Year ended September 30, 2007		154.7		33.4			57.4		(35.5	)		210.0
Year ended September 30, 2006		144.7		(17.0	)		31.8		(30.5	)		129.0
Depreciation and amortization:
Year ended September 30, 2008	$	50.1	$	22.7		$	19.7	$	0.6		$	93.1
Year ended September 30, 2007		51.8		24.0			23.8		1.8			101.4
Year ended September 30, 2006		50.5		22.7			23.4		0.3			96.9
Capital expenditures:
Year ended September 30, 2008	$	17.9	$	58.5		$	11.5	$	0.2		$	88.1
Year ended September 30, 2007		21.7		47.5			15.0		4.1			88.3
Year ended September 30, 2006		32.2		22.8			16.1		-			71.1

U.S. Pipe losses from operations during the years ended September 30, 2008 and 2006 include restructuring charges of $18.3 million and $28.6 million, respectively.

	Mueller Co.		U.S. Pipe		Anvil		Corporate		Total
	(in millions)
Total assets:
September 30, 2008	$	1,841.1	$	471.9	$	517.0	$	260.2	$	3,090.2
September 30, 2007		1,874.9		420.8		524.7		188.8		3,009.2
Goodwill:
September 30, 2008	$	719.2	$	59.5	$	92.8	$	-	$	871.5
September 30, 2007		718.8		59.5		92.8		-		871.1
Identifiable intangible assets:
September 30, 2008	$	697.3	$	11.4	$	81.1	$	-	$	789.8
September 30, 2007		722.3		12.4		84.6		-		819.3

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Geographic area information is presented below.

	United States		Canada		Other		Total
	(in millions)
Net sales:
Year ended September 30, 2008	$	1,543.8	$	292.3	$	23.2	$	1,859.3
Year ended September 30, 2007		1,560.4		265.4		23.2		1,849.0
Year ended September 30, 2006		1,693.8		231.4		8.2		1,933.4
Property, plant and equipment, net:
September 30, 2008	$	340.6	$	13.7	$	2.5	$	356.8
September 30, 2007		335.5		14.5		1.8		351.8

Sales to two distributors comprised approximately 22%, 27% and 30% of the Company’s total net sales during the years ended September 30, 2008, 2007 and 2006, respectively. In the year ended September 30, 2008, the Company’s largest distributor accounted for 20%, 17% and 4% of net sales for Mueller Co., U.S. Pipe and Anvil, respectively. Receivables from these two distributors totaled $60.3 million and $67.4 million at September 30, 2008 and 2007, respectively.

Note 19.   Commitments and Contingencies

The Company is involved in various legal proceedings that have arisen in the normal course of operations, including the proceedings summarized below. The effect of the outcome of these matters on the Company’s future results of operations cannot be predicted with certainty as any such effect depends on future results of operations and the amount and timing of the resolution of such matters. Other than the litigation described below, management does not believe that any of the Company’s outstanding litigation would have a material adverse effect on the Company’s businesses, operations or prospects.

Environmental.  The Company is subject to a wide variety of laws and regulations concerning the protection of the environment, both with respect to the construction and operation of many of its plants and with respect to remediating environmental conditions that may exist at its own and other properties. Management believes that the Company is in substantial compliance with federal, state and local environmental laws and regulations. The Company accrues for environmental expenses resulting from existing conditions that relate to past operations when the costs are probable and reasonably estimable.

In September 1987, the Company implemented an Administrative Consent Order (“ACO”) for its Burlington plant that was required under the New Jersey Environmental Cleanup Responsibility Act (now known as the Industrial Site Recovery Act). The ACO required soil and ground water cleanup, and the Company has completed, and has received final approval on, the soil cleanup required by the ACO. U.S. Pipe is continuing to address ground water issues at this site. Further remediation could be required. These remediation costs are expected to be minimal. Long-term ground water monitoring is also required to verify natural attenuation. Management does not know how long ground water monitoring will be required and does not believe monitoring or further cleanup costs, if any, will have a material adverse effect on the consolidated financial condition or results of operations of the Company.

In June 2003, Solutia Inc. and Pharmacia Corporation (collectively “Solutia”) filed suit against U.S. Pipe and a number of co-defendant foundry-related companies in the U.S. District Court for the Northern District of Alabama for contribution and cost recovery allegedly incurred and to be incurred by Solutia in performing remediation of polychlorinated biphenyls (“PCBs”) and heavy metals in Anniston, Alabama, pursuant to a partial consent decree with the United States Environmental Protection Agency (“EPA”). U.S. Pipe and certain co-defendants subsequently reached a settlement with EPA concerning their liability for certain contamination in and around Anniston, which was memorialized in an Administrative Agreement and Order on Consent (“AOC”) that became effective in January 2006. U.S. Pipe has reached a settlement agreement whereby Phelps Dodge Industries, Inc., a co-defendant and co-respondent on the AOC, has assumed U.S. Pipe’s obligation to perform the work required under the AOC.

U.S. Pipe and the other settling defendants contend that the legal effect of the AOC extinguishes Solutia’s claims and they filed a motion for summary judgment to that effect. Discovery in this matter has been stayed while

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the motion for summary judgment was pending. The court recently issued a summary judgment order, holding that plaintiffs’ claims for contribution are barred by the AOC but giving plaintiffs the right to seek to recover cleanup costs they voluntarily incurred. The court granted a motion for immediate appeal to the Eleventh Circuit Court of Appeals, but the Eleventh Circuit declined to take the appeal. Management currently has no basis to form a view with respect to the probability or amount of liability in this matter if its motion for summary judgment is unsuccessful.

U.S. Pipe and a number of co-defendant foundry-related companies were named in a putative civil class action case originally filed in April 2005 in the Circuit Court of Calhoun County, Alabama, and removed by defendants to the U.S. District Court for the Northern District of Alabama under the Class Action Fairness Act. The putative plaintiffs in the case filed an amended complaint with the U.S. District Court in December 2006. The amended complaint alleged state law tort claims (negligence, failure to warn, wantonness, nuisance, trespass and outrage) arising from creation and disposal of “foundry sand” alleged to contain harmful levels of PCBs and other toxins, including arsenic, cadmium, chromium, lead and zinc. The plaintiffs originally sought damages for real and personal property and for other unspecified personal injury. On June 4, 2007, a Motion to Dismiss was granted to U.S. Pipe and certain co-defendants as to the claims for negligence, failure to warn, nuisance, trespass and outrage. The remainder of the complaint was dismissed with leave to file an amended complaint. On July 6, 2007, plaintiffs filed a second amended complaint, which dismissed prior claims relating to U.S. Pipe’s former facility located at 2101 West 10th Street in Anniston, Alabama and no longer alleges personal injury claims. Plaintiffs filed a third amended complaint on July 27, 2007. U.S. Pipe and the other defendants have moved to dismiss the third amended complaint. On September 24, 2008, the court issued an order on the motion, dismissing the claims for trespass and permitting the plaintiffs to move forward with their claims of nuisance, wantonness and negligence. Management believes that numerous procedural and substantive defenses are available. At present, management has no reasonable basis to form a view with respect to the probability or amount of liability in this matter.

In the acquisition agreement pursuant to which a predecessor to Tyco sold the Company’s Mueller Co. and Anvil businesses to the prior owners of these businesses in August 1999, Tyco agreed to indemnify the Company and its affiliates, among other things, for all “Excluded Liabilities”. Excluded Liabilities include, among other things, substantially all liabilities relating to prior to August 1999. The indemnity survives indefinitely and is not subject to any deductibles or caps. However, the Company may be responsible for these liabilities in the event that Tyco ever becomes financially unable to or otherwise fails to comply with, the terms of the indemnity. In addition, Tyco’s indemnity does not cover liabilities to the extent caused by the Company or the operation of its business after August 1999, nor does it cover liabilities arising with respect to businesses or sites acquired after August 1999. In June 2007, Tyco was separated into three separate, publicly traded companies. Should the entity or entities that assumed Tyco’s obligations under the acquisition agreement ever become financially unable or fail to comply with the terms of the indemnity, the Company may be responsible for such obligations or liabilities.

Some of the Company’s subsidiaries have been named as defendants in asbestos-related lawsuits. Management does not believe these lawsuits, either individually or in the aggregate, are material to the Company’s consolidated financial position or results of operations.

Other Litigation.  The Company and its subsidiaries are parties to a number of other lawsuits arising in the ordinary course of their businesses, including product liability cases for products manufactured by the Company and third parties. We provide for costs relating to these matters when a loss is probable and the amount is reasonably estimable. Administrative costs related to these matters are expensed as incurred. The effect of the outcome of these matters on our future results of operations cannot be predicted with certainty as any such effect depends on future results of operations and the amount and timing of the resolution of such matters. While the results of litigation cannot be predicted with certainty, management believes that the final outcome of such other litigation is not likely to have a materially adverse effect on the Company’s consolidated financial statements.

Walter Industries-related Income Taxes.  Each member of a consolidated group for federal income tax purposes is severally liable for the federal income tax liability of each other member of the consolidated group for any year in which it is a member of the group at any time during such year. Each member of the Walter Industries consolidated group, which included the Company through December 14, 2006, is also jointly and severally liable for pension and benefit funding and termination liabilities of other group members, as well as

F-40

certain benefit plan taxes. Accordingly, the Company could be liable under such provisions in the event any such liability is incurred, and not discharged, by any other member of the Walter Industries consolidated group for any period during which the Company was included in the Walter Industries consolidated group.

A dispute exists with regard to federal income taxes for fiscal years 1980 through 1994 and 1999 through 2001 allegedly owed by the Walter Industries consolidated group, which included U.S. Pipe during these periods. According to Walter Industries’ quarterly report on Form 10-Q for the period ended September 30, 2008, Walter Industries’ management estimates that the amount of tax claimed by the IRS is approximately $34.0 million for issues currently in dispute in bankruptcy court for matters unrelated to the Company. This amount is subject to interest and penalties. In addition, the Internal Revenue Service has issued a Notice of Proposed Deficiency assessing additional tax of $82.2 million for the fiscal years ended May 31, 2000, December 31, 2000 and December 31, 2001. As a matter of law, the Company is jointly and severally liable for any final tax determination, which means that in the event Walter Industries is unable to pay any amounts owed, the Company would be liable. Walter Industries disclosed in the above mentioned Form 10-Q that it believes its filing positions have substantial merit and that it intends to defend vigorously any claims asserted.

Walter Industries effectively controlled all of the Company’s tax decisions for periods during which the Company was a member of the Walter Industries consolidated federal income tax group and certain combined, consolidated or unitary state and local income tax groups. Under the terms of the income tax allocation agreement between the Company and Walter Industries dated May 26, 2006, the Company generally computes its tax liability on a stand-alone basis, but Walter Industries has sole authority to respond to and conduct all tax proceedings (including tax audits) relating to our federal income and combined state returns, to file all such returns on behalf of the Company and to determine the amount of the Company’s liability to (or entitlement to payment from) Walter Industries for such periods. This arrangement may result in conflicts of interests between the Company and Walter Industries. The Spin-off was intended to qualify as a tax-free spin-off under Section 355 of the Internal Revenue Code of 1986, as amended. In addition, the tax allocation agreement provides that if the Spin-off is determined not to be tax-free pursuant to Section 355 of the Internal Revenue Code of 1986, as amended, the Company generally will be responsible for any taxes incurred by Walter Industries or its shareholders if such taxes result from certain of the Company’s actions or omissions and for a percentage of any such taxes that are not a result of the Company’s actions or omissions or Walter Industries’ actions or omissions or taxes based upon the Company’s market value relative to Walter Industries’ market value. Additionally, to the extent that Walter Industries was unable to pay taxes, if any, attributable to the Spin-off and for which it is responsible under the tax allocation agreement, the Company could be liable for those taxes as a result of being a member of the Walter Industries consolidated group for the year in which the Spin-off occurred.

Operating Leases.  The Company maintains operating leases primarily for equipment and office space. Rent expense was $12.4 million, $9.0 million and $10.0 million for the years ended September 30, 2008, 2007 and 2006, respectively. Future minimum payments under non-cancelable operating leases are $8.7 million, $7.7 million, $6.8 million, $4.4 million, $2.4 million during the years ending September 30, 2009, 2010, 2011, 2012 and 2013, respectively. Minimum payments due beyond September 30, 2013 are $3.3 million.

Other.  In the opinion of management, accruals associated with contingencies incurred in the normal course of business are sufficient. Resolution of existing known contingencies is not expected to affect the Company’s financial position or results of operations significantly.

Note 20.   New Accounting Pronouncements

In September 2006, the FASB issued FAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. Management does not believe the adoption of this standard, which became effective October 1, 2008, will have a material impact on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Options for Financial Assets and Financial Liabilities, which permits entities to elect to measure many financial instruments and certain other items at fair value. Since management has elected not to apply the fair value measurement option, management

F-41

does not believe the adoption of this standard, which became effective for the Company on October 1, 2008, will have a material impact on the Company’s consolidated financial statements.

In March 2008, the SFAS issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, which requires enhanced disclosures about an entity’s derivative and hedging activities. Entities will be required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. Adoption of this standard will be required by the Company effective January 1, 2009.

Note 21.   Subsequent Events

On October 30, 2008, the Company declared a dividend of $0.0175 per share on the Company’s Series A and Series B common stock, payable on November 20, 2008 to stockholders of record at the close of business on November 10, 2008.

Note 22.   Quarterly Consolidated Financial Information (Unaudited)

	Quarter ended
	December 31			March 31		June 30			September 30
	(in millions, except per share amounts)
Year ended September 30, 2008:
Net sales	$	412.3		$	421.6	$	528.5		$	496.9
Gross profit		94.4			98.8		123.4			122.4
Income from operations		16.4			28.0		53.6			48.1
Net income (loss)		(1.6	)		5.7		20.3			17.6
Net income (loss) per share:
Basic and diluted (1)		(0.01	)		0.05		0.18			0.15
Year ended September 30, 2007:
Net sales	$	411.9		$	459.7	$	502.5		$	474.9
Gross profit		107.7			117.8		119.5			118.2
Income from operations		49.0			52.9		57.4			50.7
Net income (loss)		17.0			17.9		(1.3	)		14.6
Net income (loss) per share:
Basic and diluted (1)		0.15			0.16		(0.01	)		0.13

(1) The sum of quarterly earnings per share amounts is different from annual amounts due to rounding.

F-42

Note 23.   Consolidating Guarantor and Non-Guarantor Financial Information

The following information is included as a result of the guarantee by certain of the Company’s wholly-owned U.S. subsidiaries (“Guarantor Companies”) of the Senior Notes. None of the Company’s other subsidiaries guarantee the Senior Notes. Each of the guarantees is joint and several and full and unconditional. Guarantor Companies are listed below.

	State of
	incorporation
Name	or organization
Anvil 1, LLC	Delaware
Anvil 2, LLC	Delaware
Anvil International LLC	Delaware
Anvil International, LP	Delaware
AnvilStar, LLC	Delaware
Fast Fabricators, LLC	Delaware
Henry Pratt Company, LLC	Delaware
Henry Pratt International, LLC	Delaware
Hersey Meters Co., 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. Ltd.	Alabama
Mueller Financial Services, LLC	Delaware
Mueller Group, LLC	Delaware
Mueller Group Co-Issuer, Inc.	Delaware
Mueller International, Inc.	Delaware
Mueller International, L.L.C.	Delaware
Mueller International Finance, Inc.	Delaware
Mueller International Finance, L.L.C.	Delaware
Mueller Service California, Inc.	Delaware
Mueller Service Co., LLC	Delaware
United States Pipe and Foundry Company, LLC	Alabama

F-43

Mueller Water Products, Inc. and Subsidiaries
Consolidating Balance Sheet
September 30, 2008

							Non-
				Guarantor			guarantor
	Issuer			companies			companies		Eliminations			Total
	(in millions)
Assets:
Cash and cash equivalents	$	179.1		$	(4.6	)	$	9.4	$	-		$	183.9
Receivables, net		-			256.5			41.7		-			298.2
Inventories		-			392.1			67.3		-			459.4
Deferred income taxes		48.2			-			-		-			48.2
Other current assets		20.5			37.6			2.5		-			60.6
Total current assets		247.8			681.6			120.9		-			1,050.3
Property, plant and equipment		2.6			338.0			16.2		-			356.8
Goodwill		-			871.5			-		-			871.5
Identifiable intangible assets		-			789.8			-		-			789.8
Other noncurrent assets		18.3			1.7			1.8		-			21.8
Investment in subsidiaries		901.4			18.5			-		(919.9	)		-
Total assets	$	1,170.1		$	2,701.1		$	138.9	$	(919.9	)	$	3,090.2
Liabilities and equity:
Current portion of debt	$	8.9		$	0.8		$	-	$	-		$	9.7
Accounts payable		8.3			132.8			14.9		-			156.0
Other current liabilities		39.5			82.2			7.3		-			129.0
Total current liabilities		56.7			215.8			22.2		-			294.7
Intercompany accounts		(1,616.8	)		1,519.0			97.8		-			-
Long-term debt		1,084.7			1.1			-		-			1,085.8
Deferred income taxes		292.9			2.6			0.3		-			295.8
Other noncurrent liabilities		23.7			61.2			0.1		-			85.0
Total liabilities		(158.8	)		1,799.7			120.4		-			1,761.3
Equity		1,328.9			901.4			18.5		(919.9	)		1,328.9
Total liabilities and equity	$	1,170.1		$	2,701.1		$	138.9	$	(919.9	)	$	3,090.2

F-44

Mueller Water Products, Inc. and Subsidiaries
Consolidating Balance Sheet
September 30, 2007

							Non-
				Guarantor			guarantor
	Issuer			companies			companies			Eliminations			Total
	(in millions)
Assets:
Cash and cash equivalents	$	90.2		$	(8.6	)	$	17.3		$	-		$	98.9
Receivables, net		11.9			249.1			41.1			-			302.1
Inventories		-			390.3			63.2			-			453.5
Deferred income taxes		29.2			-			-			-			29.2
Other current assets		34.3			29.8			2.2			-			66.3
Total current assets		165.6			660.6			123.8			-			950.0
Property, plant and equipment		4.5			331.1			16.2			-			351.8
Goodwill		2.0			869.1			-			-			871.1
Identifiable intangible assets		-			819.3			-			-			819.3
Other noncurrent assets		34.6			(14.6	)		(3.0	)		-			17.0
Investment in subsidiaries		743.5			18.5			-			(762.0	)		-
Total assets	$	950.2		$	2,684.0		$	137.0		$	(762.0	)	$	3,009.2
Liabilities and equity:
Current portion of debt	$	6.2		$	-		$	-		$	-		$	6.2
Accounts payable		14.8			85.2			12.3			-			112.3
Other current liabilities		16.0			106.6			(0.8	)		-			121.8
Total current liabilities		37.0			191.8			11.5			-			240.3
Intercompany accounts		(1,829.1	)		1,720.8			108.3			-			-
Long-term debt		1,094.3			-			-			-			1,094.3
Deferred income taxes		307.3			-			-			-			307.3
Other noncurrent liabilities		29.7			27.9			(1.3	)		-			56.3
Total liabilities		(360.8	)		1,940.5			118.5			-			1,698.2
Equity		1,311.0			743.5			18.5			(762.0	)		1,311.0
Total liabilities and equity	$	950.2		$	2,684.0		$	137.0		$	(762.0	)	$	3,009.2

F-45

Mueller Water Products, Inc. and Subsidiaries
Consolidating Statement of Operations
Year Ended September 30, 2008

						Non-
				Guarantor		guarantor
	Issuer			companies		companies			Eliminations			Total
	(in millions)
Net sales	$	-		$	1,555.7	$	303.6		$	-		$	1,859.3
Cost of sales		-			1,160.2		260.1			-			1,420.3
Gross profit		-			395.5		43.5			-			439.0
Operating expenses:
Selling, general and administrative		37.7			200.7		36.2			-			274.6
Restructuring		-			18.3		-			-			18.3
Operating income (loss)		(37.7	)		176.5		7.3			-			146.1
Interest expense, net		72.5			0.3		(0.4	)		-			72.4
Loss on early extinguishment of debt		-			-		-			-			-
Income (loss) before income taxes		(110.2	)		176.2		7.7			-			73.7
Income tax expense (benefit)		(47.4	)		75.8		3.3			-			31.7
Equity in income of subsidiaries		104.8			4.4		-			(109.2	)		-
Net income	$	42.0		$	104.8	$	4.4		$	(109.2	)	$	42.0

F-46

Mueller Water Products, Inc. and Subsidiaries
Consolidating Statement of Operations
Year Ended September 30, 2007

							Non-
				Guarantor			guarantor
	Issuer			companies			companies			Eliminations			Total
	(in millions)
Net sales	$	-		$	1,564.0		$	285.0		$	-		$	1,849.0
Cost of sales		-			1,135.5			250.3			-			1,385.8
Gross profit		-			428.5			34.7			-			463.2
Operating expenses:
Selling, general and administrative		33.6			190.6			29.0			-			253.2
Restructuring		-			-			-			-			-
Operating income (loss)		(33.6	)		237.9			5.7			-			210.0
Interest expense, net		87.2			(0.2	)		(0.2	)		-			86.8
Loss on early extinguishment of debt		36.5			-			-			-			36.5
Income (loss) before income taxes		(157.3	)		238.1			5.9			-			86.7
Income tax expense (benefit)		(69.8	)		105.7			2.6			-			38.5
Equity in income of subsidiaries		135.7			3.3			-			(139.0	)		-
Net income	$	48.2		$	135.7		$	3.3		$	(139.0	)	$	48.2

F-47

Mueller Water Products, Inc. and Subsidiaries
Consolidating Statement of Cash Flows
Year Ended September 30, 2008

							Non-
				Guarantor			guarantor
	Issuer			companies			companies			Eliminations		Total
	(in millions)
Operating activities:
Net cash provided by (used in) operating activities	$	101.3		$	85.3		$	(4.6	)	$	-	$	182.0
Investing activities:
Capital expenditures		(0.2	)		(85.0	)		(2.9	)		-		(88.1	)
Proceeds from sale of property, plant and equipment		-			9.6			-			-		9.6
Net cash used in investing activities		(0.2	)		(75.4	)		(2.9	)		-		(78.5	)
Financing activities:
Decrease in outstanding checks		-			(6.9	)		-			-		(6.9	)
Debt payments		(5.0	)		-			-			-		(5.0	)
Common stock issuance		1.9			-			-			-		1.9
Dividend payments		(8.1	)		-			-			-		(8.1	)
Net cash used in financing activities		(11.2	)		(6.9	)		-			-		(18.1	)
Effect of currency exchange rate changes on cash		-			-			(0.4	)		-		(0.4	)
Net change in cash and cash equivalents		89.9			3.0			(7.9	)		-		85.0
Cash and cash equivalents at beginning of year		90.2			(8.6	)		17.3			-		98.9
Cash and cash equivalents at end of year	$	180.1		$	(5.6	)	$	9.4		$	-	$	183.9

F-48

Mueller Water Products, Inc. and Subsidiaries
Consolidating Statement of Cash Flows
Year Ended September 30, 2007

							Non-
				Guarantor			guarantor
	Issuer			companies			companies			Eliminations		Total
	(in millions)
Operating activities:
Net cash provided by operating activities	$	40.6		$	106.4		$	8.1		$	-	$	155.1
Investing activities:
Capital expenditures		(4.1	)		(81.6	)		(2.6	)		-		(88.3	)
Proceeds from sale of property, plant and equipment		-			0.8			-			-		0.8
Acquisition of businesses, net of cash acquired		-			(26.2	)		-			-		(26.2	)
Net cash used in investing activities		(4.1	)		(107.0	)		(2.6	)		-		(113.7	)
Financing activities:
Increase in outstanding checks		-			3.1			-			-		3.1
Debt borrowings		1,140.0			-			-			-		1,140.0
Debt payments		(1,151.1	)		-			-			-		(1,151.1	)
Common stock issuance		1.8			-			-			-		1.8
Deferred financing fee payments		(11.4	)		-			-			-		(11.4	)
Dividend payments		(8.0	)		-			-			-		(8.0	)
Net cash provided by (used in) financing activities		(28.7	)		3.1			-			-		(25.6	)
Effect of currency exchange rate changes on cash		-			-			1.7			-		1.7
Net change in cash and cash equivalents		7.8			2.5			7.2			-		17.5
Cash and cash equivalents at beginning of year		82.4			(11.1	)		10.1			-		81.4
Cash and cash equivalents at end of year	$	90.2		$	(8.6	)	$	17.3		$	-	$	98.9

F-49

EX-10.5

Exhibit 10.5

MUELLER WATER PRODUCTS, INC.

Amended and Restated 2006 Stock Incentive Plan

Approved by the Board of Directors on November 30, 2007
Approved by the Stockholders on January 30, 2008

Termination Date: May 23, 2016

I. PURPOSE.

          1.1. The purpose of this Plan is to aid the Company and its Affiliates in recruiting and retaining key Employees (including officers), Directors, and Consultants of outstanding ability and to motivate such persons to exert their best efforts on behalf of the Company and its Affiliates by providing incentives through the granting of Stock Awards. The Company expects that it will benefit from the added interest which such key Employees, Directors and Consultants will have in the welfare of the Company as a result of their proprietary interest in the Company’s success.

II. DEFINITIONS.

          2.1. “Affiliate” means, with respect to the Company, any entity directly or indirectly controlling, controlled by, or under common control with, the Company or any other entity designated by the Board in which the Company or any Affiliate has an interest.

          2.2. “Applicable Law” means the legal requirements relating to the administration of an equity compensation plan under applicable U.S. federal and state corporate and securities laws, the Code, any stock exchange rules or regulations, and the applicable laws of any other country or jurisdiction, as such laws, rules, regulations and requirements shall be in place from time to time.

          2.3. “Beneficial Owner” means the definition given in Rule 13d-3 promulgated under the Exchange Act.

          2.4. “Board” means the board of directors of the Company.

          2.5. “Cause” means any of the following: (1) the Participant’s theft, dishonesty, or falsification of any documents or records related to the Company or any of its Affiliates; (2) the Participant’s improper use or disclosure of the Company’s or any of its Affiliate’s confidential or proprietary information; (3) any action by the Participant which has a material detrimental effect on the reputation or business of the Company or any of its Affiliates; (4) the Participant’s failure or inability to perform any reasonable assigned duties, if such failure or inability is reasonably capable of cure, after being provided with a reasonable opportunity to cure, such failure or inability; (5) any material breach by the Participant of any employment or service agreement between the Participant and the Company or any of its Affiliates or applicable policy of the Company or any of its Affiliates,

which breach is not cured pursuant to the terms of such agreement; or (6) the Participant’s indictment or plea of guilty or nolo contendere with respect to any criminal act which impairs the Participant’s ability to perform his or her duties with the Company or any of its Affiliates. Notwithstanding the foregoing, the definition of “Cause” in an individual written agreement between the Company or any of its Affiliates and the Participant shall supersede the foregoing definition with respect to Stock Awards subject to such individual agreement to the extent expressly provided for in such individual written agreement (it being understood, however, that if no definition of the term “Cause” is set forth in such an individual written agreement, the foregoing definition shall apply).

          2.6. “Change of Control” means , unless otherwise provided in a Stock Award Agreement, the occurrence of any of the following events:

          (i) The sale, exchange, lease or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company to a person or group of related persons, as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act;

          (ii) A merger or consolidation or similar transaction involving the Company if the stockholders of the Common Stock of the Company immediately prior to such transaction do not own a majority of the outstanding common stock of the surviving company or its parent immediately after the transaction in substantially the same proportions relative to each other as immediately prior to such transaction;

          (iii) Any person or group becomes the Beneficial Owner, directly or indirectly, of more than 50% of the total voting power of the voting stock of the Company, including by way of merger, consolidation or otherwise (for the purposes of this clause (iii), a member of a group will not be considered to be the Beneficial Owner of the securities owned by other members of the group other than in response to a contested proxy or other control battle); or

          (iv) During any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board (together with any new Directors whose election by such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the Directors of the Company then still in office, who were either Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board then in office.

          2.7. “Code” means the Internal Revenue Code of 1986, as amended from time to time.

          2.8. “Committee” means the Board, or a committee of one or more members of the Board (or other individuals who are not members of the Board to the extent allowed by law) duly appointed by the Board in accordance with the Plan and Applicable Law. At any

2

time that no such committee has been appointed, the Board shall constitute the “Committee” hereunder.

          2.9. “Common Stock” means the Series A common stock of the Company, par value $0.01 per Share.

          2.10. “Company” means Mueller Water Products, Inc., a Delaware corporation.

          2.11. “Consultant” means any person (i) engaged by the Company or an Affiliate to render consulting or advisory services and who is compensated for such services or (ii) who is a member of the board of directors of an Affiliate. For purposes of determining eligibility to participate in the Plan, the term Consultant shall be clarified pursuant to the provisions of Section 5.4.

          2.12. “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Director, or Consultant, as applicable, is not interrupted or terminated. Unless otherwise expressly provided in the Stock Award, the Participant’s Continuous Service shall be deemed to have terminated when the Participant “separates from service” within the meaning of Code Section 409A.

          2.13. “Covered Employee” means a “covered employee” as determined for purposes of Section 162(m) of the Code.

          2.14. “Director” means a member of the Board of Directors of the Company.

          2.15. “Disability” (a) means with respect to all Incentive Stock Options, the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code, (b) for all other purposes, has the meaning under Section 409A(a)(2)(C)(i) of the Code, that is, the Participant (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death, or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Participant’s employer.

          2.16. “Employee” means any person employed by the Company or an Affiliate. Compensation by the Company or an Affiliate solely for services as a Director or as a Consultant shall not be sufficient to constitute “employment” by the Company or an Affiliate.

          2.17. “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

          2.18. “Fair Market Value” means, as of any date, the value of the Common Stock determined as follows:

3

          (i) If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no such sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable;

          (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; or

          (iii) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.

          (iv) Notwithstanding the foregoing, to the extent required to comply with Section 409A of the Code in order to avoid the imposition of penalties or interest in respect thereof, the value of the Common Stock shall be determined in a manner consistent with Section 409A (and the regulations and guidance promulgated thereunder).

          2.19. “Full-Value Stock Award” shall mean any of a Restricted Stock Bonus, Restricted Stock Units, Phantom Stock Units, Performance Share Bonus, or Performance Share Units.

          2.20. “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

          2.21. “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

          2.22. “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.

          2.23. “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

          2.24. “Participant” means an Employee, Director or Consultant to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.

          2.25. “Performance Share Bonus” means a grant of shares of the Company’s Common Stock not requiring a Participant to pay any amount of monetary consideration

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(other than par value to the extent required by Applicable Law), and subject to the provisions of Section 8.2 of the Plan.

          2.26. “Performance Share Unit” means the right to receive the value of one (1) share of the Company’s Common Stock at the time the Performance Share Unit vests, with the further right to elect to defer receipt of that value otherwise deliverable upon the vesting of an award of Performance Share Units to the extent permitted in the Participant’s agreement. These Performance Share Units are subject to the provisions of Section 8.2 of the Plan.

          2.27. “Phantom Stock Unit” means the right to receive the value of one (1) share of the Company’s Common Stock, subject to the provisions of Section 8.2 of the Plan.

          2.28. “Plan” means this Mueller Water Products, Inc. 2006 Stock Incentive Plan, as amended and in effect from time to time.

          2.29. “Restricted Stock Bonus” means a grant of shares of the Company’s Common Stock not requiring a Participant to pay any amount of monetary consideration (other than par value to the extent required by Applicable Law), and subject to the provisions of Section 8.2 of the Plan.

          2.30. “Restricted Stock Purchase Right” means the right to acquire shares of the Company’s Common Stock upon the payment of the agreed-upon monetary consideration, subject to the provisions of Section 8.2 of the Plan.

          2.31. “Restricted Stock Unit” means the right to receive the value of one (1) share of the Company’s Common Stock at the time the Restricted Stock Unit vests, with the further right to elect to defer receipt of that value otherwise deliverable upon the vesting of an award of restricted stock to the extent permitted in the Participant’s agreement. These Restricted Stock Units are subject to the provisions of Section 8.2 of the Plan.

          2.32. “Retirement” means the voluntary termination of a Participant’s Continuous Service at such time that the Participant’s age and years of service equal or exceed 70, but only after the Participant’s 60^th birthday.

          2.33. “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule l6b-3, as in effect from time to time.

          2.34. “Securities Act” means the Securities Act of 1933, as amended from time to time.

          2.35. “Stock Appreciation Right” means the right to receive an amount equal to the Fair Market Value of one (1) share of the Company’s Common Stock on the day the Stock Appreciation Right is redeemed, reduced by the deemed exercise price or base price of such right, subject to the provisions of Section 8.1 of the Plan.

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          2.36. “Stock Award” means any award of an Option, Restricted Stock Bonus, Restricted Stock Purchase Right, Stock Appreciation Right, Phantom Stock Unit, Restricted Stock Unit, Performance Share Bonus, Performance Share Unit, or other stock-based award.

          2.37. “Stock Award Agreement” means a written agreement between the Company and a holder of a Stock Award setting forth the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

          2.38. “Subsidiary” means a subsidiary corporation, as defined in Section 424(f) of the Code.

          2.39. “Ten Percent Shareholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation.

III. ADMINISTRATION.

          3.1. Administration. The Plan shall be administered by a Committee consisting of two or more directors, each of whom shall be a “non-employee director” within the meaning of Rule 16b-3 and an “outside director” within the meaning of Section 162(m) of the Code, unless otherwise determined by the Board. The Committee shall administer the Plan and shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

          (i) To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; what type or combination of types of Stock Awards shall be granted; the terms and conditions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive cash and/or Common Stock pursuant to a Stock Award; the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such person; and whether a Stock Award will be adjusted to account for dividends paid with respect to the Company’s Common Stock (subject to the requirements of Code Section 409A).

          (ii) To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for the administration of the Plan. The Committee, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan and the terms of the Stock Award fully effective (but only to the extent consistent with the requirements of Code Section 409A, where applicable).

          (iii) To amend the Plan or a Stock Award as provided in the Plan.

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          (iv) Generally, to exercise such powers and to perform such acts as the Committee deems necessary, desirable, convenient or expedient to promote the best interests of the Company consistent with the provisions of the Plan (subject to the requirements of Code Section 409A, where applicable).

          (v) To adopt sub-plans and/or special provisions applicable to Stock Awards regulated by the laws of a jurisdiction other than and outside of the United States. Except with respect to Section 4 of the Plan and such other sections as required by Applicable Law, the sub-plans and/or special provisions may take precedence over other provisions of the Plan to the extent expressly set forth in the terms of such sub-plans and/or special provisions.

          (vi) To authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of a Stock Award previously granted by the Committee.

          (vii) To impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any shares of Common Stock issued as a result of or under a Stock Award, including, without limitation, (A) restrictions under an insider trading policy and (B) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

          (viii) To provide, either at the time a Stock Award is granted or by subsequent action, that a Stock Award shall contain as a term thereof, a right, either in tandem with the other rights under the Stock Award or as an alternative thereto, of the Participant to receive, without payment to the Company, a number of shares of Common Stock, cash or a combination thereof, the amount of which is determined by reference to the value of the Stock Award.

          (ix) To assume, or provide for the issuance of substitute Stock Awards that will substantially preserve the otherwise applicable terms of, stock options and other stock-based awards previously granted by an Affiliate to an award holder who is or becomes eligible to participate in the Plan, as determined by the Committee in its sole discretion; provided, however, that any such assumption or substitution shall comply with Applicable Law, including but not limited to Sections 409A and 424 of the Code, and any such substitute Stock Awards may be granted at a price below Fair Market Value only to the extent that such grants would otherwise comply with the terms of this Plan, including but not limited to Section 10.10 hereof.

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          3.2. Delegation by the Committee. In no way limiting any other provision of the Plan, the Committee may delegate its duties and powers hereunder in whole or in part to any subcommittee thereof consisting solely of at least two individuals who are intended to qualify as “Non-Employee Directors” within the meaning of Rule 16b-3 under the Exchange Act and “outside directors” within the meaning of Section 162(m) of the Code.

          3.3. Stock Pool. The Committee may, by resolution, authorize the Chief Executive Officer or another director to grant a Stock Award, to the extent permitted by Delaware law, to any Employee who is not a Covered Employee or expected to become a Covered Employee or is not a named executive officer, in accordance with the limitations established by the Committee including the maximum number of shares of Common Stock subject to all such Stock Awards made in a fiscal year of the Company, the maximum Shares subject to all Stock Awards made to any one person at any one time, the requirement that no Stock Award be made at less than Fair Market Value, and subject to any other restrictions required by law. Any Stock Awards made pursuant to this delegation shall be reported periodically to the Committee.

          3.4. Effect of the Committee’s Decision. All determinations, interpretations and constructions made by the Committee or its duly authorized sub-committee(s) in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.

IV. SHARES SUBJECT TO THE PLAN.

          4.1. Share Reserve. Subject to the provisions of Section 11 of the Plan relating to adjustments upon changes in Common Stock, the maximum aggregate number of shares of Common Stock that may be issued pursuant to Stock Awards shall not exceed 8,000,000 shares of Common Stock (“Share Reserve”), provided that each share of Common Stock issued pursuant to an Option or Restricted Stock Purchase Right shall reduce the Share Reserve by one (1) share and each share of Common Stock subject to the redeemed portion of a Stock Appreciation Right (whether the distribution upon redemption is made in cash, stock or a combination of the two) shall reduce the Share Reserve by one (1) share. Each share of Common Stock issued pursuant to a Full-Value Stock Award shall reduce the Share Reserve by one (1) share. To the extent that a distribution pursuant to a Stock Award is made in cash, the Share Reserve shall be reduced by the number of shares of Common Stock subject to the redeemed or exercised portion of the Stock Award. Notwithstanding any other provision of the Plan to the contrary, the maximum aggregate number of shares of Common Stock that may be issued under the Plan pursuant to Incentive Stock Options is 1,250,000 shares of Common Stock (“ISO Limit”), subject to the adjustments provided for in Section 11 of the Plan.

          4.2. Reversion of Shares to the Share Reserve. If any Stock Award granted under this Plan shall for any reason (i) expire, be cancelled or otherwise terminate, in whole or in part, without having been exercised or redeemed in full, (ii) be reacquired by the Company prior to vesting, or (iii) be repurchased at cost by the Company prior to vesting, the shares of Common Stock not acquired under such Stock Award shall revert or be added to

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the Share Reserve and become available for issuance under the Plan; provided, however, that such shares of Common Stock shall not be available for issuance pursuant to the exercise of Incentive Stock Options.

          4.3. Source of Shares. The shares of Common Stock subject to the Plan may be unissued shares or reacquired shares (whether purchased on the market or otherwise reacquired).

V. ELIGIBILITY.

          5.1. Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to Employees. Stock Awards other than Incentive Stock Options may be granted to Employees, Directors, and Consultants. Nonstatutory Stock Options and Stock Appreciation Rights may be granted only with respect to “service recipient stock” as such term is used in Code Section 409A.

          5.2. Ten Percent Stockholders. A Ten Percent Shareholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock at the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant, except as provided in Section 3.1(ix) above.

          5.3. Annual Limitation. Subject to the provisions of Section 11 of the Plan relating to adjustments upon changes in the shares of Common Stock, no Employee shall be eligible to be granted Options and other Stock Awards covering more than 1,000,000 shares of Common Stock (with respect to Stock Awards payable in shares) or with a value in excess of $5,000,000 (with respect to Stock Awards payable in cash) during any fiscal year; provided that in connection with his or her initial service, an Employee may be granted Options and other Stock Awards covering not more than an additional 300,000 shares of Common Stock (with respect to Stock Awards payable in shares) or with a value in excess of $5,000,000 (with respect to Stock Awards payable in cash), which shall not count against the limit set forth in the preceding sentence.

          5.4. Consultants. A Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not available to register either the offer or the sale of the Company’s securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the Company determines both (1) that such grant (A) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (2) that such grant complies with the securities laws of all other relevant jurisdictions.

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VI. OPTION PROVISIONS.

          6.1 Form of Options. Each Option shall be in such form and shall contain such terms and conditions as the Committee shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased upon exercise of each type of Option. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:

          6.2 Term. In the absence of a provision to the contrary in the individual Optionholder’s Stock Award Agreement, and subject to the provisions of Section 5.2 of the Plan regarding grants of Incentive Stock Options to Ten Percent Stockholders, the term of the Option shall be ten (10) years from the date it was granted.

          6.3 Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), or such other limit as may be set by Applicable Law, the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options.

          6.4 Exercise Price of an Incentive Stock Option. The exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted (or less than one hundred and ten percent (110%) in the case of a Ten Percent Shareholder), except as provided in Section 3.1(ix) above.

          6.5 Exercise Price of a Nonstatutory Stock Option. The exercise price of each Nonstatutory Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted, except as provided in Section 3.1(ix) above.

          6.6 Consideration.

          (i) The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (a) in cash or by check at the time the Option is exercised or (b) at the discretion of the Committee (in the case of Incentive Stock Options, at the time of the grant of the Option): (1) by delivery to the Company of other shares of Common Stock (subject to such requirements as may be imposed by the Committee), (2) if there is a public market for the Common Stock at such time, and to the extent permitted by Applicable Law, pursuant to a “same day sale” program that results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company

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from the sales proceeds, (3) reduction of the Company’s liability to the Optionholder, (4) by any other form of consideration permitted by law, but in no event shall a promissory note or other form of deferred payment constitute a permissible form of consideration for an Option granted under the Plan, or (5) by some combination of the foregoing. In each such case, the combination of any cash and property used to pay the purchase price shall have a Fair Market Value on the exercise date equal to the applicable exercise price.

          (ii) Unless otherwise specifically provided in the Stock Award Agreement, the purchase price of Common Stock acquired pursuant to a Stock Award that is paid by delivery to the Company of other Common Stock, which Common Stock was acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a supplemental charge to earnings for financial accounting purposes).

          (iii) Whenever a Participant is permitted to pay the exercise price of a Stock Award and/or taxes relating to the exercise of a Stock Award by delivering Common Stock, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirements by presenting proof of beneficial ownership of such Common Stock, in which case the Company shall treat the Stock Award as exercised or redeemed without further payment and shall withhold such number of shares of Common Stock from the Common Stock acquired under the Stock Award. When necessary to avoid a supplemental charge to earnings for financial accounting purposes, any such withholding for tax purposes shall be made at the statutory minimum rate of withholding.

          6.7 Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder.

          6.8 Transferability of a Nonstatutory Stock Option. Except as otherwise provided in the Stock Award Agreement, a Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may transfer a Nonstatutory Stock Option to a trust established solely for the benefit of one or more family members (as defined in the General Instructions to Form S-8 promulgated under the Securities Act of 1933, or a successor to such instructions or such form) of the Optionholder; provided that the Participant may not receive any consideration for the transfer. All terms and conditions applicable to the Nonstatutory Stock Option, including without limitation provisions relating to the termination of the Participant’s Continuous Service, and the effect thereof, shall continue to apply following a transfer made in accordance with this Section 6.8. Subsequent transfers of a Nonstatutory Stock Option transferred by a Participant in accordance with this Section 6.8 shall be prohibited, except by will or by the laws of descent and distribution; provided that a transferee, where applicable under the terms of the transfer from the Participant, shall have the right previously held by the Participant to designate a Beneficiary.

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          6.9 Vesting Generally. Options granted under the Plan shall be exercisable at such times and upon such terms and conditions as may be determined by the Committee. The vesting provisions of individual Options may vary. The provisions of this Section 6.9 are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised.

          6.10 Termination of Unvested Options. Any Option or portion thereof that is not vested at the time of termination of Continuous Service shall lapse and terminate, and shall not be exercisable by the Optionee or any other person, unless otherwise provided for in the Stock Award Agreement.

          6.11 Termination of Continuous Service. In the event an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death, Disability or Retirement or termination for Cause), the Option shall remain exercisable for three (3) months following the date of termination (to the extent that the Option was exercisable at that time), or such other period specified in the Stock Award Agreement. In no event may the Option be exercised after the expiration of the term of the Option as set forth in the Stock Award Agreement. If the Optionholder does not exercise his or her Option within the specified time, the Option shall terminate.

          6.12 Extension of Termination Date. An Optionholder’s Stock Award Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service (other than upon the Optionholder’s death or termination for Cause) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act or other applicable securities law, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the Stock Award Agreement or (ii) the expiration of a period of three (3) months after the termination of the Optionholder’s Continuous Service during which the exercise of the Option would not be in violation of such registration requirements or other applicable securities law. The provisions of this Section 6.12 notwithstanding, in the event that a sale of the shares of Common Stock received upon exercise of his or her Option would subject the Optionholder to liability under Section 16(b) of the Exchange Act, then the Option will terminate on the earlier of (1) the fifteenth (15^th) day after the last date upon which such sale would result in liability, or (2) two hundred ten (210) days following the date of termination of the Optionholder’s employment or other service to the Company (and in no event later than the expiration of the term of the Option).

          6.13 Disability or Retirement of Optionholder. In the event an Optionholder’s Continuous Service terminates upon the Optionholder’s Disability or Retirement, the Option shall remain exercisable for two (2) years following the date of termination (to the extent that the Option was exercisable at that time), or such other period specified in the Stock Award Agreement. In no event may the Option be exercised after than the expiration of the term of the Option as set forth in the Stock Award Agreement. If the Optionholder does not exercise his or her Option within the specified time, the Option shall terminate.

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          6.14 Death of Optionholder. In the event (i) an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death or (ii) the Optionholder dies after the termination of his or her Continuous Service but within the post-termination exercise period applicable to the Option, then, except as otherwise provided in the Stock Award Agreement, the Option shall remain exercisable for two (2) years following the date of death (to the extent that the Option was exercisable at that time). In no event may the Option be exercised after the expiration of the term of the Option as set forth in the Stock Award Agreement. If the Option is not exercised by the person entitled to do so within the specified time, the Option shall terminate.

          6.15 Termination for Cause. Unless otherwise provided in the applicable Stock Award Agreement, the Option shall cease to be exercisable as to all unexercised shares of Common Stock (including any vested shares) immediately upon the termination of the Optionholder’s Continuous Service for Cause.

          6.16 Early Exercise Generally Not Permitted. The Company may grant Options which permit the Optionholder to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the vesting of the Option. If a Stock Award Agreement does permit such early exercise, any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Committee determines to be appropriate.

          6.17 No Repricing of Options. The Committee shall have no authority to make any adjustment or amendment (except as provided in Section 3.1(ix) or Article XI of this Plan), and no such adjustment or amendment shall be made, that reduces or would have the effect of reducing the exercise price of an Option previously granted under the Plan, whether through amendment, cancellation or replacement grants, or other means, unless the Company’s stockholders shall have approved such adjustment or amendment.

VII. NON-DISCRETIONARY STOCK AWARDS FOR ELIGIBLE DIRECTORS.

          7.1 Stock Awards for Eligible Directors. In addition to any other Stock Awards that Directors may be granted on a discretionary basis under the Plan, each Director of the Company who is not an Employee of the Company or any Affiliate (each, an “Eligible Director”) shall be automatically granted, without the necessity of action by the Committee, the following Stock Awards:

          (i) Initial Grant. On the date that a Director commences service on the Board and satisfies the definition of an Eligible Director, an initial grant of a Stock Award (the “Initial Grant”) shall automatically be made to that Eligible Director. The type of Stock Award, the number of shares subject to this Initial Grant and other terms governing this Initial Grant shall be as determined by the Committee in its sole discretion. If the Committee does not establish the terms and conditions of the Initial Grant for a given newly-elected Eligible Director prior to the date of grant, then the Stock Award shall be of the same type, and for the same number of shares, as the Initial Grant made to the immediately preceding newly-elected Eligible Director. If at the time a Director first

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commences service on the Board, the Director does not satisfy the definition of an Eligible Director, such Director shall not be entitled to an Initial Grant at any time, even if such Director subsequently becomes an Eligible Director.

          (ii) Annual Grant. An annual Stock Award grant (the “Annual Grant”) shall automatically be made to each Director who (1) is re-elected to the Board, (2) is an Eligible Director on the relevant grant date, and (3) has served as a Director for a period of at least six (6) months on the relevant grant date. The type of Stock Award, the number of shares subject to the Annual Grant and other terms governing the Annual Grant shall be as determined by the Committee in its sole discretion. If the Committee does not establish the terms and conditions of the Annual Grant prior to the date of grant, then the Annual Grant shall be of the same type, and for the same number of shares of Common Stock, as the Annual Grants made for the immediately preceding year. The date of grant of an Annual Grant is the date on which the Director is re-elected to serve on the Board.

          (iii) Vesting. Notwithstanding the foregoing, if the vesting of the Stock Award is based solely on the Director’s Continuous Service, the Stock Award will not fully vest in less than three (3) years.

          (iv) Vesting on Retirement. All Initial Grants and Annual Grants held by an Eligible Director shall become fully vested and exercisable upon the termination of the Eligible Director’s Continuous Service by reason of Retirement, unless otherwise expressly set forth in the applicable Stock Award Agreement(s).

VIII. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

          8.1. Stock Appreciation Rights. Each award of Stock Appreciation Rights (“SARs”) granted under the Plan shall be subject to such terms and conditions as the Committee shall deem appropriate. The terms and conditions of SAR agreements need not be identical, but each SAR agreement shall include the substance of each of the applicable provisions of this Section 8.1. The two types of SARs that are authorized for issuance under this Plan are:

          (i) Stand-Alone SARs. The following terms and conditions shall govern the grant and redeemability of stand-alone SARs:

          (A) The stand-alone SAR shall cover a specified number of underlying shares of Common Stock and shall be redeemable upon such terms and conditions as the Committee may establish. Upon redemption of the stand-alone SAR, the holder shall be entitled to receive a distribution from the Company in an amount equal to the excess of (i) the aggregate Fair Market Value (on the redemption date) of the shares of Common Stock underlying the redeemed right over (ii) the aggregate base price in effect for those shares.

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          (B) The number of shares of Common Stock underlying each stand-alone SAR and the base price in effect for those shares shall be determined by the Committee in its sole discretion at the time the stand-alone SAR is granted. In no event, however, may the base price per share be less than one hundred percent (100%) of the Fair Market Value per underlying share of Common Stock on the grant date.

          (C) The distribution with respect to any redeemed stand-alone SAR may be made in shares of Common Stock valued at Fair Market Value on the redemption date, in cash, or partly in shares and partly in cash, as the Committee shall in its sole discretion deem appropriate.

          (ii) Stapled SARs. The following terms and conditions shall govern the grant and redemption of stapled SARs:

          (A) Stapled SARs may only be granted concurrently with an Option to acquire the same number of shares of Common Stock as the number of such shares underlying the stapled SARs.

          (B) Stapled SARs shall be redeemable upon such terms and conditions as the Committee may establish and shall grant a holder the right to elect among (i) the exercise of the concurrently granted Option for shares of Common Stock, whereupon the number of shares of Common Stock subject to the stapled SARs shall be reduced by an equivalent number, (ii) the redemption of such stapled SARs in exchange for a distribution from the Company in an amount equal to the excess of the Fair Market Value (on the redemption date) of the number of vested shares which the holder redeems over the aggregate base price for such vested shares, whereupon the number of shares of Common Stock subject to the concurrently granted Option shall be reduced by any equivalent number, or (iii) a combination of (i) and (ii).

          (C) The distribution to which the holder of stapled SARs shall become entitled upon the redemption of stapled SARs may be made in shares of Common Stock valued at Fair Market Value on the redemption date, in cash, or partly in shares and partly in cash, as the Committee shall in its sole discretion deem appropriate.

          (iii) Limitations. The total number of shares of Common Stock subject to a SAR may, but need not, vest in period installments that may, but need not, be equal. The Committee shall determine the criteria under which shares of Common Stock under the SAR may vest. If the Stock Award Agreement does not provide for transferability, then the shares subject to the SAR shall not be transferable except by will or by the laws of descent and distribution.

          (iv) No Repricing of Stock Appreciation Rights. The Committee shall have no authority to make any adjustment or amendment (except as provided in Section 3.1(ix) or Article

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XI of this Plan), and no such adjustment or amendment shall be made, that reduces or would have the effect of reducing the base price of a Stock Appreciation Right previously granted under the Plan, whether through amendment, cancellation or replacement grants, or other means, unless the Company’s stockholders shall have approved such adjustment or amendment.

          8.2. Other Stock-Based Awards. The Committee, in its sole discretion, may grant or sell an award of a Restricted Stock Bonus, Restricted Stock Purchase Right, Phantom Stock Unit, Restricted Stock Unit, Performance Share Bonus, Performance Share Unit, or other stock-based award that is valued in whole or in part by reference to, or is otherwise based on, the Fair Market Value of the Company’s Common Stock (each, an “Other Stock-Based Award”). Each Other Stock-Based Award shall be subject to a Stock Award Agreement which shall contain such terms and conditions as the Committee shall deem appropriate, including any provisions for the deferral of the receipt of any shares of Common Stock, cash or property otherwise distributable to the Participant in respect of the Stock Award. The terms and conditions of Other Stock-Based Awards may change from time to time, and the terms and conditions of separate Other Stock-Based Awards need not be identical, but each Other Stock-Based Award shall be subject to the following provisions (either through incorporation of provisions hereof by reference in the applicable Stock Award Agreement or otherwise):

          (i) Purchase Price. Other Stock-Based Awards may be granted in consideration for past services actually rendered to the Company or an Affiliate. The purchase price (if any) under each Other Stock-Based Award shall be such amount as the Committee shall determine and designate in the applicable Stock Award Agreement. To the extent required by Applicable Law, the purchase price shall not be less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Other Stock-Based Award on the date such award is made or at the time the purchase is consummated, as applicable.

          (ii) Consideration.

          (A) The purchase price (if any) of Common Stock acquired pursuant to Other Stock-Based Awards shall be paid either: (1) in cash or by check, or (2) as determined by the Committee (and to the extent required by Applicable Law, at the time of the grant): (v) by delivery to the Company of other shares of Common Stock (subject to such requirements as may be imposed by the Committee), (w) if there is a public market for the Common Stock at such time, and to the extent permitted by Applicable Law, pursuant to a “same day sale” program that results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds, (x) reduction of the Company’s liability to the Participant, (y) by any other form of consideration permitted by law, but in no event shall a promissory note or other form of deferred payment constitute a permissible form of consideration, or (z) by some combination of the foregoing.

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          (B) Unless otherwise specifically provided in the Stock Award Agreement, the purchase price of Common Stock acquired pursuant to any Other Stock-Based Award that is paid by delivery to the Company of other Common Stock, which Common Stock was acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a supplemental charge to earnings for financial accounting purposes). To the extent required by Applicable Law, the Participant shall pay the Common Stock’s “par value” solely in cash or by check.

          (C) Whenever a Participant is permitted to pay the exercise price of any Other Stock-Based Award and/or taxes relating to the exercise thereof by delivering Common Stock, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirements by presenting proof of beneficial ownership of such Common Stock, in which case the Company shall treat the Other Stock-Based Award as exercised or redeemed without further payment and shall withhold such number of shares of Common Stock from the Common Stock acquired under the Other Stock-Based Award. When necessary to avoid a supplemental charge to earnings for financial accounting purposes, any such withholding for tax purposes shall be made at the statutory minimum rate of withholding.

          (iii) Vesting. The total number of shares of Common Stock subject to each Other Stock-Based Award may, but need not, vest and/or become redeemable in periodic installments that may, but need not, be equal. The Committee shall determine the criteria under which shares of Common Stock under the each Other Stock-Based Award may vest. The criteria may or may not include performance criteria or Continuous Service. Shares of Common Stock acquired under each Other Stock-Based Award may, but need not, be subject to a share repurchase right or similar forfeiture feature in favor of the Company in accordance with a vesting schedule to be determined by the Committee.

          (iv) Distributions. The distribution with respect to any Other Stock-Based Award may be made in shares of Common Stock valued at Fair Market Value on the redemption or exercise date, in cash, or partly in shares and partly in cash, as the Committee shall in its sole discretion deem appropriate.

          (v) Termination of Participant’s Continuous Service. In the event a Participant’s Continuous Service terminates, the Company may repurchase or reacquire, and/or the Participant shall forfeit (as applicable), any or all of the shares of Common Stock held by the Participant that have not vested as of the date of termination on such terms and conditions as set forth in the Stock Award Agreement.

          (vi) Transferability. Rights to acquire shares of Common Stock under Other Stock-Based Award shall be transferable by the Participant only upon such terms and conditions as are set forth in the applicable Stock Award Agreement, as the Committee shall determine in its discretion. If the Stock Award Agreement does not provide for

17

transferability, then the shares subject to Other Stock-Based Award shall not be transferable except by will or by the laws of descent and distribution. Notwithstanding the foregoing, the Participant may transfer an Other Stock-Based Award to a trust established solely for the benefit of one or more family members (as defined in the General Instructions to Form S-8 promulgated under the Securities Act of 1933, or a successor to such instructions or such form) of the Participant; provided that the Participant may not receive any consideration for the transfer. All terms and conditions applicable to the Other Stock-Based Award, including without limitation provisions relating to the termination of the Participant’s Continuous Service, and the effect thereof, shall continue to apply following a transfer made in accordance with this Section 8.2(vi). Subsequent transfers of an Other Stock-Based Award transferred by a Participant in accordance with this Section 8.2(vi) shall be prohibited, except by will or by the laws of descent and distribution; provided that a transferee, where applicable under the terms of the transfer from the Participant, shall have the right previously held by the Participant to designate a Beneficiary.

IX. ISSUANCE OF SHARES.

          9.1. Availability of Shares. During the terms of the outstanding Stock Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Stock Awards.

          9.2. Securities Law Compliance. The grant of Stock Awards and the issuance of Common Stock pursuant to Stock Awards shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to securities. The Company shall use commercially reasonable efforts to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise, redemption or satisfaction of the Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act or under any foreign law of similar effect the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after commercially reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock related to such Stock Awards unless and until such authority is obtained.

          9.3. Proceeds. Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute general funds of the Company.

X. MISCELLANEOUS.

          10.1. Vesting Generally. If the vesting of a Stock Award is based solely on the Participant’s Continuous Service, the Stock Award will not fully vest in less than three (3) years and if the vesting of a Stock Award is based on the achievement of performance criteria, the Stock Award will not fully vest in less than one (1) year.

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          10.2. Acceleration of Exercisability and Vesting. The Committee shall have the power to accelerate exercisability and/or vesting of any Stock Award only in the case of death, disability, retirement or Change of Control. Subject to the prior sentence, the Committee shall have the power to accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest.

          10.3. Clawback. The Company may provide in any Stock Award Agreement that, upon the Committee’s discovery of facts that would be grounds for a termination for Cause of a Participant’s Continuous Service, and regardless of whether such discovery is made prior to or following a termination of Continuous Service for any reason, the Committee may (in its sole discretion, but acting in good faith) direct that the Company recover all or a portion of the Stock Award, including any shares of Common Stock then held by the Participant as well as any gain recognized by the Participant upon any sale of the shares of Common Stock issued pursuant to the Stock Award. In no event shall the amount to be recovered by the Company be less than any amount required to be repaid or recovered as a matter of law. The Committee shall determine whether the Company shall effect any such recovery or repayment (i) by seeking recovery or repayment from the Participant, (ii) by reducing (subject to Applicable Law and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be payable to the Participant under any compensatory plan, program, agreement or arrangement maintained by the Company or any of its Affiliates, (iii) by withholding payment of future compensation (including the payment of any discretionary bonus amount) or grants of compensatory awards that would otherwise have been made in accordance with the otherwise applicable compensation practices of the Company or any Affiliate, or (iv) by any combination of the foregoing.

          10.4. Compliance of Performance Awards. Notwithstanding anything to the contrary herein, any Stock Award granted under this Plan may, but need not, be granted in a manner which may be deductible by the Company under Section 162(m) of the Code and, as applicable, compliant with the requirements of Section 409A of the Code (such awards, “Performance-Based Awards”). A Participant’s Performance-Based Award shall be determined based on the attainment of written performance goals approved by the Committee for a performance period established by the Committee, which goals are approved (i) while the outcome for that performance period is substantially uncertain and (ii) during such period of time as permitted by Applicable Law. The performance goals, which must be objective, shall be based upon one or more of the following criteria: (i) consolidated earnings before or after taxes (including earnings before one or more of the following: interest, taxes, depreciation and amortization); (ii) net income; (iii) operating income; (iv) earnings per share; (v) book value per share; (vi) return on stockholders’ equity; (vii) expense management; (viii) return on investment; (ix) improvements in capital structure; (x) profitability of an identifiable business unit or product; (xi) maintenance or improvement of profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or sales; (xv) costs and/or cost reductions or savings; (xvi) cash flow; (xvii) working capital; (xviii) return on invested

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capital or assets; (xix) consummations of acquisitions or sales of certain Company assets, subsidiaries or other businesses; (xx) funds from operations and (xxi) pre-tax income . The foregoing criteria may relate to the Company, one or more of its Affiliates or one or more of its divisions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the Committee shall determine. In addition, to the degree consistent with Section 162(m) of the Code (or any successor section thereto) and/or Section 409A of the Code, the performance goals may be calculated without regard to extraordinary items. The Committee shall determine whether, with respect to a performance period, the applicable performance goals have been met with respect to a given Participant and, if they have, to so certify and ascertain the amount of the applicable Performance-Based Award. No Performance-Based Awards will be paid for such performance period until such certification is made by the Committee. The amount of the Performance-Based Award actually paid to a given Participant may be less than the amount determined by the applicable performance goal formula, at the discretion of the Committee. The amount of the Performance-Based Award determined by the Committee for a performance period shall be paid to the Participant at such time as determined by the Committee in its sole discretion after the end of such performance period; provided, however, that a Participant may, if and to the extent permitted by the Committee and consistent with the provisions of Section 162(m) and/or Section 409A of the Code, elect to defer payment of a Performance-Based Award.

          10.5. Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to a Stock Award except to the extent that the Company has issued the shares of Common Stock relating to such Stock Award or except as expressly provided in a Stock Award Agreement.

          10.6. No Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the Company, and any applicable provisions of the corporate law of the state or other jurisdiction in which the Company is domiciled, as the case may be.

          10.7. Investment Assurances. The Company may require a Participant, as a condition of exercising or redeeming a Stock Award or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of acquiring the Common Stock; (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own

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account and not with any present intention of selling or otherwise distributing the Common Stock; and (iii) to give such other written assurances as the Company may determine are reasonable in order to comply with Applicable Law. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act or (2) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws, and in either case otherwise complies with Applicable Law. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with Applicable Laws, including, but not limited to, legends restricting the transfer of the Common Stock.

          10.8. Designation of a Beneficiary. The Committee may establish rules pertaining to the designation by the Participant of a beneficiary who is to receive any shares of Common Stock and/or any cash, or have the right to exercise or redeem that Participant’s Stock Award, in the event of such Participant’s death.

          10.9. Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement, the Participant may satisfy any federal, state, local, or foreign tax withholding obligation relating to the grant, exercise, acquisition or redemption of a Stock Award or the acquisition, vesting, distribution or transfer of Common Stock under a Stock Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (where withholding in excess of the minimum amount will result in a supplemental charge to earnings for financial accounting purposes); or (iii) delivering to the Company owned and unencumbered shares of Common Stock; provided, however, that in the case of the tender of shares, that any such shares have been held by the Participant for not less than six (6) months (or such other period as established from time to time by the Committee in order to avoid a supplemental charge to earnings for financial accounting purposes).

          10.10. Section 409A. Notwithstanding anything in the Plan to the contrary, it is the intent of the Company that the administration of the Plan, and the granting of all Stock Awards under this Plan, shall be done in accordance with Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including any guidance or regulations that may be issued after the effective date of this Plan, and shall not cause the acceleration of, or the imposition of the additional, taxes provided for in Section 409A of the Code. Any Stock Award shall be granted, deferred, paid out or modified under this Plan in a manner that shall be intended to avoid resulting in the acceleration of taxation, or the imposition of penalty taxation, under Section 409A upon a Participant. In the event that it is reasonably determined by the Committee that any amounts

21

payable in respect of any Stock Award under the Plan will be taxable to a Participant under Section 409A of the Code prior to the payment and/or delivery to such Participant of such amounts under the applicable Stock Award Agreement or will be subject to the acceleration of taxation or the imposition of penalty taxation under Section 409A of the Code, the Company may either (i) adopt such amendments to the Plan and related Stock Award, and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Plan and Stock Awards hereunder, and/or (ii) take such other actions as the Committee determines necessary or appropriate to comply with the requirements of Section 409A of the Code. Notwithstanding anything to the contrary herein, if Participant is a “specified employee” under Section 409A of the Code, then any payment(s) to the Participant described herein upon his or her termination of continuous service that (A) constitute “deferred compensation” to a Participant under Section 409A; (B) are not exempt from Section 409A and (C) are otherwise payable within 6 months after Participant’s termination of continuous service, shall instead be made on the date 6 months and 1 day after such termination of continuous service, and such payment(s) shall be increased by an amount equal to interest on such payment(s) at a rate of interest equal to the Federal Funds Rate in effect as of the date of termination of continuous service from the date on which such payment(s) would have been made in the absence of this provision and the payment date described in this sentence.

          10.11. Market Standoff Provision. If required by the Company (or a representative of the underwriter(s)) in connection with the first underwritten registration of the offering of any equity securities of the Company under the Securities Act, for a specified period of time, the Participant shall not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of the Common Stock acquired by the Participant pursuant to a Stock Award, and shall execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop transfer instructions with respect to such shares until the end of such period.

          10.12 De Minimis Cap. Notwithstanding any other provision of the Plan, the Committee may grant Stock Awards that do not conform to the requirements of the Plan so long as such Stock Awards do not exceed 10% of the shares authorized for issuance under the Plan.

XI. ADJUSTMENTS UPON CHANGES IN STOCK.

          11.1. Capitalization Adjustments. In the event of any change in the Common Stock subject to the Plan or subject to or underlying any Stock Award, by reason of any stock dividend, stock split, reverse stock split, reorganization, recapitalization, merger, consolidation, spin-off, combination, exchange of shares of Common Stock or other corporate exchange, or any distribution or dividend to stockholders of Common Stock

22

(whether paid in cash or otherwise) or any transaction similar to the foregoing, the Committee shall, without liability to any person, make such substitution or adjustment, if any, as it deems to be equitable to (i) the type, class(es) and maximum number of securities or other property subject to the Plan pursuant to the Share Reserve, the ISO Limit, and Section 5.3, (ii) the type, class(es) and number of securities subject to option grants to Eligible Directors under Section 7 of the Plan, (iii) the type, class(es) and number of securities or other property subject to, as well as the exercise price, base price, redemption price or purchase price applicable to, outstanding Stock Awards or (iv) any other affected terms of any outstanding Stock Awards. Any determination, substitution or adjustment made by the Committee under this Section 11.1, shall be final, binding and conclusive on all persons. The conversion of any convertible securities of the Company shall not be treated as a transaction that shall cause the Committee to make any determination, substitution or adjustment under this Section 11.1. Any actions taken under this Section 11.1 shall be made in accordance with the applicable restrictions of Code Section 409A, including without limitation such restrictions with regard to the adjustment of stock options and stock appreciation rights that are considered exempt from Code Section 409A.

          11.2. Adjustments Upon a Change of Control. In the event of a Change of Control, then the Committee or the board of directors of any surviving entity or acquiring entity may provide or require that the surviving or acquiring entity shall: (1) assume or continue all or any part of the Stock Awards outstanding under the Plan or (2) substitute substantially equivalent stock awards (including an award to acquire substantially the same consideration paid to the stockholders in the transaction by which the Change of Control occurs) for those Stock Awards outstanding under the Plan. In the event any surviving entity or acquiring entity refuses to assume or continue outstanding Stock Awards or to substitute similar stock awards for those outstanding under the Plan, then with respect to Stock Awards held by Participants whose Continuous Service has not terminated, the Committee in its sole discretion and without liability to any person may: (1) provide for the payment of a cash amount in exchange for the cancellation of a Stock Award equal to the product of (x) the excess, if any, of the Fair Market Value per share of Common Stock at such time over the exercise or redemption price, if any, and (y) the total number of shares then subject to such Stock Award; (2) continue the Stock Awards upon such terms as the Committee determines in its sole discretion; (3) provide for the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Stock Awards (including any unrealized value immediately prior to the Change of Control) previously granted hereunder, as determined by the Committee in its sole discretion; or (4) notify Participants holding Stock Awards that they must exercise or redeem any portion of such Stock Award (including, at the discretion of the Committee, any unvested portion of such Stock Award) at or prior to the closing of the transaction by which the Change of Control occurs and that the Stock Awards shall terminate if not so exercised or redeemed at or prior to the closing of the transaction by which the Change of Control occurs. With respect to any other Stock Awards outstanding under the Plan, such Stock Awards shall terminate if not exercised or redeemed with respect to the vested portion of the Stock Award (and, at the discretion of the Committee, any unvested portion of such Stock Award) at or prior to the closing of the transaction by which the Change of Control occurs. In the event of the dissolution or liquidation of the Company,

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unless the Board determined otherwise, all outstanding Stock Awards will terminate immediately prior to the dissolution or liquidation of the Company. In all cases, the Committee shall not be obligated to treat all Stock Awards, even those that are of the same type, in the same manner. Any actions taken under this Section 11.2 shall be made in accordance with the applicable restrictions of Code Section 409A.

XII. AMENDMENT OR TERMINATION OF THE PLAN OR STOCK AWARDS.

          12.1. Term and Termination of the Plan. The Committee may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the day before the tenth (10^th) anniversary of the earlier of the date that the Plan is approved by the stockholders of the Company or the date the Plan is adopted by the Board. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

          12.2. Amendment of the Plan and Stock Awards. The Committee at any time, and from time to time, may amend the Plan, subject to the approval of the Company’s stockholders to the extent such approval is necessary under Applicable Law or is required by the terms of Section 6.17 or Section 8.1(iv) of the Plan. The Committee at any time, and from time to time, may amend the terms of one or more Stock Awards. It is expressly contemplated that the Committee may amend the Plan and Stock Awards in any respect the Committee deems necessary or advisable (i) to provide eligible Participants with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and deferred compensation and/or (ii) to bring the Plan and/or Stock Awards granted under the Plan into compliance with Applicable Law.

          12.3. No Material Impairment of Rights. Notwithstanding anything to the contrary in the Plan, the amendment, suspension or termination of the Plan and the amendment of outstanding Stock Awards, shall not materially impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the Participant unless such amendment is necessary pursuant to Section 10.10 hereof, in which case the Participant will be deemed to have consented to the amendment by virtue of accepting the grant of the Stock Award.

XIII. EFFECTIVE DATE OF PLAN.

          13.1 Effective Date. The Plan shall become effective as of the date the Board approves the Plan, or such later date as is designated by the Board (such date, as set forth on the first page of this Plan, the “Effective Date”), subject to the approval of the Plan by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted by the Board.

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XIV. CHOICE OF LAW.

          14.1 Choice of Law. The law of the State of Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state’s conflict of laws rules.

[Revised 02/06/08]

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EX-12.1

Exhibit 12.1

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

     The following table sets forth the ratio of earnings to fixed charges for the periods indicated. The periods ending September 30, 2005 and 2004 are unaudited.

										Nine months
										ended
	Year ended September 30,									September 30,
	2008(a)		2007(a)		2006(a)		2005			2005		2004
					(in millions)
Income (loss) before income taxes	$	73.7	$	86.7	$	13.1	$	(0.5	)	$	7.9	$	(9.9	)
Fixed charges:
Total interest including amortization of debt discount and issue costs and amounts capitalized		77.5		90.8		123.7		21.5			15.5		13.4
Estimated interest within rent expense		4.1		3.0		3.3		—			—		0.1
Total fixed charges	$	81.6	$	93.8	$	127.0	$	21.5		$	15.5	$	13.5
Earnings (b)	$	155.3	$	180.5	$	140.1	$	21.0		$	23.4	$	3.6
Ratio of earnings to fixed charges(c)		1.9		1.9		1.1		—			1.5		—

(a)	Data for the fiscal years ended September 30, 2008, 2007 and 2006 include results from Predecessor Mueller, which was acquired by the Company on October 3, 2005.
(b)	For these ratios, “earnings” represents income (loss) before income taxes plus fixed charges.
(c)	Due to losses during the year ended September 30, 2005, and the nine months ended September 30, 2004 the ratio of earnings to fixed charges for those periods was less than 1.0. The deficiency of earnings to total fixed charges was $0.5 million and $9.9 million, respectively, for those periods.

EX-14.1

Code of Business Conduct and Ethics Doing the Right Thing

LETTER FROM THE
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER

June 16, 2008

From the Desk of Gregory E. Hyland,
     Chairman of the Board and Chief Executive Officer:

To all Employees, Agents and Associates of Mueller Water Products, Inc. and its subsidiaries:

Mueller Water Products is composed of companies that have long traditions of creating quality products and of dealing with honesty and integrity with our customers and those with whom we do business. We take pride in our reputation and it is critical to our future success.

Our new Code of Business Conduct and Ethics explains our policies on how we conduct ourselves and how we do business. Whether an employee or member of our board of directors, each of us needs to understand and commit to this Code of Business Conduct and Ethics and the policies it discusses.

Our guiding principle is to always conduct our business in a way that fully complies with controlling laws – and to act in an ethical and professional manner. When the law is unclear, we must conduct our business in such a way that we would be proud to have all the facts disclosed. Warren Buffett set this standard for his employees as a “rule of thumb”:

I want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper – to be read by their spouses, children, and friends – with the reporting done by an informed and critical reporter.

Whatever we do for the Company, we each fulfill an important role and we each face ethical questions – in our dealings at the office; with customers and suppliers; with business partners; and with our communities and the local and national governments with which we do business. We depend on every employee, officer, director, agent or representative to use good judgment and act with integrity, in the face of challenging business and competitive pressures. The test is not simply, “What must I do to comply with the law?” but “What role can I play in setting world-class ethical standards for my company?”

This Code of Business Conduct and Ethics sets forth standards that remind us of our obligations. The Company will adopt other policies from time to time to supplement these standards, and to enforce our policies. But I know that we will all go beyond these standards and written policies – we depend on you every day, and we know that you will do the right thing.

Gregory E. Hyland
Chairman of the Board and
Chief Executive Officer

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CONTENTS

Letter from the Chairman of the Board and Chief Executive Officer	3
Introduction	5
How To Report Suspected Violations	5
No Retaliation	6
Code of Business Conduct and Ethics	7
Our People	7
Employment Practices	7
Harassment Prohibited	7
Alcohol and Substance Abuse	8
Health and Safety	8
Privacy	9
Our Company’s Property	9
Company Property	9
Accuracy of Company Records	11
Our Customers and Suppliers	12
Conflicts of Interest; Hiring Relatives or Friends	12
Entertainment or Gifts	13
Other Dealings with our Customers	15
Advertising/Promotions	16
Dealing with our Suppliers	16
Intellectual Property and Confidential Information	16
Our Competitors	17
Fair Dealing	17
Antitrust and Competition Laws	18
Our Communities	18
Environmental Policies	18
Anti-Corruption	19
Political Activities and Contributions	20
Our Stockholders	20
Laws and Regulations	20
Money Laundering	21
Securities Laws and Inside Information	21
Disclosing Material Information	21
International Trade Laws	22
Retaining Business Records	23
Our Responsibilities	23
Personal Responsibilities	23
Reporting Responsibilities	24
Waivers or Amendments	25
European Union Exceptions	25
Code of Ethics for Senior Financial Officers	26
Conclusion and Acknowledgment	27
Frequently Asked Questions	28
Forms	31
Conflict of Interest Form	31
Compliance Inquiry Form	32
Acknowledgment Form	33

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INTRODUCTION

Mueller Water Products has adopted principles to help us work, think, and act together to benefit all of our stakeholders. Our desire is to have these principles become the foundation for our culture and the cornerstone for how we conduct our actions. At Mueller Water Products, we:

Obey the Law – we fully support full compliance with all appropriate rules and regulations of the Company, the local communities, and governments where we work and conduct business.

Act As One Company – we understand that a collective force is stronger than individual entities and as a result we will leverage the power of our various businesses to maximize returns and continually improve our technology that will facilitate increased stockholder returns.

Communicate Clearly – we will ensure our communications are two way and very clear by ensuring everyone involved understands what we are doing, why we are doing it, how they can support the process and what we anticipate to accomplish.

Are Inclusive – we understand the benefits of diverse views on subjects and encourage participation in the process from those who can offer guidance.

Encourage Productive Conflict – we understand that not everyone will always agree on all subjects and when they do not, we expect both sides to be heard and a decision to be reached that everyone will support.

Value Each Other – we want work relationships to be positive experiences and expect that each of us will approach interactions with consideration, professionalism, understanding, and openness to drive cooperation across our Company and to foster a team environment.

HOW TO REPORT SUSPECTED VIOLATIONS

The Company provides many methods to report concerns regarding ethics and compliance. You may report concerns to your supervisor, and the Company fosters a culture that encourages discussion of safe and ethical behavior, and a commitment to integrity, honesty, openness and fairness. You may also seek out the Chief Compliance Officer or other levels of management, or specific corporate groups, such as Human Resources, the Finance Department or the Law Department.

Also, you may report your concerns or ask questions of the Corporate Compliance and Ethics Department at compliance@muellerwp.com or ask questions or report concerns anonymously to the Company’s Helpline at 1-800-569-9358.

Report concerns to your immediate supervisor

Discuss with other levels of management

Report concerns to the Corporate Compliance and Ethics Department at compliance@muellerwp.com

Contact the Company’s Helpline 1-800-569-9358

Every concern reported is taken seriously and fully investigated by the appropriate personnel.

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NO RETALIATION

The Company will not retaliate for any report made in good faith. Every report is taken seriously and fully investigated by either the Compliance and Ethics Department or the appropriate department or functional division. In particular, employees will not be punished for asking about possible breaches of law or regulation or about the policies of the Company or any subsidiary. Any allegation of retaliation will be fully investigated.

Mueller Water Products, Inc.

Compliance and Ethics	Board of Directors/		Internal Audit
Department	Audit Committee	The Network	Department
Attention: Compliance and	Attention: Board of	1-800-569-9358	Attention:
Ethics Department	Directors or Audit Committee		Internal Audit Department
1200 Abernathy Road	1200 Abernathy Road	24 hours a day	1200 Abernathy Road
Suite 1200	Suite 1200	7 days a week	Suite 1200
Atlanta, Georgia 30328 (770) 206-4200	Atlanta, Georgia 30328 (770) 206-4200	Calls may be anonymous and you can get a report number to	Atlanta, Georgia 30328 (770) 206-4200
Facsimile: (770) 206-4260	Facsimile: (770) 206-4270	arrange a call back	Facsimile: (770) 206-4235
compliance@	boardofdirectors@
muellerwp.com	muellerwp.com
	auditcommittee@
	muellerwp.com
	Mark “Confidential” or address to a particular director

Law Department Contacts

Mueller Water Products	Mueller Co.	U.S. Pipe and Foundry	Anvil International
Attention: Law Department	Attention: Law Department	Attention: Law Department	Attention: Law Department
1200 Abernathy Road	1200 Abernathy Road	3300 First Avenue North	1200 Abernathy Road
Suite 1200	Suite 1200	Birmingham, Alabama 35222	Suite 1200
Atlanta, Georgia 30328	Atlanta, Georgia 30328	(205) 254-7090	Atlanta, Georgia 30328
(770) 206-4200	(770) 206-4200	Facsimile: (205) 254-7257	(770) 206-4200
Facsimile: (770) 206-4260	Facsimile: (770) 206-4271		Facsimile: (770) 206-4271

Environmental, Health & Safety Department Contacts

Mueller Water Products	Mueller Co.	U.S. Pipe and Foundry	Anvil International
Attention: Dan Grucza	Attention: Dan Grucza	Attention: Dan Grucza	Attention: Dan Grucza
3300 First Avenue North	3300 First Avenue North	3300 First Avenue North	3300 First Avenue North
Birmingham, AL 35222	Birmingham, AL 35222	Birmingham, AL 35222	Birmingham, AL 35222
(205) 254-7026	(205) 254-7026	(205) 254-7026	(205) 254-7026
Facsimile: (205) 254-7257	Facsimile: (205) 254-7257	Facsimile: (205) 254-7257	Facsimile: (205) 254-7257

Concerns about the Company’s financial reporting or any other accounting matter may also be reported as above or may be submitted in a sealed envelope addressed to the Chairman of the Audit Committee at the above address, with the following legend: “To Be Opened Only By the Audit Committee.” All reports will be treated confidentially and may be made anonymously.

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CODE OF BUSINESS CONDUCT AND ETHICS

OUR PEOPLE

EMPLOYMENT PRACTICES

The Company is committed to hiring, training, promoting and compensating based on merit and experience. Our policy is to maintain a working environment free from discrimination because of race, color, religion, gender, age, national origin or disability, or other protected factors such as marital status, sexual orientation, veteran status or pregnancy. A full list of protected categories is set forth in the Company’s Equal Employment Opportunity policy. The Company will make reasonable accommodations for known physical or mental limitations of an otherwise qualified applicant or employee to the extent required by controlling law.

QUESTION & ANSWER

Question: I overheard my supervisor making inappropriate comments about a co-worker’s religious beliefs during a meeting. I know this is wrong, but I don’t know what to do.

Answer: Normally, you should report the incident to your supervisor, but in this situation it would be more appropriate for you to talk with your supervisor’s boss, your HR representative, the Law Department or the Chief Compliance Officer, or call the Company’s Helpline.

All Company representatives are expected to act in a fair and equitable manner to our fellow employees, customers and others with whom they come in contact. The Company is an equal opportunity employer and expects each of its employees to act in accordance with the U.S. Equal Opportunity requirements, the Canadian Human Rights requirements with respect to conduct in Canada, and similar controlling laws in any other jurisdiction. The Company could lose valuable benefits in government contracting and otherwise if we do not comply with these policies. Adherence to these policies is a condition of employment for all Company employees.

The Company will ensure that all employees are eligible to work for the Company under controlling law, including immigration laws. To make that determination, the Company makes reasonable inquiry into the eligible status of any potential employee and requires the completion of required documentation, pursuant to its internal policies. Employees must inform Human Resources of any change in status that would affect their employment eligibility for the job they are doing.

HARASSMENT PROHIBITED

Any harassment based upon a person’s race, color, religion, gender, age, national origin, marital status, sexual orientation, veteran status, pregnancy or disability is a violation of our policies and controlling law. A full list of protected categories is set forth in the Company’s Workplace Free of Harassment, Discrimination and Retaliation Policy. The Company will not tolerate any form of such harassment in the workplace. Similarly, any

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unwanted sexual advances or inappropriate behaviors, which could be labeled sexual harassment, are against Company policy and will not be tolerated.

Harassment can include behavior that creates an intimidating, hostile or offensive work environment. It can include the display of written or graphic material of an inappropriate nature. Any harassment that violates controlling law is a violation of this Code of Business Conduct and Ethics.

It is the responsibility of each employee to ensure that the workplace is free from harassment and report any harassment or suspected harassment to their supervisor, Human Resources, the Chief Compliance Officer or the Helpline.

ALCOHOL AND SUBSTANCE ABUSE

QUESTION & ANSWER

Question: I was at an event where my co-worker was drinking heavily. During the event, he was called back to work at the plant. He went back to the plant even though his speech was slurred as he was leaving. Do I need to report this?

Answer: Yes. Employees are prohibited from working under the influence of alcohol or drugs and all employees are expected to report violations of this Code of Business Conduct and Ethics, or other Company policies. You should report violations to your manager, but you may also contact your HR representative, the Law Department, the Chief Compliance Officer, or call the Company’s Helpline.

The nature of our business requires that we be alert, aware and able to respond quickly if needed. Using alcohol, drugs and medications – including some prescription medications – can impair decision-making, motor skills and response times.

The Company prohibits the use of alcohol or illegal drugs in the workplace, and the inappropriate use of legal drugs. The Company further prohibits the manufacture, distribution or possession of a controlled substance in the workplace. If you need to take any drug or medication that – either alone or in combination with other common food or drug items – may impair your ability to safely perform your assigned duties, you must advise your supervisor.

The use of a controlled substance outside the Company’s workplace where the effects of such use could impair the employee’s ability to safely and efficiently perform his or her job is also prohibited.

Any employee who reasonably suspects that another employee is selling, buying, distributing, possessing or using illegal drugs, using legal drugs inappropriately or using alcohol during working hours or non-working hours that could be impairing their ability to safely perform their job should immediately notify their supervisor, Human Resources, the Chief Compliance Officer or the Helpline.

HEALTH AND SAFETY

The Company’s Environmental, Health & Safety Department (EHS Department) works to ensure that our Company meets or exceeds all health and safety requirements, and you are responsible for complying with the policies of the EHS Department. Every employee has a role to play in the Company’s commitment to employee health and

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safety. Each employee is responsible for attaining and maintaining a safe work environment, and is expected to perform in accordance with all health and safety laws, regulations and Company policies. This includes ensuring that all workplaces use personal safety equipment when required and adhere to all rules and regulations of the Occupational Safety and Health Administration, the Canada Labour Code and other controlling safety and health laws or regulations.

DID YOU KNOW?

We each have a responsibility for the safety of ourselves and those around us.

Employees are responsible for their own safety and the safety of others around them. That includes any use of Company property. For example, Company employees may not use cell phones and PDAs while driving or otherwise using machinery. Employees must wear their seat belts at all times in vehicles. Employees should be conscious of their workplace environment and ensure that it is safe at all times for themselves and for those around them.

Employees should be aware of emergency procedures, plant shutdown operations, and the means of responding to a disaster. Employees should immediately report any known or suspected unsafe conditions, hazard or workplace injury to their supervisor or manager.

Subject to applicable law, at no time will weapons be permitted on Company property, including but not limited to, firearms, knives, or explosives unless permitted within the guidelines of your job responsibilities and current Company policies. Employees who are involved in any type of workplace violence are subject to immediate termination. Any employee who perceives a threat of physical injury should immediately report the incident.

PRIVACY

Privacy concerns are real and we respect the rights to privacy in accordance with our legal obligations. Numerous laws and regulations in the United States, Canada and other countries govern personal privacy. Some, such as the U.S. Health Insurance Portability and Accountability Act of 1996 (HIPAA), relate mainly to medical information. The Canadian Personal Information Protection and Electronic Documents Act (PIPEDA) more broadly protects employee information from unauthorized disclosure. These privacy requirements may apply to information about our agents as well. Employees must comply with controlling privacy laws and must ensure that all protected health information and other protected personal information will be kept in a protected location.

OUR COMPANY’S PROPERTY

COMPANY PROPERTY

The Company prohibits the use of Company personnel, facilities or equipment (including vehicles, telecommunications equipment, tools and computers) for anything other than Company business. Company property cannot be used for the personal benefit of any employee or for the benefit of other, non-Company related entities or persons unless permitted by your local policies. Each employee is responsible for safeguarding the

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QUESTION & ANSWER

Question: During a recent storm, a tree in my backyard fell on my house and tore my gutter off of the house. I’m a certified welder; may I borrow a Company blow torch and some other tools to fix it after work as long as I pay for the fuel and incidentals?

Answer: No, this is not an appropriate use of corporate resources. Tools and other equipment you need are provided for you to do your job at work, not for personal or other use outside of work. Use of the Company’s tools, equipment or property for other than Company business creates hazards and risks that should not be borne by the Company.

Company property that you use by appropriately protecting it from theft or misuse.

Company property, wherever it is stored – lockers, offices, desks, toolboxes – is still owned by the Company, and the Company retains the right to gain access to the Company property at all times.

In many locations, employees use computers, email, the Internet, cellular phones and other electronic devices on a daily basis. These systems have been provided to our employees to help them do their work in the most efficient and cost-effective manner. The Company recognizes that these devices may occasionally be used for personal use, which is permissible so long as it does not interfere with the employee’s performance of his or her duties, create additional cost for the Company or violate any laws or Company policies. It is not acceptable to use Company devices for personal gain or in a manner that is offensive to others. Use of these devices does not change the ownership of the content. By law, any email sent or received at work or using Company property belongs to the Company. The Company may use them or they may be obtained by someone else during an investigation or lawsuit.

Generally, employees have no expectation of privacy with respect to email and Internet communications transmitted or received through the Company’s systems. The Company retains the right to monitor, open, inspect or otherwise gain access to these communications on its systems whenever necessary to do so.

QUESTION & ANSWER

Question: My husband owns a small home remodeling business. He is away from the house during the day, and from time to time asks customers to call me or email me at work to get in touch with him. May I send a few emails on the Company system to support his business?

Answer: No. While employees may receive some personal telephone calls or emails at work, they should not use Company funds, equipment, or materials to give significant support to a business other than the Company’s business. If you feel like you are exceeding a minimum standard, you should consult with your supervisor or through the other mechanisms contained in this Code of Business Conduct and Ethics.

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ACCURACY OF COMPANY RECORDS

The Company takes its legal and ethical obligations to report complete and accurate financial information very seriously. All Company business records must be accurate, truthful and complete without restriction or qualification. Every employee must ensure that our books and records accurately reflect the true nature of the transactions represented. In addition, employees with specific financial reporting duties must understand the obligations of Senior Financial Officers under the Company Code of Ethics for Senior Financial Officers, which is available on the Company’s website. Employees are expected to report any suspected inaccuracy or false statement in the Company’s books and records to their supervisor, the Chief Financial Officer or the Internal Audit Department.

The Company has taken steps, through the adoption of policies and procedures, including its authorization matrix, to ensure that all transactions have proper management approval, are properly accounted for, and that our public reports and financial statements fairly and accurately represent these transactions. Without exception, all Company funds will be accounted for in official Company records, and the identity of each entry and account will be accurate and complete. The Company does not maintain nor does it sanction any “off the books” fund for any purpose.

The failure to maintain accurate books and records may expose the Company and/or its employees to significant civil and criminal penalties. It is a violation of Company policy to intentionally cause our books to be false, misleading or inaccurate in any way, including the concealment of any payment by means of passing it through the books and accounts of third parties, such as agents or consultants.

The Company prohibits any action to evade taxes payable by the Company. It is likewise not permissible to aid or facilitate Company employees, vendors or customers in misrepresenting or evading taxes.

DID YOU KNOW?

Falsification of an expense report or a medical reimbursement request is a falsification of the Company’s books and records.

The Company’s internal auditors must exercise independent and objective judgment. All employees are expected to fully cooperate with both internal auditors and external independent auditors by being candid and providing all information or other documentation requested by the auditors. The Company further expects all of its employees to be honest and complete in their responses to these audits and other management inquiries. Under no circumstances may any employee take any action to coerce, manipulate, mislead or fraudulently influence an internal auditor or an auditor from the Company’s independent public accounting firm. No one can ask you to violate this fundamental obligation.

Anyone who has a question or concern regarding accounting, financial reporting, internal accounting controls, auditing or other financial matters should contact the Company’s Helpline, Chief Compliance Officer, the Audit Committee or the Board of Directors as noted on www.muellerwaterproducts.com. If there is any question of propriety, ask an appropriate person in the Finance Department for help.

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QUESTION & ANSWER

Question: We owe a customer for a prior sale. The customer has asked for a discount for future purchases instead of an immediate repayment. Can we use the income this quarter, and discount this customer in the future? Do we need to make an accounting entry to reflect our arrangement?

Answer: These kinds of questions are always difficult, and you should consult with your division controller, the Company controller, Internal Audit, or the Company’s independent auditors to determine the answer that is consistent with generally accepted accounting principles.

There are two other complexities. If you have any reason to believe a non-traditional payment schedule is being used to deceive a third party, you should consult with a representative of Internal Audit or the Law Department immediately.

You should also note that the SEC takes the position that any deviation from GAAP, even on small amounts, is material if the deviation is intentional. This area is under constant supervision, and is changing, so the best course of action is to seek advice as soon as possible after you identify an issue.

OUR CUSTOMERS AND SUPPLIERS

CONFLICTS OF INTEREST; HIRING RELATIVES OR FRIENDS

DID YOU KNOW?

All relationships that could create a conflict of interest should be reported annually on the Conflict of Interest Form included as an Appendix to this Code of Business Conduct and Ethics.

Company policy regarding a possible conflict of interest is based on the principle that all employees have a duty of loyalty to the Company, and that each employee’s business decisions must be made in the best interest of the Company and not motivated by personal interest or gain.

Your personal interests or relationships must not interfere with the Company’s best interests. Any appearance of impropriety shall be avoided, particularly when you are selecting or dealing with a supplier of goods or services to the Company. This is particularly true in hiring relatives or friends. Always follow Company procurement guidelines or ask questions.

A potential conflict of interest exists if a Company employee has a business, financial, family or other relationship with suppliers, customers or competitors that may impair the independence of any judgment the employee renders on behalf of the Company. The Company expects all employees to avoid and promptly disclose potential conflicts of interest.

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As a guide, the following are examples of areas in which you may encounter conflicts of interest. Situations such as the following must be disclosed to the Chief Compliance Officer:

Employment/Business Activities of Relatives: Each employee must disclose his or her relationship with any family member or significant other or close relative who is an employee and/or owner of a customer, supplier or competitor.

Relatives Working at the Company: Under no circumstances can an employee influence the hiring of a close relative. Similarly, if an employee has a close relative who is also an employee of the Company, it is unacceptable for the employee to influence, directly or indirectly, employment or performance, compensation or promotional decisions regarding the relative.

Financial Involvement: No employee or his or her immediate family may have a significant (controlling) financial interest or management control in a competitor, supplier or customer of the Company. (A nominal or portfolio investment in a publicly traded company normally does not represent a conflict of interest.)

Outside Business Activity: No employee may have any outside business interest with a supplier, customer or competitor of the Company.

Business Opportunities: Employees should not compete with the Company. Employees are not to take, or permit others to take, advantage of a business opportunity that belongs to the Company, and should promptly report the existence of any such opportunities.

Improper Entertainment: No employee should receive improper gifts and entertainment from Company suppliers or customers.

Outside Governance Opportunities: If you have the opportunity to serve as an officer or director (or any similar function) of an unrelated entity, you must obtain approval from the Law Department prior to accepting such a position.

These situations are only examples. If you are uncertain whether a particular transaction or relationship may give rise to a conflict of interest, or may be perceived as a conflict of interest, you are encouraged to discuss the matter with your supervisor, the Chief Compliance Officer or an attorney in the Law Department before taking any action.

A Conflict of Interest Form is attached to this Code of Business Conduct and Ethics for reporting any activities or relationships that you believe could give rise to a conflict of interest. When in doubt, ask for advice or simply complete the form and request advice as the form instructs.

ENTERTAINMENT OR GIFTS

Accepting Gifts

Creating and maintaining good relationships with our customers, suppliers and business partners is vital to the Company’s success. But business decisions by Company employees are expected to be made only on the basis of quality, reputation, service, price and similar competitive factors. Therefore, good judgment and moderation must be exercised when accepting gifts, meals or entertainment in order to avoid even the appearance that a business decision has been influenced.

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DID YOU KNOW?

The receipt of gifts other than those permitted by this Code of Business Conduct and Ethics must be reported to the Chief Compliance Officer, and, for certain executives, to the SEC.

The occasional exchange of gifts, meals and entertainment of small value are a common business practice meant to provide a legitimate opportunity to interact, create goodwill and establish trust. But gifts should not be lavish or overly frequent, or given in a manner that creates an appearance of impropriety.

Certain gifts and entertainment are not to be accepted under any circumstances, including loans from individuals or organizations having dealings with the Company, any form of cash gratuities, private or personal discounts not sanctioned by the Company and any illegal activities. Gifts given with the intent to bribe, make a kickback or place undue influence are, of course, illegal and not the way the Company conducts its business.

Incidental gifts and meals or entertainment that you receive as part of your interactions with a vendor or supplier may be appropriate. For example, you may be asked to participate in a golf game with a customer or a vendor – this is an appropriate and normal way of conducting business in our industries, and it might even seem out of the norm to turn down such an invitation. But any lavish gifts – and all gifts that exceed, or might be expected to exceed, $250 in value – must be promptly reported to the Company’s Chief Compliance Officer to determine whether the gift is appropriate. Whether a gift is lavish may depend on the circumstances, but you are expected to use good judgment – how would it look on the front page of tomorrow’s newspaper? When in doubt, you should seek advice.

If the Chief Compliance Officer believes the gift, meal or entertainment is inappropriate or may create an appearance of impropriety, you may be required to reject the offer, to return the gift, to reimburse the giver (if rejection or return is not practical), or turn the gift over to the Company.

DID YOU KNOW?

Certain customers of the Company and its subsidiaries – including some of our largest customers – have agreements with the Company that prohibit Company employees from giving gifts in excess of small amounts – even as low as $50.

Giving Gifts

The same principles apply to giving gifts to potential or current customers, suppliers or other business associates. Normal business entertainment is not prohibited, but you should use good judgment in offering gifts. It is always a good idea to check with a supervisor or the Company’s Law Department for any gift that is not customary in our industries.

You should also be mindful of the policies or restrictions that may apply to the recipient – some of our customers have policies that preclude the receipt of gifts with a value as low as $50.

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Union Gift-Giving

The Company’s relationships with union representatives are different than other business partners. There are specific and complex laws related to gifts given to union representatives. Violation of these laws could have serious consequences for the Company and jeopardize our continuing relationship with the unions that represent our employees. You must contact the Law Department for guidance prior to giving any gift to a union representative.

You should consider cultural concerns regarding the giving or receiving of business gifts. If you are not sure whether a proposed gift is lawful or proper, you should contact the Company’s Law Department for guidance.

OTHER DEALINGS WITH OUR CUSTOMERS

Our customers are the lifeblood of our business. We are committed to providing the highest quality products as well as providing services and products that meet all contractual obligations and the Company’s quality standards. Our continued success and reputation around the world depends on building productive relationships with our customers based on integrity, ethical behavior and mutual trust and respect. All employees are expected to maintain impartial relationships with customers.

We manage our business according to the following principles, regardless of customer merchandising philosophy, format or class of trade:

• We will treat all customers fairly and without discrimination.

• We will not attempt to unfairly influence customer decisions regarding the purchase of competitive items.

• We will not tolerate reciprocity with customers in any part of the business. Therefore, bribes, kickbacks and rewards, including cash gratuities, trips or other similar items, are not to be solicited, given or accepted in connection with any business transaction.

QUESTION & ANSWER

Question: I am a Customer Service Representative, and my customers sometimes send gifts such as flowers or candy in appreciation for a “job well done.” One customer invites me to attend a baseball game for a visiting team I particularly enjoy. This year, they forgot. Can I call them to ask them about the tickets?

Answer: There are two questions here. First, are the gifts you receive of “nominal value”? Generally, you may accept items of nominal value. For gifts such as food it may be appropriate to share these items with the work group.

The second question is whether a request for a “gift” is really a gift. A request for a gift makes the tickets a solicitation, and not a gift. Under no circumstances should you request a personal favor as a “quid pro quo” for doing business with the Company.

Gifts that exceed nominal value may be donated to charity, if returning the gift would cause unusual hardship. If customers want to recognize your work, you should suggest that they send a letter of appreciation to your supervisor.

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ADVERTISING/PROMOTIONS

Advertisements used by the Company are to be substantiated by supporting data before they are published or broadcast. We want to ensure that our customers are not disappointed by claims for our products that are not supported by performance. You must not use trademarks or intellectual property of others in advertising our products.

DEALING WITH OUR SUPPLIERS

The Company’s worldwide supplier relationships are to be based on the fundamental concepts of honesty, fairness, mutual respect and nondiscrimination. We encourage continued supplier support that will build sound, long-term relationships. At the same time, we respect and value healthy competition for our business. Purchasing decisions by Company employees must be made solely on the basis of quality, reputation, service, cost and similar competitive factors.

Company employees who deal with suppliers or potential suppliers – whether routinely, occasionally or infrequently, directly or indirectly – must be beyond reproach in every business transaction and must not allow themselves to be put into a position where their business judgment can be influenced, or even appear to be influenced. The following best practices always apply:

• Purchases of materials and services are to be performed fairly and impartially and are not to be influenced by bias or favoritism.

• All discussions with an existing or potential supplier are to be restricted solely to the Company’s needs and the materials and/or services being offered by or sought from that supplier.

• If attendance by a Company employee at a vendor-sponsored event would provide a business opportunity for the Company, or promote a business relationship providing a tangible benefit to the Company, associated expenses should be paid by the Company.

• Reciprocity with suppliers will not be tolerated. Bribes, kickbacks, rewards or similar considerations are not to be solicited or accepted in connection with any purchasing transactions.

• Company employees who make or approve purchasing decisions are not to solicit gifts of money/time from current or potential suppliers on behalf of charitable, civic or other organizations.

INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION

Confidential intellectual property and confidential information are key tools the Company uses to create value for our employees and stockholders and must be safeguarded. Protecting this information is vital to the Company’s ability to effectively conduct its business. Intellectual property includes copyrights, patents, licenses, trademarks and trade secrets.

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Confidential information includes, but is not limited to, contract terms, customer lists, proposals, project plans, business plans, processes and other information that the Company has not released publicly or which is not available through other public methods. Confidential information can also include the same type of information received from our customers, suppliers and contractors, and we have an obligation to safeguard that information as we would the Company’s.

DID YOU KNOW?

Intellectual property includes:

Copyrights
Patents
Licenses
Trademarks
Trade secrets

As part of your work, intellectual property or confidential information may become available to you, or the suppliers and contractors you are working with. You are expected to take appropriate steps, such as use of a confidentiality agreement, to prevent misuse of Company information.

Security measures must be employed regardless of the medium on which information is stored (fiche, paper, magnetic media, etc.) or the methods by which the information is communicated (email, face-to-face conversation, etc.). Such protection includes basing access to information on “the need to know.” Managers are expected to devote sufficient time and resources to enforce information security for information under their control or use.

DID YOU KNOW?

Certain information the Company qualifies as “trade secrets.” A trade secret can be anything from a manufacturing process to a skill used in servicing a product. While confidentiality agreements usually have a defined term, the confidentiality of a trade secret should last forever – the Company can legally protect its trade secrets as long as they remain “secret.”

OUR COMPETITORS

FAIR DEALING

Our businesses rely on effective competition with our competitors. But, at the same time, we are also required to deal fairly and honestly with our competitors. Do not act in a manner that could adversely affect our reputation or otherwise restrict fair trade and competition. Do not abuse privileged information, misrepresent or harass a competitor. Always compete fairly and honestly, winning business on the basis of superior product, service, and pricing.

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ANTITRUST AND COMPETITION LAWS

DID YOU KNOW?

More than 100 countries now have competition laws.

The Company’s business is conducted under conditions of intense competition. The Company is committed to the concept of fair and vigorous competition, and to complying with all antitrust and competition laws that apply to it. Antitrust and competition laws and regulations are vigorously enforced around the world and violations may result in substantial fines, loss of business, forced sales of parts of the business, jail time and even sanctions for individuals.

Employees working with competitors are expected to know and understand the antitrust laws and regulations that apply to their locations and activities. There may be special rules and policies that apply to those employees, and they should be aware of those policies.

Every employee should know that even the receipt of information from a competitor may raise issues that need to be addressed. Communications with competitors should always be reported to a supervisor. If you have any question as to competitive implications of a conversation, agreement, arrangement or information, or if you believe that a communication is troubling under the competition and antitrust laws, refer to the controlling Antitrust Policy or contact the Company’s Law Department for further guidance.

OUR COMMUNITIES

ENVIRONMENTAL POLICIES

The Company takes pride in its improving environmental record. We strive to meet or exceed all controlling environmental laws and regulations for our various operations.

The Company recognizes that our businesses can have an effect on the environment, and that the laws and regulations that apply to our businesses sometimes are not as high as our own standards. When there are differences between the law and our own higher standards, we will apply our standards. We will work hard to mitigate adverse effects on the environment caused by our manufacturing processes and the use of our products, using reasonable environmental solutions, minimizing our impact on the environment whenever possible.

Every employee has a role to play in the Company’s commitment to the environment. Each employee must take responsibility and ownership for implementing the Company’s environmental policy. Upon the discovery of any event that may affect the environmental impact of the Company’s operations, you should promptly notify your supervisor and, if appropriate, the Company’s EHS Department or the Company’s Law Department.

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From time to time the EHS Department will adopt new policies relating to the environment. If it is your responsibility to ensure compliance with those policies, you are expected to understand the policy and what is expected of you.

ANTI-CORRUPTION

As a good corporate citizen, the Company strives to act in a manner that respects the best interests of the communities and companies with which we do business. That means it is never acceptable to make an improper payment to gain advantage. Improper payments may be deemed to be “corrupt” and could expose you and the Company to possible criminal prosecution. The Company complies with the anti-corruption laws in all countries in which we do business, including the Foreign Corrupt Practices Act (FCPA) and the Canadian Corruption of Foreign Public Officials Act. There may be laws in other countries that have a similar effect, and our policy is to comply with all controlling law.

As required by the FCPA, Company employees, directors, agents and representatives are prohibited from making payments of money or anything else of value, directly or indirectly, to foreign government officials in an effort to obtain or retain business or secure any improper advantage. All transactions with foreign officials are to be properly documented and accounted for in the Company’s records. And many countries control private companies to the point that anyone can be an “official.” The FCPA does permit some payments to non-U.S. government officials in order to secure or ensure routine services, but these permissions are very limited and you should seek legal advice in advance of any such payment.

The rules around gifts, entertainment, and travel expenses of foreign officials vary from country to country, within agencies, and even within smaller jurisdictions within a location. Before offering a gift or entertainment – even purchasing a meal for a government official – or offering to pay for travel expenses for a foreign official, contact the Company’s Law Department to ensure that it is appropriate and legal for the location. Violations of the anti-corruption laws have serious consequences, including criminal penalties and fines. The Company has adopted a specific anti-corruption policy that may apply, and you should consult it if you have questions.

QUESTION & ANSWER

Question: Our department is hosting a function and would like to invite the Minister of Energy, who is known for his positive views toward the Company. It would entail flying him from his office location to our function site. May we invite him?

Answer: There are many laws and regulations surrounding the giving of gifts, meals, and entertainment to government officials. There could also be restrictions under the FCPA that do not allow the invitation to the Minister. You should contact the Law Department for guidance prior to extending any invitation to a government official.

“Facilitating payments” may be exempt, but you are better off asking for help before making any payment that you believe could ultimately benefit a foreign official.

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POLITICAL ACTIVITIES AND CONTRIBUTIONS

The Company encourages all employees to vote and participate in the political process. However, federal, provincial, state and local laws restrict the use of Company assets in connection with the political process. Corporate political contributions are permitted only with prior written approval of the Law Department and corporate and subsidiary officers, and only to the extent allowed by law. Employees and Company agents who interact with government officials are expected to familiarize themselves with the laws that apply to those interactions. Persons who represent the Company in lobbying activities may be required to certify their activities on a regular basis.

The laws regarding entertainment and gifts vary from state to state and location to location, and many jurisdictions now prohibit the giving of anything of value – including a meal – to an elected official without some consequence. In addition:

• Unauthorized contributions or payments of any type (or promises of the same) to any local or foreign public officials are strictly prohibited.

• The Company does not reimburse anyone for personal contributions made to political candidates, parties or campaigns, including fund-raising tickets for political functions.

• Employees and directors must not pressure other employees, suppliers or others to make political contributions.

• Only authorized employees should communicate or coordinate Company business with government officials.

Acts of hospitality and entertainment directed to public officials should be of such a scale as to avoid compromising the integrity or impugning the reputation of the Company or the public official and shall comply with controlling law. Under existing law, you may not offer anything of value in certain circumstances, and in other circumstances it must be reported if the government official meets certain criteria or the Company is engaged – independently or through any of its subsidiaries – in lobbying federal government officials. The giving of a meal is excepted as long as the meal is not more than $50 in value, and no more in the aggregate than $100 in gifts in any year. Since these expenditures are aggregated across the Company’s divisions, it is important that all such gifts be coordinated and approved in advance.

OUR STOCKHOLDERS

LAWS AND REGULATIONS

Employees of the Company are expected to follow the laws, regulations, judicial decrees and orders that control the actions of the Company or that apply to its property or employees. While this Code of Business Conduct and Ethics addresses some specific legal areas, it cannot comprehensively set forth all applicable legal requirements. Any employee with questions on specific laws or regulations should contact the General Counsel or any attorney in the Law Department.

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MONEY LAUNDERING

Criminals often “launder” their criminal proceeds through legitimate business transactions. More than 100 countries currently have laws that restrict money-laundering. You are required to take reasonable steps to detect and prevent unacceptable money transfers. If you have questions, contact the Finance Department or the Law Department.

SECURITIES LAWS AND INSIDE INFORMATION

The Company is also subject to the securities laws. These laws are intended to ensure that investors in the business are treated as the “owners” of the Company, and that our creditors and stockholders understand our businesses.

These laws also require that no employee, agent or members of their immediate families purchase or sell the Company’s securities – or the securities of the companies with which we do business – when they are aware of material non-public information about such company. This means being aware of anything not yet made public by the Company that an investor would likely consider important in determining whether to buy or sell stock. It is very important that employees and agents do not communicate any material, non-public information of which they become aware, whether related to the Company or other companies with which we do business, to anyone outside of the Company. Even internally, employees and agents should only discuss this information with others on a “need to know” basis. The Law Department has adopted other policies to ensure that its employees do not inadvertently violate the securities laws.

Violations of the securities laws have serious consequences including the possibility of significant fines and time in jail. The Company encourages you to ask questions and seek advice if you have questions or are uncertain about how these laws may apply to a specific activity. Please contact the Company’s Law Department for assistance with any question regarding securities.

DID YOU KNOW?

The insider trading laws can apply to your trades in securities of any public company, including the Company’s customers if you have material, non-public information that you obtained from that customer.

DISCLOSING MATERIAL INFORMATION

Sharing material information with our stockholders, regulators and the public at the right time, and in the right manner, is vital to the Company’s success. These disclosures are also required by law. As a publicly traded company, the Company regularly discloses material information concerning the Company through its filing with various regulatory agencies, press releases, annual reports and earnings calls. It is the Company’s policy to make all disclosures in a manner designed to provide appropriate access to material information for all stockholders, investors and the public in a timely, non-selective manner.

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To ensure the proper disclosures, the Company has designated a few employees as the contact point for the media and investors. If you are approached by, or receive a call from, the media, refer the caller to the Company’s Corporate Communications Department. If you are contacted by a member of the investor community, refer the individual to the Senior Vice President of Strategic Planning & Investor Relations. The Company may have other policies that apply to such disclosures.

To further protect the Company’s material information, you should:

• Avoid discussing material information related to the Company on cell phone calls, in elevators or other public places where others may overhear your conversation.

• Never initiate a conversation with a member of the media regarding the Company’s business.

• Do not discuss Company business, material, confidential or otherwise, in internet chat rooms, websites, message boards or blogs – whether you believe these sources to be secured or not. Even if the information posted about the Company is incorrect, you should not respond or otherwise post any messages. This applies to personal as well as public websites, message boards and blogs.

INTERNATIONAL TRADE LAWS

The Company imports and exports goods and services across national borders. International trade laws apply to the transmission of such goods and services. U.S. laws are complex, and could prohibit the release of technical information, including the release of information within the U.S. If you are involved with importing or exporting, you need to be aware of the applicable governmental regulations and requirements. A failure to comply can result in fines, penalties, imprisonment and/or a loss of trade privileges.

Anything the Company ships out of the United States must be covered by an export license, but there are certain “general licenses” which allow the Company to export some non dual-use products without a specific license. Export control regulations are also quite complex and differ for companies located in the United States and abroad. The Company has adopted an Export Control Policy that ensures that employees involved in exporting activities are familiar with the controlling law governing their activities.

U.S. laws prohibit the Company from complying with or furthering an international boycott not supported by the U.S. Government, such as the Arab League boycott of Israel. Company policy requires Company employees, agents and representatives to strictly comply with U.S. anti-boycott laws, which apply to both U.S. and foreign subsidiaries and affiliates. U.S. law requires the Company to report requests to comply with the boycott, as well as requests to furnish information that may be boycott-related. Because language that may be of a boycott nature may be difficult to spot, all inquiries and correspondence originating in the Middle East, including, but not limited to, verbal inquiries, should be documented and reviewed promptly by the General Counsel.

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RETAINING BUSINESS RECORDS

The retention of business records has become a large concern in recent years, with many individuals and companies being punished for not properly retaining business records. Requirements for retaining business records are governed by various laws and regulations. In addition to the retention of records, the Company has an obligation to prevent the destruction of business records related to an investigation, claim or lawsuit. It is the Company’s policy to fully cooperate with government investigations and to properly respond to legal requirements related to the production or retention of business records.

The improper retention and destruction of records could have serious consequences, including civil and criminal penalties. Please consult the Company’s Records Retention Policy and retention schedule for information on what, how, and for how long, documents should be retained. Also speak with your supervisor or the Company’s Law Department regarding any questions you have about whether a record should be retained or destroyed.

If you learn of a government investigation or inquiry, work-related lawsuit or legal notice of process – such as a subpoena, search warrant, government request for information – immediately communicate this information to your supervisor and the Company’s Law Department. The Company and its employees have a right to be represented by legal counsel if the Company is threatened with a lawsuit or investigation. No employee should speak with a lawyer investigating a lawsuit or government investigator without approval from the Company’s Law Department. Employees should ask lawyers and government investigators for time to consult with their legal counsel before answering questions.

Under no circumstances should you:

• Destroy records related to an inquiry, request, active legal or other official matter.

• Alter relevant records.

• Lie or mislead government investigators during any investigation.

• Pressure anyone to hide information or provide false or misleading information to government investigators.

Business records include email and voice mail and business information in all forms (documents, recordings, spreadsheets), stored in paper, electronic or other formats.

OUR RESPONSIBILITIES

PERSONAL RESPONSIBILITIES

The Company strives to provide a safe, healthy and productive work environment. Each employee has a personal responsibility to other employees and to the Company to contribute to this effort and to help eliminate actions or circumstances that undermine the work environment.

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Each of us takes pride in the high standards of conduct that identify us as Company employees. It is our responsibility to implement and carry out our commitments to our stockholders, customers, suppliers, fellow employees and society as a whole. Every employee, regardless of position, is expected to assume this responsibility to assist the Company in carrying out these commitments.

All employees are responsible for:

• Reading and understanding the requirements of this Code of Business Conduct and Ethics.

• Signing the required Acknowledgment Form annually.

• Abiding by the Code of Business Conduct and Ethics, and other Company policies, and demonstrating through daily conduct their personal commitment to complying with the Code of Business Conduct and Ethics and other Company policies.

• Remaining alert to the actions of any employee, or any other person or organization with which the Company has a relationship, that violate this Code of Business Conduct and Ethics, or the Company’s other applicable policies.

• Reporting all suspected violations of this Code of Business Conduct and Ethics, including complete disclosure of all relevant information.

It is important for all employees to understand that violating this Code of Business Conduct and Ethics may result in disciplinary action. This could include suspension, paid or otherwise, or termination of employment. Violations may also result in civil or criminal prosecution and penalties under the provisions of any applicable law or regulation.

This Code sets forth the Company’s expectations of all of its employees and directors, but does not modify an individual’s employment relationship with the Company. Neither this Code of Business Conduct and Ethics nor the policies supporting it are a contract of employment and do not guarantee continuing employment for any employee.

REPORTING RESPONSIBILITIES

Ethical business conduct requires that even the appearance of inappropriate behavior be avoided as well as the behavior itself. The appearance of impropriety can often be avoided by complete and early disclosure of events to appropriate persons within the Company. Disclosure and approval received before the fact will frequently avoid questions related to later conduct. In conducting your affairs and the affairs of the Company, employees should remember that over disclosure is preferable to under disclosure.

Each employee of the Company has the obligation to report any suspected violation of this Code of Business Conduct and Ethics. Suspected violations should be reported in detail, conveying as much information as is available to allow for a proper, effective and timely investigation. Allegations will be reviewed and investigated promptly in cases where sufficient information has been provided.

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Violations, or possible violations, of the Code of Business Conduct and Ethics should generally be addressed first with the employee’s immediate supervisor. This may provide valuable insight or perspective and will encourage resolution of issues and problems within the appropriate department. But an employee who does not feel comfortable discussing the matter with his or her immediate supervisor should address the matter with the appropriate department head, Human Resources, the Chief Compliance Officer or an attorney in the Law Department. The employee may also use the Compliance Inquiry Form attached to this Code of Business Conduct and Ethics.

Any employee who feels uncomfortable speaking directly with someone at the Company is encouraged to call the Company’s Helpline. The Helpline is maintained by a third party, operates 24/7 and is not affiliated with the Company in any way. Interpreters are available through the Helpline to ensure that concerns can be properly communicated. The Helpline does not use tracking equipment, recording devices or other means of identifying the caller. Any person may remain anonymous when calling the Helpline. An employee may provide his or her name to permit the Company to make further contacts and a more complete investigation. Each employee can decide to stay anonymous, but will not suffer retaliation for calls made in good faith.

Reports received through the Helpline will be forwarded to the appropriate personnel for review and investigation, if appropriate. An employee can arrange for a call-back date to determine how the matter was handled.

The Company is aware that anonymous reporting may lead to false accusations, and the Company will carefully investigate any report. Improper use of this compliance procedure will not be tolerated, and such actions will be subject to discipline, up to and including suspension or termination of employment.

WAIVERS OR AMENDMENTS

The Company may waive or amend this Code of Business Conduct and Ethics and reserves the right to do so at any time, without advance notice, though the Company will attempt to notify employees of any such changes. All changes to this Code of Business Conduct and Ethics will be posted on the Company’s website.

Waivers of the Code of Business Conduct and Ethics are not taken lightly and are not standard. Any waiver of this Code of Business Conduct and Ethics for an employee may only be made by the Chief Compliance Officer after consideration of the facts and circumstances surrounding the request. Officer and director waivers must be promptly disclosed as required by law, stock exchange listing standards or other applicable rules or regulations.

EUROPEAN UNION EXCEPTIONS

Many European Union countries limit the types of reports that the Helpline can accept. The Helpline follows any such limitation and will notify callers from those countries, or any other callers, to the extent their calls cannot be accepted.

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CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS

The Company’s Senior Financial Officers are not only responsible for adhering to the ethical standards laid out in this Code of Business Conduct and Ethics, but have a heightened responsibility to provide leadership by example to create a culture of the highest ethical standards, commitment to compliance, a workplace that encourages employees to raise ethical and compliance issues, and prompt follow-up of such issues.

If you are a senior financial officer of the Company, you are subject to the Code of Ethics for Senior Financial Officers, which is incorporated herein by reference and available on the Company’s website. The senior financial officers include the Chief Executive Officer, the Chief Financial Officer, the Treasurer, and the Controller, and the following personnel (“Covered Persons”): the chief operating officers and principal financial officers of each of the Mueller Co., Anvil and U.S. Pipe divisions.

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CONCLUSION AND ACKNOWLEDGMENT

Final Thoughts from the Chairman:

Now that you have had a chance to read our Code of Business Conduct and Ethics, you see just how much our success depends on your commitment to ethics and good business practices in your day-to-day activities. That is why your adherence to this Code of Business Conduct and Ethics is a condition of employment wherever possible, and you are being asked to sign the attached Acknowledgment Form. Please refer to this Code of Business Conduct and Ethics often, and access the resources the Company has made available to you for guidance. The Company’s Helpline may be accessed from all locations in the world at 1-800-569-9358. You may always contact your supervisor, any attorney in the Law Department, or the Chief Compliance Officer, or just send an email with your question to compliance@muellerwp.com.

As with everything else that we do, we depend on you to make sure that we are meeting our own high standards. It is not trite to remind ourselves that many people depend on our products for clean drinking water, safety, and for strong and durable performance. We depend on your adherence to these good business practices to ensure that we can become an even larger and more successful company – the Company that we all want it to be. With your help, we can do it.

Gregory E. Hyland
Chairman of the Board and
Chief Executive Officer

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FREQUENTLY ASKED QUESTIONS

1. Conflicts of Interest – Relatives

Q:

Are distant relatives, such as cousins, included in the conflicts of interest or employment of relatives portion of the Code?

A:

The conflicts of interest and employment of relatives policies generally apply to members of the immediate family only. “Immediate family” is described as spouse, mother, father, mother-in-law, father-in-law, sister, brother, children, stepfamily members or any adult who lives in your household. However, if a personal relationship, such as a distant family relationship or a friendship could influence your objectivity or create the appearance of favoritism, please use the Conflict of Interest Inquiry Form in the Code to seek guidance from the Law Department or the Company’s Chief Compliance Officer. In addition, all such relationships must be reported annually, as job responsibilities and Company policies may change.

2. Conflicts of Interest – Gifts from Current Contractors

Q:	After signing a large contract with a supplier, they offered me two tickets to a major league sporting event. Is this an acceptable gift?
A:	Because of the possibility that this could be construed as a kickback, consult with your Company’s Law Department prior to accepting the tickets.

3. Conflicts of Interest – Bartering

Q:	If a concert venue offers me eight tickets to an event in exchange for a discount on materials to be sold for another facility being built, can I accept?
A:	No. Receipt of a personal benefit in exchange for business or preferential terms is never acceptable. We should all avoid conflicts of interest and ensure that personal interests do not impact our business decisions.

4. Sexual Harassment

Q:

If I make comments about how someone looks in a particular outfit and those comments offend that person, can that be considered sexual harassment?

A:

While such a comment made in isolation probably does not rise to the level of sexual harassment, it could, as part of a pattern of behavior, create a hostile work environment that constitutes sexual harassment. Sexual harassment can include any unwelcome sexual advances, request for sexual favors and other verbal or physical conduct of a sexual nature, particularly where such harassment has the purpose or effect of interfering in any manner with an employee’s working relationship and/or career development, or creates an intimidating, hostile or offensive working environment. The Company’s Human Resources Department has a comprehensive policy on sexual harassment for your review.

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5. Ethics and Compliance – Complaint Resolution

Q:	What happens if I am not satisfied with the resolution of a complaint I placed to the Helpline?
A:	The Helpline has protocols in place to ensure that a thorough and accurate review of your concern has been conducted and the appropriate resolution has been determined. There may be times that the Company has resolved a situation that may not be the resolution that you would have identified or has determined that the concern is not contrary to Company policy. If you continue to have concerns after a resolution has been provided, please report your concerns back to the Helpline for additional review.
Q:	Can I lose my job for filing a complaint under this policy?
A:	No, the Company absolutely prohibits retaliation for coming forward with a good faith complaint regarding any conduct that may violate this policy. If you feel that you have been retaliated against because you have filed a complaint under this policy, please immediately contact the Compliance Department. Filing a complaint under this policy, however, does not insulate you from performing your job at an acceptable level or from otherwise adhering to our business policies and practices. Accordingly, you may still be disciplined or terminated for conduct unrelated to your complaint.
Q:	What if I decide not to participate in any investigation based on a complaint made pursuant to this policy?
A:	Once we learn of an allegation that our policy has been violated, we are under a legal duty to investigate, whether you cooperate or not. We encourage employees to fully cooperate so that we can resolve any potential policy violations quickly and effectively.

6. Proprietary Information

Q:	I recently created a training presentation for my staff that includes graphics and other creative options. Can I use this presentation for personal business or take it with me if I begin working for another company?
A:	No. All work product created by you in the course of conducting Company business, including intellectual property, is the property of the Company. The Company hired and pays you for your knowledge, experience and creativity. Anything that you have created for the Company cannot be used elsewhere without prior permission. The information is owned by the Company and is therefore proprietary.

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7. Confidential Information

Q:

I generate a report on a routine basis. This report contains personal information such as names and social security numbers. I do not need to retain it. How should I discard it?

A:

Unless management has instructed you to retain all documents (paper and electronic) as a result of a government or internal investigation or other legal basis, the report should be retained or discarded in accordance with the Company’s document retention policy. Confidential documents that are discarded should be shredded or destroyed so that the information contained in the report cannot be reconstructed.

8. Charitable Contributions

Q:

Can I agree or promise that the Company will donate charitable funds to organizations that request donations?

A:

The Company has specific policies and procedures for charitable contributions. Mueller Water Products is concerned about each of the communities we serve. As such, we engage in community activities and sometimes make charitable contributions when possible and appropriate, and when in compliance with our agreements with our creditors. All charitable contributions must be approved as provided in the Company’s authorization matrix. Therefore, no employee should promise a charitable contribution to any organization until the donation has been approved by the authorized Company representative. If you have any questions regarding our charitable contribution policy please contact the Ethics & Integrity Helpline.

9. Accurate Books and Records – Travel and Expenses

Q:	While traveling on Company business, I forgot to collect receipts for two business dinners. Can I use personal receipts from different dates in place of the missing receipts? The cost was about the same.
A:	At no time should personal receipts be used to replace missing business receipts. Instead, consult your Company’s Travel and Expense policy on the appropriate protocol for missing receipts.

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CONFLICT OF INTEREST FORM

I request assistance in determining whether the following situation is a conflict of interest:

[Attach additional pages if necessary]

Name (Print):	Company:
Signature:	Location:
Today’s Date:	Title:

Please sign and return this form or a copy to your supervisor or manager.

It will be sent to the Compliance and Ethics Department for review and determination and a copy will be placed in your personnel file. Potential conflicts of interest must be reported on an annual basis as your job responsibilities and Company policies may change.

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COMPLIANCE INQUIRY FORM

If you have a question or concern as to whether specific behavior is not in compliance with the Code of Business Conduct and Ethics or corporate policy, please fill out the following inquiry form or a copy of this form and return it to the Compliance and Ethics Department.

[Attach additional pages if necessary]

Name (Print):	Company:
Signature:	Location:
Today’s Date:	Title:

If you would like us to contact you or respond to you at home, please provide the following information:

Home Address:

Home Phone Number:

I certify that the information stated above is true and correct to the best of my knowledge. I understand that any disclosures I make are subject to review and investigation by a member of management or the Compliance and Ethics Department. I understand that my disclosures may be reviewed by other appropriate Company personnel who will conduct a reasonable inquiry. I understand that to the degree possible, the disclosures that I make will be held confidential and that I will suffer no retaliation for reporting my “good faith” concerns.

Signature:

Date:

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ACKNOWLEDGMENT FORM

I certify that I have received the Mueller Water Products’ Code of Business Conduct and Ethics. I have read it and I understand that it represents some of my responsibilities as an employee, officer or director (as applicable) of the Company.

I understand that I have access to a toll-free Helpline number (1-800-569-9358) to answer any questions about the Code of Business Conduct and Ethics. I also understand that I should report any suspected violation as directed in this Code.

I further certify that I have read and understand the Code of Business Conduct and Ethics sections covering potential conflicts of interest. I understand that I may contact the Helpline with any question about any legal or regulatory requirement. I understand that all ethics concerns are treated confidentially and, according to Company policies, there will be no retaliation for asking questions or raising concerns in good faith regarding possible improper conduct.

I understand that I must comply with this Code of Business Conduct and Ethics as a condition of my employment with Mueller Water Products, Inc. or any subsidiary.

o I have no conflicts of interest.

o I request assistance in determining whether I have a conflict of interest.

Name (Print):	Company:
Position Title:	If a New Employee, Hire Date:
Location:	Today’s Date:
Signature:

Please sign and return this form to your supervisor or manager.

It will be sent to the Compliance and Ethics Department and a copy will be placed in your personnel file.

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© 2008 Mueller Water Products, Inc. All rights reserved. The information contained in this book, including all logos that appear herein are copyrights, trademarks, or other intellectual property owned, controlled, or licensed by Mueller Water Products, Inc. or its subsidiaries. No part of this book may be reproduced, transmitted, stored, or retrieved in any form or by any means without written permission of Mueller Water Products, Inc.

CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS

(As appended to the Code of Business Conduct Policy and Compliance Program of Mueller Water Products, Inc.)

This Code of Ethics (the “Code of Ethics”) applies to all senior financial officers of the Company. The senior financial officers of the Company include the Chief Executive Officer, the Chief Financial Officer, the Chief Accounting Officer, the Treasurer and Comptroller, and the following personnel (“Covered Persons”): the chief operating officers and chief financial officers of each of the Mueller Co., Anvil and U.S. Pipe divisions.

     The Audit Committee shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of this Code of Ethics by the Chief Executive Officer or Chief Financial Officer. Any other violation of this Code of Ethics may result in disciplinary action up to and including termination for cause, and, if warranted, legal proceedings, as determined by the Chief Executive Officer. In determining what action is appropriate in a particular case, the Board of Directors or the Chief Executive Officer shall take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violations in the past.

     This Code of Ethics is required by the United States securities laws and the rules and regulations of the Securities and Exchange Commission as being necessary to deter wrongdoing and to promote:

     (i) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships,

     (ii) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a company files with, or submits to, the Commission and in other public communications made by the company,

     (iii) Compliance with applicable governmental laws, rules and regulations,

     (iv) The prompt internal reporting of violations of this Code of Ethics to an appropriate person or persons identified herein; and

     (v) Accountability for adherence to this Code of Ethics.

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     As noted above, the Company is required to monitor and audit the effectiveness of this Code. If you have any questions regarding this Code, please refer to your immediate supervisor, or, with more difficult questions, please feel free to contact the Chief Financial Officer or the General Counsel. You are entitled, of course, to bring any matter to the Company’s Audit Committee in accordance with the procedures set forth in the Company’s code of business conduct.

     1. Each Covered Person must avoid any transaction or arrangement that would create a conflict of interest or the appearance of a conflict of interest between personal and professional relationships.

     A conflict of interest may be generally defined as a conflict between the Covered Person’s private interests and his or her responsibilities to the Company or an entity with which the Company maintains a relationship. A conflict of interest can also arise when an immediate family member is involved in a transaction or arrangement that in any way casts doubt upon the Covered Person’s independence. An “immediate family member” includes a Covered Person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than employees) who shares the Covered Person’s home.

     2. Covered Persons may only accept items of nominal value as gifts from the Company or any individual or entity that is involved or seeks to become involved in a business relationship with the Company.

     Gifts to Covered Persons must be inexpensive, unsolicited and not given with the objective of influencing the Covered Person’s judgment. It is acceptable for a Covered Person to accept meals or other customary forms of entertainment from individuals or entities that are involved or seek to become involved in a business relationship with the Company as long as these items are not provided in order to influence the Covered Person’s business judgment or decision. Under no circumstances is a Covered Person permitted to accept payments, loans, kickbacks, bribes, special privileges or services from anyone. If there are any questions or borderline case, Covered Persons should discuss them with the General Counsel.

     3. All Covered Persons are responsible for maintaining accurate financial records for the Company.

     Covered Persons must closely adhere to the following accounting guidelines:

     (i) All assets, liabilities and transactions of the Company should be accurately recorded in accordance with the Company’s record keeping procedures and generally accepted accounting principles;

     (ii) No false or misleading entries are permitted to be knowingly made or caused to be made in the Company’s record (including expense reports), even if such entries would not be material to the Company or its operations as a whole; and

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     (iii) Any entries that are inaccurate, false or irregular should be promptly reported to the Chairman of the Audit Committee for an immediate corrective action.

     4. Covered Persons must recognize that confidential information is an asset of the Company, and must refrain from using inside information to their personal advantage.

     Covered Persons must maintain the confidentiality of information entrusted to them by the Company or its customers or suppliers, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers or suppliers, if disclosed.

     At its core, the prohibition against insider trading focuses on the buying, selling or trading in securities using non-public information. The prohibition applies to securities of the Company as well as to customers and suppliers of the Company, or any entity with which the Company has a business relationship. Covered Persons should refer to the applicable Company’s insider trading policy for further guidance.

     Covered Persons are in a unique position to acquire non-public information about the Company, and such information might influence their decision to buy, sell or trade securities. In addition to refraining from using inside information in making their own investment decisions, Covered Persons should also avoid discussing the inside information with friends or immediate family members (whether at home or in the public) or mailing or faxing the inside information to outside sources unless appropriate confidentiality agreements are in place to ensure that material, non-public information is not used improperly.

     5. The conduct of Covered Persons should be governed by the highest standards of integrity and fairness.

     Covered Persons should avoid those situations in which outside personal interests conflict with the Company’s business. These situations include:

     (i) Ownership by a Covered Person, or a member of his or her immediate family, of a material financial interest in any outside enterprise that is involved or seeks to become involved in a business relationship with the Company;

     (ii) Ownership by a Covered Person, or a member of his or her immediate family, of a material financial interest in any outside enterprise that competes for business with the Company;

     (iii) Outside employment of a Covered Person, or a member of his or her immediate family, whether as a consultant, director, officer, employee or independent

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contractor, with an entity that is involved or seeks to become involved in a business relationship with the Company; or

     (iv) Appointment of a Covered Person, or a member of his or her immediate family, to a public office, board or commission that may create an appearance of a conflict of interest between the goals and purposes of that organization and the Company’s business. Such appointment would include a “public service” organization or a not-for-profit organization.

     6. Covered Persons must not take for themselves opportunities that they discover while working for the Company, or use corporate property or information for personal gain.

     Covered Persons must not (a) take personal advantage of a situation or knowledge acquired through the use of his or her position or the Company’s property, if the situation or knowledge could be used for the Company’s benefit, (b) use his or her position or Company property or information for personal gain, or (c) compete with the Company. Covered Persons owe a duty to the Company to advance its interests whenever the opportunity arises.

     7. In drafting periodic reports that are to be filed with the Securities and Exchange Commission, Covered Persons should take all steps necessary to ensure full, fair, accurate, timely and complete disclosure.

     (i) Go Beyond the Minimum Disclosure Required by Law. While in the past periodic reporting has focused on disclosing only those items that were mandated by the law, Covered Persons should go beyond the minimum requirements to convey the full financial picture of the Company to the public. Areas of special attention include: off-balance sheet structures, insider and affiliated party transactions, board relationships, accounting policies, and auditor relationships.

     (ii) Make Sure All Relationships that Could Give Rise to Any Perceived Conflicts are Fully Disclosed. Given the recent focus of lawmakers on a more complete disclosure of any material conflict of interest to the public, it is important to ensure that any transaction that threatens to create the appearance of a conflict of interest must be fully disclosed in the Company’s periodic reports.

     (iii) Use the MD&A Section to Paint a Complete Picture of the Company’s Financial Condition. A well-written MD&A analysis should be used in order to explain fully all of the key factors, risks and assumptions that support the Company’s business model. While the analysis is far from being an exact science, the MD&A analysis should be used to appraise fully and accurately the investors of the Company’s financial condition.

     (iv) Use More Plain English. Even though the “plain English” rules presently do not apply to periodic reports on Forms 10-K and 10-Q, the basic

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requirements, such as the use of active voice and avoidance of unnecessarily legalistic language, should nonetheless be utilized in discussions of the Company’s financial condition. Over the years, accounting rules have grown increasingly complex, and simple economic facts are often obscured with the use of complicated legal or technical terminology. Covered Persons should strive to present their analysis of the Company’s financial condition in such a way that average investors could reasonably be expected to understand the importance of the information contained in the periodic reports.

     (v) Seek Guidance from the Audit Committee. With an increased emphasis on a better conformity with accounting standards, Covered Persons should understand the needs of the Audit Committee, and understand the means of contacting the Audit Committee directly, to ensure that accounting standards are being applied uniformly and that the Company’s disclosure is supported by sound judgment and analysis.

     (vi) Provide Management with Ample Time to Review and Comment on Disclosure Documents. In an effort to meet periodic reporting deadlines, the Company’s management should be provided with an adequate opportunity to review each disclosure document and to assess its completeness and accuracy. Covered Persons should focus on completing the financial disclosure in periodic reports well ahead of the timing deadlines to allow more time for review by management and auditors.

     8. Covered Persons must comply with all laws and regulations that apply to the Company’s business.

     All Covered Persons should understand those laws that apply to them in the performance of their duties and ensure that their decisions and actions are conducted in conformity with those laws. Any violation of the applicable laws can subject the Company or the implicated Covered Person to liability. Any inquiries relating to compliance with applicable laws and regulations should be directed to the Company’s legal department.

5

EX-21.1

Exhibit 21.1

Subsidiaries of Mueller Water Products, Inc.

	State of
	incorporation or
Entity	organization	Doing business as
Anvil 1, LLC	Delaware	NA
Anvil 2, LLC	Delaware	NA
Anvil International, LLC	Delaware	Anvil International (N.H.)
Anvil International, LP	Delaware	Anvil Int’l Ltd Partnership of Delaware
		Anvil International LP of Delaware
Anvil Star, LLC	Delaware	NA
Fast Fabricators, LLC	Delaware	NA
Henry Pratt Company, LLC	Delaware	NA
Henry Pratt International, LLC	Delaware	NA
Hersey Meters Co., LLC	Delaware	Hersey Meters Co. of Delaware, LLC
Hunt Industries, LLC	Delaware	NA
Hydro Gate, LLC	Delaware	NA
J.B. Smith Mfg Co., LLC	Delaware	NA
James Jones Company, LLC	Delaware	James Jones Company of Delaware, LLC
Jingmen Pratt Valve Co. Ltd.	China	NA
MCO 1, LLC	Alabama	NA
MCO 2, LLC	Alabama	NA
Millikin Valve, LLC	Delaware	NA
Mueller Canada Holdings Corp.	Canada	NA
Mueller Canada Ltd.	Canada	Mueller Flow Control
		Canvil
		Anvil Canada
Mueller Co. Ltd.	Alabama	Mueller Co. Ltd., L.P.
		Mueller Co. Ltd. (LP)
		Mueller Flow, LLC
Mueller Financial Services, LLC	Delaware	NA
Mueller Group Co-Issuer, Inc.	Delaware	NA
Mueller Group, LLC	Delaware	NA
Mueller International Finance, Inc.	Delaware	NA
Mueller International Finance, L.L.C.	Delaware	Mueller International Finance (N.H.)
Mueller Service California, Inc.	Delaware	NA
Mueller Service Co., LLC	Delaware	NA
United States Pipe and Foundry Company, LLC	Alabama	NA

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-134737) pertaining to the 2006 Stock Incentive Plan and the 2006 Employee Stock Purchase Plan of Mueller Water Products, Inc. of our reports dated November 25, 2008, with respect to the consolidated financial statements of Mueller Water Products, Inc. and the effectiveness of internal control over financial reporting of Mueller Water Products, Inc. included in this Annual Report (Form 10-K) for the year ended September 30, 2008.

/s/ Ernst & Young LLP
Atlanta, Georgia
November 25, 2008

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-134737) of Mueller Water Products, Inc. of our report dated November 28, 2007 relating to the financial statements which appear in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
Atlanta, Georgia
November 25, 2008

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory E. Hyland, certify that:

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.

Dated: November 25, 2008

/s/ Gregory E. Hyland  

Gregory E. Hyland, 

Chief Executive Officer 

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Evan L. Hart, certify that:

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.

Dated: November 25, 2008

/s/ Evan L. Hart  

Evan L. Hart, 

Senior Vice President
and Chief Financial Officer 

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

     In connection with the accompanying annual report on Form 10-K of Mueller Water Products, Inc. (the “Company”) for the fiscal year ended September 30, 2008 (the “Report”), I, Gregory E. Hyland, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(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.

Dated: November 25, 2008

/s/ Gregory E. Hyland  

Gregory E. Hyland, 

Chief Executive Officer 

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

     In connection with the accompanying annual report on Form 10-K of Mueller Water Products, Inc. (the “Company”) for the fiscal year ended September 30, 2008 (the “Report”), I, Evan L. Hart, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(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.

Dated: November 25, 2008

/s/ Evan L. Hart  

Evan L. Hart, 

Chief Financial Officer