Note 4 – Goodwill

The changes in the carrying amount of goodwill were as follows:

(In thousands)		Plumbing & Refrigeration Segment			OEM Segment			Total

Balance at December 31, 2011, December 25, 2010, and December 26, 2009:
	Goodwill	$	141,684		$	9,971		$	151,655
	Accumulated impairment		(39,434	)		(9,971	)		(49,405	)

Goodwill, net		$	102,250		$	-		$	102,250

Because there are no observable inputs available (Level 3 hierarchy as defined by ASC 820), the Company estimates fair value of reporting units based on a combination of the market approach and income approach. The market approach measures the fair value of a business through the analysis of publicly traded companies or recent sales of similar businesses. The income approach uses a discounted cash flow model to estimate the fair value of reporting units based on expected cash flows (adjusted for capital investment required to support operations) and a terminal value. This cash flow stream is discounted to its present value to arrive at a fair value for each reporting unit. Future earnings are estimated using the Company's most recent annual projection, applying a growth rate to future periods. The discount rate selected for the reporting units is generally based on rates of return available from alternative investments of similar type and quality at the date of valuation.

There were no impairment charges resulting from the 2011 or 2010 impairment tests since the estimated fair value substantially exceeded the carrying value. During 2009, the Company incurred impairment charges of $28.6 million. In the Plumbing and Refrigeration segment, the Company recognized goodwill impairment charges of $18.6 million at Mueller Primaflow, the Company's import distribution business located in the U.K. In the OEM segment, the Company recognized goodwill impairment charges of $10.0 million at the following reporting units: (i) Impacts & Micro Gauge, (ii) Gas Products, and (iii) Mueller-Xingrong. The impairment charges resulted from diminished operating results and cash flows due to weak demand and economic conditions of the markets in which the business units participate. The Company reviewed the long-lived assets contained within the impaired reporting units, in accordance with the provisions of ASC 360, Property, Plant, and Equipment. The Company determined that the undiscounted cash flows related to these assets or asset groups were in excess of their carrying value and therefore were not impaired.

The projections used to assist in the determination of the fair value of the reporting units were based on the Company's most recent annual operating plan. Those projections are directly impacted by the condition of the markets in which the Company's businesses participate. For the reporting units included in the Plumbing & Refrigeration segment, the projections reflect, among other things, the decline of the residential construction market over the past several years. The OEM segment is also impacted by the residential construction market. Additionally, this segment is linked to the automotive industry, which was adversely affected by the economic downturn in 2008 and 2009.