-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NtuFHCNkWeL12qj0w3Cv9HMLaOV80MAuHdTBnh9xzTDx68n4sx33M34Bld1cPgGv gF5Q9DQNF3TXht1gPxX27w== 0001047469-06-006057.txt : 20061122 0001047469-06-006057.hdr.sgml : 20061122 20060501194041 ACCESSION NUMBER: 0001047469-06-006057 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 20060502 DATE AS OF CHANGE: 20060525 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Mueller Water Products, Inc. CENTRAL INDEX KEY: 0001350593 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 203547095 STATE OF INCORPORATION: DE FISCAL YEAR END: 0525 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-131536 FILM NUMBER: 06796858 BUSINESS ADDRESS: STREET 1: 4211 W. BOY SCOUT BLVD. CITY: TAMPA STATE: FL ZIP: 33607 BUSINESS PHONE: (813) 871-4811 MAIL ADDRESS: STREET 1: 4211 W. BOY SCOUT BLVD. CITY: TAMPA STATE: FL ZIP: 33607 FORMER COMPANY: FORMER CONFORMED NAME: Mueller Holding Company, Inc. DATE OF NAME CHANGE: 20060123 S-1/A 1 a2168388zs-1a.htm S-1/A
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As filed with the Securities and Exchange Commission on May 2, 2006

Registration No. 333-131536

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 2
to

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

MUELLER WATER PRODUCTS, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	3491 (Primary Standard Industrial Classification Code Number)	20-3547095 (I.R.S. Employer Identification Number)
4211 W. Boy Scout Blvd. Tampa, FL 33607 (813) 871-4811
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)
Victor P. Patrick, Esq. Vice President, Secretary 4211 W. Boy Scout Blvd. Tampa, FL 33607 (813) 871-4811 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:
Vincent Pagano, Jr., Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 (212) 455-2000		Andrew R. Schleider, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 (212) 848-4000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount Of Registration Fee(2)(3)


Series A Common Stock, par value 0.01 per share	$460,000,000	$49,920

(1): Includes the underwriters' option to purchase additional shares.
(2): Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
(3): Previously paid.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MAY 2, 2006

Mueller Water Products, Inc.

Series A Common Stock

We are selling shares of Series A common stock. Prior to this offering there has been no public market for our Series A common stock. The initial public offering price of the Series A common stock is expected to be between $ and $ per share. We intend to list our Series A common stock on The New York Stock Exchange under the symbol "MWA."

We are a wholly-owned subsidiary of Walter Industries, Inc. We have two series of authorized common stock—Series A common stock and Series B common stock. Walter Industries owns all of the outstanding shares of our Series B common stock. Except in certain circumstances, holders of our Series A common stock are entitled to one vote per share and the holders of our Series B common stock are entitled to eight votes per share on all matters to be voted on by shareholders. Following the offering, the outstanding shares of Series A common stock will represent % of the combined voting power of all series of voting stock and % of the economic interest (or rights of holders of common equity to participate in distributions in respect of the common equity) in us ( % and %, respectively, if the underwriters' option to purchase additional shares is exercised in full). The remainder of the voting power and economic interest in us will be beneficially held by Walter Industries.

Investing in our Series A common stock involves a high degree of risk. See "Risk Factors" beginning on page 21.

	Price to Public	Underwriting Discounts and Commissions	Proceeds to us


Per Share	$	$	$

Total	$	$	$

We have granted the underwriters the right to purchase up to additional shares of Series A common stock on the same terms and conditions as set forth above if the underwriters sell more than shares of Series A common stock in this offering. The underwriters can exercise their right at any time and from time to time, in whole or in part, within 30 days after the offering.

Delivery of the shares of Series A common stock will be made on or about , 2006.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Banc of America Securities LLC

Morgan Stanley

Lehman Brothers

SunTrust Robinson Humphrey

Goldman, Sachs & Co.

Avondale Partners

Calyon Securities (USA) Inc.

The date of this prospectus is , 2006

TABLE OF CONTENTS

		PAGE
SUMMARY		1
RISK FACTORS		21
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		35
USE OF PROCEEDS		36
DIVIDEND POLICY		38
CAPITALIZATION		39
DILUTION		41
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS		42
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		49
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		58
BUSINESS		97
MANAGEMENT		118

PRINCIPAL STOCKHOLDERS		135
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		136
DESCRIPTION OF CAPITAL STOCK		140
DESCRIPTION OF CERTAIN INDEBTEDNESS		147
CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS		152
SHARES ELIGIBLE FOR FUTURE SALE		155
UNDERWRITING		157
VALIDITY OF COMMON STOCK		164
EXPERTS		164
WHERE YOU CAN FIND MORE INFORMATION		164
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1

You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

Through and including , 2006 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

BASIS OF PRESENTATION

In this prospectus, unless the context otherwise requires, (1) "Mueller Water," the "Company," "we," "us" or "our" refer to Mueller Water Products, Inc. and its subsidiaries, including U.S. Pipe; (2) the "Issuer" refers to Mueller Water Products, Inc. and not to its subsidiaries; (3) "Predecessor Mueller" refers to Mueller Water prior to the Acquisition (as defined below); (4) "Walter Industries" refers to Walter Industries, Inc. and its subsidiaries (other than us); and (5) "U.S. Pipe" refers to United States Pipe and Foundry Company, LLC, our subsidiary.

On October 3, 2005, Walter Industries, through a wholly-owned subsidiary, acquired all outstanding shares of capital stock of Predecessor Mueller and contributed U.S. Pipe (which Walter Industries owned since 1969) to Predecessor Mueller through a series of transactions (the "Acquisition"). For accounting and financial statement presentation purposes, in accordance with the accounting principles generally accepted in the United States of America ("GAAP"), U.S. Pipe is treated as the accounting acquiror of Predecessor Mueller. Accordingly, effective October 3, 2005, U.S. Pipe's historical financial information is used for the Company, and all historical financial data of the Company prior to October 3, 2005 included in this prospectus is that of U.S. Pipe. Historical financial statements for Predecessor Mueller for the periods preceding the Acquisition are also included in this prospectus.

As of the date of this prospectus, we have one class of common stock, all of which is held by Walter Industries. Shortly before completion of this offering, we intend to complete a recapitalization in which we will create two series of common stock. The recapitalization, which may occur through the filing of a restated certificate of incorporation or by other means, will result in the creation of Series A common stock and Series B common stock. The shares sold in the initial public offering of our common stock will be our Series A common stock. Immediately following the offering, Walter Industries will own all of the outstanding shares of our Series B common stock, which will have eight votes per share and will be a series of common stock separate from the Series A common stock offered hereby (which has one vote per share). In general, our Series A common stock and Series B common stock will vote as a single class. The Series B common stock may be converted into Series A common stock at any time at the option of the holder prior to any tax-free spin-off of the Company and will automatically convert into Series A common stock upon certain transfers to third parties. Shares of Series A common stock and shares of Series B common stock will generally have identical rights in all material respects, except for certain voting, conversion and other rights described in this prospectus. See "Description of Capital Stock" for more information. As used in this prospectus, the term "common stock," when used in reference to our capital structure before completion of this offering, means our existing single class of common stock, and when used in reference to our capital structure following completion of this offering, means, collectively, the Series A common stock and the Series B common stock, unless otherwise specified.

Unless we specifically state otherwise, references to "pro forma" give effect, in the manner described under "Unaudited Pro Forma Condensed Combined Financial Statements," to (1) the Acquisition and related transactions, including borrowings under our $1,195.0 million credit agreement ("2005 Mueller Credit Agreement") and the use of proceeds therefrom to repay old credit facilities and to redeem second priority senior secured floating rate notes of Predecessor Mueller (collectively with the Acquisition, the "Transactions") and (2) the sale by us of shares of Series A common stock in this offering and the application of the proceeds therefrom as described in "Use of Proceeds" (the "Offering").

Unless the context indicates otherwise, whenever we refer in this prospectus to a particular fiscal year, we mean the fiscal year ending in that particular calendar year. Effective December 30, 2005, U.S. Pipe changed its fiscal year to September 30, which coincides with Predecessor Mueller's fiscal year end. Therefore, on a prospective basis, our fiscal year will end on September 30 of each year. Beginning with the three months ended December 31, 2005, we manage our business and report

operations through three segments, based largely on the products they sell and the markets they serve. Our segments are named after the lead brand in each segment: Mueller®, U.S. Pipe® and Anvil®. Such segments are consistent with the historical reporting for both Predecessor Mueller and U.S. Pipe. Predecessor Mueller had three reporting segments, Mueller, Anvil and corporate, while U.S. Pipe operated within one segment.

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

INDUSTRY AND MARKET DATA

In this prospectus, we rely on and refer to information and statistics regarding economic conditions and trends, the flow control product market and our market share in the sectors of that market in which we compete. In particular, we have obtained general industry information and statistics from the Congressional Budget Office, the U.S. Census Bureau, Freddie Mac and Moody's. We believe that these sources of information and estimates are reliable and accurate, but we have not independently verified them.

Although some of the companies that compete in our particular industry segments are publicly held as of the date of this prospectus, many are not. Accordingly, other than certain market data with respect to fire hydrants, ductile iron pipe and water valves, no current publicly available information is available with respect to the size of such markets or our relative market strength or competitive position. Our statements about our relative market strength and competitive position in this prospectus with respect to other products are based on our management's belief, internal studies and our management's knowledge of industry trends.

iii

SUMMARY

This summary highlights the more detailed information in this prospectus and you should read the entire prospectus carefully, including the section entitled "Risk Factors" and the financial statements and the related notes included in this prospectus.

Our Company

We are a leading North American manufacturer of a broad range of water infrastructure and flow control products for use in water distribution networks, water and wastewater treatment facilities, gas distribution systems and fire protection piping systems. We believe we have the most comprehensive water infrastructure and flow control product line in our industry and enjoy leading market positions based on the estimated market share of our key products, broad brand recognition and a strong reputation for quality and service within the markets we serve. We maintain one of the largest installed bases of products in the United States, including, as of December 31, 2005, approximately three million fire hydrants and approximately nine million iron gate valves. Our products are specified for use in all of the top fifty 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 in our industry. Our diverse end markets, extensive distributor and end-user relationships, acquisition strategy and leading market position have contributed to strong operating margins and sales growth. Our pro forma net sales and pro forma operating income for the twelve months ended September 30, 2005 were $1,747.0 million and $173.9 million, respectively. Our net sales and pro forma operating income for the three months ended December 31, 2005 were $480.4 million and $18.9 million, respectively. Our operations generate significant cash flow, which will provide us with flexibility in our operating and financial strategy.

We manage our business and report operations through three segments, based largely on the products they sell and the markets they serve: Mueller®, U.S. Pipe® and Anvil®. The table below illustrates each segment's pro forma operating results to external customers for the twelve months ended September 30, 2005 and three months ended December 31, 2005, as well as each segment's major products, brand names, market positions and end use markets.

		Mueller	U.S. Pipe*	Anvil
		(dollars in millions)
Pro Forma Net Sales:
	For the twelve months ended September 30, 2005	$664	$598	$485
	For the three months ended December 31, 2005	$177	$171	$133
Pro Forma Operating Income (Loss)(a):
	For the twelve months ended September 30, 2005	$141	$21	$42
	For the three months ended December 31, 2005	$42	$(28)(b)	$11

	Mueller	U.S. Pipe*	Anvil
Selected Product Lines (Market Position in the U.S. and Canada)(c)	• Fire Hydrants (#1) • Gate Valves (#2) • Butterfly and Ball Valves (#1) • Plug Valves (#2) • Brass Water Products (#2)	• Ductile Iron Pressure Pipe (#1)	• Pipe Fittings and Couplings (#1) • Grooved Products (#2) • Pipe Hangers (#2)
Selected Brand Names	• Mueller® • Pratt® • James Jones™	• U.S. Pipe® • TYTON® • FIELD LOK® • MJ FIELD LOK®	• Anvil® • Beck™ • Gruvlok®
Primary End Markets	• Water and Wastewater Infrastructure	• Water and Wastewater Infrastructure	• Fire Protection • Heating, Ventilation and Air Conditioning ("HVAC")

*: As restated
(a): Operating income excludes $30.0 million and $6.0 million of corporate expenses for the twelve months ended September 30, 2005 and the three months ended December 31, 2005, respectively, that are not allocated to the individual segments.
(b): U.S. Pipe's loss of $28.0 million for the three months ended, December 31, 2005 included $40.0 million of facility rationalization and restructuring charges, inventory write-offs and other expenses associated with the shutdown of U.S. Pipe's Chattanooga, Tennessee plant.
(c): Market position information is based on management's estimates of the overall market size and of the market share of our principal competitors for the relevant product lines. Where available, the management estimates were based on data provided by third parties, including trade associations, distributors and customers. In other instances, the estimates were based upon internal analysis prepared by our employees and management based on their expertise and knowledge of the industry.

Our segments are named after our leading brands in each segment:

•: Mueller. Sales of our Mueller segment products are driven principally by spending on water and wastewater infrastructure upgrade, repair and replacement and new water and wastewater infrastructure. Mueller segment sales of hydrants and iron gate valves are estimated to be approximately 50% for new infrastructure, with the remainder for upgrade, repair and replacement.
•: U.S. Pipe. U.S. Pipe products are sold primarily to water works distributors, contractors, municipalities, private utilities and other governmental agencies. A substantial percentage of ductile iron pressure pipe orders result from contracts that are bid by contractors or directly issued by municipalities or private utilities.
•: Anvil. Anvil products are sold to a wide variety of end-users, which are primarily commercial construction contractors. These products are typically sold to our distributors through Anvil's four regional distribution centers located in Illinois, Nevada, Pennsylvania and Texas and through Anvil's Canadian distribution and sales division. A significant portion of Anvil products are used in the fire protection industry and in HVAC applications.

Industry Overview

to upgrade, repair and replace existing water and wastewater infrastructure, new residential construction activity and non-residential construction activity. Specifically, federal and state environmental regulations, such as the Clean Water Act and the Safe Drinking Water Act, are expected to drive growth in our industry over the next several years. We anticipate that sales related to water infrastructure upgrade, repairs and replacement may grow faster than the overall market for water infrastructure and flow control products as a result of the continued aging of municipal water systems in the United States and Canada, and the expanding base of water infrastructure and flow control installations. The ductile iron pipe business, however, is somewhat sensitive to economic cycles because of its partial dependence on the level of new construction activity and state, municipal and federal tax revenues to fund water projects.

•: Water and Wastewater Infrastructure Upgrades, Repairs and Replacement. Much of the water distribution infrastructure in the United States is considered to be aging or in need of updating. In a November 2002 study, the Congressional Budget Office estimated that the average annual spending necessary to upgrade, repair and replace existing water and wastewater infrastructure will be between $24.6 billion and $41.0 billion a year over the ensuing 15 years.
•: New Water and Wastewater Infrastructure. Growth in the new water and wastewater infrastructure sector is mainly driven by new housing starts. According to the U.S. Census Bureau, housing starts in 2005 were 5.7% higher than in 2004. According to Freddie Mac, U.S. housing starts are projected to reach 1.9 million units by the end of 2006, which would represent the third best year for single-family housing construction in the last 25 years.
•: Non-Residential Construction. Non-residential construction activity includes: (1) public works and utility construction; (2) institutional construction, including education, dormitory, health facility, public, religious and amusement construction; and (3) commercial and industrial construction. According to the U.S. Census Bureau, spending on U.S. private non-residential building construction grew 5.0% in 2005 relative to 2004. According to Moody's, spending on non-residential construction is expected to increase 6.1% in 2006.

Competitive Strengths

We believe that we enjoy a number of important competitive strengths that drive our success and differentiate us from our competitors and support our market leadership, including:

•: Broad Range of Products and Leading Brands. We believe that we have the most comprehensive water infrastructure and flow control product line in our industry and enjoy leading market positions based on the estimated market share of our key products, broad brand recognition and a strong reputation for quality and service within the markets we serve. For the fiscal year ended September 30, 2005 and the three months ended December 31, 2005, on a pro forma basis, approximately 74.1% and 74.5%, respectively, of our total sales were from products in which we believe we have the #1 or #2 market share in the United States and Canada.
•: Complete Water Transmission Solutions. The combination of Predecessor Mueller and U.S. Pipe created an industry leading company with significant scale in water infrastructure and delivery systems and positions us as one of the largest suppliers to the water products sector with a strong platform to facilitate potential expansion into higher growth areas. Our broad product portfolio of engineered valves, hydrants, ductile iron pipe and pipe fittings provides distributors and end users with a comprehensive source of supply and creates a significant competitive advantage for our company.
•: Large and Growing Installed Base. We maintain one of the largest installed bases of products in the United States, including, as of December 31, 2005, approximately three million fire hydrants and approximately nine million iron gate valves. Once our products are installed, it is difficult

for an end-user to change to a competitive product due to the inventory of parts required to maintain multiple products and due to the life/safety nature of some of our products.

•: Leading Specification Position. Due to our strong brand name and our large installed base, our products are "specified" as an approved product for use in all of the top fifty metropolitan areas in the United States. The product specification approval process for a municipality generally takes a minimum of one year and there are approximately 55,000 municipal water systems in the United States. This strong specification position has contributed to long-standing relationships with all of the top distributors and creates a strong demand base for our products.
•: Established and Extensive Distribution Channels. We maintain strong, long-standing relationships with the leading distributors in our major markets throughout the United States and Canada. While we do not have long-term contracts with our distributors, we believe that our superior product quality and the technical support we provide allow us to enjoy long-term relationships with our network of over 5,000 independent distributors. The average relationship with our top ten distributors is over 20 years. Hughes Supply, Inc., one of our largest distributors, accounted for over 15% and 16%, respectively, of our consolidated pro forma net sales for the twelve months ended September 30, 2005 and for the three months ended December 31, 2005, and for over 27% and 29%, respectively, of our U.S. Pipe segment's net sales in the nine months ended September 30, 2005 and in the three months ended December 31, 2005.
•: Advanced, Low-Cost Manufacturing Capabilities. We believe our historical capital investment in manufacturing technologies helps us reduce the costs of producing our cast, malleable and ductile iron and brass water and gas flow control products. We believe that we are the only company in North America that uses the technologically-advanced lost foam casting process to manufacture fire hydrant and iron gate valve castings, which significantly reduces the manual labor and machining time otherwise needed to finish cast products. We believe that this has made us less susceptible to the increase in the prices of raw material over the last three years.
•: Highly Experienced, Proven Management Team. We are led by an experienced management team with a long and successful track record, enabling us to recognize and capitalize upon attractive opportunities in our key markets. Our five most senior members of the management team have an average of over 20 years of experience in the flow control industry and have substantial experience in acquisition and integration of businesses, cost management rationalization and efficient manufacturing processes.

Business Strategy

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

•: Capitalizing on Large, Attractive and Growing Water Infrastructure Industry. We plan to capitalize on the expected water infrastructure market growth by leveraging our large and growing installed base, leading specification position, established and extensive distribution channels and a broad range of leading water infrastructure and flow control products.
•: Achieving Ongoing Operating Synergies. We continue to seek opportunities to rationalize our manufacturing facilities and use our significant manufacturing expertise to further reduce our cost structure. We have initiated a multi-pronged synergy plan designed to streamline our manufacturing operations, add incremental volume through combining sales efforts for complementary products and combine corporate-level functions to achieve operating efficiencies, which we expect will produce approximately $40-$50 million of ongoing incremental annual operating income by early fiscal 2008.

•: Strengthening Relationship with Key Distributors. We are focused on enhancing close relationships with the strongest and fastest growing distributors and on leveraging our extensive distributor network to increase sales of our existing products, introduce new products and rapidly expand sales of products of the businesses we acquire.
•: Continuing to Focus on Operational Excellence. We will continue to pursue superior product engineering, design and innovation through our technologically-advanced manufacturing processes such as lost foam casting and automated Disa® molding machinery. We will also continue to evaluate sourcing products and materials internationally to lower our costs.
•: Focused Acquisition Strategy. We will selectively pursue attractive acquisitions that enhance our existing product offering, enable us to enter new markets, expand our technological capabilities and provide synergy opportunities. Over the past five years, we have acquired and successfully integrated eight businesses within the water infrastructure and flow control markets.
•: Selectively Expanding Internationally. We intend to expand our current international presence in sourcing and manufacturing products as well as in the sale of our products. We believe we can further utilize our current manufacturing facility in China to produce additional products. We are leveraging our Anvil Star ("Star") operations, which we acquired in 2004 from Star Pipe, Inc., to establish a lead position in the United States for the import and sale of piping component products, including fittings and couplings manufactured in China, India and Malaysia.

Corporate Structure

The chart below summarizes the key entities of our current corporate structure. For further information regarding our indebtedness see "Description of Certain Indebtedness."

Mueller Water Products, Inc. is a Delaware corporation that was formed on September 22, 2005 under the name Mueller Holding Company, Inc. Our principal executive offices are located at 4211 W. Boy Scout Blvd., Tampa, FL 33607, and our main telephone number is (813) 871-4811.

THE OFFERING

Series A common stock offered			shares
Common stock to be outstanding after the offering
	Series A common stock		shares
	Series B common stock		shares
		Total common stock outstanding	shares
Option to purchase additional shares			Up to shares of Series A common stock.
Use of proceeds			We estimate that the net proceeds from the sale of shares of our Series A common stock in this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $374.0 million ($ million if the underwriters' option to purchase additional shares is exercised in full), assuming an offering price of $ per share, which is the midpoint of the price range listed on the cover page of this prospectus. We intend to use the net proceeds from this offering, as well as any proceeds received from the exercise of the underwriters' option to purchase additional shares, to repay certain of our indebtedness, including a portion of the term loan under the 2005 Mueller Credit Agreement, and for general corporate purposes, as described under "Use of Proceeds." Because affiliates of some of the underwriters are lenders under that 2005 Mueller Credit Agreement, they will receive a portion of the proceeds from this offering. See "Underwriting."
Common stock			Shares of Series A common stock and shares of Series B common stock will generally have identical rights in all material respects, except for certain voting, conversion and other rights described in this prospectus. See "Description of Capital Stock" for more information.
Voting rights			Except in certain circumstances, holders of our Series A common stock are entitled to one vote per share and the holders of our Series B common stock are entitled to eight votes per share on all matters to be voted on by shareholders. The Series A common stock and the Series B common stock will generally vote as a single class.
			Under certain circumstances, shares of our Series B common stock can be converted into an equivalent number of shares of our Series A common stock.
			See "Description of Capital Stock—Common Stock—Voting Rights."
Controlling stockholder			As of the date of this prospectus, Walter Industries owns all outstanding shares of our common stock. Upon completion of this offering, Walter Industries will beneficially own all of our outstanding Series B common stock which will represent approximately % of the combined voting power of all of our outstanding common stock (or % if the underwriters' option to purchase additional shares is exercised in full).
			Walter Industries will continue to control us after this offering.

	For information regarding the relationship between us and Walter Industries, see "Certain Relationships and Related Party Transactions—Relationship with Walter Industries."
Dividend policy	Our board of directors currently intends to declare an initial quarterly cash dividend on each share of our common stock at an annual rate equal to approximately % of the price per share in this offering for the first full fiscal quarter following the completion of this offering.
	We expect our board to continue to declare quarterly dividends in the future. The board will determine the amount of any future dividends from time to time based on:
	•	our results of operations and the amount of our surplus available to be distributed;
	•	dividend availability and restrictions under our credit agreement and indentures;
	•	the dividend rate being paid by comparable companies in our industry;
	•	our liquidity needs and financial condition; and
	•	other factors that our board of directors may deem relevant.
	The board of directors may modify or revoke our dividend policy at any time.
	The holders of our Series A common stock and Series B common stock generally will be entitled to share equally on a per share basis in all dividends and other distributions (except for certain stock dividends) declared by our board of directors. See "Description of Capital Stock—Common Stock—Dividend Rights."
Proposed New York Stock Exchange symbol	"MWA"

The number of shares of common stock that will be outstanding after this offering is based on the number of shares of common stock outstanding as of , 2006, and an additional shares of Series A common stock sold in this offering and excludes shares of Series A common stock authorized and reserved for issuance under our equity compensation plans.

Unless otherwise indicated, all information in this prospectus assumes no exercise by the underwriters of their option to purchase up to an additional shares of Series A common stock.

Risk Factors

Investment in our Series A common stock involves substantial risks. See "Risk Factors" immediately following this summary for a discussion of certain risks relating to an investment in our Series A common stock.

Relationship with Walter Industries

As of the date of this prospectus, Walter Industries owns all outstanding shares of our common stock. Upon completion of this offering, Walter Industries will beneficially own all of our outstanding Series B common stock which will represent approximately % of the combined voting power of all of our outstanding common stock (or % if the underwriters' option to purchase additional shares is exercised in full). For as long as Walter Industries continues to beneficially own (directly or indirectly) shares of common stock representing more than 50% of the combined voting power of our outstanding common stock, Walter Industries will be able to direct the election of all of the members of our board of directors and exercise a controlling influence over our business and affairs, including:

•: any determinations with respect to mergers or other business combinations;
•: the acquisition or disposition of assets;
•: the incurrence of indebtedness;
•: the issuance of any additional common stock or other equity securities;
•: the repurchase or redemption of common stock or preferred stock; and
•: the payment of dividends.

Walter Industries will also have the power to:

•: determine or significantly influence the outcome of matters submitted to a vote of our stockholders;
•: prevent an acquisition or any other change in control of us; and
•: take other actions that might be favorable to Walter Industries.

See "Description of Capital Stock."

Our restated certificate of incorporation renounces any interest or expectancy that we have in, or right to be offered an opportunity to participate in, specified business opportunities. Our restated certificate of incorporation provides that none of Walter Industries, certain transferees of our Series B common stock ("Series B Transferee") or their respective affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from (i) engaging in a corporate opportunity in the same or similar activities or related lines of business in which we or our affiliates now engage or propose to engage or (ii) otherwise competing with us. In addition, in the event that Walter Industries or the Series B Transferee or any non-employee director acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself or himself or its or his affiliates and for us or our affiliates, Walter Industries, the Series B Transferee or such non-employee director will have no duty to communicate or offer such transaction or business opportunity to us and may take any such opportunity for themselves or offer it to another person or entity. See "Description of Capital Stock—Competition and Corporate Opportunities."

Walter Industries has indicated to us that it intends, subject to market and other conditions, to completely divest its ownership in us through a tax-free spin-off following the expiration of, or release from, the 180-day lock-up agreement with the underwriters described below. Walter Industries is not subject to any obligation, contractual or otherwise, to retain or dispose of its controlling interest in us, except that we and Walter Industries, our directors, executive officers and certain other employees have agreed, subject to certain exceptions and limitations, not to offer, sell, contract to sell, pledge or otherwise dispose of or hedge any shares of common stock or securities convertible into or exchangeable for shares of common stock, or publicly announce the intention to do any of the foregoing, without the prior written consent of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated for a period of 180 days from the date of this prospectus. See "Underwriting."

Walter Industries may also purchase additional shares of Series B common stock to maintain its then-existing percentage of the total voting power and value of us. Additionally, with respect to shares of nonvoting capital stock that may be issued in the future, Walter Industries may purchase such additional shares so as to maintain ownership of 80% of each outstanding class of such nonvoting capital stock.

See "Certain Relationships and Related Party Transactions" for additional information regarding our relationship with Walter Industries.

Summary Pro Forma and Historical Financial Data

On October 3, 2005, Walter Industries acquired all outstanding shares of capital stock of Predecessor Mueller and contributed U.S. Pipe (which Walter Industries owned since 1969) to Predecessor Mueller through a series of transactions (the "Acquisition"). For accounting and financial statement presentation purposes, in accordance with GAAP, U.S. Pipe is treated as the accounting acquiror of Predecessor Mueller. Accordingly, effective October 3, 2005, U.S. Pipe's historical financial information is used for the Company and all historical financial data of the Company included in this prospectus prior to October 3, 2005 is that of U.S. Pipe. Historical financial statements for Predecessor Mueller for the periods preceding the acquisition are also included in this prospectus.

Summary Pro Forma Financial Data

The summary unaudited pro forma statement of operations data for the twelve months ended September 30, 2005 is based on the historical financial statements of Predecessor Mueller and U.S. Pipe and has been restated to correct the classification of certain prior-period shipping and handling costs in accordance with Emerging Issues Task Force Consensus No. 00-10, "Accounting for Shipping and Handling Fees and Costs," ("EITF 00-10"). The unaudited pro forma statement of operations data for the three months ended December 31, 2005 is based on the financial statements of Mueller Water Products, Inc. The unaudited pro forma statements of operations data for the year ended September 30, 2005 and the three months ended December 31, 2005 are presented as if the Transactions and the Offering had taken place on October 1, 2004 and were carried forward through September 30, 2005 and through the three months ended December 31, 2005, respectively. The unaudited pro forma financial data is not intended to represent or be indicative of the consolidated results of operations or financial position that would have been reported had the Transactions and the Offering been completed as of the dates presented, and should not be taken as representative of our future consolidated results of operations or financial position. The unaudited pro forma financial data does not reflect (a) any operating efficiencies or cost savings that we may achieve with respect to the combined companies or (b) any additional costs that we may incur as a stand-alone company. In addition, the unaudited pro forma financial data does not include the effects of restructuring certain activities of pre-acquisition operations that have occurred subsequent to December 31, 2005. The following summary pro forma financial data should be read in conjunction with, and is qualified by reference to, "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Combined Financial Statements" and the consolidated

historical financial statements and notes thereto of Predecessor Mueller and U.S. Pipe included elsewhere in this prospectus.

			Pro Forma For the twelve months ended September 30, 2005		Pro Forma For the three months ended December 31, 2005
			(dollars in millions) As Restated		(dollars in millions)
Statement of Operations Data:
Net sales			$	1,747.0	$	480.4
Cost of sales				1,337.9		378.5

		Gross profit		409.1		101.9
Selling, general and administrative expenses				233.5		58.9
Facility rationalization and related costs				1.7		24.1

		Operating income		173.9		18.9
Interest expense and early repayment costs, net of interest income				114.7		24.8

		Income (loss) before income taxes		59.2		(5.9	)
Income tax expense (benefit)				28.2		(2.5	)

		Net income (loss)	$	31.0	$	(3.4	)

Earnings (loss) per share:
	Basic
	Diluted
Weighted average shares outstanding:
	Basic
	Diluted

Summary Historical Financial Data—Mueller Water Products, Inc.

The following summary consolidated statement of operations data for the three months ended December 31, 2005 and 2004 and the summary consolidated balance sheet data as of December 31, 2005 and September 30, 2005 are derived from, and qualified by reference to, the unaudited consolidated financial statements of Mueller Water Products, Inc. included elsewhere in this prospectus and should be read in conjunction with those unaudited consolidated financial statements and notes thereto. The following summary consolidated financial and other data of Mueller Water Products, Inc. should be read in conjunction with, and are qualified by reference to, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the unaudited consolidated financial statements and notes thereto included elsewhere in this prospectus. Summary financial data for the three months ended December 31, 2004 in the table below refers to U.S. Pipe prior to the Acquisition.

			For the three months ended December 31,
			2005			2004
			(dollars in millions)
						As Restated(j)
Statement of Operations Data:
	Net sales		$	480.4		$	141.2
	Cost of sales(a)			436.9			128.5

		Gross profit		43.5			12.7
	Selling, general and administrative expenses(b)			57.1			13.2
	Related party corporate charges(c)			1.8			1.9
	Facility rationalization, restructuring and related costs(d)			24.1			—

		Loss from operations		(39.5	)		(2.4	)
	Interest expense arising from related party payable to Walter Industries(e)			—			(5.9	)
	Interest expense, net of interest income(f)			(32.2	)		(0.1	)

		Loss before income taxes		(71.7	)		(8.4	)
	Income tax expense (benefit)			(22.9	)		1.1

		Net loss	$	(48.8	)	$	(9.5	)

	Loss per share(g)		$	(48.8	)	$	(9.5	)

Other Data:
	EBITDA(h)		$	(15.7	)	$	4.1
	Depreciation and amortization			23.8			6.5
	Capital expenditures			16.0			7.9

		December 31, 2005		September 30, 2005
		(dollars in millions)
Balance Sheet Data:
	Working capital(i)	$	623.0	$	188.7
	Property, plant and equipment, net		344.8		149.2
	Total assets(k)		2,962.2		495.4
	Total debt		1,548.6		—
	Total stockholder's equity (net capital deficiency)		725.3		(155.2	)

(a)

Cost of sales includes:

•: $58.4 million of purchase accounting adjustments related to valuing inventory acquired in the Acquisition at fair value for the three months ended December 31, 2005;
•: $1.4 million of amortization expense related to intangible assets identified during the allocation of the Acquisition purchase price for the three months ended December 31, 2005;

•: $10.7 million of inventory obsolescence write-offs related to the shut-down of the U.S. Pipe Chattanooga plant during the three months ended December 31, 2005; and
•: $5.2 million of facility expenses at the U.S. Pipe Chattanooga plant due to significantly lower than normal capacity resulting from the plant closure process during the three months ended December 31, 2005.

(b)

Selling, general and administrative expenses include:

•: $5.2 million of amortization expense related to intangible assets identified during the allocation of the Acquisition purchase price for the three months ended December 31, 2005; and
•: $4.0 million related to environmental liabilities at the U.S. Pipe Anniston, Alabama site (shut down in 2003) for the three months ended December 31, 2004.

(c)

Related party corporate charges represents costs incurred by Walter Industries that have been allocated to U.S. Pipe. Walter Industries allocates certain costs to all of its subsidiaries based on a systematic and rational method. Upon the spin-off, these charges will no longer be allocated to U.S. Pipe. However, U.S. Pipe may incur costs in an amount less than or greater than these costs for similar services performed by an unaffiliated third party.

(d)

Facility rationalization and restructuring includes severance and exit cost charges and non-cash impairment charges due to the closure of the U.S. Pipe Chattanooga plant during the three months ended December 31, 2005.

(e)

Consists of interest expense allocated by Walter Industries to U.S. Pipe. Following the Acquisition on October 3, 2005, the allocation of the interest expense terminated because the intercompany indebtedness to Walter Industries was contributed to the capital of U.S. Pipe.

(f)

Interest expense, net of interest income, includes $2.5 million in commitment fees for a bridge loan which were expensed at the expiration of the bridge loan period during the three months ended December 31, 2005. Interest expense, net of interest income, also includes interest rate swap gains of $0.4 million for the three months ended December 31, 2005.

(g)

Loss per share for all periods presented was determined using one share, which is the capital structure of the reporting entity subsequent to the Acquisition.

(h)

EBITDA represents net income adjusted for interest expense, net of interest income, income taxes, cumulative effect of change in accounting principle and depreciation and amortization. We present EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, substantially all of which present EBITDA when reporting their results.

In addition, our credit agreement uses EBITDA (with additional adjustments) to measure our compliance with covenants, such as interest coverage and debt incurrence. EBITDA is also widely used by us and others in our industry to evaluate and price potential acquisition candidates.

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•: EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
•: EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
•: EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;

•: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
•: other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

EBITDA is a measure of our performance that is not required by, or presented in accordance with, GAAP. EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP.

EBITDA reconciliation to Net loss:

	For the three months ended December 31,
	2005			2004
	(dollars in millions)
EBITDA	$	(15.7	)	$	4.1
Adjustments:
Depreciation and amortization		(23.8	)		(6.5	)
Interest expense arising from related party payable to Walter Industries		—			(5.9	)
Interest expense, net of interest income		(32.2	)		(0.1	)
Income tax (expense) benefit		22.9			(1.1	)

Net loss	$	(48.8	)	$	(9.5	)

(i): Working capital equals current assets less current liabilities.
(j): The information presented above should be read in conjunction with Mueller Water Products, Inc.'s financial statements and the notes thereto, including Note 2 related to the restatement of net sales and cost of sales, for the three months ended December 31, 2004. As described further in Note 2, sales and cost of sales have been restated to correct the classification of certain prior-period shipping and handling costs in accordance with EITF 00-10.
(k): On the Mueller Water Products, Inc. Consolidated Balance Sheet as of September 30, 2005, prepaid pension cost of $19.3 million has been netted against accrued pension liability of $72.9 million and is presented as net accrued pension liability of $53.6 million. As a result of this reclassification, total assets at September 30, 2005, as presented in this table, are $495.4 or $19.3 million less than total assets of $514.7 million as presented in U.S. Pipe's historical balance sheet at September 30, 2005.

Summary Historical Financial Data—United States Pipe and Foundry Company, LLC (U.S. Pipe)

The following summary statement of operations data for the nine months ended September 30, 2005 and for the years ended December 31, 2004 and 2003 and the summary balance sheet data as of September 30, 2005 and December 31, 2004 are derived from, and qualified by reference to, the audited financial statements of U.S. Pipe included elsewhere in this prospectus and should be read in conjunction with those financial statements and notes thereto. The summary statement of operations data for the nine months ended September 30, 2004 and the year ended December 31, 2002 and the summary balance sheet data as of September 30, 2004 and December 31, 2003 have been derived from unaudited financial statements of U.S. Pipe. The following summary financial and other data of U.S. Pipe should be read in conjunction with, and are qualified by reference to, "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Combined Financial Statements" and the financial statements and notes thereto included elsewhere in this prospectus.

			For the nine months ended September 30,						For the years ended December 31,
			2005			2004			2004			2003			2002
			(dollars in millions) As Restated(h)
Statement of Operations Data:
	Net sales		$	456.9		$	437.2		$	578.4		$	465.4		$	491.8
	Cost of sales(a)			402.2			402.9			531.4			427.4			429.8

		Gross profit		54.7			34.3			47.0			38.0			62.0
	Selling, general and administrative expenses(b)			25.9			25.0			38.2			43.5			36.1
	Related party corporate charges(c)			5.4			5.7			7.7			4.8			6.4
	Restructuring and impairment charges(d)			—			0.1			0.1			5.9			—

		Operating income (loss)		23.4			3.5			1.0			(16.2	)		19.5
	Interest expense—other			(0.3	)		(0.4	)		(0.5	)		(0.5	)		(0.1	)
	Interest expense arising from payable to parent, Walter Industries(e)			(15.2	)		(13.0	)		(18.9	)		(16.4	)		(9.4	)

		Income (loss) before income tax expense (benefit)		7.9			(9.9	)		(18.4	)		(33.1	)		10.0
	Income tax expense (benefit)			2.8			(3.9	)		(2.9	)		(12.7	)		4.1

		Income (loss) before cumulative effect of change in accounting principle		5.1			(6.0	)		(15.5	)		(20.4	)		5.9
	Cumulative effect of change in accounting principle, net of tax			—			—			—			(0.5	)		—

		Net income (loss)	$	5.1		$	(6.0	)	$	(15.5	)	$	(20.9	)	$	5.9

	Basic income (loss) per share:
		Income (loss) before cumulative effect of change in accounting principle	$	5.1		$	(6.0	)	$	(15.5	)	$	(20.4	)	$	5.9
		Cumulative effect of change in accounting principle, net of tax		—			—			—			(0.5	)		—

	Earnings (loss) per share(f)		$	5.1		$	(6.0	)	$	(15.5	)	$	(20.9	)	$	5.9

Other Data:
	EBITDA(g)		$	42.8		$	23.5		$	27.5		$	9.0		$	43.5
	Depreciation and amortization			19.4			20.0			26.5			25.2			24.0
	Capital expenditures			16.5			12.4			20.4			15.7			26.2

		As of September 30,						As of December 31,
		2005			2004			2004			2003
		(dollars in millions)
Balance Sheet Data:
	Cash and cash equivalents(i)	$	—		$	0.1		$	—		$	0.2
	Working capital		188.7			176.6			163.5			157.0
	Property, plant and equipment, net		149.2			152.2			152.9			160.1
	Total assets		514.7			491.6			473.5			452.9
	Intercompany indebtedness to Walter Industries		443.6			435.4			422.8			409.2
	Total liabilities		669.9			626.7			618.6			581.9
	Total stockholder's equity (net capital deficiency)		(155.2	)		(135.1	)		(145.1	)		(129.0	)

(a)

Cost of sales includes warranty cost of $2.3 million related to a construction project in Kansas City, Missouri during the nine months ended September 30, 2005.

(b)

Selling, general and administrative expenses include:

•: credits for environmental-related insurance settlement benefits of $5.1 million and $1.9 million for the nine months ended September 30, 2005 and the year ended December 31, 2004, respectively;
•: accrual of $4.0 million relating to environmental liabilities for the year ended December 31, 2004; and
•: settlement expenses for a commercial dispute of $1.7 million and settlement expenses for litigation matters of $6.5 million for the year ended December 31, 2003.

(c)

(d)

Restructuring and impairment charges for the year ended December 31, 2003 include $5.9 million to cease operations at the castings plant in Anniston, Alabama. These charges primarily included employee benefits costs and the write-off of fixed assets.

(e)

(f)

Earnings (loss) per share for all periods presented was determined using one share, which is the capital structure of the reporting entity subsequent to the Acquisition.

(g)

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•: EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
•: EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
•: EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;

•: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
•: other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

: EBITDA is a measure of our performance that is not required by, or presented in accordance with, GAAP. EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP.
: EBITDA reconciliation to Net income (loss):

		For the nine months ended September 30,						For the years ended December 31,
		2005			2004			2004			2003			2002
		(dollars in millions)
EBITDA		$	42.8		$	23.5		$	27.5		$	9.0		$	43.5
Adjustments:
	Depreciation and amortization		(19.4	)		(20.0	)		(26.5	)		(25.2	)		(24.0	)
	Interest expense-other		(0.3	)		(0.4	)		(0.5	)		(0.5	)		(0.1	)
	Interest expense arising from payable to parent, Walter Industries		(15.2	)		(13.0	)		(18.9	)		(16.4	)		(9.4	)
	Income tax (expense) benefit		(2.8	)		3.9			2.9			12.7			(4.1	)
	Cumulative effect of change in accounting principle, net of tax		—			—			—			(0.5	)		—

	Net income (loss)	$	5.1		$	(6.0	)	$	(15.5	)	$	(20.9	)	$	5.9

(h): The information presented above should be read in conjunction with U.S. Pipe's financial statements and the notes thereto including Note 1 related to the restatement of net sales and costs of sales. As described further in Note 1, sales and cost of sales have been restated to correct the classification of certain prior-period shipping and handling costs in accordance with EITF 00-10.
: In addition to the restatement information provided in Note 1, the following information is provided regarding the restatement:

	For the nine months ended September 30, 2004				For the year ended December 31, 2002
	As Restated		As Originally Reported		As Restated		As Originally Reported
	(dollars in millions)
Net sales	$	437.2	$	406.9	$	491.8	$	457.2
Cost of sales	$	402.9	$	372.6	$	429.8	$	395.2

(i): Cash and cash equivalents, prior to the acquisition of Predecessor Mueller on October 3, 2005, were transferred daily to the Walter Industries cash management system, effectively reducing U.S. Pipe cash to virtually zero on a daily basis. Subsequent to October 3, 2005, all cash generated by U.S. Pipe is transferred to Mueller Group and is not transferred to Walter Industries.

Summary Historical and Financial Data—Mueller Water Products, Inc. (Predecessor Mueller)

The following summary consolidated statement of operations data for the years ended September 30, 2005, 2004 and 2003 and the summary consolidated balance sheet data as of September 30, 2005, 2004 and 2003 are derived, and qualified by reference to, the audited consolidated financial statements of Mueller Water Products, Inc. and should be read in conjunction with those consolidated financial statements and notes thereto. The consolidated financial statements as of September 30, 2005 and 2004 and for each of the three years in the period ended September 30, 2005 are included elsewhere in this prospectus. The following summary consolidated financial and other data of Mueller Water Products, Inc. should be read in conjunction with, and are qualified by reference to, "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Combined Financial Statements" and the consolidated financial statements and notes thereto included in this prospectus.

			For the years ended September 30,
			2005			2004			2003
						(as restated)(g)			(as restated)(g)
			(dollars in millions except per share data)
Statement of Operations Data:
	Net sales		$	1,148.9		$	1,049.2		$	922.9
	Cost of sales			802.3			750.5			681.8

		Gross profit		346.6			298.7			241.1
	Selling, general and administrative expenses(a)			172.1			185.1			148.2
	Facility rationalization, restructuring and related costs(b)			1.7			0.9			1.7

		Operating income		172.8			112.7			91.2
	Interest expense, net of interest income(c)			(89.5	)		(63.5	)		(35.5	)

		Income before income tax expense		83.3			49.2			55.7
	Income tax expense			33.7			16.0			22.9

		Net income	$	49.6		$	33.2		$	32.8

	Earnings per share(d):
		Basic	$	0.22		$	0.11		$	0.09

		Diluted	$	0.20		$	0.10		$	0.09

	Weighted average shares outstanding (in millions):
		Basic		220.6			212.3			205.6

		Diluted		244.9			223.6			208.9

Other Data:
	EBITDA(e)		$	221.2		$	177.0		$	157.5
	Depreciation and amortization			48.4			64.3			66.3
	Capital expenditures			27.2			22.5			20.0

		As of September 30,
		2005			2004			2003
		(dollars in millions)
Balance Sheet Data:
	Working capital(f)	$	481.6		$	390.8		$	369.1
	Property, plant and equipment, net		168.0			186.8			208.0
	Total assets		1,086.8			989.2			957.4
	Total debt		1,055.7			1,039.4			575.7
	Total stockholder's equity (net capital deficiency)		(176.4	)		(232.4	)		106.8

(a): Selling, general and administrative expenses include stock compensation charges of $21.2 million and $0.7 million for the years ended September 30, 2004 and 2003, respectively.
(b): Facility rationalization and restructuring includes severance and exit cost charges and non-cash impairment charges due to the idling and obsolescence of certain assets related to (A) the implementation of lost foam technology at our Albertville, Alabama and Chattanooga, Tennessee facilities, (B) the closure of our Statesboro, Georgia manufacturing facility, (C) the relocation of certain manufacturing lines to other facilities, and (D) the shutdown of a Mueller segment plant in Colorado that ceased manufacturing operations.
(c): Interest expense, net of interest income, includes the write off of deferred financing fees of $7.0 million for 2004. Interest expense and early debt repayments costs for 2004 also includes a $7.0 million prepayment associated with the redemption in November 2003 of our senior subordinated notes due 2009. Interest expense, net of interest income, also includes interest rate swap (gains)/losses of $(5.2) million, $(12.5) million and $(13.3) million for the years ended September 30, 2005, 2004 and 2003, respectively.
(d): A reconciliation of the basic and diluted net income per share computations for the years ended September 30, 2005, 2004 and 2003 are as follows:

			For the years ended September 30,
			2005				2004				2003
			Basic		Diluted		Basic		Diluted		Basic		Diluted
			(in millions, except per share data)
Numerator:
	Net income		$	49.6	$	49.6	$	33.2	$	33.2	$	32.8	$	32.8
	Effect of dilutive securities:
		Dividends related to redeemable preferred stock(1)		—		—		9.9		9.9		14.2		14.2

			$	49.6	$	49.6	$	23.3	$	23.3	$	18.6	$	18.6

Denominator:
	Average number of common shares outstanding			220.6		220.6		212.3		212.3		205.6		205.6
	Effect of dilutive securities:
		Stock options(2)		—		—		—		1.2		—		3.3
		Warrants(3)		—		24.3		—		10.1		—		—

				220.6		244.9		212.3		223.6		205.6		208.9

Net income per share			$	0.22	$	0.20	$	0.11	$	0.10	$	0.09	$	0.09

(1): Represents dividends payable in cash related to the redeemable preferred stock which was redeemed on April 23, 2004.
(2): Represents the number of shares of common stock issuable on the exercise of dilutive employee stock options less the number of shares of common stock which could have been purchased with the proceeds from the exercise of such options. These purchases were assumed to have been made at the average market price for the period. On April 23, 2004, all options were exercised.
(3): Represents the number of warrants issued with the 14³/4% senior discount notes that were convertible into Predecessor Mueller's Class A common stock upon exercise. In connection with the acquisition of Predecessor Mueller by Walter Industries on October 3, 2005, all warrants were converted into a right to receive cash and are no longer outstanding.

(e): EBITDA represents net income adjusted for interest expense, net of interest income, income taxes, cumulative effect of change in accounting principle, and depreciation and amortization. We present EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors and other

interested parties in the evaluation of companies in our industry, substantially all of which present EBITDA when reporting their results.

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•: EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
•: EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
•: EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
•: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
•: other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

EBITDA reconciliation to Net income:

		For the years ended September 30,
		2005			2004			2003
		(dollars in millions)
EBITDA		$	221.2		$	177.0		$	157.5
Adjustments:
	Depreciation and amortization		(48.4	)		(64.3	)		(66.3	)
	Interest expense, net of interest income		(89.5	)		(63.5	)		(35.5	)
	Income tax expense		(33.7	)		(16.0	)		(22.9	)

	Net income	$	49.6		$	33.2		$	32.8

(f): Working capital equals current assets less current liabilities.
(g): See Note 2 to the Predecessor Mueller consolidated financial statements for discussion of the restatement of total assets for fiscal 2004 and the reclassification of depreciation expense from selling, general and administrative to cost of sales for fiscal years 2004 and 2003.

RISK FACTORS

You should carefully consider each of the following risks and all of the information set forth in this prospectus before deciding to invest in our Series A common stock. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could suffer. In that case, the price of our Series A common stock could decline and you could lose all or part of your investment.

Risks Relating to Our Business

Our business may suffer as a result of a downturn in government spending related to infrastructure upgrades, repairs and replacements, or in the cyclical residential or non-residential building markets.

Our business is primarily dependent upon spending on water and wastewater infrastructure upgrades, repairs and replacement, new water and wastewater infrastructure spending (which is dependent upon residential construction) and spending on non-residential construction. We are also subject to general economic conditions, the need for construction projects, interest rates and government incentives provided for public work projects. In addition, a significant percentage of our products are ultimately used by municipalities or other governmental agencies in public water transmission and collection systems. As a result, our sales could decline as a result of declines in the number of projects planned by public water agencies, government spending cuts, general budgetary constraints, difficulty in obtaining necessary permits or the inability of government entities to issue debt. 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 upgrades, repairs and replacement sector has slowed in recent years as state and local governments' budgets were negatively impacted by the downturn in the economy. Even if economic conditions were to continue to improve, state and local governments may choose not to address deferred infrastructure needs. Although the residential building market has experienced growth in recent years, this growth may not continue in the future. The residential and non-residential building markets are cyclical, and, historically, down cycles have typically lasted approximately four to six years. Any significant decline in the residential or non-residential building markets or governmental spending on infrastructure could lead to a significant decline in our sales, profitability and cash flows.

Our industry is very competitive and some of our products are commodities.

The domestic and international markets for flow control products are competitive. While there are only a few competitors for most of our product offerings, many of them are well-established companies with strong brand recognition. In particular, our malleable iron and cast iron pipe fitting products, which together comprised 5% and 6% of our pro forma sales for the 2005 fiscal year, and for the three months ended December 31, 2005, respectively, face competition from less expensive imports and our pipe nipple and hanger products and our pipe fittings and couplings products, which together comprised 16% and 17% of our pro forma sales in 2005, and for the three months ended December 31, 2005, respectively, compete on the basis of price and are sold in fragmented markets with low barriers to entry, allowing less expensive domestic and foreign producers to gain market share and reduce our margins. Also, competition for ductile iron pressure pipe sold by our U.S. Pipe segment comes not only from ductile pipe produced by a concentrated number of domestic manufacturers, but also from pipe composed of other materials, such as polyvinylchloride (PVC), high density polyethylene (HDPE), concrete, fiberglass, reinforced plastic and steel.

Foreign competition is intense and could harm our sales, profitability and cash flows.

In addition to domestic competition, we face intense foreign competition. The intensity of foreign competition is affected significantly by fluctuations in the value of the U.S. dollar against foreign

currencies, by the relative cost to ship competitive products into the North American markets and by the level of import duties imposed by the U.S. Department of Commerce on certain products. Foreign competition is likely to further increase and certain product prices will continue to face downward pressure as our domestic competitors shift their operations or outsource manufacturing requirements overseas or source supplies from foreign vendors in an effort to reduce expenses.

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.

In the fiscal year ended September 30, 2005 and the three months ended December 31, 2005, on a pro forma basis, approximately 37% of our pro forma sales were to our ten largest distributors, and approximately 30% and 29%, respectively, of our pro forma sales were to our three largest distributors: Hughes Supply, Ferguson Enterprises and National Waterworks. Our business relationships with most of our major distributor branches may be terminated at the option of either party upon zero to 60 days' notice.

While our relationships with our ten largest distributors have been long-lasting, distributors in our industry have experienced significant consolidation in recent years, and our distributors may be acquired by other distributors who buy products from our competitors. Our ability to retain these customers in the face of other competitors generally depends on a variety of factors, including the quality and price of our products and our ability to market these products effectively. As consolidation among distributors continues, pricing pressure may result, which could lead to a significant decline in our profitability. For example, Home Depot acquired National Waterworks in 2005 and announced in January 2006 that it intends to acquire Hughes Supply. As a result, two of our three largest distributors will be combined under common control. Moreover, the loss of any of National Waterworks, Hughes Supply or Ferguson Enterprises as a distributor could significantly reduce our levels of sales and profitability.

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

Our brass valve products, which constituted approximately 6% and 5% of our pro forma sales in the twelve months ended September 30, 2005 and the three months ended December 31, 2005, respectively, contain approximately 5.0% lead. Environmental advocacy groups, relying on standards established by California's Proposition 65, are seeking to eliminate or reduce the content of lead in some of these products, including water meters and valves, and to limit their sale in California. Some of our business units have entered into settlement agreements with these environmental advocacy groups that have required them to either modify some of these products or offer substitutes for them with respect to products sold in California. Modifications of or substitutions for our products to meet or conform with regulatory requirements will require incremental capital spending of up to $8.0 million in the next two years and will require us to purchase more expensive raw materials, and we may not be able to pass these costs on to our customers. Legislation to substantially restrict lead content in water products has been introduced in the United States Congress. Congress may adopt legislation that would require us to reduce or eliminate lead in our brass products which could require us to incur substantial additional production expenses. In addition, advocacy groups or other parties may file suit against us under Proposition 65, which could result in additional costs in connection with marketing and selling our brass products in California.

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

Our business is subject to the risk of price increases and fluctuations and periodic delays in the delivery of raw materials and purchased components that are beyond our control. Our operations require substantial amounts of raw materials or purchased components, such as steel pipe and scrap steel and iron, brass ingot, sand, resin, and natural gas. Management estimates that scrap metal and

ferrous alloys used in the U.S. Pipe manufacturing process account for approximately 26% of the U.S. Pipe cost to manufacture ductile iron pipe and raw materials and purchased components used in our manufacturing processes currently account for approximately 18% of the Mueller and Anvil cost of goods sold. Fluctuations in the price and delivery of these materials may be driven by the supply/demand relationship for a material and factors particular to that material. In addition, if any of our suppliers seeks bankruptcy relief or otherwise cannot continue its business as anticipated or we cannot renew our supply contracts on favorable terms, the availability of raw materials could be reduced or the price of raw materials could increase.

The availability and price of certain raw materials or purchased components, such as steel scrap, brass ingot and natural gas are subject to market forces largely beyond our control, including North American and international demand, freight costs, speculation and foreign exchange rates. We generally purchase raw materials at spot prices and generally do not have the ability to hedge our exposure to price changes. We are not always able, and may not be able in the future, to pass on increases in the price of these raw materials to our customers. In particular, when raw material prices increase rapidly or to significantly higher than normal levels, we may not be able to pass price increases through to our customers on a timely basis, if at all, which could lead to significant reductions of our operating margins and cash flow. Any fluctuations in the price or availability of raw materials or purchased components could significantly reduce our levels of production and sales or impair our profitability.

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

Some of our key products, including hydrants, valves and ductile iron pipe, are manufactured at five of our largest 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 and energy supply;
•: adverse government regulation;
•: breakdowns or equipment failures;
•: violations of our permit requirements or revocation of permits;
•: releases of pollutants and hazardous substances to air, soil, surface water or groundwater;
•: shortages of equipment or spare parts; and
•: labor disputes.

To date, we have successfully managed non-material occurrences of the foregoing events, including a fire at the Columbia, PA facility of our Anvil segment and California's adoption of laws limiting the lead content of water infrastructure products, without significant disruption of our operations. More acute occurrences of these events could cause a decrease in, or the elimination of, the revenues generated by our key facilities or a substantial increase in the costs of operating such facilities that, in turn, could, impair our cash flows and results of operations.

We may be unsuccessful in identifying or integrating suitable acquisitions, which could impair our growth.

A part of our growth strategy depends on the availability of acquisition candidates with businesses that can be successfully integrated into our existing business and that will provide us with complementary manufacturing capabilities, products or services. 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 successfully implement 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 from operations or of 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.

Businesses we have acquired or will acquire may not perform as expected.

Businesses we have recently acquired or may acquire in the future may not perform as expected. Acquired businesses may perform below expectations after the acquisition for various reasons, including legislative or regulatory changes that affect the areas in which a business specializes, the loss of key customers after the acquisition has closed, general economic factors that affect a business in a direct way and the cultural incompatibility of an acquired management team with us. Any of these factors could impair our results of operations.

We have recorded a significant amount of goodwill and other identifiable intangible assets, and we may never realize the full value of our intangible assets.

We have recorded a significant amount of goodwill and other identifiable intangible assets. As of December 31, 2005, goodwill and other net identifiable intangible assets were approximately $856.7 million and $849.3 million (or, collectively, approximately 57% of our total assets). Goodwill and net identifiable intangible assets of Mueller Water are recorded at fair value on the date of acquisition and goodwill of U.S. Pipe remains at historical cost. In accordance with Financial Accounting Standards Board Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other 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 business, and a variety of other factors. The amount of any quantified impairment must be expensed immediately as a charge to results of operations. Depending on future circumstances, it is possible that we may never realize the full value of our intangible assets. Any future determination of impairment of a significant portion of goodwill or other identifiable intangible assets would result in a non-cash impairment charge.

We have a significant amount of debt.

Following this offering, on a pro forma basis, as of December 31, 2005, our total debt would have been $1,158.9 million ($1,102.5 million if the underwriters' over-allotment option is exercised and all additional proceeds are used to reduce debt). Any decrease in the aggregate net proceeds raised in this offering will result in an increase of our pro forma total debt. See "Use of Proceeds" and "Capitalization" for additional information. We may incur significant additional indebtedness from time to time. The level of our indebtedness 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 flow 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 will require a significant amount of cash to service our debt and our ability to generate cash depends on many factors beyond our control.

Our ability to pay or to refinance our indebtedness 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. There is a risk that our business will not generate sufficient cash flow from operations, that currently anticipated revenue growth and operating improvements will not be realized or that future borrowings will not be available to us in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. If we are unable to meet our debt service obligations or fund our other liquidity needs, we could attempt to restructure or refinance our indebtedness or seek additional equity capital, but we may not be able to accomplish those actions on satisfactory terms, if at all.

Restrictive covenants in our debt instruments may limit our ability to engage in certain transactions and may diminish our ability to make payments on our indebtedness.

Our debt instruments contain various covenants that limit our ability to engage in certain transactions. Our senior credit facilities also require the maintenance of specified financial ratios and the satisfaction of other financial condition tests. 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 SEC of annual and quarterly reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Our ability to satisfy those financial ratios, tests 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 our senior credit facilities. If the lenders under our senior credit facilities or noteholders of the 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 stock and our ability to operate as a going concern.

Certain of our brass valve products may not be in compliance with NSF standards, which could limit the ability of municipalities to buy our products.

The National Sanitary Foundation ("NSF") is a non-profit entity that was contracted by the U.S. Environmental Protection Agency ("EPA") to promulgate standards for the water industry. NSF has issued NSF 61, which governs the leaching characteristics of valves and devices that are part of drinking water distribution networks, including certain of our products made from brass. In recent years, a growing majority of states have adopted, by statute or regulation, a requirement that water distribution systems utilize products that comply with NSF 61 and/or are certified as NSF 61 compliant. We, along with others in the industry, are engaged in the lengthy process of attempting to obtain certification of NSF 61 compliance for all of our relevant products. In fiscal 2005 and in the three months ended December 31, 2005, our sales of brass valve products were approximately 6% and 5%, respectively, of our total sales, on a pro forma basis. To date we have obtained certification of approximately 95% of

our brass valve and fitting products. Approximately 26% of our certified products use "low lead" brass to comply with current NSF 61 requirements. The NSF 61 certification process is ongoing with our goal to have all products requiring certification completed by January 1, 2007. In the event that some of our brass valve products are found not to be in compliance with NSF 61, those products may not be accepted by various municipalities or we may be forced to modify non-conforming products with substitute materials which may require increased cost, thereby impairing our profitability. In addition, if our competitors develop a complete line of NSF 61 compliant brass valve products before we do, we may be placed at a competitive disadvantage which may, in turn, impair our profitability.

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 our hourly workforce is highly unionized. As of December 31, 2005, on a pro forma basis, approximately 85% of our hourly workforce was represented by unions. These employees are represented by locals from approximately six different unions, including the Glass, Molders, Pottery, Plastics and Allied Workers International Union, which is our largest union. Our labor agreements will be negotiated as they expire at various times through March 2010. Work stoppages for an extended period of time could impair our business. Labor costs are a significant element of the total expenditures involved in our manufacturing process, and an increase in the costs of labor could therefore harm our business. In addition, the freight companies who deliver our products to our distributors generally use unionized truck drivers, and our business could suffer if our contractors face work stoppages or increased labor costs. For more information about our labor relations, see "Business—Employees."

Our revenues are influenced by weather conditions and the level of construction activity at different times of the year; we may not be able to generate revenues 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 production capacity and lower sales in the winter months. This seasonality in demand has resulted in fluctuations in our revenues and operating results. Because much of our overhead and expenses are fixed payments, seasonal trends can cause reductions in our profit margin and financial condition, especially during our slower periods.

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

We would be exposed to product liability claims in the event that the use of our products results, or is alleged to result, in bodily injury and/or property damage. There is a risk that we will experience product liability or warranty losses in the future or that we will incur significant costs to defend such claims. Such losses and costs 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.

We rely on 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 purchase agreement (the "Tyco Purchase Agreement") relating to the August 1999 sale by Tyco International Ltd. ("Tyco") of the Mueller and Anvil businesses to our prior owners, 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. See "Business—Legal Proceedings." 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. On January 14, 2006, Tyco's board of directors announced that it approved a plan to separate Tyco into three separate, publicly traded companies. At this time, we do not know which of the new entities will assume the indemnity provided under the terms of the Tyco Purchase Agreement if this plan is implemented. Should the entity or entities that assume Tyco's obligations under the Tyco Purchase 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 "Business—Legal Proceedings."

Environmental, health and safety laws and regulations 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 business, profitability and results of operations.

In addition, we will be required to incur costs to comply with the EPA's National Emissions Standards for Hazardous Air Pollutants ("NESHAP") for iron and steel foundries and for our foundries' painting operations. These costs may be substantial. See "Business—Environmental Matters." We may be required to 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 clean-up 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 clean-up with regard to its Burlington, New Jersey facility. Such clean-up costs could be substantial and could have a negative effect on our profitability and cash flows in any given reporting period. As described in the immediately preceding risk factor, we rely on Tyco to indemnify us for certain liabilities and there is a risk that Tyco may become unable or fail to fulfill its obligation. For more information about our environmental compliance and potential environmental liabilities, see "Business—Environmental Matters" and "Business—Legal Proceedings."

We need to improve our disclosure controls and procedures and internal control over financial reporting to comply with SEC reporting requirements; public reporting obligations have put significant demands on our financial, operational and management resources.

The Public Company Accounting Oversight Board ("PCAOB") defines a significant deficiency as a control deficiency, or a combination of control deficiencies, that adversely affects the company's ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the company's annual or interim financial statements that is more than inconsequential will not be prevented or detected. The PCAOB defines a material weakness as a single deficiency, or a

combination of deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

As of September 30, 2005, we did not maintain effective controls over the preparation, review and presentation and disclosure of our consolidated financial statements due to a lack of personnel with experience in financial reporting and control procedures necessary for SEC registrants. Specifically, our controls failed to prevent or detect the incorrect presentation of the following items in our consolidated financial statements: (i) cash flows from the effect of exchange rate changes on cash balances; (ii) cash flows from the loss on disposal of property, plant and equipment; (iii) cash flows and balance sheet presentation of book overdrafts; (iv) the presentation of current and non-current deferred income tax assets in Predecessor Mueller's consolidated balance sheet; and (v) classification of certain depreciation expense as selling, general and administrative expense instead of cost of sales in the Predecessor Mueller consolidated statement of operations. Further, our controls failed to detect the incorrect presentation of shipping and handling costs in our unaudited consolidated statement of operations for the three months ended December 31, 2004 as initially reported for the three months ended December 31, 2005. These control deficiencies resulted in the restatement of Predecessor Mueller's annual consolidated financial statements for fiscal 2004 and 2003 and interim consolidated financial statements for the first three quarters of fiscal 2005, all interim periods of fiscal 2004, audit adjustments to the 2005 annual consolidated financial statements and the restatement of our consolidated statement of operations for the three months ended December 31, 2004. Additionally, control deficiencies could result in a misstatement of the presentation and disclosure of our consolidated financial statements that would result in a material misstatement in the annual or interim financial statements that would not be prevented or detected. Accordingly, management determined that these control deficiencies constitute a material weakness.

As of September 30, 2004 and 2005, Predecessor Mueller reported the following control deficiencies that, in the aggregate, constituted a material weakness in internal control over preparation, review and presentation and disclosure of their consolidated financial statements. Specifically Predecessor Mueller's control deficiencies included: (i) a lack of personnel with experience in financial reporting and control procedures necessary for SEC registrants; (ii) a lack of sufficient controls to prevent or detect, on a timely basis, unauthorized journal entries; (iii) a lack of sufficient controls over information technology data conversion and program changes; (iv) a lack of sufficient controls over the development and communication of income tax provisions; (v) a lack of effective controls surrounding "whistleblower" hotline complaints and internal certifications to ensure that issues were communicated on a more timely basis by management to the audit committee and the independent registered public accounting firm; (vi) a lack of effective controls over revenue recognition associated with full truckload shipments not immediately dispatched by freight carriers; and (vii) a lack of formal controls and procedures regarding assessment of financial exposures and transactions, including consideration of accounting implications under GAAP. These control deficiencies resulted in audit adjustments to the consolidated financial statements for the year ended September 30, 2004. Additionally, these control deficiencies, in the aggregate, could result in a misstatement to accounts and disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. While item (i) above remains unremediated and has been added as a component of the material weakness existing at December 31, 2005 described above, management has concluded that based on the remediation actions described below, items (ii) through (vii) of this material weakness did not exist at December 31, 2005.

The material weakness and control deficiencies will need to be addressed as part of the evaluation of our internal controls over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 and may impair our ability to comply with Section 404 of the Act.

While we have taken numerous actions described under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Previously Issued Consolidated Financial Statements" to address the material weakness, additional measures may be necessary and these actions may not be sufficient to address the issues identified by us or to ensure that our internal controls over financial reporting is effective. If we are unable to correct existing or future material weaknesses in internal controls over financial reporting in a timely manner, we may not be able to record, process, summarize and report financial information within the time periods specified in the rules and forms of the SEC. This failure could harm our business and the market value of our securities and affect our ability to access the capital markets. In addition, there could be a negative reaction in the financial markets due to a loss of confidence in reliability of future financial statements and SEC filings.

Compliance with internal control reporting requirements and securities laws and regulations is likely to increase our compliance costs.

The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board ("PCAOB"), have required changes in the corporate governance and securities disclosure or compliance practices of public companies over the last few years. We expect these new rules and regulations to continue to increase our legal and financial compliance costs, as well as our ongoing audit costs, and to make legal, accounting and administrative activities more time-consuming and costly. As a result of the Company being a consolidated subsidiary of Walter Industries, in 2006, we will need to comply with the internal control reporting requirements of the Sarbanes-Oxley Act, which will have a significant impact on our compliance cost in 2006. We expect to spend $4-$6 million on our compliance costs in our fiscal year ending September 30, 2006.

Compliance with the securities laws and regulations is likely to make it more difficult and expensive for us to obtain 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 PCAOB to make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These new 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.

We may not be able to achieve the anticipated synergies in connection with our integration and rationalization plans.

We are pursuing several initiatives designed to rationalize our manufacturing facilities and to use our manufacturing expertise to reduce our costs. In fiscal 2006, we expect to achieve integration synergies between our Mueller and U.S. Pipe segments by closing the U.S. Pipe Chattanooga, Tennessee production facility and integrating it into the Mueller Chattanooga and Albertville, Alabama production facilities. We have initiated the implementation of plant and distribution combination and production efficiency strategies within our Mueller and Anvil segments, which efforts will continue through fiscal years 2006, 2007 and the beginning of 2008. Our Mueller segment sales force has begun to integrate U.S. Pipe products as complementary product offerings as part of their sales efforts. We also have begun to use our combined purchasing leverage to reduce raw material and overall product costs. If we fail to implement our integration and rationalization plans, at the economic levels or within the time periods expected, we may not be able to achieve the projected levels of synergies and cost savings. In addition, we expect to incur substantial severance, environmental and impairment costs in connection with our integration and rationalization plans.

We are a holding company and may not have access to the cash flow and other assets of our subsidiaries.

We are a holding company that has no operations of our own and derives all of our revenues and cash flow from our subsidiaries. The terms of the indentures governing our senior discount notes and senior subordinated notes and our senior credit facilities significantly restrict our subsidiaries from paying dividends and otherwise transferring assets to us. Furthermore, our subsidiaries are permitted under the terms of our senior credit facilities and other indebtedness to incur additional indebtedness that may severely restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to us. A breach of any of those covenants would be a default under the applicable debt instrument that would permit the holders thereof to declare all amounts due thereunder immediately payable. As a result, we may not have access to our subsidiaries' cash flow to finance our cash needs.

If we fail to protect our intellectual property, our business and ability to compete could suffer.

Our business depends 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 that we take to protect our intellectual property rights may not be adequate to deter infringement or 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 ability to protect our rights and 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 company resources to respond to these claims.

If transportation for our ductile iron pipe products becomes unavailable or uneconomic for our customers, our ability to sell ductile iron pipe products would suffer.

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

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.

Risks Relating to our Relationship with Walter Industries

Walter Industries controls us and may have conflicts of interest with us or you in the future.

Immediately prior to this offering, Walter Industries will be our only stockholder. Upon completion of this offering, Walter Industries will beneficially own all of our outstanding Series B common stock (which Series B common stock is entitled to eight votes per share on any matter submitted to a vote of our stockholders). The common stock beneficially owned by Walter Industries upon completion of this offering will represent in the aggregate % of the combined voting power of all of our outstanding common stock (or % if the underwriters' option to purchase additional shares is exercised in full). For as long as Walter Industries continues to beneficially own shares of common stock representing

more than 50% of the combined voting power of our common stock, Walter Industries will be able to direct the election of all of the members of our board of directors and exercise a controlling influence over our business and affairs, including any determinations with respect to mergers or other business combinations, the acquisition or disposition of assets, the incurrence of indebtedness, the issuance of any additional common stock or other equity securities, the repurchase or redemption of common stock or preferred stock and the payment of dividends. Similarly, Walter Industries will have the power to determine or significantly influence the outcome of matters submitted to a vote of our stockholders, including the power to prevent an acquisition or any other change in control of us and could take other actions that might be favorable to Walter Industries. See "Description of Capital Stock" and "Certain Relationships and Related Party Transactions."

Walter Industries will also have an option available to it to purchase additional shares of Series B common stock and/or any nonvoting capital stock to maintain its then-existing percentage of the total voting power and value of us. Additionally, with respect to shares of any nonvoting capital stock that may be issued in the future, Walter Industries will have an option to purchase such additional shares so as to maintain ownership of 80% of each outstanding class of such stock. Beneficial ownership of at least 80% of the total voting power and 80% of each class of any nonvoting capital stock is required in order to effect a tax-free spin-off of us (as discussed under "Description of Capital Stock—Common stock—Conversion Rights") or certain other tax-free transactions.

For a description of certain provisions of the restated certificate of incorporation concerning the allocation of business opportunities that may be suitable for both us and Walter Industries, see "Description of Capital Stock—Competition and Corporate Opportunities."

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 controlled group, which currently includes Walter Industries, us and Walter Industries' other subsidiaries, 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 or controlled group for any period during which we were included in the Walter Industries consolidated or controlled group.

Controversy exists with regard to federal income taxes allegedly owed by the Walter consolidated group, which includes the Company, for fiscal years 1980 through 1994 and 1999 through 2001. It is estimated that the amount of tax presently claimed by the IRS is approximately $34.0 million for issues currently in dispute in bankruptcy court and $80.4 million for the 1999 through 2001 period, each of which is for matters unrelated to the Company. These amounts are subject to interest and penalties. However, Walter Industries believes that their tax filing positions have substantial merit and intend to defend vigorously any claims asserted. Walter Industries believes that it has accruals sufficient to cover the estimated probable loss, including interest and penalties.

The tax allocation agreement between us and Walter Industries gives Walter Industries control over our pre-IPO taxes and allocates to us certain tax risks associated with a planned spin-off of our common stock.

Walter Industries effectively controls all of our tax decisions for periods during which we are 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 a tax allocation agreement between Walter Industries and us, which will be entered into in connection with this

offering, 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. See "Certain Relationships and Related Party Transactions—Relationship with Walter Industries—Tax Allocation Agreement." In addition, the tax allocation agreement will provide that in the event that Walter Industries effectuates a spin-off of our common stock that it owns and such spin-off is not tax-free pursuant to Section 355 of the Internal Revenue Code of 1986, as amended, or the "Code," we will generally be responsible for any taxes incurred by Walter Industries or its stockholders 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 taxes based upon our market value relative to Walter Industries' market value.

Because we have limited experience operating as a stand-alone entity, our future business prospects are difficult to evaluate and our business could suffer as a result of the separation of our business from Walter Industries.

Our company is a combination of the Predecessor Mueller business acquired by Walter Industries on October 3, 2005 and the U.S. Pipe business. As of the date of this prospectus, Walter Industries owns all outstanding shares of our common stock. Our operations as a stand-alone company may place significant demands on our management, operational, and technical resources. Our future performance will depend on our ability to function as a stand-alone company and on our ability to finance and manage expanding operations and to adapt our information systems to changes in its business. We rely on contractual arrangements that require Walter Industries and its affiliates to provide or procure certain critical transitional services and shared arrangements to us such as:

•: certain tax and accounting services;
•: certain human resources services, including benefit plan administration;
•: communications systems;
•: insurance; and
•: supply arrangements.

After the termination of these arrangements, we may not be able to replace these services and arrangements in a timely manner or on terms and conditions, including service levels and cost, as favorable as those we have received from Walter Industries and its affiliates. There is a risk that our separation from Walter Industries will not be successful, which could significantly impair our business, our results and our financial reporting ability.

Furthermore, the financial information included in this prospectus may not necessarily reflect what the operating results and financial condition would have been had we been a separate, stand-alone entity during the periods presented or be indicative of our future operating results and financial condition.

Our governing documents and applicable laws include provisions that may discourage a takeover attempt.

Provisions contained in our restated certificate of incorporation and by-laws and Delaware law could make it difficult for a third party to acquire us, even if doing so might be beneficial to our stockholders. For example, stockholders who wish to nominate a director or present a matter for consideration at an annual meeting are required to give us notice of such proposal, which gives us time to respond. These provisions could limit the price that certain investors might be willing to pay in the

future for shares of our Series A common stock and may have the effect of delaying or preventing a change in control.

Risks Relating to this Offering

Our Series A common stock has no prior public market and an active trading market may not develop.

Prior to this offering, there has not been a market for our Series A common stock. Although we intend to list our Series A common stock on the New York Stock Exchange, an active trading market in our Series A common stock might not develop or be sustained after this offering. An investor purchasing shares of Series A common stock in this offering will pay a price that was not established in a competitive market, but instead was determined by negotiations with the representatives of the underwriters based upon an assessment of the valuation of our Series A common stock. The public market may not agree with or accept this valuation, in which case an investor may not be able to sell shares of our stock at or above the initial offering price.

The price of our Series A common stock may be volatile and may be affected by market conditions beyond our control.

Our share price is likely to fluctuate in the future because of the volatility of the stock market in general and a variety of factors, many of which are beyond our control, including:

•: general economic conditions that impact construction and infrastructure activity, including interest rate movements;
•: quarterly variations in actual or anticipated results of our operations;
•: speculation in the press or investment community;
•: changes in financial estimates by securities analysts;
•: actions or announcements by our competitors;
•: actions by our principal stockholders;
•: regulatory actions;
•: litigation;
•: U.S. and international economic, legal and regulatory factors unrelated to our performance;
•: loss or gain of a major customer;
•: additions or departures of key personnel; and
•: future sales of our Series A common stock.

Market fluctuations could result in extreme volatility in the price of shares of our Series A common stock, which could cause a decline in the value of your investment. You should also be aware that price volatility may be greater if the public float and trading volume of shares of our Series A common stock is low. In addition, if our operating results and net income fail to meet the expectations of stock analysts and investors, we may experience an immediate and significant decline in the trading price of our stock.

Sales of common stock may depress the stock price after the offering.

After the completion of this offering, we will have outstanding shares of Series A common stock ( shares of Series A common stock if the underwriters exercise in full their option to purchase additional shares). This number is comprised of all the shares of our Series A common stock that we are selling in this offering, which may be resold immediately in the public market.

In addition, Walter Industries owns shares of our Series B common stock, which constitute all of our outstanding shares of Series B common stock. Our directors, executive officers and Walter Industries have agreed, with limited exceptions, that we and they will not directly or indirectly, without the prior written consent of the underwriters, offer to sell, sell or otherwise dispose of any of our common stock for a period of 180 days after the date of this prospectus. Subject to the selling restrictions described under "Shares Eligible for Future Sale" and "Underwriting," Walter Industries could, from time to time, convert its Series B common stock into Series A common stock on a one-for-one basis and sell any or all of those shares of Series A common stock. In addition, Walter Industries currently intends to undertake a spin-off of our capital stock to Walter Industries' shareholders. See "Certain Relationships and Related Party Transactions."

Further, following the consummation of this offering, pursuant to the terms of the agreement ("Corporate Agreement") that we expect to enter into with Walter Industries, Walter Industries and its permitted transferees will have the right to require us to register their common stock under the Securities Act of 1933 ("the Securities Act"), for sale into the public markets. Upon the effectiveness of any such registration statement, all shares covered by the registration statement will be freely transferable. On or shortly following the date of this prospectus, we also intend to file a registration statement on Form S-8 under the Securities Act to register an aggregate of shares of Series A common stock reserved for issuance under our long-term incentive plan. Subject to the exercise of issued and outstanding options, shares registered under the registration statement on Form S-8 will be available for sale into the public markets after the expiration of the 180-day lock-up agreements.

We cannot predict what effect, if any, future sales of our common stock, or the availability of common stock for future sale, will have on the market price of our Series A common stock. Sales of substantial amounts of our common stock in the public market following our initial public offering, or the perception that such sales could occur, could lead to a decline in the market price of our Series A common stock and may make it more difficult for you to sell your Series A common stock at a time and price which you deem appropriate. The sale by Walter Industries of additional shares of Series A common stock in the public market, or the perception that such sales might occur, could reduce the price that our Series A common stock might otherwise obtain or could impair our ability to obtain capital through the sale of equity securities.

The book value of shares of common stock purchased in the offering will be immediately diluted.

Investors who purchase common stock in the offering will suffer immediate dilution of $ per share in the pro forma net tangible book value per share. See "Dilution."

Our ability to pay regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our holding company structure, the covenants in our debt instruments and applicable provisions of Delaware law.

After consummation of this offering, we intend to pay cash dividends on a quarterly basis. Our board of directors may, in its discretion, decrease the level of dividends or discontinue the payment of dividends entirely. In addition, as a holding company, we will be dependent upon the ability of our subsidiaries to generate earnings and cash flows and distribute them to us so that we may pay our obligations and expenses and pay dividends to our stockholders. Our ability to pay future dividends and the ability of our subsidiaries to make distributions to us will be subject to our and their respective operating results, cash requirements and financial condition, the applicable laws of the State of Delaware (which may limit the amount of funds available for distribution), compliance with covenants and financial ratios related to existing or future indebtedness and other agreements with third parties. If, as a consequence of these various limitations and restrictions, we are unable to generate sufficient distributions from our business, we may not be able to make, or may have to reduce or eliminate, the payment of dividends on our shares.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this prospectus includes some forward-looking statements that involve a number of risks and uncertainties. A forward-looking statement is usually identified by our use of certain terminology including "believes," "expects, "may," "should," "seeks," "anticipates" or "intends" or by discussions of strategy or intentions. A number of factors could cause our actual results, performance, achievements or industry results to be very different from the results, performance or achievements expressed or implied by those forward-looking statements. These factors include, but are not limited to:

•: the competitive environment in our industry in general and in the sectors of the flow control product industry in which we compete;
•: economic conditions in general and in the sectors of the flow control product industry in which we compete;
•: changes in, or our failure to comply with, federal, state, local or foreign laws and government regulations;
•: liability and other claims asserted against our company;
•: changes in operating strategy or development plans;
•: the ability to attract and retain qualified personnel;
•: our significant indebtedness;
•: changes in our acquisition and capital expenditure plans;
•: our ability to achieve anticipated synergies;
•: our ability to timely implement improvements to our internal controls;
•: unforeseen interruptions with our largest customers; and
•: other factors we refer to in this prospectus, including factors described in the "Risk Factors" section.

In addition, forward-looking statements depend upon assumptions, estimates and dates that may not be correct or precise and involve known and unknown risks, uncertainties and other factors. Accordingly, a forward-looking statement in this prospectus is not a prediction of future events or circumstances and those future events or circumstances may not occur. Given these uncertainties, you are warned not to rely on the forward-looking statements. We are not undertaking any obligation to update these factors or to publicly announce the results of any changes to our forward-looking statements due to future events or developments.

USE OF PROCEEDS

We estimate that the net proceeds from the offering of our Series A common stock, after deducting approximately $26.0 million of estimated underwriting discounts and offering expenses, will be approximately $374.0 million. We intend to: (1) use approximately $59.1 million to redeem a portion of our 14³/4% senior discount notes due 2014; (2) contribute approximately $121.7 million to our subsidiary, Mueller Group, LLC ("Mueller Group"), which will use such proceeds to redeem a portion of its 10% senior subordinated notes due 2012 and pay accrued interest; and (3) contribute approximately $193.2 million to Mueller Group, which will use such proceeds to optionally prepay a portion of the term loan outstanding under the 2005 Mueller Credit Agreement. We will use any remaining proceeds for general corporate and other purposes.

Affiliates of Banc of America Securities LLC, Morgan Stanley & Co. Incorporated and Calyon Securities (USA) Inc., three of the underwriters in this offering, are lenders under the 2005 Mueller Credit Agreement. Accordingly, they will receive approximately $2.3 million, $0.6 million and $1.8 million, respectively, of the proceeds from this offering through the partial repayment of the term loan outstanding under the 2005 Mueller Credit Agreement, based on the aggregate principal amount of the term loan outstanding as of the date of this prospectus. See "Underwriting."

The expected sources and uses of funds in connection with the offering (assuming a May 15, 2006 completion of this offering unless otherwise specified) are set forth in the table below. The actual amounts may vary depending on the time of the completion of this offering.

Sources			Uses
(dollars in millions)
Series A common stock	$	400.0	Partial redemption of senior discount notes(1)	$	59.1
			Partial redemption of senior subordinated notes(2)		121.7
			Partial repayment of the term loan(3)		193.2
			Estimated fees and expenses(4)		26.0

Total sources	$	400.0	Total uses	$	400.0

(1): Represents redemption of approximately $51.5 million in accreted value of our 14³/4% senior discount notes due 2014 and a payment of approximately $7.6 million of a contractual premium based on the amount required at the assumed redemption date. In addition, as a result of the early repayment, the Company will record a favorable adjustment to interest expense of approximately $9.1 million for adjustment for the difference between the carrying value and the contractual obligation.
(2): Represents redemption of approximately $110.3 million of Mueller Group's 10% senior subordinated notes due 2012 and a payment of approximately $11.4 million of a contractual premium and accrued interest based on the amount required at the assumed redemption date. In addition, as a result of the early repayment, the Company will record a favorable adjustment to interest expense of approximately $6.4 million for adjustment for the difference between the carrying value and the contractual obligation.
(3): Represents the optional prepayment of a portion of the $1,050.0 million term loan outstanding under the 2005 Mueller Credit Agreement. There is no prepayment premium or penalty associated with the term loan. The senior credit facilities under the 2005 Mueller Credit Agreement consist of: (1) an amortizing senior secured term loan facility in an initial aggregate principal amount of $1,050.0 million ($1,047.4 million of which is currently outstanding) and (2) a $145.0 million senior secured revolving credit facility, which provides for loans and under which letters of credit may be

issued. The revolving credit facility will terminate on October 4, 2010, and the term loans will mature on November 1, 2011 (or October 3, 2012, if the 10% senior subordinated notes due 2012 are paid in full or refinanced prior to such date). Loans under the senior credit facilities currently bear interest, at our option, at: (x) initially, the reserve adjusted LIBOR rate plus 250 basis points or the alternate base rate plus 150 basis points for borrowings under the revolving credit facility; and (y) the reserve adjusted LIBOR rate plus 225 basis points or the alternate base rate plus 125 basis points for term loans. The proceeds of the 2005 Mueller Credit Agreement were used to retire certain old debt of Predecessor Mueller and to finance the Acquisition.

(4): Represents estimated underwriting discounts and fees and legal, accounting and other fees and expenses.

We intend to contribute the net proceeds from any shares of our Series A common stock sold pursuant to the underwriters' option to purchase additional shares to Mueller Group, which intends to use such proceeds to optionally prepay an additional portion of the term loan outstanding under the 2005 Mueller Credit Agreement or for general corporate purposes.

Any decrease in the aggregate amount of net proceeds raised in this offering (assuming net proceeds of at least $180.8 million are raised) will decrease the amount of debt under the 2005 Mueller Credit Agreement to be prepaid, but will not affect the amount of senior discount notes or senior subordinated notes to be redeemed. Any increase in the aggregate amount of net proceeds raised in this offering will be used to optionally prepay additional debt under the 2005 Mueller Credit Agreement or for general corporate purposes.

DIVIDEND POLICY

Our board of directors currently intends to declare an initial quarterly cash dividend on each share of our common stock at an annual rate equal to approximately % of the price per share in this offering for the first full fiscal quarter following the completion of this offering. We expect our board to continue to declare quarterly dividends in the future. The board will determine the amount of any future dividends from time to time based on

•: our results of operations and the amount of our surplus available to be distributed;
•: dividend availability and restrictions under our credit agreement and indentures and the applicable laws of the State of Delaware;
•: the dividend rate being paid by comparable companies in our industry;
•: our liquidity needs and financial condition; and
•: other factors that our board of directors may deem relevant.

The board of directors may modify or revoke our dividend policy at any time. The 2005 Mueller Credit Agreement and the indentures governing the senior subordinated notes and the senior discount notes limit but do not prohibit our ability to pay dividends. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" and "Description of Certain Indebtedness."

Under Delaware law, our board of directors may declare dividends only to the extent of our "surplus" (which is defined as total assets at fair market value minus total liabilities, minus statutory capital), or if there is no surplus, out of our net profits for the then current and/or immediately preceding fiscal years. The value of a corporation's assets can be measured in a number of ways and may not necessarily equal their book value. The value of our capital may be adjusted from time to time by our board of directors but in no event will be less than the aggregate par value of our issued stock. Our board of directors may base this determination on our financial statements, a fair valuation of our assets or another reasonable method. Our board of directors will seek to assure itself that the statutory requirements will be met before actually declaring dividends. In future periods, our board of directors may seek opinions from outside valuation firms to the effect that our solvency or assets are sufficient to allow payment of dividends, and such opinions may not be forthcoming. If we sought and were not able to obtain such an opinion, we likely would not be able to pay dividends.

CAPITALIZATION

The following table presents our cash and cash equivalents and consolidated capitalization as of December 31, 2005: (1) on a historical basis and (2) as adjusted to reflect the sale by us of shares of Series A common stock in this offering and the application of the proceeds as described in "Use of Proceeds." This table should be read in conjunction with our consolidated financial statements and the notes to those statements included elsewhere in this prospectus, "Selected Historical Consolidated Financial Data," "Unaudited Pro Forma Condensed Combined Financial Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Use of Proceeds."

			As of December 31, 2005
						Pro Forma
			Historical			As Adjusted for Offering
			(dollars in millions)
Cash and cash equivalents			$	72.4		$	72.4

Long-term debt, including current portion:
	Senior credit facilities(1)
		Revolver loans		0.0			0.0
		Term loans(2)		1,047.4			851.2
	Senior discount notes(3)			165.7			107.7
	Senior subordinated notes(4)			333.2			216.6
	Capital lease obligation			2.3			2.3
	Payable to parent, Walter Industries			2.6			2.6

		Total debt	$	1,551.2		$	1,180.4
Stockholders' equity:
Common stock, par value $0.01 per share, shares authorized, actual and as adjusted, shares authorized as further adjusted; shares issued and outstanding, actual and as adjusted, shares of Series A common stock and shares of Series B common stock issued and outstanding as further adjusted
Preferred stock, par value $0.01 per share, shares authorized, actual and as adjusted, shares authorized as further adjusted; no shares issued and outstanding, actual, as adjusted and as further adjusted
Additional paid-in capital				998.8			1,372.8
Accumulated deficit				(226.9	)		(240.4	)
Accumulated other comprehensive loss				(46.6	)		(46.6	)

Total stockholders' equity (deficit)				725.3			1,086.0

	Total capitalization		$	2,204.1		$	2,194.0

(1): The senior credit facilities under the 2005 Mueller Credit Agreement consist of: (1) an amortizing senior secured term loan facility in an initial aggregate principal amount of $1,050.0 million ($1,047.4 million of which is currently outstanding) and (2) a $145.0 million senior secured revolving credit facility, which provides for loans and under which letters of credit may be issued. The revolving credit facility will terminate on October 4, 2010, and the term loans will mature on the earlier of October 3, 2012 or November 1, 2011, unless the 10% senior subordinated notes due 2012 are paid in full prior to such date. Loans under the senior credit facilities currently bear interest, at our option, at: (x) initially, the reserve adjusted LIBOR rate plus 250 basis points or the alternate base rate plus 150 basis points for borrowings under the revolving credit facility; and

(y) the reserve adjusted LIBOR rate plus 225 basis points or the alternate base rate plus 125 basis points for term loans.

(2): The pro forma repayment of the term loan of $196.2 million reflected in this table exceeds the estimated term loan repayment of $193.2 million reflected in the Use of Proceeds table because the Capitalization table is pro forma as of December 31, 2005 and the Use of Proceeds table is as of the time of the offering. Although both tables reflect total estimated repayment of debt of $374.0 million, the allocation of the debt repayment varies between the December 31, 2005 pro forma period and the May 15, 2006 estimated completion date of this offering. We estimate that as of the time of the offering, prior to using the offering proceeds, the actual debt balances for the term loans, senior discount notes and senior subordinated notes will be $1,044.8 million, $171.7 million and $331.9 million, respectively.
(3): The senior discount notes were adjusted to fair market value at the date of Acquisition. The carrying value exceeds the contractual obligation by $34.8 million at December 31, 2005, on a historical basis. After the partial redemption, the carrying value would exceed the contractual obligation by $22.6 million on a pro forma basis.
(4): The senior subordinated notes were adjusted to fair market value at the date of Acquisition. The carrying value exceeds the contractual obligation by $18.2 million at December 31, 2005 on a historical basis. After the partial redemption, the carrying value would exceed the contractual obligation by $11.8 million on a pro forma basis.

DILUTION

Our net tangible book value as of was approximately $ million or $ per share. Net tangible book value per share as of is equal to our total assets (excluding intangible assets) minus our total liabilities divided by the aggregate number of shares of common stock outstanding prior to this offering. After giving effect to this offering of Series A common stock at an assumed offering price of $ per share (the midpoint of the range set forth on the cover page of the registration statement of which this prospectus is a part), and after deducting applicable underwriting discounts and estimated offering expenses, our pro forma net tangible book value at would have been approximately $ million or $ per share. This represents an immediate increase in net tangible book value of $ per share to our existing stockholder and an immediate dilution of $ per share to new investors purchasing shares in this offering. Dilution is determined by subtracting net tangible book value per share after the offering from the amount of cash paid by a new investor for a share of Series A common stock. The following table illustrates the pro forma dilution to new investors:

Assumed initial public offering price per share		$	$
	Net tangible book value per share as of
	Increase in net tangible book value per share attributable to new investors
Pro forma net tangible book value per share after this offering

Pro forma dilution per share to new investors		$	$

Assuming this offering had occurred on , the following table summarizes, on a pro forma basis, the differences between the number of shares of Series A common stock purchased from us, the total consideration paid and the average price per share paid by existing stockholder and by the new investors purchasing shares in this offering.

					Total Consideration
		Shares Purchased			Total Consideration			Average Price Per Share
		Number	Percent		Amount	Percent		Average Price Per Share
Existing stockholder				%	$		%	$
New investors

	Total			%	$		%	$

If the underwriters exercise in full their option to purchase additional shares:

•: the net tangible book value per share of common stock as of would have been $ per share, which would result in dilution to the new investors of $ per share;
•: the number of shares of common stock held by existing stockholder will decrease to approximately % of the total number of shares of our common stock outstanding after completion of this offering; and
•: the number of shares of Series A common stock held by new investors will be approximately % of the total number of shares of our common stock outstanding after completion of this offering.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial statements are based on the historical financial statements of Mueller Water Products, Inc. ("Predecessor Mueller") and United States Pipe and Foundry Company, LLC ("U.S. Pipe") after giving effect to: (1) the Acquisition and related transactions, including borrowings under our $1,195.0 million credit agreement ("2005 Mueller Credit Agreement") and the use of proceeds therefrom to repay our old credit facility and to redeem the second priority senior secured floating rate notes of Predecessor Mueller (collectively with the Acquisition, the "Transactions"); (2) the sale by us of shares of Series A common stock in this offering and the application of the proceeds therefrom as described in "Use of Proceeds" (the "Offering"); and (3) the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. For accounting and financial statement presentation purposes, U.S. Pipe is considered the accounting acquiror of Predecessor Mueller.

Effective December 30, 2005, U.S. Pipe changed its fiscal year to September 30, which coincides with Predecessor Mueller's fiscal year end. For purposes of preparing the September 30, 2005 pro forma statement of operations, the U.S. Pipe operating information for the three months ended December 31, 2004 has been added to the operating financial results for the nine months ended September 30, 2005 in arriving at the twelve months ended September 30, 2005 operating financial information in the pro forma data presented hereinafter. As described further in Note 1 to the unaudited pro forma condensed combined financial statements included herein, pro forma sales and cost of sales have been restated for the twelve months ended September 30, 2005 to correct the classification of certain prior-period shipping and handling costs in accordance with EITF 00-10.

The unaudited pro forma condensed combined statement of operations for the year ended September 30, 2005 is presented as if the Transactions and the Offering had taken place on October 1, 2004 and were carried forward through September 30, 2005. The unaudited pro forma condensed combined statement of operations for the three months ended December 31, 2005 is presented as if the offering had taken place on October 1, 2004 and were carried forward through December 31, 2005.

The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of the consolidated results of operations that would have been reported had the Transactions and the Offering been completed as of the dates presented, and should not be taken as representative of our future consolidated results of operations. The unaudited pro forma condensed combined financial statements do not reflect (a) any operating efficiencies or cost savings that we may achieve with respect to the combined companies or (b) any additional costs that we may incur as a stand-alone company. The unaudited pro forma condensed combined financial statements also do not include the effects of restructuring certain activities of pre-acquisition operations, which occurred subsequent to December 31, 2005. The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes of Predecessor Mueller and U.S. Pipe included elsewhere in this prospectus.

MUELLER WATER PRODUCTS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the three months ended December 31, 2005

		Historical Mueller Water Products, Inc. for the three months ended December 31, 2005			Pro Forma Adjustments for Transactions			Pro Forma Combined for Transactions			Pro Forma Adjustments for Offering			Pro Forma as Adjusted for Offering
		(dollars in millions except per share data)
Statement of Operations Data:
Net Sales		$	480.4			—		$	480.4		$	—		$	480.4
Cost of sales			436.9			(58.4	)(f)		378.5						378.5

Gross profit			43.5			58.4			101.9						101.9
Selling, general and administrative expense			58.9			—			58.9			—			58.9
Facility rationalization and related costs			24.1			—			24.1			—			24.1

Operating income (loss)			(39.5	)		58.4			18.9						18.9
Interest expense net of interest income			(32.2	)		—			(32.2	)		7.4	(e)		(24.8	)

Income (loss) before income taxes			(71.7	)		58.4			(13.3	)		7.4			(5.9	)
Income tax expense (benefit)			(22.9	)		23.4	(g)		0.5			(3.0	)(g)		(2.5	)

Net income (loss)		$	(48.8	)	$	35.0		$	(13.8	)	$	10.4		$	(3.4	)

Earnings (loss) per share:
Earnings (loss) per share:
	Basic
	Diluted
Weighted average shares outstanding:
	Basic
	Diluted

See notes to unaudited pro forma condensed combined statement of operations.

MUELLER WATER PRODUCTS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the year ended September 30, 2005

		Historical U.S. Pipe for the year ended September 30, 2005			Predecessor Mueller for the year ended September 30, 2005			Pro Forma Adjustments for Transactions			Pro Forma Combined for Transactions			Pro Forma Adjustments for Offering			Pro Forma as Adjusted for Transactions and Offering
		As Restated
		(dollars in millions except per share data)
																	As Restated
Statement of Operations Data:
Net sales		$	598.1		$	1,148.9		$	—		$	1,747.0			—		$	1,747.0
Cost of sales			530.8			802.3			4.8	(a)		1,337.9			—			1,337.9

Gross profit			67.3			346.6			(4.8	)		409.1			—			409.1
Selling, general and administrative expenses			46.4			172.1			15.0	(b)		233.5			—			233.5
Facility rationalization and related costs			—			1.7			—			1.7			—			1.7

Operating income (loss)			20.9			172.8			(19.8	)		173.9			—			173.9
Interest expense and early repayment costs net of interest income			(21.4	)		(89.5	)		(22.0	)(c)		(132.9	)		18.2	(e)		114.7

Income (loss) before income taxes			(0.5	)		83.3			(41.8	)		41.0			18.2			59.2
Income tax expense			3.9			33.7			(16.7	)(d)		20.9			7.3	(d)		28.2

Net income (loss)		$	(4.4	)	$	49.6		$	(25.1	)	$	20.1		$	10.9		$	31.0

Earnings (loss) per Share:
Earnings (loss) per share:
	Basic	$	(4,441,000	)	$	0.22
	Diluted	$	(4,441,000	)	$	0.20
Weighted average units/shares outstanding:
	Basic		1			220,552,697
	Diluted		1			244,907,546

See notes to unaudited pro forma condensed combined statement of operations.

1. RESTATEMENT

The Company has restated its Unaudited Pro Forma Condensed Combined Statement of Operations to correct the classification of certain prior-period shipping and handling costs in accordance with Emerging Issues Task Force ("EITF") Consensus No. 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10 does not allow shipping and handling costs to be shown as a deduction from net sales.

For the nine months ended September 30, 2005, and the years ended December 31, 2004 and 2003, the Company incorrectly included certain shipping and handling fees and costs as deductions against net sales when they should have been reported as cost of sales. The impact of the restatement was to increase net sales and cost of sales by $42.3 million for the twelve months ended September 30, 2005. The restatement had no impact on operating income or net income for any of the periods presented.

The following table sets forth the effects of the restatement discussed above on the unaudited pro forma condensed combined Statement of Operations for the twelve months ended September 30, 2005.

Unaudited Pro Form Condensed Combined Statements of Operations

	For the twelve months ended September 30, 2005
	As Reported		As Restated
	(dollars in millions)
Net sales	$	1,704.7	$	1,747.0
Cost of Sales	$	1,295.6	$	1,337.9

2. ACQUISITION

On October 3, 2005, pursuant to the agreement dated June 17, 2005, Walter Industries acquired all of the outstanding common stock of Predecessor Mueller for approximately $928.6 million. Transaction costs related to the acquisition were $14.8 million. In conjunction with the acquisition, U.S. Pipe, a wholly-owned subsidiary of Walter Industries, was contributed in a series of transactions to Predecessor Mueller's wholly-owned subsidiary, Mueller Group, LLC.

Walter Industries' acquisition of Predecessor Mueller has been accounted for as a business combination. Assets acquired and liabilities assumed were recorded at their fair values as of October 3, 2005. The total purchase price is $943.4 million, including acquisition-related transaction costs, and is comprised of (dollars in millions):

Acquisition of the outstanding common stock of Predecessor Mueller		$	928.6
Acquisition-related transaction costs			14.8

	Total purchase price	$	943.4

Acquisition-related transaction costs include investment banking, legal and accounting fees and other external costs directly related to the Acquisition.

Under business combination accounting, the purchase price was allocated to Predecessor Mueller's net tangible and identifiable intangible assets based on their fair values as of October 3, 2005. The

excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. Based on current fair values, the purchase price was allocated as follows (dollars in millions):

Receivables, net		$	177.4
Inventory			373.2
Property, plant and equipment			215.5
Identifiable intangible assets			855.9
Goodwill			798.3
Net other assets			376.5
Net deferred tax liabilities			(280.7	)
Debt			(1,572.7	)

	Total purchase price allocation	$	943.4

The purchase price allocation is preliminary and is subject to future adjustments to goodwill for finalization of the purchase price based on the cash and working capital of Mueller on October 3, 2005 and the execution of certain restructuring plans identified by Walter Industries prior to the acquisition date primarily related to the Predecessor Mueller facility rationalization actions. Costs related to these facility rationalization actions will be recorded to goodwill through October 3, 2006. On February 23, 2006, the cash and working capital adjustments were finalized. As a result, goodwill will be reduced by approximately $10.5 million during our second quarter ending March 31, 2006.

Receivables are short-term trade receivables and their net book value approximates current fair value.

Finished goods inventory is valued at estimated selling price less cost of disposal and a reasonable profit allowance for the selling effort. Work in process inventory is valued at estimated selling price of finished goods less costs to complete, cost of disposal and a reasonable profit allowance for the completing and selling effort. Raw materials are valued at book value, which approximates current replacement cost. The fair value adjustment to inventory of approximately $70.2 million is not reflected as a pro forma adjustment in the pro forma condensed combined statement of operations.

Property, plant and equipment is valued at the current replacement cost as follows (dollars in millions):

				Depreciation Period
Land		$	14.1	Indefinite
Buildings			51.8	5 to 14 years
Machinery and equipment			136.4	3 to 5 years
Other			13.2	3 years

	Total property, plant and equipment	$	215.5

Depreciation related to the property, plant and equipment adjustment is reflected in the pro forma condensed combined statement of operations.

Identifiable intangible assets were as follows (dollars in millions):

				Amortization Period
Trade name and trademark		$	403.0	Indefinite
Technology			56.3	10 years
Customer relationships			396.6	19 years

	Total identifiable intangible assets	$	855.9

Identifiable intangible assets acquired consist of trade name, trademark, technology and customer relationships and were valued at their current fair value. Trade name and trademark relate to Mueller®, Anvil®, Hersey®, Henry Pratt™ and James Jones™ and Jones®. Technology represents processes related to the design and development of products. Customer relationships represents the recurring nature of sales to current distributors, municipalities, contractors and other end customers regardless of their contractual nature. The amortization related to the fair value adjustments of these definite-lived intangible assets is reflected in the pro forma condensed combined statements of operations.

Goodwill represents the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired. Goodwill is not amortized, but rather is tested for impairment at least annually. In the event that we determine the book value of goodwill has become impaired, we will incur an accounting charge for the amount of impairment during the fiscal quarter in which such determination is made.

Net other assets include cash, prepaid expenses, deferred financing fees, accounts payable, accrued expenses and accrued pension liability and were valued at their approximate current fair value. After the purchase price allocation and the contribution of U.S. Pipe, Predecessor Mueller paid a $444.5 million dividend to Mueller Holding Company, Inc., a subsidiary of Walter Industries, to fund the acquisition, $20.0 million for transaction expenses and $10.0 million in employee-related costs and such payments are reflected in the pro forma condensed combined financial statements. Transaction expenses were capitalized and employee-related costs were expensed.

Net deferred tax liabilities include the tax effects of fair value adjustments related to identifiable intangible assets and net tangible assets.

Debt is valued at fair market value as of October 3, 2005, which resulted in a $36.0 million and a $18.9 million fair value increase to the senior discount note and the senior subordinated notes, respectively. The amortization of the premium on debt related to fair value adjustments is reflected in the pro forma condensed combined statement of operations as a credit to interest expense.

3. CREDIT AGREEMENT

On October 3, 2005, Mueller Group entered into the 2005 Mueller Credit Agreement consisting of a $145.0 million senior secured revolving credit facility terminating on October 4, 2010 and a $1,050.0 million senior secured term loan maturing in October 3, 2012 or November 1, 2011, unless the 10% senior subordinated notes due 2012 are paid in full prior to such date. Loans under the senior credit facilities currently bear interest, at our option, at: (x) initially, the reserve adjusted LIBOR rate plus 250 basis points or the alternate base rate plus 150 basis points for borrowings under the revolving credit facility; and (y) the reserve adjusted LIBOR rate plus 225 basis points or the alternate base rate plus 125 basis points for term loans. The 2005 Mueller Credit Agreement is a secured obligation of Mueller Group and substantially all of the wholly-owned domestic subsidiaries of Mueller Group, including U.S. Pipe. Proceeds from the 2005 Mueller Credit Agreement were approximately $1,053.4 million, net of approximately $21.6 million of underwriting fees and expenses, which will be

amortized over the life of the loans. The proceeds were used to retire the previous Mueller Group senior credit facility of $512.8 million, the second priority senior secured floating rate notes of $100.0 million, and to finance the acquisition of Predecessor Mueller by Walter Industries. The term loan requires quarterly principal payments of $2.6 million through October 3, 2012, at which point in time the remaining principal outstanding is due. Presently, the commitment fee on the unused portion of the revolving credit facility is 0.50% and the interest rate is a floating rate of 250 basis points over LIBOR. The term loan presently carries a floating interest rate of 225 basis points over LIBOR.

4. PRO FORMA ADJUSTMENTS

The following pro forma adjustments are included in the unaudited pro forma condensed combined statement of operations:

(a): Adjustment of $5.6 million to increase amortization expense for technology intangible assets associated with the Acquisition, net of a $0.8 million decrease in depreciation expense associated with acquired fixed assets depreciated over their remaining useful lives. The decrease in depreciation expense in relation to the increase in basis for property, plant and equipment represents adjustments to the remaining lives of the assets to reflect their expected economic life.
(b): Adjustment of $18.1 million ($20.9 million net of ($2.8 million) of recorded amortization) to increase amortization expense for customer relationship intangible assets associated with the Acquisition, net of a $3.1 million removal of seller transaction expenses incurred prior to September 30, 2005.
(c): Net adjustment consists of a $27.5 million increase in interest expense for interest on the 2005 Mueller Credit Agreement along with a $2.1 million increase in amortization expense for new deferred financing fees, net of a decrease of $7.6 million in interest expense resulting from the amortization of premium created by the fair value adjustment of Predecessor Mueller's existing public debt. A change in interest rates of ¹/8% would result in a change in interest expense of approximately $1.3 million.
(d): Adjustment to reflect the tax effect of pro forma adjustments at a 40% statutory rate. The statutory tax rate of 40% is based on a 35% statutory federal tax rate plus an average statutory state tax rate of 5%. As more fully described in Note 9 to the financial statements of U.S. Pipe, income tax expense is calculated as if U.S. Pipe filed a tax return on a stand alone basis, with the exception that the tax sharing agreement in place with Walter Industries provides that U.S. Pipe receives an immediate benefit when its tax losses for Federal purposes are utilizable by the consolidated group. On a pro forma basis, U.S. Pipe's historical tax expense of $3.9 million would have been $12.0 million on a stand alone basis assuming U.S. Pipe's deferred tax assets were consistently evaluated for realization without regard to the utilization by Walter Industries of its tax losses.
(e): Adjustments of $18.2 million and $7.4 million to decrease interest expense resulting from using the proceeds of this offering to repay debt for the year ended September 30, 2005 and the three months ended December 31, 2005, respectively.
(f): Adjustment to eliminate amortization of inventory fair value adjustment.
(g): Adjustment to reflect the tax effect of pro forma adjustments at a 40% statutory rate plus a tax benefit adjustment of $5.9 million to provide taxes, after giving effect for the transactions and offering, at an effective tax rate of 42.4%, the Company's estimated fiscal 2006 effective tax rate. Prior to initiating the offering, the Company had estimated its effective tax rate for fiscal 2006 to be 32% as a result of the fiscal 2006 forecasted loss. The effective tax rate of 32% is lower than the statutory rate primarily as a result of non-deductible interest expense.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

Selected Historical Financial Data—Mueller Water Products, Inc.

The following selected consolidated statement of operations data for the three months ended December 31, 2005 and 2004 and the selected consolidated balance sheet data as of December 31, 2005 and September 30, 2005 are derived from, and qualified by reference to, the unaudited consolidated financial statements of Mueller Water Products, Inc. included elsewhere in this prospectus and should be read in conjunction with those unaudited consolidated financial statements and notes thereto. The following selected consolidated financial and other data of Mueller Water Products, Inc. should be read in conjunction with, and are qualified by reference to, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the unaudited consolidated financial statements and notes thereto included elsewhere in this prospectus.

	For the three months ended December 31,
	2005			2004
	(dollars in millions)
				As Restated(j)
Statement of Operations Data:
Net sales	$	480.4		$	141.2
Cost of sales(a)		436.9			128.5

Gross profit		43.5			12.7
Selling, general and administrative expenses(b)		57.1			13.2
Related party corporate charges(c)		1.8			1.9
Facility rationalization, restructuring and related costs(d)		24.1			—

Loss from operations		(39.5	)		(2.4	)
Interest expense arising from related party payable to Walter Industries(e)		—			(5.9	)
Interest expense, net of interest income(f)		(32.2	)		(0.1	)

Loss before income taxes		(71.7	)		(8.4	)
Income tax expense (benefit)		(22.9	)		1.1

Net loss	$	(48.8	)	$	(9.5	)

Loss per share(g)	$	(48.8	)	$	(9.5	)

Other Data:
EBITDA(h)	$	(15.7	)	$	4.1
Depreciation and amortization		23.8			6.5
Capital expenditures		16.0			7.9

	December 31, 2005		September 30, 2005
	(dollars in millions)
Balance Sheet Data:
Working capital(i)	$	623.0	$	188.6
Property, plant and equipment, net		344.8		149.2
Total assets		2,962.2		495.4
Total debt		1,548.6		—
Total stockholder's equity (net capital deficiency)		725.3		(155.2	)

(a)

Cost of sales includes:

•: $58.4 million of purchase accounting adjustments related to valuing inventory acquired in the Acquisition at fair value for the three months ended December 31, 2005;

•: $1.4 million of amortization expense related to intangible assets identified during the allocation of the Acquisition purchase price for the three months ended December 31, 2005;
•: $10.7 million of inventory obsolescence write-offs related to the shut-down of the U.S. Pipe Chattanooga plant during the three months ended December 31, 2005; and
•: $5.2 million of facility expenses at the U.S. Pipe Chattanooga plant due to significantly lower than normal capacity resulting from the plant closure process during the three months ended December 31, 2005.

(b)

Selling, general and administrative expenses include:

•: $5.2 million of amortization expense related to intangible assets identified during the allocation of the Acquisition purchase price for the three months ended December 31, 2005; and
•: $4.0 million related to environmental liabilities at the U.S. Pipe Anniston, Alabama site (shut down in 2003) for the three months ended December 31, 2004.

(c)

(d)

(e)

(f)

(g)

Loss per share for all periods presented was determined using one share, which is the capital structure of the reporting entity subsequent to the Acquisition.

(h)

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•: EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
•: EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•: EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
•: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
•: other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

EBITDA reconciliation to Net loss:

	For the three months ended December 31,
	2005			2004
	(dollars in millions)
EBITDA	$	(15.7	)	$	4.1
Adjustments:
Depreciation and amortization		(23.8	)		(6.5	)
Interest expense arising from related party payable to Walter Industries		—			(5.9	)
Interest expense, net of interest income		(32.2	)		(0.1	)
Income tax (expense) benefit		22.9			(1.1	)

Net loss	$	(48.8	)	$	(9.5	)

(i): Working capital equals current assets less current liabilities.
(j): The information presented above should be read in conjunction with Mueller Water Products, Inc.'s financial statements and the notes thereto, including Note 2 related to the restatement of net sales and cost of sales, for the three months ended December 31, 2004. As described further in Note 2, sales and cost of sales have been restated to correct the classification of certain prior-period shipping and handling costs in accordance with EITF 00-10.

United States Pipe and Foundry Company, LLC.

The selected statement of operations data for the nine months ended September 30, 2005 and for the years ended December 31, 2004 and 2003 and the selected balance sheet data as of September 30, 2005 and December 31, 2004 are derived, and qualified by reference to, the audited financial statements of U.S. Pipe included elsewhere in this prospectus and should be read in conjunction with those financial statements and notes thereto. The selected statement of operations data for the nine months ended September 30, 2004 and the years ended December 31, 2002 and 2001 and the selected balance sheet data as of September 30, 2004 and December 31, 2003, 2002 and 2001 have been derived from unaudited financial statements of U.S. Pipe not included in this prospectus. The following selected financial and other data should be read in conjunction with, and are qualified by reference to, "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Combined Financial Statements" and the financial statements and notes thereto included elsewhere in this prospectus.

			For the nine months ended September 30,						For the years ended December 31,
			2005			2004			2004			2003			2002			2001
			(dollars in millions) As Restated(i)
Statement of Operations Data:
	Net sales		$	456.9		$	437.2		$	578.4		$	465.4		$	491.8		$	525.9
	Cost of sales(a)			402.2			402.9			531.4			427.4			429.8			429.5

		Gross profit		54.7			34.3			47.0			38.0			62.0			96.4
	Selling, general and administrative expenses(b)			25.9			25.0			38.2			43.5			36.1			37.0
	Related party corporate charges(c)			5.4			5.7			7.7			4.8			6.4			3.1
	Restructuring and impairment charges(d)			—			0.1			0.1			5.9			—			—

		Operating income (loss)		23.4			3.5			1.0			(16.2	)		19.5			56.3
	Interest expense-other			(0.3	)		(0.4	)		(0.5	)		(0.5	)		(0.1	)		(0.1	)
	Interest expense arising from payable to parent, Walter Industries(e)			(15.2	)		(13.0	)		(18.9	)		(16.4	)		(9.4	)		(18.2	)

		Income (loss) before income tax expense (benefit)		7.9			(9.9	)		(18.4	)		(33.1	)		10.0			38.0
	Income tax expense (benefit)			2.8			(3.9	)		(2.9	)		(12.7	)		4.1			15.1

		Income (loss) before cumulative effect of change in accounting principle		5.1			(6.0	)		(15.5	)		(20.4	)		5.9			22.9
	Cumulative effect of change in accounting principle, net of tax			—			—			—			(0.5	)		—			—

		Net income (loss)	$	5.1		$	(6.0	)	$	(15.5	)	$	(20.9	)	$	5.9		$	22.9

	Basic income (loss) per share:
	Income (loss) before cumulative effect of change in accounting principle		$	5.1		$	(6.0	)	$	(15.5	)	$	(20.4	)	$	5.9		$	22.9
	Cumulative effect of change in accounting principle, net of tax			—			—			—			(0.5	)		—			—

	Earnings (loss) per share(f)		$	5.1		$	(6.0	)	$	(15.5	)	$	(20.9	)	$	5.9		$	22.9

Other Data:
	EBITDA(g)		$	42.8		$	23.5		$	27.5		$	9.0		$	43.5		$	77.9
	Depreciation and amortization			19.4			20.0			26.5			25.2			24.0			21.6
	Capital expenditures			16.5			12.4			20.4			15.7			26.2			37.1

	As of September 30,						As of December 31,
	2005			2004			2004			2003			2002			2001
	(dollars in millions)
Balance Sheet Data:
Cash and cash equivalents(h)	$	—		$	0.1		$	—		$	0.2		$	0.1		$	0.1
Working capital		188.7			176.6			163.5			157.0			139.0			138.3
Property, plant and equipment, net		149.2			152.2			152.9			160.1			172.1			170.6
Total assets		514.7			491.6			473.5			452.9			448.6			444.0
Intercompany indebtedness to Walter Industries		443.6			435.4			422.8			409.2			385.2			400.8
Total liabilities		669.9			626.7			618.6			581.9			555.3			528.4
Total unit/stockholder's equity (net capital deficiency)		(155.2	)		(135.1	)		(145.1	)		(129.0	)		(106.7	)		(84.4	)

(a)

Cost of sales includes warranty cost of $2.3 million related to a construction project in Kansas City, Missouri during the nine months ended September 30, 2005.

(b)

Selling, general and administrative expenses include:

•: Credits for environmental-related insurance settlement benefits of $5.1 million and $1.9 million for the nine months ended September 30, 2005 and the year ended December 31, 2004, respectively;
•: Accrual of $4.0 million relating to environmental liabilities for the year ended December 31, 2004; and
•: Settlement expenses for a commercial dispute of $1.7 million and settlement expenses for litigation matters of $6.5 million for the year ended December 31, 2003.

(c)

(d)

(e)

(f)

Earnings (loss) per share for all periods presented was determined using one share, which is the capital structure of the reporting entity subsequent to the Acquisition.

(g)

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•: EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
•: EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
•: EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
•: Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
•: Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as comparative measures.

: EBITDA is a measure of our performance that is not required by, or presented in accordance with, GAAP. EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP.
: EBITDA reconciliation to Net income (loss):

		For the nine months ended September 30,						For the years ended December 31,
		2005			2004			2004			2003			2002			2001
		(dollars in millions)
EBITDA		$	42.8		$	23.5		$	27.5		$	9.0		$	43.5		$	77.9
Adjustments:
	Depreciation and amortization		(19.4	)		(20.0	)		(26.5	)		(25.2	)		(24.0	)		(21.6	)
	Interest expense—other		(0.3	)		(0.4	)		(0.5	)		(0.5	)		(0.1	)		(0.1	)
	Interest expense arising from payable to parent, Walter Industries		(15.2	)		(13.0	)		(18.9	)		(16.4	)		(9.4	)		(18.2	)
	Income tax (expense) benefit		(2.8	)		3.9			2.9			12.7			(4.1	)		(15.1	)
	Cumulative effect of change in accounting principle, net of tax		—			—			—			(0.5	)		—			—

	Net income (loss)	$	5.1		$	(6.0	)	$	(15.5	)	$	(20.9	)	$	5.9		$	22.9

(h): Cash and cash equivalents, prior to the acquisition of Predecessor Mueller on October 3, 2005, were transferred daily to the Walter Industries cash management system, effectively reducing U.S. Pipe cash to virtually zero on a daily basis. Subsequent to October 3, 2005, all cash generated by U.S. Pipe is maintained by U.S. Pipe and is not transferred to Walter Industries.
(i): The information presented above should be read in conjunction with U.S. Pipe's financial statements and the notes thereto including Note 1 related to the restatement of net sales and cost of sales. As described further in Note 1, sales and cost of sales have been restated to correct the classification of certain prior-period shipping and handling costs in accordance with EITF 00-10.
: In addition to the restatement information provided in Note 1, the following information is provided regarding the restatement:

	For the nine months ended September 30, 2004				For the year ended December 31, 2002
	As Restated		As Originally Reported		As Restated		As Originally Reported
	(dollars in millions)
Net sales	$	437.2	$	406.9	$	491.8	$	457.2
Cost of sales	$	402.9	$	372.6	$	429.8	$	395.2

MUELLER WATER PRODUCTS, INC. (PREDECESSOR MUELLER)

The selected consolidated statement of operations data for the years ended September 30, 2005, 2004, 2003, 2002 and 2001 and the selected consolidated balance sheet data as of September 30, 2005, 2004, 2003, 2002 and 2001 are derived, and qualified by reference to, the audited consolidated financial statements of Predecessor Mueller and should be read in conjunction with those consolidated financial statements and notes thereto. The consolidated financial statements as of September 30, 2005 and 2004 and for each of the three years in the period ended September 30, 2005 are included elsewhere in this prospectus. The following selected consolidated financial and other data of Predecessor Mueller should be read in conjunction with, and are qualified by reference to, "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Combined Financial Statements" and the consolidated financial statements and notes thereto not included in this prospectus.

			For the years ended September 30,
			2005			2004			2003			2002			2001
						(as restated)(i)			(as restated)(i)			(as restated)(i)			(as restated)(i)
			(dollars in millions except per share data)
Statement of Operations Data:
	Net sales		$	1,148.9		$	1,049.2		$	922.9		$	901.9		$	864.7
	Cost of sales			802.3			750.5			681.8			666.0			639.9
	Royalty expense(a)			—			—			—			13.5			29.1

		Gross profit		346.6			298.7			241.1			222.4			195.7
	Selling, general and administrative expenses(b)			172.1			185.1			148.2			139.4			136.7
	Facility rationalization, restructuring and related costs(c)			1.7			0.9			1.7			2.7			27.6

		Operating income		172.8			112.7			91.2			80.3			31.4
	Interest expense, net of interest income(d)			(89.5	)		(63.5	)		(35.5	)		(57.9	)		(86.7	)

		Income (loss) before income tax expense (benefit)		83.3			49.2			55.7			22.4			(55.3	)
	Income tax expense (benefit)			33.7			16.0			22.9			10.1			(20.6	)

		Income (loss) before cumulative effect of change in accounting principle		49.6			33.2			32.8			12.3			(34.7	)
	Cumulative effect of change in accounting principle, net of tax(e)			—			—			—			—			(9.1	)

		Net income (loss)	$	49.6		$	33.2		$	32.8		$	12.3		$	(43.8	)

Earnings (loss) per Share:
	Earnings (loss) per share(f):
		Basic	$	0.22		$	0.11		$	0.09		$	0.00		$	(0.26	)
		Diluted	$	0.20		$	0.10		$	0.09		$	0.00		$	(0.26	)
	Weighted average shares outstanding (in millions):
		Basic		220.6			212.3			205.6			205.3			205.3
		Diluted		244.9			223.6			208.9			207.3			206.0
Other Data:
	EBITDA(g)		$	221.2		$	177.0		$	157.5		$	143.1		$	96.8
	Depreciation and amortization			48.4			64.3			66.3			62.8			65.4
	Capital expenditures			27.2			22.5			20.0			31.3			51.0

		As of September 30,
		2005			2004			2003		2002		2001
		(dollars in millions)
Balance Sheet Data:
	Cash and cash equivalents	$	112.8		$	60.5		$	73.0	$	25.2	$	25.3
	Working capital(h)		481.6			390.8			369.1		307.7		263.1
	Property, plant and equipment, net		168.0			186.8			208.0		231.9		227.9
	Total assets		1,086.8			989.2			957.4		933.9		933.3
	Total debt		1,055.7			1,039.4			575.7		581.0		587.1
	Total stockholder's equity (net capital deficiency)		(176.4	)		(232.4	)		106.8		78.6		87.4

(a): In connection with the sale by Tyco of the Predecessor Mueller business to our prior owners (the "August 1999 Tyco Transaction"), we acquired a non-exclusive license to use the Mueller brand name for a period of two years, with an option to purchase it in September 2001 and to use the Grinnell brand name for three years. We exercised the option and purchased the Mueller intellectual property in September 2001. Payments under such license prior to the exercise of the purchase option are reflected as royalty expense in our statement of operations. These royalty expenses were funded out of restricted cash we placed into escrow in August 1999 in connection with the August 1999 Tyco Transaction. We classify the acquired Mueller intellectual property as an indefinite-life asset and therefore record no related amortization expense.
(b): Selling, general and administrative expenses include stock compensation charges of $21.2 million, $0.7 million, $1.1 million and $0.5 million for the years ended September 30, 2004, 2003, 2002 and 2001, respectively.
(c): Facility rationalization and restructuring includes severance and exit cost charges and non-cash impairment charges due to the idling and obsolescence of certain assets related to (A) the implementation of lost foam technology at our Albertville, Alabama and Chattanooga, Tennessee facilities, (B) the closure of our Statesboro, Georgia manufacturing facility, (C) the relocation of certain manufacturing lines to other facilities, and (D) the shutdown of a Mueller segment plant in Colorado that ceased manufacturing operations.
(d): Interest expense, net of interest income, includes the write off of deferred financing fees of $7.0 million for 2004 and $1.6 million for 2002. Interest expense and early debt repayment costs for 2004 also includes a $7.0 million prepayment associated with the redemption in November 2003 of our senior subordinated notes due 2009. Interest expense, net of interest income, also includes interest rate swap (gains)/losses of $(5.2) million, $(12.5) million, $(13.3) million, $(3.7) million, and $23.5 million for the years ended September 30, 2005, 2004, 2003, 2002, and 2001, respectively.
(e): Cumulative effect of accounting changes, net of tax, include $(2.7) million related to adoption of SAB 101 pertaining to revenue recognition and $(6.4) million related to accounting for interest rate swaps with the adoption of SFAS 133.
(f): A reconciliation of the basic and diluted net income (loss) per share computations for the years ended September 30, 2005, 2004, 2003, 2002 and 2001 are as follows:

			For the years ended September 30,
			2005				2004				2003				2002				2001
			Basic		Diluted		Basic		Diluted		Basic		Diluted		Basic		Diluted		Basic			Diluted
			(in millions, except per share data)
Numerator:
	Net income (loss) before cumulative effect of change in accounting principle		$	49.6	$	49.6	$	33.2	$	33.2	$	32.8	$	32.8	$	12.3	$	12.3	$	(34.7	)	$	(34.7	)
	Effect of dilutive securities:
		Dividends related to redeemable preferred stock(1)		—		—		9.9		9.9		14.2		14.2		12.1		12.1		10.4			10.4
	Net cumulative effect of change in accounting principle(4)			—		—		—		—		—		—		—		—		9.1			9.1

			$	49.6	$	49.6	$	23.3	$	23.3	$	18.6	$	18.6	$	0.2	$	0.2	$	(54.2	)	$	(54.2	)

Denominator:
	Average number of common shares outstanding			220.6		220.6		212.3		212.3		205.6		205.6		205.3		205.3		205.3			205.3
	Effect of dilutive securities:
		Stock options(2)		—		—		—		1.2		—		3.3		—		2.0		—			0.7
		Warrants(3)		—		24.3		—		10.1		—		—		—		—		—			—

				220.6		244.9		212.3		223.6		205.6		208.9		205.3		207.3		205.3			206.0

	Net income (loss) per share		$	0.22	$	0.20	$	0.11	$	0.10	$	0.09	$	0.09	$	0.00	$	0.00	$	(0.26	)	$	(0.26	)

(1): Represents dividends payable in cash related to the redeemable preferred stock which was redeemed on April 23, 2004.
(2): Represents the number of shares of common stock issuable on the exercise of dilutive employee stock options less the number of shares of common stock which could have been purchased with the proceeds from the exercise of such

options. These purchases were assumed to have been made at the average market price for the period. On April 23, 2004, as a part of a recapitalization, all options were exercised.

(3): Represents the number of warrants issued with the 14³/4% senior discount notes that were convertible into Predecessor Mueller's Class A common stock upon exercise. In connection with the acquisition of Predecessor Mueller by Walter Industries on October 3, 2005, all warrants were converted into a right to receive cash and are no longer outstanding.
(4): Represents the cumulative effect of accounting changes, net of tax, include ($2.7 million) related to adoption of SAB 101 pertaining to revenue recognition and ($6.4 million) related to accounting for interest rate swaps with the adoption of SFAS 133.

(g)

EBITDA represents net income adjusted for interest expense, net of interest income, income taxes, cumulative effect of change in accounting principle, and depreciation and amortization. We present EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, substantially all of which present EBITDA when reporting their results.

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•: EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
•: EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
•: EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
•: although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
•: other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

EBITDA reconciliation to Net income (loss):

		For the years ended September 30,
		2005			2004			2003			2002			2001
		(dollars in millions)
EBITDA		$	221.2		$	177.0		$	157.5		$	143.1		$	96.8
Adjustments:
	Depreciation and amortization		(48.4	)		(64.3	)		(66.3	)		(62.8	)		(65.4	)
	Interest expense, net of interest income		(89.5	)		(63.5	)		(35.5	)		(57.9	)		(86.7	)
	Income tax (expense) benefit		(33.7	)		(16.0	)		(22.9	)		(10.1	)		20.6
	Cumulative effect of change in accounting principle, net of tax		—			—			—			—			(9.1	)

	Net income (loss)	$	49.6		$	33.2		$	32.8		$	12.3		$	(43.8	)

(h): Working capital equals current assets less current liabilities (excluding restricted cash of zero, zero, zero, $11.6 million, and $32.8 million in each of the periods ending September 30, 2005, 2004, 2003, 2002, and 2001 and accrued royalties of zero, zero, zero, $13.5 million, and $29.1 million, in each of the periods ending September 30, 2005, 2004, 2003, 2002, and 2001. Restricted cash was set aside for the purpose of making royalty payments to Tyco under the terms of agreements that were fully expired as of September 30, 2002. We have excluded these items from the calculation of working capital in order to reflect the availability of unrestricted-use net assets).
(i): See Note 2 to the Predecessor Mueller consolidated financial statements for discussion of the restatement of total assets for fiscal 2004 and the reclassification of depreciation expense from selling, general and administrative to cost of sales for fiscal years 2004, 2003, 2002 and 2001.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Mueller Water Products, Inc.

The following discussion should be read in conjunction with the audited consolidated financial statements of United States Pipe and Foundry Company, LLC and Predecessor Mueller (formerly filed with the Securities and Exchange Commission as Mueller Water Products, Inc.) and notes thereto that appear elsewhere in this prospectus. This discussion contains forward-looking statements reflecting current expectations that involve risks and uncertainties. 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."

Introductory Note

We have restated our financial statements for U.S. Pipe to correct the classification of certain prior-period shipping and handling costs to be compliant with Emerging Issues Task Force ("EITF") Consensus No. 00-10, "Accounting for Shipping and Handling Fees and Costs." The effect of this restatement was to increase net sales and cost of sales. The restatement had no impact on operating income, net income, earnings per share or on the consolidated statement of changes in stockholders' equity and comprehensive income (loss) for any of the prior periods presented. See also Note 2 of the Mueller Water Products, Inc. Notes to Consolidated Financial Statements as of and for the three months ended December 31, 2005 and December 31, 2004 and Note 1 of the U.S. Pipe Notes to Financial Statements.

Overview

We are a leading North American manufacturer of a broad range of water infrastructure and flow control products for use in water distribution networks, water and wastewater treatment facilities, gas distribution and piping systems. Our Company is a combination of Predecessor Mueller and U.S. Pipe. Predecessor Mueller was purchased by Walter Industries on October 3, 2005. In conjunction with that purchase, Walter Industries combined U.S. Pipe, a wholly-owned subsidiary acquired in 1969, with Predecessor Mueller. As a result of this combination, in accordance with U.S. GAAP, U.S. Pipe is deemed to be the accounting acquiror of Predecessor Mueller. Accordingly, purchase accounting adjustments for the acquisition of Predecessor Mueller will be reflected for periods subsequent to October 3, 2005.

We manage our business and report operations through three operating segments, based largely on the products they sell and the markets they serve. Our segments are named after lead brands in each segment:

•: Mueller. The Mueller segment produces and sells hydrants, valves and related products primarily to the water and wastewater infrastructure markets. Sales of our Mueller segment are driven principally by spending on water and wastewater infrastructure upgrade, repair and replacement and new water and wastewater infrastructure. Subsequent to the acquisition of Predecessor Mueller, U.S. Pipe transferred its valve and hydrant business to our Mueller segment. Pro forma net sales of the U.S. Pipe valve and hydrant business for the year ended September 30, 2005 and for the three months ended December 31, 2005, were $55.1 million and $15.3 million, respectively. Our Mueller segment net sales, excluding U.S. Pipe's valve and hydrant business, was $664 million and $177 million on a pro forma basis for the year ended September 30, 2005 and the three months ended December 31, 2005, respectively. Mueller segment sales are estimated to be approximately 50% for new infrastructure, with the remainder for upgrade, repair and replacement. A significant portion of Mueller's sales are made through its broad distributor network. For most of our Mueller segment products, which are sold through independent distributors, end-users choose the brand or establish product specifications. We believe our reputation for quality, extensive distributor relationships, installed base and

coordinated marketing approach have helped our Mueller segment products to be "specified" as an approved product for use in most major metropolitan areas throughout the United States.

•: U.S. Pipe. The U.S. Pipe segment produces and sells ductile iron pressure pipe, restraint joints and fittings and related products to the water infrastructure market. U.S. Pipe products are sold primarily to water works distributors, contractors, municipalities, private utilities and other governmental agencies. A substantial percentage of ductile iron pressure pipe orders result from contracts that are bid by contractors or directly issued by municipalities or private utilities. To support our customers' inventory and delivery requirements, U.S. Pipe utilizes numerous storage depots throughout the country.
•: Anvil. The Anvil segment produces, sources and sells pipe fittings, pipe hangers and pipe nipples and a variety of related products primarily to the commercial fire protection piping systems and HVAC applications market. Sales of our Anvil segment products are driven principally by spending on non-residential construction projects.

The acquisition of Predecessor Mueller on October 3, 2005, as well as other developments, trends and factors may impact our future results including the following:

•: To respond to the recent increases in the price of brass ingot, we have implemented planned price increases for Mueller segment brass products effective May 2006, however, there is no assurance that these price increases can be maintained. Consistent with past practices, our Mueller Segment implemented a price increase in February 2006 to reflect cost increases across all product lines.
•: As presented herein, the operating results from the Acquisition of Predecessor Mueller will be consolidated with those of U.S. Pipe's results from October 3, 2005, the date of Acquisition.
•: In the quarter ended December 31, 2005, our wholly-owned subsidiary, Mueller Group, entered into the 2005 Mueller Credit Agreement. Proceeds of the 2005 Mueller Credit Agreement were approximately $1,053.4 million, net of approximately $21.6 million of underwriting fees and expenses which will be amortized over the life of the loans. The proceeds were used to refinance Predecessor Mueller's 2004 Credit Facility ("2004 Mueller Credit Facility"), redeem Predecessor Mueller's second priority senior secured floating rate notes, and finance the acquisition of Predecessor Mueller by Walter Industries. During the period subsequent to September 30, 2005, and prior to Walter Industries acquiring Predecessor Mueller on October 3, 2005, Predecessor Mueller expensed $18.4 million of deferred financing fees related to the 2004 Mueller Credit Facility. Mueller Group wrote off $2.4 million of deferred financing fees related to the second priority senior secured floating rate notes.
•: In the period subsequent to September 30, 2005 and prior to Walter Industries acquiring Predecessor Mueller on October 3, 2005, Predecessor Mueller expensed transaction fees of approximately $20.1 million and transaction bonuses of $10.0 million. These fees were contingent upon completion of the sale of Predecessor Mueller to Walter Industries. Non-contingent fees and expenses of approximately $3.1 million were expensed by Predecessor Mueller during the fiscal year ended September 30, 2005.
•: We have initiated a synergy plan designed to streamline our manufacturing operations, add incremental volume through combining sales efforts for complementary products and create savings through a coordinated purchasing plan to reduce raw material and overall production costs. We expect that the full implementation of our synergy plan by early fiscal 2008 will produce approximately $40-$50 million of ongoing incremental annual operating income.
•: As part of the synergy plan, in October 2005, we announced and have initiated the closure of the U.S. Pipe Chattanooga, Tennessee plant and the transfer of the valve and hydrant production of that plant to our Mueller segment's Chattanooga, Tennesse and Albertville, Alabama plants. The transfer of valve and hydrant production was completed in December 2005. The eventual closure of the U.S. Pipe Chattanooga, Tennessee plant will occur sometime in

fiscal 2006. Total costs related to this plant closure are expected to be approximately $45.2 million, which will be expensed and included as a component of operating income in accordance with generally accepted accounting principles. Total costs recorded as components of operating income for the three months ended December 31, 2005 were $15.9 million charged to cost of sales related to inventory obsolescence and additional facility expenses and $24.1 million of restructuring costs primarily related to fixed asset impairments, severance and environmental costs. Additional costs of $5.2 million are expected to be expensed during the remainder of fiscal 2006 as a result of closing this facility.

•: As part of the synergy plan, on January 26, 2006, we announced the closure of the Henry Pratt ("Pratt") valve manufacturing facility in Dixon, Illinois by the end of fiscal 2006. The process of transferring the Dixon plant's operations to other Pratt facilities has begun. Severance costs associated with this plant closure of approximately $1.5 million will be allocated to goodwill. Costs associated with relocating equipment will be expensed as incurred. We have other plans that were formally identified prior to the Acquisition to rationalize facilities and substantial cash expenditures in the form of severance and new equipment may be required to implement these plans. Although certain expenditures related to future plant rationalizations are expected to qualify for purchase accounting treatment and are not expected to be charged to operations, all costs of future facility rationalizations may not qualify for purchase accounting treatment.
•: In January 2005, our Mueller segment completed two acquisitions. On January 4, 2006, we acquired Hunt Industries, Inc. ("Hunt") for $6.8 million in cash. Hunt is a manufacturer of meter pits and meter yokes, based in Murfreesboro, Tennessee, which are sold by our Mueller segment. On January 27, 2006, the Company acquired the operating assets of CCNE, L.L.C., a Connecticut-based manufacturer and seller of check valves to the water and wastewater treatment markets, for $8.8 million in cash. The CCNE assets will be operated by our Milliken Valve Company and Henry Pratt Company subsidiaries.
•: We announced our intention to enter into a tax allocation agreement ("Tax Allocation Agreement") with Walter Industries in connection with this offering. Pursuant to the Tax Allocation Agreement, we and Walter Industries will make payments to each other such that, with respect to any period during which we are or were a member of the consolidated federal income tax group or any combined state or local income tax group with Walter Industries or any Walter Industries subsidiaries, the amount of taxes to be paid by us, or the amount of tax benefit to be refunded to us by Walter Industries, subject to certain adjustments, will be determined as though we were to file separate federal, state and local income tax returns as the common parent of an affiliated group of corporations filing combined, consolidated or unitary (as applicable) federal, state and local returns rather than a consolidated subsidiary of Walter Industries with respect to federal, state and local income taxes. With respect to our tax assets, our right to reimbursement from Walter Industries will be determined based on the usage of such tax assets by the Walter Industries consolidated federal income tax group or the combined, consolidated or unitary state or local income tax group. Walter Industries will continue to have all the rights of a parent of a consolidated group (and similar rights provided for by applicable state and local law with respect to a parent of a combined, consolidated or unitary group), will be the sole and exclusive agent for us in any and all matters relating to the combined, consolidated or unitary federal, state and local income tax liabilities of us, will have sole and exclusive responsibility for the preparation and filing of consolidated federal income and consolidated or combined state and local tax returns (or amended returns), and will have the power, in its sole discretion, to contest or compromise any asserted tax adjustment or deficiency and to file, litigate or compromise any claim for refund on behalf of us related to any such combined, consolidated or unitary (as applicable) federal, state or local tax return.
•: We announced our intention to adopt a new 2006 stock incentive plan designed to promote our long-term growth and financial success by providing incentives to our employees, directors and

consultants through grants of stock-based awards. The impact to net income for future grants has not yet been determined.

•: As of December 31, 2005, scrap metal costs for our U.S. Pipe segment declined 16% from their peak in 2004. Recently scrap costs have increased and are expected to remain elevated at least through March 2006.
•: Assuming that this offering is completed during the quarter ending June 30, 2006, we will incur approximately $29 million of deferred financing and contractual redemption premiums associated with the retirement of debt using the proceeds of this offering, partially offset by a combined $18.8 million reduction in the carrying value of the senior subordinated notes and the senior discount notes.

Critical Accounting Policies

Our significant accounting policies, which comprise those of U.S. Pipe and Predecessor Mueller, are described in Notes 2 and 3, respectively, in their consolidated financial statements included elsewhere in this prospectus. While all significant accounting policies are important to our consolidated financial statements, some of these policies may be viewed as being critical. Such policies are those that are both most important to the portrayal of our financial condition and require our most difficult, subjective and complex estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. These estimates are based upon our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions. We believe our most critical accounting policies are as follows:

Pensions

We sponsor a number of defined benefit retirement plans. We record annual amounts relating to these plans based on calculations specified by GAAP, which include various actuarial assumptions including the following:

U.S. Pipe

	Pension Benefits				Other Benefits
	September 30, 2005		December 31, 2004		September 30, 2005	December 31, 2004
Weighted-average assumptions used to determine benefit obligations:
Discount rate	5.0	%	6.0	%	5.0%	6.0%
Rate of compensation increase	3.5	%	3.5	%	—	—
Weighted-average assumptions used to determine net periodic costs:
Discount rate	6.0	%	6.4	%	6.0%	6.4%
Expected return on plan assets	8.9	%	8.9	%	—	—
Rate of compensation increase	3.5	%	3.5	%	—	—
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year	—		—		10.0%	10.0%
Rate to which cost trend rate is assumed to decline (the ultimate trend rate)	—		—		5.0%	5.0%
Year that the rate reaches the ultimate trend rate	—		—		2010	2009

The discount rate used to determine pension expense was decreased to 6.0% for 2005 from 6.4% used in 2004. The discount rate is based on a proprietary bond defeasance model designed by the plans' investment consultant to create a portfolio of high quality corporate bonds which, if invested on the measurement date, would provide the necessary future cash flows to pay accumulated benefits when

due. The premise of the model is that annual benefit obligations are funded from the cash flows generated from periodic bond coupon payments, principal maturities and the interest on excess cash flows, i.e. carry forward balances.

The model uses a statistical program to determine the optimal mix of securities to offset benefit obligations. The model is populated with an array of Moody's Aa-rated corporate fixed income securities that actively traded in the bond market on the measurement date. None of the securities used in the model had embedded call, put or convertible features, and none were structured with par paydowns or deferred income streams. All of the securities in the model are considered appropriate for the analysis as they are diversified by maturity date and issuer and offer predictable cash flow streams. For diversification purposes, the model was constrained to purchasing no more than 20% of any outstanding issuance. Carry forward interest is credited at a rate determined by adding the appropriate implied forward Treasury yield to the Aa-rated credit spread as of the measurement date.

The expected return on plan assets was based on U.S. Pipe's expectation of the long-term average rate of return on assets in the pension funds, which was modeled based on the current and projected asset mix of the funds and considering the historical returns earned on the type of assets in the funds. We will review our actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when appropriate. As required by U.S. GAAP, the effects of the modifications are amortized over future periods.

Assumed health care cost trends, discount rates, expected return on plan assets and salary increases have a significant effect on the amounts reported for the pension plans and health care plans. A one-percentage-point change in the rate for each of these assumptions would have the following effects:

		1-Percentage Point Increase			1-Percentage Point Decrease
		(dollars in thousands)
Discount rate:
	Effect on pension service and interest cost components	$	(210	)	$	203
	Effect on pension benefit obligation		(24,479	)		29,826
	Effect on current year pension expense		(1,480	)		1,755
Expected return on plan assets:
	Effect on current year pension expense		(1,187	)		1,187
Rate of compensation increase:
	Effect on pension service and interest cost components		340			(291	)
	Effect on pension benefit obligation		2,798			(2,432	)
	Effect on current year pension expense		567			(488	)

Among the items affecting U.S. Pipe's net accrued retirement pension benefits were additional minimum pension liabilities recognized in 2005, which primarily resulted from a further decline in the average discount rate from 6.0% to 5.0%. As a result, the net accrued benefit was increased by $24.1 million and accumulated other comprehensive loss (a component of equity) was increased by a similar amount, net of a tax benefit of $8.2 million. Depending on future plan asset performances and interest rates, additional adjustments to our net accrued benefit and equity may be required.

Predecessor Mueller

	At September 30,
	2005		2004
Weighted-average assumptions used to determine benefit obligations:
Discount rate	5.2	%	5.8	%
Rate of compensation increase	3.5	%	3.5	%
Weighted-average assumptions used to determine net periodic costs:
Discount rate:	5.8	%	6.0	%
Expected return on plan assets	7.9	%	7.9	%
Rate of compensation increase	3.5	%	3.5	%

The discount rate used to determine pension expense was decreased to 5.8% for 2005 from 6.0% used in 2004. The rate of return on plan assets used to determine pension expense is 7.9% for both 2005 and 2004. The discount rate is based on a model portfolio of Aa-rated bonds with a maturity matched to the estimated payouts of future pension benefits. The expected return on plan assets is based on Predecessor Mueller's expectation of the long-term average rate of return on assets in the pension funds, which was modeled based on the current and projected asset mix of the funds and considering the historical returns earned on the type of assets in the funds. We will review the actuarial assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when appropriate. As required by U.S. GAAP, the effects of the modifications are amortized over future periods.

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

		1-Percentage Point Increase			1-Percentage Point Decrease
		(dollars in millions)
Discount rate:
	Effect on pension service and interest cost components	$	(0.1	)	$	—
	Effect on pension benefit obligation		(12.4	)		14.0
	Effect on current year pension expense		(1.2	)		1.2
Expected return on plan assets:
	Effect on current year pension expense		(0.8	)		0.8
Rate of compensation increase:
	Effect on pension service and interest cost components		—			—
	Effect on pension benefit obligation		0.3			(0.3	)
	Effect on current year pension expense		0.1			—

Among the items affecting our net accrued retirement pension benefits were additional minimum pension liabilities recognized in 2005, which primarily resulted from a further decline in the average discount rate from 5.8% to 5.2%. As a result, the net accrued benefit was increased by $2.8 million and accumulated other comprehensive earnings (a component of equity) was reduced by a similar amount, net of a tax benefit of $1.1 million. Depending on future plan asset performance and interest rates, additional adjustments to our net accrued benefit and equity may be required.

Workers' Compensation

We are self-insured for workers' compensation benefits for work-related injuries. 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 insurance industry data when historical data is limited. Pursuant to the terms of the Tyco Purchase Agreement, Predecessor Mueller is indemnified by Tyco for all liabilities that occurred prior to August 16, 1999. Workers' compensation liabilities were as follows:

U.S. Pipe

	September 30, 2005			December 31, 2004
	(dollars in millions)
Undiscounted aggregated estimated claims to be paid	$	14.4		$	15.0
Workers' compensation liability recorded on a discounted basis	$	11.9		$	12.7
Discount rate		4.6	%		4.3	%

A one-percentage-point increase in the discount rate on the discounted claims liability would decrease the liability by $0.1 million, while a one-percentage-point decrease in the discount rate would increase the liability by $0.1 million.

Predecessor Mueller

	September 30,
	2005			2004
	(dollars in millions)
Undiscounted aggregated estimated claims to be paid	$	10.2		$	9.5
Workers' compensation liability recorded on a discounted basis	$	8.8		$	8.5
Discount rate		5.0	%		5.0	%

A one-percentage-point increase in the discount rate on the discounted claims liability would decrease the liability by $0.2 million, while a one-percentage-point decrease in the discount rate would increase the liability by $0.2 million.

Litigation, Investigations and Claims

We are involved in litigation, investigations, and claims arising out of the normal conduct of our business, including those relating to commercial transactions, as well as environmental, health and safety matters. 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 that could cause the actual liability to exceed the estimates, or that may require adjustments to the recorded liability balances in the future.

Revenue Recognition

We recognize revenue based on the recognition criteria set forth in the Securities and Exchange Commission's Staff Accounting Bulletin 104 "Revenue Recognition in Financial Statements," which is when delivery of a product has occurred and there is persuasive evidence of a sales arrangement, sales prices are fixed and determinable, and collectibility from the customers is reasonably assured. Revenue from the sale of products is recognized when title passes upon delivery to the customer. Sales are recorded net of cash discounts and rebates.

Receivables

Receivables relate primarily to customers located in North America. To reduce credit risk, we perform credit investigations prior to accepting an order and, when necessary, require letters of credit to insure payment.

Our estimate for uncollectible accounts receivable is based, in large part, upon judgments and estimates of expected losses and specific identification of problem trade accounts. Significantly weaker than anticipated industry or economic conditions could impact customers' ability to pay such that actual losses are greater than the amounts provided for in these allowances. Our periodic evaluation of the adequacy of our allowance is based on our analysis of our prior collection experience, specific customer creditworthiness and current economic trends within the industries we serve. In circumstances where we are aware of a specific customer's inability to meet its financial obligation to us (e.g., bankruptcy filings or substantial downgrading of credit ratings), we record a specific reserve to reduce the receivable to the amount we reasonably believe will be collected.

Inventories

Inventories are recorded at the lower of cost (first-in, first-out) or market value. Additionally, we evaluate our 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 can be affected by levels of production and actual costs incurred. Management periodically evaluates the effects of production levels and actual costs incurred on the costs capitalized as part of inventory cost.

Income Taxes

Deferred tax liabilities and assets are recognized 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 a valuation allowance against our deferred tax assets.

We have recorded provisions associated with income tax exposures. Such provisions require significant judgment and are adjusted when events or circumstances occur that would require a change in the estimated accrual.

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

Long-lived assets, including goodwill and intangible assets that have an indefinite life are tested for impairment annually (or more frequently if events or circumstances indicate possible impairments). Definite-lived intangible assets are amortized over their respective estimated useful lives and reviewed for impairment annually or more frequently if events or circumstances indicate possible impairment. Any recognized intangible asset determined to have an indefinite useful life will not be amortized, but instead tested for impairment. We use an estimate of future undiscounted net cash flows of the related asset or asset grouping over the remaining life in measuring whether long-lived assets other than goodwill and intangibles are impaired. If impaired, we may need to record impairment charges to reduce the carrying value of our long-lived assets.

Stock-Based Compensation

U.S. Pipe. U.S. Pipe participated in the stock-based compensation plans of its parent company, Walter Industries. Historically, Walter Industries did not allocate any costs of this plan to U.S. Pipe. Predecessor Mueller had two stock-based employee compensation plans, which are more fully described in Note 13 to its historical financial statements included elsewhere herein. For the fiscal year beginning

October 1, 2005, we will adopt SFAS No. 123(R), "Share-Based Payment," which requires that compensation costs related to share-based payment transactions be recognized in the financial statements over the period that an employee provides service in exchange for the award. We will use a modified prospective method, under which we will record compensation cost for new and modified awards over the related vesting period of such awards prospectively. No change to prior periods presented is permitted under the modified prospective method. U.S. Pipe had no stock options outstanding at December 31, 2005.

Predecessor Mueller. Predecessor Mueller previously had accounted for compensation cost for stock-based compensation arrangements under the intrinsic value method of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," which required recognizing compensation equal to the difference, if any, between the fair value of the stock option and the exercise price at the date of the grant. All options granted under Predecessor Mueller's management incentive plan were issued at fair value at the date of grant. Fair value was determined by a committee of the board of directors of Predecessor Mueller (or the board as a whole, if no committee was constituted), which took into account as appropriate recent sales of shares of common stock, recent valuations of such shares, any discount associated with the absence of a public market for such shares and such other factors as the committee (or the board, as the case may have been) deemed relevant or appropriate in its discretion.

Derivative Instruments and Hedging Activities

We currently use interest rate swaps as required in the 2005 Mueller Credit Agreement to reduce the risk of interest rate volatility. The amount to be paid or received from interest rate swaps is charged or credited to interest expense over the lives of the interest rate swap agreements. Changes in the fair value of derivatives are recorded each period in earnings or Accumulated Other Comprehensive Income (Loss), depending on whether a derivative is designated and effective as part of a hedge transaction and meets the applicable requirements associated with Statement of Financial Accounting Standards (SFAS) 133 (see Note 8). Since the adoption of SFAS No. 133 in 2001, all gains and losses associated with interest rate swaps have been included in earnings.

For a derivative to qualify as a hedge at inception and throughout the hedge period, we must formally document the nature and relationships between the hedging instruments and hedged items, as well as its risk-management objectives, strategies for undertaking the various hedge transactions and method of assessing hedge effectiveness. Any financial instrument qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period.

Additionally, we utilize forward contracts to mitigate our exposure to changes in foreign currency exchange rates from third party and intercompany forecasted transactions. The primary currency to which we are exposed and to which we hedge the exposure is the Canadian dollar. The effective portion of unrealized gains and losses associated with forward contracts are deferred as a component of Accumulated Other Comprehensive Income (Loss) until the underlying hedged transactions are reported in our consolidated statement of earnings. The balance was not material at December 31, 2005.

Recently Issued Accounting Standards

In November 2004, the Financial Accounting Standards Board issued SFAS No. 151, "Inventory Costs" which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material. This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. We intend to adopt SFAS No. 151 on October 1, 2005, the beginning of our 2006 fiscal year. The impact of the adoption of SFAS No. 151 on our financial

statements may have a material impact on our operating income in the event actual production output is significantly higher or lower than normal capacity. In the event actual production is significantly different than normal capacity, the Company may be required to recognize certain amounts of facility expense, freight, handling costs or wasted materials as a current period expense.

In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN 47"), which is an interpretation of FASB No. 143, "Accounting for Asset Retirement Obligations" ("FAS 143"). This interpretation clarifies terminology within FAS 143 and requires companies to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. This interpretation does not have a material impact on our financial condition or results of operations.

In June 2005, the FASB issued FASB No. 154, "Accounting Changes and Error Corrections" ("FAS 154"), which changes the requirements for accounting for and reporting of a change in accounting principle. FAS 154 requires retrospective application to prior periods' financial statements of a voluntary change in accounting principle unless it is impracticable. FAS 154 also requires that a change in method of depreciation, amortization or depletion for long-lived, nonfinancial assets be accounted for as a change in accounting estimate that is effected by a change in accounting principle. FAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. The adoption of FAS 154 is not expected to have a material impact on our financial condition or results of operations.

Qualitative and Quantitative 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 and U.S. government securities. 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 December 31, 2005, we had fixed rate debt of $501.2 million and variable rate debt of $1,047.4 million. The pre-tax earnings and cash flows impact resulting from a 100 basis point increase in interest rates on variable rate debt, holding other variables constant and excluding the impact of the hedging agreements described below, would be approximately $10.4 million per year.

On October 3, 2005, our wholly-owned subsidiary, Mueller Group, entered into the 2005 Mueller Credit Agreement and refinanced the 2004 Mueller Credit Facility. On October 27, 2005, Mueller Group entered into six interest rate hedge transactions with a cumulative notional value of $350.0 million. The swap terms are between one and seven years with five separate counter-parties. The objective of the hedges is to protect us against rising LIBOR interest rates that would have a negative effect on our cash flows due to changes in interest payments on the 2005 Mueller Term Loan. The structure of the hedges are a one-year 4.617% LIBOR swap of $25.0 million, a three-year 4.740% LIBOR swap of $50.0 million, a four-year 4.800% LIBOR swap of $50.0 million, a five-year 4.814% LIBOR swap of $100.0 million, a six-year 4.915% LIBOR swap of $50.0 million, and a seven year 4.960% LIBOR swap of $75.0 million. The swap agreements call for Mueller Group to make fixed rate payments over the term at each swap's stated fixed rate and to receive payments based on three month LIBOR from the counter-parties. These swaps will be settled upon maturity and will be accounted for as cash flow hedges. As such, changes in the fair value of these swaps that take place through the date of maturity will be recorded in accumulated other comprehensive income.

We will consider entering into additional interest rate swaps or other interest rate hedging instruments to protect against interest rate fluctuations on our floating rate debt.

The 2005 Mueller Credit Agreement requires that at least 50% of the funded debt of Mueller Group and its restricted subsidiaries on a consolidated basis be fixed for a period beginning no later than January 1, 2006 and ending October 3, 2008. This requirement can be met with any combination of fixed rate debt and rate protection agreements. Mueller Group is currently in compliance with this requirement.

Currency Risk

Outside of the United States, we maintain assets and operations in Canada and, to a much lesser extent, China. The results of operations and financial position of our foreign operations are principally measured in their respective currency and translated into United States dollars. As a result, exposure to foreign currency gains and losses exists. The reported income of these subsidiaries will be higher or lower depending on a weakening or strengthening of the United States dollar against the respective foreign currency. Our subsidiaries and affiliates also purchase and sell products and services in various currencies. As a result, we may be exposed to cost increases relative to the local currencies in the markets in which we sell. Because a different percentage of our revenues is in foreign currency than our costs, a change in the relative value of the United States dollar could have a disproportionate impact on our revenues compared to our cost, which could impact our margins.

A portion of our assets are based in our foreign locations and are translated into United States dollars at foreign currency exchange rates in effect as of the end of each period, with the effect of such translation reflected in other comprehensive income (loss). Accordingly, our consolidated stockholders' equity will fluctuate depending upon the weakening or strengthening of the United States dollar against the respective foreign currency.

We have entered into forward exchange contracts principally to hedge currency fluctuations in transactions (primarily anticipated inventory purchases) denominated in foreign currencies, thereby limiting the risk that would otherwise result from changes in exchange rates. The majority of the Company's exposure to currency movements is in Canada. All of the foreign exchange contracts have maturity dates in 2006. Gains and losses on the forward contracts are expected to be offset by losses/gains in recognized net underlying foreign currency transactions. As of December 31, 2005, the Company had entered into one forward contract in a notional amount of less than $0.1 million, selling U.S. dollars and purchasing Euros at an exchange rate of $1.3635.

Subsequent to December 31, 2005, we entered into forward contracts in a notional amount of $9.1 million primarily to protect anticipated inventory purchases by our Canadian operations. With these hedges, we purchase U.S. dollars and sell Canadian dollars at an average exchange rate of $0.867.

Raw Materials Risk

Our products are made from several basic raw materials, including steel pipe, scrap steel, iron, brass ingot, sand, resin and natural gas, whose prices fluctuate as market supply and demand change. Accordingly, product margins and the level of profitability can fluctuate if we are not able to pass raw material costs on to our customers. Historically, we have been succcessful in implementing product price increases to reflect raw materials pricing. However, because our U.S. Pipe segment generally experiences a lag between the effective times of raw materials price increases and U.S. Pipe product price increases, U.S. Pipe margins may be reduced by repeated spikes in raw materials pricing during a fiscal cycle. Management estimates for our Mueller and Anvil segments that raw material accounted for approximately 18% of our cost of goods sold due to increasing raw material prices in 2005. Management estimates U.S. Pipe's scrap metal and ferrous alloys used in the manufacturing process accounted for approximately 26% of the cost to manufacture ductile iron pipe for the nine months ended September 30, 2005. See "Business—Raw Materials" and "Risk Factors—Our business is subject to risk of price increases and fluctuations and delay in the delivery of raw materials and purchased components." Historically, we have been able to obtain an adequate supply of raw materials and do not

anticipate any shortage of these materials. We generally purchase raw materials at spot prices but may, from time to time, enter into commodity derivatives to reduce our exposure to fluctuation in the price of raw materials. On January 12, 2006, we entered into a swap contract to hedge anticipated purchases on natural gas from February 2006 through March 2006 totaling 0.4 million mmbtu, or approximately 80% of expected natural gas completion at a price of $9.41 mmbtu. This swap contract effectively converts a portion of forecasted purchases at market prices to a fixed price basis.

Results of Operations—Mueller Water Products, Inc.

In accordance with generally accepted accounting principles, for accounting and financial statement presentation purposes U.S. Pipe is treated as the accounting acquiror of Predecessor Mueller. Accordingly, effective October 3, 2005, U.S. Pipe's basis of accounting is used for the Company and all historical financial data of the Company prior to October 3, 2005 included herein is that of U.S. Pipe. The results of operations of Mueller Water are included beginning October 3, 2005.

Consistent with generally accepted accounting principles, the discussion of the Company's results of operations for the three months ended December 31, 2005 includes the financial results of Mueller Water for all but the first two days of the period. The inclusion of these results, plus the continuing integration process, may render direct comparison with the results for prior periods less meaningful. Accordingly, the discussion below addresses, where appropriate, trends that we believe are significant, separate and apart from the impact of the Acquisition. Supplemental information with comparisons of the three months ended December 31, 2005 Statement of Operations data to the pro forma three months ended December 31, 2004 Statement of Operations data is provided below under the subheading "—Supplemental Information—Results of Operations for the Three Months Ended December 31, 2005 Compared to Pro Forma Results of Operations for the Three Months Ended December 31, 2004."

The following table sets forth the Company's net sales, gross profit, total expenses and net loss for the three months ended December 31, 2005 and 2004:

Three Months Ended December 31, 2005 As Compared to the Three Months Ended December 31, 2004

		Three months ended
		December 31, 2005				December 31, 2004				FY06 Q1 vs. FY05 Q1
		(restated)
				Percentage of net sales(1)				Percentage of net sales(1)		Increase/ (decrease)			Percentage increase/ (decrease)
		(dollars in millions)
Net sales
	Mueller	$	176.7	36.8	%	$	—	—	%	$	176.7
	U.S. Pipe		171.1	35.6			141.2	100.0			29.9		21.2	%
	Anvil		132.6	27.6			—	—			132.6

	Consolidated	$	480.4	100.0		$	141.2	100.0		$	339.2

Gross profit
	Mueller	$	15.5	8.8		$	—	—		$	15.5
	U.S. Pipe		9.1	5.3			12.7	9.0			(3.6	)	(28.3	)
	Anvil		18.9	14.3			—	—			18.9

	Consolidated	$	43.5	9.1		$	12.7	9.0		$	30.8

Selling, general and administrative
	Mueller	$	19.3	10.9		$	—	—		$	19.3
	U.S. Pipe		11.0	6.4			13.2	9.3			(2.2	)	(16.7	)
	Anvil		20.4	15.4			—	—			20.4
	Corporate		6.4	1.3			—	—			6.4

	Consolidated	$	57.1	11.9		$	13.2	9.3		$	43.9


Related party corporate charges
	Mueller	$	—		—		$	—		—		$	—
	U.S. Pipe		1.8		1.1			1.9		1.3			(0.1	)	(5.3	)
	Anvil		—		—			—		—			—

	Consolidated	$	1.8		0.4		$	1.9		1.3		$	(0.1	)

Facility rationalization, restructuring and related costs
	Mueller	$	—		—		$	—		—		$	—
	U.S. Pipe		24.1		14.1			—		—			24.1
	Anvil		—		—			—		—			—

	Consolidated	$	24.1		5.0		$	—		—		$	24.1

Loss from operations
	Mueller	$	(3.8	)	(2.2	)	$	—		—		$	(3.8	)
	U.S. Pipe		(27.8	)	(16.2	)		(2.4	)	(1.7	)		(25.4	)
	Anvil		(1.5	)	(1.1	)		—		—			(1.5	)
	Corporate		(6.4	)	(1.3	)		—		—			(6.4	)

	Consolidated	$	(39.5	)	(8.2	)	$	(2.4	)	(1.7	)	$	(37.1	)

Interest expense arising from related party payable to Walter Industries		$	—		—		$	(5.9	)	(4.2	)	$	5.9
Interest expense, net of interest income			(32.2	)	(6.7	)		(0.1	)	—			(32.1	)

Loss before income taxes			(71.7	)	(14.9	)		(8.4	)	(5.9	)		(63.3	)
Income tax expense (benefit)			(22.9	)	(4.8	)		1.1		0.8			(24.0	)

Net loss		$	(48.8	)	(10.2	)	$	(9.5	)	(6.7	)	$	(39.3	)

(1): Percentages are by segment, if applicable.

Net Sales. Consolidated net sales for the three months ended December 31, 2005 were $480.4 million, an increase of $339.2 million from $141.2 million in the prior year period. The increase was primarily related to the Acquisition, which accounted for $309.3 million or approximately 91% of the overall increase.

Mueller segment net sales for the three months ended December 31, 2005 were $176.7 million.

U.S. Pipe segment net sales for the three months ended December 31, 2005 were $171.1 million, an increase of $29.9 million, or 21.2% from $141.2 million in the prior year period. This increase was driven primarily by improved volumes and pricing of ductile iron pipe sales.

Anvil segment net sales for the three months ended December 31, 2005 were $132.6 million.

Gross Profit. Consolidated gross profit for the three months ended December 31, 2005 was $43.5 million, an increase of $30.8 million compared to $12.7 million in the prior year period. The Acquisition of Predecessor Mueller contributed $34.4 million of the increase. Included in cost of sales for the three months ended December 31, 2005 was $58.4 million of purchase accounting adjustments related to valuing inventory acquired in the Acquisition at fair value and $1.4 million of amortization expense related to intangible assets identified during the allocation of the Acquisition purchase price.

Mueller segment gross profit for the three months ended December 31, 2005 was $15.5 million. Included in cost of sales for the three months ended December 31, 2005 was $46.2 million of purchase accounting adjustments related to valuing inventory at fair value and $1.3 million of amortization expense related to intangible assets.

U.S. Pipe segment gross profit for the three months ended December 31, 2005 was $9.1 million, a decrease of $3.6 million, or 28.3%, compared to $12.7 million in the prior year period. Gross margin decreased to 5.3% in the current period compared to 9.0% in the prior year period. On October 26, 2005 the Company announced that the U.S. Pipe Chattanooga plant would be closed during fiscal 2006 and that production of the U.S. Pipe valves and hydrants would be transferred to the Mueller manufacturing facilities at Albertville, Alabama and Chattanooga, Tennessee. In addition to transferring production to Mueller facilities, the sales responsibility for U.S. Pipe valve and hydrant product sales was transferred to the Mueller segment. In conjunction with this transfer, it was determined that certain U.S. Pipe inventory would not ultimately be sold. As a result, inventory obsolescence write-offs of $10.7 million were recorded to cost of sales during the current period.

In addition, because of the plant closure process, current period actual production capacity at the U.S. Pipe Chattanooga facility was significantly lower than normal capacity, resulting in facility expenses of $5.2 million charged directly to cost of sales.

Excluding the charges for inventory write-offs of $10.7 million and facility expenses of $5.2 million, U.S. Pipe gross margins would have been $25.0 million, or 14.6% for the current period, compared to 9.0% in the prior year period. This increase is primarily due to higher ductile iron pipe selling prices.

Anvil segment gross profit for the three months ended December 31, 2005 was $18.9 million. Included in cost of sales for the three months ended December 31, 2005 was $12.2 million of purchase accounting adjustments related to valuing inventory at fair value and $0.1 million of amortization expense related to intangible assets.

Selling, General & Administrative. Consolidated expenses for the three months ended December 31, 2005 were $57.1 million, an increase of $43.9 million, compared to $13.2 million in the prior year period. The acquisition of Predecessor Mueller accounted for $46.1 million of the increase. Expenses as a percentage of net sales increased to 11.9% in the current period compared to 9.3% in the prior year period. Included in current period expenses were amortization expenses related to definite-lived intangibles of $5.2 million as a result of the Acquisition.

Mueller segment expenses for the three months ended December 31, 2005 were $19.3 million, including $4.6 million of amortization expense of definite-lived intangibles.

U.S. Pipe segment expenses for the three months ended December 31, 2005 were $11.0 million, compared to $13.2 million for the prior year period. As a percentage of net sales, expenses improved to 6.4% in the current period compared to 9.3% in the prior year period. Prior period costs included a $4.0 million environmental charge related to the Anniston, Alabama site (shut down in 2003), which was partially offset by higher management incentive accruals and increased outside sales commissions recorded in the current period.

Anvil segment expenses for the current period were $20.4 million, including $0.6 million of amortization expense of definite-lived intangibles.

Corporate segment expenses for the current period were $6.4 million.

Related Party Corporate Charges. Certain costs incurred by Walter Industries such as insurance, executive salaries, professional service fees, human resources, transportation, and other centralized business functions are allocated to its subsidiaries. Costs incurred by Walter Industries that cannot be directly attributed to its subsidiaries are allocated to them based on estimated annual revenues.

Facility Rationalization, Restructuring and Related Costs. The Company expensed $24.1 million of restructuring costs for the three months ended December 31, 2005 related to the closure of the U.S. Pipe Chattanooga, Tennessee plant. These costs are comprised of fixed asset impairments of

$19.0 million, severance for terminated hourly and salaried employees of $3.0 million, and environmental costs of $2.1 million, primarily related to landfill closure and required site clean-up costs. The Company expects to expense additional closure costs of $5.2 million in future periods, when allowable under generally accepted accounting principles.

Interest Expense Arising from Related Party Payable to Walter Industries. Interest expense was allocated to the Company up to the date of the Acquisition based upon the outstanding balance of the intercompany note. The intercompany note to Walter Industries of $443.6 million was forgiven. There was no intercompany interest expense for the three months ended December 31, 2005 and $5.9 million for the three months ended December 31, 2004.

Interest Expense, Other, Net of Interest Income. Interest expense, net of interest income, for the current period was $32.2 million and includes $29.2 million of contractual interest expense on the 2005 Mueller Credit Agreement, and the senior subordinated notes and the senior discount notes assumed by the Company as part of the Acquisition; $2.5 million in commitment fees for a bridge loan which were expensed at the expiration of the bridge loan period during the current period and $1.2 million of amortization of deferred financing fees, partially offset by $0.4 million of gains on interest rate swaps and $0.3 million of interest income earned on unrestricted cash balances for the current period.

Income Tax Expense (Benefit). The provision for income taxes for the current period was a benefit of $22.9 million as compared to an expense of $1.1 million in the prior year period. The effective tax rates for the first quarter of 2006 was 31.9%. The effective tax rate for the first quarter 2005 was (13.1%). The negative tax rate was due to reducing a valuation allowance on state deferred tax assets.

Supplemental Information—Results of Operations for the Three Months Ended December 31, 2005 Compared to Pro Forma Results of Operations for the Three Months Ended December 31, 2004

The unaudited pro forma results of operations for the three months ended December 31, 2004 is presented as if the Acquisition of Predecessor Mueller and borrowings under the 2005 Mueller Credit Agreement had taken place on October 1, 2004 and were carried forward through December 31, 2004.

Pro Forma Results of Operations

Actual Three Months Ended December 31, 2005 As Compared to the Pro Forma Three Months Ended December 31, 2004

		Three months ended
		Actual December 31, 2005					Pro Forma December 31, 2004					Actual FY06 Q1 vs. Pro Forma FY05 Q1
		(restated)
					Percentage of net sales(1)					Percentage of net sales(1)		Increase/ (decrease)			Percentage increase/ (decrease)
		(dollars in millions)
Net sales
	Mueller	$	176.7		36.8	%	$	138.6		34.9	%	$	38.1		27.5	%
	U.S. Pipe		171.1		35.6			141.2		35.5			29.9		21.2
	Anvil		132.6		27.6			117.5		29.6			15.1		12.9

	Consolidated	$	480.4		100.0		$	397.3		100.0		$	83.1		20.9

Gross profit
	Mueller	$	15.5		8.8		$	43.1		31.1		$	(27.6	)	(64.0	)
	U.S. Pipe		9.1		5.3			12.7		9.0			(3.6	)	(28.3	)
	Anvil		18.9		14.3			30.3		25.8			(11.4	)	(37.6	)

	Consolidated	$	43.5		9.1		$	86.1		21.7		$	(42.6	)	(49.5	)

Selling, general and administrative
	Mueller	$	19.3		10.9		$	21.0		15.2		$	(1.7	)	(8.1	)
	U.S. Pipe		11.0		6.4			13.2		9.3			(2.2	)	(16.7	)
	Anvil		20.4		15.4			20.0		17.0			0.4		2.0
	Corporate		6.4		1.3			5.8		1.5			0.6		10.3

	Consolidated	$	57.1		11.9		$	60.0		15.1		$	(2.9	)	(4.8	)

Related party corporate charges
	Mueller	$	—		—		$	—		—		$	—
	U.S. Pipe		1.8		1.1			1.9		1.3			(0.1	)	(5.3	)
	Anvil		—		—			—		—			—

	Consolidated	$	1.8		0.4		$	1.9		0.5		$	(0.1	)	(5.3	)

Facility rationalization, restructuring and related costs
	Mueller	$	—		—		$	0.1		—		$	(0.1	)
	U.S. Pipe		24.1		14.1			—		—			24.1
	Anvil		—		—			—		—			—

	Consolidated	$	24.1		5.0		$	0.1		—		$	24.0

Income (loss) from operations
	Mueller	$	(3.8	)	(2.2	)	$	22.0		15.9		$	(25.8	)
	U.S. Pipe		(27.8	)	(16.2	)		(2.4	)	(1.7	)		(25.4	)
	Anvil		(1.5	)	(1.1	)		10.3		8.8			(11.8	)
	Corporate		(6.4	)	(1.3	)		(5.8	)	(1.5	)		(0.6	)	(10.3	)

	Consolidated	$	(39.5	)	(8.2	)	$	24.1		6.1		$	(63.6	)

Interest expense, net of interest income			(32.2	)	(6.7	)		(34.6	)	(8.7	)		2.4

Loss before income taxes			(71.7	)	(14.9	)		(10.5	)	(2.6	)		(61.2	)
Income tax benefit			(22.9	)	(4.8	)		0.4		0.1			(23.3	)

Net loss		$	(48.8	)	(10.2	)	$	(10.9	)	(2.7	)	$	(37.9	)

(1): Percentages are by segment, if applicable.

Management's discussion below reflects its analysis of the pro forma data presented above. Management believes that the pro forma comparisons will assist in understanding trends in the Company's business in the factors that management considers critical to assessing the Company's operating and financial performance.

Net Sales. Consolidated net sales for the three months ended December 31, 2005 were $480.4 million, an increase of $83.1 million from $397.3 million in the prior year period.

Mueller segment net sales for the three months ended December 31, 2005 were $176.7 million, an increase of $38.1 million, or 27.5% from $138.6 million in the prior year period. This increase was primarily driven by higher pricing and volumes in hydrants and water valves.

Anvil segment net sales for the three months ended December 31, 2005 were $132.6 million, an increase of $15.1 million, or 12.9% from $117.5 million in the prior year period. This increase was primarily the result of continued strength in the oilfield and mechanical markets for grooved and hanger products and growth in the sales of foreign-sourced products. Price increases implemented in late fiscal 2005 also had a positive impact, and the strength of the Canadian dollar, relative to the U.S. dollar, assisted in increasing sales in Canada.

Gross Profit. Consolidated gross profit for the three months ended December 31, 2005 was $43.5 million, a decrease of $42.6 million compared to $86.1 million in the prior year period. Included in cost of sales for the three months ended December 31, 2005 was $58.4 million of purchase accounting adjustments related to valuing inventory acquired in the Acquisition at fair value.

Mueller segment gross profit for the three months ended December 31, 2005 was $15.5 million, a decrease of $27.6 million, or 64.0% from $43.1 million in the prior year period. Gross margin decreased to 8.8% in the current period compared to 31.1% in the prior year period. The current period includes $46.2 million related to the amortization expense resulting from the purchase accounting adjustment to increase acquired inventories to fair value on the date of acquisition. Excluding the effects of this inventory amortization, gross profit would have been $58.7 million and gross margin would have been 33.2% compared to 31.1% in the prior year period. This increase was primarily due to higher pricing and volumes, particularly in hydrants and water valves.

Excluding the charges for inventory write-offs of $10.7 million and facility expenses of $5.2 million, U.S. Pipe gross margins would have been $25 million, or 14.6% for the current period, compared to 9.0% in the prior year period. This increase is primarily due to higher ductile iron pipe selling prices.

Anvil segment gross profit for the three months ended December 31, 2005 was $18.9 million, a decrease of $11.4 million, or 37.6%, compared to $30.3 million in the prior year period. The current period includes $12.2 million related to the amortization expense resulting from the purchase accounting adjustment to increase acquired inventories to fair value on the date of acquisition. Excluding the effects of this inventory amortization, gross profit would have been $31.1 million and gross margin would have been 23.5% compared to 25.8% in the prior year period.

Selling, General & Administrative. Consolidated expenses for the three months ended December 31, 2005 were $57.1 million, a decrease of $2.9 million, compared to $60.0 million in the

prior year period. Expenses as a percentage of net sales improved to 11.9% in the current period compared to 15.1% in the prior year period.

Mueller segment expenses for the three months ended December 31, 2005 were $19.3 million, a decrease of $1.7 million, or 8.1%, compared to $21.0 million in the prior year period. Expenses as a percentage of net sales improved to 10.9% in the current period compared to 15.2% in the prior year period.

U.S. Pipe segment expenses for the three months ended December 31, 2005 were $11.0 million, compared to $13.2 million for the prior year period. As a percentage of net sales, expenses improved to 6.4% in the current period compared to 9.3% in the prior year period. Prior period costs included a $4.0 million environmental charge related to the Anniston, Alabama site (shut down in 2003), which were partially offset by higher management incentive accruals and increased outside sales commissions recorded in the current period.

Anvil segment expenses for the current period were $20.4 million, an increase of $0.4 million, or 2.0%, compared to $20.0 million in the prior year period. Expenses as a percentage of net sales improved to 15.4% in the current period compared to 17.0% in the prior year period.

Corporate segment expenses for the current period were $6.4 million, an increase of $0.6 million compared to $5.8 million in the prior year period.

Facility Rationalization, Restructuring and Related Costs. The Company expensed $24.1 million of restructuring costs for the three months ended December 31, 2005, related to the closure of the U.S. Pipe Chattanooga, Tennessee plant. These costs are comprised of fixed asset impairments of $19.0 million, severance for terminated hourly and salaried employees of $3.0 million, and environmental costs of $2.1 million, primarily related to landfill closure and required site clean-up costs. The Company expects to expense additional closure costs of $5.2 million in future periods, when allowable under generally accepted accounting principles. The Company expensed $0.1 million for the three months ended December 31, 2004, for severance related to the closure of a Mueller segment manufacturing facility in Colorado.

Interest Expense, Net of Interest Income. Interest expense, net of interest income, for the current period was $32.2 million and includes $29.2 million of contractual interest expense on the 2005 Mueller Credit Agreement, and the senior subordinated notes and the senior discount notes assumed by the Company as part of the Acquisition; $2.5 million in commitment fees for a bridge loan which were expensed at the expiration of the bridge loan period during the current period and $1.2 million of amortization of deferred financing fees, partially offset by $0.4 million of gains on interest rate swaps and $0.3 million of interest income earned on unrestricted cash balances for the period. Interest expense, net of interest income, for the prior year period was $34.6 million. The decrease is primarily due to the inclusion in the prior year period of $5.9 million of interest expense arising from a related party payable to Walter Industries.

Results of Operations—United States Pipe and Foundry Company, LLC

The following table sets forth U.S. Pipe's net revenues, total expenses and net income (loss) for the nine months ended September 30, 2005, the comparable nine month period ended September 30, 2004 and years ended December 31, 2004 and 2003:

		For the nine months ended September 30,						For the years ended December 31,
		2005			2004			2004			2003
		(dollars in millions) As Restated
Net revenues		$	456.9		$	437.2		$	578.4		$	465.4
Cost of sales			402.2			402.9			531.4			427.4

	Gross profit		54.7			34.3			47.0			38.0
Selling, general and administrative expenses			25.9			25.0			38.2			43.5
Related party corporate charges			5.4			5.7			7.7			4.8
Restructuring and impairment charges			—			0.1			0.1			5.9

	Operating income (loss)		23.4			3.5			1.0			(16.2	)
Interest expense			(15.5	)		(13.4	)		(19.4	)		(16.9	)

	Income (loss) before income tax expense		7.9			(9.9	)		(18.4	)		(33.1	)
Income tax expense (benefit)			2.8			(3.9	)		(2.9	)		(12.7	)

	Income (loss) before cumulative effect of change in accounting principle		5.1			(6.0	)		(15.5	)		(20.4	)
Cumulative effect of change in accounting principle, net of tax			—			—			—			(0.5	)

	Net income (loss)	$	5.1		$	(6.0	)	$	(15.5	)	$	(20.9	)

Nine months ended September 30, 2005 versus the nine months ended September 30, 2004

Net Revenues. Net revenues were $456.9 million for the nine months ended September 30, 2005 compared to $437.2 million in the comparable prior year period. The increase was primarily due to a 20% increase in ductile iron pipe selling prices, partially offset by a 11% decrease in ductile iron pipe shipments mainly due to industry-wide delays in construction projects, some of which were due to weather-related problems. Prices were higher than the prior year as the industry has been increasing prices to offset higher scrap metal costs. Scrap metal costs increased from an average of $209 per ton in the nine months ended September 30, 2004 to an average of $223 per ton in the nine months ended September 30, 2005. Our pricing actions since September 2003 have offset scrap metal and other manufacturing cost increases.

Gross Profit. Gross margins increased to 12.0% for the nine months ended September 30, 2005 compared to 7.8% for the nine months ended September 30, 2004 as a result of higher ductile iron pipe selling prices, partially offset by higher scrap metal costs.

Operating Income. Operating income totaled $23.4 million for the nine months ended September 30, 2005 compared to $3.5 million in the comparable prior year period. The increase in operating income of $19.9 million was primarily due to higher pricing and an additional $3.2 million of insurance claim settlements, partially offset by lower volumes and higher scrap metal costs.

Interest Expense. Interest expense primarily relates to interest expense on the intercompany payable to Walter Industries.

Income Tax Expense (Benefit). As more fully described in Note 9 to the financial statements of U.S. Pipe, income tax expense is calculated as if U.S. Pipe filed on a stand alone basis, with the exception that the tax sharing agreement in place with Walter Industries provides for U.S. Pipe to receive an immediate benefit when its tax losses for Federal purposes are utilizable by the consolidated group. Under this historical tax policy, income tax expense was 36.2% of the pre-tax income for the

nine months ended September 30, 2005 compared to an income tax benefit of 39.4% of the pre-tax loss for the nine months ended September 30, 2004. The decrease results from the recording of a valuation allowance in the fourth quarter of 2004 for state income tax attributes. It is anticipated that U.S. Pipe will have a tax loss for calendar 2005 or will utilize net operating loss carryforwards, for which a valuation allowance has been established, against taxable income.

On a pro forma basis, assuming U.S. Pipe's deferred tax assets were evaluated for realization without regard to utilization by Walter Industries, income tax expense would have been $1.6 million, or 20.3% of pre-tax income, for the nine months ended September 30, 2005 compared to a pro forma income tax expense of $7.2 million, or 72.7% of pre-tax loss for the nine months ended September 30, 2004. The change in the pro forma effective tax rate results from the utilization in 2005 of a pro forma net operating loss carryforward generated for the nine months ended September 30, 2004, for which a valuation allowance had been established during 2004.

Year ended December 31, 2004 versus year ended December 31, 2003

Net Revenues. Net revenues were $578.4 million for the year ended December 31, 2004, an increase of $113.0 million from $465.4 million for the year ended December 31, 2003. This increase was primarily due to higher sales prices and increased sales volumes, especially for ductile iron pipe which had a 22% increase in average selling price and an 8% increase in sales volume. Prices were lower in 2003 as a result of an industry price war that began in 2002.

Gross Profit. Gross margins were 8.1% for the year ended December 31, 2004 compared to 8.2% for the year ended December 31, 2003 as a result of higher ductile iron pipe selling prices, offset by higher costs for scrap metal and other materials and higher manufacturing and workers' compensation costs.

Significant increases in the cost of scrap metal occurred in 2004. Scrap metal is a primary raw material used in the production of ductile iron pipe, accounting for up to 26% of the costs of producing pipe. Scrap metal costs increased from approximately $162 per ton in January 2004 to approximately $258 per ton by December 2004. Unparalleled scrap export volume, especially to China, has been the principal reason for the increased cost of scrap metal.

Operating Income. Operating income was $1.0 million in 2004, compared to a $16.2 million loss in 2003. The operating profit improvement in 2004 was primarily attributable to higher sales prices and slightly higher volumes and $1.9 million from an environmental-related insurance settlement. These improvements were partially offset by higher costs for scrap metal and ferrous alloys, higher costs for other commodities such as oil-based resins and natural gas used in the manufacturing process, higher environmental costs primarily due to a $4.0 million charge related to an EPA administrative consent order for the Anniston, Alabama facility which was closed in 2003 and higher costs related to workers' compensation, salaries and wages, legal expenses and depreciation. Operating loss for 2003 includes $5.9 million in charges related to restructuring costs to cease operations at the castings plant in Anniston, Alabama, a $6.5 million litigation settlement and a $1.7 million settlement of a commercial dispute.

Income Tax Expense (Benefit). Income tax benefit was 15.8% of the pre-tax loss for the year ended December 31 2004, compared to an income tax benefit of 38.2% of the pre-tax loss for the year ended December 31, 2003. The decrease in tax benefit results from the recognition of a valuation allowance in the fourth quarter of 2004 for state tax income tax attributes.

On a pro forma basis, as described above, income tax expense for the year ended December 31, 2004 would have been $17.9 million, or 97.3% of pre-tax loss, compared to an income tax benefit of $13.3 million, or 40.2% of pre-tax loss for 2003. The change results from a pro forma valuation allowance of $20.8 million provided against the deferred tax assets in 2004.

Consolidated Results of Operations—Predecessor Mueller

The following table sets forth Predecessor Mueller's net sales, gross profit, total expenses and net income for the years ended September 30, 2005 and 2004:

Year ended September 30, 2005 versus the year ended September 30, 2004

		For the years ended										2005 vs. 2004
		2005					2004
					Percentage of net sales(1)					Percentage of net sales(1)		Increase/ (decrease)			Percentage increase/ (decrease)
		(dollars in millions)
Net sales
	Mueller	$	663.9		57.8	%	$	618.2		58.9	%	$	45.7		7.4	%
	Anvil		485.0		42.2			431.0		41.1			54.0		12.5

	Consolidated	$	1,148.9		100.0		$	1,049.2		100.0		$	99.7		9.5

Gross profit
	Mueller	$	230.6		34.7		$	203.0		32.8		$	27.6		13.6
	Anvil		122.9		25.3			102.8		23.9			20.1		19.6
	Depreciation expense not allocated to segments		(6.9	)	(0.6	)		(7.1	)	(0.7	)		0.2		(2.8	)

	Consolidated	$	346.6		30.2		$	298.7		28.5		$	47.9		16.0

Selling, general and administrative
	Mueller	$	60.9		9.2		$	60.6		9.8		$	0.3		0.5
	Anvil		77.9		16.1			75.0		17.4			2.9		3.9
	Corporate		33.3		2.9			49.5		4.7			(16.2	)	(32.7	)

	Consolidated	$	172.1		15.0		$	185.1		17.6		$	(13.0	)	(7.0	)

Facility rationalization, restructuring and related costs
	Mueller	$	1.7		0.3		$	—		—		$	1.7		N/A
	Anvil		—		—			0.9		0.2			(0.9	)	100.0

	Consolidated	$	1.7		0.1		$	0.9		0.2		$	0.8		88.9

Operating Income
	Mueller	$	168.0		25.3		$	142.4		23.0		$	25.6		18.0
	Anvil		45.0		9.3			26.9		6.2			18.1		67.3
	Corporate		(40.2	)	(3.5	)		(56.6	)	(5.4	)		16.4		(29.0	)

	Consolidated	$	172.8		15.0		$	112.7		10.7		$	60.1		53.3

Interest expense, net of interest income		$	(89.5	)	(7.8	)	$	(63.5	)	(6.1	)	$	(26.0	)	40.9
Income before income tax expense			83.3		7.3			49.2		4.7			34.1		69.3
Income tax expense			33.7		2.9			16.0		1.5			17.7		110.6

Net income		$	49.6		4.3		$	33.2		3.2		$	16.4		49.4

(1): Percentages are by Predecessor Mueller segment, if applicable.

Net Sales. Consolidated net sales for the fiscal year ended September 30, 2005 were $1,148.9 million, an increase of $99.7 million, or 9.5%, from $1,049.2 million in 2004.

Mueller segment net sales for the fiscal year ended September 30, 2005 were $663.9 million, an increase of $45.7 million, or 7.4% from $618.2 million in 2004. This increase was driven primarily by price increases combined with the continued strong performance of the residential construction market. The Mueller segment implemented price increases in February 2004, May 2004 and January 2005 on

iron products including dry-barrel fire hydrants, water gate valves and butterfly valves; in February 2004, March 2004 and February 2005 on brass service products including brass valves and fittings; and in February 2005 on machines and tools.

Anvil net sales for the fiscal year ended September 30, 2005 were $485.0 million, an increase of $54.0 million, or 12.5%, from $431.0 million in 2004. The 2004 acquisition of Star contributed a $13.5 million increase in 2005 sales compared to 2004. The strength of the Canadian dollar contributed another $9.1 million of additional sales, while the balance of the increase was driven primarily by price increases.

Gross Profit. Consolidated gross profit for the fiscal year ended September 30, 2005 was $346.6 million, an increase of $47.9 million, or 16%, from $298.7 million in 2004. Gross margin increased to 30.2% in 2005, compared to 28.5% in 2004, which includes certain depreciation expense not allocated to segments.

Mueller segment gross profit for the fiscal year ended September 30, 2005 was $230.6 million, an increase of $27.6 million, or 13.6%, from $203.0 million in 2004. Gross margin increased to 34.7% in 2005 compared to 32.8% in 2004. The increase in gross profit was primarily driven by price increases and the continued strong performance of the residential construction market. Partially offsetting the higher prices were higher raw material costs (most notably brass ingot and scrap steel) due to worldwide supply and demand issues. We cannot provide assurances that any future increases in raw material costs can be passed to its customers.

Anvil gross profit for the fiscal year ended September 30, 2005 was $122.9 million, an increase of $20.1 million, or 19.6% from $102.8 million in 2004. Gross margin increased to 25.3% in 2005 compared to 23.9% in 2004. The acquisition contributed an increase of $1.4 million, while the remaining increase was primarily driven by price increases implemented during fiscal year 2004. These increases were partially offset by increased raw material and other production costs.

Selling, General & Administrative. Consolidated SG&A for the fiscal year ended September 30, 2005 was $172.1 million, a decrease of $13.0 million, from $185.1 million in 2004. As a percentage of net sales, SG&A improved to 15.0% in 2005 compared to 17.6% in 2004.

Mueller segment SG&A for the fiscal year ended September 30, 2005 was $60.9 million, compared to $60.6 million for the fiscal year ended September 30, 2004. As a percentage of net sales, SG&A improved to 9.2% in 2005 compared to 9.8% in 2004, as a result of increased sales. This improvement was partially offset by a 0.4% increase as a percentage of net sales in sales commission and incentive compensation costs.

Anvil SG&A for the fiscal year ended September 30, 2005 was $77.9 million, an increase of $2.9 million, or 3.9%, from $75.0 million in 2004. As a percentage of net sales, SG&A improved to 16.1% in 2005 compared to 17.4% in 2004. This improvement was a result of increased sales, a reduction in bad debt expense, and a favorable impact due to the strength of the Canadian dollar. These improvements were partially offset by a 0.8% increase as a percentage of net sales in sales commission and incentive compensation costs and a 0.2% increase as a percentage of net sales in supply chain management costs associated with greater sales of import products.

Corporate expenses for the fiscal year ended September 30, 2005 were $33.3 million compared to $49.5 million in 2004, a decrease of $16.2 million. The decrease was primarily due to a $13.8 million reduction in amortization expense for 2005 as compared to 2004 as a result of an intangible asset becoming fully amortized during the fourth quarter of 2004 and a $21.2 million reduction in corporate stock compensation charges for 2005 as compared to 2004 primarily related to charges for employee optionholders made in connection with the recapitalization during the third quarter of 2004. All options were cancelled at that time. These items were partially offset in 2005 by: legal and audit fees of $3.0 million related to an internal accounting investigation which resulted in the restatement of some

amounts in prior period financial statements prior to September 30, 2004, professional fees of $1.2 million related to exploring strategic alternatives, consulting fees of $3.1 million related to efforts to become compliant with public company reporting and Sarbanes-Oxley internal control requirements, $1.4 million related to compensation payments to current employees and directors to offset additional taxes owed by them as a result of revaluation of stock compensation paid to them in 2004, $3.5 million of professional fees related to efforts to sell Predecessor Mueller, increased board of director fees of $0.2 million, increased incentive compensation costs of $2.1 million, increased legal, audit, tax, internal audit and other consulting fees of $1.9 million associated with being an SEC registrant for all of 2005 as compared to the last quarter of 2004, and increased salary, benefit, recruiting and relocation costs of $0.9 million associated with additional accounting and legal staffing. Corporate expenses consist primarily of corporate staff, benefits, legal and professional fees and facility costs.

Facility Rationalization, Restructuring and Related Costs. Restructuring costs for the fiscal year ended September 30, 2005 were $1.7 million, related primarily to severance payments and to the termination of operating leases for the building and machinery at a Mueller segment plant in Colorado that ceased manufacturing and began outsourcing a product line in February 2005.

Facility rationalization costs for the fiscal year ended September 30, 2004 were $0.9 million, related primarily to future lease obligations at a closed Anvil facility in New Jersey and environmental issues at a closed Anvil plant in Georgia. On March 2004 Anvil entered into a consent order with the Georgia Department of Natural Resources regarding various alleged hazardous waste violations at the Statesboro, Georgia site formerly operated by Anvil. Anvil has also agreed to perform various investigatory and remedial actions at the site and its landfill.

Interest Expense, Net of Interest Income. Interest expense, net of interest income, for the fiscal year ended September 30, 2005 was $89.5 million, or a $26.0 million increase from $63.5 million for the fiscal year ended September 30, 2004. Interest expense, net of interest income, for the fiscal year ended September 30, 2005 includes $33.8 million of additional interest expense and amortization of deferred financing fees on $518.0 million of net additional debt resulting from recapitalization in April 2004. In the fiscal year ended September 30, 2004, interest expense included a $6.6 million write-off of term debt deferred financing fees related to the April 2004 recapitalization, and a $7.0 million early redemption penalty and a write-off of $0.4 million in deferred financing fees related to the early redemption of $50.0 million of senior subordinated debt in November 2003. Also, gains recorded in 2005 on interest rate swaps decreased $7.3 million compared to 2004 due to the expiration of swap agreements that were not renewed, and interest income increased $1.1 million compared to 2004 due to a higher average cash balance during 2005.

Income Tax Expense. Income tax expense for the fiscal year ended September 30, 2005 was $33.7 million as compared to $16.0 million in 2004. The effective tax rates for fiscal years 2005 and 2004 were 40.5% and 32.5%, respectively. The 2005 rate included the benefit recorded from U.S. export and manufacturing incentives. We expect a continuation of the U.S. export and manufacturing benefits received in 2005. The benefits include the extraterritorial income exclusion which is being phased out in 2005 and 2006, but is being replaced with the Internal Revenue Code Section 199 deduction for domestic production activities to be phased in from 2005 through 2009. We are eligible to claim both types of deductions and intend to do so to the extent allowable. Also, the 2004 rate included tax expense related to adjustments to permanent items that were not present in 2005. In 2005, net downward adjustments to tax accruals of approximately $0.3 million were recorded due to the expiration of statutes of limitation. Discrete 2004 events included the conclusion of the federal and certain state tax examinations and the expiration of certain state statutes of limitation which allowed adjustment of tax accruals downward by approximately $6.4 million. Partially offsetting these items in the third quarter of 2004 were $2.3 million of charges related to the deduction of foreign tax credits and the effects of other items, including changes in the effective rate on prior period deferred tax balances. Both years include non-deductible interest on high yield debt obligations.

The following table sets forth Predecessor Mueller's net sales, gross profit, total expenses and net income for the years ended September 30, 2004 and 2003 (dollars in millions):

Year ended September 30, 2004 versus the year ended September 30, 2003

		For the years ended September 30,
		2004					2003					2004 vs. 2003
					Percentage of net sales(1)					Percentage of net sales(1)		Increase/ (decrease)			Percentage increase/ (decrease)
		(dollars in millions)
Net sales
	Mueller.	$	618.2		58.9	%	$	536.1		58.1	%	$	82.1		15.3	%
	Anvil		431.0		41.1			386.8		41.9			44.2		11.4

	Consolidated	$	1,049.2		100.0		$	922.9		100.0		$	126.3		13.7

Gross profit
	Mueller	$	203.0		32.8		$	164.5		30.7		$	38.5		23.4
	Anvil		102.8		23.9			83.9		21.7			18.9		22.5
	Depreciation expense not allocated to segments		(7.1	)	(0.7	)		(7.3	)	(0.8	)		0.2		2.7

Consolidated		$	298.7		28.5		$	241.1		26.1		$	57.6		23.9

Selling, general and administrative
	Mueller	$	60.6		9.8		$	49.7		9.3		$	10.9		21.9
	Anvil		75.0		17.4			69.4		17.9			5.6		8.1
	Corporate		49.5		4.7			29.1		3.2			20.4		70.1

	Consolidated	$	185.1		17.6		$	148.2		16.1		$	36.9		24.9

Facility rationalization, restructuring and related costs
	Mueller	$	—		—		$	0.9		0.1		$	(0.9	)	(100.0	)
	Anvil		0.9		0.2			0.8		0.1			0.1		12.5

	Consolidated	$	0.9		0.2		$	1.7		0.2		$	(0.8	)	47.1

Operating income
	Mueller	$	142.4		23.0		$	113.9		21.2		$	28.5		25.0
	Anvil		26.9		6.2			13.7		3.5			13.2		96.4
	Corporate		(56.6	)	(5.4	)		(36.4	)	(3.9	)		(20.2	)	55.5

	Consolidated	$	112.7		10.7		$	91.2		9.9		$	21.5		23.6

Interest expense, net of interest income		$	(63.5	)	(6.1	)	$	(35.5	)	(3.8	)	$	(28.0	)	78.9
Income before income tax expense			49.2		4.7			55.7		6.0			(6.5	)	(11.7	)
Income tax expense			16.0		1.5			22.9		2.5			(6.9	)	(30.1	)

Net income		$	33.2		3.2	%	$	32.8		3.6	%	$	0.4		1.2	%

(1): Percentages are by Predecessor Mueller segment, if applicable.

Net Sales. Consolidated net sales for the fiscal year ended September 30, 2004 were $1,049.2 million, an increase of $126.3 million, or 13.7%, from $922.9 million in 2003.

Mueller segment net sales for the fiscal year ended September 30, 2004 were $618.2 million, an increase of $82.1 million, or 15.3% from $536.1 million in 2003. The increase in net sales was primarily driven by volume and pricing growth, particularly in iron fire hydrants, water valve and brass water products. Volume growth was driven by the continued strength in the residential construction market, favorable weather conditions in the spring of 2004 and improved general economic conditions. Mueller segment implemented price increases in February and May of 2004. Predecessor Mueller's acquisition of Milliken Valve Company in January 2003 (the "2003 Milliken Valve acquisition") contributed $3.6 million to the 2004 increase in net sales.

Anvil net sales for the fiscal year ended September 30, 2004 were $431.0 million, an increase of $44.2 million, or 11.4%, from $386.8 million in 2003, primarily due to higher pricing on threaded steel pipe couplings and pipe nipples. The 2004 acquisition of Star accounted for $17.0 million of the 2004 increase in sales.

Gross Profit. Consolidated gross profit for the fiscal year ended September 30, 2004 was $298.7 million, an increase of $57.6 million, or 23.9%, from $241.1 million in 2003. Gross margin increased to 28.5% in 2004 compared to 26.1% in 2003, which includes certain depreciation expense not allocated to segments.

Mueller segment gross profit for the fiscal year ended September 30, 2004 was $203.0 million, an increase of $38.5 million, or 23.4%, from $164.5 million in 2003. Gross margin increased to 32.8% of net sales in 2004 from 30.7% of net sales in 2003. The increase in gross profit was primarily driven by increased selling prices and volumes on iron fire hydrants, water valves and brass water products and a favorable product mix. Also, the 2003 Milliken Valve acquisition contributed an additional $1.2 million in 2004 and focused efforts to reduce spending and the strength of the Canadian dollar relative to the United States dollar further added to the increase in gross profits. These improvements were partially offset by increased raw material costs, representing an additional 1.2% of net sales in 2004 as compared to 2003.

Anvil gross profit for the fiscal year ended September 30, 2004 was $102.8 million, an increase of $18.9 million, or 22.5% from $83.9 million in 2003. Gross margin increased to 23.9% of net sales in 2004 compared to 21.7% of net sales in 2003. The 2004 acquisition of Star contributed $2.7 million of gross margin in 2004. The remaining increase was primarily driven by price increases implemented during fiscal year 2004 and the strength of the Canadian dollar relative to the United States dollar. This was partially offset by increased raw material costs, representing an additional 2.3% of net sales in 2004 as compared to 2003.

Selling, General & Administrative. Consolidated SG&A for the fiscal year ended September 30, 2004 was $185.1 million, an increase of $36.9 million, from $148.2 million in 2003. As a percentage of net sales, SG&A increased to 17.6% in 2004 compared to 16.1% in 2003.

Mueller segment SG&A for the fiscal year ended September 30, 2004 was $60.6 million, compared to $49.7 million for the fiscal year ended September 30, 2003. As a percentage of net sales, SG&A was 9.8% in 2004 compared to 9.3% in 2003. This increase in SG&A expense as a percentage of net sales was driven in part by the 2003 Milliken Valve acquisition, which incurred $0.7 million of expenses. 2004 SG&A expenses increased $1.9 million for amortization expense related to intangibles acquired in 2003 and 2004. SG&A expenses in 2004 increased due to costs incurred as a result of higher sales which lead to higher sales commission and other compensation costs, including incentive compensation. Other increases in expense were caused by the addition of sales personnel and a new local sales office, increased provisions for doubtful accounts, increased product redesign costs, and higher year-over-year group medical costs due to an increase in claims activity.

Anvil SG&A for the fiscal year ended September 30, 2004 was $75.0 million, an increase of $5.6 million, or 8.1%, from $69.4 million in 2003. As a percentage of net sales, SG&A decreased to

17.4% compared to 17.9% in 2003. The 2004 acquisition of Star added $4.0 million to 2004 expense. The remaining increase was driven by increased compensation expense and sales and warehousing costs associated with increased sales volume. These increases were partially offset by continued cost reductions related to Anvil's United States distribution network.

Corporate expenses for the fiscal year ended September 30, 2004 were $49.5 million compared to $29.1 million in 2003. Stock compensation charges for the fiscal year ended September 30, 2004 were $21.2 million, an increase of $20.5 million from 2003. This was due to a $20.9 million charge ($12.6 million cash and $8.3 million non-cash) for the vesting and cancellation of options held by employees and shares previously purchased with loans pursuant to the Direct Investment Program that were settled in connection with the April 2004 recapitalization. Other significant changes included a $1.6 million increase in incentive compensation in 2004, a $1.0 million increase in advisory fees paid to Donaldson, Lufkin & Jenrette in 2004, and $1.5 million of professional service fees and expenses related to the 2004 recapitalization, partially offset by a $2.4 million decrease as a result of fees that were incurred in 2003 related to potential acquisition and dispositions that were not completed and a $2.2 million reduction in amortization expense for 2004 as compared to 2003 as a result of an intangible asset becoming fully amortized during the fourth quarter of 2004.

Facility Rationalization, Restructuring and Related Costs. Facility rationalization costs decreased $0.9 million in 2004 compared to 2003, reflecting lower asset impairment charges. Anvil facility rationalization costs increased $0.1 million in 2004 compared to 2003, reflecting higher facility consolidation and cost reduction activity.

Interest Expense, Net of Interest Income. Interest expense, net of interest income, for the fiscal year ended September 30, 2004 was $63.5 million, compared to $35.5 million for 2003. This increase reflects early repayment costs, the write-off of deferred financing fees and additional debt resulting from the completion of a recapitalization of all outstanding debt. Specifically, in November 2003, $50.0 million of senior subordinated notes due 2009 were redeemed. As a result, interest expense, net of interest income, for the fiscal year ending September 30, 2004 increased relative to the prior year due to a $7.0 million prepayment premium and a $0.4 million write-off of deferred financing fees, partially offset by a $6.2 million reduction in interest expense as a result of such redemption. Further, in April 2004, Predecessor Mueller refinanced its term debt and issued $415.0 million of new notes and $110.0 million of 14.75% discount notes. This resulted in an additional write-off of term debt deferred financing fees of $6.6 million, $16.8 million of interest expense on the new notes, $6.8 million of accretion on the discount notes and $0.9 million of increased amortization on a larger balance of deferred financing fees. Interest expense also increased $0.8 million due to a decrease in interest rate swap gains. These increases were partly offset by a $6.0 million decrease in term debt interest expense due to lower interest rates.

Income Tax Expense. Income tax expense for the fiscal year ended September 30, 2004 was $16.0 million compared to $22.9 million in 2003. The effective tax rates, for fiscal 2004 and 2003 were 32.5% and 41.1%, respectively. The non-deductible portion of interest expense related to the senior discount notes issued in the third quarter served to increase the 2004 rate. However, discrete 2004 events including the conclusion of the federal tax examination, the conclusion of certain state tax examinations and expiration of certain state statutes of limitation allowed adjustments to tax accruals of approximately $6.4 million. The additional financing related to the April 2004 recapitalization was expected to inhibit its ability to realize deferred tax assets related to foreign tax credits. Accordingly, a $1.8 million adjustment was recorded to write-off these deferred tax assets.

Financial Condition

Mueller Water Products, Inc.

Cash and cash equivalents increased from zero at September 30, 2005 to $72.4 million at December 31, 2005, reflecting $74.9 million in cash flows provided by operations and $33.5 million in cash flows provided by financing activities, offset by $36.0 million of cash flows used in investing activities. At September 30, 2005, U.S. Pipe was a wholly-owned subsidiary of Walter Industries and all of its net cash activity was transferred into Walter Industries' concentrated cash management system on a daily basis.

Net receivables, consisting principally of trade receivables, were $267.0 million at December 31, 2005, an increase of $148.5 million from September 30, 2005. The Acquisition accounted for an increase of $161.9 million, partially offset by a $13.4 million decrease for the U.S. Pipe segment, primarily due to lower U.S. Pipe sales levels for the quarter ended December 31, 2005 compared to the quarter ended September 30, 2005.

Inventories were $429.1 million at December 31, 2005, an increase of $281.9 million from September 30, 2005. The Acquisition accounted for an increase of $373.2 million, partially offset by reducing acquired inventory during the period by $62.2 million and a $29.1 million decrease for the U.S. Pipe segment, primarily due to reductions in pipe, valve, and hydrant inventories and a $10.7 million inventory obsolescence write-down identified with the closure of the U.S. Pipe Chattanooga plant.

Current deferred income taxes, net, were $58.8 million at December 31, 2005, an increase of $47.7 million from September 30, 2005. The Acquisition accounted for $24.6 million of the increase. The remainder of the increase was primarily due to $15.8 million of accrued expenses not currently deductible.

Prepaid expenses, consisting principally of maintenance supplies and tooling parts and prepaid insurance premiums, were $32.1 million at December 31, 2005, an increase of $30.6 million from September 30, 2005. The Acquisition accounted for $31.1 million of the increase.

Property, plant and equipment was $344.8 million at December 31, 2005, an increase of $195.6 million from September 30, 2005, primarily due to the Acquisition ($212.9 million) and capital expenditures ($16.0 million), partially offset by fixed assets impairments resulting from the U.S. Pipe Chattanooga plant closure ($17.8 million) and depreciation expense ($17.1 million).

Deferred financing fees, net, were $32.0 million at December 31, 2005. There were no deferred financing fees at September 30, 2005. All fees are related to the 2005 Mueller Credit Agreement entered into in conjunction with the Acquisition and the existing senior subordinated notes and senior discount notes at Predecessor Mueller that were assumed as part of the Acquisition.

Due from Walter Industries affiliate was $20.0 million at December 31, 2005, representing a $20.0 million note receivable for cash invested in an affiliate of Walter Industries by the Company concurrent with the Acquisition. There was no such amount at September 30, 2005.

Identifiable intangibles, net, were $849.3 million at December 31, 2005. There were no such intangibles at September 30, 2005. Certain intangibles were identified during the allocation of the purchase of the Acquisition: (a) indefinite-lived intangible assets consisting of trade names and trademarks of $403.0 million; and (b) definite-lived intangible assets consisting of customer relationships of $396.6 million and technology of $56.3 million. Amortization expense resulting from definite-lived assets for the three months ended December 31, 2005 was $6.6 million.

Goodwill was $856.7 million at December 31, 2005, an increase of $798.3 million from September 30, 2005. This increase represents goodwill identified during the allocation of the purchase price of the Acquisition.

Accounts payable were $105.9 million at December 31, 2005, an increase of $53.4 million from September 30, 2005. The Acquisition accounted for $47.3 million of the increase.

Accrued expenses were $119.0 million at December 31, 2005, an increase of $84.3 million compared to September 30, 2005. The Acquisition accounted for $81.2 million of the increase. The remainder of the increase was primarily due to the addition of accrued restructuring of $3.8 million related to the U.S. Pipe Chattanooga plant closure.

Long-term debt, including the current portion, was $1,548.6 million at December 31, 2005. There was no debt payable to non-affiliates at September 30, 2005. All debt amounts are related to the 2005 Mueller Credit Agreement entered into in conjunction with the Acquisition and existing notes and capital leases at Predecessor Mueller that were assumed as part of the Acquisition.

Payable to parent, Walter Industries, was $2.6 million at December 31, 2005 compared to $443.6 million at September 30, 2005. In conjunction with the contribution of U.S. Pipe to Mueller Group at October 3, 2005, the intercompany balance was forgiven. The remaining payable represents certain costs incurred by Walter Industries which benefited the Company and are required to be settled in cash.

Accrued pension liability increased $43.6 million to $97.2 million at December 31, 2005. The Acquisition accounted for an increase of $41.4 million.

Non-current deferred income taxes, net, were $290.6 million at December 31, 2005, an increase of $290.6 million compared to September 30, 2005. The Acquisition accounted for $262.7 million of the increase. The remainder of the increase was primarily due to $27.9 million of accrued expenses not currently deductible.

United States Pipe and Foundry Company, LLC

Receivables, net, increased from $103.7 million at December 31, 2004 to $118.5 million at September 30, 2005. The increase was due to seasonally higher sales volume (21%) during the quarter ended September 30, 2005 compared to the quarter ended December 31, 2004, partially offset by improved cash collections which reduced days sales outstanding by 15%.

Inventories increased to $147.2 million at September 30, 2005 compared to $127.2 million at December 31, 2004 due to seasonal inventory build-up of finished goods, partially offset by a decrease in raw material costs.

Total deferred income tax assets increased to $20.6 million at September 30, 2005 compared to $8.9 million at December 31, 2004 due to increases in accrued expenses not yet deducted for income tax purposes.

Accrued expenses increased to $29.1 million at September 30, 2005 compared to $23.4 million at December 31, 2004 primarily due to increased warranty costs ($3.0 million) and the timing of payroll payments ($2.0 million).

Income taxes payable increased to $5.6 million at September 30, 2005 compared to $0.9 million at December 31, 2004 due to federal income taxes due to the parent company under the intercompany tax sharing agreement.

The intercompany payable to Walter Industries increased to $443.6 million at September 30, 2005 compared to $422.8 million at December 31, 2004 as a result of cash advanced by Walter Industries that exceeded cash provided by U.S. Pipe to Walter Industries.

Accrued pension liability increased $24.1 million to $72.9 million at September 30, 2005 primarily due to a decline in the discount rate used to measure the obligation.

Predecessor Mueller

Cash and cash equivalents increased from $60.5 million at September 30, 2004 to $112.8 million at September 30, 2005, reflecting $73.8 million in cash flows provided by operations, $1.5 million in cash flows provided by financing activities, and a $2.0 million effect of foreign currency exchange rate changes on cash (primarily due to increased strength of the Canadian dollar versus the U.S. dollar), offset by $25.0 million of cash flows used in investing activities.

Net receivables, consisting principally of trade receivables, were $177.4 million at September 30, 2005, an increase of $15.4 million from September 30, 2004. The increase was attributable to higher sales at both the Mueller and Anvil segments.

Inventories were $303.0 million at September 30, 2005, an increase of $42.8 million from September 30, 2004. Mueller segment inventories increased $25.5 million during 2005. Significant contributing factors to the increase include higher raw material costs of approximately $6.5 million, as well as a planned $5.0 million current year increase over unusually low prior year levels to better service current demand. Other contributing factors include $1.1 million of increased on-hand quantities of raw material due to larger volume purchases to achieve lower prices, $2.7 million of inventory costs associated with a large, highly-engineered project scheduled to ship in the first quarter of 2006, $2.2 million for a large order of butterfly valves scheduled to ship in the first quarter of 2006, and $1.5 million due to higher foreign currency rates used to translate Canadian-dollar valued inventory balances at September 30, 2005 compared to September 30, 2004. Anvil inventories increased $17.3 million in 2005. Of this increase, $12.8 million is related to ongoing efforts to make available a full line of foreign-sourced products to Anvil's North American customers. Another $3.0 million is related to the start up of European export efforts.

Property, plant and equipment was $168.0 million at September 30, 2005, a decrease of $18.8 million from September 30, 2004, primarily due to depreciation expense ($43.5 million), partially offset by additions ($27.2 million).

Deferred financing fees, net, were $32.2 million at September 30, 2005, a decrease of $5.2 million from September 30, 2004. This was due to normal amortization of deferred financing fees associated with various long-term debt instruments.

Non-current deferred income tax assets were $17.5 million at September 30, 2005, an increase of $9.2 million from September 30, 2004, primarily related to changes in pensions and fixed assets.

Accrued expenses were $103.3 million at September 30, 2005, an increase of $17.4 million compared to September 30, 2004. The increase was primarily due to the accruals for employee-related incentive costs and federal and state income taxes.

Long-term debt was $1,051.9 million at September 30, 2005, an increase of $15.7 million compared to September 30, 2004. This increase was primarily due to non-cash accretion on the 14³/4% senior discount notes.

Accrued pension liability increased $8.5 million to $37.7 million at September 30, 2005. This is primarily the net result of the use of a lower discount rate and an updated mortality assumption as of

September 30, 2005, partially offset by better than assumed investment performance during the year ending September 30, 2005.

Other long-term liabilities were $7.8 million at September 30, 2004, comprised of a $4.7 million liability related to interest rate swaps, and a $3.1 million tax liability. The interest rate swap position was a $0.5 million asset, reported in other long-term assets at September 30, 2005, and the tax liability decreased to $1.5 million as of September 30, 2005.

Liquidity and Capital Resources

We are a holding company and have no direct material operations. Our only material asset is our ownership of our wholly-owned subsidiary and operating entity, Mueller Group, and our only material liabilities are the senior discount notes described below and our guarantee of the 2005 Mueller Credit Agreement. See Note 6 to Consolidated Financial Statements of Predecessor Mueller. Our principal source of liquidity has been and is expected to be dividends from Mueller Group and financing activities, and our principal use of cash will be the payment of dividends, if any, on our Class A Common Stock and debt service with respect to our senior discount notes beginning in 2009.

The 2005 Mueller Credit Agreement and senior subordinated notes described below are obligations of Mueller Group and impose limitations on its ability to pay dividends to us. For example, the senior subordinated notes limit the amount of "restricted payments," including dividends, that Mueller Group can make. Generally, under the terms of the senior subordinated notes, Mueller Group can pay dividends only if its fixed charge coverage ratio (as defined therein) is 2.5 to 1 or better and only from an amount equal to 50% of its cumulative net income (as defined therein) since January 1, 2004. However, regardless of these restrictions, Mueller Group can pay dividends under these notes of up to $2.0 million per year for holding company expenses and to fund payments in respect of taxes made pursuant to tax sharing agreements. Mueller Group's ability to generate net income will depend upon various factors that may be beyond our control. Accordingly, Mueller Group may not generate sufficient cash flow or be permitted by the terms of its debt to pay dividends or distributions to us in amounts sufficient to allow us to pay cash interest on our outstanding indebtedness or to satisfy our other cash needs. We would then be required to secure alternate financing, which may not be available on acceptable terms, or at all.

Mueller Group's principal sources of liquidity have been and are expected to be cash flow from operations and borrowings under the 2005 Mueller Credit Agreement. Its principal uses of cash will be debt service requirements as described below, capital expenditures, working capital requirements, dividends to us to finance our cash needs and possible acquisitions.

Debt Service

As of December 31, 2005, we had: (a) total consolidated indebtedness of approximately $1,548.6 million; and (b) approximately $113.9 million of borrowings available under the revolver portion of the 2005 Mueller Credit Agreement, subject to customary conditions. As of December 31, 2005, we had $31.1 million in letters of credit outstanding under the 2005 Mueller Credit Agreement, which reduces availability for borrowings thereunder. The significant debt service obligations under the credit facility and indentures could have material consequences to our security holders. Our key financial covenants are dependent on attaining certain levels of EBITDA, as defined in the respective debt arrangements. The most restrictive covenant in effect at December 31, 2005 related to a leverage ratio, as defined in the 2005 Mueller Credit Agreement, which required approximately $237.0 million of EBITDA over the trailing twelve months, based on net debt outstanding at December 31, 2005. We were in compliance with this covenant at December 31, 2005.

2005 Mueller Credit Agreement. On October 3, 2005, Mueller Group, entered into a credit agreement (the "2005 Mueller Credit Agreement"). The senior credit facilities provided under the 2005 Mueller Credit Agreement consist of (1) a $145.0 million senior secured revolving credit facility terminating on October 4, 2010 (the "2005 Mueller Revolving Credit Facility") and (2) a $1,050.0 million senior secured term loan (the "2005 Mueller Term Loan") maturing on November 1, 2011 (or October 3, 2012, if the 10% senior subordinated notes due 2012 are paid in full prior to such date). Loans under the senior credit facilities currently bear interest, at our option, at: (x) initially, the reserve adjusted LIBOR rate plus 250 basis points or the alternate base rate plus 150 basis points for borrowings under the revolving credit facility; and (y) the reserve adjusted LIBOR rate plus 225 basis points or the alternate base rate plus 125 basis points for term loans. The 2005 Mueller Credit Agreement is a secured obligation of Mueller Group and substantially all of the wholly-owned domestic subsidiaries of Mueller Group, including the subsidiaries included in each of our reporting segments: Mueller, U.S. Pipe and Anvil. The 2005 Mueller Term Loan requires quarterly principal payments of $2.6 million through October 3, 2012, at which point in time the remaining principal outstanding is due. The commitment fee on the unused portion of the 2005 Mueller Revolving Credit Facility is 0.50% and the interest rate is a floating rate 250 basis points over LIBOR. The 2005 Mueller Term Loan carries a floating interest rate of 225 basis points over LIBOR.

Proceeds of the 2005 Mueller Credit Agreement were approximately $1,053.4 million, net of approximately $21.6 million of underwriting fees and expenses which will be amortized over the life of the loans. The proceeds were used to retire the 2004 Mueller Credit Facility of $512.8 million, the second priority senior secured floating rate notes of $100.0 million, and finance the acquisition of Predecessor Mueller by Walter Industries.

The 2005 Mueller Credit Agreement contains customary negative covenants and restrictions on our ability to engage in specified activities, including, but not limited to:

•: limitations on other indebtedness, liens, investments and guarantees;
•: restrictions on dividends and redemptions of our capital stock and prepayments and redemptions of debt;
•: limitations on capital expenditures; and
•: restrictions on mergers and acquisitions, sales of assets, sale and leaseback transactions and transactions with affiliates.

The 2005 Mueller Credit Agreement also contains financial covenants requiring Mueller Group to maintain:

•: an interest expense coverage ratio of at least 2.25 to 1.00 (increasing to 2.50 to 1.00 beginning with the four quarter period ending December 31, 2007);
•: a consolidated leverage ratio of not more than 5.50 to 1.00 (decreasing in annual increments to 4.00 to 1.00 by the four quarter period ending December 31, 2008); and
•: a consolidated senior secured leverage ratio of not more than 4.25 to 1.00 (decreasing in annual increments to 3.00 to 1.00 by the four quarter period ending December 31, 2008).

Borrowings under the revolving credit facility are subject to significant conditions, including compliance with the financial ratios included in the senior credit facilities and the absence of any material adverse change.

The 2005 Mueller Credit Agreement also contains certain customary events of default, including nonpayment of principal or interest, covenant defaults, inaccuracy of representations or warranties, bankruptcy and insolvency events, judgment defaults, cross defaults and a change of control, and

certain customary affirmative covenants. So long as no default has occurred, Mueller Group is permitted to make cash dividends to us of up to $7.5 million in any fiscal year, or $15.0 million in aggregate over the life of the 2005 Mueller Credit Agreement and to distribute funds to make regularly scheduled payments when due of interest and principal on our senior discount notes described below. If an event of default under the agreement shall occur and be continuing, the commitments under the related credit agreement may be terminated and the principal amount, together with all accrued unpaid interest and other amounts owed thereunder may be declared immediately due and payable.

On January 26, 2006, Mueller Group amended the 2005 Mueller Credit Agreement. The amendment removes the requirement that Mueller Group and its subsidiaries change their fiscal year end to December 31 and permits Mueller Group to pay up to $8.5 million in annual cash dividends to the Company (with any unused amount carrying forward to subsequent years) for further distribution to shareholders of the Company.

We expect to repay, on an optional basis, a portion of the term loan provided more than $180.8 million is received in the offering. There is no prepayment premium or penalty associated with this term loan.

Senior Discount Notes. On April 29, 2004, Predecessor Mueller issued $223.0 million principal amount at maturity of 14³/4% senior discount notes that will mature on April 15, 2014 together with warrants to purchase 24,487,383 shares of their Predecessor Mueller's Class A common stock. No cash interest will accrue on the notes prior to April 15, 2009. The notes had an initial accreted value of $493.596 per $1,000 principal amount at maturity of notes on April 29, 2004. The accreted value of each note will increase from the date of issuance until April 15, 2009, at a rate of 14.75% per annum compounded semi-annually such that the accreted value will equal the principal amount at maturity on April 15, 2009. Thereafter, cash interest on the notes will accrue and be payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2009 at a rate of 14.75% per annum. The notes contain customary covenants and events of default, including covenants that limit our ability to incur debt, pay dividends and make investments. Generally, the notes only permit us to pay dividends if there is no default or event of default and our fixed charge coverage ratio (as defined in the indenture relating to the notes) is at least 2.1 to 1, and the maximum amount we may pay cannot exceed 50% of Predecessor Mueller's cumulative net income (as defined in the indenture relating to the notes) since January 1, 2004 plus 50% of Mueller Water net income since October 3, 2005, subject to specified exceptions. Mueller Group is permitted to make dividends or loans to Mueller Water of up to $2.0 million in any fiscal year for costs and expenses incurred by its parent in its capacity as a holding company for services rendered on behalf of Mueller Water. In connection with the acquisition of Predecessor Mueller by Walter Industries on October 3, 2005, all warrants were converted into a right to receive cash and are no longer outstanding.

On October 4, 2005, we notified the holders of the senior discount notes that a change in control had occurred as a result of the Walter Industries acquisition of Predecessor Mueller and that, as a result, the holders had a right to cause us to repurchase their senior discount notes on or before 5:00 p.m., New York City time, on November 4, 2005 at a price of 101% of the accreted value of the notes at the time of change in control. The change of control offer expired at 5:00 p.m., New York City time, on November 6, 2005, with no senior discount notes being validly tendered and not withdrawn and, accordingly, no senior discount notes were purchased pursuant to the change of control offer.

We expect to use a portion of the net proceeds of this offering to redeem a portion of the senior discount notes and to pay the contractual premium associated with such redemption as described under "Use of Proceeds."

Senior Subordinated Notes. On April 23, 2004, Mueller Group issued $315.0 million principal amount of 10% senior subordinated notes that will mature on May 1, 2012 and that are guaranteed by each of Mueller Group's existing domestic restricted subsidiaries. Interest on the senior subordinated

notes is payable semi-annually in cash. The senior subordinated notes contain customary covenants and events of default, including covenants that limit Mueller Group's ability to incur debt, pay dividends and make investments. Generally, the notes only permit Mueller Group to pay dividends if there is no default or event of default and its fixed charge coverage ratio (as defined) is at least 2.5 to 1, and the maximum amount that may be paid cannot exceed 50% of cumulative net income (as defined) of Mueller Group since January 1, 2004, (which after October 3, 2005, includes U.S. Pipe) subject to specified exceptions. Mueller Group is permitted to make dividends or loans to Mueller Water of up to $2.0 million in any fiscal year for costs and expenses incurred by Mueller Water in its capacity as a holding company for services rendered on behalf of Mueller Group.

On October 4, 2005, Mueller Group notified the holders of the senior subordinated notes that a change in control had occurred as a result of the Walter Industries acquisition and that, as a result, the holders had a right to cause Mueller Group to repurchase their senior subordinated notes on or before 5:00 p.m., New York City time, on November 4, 2005 at a price of 101% of the principal face amount of such notes. The change of control offer expired at 5:00 p.m. New York City time, on November 6, 2005, with no senior subordinated notes being validly tendered and not withdrawn and, accordingly, no senior subordinated notes were purchased pursuant to the change of control offer.

We expect to use a portion of the net proceeds of this offering to redeem a portion of the senior subordinated notes and to pay accrued interest and the contractual premium associated with such redemptions as described under "Use of Proceeds."

Capital Expenditures

We anticipate that we will invest approximately $55.0 million to $65.0 million on sustaining capital needs in 2006. We expect our total capital expenditures to be higher due to incremental requirements to implement our synergy and rationalization plan. The 2005 Mueller Credit Agreement restricts capital expenditures. Based on current estimates, management believes that the amount of capital expenditures permitted to be made under the senior credit facilities will be adequate to grow our business according to our business strategy and to maintain the properties and business of our continuing operations.

Working Capital

Working capital of U.S. Pipe totaled $188.7 million at September 30, 2005. Working capital of Mueller Water at December 31, 2005 totaled $623.0 million. Management believes that we will continue to require working capital consistent with past experience.

Sources of Funds

We anticipate that our operating cash flow, together with borrowings under the 2005 Mueller Credit Agreement, will be sufficient to meet our anticipated future operating expenses, capital expenditures 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 indebtedness 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. See "Risk Factors."

From time to time we may explore additional financing methods and other means to lower our cost of capital, which could include stock issuance or debt financing and the application of the proceeds therefrom to the repayment of bank debt or other indebtedness. In addition, in connection with any future acquisitions, we may require additional funding which may be provided in the form of additional debt or equity financing or a combination thereof. There can be no assurance that any additional financing will be available to us on acceptable terms.

Statement of Cash Flows

Mueller Water Products, Inc.—Three months ended December 31, 2005 versus the three months ended December 31, 2004

Cash flows from operating activities. Net cash provided by operations was $74.9 million for the three months ended December 31, 2005, compared to net cash provided of $21.5 million for the three months ended December 31, 2004. The difference was due primarily to the Acquisition.

Cash flows used in investing activities. In the three months ended December 31, 2005 we had net cash used in investing activities of $36.0 million compared to net cash used in the three months ended December 31, 2004 of $20.4 million.

Cash flows from financing activities. Net cash provided by financing activities was $33.5 million for the three months ended December 31, 2005, compared to net cash used in the three months ended December 31, 2004 of $1.2 million. This was primarily due to the Acquisition, a transaction which included a $76.3 million cash due to the Walter Industries contribution of Predecessor Mueller.

U.S. Pipe—Nine-month period ended September 30, 2005 versus the year ended December 31, 2004

Cash flows from operating activities. Net cash used for operating activities was $5.1 million for the nine months ended September 30, 2005, compared to net cash provided by operating activities of $5.8 million for the year ended December 31, 2004. The decrease in cash flows from 2004 was primarily due to the change in year end to September during 2005. A significant increase in inventory as of September 30, 2005 compared to December 31, 2004 was primarily due to the change in year end from December 31 to September 30. A higher level of inventory ($20.0 million) was due to the seasonality of the business, which requires higher levels of finished goods inventory on-hand during September than compared to levels required in December. Additionally, depreciation expense for 2005 was $7.1 million lower than 2004 due to the three fewer months in the 2005 year.

Partially offsetting these decreases in cash flows were an increase in accrued expenses of $5.7 million in 2005 caused by the timing of payments of payroll and warranty claims and a $4.7 million increase in income taxes payable primarily due to an increase in pre-tax income.

In the prior year, cash flows benefited from an $18.3 million increase in accounts payable compared to 2003, primarily due to the timing of payments.

Cash flows used in investing activities. Net cash used in investing activities was $16.5 million in the nine months ended September 30, 2005 compared to $20.4 million in the year ended December 31, 2004. Fixed asset expenditures for the 2005 period were $3.9 million less than the 2004 period primarily due to the change in year during 2005, resulting in nine months of activity in 2005 compared to twelve months of activity in 2004.

Cash flows from financing activities. Cash flows from financing activities were $21.5 million in the nine months ended September 30, 2005 compared to $14.3 million in the year ended December 31, 2004 primarily due to a period over period increase in amounts advanced by Walter Industries to U.S. Pipe.

Predecessor Mueller—Year ended September 30, 2005 versus the year ended September 30, 2004

Cash flows from operating activities. Net cash provided by operating activities was $73.8 million for 2005, compared to net cash provided of $89.0 million for 2004. Significant changes in working capital balances in 2005 included a $38.8 million increase in inventories. Mueller segment inventories increased $25.5 million during 2005. Significant contributing factors to the increase include higher raw material costs of approximately $6.5 million, as well as a planned $5.0 million current year increase over

unusually low prior year levels to better service current demand. Other contributing factors include $1.1 million of increased on-hand quantities of raw material due to larger volume purchases to achieve lower prices, $2.7 million of inventory costs associated with a large, highly-engineered project scheduled to ship in the first quarter of 2006, $2.2 million for a large order of butterfly valves scheduled to ship in the first quarter of 2006, and $1.5 million due to higher foreign currency rates used to translate Canadian-dollar valued inventory balances at September 30, 2005 compared to September 30, 2004. Anvil segment inventories increased $17.3 million in 2005. Of this increase, $12.8 million is related to ongoing efforts to make available a full line of foreign-sourced products to our North American customers. Another $3.0 million is related to the start up of European export efforts.

Net cash provided by operations was $89.0 million for 2004, an increase of $15.2 million compared to 2003. The improvement was primarily the result of increased earnings before depreciation, amortization and non-cash charges and a decrease in accrued royalty. This was partially offset by increases in accounts receivable due to higher sales in 2004 and increased inventory to meet higher sales demand.

Cash flows used in investing activities. Net cash used in investing activities declined $17.3 million to $25.0 million for 2005, from $42.3 million for 2004. This decline was principally due to decreased acquisition activity (none in 2005 compared to $19.8 million in 2004). This was partly offset by a $4.7 million increase in capital spending and $2.2 million in proceeds from the sale of property, plant and equipment.

In 2004, net cash used in investing activities of $42.3 million compared to net cash used in 2003 of $19.6 million. This was primarily due to the decrease in restricted cash of $11.6 million in 2003 as the final royalty payment was made to Tyco. Also, cash paid for acquired companies increased from $11.2 million in 2003 to $19.8 million in 2004, and capital expenditures were $2.5 million higher in 2004.

Cash flows from financing activities. In 2005, $1.5 million of net cash provided by financing activities primarily represented a $4.8 million increase in book overdrafts, partially offset by $3.3 million of payments of the term loan under the 2004 Mueller Credit Facility.

Cash flows used in financing activities increased from $8.2 million in 2003 to $60.3 million in 2004. Excluding the effects of the April 2004 recapitalization, this was primarily due to early payment of $50.0 million of subordinated notes due 2009 and $30.0 million of early payments on the 2004 Mueller Credit Facility term debt in August 2004. In 2003, $8.2 million was used in financing activities, primarily payments on the term loan under the prior credit facility.

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, and we have not entered into any derivative contracts (other than those described in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Qualitative and Quantitative Disclosure About Market Risk—Interest Rate Risk" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Qualitative and Quantitative Disclosure About Market Risk—Currency Risk") or synthetic leases. We are, therefore, not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships. We utilize letters of credit and surety bonds in the ordinary course of business to ensure our performance of contractual obligations. At December 31, 2005, we had $31.1 million of letters of credit and $23.3 million of surety bonds outstanding.

Contractual Obligations

Our contractual obligations as of December 31, 2005:

Payments Due by Period

Contractual Obligations		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years		Total
		(dollars in millions)
Long-term debt
	Principal on long-term debt	$	10.5	$	21.0	$	21.0	$	1,419.9	$	1,472.4
	Interest on long-term debt(1)		103.4		204.6		257.8		382.6		948.4
Capital lease obligations			1.0		1.2		0.1		—		2.3
Operating leases			9.0		9.5		3.2		3.1		24.8
Unconditional purchase obligations(2)			21.3		0.7		—		—		22.0
Other long-term obligations(3)			—		—		—		—		—

	Total contractual cash obligations	$	145.2	$	237.0	$	282.1	$	1,805.6	$	2,469.9

(1): Interest on the senior credit facility is calculated using LIBOR of 4.54%, the rate in effect on December 31, 2005. Each increase or decrease in LIBOR of 0.125% would result in an increase or decrease in annual interest on the 2005 Mueller Credit Agreement of $1.3 million. Because the interest rate under the 2005 Mueller Credit Agreement will be variable, actual payments may differ. Interest does not include payments that could be required under our interest-rate swap agreements, which payments will depend upon movements in interest rates and could vary significantly. The payments due on the existing interest rate swaps are estimated to be approximately $4.9 million, net of LIBOR interest calculated at 4.54% received from counterparties.
(2): Includes contractual obligations for purchases of raw materials and capital expenditures.
(3): Excludes the deferred payment portion of the purchase price for Star, purchased by Predecessor Mueller on January 15, 2004. The Star purchase price is subject to adjustment to reflect, among other things, a deferred payment to be made by us to the extent that the gross profit of the business exceeds the target gross profit from February 1, 2004 to January 31, 2007. Although the maximum amount payable is $23.0 million, we estimate that the total deferred payment will be approximately $3.0 to $6.0 million. This calculation of the potential Star purchase price adjustment is based on management's best estimate; however, the actual adjustment may be materially different.

Effect of Inflation; Seasonality

We do not believe that inflation (except for the effect of inflation on the costs of scrap steel, brass ingot and steel pipe) has had a material impact on our financial position or results of operations.

Our business is dependent upon the construction industry, which is very seasonal due to the impact of winter or wet weather conditions. Our net sales and net income have historically been lowest, and our working capital needs have been highest, in the three month periods ending December 31 and March 31, when the northern United States and all of Canada generally face weather that restricts significant construction activity and we build working capital in anticipation of the peak construction season, during which time our working capital tends to be reduced.

Previously Issued Consolidated Financial Statements

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 that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and that such information is accumulated and communicated to our management, including its principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

As of December 31, 2005, the Company's management evaluated the effectiveness of the design and operation of disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act. This evaluation was done under the supervision and with the participation of management, including Gregory E. Hyland, President and Chief Executive Officer, and Jeffrey W. Sprick, Chief Financial Officer.

Based on this evaluation and because of the material weakness described below, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2005. Notwithstanding this material weakness, management concluded that the financial statements included in this prospectus for the period ended December 31, 2005 fairly present in all material respects their financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Material Weaknesses in Internal Control over Financial Reporting

As of September 30, 2005, the Company did not maintain effective controls over the preparation, review and presentation and disclosure of its consolidated financial statements due to a lack of personnel with experience in financial reporting and control procedures necessary for SEC registrants. Specifically, the Company's controls failed to prevent or detect the incorrect presentation of the following in the Company's consolidated financial statements: (i) cash flows from the effect of exchange rate changes on cash balances; (ii) cash flows from the loss on disposal of property, plant and equipment; (iii) cash flows and balance sheet presentation of book overdrafts; (iv) the presentation of current and non-current deferred income tax assets in Predecessor Mueller's consolidated balance sheet; and (v) classification of certain depreciation expense as selling, general and administrative expense instead of cost of sales in the Predecessor Mueller consolidated statement of operations. Further, the Company's controls failed to prevent or detect the incorrect presentation of shipping and handling costs in the Company's unaudited consolidated statement of operations for the three months ended December 31, 2004 as presented in the Form 10-Q for the three months ended December 31, 2005. The Company's control deficiency resulted in the restatement of Predecessor Mueller's annual consolidated financial statements for fiscal 2004 and 2003 and interim consolidated financial statements for the first three quarters of fiscal 2005, all interim periods of fiscal 2004, audit adjustments to the 2005 annual consolidated financial statements and the restatement of the Company's consolidated statement of operations for the three months ended December 31, 2004. Additionally, this control deficiency could result in a misstatement of the presentation and disclosure of the Company's consolidated financial statements that would result in a material misstatement in the annual or interim financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness.

prevent or detect, on a timely basis, unauthorized journal entries; (iii) a lack of sufficient controls over information technology data conversion and program changes; (iv) a lack of sufficient controls over the development and communication of income tax provisions; (v) a lack of effective controls surrounding "whistleblower" hotline complaints and internal certifications to ensure that issues were communicated on a more timely basis by management to the audit committee and the independent registered public accounting firm; (vi) a lack of effective controls over revenue recognition associated with full truckload shipments not immediately dispatched by freight carriers; and (vii) a lack of formal controls and procedures regarding assessment of financial exposures and transactions, including consideration of accounting implications under GAAP. These control deficiencies resulted in audit adjustments to the consolidated financial statements for the year ended September 30, 2004. Additionally, these control deficiencies, in the aggregate, could result in a misstatement to accounts and disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. While item (i) above remains unremediated and has been added as a component of the material weakness existing at December 31, 2005 described above, management has concluded that based on the remediation actions described below, items (ii) through (vii) of this material weakness did not exist at December 31, 2005.

Remediation of Material Weakness

In order to remediate the material weakness first reported as of September 30, 2004, Predecessor Mueller: (i) reassigned its Chief Financial Officer, appointed an Interim Chief Financial Officer and hired additional accounting and finance staff; (ii) introduced increased training for their existing financial and accounting and other staff; (iii) retained third-party consultants with significant SEC financial reporting experience to provide assistance in complying with SEC reporting requirements; (iv) formed a disclosure committee to supervise the preparation of their Exchange Act Reports and other public communications; (v) improved their controls over, and began developing written policies and procedures that cover all significant accounting processes, including journal entries, the development and communication of income tax provisions, information data conversion issues and program changes, revenue recognition and assessing financial exposures; (vi) improved and centralized controls over information technology; and (vii) implemented global compliance initiatives under the direction of its Chief Compliance Officer including controls surrounding "whistleblower" hotline complaints and internal certifications. The Company continued these improvement efforts during the quarter ended December 31, 2005 and has concluded that it has remediated items (ii) through (vii) of this material weakness. However, as disclosed above, item (i) of this material weakness continues to exist as of December 31, 2005 and has been added as a component of the continuing material weakness at December 31, 2005 described above.

During the quarter ended December 31, 2005, the Company took steps to remediate the material weakness that continued as of December 31, 2005. These steps included a thorough review, on a quarterly basis, of foreign currency translation cash flow statement effects, book overdrafts and transactions related to property, plant and equipment and an additional review, on a quarterly basis, of the classification requirements of each component line item and the individual elements that comprise each line item of the statement of cash flows, in accordance with Statement of Financial Accounting Standards, No. 95, "Statement of Cash Flows." Additionally, the classification of deferred income tax items in the balance sheet and cash flow statement, as well as depreciation in the statement of operations, will be evaluated quarterly, as will the proper classification of shipping and handling costs within our consolidated statement of operations.

In addition, during the quarter ended December 31, 2005, the Company made the following changes in internal control over financial reporting:

•: hired a full time Chief Financial Officer, Jeffery W. Sprick, and a Corporate Controller with SEC financial reporting experience;
•: hired additional finance and accounting personnel for our Pratt and Chattanooga facilities;
•: designated the Walter Industries audit committee, which is fully independent under New York Stock Exchange listing rules and the rules of the SEC, as our audit committee; and
•: began to implement an internal quarterly review plan to review higher risk areas in financial reporting, such as revenue recognition, inventory valuation and cash flow reporting.

The Company continues to upgrade the knowledge of its finance staff by implementing on-going United States generally accepted accounting principles training programs, consisting of providing appropriate technical resources to our finance team and training on the use of such resources, conducting a series of training sessions for plant controllers, periodic distribution of changes in accounting and reporting standards, and issuing and updating our accounting policies. Additionally, the Company terminated the former Chief Compliance Officer of Predecessor Mueller and reassigned those duties to the Director of Internal Audit. While significant improvements have been implemented, management believes that additional remediation is needed and will require changes in personnel, processes and procedures to ensure timely and accurate financial reporting on a sustainable basis.

The Company believes the additional control procedures as designed, when implemented, will fully remediate the above material weakness.

Changes in Internal Control Over Financial Reporting

Except as described above, there were no changes internal control over financial reporting during the quarter ended December 31, 2005, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

BUSINESS

Overview

		Mueller		U.S. Pipe*		Anvil
					(dollars in millions)
Pro Forma Net Sales:
	For the twelve months ended September 30, 2005	$664		$598		$485
	For the three months ended December 31, 2005	$177		$171		$133
Pro Forma Operating Income (Loss)(a):
	For the twelve months ended September 30, 2005	$141		$21		$42
	For the three months ended December 31, 2005	$42		$(28)(b)		$11
Selected Product Lines		•	Fire Hydrants (#1)	•	Ductile Iron Pressure	•	Pipe Fittings and
(Market Position in		•	Gate Valves (#2)		Pipe (#1)		Couplings (#1)
the U.S. and Canada)(c)		•	Butterfly and Ball Valves (#1)			•	Grooved Products (#2)
		•	Plug Valves (#2)			•	Pipe Hangers (#2)
		•	Brass Water Products (#2)
Selected Brand Names		•	Mueller®	•	U.S. Pipe®	•	Anvil®

	Mueller		U.S. Pipe*		Anvil
	•	Pratt®	•	TYTON®	•	Beck™
	•	James Jones™	•	FIELD LOK®	•	Gruvlok®
			•	MJ FIELD LOK®
Primary End Markets	•	Water and Wastewater	•	Water and Wastewater	•	Fire Protection
		Infrastructure		Infrastructure	•	Heating, Ventilation
						and Air Conditioning
						("HVAC")

*: As restated
(a): Operating income excludes $30.0 million and $6.0 million of corporate expenses for the twelve months ended September 30, 2005 and the three months ended December 31, 2005, respectively, that are not allocated to the individual segments.
(b): U.S. Pipe's loss of $28.0 million for the three months ended, December 31, 2005 included $40.0 million of facility rationalization and restructuring charges, inventory write-offs and other expenses associated with the shutdown of U.S. Pipe's Chattanooga, Tennessee plant.
(c): Market position information is based on management's estimates of the overall market size and of the market share of our principal competitors for the relevant product lines. Where available, the management estimates were based on data provided by third parties, including trade associations, distributors and customers. In other instances, the estimates were based upon internal analysis prepared by our employees and management based on their expertise and knowledge of the industry.

Our segments are named after our leading brands in each segment:

•: Mueller. Sales of our Mueller segment products are driven principally by spending on water and wastewater infrastructure upgrade, repair and replacement and new water and wastewater infrastructure. Mueller segment sales of hydrants and iron gate valves are estimated to be approximately 50% for new infrastructure, with the remainder for upgrade, repair and replacement. A significant portion of Mueller's sales are made through its broad distributor network. For most of our Mueller segment products, which are sold through independent distributors, end-users (principally municipalities) choose the brand or establish product specifications. We believe our reputation for quality, extensive distributor relationships, installed base and coordinated marketing approach have helped our Mueller segment products to be "specified" as an approved product for use in most major metropolitan areas throughout the United States. This specification and our relationships with end-users elevate the importance of our water and wastewater infrastructure products to our distributors.
•: U.S. Pipe. U.S. Pipe products are sold primarily to water works distributors, contractors, municipalities, private utilities and other governmental agencies. A substantial percentage of ductile iron pressure pipe orders result from contracts that are bid by contractors or directly issued by municipalities or private utilities. To support our customers' inventory and delivery requirements, U.S. Pipe utilizes numerous storage depots throughout the country.
•: Anvil. Anvil products are sold to a wide variety of end-users, which are primarily commercial construction contractors. These products are typically sold to our distributors through Anvil's four regional distribution centers located in Illinois, Nevada, Pennsylvania and Texas and through Anvil's Canadian distribution and sales division. A significant portion of Anvil products are used in the fire protection industry and in HVAC applications.

We believe that our current network of independent flow control distributors is the largest such distribution network in the United States and Canada. We also have approximately 500 inside and outside sales and sale support personnel who work directly with end-users, including municipalities. Our products are sold to a wide variety of end-users, including municipalities, publicly and privately-owned water and wastewater utilities, gas utilities and construction contractors. We believe that our sales are substantially driven by: (1) spending on water and wastewater infrastructure upgrade, repair and replacement due to aging and outdated water distribution systems in North America; (2) new water and

wastewater infrastructure, driven primarily by new residential construction; and (3) non-residential construction.

Industry Overview

The North American water infrastructure and flow control industry consists of the manufacturers of valves, pipe, fittings, fixtures, pumps and seals. Growth in the sectors we serve is driven by the need to upgrade, repair and replace existing water and wastewater infrastructure, new residential construction activity and non-residential construction activity. Specifically, federal and state environmental regulations, such as the Clean Water Act and the Safe Drinking Water Act, are expected to drive growth in our industry over the next several years. We anticipate that sales related to water infrastructure upgrade, repairs and replacement may grow faster than the overall market for water infrastructure and flow control products as a result of the continued aging of municipal water systems in the United States and Canada, and the expanding base of water infrastructure and flow control installations. The ductile iron pipe business, however, is somewhat sensitive to economic cycles because of its partial dependence on the level of new construction activity and state, municipal and federal tax revenues to fund water projects.

•: Water and Wastewater Infrastructure Upgrades, Repairs and Replacement. Much of the water distribution infrastructure in the United States is considered to be aging or in need of updating. Growth in the water and wastewater infrastructure upgrades, repairs and replacement sector is driven primarily by: (1) the growing installed base, as new infrastructure is put in place, creating a continuously growing base to facilitate future recurring revenues; (2) the age of existing systems; (3) the operating cost of systems; (4) general use of systems; (5) governmental budgetary constraints; and (6) changes in federal and state environmental regulations, including, most recently, the Clean Water Act and the Safe Drinking Water Act. In a November 2002 study, the Congressional Budget Office estimated that the average annual spending necessary to upgrade, repair and replace existing water and wastewater infrastructure will be between $24.6 billion and $41.0 billion a year over the ensuing 15 years. Although spending in this sector has been constrained in recent years as a result of budget limitations on state and local governments and the weak economic environment, we believe that this sector has begun to benefit from an improvement in the overall economy as state and local governments are addressing deferred infrastructure needs.
•: New Water and Wastewater Infrastructure. Growth in the new water and wastewater infrastructure sector is mainly driven by new housing starts. According to the U.S. Census Bureau, housing starts in 2005 were 5.7% higher than in 2004. According to Freddie Mac, U.S. housing starts are projected to reach 1.9 million units by the end of 2006, which would represent the third best year for single-family housing construction in the last 25 years.
•: Non-Residential Construction. Non-residential construction activity includes: (1) public works and utility construction; (2) institutional construction, including education, dormitory, health facility, public, religious and amusement construction; and (3) commercial and industrial construction. According to the U.S. Census Bureau, spending on U.S. private non-residential building construction grew 5.0% in 2005 relative to 2004. According to Moody's, spending on non-residential construction is expected to increase 6.1% in 2006.

Competitive Strengths

We believe that we enjoy a number of important competitive strengths that drive our success and differentiate us from our competitors and support our market leadership, including:

•: Broad Range of Products and Leading Brands. We believe that we have the most comprehensive water infrastructure and flow control product line in our industry and enjoy leading market positions based on the estimated market share of our key products, broad brand recognition and

a strong reputation for quality and service within the markets we serve. For the fiscal year ended September 30, 2005 and the three months ended December 31, 2005, on a pro forma basis, approximately 74.1% and 74.5%, respectively, of our total sales were from products in which we believe we have the #1 or #2 market share in the United States and Canada. We believe we are one of the largest manufacturers of flow control products, including fire hydrants and gate valves, in the United States and Canada in the markets we serve. As of December 31, 2005, we were also one of the nation's largest producers of ductile iron pressure pipe based on industry shipping information provided by the Ductile Iron Pipe Research Association. Our brand names are highly recognized for quality and reliability.

•: Complete Water Transmission Solutions. The combination of Predecessor Mueller and U.S. Pipe created an industry leading company with significant scale in water infrastructure and delivery systems and positions us as one of the largest suppliers to the water products sector with a strong platform to facilitate potential expansion into higher growth areas. Our broad product portfolio of engineered valves, hydrants, ductile iron pipe and pipe fittings provides distributors and end users with a comprehensive source of supply and creates a significant competitive advantage for our company.
•: Large and Growing Installed Base. We maintain one of the largest installed bases of products in the United States, including, as of December 31, 2005, approximately three million fire hydrants and approximately nine million iron gate valves. We believe our large installed base enhances our competitive position and increases our importance to our distributors and end-users. Once our products are installed, it is difficult for an end-user to change to a competitive product due to the inventory of parts required to maintain multiple products and due to the life/safety nature of some of our products. To ensure consistency, end-users of our water infrastructure products often require that contractors use the same products that have been historically used in a municipality, or products with similar specifications. In addition, as water and wastewater distribution and treatment infrastructure is improved and expanded, we believe that spending on systems upgrades will increase. We believe we are positioned to benefit from this spending as our large installed base of products leads to repeat purchases by end-users for system maintenance and enhances the sale of our new parts.
•: Leading Specification Position. Due to our strong brand name and our large installed base, our products are "specified" as an approved product for use in all of the top fifty metropolitan areas in the United States. The product specification approval process for a municipality generally takes a minimum of one year and there are approximately 55,000 municipal water systems in the United States. This strong specification position has contributed to long-standing relationships with all of the top distributors and creates a strong demand base for our products. For most of our water infrastructure products, including those which are sold through independent distributors, end-users choose the brand or establish product specifications, including required approvals from industry standard setting organizations. We leverage our strong brand reputation and installed base with a dedicated sales force that works directly with municipalities and other end-users to have our products specified by municipalities when awarding new construction contracts or major upgrade, repair or replacement projects. We believe that, because of this large installed base, as well as our brand recognition and reputation for quality, our products are specified more often than those made by our competitors.
•: Established and Extensive Distribution Channels. We maintain strong, long-standing relationships with the leading distributors in our major markets throughout the United States and Canada. While we do not have long-term contracts with our distributors, we believe that our superior product quality and the technical support we provide allow us to enjoy long-term relationships with our network of over 5,000 independent distributors. The average relationship with our top ten distributors is over 20 years. In addition, we believe the breadth of our product offering and our ability to provide products throughout the United States and Canada have enabled us to

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strengthen our relationships with the leading independent distributors as they seek to simplify their procurement process and broaden their geographic reach. Hughes Supply, Inc., one of our largest distributors, accounted for over 15% and 16%, respectively, of our consolidated pro forma net sales for the twelve months ended September 30, 2005 and for the three months ended December 31, 2005, and for over 27% and 29%, respectively, of our U.S. Pipe segment's net sales in the nine months ended September 30, 2005 and in the three months ended December 31, 2005. Our acquisition of the assets of Star, an importer of piping products produced in China, India and Malaysia in 2004, has allowed us to provide both domestic and foreign sourced-piping systems products to our distributors. We believe that this has made us less susceptible to the increase in the spot price of steel scrap, which has doubled between 2002 and 2005.

•: Advanced, Low-Cost Manufacturing Capabilities. We believe our historical capital investment in manufacturing technologies helps us reduce the costs of producing our cast, malleable and ductile iron and brass water and gas flow control products. We believe that we are the only company in North America that uses the technologically-advanced lost foam casting process to manufacture fire hydrant and iron gate valve castings, which significantly reduces the manual labor and machining time otherwise needed to finish cast products. Based on our experience, we believe that our lost foam process is significantly less costly than the traditional method utilized by our competitors. We believe that this has made us less susceptible to the increase in the prices of raw material over the last three years. In 2002, we completed a capital improvement plan, pursuant to which we invested $124.3 million from 2000 to 2002 to (i) implement new low cost manufacturing technologies, including our lost foam casting process and (ii) consolidate certain manufacturing facilities, including our Statesboro, Georgia foundry. We believe that the completion of this capital improvement plan improved the efficiency of our manufacturing processes and the quality of many of our products.
•: Highly Experienced, Proven Management Team. We are led by an experienced management team with a long and successful track record, enabling us to recognize and capitalize upon attractive opportunities in our key markets. Our five most senior members of the management team have an average of over 20 years of experience in the flow control industry and have substantial experience in acquisition and integration of businesses, cost management rationalization and efficient manufacturing processes. The management team is led by Gregory E. Hyland, the Chairman, President and Chief Executive Officer, who has over 20 years of experience in the flow control industry.

Business Strategy

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

•: Capitalizing on Large, Attractive and Growing Water Infrastructure Industry. We plan to capitalize on the expected water infrastructure market growth by leveraging our large and growing installed base, leading specification position, established and extensive distribution channels and a broad range of leading water infrastructure and flow control products. Much of the water distribution infrastructure in the United States is aging and in need of replacement or updating. In a November 2002 study, the Congressional Budget Office estimated that the average annual spending necessary to upgrade, repair and replace existing water and wastewater infrastructure will be between $24.6 billion and $41.0 billion a year over the next 15 years.
•: Achieving Ongoing Operating Synergies. We continue to seek opportunities to rationalize our manufacturing facilities and use our significant manufacturing expertise to further reduce our cost structure. We have initiated a multi-pronged synergy plan designed to streamline our

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manufacturing operations, add incremental volume through combining sales efforts for complementary products and combine corporate-level functions to achieve operating efficiencies. In fiscal 2006, we expect to achieve integration synergies between our Mueller and U.S. Pipe segments by closing the U.S. Pipe Chattanooga, Tennessee production facility and integrating it into the Mueller Chattanooga and Albertville, Alabama production facilities. In addition, we have initiated the implementation of plant and distribution combination and production efficiency strategies within our Mueller and Anvil segments, and these efforts will continue through fiscal years 2006, 2007 and the beginning of 2008. Our Mueller segment sales force has begun to integrate U.S. Pipe products as complementary product offerings as part of their sales efforts. We also have begun to use the combined purchasing leverage of our Mueller, U.S. Pipe and Anvil segments to reduce raw material and overall product costs and to date, have entered into a steel scrap procurement agreement from our Mueller and U.S. Pipe segments. We expect that the full implementation of our synergy and rationalization plan by early fiscal 2008 will produce approximately $40-$50 million of ongoing incremental annual operating income.

•: Strengthening Relationship with Key Distributors. We are focused on enhancing close relationships with the strongest and fastest growing distributors and on leveraging our extensive distributor network to increase sales of our existing products, introduce new products and rapidly expand sales of products of the businesses we acquire. The competitive environment for independent distributors has been and continues to be characterized by consolidation as distributors seek to broaden their geographical reach and achieve economies of scale. Our top distributors are growth oriented companies that have been among the leaders in this consolidation trend. By having strong relationships with distributors who are leading the consolidation, we believe we will benefit from their growth.
•: Continuing to Focus on Operational Excellence. We will continue to pursue superior product engineering, design and innovation through our technologically-advanced manufacturing processes. We will also continue to evaluate sourcing products and materials internationally to lower our costs. We employ highly efficient manufacturing methods, such as lost foam casting and automated Disa® molding machinery, which are designed to continue to solidify our position as a low cost domestic producer of water infrastructure and flow control products.
•: Focused Acquisition Strategy. Acquisitions are an important part of our growth strategy. Certain segments of the industry in which we compete are fragmented, providing for numerous acquisition opportunities. We will selectively pursue attractive acquisitions that enhance our existing product offering, enable us to enter new markets, expand our technological capabilities and provide synergy opportunities. Over the past five years, we have acquired and successfully integrated eight businesses within the water infrastructure and flow control markets. We intend to continue to selectively pursue acquisitions that will enhance our position as a complete water flow control and transmission solutions provider. Our recent acquisitions include Beck Manufacturing and Merit Manufacturing, each of which is a piping system components manufacturer (2001), Hydro Gate, a sluice gate valve manufacturer (2001), and Milliken Valve, a plug valve manufacturer (2003). In 2003, we acquired Jingmen Pratt, a machine shop in Hubei Province, China. In addition, we acquired Star in January 2004 to enter the market for lower-cost, foreign-produced products and to complement certain of our piping products produced in the United States and Canada. We have recently announced the acquisition of Hunt Industries, a manufacturer of water meter pits and water meter yokes, which further enhances our product offering.
•: Selectively Expanding Internationally. We intend to expand our current international presence in sourcing and manufacturing products as well as in the sale of our products. We believe we can further utilize our current manufacturing facility in China to produce additional products. We are leveraging our Star operations, which we acquired in 2004 from Star Pipe, Inc., to establish a lead position in the United States for the import and sale of piping component products,

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including fittings and couplings manufactured in China, India and Malaysia. In addition, we expect to increase our international sales volumes, primarily in Europe and China by capitalizing on our existing brand recognition and customer relationships. For example, in Europe, we added two distributors for our European products. In China, we acquired Jingmen Pratt in 2003 and established a Shanghai office in July 2004, which we intend to use as a platform to explore sales opportunities for our products in this fast growing market.

Product Segments

We believe that we are the broadest full-line supplier of flow control products for water and wastewater infrastructure systems and piping component systems in the United States and Canada. We have the capability to manufacture flow control products for water and gas systems, ranging from fire hydrants to ¹/8 inch pipe fittings that connect pipes together to 10-foot engineered valves. Our principal products are fire hydrants, ductile iron pipe, water and gas valves and a complete range of pipe fittings, couplings, hangers and nipples. Our products are designed, manufactured and tested in compliance with industry standards.

We manage our business and report operations through three reporting segments, based largely on the products they sell and the markets they serve. Our segments are named after lead brands in each segment: Mueller®, through which we sell our hydrants and valves and other water and wastewater infrastructure and gas distribution products described below under various brand names including Mueller®, Henry Pratt™, Hersey® and James Jones™; U.S. Pipe®, through which we sell ductile iron pipe under the brand name U.S. Pipe® and Anvil®, through which we sell our pipe fittings and couplings, pipe hangers, pipe nipples and related products under various brand names, including Anvil®, Beck™, Gruvlok® and Merit®.

Gross sales amounts are shown in the Mueller, U.S. Pipe and Anvil Products sections below and exclude estimated cash discounts and rebates, which are deducted from net sales for financial reporting purposes.

Mueller Products

Fire Hydrants. We believe our Mueller segment is one of the largest manufacturers of dry-barrel fire hydrants in the United States and Canada. New fire hydrant and fire hydrant part sales accounted for approximately $161.0 million, $151.0 million and $125.0 million of our total sales in 2005, 2004 and 2003, respectively. Fire hydrants are sold for new water infrastructure development as well as water infrastructure rehabilitation projects. On October 26, 2005, Walter Industries announced plans to close the U.S. Pipe Chattanooga, Tennessee plant and transfer the valve and hydrant production of that plant to Mueller's Chattanooga and Albertville, Alabama plants during our 2006 fiscal year. After October 3, 2005, the Mueller segment will include results from operations from sales of hydrants previously manufactured by U.S. Pipe.

Our fire hydrants consist of an above-ground fire hydrant and a below-ground cast iron pipe that connects to a water main. In dry-barrel hydrants, the valve connecting the barrel of the hydrant and the water main is located below ground at or below the frost line, which keeps the hydrant "dry" and the water source deep enough to ensure that the water does not freeze. We market 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, and manufacture them in our Albertville, Alabama and Milton, Ontario facilities. We also make a limited number of wet barrel hydrants, where the valve is placed inside the above-ground hydrant and the barrel contains water in it at all times. Wet barrel hydrants are made for the California and Hawaii markets and sold under the James 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 maintain inventories of spare parts for emergency repairs and the desire to ensure a uniform system. We believe that our large installed base of hydrants throughout

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the United States and Canada and our reputation for superior quality and performance, together with our incumbent specification position, have contributed to our leading market share based on the estimated market share of our key products. Our large installed base of approximately three million hydrants also leads to recurring revenue.

Water and Gas Valves and Related Products. We believe our Mueller segment has the broadest product line of valves for residential water and gas systems and that we are one of the largest manufacturers of butterfly valves and water gate valves in the United States and Canada. Water and gas valves and related products accounted for approximately $473.0 million, $437.0 million and $381.0 million of our sales in 2005, 2004 and 2003, respectively. Our significant industry-leading market position is the result of our strong brand recognition, superior quality and specification acceptance. On October 26, 2005, Walter Industries announced plans to close the U.S. Pipe Chattanooga, Tennessee plant and transfer the valve and hydrant production of that plant to Mueller's Chattanooga facility and Albertville, Alabama plants during our 2006 fiscal year. The eventual closure of the Chattanooga plant will occur sometime in 2006. The estimated Chattanooga pre-tax closing costs that are expected to be recorded in the first quarter of fiscal 2006 ending December 31, 2005 consist of $17.8 million of long-lived asset write-offs, a $5.2 million inventory absorption loss, an $11.9 million charge to write inventory down to fair value, $3.0 million for severance costs and an environmental charge of $2.1 million. The Company expects to recognize additional severance expense during the second quarter of 2006 in the amount of $0.6 million. In addition, the Company anticipates additional environmental-related charges of $1.3 million and a $3.3 million charge to increase the pension and postretirement benefit obligations to be recognized in fiscal 2006. Once the manufacturing of these products is transferred to Mueller, the Mueller segment will include the results of operations from sales of valves previously manufactured by U.S. Pipe.

All of our valve products are used to control transmission of potable water, non-potable water or gas. Our product line includes butterfly, gate, tapping, check, plug and ball valves. Water valve products range in size from ³/4 inch to 10 feet. The smaller iron gate-type valves are produced by our Chattanooga, Tennessee plant and the larger iron butterfly valves are produced by our Henry Pratt subsidiary in Dixon, Illinois. Brass valves are produced in our Decatur, Illinois and El Monte, California plants. Most of these valves are used in water distribution.

We produce small iron valves, meter bars, and line stopper fittings for use in gas systems in our Decatur, Illinois and Brownsville, Texas plants. We also manufacture machines and tools for tapping, drilling, extraction, installation and stopping-off. These machines and tools are designed to work with our water and gas fittings and valves as an integrated system. We believe that we are one of the largest manufacturers in the line stopper fittings and machines sector in the United States and Canada.

Other Mueller Products. Other Mueller segment products include: pipe repair products, such as repair clamps and couplings used to repair leaks in water and gas distribution systems; municipal castings, such as manhole covers and street drain grates; and patterns used by the foundry and automotive industries. We market these products under the Mueller®, Mueller Canada™, James Jones™, and Viking Johnson® brand names. These products accounted for $57.0 million, $47.0 million and $45.2 million of Mueller segment sales in 2005, 2004 and 2003, respectively.

U.S. Pipe Products

U.S. Pipe manufactures and sells a broad line of ductile iron pressure pipe, restraint joints, fittings and other cast iron products. Founded in 1899 and headquartered in Birmingham, Alabama, it is one of the nation's largest producers of ductile iron pressure pipe based on industry shipping information provided by the Ductile Iron Pipe Research Association. In the nine months ended September 30, 2005 and in the years ended December 31, 2004 and 2003, net sales and revenues amounted to $456.9 million, $578.4 million and $465.4 million, respectively. These sales also reflect sales of valves and hydrants that were transferred to our Mueller segment in December 2005.

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U.S. Pipe manufactures and markets a complete line of ductile iron pipe ranging from 4" to 64" in diameter as well as various metric sizes, in lengths up to 20 feet. Ductile iron pressure pipe is used primarily for drinking (potable) water distribution systems, small water system grids, reinforcing distribution systems (including looping grids and supply lines) and is used for major water and wastewater transmission and collection systems.

Anvil Products

Pipe Fittings and Couplings. We are one of the largest manufacturers of threaded and grooved pipe fittings and couplings in the United States and Canada. Pipe fittings and couplings join two pipes together. Listed below are the four primary categories of pipe fittings and couplings that we manufacture.

Malleable Iron Fittings and Unions. Malleable iron fittings and unions accounted for $66.0 million, $66.0 million and $69.0 million of Anvil's sales in 2005, 2004, and 2003, respectively. Malleable iron is a cast iron that is heat-treated to make it stronger, which allows us to use a thinner wall and results in a lighter product. Malleable iron is primarily used to join pipe in various gas, plumbing and HVAC applications. We manufacture these products at our Columbia, Pennsylvania foundry.

Cast Iron Fittings. We believe we are one of the largest manufacturers of cast iron fittings in the United States. Cast iron fittings accounted for approximately $33.0 million, $32.0 million and $32.0 million of Anvil's sales in 2005, 2004, and 2003, respectively. Cast iron is the most economical threaded fittings material and is typically used in low pressure applications such as sprinkler systems and other fire protection systems. We manufacture cast iron fittings primarily in our Columbia, Pennsylvania foundry. We believe that the substantial majority of our cast iron product is used in the fire protection industry, with the remainder used in steam and other HVAC applications.

Threaded Steel Pipe Couplings. We believe we are one of the largest manufacturers of threaded steel pipe couplings in the United States and Canada. Threaded steel pipe couplings accounted for $35.0 million, $33.0 million and $25.0 million of Anvil's sales in 2005, 2004 and 2003, respectively. Threaded steel pipe couplings are used in the plumbing and electrical markets to join pipe and conduit and by pipe mills as threaded end protectors. We manufacture steel couplings at our Waynesboro, Pennsylvania and Simcoe, Ontario facilities.

Grooved Products. We believe we are one of the largest manufacturers of grooved products in the United States and Canada. Sales of grooved products were approximately $53.0 million, $56.0 million and $52.0 million in 2005, 2004 and 2003, respectively. 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 manufacture our grooved couplings and fittings under the Gruvlok® name in our Columbia, Pennsylvania foundry. In addition, we purchase privately labeled products to complement our grooved product offerings including grooved copper and stainless steel fittings. These additional purchased products complement our offering of grooved products and enable us to better serve our customers' project requirements. Purchased products accounted for $17.0 million, $17.0 million and $15.0 million of Anvil's grooved product sales in 2005, 2004 and 2003, respectively.

In connection with the August 1999 sale of the Predecessor Mueller business by Tyco to our prior owners, Anvil entered into a five-year agreement that granted Tyco the exclusive right to distribute our Gruvlok® products in Europe, Asia and Latin America. That agreement expired in August 2004 and we have begun to engage new distributors for these products in Europe, which we view as a growth opportunity.

Pipe Hangers. We believe we are one of the largest manufacturers of pipe hangers in the United States and Canada. Anvil's annual hanger sales were approximately $45.0 million, $39.0 million and $42.0 million in 2005, 2004 and 2003, respectively. Pipe hangers provide support for pipes and are used

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in sprinkler systems, HVAC applications and in power and petrochemical plants. We manufacture our standard pipe hangers in Henderson, Tennessee and Columbia, Pennsylvania and we produce special order, or engineered, pipe hangers in North Kingston, Rhode Island. We have retained a strong core engineering staff and believe that we are the leader in technical competency in this sector.

Pipe Nipples. We believe we are also one of the largest manufacturers of pipe nipples in the United States and Canada. Anvil's sales of pipe nipples were approximately $62.0 million, $53.0 million and $46.0 million in 2005, 2004 and 2003, respectively. The pipe nipple product line is a complementary product offering and is packaged (1) with cast iron for the fire protection market, (2) with malleable iron for the industrial market, (3) with our forged steel product line and (4) as a general plumbing market item.

We produce the majority of our pipe nipple products at Beck Manufacturing's facilities in Greencastle, Pennsylvania and Santa Fe Springs, California. Seamless pipe nipples are produced at our Longview, Texas facility. Pipe nipples for the Canadian market are manufactured at our Simcoe, Ontario facility.

Other Piping System Products. In addition to our key products that we have described above, we sell (1) products sourced outside the United States and Canada through our Star business, which we acquired in January 2004, (2) products that we purchase from third parties and (3) many other products that we manufacture, including (A) oilfield products, such as forged steel pipe fittings, hammer unions, bull plugs and swage nipples which are used to connect pipes in oil and gas applications and (B) electrical products, such as PVC conduit couplings and elbows used to carry wire and cable in electrical applications. Sales of purchased products by our Anvil segment were approximately $146.0 million, $118.0 million and $86.0 million in 2005, 2004 and 2003, respectively, and sales of our other manufactured products were approximately $74.0 million, $58.0 million and $54.0 million in 2005, 2004 and 2003, respectively.

Sales, Marketing and Distribution

Mueller Products

Our Mueller segment sells its products to a wide variety of end-users, including municipalities, publicly and privately owned water and wastewater utilities, gas utilities and construction contractors. These products are usually sold to our distributors; distributors then sell these products to contractors who have won a contract to construct, replace or upgrade a water, wastewater or gas system for an end-user or non-residential facility. In some cases, end-users of Mueller segment products, including municipalities and utilities, buy products directly from Mueller, most often as part of a program to repair, replace or upgrade existing infrastructure. Sales of our Mueller segment products are heavily influenced by the specifications in those contracts.

Mueller has a sales force of approximately 85 dedicated employee sales representatives in the field and about 75 non-employee manufacturers' representatives as well as a team of approximately 110 in-house marketing and sales professionals. Our field sales and manufacturers representatives call on municipalities, water companies and other end-users to ensure that Mueller products, or the corresponding quality standards, are specified. In addition, to ensure consistency, municipalities often require that contractors use the same products that have been historically used in that municipality.

For the Mueller segment, the large installed base, broad product range and well known brands have led to our strong, long-standing relationships with all of the leading distributors in the industries Mueller serves. For most of the Mueller segment products, which are sold through independent distributors, end-users choose the brand or establish product specifications. We generally ship Mueller products, including hydrants and water and gas valves, directly to distributors carrying these products from our plants. Mueller's distribution network covers all of the major markets in the United States and Canada. We typically do not have long-term contracts with our distributors, although we have

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long-term relationships with most of our top distributors. The top three distributors for Mueller accounted, in the aggregate, for approximately 45% of our sales in 2005. The loss of any one of these distributors could have a material adverse effect on our business. See "Risk Factors—Risks Relating to Our Business—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 Products

U.S. Pipe products are sold primarily to water works distributors, contractors, municipalities, private utilities and other governmental agencies. A substantial percentage of ductile iron pressure pipe orders result from contracts that are bid by contractors or directly issued by municipalities or private utilities. An increasing portion of ductile iron pressure pipe sales is made through independent water works distributors. U.S. Pipe maintains numerous supply depots in leased space throughout the country, which are used as a source of pipe for start-up projects, to support ongoing projects and to aid in completing projects.

U.S. Pipe has a sales force of approximately 50 dedicated employee sales representatives in the field and about 30 inside sales representatives and sales engineers who sell pipe products throughout the United States. The organization is divided into four geographic territories each managed by a regional sales manager. International orders are sold directly by U.S. Pipe sales personnel as well as through third-party representatives.

U.S. Pipe has one customer, Hughes Supply, Inc., with whom we do not have a written contract, that represents 27%, 28% and 24% of net sales for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003, respectively. We believe the loss of this single customer could have a material adverse effect on the results of operations of the Company. See "Risk Factors—Risks Relating to Our Business—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 Products

Our Anvil segment sells its products to a wide variety of end-users, including, primarily, commercial construction contractors. These products are typically sold to our distributors through Anvil's four regional distribution centers located in key geographic areas throughout the United States and through Anvil's Canadian distribution and sales division. We generally ship Anvil segment products, including pipe fittings, couplings, hangers and nipples, from our plants to four regional service centers that we operate in the United States, and we ship products from these distribution centers to distributors carrying these products. Our regional service centers are strategically located to provide 24-hour delivery to the majority of the Anvil customers. In addition, we operate 22 smaller warehouses throughout the United States and Canada and one in Europe to support the Anvil segment operations. We have historically stocked some products manufactured by third parties in these distribution centers in order to provide a broader product offering. In 2005 products manufactured by third parties accounted for approximately 32% of total sales for the Anvil Segment. We reduced the scope of the offering of Anvil products purchased from third parties in the United States, which are lower margin. However, we continue to sell a broad range of purchased products in Canada.

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Most of Anvil segment products are not specified. Anvil's sales force of approximately 100 dedicated employee sales representatives in the field and about 130 in-house marketing and sales professionals markets Anvil products to distributors. Sales of Anvil products are generally influenced by the distributors, as end-user customers will buy from a distributor's available offerings based on price and quality.

Anvil generally does not have long-term contracts with any distributors, although Anvil has long-term relationships with most of our top distributors. The top three distributors for Anvil accounted, in the aggregate, for approximately 14% of Anvil's sales in 2005. The loss of any one of these distributors could have a material adverse effect on our business. See "Risk Factors—Risks Relating to Our Business—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."

Sales of Anvil products to domestic customers, including Canadian customers, accounted for 98% of Anvil's sales for fiscal year 2005, representing 41% of our overall sales for 2005.

Backlog

Except for our U.S. Pipe segment, our backlog is not significant. Our Mueller and Anvil segments generally manufacture products from raw materials in stock and deliver them to customers within approximately two weeks from receipt of the order, depending upon customer delivery specifications. U.S. Pipe has a significant backlog. At December 31, 2005, U.S. Pipe had a backlog of pressure pipe, valves and hydrants and fittings of $79.0 million, compared to $81.0 million at September 30, 2005 and $91.0 million at December 31, 2004. Backlog is considered firm, except for $21.0 million at December 31, 2005 which is based on a customer's letter of intent. The ductile iron pipe business is generally sensitive to economic recession because of its partial dependence on the level of new construction activity and state, municipal and federal tax revenues to fund water projects. However, certain aspects of U.S. Pipe's operations have in the past helped to reduce the impact of downturns in new construction. First, U.S. Pipe's products have experienced a strong level of demand in the replacement market, in part driven by mandates from the Safe Drinking Water Act. U.S. Pipe believes that growth of the replacement market will accelerate as a result of anticipated major expenditures by government entities, such as the New York, Boston, Washington, D.C., Atlanta and Philadelphia municipalities, to rehabilitate aging or inadequate water transmission systems. Although U.S. Pipe does not now have contracts with any of these municipalities for large-scale infrastructure replacement, U.S. Pipe believes that it is well positioned to take advantage of this opportunity because of U.S. Pipe's relationships with these municipalities and because of U.S. Pipe's significant market position in the ductile iron pipe industry. Second, U.S. Pipe's Burlington, New Jersey plant is adjacent to the northeastern market with its significant replacement potential and its operations in the south are located in areas of steady economic growth. The west coast, served by the Union City, California plant, has a critical shortage of water for many of the large metropolitan areas that will require major transmission pipelines in the future. Because freight costs for pipe are high, locations close to important markets lower transportation costs, thereby making U.S. Pipe's products more competitive.

Manufacturing

Mueller

Our Mueller segment operates 18 manufacturing facilities in the United States, Canada and China. Their manufacturing operations include foundry, machining, fabrication, assembly, testing and painting operations. We believe that our existing manufacturing capacity is sufficient for our near-term requirements and we have no current plans to expand capacity. However, we plan to maximize operational efficiencies throughout all of our plants, and may relocate certain manufacturing operations to other facilities as part of these plans. These actions may result in future facility closures.

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Mueller foundries use two casting techniques, green sand and lost foam. At present, we utilize the lost foam technology for hydrants in our Albertville, Alabama facility and for gate valve production in their Chattanooga, Tennessee facility. The lost foam process has several advantages over the green sand process for high-volume products, including the need for less manual finishing, lower scrap levels and the ability to reuse the sand. 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, and function as well as intended production volumes.

U.S. Pipe

Our U.S. Pipe segment operates 5 manufacturing facilities in the United States, which primarily manufacture ductile iron pressure pipe. We believe U.S. Pipe's manufacturing capacity is sufficient for our near-term requirements and we have no current plans to expand capacity. However, we do plan to close the U.S. Pipe Chattanooga, Tennessee manufacturing facility and plan to transfer substantially all of its production to existing Mueller plants in Chattanooga, TN and Albertville, AL. U.S. Pipe utilizes the DeLavaud centrifugal casting process which consists of introducing molten iron into a rapidly turning steel mold and relying on the centrifugal force to uniformly distribute the iron around the inner surface of the mold to produce high-quality ductile iron pressure pipe.

Anvil

Our Anvil segment operates 11 manufacturing facilities. Anvil employs highly automated Disa® molding machines to produce products in its Columbia, Pennsylvania foundry facility.

Raw Materials

Our products are made from several basic raw materials, including sand, resin, brass ingot, steel pipe, and scrap steel and iron. These materials are readily available and are competitively priced. Historically, we have been able to obtain an adequate supply of raw materials and do not anticipate any shortage of these materials.

We generally purchase raw materials at spot prices and generally do not have the ability to hedge our exposure to price changes. Our business could be adversely affected by increases in the cost of our raw materials, as we may not be able to fully pass these costs on to our customers. An increased worldwide demand for steel scrap, the raw material from which our threaded and grooved pipe fittings as well as all iron valves and hydrants are made, has increased the spot price of steel scrap used by Mueller and Anvil from an average price per ton of $156 for the fiscal year ended September 30, 2003 to an average of approximately $330 per ton for the fiscal year ended September 30, 2005. Management estimates that raw materials and purchased components used in the manufacturing processes of Mueller and Anvil currently account for approximately 18% of the cost of goods sold for Mueller and Anvil due to increasing raw material prices.

The spot price of scrap metal used by U.S. Pipe has increased from approximately $162 per ton in January 2004 to approximately $206 per ton in September 2005. Management estimates that scrap metal and ferrous alloys used in the U.S. Pipe manufacturing process accounted for up to 26% of the U.S. Pipe cost to manufacture ductile iron pipe for the nine months ended September 30, 2005.

We increased prices to our customers during the 2002 to 2005 time period to mitigate the effect of these cost increases. We can give no assurances that the price of steel scrap will remain at the current pricing levels or that we will be able to increase prices to our customers to offset any future cost increases. See "Risk Factors—Risks Relating to Our Business—Our business is subject to risk of price increases and fluctuations and delay in the delivery of raw materials and purchased components."

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Research and Development

We have a dedicated team of research and development ("R&D") professionals, who focus on the development of new products as well as on the support, modification and improvement of existing products. Presently, we employ 34 people, including 18 degreed professionals (metallurgists and engineers), dedicated to R&D activities. Our R&D efforts are operated primarily out of our facility in Smithfield, Rhode Island. In addition, our U.S. Pipe segment employs an R&D team in its facility in Bessemer, Alabama.

Ideas are generated by manufacturing, marketing or R&D personnel. In order for a project to move beyond the idea stage, all three disciplines must agree on the suitability of the product and determine an estimated payback. After the approval, it typically takes 6 to 12 months to tool, test and start production. The R&D team typically works on various products at one time.

Our Mueller and Anvil segments incurred R&D expenditures of approximately $4.8 million, $4.4 million and $4.7 million in fiscal years 2005, 2004 and 2003, respectively. U.S. Pipe's total R&D expenditures were approximately $0.4 million for the nine months ended September 30, 2005, and were $1.5 million for both calendar years 2004 and 2003.

Patents, Licenses and Trademarks

We have a significant number of 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 business. 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 pipe accessories, such as joint restraint systems.

Seasonality

See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Effect of Inflation; Seasonality."

Competition

The domestic and international markets for flow control 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 we maintain a strong competitive position for each of our key product offerings. Management considers product quality, service, brand recognition, price, effectiveness of distribution and technical support to be primary competitive factors.

The competitive environment for our Mueller segment products is mature and stable with limited movement in market share over time. Management believes that our Mueller hydrants and valves enjoy strong competitive positions based largely on their quality and dependability. The principle competitors for Mueller segment hydrants and iron gate valves are McWane, Inc. and American Flow Control. The primary competitors for Mueller's brass products are A.Y. McDonald, Ford Meter Box and Cambridge Brass.

The ductile iron pressure pipe industry, in which U.S. Pipe operates, is highly competitive, with a small number of manufacturers of ductile iron pressure pipe and fittings. Major competitors of U.S. Pipe include McWane, Inc., Griffin Ductile Iron Pipe Company and American Cast Iron Pipe

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Company. Additional competition for ductile iron pressure pipe comes from pipe composed of other materials, such as polyvinylchoride (PVC), high density polyethylene (HDPE), concrete, fiberglass, reinforced plastic and steel. Although ductile iron pressure pipe is typically more expensive than competing forms of pipe, customers chose ductile iron for its quality, longevity, strength, ease of installation and lack of maintenance problems.

The market for Anvil segment products is highly competitive, price sensitive and vulnerable to the increased acceptance of foreign products. For domestic manufacturing and sales, Anvil's primary competitor for malleable and cast iron fittings is Ward Manufacturing; for ductile and grooved fittings, Anvil's significant competitors are Victaulic and Tyco Engineered Products; and for pipe hangers, Anvil's principle competitors are ERICO, Tolco/Nibco and Michigan Hanger Company. Anvil products have mechanical and industrial applications, such as HVAC systems, and fire protection applications, such as sprinkler systems. We estimate that 72% of these products are used in mechanical applications and the remainder in fire protection systems. While the mechanical market has generally resisted acceptance of foreign products, the fire protection market has broadly accepted foreign products as a substitute for domestic piping system products. Fire protection products are sold primarily on price and are sold at lower prices by foreign manufacturers.

Environmental Matters

We are subject to various laws and regulations relating to health, safety and the protection of the environment. These laws relate to, among other things, worker health and safety and the use, discharge and disposal of regulated substances and wastewater generated during our manufacturing processes. As a result, we are required to obtain and maintain air, storm water, wastewater and other permits at many of our facilities, and make certain regular reports to federal, state and local agencies regarding our operations. We cannot assure you that we will not incur material fines, penalties, costs or liabilities in connection with such requirements or a failure to comply with them. While we currently incur capital and other expenditures to comply with these environmental, health and safety laws, these laws may become more stringent and our processes may change. Therefore, the amount and timing of such expenditures in the future may vary substantially from those currently anticipated.

U.S. Pipe has implemented an Administrative Consent Order ("ACO") for its 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 U.S. Pipe 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 will be required to verify natural attenuation. It is not known how long ground water monitoring will be required. Management does not believe monitoring or further cleanup costs, if any, will have a material adverse effect on the financial condition or results of operations of the Company and its subsidiaries.

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PRP's have negotiated an administrative consent order ("ACO") with the EPA and the PRP's have agreed to divide clean-up costs pro-rata subject to later adjustment based on the relative contribution by each PRP to the contamination. Management estimates the Company's share of liability for cleanup, after allocation among several PRPs, will be approximately $4.0 million, which was accrued in 2004. Management does not believe that U.S. Pipe's share of any liability under the ACO will have a material adverse effect on the financial condition of the Company, but could be material to results of operations in future reporting periods. In addition, civil litigation is ongoing with respect to this site, including a suit by another PRP for contribution and a putative class action alleging personal injury. See "—Legal Proceedings" for descriptions of these civil lawsuits.

On March 31, 2004, our subsidiary, Anvil International, entered into a consent order with the Georgia Department of Natural Resources regarding various alleged hazardous waste violations at the Statesboro, Georgia site formerly operated by Anvil. Pursuant to the consent order, Anvil has agreed to pay a settlement amount of $100,000, comprised of a $50,000 monetary fine and $50,000 towards a supplemental environmental project. Anvil has also agreed to perform various investigatory and remedial actions at the site and its landfill. While the ultimate investigatory and remedial costs are currently unknown, based on currently available information the total costs are estimated to be approximately $1.3 million. As of December 31, 2005, we have spent approximately $0.3 million, reducing our accrual for this matter to approximately $0.9 million as of December 31, 2005.

On April 22, 2004, the EPA issued final National Emissions Standards for Hazardous Air Pollutants (NESHAP's) under the federal Clean Air Act for iron and steel foundries. The NESHAP for iron and steel foundries will require reductions in hazardous air pollutant emissions by the industry. In addition, other NESHAP's apply to painting operations at our foundries. While we are in the process of analyzing the impact these standards may have on us and our future financial results, we expect we will need to incur additional and possibly material costs to comply with the regulations with respect to Mueller's Albertville, Alabama and Chattanooga, Tennessee facilities and may need to incur additional and possibly material costs with respect to Anvil's Columbia, Pennsylvania facility. In addition, to comply with the applicable standard for iron and steel foundries, we anticipate that we will incur approximately $10.0 million in capital costs through December 2007 at the U.S. Pipe facilities located in Bessemer, Alabama, North Birmingham, Alabama, Union City, California, and Burlington, New Jersey. See "Risk Factors—Risks Relating to Our Business—Environmental, health and safety laws and regulations 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," "Risk Factors—Risks Relating to Our Business—Our brass valve products contain lead, which may replaced in the future," "Risk Factors—Risks Relating to Our Business—Certain of our brass valve products may not be in compliance with NSF standards, which could limit the ability of municipalities to buy our products" and "Risk Factors—Risks Relating to Our Business—We rely on Tyco to indemnify us for certain liabilities and there is a risk that Tyco may become unable or may fail to fulfill its obligations."

Although we now produce a small amount of no-lead brass products, most of our brass valve products contain approximately 5.0% lead. 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. Some of our subsidiaries have entered into settlement agreements with these environmental advocacy groups to modify products or offer substitutes for sale in California. Legislation to substantially restrict lead content in water infrastructure products has been introduced in the United States Congress. Congress or state jurisdictions other than California may enact legislation similar to Proposition 65 to restrict the content of lead in water products, which could require us to incur additional capital expenses to modify our production. To date, we have undertaken a capital project to implement a no-lead brass production line that will require us to incur approximately $8 million in incremental capital spending over the next two years. In addition, advocacy groups or other parties may file suit against us under Proposition 65 or under new, similar

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legislation adopted in other jurisdictions that could result in additional costs in connection with marketing and selling our brass products in California or in such other jurisdictions.

In the acquisition agreement pursuant to which Tyco International ("Tyco") sold Predecessor Mueller to its prior owners in August 1999, Tyco agreed to indemnify the Company and its affiliates for all "Excluded Liabilities". Excluded Liabilities include, among other things, substantially all liabilities relating to the time prior to the August 1999 Tyco transaction. 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 environmental liabilities to the extent caused by the Company or the operation of its business after the August 1999 Tyco transaction, nor does it cover environmental liabilities arising with respect to businesses or sites acquired after the August 1999 Tyco Transaction.

Some environmental laws require investigation and cleanup of environmental contamination at properties we now or previously owned, leased or operated. Some of our operations (in particular, operations at our manufacturing facilities) have been conducted at their current locations for many years. The processes at these and our other facilities currently and historically have involved the storage and use of regulated substances on-site or in underground storage tanks and the related generation of solid and hazardous waste disposed of off-site or in on-site solid waste landfills. Remediation projects are being undertaken at a handful of our sites by third parties who have indemnified us. We have received notices from third parties or governmental agencies of liability or potential liability in connection with our off-site disposal of solid and hazardous substances relating to our current and former operations. While we currently anticipate that expenditures relating to these sites will not be material, we may receive additional notices and the amount and timing of expenditures relating to known or unknown sites may vary substantially from those currently anticipated. In addition, we also may be subject to claims for property damage, personal injury, natural resource damages or other issues as a result of such matters.

See "—Legal Proceedings" for descriptions of material litigation and other legal proceedings relating to environmental matters.

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 "—Legal Proceedings," "Risk Factors—Risks Relating to Our Business—Our brass valve products contain lead, which may replaced in the future" and "Risk Factors—Risks Relating to Our Business—Certain of our brass valve products may not be in compliance with NSF standards, which could limit the ability of municipalities to buy our products."

Employees

We employ approximately 7,000 people, of whom approximately 90% work in the United States. The hourly employees at our principal United States manufacturing plants and foundries in Albertville, AL, Bessemer, AL, North Birmingham, AL, El Monte, CA, Union City, CA, Aurora, IL, Decatur, IL, Dixon, IL, Burlington, NJ, Columbia, PA, Chattanooga, TN, Houston, TX, and Henderson, TN are represented by unions, as are the hourly employees at two of our four distribution centers. Our operations in Canada at St. Jerome, Milton and at Simcoe are also unionized.

The contracts with our union employees at our eight largest manufacturing facilities expire at different times: Chattanooga in September 2006, Decatur in June 2007, Bessemer in October 2007,

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Union City in December 2007, Burlington and Columbia in April 2008, Albertville in September 2008 and North Birmingham in January 2009. Other contracts with the unions represented at U.S. Pipe's Chattanooga, Tennessee facility, which is slated for closure as described elsewhere in this prospectus, are set to expire in April 2006 and May 2008. We have concluded effects bargaining with the unions represented at the U.S. Pipe Chattanooga, Tennessee facility with regard to the plant closure.

Union contracts at other Mueller and Anvil facilities expire as follows: Dixon in March 2006, Aurora in August 2007, Henderson in December 2007, El Monte in July 2008, Simcoe in November 2008 and Houston in January 2009.

In addition, approximately 125 of our employees are represented by various unions at our Anvil facilities located in British Columbia, Montreal, Quebec, Bloomington, MN, Bristol, PA, Cincinnati, OH, Taylor, MI, and University Park, IL.

We believe that relations with our employees, including those represented by unions, are good. The last major union strike was in 1989 at the U.S. Pipe Bessemer, Alabama facility. The strike lasted six weeks.

Geographic Information

More than 98% of our sales for fiscal year 2005 are to our U.S. and Canadian customers.

Properties

The following chart describes our principal properties.

Mueller Segment

Location	Activity	Size (sq. ft.)	Owned or Leased
Albertville, AL	Foundry, fabrication, machine shop	358,000	Leased
Aurora, IL	Fabrication, machine shop	146,880	Owned
Bethlehem, PA	Fabrication, machine shop	104,000	Leased
Brownsville, TX	Machine shop	48,540	Leased
Chattanooga, TN	Foundry, fabrication, machine shop	578,164	Owned
Chattanooga, TN	Machine shop	26,500	Leased
Cleveland, NC	Machine shop	190,000	Owned
Cleveland, TN	Fabrication, machine shop	70,000	Owned
Decatur, IL	Foundry, fabrication, machine shop, headquarters	467,044	Owned
Dixon, IL	Fabrication, machine shop	146,880	Owned
El Monte, CA	Foundry, fabrication, machine shop	64,000	Owned
Hammond, IN	Fabrication, machine shop	51,160	Owned
Jingmen, China	Machine shop	154,377	Owned
Milton, Ontario	Machine shop	127,000	Leased
Murfreesboro, TN	Assembly	11,400	Owned
Murfreesboro, TN	Fabrication, assembly	12,000	Leased
Salem, VA	Fabrication	5,250	Leased
St. Jerome, Quebec	Foundry, machine shop	55,000	Owned

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U.S. Pipe Segment

Location	Activity	Size (sq. ft.)	Owned or Leased
Birmingham, AL	Administrative headquarters	66,000	Owned
Bessemer, AL	Foundry, machine shop	648,000	Owned
N. Birmingham, AL	Foundry, machine shop	360,000	Owned
Union City, CA	Foundry, machine shop	139,000	Owned
Burlington, NJ	Foundry, machine shop, assembly	329,000	Owned
Chattanooga, TN*	Foundry, machine shop, assembly	712,000	Owned

*: To be closed in fiscal 2006

Anvil Segment

Location	Activity	Size (sq. ft.)	Owned or Leased
Aurora, OH	Pipe cutting, machine shop	39,650	Leased
Columbia, PA	Foundry, galvanizing, painting, assembly, machine shop	663,000	Owned
Greencastle, PA	Bending, pipe cutting, machine shop	132,743	Owned
Henderson, TN	Stamping, fabrication, assembly, machine shop	236,479	Owned
Houston, TX	Machine shop	45,988	Owned
Longview, TX	Assembly, machine shop	95,650	Owned
North Kingstown, RI	Painting, fabrication, assembly, machine shop	121,000	Leased
Pottstown, PA	Forming, fabrication, assembly, machine shop	46,000	Owned
Santa Fe Springs, CA	Pipe cutting, machine shop	37,815	Leased
Simcoe, Ontario	Fabrication, machine shop	145,000	Owned
Waynesboro, PA	Pipe cutting, machine shop	72,836	Owned

Our leased properties have terms that expire between March 2006 and February 2014.

We also operate four leased regional distribution centers in the United States for our Anvil products. See "Business—Sales, Marketing and Distribution." The United States centers are located in University Park, Illinois; Sparks, Nevada; Bristol, Pennsylvania; Grand Prairie, Texas and have lease terms that expire between January 2006 and December 2013. In addition, we operate 24 smaller warehouses throughout the United States and Canada to support our Anvil operations.

We consider our plants and equipment to be well-maintained and believe our plants will have sufficient capacity to meet our present and anticipated future needs for the next five years. All of our domestic facilities, leases and leasehold interests are encumbered by liens securing our obligations under the 2005 Mueller Credit Agreement and the Mueller Group's senior discount notes.

Legal Proceedings

We are involved in various legal proceedings which have arisen in the normal course of our 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, we do not believe that any of our outstanding litigation would have a material adverse effect on our business, operations or prospects.

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U.S. Pipe has implemented an Administrative Consent Order ("ACO") for its 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. U.S. Pipe has completed, and has received final approval for 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 will be required to verify natural attenuation. It is not known how long ground water monitoring will be required. Management does not believe monitoring or further cleanup costs, if any, will have a material adverse effect on the financial condition or results of operations of the Company and its subsidiaries.

The Federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), generally imposes liability, which may be joint and several and is without regard to fault or the legality of waste generation or disposal, on certain classes of persons, including owners and operators of sites at which hazardous substances are released into the environment (or pose a threat of such release), persons that disposed or arranged for the disposal of hazardous substances at such sites, and persons who owned or operated such sites at the time of such disposal. CERCLA authorizes the EPA, the States and, in some circumstances, private entities to take actions in response to public health or environmental threats and to seek to recover the costs they incur from the same classes of persons. Certain governmental authorities can also seek recovery for damages to natural resources.

Currently, U.S. Pipe has been identified as a potentially responsible party ("PRP") by the EPA under CERCLA with respect to cleanup of hazardous substances in Anniston, Alabama. U.S. Pipe is among many PRP's at such sites and a significant number of the PRP's are substantial companies. The PRP's have negotiated an Administrative Order of Consent ("ACO") with the EPA and the PRP's have agreed to divide clean-up costs pro-rata subject to later adjustment based on the relative contribution by each PRP to the contamination. Management estimates the Company's share of liability for cleanup after allocation among the several PRPs, will be approximately $4.0 million which was accrued in 2004. Management does not believe that U.S. Pipe's share of any liability under the ACO will have a material adverse effect on the financial condition of the Company, but could be material to results of operations in future periods.

Solutia, Inc. and Pharmacia Corporation ("Solutia") filed suit against United States Pipe and Foundry Company and Walter Industries on January 5, 2003 (Solutia, Inc. and Pharmacia Corporation v. United States Pipe and Foundry Company, Walter Industries, Inc., et al, Case No. CV-03-PWG-1345-E) in US District court for the Northern District of Alabama. This is a civil action for contribution and cost recovery by Solutia with respect to costs incurred and to be incurred in performing remediation of polychlorinated biphenyls ("PCB") and heavy metals mandated by EPA in Anniston, Alabama with respect to the ACO described above. The ACO provides protection against contribution claims by third parties, such as Solutia. Management believes that the likelihood of liability in the contribution litigation is remote.

Walter Industries, Inc. and United States Pipe and Foundry Company have been named in a suit filed by Isaiah Evans on April 8, 2005 (Isaiah Evans et al v. Walter Industries, Inc., United States Pipe and Foundry Company, Inc., et al, Case No. CV:05-258) in the Circuit Court of Calhoun County, Alabama. This is a purported civil class action case filed against 18 foundries in the Anniston, Alabama area alleging state law tort claims in the creation and disposal of foundry sand alleged to contain lead and PCB's. The plaintiffs are seeking damages for personal injury and property damage. This matter is still in early stages of litigation and no substantive discovery has taken place yet. In addition, management believes that both procedural and substantive defenses would be available to us should this class action proceed. Accordingly, management believes that, presently, there is no reasonable procedural or factual basis for management to form a view with respect to the probability of liability in this matter.

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The Los Angeles Department of Water and Power, ex rel. Nora Armenta ("Armenta") filed suit against our subsidiaries, James Jones Company, Mueller Co. et al. (Superior Court, Los Angeles County, California; Case No. BC 173487) on June 27, 1997. In a related case, on September 15, 2004, the City of Banning and other California municipalities (collectively, "City of Banning") filed suit against the Company's subsidiary, James Jones Company et. al., (Superior Court, Los Angeles County; Case No. BC 321513). The Armenta matter is a false claims lawsuit brought on behalf of cities, water districts and municipalities against our James Jones Company subsidiary alleging that the defendants sold allegedly non-conforming public water system parts to various government entities. The lawsuit seeks consequential damages, penalties and punitive damages relating to the repair and replacement of the water systems to remove the allegedly non-conforming parts. Our subsidiary, Mueller Co., which had also been named as a defendant in the Armenta matter, brought a summary judgment motion and was dismissed from this litigation in January 2004. On September 15, 2004, the Armenta trial court ruled against the intervention of approximately 30 municipalities that had failed to intervene within the time deadlines previously specified by the court. The trial court also ruled that the majority of municipalities that had purchased James Jones products from contractors or distributors, were not in privity with the James Jones Company and were not entitled to punitive damages. Following the Armenta Court's ruling, on September 15, 2004, the water districts and municipalities filed the City of Banning action against the James Jones Company and Watts (former parent company of James Jones Company), alleging fraud and intentional misrepresentation. This lawsuit is based on the same underlying facts as the Armenta lawsuit. Any liability associated with these lawsuits is covered by the Tyco indemnity, and the defense is being paid for and conducted by Tyco, all in accordance with the indemnity obligation of Tyco described below.

In the acquisition agreement pursuant to which Tyco International sold Predecessor Mueller to its prior owners in August 1999, Tyco agreed to indemnify the Company and its affiliates for all "Excluded Liabilities." Excluded Liabilities include, among other things, substantially all liabilities relating to the time prior to the August 1999 Tyco transaction. 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 the August 1999 Tyco transaction, nor does it cover liabilities arising with respect to businesses or sites acquired after the August 1999 Tyco transaction.

Some of our subsidiaries have been named as defendants in a small number of asbestos-related lawsuits. We do not believe these lawsuits, either individually or in the aggregate, are material to our financial position or results of operations.

The Issuer and its subsidiaries are parties to a number of other lawsuits arising in the ordinary course of their businesses. We provide for costs relating to these matters when a loss is probable and the amount is reasonably estimable. The effect of the outcome of these matters on the 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, the we believe that the final outcome of such other litigation will not have a materially adverse effect on our consolidated financial statements.

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MANAGEMENT

The following table sets forth the name, age, as of May 1, 2006, and position of each of our executive officers and directors.

Name	Age	Position
Gregory E. Hyland	55	Chairman of the Board of Directors, President and Chief Executive Officer
Dale B. Smith	61	Chief Operating Officer and Chief Executive Officer, Mueller Group
Ray Torok	59	President, U.S. Pipe
Thomas E. Fish	52	President, Anvil
Doyce Gaskin	50	Vice President, Manufacturing
Jeffery W. Sprick	38	Chief Financial Officer
Victor P. Patrick	48	Vice President and Secretary
William F. Ohrt	57	Vice President
Joseph J. Troy	42	Vice President
Donald N. Boyce	67	Director
Howard L. Clark	62	Director
Jerry W. Kolb	70	Director
Joseph B. Leonard	62	Director
Mark J. O'Brien	63	Director
Bernard G. Rethore	64	Director
Neil A. Springer	67	Director
Michael T. Tokarz	56	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 has also served as Chairman, President and Chief Executive Officer of Walter Industries since September 2005. Prior to that time, Mr. Hyland served as President, U.S. Fleet Management Solutions of Ryder System, Inc. since June 2005. He served as Executive Vice President, U.S. Fleet Management Solutions of Ryder since October 2004. Between the period December 2003 to September 2004, Mr. Hyland was not employed. He was President of the Industrial Products Segment for Textron, Inc. 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. Mr. Hyland is a graduate of the University of Pittsburgh, where he earned his bachelor's and master of business administration degrees.

Dale B. Smith has been Chief Operating Officer since January 2006. From October 2005 to April 2006, Mr. Smith served as a member of our board of directors. He is also Chief Executive Officer of Mueller Group, a position he has held since August 1999. Prior to that time, Mr. Smith served as Executive Vice President of our subsidiary 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

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Controller for Grinnell Corp. from 1981 to 1983. From 1971 to 1981, Mr. Smith was employed by Price Waterhouse & Co. as a certified public accountant. Mr. Smith graduated from Middlebury College with an A.B. in Economics in 1967 and received an M.B.A. in Finance and Accounting from the University of Rochester in 1971.

Ray Torok has been President of our U.S. Pipe segment since July 2004. Before joining U.S. Pipe, from May 2003 to December 2003, he was interim President at Golden Casting Corporation, a foundry operation producing highly engineered precision castings and from October 1998 to February 2003, he was President and Chief Executive Officer of Cold Metal Products, a steel production company.

Thomas E. Fish has served as President of our Anvil segment since 2000. From January 2005 through November 2005, Mr. Fish served as Mueller's Interim Chief Financial Officer. Mr. Fish served as Vice President of Manufacturing for Grinnell Corp. 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 from 1982 to 1984. Mr. Fish was employed by Price Waterhouse & Co. from 1976 to 1982 as a certified public accountant. Mr. Fish graduated from the University of Rhode Island with a B.S. in accounting in 1976.

Doyce Gaskin has served as Predecessor Mueller's Vice President, Manufacturing since February 1999. He served as Plant Manager, Chattanooga from 1996 to 1999 and as Manufacturing Manager, Albertville from 1994 to 1996. Prior to that time, Mr. Gaskin held a variety of positions at Mueller's Albertville Plant, including Maintenance & Plant Engineering Manager (3 years), Maintenance Superintendent (8 years) and Production Supervisor (8 years). Mr. Gaskin graduated from Snead State with an Associates Degree in Business Administration/Management in 1988.

Jeffery W. Sprick has served as our Chief Financial Officer since November 2005. Prior to November 2005, Mr. Sprick served as Senior Vice President and Controller of Walter Industries. From April 2002 to August 2005 Mr. Sprick served as Vice President of Corporate Accounting of Walter Industries. Prior to joining Walter Industries in April 2002, Mr. Sprick was a senior manager of PricewaterhouseCoopers, where he was employed from 1989 until March 2002. Mr. Sprick holds a bachelor's degree in business administration from the University of Michigan.

Victor P. Patrick is a Vice President of the Company. From October 2005 to April 2006, Mr. Patrick served as a member of our board of directors. Mr. Patrick also serves as Senior Vice President, General Counsel and Secretary of Walter Industries, which positions he has held since 2002. Before joining Walter Industries, Mr. Patrick was Vice President, Secretary and Deputy General Counsel for Honeywell International Inc. from 1996. Prior to joining Honeywell, Mr. Patrick was an associate in the Washington, D.C. and Brussels, Belgium offices of the Cleary, Gottlieb, Stein & Hamilton law firm. Mr. Patrick holds a bachelor's degree from Princeton University and a law degree from Harvard Law School.

William F. Ohrt is a Vice President of the Company. From October 2005 to April 2006, Mr. Ohrt served as a member of our board of directors. Mr. Ohrt also serves as Executive Vice President and Chief Financial Officer of Walter Industries, which positions he has held since January 2001. Mr. Ohrt joined Walter Industries from Dura Automotive Systems, Inc., where he served as Vice President and Chief Financial Officer from December 1999. He previously worked at Navistar, ITT Industries and AlliedSignal. A certified public accountant, Mr. Ohrt began his career at the Detroit offices of PricewaterhouseCoopers. He earned his bachelor's degree in accounting from Wayne State University in 1975 and an MBA in finance from the University of Detroit in 1981.

Joseph J. Troy is a Vice President of the Company. From October 2005 to April 2006, Mr. Troy served as a member of our board of directors. Mr. Troy has been Senior Vice President, Financial Services, of Walter Industries since April 2002. In this position, Mr. Troy oversees Walter Industries' Financial Services Group, where he is President of Mid-State Homes, Inc. and Chief Executive Officer of Walter Mortgage Company since 2001. He also oversees Walter Industries' merger and acquisition

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activities as well as investor relations. Prior to rejoining Walter Industries in November 2000 as Senior Vice President and Treasurer, Mr. Troy was Executive Vice President and Chief Financial Officer of Gold Standard Multimedia, Inc., a high-tech provider of pharmaceutical information. From 1998 through 2000, Mr. Troy served as Walter Industries' Vice President—Treasurer. Previously, he was Senior Vice President—Corporate Finance for the Global Finance Division of NationsBank. Mr. Troy earned his MBA, along with a bachelor's degree in business administration, from Loyola College of Baltimore.

Donald N. Boyce has been a member of our board of directors since April 2006. He has been a director of Walter Industries since August 1998. Mr. Boyce was appointed Interim Chairman of the Board of Walter Industries, President and Chief Executive Officer of Walter Industries on August 3, 2000 and resigned as President and Chief Executive Officer on November 2, 2000. He resigned from the position of Chairman of the Board as of March 1, 2002. Mr. Boyce was Chairman of the Board of Directors of IDEX Corporation from April 1, 1999 until March 31, 2000 and was Chairman of the Board of Directors, President and Chief Executive Officer of IDEX Corporation from January 1988 until March 31, 1999.

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 Vice Chairman of Lehman Brothers Inc., an investment-banking firm, since February 1993; prior thereto Mr. Clark served as Chairman and Chief Executive Officer of Shearson Lehman Brothers Inc. Mr. Clark also is a director of Lehman Brothers Inc., Maytag Corporation, United Rentals, Inc. and White Mountains Insurance Group, Ltd.

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 retired as a Vice Chairman of Deloitte & Touche LLP in 1998, a position he held since 1986. He also is a director of The Mid-America Group.

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 23, 2005. Mr. Leonard has been Chairman and Chief Executive Officer of AirTran Holdings, Inc. since January 1999 and served as President of AirTran Holdings, Inc. from January 1999 through January 2001. From 1993 to 1998, Mr. Leonard served in various executive capacities for AlliedSignal, Inc. and its Aerospace division, last serving as the President and Chief Executive Officer of marketing, sales and service of AlliedSignal Aerospace and Senior Vice president of AlliedSignal, Inc. during 1998. From 1991 to 1993, Mr. Leonard served as Executive Vice President of Northwest Airlines, Inc. Prior to that, Mr. Leonard served in various executive positions for Eastern Airlines, Inc. from 1984 to 1990, as Assistant Vice President, aircraft maintenance for American Airlines, Inc. from 1982 to 1984 and in various maintenance and quality control positions for Northwest Airlines, Inc. from 1969 to 1982.

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 23, 2005. Since March 2, 2006, Mr. O'Brien also serves as Chairman and Chief Executive Officer of Walter Industries' Homes 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 capacities at Pulte Homes, Inc. for 21 years, culminating in his appointment as President and Chief Executive Officer. He retired from that position in 2003.

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 since April 2000. From January 2000 to April 2000 he served as Flowserve Corporation's Chairman. He had previously served as Chairman and Chief Executive Officer of Flowserve Corporation from July 1997 to January 2000 and held the additional title of President from

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October 1998 to July 1999. Mr. Rethore is a director of Maytag Corp., Belden CDT, Inc., and Dover Corp.

Neil A. Springer has been a member of our board of directors since April 2006. He has been a director of Walter Industries since August 2000. Mr. Springer is managing director of Springer & Associates LLC which was established in 1994. Mr. Springer also is a director of IDEX Corporation and CUNA Mutual Insurance Group.

Michael T. Tokarz has been a member of our board of directors since April 2006. He has been a director of Walter Industries since September 1987. Since February 1, 2002 he has been a member of the Tokarz Group, LLC. From January 1996 until February 1, 2002, Mr. Tokarz was a member of the limited liability company which serves as the general partner of Kohlberg Kravis Roberts & Co. L.P. Mr. Tokarz also is a director of IDEX Corporation, Conseco, Inc. and MVC Capital, Inc.

Executive Compensation

The aggregate remuneration during 2003, 2004 and 2005 of the Chief Executive Officer and the four other most highly compensated executive officers of the issuer whose salary and bonus exceeded $100,000 for the fiscal year ended September 30, 2005, is set forth in the following table. The individuals named in the table will be referred to as our named executive officers:

									Long Term Compensation
	Annual Compensation											Awards
Name and Principal Position	Year	Salary			Bonus		Other Annual Compensation		Restricted Stock Award(s)	Securities Underlying Options		Long Term Incentive Plan Payouts	All Other Compensation
Dale B. Smith President and Chief Executive Officer	2005 2004 2003	$	379,167 350,000 350,000		$	3,373,920 2,245,320 1,273,327	410,332	(4) (5) (5)	— — —	— — —		— — —	— — —
Thomas E. Fish Interim Chief Financial Officer and President, Anvil Segment(1)	2005 2004 2003		262,500 245,000 245,000			874,700 378,800 158,600	112,293	(4) (5) (5)	— — —	— — 157,500	(6)	— — —	— — —
George P. Bukuras Vice President, Chief Compliance Officer, General Counsel and Secretary(1)	2005 2004 2003		210,417 200,000 198,333	(2)		468,600 311,850 176,851		(5) (5) (5)	— — —	— — —		— — —	— — —
Darrell Jean Vice President, Business Development(1)	2005 2004 2003		200,000 188,333 177,500	(3)		468,600 561,330 318,332	107,278	(4) (5) (5)	— — —	— — 157,500	(6)	— — —	— — —
Doyce Gaskin Vice President, Manufacturing	2005 2004 2003		176,667 165,000 158,333			534,927 450,847 284,326	103,617	(4) (5) (1)	— — —	— — 157,500	(6)	— — —	— — —

(1): Mr. Fish served as our Interim Chief Financial Officer from January 27, 2005 until November 7, 2005, and effective March 1, 2005, Mr. Fish's base salary was increased to $275,000. Mr. Jean served as our Chief Financial Officer through January 26, 2005. From February 18, 2005 until November 30, 2005, Mr. Jean served as our Vice President, Business Development. As of November 30, 2005, Mr. Jean's employment by us was terminated. Effective November 4, 2005, Mr. Bukuras's employment by us was terminated.
(2): In connection with the termination of Mr. Burkuras' employment, effective as of November 4, 2005, Mr. Burkuras was entitled to a lump sum severance payment under his existing employment agreement in an amount equal to 18 months of his then-current base salary and 150% of the bonus paid to him in fiscal year

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2005. Payment of the severance was deferred for 6 months after his termination date as a result of the application of Section 409A of the Code.

(3): In connection with the termination of Mr. Jean's employment, effective as of November 4, 2005, Mr. Jean was entitled to severance payments under his existing employment agreement in an amount equal to the greater of: (a) the sum of his unpaid salary (at an annual rate of $200,000) and annual bonus (only if and to the extent bonus is paid to other senior executives of Mueller Group) through December 31, 2007, and (b) 18 months of salary at $200,000 per year plus 150% of the bonus for the 2005 fiscal year. Payment of the severance was deferred for 6 months into 2006 as a result of the application of Section 409A of the Code.
(4): Other annual compensation includes, among other items, compensation payments made to current employees and directors to offset additional taxes owed by them as a result of the revaluation of compensation paid in Mueller Water stock in 2004 as follows: Mr. Smith, $386,538; Mr. Fish, $98,696; Mr. Jean, $98,696; and Mr. Gaskin, $98,696.
(5): The amount is less than $50,000 and 10.0% of annual compensation for that individual.
(6): Shares of Predecessor Mueller.

Stock Option and Stock Appreciation Rights

No grants of stock options to purchase shares of our common stock or stock appreciation rights were made to our named executive officers during the fiscal year ended September 30, 2005.

Exercises and Holdings of Stock Options and Stock Appreciation Rights

None of our named executive officers held stock options or stock appreciation rights at year-end and none exercised stock options to purchase shares of our common stock or stock appreciation rights during the fiscal year ended September 30, 2005.

Long-Term Incentive Plan Awards

We did not have any long-term incentive plans during the fiscal year ended September 30, 2005.

Pension Plan

None of our named executive officers participate in any defined benefit pension plan. Our named executive officers participate in either our 401(k) plan or the Walter Industries, Inc. 401(k) plan, under which they receive matching company contributions in accordance with the terms of the applicable plan.

Stock Option and Incentive Plans

2006 Stock Incentive Plan

Our board of directors and stockholders approved the form of the 2006 Stock Incentive Plan on April 26, 2006. The following description of the 2006 Stock Incentive Plan is a summary of the key terms of the 2006 Stock Incentive Plan. The full text of the 2006 Stock Incentive Plan has been filed as an exhibit to the registration statement of which this prospectus is a part.

Purpose. The purpose of the 2006 Stock Incentive Plan is to promote our long-term growth and financial success by providing incentives to our employees, directors, and consultants through grants of stock-based awards. These awards are intended to tie the interests of participants directly to stockholder interests and encourage individual and collective behavior that enhances our success as a business. The provisions of the 2006 Stock Incentive Plan, which allow for the grant of various types of equity-based awards, are also intended to provide greater flexibility to maintain the Company's competitive ability to attract, retain and motivate participants for the benefit of the Company and our stockholders.

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Eligibility. Generally, all of the employees (including executive officers), members of our board of directors, and consultants of the Company, its designated subsidiaries, and its affiliates are eligible to participate in the 2006 Stock Incentive Plan. Directors, employees and consultants subject to the rules or laws of a foreign jurisdiction that prohibit or make their participation impractical are not eligible to participate.

Types of Stock-Based Awards. The types of stock-based awards that will be available for grant under the 2006 Stock Incentive Plan (described in more detail below) are:

•: incentive stock options;
•: nonstatutory stock options;
•: restricted stock bonuses;
•: restricted stock purchase rights;
•: stock appreciation rights;
•: phantom stock units;
•: restricted stock units;
•: performance share bonuses; and
•: performance share units.

Share Reserve. A total of of our shares of our Series A common stock will be reserved for issuance under the 2006 Stock Incentive Plan. Not more than shares of our Series A common stock may be issued under the 2006 Stock Incentive Plan pursuant to incentive stock options. Shares of Series A Common stock covered by awards under the 2006 Stock Incentive Plan that expire, are canceled, or otherwise terminate prior to being exercised or redeemed in full, or are repurchased or reacquired by us prior to vesting, will again be available for grant under the 2006 Stock Incentive Plan.

Section 162(m) Limit. Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), permits performance-based compensation that meets the requirements established by the IRS to be excluded from the limitation on deductibility of compensation in excess of $1.0 million paid to certain specified senior executives. So that income that is recognized with respect to options and other stock awards may qualify for full deductibility to the Company under Section 162(m), the 2006 Stock Incentive Plan limits awards to individual participants to no more than shares of our Series A common stock subject to awards payable in shares (or with a value in excess of $ for awards payable in cash) during any fiscal year, except for new employees, who may receive an award covering up to an additional shares of our Series A common stock (or if the award is payable in cash, with a value not to exceed $ ) if such award is in connection with his or her initial service.

Adjustments by our Board of Directors. The number of shares issued or reserved pursuant to the 2006 Stock Incentive Plan, the share limits on grants of options and/or other stock awards to a given participant, and the number of shares subject to, and the exercise or base price for, outstanding awards, is subject to adjustment as determined by our board of directors on account of mergers, consolidations, reorganizations, recapitalizations, reincorporations, stock splits, spin-offs, stock dividends, extraordinary dividends and distributions, liquidating dividends, combinations or exchanges of shares, changes in corporate structure or other transactions which similarly affect our Series A common stock.

Administration of the 2006 Stock Incentive Plan. As authorized by the 2006 Stock Incentive Plan, our board of directors expects to delegate administration of the 2006 Stock Incentive Plan to the compensation committee. The plan administrator has the authority to perform the following actions, among other actions:

•: designate participants in the 2006 Stock Incentive Plan;

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•: determine the type(s), number of shares, terms and conditions of awards, as well as the timing and manner of grant, subject to the terms of the 2006 Stock Incentive Plan;
•: interpret the 2006 Stock Incentive Plan and establish, adopt or revise any rules and regulations to administer the 2006 Stock Incentive Plan; and
•: make all other decisions and determinations that may be required under the 2006 Stock Incentive Plan.

Options. Options granted under the 2006 Stock Incentive Plan will generally have an exercise price that is at least equal to 100% of the fair market value of our Series A common stock on the date the option is granted. To the extent permitted in his or her option agreement and to the extent permitted by law, an option holder may exercise an option by payment of the exercise price in a number of different ways, including: (1) in cash or by check; (2) pursuant to a "same day sale" program; (3) by the surrender of shares of, or attestation of ownership of, our Series A common stock already owned by the option holder; (4) by reduction of our liability to the option holder; or (5) by some combination of the above. It is expected that options will generally vest in equal annual installments over three years. Unless the option holder's option agreement provides otherwise, options will expire, to the extent unexercised, ten years from the date of grant. Unless the option holder's option agreement provides otherwise, in the event of the option holder's termination of service, the option holder (or in the event of death, the holder's beneficiary or successor) will have up to three months (two years on account of disability, death, or retirement) from termination of service to exercise vested options.

Awards to Non-Employee Directors. A director who is not an employee of ours (an "Eligible Director") will be eligible to receive stock-based awards of our Series A common stock in connection with joining the board of directors. The board of directors, in its sole discretion, will determine the number of shares subject to, and the other terms governing, these initial stock-based awards. This initial stock-based award will be made automatically on the date that the Eligible Director commences service as a member of our board of directors and will vest in accordance with the stock award agreement. Normally, stock options that are included in the initial stock-based award will vest in equal annual installments over three years. Each Eligible Director will also receive an annual stock-based award on the date the Eligible Director is re-elected to the board, provided that he or she has served as a director for a period of at least six months prior to re-election. The board of directors, in its sole discretion, will determine the number of shares subject to this annual stock-based award and the other terms governing the stock-based award. These annual stock-based awards will vest in accordance with the terms of the stock award agreement. Stock options included in both the initial stock-based award and the annual stock-based award will have an exercise price that is at least equal to 100% of the fair market value of our common stock on the date of grant. In the event that the stock-based award holder's status as an Eligible Director terminates for any reason other than disability or death, the stock-based award holder will generally have up to three months from termination to exercise any vested options that he or she has. If the Eligible Director's service is terminated due to disability or death, the stock-based award holder, or the holder's beneficiary or successor (as applicable) will generally have up to two years from termination to exercise vested options within the stock-based award. In no event will the options that are part of the stock-based award expire later than ten years from the date of grant. In addition, upon the termination of an Eligible Director's service by reason of his or her retirement, all of his or her then-outstanding initial and annual awards will become fully vested and exercisable.

Restricted Stock Bonuses and Performance Share Bonuses. Restricted stock bonuses and performance share bonuses are grants of our Series A common stock generally not requiring any monetary consideration (other than payment of the par value of the shares of our Series A common stock to the extent required by law), but subject to restrictions as determined by the plan administrator.

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Generally, unless the participant's award agreement provides otherwise, the participant may not sell, transfer, or otherwise dispose of the shares issued in the participant's name at the time of grant until those restrictions are met. The vesting of restricted stock bonus awards will generally be based on the participant's continuous service; the vesting of performance share bonus awards will generally be based on the achievement of certain performance criteria, as determined by the plan administrator. If the vesting of a restricted stock bonus award is based on the participant's continuous service, such restricted stock bonus generally will not fully vest in less than three years; a performance share bonus award generally will not fully vest in less than one year. In the event a participant's continuous service terminates or a participant fails to meet performance criteria, all unvested shares as of the date of termination will be reacquired by us at the same price paid to us, if any, by the participant.

Restricted Stock Purchase Rights. Restricted stock purchase rights entitle a participant to purchase shares of our Series A common stock. The purchase price will be determined by the plan administrator but will generally be at least 100% of the fair market value of our Series A common stock on the date of such award. Generally, unless the participant's award agreement provides otherwise, the participant may not sell, transfer, or otherwise dispose of the shares issued in the participant's name at the time of grant until those restrictive conditions are met. The vesting of restricted stock purchase rights will be determined by the plan administrator for each grant. In the event a participant's continuous service terminates, all unvested shares as of the date of termination may be repurchased by us at the same price paid to us by the participant.

Stock Appreciation Rights. The plan administrator may grant stock appreciation rights independently of, or in connection with, an option grant. The base price per share of a stock appreciation right generally will be at least 100% of the fair market value of our Series A common stock on the date of grant. Generally, each stock appreciation right will entitle a participant upon redemption to an amount equal to (a) the excess of (1) the fair market value on the redemption date of one share of Series A common stock over (2) the base price, multiplied by (b) the number of shares of our Series A common stock covered by the stock appreciation right being redeemed. To the extent a stock appreciation right is granted concurrently with an option grant, the redemption of the stock appreciation right will proportionately reduce the number of shares of Series A common stock subject to the concurrently granted option. Payment shall be made in shares of Series A common stock or in cash, or a combination of both, as determined by the plan administrator.

Phantom Stock Units. A phantom stock unit is the right to receive the value of one share of Series A common stock, redeemable upon terms and conditions set by the plan administrator. Distributions upon redemption of phantom stock units may be in shares of Series A common stock valued at fair market value on the date of redemption or in cash, or a combination of both, as determined by the plan administrator.

Restricted Stock Units and Performance Share Units. The plan administrator may also award restricted stock units or performance share units, both of which entitle the participant to receive the value of one share of common stock per unit no earlier than the time the unit vests, with delivery of such value (distributed in shares of Series A common stock or in cash) on a date chosen by the participant. For restricted stock units, vesting will generally be based on the participant's continuous service; for performance share units, vesting will generally be based on the achievement of certain performance criteria, as determined by the plan administrator. In the event a participant's continuous service terminates or a participant fails to meet performance criteria, all unvested shares of Series A common stock subject to one of these awards as of the date of termination will be subject to our reacquisition at the same price paid to us, if any, by the participant.

Transferability. Unless otherwise determined by the plan administrator or provided for in a written agreement setting forth the terms of an award, awards granted under the 2006 Stock Incentive Plan will not be transferable other than by will or by the laws of descent and distribution.

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Change of Control. In the event of a change of control, as defined in the 2006 Stock Incentive Plan, other than dissolution, our board of directors may provide for (1) the assumption or continuation of any stock awards outstanding under the Plan, (2) the issuance of substitute awards that will substantially preserve the terms of any awards, (3) a cash payment in exchange for the cancellation of an award or (4) the termination of an award upon the consummation of the change of control. Furthermore, at any time our board of directors may provide for the acceleration of exercisability and/or vesting of an award. In the event of the dissolution of the Company, unless our board determines otherwise, all outstanding awards will terminate immediately prior to dissolution.

Amendment or Termination. Our board of directors may amend, suspend, or terminate the 2006 Stock Incentive Plan in any respect at any time, subject to stockholder approval if such approval is required by applicable law or stock exchange rules. However, no amendment to the 2006 Stock Incentive Plan may generally materially impair any of the rights of a participant under any awards previously granted without his or her written consent.

Term. Unless earlier terminated by the board of directors, the 2006 Stock Incentive Plan will expire on the tenth anniversary of the date of board approval. No awards will be granted under the Plan after that date.

Outstanding Awards. As of the date of the registration statement, of which this prospectus is a part, no stock options or other equity-based awards had been granted and no shares of our Series A common stock had been issued under the 2006 Stock Incentive Plan. In connection with this offering, and upon the effectiveness of the registration statement, we anticipate granting restricted stock unit awards covering shares of our Class A common stock with an aggregate value of not more than $18.4 million (valued at the initial public offering price per share) to up to 31 members of our management team, with all these awards cliff vesting at the end of three years of service. We anticipate granting such restricted stock unit awards to our named executive officers and directors in the following amounts:

Name		Number of Shares		Value at IPO Price

Other future grants under the 2006 Stock Incentive Plan will be made at the discretion of the Committee, and, accordingly, are not yet determinable. In addition, benefits under the 2006 Stock Incentive Plan will depend on a number of factors, including the fair market value of the Company's common stock on future dates and the exercise decisions made by the participants. Consequently, it is not possible to determine the benefits that might be received by participants receiving discretionary grants under the 2006 Stock Incentive Plan.

In addition, we anticipate that any stock awards held by our employees that are denominated in shares of Walter Industries common stock will be converted into an equivalent award denominated in our Series A common stock following Walter Industries' distribution of our Class B common stock to its shareholders. Upon conversion, the new awards will generally preserve the value, terms and conditions of the original awards to the greatest extent permitted by applicable law and the terms of the 2006 Stock Incentive Plan.

2006 Employee Stock Purchase Plan

Our board of directors and stockholders approved the form of the 2006 Employee Stock Purchase Plan on April 26, 2006. The following description of the 2006 Employee Stock Purchase Plan is a

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summary of the key terms of the 2006 Employee Stock Purchase Plan. The full text of the 2006 Employee Stock Purchase Plan has been filed as an exhibit to the registration statement of which this prospectus is a part.

Purpose. The 2006 Employee Stock Purchase Plan is intended to qualify as an "employee stock purchase plan" under Section 423 of the U.S. Internal Revenue Code of 1986, as amended, (the "Code") and provides our employees with an opportunity to purchase shares of our common stock through payroll deductions.

Share Reserve. A maximum of shares of the Company's Series A common stock may be issued under the 2006 Employee Stock Purchase Plan. The number of shares of Series A common stock issued or reserved pursuant to the 2006 Employee Stock Purchase Plan and the number of shares subject to, and the exercise price of, outstanding awards is subject to adjustment, as determined by the board of directors, on account of stock splits, stock dividends and other dilutive changes in our shares of Series A common stock. The shares may consist of unissued shares, treasury shares or shares purchased on the open market.

Administration. As authorized by the 2006 Employee Stock Purchase Plan, our board of directors expects to delegate administration of the 2006 Stock Incentive Plan to the compensation committee. The plan administrator has the authority to make rules and regulations for the administration of the 2006 Employee Stock Purchase Plan and its interpretations and decisions with regard to the 2006 Employee Stock Purchase Plan is final and binding on all parties.

Eligibility. Generally, all regular employees of the Company and its designated subsidiaries whose customary employment is for at least 20 hours per week will be eligible to participate in the 2006 Employee Stock Purchase Plan, unless employees own shares possessing 5% or more of the total combined voting power or value of all classes of shares of the Company or any subsidiary. However, employees subject to the rules or laws of a foreign jurisdiction that prohibit or make their participation impractical are not eligible to participate.

Participation in the Plan. Eligible employees may participate in the 2006 Employee Stock Purchase Plan by electing to participate in a given offering period pursuant to procedures set forth by the plan administrator. A participant's election to participate in the 2006 Employee Stock Purchase Plan will continue until the participant makes a new election, or withdraws from an offering period or the 2006 Employee Stock Purchase Plan.

Payroll Deductions. Participants may elect to deduct from 1% to 10% of their base cash compensation, excluding bonuses, stock compensation income and other forms of extraordinary compensation. The maximum number of shares of Series A common stock that any single employee may purchase under the 2006 Employee Stock Purchase Plan during any single offering period is shares. No more than shares may be purchased by all participants in the aggregate during any single offering period. Certain provisions of the 2006 Employee Stock Purchase Plan that are intended to satisfy applicable U.S. federal tax laws impose additional limitations on the amount of common stock that may be purchased during any calendar year by a participant.

Purchase of Stock. The 2006 Employee Stock Purchase Plan designates offering periods and purchase dates. Offering periods will generally be consecutive three month periods, commencing on or about each November 1, February 1, May 1, and August 1 and ending on or about each January 31, April 30, July 31, and October 31, respectively. On the first trading day of each offering period (such date, the "offering date"), each participant will be granted an option to purchase on the last trading day of that offering period (the "purchase date") such number of shares of our Series A common stock as is determined by dividing the total amount that has been withheld from the employee's compensation under the 2006 Employee Stock Purchase Plan during that offering period by the applicable purchase price. The purchase price shall be 85% of the lesser of the fair market value of the

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shares on the offering date or the purchase date. The participant's option is automatically exercised on the purchase date.

Initial Offering Period. The initial offering period shall commence on the effective date of the registration statement of which this prospectus is a part and will end on the next regularly scheduled purchase date, with shares purchased at the lower of 85% of the initial public offering price or 85% of the fair market value of the Series A common stock on the next purchase date.

Termination of Participation in the Plan. The plan administrator will determine the terms and conditions under which a participant may withdraw from an offering period or the 2006 Employee Stock Purchase Plan. A participant's participation in the 2006 Employee Stock Purchase Plan will be terminated upon the termination of such participant's employment for any reason. Upon a termination of a participant's employment during an offering period, all payroll deductions credited to such participant's plan account will be refunded to the participant.

Amendment and Termination. The board may amend, alter or discontinue the 2006 Employee Stock Purchase Plan at any time; provided, however, that no amendment, alteration or discontinuation will be made to an option which, without a participant's consent, would impair any of such participant's rights and obligations under that option. To the extent necessary to comply with the requirements of Section 423 of the Code, the Company will obtain stockholder approval of any amendment, alteration or discontinuation of the 2006 Employee Stock Purchase Plan.

The 2006 Employee Stock Purchase Plan will terminate upon the earlier of (i) the termination of the 2006 Employee Stock Purchase Plan by the board of directors or (ii) the tenth anniversary of the date of board approval.

Withholding. The Company reserves the right to withhold from shares or compensation paid to a participant any amounts which it is required by law to withhold.

Change of Control. In the event of a proposed dissolution or liquidation of the Company, any options outstanding under the plan will generally terminate immediately prior to the proposed dissolution or liquidation and all contributions will be refunded to the participants. In the event of a sale of substantially all of the assets of the Company or the merger of the Company with another corporation, (1) each option may be assumed or an equivalent option substituted by the successor corporation (2) the offering period in effect may be shortened and terminate immediately prior to the proposed sale or merger, (3) all outstanding options may terminate with all contributions returned to participants, or (4) the options may continue unchanged.

Other Information. As of , 2006, approximately of our employees would be eligible for participation in the 2006 Employee Stock Purchase Plan. Because the benefits conveyed under the 2006 Employee Stock Purchase Plan are contingent upon, among other things, the amount of contributions participating employees make on a voluntary basis, it is not possible to determine the benefits eligible employees will receive under the 2006 Employee Stock Purchase Plan.

Executive Incentive Plan

In general, Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code "), imposes a limit on corporate tax deductions for compensation in excess of $1.0 million per year paid by a public company to its named executive officers. An exception to this $1.0 million limitation is provided for "qualified performance-based compensation" that satisfies certain conditions set forth in Section 162(m) of the Code and the regulations promulgated thereunder, including stockholder approval.

Our board of directors and our shareholders approved the Executive Incentive Plan (the "Incentive Plan") on April 26, 2006 in order for compensation paid thereunder to qualify as "qualified

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performance-based compensation" within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder and, accordingly, to be eligible for deductibility by the Company. The following description of the Incentive Plan is a summary of the key terms of the Incentive Plan. The full text of the Incentive Plan has been be filed as an exhibit to the registration statement of which this prospectus is a part.

Purpose. The purpose of the Incentive Plan is to attract, retain, motivate and reward executives and key employees of the Company to produce results that increase stockholder value and to encourage individual and team behavior that helps us achieve both short and long-term corporate objectives. The compensation awarded under the Incentive Plan generally is intended to be "qualified performance-based compensation" that is exempt from the $1.0 million limitation on executive compensation under Section 162(m) of the Code and the regulations promulgated thereunder.

Administration and Interpretation. The Incentive Plan will be administered by a committee of the board of directors that meets the requirements of Section 162(m) of the Code. The committee will have the authority to administer and interpret the Incentive Plan.

Eligibility. Each individual who is a named executive officer or a key employee and who is selected to participate in the Incentive Plan for a specified fiscal year by the committee is eligible for a performance-based award for such fiscal year. When an individual is selected by the committee to participate in the Incentive Plan, the committee will establish objectively determinable performance targets for such individual for the fiscal year at issue. The committee also will establish specified levels of the performance targets and the amount to be paid at each such specified level.

Business Criteria. As indicated above, each participant's bonus will be based on pre-established performance target. Our plan provides broad discretion to the committee to establish objective performance measures, which may include one or more of the following objective business criteria: (a) pre-tax income; (b) operating income; (c) net earnings; (d) net income; (e) cash flow; (f) earnings per share; (g) return on equity; (h) return on invested capital or assets; (i) cost reductions or savings; (j) funds from operations; (k) appreciation in the fair market value of our stock; (l) earnings before any one or more of interest, taxes, depreciation or amortization, or (m) implementation of our critical processes or projects.

Bonus Amount. The bonus award for any participant is based on the achievement of specified levels above the performance targets. Prior to the payment of a bonus award to a participant, the committee must certify in writing the level of the performance attained.

Performance-Based Compensation. With respect to any award payable under the Incentive Plan, the performance targets applicable to such award will be established in writing before the first day of the fiscal year to which such award relates. However, to the extent permitted under Section 162(m)(4)(C) of the Code, and the regulations promulgated thereunder, such performance targets may be established in writing by the committee not later than 90 days after the commencement of the period of service to which the performance targets relate, provided that the outcome is substantially uncertain at the time the committee actually establishes the performance targets; and, provided, further, that in no event shall the performance targets be established after 25% of the period of service (as scheduled in good faith at the time the performance targets are established) has elapsed. No award which is intended to qualify as "qualified performance-based compensation," within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder, will be paid to a participant unless and until the committee makes a certification in writing with respect to the level of performance attained by the Company for the fiscal year to which such award relates, as required by Section 162(m) of the Code and the regulations promulgated thereunder.

Method of Payment. Each award shall be paid in cash. Unless otherwise directed by the compensation committee, payment shall be made within 2.5 months after the end of the fiscal year in which such bonus award was earned.

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Effective Date. The Incentive Plan became effective upon our stockholders' approval thereof on April 26, 2006. Except with respect to fiscal year 2006, the Incentive Plan year will commence on the first day of each fiscal year and end on the last day of that fiscal year.

Amendment. The Incentive Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the committee. However, to the extent required by Section 162(m) of the Code, and the regulations promulgated thereunder, no action of the committee may modify the performance targets applicable to awards after the commencement of the fiscal year with respect to which such awards relate.

Employment Agreements; Compensation and Severance Arrangements

Gregory E. Hyland. Mr. Hyland's employment with the Company is governed by the terms of his employment agreement with Walter Industries which provides for an annual base salary of $725,000, an annual target bonus of 100% of annual base salary, a car allowance of $2,000 per month, four weeks vacation each year, reimbursement of tax planning and club membership expenses, participation in a supplementary retirement savings plan and severance of 24 months salary and 12 months bonus (with pro rata bonus for the year of termination and continuation of fringe benefits during the 24 month severance period) in the event that he is terminated without cause or resigns following a significant diminution in pay or responsibilities. The employment agreement also provides for an annual equity opportunity with a target value calculated at $1.6 million.

Dale B. Smith. Mr. Smith's executive employment agreement with Mueller Holding Company, Inc. provides that Mr. Smith will serve as Chief Operating Officer of the Company and Chief Executive Officer of Mueller Group.

The executive employment agreement provides, for the period ending December 31, 2007, an annual base salary of at least $400,000 and an annual incentive target bonus opportunity, currently set at approximately $2,000,000, based on the achievement of operating income, return on net assets and synergy targets, with the potential for a larger annual incentive bonus if these targets are exceeded. These targets that have been set for fiscal 2006 under the Walter Industries, Inc. Executive Incentive Plan are based on the annual business plan and will be revised at the Board's discretion for future fiscal periods. From December 31, 2007 to his 65th birthday, Mr. Smith's annual base salary will be at least $1,500,000 and his participation in a bonus plan shall be at the discretion of, and on terms and conditions to be established by, the compensation committee and he shall not be required to work more than 12 weeks per year. The agreement also provides for other benefits customarily accorded to our executives. If Mr. Smith is terminated without cause or suffers a constructive termination as more specifically set forth in the agreement, then through the date of his 65th birthday, Mr. Smith will be entitled to payment of his base salary, any bonus and any equity interest as may be set forth under any applicable plan or award.

The executive employment agreement also provides for equity grants with a value at grant date of $1,000,000 (calculated using a modified Black-Scholes model) on or about January 23, 2006 and December 31, 2006. The grants shall each vest in full on December 31, 2007 and Mr. Smith shall have until December 31, 2010 to exercise any stock options included in the equity grants. The first of such equity grants consisted of 15,750 restricted stock units and 15,750 non-qualified stock options with a strike price equal to the average of the high and low trading prices for Walter Industries' common stock on the New York Stock Exchange on the grant date. The first equity grant is denominated in the common stock of Walter Industries, and it is anticipated that the second grant will be denominated in our common stock. The first equity grant will be converted into an equivalent equity grant in our common stock no later than 90 days following the distribution of our common stock to the shareholders of Walter Industries. Upon conversion, the grant will preserve the value, terms and conditions of Walter Industries' equity grant to Mr. Smith.

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Mr. Smith has no family relationship with any director or executive officer of the Company, Mueller Group or Walter Industries, Inc. He will continue as an officer of the Company and Mueller Group until the earlier of his termination of employment or the election of his successor by the board of directors of the Company and Mueller Group.

Ray Torok. Mr. Torok's employment with the Company is governed by the terms of his employment agreement with Walter Industries which provides for an annual base salary, currently set at $318,052, an annual target bonus of 60% of annual base salary, a car allowance of $1,500 per month, four weeks vacation each year, and severance of 12 months' salary and 12 months' bonus (with continuation of fringe benefits during the 12-month severance period) in the event that he is terminated without cause or resigns following a significant diminution in pay or responsibilities.

Thomas E. Fish and Doyce Gaskin. Our subsidiary, Mueller Group, has entered into employment agreements with each of Messers. Fish and Gaskins. The term of employment under each employment agreement is one year, commencing on the effective date, and renewing thereafter for successive periods of one year each. Under his employment agreement, Mr. Fish's annual base salary from January 1, 2005 through February 28, 2005 was $245,000 and from and after March 1, 2005 is $275,000. Mr. Gaskin's annual base salary is $200,000 under his employment agreement. Each employment agreement provides that the covered employee's base salary shall be reviewed no less frequently than annually by the compensation committee and shall be increased by an amount that is at least equal to the greater of: (i) 4% of the employee's base salary in effect immediately prior to such adjustment, or (ii) the product of (A) the cost of living increase (as defined in each employment agreement) and (B) the employee's base salary in effect immediately prior to such adjustment.

Mr. Fish is entitled under his employment agreement to receive an annual bonus equivalent to not less than 30% of the bonus pool applicable to compensate senior executives of Mueller Group's Anvil segment, and, for the fiscal year ending September 30, 2005, a discretionary bonus of not less than $200,000. Mr. Gaskin is entitled under his employment agreement to receive an annual bonus equivalent to not less than 15% of the bonus pool established from time to time by the board of directors based on the annual EBITDA of the Mueller segment operating units set forth in his employment agreement. Each employee also is entitled to participate in the benefit programs available to Mueller Group employees generally, and employees in the class of senior executives of Mueller Group.

Under each employment agreement, if the covered employee's employment is terminated by Mueller Group without cause, other than upon his death or disability (as defined in each employment agreement), or by the employee for good reason (as defined in each employment agreement) the employee will be entitled to receive payment of a severance benefit in an amount equal to the sum of (A) 18 months' base salary, plus (B) 150% of the annual bonus paid or payable to the employee for the fiscal year immediately preceding the fiscal year in which termination occurs. These severance rights supersede and replace any rights these employees had to severance under any other arrangement or agreement with Mueller Group, including the Mueller Group Key Employee Severance Plan.

In the event a covered employee's employment is terminated as a result of his death or disability, he or his heirs or estate, as applicable, will be entitled to receive the employee's base salary through the end of the fiscal year in which the termination occurs, reimbursement of expenses incurred prior to such termination and any bonus payment payable to the employee for the fiscal year in which the termination occurs, prorated through the date of termination.

Both employees are subject to certain confidentiality and non-competition provisions under the employment agreements.

Jeffery W. Sprick. Mr. Sprick's employment with the Company is governed by the terms of his employment agreement with Walter Industries which provides for an annual base salary, currently set at $240,000, eligibility for an annual target bonus of 50% of base salary, four weeks vacation each year,

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and severance of 12 months' salary and 12 months' bonus (with continuation of fringe benefits during the 12-months severance period) in the event that he is terminated without cause or resigns following a significant diminution in pay or responsibilities.

Victor P. Patrick. Mr. Patrick's employment with the Company is governed by the terms of his employment agreement with Walter Industries which provides for an annual base salary, currently set at $307,157, an annual target bonus of 60% of annual base salary, a car allowance of $1,500 per month, four weeks vacation each year, and severance of 18 months salary and 18 months bonus (with continuation of fringe benefits during the 18-month severance period) in the event that he is terminated without cause or resigns following a significant diminution in pay or responsibilities.

William F. Ohrt. Mr. Ohrt's employment with the Company is governed by the terms of his employment agreement with Walter Industries which provides for an annual base salary, currently set at $355,129, an annual target bonus of 100% of annual base salary, a car allowance of $1,500 per month, four weeks of vacation each year, and severance of 18 months salary and 18 months bonus (with continuation of fringe benefits during the 18-month severance period) in the event that he is terminated without cause or resigns following a significant diminution in pay or responsibilities.

Joseph J. Troy. Mr. Troy's employment with the Company is governed by the terms of his employment agreement with Walter Industries which provides for an annual base salary, currently set at $301,994, an annual target bonus of 60% of annual base salary, a car allowance of $1,500 per month, 30 days of vacation each year, and severance of 18 months salary and 18 months bonus (with continuation of fringe benefits during the 18-month severance period) in the event that he is terminated without cause or resigns following a significant diminution in pay or responsibilities.

George P. Bukuras. As of February 1, 2003, our subsidiary, Mueller Group entered into an employment agreement with Mr. Bukuras, our former Vice President, General Counsel, Chief Compliance Officer and Secretary. Mr. Bukuras was terminated as of right and other than for "Cause" effective November 4, 2005, on which date he resigned from all positions at the Company and its subsidiaries. Upon termination Mr. Bukuras executed the release that was attached to his employment agreement. The following summarizes the severance terms applicable to Mr. Bukuras pursuant to his employment agreement.

Upon termination other than for "Cause" Mr. Bukuras became entitled to a lump-sum severance payment, payable no earlier than six (6) months after his termination date in an amount equal to the sum of: (I) 18 months' base salary, and (II) 150.0% of the bonus paid or payable to him for the fiscal year in which such termination of employment occurs.

Darrell Jean. As of February 18, 2005, our subsidiary, Mueller Group entered into an employment agreement with Mr. Jean relating to his employment with us in the position of Vice President, Business Development. Mr. Jean previously served as our Chief Financial Officer and was replaced by Mr. Fish on January 27, 2005. Mr. Jean was terminated as of right and other than for "Cause" effective November 30, 2005, on which date he resigned from all positions at the Company and its subsidiaries. Upon termination Mr. Jean executed the release that was attached to his employment agreement. The following summarizes the severance terms applicable to Mr. Jean pursuant to his employment agreement.

Because Mr. Jean was terminated without cause on or before December 31, 2006, he is entitled to receive payment of a severance benefit in an amount equal to the greater of: (I) the sum of the unpaid salary and annual bonus (only if and to the extent bonus is paid to other senior executives of Mueller Group) through December 31, 2007, the last day of his employment agreement term, or (II) the sum of (A) 18 months' salary, plus (B) 150.0% of the annual bonus paid or payable to Mr. Jean for the fiscal year in which termination occurred. The severance benefit will be paid no sooner than six months after the termination date in equal monthly installments. The Company will pay severance based upon the

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option set forth above as item (II). In the event that this yields an amount that is less than the payment that would have been due pursuant to payment option (I) above, the Company will pay the difference to Mr. Jean on or about December 31, 2007.

Director Compensation

For fiscal 2005, none of our current directors received compensation for their services.

Prior to the completion of this offering, we expect our board of directors to approve a compensation program for our directors for fiscal year 2006. The expected terms of the compensation program are as follows:

•: Each non-employee director who first joins our board of directors after the effective date of the registration statement of which this prospectus is a part will receive a stock-based award for shares. The initial stock-based award will occur when the director takes office. It is expected that the stock-based award will have a three year vesting period.
•: At the time of each of our annual stockholders' meetings, each non-employee director who will continue to be a director after that meeting will automatically be granted an option for shares of our common stock. However, a new non-employee director who is receiving the initial option will not receive this option in the same calendar year. It is expected that the option will vest in three equal annual installments.
•: A non-employee director's award granted under this program will become fully vested upon a change in control of the company and upon a termination of service by reason of retirement.
•: The exercise price of each non-employee director's option will be equal to at least the fair market value of our Series A common stock on the option grant date.
•: Each non-employee member of our board of directors will be entitled to receive a retainer fee of $11,250 per quarter. In addition, each non-employee director serving as the chair of our audit committee and compensation committee will be entitled to a retainer fee of $13,750 per quarter and $12,500 per quarter, respectively. The retainer fees will be paid in four quarterly payments on the first day of each calendar quarter.
•: Under the Mueller Water Products, Inc. Directors' Deferred Fee Plan, non-employee directors may elect to defer all or a portion of their director's fees. The deferred fees, at each electing director's option, are credited to either an income account or a stock equivalent account or are divided between the two accounts. If a director elects the income account, the director's fees otherwise payable are credited as a dollar amount to the director's income account on the date such fees would otherwise have been paid. If a director elects the stock equivalent account, director's fees otherwise payable during a calendar quarter are converted to stock equivalent shares equal in number to the maximum number of shares of Series A common stock, or fraction thereof (to the nearest one hundredth (1/100) of one share), which could be purchased with the dollar amount of such fees at the closing market price of the Series A common stock on the first business day of the following calendar quarter, or if that date is not a trading date, on the next trading date. The income account is credited quarterly with interest at an annual rate equal to the yield of a 10-year U.S. Treasury Note as of the beginning of such calendar quarter plus 1.00%, and the stock equivalent account is credited with stock equivalent shares equal in number to the maximum number of shares of Series A common stock, or fraction thereof (to the nearest one hundredth (1/100) of one share), which could have been purchased with the cash dividend, if any, which would have been payable had the participant been the actual owner of the number of shares of Series A common stock credited to his account as of the record date for such dividend. Administration of the Directors' Deferred Fee Plan will be in compliance with the American Jobs Creation Act of 2004.

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•: Deferred payments are made in January of the year determined by the non-employee director pursuant to an election filed with the Secretary of the Company, which may be any calendar year not earlier than the year in which the participant has his 72nd birthday or which may be the year of the participant's first termination of his services as a director, with the payment made in cash in one, five, ten or fifteen annual installments as shall be determined by the participating director in his election form. Payments from the income account are made in cash and payments from the stock equivalent account are made in cash at the Series A common stock's then current market value.

Board Composition

Our board of directors consists of nine members, all of whom, other than Mr. Hyland and Mr. O'Brien, are independent directors under the independence standards established by the applicable rules of the New York Stock Exchange. All directors are elected at each annual meeting of stockholders for a one-year term.

Board Committees

Our board has the authority to appoint committees to perform certain management and administrative functions. On April 26, 2006, our board of directors established an audit committee, a compensation committee and a nominating and corporate governance committee as described below. From time to time, the board may establish other committees to facilitate the management of the Company.

Audit Committee: The audit committee is comprised entirely of independent directors. The audit committee reviews and, as it deems appropriate, recommends to the board of directors the internal accounting and financial controls for the company and the accounting principles and auditing practices and procedures to be employed in preparation and review of our financial statements. The audit committee also engages independent registered public accountants, determines the scope of the audit to be undertaken by such auditors and determines the compensation of such auditors. The members of the audit committee are Neil A. Springer, Chairman, Jerry W. Kolb, Joseph B. Leonard and Bernard G. Rethore.

Compensation Committee: The compensation committee is comprised entirely of independent directors. The compensation committee reviews and approves the compensation of our Chief Executive Officer. The compensation committee also, as it deems appropriate, recommends to the board of directors policies, practices and procedures relating to the compensation of the officers and other managerial employees and the establishment and administration of incentive compensation and equity-based benefit plans. In addition, the compensation committee also produces a compensation committee report to be included in our annual proxy statements or annual reports on Form 10-K. The members of the compensation committee are Donald N. Boyce, Chairman, Jerry W. Kolb, Bernard G. Rethore and Neil A. Springer.

Nominating and Corporate Governance Committee: The nominating and corporate governance committee is comprised entirely of independent directors. The nominating and corporate governance committee identifies and recommends nominees to our board of directors and develops and recommends to the board corporate governance guidelines and oversees the evaluation of the board and management. The members of the nominating and corporate governance committee are Howard L. Clark, Jr., Chairman, Donald N. Boyce, Joseph B. Leonard and Michael T. Tokarz.

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PRINCIPAL STOCKHOLDERS

As of the date of this prospectus, Walter Industries owns all outstanding shares of our common stock. Upon completion of this offering, Walter Industries will beneficially own all of our outstanding Series B common stock which will represent approximately % of the combined voting power of all of our outstanding common stock (or % if the underwriters' option to purchase additional shares is exercised in full). The following table sets forth information with respect to the beneficial ownership of our voting common stock upon completion of this offering by (1) any person or group who is known to us to beneficially own more than five percent of our common stock, (2) each of our directors and named executive officers and (3) all directors and executive officers as a group.

In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to securities and includes shares issuable pursuant to options or conversion rights that are exercisable within 60 days of , 2006, including Series B shares, since they are convertible at any time. Shares issuable pursuant to options or conversion rights are deemed outstanding in computing the percentage held by the person holding such options or conversion rights but are not deemed outstanding in computing the percentage held by any other person.

The number of shares of common stock outstanding after this offering includes shares of common stock being offered for sale by us in this offering. The percentage of beneficial ownership for the following table is based on shares of common stock outstanding as of , 2006, and shares of common stock outstanding after the completion of this offering.

To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock.

	Series A Common Stock				Series B Common Stock			Total Series A and Series B Common Stock
	Shares Beneficially Owned Prior to this Offering		Shares Beneficially Owned After this Offering(1)		Shares Beneficially Owned Prior to and After this Offering
Name of Beneficial Owner(2)	Shares Beneficially Owned Prior to this Offering		Shares Beneficially Owned After this Offering(1)		Shares Beneficially Owned Prior to and After this Offering			Percentage of Shares Beneficially Owned Prior to this Offering	Percentage of Shares Beneficially Owned After this Offering(1)
Name of Beneficial Owner(2)	Number	Percent	Number	Percent	Number	Percent
Walter Industries	—	—	—	—		100	%
Gregory E. Hyland	—	—			—	—
Dale B. Smith	—	—			—	—
Thomas E. Fish
Doyce Gaskin
Victor P. Patrick	—	—			—	—
William F. Ohrt	—	—			—	—
Joseph J. Troy	—	—			—	—
All directors and executive officers as a group (9 persons)	—	—			—	—

*: Less than 1%.
(1): Assumes no exercise of the underwriters' option to purchase additional shares. See "Underwriting."
(2): The address for Walter Industries and for each of our directors and executive officers is 4211 W. Boy Scout Blvd., Tampa, FL 33607.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Relationship with Walter Industries

•: any determinations with respect to mergers or other business combinations;
•: the acquisition or disposition of assets;
•: the incurrence of indebtedness;
•: the issuance of any additional common stock or other equity securities;
•: the repurchase or redemption of common stock or preferred stock; and
•: the payment of dividends.

Walter Industries also will have the power to:

•: determine or significantly influence the outcome of matters submitted to a vote of our stockholders;
•: prevent an acquisition or any other change in control of us; and
•: take other actions that might be favorable to Walter Industries.

See "Description of Capital Stock."

Walter Industries has indicated to us that it intends, subject to market and other conditions, to completely divest its ownership in us following the expiration of, or release from, the 180-day lock-up agreement with the underwriters described below. If this divestment is by means of a tax-free spin-off, Walter Industries intends to obtain both a ruling from the Internal Revenue Service and an opinion of counsel as to the qualification as a tax-free spin-off under section 355 of the Code. Walter Industries is not subject to any obligation, contractual or otherwise, to retain or dispose of its controlling interest in us, except that we and Walter Industries, our directors, executive officers and certain other employees have agreed, subject to certain exceptions and limitations, not to offer, sell, contract to sell, pledge or otherwise dispose of or hedge any shares of common stock or securities convertible into or

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exchangeable for shares of common stock, or publicly announce the intention to do any of the foregoing, without the prior written consent of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated for a period of 180 days from the date of this prospectus. As a result, there can be no assurance concerning the period of time during which Walter Industries will maintain its beneficial ownership of our common stock owned by it following this offering. See "Underwriting."

Walter Industries currently maintains director and officer liability insurance for itself and its subsidiaries, including us. We expect that we will not be covered by the Walter Industries' policies following the completion of the spin-off. Accordingly, we expect to institute a stand alone director and officer insurance coverage program following the spin-off.

For a description of certain provisions of our restated certificate of incorporation concerning the allocation of business opportunities that may be suitable for both us and Walter Industries, see "Description of Capital Stock—Competition and Corporate Opportunities."

Tax Allocation Agreement

Prior to this offering, we have been included in the Walter Industries consolidated federal income tax group, and our federal income tax liability has been included in the consolidated federal income tax liability of Walter Industries and its subsidiaries. In certain circumstances, we and certain of our subsidiaries have been included with Walter Industries and certain Walter Industries subsidiaries in combined, consolidated, or unitary income tax groups for state and local tax purposes. If Walter Industries retains less than 80% of the value of the Company after this offering, we will not be included in the Walter Industries consolidated federal income tax group, and we may be included in certain combined, consolidated or unitary income tax groups for state and local tax purposes.

Prior to the completion of this offering, we and Walter Industries will enter into a tax allocation agreement ("Tax Allocation Agreement") in connection with this offering. Pursuant to the Tax Allocation Agreement, we and Walter Industries will make payments to each other such that, with respect to any period during which we are or were a member of the consolidated federal income tax group or any combined state or local income tax group with Walter Industries or any Walter Industries subsidiaries, the amount of taxes to be paid by us, or the amount of tax benefit to be refunded to us by Walter Industries, subject to certain adjustments, will be determined as though we were to file separate federal, state and local income tax returns as the common parent of an affiliated group of corporations filing combined, consolidated or unitary (as applicable) federal, state and local returns rather than a consolidated subsidiary of Walter Industries with respect to federal, state and local income taxes. With respect to our tax assets, our right to reimbursement from Walter Industries will be determined based on the usage of such tax assets by the Walter Industries consolidated federal income tax group or the combined, consolidated or unitary state or local income tax group. Walter Industries will continue to have all the rights of a parent of a consolidated group (and similar rights provided for by applicable state and local law with respect to a parent of a combined, consolidated or unitary group), will be the sole and exclusive agent for us in any and all matters relating to the combined, consolidated or unitary federal, state and local income tax liabilities of us, will have sole and exclusive responsibility for the preparation and filing of consolidated federal income and consolidated or combined state and local tax returns (or amended returns), and will have the power, in its sole discretion, to contest or compromise any asserted tax adjustment or deficiency and to file, litigate or compromise any claim for refund on behalf of us related to any such combined, consolidated or unitary (as applicable) federal, state or local tax return.

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Each member of a consolidated group 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. Accordingly, although the Tax Allocation Agreement described above will allocate tax liabilities between us and Walter Industries, for any period during which we were included in the Walter Industries consolidated group, we could be liable for tax liabilities not allocated to us under the Tax Allocation Agreement in the event that any federal tax liability is not discharged by any other member of the Walter Industries consolidated group. See "Risk Factors—Risks Relating to Our Relationship with Walter Industries—Walter Industries controls us and may have conflicts of interest with us or you in the future."

Corporate Agreement

Prior to the completion of this offering, we and Walter Industries expect to enter into the Corporate Agreement under which we will grant to Walter Industries a continuing option, assignable to any of its subsidiaries, to purchase, under certain circumstances, additional shares of our Series B common stock or shares of our nonvoting capital stock, if any, referred to as the "Stock Option." The Stock Option may be exercised simultaneously with the issuance of any equity security by us (other than in this offering or upon the exercise of the underwriters' option to purchase additional shares), with respect to Series B common stock, only to the extent necessary for Walter Industries to maintain its then-existing percentage of the total voting power and value of the Company and, with respect to shares of our nonvoting capital stock, to the extent necessary to own 80% of each outstanding class of such stock. The purchase price of the shares of Series B common stock purchased upon any exercise of the Stock Option, subject to certain exceptions, will be based on the market price of the Series A common stock, and the purchase price of nonvoting capital stock will be the price at which such stock may be purchased by third parties. The Stock Option will expire in the event that Walter Industries reduces its beneficial ownership of common stock in us to less than 20% of the value of the total outstanding shares of common stock.

The Corporate Agreement will also provide that, upon the request of Walter Industries, we will use our best efforts to effect the registration under the applicable federal and state securities laws of any of the shares of common stock and nonvoting capital stock (and any other securities issued in respect of or in exchange for either) beneficially owned by Walter Industries for sale in accordance with Walter Industries' intended method of disposition thereof, and will take such other actions as may be necessary to permit the sale thereof in other jurisdictions, subject to certain specified limitations. Walter Industries will also have the right which, subject to certain limitations, it may exercise at any time and from time to time, to include the shares of common stock beneficially owned by it in certain other registrations of our common equity securities initiated by us or on our behalf or on behalf of our other stockholders. We will agree to pay all out-of-pocket costs and expenses in connection with each such registration that Walter Industries requests or in which Walter Industries participates. Subject to certain limitations specified in the Corporate Agreement, such registration rights will be assignable by Walter Industries and its assigns. The Corporate Agreement will contain indemnification and contribution provisions (i) by Walter Industries and its permitted assigns for the benefit of us and related persons and (ii) by us for the benefit of Walter Industries and the other persons entitled to effect registrations of common stock (and other securities) pursuant to its terms and related persons.

The Corporate Agreement will also provide that for so long as Walter Industries (directly or indirectly) owns shares of capital stock having more than 50% of the total voting power of all capital stock outstanding of us, we may not take any action or enter into any commitment or agreement which may reasonably be anticipated to result, with or without notice and with or without lapse of time, or otherwise, in a contravention (or an event of default) by Walter Industries of: (i) any provision of applicable law or regulation, including but not limited to provisions pertaining to the Code or the Employee Retirement Income Security Act of 1974, as amended; (ii) any provision of Walter Industries' certificate of incorporation or by-laws; (iii) any credit agreement or other material instrument binding

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upon Walter Industries or its assets or (iv) any judgment, order or decree of any governmental body, agency or court having jurisdiction over Walter Industries or its assets.

Relationships with Other Subsidiaries of Walter Industries; Transition Services Agreement

U.S. Pipe has a number of business relationships with Sloss Industries Corporation ("Sloss") and United Land Corporation ("United Land"), which are both wholly-owned subsidiaries of Walter Industries. Sloss provides 100% of the foundry coke used in the manufacture of U.S. Pipe's products and receives the wastewater from U.S. Pipe's North Birmingham facility. Additionally, Sloss provides U.S. Pipe's North Birmingham facility's electricity requirements. Other incidental services provided by Sloss to U.S. Pipe include rail car switching and lease of an Indiana facility as a distribution location. In addition, U.S. Pipe owns two landfills where the maintenance is provided by United Land. For the twelve months ended September 30, 2005, the aggregate amount of such transactions was $22 million. Following the offering, U.S. Pipe expects to either pay such subsidiaries of Walter Industries fair market price for these services or to find an alternative supplier. In addition, prior to the completion of this offering, we and Walter Industries expect to enter into the Transition Services Agreement pursuant to which we and Walter Industries and certain of our respective subsidiaries will provide to each other certain services, including the services described above.

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DESCRIPTION OF CAPITAL STOCK

The following is a description of the material provisions of our capital stock, as well as other material terms of our restated certificate of incorporation and restated bylaws, as they will be in effect as of the consummation of the offering. We expect to amend and restate our certificate of incorporation shortly before completion of this offering to establish the terms of the Series A common stock and Series B common stock as described below. Copies of a form of our restated certificate of incorporation, as amended, and a form of our restated bylaws have been filed as exhibits to the registration statement of which this prospectus forms a part.

General

Our authorized capital stock consists of (i) shares of common stock, par value $0.01 per share, consisting of shares of Series A common stock and shares of Series B common stock and (ii) shares of preferred stock, par value $0.01 per share. Of the shares of Series A common stock, shares are being offered in this offering (excluding shares subject to the underwriters' option to purchase additional shares), shares will be reserved for issuance upon conversion of Series B common stock into Series A common stock, shares issuable upon the exercise of stock options have been reserved for issuance pursuant to employee benefit plans. See "Management." Of the shares of authorized Series B common stock, shares will be outstanding, all of which will be beneficially owned by Walter Industries as of the closing date of the offering. As of the closing date of the offering, there will be no preferred stock outstanding, and only shares of our common stock will be entitled to vote generally in the election of directors. We will issue all shares of our capital stock in uncertificated form unless our board of directors determines that any particular class or series will be issued in certificated form. A description of the material terms and provisions of our restated certificate of incorporation affecting the relative rights of the Series A common stock, the Series B common stock and the preferred stock is set forth below. The following description of our capital stock is intended as a summary of the material provisions of our capital stock. We refer you to our restated certificate of incorporation filed as an exhibit to the registration statement of which this prospectus is a part and to Delaware corporate law for additional information.

Common Stock

Shares of Series A common stock and Series B common stock generally have identical rights in all material respects, except for certain voting, conversion and other rights described below.

Voting Rights

Holders of Series A common stock are entitled to one vote per share, and holders of Series B common stock are entitled to eight votes per share, subject to (i) the right of Walter Industries or the Series B Transferee (as defined below), as the case may be, to reduce from time to time the number of votes per share of Series B common stock by written notice to us specifying the reduced number of votes per share and (ii) the special provisions for a vote to convert the Series B common stock into Series A common stock after a tax-free spin-off described further below under "Description of Capital Stock—Common Stock—Conversion Rights." Accordingly, a holder or holders of shares representing more than 50% of the voting power of our outstanding shares entitled to vote generally in the election of directors can, if they choose to do so, elect all of our directors.

Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of Series A common stock and Series B common stock present in person or represented by proxy, voting together as a single class, subject to any voting rights granted to holders of any preferred stock. Except as otherwise provided by law, and subject to any voting rights granted to holders of any outstanding preferred stock, amendments to the restated certificate of incorporation, consolidations, mergers and other matters requiring a stockholder vote must be approved by a majority of the combined voting

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power of all Series A common stock and Series B common stock, voting together as a single class. However, amendments to our restated certificate of incorporation that would adversely affect the powers, preferences or rights of the Series B common stock (other than general changes affecting both series of common stock equally) must be approved by holders of shares representing a majority of the outstanding shares of Series B common stock, voting separately as a class. Delaware law also provides a similar right to holders of Series A common stock for amendments that would adversely affect the powers, preferences or rights of the Series A common stock but do not so affect the Series B common stock. Notwithstanding the foregoing, any amendment to our restated certificate of incorporation to increase or decrease the authorized number of shares of any class or series of our capital stock may be approved upon the affirmative vote of the holders of shares representing a majority of the voting power of our outstanding shares entitled to vote generally in the election of directors, voting together as a single class. In addition, as described under "Description of Capital Stock—Certain Provisions of our Certificate of Incorporation and Bylaws—Supermajority Provisions," amendments to certain provisions of our restated certificate of incorporation and restated bylaws require the affirmative vote of holders of shares representing at least 80% of the voting power of our outstanding shares entitled to vote generally in the election of directors, voting together as a single class.

Dividend Rights

Holders of Series A common stock and Series B common stock will be entitled to share equally on a per share basis in all dividends if, as and when dividends are declared from time to time by our board of directors out of funds legally available for that purpose, after payment of dividends required to be paid on outstanding preferred stock, as described below, if any. Dividends consisting of shares of Series A common stock and Series B common stock may be paid only as follows: (i) shares of Series A common stock may be paid only to holders of shares of Series A common stock, and shares of Series A common stock or Series B common stock may be paid to holders of shares of Series B common stock (except that in a distribution pursuant to stock splits or divisions of common stock, only shares of Series A Common Stock will be distributed on shares of Series A common stock, and only shares of Series B common stock will be distributed on shares of Series B common stock); and (ii) shares shall be paid equally on a per share basis with respect to each outstanding share of Series A and Series B common stock.

We may not subdivide or combine shares of either series of common stock without at the same time proportionally subdividing or combining shares of the other series.

Our dividend policy following this offering is described under "Dividend Policy."

Liquidation Rights

Upon our liquidation, dissolution or winding up, after payment in full of the amounts required to be paid to holders of preferred stock, if any, all holders of common stock are entitled to share equally on a per share basis in any assets available for distribution to holders of shares of common stock.

Conversion Rights

Prior to a tax-free spin-off, each share of Series B common stock is convertible while held by Walter Industries, the Series B Transferee (as defined below), if any, or their subsidiaries, at the option of the holder thereof, into one share of Series A common stock. Except as a result of a tax-free spin-off or otherwise provided below, any shares of Series B common stock transferred to a person other than Walter Industries or any of its subsidiaries or the Series B Transferee or any of its subsidiaries shall automatically convert to shares of Series A common stock upon such transfer either before or after a tax-free spin-off.

Shares of Series B common stock representing at least 50% economic interest in us transferred by Walter Industries or any of its subsidiaries to any person, referred to as the "Series B Transferee," shall

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not automatically convert to shares of Series A common stock upon such disposition. Any shares of Series B common stock retained by Walter Industries or any of its subsidiaries following any such disposition to the Series B Transferee shall automatically convert to shares of Series A common stock upon such disposition. In addition, a transfer of any shares of Series B common stock to any subsidiary of Walter Industries or the Series B Transferee or a transfer to any person that becomes the parent company of Walter Industries or the Series B Transferee (in which case references in our restated certificate of incorporation to Walter Industries and the Series B Transferee shall be deemed to refer to such parent company) shall not automatically convert shares of Series B common stock to shares of Series A common stock. Shares of Series B common stock transferred to stockholders of Walter Industries or stockholders of the Series B Transferee as a distribution intended to be a tax-free spin-off shall not convert to shares of Series A common stock upon the occurrence of a tax-free spin-off. Following a tax-free spin-off, we can initiate a conversion of shares of Series B common stock into shares of Series A common stock at any time, provided that we have received an opinion of counsel or a favorable private letter ruling from the Internal Revenue Service, in either case satisfactory to Walter Industries or the Series B Transferee, as the case may be, in its sole and absolute discretion, to the effect that such conversion will not affect the tax-free treatment of the spin-off. Such right shall be exercised by us in good faith solely to preserve the tax-free status of the spin-off (and in determining whether an opinion or ruling is satisfactory, Walter Industries or the Series B Transferee may consider, among other factors, the appropriateness of any underlying assumptions and representations used as a basis for the opinion or ruling and Walter Industries or the Series B Transferee may determine that no opinion or ruling would be acceptable to Walter Industries, or the Series B Transferee, as the case may be). If such an opinion or ruling is received, approval of such conversion may be submitted by us to a vote of the holders of our common stock. Approval of such conversion will require the affirmative vote of the holders of a majority of the shares of both the Series A common stock and Series B common stock, voting together as a single class, with each share entitled to one vote for such purpose. No assurance can be given that such conversion would be initiated or consummated.

All shares of Series B common stock shall automatically convert into Series A common stock if a tax-free spin-off has not occurred and the number of outstanding shares of Series B common stock beneficially owned by Walter Industries or the Series B Transferee, as the case may be, falls below % of the aggregate number of outstanding shares of common stock. This will prevent Walter Industries or the Series B Transferee, as the case may be, from decreasing its economic interest in us to less than % while still retaining control of more than % of our voting power.

Other Rights and Restrictions

Shares of Series B common stock may only be issued to Walter Industries or the Series B Transferee (or their subsidiaries) without the prior written consent of the holders of a majority of outstanding shares of Series B common stock, and no shares of our common stock or nonvoting capital stock may be issued in violation of the provisions of the Corporate Agreement pertaining to Walter Industries' option to acquire more shares of Series B common stock or nonvoting capital stock.

No shares of common stock are subject to redemption or have preemptive rights to purchase additional shares of common stock, except for rights granted to Walter Industries pursuant to the Corporate Agreement. See "Certain Relationships and Related Party Transactions—Relationship with Walter Industries—Corporate Agreement."

Upon consummation of the offering, all outstanding shares of Series A common stock and Series B common stock will be legally issued, fully paid and nonassessable.

Preferred Stock

We may issue shares of preferred stock from time to time in one or more series and with such designations and preferences for each series as shall be stated in the resolutions providing for the

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designation and issue of each such series adopted by our board of directors. The board of directors is authorized by our restated certificate of incorporation to determine, without a vote of our stockholders, the voting, dividend, redemption, liquidation and other preferences and rights, and any qualifications, limitations or restrictions, pertaining to such series of preferred stock.

Our board of directors, without stockholder approval, may issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of the common stock and could have certain antitakeover effects. We have no present plans to issue any shares of preferred stock. The ability of the board of directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change in control of the company or the removal of existing management.

Competition and Corporate Opportunities

Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. Our restated certificate of incorporation renounces any interest or expectancy that we have in, or right to be offered an opportunity to participate in, specified business opportunities. Our restated certificate of incorporation provides that none of Walter Industries or the Series B Transferee or their respective affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from (i) engaging in a corporate opportunity in the same or similar activities or related lines of business in which we or our affiliates now engage or propose to engage or (ii) otherwise competing with us. In addition, in the event that Walter Industries or the Series B Transferee or any non-employee director acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself or himself or its or his affiliates and for us or our affiliates, Walter Industries, the Series B Transferee or such non-employee director will have no duty to communicate or offer such transaction or business opportunity to us and may take any such opportunity for themselves or offer it to another person or entity. Our restated certificate of incorporation does not renounce our interest in any business opportunity that is expressly offered to a non-employee director solely in his or her capacity as our director or officer. No business opportunity offered to any non-employee director will be deemed to be a potential corporate opportunity for us unless we would be permitted to undertake the opportunity under our restated certificate of incorporation, we have sufficient financial resources to undertake the opportunity and the opportunity would be in line with our business.

Certain Provisions of our Certificate of Incorporation and Bylaws

In addition to the foregoing, certain provisions of our restated certificate of incorporation and restated bylaws, which are summarized in the following paragraphs, may have an anti-takeover effect and may delay, defer or prevent a tender offer, takeover attempt, acquisition or merger that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by stockholders.

Calling of Special Meetings of Stockholders

Our restated bylaws provide that a special meeting of our stockholders may be called at any time only by the board of directors (or a duly designated committee of the board) unless otherwise provided by Delaware law.

Advance Notice Requirements for Stockholder Proposals and Director Nominations

Our restated bylaws provide that stockholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of stockholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a stockholder's notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the

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first anniversary date on which the proxy materials for the previous year's annual meeting were first mailed. Our restated bylaws also specify requirements as to the form and content of a stockholder's notice. These provisions, which do not apply to Walter Industries or the Series B Transferee, may impede stockholders' ability to bring matters before an annual meeting of stockholders or make nominations for directors at an annual meeting of stockholders.

Stockholder Action by Written Consent

Delaware law permits stockholder action by written consent unless otherwise provided by the certificate of incorporation. Our restated certificate of incorporation precludes stockholder action by written consent after the date on which Walter Industries or, if applicable, the Series B Transferee (including if applicable any parent company of either of them) ceases to beneficially own, in the aggregate, shares representing at least 50% of the voting power of our outstanding shares entitled to vote generally in the election of directors.

Amendment of Bylaws by Directors; Number, Election and Term of Directors; Vacancies on Board of Directors

Our restated certificate of incorporation grants our board of directors the authority to amend and repeal our bylaws without a stockholder vote in any manner not inconsistent with Delaware law or our restated certificate of incorporation.

The total number of directors constituting the entire board may not be less than six or more than eleven directors. Although our directors are elected to serve until his or her successor is elected at each annual meeting of stockholders, any vacancy on the board of directors may be filled only by the affirmative vote of the remaining directors, unless otherwise required by law or permitted by our board of directors. If applicable law requires a vacancy to be filled by the stockholders, the affirmative vote of at least 80% of the voting power of our shares entitled to vote generally in the election of directors, voting as a single class, is required.

No Cumulative Voting

Delaware law provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless the certificate of incorporation provides otherwise. Our restated certificate of incorporation expressly provides that there is no cumulative voting.

Supermajority Provisions

Delaware law provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote is required to amend a corporation's certificate of incorporation or bylaws, unless the certificate of incorporation requires a greater percentage. Our restated certificate of incorporation provides that the following provisions in the restated certificate of incorporation and restated bylaws may be amended only by a vote of at least 80% of the voting power of our outstanding shares entitled to vote generally in the election of directors, voting together as a single class:

•: the power of our board of directors to amend the bylaws;
•: the number, election and term of our directors and the filling of vacancies on our board of directors;
•: the absence of cumulative voting;
•: the provisions regarding stockholder action by written consent;
•: the ability to call a special meeting of stockholders being vested solely in our board of directors (or a duly designated committee thereof);
•: the advance notice requirements for stockholder proposals and director nominations;

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•: the exculpation of liability of our directors for monetary damages for breaches of fiduciary duties;
•: the provisions whereby we waived certain competitive acts by certain affiliates and renounced certain corporate opportunities; and
•: the amendment provisions requiring that the above provisions be amended only with an 80% supermajority vote.

Exculpation of Liability and Indemnification of Officers and Directors

Delaware law authorizes corporations to limit or eliminate the personal liability of directors to a corporation and its stockholders for monetary damages for breaches of directors' fiduciary duties, except for:

•: for any breach of the director's duty of loyalty to the corporation or its stockholders;
•: for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
•: under Section 174 of the Delaware General Corporation Law regarding unlawful dividends or stock repurchases and redemptions; or
•: for transactions from which the director derived an improper personal benefit.

Our restated certificate of incorporation includes a provision that eliminates the personal liability of directors for monetary damages for breaches of directors' fiduciary duties to the fullest extent permitted by Delaware law.

Our restated bylaws provide that we must indemnify our present and former directors and officers to the fullest extent permitted by Delaware law. We are also expressly required to advance certain expenses (including attorneys' fees and disbursements) to our present and former directors and officers in connection with certain actions, suits and proceedings involving them to the fullest extent permitted by Delaware law, and we are authorized to carry directors' and officers' insurance providing indemnification for them as well.

The exculpation of liability and the indemnification provisions in our restated certificate of incorporation and restated bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

Delaware Anti-Takeover Statute

We will be subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. In general, Section 203 prohibits a publicly held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:

•: the corporation has elected in its certificate of incorporation not to be governed by Section 203, which we have not done;
•: prior to the time the person became an interested stockholder, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
•: upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the stockholder owned at least 85% of the voting stock of the corporation

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outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

•: at the time of or after the person became an interested stockholder, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66²/3% of the outstanding voting stock which is not owned by the interested stockholder.

The term "business combination" is defined generally to include, among other things, mergers or consolidations between a Delaware corporation and an "interested stockholder," transactions with an "interested stockholder" involving the assets or stock of the corporation or its majority-owned subsidiaries, transactions which increase an interested stockholder's percentage ownership of stock and the receipt by an interested stockholder of a disproportionate financial benefit provided by or through the corporation or its majority-owned subsidiaries.

The term "interested stockholder" is defined to include any person, other than the corporation and any direct or indirect majority-owned subsidiary of the corporation, that is the owner of 15% or more of the outstanding voting stock of the corporation, or is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation, at any time within three years immediately prior to the relevant date, or the affiliates and associates of any such person.

Section 203 makes it more difficult for a person who would be an "interested stockholder" to effect various business combinations with a corporation for a three-year period. The provisions of Section 203 may encourage companies interested in acquiring our company to negotiate in advance with our board of directors, because the stockholder approval requirement would be avoided if our board of directors approves either the business combination or the transaction which results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests. Walter Industries, however, will not be subject to the restrictions of Section 203 because it became an "interested shareholder" before we became a public company.

Authorized but Unissued Capital Stock

Delaware law does not require stockholder approval for any issuance of authorized shares. However, the listing requirements of the New York Stock Exchange, which would apply so long as our Series A common stock is listed on the New York Stock Exchange, require stockholder approval of certain issuances equal to or exceeding 20% of the then-outstanding voting power or then outstanding number of shares of common stock. These additional shares may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions. One of the effects of the existence of unissued and unreserved common stock may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive the stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices.

Listing

We intend to list our Series A common stock on the New York Stock Exchange under the symbol "MWA."

Transfer Agent and Registrar

The transfer agent and registrar for our common stock will be The Bank of New York.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

The following descriptions are summaries of the material terms of the agreements governing our material indebtedness. The summaries may not contain all the information that is important to you. To fully understand these agreements, you should carefully read each of them. Copies of these agreements have been filed with the SEC as exhibits to the registration statement of which this prospectus is a part.

2005 Mueller Credit Agreement

On October 3, 2005, our subsidiary, Mueller Group, LLC, entered into a $1,195.0 million credit agreement ("2005 Mueller Credit Agreement") with a syndicate of banks and other financial institutions led by Banc of America Securities LLC and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint book managers. The senior credit facilities provided under the 2005 Mueller Credit Agreement include (1) an amortizing term loan facility in an initial aggregate principal amount of $1,050.0 million, $1,047.4 million of which was outstanding as of December 31, 2005, and (2) a $145.0 million revolving credit facility, which provides for loans and under which letters of credit may be issued. As of December 31, 2005, we had obtained $31.1 million in letters of credit, which reduces availability for borrowings under the revolving credit facility, and had no borrowings under our revolving credit facility. The revolving credit facility will terminate on October 4, 2010, and the term loans will mature on November 1, 2011 (or October 3, 2012, if the 10% senior subordinated notes due 2012 are paid in full or refinanced prior to such date).

Loans under the senior credit facilities currently bear interest, at our option, at:

•: initially, the reserve adjusted LIBOR rate plus 250 basis points or the alternate base rate plus 150 basis points for borrowings under the revolving credit facility; and
•: the reserve adjusted LIBOR rate plus 225 basis points or the alternate base rate plus 125 basis points for term loans.

Mueller Group also currently pays commitment fees at a rate equal to 0.50% per year on the unused portion of the revolving credit facility. These fees are payable quarterly in arrears and upon the maturity or termination of the revolving credit facility. The applicable margin for term loans, revolving credit loans and the applicable commitment fees are subject to adjustment based on the leverage ratio, which measures the ratio of consolidated total debt to consolidated EBITDA of Mueller Group and its subsidiaries (each as defined in the senior credit facilities).

Mueller Group pays a letter of credit fee on the outstanding undrawn amounts of letters of credit issued under the senior credit facilities at a rate per year equal to (1) in the case of standby letters of credit, the then existing applicable margin for revolving credit loans and (2) in the case of commercial letters of credit, 50% of the then existing applicable margin for revolving loans which is shared by all lenders participating in that letter of credit, and an additional fronting fee to the issuer of each letter of credit, payable quarterly in arrears.

Mueller Group is required to repay the term loans in twenty-seven (27) consecutive quarterly installments equal to $2,625,000 on the last business day of each March, June, September and December, commencing on December 31, 2005, and the remaining amount is payable on the maturity date of the term loans. Principal amounts outstanding under the revolving credit facility will be due and payable in full at maturity on October 4, 2010.

The senior credit facilities are subject to mandatory prepayment:

•: with the net cash proceeds of the sale or other disposition of any property or assets of, Mueller Group and its subsidiaries, subject to permitted reinvestments and other specified exceptions;

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•: with the net cash proceeds received from incurrences of debt by Mueller Group and its subsidiaries, subject to specified exceptions;
•: so long as Mueller Group's senior secured leverage ratio (as defined in the senior credit facilities) exceeds 1.50 to 1.00, with 50.0% of excess cash flow, as defined in the senior credit facilities, for each fiscal year, subject to specified exceptions; and
•: so long as Mueller Group's senior secured leverage ratio (as defined in the senior credit facilities) exceeds 1.50 to 1.00, with 50% of net cash proceeds received from issuances of equity securities by us, subject to specified exceptions.

All mandatory prepayment amounts will be applied first pro rata to the prepayment of the term loans to reduce the remaining amortization payments.

We, Mueller Group Co-Issuer, Inc. and all of Mueller Group's direct and indirect domestic restricted subsidiaries are guarantors of the senior credit facilities. Mueller Group's obligations under the senior credit facilities are secured by:

•: a first priority perfected lien on substantially all of Mueller Group's and the guarantors' existing and after-acquired personal property, a pledge of all of the stock or membership interest of all of the guarantors (other than our stock), Mueller Group's stock and all of the stock or membership interests of all of Mueller Group's existing or future domestic subsidiaries and no more than 65% of the voting stock of any foreign subsidiary held by Mueller Group or a subsidiary guarantor and a pledge of all intercompany indebtedness in favor of Mueller Group or any guarantor;
•: first-priority perfected liens on all of Mueller Group's and the guarantors' material existing and after-acquired real property fee interests, subject to customary permitted liens described in the senior credit facilities; and
•: a negative pledge on all of our and our restricted subsidiaries' assets, including our intellectual property.

The senior credit facilities contain customary negative covenants and restrictions on our ability to engage in specified activities, including, but not limited to:

•: limitations on other indebtedness, liens, investments and guarantees;
•: restrictions on dividends and redemptions of our capital stock and prepayments and redemptions of debt;
•: limitations on capital expenditures; and
•: restrictions on mergers and acquisitions, sales of assets, sale and leaseback transactions and transactions with affiliates.

The senior credit facilities also contain financial covenants requiring Mueller Group to maintain:

•: an interest expense coverage ratio of at least 2.25 to 1.0 (increasing to 2.50 to 1.00 beginning with the four quarter period ending December 31, 2007);
•: a consolidated leverage ratio of not more than 5.50 to 1.00 (decreasing in annual increments to 4.00 to 1.00 by the four quarter period ending December 31, 2008); and
•: a consolidated senior secured leverage ratio of not more than 4.25 to 1.00 (decreasing in annual increments to 3.00 to 1.00 by the four quarter period ending December 31, 2008).

Borrowings under the revolving credit facility are subject to significant conditions, including compliance with the financial ratios included in the senior credit facilities and the absence of any

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material adverse change. See "Risk Factors—Risks Relating to Our Business—Restrictive covenants in our debt instruments may limit our ability to engage in certain transactions and may diminish our ability to make payments on our indebtedness."

The senior credit facilities also contain certain customary events of default, including nonpayment of principal or interest, covenant defaults, inaccuracy of representations or warranties, bankruptcy and insolvency events, judgment defaults, cross defaults and a change of control and affirmative covenants.

Senior Discount Notes

On April 29, 2004, we sold units consisting of $1,000 principal amount at maturity of senior discount notes due 2014, and warrants to purchase shares of Predecessor Mueller's Class A common stock, for gross proceeds of approximately $110.1 million. In connection with the Acquisition, all warrants were converted into a right to receive cash and are no longer outstanding. The notes accrete at a rate of 14³/4% and compound semi-annually to April 2009 to a principal amount at maturity of $223.0 million. Interest is payable in cash semi-annually in arrears thereafter on April 15 and October 15 of each year. The notes are senior unsecured obligations but they effectively rank junior to all liabilities of our subsidiaries.

Except as provided below, the notes are not redeemable at our option prior to April 15, 2009. Thereafter, the notes will be subject to redemption at our option, in whole or from time to time in part, upon not less than 30 nor more than 60 days' notice, in cash at an initial redemption price equal to 107.375% of the accreted value declining ratably to par in 2012 and thereafter plus accrued and unpaid interest, thereon to the applicable redemption date.

In addition, on or prior to April 15, 2007, we may redeem in the aggregate up to 35% of the aggregate principal amount of the notes from time to time originally issued with the net cash proceeds of one or more public equity offerings, at a redemption price (expressed as a percentage of accreted value on the redemption date) of 114.75% plus accrued and unpaid interest to the redemption date.

We expect to use a portion of the net proceeds of this offering to redeem a portion of the senior discount notes and to pay the premium associated with such redemption as described under "Use of Proceeds."

Holders have the option of requiring us to repurchase the notes upon a change of control at a repurchase price equal to 101% of the accreted value of the notes plus accrued interest, if any, to the date of the repurchase. In addition, to the extent that we do not reinvest the proceeds of specified asset sales in our business or use those proceeds to repay indebtedness, we will be required to use the proceeds to make an offer to repurchase the notes at a repurchase price equal to the accreted value of the notes plus accrued interest.

The indenture governing the notes restricts our ability and the ability of our restricted subsidiaries to:

•: incur additional indebtedness and issue preferred stock;
•: create liens;
•: engage in sale-leaseback transactions;
•: pay dividends or make distributions in respect of capital stock;
•: purchase or redeem capital stock;
•: make investments or restricted payments;
•: enter into agreements that restrict the ability of our subsidiaries to make dividends or loans, transfer assets or repay debt to us;

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•: sell assets;
•: enter into transactions with affiliates; or
•: effect a consolidation or merger.

The notes include customary events of default, including failure to pay principal and interest on the notes, a failure to comply with covenants, a failure by us or our restricted subsidiaries to pay material judgments or indebtedness and bankruptcy and insolvency events with respect to us and our restricted subsidiaries.

Senior Subordinated Notes

On April 23, 2004, Mueller Group issued $315.0 million aggregate principal amount of 10% senior subordinated notes which will mature on May 1, 2012. Interest on the subordinated notes is payable in cash on May 1 and November 1 of each year, beginning on November 1, 2004.

The senior subordinated notes are subject to redemption, in whole or in part, at Mueller Group's option, at any time on or after May 1, 2008 upon not less than 30 nor more than 60 days notice, in cash, at the redemption prices set forth below plus accrued and unpaid interest, thereon to the applicable redemption date, if redeemed during the twelve month period commencing on May 1 of the years set forth below:

Period	Redemption Price
2008	105.000	%
2009	102.500	%
2010 and thereafter	100.000	%

In addition, prior to May 1, 2007, Mueller Group may redeem up to 35% of the aggregate principal amount of the senior subordinated notes originally issued at a redemption price of 110.000% of the principal amount thereof, plus accrued and unpaid interest with the proceeds of public equity offerings.

We expect to use a portion of the net proceeds of this offering to redeem a portion of the senior subordinated notes and to pay accrued interest and premium associated with such redemptions as described under "Use of Proceeds."

Holders have the option of requiring Mueller Group to repurchase the senior subordinated notes upon a change of control at a repurchase price equal to 101% of the principal amount plus accrued interest, if any, to the date of the repurchase. In addition, to the extent that Mueller Group does not reinvest the proceeds in excess of $10.0 million of specified asset sales in its business or use those proceeds to repay indebtedness, it will be required to use the proceeds to make an offer to repurchase the senior subordinated notes at a repurchase price equal to 101% of the aggregate principal amount of the senior subordinated notes plus accrued and unpaid interest.

The senior subordinated notes are jointly and severally guaranteed on an unsecured, senior subordinated basis by all of Mueller Group's existing domestic restricted subsidiaries and all future wholly-owned domestic restricted subsidiaries that guarantee the 2005 Mueller Credit Agreement.

The indenture governing the senior subordinated notes restricts the ability of Mueller Group and its subsidiaries to, among other things:

•: incur additional indebtedness and issue preferred stock;
•: create liens;
•: engage in sale-leaseback transactions;

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•: pay dividends or make distributions in respect of capital stock, including dividends to us;
•: purchase or redeem capital stock;
•: make investments or restricted payments;
•: enter into agreements that restrict the ability of its subsidiaries, to make dividends or loans, transfer assets or repay debt to Mueller Group;
•: sell assets;
•: enter into transactions with affiliates, including us; or
•: effect a consolidation or merger.

The senior subordinated notes include customary events of default, including failure to pay principal and interest on the senior subordinated notes, a failure to comply with covenants, a failure by Mueller Group or its restricted subsidiaries to pay material judgments or indebtedness and bankruptcy and insolvency events with respect to Mueller Group and its restricted subsidiaries.

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CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES
TO NON-U.S. HOLDERS

The following is a summary of certain United States federal income and estate tax consequences of the purchase, ownership and disposition of our common stock as of the date hereof. Except where noted, this summary deals only with common stock that is held as a capital asset by a non-U.S. holder.

A "non-U.S. holder" means a beneficial owner of our common stock (other than a partnership) that is not for United States federal income tax purposes any of the following:

•: an individual citizen or resident of the United States;
•: a corporation (or any other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
•: an estate the income of which is subject to United States federal income taxation regardless of its source; or
•: a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

This summary is based upon provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings and judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income and estate tax consequences different from those summarized below. This summary does not address all aspects of United States federal income and estate taxes and does not deal with foreign, state, local or other tax considerations that may be relevant to non-U.S. holders in light of their personal circumstances. In addition, it does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws (including if you are a United States expatriate, "controlled foreign corporation," "passive foreign investment company," a dealer in securities or currencies, a bank, an insurance company, a tax-exempt entity, a trader in securities that elects to use a mark-to-market method of accounting for its securities holdings, a person holding shares of our common stock as part of a hedging, integrated, constructive sale or conversion transaction or a straddle, or a partnership or other pass-through entity for United States federal income tax purposes). We cannot assure you that a change in law will not alter significantly the tax considerations that we describe in this summary.

If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common stock, you should consult your tax advisors.

If you are considering the purchase of our common stock, you should consult your own tax advisors concerning the particular United States federal income and estate tax consequences to you of the ownership of the common stock, as well as the consequences to you arising under the laws of any other taxing jurisdiction.

Dividends

If we make a distribution of cash or other property (other than certain pro rata distributions of our common stock) in respect of our common stock, the distribution will be treated as a dividend to the extent it is paid from our current or accumulated earnings and profits (as determined under United States federal income tax principles). If the amount of a distribution exceeds our current and accumulated earnings and profits, such excess first will be treated as a tax-free return of capital to the

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extent of the non-U.S. holder's tax basis in our common stock, and thereafter will be treated as gain as described below under "Certain United States Federal Income and Estate Tax Consequences to Non-U.S. Holders—Gain on Disposition of Common Stock." Dividends paid to a non-U.S. holder of our common stock generally will be subject to withholding of United States federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States are not subject to the withholding tax, provided certain certification and disclosure requirements are satisfied. Instead, such dividends are subject to United States federal income tax on a net income basis in the same manner as if the non-U.S. holder were a United States person as defined under the Code, unless an applicable income tax treaty provides otherwise. Any such effectively connected dividends received by a foreign corporation may be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

A non-U.S. holder of our common stock who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as discussed below, for dividends will be required (a) to complete Internal Revenue Service Form W-8BEN (or other applicable form) and certify under penalty of perjury that such holder is not a United States person as defined under the Code and is eligible for treaty benefits or (b) if our common stock is held through certain foreign intermediaries, to satisfy the relevant certification requirements of applicable United States Treasury regulations. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals.

A non-U.S. holder of our common stock eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service.

Gain on Disposition of Common Stock

Any gain realized on the disposition of our common stock generally will not be subject to United States federal income tax unless:

•: the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment of the non-U.S. holder);
•: the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or
•: we are or have been a "United States real property holding corporation" for United States federal income tax purposes.

An individual non-U.S. holder described in the first bullet point immediately above will be subject to tax on the net gain derived from the sale under regular graduated United States federal income tax rates. An individual non-U.S. holder described in the second bullet point immediately above will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by United States source capital losses, even though the individual is not considered a resident of the United States. If a non-U.S. holder that is a foreign corporation falls under the first bullet point immediately above, it will be subject to tax on its net gain in the same manner as if it were a United States person as defined under the Code and, in addition, may be subject to the branch profits tax equal to 30% of its effectively connected earnings and profits or at such lower rate as may be specified by an applicable income tax treaty.

We believe we are not and do not anticipate becoming a "United States real property holding corporation" for United States federal income tax purposes.

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Federal Estate Tax

Common stock held by an individual non-U.S. holder at the time of death will be included in such holder's gross estate for United States federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.

Information Reporting and Backup Withholding

We must report annually to the Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty.

A non-U.S. holder will be subject to backup withholding for dividends paid to such holder unless such holder certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that such holder is a United States person as defined under the Code), or such holder otherwise establishes an exemption.

Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale of our common stock within the United States or conducted through certain United States-related financial intermediaries, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person as defined under the Code), or such owner otherwise establishes an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder's United States federal income tax liability provided the required information is furnished to the Internal Revenue Service.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for the Series A common stock, and no prediction can be made as to the effect, if any, that large numbers of outstanding shares of common stock beneficially owned by Walter Industries following this offering, or the availability of such shares for sale, will have on the market price of the Series A common stock prevailing from time to time. Nevertheless, dispositions of substantial amounts of common stock beneficially owned by Walter Industries in the public market following this offering, or the perception that such dispositions could occur, could adversely affect prevailing market prices for the Series A common stock offered in this offering. These factors also could impair our ability to raise capital through future offerings of shares.

Upon completion of this offering, we will have shares of Series A common stock issued and outstanding ( if the underwriters' option to purchase additional shares is exercised in full) and shares of Series B common stock issued and outstanding. All of the shares of Series A common stock to be sold in this offering will be freely tradable without restrictions or further registration under the Securities Act, except for any shares purchased by an "affiliate" of us (as that term is defined in Rule 144 adopted under the Securities Act, or "Rule 144"), which will be subject to the resale limitations of Rule 144. The outstanding shares of Series B common stock that are beneficially owned by Walter Industries have not been registered under the Securities Act and may not be sold in the absence of an effective registration statement under the Securities Act other than in accordance with Rule 144 or another exemption from registration. Walter Industries has certain rights to require us to effect registration of shares of common stock owned by Walter Industries, which rights may be assigned. See "Certain Relationships and Related Party Transactions—Relationship with Walter Industries—Corporate agreement."

Rule 144 and Rule 144A

In general, under Rule 144, a person (or persons whose shares are required to be aggregated) who has beneficially owned shares of common stock for at least one year, including a person who may be deemed an "affiliate," is entitled to sell, within any three-month period, a number of shares that does not exceed the greater of one percent of the total number of shares of the class of stock sold or the average weekly reported trading volume of the class of stock being sold during the four calendar weeks preceding such sale. A person who is not deemed an "affiliate" of us at any time during the three months preceding a sale and who has beneficially owned shares for at least two years is entitled to sell such shares under Rule 144 without regard to the volume limitations described above. As defined in Rule 144, an "affiliate" of an issuer is a person that directly or indirectly through the use of one or more intermediaries controls, is controlled by, or is under common control with, such issuer.

Rule 144A under the Securities Act, or "Rule 144A," provides a non-exclusive safe harbor exemption from the registration requirements of the Securities Act for specified resales of restricted securities to certain institutional investors. In general, Rule 144A allows unregistered resales of restricted securities to a "qualified institutional buyer," which generally includes an entity, acting for its own account or for the account of other qualified institutional buyers, that in the aggregate owns or invests at least $100.0 million in securities of unaffiliated issuers. Rule 144A does not extend an exemption to the offer or sale of securities that, when issued, were of the same class as securities listed on a national securities exchange or quoted on an automated quotation system. The shares of our common stock outstanding as of the date of this prospectus would be eligible for resale under Rule 144A because such shares, when issued, were not of the same class as any listed or quoted securities. The foregoing summary of Rule 144 and Rule 144A is not intended to be a complete description thereof.

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Lock-up agreements

Walter Industries has indicated that it intends, subject to market and other conditions, to completely divest its ownership in us following the expiration of, or release from, the 180-day lock-up agreement with the underwriters described below. Walter Industries is not subject to any obligation, contractual or otherwise, to retain or divest its controlling interest, except that we and Walter Industries, our directors, executive officers and certain other employees have agreed, subject to certain exceptions, not to offer, sell, contract to sell, pledge or otherwise dispose of any shares of common stock or any of our securities which are substantially similar to shares of common stock for a period of 180 days after the date of this prospectus without the prior written consent of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated, subject to certain limitations. As a result, there can be no assurance concerning the period of time during which Walter Industries will maintain its beneficial ownership of common stock owned by it following this offering. See "Underwriting."

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UNDERWRITING

Banc of America Securities LLC, Morgan Stanley & Co. Incorporated and Lehman Brothers Inc. are acting as representatives and joint book-running managers of the offering. Under the terms and subject to the conditions contained in an underwriting agreement dated , 2006, we have severally agreed to sell to the underwriters named below, and each underwriter has agreed to purchase, the number of shares of common stock listed next to its name in the following table:

Underwriter			Number of Shares
Banc of America Securities LLC
Morgan Stanley & Co. Incorporated
Lehman Brothers Inc.
SunTrust Capital Markets, Inc.
Goldman, Sachs & Co.
Avondale Partners, LLC
Calyon Securities (USA) Inc.
	Total

The underwriting agreement is subject to a number of terms and conditions and provides that the underwriters are obligated to purchase all of the shares of Series A common stock in the offering if any are purchased, other than those shares covered by the option to purchase additional shares described below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.

We have granted to the underwriters an option to purchase on a pro rata basis up to additional shares of Series A common stock at the initial public offering price less the underwriting discounts and commissions. The option may be exercised at any time and from time to time, in whole or in part, within 30 days after the date of this prospectus. These additional shares would cover sales by the underwriters which exceed the total number of shares shown in the table above. To the extent that the underwriters exercise this option, each underwriter will purchase additional shares from us in approximately the same proportion as it purchased the shares shown in the table above. If purchased, the additional shares will be sold by the underwriters on the same terms as those on which the other shares are sold. We will pay the expenses associated with the exercise of this option.

The underwriters propose to offer the shares of common stock initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a selling concession of not more than $ per share on sales to other broker/dealers. The underwriters and selling group members may allow, and those brokers/dealers may re-allow, a discount of $ per share on sales to other broker/dealers. After the initial public offering, the underwriters may change the public offering price and concession and discount to broker/dealers. The Series A common stock is offered subject to a number of conditions, including:

•: a receipt and acceptance of the common stock by the underwriters; and
•: the underwriters' right to reject orders in whole or in part.

The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by us. These amounts are shown assuming no exercise and full exercise of the

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underwriters' option to purchase additional shares. We estimate that the expenses of the offering to be paid by us, not including underwriting discounts and commissions, will be approximately $ .

		Paid by Us
		No Exercise	Full Exercise
Per Share		$	$
	Total	$	$

The underwriters have informed us that they do not expect to make sales to accounts over which they exercise discretionary authority in excess of 5% of the shares of Series A common stock being offered.

We, our directors and executive officers and our sole stockholder, Walter Industries, have entered into lock-up agreements with the underwriters. Under these agreements, subject to exceptions, we may not issue any new shares of common stock, and we and Walter Industries may not, directly or indirectly, offer, sell, contract to sell, pledge or otherwise dispose of or hedge any shares of common stock or securities convertible into or exchangeable for shares of common stock, or publicly announce the intention to do any of the foregoing, without the prior written consent of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated for a period of 180 days from the date of this prospectus. This consent may be given at any time without public notice. In addition, during this lock-up period, we have also agreed not to file any registration statement (other than a registration statement relating to employee benefit plans described in this prospectus) for, and each of our officers and stockholders has agreed not to make any demand for, or exercise any right of, the registration of, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock without the prior written consent of the representatives of the underwriters. The underwriters have no current intention or arrangement to release any shares subject to these lock-up agreements. The release of any shares from these lock-up agreements will be considered on a case by case basis. In considering whether to release any shares, the underwriters would consider the particular circumstances surrounding the request, including but not limited to, the length of time before the lock-up expires, the number of shares requested to be released, the reasons for the request, the possible impact on the market for our common stock, and whether the holder of our shares requesting the release is an officer, director or other affiliate of the Company.

The above lock-up provisions shall not apply to the shares of Series A common stock to be sold in this offering or transactions by any person other than us relating to shares of Series A common stock acquired in open market transactions after the completion of this offering.

In addition, the above lock-up provision will not preclude:

•: any conversion by Walter Industries of shares of Series B common stock into shares of Series A common stock;
•: issuances of shares of Series A common stock upon the exercise of an option, warrant or similar security outstanding as of the date of this prospectus or upon the conversion of securities outstanding as of the date of this prospectus;
•: the grants by us of shares of Series A common stock or options to purchase shares of Series A common stock under our benefit plans described in this prospectus; provided that no such options shall vest prior to the 181^st day from the date of this prospectus or the recipients of such grant agrees to be bound by the restrictions described in this paragraph for the remainder of the lock-up period;
•: acquisitions by us of our Series A common stock in open market transactions after the completion of this offering and reissuance of such acquired shares to our employees pursuant to our 2006 Employee Stock Purchase Plan described in this prospectus;

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•: transfers by directors or executive officers of shares of Series A common stock by gift or to immediate family members;
•: transfers by our directors, executive officers or their personal representatives upon death or disability or termination of employment in accordance with the terms of the applicable employment or other agreements entered into prior to the date of this prospectus; and
•: the issuance of our common stock in connection with the acquisition of, or a merger with, another company provided that the recipients of such common stock agrees to be bound by the restrictions described in this paragraph for the remainder of the lock-up period;

provided that, in each case described in this paragraph, the transferee or acquirer of any shares of Series A common stock agrees in writing to be bound by the terms of a lock-up agreement for the remainder of the original lock-up period to the same extent as if the transferee or acquirer were a party to such lock-up agreement and no filing by any party under the Exchange Act is be required or shall be voluntarily made in connection with such transfer or distribution.

At our request, the underwriters have reserved for sale to our employees, directors, families of employees and directors at the initial public offering price up to 5% of the shares being offered by this prospectus. The sale of the reserved shares to these purchasers will be made by Morgan Stanley & Co. Incorporated. If purchased by these persons, these shares will be subject to a 180-day lock-up restriction. We do not know if our employees, directors, families of employees and directors will choose to purchase all or any portion of the reserved shares, but any purchases they do make will reduce the number of shares available to the general public. If all of these reserved shares are not purchased, the underwriters will offer the remainder to the general public on the same terms as the other shares offered by this prospectus.

We have agreed to indemnify the underwriters against liabilities under the Securities Act, or to contribute to payments that the underwriters may be required to make in that respect.

We intend to list our Series A common stock on The New York Stock Exchange under the symbol "MWA".

In connection with the listing of the common stock on The New York Stock Exchange, the underwriters will undertake to sell round lots of 100 shares or more to a minimum of 2,000 beneficial owners.

We and our subsidiaries may from time to time enter into other investment banking relationships with the underwriters or their affiliates pursuant to which the underwriters will receive customary fees and will be entitled to reimbursement for all related reasonable disbursements and out-of-pocket expenses. We expect that any arrangement will include provisions for the indemnification of the underwriters against a variety of liabilities, including liabilities under the federal securities laws. Bank of America, N.A. and Morgan Stanley Senior Funding, Inc., affiliates of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated, are lenders under the 2005 Mueller Credit Agreement, pursuant to which Banc of America Securities LLC and Morgan Stanley Senior Funding, Inc. are joint lead arrangers and joint book managers. Accordingly, they expect to receive approximately $2.3 million and $0.8 million, respectively, of the proceeds from this offering through the partial repayment of the term loan outstanding under the 2005 Mueller Credit Agreement, based on the aggregate principal amount of the term loan outstanding as of the date of this prospectus. Bank of America, N.A. and Morgan Stanley Senior Funding, Inc. are also lenders under a credit agreement with Walter Industries, as borrower. In addition, Howard L. Clark, Jr., a director of Walter Industries since March 1995 and a director of Mueller Water since April 2006, is a Vice Chairman of Lehman Brothers Inc. In addition, Calyon New York Branch and SunTrust Bank, affiliates of Calyon Securities (USA) Inc. and SunTrust Capital Markets, Inc., are lenders under the 2005 Mueller Credit Agreement. Based on the aggregate principal amount of the term loan outstanding as of the date of this prospectus, Calyon New York

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Branch expects to receive approximately $1.8 million of the proceeds from this offering through the partial repayment of the term loan outstanding under the 2005 Mueller Credit Agreement. Affiliates of SunTrust Capital Markets, Inc. are also lenders under credit agreements with Walter Industries and its affiliates.

Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock will be determined by negotiation between us and the underwriters. The principal factors to be considered in determining the initial public offering price include the following:

•: the information included in this prospectus and otherwise available to the underwriters;
•: market conditions for initial public offerings;
•: the history of and prospects for our business, our past and present operations;
•: the history and prospects for the industry in which we compete;
•: our past and present earnings and current financial position;
•: an assessment of our management;
•: the market of securities of companies in businesses similar to ours; and
•: the general condition of the securities markets.

There can be no assurance that the initial public offering price will correspond to the price at which our common stock will trade in the public market subsequent to this offering or that an active trading market will develop and continue after this offering.

In connection with this offering, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our common stock, including:

•: stabilizing transactions;
•: short sales;
•: syndicate covering transactions;
•: imposition of penalty bids; and
•: purchases to cover positions created by short sales.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our common stock while this offering is in progress. Stabilizing transactions may include making short sales of our common stock, which involves the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering, and purchasing shares of common stock from us or on the open market to cover positions created by short sales. Short sales may be "covered" shorts, which are short positions in an amount not greater than the underwriters' option to purchase additional shares referred to above, or may be "naked" shorts, which are short positions in excess of that amount. Syndicate covering transactions involve purchases of our common stock in the open market after the distribution has been completed in order to cover syndicate short positions.

The underwriters may close out any covered short position either by exercising their option to purchase additional shares, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares as referred to above.

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A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchased in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.

The representatives also may impose a penalty bid on underwriters and dealers participating in the offering. This means that the representatives may reclaim from any syndicate members or other dealers participating in the offering the underwriting discount, commissions or selling concession on shares sold by them and purchased by the representatives in stabilizing or short covering transactions.

These activities may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result of these activities, the price of our common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence the activities, they may discontinue them at any time. The underwriters may carry out these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise.

A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations. Other than the prospectus in electronic format, the information of any such web site, or accessible through any such web sites, is not part of this prospectus. In addition, shares may be sold by underwriters to securities dealers who resell shares to online brokerage account holders.

Each underwriter intends to comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Series A common stock or has in its possession or distributes the prospectus.

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date), an offer of the Series A common stock to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to the Series A common stock which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of the Series A common stock to the public in that Relevant Member State at any time:

(a): to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
(b): to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or
(c): in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an "offer of securities to the public" in relation to any securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the same may be varied in that

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Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

No prospectus (including any amendment, supplement or replacement thereto) has been prepared in connection with the offering of the Series A common stock that has been approved by the Autorité des marchés financiers or by the competent authority of another State that is a contracting party to the Agreement on the European Economic Area and notified to the Autorité des marchés financiers; no Series A common stock has been offered or sold and will be offered or sold, directly or indirectly, to the public in France except to permitted investors ("Permitted Investors") consisting of persons licensed to provide the investment service of portfolio management for the account of third parties, qualified investors (investisseurs qualifiés) acting for their own account and/or investors belonging to a limited circle of investors (cercle restreint d'investisseurs) acting for their own account, with "qualified investors" and "limited circle of investors" having the meaning ascribed to them in Articles L. 411-2, D. 411-1, D. 411-2, D. 734-1, D. 744-1, D. 754-1 and D. 764-1 of the French Code Monétaire et Financier and applicable regulations thereunder; none of this prospectus or any other materials related to the offering or information contained therein relating to the Series A common stock has been released, issued or distributed to the public in France except to Permitted Investors; and the direct or indirect resale to the public in France of any shares of Series A common stock acquired by any Permitted Investors may be made only as provided by Articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8 to L. 621-8-3 of the French Code Monétaire et Financier and applicable regulations thereunder.

Each underwriter acknowledges and agrees that:

(i): it has not offered or sold and will not offer or sell the Series A common stock other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Series A common stock would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 (the "FSMA") by us;
(ii): it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Series A common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and
(iii): it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Series A common stock in, from or otherwise involving the United Kingdom.

This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The Series A common stock are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Series A common stock will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

The offering of the Series A common stock has not been cleared by the Italian Securities Exchange Commission (Commissione Nazionale per le Società e la Borsa, the "CONSOB") pursuant to Italian securities legislation and, accordingly, has represented and agreed that the shares of Series A

162

common stock may not and will not be offered, sold or delivered, nor may or will copies of this prospectus supplement or the accompanying prospectus or any other documents relating to the Series A common stock be distributed in Italy, except (i) to professional investors (operatori qualificati), as defined in Article 31, second paragraph, of CONSOB Regulation No. 11522 of July 1, 1998, as amended, (the "Regulation No. 11522"), or (ii) in other circumstances which are exempted from the rules on solicitation of investments pursuant to Article 100 of Legislative Decree No. 58 of February 24, 1998 (the "Financial Service Act") and Article 33, first paragraph, of CONSOB Regulation No. 11971 of May 14, 1999, as amended.

Any offer, sale or delivery of the shares of Series A common stock or distribution of copies of this prospectus supplement or the accompanying prospectus or any other document relating to the Series A common stock in Italy may and will be effected in accordance with all Italian securities, tax, exchange control and other applicable laws and regulations, and, in particular, will be: (i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Financial Services Act, Legislative Decree No. 385 of September 1, 1993, as amended (the "Italian Banking Law"), Regulation No. 11522, and any other applicable laws and regulations; (ii) in compliance with Article 129 of the Italian Banking Law and the implementing guidelines of the Bank of Italy; and (iii) in compliance with any other applicable notification requirement or limitation which may be imposed by CONSOB or the Bank of Italy.

Any investor purchasing the shares of Series A common stock in the offering is solely responsible for ensuring that any offer or resale of the Series A common stock it purchased in the offering occurs in compliance with applicable laws and regulations.

This prospectus supplement and the accompanying prospectus and the information contained therein are intended only for the use of its recipient and, unless in circumstances which are exempted from the rules on solicitation of investments pursuant to Article 100 of the "Financial Service Act" and Article 33, first paragraph, of CONSOB Regulation No. 11971 of May 14, 1999, as amended, is not to be distributed, for any reason, to any third party resident or located in Italy. No person resident or located in Italy other than the original recipients of this document may rely on it or its content.

Italy has only partially implemented the Prospectus Directive, the provisions above relating to the European Economic Area shall apply with respect to Italy only to the extent that the relevant provisions of the Prospectus Directive have already been implemented in Italy.

Insofar as the requirements above are based on laws which are superseded at any time pursuant to the implementation of the Prospectus Directive, such requirements shall be replaced by the applicable requirements under the Prospectus Directive.

163

VALIDITY OF COMMON STOCK

The validity of the issuance of the shares of Series A common stock offered hereby will be passed upon for Mueller Water by Simpson Thacher & Bartlett LLP, New York, New York and by Shearman & Sterling LLP, New York, New York, for the underwriters.

EXPERTS

The financial statements of United States Pipe and Foundry Company, LLC (U.S. Pipe) as of September 30, 2005 and December 31, 2004 and for the nine-month period ended September 30, 2005 and the years ended December 31, 2004 and 2003 and of Mueller Water Products, LLC (formerly Mueller Water Products, Inc.) and its subsidiaries as of September 30, 2005 and 2004, and for each of the three years in the period ended September 30, 2005 included in this prospectus have been so included in reliance on the reports (which contains an explanatory paragraph relating to US Pipe's restatement of its financial statements as described in Note 1 to the financial statements and Mueller Water Products LLC's restatement of its financial statements as described in Note 2 to the financial statements) of PricewaterhouseCoopers LLP, an independent registered certified public accounting firm, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC, Washington, D.C. 20549, a registration statement on Form S-1 under the Securities Act with respect to the common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to the company and its common stock, reference is made to the registration statement and the exhibits and any schedules filed therewith. A copy of the registration statement, including the exhibits and schedules thereto, may be read and copied at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site at http://www.sec.gov, from which interested persons can electronically access the registration statement, including the exhibits and any schedules thereto. The registration statement, including the exhibits and schedules thereto, are also available for reading and copying at the offices of the New York Stock Exchange at 20 Broad Street, New York, New York 10005.

We are subject to the requirements of the Exchange Act and file periodic reports and other information with the SEC. We intend to furnish our stockholders with annual reports containing consolidated financial statements audited by an independent public accounting firm. We also maintain an Internet site at http://www.muellercompany.com. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part.

164

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Mueller Water Products, Inc.
	Consolidated Balance Sheets as of December 31, 2005 (unaudited) and September 30, 2005	F-2
	Consolidated Statement of Operations for the three months ended December 31, 2005 and 2004 (unaudited)	F-3
	Consolidated Statement of Shareholders' Equity (Deficit) for the three months ended December 31, 2005 (unaudited)	F-4
	Consolidated Statements of Cash Flows for the three months ended December 31, 2005 and 2004 (unaudited)	F-5
	Notes to Consolidated Financial Statements (unaudited)	F-7
United States Pipe and Foundry Company, LLC
	Report of Independent Registered Certified Public Accounting Firm	F-34
	Balance Sheets as of September 30, 2005 and December 31, 2004	F-35
	Statements of Operations for the Nine Months Ended September 30, 2005 and the Years Ended December 31, 2004 and 2003	F-36
	Statements of Changes in Unit/Stockholder's Equity (Net Capital Deficiency) and Comprehensive Income (Loss) for the Nine Months Ended September 30, 2005 and the Years Ended December 31, 2004 and 2003	F-37
	Statements of Cash Flows for the Nine Months Ended September 30, 2005 and the Years Ended December 31, 2004 and 2003	F-38
	Notes to Financial Statements	F-39
Mueller Water Products, LLC
	Report of Independent Registered Public Accounting Firm	F-56
	Consolidated Balance Sheets as of September 30, 2005 and 2004	F-57
	Consolidated Statements of Operations for the Fiscal Years Ended September 30, 2005, 2004 and 2003	F-58
	Consolidated Statements of Shareholders' Deficit and Redeemable Preferred and Common Stock for the Three Years Ended September 30, 2005	F-59
	Consolidated Statements of Cash Flows for the Fiscal Years Ended September 30, 2005, 2004 and 2003	F-60
	Notes to Consolidated Financial Statements	F-62

F-1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MUELLER WATER PRODUCTS, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

		December 31, 2005			September 30, 2005
		(dollars in millions)
Assets
Cash and cash equivalents		$	72.4		$	—
Receivables, net of allowance for doubtful accounts of $6.4 million and $0.9 million at December 31, 2005 and September 30, 2005, respectively			267.0			118.5
Inventories			429.1			147.2
Deferred income taxes			58.8			11.1
Prepaid expenses			32.1			1.5

	Total current assets		859.4			278.3
Property, plant and equipment, net			344.8			149.2
Deferred financing fees, net			32.0			—
Deferred income taxes			—			9.5
Due from Walter affiliate			20.0			—
Intangible assets, net			849.3			—
Goodwill			856.7			58.4

	Total assets	$	2,962.2		$	495.4

Liabilities
Current portion of long-term debt		$	11.5		$	—
Accounts payable			105.9			52.5
Accrued expenses and other liabilities			119.0			34.7
Payable to affiliate, Sloss Industries			—			2.5

	Total current liabilities		236.4			89.7
Long-term debt			1,537.1			—
Payable to parent, Walter Industries			2.6			443.6
Accrued pension liability, net			97.2			53.6
Accumulated postretirement benefits obligation			52.8			51.1
Deferred income taxes			290.6			—
Other long-term liabilities			20.2			12.6

	Total liabilities		2,236.9			650.6

Shareholder's equity (deficit):
Membership unit:
	(1 unit outstanding at December 31, 2005 and September 30, 2005)		—			—
Capital in excess of par value			998.8			68.3
Accumulated deficit			(226.9	)		(178.1	)
Accumulated other comprehensive loss			(46.6	)		(45.4	)

Total shareholder's equity (deficit)			725.3			(155.2	)

Total liabilities and shareholder's equity (deficit)		$	2,962.2		$	495.4

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

F-2

MUELLER WATER PRODUCTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

			Three months ended
			December 31, 2005			December 31, 2004
						(restated)
			(dollars in millions)
Net sales			$	480.4		$	141.2
Cost of sales				436.9			128.5

	Gross profit			43.5			12.7
Operating expenses:
	Selling, general and administrative			57.1			13.2
	Related party corporate charges			1.8			1.9
	Facility rationalization, restructuring and related costs			24.1			—

		Total operating expenses		83.0			15.1

Loss from operations				(39.5	)		(2.4	)
Interest expense arising from related party payable to Walter Industries				—			(5.9	)
Interest expense, net of interest income				(32.2	)		(0.1	)

	Loss before income taxes			(71.7	)		(8.4	)
Income tax expense (benefit)				(22.9	)		1.1

	Net loss		$	(48.8	)	$	(9.5	)

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

F-3

MUELLER WATER PRODUCTS, INC.

UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED DECEMBER 31, 2005

			Capital in Excess of Par Value			Accumulated Deficit			Comprehensive Income (Loss)			Accumulated Other Comprehensive Loss			Total
Balance at September 30, 2005			$	68.3		$	(178.1	)				$	(45.4	)	$	(155.2	)
Walter's investment in subsidiary				943.4			—						—			943.4
Dividend to Walter				(444.5	)		—						—			(444.5	)
Dividend to Walter for acquisition costs				(12.0	)		—						—			(12.0	)
Forgiveness of U.S. Pipe payable to Walter				443.6			—						—			443.6
	Comprehensive loss
		Net loss		—			(48.8	)		(48.8	)		—			(48.8	)
		Unrealized loss on interest rate swaps, net of tax		—			—			(1.1	)		(1.1	)		(1.1	)
		Foreign currency translation adjustments		—			—			(0.1	)		(0.1	)		(0.1	)

Comprehensive loss									$	(50.0	)

Balance at December 31, 2005			$	998.8		$	(226.9	)				$	(46.6	)	$	725.3

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

F-4

MUELLER WATER PRODUCTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three months ended
		December 31, 2005			December 31, 2004
		(dollars in millions)
Cash flows from operating activities
Net loss		$	(48.8	)	$	(9.5	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
	Depreciation		17.1			6.5
	Amortization of intangibles		6.6			—
	Amortization of deferred financing fees		1.2			—
	Amortization of tooling		0.1			—
	Accretion resulting from valuing acquired debt at fair value		(1.9	)		—
	Accretion on senior discount notes		5.2			—
	Gain on disposal of property, plant and equipment		(0.4	)		0.7
	Impairments of property, plant and equipment		19.2			—
	Provision for deferred income taxes		(25.8	)		—
	Gain on interest rate swaps		(0.4	)		—
Changes in assets and liabilities, net of the effects of acquisitions:
	Receivables		28.9			16.5
	Inventories		91.2			(4.2	)
	Income taxes payable		—			10.7
	Prepaid expenses and other current assets		1.0			0.4
	Pension and other long-term liabilities		(4.4	)		2.5
	Accounts payable, accrued expenses and other current liabilities		(13.9	)		(2.3	)
	Other, net		—			0.2

Net cash provided by operating activities			74.9			21.5

Cash flows from investing activities
Purchase of property, plant and equipment			(16.0	)		(7.9	)
Increase in amounts due from Walter			(20.0	)		(12.5	)

Net cash used in investing activities			(36.0	)		(20.4	)

Cash flows from financing activities
Book cash overdrafts			0.6			(1.2	)
Proceeds from short-term borrowings			55.9			—
Retirement of short-term debt			(55.9	)		—
Proceeds from long-term debt			1,050.0			—
Retirement of long-term debt, including capital lease obligations			(615.3	)		—
Payment of deferred financing fees			(21.6	)		—
Dividend to Walter			(444.5	)		—
Dividend to Walter for acquisition costs			(12.0	)		—
Walter contribution of Predecessor Mueller's cash			76.3			—

Net cash used in financing activities			33.5			(1.2	)

Increase (decrease) in cash and cash equivalents			72.4			(0.1	)
Cash and cash equivalents
Beginning of period			—			0.1

End of period		$	72.4		$	—

F-5

Schedule of non-cash investing and financing activities:

On October 3, 2005, the Company's parent Walter Industries, purchased all the outstanding common stock of Predecessor Mueller.

		(dollars in millions)
Contribution of Predecessor Mueller by Walter		$	943.4
Less: Cash of Predecessor Mueller received			(76.3	)

	Total net assets received excluding cash	$	867.1

Subsequent to the Acquisition, the Company's parent, Walter Industries, forgave an intercompany receivable with U.S. Pipe of $443.6 million.

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

F-6

MUELLER WATER PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE THREE MONTHS ENDED DECEMBER 31, 2005 AND DECEMBER 31, 2004

(UNAUDITED)

Note 1. Organization

The registrant is Mueller Water Products, Inc., a Delaware corporation ("Mueller Water" or the "Company"). The Company is the surviving corporation of the merger on February 2, 2006 of Mueller Water Products, LLC (Commission File Number: 333-116590) and Mueller Water Products Co-Issuer, Inc. with and into Mueller Holding Company, Inc., a Delaware corporation. See Note 15 for a detailed description of the merger.

On October 3, 2005, through a series of transactions (the "Acquisition"), Walter Industries, Inc. ("Walter"), through a wholly-owned subsidiary, acquired all outstanding shares of capital stock of Mueller Water Products, Inc. ("Predecessor Mueller"), which immediately was converted into Mueller Water Products, LLC, a Delaware limited liability company and contributed United States Pipe and Foundry Company, LLC, ("U.S. Pipe"), owned by Walter since 1969, to the acquired company. In accordance with generally accepted accounting principles, for accounting purposes U.S. Pipe is treated as the acquirer of Predecessor Mueller. Accordingly, effective October 3, 2005, U.S. Pipe's basis of accounting is used for the Company and all financial data for periods prior to October 3, 2005 of the Company included in this prospectus, is that of U.S. Pipe. The results of operations of Predecessor Mueller are included in the Consolidated Statements of Operations beginning October 3, 2005.

The Company was originally organized as United States Pipe and Foundry Company, Inc. ("Inc.") and was a wholly-owned subsidiary of Walter Industries, Inc., a diversified New York Stock Exchange traded company (NYSE: WLT). On September 23, 2005, Inc. was dissolved and United States Pipe and Foundry Company, LLC was organized in the state of Alabama, and the operations of Inc. were conducted under the form of a limited liability company.

In December 2005, U.S. Pipe changed its fiscal year-end to September 30, which coincides with the fiscal year end of Predecessor Mueller. Beginning with the quarter ended December 31, 2005, the Company has three operating segments which are named after its leading brands in each segment: Mueller, U.S. Pipe, and Anvil.

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses for the reporting periods. Actual results for future periods could differ from those estimates used by management. In the opinion of management, all normal and recurring adjustments that are considered necessary for a fair financial statement presentation have been made.

Certain amounts in the prior period's consolidated financial statements have been reclassified to conform to the current-period presentation. On the Consolidated Balance Sheet as of September 30, 2005, prepaid pension cost of $19.3 million has been netted against accrued pension liability of $72.9 million and is presented as accrued pension liability, net of $53.6 million.

Note 2. Restatement

The Company has restated its consolidated financial statements to correct the classification of certain prior-period shipping and handling costs in accordance with Emerging Issues Task Force ("EITF") Consensus No. 00-10, "Accounting for Shipping and Handling Fees and Costs," at its U.S. Pipe segment. EITF 00-10 does not allow shipping and handling costs to be shown as a deduction from net sales.

F-7

The Company's prior method of accounting for the cost to deliver products to the customer's designated location was to include these costs as a deduction from net sales and revenues. Such costs are now included in cost of sales. The impact of the restatement was to increase net sales and cost of sales by $10.9 million in the three months ended December 31, 2004. The restatement had no impact on operating income or net income for the three months ended December 31, 2004.

The following tables set forth the effects of the restatement discussed above on the financial statements for the three months ended December 31, 2004 as follows:

Consolidated Statement of Operations

	For the three months ended December 31, 2004
	As Reported		As Restated
	(dollars in millions)
Net sales	$	130.3	$	141.2
Cost of sales	$	117.6	$	128.5

Segment Information

		For the three months ended December 31, 2004:
		As Reported		As Restated
		(dollars in millions)
Net sales:
	Mueller	$	—	$	—
	U.S. Pipe		130.3		141.2
	Anvil		—		—

	Consolidated	$	130.3	$	141.2

Net sales:
	United States	$	126.8	$	137.7
	Canada		—		—
	Other countries		3.5		3.5

		$	130.3	$	141.2

Note 3. Summary of Significant Accounting Policies

Revenue Recognition—The Company recognizes revenue based on the recognition criteria set forth in the Securities and Exchange Commission's Staff Accounting Bulletin 104 "Revenue Recognition in Financial Statements", which is when delivery of product 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 from the sale of products via rail or

F-8

truck is recognized when title passes upon delivery to the customer. Revenue earned for shipments via ocean vessel is recognized under international shipping standards as defined by Incoterms 2000 when title and risk of loss transfer to the customer. Sales are 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 Consolidated Statements of Operations. Amounts billed to customers, if any, to cover shipping and handling costs are included in net sales.

Customer Rebates—Customer rebates are applied against net sales at the time the sales are recorded based on estimates with respect to the deductions to be taken.

Cash and Cash Equivalents—The Company considers all highly liquid investments with original maturities of ninety 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 amount and the right of offset exists. Where there is no right of offset against cash balances, outstanding checks are classified along with accounts payable. At December 31, 2005 and September 30, 2005 checks issued but not yet presented to the banks for payment (i.e. book cash overdrafts) were $0.6 million and zero, respectively, and were recorded in accounts payable.

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

The estimated allowance for doubtful accounts receivable is based, in large part, upon judgments and estimates of expected losses and specific identification of problem trade 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 these allowances. The periodic evaluation of the adequacy of the allowance for doubtful accounts 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 the Company reasonably believes will be collected.

Inventories—Inventories are recorded at the lower of cost (first-in, first-out) 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 can be affected by levels of production and actual costs incurred. Management periodically evaluates the effects of production levels and actual costs incurred on the costs capitalized as part of inventory.

Property, plant and equipment—Property, plant and equipment is recorded at cost, less accumulated depreciation and amortization. Depreciation is recorded on the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on the straight-line method over the lesser of the useful life of the improvement or the remaining lease term. Estimated useful lives used in computing depreciation expense are 2 to 20 years for machinery and equipment and 3 to 50 years for

F-9

land improvements and buildings. Gains and losses upon disposition are reflected in the Consolidated Statements of Operations in the period of disposition.

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

The Company accounts for its asset retirement obligations related to plant and landfill closures in accordance with Statement of Financial Accounting Standards No. 143 ("SFAS 143"). Under SFAS 143, liabilities are recognized at fair value for an asset retirement obligation in the period in which it is incurred and the carrying amount of the related long-lived asset is correspondingly increased. Over time, the liability is accreted to its future value. The corresponding asset capitalized at inception is depreciated over the useful life of the asset.

Tooling—Prepaid expenses include maintenance and tooling inventory costs. Perishable tools and maintenance items are expensed when put into service. More durable items are amortized over their estimated useful lives, ranging from 4 to 10 years.

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 associated with Predecessor Mueller as it existed as of August 16, 1999, whether known or not.

Accounting for the Impairment of Long-Lived Assets—Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. Goodwill and intangible assets that have an indefinite life are not amortized, but instead are tested for impairment annually (or more frequently if events or circumstances indicate possible impairments) using both a discounted cash flow method and a market comparable method.

Workers' Compensation—The Company is self-insured for workers' compensation benefits for work related injuries. 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 of the Company or insurance industry data when historical data is limited. The Company is indemnified by Tyco for all liabilities associated with Predecessor Mueller that occurred prior to August 16, 1999. Workers' compensation liabilities were as follows (in millions):

		December 31, 2005			September 30, 2005
Undiscounted aggregated estimated claims to be paid		$	27.0		$	14.4
Workers' compensation liability recorded on a discounted basis		$	22.8		$	11.9

F-10

the discount 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. The weighted average rate used for discounting the liability at December 31, 2005 and September 30, 2005 was 4.6%. At December 31, 2005, a one-percentage-point increase in the discount rate on the discounted claims liability would decrease the liability by $0.1 million, while a one-percentage-point decrease in the discount rate would increase the liability by $0.1 million.

Warranty Costs—The Company accrues for U.S. Pipe segment warranty expenses that include customer costs of repair and/or replacement, including labor, materials, equipment, freight and reasonable overhead costs, determined on a case-by-case basis, whenever the Company's products and/or services fail to comply with published industry standards or mutually agreed upon customer requirements.

The Company accrues for the estimated cost of product warranties of the Mueller and Anvil segments at the time of sale based on historical experience. Adjustments to obligations for warranties are made as changes in the obligations become reasonably estimable.

Activity in accrued warranty, included in the caption accrued expenses in the accompanying Consolidated Balance Sheets, was as follows (in millions):

	Three months ended December 31,
	2005			2004
Accrued balance at beginning of period	$	4.7		$	1.8
Accrued warranty of Predecessor Mueller		1.6			—
Warranty expense		0.4			0.8
Settlement of warranty claims		(1.7	)		(0.9	)

Balance at end of period	$	5.0		$	1.7

Deferred Financing Fees—Costs of debt financing included in other non-current assets are amortized over the life of the related loan agreements, which range from five to ten years. Such costs are reassessed when amendments occur, in accordance with Emerging Issues Task Force (EITF) 96-19, "Debtors Accounting for a Modification or Exchange of Debt Instruments."

Income Taxes—Deferred tax liabilities and assets are recognized 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.

Research and Development—Research and development expenditures are expensed when incurred.

Advertising—Advertising costs are expensed when incurred.

F-11

Translation of Foreign Currency—Assets and liabilities of the Company's businesses operating outside of the United States of America which maintains accounts in a functional currency other than U.S. dollars are translated into U.S. dollars using year-end exchange rates. Revenues and expenses are translated at the average exchange rates effective during the year. Foreign currency translation gains and losses are included as a separate component of stockholders' equity. Gains and losses resulting from foreign currency transactions, the amounts of which are not material, are included in cost of sales.

Derivative Instruments and Hedging Activities—The Company currently uses interest rate swaps as required in the 2005 Mueller Credit Agreement to reduce the risk of interest rate volatility. The amount to be paid or received from interest rate swaps is charged or credited to interest expense over the lives of the interest rate swap agreements. Changes in the fair value of derivatives are recorded each period in earnings or Accumulated Other Comprehensive Income (Loss), depending on whether or not a derivative is designated and effective as part of a hedge transaction and meets the applicable requirements associated with Statement of Financial Accounting Standards No. 133 ("SFAS 133") (see Note 7).

Additionally, the Company utilizes forward contracts to mitigate its exposure to changes in foreign currency exchange rates from third party and intercompany forecasted transactions. The primary currency to which the Company is exposed and to which it hedges the exposure is the Canadian Dollar. The effective portion of unrealized gains and losses associated with forward contracts are deferred as a component of Accumulated Other Comprehensive Income (Loss) until the underlying hedged transactions are reported in the Company's Consolidated Statements of Operations.

Related Party Transactions—The Company purchases foundry coke from an affiliate, Sloss Industries, Inc. for an amount that approximates the market value of comparable transactions. Costs included in cost of sales related to purchases from Sloss Industries, Inc. were $5.7 million and $3.6 million for the three months ended December 31, 2005 and 2004, respectively.

Other services that Sloss Industries, Inc. provides to the Company include the delivery of electrical power to one of the Company's facilities, rail car switching and the leasing of a distribution facility. The total of these other services included in the Company's operating expenses were $0.4 million and $0.4 million for the three months ended December 31, 2005 and 2004, respectively.

Related Party Allocations—Certain costs incurred by Walter such as insurance, executive salaries, professional service fees, human resources, transportation, healthcare and other centralized business functions are allocated to its subsidiaries. Certain costs that were considered directly related to the U.S. Pipe segment were charged to the Company and included in selling, general and administrative expenses. These costs were approximately $0.5 million and $0.3 million for the three months ended December 31, 2005 and 2004, respectively. Costs incurred by Walter that cannot be directly attributed to its subsidiaries are allocated to them based on estimated annual revenues. Such costs were allocated to the Company and are recorded in the caption, related party corporate charges, in the accompanying Consolidated Statements of Operations and were approximately $1.8 million and $1.9 million for the three months ended December 31, 2005 and 2004, respectively.

While the Company considers the allocation of such costs to be reasonable, in the event the Company was not affiliated with Walter, these costs may increase or decrease.

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Note 4. Acquisition of Predecessor Mueller by Walter Industries

On October 3, 2005, pursuant to the agreement dated June 17, 2005, Walter acquired all of the outstanding common stock of Predecessor Mueller for $943.4 million and assumed $1.05 billion of indebtedness. Predecessor Mueller was converted into a limited liability company on October 3, 2005 and was merged with and into the Company on February 2, 2006. Transaction costs included in the acquisition price were $14.8 million. In conjunction with the acquisition, U.S. Pipe was contributed in a series of transactions to Mueller Group, LLC ("Mueller Group" or "Group"), a wholly-owned subsidiary of the Company, on October 3, 2005.

Walter's acquisition of Predecessor Mueller has been accounted for as a business combination with U.S. Pipe considered the acquirer for accounting purposes. Assets acquired and liabilities assumed were recorded at their fair values as of October 3, 2005. The total purchase price of $943.4 million is comprised of (dollars in millions):

Acquisition of the outstanding common stock of Predecessor Mueller		$	928.6
Acquisition-related transaction costs			14.8

	Total purchase price	$	943.4

Acquisition-related transaction costs include investment banking, legal and accounting fees and other external costs directly related to the Acquisition.

Under business combination accounting, the purchase price was allocated to Predecessor Mueller's net tangible and identifiable intangible assets based on their fair values as of October 3, 2005. The excess of the purchase price over the net tangible and identifiable intangible assets is recorded as goodwill. Based on current fair values, the purchase price was allocated as follows (dollars in millions):

Receivables, net		$	177.4
Inventory			373.2
Property, plant and equipment			215.5
Identifiable intangible assets			855.9
Goodwill			798.3
Net other assets			376.5
Net deferred tax liabilities			(280.7	)
Debt			(1,572.7	)

	Total purchase price allocation	$	943.4

The purchase price allocation is preliminary and is subject to future adjustments to goodwill for the execution of certain restructuring plans identified by Walter prior to the acquisition date primarily related to Predecessor Mueller facility rationalization actions. Any adjustments to goodwill related to such facility rationalization costs will be recorded no later than October 3, 2006.

Receivables are short-term trade receivables and their net book value approximates current fair value.

Finished goods inventory is valued at estimated selling price less cost of disposal and reasonable profit allowance for the selling effort. Work in process inventory is valued at estimated selling price of

F-13

finished goods less costs to complete, cost of disposal and a reasonable profit allowance for the completing and selling effort. Raw materials are valued at book value, which approximates current replacement cost. The carrying value of inventories include $70.2 million in excess of Predecessor Mueller's carrying value, of which $58.4 million was charged to cost of sales during the three months ended December 31, 2005.

Property, plant and equipment are valued at the current replacement cost as follows (in millions):

				Depreciation Period
Land		$	14.1	Indefinite
Buildings			51.8	5 to 14 years
Machinery and equipment			136.4	3 to 5 years
Other			13.2	3 years

	Total property, plant and equipment	$	215.5

Identifiable intangible assets acquired consist of trade name, trademark, technology and customer relationships and were valued at their current fair value. Trade name and trademark relate to Mueller®, Anvil®, Hersey™, Henry Pratt™ and James Jones™. Technology represents processes related to the design and development of products. Customer relationships represent the recurring nature of sales to current distributors, municipalities, contractors and other end customers regardless of their contractual nature.

Identifiable intangible assets were as follows (dollars in millions):

				Amortization Period
Trade name and trademark		$	403.0	Indefinite
Technology			56.3	10 years
Customer relationships			396.6	19 years

	Total identifiable intangible assets	$	855.9

F-14

Net deferred tax liabilities include the tax effects of fair value adjustments related to identifiable intangible assets and net tangible assets.

Debt is valued at fair market value as of October 3, 2005.

The following table of unaudited pro forma results of operations of Predecessor Mueller and U.S. Pipe for the three months ended December 31, 2004 is presented as if the Acquisition and borrowings under the 2005 Mueller Credit Agreement had taken place on October 1, 2004 and were carried forward through December 31, 2004.

The unaudited pro forma amounts are not intended to represent or be indicative of the consolidated results of operations that would have been reported had the Acquisition and borrowings under the 2005 Mueller Credit Agreement been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations of the Company.

	Three months ended December 31, 2004
	(dollars in millions) (restated)
Net sales	$	397.3
Net income	$	(10.9	)

The pro forma amounts are based on the historical results of operations and are adjusted for amortization of definite-lived intangibles of $6.6 million, depreciation of property, plant and equipment of ($0.2) million, interest expense of $7.4 million and amortization of financing fees related to the 2005 Mueller Credit Agreement of $2.4 million.

Note 5. Facility Rationalization, Restructuring and Related Costs

On October 26, 2005, Walter announced plans to close U.S. Pipe's Chattanooga, Tennessee plant and transfer the valve and hydrant production of that plant to Mueller's Chattanooga, Tennessee and Albertville, Alabama plants. The eventual closure of the U.S. Pipe Chattanooga plant is expected to occur in calendar 2006, resulting in the termination of approximately 340 employees. Total estimated restructuring and impairment charges related to this closure are $29.3 million, of which $24.1 million

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was expensed during the three months ended December 31, 2005. Restructuring costs recognized in the Consolidated Statement of Operations associated with this plant closure were as follows:

			Restructuring & impairment charges expensed
	Total estimated restructuring costs		For the three months ended December 31, 2005
	(dollars in millions)
Termination benefits	$	3.6	$	3.0
Other employee-related costs		3.3		—
Other associated costs		3.4		2.1
Impairment of property, plant and equipment		19.0		19.0

Total	$	29.3	$	24.1

Termination benefits relating to the U.S. Pipe Chattanooga plant closure of $3.0 million consist primarily of severance related to staff reductions of hourly and salaried personnel. The Company expects to recognize an additional $0.6 million for severance expense during the remainder of fiscal 2006. In addition, the Company expects to recognize other employee-related costs of approximately $3.3 million related to pension and other postretirement benefit obligations during the first quarter of Walter's pension benefit measurement period, which begins on January 1, 2006.

Other associated costs of $2.1 million principally include an increase to the estimated asset retirement obligation. The Company expects to recognize an additional $1.3 million of environmental-related costs, as those costs are incurred during fiscal 2006.

Fixed asset impairment charges of $19.0 million were recorded during the three months ended December 31, 2005. These assets have a net book value of $3.9 million at December 31, 2005.

Activity in accrued restructuring was as follows (dollars in millions):

	For the three months ended December 31, 2005
Beginning balance	$	—
Restructuring expenses accrued		5.1
Restructuring payments and charges		(1.3	)

Ending balance	$	3.8

In addition to transferring production to Mueller facilities, the responsibility for U.S. Pipe valve and hydrant products was transferred to the Mueller segment. Through this transfer, it was determined that certain U.S. Pipe inventory would not ultimately be sold. As a result, inventory obsolescence charges relating to U.S. Pipe valve and hydrant inventory of $10.7 million were recorded to cost of sales during the three months ended December 31, 2005.

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In addition, current period actual production output at U.S. Pipe Chattanooga was significantly lower than normal capacity, resulting in additional facility expenses of $5.2 million charged to cost of sales during the three months ended December 31, 2005.

Note 6. Borrowing Arrangements

Long-Term Debt—Long-term debt consists of the following obligations:

	December 31, 2005			September 30, 2005
	(dollars in millions)
2005 Mueller Credit Agreement	$	1,047.4		$	—
10% senior subordinated notes(1)		333.2			—
14³/4% senior discount notes(2)		165.7			—
Capital lease obligations		2.3			—

		1,548.6			—
Less current portion		(11.5	)		—

	$	1,537.1		$	—

1): The value of the 10% senior subordinated notes were recorded at fair value at October 3, 2005 which was an increase of $18.9 million over Predecessor Mueller's carrying amount. This amount is amortized over the life of the notes as a reduction to interest expense. As of December 31, 2005, the unamortized fair value adjustment was $18.2 million.
2): The value of the 14³/4% senior discount notes were recorded at fair value at October 3, 2005 which was an increase of $36.0 million over Predecessor Mueller's carrying amount. This amount is amortized over the remaining life of the notes as a reduction to interest expense. As of December 31, 2005 the unamortized fair value adjustment was $34.8 million.

2005 Mueller Credit Agreement: On October 3, 2005, Group entered into a credit agreement (the "2005 Mueller Credit Agreement") consisting of a $145 million senior secured revolving credit facility maturing in October 2010 (the "2005 Mueller Revolving Credit Facility") and a $1,050 million senior secured term loan maturing in October 2012 (the "2005 Mueller Term Loan"). The 2005 Mueller Credit Agreement is a secured obligation of Group and substantially all of its wholly-owned domestic subsidiaries, including U.S. Pipe. The 2005 Mueller Term Loan requires quarterly principal payments of $2.6 million through October 3, 2012, at which point in time the remaining principal outstanding is due. The commitment fee on the unused portion of the 2005 Mueller Revolving Credit Facility is 0.50% and the interest rate is a floating interest rate of 2.5% over LIBOR. The 2005 Mueller Term Loan carries a floating interest rate of 2.25% over LIBOR.

Proceeds from the 2005 Mueller Credit Agreement were $1,053.4 million, net of $21.6 million of underwriting fees and expenses which will be amortized over the life of the loans. The proceeds were used to finance the acquisition of Predecessor Mueller by Walter and to refinance existing indebtedness.

F-17

On January 24, 2006, Group entered into an Amendment No. 1 (the "First Amendment") to the 2005 Credit Agreement. The First Amendment removes the requirement that Group and its subsidiaries change their fiscal year end to December 31 and, in the event of an initial public offering of the Company, provides the ability for Group to pay up to $8.5 million in cash dividends to the Company for further distribution to the Company's shareholders. The Company is a wholly-owned subsidiary of Walter.

The debt instruments described below were liabilities of Predecessor Mueller and Group prior to the Acquisition on October 3, 2005 and continue as liabilities of the Company and Group subsequent to the Acquisition.

10% Senior Subordinated Notes: On April 23, 2004, Mueller Group, Inc. (now, Mueller Group, LLC) issued $315 million principal face amount of 10% senior subordinated notes due 2012. The senior subordinated notes are guaranteed by each of Group's existing domestic restricted subsidiaries. The subordinated notes contain customary covenants and events of default, including covenants that limit Group's ability to incur debt, pay dividends and make investments.

On October 4, 2005, Group notified the holders of the subordinated notes that the Acquisition was a change in control and that, as a result, the holders had a right to cause Group to repurchase their senior subordinated notes on or before 5:00 p.m. eastern standard time, on November 4, 2005 at a price of 101% of the principal face amount of such notes. The change of control offer expired at 5:00 p.m. eastern standard time, on November 6, 2005, with no subordinated notes being validly tendered and not withdrawn and, accordingly, no subordinated notes were purchased pursuant to the change of control offer.

14³/4% Senior Discount Notes: On April 29, 2004, Predecessor Mueller issued 223,000 units, consisting of $223 million principal face amount of 14³/4% senior discount notes due 2014 and warrants to purchase 24,487,383 shares of Predecessor Mueller's common stock. In connection with the Acquisition, these warrants were cancelled and converted into the right to receive cash equal to the number of shares of common stock into which the warrants would have been exercisable multiplied by the per-share merger consideration (less the exercise price per warrant). The senior discount notes remain senior unsecured obligations of the Company and are effectively subordinated to all of its existing and future secured debt and to all indebtedness and other liabilities of the Company's subsidiaries, including Group. The senior discount notes do not require cash interest payments until April 2009.

On October 4, 2005, the Company notified the holders of the senior discount notes that the Acquisition was a change in control and that, as a result, the holders had a right to cause the Company to repurchase their senior discount notes on or before 5:00 p.m., New York City time, on November 4, 2005 at a price of 101% of the accreted value of the notes at the time of change of control. The

F-18

change of control offer expired at 5:00 p.m., New York City time, on November 6, 2005, with no senior discount notes being validly tendered and not withdrawn and, accordingly, no senior discount notes were purchased pursuant to the change of control offer.

Capital Leases—The Company leases automobiles under capital lease arrangements that expire over the next four years.

Interest Rate Swaps—These hedges are described in Note 7 and comply with covenants contained in the 2005 Mueller Credit Agreement.

Distributions from Group—The Company has no material assets other than its ownership of Group's capital stock and accordingly depends upon distributions from Group to satisfy its cash needs. The Company's principal cash needs will be debt service on its senior discount notes due 2014. These senior discount notes do not require cash interest payments until 2009 and contain restrictive covenants that will, among other things, limit the ability of the Company and its subsidiaries (including Group) to incur debt, pay dividends and make investments. Neither Group nor any of its subsidiaries guarantee these notes. The Company, however, is a holding company and its ability to pay interest on the notes will be dependent upon the receipt of dividends from its subsidiaries. Group is the Company's only direct subsidiary. However, the terms of Group's borrowing arrangements significantly restrict its ability to pay dividends to the Company.

Note 7. Derivative Financial Instruments

Interest Rate Swaps—On October 27, 2005, Group entered into six interest rate hedge transactions with a cumulative notional amount of $350 million. The swap terms are between one and seven years with five separate counter-parties. The objective of the hedges is to protect the Company against rising LIBOR interest rates that would have a negative effect on the Company's cash flows due to changes in interest payments on its 2005 Mueller Term Loan. The structure of the hedges are a one-year 4.617% LIBOR swap of $25 million, a three-year 4.740% LIBOR swap of $50 million, a four-year 4.800% LIBOR swap of $50 million, a five-year 4.814% LIBOR swap of $100 million, a six-year 4.915% LIBOR swap of $50 million, and a seven year 4.960% LIBOR swap of $75 million. These swap agreements call for the Company to make fixed rate payments over the term at each swap's stated fixed rate and to receive payments based on three month LIBOR from the counter-parties. These swaps will be settled quarterly over their lives and will be accounted for as cash flow hedges. As such, changes in the fair value of these swaps that take place through the date of maturity will be recorded in Accumulated Other Comprehensive Income (Loss). These hedges comply with covenants contained in the 2005 Mueller Credit Agreement.

Group also has two interest rate hedge agreements that existed as of October 3, 2005: a two-year 3.928% LIBOR swap that matures in May 2007 and a two-year 4.249% LIBOR swap that matures in April 2007. The changes in fair value of these two swaps were recorded as interest expense in the Statements of Operations until achieving hedge effectiveness in October 2005 and November 2005, respectively, at which times such changes in fair value were recorded in Accumulated Other Comprehensive Income (Loss).

F-19

The Company recorded an unrealized loss from its swap contracts, net of tax, of $1.1 million at December 31, 2005 in Accumulated Other Comprehensive Income (Loss).

Forward Foreign Currency Exchange Contracts

The Company entered into forward exchange contracts primarily to hedge currency fluctuations from transactions (primarily anticipated inventory purchases) denominated in foreign currencies, thereby limiting the risk that would otherwise result from changes in foreign currency exchange rates. The majority of the Company's exposure to currency movements is in Canada. All of the foreign currency exchange contracts have maturity dates in 2006. Gains and losses on the forward foreign currency exchange contracts are expected to be offset by losses / gains in recognized net underlying foreign currency exchange transactions. As of December 31, 2005, the Company had entered into one forward contract at a notional amount of less than $0.1 million, selling U.S. dollars and purchasing euros at an exchange rate of $1.3635.

Subsequent to December 31, 2005, the Company entered into forward foreign currency exchange contracts at a notional amount of $9.1 million primarily to protect anticipated inventory purchases by its Canadian operations. With these hedges, the Company purchases U.S. dollars and sells Canadian dollars at an average exchange rate of $0.867.

Natural Gas Swap

On January 12, 2006, Group entered into a swap contract to hedge anticipated purchases of natural gas from February 2006 through March 2006 totaling 0.4 million mmbtu, or approximately 80% of expected natural gas consumption, at a price of $9.41 per mmbtu. This swap contract effectively converts a portion of forecasted purchases at market prices to a fixed price basis. Any change in the fair value of this swap contract will be recorded in Accumulated Other Comprehensive Income (Loss).

Note 8. Interest Expense Arising from Related Party Payable to Walter Industries

Interest expense associated with the outstanding debt payable to Walter was allocated to the Company up to the date of the Acquisition based upon the outstanding balance of the intercompany note. An intercompany note to Walter of $443.6 million was forgiven and contributed to capital. Intercompany interest expense was zero and $5.9 million for the three months ended December 31, 2005 and 2004, respectively.

F-20

Note 9. Pension and Other Postretirement Benefits

The components of net periodic benefit cost for pension and postretirement benefits for the three months ended December 31, 2005 and December 31, 2004 are as follows:

			Pension Benefits						Other Benefits
			For the three months ended December 31,						For the three months ended December 31,
			2005			2004			2005			2004
			(dollars in millions)
Components of net periodic benefit cost:
	Service cost		$	2.0		$	1.1		$	0.2		$	0.1
	Interest cost			4.7			3.2			0.3			0.4
	Expected return on plan assets			(4.9	)		(3.1	)		—			—
	Amortization of prior service cost			0.1			0.1			(0.6	)		(0.7	)
	Amortization of net loss (gain)			1.9			0.8			(0.2	)		(0.2	)
		Curtailment settlement loss		—			—			—			0.3

	Net periodic benefit cost		$	3.8		$	2.1		$	(0.3	)	$	(0.1	)

For the three months ended December 31, 2005, the Company had no contributions to its pension plans. The Company presently anticipates contributing approximately $0.5 million to fund its pension plans in fiscal 2006 and may make further discretionary payments.

Note 10. Goodwill and Identifiable Intangibles

Goodwill and intangible assets that have an indefinite life are not amortized, but instead are tested for impairment annually (or more frequently if events or circumstances indicate possible impairments) using both a discounted cash flow method and a market comparable method. Definite-lived intangible assets are amortized over their respective estimated useful lives and reviewed for impairment if events or circumstances indicate possible impairment. The Company uses an estimate of future undiscounted net cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable.

F-21

Identifiable intangible assets consist of the following:

	December 31, 2005
	Cost		Accumulated Amortization
	(dollars in millions)
Definite-lived intangible assets
Technology	$	56.3	$	1.4
Customer relationships		396.6		5.2

		452.9		6.6
Indefinite lived intangible assets
Trade name and trademarks		403.0		—

	$	855.9	$	6.6

Goodwill was $856.7 million at December 31, 2005, compared to $58.4 million at September 30, 2005. The increase of $798.3 million represents goodwill identified during the allocation of the purchase price of the Acquisition. Goodwill is expected to increase over the next twelve months as the Company implements facility rationalizations that were formally identified prior to the Acquisition. Certain facility rationalization costs, primarily related to severance, will be recorded as a liability at the time identified as permitted under accounting principles generally accepted in the United States of America, with a corresponding increase in goodwill. All closure costs related to the shut-down of the U.S. Pipe Chattanooga facility (as described in Note 4) have been charged to operating expenses and not reflected as a component of goodwill.

Note 11. Supplementary Balance Sheet Information

Selected supplementary balance sheet information is presented below:

	December 31, 2005		September 30, 2005
	(dollars in millions)
Inventories
Purchased materials and manufactured parts	$	74.9	$	30.6
Work in process		111.3		15.5
Finished goods		242.9		101.1

	$	429.1	$	147.2

	December 31, 2005			September 30, 2005
	(dollars in millions)
Property, plant and equipment
Land	$	25.5		$	11.3
Buildings		86.0			33.8
Machinery and equipment		540.0			401.7
Other		20.5			16.2
Accumulated depreciation		(327.2	)		(313.8	)

	$	344.8		$	149.2

F-22

	December 31, 2005		September 30, 2005
	(dollars in millions)
Accrued expenses and other liabilities
Vacations and holidays	$	14.3	$	4.5
Workers' compensation and comprehensive liability		6.3		2.9
Accrued payroll and bonus		10.9		3.9
Accrued sales commissions		3.3		1.0
Accrued other taxes		6.1		2.1
Accrued warranty claims		5.0		4.7
Accrued environmental claims		4.0		4.0
Accrued income taxes		3.9		5.5
Accrued cash discounts and rebates		24.2		4.8
Accrued interest		12.2		—
Unclaimed payments to Predecessor Mueller warrant holders(1)		8.9		—
Other		19.9		1.3

	$	119.0	$	34.7

(1): Together with the issuance of the 14³/4% senior discount notes, Predecessor Mueller issued 223,000 warrants to purchase 24,487,383 shares of Class A common stock at $0.01 per share. On October 3, 2005, in connection with the Acquisition of the Company by Walter, the outstanding warrants were converted into the right to receive cash upon exercise of the warrants. As of December 31, 2005, approximately 12,000 warrants had not been presented for payment. All funds required for settlement of warrants are funded by amounts held in escrow in connection with the Acquisition.

Note 12. Supplementary Income Statement Information

The components of interest expense, net of interest income are presented below:

		Three months ended
		December 31, 2005			December 31, 2004
		(dollars in millions)
Interest expense, net of interest income:
	Contractual interest expense	$	29.2		$	0.1
	Deferred financing fee amortization		1.2			—
	Write off of bridge loan commitment fees		2.5			—
	Interest rate swap gains		(0.4	)		—

	Interest expense		32.5			0.1
	Interest income		(0.3	)		—

Total interest expense, net of interest income		$	32.2		$	0.1

The bridge loan commitment fees represent fees paid to lenders to make available to the Company a bridge loan facility to repurchase the 14³/4% senior discount notes and 10% senior subordinated notes

F-23

from the holders of such notes under the terms of the change of control provisions of the indentures, as described in Note 5. No notes were tendered under the offer and the bridge loan was not used. The related commitment fees were charged to interest expense during the three months ended December 31, 2005.

Note 13. Income Taxes

The Company files a consolidated federal income tax return with Walter Industries Inc. The tax provision has been determined under FAS 109 "Accounting for Income Taxes" taking into account the intercompany tax sharing agreement.

The components of pretax earnings (losses) are as follows (in millions):

	For the quarter ended December 31,
	2005			2004
United States	$	(74.5	)	$	(8.5	)
Foreign	$	2.8		$	—

Income tax expense (benefit) applicable to continuing operations consists of the following components (in millions):

		Current		12/31/05 Deferred			Total			Current			12/31/04 Deferred			Total
Federal		$	0.4	$	(20.1	)	$	(19.7	)	$	(3.6	)	$	(0.1	)	$	(3.7	)
State and local			1.5		(5.7	)		(4.2	)		(0.6	)		5.4			4.8
Foreign			1.1		(0.1	)		1.0			—			—			—

	Total	$	3.0	$	(25.9	)	$	(22.9	)	$	(4.2	)	$	5.3		$	1.1

The Company estimates its annual effective tax rate in accordance with APB Opinion 28 "Interim Financial Reporting". The estimated effective tax rate difference from the statutory rate is primarily due to nondeductible interest and state income taxes.

The reduction in valuation allowance from $9.0 million to zero during the three months ended December 31, 2005 consists of $7.5 million of state income tax benefits at U.S. Pipe for which the Company believes is more likely than not to be realized and $1.5 million of assets that expired during the current period due to the passage of time or as a result of the Acquisition. These valuation allowance reductions were not recorded as a component of income tax expense.

The Company has gross deferred tax assets of $135.1 million and gross deferred tax liabilities of $366.9 million as of December 31, 2005.

The Company has Federal and State net operating loss carryforwards of approximately $8.1 million and $77 million respectively that expire in 2024. If certain changes in ownership occur, utilization of the net carryforwards may be limited.

F-24

Undistributed earnings of the Company's foreign subsidiaries amounted to approximately $80.2 million at December 31, 2005. Deferred taxes have not been provided on the foreign earnings because the Company intends to reinvest those earnings indefinitely.

A controversy exists with regard to federal income taxes allegedly owed by the Walter consolidated group, which includes the Company, for fiscal years 1980 through 1994. It is estimated that the amount of tax presently claimed by the IRS in 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. Under tax law, the Company is jointly and severally liable for any final tax and intends to defend vigorously any claims asserted. Walter believes that it has sufficient accruals to address any claims, including interest and penalties and furthermore these matters do not relate to the operations of the Company. There are no changes or accruals in the Company's accounts related to these issues since these matters do not relate to the operations of the Company.

Note 14. Segment Information

Prior to the Acquisition on October 3, 2005, the Company had one segment—U.S. Pipe. As of December 31, 2005, the Company's operations consisted of three operating segments: Mueller, U.S. Pipe and Anvil. These segments are organized based on products and are consistent with how the operating segments are managed, how resources are allocated, and how information is used by the chief operating decision maker. The Mueller segment is a manufacturer of valves, fire hydrants and other related products utilized in the distribution of water and gas and in water and wastewater treatment facilities. The U.S. Pipe segment is a manufacturer of ductile iron pressure pipe, fittings and other cast iron products used primarily for major water and wastewater transmission and collection systems. The Anvil segment is a manufacturer of cast iron and malleable iron pipe fittings, ductile iron couplings and fittings, pipe hangers and other related products for the fire protection, plumbing, heating, mechanical, construction, retail hardware and other related industries. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

Intersegment sales and transfers are made at established intersegment selling prices generally intended to cover costs. Our determination of segment earnings does not reflect allocations of certain corporate expenses not directly attributable to segment operations and intersegment eliminations, which we designate as Corporate in the segment presentation, and is before interest expense, net of interest income, and income taxes. Corporate expenses include those costs incurred by Mueller's corporate function and do not include any allocated costs from Walter. Corporate costs include those costs related to financial and administrative matters, treasury, risk management, human resources, legal counsel, and tax functions. Corporate assets include cash, deferred tax assets and deferred financing fees. These assets have not been pushed down to our segments and are maintained as Corporate items. Therefore, segment earnings are not reflective of results on a stand-alone basis. See also Note 2 regarding Related Party Allocations from Walter which are reflected in the Company's SG&A expenses.

F-25

Segment assets consist primarily of accounts receivable, inventories, property, plant and equipment, goodwill, and identifiable intangibles. Summarized financial information for our segments follows:

		For the three months ended:
		December 31, 2005			December 31, 2004
					(restated)
		(dollars in millions)
Net sales:
	Mueller	$	176.7		$	—
	U.S. Pipe		171.1			141.2
	Anvil		132.6			—

	Consolidated	$	480.4		$	141.2

Loss from operations:
	Mueller	$	(3.8	)	$	—
	U.S. Pipe		(27.8	)		(2.4	)
	Anvil		(1.5	)		—
	Corporate expense(1)		(6.4	)		—

	Consolidated	$	(39.5	)	$	(2.4	)

Depreciation and amortization expense:
	Mueller	$	12.0		$	—
	U.S. Pipe		6.3			6.5
	Anvil		5.4			—
	Corporate		0.1			—

	Consolidated	$	23.8		$	6.5

Capital expenditures:
	Mueller	$	6.0		$	—
	U.S. Pipe		7.4			7.9
	Anvil		2.5			—
	Corporate		0.1			—

	Consolidated	$	16.0		$	7.9

(1): Includes certain expenses not allocated to segments.

		December 31, 2005		September 30, 2005
		(dollars in millions)
Total assets:
	Mueller	$	1,864.3	$	—
	U.S. Pipe		431.8		495.4
	Anvil		488.0		—

F-26

	Corporate		178.1		—

	Consolidated	$	2,962.2	$	495.4

Goodwill:
	Mueller	$	710.5	$	—
	U.S. Pipe		58.4		58.4
	Anvil		87.8		—

	Consolidated	$	856.7	$	58.4

Identifiable intangibles:
	Mueller	$	759.6	$	—
	U.S. Pipe		—		—
	Anvil		89.7		—

	Consolidated	$	849.3	$	—

F-27

Geographical area information with respect to net sales, as determined by the location of the customer invoiced, and property, plant and equipment—net, as determined by the physical location of the assets, were as follows:

		For the three months ended:
		December 31, 2005		December 31, 2004
				(restated)
		(dollars in millions)
Net sales:
	United States	$	430.1	$	137.7
	Canada		48.1		—
	Other Countries		2.2		3.5

		$	480.4	$	141.2

		December 31, 2005		September 30, 2005
		(dollars in millions)
Property, plant and equipment, net:
	United States	$	325.7	$	149.2
	Canada		17.6		—
	Other Countries		1.5		—

		$	344.8	$	149.2

Note 15. Commitments and Contingencies

Income Tax Litigation

A controversy exists with regard to federal income taxes allegedly owed by the Walter consolidated group, which includes the U.S. Pipe segment, for fiscal years 1980 through 1994. It is estimated that the amount of tax presently 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 $80.4 million for the fiscal years ended May 31, 2000, December 31, 2000, and December 31, 2001. The proposed adjustments relate primarily to Walter's method of recognizing revenue on the sale of homes and related interest income on the instalment notes receivable. Under tax law, the Company is jointly and severally liable for any final tax determination. However, Walter and its affiliates believe that their tax filing positions have substantial merit and intend to defend vigorously any claims asserted. Walter believes that it has an accrual sufficient to cover the estimated probable loss, including interest and penalties. There are no charges or accruals in the Company's accounts related to these issues since these matters do not relate to the operations of the Company.

F-28

Environmental Matters

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. The Company believes that it 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. Expenses charged to the statement of operations for compliance of ongoing operations and for remediation of environmental conditions arising from past operations in the three months ended December 31, 2005 and 2004 were approximately $0.4 million and $0.2 million, respectively. Because environmental laws and regulations continue to evolve and because conditions giving rise to obligations and liabilities under environmental laws are in some circumstances not readily identifiable, it is difficult to forecast the amount of such future environmental expenditures or the effects of changing standards on future business operations or results. Consequently, the Company can give no assurance that such expenditures will not be material in the future. The Company capitalizes environmental expenditures that increase the life or efficiency of property or that reduces or prevents environmental contamination. Capital expenditures for environmental requirements are anticipated to average approximately $4.0-6.0 million per year in the next five years. Capital expenditures for the three months ended December 31, 2005 and 2004 for environmental requirements were approximately $0.6 million and $1.2 million, respectively.

The Company has implemented an Administrative Consent Order ("ACO") for its 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 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 will be required to verify natural attenuation. It is not known how long ground water monitoring will be required. Management does not believe monitoring or further cleanup costs, if any, will have a material adverse effect on the financial condition or results of operations of the Company.

F-29

With respect to the site located in Anniston, the PRP's have negotiated an administrative consent order with the EPA. Based on these negotiations, management estimates the Company's share of liability for cleanup, after allocation among several PRP's, will be approximately $4.0 million, which was accrued in 2004. Civil litigation in respect of the site is also ongoing as follows: a suit for contribution by another Anniston PRP and a putative class action lawsuit against 18 foundries in the Anniston, Alabama area alleging state law tort claims in the creation and disposal of foundry sand alleged to contain lead and PCB's and seeking damages for personal injury and property damage. Management believes that the likelihood of liability in the contribution litigation is remote. The class action lawsuit is still in early stages of litigation and no substantive discovery has taken place yet. In addition, management believes that both procedural and substantive defenses would be available to the Company should this litigation proceed. Accordingly, management believes that presently, there is no reasonable basis for management to form a view with respect to the probability of liability in the putative class action matter.

The Company's Anvil segment 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, Anvil agreed to pay a monetary fine of $50,000 and pay an additional $50,000 to fund a supplemental environmental project. Anvil has also agreed to perform various investigatory and remedial actions at the foundry and its landfill. The total costs are estimated to be between $1.2 million and $1.4 million. The Company maintains an adequate reserve to cover these estimated costs.

Over the next two years, the Company could potentially incur between $8.5 million and $12.5 million of capital costs at its iron foundries to comply with the United States Environmental Protection Agency's National Emissions Standards for Hazardous Air Pollutants which were issued April 22, 2004. The Company is in the process of analyzing the impact of this standard and the costs associated with compliance.

Although no assurances can be given that the Company will not be required in the future to make material expenditures relating to environmental laws or legally mandated site clean-up, management does not believe at this time that the compliance and cleanup costs, if any, associated with the current laws and sites for which the Company has cleanup liability or any other future sites will have a material adverse effect on the financial condition or results of operations of the Company, but such cleanup costs could be material to results of operations in a reporting period.

In 2004, the Company entered into a settlement and release agreement with a former insurer whereby the former insurer paid $1.9 million, net of legal fees, to the Company for historical insurance claims, previously expensed as incurred by the Company. Such claims had not previously been submitted to the insurance company for reimbursement. The Company released the insurer of both past and future claims, and recorded a $1.9 million reduction to selling, general and administrative expenses in 2004.

F-30

past and future claims. During 2005, the Company received $2.8 million in cash and the remainder is expected to be received in the second quarter of fiscal 2006. The Company recorded a $5.1 million reduction to selling, general and administrative expenses in 2005.

Under the terms of the agreement whereby Tyco International sold the Company in August 1999 to our prior owners (the "August 1999 Tyco Transaction"), Tyco agreed to indemnify Predecessor Mueller Water and its affiliates for all "Excluded Liabilities". Excluded Liabilities include, among other things, substantially all environmental liabilities relating to the time prior to the August 1999 Tyco Transaction. The indemnity survives indefinitely, is not subject to any deductibles or caps, and continues with respect to our current operations, other than those operations acquired since the August 1999 Tyco Transaction, including the operations of our U.S. Pipe segment. If Tyco ever becomes financially unable to, or otherwise fails to comply with the terms of the indemnity, we may be responsible for the Tyco-indemnified obligations. In addition, Tyco's indemnity does not cover environmental liabilities to the extent caused by us or Predecessor Mueller or the operation of the Predecessor Mueller business after the August 1999 Tyco Transaction, nor does it cover environmental liabilities arising with respect to businesses or sites acquired after the August 1999 Tyco Transaction, which would include the U.S. Pipe business and facilities.

Miscellaneous Litigation

In 2003, the Company increased its accruals for outstanding litigation by approximately $6.5 million, principally related to the settlement of a class action employment matter. The settlement was finalized in May 2004 for an amount approximating the accrual.

In the purchase agreement relating to the August 1999 sale by Tyco of the Predecessor Mueller business to our prior owners, Tyco agreed to indemnify Predecessor Mueller and its affiliates for all "Excluded Liabilities." Excluded Liabilities include, among other things, substantially all liabilities relating to the time prior to the August 1999 Tyco sale. 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 (or any successor entity) ever becomes financially unable or fails to comply with, the terms of the indemnity. In addition, Tyco's indemnity does not cover environmental liabilities to the extent caused by us or Predecessor Mueller or the operation of the Predecessor Mueller business after the August 1999 Tyco sale, nor does it cover environmental liabilities arising with respect to businesses or sites acquired after the August 1999 Tyco sale, which would include the U.S. Pipe business and facilities.

Our subsidiary, James Jones Company, and its former parent company are defendants in a false claims lawsuit in which a former James Jones Company employee is suing on behalf of cities, water districts and municipalities. The employee alleges that the defendants sold allegedly non-conforming public water system parts to various government entities. The lawsuit seeks consequential damages, penalties and punitive damages. Our subsidiary, Mueller Co., which had also been named as a defendant, brought a summary judgment motion and was dismissed from this litigation in January 2004. On September 15, 2004, the trial court ruled against the intervention of approximately 30 municipalities that had failed to intervene within the time deadlines previously specified by the Court. The trial court

F-31

also ruled that the majority of municipalities that had purchased James Jones products from contractors or distributors, were not in privity with the James Jones Company and were not entitled to punitive damages. Following the Court's ruling, the water districts and municipalities filed a new action against the James Jones Company, Mueller Co. and Watts (former parent company of James Jones Company), alleging fraud and intentional misrepresentation. This lawsuit is based on the same underlying facts as the false claims lawsuit. Any liability associated with these lawsuits is covered by the Tyco indemnity, and the defense is being paid for and conducted by Tyco.

The Company is a party to a number of other lawsuits arising in the ordinary course of business. The Company provides for costs relating to these matters when a loss is probable and the amount is reasonably estimable. 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. While the results of litigation cannot be predicted with certainty, the Company believes that the final outcome of such other litigation will not have a materially adverse effect on the Company's financial statements.

Note 16. Subsequent Events

In January 2006, the Company's Mueller segment completed two acquisitions. On January 4, 2006, the Company acquired Hunt Industries, Inc. ("Hunt") for $6.8 million in cash. Hunt is a manufacturer of meter pits and meter yokes, based in Murfreesboro, Tennessee, which are sold by our Mueller segment. On January 27, 2006, the Company acquired the operating assets of CCNE, L.L.C., a Connecticut-based manufacturer of check valves for sale to the water and wastewater treatment markets, for $8.8 million in cash. The CCNE assets will be operated by our Milliken Valve Company and Henry Pratt Company subsidiaries.

On January 26, 2006, the Company announced plans to close its Henry Pratt valve manufacturing facility in Dixon, Illinois by the end of 2006. The process of transferring the Dixon plant's operations to other Henry Pratt facilities has begun.

On January 31, 2006, Mueller Holding Company, Inc., a Delaware corporation ("Holdco"), Mueller Water Products, LLC, a Delaware limited liability company ("Mueller LLC"), and Mueller Water Products Co-Issuer, Inc., a Delaware corporation ("Co-Issuer"), entered into an Agreement and Plan of Merger (the "Merger Agreement"). On February 2, 2006, pursuant to the terms of the Merger Agreement, Mueller LLC and Co-Issuer merged (the "Merger") with and into Holdco, which was the surviving corporation and which changed its name, upon merger, to Mueller Water Products, Inc. In the Merger, each limited liability company interest of Mueller LLC and each share of common stock of Co-Issuer outstanding immediately prior to the Merger was cancelled and retired and ceased to exist, and each share of common stock of Holdco remained unchanged and continued to remain outstanding after the Merger.

F-32

On February 3, 2006, the Company filed with the Securities and Exchange Commission a registration statement on Form S-1 (Registration No. 333-131536) relating to a proposed initial public offering of the Company's Series A common stock.

Note 17. New Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board issued SFAS No. 151, "Inventory Costs," which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material. This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The Company adopted SFAS No. 151 on October 1, 2005, the beginning of its 2006 fiscal year. The impact of the adoption of SFAS No. 151 on the Company's financial statements may have a material impact on our operating income in the event actual production output is significantly higher or lower than normal capacity. In the event actual production capacity is significantly different than normal capacity, the Company may be required to recognize certain amounts of facility expense, freight, handling costs or wasted materials as a current period expense.

In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN 47"), which is an interpretation of FASB No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). This interpretation clarifies terminology within SFAS 143 and requires companies to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. FIN 47 is effective for fiscal years beginning after December 15, 2005. This standard is not expected to have a material impact on the Company's financial condition or results of operations.

In June 2005, the FASB issued FASB No. 154, "Accounting Changes and Error Corrections", which changes the requirements for accounting for and reporting of a change in accounting principle. SFAS 154 requires retrospective application to prior periods' financial statements of a voluntary change in accounting principle unless it is impracticable. SFAS 154 also requires that a change in method of depreciation, amortization or depletion for long-lived, nonfinancial assets be accounted for as a change in accounting estimate that is affected by a change in accounting principle. SFAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. The adoption of SFAS 154 is not expected to have a material impact on the Company's financial condition or results of operations.

F-33

REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To the Member and Board of Managers of
United States Pipe and Foundry Company, LLC

In our opinion, the accompanying balance sheets and the related statements of operations, of changes in unit/stockholder's equity (net capital deficiency) and comprehensive income (loss) and of cash flows present fairly, in all material respects, the financial position of United States Pipe and Foundry Company, LLC at September 30, 2005 and December 31, 2004, and the results of its operations and its cash flows for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003 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 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, 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 1, the Company has restated its financial statements for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003.

As discussed in Note 2, the Company adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003.

/s/ PricewaterhouseCoopers LLP
Tampa, Florida
February 3, 2006, except the restatement
described in Note 1 as
to which the date is March 24, 2006

F-34

UNITED STATES PIPE AND FOUNDRY COMPANY, LLC
BALANCE SHEETS
(in thousands, except unit/share amounts)

		September 30, 2005			December 31, 2004
ASSETS
Cash and cash equivalents		$	—		$	—
Receivables, net			118,497			103,692
Inventories			147,207			127,162
Deferred income taxes			11,099			11,760
Prepaid expenses and other assets			1,509			1,044

	Total current assets		278,312			243,658
Property, plant and equipment, net			149,154			152,944
Deferred income taxes			9,514			—
Prepaid pension cost and other intangible assets			19,317			18,459
Goodwill			58,411			58,411

	Total assets	$	514,708		$	473,472

LIABILITIES AND UNIT/STOCKHOLDER'S EQUITY (NET CAPITAL DEFICIENCY)
Accounts payable		$	52,451		$	51,825
Accrued expenses			29,143			23,443
Payable to affiliate, Sloss Industries			2,475			3,986
Income taxes payable			5,551			879

	Total current liabilities		89,620			80,133
Payable to Parent, Walter Industries			443,683			422,842
Deferred income taxes			—			2,833
Accrued pension liability			72,938			48,873
Accumulated postretirement benefits obligation			51,071			51,221
Other long-term liabilities			12,632			12,682

	Total liabilities		669,944			618,584

Commitments and contingencies (Note 11)
UNIT/STOCKHOLDER'S EQUITY (NET CAPITAL DEFICIENCY)
Membership units at September 30, 2005:
	Authorized—1,000 units
	Issued—1,000 units		—
Common stock, $0.01 par value per share at December 31, 2004:
	Authorized—1,000 shares
	Issued—1,000 shares					—
Capital in excess of par value			68,335			68,335
Accumulated deficit			(178,157	)		(183,225	)
Accumulated other comprehensive loss			(45,414	)		(30,222	)

Total unit/stockholder's equity (net capital deficiency)			(155,236	)		(145,112	)

	Total liabilities and unit/stockholder's equity (net capital deficiency)	$	514,708		$	473,472

See accompanying "Notes to Financial Statements"

F-35

UNITED STATES PIPE AND FOUNDRY COMPANY, LLC
STATEMENTS OF OPERATIONS
(dollars and per share amounts in thousands)

						For the years ended December 31,
			For the nine months ended September 30, 2005			For the years ended December 31,
			For the nine months ended September 30, 2005			2004			2003
			As Restated
Net sales			$	456,931		$	578,370		$	465,330
Cost of sales				402,245			531,401			427,405

	Gross profit			54,686			46,969			37,925
Operating expenses:
	Selling, general and administrative			25,939			38,169			43,421
	Related party corporate charges			5,387			7,643			4,790
	Restructuring and impairment charges			—			121			5,938

		Total operating expenses		31,326			45,933			54,149

Operating income (loss)				23,360			1,036			(16,224	)
Interest expense arising from payable to Parent (1)				(15,151	)		(18,927	)		(16,379	)
Interest expense—other				(264	)		(505	)		(464	)

Income (loss) before income tax expense (benefit)				7,945			(18,396	)		(33,067	)
Income tax expense (benefit)				2,877			(2,901	)		(12,632	)

Income (loss) before cumulative effect of change in accounting principle				5,068			(15,495	)		(20,435	)
Cumulative effect of change in accounting principle, net of tax				—			—			(454	)

Net income (loss)			$	5,068		$	(15,495	)	$	(20,889	)

Basic income per share:
Income (loss) before cumulative effect of change in accounting principle			$	5,068		$	(15,495	)	$	(20,435	)
Cumulative effect of change in accounting principle, net of tax				—			—			(454	)

Earnings (loss) per share			$	5,068		$	(15,495	)	$	(20,889	)

Shares used to determine earnings (loss) per share				1			1			1

(1): United States Pipe and Foundry Company, LLC, which is a wholly owned subsidiary of Walter Industries, Inc., is charged interest expense on the outstanding balance of the intercompany payable to Walter Industries, Inc.

See accompanying "Notes to Financial Statements"

F-36

UNITED STATES PIPE AND FOUNDRY COMPANY, LLC
STATEMENTS OF CHANGES IN UNIT/STOCKHOLDER'S EQUITY
(NET CAPITAL DEFICIENCY) AND COMPREHENSIVE INCOME (LOSS)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND
THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(in thousands)

			Total			Capital in Excess of Par Value		Comprehensive Income (Loss)			Accumulated Deficit			Accumulated Other Comprehensive Loss
Balance at December 31, 2002			$	(106,731	)	$	68,335				$	(146,841	)	$	(28,225	)
Comprehensive loss:
	Net loss			(20,889	)			$	(20,889	)		(20,889	)
	Other comprehensive loss:
		Increase in additional minimum pension liability, net of tax benefit of $767		(1,426	)				(1,426	)					(1,426	)

Comprehensive loss								$	(22,315	)

Balance at December 31, 2003				(129,046	)		68,335					(167,730	)		(29,651	)
Comprehensive loss:
	Net loss			(15,495	)			$	(15,495	)		(15,495	)
	Other comprehensive loss:
		Increase in additional minimum pension liability, net of tax benefit of $309		(571	)				(571	)					(571	)

Comprehensive loss								$	(16,066	)

Balance at December 31, 2004				(145,112	)		68,335					(183,225	)		(30,222	)
Comprehensive loss:
	Net income			5,068				$	5,068			5,068
	Other comprehensive loss:
		Increase in additional minimum pension liability, net of tax benefit of $8,179		(15,192	)				(15,192	)					(15,192	)

Comprehensive loss								$	(10,124	)

Balance at September 30, 2005			$	(155,236	)	$	68,335				$	(178,157	)	$	(45,414	)

See accompanying "Notes to Financial Statements"

F-37

UNITED STATES PIPE AND FOUNDRY COMPANY, LLC
STATEMENTS OF CASH FLOWS
(in thousands)

							For the years ended December 31,
				For the nine months ended September 30, 2005			For the years ended December 31,
				For the nine months ended September 30, 2005			2004			2003
OPERATING ACTIVITIES
	Net income (loss)			$	5,068		$	(15,495	)	$	(20,889	)
	Adjustments to reconcile income (loss) to net cash (used in) provided by operating activities:
		Cumulative effect of change in accounting principle, net of tax			—			—			454
		Provision for losses on receivables			241			263			236
		Depreciation			19,401			26,523			25,182
		Restructuring and impairment charges (a)			—			—			4,700
		Loss on sale of property, plant and equipment			862			1,020			164
		Provision (credit) for deferred income taxes			(3,507	)		8,964			(2,007	)
		Decrease (increase) in prepaid pension cost and other intangible assets			(858	)		(7,568	)		1,991
		Increase in accrued pension liability			694			527			1,885
		Decrease in accumulated postretirement benefits obligation			(150	)		(3,042	)		(6,709	)
		(Decrease) increase in other long-term liabilities			(50	)		1,357			3,775
	Decrease (increase) in current assets:
		Receivables			(15,046	)		(22,581	)		(5,127	)
		Inventories			(20,045	)		(3,679	)		(10,636	)
		Prepaid expenses and other assets			(465	)		144			500
	Increase (decrease) in current liabilities:
		Accounts payable			(66	)		18,313			(4,283	)
		Accrued expenses (a)			5,700			(198	)		6,059
		Payable to affiliate, Sloss Industries			(1,511	)		1,936			1,045
		Income taxes payable			4,672			(645	)		(2,717	)

			Cash flows (used in) provided by operating activities		(5,060	)		5,839			(6,377	)

INVESTING ACTIVITIES
		Additions to property, plant and equipment			(16,473	)		(20,354	)		(15,687	)

			Cash flows used in investing activities		(16,473	)		(20,354	)		(15,687	)

FINANCING ACTIVITIES
		Increase (decrease) in book cash overdrafts			692			(1,331	)		242
		Increase in amounts payable to Parent			20,841			15,673			21,927

			Cash flows provided by financing activities		21,533			14,342			22,169

Net (decrease) increase in cash and cash equivalents					—			(173	)		105
Cash and cash equivalents at beginning of period					—			173			68

Cash and cash equivalents at end of period				$	—		$	—		$	173

(a): The Company recorded restructuring and impairment charges of $121 and $5,938 for the years ended December 31, 2004 and 2003, respectively. A portion of these charges, consisting of write offs of assets, were non-cash and are reconciled below:

	2004		2003
Accrued expenses	$	121	$	1,238
Non-cash		—		4,700

Total restructuring and impairment charges	$	121	$	5,938

See accompanying "Notes to Financial Statements"

F-38

UNITED STATES PIPE AND FOUNDRY COMPANY, LLC
NOTES TO FINANCIAL STATEMENTS
Restated

NOTE 1. Organization and Restatement

United States Pipe and Foundry Company, LLC ("the Company" or "U.S. Pipe") operates in a single business segment and manufactures and sells a broad line of ductile iron pressure pipe, fittings, valves, hydrants and other cast iron products. The Company was founded in 1899 and is headquartered in Birmingham, Alabama.

The following table summarizes the Company's net sales by product line (in thousands):

			For the years ended December 31,
	For the nine months ended September 30, 2005		For the years ended December 31,
	For the nine months ended September 30, 2005		2004		2003
	As Restated		As Restated
Ductile iron pipe	$	363,396	$	456,521	$	353,492
Valves and hydrants		44,477		51,500		46,819
Fittings		22,759		38,349		35,322
Other		26,299		32,000		29,697

	$	456,931	$	578,370	$	465,330

The Company was originally organized as United States Pipe and Foundry Company, Inc. ("Inc.") and is a wholly owned subsidiary of Walter Industries, Inc. ("WII", "Walter Parent" or "Walter"), a diversified New York Stock Exchange traded company (NYSE: WLT). On September 23, 2005, Inc. was dissolved and United States Pipe and Foundry Company, LLC was organized in the state of Alabama, and the operations of Inc. are now conducted under the form of a limited liability company. The Company's operations are located in the United States of America and its revenues are principally domestic. Foreign sales were less than 5% of total net sales during each of the last three years.

On September 29, 2005, Walter contributed U.S. Pipe to Mueller Holding Company, Inc., a wholly owned subsidiary of Walter. All historical U.S. Pipe balances have been reflected in these financial statements. See Note 13, "Subsequent Events."

Restatement of Financial Statements

The Company has restated its financial statements to correct the classification of certain prior-period shipping and handling costs in accordance with Emerging Issues Task Force ("EITF") Consensus No. 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10 does not allow shipping and handling costs to be shown as a deduction from net sales.

The Company's prior method of accounting for the cost to deliver products to the customer's designated location was to include these costs as a deduction from net sales. Such costs are now included in cost of sales. The impact of the restatement was to increase net sales and cost of sales by $31.4 million for the nine months ended September 30, 2005, $41.2 million and $33.5 million for the years ended December 31, 2004 and 2003, respectively. The restatement has no impact on operating income, net income, earnings per unit/share or on the statement of changes in unit/stockholders' equity (net capital deficiency) and comprehensive income (loss) for any of the periods presented.

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The following table presents the impact of the restatement on the financial statements for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003 (dollars in thousands):

		For the nine months ended September 30,				For the years ended December 31,
		2005		2005		2004		2004		2003		2003
		As Restated		As Originally Reported		As Restated		As Originally Reported		As Restated		As Originally Reported
Net sales		$	456,931	$	425,545	$	578,370	$	537,170	$	465,330	$	431,871
Cost of sales			402,245		370,859		531,401		490,201		427,405		393,946

	Gross profit	$	54,686	$	54,686	$	46,969	$	46,969	$	37,925	$	37,925

NOTE 2. Summary of Significant Accounting Policies

Basis of Presentation

Effective December 30, 2005, the Company changed its fiscal year end from December 31 to September 30. As such, the fiscal period ended September 30, 2005 included in this report covers the nine-month period from January 1, 2005 to September 30, 2005.

The financial statements are prepared in accordance with accounting principles generally accepted in the United States, which requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of trade and other receivables. The Company has one customer who represents 27%, 28% and 24% of net sales for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003, respectively. This customer also represents 27% and 21% of the trade receivables balance at September 30, 2005 and December 31, 2004, respectively.

Earnings (Loss) Per Share

The Company has 1,000 units/shares outstanding for all periods presented. In calculating its historical earnings (loss) per share, the Company has used one share, which represents the capital structure of the reporting entity subsequent to the October 3, 2005 business combination described in Note 13.

Revenue Recognition

The Company recognizes revenue based on the recognition criteria set forth in the Securities and Exchange Commission's Staff Accounting Bulletin 104, "Revenue Recognition in Financial Statements."

For shipments via rail or truck, revenue is recognized when title passes upon delivery to the customer. Revenue earned for shipments via ocean vessel is recognized under international shipping standards as defined by Incoterms 2000 when title and risk of loss transfer to the customer.

Cash and Cash Equivalents

Cash and cash equivalents include short-term deposits and highly liquid investments which have original maturities of three months or less and are stated at cost which approximates market. The Company's cash management system provides for the reimbursement of all major bank disbursement accounts on a daily basis. Checks issued but not yet presented to the banks for payment (i.e. book cash overdrafts) are included in accounts payable.

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Receivables

Allowances for losses on trade and other accounts receivable are based, in large part, upon judgments and estimates of expected losses and specific identification of problem trade accounts and other receivables. Significantly weaker than anticipated industry or economic conditions could impact customers' ability to pay such that actual losses could be greater than the amounts provided for in these allowances.

Inventories

Inventories are recorded at the lower of cost (first-in, first-out) 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 can be affected by levels of production and actual costs incurred. Management periodically evaluates the effects of production levels and actual costs incurred on the costs capitalized as part of inventory.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost, less accumulated depreciation and amortization. Depreciation is recorded on the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on the straight-line method over the lesser of the useful life of the improvement or the remaining lease term. Estimated useful lives used in computing depreciation expense are 3 to 20 years for machinery and equipment and 3 to 50 years for land improvements and buildings. Gains and losses upon disposition are reflected in the statement of operations in the period of disposition.

The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 143 ("SFAS 143"), "Accounting for Asset Retirement Obligations," as of January 1, 2003, related to plant and landfill closures. Under SFAS 143, liabilities are recognized at fair value for an asset retirement obligation in the period in which it is incurred and the carrying amount of the related long-lived asset is correspondingly increased. Over time, the liability is accreted to its future value. The corresponding asset capitalized at inception is depreciated over the useful life of the asset. The adoption of SFAS 143 was recorded in the first quarter of 2003 and resulted in an increase to net property, plant and equipment of approximately $2.3 million, a net increase to the asset retirement obligation of approximately $3.1 million, and as a cumulative effect of a change in accounting principle, a pre-tax decrease in income of approximately $0.8 million ($0.5 million, net of taxes).

Accounting for the Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. The Company uses an estimate of the future undiscounted net cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. See Note 3, "Restructuring, Impairment and Other Charges" and Note 13, "Subsequent Events."

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Workers' Compensation

The Company is self-insured for workers' compensation benefits for work related injuries. 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 of the Company or insurance industry data when historical data is limited. Workers' compensation liabilities were as follows (in thousands):

		September 30, 2005			December 31, 2004
Undiscounted aggregated estimated claims to be paid		$	14,402		$	15,039
Workers' compensation liability recorded on a discounted basis		$	11,919		$	12,665

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 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. The weighted average rate used for discounting the liability at September 30, 2005 was 4.6%. A one-percentage-point increase in the discount rate on the discounted claims liability would decrease the liability by $0.1 million, while a one-percentage-point decrease in the discount rate would increase the liability by $0.1 million.

Warranty Costs

The Company accrues for warranty expenses that include customer costs of repair and/or replacement, including labor, materials, equipment, freight and reasonable overhead costs, determined on a case-by-case basis, whenever the Company's products and/or services fail to comply with published industry standards or mutually agreed upon customer requirements.

Activity in accrued warranty, included in the caption accrued expenses in the accompanying balance sheets, was as follows (in thousands):

				For the years ended December 31,
	For the nine months ended September 30, 2005			For the years ended December 31,
	For the nine months ended September 30, 2005			2004			2003
Accrued balance at beginning of period	$	1,716		$	540		$	1,352
Warranty expense		5,671			5,514			2,908
Settlement of warranty claims		(2,711	)		(4,338	)		(3,720	)

Balance at end of period	$	4,676		$	1,716		$	540

Related Party Transactions

The Company purchases foundry coke from an affiliate, Sloss Industries, Inc. for an amount that approximates the market value of comparable transactions. Costs included in cost of sales related to purchases from Sloss Industries, Inc. were $17.9 million, $15.1 million and $13.4 million for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003, respectively.

Other services that Sloss Industries, Inc. provides to the Company include the delivery of electrical power to one of the Company's facilities, rail car switching and the leasing of a distribution facility. The total of these other services included in the Company's operating expenses were $1.7 million, $1.8 million and $1.6 million for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003, respectively.

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Related Party Allocations

Certain costs incurred by Walter such as insurance, executive salaries, professional service fees, human resources, transportation, healthcare and other centralized business functions are allocated to its subsidiaries. Certain costs that were considered directly related to the Company were charged to the Company and included in selling, general and administrative expenses. These costs approximated $1.3 million, $1.4 million and $1.4 million for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003, respectively. Costs incurred by Walter that cannot be directly attributed to its subsidiaries are allocated to them based on estimated annual revenues. Such costs were allocated to the Company and are recorded in the caption, related party corporate charges, in the accompanying statements of operations and were approximately $5.4 million, $7.6 million and $4.8 million for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003, respectively.

While the Company considers the allocation of such costs to be reasonable, in the event the Company was not affiliated with Walter, these costs may increase or decrease.

NOTE 3. Restructuring, Impairment and Other Charges

On April 29, 2003, the Company ceased production and manufacturing operations at its castings plant in Anniston, Alabama. The decision to cease operations was the result of several years of declining financial results and resulted in the termination of approximately 80 employees. Exit costs associated with the plant closure were $6.1 million. Costs associated with the restructuring were as follows (in thousands):

			Restructuring & impairment charges expensed for the years ended December 31,
	Total Costs
	Total Costs		2004			2003
One-time termination benefits	$	758	$	32		$	726
Contract termination costs		76		(209	)		285
Other associated costs		787		560			227
Write-off of property, plant and equipment and related parts and materials		4,438		(262	)		4,700

Total	$	6,059	$	121		$	5,938

Other associated costs principally include site clean-up costs that were expensed as restructuring charges when incurred. Adjustments were made in 2004 to reduce restructuring and impairment expense by $0.3 million related to unanticipated scrap material recoveries from demolition of the manufacturing facility and $0.2 million related to an unexpected early termination of a power contract. There were no additional charges related to restructuring or impairment during the nine months ended September 30, 2005.

Activity in accrued restructuring was as follows (in thousands):

	For the years ended December 31,
	2004			2003
Beginning balance	$	243		$	—
Restructuring expenses accrued		383			1,238
Restructuring payments		(626	)		(995	)

Ending balance	$	—		$	243

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NOTE 4. Receivables

Receivables are summarized as follows (in thousands):

		September 30, 2005			December 31, 2004
Trade receivables		$	115,007		$	102,845
Other receivables			4,376			1,559
	Less: Allowance for losses		(886	)		(712	)

Receivables, net		$	118,497		$	103,692

Activity in allowance for losses is summarized as follows (in thousands):

				For the years ended December 31,
	For the nine months ended September 30, 2005			For the years ended December 31,
	For the nine months ended September 30, 2005			2004			2003
Balance at beginning of period	$	712		$	788		$	781
Provisions charged to income		241			263			236
Charge-offs, net of recoveries		(67	)		(339	)		(229	)

Balance at end of period	$	886		$	712		$	788

NOTE 5. Inventories

Inventories are summarized as follows (in thousands):

	September 30, 2005		December 31, 2004
Finished goods	$	101,079	$	86,739
Work in process		15,472		12,590
Raw materials and supplies		30,656		27,833

Total inventories	$	147,207	$	127,162

NOTE 6. Property, Plant and Equipment

Property, plant and equipment are summarized as follows (in thousands):

			September 30, 2005			December 31, 2004
Land			$	1,963		$	1,963
Land improvements				9,284			9,182
Buildings and leasehold improvements				33,786			33,591
Machinery and equipment				401,675			398,653
Construction in progress				16,240			9,903

	Total			462,948			453,292
	Less: Accumulated depreciation			(313,794	)		(300,348	)

		Net	$	149,154		$	152,944

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NOTE 7. Goodwill

The Company accounts for goodwill under SFAS No. 142, "Goodwill and Other Intangible Assets." Goodwill is not amortized, but reviewed for impairment on an annual basis as of January 1, or more frequently if significant events occur that indicate impairment could exist. The fair value of the Company is determined using a valuation model that incorporates transactions of comparable companies and expected future cash flow projections of the Company which are then discounted using a risk-adjusted discount rate.

NOTE 8. Accrued Expenses

Accrued expenses are summarized as follows (in thousands):

	September 30, 2005		December 31, 2004
Vacations and holidays	$	4,573	$	4,512
Workers' compensation		2,882		3,353
Accrued payroll and bonus		3,894		1,695
Accrued sales commissions		1,006		653
Accrued other taxes		2,091		1,554
Accrued warranty claims		4,676		1,716
Accrued environmental claims		4,000		4,000
Accrued volume discounts		4,785		5,100
Other		1,236		860

Total accrued expenses	$	29,143	$	23,443

NOTE 9. Income Taxes

Income tax expense (benefit) applicable to the Company consists of the following (in thousands):

		For the nine months ended September 30,							For the years ended December 31,
		2005							2004								2003
		Current		Deferred			Total		Current			Deferred		Total			Current			Deferred			Total
Federal		$	6,384	$	(3,507	)	$	2,877	$	(11,865	)	$	4,085	$	(7,780	)	$	(10,625	)	$	(252	)	$	(10,877	)
State and local			—		—			—		—			4,879		4,879			—			(1,755	)		(1,755	)

	Total	$	6,384	$	(3,507	)	$	2,877	$	(11,865	)	$	8,964	$	(2,901	)	$	(10,625	)	$	(2,007	)	$	(12,632	)

The income tax expense (benefit) at the Company's effective tax rate differed from the Federal statutory rate as follows:

				For the years ended December 31,
		For the nine months ended September 30, 2005		For the years ended December 31,
		For the nine months ended September 30, 2005		2004		2003
Statutory tax rate		35.0	%	(35.0	)%	(35.0	)%
Effect of:
	State and local income tax	4.8	%	—		(3.5	)%
	Change in valuation allowances	(4.8	)%	19.2	%	—
	Other, net	1.2	%	—		0.3	%

Effective tax rate		36.2	%	(15.8	)%	(38.2	)%

F-45

The change in valuation allowances consists of state income tax benefits for which the Company believes it is more likely than not that the deferred tax asset will not be realized.

Activity in the valuation allowance for deferred tax assets is summarized as follows (in thousands):

	September 30, 2005			December 31, 2004			December 31, 2003
Balance at beginning of period	$	10,477		$	8,712		$	6,200
Provision (reversal) applicable to state net deferred tax assets		(2,560	)		(441	)		2,512
Provision (reversal) applicable to other comprehensive loss		1,109			2,206			—

Balance at end of period	$	9,026		$	10,477		$	8,712

Deferred tax assets (liabilities) related to the following (in thousands):

		September 30, 2005			December 31, 2004
Deferred tax assets:
	Allowance for losses on receivables	$	352		$	356
	Inventories		105			157
	Accrued expenses		12,110			10,535
	Net operating loss		6,164			6,906
	Postretirement benefits other than pensions		20,298			21,251
	Pensions		21,312			13,490

			60,341			52,695
	Valuation allowance		(9,026	)		(10,477	)

	Net deferred tax assets		51,315			42,218
Deferred tax liabilities:
	Depreciation and amortization		(30,702	)		(33,291	)

Net deferred tax assets		$	20,613		$	8,927

For Federal income tax purposes, Walter files a consolidated income tax return with its subsidiaries and affiliates, which includes the Company. The income tax provision has been presented as if the Company filed on a stand alone basis, with the exception that the tax sharing agreement in place with Walter provides that subsidiaries of Walter generating losses will receive compensation for such losses during the year the loss was generated. Since the Federal losses generated at the Company provide an immediate benefit through the tax sharing agreement, management determined that the benefit should be fully recognized on a stand alone basis. Had Walter's agreement with its subsidiaries not provided for immediate benefit as of September 30, 2005, the Company would have been in a net operating loss position for Federal income tax purposes. On a separate return basis, such losses totaled $2.4 million as of September 30, 2005. Furthermore, without Walter providing immediate benefit and without consideration of the Company's merger into Mueller Water Products on October 3, 2005, (see Note 13), it is more likely than not that such Federal operating losses would not be utilized. The information below provides the pro forma affect as if the Company determined a stand alone tax

F-46

provision assuming the Company provided taxes without consideration of its parent company benefit for the nine months ended September 30, 2005 (in thousands):

	As Reported							Pro Forma (unaudited)
	Current		Deferred			Total		Current		Deferred		Total
Federal	$	6,384	$	(3,507	)	$	2,877	$	1,556	$	—	$	1,556
State and Local		—		—			—		—		—		—

	$	6,384	$	(3,507	)	$	2,877	$	1,556	$	—	$	1,556

Additionally, on a pro forma basis, the above net deferred tax asset of $20.6 million would be reduced to zero.

The Company has state net operating loss carryforwards of approximately $77.0 million expiring beginning 2009 for which a valuation allowance has been established. Additionally, the loss carryforwards are subject to limitations in certain jurisdictions under IRC Section 382.

A controversy exists with regard to federal income taxes allegedly owed by the Walter consolidated group, which includes the Company, for fiscal years 1980 through 1994. It is estimated that the amount of tax presently 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. Under tax law, the Company is jointly and severally liable for any final tax determination. However, Walter and its affiliates believe that their tax filing positions have substantial merit and intend to defend vigorously any claims asserted. Walter believes that it has an accrual sufficient to cover the estimated probable loss, including interest and penalties. There are no charges or accruals in the Company's accounts related to these issues since these matters do not relate to the operations of the Company.

NOTE 10. Pension and Other Employee Benefits

The Company has various pension and profit sharing plans covering substantially all employees (the "Plans"). Total pension expense for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003 was $5.4 million, $8.4 million and $9.4 million, respectively. 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 Standards" of the Employee Retirement Income Security Act of 1974 ("ERISA"). 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 not funded. New salaried employees have been ineligible to participate in postretirement healthcare benefits since May 2000. Effective January 1, 2003, the Company placed a monthly cap on Company contributions for postretirement healthcare coverage of $350 per salaried participant (pre-Medicare eligibility) and $150 per participant (post-Medicare eligibility).

The Company's policy is to use a measurement date that is three months prior to its fiscal year end. For the nine months ended September 30, 2005, the Company used a June 30 measurement date for all of its pension and postretirement benefit plans. For the years ended December 31, 2004 and 2003, the Company used a September 30 measurement date. The amounts recognized for such plans are as follows (in thousands):

F-47

		Pension Benefits						Other Benefits
		Sept. 30, 2005			Dec. 31, 2004			Sept. 30, 2005			Dec. 31, 2004
Accumulated benefit obligation		$	234,925		$	197,040		$	29,498		$	23,747

Change in projected benefit obligation:
	Projected benefit obligation at beginning of period	$	216,269		$	205,966		$	23,747		$	23,822
	Service cost		3,824			4,617			413			549
	Interest cost		9,445			12,710			1,031			1,453
	Amendments		900			412			—			—
	Actuarial loss (gain)		37,024			4,720			5,110			(475	)
	Benefits paid		(9,487	)		(12,156	)		(803	)		(1,867	)
	Other		—			—			—			265

	Projected benefit obligation at end of period	$	257,975		$	216,269		$	29,498		$	23,747

Change in plan assets:
	Fair value of plan assets at beginning of period	$	164,249		$	147,102		$	—		$	—
	Actual gain (loss) on plan assets		17,939			13,562			—			—
	Employer contribution		950			15,741			803			1,867
	Benefits paid		(9,487	)		(12,156	)		(803	)		(1,867	)

	Fair value of plan assets at end of period	$	173,651		$	164,249		$	—		$	—

	Funded (unfunded) status	$	(84,324	)	$	(52,020	)	$	(29,498	)	$	(23,747	)
	Unrecognized net actuarial loss (gain)		92,918			65,725			(13,659	)		(12,435	)
	Unrecognized prior service cost		3,071			2,377			(8,256	)		(15,526	)
	Contribution after measurement date		4,581			—			342			487

	Prepaid (accrued) benefit cost	$	16,246		$	16,082		$	(51,071	)	$	(51,221	)

Amounts recognized in the balance sheet:
	Prepaid benefit cost	$	16,246		$	16,082		$	—		$	—
	Accrued benefit cost		(72,938	)		(48,873	)		(51,071	)		(51,221	)
	Intangible asset		3,071			2,377			—			—
	Accumulated other comprehensive income, before tax effects		69,867			46,496			—			—

	Net amount recognized	$	16,246		$	16,082		$	(51,071	)	$	(51,221	)

Information for pension plans with an accumulated benefit obligation in excess of plan assets are as follows (in thousands):

	September 30, 2005		December 31, 2004
Projected benefit obligation	$	257,975	$	216,269
Accumulated benefit obligation	$	234,925	$	197,040
Fair value of plan assets	$	173,651	$	164,249

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The amounts in each period reflected in other comprehensive income are as follows (in thousands):

		Pension Benefits
		September 30, 2005			December 31, 2004
Increase in minimum liability (before tax effects) included in other comprehensive income		$	23,371		$	880

A summary of key assumptions used is as follows:

		Pension Benefits						Other Benefits
				December 31,						December 31,
		Sept. 30, 2005		December 31,				Sept. 30, 2005		December 31,
		Sept. 30, 2005		2004		2003		Sept. 30, 2005		2004		2003
Weighted average assumptions used to determine benefit obligations:
	Discount rate	5.00	%	6.00	%	6.35	%	5.00	%	6.00	%	6.35	%
	Rate of compensation increase	3.50	%	3.50	%	3.50	%	—		—		—
Weighted average assumptions used to determine net periodic cost:
	Discount rate	6.00	%	6.35	%	7.25	%	6.00	%	6.35	%	7.25	%
	Expected return on plan assets	8.90	%	8.90	%	9.25	%	—		—		—
	Rate of compensation increase	3.50	%	3.50	%	3.50	%	—		—		—
Assumed healthcare cost trend rates:
	Health care cost trend rate assumed for the next year	—		—		—		10.00	%	10.00	%	10.00	%
	Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	—		—		—		5.00	%	5.00	%	5.00	%
	Year that the rate reaches the ultimate trend rate	—		—		—		2010		2009		2008

The components of net periodic benefit cost (income) are as follows (in thousands):

		Pension Benefits									Other Benefits
					For the years ended December 31,									For the years ended December 31,
		For the nine months ended Sept. 30, 2005			For the years ended December 31,						For the nine months ended Sept. 30, 2005			For the years ended December 31,
		For the nine months ended Sept. 30, 2005			2004			2003			For the nine months ended Sept. 30, 2005			2004			2003
Components of net periodic benefit cost (income):
	Service cost	$	3,824		$	4,617		$	4,386		$	413		$	549		$	509
	Interest cost		9,445			12,710			13,339			1,031			1,453			1,456
	Expected return on plan assets		(10,560	)		(12,451	)		(11,631	)		—			—			—
	Amortization of transition amount		—			(2	)		(360	)		—			—			—
	Amortization of prior service cost		205			255			285			(1,867	)		(2,759	)		(2,489	)
	Amortization of net loss (gain)		2,454			3,263			3,406			(670	)		(855	)		(1,077	)
	Curtailment settlement loss		—			—			—			—			265			—

Net periodic benefit cost (income)		$	5,368		$	8,392		$	9,425		$	(1,093	)	$	(1,347	)	$	(1,601	)

The discount rate is based on a proprietary bond defeasance model designed by the Plans' investment consultant to create a portfolio of high quality corporate bonds which, if invested on the measurement date, would provide the necessary future cash flows to pay accumulated benefits when

F-49

The model uses a statistical program to determine the optimal mix of securities to offset benefit obligations. The model is populated with an array of Moody's Aa-rated corporate fixed income securities that actively traded in the bond market on the measurement date. None of the securities used in the model had embedded call, put or convertible features, and none were structured with par paydowns or deferred income streams. All of the securities in the model are considered appropriate for the analysis as they are diversified by maturity date and issuer and offer predictable cash flow streams. For diversification purposes, the model was constrained to purchasing no more than 20 percent of any outstanding issuance. Carryforward interest is credited at a rate determined by adding the appropriate implied forward Treasury yield to the Aa-rated credit spread as of the measurement date.

The expected return on pension assets is based on the long-term actual average rate of return on the Plans' pension assets and projected returns using asset mix forecasts and historical return data.

The Company's pension plans weighted-average asset allocations at the measurement date, by asset category, are as follows:

	June 30, 2005	September 30, 2004
Asset Category:
Equity securities	68%	68%
Debt securities	30%	30%
Other	2%	2%

Total	100%	100%

The plan assets of the pension plans are contributed to, held and invested by the Walter Industries, Inc. Subsidiaries Master Pension Trust ("Pension Trust"). The plan assets included in the Company's determination of its pension benefit obligation is based on an allocation of the Pension Trust assets, whereby the projected benefit obligation of the Company is compared with the projected benefit obligation of Walter and its affiliates (including the Company) to determine the Company's "Projected Benefit Obligation Ratio." This ratio is applied to the total assets in the Pension Trust to determine the amount of assets allocated to the Company. The Pension Trust employs a total return investment approach whereby a mix of equity and fixed income investments are used to meet the long-term funding requirements of the Pension Trust. The asset mix strives to generate rates of return sufficient to fund plan liabilities and exceed the long-term rate of inflation, while maintaining an appropriate level of portfolio risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The investment portfolio is diversified across domestic and foreign equity holdings, and by investment styles and market capitalizations. Fixed income holdings are diversified by issuer, security type, and principal and interest payment characteristics. Derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual benefits liability measurements, and periodic asset/liability studies.

F-50

As of June 30, 2005, the Pension Trust's strategic asset allocation was as follows:

		Strategic Allocation	Tactical Range
Asset Class:
Total Equity		70%	65-70%
	Large Capitalization Stocks	45%	40-50%
	Mid Capitalization Stocks	10%	8-12%
	Small Capitalization Stocks	0%	0%
	International Stocks	15%	12-18%
Total Fixed Income		30%	25-35%
Total Cash		0%	0-2%

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 Pension Trust employs a building block approach in determining the long-term rate of return for plan assets. Historical market returns are studied and long-term risk/return relationships between equity and fixed income asset classes are analyzed. This analysis supports the fundamental investment principle that assets with greater risk generate higher returns over long periods of time. The historical impact of returns in one asset class on returns of another asset class is reviewed to evaluate portfolio diversification benefits. Current market factors including inflation rates and interest rate levels are considered before assumptions are developed. The long-term portfolio return is established via the building block approach by adding interest rate risk and equity risk premiums to the anticipated long-term rate of inflation. Proper consideration is given to the importance of portfolio diversification and periodic rebalancing. Peer data and historical return assumptions are reviewed to check for reasonableness.

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 thousands):

		1-Percentage Point Increase			1-Percentage Point Decrease
Health care cost trend:
	Effect on total of service and interest cost components	$	62		$	(53	)
	Effect on postretirement benefit obligation		701			(612	)
Discount rate:
	Effect on postretirement service and interest cost components		(9	)		(3	)
	Effect on postretirement benefit obligation		(2,468	)		2,770
	Effect on current year postretirement benefits expense		(159	)		155
	Effect on pension service and interest cost components		(210	)		203
	Effect on pension benefit obligation		(24,479	)		29,826
	Effect on current year pension expense		(1,480	)		1,755
Expected return on plan assets:
	Effect on current year pension expense		(1,187	)		1,187
Rate of compensation increase:
	Effect on pension service and interest cost components		340			(291	)
	Effect on pension benefit obligation		2,798			(2,432	)
	Effect on current year pension expense		567			(488	)

F-51

The Company's minimum pension plan funding requirement for fiscal 2006 is $0.1 million, which the Company expects to fully fund. The Company also expects to contribute $1.7 million to its other post-employment benefit plan in fiscal 2006. The following estimated benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):

	Pension Benefits		Other Postretirement Benefits Before Medicare Subsidy		Medicare Part D Subsidy
2006	$	13,975	$	1,711	$	—
2007		14,351		1,721		—
2008		14,750		1,781		—
2009		15,143		1,924		—
2010		15,529		1,999		—
Years 2011-2015		85,043		10,824		—

NOTE 11. Commitments and Contingencies

Income Tax Litigation

The Company is currently engaged in litigation with regard to Federal income tax disputes (see Note 9).

Environmental Matters

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. The Company believes that it 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. Expenses charged to the statement of operations for compliance of ongoing operations and for remediation of environmental conditions arising from past operations in the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003 were approximately $4.4 million, $9.5 million and $4.2 million, respectively. Because environmental laws and regulations continue to evolve and because conditions giving rise to obligations and liabilities under environmental laws are in some circumstances not readily identifiable, it is difficult to forecast the amount of such future environmental expenditures or the effects of changing standards on future business operations or results. Consequently, the Company can give no assurance that such expenditures will not be material in the future. The Company capitalizes environmental expenditures that increase the life or efficiency of property or that reduce or prevent environmental contamination. Capital expenditures for environmental requirements are anticipated to average approximately $4.0-6.0 million per year in the next five years. Capital expenditures for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003 for environmental requirements were approximately $1.7 million, $2.7 million and zero, respectively.

The Company has implemented an Administrative Consent Order ("ACO") for its 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 the Company has completed, and has received final approval on, the soil cleanup required by the ACO. The Company 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 will be required to verify natural attenuation. It is not known how long ground water monitoring will be required. Management does not believe monitoring or further cleanup costs, if any, will have a material adverse effect on the financial condition or results of operations of the Company.

F-52

The Federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") generally imposes liability, which may be joint and several and is without regard to fault or the legality of waste generation or disposal, on certain classes of persons, including owners and operators of sites at which hazardous substances are released into the environment (or pose a threat of such release), persons that disposed or arranged for the disposal of hazardous substances at such sites, and persons who owned or operated such sites at the time of such disposal. CERCLA authorizes the EPA, the States and, in some circumstances, private entities to take actions in response to public health or environmental threats and to seek to recover the costs they incur from the same classes of persons. Certain governmental authorities can also seek recovery for damages to natural resources. Currently, U.S. Pipe has been identified as a potentially responsible party ("PRP") by the EPA under CERCLA with respect to cleanup of hazardous substances at two sites to which its wastes allegedly were transported or deposited. The Company is among many PRP's at such sites and a significant number of the PRP's are substantial companies. An agreement has been reached with the EPA and a Consent Order, signed by U.S. Pipe and the EPA, has been finalized respecting one of the sites. U.S. Pipe has satisfied its obligations under the Consent Order at a cost that was not material. Natural resource damage claims respecting that same site have now also been made by the State of California; while the liability and the corresponding insurance claim cannot be estimated at this time, U.S. Pipe, as a member of the same group of PRPs, believes it has adequate first dollar insurance coverage covering the State's claims. With respect to the other site, located in Anniston, Alabama, the PRPs have been negotiating an administrative consent order with the EPA. Based on these negotiations, management estimates the Company's share of liability for cleanup, after allocation among several PRPs, will be approximately $4.0 million, which was accrued in 2004. Civil litigation in respect of the site is also ongoing, including a putative class action lawsuit alleging property damage and personal injury. Management does not believe that U.S. Pipe's share of any additional liability will have a material adverse effect on the financial condition of the Company, but could be material to results of operations in future reporting periods.

Although no assurances can be given that the Company will not be required in the future to make material expenditures relating to these or other sites, management does not believe at this time that the cleanup costs, if any, associated with these or other sites will have a material adverse effect on the financial condition or results of operations of the Company, but such cleanup costs could be material to results of operations in a reporting period.

In 2005, the Company entered into a settlement and release agreement with a former insurer whereby the former insurer agreed to pay $5.1 million, net of legal fees, to the Company for historical insurance claims previously expensed as incurred by the Company. Such claims had not previously been submitted to the insurance company for reimbursement. The Company released the insurer of both past and future claims. During 2005, the Company received $2.8 million in cash and the remainder is expected to be received in the second quarter of fiscal 2006. The Company recorded a $5.1 million reduction to selling, general and administrative expenses in 2005.

Miscellaneous Litigation

F-53

Operating Leases

The Company accounts for operating leases in accordance with SFAS 13, "Accounting for Leases," which includes guidance for evaluating free rent periods, determining amortization periods of leasehold improvements and incentives related to leasehold improvements. The Company's operating leases are primarily for equipment and office space.

Rent expense was $0.2 million, $0.3 million and $0.2 million for the nine months ended September 30, 2005 and the years ended December 31, 2004 and 2003, respectively. Future minimum payments under non-cancelable operating leases as of September 30, 2005 are (in thousands):

	Operating Leases
2006	$	249
2007		158
2008		73
2009		67
2010		67
Thereafter		130

NOTE 12. Accounting Standards Not Yet Adopted

In November 2004, the Financial Accounting Standards Board issued SFAS No. 151, "Inventory Costs," which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material. This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The Company intends to adopt SFAS No. 151 on October 1, 2005, the beginning of its 2006 fiscal year. The impact of the adoption of SFAS No. 151 on the Company's financial statements may have a material impact on our operating income in the event actual production output is significantly higher or lower than normal capacity. In the event actual production capacity is significantly different than normal capacity, the Company may be required to recognize certain amounts of facility expense, freight, handling costs or wasted materials as a current period expense.

In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN 47"), which is an interpretation of FASB No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). This interpretation clarifies terminology within SFAS 143 and requires companies to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. FIN 47 is effective for fiscal years beginning after December 15, 2005. This standard is not expected to have a material impact on the Company's financial condition or results of operations.

F-54

depreciation, amortization or depletion for long-lived, nonfinancial assets be accounted for as a change in accounting estimate that is effected by a change in accounting principle. SFAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. The adoption of SFAS 154 is not expected to have a material impact on the Company's financial condition or results of operations.

NOTE 13. Subsequent Events

On October 3, 2005, pursuant to the agreement dated June 17, 2005, Walter, through a wholly-owned subsidiary, acquired all of the outstanding common stock of Mueller Water Products and subsidiaries ("Mueller") for $943.4 million and assumed approximately $1.05 billion of indebtedness at Mueller. In conjunction with the acquisition, the Company was contributed to Mueller. For accounting and financial statement presentation purposes, the Company is treated as accounting acquiror of Mueller. Mueller had net sales of $1,148.9 million for the fiscal year ended September 30, 2005 and total assets of $1,086.8 million at September 30, 2005.

The purchase price was allocated to Mueller's net tangible and identifiable intangible assets based on their fair values as of October 3, 2005. The excess of the purchase price over the net tangible and identifiable intangible assets was recorded as goodwill. Based on current fair values, the purchase price was allocated as follows (dollars in millions):

Receivables, net		$	177.4
Inventories			373.2
Property, plant and equipment			215.5
Identifiable intangible assets			855.9
Goodwill			817.6
Net other assets			376.5
Net deferred tax liabilities			(300.0	)
Debt(1)			(1,572.7	)

	Total purchase price allocation	$	943.4

(1): Includes debt existing at the date of acquisition and additional debt assumed by Mueller in conjunction with Walter's acquisition of Mueller.

In addition, Walter Parent, contributed its net intercompany receivable balance to capital in excess of par value of the Company. The Company will reflect this decrease in intercompany payable as additional equity in October 2005.

On October 21, 2005, Walter announced its plan to undertake an initial public offering and subsequent spin-off of the Company, which comprises the combined operations of the Company and Mueller.

On October 26, 2005, Walter announced plans to close U.S. Pipe's Chattanooga, Tennessee plant and transfer the valve and hydrant production operations of that plant to Mueller's Chattanooga, Tennessee and Albertville, Alabama plants. The eventual closure of the Chattanooga plant is expected to occur in 2006. The estimated Chattanooga pre-tax closing costs that are expected to be recorded in the first quarter of fiscal 2006 ending December 31, 2005 consist of $17.8 million of long-lived asset write-offs, a $5.2 million inventory absorption loss, an $11.9 million charge to write inventory down to fair value, $3.0 million for severance costs and an environmental charge of $2.1 million. The Company expects to recognize additional severance expense during the second quarter of 2006 in the amount of $0.6 million. In addition, the Company anticipates additional environmental-related charges of $1.3 million and a $3.3 million charge to increase the pension and other postretirement benefit obligations to be recognized in fiscal 2006.

F-55

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of
Mueller Water Products, LLC
(formerly Mueller Water Products, Inc.)

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, shareholders' deficit and redeemable preferred and common stock and of cash flows present fairly, in all material respects, the financial position of Mueller Water Products, LLC, at September 30, 2005 and 2004, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2005, 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 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, 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 2 to the consolidated financial statements, the Company has restated its 2004 and 2003 consolidated financial statements.

/s/ PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois December 16, 2005

F-56

MUELLER WATER PRODUCTS, LLC (FORMERLY MUELLER WATER PRODUCTS, INC.)

CONSOLIDATED BALANCE SHEETS

		September 30, 2005			September 30, 2004
					(restated)
		(dollars in millions)
Assets
Cash and cash equivalents		$	112.8		$	60.5
Receivables, net			177.4			162.0
Inventories			303.0			260.2
Income tax receivable			—			4.1
Deferred income taxes			27.7			21.8
Prepaid expenses			31.1			28.9

	Total current assets		652.0			537.5
Property, plant and equipment, net			168.0			186.8
Deferred financing fees, net			32.2			37.4
Deferred income taxes			17.5			8.3
Other long-term assets			1.5			0.8
Identifiable intangibles, net			52.4			55.2
Goodwill			163.2			163.2

	Total assets	$	1,086.8		$	989.2

Liabilities
Accounts payable		$	63.3		$	57.6
Current portion of long-term debt			3.8			3.2
Accrued expenses and other liabilities			103.3			85.9

	Total current liabilities		170.4			146.7
Long-term debt			1,051.9			1,036.2
Accrued pension liability			37.7			29.2
Other long-term liabilities			1.5			7.8

	Total liabilities		1,261.5			1,219.9

Commitments and contingencies (Note 9)
Redeemable common stock			1.7			1.7

Shareholders' deficit:
Common stock:
	Class A, $0.01 par value (400,000,000 shares authorized and 131,208,998 issued)		1.3			1.3
	Class B, $0.01 par value, convertible, non-voting (150,000,000 shares authorized and 89,343,699 shares issued)		0.9			0.9
Accumulated deficit			(169.0	)		(218.6	)
Accumulated other comprehensive loss			(9.6	)		(16.0	)

Total shareholders' deficit			(176.4	)		(232.4	)

Total liabilities and shareholders' deficit		$	1,086.8		$	989.2

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

F-57

MUELLER WATER PRODUCTS, LLC (FORMERLY MUELLER WATER PRODUCTS, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

			Fiscal Years Ended
			September 30, 2005			September 30, 2004			September 30, 2003
						(restated)			(restated)
			(dollars in millions)
Net sales			$	1,148.9		$	1,049.2		$	922.9
Cost of sales				802.3			750.5			681.8

	Gross profit			346.6			298.7			241.1
Operating expenses:
	Selling, general and administrative			172.1			185.1			148.2
	Facility rationalization, restructuring and related costs			1.7			0.9			1.7

		Total operating expenses		173.8			186.0			149.9

Income from operations				172.8			112.7			91.2
Interest expense, net of interest income				(89.5	)		(63.5	)		(35.5	)

	Income before income taxes			83.3			49.2			55.7
Provision for income taxes				33.7			16.0			22.9

	Net income		$	49.6		$	33.2		$	32.8

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

F-58

MUELLER WATER PRODUCTS, LLC (FORMERLY MUELLER WATER PRODUCTS, INC.)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT AND REDEEMABLE PREFERRED AND COMMON STOCK
FOR THE THREE YEARS ENDED SEPTEMBER 30, 2005

			Common Stock $0.01 Par Value
			Common Stock $0.01 Par Value															Accumulated Other Comprehensive Loss
			Class A Shares	Amount		Class B Shares	Amount		Additional Paid in Capital			Accumulated Deficit			Comprehensive Income (Loss)			Accumulated Other Comprehensive Loss			Stockholder Loans			Total			Redeemable Preferred Stock			Redeemable Common Stock
			(dollar amounts and shares in millions)
Balance at September 30, 2002			116.0	$	1.1	89.3	$	0.9	$	155.8		$	(47.0	)				$	(29.6	)	$	(2.6	)	$	78.6		$	82.4		$	2.1
Issuance of common stock			0.5		—	—		—		—			—						—			—			—			—			0.7
Accretion of redeemable preferred stock			—		—	—		—		(14.2	)		—						—			—			(14.2	)		14.2			—
Interest on stockholder loans			—		—	—		—		—			—						—			(0.2	)		(0.2	)		—			(0.2	)
Employees stock compensation			—		—	—		—		0.7			—						—			—			0.7			—			—
	Comprehensive income
		Net income	—		—	—		—		—			32.8		$	32.8			—			—			32.8			—			—
		Foreign currency translation adjustments	—		—	—		—		—			—			10.4			10.4			—			10.4			—			—
		Increase in additional minimum pension liability	—		—	—		—		—			—			(1.3	)		(1.3	)		—			(1.3	)		—			—

	Comprehensive income														$	41.9

Balance at September 30, 2003			116.5		1.1	89.3		0.9		142.3			(14.2	)		—			(20.5	)		(2.8	)		106.8			96.6			2.6
Fair market value of warrants			—		—	—		—		10.5			—						—			—			10.5			—			—
Accretion of Redeemable preferred stock			—		—	—		—		(9.9	)		—						—			—			(9.9	)		9.9			—
Retirement of preferred stock			—		—	—		—		—			—						—			—			—			(106.5	)		—
Interest on stockholder loans			—		—	—		—		—			—						—			(0.2	)		(0.2	)		—			(0.2	)
Repayment of shareholder loans, including interest			—		—	—		—		—			(6.2	)					—			3.0			(3.2	)		—			3.2
Dividends paid			—		—	—		—		(162.3	)		(231.4	)					—			—			(393.7	)					(5.5	)
Employee stock compensation			14.7		0.2	—		—		21.0			—						—			—			21.2			—			—
Increase in redeemable common stock			—		—	—		—		(1.6	)		—						—			—			(1.6	)		—			1.6
	Comprehensive income
		Net income	—		—	—		—		—			33.2		$	33.2			—			—			33.2			—			—
		Foreign currency translation adjustments	—		—	—		—		—			—			4.3			4.3			—			4.3			—			—
		Decrease in additional minimum pension liability	—		—	—		—		—			—			0.2			0.2			—			0.2			—			—

Comprehensive income															$	37.7

Balance at September 30, 2004			131.2		1.3	89.3		0.9		—			(218.6	)		—			(16.0	)		—			(232.4	)		—			1.7
	Comprehensive income
		Net income	—		—	—		—		—			49.6			49.6			—			—			49.6			—			—
		Foreign currency translation adjustments	—		—	—		—		—			—			8.1			8.1			—			8.1			—			—
		Increase in additional minimum pension liability	—		—	—		—		—			—			(1.7	)		(1.7	)		—			(1.7	)		—			—

Comprehensive income															$	56.0

Balance at September 30, 2005			131.2	$	1.3	89.3	$	0.9	$	—		$	(169.0	)				$	(9.6	)	$	—		$	(176.4	)	$	—		$	1.7

The acompanying notes are an integral part of the financial statements.

F-59

MUELLER WATER PRODUCTS, LLC (FORMERLY MUELLER WATER PRODUCTS, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Fiscal Years ended
			September 30, 2005			September 30, 2004			September 30, 2003
						(restated)			(restated)
			(dollars in millions)
Operating Activities
Net income			$	49.6		$	33.2		$	32.8
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation			43.5			46.0			47.2
	Amortization of intangibles			2.8			16.0			17.1
	Amortization of deferred financing fees			5.2			3.6			2.7
	Amortization of tooling			2.1			2.3			2.0
	Accretion on senior discount notes			17.8			6.8			—
	Amortization of discount on 14³/4% senior discount notes			1.1			0.4			—
	Write off of deferred financing fees			—			7.0			—
	Non-cash stock compensation			—			8.6			0.7
	Gain on interest rate swaps			(5.2	)		(12.5	)		(13.3	)
	Deferred income taxes			(14.1	)		(5.3	)		0.5
	Asset impairments			0.5			0.1			1.4
	(Gain) Loss on disposals of property, plant and equipment			(0.3	)		1.6			—
Changes in assets and liabilities, net of the effects of acquisitions:
	Receivables			(12.6	)		(21.7	)		(2.4	)
	Inventories			(38.8	)		(9.6	)		(5.3	)
	Income tax receivable			4.1			(4.1	)		—
	Prepaid expenses			(4.1	)		(1.3	)		(3.5	)
	Pension, net			6.6			(2.7	)		1.0
	Accounts payable and accrued expenses			16.5			18.9			3.5
	Accrued royalty expense			—			—			(13.5	)
	Other, net			(0.9	)		1.7			2.9

		Cash flows provided by operating activities		73.8			89.0			73.8

Investing Activities
Additions to property, plant and equipment				(27.2	)		(22.5	)		(20.0	)
Proceeds from sale of property, plant and equipment				2.2			—			—
Acquisition of businesses, net of cash acquired				—			(19.8	)		(11.2	)
Decrease in restricted cash				—			—			11.6

		Cash flows used in investing activities		(25.0	)		(42.3	)		(19.6	)

Financing Activities
Book overdrafts				4.8			3.3			(2.7	)
Proceeds from short-term borrowings				—			9.2			—
Retirement of short-term debt				—			(9.2	)		—
Proceeds from long-term debt				—			1,070.1			—
Retirement of long-term debt, including capital lease obligations				(3.3	)		(604.6	)		(6.2	)
Redemption of preferred stock				—			(106.5	)		—
Payment of deferred financing fees				—			(36.0	)		—
Dividends paid (excluding amounts paid to optionholders)				—			(386.6	)		—
Contributed capital				—			—			0.7

		Cash flows used in financing activities		1.5			(60.3	)		(8.2	)

Effect of exchange rate changes on cash				2.0			1.1			1.8

Increase (decrease) in cash and cash equivalents				52.3			(12.5	)		47.8
Cash and cash equivalents
Beginning of year				60.5			73.0			25.2

End of year			$	112.8		$	60.5		$	73.0

Supplemental Disclosures
Interest paid			$	73.5		$	50.4		$	48.1
Income taxes paid			$	40.6		$	27.4		$	9.0

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The Company recorded facility rationalization, restructuring and related charges of $1.7 million, $0.9 million and $1.7 million for the years ended September 30, 2005, 2004 and 2003, respectively. A portion of these charges, consisting of write-offs of assets, were non-cash and are reconciled below:

		Fiscal Years ended
		September 30, 2005		September 30, 2004		September 30, 2003
		(dollars in millions)
Accrued expenses		$	1.2	$	0.4	$	0.3
Non-cash			0.5		0.5		1.4

	Total facility rationalization, restructuring and related costs	$	1.7	$	0.9	$	1.7

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

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MUELLER WATER PRODUCTS, LLC (FORMERLY MUELLER WATER PRODUCTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization

Mueller Water Products, LLC (formerly Mueller Water Products, Inc.) ("Mueller Water" or "Water" or the "Company") is the parent company of Mueller Group, LLC (formerly Mueller Group, Inc.) ("Group"). As of September 30, 2005, the Company has two reporting and operating segments, Mueller and Anvil. The Mueller segment (formerly called "Water infrastructure") is a manufacturer of valves, fire hydrants and other related products utilized in the distribution of water and gas and in water and wastewater treatment facilities. The Anvil segment (formerly called "Piping systems") is a manufacturer of cast iron and malleable iron pipe fittings, ductile iron couplings and fittings, pipe hangers and other related products for the plumbing, heating, mechanical, construction retail hardware and other related industries. Both segments have operations in the United States and Canada.

Fiscal Year End—The fiscal year of the Company ends on September 30.

Acquisition by Walter Industries

On October 3, 2005, pursuant to the agreement dated June 17, 2005, Walter Industries, Inc. ("Walter") acquired all of the outstanding common stock of the Company for a cash payment of $928.6 million. Approximately $1.05 billion of the Company's indebtedness was assumed as part of the acquisition. In conjunction with the acquisition, through a series of transactions, U.S. Pipe, a wholly-owned subsidiary of Walter, was contributed by Walter Industries, Inc. to the Company's wholly-owned subsidiary, Mueller Group, LLC ("Group").

Walter financed the acquisition of the common stock of the Company with a combination of available cash, new debt, and borrowings under the 2005 Mueller Credit Agreement, as more fully described in Note 6 to the consolidated financial statements. The purchase price of the Company will be allocated to Mueller's net tangible assets and identified intangible assets based on their fair values at October 3, 2005. The excess of the purchase price over net tangible and intangible assets will be recorded as goodwill. In accordance with generally accepted accounting principles the assets and liabilities of U.S. Pipe were contributed to the Company based on their book values as of October 3, 2005.

Note 2. Annual Restatements

In the course of finalizing the 2005 financial statements, the Company determined that certain items included in the consolidated financial statements were incorrect in annual and interim periods.

Effect of exchange rate changes on cash

In fiscal 2003 and 2004, the Company presented the entire change related to foreign currency translation in the "Effect of exchange rate changes on cash" line item in the Statements of Consolidated Cash Flows. The portion of cash flow changes related to increases or decreases in assets and liabilities associated with operating, investing and financing activities did not consider the amount of the change related to foreign currency translation.

Loss on disposal of property, plant and equipment

In fiscal 2004, the Company presented loss on disposal of property, plant and equipment as an investing activity in error, when it should have been presented as an adjustment in determining cash flows provided by operating activities.

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Book overdrafts

In fiscal 2003 and 2004, cash accounts in book overdraft positions were netted with cash accounts where legal right of offset did not exist. On the balance sheet, cash and cash equivalents should have increased and a liability recorded with respect to such book overdrafts by comparable amounts. The change in the book overdraft should have been reflected as a financing activity in the consolidated statements of cash flows and has been included in accounts payable in the consolidated balance sheet.

Current and Non-current deferred income taxes

In 2004, the Company should have classified certain deferred income tax assets as current in the balance sheet, based on the nature of the underlying temporary difference, but included such temporary differences as non-current.

Misclassification of depreciation expense—In fiscal 2003 and 2004 the Company incorrectly classified certain depreciation expense amounts as selling, general and administrative expense in the Consolidated Statement of Operations when it should have been reported as cost of sales. The restatement had no impact on the Company's consolidated net income.

As a result of these findings, the Company has restated its annual and interim financial statements. The restatement had no impact on the Company's net income or the consolidated statement of stockholders' deficit for any of the prior periods presented. Certain items included in Other, net, in the statement of cash flows in prior periods are also presented as discrete items in the current year presentation and are included in the tables below.

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The following tables set forth the effects of the adjustments discussed above on the financial statements for the years ended September 30, 2004 and 2003 as follows (dollars in millions):

		September 30, 2004						September 30, 2003
		AS REPORTED			AS RESTATED			AS REPORTED			AS RESTATED
Statements of Consolidated Cash Flows
Cash Flows From Operating Activities:
	Accretion on senior discount notes	$	—		$	6.8		$	—		$	—
	Amortization of discount on 14³/4% senior discount notes	$	—		$	0.4		$	—		$	—
	(Gain) Loss on disposal of property, plant and equipment	$	—		$	1.6		$	—		$	—
	Deferred income taxes	$	4.4		$	(5.3	)	$	4.0		$	0.5
	Receivables	$	(23.6	)	$	(21.7	)	$	(6.0	)	$	(2.4	)
	Inventories	$	(12.5	)	$	(9.6	)	$	(11.1	)	$	(5.3	)
	Prepaid expenses and other current assets	$	(1.4	)	$	(1.3	)	$	(3.8	)	$	(3.5	)
	Accounts payable, accrued expenses and other current liabilities	$	20.1		$	18.9		$	6.0		$	3.5
	Pension, net	$	(2.6	)	$	(2.7	)	$	1.0		$	1.0
	Other, net	$	(0.4	)	$	1.7		$	(2.0	)	$	2.9
	Cash flows provided by operating activities	$	84.2		$	89.0		$	65.2		$	73.8
Cash Flows Used In Investing Activities:
	Loss on disposal of property, plant and equipment	$	1.6		$	—		$	—		$	—
	Cash flows used in investing activities	$	(40.7	)	$	(42.3	)	$	(19.6	)	$	(19.6	)
Cash Flows Used In Financing Activities:
	Book overdrafts	$	—		$	3.3		$	—		$	(2.7	)
	Cash flows used in financing activities	$	(63.6	)	$	(60.3	)	$	(5.5	)	$	(8.2	)
Effect of exchange rate changes on cash		$	4.3		$	1.1		$	10.4		$	1.8
Increase (decrease) in cash and cash equivalents		$	(15.8	)	$	(12.5	)	$	50.5		$	47.8
Cash and cash equivalents—Beginning of period		$	71.4		$	73.0		$	20.9		$	25.2
Cash and cash equivalents—End of period		$	55.6		$	60.5		$	71.4		$	73.0

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		September 30, 2004
		AS REPORTED		AS RESTATED
Consolidated Balance Sheets
	Cash and cash equivalents	$	55.6	$	60.5
	Deferred income tax—current	$	9.0	$	21.8
	Current assets	$	519.8	$	537.5
	Deferred income tax—non-current	$	21.1	$	8.3
	Total assets	$	984.3	$	989.2
	Accounts payable	$	52.7	$	57.6
	Total current liabilities	$	141.8	$	146.7
	Total liabilities	$	1,215.0	$	1,219.9
	Total liabilities and shareholders' deficit	$	984.3	$	989.2

Consolidated Statement of Operations

	For the year ended September 30, 2004
	AS REPORTED		AS RESTATED
Cost of sales	$	743.4	$	750.5
Gross profit	$	305.8	$	298.7
Selling, general and administrative expense, which includes stock compensation expense	$	192.2	$	185.1

	For the year ended September 30, 2003
	AS REPORTED		AS RESTATED
Cost of sales	$	674.5	$	681.8
Gross profit	$	248.4	$	241.1
Selling, general and administrative expense, which includes stock compensation expense	$	155.5	$	148.2

Note 3. Summary of Significant Accounting Policies

Basis of Presentation—The consolidated financial statements include the accounts of the Company and all of its subsidiaries. Preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated statements. Actual results could differ from those estimates. All significant intercompany transactions and balances have been eliminated. Certain prior period amounts have been reclassified to conform to the current year presentation.

Revenue Recognition—The Company recognizes revenue based on the recognition criteria set forth in the Securities and Exchange Commission's Staff Accounting Bulletin 104 "Revenue Recognition in Financial Statements", which is when delivery of product 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 from the sale of our products is

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recognized when title passes upon delivery to the customer. Sales are recorded net of estimated cash discounts and rebates.

Customer Rebates—Customer rebates are applied against net sales at the time the sales are recorded based on estimates with respect to the deductions to be taken.

Cash and Cash Equivalents—The Company considers all highly liquid investments with original maturities of ninety 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 amount and the right of offset exists. Where there is no right of offset against cash balances, outstanding checks are classified along with accounts payable. At September 30, 2005 and 2004 the Company had book overdraft positions of $9.7 million and $4.9 million, respectively, recorded in accounts payable.

Restricted Cash—The Company was required to use the restricted cash to make annual royalty payments to Tyco, the Company's owner prior to August 1999, under the Grinnell License Agreement which expired as of September 30, 2002. The last payment was made in December 2002.

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

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

The following table summarizes information concerning the Company's allowance for doubtful accounts:

	2005			2004			2003
	(dollars in millions)
Balance at beginning of year	$	5.1		$	4.9		$	4.2
Charged to costs and expenses		0.5			2.2			1.6
Write-offs and recoveries		(0.6	)		(2.0	)		(0.9	)

Balance at end of year	$	5.0		$	5.1		$	4.9

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Inventories—Inventories are recorded at the lower of cost (first-in, first-out) or market value. Additionally, the Company evaluates its inventory reserves in terms of excess and obsolete exposures. This evaluation includes such factors as anticipated usage, inventory turnover, inventory levels and ultimate product sales value. As such, these factors may change over time causing the reserve level to adjust accordingly. Inventory cost includes an overhead component that can be affected by levels of production and actual costs incurred. Management periodically evaluates the effects of production levels and actual costs incurred on the costs capitalized as part of inventory cost.

The following table summarizes information concerning the Company's inventory valuation reserves:

	2005			2004			2003
	(dollars in millions)
Balance at beginning of year	$	16.7		$	14.7		$	13.4
Charged to costs and expenses		6.4			3.8			3.1
Write-offs and deductions		(4.0	)		(1.9	)		(1.9	)
Currency translation adjustments		0.2			0.1			0.1

Balance at end of year	$	19.3		$	16.7		$	14.7

Property, Plant and Equipment—Property, plant and equipment are recorded at cost less accumulated depreciation and amortization. Maintenance and repair expenditures are charged to expense when incurred. Direct internal and external costs to implement computer systems and software are capitalized as incurred. Capitalized costs of computer systems and software are amortized beginning when site installations or module development is complete and ready for its intended use. The straight-line method of depreciation and amortization is used over the estimated useful lives of the related assets as follows:

Buildings and related improvements		5 to 40 years
Leasehold improvements		3 to 20 years
Other plant, machinery, equipment, furniture and fixtures		2 to 15 years
Computer systems and software		3 years

Gains and losses arising on the disposal of property, plant and equipment are included in the accompanying statements of operations.

Environmental Expenditures—The Company capitalizes environmental expenditures that increase the life or efficiency of property or that reduces or prevents 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 associated with the Mueller and Anvil business as it existed as of August 16, 1999, whether known or not.

In 2002, the Company incurred costs of $2.1 million associated with increasing the capacity of an existing landfill operated by the Company. The portion of the costs that extended the capacity of the landfill of $1.7 million was capitalized, with remaining costs expensed. This capitalized asset is being depreciated over 10 years. The Company operates another landfill site and has not incurred costs to increase the capacity through 2005. If the Company decides to increase the capacity of the site in the

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future, the portion of the cost that extends the capacity of the landfill will be capitalized, with any remaining cost expensed.

Accounting for the Impairment of Long-Lived Assets—Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. The Company uses an estimate of the future undiscounted net cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable.

Goodwill, Intangible Assets and Other Assets—Goodwill and intangible assets that have an indefinite life are tested for impairment annually (or more frequently if events or circumstances indicate possible impairments) using both a discounted cash flow method and a market comparable method. As of October 1, 2001, September 30, 2002, 2003, 2004, and 2005, no impairment was indicated. Definite-lived intangible assets are amortized over their respective estimated useful lives and reviewed for impairment annually or more frequently if events or circumstances indicate possible impairment. Any recognized intangible asset determined to have an indefinite useful life will not be amortized, but instead tested for impairment in accordance with the standard until its life is determined to no longer be indefinite. The Company uses an estimate of future undiscounted net cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable.

Identifiable intangible assets consist of the following as of September 30:

	2005				2004
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(dollars in millions)
Definite-lived intangible assets
Non compete agreements	$	84.7	$	82.9	$	84.7	$	82.0
Patents		0.5		0.1		0.5		0.1
Design and engineering drawing rights		7.3		2.1		7.3		1.2
Customer relationships		4.0		1.7		4.0		0.7

		96.5		86.8		96.5		84.0
Indefinite lived intangible assets
Tradenames		42.7		—		42.7		—

	$	139.2	$	86.8	$	139.2	$	84.0

Amortization of definite lived intangible assets was $2.8 million, $16.0 million, and $17.1 million for the years ended September 30, 2005, 2004 and 2003, respectively. The $13.2 million decrease in amortization expense for 2005 as compared to 2004 is primarily due to a $13.8 million reduction due to a non-compete agreement with Tyco that was fully amortized in 2004. Estimated amortization expense for the years ending September 30, 2006, 2007, 2008, 2009 and 2010 is $2.6 million, $1.6 million, $1.4 million, $0.9 million and $0.7 million, respectively.

Warranty Costs—The Company accrues for the estimated cost of product warranties at the time of sale based on historical experience. Adjustments to obligations for warranties are made as changes in

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the obligations become reasonably estimable. The following table summarizes information concerning product warranty accruals:

	2005			2004
	(dollars in millions)
Accrued balance at beginning of year	$	1.6		$	0.9
Warranty expense		1.6			5.2
Settlement of warranty claims		(1.6	)		(4.5	)

Balance at end of year	$	1.6		$	1.6

Deferred Financing Fees—Deferred costs of debt financing included in other non-current assets are amortized over the life of the related loan agreements, which range from one to eight years. Such costs are reassessed when amendments occur, in accordance with Emerging Issues Task Force (EITF) 96-19, "Debtors Accounting for a Modification or Exchange of Debt Instruments."

Income Taxes—Deferred tax liabilities and assets are recognized 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.

Tooling—Prepaid expenses include maintenance and tooling inventory costs. Perishable tools and maintenance items are expensed when put into service. More durable items are amortized over their estimated useful lives, ranging from 4 to 10 years.

Research and Development—Research and development expenditures are expensed when incurred.

Advertising—Advertising costs are expensed when incurred.

Translation of Foreign Currency—Assets and liabilities of the Company's businesses operating outside of the United States of America which account in a functional currency other than U.S. dollars are translated into U.S. dollars using year-end exchange rates. Revenues and expenses are translated at the average exchange rates effective during the year. Foreign currency translation gains and losses are included as a separate component of stockholders' equity. Gains and losses resulting from foreign currency transactions, the amounts of which are not material, are included in cost of sales.

Derivative Instruments and Hedging Activities—The Company currently uses interest rate swaps as required in the credit agreement to reduce the risk of interest rate volatility. The amount to be paid or received from interest rate swaps is charged or credited to interest expense over the lives of the interest rate swap agreements. Changes in the fair value of derivatives are recorded each period in earnings or Accumulated Other Comprehensive Income (Loss), depending on whether a derivative is designated and effective as part of a hedge transaction and meets the applicable requirements associated with Statement of Financial Accounting Standards (SFAS) No. 133 (see Note 8). Since the adoption of SFAS No. 133 in 2001, all gains and losses associated with interest rate swaps have been included in earnings.

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Workers' Compensation—The Company is self-insured for workers' compensation benefits for work-related injuries. 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 insurance industry data when historical data is limited. The Company is indemnified by Tyco for all liabilities associated with the Mueller business that occurred prior to August 16, 1999. Workers' compensation liabilities were as follows:

	September 30,
	2005			2004
	(dollars in millions)
Undiscounted aggregated estimated claims to be paid	$	10.2		$	9.5
Workers' compensation liability recorded on a discounted basis	$	8.8		$	8.5
Discount rate		5	%		5	%

A one-percentage-point increase in the discount rate on the discounted claims liability would decrease the liability by $0.2 million at September 30, 2005, while a one-percentage-point decrease in the discount rate would increase the liability by $0.2 million at September 30, 2005.

Stock Based Compensation—The Company had two stock-based employee compensation plans, which are more fully described in Note 12. For the fiscal year beginning October 1, 2005, the Company will adopt SFAS No. 123(R), "Accounting for Stock Issued to Employees," which requires that compensation costs related to share-based payment transactions be recognized in the financial statements over the period that an employee provides service in exchange for the award. The Company will use a modified prospective method, under which it will record compensation cost for new and modified awards over the related vesting period of such awards prospectively and record compensation cost prospectively for the unvested portion, at the date of adoption, of previously issued and outstanding awards over the remaining vesting period of such awards. No change to prior periods presented is permitted under the modified prospective method. The Company had no stock options outstanding at September 30, 2005 and, therefore, does not expect the adoption of SFAS No. 123(R) to have a material effect.

The Company has recognized compensation cost for stock-based compensation arrangements under the intrinsic value method of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," which required recognizing compensation equal to the difference, if any, between the fair value of the stock option and the exercise price at the date of the grant. All options granted under the Management Incentive Plan were issued at fair value at the date of grant. Fair value was determined by a committee of the board of directors of the Company (or the board as a whole, if no committee was constituted), which took into account as appropriate recent sales of shares of the Company's common stock, recent valuations of such shares, any discount associated with the absence of

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a public market for such shares and such other factors as the committee (or the board, as the case may have been) deemed relevant or appropriate in its discretion.

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock Based Compensation," as amended by SFAS No. 148 "Accounting for Stock Based Compensation—Transition and Disclosure," to stock based employee compensation.

	2005		2004			2003
	(dollars in millions)
Net income, as reported	$	49.6	$	33.2		$	32.8
Deduct: Total stock based employee compensation expense determined under fair value base method for all awards, net of tax related effects		—		(0.2	)		(0.2	)

Pro forma net income	$	49.6	$	33.0		$	32.6

In connection with the April 2004 Recapitalization, which is more fully described in Note 6, the Company modified these stock awards to accelerate vesting, allowed for net cash settlement of options and issued shares to option holders with a fair value of $0.43 per share upon completion of the recapitalization. These actions changed the accounting treatment of these stock awards from fixed to variable accounting. As a result, the Company recognized stock compensation expense of $18.9 million in the third quarter of 2004.

Additionally, the Company allowed certain employees to participate in the Company's Direct Investment Program. Under this program, which is more fully described in Note 13, certain employees were allowed to purchase a specific number of shares of the Company and borrow up to 50% of the total purchase price on a non-recourse basis. For those shares subject to such loans, variable plan accounting applied, resulting in a non-cash compensation charge of $2.3 million.

Note 4. Acquisitions

The following acquisitions have been accounted for in accordance with SFAS No. 141 and the operating results have been included in the Company's consolidated results since the date of acquisition.

Fiscal Year 2004 Acquisitions

Star Pipe, Inc.—Effective January 15, 2004, the Company acquired certain assets of Star Pipe, Inc. ("Star"), a leading distributor of foreign-sourced cast and grooved fittings and couplings, for $17.0 million in cash. The Star acquisition provides an entry into the foreign-sourced product marketplace.

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The following presents the estimated fair values of the assets and liabilities acquired as of January 15, 2004:

	(dollars in millions)
Current assets	$	13.1
Property, plant & equipment		0.4
Intangible assets		6.7

Total assets		20.2

Current liabilities		3.2

Net assets acquired	$	17.0

As part of the acquisition, the Company agreed to a future payment to be made to the seller to the extent that the gross profit of the acquired business exceeds a targeted gross profit. The maximum potential payment amount is $23 million. Management currently estimates the payment could total approximately $3 to $6 million for the payment period that began February 1, 2004 and ends January 31, 2007. The payment amount indicated above is based on management's best estimate, but the actual adjustment could be materially different. The liability for such payment will be recorded at the end of each payment period, as earned, in accordance with the purchase agreement. No payment was earned for the years ended September 30, 2005 or September 30, 2004.

The intangible assets acquired include trademarks, customer relationships and a non-compete agreement with the former owners. These intangibles are being amortized over their estimated useful lives of ten years, three years and five years, respectively.

Modern Molded Products—Effective January 15, 2004, the Company acquired certain assets of Modern Molded Products ("Modern Molded") for $2.8 million in cash. The purchase of the assets and technology of Modern Molded allows the company to internally produce parts that were previously purchased and to reduce spending as well as to increase product supply line predictability.

The following presents the estimated fair values of the assets and liabilities acquired as of January 15, 2004:

	(dollars in millions)
Current assets	$	0.2
Property, plant & equipment		0.7
Intangible assets		1.9

Net assets acquired	$	2.8

The intangible assets acquired include a non-compete agreement with the former owners and purchased technology. These intangibles are being amortized over their estimated useful lives of five years.

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The following unaudited pro forma summary presents the consolidated results of operations for the fiscal years ended September 30, 2003 and September 30, 2004 as if the acquisitions of Star and Modern Molded had occurred as of October 1, 2003:

	2004		2003
	(dollars in millions) (unaudited)
Net Sales	$	1,056.8	$	942.9
Net income	$	33.5	$	33.7

The unaudited consolidated pro forma information is not necessarily indicative of the combined results that would have occurred had the acquisitions occurred on that date, nor is it indicative of the results that may occur in the future.

Fiscal Year 2003 Acquisitions

Jingmen Pratt—Effective March 18, 2003, the Company acquired certain net assets of Jingmen Pratt ("Jingmen" formerly "LS Industries"), a supplier of manufactured butterfly valves for approximately $1.9 million in cash, net of cash acquired.

The following presents the estimated fair values of the assets acquired and liabilities assumed as of March 18, 2003:

			(dollars in millions)
Current assets			$	1.4
Property, plant and equipment				0.8
Intangible assets
	Noncompete agreements			0.6
	Goodwill			0.1

		Total assets		2.9

Current liabilities				1.0

		Net assets acquired	$	1.9

The non-compete agreement is being amortized over the three-year life of the agreement.

Milliken Valve Corp.—Effective January 24, 2003, the Company acquired net certain assets of Milliken Valve Corp. ("Milliken"), a manufacturer of plug valves for approximately $7.5 million in cash, net of cash acquired.

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The following presents the estimated fair values of the assets acquired and liabilities assumed as of January 24, 2003.

			(dollars in millions)
Current assets			$	4.6
Property, plant and equipment				0.8
Intangible assets
	Trademarks			1.9
	Customer relationships			2.0
	Noncompete agreements			0.1

		Total intangible assets		4.0

		Total assets		9.4
Current liabilities				1.9

Net assets acquired			$	7.5

In accordance with the appraisals done at the acquisition date, the trademarks are being amortized over 15 years and the customer relationships will be amortized over 10 years. The non-compete agreement is being amortized over the five-year life of the agreement.

Specialty Steel Corporation—Effective October 10, 2002, the Company acquired certain assets of Specialty Steel Corporation ("Specialty Steel"), a machine shop for large products for approximately $1.8 million in cash, net of cash acquired.

The purchase price of $1.8 million was allocated entirely to the fair value of the property, plant and equipment acquired from Specialty Steel.

The following unaudited pro forma summary presents the consolidated results of operations for the year ended September 30, 2003 as if the acquisitions of Specialty Steel, Milliken and Jingmen had occurred at the beginning of fiscal 2003:

	2003
	(dollars in millions) (Unaudited)
Net sales	$	925.9
Net income	$	33.3

Note 5. Income Taxes

The Company's income tax provision (benefit) was computed in accordance with SFAS No. 109 and is based on current tax rates. The Company's foreign income tax provision relates to Canadian federal and provincial income taxes.

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The provision (benefit) for income taxes and the reconciliation between the United States federal income taxes at the statutory rate on consolidated income (loss) before taxes and the Company's income tax provision (benefit) are as follows.

	Fiscal year ended September 30,
	2005			2004			2003
	(dollars in millions)
U.S. federal income taxes at the statutory rate	$	29.2		$	17.2		$	19.5
Adjustments to reconcile to the Company's income tax provisions:
U.S. state income tax provision, net		2.8			1.6			2.0
Foreign rate differential		(0.2	)		(0.1	)		0.6
Nondeductible charges		0.3			0.4			0.3
Nondeductible interest on high yield debt obligation		2.4			0.9			—
U.S. export and manufacturing incentives		(0.8	)		—			—
Research and development credit		(0.2	)		(0.2	)		—
Tax accrual adjustments for conclusion of examinations and expiration of certain state statutes		(0.3	)		(6.4	)		—
Reduction of Foreign Tax Credits		—			1.8			—
Other (net)		0.5			0.8			0.5

Provision for income taxes		33.7			16.0			22.9
Deferred provision (benefit) for income taxes		(14.1	)		(5.3	)		0.5

Current provision for income taxes	$	47.8		$	21.3		$	22.4

The provisions for the fiscal years ended September 30, 2005, 2004 and 2003 included $6.8 million, $4.4 million and $2.5 million, respectively, for foreign income taxes. The foreign component of income before income taxes was $19.9 million, $14.0 million and $6.3 million, respectively, for each of the periods above.

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The deferred income tax balance sheet accounts result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of the net deferred income tax asset are as follows:

	September 30,
	2005			2004
	(dollars in millions)
Deferred tax assets
Inventories	$	15.1		$	10.1
Identifiable intangibles		12.5			15.4
Accrued liabilities and reserves		19.2			12.7
Unrealized loss on derivatives		—			1.8
State net operating loss carryforwards		0.8			1.8
Accumulated other comprehensive loss:
Additional minimum pension liability		17.9			16.8

		65.5			58.6

State net operating loss carryforward valuation allowance		(0.8	)		(1.8	)

		64.7			56.8

Deferred tax liabilities
Property, plant and equipment		(13.0	)		(17.8	)
Unrealized gain on derivatives		(0.2	)		—
Pensions		(3.4	)		(5.2	)
Other		(2.9	)		(3.7	)

		(19.5	)		(26.7	)

Net deferred income tax assets	$	45.2		$	30.1

As of September 30, 2005, the Company had $0.8 million of state net operating loss carryforwards, due to expire in 2016 and 2021 through 2023, for which there is currently a full valuation allowance. The decrease in valuation allowance from the prior year is due to the utilization of state net operating loss carryforwards related to Anvil International, Inc.

Undistributed earnings of the Company's foreign subsidiary amounted to approximately $80.2 million and $64.0 million at September 30, 2005 and 2004, respectively. The American Jobs Creation Act ("AJCA") which was enacted on October 22, 2004 created a temporary incentive for US multinationals to repatriate accumulated earnings outside the United States by providing an 85 percent dividends received deduction for certain dividends from controlled foreign corporations. The Company may elect to apply this provision to qualifying earnings repatriations in either fiscal 2005 or in fiscal 2006. As of September 30, 2005, and prior to the acquisition on October 3, 2005, the Company has not provided deferred taxes on foreign earnings because any taxes on dividends would be substantially offset by foreign tax credits or because the Company intends to reinvest those earnings indefinitely. Due to the complexity of the repatriation provision, the Company is still evaluating the effects of this provision on its plan for repatriation of foreign earnings.

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Note 6. Borrowing Arrangements

Long-Term Debt—Long-term debt consists of the following obligations:

	September 30,
	2005			2004
	(dollars in millions)
Senior credit facility term loans	$	512.8		$	515.0
Second priority senior secured floating rate notes		100.0			100.0
10% senior subordinated notes		315.0			315.0
14³/4 senior discount notes(1)		125.7			106.8
Capital lease obligations		2.2			2.6

		1,055.7			1,039.4
Less current portion		(3.8	)		(3.2	)

	$	1,051.9		$	1,036.2

(1): The accreted value of the notes was reduced by $9.0 million (net of $1.5 million of amortization) and $10.1 (net of $0.4 million of amortization) at September 30, 2005 and September 30, 2004, respectively, to reflect the fair market value assigned to the warrants sold as units with the notes. The fair market value assigned to the warrants was credited to additional paid-in capital. A schedule of debt maturities as of September 30, 2005 is as follows:

	Less than 1 year		1-3 years		4-5 years		After 5 years		Total
	(dollars in millions)
Senior credit facility term loans	$	2.9	$	5.8	$	5.8	$	498.3	$	512.8
Second Priority Senior Secured Notes		—		—		—		100.0		100.0
10% Senior Subordinated Notes		—		—		—		315.0		315.0
14³/4% Senior Discount Notes		—		—		—		125.7		125.7
Capital lease obligations		0.9		1.2		0.1		—		2.2

Total debt maturities	$	3.8	$	7.0	$	5.9	$	1,039.0	$	1,055.7

Recapitalization: On April 23, 2004, Group sold its Second Priority Senior Secured Floating Rate Notes due 2011 and 10% Senior Subordinated Notes due 2012 (collectively referred to as the "Prior Notes") generating net proceeds of approximately $402.3 million. Concurrently with those offerings, Group amended and restated its credit facility and borrowed $545.0 million of new term loans thereunder ("2004 Mueller Credit Facility"). Mueller Group used the net proceeds from those offerings and the credit facility borrowings to repay all existing loans under its old credit facility together with accrued interest and a 1.0% prepayment premium thereon and paid a dividend to the Company, which was used to (1) redeem our preferred stock (liquidation value $105.5 million at April 23, 2004) together with a 1.0% premium (approximately $1.0 million), (2) pay a dividend to common stockholders of approximately $1.43 per share, or approximately $293.4 million in the aggregate and (3) make a payment to employee optionholders of the excess of the per share dividend to common stockholders over the exercise price of their options, or approximately $5.4 million in the aggregate. Mueller Group retained approximately $10.0 million as cash to be used for general corporate purposes.

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On April 29, 2004, the Company issued 14³/4% senior discount notes, with detachable warrants to purchase our common stock. The proceeds of the offering were approximately $106.0 million, after deduction of the initial purchasers' discounts and commissions and other expenses of the offering. We used the proceeds to (1) pay an additional dividend to common stockholders of approximately $0.48 per share, or approximately $99.8 million in the aggregate, (2) make a payment to employee optionholders who held options with an exercise price of $1.00 or $1.19 per share of $0.48 per share, and (3) a payment to employee optionholders who held options with an exercise price of $1.50 per share of $0.41 per share, or approximately $7.1 million in the aggregate.

In connection with the Recapitalization, the Company modified certain stock awards to accelerate vesting, allowed net cash settlement of options and issued shares to option holders with a fair value of $0.43 per share upon completion of the Recapitalization. These actions changed the accounting treatment of these stock awards from fixed to variable accounting. As a result, the Company recognized stock compensation expense of $18.9 million in the third quarter of 2004.

2004 Mueller Credit Facility: Group entered into the 2004 Mueller Credit Facility, which includes a $545 million amortizing senior credit facility term loan ($32.2 million of which has already been repaid) maturing seven years after closing and an $80.0 million revolving credit facility that will terminate five years after closing. The revolving credit facility and/or the term loan facility are subject to a potential, although uncommitted, increase of up to an aggregate of $50.0 million at Group's request at any time prior to maturity. In addition, although uncommitted, a foreign currency sub-facility may be made available to one or more of Group's restricted foreign subsidiaries in an aggregate principal amount of up to the U.S. dollar equivalent of $30.0 million. This increase and the additional foreign currency sub-facility will only be available if one or more financial institutions agree to provide them. Group had no borrowings under the revolving credit facility at September 30, 2005.

Borrowings under the 2004 Mueller Credit Facility bore interest based on a margin over, at Group's option, the base rate or LIBOR. The applicable margin was 2.75% over LIBOR and 1.50% over the base rate for term loans. The applicable margin under the revolving senior credit facility was a range of 2.25% to 3.25% over LIBOR and a range of 1.00% to 2.00% over the base rate, depending on Group's ratio of consolidated debt to EBITDA as defined in the senior credit facility. At September 30, 2005 the applicable margin on the revolving senior credit facility was 2.75% over LIBOR and 1.50% over the base rate. Group's obligations under the senior credit facility are guaranteed by Water and all of Group's existing or future domestic restricted subsidiaries and is secured by substantially all of the assets of Group and its subsidiary guarantors, including a pledge of the capital stock of all Group's existing and future domestic subsidiaries, a pledge of no more than 65.0% of the voting stock of any of Group's foreign subsidiaries, a pledge of all intercompany indebtedness in favor of Group and its domestic restricted subsidiaries, and a pledge of Group's capital stock by Water. The 2004 Mueller Credit Facility contained customary covenants, including covenants that limit Group's ability to incur debt and liens, pay dividends and make investments and capital expenditures, and events of default. Mueller Group was permitted to make payments of up to $2.0 million in any fiscal year to Mueller Water Products to pay overhead expenses of Mueller Water Products. This agreement was terminated on October 3, 2005 as part of the acquisition.

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secured term loan maturing in October 2012 (the "2005 Mueller Term Loan"). The 2005 Mueller Credit Agreement is a secured obligation of Group and substantially all of its wholly-owned domestic subsidiaries, including U.S. Pipe. The 2005 Mueller Term Loan requires quarterly principal payments of $2.6 million through October 3, 2012, at which point in time the remaining principal outstanding is due. The commitment fee on the unused portion of the 2005 Mueller Revolving Credit Facility is 0.50% and the interest rate is a floating rate 2.5% over LIBOR. The 2005 Mueller Term Loan carries a floating interest rate of 2.25% over LIBOR.

Proceeds of the 2005 Mueller Credit Agreement were approximately $1,053.4 million, net of approximately $21.6 million of underwriting fees and expenses which will be amortized over the life of the loans. The proceeds were used to refinance the prior Group credit facility and finance the acquisition of the Company by Walter. Subsequent to September 30, 2005 and prior to the acquisition by Walter on October 3, 2005, Group wrote off $18.4 million of deferred financing fees related to the 2004 Mueller Credit Facility.

The 2005 Mueller Credit Agreement contains customary events of default and covenants, including covenants that restrict the ability of Group and certain of its subsidiaries to incur certain additional indebtedness, create or permit liens on assets, engage in mergers or consolidations, and certain restrictive financial covenants. So long as no default has occurred, Mueller Group is permitted to make cash dividends to Mueller Water Products of up to $7.5 million in any fiscal year, or $15 million in aggregate over the life of the Credit Agreement and to distribute funds to make regularly scheduled payments when due of interest and principal on Mueller Water Products' notes. If an event of default under the agreement shall occur and be continuing, the commitments under the related credit agreement may be terminated and the principal amount, together with all accrued unpaid interest and other amounts owed thereunder, may be declared immediately due and payable.

Second Priority Senior Secured Floating Rate Notes: Group issued $100 million of such notes with interest payable at a rate equal to the three-month reserve-adjusted LIBOR, which is reset quarterly, plus 4.75%. The interest rate for the interest period beginning August 1, 2005 is 8.44% per annum. The secured notes mature in 2011 and are guaranteed by each of the existing domestic restricted subsidiaries and secured by second-priority liens on the assets securing the senior credit facility (other than certain subsidiary stock and assets of Water). The secured notes contain customary covenants and events of default, including covenants that limit Group's ability to incur debt, pay dividends and make investments and also include a maintenance covenant limiting Group's senior total leverage as a multiple of EBITDA, as defined in the indenture.

On October 3, 2005, Group delivered a notice of redemption with respect to all of the secured notes, providing for the redemption of all such secured notes on November 2, 2005. In addition, Group delivered to the trustee for the secured notes, $104.1 million in trust equal to the principal, premium and interest accruing to the redemption date. Subsequent to September 30, 2005 and prior to the acquisition by Walter on October 3, 2005, Group wrote off $2.4 million of deferred financing fees related to the secured notes. As a result of Group having called the secured notes for redemption and having made the payment into trust, as well as having satisfied certain other procedural requirements, Group satisfied and discharged its obligations with respect to the secured notes and the related indenture.

F-79

10% Senior Subordinated Notes: Interest on the subordinated notes is payable at an annual rate of 10%. The subordinated notes mature in 2012 and are guaranteed by each of Group's existing domestic restricted subsidiaries. The subordinated notes contain customary covenants and events of default, including covenants that limit Group's ability to incur debt, pay dividends and make investments. Mueller Group is permitted to make dividends or loans to Mueller Water Products of up to $2 million in any fiscal year for costs and expenses incurred by Mueller Water Products in its capacity as a holding company for services rendered on behalf of Mueller Group. Generally, the notes only permit Mueller Group to pay dividends if there is no default or event of default and its fixed charge coverage ratio (as defined) is at least 2.5 to 1, and the maximum amount that may be paid cannot exceed 50% of our cumulative net income (as defined) since January 1, 2004, subject to specified exceptions.

On October 4, 2005, Group notified the holders of the subordinated notes that a change in control had occurred as a result of the Walter Industries acquisition and that, as a result, the holders had a right to cause Group to repurchase their subordinated notes on or before 5:00 p.m., New York City time, on November 4, 2005 at a price of 101% of the principal face amount of such notes. The change of control offer expired at 5:00 p.m. New York City time, on November 6, 2005, with no subordinated notes being validly tendered and not withdrawn and, accordingly, no subordinated notes were purchased pursuant to the change of control offer.

14³/4% Senior Discount Notes: On April 29, 2004, the Company issued 223,000 units, each consisting of $1,000 principal amount at maturity of 14³/4% Senior Discount Notes due 2014 and one warrant to purchase 109.80889 shares of Class A common stock of the Company at $0.01 per share. The notes are senior unsecured obligations and are effectively subordinated to all of its existing and future secured debt and to all indebtedness and other liabilities of its subsidiaries, including Group.

On October 3, 2005, in connection with the acquisition of the Company by Walter, the outstanding warrants were converted into the right to receive cash upon exercise of the warrants. These warrants were classified as permanent equity in prior periods as the contracts required settlement in shares, absent a change in control event, in which case the warrant automatically become exercisable for the kind and amount of consideration provided to shareholders. All funds required for settlement of warrants are funded by amounts held in cash in connection with the acquisition by Walter.

On October 4, 2005, the Company notified the holders of the senior discount notes that a change in control had occurred as a result of the Walter Industries acquisition and that, as a result, the holders had a right to cause the Company to repurchase their senior discount notes on or before 5:00 p.m., New York City time, on November 4, 2005 at a price of 101% of the accreted value of the notes at the time of change in control. The change of control offer expired at 5:00 p.m., New York City time, on November 6, 2005, with no senior discount notes being validly tendered and not withdrawn and, accordingly, no senior discount notes were purchased pursuant to the change of control offer.

Capital Leases—The Company leases automobiles under capital lease arrangements that expire over the next four years.

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Future minimum lease payments under scheduled capital leases that have initial or remaining non-cancelable terms in excess of one year are as follows:

		(dollars in millions)
Fiscal 2006		$	1.1
Fiscal 2007			0.9
Fiscal 2008			0.5
Fiscal 2009			0.1

	Total minimum lease payments		2.6
Amount representing interest			(0.4	)

Obligations under capital leases			2.2
Obligations due within one year			(0.9	)

Long term obligations		$	1.3

Interest Rate Swaps—Group has entered into interest rate swap agreements in order to reduce interest rate risks and manage interest expense. As of September 30, 2005, a notional principal amount of $100 million in swap agreements is still outstanding and scheduled to mature between April 2007 and May 2007. At September 30, 2005, the fair value of interest rate swaps was an asset of $0.5 million. At September 30, 2004 and 2003, the fair value of interest rate swaps was a liability of $4.7 million, and $17.2 million, respectively. The swap agreements effectively convert floating-rate debt into fixed-rate debt and carry an average fixed interest rate of 4.09% at September 30, 2005. Interest differentials to be paid or received because of swap agreements are reflected as an adjustment to interest expense over the related debt period. For the fiscal years ended September 30, 2005, 2004 and 2003 Group recorded gains on interest rate swaps of $5.2 million, $12.5 million, and $13.3 million, respectively. While Group is exposed to credit loss on its interest rate swaps in the event of non-performance by the counterparties to such swaps, management believes such nonperformance is unlikely to occur given the financial resources of the counterparties.

On October 27, 2005, Group entered into six interest rate hedge transactions with a cumulative notional value of $350 million. These hedges are described in Note 8 and principally comply with covenants contained in the 2005 Mueller Credit Agreement.

Distributions to Water—Water has no material assets other than its ownership of Group's capital stock and accordingly depends upon distributions from Group to satisfy its cash needs. The Company's principal cash needs will be debt service on its Senior Discount Notes due 2014. These notes do not require cash interest payments until 2009 and contain restrictive covenants that will, among other things, limit the ability of the Company and its subsidiaries (including Group) to incur debt, pay dividends and make investments. Neither Group nor any of its subsidiaries guarantee these notes. The Company, however, is a holding company and its ability to pay interest on the notes will be dependent upon the receipt of dividends from its subsidiaries. Group is Water's only direct subsidiary. However, the terms of Group's borrowing arrangements significantly restrict its ability to pay dividends to Water.

Fair Value of Debt—Based on the level of interest rates prevailing at September 30, 2005, the fair value of the Company's fixed-rate debt exceeded its carrying value by approximately $54.9 million.

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Unrealized gains or losses on debt do not result in the realization or expenditure of cash and generally are not recognized for financial reporting purposes unless the debt is retired prior to its maturity.

Note 7. Redeemable Preferred and Common Stock

Redeemable Preferred Stock.—In connection with its formation in 1999, the Company issued two million shares of 16% Senior Exchangeable Preferred Stock, due August 15, 2010, par value $0.01 per share ("preferred stock"). The preferred stock provided for dividends at a rate of 16% per annum, which dividends would accrue or be payable in cash, at the Company's option until August 2006. The liquidation value was $25 per share plus the dividend accretion since issuance.

The accretion of dividends of $9.9 million for the fiscal year ended September 30, 2004 was accounted for as a non-cash charge to additional paid-in capital and reduced the net income available to common shareholders. As described in Note 6, the preferred stock was redeemed by the Company on April 23, 2004.

Redeemable Common Stock—Group has entered into an employment agreement with Dale Smith, Group's President and Chief Executive Officer, which, in certain circumstances, gives Mr. Smith the right to sell to the Company, at a price equal to the fair market value of his equity interests as of the date of such sale or purchase, his shares of the Company's common stock. The Company had classified an amount representing the initial fair value of the redeemable shares of its common stock owned by Mr. Smith outside of permanent equity. At September 30, 2005 and September 30, 2004, Mr. Smith owned approximately 9.2 million Class A common shares, respectively.

On October 3, 2005, Walter Industries acquired 100% of the outstanding common stock of the Company, including all of the common shares held by Mr. Smith.

Note 8. Derivative Instruments

All derivative financial instruments are recorded on the consolidated balance sheets at their fair value as either assets or liabilities. Changes in the fair value of derivatives are recorded each period in earnings or Accumulated Other Comprehensive Income (Loss), depending on whether or not a derivative is designated and effective as part of a hedge transaction and, if it is, the type of hedge transaction. Any gains and losses on derivative instruments that are reported in Accumulated Other Comprehensive Income (Loss) are included in earnings in the periods in which earnings are affected by the hedged item. All gains or losses associated with interest rate swaps have been included in earnings and not Accumulated Other Comprehensive Income (Loss).

For a derivative to qualify as a hedge at inception and throughout the hedge period, the Company must formally document the nature and relationships between the hedging instruments and hedged items, as well as its risk-management objectives, strategies for undertaking the various hedge transactions and method of assessing hedge effectiveness. Any financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period.

Interest Rate Swaps—At September 30, 2005, the fair value of interest rate swaps was an asset of $0.5 million. At September 30, 2004 and 2003, the fair value of interest rate swaps was a liability of $4.7 million, and $17.2 million, respectively.

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On October 27, 2005, Group entered into six interest rate hedge transactions with a cumulative notional value of $350 million. The swap terms are between one and seven years with five separate counter-parties. The objective of the hedges is to protect the Company against rising LIBOR interest rates that would have a negative effect on the Company's cash flows due to changes in interest payments on its 2005 Mueller Term Loan. The structure of the hedges are a one-year 4.617% LIBOR swap of $25 million, a three-year 4.740% LIBOR swap of $50 million, a four-year 4.800% LIBOR swap of $50 million, a five-year 4.814% LIBOR swap of $100 million, a six-year 4.915% LIBOR swap of $50 million, and a seven year 4.960% LIBOR swap of $75 million. The swap agreements call for the Company to make fixed rate payments over the term at each swap's stated fixed rate and to receive payments based on three month LIBOR from the counter-parties. These swaps will be settled upon maturity and will be accounted for as cash flow hedges. As such, changes in the fair value of these swaps that take place through the date of maturity will be recorded in accumulated other comprehensive income. These hedges principally comply with covenants contained in the 2005 Mueller Credit Agreement.

Note 9. Commitments and Contingencies

The Company occupies certain facilities under leases that expire at various dates through the year 2013. Rental expense under these leases and leases for equipment was $9.1 million, $9.3 million and $9.3 million for the fiscal years ended September 30, 2005, 2004, and 2003, respectively. At September 30, 2005, the aggregate minimum lease payment obligations of $22.6 million under noncancelable operating leases were as follows:

Fiscal year	(dollars in millions)
2006	$	7.8
2007		5.8
2008		3.9
2009		1.4
2010		1.1
Thereafter		2.6

	$	22.6

The Company is subject to retention on certain contracts, with the retention portion of the amount receivable paid upon project completion.

The Company has contractual obligations for purchases of raw materials, purchased components and capital expenditures totaling $12.6 million, of which $12.1 million is expected to be paid in the next twelve months.

In the normal course of business, the Company incurs claims with respect to product liability. Such claims are insured up to certain limits, with such policies containing certain self-insured retention limits. Product liability claims for products manufactured or sold by the Mueller business prior to the August 1999 Tyco Transaction, and environmental claims relating to property owned by the Mueller business in August 1999 and before, arising out of events occurring prior to that date, are subject to indemnification by Tyco, based on the provisions of the August 1999 Tyco Transaction.

F-83

Certain of the products sold contain lead. Environmental advocacy groups, relying on standards established by California's Proposition 65, are seeking to eliminate or reduce the content of lead in some Company products offered for sale in California. In certain cases, the Company has entered into settlement agreements with these environmental advocacy groups to modify our products or offer substitutes. Further, similar issues may be raised by other advocacy groups in other jurisdictions under legislation similar to Proposition 65.

Over the next two to three years, the Company expects to incur between $2.0 million and $6.0 million of capital costs at its steel and iron foundries to comply with the United States Environmental Protection Agency's National Emissions Standards for Hazardous Air Pollutants which were issued April 22, 2004. The Company is in the process of performing an analysis to assess the impact of these standards on the financial results of the Company.

The Company's subsidiary, James Jones Company, and Tyco, its former parent company, are defendants in a false claims lawsuit in which a former James Jones Company employee is suing on behalf of cities, water districts and municipalities. The employee alleges that the defendants sold allegedly non-conforming public water system parts to various government entities. The lawsuit seeks consequential damages, penalties and punitive damages. The Company's subsidiary, Mueller Co., which had also been named as a defendant, brought a summary judgment motion and was dismissed from this litigation in January 2004. Any liability associated with the lawsuit is covered by an indemnification from Tyco.

On March 31, 2004, the Company's subsidiary, Anvil International, entered into a consent order with the Georgia Department of Natural Resources regarding various alleged hazardous waste violations at the Statesboro, Georgia site formerly operated by Anvil. Pursuant to the consent order, Anvil has agreed to pay a settlement amount of $100,000, comprised of a $50,000 monetary fine and $50,000 towards a supplemental environmental project. Anvil has also agreed to perform various investigatory and remedial actions at the site and its landfill. While the ultimate investigatory and remedial costs are currently unknown, based on currently available information the total costs are estimated to be approximately $1.3 million. The Company has spent $0.3 million and has accrued $1.0 million as of September 30, 2005.

In November 2005, the Company reached an agreement in principle to settle the previously reported dispute concerning the amount of Anvil's withdrawal liability in respect of the Teamsters Local 11 Pension Fund and the 2003 closure of the Anvil facility in Kearny, New Jersey. An accrual for the settlement was recognized as of September 30, 2005 and is reflected in the financial statements for the year then ended.

As part of the Star acquisition (see Note 4), Anvil has agreed to a future payment to be made to the seller to the extent that the gross profit of the acquired business exceeds a targeted gross profit. The maximum potential payment amount is $23 million. Management currently estimates the payment could total approximately $3 to $6 million for the payment period that began February 1, 2004 and ends January 31, 2007. The payment amount indicated above is based on management's best estimate, but the actual adjustment could be materially different. The liability for such payment will be recorded at the end of each payment period, in accordance with the purchase agreement. No payment was earned for the years ended September 30, 2005 or September 30, 2004.

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The Company has entered into employment agreements with Dale Smith, Thomas Fish and Doyce Gaskin. In addition, benefit plans have been adopted that provide for severance and other payments when certain events occur, such as a change in control. These employment agreements and plans require payments under the circumstances set forth therein.

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 significantly affect the Company's financial position and result of operations.

Note 10. Retirement Plans

Defined Benefit Pension Plans—The Company has a number of non-contributory and contributory defined benefit retirement plans covering certain United States and non-United States employees of the Company and its subsidiaries. Contributions are based on the projected unit credit method of calculation and are charged to the statements of operations on a systematic basis over the expected average remaining service lives of current employees. The Company's funding policy is to make annual contributions to the extent such contributions are tax deductible as actuarially determined. The benefits under the defined benefit plans are based on years of service and compensation.

The following table presents the changes in the projected benefit obligations:

		Fiscal year ended September 30,
		2005			2004
		(dollars in millions)
Benefit obligation at beginning of the period		$	110.1		$	104.6
	Service cost		3.3			2.1
	Interest cost		6.1			6.1
	Actuarial losses		9.0			2.3
	Benefits paid		(6.6	)		(6.1	)
	Plan amendments		0.3			0.4
	Employee contributions		0.2			0.1
	Currency translation adjustment		1.0			0.6

Net increase for the period			13.3			5.5

Projected benefit obligation, end of the period		$	123.4		$	110.1

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The following table presents the changes in fair value of plan assets:

	Fiscal year ended September 30,
	2005			2004
	(dollars in millions)
Fair value of plan assets at beginning of period	$	79.2		$	71.6
Actual return on plan assets		8.9			5.5
Employer contributions		0.5			7.3
Benefits paid		(6.6	)		(6.1	)
Employee contributions		0.2			0.1
Currency translation adjustment		1.1			0.8

Net increase for the period		4.1			7.6

Fair value of plan assets at the end of the period	$	83.3		$	79.2

Information for the pension plans with an accumulated benefit obligation in excess of plan assets:

	September 30,
	2005		2004
	(dollars in millions)
Projected benefit obligation	$	114.0	$	102.6
Accumulated benefit obligation	$	114.0	$	102.6
Fair value of plan assets	$	72.0	$	69.3

The following is a reconciliation of the funded status of the plans:

	Fiscal year ended September 30,
	2005			2004
	(dollars in millions)
Funded status	$	(40.1	)	$	(30.9	)
Unrecognized prior service cost		1.4			1.2
Unrecognized net actuarial loss		47.9			44.4

Net amount recognized	$	9.2		$	14.7

Amounts recognized in the Consolidated Balance Sheets consist of:

	Fiscal year ended September 30,
	2005			2004
	(dollars in millions)
Accrued pension liability (net of prepaid pension asset of $4.2 million and $4.1 million at September 30, 2005 and 2004, respectively)	$	(37.7	)	$	(29.2	)
Pension intangible		1.0			0.8
Additional minimum pension liability (pretax)		45.9			43.1

Net amount recognized	$	9.2		$	14.7

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The following table presents the components of net periodic benefit cost:

	Fiscal year ended September 30,
	2005			2004			2003
	(dollars in millions)
Service cost	$	3.3		$	2.1		$	2.0
Interest cost		6.1			6.1			6.1
Expected return on plan assets		(5.9	)		(5.3	)		(4.6	)
Amortization of prior service cost		0.1			0.1			0.1
Other		0.1			0.1			—
Amortization of net actuarial loss		2.7			2.7			2.5

Net periodic benefit cost	$	6.4		$	5.8		$	6.1

	At September 30,
	2005		2004
	(dollars in millions)
Other comprehensive income attributable to the change in additional minimum liability recognition (pre-tax)	$	2.8	$	(1.0	)

	At September 30,
	2005		2004
Weighted-Average Assumptions used to determine projected benefit obligations as of end of fiscal year
Discount rate:	5.2	%	5.8	%
Rate of compensation increase:	3.5	%	3.5	%

	Fiscal Year ended September 30,
	2005		2004		2003
Weighted-Average Assumptions used to determine net periodic benefit cost
Discount rate:	5.8	%	6.0	%	6.0	%
Rate of compensation increase:	3.5	%	3.5	%	5.0	%
Expected long-term return on plan assets:	7.9	%	7.9	%	7.9	%

The discount rate is based on published rates for high-quality fixed-income investments that produce cash flows that approximate the timing and amount of expected future benefit payments. To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target allocation of the pension portfolio, over a 20-year time horizon based on the facts and circumstances that exist as of the measurement date. The Company also reflected historical and expected future returns associated with its active management of certain asset classes in recognition of the potential to outperform the broader market.

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The company's pension plans' weighted-average asset allocations at September 30, 2005, and 2004, by asset category, are as follows:

	At September 30,
	2005		2004
Equity Securities	65.0	%	62.4	%
Debt Securities	33.3	%	36.7	%
Other	1.7	%	0.9	%

Total	100.0	%	100.0	%

The target asset allocations for the plans are 45% for large cap domestic equities (range of 35%-50%), 5% for small cap domestic equities (range of 0% to 10%), 10% for international equities (range of 5% to 15%), and 40% for domestic fixed income (range of 35% to 45%). The assets of the company's plans are well diversified and managed with the goal of maximizing the plans' real return within an acceptable level of risk. The asset allocation is designed to minimize the plans' volatility of returns through the use of a 40% allocation to fixed income securities. To offset the lower overall expected returns from fixed income securities; the target equity component is weighted at 60% and includes both small cap and international equities. The small cap equity allocation has a higher overall expected return than large cap equities. International equities are considered a diversifier for the plans, as the current expected return of international equities is not significantly different than for domestic equities.

The Company reviews asset allocation each quarter to determine if the asset class allocations for each asset class fall within the approximate target ranges. If assets fall outside the ranges, rebalancing is accomplished through cash flows and/or transfer of assets between asset classes.

The Company is required to contribute $0.5 million to its pension plans in 2006, and it may make further discretionary payments.

The following benefit payments, which reflect expected future service, are expected to be paid:

Fiscal Year	(dollars in millions)
2006	$	6.5
2007	$	6.6
2008	$	6.7
2009	$	6.8
2010	$	6.9
2011 to 2015	$	35.9

Of the total plan obligations at September 30, 2005, 2004 and 2003, 91% relate to United States plans, and 9% relate to non-United States plans.

Defined Contribution Retirement Plan—Certain United States employees of the Company and its subsidiaries participate in a defined contribution 401(k) matching plan. Pension expense for the defined contribution plan is computed as a percentage of participants' compensation and was $5.6 million, $5.4 million and $5.9 million for the fiscal years ended September 30, 2005, 2004 and 2003, respectively.

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Note 11. Supplementary Balance Sheet Information

Selected supplementary balance sheet information is presented below:

	September 30,
	2005			2004
	(dollars in millions)
Inventories
Purchased materials and manufactured parts	$	33.5		$	41.1
Work in process		90.6			67.3
Finished goods		178.9			151.8

	$	303.0		$	260.2

Property, plant and equipment
Land	$	9.2		$	9.6
Buildings		63.0			58.6
Machinery and equipment		300.0			286.6
Other		14.9			15.4
Accumulated depreciation		(219.1	)		(183.4	)

	$	168.0		$	186.8

Accrued expenses and other liabilities
Vacations and holidays	$	9.7		$	9.1
Workers compensation		8.8			8.5
Accrued interest		15.2			16.6
Accrued payroll and bonus		20.0			14.7
Accrued sales commissions		3.8			4.0
Accrued cash discounts and rebates		15.8			14.4
Accrued federal and state income taxes		4.7			0.5
Accrued other taxes		4.1			4.6
Accrued medical claims		4.0			3.6
Other		17.2			9.9

	$	103.3		$	85.9

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Note 12. Supplementary Income Statement Information

Selected supplementary income statement information is presented below.

	Fiscal year ended September 30,
	2005			2004			2003
	(dollars in millions)
Included in selling, general and administrative:
Research and development	$	4.8		$	4.4		$	4.7

Advertising	$	2.1		$	2.3		$	1.6

Interest expense, net of interest income:
Contractual interest expense	$	91.2		$	59.0		$	47.0
Deferred financing fee amortization		5.2			3.6			2.7
Senior subordinated debt early redemption penalty		—			7.0			—
Write off of deferred financing fees		—			7.0			—
Interest rate swap gains		(5.2	)		(12.5	)		(13.3	)

Interest expense		91.2			64.1			36.4
Interest income		(1.7	)		(0.6	)		(0.9	)

Total interest expense, net of interest income	$	89.5		$	63.5		$	35.5

A reconciliation of net income available to common shareholders is as follows:

	Fiscal year ended September 30,
	2005		2004			2003
	(dollars in millions)
Net income	$	49.6	$	33.2		$	32.8
Less preferred share accretion		—		(9.9	)		(14.2	)

Net income available to common shareholders	$	49.6	$	23.3		$	18.6

Note 13. Stock Plans

Effective August 31, 2000, the Company implemented a Management Incentive Plan and a Direct Investment Program. These stock plans were created with the purpose of attracting, retaining and motivating key employees of the Company and its subsidiaries. In conjunction with the acquisition of the Company by Walter Industries on October 3, 2005, these plans have been terminated. Company employees will be eligible to participate in the various Walter programs.

Direct Investment Program—Under the Direct Investment Program, certain employees were allowed to purchase a specific number of shares of class A common stock of the Company at a price equal to fair value at the time of the purchase. Under the plan, the Company loaned the employee up to 50% of the total purchase price on a non-recourse basis and all shares purchased were pledged as collateral. The Company was authorized to grant 10 million shares under the plan and issued approximately 9.5 million shares at a purchase price of $1.00 per share as of September 30, 2000 and an additional 0.5 million shares at a purchase price of $1.50 per share as of September 30, 2003. The Company

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recorded non-cash compensation expense of $2.3 million for the fiscal year ended September 30, 2004, related to the loan portion of the shares purchased pursuant to the Direct Investment Program.

During fiscal 2003, the Company's Chief Executive Officer purchased 476,244 shares of class A common stock at $1.50 per share under the Direct Investment Program for approximately $0.7 million.

In connection with the recapitalization completed in April 2004, all outstanding employee loans were repaid in full by the employees. The Company recorded a non-cash compensation charge of approximately $2.3 million related to the loan portion of the shares purchased pursuant to the Direct Investment Program. There were no remaining shares available for purchase as of September 30, 2005.

Management Incentive Plan—Under the Management Incentive Plan, the Company was authorized to grant stock options to key individuals of the Company and its subsidiaries to acquire 15 million shares of class A common stock. The options were to be granted at purchase prices equal to the fair value of the common shares on the dates of grant. According to the terms of the Plan, the options would become fully vested and exercisable on the eighth anniversary of the date of grant, provided that the individual was in the employment of the Company at all times during the vesting period, and would expire after ten years.

As all options granted had an exercise price equal to the fair value at the date of grant, no compensation expense was required to be recognized prior to the recapitalization discussed in Note 6.

In connection with the recapitalization, the Company modified these stock option awards to accelerate vesting, allowed for net cash settlement of options and issued shares to optionholders with a fair value of $0.43 per share upon completion of a recapitalization. The Company made a payment to its employee optionholders of the excess of the per share dividend to its common stockholders over the exercise price of their options, or approximately $12.6 million in the aggregate, and the shares were issued and the options were cancelled. The option buyout resulted in an additional charge of approximately $18.9 million ($12.6 million cash charge and $6.3 million non-cash charge) upon completion of the recapitalization in the quarter ended June 26, 2004.

Information with respect to stock option activity under the Company's plan is as follows:

		Number of Common Shares		Option Price Per Share	Weighted Average Exercise Price
Options outstanding at September 30, 2002		13,231,975		$1.00 to $1.19	$	1.01

	Granted	1,700,000		1.50		1.50
	Cancelled	(203,550	)	1.00		1.00

Options outstanding at September 30, 2003		14,728,425		$1.00 to $1.50	$	1.06

	Granted	—
	Options cancelled upon recapitalization and issuance of Class A common shares	(14,728,425	)

Options outstanding at September 30, 2004		—

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In addition, the Company granted options to certain members of the Board of Directors under this plan. There were 166,250 options granted to members of the Board of Directors outstanding as of September 30, 2003.

There were no options granted or outstanding on September 30, 2005.

Note 14. Facility Rationalization, Restructuring and Related Costs

2005—During fiscal 2005, the Company recorded accrued costs of $1.7 million, related primarily to severance payments and to the termination of operating leases for the building and machinery at a Mueller plant in Colorado that ceased manufacturing operations. As of September 30, 2005, all employees have been severed and $0.3 million of lease termination accrual is remaining to be settled.

2004—During fiscal 2004, the Company recorded $0.9 million, related to asset impairments, environmental issues at a closed facility in Statesboro, Georgia (see Note 9) and lease expense at a closed and vacated facility.

2003—During fiscal 2003, the Company continued its efforts to reduce operating costs. The Company incurred $0.3 million of costs related to relocation of manufacturing production to another facility. Additionally, after reviewing its facility utilization and associated assets, the Company recorded a charge of $1.4 million related to asset impairments.

Note 15. Related Parties

As of September 30, 2005, substantially all of the outstanding shares of the Company's common stock were held by the Donaldson, Lufkin & Jenrette ("DLJ") Merchant Banking funds. As a result of their stock ownership, the DLJ Merchant Banking funds controlled the Company and had the power to elect all of the Company's directors, appoint new management and approve any action requiring the approval of the holders of common stock, including adopting amendments to the Company's certificate of incorporation and approving acquisitions or sales of all or substantially all of the Company's assets. The directors elected by the DLJ Merchant Banking funds had the ability to control decisions affecting the Company's capital structure, including the issuance of additional capital stock, the implementation of stock repurchase programs and the declaration of dividends.

DLJ Merchant Banking II, Inc. was paid an annual advisory fee of $500,000 in connection with a financial advisory agreement. This agreement terminated on October 3, 2005 in conjunction with the purchase of the Company by Walter. Additionally, at September 30, 2004, the Company had a $1.0 million payable to DLJ Merchant Banking II as a one-time advisory fee permitted upon the amendment of the senior credit facility.

Credit Suisse First Boston LLC, an affiliate of the DLJ Merchant Banking funds, had received customary fees and reimbursement of expenses in connection with the arrangement and syndication of the senior credit facility and as a lender and agent thereunder. Credit Suisse First Boston LLC was also one of the initial purchasers of the Company's 14³/4% Senior Discount Notes in the April 2004 recapitalization. The aggregate amount of all fees payable to entities affiliated with Credit Suisse First Boston LLC in connection with these advisory services and financing arrangements (including those fees mentioned above) was approximately $0.9 million, $27.2 million and $0.5 million in 2003, 2004 and

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2005. This relationship terminated on October 3, 2005, in connection with the purchase of the Company by Walter.

Note 16. Common Stock Warrants and Restrictions

Together with the issuance in April 2004 of the 14³/4% Senior Discount Notes due 2014, the Company issued 223,000 warrants to purchase 24,487,383 shares of Class common stock at $0.01 per share. Upon the exercise of the warrants, the Company will receive $0.2 million in cash.

Note 17. Segment Information

As of September 30, 2005, the Company's operations consisted of two operating segments: Mueller and Anvil. These segments are organized around differences in products and are consistent with how the operating entities are managed, how resources are allocated, and how information is used by the chief operating decision maker. The Mueller segment is a manufacturer of valves, fire hydrants and other related products utilized in the distribution of water and gas and in water and wastewater treatment facilities. The Anvil segment is a manufacturer of cast iron and malleable iron pipe fittings, ductile iron couplings and fittings, pipe hangers and other related products for the plumbing, heating, mechanical, construction retail hardware and other related industries. Both segments have operations in the United States and Canada.

Intersegment sales and transfers are made at established intersegment selling prices generally intended to cover costs. Our determination of segment earnings does not reflect allocations of certain corporate expenses not directly attributable to segment operations and intersegment eliminations, which we designate as Corporate in the segment presentation, and is before interest expense, net, and income taxes. Corporate expenses include costs related to financial and administrative matters, treasury, risk management, human resources, legal counsel, and tax functions. Corporate assets include items recorded at the date of the Company's inception in 1999 related to purchase accounting valuation adjustments associated with property, plant and equipment and non-compete agreements with the predecessor parent company, as well as intangibles associated with intellectual property. These assets and any related depreciation or amortization expense have not been pushed down to our segments and are maintained as Corporate items. Therefore, segment earnings are not reflective of results on a stand-alone basis.

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Segment assets consist primarily of accounts receivable, inventories, property, plant and equipment, net, goodwill, and identifiable intangibles, net. Summarized financial information for our segments follows:

		Fiscal year ended September 30,
		2005			2004			2003
		(dollars in millions)
Net sales:
	Mueller	$	663.9		$	618.2		$	536.1
	Anvil		485.0			431.0			386.8

	Consolidated	$	1,148.9		$	1,049.2		$	922.9

Intersegment sales:
	Mueller	$	13.9		$	14.1		$	13.4
	Anvil		0.8			0.7			0.4

	Consolidated	$	14.7		$	14.8		$	13.8

Operating income (expense):
	Mueller	$	168.0		$	142.4		$	113.9
	Anvil		45.0			26.9			13.7
	Corporate expense(1)		(40.2	)		(56.6	)		(36.4	)

	Consolidated operating income	$	172.8		$	112.7		$	91.2

Depreciation and amortization expense:
	Mueller	$	21.8		$	24.0		$	24.2
	Anvil		17.3			17.3			16.7
	Corporate		9.3			23.0			25.4

	Consolidated	$	48.4		$	64.3		$	66.3

Fixed asset impairment charges:
	Mueller	$	—		$	—		$	0.9
	Anvil		0.5		$	0.1			0.5
	Corporate		—			—			—

	Consolidated	$	0.5		$	0.1		$	1.4

Capital expenditures:
	Mueller	$	17.2		$	11.3		$	11.5
	Anvil		9.7			11.2			8.5
	Corporate		0.3			—			—

	Consolidated	$	27.2		$	22.5		$	20.0

(1): Includes certain expenses not allocated to segments.

F-94

		Fiscal year ended September 30,
		2005		2004 (restated)
		(dollars in millions)
Total assets:
	Mueller	$	516.6	$	500.0
	Anvil		303.6		307.9
	Corporate		266.6		181.3

	Consolidated	$	1,086.8	$	989.2

Goodwill:
	Mueller	$	149.1	$	149.1
	Anvil		14.1		14.1

	Consolidated	$	163.2	$	163.2

Identifiable intangibles:
	Mueller	$	4.4	$	5.3
	Anvil		5.3		7.2
	Corporate		42.7		42.7

	Consolidated	$	52.4	$	55.2

		Fiscal year ended September 30,
		2005		2004		2003
		(dollars in millions)
Net sales:
	United States	$	935.1	$	873.2	$	779.1
	Canada		201.9		166.5		128.1
	Other Countries		11.9		9.5		15.7

		$	1,148.9	$	1,049.2	$	922.9

Property, plant and equipment, net:
	United States	$	152.8	$	173.7
	Canada		12.6		11.7
	Other Countries		2.6		1.4

		$	168.0	$	186.8

For the year ended September 30, 2005, sales to three distributors comprised approximately 30% of the Company's total net sales.

F-95

Note 18. New Accounting Pronouncements

In November 2004, the Financial Accounting Standards Board issued SFAS No. 151, "Inventory Costs." SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material. This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 is effective for fiscal years beginning after June 15, 2005. The Company intends to adopt SFAS No. 151 on October 1, 2005, the beginning of its 2006 fiscal year. The impact of the adoption of SFAS No. 151 on the Company's financial statements has not yet been determined.

FASB Staff Position (FSP) No. FAS 109-1 and 109-2 were issued in December 2004, providing guidance on foreign earnings repatriation and qualified production activities of the American Jobs Creation Act (AJCA) that was enacted on October 22, 2004. The AJCA created a temporary incentive for United States multinationals to repatriate accumulated earnings outside the United States by providing an 85 percent dividends received deduction for certain qualifying earnings repatriations in either fiscal 2005 or in fiscal 2006. As of September 30, 2005, and prior to the acquisition on October 3, 2005, the Company has not provided deferred taxes on foreign earnings because any taxes on dividends would be substantially offset by foreign tax credits or because the Company intends to reinvest those earnings indefinitely. Due to the complexity of the repatriation provision, the Company is still evaluating the effects of this provision on its plan for repatriation of foreign earnings.

In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN 47"), which is an interpretation of FASB No. 143, "Accounting for Asset Retirement Obligations" ("FAS 143"). This interpretation clarifies terminology within FAS 143 and requires companies to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. The impact of the adoption of FIN 47 on the Company's financial statements has not yet been determined.

In June 2005, the FASB issued FASB No. 154, "Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3" ("FAS 154"), which changes the requirements for accounting for and reporting of a change in accounting principle. FAS 154 requires retrospective application to prior periods' financial statements of a voluntary change in accounting principle unless it is impracticable. FAS 154 also requires that a change in method of depreciation, amortization or depletion for long-lived, nonfinancial assets be accounted for as a change in accounting estimate that is effected by a change in accounting principle. FAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, but does not change the transition provisions of any existing accounting pronouncements, including those that are in a transition phase as of the effective date of FAS 154. The adoption of FAS 154 will not have a material impact on the Company's financial condition or results of operations.

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Note 19. Interim Restatements

The Company restated prior annual periods as discussed in Note 2. The interim financial statements for the periods noted below have been restated for cash flow statement errors related to foreign currency translation and book overdrafts, the misclassification of deferred income tax assets between current and non-current classifications in the balance sheet and the misclassification of depreciation expense between selling, general and administrative expense and cost of sales as described in Note 2. The restatements had no impact on the Company's consolidated net income or the consolidated statement of stockholders' deficit for any of the prior interim periods presented, and resulted in increasing cash and cash equivalents with an offsetting increase in book overdraft in the consolidated balance sheet in the prior interim periods.

The following tables set forth the effects of the adjustments discussed above on the financial statements for each of the periods shown below (dollars in millions):

		Three months ended December 27, 2003						Three months ended January 1, 2005
Statements of Consolidated Cash Flows		as reported			as restated			as reported			as restated
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Cash Flows From Operating Activities:
	(Gain) loss on disposal of property, plant and equipment	$	—		$	0.1		$	—		$	0.1
	Deferred income taxes	$	0.8		$	0.8		$	(0.4	)	$	(0.5	)
	Receivables	$	17.6		$	18.3		$	20.7		$	22.2
	Inventories	$	(3.7	)	$	(2.5	)	$	(27.9	)	$	(25.5	)
	Prepaid expenses and other current assets	$	0.2		$	0.3		$	(0.7	)	$	(0.6	)
	Accounts payable, accrued expenses and other current liabilities	$	(18.8	)	$	(19.3	)	$	(20.0	)	$	(20.9	)
	Other, net	$	(0.2	)	$	(0.1	)	$	4.2		$	(0.3	)
	Cash flows provided by operating activities	$	15.3		$	17.0		$	(2.7	)	$	0.5
Cash Flows Used In Investing Activities:
	(Gain) loss on disposal of property, plant and equipment	$	0.1		$	—		$	0.1		$	—
	Cash flows used in investing activities	$	(4.4	)	$	(4.5	)	$	(4.6	)	$	(4.7	)
Cash Flows Used In Financing Activities:
	Book overdrafts	$	—		$	0.3		$	—		$	(0.7	)
	Cash flows used in financing activities	$	(51.1	)	$	(50.8	)	$	(0.3	)	$	(1.0	)
Effect of exchange rate changes on cash		$	2.1		$	0.5		$	4.0		$	0.9
Increase (decrease) in cash and cash equivalents		$	(38.1	)	$	(37.8	)	$	(3.6	)	$	(4.3	)
Cash and cash equivalents—Beginning of period		$	71.4		$	73.0		$	55.6		$	60.5
Cash and cash equivalents—End of period		$	33.3		$	35.2		$	52.0		$	56.2

F-97

		Six months ended March 27, 2004						Six months ended April 2, 2005
Statements of Consolidated Cash Flows		as reported			as restated			as reported			as restated
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Cash Flows From Operating Activities:
	All other adjustments	$	2.3		$	2.3		$	(0.1	)	$	(0.2	)
	Receivables	$	(14.5	)	$	(14.0	)	$	(1.7	)	$	(0.6	)
	Inventories	$	(16.3	)	$	(15.4	)	$	(43.8	)	$	(42.1	)
	Accounts payable, accrued expenses and other current liabilities	$	(7.9	)	$	(8.3	)	$	(3.1	)	$	(3.8	)
	Other, net	$	3.5		$	3.4		$	13.2		$	14.0
	Cash flows provided by operating activities	$	9.3		$	10.2		$	2.9		$	5.7
Cash Flows Used In Financing Activities:
	Book overdrafts	$	—		$	5.9		$	—		$	4.9
	Cash flows used in financing activities	$	(43.4	)	$	(37.5	)	$	(1.2	)	$	3.7
Effect of exchange rate changes on cash		$	1.3		$	0.4		$	3.4		$	0.6
Increase (decrease) in cash and cash equivalents		$	(63.6	)	$	(57.7	)	$	(8.5	)	$	(3.6	)
Cash and cash equivalents—Beginning of period		$	71.4		$	73.0		$	55.6		$	60.5
Cash and cash equivalents—End of period		$	7.8		$	15.3		$	47.1		$	56.9

		Nine months ended June 26, 2004						Nine months ended July 2, 2005
Statements of Consolidated Cash Flows		as reported			as restated			as reported			as restated
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Cash Flows From Operating Activities:
	Receivables	$	(16.7	)	$	(16.8	)	$	1.1		$	1.6
	Inventories	$	(9.1	)	$	(9.2	)	$	(49.5	)	$	(48.8	)
	Accounts payable, accrued expenses and other current liabilities	$	(3.7	)	$	(3.7	)	$	(4.8	)	$	(5.2	)
	Other, net	$	8.7		$	9.1		$	9.6		$	10.7
	Cash flows provided by operating activities	$	50.8		$	51.0		$	31.2		$	33.1
Cash Flows Used In Financing Activities:
	Book overdrafts	$	—		$	7.9		$	—		$	3.6
	Cash flows used in financing activities	$	(61.9	)	$	(54.0	)	$	(2.4	)	$	1.2
Effect of exchange rate changes on cash		$	0.2		$	—		$	2.2		$	0.3
Increase (decrease) in cash and cash equivalents		$	(48.1	)	$	(40.2	)	$	10.2		$	13.8
Cash and cash equivalents—Beginning of period		$	71.4		$	73.0		$	55.6		$	60.5
Cash and cash equivalents—End of period		$	23.3		$	32.8		$	65.8		$	74.3

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		January 1, 2005				April 2, 2005				July 2, 2005
		as reported		as restated		as reported		as restated		as reported		as restated
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Consolidated Balance Sheets
	Cash and cash equivalents	$	52.0	$	56.2	$	47.1	$	56.9	$	65.8	$	74.3
	Deferred income taxes—current		9.0		22.5		9.9		23.5		10.1		23.9
	Current assets		521.9		539.6		556.0		579.4		573.5		595.8
	Deferred income taxes—non-current		21.5		8.0		23.2		9.6		28.6		14.8
	Total assets		978.7		982.9		1,008.9		1,018.7		1,026.2		1,034.7
	Accounts payable		47.7		51.9		51.2		61.0		50.2		58.7
	Total current liabilities		122.5		126.7		139.4		149.2		137.7		146.2
	Total liabilities		1,198.7		1,202.9		1,220.3		1,230.1		1,222.8		1,231.3
	Total liabilities and shareholders' deficit		978.7		982.9		1,008.9		1,018.7		1,026.2		1,034.7

Consolidated Statement of Operations

	Three months ended December 27, 2003				Three months ended March 27, 2004				Three months nded June 26, 2004
	as reported		as restated		as reported		as restated		as reported		as restated
	(Unaudited)				(Unaudited)				(Unaudited)
Cost of sales	$	161.5	$	163.3	$	169.7	$	171.4	$	204.5	$	206.3
Gross profit	$	58.7	$	56.9	$	66.6	$	64.9	$	84.6	$	82.8
Selling, general and administrative expense, including stock compensation expense	$	38.8	$	37.0	$	40.1	$	38.4	$	67.7	$	65.9

	Three month ended January 1, 2005				Three months ended April 2, 2005				Three months ended July 2, 2005
	as reported		as restated		as reported		as restated		as reported		as restated
	(Unaudited)				(Unaudited)				(Unaudited)
Cost of sales	$	180.2	$	181.9	$	197.3	$	199.0	$	200.2	$	202.1
Gross profit	$	75.9	$	74.2	$	87.9	$	86.2	$	96.7	$	94.8
Selling, general and administrative expense, including stock compensation expense	$	43.6	$	41.9	$	47.7	$	46.0	$	47.8	$	45.9

	Six months ended March 27, 2004				Six months ended April, 2, 2005
	as reported		as restated		as reported		as restated
	(Unaudited)				(Unaudited)
Cost of sales	$	331.2	$	334.7	$	377.5	$	380.9
Gross profit	$	125.3	$	121.8	$	163.8	$	160.4
Selling, general and administrative expense, including stock compensation expense	$	78.9	$	75.4	$	91.3	$	87.9

F-99

	Nine months ended June 26, 2004				Nine months ended July 2, 2005
	as reported		as restated		as reported		as restated
	(Unaudited)				(Unaudited)
Cost of sales	$	535.7	$	541.0	$	577.7	$	583.0
Gross profit	$	209.9	$	204.6	$	260.5	$	255.2
Selling, general and administrative expense, including stock compensation expense	$	146.6	$	141.3	$	139.1	$	133.8

Note 20. Subsequent Events

On October 3, 2005, Walter acquired the Company, as discussed in Note 1. In conjunction with the acquisition, the Company entered into the 2005 Mueller Credit Agreement, as discussed in Note 6. Proceeds of the 2005 Mueller Credit Agreement were approximately $1,053.4 million, net of approximately $21.6 million of underwriting fees and expenses which will be amortized over the life of the loans. The proceeds were used to refinance the prior credit facility, defease and redeem our Second Priority Senior Secured Floating Rate Notes, and finance the acquisition of the Company by Walter. Subsequent to September 30, 2005 and prior to the Walter acquisition on October 3, 2005, the Company wrote off $18.4 million of deferred financing fees related to the 2004 Mueller Credit Facility.

On October 3, 2005, Mueller Group delivered a notice of redemption with respect to all of the Second Priority Senior Secured Floating Rate Notes ("secured notes"), providing for the redemption of all such secured notes on November 2, 2005, as discussed in Note 6. In addition, Mueller Group delivered to Law Debenture Trust Company of New York, the trustee for the secured notes, $104.1 million in trust equal to the principal, call premium and interest accruing to the redemption date. Subsequent to September 30, 2005 and prior to the Walter acquisition on October 3, 2005, Mueller Group wrote off $2.4 million of deferred financing fees related to the secured notes.

In the period subsequent to September 30, 2005 and prior to Walter acquiring the Company on October 3, 2005, the Company expensed transaction fees of approximately $20.1 million to Credit Suisse First Boston LLC, an affiliate of the DLJ Merchant Banking Funds, and transaction bonuses of $10.0 million. These fees were contingent upon closing the acquisition. Non-contingent fees and expenses of approximately $3.5 million were expensed during the fiscal year ended September 30, 2005.

On October 3, 2005, in connection with the acquisition of the Company by Walter, the outstanding warrants were converted into the right to receive cash upon exercise of the warrants, as discussed in Note 16. These warrants were classified as permanent equity in prior periods as the contracts required settlement in shares, absent a change in control event, in which case the warrant automatically become exercisable for the kind and amount of consideration provided to shareholders. Upon the exercise of the warrants, the Company will receive $0.2 million in cash. As of December 12, 2005, 193,435 warrants had been exercised for cash. Total cash to be paid for such exercise of all warrants is approximately $90.5 million.

On October 4, 2005, the Company notified the holders of the 10% Senior Subordinated Notes and the 14³/4% Senior Discount Notes that a change in control had occurred as a result of the Walter Industries acquisition and that, as a result, the holders had a right to cause the Company to repurchase their notes, as discussed in Note 6.

F-100

On October 21, 2005, Walter announced its plan to initiate an initial public offering of equity securities and subsequent spin-off of the Company.

On October 26, 2005, Walter announced plans to close the Company'sits U.S. Pipe Chattanooga, Tennessee plant and transfer the valve and hydrant production of that plant to the Company's Mueller Chattanooga, Tennessee and Albertville, Alabama plants by December 31, 2005. The eventual closure of the U.S. Pipe Chattanooga plant will occur sometime in 2006. The estimated pre-tax restructuring costs consisting of the write-off of impaired assets and severance and environmental costs are estimated at $37.8 million, of which $21.9 million are non-cash, and are expected to be recorded in the quarter ending December 31, 2005.

On October 27, 2005, Group entered into six interest rate hedge transactions totaling $350 million. These interest rate hedges are discussed in more detail in Note 8.

F-101

MUELLER WATER PRODUCTS, INC.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

		Amount To Be Paid
Registration fee		$	49,920
NASD Filing fee			40,500
NYSE listing fee			*
Listing fee			*
Transfer agent's fees			*
Printing and engraving expenses			*
Legal fees and expenses			*
Accounting fees and expenses			*
Blue Sky fees and expenses			*
Miscellaneous			*

	Total	$	*

*: To be filed by amendment.

Each of the amounts set forth above, other than the registration fee and the NASD filing fee, is an estimate.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Mueller Water Products, Inc. (the "Company") is a Delaware corporation. Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for any of the following:

•: any breach of the director's duty of loyalty to the corporation or its stockholders;
•: acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
•: payments of unlawful dividends or unlawful stock repurchases or redemptions under Section 174 of the Delaware General Corporation Law; or
•: any transaction from which the director derived an improper personal benefit.

Any repeal or modification of such provisions shall not adversely affect any right or protection of a director for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. Our restated certificate of incorporation provides that no director shall be personally liable to us or any of our stockholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted by Delaware law, except for any liability imposed by Section 102(b)(7) as discussed above.

Under Section 145 of the Delaware General Corporation Law, a corporation may indemnify any individual made a party or threatened to be made a party to any type of proceeding, other than an action by or in the right of the corporation, because he or she is or was an officer, director, employee or agent of the corporation or was serving at the request of the corporation as an officer, director, employee or agent of another corporation or entity against expenses, judgments, fines and amounts

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paid in settlement actually and reasonably incurred in connection with such proceeding: (1) if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation; or (2) in the case of a criminal proceeding, he or she had no reasonable cause to believe that his or her conduct was unlawful. A corporation may indemnify any individual made a party or threatened to be made a party to any threatened, pending or completed action or suit brought by or in the right of the corporation because he or she was an officer, director, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other entity, against expenses actually and reasonably incurred in connection with such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, provided that such indemnification will be denied if the individual is found liable to the corporation unless, in such a case, the court determines the person is nonetheless entitled to indemnification for such expenses. A corporation must indemnify a present or former director or officer who successfully defends himself or herself in a proceeding to which he or she was a party because he or she was a director or officer of the corporation against expenses actually and reasonably incurred by him or her. Expenses incurred by an officer or director, or any employees or agents as deemed appropriate by the board of directors, in defending civil or criminal proceedings may be paid by the corporation in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of such director, officer, employee or agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation. The Delaware law regarding indemnification and expense advancement is not exclusive of any other rights which may be granted by our restated certificate of incorporation or restated bylaws, a vote of stockholders or disinterested directors, agreement or otherwise.

Our restated bylaws provide that we must indemnify our former and present directors and officers, and to advance them certain expenses in defending any relevant action, suit or proceeding, to the fullest extent permitted by the laws of the State of Delaware, subject to the limitations as described above. Our bylaws also provide in greater detail our obligations and certain procedures regarding such indemnification and the advancement of expenses. The provision of indemnification and the advancement of expenses to persons under our bylaws does not limit or restrict in any way our power to indemnify or advance expenses to them in any other way permitted by law. Without limitation to the foregoing sentence, our bylaws also authorize us to maintain insurance on behalf of any of our former or present directors and officers against any liability asserted against them or incurred by them in their capacity or status as directors or officers of the Company. For itself and its subsidiaries, including the Company, Walter Industries, Inc. has in place director and officer liability insurance that covers the Company's officers and directors; and neither the level or type of director and officer insurance coverage nor the premiums associated with that coverage has changed in connection with this offering of Company equity securities.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, the following unregistered securities were sold:

1. On April 23, 2004, our subsidiary, Mueller Group, LLC (formerly, Mueller Group, Inc.), issued and sold an aggregate of $415,000,000 of notes, which consisted of $100,000,000 Second Priority Senior Secured Floating Rate Notes due November 1, 2011 and $315,000,000 10% Senior Subordinated Notes due May 1, 2012, pursuant to Rule 144A and Regulation S. Credit Suisse First Boston LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Banc One Capital Markets, Inc. were the initial purchasers. The aggregate discounts to the initial purchasers were approximately $10.1 million.

2. On April 29, 2004, Predecessor Mueller issued and sold 223,000 units, each consisting of $1,000 principal amount at maturity of 14³/4% Senior Discount Notes due April 15, 2014 and one

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warrant to purchase 109.80889 shares of Class A common stock, pursuant to Rule 144A and Regulation S. Credit Suisse First Boston LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. were the initial purchasers. The aggregate discounts to the initial purchasers were approximately $3.2 million.

3. On April 29, 2004, Predecessor Mueller issued 14,607,769 shares of its common stock upon the cancellation of all of the vested stock options then outstanding under its Management Incentive Plan, pursuant to Rule 701.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

The list of exhibits is incorporated herein by reference to the Exhibit Index following the signature pages.

(B) FINANCIAL STATEMENT SCHEDULES

Financial schedules are omitted because they are not applicable or the information is included in the financial statements or related notes.

ITEM 17. UNDERTAKINGS

The undersigned hereby undertakes:

(a) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions referenced in Item 14 of this Registration Statement, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Mueller Water Products, Inc. has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Tampa, State of Florida, on April 29, 2006.

MUELLER WATER PRODUCTS, INC.
By:	/s/ GREGORY E. HYLAND
	Name:	Gregory E. Hyland
	Title:	Chairman of the Board of Directors, President and Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Gregory E. Hyland, Joseph J. Troy and Victor P. Patrick his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and any and all additional registration statements pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agents full power and authority to do and perform each and every act in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed by the following persons 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)	April 29, 2006
/s/ JEFFERY W. SPRICK Jeffery W. Sprick	Chief Financial Officer (principal financial officer and principal accounting officer)	April 29, 2006
/s/ DONALD N. BOYCE Donald N. Boyce	Director	April 29, 2006
/s/ HOWARD L. CLARK Howard L. Clark	Director	April 28, 2006
/s/ JERRY W. KOLB Jerry W. Kolb	Director	April 29, 2006

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/s/ JOSEPH B. LEONARD Joseph B. Leonard	Director	April 28, 2006
/s/ MARK J. O'BRIEN Mark J. O'Brien	Director	April 29, 2006
/s/ BERNARD G. RETHORE Bernard G. Rethore	Director	April 29, 2006
/s/ NEIL A. SPRINGER Neil A. Springer	Director	April 29, 2006
/s/ MICHAEL T. TOKARZ Michael T. Tokarz	Director	April 29, 2006

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EXHIBIT INDEX

Exhibit No.		Document
1.1		Form of Underwriting Agreement
3.1		Form of Restated Certificate of Incorporation of Mueller Water Products, Inc.
3.2		Form of Restated Bylaws of Mueller Water Products, Inc.
5.1		Opinion of Simpson Thacher & Bartlett LLP
10.1		Credit Agreement, dated as of October 3, 2005, among Mueller Group, LLC, Bank of America, N.A., as administrative agent, Morgan Stanley Senior Funding, Inc., as syndication agent, Caylon New York Branch, Fifth Third Bank and JPMorgan Chase Bank, N.A., as co-documentation agents, and the other lenders named therein(1)
10.2		Amendment No.1, dated as of January 24, 2006, among Mueller Group, LLC, Bank of America, N.A., as administrative agent, the lenders signatory thereto and each of the guarantors signatory thereto(2)
10.3		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(3)
10.4*		Supplemental Indenture, dated as of October 3, 2005, among Mueller Water Products Co-Issuer, Inc., Mueller Water Products, LLC and Law Debenture Trust Company of New York
10.5		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(4)
10.6		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(5)
10.7*		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
10.8		Form of Corporate Agreement by and between Walter Industries, Inc. and Mueller Water Products, Inc.
10.9		Form of 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)
10.10		Form of Transition Services Agreement by and between Walter Industries, Inc. and Mueller Water Products, Inc.
10.11		Form of Mueller Water Products, Inc. 2006 Stock Incentive Plan
10.12		Form of Mueller Water Products, Inc. 2006 Employee Stock Purchase Plan
10.13		Form of Mueller Water Products, Inc. Directors' Deferred Fee Plan
10.14		Form of Executive Incentive Plan of Mueller Water Products, Inc.
10.15		Executive Employment Agreement, dated September 9, 2005 between Walter Industries, Inc. and Gregory E. Hyland(6)

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10.16		Executive Employment Agreement, dated January 23, 2006, between Mueller Holding Company, Inc. and Dale B. Smith(7)
10.17		Employment Agreement, dated as of June 17, 2005, between Mueller Group, Inc. and Thomas E. Fish(8)
10.18		Employment Agreement, dated as of June 17, 2005, between Mueller Group, Inc. and Doyce Gaskin(9)
10.19		Employment Agreement, dated April 17, 2006, between Mueller Water Products, Inc. and Jeffery W. Sprick(10)
10.20		Employment Agreement, dated July 24, 2002, between Walter Industries, Inc. and Victor Patrick(11)
10.21		Employment Agreement, dated December 28, 2000, between Walter Industries, Inc. and William F. Ohrt(12)
10.22		Employment Agreement, dated October 31, 2000, between Walter Industries, Inc. and Joseph J. Troy(13)
10.23	*	Employment Agreement, dated July 12, 2004, between Walter Industries, Inc. and Raymond P. Torok
10.24		Employment Agreement, dated February 1, 2003, between Mueller Group, Inc. and George P. Bukuras(14)
10.25		Employment Agreement, dated as of February 18, 2005, between Mueller Group, Inc. and Darrell Jean(15)
21.1	*	Subsidiaries of Mueller Water Products, Inc.
23.1		Consent of PricewaterhouseCoopers LLP
23.2		Consent of PricewaterhouseCoopers LLP
23.3		Consent of Simpson Thacher & Bartlett LLP (included in Exhibit 5.1)
24.1		Power of Attorney (included on signature page)
99.1		Form of Notice of Stock Option Grant under Mueller Water Products, Inc. 2006 Stock Incentive Plan
99.2		Form of Election to Participate in Mueller Water Products, Inc. Directors' Deferred Fee Plan
99.3		Form of Mueller Water Products, Inc. 2006 Stock Incentive Plan Restricted Stock Unit Award Agreement

*: Previously filed
(1): Incorporated by reference to Exhibit 10.1 to Mueller Water Products, LLC Form 8-K (File no. 333-116590) filed on October 5, 2005.
(2): Incorporated by reference to Exhibit 10.1 to Mueller Water Products, LLC Form 8-K (File no. 333-116590) filed on January 27, 2006.
(3): 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.

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(4): Incorporated by reference to Exhibit 10.1 to Mueller Water Products, Inc. Form 8-K (File no. 333-131521) filed on February 3, 2006.
(5): 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.
(6): Incorporated by reference to Exhibit 10.22 to Walter Industries, Inc. Form 8-K (File no. 001-13711) filed on September 12, 2005.
(7): Incorporated by reference to Exhibit 10.2 to Mueller Water Products, LLC Form 8-K (File no. 333-116590) filed on January 27, 2006.
(8): Incorporated by reference to Exhibit 10.1 to Mueller Group, LLC Form 8-K (File no. 333-117473) filed on June 21, 2005.
(9): Incorporated by reference to Exhibit 10.2 to Mueller Group, LLC Form 8-K (File no. 333-117473) filed on June 21, 2005.
(10): Incorporated by reference to Exhibit 10.1 to Mueller Water Products, Inc. Form 8-K (File No. 333-131521) filed on April 21, 2006.
(11): Incorporated by reference to Exhibit 10.15 to Walter Industries, Inc. Form 10-K (File no. 001-13711) filed on March 15, 2004.
(12): Incorporated by reference to Exhibit 10.18 to Walter Industries, Inc. Form 10-K (File no. 001-13711) filed on March 20, 2002.
(13): Incorporated by reference to Exhibit 10.17 to Walter Industries, Inc. Form 10-K (File no. 001-13711) filed on March 21, 2003.
(14): Incorporated by reference to Exhibit 10.5 to Mueller Water Products, Inc.'s Registration Statement on Form S-1 (File no. 333-116950) filed on June 17, 2004.
(15): Incorporated by reference to Exhibit 10.1 to Mueller Group, Inc. Form 8-K (File no. 333-117473) filed on February 24, 2005.

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QuickLinks

EXHIBIT 1.1

[Form of Underwriting Agreement]

MUELLER WATER PRODUCTS, INC.

[______] SHARES OF SERIES A COMMON STOCK

Underwriting Agreement

dated [________], 2006

Table of Contents

		Page
Section 1. Representations and Warranties of the Company and Walter Industries.
A.	Company Representations and Warranties
(a)	Compliance with Registration Requirements
(b)	Company Not Ineligible Issuer
(c)	Registration Statement; Time of Sale Prospectus; Prospectus.
(e)	Issuer Free Writing Prospectuses
(f)	Offering Materials Furnished to Underwriter
(g)	Distribution of Offering Material By the Company
(h)	The Underwriting Agreement
(i)	No Applicable Registration or Similar Rights
(j)	No Material Adverse Change.
(k)	Independent Accountants
(l)	Incorporation and Good Standing of the Company and its subsidiaries
(m)	Capitalization and Other Capital Stock Matters
(n)	Absence of Lock-Up Agreements
(o)	Listing
(p)	Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
	Required
(q)	No Material Actions or Proceedings
(r)	Intellectual Property Rights
(s)	All Necessary Permits, etc
(t)	Title to Properties
(u)	Tax Law Compliance
(v)	Not an “Investment Company”
(w)	No Price Stabilization or Manipulation
(x)	Related Party Transactions
(y)	Company’s Accounting System and Internal Controls
(z)	Compliance with Environmental Laws
(aa)	Compliance with Laws
(bb)	Dividend Payments
(cc)	Section 16 Insiders
(dd)	Insurance.
(ee)	No Unregistered Sales of Common Stock.
(ff)	[Compliance with Laws of Foreign Jurisdictions.
(gg)	No Required Consent for Offering of Directed Shares.
(hh)	Directed Share Program Participants.
B.	Walter Industries Representations and Warranties
(a)	The Underwriting Agreement.
(b)	Company Representation.
Section 2. Purchase, Sale and Delivery of the Common Shares
(a)	The Firm Common Shares and the Optional Common Shares
(b)	The Closing Date
(c)	Payment for the Common Shares
(d)	Delivery of Prospectuses to the Underwriters
Section 3. Covenants of the Company
(a)	Underwriter’s Review of Proposed Amendments and Supplements

(b)	Free Writing Prospectus; Time of Sale Prospectus
(c)	Permitted Free Writing Prospectuses
(d)	Amendments and Supplements to the Time of Sale Prospectus and the Prospectus
(e)	Securities Act Compliance
(f)	Copies of any Amendments and Supplements to the Prospectus
(g)	Blue Sky Compliance
(h)	Use of Proceeds.
(i)	Transfer Agent
(j)	Earnings Statement
(k)	Periodic Reporting Obligations
(l)	Listing.
(m)	Agreement Not to Offer or Sell Additional Securities
(n)	No Manipulation of Price
(o)	Exchange Act Compliance
Section 4. Covenants of the Underwriters
Section 5. Payment of Expenses
Section 6. Conditions of the Obligations of the Underwriters
(a)	Accountants’ Comfort Letter
(b)	Compliance with Registration Requirements; No Stop Order
(c)	No Material Adverse Change or Ratings Agency Change
(d)	Opinion of Counsel for the Company
(e)	Opinion of Counsel for the Underwriters
(f)	Officers’ Certificate
(g)	Bring-down Comfort Letter
(h)	Lock-Up Agreement from Directors and Certain Senior Executive Officers of the Company
(i)	Additional Documents
Section 7. Reimbursement of Underwriter’s Expenses
Section 8. Indemnification
(a)	Indemnification of the Underwriters by the Company and Walter Industries
(b)	Indemnification of the Company and its Directors and Officers
(c)	Notifications and Other Indemnification Procedures
(d)	Settlements
Section 9. Contribution
Section 10. Directed Share Program Indemnification.
Section 11. Termination of this Agreement
Section 12. Representations and Indemnities to Survive Delivery
Section 13. Effectiveness; Defaulting Underwriters
Section 14. Notices
Section 15. Successors
Section 16. Partial Unenforceability
Section 17. Governing Law Provisions
Section 18. General Provisions
(a)	Entire Agreement.
(b)	Sophisticated Persons.
(c)	No Fiduciary Agreement.

Underwriting Agreement

[____________], 2006

BANC OF AMERICA SECURITIES LLC
9 West 57^th Street
New York, NY 10019

MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036

LEHMAN BROTHERS INC.
745 Seventh Avenue
New York, New York 10019

Ladies and Gentlemen:

Mueller Water Products, Inc., a Delaware corporation (the “Company”), and a wholly owned subsidiary of Walter Industries, Inc., a Delaware corporation (“Walter Industries”), proposes to issue and sell to the several underwriters named in Schedule A (the “Underwriters”) an aggregate of [________] shares (the “Firm Common Shares”) of its Series A common stock, par value $.01 per share (the “Common Stock”). In addition, the Company has granted to the Underwriters an option to purchase up to an additional [___________] shares (the “Optional Common Shares”) of Common Stock, as provided in Section 2. The Firm Common Shares and, if and to the extent such option is exercised, the Optional Common Shares are collectively referred to as the “Common Shares.” Banc of America Securities LLC (“BAS”), Morgan Stanley & Co. Incorporated (“Morgan Stanley”) and Lehman Brothers Inc. have agreed to act as representatives of the several Underwriters (in such capacity, the “Representatives”) in connection with the offering and sale of the Common Shares. To the extent there are no additional Underwriters listed on Schedule A other than you, the terms Representatives and Underwriters as used herein shall mean you, as Underwriters. The terms Representatives and Underwriters shall mean either the singular or plural as the context requires.

The Company has filed with the Securities and Exchange Commission (the “Commission”) a registration statement, including a prospectus, relating to the Common Shares. The registration statement as amended at the time it becomes effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended (the “Securities Act”), is hereinafter referred to as the “Registration Statement”; the prospectus in the form first used to confirm sales of the Common Shares (or in the form first made available to the Underwriters by the Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act) that is first filed pursuant to Rule 424(b) under the Securities Act after the date and time that this Agreement is executed and delivered by the parties hereto is hereinafter referred to as the “Prospectus”; and the term “preliminary prospectus” means each preliminary form of Prospectus filed as part of the

Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act. If the Company has filed an abbreviated registration statement to register additional shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the “Rule 462 Registration Statement”), then any reference herein to the term “Registration Statement” shall be deemed to include such Rule 462 Registration Statement.

For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule 405 under the Securities Act; “Time of Sale Prospectus” means the preliminary prospectus, as amended and supplemented, together with the free writing prospectuses identified in Schedule B, if any, and the other documents or information identified in Schedule C hereto; “broadly available road show” means a “bona fide electronic road show” as defined in Rule 433(h)(5) under the Securities Act that has been made available without restriction to any person; and “Execution Time” means [_____] [a.m.][p.m.] (New York City time) on the date of this Agreement, which is the time of the first sale of the Common Shares by you to the public.

Morgan Stanley has agreed to reserve a portion of the Common Shares to be purchased by it under this Agreement for sale to the Company’s directors, officers, employees and business associates and other parties related to the Company (collectively, “Participants”), as set forth in the Prospectus under the heading “Underwriting” (the “Directed Share Program”). The Common Shares to be sold by Morgan Stanley and its affiliates pursuant to the Directed Share Program are referred to hereinafter as the “Directed Shares”. Any Directed Shares not confirmed for purchase by any Participant by the end of the business day on which this Agreement is executed will be offered to the public by the Underwriters as set forth in the Prospectus.

The Company is advised by you that the Underwriters propose to make a public offering of their respective portions of the Common Shares as soon after this Agreement has become effective as in your judgment is advisable. The Company is further advised by you that the Common Shares are to be offered to the public upon the terms set forth in the Prospectus.

Section 1. Representations and Warranties of the Company and Walter Industries.

A. The Company hereby represents, warrants and covenants to each Underwriter as follows:

(a) Compliance with Registration Requirements. The Registration Statement has become effective. No stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated or threatened by the Commission.

(b) Company Not Ineligible Issuer. The Company is not an “ineligible issuer” in connection with the offering pursuant to Rules 164, 405 and 433 under the

Securities Act. Any free writing prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each free writing prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or behalf of or used or referred to by the Company complies or will comply in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Except for the free writing prospectuses, if any, identified in Schedule B hereto, and electronic road shows each furnished to you before first use, the Company has not prepared, used or referred to, and will not, without your prior consent, prepare, use or refer to, any free writing prospectus.

(c) Registration Statement; Time of Sale Prospectus; Prospectus. (i) The Registration Statement, when it became effective, did not contain, and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement, as of the date hereof, does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the Registration Statement and the Prospectus comply, and as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (iv) the Time of Sale Prospectus at the Execution Time does not, and at the time of each sale of the Common Shares in connection with the offering when the Prospectus is not yet available to prospective purchasers and at the Closing Date (as defined in Section 2) and at any Subsequent Closing Date (as defined in Section 2), the Time of Sale Prospectus, as then amended or supplemented by the Company, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (v) each broadly available road show, if any, when considered together with the Time of Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (vi) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein; it being understood and agreed that the only such information furnished by any Underwriter consists of the information set forth in Schedule D hereof.

(e) Issuer Free Writing Prospectuses. For purposes of this Agreement, the only “Issuer Free Writing Prospectus” shall mean the issuer free writing prospectuses as defined in Rule 433 under the Securities Act and identified in Schedule B hereto, if

any. [Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the Offering or until any earlier date that the Company notified or notifies the Representatives as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement, the Company has promptly notified or will promptly notify the Representatives and has promptly amended or will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict. The foregoing two sentences do not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information set forth in Schedule D hereof].

(f) Offering Materials Furnished to Underwriter. On or prior to the Closing Date, upon request, the Company will deliver to the Underwriters one duplicate of the complete manually signed Registration Statement and of each consent and certificate of experts filed as a part thereof, and conformed copies of the Registration Statement (without exhibits), copies of the Time of Sale Prospectus and Prospectus, in such quantities and at such places as the Underwriters may reasonably request.

(g) Distribution of Offering Material By the Company. The Company has not distributed and will not distribute to potential investors or to the general public, prior to the later of the Closing Date (as defined below) and the completion of the Underwriter’s distribution of the Common Shares, any offering material in connection with the offering and sale of the Common Shares other than the Time of Sale Prospectus, the Prospectus or the Registration Statement.

(h) The Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company, enforceable in accordance with its terms, except as rights to indemnification and contribution hereunder may be limited by applicable law and public policy and except as the enforcement hereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

(i) No Applicable Registration or Similar Rights. There are no persons with registration or other similar rights to have any equity or debt securities registered for sale under the Registration Statement or included in the offering contemplated by this Agreement, except for such rights as have been duly waived.

(j) No Material Adverse Change. Except as otherwise disclosed in the Time of Sale Prospectus (exclusive of any amendments or supplements thereto

subsequent to the date hereof), subsequent to the respective dates as of which information is given in the Time of Sale Prospectus: (i) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Company and its subsidiaries, considered as one entity (any such change is called a “Material Adverse Change”); (ii) the Company and its subsidiaries, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business, nor entered into any material transaction or agreement not in the ordinary course of business; and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company or, except for dividends paid to the Company or other subsidiaries, any of its subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock.

(k) Independent Accountants. PricewaterhouseCoopers LLP, who have expressed their opinion with respect to the financial statements (which term as used in this Agreement includes the related notes thereto) and supporting schedules filed with the Commission as part of the Registration Statement and included in the Time of Sale Prospectus and the Prospectus, is an independent registered public accounting firm as required by the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(l) Incorporation and Good Standing of the Company and its subsidiaries. Each of the Company and each of its significant subsidiaries (as defined in Rule 1-02 of Regulation S-X) (“Significant Subsidiaries”) has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Time of Sale Prospectus and the Prospectus and, in the case of the Company, to enter into and perform its obligations under this Agreement. Each of the Company and each of its Significant Subsidiaries is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, result in a Material Adverse Change. All of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and, except as described in the Time of Sale Prospectus and the Prospectus, is owned by the Company, directly or through its subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim. The Company does not own or control, directly or indirectly, any subsidiary (as defined in Rule 405 under the Securities Act) other than (i) the subsidiaries listed in Exhibit D hereto and (ii) subsidiaries, if considered in the aggregate as a single subsidiary, would not constitute a Significant Subsidiary.

(m) Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding capital stock of the Company is as set forth in the Time of Sale Prospectus and the Prospectus under the captions “Description of Capital Stock” (other

than for subsequent issuances, if any, pursuant to Stock Plans (as defined below) described in the Time of Sale Prospectus and the Prospectus or upon exercise of outstanding options described in the Time of Sale Prospectus and the Prospectus). The Common Stock (including the Common Shares) conforms in all material respects to the description thereof contained in the Time of Sale Prospectus and the Prospectus. All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and non-assessable and have been issued in compliance with federal and state securities laws. None of the outstanding shares of Common Stock were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries other than (i) those accurately described in the Time of Sale Prospectus and the Prospectus and (ii) those options granted pursuant to the Stock Plans (as defined below). The description of the Company’s stock purchase, stock option, stock bonus and other stock plans or arrangements (“Stock Plans”), and the options or other rights granted thereunder, set forth in the Time of Sale Prospectus and the Prospectus accurately and fairly presents and summarizes such plans, arrangements, options and rights in all material respects.

(n) Absence of Lock-Up Agreements. There does not exist any agreements between the Company and any of its security holders that prohibit the sale, transfer, assignment, pledge or hypothecation of any of the Company’s securities in connection with the offering of the Common Shares.

(o) Listing. The Common Shares have been approved for listing on the New York Stock Exchange (the “NYSE”).

(p) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required. Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws or is in default (or, with the giving of notice or lapse of time, would be in default) (“Default”) under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound (including, without limitation, the credit agreement dated October 3, 2005 among Mueller Group, LLC, a wholly-owned subsidiary of the Company, and the parties named therein for whom Bank of America, N.A. is acting as administrative agent), or to which any of the property or assets of the Company or any of its subsidiaries is subject (each, an “Existing Instrument”), except for such Defaults as would not, individually or in the aggregate, result in a Material Adverse Change.

The Company’s execution, delivery and performance of this Agreement and consummation of the transactions contemplated thereby and by the Time of Sale Prospectus and the Prospectus (i) have been duly authorized by all necessary corporate action required by the Company and will not result in any violation of the provisions of the charter or by-laws of the Company or any Significant Subsidiary, (ii) will not conflict with or constitute a breach of, or Default or a Debt Repayment Triggering Event (as

defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument, except for breaches or Defaults that would not, individually or in the aggregate, result in a Material Adverse Change and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Company or any subsidiary, except for such violations as would not, individually or in the aggregate, result in a Material Adverse Change. No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, is required for the Company’s execution, delivery and performance of this Agreement and consummation of the transactions contemplated thereby and by the Time of Sale Prospectus and the Prospectus, except such as have been obtained or made by the Company and are in full force and effect under the Securities Act and the NYSE and such as may be required under applicable state securities or blue sky laws and from the National Association of Securities Dealers, Inc. (the “NASD”). As used herein, a “Debt Repayment Triggering Event” means any event or condition which gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.

(q) No Material Actions or Proceedings. Except as otherwise disclosed in the Time of Sale Prospectus and the Prospectus, there are no legal or governmental actions, suits or proceedings pending or, to the Company’s knowledge, threatened (i) against or affecting the Company or any of its subsidiaries, or (ii) which has as the subject thereof any property owned or leased by, the Company or any of its subsidiaries where in any such case (A) there is a reasonable possibility that such action, suit or proceeding might be determined adversely to the Company or such subsidiary and (B) any such action, suit or proceeding, if so determined adversely, would reasonably be expected to result in a Material Adverse Change or adversely affect the consummation of the transactions contemplated by this Agreement. To the Company’s knowledge, no material labor dispute with the employees of the Company or any of its subsidiaries, or with the employees of any principal supplier of the Company or any of its subsidiaries, exists or, to the best of the Company’s knowledge, is threatened or imminent.

(r) Intellectual Property Rights. The Company and its subsidiaries own or possess sufficient trademarks, trade names, patent rights, copyrights, domain names, licenses, approvals, trade secrets and other similar rights (collectively, “Intellectual Property Rights”) reasonably necessary to conduct their businesses as now conducted; except where the failure to own or possess such Intellectual Property Rights would not result in a Material Adverse Change. Neither the Company nor any of its subsidiaries has received any notice of infringement or conflict with asserted Intellectual Property Rights of others, which infringement or conflict, if the subject of an unfavorable decision, would result in a Material Adverse Change.

(s) All Necessary Permits, etc. The Company and each Significant Subsidiary possess such valid and current certificates, authorizations or permits issued by

the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct their respective businesses, and neither the Company nor any subsidiary has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, could result in a Material Adverse Change.

(t) Title to Properties. Except as set forth in the Time of Sale Prospectus and the Prospectus, the Company and each of its subsidiaries has good and marketable title to all the properties and assets reflected as owned by each of them in the financial statements included in the Time of Sale Prospectus and the Prospectus, in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, claims and other defects, except such as do not, singly or in the aggregate, materially and adversely affect the value of such property and do not, singly or in the aggregate, materially interfere with the use made or proposed to be made of such property by the Company or such subsidiary. Except as set forth in the Time of Sale Prospectus and the Prospectus, the real property, improvements, equipment and personal property held under lease by the Company or any subsidiary are held under valid and enforceable leases, with such exceptions as are not material and do not, singly or in the aggregate, materially interfere with the use made or proposed to be made of such real property, improvements, equipment or personal property by the Company or such subsidiary.

(u) Tax Law Compliance. Except as described in the Time of Sale Prospectus and the Prospectus, Walter Industries, the Company and each subsidiary of the Company have filed all necessary federal, state and foreign income and franchise tax returns and have paid all taxes required to be paid by any of them and, if due and payable, any related or similar assessment, fine or penalty levied against any of them, except as may be being contested in good faith and by appropriate proceedings and except where the failure to so file or pay would not, individually or in the aggregate, result in a Material Adverse Change.

(v) Not an “Investment Company”. The Company has been advised of the rules and requirements under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The Company is not required to register as an “investment company” within the meaning of Investment Company Act and will conduct its business in a manner so that it will not become subject to the Investment Company Act.

(w) No Price Stabilization or Manipulation. The Company has not taken, and will not take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of any security of the Company prohibited by the Securities Act to facilitate the sale or resale of the Common Shares.

(x) Related Party Transactions. There are no business relationships or related-party transactions involving the Company or any subsidiary or any other person required by the Securities Act to be described in the Time of Sale Prospectus and the Prospectus which have not been described as required.

(y) Company’s Accounting System and Internal Controls. The Company and its consolidated subsidiaries maintain a system of accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles as applied in the United States and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences; (v) financial statement certification requirements under the Exchange Act or otherwise are accurate; and (vi) NYSE corporate governance requirements are complied with, in all material respects, including, without limitation, audit and other board of directors committee composition requirements, except as permitted by any applicable NYSE waiting period. Except as disclosed in the Time of Sale Prospectus and the Prospectus, to the Company’s knowledge after reasonable investigation, since the end of the most recent audited fiscal year of the Company and Mueller Water Products, LLC, there has been (i) no material weakness in the Company’s or Mueller Water Products, LLC’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s or Mueller Water Products, LLC’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s or Mueller Water Products, LLC’s internal control over financial reporting.

(z) Compliance with Environmental Laws. Except as disclosed in the Time of Sale Prospectus and the Prospectus and except as would not, individually or in the aggregate, result in a Material Adverse Change (i) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign law or regulation relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products (collectively, “Materials of Environmental Concern”), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environment Concern (collectively, “Environmental Laws”), which violation includes, but is not limited to, noncompliance with any permits or other governmental authorizations required for the operation of the business of the Company or its subsidiaries under applicable Environmental Laws, or noncompliance with the terms and conditions thereof, nor has the Company or any of its subsidiaries received any written communication from a governmental authority, that alleges that the Company or any of its subsidiaries is in violation of any Environmental Law; (ii) there is no claim, action or cause of action filed with a court or governmental authority, no investigation with respect to which either the Company or any of its subsidiaries has received written notice, and no written notice by any person or entity alleging potential liability for investigatory costs, cleanup costs, governmental responses costs, natural resources damages, property damages, personal injuries, attorneys’ fees or penalties arising out of, based on or resulting from the presence, or release into the environment, of any Material

of Environmental Concern at any location owned, leased or operated by the Company or any of its subsidiaries, now or in the past (collectively, “Environmental Claims”), pending or, to the best of the Company’s knowledge, threatened against the Company or any of its subsidiaries or any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law; and (iii) to the best of the Company’s knowledge, there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Material of Environmental Concern, that reasonably could result in a violation of any Environmental Law or form the basis of a potential Environmental Claim against the Company or any of its subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law.

(aa) Compliance with Laws. The Company has not been advised, and has no reason to believe, that it or any of its subsidiaries is not conducting business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, except where failure to be so in compliance would not result in a Material Adverse Change. The Company has not been advised, and has no reason to believe, that it or any of its directors and officers have, in their capacities as such, failed to comply with the provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, except where failure to so comply would not result in a Material Adverse Change.

(bb) Dividend Payments. Except as disclosed in the Time of Sale Prospectus and the Prospectus, no subsidiary of the Company is currently prohibited, directly or indirectly under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock or from repaying to the Company any loans or advances to such subsidiary from the Company.

(cc) Section 16 Insiders. There are no directors, officers or, to the best of the Company’s knowledge, principal stockholders of the Company required to file reports relating to beneficial ownership of the Company’s securities under Section 16 of the Exchange Act, except for those persons and entities listed on Schedule E hereto.

(dd) Insurance. The Company and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged; neither the Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for; and neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that could not reasonably be expected to result in a Material Adverse Change, in each case, except as described in the Time of Sale Prospectus.

(ee) No Unregistered Sales of Common Stock. Except as described in the Time of Sale Prospectus, the Company has not sold, issued or distributed any shares of Common Stock during the six-month period preceding the date hereof, including any sales pursuant to Rule 144A under, or Regulation D or S of, the Securities Act, other than shares issued pursuant to employee benefit plans, qualified stock option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants.

(ff) [Compliance with Laws of Foreign Jurisdictions. The Registration Statement, the Prospectus, the Time of Sale Prospectus and each preliminary prospectus comply, and any amendments or supplements thereto will comply, with any applicable laws or regulations of foreign jurisdictions in which the Prospectus, the Time of Sale Prospectus or any preliminary prospectus, as amended or supplemented, if applicable, are distributed in connection with the Directed Share Program].

(gg) No Required Consent for Offering of Directed Shares. [No consent, approval, authorization or order of, or qualification with, any governmental body or agency, other than those obtained, is required in connection with the offering of the Directed Shares in any jurisdiction where the Directed Shares are being offered][No Directed Shares have been offered, and no Prospectus, the Time of Sale Prospectus or any preliminary prospectus, as amended or supplemented, if applicable, have been distributed, in connection with the Directed Share Program in any jurisdiction outside the United States.]

(hh) Directed Share Program Participants. [The Company has not offered, or caused Morgan Stanley to offer, Shares to any person pursuant to the Directed Share Program with the specific intent to unlawfully influence a customer or supplier of the Company to alter the customer’s or supplier’s level or type of business with the Company, or a trade journalist or publication to write or publish favorable information about the Company or its products][All of the Participants in the Directed Share Program are directors, officers or employees of the Company or its subsidiaries or its affiliates].

B. Walter Industries hereby represents, warrants and covenants to each Underwriter as follows:

(a) The Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by or on behalf of Walter Industries.

(b) Company Representation. Walter Industries has no reason to believe that the representations and warranties of the Company contained in Section 1.A of this Agreement (other than Section 1.A(c)(iii) as to which Walter Industries is not called upon to express any belief) are not true and correct; and the sale of the Common Shares by the Company pursuant to this Agreement is not prompted by any material information concerning the Company or any of its subsidiaries which is not set forth in the Time of Sale Prospectus and the Prospectus.

Any certificate signed by an officer of the Company and delivered to the Representatives or to counsel for the Underwriters in connection with this Agreement

shall be deemed to be a representation and warranty by the Company to the Underwriters as to the matters set forth therein.

The Company acknowledges that the Underwriters and, for purposes of the opinions to be delivered pursuant to Section 6 hereof, counsel to the Company and counsel to the Underwriters, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.

Section 2. Purchase, Sale and Delivery of the Common Shares.

(a) The Firm Common Shares and the Optional Common Shares. The Company agrees to sell to the several Underwriters the Firm Common Shares upon the terms set forth herein. On the basis of the representations, warranties and agreements herein contained, and upon the terms but subject to the conditions herein set forth, the Underwriters agree, severally and not jointly, to purchase from the Company the respective number of Firm Common Shares set forth opposite their names on Schedule A. The purchase price per Firm Common Share to be paid by the Underwriters to the Company shall be $[______] per share.

In addition, on the basis of the representations, warranties and agreements herein contained, and upon the terms but subject to the conditions herein set forth, the Company hereby grants an option to the several Underwriters to purchase, severally and not jointly, up to an aggregate of [______] Optional Common Shares from the Company at the purchase price per share to be paid by the Underwriters for the Firm Common Shares, as set forth in the preceding paragraph. The option granted hereunder may be exercised at any time and from time to time upon notice by the Underwriters to the Company, which notice may be given at any time and from time to time within 30 days from the date of this Agreement. Such notice shall set forth (i) the aggregate number of Optional Common Shares as to which the Underwriters are exercising the option, (ii) the names and denominations in which the certificates for the Optional Common Shares are to be registered and (iii) the time, date and place at which such certificates will be delivered (which time and date may be simultaneous with, but not earlier than, the Closing Date; and in such case the term “Closing Date” shall refer to the time and date of delivery of certificates for the Firm Common Shares and the Optional Common Shares). Each time and date of delivery, if subsequent to the Closing Date, is called a “Subsequent Closing Date” and shall be determined by the Underwriters and shall not be earlier than two nor later than five full business days after delivery of such notice of exercise. If any Optional Common Shares are to be purchased, each Underwriter agrees, severally and not jointly, to purchase the number of Optional Common Shares (subject to such adjustments to eliminate fractional shares as the Underwriters may determine) that bears the same proportion to the total number of Optional Common Shares to be purchased as the number of Firm Common Shares set forth on Schedule A opposite the name of such Underwriter bears to the total number of Firm Common Shares.

The Common Shares are to be offered to the public initially at $[____] per share (the “Public Offering Price”) and to certain dealers selected by the Underwriters at a price that represents a concession not in excess of $[____] per share under the Public Offering

Price. Any of the Underwriters may allow, and such dealers may reallow, a concession, not in excess of $[____] per share, to any Underwriter or to certain other dealers.

(b) The Closing Date. Delivery of certificates for the Common Shares to be purchased by the Underwriters and payment therefor shall be made at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022 (or such other place as may be agreed to by the Company and the Underwriters) at 9:00 a.m., New York time, on [_______], 2006, or such other time and date (not later than 1:30 p.m., New York time, on the fifth business day following [____________], 2006) as the Underwriters shall designate by notice to the Company (the time and date of such closing are called the “Closing Date”). The Company hereby acknowledges that circumstances under which the Underwriters may provide notice to postpone the Closing Date as originally scheduled include, but are in no way limited to, any determination by the Company or the Underwriters to recirculate to the public copies of an amended or supplemented Time of Sale Prospectus or Prospectus.

(c) Payment for the Common Shares. Payment for the Firm Common Shares to be sold by the Company shall be made at the Closing Date and payment for the Optional Common Shares, if any, shall be made at the applicable Subsequent Closing Date, in each case, by wire transfer of immediately available funds to the order of an account or accounts specified by the Company. The Company hereby agrees that it will pay all stock transfer taxes, stamp duties and other similar taxes, if any, payable upon the sale or delivery of the Common Shares to be sold by it to the Underwriters, or otherwise in connection with the performance of its obligations hereunder.

(d) Delivery of Prospectuses to the Underwriters. Not later than 12:00 p.m., New York time, on the second business day following the date the Common Shares are first released by the Underwriters for sale to the public, the Company shall deliver or cause to be delivered, copies of the Prospectus in such quantities and at such places as the Underwriters shall reasonably request.

Section 3. Covenants of the Company. The Company further covenants and agrees with the Underwriters as follows:

(a) Underwriter’s Review of Proposed Amendments and Supplements. During such period beginning on the date hereof and ending on the later of the Closing Date or such date, as in the opinion of counsel for the Underwriters, the Prospectus is no longer required by law to be delivered in connection with sales by an Underwriter or dealer (the “Prospectus Delivery Period”), prior to amending or supplementing the Registration Statement, the Time of Sale Prospectus or the Prospectus, the Company shall furnish to the Underwriters for review a copy of each such proposed amendment or supplement, and the Company shall not file any such proposed amendment or supplement to which the Underwriters reasonably object. Subject to the foregoing sentence, the Company will cause the Prospectus and any supplement thereto to be filed with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed and will provide evidence satisfactory to the Underwriters of such timely filing.

(b) Free Writing Prospectus; Time of Sale Prospectus. The Company covenants and agrees (i) to furnish to the Underwriters a copy of each proposed free writing prospectus to be prepared by, used by, or referred to by the Company and not to use or refer to any proposed free writing prospectus to which the Underwriters reasonably object and (ii) not to take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not have been required to file thereunder.

(c) Permitted Free Writing Prospectuses. The Company represents that it has not made, and agrees that, unless it obtains the prior consent of the Underwriters (which consent shall not be unreasonably withheld), it will not make, any offer relating to the Common Shares that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 of the Securities Act) required to be filed by the Company with the Commission or retained by the Company under Rule 433 of the Securities Act; provided that the prior consent of the Underwriters hereto shall be deemed to have been given in respect of the Issuer Free Writing Prospectuses, if any, included in Schedule B hereto. Any such free writing prospectus consented to by the Underwriters is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company agrees that (i) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) has complied and will comply, as the case may be, with the requirements of Rules 164 and 433 of the Securities Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.

(d) Amendments and Supplements to the Time of Sale Prospectus and the Prospectus. If the Time of Sale Prospectus is being used to solicit offers to buy the Common Shares at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which the Time of Sale Prospectus as then amended or supplemented would include an untrue statement of material fact or omit to state a material fact required to be stated therein, and it is necessary to amend or supplement the Time of Sale Prospectus in order to make the statements therein, in the light of the circumstances when the Time of Sale Prospectus is delivered to a purchaser, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information contained in the Registration Statement then on file with the Commission, or if, in the opinion of counsel for the Underwriters, it is otherwise necessary to amend or supplement the Time of Sale to comply with applicable law, the Company agrees to promptly prepare (subject to Section 3(a) hereof), file with the Commission and furnish at its own expense to the Underwriters, amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in the light of the circumstances when the Time of Sale Prospectus is delivered to a purchaser, be misleading, or so that the Time of Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration Statement then on file, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with applicable law.

If, during the Prospectus Delivery Period, any event shall occur or condition exist as a result of which the Prospectus as then amended or supplemented would include an untrue statement of material fact or omit to state a material fact required to be stated therein, and it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, it is otherwise necessary to amend or supplement the Prospectus to comply with applicable law, the Company agrees to promptly prepare (subject to Section 3(a) hereof), file with the Commission and furnish at its own expense to the Underwriters, amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading, or so that the Prospectus, as amended or supplemented, will comply with applicable law.

(e) Securities Act Compliance. After the date of this Agreement, the Company shall promptly advise the Underwriters in writing (i) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Time of Sale Prospectus or the Prospectus or the receipt of any comments from the Commission relating to the Registration Statement, (ii) when the Prospectus, and any supplement thereto, shall have been filed (if required) with the Commission pursuant to Rule 424(b), (iii) when, prior to the termination of the Prospectus Delivery Period, any amendment to the Registration Statement shall have been filed or become effective, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto or of any order preventing or suspending the use of the Time of Sale Prospectus or the Prospectus, (v) of the receipt of any notice from the Commission pursuant to Rule 401(g)(2) of the Securities Act objecting to use of the Registration Statement, and (vi) of any proceedings to remove, suspend or terminate from listing the Common Stock from the NYSE, or of the threatening or initiation of any proceedings for any of such purposes. If the Commission shall enter any such stop order or issue any notice pursuant to Rule 401(g)(2) of the Securities Act at any time, the Company will use its best efforts to obtain the lifting of such order at the earliest possible moment.

(f) Copies of any Amendments and Supplements to the Prospectus. The Company agrees to furnish the Underwriters, without charge, during the Prospectus Delivery Period, as many copies of the Time of Sale Prospectus and the Prospectus and any amendments and supplements thereto as the Underwriters may reasonably request.

(g) Blue Sky Compliance. The Company shall cooperate with the Underwriters and counsel for the Underwriters, as the Underwriters may reasonably request from time to time, to qualify or register the Common Shares for sale under (or obtain exemptions from the application of) the state securities or blue sky laws of those jurisdictions designated by the Underwriters, shall comply with such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Common Shares. The Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be

subject to taxation as a foreign corporation. The Company will advise the Underwriters promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Common Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its reasonable best efforts to obtain the withdrawal thereof at the earliest possible moment.

(h) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Common Shares sold by it in the manner described under the caption “Use of Proceeds” in each of the Time of Sale Prospectus and the Prospectus.

(i) Transfer Agent. The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Common Stock.

(j) Earnings Statement. As soon as practicable, the Company will make generally available to its security holders and to the Underwriters an earnings statement (which need not be audited) of the Company and its consolidated subsidiaries that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act.

(k) Periodic Reporting Obligations. During the Prospectus Delivery Period the Company shall file, on a timely basis, with the Commission all reports and documents required to be filed under the Exchange Act.

(l) [Listing. The Company will use its reasonable best efforts to list, subject to notice of issuance, the Common Shares on the New York Stock Exchange].

(m) Agreement Not to Offer or Sell Additional Securities. During the period commencing on the date hereof and ending on the 180^th day following the date of the Prospectus, the Company shall not issue any new shares of Common Stock, and each of the Company and Walter Industries will not, without the prior written consent of each of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated (which consent may be withheld at the sole discretion of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated, respectively), directly or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or establish an open “put equivalent position” or liquidate or decrease a “call equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition of), or announce the offering of, or file any registration statement under the Securities Act (other than the filing of a registration statement for the registration of shares of Common Stock pursuant to the Company’s employee benefit plans described in the Prospectus) in respect of, any shares of Common Stock, options or warrants to acquire shares of Common Stock or securities exchangeable or exercisable for or convertible into shares of Common Stock; provided, however, that:

(1) Walter Industries may convert shares of the Company’s Series B Common Stock, par value $.01 per share, into shares of Common Stock;

(2) the Company may issue shares of its Common Stock upon the exercise of options, warrants or similar securities outstanding as of the date hereof and described in the Prospectus or upon the conversion of securities outstanding as of the date hereof;

(3) the Company may grant shares of its Common Stock or options to purchase shares of its Common Stock pursuant to its benefit plans described in the Prospectus, provided that (i) such options do not vest, in whole or in part, during such 180-day period or (ii) the recipients of such grant agrees to be bound by the restrictions described in this Section 3(m);

(4) the Company may offer, sell, contract to sell or issue shares of Common Stock in connection with the acquisition of, or merger with, another company, provided that the recipients of such common stock agrees to be bound by the restrictions described in this paragraph for the remainder of such 180-day period;

(5) the Company may acquire shares of Common Stock in open market transactions after the completion of the offering of Shares contemplated by this Agreement and reissue such acquired shares to its employees pursuant to its 2006 Employee Stock Purchase Plan described in the Prospectus,

provided that, in each case described in clauses (1) through (3) above, it shall be a pre-condition to any such issuance, grant, sale, offer, transfer or other disposition that the holder of such shares, options, or shares issued upon exercise of such options or warrants, agree in writing to be bound by the terms of a lock-up agreement to the same extent as if such holder were a party hereto (and that the execution and delivery by such holder of a lock-up agreement substantially in the form attached hereto as Exhibit C shall satisfy such condition) and no filing by any party (donor, donee, transferor or transferee) under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with such transfer or distribution (other than a filing on a Form 5 made after the expiration of the 180-day period referred to above. The foregoing restrictions shall not apply to (i) the Common Shares being offered and sold pursuant to the terms of this Agreement or (ii) transactions by any person other than the Company or Walter Industries relating to shares of Common Stock acquired in open market transactions after the completion of the offering of Shares contemplated by this Agreement.

(n) No Manipulation of Price. The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company prohibited by the Securities Act.

(o) Exchange Act Compliance. During the Prospectus Delivery Period, the Company will file all documents required to be filed with the Commission pursuant to

Section 13(a), 13(c), 14 or 15(d) of the Exchange Act in the manner and within the time periods required by the Exchange Act. Additionally, the Company shall report the use of proceeds from the issuance of the Common Shares as may be required under Rule 463 under the Securities Act.

The Representatives, on behalf of the several Underwriters, may, in their sole discretion, waive in writing the performance by the Company of any one or more of the foregoing covenants in whole or in part.

Section 4. Covenants of the Underwriters. Each Underwriter severally covenants with the Company not to take any action that would result in the Company being required to file with the Commission under Rule 433(d) a free writing prospectus prepared by or on behalf of such Underwriter that otherwise would not be required to be filed by the Company thereunder, but for the action of such Underwriter.

Section 5. Payment of Expenses.

The Company agrees to pay all costs, fees and expenses incurred in connection with the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including without limitation (i) all expenses incident to the issuance and delivery of the Common Shares (including all printing and engraving costs), (ii) all fees and expenses of the registrar and transfer agent of the Common Stock, (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of the Company’s counsel, independent public or certified public accountants and other advisors, (v) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), each Time of Sale Prospectus and the Prospectus, and all amendments and supplements thereto, and this Agreement, (vi) all filing fees, attorneys’ fees and expenses incurred by the Company or the Underwriters in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Common Shares for offer and sale under the state securities or blue sky laws or the provincial securities laws of Canada, and, if requested by the Representatives, preparing and printing a “Blue Sky Survey” or memorandum, and any supplements thereto, advising the Underwriters of such qualifications, registrations and exemptions, (vii) the filing fees incident to the NASD’s review and approval of the Underwriters’ participation in the offering and distribution of the Common Shares, (viii) the fees and expenses associated with listing of the Common Stock on the New York Stock Exchange and the preparation and filing of the registration statement on Form 8-A relating to the Common Stock, (ix) all other fees, costs and expenses referred to in Item 13 of Part II of the Registration Statement [and (x) all costs and expenses of the Underwriters, including the fees and disbursements of counsel for the Underwriters, in connection with matters related to the Directed Shares which are designated by the Company for sale to the Participants]. In addition, the Company shall make available an airplane (which may be a Company-owned airplane) available for transportation in connection with presentations to prospective purchasers of the Common Shares (the “roadshow”), and the Underwriters shall pay all other costs, fees and expenses of the

Company incurred in connection with such roadshow. Except as provided in this Section 5, Section 7, and Section 11 hereof, the Underwriters shall pay their own expenses, including the fees and disbursements of its counsel.

Section 6. Conditions of the Obligations of the Underwriters.

The obligations of the Underwriters to purchase and pay for the Common Shares as provided herein on the Closing Date and, if applicable, each Subsequent Closing Date, shall be subject to the accuracy of the representations and warranties on the part of the Company set forth in Section 1 hereof as of the date hereof and as of the Closing Date as though then made, to the timely performance by the Company of its covenants and other obligations hereunder, and to each of the following additional conditions:

(a) Accountants’ Comfort Letter. On the date hereof, the Underwriters shall have received from PricewaterhouseCoopers LLP, an independent registered public accounting firm with respect to the Company, a letter dated the date hereof addressed to the Underwriters in form and substance satisfactory to PricewaterhouseCoopers LLP (the execution by PricewaterhouseCoopers LLP of such letter to be conclusive evidence that such letter is in form and substance satisfactory to it) and, in addition to the above, such letter shall be in form and substance satisfactory to the Underwriters containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters, delivered according to Statement of Auditing Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial statements and certain financial information contained in the Time of Sale Prospectus and the Prospectus.

(b) Compliance with Registration Requirements; No Stop Order. For the period from and after the effectiveness of this Agreement and prior to the Closing Date and, with respect to the Optional Common Shares, prior to the applicable Subsequent Closing Date:

(i) the Company shall have filed the Prospectus with the Commission (including the information required by Rule 430A under the Securities Act) in the manner and within the time period required by Rule 424(b) under the Securities Act; or the Company shall have filed a post-effective amendment to the Registration Statement containing the information required by such Rule 430A, and such post-effective amendment shall have become effective;

(ii) all material required to be filed by the Company pursuant to Rule 433(d) under the Securities Act, shall have been filed with the Commission within the applicable time periods prescribed for such filings under such Rule 433;

(iii) no stop order suspending the effectiveness of the Registration Statement, or any post-effective amendment to the Registration Statement, shall be in effect and no proceedings for such purpose shall have been instituted or threatened by the Commission, and the Company has not received from the

Commission any notice pursuant to Rule 401(g)(2) of the Securities Act objecting to use of the automatic shelf registration statement form; and

(iv) the NASD shall have raised no objection to the fairness and reasonableness of the underwriting terms and arrangements.

(c) No Material Adverse Change or Ratings Agency Change. For the period from and after the date of this Agreement and prior to the Closing Date, and, with respect to the Optional Common Shares, prior to the applicable Subsequent Closing Date:

(i) in the judgment of the Underwriters there shall not have occurred any Material Adverse Change; and

(ii) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading), in the rating accorded to any securities of the Company or any of its subsidiaries by any “nationally recognized statistical rating organization” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act, as a result of which, in the sole judgment of the Representatives, it is impracticable or inadvisable to purchase and pay for the Common Shares in the manner and on the terms described in the Time of Sale Prospectus and the Prospectus or to enforce contracts for the sale of securities.

(d) Opinion of Counsel for the Company. On the Closing Date (and, with respect to the Optional Common Shares, each Subsequent Closing Date) the Underwriters shall have received the opinion and negative assurance letter of Simpson Thacher & Bartlett LLP, counsel for the Company and Walter Industries, each dated as of such Closing Date, the forms of which are attached as Exhibit A1 and Exhibit A2, and of [__________], General Counsel of the Company, dated as of the Closing Date, in the form of which is attached as Exhibit B.

(e) Opinion of Counsel for the Underwriters. On the Closing Date (and, with respect to the Optional Common Shares, each Subsequent Closing Date) the Underwriters shall have received the favorable opinion of Shearman & Sterling LLP, counsel for the Underwriters, dated as of the Closing Date, with respect to the matters customarily addressed in such transactions.

(f) Officers’ Certificate. On the Closing Date (and, with respect to the Optional Common Shares, each Subsequent Closing Date) the Underwriters shall have received a written certificate executed by the Chairman of the Board, Chief Executive Officer or President, and the Chief Financial Officer or Chief Accounting Officer of the Company, dated as of the Closing Date or the Subsequent Closing Date, as applicable, to the effect set forth in subsection (b)(iii) of this Section 6, and further to the effect that:

(i) for the period from and after the date of this Agreement and prior to such Closing Date, there has not occurred any Material Adverse Change;

(ii) the representations, warranties and covenants of the Company set forth in Section 1 of this Agreement are true and correct with the same force and effect as though expressly made on and as of such Closing Date; and

(iii) the Company has complied with all the agreements hereunder and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date.

(g) Bring-down Comfort Letter. On the Closing Date (and, with respect to the Optional Common Shares, each Subsequent Closing Date) the Underwriters shall have received from PricewaterhouseCoopers LLP, an independent registered public accounting firm with respect to the Company, a letter dated such date, in form and substance satisfactory to the Underwriters, to the effect that they reaffirm the statements made in the letter furnished by them pursuant to subsection (a) of this Section 6, except that the specified date referred to therein for the carrying out of procedures shall be no more than three business days prior to the Closing Date (and, with respect to the Optional Common Shares, each Subsequent Closing Date).

(h) Lock-Up Agreement from Directors and Certain Senior Executive Officers of the Company. On or prior to the date hereof, the Company shall have furnished to the Underwriters an agreement in the form of Exhibit C hereto from each of the persons listed on Schedule F hereto, and each such agreement shall be in full force and effect on each of the Closing Date and the Subsequent Closing Date.

(i) Additional Documents. On or before the Closing Date (and, with respect to the Optional Common Shares, each Subsequent Closing Date), the Underwriters and counsel for the Underwriters shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Common Shares as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

If any condition specified in this Section 6 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the Underwriters by notice to the Company at any time on or prior to the Closing Date, which termination shall be without liability on the part of any party to any other party, except that Section 5, Section 7, Section 8, Section 9 and Section 10 shall at all times be effective and shall survive such termination.

Section 7. Reimbursement of Underwriter’s Expenses.

If this Agreement is terminated by the Underwriters pursuant to Section 6 or Section 11 if the sale to the Underwriters of the Common Shares on the Closing Date is not consummated because of any refusal, inability or failure on the part of the Company

to perform any agreement herein or to comply with any provision hereof, the Company agrees to reimburse the Underwriters, upon demand for all documented out-of-pocket expenses that shall have been reasonably incurred by the Underwriters in connection with the proposed purchase and the offering and sale of the Common Shares, including but not limited to fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone charges.

Section 8. Indemnification.

(a) Indemnification of the Underwriters by the Company and Walter Industries.

(I) The Company agrees to indemnify and hold harmless each Underwriter, its officers and employees, and each person, if any, who controls such Underwriter within the meaning of the Securities Act and the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which such Underwriter, officer, employee or controlling person may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Time of Sale Prospectus, the Prospectus or any Issuer Free Writing Prospectus, or in any amendment thereof or supplement thereto, or the omission or alleged omission therefrom of a material fact, in each case, necessary to make the statements therein not misleading and to reimburse such Underwriter, officer, employee or controlling person for any and all expenses (including the fees and disbursements of counsel chosen by such Underwriter) as such expenses are reasonably incurred by such Underwriter, officer, employee or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon (1) any breach by such Underwriter of its covenant set forth in Section 4 hereof or (2) any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Underwriters expressly for use in the Registration Statement, the Time of Sale Prospectus, the Prospectus or any Issuer Free Writing Prospectus (or any amendment or supplement thereto), it being understood and agreed that the only such information furnished by the Underwriters consists of the information set forth in Schedule D hereof. The indemnity agreement set forth in this Section 8(a)(I) shall be in addition to any liabilities that the Company may otherwise have.

(II) Walter Industries agrees to indemnify and hold harmless each Underwriter, its officers and employees, and each person, if any, who controls such Underwriter within the meaning of the Securities Act and the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which such Underwriter, officer, employee or controlling person may become subject, under the Securities Act, the

Exchange Act or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of Walter Industries), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Time of Sale Prospectus, the Prospectus or any Issuer Free Writing Prospectus, or in any amendment thereof or supplement thereto, or the omission or alleged omission therefrom of a material fact, in each case, necessary to make the statements therein not misleading (but only with reference to information relating to Walter Industries furnished by or on behalf of Walter Industries for use in the Registration Statement, the Time of Sale Prospectus, the Prospectus or any Issuer Free Writing Prospectus, or in any amendment thereof or supplement thereto) and to reimburse such Underwriter, officer, employee or controlling person for any and all expenses (including the fees and disbursements of counsel chosen by such Underwriter) as such expenses are reasonably incurred by such Underwriter, officer, employee or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon (1) any breach by such Underwriter of its covenant set forth in Section 4 hereof or (2) any untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to Walter Industries by the Underwriters expressly for use in the Registration Statement, the Time of Sale Prospectus, the Prospectus or any Issuer Free Writing Prospectus (or any amendment or supplement thereto), it being understood and agreed that the only such information furnished by the Underwriters consists of the information set forth in Schedule D hereof. The indemnity agreement set forth in this Section 8(a)(II) shall be in addition to any liabilities that Walter Industries may otherwise have.

(b) Indemnification of the Company and its Directors and Officers. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, each of its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act, against any loss, claim, damage, liability or expense, as incurred, to which the Company or any such director, officer or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Underwriter), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, the Time of Sale Prospectus, the Prospectus and any Issuer Free Writing Prospectus, or in any amendment thereof or supplement thereto, or arises out of or is based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Time of Sale Prospectus, the Prospectus and any

Issuer Free Writing Prospectus (or any amendment thereof or supplement thereto), in reliance upon and in conformity with written information furnished to the Company by the Underwriters expressly for use therein; and to reimburse the Company or any such director, officer, or controlling person for any legal and other expense reasonably incurred by the Company or any such director, officer, or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. The Company hereby acknowledges that the only information that the Underwriters have furnished to the Company expressly for use in the Registration Statement, the Time of Sale Prospectus, the Prospectus and any Issuer Free Writing Prospectus (or any amendment thereof or supplement thereto) are the statements set forth in Schedule D; and the Underwriters confirm that such statements are correct. The indemnity agreement set forth in this Section 8(b) shall be in addition to any liabilities that the Underwriters may otherwise have.

(c) Notifications and Other Indemnification Procedures. Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof may be made against an indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof, but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 8 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that a conflict may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party’s election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel (together with local counsel), approved by the indemnifying party (the Underwriters in the case of Section 8(b) and Section 9), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel satisfactory to the

indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party.

(d) Settlements. The indemnifying party under this Section 8 shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there is a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 8(c) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. Notwithstanding the immediately preceding sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, an indemnifying party shall not be liable for any settlement of the nature contemplated by this Section 8 effected without its consent if such indemnifying party (i) reimburses such indemnified party in accordance with such request to the extent it determines in good faith such request to be reasonable and (ii) provides written notice to the indemnified party substantiating in reasonable detail the unpaid balance as unreasonable, in each case prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent (x) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding and (y) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

Section 9. Contribution.

If the indemnification provided for in Section 8 is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Common Shares pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i)

above but also the relative fault of the Company, on the one hand, and the Underwriters, on the other hand, in connection with the statements or omissions or inaccuracies in the representations and warranties herein which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Common Shares pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Common Shares pursuant to this Agreement (before deducting expenses) received by the Company, and the total underwriting discount received by the Underwriters bear to the aggregate initial offering price of the Common Shares. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact or any such inaccurate or alleged inaccurate representation or warranty relates to information supplied by the Company, on the one hand, or the Underwriters, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 8(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 8(c) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 9; provided, however, that no additional notice shall be required with respect to any action for which notice has been given under Section 8(c) for purposes of indemnification.

The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 9.

Notwithstanding the provisions of this Section 9, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Common Shares purchased by it and distributed to investors were offered to investors exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 9, (i) each officer and employee of an Underwriter and each person, if any, who controls an Underwriter within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as such Underwriter and (ii) each director of the Company, each officer of the Company, and each person, if any, who controls the Company within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company.

Section 10. Directed Share Program Indemnification.

(a) The Company agrees to indemnify and hold harmless Morgan Stanley, each person, if any, who controls Morgan Stanley within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and each affiliate of Morgan Stanley within the meaning of Rule 405 of the Securities Act (“Morgan Stanley Entities”) from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) (i) to the extent not covered by the indemnification provisions of Section 8(a), caused by any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or with the consent of the Company for distribution to Participants in connection with the Directed Share Program or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) caused by the failure of any Participant to pay for and accept delivery of Directed Shares that the Participant agreed to purchase; or (iii) related to, arising out of, or in connection with the Directed Share Program, other than losses, claims, damages or liabilities (or expenses relating thereto) that are finally judicially determined to have resulted from the bad faith or gross negligence of Morgan Stanley Entities. For the avoidance of doubt, nothing in this Section 10(a) shall require the Company to indemnify and hold harmless any of the Morgan Stanley Entities with reference to any information that the Underwriters have furnished to the Company expressly for use in the Registration Statement, the Time of Sale Prospectus, the Prospectus and any Issuer Free Writing Prospectus (or any amendment thereof or supplement thereto), which are as set forth in Schedule D, and referred to in Section 8(b) hereof.

(b) In case any proceeding (including any governmental investigation) shall be instituted involving any Morgan Stanley Entity in respect of which indemnity may be sought pursuant to Section 10(a), the Morgan Stanley Entity seeking indemnity, shall promptly notify the Company in writing and the Company, upon request of the Morgan Stanley Entity, shall retain counsel reasonably satisfactory to the Morgan Stanley Entity to represent the Morgan Stanley Entity and any others the Company may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any Morgan Stanley Entity shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Morgan Stanley Entity unless (i) the Company shall have agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Company and the Morgan Stanley Entity and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company shall not, in respect of the legal expenses of the Morgan Stanley Entities in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Morgan Stanley Entities. Any such separate firm for the Morgan Stanley Entities shall be designated in writing by Morgan Stanley. The Company shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Company agrees to indemnify the Morgan Stanley Entities from and

against any loss or liability by reason of such settlement or judgment. The Company shall not, without the prior written consent of Morgan Stanley, effect any settlement of any pending or threatened proceeding in respect of which any Morgan Stanley Entity is or could have been a party and indemnity could have been sought hereunder by such Morgan Stanley Entity, unless such settlement includes an unconditional release of the Morgan Stanley Entities from all liability on claims that are the subject matter of such proceeding.

(c) To the extent the indemnification provided for in Section 10(a) is unavailable to a Morgan Stanley Entity or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then the Company in lieu of indemnifying the Morgan Stanley Entity thereunder, shall contribute to the amount paid or payable by the Morgan Stanley Entity as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Morgan Stanley Entities on the other hand from the offering of the Directed Shares or (ii) if the allocation provided by Section 10(c)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in Section 10(c)(i) above but also the relative fault of the Company on the one hand and of the Morgan Stanley Entities on the other hand in connection with any statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Morgan Stanley Entities on the other hand in connection with the offering of the Directed Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Directed Shares (before deducting expenses) and the total underwriting discounts and commissions received by the Morgan Stanley Entities for the Directed Shares, bear to the aggregate Public Offering Price of the Directed Shares. If the loss, claim, damage or liability is caused by an untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact, the relative fault of the Company on the one hand and the Morgan Stanley Entities on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Morgan Stanley Entities and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(d) The Company and the Morgan Stanley Entities agree that it would not be just or equitable if contribution pursuant to this Section 10 were determined by pro rata allocation (even if the Morgan Stanley Entities were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 10(c). The amount paid or payable by the Morgan Stanley Entities as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by the Morgan Stanley Entities in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 10, no Morgan Stanley Entity shall be required to contribute any amount in excess of the amount by which the total price at

which the Directed Shares distributed to the public were offered to the public exceeds the amount of any damages that such Morgan Stanley Entity has otherwise been required to pay. The remedies provided for in this Section 10 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

(e) The indemnity and contribution provisions contained in this Section 10 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Morgan Stanley Entity or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Directed Shares.

Section 11. Termination of this Agreement.

On or prior to the Closing Date this Agreement may be terminated by the Underwriters by notice given to the Company if at any time (i) trading or quotation in any of the Company’s securities shall have been suspended or limited by the Commission or by the New York Stock Exchange, or trading in securities generally on the New York Stock Exchange shall have been suspended or limited, or minimum or maximum prices shall have been generally established on any of such stock exchanges by the Commission or the NASD; (ii) a general banking moratorium shall have been declared by federal or New York authorities; (iii) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred as a result of which, in the sole judgment of the Representatives, it is impracticable to purchase and pay for the Firm Common Shares within a reasonable time after the Closing Date (or, with respect to the Optional Common Shares, the Subsequent Closing Date), it being understood that the Underwriters shall use their reasonable efforts to purchase and pay for the Common Shares during such time; (iv) there shall have occurred any outbreak or escalation of national or international hostilities or any crisis or calamity, or any change in the United States or international financial markets, or any substantial change or development involving a prospective substantial change in United States’ or international political, financial or economic conditions, as in the judgment of the Representatives is material and adverse and makes it impracticable or inadvisable to market the Common Shares in the manner and on the terms described in the Time of Sale Prospectus and the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date hereof) or to enforce contracts for the sale of securities or (v) in the judgment of the Underwriters there shall have occurred any Material Adverse Change. Any termination pursuant to this Section 11 shall be without liability on the part of (a) the Company to the Underwriters, except that the Company shall be obligated to reimburse the expenses of the Underwriters pursuant to Sections 4 and 7 hereof, (b) the Underwriters to the Company, or (c) of any party hereto to any other party except that the provisions of Section 8, Section 9 and Section 10 shall at all times be effective and shall survive such termination.

Section 12. Representations and Indemnities to Survive Delivery.

The respective indemnities, contribution, agreements, representations, warranties and other statements of the Company and Walter Industries, of their respective officers

and of the Underwriters set forth in or made pursuant to this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation, or statement as to the result hereof, made by or on behalf of the Underwriters, the Company or Walter Industries or any of its or their respective partners, officers or directors or any controlling person, as the case may be, (ii) acceptance of the Common Shares and payment for them hereunder and (iii) any termination of this Agreement.

Section 13. Effectiveness; Defaulting Underwriters.

This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

If, on the Closing Date or a Subsequent Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Common Shares that it has or they have agreed to purchase hereunder on such date, and the aggregate number of Common Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Common Shares to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Firm Common Shares set forth opposite their respective names in Schedule A bears to the aggregate number of Firm Common Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as you may specify, to purchase the Common Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Common Shares that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 13 by an amount in excess of one-ninth of such number of Common Shares without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm Common Shares and the aggregate number of Firm Common Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Firm Common Shares to be purchased on such date, and arrangements satisfactory to you and the Company for the purchase of such Firm Common Shares are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case either you or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement, in the Time of Sale Prospectus, in the Prospectus or in any other documents or arrangements may be effected. If, on a Subsequent Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Additional Shares to be purchased on such Subsequent Closing Date, the non-defaulting Underwriters shall have the option to (a) terminate their obligation hereunder to purchase the Additional Shares to be sold on such Subsequent Closing Date or (b) purchase not less than the number of Additional Shares that such non-defaulting Underwriters would have been obligated to purchase in the absence of such default. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.

If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement, the Company will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder.

Section 14. Notices.

All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:

If to the Representatives:

To:

Banc of America Securities LLC
9 West 57^th Street
New York, NY 10019
Facsimile: (212) 933-2217
Attention: Syndicate Department

With a copy to:

Banc of America Securities LLC
9 West 57^th Street
New York, NY 10019
Facsimile: (212) 583-8567
Attention: Legal Department

Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Facsimile: [_______________]
Attention: Equity Syndicate Desk

Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Facsimile: [_______________]
Attention: Legal Department

Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Facsimile: 646-834-8133
Attention: Syndicate Registration

In the case of notices delivered pursuant to Section 8 or Section 9:

Lehman Brothers Inc.
399 Park Avenue, 10^th Floor
New York, New York 10022
Facsimile:      212-520-0421
Attention:     Director of Litigation
                        Office of the General Counsel

If to the Company:

Mueller Water Products, Inc.
4211 W. Boy Scout Blvd.

Tampa, FL 33607

Facsimile: (813) [________]

Attention: [________]

If to Walter Industries, Inc.:

Mueller Water Products, Inc.
4211 W. Boy Scout Blvd.

Tampa, FL 33607

Facsimile: (813) [________]

Attention: [_________]

Any party hereto may change the address for receipt of communications by giving written notice to the others.

Section 15. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 8, Section 9 and Section 10, and in each case their respective successors, and no other person will have any right or obligation hereunder. The term “successors” shall not include any purchaser of the Common Shares as such from the Underwriters merely by reason of such purchase.

Section 16. Partial Unenforceability. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

Section 17. Governing Law Provisions. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

Section 18. General Provisions. (a) Entire Agreement. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto. The Table of Contents and the Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

(b) Sophisticated Persons. Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification provisions of Section 8 and the contribution provisions of Section 9, as well as the provisions of Section 10, and is fully informed regarding said provisions.

Each of the parties hereto further acknowledges that the provisions of Sections 8, 9 and 10 hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Time of Sale Prospectus and the Prospectus (and any amendments and supplements thereto), as required by the Securities Act and the Exchange Act.

(c) No Fiduciary Agreement. The Company acknowledges that in connection with the offering of the Common Shares: (i) the Underwriters have acted at arms length, are not agents of, and owe no fiduciary duties to, the Company or any other person, (ii) the Underwriters owe the Company only those duties and obligations set forth in this Agreement and prior written agreements (to the extent not superseded by this Agreement), if any, and (iii) the Underwriters may have interests that differ from those of the Company. The Company waives to the full extent permitted by applicable law any claims it may have against the Underwriters arising from an alleged breach of fiduciary duty in connection with the offering of the Common Shares.

If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company and Walter Industries the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.

Very truly yours,

Mueller Water Products, Inc.

By:

Name:

Title:

Walter Industries, Inc.

By:

Name:

Title:

The foregoing Underwriting Agreement is hereby confirmed and accepted by the Underwriters as of the date first above written.

Banc of America Securities LLC

By: ___ ___

Name:

Title:

Morgan Stanley & Co. Incorporated

By: ___ ___

Name:

Title:

Lehman Brothers Inc.

By: ___ ___

Name:

Title:

Acting on behalf of themselves and on behalf of
the several Underwriters named on Schedule A hereto

SCHEDULE A

Underwriters	Number of Firm Common Shares to be Purchased
Banc of America Securities LLC
Morgan Stanley & Co. Incorporated
Lehman Brothers Inc.
SunTrust Capital Markets, Inc.
Goldman, Sachs & Co.
Avondale Partners, LLC
Calyon Securities (USA) Inc.

Total

SCHEDULE B

Issuer Free Writing Prospectus

SCHEDULE C

Pricing Information

Price per share to the public: $[______]
Offering proceeds to the Company, before expenses: $[_________]
Closing date: $[_______]

SCHEDULE D

Statements Provided By the Underwriters

1. The names of the Underwriters in the table set forth in the first paragraph of the section captioned “Underwriting” in the preliminary prospectus and the Prospectus.

2. The fourth paragraph of the section captioned “Underwriting” in the preliminary prospectus and the Prospectus regarding selling concessions and discounts.

3. The sixth paragraph of the section captioned “Underwriting” in the preliminary prospectus and the Prospectus regarding sales to discretionary accounts.

4. The seventeenth paragraph of the section captioned “Underwriting” in the preliminary prospectus and the Prospectus regarding stabilization.

5. The twenty-third paragraph of the section captioned “Underwriting” in the preliminary prospectus and the Prospectus regarding the online availability of a Prospectus in electronic format.

SCHEDULE E

Section 16 Insiders

SCHEDULE F

Persons Subject to Lock-Up

EXHIBIT A1

Opinion of Simpson Thacher & Bartlett LLP delivered pursuant to Section 6(d) of the Underwriting Agreement.

EXHIBIT A2

Negative assurance letter of Simpson Thacher & Bartlett LLP delivered pursuant to Section 6(d) of the Underwriting Agreement.

EXHIBIT B

Opinion of [_______________], General Counsel of the Company, delivered pursuant to Section 6(d) of the Underwriting Agreement.

EXHIBIT C

Form of Lock-Up Agreement

[__________________], 2006

BANC OF AMERICA SECURITIES LLC
9 West 57^th Street
New York, NY 10019

MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036

LEHMAN BROTHERS INC.
745 Seventh Avenue
New York, New York 10019

As Representatives of the several Underwriters

Re: Mueller Water Products, Inc. (the “Company”)

Ladies and Gentlemen:

The undersigned is an owner of record or beneficially of certain shares of [FOR D/Os: Series A Common Stock, par value $.01 per share (“Series A Common Stock”)][FOR WALTER INDUSTRIES: shares of Series B Common Stock, par value $.01 per share (“Series B Common Stock”)], of the Company or securities convertible into or exchangeable or exercisable for Series A Common Stock. The Company proposes to carry out a public offering of shares of its Series A Common Stock (the “Offering”) for which you will act as the representatives of the underwriters. The undersigned recognizes that the Offering will be of benefit to the undersigned and will benefit the Company. The undersigned acknowledges that you and the other underwriters are relying on the representations and agreements of the undersigned contained in this letter in carrying out the Offering and in entering into underwriting arrangements with the Company with respect to the Offering.

In consideration of the foregoing, the undersigned hereby agrees that the undersigned will not, (and will cause any spouse or immediate family member of the spouse or the undersigned living in the undersigned’s household not to), without the prior written consent of each of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated (which consent may be withheld at the sole discretion of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated, respectively), directly or indirectly, sell, offer, contract or grant any option to sell (including without limitation any short sale), pledge, transfer, establish an open “put equivalent position” or liquidate or decrease a “call equivalent position” within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, or otherwise dispose of or transfer (or enter into any transaction which is designed to, or might reasonably be expected to, result

C-1

in the disposition of) including the filing (or participation in the filing of) of a registration statement with the Securities and Exchange Commission in respect of, any shares of Series A Common Stock, options or warrants to acquire shares of Series A Common Stock, or securities exchangeable or exercisable for or convertible into shares of Series A Common Stock currently or hereafter owned either of record or beneficially (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the undersigned (or such spouse or family member), or publicly announce an intention to do any of the foregoing, for a period commencing on the date hereof and continuing through the close of trading on the date 180 days after the date of the Prospectus (the “Lock-Up Period”). In addition, the undersigned agrees that, without the prior written consent of each of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated (which consent may be withheld at the sole discretion of Banc of America Securities LLC and Morgan Stanley & Co. Incorporated, respectively), it will not, during the Lock-Up Period, make any demand for or exercise any right with respect to, the registration of any shares of Series A Common Stock or any security convertible into or exercisable or exchangeable for Series A Common Stock.

The foregoing paragraph shall not apply to (i) the issuance of any shares of Series A Common Stock upon any exercise or the conversion of any options, warrants or securities that are outstanding as of the date hereof and described in the Prospectus, (ii) any grant by the Company of options to purchase shares of its Series A Common Stock pursuant to its benefit plans described in the Prospectus, provided that such options do not vest, in whole or in part, during such 180-day period or the recipients of such grant agrees to be bound by the restrictions described in this letter agreement; (iii) any transfer of shares of Series A Common Stock as bona fide gifts (or other transfers for no consideration) or to the immediate family of the undersigned; (iv) any transfer effected by the undersigned or by the personal representatives of the undersigned of shares of Series A Common Stock in the event of death, disability or termination of employment of the undersigned in accordance with the terms of the applicable employment agreement or other agreements entered into prior to the date of the Prospectus; [and] (v) transactions relating to shares of Series A Common Stock acquired in open market transactions after completion of the Offering;[and (vi) [FOR WALTER INDUSTRIES: any conversion by the undersigned of shares of Series B Common Stock into shares of Series A Common Stock)]; provided, however, that in each case, it shall be a pre-condition to any such issuance, grant, sale, offer, transfer or other disposition that the holder of such shares, options, or shares issued upon exercise of such options or warrants, agree in writing to be bound by the terms of a lock-up agreement to the same extent as if such holder were a party hereto (and that the execution and delivery by such holder of a lock-up agreement substantially in the form of this letter agreement shall satisfy such condition, and there shall be no further transfer of such Series A Common Stock except in accordance with this letter agreement), and no filing by any party (donor, donee, transferor or transferee) under Section 16(a) of the Securities Exchange Act of 1934, as amended, shall be required or shall be voluntarily made in connection with such transfer or distribution (other than a filing on a Form 5 made after the expiration of the 180-day period referred to above).

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For purposes of this letter agreement, “immediate family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother- or father-in-law, son- or daughter-in-law, brother- or sister-in-law, niece, nephew, aunt, uncle or first cousin, including adoptive relationships.

The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock held by the undersigned except in compliance with the foregoing restrictions.

With respect to the Offering only, the undersigned waives any registration rights relating to registration under the Securities Act of 1933, as amended, of any shares of Series A Common Stock owned either of record or beneficially by the undersigned, including any rights to receive notice of the Offering.

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This agreement is irrevocable and will be binding on the undersigned and the respective successors, heirs, personal representatives, and assigns of the undersigned.

Printed Name of Holder

By:
Signature

Printed Name of Person Signing

(and indicate capacity of person signing if signing as

custodian, trustee, or on behalf of an entity)

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EXHIBIT D

List of subsidiaries

SUBSIDIARY	STATE/COUNTRY OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION
Anvil 1, LLC	Delaware
Anvil 2, LLC	Delaware
AnvilStar, LLC	Delaware
Anvil International, LP	Delaware
Anvil International, 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
James Jones Company, LLC	Delaware
J.B. Smith Mfg Co., LLC	Delaware
Jingmen Pratt Valve Co. Ltd.	People’s Republic of China
MCO 1, LLC	Alabama
MCO 2, LLC	Alabama
Mueller Canada Holding Corp.	Canada
Mueller Canada Ltd.	Canada
Mueller Co. Ltd.	Alabama
Mueller Group Co-Issuer, Inc.	Delaware
Mueller Group, LLC	Delaware
Mueller Service Co., LLC	Delaware
Milliken Acquisition Valve, LLC	Delaware
Mueller International, Inc.	Delaware
Mueller International, LLC	Delaware
Mueller International Finance, Inc.	Delaware
Mueller International Finance, LLC	Delaware
United States Pipe and Foundry Company, LLC	Alabama

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EX-3.1 3 a2169810zex-3_1.htm EXHIBIT 3.1

EXHIBIT 3.1

[Form of Restated Certificate of Incorporation of Mueller Water Products, Inc.]

RESTATED CERTIFICATE OF INCORPORATION

MUELLER WATER PRODUCTS, INC.

* * *

The undersigned hereby certifies on behalf of Mueller Water Products, Inc., a Delaware corporation (the “Corporation”), as follows:

(1) The name under which the Corporation was originally incorporated is Mueller Holding Company, Inc.

(2) The original Certificate of Incorporation of the Corporation was filed with the Secretary of the State of the State of Delaware on September 22, 2005, and was amended by a Certificate of Merger filed with the Secretary of State of the State of Delaware on January __, 2006.

(3) This Restated Certificate of Incorporation, which both restates and further amends the provisions of the Corporation’s Certificate of Incorporation, has been duly adopted in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”).

(4) The Certificate of Incorporation of the Corporation is hereby amended and restated to read in its entirety as follows:

ARTICLE I

SECTION 1.1. Name. The name of the Corporation (the “Corporation”) is: Mueller Water Products, Inc.

ARTICLE II

SECTION 2.1. Address. The registered office in the State of Delaware is Corporation Service Company, 2711 Centerville Road, Suite 400, City of Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is the Corporation Service Company.

ARTICLE III

SECTION 3.1. Purpose. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).

ARTICLE IV

SECTION 4.1. Capitalization. The total number of shares of stock that the Corporation is authorized to issue is shares, consisting of (i) shares of Common Stock, par value $0.01 per share, of which shares shall be designated Series A Common Stock (“Series A Common Stock”) and shares shall be designated Series B Common Stock (“Series B Common Stock” and, with the Series A Common Stock, the “Common Stock”), and (ii) shares of Preferred Stock, par value $0.01 per share (“Preferred Stock”).

Without regard to any other provision of this Restated Certificate of Incorporation (including without limitation the other provisions of this Article IV), each one share of Common Stock, $0.01 par value, either issued and outstanding or held by the Corporation as treasury stock, immediately prior to the time this Restated Certificate of Incorporation becomes effective shall be, and hereby is, automatically reclassified as and changed into fully paid and nonassessable shares of Series B Common Stock, without any further act by the Corporation or the holders thereof.

SECTION 4.2. Preferred Stock. Subject to the other provisions of this Restated Certificate of Incorporation, the Board of Directors is hereby expressly authorized, by resolution or resolutions, to provide, out of the unissued shares of Preferred Stock, for one or more series of Preferred Stock and, with respect to each such series, to fix the number of shares constituting such series, the voting powers, full or limited, or no voting power of the shares of such series, and the designation, preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, of the shares of such series, as are not inconsistent with this Restated Certificate of Incorporation or any amendment hereto, and as may be permitted by the DGCL. The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.

SECTION 4.3. Common Stock.

(a) General. Except as provided in this Section 4.3 or as otherwise required by the DGCL, all shares of Series A Common Stock and the Series B Common Stock shall have the same powers, privileges, preferences and relative participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, and shall be identical to each other in all respects.

(b) Dividends. Subject to applicable law, any other provision of this Restated Certificate of Incorporation, and the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having preference over the right to participate with the Common Stock with respect to the payment of dividends, the holders of Series A Common Stock and Series B Common Stock shall be entitled to receive such dividends and other distributions in cash, stock of any corporation (other than, except as set forth in the following sentences, Common Stock of the Corporation) or property of the Corporation when and as may be declared thereon by the Board of Directors from time to time out of assets or funds of the

Corporation legally available therefor and shall share equally on a per share basis in all such dividends and other distributions. In the case of dividends or other distributions payable in Common Stock other than distributions pursuant to stock splits or divisions of Common Stock, only shares of Series A Common Stock shall be paid or distributed with respect to Series A Common Stock, and either shares of Series A Common Stock or Series B Common Stock may be paid or distributed with respect to Series B Common Stock. In the case of distributions pursuant to stock splits or divisions of Common Stock of the Corporation, only shares of Series A Common Stock shall be paid or distributed with respect to Series A Common Stock, and only shares of Series B Common Stock shall be paid or distributed with respect to Series B Common Stock. In any dividends or other distributions payable in Common Stock, including but not limited to distributions pursuant to stock splits or divisions of Common Stock, the number of shares of Series A Common Stock and Series B Common Stock so distributed on each share shall be equal.

(c) Voting Rights. (i) Each holder of record of Series A Common Stock shall have one vote for each share of Series A Common Stock outstanding in his name on the books of the Corporation and which is entitled to vote, and each holder of record of Series B Common Stock shall have eight votes for each share of Series B Common Stock that is outstanding in his name on the books of the Corporation and which is entitled to vote; provided, however, that notwithstanding the foregoing, a Permitted Holder (as defined below) that beneficially owns (as determined in accordance with Section 10.2) all of the outstanding shares of Series B Common Stock shall have the right to reduce from time to time the number of votes per share to which the holders of Series B Common Stock are entitled to any number of votes per share of Series B Common Stock less than eight (but not fewer than one) by written notice to the Corporation, which notice shall (A) specify the reduced number of votes per share, (B) be included with the records of the Corporation maintained by the Secretary and be provided to any stockholder of record of the Corporation upon request therefor, and (C) for so long thereafter as there shall be shares of Series B Common Stock outstanding, be referred to or reflected in any proxy or information statement provided to holders of the Common Stock in connection with any matter to be voted upon by such holders; and provided, further, that with respect to the vote on any proposed conversion of the shares of Series B Common Stock into shares of Series A Common Stock pursuant to Section 4.3(f)(vi) below, every holder of a share of Common Stock, irrespective of series, shall have one vote for each share of Common Stock outstanding in his name on the books of the Corporation and which is entitled to vote. A “Permitted Holder” means, subject to the application of Section 4.3(f)(iv), any of (1) Walter Industries, Inc., a Delaware corporation (“Walter”), (2) any person (as defined in Section 10.2) to which Walter or any of its subsidiaries transfers shares of Series B Common Stock representing at least a 50% economic interest in the then outstanding Common Stock taken as a whole (the “Series B Transferee”), or (3) any majority-owned subsidiary of Walter or the Series B Transferee for so long as such subsidiary remains a majority-owned subsidiary thereof.

(ii) The holders of record of Series A Common Stock and holders of record of Series B Common Stock shall vote together as a single class on all matters (including, without limitation, any amendment to this Restated Certificate of Incorporation, any merger or consolidation of the Corporation, any sale of all or substantially all of the assets of the Corporation or similar transactions), except as otherwise required by the DGCL or this Restated Certificate of Incorporation.

(iii) In the election of directors, each stockholder shall be entitled to cast for any one candidate no greater number of votes than the number of shares held by such stockholder; no stockholder shall be entitled to cumulate votes on behalf of any candidate.

(iv) Except as otherwise required by the DGCL, holders of record of either series of Common Stock, as such, shall not be entitled to vote on any amendment to this Restated Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Restated Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) or pursuant to the DGCL.

(d) Special Consent Required for Certain Amendments. The affirmative vote of the holders of a majority of the outstanding Series B Common Stock, voting separately as a class, shall be required for any amendment, alteration or repeal (including but not limited to by merger, consolidation or otherwise by operation of law) of any provision of this Restated Certificate of Incorporation that would adversely affect the powers, preferences or rights of the Series B Common Stock (except for changes affecting only those powers, preferences or rights shared by both series of Common Stock and affecting such powers, preferences or rights equally with respect to both series of Common Stock).

(e) Liquidation, Dissolution or Winding Up. Upon the dissolution, liquidation or winding up of the Corporation, subject to the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference over the right to participate with the Common Stock with respect to the distribution of assets of the Corporation upon such dissolution, liquidation or winding up of the Corporation, the holders of Common Stock, shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by such holders. Neither the holders of Series A Common Stock nor the holders of Series B Common Stock shall have any preference over the other in connection with such distribution.

(f) Conversion. (i) Prior to the date on which shares of Series B Common Stock are transferred to the stockholders of either Walter or to the Series B Transferee in a transaction (a “Tax-Free Spin-Off”) intended to be tax-free under Section 355 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), each record holder of shares of Series B Common Stock may convert such shares into an equal number of shares of Series A Common Stock by surrendering ownership of such shares to the Corporation for conversion, paying any required tax transfer stamps and providing proof of such payment to the Corporation, and providing a written notice by such record holder to the Corporation stating that such record holder desires to convert such shares of Series B Common Stock into the same number of shares of Series A Common Stock and requesting that the Corporation issue all of such shares of Series A Common Stock to the persons named therein, setting forth the number of shares of Series A Common Stock to be issued to each such person. For purposes of this Section 4.3(f), a Tax-Free Spin-Off shall be deemed to have occurred at the time shares are first transferred to stockholders of either Walter or Series B Transferee, as the case may be, following receipt of an affidavit

described in Section 4.3(f)(x)(D) below. To the extent permitted by law, such voluntary conversion shall be deemed to have been effected at the close of business on the date of such surrender. Following a Tax-Free Spin-Off, shares of Series B Common Stock shall no longer be convertible into shares of Series A Common Stock except as set forth in the other provisions of Section 4.3(f) below.

(ii) Prior to or after a Tax-Free Spin-Off, each share of Series B Common Stock shall automatically convert into one share of Series A Common Stock upon the transfer of such share if, after such transfer, such share is not beneficially owned by a Permitted Holder. Such automatic conversion shall be deemed to have been effected at the close of business on the date of such transfer. Notwithstanding the foregoing, however, shares of Series B Common Stock shall not convert into shares of Series A Common Stock as a result of any Tax-Free Spin-Off.

(iii) Prior to a Tax-Free Spin-Off, shares of Series B Common Stock representing at least a 50% economic interest in the then outstanding Common Stock taken as a whole transferred by Walter or its subsidiaries to a Series B Transferee shall not automatically convert to Series A Common Stock upon such transfer of such shares. Any shares of Series B Common Stock retained by Walter and its subsidiaries following such transfer of shares of Series B Common Stock to the Series B Transferee shall automatically convert into shares of Series A Common Stock upon such transfer. Such automatic conversion shall be deemed to have been effected at the close of business on the date of such transfer.

(iv) Prior to a Tax-Free Spin-Off, a transfer of all of the shares of Series B Common Stock beneficially owned by Walter or the Series B Transferee to a parent company that acquires beneficial ownership of all of the outstanding capital stock of Walter or the Series B Transferee, respectively, shall not automatically convert to Series A Common Stock upon such transfer of such shares. Upon such acquisition, references to Walter or the Series B Transferee, as the case may be, in this Restated Certificate of Incorporation and the Restated Bylaws of the Corporation (as they may be amended from time to time, the “Bylaws”) shall be deemed to refer to such parent company.

(v) Each share of Series B Common Stock shall automatically convert into one share of Series A Common Stock if at any time prior to a Tax-Free Spin-Off the number of outstanding shares of Series B Common Stock owned by all Permitted Holders is less than % of the aggregate number of shares of Common Stock then outstanding. Such automatic conversion shall be deemed to have been effected at the close of business on the first date that such threshold is reached.

(vi) In the event of a Tax-Free Spin-Off, shares of Series B Common Stock transferred to stockholders of either Walter or the Series B Transferee shall not convert to shares of Series A Common Stock. Following such Tax-Free Spin-Off at any time, the Corporation may submit for stockholder approval, subject to the conditions set forth below, a proposal to convert all outstanding shares of Series B Common Stock into shares of Series A Common Stock; provided, however, that the Corporation has received

an opinion of counsel or a favorable private letter ruling from the Internal Revenue Service, in either case satisfactory to Walter or the Series B Transferee, as the case may be, in its sole and absolute discretion, which shall be exercised in good faith solely to preserve the tax-free status of the Tax-Free Spin-Off (and in determining whether an opinion or ruling is satisfactory, Walter or the Series B Transferee may consider, among other factors, the appropriateness of any underlying assumptions and representations if used as a basis for the opinion or ruling, and Walter or the Series B Transferee may determine that no opinion or ruling would be acceptable to Walter or the Series B Transferee, as the case may be), to the effect that such conversion will not affect the tax-free treatment of the Tax-Free Spin-Off. If such an opinion or ruling is received, approval of such conversion may be submitted to a vote of the holders of the Common Stock. At the meeting of stockholders called for such purpose, every holder of Common Stock shall be entitled to one vote in person or by proxy for each share of Common Stock standing in his name on the books of the Corporation. Approval of such conversion shall require approval by the affirmative vote of a majority of the votes entitled to be cast by the holders of the Series A Common Stock and Series B Common Stock, voting together as a single class, and neither series of Common Stock shall be entitled to a separate class or series vote. Such conversion shall be effective on the date on which such approval is given at a meeting of stockholders called for such purpose.

(vii) The Corporation will provide notice of any automatic conversion of all outstanding shares of Series B Common Stock to holders of record of the Common Stock as soon as practicable following such conversion; provided, however, that the Corporation may satisfy such notice requirement by providing such notice prior to such conversion. Such notice shall be provided either (A) by mailing notice of such conversion first class postage prepaid, to each holder of record of the Common Stock, at such holder’s address as it appears on the books of the Corporation or (B) by public announcement as provided in the Bylaws; provided, however, that no failure to give such notice nor any defect therein shall affect the validity of the automatic conversion of any shares of Series B Common Stock. Each such notice shall state, as appropriate, the automatic conversion date; that all outstanding shares of Series B Common Stock are automatically converted; and that no dividends will be declared on the shares of Series B Common Stock converted after such conversion date.

(viii) Prior to a Tax-Free Spin-Off, holders of shares of Series B Common Stock may (A) transfer any or all of such shares of Series B Common Stock held by them only in connection with a transfer which meets the qualifications of Section 4.3(f)(x) below, or (B) convert any or all of such shares into shares of Series A Common Stock. Prior to a Tax-Free Spin-Off, no one other than those persons in whose names shares of Series B Common Stock become registered on the books of the Corporation by reason of their record ownership of shares of Common Stock of the Corporation which are reclassified into shares of Series B Common Stock, or transferees or successive transferees who receive shares of Series B Common Stock in connection with a transfer which meets the qualifications set forth in Section 4.3(f)(x) below, shall by virtue of the acquisition of shares of Series B Common Stock have the status of an owner or holder of shares of Series B Common Stock or be recognized as such by the Corporation or be

otherwise entitled to enjoy for his own benefit the special rights and powers of a holder of shares of Series B Common Stock.

(ix) Holders of shares of Series B Common Stock may at any time transfer to any person the shares of Series A Common Stock issuable upon conversion of such shares of Series B Common Stock.

(x) Prior to or in connection with a Tax-Free Spin-Off, shares of Series B Common Stock may only be transferred to a Permitted Holder and shall be transferred on the books of the Corporation, upon presentation at the office of the Secretary of the Corporation (or at such additional place or places as may from time to time be designated by the Secretary or any Assistant Secretary of the Corporation) of the transfer instructions for such shares, in proper form for transfer and accompanied by all requisite stock transfer tax stamps, only if such transfer instructions when so presented shall also be accompanied by any one of the following (giving effect to the last sentence of Section 4.3(f)(iv) if applicable):

(A) an affidavit from Walter or the Series B Transferee, as the case may be, stating that such request is being presented to effect a transfer by such person of such shares to a subsidiary thereof;

(B) an affidavit from Walter or the Series B Transferee, as the case may be, stating that such request is being presented to effect a transfer by any subsidiary thereof of such shares to such person or another subsidiary thereof;

(C) an affidavit from Walter stating that such request is being presented to effect a transfer by Walter or any of its subsidiaries of such shares to the Series B Transferee; or

(D) an affidavit from Walter or the Series B Transferee, as the case may be, stating that such request is being presented to effect a transfer by such person of such shares to its stockholders in connection with a Tax-Free Spin-Off.

(xi) (A) If a record holder of shares of Series B Common Stock shall deliver a request for transfer for such shares, properly endorsed for transfer or accompanied by an instrument of transfer, to a person who receives such shares in connection with a transfer which does not meet the qualifications set forth in Section 4.3(f)(x), then such person or any successive transferee of such shares shall treat such endorsement or instrument as authorizing him on behalf of such record holder to convert such shares in the manner above provided for the purpose of the transfer to himself of the shares of Series A Common Stock issuable upon such conversion, and to give on behalf of such record holder the written notice of conversion above required, and shall convert such shares of Series B Common Stock accordingly. (B) If such shares of Series B Common Stock shall improperly have been registered in the name of such a person (or in the name of any successive transferee of such shares), such person or transferee shall be deemed to have surrendered such shares, and shall provide the Corporation with the

written notice of conversion above required, in which case (1) such person or transferee shall be deemed to have elected to treat the instrument of transfer so delivered by such former record holder as authorizing such person or transferee on behalf of such former record holder so to convert such shares and so to give such notice, (2) the shares of Series B Common Stock registered in the name of such former record holder shall be deemed to have been surrendered for conversion for the purpose of the transfer to such person or transferee of the shares of Series A Common Stock issuable upon conversion, and (3) the appropriate entries shall be made on the books of the Corporation to reflect such action.

(xii) In the event that the Board of Directors of the Corporation (or any committee of the Board of Directors, or any officer of the Corporation, designated for the purpose by the Board of Directors) shall determine, upon the basis of facts not disclosed in any affidavit or other document accompanying the request for transfer for shares of Series B Common Stock when presented for transfer, that such shares of Series B Common Stock have been registered in violation of the provisions of Section 4.3(f)(x), or shall determine that a person is enjoying for his own benefit the special rights and powers of shares of Series B Common Stock in violation of such provisions, then the Corporation shall take such action at law or in equity as is appropriate under the circumstances. An unforeclosed pledge made to secure a bona fide obligation shall not be deemed to violate such provisions.

(xiii) Prior to the occurrence of a Tax-Free Spin-Off, every statement of ownership of shares of Series B Common Stock, certificates for shares of Series B Common Stock, if any, and the records of the Corporation shall include a legend reading as follows:

“The shares of Series B Common Stock reflected upon these records (or represented by this certificate) are subject to certain transfer restrictions set forth in Section 4.3(f) of the Restated Certificate of Incorporation of this Corporation and may not be transferred to any person in connection with a transfer that does not meet the qualifications set forth in Section 4.3(f) of the Restated Certificate of Incorporation of this Corporation, and no person who receives such shares in connection with a transfer which does not meet the qualifications prescribed by such Section 4.3(f) is entitled to own or to be registered as the record holder of such shares of Series B Common Stock, but the record holder of these shares may at any time convert such shares of Series B Common Stock into the same number of shares of Series A Common Stock. Each holder of these shares, by accepting the same, accepts and agrees to all of the foregoing.”

Upon and after the transfer of shares in a Tax-Free Spin-Off, shares of Series B Common Stock shall no longer bear the foregoing legend.

(xiv) Upon any conversion of shares of Series B Common Stock into shares of Series A Common Stock pursuant to the provisions of this Section 4.3(f), (A) the rights of the holders of shares of Series B Common Stock as such shall cease and such holders shall be treated for all purposes as having become the record owners of the shares of Series A Common Stock issuable upon such conversion; provided, however,

that such persons shall be entitled to receive when paid any dividends declared on the Series B Common Stock as of a record date preceding the time of such conversion and unpaid as of the time of such conversion (giving effect to the proviso in Section 4.3(b) as if such dividends had been declared with respect to the shares of Series A Common Stock received upon conversion); provided, further, that any dividend declared prior to such conversion, for which the record date or payment date shall be subsequent to such conversion, which may have been declared on the shares of Series B Common Stock so converted shall be deemed to have been declared, and shall be payable, with respect to the shares of Series A Common Stock into or for which such shares of Series B Common Stock shall have been so converted, and any such dividend which shall have been declared on such shares payable in shares of Series B Common Stock shall be deemed to have been declared, and shall be payable, in shares of Series A Common Stock.

(xv) The Corporation will not be required to pay any documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Series A Common Stock on the conversion of shares of Series B Common Stock pursuant to this Section 4.3(f), and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

(xvi) As long as any shares of Series B Common Stock shall be outstanding, the Corporation shall reserve and keep available out of its authorized but unissued shares of Series A Common Stock, solely for the purpose of effecting the conversion of shares of Series B Common Stock, that number of shares of Series A Common Stock necessary to effect the conversion of all of the then outstanding shares of Series B Common Stock. If at any time, the Board of Directors of the Corporation determines that the number of authorized but unissued shares of Series A Common Stock would be insufficient to effect the conversion of all of the then outstanding shares of Series B Common Stock, the Corporation shall take such action as may be necessary or advisable to increase its authorized but unissued shares of Series A Common Stock to such number of shares as shall be sufficient to effect such conversion.

(xvii) Upon the conversion of all or any portion of Series B Common Stock pursuant to this Section 4.3(f), the Series B Common Stock so converted shall be cancelled and retired and may not be reissued. Following the conversion pursuant to this Section 4.3(f) of all outstanding shares of Series B Common Stock, the Corporation shall file a certificate of retirement with the Secretary of State of the State of Delaware in accordance with Section 243 of the DGCL, and thereafter such certificate of retirement shall have the effect of eliminating from this Restated Certificate of Incorporation all references to the Series B Common Stock.

(g) Preemptive Rights. Neither holders of the Series A Common Stock nor holders of Series B Common Stock shall have preemptive rights.

(h) Restrictions on Issuances. Shares of Series B Common Stock may not be issued by the Corporation to any person other than a Permitted Holder, except with the prior written consent of the holders of a majority of the outstanding Series B Common Stock.

(i) Splits, Subdivisions, Etc.. In the event that the Corporation shall, at any time when any shares of Series B Common Stock are outstanding, effect a split, subdivision, combination or consolidation of the outstanding shares of Series A Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Series A Common Stock, then in each case the Corporation shall, at the same time, effect an equivalent split, subdivision, combination or consolidation of the outstanding shares of Series B Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Series B Common Stock. In the event that the Corporation shall, at any time when any shares of Series A Common Stock are outstanding, effect a split, subdivision, combination or consolidation of the outstanding shares of Series B Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Series B Common Stock, then in each case the Corporation shall, at the same time, effect an equivalent split, subdivision, combination or consolidation of the outstanding shares of Series A Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Series A Common Stock. Notwithstanding the foregoing provisions, but in addition to any vote of the holders of any class or series of the stock of this Corporation required by the DGCL or by this Restated Certificate of Incorporation, the Corporation may effect any reclassification, split, subdivision, combination or consolidation of the shares of Series A Common Stock and Series B Common Stock with different proportions for each series if such reclassification, split, subdivision, combination or consolidation is approved by the affirmative votes of a majority of the total voting power of the outstanding shares of Series A Common Stock and Series B Common Stock, each voting as a separate class.

SECTION 4.4. Amendment to Authorized Shares. The number of authorized shares of any class or series of capital stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of at least a majority in voting power of all the shares of the Corporation entitled to vote generally in the election of directors, irrespective of the provisions of Section 242(b)(2) of the DGCL or any corresponding provision hereinafter enacted, but subject to the rights of the holders of any outstanding Preferred Stock.

ARTICLE V

SECTION 5.1. Amendments to Bylaws. In furtherance and not in limitation of the powers conferred by the DGCL, the Board of Directors is expressly authorized to adopt, amend and repeal the Bylaws of the Corporation without the vote or consent of the stockholders, in any manner not inconsistent with the DGCL or this Restated Certificate of Incorporation; provided, however, that any such adoption, amendment or repeal by the Board of Directors must be made by the affirmative vote of a majority of the directors constituting the entire Board of Directors. Notwithstanding anything to the contrary contained in this Restated Certificate of Incorporation, the affirmative vote of the holders of at least 80% in voting power of all the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required in order for the stockholders of the Corporation to amend or repeal Sections 2.02, 2.03 or 9.01 of the Bylaws or to adopt any provision inconsistent therewith.

SECTION 5.2. Number, Election and Term of Directors. The Board of Directors shall consist of not less than six directors or more than eleven directors, the exact number of directors to be determined from time to time as set forth in the Bylaws. The Board of Directors shall be elected by the stockholders at their annual meeting, and each director shall serve until his successor shall be elected and qualified or until his earlier resignation or removal. Elections of directors need not be by written ballot.

SECTION 5.3. Vacancies and Newly Created Directorships. Any vacancy occurring in the Board of Directors caused by resignation or removal from office, increase in number of directors or otherwise shall, unless otherwise required by law or by resolution of the Board of Directors, be filled only by the affirmative vote of a majority of the remaining members of the Board of Directors, though less than a quorum, or by a sole remaining director. Except as may be otherwise provided in this Restated Certificate of Incorporation, no decrease in the authorized number of directors shall shorten the term of any incumbent director. If any applicable provision of the DGCL expressly confers power on stockholders to fill such a directorship at a special meeting of stockholders, such a directorship may be filled at such meeting only by the affirmative vote of at least 80% of the voting power of all shares of capital stock of the Corporation entitled to vote generally in the election of directors voting as a single class. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor.

ARTICLE VI

SECTION 6.1. Action by Written Consent of Stockholders. Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an office or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded; provided, however, that if at any time no Permitted Holder is the beneficial owner, in the aggregate, of at least 50% in voting power of all shares entitled to vote generally in the election of directors, then any action required or permitted to be taken by the holders of the Common Stock of the Corporation must be effected at a duly called annual or special meeting of such holders and may no longer be effected by any consent in writing by such holders.

ARTICLE VII

SECTION 7.1. Exculpation of Liability. To the fullest extent permitted by the DGCL as the same exists or may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for any liability imposed by Section 102(b)(7) of the DGCL (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing

violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit.

SECTION 7.2. Adjustments; Amendments. If the DGCL is amended after the date of the filing of this Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended from time to time. No repeal or modification of any provision of this Article VII by the stockholders of the Corporation or otherwise shall adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

ARTICLE VIII

SECTION 8.1. Competition and Corporate Opportunities.

(a) In recognition and anticipation that (i) certain directors, principals, officers, employees, agents and other representatives of the Permitted Holders (collectively, the “Original Stockholders”) and their respective Affiliates (as defined below) may serve as directors or officers of the Corporation, (ii) the Original Stockholders and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, and (iii) members of the Board of Directors who are not employees of the Corporation (“Non-Employee Directors”) and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, the provisions of this Section 8.1 are set forth to regulate and define the conduct of certain affairs of the Corporation with respect to certain classes or categories of business opportunities as they may involve the Original Stockholders, the Non-Employee Directors or their respective Affiliates and the powers, rights, duties and liabilities of the Corporation and its directors, officers and stockholders in connection therewith. For purposes of this Section 8.1, “Affiliate” shall mean (A) in respect of an Original Stockholder, any person that, directly or indirectly, is controlled by such Original Stockholder, controls such Original Stockholder or is under common control with such Original Stockholder and shall include any principal, member, director, partner, shareholder, officer, employee, agent or other representative of any of the foregoing (other than the Corporation, any person that is controlled by the Corporation and the public stockholders or other equity holders of Walter or the Series B Transferee), (B) in respect of a Non-Employee Director, any person that, directly or indirectly, is controlled by such Non-Employee Director (other than the Corporation and any person that is controlled by the Corporation), and (C) in respect of the Corporation, any person that, directly or indirectly, is controlled by the Corporation.

(b) None of (i) any Original Stockholder or any of its Affiliates or (ii) any Non-Employee Director (including but not limited to any Non-Employee Director who serves as an officer of the Corporation in both his director and officer capacities) or his Affiliates (each of the persons identified in (i) and (ii) above being referred to as an “Identified Person”) shall have any

duty to refrain from directly or indirectly (x) engaging in a corporate opportunity in the same or similar business activities or lines of business in which the Corporation or any of its Affiliates now engages or proposes to engage or (y) otherwise competing with the Corporation, and, to the fullest extent permitted by the DGCL, no Identified Person shall be liable to the Corporation or its stockholders for breach of any fiduciary duty solely by reason of the fact that such Identified Person engages in any such activities. The Corporation hereby renounces any interest or expectancy in, or in being offered an opportunity to participate in, any business opportunity which may be a corporate opportunity for an Identified Person and the Corporation or any of its Affiliates, except as provided in Section 8.1(c) below. In the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for himself and the Corporation or any of its Affiliates, such Identified Person shall have no duty to communicate or offer such transaction or other business opportunity to the Corporation or any of its Affiliates and, to the fullest extent permitted by the DGCL, shall not be liable to the Corporation or its stockholders for breach of any fiduciary duty as a stockholder, director or officer of the Corporation solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for himself, or offers or directs such corporate opportunity to another person.

(c) The Corporation does not renounce its interest in any corporate opportunity offered to any Non-Employee Director (including but not limited to any Non-Employee Director who serves as an officer of this Corporation) if such opportunity is expressly offered to such person solely in his capacity as a director or officer of the Corporation and the provisions of Section 8.1(b) above shall not apply to any such corporate opportunity.

(d) In addition to and notwithstanding the foregoing provisions of this Section 8.1, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Corporation if it is a business opportunity that the Corporation is not permitted to undertake under the terms of Article III or that the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy.

(e) To the fullest extent permitted by law, any person purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Section 8.1.

ARTICLE IX

SECTION 9.1. Amendment. Notwithstanding anything contained in this Restated Certificate of Incorporation to the contrary and in addition to any vote required by applicable law, the affirmative vote of the holders of at least 80% in voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Section 4.3(c)(iii), Article V, Article VI, Article VII or Article VIII or this Article IX or to adopt any provision inconsistent therewith.

ARTICLE X

SECTION 10.1. Severability. If any provision or provisions of this Restated Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever, then, to the fullest extent permitted by applicable law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Restated Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby.

SECTION 10.2. Interpretation. Titles and headings to sections are inserted for convenience of reference only and are not intended to be a part or to affect the meaning or interpretation hereof. The words “hereof”, “herein”, “hereunder” and comparable terms refer to the entirety of this Restated Certificate of Incorporation and not to any particular article, section or other subdivision hereof, and the words “including” and comparable terms shall be deemed to followed by the words “without limitation”. References to any gender include references to other genders, and references to the singular include references to the plural and vice versa. Unless otherwise specified, references to “Article”, “Section” or another subdivision are to an article, section or subdivision of this Restated Certificate of Incorporation. A “person” means any individual, corporation, partnership, limited liability company, trust or other entity. “Beneficial ownership” shall be determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended.

* * *

IN WITNESS WHEREOF, the undersigned has caused this Restated Certificate of Incorporation to be executed by a duly authorized officer as of ____________, 2006.

	MUELLER WATER PRODUCTS, INC.

	By:	________________________________
		Name:
		Title:

EX-3.2 4 a2169810zex-3_2.htm EXHIBIT 3.2

EXHIBIT 3.2

[Form of Restated Bylaws of Mueller Water Products, Inc.]

RESTATED BYLAWS

MUELLER WATER PRODUCTS, INC.

(Effective as of , 2006)

* * *

ARTICLE I

OFFICES

SECTION 1.01. Registered Office. The Corporation shall maintain its registered office in the State of Delaware at Corporation Service Company, 2711 Centerville Road, Suite 400, City of Wilmington, County of New Castle, Delaware 19808. The Corporation may also have offices in such other places in the United States or elsewhere as the Board of Directors may, from time to time, appoint or as the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 2.01. Annual Meetings. Annual meetings of stockholders may be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors shall determine. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as described in Section 2.11 of these Bylaws in accordance with Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”).

SECTION 2.02. Special Meetings. Subject to the Restated Certificate of Incorporation of the Corporation (as it may be amended from time to time, the “Certificate of Incorporation”), special meetings of stockholders, unless otherwise prescribed by the DGCL, may be called at any time only by the Board of Directors (including, for purposes of clarity, a duly designated committee thereof), and no special meetings of stockholders shall be called by any other person.

SECTION 2.03. Notice of Stockholder Business and Nominations.

(A) Annual Meetings of Stockholders.

(1) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (b) by or at the direction of the Board of Directors, or (c) by any stockholder of the Corporation who

is entitled to vote at the meeting, who, subject to paragraph (C)(4) of this Section 2.03, complied with the notice procedures set forth in paragraphs (A)(2) and (A)(3) of this Section 2.03 and who was a stockholder of record at the time such notice is delivered to the Secretary of the Corporation.

(2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of this Section 2.03, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, and any such proposed business other than nominations of persons for election to the Board of Directors must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is changed by more than thirty (30) days from the anniversary date of the previous year’s meeting, notice by the stockholder to be timely must be so delivered not earlier than one hundred and twenty (120) days prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. Public announcement of an adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice. Notwithstanding anything in this Section 2.03(A)(2) to the contrary, if the number of directors to be elected to the Board of Directors of the Corporation at an annual meeting is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least one hundred (100) calendar days prior to the anniversary of the mailing of proxy materials for the prior year’s annual meeting of stockholders, then a stockholder’s notice required by this Section shall be considered timely, but only with respect to nominees for any new positions created by such increase, if it is received by the Secretary of the Corporation not later than the close of business on the tenth (10th) calendar day following the day on which such public announcement is first made by the Corporation.

(3) Such stockholder’s notice also shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books and records, and of such beneficial owner, (ii) the class and number of shares of capital stock of the Corporation which are owned

beneficially and of record by such stockholder and such beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, and (iv) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (x) to deliver a proxy statement or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee or (y) otherwise to solicit proxies from stockholders in support of such proposal or nomination. The foregoing notice requirements shall be deemed satisfied by a stockholder if the stockholder has notified the Corporation of his intention to present a proposal at an annual meeting in compliance with Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

(B) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is entitled to vote at the meeting, who (subject to paragraph (C)(4) of this Section 2.03) complies with the notice procedures set forth in this Section 2.03 and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice as required by paragraph (A)(2) of this Section 2.03 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholders’ notice as described above.

(C) General. (1) Except as provided in paragraph (C)(4) of this Section 2.03, only such persons who are nominated in accordance with the procedures set forth in this Section 2.03 shall be eligible for election to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in these

Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposal or nomination shall be disregarded. The chairman of the meeting of stockholders shall, if the facts warrant, determine and declare to the meeting that any nomination or business was not properly brought before the meeting and in accordance with the provisions of these Bylaws, and if he should so determine, the chairman shall so declare to the meeting, and any such nomination or business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this Section 2.03, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.03, to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

(2) Whenever used in these Bylaws, “public announcement” shall mean disclosure (a) in a press release released by the Corporation, provided such press release is released by the Corporation following its customary procedures, is reported by the Dow Jones News Service, Associated Press or comparable national news service, or is generally available on Internet news sites, or (b) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(3) Notwithstanding the foregoing provisions of this Section 2.03, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.03. Nothing in these Bylaws shall be deemed to affect any rights (a) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act, or (b) of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances.

(4) Notwithstanding anything to the contrary contained in this Section 2.03, for as long as a Permitted Holder (as defined in the Certificate of Incorporation) is the beneficial owner of at least 50% in voting power of all shares entitled to vote generally in the election of directors, no Permitted Holder shall be subject to the notice procedures set forth in paragraphs (A)(2), (A)(3) or (B) of this Section 2.03 to nominate any person for election to the Board of Directors or to propose any business to be considered by the stockholders at an annual meeting of stockholders.

SECTION 2.04. Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a timely written notice or electronic transmission, in the manner provided in Section 232 of the DGCL, of the meeting, which shall state the place, if any, date and time of the meeting, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purposes for which the meeting is called, shall be mailed to or transmitted electronically by the Secretary of the Corporation to each stockholder of

record entitled to vote thereat. Unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, the notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting.

SECTION 2.05. Quorum. Unless otherwise required by law, the holders of a majority of the voting power of the outstanding shares of stock entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders. When a quorum is once present to organize a meeting, the quorum is not broken by the subsequent withdrawal of any stockholders.

SECTION 2.06. Voting. At all meetings of the stockholders, each stockholder shall be entitled to vote, in person or by proxy, the shares of voting stock owned by such stockholder of record on the record date for the meeting. When a quorum is present or represented at any meeting, the vote of the holders of a majority of the voting power of the shares of stock present in person or represented by proxy and entitled to vote thereon shall decide any question brought before such meeting, unless the question is one upon which, by express provision of law, the rules or regulations of any stock exchange or quotation system applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, of the Certificate of Incorporation or of these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Notwithstanding the foregoing sentence and subject to the Certificate of Incorporation, all elections of directors shall be determined by a plurality of the votes cast in respect of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.

SECTION 2.07. Chairman of Meetings. The Chairman of the Board of Directors, if one is elected, or, in his absence or disability, the President of the Corporation, shall preside at all meetings of the stockholders.

SECTION 2.08. Secretary of Meeting. The Secretary of the Corporation shall act as Secretary at all meetings of the stockholders. In the absence or disability of the Secretary, the Chairman of the Board of Directors or the President shall appoint a person to act as Secretary at such meetings.

SECTION 2.09. Adjournment. At any meeting of stockholders of the Corporation, if less than a quorum be present, the Board of Directors, the chairman of the meeting or a majority of the stockholders entitled to vote thereat, present in person or by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Any business may be transacted at the adjourned meeting that might have been transacted at the meeting originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

SECTION 2.10. Remote Communication. If authorized by the Board of Directors, and subject to such guidelines and procedures as the Board of Directors may adopt,

stockholders and proxy holders not physically present at a meeting of stockholders may, by means of remote communication:

(a) participate in a meeting of stockholders; and

(b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication;

provided, however, that

(i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder;

(ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including but not limited to an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and

(iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

ARTICLE III

BOARD OF DIRECTORS

SECTION 3.01. Powers. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors. The Board of Directors shall exercise all of the powers and duties conferred by law except as provided by the Certificate of Incorporation or these Bylaws.

SECTION 3.02. Number, Election and Term. The Board of Directors shall consist of not less than six directors or more than eleven directors, the exact number of directors to be determined from time to time by resolution adopted by the Board of Directors. The Board of Directors shall be elected by the stockholders at their annual meeting, and each director shall serve until his successor shall be elected and qualified or until his earlier resignation or removal. Elections of directors need not be by written ballot.

SECTION 3.03. Resignations. Any director may resign at any time upon notice given in writing or by electronic transmission. The resignation shall take effect at the time specified therein, and if no time is specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective.

SECTION 3.04. Removal. Except as may be otherwise provided by the Certificate of Incorporation, any or all of the directors (other than the directors, if any, elected

only by the holders of any series of Preferred Stock of the Corporation, voting as a separate class) may be removed at any time either with or without cause by the affirmative vote of a majority in voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting as a single class.

SECTION 3.05. Vacancies and Newly Created Directorships. Any vacancy occurring in the Board of Directors caused by resignation or removal from office, increase in number of directors or otherwise shall, unless otherwise required by law or by resolution of the Board of Directors, be filled only by the affirmative vote of a majority of the remaining members of the Board of Directors, though less than a quorum, or by a sole remaining director. Except as may be otherwise provided in the Certificate of Incorporation, no decrease in the authorized number of directors shall shorten the term of any incumbent director. If any applicable provision of the DGCL expressly confers power on stockholders to fill such a directorship at a special meeting of stockholders, such a directorship may be filled at such meeting only by the affirmative vote of at least 80% of the voting power of all shares of capital stock of the Corporation entitled to vote generally in the election of directors voting as a single class. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor.

SECTION 3.06. Meetings. Regular meetings of the Board of Directors may be held at such places and times as shall be determined from time to time by the Board of Directors or as may be specified in a notice of meeting. Special meetings of the Board of Directors may be called by the President, and shall be called by the President or the Secretary if directed by the Board of Directors. Notice need not be given of regular meetings of the Board of Directors. At least 24 hours notice before each special meeting of the Board of Directors, providing notice of the time, date and place of the meeting and the purpose or purposes for which the meeting is called, shall be given to each director, either in person or by telephone, electronic transmission or any other method permitted by the DGCL.

SECTION 3.07. Quorum, Voting and Adjournment. A majority of the total number of directors shall constitute a quorum for the transaction of business. Except as otherwise provided by law, the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present thereat may adjourn such meeting to another time and place. Notice of such adjourned meeting need not be given if the time and place of such adjourned meeting are announced at the meeting so adjourned.

SECTION 3.08. Committees. The Board of Directors may by resolution designate one or more committees, including but not limited to an Audit Committee, each such committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee to replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors establishing such committee, shall have and may exercise all the powers

and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving, adopting or recommending to the stockholders any action or matter (other than recommendations relating to the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (b) adopting, amending or repealing any Bylaw of the Corporation. All committees of the Board of Directors shall keep minutes of their meetings and shall report their proceedings to the Board of Directors when requested or required by the Board of Directors. Unless otherwise determined by the Board of Directors or the committee, a majority of the total number of directors constituting the committee shall constitute a quorum for the transaction of business for such committee.

SECTION 3.09. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or any committee thereof, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed in the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form or shall be in electronic form if the minutes are maintained in electronic form.

SECTION 3.10. Compensation. The Board of Directors shall have the authority to fix the compensation of directors for their services. A director may also serve the Corporation in other capacities and receive compensation therefor.

SECTION 3.11. Remote Meeting. Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting by means of conference telephone or other communications equipment in which all persons participating in the meeting can hear each other. Participation in a meeting by means of conference telephone or other communications equipment shall constitute the presence in person at such meeting.

ARTICLE IV

OFFICERS

SECTION 4.01. Number. The officers of the Corporation shall include a President and a Secretary, both of whom shall be elected by the Board of Directors and who shall hold office for such terms as shall be determined by the Board of Directors and until their successors are elected and qualify or until their earlier resignation or removal. In addition, the Board of Directors may elect a Chairman of the Board of Directors, one or more Vice Presidents, including but not limited to an Executive Vice President, a Treasurer and one or more Assistant Treasurers and one or more Assistant Secretaries, who shall hold their office for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. The initial officers shall be elected at the first meeting of the Board of Directors and, thereafter, at the annual organizational meeting of the Board of Directors. Any number of offices may be held by the same person.

SECTION 4.02. Other Officers and Agents. The Board of Directors may appoint such other officers and agents as it deems advisable, who shall hold their office for such terms and shall exercise and perform such powers and duties as shall be determined from time to time by the Board of Directors.

SECTION 4.03. Chairman. The Chairman of the Board of Directors shall be a member of the Board of Directors and shall preside at all meetings of the Board of Directors and of the stockholders. In addition, the Chairman of the Board of Directors shall have such powers and perform such other duties as from time to time may be assigned to him by the Board of Directors.

SECTION 4.04. President. The President shall be the Chief Executive Officer of the Corporation. He shall exercise such duties as customarily pertain to the office of President and Chief Executive Officer, and shall have general and active management of the property, business and affairs of the Corporation, subject to the supervision and control of the Board of Directors. He shall perform such other duties as prescribed from time to time by the Board of Directors or these Bylaws. In the absence, disability or refusal of the Chairman of the Board of Directors to act, or the vacancy of such office, the President shall preside at all meetings of the stockholders and of the Board of Directors. Except as the Board of Directors shall otherwise authorize, the President shall execute bonds, mortgages and other contracts on behalf of the Corporation, and shall cause the seal to be affixed to any instrument requiring it and, when so affixed, the seal shall be attested by the signature of the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.

SECTION 4.05. Vice Presidents. Each Vice President, if any are elected, of whom one or more may be designated an Executive Vice President, shall have such powers and shall perform such duties as shall be assigned to him by the President or the Board of Directors.

SECTION 4.06. Treasurer. The Treasurer shall have custody of the corporate funds, securities, evidences of indebtedness and other valuables of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation. He shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation, taking proper vouchers therefor. He shall render to the President and Board of Directors, upon their request, a report of the financial condition of the Corporation. If required by the Board of Directors, he shall give the Corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board of Directors shall prescribe. The Treasurer shall have such further powers and perform such other duties incident to the office of Treasurer as from time to time are assigned to him by the Board of Directors.

SECTION 4.07. Secretary. The Secretary shall cause minutes of all meetings of the stockholders and directors to be recorded and kept; cause all notices required by these Bylaws or otherwise to be given properly; see that the minute books, stock books, and other nonfinancial books, records and papers of the Corporation are kept properly; and cause all reports, statements, returns, certificates and other documents to be prepared and filed when and

as required. The Secretary shall have such further powers and perform such other duties as prescribed from time to time by the Board of Directors.

SECTION 4.08. Assistant Treasurers and Assistant Secretaries. Each Assistant Treasurer and each Assistant Secretary, if any are elected, shall be vested with all the powers and shall perform all the duties of the Treasurer and Secretary, respectively, in the absence or disability of such officer, unless or until the Board of Directors shall otherwise determine. In addition, Assistant Treasurers and Assistant Secretaries shall have such powers and shall perform such duties as shall be assigned to them by the Board of Directors.

SECTION 4.09. Corporate Funds and Checks. The funds of the Corporation shall be kept in such depositories as shall from time to time be prescribed by the Board of Directors. All checks or other orders for the payment of money shall be signed by the President or the Secretary or such other person or agent as may from time to time be authorized and with such countersignature, if any, as may be required by the Board of Directors.

SECTION 4.10. Contracts and Other Documents. The President and the Secretary, or such other officer or officers as may from time to time be authorized by the Board of Directors or any other committee given specific authority in the premises by the Board of Directors during the intervals between the meetings of the Board of Directors, shall have power to sign and execute on behalf of the Corporation deeds, conveyances and contracts, and any and all other documents requiring execution by the Corporation.

SECTION 4.11. Compensation. The compensation of the officers of the Corporation shall be fixed from time to time by the Board of Directors (subject to any employment agreements that may then be in effect between the Corporation and the relevant officer). None of such officers shall be prevented from receiving such compensation by reason of the fact that he is also a director of the Corporation. Nothing contained herein shall preclude any officer from serving the Corporation, or any subsidiary, in any other capacity and receiving such compensation by reason of the fact that he is also a director of the Corporation.

SECTION 4.12. Ownership of Stock of Another Corporation. Unless otherwise directed by the Board of Directors, the President or the Secretary, or such other officer or agent as shall be authorized by the Board of Directors, shall have the power and authority, on behalf of the Corporation, to attend and to vote at any meeting of stockholders of any corporation in which the Corporation holds stock and may exercise, on behalf of the Corporation, any and all of the rights and powers incident to the ownership of such stock at any such meeting, including the authority to execute and deliver proxies and consents on behalf of the Corporation.

SECTION 4.13. Delegation of Duties. In the absence, disability or refusal of any officer to exercise and perform his duties, the Board of Directors may delegate to another officer such powers or duties.

SECTION 4.14. Resignation and Removal. Any officer of the Corporation may be removed from office for or without cause at any time by the Board of Directors. Any officer may resign at any time in the same manner prescribed under Section 3.03 of these Bylaws.

SECTION 4.15. Vacancies. The Board of Directors shall have power to fill vacancies occurring in any office.

ARTICLE V

STOCK

SECTION 5.01. Certificates of Stock. The shares of stock of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation’s stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman of the Board of Directors or the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, certifying the number and class of shares of stock in the Corporation owned by him. Any or all of the signatures on the certificate may be a facsimile. The Board of Directors shall have the power to appoint one or more transfer agents and/or registrars for the transfer or registration of certificates of stock of any class, and may require stock certificates to be countersigned or registered by one or more of such transfer agents and/or registrars.

SECTION 5.02. Transfer of Shares. Shares of stock of the Corporation shall be transferable upon its books by the holders thereof, in person or by their duly authorized agents, upon surrender to the Corporation by delivery thereof to the person in charge of the stock and transfer books and ledgers. Such certificates shall be cancelled and new certificates shall thereupon be issued. A record shall be made of each transfer. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented, both the transferor and transferee request the Corporation to do so. The Board of Directors shall have power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of certificates for shares of stock of the Corporation.

SECTION 5.03. Lost, Stolen, Destroyed or Mutilated Certificates. A new certificate of stock may be issued in the place of any certificate previously issued by the Corporation alleged to have been lost, stolen or destroyed, and the Board of Directors may, in their discretion, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond, in such sum as the Board of Directors may direct, in order to indemnify the Corporation against any claims that may be made against it in connection therewith. A new certificate of stock may be issued in the place of any certificate previously issued by the Corporation that has become mutilated without the posting by the owner of any bond upon the surrender by such owner of such mutilated certificate.

SECTION 5.04. Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or

allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (a) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting; (b) to the extent permitted by the Certificate of Incorporation, in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed: (x) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (y) to the extent permitted by the Certificate of Incorporation, the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation in accordance with applicable law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (z) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

SECTION 5.05. Registered Stockholders. Prior to the surrender to the Corporation of the certificate or certificates for a share or shares of stock with a request to record the transfer of such share or shares, the Corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner. To the fullest extent permitted by law, the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof.

ARTICLE VI

NOTICE AND WAIVER OF NOTICE

SECTION 6.01. Notice. If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the DGCL.

SECTION 6.02. Waiver of Notice. A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given

before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting (in person or by remote communication) shall constitute waiver of notice except attendance for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

ARTICLE VII

INDEMNIFICATION

SECTION 7.01. Indemnification Respecting Third Party Claims.

(A) Indemnification of Directors and Officers. The Corporation, to the fullest extent permitted by the laws of the State of Delaware as in effect from time to time, shall indemnify any person who was or is made a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (including but not limited to any appeal thereof), whether civil, criminal, administrative, or investigative (other than an action by or in the right of the Corporation), by reason of the fact that such person is or was a director or officer of the Corporation, or, if at a time when he was a director or officer of the Corporation, is or was serving at the request of, or to represent the interests of, the Corporation as a director, officer, partner, member, trustee, fiduciary, employee, agent or other similar capacity (a “Subsidiary Officer”) of another corporation, partnership, joint venture, limited liability company, trust, employee benefit plan, charitable or not-for-profit public service organization, trade association or other enterprise (an “Affiliated Entity”), against expenses (including but not limited to attorneys’ fees and disbursements), judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that such person had reasonable cause to believe that his conduct was unlawful. Notwithstanding anything to the contrary in the foregoing provisions of this paragraph, a person shall not be entitled, as a matter of right, to indemnification pursuant to this paragraph against expenses incurred in connection with any action, suit or proceeding commenced by such person against the Corporation or any Affiliated Entity or any person who is or was a director, officer, partner, member, fiduciary, employee or agent of the Corporation or a Subsidiary Officer of any Affiliated Entity in their capacity as such, but such indemnification may be provided by the Corporation in a specific case as permitted by Section 7.06 of this Article.

(B) Indemnification of Employees and Agents. The Corporation may indemnify any present or former employee or agent of the Corporation in the manner and to the same or a lesser extent that it shall indemnify any director or officer under paragraph (A) above in this Section 7.01.

SECTION 7.02. Indemnification Respecting Derivative Claims.

(A) Indemnification of Directors and Officers. The Corporation, to the fullest extent permitted by the laws of the State of Delaware as in effect from time to time, shall indemnify any person who was or is made a party or is threatened to be made a party to any threatened, pending or completed action or suit (including but not limited to any appeal thereof) brought by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation, or, if at a time when he was a director or officer to the Corporation, is or was serving at the request of, or to represent the interests of, the Corporation as a Subsidiary Officer of an Affiliated Entity against expenses (including but not limited to attorneys’ fees and disbursements) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought or in which such judgment was rendered shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the Court of Chancery of the State of Delaware or such other court shall deem proper. Notwithstanding anything to the contrary in the foregoing provisions of this paragraph, a person shall not be entitled, as a matter of right, to indemnification pursuant to this paragraph against expenses incurred in connection with any action or suit in the right of the Corporation commenced by such person, but such indemnification may be provided by the Corporation in any specific case as permitted by Section 7.06 of this Article.

(B) Indemnification of Employees and Agents. The Corporation may indemnify any present or former employee or agent of the Corporation in the manner and to the same or a lesser extent that it shall indemnify any director or officer under paragraph (A) above in this Section 7.02.

SECTION 7.03. Determination of Entitlement to Indemnification. Any indemnification to be provided under Section 7.01 or 7.02 of this Article (unless ordered by a court of competent jurisdiction) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification is proper under the circumstances because such person has met the applicable standard of conduct set forth in such paragraph. Such determination shall be made in accordance with any applicable procedures authorized by the Board of Directors and in accordance with the DGCL. In the event a request for indemnification is made by any person referred to in paragraph (A) of Section 7.01 or 7.02 of this Article, the Corporation shall use its best efforts to cause such determination to be made not later than 60 days after such request is made.

SECTION 7.04. Right to Indemnification in Certain Circumstances.

(A) Indemnification Upon Successful Defense. Notwithstanding the other provisions of this Article, to the extent that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or

proceeding referred to in any of paragraphs (A) or (B) of Section 7.01 or 7.02 of this Article, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including but not limited to attorneys’ fees and disbursements) actually and reasonably incurred by such person in connection therewith.

(B) Indemnification for Service As a Witness. To the extent any person who is or was a director or officer of the Corporation has served or prepared to serve as a witness in any action, suit or proceeding (whether civil, criminal, administrative, or investigative), including but not limited to any investigation by any legislative body or any regulatory or self-regulatory body by which the Corporation’s business is regulated, by reason of his services as a director or officer of the Corporation or his service as a Subsidiary Officer of an Affiliated Entity at a time when he was a director or officer of the Corporation (assuming such person is or was serving at the request of, or to represent the interests of, the Corporation as a Subsidiary Officer of such Affiliated Entity) but excluding service as a witness in an action or suit commenced by such person (unless such expenses were incurred with the approval of the Board of Directors, a committee thereof or the Chairman of the Board or the President of the Corporation), the Corporation shall indemnify such person against out-of-pocket expenses (including but not limited to attorneys’ fees and disbursements) actually and reasonably incurred by such person in connection therewith and shall use its best efforts to provide such indemnity within 45 days after receipt by the Corporation from such person of a statement requesting such indemnification, averring such service and reasonably evidencing such expenses; it being understood, however, that the Corporation shall have no obligation under this Article to compensate such person for such person’s time or efforts so expended. The Corporation may indemnify any employee or agent of the Corporation to the same or a lesser extent as it may indemnify any director or officer of the Corporation pursuant to the foregoing sentence of this paragraph.

SECTION 7.05. Advances of Expenses.

(A) Advances to Directors and Officers. To the fullest extent not prohibited by applicable law, expenses incurred by any person referred to in paragraph (A) of Section 7.01 or 7.02 of this Article in defending a civil, criminal, administrative, or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking in writing by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified in respect of such expenses by the Corporation as authorized by this Article.

(B) Advances to Employees and Agents. To the fullest extent not prohibited by applicable law, expenses incurred by any person referred to in paragraph (b) of Section 7.01 or 7.02 of this Article in defending a civil, criminal, administrative, or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors, a committee thereof or an officer of the Corporation authorized to so act by the Board of Directors upon receipt of an undertaking in writing by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation in respect of such expenses as authorized by this Article.

SECTION 7.06. Claims and Procedures.

(A) If (1) a claim under this Article with respect to any right to indemnification is not paid in full by the Corporation (following the final disposition of the action, suit or proceeding) within 60 days after a written demand has been received by the Corporation or (y) a claim under Section 7.05 of this Article with respect to any right to the advancement of expenses is not paid in full by the Corporation within 20 days after a written demand has been received by the Corporation, then the person seeking to enforce a right to indemnification or to an advancement of expenses, as the case may be, may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim.

(B) If successful in whole or in part in any suit brought pursuant to Section 7.06(A) of this Article, or in an action, suit or proceeding brought by the Corporation to recover an advancement of expenses (whether pursuant to the terms of an undertaking or otherwise), the person seeking to enforce a right to indemnification or an advancement of expenses hereunder or the person from whom the Corporation sought to recover an advancement of expenses, as the case may be, shall be entitled to be paid by the Corporation the reasonable expenses (including but not limited to attorneys’ fees and disbursements) of prosecuting or defending such suit.

(C) (1) In any action, suit or proceeding brought by a person seeking to enforce a right to indemnification hereunder (but not a suit brought by a person seeking to enforce a right to an advancement of expenses hereunder), it shall be a defense that the person seeking to enforce a right to indemnification has not met any applicable standard for indemnification under applicable law. (2) With respect to any action, suit or proceeding brought by a person seeking to enforce a right to indemnification or right to advancement of expenses hereunder or any action, suit or proceeding brought by the Corporation to recover an advancement of expenses (whether pursuant to the terms of an undertaking or otherwise), neither (a) the failure of the Corporation to have made a determination prior to commencement of such suit that indemnification of such person is proper in the circumstances because such person has met the applicable standards of conduct under applicable law, nor (b) an actual determination by the Corporation that such person has not met such applicable standards of conduct, shall create a presumption that such person has not met the applicable standards of conduct or, in a case brought by such person seeking to enforce a right to indemnification, be a defense to such suit.

(D) In any action, suit or proceeding brought by a person seeking to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses (whether pursuant to the terms of an undertaking or otherwise), the burden shall be on the Corporation to prove that the person seeking to enforce a right to indemnification or to an advancement of expenses or the person from whom the Corporation seeks to recover an advancement of expenses is not entitled to be indemnified, or to such an advancement of expenses, under this Article or otherwise.

SECTION 7.07. Indemnification Not Exclusive. The provision of indemnification to or the advancement of expenses to any person under this Article, or the entitlement of any person to indemnification or advancement of expenses under this Article, shall not limit or restrict in any way the power of the Corporation to indemnify or advance expenses to such person in any other way permitted by law or be deemed exclusive of, or invalidate, any right to which any person seeking indemnification or advancement of expenses may be entitled under any law, agreement, vote of stockholders or disinterested directors or otherwise, both as to

action in such person’s capacity as an officer, director, employee or agent of the Corporation and as to action in any other capacity.

SECTION 7.08. Corporate Obligations; Reliance. The provisions of this Article shall be deemed to create a binding contractual obligation on the part of the Corporation to the persons who from time to time are elected officers or directors of the Corporation, and such persons in acting in their capacities as officers or directors of the Corporation or Subsidiary Officers of any Affiliated Entity shall be entitled to rely on such provisions of this Article, without giving notice thereof to the Corporation. Any amendment, repeal, or modification of, or adoption of any provision inconsistent with, this Article (or any provision hereof) shall not adversely affect any right to indemnification or advancement of expenses granted to any person pursuant hereto with respect to any act or omission of such person occurring prior to the time of such amendment, repeal, modification, or adoption (regardless of whether the action, suit or proceeding relating to such acts or omissions is commenced before or after the time of such amendment, repeal, modification, or adoption).

SECTION 7.09. Accrual of Claims; Successors. The indemnification provided or permitted under the foregoing provisions of this Article shall or may, as the case may be, apply in respect of any expense, judgment, fine, penalty or amount paid in settlement, whether or not the claim or cause of action in respect thereof accrued or arose before or after the effective date of such provisions of this Article. The right of any person who is or was a director, officer, employee or agent of the Corporation to indemnification or advancement of expenses as provided under the foregoing provisions of this Article shall continue after he shall have ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, distributees, executors, administrators and other legal representatives of such person.

SECTION 7.10. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of, or to represent the interests of, the Corporation as a Subsidiary Officer of any Affiliated Entity, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article or applicable law.

SECTION 7.11. Definitions of Certain Terms. For purposes of this Article, (i) references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed into the Corporation in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request, or to represent the interests of, such constituent corporation as a director, officer, employee or agent of any Affiliated Entity shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued; (ii) references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; (iii) references to “serving at the request of the Corporation” shall include any service as a director, officer, partner, member, trustee, fiduciary, employee or agent of the

Corporation or any Affiliated Entity which service imposes duties on, or involves services by, such director, officer, partner, member, trustee, fiduciary, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries, and (iv) a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interest of the Corporation” as referred to in this Article.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Electronic Transmission. For purposes of these Bylaws, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

SECTION 8.02. Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.

SECTION 8.03. Fiscal Year. The fiscal year of the Corporation shall end on September 30 of each year, or such other twelve consecutive months as the Board of Directors may designate.

SECTION 8.04. Books and Records. The books and records of the Corporation may be kept (subject to any mandatory requirement of law) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors.

SECTION 8.05. Inconsistent Provisions; Severability. In the event that any provision of these Bylaws is or becomes inconsistent with any provision of the Certificate of Incorporation, the provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect, and if any provision of these Bylaws shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever, then, to the fullest extent permitted by applicable law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of these Bylaws (including, without limitation, each portion of any paragraph of these Bylaws containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby.

SECTION 8.06. Interpretation. Titles and headings to sections are inserted for convenience of reference only and are not intended to be a part or to affect the meaning or interpretation hereof. The words “hereof”, “herein”, “hereunder” and comparable terms refer to the entirety of these Bylaws and not to any particular article, section or other subdivision hereof, and the words “including” and comparable terms shall be deemed to followed by the words “without limitation”. References to any gender include references to other genders, and

references to the singular include references to the plural and vice versa. Unless otherwise specified, references to “Article”, “Section” or another subdivision are to an article, section or subdivision of these Bylaws. A “person” means any individual, corporation, partnership, limited liability company, trust or other entity. “Beneficial ownership” shall be determined in accordance with Rule 13d-3 of the Exchange Act.

ARTICLE IX

AMENDMENTS

SECTION 9.01. Amendments. Subject to Section 5.1 of the Certificate of Incorporation, these Bylaws may be adopted, amended or repealed at any meeting of the Board of Directors or of the stockholders; provided, however, that any such adoption, amendment or repeal by the Board of Directors must be made by the affirmative vote of a majority of the directors constituting the entire Board of Directors. Notwithstanding anything to the contrary contained in these Bylaws, the affirmative vote of the holders of at least 80% in voting power of all the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required in order for the stockholders of the Corporation to amend or repeal Sections 2.02 or 2.03 or this Section 9.01 of these Bylaws or to adopt any provision inconsistent therewith.

* * *

EX-5.1 5 a2169810zex-5_1.htm EXHIBIT 5.1

EXHIBIT 5.1

[Letterhead of Simpson Thacher & Bartlett LLP]

May 1, 2006

Mueller Water Products, Inc.
4211 W. Boy Scout Blvd.

Tampa, FL 33607

Ladies and Gentlemen:

We have acted as counsel to Mueller Water Products, Inc., a Delaware corporation (the “Company”), in connection with the Registration Statement on Form S-1 (the “Registration Statement”) filed by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), relating to the issuance by the Company of shares of Common Stock, par value $0.01 per share (together with any additional shares of such stock that may be issued by the Company pursuant to Rule 462(b) (as prescribed by the Commission pursuant to the Act) in connection with the offering described in the Registration Statement, the “Shares”).

We have examined the Registration Statement and a form of the Restated Certificate of Incorporation of the Company, which has been filed with the Commission as an exhibit to the Registration Statement. We also have examined the originals, or duplicates or certified or conformed copies, of such corporate records, agreements, documents and other instruments and have made such other investigations as we have deemed relevant and necessary in connection with the opinions hereinafter set forth. As to questions of fact material to this opinion, we have relied upon certificates or comparable documents of public officials and of officers and representatives of the Company.

In rendering the opinion set forth below, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as duplicates or certified or conformed copies and the authenticity of the originals of such latter documents.

Based upon the foregoing, and subject to the qualifications, assumptions and limitations stated herein, we are of the opinion that (1) when the Board of Directors of the Company (the “Board”) has taken all necessary corporate action to authorize

and approve the Restated Certificate of Incorporation of the Company and the issuance of the Shares and the Restated Certificate of Incorporation has been duly filed with the Secretary of State of the State of Delaware, and (2) upon payment and delivery in accordance with the applicable definitive underwriting agreement approved by the Board, the form of which has been filed with the Commission as an exhibit to the Registration Statement, the Shares will be validly issued, fully paid and nonassessable.

We do not express any opinion herein concerning any law other than the Delaware General Corporation Law (including the statutory provisions, all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting the foregoing).

We hereby consent to the filing of this opinion letter as Exhibit 5 to the Registration Statement and to the use of our name under the caption “Validity of Common Stock” in the Prospectus included in the Registration Statement.

	Very truly yours,


	/s/ Simpson Thacher & Bartlett LLP


	SIMPSON THACHER & BARTLETT LLP

EX-10.8 6 a2169810zex-10_8.htm EXHIBIT 10.8

EXHIBIT 10.8

[Form of Corporate Agreement by and between

Walter Industries, Inc. and Mueller Water Products, Inc.]

CORPORATE AGREEMENT

THIS CORPORATE AGREEMENT (“Agreement”) is entered into as of [ ], 2006 by and between WALTER INDUSTRIES, INC., a Delaware corporation (“Walter”), and MUELLER WATER PRODUCTS, INC., a Delaware corporation (“Mueller”).

RECITALS

A. Walter beneficially owns all of the issued and outstanding shares of capital stock of Mueller, and Mueller is a member of Walter’s “affiliated group” of corporations (the “Walter Group”) for federal income tax purposes.

B. The parties are contemplating the possibility that (i) Mueller will sell shares of Series A Common Stock, par value $0.01 per share (“Series A Common Stock”), in an initial public offering (the “Initial Public Offering”) registered under the Securities Act of 1933, as amended, and (ii) immediately following the Initial Public Offering, Walter will own all of the outstanding shares of Series B Common Stock, par value $0.01 per share (“Series B Common Stock”), of Mueller, which will have eight votes per share and will be a series of common stock separate from the Series A Common Stock.

C. The parties desire to enter into this Agreement to set forth their agreement regarding (i) Walter’s rights to purchase additional shares of Series B Common Stock upon any issuance of certain classes of capital stock of Mueller to any person to permit Walter to maintain its percentage ownership interest in Mueller, (ii) Walter’s rights to purchase shares of non-voting classes of capital stock of Mueller to permit Walter to own eighty percent (80%) of each class of such stock outstanding, (iii) certain registration rights with respect to Series B Common Stock (and any other securities issued in respect thereof or in exchange therefor) and (iv) certain representations, warranties, covenants and agreements applicable so long as Mueller is a subsidiary of Walter.

AGREEMENTS

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Walter and Mueller, for themselves, their successors and assigns, hereby agree as follows:

ARTICLE I
DEFINITIONS

1.1. Definitions. As used in this Agreement, the following terms will have the following meanings, applicable both to the singular and the plural forms of the terms described:

“Affiliate” means, with respect to a given Person, any Person controlling, controlled by or under common control with such Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to vote a majority of the securities having voting power for the election of directors (or other Persons acting in similar capacities) of such Person or otherwise to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

“Agreement” has the meaning ascribed thereto in the preamble hereto, as such agreement may be amended and supplemented from time to time in accordance with its terms.

“Applicable Stock” means at any time the (i) shares of Common Stock owned by the Walter Entities that were owned on the date hereof, plus (ii) shares of Series B Common Stock purchased by the Walter Entities pursuant to Article II of this Agreement, plus (iii) shares of Common Stock that were issued to Walter Entities in respect of shares described in either clause (i) or clause (ii) in any reclassification, share combination, share subdivision, share dividend, share exchange, merger, consolidation or similar transaction or event.

“Series A Common Stock” has the meaning ascribed thereto in the recitals to this Agreement.

“Series B Common Stock” has the meaning ascribed thereto in the recitals to this Agreement.

“Series B Common Stock Option” has the meaning ascribed thereto in Section 2.1(a).

“Series B Common Stock Option Notice” has the meaning ascribed thereto in Section 2.2.

“Series B Transferee” shall have the meaning ascribed thereto in Mueller’s Restated Certificate of Incorporation.

“Common Stock” means the Series A Common Stock, the Series B Common Stock, any other class of Mueller’s capital stock representing the right to vote generally for the election of directors and, for so long as Mueller continues to be a subsidiary corporation includable in a consolidated federal income tax return of the Walter Group, any other security of Mueller treated as stock for purposes of Section 1504 of the Internal Revenue Code of 1986, as amended.

“Company Securities” has the meaning ascribed thereto in Section 3.2(b).

“Disadvantageous Condition” has the meaning ascribed thereto in Section 3.1(a).

“Holder” means Walter, the other Walter Entities and any Transferee.

“Holder Securities” has the meaning ascribed thereto in Section 3.2(b).

“Initial Public Offering” has the meaning ascribed thereto in the recitals to this Agreement.

“Initial Public Offering Date” means the date of completion of the initial sale of Series A Common Stock in the Initial Public Offering.

“Issuance Event” has the meaning ascribed thereto in Section 2.2.

“Issuance Event Date” has the meaning ascribed thereto in Section 2.2.

“Market Price” of any shares of Series A Common Stock on any date means (i) the average of the last sale price of such shares on each of the five trading days immediately preceding such date on the New York Stock Exchange, Inc. or, if such shares are not listed thereon, on the principal national securities exchange or automated interdealer quotation system on which such shares are traded or (ii) if such sale prices are unavailable or such shares are not so traded, the value of such shares on such date determined in accordance with agreed-upon procedures reasonably satisfactory to Mueller and Walter.

“Mueller” has the meaning ascribed thereto in the preamble hereto.

“Mueller Entities” means Mueller and its Subsidiaries, and “Mueller Entity” shall mean any of the Mueller Entities.

“Nonvoting Stock” means any class of Mueller’s capital stock not representing the right to vote generally for the election of directors.

“Nonvoting Stock Option” has the meaning ascribed thereto in Section 2.1(c).

“Nonvoting Stock Option Notice” has the meaning ascribed thereto in Section 2.2.

“Other Holders” has the meaning ascribed thereto in Section 3.2(c).

“Other Securities” has the meaning ascribed thereto in Section 3.2.

“Ownership Percentage” means, at any time, the fraction, expressed as a percentage and rounded to the next highest thousandth of a percent, whose numerator is the aggregate Value of the Applicable Stock and whose denominator is the aggregate Value of the then-outstanding shares of Common Stock of Mueller; provided, however, that any shares of Common Stock issued by Mueller in violation of its obligations under Article II of this Agreement shall not be deemed outstanding for the purpose of determining the Ownership Percentage. For purposes of this definition, “Value” means, with respect to any share of stock, the value of such share determined by Walter under principles applicable for purposes of Section 1504 of the Internal Revenue Code of 1986, as amended.

“Person” means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, government (and any department or agency thereof) or other entity.

“Registrable Securities” means shares of Series A Common Stock, shares of Series B Common Stock and any stock or other securities into which or for which such Common Stock may hereafter be changed, converted or exchanged and any other shares or securities issued to Holders of such Common Stock (or such shares or other securities into which or for which such shares are so changed, converted or exchanged) upon any reclassification, share combination, share subdivision, share dividend, share exchange, merger, consolidation or similar transaction or event or pursuant to the Nonvoting Stock Option. As to any particular Registrable Securities, such Registrable Securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale by the Holder thereof shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) they shall have been distributed to the public in accordance with Rule 144, (iii) they shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by Mueller and subsequent disposition of them shall not require registration or qualification of them under the Securities Act or any state securities or blue sky law then in effect or (iv) they shall have ceased to be outstanding.

“Registration Expenses” means any and all expenses incident to performance of or compliance with any registration of securities pursuant to Article III, including, without limitation, (i) the fees, disbursements and expenses of Mueller’s counsel and accountants and the fees and expenses of counsel selected by the Holders in accordance with this Agreement in connection with the registration of the securities to be disposed of, such fees and expenses of such counsel selected by the Holders to be reasonable in the reasonable discretion of Mueller; (ii) all expenses, including filing fees, in connection with the preparation, printing and filing of the registration statement, any preliminary prospectus or final prospectus, any other offering document and amendments and supplements thereto and the mailing and delivering of copies thereof to any underwriters and dealers; (iii) the cost of printing or producing any underwriting agreements and blue sky or legal investment memoranda and any other documents in connection with the offering, sale or delivery of the securities to be disposed of; (iv) all expenses in connection with the qualification of the securities to be disposed of for offering and sale under state securities laws, including the fees and disbursements of counsel for the underwriters or the Holders of securities in connection with such qualification and in connection with any blue sky and legal investment surveys; (v) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the securities to be disposed of; (vi) transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering; (vii) all security engraving and security printing expenses; (viii) all fees and expenses payable in connection with the listing of the securities on any securities exchange or automated interdealer quotation system or the rating of such securities, (ix) any other fees and disbursements of underwriters customarily paid by the sellers of securities, but excluding underwriting discounts and commissions and transfer taxes, if any, and (x) other reasonable out-of-pocket expenses of Holders other than legal fees and expenses referred to in clause (i) above.

“Rule 144” means Rule 144 (or any successor rule to similar effect) promulgated under the Securities Act.

“Rule 415 Offering” means an offering on a delayed or continuous basis pursuant to Rule 415 (or any successor rule to similar effect) promulgated under the Securities Act.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, or any successor statute.

“Selling Holder” has the meaning ascribed thereto in Section 3.4(e).

“Subsidiary” means, as to any Person, any corporation, association, partnership, joint venture or other business entity of which more than 50% of the voting capital stock or other voting ownership interests is owned or controlled, directly or indirectly, by such Person or by one or more of the Subsidiaries of such Person or by a combination thereof. “Subsidiary,” when used with respect to Walter or Mueller, shall also include any other entity affiliated with Walter or Mueller, as the case may be, that Walter and Mueller may hereafter agree in writing shall be treated as a “Subsidiary” for the purposes of this Agreement.

“Transferee” has the meaning ascribed thereto in Section 3.9.

“Walter Entities” means Walter and Subsidiaries of Walter (other than Subsidiaries that constitute Mueller Entities), and “Walter Entity” shall mean any of the Walter Entities.

“Walter Ownership Reduction” means any decrease at any time in the Ownership Percentage to less than forty-five percent (45%).

“Walter Transferee” has the meaning ascribed thereto in Section 3.9.

“Walter” has the meaning ascribed thereto in the preamble hereto.

“Walter Group” has the meaning ascribed thereto in the recitals to this Agreement.

1.2. Internal References. Unless the context indicates otherwise, references to Articles, Sections and paragraphs shall refer to the corresponding articles, sections and paragraphs in this Agreement and references to the parties shall mean the parties to this Agreement.

ARTICLE II
OPTIONS

2.1. Options. (a) Mueller hereby grants to Walter, on the terms and conditions set forth herein, a continuing right (the “Series B Common Stock Option”) to purchase from Mueller, at the times set forth herein, such number of shares of Series B Common Stock as is necessary to allow the Walter Entities to maintain the percentage of the then-outstanding

Common Stock of Mueller that is equal to the Ownership Percentage. The Series B Common Stock Option shall be assignable, in whole or in part and from time to time, by Walter to any Walter Entity. The exercise price for the shares of Series B Common Stock purchased pursuant to the Series B Common Stock Option shall be the Market Price of the Series A Common Stock as of the date of first delivery of notice of exercise of the Series B Common Stock Option by Walter (or its permitted assignee hereunder) to Mueller; provided, however, that the exercise price shall be at least equal to the aggregate par value of the shares of Series B Common Stock purchased thereby.

(b) The provisions of Section 2.1(a) hereof notwithstanding, the Series B Common Stock Option granted pursuant to Section 2.1(a) shall not apply and shall not be exercisable in connection with the issuance by Mueller of any shares of Common Stock pursuant to any stock option or other executive or employee benefit or compensation plan maintained by Mueller, so long as, from and after the date hereof and prior to the issuance of such shares, Mueller has repurchased from shareholders and not subsequently reissued a number of shares equal or greater to the number of shares to be issued in any such issuance.

(c) Mueller hereby grants to Walter, on the terms and conditions set forth herein, a continuing right (the “Nonvoting Stock Option” and, together with the Series B Common Stock Option, the “Options”) to purchase from Mueller, at the times set forth herein, such number of shares of Nonvoting Stock as is necessary to allow the Walter Entities to own eighty percent (80%) of each class of outstanding Nonvoting Stock. The Nonvoting Stock Option shall be assignable, in whole or in part and from time to time, by Walter to any Walter Entity. The exercise price for the shares of Nonvoting Stock purchased pursuant to the Nonvoting Stock Option shall be the price at which such Nonvoting Stock is then being sold to third parties, or, if no Nonvoting Stock is being sold, the fair market value thereof as determined in good faith by the Board of Directors of Mueller; provided, however, that the exercise price shall be at least equal to the aggregate par value of the shares of Nonvoting Stock purchased thereby.

2.2. Notice. At least 20 business days prior to the issuance of any shares of Common Stock (other than in connection with the Initial Public Offering, including the full exercise of all underwriters’ over-allotment options granted in connection therewith and other than issuances of Common Stock to any Walter Entity) or the first date on which any event could occur that, in the absence of a full or partial exercise of the Series B Common Stock Option, would result in a reduction in the Ownership Percentage, Mueller will notify Walter in writing (a “Series B Common Stock Option Notice”) of any plans it has to issue such shares or the date on which such event could first occur. At least 20 business days prior to the issuance of any shares of Nonvoting Stock (other than issuances of Nonvoting Stock to any Walter entity) or the first date on which any event could occur that, in the absence of a full or partial exercise of the Nonvoting Stock Option, would result in the Walter Entities owning less than eighty percent (80%) of each class of outstanding Nonvoting Stock, Mueller will notify Walter in writing (a “Nonvoting Stock Option Notice” and, together with a Series B Common Stock Option Notice, an “Option Notice”) of any plans it has to issue such shares or the date on which such event could first occur. Each Option Notice must specify the date on which Mueller intends to issue such additional shares or on which such event could first occur (such issuance or event being referred to herein as an “Issuance Event” and the date of such issuance or event as an “Issuance

Event Date”), the number of shares Mueller intends to issue or may issue and the other terms and conditions of such Issuance Event.

2.3. Option Exercise and Payment . The Series B Common Stock Option may be exercised by Walter (or any Walter Entity to which all or any part of the Series B Common Stock Option has been assigned) for a number of shares equal to or less than the number of shares that are necessary for the Walter Entities to maintain, in the aggregate, the percentage of the then-outstanding shares of Common Stock of Mueller that is equal to the then-current Ownership Percentage. The Nonvoting Stock Option may be exercised by Walter (or any Walter Entity to which all or any part of the Nonvoting Stock Option has been assigned) for a number of shares equal to or less than the number of shares that are necessary for the Walter Entities to own, in the aggregate, eighty percent (80%) of each class of outstanding Nonvoting Stock. Each Option may be exercised at any time after receipt of an applicable Option Notice and prior to the applicable Issuance Event Date by the delivery to Mueller of a written notice to such effect specifying (i) the number of shares of Series B Common Stock or Nonvoting Stock, as the case may be, to be purchased by Walter, or any of the Walter Entities and (ii) a calculation of the exercise price for such shares; provided, however, that if Mueller shall have issued any shares of Common Stock in violation of its obligations under this Article II, the Option may be exercised at any time by the delivery to Mueller of a written notice to such effect specifying the information described in clauses (i) and (ii) above. Upon any exercise of an Option, Mueller will promptly (and in any event on or prior to the applicable Issuance Event Date) (i) deliver to Walter (or any Walter Entity designated by Walter), against payment therefor, certificates (issued in the name of Walter or its permitted assignee hereunder or as directed by Walter) representing the shares of Series B Common Stock or Nonvoting Stock, as the case may be, being purchased upon such exercise, and (ii) record the issuance of such shares, upon payment therefor, in Mueller’s stock ledger. Payment for such shares shall be made by wire transfer or intrabank transfer of immediately-available funds to such account as shall be specified by Mueller, for the full purchase price for such shares.

2.4. Effect of Failure to Exercise. Except as provided in Section 2.6, any failure by Walter to exercise either Option, or any exercise for less than all shares purchasable under either Option, in connection with any particular Issuance Event shall not affect Walter’s right to exercise the relevant Option in connection with any subsequent Issuance Event.

2.5. Initial Public Offering. Notwithstanding the foregoing, Walter shall not be entitled to exercise the Series B Common Stock Option in connection with the Initial Public Offering of the Series A Common Stock if, upon the completion of the Initial Public Offering, including the full exercise of all underwriters’ over-allotment options granted in connection therewith, the Ownership Percentage would be no less than eighty percent (80%).

2.6. Termination of Options. The Options shall terminate upon the occurrence of any Issuance Event that, after considering Walter’s response thereto and to any other Issuance Events, results in the Ownership Percentage being less than twenty percent (20%), other than any Issuance Event in violation of this Agreement. Each Option, or any portion thereof assigned to any Walter Entity other than Walter, also shall terminate in the event that the Person to whom such Option, or such portion thereof has been transferred, ceases to be a Walter Entity for any reason whatsoever.

ARTICLE III
REGISTRATION RIGHTS

3.1. Demand Registration - Registrable Securities. (a) Upon written notice provided at any time after the Initial Public Offering Date from any Holder of Registrable Securities requesting that Mueller effect the registration under the Securities Act of any or all of the Registrable Securities held by such Holder, which notice shall specify the intended method or methods of disposition of such Registrable Securities, Mueller shall use its best efforts to effect the registration under the Securities Act and applicable state securities laws of such Registrable Securities for disposition in accordance with the intended method or methods of disposition stated in such request (including in a Rule 415 Offering, if Mueller is then eligible to register such Registrable Securities on Form S-3 (or a successor form) for such offering); provided, that:

(i) with respect to any registration statement filed, or to be filed, pursuant to this Section 3.1, if Mueller shall furnish to the Holders of Registrable Securities that have made such request a certified resolution of the Board of Directors of Mueller (adopted by the affirmative vote of a majority of the total number of directors, without any vacancies) stating that in the Board of Directors’ good faith judgment it would (because of the existence of, or in anticipation of, any acquisition or financing activity, or the unavailability for reasons beyond Mueller’s reasonable control of any required financial statements, or any other event or condition of similar significance to Mueller) be significantly disadvantageous (a “Disadvantageous Condition”) to Mueller for such a registration statement to be maintained effective, or to be filed and become effective, and setting forth the general reasons for such judgment, Mueller shall be entitled to cause such registration statement to be withdrawn and the effectiveness of such registration statement terminated, or, in the event no registration statement has yet been filed, shall be entitled not to file any such registration statement, until such Disadvantageous Condition no longer exists (notice of which Mueller shall promptly deliver to such Holders). Upon receipt of any such notice of a Disadvantageous Condition, such Holders shall forthwith discontinue use of the prospectus contained in such registration statement and, if so directed by Mueller, each such Holder will deliver to Mueller all copies, other than permanent file copies then in such Holder’s possession, of the prospectus then covering such Registrable Securities current at the time of receipt of such notice; provided, that the filing of any such registration statement may not be delayed for a period in excess of six months due to the occurrence of any particular Disadvantageous Condition;

(ii) after any Walter Ownership Reduction, the Holders of Registrable Securities may collectively exercise their rights under this Section 3.1 (through notice delivered by Holders owning in the aggregate a majority in economic interest of the Registrable Securities then held by Holders) on not more than three occasions (it being acknowledged that prior to any Walter Ownership Reduction, there shall be no limit to the number of occasions on which such Holders (other than any Walter Transferees and their Affiliates (other than Walter Entities)) may exercise such rights);

(iii) Except as otherwise provided herein, the Holders of Registrable Securities shall not have the right to exercise registration rights pursuant to this Section

3.1 within the 180-day period following the registration and sale of Registrable Securities effected pursuant to a prior exercise of the registration rights provided in this Section 3.1; and

(iv) the Holders of Registrable Securities shall not have the right to exercise registration rights pursuant to this Section 3.1 within the 180-day period following the effective date of the Registration Statement in connection with the Initial Public Offering.

(b) Notwithstanding any other provision of this Agreement to the contrary, a registration requested by a Holder of Registrable Securities pursuant to this Section 3.1 shall not be deemed to have been effected (and, therefore, not requested for purposes of paragraph (a) above), (i) unless it has become effective, (ii) if, after it has become effective, such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason other than a misrepresentation or an omission by such Holder and, as a result thereof, the Registrable Securities requested to be registered cannot be completely distributed in accordance with the plan of distribution set forth in the related registration statement or (iii) if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied or waived other than by reason of some act or omission by such Holder of Registrable Securities.

(c) In the event that any registration pursuant to this Section 3.1 shall involve, in whole or in part, an underwritten offering, the Holders of a majority of the Registrable Securities to be registered shall have the right to designate an underwriter or underwriters reasonably acceptable to Mueller as the lead or managing underwriters of such underwritten offering and, in connection with each registration pursuant to this Section 3.1, such Holders may select one counsel reasonably acceptable to Mueller to represent all such Holders.

(d) Mueller shall have the right to cause the registration of additional equity securities for sale for its account, the account of any Mueller Entity or any existing or former directors, officers or employees of the Mueller Entities in any registration of Registrable Securities requested by the Holders pursuant to paragraph (a) above; provided, however, that if the registration and sale of such additional equity securities would require Walter or any Walter Entity to exercise the Options to maintain the then-current Ownership Percentage or ownership of eighty percent (80%) of each class of outstanding Nonvoting Stock, then the number of such additional equity securities shall be reduced so that exercise of the Options would not be necessary for Walter or any Walter Entity to maintain such ownership levels and, provided, further, that if such Holders are advised in writing (with a copy to Mueller) by a nationally recognized investment banking firm selected by such Holders reasonably acceptable to Mueller (which shall be the lead underwriter or a managing underwriter in the case of an underwritten offering) that, in such firm’s good faith view, all or a part of such additional equity securities cannot be sold and the inclusion of such additional equity securities in such registration would be likely to have an adverse effect on the price, timing or distribution of the offering and sale of the Registrable Securities then contemplated by any Holder, the registration of such additional equity securities or part thereof shall not be permitted. The Holders of the Registrable Securities to be offered may require that any such additional equity securities be included in the offering proposed by such Holders on the same conditions as the Registrable Securities that are included

therein. In the event that the number of Registrable Securities requested to be included in a registration statement by the Holders thereof exceeds the number which, in the good faith view of such investment banking firm, can be sold without adversely affecting the price, timing, distribution or sale of securities in the offering, the number shall be allocated pro rata among the requesting Holders on the basis of the relative number of Registrable Securities then held by each such Holder (provided that any number in excess of a Holder’s request may be reallocated among the remaining requesting Holders in a like manner).

3.2. Piggyback Registration. In the event that Mueller at any time after the Initial Public Offering Date proposes to register any of its Common Stock, any other of its equity securities or securities convertible into or exchangeable for its equity securities (collectively, including Common Stock, “Other Securities”) under the Securities Act, whether or not for sale for its own account, in a manner that would permit registration of Registrable Securities for sale for cash to the public under the Securities Act, it shall at each such time give prompt written notice to each Holder of Registrable Securities of its intention to do so and of the rights of such Holder under this Section 3.2. Subject to the terms and conditions hereof, such notice shall offer each such Holder the opportunity to include in such registration statement such number of Registrable Securities as such Holder may request. Upon the written request of any such Holder made within 15 days after the receipt of Mueller’s notice (which request shall specify the number of Registrable Securities intended to be disposed of and the intended method of disposition thereof), Mueller shall use its best efforts to effect, in connection with the registration of the Other Securities, the registration under the Securities Act of all Registrable Securities which Mueller has been so requested to register, to the extent required to permit the disposition (in accordance with such intended method of disposition thereof) of the Registrable Securities so requested to be registered; provided, that:

(a) if, at any time after giving such written notice of its intention to register any Other Securities and prior to the effective date of the registration statement filed in connection with such registration, Mueller shall determine for any reason not to register the Other Securities, Mueller may, at its election, give written notice of such determination to such Holders and thereupon Mueller shall be relieved of its obligation to register such Registrable Securities in connection with the registration of such Other Securities, without prejudice, however, to the rights of the Holders of Registrable Securities immediately to request that such registration be effected as a registration under Section 3.1 to the extent permitted thereunder;

(b) if the registration referred to in the first sentence of this Section 3.2 is to be an underwritten registration on behalf of Mueller, and a nationally recognized investment banking firm selected by Mueller advises Mueller in writing that, in such firm’s good faith view, all or a part of such Registrable Securities cannot be sold and the inclusion of all or a part of such Registrable Securities in such registration would be likely to have an adverse effect upon the price, timing or distribution of the offering and sale of the Other Securities then contemplated, Mueller shall include in such registration: (i) first, all Other Securities Mueller proposes to sell for its own account (“Company Securities”), (ii) second, up to the full number of Registrable Securities held by Holders constituting Walter Entities that are requested to be included in such registration (Registrable Securities that are so held being sometimes referred to herein as “Holder Securities”) in excess of the number of Company Securities to be sold in such offering which, in the good faith view of such investment banking firm, can be sold without adversely affecting

such offering (and (x) if such number is less than the full number of such Holder Securities, such number shall be allocated by Walter among such Walter Entities and (y) in the event that such investment banking firm advises that less than all of such Holder Securities may be included in such offering, such Walter Entities may withdraw their request for registration of their Registrable Securities under this Section 3.2 and 90 days subsequent to the effective date of the registration statement for the registration of such Other Securities request that such registration be effected as a registration under Section 3.1 to the extent permitted thereunder), (iii) third, up to the full number of Registrable Securities held by Holders (other than Walter Entities) of Registrable Securities that are requested to be included in such registration in excess of the number of Company Securities and Holder Securities to be sold in such offering which, in the good faith view of such investment banking firm, can be so sold without so adversely affecting such offering (and (x) if such number is less than the full number of such Registrable Securities, such number shall be allocated pro rata among such Holders on the basis of the number of Registrable Securities requested to be included therein by each such Holder and (y) in the event that such investment banking firm advises that less than all of such Registrable Securities may be included in such offering, such Holders may withdraw their request for registration of their Registrable Securities under this Section 3.2 and 90 days subsequent to the effective date of the registration statement for the registration of such Other Securities request that such registration be effected as a registration under Section 3.1 to the extent permitted thereunder) and (iv) fourth, up to the full number of the Other Securities (other than Company Securities), if any, in excess of the number of Company Securities and Registrable Securities to be sold in such offering which, in the good faith view of such investment banking firm, can be so sold without so adversely affecting such offering (and, if such number is less than the full number of such Other Securities, such number shall be allocated pro rata among the holders of such Other Securities (other than Company Securities) on the basis of the number of securities requested to be included therein by each such Holder);

(c) if the registration referred to in the first sentence of this Section 3.2 is to be an underwritten secondary registration on behalf of holders of Other Securities (the “Other Holders”), and the lead underwriter or managing underwriter advises Mueller in writing that in their good faith view, all or a part of such additional securities cannot be sold and the inclusion of such additional securities in such registration would be likely to have an adverse effect on the price, timing or distribution of the offering and sale of the Other Securities then contemplated, Mueller shall include in such registration the number of securities (including Registrable Securities) that such underwriters advise can be so sold without adversely affecting such offering, allocated pro rata among the Other Holders and the Holders of Registrable Securities on the basis of the number of securities (including Registrable Securities) requested to be included therein by each Other Holder and each Holder of Registrable Securities; provided, that if such registration statement is to be filed at any time after a Walter Ownership Reduction, if such Other Holders have requested that such registration statement be filed pursuant to demand registration rights granted to them by Mueller, Mueller shall include in such registration (i) first, Other Securities sought to be included therein by the Other Holders pursuant to the exercise of such demand registration rights, (ii) second, the number of Holder Securities sought to be included in such registration in excess of the number of Other Securities sought to be included in such registration by the Other Holders which in the good faith view of such investment banking firm, can be so sold without so adversely affecting such offering (and (x) if such number is less than the full number of such Holder Securities, such number shall be allocated by Walter among

such Walter Entities and (y) in the event that such investment banking firm advises that less than all of such Holder Securities may be included in such offering, such Walter Entities may withdraw their request for registration of their Registrable Securities under this Section 3.2 and 90 days subsequent to the effective date of the registration statement for the registration of such Other Securities request that such registration be effected as a registration under Section 3.1 to the extent permitted thereunder) and (iii) third, the number of Registrable Securities sought to be included in such registration by Holders (other than Walter Entities) of Registrable Securities in excess of the number of Other Securities and the number of Holder Securities sought to be included in such registration which, in the good faith view of such investment banking firm, can be so sold without so adversely affecting such offering (and (x) if such number is less than the full number of such Registrable Securities, such number shall be allocated pro rata among such Holders on the basis of the number of Registrable Securities requested to be included therein by each such Holder and (y) in the event that such investment banking firm advises that less than all of such Registrable Securities may be included in such offering, such Holders may withdraw their request for registration of their Registrable Securities under this Section 3.2 and 90 days subsequent to the effective date of the registration statement for the registration of such Other Securities request that such registration be effected as a registration under Section 3.1 to the extent permitted thereunder);

(d) Mueller shall not be required to effect any registration of Registrable Securities under this Section 3.2 incidental to the registration of any of its securities in connection with mergers, acquisitions, exchange offers, subscription offers, dividend reinvestment plans or stock option or other executive or employee benefit or compensation plans; and

(e) no registration of Registrable Securities effected under this Section 3.2 shall relieve Mueller of its obligation to effect a registration of Registrable Securities pursuant to Section 3.1.

3.3. Expenses. Except as provided herein, Mueller shall pay all Registration Expenses with respect to a particular offering (or proposed offering). Notwithstanding the foregoing, each Holder and Mueller shall be responsible for its own internal administrative and similar costs, which shall not constitute Registration Expenses.

3.4. Registration and Qualification. If and whenever Mueller is required to effect the registration of any Registrable Securities under the Securities Act as provided in Sections 3.1 or 3.2, Mueller shall as promptly as practicable:

(a) prepare, file and use its reasonable best efforts to cause to become effective a registration statement under the Securities Act relating to the Registrable Securities to be offered;

(b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities until the earlier of (A) such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of

disposition set forth in such registration statement and (B) the expiration of six months after such registration statement becomes effective; provided, that such six-month period shall be extended for such number of days that equals the number of days elapsing from (x) the date the written notice contemplated by paragraph (f) of this Section 3.4 is given by Mueller to (y) the date on which Mueller delivers to the Holders of Registrable Securities the supplement or amendment contemplated by paragraph (f) of this Section 3.4;

(c) furnish to the Holders of Registrable Securities and to any underwriter of such Registrable Securities such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), in conformity with the requirements of the Securities Act, such documents incorporated by reference in such registration statement or prospectus, and such other documents, as the Holders of Registrable Securities or such underwriter may reasonably request, and upon request a copy of any and all transmittal letters or other correspondence to or received from, the SEC or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering;

(d) use its reasonable best efforts to register or qualify all Registrable Securities covered by such registration statement under the securities or blue sky laws of such U.S. jurisdictions as the Holders of such Registrable Securities or any underwriter to such Registrable Securities shall request, and use its reasonable best efforts to obtain all appropriate registrations, permits and consents in connection therewith, and do any and all other acts and things which may be necessary or advisable to enable the Holders of Registrable Securities or any such underwriter to consummate the disposition in such jurisdictions of its Registrable Securities covered by such registration statement; provided, that Mueller shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any such jurisdiction wherein it is not so qualified or to consent to general service of process in any such jurisdiction;

(e) (i) use its best efforts to furnish to each Holder of Registrable Securities included in such registration (each, a “Selling Holder”) and to any underwriter of such Registrable Securities an opinion of counsel for Mueller addressed to each Selling Holder and dated the date of the closing under the underwriting agreement (if any) (or if such offering is not underwritten, dated the effective date of the registration statement) and (ii) use its best efforts to furnish to each Selling Holder a “cold comfort” letter addressed to each Selling Holder and signed by the independent public accountants who have audited the financial statements of Mueller included in such registration statement, in each such case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to underwriters in underwritten public offerings of securities and such other matters as the Selling Holders may reasonably request and, in the case of such accountants’ letter, with respect to events subsequent to the date of such financial statements;

(f) as promptly as practicable, notify the Selling Holders in writing (i) at any time when a prospectus relating to a registration pursuant to Sections 3.1 or 3.2 is required to be

delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) of any request by the SEC or any other regulatory body or other body having jurisdiction for any amendment of or supplement to any registration statement or other document relating to such offering, and in either such case, at the request of the Selling Holders prepare and furnish to the Selling Holders a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading;

(g) if reasonably requested by the lead or managing underwriters, use its best efforts to list all such Registrable Securities covered by such registration on each securities exchange and automated inter-dealer quotation system on which a class of common equity securities of Mueller is then listed;

(h) to the extent reasonably requested by the lead or managing underwriters, cause appropriate officers of Mueller to participate in any “road shows” scheduled in connection with any such registration, with all out-of-pocket costs and expense incurred by Mueller or such officers in connection with such participation to be paid by Mueller; and

(i) furnish for delivery in connection with the closing of any offering of Registrable Securities pursuant to a registration effected pursuant to Sections 3.1 or 3.2 unlegended certificates representing ownership of the Registrable Securities being sold in such denominations as shall be requested by the Selling Holders or the underwriters.

3.5. Conversion of Other Securities, Etc. In the event that any Holder offers any options, rights, warrants or other securities issued by it or any other Person that are offered with, convertible into or exercisable or exchangeable for any Registrable Securities, the Registrable Securities underlying such options, rights, warrants or other securities shall continue to be eligible for registration pursuant to Sections 3.1 and 3.2.

3.6. Underwriting; Due Diligence. (a) If requested by the underwriters for any underwritten offering of Registrable Securities pursuant to a registration requested under this Article III, Mueller shall enter into an underwriting agreement with such underwriters for such offering, which agreement will contain such representations and warranties by Mueller and such other terms and provisions as are customarily contained in underwriting agreements of Mueller to the extent relevant and as are customarily contained in underwriting agreements generally with respect to secondary distributions to the extent relevant, including, without limitation, indemnification and contribution provisions substantially to the effect and to the extent provided in Section 3.7, and agreements as to the provision of opinions of counsel and accountants’ letters to the effect and to the extent provided in Section 3.4(e). The Selling Holders on whose behalf the Registrable Securities are to be distributed by such underwriters shall be parties to any such underwriting agreement and the representations and warranties by, and the other agreements on

the part of, Mueller to and for the benefit of such underwriters, shall also be made to and for the benefit of such Selling Holders. Such underwriting agreement shall also contain such representations and warranties by such Selling Holders and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, when relevant, including, without limitation, indemnification and contribution provisions substantially to the effect and to the extent provided in Section 3.7.

(b) In connection with the preparation and filing of each registration statement registering Registrable Securities under the Securities Act pursuant to this Article III, Mueller shall give the Holders of such Registrable Securities and the underwriters, if any, and their respective counsel and accountants, such reasonable and customary access to its books and records and such opportunities to discuss the business of Mueller with its officers and the independent public accountants who have certified the financial statements of Mueller as shall be necessary, in the opinion of such Holders and such underwriters or their respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act.

3.7. Indemnification and Contribution. (a) In the case of each offering of Registrable Securities made pursuant to this Article III, Mueller agrees to indemnify and hold harmless, to the extent permitted by law, each Selling Holder, each underwriter of Registrable Securities so offered and each Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act and the officers, directors, affiliates, employees and agents of each of the foregoing, against any and all losses, liabilities, costs (including reasonable attorney’s fees and disbursements), claims and damages, joint or several, to which they or any of them may become subject, under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, insofar as such losses, liabilities, costs, claims and damages (or actions or proceedings in respect thereof, whether or not such indemnified Person is a party thereto) arise out of or are based upon any untrue statement by Mueller or alleged untrue statement by Mueller of a material fact contained in the registration statement (or in any preliminary or final prospectus included therein) or in any offering memorandum or other offering document relating to the offering and sale of such Registrable Securities prepared by Mueller or at its direction, or any amendment thereof or supplement thereto, or in any document incorporated by reference therein, or any omission by Mueller or alleged omission by Mueller to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that Mueller shall not be liable to any Person in any such case to the extent that any such loss, liability, cost, claim or damage arises out of or relates to any untrue statement or alleged untrue statement, or any omission, if such statement or omission shall have been made in reliance upon and in conformity with information relating to a Selling Holder, another holder of securities included in such registration statement or underwriter furnished to Mueller by or on behalf of such Selling Holder, other holder or underwriter specifically for use in the registration statement (or in any preliminary or final prospectus included therein), offering memorandum or other offering document, or any amendment thereof or supplement thereto. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Selling Holder, any other holder or any underwriter and shall survive the transfer of such securities. The foregoing indemnity agreement is in addition to any liability that Mueller may otherwise have to each Selling Holder, other holder or underwriter of the Registrable Securities or any controlling person of the foregoing and the officers, directors, affiliates, employees and agents of each of the foregoing; provided, further,

that, in the case of an offering with respect to which a Selling Holder has designated the lead or managing underwriters (or a Selling Holder is offering Registrable Securities directly, without an underwriter), this indemnity does not apply to any loss, liability, cost, claim or damage arising out of or relating to any untrue statement or alleged untrue statement or omission or alleged omission in any preliminary prospectus or offering memorandum if a copy of a final prospectus or offering memorandum was not sent or given by or on behalf of any underwriter (or such Selling Holder or other holder, as the case may be) to such Person asserting such loss, liability, cost, claim or damage at or prior to the written confirmation of the sale of the Registrable Securities as required by the Securities Act and such untrue statement or omission had been corrected in such final prospectus or offering memorandum.

(b) In the case of each offering made pursuant to this Agreement, each Selling Holder, by exercising its registration rights hereunder, agrees to indemnify and hold harmless, and to cause each underwriter of Registrable Securities included in such offering (in the same manner and to the same extent as set forth in Section 3.7(a)) to agree to indemnify and hold harmless, Mueller, each other underwriter who participates in such offering, each other Selling Holder or other holder with securities included in such offering and in the case of an underwriter, such Selling Holder or other holder, and each Person, if any, who controls any of the foregoing within the meaning of the Securities Act and the officers, directors, affiliates, employees and agents of each of the foregoing, against any and all losses, liabilities, costs (including reasonable attorney’s fees and disbursements), claims and damages to which they or any of them may become subject, under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, insofar as such losses, liabilities, costs, claims and damages (or actions or proceedings in respect thereof, whether or not such indemnified Person is a party thereto) arise out of or are based upon any untrue statement or alleged untrue statement by such Selling Holder or underwriter, as the case may be, of a material fact contained in the registration statement (or in any preliminary or final prospectus included therein) or in any offering memorandum or other offering document relating to the offering and sale of such Registrable Securities prepared by Mueller or at its direction, or any amendment thereof or supplement thereto, or any omission by such Selling Holder or underwriter, as the case may be, or alleged omission by such Selling Holder or underwriter, as the case may be, of a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement of a material fact is contained in, or such material fact is omitted from information relating to such Selling Holder or underwriter, as the case may be, furnished to Mueller by or on behalf of such Selling Holder or underwriter, as the case may be, specifically for use in such registration statement (or in any preliminary or final prospectus included therein), offering memorandum or other offering document, or any amendment thereof or supplement thereto. The foregoing indemnity is in addition to any liability which such Selling Holder or underwriter, as the case may be, may otherwise have to Mueller, or controlling persons and the officers, directors, affiliates, employees, and agents of each of the foregoing; provided, however, that, in the case of an offering made pursuant to this Agreement with respect to which Mueller has designated the lead or managing underwriters (or Mueller is offering securities directly, without an underwriter), this indemnity does not apply to any loss, liability, cost, claim, or damage arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission in any preliminary prospectus or offering memorandum if a copy of a final prospectus or offering memorandum was not sent or given by or on behalf of any underwriter (or Mueller, as the case may be) to such Person

asserting such loss, liability, cost, claim or damage at or prior to the written confirmation of the sale of the Registrable Securities as required by the Securities Act and such untrue statement or omission had been corrected in such final prospectus or offering memorandum.

(c) Each party indemnified under paragraph (a) or (b) of this Section 3.7 shall, promptly after receipt of notice of a claim or action against such indemnified party in respect of which indemnity may be sought hereunder, notify the indemnifying party in writing of the claim or action; provided, that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party on account of the indemnity agreement contained in paragraph (a) or (b) of this Section 3.7 otherwise than under such paragraphs. If any such claim or action shall be brought against an indemnified party, and it shall have notified the indemnifying party thereof, unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified party and indemnifying parties may exist in respect of such claim, the indemnifying party shall be entitled to participate therein, and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel satisfactory to the indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party). After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 3.7 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation. If the indemnifying party does not assume the defense of such claim or action, it is understood that the indemnifying party shall not, in connection with any one such claim or action or separate but substantially similar or related claims or actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to one separate firm of local attorneys in each such jurisdiction) at any time for all such indemnified parties. Any indemnifying party against whom indemnity may be sought under this Section 3.7 shall not be liable to indemnify an indemnified party if such indemnified party settles such claim or action without the consent of the indemnifying party, which consent shall not be unreasonably withheld.

(d) If the indemnification provided for in this Section 3.7 shall for any reason be unavailable (other than in accordance with its terms) to an indemnified party in respect of any loss, liability, cost, claim or damage referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, cost, claim or damage in such proportion as shall be appropriate to reflect (i) the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other hand or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or if the indemnified party failed to give the notice required under paragraph (c) of this Section 3.7, the relative benefits and the relative fault of the indemnifying party on the one hand and the indemnified party on the other with respect to the statements or omissions which resulted in such loss, liability, cost, claim or damage as well as any other relevant equitable considerations. The relative benefits received by the indemnifying party and the indemnified party shall be deemed to be in the same respective proportion as the net proceeds (before deducting expenses) of the offering received by such party (or, in the case of an underwriter, such underwriter’s discounts and commissions) bear to the aggregate offering price of the Registrable Securities or Other Securities. The relative fault shall be determined by

reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the indemnifying party on the one hand or the indemnified party on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission, but not by reference to any indemnified party’s stock ownership in Mueller. The amount paid or payable by an indemnified party as a result of the loss, cost, claim, damage or liability, or action in respect thereof, referred to above in this paragraph (d) shall be deemed to include, for purposes of this paragraph (d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(e) Indemnification and contribution similar to that specified in the preceding paragraphs of this Section 3.7 (with appropriate modifications) shall be given by Mueller, the Selling Holders and underwriters with respect to any required registration or other qualification of securities under any state law or regulation or governmental authority.

(f) The obligations of the parties under this Section 3.7 shall be in addition to any liability which any party may otherwise have to any other party.

3.8. Rule 144 and Form S-3. Commencing 90 days after the Initial Public Offering Date, Mueller shall use its best efforts to ensure that the conditions to the availability of Rule 144 set forth in paragraph (c) thereof shall be satisfied. Upon the request of any Holder of Registrable Securities, Mueller will deliver to such Holder a written statement as to whether it has complied with such requirements. Mueller further agrees to use its reasonable efforts to cause all conditions to the availability of Form S-3 (or any successor form) under the Securities Act of the filing of registration statements under this Agreement to be met as soon as practicable after the Initial Public Offering Date. Notwithstanding anything contained in this Section 3.8, Mueller may deregister under Section 12 of the Securities Exchange Act of 1934, as amended, if it then is permitted to do so pursuant to said Act and the rules and regulations thereunder.

3.9. Transfer of Registration Rights. Any Holder may transfer all or any portion of its rights under Article III to any transferee of a number of Registrable Securities owned by such Holder exceeding three percent (3%) of the outstanding class or series of such securities at the time of transfer (each transferee that receives such minimum number of Registrable Securities, a “Transferee”); provided, that each Transferee of Registrable Securities (other than Walter Entities) to which Registrable Securities are transferred, sold or assigned directly by a Walter Entity (such Transferee, a “Walter Transferee”), together with any Affiliate of such Walter Transferee (and any subsequent direct or indirect Transferees of Registrable Securities from such Walter Transferee and any Affiliates thereof) shall be entitled to request the registration of Registrable Securities pursuant to this Section 3.9 only once prior to a Walter Ownership Reduction and thereafter shall only be entitled to request the registration of Registrable Securities pursuant to Section 3.1(a)(ii) and, provided, further, that no Transferee shall be entitled to request registration pursuant to this Section 3.9 for an amount of Registrable Securities equal to less than $50,000,000. Any transfer of registration rights pursuant to this Section 3.9 shall be effective upon receipt by Mueller of (i) written notice from such Holder

stating the name and address of any Transferee and identifying the number of Registrable Securities with respect to which the rights under this Agreement are being transferred and the nature of the rights so transferred and (ii) a written agreement from such Transferee to be bound by the terms of this Article III and Sections 5.3, 5.4, 5.9, 5.10, and 5.11 of this Agreement. The Holders may exercise their rights hereunder in such priority as they shall agree upon among themselves.

3.10. Holdback Agreement. If any registration pursuant to this Article III shall be in connection with an underwritten public offering of Registrable Securities, each Selling Holder agrees not to effect any public sale or distribution, including any sale under Rule 144, of any equity security of Mueller or any security convertible into or exchangeable or exercisable for any equity security of Mueller, in the case of Registrable Securities (otherwise than through the registered public offering then being made), within 7 days prior to or 90 days (or such lesser period as the lead or managing underwriters may permit) after the effective date of the registration statement (or the commencement of the offering to the public of such Registrable Securities in the case of Rule 415 offerings). Mueller hereby also so agrees; provided, that, subject to Section 3.6(a) hereof, Mueller shall not be so restricted from effecting any public sale or distribution of any security in connection with any merger, acquisition, exchange offer, subscription offer, dividend reinvestment plan or stock option or other executive or employee benefit or compensation plan.

3.11. Registration of Preferred Stock. Mueller agrees that it shall from time to time enter into one or more agreements with Walter and/or the Series B Transferee, if any, in form and substance reasonably satisfactory to the parties thereto, granting to Walter or the Series B Transferee, as the case may be, registration rights for the registration of any shares of preferred stock of Mueller that may hereafter be owned, directly or indirectly, by Walter or the Series B Transferee, as the case may be, substantially upon the same terms and conditions as those contained in Article III for the benefit of Walter.

ARTICLE IV
CERTAIN COVENANT AND AGREEMENTS

4.1. No Violations. (a) For so long as the Walter Entities collectively own shares of capital stock of Mueller having more than fifty percent (50%) of the total voting power of all capital stock of Mueller outstanding, Mueller covenants and agrees that it will not take any action or enter into any commitment or agreement which may reasonably be anticipated to result, with or without notice and with or without lapse of time or otherwise, in a contravention or event of default by any Walter Entity of (i) any provisions of applicable law or regulation, including but not limited to provisions pertaining to the Internal Revenue Code of 1986, as amended, or the Employee Retirement Income Security Act of 1974, as amended, (ii) any provision of Walter’s certificate of incorporation or bylaws, (iii) any credit agreement or other material instrument binding upon Walter or (iv) any judgment, order or decree of any governmental body, agency or court having jurisdiction over Walter or any of its assets.

(b) Mueller and Walter agree to provide to the other any information and documentation requested by the other for the purpose of evaluating and ensuring compliance with Section 4.1(a) hereof.

(c) Notwithstanding the foregoing Sections 4.1(a) and 4.1(b), nothing in this Agreement is intended to limit or restrict in any way Walter’s rights as a shareholder of Mueller.

4.2. Confidentiality. Except as required by law, regulation or legal or judicial process, Walter agrees that neither it nor any Walter Entity nor any of their respective directors, officers or employees will without the prior written consent of Mueller disclose to any Person any material, non-public information concerning the business or affairs of Mueller acquired from any director, officer or employee of Mueller (including any director, officer or employee of Mueller who is also a director, officer or employee of Walter).

ARTICLE V
MISCELLANEOUS

5.1. Limitation of Liability. Neither Walter nor Mueller shall be liable to the other for any special, indirect, incidental or consequential damages of the other arising in connection with this Agreement.

5.2. Subsidiaries. Walter agrees and acknowledges that Walter shall be responsible for the performance by each Walter Entity of the obligations hereunder applicable to such Walter Entity.

5.3. Amendments. This Agreement may not be amended or terminated orally, but only by a writing duly executed by or on behalf of the parties hereto. Any such amendment shall be validly and sufficiently authorized for purposes of this Agreement if it is signed on behalf of Walter and Mueller by any of their respective presidents or vice presidents.

5.4. Term. This Agreement shall remain in effect until all Registrable Securities held by Holders have been transferred by them to Persons other than Transferees; provided, that the provisions of Section 3.7 shall survive any such expiration.

5.5. Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid, illegal or unenforceable to any extent, the remainder of this Agreement or such provision of the application of such provision to such party or circumstances, other than those to which it is so determined to be invalid, illegal or unenforceable, shall remain in full force and effect to the fullest extent permitted by law and shall not be affected thereby, unless such a construction would be unreasonable.

5.6. Notices. All notices and other communications required or permitted hereunder shall be in writing, shall be deemed duly given upon actual receipt, and shall be delivered (a) in person, (b) by registered or certified mail, postage prepaid, return receipt requested or (c) by facsimile or other generally accepted means of electronic transmission (provided that a copy of any notice delivered pursuant to this clause (c) shall also be sent pursuant to clause (b)), addressed as follows:

(a) if to Mueller, to:

Mueller Water Products, Inc.
4211 W. Boy Scout Blvd.
Tampa, FL 33607
Attention: Chief Executive Officer
Tel: (813) 871-4455
Fax: (813) 871-4430

(b) If to Walter, to:

Walter Industries, Inc.
4211 W. Boy Scout Blvd.
Tampa, FL 33607
Attention: General Counsel
Tel: (813) 871-4120
Fax: (813) 871-4420

or to such other addresses or telecopy numbers as may be specified by like notice to the other parties.

5.7. Further Assurances. Walter and Mueller shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such instruments and take such other action as may be necessary or advisable to carry out their obligations under this Agreement and under any exhibit, document or other instrument delivered pursuant hereto.

5.8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same agreement.

5.9. Governing Law. This Agreement and the transactions contemplated hereby shall be construed in accordance with, and governed by, the laws of the State of Delaware.

5.10. Entire Agreement. This Agreement constitutes the entire understanding of the parties hereto with respect to the subject matter hereof.

5.11. Series B Transferee. Mueller agrees that it shall enter into an agreement with the Series B Transferee (as defined in Mueller’s Restated Certificate of Incorporation), if any, in form and substance reasonably satisfactory to the Series B Transferee and Mueller (i) granting to the Series B Transferee options for the purchase of Series B Common Stock and Nonvoting Stock substantially upon the same terms and conditions as those contained in Article II, (ii) granting to the Series B Transferee registration rights for the registration of Registrable Securities substantially upon the same terms and conditions as those contained in Article III for the benefit of Walter and (iii) containing other covenants and agreement for the benefit of the Series B Transferee that are substantially similar to the other covenants and agreements contained in this Agreement for the benefit of Walter; provided, that such agreement shall contain terms (including covenants and agreements of the Series B Transferee) for the benefit of

Mueller that are substantially similar to the terms (including the covenants and agreements of Walter) for the benefit of Mueller contained herein.

5.12. Successors. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns. Nothing contained in this Agreement, express or implied, is intended to confer upon any other person or entity any benefits, rights or remedies.

5.13. Specific Performance. The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, it is agreed that they shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction in the United States or any state thereof, in addition to any other remedy to which they may be entitled at law or equity.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.

	Walter Industries, Inc.

	By:
		Name:
		Title:

	Mueller Water Products, Inc.

	By:
		Name:
		Title:

EX-10.9 7 a2169810zex-10_9.htm EXHIBIT 10.9

EXHIBIT 10.9

[Form of 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)]

INCOME TAX ALLOCATION AGREEMENT

THIS AMENDED AND RESTATED INCOME TAX ALLOCATION AGREEMENT (this “Agreement”) dated as of , 2006 is made and entered into by Walter Industries, Inc., a Delaware corporation (“Walter”) and the Walter Affiliates (as defined below), and Mueller Water Products, Inc., a Delaware corporation (“Mueller”) and the Mueller Affiliates (as defined below).

RECITALS

WHEREAS, Walter is the common parent corporation of an “affiliated group” of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and of certain combined groups as defined under similar laws of other jurisdictions and Mueller and the Mueller Affiliates are, as of the date hereof, and have been members of such groups;

WHEREAS, the groups of which Walter is the common parent and Mueller and the Mueller Affiliates are members file or intend to file Consolidated Returns and Combined Returns (each as defined below);

WHEREAS, Mueller intends to effect the initial public offering by Mueller of Mueller common stock that will reduce Walter’s ownership of Mueller, on a fully diluted basis, to less than eighty percent (80%) of the value of Mueller’s common stock (the “IPO”);

WHEREAS, as a result of the reduction in Walter’s ownership, Mueller and the Mueller Affiliates will cease to be members of the Consolidated Group and may cease to be members of one or more Combined Groups (each as defined below);

WHEREAS, Walter intends to make a distribution of the issued and outstanding shares of Mueller stock pro rata to the holders of Walter capital stock in a transaction that is intended to qualify as a tax-free distribution under Section 355 of the Code; and

WHEREAS, Walter and Mueller desire to set forth their agreement regarding the allocation of taxes, the filing of tax returns, the administration of tax contests and other related matters and to replace in its entirety the Income Tax Allocation Agreement, dated as of October 3, 2005, between Walter and Mueller setting forth their agreement with respect to certain tax matters (the “Original Income Tax Allocation Agreement”) with the terms of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

SECTION 1. DEFINITIONS

1.1 “AUDIT” includes any audit, assessment of Taxes, other examination by any Tax Authority, proceeding, or appeal of such proceeding relating to Taxes, whether administrative or judicial.

1.2 “COMBINED GROUP” means a group of corporations or other entities that files a Combined Return.

1.3 “COMBINED RETURN” means any Tax Return with respect to Non-Federal Taxes filed on a consolidated, combined (including nexus combination, worldwide combination, domestic combination, line of business combination or any other form of combination) or unitary basis wherein one or more members of the Mueller Group join in the filing of a Tax Return with Walter or a Walter Affiliate that is not also a member of the Mueller Group.

1.4 “CONSOLIDATED GROUP” means the affiliated group of corporations within the meaning of Section 1504(a) of the Code of which Walter is the common parent and which includes the Mueller Group.

1.5 “CONSOLIDATED RETURN” means any Tax Return with respect to Federal Income Taxes filed by the Consolidated Group pursuant to Section 1501 of the Code.

1.6 “DECONSOLIDATION” means any event pursuant to which Mueller and the Mueller Group cease to be includible in either the Consolidated Group or any Combined Group, as the context requires.

1.7 “DECONSOLIDATION DATE” means the close of business on the day on which a Deconsolidation occurs. Unless otherwise required by the relevant Tax Authority or a court of competent jurisdiction, Walter and Mueller, for itself and the Mueller Group, agree to file all Tax Returns, and to take all other actions, relating to Federal Income Taxes or Non-Federal Combined Taxes in a manner consistent with the position that Mueller and the Mueller Group are includible in the Consolidated Group and any applicable Combined Group for all days from the date hereof through and including a Deconsolidation Date.

1.8 “DISTRIBUTION” means any distribution by Walter of the issued and outstanding shares of Mueller stock that Walter holds at such time in a transaction intended to qualify as a tax-free distribution under Section 355 of the Code.

1.9 “DISTRIBUTION TAXES” means any (i) Taxes imposed on, or increase in Taxes incurred by, Walter or any Walter Affiliate and (ii) any Taxes of a Walter shareholder (or former Walter shareholder) that are required to be paid or reimbursed by Walter or any Walter Affiliate pursuant to a legal determination, resulting from, or arising in connection with, the failure of a Distribution to qualify as a tax-free transaction under Section 355 of the Code (including, without limitation, any Tax resulting from the application of Section 355(d) or Section 355(e) of the Code to a Distribution) or corresponding provisions of the laws of any other jurisdictions. Any Tax referred to in the immediately preceding sentence shall be determined using the highest applicable statutory Tax rate for the relevant taxable period (or portion thereof).

1.10 “ESTIMATED TAX INSTALLMENT DATE” means the installment due dates prescribed in Section 6655(c) of the Code (presently April 15, June 15, September 15 and December 15).

1.11 “FEDERAL INCOME TAX” or “FEDERAL INCOME TAXES” means any tax imposed under Subtitle A of the Code (including the taxes imposed by Sections 11, 55, 59A, and 1201(a) of the Code), including any interest, additions to Tax, or penalties applicable thereto, and any other income based United States Federal Tax which is hereinafter imposed upon corporations.

1.12 “FEDERAL TAX” means any Tax imposed under the Code or otherwise under United States federal Tax law.

1.13 “FINAL DETERMINATION” means (a) the final resolution of any Tax (or other matter) for a taxable period, including any related interest or penalties, that, under applicable law, is not subject to further appeal, review or modification through proceedings or otherwise, including (1) by the expiration of a statute of limitations (giving effect to any extension, waiver or mitigation thereof) or a period for the filing of claims for refunds, amended returns, appeals from adverse determinations, or recovering any refund (including by offset), (2) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable, (3) by a closing agreement or an accepted offer in compromise under Section 7121 or 7122 of the Code, or comparable agreements under laws of other jurisdictions, (4) by execution of an IRS Form 870-AD, or by a comparable form under the laws of other jurisdictions (excluding, however, any such form that reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund and/or the right of the Tax Authority to assert a further deficiency), or (5) by any allowance of a refund or credit, but only after the expiration of all periods during which such refund or credit may be recovered (including by way of offset) or (b) the payment of Tax by any member of the Consolidated Group or Combined Group with respect to any item disallowed or adjusted by a Tax Authority provided that Walter determines that no action should be taken to recoup such payment.

1.14 “IRS” means the Internal Revenue Service.

1.15 “MARKET VALUATION” means as of the first business day immediately following the date on which the Distribution is effected (i) with respect to Mueller, the fair market value of all of its issued and outstanding stock (measured using the mean of the high and low of the public trading price as published in The Wall Street Journal) as of such date, or (ii) with respect to Walter, the fair market value of all of its issued and outstanding stock (measured using the mean of the high and low of the public trading price as published in The Wall Street Journal) as of such date.

1.16 “MUELLER AFFILIATE” means any corporation or other entity, including any entity that is a disregarded entity for federal income tax purposes, directly or indirectly “controlled” by Mueller where “control” means the ownership of fifty percent (50%) or more of the ownership interests of such corporation or other entity (by vote or value) or the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such corporation or other entity.

1.17 “MUELLER BUSINESS” means the business and operations conducted by Mueller and its Affiliates as such business and operations will continue after the date of the IPO.

1.18 “MUELLER GROUP” means the affiliated group of corporations, including any entity that is a disregarded entity for federal income tax purposes, as defined in Section 1504(a) of the Code, or similar group of entities as defined under similar laws of other jurisdictions, of which Mueller would be the common parent if it were not a subsidiary of Walter, and any corporation or other entity, including any entity that is a disregarded entity for federal income tax purposes, which may be or become a member of such group from time to time.

1.19 “MUELLER GROUP COMBINED TAX LIABILITY” means, with respect to any taxable year, the Mueller Group’s liability for Non-Federal Combined Taxes as determined under Section 3.6 of this Agreement.

1.20 “MUELLER GROUP FEDERAL INCOME TAX LIABILITY” means, with respect to any taxable year, the Mueller Group’s liability for Federal Income Taxes as determined under Section 3.5 of this Agreement.

1.21 “NON-FEDERAL COMBINED TAXES” means any Non-Federal Taxes with respect to which a Combined Return is filed.

1.22 “NON-FEDERAL SEPARATE TAXES” means any Non-Federal Taxes that are not Non-Federal Combined Taxes.

1.23 “NON-FEDERAL TAXES” means any Tax other than a Federal Tax.

1.24 “OFFICER’S CERTIFICATE” means a letter executed by an officer of Walter or Mueller and provided to Tax Counsel as a condition for the completion of a Tax Opinion or Supplemental Tax Opinion.

1.25 “POST-DECONSOLIDATION PERIOD” means a taxable period beginning after the applicable Deconsolidation Date.

1.26 “PRE-DECONSOLIDATION PERIOD” means any taxable period beginning on or prior to the applicable Deconsolidation Date.

1.27 “PRO FORMA MUELLER GROUP COMBINED RETURN” means a pro forma non-federal combined tax return or other schedule prepared pursuant to Section 3.6 of this Agreement.

1.28 “PRO FORMA MUELLER GROUP CONSOLIDATED RETURN” means a pro forma consolidated federal income tax return prepared pursuant to Section 3.5(b) of this Agreement.

1.29 “REDETERMINATION AMOUNT” means, with respect to any taxable year, the amount determined under Section 3.10 of this Agreement.

1.30 “RULING” means (i) any private letter ruling issued by the IRS in connection with a Distribution in response to a request for such a private letter ruling filed by Walter (or any Walter Affiliate) prior to the date of a Distribution, and (ii) any similar ruling issued

by any other Tax Authority addressing the application of a provision of the laws of another jurisdiction to a Distribution.

1.31 “RULING DOCUMENTS” means (i) the request for a Ruling filed with the IRS, together with any supplemental filings or other materials subsequently submitted on behalf of Walter, its Affiliates and shareholders to the IRS, or on behalf of Mueller, its Affiliates and shareholders to the IRS the appendices and exhibits thereto, and any Ruling issued by the IRS to Walter (or any Walter Affiliate) or Mueller (or any Mueller Affiliate) in connection with a Distribution and (ii) any similar filings submitted to, or rulings issued by, any other Tax Authority in connection with a Distribution.

1.32 “SUPPLEMENTAL RULING” means (i) any ruling (other than the Ruling) issued by the IRS in connection with a Distribution, and (ii) any similar ruling issued by any other Tax Authority addressing the application of a provision of the laws of another jurisdiction to a Distribution.

1.33 “SUPPLEMENTAL RULING DOCUMENTS” means (i) the request for a Supplemental Ruling, together with any supplemental filings or other materials subsequently submitted, the appendices and exhibits thereto, and any Supplemental Rulings issued by the IRS in connection with a Distribution and (ii) any similar filings submitted to, or rulings issued by, any other Tax Authority in connection with a Distribution.

1.34 “SUPPLEMENTAL TAX OPINION” has the meaning set forth in Section 4.2(c) of this Agreement.

1.35 “TAX ASSET” means any net operating loss, net capital loss, investment tax credit, foreign tax credit, charitable deduction or any other deduction, credit or tax attribute which could reduce Taxes (including without limitation deductions and credits related to alternative minimum taxes).

1.36 “TAX AUTHORITY” includes the IRS and any state, local, or other governmental authority responsible for the administration of any Taxes.

1.37 “TAX COUNSEL” means a nationally recognized law firm or accounting firm selected by Walter to provide a Tax Opinion or a Supplemental Tax Opinion.

1.38 “TAX” or “TAXES” means any charges, fees, levies, imposts, duties, or other assessments of a similar nature, including without limitation, income, alternative or add-on minimum, gross receipts, excise, employment, sales, use, transfer, license, payroll, franchise, severance, stamp, occupation, windfall profits, withholding, Social Security, unemployment, disability, ad valorem, estimated, highway use, commercial rent, capital stock, paid up capital, recording, registration, property, real property gains, value added, business license, custom duties, or other tax or governmental fee of any kind whatsoever, imposed or required to be withheld by any Tax Authority including any interest, additions to Tax, or penalties applicable thereto.

1.39 “TAX RETURN” OR “TAX RETURNS” means any return, declaration, statement, report, schedule, certificate, form, information return or any other document (and any related or supporting information) including an amended tax return required to be supplied to, or filed with, a Tax Authority with respect to Taxes.

1.40 “TAX OPINION” means an opinion issued by Tax Counsel as one of the conditions to completing a Distribution addressing certain United States federal income tax consequences of a Distribution under Section 355 of the Code.

1.41 “WALTER AFFILIATE” means any corporation or other entity, including any entity that is disregarded for federal income tax purposes, directly or indirectly “controlled” by Walter where “control” means the ownership of fifty percent (50%) or more of the ownership interests of such corporation or other entity (by vote or value) or the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such corporation or other entity, but at all times excluding Mueller or any Mueller Affiliate.

1.42 “WALTER BUSINESS” means all of the businesses and operations conducted by Walter and its Affiliates, excluding the Mueller Business, at any time, whether prior to, or after the date of the IPO.

SECTION 2. PREPARATION AND FILING OF TAX RETURNS

2.1 IN GENERAL. (a) Walter shall have the sole and exclusive responsibility for the preparation and filing of any Consolidated Return or Combined Return.

(b) Mueller shall, subject to Section 2.2 of this Agreement, be responsible for preparing and filing all Tax Returns of Mueller and the Mueller Affiliates other than those described in Section 2.1(a) of this Agreement.

2.2 PREPARATION AND FILING OF RETURNS. (a) All Tax Returns filed after the date of this Agreement by Walter, any Walter Affiliate, Mueller, or any Mueller Affiliate shall (1) be prepared in a manner that is consistent with Section 4 of this Agreement and the Code, and (2) filed on a timely basis (taking into account applicable extensions) by the party responsible for such filing under Section 2.1 of this Agreement.

(b) In its sole discretion, Walter shall have the exclusive right with respect to any Consolidated Return or Combined Return (a) to determine (1) the manner in which such Tax Return shall be prepared and filed, including, without limitation, the manner in which any item of income, gain, loss, deduction or credit shall be reported, (2) whether any extensions may be requested, (3) the elections that will be made by any member of the Consolidated Group or applicable Combined Group, and (4) whether any amended Tax Returns should be filed, (b) to control, contest, and represent the interests of the Consolidated Group and any Combined Group in any Audit and to resolve, settle, or agree to any adjustment or deficiency proposed, asserted or assessed as a result of any Audit, (c) to file, prosecute, compromise or settle any claim for refund, and (d) to determine whether any refunds, to which the Consolidated Group or applicable Combined Group may be entitled, shall be paid by way of refund or credited against the Tax liability of the Consolidated Group or applicable Combined Group. Mueller, for itself and its subsidiaries, hereby irrevocably appoints Walter as its agent and attorney-in-fact to take such action (including the execution of documents) as Walter may deem appropriate to effect the foregoing.

2.3 FURNISHING INFORMATION. Mueller (or the applicable Mueller Affiliate) shall (a) furnish to Walter in a timely manner such information and documents as Walter may reasonably request for purposes of (1) preparing any original or amended Consolidated Return or Combined Return, (2) contesting or defending any Audit relating to a Consolidated

Return or a Combined Return, and (3) making any determination or computation necessary or appropriate under this Agreement, (b) cooperate in any Audit of any Consolidated Return or Combined Return, (c) retain and provide on demand books, records, documentation or other information relating to any tax return until the later of (1) the expiration of the applicable statute of limitations (giving effect to any extension, waiver, or mitigation thereof) and (2) in the event any claim is made under this Agreement for which such information is relevant, until a Final Determination with respect to such claim, and (d) take such action as Walter may deem appropriate in connection therewith. Walter shall provide Mueller (or the applicable Mueller Affiliate) any assistance reasonably required in providing any information requested pursuant to this Section 2.3.

2.4 EXPENSES. Mueller shall reimburse Walter for any outside legal and accounting expenses incurred by Walter in the course of the conduct of any Audit regarding the Tax liability of the Consolidated Group or any Combined Group, and for any other expense incurred by Walter in the course of any litigation relating thereto, to the extent such costs are reasonably attributable to Mueller or any Mueller Affiliate and provided Walter has conferred with Mueller as to the portion of the Audit relating to Mueller or the Mueller Affiliate. Notwithstanding the foregoing, Walter shall have the sole discretion to control, contest, represent, file, prosecute, challenge or settle any Audit pursuant to Section 2.2 of this Agreement.

SECTION 3. PAYMENT OF TAXES AND TAX SHARING AMOUNTS

3.1 FEDERAL INCOME TAXES. Walter shall pay (or cause to be paid) to the IRS all Federal Income Taxes, if any, of the Consolidated Group.

3.2 NON-FEDERAL COMBINED TAXES. Walter shall pay (or cause to be paid) to the appropriate Tax Authorities all Non-Federal Combined Taxes, if any, of any Combined Group.

3.3 NON-FEDERAL SEPARATE TAXES AND OTHER TAXES. Mueller shall pay to the appropriate Tax Authorities all Non-Federal Separate Taxes and any other Taxes (other than those described in Section 3.1 and Section 3.2 of this Agreement), if any, of Mueller and the Mueller Affiliates.

3.4 MUELLER LIABILITY FOR FEDERAL INCOME TAXES AND NON-FEDERAL COMBINED TAXES. For each taxable year (or portion thereof ending on the applicable Deconsolidation Date) during a Pre-Deconsolidation Period, Mueller shall pay to Walter an amount equal to the sum of the Mueller Group Federal Income Tax Liability and the Mueller Group Combined Tax Liability for such period.

3.5 MUELLER GROUP FEDERAL INCOME TAX LIABILITY. (a) IN GENERAL. The Mueller Group Federal Income Tax Liability for each taxable year (or portion thereof ending on the applicable Deconsolidation Date) shall be the Mueller Group’s liability for Federal Income Taxes as determined on a Pro Forma Mueller Group Consolidated Return prepared in accordance with Section 3.5(b) of this Agreement.

(b) PRO FORMA FEDERAL RETURN. For each taxable year (or portion thereof ending on the applicable Deconsolidation Date) during a Pre-Deconsolidation Period, Walter shall prepare or cause to be prepared (and, as requested by Walter, Mueller shall cooperate in preparing) a Pro Forma Mueller Group Consolidated Return as if the Mueller Group were not

and never were part of the Consolidated Group, but rather were a separate affiliated group of corporations of which Mueller were the common parent filing a consolidated federal income tax return pursuant to Section 1501 of the Code. For purposes of this Section 3.5(b), the Mueller Group’s Federal Income Tax Liability shall not be reduced by the Mueller Group’s carrybacks and carryovers of federal Tax Assets from other taxable years (such items being addressed by Section 3.5(c) herein).

(c) FEDERAL TAX ASSETS. Walter shall pay to the Mueller Group, not later than 15 business days after Walter makes a payment to, or receives a payment, credit or offset from any Tax Authority pursuant to this Section 3, the amount, if any, by which one or more federal Tax Assets of the Mueller Group reduced the Federal Income Tax liability of the Consolidated Group for any taxable year. For purposes of computing the amount of the payment described in this Section 3.5(c), one or more federal Tax Assets of the Mueller Group shall be considered to have reduced the Consolidated Group’s Federal Income Tax liability in a given year by an amount equal to the difference, if any, between (i) the amount of the Consolidated Group’s Federal Income Tax liability for the year computed without regard to such Tax Asset or Tax Assets and (ii) the amount of the Consolidated Group’s Federal Income Tax liability for the year computed with regard to such Tax Asset or Tax Assets.

3.6 MUELLER GROUP COMBINED TAX LIABILITY. (a) IN GENERAL. The Mueller Group Combined Tax Liability for each taxable year (or portion thereof ending on the applicable Deconsolidation Date) shall be the sum for such taxable period of the Mueller Group’s liability for each Non-Federal Combined Tax, as determined on Pro Forma Mueller Group Combined Returns prepared in a manner consistent with the principles and procedures set forth in Section 3.5 hereof.

(b) STATE TAX ASSETS. Walter shall pay to the Mueller Group, not later than 15 business days after Walter makes a payment to, or receives a payment, credit or offset from any Tax Authority pursuant to this Section 3, the amount, if any, by which one or more state or local Tax Assets of Mueller and the Mueller Affiliates reduced the Combined Tax liability of the applicable Combined Group for any taxable year. For purposes of computing the amount of the payment described in this Section 3.6(b), one or more state or local Tax Assets of Mueller and the Mueller Affiliates shall be considered to have reduced the Combined Group’s Tax liability in a given year by an amount equal to the difference, if any, between (i) the amount of the Combined Group’s Tax liability for the year computed without regard to such Tax Asset or Tax Assets and (ii) the amount of the Combined Group’s Tax liability for the year computed with regard to such Tax Asset or Tax Assets.

3.7 FOREIGN TAX ASSETS. Any other Tax Assets (other than Tax Assets described in Sections 3.5(c) and 3.6(b)) will be reimbursed at the time of use by Walter or Walter Affiliates in accordance with principles set forth in Sections 3.5(c) and 3.6(b).

3.8 TAX SHARING INSTALLMENT PAYMENTS. (a) FEDERAL INCOME TAXES. Not later than five business days prior to each Estimated Tax Installment Date with respect to any Pre-Deconsolidation Period, Walter shall determine under Section 6655 of the Code the estimated amount of the related installment of the Mueller Group Federal Income Tax Liability. Mueller shall then pay to Walter, not later than such Estimated Tax Installment Date, the amount thus determined.

(b) NON-FEDERAL COMBINED TAXES. Not later than five business days prior to any estimated tax installment date with respect to Non-Federal Combined Taxes for any Pre-Deconsolidation Period, Walter shall determine the estimated amount of the related installment of the Mueller Group Combined Tax Liability for the taxable year. Mueller shall pay to Walter, not later than the due date for such installment, the amount thus determined.

3.9 TAX SHARING TRUE-UP PAYMENTS. (a) FEDERAL INCOME TAXES. Not later than 15 business days after the Consolidated Return is filed with respect to any Pre-Deconsolidation Period, Walter shall deliver to Mueller a Pro Forma Mueller Group Consolidated Return or other comparable schedule reflecting the Mueller Group Federal Income Tax Liability for such taxable year (or portion thereof ending on the applicable Deconsolidation Date). Not later than 10 business days after the date such Pro Forma Mueller Group Consolidated Return or other schedule is delivered, Mueller shall pay to Walter, or Walter shall pay to Mueller, as appropriate, an amount equal to the difference, if any, between the Mueller Group Federal Income Tax Liability for such taxable year (or portion thereof ending on the applicable Deconsolidation Date) and the aggregate amount paid by Mueller with respect to such taxable year (or portion thereof ending on the applicable Deconsolidation Date) under Section 3.8(a) of this Agreement.

(b) NON-FEDERAL COMBINED TAXES. Not later than 15 business days after the Combined Return is filed with respect to any period that includes any Pre-Deconsolidation Period, Walter shall deliver to Mueller a Pro Forma Mueller Group Combined Return or other comparable schedule reflecting the Mueller Group Combined Tax Liability for such taxable year (or portion thereof ending on the applicable Deconsolidation Date). Not later than 10 business days following delivery of such Pro Forma Mueller Group Combined Return or other schedule, Mueller shall pay to Walter, or Walter shall pay to Mueller, as appropriate, an amount equal to the difference, if any, between the Mueller Group Combined Tax Liability for such taxable year (or portion thereof ending on the applicable Deconsolidation Date) and the amount paid by Mueller with respect to such taxable year (or portion thereof ending on the applicable Deconsolidation Date) under Section 3.8(b) of this Agreement.

3.10 REDETERMINATION AMOUNT. (a) IN GENERAL. In the event of any redetermination of any item of income, gain, loss, deduction or credit of any member of the Consolidated Group or any Combined Group as a result of a Final Determination or any settlement or compromise with any Tax Authority (including any amended Tax Return or claim for refund filed by Walter), Mueller shall pay Walter or Walter shall pay Mueller, as the case may be, the Redetermination Amount.

(b) COMPUTATION. The Redetermination Amount shall be the difference, if any, between all amounts previously determined under Section 3 of this Agreement and all amounts that would have been determined under Section 3 of this Agreement taking such redetermination into account (including any additions to Tax or penalties applicable thereto), together with interest for each day calculated (1) with respect to redeterminations affecting Federal Income Taxes, at the rate determined, in the case of payment by Mueller to Walter, under Section 6621(a)(2) of the Code and, in the case of payment by Walter to Mueller, under Section 6621(a) (1) of the Code, and (2) with respect to redeterminations affecting Non-Federal Combined Taxes, under similar laws, if any, of other jurisdictions.

(c) PAYMENT. Walter shall deliver to Mueller a schedule reflecting the computation of any Redetermination Amount with respect to any taxable year. Not later than

5 business days after the date such schedule is delivered, Mueller shall pay Walter, or Walter shall pay Mueller, such Redetermination Amount.

3.11. INTEREST. Payments under this Section 3 that are not made within the prescribed period shall thereafter bear interest at the Federal short-term rate established pursuant to Section 6621 of the Code.

3.12. CARRYBACKS. (a) In the event any Tax Asset of the Mueller Group for any Post-Deconsolidation Period is eligible to be carried back to a Pre-Deconsolidation Period, Mueller shall, to the extent permitted by applicable law, elect to carry such amounts forward to any Post-Deconsolidation Period. If Mueller is required by law to carry back any such Tax Asset to a taxable Pre-Deconsolidation Period, Walter agrees to make a payment to Mueller to the extent that such a payment would be required under the terms of Section 3.5(c), Section 3.6(b) or Section 3.7 of this Agreement, net of any expenses incurred by Walter or Walter Affiliates. If subsequent to the payment by Walter to Mueller of any such amount, there shall be (a) a Final Determination which results in a disallowance or a reduction of the Tax Asset so carried back or (b) a reduction in the amount of the benefit realized by the Walter Group for any reason, Mueller shall repay to Walter, within 30 business days of such event any amount which would not have been payable to Mueller pursuant to this Section 3.12 had the amount of the benefit been determined in light of these events. Mueller shall hold Walter harmless for any penalty, addition to Tax or interest payable by any member of the Walter Group as a result of any such event. Any such amount shall be paid by Mueller to Walter within 30 business days of the payment by Walter or any member of the Consolidated Group or Combined Group of any such penalty, addition to Tax, or interest.

SECTION 4. DECONSOLIDATION AND DISTRIBUTION TAXES

4.1 CONTINUING COVENANTS. Mueller, for itself and the Mueller Affiliates, covenants that on or after a Deconsolidation it will not (nor will it cause or permit any member of the Mueller Group ), in respect of any Pre-Deconsolidation Period, (i) make or change any tax election, (ii) change any accounting method, (iii) amend any Tax Return or take any Tax position on any Tax Return that is inconsistent with any Tax position on any Tax Return of the Walter Group, or (iv) take any action, omit to take any action or enter into any transaction that results in any increased Tax liability or reduction of any Tax Asset of the Walter Group.

4.2 ADDITIONAL CONTINUING COVENANTS. (a) MUELLER RESTRICTIONS. Mueller agrees that, until such time as the stock of Mueller owned by Walter and Walter Affiliates constitutes fifty percent (50%) or less of the total combined voting power of all of the outstanding stock of Mueller, Mueller (1) will not knowingly take or fail to take, or permit any Mueller Affiliate to knowingly take or fail to take, any action that could reasonably be expected to preclude Walter’s ability to effectuate a Distribution, and (2) will not issue any stock of Mueller (or any instrument that is convertible, exercisable or exchangeable into any such stock) in an acquisition or public or private offering if, immediately after such issuance, Walter would, or would reasonably be expected to, not own stock of Mueller that, on a fully diluted basis, constitutes “control” (within the meaning of Section 368(c) of the Code) of Mueller. In the event of a Distribution, Mueller agrees that (1) it will take, and cause each Mueller Affiliate to take, any action reasonably requested by Walter in order to enable Walter to effectuate a Distribution (including, without limitation, any internal restructuring necessary to satisfy the active trade or business requirement of Section 355(b) of the Code) and (2) it will not take or fail to take, or permit any Mueller

Affiliate to take or fail to take, any action where such action or failure to act would be inconsistent with any written representations of an officer of Mueller pursuant to Section 4.2(e) of this Agreement with respect to any material, information, covenant or representation that relates to facts or matters related to Mueller, any Mueller Affiliate, or the Mueller Business in an Officer’s Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents, Supplemental Ruling Documents, Ruling, or Supplemental Ruling other than as permitted by Section 4.2(c) of this Agreement. For this purpose an action is considered inconsistent with a representation if the representation states that there is no plan or intention to take such action. In the event of a Distribution, Mueller agrees that it will not take (and it will cause the Mueller Affiliates to refrain from taking) any position on a Tax Return that is inconsistent with the treatment of a Distribution as a tax-free transaction under Section 355 of the Code.

(b) WALTER RESTRICTIONS. In the event of a Distribution, Walter agrees that it will not take or fail to take, or permit any Walter Affiliate to take or fail to take, any action where such action or failure to act would be inconsistent with any material, information, covenant or representation that relates to facts or matters related to Walter (or any Walter Affiliate) or within the control of Walter and is contained in an Officer’s Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents, Supplemental Ruling Documents, Ruling, or Supplemental Ruling. For this purpose an action is considered inconsistent with a representation if the representation states that there is no plan or intention to take such action. In the event of a Distribution, Walter agrees that it will not take (and it will cause the Walter Affiliates to refrain from taking) any position on a Tax Return that is inconsistent with the treatment of a Distribution as a tax-free transaction under Section 355 of the Code.

(c) CERTAIN MUELLER ACTIONS FOLLOWING A DISTRIBUTION. In the event of a Distribution, Mueller agrees that, during the 2-year period following a Distribution, without first obtaining, at Mueller’s own expense, either a supplemental opinion from Tax Counsel that such action will not result in Distribution Taxes (a “Supplemental Tax Opinion”) or a Supplemental Ruling that such action will not result in Distribution Taxes, unless in any such case Walter and Mueller agree otherwise, Mueller shall not (1) sell all or substantially all of the assets of Mueller or any Mueller Affiliate, (2) merge Mueller or any Mueller Affiliate with another entity, without regard to which party is the surviving entity, (3) transfer any assets of Mueller in a transaction described in Section 351 (other than a transfer to a corporation which files a consolidated return with Mueller and which is wholly-owned, directly or indirectly, by Mueller) or subparagraph (C) or (D) of Section 368(a)(1) of the Code, (4) issue stock of Mueller or any Mueller Affiliate (or any instrument that is convertible or exchangeable into any such stock) in an acquisition or public or private offering, or (5) facilitate or otherwise participate in any acquisition of stock in Mueller that would result in any shareholder owning five percent (5%) or more of the outstanding stock of Mueller. Mueller or any Mueller Affiliate shall only undertake any of such actions after Walter’s receipt of such Supplemental Tax Opinion or Supplemental Ruling and pursuant to the terms and conditions of any such Supplemental Tax Opinion or Supplemental Ruling or as otherwise consented to in writing in advance by Walter. The parties hereby agree that they will act in good faith to take all reasonable steps necessary to amend this Section 4.2(c), from time to time, by mutual agreement, to (i) add certain actions to the list contained herein, or (ii) remove certain actions from the list contained herein, in either case, in order to reflect any relevant change in law, regulation or administrative interpretation occurring after the date of this Agreement.

(d) NOTICE OF SPECIFIED TRANSACTIONS. Not later than 30 days prior to entering into any oral or written contract or agreement, and not later than 5 days after it first becomes aware of any negotiations, plan or intention (regardless of whether it is a party to such negotiations, plan or intention), regarding any of the transactions described in Section 4.2(c) of this Agreement, Mueller shall provide written notice of its intent to consummate such transaction or the negotiations, plan or intention of which it becomes aware, as the case may be, to Walter.

(e) MUELLER COOPERATION. Mueller agrees that, at the request of Walter, Mueller shall cooperate fully with Walter to take any action necessary or reasonably helpful to effectuate a Distribution, including seeking to obtain, as expeditiously as possible, a Tax Opinion, Supplemental Tax Opinion, Ruling, and/or Supplemental Ruling. Such cooperation shall include the execution of any documents that may be necessary or reasonably helpful in connection with obtaining any Tax Opinion, Supplemental Tax Opinion, Ruling, and/or Supplemental Ruling (including, without limitation, any (i) power of attorney, (ii) Officer’s Certificate, (iii) Ruling Documents, (iv) Supplemental Rulings Documents, and/or (v) reasonably requested written representations confirming that (a) Mueller has read the Officer’s Certificate, Ruling Documents, and/or Supplemental Ruling Documents and (b) all information and representations, if any, relating to Mueller, any Mueller Affiliate, or the Mueller Business contained in the Officer’s Certificate, Ruling Documents, and/or Supplemental Ruling Documents are true, correct and complete in all material respects).

4.3 DISTRIBUTION TAXES. The parties have set forth how certain Tax matters with respect to a Distribution would be handled in the event that a Distribution is pursued at some future time.

(a) WALTER’S LIABILITY FOR DISTRIBUTION TAXES. In the event of a Distribution, notwithstanding Section 3 of this Agreement, Walter and each Walter Affiliate shall be jointly and severally liable for any Distribution Taxes, to the extent that such Distribution Taxes are attributable to, caused by, or result from, one or more of the following:

(1) any action or omission by Walter (or any Walter Affiliate) inconsistent with any material, information, covenant or representation related to Walter, any Walter Affiliate, or the Walter Business in an Officer’s Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents, Supplemental Ruling Documents, Ruling, or Supplemental Ruling (for the avoidance of doubt, disclosure of any action or fact that is inconsistent with any material, information, covenant or representation submitted to Tax Counsel, the IRS, or other Tax Authority, as applicable, in connection with an Officer’s Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents, Supplemental Ruling Documents, Ruling, or Supplemental Ruling shall not relieve Walter (or any Walter Affiliate) of liability under this Agreement);

(2) any action or omission by Walter (or any Walter Affiliate), including a cessation, transfer to affiliates, or disposition of its active trades or businesses, or an issuance of stock, stock buyback or payment of an extraordinary dividend by Walter (or any Walter Affiliate) following a Distribution;

(3) any acquisition of any stock or assets of Walter (or any Walter Affiliate) by one or more other persons (other than Mueller or a Mueller Affiliate) prior to or following a Distribution; or

(4) any issuance of stock by Walter (or any Walter Affiliate).

(b) MUELLER’S LIABILITY FOR DISTRIBUTION TAXES. In the event of a Distribution, notwithstanding Section 3 of this Agreement, Mueller and each Mueller Affiliate shall be jointly and severally liable for any Distribution Taxes, to the extent that such Distribution Taxes are attributable to, caused by, or result from, one or more of the following:

(1) any action or omission by Mueller (or any Mueller Affiliate) after a Distribution at any time, that is inconsistent with any written representations of an officer of Mueller pursuant to Section 4.2(e) of this Agreement with respect to any material, information, covenant or representation related to Mueller, any Mueller Affiliate, or the Mueller Business in an Officer’s Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents, Supplemental Ruling Documents, Ruling, or Supplemental Ruling (for the avoidance of doubt, disclosure by Mueller (or any Mueller Affiliate) to Walter (or any Walter Affiliate) of any action or fact that is inconsistent with any material, information, covenant or representation submitted to Tax Counsel, the IRS, or other Tax Authority, as applicable, in connection with an Officer’s Certificate, Tax Opinion, Supplemental Tax Opinion, Ruling Documents, Supplemental Ruling Documents, Ruling, or Supplemental Ruling shall not relieve Mueller (or any Mueller Affiliate) of liability under this Agreement);

(2) any action or omission by Mueller (or any Mueller Affiliate) after the date of a Distribution (including any act or omission that is in furtherance of, connected to, or part of a plan or series of related transactions (within the meaning of Section 355(e) of the Code) occurring on or prior to the date of a Distribution) including a cessation, transfer to affiliates or disposition of the active trades or businesses of Mueller (or any Mueller Affiliate), stock buyback or payment of an extraordinary dividend;

(3) any acquisition of any stock or assets of Mueller (or any Mueller Affiliate) by one or more other persons (other than Walter or any Walter Affiliate) prior to or following a Distribution; or

(4) any issuance of stock by Mueller (or any Mueller Affiliate) after a Distribution, including any issuance pursuant to the exercise of employee stock options or other employment related arrangements or the exercise of warrants.

(c) JOINT LIABILITY FOR REMAINING DISTRIBUTION TAXES. Walter and each Walter Affiliate shall be liable for a percentage of any Distribution Taxes (not otherwise allocated by Sections 4.3(a) or (b) of this Agreement) equal to the quotient of (i) Walter’s Market Valuation, divided by (ii) the sum of (x) Walter’s Market Valuation, and (y) Mueller’s Market Valuation. Mueller and each Mueller Affiliate shall be jointly and severally liable for a percentage of any Distribution Taxes (not otherwise allocated by Sections 4.3(a) or (b) of this Agreement) equal to the quotient of (i) Mueller’s Market Valuation, divided by (ii) the sum of (x) Walter’s Market Valuation, and (y) Mueller’s Market Valuation.

SECTION 5. MISCELLANEOUS

5.1 TERM. All rights and obligations arising hereunder shall survive until they are fully effectuated or performed provided that, notwithstanding anything in this Agreement to the contrary, this Agreement shall remain in effect and its provisions shall survive for the

full period of all applicable statutes of limitation (giving effect to any extension, waiver or mitigation thereof).

5.2 ALLOCATIONS. (a) IN GENERAL. All computations with respect to any Pre-Deconsolidation Period shall be made pursuant to the principles of Treasury Regulations Section 1.1502-76(b), taking into account such elections thereunder as Walter, in its sole discretion, shall make.

(b) TAX ASSETS. Walter shall advise Mueller in writing within 90 days after the filing of the Consolidated Return for the taxable year that includes the Deconsolidation Date of the allocation of any Tax Assets among Walter, each Walter Affiliate, Mueller, and each Mueller Affiliate. The parties hereby agree that, for purposes of determining such allocation, Walter shall be free to use any legally permissible method of allocation in its sole discretion.

5.3 CHANGES IN LAW. Any reference to a provision of the Code or a similar law of another jurisdiction shall include a reference to any successor provision to such provision.

5.4 CONFIDENTIALITY. Each party shall hold and cause its advisors and consultants to hold in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of its counsel, by other requirements of law, all information (other than any such information relating solely to the business or affairs of such party) concerning the other parties hereto furnished it by such other party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (a) previously known by the party to which it was furnished, (b) in the public domain through no fault of such party, or (c) later lawfully acquired from other sources not under a duty of confidentiality by the party to which it was furnished), and each party shall not release or disclose such information to any other person, except its auditors, attorneys, financial advisors, bankers and other consultants who shall be advised of and agree to be bound by the provisions of this Section 5.4. Each party shall be deemed to have satisfied its obligation to hold confidential information concerning or supplied by the other party if it exercises the same care as it takes to preserve confidentiality for its own similar information.

5.5 SUCCESSORS. This Agreement shall be binding on and inure to the benefit of any successor, by merger, acquisition of assets or otherwise, to any of the parties hereto (including any successor of Walter and Mueller succeeding to the tax attributes of such party under Section 381 of the Code), to the same extent as if such successor had been an original party.

5.6 AUTHORIZATION, ETC. Each of the parties hereto hereby represents and warrants that it has the power and authority to execute, deliver and perform this Agreement, that this Agreement has been duly authorized by all necessary corporate action on the part of such party, that this Agreement constitutes a legal, valid and binding obligation of each such party and that the execution, delivery and performance of this Agreement by such party does not contravene or conflict with any provision of law or of its charter or bylaws or any agreement, instrument or order binding on such party.

5.7 ENTIRE AGREEMENT. This Agreement contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements.

5.8 SECTION CAPTIONS. Section captions used in this Agreement are for convenience and reference only and shall not affect the construction of this Agreement.

5.9 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to laws and principles relating to conflicts of law.

5.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.

5.11 WAIVERS AND AMENDMENTS. This Agreement shall not be waived, amended or otherwise modified except in writing, duly executed by all of the parties hereto.

5.12 SEVERABILITY. In case any one or more of the provisions in this Agreement should be invalid, illegal or unenforceable, the enforceability of the remaining provisions hereof will not in any way be effected or impaired thereby.

5..13 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the benefit of the parties to this Agreement and each Walter Affiliate and Mueller Affiliate and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other rights in excess of those existing without this Agreement.

5.14 OTHER REMEDIES. Mueller recognizes that any failure by it or any Mueller Affiliate to comply with its obligations under Section 4 of this Agreement would, in the event of a Distribution, result in Distribution Taxes that would cause irreparable harm to Walter, Walter Affiliates, and their stockholders. Accordingly, Walter shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which Walter is entitled at law or in equity.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by a duly authorized officer as of the date first above written.

WALTER INDUSTRIES, INC.

By:
Name:
Title:

MUELLER WATER PRODUCTS, INC.

By:
Name:
Title:

EX-10.10 8 a2169810zex-10_10.htm EXHIBIT 10.10

Exhibit 10.10

[Form of Transition Services Agreement by and between Walter Industries, Inc. and Mueller Water Products, Inc.]

TRANSITION SERVICES AGREEMENT

This Transition Services Agreement (this “Services Agreement”) is made as of the _____ day of _________, 2006, by and among (i) Walter Industries, Inc., a Delaware corporation (“Walter”) on behalf of itself and each of the other Walter Entities, and (ii) Mueller Water Products, Inc., a Delaware corporation (“Mueller”), on behalf of itself and each of the other Mueller Entities. The Mueller Entities currently receive certain services from and provide certain services to the Walter Entities. Each of the Walter Entities and the Mueller Entities desire that these services continue to be provided after the initial public offering of shares of Mueller and the subsequent spin-off of Mueller’s common stock to Walter’s shareholders, upon the terms and conditions set forth in this Services Agreement.

In consideration of the mutual covenants and agreements contained in this Services Agreement, the parties hereto hereby agree as follows:

ARTICLE 1.

DEFINITIONS

1.1 Unless the context otherwise requires, the following terms and their singular or plural, used in this Services Agreement shall have the meanings set forth below:

a) “Force Majeure” shall have the meaning set forth in Section 7.1 of this Services Agreement.

b) “Mueller” shall have the meaning set forth in the preamble to this Services Agreement.

c) “Mueller Entities” means, collectively, Mueller and any of its Affiliates that are listed as Recipients on Schedule A or as Providers on Schedule B.

d) “Mueller Provided Services” shall have the meaning set forth in Section 2.2 of this Services Agreement.

e) “Person” means an individual, partnership, corporation, trust, unincorporated association, or other entity or association.

f) “Provider” shall mean the particular Walter Entity or Mueller Entity, in any Services Agreement.

g) “Recipient” shall mean the particular Walter Entity or Mueller Entity, in any given location, that is receiving services or leasing or subleasing property (as tenant) pursuant to this Services Agreement.

h) “Term” shall have the meaning set forth in Section 5.1 of this Services Agreement.

i) “Walter” shall have the meaning set forth in the preamble to this Services Agreement.

j) “Walter Entities” means, collectively, Walter and any of its Affiliates that are listed as Providers on Schedule A or as Recipients on Schedule B.

k) “Walter Provided Services” shall have the meaning set forth in Section 2.1 of this Services Agreement.

Other terms are used as defined elsewhere herein.

ARTICLE 2.

SERVICES

2.1 Walter Provided Services. Pursuant to the terms of this Services Agreement, the Walter Entities agree to provide, or cause to be provided, to the respective Mueller Entities the services described in Schedule A to this Services Agreement (the “Walter Provided Services”).

2.2 Mueller Provided Services. Pursuant to the terms of this Services Agreement, the Mueller Entities agree to provide, or cause to be provided, the services described in Schedule B to this Services Agreement (the “Mueller Provided Services”).

2.3 Other Services. If, after the execution of this Services Agreement, the parties determine that a service provided by the Walter Entities to the Mueller Entities or by the Mueller Entities to the Walter Entities prior to the date hereof was omitted from the Schedules to this Services Agreement, then the parties shall negotiate in good faith to agree to the terms and conditions upon which such services would be added to this Services Agreement, it being agreed that the charges for such services should be determined on a basis consistent with the methodology for determining the initial prices provided for in Section 3.3.

ARTICLE 3.

COMPENSATION

3.1 Compensation for Walter Provided Services. Subject to Section 3.4, the compensation for the Walter Provided Services for the duration of the Term shall be as described for each individual service provided as set forth on Schedule A plus applicable sales or value-added taxes, if any.

3.2 Compensation for Mueller Provided Services. Subject to Section 3.4, the compensation for the Mueller Provided Services for the duration of the term shall be as described for each individual service as set forth on Schedule B plus applicable sales or value-added taxes, if any.

3.3 Methodology for Determining Prices. The parties agree that the prices charged by a Provider for any Service provided hereunder shall be sufficient to cover such Provider’s reasonable estimate of its actual costs and, if applicable, consistent with the prices such provider would charge to an Affiliate, in each case without taking into account any profit margin or projected savings from increased efficiency.

3.4 Price Adjustments. It is the intent of the parties that the prices set forth on the Schedules hereto are consistent with the methodology for determining prices as described in Section 3.3. If the parties determine in good faith that the initial prices set forth on the Schedules hereto are not consistent with such methodology, then the parties shall negotiate in good faith to adjust such prices in a manner that is consistent with such methodology.

3.5 Allocation of Certain Expenses.

(a) (i) In respect of software applications which are resident in the Mueller Entities while they are affiliates of the Walter Entities, Mueller shall bear the costs and expenses of obtaining any and all licenses for such software applications for Mueller.

(ii) Walter and Mueller cooperate in good faith to minimize the costs and expenses to be incurred pursuant to this Section 3.5(a).

(b) Walter and Mueller shall each bear the costs and expenses of obtaining any and all consents from third parties which may be necessary in connection with the other party’s provision of services to the Recipient hereunder.

3.6 Terms of Payment; Dispute Resolution.

(a) Except as otherwise expressly provided herein, Providers shall invoice Recipients monthly (or, if mutually agreeable to Provider and Recipient, quarterly or semi-annually) in arrears for the services provided by them under this Services Agreement. Payment in U.S. dollars shall be made by Recipients within 30 days after receipt of any invoice. No Recipient shall withhold any payments to its Provider under this Services Agreement, and no Provider shall withhold the provision of any services to its Recipient, notwithstanding any dispute that may be pending between them, whether

under this Services Agreement or otherwise (any required adjustment being made on subsequent invoices), unless such withholding is provided for in an arbitral award in accordance with Section 9.6 of this Services Agreement.

(b) If there is a dispute between any Recipient and any Provider regarding the amounts shown as billed to such Recipient on any invoice, such Provider shall furnish to such Recipient reasonable documentation to substantiate the amounts billed including, but not limited to listings of the dates, times and amounts of the services in question where applicable and practicable. Upon delivery of such documentation, such Recipient and such Provider shall cooperate and use their best efforts to resolve such dispute among themselves. If such disputing parties are unable to resolve their dispute within thirty (30) calendar days of the initiation of such procedure, and such Recipient believes in good faith and with a reasonable basis that the amounts shown as billed to such Recipient are inaccurate or are otherwise not in accordance with the terms of this Services Agreement, then such Recipient shall have the right, as its own expense, to commence arbitration in accordance with Section 9.1 of this Services Agreement.

ARTICLE 4.

OCCUPANCY RIGHTS

4.1 Any Employee of a Walter Entity or Mueller Entity who is located at a facility of the other party may remain at such location for a period not to exceed 180 days after the date of the spin-off; provided, however, that such employee shall be required to adhere to all applicable security restrictions and guidelines at such facility. Thereafter, the owner of such facility may require such employee(s) to vacate the premises unless, prior to such time, the parties have executed a formal lease or other occupancy arrangements upon commercially reasonable terms that are mutually acceptable to the parties.

ARTICLE 5.

TERM

5.1 Term. Except as expressly provided otherwise in this Services Agreement, or with respect to specific services as indicated on the Schedules hereto, the term of this Services Agreement shall commence immediately and shall expire automatically at the time the term of every service described on the Schedules hereto has terminated (the “Term”). The obligation of any Recipient to make a payment for services previously rendered shall not be affected by the expiration of the term and shall continue until full payment is made.

5.2 Termination of Individual Services. (a) Each of the individual services described on the schedules hereto has a separate term which, in respect of some services, includes a right of extension. Unless earlier terminated pursuant to the following sentence, the obligation of a Provider to provide a service will terminate upon the expiration of the

term of such service. Effective between the respective Provider and Recipient, a Recipient may terminate at any time during the Term any individual service provided under this Services Agreement on a service-by-service basis (and/or location-by-location basis where an individual service is provided to multiple locations of a Recipient) upon written notice to the Provider identifying the particular service (or location) to be terminated and the effective date of termination, which date shall not be less than 30 days after receipt of such notice unless the Provider otherwise agrees. Effective upon the termination of any service, an appropriate reduction will be made in the fees charged to such Recipient.

ARTICLE 6.

CERTAIN COVENANTS

6.1 Points of Contact. Each Provider and Recipient shall name a point of contact which shall be added to the Schedules hereto. Such points of contact shall be responsible for the implementation of this Services Agreement between the respective Provider and its Recipient, including resolutions of any issues that may arise during the performance hereunder on a day-to-day basis.

6.2 Cooperation; Reasonable Care.

(a) The parties will cooperate (using reasonable commercial efforts) to effect a smooth and orderly transition of the services provided hereunder from the Providers to the respective Recipients including, without limitation, the separation of the Mueller Entities from the Walter Entities; provided, however, that this Section 6.2 shall not require any party hereto to incur any out-of-pocket expenses unless and except as expressly provided otherwise herein.

(c) Each Provider shall perform the services that it is required to provide to its respective Recipient(s) under this Services Agreement with reasonable skill and care and shall use at least that degree of skill and care that it would exercise in similar circumstances in carrying out its own business. Each Provider shall take necessary measures to protect the respective Recipient’s data that is processed by such Provider from destruction, deletion or unauthorized change and allow its recovery in events of Force Majeure; provided, however, that a Provider shall be deemed to have satisfied this obligation if the measures taken to protect and recover recipient’s data are equivalent to what it uses in carrying out its own business.

6.3 Migration Projects. Each Provider will provide the respective Recipient with reasonable support necessary to transition the services, which may include consulting and training and providing reasonable access to data and other information and to Providers employees; provided, however, that such activities shall not unduly burden or interfere with Provider’s business and operations. Where required for transitioning the services,

the Recipient’s employees will be granted reasonable access to the respective Provider’s facilities during normal business hours.

6.4 Further Assurances. From time to time after the date hereof, without further consideration, each party shall execute and deliver such formal lease or license agreements as another party may reasonably request to evidence any lease or license provided for herein or contemplated hereby.

6.5 Certain disbursements/receipts. The parties hereto contemplate that, from time to time, Walter-related entities and/or Mueller-related entities (any such party, the “Paying Party”), as a convenience to another Mueller-related entity or Walter-related entity, as the case may be (the “Responsible Party”), in connection with the transactions contemplated by this Services Agreement, may make certain payments that are properly the responsibility of the Responsible Party (any such payment made, a “Disbursement”). Similarly, from time to time, Walter Entities and/or Mueller Entities (any such party, the “Receiving Party”) may receive from third parties certain payments to which another Mueller-related entity or Walter-related entity, as the case may be, is entitled (any such party, the “Other Party”, and any such payment received, a “Receipt”).

(a) Disbursements.

(i) For Disbursements made by check, the Responsible Party will reimburse the Paying Party within seven (7) business days after written notice of such Disbursement has been given to the Responsible Party.

(ii) In case of a Disbursement by wire, if written notice has been given by 2:00 p.m. on the business day prior to the payment of such Disbursement, the Responsible Party shall reimburse the Paying Party for the amount of such payment on the date the Disbursement is made by the Paying Party. If notice as provided above has not been given prior to the payment of such Disbursement, the Responsible Party shall reimburse the Paying party for the amount of such payment within one business day after receipt of the Responsible Party of such notice form the Paying Party.

(iii) A Paying Party shall provide such supporting documentation regarding Disbursements for which it is seeking reimbursement as the Responsible Party may reasonably request.

(b) Receipts. A Receiving Party shall remit Receipts to the Other Party within one business day of receipt thereof. Concerning the cash collection of outstanding receivables, the Receiving Party shall remit such cash on a weekly basis with interest at the prime rate stated in 6.5(e).

(c) Certain Exceptions. Notwithstanding anything to the contrary set forth above, if with respect to any particular transaction(s), it is impossible or impracticable under the circumstances to comply with the procedures set forth in subsections (a) and (b) of this Section 6.5 (including the time periods specified therein), the parties will

cooperate to find a mutually agreeable alternative that will achieve substantially similar economic results from the point of view of the Paying Party or the Other Party, as the case may be (i.e., an alternative pursuant to which the Paying Party will not incur any material interest expense or the Other Party will not be deprived of any material interest income); provided, however, that if a Receiving party cannot comply with the procedures set forth in subsection (b) of this Section because it does not become aware of a Receipt on behalf of the Other Party shall remit such Receipt (without interest thereon) to the Other Party within one business day after the Receiving Party becomes aware of such Receipt.

(d) Funding of Payroll. Notwithstanding anything which may be to the contrary set forth in Section 6(a) or 6(c) above, payroll checks disbursed by or at the direction of a Walter Entity as part of the Walter Provided Services shall be funded in immediately available funds to an account as directed by such Walter Entity on the day the checks are issued to Mueller employees, provided such Walter Entity notifies the respective Mueller Entity by 3:00 p.m. on the business day prior to check issuance of the funding requirement amount (which amount shall be grossed up to include any social charges and other accessories on salaries). Direct deposit of payroll will have the same notice requirement and be funded on payday (alternately referred to as the settlement date).

(e) Interest Rate. The rate for any interest or expense that is paid or payable pursuant to Section 6.5(b) shall be the prime rate as published by the Wall Street Journal.

ARTICLE 7.

FORCE MAJEURE

7.1 Force Majeure. No Provider shall bear any responsibility or liability for any losses, damages, liabilities, claims, costs or expenses, including attorneys’, accountants’ or experts’ fees (“Damages”) arising out of any delay, inability to perform or interruption of its performance of obligations under this Services Agreement due to any acts or omissions of Recipient or for events beyond its reasonable control (herinafter referred to as “Force Majeure”) including, without limitation, acts of God, act of governmental authority, act of the public enemy or due to war, riot, flood, civil commotion, insurrection, labor difficulty, severe or adverse weather conditions, lack of or shortage of electrical power, malfunctions of equipment or software programs or any other cause beyond the reasonable control of the Provider whose performance is affected by the Force Majeure event.

ARTICLE 8.

INDEMNITY

8.1 Indemnity.

(a) The Walter Entities and Mueller Entities, in both instances jointly and severally, will each indemnify and hold harmless the other, their agents, employees and invitees, against all liabilities, claims, losses, damages, death or personal injury of whatever nature or kind, arising out of their respective performance of this Services Agreement or the entry of their respective agents, employees or invitees in the premises of the other, to the extent occasioned by their own willful misconduct or negligent actions or omissions or the willful misconduct or negligent actions or omissions of their respective agents, employees or invitees.

(b) Notwithstanding the foregoing, no party shall be entitled to any damages with respect to lost profits or other consequential damages or punitive damages with respect to the performance by any other party under this Services Agreement.

ARTICLE 9.

MISCELLANEOUS

9.1 Resolution of Disputes; Continuation of Services Pending Outcome of Dispute. In the event of any dispute between the parties or between Providers and Recipients, the parties agree to be bound by the arbitration procedures set forth in Section 9.6 of this Services Agreement. Notwithstanding the existence of any dispute between the parties, no Provider shall discontinue the supply of any service provided for herein, unless so provided in an arbitral determination that the respective Recipient is in default of an obligation under this Services Agreement.

9.2 Notices. All notices, consents, waiver, claims and other communications hereunder (each a “Notice”) shall be in writing and shall be (a) personally delivered, (b) deposited, prepaid in a nationally established overnight delivery firm such as Federal Express, (c) mailed by certified mail, return receipt requested, or (d) transmitted by facsimile as follows:

As to Walter or any other Walter Entity:

Walter Industries, Inc.

4211 W. Boy Scout Blvd.

Tampa, FL 33607

Attention: Victor P. Patrick

Senior Vice President and General Counsel

Fax No.: (813) 871-4420

As to Mueller or any other Mueller Entity:

Mueller Water Products, Inc.

[Address]

or to any other address which such party may have subsequently communicated to the other party by a Notice given in accordance with the provisions of this Section. Each Notice shall be deemed given and effective upon receipt (or refusal or receipt).

9.3 Entire Agreement. This Services Agreement and the Schedules attached hereto contain every obligation and understanding between the parties relating to the subject matter hereof and merge all prior discussion, negotiations and agreement, if any, between them, and none of the parties shall be bound by any representations, warranties, covenants or other understandings, other than as expressly provided herein or therein.

9.4 Waiver and Amendment. Any representation, warranty, covenant, term or condition of this Services Agreement which may legally be waived, may be waived, or the time of performance thereof extended, at any time by the party hereto entitled to the benefit thereof, and any term, condition or covenant hereto may be amended by the parties hereto at any time. Any such waiver, extension or amendment shall be evidenced by an instrument in writing executed on behalf of the appropriate party by a Person who has been authorized by such party to execute waivers, extensions or amendments on its behalf. No waiver by any party hereto, whether express or implied, of its rights under any provisions at any other time or a waiver of such party’s rights under any other provision of this Services Agreement. No failure by any party hereto to take any action against any breach of this Services Agreement or default by another party shall constitute a waiver of the former party’s right to enforce any provision of this Services Agreement or to take action against such breach or default or any subsequent breach or default by such other party.

9.5 Severability. In the event that any one or more of the provisions contained in this Services Agreement shall be declared invalid, void or unenforceable, the remainder of the provisions of this Services Agreement shall remain in full force and effect, and such invalid, void or unenforceable provision shall be interpreted as closely as possible to the manner in which it was written.

9.6 Governing Law; Jurisdiction. This Services Agreement shall be interpreted and construed in accordance with the laws of New York without giving effect to the principles of conflicts of laws thereof. Neither party shall commence any proceeding against the other party under this Services Agreement unless and until the parties shall have attempted in good faith to settle the underlying dispute through negotiation or mediation for a period of not less than 30 days. If the parties have not resolved the dispute within 30 days, then either party may initiate arbitration by notifying the other party in writing that arbitration is demanded. The arbitration shall be conducted in accordance with the CPR Institute for Dispute Resolution Rules for Non-Administered Arbitration (the “Rules”) by one arbitrator. Unless the parties agree on an individual arbitrator by name, each party shall appoint one arbitrator, obtain its appointee’s acceptance of such appointment, and deliver written notification of such appointment and acceptance to the other party within 10 days after delivery of the written notice demanding arbitration. The two party appointed arbitrators shall then jointly appoint a third arbitrator, obtain the appointee’s acceptance of such appointment and notify the

parties in writing of such appointment and acceptance within 10 days after their appointment and acceptance. The arbitrator appointed by the two party-appointed arbitrators shall serve as the sole arbitrator. If the party appointed arbitrators fail to appoint an arbitrator within the time limits specified herein, the CPR Institute for Dispute Resolution shall appoint the arbitrator in accordance with Article 6 of the Rules. Judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. Unless otherwise agreed, the place of the arbitration shall be Jacksonville, Florida.

9.7 Counterpart Execution. This Services Agreement may be executed in counterparts with the same effect as if all of the parties had signed the same document. Such counterparts shall be construed together and shall constitute one and the same instrument, notwithstanding that all of the parties are not signatories to the original or the same instrument, or that signature pages from different counterparts are combined. The signature of any party to one counterpart shall be deemed to be a signature to and may be appended to any other counterpart.

9.8 Assignment. This Services Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that this Agreement may not be assigned by either party to any Person without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, either party may assign any of its rights and obligations under this Services Agreement, in whole or in part, to one or more wholly owned subsidiaries of such party. Any party so assigning this Services Agreement shall remain fully liable to the other party for the performance by any assignee of any obligation of such party so assigned. Any purported assignment in violation of this Section 9.8 shall be void.

9.9 No Third Party Beneficiary. Nothing expressed or implied in this Services Agreement is intended, or shall be construed, to confer upon or give any Person other than the parties hereto, their respective successors and permitted assigns and the indemnities, any rights or remedies under or by reason of this Services Agreement.

9.10 Headings and Interpretation. Titles and headings to articles and sections herein and titles to the Schedules are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Services Agreement. The Schedules referred to herein shall be construed with and as an integral part of this Services Agreement to the same extent as if they were set forth verbatim herein.

9.11 Survival. Notwithstanding anything to the contrary herein, the rights and obligations of the parties under this Services Agreement which by their nature would continue beyond the termination of this Services Agreement, including but not limited to rights and obligations those set forth in Sections 3.6, 6.5, 8.1, 9.1 and 9.6, shall survive termination of this Services Agreement.

IN WITNESS WHEREOF, the duly authorized officers or representatives of the parties hereto have duly executed this Services Agreement as of the date first written above.

MUELLER ENTITIES:		WALTER ENTITIES:

MUELLER WATER PRODUCTS, INC.		WALTER INDUSTRIES, INC.


Name:		Name:
Title:		Title:

EX-10.11 9 a2169810zex-10_11.htm EXHIBIT 10.11

EXHIBIT NO. 10.11

[Form of Mueller Water Products, Inc. 2006 Stock Incentive Plan]

MUELLER WATER PRODUCTS, INC.

2006 STOCK INCENTIVE PLAN

Approved by the Board of Directors on , 2006

Approved by Stockholders on , 2006

Effective Date: , 2006

Termination Date: , 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 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 is or 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 in the event of a termination of all positions a Participant holds with the Company and its Affiliates, except in the case of a transition from status as a Consultant to status as an Employee if and only if there is no interruption or termination of the Participant’s service in connection with such transition. For example, unless otherwise expressly provided in the Stock Award, a termination in a Participant’s status as an Employee and the immediate commencement of service as a Consultant of the Company will constitute a termination of Continuous Service. Notwithstanding anything herein to the contrary, the Committee, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by the Company or an Affiliate, including sick leave, military leave or any other personal leave.

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

3 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:

(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.

4 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 (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. “Retirement” means the voluntary termination of a Participant’s Continuous Service in all capacities with the Company and all of its Affiliates at such time that the Participant’s age and years of service equal or exceed 70.

2.30. “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.

2.31. “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.

2.32. “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.

2.33. “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.

5 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.

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 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.

(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.

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

(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.

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(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.

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. 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 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

7 Reserve by one (1) shares. 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 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 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.

5.2. Ten Percent Shareholders. 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.

5.3. Annual Section 162(m) Limitation. Subject to the provisions of Section 11 of the Plan relating to adjustments upon changes in the shares of Common Stock, and to the extent required for compliance with Section 162(m) of the Code, no Employee shall be eligible to be granted Options and other Stock Awards covering more than 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 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

8 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.

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 Shareholders, 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).

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.

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

9

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 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.

(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.

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.

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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.

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

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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.

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 first day following 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 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 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 Award”) 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 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 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).

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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 SAR awards 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.

(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

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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 award 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.

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

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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.

(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.

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(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 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.

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. Unless otherwise provided in the Stock Award Agreement or the terms of the Plan, 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 Participant’s achievement of performance criteria, the Stock Award will not fully vest in less than one (1) year.

10.2. Acceleration of Exercisability and Vesting. The Committee shall have the power to accelerate exercisability and/or vesting when it deems fit, such as upon a Change of

16 Control. 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 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

17 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 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

18 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 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 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

19 determines necessary or appropriate to comply with the requirements of Section 409A of the Code.

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.

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 (whether paid in cash or otherwise) or any transaction similar to the foregoing, the Committee in its sole discretion and without liability to any person may 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.

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

20 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, unless the Board determined otherwise, all outstanding 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.

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. 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

21 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.

14.1 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.

XIV. CHOICE OF LAW.

15.1 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.

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EX-10.12 10 a2169810zex-10_12.htm EXHIBIT 10.12

EXHIBIT 10.12

[Form of Mueller Water Products, Inc. 2006 Employee Stock Purchase Plan]

MUELLER WATER PRODUCTS, INC.

2006 EMPLOYEE STOCK PURCHASE PLAN

Approved by the Board of Directors on , 2006

Approved by Stockholders on , 2006

Termination Date: , 2016

The following constitute the provisions of the 2006 Employee Stock Purchase Plan of Mueller Water Products, Inc.

1. Purpose. The purpose of the Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company. The Company intends that the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code. The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.

2. Definitions.

(a) “Applicable Law” means the legal requirements relating to the administration of an employee stock purchase plan under applicable U.S. state corporate and securities laws, U.S. federal 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.

(b) “Board” means the board of directors of the Company.

(d) “Committee” means the Board or a committee named by the Board.

(e) “Common Stock” means the Series A common stock of the Company, par value $0.01 per Share, or any securities into which such stock may be converted.

(f) “Company” means Mueller Water Products, Inc., a Delaware corporation.

(g) “Compensation” means base cash compensation and commissions earned by an Employee from the Company or a Designated Subsidiary, but excluding overtime, shift differentials, bonuses, incentive compensation, relocation, expense reimbursements, tuition and other reimbursements and income realized as a result of participation in any stock option, stock purchase, or similar plan of the Company or any Designated Subsidiary.

(h) “Continuous Status as an Employee” means the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of (i) sick leave; (ii) military leave; (iii) any other bona fide leave of absence approved by the Administrator, provided that such leave is for a period of not more than three months, unless reemployment upon the expiration of such leave is guaranteed by contract (including Company policy) or statute; or (iv) transfers between the Company and its Designated Subsidiaries.

(i) “Contributions” means all amounts credited to the account of a Participant pursuant to the Plan.

(j) “Corporate Transaction” means a sale of all or substantially all of the Company’s assets, a merger, a consolidation, a tender offer, or other capital reorganization of the Company with or into another corporation, including but not limited to:

(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 is or becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), 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.

(k) “Designated Subsidiary” means a Subsidiary that has been designated by the Committee in its sole discretion, from time to time, as eligible to participate in the Plan with respect to its Employees.

(l) “Effective Date” means the date on which the registration statement on Form S-1 filed with the Securities and Exchange Commission pursuant to Rule 424 under

the Securities Act for the initial public offering of the Company’s Common Stock (the “Registration Statement”) becomes effective; provided, however, except as otherwise determined by the Committee to the extent permitted under the Plan, that no Offering Period shall commence under the Plan until, and the first Offering Date under the Plan shall be, August 1, 2006.

(m) “Employee” means any person, including an Officer, who is an employee of the Company or its Designated Subsidiaries for tax purposes and who is customarily employed for at least twenty (20) hours per week and more than five (5) months in a calendar year by the Company or one of its Designated Subsidiaries; provided, however, that the Committee may establish administrative rules requiring that employment commence some minimum period (not to exceed 30 days) prior to an Offering Date in order to be eligible to participate in the Offering Period beginning on that Offering Date.

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

(o) “Fair Market Value” means, as of a given date, the value of the Common Stock determined as follows: (1) if the Common Stock is listed on any established stock exchange or national market system, the Fair Market Value shall be the closing sales price per Share of the Common Stock (or the closing bid, if no sales were reported) on the date of determination as quoted on such exchange or system on which the Common Stock has the highest average trading volume, as reported in the The Wall Street Journal or such other source as the Committee deems reliable, (2) if the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be the mean of the closing bid and asked prices for the Common Stock on the date of such determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable, or (3) in the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee.

(p) “Offering Date” means the first Trading Day of each Offering Period of the Plan, except as further described in Section 4.

(q) “Offering Period” means a period of approximately three (3) months generally commencing on February 1, May 1, August 1 and November 1 of each year and generally ending on the following April 30, July 31, October 31 and January 31, respectively, except as further described in Section 4.

(r) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(s) “Participant” shall mean an Employee who is eligible to, and elects to, be a participant in the Plan as provided in Section 5 and whose participation has not terminated in accordance with the terms of the Plan.

(t) “Plan” means this 2006 Employee Stock Purchase Plan.

(u) “Purchase Date” means the last Trading Day of each Offering Period of the Plan.

(v) “Purchase Price” means, with respect to an Offering Period, an amount equal to a percentage (not less than 85%) established by the Committee (the “Designated Percentage”) of the lesser of (i) the Fair Market Value of a Share of Common Stock on the Offering Date or (ii) the Fair Market Value of a Share of Common Stock on the Purchase Date, as adjusted by the Committee pursuant to Section 18 in accordance with Section 424(a) of the Code. The Committee may change the Designated Percentage with respect to any future Offering Period, and the Committee may determine with respect to any prospective Offering Period that the option price shall be the Designated Percentage of the Fair Market Value of a Share of the Common Stock on the Purchase Date (without reference to the Fair Market Value of a Share of Common Stock on the Offering Date).

(w) “Securities Act” shall mean the U.S. Securities Act of 1933, as amended from time to time.

(x) “Share” means a share of Common Stock, as adjusted in accordance with Section 18 of the Plan.

(y) “Subsidiary” means any entity treated as a corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, within the meaning of Code Section 424(f), whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.

(z) “Trading Day” shall mean a day on which U.S. national stock exchanges and the National Market System are open for trading and the Common Stock is being publicly traded on one or more of such markets.

3. Eligibility.

(a) Any person who is an Employee as of the Offering Date of a given Offering Period shall be eligible to participate in such Offering Period under the Plan, subject to the requirements of this Section 3, Section 5(a) and the limitations imposed by Section 423(b) of the Code.

(b) Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) if, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary, or (ii) if such option would permit his or her rights to purchase Common Stock under all employee stock purchase plans (described in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate that exceeds Twenty-Five Thousand Dollars ($25,000) of the Fair Market Value of such Common Stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time.

(c) All Employees who participate in the Plan shall have the same rights and privileges under the Plan, except for differences that may be mandated by local law and that are consistent with Code Section 423(b)(5); provided that individuals participations in a sub-plan adopted pursuant to Section 24 which is not designed to qualify under Code Section 423 need not have the same rights and privileges as Employees participating in the Code Section 423 Plan.

4. Offering Periods. The Plan shall be implemented by a series of Offering Periods of approximately three (3) months’ duration, with new Offering Periods commencing on February 1, May 1, August 1 and November 1 of each year and ending on the following April 30, July 31, October 31 and January 31, respectively. Except as otherwise determined by the Committee to the extent permitted under the Plan, the first Offering Period shall commence on August 1, 2006. The Committee shall have the power to change the duration and/or the frequency of Offering Periods with respect to future Offering Periods if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected, subject to compliance with Applicable Laws.

5. Participation.

(a) An eligible Employee may become a Participant in the Plan by completing a subscription agreement and any other required documents (“Enrollment Documents”) provided by the Company and submitting them to the Company or, as applicable, the stock brokerage or other financial services firm designated by the Company (“Designated Broker”) within the period set by the Committee with respect to a given Offering Period. The Enrollment Documents and their submission may be electronic, as directed by the Company.

(b) Payroll deductions shall commence on the date of the first paycheck paid on or after the Offering Date and shall end on the date of the last paycheck paid on or prior to the Purchase Date of the Offering Period to which the Enrollment Documents are applicable, unless sooner terminated by the Participant as provided in Section 10.

(c) Once an eligible Employee becomes a Participant in the Plan, he or she will automatically participate in all subsequent Offering Periods at the same Contribution rate, unless he or she (i) submits new Enrollment Documents or (ii) withdraws from participation in the Plan as provided in Section 10 of the Plan.

6. Method of Payment of Contributions.

(a) A Participant shall elect to have payroll deductions made on each payday during the Offering Period at the rate of any whole percentage of the Participant’s Compensation not less than one percent (1%) and not more than ten percent (10%) (or such greater percentage as the Committee may establish from time to time before an Offering Date). All Contributions made by a Participant will be credited to a bookkeeping account in his or her name under the Plan. A Participant may not make any additional payments into the Plan. Notwithstanding the foregoing, in locations in which Applicable Law prohibits payroll deductions, an eligible Employee may elect to participate through contributions to his or her account under the Plan in a form acceptable to the Committee, and such Employees shall be deemed to be participating in a

sub-plan, unless the Committee otherwise expressly provides that such Employees shall be treated as participating in the Plan.

(b) The Committee may establish rules pertaining to the changes to the rate of a Participant’s Contributions, limiting the frequency with which Participants may change his or her rate of participation, the timing of the elections for such changes, and whether or not changes may effectuate an increase in Contributions or only a decrease in Contributions. A Participant may change his or her rate of Contributions with respect to current or future Offering Periods by filing new Enrollment Documents at such times and on such terms as specified by the Committee.

(c) To the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) herein, a Participant’s payroll deductions may be decreased by the Company to 0% during any Offering Period scheduled to end during the current calendar year. Payroll deductions shall re-commence at the rate provided in such Participant’s then-effective Enrollment Documents at the beginning of the first Offering Period that is scheduled to end in the following calendar year. In addition, a Participant’s payroll deductions may be decreased by the Company to 0% at any time during an Offering Period in order to avoid unnecessary payroll contributions as a result of application of the maximum share limit set forth in Section 8, in which case payroll deductions shall re-commence at the rate provided in such Participant’s then-effective Enrollment Documents at the beginning of the next Offering Period.

7. Grant of Option. On the Offering Date of each Offering Period, each eligible Employee shall be granted an option to purchase on each Purchase Date a number of Shares of the Company’s Common Stock determined by dividing the accumulated Contributions credited to the Participant’s account as of the Purchase Date by the applicable Purchase Price. An option will expire upon the earliest to occur of (i) the failure of a newly eligible Employee to complete and submit the Enrollment Documents by the date determined by the Committee with respect to that Offering Period, (ii) the termination of a Participant’s participation in the Plan, (iii) the exercise of the option on the Purchase Date or (iv) the termination of the Offering Period as provided in the Plan.

8. Exercise of Option.

(a) Unless a Participant withdraws from the Plan as provided in Section 10, and except as otherwise provided in Sections 7, 18 or 19, the Participant’s option for the purchase of Shares will be exercised automatically on the Purchase Date of the Offering Period for the purchase of that number of whole Shares that can be purchased under the option with the accumulated Contributions credited to the Participant’s account at the applicable Purchase Price. Notwithstanding the foregoing, and in addition to any other limitations set forth in the Plan and under Applicable Law, the maximum number of Shares a Participant may purchase during each Offering Period shall be Shares and the maximum number of Shares that all Participant may purchase in the aggregate during each Offering Period shall be Shares, in each case subject to any adjustment pursuant to Section 18 below. The Company shall retain the full amount of Contributions used to purchase Common Stock as payment for the Common Stock.

(b) For tax purposes, the Shares purchased upon exercise of an option hereunder shall be deemed to be sold to the Participant on the Purchase Date. The Company or its designee may make such provisions and take such action as it deems necessary or appropriate for the withholding of taxes and/or social insurance as required by Applicable Law. Each Participant is responsible for the payment of all individual tax liabilities arising under the Plan, including with respect to the sale or other disposition of Shares acquired under the Plan.

9. Delivery.

(a) The Company will deliver Shares purchased under the Plan (or a record thereof) as promptly as possible. The Committee may permit or require that Shares purchased under the Plan be deposited directly with the Designated Broker, and the Committee may utilize electronic or automated methods of Share transfer. The Committee may require that Shares be retained with the Designated Broker for a designated period of time and/or may establish other procedures to permit tracking of “disqualifying dispositions” of such Shares. A “disqualifying disposition” is any sale or other disposition which is made within two years after the Offering Date or within one year after the Purchase Date. A “qualifying disposition” will occur if the sale or other disposition of the Shares is made after the Shares have been held for more than two years after the Offering Date and more than one year after the Purchase Date. Participants are urged to consult their personal tax advisors regarding the specific U.S. federal, state, local and foreign income and other tax consequences applicable to dispositions.

(b) The Committee may in its discretion direct the Company to retain in a Participant’s account for the subsequent Offering Period any payroll deductions which are not sufficient to purchase a whole Share of Common Stock or return such amount to the Participant. Any other amounts left over in a Participant’s account after a Purchase Date shall be returned to the Participant.

(c) No Participant shall have any voting, dividend, or other stockholder rights with respect to Shares subject to any option granted under the Plan until the Shares subject to the option have been purchased and delivered to the Participant as provided in this Section 9.

10. Voluntary Withdrawal; Termination of Employment.

(a) A Participant may terminate his or her participation in the Plan and withdraw all of the Contributions credited to his or her account under the Plan prior to a Purchase Date by submitting a completed “Notice of Withdrawal” form to the Company (or, as applicable, the Designated Broker). As soon as practicable following the Company’s receipt of the Notice of Withdrawal, all of the Participant’s Contributions credited to his or her account will be returned without any interest thereon, and no further Contributions for the purchase of Shares will be made during the Offering Period. The Committee may establish rules (i) pertaining to the timing of withdrawals, (ii) limiting the frequency with which Participants may withdraw and re-enroll and (iii) imposing a waiting period on Participants wishing to re-enroll following withdrawal.

(b) Upon termination of the Participant’s Continuous Status as an Employee prior to the Purchase Date of an Offering Period for any reason, the Contributions credited to his

or her account will be returned to him or her or, in the case of his or her death, to the person or persons entitled thereto, and his or her option will be automatically terminated.

(c) The Committee may establish rules regarding when leaves of absence or changes of employment status will be considered to be a termination of employment, and the Committee may establish termination-of-employment procedures for this Plan that are independent of similar rules established under other benefit plans of the Company and its Designated Subsidiaries; provided that such procedures are not in conflict with the requirements of Section 423 of the Code.

11. Interest. No interest shall accrue on the Contributions of a Participant in the Plan.

12. Stock.

(a) Subject to adjustment as provided in Section 18, the maximum number of Shares that may be made available for sale and which may be issued under the Plan shall be shares outstanding after the IPO] Shares. The Shares may consist, in whole or in part, of unissued Shares, treasury Shares, or Shares purchased by the Company on the open market. The issuance of Shares pursuant to the Plan shall reduce the total number of Shares that may be made available for sale and which may be issued under the Plan.

(b) If the Committee determines that, on a given Purchase Date, the number of Shares with respect to which options are to be exercised may exceed (1) the number of Shares of Common Stock that were available for sale under the Plan as of the Offering Date, or (2) the number of Shares available for sale under the Plan with respect to that Offering Period, the Committee may in its sole discretion provide for a pro rata allocation of the Shares of Common Stock available for purchase in that Offering Period in as uniform a manner as shall be practicable and equitable among all Participants in that Offering Period and either (i) continue the Plan or (ii) terminate the Plan pursuant to Section 19 below.

13. Administration.

(a) The Committee will have the authority and responsibility for the day-to-day administration of the Plan as well as the authority and responsibility specifically provided in this Plan, in addition to any other duties, responsibilities and authority delegated to the Committee by the Board. The Committee may delegate to one or more individuals the day-to-day administration of the Plan. The Committee shall have full power and authority to (i) adopt, amend and rescind any Plan rules which it deems desirable and appropriate for the proper administration of the Plan, (ii) construe and interpret the provisions of the Plan, (iii) supervise the administration of the Plan, (iv) make factual determinations relevant to Plan entitlements and (v) take all other actions in connection with administration of the Plan as it deems necessary or advisable, consistent with any delegation from the Board. Decisions of the Board and the Committee shall be final and binding upon all participants.

(b) Without stockholder consent and without regard to whether any Participant rights may be considered to have been adversely affected, the Committee shall be entitled to change the timing of future Offering Periods, limit the frequency and/or number of

changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Committee determines in its sole discretion advisable that are consistent with the Plan.

14. Designation of Beneficiary. The Committee may establish rules pertaining to the designation by the Participant of a beneficiary who is to receive any Shares and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to the end of an Offering Period.

15. Transferability. During his or her lifetime, a Participant’s option to purchase Shares hereunder is exercisable only by him or her. Neither Contributions credited to a Participant’s account nor any rights with regard to the exercise of an option or the receipt of Shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 14) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw from the Plan in accordance with Section 10.

16. Use of Funds. All Contributions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such Contributions.

17. Reports. Individual accounts will be maintained for each Participant in the Plan. Statements of account will be provided to Participants by the Company or the Designated Broker at least annually, which statements will set forth the amounts of Contributions, the per Share Purchase Price, the number of Shares purchased and the remaining cash balance, if any.

18. Adjustments Upon Changes in Capitalization; Corporate Transactions.

(a) Adjustment. Subject to any required action by the stockholders of the Company, in the event of any change in the Common Stock subject to the Plan or subject to or underlying any outstanding option, 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 (whether paid in cash or otherwise) or any transaction similar to the foregoing, the Board in its sole discretion and without liability to any person may make such substitution or adjustment, if any, as it deems to be equitable to (i) the number and kind of Shares or other securities that have been authorized for issuance under the Plan but have not yet been placed under option, including the number of Shares of Common Stock set forth in Section 12(a) above (collectively, the “Reserves”), (ii) the maximum number of Shares of Common Stock that may be purchased by a Participant and/or by all Participants in an Offering Period as set forth in

Section 8, (iii) the number and kind of Shares or other securities covered by each option under the Plan that has not yet been exercised, (iv) the Purchase Price per Share of Common Stock covered by each option under the Plan that has not yet been exercised and (v) any other affected terms of the Plan or any outstanding option. Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an option.

(b) Corporate Transactions.

(i) In the event of a dissolution or liquidation of the Company, and unless otherwise provided by the Board, (i) any Offering Period then in progress, and any options outstanding thereunder will terminate prior to the consummation of such transaction and (ii) all Contributions will be refunded to the Participants.

(ii) In the event of a Corporate Transaction, then in the sole discretion of the Board, (1) each option shall be assumed or an equivalent option shall be substituted by the successor corporation or parent or subsidiary of such successor entity, (2) a date established by the Board on or before the date of consummation of such Corporate Transaction shall be treated as a Purchase Date, and all outstanding options shall be exercised on such date, (3) all outstanding options shall terminate and all Contributions will be refunded to the Participants, or (4) all outstanding options shall continue unchanged.

19. Amendment or Termination. The Board may, at any time and for any reason, terminate, suspend or amend the Plan; provided, however, that no such actions may adversely affect outstanding options except as provided in Section 18 and this Section 19. Notwithstanding the foregoing, the Board may terminate or suspend the Plan and/or an on-going Offering Period if the Board determines that such action is in the best interests of the Company and the stockholders. Upon a termination or suspension of the Plan, the Board may in its discretion (i) return without interest, the Contributions credited to Participants’ accounts to such Participants or (ii) set an earlier Purchase Date with respect to an Offering Period then in progress. The Company shall obtain stockholder approval of any amendments or terminations in such a manner and to such a degree as required by Applicable Law.

20. Notices. All notices or other communications by an Employee to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

21. Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such Shares pursuant thereto shall comply with all Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. In connection with the granting or exercise of an option, the Company may require a Participant to make such representations and warranties which, in the opinion of counsel for the Company, are required by Applicable Law.

22. Term of Plan; Effective Date. This Plan shall be effective on the Effective Date, subject to approval of the stockholders of the Company within twelve (12) months before or after its date of adoption by the Board. It shall continue in effect for a term of ten (10) years from the Effective Date unless sooner terminated under Section 19.

23. Additional Restrictions of Rule 16b-3. The terms and conditions of options granted hereunder to, and the purchase of Shares by, persons subject to Section 16 of the Exchange Act shall comply with the applicable provisions of Rule 16b-3. This Plan shall be deemed to contain, and such options shall contain, and the Shares issued upon exercise thereof shall be subject to, such additional conditions and restrictions as may be required by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.

24. Rules for Foreign Jurisdictions. The Committee may adopt rules or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of Applicable Laws. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules and procedures regarding handling of payroll deductions or other contributions by Participants, payment of interest, conversion of local currency, payroll tax, withholding procedures and handling of stock certificates which vary with local requirements; however, if such varying provisions are not in accordance with the provisions of Section 423(b) of the Code, including but not limited to the requirement of Section 423(b)(5) of the Code that all options granted under the Plan shall have the same rights and privileges unless otherwise provided under the Code and the regulations promulgated thereunder, then the individuals affected by such varying provisions shall be deemed to be participating under a sub-plan and not the Plan. The Committee may also adopt sub-plans applicable to particular Designated Subsidiaries or locations, which sub-plans may be designed to be outside the scope of Code section 423. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of Section 12, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan.

25. No Enlargement of Rights. Nothing contained in this Plan shall be deemed to give any Employee or other individual the right to be retained in the employ or service of the Company or any Subsidiary or to interfere with the right of the Company or any Subsidiary to discharge any Employee or other individual at any time, for any reason or no reason, with or without notice.

26. Lock-Up. By electing to participate in the Plan, the Participant agrees that the Company (or a representative of the underwriter(s)) may, in connection with any underwritten registration of the offering of any securities of the Company under the Securities Act, require that the Participant 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 Common Stock or other securities of the Company held by the Participant (including but not limited to any Shares purchased under the Plan), for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. The Participant further agrees to 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 Shares of Common Stock until the end of such period. The underwriters of the Company’s stock are intended third party beneficiaries of this section and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

27. Governing Law. This Plan shall be governed by applicable laws of the State of Delaware.

EX-10.13 11 a2169810zex-10_13.htm EXHIBIT 10.13

EXHIBIT 10.13

[Form of Mueller Water Products, Inc. Directors’ Deferred Fee Plan]

MUELLER WATER PRODUCTS, INC.

DIRECTORS’ DEFERRED FEE PLAN

Effective Date: , 2006

1. Establishment of Plan

The Mueller Water Products, Inc. Directors’ Deferred Fee Plan (the “Plan”) has been established by Mueller Water Products. Inc. (the “Company”) for eligible members of the Board of Directors (the “Board”) of the Company. 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 above, the “Effective Date”).

2. Eligibility

Each person who is elected to be a member of the Board and who is not an employee of the Company or any of its subsidiaries (each, a “Director”) is eligible to elect to participate in the Plan.

3. Participation

a) Form of Election. A Director may elect to become a Participant (as defined below) and, as such, to defer all or a portion of the fees to which he may thereafter be entitled to receive as a Director (not including expense reimbursement) by completing and signing an “Election to Participate in the Mueller Water Products, Inc. Directors’ Deferred Fee Plan”. A Director electing to participate (a “Participant”) shall designate whether his fees are to be credited to an “Income Account” or to a “Stock Equivalent Account,” or divided in any manner between such two accounts.

b) Initial Election. A Director’s initial election to participate in the Plan must be made no later than 30days following the date on which the individual becomes eligible to participate in the Plan (i.e., either following the initial adoption of the Plan or upon first becoming a Director). If the Director does not elect to participate in the Plan upon first becoming eligible to participate, the Director may only elect to participate in the Plan with respect to subsequent terms of office. Any such initial election with respect to a subsequent term of office must be made no later than December 31^st of the year preceding the year in which the Director will commence services for the subsequent term of office.

c) Elections as to Future Services. The Director’s most-recently filed election shall be deemed to be irrevocable and effective for fees to be earned with respect to services to be provided in future terms of office unless the Director files a new election in the manner and form established by the Committee on or before December 31^st of the year preceding the year in which the Director expects to commence services for the future term of office.

d) Elections as to Prior Services. A Director’s election as to fees previously earned and deferred under the Plan may be amended or revoked only in a manner established by the Committee (as defined below) and on such terms as comply with applicable law.

4. Operation of Plan

a) Income Account

A Participant’s fees otherwise payable shall be credited as a dollar amount to the Participant’s Income Account on the date the fee would have otherwise been paid. At the end of each calendar quarter, the Participant’s Income Account will be credited with interest at an annual rate equal to the yield of a 10-year U.S. Treasury Note as of the beginning of such calendar quarter plus 1.00%. Interest shall be computed on the basis of the beginning monthly credit balance in the Participant’s Income Account during such quarter.

b) Stock Equivalent Account

On the first business day of each calendar quarter, a Participant’s fees otherwise payable during the preceding calendar quarter shall be credited as “Stock Equivalent Shares” in the Participant’s Stock Equivalent Account. The Stock Equivalent Shares credited shall be equal in number to the maximum number of shares of the Company’s Class A common stock (the “Common Stock”), or fraction thereof, to the nearest one hundredth of one share, which could be purchased with the dollar amount of the deferred fees at the closing market price for such stock on that date, or if that date is not a trading date, on the next date that is a trading date.

If the Participant is not serving as a Director on the first business day of any calendar quarter due to death, resignation or removal (a “Termination Event”), such Participant’s fees otherwise payable prior to the Termination Event shall, no later than the tenth day after the Termination Event, be converted into Stock Equivalent Shares equal in number to the maximum number of shares of the Company’s Common Stock, or fraction thereof, to the nearest one hundredth of one share, which could be purchased with such dollar amount at the closing market price for such

stock on that date, or if that date is not a trading date, on the next date that is a trading date.

Stock Equivalent Shares shall be appropriately adjusted in the event of any stock dividends, stock splits or any other similar changes in the Company’s Common Stock (such change, a “Change in the Capital Structure”). In the event that the Company’s Common Stock is converted into other securities or property in connection with a Change in the Capital Structure, all references herein to the Company’s “Common Stock” shall be deemed references to the new security or property. With respect to the payment of any cash dividends, on each dividend payment date, an amount equal to the cash dividend which would have been payable had the Participant been the actual owner of the number of shares of the Company’s Common Stock reflected as Stock Equivalent Shares in his Stock Equivalent Account shall be credited to such account, and such amount shall be converted to Stock Equivalent Shares, in the manner described in this Section 4 based on the market price of the Company’s Common Stock on such dividend payment date.

5. Payments

In January of the year determined by the Participant pursuant to a valid election filed with the Secretary of the Company, which may be any calendar year in which or after which the Participant has his 72^nd birthday or which may be the year of the Participant’s first termination of his services as a Director (such date, the “Payment Date”), the Company shall make the payment of the Income Account and the Stock Equivalent Account in cash to the Participant in one, five, ten or fifteen annual installments, as shall be determined by the Participant in accordance with the terms of his election form. Each annual installment payment shall be made no later than January 30, beginning with the first Payment Date. Until complete payment of a Participant’s Deferred Fee Accounts, such accounts shall be appropriately adjusted from time to time in accordance with paragraphs 4(a) and 4(b) above. In the event of a Participant’s death, payment of all or the remaining portion of his Deferred Fee Accounts will continue to be made to his beneficiary or beneficiaries in the series of annual installments as determined by the Participant in the last election form on file with the Secretary. In the absence of an election filed by the Participant with the Secretary of the Company, the entire balance of a Participant’s Income Account and Stock Equivalent Account shall be paid in a lump sum to the Participant (or in the event of a Participant’s death, to his beneficiary or beneficiaries) between January 1 and January 30 of the calendar year following the year of the Participant’s first termination of services as a director.

6. General

a) Each Participant or former Participant entitled to payment of deferred fees hereunder from time to time may name any beneficiary or

beneficiaries (who may be named contingently or successively) to whom any such deferred fees are to be paid in case of his death before he receives any or all of such fees. Each beneficiary designation will revoke all prior designations by the same Participant or former Participant, shall be in form prescribed by the Company, and will be effective only when filed by the Participant or former Participant in writing with the Committee during his lifetime. In the absence of any such designation, any fees remaining unpaid at a Participant’s or former Participant’s death shall be paid to his estate.

b) The establishment of the Plan and the eligibility of or participation by any person shall not be construed to confer any right on the part of such person to be nominated for re-election, or to be re-elected, to the Board or to otherwise remain in the service of the Company.

c) Deferred fees hereunder are not in any way subject to the debts or other obligations of persons entitled thereto, and may not be voluntarily or involuntarily sold, transferred or assigned. When a person entitled to a payment under the Plan is under legal disability or, in the Company’s opinion, is in any way incapacitated so as to be unable to manage his financial affairs, the Committee may direct that payment be made to such person’s legal representative, if any, and if none the Committee may at its election make payment to such person’s spouse or otherwise apply such payment for such person’s benefit in any manner it deems proper. Any payment made in accordance with the preceding sentence shall be in complete discharge of the obligation of the Company or any of its subsidiaries to make such payment under the Plan.

d) This plan is an unfunded plan that is either not classified as an “employee pension benefit plan” or “pension plan” within the meaning of Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly-compensated employees” within the meaning of Sections 201, 301, and 401 of ERISA, and therefore may be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA upon the making of certain filings with the Department of Labor. Accordingly, the Company may terminate the Plan and make no further benefit payments or amend the Plan to prevent certain individuals from participating in the Plan if it is determined that such steps are necessary to bring the Plan into compliance with certain requirements under ERISA.

e) The establishment of Deferred Fee Accounts for a Participant shall give him no right or security interest in any asset of the Company or any of its subsidiaries, and no trust relationship with respect to such accounts is intended. The right of the Participant or his beneficiary to receive a

distribution under this Plan shall be an unsecured claim against the general assets of the Company, and neither the Participant nor his beneficiary shall have any rights in or against any amounts credited to his Deferred Fee Accounts or any other specific asset of the Company. All amounts credited to the Deferred Fee Accounts shall constitute general assets of the Company.

f) A Stock Equivalent Account for a Participant shall give him no right to receive either treasury or unissued shares of Common Stock or any other classes of stock of the Company and no rights as a stockholder of the Company.

7. Section 409A

Notwithstanding anything in the Plan to the contrary, it is intended that the administration of the Plan, and the deferral and payment of all amounts under this Plan, shall be done in accordance with Section 409A of the Internal Revenue Code of 1986, as amended from time to time (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 amounts shall be 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 payable 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, or will be subject to the acceleration of taxation or the imposition of penalty taxation under Section 409A of the Code, the Committee may either (i) adopt such amendments to the Plan 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 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.

8. Administration and Choice of Law.

The Plan shall be administered by 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 (the “Committee”). At any time that no such committee has been appointed, the Board shall constitute the “Committee” hereunder. The Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan. The

Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, but not limited to, Participants and their beneficiaries or successors). 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.

9. Amendment and Discontinuance

The Committee hereby reserves the right to amend or discontinue the Plan at any time; provided, however, that any amendment or discontinuance of the Plan shall be prospective in operation only and shall not affect the payment of any deferred fees theretofore earned by any Participant or former Participant unless the person affected shall expressly consent thereto.

EX-10.14 12 a2169810zex-10_14.htm EXHIBIT 10.14

EXHIBIT 10.14

[Form of Executive Incentive Plan of Mueller Water Products, Inc.]

Executive Incentive Plan

Mueller Water Products, Inc.

Contents

Article 1. Establishment, Objectives, and Duration		A-3

Article 2. Definitions		A-3

Article 3. Administration		A-4

Article 4. Eligibility and Participation		A-5

Article 5. Awards		A-5

Article 6. Beneficiary Designation		A-6

Article 7. Deferrals		A-6

Article 8. No Right to Employment or Participation		A-6

Article 9. Amendment, Modification, and Termination		A-6

Article 10. Withholding		A-6

Article 11. Successors		A-7

Article 12. Legal Construction		A-7

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Mueller Water Products, Inc.
Executive Incentive Plan

Article 1. Establishment, Objectives, and Duration

1.1 Establishment of the Plan. Mueller Water Products, Inc., a Delaware corporation (the “Company”), hereby establishes an incentive compensation plan to be known as the “Mueller Water Products, Inc. Executive Incentive Plan” (the “Plan”), as set forth herein and as it may be amended from time to time.

Subject to approval by the Company’s shareholders, the Plan shall become effective as of the date the shareholders first approve the Plan (the “Effective Date”), and shall remain in effect as provided in Section 1.3 hereof.

1.2 Objectives of the Plan. The primary objectives of the Plan are: (a) to attract, motivate, and retain high-caliber individuals by providing competitive annual incentive opportunities, (b) to provide an incentive to key employees of the Company who have significant responsibility for the success and growth of the Company, and (c) to satisfy the requirements of Section 162(m) of the Code.

1.3 Duration of the Plan. The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Committee to amend or terminate the Plan at any time pursuant to Article 9 hereof, for a period of ten (10) years, at which time the right to grant Awards under the Plan shall terminate.

Article 2. Definitions

Whenever the following terms are used in the Plan, with their initial letter(s) capitalized, they shall have the meanings set forth below:

(a) “Award” means an award described in Article 5 hereof.

(b) “Award Pool” means, with respect to a Plan Year, three percent (3%) of the Company’s operating income for the Plan Year.

(c) “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as amended from time to time, or any successor rule.

(d) “Board” or “Board of Directors” means the Board of Directors of the Company.

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

(f) “Committee” means the Compensation Committee of the Board or any other committee appointed by the Board to administer the Plan and Awards to Participants hereunder, as specified in Article 3 hereof.

(g) “Company” means Mueller Water Products, Inc., a Delaware corporation, and any successor thereto as provided in Article 11 hereof.

(h) “Director” means any individual who is a member of the Board.

(i) “Effective Date” shall have the meaning ascribed to such term in Section 1.1 hereof.

(j) “Employee” means any employee of the Company or of a Subsidiary. Directors who are employed by the Company or by a Subsidiary shall be considered Employees under the Plan.

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(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute.

(l) “Insider” means an individual who is, on the relevant date, subject to the reporting requirements of Section 16(a) of the Exchange Act.

(m) “Participant” means a key Employee who has been selected to receive an Award or who holds an outstanding Award.

(n) “Performance-Based Exception” means the performance-based exception from the tax deductibility limitation imposed by Code Section 162(m), as set forth in Code Section 162(m) (4) (C).

(o) “Plan” means the Mueller Water Products, Inc. Executive Incentive Plan, as set forth herein and as it may be amended from time to time.

(p) “Plan Year” means the Company’s fiscal year.

(q) “Subsidiary” means a corporation, partnership, joint venture, or other entity in which the Company has an ownership or other proprietary interest of more than fifty percent (50%).

Article 3. Administration

3.1 General. Except as otherwise determined by the Board in its discretion, the Plan shall be administered by the Committee, which shall consist exclusively of two (2) or more nonemployee Directors within the meaning of the rules promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act who also qualify as outside directors within the meaning of Code Section 162(m) and the related regulations under the Code. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board. The Committee shall have the authority to delegate administrative duties to officers or Directors of the Company; provided that the Committee may not delegate its authority with respect to: (a) nonministerial actions with respect to Insiders; (b) nonministerial actions with respect to Awards that are intended to qualify for the Performance-Based Exception; and (c) certifying that any performance goals and other material terms attributable to Awards intended to qualify for the Performance-Based Exception have been satisfied.

3.2 Authority of the Committee. Except as limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions hereof, the Committee shall have full power in its discretion to select key Employees who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any Award, document, or instrument issued under the Plan; establish, amend, or waive rules and regulations for the Plan’s administration; and (subject to the provisions of Article 9 hereof) amend the terms and conditions of any outstanding Award as provided in the Plan. Further, the Committee shall make all other determinations that may be necessary or advisable for the administration of the Plan.

3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders and resolutions of the Committee shall be final, conclusive, and binding on all persons, including the Company, its shareholders, Directors, Employees, Participants, and their estates and beneficiaries.

3.4 Performance-Based Awards. For purposes of the Plan, it shall be presumed, unless the Committee indicates to the contrary, that all Awards are intended to qualify for the Performance-Based Exception. If the Committee does not intend an Award to qualify for the Performance-Based Exception, the Committee shall reflect its intent in its records in such manner as the Committee determines to be appropriate.

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Article 4. Eligibility and Participation

4.1 Eligibility. All key Employees are eligible to participate in the Plan.

4.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees those to whom Awards shall be granted and shall determine the nature and amount of each Award.

Article 5. Awards

5.1 Grant of Awards. All Awards under the Plan shall be granted upon terms approved by the Committee. However, no Award shall be inconsistent with the terms of the Plan or fail to satisfy the requirements of applicable law. Each Award shall relate to a designated Plan Year.

5.2 Award Pool Limitation. The sum of the Awards for a single Plan Year shall not exceed one hundred percent (100%) of the amount in the Award Pool for that Plan Year.

5.3 Individual Maximum Awards. For any given Plan Year, no one Participant shall receive an Award in excess of fifty percent (50%) of the Award Pool.

5.4 Limitations on Committee Discretion. The Committee may reduce, but may not increase, any of the following:

(a) The maximum Award for any Participant; and

(b) The size of the Award Pool.

5.5 Payment. Payment of Awards shall be subject to the following:

(a) Unless otherwise determined by the Committee, in its sole discretion, a Participant shall have no right to receive a payment under an Award for a Plan Year unless the Participant is employed by the Company or a Subsidiary at all times during the Plan Year.

(b) The Committee may, in its discretion, authorize payment to a Participant of less than the Participant’s maximum Award and may provide that a Participant shall not receive any payment with respect to an Award. In exercising its discretion, the Committee shall consider such factors as it considers appropriate. The Committee’s decision shall be final and binding upon any person claiming a right to a payment under the Plan.

(c) In no event may the portion of the Award Pool allocated to a Participant for a given Plan Year be increased in any way, including as a result of the reduction of any other Participant’s allocated portion.

(d) Payments of Awards shall be wholly in cash.

(e) Each Award shall be paid on a date prescribed by the Committee, but in no event later than two and one-half (2½) months following the end of the Plan Year.

Article 6. Beneficiary Designation

Each Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of the Participant’s death before the Participant receives any or all of such benefit. Each such designation shall revoke all prior designations

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by the same Participant with respect to such benefit, shall be in a form prescribed by the Company, and shall be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, any benefits remaining unpaid under the Plan at the Participant’s death shall be paid to the Participant’s estate.

Article 7. Deferrals

The Committee may permit or require a Participant to defer such Participant’s receipt of the payment of cash that would otherwise be due to such Participant in connection with any Awards. If any such deferral election is required or permitted, the Committee shall, in its discretion, establish rules and procedures for such payment deferrals that meet the requirements of Section 409A of the Code.

Article 8. No Right to Employment or Participation

8.1 Employment. The Plan shall not interfere with or limit in any way the right of the Company or of any Subsidiary to terminate any Participant’s employment at any time, and the Plan shall not confer upon any Participant the right to continue in the employ of the Company or of any Subsidiary.

8.2 Participation. No Employee shall have the right to be selected to receive an Award or, having been so selected, to be selected to receive a future Award.

Article 9. Amendment, Modification, and Termination

9.1 Amendment, Modification, and Termination. Subject to the terms of the Plan, the Committee may at any time and from time to time, alter, amend, suspend, or terminate the Plan in whole or in part; provided that unless the Committee specifically provides otherwise, any revision or amendment that would cause the Plan to fail to comply with any requirement of applicable law, regulation, or rule if such amendment were not approved by the shareholders of the Company shall not be effective unless and until shareholder approval is obtained.

9.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan; provided that the Committee shall not be authorized to adjust an Award that the Committee intends to qualify for the Performance-Based Exception if such adjustment (or the authority to make such adjustment) would prevent the Award from qualifying for the Performance-Based Exception.

9.3 Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary (but subject to Section 1.1 hereof), no termination, amendment, or modification of the Plan shall cause any previously granted Awards to be forfeited. After the termination of the Plan, any previously granted Award shall remain in effect and shall continue to be governed by the terms of the Plan and the Award.

Article 10. Withholding

The Company and its Subsidiaries shall have the power and the right to deduct or withhold, or to require a Participant to remit to the Company or to a Subsidiary, an amount that the Company or a Subsidiary reasonably determines to be required to comply with federal, state, local, or foreign tax withholding requirements.

Article 11. Successors

All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

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Article 12. Legal Construction

12.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, any feminine term used herein also shall include the masculine, and the plural shall include the singular and the singular shall include the plural.

12.2 Severability. If any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

12.3 Requirements of Law. The granting of Awards under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies as may be required.

12.4 Governing Law. The Plan and all Awards shall be construed in accordance with and governed by the laws of the state of Delaware (without regard to the legislative or judicial conflict of laws rules of any state), except to the extent superseded by federal law.

12.5 Section 409A. To the extent an Award would be subject to the requirements of Code Section 409A and the regulations thereunder, the Plan shall be construed and administered so that the Award complies with Code Section 409A.

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EX-23.1 13 a2166880zex-23_1.htm EXHIBIT 23.1
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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED CERTIFIED
PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Amendment No. 2 to the Registration Statement on Form S-1 of our report dated February 3, 2006, except the Restatement described in Note 1 as to which the date is March 24, 2006, relating to the financial statements of United States Pipe and Foundry Company, LLC, which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
Tampa, Florida

May 1, 2006

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CONSENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
EX-23.2 14 a2166880zex-23_2.htm EXHIBIT 23.2
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Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Amendment No. 2 to the Registration Statement on Form S-1 of our report dated December 16, 2005, relating to the financial statements of Mueller Water Products, LLC, which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
Chicago, Illinois

May 1, 2006

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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EX-99.1 15 a2169810zex-99_1.htm EXHIBIT 99.1

EXHIBIT 99.1

[Form of Notice of Stock Option Grant under Mueller Water Products, Inc. 2006 Stock Incentive Plan]

MUELLER WATER PRODUCTS, INC.

2006 STOCK INCENTIVE PLAN

NOTICE OF STOCK OPTION GRANT

Unless otherwise defined herein, the terms defined in the Mueller Water Products, Inc. 2006 Stock Incentive Plan (the “Plan”) shall have the same defined meanings in this Notice of Stock Option Grant (“Notice of Grant”).

[Optionholder’s Name and Address]

The person named above (the “Optionholder”) has been granted an option (the “Option”) to purchase shares of Common Stock of Mueller Water Products, Inc. (the “Company”), subject to the terms and conditions of the Plan, this Notice of Grant, and the Stock Option Agreement (attached hereto as Exhibit A-1), as follows:

Grant Number:

Date of Grant:

Vesting Commencement Date:

Exercise Price per Share:	$

Total Number of Shares Granted:

Total Exercise Price:	$

Type of Option (check one): o Incentive Stock Option o Nonstatutory Stock Option

Term/ Expiration Date: Not later than ________ ___, 20__

Payment:

By one or a combination of the following items (as described in greater detail in the Stock Option Agreement and the Plan):

o By cash or check

o By a “same day sale” arrangement

o By delivery of other shares of Common Stock

Vesting Schedule:

This Option may be exercised, in whole or in part, in accordance with the following schedule:

The shares of Common Stock subject to the Option shall vest as follows: __________; subject to the Optionholder’s Continuous Service with the Company on such dates. If, on

any vesting date, this Vesting Schedule would result in the vesting of a fraction of a share, such fraction shall be rounded down to the nearest whole share.

The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this Notice of Grant, the Stock Option Agreement, and the Plan, both of which are made a part of this document. The Optionholder has reviewed the Plan, the Notice of Grant and the Stock Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Notice of Grant. Optionholder further acknowledges that as of the Date of Grant, this Notice of Grant, the Stock Option Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) options previously granted and delivered to Optionholder, and (ii) the following agreements only:

Other Agreements (if any): __________________________.

The Optionholder acknowledges that if no other agreements are listed above, no other agreements on the subject hereof exist. By signing the Notice of Grant, the Optionholder agrees to accept as binding, conclusive and final all decisions or interpretations of the Board of Directors (or any Committee to whom the Board has delegated administration of the Plan) upon any questions relating to the Plan, the Notice of Grant and the Option Agreement.

The Optionholder further acknowledges by his or her signature below that he or she has selected one of the designated alternatives for the receipt of the prospectus for the Plan (the “Prospectus”) and other communications relating to the Plan and the Option. The Optionholder understands that if he or she does not select any of the alternatives listed below, the Optionholder will generally receive all such materials and communications by mail. Regardless of the alternative chosen by the Optionholder, the Optionholder agrees it is his or her responsibility to notify the Company as to his or her mailing address so that the Optionholder may receive any stockholder information to be delivered by mail.

	The Optionholder should check only one of the following alternatives:

	The Optionholder wishes to receive all communications regarding his or her Option, including the Prospectus, by electronic delivery through access on the Company’s Internet site at . The Optionholder represents that he or she has the ability to, and understands how to, easily and regularly access this site.

	The Optionholder will pick up communications regarding his or her Option, including the Prospectus, at a local Company site.

	The Optionholder wishes the Company to mail to him or her any communications regarding his or her Option, including the Prospectus.

OPTIONHOLDER:		MUELLER WATER PRODUCTS, INC.

(Signature)		(Signature)


(Print Name)		(Print Name and Title)


(Date)		(Date)

EXHIBIT A-1

MUELLER WATER PRODUCTS, INC.

2006 STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

1. Grant of Option. The Company hereby grants to the Optionholder named in the Notice of Grant attached to this Agreement (the “Optionholder”) an option (the “Option”) to purchase the number of shares of Common Stock (“Shares”), as set forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant (the “Exercise Price”), subject to the terms and conditions of the Plan, which is incorporated by reference into this Stock Option Agreement (the “Option Agreement”), the Option Agreement and the Notice of Grant. In the event of a conflict between the terms and conditions of the Plan and the terms and conditions of this Option Agreement, the terms and conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this Option is intended to be an Incentive Stock Option, to the extent that the aggregate Fair Market Value of the Common Stock subject to the the Option (as determined at the time of grant) exceeds the $100,000 rule of Code Section 422(d), it shall be treated as a Nonstatutory Stock Option (“NSO”).

2. Exercise of Option.

(a) Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise. This Option is exercisable by delivery of an exercise notice (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan and the Option Agreement. The Exercise Notice shall be completed by the Optionholder and delivered to the Company’s Stock Plan Administrator. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. The Optionholder shall also be required to make adequate provision for all withholding taxes relating to the exercise of the Option as a condition to the exercise of the Option. This Option shall be deemed to be exercised only upon receipt by the Company of such fully executed Exercise Notice accompanied by the payment of such aggregate Exercise Price and arrangement for the adequate provision for the withholding taxes relating to the exercise.

(c) Compliance. No Shares shall be issued pursuant to the exercise of this Option unless such issuance, exercise, and the method of payment of consideration for such Shares complies with Applicable Law. This Option may not be exercised for a fraction of a share. Assuming such compliance, for income tax purposes the Exercised Shares shall be considered transferred to the Optionholder on the date the Option is exercised with respect to such Exercised Shares. Notwithstanding the foregoing, the Company shall not be liable to the Optionholder for damages relating to any delays in issuing the certificates for the Exercised Shares to the Optionholder, any loss of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves.

3. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionholder:

(a) cash or check;

(b) consideration received by the Company under a “same day sale” program implemented by the Company in connection with the Plan; or

(c) by delivery to the Company of other shares of Common Stock; provided, however, that if the Exercise Price of Common Stock acquired pursuant to this Option is paid by delivery to the Company of other Common Stock acquired, directly or indirectly from the Company, the Exercise Price shall be paid only by shares of the Common Stock of the Company that have been held by the Optionholder for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). The Optionholder may, subject to procedures satisfactory to the Board, satisfy such delivery requirement by presenting proof of beneficial ownership of such Common Stock.

4. Period for Exercise. Subject to the provisions of the Plan, the Notice of Grant and this Option Agreement, the Optionholder may exercise this Option as to any vested Shares at any time prior to the earliest to occur of the following:

(a) the Term/Expiration Date set forth in the Notice of Grant;

(b) two (2) years following the date of the Optionholder’s termination of Continuous Service as a result of death, Disability or Retirement;

(c) three (3) months following the date of the Optionholder’s termination of Continuous Service by the Company without Cause (and other than as a result of death, Disability or Retirement) or by the Optionholder for any reason; and

(d) the date of the Optionholder’s termination of Continuous Service by the Company for Cause.

5. Non-Transferability of Option. This Option may not be transferred in any manner other than by will or by the laws of descent or distribution and may be exercised during the lifetime of the Optionholder only by the Optionholder. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionholder.

6. Notice of Disqualifying Disposition of ISO Shares. If the Optionholder sells or otherwise disposes of any of the Shares acquired pursuant to an ISO (“ISO Shares”) on or before the later of (i) two years after the grant date, or (ii) one year after the exercise date, the Optionholder shall immediately notify the Company in writing of such disposition. The Optionholder understands and agrees that he or she may be subject to income tax withholding by the Company on the compensation income recognized from such early disposition of ISO Shares by payment in cash or out of the current earnings paid to the Optionholder.

7. Lock-Up. By exercising the Option, the Optionholder agrees that the Company (or a representative of the underwriter(s)) may, in connection with the first underwritten registration of the offering of any equity securities of the Company under the Securities Act (and/or any underwritten registration of any securities of the Company prior to that time), require that the Optionholder 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 Common Stock or other securities of the Company held by the Optionholder, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. The Optionholder further agrees to 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 Shares of Common Stock until the end of such period. The underwriters of the Company’s stock are intended third party beneficiaries of this section and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

8. Entire Agreement; Governing Law. The Plan and the Notice of Grant are incorporated herein by reference. Except as expressly set forth in the Notice of Grant, the Plan, the Notice of Grant and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionholder with respect to the subject matter hereof. The Company may amend the terms of the Option; provided that the rights under any Option shall not be materially impaired by any such amendment except by means of a writing signed by the Company and the Optionholder. The Option is governed by the law of the State of Delaware, without regard to the principles of conflicts of law.

9. NO GUARANTEE OF CONTINUED SERVICE. THE OPTIONHOLDER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE, DIRECTOR, OR CONSULTANT AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). THE OPTIONHOLDER FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE, DIRECTOR, OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH THE OPTIONHOLDER’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONHOLDER’S RELATIONSHIP (I) AS AN EMPLOYEE AT ANY TIME, WITH OR WITHOUT CAUSE; (II) AS A CONSULTANT PURSUANT TO THE TERMS OF OPTIONHOLDER’S AGREEMENT WITH THE COMPANY OR AN AFFILIATE; OR (III) AS 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.

EX-99.2 16 a2169810zex-99_2.htm EXHIBIT 99.2

EXHIBIT 99.2

[Form of Election to Participate in Mueller Water Products, Inc. Directors’ Deferred Fee Plan]

ELECTION TO PARTICIPATE IN

MUELLER WATER PRODUCTS, INC.

DIRECTORS’ DEFERRED FEE PLAN

Pursuant to the provisions of Paragraph 3 of the Mueller Water Products, Inc. Directors’ Deferred Fee Plan (the “Plan”), I hereby elect to have _________% of the amounts payable to me for services rendered by me on and after ______________ ___, 20___ as a Director of Mueller Water Products, Inc. (the “Company”) deferred and credited to the following Deferred Fee Account(s):

Income Account ________________ %

Stock Equivalent Account ________________ %

Pursuant to the provisions of Paragraph 5 of the Plan, I hereby elect that my first Payment Date be defined as (check only one):

_____ the year of my termination of services as a Director

_____ the calendar year ___________ (insert any calendar year no earlier than the year of your 72^nd birthday).

Payments from my Deferred Fee Account(s) shall be paid in ____________ (choose only 1, 5, 10 or 15) annual installments, in accordance with the provisions of the Plan. In the event of my death prior to my receipt of all payments from my Deferred Fee Account(s), I hereby direct that the balance be distributed to my beneficiary or beneficiaries as follows:

______________________________________________

(Name of beneficiary and relationship to you)

It is understood this election is to remain in effect until revoked or amended as provided in Paragraph 3 of the Plan.

Signature Date

Print Name

(Rev.4/06)

EX-99.3 17 a2169810zex-99_3.htm EXHIBIT 99.3

EXHIBIT 99.3

[Form of Mueller Water Products, Inc. 2006 Stock Incentive Plan Restricted Stock Unit Award Agreement]

Mueller Water Products, Inc.
2006 Stock Incentive Plan
Restricted Stock Unit Award Agreement

THIS AGREEMENT, effective as of the Date of Grant set forth below, represents a grant of restricted stock units (“RSUs”) by Mueller Water Products, Inc., a Delaware corporation (the “Company”), to the Participant named below, pursuant to the provisions of the Mueller Water Products, Inc. 2006 Stock Incentive Plan (the “Plan”). You have been selected to receive a grant of RSUs pursuant to the Plan, as specified below.

The Plan provides a complete description of the terms and conditions governing the grant of RSUs. If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms shall completely supersede and replace the conflicting terms of this Agreement. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein.

Participant: «FirstName» «MI» «LastName»

Date of Grant: << date>>

Number of RSUs Granted: «RSU_Shares»

Purchase Price: None

[If applicable][Annual Share Price Targets:]

First Anniversary		$
Second Anniversary		$
Third Anniversary		$
Fourth Anniversary		$
Fifth Anniversary		$
Sixth Anniversary		$
Seventh Anniversary		$

The parties hereto agree as follows:

1. Service with the Company. Except as may otherwise be provided in Section 6, the RSUs granted hereunder are granted on the condition that the Participant remains in the Continuous Service of the Company or its Affiliates from the Date of Grant through (and including) the vesting date, as set forth in Section 2 (referred to herein as the “Period of Restriction”).

This grant of RSUs shall not confer any right to the Participant (or any other Participant) to be granted RSUs or other Stock Awards in the future under the Plan.

2. Vesting. RSUs shall vest one hundred percent (100%) at the end of the ______ anniversary following the Date of Grant[; provided, however, if the predetermined Annual Share Price Targets (as set forth above) are achieved and the Participant’s Continuous Service is not terminated, the vesting of the RSUs shall accelerate as follows:

(a) _______ percent (___%) of the total number of RSUs granted shall vest on the _____ anniversary of the Date of Grant (i.e., the Participant’s Continuous Service must not have terminated prior to such date and the Company’s Common Stock must achieve the Annual Share Price Target in order to vest) if the closing price of the Company’s stock is at least equal to ____ dollars and ______ cents ($_____) for any period of sixty (60) consecutive calendar days during the calendar year preceding the first anniversary.] [If applicable]

3. Timing of Payout. At the time that an RSU vests, one share of the Company’s Common Stock shall be issuable for each RSU that vests on such date, subject to the terms and provisions of the Plan and this Agreement. Payout of all RSUs shall occur as soon as administratively feasible after vesting (subject to the Particpant’s satisfaction of any required tax or other withholding obligations), unless a Participant elects to defer the payout of RSUs upon vesting by completing in writing and returning to the Company an irrevocable deferral election form within thirty (30) days after the Date of Grant. Any fractional RSU remaining after this Stock Award is fully vested shall be discarded and shall not be converted into a fractional share.

4. Form of Payout. Vested RSUs will be paid out solely in the form of shares of stock of the Company.

5. Voting Rights and Dividends. Until such time as the RSUs are paid out in shares of Company stock, the Participant shall not have voting rights. Further, no dividends shall be paid on any RSUs.

6. Termination of Continuous Service. In the event of the termination of the Participant’s Continuous Service for any reason during the Period of Restriction, all RSUs held by the Participant under this Agreement at the time of the termination of his or her Continuous Service and still subject to the Period of Restriction shall be forfeited by the Participant to the Company. However, the Committee may, in its sole discretion, vest all or any portion of the RSUs held by the Participant under this Agreement. For all previously vested RSUs that have been properly deferred under this Agreement, payout shall occur upon the earlier to occur of (a) the elected deferred vesting date, (b) the six (6) month anniversary of termination date if the Participant is a “specified employee” (within the meaning of Section 409A of the Code), or (c) the date of the termination of the Participant’s Continuous Service for any reason[, other than a termination for Cause.

7. Change of Control. Notwithstanding anything to the contrary in this Agreement, in the event of a Change of Control of the Company during the Period of Restriction and prior to the termination of the Participant’s Continuous Service, the Period of Restriction imposed on the RSUs under this Agreement shall immediately lapse, with all such RSUs becoming fully vested and payable, subject to Applicable Law and the terms of any effective deferral election form previously filed by the Participant with respect to the RSUs.

8. Restrictions on Transfer. RSUs granted pursuant to this Agreement may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated (a “Transfer”), other than by will or by the laws of descent and distribution, except as provided in the Plan. If any Transfer, whether voluntary or involuntary, of RSUs is made, or if any attachment, execution, garnishment, or lien shall be issued against or placed upon the RSUs, the Participant’s right to such RSUs shall be immediately forfeited by the Participant to the Company, and this Agreement shall lapse. Any shares of stock of the Company received upon payout of the RSUs may be transferred only in accordance with the terms of the Plan, the Company’s policies on trading in the Company’s securities, and Applicable Law,

9. Recapitalization. In the event of any change in the capitalization of the Company such as a stock split or a corporate transaction such as any merger, consolidation, separation, or otherwise, the number and class of RSUs subject to this Agreement may be equitably adjusted by the Committee, in its sole discretion, to prevent dilution or enlargement of rights in accordance with Article XII of the Plan.

10. Beneficiary Designation. The Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Agreement is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the Participant with respect to the rights under this Agreement, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Secretary of the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

11. Continuation of Service. This Agreement shall not confer upon the Participant any right to continue in the service of the Company or its Affiliates, nor shall this Agreement interfere in any way with the Company’s or its Affiliates’ right to terminate the Participant’s Continuous Service at any time.

12. Miscellaneous.

(a) This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and supersedes in its entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof. This Agreement and the rights of the Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. The Committee shall have the right to impose such restrictions on any shares acquired pursuant to this Agreement, as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such shares. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon the Participant.

(b) The Committee may terminate, amend, or modify the Plan as set forth in the Plan.

(c) The Participant may elect, subject to any procedural rules adopted by the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold and sell shares having an aggregate Fair Market Value on the date the tax is to be determined, equal to the minimum amount required to be withheld.

The Company shall have the power and the right to deduct or withhold from the Participant’s compensation, or require the Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including the Participant’s FICA obligation), domestic or foreign, required by law to be withheld with respect to this Stock Award.

(d) The Participant agrees to take all steps necessary to comply with all applicable provisions of federal and state securities laws in exercising his or her rights under this Agreement.

(e) This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

(f) All obligations of the Company under the Plan and this Agreement, with respect to the RSUs, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

(g) To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the state of Delaware.

(h) By accepting the grant of this Stock Award, the Participant agrees that the Company (or a representative of the underwriter(s)) may, in connection with the first underwritten registration of the offering of any equity securities of the Company under the Securities Act (and/or any underwritten registration of any securities of the Company prior to that time), require that the Participant 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 Common Stock or other securities of the Company held by the Participant, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the Securities Act. The Participant further agrees to 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 shares of Common Stock until the end of such period. The underwriters of the Company’s stock are intended third party beneficiaries of this section and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed effective as of the Date of Grant.

	Mueller Water Products, Inc.

	By:
		[Title]

ATTEST:


	Participant

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[SIMPSON THACHER & BARTLETT LLP LETTERHEAD]

        May 1, 2006

VIA DHL AND EDGAR

Re:
Mueller Water Products, Inc.—Registration Statement on
Form S-1, File No.: 333-131536 (the "Registration Statement")

Pamela A. Long
Lesli Sheppard
Craig Slivka
Division of Corporation Finance
Securities and Exchange Commission
Mail Stop 7010
100 F Street, N.E.
Washington D.C. 20549

Dear Ms. Long, Ms. Sheppard and Mr. Slivka:

        On behalf of Mueller Water Products, Inc. (the "Registrant"), we are writing to respond to the comments set forth in the comment letter of the staff of the Securities and Exchange Commission (the "Staff") dated April 21, 2006 (the "comment letter") relating to Amendment No. 1 to the Registration Statement, as filed by the Registrant on March 31, 2006. The Registrant has also revised the Registration Statement in response to the Staff's comments and is filing concurrently with this letter Amendment No. 2 to the Registration Statement ("Amendment No. 2"), which reflects these revisions and generally updates financial and other information.

        For your convenience, the numbered paragraphs of this letter correspond to the numbered paragraphs of the comment letter. Page references in the text of this letter correspond to the pages of Amendment No. 2.

Form S-1

General

1.
Please disclose all the omitted information in your document. Please note that we may have additional substantive comments once you have completed the missing information.

The Registrant has included additional information that the Registrant is not entitled to omit under Rule 430A in, and has filed several additional exhibits (including a form of underwriting agreement) with, Amendment No. 2. In addition, the Registrant respectfully advises the Staff that the Registrant expects to include the remaining information that the Registrant is not entitled to omit under Rule 430A in, and to file the remaining exhibits with, the next pre-effective amendment to the Registration Statement.

Prospectus Summary, page 1

2.
We note your response to comment 7 of our March 2, 2006 letter that your market position information is based on management's estimates. However, please specify the measures used by management to determine the market position presented in the chart. Please specify what management estimated.

The Registrant respectfully advises the Staff that data relating to the Registrant's market position presented in the Registration Statement was generated based on the management's estimates of the overall market size and of the market share of the Registrant's principal competitors for the relevant product lines. Where available, the management's estimates were based on data provided by third parties, including trade associations, distributors and customers. In other instances, the estimates were based upon internal analysis prepared by the Registrant's employees and

management based on their expertise and knowledge of the industry. In addition, the Registrant has revised its disclosure on pages 2 and 98 in response to the Staff's comment.

Relationship with Walter Industries, page 9

3.
Please avoid using embedded lists of information in your disclosures. For example, revise the third and fourth sentences to break out this information into bullet points.

The Registrant has revised its disclosure on pages 9 and 136 to break out the above-referenced information into bullet points.

4.
In the second full paragraph, please briefly describe the allocation of business opportunities.

The Registrant has revised its disclosure on pages 9 and 136 to describe the allocation of business opportunities.

Risk Factors, page 21

5.
We note your response to comment 13 of our letter dated March 2, 2006. Please revise to also avoid the term "adversely impacted" in the subheading of your last risk factor on page 22.

The Registrant has revised its disclosure on page 22 in response to the Staff's comment.

Environmental, health and safety laws..., page 27

6.
In the third paragraph, you repeat much of the information disclosed in the preceding risk factor concerning Tyco's indemnification. Please revise to eliminate repetition.

The Registrant has removed repetitive information concerning Tyco's indemnification on page 27 in response to the Staff's comment.

Compliance with internal control reporting..., page 29

7.
Please delete the last paragraph added to this section as it duplicates the following risk factor

The Registrant has deleted the last paragraph of the above-referenced risk factor on page 29 in response to the Staff's comment.

Debt Service, page 87

8.
Please disclose the actual financial covenant leverage ratios and minimum coverage of interest expense for the 2005 Mueller Credit Facility.

The Registrant has revised its disclosure on pages 88 and 148 to include the specific financial covenant leverage ratios and minimum coverage of interest expense for the 2005 Mueller Credit Facility.

Description of Certain Indebtedness, page 144

9.
In the italicized paragraph that precedes this section, please delete the language that your description is "qualified in its entirety by reference." Rule 411(a) of Regulation C under the Securities Act allows qualification of information inside the prospectus by reference to information outside the prospectus only to the extent that the form explicitly permits it or where the form requires a summary of the document. Please make similar revisions on page 121 in the first paragraph under "2006 Stock Incentive Plan," page 125 in the first paragraph under "2006 Employee Stock Purchase Plan," page 127 in the first paragraph under "Section 162(m) Incentive Compensation Plan," and page 137 in the first paragraph under "General" in your "Description of Capital Stock."

2

The Registrant has revised its disclosure on pages 122, 126-127, 129, 140 and 147 in response to the Staff's comment.

Unaudited Pro Forma Condensed Combined Financial Statements, page 42

Note 2—Acquisition, page 45

10.
Please revise your disclosure to include the amount of the fair value adjustment for the debt assumed at October 3, 2005.

The Registrant has revised its disclosure on page 47 to include the amount of the fair value adjustment for the debt assumed at October 3, 2005 in response to the Staff's comment.

Note 4—Pro Forma Adjustments, page 48

Adjustment (b)

11.
Please explain to us why you are removing $3.1 million of seller transaction expenses.

The Registrant respectfully advises the Staff that the $3.1 million of seller transaction expenses were removed because these expenses represent one-time costs (primarily legal and other professional fees) incurred solely in connection with the sale of Mueller Water to Walter Industries.

Adjustment (c)

12.
Please tell us what interest rate you used to derive pro forma interest expense for the 2005 Mueller Credit Agreement.

The Registrant respectfully advises the Staff that it used the interest rate of 6.3% to derive pro forma interest expense for the 2005 Mueller Credit Agreement, which was the rate as of the transaction date.

13.
Please tell us whether your adjustment reflects the elimination of interest expense related to both the 2004 Mueller Credit Agreement and the second priority senior secured floating rate notes, both of which were retired by use of the proceeds of the 2005 Mueller Credit Agreement.

The Registrant respectfully advises the Staff that the above-referenced adjustment reflects the elimination of interest expense related to both the 2004 Mueller Credit Agreement and the second priority senior secured floating rate notes.

Pro Forma Adjustment (f)

14.
Please tell us why you have eliminated the amortization of the inventory fair value adjustment of $58.4 million.

The Registrant respectfully advises the Staff that in the pro forma income statement for the period ending December 31, 2005, the Registrant excluded the effect of recognizing the income statement impact of the step up of inventory to fair market value of $58.4 million, which was realized when the inventory was sold during the quarter ended December 31, 2005. It is the Registrant's understanding that, in the Staff's view, a material nonrecurring charge such as this, which resulted directly from the transaction and was included in the operating results of the Registrant within 12 months following the transaction, should not be included in the pro forma income statement but rather should be disclosed in a note that (i) indicates the nature of such charge and (ii) discloses that that the charge has been excluded from the pro forma income statement. Accordingly, the Registrant believes that its disclosure in the pro forma adjustment (f) is appropriate and consistent with the Staff's guidance.

3

Adjustment (g)

15.
We note that you have reflected the tax effect of your pro forma adjustments using rates other than the statutory rate. The tax effect on your adjustments should be calculated with respect to the statutory rate in effect during the period presented in your pro forma statement of operations. In this regard, please revise your pro forma statement of operations to tax effect your adjustments at the statutory rate or tell us why you used rates other than the statutory rates. In addition, please tell us how you determined your statutory rate to be 40% in adjustment (d).

The Registrant respectfully advises the Staff that its statutory tax rate of 40% was determined based on a statutory Federal tax rate of 35% plus an average statutory state tax rate of 5%. Furthermore, the Registrant's pro forma adjustments have been tax effected at the statutory tax rate of 40%. However, in addition to the effect of the pre-tax pro forma adjustments at a tax rate of 40%, the Registrant has included a pro forma adjustment on the tax line to derive the estimated effective tax rate expected after giving effect for the transactions and the offering. The example illustrates this calculation using the six months ended March 31, 2006 actual financial results and pro forma adjustments (the Company plans to file an amendment incorporating the March 31, 2006 financial information):

Mueller Water Products, Inc.

($ in millions)

Actual for the
six months ended
3/31/2006
Pro Forma
Adjustments
for Transactions
and Offering
Pro Forma
As Adjusted
for Offering

Income before income taxes $ (74.3 ) $ 87.3 $ 13.0

Income tax expense (23.7 ) 34.9 11.2

Net income $ (50.6 ) $ 52.4 $ 1.8

Calculated effective tax rate:

31.9%

40.0%

Calculated Effective Tax Rate of the "Pro Forma As Adjusted for Offering" 86.4%

($in millions)

Actual for the
six months ended
3/31/2006
Pro Forma
Adjustments
for Transactions
and Offering
Add'l Tax
Adjustment for
Expected ETR
Pro Forma
As Adjusted
for Offering

Income before income taxes $ (74.3 ) $ 87.3 $ 13.0

Income tax expense 34.9 34.9

Income tax expense (23.7 ) (5.7 ) (29.4 )

Net income $ (50.6 ) $ 58.1 $ 18.5

Calculated effective tax rate: 31.9% 40.0%

Calculated Effective Tax Rate of the "Pro Forma As Adjusted for Offering"

42.4%

        As illustrated above, the Registrant believes that excluding the additional adjustment of $5.7 million for the expected effective tax rate could be misleading. The Registrant does not expect an effective tax rate of 86.4% subsequent to the transactions and the offering. Accordingly, the Registrant respectfully submits to the Staff that the Registrant's believes that its methodology, which was applied to the December 31, 2005 pro formas and which the Registrant plans to apply to the March 31, 2006 pro formas, is reasonable and appropriate as applied to the specific facts and circumstances.

        In addition, the Registrant had revised its disclosure on pages 43 and 48 to describe the Registrant's effective tax rate and the reasons for using rates other than the statutory rate in response to the Staff's comment.

4

Form 10-Q/A for the Fiscal Quarter Ended December 31, 2005

Note 15—Commitments and Contingencies, page 24

16.
We have read your response to prior comment 61 and note your revisions to note 15. With respect to the putative class action lawsuit alleging property damage and personal injury related to the environmental matter at the Anniston, Alabama site; please explain to us why you have "not yet formed a view with respect to the probability of liability".

The Registrant respectfully advises the Staff that above-referenced matter remains in early stages of litigation. No substantive discovery has taken place yet. In addition, the Registrant believes that both procedural and substantive defenses would be available to the Registrant should this class action proceed. Accordingly, the Registrant believes that, at this stage, there is no reasonable factual and procedural basis for the Registrant's management to form a view as to the extent or likelihood of the Registrant's potential liability.

The Registrant respectfully advises the Staff that due to the differences in format of the disclosure in the Registration Statement and Form 10-Q for the fiscal quarter ended December 31, 2005, the conforming changes to the Form 10-Q would be relatively minor and primarily of a clarifying nature. In addition, by the time the Registration Statement is declared effective, the fiscal quarter ending March 31, 2006 will be completed. Accordingly, the Registrant respectfully requests the Staff's permission not to amend its Form 10-Q for the fiscal quarter ended December 31, 2005, but rather to include the disclosure revised in response to the Staff's comment 16 in its Form 10-Q for the fiscal quarter ending March 31, 2006.

In addition, the Registrant has revised its disclosure on pages 116 and F-30 in response to the Staff's comment.

* * * * * * *

        Please call me (212-455-3125) or Igor Fert (212-455-2255) of my firm if you wish to discuss our responses to the comment letter.

Very truly yours,

/s/  VINCENT PAGANO JR.
Vincent Pagano Jr.

5

QuickLinks
Form S-1
Form 10-Q/A for the Fiscal Quarter Ended December 31, 2005
-----END PRIVACY-ENHANCED MESSAGE-----

($ in millions)	Actual for the six months ended 3/31/2006			Pro Forma Adjustments for Transactions and Offering		Pro Forma As Adjusted for Offering
Income before income taxes	$	(74.3	)	$	87.3	$	13.0
Income tax expense		(23.7	)		34.9		11.2

Net income	$	(50.6	)	$	52.4	$	1.8

Calculated effective tax rate:		31.9%			40.0%
Calculated Effective Tax Rate of the "Pro Forma As Adjusted for Offering"							86.4%