TO OUR STOCKHOLDERS, CUSTOMERS AND EMPLOYEES The first quarter of 2000 was another record-setting quarter for Mueller. Net earnings rose 23 percent to $26.6 million, or 69 cents per diluted share, compared with 55 cents per diluted share for the same quarter last year. Net sales for the first quarter were $302.4 million, an increase of five percent over sales of $287.8 million for the first quarter of 1999. We shipped 194 million pounds of product, versus 208 million pounds in the first quarter of 1999. This decline in volume was due primarily to production interruptions at our copper tube and fittings operations. We appreciate the efforts of our employees, which minimized the downtime and its impact on our customer service. It is significant that Mueller's earnings increase was achieved despite a marked rise in the effective tax rate applicable to our earnings. In the first quarter of 1999, our tax rate was 30.5 percent contrasted with 36.9 percent for the first quarter of 2000. The tax rate increase was due to our having recognized the majority of various historical tax benefits in prior years. Income before taxes for the first quarter was $42.1 million; a 35 percent increase compared with the same quarter of 1999. Over the years, Mueller's policy of investing in capital programs has yielded excellent results. In 1999, our capital investments totaled $40.1 million; however, in 2000, we plan on committing $90 million (the most ever) for capital projects, which should allow us to further reduce costs, improve yields and increase efficiencies. During 2000, our Wynne, Arkansas, tube mill modernization project will be completed, and by year- end, our $40 million project to sharply reduce conversion costs at our European tube mills should be well advanced. In October 1999, Mueller initiated a program to repurchase up to four million shares of its outstanding common stock. Since then, we have acquired 1,156,000 shares at an average cost of $31.22 per share. We may repurchase additional shares from time to time subject to market conditions and management discretion regarding the alternative uses of funds. The U.S. housing industry continues to show strength with housing starts currently at a seasonally adjusted annual rate of 1.78 million units. There appears to be little evidence of any pullback in demand so far, despite the five interest rate increases imposed by the Federal Reserve Bank since last June. Pricing in the housing market remains strong, as both existing and new homes are in short supply. Moreover, the U.S. economy continues to grow rapidly, with stunning productivity increases and low inflation. We believe these factors signal a positive environment for our business. -1- Our Annual Stockholders' Meeting will be held at Mueller's headquarters in Memphis, Tennessee, on May 12, 2000. You should have already received the notice of meeting, as well as proxy material and the 1999 Annual Report. We hope you can attend, but if you cannot, we urge you to sign and return your proxy card. Sincerely, /S/HARVEY L. KARP Harvey L. Karp Chairman of the Board /S/WILLIAM D. O'HAGAN William D. O'Hagan President and Chief Executive Officer April 13, 2000 -2- Historical Analysis (1994-2000) of Quarterly Earnings Before Tax and Earnings Per Share Mueller's earnings have grown substantially over the past six years. In the first quarter of 2000, our Company earned $42.1 million before tax, compared with $6.7 million for the same quarter of 1994, an increase of 528 percent. Diluted earnings per share have risen 590 percent, from $0.10 to $0.69. [GRAPH] First Quarter Diluted Earnings Per Share 1994 $0.10 1995 0.27 1996 0.34 1997 0.40 1998 0.49 1999 0.55 2000 0.69