To our Stockholders, Customers and Employees Mueller's earnings continued to grow at a rapid pace in the second quarter of 2000. Net earnings rose 17.3 percent to $29.8 million, or 78 cents per diluted share, compared with $25.4 million or 64 cents per diluted share for the same quarter of 1999. On a pretax basis, Mueller's earnings growth was even more impressive at 26.0 percent. The effective tax rate in the second quarter was 36.9 percent, contrasted with 32.0 percent for the same quarter last year. Net sales for the second quarter totaled $328.6 million, an increase of 12.0 percent over sales of $293.3 million for the second quarter of 1999. We shipped 216 million pounds of product versus 211 million pounds in the same quarter last year. We are pleased to note that the American Metals Market, a metals industry journal, in its annual review of the major companies in the industry, ranked Mueller as the top company in 1999 in terms of return on total assets. At 10.98 percent, Mueller's performance was more than double the average return of the 25 companies listed in the review. During the quarter, Mueller acquired Micro Gauge, Inc. and a related business, Microgauge Machining Inc., for approximately $9.1 million. These acquisitions bring to our Industrial Products Division specialized machining capabilities, which were previously outsourced to Micro Gauge. Subsequent to the end of the fiscal quarter, the Company also acquired Propipe Technologies, Inc., a fabricator of gas train manifold systems, for approximately $6.0 million. These acquired businesses have annualized sales of approximately $30 million, a portion of which were to Mueller. The outlook for the housing industry continues to appear promising with housing starts currently at a seasonally adjusted annual rate of 1.6 million units. Despite six interest rate increases imposed by the Federal Reserve over the past year, mortgage rates remain attractive. In fact, 30-year fixed-rate mortgages have dropped from a high for the year of 8.82 percent (on May 19) to a rate of 8.16 percent (on July 7). Also, approximately 30 percent of homebuyers are using adjustable rate mortgages to finance their purchases at rates often 100 basis points lower than fixed-rate mortgages. On June 30, 2000, Robert J. Pasquarelli was appointed Mueller's Vice President and General Manager, European Operations. He will be responsible for implementation of the Company's capital improvement program in Europe, as well as day-to-day operations. Mr. Pasquarelli, coincident with his appointment, resigned as a director, and was succeeded by Gary S. Gladstein. Mr. Gladstein, age 55, is a CPA and holds an MBA degree. He formerly served as a Mueller director from 1990 to 1994. We are also pleased to report that John P. Fonzo has been appointed Vice President, General Counsel and Secretary, succeeding William H. Hensley who will be returning to Kansas. -1- Our Annual Stockholders' Meeting was held at Mueller's corporate headquarters in Memphis on May 12, 2000. The Stockholders reelected Messrs. Hodes, Karp, Manolovici, O'Hagan, and Pasquarelli as directors and approved the appointment of Ernst & Young LLP as our independent auditors. 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 July 12, 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 second quarter of 2000, our Company earned $47.2 million before tax, compared with $9.1 million for the same quarter of 1994, an increase of 419 percent. Diluted earnings per share have risen 457 percent, from 14 cents to 78 cents. [GRAPH] SECOND QUARTER DILUTED EARNINGS PER SHARE 1994 $0.14 1995 0.28 1996 0.36 1997 0.42 1998 0.50 1999 0.64 2000 0.78