TO OUR STOCKHOLDERS, CUSTOMERS, AND EMPLOYEES Mueller's business continued to improve in the second quarter of 2002, although at a somewhat slower pace than we had anticipated. On a sequential basis, earnings per diluted share increased from 31 cents in the fourth quarter of 2001, to 48 cents in the first quarter of 2002, to 50 cents for the current quarter. Net income was $18.5 million, or 50 cents per diluted share, compared with $20.8 million, or 56 cents per diluted share for the same quarter last year. Net sales for the second quarter of 2002, were $277 million compared with $286 million for the same quarter 2001. We shipped 198 million pounds of product (an increase of two percent over the first quarter of this year) versus 186 million pounds in the second quarter of 2001. Profit margins were at sub-par levels in the second quarter of 2002. Ordinarily, businesses expect margins to decline during an economic slowdown; and that is what occurred in the year 2001. However, as the economy improved in 2002, we anticipated an improvement in margins, but it has been slow in coming. Nonetheless, we are optimistic that margins will rise to more acceptable levels in the near term. Our financial condition is strong. Year-to-date, Mueller has generated $56 million in cash from operations, and we ended the quarter with $129 million in cash on hand. Our debt-to-total capitalization is a very low 2.5 percent, and net of cash, we have no debt. The outlook for our business remains positive. The housing and construction industry continues to show vigor. Housing starts are currently at a seasonally adjusted annual rate of 1.7 million units. Thirty-year mortgage rates have stayed below seven percent and building permits, an important indicator of future business, remain robust. In addition, the inventory of new homes available for sale is near its historic low, and this means there is little reason for builders to curtail their activity. And importantly, the overall national economy grew significantly in the first quarter of 2002, and the index of leading economic indicators forecasts continued economic improvement. Our Annual Stockholders' Meeting was held at Mueller's headquarters in Memphis, Tennessee on May 9, 2002. The stockholders elected Messrs. Fulvio, Gladstein, Hodes, Karp, and O'Hagan as directors, approved the appointment of Ernst & Young LLP as our independent auditors, and approved the Company's new stock option program. Sincerely, /S/HARVEY L. KARP /S/WILLIAM D. O'HAGAN Harvey L. Karp William D. O'Hagan Chairman of the Board President and Chief Executive Officer July 16, 2002 -1-