TO OUR STOCKHOLDERS, CUSTOMERS AND EMPLOYEES It is a pleasure to report that the first quarter of 1999 was the best quarter in Mueller's history. Net earnings rose 13 percent compared with the same quarter of 1998. Net sales, pounds shipped and operating income all posted double digit gains. Net earnings were $21.7 million, or 55 cents per diluted share, compared to $19.3 million, or 49 cents per diluted share, for the first quarter of 1998. Net sales for the first quarter were $287.8 million, an increase of 27 percent over sales of $226.7 million for the same quarter of 1998. We shipped 208 million pounds of product, compared with 156 million pounds in the first quarter of 1998. This increase in product shipments includes volume from businesses acquired in 1998. Mueller invested $55 million in capital additions and improvements in 1998. An additional $50 million has been budgeted for 1999. Our largest proposed project is the modernization of our recently-acquired tube mill in Wynne, Arkansas. We are pleased to report that our new copper casting facility in Fulton, Mississippi is now operating. This facility permits the use of a mix of copper scrap and cathode which can result in savings when the spread between the cost of scrap and the cost of cathode widens. B&K Industries, Inc., acquired in August 1998, is proving to be an excellent complement to Mueller's manufacturing operations. B&K's expertise in serving the retail marketplace has already allowed Mueller to establish major new national accounts. Our European tube businesses are continuing to improve operationally; we expect these businesses to break even by the second half of this year. In December 1998, we completed a $125 million unsecured bank financing on attractive terms. In addition, we have available a $100 million line of credit, none of which has been drawn against. The U.S. housing industry continues to be vibrant. Housing starts are running at an annual rate of 1.8 million units, nine percent above the rate one year ago. Mortgage rates remain very attractive, at around seven percent for a 30-year loan. Consumer confidence is high and the index of leading indicators has risen for the last five months. These signs indicate continuing underlying strength for the U.S. housing industry, which bodes well for our business. -1- Our Annual Stockholders' Meeting will be held at Mueller's headquarters in Memphis, Tennessee on May 6, 1999. You should have already received the notice of the meeting, as well as proxy material and the 1998 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 14, 1999 -2- Historical Analysis (1994-1999) of Quarterly Earnings Before Tax and Earnings Per Share Mueller's earnings have grown substantially over the past five years. In the first quarter of 1999, our Company earned $31.2 million before tax, compared with $6.7 million for the same quarter of 1994, an increase of 366 percent. Diluted earnings per share have risen 450 percent, from $0.10 to $0.55. [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