MUELLER INDUSTRIES INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 27, 2003 Commission file number 1-6770

MUELLER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

Delaware 25-0790410
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

8285 Tournament Drive, Suite 150
Memphis, Tennessee 38125
(Address of principal executive offices)

Registrant's telephone number, including area code: (901) 753-3200
Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
Common Stock, $0.01 Par Value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.[ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ X ] No [ ]

The aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common
equity, as of the last business day of the Registrant's most recently
completed second fiscal quarter was $911,997,281.

The number of shares of the Registrant's common stock outstanding as of
February 25, 2004 was 34,917,827 excluding 5,173,675 treasury shares.

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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following document are incorporated by reference into this
Report: Registrant's Definitive Proxy Statement for the 2004 Annual Meeting
of Stockholders, scheduled to be mailed on or about March 24, 2004 (Part
III).

MUELLER INDUSTRIES, INC.

-------------------

As used in this report, the terms "Company", "Mueller", and "Registrant" mean
Mueller Industries, Inc. and its consolidated subsidiaries taken as a whole,
unless the context indicates otherwise.

-------------------

TABLE OF CONTENTS

Page

Part I
Item 1. Business 3
Item 2. Properties 9
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 12

Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 12
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk 14
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 14
Item 9A. Controls and Procedures 14

Part III
Item 10. Directors and Executive Officers of the Registrant 15
Item 11. Executive Compensation 15
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters 15
Item 13. Certain Relationships and Related Transactions 18
Item 14. Principal Accounting Fees and Services 18

Part IV
Item 15. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 18

Signatures 22

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PART I

ITEM 1. BUSINESS

Introduction

The Company is a leading manufacturer of copper, brass, plastic, and
aluminum products. The range of these products is broad: copper tube and
fittings; brass and copper alloy rod, bar, and shapes; aluminum and brass
forgings; aluminum and copper impact extrusions; plastic fittings and
valves; refrigeration valves and fittings; and fabricated tubular products.
Mueller's operations are located throughout the United States, and in
Canada, Mexico, and Great Britain.

The Company's businesses are managed and organized into two segments:
Standard Products Division ("SPD") and Industrial Products Division ("IPD").
SPD manufactures and sells copper tube, copper and plastic fittings, and
valves. Outside of the United States, SPD manufactures and sells copper
tube in Europe. SPD sells these products to wholesalers in the HVAC
(heating, ventilation, and air-conditioning), plumbing, and refrigeration
markets, to distributors to the manufactured housing and recreational
vehicle industries, and to building material retailers. IPD manufactures
and sells brass and copper alloy rod, bar, and shapes; aluminum and brass
forgings; aluminum and copper impact extrusions; refrigeration valves and
fittings; fabricated tubular products; and gas valves and assemblies. IPD
sells its products primarily to original equipment manufacturers ("OEMs"),
many of which are in the HVAC, plumbing, and refrigeration markets. The
majority of the Company's manufacturing facilities operated at moderate
levels during 2003 and 2002, and high levels in 2001.

During 2002, the Company sold its wholly owned subsidiary, Utah Railway
Company. Certain expenses related primarily to retiree benefits at inactive
operations were formerly combined with the operations of Utah Railway
Company under a third industry segment, Other Businesses. Following the
sale of Utah Railway Company and its classification as discontinued
operations, these expenses of inactive operations have been combined into
the unallocated expenses classification.

Information concerning segments and geographic information appears
under "Note 15 - Industry Segments" in the Notes to Consolidated Financial
Statements for the year ended December 27, 2003 in Item 8 of this Report,
which is incorporated herein by reference.

The Company is a Delaware corporation incorporated on October 3, 1990.

Standard Products Division

Mueller's Standard Products Division includes a broad line of copper
tube, which ranges in size from 1/8 inch to 8 inch diameter, and is sold in
various straight lengths and coils. Mueller is a market leader in the air-
conditioning and refrigeration tube markets. Additionally, Mueller supplies
a variety of water tube in straight lengths and coils used for plumbing
applications in virtually every type of construction project.

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SPD also includes copper and plastic fittings and related components
for the plumbing and heating industry that are used in water distribution
systems, heating systems, air-conditioning, and refrigeration applications,
and drainage, waste, and vent systems. A major portion of Mueller's
products are ultimately used in the domestic residential and commercial
construction markets and, to a lesser extent, in the automotive and heavy on
and off-the-road vehicle markets.

On September 27, 2002, the Company acquired certain assets of Colonial
Engineering, Inc.'s Fort Pierce, Florida operations. These operations
manufacture injected molded plastic pressure fittings for plumbing,
agricultural, and industrial use including a line of PVC Schedule 40 and 80
and CPVC fittings.

In December 2002, the Company initiated a plan to sell or liquidate its
French manufacturing operations, Mueller Europe S. A. On March 3, 2003,
Mueller Europe S.A. filed a petition for liquidation with the Commercial
Court of Provins Province, France and, on March 4, 2003, the Court declared
the entity to be in liquidation. The disposition of remaining assets and
obligations of Mueller Europe S.A. is under the jurisdiction of the Court.
In 2003, the Company recognized operating losses from discontinued
operations incurred by Mueller Europe S.A. for the period the business
operated.

SPD markets primarily through its own sales and distribution
organization, which maintains sales offices and distribution centers
throughout the United States and in Canada, Mexico, and Europe.
Additionally, products are sold and marketed through a network of agents,
which, when combined with the Company's sales organization, provide the
Company broad geographic market representation.

The businesses in which SPD is engaged are highly competitive. The
principal methods of competition for Mueller's products are customer
service, availability, and price. The total amount of order backlog for SPD
as of December 27, 2003 was not significant.

The Company competes with various companies, depending on the product
line. In the U.S. copper tubing business, the domestic competition includes
Cerro Copper Products Co., Inc., Reading Tube Corporation, and Wolverine
Tube, Inc., as well as many actual and potential foreign competitors. In
the European copper tubing business, Mueller competes with at least eight
European-based manufacturers of copper tubing as well as other foreign-based
manufacturers. In the copper fittings market, competitors include Elkhart
Products, a division of Amcast Industrial Corporation, and NIBCO, Inc., as
well as several foreign manufacturers. Additionally, the Company's copper
tube and fittings businesses compete with a large number of manufacturers of
substitute products made from other metals and plastic. The plastic
fittings competitors include NIBCO, Inc., Charlotte Pipe & Foundry, and
other companies. Management believes that no single competitor offers such
a wide-ranging product line as Mueller and that this is a competitive
advantage in some markets.

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Industrial Products Division

Mueller's Industrial Products Division includes brass rod, nonferrous
forgings, and impact extrusions that are sold primarily to OEMs in the
plumbing, refrigeration, fluid power, and automotive industries, as well as
to other manufacturers and distributors. The Port Huron, Michigan mill
extrudes brass, bronze, and copper alloy rod in sizes ranging from 3/8
inches to 4 inches in diameter. These alloys are used in applications that
require a high degree of machinability, wear and corrosion resistance, as
well as electrical conductivity. IPD also manufactures brass and aluminum
forgings, which are used in a wide variety of end products, including
automotive components, brass fittings, industrial machinery, valve bodies,
gear blanks, and computer hardware. The Company also serves the automotive,
military ordnance, aerospace, and general manufacturing industries with
cold-formed aluminum and copper impact extrusions. Typical applications for
impacts are high strength ordnance, high-conductivity electrical components,
builders' hardware, hydraulic systems, automotive parts, and other uses
where toughness must be combined with varying complexities of design and
finish. Other products include valves and custom OEM products for
refrigeration and air-conditioning applications, and shaped and formed tube,
produced to tight tolerances, for baseboard heating, appliances, and medical
instruments. The total amount of order backlog for IPD as of December 27,
2003 was not significant.

On August 21, 2002, the Company acquired 100 percent of the outstanding
stock of Overstreet-Hughes, Co., Inc. Overstreet-Hughes, located in
Carthage, Tennessee, manufactures precision tubular components and
assemblies primarily for the OEM air-conditioning market.

During 2000, the Company completed two acquisitions: (i) Micro Gauge,
Inc. and a related business, Microgauge Machining, Inc., a specialized
machining operation, and (ii) Propipe Technologies, Inc., a fabricator of
gas train manifold systems.

IPD primarily sells directly to OEM customers. Competitors, primarily
in the brass rod market, include Cerro Metal Products Company, Inc., Chase
Industries, Inc., a subsidiary of Olin Corporation, Extruded Metals Inc.,
and others both domestic and foreign. Outside of North America, IPD sells
products through various channels.

Labor Relations

At December 27, 2003, the Company employed approximately 3,500
employees, of which approximately 1,200 were represented by various unions.
The union contracts that cover employees at the Company's Port Huron,
Michigan facilities expire April 1, 2004, and the union contract that covers
employees at the Company's Wynne, Arkansas facility expires June 28, 2004.
The Company expects to renew these contracts without material disruption of
its operations. The union contract at the Company's U.K. operation is
renewed annually. Other contracts expire on various dates through October
2006.

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Raw Material and Energy Availability

The major portion of Mueller's base metal requirements (primarily
copper) is normally obtained through short-term supply contracts with
competitive pricing provisions (for cathode) and the open market (for
scrap). Other raw materials used in the production of brass, including
brass scrap, zinc, tin, and lead, are obtained from zinc and lead producers,
open-market dealers, and customers with brass process scrap. Raw materials
used in the fabrication of aluminum and plastic products are purchased in
the open market from major producers.

Adequate supplies of raw material have historically been available to
the Company from primary producers, metal brokers, and scrap dealers.
Sufficient energy in the form of natural gas, fuel oils, and electricity is
available to operate the Company's production facilities. While temporary
shortages of raw material and fuels may occur occasionally, to date they
have not materially hampered the Company's operations.

An increasing demand for copper and copper alloy from China has had an
affect on the global distribution of such commodities. The extent and
duration of these conditions and the consequent impact on
price/availability, if any, in the long-term is unknowable at this time. In
the short-term, due to the increased demand for copper (cathode and scrap)
and copper alloy products from the export market, the raw material market is
tightening. Mueller has commitments for a portion of its metal requirements
through 2004 and has extended its forward purchases in the spot market more
than normal. Historically, rising prices have resulted in increased
availability of copper scrap in the United States, which can normally be
purchased at then market prices. Mueller's copper tube facilities can
accommodate copper scrap as the primary feedstock. To the extent scrap
remains available, this represents an additional source of supply. While
the Company will continue to react to market developments, resultant pricing
volatility or supply disruptions, if any, could nonetheless adversely affect
the Company.

Environmental Matters

Compliance with environmental laws and regulations is a matter of high
priority for the Company. Mueller's provision for environmental compliance
includes charges of $1.2 million in 2003, $1.6 million in 2002, and $3.6
million in 2001. Except as discussed below, the Company does not anticipate
that it will need to make material expenditures for such compliance
activities during the remainder of the 2004 fiscal year, or for the next two
fiscal years.

Mining Remedial Recovery Company

Mining Remedial Recovery Company ("MRRC"), a wholly owned subsidiary,
was formed for the purpose of managing the remediation of certain properties
and the appropriate disposition thereof.

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Mammoth Mine Site

MRRC owns certain inactive mines in Shasta County, California. MRRC
has continued a program, begun in the late 1980s, of sealing mine portals
with concrete plugs in mine adits which were discharging water. The sealing
program has achieved a reduction in the metal load in discharges from these
adits; however, additional reductions are being required. In response to a
1996 Order issued by the California Regional Water Quality Control Board
("QCB"), MRRC completed a feasibility study in 1997 describing measures
designed to mitigate the effects of acid rock drainage. In December 1998,
the QCB modified the order extending MRRC's time to comply with water
quality standards until December 1, 2003. In September 2002, the QCB
adopted a new order requiring MRRC to adopt Best Management Practices ("BMP")
to control discharges of acid mine drainage. The new order extends the time
to comply with water quality standards until September 2007. MRRC has
agreed to implement BMP to reduce or prevent the discharge of acid mine
drainage until such point as compliance with the order is achieved or,
through the Use Attainability Analysis process, the designated, beneficial
uses of the respective watercourses are modified, allowing for the adoption
of alternative receiving water limits. MRRC estimates it will spend between
$0.5 and $1.0 million annually over the next several years to comply with the
order.

U.S.S. Lead

In 1991, U.S.S. Lead Refinery, Inc. ("Lead Refinery") responded to an
information request from the EPA under Superfund for information on whether
Lead Refinery arranged for the disposal of hazardous substances in the
vicinity of the Grand Calumet River/Indiana Harbor Ship Canal. By letter
dated February 4, 1997, the Indiana Department of Environmental Management
("IDEM") notified Lead Refinery that a preassessment screening of the Grand
Calumet River and the Indiana Harbor Canal conducted pursuant to Superfund
had identified releases of hazardous substances from Lead Refinery and other
potentially responsible parties ("PRPs") that had adversely impacted natural
resources. Based on its prescreening work, IDEM performed sampling in this
area and initiated an assessment plan, which will determine the nature and
extent of any required remediation and any resulting assessments against any
of the PRPs.

In 1991, Lead Refinery also responded to an information request under
Superfund regarding the site in East Chicago, Indiana. In 1992, the EPA
advised Lead Refinery of its intent to list the property as a Superfund
site; however, as of February 27, 2004, the EPA had deferred such listing. In
1993, Lead Refinery entered into a Consent Order with the EPA pursuant to
Section 3008(h) of the Resource Conservation and Recovery Act ("RCRA"). The
Consent Order covers remediation activities at the East Chicago, Indiana
site and provides for Lead Refinery to complete certain on-site interim
remedial activities and studies that extend off-site. In November 1996, the
EPA approved, with modifications, the Interim Stabilization Measures
Workplan and designated a Corrective Action Management Unit ("CAMU") at the
Lead Refinery site. Site activities, which began in December 1996, were
substantially concluded in the fourth quarter of 2002. Costs for remaining
cleanup efforts on site are estimated to be less than $0.5 million. In the
process of remediating the site, Lead Refinery identified petroleum

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contamination on site. As a result, Lead Refinery installed a slurry wall
around the CAMU and initiated characterization of areas suspected to have
petroleum contamination. Lead Refinery has addressed this contamination
pursuant to plans approved by the EPA. Additionally, Lead Refinery has
conducted initial investigations to determine if other contamination exists
that is not addressed by the Consent Order. Lead Refinery, without
additional assistance from MRRC, lacks the financial resources needed to
complete any additional remediation determined to be required and may seek
financial assistance from other PRPs to permit Lead Refinery to conduct a
private-party cleanup under RCRA, to the extent available under applicable
law and regulations.

Lead Refinery has been informed by the former owner and operator of a
Superfund site located in Pedricktown, New Jersey that it intends to seek
CERCLA response costs for alleged shipments of hazardous substances to the
site. Lead Refinery has executed an agreement regarding that site, which
indefinitely extends the statute of limitations. By letter dated January
26, 1996, Lead Refinery and other PRPs received from the EPA a proposed
Administrative Order on Consent to perform the remedial design for operable
Unit 1 of the Pedricktown Superfund Site. Lead Refinery determined not to
execute the Administrative Order on Consent. Several other PRPs, however,
executed the agreement and are conducting the remedial design.

In October 2003, Lead Refinery received a settlement offer for $929
thousand for CERCLA contribution to past and future response costs incurred
at the NL/Taracorp Superfund site located in Granite City, Illinois. Lead
Refinery declined that offer. In February of 2004, NL Industries, Inc. filed
a contribution action against all non-settling PRPs on the EPA's allocation
list, including Lead Refinery, seeking payments of an equitable share of
clean-up costs incurred by that corporation. Lead Refinery intends to contest
this action and seek a voluntary dismissal of Lead Refinery from the action.

Other

In connection with acquisitions, the Company established environmental
reserves to fund the cost of remediation at sites currently or formerly
owned by various acquired entities. The Company, through its acquired
subsidiaries, is engaged in ongoing remediation and site characterization
studies.

Mueller Copper Tube Products, Inc.

In 1999, Mueller Copper Tube Products, Inc. ("MCTP") commenced a
cleanup and remediation of soil and groundwater at its Wynne, Arkansas
plant. MCTP is currently removing trichloroethene, a cleaning solvent
formerly used by MCTP, from the soil and groundwater. On August 30, 2000,
MCTP received approval of its Final Comprehensive Investigation report and
Storm Water Drainage Investigation Report addressing the treatment of soils
and groundwater, from the Arkansas Department of Environmental Quality. The
Company established a reserve for this project in connection with the
acquisition of MCTP in 1998.

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Other Business Factors

The Registrant's business is not materially dependent on patents,
trademarks, licenses, franchises, or concessions held. In addition,
expenditures for company-sponsored research and development activities were
not material during 2003, 2002, or 2001. No material portion of the
Registrant's business involves governmental contracts. Seasonality of the
Company's sales is not significant.

SEC Filings

We make available through our Internet website our Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the Securities and
Exchange Commission. To retrieve any of this information, you may access
our Internet home page at www.muellerindustries.com, select Mueller
Financials, and then select SEC Filings.

ITEM 2. PROPERTIES

Information pertaining to the Registrant's major operating facilities
is included below. Except as noted, the Registrant owns all of its
principal properties. The Registrant's plants are in satisfactory condition
and are suitable for the purpose for which they were designed and are now
being used.

Approximate
Location Property Size Description

Standard Products Division

Fulton, MS 418,000 sq. ft. Copper tube mill. Facility includes
52.37 acres casting, extruding, and finishing
equipment to produce copper tubing,
including tube feed stock for the
Company's copper fittings plants
and Precision Tube factory.

Fulton, MS 103,000 sq. ft. Casting facility. Facility includes
11.9 acres casting equipment to produce copper
billets used in the adjoining copper
tube mill.

Wynne, AR 682,000 sq. ft.(1) Copper tube mill. Facility includes
39.2 acres extrusion and finishing equipment to
produce copper tubing and copper tube
line sets.

Fulton, MS 58,500 sq. ft. Packaging and bar coding facility for
15.53 acres retail channel sales.

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Approximate
Location Property Size Description

Fulton, MS 70,000 sq. ft.(2) Copper fittings plant. High-volume
7.68 acres facility that produces copper fittings
using tube feed stock from the
Company's adjacent copper tube mill.

Covington, TN 159,500 sq. ft. Copper fittings plant. Facility
40.88 acres produces copper fittings using tube
feed stock from the Company's copper
tube mills.

Port Huron, MI 40,000 sq. ft. Formed tube plant. Produces copper
5.11 acres fittings using cold heading equipment.

Kalamazoo, MI 205,000 sq. ft. Plastic fittings plant. Produces DWV
18 acres fittings using injection molding
equipment.

Cerritos, CA 115,000 sq. ft. Plastic fittings plant. Produces DWV
5.1 acres fittings using injection molding
equipment.

Upper 82,000 sq. ft. Plastic fittings plant. Produces DWV
Sandusky, OH 7.52 acres fittings using injection molding
equipment.

Fort Pierce, FL 69,875 sq. ft. Plastic fittings plant. Produces
5.60 acres pressure plastic fittings using injection
molding equipment.

Bilston, 402,500 sq. ft. Copper tube mill. Facility includes
England 14.95 acres casting, extruding, and finishing
United Kingdom equipment to produce copper tubing.

Industrial Products Division

Port Huron, MI 322,500 sq. ft. Brass rod mill. Facility includes
71.5 acres casting, extruding, and finishing
equipment to produce brass rods and
bars, in various shapes and sizes.

Port Huron, MI 127,500 sq. ft. Forgings plant. Produces brass and
aluminum forgings.

Marysville, MI 81,500 sq. ft. Aluminum and copper impacts plant.
6.72 acres Produces made-to-order parts using cold
impact processes.

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Approximate
Location Property Size Description

Hartsville, TN 78,000 sq. ft. Refrigeration products plant.
4.51 acres Produces products used in
refrigeration applications such as
ball valves, line valves, and
compressor valves.

Carthage, TN 67,520 sq. ft. Fabrication facility. Produces precision
10.98 acres tubular components and assemblies.

Jacksboro, TN 65,066 sq. ft. Bending and fabricating facility.
11.78 acres Produces gas burners, supply tubes,
and manifolds for the gas appliance
industry.

Waynesboro, TN 57,000 sq. ft.(3) Gas valve plant. Facility produces
5.0 acres brass valves and assemblies for the
gas appliance industry.

North Wales, PA 174,000 sq. ft. Precision Tube factory. Facility
18.9 acres fabricates copper tubing, copper
alloy tubing, aluminum tubing, and
fabricated tubular products.

Brighton, MI 65,000 sq. ft.(4) Machining operation. Facility
machines component parts for supply
to automotive industry.

Middletown, OH 55,000 sq. ft. Fabricating facility. Produces burner
2.0 acres systems and manifolds for the gas
appliance industry.

In addition, the Company owns and/or leases other properties used as
distribution centers and corporate offices.
(1) Facility is located on land leased from a local municipality, with an
option to purchase at nominal cost.
(2) Facility is leased under a long-term lease agreement, with an option
to purchase at nominal cost.
(3) Facility is leased from a local municipality for a nominal amount.
(4) Facility is leased under an operating lease.

ITEM 3. LEGAL PROCEEDINGS

Environmental Proceedings

Reference is made to "Environmental Matters" in Item 1 of this Report,
which is incorporated herein by reference, for a description of
environmental proceedings.

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Other Matters

The Company is aware of investigations of competition in markets in
which it participates, or has participated in the past, in Europe, Canada
and the United States. On October 21, 2003, the Company was informed that
the investigations of which it was aware in the United States have been
closed. On September 1, 2003, the European Commission released a statement
alleging infringements in Europe of competition rules by manufacturers of
copper tubes including the Company and businesses in France and England,
which it acquired in 1997. The Company took the lead in bringing these
issues to the attention of the European Commission and has fully cooperated
in the resulting investigation from its inception. The Company does not
anticipate any material adverse effect on its business or financial position
as a result of the European Commission's action or other investigations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of February 24, 2004, the number of holders of record of Mueller's
Common Stock was approximately 2,000. On February 25, 2004, the closing
price for Mueller's Common Stock on the New York Stock Exchange was $31.93.

Through December 27, 2003, the Company has paid no cash dividends on
its Common Stock. Subsequent to December 27, 2003, the Company declared a
regular quarterly dividend of 10 cents per share on its Common Stock.
Payment of dividends in the future is dependent upon the Company's financial
condition, cash flows, capital requirements, earnings, and other factors.

The high, low, and closing prices of Mueller's Common Stock on the New
York Stock Exchange for each fiscal quarter of 2003 and 2002 were as
follows:

High Low Close

2003
Fourth quarter $ 34.83 $ 24.95 $ 34.83
Third quarter 29.65 25.40 25.40
Second quarter 28.38 24.70 27.06
First quarter 28.23 22.99 24.92

2002
Fourth quarter $ 29.70 $ 24.29 $ 27.33
Third quarter 31.60 23.84 25.51
Second quarter 36.12 31.15 31.75
First quarter 35.43 30.44 34.99

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ITEM 6. SELECTED FINANCIAL DATA

(In thousands, except per share data)

2003 2002 2001 2000 1999

For the fiscal year:
Net sales (1) $ 999,078 $ 952,983 $ 969,106 $ 1,157,660 $ 1,110,361

Operating income (1) 49,384 85,756 105,529 145,638 145,676

Net income from continuing operations 44,221 71,177 65,423 92,985 99,362

Diluted earnings per share
from continuing operations 1.19 1.92 1.76 2.44 2.51

At year-end:
Total assets 1,055,184 987,947 916,065 910,276 904,080

Long-term debt 11,437 14,005 46,977 100,975 118,858

(1) From continuing operations

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Management's discussion and analysis of financial condition and results
of operations is contained in the caption "Financial Review" in the
"Consolidated Financial Statements" submitted as a separate section of this
Annual Report on Form 10-K commencing on page F-1.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative disclosures about market risk are
contained in the caption "Financial Review" in the "Consolidated Financial
Statements" submitted as a separate section of this Annual Report on Form
10-K commencing on page F-1.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statements required by this item are contained in the
"Consolidated Financial Statements" submitted as a separate section of this
Annual Report on Form 10-K commencing on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures designed to
ensure information required to be disclosed in Company reports filed under
the Securities Exchange Act of 1934, as amended, (the "Exchange Act") is
recorded, processed, summarized, and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures are designed to provide reasonable
assurance that information required to be disclosed in Company reports filed
under the Exchange Act is accumulated and communicated to management,
including the Company's Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure.

The Company's management, under the supervision and with the
participation of the Company's Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Company's disclosure
controls and procedures as of the end of the period covered by this report.
Based upon that evaluation, the Company's Chief Executive Officer and Chief
Financial Officer concluded that the disclosure controls and procedures are
effective.

There were no changes in the Company's internal control over financial
reporting during the Company's fiscal quarter ending December 27, 2003, that
have materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 is contained under the captions
"Ownership of Common Stock by Directors and Executive Officers and
Information about Director Nominees," "Corporate Governance," "Audit
Committee Report," and "Section 16(a) Beneficial Ownership Compliance
Reporting" in the Company's Proxy Statement for its 2004 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission on or
about March 24, 2004 which is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is contained under the caption
"Executive Compensation" in the Company's Proxy Statement for its 2004
Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission on or about March 24, 2004, which is incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

The following table discloses information regarding the securities to
be issued and the securities remaining available for issuance under the
Registrant's stock-based incentive plans as of December 27, 2003 (shares in
thousands):

-15-

(c) Number of securities
remaining available for future
(a) Number of securities (b) Weighted average issuance under equity
to be issued upon exercise exercise price of compensation plans (excluding
of outstanding options, outstanding options securities reflected in column
Plan category warrants, and rights warrants, and rights (a))

Equity compensation plans
approved by security
holders 1,110 $ 23.665 714

Equity compensation
plans not approved by
security holders 3,015 6.083 -
-------------- --------------
Total 4,125 10.816 714
============== ==============

-16-

Pursuant to Option Agreements, dated December 4, 1991 and March 3,
1992, Mr. Karp was granted options (the "Karp Options") to acquire 3.6
million shares of Common Stock at an exercise price of $2.0625 per share (as
adjusted for subsequent stock splits) of which 2.4 million shares remained
unexercised at December 27, 2003. The Karp Options are currently fully
exercisable and will remain exercisable until one year after termination of
Mr. Karp's employment with the Company under Mr. Karp's employment agreement
with the Company (the "Karp Employment Agreement"), unless Mr. Karp's
employment is terminated for Cause (as defined in the Karp Employment
Agreement), in which case the Karp Options shall only remain exercisable for
a period of 30 days following Mr. Karp's receipt of written notice from the
Company specifying the basis for Cause.

On May 7, 1997, Mr. O'Hagan was granted an option to acquire 180
thousand shares of Common Stock at an exercise price of $19.875 per share
(as adjusted for a subsequent stock split), on October 9, 1998 Mr. O'Hagan
was granted an option to acquire 200 thousand shares of Common Stock at an
exercise price of $15.9375 per share, on February 13, 2002 Mr. O'Hagan was
granted an option to acquire 100 thousand shares of Common Stock at an
exercise price of $31.75 per share and on February 13, 2003 Mr. O'Hagan was
granted an option to acquire 100 thousand share of Common Stock at an
exercise price of $25.10 per share (collectively, the "O'Hagan Treasury
Options"). Each of the O'Hagan Treasury Options has a term of ten years,
subject to earlier expiration upon termination of employment, and vests
ratably over a five-year period from the date of the grant, except that if
there is a Change in Control as defined in Mr. O'Hagan's employment
agreement with the Company (the "O'Hagan Employment Agreement"), all of the
O'Hagan Treasury Options will become immediately exercisable on the later to
occur of (i) the day Mr. O'Hagan notifies the Company he is terminating his
employment with the Company as a result of said change, and (ii) ten days
prior to the date Mr. O'Hagan's employment with the Company is terminated by
the Company. In addition, all outstanding unvested O'Hagan Treasury Options
will immediately vest and become exercisable if Mr. O'Hagan's employment is
terminated by the Company without Cause (as defined in the O'Hagan
Employment Agreement) or by Mr. O'Hagan for Good Reason (as defined in the
O'Hagan Employment Agreement). The O'Hagan Treasury Options may only be
exercised for shares of Common Stock held in treasury by the Company.

On June 30, 2000 and June 30, 2003, the Company granted to Messrs.
Robert J. Pasquarelli and Michael O. Fifer, respectively, options to acquire
15 thousand and 20 thousand shares of Common Stock, respectively, at an
exercise price of $27.8125 and $27.06 per share, respectively. Each of
these options has a term of ten years, subject to earlier expiration upon
termination of employment, and vests and becomes exercisable ratably over a
five-year period from the date of the grant. These options may only be
exercised for shares of Common Stock held in treasury by the Company.

Other information required by Item 12 is contained under the captions
"Principal Stockholders" and "Ownership of Common Stock by Directors and
Executive Officers and Information about Director Nominees" in the Company's
Proxy Statement for its 2004 Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission on or about March 24, 2004 which is
incorporated herein by reference.

-17-

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 is contained under the caption
"Principal Accounting Fees and Services" in the Company's Proxy Statement
for its 2004 Annual Meeting of Stockholders to be filed with the Securities
and Exchange Commission on or about March 24, 2004 which is incorporated
herein by reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

1. Financial Statements: the financial statements, notes, and report of
independent auditors described in Item 8 of this Annual Report on
Form 10-K are contained in the "Consolidated Financial Statements"
submitted as a separate section of this Annual Report on Form 10-K
commencing on page F-1.

2. Financial Statement Schedule: the financial statement schedule
described in Item 8 of this report contained in the "Consolidated
Financial Statements" submitted as a separate section of this Annual
Report on Form 10-K commencing on page F-1.

3. Exhibits:

3.1 Certificate of Incorporation of the Registrant and all
amendments thereto.

3.2 By-laws of the Registrant, as amended and restated, effective
November 10, 1994 (Incorporated herein by reference to Exhibit
3.2 of the Registrant's Annual Report on Form 10-K, dated March
24, 2003, for the fiscal year ended December 28, 2002).

4.1 Rights Agreement, dated as of November 10, 1994, between the
Registrant and Continental Stock Transfer and Trust Company, as
Rights Agent, which includes the Form of Certificate of
Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock of the Registrant, as Exhibit A,
the Form of Rights Certificate, as Exhibit B, and the Summary
of Rights to Purchase Preferred Stock, as Exhibit C
(Incorporated herein by reference to Exhibit 4.1 of the
Registrant's Annual Report on Form 10-K, dated March 24, 2003,
for the fiscal year ended December 28, 2002).

4.2 Credit Agreement among the Registrant (as Borrower) and
Standard Federal Bank and other banking institutions and
Standard Federal Bank (as Agent) dated as of November 6, 2003.

-18-

4.3 Certain instruments with respect to long-term debt of the
Registrant have not been filed as Exhibits to this Report since
the total amount of securities authorized under any such
instruments does not exceed 10 percent of the total assets of
the Registrant and its subsidiaries on a consolidated basis.
The Registrant agrees to furnish a copy of each such instrument
upon request of the Securities and Exchange Commission.

10.1 Stock Option Agreement, dated December 4, 1991, by and between
the Registrant and Harvey L. Karp (Incorporated herein by
reference to Exhibit 10.4 of the Registrant's Annual Report on
Form 10-K, dated March 24, 2003, for the fiscal year ended
December 28, 2002).

10.2 Stock Option Agreement, dated March 3, 1992, by and between the
Registrant and Harvey L. Karp (Incorporated herein by reference
to Exhibit 10.5 of the Registrant's Annual Report on Form 10-K,
dated March 24, 2003, for the fiscal year ended December 28,
2002).

10.3 Mueller Industries, Inc. 1991 Incentive Stock Option Plan
(Incorporated herein by reference to Exhibit 10.6 of the
Registrant's Annual Report on Form 10-K, dated March 24, 2003,
for the fiscal year ended December 28, 2002).

10.4 Summary description of the Registrant's 2004 bonus plan for
certain key employees.

10.5 Amended and Restated Employment Agreement, effective as of
September 17, 1997, by and between the Registrant and Harvey L.
Karp (Incorporated herein by reference to Exhibit 10.8 of the
Registrant's Annual Report on Form 10-K, dated March 24, 2003,
for the fiscal year ended December 28, 2002).

10.6 Amended and Restated Employment Agreement, effective as of
September 17, 1997, by and between the Registrant and William
D. O'Hagan (Incorporated herein by reference to Exhibit 10.9 of
the Registrant's Annual Report on Form 10-K, dated March 24,
2003, for the fiscal year ended December 28, 2002).

10.7 Amendment to Amended and Restated Employment Agreement,
effective May 12, 2000, by and between the Registrant and
William D. O'Hagan (Incorporated herein by reference to Exhibit
10.1 of the Registrant's Quarterly Report on Form 10-Q, dated
July 24, 2000, for the quarter ended June 24, 2000).

10.8 Mueller Industries, Inc. 1994 Stock Option Plan (Incorporated
herein by reference to Exhibit 10.11 of the Registrant's Annual
Report on Form 10-K, dated March 24, 2003, for the fiscal year
ended December 28, 2002).

10.9 Mueller Industries, Inc. 1994 Non-Employee Director Stock
Option Plan (Incorporated herein by reference to Exhibit 10.12
of the Registrant's Annual Report on Form 10-K, dated March 24,
2003, for the fiscal year ended December 28, 2002).

-19-

10.10 Mueller Industries, Inc. Deferred Compensation Plan, effective
December 1, 2000 (Incorporated herein by reference to Exhibit
10.13 of the Registrant's Annual Report on Form 10-K, dated
March 26, 2001, for the fiscal year ended December 30, 2000).

10.11 Mueller Industries, Inc. 1998 Stock Option Plan (Incorporated
herein by reference to Exhibit 10.14 of the Registrant's Annual
Report on Form 10-K, dated March 24, 2003, for the fiscal year
ended December 28, 2002).

10.12 Stock Option Agreement, dated May 7, 1997, by and between the
Registrant and William D. O'Hagan.

10.13 Stock Option Agreement, dated October 9, 1998, by and between
the Registrant and William D. O'Hagan.

10.14 Stock Option Agreement, dated February 13, 2002, by and between
the Registrant and William D. O'Hagan (Incorporated herein by
reference to Exhibit 10.17 of the Registrant's Annual Report on
Form 10-K, dated March 24, 2003, for the fiscal year ended
December 28, 2002).

10.15 Employment Agreement, effective October 17, 2002, by and
between the Registrant and Kent A. McKee (Incorporated herein
by reference to Exhibit 10.18 of the Registrant's Annual Report
on Form 10-K, dated March 24, 2003, for the fiscal year ended
December 28, 2002).

10.16 Stock Option Agreement, dated February 13, 2003, by and between
the Registrant and William D. O'Hagan.

10.17 Nonqualified Stock Option Agreement, dated June 30, 2000, by and
between the Registrant and Robert J. Pasquarelli.

10.18 Nonqualified Stock Option Agreement, dated June 30, 2003, by and
between the Registrant and Michael O. Fifer.

14.0 Code of Business Conduct and Ethics.

21.0 Subsidiaries of the Registrant.

23.0 Consent of Independent Auditors (Includes report on Financial
Statement Schedule).

31.1 Certification of Chief Executive Officer pursuant to Rule 13a-
14(a) and Rule 15d-14(a) of the Securities Exchange Act of
1934, as amended.

31.2 Certification of Chief Financial Officer pursuant to Rule 13a-
14(a) and Rule 15d-14(a) of the Securities Exchange Act of
1934, as amended.

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

-20-

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

(b) During the three months ended December 27, 2003, the registrant
filed the following Current Report on Form 8-K:

October 14, 2003: Item 7. Financial Statements and Exhibits. Item
12. Results of Operations and Financial Condition. Third Quarter
Earnings Release.

-21-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on March
1, 2004.

MUELLER INDUSTRIES, INC.

/s/ HARVEY L. KARP
Harvey L. Karp, Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

Signature Title Date

/s/HARVEY L KARP Chairman of the Board, and Director March 1, 2004
Harvey L. Karp

/s/ GENNARO J. FULVIO Director March 1, 2004
Gennaro J. Fulvio

/s/ GARY S. GLADSTEIN Director March 1, 2004
Gary S. Gladstein

/s/ TERRY HERMANSON Director March 1, 2004
Terry Hermanson

/s/ ROBERT B. HODES Director March 1, 2004
Robert B. Hodes

/s/ WILLIAM D. O'HAGAN President, Chief Executive Officer, March 1, 2004
William D. O'Hagan Director

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person on behalf of the
Registrant and in the capacities and on the date indicated.

Signature and Title Date

/s/ KENT A. MCKEE March 1, 2004
Kent A. McKee
Vice President and
Chief Financial Officer
(Principal Accounting Officer)

/s/ RICHARD W. CORMAN March 1, 2004
Richard W. Corman
Corporate Controller

-22-

MUELLER INDUSTRIES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Review F-2

Consolidated Statements of Income for the years December 27, 2003,
December 28, 2002, and December 29, 2001 F-13

Consolidated Balance Sheets as of December 27, 2003
and December 28, 2002 F-15

Consolidated Statements of Cash Flows for the years
December 27, 2003, December 28, 2002, and December 29, 2001 F-17

Consolidated Statements of Stockholders' Equity for the years
December 27, 2003, December 28, 2002, and December 29, 2001 F-19

Notes to Consolidated Financial Statements F-22

Report of Independent Auditors F-49

FINANCIAL STATEMENT SCHEDULE

Schedule for the fiscal years ended December 27, 2003,
December 28, 2002, and December 29, 2001.

Valuation and Qualifying Accounts (Schedule II) F-50

F-1

FINANCIAL REVIEW

OVERVIEW

Mueller Industries, Inc. is a leading manufacturer of copper tube and
fittings; brass and copper alloy rod, bar and shapes; aluminum and brass
forgings; aluminum and copper impact extrusions; plastic fittings and
valves; refrigeration valves and fittings; and fabricated tubular products.
Mueller's operations are located throughout the United States and in Canada,
Mexico, and Great Britain.

The Company's businesses are managed and organized into two segments:
(i) Standard Products Division (SPD) and (ii) Industrial Products Division
(IPD). SPD manufactures and sells copper tube, and copper and plastic
fittings and valves. Outside of the United States, SPD manufactures copper
tube in Europe. SPD sells these products to wholesalers in the HVAC
(heating, ventilation, and air-conditioning), plumbing and refrigeration
markets, to distributors to the manufactured housing and recreational
vehicle industries, and to building material retailers. IPD manufactures
and sells brass and copper alloy rod, bar, and shapes; aluminum and brass
forgings; aluminum and copper impact extrusions; refrigeration valves and
fittings; fabricated tubular products; and gas valves and assemblies. IPD
sells its products primarily to original equipment manufacturers (OEMs),
many of which are in the HVAC, plumbing and refrigeration markets.

New housing starts and commercial construction are important
determinants of the Company's sales to the HVAC, refrigeration and plumbing
markets because the principal end use of a significant portion of the
Company's products is in the construction of single and multi-family housing
and commercial buildings. Repairs and remodeling projects are also
important drivers of underlying demand for these products.

Profitability of certain of the Company's product lines depends upon
the "spreads" between the cost of raw material and the selling prices of its
completed products. The open market prices for copper cathode and scrap, for
example, influence the selling price of copper tubing, a principal product
manufactured by the Company. The Company attempts to minimize the effects of
fluctuations in material costs by passing through these costs to its
customers. The Company's earnings and cash flow are dependent upon these
spreads that fluctuate based upon market conditions.

Earnings and profitability is also subject to market trends such as
substitute products and imports. Plastic plumbing systems are the primary
substitute product; these products represent an increasing share of
consumption. Imports of copper tubing from Mexico have increased in recent
years, although U.S. consumption is still predominantly supplied by U.S.
manufacturers.

F-2

RESULTS OF OPERATIONS

2003 Performance Compared with 2002

Consolidated net sales in 2003 were $999.1 million, a 4.8 percent
increase over net sales of $953.0 million in 2002. Pounds of product sold
totaled 695.8 million in 2003 compared with 694.0 million pounds sold in
2002. Net selling prices generally fluctuate with changes in raw material
prices. The COMEX average copper price in 2003 was approximately 80 cents
per pound, or 13 percent more than the 2002 average of 71 cents. This
change impacted the Company's net sales and cost of goods sold, particularly
in the later part of the year as COMEX steadily climbed, ending the year at
$1.04 per pound.

Cost of goods sold increased $71.1 million, to $815.8 million in 2003.
This increase was attributable primarily to higher raw material costs.
Gross profit was $183.2 million or 18.3 percent of net sales in 2003
compared with $208.2 million or 21.8 percent of net sales in 2002. The
decline in gross profit was due to lower spreads in core product lines,
primarily copper tube, fittings, and brass rod. The quarterly gross profit
trend bottomed out in the first quarter and steadily improved throughout the
year.

Depreciation and amortization increased to $39.0 million in 2003 from
$37.4 million in 2002; the increase was due to capital expenditures.
Selling, general, and administrative expense increased to $94.9 million in
2003; this increase was due to (i) higher distribution costs related to
expansion of dedicated warehousing, (ii) health and medical benefit plans,
(iii) pension costs, and (iv) additional provisions for doubtful accounts.

Interest expense decreased to $1.2 million in 2003 from $1.5 million in
2002. This decrease was primarily due to debt reductions. Environmental
expense totaled $1.2 million in 2003 compared with $1.6 million in 2002.
Other income was slightly lower due to lower interest income yields on
invested cash balances.

Income tax expense declined substantially to $7.2 million, for an
effective rate of 14 percent, due to the recognition of a deferred income
tax benefit. During the third quarter of 2003, the Company recognized a
deferred income tax benefit, upon the closure of the open tax year, by
reducing a valuation allowance of $9.3 million related to an operating loss
resulting from the 1999 sale of a subsidiary. Realization of the tax
benefit occurred during the year of sale.

During 2002, the Company sold its wholly owned subsidiary, Utah Railway
Company, and initiated steps to sell or liquidate its French manufacturing
operations, Mueller Europe S.A. The Company expects no further obligations
or contingencies from these discontinued operations and, therefore, during
2003 it recognized a $1.7 million gain to reflect adjustments to the
previous estimates on disposition.

The Company's employment was approximately 3,500 at the end of 2003
compared with 3,600 at the end of 2002.

F-3

Standard Products Division

Net sales by SPD were $718 million in 2003 compared with $679 million
in 2002 for a 5.6 percent increase. Operating income was $54.1 million in
2003 compared with $79.0 million in 2002. The decline in operating profit
was due to lower spreads in certain product lines, primarily copper tube and
fittings, and increased distribution costs.

Industrial Products Division

IPD's net sales were $292 million in 2003 compared with $280 million in
2002. Operating income was $11.7 million in 2003 compared with $20.4
million in 2002. Brass rod earnings declined on lower volume and spreads.
The division's results also declined due to poor performance of certain
product lines including Overstreet-Hughes, Co., Inc. (Overstreet-Hughes).
The results of Overstreet-Hughes, which manufactures precision tubular
components and assemblies primarily for the OEM air-conditioning market,
did not meet expectation during 2003; the Company is evaluating alternatives
to improve performance to an acceptable level. If the Company is unable to
achieve improvements, a write-down of these assets could be necessary in the
future.

2002 Performance Compared with 2001

Consolidated net sales in 2002 were $953 million, 1.7 percent less than
net sales of $969 million in 2001. Pounds of product sold totaled 694
million in 2002 or 6.8 percent more than the 650 million pounds sold in
2001. This increase in pounds sold was primarily attributable to the brass
rod business. The COMEX average copper price in 2002 was approximately 1.2
percent less than the 2001 average. This change impacted the Company's net
sales and cost of goods sold.

Cost of goods sold increased $4.4 million, to $745 million in 2002.
This increase was attributable to increased volumes. Gross profit was $208
million or 21.8 percent of net sales in 2002 compared with $229 million or
23.6 percent of net sales in 2001. The decline in gross profit was due to
lower spreads in certain product lines, primarily copper tube.

Depreciation and amortization decreased to $37.4 million in 2002 from
$39.5 million in 2001. The decrease was due primarily to discontinuing
goodwill amortization, totaling $4.4 million in 2001, in accordance with
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets". Selling, general, and administrative expense increased
1.5 percent to $85.0 million in 2002, reflecting increased volume.

Interest expense decreased to $1.5 million in 2002 from $3.3 million in
2001. This decrease was primarily due to debt reductions. No interest was
capitalized during 2002, whereas $1.4 million of interest was capitalized on
major capital improvement projects in 2001. Environmental expense totaled
$1.6 million in 2002 compared with $3.6 million in 2001. Other income
remained flat at $5.8 million in 2002 and 2001.

F-4

During 2002, the Company sold its wholly owned subsidiary, Utah Railway
Company, to Genessee & Wyoming Inc. Proceeds from the sale were $55.4
million. The Company recognized a gain of $21.1 million, net of income
taxes of $11.6 million, from the sale. Also during 2002, the Company
initiated steps to sell or liquidate its French manufacturing operations,
Mueller Europe S.A. The Company recognized a loss of $13.4 million, net of
$15.2 million income tax benefit, to write-down the value of the French
business to its net realizable value.

The Company provided $17.3 million for income taxes attributable to
continuing operations in 2002, of which $9.7 million was deferred. The sale
of Utah Railway Company enabled the Company to utilize previously
unrecognized capital loss carryforwards. In accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes", the
recognition of this capital loss carryforward benefit of $12.7 million was
classified as a reduction to current income taxes on continuing operations.
Current income tax expense of $7.6 million reflects the benefit of
recognizing this capital loss carryforward. The 2002 effective tax rate was
19.5 percent while the 2001 rate was 37.3 percent.

The Company's employment at its ongoing operations was approximately
3,600 at the end of 2002. This compares with approximately 3,400 at the
2001 year-end. This increase is attributable to acquisitions.

Standard Products Division

Net sales by SPD were $679 million in 2002 compared with $722 million
in 2001 for a 6 percent decrease. Operating income was $79.0 million in
2002 compared with $105 million in 2001. The decline in operating profit
was due to lower spreads in certain product lines, primarily copper tube.
In September 2002, the Company acquired certain assets of Colonial
Engineering, Inc.'s Fort Pierce, Florida operations. These operations
manufacture injected molded plastic pressure fittings for plumbing,
agricultural, and industrial use including a line of PVC Schedule 40 and 80
and CPVC fittings. These operations generated sales of approximately $15
million in 2001. Total consideration paid was approximately $14.1 million.

Industrial Products Division

IPD's net sales were $280 million in 2002 compared with $252 million in
2001. Operating income was $20.4 million in 2002 compared with $17.5
million in 2001. Volume increases were responsible for the increase in
2002 earnings. In August 2002, the Company acquired 100 percent of
the outstanding stock of Overstreet-Hughes. Overstreet-Hughes, located in
Carthage, Tennessee, manufactures precision tubular components and
assemblies primarily for the OEM air-conditioning market and had sales in
2001 of approximately $8 million. Total consideration paid at closing,
including assumption of debt, was approximately $6.3 million. A contingent
payment of up to $2 million will be paid if certain financial targets are
achieved.

F-5

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents balance increased to $255.1
million at year-end. Major components of the 2003 change included $73.4
million of cash provided by operating activities, $36.2 million of cash used
in investing activities and $3.5 million of cash used in financing
activities.

Net income from continuing operations of $44.2 million in 2003 was the
primary component of cash provided by operating activities. Depreciation and
amortization of $39.0 million were the primary non-cash adjustments. Major
changes in working capital included a $34.0 million increase in trade
accounts receivable due to better volumes and higher raw material costs in
the fourth quarter of 2003 compared with the fourth quarter of 2002.

The major components of net cash used for investing activities during
2003 included $27.2 million used for capital expenditures and $10.8 million
used for acquiring an additional equity interest in Conbraco Industries,
Inc. Conbraco, headquartered in Matthews, North Carolina, is a manufacturer
of flow control products including Apollo ball valves, automation
products, backflow preventers, butterfly valves, check valves, investment cast
steel products, marine valves, safety relief valves, strainers and plumbing
and heating products for commercial and industrial applications. The $10.8
million investment, made at the beginning of the year, increased the
Company's interest in Conbraco to approximately 34 percent.

Net cash used in financing activities totaled $3.5 million consisting
primarily of $3.9 million for debt repayments partially offset by proceeds
from the sale of treasury stock.

The Company has a $150 million unsecured line-of-credit (Credit
Facility) which expires in November 2006. At year-end, the Company had no
borrowings against the Credit Facility. Approximately $7.2 million in
letters of credit were backed by the Credit Facility at the end of 2003. At
December 27, 2003, the Company's total debt was $14.3 million or 2 percent
of its total capitalization.

Covenants contained in the Company's financing obligations require,
among other things, the maintenance of minimum levels of working capital,
tangible net worth, and debt service coverage ratios. At December 27, 2003,
the Company was in compliance with all of its debt covenants.

The Company expects to invest between $20 and $25 million for capital
expenditures during 2004.

F-6

Contractual cash obligations of the Company at December 27, 2003
included the following:

(In millions)

Payments Due by Year
2005- 2007-
Total 2004 2006 2008 Thereafter

Long-term debt,
including capital
lease obligations $ 14.3 $ 2.8 $ 0.7 $ 0.5 $ 10.3
Operating leases 22.4 6.6 8.4 5.6 1.8
Purchase commitments (a) 143.3 143.3 - - -
----- ----- ----- ----- -----
Total
contractual
cash obligations $180.0 $152.7 $ 9.1 $ 6.1 $ 12.1
===== ===== ===== ===== =====

(a) Purchase commitments include $17.7 million of open fixed price
purchases of raw materials. Additionally, the Company has contractual
supply commitments, totaling $125.6 million at year-end prices, for raw
materials consumed in the ordinary course of business; these contracts
contain variable pricing based upon COMEX.

The above obligations will be satisfied with existing cash (which net
of indebtedness is $240.1 million), and cash generated by operations.
Additionally, the cash flow to fund pension and OPEB obligations is
insignificant. During 2003, funded pension assets recovered a significant
portion of market value declines experienced in 2002 and 2001. The Company
has no off-balance sheet financing arrangements except for the operating
leases identified above.

Fluctuations in the cost of copper and other raw materials affect the
Company's liquidity. Changes in material costs directly impact components
of working capital, primarily inventories and accounts receivable. Since
the end of the third quarter of 2003, there has been a significant increase
in COMEX copper prices. From the September 30, 2003 close through late
February of 2004, the cost has risen to approximately $1.30 per pound, or
approximately 60 percent. This rise in the price of cathode has also
resulted in sharp increases in the open market price for copper scrap and,
to a lesser extent, the price of brass scrap.

Subsequent to year-end the Company's Board of Directors declared a
regular quarterly dividend of 10 cents per share on its common stock.
Payment of dividends in the future is dependent upon the Company's
financial condition, cash flows, capital requirements, earnings, and other
factors.

F-7

Management believes that cash provided by operations and currently
available cash of $255.1 million will be adequate to meet the Company's
normal future capital expenditure and operational needs. The Company's
current ratio was 5 to 1 at December 27, 2003.

The Company's Board of Directors has authorized the repurchase until
October 2004 of up to ten million shares of the Company's common stock
through open market transactions or through privately negotiated
transactions. The Company has no obligation to purchase any shares and may
cancel, suspend, or extend the time period for the purchase of shares at
any time. Any purchases will be funded primarily through existing cash and
cash from operations. The Company may hold any shares purchased in
treasury or use a portion of the repurchased shares for employee benefit
plans, as well as for other corporate purposes. Through December 27, 2003,
the Company had repurchased approximately 2.4 million shares under this
authorization.

Environmental Matters

The Company ended 2003 with total environmental reserves of
approximately $9.6 million. Based upon information currently available,
management believes that the outcome of pending environmental matters will
not materially affect the overall financial position and results of
operations of the Company.

MARKET RISKS

The Company is exposed to market risk from changes in foreign currency
exchange, raw material costs, and energy costs. To reduce such risks, the
Company may periodically use financial instruments. All hedging transactions
are authorized and executed pursuant to policies and procedures. Further,
the Company does not buy or sell financial instruments for trading purposes.
A discussion of the Company's accounting for derivative instruments and
hedging activities is included in the Summary of Significant Accounting
Policies in the Notes to Consolidated Financial Statements.

Foreign Currency Exchange Rates

Foreign currency exposures arising from transactions include firm
commitments and anticipated transactions denominated in a currency other
than an entity's functional currency. The Company and its subsidiaries
generally enter into transactions denominated in their respective functional
currencies. Foreign currency exposures arising from transactions denominated
in currencies other than the functional currency are not material; however,
the Company may utilize certain forward fixed-rate contracts to hedge such
transactional exposures. Gains and losses with respect to these positions
are deferred in stockholders' equity as a component of comprehensive income
and reflected in earnings upon collection of receivables. At year-end, the
Company had no open forward contracts to exchange foreign currencies.

F-8

The Company's primary foreign currency exposure arises from foreign-
denominated revenues and profits and their translation into U.S. dollars.
The primary currencies to which the Company is exposed include the Canadian
dollar, the British pound sterling, the Euro, and the Mexican peso. The
Company generally views as long-term its investments in foreign subsidiaries
with a functional currency other than the U.S. dollar. As a result, the
Company generally does not hedge these net investments. The net investment
in foreign subsidiaries translated into U.S. dollars using the year-end
exchange rates was $60.6 million at December 27, 2003 and $73.6 million at
December 28, 2002. The potential loss in value of the Company's net
investment in foreign subsidiaries resulting from a hypothetical 10 percent
adverse change in quoted foreign currency exchange rates at December 27,
2003 and December 28, 2002 amounted to $6.1 million and $7.6 million,
respectively. This change would be reflected in the equity section of the
Company's Consolidated Balance Sheet.

Cost and Availability of Raw Materials and Energy

Copper and brass represent the largest component of the Company's
variable costs of production. The cost of these materials is subject to
global market fluctuations caused by factors beyond the Company's control.
Significant increases in the cost of metal, to the extent not reflected in
prices for the Company's finished products, or the lack of availability
could materially and adversely affect the Company's business, results of
operations and financial condition.

The Company occasionally enters into forward fixed-price arrangements
with certain customers. The Company may utilize forward contracts to hedge
risks associated with forward fixed-price arrangements. The Company may also
utilize forward contracts to manage price risk associated with inventory.
Gains or losses with respect to these positions are deferred in
stockholders' equity as a component of comprehensive income and reflected in
earnings upon the sale of inventory. Periodic value fluctuations of the
contracts generally offset the value fluctuations of the underlying fixed-
price transactions or inventory. At year-end, the Company held open forward
contracts to purchase approximately $1.0 million of copper over the next 12
months.

Futures contracts may also be used to manage price risk associated with
natural gas purchases. Gains and losses with respect to these positions are
deferred in stockholders' equity as a component of comprehensive income and
reflected in earnings upon consumption of natural gas. Periodic value
fluctuations of the contracts generally offset the value fluctuations of the
underlying natural gas prices. At year-end, the Company held open hedge
forward contracts to purchase approximately $1.0 million of natural gas over
the next three months.

F-9

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's Consolidated Financial Statements are prepared in
accordance with accounting principles generally accepted in the United
States. Application of these principles requires the Company to make
estimates, assumptions, and judgments that affect the amounts reported in
the Consolidated Financial Statements. Management believes the most complex
and sensitive judgments, because of their significance to the Consolidated
Financial Statements, result primarily from the need to make estimates about
the effects of matters which are inherently uncertain. The accounting
policies and estimates that are most critical to aid in understanding and
evaluating the results of operations and financial position of the Company
include the following:

Inventory Valuation

Inventories are valued at the lower of cost or market. The most
significant component of the Company's inventory is copper; the domestic
copper inventories are valued under the LIFO method. The market price of
copper cathode and scrap are subject to volatility. During periods when
open market prices decline below net book value, the Company may need to
provide an allowance to reduce the carrying value of its inventory. In
addition, certain items in inventory may be considered obsolete and, as
such, the Company may establish an allowance to reduce the carrying value of
those items to their net realizable value. Changes in these estimates
related to the value of inventory, if any, may result in a materially
adverse or positive impact on the Company's reported financial position or
results of operations. The Company recognizes the impact of any changes in
estimates, assumptions, and judgments in income in the period in which it is
determined.

Deferred Taxes

Deferred tax assets and liabilities are recognized on the difference
between the financial statement and the tax law treatment of certain items.
Realization of certain components of deferred tax assets is dependent upon
the occurrence of future events. The Company records a valuation allowance
to reduce its deferred tax asset to the amount it believes is more likely
than not to be realized. These valuation allowances can be impacted by
changes in tax laws, changes to statutory tax rates, and future taxable
income levels and are based on the Company's judgment, estimates, and
assumptions regarding those future events. In the event the Company were to
determine that it would not be able to realize all or a portion of the net
deferred tax assets in the future, the Company would increase the valuation
allowance through a charge to income in the period that such determination
is made. Conversely, if the Company were to determine that it would be able
to realize its deferred tax assets in the future, in excess of the net
carrying amounts, the Company would decrease the recorded valuation
allowance through an increase to income in the period that such
determination is made.

F-10

Environmental Reserves

The Company recognizes an environmental liability when it is probable
the liability exists and the amount is reasonably estimable. The Company
estimates the duration and extent of its remediation obligations based upon
reports of outside consultants, internal analyses of clean-up costs and
ongoing monitoring, communications with regulatory agencies, and changes in
environmental law. If the Company were to determine that its estimates of
the duration or extent of its environmental obligations were no longer
accurate, the Company would adjust its environmental liabilities accordingly
in the period that such determination is made.

Allowance for Doubtful Accounts

The Company provides an allowance for receivables that may not be fully
collected. In circumstances where the Company is aware of a customer's
inability to meet its financial obligations (i.e., bankruptcy filings or
substantial down-grading of credit ratings), it records a reserve for bad
debts against amounts due to reduce the net recognized receivable to the
amount it believes most likely will be collected. For all other customers,
the Company recognizes reserves for bad debts based on its historical
collection experience. If circumstances change (i.e., greater than expected
defaults or an unexpected material adverse change in a major customer's
ability to meet its financial obligations), the Company's estimates of the
recoverability of amounts due could be reduced by a material amount.

Recently Issued Accounting Standards

The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard No. 149, "An Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", in April 2003 and Statement
of Financial Accounting Standard No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity" in May 2003,
revised Statement of Financial Accounting Standard No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits - an amendment
of FASB Statements No. 87, 88 and 106", in December 2003, and revised FASB
Interpretation No. 46, "Variable Interest Entities", (the Statements). The
provisions of these Statements, which are currently not applicable to the
Company, became, or will become, effective in whole or in part at various
times in 2003 and thereafter. These Statements will be considered and
adopted, where and when applicable, by the Company at the appropriate future
point in time. None of the Statements had a significant effect on the
results of operations or financial position of the Company reported in the
accompanying Consolidated Financial Statements.

F-11

Cautionary Statement Regarding Forward-Looking Information

This Annual Report contains various forward-looking statements and
includes assumptions concerning the Company's operations, future results and
prospects. These forward-looking statements are based on current
expectations and are subject to risk and uncertainties. In connection with
the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995, the Company provides the following cautionary statement identifying
important economic, political, and technological factors, among others, the
absence of which could cause actual results or events to differ materially
from those set forth in or implied by the forward-looking statements and
related assumptions.

Such factors include: (i) the current and projected future business
environment, including interest rates and capital and consumer spending;
(ii) the domestic housing and commercial construction industry environment;
(iii) availability and price fluctuations in commodities (including copper,
natural gas, and other raw materials, including crude oil that indirectly
effects plastic resins); (iv) competitive factors and competitor responses
to the Company's initiatives; (v) stability of government laws and
regulations, including taxes; and (vi) continuation of the environment to
make acquisitions, domestic and foreign, including regulatory requirements
and market values of candidates.

F-12

Mueller Industries, Inc.
Consolidated Statements of Income
Years Ended December 27, 2003, December 28, 2002, and December 29, 2001

(In thousands, except per share data)

2003 2002 2001

Net sales $ 999,078 $ 952,983 $ 969,106

Cost of goods sold 815,849 744,781 740,366
--------- --------- ---------
Gross profit 183,229 208,202 228,740

Depreciation and amortization 38,954 37,440 39,461
Selling, general, and
administrative expense 94,891 85,006 83,750
--------- --------- ---------
Operating income 49,384 85,756 105,529

Interest expense (1,168) (1,460) (3,311)
Environmental expense (1,165) (1,639) (3,600)
Other income, net 4,385 5,810 5,787
--------- --------- ---------
Income from continuing operations
before income taxes 51,436 88,467 104,405

Income tax expense (7,215) (17,290) (38,982)
--------- --------- ---------

Income from continuing operations 44,221 71,177 65,423

Discontinued operations, net of
income taxes:
Income (loss) from operation of
discontinued operations (539) (886) 1,532
Gain on disposition of
discontinued operations 1,699 7,701 -
--------- --------- ---------

Net income $ 45,381 $ 77,992 $ 66,955
========= ========= =========

See accompanying notes to consolidated financial statements.

F-13

Mueller Industries, Inc.
Consolidated Statements of Income (continued)
Years Ended December 27, 2003, December 28, 2002, and December 29, 2001

(In thousands, except per share data)

2003 2002 2001

Weighted average shares for basic
earnings per share 34,264 33,993 33,409
Effect of dilutive stock options 2,597 3,055 3,836
--------- --------- ---------
Adjusted weighted average shares for
diluted earnings per share 36,861 37,048 37,245
========= ========= =========

Basic earnings (loss) per share:
From continuing operations $ 1.29 $ 2.09 $ 1.96
From discontinued operations (0.02) (0.03) 0.04
From gain on disposition of
discontinued operations 0.05 0.23 -
--------- --------- ---------

Basic earnings per share $ 1.32 $ 2.29 $ 2.00
========= ========= =========

Diluted earnings (loss) per share:
From continuing operations $ 1.19 $ 1.92 $ 1.76
From discontinued operations (0.01) (0.02) 0.04
From gain on disposition of
discontinued operations 0.05 0.21 -
--------- --------- ---------

Diluted earnings per share $ 1.23 $ 2.11 $ 1.80
========= ========= =========

See accompanying notes to consolidated financial statements.

F-14

Mueller Industries, Inc.
Consolidated Balance Sheets
As of December 27, 2003 and December 28, 2002

(In thousands)

2003 2002

Assets
Current assets
Cash and cash equivalents $ 255,088 $ 217,601

Accounts receivable, less allowance for
doubtful accounts of $4,734 in 2003
and $6,443 in 2002 163,006 132,427

Inventories 140,548 142,953

Current deferred income taxes 9,035 4,506

Other current assets 2,678 2,860
---------- ----------

Total current assets 570,355 500,347

Property, plant, and equipment, net 345,537 352,469

Goodwill, net 104,849 105,551

Other assets 34,443 29,580
---------- ----------

Total Assets $ 1,055,184 $ 987,947
========== ==========

See accompanying notes to consolidated financial statements.

F-15

Mueller Industries, Inc.
Consolidated Balance Sheets (continued)
As of December 27, 2003 and December 28, 2002

(In thousands, except share data)

2003 2002

Liabilities and Stockholders' Equity

Current liabilities
Current portion of long-term debt $ 2,835 $ 4,161
Accounts payable 42,081 41,004
Accrued wages and other employee costs 25,631 26,199
Other current liabilities 42,959 34,987
---------- ----------
Total current liabilities 113,506 106,351

Long-term debt, less current portion 11,437 14,005
Pension liabilities 18,077 22,364
Postretirement benefits other than pensions 13,566 13,186
Environmental reserves 9,560 9,110
Deferred income taxes 63,734 59,269
Other noncurrent liabilities 10,238 9,718
---------- ----------
Total liabilities 240,118 234,003
---------- --------

Minority interest in subsidiaries 208 421

Stockholders' equity
Preferred stock - shares authorized 4,985,000;
none outstanding - -

Series A junior participating preferred
stock - $1.00 par value; shares
authorized 15,000; none outstanding - -

Common stock - $.01 par value; shares
authorized 100,000,000; issued 40,091,502;
outstanding 34,276,343 in 2003
and 34,257,419 in 2002 401 401
Additional paid-in capital, common 259,110 258,939
Retained earnings 655,495 610,114
Accumulated other comprehensive loss (5,586) (21,133)
Treasury common stock, at cost (94,562) (94,798)
---------- ----------
Total stockholders' equity 814,858 753,523
---------- ----------
Commitments and contingencies - -
---------- ----------
Total Liabilities and Stockholders' Equity $ 1,055,184 $ 987,947
========== ==========

See accompanying notes to consolidated financial statements.

F-16

Mueller Industries, Inc.
Consolidated Statements of Cash Flows
Years Ended December 27, 2003, December 28, 2002, and December 29, 2001

(In thousands)

2003 2002 2001

Operating activities:
Net income from continuing operations $ 44,221 $ 71,177 $ 65,423
Reconciliation of net income from
continuing operations to net cash
provided by operating activities:
Depreciation 38,531 36,979 34,539
Amortization 423 461 4,922
Income tax benefit from exercise
of stock options 18 13,243 356
Deferred income taxes (287) 9,686 15,737
Provision for doubtful
accounts receivable 3,172 374 526
Minority interest in subsidiaries,
net of dividend paid (213) 150 (26)
Loss (gain) on disposal of properties 290 (485) (249)
Equity in loss of
unconsolidated subsidiaries 460 - -
Changes in assets and liabilities,
net of businesses acquired:
Receivables (35,129) 6,021 1,293
Inventories 2,948 (13,744) 13,778
Other assets 3,240 (4,154) 1,534
Current liabilities 14,620 3,683 (14,591)
Other liabilities (54) (91) (585)
Other, net 1,176 917 (1,204)
--------- --------- ---------
Net cash provided by
operating activities 73,416 124,217 121,453
--------- --------- ---------

Investing activities:
Proceeds from sale of Utah
Railway Company - 55,403 -
Capital expenditures (27,236) (23,265) (46,624)
Acquisition of businesses - (20,457) -
Proceeds from sales of properties 1,412 8,165 2,715
Purchase of Conbraco Industries, Inc.
common stock (10,806) (7,320) -
Escrowed IRB proceeds 449 2,445 (2,515)
--------- --------- ---------
Net cash (used in) provided by
investing activities (36,181) 14,971 (46,424)
--------- --------- ---------

See accompanying notes to consolidated financial statements.

F-17

Mueller Industries, Inc.
Consolidated Statements of Cash Flows (continued)
Years Ended December 27, 2003, December 28, 2002, and December 29, 2001

(In thousands)

2003 2002 2001

Financing activities:
Repayments of long-term debt $ (3,894) $ (34,119) $ (65,911)
Acquisition of treasury stock - (14,754) -
Proceeds from the sale of
treasury stock 389 3,204 1,729
Proceeds from issuance of
long-term debt - - 10,000
--------- --------- ---------
Net cash used in financing activities (3,505) (45,669) (54,182)
--------- --------- ---------

Effect of exchange rate changes on cash 3,505 719 (1,084)
--------- --------- ---------

Increase in cash and
cash equivalents 37,235 94,238 19,763
Cash provided by
discontinued operations 252 1,501 1,831
Cash and cash equivalents at the
beginning of the year 217,601 121,862 100,268
--------- --------- ---------

Cash and cash equivalents at the
end of the year $ 255,088 $ 217,601 $ 121,862
========= ========= =========

For supplemental disclosures of cash flow information, see
Notes 1, 5, 7, and 13.

See accompanying notes to consolidated financial statements.

F-18

Mueller Industries, Inc.
Consolidated Statements of Stockholders' Equity
Years Ended December 27, 2003, December 28, 2002, and December 29, 2001
(In thousands)

Accumulated
Common Stock Additional Other Treasury Stock
Number Paid-In Retained Comprehensive Number
of Shares Amount Capital Earnings Income (Loss) of Shares Cost Total

Balance, December 30, 2000 40,092 $ 401 $ 260,979 $ 465,167 $ (11,826) 6,734 $(100,616) $ 614,105
Comprehensive income:
Net income - - - 66,955 - - - 66,955
Other comprehensive
income (loss):
Foreign currency translation - - - - (4,564) - - (4,564)
Minimum pension liability
adjustment, net of
applicable income tax
benefit of $1,165 - - - - (4,370) - - (4,370)
Cumulative effect of change
in accounting for
derivative financial
instruments, net of
applicable income taxes
of $75 - - - - 122 - - 122
Change in fair value of
derivatives, net of
applicable income tax
benefit of $1,414 - - - - (2,306) - - (2,306)
Losses reclassified into
earnings from other
comprehensive income, net
of applicable income tax
benefit of $556 - - - - 906 - - 906
--------
Comprehensive income 56,743
Issuance of shares
under incentive
stock option plan - - 312 - - (109) 1,417 1,729
Tax benefit related to
employee stock options - - 356 - - - - 356
------- ---- -------- -------- -------- ------ -------- --------
Balance, December 29, 2001 40,092 401 261,647 532,122 (22,038) 6,625 (99,199) 672,933

See accompanying notes to consolidated financial statements.

F-19

Mueller Industries, Inc.
Consolidated Statements of Stockholders' Equity (continued)
Years Ended December 27, 2003, December 28, 2002, and December 29, 2001
(In thousands)

Accumulated
Common Stock Additional Other Treasury Stock
Number Paid-In Retained Comprehensive Number
of Shares Amount Capital Earnings Income (Loss) of Shares Cost Total

Balance, December 29, 2001 40,092 $ 401 $ 261,647 $ 532,122 $ (22,038) 6,625 $ (99,199) $ 672,933
Comprehensive income:
Net income - - - 77,992 - - - 77,992
Other comprehensive
income (loss):
Foreign currency translation - - - - 10,706 - - 10,706
Minimum pension liability
adjustment, net of
applicable income taxes
of $1,153 - - - - (12,747) - - (12,747)
Change in fair value of
derivatives, net of
applicable income tax
benefit of $386 - - - - (630) - - (630)
Losses reclassified into
earnings from other
comprehensive income, net
of applicable income tax
benefit of $685 - - - - 3,576 - - 3,576
--------
Comprehensive income 78,897
Issuance of shares
under incentive
stock option plan - - (15,951) - - (1,247) 19,155 3,204
Repurchase of common stock - - - - - 456 (14,754) (14,754)
Tax benefit related to
employee stock options - - 13,243 - - - - 13,243
------- ---- -------- -------- -------- ------ -------- --------
Balance, December 28, 2002 40,092 401 258,939 610,114 (21,133) 5,834 (94,798) 753,523

See accompanying notes to consolidated financial statements.

F-20

Mueller Industries, Inc.
Consolidated Statements of Stockholders' Equity (continued)
Years Ended December 27, 2003, December 28, 2002, and December 29, 2001
(In thousands)

Accumulated
Common Stock Additional Other Treasury Stock
Number Paid-In Retained Comprehensive Number
of Shares Amount Capital Earnings Income (Loss) of Shares Cost Total

Balance, December 28, 2002 40,092 $ 401 $ 258,939 $ 610,114 $ (21,133) 5,834 $ (94,798) $ 753,523
Comprehensive income:
Net income - - - 45,381 - - - 45,381
Other comprehensive
income:
Foreign currency translation - - - - 10,941 - - 10,941
Minimum pension liability
adjustment, net of
applicable income taxes
of $3 - - - - 4,277 - - 4,277
Change in fair value of
derivatives, net of
applicable income tax
benefit of $156 - - - - 255 - - 255
Losses reclassified into
earnings from other
comprehensive income, net
of applicable income tax
benefit of $45 - - - - 74 - - 74
--------
Comprehensive income 60,928
Issuance of shares
under incentive
stock option plan - - 153 - - (19) 236 389
Tax benefit related to
employee stock options - - 18 - - - - 18
------- ---- -------- -------- -------- ------ -------- --------
Balance, December 27, 2003 40,092 $ 401 $ 259,110 $ 655,495 $ (5,586) 5,815 $ (94,562) $ 814,858
======= ==== ======== ======== ======== ====== ======== ========

See accompanying notes to consolidated financial statements.

F-21

Notes to Consolidated Financial Statements

Note 1 - Summary of Significant Accounting Policies

Nature of Operations

The principal business of Mueller Industries, Inc. is the manufacture
and sale of copper tube and fittings; brass and copper alloy rod, bar, and
shapes; aluminum and brass forgings; aluminum and copper impact extrusions;
plastic fittings and valves; refrigeration valves and fittings; fabricated
tubular products; and gas valves and assemblies. The Company markets its
products to the HVAC, plumbing, refrigeration, hardware, and other
industries. Mueller's operations are located throughout the United States
and in Canada, Mexico, and Great Britain.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Mueller
Industries, Inc. and its majority owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The minority interest represents separate private ownership of 25 percent of
Ruby Hill Mining Company and 19 percent of Richmond-Eureka Mining Company.

Revenue Recognition

Revenue is recognized when products are shipped. The Company classifies
the cost of shipping its product to customers as a component of cost of goods
sold.

Cash Equivalents

Temporary investments with maturities of three months or less are
considered to be cash equivalents. These investments are stated at cost. At
December 27, 2003 and December 28, 2002, temporary investments consisted of
certificates of deposit, commercial paper, bank repurchase agreements, and
U.S. and foreign government securities totaling $254.9 million and $219.7
million, respectively.

Allowance for Doubtful Accounts

The Company provides an allowance for receivables that may not be fully
collected. In circumstances where the Company is aware of a customer's
inability to meet its financial obligations (i.e., bankruptcy filings or
substantial down-grading of credit ratings), it records a reserve for bad
debts against amounts due to reduce the net recognized receivable to the
amount it believes most likely will be collected. For all other customers,
the Company recognizes reserves for bad debts based on its historical
collection experience. If circumstances change (i.e., greater than expected
defaults or an unexpected material adverse change in a major customer's
ability to meet its financial obligations), the Company's estimates of the
recoverability of amounts due could be reduced by a material amount.

F-22

Inventories

The Company's inventories are valued at the lower of cost or market.
The material component of its U.S. copper tube and copper fittings
inventories is valued on a last-in, first-out (LIFO) basis. Other
inventories, including the non-material components of U.S. copper tube and
copper fittings, are valued on a first-in, first-out (FIFO) basis. Inventory
costs include material, labor costs, and manufacturing overhead.

The market price of copper cathode and scrap are subject to
volatility. During periods when open market prices decline below net book
value, the Company may need to provide an allowance to reduce the carrying
value of its inventory. In addition, certain items in inventory may be
considered obsolete and, as such, the Company may establish an allowance to
reduce the carrying value of those items to their net realizable value.
Changes in these estimates related to the value of inventory, if any, may
result in a materially adverse or positive impact on the Company's reported
financial position or results of operations. The Company recognizes the
impact of any changes in estimates, assumptions, and judgments in income in
the period in which it is determined.

Property, Plant, and Equipment

Property, plant, and equipment are stated at cost. Depreciation of
buildings, machinery, and equipment is provided on the straight-line method
over the estimated useful lives ranging from 20 to 40 years for buildings and
five to 20 years for machinery and equipment.

Goodwill and Other Intangible Assets

Goodwill represents cost in excess of fair values assigned to the
underlying net assets of acquired businesses and, prior to the adoption of
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" (SFAS No. 142) in 2002, was amortized using the straight-
line method over 20 to 25 years. Following the adoption of SFAS No. 142,
amortization of goodwill was discontinued. All other intangible assets are
amortized over their estimated useful lives.

Under SFAS No. 142, goodwill is subject to impairment testing which
compares carrying values to fair values and, when appropriate, the carrying
value of these assets is required to be reduced to fair value. The Company
performs its annual impairment assessment in the fourth quarter of each
fiscal year, unless circumstances dictate more frequent assessments. For
testing purposes, the Company uses components of its reporting segments;
components of a segment having similar economic characteristics are combined.
No impairment loss resulted from the 2003 or 2002 tests performed under SFAS
No. 142. There can be no assurance that goodwill impairment will not occur
in the future.

F-23

Environmental Reserves

The Company recognizes an environmental liability when it is probable
the liability exists and the amount is reasonably estimable. The Company
estimates the duration and extent of its remediation obligations based upon
reports of outside consultants, internal analyses of clean-up costs and
ongoing monitoring, communications with regulatory agencies, and changes in
environmental law. If the Company were to determine that its estimates of
the duration or extent of its environmental obligations were no longer
accurate, the Company would adjust its environmental liabilities accordingly
in the period that such determination is made.

Earnings Per Share

Basic earnings per share is computed based on the average number of
common shares outstanding. Diluted earnings per share reflects the increase
in average common shares outstanding that would result from the assumed
exercise of outstanding stock options calculated using the treasury stock
method.

Income Taxes

Deferred tax assets and liabilities are recognized on the difference
between the financial statement and the tax law treatment of certain items.
Realization of certain components of deferred tax assets is dependent upon
the occurrence of future events. The Company records a valuation allowance
to reduce its deferred tax asset to the amount it believes is more likely
than not to be realized. These valuation allowances can be impacted by
changes in tax laws, changes to statutory tax rates, and future taxable
income levels and are based on the Company's judgment, estimates, and
assumptions regarding those future events. In the event the Company were to
determine that it would not be able to realize all or a portion of the net
deferred tax assets in the future, the Company would increase the valuation
allowance through a charge to income in the period that such determination is
made. Conversely, if the Company were to determine that it would be able to
realize its deferred tax assets in the future, in excess of the net carrying
amounts, the Company would decrease the recorded valuation allowance through
an increase to income in the period that such determination is made.

Stock-Based Compensation

The Company accounts for its stock-based compensation plans using the
intrinsic value method prescribed in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB No. 25), and related
Interpretations. No stock-based employee compensation expense is reflected
in net income because the exercise price of the Company's incentive employee
stock options equals the market price of the underlying stock on the date of
grant. The following table illustrates the effect on net income and earnings
per share if the Company had applied the fair value recognition provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS No. 123), to stock-based employee compensation.

F-24

(In thousands, except per share data)

2003 2002 2001

Net income $ 45,381 $ 77,992 $ 66,955
SFAS No. 123 compensation
expense, net of income taxes (2,028) (2,485) (1,991)
--------- --------- ---------
SFAS No. 123 pro forma
net income $ 43,353 $ 75,507 $ 64,964
========= ========= =========

Pro forma earnings per share:
Basic $ 1.27 $ 2.22 $ 1.94
Diluted $ 1.18 $ 2.04 $ 1.75

Earnings per share, as reported:
Basic $ 1.32 $ 2.29 $ 2.00
Diluted $ 1.23 $ 2.11 $ 1.80

Concentrations of Credit and Market Risk

Concentrations of credit risk with respect to accounts receivable are
limited due to the large number of customers comprising the Company's
customer base, and their dispersion across different geographic areas and
different industries, including HVAC, plumbing, refrigeration, hardware,
automotive, OEMs, and others.

The Company minimizes its exposure to base metal price fluctuations
through various strategies. Generally, it prices an equivalent amount of
copper raw material, under flexible pricing arrangements it maintains with
its suppliers, at the time it determines the selling price of finished
products to its customers.

At December 27, 2003, the Company held open forward commitments to
purchase approximately $1.0 million of copper in the next 12 months and
approximately $1.0 million of natural gas in the next three months.

F-25

Derivative Instruments and Hedging Activities

The Company has utilized forward contracts to manage the volatility
related to purchases of copper and natural gas, and sales denominated in
foreign currencies. In addition, the Company has reduced its exposure to
increases in interest rates by entering into an interest rate swap contract.
These contracts have been designated as cash flow hedges. In accordance with
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS No. 133), the Company has
recorded the fair value of these contracts in the Consolidated Balance Sheet.
The related gains and losses on the contracts are deferred in stockholders'
equity as a component of comprehensive income. With respect to the copper
and natural gas contracts, deferred gains and losses are recognized in cost
of goods sold in the period in which the related sales or consumption of the
commodities are recognized. Deferred gains and losses on foreign currency
contracts are recognized in selling, general, and administrative expense in
the period in which the foreign sales are collected. Deferred gain or loss
on the interest rate swap contract is recognized in interest expense in the
period in which the related interest payment being hedged is expensed. To
the extent that the changes in the fair value of the contracts do not
perfectly offset the changes in the present value of the hedged transactions,
that ineffective portion is immediately recognized in earnings. Gains and
losses recognized by the Company in 2003 related to the ineffective portion
of its hedging instruments, as well as gains and losses related to the
portion of the hedging instruments excluded from the assessment of hedge
effectiveness, were not material to the Company's Consolidated Financial
Statements. Should these contracts no longer meet hedge criteria in
accordance with SFAS No. 133, either through lack of effectiveness or because
the hedged transaction is not probable of occurring, all deferred gains and
losses related to the hedge will be immediately reclassified from accumulated
other comprehensive loss into earnings.

The Company primarily executes derivative contracts with major financial
institutions. These counterparties expose the Company to credit risk in the
event of non-performance. The amount of such exposure is limited to the
unpaid portion of amounts due to the Company pursuant to terms of the
derivative instruments, if any. Although there are no collateral
requirements, if a downgrade in the credit rating of these counterparties
occurs, management believes that this exposure is mitigated by provisions in
the derivative arrangements which allow for the legal right of offset of any
amounts due to the Company from the counterparties with any amounts payable
to the counterparties by the Company. As a result, management considers the
risk of counterparty default to be minimal.

Fair Value of Financial Instruments

The carrying amounts for cash and cash equivalents, accounts receivable,
and accounts payable approximate fair value due to the short-term maturity of
these instruments. Using a discounted cash flow analysis, the fair value of
the Company's long-term debt instruments exceeded their carrying value by
$1.2 million and $1.0 million at December 27, 2003 and December 28, 2002,
respectively, based on the estimated current incremental borrowing rates for
similar types of borrowing arrangements. The fair value of the Company's
interest rate swap contract was approximately $1.0 million at December 27,
2003. This value represents the estimated amount the Company would need to

F-26

pay if such contract were terminated before maturity, principally resulting
from market interest rate decreases. The contracted rates on committed
forward contracts do not exceed the market rates for similar term contracts
at December 27, 2003. The Company estimates the fair value of contracts by
obtaining quoted market prices.

Fair value estimates are made at a specific point in time based on
relevant market information about the financial instrument. These estimates
are subjective in nature and involve uncertainties and matters of significant
judgment and, therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.

Foreign Currency Translation

For foreign subsidiaries, the functional currency is the local currency.
Balance sheet accounts are translated at exchange rates in effect at the end
of the year and income statement accounts are translated at average exchange
rates for the year. Translation gains and losses are included in
stockholders' equity as a component of comprehensive income. Transaction
gains and losses included in the Consolidated Statements of Income were not
significant.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates, assumptions, and judgments that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

Recently Issued Accounting Standards

The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard No. 149, "An Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", in April 2003 and Statement of
Financial Accounting Standard No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity", in May 2003,
revised Statement of Financial Accounting Standard No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits - an amendment
of FASB Statements No. 87, 88 and 106", in December 2003, and revised FASB
Interpretation No. 46, "Variable Interest Entities", (the Statements). The
provisions of these Statements, which are currently not applicable to the
Company, became, or will become, effective in whole or in part at various
times in 2003 and thereafter. These Statements will be considered and adopted,
where and when applicable, by the Company at the appropriate future point in
time. None of the Statements had a significant effect on the results of
operations or financial position of the Company reported in the accompanying
Consolidated Financial Statements.

F-27

Note 2 - Inventories

(In thousands)

2003 2002

Raw material and supplies $ 22,261 $ 22,692
Work-in-process 20,395 21,477
Finished goods 97,892 98,784
---------- ----------
Inventories $ 140,548 $ 142,953
========== ==========

Inventories valued using the LIFO method totaled $34.2 million at
December 27, 2003 and $37.2 million at December 28, 2002. At December 27,
2003, the approximate FIFO cost of such inventories was $42.0 million. At
December 28, 2002, the FIFO cost of inventories approximated the LIFO value.

Note 3 - Property, Plant, and Equipment, Net

(In thousands)

2003 2002

Land and land improvements $ 8,753 $ 9,332
Buildings 90,279 86,924
Machinery and equipment 466,006 442,987
Construction in progress 16,976 13,618
---------- ----------
582,014 552,861
Less accumulated depreciation (236,477) (200,392)
---------- ----------
Property, plant, and equipment, net $ 345,537 $ 352,469
========== ==========

Note 4 - Goodwill

Effective at the beginning of 2002, the Company ceased the amortization
of goodwill in accordance with SFAS No. 142. A reconciliation of reported
net income and earnings per share to pro forma net income and earnings per
share that would have resulted if SFAS No. 142 had been adopted at the
beginning of 2001 is as follows:

F-28

(In thousands, except per share data)

2003 2002 2001

Net income $ 45,381 $ 77,992 $ 66,955
Goodwill amortization, net of tax - - 3,849
--------- --------- ---------
Pro forma net income $ 45,381 $ 77,992 $ 70,804
========= ========= =========

Pro forma earnings per share:
Basic $ 1.32 $ 2.29 $ 2.12
Diluted $ 1.23 $ 2.11 $ 1.90

Earnings per share, as reported:
Basic $ 1.32 $ 2.29 $ 2.00
Diluted $ 1.23 $ 2.11 $ 1.80

The changes in the carrying amount of goodwill during the year ended December
27, 2003 were as follows:

(In thousands)

Standard Industrial
Products Products
Division Division Total

Balance at December 29, 2001 $ 90,249 $ 8,500 $ 98,749
Goodwill acquired during the year 4,610 2,192 6,802
--------- --------- ---------
Balance at December 28, 2002 94,859 10,692 105,551
Adjustments to the fair value
of businesses acquired during 2002 (789) 87 (702)
--------- --------- ---------
Balance at December 27, 2003 $ 94,070 $ 10,779 $ 104,849
========= ========= =========

F-29

Note 5 - Long-Term Debt

(In thousands)

2003 2002

2001 Series IRBs with interest at
6.63%, due 2021 $ 10,000 $ 10,000
1997 Series IRBs with interest at
7.39%, due through 2014 3,125 6,625
Other, including capitalized
lease obligations 1,147 1,541
---------- ----------
14,272 18,166
Less current portion of long-term debt (2,835) (4,161)
---------- ----------
Long-term debt $ 11,437 $ 14,005
========== ==========

The Company has a Credit Agreement (the Agreement) with a syndicate of
five banks establishing an unsecured $150 million revolving credit facility
(the Credit Facility) which matures in November 2006. Borrowings under the
Credit Facility bear interest, at the Company's option, at (i) LIBOR plus a
variable premium or (ii) the greater of Prime or the Federal Funds rate plus
..50 percent. LIBOR advances may be based upon the one, two, three, or six-
month LIBOR. The variable premium over LIBOR is based on certain financial
ratios, and can range from 35 to 50 basis points. At December 27, 2003, the
premium was 35 basis points. Additionally, a facility fee is payable
quarterly on the total commitment and varies from 150 to 250 basis points
based upon the Company's capitalization ratio. Availability of funds under
the Credit Facility is reduced by the amount of certain outstanding letters
of credit, which totaled approximately $7.2 million at December 27, 2003.

Borrowings under the Agreement require the Company, among other things,
to maintain certain minimum levels of net worth and meet certain minimum
financial ratios. At December 27, 2003, the Company was in compliance with
all debt covenants.

Aggregate annual maturities of the Company's debt are $2.8 million, $0.2
million, $0.4 million, $0.3 million, and $0.2 million for the years 2004
through 2008 respectively, and $10.4 million thereafter. Interest paid in
2003, 2002, and 2001 was $1.2 million, $1.6 million, and $5.5 million,
respectively. During 2001, the Company capitalized interest of $1.4 million
related to its major capital improvement programs. No interest was
capitalized in 2003 or in 2002.

The Company has guarantees which are letters of credit issued by the
Company generally to guarantee the payment of insurance deductibles and
retiree health benefits. The terms of the Company's guarantees are generally
one year but are renewable annually as required. The maximum potential
amount of future payments the Company could be required to make under its
guarantees at December 27, 2003 was $7.2 million.

F-30

Note 6 - Stockholders' Equity

On November 10, 1994, the Company declared a dividend distribution of
one Right for each outstanding share of the Company's common stock. Each
Right entitles the holder to purchase one unit consisting of one-thousandth
of a share of Series A Junior Participating Preferred Stock at a purchase
price of $160 per unit, subject to adjustment. The Rights will not be
exercisable, or transferable apart from the Company's common stock, until 10
days following an announcement that a person or affiliated group has
acquired, or obtained the right to acquire, beneficial ownership of 15
percent or more of its common stock other than pursuant to certain offers for
all shares of the Company's common stock that have been determined to be fair
to, and in the best interest of, the Company's stockholders. The Rights,
which do not have voting rights, will be exercisable by all holders (except
for a holder or affiliated group beneficially owning 15 percent or more of
the Company's common stock, whose Rights will be void) so that each holder of
a Right shall have the right to receive, upon the exercise thereof, at the
then current exercise price, the number of shares of the Company's common
stock having a market value of two times the exercise price of the Rights.
All Rights expire on November 10, 2004, and may be redeemed by the Company at
a price of $.01 at any time prior to either their expiration or such time
that the Rights become exercisable.

In the event that the Company is acquired in a merger or other business
combination, or certain other events occur, provision shall be made so that
each holder of a Right (except Rights previously voided) shall have the right
to receive, upon exercise thereof at the then current exercise price, the
number of shares of common stock of the surviving company which at the time
of such transaction would have a market value of two times the exercise price
of the Right.

The Company's Board of Directors has authorized the repurchase until
October 2004 of up to ten million shares of the Company's common stock
through open market transactions or through privately negotiated
transactions. The Company has no obligation to purchase any shares and may
cancel, suspend, or extend the time period for the purchase of shares at any
time. Any purchases will be funded primarily through existing cash and cash
from operations. The Company may hold any shares purchased in treasury or
use a portion of the repurchased shares for employee benefit plans, as well
as for other corporate purposes. Through December 27, 2003, the Company had
repurchased approximately 2.4 million shares under this authorization.

Components of accumulated other comprehensive loss are as follows:

(In thousands)

2003 2002

Cumulative foreign currency translation adjustment $ 7,715 $ (3,226)
Minimum pension liability, net of income tax (12,840) (17,117)
Unrealized derivative losses, net of income tax (461) (790)
---------- ----------
Accumulated other comprehensive loss $ (5,586) $ (21,133)
========== ==========

F-31

The change in cumulative foreign currency translation adjustment
primarily relates to the Company's investment in its U.K. and Canadian
subsidiaries and fluctuations in exchange rates between their local
currencies and the U.S. dollar.

Note 7 - Income Taxes

The components of income from continuing operations before income
taxes were taxed under the following jurisdictions:

(In thousands)

2003 2002 2001

Domestic $ 60,937 $ 90,667 $ 114,984
Foreign (9,501) (2,200) (10,579)
--------- --------- ---------
Income from continuing operations
before income taxes $ 51,436 $ 88,467 $ 104,405
========= ========= =========

Income tax expense attributable to continuing operations consists of
the following:

(In thousands)

2003 2002 2001

Current tax expense:
Federal $ 4,928 $ 6,917 $ 21,532
Foreign 1,744 287 595
State and local 830 400 1,118
--------- --------- ---------
Current tax expense 7,502 7,604 23,245
--------- --------- ---------

Deferred tax (benefit) expense:
Federal 504 9,215 15,032
Foreign (869) 137 (54)
State and local 78 334 759
--------- --------- ---------
Deferred tax (benefit) expense (287) 9,686 15,737
--------- --------- ---------
Income tax expense $ 7,215 $ 17,290 $ 38,982
========= ========= =========

U.S. income and foreign withholding taxes are provided on the earnings
of foreign subsidiaries that are expected to be remitted to the extent that
taxes on the distribution of such earnings would not be offset by foreign tax
credits.

F-32

The difference between the reported income tax expense and a tax
determined by applying the applicable U.S. federal statutory income tax rate
to income from continuing operations before income taxes is reconciled as
follows:

(In thousands)

2003 2002 2001

Expected income tax expense $ 18,003 $ 30,964 $ 36,542
State and local income tax,
net of federal benefit 618 594 1,542
Foreign income taxes 220 1,330 3,657
Valuation allowance (12,190) (14,928) (284)
Other, net 564 (670) (2,475)
--------- --------- ---------
Income tax expense $ 7,215 $ 17,290 $ 38,982
========= ========= =========

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below:

(In thousands)

2003 2002

Deferred tax assets:
Accounts receivable $ 1,640 $ 1,806
Inventories 1,523 1,560
Pension, OPEB, and accrued items 11,103 10,531
Other reserves 8,035 7,905
Net operating loss carryforwards 10,175 22,043
Capital loss carryforwards 1,780 2,575
Foreign tax credits 2,119 -
Alternative minimum tax
credit carryforwards 4,026 4,026
Other 32 398
---------- ----------

Total deferred tax assets 40,433 50,844

Less valuation allowance (20,840) (33,030)
---------- ----------

Deferred tax assets, net of
valuation allowance 19,593 17,814
---------- ----------

F-33

(In thousands)

2003 2002

Deferred tax liabilities:
Property, plant, and equipment 72,884 70,356
Other 1,408 2,221
---------- ----------
Total deferred tax liabilities 74,292 72,577
---------- ----------
Net deferred tax liability $ (54,699) $ (54,763)
========== ==========

As of December 27, 2003, the Company had domestic net operating loss
carryforwards (NOLs) of $1.1 million, which expire in 2006. In addition, the
Company had alternative minimum tax credit carryforwards of approximately
$4.0 million, which are available to reduce future federal regular income
taxes, if any, over an indefinite period, and capital loss carryforwards
totaling $5.1 million, of which $3.8 million expire in 2004, $1.0 million
expire in 2005, and $0.3 million expire in 2006.

As of December 27, 2003, the Company had foreign net operating loss
carryforwards (foreign NOLs) available to offset $32.7 million of foreign
subsidiary income. These foreign NOLs have not been recognized, and are
available to offset foreign subsidiary income over an indefinite period. The
disposition of Mueller Europe S.A. reduced the Company's foreign NOLs in 2002
by $27.9 million, which had been entirely reserved by a valuation allowance.

During 2003, the Company recognized a deferred income tax benefit, upon
the closure of the open tax year, by reducing a valuation allowance of $9.3
million related to an operating loss resulting from the 1999 sale of a
subsidiary. Realization of the tax benefit occurred during the year of sale.

During 2002, the Company realized capital gains totaling approximately
$41.4 million, primarily from the sale of Utah Railway Company. Existing
capital loss carryforwards, which for financial reporting purposes were
entirely reserved by a valuation allowance, were used to offset the 2002
capital gains. The income tax benefit of approximately $14.9 million
generated by eliminating this valuation allowance was recognized in 2002 as a
reduction to income taxes provided for continuing operations in accordance
with SFAS No. 109. No income tax expense was included in the operation of
discontinued operations in 2003 whereas $2.7 million was included in 2002 and
$2.1 million was included in 2001.

Income taxes paid (refunded) were approximately $0.8 million in 2003,
$(0.2) million in 2002, and $28.3 million in 2001.

Note 8 - Other Current Liabilities

Included in other current liabilities were accrued discounts and
allowances of $24.0 million at December 27, 2003 and $21.2 million at
December 28, 2002.

F-34

Note 9 - Employee Benefits

The Company sponsors several qualified and nonqualified pension plans
and other postretirement benefit plans for certain of its employees. The
following tables provide a reconciliation of the changes in the plans'
benefit obligations and the fair value of the plans' assets over the two-year
period ending December 27, 2003, and a statement of the plans' funded status
as of December 27, 2003 and December 28, 2002:

(In thousands)

Pension Benefits Other Benefits
2003 2002 2003 2002

Change in benefit
obligation:
Obligation at
beginning of year $ 120,654 $ 103,008 $ 10,729 $ 8,114
Service cost 1,766 1,354 5 5
Interest cost 7,495 7,407 694 853
Participant contributions 351 295 - -
Actuarial loss 3,766 11,000 146 2,527
Benefit payments (6,234) (6,049) (818) (770)
Settlement (67) - - -
Foreign currency
translation adjustment 4,611 3,639 - -
-------- -------- -------- --------
Obligation at end of year $ 132,342 $ 120,654 $ 10,756 $ 10,729
======== ======== ======== ========
Change in fair value
of plan assets:
Fair value of plan
assets at beginning
of year $ 98,251 $ 112,563 $ - $ -
Actual return on
plan assets 18,535 (13,086) - -
Employer contributions 1,047 1,938 818 770
Participant contributions 351 295 - -
Benefit payments (6,234) (6,049) (818) (770)
Settlement (67) - - -
Foreign currency
translation adjustment 3,006 2,590 - -
-------- -------- -------- --------
Fair value of plan assets
at end of year $ 114,889 $ 98,251 $ - $ -
======== ======== ======== ========
Funded status:
Funded (underfunded)
status at end of year $ (17,453) $ (22,403) $ (10,756) $ (10,729)
Unrecognized prior
service cost 2,664 3,149 (80) (88)
Unrecognized loss 17,765 24,688 2,817 2,791
-------- -------- -------- --------
Net amount recognized $ 2,976 $ 5,434 $ (8,019) $ (8,026)
======== ======== ======== ========

F-35

The projected benefit obligation, accumulated benefit obligation, and
fair value of plan assets for the pension plans with benefit obligations in
excess of plan assets were $104.6 million, $103.1 million, and $84.1 million,
respectively, as of December 27, 2003, and $93.9 million, $91.8 million, and
$70.2 million, respectively, as of December 28, 2002.

The following table provides the amounts recognized in the Consolidated
Balance Sheets as of December 27, 2003 and December 28, 2002:

(In thousands)

Pension Benefits Other Benefits
2003 2002 2003 2002

Prepaid benefit cost $ 8,203 $ 8,967 $ - $ -
Intangible asset - 1,702 - -
Accrued benefit liability (18,077) (22,365) (8,019) (8,026)
Accumulated other
comprehensive loss 12,850 17,130 - -
-------- -------- -------- --------

Net amount recognized $ 2,976 $ 5,434 $ (8,019) $ (8,026)
======== ======== ======== ========

The components of net periodic benefit cost (income) are as follows:

(In thousands)

2003 2002 2001

Pension benefits:
Service cost $ 1,766 $ 1,354 $ 1,802
Interest cost 7,495 7,407 7,222
Expected return on
plan assets (7,724) (9,061) (9,794)
Amortization of prior
service cost 491 856 904
Amortization of net (gain) loss 1,327 (714) (1,749)
--------- --------- ---------
Net periodic benefit
cost (income) $ 3,355 $ (158) $ (1,615)
========= ========= =========
Other benefits:
Service cost $ 5 $ 5 $ 13
Interest cost 694 853 702
Amortization of prior
service cost (8) (8) (8)
Amortization of net gain 120 122 -
Curtailment gain - - (323)
--------- --------- ---------
Net periodic benefit cost $ 811 $ 972 $ 384
========= ========= =========

F-36

Prior service costs are amortized on a straight-line basis over the
average remaining service period of active participants. Gains and losses in
excess of 10 percent of the greater of the benefit obligation and the market-
related value of assets are amortized over the average remaining service
period of active participants.

The assumptions used in the measurement of the Company's benefit
obligations are as follows:

Pension Benefits Other Benefits
2003 2002 2003 2002

Weighted average
assumptions:
Discount rate 6.08% 6.42% 6.25% 6.75%
Expected return
on plan assets 8.07% 8.05% N/A N/A
Rate of compensation
increases 4.25% 4.00% N/A N/A

The assumptions used in the measurement of the Company's net periodic
benefit cost are as follows:

Pension Benefits Other Benefits
2003 2002 2001 2003 2002 2001

Weighted average
assumptions:
Discount rate 6.42% 7.25% 7.17% 6.75% 6.75% 8.21%
Expected return
on plan assets 8.05% 8.10% 7.96% N/A N/A N/A
Rate of compensation
increases 4.00% 4.25% 3.25% N/A N/A N/A

Only one pension plan uses the rate of compensation increase in its
benefit formula. All other pension plans are based on length of service.

The annual assumed rate of increase in the per capita cost of covered
benefits (i.e., health care cost trend rate) is assumed to range from 7.6 to
10.4 percent for 2003, gradually decrease to 5.5 percent for 2011, and remain
at that level thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rates by one percentage point would increase
the accumulated postretirement benefit obligation by $900 thousand and the
service and interest cost components of net periodic postretirement benefit
costs by $60 thousand for 2003. Decreasing the assumed health care cost
trend rates by one percentage point in each year would decrease the
accumulated postretirement benefit obligation and the service and interest
cost components of net periodic postretirement benefit costs for 2003 by $821
thousand and $56 thousand, respectively.

F-37

The weighted average asset allocation of the Company's pension fund
assets are as follows:

Pension Plan Assets
2003 2002

Equity securities 71% 60%
Index funds 10 8
Debt securities 6 9
Cash and equivalents 2 12
Other 11 11
------- -------
100% 100%
======= =======

The measurement date for the majority of the plans is at year-end.

The Company's pension plan obligations are long-term in nature and,
accordingly, the plan assets are invested for the long-term. The Company
believes that a diversified portfolio of equity securities (both actively
managed and index funds) and private equity funds have an acceptable risk-
return profile that, over the long-term, is better than fixed income
securities. Consequently, the pension plan assets are heavily weighted to
equity investments. Plan assets are monitored periodically. Based upon
results, investment managers and/or asset classes are redeployed when
considered necessary. Expected rates of return on plan assets were
determined based on historical market returns giving consideration to the
composition of each plan's portfolio.

The plans' assets do not include investment in securities issued by the
Company. The Company expects to contribute between $1.0 million and $1.5
million to its pension plans and approximately $1.0 million to its other
postretirement benefit plans in 2004.

The Company sponsors voluntary employee savings plans that qualify under
Section 401(k) of the Internal Revenue Code of 1986. Compensation expense for
the Company's matching contribution to the 401(k) plans was $2.0 million in
2003 and in 2002, and $2.1 million in 2001. The Company's match is a cash
contribution. Participants direct the investment of their account balances
by allocating among a range of asset classes including mutual funds (equity,
fixed income, and balanced funds), and money market funds. The plans do not
offer direct investment in securities issued by the Company.

F-38

In October 1992, the Coal Industry Retiree Health Benefit Act of 1992
(the Act) was enacted. The Act mandates a method of providing for
postretirement benefits to UMWA current and retired employees, including some
retirees who were never employed by the Company. In October 1993,
beneficiaries were assigned to the Company and the Company began its mandated
contributions to the UMWA Combined Benefit Fund, a multiemployer trust.
Beginning in 1994, the Company was required to make contributions for
assigned beneficiaries under an additional multiemployer trust created by the
Act, the UMWA 1992 Benefit Plan. The ultimate amount of the Company's
liability under the Act will vary due to factors which include, among other
things, the validity, interpretation, and regulation of the Act, its joint
and several obligation, the number of valid beneficiaries assigned, and the
extent to which funding for this obligation will be satisfied by transfers of
excess assets from the 1950 UMWA pension plan and transfers from the
Abandoned Mine Reclamation Fund. Nonetheless, the Company believes it has an
adequate reserve for this liability which totaled $6.3 million in 2003 and
$5.4 million in 2002.

The Company maintains a nonqualified, deferred compensation plan, which
permits certain management employees to annually elect to defer, on a pretax
basis, a portion of their compensation. The deferred benefit to be provided
is based on the amount of compensation deferred, Company match, and earnings
on the deferrals. During 2001, the Company match was discontinued. Other
expenses associated with the plan in 2003, 2002 and 2001 were insignificant.
The Company has invested in certain assets to assist in funding this plan.
The fair value of these assets, included in other assets, was $6.7 million at
December 27, 2003 and $5.5 million at December 28, 2002.

The Company makes contributions to certain multiemployer defined benefit
pension plan trusts that cover union employees based on collective bargaining
agreements. Contributions by employees are not required nor are they
permitted. Pension expense under the multiemployer defined benefit pension
plans was $0.3 million for 2003, 2002, and 2001.

Note 10 - Commitments and Contingencies

The Company is subject to environmental standards imposed by federal,
state, local, and foreign environmental laws and regulations. The Company has
provided and charged to income $1.2 million in 2003, $1.6 million in 2002,
and $3.6 million in 2001 for pending environmental matters. The basis for
the provision is updated information and results of ongoing remediation and
monitoring programs. Environmental reserves total $9.6 million in 2003
and $9.1 million in 2002. These projected costs will be funded in future
years as remediation programs progress. Management believes that the outcome
of pending environmental matters will not materially affect the financial
position or results of operations of the Company.

The Company is involved in certain litigation as a result of claims that
arose in the ordinary course of business, which management believes will not
have a material adverse effect on the Company's financial position or results
of operations. Additionally, the Company may realize the benefit of certain
insurance and legal claims in the future; these gain contingencies are not
recognized in the Consolidated Financial Statements.

F-39

The Company is aware of investigations of competition in markets in
which it participates, or has participated in the past, in Europe, Canada and
the United States. On October 21, 2003, the Company was informed that the
investigations of which it was aware in the United States have been closed.
On September 1, 2003, the European Commission released a statement alleging
infringements in Europe of competition rules by manufacturers of copper tubes
including the Company and businesses in France and England, which it acquired
in 1997. The Company took the lead in bringing these issues to the attention
of the European Commission and has fully cooperated in the resulting
investigation from its inception. The Company does not anticipate any
material adverse effect on its business or financial position as a result of
the European Commission's action or other investigations.

The Company leases certain facilities and equipment under operating
leases expiring on various dates through 2011. The lease payments under
these agreements aggregate to approximately $6.6 million in 2004, $4.6
million in 2005, $3.8 million in 2006, $3.1 million in 2007, $2.5 million in
2008, and $1.8 million thereafter. Total lease expense amounted to $7.0
million in 2003, $10.6 million in 2002, and $8.8 million in 2001.

Note 11 - Other Income, Net

(In thousands)

2003 2002 2001

Rent and royalties $ 2,821 $ 2,364 $ 686
Interest income 2,466 3,111 4,826
(Loss) gain on disposal of
properties, net (290) 485 249
Minority interest in income
of subsidiaries (152) (150) 26
Equity in loss of
unconsolidated subsidiary (460) - -
--------- --------- ---------
Other income, net $ 4,385 $ 5,810 $ 5,787
========= ========= =========

Note 12 -Stock Options

The Company follows APB No. 25 in accounting for its employee stock
options. Under APB No. 25, no compensation expense is recognized because the
exercise price of the Company's incentive employee stock options equals the
market price of the underlying stock on the date of grant.

Under existing plans, the Company may grant options to purchase shares
of common stock at prices not less than the fair market value of the stock on
the date of the grant. Generally, the options vest annually in equal
increments over a five-year period beginning one year from the date of the
grant. Any unexercised options expire after not more than ten years. No
options may be granted after ten years from the date of plan adoption.

F-40

Additionally, the Company has granted stock options to key executives as
retention incentives and inducements to enter into employment agreements with
the Company. Generally, these special grants have terms and conditions
similar to those granted under the Company's other stock option plans.

The income tax benefit associated with the exercise of stock options
reduced income taxes payable, classified as other current liabilities, by $18
thousand in 2003, $13.2 million in 2002, and $0.4 million in 2001. Such
benefits are reflected as additions directly to additional paid-in capital
and, therefore, have no effect on the Company earnings.

A summary of the Company's stock option activity and related information
follows:

(Shares in thousands)

Weighted Average
Options Exercise Price

Outstanding at December 30, 2000 5,022 $ 7.22
Granted 76 29.43
Exercised (120) 17.55
Expired, cancelled, or surrendered (42) 26.03
--------
Outstanding at December 29, 2001 4,936 7.15
Granted 261 31.79
Exercised (1,255) 2.80
Expired, cancelled, or surrendered (21) 30.39
--------
Outstanding at December 28, 2002 3,921 10.06
Granted 281 25.66
Exercised (24) 21.78
Expired, cancelled, or surrendered (53) 28.92
--------
Outstanding at December 27, 2003 4,125 10.82
========

Options exercisable at:
December 29, 2001 4,462 $ 5.24
December 28, 2002 3,410 7.24
December 27, 2003 3,554 8.03

Exercise prices for stock options outstanding at December 27, 2003,
ranged from $2.06 to $37.04. Of the 4.1 million stock options outstanding at
year-end, 2.4 million were owned by the Chairman of the Company's Board of
Directors, Mr. Harvey L. Karp, and expire one year after Mr. Karp's
separation from employment with the Company. Mr. Karp's options have an
exercise price of $2.06 per share. The weighted average remaining life of the
remaining 1.7 million shares is 5.5 years, and the weighted average exercise
price of these shares is $22.99. The weighted average fair value per option
granted was $10.06 in 2003, $12.49 in 2002, and $13.58 in 2001.

F-41

Mr. Karp exercised options to purchase 1.2 million shares of Company
stock during 2002 and none during 2003. As provided in Mr. Karp's option
agreement, the Company withheld the number of shares, at their fair market
value, sufficient to cover the minimum withholding taxes incurred by the
exercise. These shares withheld have been classified as acquisition of
treasury stock in the Company's Consolidated Financial Statements.

As of December 27, 2003, the Company had reserved 2.4 million shares of
its common stock for issuance pursuant to certain stock option plans.
Additionally, the Company had reserved 15 thousand shares of preferred stock
for issuance pursuant to the shareholder rights plan.

Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method. The
fair value for these options at the date of grant was estimated using the
following weighted average assumptions for the years 2003, 2002, and 2001
weighted average expected life of the options of six years; and no dividend
payments. The weighted average risk free interest rate used in the model was
3.81 percent for 2003, 3.44 percent for 2002, and 4.67 percent for 2001. The
volatility factor of the expected market value of the Company's common stock
was 0.331 in 2003, 0.344 in 2002, and 0.418 in 2001.

The pro forma information was determined using the Black-Scholes option
valuation model. Option valuation models require highly subjective
assumptions including the expected stock price volatility. Because the
Company's employee stock options have characteristics significantly different
from those of traded options, and because changes in the subjective
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting periods. The
Company's pro forma information is included in the Summary of Significant
Accounting Policies.

Note 13 - Acquisitions

On September 27, 2002, the Company acquired certain assets of Colonial
Engineering, Inc.'s Fort Pierce, Florida operations. These operations
manufacture injected molded plastic pressure fittings for plumbing,
agricultural, and industrial use including a line of PVC Schedule 40 and 80
and CPVC fittings. These operations generated sales of approximately $15
million in 2001. The purchase price was approximately $14.1 million.

On August 21, 2002, the Company acquired 100 percent of the outstanding
stock of Overstreet-Hughes, Co., Inc. Overstreet-Hughes, located in
Carthage, Tennessee, manufactures precision tubular components and assemblies
primarily for the OEM air-conditioning market and had sales in 2001 of
approximately $8 million. Total consideration paid at closing, including
assumption of debt, was approximately $6.3 million. A contingent payment of
up to $2 million will be paid if certain financial targets are achieved.

F-42

Both of the acquisitions were accounted for using the purchase method of
accounting. Therefore, the results of operations of the acquired businesses
were included in the Company's Consolidated Financial Statements from
their respective acquisition dates. The purchase price for these
acquisitions, which was financed by available cash balances, has been
allocated to the assets of the acquired businesses based on their respective
fair market values.

The final assessment of fair values of the assets and liabilities
associated with the 2002 acquisitions was completed during 2003. The
determination of final fair values resulted in adjustments from initially
recorded values. These adjustments increased working capital by $0.6
million, increased other assets by $2.0 million, and decreased goodwill by
$0.8 million. The total fair value of assets acquired in 2002 was $23.6
million, and the fair value of liabilities assumed in 2002 was $1.9 million.
The excess of the purchase price over the net assets acquired in 2002 was
$6.1 million.

During 2002, the Company acquired an equity interest in Conbraco
Industries, Inc. for $7.3 million in cash; early in 2003, the Company
acquired an additional interest for $10.8 million. Conbraco is a manufacturer
of flow control products including ball valves, automation products, backflow
preventers, butterfly valves, check valves, forged steel products, marine
valves, safety relief valves, strainers and plumbing and heating products for
commercial and industrial applications. The Company's interest totaled 39
percent of Conbraco's equity at December 27, 2003. This investment is
accounted for by the equity method of accounting, and is included in the
other assets classification in the Consolidated Balance Sheet.

Note 14 - Discontinued Operations

On August 28, 2002, the Company completed the sale of its wholly owned
subsidiary, Utah Railway Company, to Genessee & Wyoming Inc. Proceeds from
the sale were approximately $55.4 million. The Company recognized a gain of
$21.1 million (net of income taxes of $11.6 million) from the sale.

In December 2002, the Company initiated a plan to sell or liquidate its
French manufacturing operations, Mueller Europe S. A. A loss of $13.4
million was recognized to write-down this operation to its net realizable
value. This loss is net of a $15.2 million income tax benefit related to the
operation's cumulative losses previously unrecognized for tax purposes.
Included in the loss is a provision to expense the cumulative foreign
currency translation adjustment of $2.5 million, which was previously
recognized as a component of other comprehensive loss. Major components of
this operation included in the Consolidated Balance Sheet at December 28,
2002 were current assets of $6.3 million and current liabilities of $6.0
million. On March 3, 2003, Mueller Europe S.A. filed a petition for
liquidation with the Commercial Court of Provins Province, France and on
March 4, 2003 the Court declared the entity to be in liquidation. The
disposition of remaining assets and obligations of Mueller Europe S.A. is
under the jurisdiction of the Court. In 2003, the Company recognized
operating losses from discontinued operations incurred by Mueller Europe S.A.
for the period the business operated.

F-43

The Company expects no further obligations or contingencies from these
discontinued operations and, therefore, during 2003 it recognized a $1.7
million gain to reflect adjustments to the previous estimates on disposition.
Operating results of both businesses, net of applicable income taxes, are
included in the Consolidated Statements of Income classified as income (loss)
from operation of discontinued operations.

Operating results of discontinued operations were as follows:

(In thousands)

2003 2002 2001

Net sales:
Utah Railway Company $ - $ 15,394 $ 23,399
Mueller Europe S.A. 2,323 49,767 59,940
--------- --------- ---------
$ 2,323 $ 65,161 $ 83,339
========= ========= =========

Income (loss) before income taxes:
Utah Railway Company $ - $ 7,482 $ 5,502
Mueller Europe S.A. (539) (5,682) (1,915)
--------- --------- ---------
$ (539) $ 1,800 $ 3,587
========= ========= =========

Net income (loss):
Utah Railway Company $ - $ 4,812 $ 3,465
Mueller Europe S.A. (539) (5,698) (1,933)
--------- --------- ---------
$ (539) $ (886) $ 1,532
========= ========= =========

Note 15 - Industry Segments

The Company's reportable segments include its Standard Products Division
(SPD) and its Industrial Products Division (IPD). These segments are
classified primarily by the markets for their products. Performance of
segments is generally evaluated by their operating income.

SPD manufactures copper tube and fittings, plastic fittings, and line
sets. These products are manufactured in the U.S. and Europe and are sold
primarily to wholesalers.

IPD manufactures brass rod, impact extrusions, and forgings as well as a
variety of end-products including plumbing brass; automotive components;
valves and fittings; and specialty copper, copper-alloy, and aluminum tubing.
These products are sold primarily to OEM customers.

F-44

Summarized segment and geographic information is shown in the following
tables. Geographic sales data indicates the location from which products are
shipped. Unallocated expenses include general corporate expenses, plus
certain charges or credits not included in segment activity. Certain
expenses related primarily to retiree benefits at inactive operations were
formerly combined with the operations of Utah Railway Company under a third
industry segment, Other Businesses. Following the sale of Utah Railway
Company and its classification as discontinued operations, these expenses of
inactive operations have been combined into the unallocated expenses
classification. In addition, the operations of Mueller Europe S.A. are
classified as discontinued operations and have been eliminated from the
operating results of SPD.

Worldwide sales to one customer from the Standard Products Division
totaled $111.0 million in 2003, $101.0 million in 2002, and $97.2 million in
2001, which represented 11 percent in 2003 and in 2002, and 10 percent in
2001 of the Company's consolidated net sales. No other customer accounted
for more than 10 percent of consolidated net sales.

SEGMENT INFORMATION:

(In thousands)

2003 2002 2001

Net sales:
Standard Products Division $ 717,606 $ 679,264 $ 721,520
Industrial Products Division 292,008 279,591 251,747
Elimination of intersegment sales (10,536) (5,872) (4,161)
--------- --------- ---------
$ 999,078 $ 952,983 $ 969,106
========= ========= =========

Depreciation and amortization:
Standard Products Division $ 26,038 $ 24,975 $ 27,588
Industrial Products Division 11,023 10,539 10,098
General corporate 1,893 1,926 1,775
--------- --------- ---------
$ 38,954 $ 37,440 $ 39,461
========= ========= =========

Operating income:
Standard Products Division $ 54,123 $ 78,964 $ 104,603
Industrial Products Division 11,672 20,353 17,469
Unallocated expenses (16,411) (13,561) (16,543)
--------- --------- ---------
$ 49,384 $ 85,756 $ 105,529
========= ========= =========

Expenditures for long-lived assets:
Standard Products Division $ 21,465 $ 27,400 $ 33,902
Industrial Products Division 5,623 11,558 10,379
--------- --------- ---------
$ 27,088 $ 38,958 $ 44,281
========= ========= =========

F-45

(In thousands)

2003 2002 2001

Segment assets:
Standard Products Division $ 594,236 $ 594,516 $ 604,099
Industrial Products Division 159,303 171,315 158,659
General corporate 301,645 222,116 153,307
--------- --------- ---------
$1,055,184 $ 987,947 $ 916,065
========= ========= =========

GEOGRAPHIC INFORMATION:

(In thousands)

2003 2002 2001

Net sales:
United States $ 895,994 $ 870,457 $ 881,357
Foreign 103,084 82,526 87,749
--------- --------- ---------
$ 999,078 $ 952,983 $ 969,106
========= ========= =========

Long-lived assets:
United States $ 437,182 $ 443,295 $ 451,231
Foreign 47,647 44,305 60,921
--------- --------- ---------
$ 484,829 $ 487,600 $ 512,152
========= ========= =========

F-46

Note 16 - Quarterly Financial Information (Unaudited)

(In thousands, except per share data)

First Second Third Fourth
Quarter Quarter Quarter Quarter

2003
Net sales $ 232,022 $ 248,221 $ 251,053 $ 267,782
Gross profit (1) 40,107 44,760 49,093 49,269
Income from
continuing operations 4,460 8,979 19,737 11,045
Loss from operations
of discontinued operations,
net of tax (539) - - -
Gain on disposition of
discontinued operations,
net of tax - - 1,699 -
Net income 3,921 8,979 21,436 11,045
Basic earnings (loss)
per share:
From continuing operations 0.13 0.26 0.58 0.32
From discontinued operations (0.02) - - -
From sale of discontinued
operations - - 0.05 -
Basic earnings per share 0.11 0.26 0.63 0.32
Diluted earnings (loss)
per share:
From continuing operations 0.12 0.24 0.53 0.30
From discontinued operations (0.01) - - -
From sale of discontinued
operations - - 0.05 -
Diluted earnings per share 0.11 0.24 0.58 0.30

(1) Gross profit is net sales less cost of goods sold, which excludes
depreciation and amortization.

F-47

(In thousands, except per share data)

First Second Third Fourth
Quarter Quarter Quarter Quarter

2002
Net sales $ 249,053 $ 260,507 $ 227,294 $ 216,129
Gross profit (1) 57,247 59,156 50,992 40,807
Income from
continuing operations 17,865 18,716 25,822 8,774
Income (loss) from operations
of discontinued operations,
net of tax 71 (251) (313) (393)
Gain (loss) on disposition of
discontinued operations,
net of tax - - 21,123 (13,422)
Net income (loss) 17,936 18,465 46,632 (5,041)
Basic earnings (loss)
per share:
From continuing operations 0.54 0.55 0.75 0.25
From discontinued operations - (0.01) (0.01) (0.01)
From sale of discontinued
operations - - 0.62 (0.39)
Basic earnings (loss)
per share 0.54 0.54 1.36 (0.15)
Diluted earnings (loss)
per share:
From continuing operations 0.48 0.50 0.70 0.24
From discontinued operations - - - (0.01)
From sale of discontinued
operations - - 0.57 (0.37)
Diluted earnings (loss)
per share 0.48 0.50 1.27 (0.14)

(1) Gross profit is net sales less cost of goods sold, which excludes
depreciation and amortization.

F-48

Report of Independent Auditors

The Stockholders of Mueller Industries, Inc.

We have audited the accompanying consolidated balance sheets of Mueller
Industries, Inc. as of December 27, 2003 and December 28, 2002, and the
related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 27, 2003.
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 in accordance with auditing standards generally
accepted in the 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. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Mueller Industries, Inc. at December 27, 2003 and December 28, 2002, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 27, 2003, in conformity with
accounting principles generally accepted in the United States.

As discussed in Note 4 to the consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" in 2002.

/S/ERNST & YOUNG LLP

Memphis, Tennessee
January 30, 2004

F-49

MUELLER INDUSTRIES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 27, 2003, December 28, 2002, and December 29, 2001
(In thousands)

Additions
-------------------------------
Balance at Charged to Balance
beginning costs and Other at end
of year expenses additions Deductions of year
------------ ------------ ----------- ----------- -----------

2003
Allowance for doubtful accounts $ 6,443 $ 3,172 $ - $ 4,881 $ 4,734

Environmental reserves $ 9,110 $ 1,165 $ 1,293 (1) $ 2,008 $ 9,560

Severance and related $ 13 $ 46 $ - $ - $ 59

Other reserves (4) $ 1,721 $ - $ - $ 986 $ 735

Valuation allowance for deferred
tax assets $ 33,030 $ 1,807 $ - $ 13,997 $ 20,840

2002
Allowance for doubtful accounts $ 6,573 $ 374 $ - $ 504 $ 6,443

Environmental reserves $ 9,203 $ 1,739 $ 543 $ 2,375 $ 9,110

Severance and related $ 14 $ - $ - $ 1 $ 13

Other reserves (4) $ 3,306 $ - $ 200 $ 1,785 $ 1,721

Valuation allowance for deferred
tax assets $ 58,535 $ 136 $ - $ 25,641 $ 33,030

2001
Allowance for doubtful accounts $ 5,612 $ 1,704 $ - $ 743 $ 6,573

Environmental reserves $ 9,862 $ 3,600 $ 311 (1) $ 4,570 $ 9,203

Severance and related $ 2,187 $ 707 $ - $ 2,880 $ 14

Other reserves (4) $ 11,332 $ - $ - $ 8,026 $ 3,306

Valuation allowance for deferred
tax assets $ 34,286 $ 678 $ 24,530 (2) $ 959 $ 58,535

(1) Includes insurance proceeds and currency translation changes.
(2) Balance reclassified from other liabilities.
(3) Other additions to the valuation allowance for deferred tax assets relate to capital loss
carryforwards, foreign net operating loss carryforwards, and foreign audit and withholding allowances.
(4) Other reserves are included in the balance sheet captions "Other
current liabilities" and "Other noncurrent liabilities".

F-50

EXHIBIT INDEX

3.1 Certificate of Incorporation of the Registrant and all
amendments thereto.

4.2 Credit Agreement among the Registrant (as Borrower) and
Standard Federal Bank and other banking institutions and
Standard Federal Bank (as Agent) dated as of November 6, 2003.

4.3 Certain instruments with respect to long-term debt of the
Registrant have not been filed as Exhibits to this Report since
the total amount of securities authorized under any such
instruments does not exceed 10 percent of the total assets of
the Registrant and its subsidiaries on a consolidated basis.
The Registrant agrees to furnish a copy of each such instrument
upon request of the Securities and Exchange Commission.

10.4 Summary description of the Registrant's 2004 bonus plan for
certain key employees.

10.12 Stock Option Agreement, dated May 7, 1997, by and between the
Registrant and William D. O'Hagan.

10.13 Stock Option Agreement, dated October 9, 1998, by and between
the Registrant and William D. O'Hagan.

10.16 Stock Option Agreement, dated February 13, 2003, by and between
the Registrant and William D. O'Hagan.

10.17 Nonqualified Stock Option Agreement, dated June 30, 2000, by and
between the Registrant and Robert J. Pasquarelli.

10.18 Nonqualified Stock Option Agreement, dated June 30, 2003, by and
between the Registrant and Michael O. Fifer.

14.0 Code of Business Conduct and Ethics.

21.0 Subsidiaries of the Registrant.

23.0 Consent of Independent Auditor (Includes report on Financial
Statement Schedule).

31.1 Certification of Chief Executive Officer pursuant to Rule 13a-
14(a) and Rule 15d-14(a) of the Securities Exchange Act of
1934, as amended.

31.2 Certification of Chief Financial Officer pursuant to Rule 13a-
14(a) and Rule 15d-14(a) of the Securities Exchange Act of
1934, as amended.

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.