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WASHINGTON, D.C. 20549

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Quarter Ended June 29, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from        to       

Commission file number 333-29141

(Exact Name of Registrant as Specified in Its Charter)

Registrant's telephone number, including area code: (281) 876-0080

Indicate by 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 [ ]

There were 252,000 shares of the Registrant's Class A Common Stock outstanding as of the close of business on August 12, 2002, all of which are held by Merchants Metals Holding Company.

The accompanying notes are an integral part of the consolidated financial statements

MMI PRODUCTS, INC.

The accompanying notes are an integral part of the consolidated financial statements.

The consolidated financial statements include the accounts of MMI Products, Inc. and its wholly owned subsidiary, MMI Management, Inc., and their partnership interests in MMI Management Services L.P. (collectively, "MMI"). All significant intercompany balances and transactions have been eliminated. MMI Products, Inc. is a wholly owned subsidiary of Merchants Metals Holding Company ("MMHC"). MMI is a manufacturer and distributor of products used in the commercial, infrastructure, and residential construction industries within the United States. The manufactured products in each of MMI's product lines are produced primarily from the same raw material, steel rod. MMI's customers include contractors, fence wholesalers, industrial manufacturers, highway construction contractors and fabricators of reinforcing bar. The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted. These financial statements should be read in conjunction with MMI's annual financial statements for the fiscal year ended December 29, 2001 included in the Form 10-K filed with the Securities and Exchange Commission on March 14, 2002.

In the opinion of management, the financial statements contain all adjustments, consisting only of normal recurring adjustments, considered necessary to present fairly the financial position of MMI as of June 29, 2002 and the results of its operations and its cash flows for the respective periods ended June 29, 2002 and June 30, 2001. Certain prior year amounts have been reclassified to conform with the current year presentation. Operating results for the fiscal three month and fiscal six month period ended June 29, 2002 are not necessarily indicative of the results that may be expected for the fiscal year ending December 28, 2002.

Effective December 30, 2001, MMI adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, which prohibits the amortization of goodwill and intangible assets with indefinite useful lives. SFAS No. 142 requires that these assets be reviewed for impairment at least annually. Intangible assets with finite lives will continue to be amortized over their estimated useful lives.

In accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, MMI has historically evaluated goodwill for impairment by comparing its total unamortized balance of goodwill to total MMI projected undiscounted cash flows. SFAS No. 142 employs a different methodology which tests for impairment at the operating division level (defined by the standard as "reporting unit"). Impairment testing is performed at the time of adoption and at least annually thereafter.

During the second quarter, MMI completed the required initial impairment analysis which indicated no impairment of goodwill existed at December 30, 2001.

If the new accounting standard had been applied during the three and six-month period ended June 30, 2001, that period's net income would have been increased as follows:

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions of Accounting Principles Board (APB) Opinion No. 30, Reporting the Results of Operations. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001, with earlier application encouraged. MMI adopted SFAS No. 144 as of December 30, 2001 and the adoption of the statement did not have a significant impact on MMI's financial position or results of operations.

On March 6, 2002, $38.7 million in principal amount of the 13% Notes was exchanged, on a par-for-par basis, for newly issued 11.25% Notes plus an aggregate cash payment of approximately $3 million funded by the revolving credit facility. The aggregate cash payment was calculated by adding (i) the present value, as of the date of exchange, of the difference between the remaining interest payments on the 13% Notes versus the 11.25% Notes, and (ii) the difference between the accrued and unpaid interest on the 13% Notes and the 11.25% Notes between the last interest payment date and the date of exchange. The newly issued 11.25% Notes were registered on March 26, 2002.

Inventories consisted of the following:

Property, plant, and equipment consist of the following:

Goodwill and other intangible assets consist of the following:

MMI has four operating units that are aggregated into two reportable segments: Fence and Concrete Construction Products. Each segment includes two operating units that offer complementary products and services within their respective industries.

5. Segment Reporting (continued)

Summarized financial information concerning the reportable segments is shown in the following table. The Corporate column for earnings before interest and income taxes represents amortization of intangibles and nonrecurring items. Corporate general and administrative expenses are allocated to the segments based upon proportional net sales.

(In Thousands)

(In Thousands)

MMI PRODUCTS, INC.

MMI is involved in a number of legal actions arising in the ordinary course of business. Although no assurance can be given with respect to the ultimate outcome of any asserted claim or litigation, no material affect on financial position or future operating results is expected.

On May 13, 2002, MMI paid a $1.9 million dividend to its parent company, MMHC. This dividend was funded by borrowings under MMI's revolving credit facility. The dividend was used by MMHC to reduce the obligation under its subordinated credit facility.

On July 31, 2002, MMI announced that it has shut down its galvanized wire production line in response to unfavorable market conditions. No impairment of the recorded equipment values associated with this operation has occurred.

On August 8, 2002, MMI paid a $3.6 million dividend to its parent company, MMHC. This dividend was funded by borrowings under MMI's revolving credit facility. The dividend was used by MMHC to reduce the obligation under its subordinated credit facility.

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes to the consolidated financial statements. Our estimation process generally relates to potential bad debts, damaged and slow moving inventory, value of intangible assets, and health care and workers compensation claims. We base our judgments on historical experience and various other assumptions that we believe to be reasonable under the circumstances. These judgments result in the amounts shown as carrying values of assets and liabilities in the financial statements and accompanying notes to the consolidated financial statements. Actual results could differ from our estimates.

We believe the following accounting policies are the most critical in the preparation of our consolidated financial statements.

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is probable. These criteria are met generally at the time product is shipped but sometimes when the product reaches its destination. We maintain an allowance for doubtful accounts receivable by providing for specifically identified accounts where collectibility is questionable and a general allowance based on the aging of the receivables compared to past experience and current trends. A change in past experience or current trends could require a material change in our estimate of the allowance for doubtful accounts.

We reserve for damaged and slow moving inventory based on specific identification, and in some cases, a general reserve based on historical trends. The amount reserved is the recorded cost of the inventory minus its estimated realizable value. A portion of manufacturing and purchase price variances are capitalized to inventory based on inventory turnover rates.

We accrue estimated liabilities for workers compensation and claims incurred but not reported for our self-insured health care program. These accruals are based on current and historical trends. A change in the current or historical trends could require a material change in our estimate for this accrued liability.

We account for business acquisitions using the purchase method of accounting. The cost of the acquired company is allocated to identifiable tangible and intangible assets based on estimated fair value, with the excess allocated to goodwill.

Consolidated sales for the three months ended June 29, 2002 increased by $10.9 million, or 8%, compared to the three months ended June 30, 2001.

Fence sales were up by 19%, to $87.1 million, compared to $73.5 million for the three months ended June 30, 2001, due to improved market activity nationwide (particularly in residential construction) and competitive actions to increase market share.

Concrete Construction Products' sales decreased by 4%, to $61.5 million, for the three months ended June 29, 2002 compared to $64.2 million in the prior year's period. A slowdown in commercial construction activity and resulting competitive pricing pressures were the primary reasons for the decline in revenues.

Consolidated gross profit for the three months ended June 29, 2002 increased by $0.5 million, or 2%, compared to the three months ended June 30, 2001. As a percentage of sales, gross profit decreased to 17.9% for the three months ended June 29, 2002 as compared to 18.9% in the prior year period.

Gross profit for the Fence segment increased during the three months ended June 29, 2002 by 16%, to $14.8 million, compared to $12.8 million for the prior year period. This increase is attributable primarily to the higher sales volume, as well as improved costs of some purchased products, and more efficient utilization of plant facilities as compared to the corresponding three month period in the prior year. Offsetting the positives were higher steel rod costs and inventory writedowns.

Gross profit for the Concrete Construction Products segment decreased by $1.5 million, to $11.8 million, for the three months ended June 29, 2002 compared to $13.3 million for the prior year period. The decline was attributable to the lower volume of sales, its effect on absorption of fixed manufacturing costs and increases in the cost of steel rod. The existence of quotas on imported steel rod and suits demanding dumping margins and countervailing duties against certain countries has provided domestic rod producers the opportunity to raise prices. In the galvanized wire product line, these factors and difficult competition from imports led to the shutdown of this product line.

Selling, general, administrative and other expenses increased 4%, to $11.9 million, during the three months ended June 29, 2002 compared to $11.4 million for the prior year period. The Fence segment accounted for the majority of the increase as more sales and support personnel were hired to support the increased level of activity in this market. Consulting expenses of $0.6 million related to strategic planning initiatives and improved costing methodologies also contributed to the increase. The increases were partially offset by the discontinuance of goodwill amortization expense required by the adoption of Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. The goodwill amortization recorded for the three months ended June 30, 2001 was $0.6 million. As a percent of sales, selling, general, administrative and other expenses for the three months were 8% in fiscal 2002 and 8.3% in fiscal 2001.

Interest expense for the three months ended June 29, 2002 increased by 8%, to $6.3 million compared to $5.8 million during the three months ended June 30, 2001. This increase is primarily attributable to the rate increase associated with the issuance of $50 million in senior subordinated notes in the third quarter of 2001. This borrowing paid down a revolving credit facility in order to enhance liquidity.

Consolidated sales for the six months ended June 29, 2002 increased 9%, or $20.8 million to $264.6 million, as compared to $243.8 million in the six months ended June 30, 2001.

Fence segment sales were up 20% to $150.3 million as compared to $125.7 million in the six months ended June 30, 2001. The improved results were due to favorable market activity, particularly in the first quarter of 2002 as compared to the first quarter of 2001 when more severe winter weather impacted sales activity. In addition, MMI has taken a variety of competitive actions to improve its market performance.

Concrete Construction Products' sales decreased by 3%, to $114.3 million, in the first six months of fiscal 2002 compared to $118.1 million for the prior year period. A slowdown in commercial construction activity and competitive pricing pressures were primary reasons for the decline.

Consolidated gross profit for the six months ended June 29, 2002 increased 6%, or $2.6 million to $45.3 million, as compared to $42.7 million in the six months ended June 30, 2001. As a percentage of sales, gross profit decreased from 17.5% in 2001 to 17.1% for the six months ended June 29, 2002.

Gross profit for the Fence segment increased in the first six months of fiscal 2002 by 35%, to $24.8 million, compared to $18.3 million for the prior year first six months. The improvement was due to higher sales volume, more efficient plant operations, and lower costs of certain purchased products which helped to offset rising costs of steel rod included in certain manufactured products.

Gross profit for the Concrete Construction Products segment decreased by $3.8 million, to $20.6 million, for the three months ended June 29, 2002 compared to $24.4 million in the prior year's period. The decrease in gross profit was due to the decrease in sales volume, the higher cost of steel rod from both domestic and foreign suppliers, lower absorption of fixed manufacturing costs and competitive pricing pressures.

Selling, general, administrative and other expenses increased 3%, to $24.0 million, in the first six months of fiscal 2002 compared to $23.4 million in fiscal 2001. This increase was primarily attributable to consulting expenses of $0.7 million related to strategic planning initiatives and improved costing methodologies. The increase was partially offset by the discontinuance of goodwill amortization expense required by the adoption of Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. The goodwill amortization recorded for the six months ended June 30, 2001 was $1.1 million. As a percent of sales, selling, general, administrative and other expenses for the six months were 9% and 10% in fiscal 2002 and fiscal 2001, respectively.

Interest expense in the first six months of fiscal 2002 increased by 8%, to $12.7 million compared to $11.8 million in the first six months of fiscal 2001. This increase is primarily attributable to a rate increase associated with the issuance of $50 million of senior subordinated notes in the third quarter of 2001, as discussed above.

Cash Flows. For the six months ended June 29, 2002, net cash used in operating activities was approximately $13.1 million, as compared to net cash provided by operating activities of $8.1 million during the first six months of 2001. The change of $21.2 million was due primarily to increased working capital. Greater quantities of steel rod than normal were purchased to lessen the impact of expected price increases. In addition, the negotiation of favorable terms on purchased products in some cases involved buying larger quantities and paying on accelerated terms. Cash used in investing activities decreased approximately $2 million. Whereas $2.1 million was invested in the Page Two, Inc. and Kewe 3, Inc. acquisition during the first six months of fiscal 2001, no business acquisitions occurred in the first six months of fiscal 2002. The financing of working capital increases and capital expenditures was provided by MMI's revolving credit facility. Other financing activities included a $3 million payment required to effect the exchange of 13% Notes for newly issued 11.25% Notes and a $1.9 million dividend to MMHC.

EBITDA is a widely accepted financial indicator of a company's ability to service and incur debt. MMI's EBITDA for the first six months of fiscal year 2002 and 2001 was $27.2 million and $26.3 million, respectively. The increase in EBITDA is primarily due to increases in income before interest and income taxes due to the changes in net sales, gross profit and selling, general and administrative expenses discussed in "Results of Operations" above. EBITDA should not be considered in isolation from or as a substitute for net income or cash flow measures prepared in accordance with accounting principles generally accepted in the United States or as a measure of a company's profitability or liquidity. EBITDA is defined as the sum of income before interest, income taxes, depreciation and amortization.

MMI expects that cash flows from operations and the borrowing availability under its revolving credit facility will provide sufficient liquidity to meet its normal operating requirements, capital expenditure plans and existing debt service. Although capital expenditures in the first six months of 2002 were about the same as in the comparable period of 2001, expenditures in the future are expected to increase because of potential cost reduction opportunities provided by new technology and processes available to MMI.

MMI has pursued and intends to continue to pursue a strategy of business acquisitions that will broaden its distribution network, complement or extend its existing product lines or increase its production efficiency and capacity. The borrowing availability under its revolving line of credit facility and its additional borrowing capability (which MMI believes is justified by its financial position and operating cash flows) are expected to be the financing sources for such acquisitions. It is possible that, depending on MMI's future operating cash flows and the size of potential acquisitions, MMI will seek additional sources of financing subject to limitations set forth in its senior subordinated notes indenture.

MMI's products are used in the commercial, infrastructure, and residential construction industries. These industries are both cyclical and seasonal, and changes in demand for construction services have a material impact on MMI's sales and profitability. The highest level of sales and profitability occur during the times of the year when climatic conditions are most conducive to construction activity. Accordingly, sales will typically be higher in the second and third quarters and will be lower in the first and fourth quarters.

The statements contained in this report which are not historical facts, including, but not limited to, statements found under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" above, are forward looking statements that involve a number of risks and uncertainties. The actual results of the future events described in such forward looking statements in this report could differ materially from those contemplated by such forward looking statements. Among the factors that could cause actual results to differ materially are the risks and uncertainties discussed in the report, including without limitations, the portions of such statements under the caption referenced above, and the uncertainties set forth from time to time in MMI's other public reports and filings and public statements.

MMI is subject to market risk exposure related to changes in interest rates on its revolving credit facility and its senior subordinated notes. Borrowings under the credit facility bear interest, at either the bank's base rate plus 0.25% or Eurodollar rate plus 1.25% to 2.75%, at the option of MMI. The fixed rate senior subordinated notes are subject to change in fair value. At June 29, 2002, the estimated fair value of the notes was $204.5 million. At December 29, 2001, the estimated fair value of the notes was $186.5 million. The estimated fair values are based on the quoted market prices. The variation in fair value is a function of market interest rate changes and the investor perception of the investment.

We have exposure to price fluctuations associated with steel rod, our primary raw material. We negotiate purchase commitments from one to nine months in advance to limit our exposure to price fluctuations and ensure availability of the materials. Approximately half of our steel rod is purchased from foreign sources. Such purchases are denominated in U.S. dollars. Our ability to continue to acquire steel rod from overseas sources on favorable terms may be adversely affected by fluctuations in foreign currency exchange rates, foreign taxes, duties, tariffs, trade embargoes and other import limitations, resulting in an increase in our cost of sales. Most steel rod imports are subject to a three-year, tariff-rate quota that commenced in March 2000. In addition, anti-dumping and countervailing-duty cases relating to steel rod imports from selected foreign countries have been put in place. Because steel rod comprises a substantial portion of our cost of goods sold (approximately 25% in fiscal 2001), any increase in steel rod cost which cannot be passed on to our customers would reduce our gross profit and cash flows from operations. Although we have historically been able to pass along increases in steel rod prices to our customers, competitive pressures may prevent us from doing so in the future. A decrease in our volume of raw material purchases could also result in us being unable to secure volume purchase discounts that we have received in the past which would reduce cash flows from operations and thus jeopardize our ability to service debt obligations and obtain additional financing to grow our business.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

Pursuant to the requirements 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.