Exhibit 13

--------------------------------------------------------------------------------
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS
--------------------------------------------------------------------------------

As  used  herein,   Maverick  Tube  Corporation  and  its  direct  and  indirect
wholly-owned subsidiaries are collectively referred to as "the Company," whereas
"Maverick"  is the Company  exclusive of its  subsidiary  Prudential  Steel Ltd.
("Prudential").  Also,  unless the context otherwise  requires,  the terms "we,"
"us" or "our" refers to the Company.

Certain  statements  contained  in  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of  Operations"  regarding  matters  (including
statements as to our beliefs or expectations)  that are not historical facts are
forward-looking  statements.  Because such  forward-looking  statements  include
risks and  uncertainties,  actual  results  may  differ  materially  from  those
expressed  or  implied  by  such   forward-looking   statements.   For  example,
uncertainty continues to exist as to future levels and volatility of oil and gas
price expectations and their effect on drilling levels and demand for our energy
related products,  the future impact of industry-wide  draw-downs of inventories
and future import levels.  Uncertainty also exists as to the trend and direction
of both product pricing and purchased steel costs.

All amounts are expressed in U.S. dollars unless otherwise indicated.


CHANGE IN YEAR-END
--------------------------------------------------------------------------------

In conjunction  with Maverick's  combination  with  Prudential  completed in the
third quarter of 2000,  Maverick's  Board of Directors  approved a change in the
fiscal year-end of the Company from September 30 to December 31,  effective with
the calendar year beginning January 1, 2000. Accordingly, our fiscal year is now
on a calendar year basis. A three-month "Transition Period" from October 1, 1999
through December 31, 1999 preceded the start of the 2000 calendar year.

As a result of the differing  year-ends of Maverick and Prudential  prior to the
combination  and  Maverick's  change  in  year-end,   financial  statements  for
dissimilar year-ends have been combined. Maverick's financial statements for its
fiscal  year ended  September  30,  1999 have been  combined  with  Prudential's
financial  statements for the year ended December 31, 1999.  Thus,  Prudential's
results of operations are included in both the year ended September 30, 1999 and
the Transition Period for the three months ended December 31, 1999.


OVERVIEW
--------------------------------------------------------------------------------

Our products include Electric  Resistance Welded (ERW) Oil Country Tubular Goods
(sometimes  referred  to as OCTG) and line  pipe,  which are sold  primarily  to
distributors who supply end-users in the energy industry,  and structural tubing
and  standard  pipe,  which are sold  primarily  to service  centers  who supply
end-users in  construction,  transportation,  agriculture  and other  industrial
enterprises.  We  generate  approximately  85% of  our  revenue  from  supplying
products to the energy business.


Energy Products Demand and Consumption
--------------------------------------

Demand for our energy related products depends  primarily upon the number of oil
and natural gas wells being drilled,  completed and worked over in the U. S. and
Canada and the depth and drilling conditions of these wells. The levels of these
activities are primarily  dependent on oil and natural gas prices. Many factors,
such as the  supply  and  demand  for  oil and  natural  gas,  general  economic
conditions,  and global weather patterns,  affect these prices. As a result, the
future  level and  volatility  of oil and natural gas prices are  uncertain.  In
addition,  seasonal fluctuations that affect our customers may affect the demand
for our products. For instance,  weather conditions during the first half of the
calendar  year make drilling  more  difficult in the U.S.,  while the second and
third  quarters are more  difficult in western  Canada.  Consequently,  drilling
activity and the corresponding  demand for our products are lower at these times
in these respective regions.

U.S.  end-users  obtain OCTG from  domestic and foreign pipe  producers and from
draw-downs of inventory  from the  end-user,  distributor  or mill  inventories.
Industry  inventories  of our products can change  significantly  from period to
period.  This can have a direct effect on demand for our products when customers
draw-down  from  inventory   rather  than  purchasing  our  products.   Canadian
distributors do not generally hold significant amounts of inventories.
<page>
The  following  table  illustrates  certain  factors  related  to  industry-wide
drilling  activity,  energy prices,  OCTG  consumption,  shipments,  imports and
inventories for the periods presented:

                                                      Three Months
                                                         Ended      Year Ended
                             Year Ended December 31,  December 31, September 30,
                                2001         2000        1999          1999
                           -----------------------------------------------------
U.S. Market Activity:
Average rig count..........        1,157          918          775           602
Average U.S. energy prices:
Oil per barrel (West Texas
 Intermediate).............       $26.11       $30.16       $24.30        $16.36
Natural gas per MCF
 (Average U.S.)............        $4.00        $4.18        $2.45         $2.06

U.S. OCTG Consumption:
 (in thousands of tons)
U.S. producer shipments....        1,962        1,853          376           661
Imports....................          904          720           83           134
Inventory (increase)
 /decrease.................           15         (436)         (15)          370
Used pipe..................           79          174           44           158
                           -----------------------------------------------------
Total U.S. Consumption.....        2,960        2,311          488         1,323
                           =====================================================


                                                 Year Ended December 31,
                                             2001         2000         1999
                                        ----------------------------------------
Canadian Market Activity:
Average rig count.......................          341          344           244
Average Canadian energy prices:
Natural gas per U.S. $ per MCF
  (Average Alberta spot price)..........        $4.07        $3.38         $1.97

Canadian OCTG Consumption:
(in thousands of tons)
Canadian producer shipments.............          463          465           303
Imports.................................          222          273           160
Inventory (increase)/decrease...........           71           25            10
                                        ----------------------------------------
Total Canadian consumption..............          756          763           473
                                        ========================================

The U.S.  rig  count in the table is based on weekly  rig count  reporting  from
Baker Hughes,  Inc. Energy prices in the table are monthly average period prices
as reported by Spears and Associates for West Texas Intermediate grade crude oil
and the average U.S.  monthly  natural gas cash price as reported by Natural Gas
Week.  Imports  are as  reported  by Duane  Murphy and  Associates  in "The OCTG
Situation  Report."  Inventory  (increase)/decrease  is our estimates based upon
independent  research by Duane Murphy and  Associates.  Used pipe quantities are
calculated by multiplying 8.3  recoverable  tubing and casing tons by the number
of abandoned oil and gas wells.  U.S.  consumption of OCTG is our estimate based
on estimated  per rig  consumption  of OCTG  multiplied  by the Baker Hughes rig
count.  U.S.  producer  shipments  are our  estimates  calculated  based  on the
components listed above.

The Canadian rig count in the table is based on weekly rig count  reporting from
Baker Hughes,  Inc.  Energy prices in the table are the average  Alberta natural
gas  spot  price.  Imports  are as  reported  by  Statistics  Canada.  Inventory
(increase)/decrease  is our  estimates  based upon data  reported by  Statistics
Canada. Canadian producer shipments are reported by Statistics Canada Steel Pipe
and Tube Report.

                                      [18]
<page>
According to published  industry  reports,  average U.S.  drilling  increased by
26.0% from calendar 2000 to calendar 2001,  averaging  approximately 1,157 rigs,
with  gas-related   drilling  increasing  by  30.4%  and  oil-related   drilling
increasing  by 10.2%.  The average rig count for the fourth  quarter of 2001 was
1,008 with the rig count level  decreasing to 901 at December 31, 2001.  Average
U.S. energy prices  decreased  during calendar 2001, with natural gas decreasing
4.3% and oil  decreasing  by  13.4%.  Average  gas and  crude  oil  prices  seen
throughout  the year in the U.S.  had a positive  effect on  drilling  levels in
calendar 2001.

According to published industry reports,  average Canadian drilling decreased by
0.9% from calendar 2000 to calendar 2001, averaging  approximately 341 rigs. The
average  rig count  for the  fourth  quarter  of 2001 was 276 with the rig count
level  decreasing  to 263 at December 31,  2001.  Average  Canadian  natural gas
prices  increased  during  calendar  2001 by 20.4% and oil prices  decreased  by
13.4%. Average gas and crude oil prices seen throughout the year in Canada had a
positive effect on drilling levels in calendar 2001.

Imports into the U.S.  remained  high during  calendar  2001 from a 17.0% market
share for the three  months  ended  December 31, 1999 to a 31.2% market share in
calendar 2000 to a 30.5% market share in calendar 2001. During calendar 2001 and
fiscal 1999, U.S. industry inventory  decreases adversely affected U.S. producer
shipments  by  satisfying  an  estimated  0.5%  and  28.0%,   respectively,   of
consumption.  For the three months ended  December,  31, 1999 and calendar 2000,
U.S.  industry  inventory  increases  resulted in additional  demand of 3.1% and
18.9%, respectively, of total U.S. OCTG consumption. Management believes that at
December 31, 2001,  U.S.  industry  inventory was at a high level in relation to
demand,  as  inventory  months of supply  increased  16.4%,  from 5.5  months at
calendar year 2000 to 6.4 months at calendar year 2001.

As a result of increased drilling activity partially offset by increased imports
and a  decrease  in U.S.  industry  inventories,  we  estimate  that  total U.S.
producer  shipments  increased by 5.9% in calendar  2001 as compared to calendar
2000. During that same period,  our shipments of U.S. OCTG were up 16.9% and our
export  sales,  primarily to Canada,  decreased by 49.0%.  We estimate  that our
domestic OCTG market share  increased  from 15.9% during  calendar 2000 to 18.4%
during  calendar 2001. The 18.4% market share we captured  during  calendar 2001
was  slightly  higher  than  the  market  share  we have  captured  historically
partially due to the customers we aligned ourselves with who were generally more
busy than the market as a whole and we were less reliant on spot  business  that
dried up as inventories started to decline.

Imports into Canada  decreased during calendar 2001 from a 35.8% market share in
calendar 2000 to a 29.4% market share in calendar  2001.  During  calendar 2001,
Canadian producer shipments of OCTG decreased by 0.4%.  Shipments in Canada were
adversely impacted by low-priced imports.

As a result of the decreased drilling activity,  we estimate that total Canadian
consumption  decreased  by 0.9% in calendar  2001 as compared to calendar  2000.
During that same period,  our shipments of Canadian  OCTG  decreased  17.3%.  We
estimate  that our Canadian  OCTG market share of domestic  shipments  decreased
from 42.0% during  calendar  2000 to 35.0% during  calendar 2001 due to end-user
consolidations,  more aggressive competitive pricing pressures and an additional
domestic producer of OCTG products during the current year.

Published  information  suggests  that U.S.  demand  for line pipe was up during
calendar 2001 by an estimated 34.7%.  Domestic  shipments  increased by 28.8% as
the import market share rose from 26.3% to 40.7%.  Canadian demand for line pipe
decreased during calendar 2001 by an estimated 0.9% with domestic shipments down
by 24.9% as the import market share fell from 43.7% to 34.3%.


Industrial Products Demand and Consumption
------------------------------------------

Given the numerous  applications for our industrial products,  sources of demand
for these  products  are  diversified.  Demand  depends on the general  level of
economic activity in the construction,  transportation,  agricultural,  material
handling and  recreational  market segments,  the use of structural  tubing as a
substitute for other  structural steel forms,  such as I-beams and H-beams,  and
draw-downs of existing customer inventories.

We estimate that the U.S. demand for structural tube products (commonly referred
to as hollow  structural  sections or HSS) of the type we produce  increased  by
5.0% in  calendar  2001 as compared  to  calendar  2000 and total U.S.  producer
shipments  increased  by 10.5% as import  market  share  declined  from 23.6% to
19.6%.  According to published  reports,  the U.S.  standard  pipe market demand
decreased 0.9%, while total U.S. domestic producer  shipments  increased by 3.3%
as the import market share decreased from 40.0% to 37.4%.

<page>
Pricing and Costs of Our Products
---------------------------------

Pricing of our  products  was mixed during  calendar  2001  compared to calendar
2000.  U.S. OCTG product  pricing was up 3.1% due to the increase in the average
rig count level  throughout  calendar  2001.  Average  pricing of our U.S. line,
structural  and standard  product  pricing  decreased  by 5.6%,  9.8% and 13.7%,
respectively.  U.S.  structural  and standard  pricing was down primarily due to
decreasing  steel prices  during the year.  Pricing of our  Canadian  energy and
industrial products was down by 6.3% and 12.8%,  respectively.  Prices were down
primarily  due to the weak  exchange  rate of the  Canadian  dollar  to the U.S.
dollar,  lower steel costs,  an  additional  domestic  producer of OCTG products
during the current  year and the decision by the  Canadian  government  to allow
additional OCTG imports into the country during the current year.

U.S steel costs included in cost of goods sold decreased during calendar 2001 by
$53 per ton, or 17.5%,  from $303 per ton to $250 per ton. Of this  change,  $35
resulted from our major supplier of steel  effecting  three price decreases from
mid-August 2001 to December 2001. Some of these price  reductions were reflected
in our cost of goods sold in the third and fourth  quarters  of  calendar  2001.
Currently,  our  replacement  cost of  steel is  about  the  same as the  amount
included in cost of goods sold in calendar 2001; however, we expect a 20% to 30%
per ton increase throughout calendar 2002.

The same factors that have influenced  steel costs and cost of goods sold in our
U.S. operations have also affected the steel costs and cost of goods sold in our
Canadian  operations.  Canadian cost of goods sold had decreased in the calendar
year as compared to the prior year but will increase throughout 2002.

Purchased steel represents  approximately  two-thirds of our cost of goods sold.
As a result,  the steel  industry,  which is highly  volatile  and  cyclical  in
nature,  affects our business both positively and negatively.  Numerous factors,
most of which are beyond our control, drive the cycles of the steel industry and
influence steel prices including general economic conditions,  industry capacity
utilization,  import duties and other trade  restrictions and currency  exchange
rates. Changes in steel prices have a significant impact on the margin levels of
our  products.  In  addition,  we depend on a few  suppliers  for a  significant
portion of our steel. The loss of one or more of our significant steel suppliers
could  affect  our  ability to produce  our  products  and could have a material
adverse effect on our business.


Impact of Market Conditions
---------------------------

The OCTG market  conditions  described  above  impacted our  operations  and our
competitors  significantly  during  2001,  as sales  remained  at normal  levels
throughout  the first nine  months of the year due to the  increase  in drilling
activity.  The decrease in drilling  levels  during the last three months of the
year  resulted  in  lower  than  expected  sales.  Consequently,   industry-wide
inventory  levels  declined  during  the year and the  impact of these  industry
decreases had a negative impact on domestic shipments.  As our recent experience
indicates,  oil and gas prices are volatile and can have a substantial effect on
drilling  levels  and  resulting   demand  for  our  energy  related   products.
Uncertainty  also  exists as to the future  demand and pricing for HSS and other
industrial related products.

                                      [19]
<page>
Trade Cases
-----------

The level of imports of OCTG, which has varied  significantly over time, affects
the U.S. and Canadian  OCTG markets.  We believe that these  imports  levels are
affected by, among other things:

   North American and overall world demand for OCTG,
   The trade practices of and government subsidies to foreign producers and
   The presence or absence of antidumping and countervailing duties.

Antidumping and countervailing  duty orders require special duties to be imposed
in amounts  designed  to offset  unfair  pricing and  government  subsidization,
respectively. In November, the International Trade Commission recommended to the
president  that a Section  201 case for steel  and all steel  products  with the
exception of OCTG be supported  with a wide-scale  program of quotas and duties.
The president  announced his remedy plan on March 5, 2002,  which could increase
the cost of foreign  imported hot rolled steel and steel products.  This measure
could increase the cost of our purchased  steel  significantly.  We have already
seen some  increases  which we feel are  linked to the trade  cases as our major
supplier of steel increased our steel prices by $20 in January and is looking to
implement  another price  increase in April.  This measure also does not protect
our OCTG pipe and could allow  additional  imports to come into the U.S. market.
The industry is considering  filing a dumping case on OCTG products in the first
quarter of 2002.

Previously,  there existed a Canada  Customs and Revenue  Agency ruling  against
carbon  grade  casing  from the U.S.  and Korea into  Canada  which  required an
interested  importer to obtain "normal  values" for these  products.  In June of
2001, the Canadian ruling was expired and U.S. and Korean carbon grade casing is
no longer subject to import restrictions.  This expiration poses a threat to the
selling  price  in  Canada  and may  force  us to  compete  with  more  U.S.  or
internationally priced products.


RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

Calendar Year Ended  December 31, 2001 Compared to Calendar Year Ended  December
31, 2000

Overall Company
---------------

In calendar  2001,  net sales  decreased  $16.5  million,  or 3.0%,  from $545.1
million in calendar 2000 to $528.6 million in calendar 2001.  These results were
attributable  primarily to a decrease of 0.5% in total product  shipments,  from
891,230  tons in  calendar  2000 to  886,991  tons in  calendar  2001 and a 2.6%
decrease in the overall  average net selling price during  calendar 2001 from an
average of $612 per ton to $596 per ton.

Cost of goods sold  decreased  $46.0  million,  or 9.8%,  from $471.5 million in
calendar 2000 to $425.5 million in calendar  2001.  Overall unit cost per ton of
products sold  decreased  9.3% (from an average of $529 per ton to $480 per ton)
in calendar 2001. The decrease was due primarily to a decrease in steel costs as
U.S.  steel cost of goods sold  decreased  17.5%.  The decrease in cost of goods
sold was  partially  offset by an overall  increase in  conversion  costs during
calendar 2001 primarily due to lower fixed cost absorption.

Gross profit increased $29.5 million,  or 40.0%,  from $73.6 million in calendar
2000 to $103.1 million in calendar 2001.  Gross profit per ton for calendar 2000
was $83 per ton as compared to $116 per ton for calendar 2001.  Gross profit per
ton increased as a result of lower steel costs partially offset by lower selling
prices and higher  conversion  costs.  Gross profit as a percentage of net sales
was 19.5% for  calendar  2001,  as  compared  to 13.5% for  calendar  2000.  The
increase in the gross profit is due to the factors discussed above.

Selling,  general and  administrative  expenses increased $4.9 million or 19.2%,
from $25.5  million in calendar 2000 to $30.4  million in calendar  2001.  These
expenses  were  principally  impacted  by  additional  depreciation  on our  new
enterprise  resource  planning system,  general wage increases  effective at the
beginning of the year, increased incentive  compensation and a specific bad debt
provision of $1.1 million related to a customer that declared  bankruptcy in the
fourth  quarter of 2001.  Selling,  general  and  administrative  expenses  as a
percentage of net sales increased from 4.7% in calendar 2000 to 5.7% in calendar
2001.
<page>
During  December 2001,  the Company  announced its plan to exit its operation at
its Longview,  Washington facility and move the equipment to Hickman,  Arkansas.
As a result of an expected  lower overhead  structure and reduced  freight costs
because of the close proximity to steel vendors,  the Company  believes its plan
should  result  in an annual  savings  of  approximately  $3.0  million  to $5.0
million.  In connection with the exit plan, the Company recorded a restructuring
charge for the  write-down  of property of $6.5 million and accrual of severance
costs and other cash obligations of $1.6 million  resulting in a total charge of
$8.1 million. The most significant  accounting estimate is the value of the land
and building at the facility that will be sold, which is based on an independent
appraisal.  Future cash outlays related to the exit charge include the severance
and other cash  obligations of $1.6 million and $6.7 million  related to capital
expenditures  and other  cash costs  expected  to be funded  through  the future
proceeds on the sale of the Longview,  Washington  land and building and reduced
working capital needs.

During October 1999, we acquired the equipment for and began the construction of
a new  large  diameter  pipe  and  tubing  facility  adjacent  to  our  existing
facilities in Hickman,  Arkansas.  Prior to becoming  fully  operational  in the
third  quarter of 2001,  we incurred  net costs of $1.1  million  related to the
commencement  of  operations  at this  facility.  While this new  facility is an
important  part of the Company's  strategy to expand its product lines and enter
new markets,  opening the new facility may expose us to risks including  intense
competition  in the larger  diameter  product lines,  the current  industry-wide
overcapacity  in these product  lines,  and potential  unforeseen or higher than
expected costs. Any of these risks could adversely affect or prevent the success
of the new facility.

Interest expense decreased $100,000, or 3.1%, from $3.2 million in calendar 2000
to $3.1  million  in  calendar  2001 as a result  of  decreased  borrowings  and
decreasing  interest  rates.  The lower  interest  rates  reflect  our  improved
operating  results  that were largely  attributable  to the effects of the prior
calendar  year's  favorable  energy  market.  Our debt to  capitalization  ratio
decreased  from 29.8% at December 31, 2000 to 24.2% at December  31, 2001.  This
decrease  was  primarily  due to a decrease  in the  short-term  revolver in the
amount of $17.5  million  offset by an $11.5  million in  purchases  of treasury
stock.

The provision for income taxes on  continuing  operations  was $21.2 million for
calendar  2001,  compared to the prior calendar year provision of $14.7 million.
This change is attributable to the generation of pre-tax income of $60.5 million
in calendar 2001, compared to pre-tax income in calendar 2000 of $33.5 million.

At December 31, 2001, we had available net operating loss  carryforwards  with a
tax value of $2.4  million  that  were  generated  during  fiscal  1999  through
calendar 2000. These  carryforwards  expire in 2019 and 2020. The  carryforwards
can be  utilized  in  $1.5  million  increments  per  year to  offset  financial
statement  earnings after  temporary  differences  associated with the Longview,
Washington  operations as they file a separate,  stand-alone tax return. We have
established  a valuation  allowance  of $1.0 million for that portion of the net
operating  losses  that may not be  recoverable  from future  taxable  income in
connection  with these  operations.  At December  31, 2001,  we had  alternative
minimum  tax  credit  carryforwards  of $4.0  million  available  for income tax
purposes  that  do not  expire.  See  Note 8 of the  Notes  to the  Consolidated
Financial Statements.

During  March 2001,  the Company  decided to  discontinue  its DOM  business and
recorded  a $10.2  million  charge  (net of  taxes)  for  the  expected  loss on
disposal.

                                      [20]
<page>
The most  significant  accounting  estimate is the  realizable  value of the DOM
machinery and equipment.  The Company is proceeding in its  negotiations to sell
the  facility  and  believes it will sell or  liquidate  the assets in the first
quarter of 2002. Losses from these operations during calendar 2001 were $957,000
(net of taxes).

As a result of the increased gross profit partially offset by restructuring  and
start-up costs and the other factors discussed above, we generated net income of
$28.0  million,  or $0.82 diluted income per share in calendar 2001, an increase
of $11.4  million  from the $16.6  million,  or $0.48  diluted  income per share
reported for calendar 2000.


Maverick Tube L.P. Segment
--------------------------

The  Company's  segments are based on  geographic  regions.  Maverick  Tube L.P.
("Maverick L.P."), a wholly-owned  subsidiary of the Company, is responsible for
our operations in Hickman, Arkansas and Conroe, Texas. Prudential is responsible
for our operations in Calgary, Alberta and Longview, Washington (scheduled to be
closed in March 2002).

Maverick L.P.'s sales increased $41.0 million,  or 14.0%, from $293.9 million in
calendar 2000 to $334.9  million in calendar  2001.  Maverick  L.P.'s  shipments
increased 69,190 tons, or 13.9%,  from 498,690 tons to 567,880 tons for the same
periods.  Energy shipments comprised 74,131 tons of this increase.  Our domestic
shipments of OCTG  increased by 20.9% due to an increasing rig count in the U.S.
throughout the calendar year. Our export sales,  primarily to Canada,  decreased
by 49.0%,  from 28,189 tons in  calendar  2000 to 14,361 tons in calendar  2001.
Industrial  products  shipments  decreased by 4,941 tons from  calendar  2000 to
calendar 2001.  The average  selling price for all of Maverick  L.P.'s  products
remaining  flat at $589  per ton.  The  average  selling  price  for our  energy
products  was  $655  per ton,  an  increase  of $4 per  ton.  The  increase  was
principally due to the  strengthening of the energy market  throughout the first
nine months of calendar 2001.  The rig count and average  selling prices started
to weaken during the fourth quarter of calendar 2001. The average  selling price
of our  industrial  products  was  $412  per  ton,  a  decrease  of $42 per ton,
primarily due to decreasing steel costs throughout the year.

Maverick L.P.'s cost of goods sold of $279.9 million increased $18.4 million, or
7.0%, in calendar  2001,  compared with the prior fiscal year.  The increase was
primarily due to increased product shipments. However, overall unit cost per ton
of  products  sold  decreased  5.9% (from an average of $524 per ton to $493 per
ton) in calendar  2001.  The decrease  was due  primarily to a decrease in steel
costs of 17.5%, or $53 per ton,  during  calendar 2001. See "Overview."  Overall
conversion costs remained relatively stable during calendar 2001.

Maverick  L.P.'s gross profit  increased  $22.6  million,  or 69.7%,  from $32.4
million in calendar 2000 to $55.0 million in calendar 2001. Gross profit per ton
rose from $65 per ton in calendar  2000 to $97 per ton in calendar  2001.  Gross
profit as a percentage of net sales was 16.4% for calendar  2001, as compared to
11.0% for  calendar  2000.  The change in the gross profit is due to the factors
discussed above.


Prudential Segment
------------------

Prudential's  sales  decreased $57.5 million,  or 22.9%,  from $251.2 million in
calendar  2000 to  $193.7  million  in  calendar  2001.  Prudential's  shipments
decreased  73,429 tons,  or 18.7%,  from 392,540  tons to 319,111  tons.  Energy
shipments comprised 60,603 of this decrease, while industrial products shipments
comprised  10,300 tons of this decrease in shipments.  Overall  average  selling
price for  Prudential's  products  decreased by 5.2% from an average of $640 per
ton to $607 per ton. The average  selling price for our energy products was $662
per ton, a decrease of $37 per ton. All of these decreases were  principally due
to increased  imports into the energy market  throughout  2001 and a decrease in
the foreign currency  exchange rate. The average selling price of our industrial
products was $411 per ton, a decrease of $61 per ton. Tolling tons comprised the
remainder of the decrease in shipments.

Prudential's  cost of goods sold of $145.6 million  decreased $64.4 million,  or
30.7% in calendar 2000,  compared with the prior year.  Also,  overall unit cost
per ton of  products  sold  decreased  14.8% (from an average of $535 per ton to
$456 per ton) in calendar 2001. These decreases were due primarily to a decrease
in steel  costs as steel  cost of goods  sold  decreased  17.5%,  or $53 per ton
during calendar 2001. See "Overview."

Prudential's  gross profit increased $6.9 million,  or 16.7%, from $41.2 million
in  calendar  2000 to $48.1  million  in  calendar  2001.  Gross  profit per ton
increased  from $105 per ton in calendar 2000 to $151 per ton in calendar  2001.
Gross  profit as a  percentage  of net sales was  24.8% for  calendar  2001,  as
compared to 16.4% for  calendar  2000.  The change in the gross profit is due to
the factors discussed above.

<page>
Calendar Year Ended  December 31, 2000  Compared to Fiscal Year Ended  September
30, 1999

Overall Company
---------------

In calendar 2000, net sales  increased  $236.5  million,  or 76.6%,  from $308.6
million in fiscal 1999 to $545.1  million in calendar  2000.  These results were
attributable primarily to an increase of 56.6% in total product shipments,  from
569,081  tons in  fiscal  1999 to  891,230  tons in  calendar  2000  and a 12.9%
increase in the overall  average net selling price during  calendar 2000 from an
average of $542 per ton to $612 per ton.

Cost of goods sold increased  $181.6 million,  or 62.6%,  from $289.9 million in
fiscal 1999 to $471.5  million in calendar  2000.  The overall  increase was due
primarily to increased product shipments. However, the overall unit cost per ton
of  products  sold  increased  3.9% (from an average of $509 per ton to $529 per
ton) in calendar  2000.  The increase was due  primarily to an increase in steel
costs as U.S. steel cost of goods sold increased 8.5%.  Overall conversion costs
decreased during calendar 2000 primarily due to higher fixed cost absorption.

Gross profit  increased $54.9 million,  or 293.6%,  from $18.7 million in fiscal
1999 to $73.6 million in calendar 2000. Gross profit per ton for fiscal 1999 was
$33 per ton as compared to $83 per ton for calendar  2000.  Gross profit per ton
was  impacted by rising  selling  prices and lower  conversion  costs  partially
offset by higher  steel costs.  Gross  profit as a  percentage  of net sales was
13.5% for calendar  2000,  as compared to 6.1% for fiscal 1999.  The increase in
the gross profit is due to the factors discussed above.

Selling,  general and administrative  expenses increased $3.5 million, or 15.9%,
from $22.0  million in fiscal  1999 to $25.5  million in  calendar  2000.  These
expenses  were  principally  impacted  by  additional  depreciation  on our  new
enterprise  resource  planning system,  general wage increases  effective at the
beginning of the year and additional head count to support the rise in the sales
level. Selling, general and administrative expenses as a percentage of net sales
decreased from 7.1% in fiscal 1999 to 4.7% in calendar 2000 due primarily to the
increased sales level.

During October 1999, we acquired the equipment for and began the construction of
a new  large  diameter  pipe  and  tubing  facility  adjacent  to  our  existing
facilities in Hickman,  Arkansas.  We incurred net costs of $267,000  related to
the commencement of operations at this facility.  These costs were manufacturing
costs incurred  prior to the fully  integrated  operations of the facility.  The
manufacturing  costs were offset by a large  industrial  product order which was
produced and shipped in December 2000 and are included in the Maverick Tube L.P.
segment operating income for the calendar year ended December 31, 2000.

On September 22, 2000, the business  combination  with Prudential Steel Ltd. was
completed.  As this transaction was accounted for as a pooling of interests,  we
recorded a pre-tax  charge of $11.3  million ($9.4 million after tax) for direct
and severance  costs  associated with the  transaction.  These costs reduced net
income per share by $0.27 per share for the  calendar  year ended  December  31,
2000.

                                      [21]
<page>
Interest expense  increased $1.3 million,  or 68.4%, from $1.9 million in fiscal
1999 to $3.2 million in calendar  2000 as a result of increased  borrowings  and
interest rates. The higher interest rates were primarily due to revisions to our
credit   facilities  to  reflect  our   operating   results  that  were  largely
attributable to the effects of the prior fiscal year's unfavorable energy market
and to  provide  additional  availability  in the  borrowing  base.  Our debt to
capitalization  ratio  increased  from 22.8% at  September  30, 1999 to 29.8% at
December 31, 2000. This increase was primarily due to $33.2 million in purchases
of  property,  plant and  equipment  that were not  financed  by the sale of 2.3
million shares of common stock during the  Transition  Period ended December 31,
1999 (the proceeds of which were used primarily to finance the  acquisition  and
construction of the large mill facility in Hickman, Arkansas) and an increase of
$25.2 million in working capital needs.

The provision for income taxes was $14.7 million for calendar 2000,  compared to
fiscal 1999, when we recorded a benefit of $348,000. This change is attributable
to the generation of pre-tax income of $33.5 million in calendar 2000,  compared
to  pre-tax  loss in fiscal  1999 of $5.4  million.  During  calendar  2000,  we
incurred a loss of $2.0 million at our  Longview,  Washington  facility that has
not yet  been  recognized  for tax  purposes  and  thus,  no  benefit  has  been
recognized in our financial statements.

Losses from the  discontinued  DOM  operations  during  calendar  2000 were $2.2
million net of taxes.

As a result of the increased  gross profit  partially  offset by the transaction
costs of our business  combination  and the other factors  discussed  above,  we
generated net income of $16.6  million,  or $0.48 diluted  income per share,  in
calendar 2000, an increase of $23.9 million from the $7.3 million loss, or $0.24
diluted loss per share, reported for fiscal 1999.


Maverick Tube L.P. Segment
--------------------------

Maverick L.P.'s sales increased $127.3 million, or 76.4%, from $166.6 million in
fiscal  1999 to $293.9  million in  calendar  2000.  Maverick  L.P.'s  shipments
increased 165,457 tons, or 49.6%, from 333,233 tons to 498,690 tons for the same
periods.  Energy shipments comprised 156,652 tons of this increase. Our domestic
shipments of OCTG increased by 102.2% due to an increasing rig count  throughout
the calendar year and  inventory  build up by our  customers.  Our export sales,
primarily  to Canada,  increased  by 41.4%,  from  19,931 tons in fiscal 1999 to
28,189 tons in calendar 2000, as the average  Canadian rig count rose 62.3% from
212 rigs to 344 rigs.  Industrial  products shipments comprised the remainder of
8,805 tons of the  increase in  shipments.  Overall  average  selling  price for
Maverick L.P.'s  products  increased by 17.8% from an average of $500 per ton to
$589 per ton. The average selling price for energy products was $651 per ton, an
increase of $100 per ton. The increase was principally due to the  strengthening
of the energy market  throughout  calendar  2000.  The average  selling price of
industrial products was $454 per ton, an increase of $17 per ton.

Maverick L.P.'s cost of goods sold of $261.5 million increased $97.7 million, or
59.6%,  in calendar 2000,  compared with the prior fiscal year. The increase was
primarily due to increased  product  shipments.  Also, the overall unit cost per
ton of products sold increased 6.7% (from an average of $491 per ton to $524 per
ton) in calendar  2000.  The increase was due  primarily to an increase in steel
costs of 8.5%, or $24 per ton, during calendar 2000.  Overall  conversion  costs
remained relatively stable during calendar 2000.

Maverick  L.P.'s gross profit  increased $29.6 million,  or 1,057.1%,  from $2.8
million in fiscal 1999 to $32.4 million in calendar  2000.  Gross profit per ton
rose  dramatically  from $8 per ton in  fiscal  1999 to $65 per ton in  calendar
2000.  Gross profit as a percentage of net sales was 11.0% for calendar 2000, as
compared to 1.7% for fiscal  1999.  The change in the gross profit is due to the
factors discussed above.


Prudential Segment
------------------

Prudential's  sales increased $109.2 million,  or 76.9%,  from $142.0 million in
fiscal 1999 to $251.2 million in calendar 2000. Prudential's shipments increased
156,692 tons,  or 66.4%,  from 235,848 tons to 392,540  tons.  Energy  shipments
comprised  137,003 of this increase as the average Canadian rig count rose 41.0%
from 244 rigs in 1999 to 344 rigs in 2000.  We believe  our  increase  in energy
shipments and market share was due to our ability to respond  quickly to changes
in the  market.  Industrial  products  shipments  comprised  2,871  tons  of the
increase in shipments.  Overall average selling price for Prudential's  products
increased  by 6.3% from an average of $602 per ton to $640 per ton.  The average
selling price for energy  products was $699 per ton, an increase of $44 per ton.
The increase was principally due to the recovery in the energy market throughout
2000.  The average  selling  price of  industrial  products was $472 per ton, an
increase of $13 per ton. Tolling tons comprised the remainder of the increase in
shipments.
<page>
Prudential's  cost of goods sold of $210.0 million  increased $83.9 million,  or
66.5%,  in  calendar  2000,  compared  with the prior  year.  The  increase  was
primarily  due to  increased  product  shipments.  Overall  unit cost per ton of
products sold  remained  consistent at an average of $535 per ton. The stability
in unit  costs  was due  primarily  to an  increase  in steel  costs  offset  by
decreased conversion costs due to better fixed cost absorption.

Prudential's gross profit increased $25.3 million, or 159.1%, from $15.9 million
in fiscal 1999 to $41.2 million in calendar 2000. Gross profit per ton increased
from $67 per ton in fiscal 1999 to $105 per ton in calendar  2000.  Gross profit
as a percentage  of net sales was 16.4% for calendar  2000, as compared to 11.2%
for fiscal 1999. The change in the gross profit is due to the factors  discussed
above.


Transition Period Ended December 31, 1999 Compared to Quarter Ended December 31,
1998

Overall Company
---------------

In the  Transition  Period ended December 31, 1999,  net sales  increased  $56.5
million,  or 80.3%,  from $70.4 million for the three months ended  December 31,
1998 to $126.9  million for the three  months ended  December  31,  1999.  These
results were  attributable  primarily  to an increase of 90.6% in total  product
shipments,  from 120,480  tons in the three  months  ended  December 31, 1998 to
229,667 tons in the three months ended  December 31, 1999 and a 5.3% decrease in
the overall average net selling price during the three months ended December 31,
1999 from an average of $584 per ton to $553 per ton.

Cost of goods sold increased $49.8 million, or 76.1%, from $65.4 million for the
three  months  ended  December  31, 1998 to $115.2  million for the three months
ended  December 31, 1999.  The overall  increase was due  primarily to increased
product  shipments.  However,  the overall  unit cost per ton of  products  sold
decreased  7.6%  (from an average of $543 per ton to $502 per ton) for the three
months  ended  December 31,  1999.  The  decrease was due  primarily to a slight
decline in steel costs.

Gross profit increased $6.7 million,  or 134.0%, from $5.0 million for the three
months  ended  December  31, 1998 to $11.7  million for the three  months  ended
December 31, 1999.  Gross profit per ton for the three months ended December 31,
1998  was $42 per ton as  compared  to $51 per ton for the  three  months  ended
December 31, 1999.  Gross profit per ton was impacted by falling  selling prices
partially offset by lower steel costs. Gross profit as a percentage of net sales
was 9.2% for the three months ended  December 31, 1999,  as compared to 7.1% for
the three months ended  December 31, 1998. The change in the gross profit is due
to the factors discussed above.

                                      [22]
<page>
Selling,  general and  administrative  expenses increased $2.2 million or 44.9%,
from $4.9 million for the three  months ended  December 31, 1998 to $7.1 million
for  the  three  months  ended  December  31,  1999.  These  expenses  increased
principally  as a result of an increase in bad debt  expense,  early  retirement
costs for Prudential senior  executives and management  personnel and additional
expenses  for  the  Longview,   Washington   facility.   Selling,   general  and
administrative expenses as a percentage of net sales decreased from 6.9% for the
three months ended December 31, 1998 to 5.6% for the three months ended December
31, 1999 due primarily to the increased sales level.

Interest  expense  decreased  $158,000,  or 38.2%,  from  $414,000 for the three
months ended  December 31, 1998 to $256,000 for the three months ended  December
31, 1999 as a result of decreased borrowings.

The  provision  for income  taxes was $2.1  million for the three  months  ended
December 31, 1999,  compared to the prior year,  when we recorded a benefit from
income taxes of  $290,000.  This change is  attributable  to the  generation  of
pre-tax  income of $4.3 million for the three  months  ended  December 31, 1999,
compared to a pre-tax loss of $1.4  million for the three months ended  December
31, 1998. During the three months ended December 31, 1999, we incurred a loss of
$1.1  million  at our  Longview,  Washington  facility  that  has not  yet  been
recognized  for tax purposes  and thus,  no benefit has been  recognized  in our
financial statements.

Losses  from the  discontinued  DOM  operations  during the three  months  ended
December 31, 1999 were $687,000 net of taxes.

As a result of the increased gross profit and the other factors discussed above,
we generated a net income of $1.5 million,  or $0.05  diluted  income per share,
for the three months ended  December 31, 1999,  an increase of $2.6 million from
the $1.1 million net loss,  or $0.04  diluted  loss per share,  reported for the
three months ended December 31, 1998.


Maverick Tube L.P. Segment
--------------------------

Maverick L.P.'s sales increased $25.9 million,  or 62.6%, from $41.4 million for
the three months ended  December 31, 1998 to $67.3  million for the three months
ended December 31, 1999.  Maverick L.P.'s  shipments  increased  53,650 tons, or
70.4%,  from 76,151 tons to 129,801  tons.  Overall  average  selling  price for
Maverick  L.P.'s  products  decreased by 4.8% from an average of $544 per ton to
$518 per ton. The decrease was due to the continuation of the unfavorable energy
market conditions through the end of 1999.

Maverick L.P.'s cost of goods sold of $64.0 million increased $23.6 million,  or
58.4%,  for the three months ended  December 31, 1999,  compared  with the prior
year period.  The increase was  primarily  due to increased  product  shipments.
However,  the overall unit cost per ton of products sold decreased 7.2% (from an
average of $531 per ton to $493 per ton) for the three months ended December 31,
1999.

Maverick  L.P.'s gross  profit  increased  $2.3  million,  or 230.0%,  from $1.0
million for the three  months  ended  December  31, 1998 to $3.3 million for the
three months ended December 31, 1999. Gross profit per ton rose from $13 per ton
for the three months ended December 31, 1998 to $25 per ton for the three months
ended December 31, 1999.  Gross profit as a percentage of net sales was 4.9% for
the three  months ended  December  31,  1999,  as compared to 2.4% for the three
months ended  December  31,  1998.  The change in the gross profit is due to the
factors discussed above.


Prudential Segment
------------------

Prudential's  sales increased $30.6 million,  or 105.5%,  from $29.0 million for
the three months ended  December 31, 1998 to $59.6  million for the three months
ended  December 31,  1999.  Prudential's  shipments  increased  55,537 tons,  or
125.3%,  from 44,329 tons to 99,866  tons.  Overall  average  selling  price for
Prudential's  products decreased by 8.7% from an average of $654 per ton to $597
per ton. The  decrease was due to the  continuation  of the  unfavorable  energy
market conditions through the end of 1999.

Prudential's  cost of goods sold of $51.2 million  increased  $26.2 million,  or
104.8%,  for the three months ended  December 31, 1999,  compared with the prior
year period.  The increase was  primarily  due to increased  product  shipments.
However,  the overall unit cost per ton of products sold decreased 9.0% (from an
average of $564 per ton to $513 per ton) for the three months ended December 31,
1999.

Prudential's gross profit increased $4.4 million,  or 110.0%,  from $4.0 million
for the three  months  ended  December  31,  1998 to $8.4  million for the three
months ended December 31, 1999.  Gross profit per ton decreased from $90 per ton
for the three months ended December 31, 1998 to $84 per ton for the three months
ended December 31, 1999. Gross profit as a percentage of net sales was 14.1% for
the three  months ended  December  31, 1999,  as compared to 13.8% for the three
months ended  December  31,  1998.  The change in the gross profit is due to the
factors discussed above.

<page>
LIQUIDITY AND CAPITAL RESOURCES
--------------------------------------------------------------------------------

Working capital at December 31, 2001 was $142.3 million and the ratio of current
assets to current  liabilities  was 3.7 to 1,  compared  to  working  capital of
$118.8  million  and a  current  ratio of 2.2 to 1 at  December  31,  2000.  The
increase in working capital was  principally due to a $17.5 million  decrease in
the  short-term  revolving  credit  facility  and a $25.2  million  decrease  in
accounts  payable  partially  offset by a $34.0  million  decrease  in  accounts
receivable.  The  decrease  in  accounts  receivable,  accounts  payable and the
short-term  revolving  credit  facility  resulted from the  decreased  volume of
energy business  experienced during the fourth quarter of 2001. Cash provided by
operating activities for calendar 2001 was $52.4 million.

During calendar 2000,  three months ended December 31, 1999 and fiscal 1999, net
cash (used) provided by operating activities was $11.9 million,  $(15.6) million
and $23.5 million, respectively. In calendar 2000 and fiscal 1999, cash provided
by operating activities was primarily used to fund capital expenditures. For the
three months ended  December 31, 1999,  we used the proceeds of a then  recently
completed  sale of common  stock to fund our  operating  activities  and capital
expenditures.

Cash used in investing  activities  in calendar  2001 and 2000,  the three month
period ended December 31, 1999 and fiscal 1999 was $25.8 million, $51.7 million,
$18.0 million and $16.1  million,  respectively.  In calendar 2001, we used $5.0
million for the installation of equipment associated with our new large diameter
pipe and tubing  facility in Hickman,  Arkansas and $5.3 million for  additional
upgrades to our  enterprise  resource  system.  In calendar  2000, we used $34.9
million  primarily for the  construction and equipping of our new large diameter
pipe and tubing  facility  and $2.5  million for the  completion  of the premium
thread  facility in Calgary,  Alberta.  In the three months  ended  December 31,
1999, we used $14.4 million  primarily for the construction and equipping of our
new large  diameter  pipe and  tubing  facility.  In fiscal  1999,  we used $7.3
million  primarily  for  purchases  of  equipment,  $4.6  million  for  our  new
enterprise  resource  planning  system,  $3.0 million for the  completion of the
Longview,  Washington  facility  and $2.1  million for the deposit on large mill
equipment.

                                      [23]
<page>
During calendar 2001,  cash used by financing  activities was $27.0 million that
was principally attributable to a net pay-down of $18.0 million in our revolving
credit  facilities  and the purchase of 1.2 million  shares of treasury stock in
the amount of $11.5 million  supplemented  by $2.5 million from  employee  stock
option exercises.

During  calendar 2000,  cash provided by financing  activities was $44.3 million
that  was  principally  attributable  to a $45.9  million  net  increase  in our
revolving  credit  facilities  supplemented  by $1.4 million from employee stock
option exercises.  Dividends paid to the former stockholders of Prudential prior
to the  Company's  combination  with  Prudential  reduced  the cash  provided by
financing activities by $3.1 million.

During the three months ended  December  31,  1999,  cash  provided by financing
activities of $34.3 million was principally due to proceeds from the sale of 2.3
million  shares of our  common  stock,  which  generated  $34.9  million  in net
proceeds. These net proceeds were offset by other working capital needs.

During fiscal 1999, cash provided by financing  activities was $2.4 million that
was  primarily  attributable  to a $7.3  million net  increase in our  revolving
credit facilities. The increase in our revolving credit facilities was offset by
other regularly scheduled term debt payments of $853,000.  Dividends paid to the
former  stockholders  of  Prudential  prior to the  Company's  combination  with
Prudential reduced the cash provided by financing activities by $4.1 million.

We have  two  revolving  credit  facilities.  The  short-term  revolving  credit
facility is with a Canadian  financial  institution and the long-term  revolving
credit facility is with a group of U.S. financial  institutions.  The short-term
facility is a $25.1 million (C$40.0 million Canadian) unsecured demand operating
credit facility  limited to working capital  restrictions  and bears interest at
either Canadian prime,  U.S. base rate, LIBOR plus 1.0%, or Bankers'  Acceptance
rates plus  stamping  fees.  This  facility  is subject to certain  restrictions
related to working capital.  This facility is considered to be short-term and is
included in our current liabilities.  Additional available borrowings under this
facility at December 31, 2001 are $21.9 million.  The long-term revolving credit
facility  provides  for  maximum  borrowings  up to the  lesser of the  eligible
borrowing  base or $80.0  million and bears  interest  at either the  prevailing
prime rate or the Eurodollar  rate,  adjusted by an interest  margin,  depending
upon certain financial measurements.  The long-term revolving credit facility is
secured by  accounts  receivable,  inventories  and certain  equipment  and will
mature on January 1, 2004.  The long-term  revolver did not have any  additional
borrowings  at December 31, 2001.  On January 30, 2002,  the Company  obtained a
waiver to avoid a scheduled $5.0 million  reduction of the available  borrowings
under the  facility  subsequent  to December 31, 2001.  The  long-term  revolver
includes  restrictive  covenants  relating  to levels  of funded  debt and other
financial measurements. As of December 31, 2001, the applicable interest rate on
the short-term  revolving  credit facility and the long-term credit facility was
4.0% and 3.0% per annum, respectively.

Consistent with the Company's business  strategy,  the Company currently intends
to retain its earnings to finance the growth and development of its business and
we do not anticipate  paying cash  dividends in the near future.  Any payment of
cash dividends in the future will depend upon our financial  condition,  capital
requirements  and earnings as well as other  factors the Board of Directors  may
deem relevant.  Our long-term  revolving credit facility with commercial lenders
restricts the amount of dividends we can pay to our stockholders.

Our capital expenditure budget for calendar 2002 is approximately $16.3 million,
of  which  $5.0  million  will  be  used  for the  relocation  of the  Longview,
Washington equipment to one of our existing facilities in Hickman, Arkansas. The
remaining  $11.3  million  of our  capital  expenditure  budget  will be used to
acquire new equipment for our existing  manufacturing  facilities and to enhance
our new enterprise  resource  planning system. We expect to meet ongoing working
capital and the capital expenditure requirements from a combination of cash flow
from operating  activities and available  borrowings  under our revolving credit
facilities.
<page>
On February 12, 2002, the Company signed a definitive  agreement to purchase all
of  the  outstanding   capital  stock  of  Precision  Tube  Holding  Corporation
("Precision") for cash of $55.0 million, subject to a working capital adjustment
and 200,000  shares of the  Company's  common  stock.  The Company will also pay
approximately  $500,000 for  additions to property,  plant and  equipment  after
January 31, 2002. In  connection  with this  proposed  acquisition,  the Company
obtained  a  commitment  from a banking  institution  to enter into a new senior
credit  facility  providing the Company with a $150.0 million  revolving line of
credit on February 25, 2002.  The new senior credit  facility  would replace the
existing  short-term and long-term revolving debt and will expire in March 2006.
The additional  available borrowings under this new senior credit facility would
have been approximately  $30.0 million as of December 31, 2001 pro forma for the
net additional debt required for the acquisition. The new senior credit facility
will be secured by all accounts  receivable,  inventories  and  equipment of the
Company  along with real  estate.  Under the new  senior  credit  facility,  the
Company  can  borrow  an  amount  based on a  percentage  of  eligible  accounts
receivable,  eligible  inventory  and property,  plant and equipment  reduced by
outstanding   letters  of  credit.  The  new  senior  credit  facility  includes
restrictive  covenants  relating to a minimum  fixed  charge  coverage  ratio if
excess availability falls below $30.0 million and limits capital expenditures to
$25.0 million per year. In conjunction with the new senior credit facility,  the
Company may enter into an additional  $10.0  million to $25.0 million  long-term
senior,  subordinated financing to reduce borrowings under the new senior credit
facility.  These additional borrowings would increase the availability under the
new senior credit facility.

We  anticipate  we will comply  with the  covenants  in 2002 and beyond.  If our
operations are less than projected,  we could be in default under this facility.
Although we would  attempt to obtain an  amendment  to the facility to cure this
breech or a waiver from the lender,  we cannot give any assurance  that we could
obtain an amendment or waiver or one with terms as favorable as the terms of the
new facility. If we are unable to obtain an amendment or waiver, we would remain
in default and the lender would have the right to exercise all of its  remedies,
including,  without limitation,  the ability to accelerate all of the debt under
the facility.  We believe that our  projections for 2002 are based on reasonable
assumptions  and that it is unlikely that we would  default  absent any material
negative  event  affecting  our  industry  and the  economy as a whole.  We also
believe our lender would provide waivers if necessary.  However, our expectation
of future  operating  results and continued  compliance  with our debt covenants
cannot be ensured, as we do not control our lender's actions. If our projections
are not  achieved  and our debt is  placed in  default,  we would  experience  a
material  adverse  impact on our  reported  financial  position  and  results of
operations.


DISCLOSURE OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
--------------------------------------------------------------------------------

Revenues and Accounts Receivable Collectibility
-----------------------------------------------

We  generate  a   significant   portion  of  our  sales  of  OCTG  from  certain
distributors. If these distributors experience significant adverse conditions in
operations,  including a continuing  downturn in demand, they may not be able to
meet their  ongoing  financial  obligation  to us for prior sales or continue to
purchase additional products from us in the future.

We evaluate the collectibility of our accounts receivable based on a combination
of  factors.  In  circumstances  where  we are  aware of a  specific  customer's
inability  to meet its  financial  obligation  to us (e.g.,  bankruptcy  filing,
substantial  downgrading of credit),  we record a specific reserve for bad debts
against the amounts due reducing the net recognized  receivable to the amount we
reasonably  believe will be  collected.  For all other  customers,  we recognize
reserves  for bad debts based on the length of time  receivables  have been past
due and our historical experience with receivable  collection.  If circumstances
change, such as further  deterioration in a major customer's ability to meet its
financial  obligation to us, our estimate of the recovery  could be reduced by a
material amount.

                                      [24]
<page>

Inventory Valuation
-------------------

Our inventories are valued at the lower of average cost or market.  We perform a
quarterly  analysis to determine  whether any  reduction in our average costs is
necessary to record our inventories at a lower market amount.  We also perform a
quarterly  analysis to determine  whether any prime  products need to be written
down to a secondary  carrying  value given the  intended  sales  channel for the
product.  Should we not achieve our  expectation of the net realizable  value of
this inventory,  we could potentially incur further losses in the disposition of
this inventory.


Potential Product Liability and Environmental Claims
----------------------------------------------------

Drilling  for oil and natural gas involves a variety of risks that can result in
significant  losses.  Actual or claimed defects in our products may give rise to
claims against us for these losses.  The  transportation  of oil and gas through
line  pipe  also  involves  risks.  A  failure  of line  pipe may  give  rise to
environmental  liabilities  and  claims  against  us  for  losses.  The  use  of
structural  tubing can also involve  risks.  Actual or claimed  defects in these
pipe and tubing  products can also expose us to claims for damages.  We maintain
insurance  coverage against  potential product liability claims in amounts which
we believe to be adequate.  We have not historically  incurred  material product
liability  costs,   nor  have  we  experienced   difficulties  in  obtaining  or
maintaining adequate product liability insurance coverage. However, we may incur
product  liability in excess of our insurance  coverage or incur other uninsured
costs, and we may not be able to maintain adequate  insurance coverage levels in
the future.

In  circumstances  where we are aware of a  specific  uninsured  product  defect
claim, we record a specific reserve for the amount we reasonably believe will be
paid or for an allowance to be granted to the customer.


Longview, Washington Exit Cost Estimate
---------------------------------------

Our  estimate  of the  cost of $8.1  million  to exit the  Longview,  Washington
facility  includes a provision  to write down  certain  property by $6.5 million
based on an appraisal of its recovery value of $6.0 million.  We cannot give any
assurance  that  we will  find a buyer  for the  property  at the  $6.0  million
appraised  value.  Our plan assumes that these proceeds,  along with significant
working capital reductions,  will fund additional capital expenditures and other
cash costs  necessary  to relocate the  equipment  to our  existing  facility in
Hickman,  Arkansas. We also may face unanticipated  expenditures that may render
or eliminate our projected annual savings of $3.0 million to $5.0 million.


Cold Drawn Tubular Business Discontinued Operation
--------------------------------------------------

During the first quarter of 2001, the Company  adopted a formal plan to sell the
operating assets of its Cold Drawn Tubular Business (DOM). The operating results
of the DOM business,  including the provision for loss on disposal and operating
losses,  are estimated to be $11.2  million  (after tax).  The most  significant
accounting estimate is the realizable value of the machinery and equipment.  The
Company is  proceeding  with  negotiations  to sell the facility and  ultimately
plans to sell or  liquidate  this  business  in the first  quarter of 2002.  The
estimated proceeds will be determined by either the sale or liquidation.


Pension Plan
------------

Prudential  sponsors  two  pension  plans  (Hourly  Plan and Salary  Plan) and a
supplemental  executive  retirement  plan (SERP) and  accounts  for the plans in
accordance  with  Statement  of  Financial  Accounting  Standard  (SFAS) No. 87,
"Employers'  Accounting for Pensions," which requires that amounts recognized in
financial  statements be determined on an actuarial  basis. The most significant
estimates  involve  the  expected  long-term  rate of return on plan  assets and
discount rate. The Company has assumed the expected  long-term rate of return to
be 7% and the discount  rate,  which  reflects the current rate at which pension
liabilities could be effectively  settled,  to be 6.75% at December 31, 2001. In
estimating  the  discount  rate,  the  Company  looks  to  rates  of  return  on
high-quality,  fixed  income  investments.  The  Company  believes  its  pension
assumptions to be conservative.  Based upon the fact that the Hourly Plan is now
in an under funded position,  management  expects that the total pension expense
will be  approximately  $800,000 for 2002 compared to actual pension  expense of
$86,000 for 2001. However, 2002 expense may be less if the return on plan assets
exceeds the assumed rate of return

<page>
Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------

We are subject to interest rate risk to the extent we borrow  against our credit
facilities  with  variable  interest  rates.   Assuming  the  current  level  of
borrowings at variable rates and assuming a  two-percentage  point change in the
average interest rate under these borrowings,  it is estimated that our interest
expense  for  the  year  ended   December  31,  2001  would  have  increased  by
approximately $1.3 million. In the event of an adverse change in interest rates,
management  would  likely  take  actions  that would  mitigate  our  exposure to
interest rate risk; however, due to the uncertainty of the actions that would be
taken and their possible effects, this analysis assumes no such action. Further,
this  analysis  does not  consider  the  effects  of the  change in the level of
overall economic activity that could exist in such an environment.

The  following  table  sets  forth  certain   information  about  the  Company's
contractual obligations as of December 31, 2001 (in thousands):

                                  Payments Due By Period
                        ----------------------------------------------     Fair
                               Less Than      2-3        4-5    After     Market
Contractual Obligations  Total   1Year       Years      Years  5 Years    Value
--------------------------------------------------------------------------------

Short-term debt
 (variable)............. $3,219   $3,219        $--       $--     $--     $3,219
Capital lease
 obligations (fixed)....  6,561      840      4,011     1,248     462      6,644
Long-term debt
 (variable)............. 62,000       --     62,000        --      --     62,000
Other debt (fixed)......    368       98        270        --      --        362
                        --------------------------------------------------------
Total contractual
 cash obligations.......$72,148   $4,157    $66,281    $1,248    $462    $72,225
                        ========================================================

We are also subject to commodity  price risk with respect to purchases of steel.
Purchased steel represents  approximately  two-thirds of our cost of goods sold.
As a result,  the steel  industry,  which is highly  volatile  and  cyclical  in
nature,  affects and will affect our business both  positively  and  negatively.
Numerous factors, most of which are beyond our control,  drive the cycles of the
steel industry and influence steel prices. Changes in steel prices have and will
have a significant impact on the margin levels of our products.

The Company's  reported cash flows related to its Canadian  operations are based
on cash  flows  measured  in  Canadian  dollars  converted  to the  U.S.  dollar
equivalent  based on  published  exchange  rates for the  period  reported.  The
Company believes its current risk exposure to the exchange rate movements, based
on net cash flows, to be immaterial.

Prudential's  facility  located in Calgary,  Alberta operates under a collective
bargaining agreement expiring on December 31, 2003 that covers approximately 68%
of all  Prudential  employees.  While the Company  believes  its  present  labor
relations are good,  there can be no assurance  that the  collective  bargaining
agreement will be renewed or that a new collective bargaining agreement on terms
acceptable to us will be established.

                                      [25]
<page>
--------------------------------------------------------------------------------
                   MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
--------------------------------------------------------------------------------

                                                            December 31,
ASSETS                                                   2001           2000
                                                     ---------------------------
Current assets:
 Cash and cash equivalents...........................       $1,940       $2,193
 Accounts receivable, less allowances of
  $2,412 and $2,141 in 2001 and 2000, respectively...       41,021       74,979
 Inventories.........................................      141,739      137,718
 Deferred income taxes...............................        7,305        2,764
 Income taxes refundable.............................           --           45
 Prepaid expenses and other current assets...........        2,440        2,978
                                                     ---------------------------
Total current assets.................................      194,445      220,677

Property, plant and equipment, net...................      158,261      167,263

Other assets.........................................        4,741        2,878
                                                     ---------------------------
                                                          $357,447     $390,818
                                                     ===========================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable....................................      $23,668      $48,885
 Accrued expenses and other liabilities..............       15,605       20,025
 Deferred revenue....................................        3,759        8,954
 Income taxes payable................................        4,940        2,353
 Revolving credit facility...........................        3,219       20,766
 Current maturities of long-term debt................          938          866
                                                     ---------------------------
Total current liabilities............................       52,129      101,849
Long-term debt, less current maturities..............        5,991        6,929
Revolving credit facility............................       62,000       62,038
Other liabilities....................................        3,823        1,789
Deferred income taxes................................        8,121        4,957

STOCKHOLDERS' EQUITY

Preferred stock, $0.01 par value; 5,000,000
 authorized shares, 1 share issued and
 outstanding in 2001 and 2000........................           --           --
Common stock, $0.01 par value; 80,000,000
 authorized shares, 34,013,036 and 33,712,312
 shares issued in 2001 and 2000, respectively,
 32,812,036 and 33,712,312 share outstanding
 in 2001 and 2000, respectively......................          340          337
Treasury stock, 1,201,000 shares in 2001.............      (11,525)          --
Additional paid-in capital...........................      114,307      111,542
Retained earnings....................................      135,831      107,790
Accumulated other comprehensive loss.................      (13,570)      (6,413)
                                                     ---------------------------
                                                           225,383      213,256
                                                     ---------------------------
                                                          $357,447     $390,818
                                                     ===========================

See accompanying notes.
                                      [26]
<page>
<table>
<caption>
------------------------------------------------------------------------------------------------------------
                                  MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (In thousands, except per share data)
------------------------------------------------------------------------------------------------------------

                                                                                 Three Months      Year
                                                                                    Ended         Ended
                                                      Year Ended December 31,    December 31,  September 30,
                                                        2001           2000          1999          1999
                                                  ----------------------------------------------------------

                                                     <c>            <c>           <c>           <c>
Net sales.........................................       $528,606       $545,104      $126,880      $308,621
Cost of goods sold................................        425,516        471,478       115,174       289,879
                                                  ----------------------------------------------------------
Gross profit......................................        103,090         73,626        11,706        18,742
Selling, general and administrative...............         30,372         25,466         7,104        22,036
Restructuring charges.............................          8,061             --            --            --
Start-up costs....................................          1,101            267            --           283
                                                  ----------------------------------------------------------
Income (loss) from operations.....................         63,556         47,893         4,602        (3,577)
Transaction costs.................................             --         11,253            --            --
Interest expense..................................          3,090          3,177           256         1,868
                                                  ----------------------------------------------------------
Income (loss) from continuing operations before
 income taxes.....................................         60,466         33,463         4,346        (5,445)
Provision (benefit) for income taxes..............         21,228         14,736         2,112          (348)
                                                  ----------------------------------------------------------
Income (loss) from continuing operations..........         39,238         18,727         2,234        (5,097)

Income (loss) from operations of discontinued DOM
 facility, less applicable income tax benefit of
 $567 and $1,215 for the years ended December 31,
 2001 and 2000, respectively and $386 for the
 three months ended December 31, 1999 and $1,255
 for the year ended September 30, 1999............           (957)        (2,162)         (687)       (2,237)

Income (loss) on disposal of DOM facility,
 including provision of $1,447 for operating
 losses during phase-out period, less applicable
 income tax benefit of $5,760.....................        (10,240)            --            --            --
                                                  ----------------------------------------------------------
Net income (loss).................................        $28,041        $16,565        $1,547       $(7,334)
                                                  ==========================================================

Basic earnings (loss) per share
  Income (loss) from continuing operations........          $1.17          $0.56         $0.07        $(0.16)
  Income (loss) from discontinued operations......          (0.33)         (0.07)        (0.02)        (0.08)
                                                  ----------------------------------------------------------
Net income (loss).................................          $0.84          $0.49         $0.05        $(0.24)
                                                  ==========================================================

Diluted earnings (loss) per share
  Income (loss) from continuing operations........          $1.15          $0.54         $0.07        $(0.16)
  Income (loss) from discontinued operations......          (0.33)         (0.06)        (0.02)        (0.08)
                                                  ----------------------------------------------------------
  Net income (loss)...............................          $0.82          $0.48         $0.05        $(0.24)
                                                  ==========================================================
See accompanying notes.

                                                        [27]
</table>
<page>
<table>
<caption>
------------------------------------------------------------------------------------------------------------------------------------
                                               MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                    (In thousands, except share data)
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                Accumulated
                                                                                                  Other
                                                                                   Additional    Retained
                                                        Common Stock      Treasury   Paid-In   Comprehensive           Stockholders'
                                                       Shares    Amount    Stock     Capital   Income (Loss)  Earnings    Equity
                                                  ----------------------------------------------------------------------------------

                                                <c>            <c>       <c>      <c>          <c>        <c>          <c>
Balance at September 30, 1998.....................  31,159,971     $311      $--      $73,966      $(8,147)   $107,016     $173,146
 Net loss.........................................          --       --       --           --           --      (7,334)      (7,334)
 Foreign currency translation.....................          --       --       --           --        4,991          --        4,991
                                                                                                                       -------------
 Comprehensive (loss).............................                                                                           (2,343)
 Dividends paid to Prudential Steel Ltd.
  stockholders....................................          --       --       --           --           --      (4,070)      (4,070)
 Exercise of stock options - Prudential Steel Ltd.
  directors and employees.........................       1,838       --       --            9           --          --            9
 Exercise of stock  options - Maverick
  directors and employees.........................       3,000       --       --           19           --          --           19
 Tax benefit associated with the exercise of
  non-qualified Maverick stock options............          --       --       --           13           --          --           13
                                                  ----------------------------------------------------------------------------------
Balance at September 30, 1999.....................  31,164,809      311       --       74,007       (3,156)     95,612      166,774
 Net income.......................................          --       --       --           --           --       1,547        1,547
 Foreign currency translation.....................          --       --       --           --        1,608          --        1,608
                                                                                                                        ------------
 Comprehensive income.............................                                                                            3,155
 Dividends paid to Prudential Steel Ltd.
  stockholders....................................          --       --       --           --           --      (1,027)      (1,027)
 Exercise of stock options - Prudential Steel Ltd.
  directors and employees.........................       1,838       --       --            9           --          --            9
 Exercise of stock options - Maverick directors
  and employees...................................      28,000        1       --          186           --          --          187
 Issuance of Maverick shares......................   2,300,000       23       --       34,880           --          --       34,903
 Adjustment for change in year-end................      (1,838)      --       --           (9)      (1,608)     (1,818)      (3,435)
                                                  ----------------------------------------------------------------------------------
Balance at December 31, 1999......................  33,492,809      335       --      109,073       (3,156)     94,314      200,566
 Net income.......................................          --       --       --           --           --      16,565       16,565
 Foreign currency translation.....................          --       --       --           --       (3,257)         --       (3,257)
                                                                                                                         -----------
 Comprehensive income.............................                                                                           13,308
 Dividends paid to Prudential Steel Ltd.
  stockholders....................................          --       --       --           --           --      (3,089)      (3,089)
 Exercise of stock options - Prudential Steel Ltd.
  directors and employees.........................      88,753        1       --          567           --          --          568
 Exercise of stock  options - Maverick directors
  and employees...................................     130,750        1       --          845           --          --          846
 Tax benefit associated with the exercise of
  non-qualified Maverick stock options............          --       --       --        1,057           --          --        1,057
                                                  ----------------------------------------------------------------------------------
Balance at December 31, 2000......................  33,712,312      337       --      111,542       (6,413)    107,790      213,256
 Net income.......................................          --       --       --           --           --      28,041       28,041
 Minimum pension liability ($374 net of tax)......          --       --       --           --         (666)         --         (666)
 Foreign currency translation.....................          --       --       --           --       (6,491)         --       (6,491)
                                                                                                                         -----------
 Comprehensive income.............................                                                                           20,884
 Purchase of treasury stock.......................  (1,201,000)      --  (11,525)          --           --          --      (11,525)
 Exercise of stock options - Maverick directors
  and employees...................................     300,724        3       --        2,459           --          --        2,462
 Tax  benefit associated with the exercise of
  non-qualified Maverick stock options............          --       --       --          306           --          --          306
                                                  ----------------------------------------------------------------------------------
Balance at December 31, 2001......................  32,812,036     $340 $(11,525)    $114,307     $(13,570)   $135,831     $225,383
                                                  ==================================================================================

See accompanying notes.

                                                                      [28]
</table>
<page>
<table>
<caption>
------------------------------------------------------------------------------------------------------------
                                   MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                (In thousands)
------------------------------------------------------------------------------------------------------------

                                                                                Three Months      Year
                                                                                   Ended          Ended
                                                     Year Ended December 31,     December 31, September 30,
                                                       2001            2000          1999         1999
                                                  ----------------------------------------------------------

                                                     <c>             <c>            <c>          <c>
OPERATING ACTIVITIES
Income (loss) from continuing operations..........        $39,238        $18,727        $2,234       $(5,097)
Adjustments to reconcile income (loss) from
 continuing operations to net cash provided (used)
 by operating activities:
Depreciation and amortization.....................         14,841         12,602         3,064        10,895
Deferred income taxes.............................          4,742           (980)            41        (2,105)
Provision for losses on accounts receivable.......            354            666          (130)         (522)
(Gain) loss on sale of equipment..................             14             --            18           (28)
Noncash portion of restructuring charges..........          6,476             --            --            --
Changes in operating assets and liabilities:
  Accounts receivable.............................         29,355        (20,010)       (9,643)      (19,140)
  Inventories.....................................        (12,157)       (14,952)      (24,603)        7,405
  Prepaid expenses and other current assets.......            230           (976)         1,065          (334)
  Other assets....................................         (3,677)         1,897            79           571
  Accounts payable................................        (23,709)           615         6,416        27,697
  Accrued expenses and other liabilities..........          1,903         10,677         4,294         4,062
  Deferred revenue................................         (5,195)         3,656         1,582           132
                                                  ----------------------------------------------------------
Cash provided (used) by operating activities......         52,415         11,923       (15,583)       23,536

INVESTING ACTIVITIES
Expenditures for property, plant and equipment....        (25,784)       (51,780)      (18,004)      (16,288)
Proceeds from disposal of equipment...............             --             43             1           194
                                                  ----------------------------------------------------------
Cash used by investing activities.................        (25,784)       (51,737)      (18,003)      (16,094)

FINANCING ACTIVITIES
Proceeds from borrowings and notes................        242,903        322,363        57,793        79,331
Principal payments on borrowings and notes........       (260,876)      (276,419)      (57,494)      (72,923)
                                                  ----------------------------------------------------------
                                                          (17,973)        45,944           299         6,408
Dividends paid to Prudential Steel Ltd.
 stockholders.....................................             --         (3,089)       (1,027)       (4,070)
Purchase of treasury stock........................        (11,525)            --            --            --
Proceeds from exercise of stock options...........          2,462          1,414           196            28
Proceeds from sale of common stock................             --             --        34,903            --
                                                  ----------------------------------------------------------
Cash provided (used) by financing activities......        (27,036)        44,269        34,371         2,366

DISCONTINUED OPERATIONS
Loss from discontinued operations.................        (11,197)        (2,162)         (687)       (2,237)
Adjustments to reconcile loss from discontinued
 operations to net cash provided (used) by
 discontinued operations:
Depreciation......................................          1,455          1,217           263           525
Loss on disposal..................................         10,240             --            --            --
Change  in  operating   assets  and  liabilities
 of  discontinued operations......................            173           (422)         (359)       (4,465)
Capital expenditures..............................           (296)        (1,971)         (551)       (2,754)
                                                  ----------------------------------------------------------
Net cash provided (used) by discontinued
 operations.......................................            375         (3,338)       (1,334)       (8,931)

Effect of exchange rate changes on cash...........           (223)            --            --            --
                                                  ----------------------------------------------------------
Increase (decrease) in cash and cash equivalents..           (253)         1,117          (549)          877

Cash and cash equivalents at beginning of period..          2,193          1,076         1,625           748
                                                  ----------------------------------------------------------
Cash and cash equivalents at end of period........         $1,940         $2,193        $1,076        $1,625
                                                  ==========================================================


Supplemental disclosures of cash flow information:
 Cash paid (received) during the period for:
   Interest (net of amounts capitalized of $1,251,
    $2,937, $249, and $543).......................         $3,237         $3,181          $476        $1,862
   Income taxes...................................        $12,884         $6,027        $1,625         $(682)

See accompanying notes.

                                                         [29]
</table>
<page>
--------------------------------------------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1. Summary of Significant Accounting Policies
--------------------------------------------------------------------------------

Principles of Consolidation
---------------------------

The  consolidated  financial  statements  include the accounts of Maverick  Tube
Corporation and its direct and indirect wholly-owned subsidiaries  (collectively
referred to as "the Company," whereas "Maverick" is the Company exclusive of its
subsidiary  Prudential  Steel Ltd.). All significant  intercompany  accounts and
transactions  have been  eliminated.  The  accompanying  consolidated  financial
statements   include  the  financial   statements   of  Prudential   Steel  Ltd.
("Prudential") for all periods presented.


Change in Year-End
------------------

On July 19, 2000,  the Board of  Directors of Maverick  approved a change in the
fiscal year-end of the Company from September 30 to December 31,  effective with
the calendar year  beginning  January 1, 2000. A three month  transition  period
from  October  1, 1999  through  December  31,  1999 (the  "Transition  Period")
preceded the start of the 2000  calendar  year.  "1999" refers to the year ended
September  30,  1999,  the  Transition  Period  refers to the three months ended
December 31, 1999,  and "2001" and "2000" refer to the years ended  December 31,
2001 and 2000, respectively.


Functional Currency
-------------------

The  assets,  liabilities  and  operations  of  Prudential's  Calgary,  Alberta,
operations are measured using the Canadian dollar as the functional currency but
are presented in this report in U.S. dollars unless otherwise indicated. Foreign
currency translation adjustments are reported as accumulated other comprehensive
income (loss) in the  stockholders'  equity section of the consolidated  balance
sheets.


Revenue Recognition
-------------------

The Company  records revenue from product sales when the product is shipped from
its facilities or its outside yards.


Inventories
-----------

Inventories are principally valued at the lower of average cost or market.


Property, Plant and Equipment
-----------------------------

Property,  plant and equipment are stated on the basis of cost.  Depreciation is
computed  under the  straight-line  method over the  respective  assets'  useful
lives. Useful lives of the Company's assets are as follows:

          Land and leasehold improvements...................  10 to 20 years
          Buildings.........................................  20 to 40 years
          Transportation equipment..........................   4 to 10 years
          Machinery and equipment...........................   2 to 12 years
          Furniture and fixtures............................   2 to 10 years
          Computer software.................................    3 to 7 years

Repair  and  maintenance  costs  that do not  extend  the life of  property  and
equipment are expensed as incurred.


Income Taxes
------------

Deferred taxes are provided on an asset and liability  method  whereby  deferred
tax assets are recognized for taxable  temporary  differences and operating loss
and other tax credit  carryforwards  and deferred tax liabilities are recognized
for deductible temporary differences.  Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.

<page>
Stock-Based Compensation
------------------------

As permitted by Statement  of  Financial  Accounting  Standards  (SFAS) No. 123,
"Accounting  for  Stock-Based  Compensation,"  the  Company  follows  Accounting
Principles  Board Opinion No. 25 and related  interpretations  in accounting for
its director and employee stock options.


Use of Estimates
----------------

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


Earnings (Loss) per Common Share
--------------------------------

Basic  earnings per share exclude any dilutive  effects of options,  but include
the  exchangeable  shares  (as  further  discussed  in  Notes 2 and 15) from the
business  combination  with  Prudential  on an as-if  exchanged  basis.  Diluted
earnings per share include the  exchangeable  shares on an as-if exchanged basis
and the net effect of stock options.

The  reconciliation  for diluted  earnings  (loss) per share for the years ended
December 31, 2001 and 2000,  the three months ended  December 31, 1999,  and the
year ended September 30, 1999 is as follows (in thousands):

                                                       Transition
                                2001         2000        Period        1999
                           -----------------------------------------------------

Average shares outstanding        33,547       33,633       31,703       31,160
Dilutive effect of
 outstanding stock Options.          570          892          935           --
                           -----------------------------------------------------
Average shares deemed
 outstanding...............       34,117       34,525       32,638       31,160
                           =====================================================
Net income (loss) used in
 the calculation of basic
 and diluted earnings
 (loss) per share..........      $28,041      $16,565       $1,547      $(7,334)
                           =====================================================


Accumulated Other Comprehensive Loss
------------------------------------

Accumulated other comprehensive loss is as follows:

                                                                    Accumulated
                                           Foreign      Minimum       Other
                                          Currency      Pension    Comprehensive
                                         Translation   Liability   Income (Loss)
                                        ----------------------------------------

Balance at September 30, 1998...........      $(8,147)         $--      $(8,147)
 Current period change..................        4,991           --        4,991
                                        ----------------------------------------
Balance at September 30, 1999...........       (3,156)          --       (3,156)
 Current period change..................        1,608           --        1,608
 Adjustment for change in year-end......       (1,608)          --       (1,608)
                                        ----------------------------------------
Balance at December 31, 1999............       (3,156)          --       (3,156)
 Current period change..................       (3,257)          --       (3,257)
                                        ----------------------------------------
Balance at December 31, 2000............       (6,413)          --       (6,413)
 Current period change..................       (6,491)        (666)      (7,157)
                                        ----------------------------------------
Balance at December 31, 2001............     $(12,904)       $(666)    $(13,570)
                                        ========================================

                                      [30]
<page>
Treasury Stock
--------------

The Company's repurchases of common stock are recorded as treasury stock at cost
and result in a reduction of  stockholders'  equity.  When  treasury  shares are
reissued,  the Company uses average cost to value treasury shares and any excess
of average  cost over  reissuance  price is treated as a  reduction  of retained
earnings. The Company purchased 1,201,000 shares for $11,525,000 during the year
ended December 31, 2001.


Business Segments
-----------------

The Company's  segments are based on geographic  regions.  Maverick Tube L.P., a
wholly-owned  subsidiary  of the  Company,  is  responsible  for  the  Company's
operations in Hickman,  Arkansas and Conroe, Texas.  Prudential,  a wholly-owned
subsidiary  of the Company,  is  responsible  for the  Company's  operations  in
Calgary, Alberta, and Longview, Washington (scheduled to be closed March 2002).


Cash Equivalents
----------------

The Company's  policy is to consider demand deposits and short-term  investments
with a maturity of three months or less when purchased as cash equivalents.


Financial Instruments
---------------------

Financial instruments consist of cash and cash equivalents, accounts receivable,
accounts payable and long-term debt  obligations.  The carrying value of amounts
reported  in the  consolidated  balance  sheets  for cash and cash  equivalents,
accounts  receivable and accounts payable  approximate fair value.  Management's
estimate of the fair value of long-term debt  obligations is discussed in Note 5
to the consolidated financial statements.


Recent Accounting Pronouncements
--------------------------------

In July 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 141,
"Business  Combinations"  and SFAS  No.  142,  "Goodwill  and  Other  Intangible
Assets," effective for fiscal years beginning after December 15, 2001. Under the
new rules, the pooling of interests method is no longer permitted,  and goodwill
will no longer be amortized  but will be subject to an annual  impairment  test.
Other  intangible  assets will continue to be amortized over their useful lives.
The Company does not expect the  implementation of SFAS No. 141 and SFAS No. 142
to have an impact on its financial statements as of December 31, 2001 and 2000.


Reclassifications
-----------------

Certain  reclassifications  have been made to prior  year  balances  in order to
conform to the current year presentation.


2. Business Combination
--------------------------------------------------------------------------------

On June 11, 2000, Maverick and Prudential entered into a definitive  Combination
Agreement  providing  for the  combination  of  Prudential  with  Maverick.  The
transaction was completed on September 22, 2000.

Under the terms of the transaction,  Prudential stockholders received 0.52 of an
exchangeable  share,  issued by Maverick  Tube  (Canada)  Inc.,  a  wholly-owned
Canadian   subsidiary  of  the  Company,   for  each  Prudential  common  share.
Consequently,   Prudential   stockholders   received   a  total  of   15,813,088
exchangeable  shares. The exchangeable shares are Canadian securities that began
trading on The Toronto Stock  Exchange on September 27, 2000.  These shares have
the same  voting  rights,  dividend  and  distribution  entitlements,  and other
attributes as shares of the Company's common stock and are exchangeable, at each
stockholder's option, for the Company's common stock on a one-for-one basis. The
transaction was accounted for as a pooling of interests.
<page>
As a result of the  differing  year-ends  of Maverick  and  Prudential  prior to
combination  and the  Company's  change in year-end,  financial  statements  for
dissimilar year-ends have been combined. Maverick's financial statements for the
year ended  September 30, 1999 have been combined  with  Prudential's  financial
statements  for the year ended  December  31,  1999.  As a result,  Prudential's
results of operations  for the three months ended December 31, 1999 are included
in both the  consolidated  statements of operations  and cash flows for the year
ended  September  30, 1999 and for the three  months  ended  December  31, 1999.
Prudential's  net sales and net income  recognized  for the three  months  ended
December 31, 1999 were $59,647,000 and $2,845,000, respectively. Included in the
consolidated  statement of stockholders'  equity is a $3,435,000  adjustment for
the  change in  year-end  which  represents  Prudential's  stockholders'  equity
activity for the three  months ended  December 31, 1999 that is included in 1999
and the Transition Period.

The unaudited summarized consolidated results of operations for the three months
ended December 31, 1998 are provided for comparative  purposes to the Transition
Period and are as  follows:  net sales  $70,439,000,  gross  profit  $5,049,000,
benefit for income taxes  $290,000,  net loss  $1,111,000,  basic loss per share
$0.04, and diluted loss per share $0.04.

The  historical  consolidated  financial  statements  of  Prudential,   although
previously  issued  in  Canadian  dollars,  are  included  in  the  consolidated
financial  statements in U.S.  dollars.  The separate  stockholders'  equity and
results of  operations  previously  reported by the  separate  companies  are as
follows (in thousands):

                                         Six Months
                                        Ended June 30, Transition
                                            2000         Period        1999
                                        ----------------------------------------
                                         (Unaudited)
Revenues:
 Maverick...............................     $137,137      $67,233     $166,647
 Prudential.............................      118,182       59,647      141,974
                                        ----------------------------------------
 Combined...............................     $255,319     $126,880     $308,621
                                        ========================================

Net income (loss):
 Maverick...............................       $1,587      $(1,298)    $(10,449)
 Prudential.............................       10,190        2,845        3,115
                                        ----------------------------------------
 Combined...............................      $11,777       $1,547      $(7,334)
                                        ========================================

Stockholders' equity:
 Maverick...............................     $115,876     $113,438      $79,646
 Prudential.............................       93,341       87,128       87,128
                                        ----------------------------------------
 Combined...............................     $209,217     $200,566     $166,774
                                        ========================================

There were no material  adjustments  required to conform the accounting policies
of the two companies.  Certain amounts of Prudential  have been  reclassified to
conform to the reporting practices of Maverick.

In connection with the combination,  the Company recorded  transaction  costs of
$11,253,000  ($9,400,000  after  tax)  for the year  ended  December  31,  2000.
Transaction  costs include  investment  banking,  legal,  accounting,  printing,
severance pay and other costs directly related to the  combination.  These costs
reduced net income by $0.27 per share for the year ended December 31, 2000.

                                      [31]
<page>
3.    Discontinued Operations
--------------------------------------------------------------------------------

During the first quarter of 2001, the Company  adopted a formal plan to sell the
operating  assets of its Cold Drawn Tubular  Business  (DOM).  Accordingly,  the
operating  results of the DOM facility,  including the provision for the loss on
disposal and operating losses during the phase-out period of $10,240,000 (net of
$5,760,000 tax benefit),  have been segregated  from  continuing  operations and
reported  separately as discontinued  operations in the statement of operations.
DOM revenues were  $7,544,000,  $15,278,000,  $2,736,000  and $5,770,000 for the
years ended  December 31, 2001 and 2000,  the three  months  ended  December 31,
1999, and the year ended September 30, 1999, respectively. The net assets of DOM
included in the accompanying consolidated balance sheet at December 31, 2001 and
2000, consist of the following (in thousands):

                                                          2001          2000
                                                     ---------------------------

Inventories and current assets.......................       $5,204       $6,240
Net plant and equipment..............................        3,536       14,735
Accounts payable and other current liabilities.......         (186)        (849)
                                                     ---------------------------
Net assets of discontinued operations................       $8,554      $20,126
                                                     ===========================

The Company expects to complete its exit from the DOM business before the end of
the first quarter of 2002.


4. Restructuring Charges
--------------------------------------------------------------------------------

During  December  2001,  the Company  announced  its plans to exit its Longview,
Washington  facility and move the operations to one of its existing buildings in
Hickman,  Arkansas.  As a result, 112 employees at the facility were terminated.
Restructuring  costs of $8,061,000  ($5,573,000  after tax) were recorded in the
2001  consolidated  statement of operations and included the following items (in
thousands):

Noncash costs:
Write-down of property, plant and equipment to fair value.........       $6,476
Cash costs:
Employee severance cost...........................................          581
Other.............................................................        1,004
                                                                  --------------
                                                                          1,585
                                                                  --------------
Total restructuring costs.........................................       $8,061
                                                                  ==============

As of December  31,  2001,  there was no activity  charged to the  reserve.  The
restructuring  activities  are expected to be completed by the end of the second
quarter of 2002.

Future  cash  outlays  expected  in 2002  related  to the exit of the  Longview,
Washington  operations are anticipated to be $7,900,000 including the $1,585,000
cash costs above and $6,315,000 related primarily to capital expenditures at our
existing  facility in Hickman,  Arkansas.  These cash outlays are expected to be
funded  through the future sale of the  Longview,  Washington  land and building
along with a reduction in working capital requirements for this operation.

<page>
5. Long-Term Debt and Revolving Credit Facilities
--------------------------------------------------------------------------------

Long-term debt,  including  Maverick's  long-term revolving credit facility,  at
December 31, 2001 and 2000, consists of the following (in thousands):

                                                          2001         2000
                                                     ---------------------------

Capital  lease  obligation,  secured  by property
 and plant  (net  book  value $6,027,000 at
 December 31,  2001); payable in monthly
 installments (including interest at 8.0%) of
 $59,475; final payment due on August 1, 2007........       $3,244       $3,679

Capital lease obligation, secured by property and
 plant (net book value $9,495,000 at December 31,
 2001); interest of 7.5% payable monthly; payable
 in monthly principal installments of approximately
 $20,000 (plus interest) commencing on March 1,
 1996; gradually increasing to $31,250 by year
 seven and increasing to $240,417 in year eight;
 final payment due on February 1, 2004...............        3,317        3,654

Revolving credit notes, secured by certain accounts
 receivable, inventories and equipment; due on
 January 1, 2004; interest payable monthly (3.0%
 at December 31, 2001) at either prime, Federal
 Funds Rate plus 0.5%, or the LIBOR rate, adjusted
 by an interest margin, depending upon certain
 financial measurements..............................       62,000       62,038

Other................................................          368          462
                                                     ---------------------------
                                                            68,929       69,833
Less current maturities..............................         (938)        (866)
                                                     ---------------------------
                                                           $67,991      $68,967
                                                     ===========================

Prudential  has a  C$40,000,000  ($25,118,000  at December 31,  2001)  unsecured
credit  facility  subject to  certain  restrictions  related to working  capital
through a  Canadian  chartered  bank.  Interest  is  payable  monthly  at either
Canadian prime,  U.S. base rate,  LIBOR plus 1.0%, or Bankers'  Acceptance rates
plus stamping  fees. The effective  interest rate on the amounts  outstanding at
December 31, 2001 is 4.0%. Additional available borrowings under the facility at
December 31, 2001 are  $21,899,000.  The  aggregate  outstanding  balance of the
credit  facility at December 31, 2001 and 2000, is $3,219,000  and  $20,766,000,
respectively.   Borrowings   under  this  credit   facility  are  classified  as
short-term.

Maverick has a revolving  credit  facility  that provides for advances up to the
lesser of $80,000,000 or the eligible  borrowing base as defined in the facility
agreement.  In addition,  Maverick had outstanding  letters of credit under this
revolving  credit  agreement of  $1,428,000  at December 31, 2001 (which  expire
through  November  2002).  The  Company  did not have any  additional  available
borrowings  under this facility at December 31, 2001.  On January 30, 2002,  the
Company  obtain  a waiver  to  avoid a  scheduled  $5,000,000  reduction  of the
available  borrowings  under the facility  subsequent to December 31, 2001.  The
agreement includes  restrictive  covenants relating to levels of funded debt and
other financial  measurements  and restricts the amount of dividends that can be
paid on  common  stock.  The  revolving  credit  agreement  requires  an  annual
commitment fee based upon certain financial measurements.

                                      [32]
<page>
On February 25, 2002, the Company  obtained a commitment for a new senior credit
facility  providing for a $150,000,000  revolving line of credit. The new senior
credit  facility  will replace the existing  Maverick and  Prudential  revolving
credit  facilities.  Interest  is payable  monthly at LIBOR rate  adjusted by an
interest margin,  depending upon certain financial  measurements.  Under the new
senior credit  facility,  the Company can borrow an amount based on a percentage
of eligible  accounts  receivable,  eligible  inventory and property,  plant and
equipment  reduced by outstanding  letters of credit.  The additional  available
borrowings  under this new senior credit facility would have been  approximately
$30,000,000  as of  December  31,  2001 pro  forma for the net  additional  debt
required for the  acquisition  of Precision  Tube Holding  Corporation.  The new
senior credit facility includes restrictive  covenants relating to maintaining a
minimum fixed charge ratio if  availability  falls below  $30,000,000 and limits
capital  expenditures to $25,000,000 per year. Like our current facilities,  the
new senior credit facility would limit or restrict our ability to pay dividends,
create liens, sell assets or enter into transactions with affiliates without the
consent of the lenders.

The present  value of future  minimum  lease  payments  under the capital  lease
obligations as of December 31, 2001 is as follows (in thousands):

                                        Total Minimum   Minimum
                                            Lease        Lease     Present Value
                                          Payments      Interest    of Payments
                                        ----------------------------------------

2002....................................       $1,319         $479         $840
2003....................................        3,330          353        2,977
2004....................................        1,199          165        1,034
2005....................................          714          115          599
2006....................................          714           65          649
Thereafter..............................          476           14          462
                                        ----------------------------------------
                                               $7,752       $1,191       $6,561
                                        ========================================

Property, plant and equipment at December 31, 2001 and 2000, include $19,527,000
and  $19,294,000,   respectively,  under  leases  that  have  been  capitalized.
Accumulated  depreciation  for these assets was  $4,005,000  and  $3,477,000  at
December 31, 2001 and 2000, respectively.

The  fair  value  of the  Company's  total  debt is  based  on  estimates  using
discounted  cash flow analyses based on quoted market prices for similar issues.
The estimated fair value of total debt at December 31, 2001 was $72,225,000.


6. Inventories
--------------------------------------------------------------------------------

Inventories  at  December  31,  2001 and  2000,  consist  of the  following  (in
thousands):

                                                         2001          2000
                                                     ---------------------------

Finished goods.......................................      $86,256      $77,490
Work-in-process......................................        3,574        4,197
Raw materials........................................       30,089       32,276
In-transit materials.................................       11,849       14,936
Storeroom parts......................................        9,971        8,819
                                                     ---------------------------
                                                          $141,739     $137,718
                                                     ===========================

Finished goods at December 31, 2001 and 2000 include  $3,353,000 and $7,485,000,
respectively, of customer-obligated inventory.


7. Property, Plant and Equipment
--------------------------------------------------------------------------------

Property,  plant and  equipment  at December  31, 2001 and 2000,  consist of the
following (in thousands):

                                                          2001         2000
                                                     ---------------------------

Land.................................................       $4,097       $4,232
Land and leasehold improvements......................        3,659        5,363
Buildings............................................       54,547       39,943
Transportation equipment.............................        4,174        3,826
Machinery and equipment..............................      174,502      188,336
Computer software....................................       16,611       10,748
Furniture and fixtures...............................        4,000        4,359
                                                     ---------------------------
                                                           261,590      256,807
Less accumulated depreciation........................     (103,329)     (89,544)
                                                     ---------------------------
                                                          $158,261     $167,263
                                                     ===========================


8. Income Taxes
--------------------------------------------------------------------------------

The jurisdictional components of income (loss) from continuing operations before
income taxes for the years ended  December  31, 2001 and 2000,  the three months
ended  December 31, 1999,  and the year ended  September 30, 1999 are as follows
(in thousands):

                                                       Transition
                               2001          2000        Period         1999
                           -----------------------------------------------------

Domestic...................      $24,556       $3,979      $(4,818)    $(13,849)
Foreign....................       35,910       29,484        9,164        8,404
                           -----------------------------------------------------
                                 $60,466      $33,463       $4,346      $(5,445)
                           =====================================================

The  components of the provision  (benefit) for income taxes for the years ended
December 31, 2001 and 2000,  the three months ended  December 31, 1999,  and the
year ended September 30, 1999 are as follows (in thousands):

                                                       Transition
                               2001         2000         Period         1999
                           -----------------------------------------------------

Current:
  Federal..................       $8,107       $3,282        $(320)     $(2,174)
  State....................          264           67          (23)        (112)
  Foreign..................       14,234       11,680        2,392        4,027
                           -----------------------------------------------------
                                  22,605       15,029        2,049        1,741
                           -----------------------------------------------------

Deferred:
  Domestic.................        1,254         (148)          --       (2,211)
  Foreign..................       (2,631)        (145)          63          122
                           -----------------------------------------------------
                                  (1,377)        (293)          63       (2,089)
                           -----------------------------------------------------
                                 $21,228      $14,736       $2,112        $(348)
                           =====================================================

The difference between the effective income tax rate and the U.S. federal income
tax rate for the years ended  December 31, 2001 and 2000, the three months ended
December 31, 1999, and the year ended September 30, 1999 is explained as follows
(in thousands):

                                                      Transition
                                2001         2000        Period        1999
                           -----------------------------------------------------

Provision (benefit)
 at U.S. statutory tax rate      $21,163      $11,745       $1,532      $(1,892)
State and local taxes, net
 of federal tax benefit....          280           67          (23)        (112)
Taxes on foreign income in
 excess of U.S. statutory
 rate......................        3,401        2,677          487          698
Alternative minimum tax....           --           81           --           --
Increase (decrease) in
 valuation allowance.......       (1,376)         660          604        1,717
Manufacturing and
 processing deduction......       (2,877)      (2,764)        (524)        (900)
Nondeductible expenses
 (income)..................         (393)       1,910           72           --
Other......................        1,030          360          (36)         141
                           -----------------------------------------------------
                                 $21,228      $14,736       $2,112        $(348)
                           =====================================================

                                      [33]
<page>
Temporary  differences which give rise to deferred tax assets and liabilities at
December 31, 2001 and 2000 are as follows (in thousands):

                                                          2001         2000
                                                     ---------------------------

Deferred tax assets:
 Various accrued liabilities and reserves............       $4,560       $3,880
 Net operating loss carryforwards....................        2,402        6,315
 Alternative minimum tax carryforwards...............        4,022        2,622
 Asset valuations....................................          993          255
 Valuation allowance.................................       (1,001)      (2,377)
                                                     ---------------------------
 Total deferred tax assets...........................       10,976       10,695
Deferred tax liabilities:
 Accelerated depreciation............................       10,894       12,222
 Pension plan........................................          216          666
 Asset valuations....................................          682           --
                                                     ---------------------------
 Total deferred tax liabilities......................       11,792       12,888
                                                     ---------------------------
 Net deferred tax liabilities........................        $(816)     $(2,193)
                                                     ===========================

All cumulative  undistributed earnings of the Company's foreign subsidiary up to
C$100,000,000  ($62,794,000  at December  31, 2001) are  considered  permanently
reinvested in the foreign location.

Maverick  had  alternative  minimum  tax  credit   carryforwards  of  $4,022,000
available for income tax purposes at December 31, 2001.  These  carryforwards do
not expire.

Prudential  has available net operating loss  carryforwards  with a tax value of
$2,402,000  at  December  31,  2001  which  expire in 2019 and  2020.  These net
operating  loss  carryforwards,  which are  subject to an annual  limit,  can be
utilized to offset  taxable  income  generated  from the assets of the Longview,
Washington  facility.  The  assets  of the  Longview,  Washington  facility  are
scheduled  to be  relocated  to one  of the  Company's  existing  facilities  in
Hickman, Arkansas during 2002. Management's assessment is that the character and
nature of future  taxable  income may not allow the  Company to realize the full
amount of the tax benefits of these net operating losses within the carryforward
period.  Accordingly,  a valuation  allowance has been made for amounts that may
not be recoverable.


9. Defined Contribution Plans
--------------------------------------------------------------------------------

The Company sponsors two defined contribution 401(k) plans that are available to
all U.S.  employees.  The plans may be amended or  terminated at any time by the
Board of Directors. The Company, although not required to, has provided matching
contributions  to the plans for the years ended  December 31, 2001 and 2000, the
three months ended December 31, 1999,  and the year ended  September 30, 1999 of
$878,000, $849,000, $201,000, and $718,000, respectively.

The Company also  sponsors  two deferred  compensation  plans  covering  certain
Maverick  officers  and key  employees.  One  plan  provides  for  discretionary
contributions based solely upon the Company's profitability and the individuals'
gross wages. The other plan provides for fixed contributions to certain officers
of the  Company.  The  Company  contribution  to these plans for the years ended
December 31, 2001 and 2000,  and the year ended  September 30, 1999 was $45,000,
$60,000 and $60,000 respectively.  The Company did not contribute to these plans
for the three months ended December 31, 1999.


10. Defined Benefit Plans
--------------------------------------------------------------------------------

Prudential  sponsors  two  pension  plans  (Hourly  Plan and Salary  Plan) and a
postretirement  benefit plan for substantially all of its Canadian employees and
a  supplemental   executive  retirement  plan  (SERP)  for  certain  former  key
executives. A reconciliation of changes in the plans' benefit obligations,  fair
value of assets, and statement of funded status for the years ended December 31,
2001 and 2000, is as follows (in thousands):
<page>
                                Pension Benefits           Postretirement
                                    and SERP                Benefit Plan
                                2001         2000         2001         2000
                           -----------------------------------------------------

Change in benefit
obligation:
 Benefit obligation
  at beginning of year.....      $25,325      $21,802       $1,070         $479
 Service cost..............          909          915           30           31
 Interest cost.............        1,733        1,653           69           69
 Plan amendments...........        1,438          226           --           --
 Actuarial loss............        2,518        2,467          241          537
 Benefits paid.............       (1,112)        (885)         (38)         (26)
 Foreign currency
  translation change.......       (1,436)        (853)         (60)         (20)
                           -----------------------------------------------------
 Benefit obligation at end
  of year..................      $29,375      $25,325       $1,312       $1,070
                           =====================================================


Change in fair value of
plan assets:
 Fair value of plan assets
  at beginning of year.....      $33,138      $25,514          $--          $--
 Employer contributions....          155           57           38           26
 Actual return on plan
  assets...................       (2,045)       9,450           --           --
 Benefits paid.............       (1,112)        (885)         (38)         (26)
 Foreign currency
  translation change.......       (1,884)        (998)          --           --
                           -----------------------------------------------------
 Fair value of plan assets
  at end of year...........      $28,252      $33,138          $--          $--
                           =====================================================

Funded status:
 Overfunded (underfunded)
  status at end of year....      $(1,123)      $7,813      $(1,312)     $(1,070)
 Unrecognized actuarial
  (gain) loss..............        5,228       (1,598)         200          (43)
 Unrecognized transition
  asset....................       (5,535)      (6,415)         489          562
 Unrecognized prior
  service cost.............        1,503          208           --           --
                           -----------------------------------------------------
 Prepaid (accrued) benefit
  cost.....................          $73           $8        $(623)       $(551)
                           =====================================================

Amounts recognized in the
balance sheets:
 Prepaid benefit costs.....       $1,531       $1,797          $--          $--
 Accrued benefit liability.       (3,822)      (1,789)        (623)        (551)
 Intangible asset..........        1,324           --           --           --
 Additional minimum pension
  liability................        1,040           --           --           --
                           -----------------------------------------------------
 Net amount recognized.....          $73           $8        $(623)       $(551)
                           =====================================================

The Hourly Plan projected and accumulated  benefit obligations of $12,889,000 at
December 31, 2001 were in excess of the fair value of plan assets of $10,731,000
at December 31, 2001. The SERP projected and accumulated  benefit obligations of
$1,664,000  and  $1,789,000  at December 31, 2001 and 2000,  respectively,  were
unfunded.  The fair value of plan  assets for the Salary  Plan were in excess of
the projected and accumulated benefit obligations at December 31, 2001 and 2000.

The provisions of SFAS No. 87, "Employers' Accounting for Pensions," require the
recognition of an additional  minimum liability and related  intangible asset to
the extent that  accumulated  benefits  exceed plan  assets.  As of December 31,
2001,  the Company  recorded an adjustment  of $1,040,000  which was required to
reflect the Company's minimum liability.

Benefit costs consist of the following for the years ended December 31, 2001 and
2000, the three months ended December 31, 1999, and the year ended September 30,
1999 (in thousands):

                                      [34]
<page>
                                                      Transition
                               2001         2000        Period         1999
                           -----------------------------------------------------

Pension Benefit Costs:
 Service cost..............         $909         $915         $176         $719
 Interest cost.............        1,733        1,653          432        1,759
 Expected return on plan
  assets...................       (2,154)      (2,115)        (441)      (1,802)
 Amortization of prior
  service cost.............         (287)        (425)          (3)         (12)
 Amortization of transition
  (asset) obligation.......          (96)         366           --           --
 Recognized net actuarial
  gain.....................          (19)          --          (74)        (303)
                           -----------------------------------------------------
                                     $86         $394          $90         $361
                           =====================================================

                                                       Transition
                                2001         2000        Period        1999
                           -----------------------------------------------------

Postretirement Benefit Plan
Costs:
Service cost...............          $30          $31           $8          $33
Interest cost..............           69           69           17           67
Recognized net actuarial
 loss......................           41           42           11           45
                           -----------------------------------------------------
                                    $140         $142          $36         $145
                           =====================================================

The prior  service  costs are  amortized  on the  straight-line  basis  over the
average  remaining service period of active  participants.  Gains and losses are
amortized over the average remaining service period of active participants.

The weighted  average  assumptions used in accounting for the Company's plans at
December 31, 2001 and 2000, are as follows:

                                                           Postretirement
                               Pension Benefits             Benefit Plan
                               2001         2000          2001         2000
                           -----------------------------------------------------

Discount rate..............        6.75%        6.75%        6.50%         6.75%
Expected return on plan
 assets....................        7.00%        7.00%          --            --
Rate of compensation
 increase..................        4.25%        4.25%          --            --

For measurement purposes, a 9.00% annual rate of increase in the per capita cost
of covered  health care  benefits was assumed for 2002.  The rate was assumed to
decrease gradually each successive year until it reaches 4.50%.

Assumed  health care cost trend rates have a  significant  effect on the amounts
reported for a postretirement health care plan. A one-percentage-point change in
assumed  health  care cost  trend  rates  would  have the  following  effect (in
thousands):

                                                      1% Increase  1% Decrease
                                                     ---------------------------

Effect on total service and interest cost components.          $20          $16
Effect on accumulated postretirement benefit
 obligations.........................................         $210         $171


11. Segment Information
--------------------------------------------------------------------------------

The following  table sets forth data (in thousands) for the years ended December
31, 2001 and 2000,  the three months ended December 31, 1999, and the year ended
September 30, 1999 for the  reportable  industry  segments of Maverick Tube L.P.
and Prudential.  Identifiable assets are those used in the Company's  operations
in each segment.

                           Maverick Tube
                                L.P.     Prudential    Corporate      Total
                           -----------------------------------------------------

Year Ended December 31, 2001
----------------------------

Net sales..................     $334,892     $193,714          $--     $528,606
Operating income...........       30,941       32,615           --       63,556
Identifiable assets........      212,531      127,206       17,710      357,447
Depreciation and
 amortization..............        8,571        4,878        1,392       14,841
Capital expenditures.......       18,803        1,301        5,680       25,784


Year Ended December 31, 2000
----------------------------

Net sales..................     $293,925     $251,179          $--     $545,104
Operating income...........       14,664       33,229           --       47,893
Identifiable assets........      223,634      152,198       14,986      390,818
Depreciation and
 amortization..............        6,357        4,812        1,433       12,602
Capital expenditures.......       40,553        8,055        3,172       51,780


Three Months Ended December 31, 1999
------------------------------------

Net sales..................      $67,233      $59,647          $--     $126,880
Operating income (loss)....         (751)       5,353           --        4,602
Identifiable assets........      176,785      129,093       17,377      323,255
Depreciation and
 amortization..............        1,423        1,317          324        3,064
Capital expenditures.......       14,870        1,934        1,200       18,004


Year Ended September 30, 1999
-----------------------------

Net sales..................     $166,647     $141,974          $--     $308,621
Operating income (loss)....      (10,848)       7,271           --       (3,577)
Identifiable assets........      142,630      129,093       17,518      289,241
Depreciation and
 amortization..............        6,306        4,065          524       10,895
Capital expenditures.......        6,567        5,048        4,673       16,288

The following  table sets forth the energy and industrial  product sales for the
years ended  December 31, 2001 and 2000,  the three  months  ended  December 31,
1999, and the year ended September 30, 1999 (in thousands).

                                                      Transition
                               2001         2000         Period        1999
                           -----------------------------------------------------

Energy product sales.......     $447,881     $449,290     $103,452     $225,149
Industrial product
 sales.....................       80,725       95,814       23,428       83,472
                           -----------------------------------------------------
                                $528,606     $545,104     $126,880     $308,621
                           =====================================================

The Company had  intersegment  sales of  $18,782,000  and $424,000 for the years
ended  December  31, 2001 and 2000,  respectively.  There were no  inter-segment
sales for the three months ended December 31, 1999 and the year ended  September
30, 1999.

Prudential's facility located in Calgary,  Alberta,  operates under a collective
bargaining agreement that covers approximately 68% of all Prudential  employees.
The collective bargaining agreement expires on December 31, 2003.


12. Operating Leases
--------------------------------------------------------------------------------

The Company  rents office  facilities  and  equipment  under  various  operating
leases.  Future  minimum  payments  under  noncancelable  operating  leases with
initial or remaining  terms in excess of one year are as follows at December 31,
2001 (in thousands):

           2002...................................................       $4,026
           2003...................................................        3,458
           2004...................................................        2,469
           2005...................................................        2,356
           2006...................................................        2,000
                                                                  --------------
                                                                        $14,309
                                                                  ==============

Rent expense for all operating leases was $4,356,000,  $3,780,000,  $858,000 and
$3,076,000  for the years ended  December  31, 2001 and 2000,  the three  months
ended December 31, 1999, and the year ended September 30, 1999, respectively.

                                      [35]
<page>
13. Contingencies
--------------------------------------------------------------------------------

Various  claims,  incidental  to the ordinary  course of  business,  are pending
against the Company.  In the opinion of  management,  after  consultations  with
legal  counsel,  resolution  of these matters is not expected to have a material
effect on the accompanying financial statements.


14. Stock Option Plans
--------------------------------------------------------------------------------

The Company  sponsors two  employee  stock option plans (the "1990 Plan" and the
"1994 Plan")  allowing  for  incentive  stock  options and  non-qualified  stock
options.  In addition,  the Company sponsors two stock option plans for eligible
directors (the "1994 Director Plan" and the "1999 Director  Plan")  allowing for
non-qualified  stock options.  Lastly,  the Company sponsors a combined employee
and director stock option plan (the  "Prudential  Plan")  allowing for incentive
stock options and non-qualified stock options. These plans have been approved by
the stockholder's of the Company and no options have been granted by the Company
outside of these plans.  The 1990 Plan,  1994 Plan,  1994  Director  Plan,  1999
Director  Plan and  Prudential  Plan provide that 340,000,  1,500,000,  200,000,
300,000 and 650,187  shares,  respectively,  may be issued under the plans at an
option  price not less than the fair  market  value of the stock at the time the
option is granted.  The 1990 Plan,  1994 Plan, 1994 Director Plan, 1999 Director
Plan and Prudential Plan expire in December 2000,  November 2004, November 1999,
November 2004 and September 2000, respectively. The options vest pursuant to the
schedule set forth for each plan. In general,  the options issued under the 1994
and 1999  Director  Plans vest six months from the date of grant and the options
issued  under the 1990 Plan,  1994 Plan and  Prudential  Plan vest  ratably over
periods ranging from one to five years.  At December 31, 2001 and 2000,  646,918
and 198,668 shares were available for grant under all of the option plans.

The Company  grants stock  options for a fixed number of shares to directors and
employees  with an  exercise  price equal to the fair value of the shares at the
time of the grant.  Accordingly,  the  Company has not  recognized  compensation
expense for its stock  option  grants.  If the Company had elected to  recognize
compensation  cost based on the fair value of the  options  granted at the grant
date as prescribed  by SFAS No. 123, net income  (loss) and earnings  (loss) per
share would have been  reduced (or  increased)  to the pro forma  amounts in the
table below.  The fair value of the options granted for the years ended December
31, 2001 and 2000 and for the year ended September 30, 1999 was determined to be
$1,474,000,  $3,546,000  and  $2,946,000,  respectively.  There  were no options
granted  during  the  Transition  Period.  For the  purposes  of these pro forma
disclosures,   the  estimated  fair  value  of  the  options  is  recognized  as
compensation expense over the options' vesting period.

                                                      Transition
                               2001          2000       Period         1999
                           -----------------------------------------------------
Pro Forma
 Income (loss) from
  continuing operations
  (in thousands)...........      $37,340      $17,615       $1,977      $(6,116)
 Basic earnings (loss)
  per share from continuing
  operations...............        $1.11        $0.52        $0.06       $(0.20)
 Diluted earnings (loss)
  per share from continuing
  operations...............        $1.09        $0.51        $0.06       $(0.20)

The  compensation  expense  associated  with  the  fair  value  of  the  options
calculated  for the years ended  December  31, 2001 and 2000,  the three  months
ended  December  31,  1999,  and  the  year  ended  September  30,  1999  is not
necessarily  representative  of the  potential  effects on  reported  net income
(loss) in future years.

The fair value of the options granted was estimated at the date of grant using a
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions  for the years ended  December  31, 2001 and 2000 and the year ended
September 30, 1999,  respectively:  risk-free  interest rate of 4.90%, 5.97% and
4.99%; no dividend payments expected;  volatility factors of the expected market
price of the Company's  common stock of 0.678,  0.672 and 0.613;  and a weighted
average expected life of the options of 8.3 years, 8.3 years and 8.6 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In  addition,  option  valuation  models  require  the  input  of
subjective  assumptions  including the expected stock price volatility.  Because
the Company's stock options have  characteristics  significantly  different from
those of traded options and because changes in the subjective input  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 stock options.
<page>
The following table summarizes  option activity and related  information for the
years ended  December 31, 2001 and 2000,  the three  months  ended  December 31,
1999, and the year ended September 30, 1999:

                                                        Weighted
                                            Shares      Average       Weighted
                                             Under      Exercise      Average
                                            Option       Price       Fair Value
                                        ----------------------------------------
Options outstanding at October 1, 1998..      924,524        $7.91
Options exercised.......................       (3,000)        6.46
Options forfeited.......................       (5,000)        7.13
Options granted.........................      576,413         7.26        $5.11
                                        ----------------------------------------
Options outstanding at
 September 30, 1999.....................    1,492,937         7.67
Options exercised.......................      (29,838)        6.53
Options forfeited.......................       (1,668)        7.08
Options granted.........................           --           --          $--
                                        ----------------------------------------
Options outstanding at December 31, 1999    1,461,431         7.69
Options exercised.......................     (219,503)        6.26
Options forfeited.......................      (26,500)        7.13
Options granted.........................      303,009        16.24       $11.70
                                        ----------------------------------------
Options outstanding at December 31, 2000    1,518,437         9.61
Options exercised.......................     (300,724)        8.21
Options forfeited.......................      (55,750)       15.40
Options granted.........................      100,000        24.40       $14.74
                                        ----------------------------------------
Options outstanding at December 31, 2001    1,261,963       $10.98
                                        ==========================

The following table summarizes information about fixed stock options outstanding
at December 31, 2001:

                            Options Outstanding              Options Exercisable
                ---------------------------------------   ----------------------
                          Weighted Average    Weighted               Weighted
   Range of                  Remaining         Average                Average
Exercise Price  Options  Contractual Life  Exercise Price Options Exercise Price
--------------------------------------------------------------------------------

 $4.00 -  $5.88   287,333     3.6 years          $4.55       287,333      $4.55
 $6.63 -  $8.75   401,127     6.9 years          $7.05       184,111      $7.02
$10.24 - $24.40   573,503     6.4 years         $16.96       349,223     $16.40
--------------------------------------------------------------------------------
 $4.00 - $24.40 1,261,963     5.9 years         $10.98       820,667     $10.97
================================================================================

                                      [36]
<page>
15. Capital Stock
--------------------------------------------------------------------------------

In conjunction with the Prudential transaction, the Company's Board of Directors
designated  one share of the  Company's  authorized  preferred  stock as Special
Voting Stock. The Special Voting Stock is entitled to a number of votes equal to
the number of outstanding exchangeable shares of Maverick Tube (Canada) Inc., on
all matters presented to the common  stockholders of the Company.  The one share
of Special  Voting  Stock is issued to CIBC  Mellon  Trust  Company,  as trustee
pursuant to the Voting and Exchange Trust Agreement among the Company,  Maverick
Tube (Canada) Inc. and CIBC Mellon Trust Company, for the benefit of the holders
of the  exchangeable  shares  of  Maverick  Tube  (Canada)  Inc.  For  financial
statement  purposes,  the  exchangeable  shares that have not been exchanged for
shares of the  Company's  common  stock  have been  treated  as if they had been
exchanged and are included in the Company's outstanding shares of common stock.

As  long  as  any  exchangeable  shares  of  Maverick  Tube  (Canada)  Inc.  are
outstanding,  the Special Voting Stock may not be redeemed, the number of shares
comprising  the Special  Voting Stock shall not be increased or decreased and no
other  term of the  Special  Voting  Stock  shall be  amended,  except  upon the
unanimous  approval of all common  stockholders  of the Company.  If the Special
Voting  Stock is purchased  or  otherwise  acquired by the Company,  it shall be
deemed retired, cancelled, and thereafter will become an authorized but unissued
and undesignated preferred share of the Company.


16. Stockholder Rights Plan
--------------------------------------------------------------------------------

In July 1998,  the  Company's  Board of Directors  adopted a common  stockholder
rights plan pursuant to which the Company  declared a dividend  distribution  of
one preferred stock purchase right (the "Right") for each  outstanding  share of
common stock of the Company (other than shares held in the Company's  treasury).
As of September 22, 2000, the Company  undertook to distribute at the Separation
Time (as defined  below) to the then record holders of  exchangeable  shares one
Right for each  exchangeable  share  then  held of  record.  The  Right  becomes
exercisable the day that a public announcement is made that a person or group of
affiliated or associated persons has acquired, or obtained the right to acquire,
beneficial  ownership of 20% or more of the outstanding  shares of common stock,
or the tenth day following the  commencement of a tender offer or exchange offer
that would result in a person or a group becoming the  beneficial  owners of 20%
or more of such outstanding share of common stock (each, the "Separation Time").
After such Right becomes exercisable and upon a "flip-in event" (as such item is
defined in the plan),  each Right  entitles the holder to purchase $100 worth of
the  Company's  common  stock or preferred  stock,  as the case may be, for $50.
Until a Right is exercised or exchanged,  the holder thereof will have no rights
as a stockholder of the Company,  including,  without  limitation,  the right to
receive dividends.  The Right is subject to redemption by the Company's Board of
Directors  for $0.01 per Right at any time  prior to the date  which a person or
group acquires beneficial ownership of 20% or more of the Company's common stock
or subsequent thereto at the option of the Board of Directors. The Rights expire
July 23, 2008.


17. Subsequent Events
--------------------------------------------------------------------------------

On February 12, 2002, the Company signed a definitive  agreement to purchase all
of the capital stock of Precision  Tube Holding  Corporation,  a privately  held
Houston-area based coiled tubular goods manufacturer,  for a cash purchase price
of approximately $55,000,000 and 200,000 shares of common stock of Maverick Tube
Corporation. The acquisition is expected to close on or near March 31, 2002.

<page>
18. Quarterly Financial Data (Unaudited)
--------------------------------------------------------------------------------

The results of operations by quarter for calendar  years ended December 31, 2001
and 2000, were as follows (in thousands):

Quarter Ended                March 31,     June 30,  September 30,  December 31,
                               2001         2001         2001          2001
                           -----------------------------------------------------

Net sales..................     $153,475     $134,561     $135,877     $104,693
Gross profit...............       31,081       30,991       26,554       14,464
Income (loss) from
 continuing operations.....       15,024       14,430       11,459(2) (1,675)(3)
Net income (loss)..........        3,827(1)    14,430       11,459(2) (1,675)(3)
Basic earnings (loss) per
 share from continuing
 operations................         0.45         0.43         0.34        (0.05)
Basic earnings (loss) per
 share.....................         0.11         0.43         0.34        (0.05)
Diluted earnings (loss) per
 share from continuing
 operations................         0.43         0.42         0.34        (0.05)
Diluted earnings(loss) per
 share.....................         0.11         0.42         0.34        (0.05)


Quarter Ended                March 31,     June 30,  September 30,  December 31,
                               2000          2000         2000         2000
                           -----------------------------------------------------

Net sales..................     $132,050     $123,269     $134,806      $154,979
Gross profit...............       16,483       17,112       15,589(4)     24,442
Income (loss) from
 continuing operations.....        6,157        6,594       (4,104)(4)(5) 10,080
Net income (loss)..........        5,553        6,224       (5,098)(4)(5)  9,886
Basic earnings (loss) per
 share from continuing
 operations................         0.18         0.20        (0.12)         0.32
Basic earnings (loss) per
 share.....................         0.17         0.19        (0.15)         0.29
Diluted earnings (loss) per
 share from continuing
 operations................         0.18         0.19        (0.12)         0.31
Diluted earnings (loss) per
 share.....................         0.16         0.18        (0.15)         0.29

(1)  During the quarter ended March 31, 2001, the Company decided to discontinue
     its DOM business and recorded a $16,000,000 ($10,240,000 net of tax) charge
     to  earnings.  This charge  reduced net income for the quarter by $0.32 per
     diluted share.
(2)  During the quarter ended September 30, 2001, the Company  recorded a charge
     of  $1,500,000  ($960,000 net of tax) in  connection  with an  unsuccessful
     acquisition.  These  costs  decreased  net  income  for the  quarter  ended
     September 30, 2001 by $0.03 per share.
(3)  During  the  quarter  ended  December  31,  2001,  the  Company  recorded a
     restructuring  charge for the  write-down  of property  and  equipment  and
     accrual of other cash  obligations  of $8,061,000  ($5,573,000  net of tax)
     resulting  from  the  planned  closing  of the  Longview  facility  and the
     relocation  of most of the  facility's  production  equipment  to  Hickman,
     Arkansas. These costs reduced net income by $0.17 per share.
(4)  During the  quarter  ended  September  30,  2000,  the  Company  recorded a
     $1,588,000  ($1,388,000 net of tax) charge to earnings for the reduction in
     carrying  value at the Company's  Longview,  Washington,  and Beaver Falls,
     Pennsylvania,  facilities related to excess and obsolete inventory and to a
     decline in  selling  prices of the  industrial  products  at the  Longview,
     Washington, facility ($0.04 per share).
(5)  During the quarter  ended  September  30,  2000,  the  Company  recorded an
     $11,253,000  ($9,400,000 net of tax) charge to earnings for the transaction
     costs  associated  with the  transaction  between  Maverick and  Prudential
     ($0.27 per share).

                                      [37]
<page>
--------------------------------------------------------------------------------
                         Report of Independent Auditors
--------------------------------------------------------------------------------

Board of Directors and Stockholders
Maverick Tube Corporation

We have audited the  accompanying  consolidated  balance sheets of Maverick Tube
Corporation  and  subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
each of the two years in the period ended December 31, 2001, for the three-month
period ended December 31, 1999, and for the year ended September 30, 1999. These
consolidated  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 consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Maverick Tube  Corporation  and  subsidiaries at December 31, 2001 and 2000, and
the  consolidated  results of their  operations and their cash flows for each of
the two years in the period ended December 31, 2001, for the three-month  period
ended  December  31,  1999,  and for the  year  ended  September  30,  1999,  in
conformity with accounting principles generally accepted in the United States.


                                         /s/ Ernst & Young LLP

St. Louis, Missouri
February 1, 2002, except for paragraph 4 of
  Note 5 and Note 17, as to which the
  dates are February 25, 2002 and February
  12, 2002, respectively



                                      [38]
<page>
--------------------------------------------------------------------------------
                           MAVERICK TUBE CORPROATION
--------------------------------------------------------------------------------
OFFICERS
--------------------------------------------------------------------------------

Gregg M. Eisenberg
Chairman of the Board,
President and
Chief Executive Officer

Pamela G. Boone
Vice President -
Finance and Administration,
Treasurer, Secretary and
Chief Financial Officer

T. Scott Evans
Vice President -
Commercial Operations

Sudhakar Kanthamneni
Vice President -
Manufacturing and
Technology

Richard W. Preckel
Vice President -
Canadian Operations

BOARD OF DIRECTORS
--------------------------------------------------------------------------------
Gregg M. Eisenberg
Chairman of the Board,
President
and Chief Exectuive Officer

C. Robert Bunch
Vice President and Chief Administrative
Officer of Input/Output, Inc.

Rhys T. Eyton
Chairman of Canadian Hotel
Income Properties, Director
of Vancouver Airport Authority
and Clarica Life Insurance Company

Dennis G. Flanagan
Director of NAL Energy and Nexen Inc.

David H. Kennedy
Independent energy consultant
and Director of Carbon Energy Corporation
and RBC Capital Partners Energy Fund

William E. Macaulay
Chairman and Chief Executive
Officer, First Reserve Corp., Director
of Weatherford International, Inc.,
National-Oilwell, Inc. and Pride
International, Inc. and Chairman
of the Board, Dresser, Inc.

Wayne P. Mang
Non-Executive Chairman and
Director of Wainbee Holdings Ltd.

C. Adams Moore
Independent consultant in steel
distributiona and fabrication, Director
of Fisher Tank Company and Warren
Fabricating Corporation

Donald A. Pether
Chief Operating Officer of Dofasco, Ins.,
President of DoSol Galva, Inc.,
Management Committee of Gallatin Steel,
Chairman of Dofasco de Mexico,
Director of Powerlases and Dofasco U.S.A.
Inc., and Board of Governors of McMaster
University and the Hamilton Art Gallery

Norman W. Robertson
Director of Clarica Life Insurance
Company and Tesco Corporation

J. Donald Wilson
Vice President and Director of Calgary
Exhibition and Stampede

                                      [39]
<page>
--------------------------------------------------------------------------------
                        HISTORICAL FINANCIAL INFORMATION
--------------------------------------------------------------------------------

The selected  financial data for the Company set forth below for the years ended
December 31, 2001 and 2000,  for the three months ended  December 31, 1999,  and
for the years  ended  September  30,  1999,  1998,  and 1997,  should be read in
conjunction with the consolidated financial statements,  related notes and other
financial information included herein.
<table>
<caption>
                                                                                 Three Months
                                                                                     Ended
                                                      Year Ended December 31,     December 31,       Year Ended September 30,
(in thousands, except per share data)                   2001            2000         1999          1999         1998         1997
                                                  ----------------------------------------------------------------------------------
Statement of Operations Data:

                                                     <c>            <c>           <c>           <c>           <c>       <c>
Net sales.........................................       $528,606       $545,104      $126,880      $308,621      $383,827  $545,337
Cost of goods sold................................        425,516        471,478       115,174       289,879       331,406   452,951
                                                  ----------------------------------------------------------------------------------
Gross profit......................................        103,090         73,626        11,706        18,742        52,421    92,386
Selling, general and administrative...............         30,372(1)      25,466         7,104        22,036        20,103(2) 19,810
Restructuring charges.............................          8,061(3)          --            --            --            --        --
Start-up costs....................................          1,101(4)         267(4)         --           283(4)        775(4)     --
                                                  ----------------------------------------------------------------------------------
Income (loss) from operations.....................         63,556         47,893         4,602        (3,577)       31,543    72,576
Transaction costs.................................             --         11,253(5)         --            --            --        --
Interest expense..................................          3,090          3,177           256         1,868         1,658     1,445
                                                  ----------------------------------------------------------------------------------
Income (loss) from continuing operations before
income taxes......................................         60,466         33,463         4,346        (5,445)       29,885    71,131
Provision (benefit) for income taxes..............         21,228         14,736         2,112          (348)       10,587    25,330
                                                  ----------------------------------------------------------------------------------
Income (loss) from continuing operations..........         39,238         18,727         2,234        (5,097)       19,298    45,801
Loss from operations of discontinued DOM
facility, less applicable income tax benefit (6)..           (957)        (2,162)         (687)       (2,237)           --        --
Loss on disposal of DOM facility (6)..............        (10,240)            --            --            --            --        --
                                                  ----------------------------------------------------------------------------------
Net income (loss).................................        $28,041        $16,565        $1,547       $(7,334)      $19,298   $45,801
                                                  ==================================================================================

Diluted earnings (loss) per share from
continuing operations.............................          $1.15          $0.54         $0.07        $(0.16)        $0.61     $1.46
                                                  ==================================================================================
Diluted earnings (loss) per share.................          $0.82          $0.48         $0.05        $(0.24)        $0.61     $1.46
                                                  ==================================================================================

Average shares deemed outstanding.................         34,117         34,525        32,638        31,160        31,569    31,276
                                                  ==================================================================================

Other Data:
Depreciation and amortization.....................        $14,841        $12,602        $3,064       $10,895        $8,553    $8,453
Capital expenditures..............................         25,784         51,780        18,004        16,288        43,151    14,771
EBITDA (7)........................................         78,397         49,242         7,666         7,318        40,096    81,029

Balance Sheet Data:
(End of period)
Working capital...................................       $142,316       $118,828      $108,632       $93,586      $108,343  $111,380
Total assets......................................        357,447        390,818       323,255       289,241       258,201   285,494
Current maturities of long-term debt..............            938            866           723           708           653       604
Short-term revolving credit facility..............          3,219         20,766        10,067        10,067         6,133        --
Long-term revolving credit facility...............         62,000         62,038        27,150        31,000        27,400    10,000
Other long-term debt (less current maturities)....          5,991          6,929         7,300         7,518         8,226     8,879
Stockholders' equity..............................        225,383        213,256       200,566       166,774       173,146   162,801
</table>

(1)  Includes  a  charge  of  $1,500,000  in  connection  with  an  unsuccessful
     acquisition.
(2)  Includes a write-down of software costs of $1,605,000.
(3)  The Company recorded a restructuring  charge for the write-down of property
     and equipment and accrual of other cash obligations of $8,061,000 resulting
     from the planned  closing of the Longview  facility and the  relocation  of
     most of that facility's production equipment to Hickman, Arkansas.
(4)  Represents  the  operating  loss of the Company's  large  diameter pipe and
     tubing  facility  which began  operations  in October 2000 and the Longview
     facility which began operations in December 1998.
(5)  In  connection  with  the  Prudential  combination,  the  Company  recorded
     transaction  costs of  $11,253,000  for the year ended  December  31, 2000.
     Transaction costs include investment banking, legal, accounting,  printing,
     severance pay and other costs directly related to the combination.
(6)  The Company decided to discontinue its DOM business during 2001.
(7)  EBITDA   represents   earnings  (loss)  before   interest,   income  taxes,
     depreciation  and  amortization.  The Company  believes  EBITDA is a widely
     accepted,  supplemental  financial  measurement  used by many investors and
     analysts to analyze and compare companies'  performances.  However,  EBITDA
     should not be considered as an alternative to income from  operations or to
     cash flows from operating, investing or financing activities, as determined
     in accordance with accounting  principles  generally accepted in the United
     States.  Because  EBITDA  excludes some, but not all, items that affect net
     income and because these measures may vary among companies, the EBITDA data
     presented above may not be comparable to similarly titled measures of other
     companies.

                                      [40]
<page>
--------------------------------------------------------------------------------
                            Stockholder Information
--------------------------------------------------------------------------------

Market For Our Common Equity And Related Stockholder Matters

Principal Market
----------------

Our common  stock,  par value  $0.01 per share,  is traded on the New York Stock
Exchange  under the  symbol  "MVK."  Our  exchangeable  shares are traded on The
Toronto Stock  Exchange under the symbol "MAV." Prior to September 25, 2000, our
common stock was listed and traded on the NASDAQ/National Market System.

Stock Price and Dividend Information
------------------------------------

The high and low  closing  sales  prices of our common  stock  during the first,
second,  third and fourth  quarters  for the years ended  December  31, 2001 and
2000, respectively, were as follows:

                              2001                               2000
                     ----------------------           --------------------------
Quarter                High            Low             High               Low
--------------------------------------------------------------------------------

First                 $25.72         $18.75           $32.438           $19.375
Second                $26.45         $16.10           $36.313           $26.125
Third                 $16.32          $8.86           $29.813           $21.750
Fourth                $13.29          $8.91           $27.625           $12.688

The high and low  closing  sales  prices on The  Toronto  Stock  Exchange of our
exchangeable shares during the first,  second, third and fourth quarters for the
year ended December 31, 2001 and for the third and fourth  quarters for the year
ended December 31, 2000 were as follows:

                              2001                               2000
                    ------------------------           -------------------------
Quarter                High            Low             High              Low
--------------------------------------------------------------------------------

First                C$38.60        C$28.90               $--               $--
Second               C$41.00        C$24.50               $--               $--
Third                C$24.50        C$14.00           C$40.50           C$40.25
Fourth               C$21.04        C$13.82           C$41.50           C$19.55

We  have  not  declared  or  paid  cash  dividends  on our  common  stock  since
incorporation.  We currently intend to retain earnings to finance the growth and
development of our business and do not  anticipate  paying cash dividends in the
near  future.  Any payment of cash  dividends in the future will depend upon our
financial condition,  capital requirements and earnings as well as other factors
the Board of Directors may deem  relevant.  Our revolving  credit  facility with
commercial  lenders  restricts  the  amount  of  dividends  we  can  pay  to our
stockholders.

Approximate Number of Holders of Common Stock
---------------------------------------------

There were 155 holders of record of our common  stock as of December  31,  2001.
There were 7 holders of record of our  exchangeable  shares as of  December  31,
2001.

Stockholder Information
-----------------------

Corporate Headquarters
16401 Swingley Ridge Road
Seventh Floor
Chesterfield, Missouri 63017
(636) 733-1600

Independent Auditors
Ernst & Young LLP
The Plaza in Clayton
Suite 1300
190 Carondelet Plaza
Clayton, Missouri 63105
(314) 290-1000

Legal Counsel
Gallop, Johnson & Neuman, LC
Interco Corporate Tower
101 South Hanley
St. Louis, Missouri 63105
(314) 862-1200
<page>
Transfer Agent and Registrar
(Common Shares)
Computershare Investor Services
2 North LaSalle Street
Chicago, Illinois 60602
(312) 588-4211

Transfer Agent and Registrar
(Exchangeable Shares)
CIBC Mellon Trust Company
P.O. Box 7010
Adelaide Street Postal Station
Toronto, Ontario M5C 2W9
(800) 387-0825

10-K Report Available
---------------------

Stockholders  may obtain a copy of our Annual Report on Form 10-K filed with the
Securities  and Exchange  Commission  by writing to Maverick  Tube  Corporation,
16401  Swingley  Ridge  Road,  Seventh  Floor,  Chesterfield,   Missouri  63017,
Attention: Secretary.

                                      [41]