Exhibit 13

MARKET FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Principal Market

Our common  stock,  par value  $.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, 2000 and
1999, respectively, were as follows:

                                2000                              1999
Quarter                  High           Low              High              Low
--------------------------------------------------------------------------------


First                $   32.438    $   19.375        $   7.313        $   5.500
Second               $   36.313    $   26.125        $   15.250       $   5.688
Third                $   29.813    $   21.750        $   22.250       $  11.875
Fourth               $   27.625    $   12.688        $   26.250       $  16.313

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

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

Third                C$   41.50       C$  40.25
Fourth               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 businesses 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 150 holders of record of our common  stock as of December  31,  2000.
There were 21 holders of record of our  exchangeable  shares as of December  31,
2000.


<PAGE>
<TABLE>
                   Maverick Tube Corporation and Subsidiaries

                        Historical Financial Information

The selected  financial  data for the Company set forth below for the year ended
December 31, 2000,  for the three  months ended  December 31, 1999,  and for the
years  ended  September  30,  1999,  1998,  1997,  and  1996,  should be read in
conjunction with the consolidated financial statements,  related notes and other
financial information included herein.

                                                            Three Months
                                            Year Ended          Ended
                                           December 31,     December 31,                     Year Ended September 30,
(in thousands, except per share data)          2000             1999             1999            1998           1997        1996 (5)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>             <C>                 <C>            <C>            <C>           <C>
Statement of Operations Data:

Net sales                                 $ 560,382       $ 129,616          $ 314,391      $ 383,827       $ 545,337     $ 382,338
Cost of goods sold                          490,133         118,983            295,649        331,406         452,951       329,553
                                          ------------------------------------------------------------------------------------------

Gross profit                                 70,249          10,633             18,742         52,421          92,386        52,785
Selling, general and administrative          25,466           7,104             22,036         20,103 (4)      19,810        15,927
Start-up costs                                  267 (1)           -              3,745 (3)        775 (3)           -             -
                                          ------------------------------------------------------------------------------------------

Income (loss) from operations                44,516           3,529             (7,039)        31,543          72,576        36,858
Transaction costs                            11,253 (2)           -                  -              -               -             -
Interest expense                              3,177             256              1,868          1,658           1,445         2,386
                                          ------------------------------------------------------------------------------------------

Income (loss) before income taxes            30,086           3,273             (8,907)        29,885          71,131        34,472
Provision (benefit) for income taxes         13,521           1,726             (1,573)        10,587          25,330        11,126
                                          ------------------------------------------------------------------------------------------

Net income (loss)                         $  16,565       $   1,547          $  (7,334)     $  19,298       $  45,801      $ 23,346
                                          ==========================================================================================

Diluted earnings (loss) per share         $     .48       $     .05          $    (.24)     $     .61       $    1.46      $    .76
                                          ==========================================================================================

Average shares deemed outstanding            34,525          32,638             31,160         31,569          31,276        30,705
                                          ==========================================================================================


Other Data:
Depreciation and amortization             $  13,819       $  3,327          $   11,420      $   8,553      $   8,453      $   7,876
Capital expenditures                         53,751         18,555              16,917         43,151         14,771          7,630
EBITDA (6)                                   47,082          6,856               4,381         40,096         81,029         44,734

Balance Sheet Data:
(End of period)
Working capital                           $ 118,828       $108,632          $   93,586      $ 108,343      $ 111,380      $  75,810
Total assets                                389,029        323,255             289,241        258,201        285,494        214,490
Current maturities of long-term debt            866            723                 708            653            604          1,843
Short-term revolving credit facility         20,766         10,067              10,067          6,133              -             -
Long-term revolving credit facility          62,038         27,150              31,000         27,400         10,000         13,250
Other long-term debt (less current
  maturities)                                 6,929          7,300               7,518          8,226          8,879         11,901
Stockholders' equity                        213,256        200,566             166,774        173,146        162,801        118,239

<PAGE>
<FN>
(1)  Represents  the  operating  loss of the Company's  large  diameter pipe and
     tubing   facility   which  has  not  yet  been  completed  and  is  waiting
     installation  of the energy  finishing  equipment,  which is expected to be
     fully operational in March 2001.

(2)  In connection with the 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.

(3)  Represents the operating loss of the Company's cold drawn mechanical tubing
     facility which began  operations in October 1998 and the Longview  facility
     which began operations in December 1998.

(4)  Includes a write-down of software costs of $1,605,000.

(5)  Includes the one-time  effect of the change in  accounting  practice  which
     resulted in a reduction in net sales,  gross  profit,  net income and basic
     and diluted net income per share of  $8,700,000,  $1,000,000,  $839,000 and
     $0.03, respectively.

(6)  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 generally accepted accounting principles. 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.
</FN>
</TABLE>

<PAGE>
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  the  beliefs  or  expectations  of  Maverick)  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.  Reference is made to the
"Risk Factors" discussed in Exhibit 99.1 of the Company's Form 10-K for its year
ended December 31, 2000.

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

COMBINATION WITH  PRUDENTIAL

On June 11, 2000, the Company  entered into a definitive  Combination  Agreement
providing for the  combination of Prudential,  a corporation  existing under the
laws of the Province of Alberta,  Canada, with the Company.  The transaction was
completed on September 22, 2000.

Under the terms of the combination,  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 under the symbol
MAV. These shares have the same voting rights,  dividend  entitlements and other
attributes as shares of the Company's common stock and are exchangeable, at each
exchangeable   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
and thus the financial  statements and management's  discussion and analysis for
the fiscal years ended September 30, 1999 and 1998 have been restated to include
the operations and activities of Prudential.

In conjunction with the announcement of this transaction,  the Maverick 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.  The Maverick's financial statement for
its fiscal  year  ended  September  30,  1999 and 1998 have been  combined  with
Prudential's  financial  statements  for the years ended  December  31, 1999 and
1998.  Thus,  Prudential's  results of operations  are included in both the year
ended September 30, 1999 and the Transition Period 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.

OCTG 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 United
States 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.  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.
Canadian distributors do not generally hold significant amounts of inventories.

The  following  table  illustrates  certain  factors  related  to  industry-wide
drilling  activity,  energy  prices,  oil  country  tubular  goods  consumption,
shipments, imports and inventories for the periods presented:

                                                 Three Months
                                   Year Ended       Ended         Year Ended
                                   December 31,   December 31,   September 30,
                                      2000           1999       1999        1998
                                  ----------------------------------------------

U.S. Market Activity:
Average rig count                       918          775         602       903
Average U.S. energy prices:
Oil per barrel (West Texas
  Intermediate)                      $30.16       $24.30      $16.36    $16.94
Natural gas per MCF
   (Average U.S.)                    $ 4.18       $ 2.45      $ 2.06    $ 2.26

U.S. oil country tubular goods
consumption (in thousands of tons):
U.S. producer shipments               1,856          376         661     1,548
Imports                                 717           83         134       402
Inventory (increase)/decrease          (436)         (15)        370       (66)
Used pipe                               174           44         158       139
                                  ----------------------------------------------
   Total U.S. Consumption             2,311          488       1,323     2,023
                                  ==============================================

                                               Year Ended December 31,
                                        2000          1999             1998
                                    --------------------------------------------


Canadian Market Activity:
Average rig count                       344            244              263
Average Canadian energy prices:
Natural gas per U.S. $ per MCF
   (Average Alberta spot price)       $3.38          $1.86             $1.33
Canadian oil country tubular goods
Consumption (in thousands of tons):
Canadian producer shipments             465            303              350
Imports                                 273            160              157
Inventory (increase)/decrease            25             10              (15)
                                   ---------------------------------------------
Total Canadian consumption              763            473              492
                                   =============================================

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  are 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  are our  estimates  based upon data  reported by Statistics
Canada. Canadian producer shipments are reported by Statistics Canada Steel Pipe
and Tube Report.

According to published  industry  reports,  average U.S.  drilling  increased by
18.5% during calendar 2000,  averaging  approximately 918 rigs, with gas-related
drilling  increasing  by 15.2% and  oil-related  drilling  increasing  by 33.1%.
Average  energy  prices   increased  during  calendar  2000,  with  natural  gas
increasing  70.6% and oil  increasing  by 24.1%.  The increases in energy prices
seen  throughout the year had a positive  effect on drilling  levels in calendar
2000. At the end of fiscal 1999 (September  30),  drilling was at 730 rigs, down
3.2% from its fiscal 1998 year-end level of 754 rigs. However, drilling began to
increase  with the upturn in prices  and  increased  to 1,099 rigs by  December,
2000, up by 50.5% from fiscal 1999 year-end levels.

According to published industry reports,  average Canadian drilling increased by
41.0% from calendar 1999 to calendar  2000,  averaging  approximately  344 rigs.
Average  energy  prices   increased  during  calendar  2000,  with  natural  gas
increasing  81.7% and oil increasing by 24.1%. The increases in crude oil prices
seen  throughout the year had a positive  effect on drilling  levels in calendar
2000. At the end of calendar  1999,  drilling was at 385 rigs, up 55.2% from its
calendar 1998 year-end  level of 248 rigs, and continued to increase to 411 rigs
by December, 2000, up by 6.8% from calendar 1999 year-end levels.

Imports into the U.S.  increased  during calendar 2000 from a 10.1% market share
in fiscal 1999 to a 17.0% market  share for the three months ended  December 31,
1999 to a 31.0% market share in calendar 2000. During fiscal 1999, U.S. industry
inventory  decreases adversely affected U.S. producer shipments by satisfying an
estimated  28.0% 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, 2000,  U.S.  industry  inventory was a
normal  level in relation to demand,  as  inventory  months of supply  increased
25.0%,  from 4.8  months  at fiscal  year-end  1999 to 6.0  months  at  calendar
year-end 2000.

As a result of  increasing  drilling  activity and an increase in U.S.  industry
inventories,  partially offset by increased imports, we estimate that total U.S.
producer  shipments  increased by 180.8% in calendar  2000 as compared to fiscal
1999. During that same period, our shipments of U.S. OCTG were up 102.2% and our
export sales, primarily to Canada, increased by 41.4%. However, we estimate that
our domestic  OCTG market  share  decreased  from 22% during  fiscal 1999 to 16%
during  calendar 2000. The 16% market share we captured during the calendar year
ended  December 31, 2000 was more in line with the market share we have captured
historically.

Imports into Canada  increased during calendar 2000 from a 33.8% market share in
fiscal  1999 to 35.8%  market  share in calendar  2000.  During  calendar  2000,
Canadian producer shipments of OCTG increased by 53.5%. Shipments in Canada were
adversely  impacted  by low  priced  imports.  . As a  result  of the  increased
drilling  activity,  we estimate that total  Canadian  consumption  increased by
61.3% in calendar  2000 as compared to calendar  1999.  During that same period,
our Canadian  shipments of OCTG increased  65.4%.  We estimate that our Canadian
OCTG market share of domestic  shipments  increased  from 39.0% during  calendar
1999 to 42.0% during calendar 2000.

Published  information  suggests  that U.S.  demand  for line pipe was also down
during calendar 2000 by an estimated 3.5%.  However,  domestic shipments fell by
11.6% as the import market share rose from 34.6% to 40.2%.  Canadian  demand for
line pipe  increased  during  calendar 2000 by an estimated  75.6% with domestic
shipments up by 84.4% as the import market share fell from 38.1% to 35.0%.

Industrial 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
7.6% in  calendar  2000 as compared  to  calendar  1999 and total U.S.  producer
shipments increased by 4.6% as import market share declined slightly.  According
to published  reports,  the U.S.  standard pipe market demand  increased  10.0%,
while total U.S.  domestic  producer  shipments  declined by 15.8% as the import
market share increased from 31.4% to 47.5%.

Pricing and Costs

Pricing of our products  was up during  calendar  2000  compared to fiscal 1999.
Average pricing of our U.S. OCTG, line,  structural and standard product pricing
increased by 15.0%,  19.5%,  3.1% and 12.1%,  respectively.  U.S. energy product
pricing was up due to the increase in drilling  activity.  U.S.  structural  and
standard  pricing was up primarily  due to  increasing  steel prices  during the
early part of the year.  Pricing of our Canadian energy products was up by 7.1%,
while industrial products pricing rose by 2.9%.

U.S steel costs included in cost of goods sold increased during calendar 2000 by
$24 per ton, or 8.5%,  from $279 per ton to $303 per ton. Our major  supplier of
steel  announced  seven price  decreases  from  mid-May  2000 to December  2000,
reducing our replacement  cost of steel by  approximately  $100 per ton. Some of
these price reductions were reflected in our cost of goods sold in the third and
fourth quarters of calendar 2000.  Currently,  our replacement  cost of steel is
less  than  the  cost  included  in  cost of  goods  sold  in  calendar  2000 by
approximately  $58 per ton, or 19.0%.  These  price  decreases  reflect  reduced
demand,  increased imports and inventory  adjustments in the steel industry.  We
estimate that the full effect of these  decreases will not be fully reflected in
cost of goods sold until the second quarter of calendar 2001.

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 increased in the calendar
year as compared to the prior year but will  continue to decrease  through early
2001 as reduced replacement costs are realized.

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.

The OCTG market  conditions  described  above  impacted our  operations  and our
competitors  significantly  during  2000,  as sales  returned  to normal  levels
throughout  the year due to the rapid rise in natural gas and oil prices and the
resulting   significant   increases   in   drilling   activity.    Consequently,
industry-wide  inventory  levels  built  during the year and the impact of these
industry  increases had a positive 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.

RESULTS OF OPERATIONS

The following table sets forth, for the periods presented,  certain  information
relating to our operations expressed as a percentage of net sales:

                                        Three Months
                          Year Ended        Ended              Year Ended
                         December 31,    December 31,         September 30,
                             2000           1999            1999          1998
                        --------------------------------------------------------

Net sales                   100.0%         100.0%          100.0%        100.0%
Cost of goods sold           87.5           91.8            94.0          86.4
                        --------------------------------------------------------
Gross profit                 12.5            8.2             6.0          13.6
Selling, general and
   Administrative             4.6            5.5             7.0           5.2
Start-up costs                 --             --             1.2           0.2
                        --------------------------------------------------------
Income (loss) from
 operations                   7.9            2.7            (2.2)          8.2
Transaction costs             2.0             --              --            --
Interest expense              0.5            0.2             0.6           0.4
                        --------------------------------------------------------
Income (loss) before
   income taxes               5.4            2.5            (2.8)          7.8
Provision (benefit) for
   income taxes               2.4            1.3            (0.5)          2.8
                        --------------------------------------------------------
Net income (loss)             3.0            1.2            (2.3)          5.0
                        ========================================================

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

Overall Company

In calendar 2000, net sales  increased  $246.0  million,  or 78.2%,  from $314.4
million in fiscal 1999 to $560.4  million in calendar  2000.  These results were
attributable primarily to an increase of 57.8% in total product shipments,  from
573,807  tons in  fiscal  1999 to  905,571  tons in  calendar  2000 and an 13.0%
increase in the overall  average net selling price during  calendar 2000 from an
average of $548 per ton to $619 per ton.

Cost of goods sold increased  $194.5 million,  or 65.8%,  from $295.6 million in
fiscal 1999 to $490.1  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  5.0% (from an average of $515 per ton to $541 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%. See  "Overview."  Overall
conversion  costs  decreased  during calendar 2000 primarily due to higher fixed
cost absorption.

Gross profit  increased $51.5 million,  or 274.8%,  from $18.7 million in fiscal
1999 to $70.2 million in calendar 2000. Gross profit per ton for fiscal 1999 was
$33 per ton as compared to $78 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
12.5% for calendar  2000,  as compared to 6.0% for fiscal 1999.  The increase in
the gross profit is due to the factors discussed above.

Selling,  general and  administrative  expenses increased $3.4 million or 15.6%,
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 7.0% in fiscal 1999 to 4.6% 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.  See "Combination with Prudential." 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.

Interest expense  increased $1.3 million,  or 70.1%, 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 $13.5 million for calendar 2000,  compared to
the prior fiscal year when we recorded a benefit of $1.6 million. This change is
attributable  to the  generation of pre-tax  income of $30.1 million in calendar
2000, compared to pre-tax loss in calendar 1999 of $8.9 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.

At December 31, 2000, we had available net operating loss carryforwards of $17.8
million that were  generated  during fiscal 1999 through  calendar  2000.  These
carryforwards  expire in 2019 and 2020.  $10.4 million of the net operating loss
carryforwards  can be utilized in calendar  2001 to offset  financial  statement
earnings after temporary  differences from Maverick Tube L.P. The remaining $7.4
million can be utilized  $1.5  million  per year to offset  financial  statement
earnings after temporary  differences from the Longview,  Washington facility as
they file a separate,  stand-alone  tax return.  At  December 31,  2000,  we had
alternative  minimum tax credit  carryforwards  of $2.6  million  available  for
income  tax  purposes.  See Note 9 of the  Notes to the  Consolidated  Financial
Statements.


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

In  conjunction  with  the  Prudential  transaction,   we  changed  our  segment
reporting. Accordingly, the segments are now based on geographic regions instead
of product lines as previously reported. Maverick Tube L.P. ("Maverick L.P."), a
wholly-owned  subsidiary of the Company,  is  responsible  for our operations in
Hickman,  Arkansas,  Beaver Falls, Pennsylvania and Conroe, Texas. Prudential is
responsible for our operations in Calgary, Alberta and Longview, Washington.

Maverick L.P.'s sales increased $136.8 million, or 79.3%, from $172.4 million in
fiscal  1999 to $309.2  million in  calendar  2000.  Maverick  L.P.'s  shipments
increased 175,072 tons, or 51.8%, from 337,959 tons to 513,031 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
18,420 tons of the increase in  shipments.  Overall  average  selling  price for
Maverick L.P.'s  products  increased by 18.2% from an average of $510 per ton to
$603 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 $505 per ton, an increase of $44 per ton.

Maverick L.P.'s cost of goods sold of $280.1 million  increased  $110.6 million,
or 65.3% 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 8.8% (from an average of $502 per ton to $546 per
ton) in calendar  2000.  The increase was due  primarily to an increase in steel
costs as steel cost of goods sold increased 8.5%, or $24 per ton during calendar
2000. See "Overview." Overall conversion costs remained relatively stable during
calendar 2000.

Maverick  L.P.'s gross profit  increased  $26.2  million,  or 903.4%,  from $2.9
million in fiscal 1999 to $29.1 million in calendar  2000.  Gross profit per ton
rose  dramatically  from $9 per ton in  fiscal  1999 to $57 per ton in  calendar
2000.  Gross profit as a percentage of net sales was 9.4% 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.

Prudential's  cost of goods sold of $210.0 million  increased $83.9 million,  or
66.6% 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. See "Overview."

Prudential's gross profit increased $25.2 million, or 158.5%, from $15.9 million
in fiscal 1999 to $41.1 million in calendar 2000. Gross profit per ton increased
from $67 per ton in fiscal 1999 to $105 per ton in calendar 2000. Rising selling
prices  partially  offset by higher steel costs impacted gross profit margin per
ton.  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  $59.2
million,  or 84.0%,  from $70.4 million for the three months ended  December 31,
1998 to $129.6  million for the three  months ended  December  31,  1999.  These
results were  attributable  primarily  to an increase of 92.6% in total  product
shipments,  from 120,480  tons in the three  months  ended  December 31, 1998 to
232,032 tons in the three months ended  December 31, 1999 and a 4.4% decrease in
the overall average net selling price during the three months ended December 31,
1999 from an average of $584 per ton to $559 per ton.

Cost of goods sold increased $53.6 million, or 82.0%, from $65.4 million for the
three  months  ended  December  31, 1998 to $119.0  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  5.5%  (from an average of $543 per ton to $513 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 $5.6 million,  or 110.6%, from $5.0 million for the three
months  ended  December  31, 1998 to $10.6  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 $46 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 8.2% 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.

Selling,  general and  administrative  expenses increased $2.2 million or 46.2%,
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 5.5% 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 $1.7  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 $3.3 million for the three  months  ended  December 31, 1999,
compared to a pre-tax loss of $1.4 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.

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 $28.6 million,  or 69.1%, from $41.4 million for
the three months ended  December 31, 1998 to $70.0  million for the three months
ended December 31, 1999.  Maverick L.P.'s  shipments  increased  56,015 tons, or
73.6%,  from 76,151 tons to 132,166  tons.  Overall  average  selling  price for
Maverick  L.P.'s  products  decreased by 2.6% from an average of $544 per ton to
$529 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 $67.8 million increased $27.4 million,  or
67.9% 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  3.2% (from an average
of $530 per ton to $513 per ton) for the three months ended December 31, 1999.

Maverick  L.P.'s gross  profit  increased  $1.2  million,  or 115.3%,  from $1.0
million for the three  months  ended  December  31, 1998 to $2.2 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 $17 per ton for the three months
ended December 31, 1999.  Gross profit as a percentage of net sales was 3.1% 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 105.3%,  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 109.4%,  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.

Fiscal Year Ended September 30, 1999 Compared to Fiscal Year Ended September 30,
1998

Overall Company

In fiscal 1999, net sales decreased $69.4 million, or 18.1%, from $383.8 million
in fiscal 1998 to $314.4 million in fiscal 1999. These results were attributable
primarily to a decrease of 3.0% in total product shipments, from 591,785 tons in
fiscal 1998 to 573,807  tons in fiscal 1999 and a 14.1%  decrease in the overall
average net selling  price during fiscal 1999 from an average of $649 per ton to
$548 per ton.

Cost of goods sold  decreased  $35.8 million,  or 10.8%,  from $331.4 million in
fiscal  1998 to $295.6  million in fiscal  1999.  The overall  decrease  was due
primarily to decreased product shipments. However, the overall unit cost per ton
of  products  sold  decreased  8.0% (from an average of $560 per ton to $515 per
ton) in fiscal 1999. The decrease was due primarily to a decrease in steel costs
as U.S.  steel cost of goods sold  decreased  13.0%.  Overall  conversion  costs
increased during fiscal 1999 primarily due to lower fixed cost absorption.

Gross profit  decreased  $33.6 million,  or 64.1%,  from $52.4 million in fiscal
1998 to $18.8  million in fiscal 1999.  Gross profit per ton for fiscal 1998 was
$89 per ton as compared to $33 per ton for fiscal 1999. Gross profit per ton was
impacted by falling selling prices and higher  conversion costs partially offset
by lower steel costs.  Gross  profit as a  percentage  of net sales was 6.0% for
fiscal  1999,  as  compared  to 13.6% for fiscal  1998.  The change in the gross
profit is due to the factors discussed above.

Selling,  general and  administrative  expenses  increased $1.9 million or 9.5%,
from  $20.1  million  in fiscal  1998 to $22.0  million  in fiscal  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.  These increased
expenses were partially offset by the write-down of software  development  costs
of $1.6  million  in  fiscal  1998 and lower  sales  commissions  on  industrial
products sales. Selling,  general and administrative expenses as a percentage of
net  sales  increased  from  5.2% in  fiscal  1998 to 7.0% in  fiscal  1999  due
primarily to the decreased sales level.

During  September  1998,  we  acquired  assets  that are being  utilized  in the
production  of cold  drawn  tubular  products  at a  facility  in Beaver  Falls,
Pennsylvania.  We incurred  operating  losses of  approximately  $3.5 million in
fiscal 1999  related to the  operations  at this  facility  that had not reached
normal  production  capacity.  Also,  during 1998, we acquired the equipment and
began the  construction  of a new  facility  in  Longview,  Washington.  Initial
production focused on industrial tubing. Finishing lines were completed by March
1999,  which added the capability to produce energy  products and standard pipe.
We incurred net costs of $283,000  during fiscal 1999 related to the  operations
of this  facility.  These costs are  comprised  primarily  of salary and related
costs for the production,  sales and administrative personnel prior to the fully
integrated  operation of the facility.  These start-up  costs  increased our net
loss by $0.08 per diluted share for fiscal 1999.

Interest expense increased $210,000,  or 12.7%, from $1.7 million in fiscal 1998
to $1.9  million in fiscal 1999 as a result of  increased  interest  rates.  The
increased interest rates were primarily due to revisions to our revolving credit
facilities to reflect our operating results, largely attributable to the effects
of the unfavorable energy market, and to provide additional  availability in the
borrowing base.

The benefit from income taxes was $1.6 million for fiscal 1999,  compared to the
prior  year when we  recorded  a  provision  of $10.6  million.  This  change is
attributable to the generation of pre-tax losses of $8.9 million in fiscal 1999,
compared to pre-tax income in fiscal 1998 of $29.9 million.  During fiscal 1999,
we incurred a loss of $3.9 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.

As a result of the decreased gross profit and the other factors discussed above,
we  generated a net loss of $7.3  million,  or $0.24  diluted  loss per share in
fiscal  1999,  a decrease  of $26.6  million  from the $19.3  million,  or $0.61
diluted earnings per share reported for fiscal 1998.

Maverick Tube L.P. Segment

Maverick L.P.'s sales decreased $93.0 million,  or 35.0%, from $265.4 million in
fiscal  1998 to  $172.4  million  in  fiscal  1999.  Maverick  L.P.'s  shipments
decreased  90,257 tons,  or 21.1%,  from 428,216  tons to 337,959  tons.  Energy
shipments comprised 78,285 tons of this decrease. Our domestic shipments of OCTG
fell by 32.8%  due to a  declining  rig count  throughout  the  fiscal  year and
inventory  draw-downs by our customers.  Our export sales,  primarily to Canada,
decreased  by 22.9%,  from  25,866  tons in fiscal 1998 to 19,931 tons in fiscal
1999,  as the average  Canadian  rig count fell 34.4% from 323 rigs to 212 rigs.
Industrial  products  shipments  comprised  the  remainder of 11,972 tons of the
decrease  in  shipments.  Overall  average  selling  price for  Maverick  L.P.'s
products decreased by 17.7% from an average of $620 per ton to $510 per ton. The
average  selling price for energy  products was $551 per ton, a decrease of $151
per ton. The  decrease  was  principally  due to the  deterioration  in the U.S.
energy market  throughout  fiscal 1999. The average  selling price of industrial
products was $461 per ton, a decrease of $27 per ton.

Maverick L.P.'s cost of goods sold of $169.5 million decreased $62.5 million, or
26.9% in fiscal 1999,  compared with the prior year.  The decrease was primarily
due to decreased product  shipments.  However,  the overall unit cost per ton of
products sold  decreased  7.4% (from an average of $542 per ton to $502 per ton)
in fiscal 1999.  The decreased was due primarily to a decrease in steel costs as
steel cost of goods sold  decreased  13.0%,  or $42 per ton during  fiscal 1999.
Overall conversion costs remained relatively stable during fiscal 1999.

Maverick  L.P.'s gross profit  decreased  $30.5  million,  or 91.4%,  from $33.4
million in fiscal 1998 to $2.9 million in fiscal 1999. Gross profit per ton fell
dramatically from $78 per ton in fiscal 1998 to $8 per ton in fiscal 1999. Gross
profit as a  percentage  of net sales was 1.7% for fiscal  1999,  as compared to
12.6% for  fiscal  1998.  The change in the gross  profit is due to the  factors
discussed above.

Prudential Segment

Prudential's  sales  increased $23.6 million,  or 19.9%,  from $118.4 million in
1998 to $142.0 million in 1999. Prudential's shipments increased 54,728 tons, or
30.2%, from 181,120 tons to 235,848 tons. Energy shipments comprised 45,811 tons
of this  increase  despite the average  Canadian rig count falling 7.2% from 263
rigs in 1998 to 244 rigs in 1999.  We believe our  increase in energy  shipments
was due to our ability to respond  quickly to changes in the market.  Industrial
products shipments  comprised 16,842 tons of the increase in shipments.  Overall
average  selling  price  for  Prudential's  products  decreased  by 8.0% from an
average of $654 per ton to $602 per ton.  The average  selling  price for energy
products  was  $655  per ton,  a  decrease  of $82 per  ton.  The  decrease  was
principally due to the  deterioration  in the energy market  throughout 1999 and
increased  competition  from  imports.  The average  selling price of industrial
products  was $459 per ton,  a decrease  of $78 per ton.  Tolling  ton  decrease
comprised the remainder of the difference in the increase in shipments.

Prudential's  cost of goods sold of $126.1 million  increased $26.7 million,  or
26.9% in 1999,  compared with the prior year.  The increase was primarily due to
increased product shipments.  However, the overall unit cost per ton of products
sold  decreased 2.6% (from an average of $549 per ton to $535 per ton) in fiscal
1999. The decrease in unit costs was due primarily to a decrease in steel costs.

Prudential's  gross profit decreased $3.1 million,  or 16.3%, from $19.0 million
in fiscal 1998 to $15.9  million in fiscal 1999.  Gross profit per ton decreased
from $105 per ton in fiscal  1998 to $67 per ton in fiscal  1999.  Deteriorating
selling  prices  partially  offset by lower steel costs  impacted  gross  profit
margin per ton.  Gross profit as a percentage  of net sales was 11.2% for fiscal
1999,  as compared to 16.0% for fiscal  1998.  The change in the gross profit is
due to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

Working capital at December 31, 2000 was $118.8 million and the ratio of current
assets to current liabilities was 2.2 to 1, compared to working capital of $93.6
million and a current ratio of 2.2 to 1 at September  30, 1999.  The increase in
working  capital was  principally  due to a $21.2  million  increase in accounts
receivable and a $15.3 million  increase in inventories  partially  offset by an
$11.9  million  increase  in accrued  expenses  and a $3.7  million  increase in
deferred  revenue.  The increase in accounts  receivable,  inventories,  accrued
expenses and deferred revenue was due to the increased volume of energy business
experienced  throughout calendar 2000. Cash provided by operating activities for
calendar 2000 was $10.6  million.  The primary  source of cash was the cash from
operations of $30.4  (excluding  depreciation and amortization of $13.8 million)
partially  offset  by  the  above-described  changes  in  operating  assets  and
liabilities.

During the three months ended December 31, 1999,  fiscal 1999 and 1998, net cash
(used)  provided by operating  activities  was $(16.4),  $17.4  million and $4.0
million,  respectively.  For the three months ended December 31, 1999, cash used
by operating  activities and funding for capital  expenditures  came principally
from the sale of  common  stock.  In  fiscal  1999,  the net  cash  provided  by
operating activities was primarily used to fund capital expenditures.  In fiscal
1998,  the funding for capital  expenditures  came from the net cash provided by
operating  activities,  the proceeds  from  borrowings  and notes and the use of
prior year cash balances.

Cash used in investing activities in calendar 2000, the three month period ended
December 31, 1999, fiscal 1999 and 1998 was $53.7 million,  $18.6 million, $18.8
million and $43.1 million, respectively. In calendar 2000, we used $34.9 million
primarily for the  construction and equipping of our new large diameter pipe and
tubing facility in Hickman,  Arkansas 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 Hickman,  Arkansas. 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.  We funded the remaining $9.65 million of the purchase price for
the large mill  equipment on November  10, 1999.  See Note 3 of the Notes to the
Consolidated Financial Statements.  In fiscal 1998, we purchased property, plant
and  equipment of $43.2 of which $11.5  million was spent on the purchase of the
production facility for cold drawn mechanical tubing and $17.8 million was spent
on the Longview, Washington facility.

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.

During fiscal 1998, cash provided by financing activities was $19.3 million that
was  primarily  attributable  to a $23.5  million net increase in our  revolving
credit facilities used to fund the purchase of the production  facility for cold
drawn mechanical  tubing and other working capital needs.  These borrowings were
partially  offset by dividends paid to the former  stockholders of Prudential of
$4.1 million.

We have three  revolving  credit  facilities.  The short-term  revolving  credit
facility is with a Canadian financial institution,  the operating line of credit
is with a U.S. financial institution and the long-term revolving credit facility
is with a group of U.S.  financial  institutions.  The short-term  facility is a
$26.7 million  (C$40.0  million  Canadian)  unsecured  demand  operating  credit
facility.  This facility is  considered to be short-term  and is included in our
current  liabilities.  The operating  line of credit is a $5.0 million  facility
that  is  used  to  fund  the  working  capital  requirements  of the  Longview,
Washington  operation.  It is secured by letters of credit drawn on the Canadian
bank and any borrowings on the U.S.  operating line reduce the  availability  of
the  short-term  revolving  credit  facility.  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.

Consistent with the Company's  business  strategy prior to the combination,  the
Company  currently  intends  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  long-term  revolving  credit
facility with commercial lenders restricts the amount of dividends we can pay to
our stockholders.

Our capital  expenditure budget for fiscal 2001 is approximately  $20.0 million,
of  which  $3.5  million  will be used  for the  construction  of a new  coating
facility,  which will be built  adjacent to our existing  facilities in Hickman,
Arkansas.  The remaining $16.5 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 that constitute our primary sources of liquidity.

As of  December  31,  2000,  the  applicable  interest  rate  on the  short-term
revolving  credit  facility/operating  line of credit and the  long-term  credit
facility  was 7.0 and 9.5 percent per annum,  respectively.  We had $5.9 million
and $14.6 million in additional  available borrowings as of December 31, 2000 on
the short-term revolving credit  facility/operating line of credit and long-term
revolving  credit facility,  respectively.  As of December 31, 2000, we had $2.2
million in cash and cash equivalents.

<PAGE>
<TABLE>
<CAPTION>
                                 Maverick Tube Corporation and Subsidiaries
                                        Consolidated Balance Sheets
                                     (In thousands, except share data)

                                                                   December 31,         September 30,
                                                                        2000                 1999
                                                               --------------------------------------------
<S>                                                               <C>                   <C>
ASSETS
Current assets:
 Cash and cash equivalents                                        $     2,193           $    1,625
 Accounts receivable, less allowances of $2,141
   and $1,581 in 2000 and 1999, respectively                           74,979               54,952
 Inventories                                                          137,718              106,638
 Deferred income taxes                                                  2,764                3,000
 Income taxes refundable                                                   45                3,739
 Prepaid expenses and other current assets                              2,978                2,054
                                                               -----------------------------------
   Total current assets                                               220,677              172,008

Property, plant and equipment, net                                    167,263              114,160

Other assets                                                            1,089                3,073
                                                               -----------------------------------
                                                                  $   389,029           $  289,241
                                                               ===================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                                 $   48,885           $   46,593
 Accrued expenses and other liabilities                               20,025               17,338
 Deferred revenue                                                      8,954                3,716
 Income taxes payable                                                  2,353                    -
 Revolving credit facility                                            20,766               10,067
 Current maturities of long-term debt                                    866                  708
                                                               -----------------------------------
  Total current liabilities                                          101,849               78,422

Long-term debt, less current maturities                                6,929                7,518
Revolving credit facility                                             62,038               31,000
Deferred income taxes                                                  4,957                5,527
Commitments and contingencies (Notes 6, 13 and 14)                         -                    -

STOCKHOLDERS' EQUITY
 Preferred stock, $.01 par value; 5,000,000
  authorized shares; 1 share issued and outstanding
  in 2000 and 1999                                                        -                    -
 Common stock, $.01 par value; 80,000,000
  authorized shares; 33,712,312 and 31,164,809 shares
  issued and outstanding in 2000 and 1999, respectively                 337                  311
 Additional paid-in capital                                         111,542               74,007
 Retained earnings                                                  107,790               95,612
 Accumulated other comprehensive loss:
  Foreign currency translation                                       (6,413)              (3,156)
                                                               -----------------------------------
                                                                    213,256              166,774
                                                               -----------------------------------
                                                                  $ 389,029          $   289,241
                                                               ===================================
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                               Maverick Tube Corporation and Subsidiaries
                                                  Consolidated Statements of Operations
                                                  (In thousands, except per share data)

                                                             Three Months
                                            Year Ended          Ended
                                           December 31,      December 31,       Year Ended September 30,
                                               2000             1999            1999            1998
                                      ---------------------------------------------------------------------
<S>                                         <C>             <C>              <C>              <C>
 Net sales                                  $  560,382      $  129,616       $ 314,391        $ 383,827
 Cost of goods sold                            490,133         118,983         295,649          331,406
                                      ---------------------------------------------------------------------
 Gross profit                                   70,249          10,633          18,742           52,421

 Selling, general and administrative            25,466           7,104          22,036           20,103
 Start-up costs                                    267               -           3,745              775
                                      ---------------------------------------------------------------------

 Income (loss) from operations                  44,516           3,529          (7,039)          31,543

 Transaction costs                              11,253               -               -                -
 Interest expense                                3,177             256           1,868            1,658
                                      ---------------------------------------------------------------------
 Income (loss) before income taxes              30,086           3,273          (8,907)          29,885

 Provision (benefit) for income taxes           13,521           1,726          (1,573)          10,587
                                      ---------------------------------------------------------------------
 Net income (loss)                          $   16,565      $    1,547       $  (7,334)        $ 19,298
                                      =====================================================================

Basic earnings (loss) per share             $     0.49      $     0.05       $   (0.24)        $   0.62
                                      =====================================================================

Diluted earnings (loss) per share           $     0.48      $     0.05       $   (0.24)        $   0.61
                                      =====================================================================
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                               Maverick Tube Corporation and Subsidiaries
                                             Condolidated Statements of Stockholders' Equity
                                                    (In thousands, except share data)

                                                                                                Accumulated
                                                                                   Additional      Other
                                                                  Common Stock      Paid-In    Comprehensive Retained  Stockholders'
                                                                 Shares   Amount    Capital    Income (Loss) Earnings     Equity
                                                               ---------------------------------------------------------------------
<S>                                                            <C>        <C>      <C>         <C>          <C>          <C>
Balance at September 30, 1997                                  31,121,806 $  311   $ 73,091    $   (2,396)  $ 91,795     $  162,801

  Net income                                                            -      -          -             -     19,298         19,298
  Foreign currency translation                                          -      -          -        (5,751)         -         (5,751)
                                                                                                                         -----------
  Comprehensive income                                                                                                       13,547
  Dividends paid to Prudential Steel Ltd. stockholders                  -      -          -             -     (4,077)        (4,077)
  Exercise of stock options - Prudential Steel Ltd.
   directors and employees                                         11,665      -         65             -          -             65
  Exercise of stock options - Maverick directors and employees     26,500      -        162             -          -            162
  Tax benefit associated with the exercise
   of non-qualified Maverick stock options                              -      -        648             -          -            648
                                                               ---------------------------------------------------------------------

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
                                                               =====================================================================
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                               Maverick Tube Corporation and Subsidiaries
                                                  Consolidated Statements of Cash Flows
                                                             (In thousands)

                                                                       Three Months
                                                       Year Ended         Ended
                                                       December 31,     December 31,    Year Ended September 30,
                                                           2000            1999            1999          1998
                                                     -------------------------------------------------------------
<S>                                                   <C>               <C>            <C>            <C>
OPERATING ACTIVITIES
Net income (loss)                                     $   16,565        $   1,547      $  (7,334)     $  19,298
Adjustments to reconcile net income (loss) to net
 cash provided (used) by operating activities:
  Depreciation and amortization                           13,819            3,327         11,420          8,553
  Deferred income taxes                                     (980)              41         (2,105)           810
  Provision for losses on accounts receivable                666             (130)          (522)             3
  (Gain) loss on sale of equipment                             1               18            (28)            49
  Loss on write-down of software development costs             -                -              -          1,605
  Changes in operating assets and liabilities:
    Accounts receivable                                  (21,217)          (9,425)       (20,749)        30,868
    Inventories                                          (15,270)         (24,816)         3,562          3,987
    Prepaid expenses and other current assets                551              (32)         1,034         (1,800)
    Other assets                                             342              146            571            189
    Accounts payable                                         502            5,486         25,807        (27,334)
    Accrued expenses and other liabilities                11,921            5,890          5,571        (19,573)
    Deferred revenue                                       3,656            1,582            132        (12,667)
                                                     -------------------------------------------------------------
Cash provided (used) by operating activities              10,556          (16,366)        17,359          3,988

INVESTING ACTIVITIES
Expenditures for property, plant and equipment           (53,751)         (18,555)       (16,917)       (43,151)
Deposit on equipment                                           -                -         (2,125)             -
Proceeds from disposal of equipment                           43                1            194             30
                                                     -------------------------------------------------------------
Cash used by investing activities                        (53,708)         (18,554)       (18,848)       (43,121)

FINANCING ACTIVITIES
Proceeds from borrowings and notes                       322,363           57,793         79,331        173,663
Principal payments on borrowings and notes              (276,419)         (57,494)       (72,923)      (150,537)
                                                     -------------------------------------------------------------
                                                          45,944              299          6,408         23,126
Dividends paid to Prudential Steel Ltd. stockholders      (3,089)          (1,027)        (4,070)        (4,077)
Proceeds from exercise of stock options                    1,414              196             28            227
Proceeds from sale of common stock                             -           34,903              -              -
                                                     -------------------------------------------------------------
Cash provided by financing activities                     44,269           34,371          2,366         19,276

Effect on exchange rate changes on cash                        -                -              -           (669)
                                                     -------------------------------------------------------------

Increase (decrease) in cash and cash equivalents           1,117             (549)           877        (20,526)

Cash and cash equivalents at beginning of period           1,076            1,625            748         21,274
                                                     -------------------------------------------------------------

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

Supplemental disclosures of cash flow information:
 Cash paid (received) during the period for:
 Interest (net of amounts capitalized of $2,937,
  $249, $543, and $355)                                $   3,181        $     476      $   1,862      $   1,660
 Income taxes                                          $   6,027        $   1,625      $    (682)     $  20,207

<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>

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" and "1998" refer to the
respective  years ended September 30, the Transition  Period refers to the three
months ended December 31, 1999, and "2000" refers to the year ended December 31,
2000.

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

Income Taxes

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

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 generally  accepted
accounting  principles  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 16) 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 year ended
December 31, 2000, the three months ended December 31, 1999, and the years ended
September 30, 1999 and 1998, is as follows (in thousands):

                                                 Transition
                                          2000     Period     1999        1998
                                        ----------------------------------------

Average shares outstanding               33,633     31,703    31,160     31,156
Dilutive effect of outstanding stock
  options                                   892        935        --        413
                                        ----------------------------------------
Average shares deemed outstanding        34,525     32,638    31,160     31,569
                                        ========================================
Net income (loss) used in basic and
  diluted earnings (loss) per share     $16,565   $  1,547   $(7,334)  $ 19,298
                                        ========================================

Business Segments

The Company  changed its segment  reporting in conjunction  with the combination
with Prudential.  Accordingly,  the segments are now based on geographic regions
instead  of  product  lines  as  previously  reported.  Maverick  Tube  L.P.,  a
wholly-owned  subsidiary  of the  Company,  is  responsible  for  the  Company's
operations in Hickman,  Arkansas,  Beaver Falls, Pennsylvania and Conroe, Texas.
Prudential,  a wholly-owned  subsidiary of the Company,  is responsible  for the
Company's operations in Calgary, Alberta, and Longview, Washington.

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 6
to the consolidated financial statements.

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 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.

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 as of
September  30, 1999 and for the years ended  September  30, 1999 and 1998,  have
been combined with Prudential's financial statements as of December 31, 1999 and
for the years  ended  December  31,  1999 and 1998,  respectively.  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          1998
                         -------------------------------------------------------
                           (Unaudited)
Revenues:
  Maverick                 $ 145,753      $  69,969     $ 172,417     $ 265,389
  Prudential                 118,182         59,647       141,974       118,438
                         -------------------------------------------------------
    Combined               $ 263,935      $ 129,616     $ 314,391     $ 383,827
                         =======================================================

Net income (loss):
  Maverick                 $   1,587      $ (1,298)     $ (10,449)    $  11,385
  Prudential                  10,190         2,845          3,115         7,913
                         -------------------------------------------------------
    Combined               $  11,777      $  1,547      $  (7,334)    $  19,298
                         =======================================================

Stockholders' equity:
  Maverick                 $ 115,875      $ 113,438     $  79,646     $  90,063
  Prudential                  93,371         87,128        87,128        83,083
                         -------------------------------------------------------
    Combined               $ 209,246      $ 200,566     $ 166,774     $ 173,146
                         =======================================================

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.

3.    Purchase of Equipment and Sale of Stock

On September 3, 1999, the Company  entered into an Asset  Purchase  Agreement to
purchase mill equipment for  $11,750,000.  In September 1999, the Company made a
deposit of $2,100,000  on the  equipment and funded the remaining  $9,650,000 of
the  purchase  price on November 10, 1999.  This  equipment  will be used by the
Company  in  connection  with the  construction  and  equipping  of a new  large
diameter  pipe and  tubing  facility  adjacent  to its  existing  facilities  in
Hickman,  Arkansas.  The Company  estimates that the total cost for this project
will be $51,000,000, which includes outstanding commitments at December 31, 2000
of $1,800,000.

The Company  funded this project  principally  through the issuance of 2,300,000
shares of its common stock. The original  2,000,000 shares offered to the public
closed on October 6, 1999.  The  underwriters'  overallotment  of 300,000 shares
closed on October 21, 1999.  Total proceeds to the Company from the sale, net of
the underwriting  discount and other expenses,  were $34,903,000.  The remaining
portion  of the funds  necessary  to  finance  the  facility  will come from the
Company's long-term revolving credit facility

4.    Start-Up Costs

The Company began construction on a new production facility in Hickman, Arkansas
during 1999.  Start-up  costs for the year 2000 were  $267,000.  These costs are
comprised   primarily  of  manufacturing  costs  incurred  prior  to  the  fully
integrated  operation  of the facility  which were offset by a large  industrial
product  order  which  was  produced  and  shipped  in  December  2000.  The new
production  facility has not yet been completed and is awaiting  installation of
the energy  finishing  equipment  which is expected to be fully  operational  by
March 2001. These start-up costs decreased the net income of the Company for the
year ended December 31, 2000 by $0.01 per share.

During 1998,  the Company  acquired  assets to be used in the production of cold
drawn tubular products at a production  facility in Beaver Falls,  Pennsylvania,
from PMAC,  Ltd.  for  $11,464,000.  The Company  incurred  operating  losses of
$3,462,000  for the year ended  September 30, 1999 related to the  operations at
this facility which had not reached  normal  production  capacity.  The facility
became  fully  operational  during  January of 2000.  These costs are  comprised
primarily of salary and related costs for production,  sales and  administrative
personnel  prior  to the  fully  integrated  operation  of the  facility.  These
start-up  costs  increased  the net  loss of the  Company  for  the  year  ended
September 30, 1999 by $0.07 per share.

During 1998,  the Company began  construction  on a new  production  facility in
Longview,  Washington.  The Company  incurred  costs of $283,000 and $775,000 in
1999 and 1998,  respectively,  related to the commencement of operations of this
facility  which began in December 1998.  The facility  became fully  operational
during January 1999.  These costs are comprised  primarily of salary and related
costs for production and sales personnel prior to the fully integrated operation
of the facility.  These start-up costs increased the net loss of the Company for
the year  ended  September  30,  1999 by $0.01 per share and  decreased  the net
income of the Company by $0.02 per share for the year ended September 30, 1998.

5.  Write-Down of Software Developments Costs

During the year ended  September  30,  1998,  the  Company  recorded a charge of
$1,605,000 in selling,  general and administrative expense for the write-down of
certain  software  development  costs  relating  to  information  systems  being
replaced by a new enterprise resource planning system.

6. Long-Term Debt and Revolving Credit Facilities

Long-term debt,  including  Maverick's  long-term revolving credit facility,  at
December  31, 2000 and at  September  30, 1999  consists  of the  following  (in
thousands):

                                                           2000        1999
                                                      --------------------------

Capital lease obligation, secured by
 property, plant and equipment (net
 book value $6,212,000 at December
 31, 2000); payable in monthly
 installments (including interest at
 8.0%) of $59,479; final payment due
 on August 1, 2007                                      $  3,679       $ 4,176

Capital lease obligation, secured by
 property and plant (net book value
 $9,605,000 at December 31, 2000);
 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                                   3,654         4,050

Revolving credit notes, secured by
 certain accounts receivable, inventories
 and equipment; due on January 1, 2004;
 interest payable monthly at either prime,
 Federal Funds rate plus 0.5% or the LIBOR
 rate, adjusted by an interest margin,
 depending upon certain financial
 measurements (9.5% at December 31, 2000)                 62,038        31,000

Other                                                        462            --
                                                      --------------------------
                                                          69,833        39,226
Less current maturities                                     (866)         (708)
                                                      --------------------------
                                                        $ 68,967      $ 38,518
                                                      ==========================

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  $828,000 at  December  31, 2000 (which  expire
through April 2001).  Additional available borrowings under the credit agreement
at December  31,  2000 were  $14,592,000.  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.

In addition to Maverick's  long-term credit facility,  Prudential has two credit
facilities,  a C$40,000,000  ($26,676,000 at December 31, 2000) unsecured demand
operating  facility through a Canadian  chartered bank, and a $5,000,000  demand
credit  facility  through a U.S.  institution  for use in  funding  the  working
capital  requirements  of the  Longview,  Washington,  operation.  These  credit
facilities are reviewed annually.  The $5,000,000 facility is secured by letters
of credit drawn on the Canadian  bank line and any  borrowings  on the U.S. line
reduce the amount available on the Canadian line. Interest is payable monthly at
either Canadian prime,  U.S. base rate, LIBOR plus 0.5%, or Bankers'  Acceptance
rates plus stamping fees. The effective interest rate on the amounts outstanding
at  December  31, 2000 is 7.01%.  Additional  available  borrowings  under these
facilities  at December  31, 2000 were  $5,910,000.  The  aggregate  outstanding
balance of the two credit facilities at December 31, 2000 and September 30, 1999
was $20,766,000 and $10,067,000, respectively.

The present  value of future  minimum  lease  payments  under the capital  lease
obligations as of December 31, 2000 is as follows (in thousands):

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

2001              $    1,314            $     541             $     773
2002                   1,319                  479                   840
2003                   3,330                  353                 2,977
2004                   1,199                  165                 1,034
2005                     714                  115                   599
Thereafter             1,189                   79                 1,110
               -----------------------------------------------------------------
                  $    9,065            $   1,732             $   7,333
               =================================================================

Property,  plant and  equipment  at  December 31,  2000 and  September  30, 1999
include $19,294,000 and $18,654,000,  respectively,  under leases that have been
capitalized.  Accumulated  depreciation  for these  assets  was  $3,477,000  and
$2,820,000 at December 31, 2000 and at September 30, 1999, 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, 2000 was $90,461,000.

7. Inventories

Inventories at December 31, 2000 and September 30, 1999 consist of the following
(in thousands):

                                                      2000            1999
                                               ---------------------------------

Finished goods                                  $    77,490       $   58,156
Work-in-process                                       4,197            3,436
Raw materials                                        32,276           25,163
In-transit materials                                 14,936           13,626
Storeroom parts                                       8,819            6,257
                                               ---------------------------------
                                                $   137,718       $  106,638
                                               =================================

Finished  goods at December 31, 2000 and September  30, 1999 include  $7,485,000
and $3,560,000, respectively, of customer-obligated inventory.

8. Property, Plant and Equipment

Property,  plant and  equipment  at  December  31, 2000 and  September  30, 1999
consist of the following (in thousands):

                                                      2000            1999
                                               ---------------------------------

Land                                            $     4,232       $  3,219
Land and leasehold improvements                       5,363          5,952
Buildings                                            39,943         37,056
Transportation equipment                              3,826          3,026
Machinery and equipment                             188,336        130,267
Computer software                                    10,748          5,822
Furniture and fixtures                                4,359          5,213
                                               ---------------------------------
                                                    256,807        190,555
Less accumulated depreciation                       (89,544)       (76,395)
                                               ---------------------------------
                                                $   167,263      $  114,160
                                               =================================

9. Income Taxes

The jurisdictional  components of income (loss) before income taxes for the year
ended December 31, 2000, the three months ended December 31, 1999, and the years
ended September 30, 1999 and 1998, are as follows (in thousands):

                                              Transition
                                      2000      Period      1999          1998
                                  ----------------------------------------------

Domestic                           $    602   $ (5,891)  $(17,311)    $  16,805
Foreign                              29,484      9,164      8,404        13,080
                                  ----------------------------------------------
                                   $ 30,086   $  3,273   $ (8,907)    $  29,885
                                  ==============================================

The  components of the  provision  (benefit) for income taxes for the year ended
December 31, 2000, the three months ended December 31, 1999, and the years ended
September 30, 1999 and 1998, are as follows (in thousands):

                                              Transition
                                      2000      Period      1999          1998
                                  ----------------------------------------------

Current:
   Federal                         $   2,067  $  (706)   $ (3,399)    $   4,120
   State                                  67      (23)       (112)          139
   Foreign                            11,680    2,392       4,027         5,367
                                  ----------------------------------------------
                                      13,814    1,663         516         9,626
                                  ----------------------------------------------
Deferred:
  Domestic                             (148)       --      (2,211)        1,161
  Foreign                              (145)       63         122          (200)
                                  ----------------------------------------------
                                       (293)       63      (2,089)          961
                                  ----------------------------------------------
                                   $ 13,521   $ 1,726    $ (1,573)     $ 10,587
                                  ==============================================

The difference between the effective income tax rate and the U.S. federal income
tax rate for the year ended  December 31, 2000,  the three months ended December
31,  1999,  and the years ended  September  30, 1999 and 1998,  is  explained as
follows (in thousands):

                                             Transition
                                      2000     Period       1999          1998
                                  ----------------------------------------------

Provision (benefit) at U.S.
 statutory tax rate                $ 10,530   $  1,146   $(3,117)      $ 10,161
State and local taxes, net
 of federal tax benefit                  67        (23)     (112)           139
Taxes on foreign income in
 excess of U.S. statutory rate        2,677        487       698          1,736
Alternative minimum tax                  81         --        --             --
Increase in valuation allowance         660        604     1,717             --
Manufacturing and processing
 deduction                           (2,764)      (524)     (900)        (1,129)
Benefit of foreign sales
 corporation                             --         --        --           (354)
Nondeductible expenses                1,910         72        --             --
Other items                             360        (36)      141             34
                                  ----------------------------------------------
                                   $ 13,521   $  1,726   $(1,573)      $ 10,587
                                  ==============================================

Temporary  differences which give rise to deferred tax assets and liabilities at
December 31, 2000 and at September 30, 1999 are as follows (in thousands):

                                                        2000            1999
                                                    ----------------------------


Deferred tax assets:
  Various accrued liabilities and reserves           $  3,880        $  3,550
  Net operating loss carryforwards                      6,315           5,849
  Alternative minimum tax carryforwards                 2,622           2,541
  Tax benefit associated with the exercise of
    non-qualified stock options                            --              13
  Asset valuations                                        255              --
  Valuation allowance                                  (2,377)         (1,717)
                                                    ----------------------------
    Total deferred tax assets                          10,695          10,236

Deferred tax liabilities:
  Accelerated depreciation                             12,222           8,957
  Pension plan                                            666             608
  Asset valuations                                         --           3,198
                                                    ----------------------------
    Total deferred tax liabilities                     12,888          12,763
                                                    ----------------------------
    Net deferred tax liabilities                     $ (2,193)       $ (2,527)
                                                    ============================

All cumulative  undistributed earnings of the Company's foreign subsidiary up to
C$145,000,000  ($97,150,000  at December  31, 2000) are  considered  permanently
reinvested in the foreign  location.  As  undistributed  earnings in the foreign
location are below this amount at December 31, 2000, no deferred income taxes on
such  undistributed  earnings  have  been  provided.  The  determination  of the
deferred income tax liability if such cumulative undistributed earnings were not
permanently reinvested is not practicable at this time.

Maverick has  $10,398,000  of net operating loss  carryforwards  which expire in
2019 and 2020. At December 31, 2000, Maverick had alternative minimum tax credit
carryforwards  of $2,622,000  available  for income tax  purposes.  These credit
carryforwards do not expire.

Prudential  has  available  net operating  loss  carryforwards  of $7,413,000 at
December  31,  2000  which  expire in 2019 and 2020.  These net  operating  loss
carryforwards,  which are  limited to  $1,500,000  annually,  can be utilized to
offset  taxable  income  for the  Longview,  Washington  facility.  Management's
assessment  is that the character  and nature of future  taxable  income may not
allow the Company to realize  the tax  benefits  of these net  operating  losses
within the carryforward period. Accordingly, a valuation allowance has been made
for the entire amount.

10. 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 year  ended  December  31,  2000,  the three
months ended December 31, 1999, and the years ended September 30, 1999 and 1998,
of $849,000, $201,000, $718,000 and $704,000, 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 year ended
December 31, 2000 and the years ended  September 30, 1999 and 1998, was $60,000,
$60,000 and  $310,000,  respectively.  The Company did not  contribute  to these
plans for the three months ended December 31, 1999.

11. Defined Benefit Plans

Prudential  sponsors  two pension  plans and a  postretirement  benefit plan for
substantially all of its Canadian employees.  A reconciliation of changes in the
plan's benefit obligations, fair value of assets, and statement of funded status
for the years ended  December 31, 2000 and September 30, 1999 are as follows (in
thousands):

                                                               Postretirement
                                           Pension Benefits     Benefit Plan
                                             2000     1999       2000     1999
                                          --------------------------------------

Change in benefit obligation:
  Benefit obligation at beginning of year  $ 20,037  $ 18,083   $  479   $  313
  Service cost                                1,108       719      142      145
  Interest cost                               1,539     1,420       69       67
  Actuarial (gain) loss                       2,054      (644)     426      (50)
  Benefits paid                                (413)     (634)     (26)     (17)
  Foreign currency translation change          (784)    1,093      (20)      21
                                          --------------------------------------
  Benefit obligation at end of year        $ 23,541  $ 20,037   $ 1,070  $  479
                                          ======================================

Change in fair value of plan assets:
  Fair value of plan assets at
   beginning of year                       $ 25,514  $ 21,215   $    --  $   --
  Actual return on plan assets                9,035     3,650        --      --
  Benefits paid                                (413)     (634)       --      --
  Foreign currency translation change          (998)    1,283        --      --
                                          --------------------------------------
  Fair value of plan assets at end of
   year                                    $ 33,138  $ 25,514   $    --  $   --
                                          ======================================

Funded status:
  Overfunded (underfunded)
    status at end of year                  $  9,597  $ 5,477    $(1,070) $ (479)
  Unrecognized (gain) loss                   (7,805)  (3,844)       519      --
                                          --------------------------------------
  Prepaid (accrued) benefit cost           $  1,792  $ 1,633    $  (551) $ (479)
                                          ======================================

Benefit costs consist of the following for the year ended December 31, 2000, the
three months ended December 31, 1999, and the years ended September 30, 1999 and
1998 (in thousands):

                                                 Transition
                                        2000       Period      1999      1998
                                    --------------------------------------------

Pension Benefit Costs

Service cost                         $   882     $    176    $   719   $    672
Interest cost                          1,539          347      1,420      1,280
Expected return on plan assets        (2,115)        (441)    (1,802)    (1,500)
Amortization of prior service costs       18           (3)       (12)       (12)
Recognized net actuarial gain           (544)         (74)      (303)      (113)
                                    --------------------------------------------
                                     $  (220)    $      5    $    22   $    327
                                    ============================================

                                                 Transition
                                        2000       Period      1999      1998
                                    --------------------------------------------
Postretirement Benefit Plan Costs

Service cost                         $    31     $      8    $    33   $     29
Interest cost                             68           17         67         71
Recognized net actuarial loss             43           11         45        127
                                    --------------------------------------------
                                     $   142     $     36    $   145   $    227
                                    ============================================

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 plan at
December 31, 2000 and September 30, 1999 are as follows:

                                                                Postretirement
                                       Pension Benefits          Benefit Plan
                                        2000      1999         2000        1999
                                    --------------------------------------------

Discount rate                          6.75%     7.50%        6.75%       7.50%
Expected return on plan assets         7.00%     7.50%           --          --
Rate of compensation increase          4.25%     5.00%           --          --

For  measurement  purposes,  an 8.00%  annual rate of increase in the per capita
cost of covered  health care benefits was assumed for 2001. The rate was assumed
to decrease gradually each successive year until it reaches 4.00%.

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        $  21        $  17
Effect on accumulated postretirement benefit obligations    $ 203        $ 161

Prudential  sponsors two  Supplemental  Executive  Retirement Plans (SERP's) for
certain former key executives.  Compensation  expense related to these plans was
$614,000,  $85,000, $339,000 and $241,000, for the year ended December 31, 2000,
the three months ended December 31, 1999, and the years ended September 30, 1999
and 1998, respectively. Total benefits accrued under these plans were $1,784,000
at December 31, 2000 and $1,278,000 at September 30, 1999.

12. Segment Information

The following  table sets forth data (in  thousands) for the year ended December
31,  2000,  the three  months  ended  December  31,  1999,  and the years  ended
September 30, 1999 and 1998,  for the reportable  industry  segments of Maverick
Tube L.P. and  Prudential.  Inter-segment  sales are not material.  Identifiable
assets are those used in the Company's operations in each segment.

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

Year Ended December 31, 2000

Net sales                        $ 309,203      $ 251,179    $     -   $560,382
Operating income                    11,287         33,229          -     44,516
Identifiable assets                223,634        150,409     14,986    389,029
Depreciation and amortization        7,574          4,812      1,433     13,819
Capital expenditures                42,524          8,055      3,172     53,751


Three Months Ended December
 31, 1999

Net sales                       $   69,969      $  59,647    $     -   $129,616
Operating income (loss)             (1,824)         5,353          -      3,529
Identifiable assets                176,785        129,093     17,377    323,255
Depreciation and amortization        1,686          1,317        324      3,327
Capital expenditures                15,421          1,934      1,200     18,555


Year Ended September 30, 1999

Net sales                        $ 172,417      $ 141,974    $     -   $314,391
Operating income (loss)            (14,310)         7,271          -     (7,039)
Identifiable assets                142,630        129,093     17,518    289,241
Depreciation and amortization        6,831          4,065        524     11,420
Capital expenditures                 7,196          5,048      4,673     16,917


Year Ended September 30, 1998

Net sales                        $ 265,389      $ 118,438     $    -   $383,827
Operating income (loss)             20,141         13,007     (1,605)    31,543
Identifiable assets                145,452        101,316     11,433    258,201
Depreciation and amortization        5,703          2,381        469      8,553
Capital expenditures                19,698         20,970      2,483     43,151

The following  table sets forth the energy and industrial  product sales for the
year ended  December 31, 2000, the three months ended December 31, 1999, and the
years ended September 30, 1999 and 1998 (in thousands).

                                              Transition
                                     2000       Period       1999       1998
                                 -----------------------------------------------

Energy product sales             $ 449,290   $ 103,452    $ 225,149   $ 289,813
Industrial product sales           111,092      26,164       89,242      94,014
                                 -----------------------------------------------
                                 $ 560,382   $ 129,616    $ 314,391   $ 383,827
                                 ===============================================

Prudential's facility located in Calgary,  Alberta,  operates under a collective
bargain  agreement that covers 68% of all Prudential  employees.  The collective
bargain  agreement  expired on  December  31,  2000.  A new  collective  bargain
agreement  is being  negotiated  and  management  believes  that the  facility's
operations will not be adversely affected.

13. 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,
2000 (in thousands):

                 2001                    $       4,047
                 2002                            3,185
                 2003                            2,600
                 2004                            2,361
                 2005                            2,377
                                        -------------------
                                         $      14,570
                                        ===================

Rent expense for all operating leases was $3,780,000,  $858,000,  $3,076,000 and
$2,170,000 for the year ended December 31, 2000, the three months ended December
31, 1999, and the years ended September 30, 1999 and 1998, respectively.

14. 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.

15. 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.  The 1990 Plan, 1994 Plan, 1994
Director  Plan,  1999  Director Plan and  Prudential  Plan provide that 340,000,
1,000,000,  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 option. 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, 2000
and  September  30, 1999,  198,668 and 225,509  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 any of 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 year ended
December  31, 2000 and for the years  ended  September  30,  1999 and 1998,  was
determined to be $3,546,000, $2,946,000 and $1,916,000, 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
                                         2000     Period      1999      1998
                                     -------------------------------------------
Pro Forma

  Net income (loss) (in thousands)    $ 15,453   $ 1,290    $ (8,353)  $ 18,406
  Basic earnings (loss) per share         0.46      0.04       (0.27)      0.59
  Diluted earnings (loss) per share       0.45      0.04       (0.27)      0.58


The  compensation  expense  associated  with  the  fair  value  of  the  options
calculated for the year ended December 31, 2000, the three months ended December
31, 1999,  and the years ended  September 30, 1999 and 1998, 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 year ended December 31, 2000 and the years ended  September
30, 1999 and 1998,  respectively:  risk-free  interest rate of 5.97%,  4.99% and
5.66%; no dividend payments expected;  volatility factors of the expected market
price of the Company's  common stock of 0.672,  0.613 and 0.555;  and a weighted
average expected life of the options of 8.3 years, 8.6 years and 7.8 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.

The following table summarizes option activity and related  information for year
ended December 31, 2000, the three months ended December 31, 1999, and the years
ended September 30, 1999 and 1998:

                                                      Weighted        Weighted
                                      Shares Under     Average         Average
                                         Option     Exercise Price   Fair Value
                                      ------------------------------------------

Options outstanding at October
 1, 1997                                844,197       $   5.78
Options exercised                       (38,166)          5.86
Options forfeited                       (71,500)          5.71
Options granted                         189,993          16.15          $ 10.09
                                      ------------------------------------------

Options outstanding at September
 30, 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
                                      ==========================

The following table summarizes information about fixed stock options outstanding
at December 31, 2000:

                        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    396,653    3.5 years        $  4.63     396,653      $  4.63
$6.63  - $8.75    509,334    6.9 years        $  6.98     124,391      $  6.78
$10.24 - $22.31   612,450    8.1 years        $ 15.03     254,941      $ 16.40
--------------------------------------------------------------------------------
$4.00 - $22.31  1,518,437    6.5 years        $  9.61     775,985      $  8.84
================================================================================

16. 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.

17. 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 $.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.

18. Quarterly Financial Data (Unaudited)

The results of operations by quarter for calendar  years ended December 31, 2000
and 1999, were as follows (in thousands):

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

Net sales                 $ 135,961   $ 127,549    $138,504         $   158,368
Gross profit                 15,874      16,864      14,326 (1)          23,185
Net income (loss)             5,553       6,224      (5,098)(1)(2)        9,886
Basic earnings (loss)
 per share                      .16         .19        (.15)                .29
Diluted earnings (loss)
 per share                      .16         .18        (.15)                .29


Quarter Ended                March 31,  June 30,  September 30,    December 31,
                               1999       1999        1999             1999
                         -------------------------------------------------------

Net sales                 $  61,510     $ 61,718    $ 90,128        $   129,616
Gross profit                  2,521        1,618       5,406             10,633
Net income (loss)            (2,907)      (3,363)     (1,545)             1,547
Basic earnings (loss)
 per share                     (.09)        (.11)       (.05)               .05
Diluted earnings (loss)
 per share                     (.09)        (.11)       (.05)               .05

(1)  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).

(2)  During the  quarter  ended  September  30,  2000,  the  Company  recorded a
     $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).


<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, 2000 and September 30, 1999, and
the related  consolidated  statements of operations,  stockholders'  equity, and
cash flows for the year ended  December 31,  2000,  for the  three-month  period
ended  December  31,  1999,  and for each of the two years in the  period  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, 2000 and September
30, 1999, and the consolidated  results of their operations and their cash flows
for the year ended December 31, 2000, for the three-month  period ended December
31, 1999, and for each of the two years in the period ended September 30,  1999,
in  conformity  with  accounting  principles  generally  accepted  in the United
States.

                                               /s/ ERNST & YOUNG LLP

St. Louis, Missouri
February 15, 2001