Exhibit 13
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MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS
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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  subsidiaries  Prudential Steel Ltd.
("Prudential"), Precision Tube Holding Corporation ("Precision") and the tubular
division of The LTV Corporation.  Also, unless the context  otherwise  requires,
the terms "we," "us" or "our" refer to the Company.

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

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

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

Our products  include  electric  resistance  welded,  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 steel  electric
conduit,  structural  tubing and  standard  pipe,  which are sold  primarily  to
service  centers  that  supply   end-users  in   construction,   transportation,
agriculture  and other  industrial  enterprises.  In  addition,  we also produce
coiled tubing and line pipe which are sold to service  companies  worldwide.  We
generated approximately 82% of our revenue from supplying products to the energy
business during 2002.

Business Acquisitions
---------------------

On March  29,  2002,  we  completed  the  purchase  of all the  common  stock of
Precision,  a privately held, Houston based,  coiled tubular goods manufacturer,
in exchange for $60.7 million cash and 200,000  common shares.  The  acquisition
was  accounted  for  as  a  purchase  business  combination  and  the  financial
statements of Precision have been  consolidated  from the acquisition  date. The
cost to  acquire  Precision  has  been  allocated  to the  assets  acquired  and
liabilities  assumed  according to their  estimated  fair values and resulted in
goodwill of $43.1 million.

On December 31,  2002,  we acquired  the assets and certain  liabilities  of the
tubular  division of The LTV Corporation for $120.2 million cash (which included
a $10.2  million  working  capital  adjustment,  subject to  finalization).  The
acquisition was accounted for as a purchase business combination and the cost to
acquire  the  tubular  division of The LTV  Corporation  has been  preliminarily
allocated to the assets  acquired  and  liabilities  assumed  according to their
estimated  fair values and  resulted in goodwill of $50.1  million.  Final fixed
asset appraisals,  identification of intangible assets and exit costs associated
with  our  rationalization   plans  are  subject  to  adjustment  as  additional
information  becomes  available.  In  2003,  we  announced  the  closure  of the
Youngstown  facility.  We are currently  determining the required exit costs and
expect to revise the  preliminary  allocation of the cost to acquire the tubular
division of The LTV Corporation in the first half of 2003.

The aggregate purchase price for these two acquisitions was approximately $183.0
million and their  annual  sales are $282.6  million.  Based upon the  Company's
recent  acquisitions,  the Chief  Operating  Decision Maker is in the process of
reassessing the appropriate business segments.

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

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

U.S.  end-users  obtain OCTG from  domestic and foreign pipe  producers and from
draw-downs of inventory  from the  end-user,  distributor  or mill  inventories.
Industry  inventories  of our products can change  significantly  from period to
period.  This can have a direct effect on demand for our products when customers
draw-down  from  inventory   rather  than  purchasing  our  products.   Canadian
distributors do not generally hold significant amounts of inventories.

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

                                                  Year Ended December 31,
                                               2002        2001        2000
                                           -------------------------------------

U.S. Market Activity:
Average rig count..........................         831       1,157         918
Average U.S. energy prices:
Oil per barrel (West Texas Intermediate)...      $26.18      $26.11      $30.16
Natural gas per MCF (Average U.S.).........       $3.29       $4.02       $4.18

U.S. OCTG Consumption:
 (in thousands of tons)
U.S. producer shipments....................       1,463       1,993       1,853
Imports....................................         491         904         720
Inventory (increase)/decrease..............         209          15        (436)
Used pipe..................................          94          79         174
                                           -------------------------------------
Total U.S. Consumption.....................       2,257       2,991       2,311
                                           =====================================

Canadian Market Activity:
Average rig count..........................         262         341         344
Average Canadian energy prices:
Natural gas per U.S. $ per MCF
 (Average Alberta spot price)..............       $2.67       $4.19       $3.38

Canadian OCTG Consumption:
 (in thousands of tons)
Canadian producer shipments................         406         464         465
Imports....................................         195         222         273
Inventory (increase)/decrease..............           1          70          25
                                           -------------------------------------
Total Canadian consumption.................         602         756         763
                                           =====================================

                                      [18]
<Page>
The U.S.  rig  count in the table is based on weekly  rig count  reporting  from
Baker Hughes,  Inc. Energy prices in the table are monthly average period prices
as reported by Spears and Associates for West Texas Intermediate grade crude oil
and the average U.S.  monthly  natural gas cash price as reported by Natural Gas
Week.  Imports  are as  reported  by Duane  Murphy and  Associates  in "The OCTG
Situation  Report."  Inventory  (increase)/decrease  is our estimates based upon
independent  research by Duane Murphy and  Associates.  Used pipe quantities are
calculated by multiplying 8.3  recoverable  tubing and casing tons by the number
of abandoned oil and gas wells.  U.S.  consumption of OCTG is our estimate based
on estimated  per rig  consumption  of OCTG  multiplied  by the Baker Hughes rig
count.  U.S.  producer  shipments  are our  estimates  calculated  based  on the
components listed above.

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

According to published  industry  reports,  average U.S.  drilling  decreased by
28.2% from 2001 to 2002,  averaging  approximately  831 rigs,  with  gas-related
drilling  decreasing by 26.3% and oil-related  drilling decreasing by 36.9%. The
average  rig count  for the  fourth  quarter  of 2002 was 847 with the rig count
level  increasing  to 856 at December 31, 2002.  Average U.S.  natural gas price
decreased  during 2002, by 18.2% and oil prices  increased by 0.3%.  Average gas
and crude oil prices seen  throughout the year in the U.S. had a negative effect
on drilling levels in 2002.

According to published industry reports,  average Canadian drilling decreased by
23.2% from 2001 to 2002, averaging approximately 262 rigs. The average rig count
for the fourth  quarter of 2002 was 283 with the rig count level  increasing  to
348 at December 31, 2002.  Average  Canadian natural gas prices decreased during
2001 by 36.3% and oil prices increased by 0.3%. Average gas and crude oil prices
seen  throughout the year in Canada had a negative  effect on drilling levels in
2002.

Imports into the U.S.  returned to normal levels during 2002 from a 31.2% market
share in 2000 to a 30.2%  market  share in 2001 to a 21.8% market share in 2002.
During 2002 and 2001, U.S. industry inventory  decreases adversely affected U.S.
producer  shipments by satisfying an estimated 9.3% and 0.5%,  respectively,  of
consumption.   During  2000,  U.S.  industry  inventory  increases  resulted  in
additional  demand of 18.9% of total  U.S.  OCTG  consumption.  We believe as of
December  31, 2002,  U.S.  industry  inventory  was below  historical  levels in
relation to demand,  as inventory  months of supply  decreased  14.9%,  from 6.7
months at December 31, 2001 to 5.7 months at December 31, 2002.

As a result of  decreased  drilling  activity  and a decrease  in U.S.  industry
inventories,  we estimate total U.S.  producer  shipments  decreased by 26.6% in
2002 as compared to 2001.  During that same period,  our  shipments of U.S. OCTG
were down 22.3% and our export sales,  primarily to Canada,  increased by 34.2%.
However,  we estimate our domestic OCTG market share increased from 18.0% during
2001 to 18.9%  during 2002.  The 18.9% market share we captured  during 2002 was
slightly higher than the market share we have captured historically.  We believe
this is partially due to our customers  being generally more active and stronger
alliance business  particularly in the fourth quarter of 2002 than the market as
a whole.

Imports into Canada increased during 2001 from a 29.4% market share in 2001 to a
32.4% market share in 2002.  During 2002,  Canadian  producer  shipments of OCTG
decreased by 12.5%.  Shipments in Canada were  adversely  impacted by low-priced
imports.

As a result of the  decreased  drilling  activity,  we estimate  total  Canadian
consumption  decreased  by 20.4% in 2002 as compared  to 2001.  During that same
period, our shipments of Canadian OCTG decreased 0.3%.  However, we estimate our
Canadian  OCTG market share of domestic  shipments  increased  from 34.9% during
2001 to 39.8%  during 2002.  The 39.8% market share we captured  during 2002 was
slightly higher than the market share we have captured historically.  We believe
this is partially  due to our  customers  being  generally  more active than the
market as a whole and less reliance on spot business.

Coiled  down-hole tubing is primarily used to service existing oil and gas wells
by reestablishing well production and extending well life. Commodity pricing and
industry  cash flow are  primary  drivers  of well  service  work and demand for
coiled  down-hole  tubing.  Industry  cash flows  declined  throughout  the year
primarily due to a decline in demand and lower  natural gas prices.  Uncertainty
within the energy sector  continued to stall capital  expenditures  and impacted
demand for well service work.  Service work levels in 2002 were  unchanged  from
2001 and  expectations  for 2003 are for increased well service work which would
therefore increase demand for coiled down-hole tubing.

Published  information  suggests that U.S.  demand for line pipe was down during
2002 by an estimated 13.2%.  Domestic shipments  decreased by 5.2% as the import
market share  declined from 40.8% to 36.7%.  Canadian  demand for line pipe also
decreased  during 2002 by an estimated  36.6% with  domestic  shipments  down by
38.0% as the import market share increased from 33.4% to 45.9%.

Coiled line pipe is a relatively  new  application  of  technology  in offshore,
sub-sea  applications  where  continuous  lengths of steel pipe are used as flow
lines and umbilical lines sheathing  control cables.  Coiled line pipe is a more
cost  effective  application  compared to  traditional  jointed  line pipe as it
allows for much more rapid installation  which reduces overall costs.  Published
reports  indicate U.S.  offshore  spending was down 37% in 2002 as many offshore
projects were deferred. While this impacted 2002 sales in this segment, deferred
projects may proceed this year given  current  energy  prices and  strengthening
demand for energy.

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

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

We estimate the U.S. demand for structural tube products  (commonly  referred to
as hollow  structural  sections or HSS) of the type we produce decreased by 3.5%
in 2002 as compared to 2001 and total U.S. producer shipments  decreased by 1.1%
as import market share declined from 21.8% to 19.8%.

                                      [19]
<Page>
On December 31, 2002,  we acquired the tubular  division of The LTV  Corporation
and expanded our product line into  electrical  conduit.  Electrical  conduit is
primarily used as sheathing for  electrical  and computer  wiring in industrial,
commercial  and  institutional   construction  referred  to  as  non-residential
construction.  As such,  electrical  conduit  demand is primarily  influenced by
changes in  non-residential  construction  expenditures.  According to published
reports,  as a result  of weak  economic  growth,  non-residential  construction
expenditures were down between 16-17% in 2002. As a result,  industry electrical
conduit   shipments   were  down   2.6%  in  2002.   Published   forecasts   for
non-residential  construction  activity in 2003 are mixed ranging from flat to a
further drop of 7%. Industry  forecasts suggest conduit shipments to remain flat
in 2003 as the decline in  non-residential  construction  will not impact  those
shipments  which use  electrical  conduit.  Four domestic  producers in the U.S.
manufacture  most of the electrical  conduit consumed in the U.S. The import and
export markets for conduit are limited by strong local competition.

Standard pipe is used in a variety of applications for transporting  fluids such
as water and steam and  structural  applications  in industrial  and  commercial
buildings  and  industrial  processing  plants.  Demand  for  standard  pipe  is
primarily affected by general economic activity and non-residential construction
expenditures.  According to published  reports,  the U.S.  standard  pipe market
demand decreased 11.6%, while total U.S. domestic producer  shipments  decreased
by 12.6% as the import market share  increased from 35.6% to 36.3%.  Prices tend
to be very  competitive  and margins are  typically  thin. As forecasts for 2003
suggest  from  flat to a  further  drop of 7% in  non-residential  expenditures,
aggregate standard pipe shipping volumes are expected to remain flat in 2003.

Pricing and Costs of Our Products
---------------------------------

Pricing of our products was mixed during 2002  compared to 2001.  Our U.S.  OCTG
product  pricing  was down 11.2% due to the  decrease  in the  average rig count
level  throughout  2002.  Average pricing of our U.S. line and standard  product
pricing decreased by 2.0% and 6.5%, respectively. Line and standard pipe pricing
was down due to relatively weak market  conditions.  Average pricing of our U.S.
structural  product  pricing  increased by 8.4%.  Pricing of our Canadian energy
products was down by 1.3%, while pricing of our Canadian industrial products was
up by 13.1%.  Canadian energy product prices were down primarily due to the weak
exchange rate of the Canadian dollar to the U.S. dollar,  lower drilling levels,
an additional domestic producer of OCTG products during the current year and the
decision by the Canadian  government to allow  additional  OCTG imports into the
country  during the prior  year.  Structural  pricing  was up  primarily  due to
increasing  steel prices during the year.  We have  announced two spot U.S. OCTG
price   increases   since  the   beginning  of  the  year  which  have  averaged
approximately $85 per ton or 12.0%. Given the mix of our U.S. alliance sales and
volume of our  Canadian  OCTG  business,  the timing and the amount of the price
increases which will be realized is uncertain.

Average steel costs included in cost of goods sold increased  during 2002 by $26
per ton, or 9.5%, from $274 per ton to $300 per ton. The majority of this change
resulted from our major supplier of steel  effecting  three price increases ($15
per ton in January 2002, $40 per ton in April 2002 and $60 per ton in July 2002)
during the first eleven months of the year with a slight price decrease ($15 per
ton in December  2002) during the last month of the year.  Our major supplier of
steel  decreased  steel  prices twice in early 2003 ($10 per ton in January 2003
and $25 per ton in  February  2003).  However,  they  also  announced  one price
increase of $30 per ton to be effective April 1, 2003. As with any change in our
cost of steel raw materials, we can not be certain as to the timing or extent of
which such change is realized.  However,  early signs  indicate that this latest
round of steel cost increases may not hold. While we expect the replacement cost
of steel to be volatile in 2003,  these costs are currently below the prevailing
price experienced  during the second half of 2002 and may experience  additional
downward pressure if general economic conditions do not improve.

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 energy  products due to the fact that energy  products  pricing is driven by
OCTG and line pipe demand and not steel costs.  In addition,  we depend on a few
suppliers for a significant portion of our steel. The loss of one or more of our
significant steel suppliers could affect our ability to produce our products and
could have a material adverse effect on our business.

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

The OCTG market  conditions  described  above  impacted our  operations  and our
competitors  significantly  during 2002, as sales  remained  below normal levels
throughout  the year due to the decrease in drilling  activity.  The decrease in
drilling  levels  during  the  year  resulted  in  lower  than  expected  sales.
Consequently,  industry-wide  inventory  levels declined during the year and the
impact of these industry decreases had a negative impact on domestic  shipments.
As our recent experience indicates, oil and gas prices are volatile and can have
a  substantial  effect on drilling  levels and  resulting  demand for our energy
related  products.  Uncertainty  also exists as to the future demand and pricing
for our electrical conduit, HSS and other industrial related products.

Trade Cases
-----------

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

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

Antidumping and countervailing  duty orders require special duties to be imposed
in amounts  designed  to offset  unfair  pricing and  government  subsidization,
respectively.  In the  U.S.,  once an  order  is in  place,  foreign  producers,
importers,  domestic  producers and other parties may request an "administrative
review" on a yearly basis to  determine  the duty rates to be applied to imports
from the companies  covered by the review.  In addition,  a company that did not
ship to the U.S. during the original period examined by the U.S.  government may
request  a "new  shipper  review"  to obtain  its own duty rate on an  expedited
basis.

U.S.  antidumping and  countervailing  duty orders may be revoked as a result of
periodic  "sunset  reviews." An individual  importer may also obtain  revocation
applicable  only to itself under certain  circumstances.  In June 2000, the U.S.
government  completed  sunset reviews of orders  covering  Canada and Taiwan and
revoked both orders. In June 2001, the U.S. government  completed sunset reviews
of the orders covering Argentina,  Italy, Japan, Korea and Mexico and kept those
orders in place.  However,  those orders will be subject to a new sunset  review
beginning in 2005.

                                      [20]
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If the orders covering imports from Argentina,  Italy,  Japan,  Korea and Mexico
are revoked in full or in part or the duty rates lowered, we could be exposed to
increased  competition from imports that could have a material adverse effect on
our U.S. business. In addition, The Continued Dumping and Subsidy Offset Act was
passed  during  2000.  This act allowed for the  tariffs  collected  by the U.S.
Customs  Department  to be  dispersed  to those  companies  that  supported  the
original suit. The three-year  tariff rate quota on welded line pipe 16 inch and
under impossed in March 2000 under Section 201 expired on March 1, 2003. It will
not be  renewed.  The  revocation  of the import  duty orders on line pipe could
expose us to increased  competition from imports that could adversely affect our
sales and operating profits in this segment of our business.

In March  2002,  an  antidumping  petition  was filed  with the U.S.  government
covering oil country tubular goods from Austria, Brazil, China, France, Germany,
India,  Indonesia,  Romania, South Africa, Spain, Turkey, Ukraine and Venezuela.
On May 10, 2002, the U.S. government voted to end this case. As a result of this
ruling,  there will not be any additional  import relief for oil country tubular
goods.  Imports of OCTG  products  not  covered by this trade case  ruling  have
remained at existing levels due to low market demand for most of 2002.  However,
as the market begins to improve, our OCTG products will be subject to both price
and demand pressure throughout 2003.

The  Section  201 trade case signed by the  President  in March 2002  provides a
three-year program of quotas and tariffs covering a wide range of imported steel
products  with the  exception  of OCTG.  Of specific  interest to our  business,
imported flat rolled products,  including hot rolled steel coils, are subject to
a three-year  decreasing  tariff system of 30%, 24% and 18%.  Also, our standard
pipe product line and HSS product line are subject to this same tariff system of
15%, 12% and 9%. Our OCTG and electrical conduit product lines are not protected
in the trade case ruling.  The Section 201 trade case is scheduled  for a review
in September  2003. The President may adjust or eliminate the tariffs based upon
the results of this review.

In August of 2002, the Canadian International Trade Tribunal found injury on the
part of all imported steel products except hot rolled products. At this point in
time, the Canadian government has not acted on the Tribunal's findings; thus, no
further trade action has been taken.

This plan  resulted in an increase  in the cost of foreign  imported  hot rolled
steel and steel  products.  This,  in turn,  increased the cost of our purchased
steel. We have experienced  steel price increases that we believe were caused by
the Section 201 trade case,  such as the increase in steel  prices  described in
"Pricing and Costs of Our Products."

Collective Bargaining Agreements
--------------------------------

Prudential's  facility  located in Calgary,  Alberta operates under a collective
bargaining agreement expiring on December 31, 2003 that covers approximately 73%
of all Prudential employees. Prudential has a good working relationship with the
union and there have been no significant labor stoppages in the their history.

Facilities acquired as part of the assets and certain liabilities of the tubular
division of The LTV Corporation,  which are located in Youngstown, Ohio; Elyria,
Ohio; Ferndale, Michigan and Counce, Tennessee, operate under several collective
bargaining agreements.  Collective bargaining agreements cover approximately 53%
of all the tubular  division  employees.  The collective  bargaining  agreements
expire on November 15, 2005.

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

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001
---------------------------------------------------------------------

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

In 2002, net sales  decreased  $92.0 million,  or 16.9%,  from $544.9 million in
2001 to $452.9 million in 2002. These results were  attributable  primarily to a
decrease  of 16.5% in total  product  shipments,  from  886,991  tons in 2001 to
740,852  tons in 2002 and a 0.5%  decrease  in the  overall  average net selling
price of our  products  during  2002 from an average of $614 per ton to $611 per
ton.

Cost of goods sold decreased $31.9 million, or 7.2%, from $441.8 million in 2001
to $409.9 million in 2002.  Overall unit cost per ton of products sold increased
11.0%  (from an average of $498 per ton to $553 per ton) in 2002.  The  increase
was due  primarily  to an increase  in steel  costs of $26 per ton or 9.5%.  The
decrease  in cost of goods sold is  primarily  due to a 16.5%  decrease in total
product  shipments  partially  offset by an overall increase in conversion costs
during 2002 primarily due to lower fixed cost absorption.

Gross profit decreased $60.1 million,  or 58.3%,  from $103.1 million in 2001 to
$43.0  million  in  2002.  Gross  profit  per ton for  2001  was $116 per ton as
compared to $58 per ton for 2002.  Gross profit per ton decreased as a result of
higher steel costs,  lower selling  prices and higher  conversion  costs.  Gross
profit as a percentage  of net sales was 9.5% for 2002, as compared to 18.9% for
2001.

Selling,  general and administrative  expenses increased $3.6 million, or 11.8%,
from  $30.4  million  in 2001 to $34.0  million  in 2002.  These  expenses  were
principally  impacted  by  additional  expenses  from the  Precision  sales  and
administration  personnel  and  depreciation  on  our  new  enterprise  resource
planning system, partially offset by decreased incentive compensation.  Selling,
general and administrative  expenses as a percentage of net sales increased from
5.6% in 2001 to 7.5% in 2002.

During  December  2001, we announced  our plan to exit the Longview,  Washington
facility and move the production equipment to Hickman,  Arkansas.  In connection
with the exit plan, we recorded a  restructuring  charge in 2001 of $8.0 million
related  to the write  down of  property,  plant and  equipment,  severance  and
closure costs. In 2002, we recorded an additional charge of $1.2 million for the
write-down  of property of $0.9 million to reflect the most recent  market data.
We also recorded $0.3 million  additional  cash  charges.  The most  significant
accounting estimate is the value of the land and building at the facility, which
is based on an independent appraisal. We completed the majority of our exit plan
in 2002 and expect to pay the remaining cash exit costs in 2003.

The  Company  received  a $2.7  million  partial  recovery  for the  trade  case
outstanding with the Department of Commerce. Payments went to various companies,
including  Maverick,  under the Continued Dumping and Subsidy Offset Act of 2000
and were made to cover certain  expenses  including  investment in manufacturing
facilities  and  acquisition  of  technology  incurred  after the  imposition of
antidumping and anti-subsidy  measures.  Because these expenses were included in
operating  income in previous years, we recorded the recovery as a separate line
item  included in operating  income to  consistently  reflect the effect of this
payment on operations.

                                      [21]
<Page>
Interest expense increased $0.9 million,  or 29.0%, from $3.1 million in 2001 to
$4.0  million in 2002 as a result of an increase in deferred  loan  amortization
associated  with our new  revolving  credit  facility  offset by a  decrease  in
borrowings and a decrease in interest rates.

The  provision for income taxes on  continuing  operations  was $3.4 million for
2002,  compared to the prior year  provision  of $21.2  million.  This change is
attributable  to the  generation  of  pre-tax  income of $6.5  million  in 2002,
compared to pre-tax  income in 2001 of $60.5 million.  The effective  income tax
rate for  2002  differed  from the  federal  statutory  tax rate due to  several
factors, the most significant of which were taxes on foreign dividends offset by
a decrease in the valuation allowance.

At December 31, 2002, we had available net operating loss  carryforwards  with a
tax value of $2.4  million  that were  generated  during 1999  through  2000.  A
valuation  allowance  of  $1.0  million  previously  recorded  against  the  net
operating  loss was reversed in 2002 because our assessment is the character and
nature of future  taxable income will allow us to realize the full amount of the
net operating loss. These carryforwards expire in 2019 and 2020. At December 31,
2002,  we had  alternative  minimum  tax credit  carryforwards  of $5.5  million
available  for income  tax  purposes  that do not  expire  and $11.3  million of
foreign tax credits  with an $8.3  million  valuation  allowance  to reflect the
amounts more likely than not to be realized in the future.

During the first quarter of 2001, we adopted a formal plan to sell the operating
assets of our Cold Drawn Tubular  Business (DOM) and recorded a loss on disposal
of $10.2 million.  On March 29, 2002,  pursuant to an asset  purchase  agreement
dated March 21,  2002,  the Company  completed  the sale of the DOM business for
$8.1  million,  consisting of cash in the amount of $1.2 million and the buyer's
nine-year  secured  promissory note of $6.9 million.  To accommodate the buyer's
purchase of the DOM business,  the Company  guaranteed  the $1.5 million line of
credit of the buyer. In exchange,  the Company was granted liens and appropriate
subrogation rights in the assets conveyed to the buyer. The Company recognized a
$0.5 million after-tax gain from discontinued operations in 2002.

The Company incurred an extraordinary after-tax loss of $0.2 million in 2002 due
to early  retirement  of debt  associated  with the  extinguishment  of two bank
credit facilities.

As a result of the  decreased  gross profit and  restructuring  costs  partially
offset by the partial trade case relief and the other factors  discussed  above,
we generated  net income of $3.4 million,  or $0.09 diluted  income per share in
2002,  a decrease of $24.6  million  from the $28.0  million,  or $0.82  diluted
income per share reported for 2001.

Segment Information
-------------------

Maverick Tube L.P. ("Maverick L.P."), a wholly-owned  subsidiary of the Company,
is  responsible  for our  operations  in Hickman,  Arkansas  and Conroe,  Texas.
Precision,  a wholly-owned  subsidiary of the Company,  is  responsible  for the
Company's coiled tubing operations in Houston,  Texas. Prudential is responsible
for  our  operations  in  Calgary,  Alberta.  The  tubular  division  of The LTV
Corporation was acquired on December 31, 2002, and consequently,  its operations
had no effect on our 2002 operating results.

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

Maverick L.P.'s sales decreased $72.2 million,  or 21.0%, from $344.3 million in
2001 to $272.1 million in 2002. Maverick L.P.'s shipments decreased 80,363 tons,
or  14.2%,  from  567,880  tons to  487,517  tons for the same  periods.  Energy
shipments comprised 71,051 tons of this decrease. Our domestic shipments of OCTG
decreased  by 22.3% due to a  decreasing  rig count in the U.S.  throughout  the
year.  Our export sales,  primarily to Canada,  increased by 34.2%,  from 13,854
tons in 2001 to 18,598 tons in 2002.  Industrial products shipments decreased by
9,312 tons from 2001 to 2002.  The  average  selling  price for all of  Maverick
L.P.'s  products  decreased  by 7.9% from an average of $606 per ton to $558 per
ton.  The  average  selling  price for our energy  products  was $595 per ton, a
decrease of $74 per ton. The decrease was  principally  due to the  weakening of
the energy market  throughout  2002. The average selling price of our industrial
products  was  $468 per  ton,  an  increase  of $34 per  ton,  primarily  due to
increasing steel costs throughout the year.

Maverick L.P.'s cost of goods sold of $267.6 million decreased $21.7 million, or
7.5%, in 2002,  compared with the prior year.  The decrease was primarily due to
decreased product shipments. However, overall unit cost per ton of products sold
increased  7.9% (from an  average of $509 per ton to $549 per ton) in 2002.  The
increase was due primarily to an increase in steel costs of $25 per ton or 9.7%.
Overall  conversion costs increased on fewer tons sold in 2002 compared to 2001,
due primarily to lower fixed cost absorption.

Maverick  L.P.'s gross profit  decreased  $50.5  million,  or 91.8%,  from $55.0
million in 2001 to $4.5 million in 2002.  Gross profit per ton declined from $97
per ton in 2001 to $9 per ton in 2002. Gross profit as a percentage of net sales
was 1.7% for 2002, as compared to 16.0% for 2001. The change in the gross profit
is due to the factors discussed above.

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

Prudential's  sales  decreased $48.9 million,  or 24.4%,  from $200.6 million in
2001 to $151.7 million in 2002. Prudential's shipments decreased 76,453 tons, or
24.0%, from 319,111 tons to 242,658 tons.  Energy shipments  comprised 59,397 of
this decrease,  while industrial products shipments comprised 8,673 tons of this
decrease  in  shipments.  Our  energy  shipments  decreased  by  22.5%  due to a
decreasing rig count in Canada  throughout  the year.  Overall  average  selling
price for  Prudential's  products  decreased by 0.6% from an average of $629 per
ton to $625 per ton. The average  selling price for our energy products was $675
per ton, a decrease of $9 per ton. All of these  decreases were  principally due
to increased  imports into the energy market  throughout  2002 and a decrease in
the foreign currency  exchange rate. The average selling price of our industrial
products was $507 per ton, an increase of $60 per ton.  Tolling  tons  comprised
the remainder of the decrease in shipments and overall average selling price.

Prudential's  cost of goods sold of $119.9 million  decreased $32.6 million,  or
21.4% in 2002,  compared with the prior year. Also, overall unit cost per ton of
products sold  increased  3.3% (from an average of $478 per ton to $494 per ton)
in 2002. The increase was due primarily to an increase in steel costs of $33 per
ton or 10.6%.

                                      [22]
<Page>
Prudential's gross profit decreased $16.3 million,  or 33.9%, from $48.1 million
in 2001 to $31.8 million in 2002.  Gross profit per ton decreased  from $151 per
ton in 2001 to $131 per ton in 2002.  Gross profit as a percentage  of net sales
was 21.0% for  2002,  as  compared  to 24.0% for 2001.  The  change in the gross
profit is due to the factors discussed above.

Precision Segment
-----------------

On March 29, 2002, we acquired Precision and the results of operations have been
included  since the  acquisition  date.  Precision had sales of $29.1 million on
shipments  of  10,677  tons in 2002.  Cost of  goods  sold  was  $22.4  million,
resulting in a gross profit of $6.7 million. Precision's gross profit margin was
23.0% in 2002.

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

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

In 2001, net sales decreased $17.1 million, or 3.0%, from $562.0 million in 2000
to $544.9  million in 2001.  These  results  were  attributable  primarily  to a
decrease  of 0.5% in  total  product  shipments,  from  891,230  tons in 2000 to
886,991  tons in 2001 and a 2.7%  decrease  in the  overall  average net selling
price of our  products  during  2001 from an average of $631 per ton to $614 per
ton.

Cost of goods sold decreased $46.6 million, or 9.5%, from $488.4 million in 2000
to $441.8 million in 2001.  Overall unit cost per ton of products sold decreased
9.1% (from an average of $548 per ton to $498 per ton) in 2001. The decrease was
due primarily to a decrease in steel costs of $63 per ton or 18.7%. The decrease
in cost of goods sold was partially  offset by an overall increase in conversion
costs during 2001 primarily due to lower fixed cost absorption.

Gross profit  increased $29.5 million,  or 40.1%,  from $73.6 million in 2000 to
$103.1  million  in  2001.  Gross  profit  per ton for  2000  was $83 per ton as
compared to $116 per ton for 2001. Gross profit per ton increased as a result of
lower steel costs partially offset by lower selling prices and higher conversion
costs. Gross profit as a percentage of net sales was 18.9% for 2001, as compared
to 13.1% for 2000.

Selling,  general and administrative  expenses increased $4.9 million, or 19.2%,
from  $25.5  million  in 2000 to $30.4  million  in 2001.  These  expenses  were
principally  impacted by additional  depreciation on our new enterprise resource
planning system,  general wage increases effective at the beginning of the year,
increased  incentive  compensation  and a specific  bad debt  provision  of $1.1
million related to a customer that declared  bankruptcy in the fourth quarter of
2001. Selling,  general and administrative expenses as a percentage of net sales
increased from 4.5% in 2000 to 5.6% in 2001.

During  December  2001,  the Company  announced  its plan to exit the  Longview,
Washington facility and move the production equipment to Hickman, Arkansas. As a
result of an expected lower overhead structure and reduced freight costs because
of the proximity to steel vendors,  the Company  believes its plan should result
in an  annual  savings  of  approximately  $3.0  million  to  $5.0  million.  In
connection with the exit plan, the Company  recorded a restructuring  charge for
the  write-down  of property of $6.5 million and accrual of severance  costs and
other cash  obligations  of $1.6  million  resulting  in a total  charge of $8.1
million.  The most significant  accounting estimate is the value of the land and
building at the facility, which is based on an independent appraisal.

During October 1999, we acquired the equipment for and began the construction of
a new  large  diameter  pipe  and  tubing  facility  adjacent  to  our  existing
facilities in Hickman,  Arkansas.  Prior to becoming  fully  operational  in the
third  quarter of 2001,  we incurred  net costs of $1.1  million  related to the
commencement of operations at this facility.

Interest expense  decreased $0.1 million,  or 3.1%, from $3.2 million in 2000 to
$3.1 million in 2001 as a result of decreased borrowings and decreasing interest
rates. The lower interest rates reflect our improved operating results that were
largely attributable to the effects of the prior year's favorable energy market.
Our debt to  capitalization  ratio  decreased from 29.8% at December 31, 2000 to
24.2% at December 31, 2001. This decrease was primarily due to a decrease in the
short-term  revolver in the amount of $17.5  million  offset by $11.5 million in
purchases of treasury stock.

The provision for income taxes on  continuing  operations  was $21.2 million for
2001,  compared to the prior year  provision  of $14.7  million.  This change is
attributable  to the  generation  of  pre-tax  income of $60.5  million in 2001,
compared to pre-tax  income in 2000 of $33.5 million.  The effective  income tax
rate for  2001  differed  from the  federal  statutory  tax rate due to  several
factors,  the most  significant  of which were and a decrease  in the  valuation
allowance, offset by taxes on foreign dividends.

During  March 2001,  the Company  decided to  discontinue  its DOM  business and
recorded  a $10.2  million  charge  (net of  taxes)  for  the  expected  loss on
disposal.  Losses from these  operations  during 2001 were $1.0  million (net of
taxes).

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

Segment Information
-------------------

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

Maverick L.P.'s sales increased $42.6 million,  or 14.1%, from $301.7 million in
2000 to $344.3 million in 2001. Maverick L.P.'s shipments increased 69,190 tons,
or  13.9%,  from  498,690  tons to  567,880  tons for the same  periods.  Energy
shipments comprised 74,131 tons of this increase. Our domestic shipments of OCTG
increased by 21.1% due to an  increasing  rig count in the U.S.  throughout  the
year.  Our export sales,  primarily to Canada,  decreased by 50.9%,  from 28,190
tons in 2000 to 13,854 tons in 2001.  Industrial products shipments decreased by
4,941 tons from 2000 to 2001.  The  average  selling  price for all of  Maverick
L.P.'s  products  remained  relatively flat at $606 per ton. The average selling
price for our energy  products  was

                                      [23]
<Page>
$669 per ton, an increase of $6 per ton. The increase was principally due to the
strengthening of the energy market throughout the first nine months of 2001. The
rig count and average selling prices started to weaken during the fourth quarter
of 2001. The average selling price of our industrial  products was $434 per ton,
a decrease of $44 per ton,  primarily due to decreasing  steel costs  throughout
the year.

Maverick L.P.'s cost of goods sold of $289.3 million increased $20.0 million, or
7.4%, in 2001,  compared with the prior fiscal year.  The increase was primarily
due to  increased  product  shipments.  However,  overall  unit  cost per ton of
products sold  decreased  5.7% (from an average of $540 per ton to $509 per ton)
in 2001.  The decrease was due primarily to a decrease in steel costs of $40 per
ton or 13.6%. Overall conversion costs remained relatively stable during 2001.

Maverick  L.P.'s gross profit  increased  $22.6  million,  or 69.7%,  from $32.4
million in 2000 to $55.0 million in 2001. Gross profit per ton rose from $65 per
ton in 2000 to $97 per ton in 2001.  Gross profit as a  percentage  of net sales
was 16.0% for  2001,  as  compared  to 10.7% for 2000.  The  change in the gross
profit is due to the factors discussed above.

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

Prudential's  sales  decreased $59.7 million,  or 22.9%,  from $260.3 million in
2000 to $200.6 million in 2001. Prudential's shipments decreased 73,429 tons, or
18.7%, from 392,540 tons to 319,111 tons.  Energy shipments  comprised 60,603 of
this decrease, while industrial products shipments comprised 10,300 tons of this
decrease in shipments.  Overall average selling price for Prudential's  products
decreased  by 5.1% from an average of $663 per ton to $629 per ton.  The average
selling  price for our energy  products  was $684 per ton, a decrease of $44 per
ton. All of these decreases were  principally due to increased  imports into the
energy market  throughout 2001 and a decrease in the foreign  currency  exchange
rate. The average  selling price of our industrial  products was $447 per ton, a
decrease of $78 per ton. Tolling tons comprised the remainder of the decrease in
shipments and overall average selling price.

Prudential's  cost of goods sold of $152.5 million  decreased $66.6 million,  or
30.4% in 2000,  compared with the prior year. Also, overall unit cost per ton of
products sold decreased  14.3% (from an average of $558 per ton to $478 per ton)
in 2001.  The decrease was due primarily to a decrease in steel costs of $86 per
ton or 21.4%.

Prudential's  gross profit increased $6.9 million,  or 16.7%, from $41.2 million
in 2000 to $48.1 million in 2001.  Gross profit per ton increased  from $105 per
ton in 2000 to $151 per ton in 2001.  Gross profit as a percentage  of net sales
was 24.0% for  2001,  as  compared  to 15.8% for 2000.  The  change in the gross
profit is due to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES
--------------------------------------------------------------------------------

Working capital at December 31, 2002 was $201.2 million and the ratio of current
assets to current  liabilities  was 2.9 to 1,  compared  to  working  capital of
$142.3  million  and a  current  ratio of 3.7 to 1 at  December  31,  2001.  The
increase in working capital was  principally due to a $68.5 million  increase in
inventory and a $32.6 million increase in accounts  receivable  partially offset
by a $54.8 million  increase in accounts  payable.  The increase in inventories,
accounts  receivable and accounts  payable resulted from the acquisitions of the
tubular  division  of The  LTV  Corporation  and  Precision  and an  anticipated
increase in the volume of energy  business  expected during the first quarter of
2003.  Cash  provided  by  continuing  operating  activities  for 2002 was $31.7
million.

Cash used in investing  activities  in 2002,  2001 and 2000 was $199.8  million,
$25.8 million and $51.7 million,  respectively.  In 2002, we used $177.1 million
for  the  acquisition  of the  tubular  division  of  The  LTV  Corporation  and
Precision.  In 2002,  we used $6.1  million for the  installation  of  equipment
relocated from our Longview,  Washington facility to our large diameter pipe and
tubing  facility in Hickman,  Arkansas and $3.5 million for the  installation of
the Longview  slitter to our Calgary,  Alberta  facility.  In 2001, we used $5.0
million for the installation of equipment associated with our new large diameter
pipe and tubing  facility in Hickman,  Arkansas and $5.3 million for  additional
upgrades to our enterprise resource system.

During 2002,  cash provided by financing  activities was $168.3 million that was
principally  attributable to a $70.9 million increase in our long-term revolving
credit facility, $90.4 million from the issuance of 6.5 million shares of common
stock and the sale of 1.2  million  shares of  treasury  stock in the  amount of
$15.9  million,  partially  offset by a $3.2 million  decrease in our short-term
revolving  credit  facility and $1.2 million of  regularly  scheduled  term debt
payments.  Our debt to capitalization ratio increased from 24.2% at December 31,
2001 to 29.1% at December 31, 2002.

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

We have a senior credit revolving facility providing for a $195.0 million (which
includes a $10.0 million secured over-advanced  commitment that expires on March
31, 2003) revolving line of credit. In addition,  we have outstanding letters of
credit under this  agreement  of $1.5 million at December 31, 2002.  Interest is
payable monthly at the LIBOR rate adjusted by an interest margin, depending upon
certain financial  measurements.  Under the revolving senior credit facility, we
can borrow an amount  based on a  percentage  of eligible  accounts  receivable,
eligible  inventory and property,  plant and  equipment  reduced by  outstanding
letters of credit.  The additional  available  borrowing under the senior credit
facility is  approximately  $53.5  million as of December 31,  2002.  The senior
credit  facility  includes a  restrictive  covenant  relating to  maintaining  a
minimum fixed charge coverage ratio if  availability  falls below $30.0 million.
The senior credit facility also limits capital expenditures to $30.0 million per
year and limits our ability to pay dividends, create liens, sell assets or enter
into transactions with affiliates without the consent of the lenders.

We anticipate we will comply with the covenants in 2003 and beyond;  however, if
our  operations  are less than  projected,  we could be in  default  under  this
facility.  We  believe  that our  projections  for 2003 are based on  reasonable
assumptions  and that it is unlikely that we would  default  absent any material

                                      [24
<Page>
negative  event  affecting our industry and the economy as a whole.  Although we
would  attempt to obtain an  amendment  to the facility to cure this breach or a
waiver from the lender,  we cannot give any  assurance  that we could  obtain an
amendment  or  waiver  or one with  terms as  favorable  as the terms of the new
facility.  If we are unable to obtain an amendment or waiver, we would remain in
default  and the lender  would have the right to exercise  all of its  remedies,
including,  without limitation,  the ability to accelerate all of the debt under
the  facility.  We also believe our lender would  provide  waivers if necessary.
However,  our expectation of future operating  results and continued  compliance
with our debt  covenants  cannot be ensured,  as we do not control our  lender's
actions.  If our projections are not achieved and our debt is placed in default,
we would experience a material adverse impact on our reported financial position
and results of operations.

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

Our capital  expenditure  budget for 2003 is  approximately  $20.0 million.  Our
capital  expenditure  budget  will be  used to  acquire  new  equipment  for our
existing  manufacturing  facilities  and to implement  our  enterprise  resource
planning  system in our newly acquired  subsidiaries.  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 facility.

On February  19,  2003,  the Company  signed an agreement to purchase all of the
capital stock of SeaCAT  Corporation,  a privately held,  Houston based,  coiled
tubular goods  manufacturer,  for a purchase  price of $4.0 million cash, a $5.0
million  secured 11.0%  subordinated  note and 733,676 shares of common stock of
Maverick.  The purchase price is subject to an earn-out over a three-year period
with a maximum  additional  payment of $250,000 per year. The acquisition closed
on February 28, 2003.

CRITICAL ACCOUNTING ESTIMATES
--------------------------------------------------------------------------------

Certain  accounting  issues require  management  estimates and judgments for the
preparation of financial statements. We believe that the estimates,  assumptions
and judgements  involved in the  accounting  policies  described  below have the
greatest potential impact on our financial  statements.  Therefore,  we consider
these to be our critical accounting estimates.  Our management has discussed the
development and selection of these critical accounting  estimates with the Audit
Committee of our Board of  Directors  and the Audit  Committee  has reviewed the
Company's  disclosure relating to these estimates in the "Management  Discussion
and Analysis." Our most significant estimates and judgements are listed below.

Goodwill
--------

Our acquisition of Precision and the tubular division of The LTV Corporation has
resulted in goodwill of $93.2 million.  Under Statement of Financial  Accounting
Standards  No. 142,  "Goodwill  and Other  Intangible  Assets," we conducted our
initial  impairment test in 2002 and determined that no impairment had occurred.
We will be required to conduct an impairment test of goodwill on an annual basis
and between annual tests if an event occurs or  circumstances  change that would
more  likely  than not  reduce  the fair  value of a  reporting  unit  below its
carrying value.

As we  discussed  in the  notes  to the  financial  statements,  we  have  three
operating segments,  one of which is the Precision segment.  Management analyzed
the valuation of the Precision  reporting unit utilizing a discounted  cash flow
method and a market multiple  method.  Both of these  techniques  required us to
estimate  future  sales  prices and volumes of  Precision.  We used our internal
budgets,  which are based on recent sales data and market information as well as
current cost of production to estimate  future cash flows. We estimated that the
Precision enterprise value was greater than our $60.7 million investment.  While
the annual  impairment test did not indicate  goodwill  impairment,  we would be
subject  to  future  impairment  if the  operating  results  and  cash  flows of
Precision  would not support the fair value of the  reporting  unit's net assets
including goodwill.

Due to the  timing  of  the  acquisition  of the  tubular  division  of The  LTV
Corporation  on December 31,  2002,  we will not perform an  impairment  test of
goodwill  until the fourth  quarter of 2003. We may perform an  impairment  test
before the fourth  quarter of 2003 if an event  occurs or  circumstances  change
during  2003 that would more likely than not reduce the fair value of net assets
including goodwill.

Accounts Receivable Collectibility
----------------------------------

We  evaluate  the  collectibility  of our  accounts  receivable  for each of our
segments based on a combination of factors.  In circumstances where we are aware
of a specific  customer's  inability  to meet its  financial  obligations  to us
(e.g.,  bankruptcy  filing,  substantial  downgrading  of  credit),  we record a
specific  reserve  for bad  debts  against  the  amounts  due  reducing  the net
recognized receivable to the amount we estimate will be collected. For all other
customers,  we  estimate  reserves  for bad  debts  based on the  length of time
receivables  have been past due and our historical  experience  with  receivable
collection.  If circumstances  change, such as further  deterioration in a major
customer's ability to meet its financial  obligations to us, our estimate of the
recovery  could be reduced by a material  amount.  Our bad debt expense for 2002
and 2001 was $0.2 million and $1.0 million, respectively.

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

We have  three  operating  segments,  one of which  is the  Maverick  Tube  L.P.
segment.  On March 29, 2002, pursuant to an asset purchase agreement dated March
21, 2002,  Maverick  Tube L.P.  completed  the sale of the DOM business for $8.1
million,  consisting  of cash in the  amount  of $1.2  million  and the  buyer's
nine-year secured promissory note of $6.9 million payable through March 2011. To
accommodate the buyer's purchase of the DOM business,  we guaranteed the buyer's
$1.5 million line of credit. In exchange,  we were granted liens and subrogation
rights in the assets  conveyed to the buyer.  We have not  established  reserves
against  the  note or  guarantee  as we  estimate  the  collateral  value of the
equipment is adequate to cover losses,  if any, we may experience  based upon an
event of default.

                                      [25]
<Page>
Income Tax Matters
------------------

We face  challenges  from  domestic and foreign tax  authorities  regarding  the
amount of taxes due. These challenges include questions regarding the timing and
amount  of  deductions  and  the  allocation  of  income  among  various  taxing
jurisdictions.  In evaluating  the exposure  associated  with our various filing
positions, we estimate reserves for probable exposures.  Based on our evaluation
of our tax  positions,  we believe we have  appropriately  accrued for  probable
exposures.  To the extent we were to prevail in matters for which  accruals have
been  established  or be required to pay amounts in excess of our reserves,  our
effective  tax rate in a given  financial  statement  period  may be  materially
impacted.

We had alternative  minimum tax credit  carryforwards of $5.5 million  available
for income tax  purposes at December 31, 2002.  These tax  carryforwards  do not
expire. At December 31, 2002, we had net operating loss carryforwards with a tax
value of $2.4  million.  During 2002,  these net operating  loss  carryforwards,
which had been  contained in a stand-alone  subsidiary,  were with the merger of
the stand-alone  subsidiary  into Maverick Tube L.P.,  absorbed by Maverick Tube
L.P.  Consequently,  our current  assessment is that the character and nature of
future  taxable  income  will  allow us to  realize  the full  amount of the tax
benefits of the net operating loss carryforwards  before they expire in 2019 and
2020.  Accordingly,  we reversed our $1.0 million previously  recorded valuation
allowance against the net operating loss carryforwards in 2002.

Income tax expense  recorded on  cumulative  undistributed  foreign  earnings is
fully offset by foreign tax credits associated with those earnings.  At December
31,  2002,  we had $11.3  million of foreign tax credit  carryforwards.  We have
placed a valuation  allowance of $8.3 million  against  these foreign tax credit
carryforwards  to reflect the amount that is more likely than not to be realized
in the future.  With the Company's recent  acquisitions,  management believes it
will be able to generate  sufficient foreign source income and maintain domestic
profitability  within the five year time frame required to utilize the remaining
foreign tax credit carryforward.

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

As we  discussed  in the  notes  to the  financial  statements,  we  have  three
operating segments, one of which is the Prudential segment.  Prudential sponsors
two pension  plans  (Hourly Plan and Salary Plan) and a  supplemental  executive
retirement  plan (SERP) and accounts for the plans in accordance  with Statement
of Financial Accounting Standards No. 87, "Employers'  Accounting for Pensions,"
which requires that amounts recognized in financial  statements be determined on
an  actuarial  basis.  The  most  significant  estimates  involve  the  expected
long-term  rate of return on plan  assets  and  discount  rate.  Prudential  has
assumed the expected  long-term  rate of return to be 7% and the discount  rate,
which  reflects  the  current  rate  at  which  pension   liabilities  could  be
effectively  settled,  to be 6.5% at December 31, 2002. In  estimating  both the
long-term  rate and the discount  rate,  Prudential  looks to rates of return on
high-quality,  fixed income  investments with a balance between equity and fixed
income   investments.   Prudential   monitors  the   performance  of  the  funds
semi-annually  against asset return benchmarks  mandated by Prudential's  board.
Based  upon  these   benchmarks,   we  believe  our  pension   assumptions   are
conservative.

The Hourly  Plan is now in an  underfunded  position;  therefore,  we expect the
total  pension  expense  could  increase up to $1.8 million for 2003 compared to
actual pension expense of $0.8 million for 2002.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------

Interest Rate Risk
------------------

We are  subject  to  interest  rate risk to the  extent we  borrow  against  our
revolving  credit facility with variable  interest  rates.  Assuming the current
level of borrowings at variable rates and assuming a two-percentage point change
in the average  interest rate under these  borrowings,  it is estimated that our
interest  expense for the year ended  December 31, 2002 would have  increased by
approximately $2.7 million. In the event of an adverse change in interest rates,
we would likely take actions that would  mitigate our exposure to interest  rate
risk;  however,  due to the  uncertainty  of the actions that would be taken and
their possible  effects,  this analysis  assumes no such action.  Further,  this
analysis  does not  consider  the  effects of the change in the level of overall
economic activity that could exist in such an environment.

The  following  table  sets  forth  certain   information  about  the  Company's
contractual obligations as of December 31, 2002 (in thousands):

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

Capital lease
 obligations (fixed)....  $5,719   $2,977   $1,633     $1,109    $--     $6,071
Long-term debt
 (variable)............. 132,927       --       --    132,927     --    132,927
Other liabilities
 (fixed)................   1,770      544    1,088        138     --      1,770
                        --------------------------------------------------------
Total contractual
 cash obligations.......$140,416   $3,521   $2,721   $134,174    $--   $140,768
                        ========================================================

Steel Commodity Risk
--------------------

We are also subject to commodity  price risk with respect to purchases of steel.
Purchased steel represents  approximately  two-thirds of our cost of goods sold.
As a result,  the steel  industry,  which is highly  volatile  and  cyclical  in
nature, affects and will affect our business both positively and negatively. See
"Pricing and Costs of Our Products."

Foreign Currency Risk
---------------------

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

                                      [26]
<Page>
REPORT OF INDEPENDENT AUDITORS

The 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, 2002 and 2001, and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of the three  years in the period  ended  December  31,  2002.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  consolidated  financial  position of Maverick Tube
Corporation and Subsidiaries at December 31, 2002 and 2001, and the consolidated
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 2002 in  conformity  with  accounting  principles
generally accepted in the United States.


                                               /s/ Ernst & Young LLP

St. Louis, Missouri
February 3, 2003, except for
 Note 18, as to which the
 date is February 19, 2003

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

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of Maverick is responsible for the  information  contained in the
financial  statements.  The  financial  statements  have been  prepared by us in
accordance with accounting  principles  generally  accepted in the United States
appropriate in the circumstances  and necessarily  include certain amounts based
on management's best estimates and judgments.

We  maintain  a  system  of  internal  accounting  control  that we  believe  is
sufficient  to provide  reasonable  assurance  that,  in all material  respects,
transactions  are  properly   authorized  and  recorded,   financial   reporting
responsibilities  are  met and  accountability  for  assets  is  maintained.  In
establishing  and  maintaining  any  system of  internal  control,  judgment  is
required  to assess  and  balance  the  relative  costs and  expected  benefits.
Management  believes  that  through  the careful  selection  of  employees,  the
division  of  responsibilities  and  the  application  of  formal  policies  and
procedures,  Maverick  has  an  effective  and  responsive  system  of  internal
accounting controls. The system is monitored by our staff of controllers and our
internal auditor, who evaluate and report to management on its effectiveness. In
addition, our code of conduct requires and our employees have agreed to maintain
a high level of ethical standards in the conduct of the Company's business.

The Audit Committee of the Board of Directors is comprised of three  independent
directors who meet regularly with the independent auditors, the internal auditor
and management to ensure that each is meeting its responsibilities regarding the
objectivity  and  integrity  of the  Company's  financial  statements.  Both the
independent auditors and internal auditor have full and free access to the Audit
Committee  without the presence of management,  to discuss,  among other things,
their evaluation of the adequacy of the internal controls and the quality of our
financial reporting.



/s/ Gregg Eisenberg                          /s/ Pamela G. Boone
Gregg Eisenberg                              Pamela G. Boone
Chairman of the Board, President             Vice President - Finance and
 and Chief Executive Officer                 Administration Treasurer, Secretary
                                             and Chief Financial Officer

                                      [27]
<Page>
--------------------------------------------------------------------------------
                   MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
--------------------------------------------------------------------------------

                                                              December 31,
ASSETS                                                     2002        2001
                                                       -------------------------
Current assets:
 Cash and cash equivalents.............................      $2,551      $1,940
 Accounts receivable, less allowances of
  $5,188 and $2,412 in 2002 and 2001, respectively.....      73,660      41,021
 Inventories...........................................     210,207     141,739
 Deferred income taxes.................................      11,338       7,305
 Income taxes refundable...............................         637           -
 Prepaid expenses and other current assets.............      10,375       2,440
                                                       -------------------------
Total current assets...................................     308,768     194,445

Property, plant and equipment, net.....................     179,244     158,261

Goodwill...............................................      93,184           -

Note receivable........................................       6,877           -

Other assets...........................................       7,810       4,741
                                                       -------------------------
                                                           $595,883    $357,447
                                                       =========================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable......................................     $78,457     $23,668
 Accrued expenses and other liabilities................      23,531      15,605
 Deferred revenue......................................       2,608       3,759
 Income taxes payable..................................           -       4,940
 Revolving credit facility.............................           -       3,219
 Current maturities of long-term debt..................       2,977         938
                                                       -------------------------
Total current liabilities..............................     107,573      52,129

Long-term debt, less current maturities................       2,742       5,991
Revolving credit facility..............................     132,927      62,000
Other liabilities......................................       7,640       3,823
Deferred income taxes..................................       6,715       8,121

STOCKHOLDERS' EQUITY

Preferred stock, $0.01 par value; 5,000,000
 authorized shares; 1 share issued and
 outstanding in 2002 and 2001..........................           -           -
Common stock, $0.01 par value; 80,000,000
 authorized shares; 40,942,976 and 34,013,036
 shares issued in 2002 and 2001, respectively;
 40,942,976 and 32,812,036 shares outstanding
 in 2002 and 2001, respectively........................         409         340
Treasury stock, 1,201,000 shares in 2001...............           -     (11,525)
Additional paid-in capital.............................     212,361     114,307
Retained earnings......................................     139,235     135,831
Accumulated other comprehensive loss...................     (13,719)    (13,570)
                                                       -------------------------
                                                            338,286     225,383
                                                       -------------------------
                                                           $595,883    $357,447
                                                       =========================

See accompanying notes.
                                      [28]
<Page>
--------------------------------------------------------------------------------
                   MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share data)
--------------------------------------------------------------------------------
                                                 Year Ended December 31,
                                           -------------------------------------
                                               2002        2001        2000
                                           -------------------------------------
Net sales..................................    $452,913    $544,933    $562,023
Cost of goods sold.........................     409,916     441,843     488,397
                                           -------------------------------------
Gross profit...............................      42,997     103,090      73,626
Selling, general and administrative........      34,032      30,372      25,466
Restructuring charges......................       1,186       8,061           -
Partial trade case relief..................      (2,709)          -           -
Start-up costs.............................           -       1,101         267
                                           -------------------------------------
Income from operations.....................      10,488      63,556      47,893
Transaction costs..........................           -           -      11,253
Interest expense...........................       3,961       3,090       3,177
                                           -------------------------------------
Income from continuing operations
 before income taxes.......................       6,527      60,466      33,463
Provision for income taxes.................       3,414      21,228      14,736
                                           -------------------------------------
Income from continuing operations..........       3,113      39,238      18,727

Loss from operations of discontinued DOM
 facility, less applicable income tax
 benefit of $567 and $1,215 for the years
 ended December 31, 2001 and 2000,
 respectively..............................           -        (957)     (2,162)

Gain (loss) on disposal of DOM facility,
 including provision of $1,447 for
 operating losses during phase-out
 period, less applicable income tax
 (provision) benefit of $(250) and
 $5,760 for the years ended December
 31, 2002 and 2001, respectively...........         518     (10,240)          -
                                           -------------------------------------
Income before extraordinary items..........       3,631      28,041      16,565
Extraordinary items, net of income taxes...        (227)          -           -
                                           -------------------------------------
Net income.................................      $3,404     $28,041     $16,565
                                           =====================================

Basic earnings (loss) per share
 Income from continuing operations.........       $0.08       $1.17       $0.56
 Income (loss) from discontinued
  operations...............................        0.01       (0.33)      (0.07)
 Extraordinary items.......................           -           -           -
                                           -------------------------------------
Net income.................................       $0.09       $0.84       $0.49
                                           =====================================

Diluted earnings (loss) per share
 Income from continuing operations.........       $0.08       $1.15       $0.54
 Income (loss) from discontinued
  operations...............................        0.01       (0.33)      (0.06)
 Extraordinary items.......................           -           -           -
                                           -------------------------------------
Net income.................................       $0.09       $0.82       $0.48
                                           =====================================

See accompanying notes.
                                      [29]
<Page>
--------------------------------------------------------------------------------
                   MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (In thousands, except share data)
--------------------------------------------------------------------------------
<Table>
<Caption>


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

                                                <c>            <c>         <c>  <c>           <c>          <c>        <c>
Balance at December 31, 1999...................... 33,492,809     $335        $-   $109,073       $(3,156)    $94,314      $200,566
 Net income.......................................          -        -         -          -             -      16,565        16,565
 Foreign currency translation.....................          -        -         -          -        (3,257)          -        (3,257)
                                                                                                                       -------------
  Comprehensive income............................                                                                           13,308
 Dividends paid to Prudential Steel Ltd.
  stockholders....................................          -        -         -          -             -      (3,089)       (3,089)
 Exercise of stock options - Prudential Steel Ltd.
  directors and employees.........................     88,753        1         -        567             -           -           568
 Exercise of stock options - Maverick directors
  and employees...................................    130,750        1         -        845             -           -           846
 Tax benefit associated with the exercise of
  non-qualified Maverick stock options............          -        -         -      1,057             -           -         1,057
                                                  ----------------------------------------------------------------------------------

Balance at December 31, 2000...................... 33,712,312      337         -    111,542        (6,413)    107,790       213,256
 Net income.......................................          -        -         -          -             -      28,041        28,041
 Minimum pension liability (net of $374 tax
  benefit)........................................          -        -         -          -          (666)          -          (666)
 Foreign currency translation.....................          -        -         -          -        (6,491)          -        (6,491)
                                                                                                                       -------------
  Comprehensive income............................                                                                           20,884
 Purchase of treasury stock....................... (1,201,000)       -   (11,525)         -             -           -       (11,525)
 Exercise of stock options - Maverick directors
  and employees...................................    300,724        3         -      2,459             -           -         2,462
 Tax benefit associated with the exercise of
   non-qualified Maverick stock options...........          -        -         -        306             -           -           306
                                                  ----------------------------------------------------------------------------------

Balance at December 31, 2001...................... 32,812,036      340   (11,525)   114,307       (13,570)    135,831       225,383
 Net income.......................................          -        -         -          -             -       3,404         3,404
 Minimum pension liability (net of $528 tax
  benefit)........................................          -        -         -          -        (1,001)          -        (1,001)
 Foreign currency translation.....................          -        -         -          -           852           -           852
                                                                                                                       -------------
  Comprehensive income............................                                                                            3,255
 Sale of treasury stock...........................  1,201,000        -    11,525      4,328             -           -        15,853
 Exercise of stock options - Maverick directors
  and employees...................................    180,940        2         -      1,072             -           -         1,074
 Issuance of Maverick common stock................  6,749,000       67         -     92,593             -           -        92,660
 Tax benefit associated with the exercise of
   non-qualified Maverick stock options...........          -        -         -         61             -           -            61
                                                  ----------------------------------------------------------------------------------
Balance at December 31, 2002...................... 40,942,976     $409        $-   $212,361      $(13,719)   $139,235      $338,286
                                                  ==================================================================================
</Table>
See accompanying notes.

                                      [30]
<Page>
--------------------------------------------------------------------------------
                   MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
--------------------------------------------------------------------------------
                                                  Year Ended December 31,
                                               2002        2001        2000
                                           -------------------------------------

OPERATING ACTIVITIES
Income from continuing operations..........      $3,113     $39,238     $18,727
Adjustments to reconcile income from
 continuing operations to net cash
 provided by operating activities:
Depreciation and amortization..............      19,954      14,841      12,602
Deferred income taxes......................      (5,314)      4,742        (980)
Provision for losses on accounts
 receivable................................         444         354         666
Loss on sale of equipment..................          39          14           1
Noncash portion of restructuring charges...         861       6,476           -
Changes in  operating  assets and
 liabilities,  net of effect of
 acquisitions:
  Accounts receivable......................       1,033      29,355     (20,010)
  Inventories..............................     (21,430)    (12,157)    (14,952)
  Prepaid expenses and other current
   assets..................................      (7,562)        230        (976)
  Other assets.............................       5,144      (3,677)      1,897
  Accounts payable.........................      46,622     (23,709)        615
  Accrued expenses and other liabilities...     (10,030)      1,903      10,677
  Deferred revenue.........................      (1,151)     (5,195)      3,656
                                           -------------------------------------
Cash provided by continuing operating
 activities................................      31,723      52,415      11,923

INVESTING ACTIVITIES
Cash paid for acquisitions, net of
 cash received.............................    (177,064)          -           -
Expenditures for property, plant and
 equipment.................................     (22,809)    (25,784)    (51,780)
Proceeds from disposal of equipment........          73           -          43
                                           -------------------------------------
Cash used by investing activities..........    (199,800)    (25,784)    (51,737)

FINANCING ACTIVITIES
Proceeds from borrowings and notes.........     761,862     242,903     322,363
Principal payments on borrowings and notes.    (696,412)   (260,876)   (276,419)
                                           -------------------------------------
                                                 65,450     (17,973)     45,944
Dividends paid to Prudential Steel Ltd.
 stockholders..............................           -           -      (3,089)
Purchase of treasury stock.................           -     (11,525)          -
Deferred debt costs........................      (4,452)          -           -
Proceeds from sale of treasury stock.......      15,853           -           -
Proceeds from exercise of stock options....       1,074       2,462       1,414
Proceeds from sale of common stock.........      90,370           -           -
                                           -------------------------------------
Cash provided (used) by financing
 activities................................     168,295     (27,036)     44,269

DISCONTINUED OPERATIONS
Gain (loss) from discontinued operations...         518     (11,197)     (2,162)
Adjustments to reconcile gain (loss)
 from discontinued operations to net
 cash provided (used) by discontinued
 operations:
Depreciation...............................         376       1,455       1,217
(Gain) loss on disposal....................        (518)     10,240           -
Change in operating assets and
 liabilities of discontinued
 operations................................        (742)        173        (422)
Proceeds from sale of discontinued
 operations................................       1,238           -           -
Capital expenditures.......................           -        (296)     (1,971)
                                           -------------------------------------
Net cash provided (used) by discontinued
 operations................................         872         375      (3,338)

Effect of exchange rate changes on cash....        (479)       (223)          -
                                           -------------------------------------

Increase (decrease) in cash and cash
 equivalents...............................         611        (253)      1,117

Cash and cash equivalents at beginning of
 year......................................       1,940       2,193       1,076
                                           -------------------------------------
Cash and cash equivalents at end of year...      $2,551      $1,940      $2,193
                                           =====================================

Supplemental disclosures of cash flow
information:
 Cash paid during the year for:
  Interest (net of amounts capitalized
   of $616, $1,251 and $2,937).............      $3,154      $3,237      $3,181
  Income taxes.............................     $11,964     $12,884      $6,027

 Noncash investing and financing
 activities:
  Note receivable for sale of discontinued
   operations..............................      $6,877          $-          $-
  Stock issued for acquisition.............      $2,290          $-          $-

See accompanying notes.

                                      [31]
<Page>
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

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

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

The  consolidated  financial  statements  include the accounts of Maverick  Tube
Corporation and its direct and indirect wholly-owned subsidiaries  (collectively
referred to as "the Company," whereas "Maverick" is the Company exclusive of its
subsidiaries:  Prudential Steel Ltd., Precision Tube Holding Corporation and the
tubular division of The LTV Corporation).  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,  Precision Tube Holding  Corporation
("Precision")  since its acquisition on March 29, 2002 and the tubular  division
of The LTV Corporation since its acquisition on December 31, 2002.

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 revenue is realizable
and the  product is shipped  from its  facilities  or its  outside  yards.  This
includes satisfying the following criteria: the arrangement with the customer is
evident,  usually  through the receipt of a purchase  order;  the sales price is
fixed or determinable;  delivery has occurred and  collectibility  is reasonably
assured.  Freight and  shipping  that is billed to  customers is included in net
sales, and the cost of shipping is included in cost of sales.

Accounts Receivable
-------------------

Credit  risk on trade  receivables  arising  from  the  Company's  net  sales is
minimized  as a result  of the  large and  diversified  nature of the  Company's
customer base.  The Company  controls its exposure to credit risk through credit
approvals, credit limits and monitoring procedures.  Collateral is generally not
required for the Company's trade receivables.

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

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

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

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

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

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

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

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

Goodwill and Intangible Assets
------------------------------

The Company adopted  Statement of Financial  Accounting  Standards  ("SFAS") No.
142,  "Goodwill and Other Intangible  Assets" in connection with the acquisition
of Precision on March 29,  2002.  Prior to the  acquisition  of  Precision,  the
Company did not have any goodwill recorded.

The Company conducts a formal impairment test of goodwill on an annual basis and
between annual tests if an event occurs or circumstances  change that would more
likely  than not reduce the fair value of a  reporting  unit below its  carrying
value. The annual impairment test did not indicate an impairment of goodwill.

All of the  Company's  intangible  assets  (other than  goodwill) are subject to
amortization.

Stock-Based Compensation
------------------------

At December 31, 2002,  the Company has three employee stock option plans and two
stock  option  plans  for  eligible   directors   allowing  for   incentive  and
non-qualified  stock  options,  which are  described  more fully in Note 15. The
Company   accounts  for  those  plans  under  the  recognition  and  measurement
principles of Accounting  Principles  Board ("APB") Opinion No. 25,  "Accounting
for Stock Issued to  Employees,"  and related  interpretations.  No  stock-based
employee  compensation  cost is reflected in net income,  as all options granted
under  those  plans  had an  exercise  price  equal to the  market  value of the
underlying  common stock on the date of grant.  The following table  illustrates
the effect on net income and  earnings  per share if the Company had applied the
fair value recognition  provisions of SFAS No. 123,  "Accounting for Stock-Based
Compensation," to stock-based employee compensation for the years ended December
31, 2002, 2001 and 2000 (in thousands, except per share information):

                                               2002        2001        2000
                                           -------------------------------------

Net income, as reported....................      $3,404     $28,041     $16,565
Deduct: total stock-based employee
 compensation expense determined
 under fair value-based method for all
 awards, net of related tax effects........      (1,120)     (1,898)     (1,112)
                                           -------------------------------------
Pro forma net income.......................      $2,284     $26,143     $15,453
                                           =====================================

Basic earnings per share
 Net income - as reported..................       $0.09       $0.84       $0.49
 Net income - pro forma....................       $0.06       $0.78       $0.46

Diluted earnings per share
 Net income - as reported..................       $0.09       $0.82       $0.48
 Net income - pro forma....................       $0.06       $0.77       $0.45

The  compensation  expense  associated  with  the  fair  value  of  the  options
calculated  for  the  years  ended  December  31,  2002,  2001  and  2000 is not
necessarily  representative  of the  potential  effects on  reported  net income
(loss) in future years.

                                      [32]
<Page>
Use of Estimates
----------------

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

Earnings 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 per share for the years ended December
31, 2002, 2001 and 2000 is as follows (in thousands):

                                               2002        2001        2000
                                           -------------------------------------

Average shares outstanding.................      38,144      33,547      33,633
Dilutive effect of outstanding stock
 options...................................         348         570         892
                                           -------------------------------------
Average shares deemed outstanding..........      38,492      34,117      34,525
                                           =====================================
Net income used in the calculation
 of basic and diluted earnings per share...      $3,404     $28,041     $16,565
                                           =====================================

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

Accumulated other comprehensive loss is as follows (in thousands):

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

Balance at December 31, 1999...............     $(3,156)         $-     $(3,156)
 Current period change.....................      (3,257)          -      (3,257)
                                           -------------------------------------
Balance at December 31, 2000...............      (6,413)          -      (6,413)
 Current period change.....................      (6,491)       (666)     (7,157)
                                           -------------------------------------
Balance at December 31, 2001...............     (12,904)       (666)    (13,570)
 Current period change.....................         852      (1,001)       (149)
                                           -------------------------------------
Balance at December 31, 2002...............    $(12,052)    $(1,667)   $(13,719)
                                           =====================================

Treasury Stock
--------------

The Company's repurchases of common stock are recorded as treasury stock at cost
and result in a reduction of  stockholders'  equity.  When  treasury  shares are
reissued,  the Company uses average cost to value treasury shares and any excess
of average  cost over  reissuance  price is treated as a  reduction  of retained
earnings. The Company purchased 1,201,000 shares for $11,525,000 during the year
ended  December 31,  2001.  The Company sold  1,201,000  shares for  $15,853,000
during the year ended  December  31,  2002,  with the excess  proceeds  over the
purchase price credited to paid in capital.

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

Maverick Tube L.P., a wholly-owned subsidiary of the Company, is responsible for
the Company's operations in Hickman,  Arkansas; Conroe, Texas; Counce, Tennessee
and Youngstown,  Ohio. Precision,  a wholly-owned  subsidiary of the Company, is
responsible  for the  Company's  coiled  tubing  operations  in Houston,  Texas.
Prudential,  a wholly-owned  subsidiary of the Company,  is responsible  for the
Company's  operations in Calgary,  Alberta.  Republic  Conduit,  a  wholly-owned
subsidiary  of the Company,  is  responsible  for the  Company's  operations  in
Elyria,  Ohio;  Cedar Springs,  Georgia and Ferndale,  Michigan.

Deferred Debt Issuance Costs
----------------------------

Deferred debt  issuance  costs  included in other assets are amortized  over the
terms of the respective debt obligations using the interest method.

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  approximates fair value.  Management's
estimate of the fair value of the long-term note receivable is in Note 4 and the
long-term debt obligations is discussed in Note 6 to the consolidated  financial
statements.

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

In June 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
143,  "Accounting for Asset  Retirement  Obligations."  SFAS No. 143 establishes
accounting  standards for the recognition and measurement of an asset retirement
obligation and its associated asset retirement cost. It also provides accounting
guidance  for legal  obligations  associated  with the  retirement  of  tangible
long-lived assets.  This statement is effective for fiscal years beginning after
June 15, 2002. The Company believes the implementation of this new standard will
not have a material effect on the Company.

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44 and 62,  Amendment of FASB  Statement No. 13, and Technical  Corrections."
SFAS No. 145 requires,  in most cases,  gains and losses on  extinguishments  of
debt to be classified as income or loss from continuing operations,  rather than
as  extraordinary  items.  The statement is effective for fiscal years beginning
after May 15,  2002.  Upon  adoption  of SFAS No. 145,  the  Company  expects to
reclassify   previously   recognized   extraordinary   items   from  the   early
extinguishment of debt into income from continuing operations.

In July 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities." SFAS No. 146 requires companies to recognize
costs associated with exit or disposal  activities when they are incurred rather
than at the date of a  commitment  to an exit or  disposal  plan.  SFAS No.  146
replaces   Emerging  Issues  Task  Force  ("EITF")  Issue  No.  94-3  "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 is
to be applied  prospectively  to exit or  disposal  activities  initiated  after
December 31, 2002.

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

Certain  reclassifications  have been made to prior  year  balances  in order to
conform to the  current  year  presentation.  The Company  reclassified  freight
revenue previously classified in cost of goods sold to net sales for all periods
presented.

                                      [33]
<Page>
2. Business Combination
--------------------------------------------------------------------------------

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

Under the terms of the transaction,  Prudential stockholders received 0.52 of an
exchangeable  share,  issued by Maverick  Tube  (Canada)  Inc.,  a  wholly-owned
Canadian   subsidiary  of  the  Company,   for  each  Prudential  common  share.
Consequently,   Prudential   stockholders   received   a  total  of   15,813,088
exchangeable  shares. The exchangeable shares are Canadian securities that began
trading on The Toronto Stock  Exchange on September 27, 2000.  These shares have
the same  voting  rights,  dividend  and  distribution  entitlements,  and other
attributes as shares of the Company's common stock and are exchangeable, at each
stockholder's option, for the Company's common stock on a one-for-one basis. The
transaction was accounted for as a pooling of interests.

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 in 2000 by the  separate  companies
prior to the combination are as follows (in thousands):

                                                                    Six Months
                                                                      Ended
                                                                     June 30,
                                                                       2000
                                                                   -------------
                                                                    (Unaudited)
Revenues:
 Maverick..........................................................    $140,872
 Prudential........................................................     122,235
                                                                   -------------
  Combined.........................................................    $263,107
                                                                   =============

Net income:
 Maverick..........................................................      $1,587
 Prudential........................................................      10,190
                                                                   -------------
 Combined..........................................................     $11,777
                                                                   =============
Stockholders' equity:
 Maverick..........................................................    $115,876
 Prudential........................................................      93,341
                                                                   -------------
 Combined..........................................................    $209,217
                                                                   =============

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. Business Acquisitions
--------------------------------------------------------------------------------

Precision Tube Holding Corporation
----------------------------------

On March 29, 2002, the Company completed its purchase of all the common stock of
Precision,  a privately held, Houston based,  coiled tubular goods manufacturer,
in exchange for $60,678,000  cash and 200,000 common shares of the Company.  The
acquisition  was  accounted  for as a  purchase  business  combination  and  the
financial  statements of Precision have been  consolidated  from the acquisition
date. The cost to acquire  Precision has been  allocated to the assets  acquired
and  liabilities  assumed  according to their estimated fair values as described
below. The final allocation resulted in acquired goodwill of $43,131,000,  which
is not deductible for tax purposes.  Pro forma information has not been included
herein because Precision is not considered a significant subsidiary. The Company
acquired  Precision  to add  premium  coiled  tubing and coiled line pipe to its
product  lines and is  reflected  as a new  segment to the  Company's  reporting
structure.

The Tubular Division of The LTV Corporation
-------------------------------------------

On December 31, 2002, the Company acquired the assets and certain liabilities of
the  tubular  division  of The LTV  Corporation  for  $120,246,000  cash  (which
included a $10,246,000 working capital adjustment, subject to finalization). The
acquisition  was  accounted  for as a  purchase  business  combination  and  the
financial  statements of the tubular  division of The LTV Corporation  have been
consolidated from the acquisition date. The cost to acquire the tubular division
of The LTV Corporation has been  preliminarily  allocated to the assets acquired
and  liabilities  assumed  according to their  estimated fair values.  The final
fixed asset  appraisals,  identification of intangible assets and the exit costs
associated with the Company's rationalization plans are subject to adjustment as
additional information becomes available. The preliminary allocation resulted in
acquired goodwill of $50,053,000, which is fully deductible for tax purposes.

The Company  acquired the tubular  division of The LTV  Corporation to add steel
electrical  conduit to its product  lines and to expand its line pipe sales.  As
the  acquisition  was completed on December 31, 2002,  the assets  acquired have
been initially included in the Corporate segment pending permanent assignment to
the appropriate operating segment by the Chief Operating Decision Maker.

The  unaudited pro forma  results  below assume the  acquisition  of the tubular
division  of The  LTV  Corporation  occurred  at the  beginning  of the  periods
presented (in thousands, except per share amounts):

                                                           2002        2001
                                                       -------------------------

Net sales..............................................    $678,630    $795,361
Net income.............................................     $16,515     $47,684
Basic earnings per share...............................       $0.43       $1.42
Diluted earnings per share.............................       $0.43       $1.40

The above pro forma  results  include  adjustments  to give  effect to  interest
expense and other  purchase  price  adjustments.  The pro forma  results are not
necessarily indicative of the operating results that would have occurred had the
acquisitions been consummated as of the beginning of the periods presented,  nor
are they necessarily indicative of future operating results.

                                      [34]
<Page>
Following is a summary of the net assets and  liabilities  acquired  during 2002
(in thousands):

                                                                    The tubular
                                                                    division of
                                                                     The LTV
                                                         Precision  Corporation
                                                       -------------------------

Purchase price (including transaction costs)...........     $62,966    $120,157

Assets acquired:
 Cash..................................................       3,855           5
 Accounts receivable...................................       8,141      22,208
 Inventory.............................................       4,217      42,462
 Property, plant and equipment.........................       7,443      12,874
 Other assets..........................................       5,218       2,798
                                                       -------------------------
                                                             28,874      80,347
Liabilities acquired:
 Accounts payable......................................      (1,718)     (6,430)
 Other accruals........................................      (7,321)     (3,813)
                                                       -------------------------
                                                             (9,039)    (10,243)
 Net assets acquired...................................      19,835      70,104
                                                       -------------------------
Goodwill...............................................     $43,131     $50,053
                                                       =========================

4. Discontinued Operations
--------------------------------------------------------------------------------

During the first quarter of 2001, the Company  adopted a formal plan to sell the
operating  assets of its Cold Drawn Tubular  Business  (DOM).  Accordingly,  the
operating  results of the DOM facility,  including the provision for the loss on
disposal and operating losses during the phase-out period of $10,240,000 (net of
$5,760,000 tax benefit),  have been segregated  from  continuing  operations and
reported separately as discontinued operations in the statements of income.

On March 29, 2002, pursuant to an asset purchase agreement dated March 21, 2002,
the Company completed the sale of the DOM business for $8,115,000, consisting of
cash in the amount of $1,238,000 and the buyer's  nine-year  secured  promissory
note of  $6,877,000,  which  approximates  its fair value.  To  accommodate  the
buyer's  purchase of the DOM business,  the Company  guaranteed  the  $1,500,000
asset-based  line  of  credit  (advances  limited  to 80% of  eligible  accounts
receivable)  of the buyer.  In  exchange,  the  Company  was  granted  liens and
appropriate  subrogation rights in the assets conveyed to the buyer. The Company
recognized a $518,000  after-tax gain from discontinued  operations for the year
ended December 31, 2002.

DOM  revenues  were  $37,000,  $7,891,000  and  $15,619,000  for the years ended
December 31, 2002, 2001 and 2000,  respectively.  The net assets of DOM included
in the accompanying  consolidated  balance sheets at December 31, 2002 and 2001,
consist of the following (in thousands):

                                                           2002        2001
                                                       -------------------------

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

5. Restructuring Charges
--------------------------------------------------------------------------------

During  December  2001,  the Company  announced  its plans to exit its Longview,
Washington  facility and move the operations to one of its existing buildings in
Hickman,  Arkansas.  As a result,  all 124  employees at the facility  have been
terminated  as of  December  31,  2002.  Restructuring  costs of  $1,186,00  and
$8,061,000 were recorded in the 2002 and 2001 consolidated  statements of income
and included the following items (in thousands):

                                                           2002        2001
                                                       -------------------------
Noncash costs:
Write-down of property, plant and equipment
 to fair value.........................................        $861      $6,476
Cash costs:
Employee severance cost................................           -         581
Adjustment to the original estimate....................        (356)          -
Other..................................................         681       1,004
                                                       -------------------------
                                                                325       1,585
                                                       -------------------------
Total restructuring costs..............................      $1,186      $8,061
                                                       =========================

Following  is a summary of the accrued  restructuring  liabilities  and activity
through December 31, 2002 (in thousands):

                                             Employee
                                             Severance     Other       Total
                                           -------------------------------------

Balance, December 31, 2001.................        $581      $1,004      $1,585
Additional costs...........................           -         681         681
Cash payments..............................        (239)     (1,191)     (1,430)
Adjustment to original estimate............        (342)        (14)       (356)
                                           -------------------------------------
Balance, December 31, 2002.................          $-        $480        $480
                                           =====================================

Future cash outlays  expected in 2003  relating to the  Company's  exit from the
Longview,  Washington  facility are anticipated to be comprised of the remaining
$480,000  cash costs  above.  These cash outlays are  ultimately  expected to be
funded  through the future sale of the  Longview,  Washington  land and building
which is held for sale at a  carrying  value of $6.0  million  and is  currently
being marketed through a national broker.

                                      [35]
<Page>
6. Long-Term Debt and Revolving Credit Facilities
--------------------------------------------------------------------------------

Long-term debt, including the Company's long-term revolving credit facility,  at
December 31, 2002 and 2001, consists of the following (in thousands):

                                                           2002        2001
                                                       -------------------------

Capital lease obligation, secured by
 property and plant (net book value
 $5,842 at December 31, 2002);
 payable in monthly installments
 (including interest at 8.0%) of
 $59; final payment due on
 August 1, 2007........................................      $2,772      $3,244
Capital lease obligation, secured by
 property and plant (net book value
 $9,255 at December 31, 2002);
 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 by year seven and
 increasing to $240 in year eight;
 final payment due on February 1, 2004.................       2,947       3,317
Senior revolving credit facility,
 secured by certain accounts receivable,
 inventories and property, plant and
 equipment; due on March 31, 2006;
 interest payable monthly (5.24% at
 December 31, 2002) at either U.S. or
 Canadian prime, Bankers' Acceptance
 rates plus stamping fees, or the LIBOR
 rate, adjusted by an interest margin,
 depending upon excess availability....................     132,927           -
Revolving credit notes, secured by
 certain accounts receivable,
 inventories and equipment; due on
 January 1, 2004 (retired on March 29,
 2002); interest payable monthly (3.0%
 at December 31, 2001) at either prime,
 Federal Funds Rate plus 0.5%, or the
 LIBOR rate, adjusted by an interest
 margin, depending upon certain
 financial measurements................................           -      62,000
Other..................................................           -         368
                                                       -------------------------
                                                            138,646      68,929
Less current maturities................................      (2,977)       (938)
                                                       -------------------------
                                                           $135,669     $67,991
                                                       =========================

The Company has a senior credit  facility  providing for a  $195,000,000  (which
includes a $10,000,000  secured  over-advanced  commitment that expires on March
31, 2003)  revolving line of credit.  In addition,  the Company has  outstanding
letters of credit  under this  agreement  of  $1,478,000  at December  31, 2002.
Interest is payable  monthly at the LIBOR rate  adjusted by an interest  margin,
depending upon certain financial measurements. Under the senior credit facility,
the  Company can borrow an amount  based on a  percentage  of eligible  accounts
receivable,  eligible  inventory  and property,  plant and equipment  reduced by
outstanding  letters of credit.  The additional  available  borrowings under the
senior credit  facility are  approximately  $53,500,000 as of December 31, 2002.
The  senior  credit  facility  includes   restrictive   covenants   relating  to
maintaining a minimum fixed charge  coverage ratio if  availability  falls below
$30,000,000.  The senior credit  facility also limits  capital  expenditures  to
$30,000,000 per year and limits the Company's  ability to pay dividends,  create
liens,  sell  assets or enter into  transactions  with  affiliates  without  the
consent of the lenders.

During 2002,  the Company  incurred an  extraordinary  loss  resulting  from the
establishment  of its new credit  facility,  due to the  write-off of debt costs
previously deferred of $227,000 after-tax.

Prudential  had a  C$40,000,000  ($25,118,000  at December 31,  2001)  unsecured
credit  facility  subject to  certain  restrictions  related to working  capital
through a Canadian  chartered bank that was retired on March 29, 2002.  Interest
was payable monthly at either Canadian prime, U.S. base rate, LIBOR plus 1.0% or
Bankers' Acceptance rates plus stamping fees. The effective interest rate on the
amounts  outstanding  at December 31, 2001 was 4.0%.  The aggregate  outstanding
balance of the credit facility at December 31, 2001 was  $3,219,000.  Borrowings
under this credit facility were classified as short-term.

The present  value of future  minimum  lease  payments  under the capital  lease
obligations as of December 31, 2002 is as follows (in thousands):


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

2003.......................................      $3,330        $353      $2,977
2004.......................................       1,199         165       1,034
2005.......................................         714         115         599
2006.......................................         712          65         647
2007.......................................         476          14         462
Thereafter.................................           -           -           -
                                           -------------------------------------
                                                 $6,431        $712      $5,719
                                           =====================================

Property, plant and equipment at December 31, 2002 and 2001, include $19,653,000
and  $19,527,000,   respectively,  under  leases  that  have  been  capitalized.
Accumulated  depreciation  for these assets was  $4,556,000  and  $4,005,000  at
December 31, 2002 and 2001, 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, 2002 was $138,998,000.

                                      [36]
<Page>
7. Inventories
--------------------------------------------------------------------------------

Inventories  at  December  31,  2002 and  2001,  consist  of the  following  (in
thousands):

                                                           2002        2001
                                                       -------------------------

Finished goods.........................................    $109,878     $86,256
Work-in-process........................................       7,982       3,574
Raw materials..........................................      51,390      30,089
In-transit materials...................................      29,090      11,849
Storeroom parts........................................      11,867       9,971
                                                       -------------------------
                                                           $210,207    $141,739
                                                       =========================

Finished goods at December 31, 2002 and 2001 include  $2,705,000 and $3,353,000,
respectively, of customer-obligated inventory.

8. Property, Plant and Equipment
--------------------------------------------------------------------------------

Property,  plant and  equipment  at December  31, 2002 and 2001,  consist of the
following (in thousands):

                                                           2002        2001
                                                       -------------------------

Land...................................................      $5,358      $4,097
Land and leasehold improvements........................       5,532       3,659
Buildings..............................................      64,047      54,547
Transportation equipment...............................       4,287       4,174
Machinery and equipment................................     193,298     174,502
Computer software......................................      19,393      16,611
Furniture and fixtures.................................       4,741       4,000
                                                       -------------------------
                                                            296,656     261,590
Less accumulated depreciation..........................    (117,412)   (103,329)
                                                       -------------------------
                                                           $179,244    $158,261
                                                       =========================

Property,  plant and  equipment  held in use by the  Company  are  reviewed  for
impairment  whenever  events or changes in  circumstances  indicate the carrying
amount of an asset may not be recoverable.

9. Income Taxes
--------------------------------------------------------------------------------

The jurisdictional components of income from continuing operations before income
taxes for the years ended  December 31,  2002,  2001 and 2000 are as follows (in
thousands):

                                               2002        2001        2000
                                           -------------------------------------

Domestic...................................     $(7,797)    $24,556      $3,979
Foreign....................................      14,324      35,910      29,484
                                           -------------------------------------
                                                 $6,527     $60,466     $33,463
                                           =====================================

The  components of the provision  (benefit) for income taxes for the years ended
December 31, 2002, 2001 and 2000 are as follows (in thousands):

                                               2002        2001        2000
                                           -------------------------------------

Current:
 Federal...................................      $1,015      $8,107      $3,282
 State.....................................         (89)        264          67
 Foreign...................................       7,617      14,234      11,680
                                           -------------------------------------
                                                  8,543      22,605      15,029
                                           -------------------------------------

Deferred:
 Domestic..................................      (2,686)      1,254        (148)
 Foreign...................................      (2,443)     (2,631)       (145)
                                           -------------------------------------
                                                 (5,129)     (1,377)       (293)
                                           -------------------------------------
                                                 $3,414     $21,228     $14,736
                                           =====================================

The difference between the effective income tax rate and the U.S. federal income
tax rate for the years ended  December 31,  2002,  2001 and 2000 is explained as
follows (in thousands):

                                               2002        2001        2000
                                           -------------------------------------

Provision at U.S. statutory tax rate.......      $2,284     $21,163     $11,745
State and local taxes, net of federal tax
 benefit...................................         (89)        280          67
Taxes on foreign income in excess of U.S.
  statutory rate...........................         160          41           -
Taxes on foreign dividend..................       1,776         525           -
Alternative minimum tax....................           -           -          81
Increase (decrease) in valuation
 allowances................................      (1,001)     (1,376)        660
Nondeductible expenses (income)............        (426)       (449)      1,910
Other......................................         710       1,044         273
                                           -------------------------------------
                                                 $3,414     $21,228     $14,736
                                           =====================================

Temporary  differences which give rise to deferred tax assets and liabilities at
December 31, 2002 and 2001 are as follows (in thousands):

                                                           2002        2001
                                                       -------------------------

Deferred tax assets:
 Various accrued liabilities and reserves..............      $7,277      $4,560
 Net operating loss carryforwards......................       2,406       2,402
 Alternative minimum tax carryforwards.................       5,452       4,022
 Foreign tax credit carryforwards......................      11,342       3,341
 Pension plan..........................................         331           -
 Asset valuations......................................       1,544         993
 Valuation allowances:
  Net operating loss carryforwards.....................           -      (1,001)
  Foreign tax credit carryforwards.....................      (8,349)     (3,341)
                                                       -------------------------
  Total deferred tax assets............................      20,003      10,976
Deferred tax liabilities:
 Accelerated depreciation..............................      15,380      10,894
 Pension plan..........................................           -         216
 Asset valuations......................................           -         682
                                                       -------------------------
  Total deferred tax liabilities.......................      15,380      11,792
                                                       -------------------------
  Net deferred tax assets (liabilities)................      $4,623       $(816)
                                                       =========================

                                      [37]
<Page>
Maverick  had  alternative  minimum  tax  credit   carryforwards  of  $5,452,000
available for income tax purposes at December 31, 2002.  These  carryforwards do
not expire.

At December 31, 2002,  Maverick had net operating loss  carryforwards with a tax
value of $2,406,000. Management's assessment is that the character and nature of
future  taxable  income will allow the Company to realize the full amount of the
tax benefits of the net operating loss carryforwards  before they expire in 2019
and 2020 and  accordingly  reversed in 2002 the $1,001,000  previously  recorded
valuation allowance against the net operating loss carryforwards.

At  December  31,  2002,   Maverick  had   $11,342,000  of  foreign  tax  credit
carryforwards.  Maverick has placed a valuation  allowance of $8,349,000 against
these foreign tax credit carryforwards to reflect the amount that is more likely
than  not  to be  realized  in  the  future.  Income  tax  expense  provided  on
undistributed foreign earnings is fully offset by foreign tax credits associated
with these earnings. At December 31, 2001, the Company had $3,341,000 of foreign
tax credits with an offsetting valuation allowance.

10. Defined Contribution Plans
--------------------------------------------------------------------------------

The Company sponsors three defined  contribution 401(k) plans that are available
to all U.S. employees. The plans may be amended or terminated at any time by the
Board of Directors. The Company, although not required to, has provided matching
contributions  to the plans for the years ended December 31, 2002, 2001 and 2000
of $927,000, $878,000 and $849,000, 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  for  certain
officers of the Company.  The Company  contribution to these plans for the years
ended  December  31,  2002,  2001 and 2000 was  $45,000,  $45,000  and  $60,000,
respectively.

11. Defined Benefit Plans
--------------------------------------------------------------------------------

Prudential  sponsors  two  pension  plans  (Hourly  Plan and Salary  Plan) and a
postretirement  benefit plan for substantially all of its Canadian employees and
a  supplemental   executive  retirement  plan  (SERP)  for  certain  former  key
Prudential  executives.  A  reconciliation  of  changes  in the  plans'  benefit
obligations,  fair value of assets and  statement of funded status for the years
ended December 31, 2002 and 2001, is as follows (in thousands):

                                   Pension Benefits          Postretirement
                                        and SERP              Benefit Plan
                               -------------------------------------------------
                                   2002        2001        2002        2001
                               -------------------------------------------------

Change in benefit obligation:
 Benefit obligation at
  beginning of year............     $29,375     $25,325      $1,312      $1,070
 Service cost..................       1,048         909          45          30
 Interest cost.................       1,963       1,733          88          69
 Plan amendments...............         741       1,438           -           -
 Actuarial loss................          70       2,518          27         241
 Benefits paid.................      (1,048)     (1,112)        (42)        (38)
 Foreign currency
  translation change...........         241      (1,436)         11         (60)
                               -------------------------------------------------
 Benefit obligation at end
  of year......................     $32,390     $29,375      $1,441      $1,312
                               =================================================

Change in fair value of plan
assets:
 Fair value of plan assets
  at beginning of year.........     $28,252     $33,138          $-          $-
 Employer contributions........         779         155           -          38
 Actual return on plan assets..      (1,737)     (2,045)          -           -
 Benefits paid.................      (1,048)     (1,112)          -         (38)
 Foreign currency translation
  change.......................         232      (1,884)          -           -
                               -------------------------------------------------
 Fair value of plan assets at
  end of year..................     $26,478     $28,252          $-          $-
                               =================================================

Funded status:
 Underfunded status at end
  of year......................     $(5,912)    $(1,123)    $(1,441)    $(1,312)
 Unrecognized actuarial loss...       8,867       5,228         224         200
 Unrecognized transition asset.      (5,064)     (5,535)        452         489
 Unrecognized prior service
  cost.........................       2,125       1,503           -           -
                               -------------------------------------------------
 Prepaid (accrued) benefit cost         $16         $73       $(765)      $(623)
                               =================================================

Amounts recognized in the
balance sheets:
 Prepaid benefit costs.........      $1,640      $1,531          $-          $-
 Accrued benefit liability.....      (5,870)     (3,823)       (765)       (623)
 Intangible asset..............       1,677       1,325           -           -
 Additional minimum pension
  liability....................       2,569       1,040           -           -
                               -------------------------------------------------
 Net amount recognized.........         $16         $73       $(765)      $(623)
                               =================================================

The Hourly Plan projected and accumulated  benefit obligations of $14,347,000 at
December 31, 2002 were in excess of the fair value of plan assets of $10,544,000
at December 31, 2002. The SERP projected and accumulated  benefit obligations of
$2,411,000  and  $1,664,000  at December 31, 2002 and 2001,  respectively,  were
unfunded. The fair value of plan assets for the Salary Plan was in excess of the
projected and accumulated benefit obligations at December 31, 2002 and 2001.

                                      [38]
<Page>
The provisions of SFAS No. 87, "Employers' Accounting for Pensions," require the
recognition of an additional  minimum liability and related  intangible asset to
the extent that  accumulated  benefits  exceed plan  assets.  As of December 31,
2002, the Company recorded an adjustment to stockholders'  equity of $2,569,000,
which was required to reflect the Company's minimum liability.

Benefit costs  consist of the  following for the years ended  December 31, 2002,
2001 and 2000 (in thousands):

                                               2002        2001        2000
                                           -------------------------------------


Pension benefit costs:
Service cost...............................      $1,048        $909        $915
Interest cost..............................       1,963       1,733       1,653
Expected return on plan assets.............      (1,985)     (2,154)     (2,115)
Amortization of prior service cost.........         131         130          18
Amortization of transition (asset)
 obligation................................        (518)       (513)        (77)
Recognized net actuarial gain..............         197         (19)          -
                                           -------------------------------------
                                                   $836         $86        $394
                                           =====================================

                                               2002        2001        2000
                                           -------------------------------------

Postretirement benefit plan costs:
Service cost...............................         $45         $30         $31
Interest cost..............................          88          69          69
Recognized net actuarial loss..............          46          41          42
                                           -------------------------------------
                                                   $179        $140        $142
                                           =====================================

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

The weighted  average  assumptions used in accounting for the Company's plans at
December 31, 2002 and 2001, are as follows:

                                                            Postretirement
                                    Pension Benefits         Benefit Plan
                               -------------------------------------------------
                                   2002        2001        2002        2001
                               -------------------------------------------------

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

For measurement purposes, a 5.25% annual rate of increase in the per capita cost
of covered  health care  benefits was assumed for 2003.  The rate was assumed to
decrease gradually each successive year until it reaches 4.50%.

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

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


Effect on total service and interest cost components...         $27         $21
Effect on accumulated postretirement benefit
 obligations...........................................        $231        $187

12. Segment Information
--------------------------------------------------------------------------------

The following  table sets forth data (in thousands) for the years ended December
31, 2002,  2001 and 2000 for the reportable  industry  segments of Maverick Tube
L.P.,  Precision  and  Prudential.  Identifiable  assets  are those  used in the
Company's operations in each segment.

On December 31, 2002, the Company acquired net assets of $130,400,000 (including
goodwill of $50,053,000)  of the tubular  division of The LTV  Corporation.  The
assets have been initially  included in the Corporate segment as of December 31,
2002, pending permanent  assignment by the Chief Operating Decision Maker to the
appropriate operating segment.
<Table>
<Caption>
                                 Maverick
                                 Tube L.P.  Precision   Prudential   Corporate     Total
                               -------------------------------------------------------------

                            <c>         <c>         <c>         <c>          <c>
Year Ended December 31, 2002

Net sales......................    $272,061     $29,130    $151,722          $-     $452,913
Operating income (loss)........       3,162        (702)      8,028           -       10,488
Identifiable assets............     253,490      71,331     117,120     153,942      595,883
Goodwill.......................           -      43,131           -      50,053       93,184
Depreciation and amortization..      13,249         657       2,691       3,357       19,954
Capital expenditures...........      13,332       1,298       4,411       3,768       22,809

Year Ended December 31, 2001

Net sales......................    $344,278          $-    $200,655          $-     $544,933
Operating income...............      30,941           -      32,615           -       63,556
Identifiable assets............     212,531           -     127,206      17,710      357,447
Depreciation and amortization..       8,571           -       4,878       1,392       14,841
Capital expenditures...........      18,803           -       1,301       5,680       25,784

Year Ended December 31, 2000

Net sales......................    $301,700          $-    $260,323          $-     $562,023
Operating income...............      14,664           -      33,229           -       47,893
Identifiable assets............     223,634           -     152,198      14,986      390,818
Depreciation and amortization..       6,357           -       4,812       1,433       12,602
Capital expenditures...........      40,553           -       8,055       3,172       51,780
</Table>
                                      [39]
<Page>
The following  table sets forth the energy and industrial  product sales for the
years ended December 31, 2002, 2001 and 2000 (in thousands).

                                               2002        2001        2000
                                           -------------------------------------

Energy product sales.......................    $373,031    $459,502    $460,798
Industrial product sales...................      79,882      85,431     101,225
                                           -------------------------------------
                                               $452,913    $544,933    $562,023
                                           =====================================

The Company had intersegment sales of $10,664,000,  $18,782,000 and $424,000 for
the years ended December 31, 2002, 2001 and 2000, respectively.

Prudential's facility located in Calgary,  Alberta,  operates under a collective
bargaining agreement that covers approximately 73% of all Prudential  employees.
The collective bargaining agreement expires on December 31, 2003.

Facilities acquired as part of the assets and certain liabilities of the tubular
division of The LTV  Corporation  acquisition,  which are located in Youngstown,
Ohio; Elyria, Ohio; Ferndale,  Michigan;  and Counce,  Tennessee,  operate under
several collective bargaining agreements. Collective bargaining agreements cover
approximately 53% of all the tubular division of The LTV Corporation  employees.
The collective bargaining agreements expire on November 15, 2005.

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,
2002 (in thousands):

           2003....................................................      $3,623
           2004....................................................       2,716
           2005....................................................       2,498
           2006....................................................       2,037
           2007....................................................       1,663
                                                                   -------------
                                                                        $12,537
                                                                   =============

Rent expense for all operating leases was $4,103,000,  $4,356,000 and $3,780,000
for the years ended December 31, 2002, 2001 and 2000, 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. These plans have been approved by
the  stockholders of the Company and no options have been granted by the Company
outside of these plans.  The 1990 Plan,  1994 Plan,  1994  Director  Plan,  1999
Director  Plan and  Prudential  Plan provide that 340,000,  1,500,000,  200,000,
300,000 and 650,187  shares,  respectively,  may be issued under the plans at an
option  price not less than the fair  market  value of the stock at the time the
option is granted.  The 1990 Plan,  the 1994 Director Plan and  Prudential  Plan
expired on December 2000,  November 1999 and September 2000,  respectively,  and
thus no further  options are available for future grants.  The 1994 Plan and the
1999  Director  Plan expire in November  2004.  The options vest pursuant to the
schedule set forth for each plan. In general,  the options issued under the 1994
and 1999  Director  Plans vest six months from the date of grant and the options
issued  under the 1990 Plan,  1994 Plan and  Prudential  Plan vest  ratably over
periods  ranging  from one year to five years.  At  December  31, 2002 and 2001,
278,418 and  646,918  shares  were  available  for grant under all of the option
plans.

The Company  grants stock  options for a fixed number of shares to directors and
employees  with an  exercise  price equal to the fair value of the shares at the
time of the grant.  Accordingly,  the  Company has not  recognized  compensation
expense for its stock option grants.  The fair value of the options  granted for
the  years  ended  December  31,  2002,  2001  and  2000  was  determined  to be
$2,779,000, $1,474,000 and $3,546,000, respectively.

For the  purposes of the pro forma  disclosures  in Note 1, the  estimated  fair
value of the options is  recognized  as  compensation  expense over the options'
vesting period.  The fair value of the options granted was estimated at the date
of grant using a Black-Scholes  option pricing model with the following weighted
average  assumptions  for the years  ended  December  31,  2002,  2001 and 2000,
respectively:  risk-free  interest rate of 3.82%,  4.90% and 5.97%;  no dividend
payments  expected;  volatility  factors  of the  expected  market  price of the
Company's  common  stock of  0.656,  0.678 and  0.672;  and a  weighted  average
expected life of the options of 3.9 years, 8.3 years and 8.3 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.

                                      [40]
<Page>
The following table summarizes  option activity and related  information for the
years ended December 31, 2002, 2001 and 2000:

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

Options outstanding at December 31, 1999...   1,461,431       $7.69
Options exercised..........................    (219,503)       6.26
Options forfeited..........................     (26,500)       7.13
Options granted............................     303,009       16.24      $11.70
                                           -------------------------------------

Options outstanding at December 31, 2000...   1,518,437        9.61
Options exercised..........................    (300,724)       8.21
Options forfeited..........................     (55,750)      15.40
Options granted............................     100,000       24.40      $14.74
                                           -------------------------------------

Options outstanding at December 31, 2001...   1,261,963       10.98
Options exercised..........................    (180,940)       6.11
Options forfeited..........................     (55,650)      20.41
Options granted............................     410,000       13.28       $6.78
                                           -------------------------------------

Options outstanding at December 31, 2002...   1,435,373      $11.89
                                           ========================

The following table summarizes information about fixed stock options outstanding
at December 31, 2002:
<Table>
<Caption>
                                      Options Outstanding                         Options Exercisable
                       --------------------------------------------------  --------------------------------
                       Weighted Average Weighted Weighted
     Range of                            Remaining          Average                           Average
  Exercise Price        Options      Contractual Life    Exercise Price      Options       Exercise Price
-----------------------------------------------------------------------------------------------------------

 <c>                  <c>                <c>                 <c>            <c>                <c>
      $4.00 -  $5.88       177,333          2.4 years             $4.89         177,333             $4.89
      $6.63 -  $8.75       377,218          5.9 years             $7.04         253,711             $7.04
     $10.24 - $24.40       880,822          7.2 years            $15.38         307,792            $19.19
-----------------------------------------------------------------------------------------------------------
      $4.00 - $24.40     1,435,373          6.3 years            $11.89         738,836            $11.58
===========================================================================================================
</Table>
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 and  cancelled.  Thereafter,  it 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 $0.01 per Right at any time  prior to the date  which a person or
group acquires beneficial ownership of 20% or more of the Company's common stock
or subsequent thereto at the option of the Board of Directors. The Rights expire
July 23, 2008.

18. Subsequent Events
--------------------------------------------------------------------------------

On February  19,  2003,  the Company  signed an agreement to purchase all of the
capital stock of SeaCAT  Corporation,  a privately held,  Houston based,  coiled
tubular  goods  manufacturer,  for  a  purchase  price  of  $4,000,000  cash,  a
$5,000,000 secured 11.0% subordinated note and 733,676 shares of common stock of
Maverick.  The purchase price is subject to an earn-out over a three-year period
with a maximum of $250,000 per year. The acquisition is expected to close during
the first quarter of 2003. Pro forma  information  has not been included  herein
because the SeaCAT Corporation is not considered a significant subsidiary.

                                      [41]
<Page>
19. Quarterly Financial Data (Unaudited)
--------------------------------------------------------------------------------

The results of operations by quarter for calendar  years ended December 31, 2002
and 2001, were as follows (in thousands):
<Table>
<Caption>
Quarter Ended                                March 31,   June 30,  September 30, December 31,
                                               2002        2002        2002         2002
                                           -------------------------------------------------

                                        <c>         <c>         <c>          <c>
Net sales..................................    $103,923(1) $106,454(1)  $117,696(1) $124,840(1)
Gross profit...............................      11,627(2)   12,227       11,056       8,087
Income (loss) from continuing
 operations before extraordinary
 items.....................................       2,066(3)      980          636(3)     (569)(3,6)
Income (loss) before extraordinary
 items.....................................       2,584         980          636        (569)
Net income (loss)..........................       2,357(4,5)    980          636        (569)
Basic earnings (loss) per share
 from continuing operations before
 extraordinary items.......................        0.06        0.03         0.02       (0.01)
Basic earnings (loss) per share
 before extraordinary items................        0.08        0.03         0.02       (0.01)
Basic earnings (loss) per share............        0.07        0.03         0.02       (0.01)
Diluted earnings (loss) per share
 from continuing operations before
 extraordinary items.......................        0.06        0.03         0.02       (0.01)
Diluted earnings (loss) per share
 before extraordinary items................        0.08        0.03         0.02       (0.01)
Diluted earnings (loss) per share..........        0.07        0.03         0.02       (0.01)

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

Net sales..................................    $158,787(1) $138,779(1)  $139,576(1) $107,791(1)
Gross profit...............................      31,081      30,991       26,554      14,464
Income (loss) from continuing
 operations................................      15,024      14,430       11,459(7)   (1,675)(3)
Net income (loss)..........................       3,827(4)   14,430       11,459      (1,675)
Basic earnings (loss) per share
 from continuing operations................        0.45        0.43         0.34       (0.05)
Basic earnings (loss) per share............        0.11        0.43         0.34       (0.05)
Diluted earnings (loss) per share
 from continuing operations................        0.43        0.42         0.34       (0.05)
Diluted earnings (loss) per share..........        0.11        0.42         0.34       (0.05)
</Table>
(1)  The Company has reclassified freight revenue previously  classified in cost
     of goods sold to net sales.
(2)  The  Company  previously   reported  $681,000  ($436,000  net  of  tax)  of
     additional costs related to closing the Longview,  Washington,  facility in
     gross  profit in the March 31,  2002 Form 10-Q.  This amount has since been
     recorded in the restructuring charge.
(3)  During  the  quarter  ended  December  31,  2001,  the  Company  recorded a
     restructuring  charge for the  write-down  of property  and  equipment  and
     accrual of other cash  obligations  of $8,061,000  ($5,573,000  net of tax)
     resulting  from  the  planned  closing  of the  Longview  facility  and the
     relocation  of most of the  facility's  production  equipment  to  Hickman,
     Arkansas.  These costs  reduced  net income by $0.17 per share.  During the
     quarters ended March 31, 2002 and December 31, 2002,  the Company  incurred
     additional  costs  related  to the  closing  of the  facility  of  $681,000
     ($436,000  net of tax) and $861,000  ($551,000  net of tax),  respectively.
     During the  quarters  ended  March 31, 2002 and  September  30,  2002,  the
     Company reversed $312,000 and $44,000 of the initial accrual primarily as a
     result of a decision to retain certain employees.
(4)  During the quarter ended March 31, 2001, the Company decided to discontinue
     its DOM business and recorded a $16,000,000 ($10,240,000 net of tax) charge
     to  earnings.  This charge  reduced net income for the quarter by $0.32 per
     share.  During the quarter ended March 31, 2002, the Company  completed the
     sale of its DOM  business  and  recorded  income from the disposal of these
     assets of $768,000  ($518,000 net of tax).  This sale  increased net income
     for the quarter by $0.02 per share.
(5)  During  the  quarter  ended  March  31,  2002,  the  Company   incurred  an
     extraordinary  loss resulting from the  establishment  of its new revolving
     credit facility, due to the write-off of bank fees that had been previously
     deferred of $364,000  ($227,000 net of tax). These costs reduced net income
     by $0.01 per share.
(6)  During  the  quarter  ended  December  31,  2002,  the  Company  received a
     $2,709,000  partial  recovery  for the  trade  cases  outstanding  with the
     Department of Commerce.  This  recovery  increased  income from  continuing
     operations before extraordinary items by $0.04 per share.
(7)  During the quarter ended September 30, 2001, the Company  recorded a charge
     of  $1,500,000  ($960,000 net of tax) in  connection  with an  unsuccessful
     acquisition.  These  costs  decreased  net  income  for the  quarter  ended
     September 30, 2001 by $0.03 per share.

                                      [42]
<Page>
--------------------------------------------------------------------------------
                           MAVERICK TUBE CORPORATION
--------------------------------------------------------------------------------


Officers
--------------------------------------------------------------------------------

Gregg Eisenberg                           James A. Cowan
Chairman of the Board,                    Executive Vice President
President and                             and Chief Operating Officer
Chief Executive Officer

Pamela G. Boone                           T. Scott Evans
Vice President - Finance                  Senior Vice President -
and Administration, Treasurer,            Sales and Marketing
Secretary and Chief Financial
Officer

Sudhakar Kanthamneni                      Richard W. Preckel
Senior Vice President -                   Vice President - Strategic
Manufacturing and Technology              Services


Board of Directors
--------------------------------------------------------------------------------

Gregg Eisenberg                           C. Robert Bunch
Chairman of the Board,                    President and Chief Operating
President and Chief                       Officer of Input/Output, Inc.
Executive Officer

David H. Kennedy                          William E. Macaulay*
Independent energy consultant             Chairman and Chief Executive
and Director of Carbon Energy             Officer, First Reserve Corp., Director
Corporation and RBC Capital               of Weatherford International, Inc.,
Partners Energy Fund                      National-Oilwell, Inc. and Pride
                                          International, Inc. and Chairman
                                          of the Board, Dresser, Inc.

Wayne P. Mang                             C. Adams Moore
Non-Executive Chairman and                Independent consultant in steel
Director of Wainbee Holdings Ltd.         distribution and fabrication,
                                          Director of Fisher Tank Company

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


*    Mr. Macaulay, who will retire in May 2003, will not stand for reelection as
     a  director.  Management  and the Board of  Directors  want to express  our
     heartfelt  thanks to Mr. Macaulay for his 15 years of service on Maverick's
     Board and wish him the best of luck in the future.  Mr.  Macaulay's  wisdom
     and business acumen have been instrumental to Maverick's growth.

                                      [43]
<Page>
--------------------------------------------------------------------------------
HISTORICAL FINANCIAL INFORMATION
--------------------------------------------------------------------------------
The selected  financial data for the Company set forth below for the years ended
December 31, 2002,  2001 and 2000, for the three months ended December 31, 1999,
and for  the  years  ended  September  30,  1999  and  1998,  should  be read in
conjunction with the consolidated financial statements,  related notes and other
financial information included herein.
<Table>
<Caption>
                                                                                              Three Months
                                                                                                  Ended             Year Ended
(in thousands, except per share data)                       Year Ended December 31,            December 31,        September 30,
                                                        2002           2001         2000           1999          1999        1998
                                                  ----------------------------------------------------------------------------------

                                               <c>          <c>            <c>           <c>           <c>          <c>
Statement of Operations Data:

Net sales.........................................     $452,913       $544,933      $562,023      $129,766     $317,121     $393,278
Cost of goods sold................................      409,916        441,843       488,397       118,060      298,379      340,857
                                                  ----------------------------------------------------------------------------------
Gross profit......................................       42,997        103,090        73,626        11,706       18,742       52,421
Selling, general and administrative...............       34,032     (1) 30,372        25,466         7,104       22,036   (2) 20,103
Restructuring charges.............................    (3) 1,186      (3) 8,061             -             -            -            -
Partial trade case relief.........................       (2,709)             -             -             -            -            -
Start-up costs....................................            -      (4) 1,101       (4) 267             -      (4) 283      (4) 775
                                                  ----------------------------------------------------------------------------------
Income (loss) from operations.....................       10,488         63,556        47,893         4,602       (3,577)      31,543
Transaction costs.................................            -              -    (5) 11,253             -            -            -
Interest expense..................................        3,961          3,090         3,177           256        1,868        1,658
                                                  ----------------------------------------------------------------------------------
Income (loss) from continuing operations before
 income taxes.....................................        6,527         60,466        33,463         4,346       (5,445)      29,885
Provision (benefit) for income taxes..............        3,414         21,228        14,736         2,112         (348)      10,587
                                                  ----------------------------------------------------------------------------------
Income (loss) from continuing operations..........        3,113         39,238        18,727         2,234       (5,097)      19,298
(Loss) from operations of discontinued DOM
 facility, less applicable income tax benefit (6).            -           (957)       (2,162)         (687)      (2,237)           -
Gain (loss) on disposal of DOM facility (6).......          518        (10,240)            -             -            -            -
                                                  ----------------------------------------------------------------------------------
Income (loss) before extraordinary items..........        3,631         28,041        16,565         1,547       (7,334)      19,298
Extraordinary items...............................         (227)             -             -             -            -            -
                                                  ----------------------------------------------------------------------------------
Net income (loss).................................       $3,404        $28,041       $16,565        $1,547      $(7,334)     $19,298
                                                  ==================================================================================

Diluted earnings (loss) per share from
 continuing operations before extraordinary items.        $0.08          $1.15         $0.54         $0.07       $(0.16)       $0.61
                                                  ==================================================================================
Diluted earnings (loss) before extraordinary
 items............................................        $0.09          $0.82         $0.48         $0.05       $(0.24)       $0.61
                                                  ==================================================================================
Diluted earnings (loss) per share.................        $0.09          $0.82         $0.48         $0.05       $(0.24)       $0.61
                                                  ==================================================================================

Average shares deemed outstanding.................       38,492         34,117        34,525        32,638       31,160       31,569
                                                  ==================================================================================

Other Data:
Depreciation and amortization.....................      $19,954        $14,841       $12,602        $3,064      $10,895       $8,553
Capital expenditures..............................       22,809         25,784        51,780        18,004       16,288       43,151

Balance Sheet Data:
(End of period)
Working capital...................................     $201,195       $142,316      $118,828      $108,632      $93,586     $108,343
Total assets......................................      595,883        357,447       390,818       323,255      289,241      258,201
Current maturities of long-term debt..............        2,977            938           866           723          708          653
Short-term revolving credit facility..............            -          3,219        20,766        10,067       10,067        6,133
Long-term revolving credit facility...............      132,927         62,000        62,038        27,150       31,000       27,400
Other long-term debt (less current maturities)....        2,742          5,991         6,929         7,300        7,518        8,226
Stockholders' equity..............................      338,286        225,383       213,256       200,566      166,774      173,146
</Table>
(1)  Includes  a  charge  of  $1,500,000  in  connection  with  an  unsuccessful
     acquisition.
(2)  Includes a write-down of software costs of $1,605,000.
(3)  The Company recorded a restructuring  charge for the write-down of property
     and  equipment  and accrual of other cash  obligations  of  $1,186,000  and
     $8,061,000  for the years ended  December 31, 2002 and 2001,  respectively,
     resulting  from the closing of the Longview  facility and the relocation of
     most of that facility's production equipment to Hickman, Arkansas.
(4)  Represents  the  operating  loss of the Company's  large  diameter pipe and
     tubing  facility  which began  operations  in October 2000 and the Longview
     facility, which began operations in December 1998.
(5)  In  connection  with  the  Prudential  combination,  the  Company  recorded
     transaction  costs of  $11,253,000  for the year ended  December  31, 2000.
     Transaction costs include investment banking, legal, accounting,  printing,
     severance pay and other costs directly related to the combination.
(6)  The Company decided to discontinue its DOM business during 2001.

                                      [44]