<PAGE>

                                                                      Exhibit 13

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

As used herein, Maverick Tube Corporation and its direct and indirect
wholly-owned subsidiaries are collectively referred to as "the Company," whereas
"Maverick" is referred to as the Company exclusive of its subsidiaries:
Prudential Steel Ltd. ("Prudential"), Precision Tube Holding Corporation
("Precision"), the tubular division of the former LTV Corporation ("Republic
Conduit") and SeaCAT Corporation ("SeaCAT"). Also, unless the context otherwise
requires, the terms "we," "us" or "our" refer to the Company.

Certain statements contained in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of this report regarding
matters (including statements as to beliefs or expectations) that are not
historical facts are forward-looking statements, as that term is defined under
the Private Securities Litigation Reform Act of 1995. 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, future import levels and the value of the U.S.
dollar. Also, uncertainty continues to exist as to future purchased steel cost
(our principal raw material, representing approximately two-thirds of cost of
goods sold).

It is not possible to foresee or identify all factors that could have a material
and negative impact on the future financial performance of the Company. The
forward-looking statements in this report are based on certain assumptions and
analyses we have made in light of our experience and perception of historical
conditions, expected future developments and other factors we believe
appropriate under the circumstances. Further information covering issues that
could materially affect our financial performance is contained in the "Risk
Factors" section of our Annual Report on Form 10-K for the year ended December
31, 2003. This information can be found on the Company's Web site at
www.maverick-tube.com.

The market data and other statistical information used throughout this report
are based on independent industry publications, government publications, reports
by market research firms or other published independent sources. Some data is
also based on our good faith estimates that are derived from our review of
internal surveys as well as the independent sources listed above. Although we
believe these sources are reliable, we have not independently verified the
information and cannot guarantee its accuracy and completeness.

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

OVERVIEW

General

Maverick Tube Corporation is a leading North American producer of welded tubular
steel products used in energy and industrial applications. We are the largest
producer of oil country tubular goods (sometimes referred to as OCTG) and line
pipe products for use in newly drilled oil and gas wells and for transporting
oil and natural gas. We primarily sell these products to distributors in the
U.S. and Canada. Over the past two years, we expanded our business into coiled
tubing products with our acquisitions of Precision and SeaCAT. These two
acquisitions added $55.3 million of sales to our consolidated operations during
2003. Coiled tubing products are used primarily to maintain existing wells and
to complete new wells. We sell coiled tubing to customers throughout North
America and internationally. OCTG, line pipe and coiled tubing products comprise
our energy product line. We generated approximately 70.3% of our revenue by
supplying products to the energy business during 2003.

We also manufacture structural tubing, also known as hollow structural sections
or HSS, standard pipe and pipe piling. In January 2003, we entered the steel
electrical conduit business with our acquisition of Republic Conduit. This
acquisition added $197.9 million of sales to our consolidated operations during
2003. Structural tubing, standard pipe, pipe piling and steel electrical conduit
products comprise our industrial product line. We sell these industrial products
to service centers, fabricators and end-users.

Business Acquisitions

On March 29, 2002, we completed the purchase of all the common stock of
Precision, a then privately held, Houston based, coiled tubular goods
manufacturer, in exchange for $60.7 million cash and 200,000 of our common
shares.

On December 31, 2002, we acquired the assets and certain liabilities of Republic
Conduit for $119.9 million cash. In February 2003, we announced the closure of
the Youngstown, Ohio, operating facility and the divisional headquarters of
Republic Conduit also located in Youngstown, Ohio. As a result, we recorded exit
costs of $2.8 million in 2003 as part of the purchase price allocation of
Republic Conduit.

On February 28, 2003, we completed the acquisition of SeaCAT, a then privately
held, Houston based, coiled tubular goods manufacturer, in exchange for $4.0
million cash, a $5.0 million secured, 11.0% subordinated note and 733,676 shares
of common stock of the Company. The purchase price could be further increased by
up to an additional $0.5 million if SeaCAT achieves certain performance targets
through 2005.

The aggregate purchase price for these three acquisitions was approximately
$195.5 million and their combined annual sales for 2003 were $253.2 million.
These acquisitions were accounted for as purchase business combinations and the
financial statements have been consolidated from the dates of the acquisitions.

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 to some extent. 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:

<PAGE>

<TABLE>
<CAPTION>
                                            YEAR ENDED DECEMBER 31,
                                       2003             2002               2001
                                     -------------------------------------------
<S>                                   <C>             <C>                 <C>
U.S. MARKET ACTIVITY:
Average rig count                     1,031              831               1,157
Average U.S. energy prices:
Oil per barrel (West Texas
  Intermediate)                      $31.26           $26.18              $26.11
Natural gas per MCF
  (Average U.S.)                      $5.50           $ 3.29              $ 4.02

U.S. OCTG CONSUMPTION:
(in thousands of tons)
U.S. producer shipments               1,828            1,465               1,993
Imports                                 778              490                 904
Inventory (increase)/decrease            (1)             209                  15
Used pipe                                94               93                  79
                                     -------------------------------------------
  Total U.S. Consumption              2,699            2,257               2,991
                                     ===========================================

CANADIAN MARKET ACTIVITY:
Average rig count                       372              262                 341
Average Canadian energy prices:
Natural gas per U.S. $ per MCF
  (Average Alberta spot price)       $ 4.72           $ 2.67              $ 4.19

CANADIAN OCTG CONSUMPTION:
(in thousands of tons)
Canadian producer shipments             549              410                 464
Imports                                 355              195                 222
Inventory (increase)/decrease           (99)              (3)                 70
                                     -------------------------------------------
  Total Canadian consumption            805              602                 756
                                     ===========================================
</TABLE>

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

According to published industry reports, average U.S. drilling increased by
24.1% from 2002 to 2003, averaging approximately 1,031 rigs, with gas-related
drilling increasing by 26.0% and oil-related drilling increasing by 14.6%. The
average rig count for the fourth quarter of 2003 was 1,109 with the rig count
level increasing to 1,114 at December 31, 2003. Average U.S. natural gas prices
and oil prices increased during 2003 by 67.2% and 19.4%, respectively. Such
increases throughout the year in the U.S. had a positive effect on drilling
levels in 2003.

According to published industry reports, average Canadian drilling increased by
42.0% from 2002 to 2003, averaging approximately 372 rigs. The average rig count
for the fourth quarter of 2003 was 408 with the rig count level increasing to
417 at December 31, 2003. Average Canadian natural gas prices and oil prices
increased during 2003 by 76.8% and 19.4%, respectively. Such increases
throughout the year in Canada had a positive effect on drilling levels in 2003.

Imports into the U.S. remained high during 2003, increasing from a 21.7% market
share in 2002 to a 28.8% market share in 2003. During 2003, U.S. industry
inventory increases were relatively minor. During 2002, U.S. industry inventory
decreases adversely affected U.S. producer shipments by satisfying an estimated
9.3% of consumption. We believe as of December 31, 2003, U.S. industry inventory
was below historical levels in relation to demand, as inventory months of supply
decreased 18.9%, from 5.3 months supply at December 31, 2002 to 4.3 months
supply at December 31, 2003.

As a result of increased drilling activity, we estimate total U.S. producer
shipments increased by 24.8% in 2003 as compared to 2002. During that same
period, our shipments of U.S. OCTG increased 37.2% and our export sales,
primarily to Canada, increased by 140.2%. We estimate our domestic OCTG market
share increased from 18.9% during 2002 to 20.7% during 2003. The 20.7% market
share we captured during 2003 was higher than the market share we have captured
historically. We believe this is partially due to our customers being generally
more active. Our customers typically use our electric resistance welded products
in shallow wells as opposed to seamless products used in deeper wells. Shallow
well drilling was more active in 2003 when compared to the deeper well drilling.

Imports into Canada increased during 2003 from a 32.4% market share in 2002 to a
44.1% market share in 2003. During 2003, Canadian producer shipments of OCTG
increased 33.9%. Domestic shipments in Canada were adversely impacted by these
low-priced imports. During 2003, Canadian industry inventories increases added
12.3% to total Canadian OCTG consumption. During 2002, Canadian inventory
increases were relatively minor.

As a result of the increased drilling activity, we estimate total Canadian
consumption increased by 33.7% in 2003 as compared to 2002. During that same
period, our shipments of Canadian OCTG increased 29.0%. However, we estimate our
Canadian OCTG market share of domestic shipments decreased from 39.7% during
2002 to 36.3% during 2003. The 36.3% market share we captured during 2003 was
slightly lower than the market share we have captured historically. We believe
this is due to our focus on increasing our selling prices throughout the year in
a more aggressive manner than our competitors and the larger share of the market
captured by imports.

Coiled down-hole tubing is primarily used to service existing oil and gas wells
to reestablish well production and extend 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 increased throughout the year
primarily due to increasing demand and higher crude oil and natural gas prices.
U.S. well service and work-over expenditures were up 6.9% in 2003, with well
service and well work-over rigs up by a similar amount. However, the overall
number of jobs was down slightly to 506,600 jobs. For 2004, U.S. well service
and work-over spending is forecasted to rise another 5.0%, with rig activity up
by 1.0% and jobs up incrementally to 508,700. We expect our well service
revenues will increase at least 5.0%, in line with industry expenditures.

Canadian expenditures on well service and work-over were up 13.1% in 2003 and
rig activity was up 13.2%. Jobs were up only 3.3%. Forecasts for 2004 indicate
expenditures will be up 8.2%, with rig activity and jobs up only 3.1% and 3.4%,
respectively. Canadian service and work-over revenues should follow expenditures
up at least 8.0% in 2004.

Published information suggests that U.S. demand for line pipe 16-inch and under
increased during 2003 by an estimated 0.7%. Domestic shipments decreased by
15.6% as the import market share increased from 35.1% to 45.7%. Canadian demand
for line pipe also increased during 2003 by an estimated 73.2% with domestic
shipments up by 94.0% as the import market share decreased from 45.9% to 34.1%.
2002 was a very weak year for the Canadian line pipe market.

<PAGE>

Coiled line pipe and umbilical tubing are primarily used in offshore, sub-sea
applications where continuous lengths of steel line pipe are used as flow lines
and umbilical tubing is used as sheathing for sub-sea well controls. 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
installed costs. Published reports indicate U.S. offshore spending was down 2.8%
in 2003 as many offshore projects continue to be deferred. We expect this will
continue to impact 2004 sales in this segment.

INDUSTRIAL PRODUCTS DEMAND AND CONSUMPTION

Given the numerous applications for our industrial products, sources of demand
for these products are diverse. 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 increased by 9.8%
in 2003 as compared to 2002 and total U.S. producer shipments increased by 11.4%
as import market share declined from 22.5% to 21.4%. During that same period,
our U.S. shipments of HSS increased 2.3%. We estimate our domestic market share
decreased from 9.8% to 9.0%. We believe this is due to our focus on increasing
our selling prices throughout the year.

On December 31, 2002, we acquired Republic Conduit and expanded our industrial
product line into electrical conduit. Electrical conduit is primarily used as
sheathing for electrical and computer wiring in industrial, commercial and
institutional construction, which are classified as non-residential
construction. As such, spending on non-residential construction primarily
influences electrical conduit demand. According to published reports, as a
result of continued weak economic growth, non-residential construction
expenditures were down an estimated 5.9% in 2003. As a result, total electrical
conduit shipments were down approximately 8.3% in 2003. Republic Conduit
shipments decreased only 2.3% during the same time frame. We estimate our market
share increased from 32.9% to 35.1%. We believe that this increase was due to
the recapturing of market share lost while Republic Conduit's former parent was
in bankruptcy.

Published forecasts call for a 4.6% increase in non-residential construction
activity in 2004, which reflects forecasts of U.S. gross domestic product
increases in 2004. Management expects conduit shipments to increase in a similar
range due to both construction and economic growth in 2004. Maverick and three
other domestic producers manufacture most of the electrical conduit consumed in
the U.S. The import and export markets for electrical conduit are limited
because this light-walled product is easily damaged during shipping.

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 4.3% in 2003, while total U.S. domestic producer shipments
increased by 1.6%, and the import market share decreased from 37.4% to 33.6%.

Standard pipe prices tend to be very competitive and margins are typically thin.
As forecasts for 2004 suggest a 4.6% increase in non-residential expenditures,
aggregate standard pipe shipping volumes are expected to increase modestly in
2004. Our standard pipe shipments increased from 3,655 tons during 2002 to
43,862 tons during 2003, primarily as a result of our Republic Conduit
acquisition. We estimate our market share increased from 0.3% to 2.7%. This
increase was due to sales from our large diameter facility and from standard
pipe shipments from the Republic Conduit acquisition.

PRICING AND COSTS OF OUR PRODUCTS

Pricing of our products was generally up during 2003 compared to 2002. Our U.S.
OCTG product pricing increased 2.2% due to the increase in the average rig count
level throughout 2003. Average pricing of our U.S. line and standard product
pricing increased by 8.2% and 14.6%, respectively. Line and standard pipe
pricing was up due to a different mix of products. Average pricing of our U.S.
structural product increased by 1.0% due to increasing steel prices during the
year. The average price of our conduit product declined from the first quarter
of 2003 to the fourth quarter of 2003 by 2.2%. Pricing of our Canadian energy
products and industrial products was up by 14.9% and 6.9%, respectively.
Canadian prices were impacted by a 12.4% increase in the exchange rate.

We announced four spot U.S. OCTG price increases since the beginning of 2004
which have averaged approximately $180 per ton or 28.9%. In addition, we also
announced steel surcharges in late December 2003, which continue to be applied
to our U.S. energy, HSS, standard pipe and piling products. We are attempting to
raise base prices on our conduit and Canadian energy products. These surcharges
and price increases across all our product lines are designed to absorb the
anticipated increase in the cost of our principal raw material. Given the mix of
our U.S. alliance sales and volume of our Canadian OCTG business, the timing and
the extent to which our price increases can be realized, are uncertain. No
assurance can be given that we will be successful in implementing price
increases sufficient to fully absorb the anticipated steel cost increases
discussed below.

Average steel costs included in cost of goods sold increased during 2003 by $31
per ton, or 10.0% from $311 per ton to $342 per ton. The majority of this change
resulted from our major supplier of steel effecting several price increases
(partially offset by several price decreases) since January 1, 2002. As with any
change in our cost of steel raw materials, we cannot be certain as to the timing
or extent of which such change is realized. The base replacement cost of hot
rolled steel at December 31, 2003 is approximately 14.0% above the average cost
of goods sold per unit experienced during 2003. In December 2003, our steel
suppliers implemented an unprecedented scrap surcharge based upon the American
Metal Market's Consumer Buying Price for No. 1 Busheling. It is expected the
surcharge will fluctuate based on scrap prices on a monthly basis. The
surcharges for January, February, March and an estimate for April 2004 are $20
per ton, $60 per ton, $100 per ton and $120 per ton, respectively. We expect the
replacement cost of steel to remain volatile throughout 2004. We estimate our
April 2004 replacement cost of steel to be approximately 50% to 75% above the
prevailing price experienced during 2003. However, the magnitude and timing of
further steel costs changes are unknown at this time.

Purchased steel represents approximately two-thirds of our cost of goods sold.
As a result, the steel industry, which is normally 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 the costs of raw material, 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 2003, as sales remained above normal levels
throughout the year due to the increase in drilling activity. The

<PAGE>

increase in drilling levels during the year resulted in higher sales.
Industry-wide inventory levels remained relatively flat and thus, had little
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

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

         -        North American and overall world demand for OCTG,

         -        The trade practices of and government subsidies to foreign
                  producers and

         -        The presence or absence of antidumping and countervailing
                  duties.

Antidumping and countervailing duty orders require special duties to be imposed
in amounts designed to offset unfair pricing and government subsidization,
respectively. In 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. 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 ("CDSOA") 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.

In March 2002, an antidumping petition was filed with the U.S. government
covering OCTG 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
was not any additional import relief for OCTG. Imports of OCTG products
increased 59.0% from 2002 to 2003, with import market share growing from 21.7%
in 2002 to 28.8% in 2003. This increased level of imports contributed to weaker
product pricing throughout most of 2003. In the absence of a trade finding on
OCTG, we can expect our OCTG products to continue to be subject to both price
and demand pressure throughout 2004.

U.S. Line Pipe - The three-year tariff rate quota on welded line pipe 16-inch
and under imposed in March 2000 under Section 201 expired on March 1, 2003. In
early March 2004, an antidumping petition was filed with the U.S. government
covering line pipe from China, Korea and Mexico.

U.S. Industrial and Other - The Section 201 trade case signed by the President
in March 2002 provided 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 30.0%,
24.0% and 18.0%. Also, our standard pipe product line and HSS product line are
subject to this same tariff system of 15.0%, 12.0% and 9.0%. On November 10,
2003, the World Trade Organization found the Section 201 trade case illegal.
Based on this decision, the European Union and other complaining countries were
in a position to impose retaliatory measures. As a result, on December 5, 2003,
the President rescinded the Section 201 protection on steel imports.

Canada - In August 2002, the Canadian International Trade Tribunal found injury
on the part of all imported steel products except hot rolled products. In
September 2003, the Canadian government rejected the Tribunal's findings; thus,
no additional duties will be imposed and no further trade action has been taken.

In October 2003, the Canada Customs and Revenue Agency initiated an inquiry into
imports of HSS into Canada. Imports of HSS into Canada can affect our Canadian
HSS selling prices and volumes.

Collective Bargaining Agreements

Prudential's facility located in Calgary, Alberta, operates under a collective
bargaining agreement expiring on December 31, 2006 covering approximately 78% of
all Prudential employees. Prudential has a good working relationship with the
union and there have been no significant labor stoppages in their history.

Facilities acquired as part of the assets and certain liabilities of Republic
Conduit, which are located in Elyria, Ohio; Ferndale, Michigan; and Counce,
Tennessee, operate under several collective bargaining agreements. Collective
bargaining agreements cover approximately 49% of all the Republic Conduit
employees. Each of these collective bargaining agreements expires on November
15, 2005.

RESULTS OF OPERATIONS

The following table illustrates the operating results and tons shipped for the
periods presents (in millions, except per share data and tons shipped):

<TABLE>
<CAPTION>
                                                                                2003 VS. 2002
                                         2003             2002             CHANGE           % CHANGE
                                    ----------------------------------------------------------------
<S>                                 <C>                 <C>               <C>               <C>
Energy tons shipped                    882,109           575,994           306,115             53.1%
Industrial tons shipped                399,535           164,858           234,677            142.4%
                                    ----------------------------------------------------------------
Total tons shipped                   1,281,644           740,852           540,792             73.0%

Net sales                           $    884.3          $  452.9          $  431.4             95.3%
Cost of goods sold                       783.3             409.9             373.4             91.1%
                                    ----------------------------------------------------------------
Gross profit                             101.0              43.0              58.0            134.9%
Income from operations                    45.3              10.5              34.8            331.4%
Income from continuing operations
   before income taxes                    35.7               6.2              29.5            475.8%
Income from continuing operations         23.0               2.9              20.1            693.1%
Net income                                23.0               3.4              19.6            576.5%
Diluted earnings per share from
   continuing operations                  0.55              0.08              0.47            587.5%
Diluted earnings per share                0.55              0.09              0.46            511.1%
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                             2002 VS. 2001
                                       2002             2001            CHANGE            % CHANGE
                                    --------------------------------------------------------------
<S>                                 <C>               <C>             <C>                 <C>
Energy tons shipped                  575,994           704,149         (128,155)           (18.2%)
Industrial tons shipped              164,858           182,842          (17,984)            (9.8%)
                                    --------------------------------------------------------------
Total tons shipped                   740,852           886,991         (146,139)           (16.5%)

Net sales                           $  452.9          $  544.9        $   (92.0)           (16.9%)
Cost of goods sold                     409.9             441.8            (31.9)            (7.2%)
                                    --------------------------------------------------------------
Gross profit                            43.0             103.1            (60.1)           (58.3%)
Income from operations                  10.5              63.6            (53.1)           (83.5%)
Income from continuing operations
   before income taxes                   6.2              60.5            (54.3)           (89.8%)
Income from continuing operations        2.9              39.2            (36.3)           (92.6%)
Net income                               3.4              28.0            (24.6)           (87.9%)
Diluted earnings per share from
   continuing operations                0.08              1.15            (1.07)           (93.0%)
Diluted earnings per share              0.09              0.82            (0.73)           (89.0%)
</TABLE>

YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002

Overall Company

In 2003, net sales increased $431.4 million, or 95.3%, from $452.9 million in
2002 to $884.3 million in 2003. These results were attributable primarily to an
increase of 73.0% in total product shipments, from 740,852 tons in 2002 to
1,281,644 tons in 2003 and a 12.9% increase in the overall average net selling
price of our products during 2003 from an average of $611 per ton to $690 per
ton. Total product shipments increased 282,593 and 10,677 during 2003 and 2002,
respectively, due to our acquisitions of Republic Conduit, Precision and SeaCAT.
Net sales associated with these acquisitions were $253.2 million and $29.1
million for 2003 and 2002, respectively.

Cost of goods sold increased $373.4 million, or 91.1%, from $409.9 million in
2002 to $783.3 million in 2003. Overall unit cost per ton of products sold
increased 10.5% (from an average of $553 per ton to $611 per ton) in 2003. Costs
increased as a result of our recent acquisitions of Precision, Republic Conduit
and SeaCAT. The product lines of these entities are more value-added and thus,
have higher steel and conversion costs associated with them. Costs also
increased due to a 73.0% increase in total product shipments and an increase in
steel costs of $31 per ton or 10.0%. See "Overview."

Gross profit increased $58.0 million, or 134.9%, from $43.0 million in 2002 to
$101.0 million in 2003. Gross profit per ton for 2002 was $58 per ton as
compared to $79 per ton for 2003. Gross profit per ton increased as a result of
higher selling prices, partially offset by higher steel costs. Gross profit as a
percentage of net sales was 11.4% for 2003, as compared to 9.5% for 2002.

Selling, general and administrative expenses increased $22.2 million, or 65.3%,
from $34.0 million in 2002 to $56.2 million in 2003. This increase resulted
primarily from the additional expenses associated with Republic Conduit sales
and administrative personnel and additional incentive compensation. See
"Overview." Selling, general and administrative expenses as a percentage of net
sales decreased from 7.5% in 2002 to 6.4% in 2003. The decrease was due to the
higher shipment levels during 2003 compared to 2002 along with the cost
increases for the comparable period.

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 $8.1 million
related to the write-down of property, plant and equipment, severance and
closure costs. In 2003, we recorded an additional charge of $0.6 million for the
write-down of property to reflect the most recent market data and other cash
charges. The most significant accounting estimate is the value of the land and
building at the facility, which is based on a firm contract on the sale of this
property. We expect to close the transaction during the first half of 2004.

The Company recognized a $1.1 million recovery for the trade case outstanding
with the Department of Commerce during 2003. Payments went to various companies,
including Maverick, under CDSOA 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. We
cannot predict the amounts or the certainty of any future recoveries associated
with CDSOA. 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.

Interest expense increased $5.3 million, or 123.3%, from $4.3 million in 2002 to
$9.6 million in 2003 as a result of higher average borrowings (primarily due to
the acquisitions of Precision, Republic Conduit and SeaCAT and the June 2003
issuance of contingent convertible, senior subordinated notes (the "Convertible
Notes")) partially offset by lower average interest rates during 2003 compared
to 2002.

The provision for income taxes on continuing operations was $12.7 million for
2003, compared to the prior year provision of $3.3 million. This change is
attributable to the generation of pre-tax income of $35.7 million in 2003,
compared to pre-tax income in 2002 of $6.2 million. The effective income tax
rate for 2003 did not significantly differ from the federal statutory tax rate.

As a result of the increased gross profit and the other factors discussed above,
we generated net income of $23.0 million, or $0.55 diluted income per share in
2003, an increase of $19.6 million from the $3.4 million, or $0.09 diluted
income per share reported for 2002.

Segment Information

The Company's two segments are the Energy Products segment and the Industrial
Products segment. These new segments are designed to improve the alignment of
strategies and objectives among sales, marketing and production; provide for
more timely and rational allocation of resources within businesses; and focus
long-term planning efforts on key objectives and initiatives.

Energy Products Segment

Energy product sales increased $246.8 million, or 65.8%, from $375.1 million in
2002 to $621.9 million in 2003. Energy product shipments increased 306,115 tons,
or 53.1%, from 575,994 tons to 882,109 tons over the same period. Energy product
shipments primarily increased due to the U.S. and Canadian rig counts increasing
from 831 and 262 active rigs, respectively, in 2002 to 1,031 and 372 active
rigs, respectively, in 2003. Overall average net selling prices for energy
products increased 8.3% from the prior year, from an average of $651 per ton to
$705 per ton. The increase in energy product sales was primarily due to
strengthening market conditions and the additional sales attributable to the
Precision and SeaCAT businesses. Energy product sales attributable to these
recent acquisitions were $74.5 million and $29.1 million for 2003 and 2002,
respectively. See "Overview."

Energy cost of goods sold increased $205.7 million, or 61.1%, from $336.7
million in 2002 to $542.4 million in 2003. Overall unit cost per ton of products
sold increased 5.1% (from an average of $585 per ton to $615 per ton) in 2003.

<PAGE>

The increase in cost of goods sold is primarily due to a 53.1% increase in total
product shipments and an increase in steel costs of $31 or 10.0% per ton.

Gross profit for energy products was $79.5 million for 2003 compared to gross
profit of $38.4 million for 2002. See "Overview." Gross profit was $90 per ton
for 2003 compared to $67 per ton for 2002. Energy product gross profit margin
percentage was 12.8% for 2003, compared to a gross profit margin percentage of
10.2% for 2002. The changes in the gross profit are due to the factors discussed
above.

Industrial Products Segment

Industrial product sales increased $184.6 million, or 237.3%, from $77.8 million
in 2002 to $262.4 million in 2003. Industrial product shipments increased
234,677 tons, or 142.4%, from 164,858 tons to 399,535 tons over the same period.
This increase in industrial product sales and shipments resulted from the
additional $178.7 million in sales and 227,861 tons attributable to the
industrial products sold by Republic Conduit. See "Overview." Overall average
net selling price for industrial products increased 39.2% from the comparable
period of the prior year from an average of $472 per ton to $657 per ton. The
addition of Republic Conduit that added both electrical conduit and mechanical
tubing increased the average selling price of our industrial product line by an
additional 39.1%. These products are more value-added and thus, sell for a
higher price.

Industrial product cost of goods sold increased $167.7 million, or 229.1%, from
$73.2 million in 2002 to $240.9 million in 2003. Overall unit cost per ton of
products sold increased 35.8% (from an average of $444 per ton to $603 per ton)
in 2003. The increase in cost of goods sold is primarily due to a 142.4%
increase in total product shipments and an increase in steel costs of $31 or
10.0% per ton.

Gross profit for industrial products was $21.5 million for 2003 compared to a
gross profit of $4.6 million for 2002. The increase in gross profit was
primarily attributable to the addition of the industrial products from Republic
Conduit. Gross profit was $54 per ton as compared to $28 per ton in the prior
year, reflecting stronger selling prices, partially offset by higher steel
prices. Industrial product gross profit margin percentage was 8.2% for 2003,
compared to 5.9% gross profit margin during the prior year.

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 $37 or 13.5% per ton. 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.

In connection with the plan to exit the Longview, Washington, facility, we
recorded a charge of $1.2 million in 2002 for the write-down of property to
reflect the most recent market data and certain additional cash charges.

In connection with CDSOA, the Company received a $2.7 million recovery for the
trade case outstanding with the Department of Commerce in 2002.

Interest expense increased $1.2 million, or 38.7%, from $3.1 million in 2001 to
$4.3 million in 2002 as a result of an increase in deferred loan amortization
associated with our new revolving credit facility partially offset by a decrease
in borrowings and a decrease in interest rates.

The provision for income taxes on continuing operations was $3.3 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 $6.2 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 partially
offset by a decrease in the valuation allowance.

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 and
reduced the provision for loss on disposal by $0.5 million after-tax.

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

Energy Products Segment

Energy product sales decreased $90.0 million, or 19.4%, from $465.1 million in
2001 to $375.1 million in 2002. Energy product shipments decreased 128,155 tons,
or 18.2%, from 704,149 tons to 575,994 tons over the same period. Energy product
shipments primarily decreased due to the U.S. and Canadian rig counts decreasing
from 1,157 and 341 active rigs, respectively, in 2001 to 831 and 262 active
rigs, respectively, in 2002. Overall average net selling prices for energy
products decreased 1.5% from the prior year, from an average of $661 per ton to
$651 per ton. The decrease in energy product sales was primarily due to
weakening market conditions.

Energy product cost of goods sold decreased $25.7 million, or 7.1%, from $362.4
million in 2001 to $336.7 million in 2002. The decrease in cost of goods sold is
primarily due to an 18.2% decrease in total product shipments partially offset
by an increase in steel costs of $37 or 13.5% per ton and overall increase in
conversion costs during 2002 primarily due to lower fixed cost absorption.
Overall unit cost per ton of products sold increased 13.6% (from an average of
$515 per ton to $585 per ton) in 2002.

<PAGE>

Gross profit for energy products was $38.4 million for 2002 compared to a gross
profit of $102.7 million for 2001. Gross profit was $67 per ton in 2002 compared
to $146 per ton in 2001. Energy product gross profit margin percentage was 10.2%
for 2002, compared to a gross profit margin percentage of 22.1% for 2001.

Industrial Products Segment

Industrial product sales decreased $2.0 million, or 2.5%, from $79.8 million in
2001 to $77.8 million in 2002. Industrial product shipments decreased 17,984
tons, or 9.8%, from 182,842 tons to 164,858 tons over the same period. The
decrease in sales and shipments was primarily due to weakening market
conditions. Overall average net selling price for industrial products increased
8.3% from the prior year from an average of $436 per ton to $472 per ton.

Industrial product cost of goods sold decreased $6.2 million, or 7.8%, from
$79.4 million in 2001 to $73.2 million in 2002. Overall unit cost per ton of
products sold increased 2.3% (from an average of $434 per ton to $444 per ton)
in 2002. The decrease in cost of goods sold is primarily due to a 9.8% decrease
in total product shipments partially offset by an increase in steel costs of $37
or 13.5% per ton and an overall increase in conversion costs during 2002
primarily was due to lower fixed cost absorption.

Gross profit for industrial products was $4.6 million for 2002, compared to a
gross profit of $0.4 million for 2001. Gross profit was $28 per ton as compared
to $2 per ton in the prior year, reflecting stronger selling prices, partially
offset by higher steel prices. Industrial product gross profit margin percentage
was 5.9% for 2002, compared to 0.5% gross profit margin during the prior year.

LIQUIDITY AND CAPITAL RESOURCES

Working capital at December 31, 2003 was $253.7 million and the ratio of current
assets to current liabilities was 3.8 to 1.0, compared to working capital of
$201.2 million and a current ratio of 2.9 to 1.0 at December 31, 2002. The
increase in working capital was principally due to a $43.5 million increase in
accounts receivable, a $26.7 million increase in cash and cash equivalents and a
$30.9 million decrease in accounts payable partially offset by a $26.2 million
decrease in inventory, a $5.8 million decrease in deferred taxes and a $10.9
million increase in accrued expenses and other liabilities. The increase in
accounts receivable and the decrease in inventory are due to increases in
shipments during 2003 compared to 2002, especially during the fourth quarter.
The increase in cash and cash equivalents and the decrease in accounts payable
was due to the proceeds from the issuance of the Convertible Notes in June 2003.
A portion of these proceeds were utilized to pay vendors who offer discounts for
timely payments and thus, lowered our accounts payable balance. Cash provided by
continuing operating activities for 2003 was $26.9 million.

Cash used in investing activities in 2003 and 2002 was $24.8 million and $199.8
million, respectively. In 2003, we used $3.9 million for the installation of a
new slitter in Arkansas, $7.0 million for integration and system efforts on our
enterprise resource system and $9.9 million for other equipment and office
upgrades. In 2003, we also used $4.0 million for the acquisition of SeaCAT. In
2002, we used $177.1 million for the acquisitions of Republic Conduit and
Precision. In 2002, we also 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; $3.5 million for the installation of the
Longview slitter in our Calgary, Alberta, facility and $13.2 million for other
equipment and system upgrades.

During 2003, cash provided by financing activities was $23.5 million,
principally attributable to the $120.0 million Convertible Notes issued in June
2003, partially offset by an $89.5 million decrease in our long-term revolving
credit facility, a $4.6 million increase in deferred debt costs and $3.0 million
of regularly scheduled term debt payments. Our net debt to capitalization ratio
(the sum of our current and long-term debt, net of cash and cash equivalents
compared to the sum of our stockholders' equity and our current and long-term
debt, net of cash and cash equivalents) decreased from 28.7% at December 31,
2002 to 27.9% at December 31, 2003. This ratio is a measure of our long-term
liquidity and is an indicator of financial flexibility.

During 2002, cash provided by financing activities was $168.3 million,
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. The principal use of these cash flows was the acquisitions of Republic
Conduit and Precision during 2002.

During 2001, cash used by financing activities was $27.0 million, 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 $185.0 million
revolving line of credit. At December 31, 2003, we had an outstanding balance of
$50.2 million against the line, and outstanding letters of credit under this
agreement of $1.8 million. 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 was approximately $133.0
million as of December 31, 2003. The senior credit facility includes a
restrictive covenant relating to maintaining a minimum fixed charge coverage
ratio if availability falls below $30.0 million. Also, if availability falls
below $50.0 million, the debt will be classified as current. 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.

In June 2003, we issued $120.0 million of Convertible Notes due June 15, 2033.
The Company pays interest semi-annually on the Convertible Notes at the rate of
4.0% per annum. Beginning with the six-month interest period commencing on June
15, 2008, the Company will pay contingent interest during a six-month interest
period if the average trading price of the Convertible Notes equals or exceeds
130.0% of the principal amount of the Convertible Notes during a specified
period prior to such six-month interest period. The Convertible Notes are
general unsecured obligations of the Company and are subordinated to the
Company's senior indebtedness referred to above. We applied approximately $73.0
million of the net proceeds of the offering to pay down our borrowings under our
senior credit facility. After application of this amount, our senior credit
facility borrowings were just above $50.0 million. We initially applied the
remaining net proceeds to cash and, thereafter, applied approximately $30.0
million of cash to pay various trade vendors who were offering discounts for
early payment.

Given the current steel price environment, inventory levels and operating
levels, we believe that working capital needs could expand substantially. Cash,
near-term profitability and the liquidity under the senior credit facility
should be more than adequate to sustain these levels of operations at the higher
steel prices. We also anticipate we will comply with our debt covenants in 2004
and beyond; however, if our operations are more severely impacted by steel price
changes or by how steel

<PAGE>

price increases impact our volumes, our earnings may be less than projected and
we could be in default under this facility. Although we would attempt to obtain
an amendment to the facility to cure any breach or a waiver, from the lender, we
cannot give any assurance we could obtain an amendment or waiver or one with
terms as favorable as the terms of the credit facility. We are investigating all
options to reduce the liquidity demands on the Company including inventory
consignments, capital expenditure needs and other financing options.

We have entered into an interest rate swap agreement with a notional amount of
$50.0 million that fixes the LIBOR-based variable rate in our senior credit
facility at 2.24% (before the applicable margin). The swap agreement terminates
on March 21, 2005. The swap is being accounted for as a cash flow hedge.
Accordingly, the difference between the interest received and interest paid is
reflected as an adjustment to interest expense. Under the terms of the swap
agreement, the next settlement amount is due March 2004. At December 31, 2003,
the swap agreement is reflected in the accompanying consolidated balance sheet
in other accrued liabilities at its fair value of $0.4 million. The unrealized
loss on the fair value of the swap agreement is reflected, net of taxes, in
other comprehensive loss.

We have entered into a foreign currency hedge agreement with a notional amount
of $30.0 million that fixes the purchase of Canadian dollars for conversion into
U.S. dollars on January 23, 2004 at an exchange rate of 1.4139. Prudential (a
Canadian subsidiary) currently borrows funds denominated in U.S. dollars. This
hedge agreement is designed to protect the variability of foreign currency risk
when the debt matures. The settlement date for the hedge agreement is January
23, 2004. The swap is being accounted for as a cash flow hedge. Accordingly, the
difference between the spot rate at the inception of the contract and the
forward rate is reflected as an adjustment to interest expense during the
duration of the contract. At December 31, 2003, the hedge agreement is reflected
in the accompanying consolidated balance sheet in other accrued liabilities at
its fair value of $2.7 million. The unrealized loss on the fair value of the
hedge agreement is reflected, net of taxes, in other comprehensive loss.

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 2004 is approximately $22.2 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. However, this budget could be reduced to help manage liquidity
needs in the current volatile steel market with no adverse impact to our
operations.

Contractual Obligations

In the normal course of business, we enter into contracts and commitments which
obligate us to make payments in the future. The following table sets forth
certain information about the Company's contractual obligations as of December
31, 2003 (in thousands):

<TABLE>
<CAPTION>
                                                           PAYMENTS DUE BY PERIOD
                                                           ----------------------                           FAIR
                                                          LESS THAN     2-3         4-5       AFTER        MARKET
CONTRACTUAL OBLIGATIONS                    TOTAL           1 YEAR      YEARS       YEARS     5 YEARS        VALUE
-------------------------------------------------------------------------------------------------------------------
<S>                                        <C>            <C>         <C>          <C>       <C>           <C>
Capital lease obligations (fixed)            $2,742         $1,034     $1,246       $462     $     --      $  2,869
Long-term debt (variable)                    50,213             --     50,213         --           --        50,213
Convertible Notes (fixed)                   120,000             --         --         --      120,000       123,600
Note payable (fixed)                          5,000          2,500      2,500         --           --         5,296
Other liabilities (fixed)                     1,197            544        653         --           --         1,197
                                           ------------------------------------------------------------------------
Total contractual cash obligations         $179,152         $4,078    $54,612       $462     $120,000      $183,175
                                           ========================================================================
</TABLE>

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's Discussion
and Analysis." Our most significant estimates and judgments are listed below.

Goodwill and Other Intangible Assets

Our acquisition of Precision, Republic Conduit and SeaCAT has resulted in
goodwill of $83.0 million and other acquired intangibles, net of accumulated
amortization, of $35.3 million. We conducted the required impairment test of our
goodwill and other intangible assets in the fourth quarter of 2003 and
determined that no impairment had occurred. We will be required to conduct an
impairment test of goodwill and other intangible assets 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.

Management analyzed the valuation of our recent acquisitions by utilizing a
discounted cash flow method and a market multiple method. Both of these
techniques required us to estimate future sales prices and volumes. 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 enterprise value of our acquisition was greater than our investment.
While the annual impairment tests did not indicate goodwill impairment, we would
be subject to future impairment if the operating results and cash flows of our
recent acquisitions would not support the fair value of the reporting unit's 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 experience with receivable collection.

<PAGE>

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 was $0.2 million for
2003 and $0.4 million for 2002.

Cold Drawn Tubular Business Discontinued Operation

On March 29, 2002, pursuant to an asset purchase agreement dated March 21, 2002,
Maverick Tube L.P. completed the sale of our cold drawn tubular assets to
Pennsylvania Cold Drawn, LLC ("PCD") for $8.1 million, consisting of cash of
$1.2 million and the buyer's nine-year secured promissory note for $6.9 million.
During 2003, we restructured the buyer's promissory note in exchange for the
release of our guarantee of certain payment obligations and obtained additional
security including the buyer's personal guarantee and increased the outstanding
note obligation. As of December 31, 2003, we hold three notes totaling $9.5
million. We have not established reserves against these notes 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.

In January 2003, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46). A
variable interest entity is a corporation, partnership, trust or any other legal
structure used for business purposes that does not have equity investors with
voting rights or has equity investors that do not provide sufficient financial
resources for the entity to support its activities. FIN 46 requires a variable
interest entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entity's activities or
entitled to receive a majority of the entity's residual returns, or both. The
provisions of FIN 46 are required to be adopted the last day of the first
quarter of 2004.

If we are required to consolidate PCD's operations into ours, on March 31, 2004,
the Company may record a non-cash cumulative charge based on the adoption of FIN
46, in the range of approximately $1.0 to $2.0 million to recognize PCD's prior
net losses. This would be reported as a separate line item in the consolidated
statements of income, net of tax. The charge will be based on the fair value of
the net assets of PCD.

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 $5.3 million available
for income tax purposes at December 31, 2003. These tax carryforwards do not
expire. At December 31, 2003, we had net operating loss carryforwards with a tax
value of $3.3 million. Our current assessment is 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 between 2005
and 2023.

Income tax expense recorded on cumulative undistributed foreign earnings is
fully offset by foreign tax credits associated with those earnings. At December
31, 2003, we had $12.4 million of foreign tax credit carryforwards. We have
placed a valuation allowance of $6.9 million against these foreign tax credit
carryforwards to reflect the amount 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.

In addition, we are deducting more interest expense for tax purposes than the
stated coupon rate on the Convertible Notes. The deductibility of the additional
interest beyond the stated coupon rate may have to be recaptured, in part or in
whole, if the Convertible Notes are redeemed for cash instead of converted into
our common stock. Should a cash redemption occur, depending on other factors,
tax payments may increase.

Pension Plans

Prudential sponsors two pension plans (Hourly Plan and Salary Plan) and a
supplemental executive retirement plan (SERP). 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 7.0% and the
discount rate, which reflects the current rate at which pension liabilities
could be effectively settled, to be 6.5% at December 31, 2003. In estimating
both the long-term rate and the discount rate, Prudential looks at 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 appropriate.

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. However, we utilize an
interest rate swap agreement to moderate a portion of our exposure. We do not
use derivative financial instruments for trading or other speculative purposes.
Assuming the current level of borrowings at variable rates and assuming a
two-percentage-point change in the average interest rate under these borrowings
and taking into account the swap agreement in place, it is estimated that our
interest expense for the year ended December 31, 2003 would not have changed by
a material amount. In the event of an adverse change in interest rates, we would
likely take actions, in addition to the swap agreement currently in place, 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, no
such actions have been considered. Further, no consideration has been given to
the effects of the change in the level of overall economic activity that could
exist in such an environment.

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 business both positively and negatively. We estimate a $10 per
ton change in the price of steel which is not offset by a similar selling price
change could impact diluted earnings per share by a range of $0.10 to $0.15. See
"Overview - Pricing and Costs of Our Products." In addition, we depend on a few
suppliers for a significant portion of our steel. The loss of one or more of our
significant steel suppliers or the inability to obtain the necessary amount of
steel could affect our ability to produce our products and could have a material
adverse effect on our business.

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.
<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, 2003 and 2002, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 2003. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Maverick Tube
Corporation and subsidiaries at December 31, 2003 and 2002, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2003 in conformity with accounting principles
generally accepted in the United States.

                              /s/ Ernst & Young LLP

St. Louis, Missouri
February 6, 2004

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

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

<PAGE>

                   MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                  DECEMBER 31,
                                                                                               2003            2002
                                                                                            --------------------------
<S>                                                                                         <C>             <C>
ASSETS

CURRENT ASSETS:

Cash and cash equivalents                                                                   $   29,202      $    2,551
Accounts receivable, less allowances of $5,414 and $5,188 in 2003 and 2002, respectively       117,115          73,660
Inventories                                                                                    184,025         210,207
Deferred income taxes                                                                            5,534          11,338
Income taxes refundable                                                                            590             637
Prepaid expenses and other current assets                                                        6,267          10,375
                                                                                            --------------------------
Total current assets                                                                           342,733         308,768
Property, plant and equipment, net of accumulated depreciation                                 189,434         179,244
Goodwill                                                                                        82,982          93,184
Other acquired intangibles, net of accumulated amortization                                     35,304               -
Notes receivable                                                                                 9,500           6,877
Other assets                                                                                    10,773           7,810
                                                                                            --------------------------
                                                                                            $  670,726      $  595,883
                                                                                            ==========================
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable                                                                            $   47,557      $   78,457
Accrued expenses and other liabilities                                                          34,391          23,531
Deferred revenue                                                                                 3,386           2,608
Income taxes payable                                                                               203               -
Current maturities of long-term debt                                                             3,533           2,977
                                                                                            --------------------------
Total current liabilities                                                                       89,070         107,573
Long-term debt, less current maturities                                                          4,209           2,742
Convertible senior subordinated notes                                                          120,000               -
Revolving credit facility                                                                       50,213         132,927
Other liabilities                                                                               16,436           7,640
Deferred income taxes                                                                            6,000           6,715

STOCKHOLDERS' EQUITY

Preferred stock, $0.01 par value; 5,000,000 authorized shares;
  1 share issued and outstanding in 2003 and 2002                                                    -               -
Common stock, $0.01 par value; 80,000,000 authorized shares; 42,001,662
  and 40,942,976 shares issued and outstanding in 2003 and 2002, respectively                      420             409
Additional paid-in capital                                                                     227,048         212,361
Retained earnings                                                                              162,192         139,235
Accumulated other comprehensive loss                                                            (4,862)        (13,719)
                                                                                            --------------------------
                                                                                               384,798         338,286
                                                                                             --------------------------
                                                                                             $  670,726      $  595,883
                                                                                             ==========================
</TABLE>
See accompanying notes.
<PAGE>

                   MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                            YEAR ENDED DECEMBER 31,
                                                                                  ------------------------------------------
                                                                                     2003            2002            2001
                                                                                  ------------------------------------------
<S>                                                                               <C>             <C>             <C>
Net sales                                                                         $  884,317      $  452,913      $  544,933
Cost of goods sold                                                                   783,353         409,916         441,843
                                                                                  ------------------------------------------
Gross profit                                                                         100,964          42,997         103,090
Selling, general and administrative                                                   56,142          34,032          30,372
Restructuring charges                                                                    584           1,186           8,061
Trade case relief                                                                     (1,104)         (2,709)              -
Start-up costs                                                                             -               -           1,101
                                                                                  ------------------------------------------
Income from operations                                                                45,342          10,488          63,556
Interest expense                                                                       9,637           4,325           3,090
                                                                                  ------------------------------------------
Income from continuing operations before income taxes                                 35,705           6,163          60,466
Provision for income taxes                                                            12,748           3,277          21,228
                                                                                  ------------------------------------------
Income from continuing operations                                                     22,957           2,886          39,238

Loss from operations of discontinued DOM facility, less applicable income tax
  benefit of $567 for the year ended December 31, 2001                                     -               -            (957)

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)
                                                                                  ------------------------------------------
Net income                                                                        $   22,957      $    3,404      $   28,041
                                                                                  ==========================================

Basic earnings (loss) per share
  Income from continuing operations                                               $     0.55      $     0.08      $     1.17
  Income (loss) from discontinued operations                                               -            0.01           (0.33)
                                                                                  ------------------------------------------
  Net income                                                                      $     0.55      $     0.09      $     0.84
                                                                                  ==========================================

Diluted earnings (loss) per share
  Income from continuing operations                                               $     0.55      $     0.08      $     1.15
  Income (loss) from discontinued operations                                               -            0.01           (0.33)
                                                                                  ------------------------------------------
  Net income                                                                      $     0.55      $     0.09      $     0.82
                                                                                  ==========================================
</TABLE>

See accompanying notes.

<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
                                                                SHARES     AMOUNT   STOCK     CAPITAL    INCOME (LOSS)
                                                               -------------------------------------------------------
<S>                                                            <C>         <C>     <C>       <C>         <C>
Balance at December 31, 2000                                   33,712,312   $337   $      -   $111,542     $ (6,413)
Net income                                                              -      -          -          -            -
Minimum pension liability (net of $374 tax benefit)                     -      -          -          -         (666)
Foreign currency translation                                            -      -          -          -       (6,491)

   Comprehensive income
Purchase of treasury stock                                     (1,201,000)     -    (11,525)         -            -
Exercise of stock options - Maverick directors and employees      300,724      3          -      2,459            -
Tax benefit associated with the exercise of non-qualified
   Maverick stock options                                               -      -          -        306            -
                                                               ----------------------------------------------------

Balance at December 31, 2001                                   32,812,036    340   (11,525)    114,307      (13,570)
Net income                                                              -      -          -          -            -
Minimum pension liability (net of $528 tax benefit)                     -      -          -          -       (1,001)
Foreign currency translation                                            -      -          -          -          852

   Comprehensive income
Sale of treasury stock                                          1,201,000      -     11,525      4,328            -
Exercise of stock options - Maverick directors and employees      180,940      2          -      1,072            -
Issuance of Maverick common stock                               6,749,000     67          -     92,593            -
Tax benefit associated with the exercise of non-qualified
   Maverick stock options                                               -      -          -         61            -
                                                               ----------------------------------------------------

Balance at December 31, 2002                                   40,942,976    409          -    212,361      (13,719)
Net income                                                              -      -          -          -            -
Minimum pension liability (net of $177 tax expense)                     -      -          -          -          338
Cash flow hedges (net of $137 tax benefit)                              -      -          -          -         (254)
Foreign currency translation                                            -      -          -          -        8,773

   Comprehensive income
Exercise of stock options - Maverick directors and employees      325,010      4          -      2,306            -
Issuance of Maverick common stock                                 733,676      7          -     12,097            -
Tax benefit associated with the exercise of non-qualified
   Maverick stock options                                               -      -          -        284            -
                                                               ----------------------------------------------------
Balance at December 31, 2003                                   42,001,662   $420   $      -   $227,048     $ (4,862)
                                                               ====================================================
</TABLE>

<TABLE>
<CAPTION>
                                                               RETAINED  STOCKHOLDERS'
                                                               EARNINGS     EQUITY
                                                               -----------------------
<S>                                                            <C>       <C>
Balance at December 31, 2000                                   $107,790    $213,256
Net income                                                       28,041      28,041
Minimum pension liability (net of $374 tax benefit)                   -        (666)
Foreign currency translation                                          -      (6,491)
                                                                         ----------
   Comprehensive income                                                      20,884
Purchase of treasury stock                                            -     (11,525)
Exercise of stock options - Maverick directors and employees          -       2,462
Tax benefit associated with the exercise of non-qualified
   Maverick stock options                                             -         306
                                                               --------------------

Balance at December 31, 2001                                    135,831     225,383
Net income                                                        3,404       3,404
Minimum pension liability (net of $528 tax benefit)                   -      (1,001)
Foreign currency translation                                          -         852
                                                                         ----------
   Comprehensive income                                                       3,255
Sale of treasury stock                                                -      15,853
Exercise of stock options - Maverick directors and employees          -       1,074
Issuance of Maverick common stock                                     -      92,660
Tax benefit associated with the exercise of non-qualified
   Maverick stock options                                             -          61
                                                               --------------------

Balance at December 31, 2002                                    139,235     338,286
Net income                                                       22,957      22,957
Minimum pension liability (net of $177 tax expense)                   -         338
Cash flow hedges (net of $137 tax benefit)                            -        (254)
Foreign currency translation                                          -       8,773
                                                                         ----------
   Comprehensive income                                                      31,814
Exercise of stock options - Maverick directors and employees          -       2,310
Issuance of Maverick common stock                                     -      12,104
Tax benefit associated with the exercise of non-qualified
   Maverick stock options                                             -         284
                                                               --------------------
Balance at December 31, 2003                                   $162,192    $384,798
                                                               ====================
</TABLE>

See accompanying notes.

<PAGE>

                   MAVERICK TUBE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         YEAR ENDED DECEMBER 31,
                                                                               2003              2002              2001
                                                                            ----------------------------------------------
<S>                                                                         <C>               <C>               <C>
OPERATING ACTIVITIES
Income from continuing operations                                           $   22,957        $    2,886        $   39,238
Adjustments to reconcile income from continuing operations
  to net cash provided by operating activities:
Depreciation                                                                    20,550            18,843            14,633
Amortization                                                                     1,861             1,111               208
Deferred income taxes                                                            4,425            (5,314)            4,742
Provision for losses on accounts receivable                                        298               444               354
Loss on sale of equipment                                                          376                39                14
Noncash portion of restructuring charges                                           150               861             6,476
Changes in operating assets and liabilities, net of effect of
  acquisitions:
  Accounts receivable                                                          (40,943)            1,033            29,355
  Inventories                                                                   40,298           (21,430)          (12,157)
  Prepaid expenses and other current assets                                      3,075            (7,335)              230
  Other assets                                                                   1,678             5,144            (3,677)
  Accounts payable                                                             (36,202)           46,622           (23,709)
  Accrued expenses and other liabilities                                         7,591           (10,030)            1,903
  Deferred revenue                                                                 778            (1,151)           (5,195)
                                                                            ----------------------------------------------
Cash provided by continuing operating activities                                26,892            31,723            52,415

INVESTING ACTIVITIES
Cash paid for acquisitions, net of cash received                                (4,000)         (177,064)                -
Expenditures for property, plant and equipment                                 (20,902)          (22,809)          (25,784)
Proceeds from disposal of equipment                                                 64                73                 -
                                                                            ----------------------------------------------
Cash used by investing activities                                              (24,838)         (199,800)          (25,784)

FINANCING ACTIVITIES
Net (repayments) borrowings on credit facility                                 (89,514)           66,388           (17,107)
Proceeds from convertible senior subordinated notes                            120,000                 -                 -
Principal payments on long-term borrowings and notes                            (2,977)             (938)             (866)
Net principal borrowings on long-term note receivable                           (1,669)                -                 -
Purchase of treasury stock                                                           -                 -           (11,525)
Deferred debt costs                                                             (4,630)           (4,452)                -
Proceeds from sale of treasury stock                                                 -            15,853                 -
Proceeds from exercise of stock options                                          2,310             1,074             2,462
Proceeds from sale of common stock                                                   -            90,370                 -
                                                                            ----------------------------------------------
Cash provided (used) by financing activities                                    23,520           168,295           (27,036)

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

Effect of exchange rate changes on cash                                          1,077              (479)             (223)
                                                                            ----------------------------------------------

Increase (decrease) in cash and cash equivalents                                26,651               611              (253)

Cash and cash equivalents at beginning of year                                   2,551             1,940             2,193
                                                                            ----------------------------------------------

Cash and cash equivalents at end of year                                    $   29,202        $    2,551        $    1,940
                                                                            ==============================================

Supplemental disclosures of cash flow information:
Cash paid during the year for:
  Interest (net of amounts capitalized of $670, $616 and
     $1,251)                                                                $    7,520        $    3,154        $    3,237
  Income taxes                                                              $    7,964        $   11,964        $   12,884

Noncash investing and financing activities:
  Note receivable for sale of discontinued operations                       $      954        $    6,877                $-
  Stock issued for acquisition                                              $   12,104        $    2,290                $-
</TABLE>

See accompanying notes.

<PAGE>

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Maverick Tube
Corporation and its direct and indirect wholly-owned subsidiaries (collectively
referred to as "the Company," whereas "Maverick" is the Company exclusive of its
subsidiaries: Prudential Steel Ltd., Precision Tube Holding Corporation, the
tubular division of The LTV Corporation and SeaCAT 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, the tubular
division of The LTV Corporation ("Republic Conduit") since its acquisition on
December 31, 2002 and SeaCAT Corporation ("SeaCAT") since its acquisition on
February 28, 2003.

FUNCTIONAL CURRENCY

Financial statements of Prudential's Calgary, Alberta, operations where the
local currency is the functional currency are translated into U.S. dollars using
period-end exchange rates for assets and liabilities and weighted-average
exchange rates during the period for revenues and expenses. Cumulative
translation adjustments associated with net assets are reported as a separate
component of other comprehensive income or loss within shareholders' equity.

Exchange rate gains or losses related to foreign currency transactions are
recognized in the income statement as incurred.

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
ensured. Freight and shipping that are billed to customers are included in net
sales, and the cost of shipping is included in cost of sales.

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.

ACCOUNTS RECEIVABLE

Accounts receivable are recorded at net realizable value. In circumstances where
the Company is aware of a specific customer's inability to meet its financial
obligations (e.g., bankruptcy filing, substantial downgrading of credit), the
Company records a specific reserve for bad debts against the amounts due
reducing the net recognized receivable to the estimate of what will be
collected. For all other customers, the Company estimates reserves for bad debts
based on the length of time receivables have been past due and its experience
with receivable collection.

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:

<TABLE>
<S>                                                            <C>
Land and leasehold improvements                                10 to 20 years
Buildings                                                      20 to 40 years
Machinery and equipment                                         2 to 12 years
Furniture and fixtures                                          2 to 10 years
Computer software                                                3 to 7 years
</TABLE>

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

INTERNAL USE SOFTWARE COSTS

The Company capitalizes direct costs incurred during the application,
development and implementation stages for developing, purchasing or otherwise
acquiring software for internal use. These software costs are included in
property, plant and equipment on the consolidated balance sheet and are
depreciated over the estimated useful life of the software. All costs incurred
during the preliminary project stage are expensed as incurred.

GOODWILL AND INTANGIBLE ASSETS

Goodwill is the excess of the purchase price over the fair value of identifiable
net assets acquired in business combinations accounted for as purchases.
Goodwill is not amortizable, but is tested for impairment annually or more
frequently if events and circumstances indicate an impairment may exist.
Intangible assets with finite lives are amortized over their estimated useful
lives. The annual impairment test performed in the fourth quarter did not
indicate an impairment of the fair value of any reporting unit below its
carrying value.

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.

ENVIRONMENTAL OBLIGATIONS

With respect to environmental obligations, the Company's policy is to accrue
costs for remediation of contaminated sites in the accounting period in which
the obligation becomes probable and the cost is reasonably estimable. The
Company's estimates of the environmental remediation reserve requirements are
generally within a range of estimates. If the Company believes no best estimate
exists by location within a range of possible outcomes, in accordance with
accounting guidance, the minimum loss within the range is accrued. As the future
amounts and dates of payments are unknown, environmental liabilities are not
discounted, and they have not been reduced for any claims for recoveries from
insurance or third parties.

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.

<PAGE>

EARNINGS PER COMMON SHARE

Basic earnings per share exclude any dilutive effects of options and the effect
of the Convertible Notes, but include the exchangeable shares (as further
described in Note 17) 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, but exclude the
effect of the Convertible Notes.

The reconciliation for diluted earnings per share for the years ended December
31, 2003, 2002 and 2001, is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                2003                2002             2001
                                                              --------------------------------------------
<S>                                                           <C>                  <C>             <C>
Average shares outstanding - basic                             41,747              38,144           33,547
Dilutive effect of outstanding stock
  options                                                         363                 348              570
                                                              --------------------------------------------
Average shares deemed outstanding - diluted                    42,110              38,492           34,117
                                                              ============================================
Net income used in the calculation
  of basic and diluted earnings
  per share                                                   $22,957              $3,404          $28,041
                                                              ============================================
</TABLE>

In June of 2003, the Company completed the sale of $120,000,000 of 4.0%
Contingent Convertible Senior Subordinated Notes due June 15, 2033 (the
"Convertible Notes"). The Convertible Notes are convertible into a total of
4,110,997 shares of Company common stock at a conversion price of $29.19 per
share, provided certain contingencies are met, including that the Company's
common stock has exceeded 120.0% of the conversion price then in effect for 20
trading days out of 30 consecutive trading days. Unless and until this
contingency or other conversion contingencies are met, the above-mentioned
shares of the Company's common stock underlying the Convertible Notes will not
be included in the Company's basic or diluted earnings per share calculations.
Should the contingencies be met, diluted earnings per share would, depending on
the relationship between the interest on the Convertible Notes and the earnings
per share of the Company's common stock, be expected to decrease as a result of
the inclusion of the underlying shares in the diluted earnings per share
calculation. Volatility in the Company's stock price could cause this condition
to be met in one quarter and not in a subsequent quarter, increasing the
volatility of diluted earnings per share.

STOCK-BASED COMPENSATION

At December 31, 2003, 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 16. 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 as if the Company had applied
the fair value recognition provisions of Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," to
stock-based employee compensation for the years ended December 31, 2003, 2002
and 2001 (in thousands, except per share information):

<TABLE>
<CAPTION>
                                                              2003             2002             2001
                                                          ---------------------------------------------
<S>                                                       <C>               <C>              <C>
Net income, as reported                                   $   22,957        $   3,404        $   28,041
Deduct: total stock-based employee compensation
   expense determined under fair value-based method
   for all awards, net of related tax effects                 (2,012)          (1,120)           (1,898)
                                                          ---------------------------------------------
Pro forma net income                                      $   20,945        $   2,284        $   26,143
                                                          =============================================
Basic earnings per share
   Net income - as reported                               $     0.55        $    0.09        $     0.84
   Net income - pro forma                                 $     0.50        $    0.06        $     0.78

Diluted earnings per share
   Net income - as reported                               $     0.55        $    0.09        $     0.82
   Net income - pro forma                                 $     0.50        $    0.06        $     0.77
</TABLE>

The compensation expense associated with the fair value of the options
calculated for the years ended December 31, 2003, 2002 and 2001, is not
necessarily representative of the potential effects on reported net income in
future years.

ACCUMULATED OTHER COMPREHENSIVE LOSS

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

<TABLE>
<CAPTION>
                                                                                ACCUMULATED
                                             FOREIGN      MINIMUM    CASH          OTHER
                                             CURRENCY     PENSION    FLOW      COMPREHENSIVE
                                           TRANSLATION   LIABILITY  HEDGES     INCOME (LOSS)
                                           -------------------------------------------------

<S>                                        <C>           <C>        <C>        <C>
Balance at December 31, 2000                $ (6,413)     $     -   $   -        $ (6,413)
  Unrealized losses                           (6,491)        (666)      -          (7,157)
                                            ---------------------------------------------
Balance at December 31, 2001                 (12,904)        (666)      -         (13,570)
  Unrealized gains (losses)                      852       (1,001)      -            (149)
                                            ---------------------------------------------
Balance at December 31, 2002                 (12,052)      (1,667)      -         (13,719)
  Unrealized gains (losses)                    8,773          338    (254)          8,857
                                            ---------------------------------------------
Balance at December 31, 2003                $ (3,279)     $(1,329)  $(254)       $ (4,862)
                                            =============================================
</TABLE>

BUSINESS SEGMENTS

On January 1, 2003, the Company revised its segment presentation into two new
segments: Energy Products and Industrial Products. The two new segments are
designed to improve the alignment of strategies and objectives among sales,
marketing and production; provide for more timely and rational allocation of
resources within businesses; and focus long-term planning efforts on key
objectives and initiatives. Prior year disclosures have been recast to reflect
this change.

The Energy Products segment includes revenue and operating expenses associated
with those products of the Company sold to the energy industry, such as oil
country tubular goods ("OCTG"), line pipe, coiled steel pipe and tolling
services. The Industrial Products segment includes revenue and operating
expenses associated with those products of the Company sold to the industrial
sector, such as electrical conduit, rigid conduit, structural shapes and rounds,
standard pipe, mechanical tubing and pipe piling.

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 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.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the U.S. 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.

<PAGE>

DERIVATIVES

As part of managing the exposure to changes in market interest and currency
exchange rates, the Company, as an end user, enters into various interest rate
and foreign currency contracts in over-the-counter markets, with other financial
institutions acting as principal counterparties. The Company uses derivatives
for hedging purposes only and does not enter into derivative financial
instruments for trading or speculative purposes.

All derivatives held by the Company are designated as hedges at inception, with
the expectation that the derivative will be highly effective in offsetting the
associated underlying exposures.

All derivatives are carried on the Company's balance sheet at fair value. Fair
values for the Company's derivative financial instruments are based on quoted
market prices of comparable instruments or, if none are available, on pricing
models or formulas using current assumptions. Changes in fair value are
recognized either in the income statement or deferred in equity, depending on
the nature of the underlying exposure being hedged and how effective the
derivative is at offsetting movements in the underlying exposure. The
ineffective portion of a derivative's change in fair value is immediately
recognized in earnings. All of the Company's derivative positions qualified for
hedge accounting. See Note 8 for additional information on derivative values,
hedge categories and gains and losses from hedging activity.

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46). A
variable interest entity is a corporation, partnership, trust or any other legal
structure used for business purposes that does not have equity investors with
voting rights or has equity investors that do not provide sufficient financial
resources for the entity to support its activities. FIN 46 requires a variable
interest entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entity's activities, or
is entitled to receive a majority of the entity's residual returns. The
provisions of FIN 46 are required to be adopted the last day of the first
quarter of 2004.

As described in Note 3, in March 2002, the Company sold its Cold Drawn Tubular
business (DOM) for cash and a promissory note from Pennsylvania Cold Drawn
("PCD"). In November 2003, the Company restructured the note, which improved its
collateral position and increased the balance due under various notes to
$9,765,000. The Company is in the process of evaluating its position with PCD to
determine if PCD would be considered a variable interest entity under FIN 46.
The Company may be required to consolidate PCD beginning the last day of the
first quarter of 2004.

Upon consolidation, on March 31, 2004, the Company may record a non-cash
cumulative charge based on the adoption of FIN 46, in the range of approximately
$1,000,000 to $2,000,000 to recognize PCD's prior net losses. This would be
reported as a separate line item in the consolidated statements of income, net
of tax. The charge will be based on the fair value of the net assets of PCD.
Excluding the potential non-cash charge, the impact of consolidating PCD will
not materially affect the Company's operating results or financial condition.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments With Characteristics of Both Liabilities and Equity." SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
No. 150 requires that an issuer classify a financial instrument that is within
its scope as a liability or as an asset in some circumstances. SFAS No. 150 is
effective for financial instruments entered into or modified after May 31, 2003
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The adoption of this statement is not expected to
have a material impact on our financial statements.

RECLASSIFICATIONS

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

2. 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 was 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.

Republic Conduit

On December 31, 2002, the Company acquired the assets and certain liabilities of
Republic Conduit for $119,863,000 cash (which included a $9,863,000 working
capital adjustment). The acquisition was accounted for as a purchase business
combination and the financial statements of Republic Conduit have been
consolidated from the acquisition date. The cost to acquire Republic Conduit was
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 $32,653,000 and intangible assets of $27,400,000, both of
which are fully deductible for tax purposes. The Company acquired Republic
Conduit to add steel electrical conduit to its industrial product line and to
expand its line pipe sales.

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

<TABLE>
<CAPTION>
                                              2002           2001
                                            -----------------------
<S>                                         <C>            <C>
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
</TABLE>

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

Exit Costs

During February 2003, the Company announced its plans to exit its Youngstown,
Ohio, operating facility and the divisional headquarters of Republic Conduit
also located in Youngstown, Ohio. As a result, 94 of the 124 employees at these
facilities have been terminated as of December 31, 2003. Following is a summary
of the exit cost recorded in the allocation of the purchase price of Republic
Conduit in 2003 (in thousands):
<PAGE>

<TABLE>
<CAPTION>
                                                                                                     2003
                                                                                                     ----
<S>                                                                                                <C>
Cash costs:
  Employee severance cost - including medical                                                      $  2,742
  Other                                                                                                 100
                                                                                                   --------
  Total restructuring costs                                                                        $  2,842
                                                                                                   ========
</TABLE>

Following is a summary of the accrued restructuring liabilities and activity
through December 31, 2003 (in thousands):

<TABLE>
<CAPTION>
                                                              EMPLOYEE
                                                              SEVERANCE            OTHER            TOTAL
                                                              ---------            -----            ------
<S>                                                           <C>                  <C>             <C>
Balance, December 31, 2002                                    $       -            $   -           $      -
  New charges                                                     2,742              100              2,842
  Cash payments                                                  (1,052)               -             (1,052)
                                                              ---------            -----           --------
Balance, December 31, 2003                                    $   1,690            $ 100           $  1,790
                                                              =========            =====           ========
</TABLE>

Future cash outlays expected in 2004 relating to the Company's exit from the
Youngstown, Ohio, facilities are anticipated to be comprised of the remaining
$1,790,000 cash costs above. These cash outlays are expected to be funded
through the Company's revolving credit facility and the future sale of the
Youngstown, Ohio, operating facility's land and building and the divisional
headquarters' land and building, which are held for sale at December 31, 2003 at
an estimated fair value of $220,000 and $379,000, respectively.

Environmental Obligations

The Company accrued possible environmental remediation liabilities on properties
associated with Republic Conduit during 2003 in the amount of $6,885,000. The
accrual was based on an independent third-party analysis of these properties and
management estimates. The accrual was recorded in the allocation of the purchase
price of Republic Conduit and is classified as other liabilities on the December
31, 2003 consolidated balance sheet. No payments were made during 2003.

These estimates of the potential remediation costs are critical because the
Company must forecast remediation activity into the future, which is highly
uncertain and requires a large degree of judgment. Therefore, the environmental
reserves may materially differ from the ultimate actual liabilities if the
Company's estimates prove to be inaccurate, which could materially affect net
income of a future period. Uncertainties related to recorded environmental
liabilities include changing governmental policy and regulations, judicial
proceedings, the method and extent of remediation and future changes in
technology. Because of these uncertainties, the range of possible outcomes could
exceed the amounts reserved.

SeaCAT Corporation

On February 28, 2003, the Company completed its acquisition of SeaCAT, a
privately held, Houston based, coiled tubular goods manufacturer, in exchange
for $4,000,000 cash, a $5,000,000 subordinated note and 733,676 common shares of
the Company. The purchase price could be further increased by up to an
additional $500,000 if SeaCAT achieves certain performance targets through 2005.
The acquisition was accounted for as a purchase business combination, and the
financial statements of SeaCAT have been consolidated from the acquisition date.
The cost to acquire SeaCAT 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 $7,198,000 and intangible
assets of $8,100,000, neither of which is deductible for tax purposes. The
Company acquired SeaCAT to expand its premium coiled tubing operations.

Following is a summary of the net assets and liabilities acquired during 2003
and 2002 (in thousands):

<TABLE>
<CAPTION>
                                                                              REPUBLIC
                                                            PRECISION         CONDUIT             SEACAT
                                                            ---------       -----------           ------
<S>                                                         <C>             <C>                   <C>
Purchase price (including transaction costs)                $  62,966       $   122,083           $21,807

Assets acquired:

  Cash                                                          3,855                 5                35
  Accounts receivable                                           8,141            22,208               187
  Inventory                                                     4,217            42,462             2,563
  Property, plant and equipment                                 7,443            13,724             5,706
  Other assets                                                  5,218             1,859               327
  Other acquired intangibles                                        -            27,400             8,100
                                                            ---------       -----------           -------
                                                               28,874           107,658            16,918
Liabilities acquired:

  Accounts payable                                             (1,718)           (6,429)           (1,328)
  Other accruals                                               (7,321)          (11,799)             (981)
                                                            ---------       -----------           -------
                                                               (9,039)          (18,228)           (2,309)
  Net assets acquired                                          19,835            89,430            14,609
                                                            ---------       -----------           -------
Goodwill                                                    $  43,131       $    32,653           $ 7,198
                                                            =========       ===========           =======
</TABLE>

3. DISCONTINUED OPERATIONS

During the first quarter of 2001, the Company adopted a formal plan to sell the
operating assets of its Cold Drawn Tubular Business (DOM). Accordingly, the
operating results of the DOM facility, including the provision for the loss on
disposal and operating losses during the phase-out period of $10,240,000 (net of
$5,760,000 tax benefit), were segregated from continuing operations and reported
separately as discontinued operations in the statements of income. The Company
reduced the provision for loss on disposal by $518,000 (after-tax) for the year
ended December 31, 2002.

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
$1,238,000 cash and the buyer's nine-year secured promissory note for
$6,877,000. The Company restructured the buyer's promissory note in exchange for
the release of its guarantee of certain payment obligations and obtained
additional security including the buyer's personal guarantee and increased the
outstanding note obligation. As of December 31, 2003, the Company holds three
PCD notes totaling $9,500,000, which approximates fair value, and accounts
receivable of $698,000.

The Company's net sales to PCD during 2003 and 2002 were $1,481,000 and
$1,006,000, respectively.

4. INVENTORIES

Inventories at December 31, 2003 and 2002, consist of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                                 2003               2002
                                                                                 ----               ----
<S>                                                                            <C>                <C>
Finished goods                                                                 $ 98,575           $109,878
Work-in-process                                                                  10,252              7,982
Raw materials                                                                    34,748             51,390
In-transit materials                                                             28,275             29,090
Storeroom parts                                                                  12,175             11,867
                                                                               --------           --------
                                                                               $184,025           $210,207
                                                                               ========           ========
</TABLE>

Finished goods at December 31, 2003 and 2002, include $3,112,000 and $2,705,000,
respectively, of customer-obligated inventory.

<PAGE>

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 31, 2003 and 2002, consist of the
following (in thousands):

<TABLE>
<CAPTION>
                                                                                 2003               2002
                                                                                 ----               ----
<S>                                                                            <C>                <C>
Land                                                                           $  8,735           $  5,358
Land and leasehold improvements                                                  10,643              5,532
Buildings                                                                        61,292             64,047
Machinery and equipment                                                         234,782            197,585
Computer software                                                                21,070             19,393
Furniture and fixtures                                                            4,243              4,741
                                                                               --------           --------
                                                                                340,765            296,656
Accumulated depreciation                                                       (151,331)          (117,412)
                                                                               --------           --------
                                                                               $189,434           $179,244
                                                                               ========           ========
</TABLE>

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.

6. GOODWILL AND OTHER ACQUIRED INTANGIBLES

The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," during
2002. Prior to adopting SFAS No. 142, the Company did not have any goodwill.
SFAS No. 142 requires that goodwill no longer be amortized, but tested for
impairment at least annually. Intangible assets with finite lives are required
to be amortized over their useful lives. 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.

A fair value approach is used to test goodwill for impairment. An impairment
charge is recognized for the amount, if any, by which the carrying amount of
goodwill exceeds its fair value. Fair value is established using discounted cash
flows. When available and as appropriate, comparative market multiples are used
to corroborate discounted cash flow results. The annual impairment test did not
indicate an impairment of goodwill.

The following table presents the Company's goodwill by segment at December 31,
2003 and 2002 (in thousands):

<TABLE>
<CAPTION>
                                                                ENERGY        INDUSTRIAL           TOTAL
                                                                ------        ----------           -----
<S>                                                             <C>           <C>                 <C>
Balance, December 31, 2001                                      $     -       $        -          $      -
Acquisitions and purchase accounting adjustments                 43,131           50,053            93,184
                                                                -------       ----------          --------
Balance, December 31, 2002                                       43,131           50,053            93,184
Acquisitions and purchase accounting adjustments                  7,198          (17,400)          (10,202)
                                                                -------       ----------          --------
Balance, December 31, 2003                                      $50,329       $   32,653          $ 82,982
                                                                =======       ==========          ========
</TABLE>

Upon closing an acquisition, the Company estimates the fair values of assets and
liabilities acquired and consolidates the information. It is often several
quarters before the Company is able to finalize those initial fair value
estimates. Accordingly, it is not uncommon for our initial estimates to
subsequently be revised.

The following table presents the Company's intangible assets by class and the
related accumulated amortization at December 31, 2003 (in thousands):

<TABLE>
<CAPTION>
                                                                 GROSS
                                                               CARRYING    ACCUMULATED
                                                                AMOUNT     AMORTIZATION              NET
                                                                ------     ------------              ---
<S>                                                            <C>         <C>                     <C>
Unamortized intangible assets:

Trademarks/brand name                                          $ 26,800       $  -                 $26,800
                                                               --------       ----                 -------
Amortized intangible assets:

Software - 2-year useful life                                       400         80                     320
Patent - 9-year useful life                                         100          3                      97
Customer relationships - 17-year  useful life                     5,900         90                   5,810
Customer relationships - 26-year  useful life                     2,300         23                   2,277
                                                               --------       ----                 -------
Total intangible assets                                           8,700        196                   8,504
                                                               --------       ----                 -------
                                                               $ 35,500       $196                 $35,304
                                                               ========       ====                 =======
</TABLE>

Prior to 2003, the Company did not have amortizable intangible assets other than
deferred debt offering costs. Based on the carrying amount of the intangibles as
of December 31, 2003, future amortization for the years ended December 31, 2004,
2005, 2006, 2007 and 2008, is estimated to be $782,000, $462,000, $462,000,
$462,000 and $462,000, respectively.

7. LONG-TERM DEBT AND REVOLVING CREDIT FACILITIES

Long-term debt, including the Company's long-term revolving credit facility, at
December 31, 2003 and 2002, consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                       2003          2002
                                                                                       ----          ----
<S>                                                                                  <C>           <C>
Capital lease obligation, secured by property and plant (net book value
   $5,656 at December 31, 2003); payable in monthly installments (including
   interest at 8.0%) of $59; final payment due on August 1, 2007                     $  2,261      $  2,772

Capital lease obligation, secured by property and plant (net book value $8,907
   at December 31, 2003); interest of 7.5% payable monthly; payable in monthly
   principal installments of approximately $20 (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                                                                                   481         2,947

Senior revolving credit facility, secured by certain accounts receivable,
   inventories and property, plant and equipment; due on March 31, 2006;
   interest payable monthly (3.9% at December 31, 2003) 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                                                                        50,213       132,927

Convertible senior subordinated notes, unsecured; due June 15, 2033;
   interest payable semi-annually at 4.0%                                             120,000             -

Note payable, secured by property and plant (net book value $2,263 at
   December 31, 2003); due on May 1, 2006 with an option to pre-pay $2,500 on
   March 1, 2004 and $2,500 on March 1, 2005; interest payable quarterly
   at 11.0%; final payment due on May 1, 2006                                           5,000             -
                                                                                     --------      --------
                                                                                      177,955       138,646
Current maturities                                                                     (3,533)       (2,977)
                                                                                     --------      --------
                                                                                     $174,422      $135,669
                                                                                     ========      ========
</TABLE>

<PAGE>

Senior Credit Facility

The Company has a senior credit facility providing for a $185,000,000 revolving
line of credit. In addition, the Company has letters of credit outstanding under
this agreement of $1,788,000 at December 31, 2003. 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
were approximately $133,000,000 as of December 31, 2003. The senior credit
facility includes restrictive covenants relating to maintaining a minimum fixed
charge coverage ratio if availability falls below $30,000,000. Also, if
availability falls below $50,000,000, the debt will be classified as current.
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.

Convertible Senior Subordinated Notes

In June 2003, the Company issued $120,000,000 of Convertible Notes due June 15,
2033. The Company pays interest semi-annually on the Convertible Notes at the
rate of 4.0% per annum. Beginning with the six-month interest period commencing
on June 15, 2008, the Company will pay contingent interest during a six-month
interest period if the average trading price of the Convertible Notes equals or
exceeds 130.0% of the principal amount of the Convertible Notes during a
specified period prior to such six-month interest period. The embedded
derivative related to this contingent interest feature is required to be valued
separately from the Convertible Notes. However, the fair value of this
derivative is not material at December 31, 2003.

The Convertible Notes are general unsecured obligations of the Company and are
subordinated to the Company's senior indebtedness. Also, the Convertible Notes
are convertible under certain limited circumstances into shares of the Company's
common stock at an initial conversion rate of 34.2583 shares of the Company's
common stock per $1,000 principal amount of the Convertible Notes, representing
a conversion price of $29.19 per common share.

The Company has the right to redeem the Convertible Notes after June 15, 2008 at
a redemption price equal to par plus accrued interest, if any. Prior to June 15,
2011, the Company may redeem the Convertible Notes only if the closing price of
the Company's common stock has exceeded 130.0% of the conversion price then in
effect over 20 trading days out of a period of 30 consecutive trading days.
After June 15, 2011, the Company may redeem the Convertible Notes at any time.
Holders of the Convertible Notes have the right to require the Company to
repurchase all or some of their Convertible Notes on June 15, 2011, 2013, 2018,
2023 and 2028, at a price equal to par plus accrued interest, if any, payable in
cash. Holders of the Convertible Notes also have the right to require the
Company to purchase all or some of their Convertible Notes at a price equal to
par plus accrued interest, if any, if certain change of control events occur
prior to June 15, 2011.

Capital Leases

The present value of future minimum lease payments under the capital lease
obligations as of December 31, 2003 is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                          PRESENT VALUE OF
                                                TOTAL MINIMUM                              MINIMUM LEASE
                                                LEASE PAYMENTS           INTEREST             PAYMENTS
                                                --------------           --------             --------
<S>                                             <C>                      <C>              <C>
2004                                               $1,199                  $165                $1,034
2005                                                  714                   115                   599
2006                                                  712                    65                   647
2007                                                  476                    14                   462
                                                   ------                  ----                ------
                                                   $3,101                  $359                $2,742
                                                   ======                  ====                ======
</TABLE>

Property, plant and equipment at December 31, 2003 and 2002, include $19,653,000
under leases that have been capitalized. Accumulated depreciation for these
assets was $5,090,000 and $4,556,000 at December 31, 2003 and 2002,
respectively.

Debt Issuance Costs

Senior credit facility issuance costs at December 31, 2003 and 2002, were
$4,708,000 and $4,137,000 and are being amortized over the life of the facility.
Note issuance costs at December 31, 2003 were $4,059,000 and are being amortized
over an eight-year period. These costs are classified as other assets on the
December 31, 2003 and 2002, consolidated balance sheets. The Company's
amortization expense (recorded as a component of net interest expense) related
to these issuance costs for the years ended December 31, 2003, 2002 and 2001,
was $1,665,000, $1,111,000 and $208,000, 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, 2003 was $181,978,000.

8. DERIVATIVES, FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Derivative Instruments and Hedging Activities

Certain activities of the Company expose it to market risks, including the
effects of changes in foreign currency exchange rates and interest rates. The
financial exposures are monitored and managed by the Company as an integral part
of its overall risk management program. The Company's risk management program
seeks to reduce the potentially adverse effects that the volatility of the
markets may have on its operating results.

The Company maintains an interest rate risk management strategy that may, from
time to time, use derivative instruments to minimize significant, unanticipated
earnings fluctuations caused by interest rate volatility.

The Company maintains a foreign currency risk management strategy that uses
derivative instruments to protect its interests from unanticipated fluctuations
in earnings and cash flows caused by volatility in currency exchange rates. The
Company does not hold or issue financial instruments for trading purposes, nor
does it hold or issue leveraged derivative instruments.

The Company generally uses cash flow hedging strategies to reduce the
potentially adverse effects that market volatility may have on its operating
results. Cash flow hedges are hedges of forecasted transactions or of the
variability of cash flows to be received or paid related to a recognized asset
or liability. The Company enters into foreign exchange forward contracts
generally expiring within six months with the objective of converting U.S.
denominated debt held by Prudential into its functional currency. These
contracts are entered into to protect against the risk the eventual cash flows
resulting from such transactions will be adversely affected by changes in
exchange rates. The Company also uses interest rate swaps to convert a portion
of its variable rate revolving credit facility to fixed rates which generally
expire in thirteen months.

Accounting for Derivatives and Hedging Activities

The Company formally documents at inception all relationships between hedging
instruments and hedged items, as well as its risk management objective and
strategy for undertaking various hedged items. The Company also formally
assesses, both at the hedge's inception and on an ongoing basis, whether the
derivatives used in hedging transactions are highly effective in offsetting
changes in fair value or cash flows of the hedged items. Changes in the fair
value of a derivative that is highly effective as, and that is designated and
qualifies as, a cash flow hedge are recorded in other comprehensive earnings,
until the underlying transactions occur. When it is determined a derivative is
not highly effective as a hedge or it has ceased to be a highly effective hedge,
the Company discontinues hedge accounting prospectively.

<PAGE>

The following table summarizes the notional transaction amounts and fair values
for the Company's outstanding derivatives, by risk category and instrument type,
at December 31, 2003.

<TABLE>
<CAPTION>
                                    NOTIONAL        FAIR VALUE
QUALIFYING CASH FLOW HEDGES          AMOUNT      ASSET/(LIABILITY)                    DESCRIPTION
---------------------------          ------      -----------------                    -----------
<S>                                 <C>          <C>                  <C>
Interest rate swaps                  $50,000          $  (428)        Effectively converts the interest rate on an equivalent
(floating to fixed rate swaps)                                        amount of variable rate borrowings to a fixed rate

Foreign currency hedges              $30,000          $(2,686)        Effectively hedges the variability in forecasted cash flows
(floating to fixed exchange rates)                                    due to the foreign currency risk associated with the
                                                                      settlement of nonfunctional currency denominated debt
</TABLE>

As of December 31, 2003, $254,000 of deferred net losses on derivative
instruments were accumulated in other comprehensive income (loss), the majority
of which is expected to be reclassified to earnings during the next twelve
months. The ineffective portion of these hedges was immaterial as of December
31, 2003 and the Company expects the hedge to remain highly effective.

Concentration of Credit Risk

By using derivative financial instruments to hedge exposures to changes in
exchange rates and interest rates, the Company exposes itself to credit risk.
The Company manages exposure to counterparty credit risk by only entering into
derivative financial instruments with highly rated institutions that can be
expected to fully perform under the terms of the agreement.

Nonderivative Financial Instruments

Nonderivative financial instruments included in the balance sheet are cash and
cash equivalents, accounts receivable, notes receivable, accounts payable and
long-term debt. 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 notes receivable is in Note 3 and the long-term debt obligations are
described in Note 7 to the consolidated financial statements.

9. 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 were
terminated as of December 31, 2002. Restructuring costs of $584,000, $1,186,000
and $8,061,000, respectively, were recorded in the 2003, 2002 and 2001
consolidated statements of income and included the following items (in
thousands):

<TABLE>
<CAPTION>
                                                                           2003         2002          2001
                                                                           ----         ----          ----
<S>                                                                        <C>         <C>           <C>
Noncash costs:
Write-down of property, plant and equipment to fair value                  $150        $  861        $6,476
Cash costs:
Employee severance cost                                                     150             -           581
Adjustment to the original estimate                                           -          (356)            -
Other                                                                       284           681         1,004
                                                                           ----        ------        ------
                                                                            434           325         1,585
                                                                           ----        ------        ------
Total restructuring costs                                                  $584        $1,186        $8,061
                                                                           ====        ======        ======
</TABLE>

Following is a summary of the accrued restructuring liabilities and activity
through December 31, 2003 (in thousands):

<TABLE>
<CAPTION>
                                                                EMPLOYEE
                                                                SEVERANCE         OTHER             TOTAL
                                                                ---------         -----             -----
<S>                                                             <C>              <C>               <C>
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
  Additional costs                                                    150            284               434
  Cash payments                                                      (150)          (480)             (630)
                                                                ---------        -------           -------
Balance, December 31, 2003                                      $       -        $   284           $   284
                                                                =========        =======           =======
</TABLE>

         Future cash outlays expected in 2004 relating to the Company's exit
from the Longview, Washington, facility are anticipated to be comprised of the
remaining $284,000 cash costs shown above. These cash outlays are ultimately
expected to be funded through the future sale of the Longview, Washington, land
and building. The Company has a firm contract on the sale of this property in
the amount of $5,850,000 and expects to close the transaction during the first
half of 2004.

10. INCOME TAXES

The jurisdictional components of income from continuing operations before income
taxes for the years ended December 31, 2003, 2002 and 2001, are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                2003             2002               2001
                                                                ----             ----               ----
<S>                                                           <C>              <C>                 <C>
Domestic                                                      $ 7,576          $ (8,161)           $24,556
Foreign                                                        28,129            14,324             35,910
                                                              -------          --------            -------
                                                              $35,705          $  6,163            $60,466
                                                              =======          ========            =======
</TABLE>

The components of the provision (benefit) for income taxes for the years ended
December 31, 2003, 2002 and 2001, are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                2003             2002               2001
                                                                ----             ----               ----
<S>                                                           <C>              <C>                 <C>
Current:
  Federal                                                     $   514          $    878            $ 8,107
  State                                                            12               (89)               264
  Foreign                                                       8,477             7,617             14,234
                                                              -------          --------            -------
                                                                9,003             8,406             22,605
                                                              -------          --------            -------
Deferred:
  Domestic                                                      2,388            (2,686)             1,254
  Foreign                                                       1,357            (2,443)            (2,631)
                                                              -------          --------            -------
                                                                3,745            (5,129)            (1,377)
                                                              -------          --------            -------
                                                              $12,748          $  3,277            $21,228
                                                              =======          ========            =======
</TABLE>

The difference between the effective income tax rate and the U.S. federal income
tax rate for the years ended December 31, 2003, 2002 and 2001, is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                2003             2002               2001
                                                                ----             ----               ----
<S>                                                           <C>              <C>                 <C>
Provision at U.S. statutory tax rate                          $12,497          $  2,157            $21,163
State and local taxes, net of federal tax benefit                  86               (89)               280
Taxes on foreign income in excess of (less than)
  U.S. statutory rate                                             (89)              160                 41
Taxes on foreign dividends                                          -             1,776                525
Valuation allowances                                               53            (1,001)            (1,376)
Permanent items                                                   129              (426)              (449)
Other                                                              72               700              1,044
                                                              -------          --------            -------
                                                              $12,748          $  3,277            $21,228
                                                              =======          ========            =======
</TABLE>

<PAGE>

Temporary differences which give rise to deferred tax assets and liabilities at
December 31, 2003 and 2002, are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                 2003               2002
                                                                                 ----               ----
<S>                                                                            <C>                 <C>
Deferred tax assets:
  Various accrued liabilities and reserves                                     $  2,669            $ 7,277
  Net operating loss                                                              3,298              2,406
  Alternative minimum tax carryforwards                                           5,282              5,452
  Foreign tax credit carryforwards                                               12,362             11,342
  Pension plans                                                                     675                331
  Asset valuations                                                                1,335              1,544
  Valuation allowances:
    Foreign tax credit carryforwards                                             (6,877)            (8,349)
    Net operating loss carryforwards                                                (53)                 -
                                                                               --------            -------
          Total deferred tax assets                                              18,691             20,003
Deferred tax liabilities:
  Depreciation                                                                   19,157             15,380
                                                                               --------            -------
            Net deferred tax assets (liabilities)                              $   (466)           $ 4,623
                                                                               ========            =======
</TABLE>

The Company had alternative minimum tax credit carryforwards of $5,282,000
available for income tax purposes at December 31, 2003. These carryforwards do
not expire.

At December 31, 2003, the Company had net operating loss carryforwards with a
tax value of $3,298,000. Management's assessment is 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 between
2005 and 2023. In 2002, the Company reversed the $1,001,000 previously recorded
valuation allowance against the net operating loss carryforwards.

At December 31, 2003, the Company had $12,362,000 of foreign tax credit
carryforwards. The Company recorded a valuation allowance of $6,877,000 against
these foreign tax credit carryforwards after reassessing 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, 2002, the Company had $11,342,000 of
foreign tax credits with an $8,349,000 valuation allowance.

11. DEFINED CONTRIBUTION PLANS

The Company sponsors four 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 has provided matching contributions to the plans
for the years ended December 31, 2003, 2002 and 2001, of $1,701,000, $927,000
and $878,000, respectively.

The Company also sponsors two deferred compensation plans covering certain
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, 2003, 2002 and 2001, was $467,000, $151,000 and $45,000, respectively.

12. 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, 2003 and 2002, is as follows (in thousands):

<TABLE>
<CAPTION>
                                                             PENSION BENEFITS            POSTRETIREMENT
                                                                 AND SERP                 BENEFIT PLAN
                                                         -----------------------     ----------------------
                                                           2003           2002         2003          2002
                                                           ----           ----         ----          ----
<S>                                                      <C>            <C>          <C>           <C>
Change in benefit obligation:
  Benefit obligation at beginning of year                $ 32,390       $ 29,375     $  1,441      $  1,312
  Service cost                                              1,507          1,048           59            45
  Interest cost                                             2,534          1,963          117            88
  Plan amendments                                               -            741            -             -
  Actuarial loss                                              213             70            -            27
  Benefits paid                                            (1,215)        (1,048)         (55)          (42)
  Foreign currency translation change                       7,198            241          321            11
                                                         --------       --------     --------      --------
  Benefit obligation at end of year                      $ 42,627       $ 32,390     $  1,883      $  1,441
                                                         ========       ========     ========      ========
Change in fair value of plan assets:
  Fair value of plan assets at beginning of year         $ 26,478       $ 28,252     $      -      $      -
  Employer contributions                                    2,120            779            -             -
  Actual return on plan assets                              3,357         (1,737)           -             -
  Benefits paid                                            (1,215)        (1,048)           -             -
  Foreign currency translation change                       5,884            232            -             -
                                                         --------       --------     --------      --------
  Fair value of plan assets at end of year               $ 36,624       $ 26,478     $      -      $      -
                                                         ========       ========     ========      ========
Funded status:
  Underfunded status at end of year                      $ (6,003)      $ (5,912)    $ (1,883)     $ (1,441)
  Unrecognized actuarial loss                               9,265          8,867          504           224
  Unrecognized transition asset                            (5,557)        (5,064)         267           452
  Unrecognized prior service cost                           2,356          2,125            -            --
                                                         --------       --------     --------      --------
  Prepaid (accrued) benefit cost                         $     61       $     16     $ (1,112)     $   (765)
                                                         ========       ========     ========      ========
Amounts recognized in the balance sheets:
  Prepaid benefit costs                                  $  1,962       $  1,640     $      -      $     --
  Accrued benefit liability                                (5,935)        (5,870)      (1,112)         (765)
  Intangible asset                                          2,022          1,677            -            --
  Additional minimum pension liability                      2,012          2,569            -            --
                                                         --------       --------     --------      --------
  Net amount recognized                                  $     61       $     16     $ (1,112)     $   (765)
                                                         ========       ========     ========      ========
</TABLE>

<TABLE>
<CAPTION>
                                                                PENSION BENEFITS           POSTRETIREMENT
                                                                    AND SERP                BENEFIT PLAN
                                                                    --------                ------------
<S>                                                             <C>                        <C>
Estimated future benefit payments are as follow at
  December 31, 2003 (in thousands):

2004                                                              $   1,806                   $   58
2005                                                                  1,919                       58
2006                                                                  2,164                       65
2007                                                                  2,254                       72
2008                                                                  2,456                       71
2009 through 2013                                                    14,638                      454
                                                                  ---------                   ------
                                                                  $  25,237                   $  778
                                                                  =========                   ======
Employer contributions expected for the year ended
  December 31, 2004 (in thousands):

Contributions required by funding regulations or laws             $   1,180                   $    -
Additional discretionary contributions                                  954                       55
                                                                  ---------                   ------
                                                                  $   2,134                   $   55
                                                                  =========                   ======
</TABLE>
<PAGE>

The Hourly Plan projected and accumulated benefit obligations of $18,822,000
were in excess of the fair value of plan assets of $15,650,000 at December 31,
2003. The SERP projected and accumulated benefit obligations of $2,971,000 and
$2,411,000 at December 31, 2003 and 2002, respectively, are unfunded. The fair
value of the Salary Plan assets was in excess of the projected and accumulated
benefit obligations of $20,835,000 and $17,830,000, respectively, at December
31, 2003.

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,
2003, the Company recorded an adjustment to stockholders' equity of $2,012,000,
which was required to reflect the Company's minimum liability.

Benefit costs consist of the following for the years ended December 31, 2003,
2002 and 2001 (in thousands):

<TABLE>
<CAPTION>
                                         2003       2002       2001
                                       -----------------------------
<S>                                    <C>        <C>        <C>
Pension benefit costs:
Service cost                           $ 1,507    $ 1,048    $   909
Interest cost                            2,534      1,963      1,733
Expected return on plan assets          (2,256)    (1,985)    (2,154)
Amortization of prior service cost         242        131        130
Amortization of transition asset          (633)      (518)      (513)
Recognized net actuarial gain (loss)       685        197        (19)
                                       -------    -------    -------
                                       $ 2,079    $   836    $    86
                                       =======    =======    =======
</TABLE>

<TABLE>
<CAPTION>
                                     2003   2002   2001
                                     ------------------
<S>                                  <C>    <C>    <C>
Postretirement benefit plan costs:
Service cost                         $ 59   $ 45   $ 30
Interest cost                         117     88     69
Recognized net actuarial loss          57     46     41
                                     ----   ----   ----
                                     $233   $179   $140
                                     ====   ====   ====
</TABLE>

The weighted average assumptions used in accounting for the Company's plans at
December 31, 2003 and 2002, are as follows:

<TABLE>
<CAPTION>
                                                          POSTRETIREMENT
                                     PENSION BENEFITS      BENEFIT PLAN
                                     -----------------------------------
                                      2003      2002      2003      2002
                                      ----------------------------------
<S>                                   <C>       <C>       <C>       <C>
Discount rate                         6.5%      6.5%      6.5%      6.5%
Expected return on plan assets        7.0%      7.0%        -         -
Rate of compensation increase         4.3%      4.3%        -         -
</TABLE>

The pension plan's 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.

At December 31, 2003 and 2002, the pension plan assets were invested 58.0% and
60.0%, respectively, in equity securities and 42.0% and 40.0%, respectively, in
debt securities. Target investment rates were 55.0% equity securities, 43.0%
debt securities, and 2.0% short-term investments. The expected rate of return on
equity securities is 8.8%, on debt securities is 5.0% and on short-term
investments is 3.0%. The range on the contractual maturities for the debt
securities is from current to April 22, 2043. The weighted average years of the
contractual maturities for these debt securities are 4.0 years to 9.5 years
depending on the fund involved.

Investment Strategy

The long-term investment objective is to secure the defined pension benefits
while managing the variability and level of the Company's contributions. The
portfolio is rebalanced periodically, as required, ensuring the maximum equity
content is 60.0% at any time. Investments are managed by external managers, who
report to a Pension Committee, and are restricted to those permitted by the
Alberta Employee Pension Plan Act, the federal Pension Benefits Standards Act on
investment-related issues, and the Income Tax Act and Regulations. Investments
are made through pooled or segregated funds.

Determination of the Long-Term Rate of Return on Assets

To estimate the expected long-term rate of return on assets, the Company
considered the current level of expected returns on the bond portion of the
portfolio, the historical level of the risk premium associated with other asset
classes in which the portfolio is invested and the expectation for future
returns on each asset class. The expected return for each asset class was
weighted based on the policy's asset mix to develop an expected long-term rate
of return for the portfolio. The 7.0% assumption is consistent with this
approach.

Measurement Date

The date used to determine pension benefits is December 31, 2003.

For post retirement benefit plan measurement purposes, a 5.3% annual rate of
increase in the per capita cost of covered health care benefits was assumed for
2004. The rate was assumed to decrease gradually each successive year until it
reaches 4.5%.

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):

<TABLE>
<CAPTION>
                                                             1.0% INCREASE      1.0% DECREASE
                                                             -------------      -------------
<S>                                                          <C>                <C>
Effect on total service and interest cost components              $ 35               $ 28
Effect on accumulated postretirement benefit obligations          $301               $245
</TABLE>

13. SEGMENT INFORMATION

Reportable Segments

The following table sets forth data (in thousands) for the years ended December
31, 2003, 2002 and 2001, regarding the reportable industry segments of the
Company. Identifiable assets are those used in the Company's operations in each
segment.

<TABLE>
<CAPTION>
                                   ENERGY    INDUSTRIAL
                                  PRODUCTS    PRODUCTS     CORPORATE    TOTAL
                                 ----------------------------------------------
<S>                              <C>         <C>           <C>        <C>
YEAR  ENDED DECEMBER 31, 2003
Net sales                        $ 621,955   $ 262,362      $     -   $ 884,317
Income from operations              44,428         914            -      45,342
Identifiable assets                439,747     150,976       80,003     670,726
Goodwill and intangible assets      58,336      59,950            -     118,286
Depreciation and amortization       14,337       3,558        4,516      22,411
Capital expenditures                 7,278       6,438        7,186      20,902

YEAR ENDED DECEMBER 31, 2002
Net sales                        $ 375,097   $  77,816      $     -   $ 452,913
Income from operations              10,374         114            -      10,488
Identifiable assets                313,636     224,719       57,528     595,883
Goodwill and intangible assets      43,131      50,053            -      93,184
Depreciation and amortization       10,123       5,591        4,240      19,954
Capital expenditures                15,260       3,806        3,743      22,809
</TABLE>

<PAGE>

<TABLE>
<S>                              <C>         <C>            <C>       <C>
YEAR ENDED DECEMBER 31, 2001
Net sales                        $ 465,089   $  79,844      $     -   $ 544,933
Income (loss) from operations       68,313      (4,757)           -      63,556
Identifiable assets                262,242      68,325       26,880     357,447
Depreciation and amortization       10,762       2,675        1,404      14,841
Capital expenditures                13,327       6,777        5,680      25,784
</TABLE>

The corporate information in the above table is not considered a segment;
however, it represents the corporate assets not identifiable to a reporting
segment necessary for the day-to-day operations of the Company.

Geographic Information

<TABLE>
<CAPTION>
                                                              OTHER
                                    U.S.        CANADA      COUNTRIES      TOTAL
                                  -----------------------------------------------
<S>                               <C>          <C>          <C>          <C>
YEAR  ENDED DECEMBER 31, 2003
Net sales                         $567,075     $296,739     $ 20,503     $884,317
Long-lived assets                  286,589       21,131            -      307,720

YEAR ENDED DECEMBER 31, 2002
Net sales                         $281,676     $159,364     $ 11,873     $452,913
Long-lived assets                  253,277       18,628          523      272,428

YEAR ENDED DECEMBER 31, 2001
Net sales                         $331,998     $211,764     $  1,171     $544,933
Long-lived assets                  129,272       28,989            -      158,261
</TABLE>

Net sales are attributable to the country based on where the product is to be
delivered. Long-lived assets represents net property, plant and equipment,
goodwill and net other acquired intangibles.

Prudential's facility located in Calgary, Alberta, operates under a collective
bargaining agreement that covers approximately 78.0% of all Prudential
employees. The collective bargaining agreement expires on December 31, 2006.

Facilities acquired as part of the assets and certain liabilities of Republic
Conduit, which are located in Elyria, Ohio; Ferndale, Michigan; and Counce,
Tennessee, operate under several collective bargaining agreements. Collective
bargaining agreements cover approximately 49.0% of all Republic Conduit
employees. The collective bargaining agreements expire on November 15, 2005.

14. 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,
2003 (in thousands):

<TABLE>
<S>                                <C>
2004                               $ 3,288
2005                                 2,964
2006                                 2,352
2007                                 2,486
2008                                 2,341
Thereafter                             500
                                   -------
                                   $13,931
                                   =======
</TABLE>

Rent expense for all operating leases was $3,989,000, $4,103,000 and $4,356,000
for the years ended December 31, 2003, 2002 and 2001, respectively.

15. 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.

16. 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, 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 within these plans. 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, 2003
and 2002, 116,168 and 278,418 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, 2003, 2002 and 2001, was determined to be
$1,457,000, $2,779,000 and $1,474,000, 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, 2003, 2002 and 2001,
respectively: risk-free interest rate of 2.97%, 3.82% and 4.90%; no dividend
payments expected; volatility factors of the expected market price of the
Company's common stock of 0.633, 0.656 and 0.678; and a weighted average
expected life of the options of 3.7 years, 3.9 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.

The following table summarizes option activity and related information for the
years ended December 31, 2003, 2002 and 2001:

<PAGE>

<TABLE>
<CAPTION>
                                                                        WEIGHTED      WEIGHTED
                                                  SHARES UNDER          AVERAGE        AVERAGE
                                                     OPTION          EXERCISE PRICE  FAIR VALUE
                                                  ------------       --------------  ----------
<S>                                               <C>                <C>             <C>
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
Options exercised                                   (325,010)               7.02
Options forfeited                                   (106,326)              20.41
Options granted                                      185,000               16.39       $ 7.88
                                                   ---------           ---------       ------

Options outstanding at December 31, 2003           1,189,037           $   13.18
                                                   =========           =========
</TABLE>

The following table summarizes information about fixed stock options outstanding
at December 31, 2003:

<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
----------------------------------------------------------------------------------------------------------
<S>                   <C>          <C>                    <C>                <C>            <C>
$4.75  - $5.18           39,273          1.5 years            $ 4.92          39,273            $ 4.92
$6.80  - $7.13          242,963          4.9 years            $ 7.07         242,963            $ 7.07
$10.37 - $15.95         665,651          8.3 years            $13.46         307,316            $13.26
$17.30 - $24.40         241,150          3.5 years            $19.90         327,037            $16.48
---------------       ---------          ---------            ------         -------            ------
$4.75 - $24.40        1,189,037          6.4 years            $13.18         916,589            $12.41
===============       =========          =========            ======         =======            ======
</TABLE>

17. CAPITAL STOCK

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.

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.

18. 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 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 20.0% 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. A
"flip-in event" will occur under our stockholder rights plan when a person
becomes an acquiring person otherwise than through a "permitted offer," as
described in our stockholder rights plan. Our stockholder rights plan defines
"permitted offer" to mean a tender or exchange offer for all outstanding shares
of common stock at a price and on terms that a majority of the independent
members of our Board of Directors determines to be adequate and otherwise in our
best interests and the best interests of our stockholders. 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 20.0% 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.

<PAGE>

19. QUARTERLY FINANCIAL DATA (UNAUDITED)

The results of operations by quarter for calendar years ended December 31, 2003
and 2002, were as follows (in thousands):

<TABLE>
<CAPTION>
QUARTER ENDED                               MARCH 31,         JUNE 30,            SEPTEMBER 30,             DECEMBER 31,
                                              2003              2003                   2003                     2003
                                            ---------------------------------------------------------------------------------
<S>                                         <C>               <C>                 <C>                       <C>
Net sales                                   $219,438          $194,925               $226,753                 $243,201
Gross profit                                  14,909            15,646                 29,765                   40,644
Net income                                       242             1,063                  8,677   (1)             12,975  (1,2)
Basic earnings per share                        0.01              0.03                   0.21                     0.31
Diluted earnings per share                      0.01              0.03                   0.21                     0.31
</TABLE>

<TABLE>
<CAPTION>
QUARTER ENDED                               MARCH 31,         JUNE 30,            SEPTEMBER 30,              DECEMBER 31,
                                              2002              2002                  2002                      2002
                                            ----------------------------------------------------------------------------------
<S>                                         <C>               <C>                 <C>                        <C>
Net sales                                   $103,923          $106,454               $117,696                 $124,840
Gross profit                                  11,627            12,227                 11,056                    8,087
Income (loss) from continuing
operations                                     1,839  (2)          980                    636   (2)               (569)  (1,2)
Net income (loss)                              2,357               980                    636                     (569)
Basic earnings (loss) per share from
 continuing operations                          0.06              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                      0.05              0.03                   0.02                    (0.01)
Diluted earnings (loss) per share               0.07              0.03                   0.02                    (0.01)
</TABLE>

(1)  During the third and fourth quarters of 2003 and 2002, the Company accrued
     $1,104,000 and $2,709,000, respectively, as a recovery for the trade case
     outstanding with the Department of Commerce. These payments were made to
     several steel and metals companies under The Continued Dumping and Subsidy
     Offset Act of 2000. These payments were made to cover certain expenses,
     including investment in manufacturing facilities and the acquisition of
     technology incurred after the imposition of anti-dumping and anti-subsidy
     measures.

(2)  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. During the quarters ended March 31, 2002, December 31, 2002 and
     December 31, 2003, the Company incurred additional costs related to the
     closing of the facility of $681,000 ($436,000 net of tax), $861,000
     ($551,000 net of tax) and $584,000 ($373,000 net of tax), respectively.
     During the quarters ended March 31, 2002 and September 30, 2002, the
     Company reversed $312,000 and $44,000, respectively, of the initial accrual
     primarily as a result of a decision to retain certain employees.

Officers and Board of Directors

<TABLE>
<CAPTION>
           Officers                                            Board of Directors
           --------                                            ------------------
<S>                                                     <C>
GREGG EISENBERG                                         GREGG EISENBERG
Chairman of the Board,                                  Chairman of the Board,
President and                                           President and
Chief Executive Officer                                 Chief Executive Officer

James A. Cowan                                          C. ROBERT BUNCH
Executive Vice President                                (President and Chief Operating
and Chief Operating Officer                             Officer of Input/Output Inc.)

Pamela G. Boone                                         David H. Kennedy
Vice President-                                         Independent energy consultant
Finance and Administration,                             and Director of Carbon Energy
Treasurer, Secretary and                                Corporation and RBC Capital
Chief Financial Officer                                 Partners Energy Fund

T. Scott Evans                                          Paul G. McDermott
Senior Vice President-                                  Managing Partner of Cadent
Sales and Marketing                                     Energy Partners, LLC and
                                                        Director of Resolute Energy, Inc.

SUDHAKAR KANTHAMNENI
Senior Vice President-                                  WAYNE P. MANG
Manufacturing and Technology                            Non-Executive Chairman and
                                                        Director of Wainbee Holdings Ltd.

RICHARD W. PRECKEL
Vice President-                                         C. ADAMS MOORE
Strategic Services                                      Independent consultant in steel
                                                        distribution and fabrication,
                                                        Director of Fisher Tank Company

                                                        J. DONALD WILSON*
                                                        Vice President and Director of
                                                        Calgary Exhibition and Stampede
</TABLE>

* Mr. Wilson, who will retire in May 2004, will not stand for reelection as
director. Management and the Board of Directors want to express our heartfelt
thanks to Mr. Wilson for his three years of service on Maverick's Board and his
sixteen years of service on Prudential's Board and wish him the best of luck in
the future. Mr. Wilson was instrumental in Prudential's growth.

<PAGE>

HISTORICAL FINANCIAL INFORMATION

The selected financial data for the Company set forth below for the years ended
December 31, 2003, 2002, 2001 and 2000, for the three months ended December 31,
1999, and for the year ended September 30, 1999, should be read in conjunction
with the consolidated financial statements, related notes and other financial
information included herein.

<TABLE>
<CAPTION>
                                                                                                          THREE
                                                                                                          MONTHS         YEAR
                                                                                                          ENDED          ENDED
     (in thousands, except per share data)                       YEAR ENDED DECEMBER 31,               DECEMBER 31,  SEPTEMBER 30,
                                                       2003         2002         2001         2000         1999          1999
                                                    ------------------------------------------------------------------------------
<S>                                                 <C>          <C>          <C>          <C>         <C>           <C>
STATEMENT OF OPERATIONS DATA:

Net sales                                           $ 884,317    $ 452,913    $ 544,933    $ 562,023    $ 129,766      $ 317,121
Cost of goods sold                                    783,353      409,916      441,843      488,397      118,060        298,379
                                                    ---------    ---------    ---------    ---------    ---------      ---------
Gross profit                                          100,964       42,997      103,090       73,626       11,706         18,742
Selling, general and administrative                    56,142       34,032     (1)30,372      25,466        7,104         22,036
Restructuring charges                                 (2) 584     (2)1,186     (2)8,061            -            -              -
Trade case relief                                      (1,104)      (2,709)           -            -            -              -
Start-up costs                                              -            -     (3)1,101      (3) 267            -        (3) 283
                                                    ---------    ---------    ---------    ---------    ---------      ---------
Income (loss) from operations                          45,342       10,488       63,556       47,893        4,602         (3,577)
Transaction costs                                           -            -            -    (4)11,253            -              -
Interest expense                                        9,637        4,325        3,090        3,177          256          1,868
                                                    ---------    ---------    ---------    ---------    ---------      ---------
Income (loss) from continuing operations before
 income taxes                                          35,705        6,163       60,466       33,463        4,346         (5,445)
Provision (benefit) for income taxes                   12,748        3,277       21,228       14,736        2,112           (348)
                                                    ---------    ---------    ---------    ---------    ---------      ---------
Income (loss) from continuing operations               22,957        2,886       39,238       18,727        2,234         (5,097)
(Loss) from operations of discontinued DOM
 facility, less applicable income tax benefit (5)           -            -         (957)      (2,162)        (687)        (2,237)
Gain (loss) on disposal of DOM facility (5)                 -          518      (10,240)           -            -              -
                                                    ---------    ---------    ---------    ---------    ---------      ---------
Net income (loss)                                   $  22,957    $   3,404    $  28,041    $  16,565    $   1,547      $  (7,334)
                                                    =========    =========    =========    =========    =========      =========

Diluted earnings (loss) per share from
 continuing operations                              $    0.55    $    0.08    $    1.15    $    0.54    $    0.07      $   (0.16)
                                                    =========    =========    =========    =========    =========      =========
Diluted earnings (loss) per share                   $    0.55    $    0.09    $    0.82    $    0.48    $    0.05      $   (0.24)
                                                    =========    =========    =========    =========    =========      =========

Average shares deemed outstanding                      42,110       38,492       34,117       34,525       32,638         31,160
                                                    =========    =========    =========    =========    =========      =========

OTHER DATA:
Depreciation and amortization                       $  22,411    $  19,954    $  14,841    $  12,602    $   3,064      $  10,895
Capital expenditures                                   20,902       22,809       25,784       51,780       18,004         16,288

BALANCE SHEET DATA:
(End of period)
Working capital                                     $ 253,663    $ 201,195    $ 142,316    $ 118,828    $ 108,632      $  93,586
Total assets                                          670,726      595,883      357,447      390,818      323,255        289,241
Current maturities of long-term debt                    3,533        2,977          938          866          723            708
Short-term revolving credit facility                        -            -        3,219       20,766       10,067         10,067
Long-term revolving credit facility                    50,213      132,927       62,000       62,038       27,150         31,000
Other long-term debt (less current maturities)        124,209        2,742        5,991        6,929        7,300          7,518
Stockholders' equity                                  384,798      338,286      225,383      213,256      200,566        166,774
</TABLE>

(1)  Includes a charge of $1,500,000 in connection with an unsuccessful
     acquisition.

(2)  The Company recorded a restructuring charge for the write-down of property
     and equipment and accrual of other cash obligations of $584,000, $1,186,000
     and $8,061,000 for the years ended December 31, 2003, 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.

(3)  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.

(4)  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.

(5)  The Company decided to discontinue its DOM business during 2001.

<PAGE>

STOCKHOLDER INFORMATION

Market for Our Common Equity and Related Stockholder Matters

Principal Market

Our common stock, par value $0.01 per share, is traded on the New York Stock
Exchange under the symbol "MVK." Our exchangeable shares are traded on The
Toronto Stock Exchange under the symbol "MAV."

Stock Price and Dividend Information

The high and low closing sales prices of our common stock during the first,
second, third and fourth quarters for the years ended December 31, 2003 and
2002, respectively, were as follows:

<TABLE>
<CAPTION>
                                                2003                                       2002
                                                ----                                       ----
Quarter                              High                   Low                  High                 Low
----------------------------------------------------------------------------------------------------------
<S>                                 <C>                   <C>                   <C>                 <C>
First                               $18.71                $12.17                $16.32              $10.97
Second                              $21.53                $16.88                $19.15              $13.25
Third                               $19.36                $14.29                $14.45              $ 8.87
Fourth                              $20.99                $15.76                $13.87              $ 8.37
</TABLE>

The high and low closing sales prices on The Toronto Stock Exchange of our
exchangeable shares during the first, second, third and fourth quarters for the
years ended December 31, 2003 and 2002, respectively, were as follows:

<TABLE>
<CAPTION>
                                               2003                                       2002
                                               ----                                       ----
Quarter                              High                  Low                   High                Low
----------------------------------------------------------------------------------------------------------
<S>                                <C>                   <C>                   <C>                 <C>
First                              C$27.61               C$19.25               C$25.78             C$17.85
Second                             C$28.96               C$24.28               C$29.59             C$20.50
Third                              C$25.12               C$19.60               C$21.00             C$13.96
Fourth                             C$28.30               C$20.50               C$21.65             C$13.50
</TABLE>

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

Approximate Number of Holders of Common Stock

There were 120 holders of record of our common stock as of December 31, 2003.
There were 9 holders of record of our exchangeable shares as of December 31,
2003.

Stockholder Information

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

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

Legal Counsel
Gallop, Johnson & Neuman, LC
Interco Corporate Tower
101 South Hanley
St. Louis, Missouri 63105
(314) 615-6000

Transfer Agent and Registrar
(Common Stock)
Computershare Investor Services
2 North LaSalle Street
Chicago, Illinois 60602
(312) 588-4211

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

10-K Report Available

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