<PAGE>

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                       For the quarter ended June 30, 2000

                         COMMISSION FILE NUMBER: 1-12881


                          LONE STAR TECHNOLOGIES, INC.



                            (A DELAWARE CORPORATION)

                       15660 N. DALLAS PARKWAY, SUITE 500
                               DALLAS, TEXAS 75248

                                  972/770-6401

                I.R.S. EMPLOYER IDENTIFICATION NUMBER: 75-2085454


         Indicate by a check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/  No / /

         As of July 31, 2000, the number of shares of Common Stock outstanding
at $1.00 par value per share was 23,561,610.

================================================================================

<PAGE>

                          LONE STAR TECHNOLOGIES, INC.

                                      INDEX

                         PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
Item 1.     CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                Consolidated Statements of Income...............................................................3

                Consolidated Balance Sheets.....................................................................4

                Consolidated Statements of Cash Flows...........................................................5

                Notes to Consolidated Financial Statements......................................................6


Item 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION..............10

                Results of Operations...........................................................................10

                Financial Condition and Liquidity...............................................................11


Item 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........................................13



                           PART II - OTHER INFORMATION


Item 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................................................13

Item 6.     EXHIBITS AND REPORTS ON FORM 8-K....................................................................13
</TABLE>


                                       2
<PAGE>

                          LONE STAR TECHNOLOGIES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                 (UNAUDITED, IN MILLIONS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                For the             For the
                                                              Quarter Ended     Six Months Ended
                                                                 June 30,           June 30,
                                                              2000     1999       2000      1999
                                                           --------------------------------------
<S>                                                      <C>       <C>       <C>        <C>
   Net revenues                                          $   153.5 $   77.2  $   307.4  $  140.9
   Cost of goods sold                                       (131.5)   (77.7)    (267.5)   (143.6)
                                                           --------------------------------------
     Gross profit (loss)                                      22.0     (0.5)      39.9      (2.7)
   Selling, general and administrative expenses               (9.3)    (3.6)     (17.4)     (7.4)
                                                           --------------------------------------
     Operating income (loss)                                  12.7     (4.1)      22.5     (10.1)
   Interest income                                             0.4      0.4        0.9       0.8
   Interest expense                                           (3.9)    (1.0)      (6.9)     (1.9)
   Other income (expense)                                       -      (0.1)       0.2      (0.2)
                                                           --------------------------------------
     Income (loss) from continuing operations before
       income tax                                              9.2     (4.8)      16.7     (11.4)
   Income tax                                                 (0.4)      -        (0.8)       -
                                                           --------------------------------------
     NET INCOME (LOSS)                                   $     8.8 $   (4.8) $    15.9 $   (11.4)
   ==============================================================================================

   PER COMMON SHARE - BASIC:
     NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS  $    0.37 $  (0.21) $    0.68 $   (0.51)
   ==============================================================================================

   PER COMMON SHARE - DILUTED:
     NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS  $    0.36 $  (0.21) $    0.65 $   (0.51)
   ==============================================================================================

   WEIGHTED AVERAGE SHARES OUTSTANDING
     Basic                                                    23.5     22.5       23.5      22.5
     Diluted                                                  24.4     22.5       24.3      22.5
</TABLE>


     See accompanying notes.



                                       3
<PAGE>

                          LONE STAR TECHNOLOGIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                   (UNAUDITED, IN MILLIONS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                       June 30,       December 31,
                                                                       --------------------------
                                                                          2000            1999
                                                                       --------------------------
<S>                                                                    <C>            <C>
     ASSETS
      CURRENT ASSETS:
        Cash and cash equivalents                                    $    16.5         $    22.2
        Short-term investments                                             1.2               1.2
        Accounts receivable, net                                          92.2              56.1
        Current inventories, net                                         121.2              88.9
        Other current assets                                               7.3               3.7
                                                                       --------------------------
      TOTAL CURRENT ASSETS                                               238.4             172.1

      Marketable securities                                               15.4              15.4
      Property, plant, and equipment, net                                175.3             149.5
      Goodwill                                                            56.6                 -
      Other noncurrent assets                                             14.5              14.1
                                                                       --------------------------
     TOTAL ASSETS                                                    $   500.2         $   351.1
     ============================================================================================


     LIABILITIES AND SHAREHOLDERS' EQUITY
      LIABILITIES:
        Current installments on long-term debt                       $     8.0         $     2.0
        Accounts payable                                                  64.7              57.0
        Accrued liabilities                                               32.1              26.2
                                                                       --------------------------
       TOTAL CURRENT LIABILITIES                                         104.8              85.2
                                                                       --------------------------

       Term loan                                                          36.0               7.0
       Revolving credit facility                                          85.0              21.0
       Postretirement benefit obligations                                 25.0              26.1
       Other noncurrent liabilities                                       15.5              15.9
                                                                       --------------------------
     TOTAL LIABILITIES                                                   266.3             155.2
                                                                       --------------------------

     Commitments and Contingencies (See Note 8)                              -                 -

     SHAREHOLDERS' EQUITY:
       Preferred stock, $1 par value
          (authorized:  10,000,000 shares, issued:  none)                    -                 -
       Common stock, $1 par value
          (authorized:  80,000,000 shares, issued:  23,822,101)
           23,061,864, respectively)                                      23.8              23.1
       Capital surplus                                                   223.0             209.9
       Accumulated other comprehensive loss                               (1.8)             (1.4)
       Accumulated deficit                                                (5.1)            (21.0)
       Treasury stock (260,491 and 462,991 common shares, respectively)   (6.0)            (14.7)
                                                                       --------------------------
     TOTAL SHAREHOLDERS' EQUITY                                          233.9             195.9
                                                                       --------------------------

     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                      $   500.2         $   351.1
     ============================================================================================
</TABLE>


     See accompanying notes.



                                       4
<PAGE>

                          LONE STAR TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (UNAUDITED, IN MILLIONS)

<TABLE>
<CAPTION>
                                                           For the Quarter     For the Six Months
                                                            Ended  June 30,      Ended June 30,
                                                            2000       1999      2000       1999
                                                          ---------------------------------------
<S>                                                     <C>       <C>        <C>       <C>
   BEGINNING CASH AND CASH EQUIVALENTS                  $    7.1  $    23.1  $   22.2  $    20.9
   ==============================================================================================

   CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income (loss)                                      8.8       (4.8)     15.9      (11.4)
   ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
      CASH PROVIDED BY OPERATING ACTIVITIES:
      Depreciation and amortization                          5.4        4.1      10.5        8.3
      Accounts receivable, net                              (5.3)      (8.1)    (20.6)      (5.6)
      Current inventories, net                               1.3       (3.1)    (21.6)      11.4
      Accounts payable and accrued liabilities              (9.6)       9.8       3.6        6.5
      Other                                                 (6.7)       3.3      (4.6)      (0.1)
                                                          ---------------------------------------
             NET CASH PROVIDED (USED) BY OPERATING
               ACTIVITIES                                   (6.1)       1.2     (16.8)       9.1

   CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures                                  (4.3)      (1.6)     (8.3)      (3.0)
      Short-term investments                                 0.1          -         -        2.0
      Marketable securities                                  5.0       (4.0)        -       (2.0)
      Cash paid for acquisition of Fintube and Bellville       -          -     (81.7)         -
                                                          ---------------------------------------
             NET CASH PROVIDED (USED) IN INVESTING
               ACTIVITIES                                    0.8       (5.6)    (90.0)      (3.0)

   CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from long-term debt                             -          -         -       10.0
      Initial borrowings under new revolving credit
        facility                                               -          -       6.8       34.0
      Net borrowings (payments) under revolving credit
        facility                                            15.7        1.3      57.2       (7.0)
      Net payments under old revolving credit facility         -          -         -      (44.0)
      Issuance of term note                                    -          -      39.0          -
      Term note repayment                                   (2.0)         -      (4.0)         -
      Issuance of common stock                               1.0        0.7       2.1        0.7
                                                          ---------------------------------------
             NET CASH PROVIDED (USED) BY FINANCING
               ACTIVITIES                                   14.7        2.0     101.1       (6.3)
                                                          ---------------------------------------

              Net increase (decrease) in cash and cash
                equivalents                                  9.4       (2.4)     (5.7)      (0.2)
                                                          ---------------------------------------

             ENDING CASH AND CASH EQUIVALENTS           $   16.5 $     20.7  $   16.5  $    20.7
   ==============================================================================================

   SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTION:
      ISSUANCE OF COMMON STOCK FOR ACQUISITION          $      -          -      20.0          -
</TABLE>


     See accompanying notes.



                                       5
<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1
In the opinion of management, the unaudited consolidated financial statements
include all adjustments (consisting of only normal, recurring adjustments)
necessary to present fairly the financial position as of June 30, 2000 and the
cash flows and the results of operations for the three months and six months
ended June 30, 2000 and 1999. Unaudited financial statements are prepared on a
basis substantially consistent with those audited for the year ended December
31, 1999. Lone Star Technologies, Inc. ("Lone Star") acquired the assets of
Fintube Limited Partnership ("FLP") and Bellville Tube Corporation
("Bellville"), respectively. The accompanying consolidated financial statements
include the operations of Fintube Technologies, Inc. ("Fintube") for the
three-months and six-months ended June 30, 2000 and the operations of Bellville
for the three months ended June 30, 2000. The results of operations for the
interim periods presented may not be indicative of total results for the full
year. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
promulgated by the Securities and Exchange Commission. However, management
believes that the disclosures contained herein are adequate to make the
information presented not misleading. Certain reclassifications of prior period
amounts have been made to conform with the current period. The unaudited
financial statements should be read in conjunction with the audited financial
statements and accompanying notes in Lone Star's Annual Report on Form 10-K as
amended for the year ended December 31, 1999.

NOTE 2 - ACQUISITIONS
On January 3, 2000, Lone Star through Fintube, a wholly owned subsidiary of Lone
Star, purchased substantially all of the assets of FLP for a base purchase price
of $82 million plus a $2.5 million adjustment for working capital and
approximately $1.5 million in acquisition related expenses (the "Fintube
Acquisition"). The Fintube Acquisition was effective as of January 1, 2000. The
working capital adjustment was estimated at the closing and was reduced on an
actual, post-closing basis by $0.7 million in July 2000. The consideration for
the Fintube Acquisition was determined following a competitive bidding process
in arm's-length negotiations between Lone Star and FLP. The acquired business
involves the design and production of finned tubes and other products used in a
variety of heat recovery applications. Lone Star is operating and using the
assets acquired in the Fintube Acquisition in substantially the same manner as
they were used by FLP prior to the Fintube Acquisition. Lone Star and Fintube
utilized three different sources of financing to pay the purchase price. Lone
Star used $20 million of cash that it received from Lone Star Steel Company
("Steel"), a wholly owned subsidiary of Lone Star, in connection with Steel's
repayment of a $20 million subordinated loan from Lone Star. Steel borrowed the
$20 million that it repaid to Lone Star under Steel's $90 million revolving line
of credit with the CIT Group/Business Credit, Inc., acting on its own behalf and
as agent for other banks. Additionally, Lone Star issued approximately $20
million of Lone Star common stock directly to the limited partners or other
beneficial owners of FLP. Finally, Fintube entered into a new Credit Agreement
with Bank of America, acting on its own behalf and as agent for other banks, in
connection with the Fintube Acquisition and borrowed (i) approximately $7
million under the revolving credit facility and (ii) $39 million under the term
loan facility.

The Fintube Acquisition has been accounted for under the purchase method of
accounting, and accordingly, the purchase price has been allocated to the assets
acquired and the liabilities assumed based upon fair value at the date of the
Fintube Acquisition. The excess purchase price over the fair values of the
tangible net assets acquired was approximately $50.1 million, has been recorded
as goodwill and is being amortized on a straight-line basis over 30 years. In
the event that facts and circumstances indicate that the goodwill may be
impaired, an evaluation of recoverability will be performed. If an evaluation is
required, the estimated future undiscounted cash flows associated with the asset
will be compared to the asset's carrying amount to determine if an adjustment is
required.

The net purchase price was allocated as follows (in thousands):

<TABLE>
<S>                                                  <C>
         Current Assets                               $26,573
         Net property & equipment                      17,963
         Other Assets                                     675
         Goodwill & other intangibles                  50,113
         Liabilities Assumed                            9,799

                  Net purchase price                  $85,525
</TABLE>

                                       6
<PAGE>

The allocation of the purchase price is preliminary and subject to adjustment
pending the outcome of an assessment of the intangible assets acquired and
the terms of the working capital purchase price adjustment.

On April 1, 2000 Lone Star through Bellville Acquisition, Inc., a wholly
owned subsidiary of Lone Star, purchased substantially all of the assets of
Bellville for a base purchase price of $14.8 million less a $0.2 million
adjustment for working capital (the "Bellville Acquisition"). The working
capital adjustment was estimated at the closing and was further adjusted by
an additional $0.1 million on an actual, post-closing basis in July 2000. The
consideration for the Bellville Acquisition was determined through arm's
length negotiations between Lone Star and Bellville. Lone Star financed the
Bellville Acquisition through cash held by Lone Star and $5 million of
borrowings. In connection with these borrowings, Steel borrowed $5 million
under its present credit facility to repay the remaining $5 million of its
subordinated loan to Lone Star. Lone Star guaranteed an additional $5 million
of Steel's credit facility, pledged the stock of Bellville as collateral for
such guaranty, and used the loan repayment to fund a portion of the Bellville
purchase price. The cash paid for the Bellville Acquisition was wired to
Bellville on March 31, 2000; however, the purchase was not effective until
April 1, 2000.

The Bellville Acquisition by Lone Star has been accounted for under the
purchase method of accounting, and accordingly, the purchase price has been
allocated to the assets acquired and the liabilities assumed based upon fair
value at the date of the Bellville Acquisition. The excess purchase price
over the fair values of the tangible net assets acquired was approximately
$7.3 million, has been recorded as goodwill and is being amortized on a
straight-line basis over 30 years. In the event that facts and circumstances
indicate that the goodwill may be impaired, an evaluation of recoverability
will be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the asset will be compared to the
asset's carrying amount to determine if an adjustment is required.

The net purchase price was allocated as follows (in thousands):

<TABLE>
<S>                                                <C>
         Net property & equipment                     $ 7,597
         Goodwill & other intangibles                   7,253
         Liabilities assumed                              285

                  Net purchase price                  $14,565
</TABLE>

The allocation of the purchase price is preliminary and subject to adjustment
pending the outcome of an assessment of the intangible assets acquired and
the terms of the working capital purchase price adjustment.

The unaudited pro forma results below assume the acquisitions occurred at the
beginning of the periods presented (in millions, except per share amounts):

<TABLE>
<CAPTION>
                                                                Three Months Ended               Six Months Ended
                                                                    June 30                          June 30
                                                              2000             1999            2000          1999
                                                          --------------------------       -----------------------
<S>                                                     <C>              <C>             <C>           <C>
Net sales                                               $    153.5       $    100.8      $    307.6    $    188.5
Net income (loss)                                              8.8             (4.4)           16.4          (6.9)
Basic income (loss) per share                                 0.37            (0.19)           0.70         (0.30)
Diluted Income (loss) per share                               0.36            (0.19)           0.67         (0.30)
</TABLE>


The above pro forma results include adjustments to give effect to
amortization of goodwill, interest expense and other purchase price
adjustments. The pro forma results are not necessarily indicative of the
operating results that would have occurred had the acquisitions been
consummated as of the beginning of the periods presented, nor are they
necessarily indicative of future operating results. Lone Star has not yet
determined the final allocation of the purchase price and, accordingly, the
amounts shown may differ from the amounts ultimately determined; however,
that allocation is not expected to differ materially from the preliminary
allocation.

                                       7
<PAGE>

NOTE 3 - BUSINESS SEGMENTS DATA

<TABLE>
<CAPTION>
                                                   For the Quarter Ended              For the Six Months Ended
                                                           June 30,                            June 30,
                                                  2000               1999                 2000          1999
                                                -----------------------------    ------------------------------
OILFIELD PRODUCTS                                        (IN MILLIONS)                  (IN MILLIONS)
<S>                                           <C>                <C>                  <C>           <C>
Net revenues                                  $     81.4         $      37.2          $    162.9    $     67.2
Operating earnings (loss)                            7.2                (4.0)               10.7          (8.6)
Identifiable assets                                216.2               145.0               216.2         145.0
Capital expenditures                                 2.1                 0.5                 4.3           1.1
Depreciation and amortization                        2.6                 2.1                 5.1           4.3

SPECIALTY TUBING
Net revenues                                  $     56.6         $      29.7          $    113.3    $     56.4
Operating earnings                                   5.5                 2.2                11.6           2.6
Identifiable assets                                225.8               124.6               225.8         124.6
Capital expenditures                                 1.9                 1.1                 3.7           1.9
Depreciation and amortization                        2.6                 1.8                 5.0           3.6

FLAT ROLLED STEEL AND OTHER PRODUCTS
Net revenues                                  $     15.5         $      10.3          $     31.2    $     17.3
Operating earnings (loss)                            0.3                (1.6)                0.2          (2.8)
Identifiable assets                                 21.1                17.6                21.1          17.6
Capital expenditures                                 0.3                   -                 0.3             -
Depreciation and amortization                        0.2                 0.2                 0.4           0.4

CORPORATE AND OTHER NON-SEGMENTS
Operating earnings (loss)                     $     (0.3)        $       0.7          $        -    $     (1.3)
Identifiable assets                                 37.1                37.5                37.1          37.5

CONSOLIDATED TOTALS
Net revenues                                  $    153.5         $      77.2          $    307.4    $    140.9
Operating earnings (loss)                           12.7                (4.1)               22.5         (10.1)
Identifiable assets                                500.2               324.7               500.2         324.7
Capital expenditures                                 4.3                 1.6                 8.3           3.0
Depreciation and amortization                        5.4                 4.1                10.5           8.3
</TABLE>

NOTE 4 - DEBT
On March 16, 1999, Steel refinanced the $100.0 million revolving credit facility
that it had in place at year-end 1998 with a $90.0 million revolving line of
credit and a three-year $10.0 million term loan. Under the new revolving credit
facility, Steel can borrow an amount based on a percentage of eligible accounts
receivable and inventories, reduced by outstanding letters of credit. At June
30, 2000, borrowings totaled $81.4 million including $8.0 million on the term
loan with a remaining availability of $16.2 million. At Steel's option, the
interest rate is the prime lending rate plus 1.0% or the LIBOR plus 3.0%. Steel
pays a 0.375% per annum fee on the unused portion of the credit facility. The
term loan is repayable in quarterly installments of $0.5 million, together with
interest at the prime lending rate plus 1.5% or the LIBOR plus 3.5%. Steel's
assets other than real estate secure these loans. In connection with the Fintube
Acquisition on January 3, 2000, and the Bellville Acquisition effective April 1,
2000 (see Note 2), Steel borrowed $25 million under its present credit facility
to repay its $25 million subordinated loan to Lone Star, Lone Star guaranteed
$25 million of Steel's credit facility and Lone Star used the loan repayment to
fund a portion of the purchase price payable in the Fintube Acquisition and the
Bellville Acquisition.

On January 3, 2000, Lone Star's new subsidiary, Fintube, entered into a new
senior credit facility providing a $20 million revolving line of credit and a
$39 million term loan used to pay part of the cash portion of the purchase price

                                       8
<PAGE>

in the Fintube Acquisition. Under the revolving line of credit, Fintube can
borrow an amount based on a percentage of eligible accounts receivable and
eligible inventory, reduced by outstanding letters of credit. At Fintube's
option, the interest rate is the prime lending rate plus 1.0% or the LIBOR
plus 2.5%. Fintube pays a 0.50% rate on the unused portion of the credit
facility. The interest rate on $20.0 million of the term loan is fixed by a
rate swap agreement at 7.20% and on the remainder of the term loan is the
same as the revolving credit facility. The term loan is repayable in
quarterly installments of $1.5 million through December 31, 2002 and of $1.75
million thereafter through December 31, 2005. As of June 30, 2000, borrowings
by Fintube totaled approximately $47.7 million, including the term loan, with
a remaining availability, based on eligible accounts receivable and inventory
on such date, of approximately $7.9 million.

NOTE 5 - EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the weighted
average number of shares of common stock. The numbers of shares used to compute
basic earnings per share for the three months ended June 30, 2000 and 1999,
respectively, were 23.5 million and 22.5 million, and six months ended June 30,
2000 and 1999, were 23.5 million and 22.5 million, respectively. Diluted
earnings per share is computed by dividing net income by the weighted average
number of shares of common stock and other dilutive securities. The numbers of
shares used to compute diluted earnings per share for the three months and the
six months ended June 30, 2000, respectively, were 24.4 million and 24.3 million
- dilutive securities respectively equivalent to 0.9 million and 0.8 million
shares of common stock were outstanding during the three months and the six
months ended June 30, 2000. Dilutive securities were not included in the
computation of diluted earnings per share for June 30, 1999. Lone Star had
losses in that period and the effect of including the dilutive securities would
have been anti-dilutive to earnings per share.

NOTE 6 - INVENTORIES
At June 30, 2000, inventories totaled $151.6 million before LIFO and other
reserves and were composed of: finished goods, $40.8 million; work in process,
$61.1 million; and raw materials and supplies, $49.7 million. Net of LIFO and
other reserves of $23.9 million, inventories were $127.7 million, of which $6.5
million (consisting of supplies and spare parts) were classified as noncurrent
assets.

NOTE 7 - CASH, INVESTMENTS, AND MARKETABLE SECURITIES
Lone Star's cash equivalents include highly liquid investments in a fund
consisting of U. S. government and related agencies obligations with original
maturities of less than three months. Short-term investments consist of U. S.
government and related agencies obligations with maturities at purchase greater
than three months and up to one year. Marketable securities consist of U. S.
government and related agencies obligations with maturities at purchase greater
than one year and up to two years. Lone Star's total cash equivalents,
short-term investments and marketable securities, the weighted average maturity
of which is less than one year, are classified as held-to-maturity because Lone
Star has the intent and ability to hold them to maturity.

NOTE 8 - COMMITMENTS AND CONTINGENCIES
Steel and Fintube have various commitments for the purchase of raw materials,
certain tubular goods, supplies, services, and energy arising in the ordinary
course of business. The majority of these commitments are for a period of less
than one year.

Steel's, Fintube's, and Bellville's operations are subject to foreign, federal,
state, provincial and local environmental laws and regulations concerning, among
other things, waste materials, wastewater disposal and air emissions. Lone Star
believes that its subsidiaries are currently in material compliance with all
applicable environmental laws and regulations.

NOTE 9 - INCOME TAXES
Lone Star had federal tax net operating loss carryforwards of approximately
$262.4 million at December 31, 1999, a portion of which may be related to
American Federal Bank (AFB), a previous subsidiary of Lone Star, and subject to
an agreement with the Federal Deposit Insurance Corporation (FDIC) whereby Lone
Star may be required to pay the FDIC for certain tax benefits. Provisions for
alternative minimum taxes of $0.4 million and $0.8 million, respectively, were
recognized for the three months and the six months ended June 30, 2000. Because
of the net losses for the six months ended June 30, 1999, no provision for taxes
was recognized for that period. If not utilized, the net operating loss
carryforwards will expire between years 2003 and 2014.

                                       9
<PAGE>

NOTE 10 - COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) for the periods ended June 30, 2000 and June 30,
1999 was:

<TABLE>
<CAPTION>
                                                             (In millions)
                                               For the Quarter Ended      For the Six Months Ended
                                                     June 30,                      June 30,
                                                2000          1999            2000         1999
                                          ---------------------------  ----------------------------
<S>                                       <C>             <C>          <C>             <C>
    Net income (loss)                       $   8.8       $  (4.8)        $   15.9     $ (11.4)
    Employee benefit plan stock grant             -             -             (0.4)          -
                                            ---------     ---------       ---------    ----------
    Comprehensive income (loss)             $   8.8       $  (4.8)        $   15.5     $ (11.4)
</TABLE>


NOTE 11 - NEW ACCOUNTING PRONOUNCEMENT
The SEC recently issued Staff Accounting Bulletin No. 101, Revenue Recognition
in Financial Statements, which provides guidance on the recognition,
presentation, and disclosure of revenue in financial statements. The Company is
currently evaluating the impact of this pronouncement, and does not believe its
application will have a material effect on the financial statements.

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (Statement) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." In June 2000, the FASB issued
Statement 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities." Statement No. 133 requires companies to record derivatives
on the balance sheet as assets for liabilities measured at fair value.
Accounting for gains or losses resulting from changes in the values of those
derivatives is dependent on the use of the derivative and whether it qualifies
for hedge accounting. Statement 138 amends Statement 133 to clarify the
appropriate accounting for certain hedging transactions. The Statements are
effective for the year beginning January 1, 2001, with earlier adoption
encouraged. Because of our minimal use of derivatives, we do not anticipate that
the adoption of the new Statements will have a significant effect on our
earnings or financial position.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

Lone Star is the leading United States manufacturer of welded "oil country
tubular goods," which are steel tubular products used in the completion of and
production from oil and natural gas wells. Lone Star is also a major
manufacturer of line pipe, which is used in the transportation of oil and gas.
In addition, Lone Star is a leading manufacturer of specialty tubing products
used in automotive, construction, agricultural and industrial applications. Lone
Star also manufactures flat rolled steel and other products for domestic
industrial markets. In January 2000, Lone Star augmented its specialty tubing
products by acquiring the assets of Fintube Limited Partnership, the largest
specialty tubing manufacturer of heat recovery finned tubes, which are primarily
used in combined-cycle power generation plants.

Although oil prices have increased and the active rig count has substantially
increased, the oil and gas markets are volatile and uncertainty exists regarding
the future levels of oil and gas prices and related drilling activity.
Therefore, no assurance can be given regarding the extent of future demand for
Lone Star's oilfield products.


                              RESULTS OF OPERATIONS

Revenues of $153.5 million for the three months ended June 30, 2000 increased
99% from the second quarter of 1999. Revenues comprised $81.4 million from
oilfield products, $56.6 million from specialty tubing products, and $15.5
million from flat rolled steel and other products, representing increases of
119%, 91%, and 50%, respectively.

Revenues for the first six months of 2000 were $307.4 million, a 118% increase
from the same 1999 period. Oilfield, specialty tubing, and flat rolled steel and
other tubular products revenues increased 142%, 101%, and 80% respectively.

Second quarter 2000 shipments increased to 201,400 tons or by 49% when compared
to the same period in 1999 and were comprised of 114,300 tons of oilfield
products, 45,800 tons of specialty tubing products and 41,300 tons of

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<PAGE>

flat rolled steel and other products. Oilfield products, specialty tubing
products, and flat rolled steel and other product shipments increased by 56%,
62%, and 22%, respectively.

Consolidated revenues reported in the statements of income are as follows:

<TABLE>
<CAPTION>
                                                     ($ in millions)                      ($ in millions)
                                                  FOR THE QUARTER ENDED              FOR THE SIX MONTHS ENDED
                                                          JUNE                                 JUNE
                                              2000      %      1999      %         2000      %      1999       %
                                              ----      -      ----      -         ----      -      ----       -
<S>                                       <C>        <C>    <C>       <C>       <C>       <C>     <C>       <C>
Oilfield products                             81.4     53      37.2     48        162.9     53      67.2      48
Specialty tubing products                     56.6     37      29.7     39        113.3     37      56.4      40
Flat rolled steel and other products          15.5     10      10.3     13         31.2     10      17.3      12
                                           --------  -----  --------  -----     --------  -----   -------   -----
Total net revenues                           153.5    100      77.2    100        307.4    100     140.9     100
                                           ========  =====  ========  =====     ========  =====   =======   =====
</TABLE>

Shipments of products by segment are as follows:

<TABLE>
<CAPTION>
                                                      (in tons)                                (in tons)
                                                FOR THE QUARTER ENDED                  FOR THE SIX MONTHS ENDED
                                                         JUNE                                     JUNE
                                            2000      %        1999      %          2000      %        1999      %
                                            ----      -        ----      -          ----      -        ----      -
<S>                                      <C>        <C>    <C>       <C>       <C>       <C>     <C>       <C>
Oilfield products                        114,300     57      73,300     54       239,700     57     129,200     54
Specialty tubing products                 45,800     23      28,200     21        96,100     23      52,700     22
Flat rolled steel and other products      41,300     20      33,800     25         83500     20      57,100     24
                                       ----------  -----  ----------  -----     ---------  -----  ----------  -----
Total net revenues                       201,400    100     135,300    100       419,300    100     239,000    100
                                       ==========  =====  ==========  =====     =========  =====  ==========  =====
</TABLE>

Increased revenues for the second quarter of 2000 were due to higher prices
in all business segments. Oilfield revenues advanced on additional shipment
volumes and higher prices as the average number of active rigs increased 57%
to 878 at the end of the second quarter from the same period in 1999.
Revenues from specialty tubing were higher reflecting the addition of Fintube
sales to this business segment. Excluding Fintube, specialty tubing revenues
were up 16% from the second quarter of 1999, due to higher shipment volumes
of precision mechanical tubulars and new heavy wall as-welded tubulars.
Revenues from flat rolled steel and other products were 35% higher than in
the second quarter of 1999 due to increased shipment volumes and higher
prices compared to the second quarter of 1999.

The gross profit for the three months and six months ended June 30, 2000 was
$22.0 million and $39.9 million, respectively, compared to a gross loss of
$0.5 million and $2.7 million, respectively, for the same 1999 period. The
operating income for the three months and six months ended June 30, 2000 was
$12.7 and $22.5 million, respectively, compared to an operating loss of $4.1
million and $10.1 million for the three months and six months ended June 30,
1999, respectively. The gross profit and operating income benefited from
Fintube's and Bellville's higher margin contributions and increased shipment
volumes for all products and higher prices for oilfield and flat rolled steel
and other products.

Selling, general, and administrative expenses were $9.3 million and $17.4
million for the three months and six months ended June 30, 2000, compared to
$3.6 million and $7.4 million for the same 1999 periods. The increases were
due to the acquisitions of Fintube and Bellville.

Net income in the second quarter of 2000 was $8.8 million, or $0.36 per
diluted share, compared to a net loss of $4.8 million, or $0.21 per diluted
share, in the three months ended June 30, 1999, and for the six months ended
June 30, 2000 was $15.9 million, or $0.65 per diluted share, compared to a
net loss of $11.4, or $0.51 per diluted share, in the same 1999 period.

                        FINANCIAL CONDITION AND LIQUIDITY

Lone Star has no direct business operations other than Steel, Fintube, and
Bellville or significant sources of cash other than from investments or the
sale of securities. Lone Star is reimbursed by Steel for most of its
operating costs as provided by its cost-sharing agreement with Steel. Under
Steel's new revolving credit agreement, Lone Star's operating costs and
Steel's portion of Lone Star's consolidated taxes are the only funds that can
be distributed to

                                       11
<PAGE>

Lone Star. Fintube pays Lone Star an annual overhead fee of $1.0 million,
which is the maximum amount permitted under Fintube's credit facility.
Bellville pays Lone Star an annual overhead fee of $0.2 million.

At June 30, 2000, Lone Star had available cash and cash equivalents,
short-term investments, and marketable securities of $33.1 million, compared
to $38.8 million at December 31, 1999. Lone Star has no immediate cash
requirements as Steel, Fintube, and Bellville reimburse Lone Star for their
overhead as described in the preceding paragraph.

Steel and Fintube require capital primarily to fund general working capital
needs and capital expenditures. Principal sources of funds include cash
generated by operations, borrowings under Steel's and Fintube's revolving
credit facilities and from Lone Star. Bellville requires capital primarily to
fund several working capital needs and capital expenditures. Principal
sources of funds include cash generated by operations and from Lone Star.

On March 16, 1999, Steel refinanced the $100.0 million revolving credit
facility that it had in place at year-end 1998 with a $90.0 million revolving
line of credit and a three-year $10.0 million term loan. Under the new
revolving credit facility, Steel can borrow an amount based on a percentage
of eligible accounts receivable and inventories, reduced by outstanding
letters of credit. At June 30, 2000, borrowings totaled $81.4 million
including $8.0 million on the term loan with a remaining availability of
$16.2 million. At Steel's option, the interest rate is the prime lending rate
plus 1.0% or the LIBOR plus 3.0%. Steel pays a 0.375% per annum fee on the
unused portion of the credit facility. The term loan is repayable in
quarterly installments of $0.5 million, together with interest at the prime
lending rate plus 1.5% or the LIBOR plus 3.5%. Steel's assets other than real
estate secure these loans. In connection with Lone Star's purchase of assets
from Fintube Limited Partnership on January 3, 2000, and Bellville Tube
Corporation on March 31, 2000 (see Note 2) Steel borrowed $25 million under
its present credit facility to repay its $25 million subordinated loan to
Lone Star, Lone Star guaranteed $25 million of Steel's credit facility and
Lone Star used the loan repayment to fund a portion of the purchase price
payable in the Fintube and Bellville Acquisitions.

On January 3, 2000, Lone Star's Fintube subsidiary entered into a new senior
credit facility providing a $20 million revolving line of credit and a $39
million term loan used to pay part of the cash portion of the purchase price
in its acquisition of substantially all of the assets of Fintube Limited
Partnership. Under the revolving line of credit, Fintube can borrow an amount
based on a percentage of eligible accounts receivable and eligible inventory,
reduced by outstanding letters of credit. At Fintube's option, the interest
rate is the prime lending rate plus 1.0% or the LIBOR plus 2.5%. Fintube pays
a 0.50% rate on the unused portion of the credit facility. The interest rate
on $20.0 million of the term loan is fixed by a rate swap agreement at 7.20%
and on the remainder of the term loan is the same as the revolving credit
facility. The term loan is repayable in quarterly installments of $1.5
million through December 31, 2002 and $1.75 million thereafter through
December 31, 2005.

As of June 30, 2000, borrowings by Fintube totaled approximately $47.7
million, including the term loan, with a remaining availability, based on
eligible accounts receivable and inventory on such date, of approximately
$7.9 million.

Steel periodically purchases steel slabs under a consignment arrangement for
use in its production process and thereby affords Steel somewhat longer
payment periods for this raw material. Steel makes the payment as the slabs
are used plus interest on unpaid amounts. At the end of the second quarter
2000, $30.2 million was included in the accounts payable.

Lone Star's operations are subject to numerous environmental laws. The three
major areas of regulation are air quality, water quality, and solid and
hazardous waste management. Steel, Fintube, and Bellville believe that these
environmental expenditures will continue to fall within their respective
contemplated operating and capital plans.

Steel and Fintube believe that funds generated by operations and borrowing
capacity under their revolving credit facilities will provide the liquidity
necessary to fund cash requirements for the remainder of 2000. Bellville
believes that funds generated by operations will provide the liquidity
necessary to fund cash requirements for the remainder of 2000. Bellville
expects to have adequate working capital from the fees it charges Steel for
processing inventory.

The matters discussed or incorporated by reference in this report on Form
10-Q that are forward-looking statements involve risks and uncertainties
including, but not limited to, economic conditions, product demand, the
regulatory and trade environment, and other risks indicated in other filings
with the Securities and Exchange Commission.

                                       12
<PAGE>

Lone Star completed its identification, assessment and remediation of the
year 2000 compliance issue ("Y2K") in December 1999. To date, Lone Star has
not experienced any material Y2K failures and to the best of its knowledge
neither have any of its significant customers or service providers. However,
there can be no assurance that in the future issues related to Y2K will not
have a material adverse effect on Lone Star's financial condition or that of
its significant customers or service providers.

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Lone Star and its subsidiaries do not invest in commodities or foreign
currencies. Lone Star's investments in cash equivalents, short-term
investments and marketable securities, the weighted average maturity of which
is less than one year, are held to maturity. Therefore, interest rate risk is
not considered to be material.

Although Lone Star's subsidiaries' long-term debt is subject to interest rate
risk, any gains or losses from hedging activities on such debt have not been
material to date. Foreign sales are made mostly from Lone Star's foreign
sales subsidiaries in the local countries and are not typically denominated
in that currency. Any gains or losses from currency translation have not been
material and Lone Star does not participate in hedging activities.

                          PART II. - OTHER INFORMATION

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The 2000 Annual Meeting of Shareholders of the registrant was held on May 9,
2000. At that meeting, three proposals were voted on: the election of five
directors, the adoption of the Lone Star Technologies, Inc. Employee Stock
Purchase Plan, and the adoption of an amendment to the 1985 Long-Term Incentive
Plan. Rhys J. Best, Frederick B. Hegi, Jr., M. Joseph McHugh, Alfred M. Micallef
and Jerry E. Ryan were elected directors of the registrant and received
affirmative votes of 20,741,943; 20,741,824; 20,740,700; 20,741,123; and
20,738,329; respectively; and negative votes of 50,900; 51,019; 52,143; 51,720;
and 54,514; respectively. Charles L. Blackburn, James E. McCormick, and Thomas
M. Mercer were previously elected to serve as directors of Lone Star and
continue to serve in this capacity. The Lone Star Technologies, Inc. Employee
Stock Purchase Plan was approved by an affirmative vote of 20,635,628 with
125,313 shares voted against and 31,901 shares abstaining. The amendment to the
1985 Long-Term Incentive Plan was approved by an affirmative vote of 20,365,294,
with 389,123 shares voted against and 38,425 shares abstaining.


ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:
         10.1(d) Amendment to the Amended 1985 Long-Term Incentive Plan adopted
         on May 9, 2000.*
         10.35 Credit Agreement dated as of January 3, 2000 between Fintube
         Technologies, Inc. and Bank of America, N.A., as Agent.
         10.36 Employee Stock Purchase Plan adopted on May 9, 2000.*
         10.37 Deferred Compensation Plan adopted by Lone Star's Board of
         Directors on May 9, 2000.*
         27 Financial Data Schedule *Management contract or compensatory plan
         or arrangement.
(b)      Reports on Form 8-K: A Current Report on Form 8-K dated April 17, 2000
         was filed reporting under Item 2 the acquisition of the assets of
         Bellville Tube Corporation. Amendment No. 1 to this report was filed on
         June 14, 2000, to include the audited financial statements of Bellville
         Tube Corporation and unaudited pro forma financial statements of Lone
         Star reflecting the acquisition of the Bellville assets. Amendment No.
         4 to the Current Report on Form 8-K dated January 18, 2000 was filed on
         June 1, 2000 to amend the pro forma financial statements of Lone Star
         reflecting the acquisition of the assets of Fintube Limited
         Partnership.

                                       13

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                                   LONE STAR TECHNOLOGIES, INC.
                                              By:        /s/ Charles J. Keszler
                                                 ------------------------------
                                                           (Charles J. Keszler)
                                                       Vice President - Finance

Dated:  August 11, 2000

















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