SECURITIES AND EXCHANGE COMMISSION Washington, D.C.  20549________________________________________FORM 10-Q

(Mark One)

|[X]   | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.       
|----- | -----------------------------------------------------------------------------------------
|      | For the quarterly period ended JUNE 30, 2001, or                                         
|      |                                                                                          
|[   ] | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|      | For the transition period from _______________________ to _______________________.       

Commission File Number:  0-4791

PAUL MUELLER COMPANY



|MISSOURI(state or other jurisdiction of incorporation or organization)                            |  | 44-0520907(I.R.S. employer identification no.)
|------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|                                                                                                  |  |                                               
|1600 WEST PHELPS ST., P.O. BOX 828, SPRINGFIELD, MISSOURI(address of principal executive offices) |  | 65801-0828(zip code)                          



Registrant's telephone number, including area code:  (417) 831-3000

______________________________________________________________________ (former name, former address and former fiscal year, if changed since last report)



Indicate by 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 shorter 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  [   ]

Indicate the number of shares outstanding of the issuer's Common Stock as of August 8, 2001:  1,179,721



PART I     -     FINANCIAL INFORMATION

The condensed financial statements included herein have been prepared by the Registrant without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in the financial statements, prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations, although the Registrant believes that the disclosures are adequate to make the information presented not misleading.  It is suggested that these condensed financial statements be read in connection with the financial statements and the notes thereto included in the Registrant's latest annual report on Form 10-K.  This report reflects all adjustments of a normal recurring nature that are, in the opinion of management, necessary for a fair statement of the results for the interim period.



PAUL MUELLER COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) (Unaudited)

|ASSETS                                                                                       |  | June 30   2001     ----------- |  | Dec. 31    2000      -----------
|-------------------------------------------------------------------------------------------- |  | ------------------------------ |  | --------------------------------
|Current Assets:                                                                              |  |                                |  |                                 
|Cash                                                                                         |  | $     1,142                    |  | $        667                    
|Available-for-sale investments, at market                                                    |  | -                              |  | 582                             
|Accounts and notes receivable, less reserve of $407 at June 30,                              |  |                                |  |                                 
|2001, and $690 at December 31, 2000, for doubtful accounts                                   |  | 15,943                         |  | 18,910                          
|Inventories -                                                                                |  |                                |  |                                 
|Raw materials and components                                                                 |  | $     7,172                    |  | $     7,642                     
|Work-in-process                                                                              |  | 8,514                          |  | 2,913                           
|Finished goods                                                                               |  | 2,395                          |  | 1,439                           
|                                                                                             |  | ------------                   |  | ------------                    
|                                                                                             |  | $   18,081                     |  | $   11,994                      
|Prepayments                                                                                  |  | 1,286                          |  | 458                             
|                                                                                             |  | ------------                   |  | ------------                    
|Total Current Assets                                                                         |  | $   36,452                     |  | $   32,611                      
|Other Assets                                                                                 |  | 3,937                          |  | 3,884                           
|Property, Plant & Equipment, at cost                                                         |  | $   66,634                     |  | $   62,814                      
|Less  -  Accumulated depreciation                                                            |  | 44,767                         |  | 43,622                          
|                                                                                             |  | ------------                   |  | ------------                    
|                                                                                             |  | $   21,867                     |  | $   19,192                      
|                                                                                             |  | ------------                   |  | ------------                    
|                                                                                             |  | $   62,256                     |  | $   55,687                      
|                                                                                             |  | =======                        |  | =======                         
|LIABILITIES AND SHAREHOLDERS' INVESTMENT                                                     |  |                                |  |                                 
|Current Liabilities:                                                                         |  |                                |  |                                 
|Accounts payable                                                                             |  | $     6,129                    |  | $     4,619                     
|Accrued expenses                                                                             |  | 6,355                          |  | 5,860                           
|Advance billings                                                                             |  | 9,981                          |  | 3,930                           
|                                                                                             |  | ------------                   |  | ------------                    
|Total Current Liabilities                                                                    |  | $   22,465                     |  | $   14,409                      
|Other Long-Term Liabilities                                                                  |  | 2,210                          |  | 1,166                           
|Contingencies                                                                                |  |                                |  |                                 
|Shareholders' Investment:                                                                    |  |                                |  |                                 
|Common stock, par value $1 per share  -  Authorized 20,000,000 shares  -  Issued             |  |                                |  |                                 
|1,354,325 shares at June 30, 2001  -  Issued 1,348,325 shares at December 31, 2000           |  | $     1,354                    |  | $     1,348                     
|Preferred stock, par value $1 per share  -  Authorized 1,000,000 shares  -  No shares issued |  | -                              |  | -                               
|Paid-in surplus                                                                              |  | 4,662                          |  | 4,494                           
|Retained earnings                                                                            |  | 34,379                         |  | 37,000                          
|                                                                                             |  | ------------                   |  | ------------                    
|                                                                                             |  | $   40,395                     |  | $   42,842                      
|Less  -                                                                                      |  |                                |  |                                 
|Treasury stock, 174,604 shares at June 30, 2001, and December 31, 2000, at cost              |  | 2,562                          |  | 2,562                           
|Deferred compensation                                                                        |  | 270                            |  | 127                             
|Accumulated other comprehensive (income) loss                                                |  | (18)                           |  | 41                              
|                                                                                             |  | ------------                   |  | ------------                    
|                                                                                             |  | $   37,581                     |  | $   40,112                      
|                                                                                             |  | ------------                   |  | ------------                    
|                                                                                             |  | $   62,256                     |  | $   55,687                      
|                                                                                             |  | =======                        |  | =======                         

The accompanying notes are an integral part of these balance sheets.



PAUL MUELLER COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in Thousands Except Per Share Amounts) (Unaudited)

|                                                                |  | Three Months Ended      June 30                 -------------------------------- |  | Six Months Ended          June 30                 --------------------------------
|--------------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------
|                                                                |  | 2001     -----------                                                             |  | 2000      -----------                                                             
|Net Sales                                                       |  | $ 23,746                                                                         |  | $ 27,887                                                                          
|                                                                |  |                                                                                  |  |                                                                                   
|Cost of Sales                                                   |  | 18,941                                                                           |  | 21,690                                                                            
|                                                                |  | -----------                                                                      |  | -----------                                                                       
|Gross Profit                                                    |  | $   4,805                                                                        |  | $   6,197                                                                         
|                                                                |  |                                                                                  |  |                                                                                   
|Selling, General, and Administrative Expenses                   |  | 4,463                                                                            |  | 4,761                                                                             
|                                                                |  | -----------                                                                      |  | -----------                                                                       
|Operating Income (Loss)                                         |  | $      342                                                                       |  | $   1,436                                                                         
|                                                                |  |                                                                                  |  |                                                                                   
|Other Income (Expense):                                         |  |                                                                                  |  |                                                                                   
|Interest income                                                 |  | $        19                                                                      |  | $        69                                                                       
|Interest expense                                                |  | (16)                                                                             |  | (2)                                                                               
|Other, net                                                      |  | 27                                                                               |  | 6                                                                                 
|                                                                |  | -----------                                                                      |  | -----------                                                                       
|                                                                |  | $        30                                                                      |  | $        73                                                                       
|                                                                |  | -----------                                                                      |  | -----------                                                                       
|                                                                |  |                                                                                  |  |                                                                                   
|Income (Loss) from Operations before Income Taxes               |  | $      372                                                                       |  | $   1,509                                                                         
|                                                                |  |                                                                                  |  |                                                                                   
|Provision (Benefit) for Income Taxes                            |  | 126                                                                              |  | 440                                                                               
|                                                                |  | -----------                                                                      |  | -----------                                                                       
|Income (Loss) before Equity in Earnings (Loss) of Joint Venture |  | $      246                                                                       |  | $   1,069                                                                         
|                                                                |  |                                                                                  |  |                                                                                   
|Equity in Earnings (Loss) of Joint Venture                      |  | (5)                                                                              |  | 16                                                                                
|                                                                |  | -----------                                                                      |  | -----------                                                                       
|Net Income (Loss)                                               |  | $      241                                                                       |  | $   1,085                                                                         
|                                                                |  | ======                                                                           |  | ======                                                                            
|                                                                |  |                                                                                  |  |                                                                                   
|Basic and Diluted Earnings (Loss) per Common Share              |  | $ 0.21                                                                           |  | $ 0.93                                                                            
|                                                                |  | ====                                                                             |  | ====                                                                              

The accompanying notes are an integral part of these statements.



PAUL MUELLER COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)

|                                                                                             |  | Six Months Ended            June 30                     ---------------------------------------
|-------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------
|                                                                                             |  | 2001     -----------                                                                           
|Cash Flows from Operating Activities:                                                        |  |                                                                                                
|Net (loss) income                                                                            |  | $   (1,209)                                                                                    
|Adjustments to reconcile net income to net cash provided (required) by operating activities: |  |                                                                                                
|Equity in loss (income) of joint venture                                                     |  | 33                                                                                             
|Bad debt expense                                                                             |  | 19                                                                                             
|Depreciation and amortization                                                                |  | 1,420                                                                                          
|Loss on sales of fixed assets                                                                |  | (7)                                                                                            
|Changes in assets and liabilities  --                                                        |  |                                                                                                
|Decrease in interest receivable                                                              |  | 1                                                                                              
|Decrease in accounts and notes receivable                                                    |  | 2,948                                                                                          
|(Increase) in inventories                                                                    |  | (6,087)                                                                                        
|(Increase) in prepayments                                                                    |  | (828)                                                                                          
|(Increase) in other assets                                                                   |  | (29)                                                                                           
|Increase in accounts payable                                                                 |  | 1,510                                                                                          
|Increase in accrued expenses                                                                 |  | 495                                                                                            
|Increase in advance billings                                                                 |  | 6,051                                                                                          
|Increase in long-term liabilities                                                            |  | 1,014                                                                                          
|                                                                                             |  | ------------                                                                                   
|Net Cash Provided by Operations                                                              |  | $     5,331                                                                                    
|                                                                                             |  |                                                                                                
|Cash Flows (Requirements) from Investing Activities:                                         |  |                                                                                                
|Proceeds from maturities of investments                                                      |  | $        607                                                                                   
|Purchases of investments                                                                     |  | -                                                                                              
|Proceeds from Sale of Equipment                                                              |  | 154                                                                                            
|Additions to property, plant, and equipment                                                  |  | (4,205)                                                                                        
|                                                                                             |  | ------------                                                                                   
|Net Cash (Required) by Investing Activities                                                  |  | $   (3,444)                                                                                    
|                                                                                             |  |                                                                                                
|Cash Flows (Requirements) from Financing Activities:                                         |  |                                                                                                
|Dividends paid                                                                               |  | $   (1,412)                                                                                    
|                                                                                             |  | ------------                                                                                   
|Net Cash (Required) by Financing Activities                                                  |  | $   (1,412)                                                                                    
|                                                                                             |  | ------------                                                                                   
|Net Increase in Cash                                                                         |  | $        475                                                                                   
|Cash at Beginning of Period                                                                  |  | 667                                                                                            
|                                                                                             |  | ------------                                                                                   
|Cash at End of Period                                                                        |  | $     1,142                                                                                    
|                                                                                             |  | =======                                                                                        
|                                                                                             |  |                                                                                                
|Supplemental Disclosures of Cash Flow Information:                                           |  |                                                                                                
|Cash paid during the period for  -                                                           |  |                                                                                                
|Income taxes                                                                                 |  | $          43                                                                                  
|Interest                                                                                     |  | $          23                                                                                  

The accompanying notes are an integral part of these statements.



PAUL MUELLER COMPANY AND SUBSIDIARIES NOTES TO CONDENSED FINANCIAL STATEMENTS JUNE 30, 2001 AND 2000, AND DECEMBER 31, 2000 (Unaudited)



|1. | The condensed financial statements include the accounts of Paul Mueller Company (Registrant) and its wholly owned subsidiaries, Mueller International Sales Corporation, Mueller Transportation, Inc., and Mueller Field Operations, Inc.  A summary of the significant accounting policies is included in Note 1 to the consolidated financial statements included in the Registrant's annual report on Form 10K for the year ended December 31, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Inventory is recorded at the lower of cost on a last-in, first-out (LIFO) basis or market.  Because the inventory determination under the LIFO method can only be made at the end of each fiscal year based on the inventory levels and costs at that time, interim LIFO determinations, including those at June 30, 2001, must necessarily be based on management's estimate of expected year-end inventory levels and costs.  Since estimates of future inventory levels and prices are subject to many factors beyond the control of management, interim financial results are subject to final year-end LIFO inventory amounts.  Accordingly, inventory components reported for the period ending June 30, 2001, are estimates based on management's knowledge of the Registrant's production cycle, the costs associated with this cycle, and the sales and purchasing volume of the Registrant.                                                    
|3. | On May 13, 1999, 6,000 shares of restricted common stock and nonqualified stock options for 20,400 shares of common stock, at a grant price of $36.00 per share, were awarded to key members of management with vesting periods of five years.  The market value of the restricted stock was $32.50 per share on the date of award.  On March 1, 2001, an additional 6,000 shares of restricted common stock and nonqualified stock options for 20,400 shares of common stock, at a grant price of $36.00 per share, were awarded to key members of management, with both having vesting periods of five years.  The market value of the restricted stock was $29.00 per share on the date of the award, and the unamortized balance of deferred compensation is included under Shareholders' Investment on the accompanying consolidated balance sheets.  The following table sets forth the computation of basic and diluted earnings per common share:

| |                                                |  | Three Months Ended           -------------------------------------- |  | Six Months Ended            --------------------------------------
| | ---------------------------------------------- |  | ------------------------------------------------------------------- |  | ------------------------------------------------------------------
| |                                                |  | 6-30-01    --------------                                           |  | 6-30-00    --------------                                         
| | Net income (loss)                              |  | $   241,000                                                         |  | $ 1,085,000                                                       
| |                                                |  | ========                                                            |  | ========                                                          
| | Shares for basic earnings per common share -   |  |                                                                     |  |                                                                   
| | Weighted average shares outstanding            |  | 1,168,021                                                           |  | 1,168,021                                                         
| | Effect of restricted stock granted             |  | 2,205                                                               |  | 102                                                               
| |                                                |  | --------------                                                      |  | --------------                                                    
| | Shares for diluted earnings per common share - |  |                                                                     |  |                                                                   
| | Adjusted weighted average shares outstanding   |  | 1,170,226                                                           |  | 1,168,123                                                         
| |                                                |  | ========                                                            |  | ========                                                          
| | Basic earnings (loss) per common share         |  | $ 0.21                                                              |  | $ 0.93                                                            
| |                                                |  | =====                                                               |  | =====                                                             
| | Diluted earnings (loss) per common share       |  | $ 0.21                                                              |  | $ 0.93                                                            
| |                                                |  | =====                                                               |  | =====                                                             

|4. | The Registrant has two reportable segments:  Industrial Equipment and Dairy Farm Equipment.  There were no intersegment sales.
|-- | ------------------------------------------------------------------------------------------------------------------------------

| | Revenues and profitability for each segment for the three months and six months ended June 30, 2001 and 2000, were as follows:
| | ------------------------------------------------------------------------------------------------------------------------------

| | Three Months Ended June 30                                                             ------------------------------------------------------------------------------------------------------------------------------
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                      
| | Revenues from external customers                                                                                                                                                                                     
| | Income (loss) before income tax                                                                                                                                                                                      

| | Three Months Ended June 30                                                             ------------------------------------------------------------------------------------------------------------------------------
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                      
| | Revenues from external customers                                                                                                                                                                                     
| | Income (loss) before income tax                                                                                                                                                                                      

|5. | The Registrant reports comprehensive income (loss) and its components in accordance with Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income."  Comprehensive income and its components, net of tax, are summarized below:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                     |  | Three Months Ended          --------------------------------------- |  | Six Months Ended             ---------------------------------------
| | --------------------------------------------------- |  | ------------------------------------------------------------------- |  | --------------------------------------------------------------------
| |                                                     |  | 6-30-01    ---------------                                          |  | 6-30-00     -----------------                                       
| | Net income (loss)                                   |  | $    241,000                                                        |  | $ 1,085,000                                                         
| | Gain on investment, net of tax                      |  | -                                                                   |  | 22,000                                                              
| | Foreign currency translation adjustment, net of tax |  | 36,000                                                              |  | (35,000)                                                            
| |                                                     |  | ---------------                                                     |  | ---------------                                                     
| | Total comprehensive income (loss)                   |  | $    277,000                                                        |  | $ 1,072,000                                                         
| |                                                     |  | =========                                                           |  | =========                                                           

|6. | The Registrant has a $6,000,000 bank-borrowing facility that expires on May 31, 2002.  As of June 30, 2001, there were no outstanding borrowings under the facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7. | The results for the three months and six months ended June 30, 2001 and 2000, reflect the adoption of Financial Accounting Standards Board's Emerging Issues Task Force (EITF) Pronouncement No. 00-10, "Accounting for Shipping and Handling Fees and Costs."  This pronouncement requires that shipping and handling costs (freight) be included within net sales.  For the three months and six months ended June 30, 2001, the effect of adopting this pronouncement increased net sales by $720,000 and $1,251,000, respectively.  For the three months and six months ended June 30, 2000, the effect of adopting this pronouncement increased net sales by $625,000 and $1,284,000, respectively.  The same amounts for each period were included as freight expense within cost of sales.
|8. | The Registrant and its subsidiaries are involved in legal proceedings incident to the conduct of their business.  It is management's opinion that none of these matters will have a materially adverse effect on the consolidated financial position, results of operations, or cash flows.  The Registrant and the Sheet Metal Workers Union, Local 208, agreed to a new three-year labor contract effective April 7, 2001.  However, two cases involving minor issues remain before the National Labor Relations Board, and the final determination of these cases may take a year.  Management believes, based on an evaluation by counsel, that there is no material financial exposure to the Registrant.                                                                                   



PAUL MUELLER COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION



The following is Management's discussion and analysis of the significant factors that have affected the Companies' earnings during the periods included in the accompanying Consolidated Condensed Statements of Income.

The information discussed below in Management's Discussion and Analysis of Operating Results and Financial Condition contains statements regarding matters that are not historical facts, but rather are forward-looking statements.  These statements are based on current financial and economic conditions and current expectations and involve risk and uncertainties.  Actual future results may differ materially depending on a variety of factors.  These factors, some of which are identified in the discussion accompanying such forward-looking statements, include, but are not limited to, milk prices paid to dairy farmers, feed prices, weather conditions, dairy farm consolidation and other factors affecting the profitability of dairy farmers, the price of stainless steel, actions of competitors, the Registrant's execution of internal performance plans, economic conditions in key export markets, the level of capital expenditures in the U.S. economy, and other changes to business conditions.

OPERATING RESULTS

Consolidated net sales for the second quarter ended June 30, 2001, decreased by $4,141,000 when compared to the second quarter ended June 30, 2000.  Sales of Industrial Equipment were lower by $1,551,000 and sales of Dairy Farm Equipment were lower by $2,654,000, when comparing the second quarter of 2001 to the second quarter of 2000.  Although the backlog for the Industrial Equipment segment was comparable between the beginning of 2001 and the beginning of 2000, field-fabrication projects (which involved both shop and fieldwork) made up a major portion of the backlog at the beginning of 2001.  These projects extend over several months, and sales are recognized only when the customer has accepted the completed vessels in the field.  During the second quarter of 2001, there was no significant sales recognition from field-fabrication projects.  Additionally, the current economic conditions have adversely affected the Industrial Equipment segment, as businesses are sharply reducing capital expenditures.  As a result, order entry for the Industrial Equipment segment continued the trend of the first quarter and was down by 7% when comparing the second quarter of 2001 to the second quarter of 2000.  With respect to the Dairy Farm Equipment segment, domestic and export sales were both down by 35% for the second quarter of 2001 versus 2000.  A major factor contributing to the decline in sales was a backlog at the beginning of 2001 that was 72% lower than the backlog at the beginning of 2000.  Additionally, domestic sales have been adversely affected by relatively flat milk production due to adverse weather conditions and the high price of milk cows, which has hampered herd expansion.  Export sales of Dairy Farm Equipment have been adversely affected during 2001 by the strength of the U.S. dollar and the outbreak of foot-and-mouth disease in key European markets.

The gross profit rate for the three months ended June 30, 2001, was 20.2% versus 22.2% for the three months ended June 30, 2000.  The lower gross profit rate was primarily the result of the 15% reduction in sales when comparing the second quarter of 2001 to the second quarter of 2000.  Additionally, margins were lower during 2001 due to the extremely competitive market conditions, which have driven prices down.  The gross profit rate was favorably affected during the second quarter of 2001, as the LIFO reserve was reduced by $250,000 due to the impact of lower stainless-steel prices.  In contrast, gross profit rate for the second quarter of 2000 was adversely affected by an increase in the LIFO reserve of $645,000 due to the rapidly increasing price of stainless steel.

Selling, general, and administrative expenses decreased by about 6% during the second quarter of 2001 compared to the second quarter of 2000.  The decrease was due to lower expenditures for personnel and for manufacturers' representative's commissions and a lower provision made for warranty expense.

Other income for the three months ended June 30, 2001, was less than the three months ended June 30, 2000, as the level of investable funds was lower and interest income declined.

The effective tax rate for the three months ended June 30, 2001 and 2000, varied from the statutory tax rate (34%) primarily as a result of tax credits and the tax benefit from export sales.

Net sales for the six months ended June 30, 2001, were $39,836,000, a decline of $11,219,000 for the six months ended June 30, 2000.  Sales for the Industrial Equipment segment were lower by $6,170,000 for the first half of 2001 compared to the first half of 2000.  As mentioned above, a major portion of the Industrial Equipment backlog at the beginning of 2001 was field-fabrication projects that take several months to complete, and consequently very little sales revenue was recognized during the first six months of 2001.  Additionally, economic conditions have adversely affected order entry for the Industrial Equipment segment and new orders are down by over 10% when comparing the first six months of 2001 to the first six months of 2000.  The Dairy Farm Equipment segment experienced a 39% decline in sales for the six months ended June 30, 2001, compared to the six months ended June 30, 2000.  The primary factor affecting Dairy Farm Equipment segment sales was the substantially lower backlog at the beginning of 2001 versus 2000, as mentioned above.  Additionally, order entry for the first six months of 2001 is 25% below order entry for the first six months of 2000.  Domestically, flat milk production, the high price of replacement milk cows, and relatively low milk prices have adversely affected order entry during the first six months of 2001.  Export sales have been affected adversely by the strong U.S. dollar and foot-and-mouth disease in key European markets.

The gross profit rate for the first six months of 2001 was 17.9% versus 23.1% for the first six months of 2000.  As mentioned above, the reduction in the gross profit rate is principally related to the significant decrease in sales volume, coupled with lower gross margins due to the extremely competitive market conditions.  Additionally, manufacturing burden was higher due to greater expenditures for utilities, personnel, and repairs during the first half of 2001 versus the first half of 2000.  For the first six months of 2001, the LIFO reserve was reduced by $300,000, and this increased the gross profit rate.  On the other hand, during the first six months of 2000, the LIFO reserve was increased by $1,130,000 due to rising stainless steel prices, and this negatively affected the gross profit rate.

Selling, general, and administrative expenses were comparable when comparing the first six months ended 2001 to the first six months of 2000.

Other income was slightly higher for the six months ended June 30, 2001, versus the same period of a year ago.  The increase was primarily due to improved results for the brewery operation.

The effective tax rate for the six months ended June 30, 2001 and 2000, varied from the statutory tax rate (34%) due to tax credits and the tax benefit of export sales.

The Registrant and the Sheet Metal Workers Union, Local 208, reached agreement on a new labor contract effective April 7, 2001.  The new contract covers three years and includes all of the provisions of the Registrant's last and final offer.  However, two cases involving minor issues remain pending before the National Labor Relations Board; but management believes, based on an evaluation by counsel, that there is no material financial exposure to the Registrant.

Market risks relating to the Registrant's operations result primarily from changes in foreign exchange rates and interest rates, as well as stainless steel prices.  The Registrant periodically enters into foreign-exchange forward contracts or spot contracts to hedge the exposure to foreign-currency-denominated purchase transactions.  Forward contracts generally have maturities of less than three months.  Foreign-currency-denominated purchases were $831,000 and $964,000 for the six months ended June 30, 2001 and 2000, respectively.  There were no foreign-exchange forward contracts outstanding at June 30, 2001 and 2000.  There were foreign currencies held at June 30, 2000, amounting to approximately $28,000 for payment of foreign-currency-denominated vendor invoices.  The Registrant's financial instruments at June 30, 2000, that were exposed to interest-rate risks, consisted of available-for-sale investments that were recorded at market value.  Available-for-sale investments were maintained in high-quality securities that consisted of tax-exempt bonds and a taxable bond fund.  Unrealized holding gains and losses were not material as of June 30, 2000; and there were no significant realized gains or losses during the six months ended June 30, 2000.  The Registrant does not use financial instruments for trading purposes.  The risk of increases in stainless-steel prices for significant Industrial Equipment segment projects that extend over several months is managed by contracting for the stainless steel at the time the project is obtained.

Concentration of credit risk, with respect to receivables, is limited due to the large number of customers and their dispersion across a wide geographic area.  The Registrant performs credit evaluations on all new customers and periodically reviews the financial condition of existing customers.  For Industrial Equipment orders, down payments and/or progress payments are generally required based on the dollar value of the order and customer creditworthiness.  Foreign receivables are generally secured by irrevocable letters of credit confirmed by a major U.S. bank.



Looking to the balance of 2001, there are factors that could affect the results of operations.  The presence of foot-and-mouth disease in Europe may continue to have an adverse effect on sales of Dairy Farm Equipment in that market.  Additionally, if outbreaks occur in other areas of the world, particularly in North and South America and in Asia, it may have a significant adverse effect on sales of Dairy Farm Equipment in those markets.

The current economic slump and the related decrease in capital expenditures is having an adverse effect on the Industrial Equipment segment, and order entry is more than 10% lower for the first half of 2001 compared to the first half of 2000.  Additionally, conditions have been very competitive, particularly with respect to price and delivery; and these factors may adversely affect the profitability of the Industrial Equipment segment for the balance of the year.

In general, the Registrant's business is not subject to seasonal variation and demand for its products.  However, because orders for certain products can be large, a small number of large orders can have a significant impact on the Registrant's sales revenue in any one particular quarter.  As a result, a relatively small reduction or delay in the number of orders shipped or completed and accepted by the customer can have a material impact on the Registrant's sales revenues for any particular quarter.  Profit margins may vary from quarter-to-quarter due to the variations in profitability of large orders, as well as the mix of various products manufactured by the Registrant.  Accordingly, results of operations for the Registrant for any particular quarter are not necessarily indicative of the results that may be expected for any subsequent quarter of the calendar year.

The backlog of sales at June 30, 2001, was $34,972,000 compared to $31,703,000 at December 31, 2000, and $32,261,000 at June 30, 2000.  The level of backlog, at any particular point in time, is not necessarily indicative of the future operating performance of the Registrant in the following quarter due to the long manufacturing or fabrication cycle for some projects.  Orders in the backlog are subject to delays in completion and/or holds at the request of the customer, and this could have a significant impact on quarterly results.  The June 30, 2001, backlog represents orders that will be completed and shipped over the next twelve months.

The Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," issued in June 2001 and effective for the Registrant's 2002 calendar year, is not expected to have a material effect on the Registrant's financial position or results of operations.

FINANCIAL CONDITION

The financial condition and the liquidity of the Registrant at June 30, 2001, have not changed significantly since December 31, 2000.  There are no significant commitments for capital expenditures at June 30, 2001.

The Registrant has a $6,000,000 bank-borrowing facility that expires on May 31, 2002.  As of June 30, 2001, there were no borrowings outstanding under the facility.  There are no commitment fees for the facility.



PART II     -     OTHER INFORMATION



|Item 6. | Exhibits and reports on Form 8-K.
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|        | a.                               
|        | b.                               

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.



|      |                |  | PAUL MUELLER COMPANY                                                                
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|DATE: | August 8, 2001 |  | /S/ DONALD E. GOLIK                                                                 
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|      |                |  | Donald E. Golik, Senior Vice President and Chief Financial Officer