<PAGE>

                    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 
    September 30, 1997, 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
----------------------------------------------------------------------
        (Exact name of registrant as specified in its charter)

                              Missouri
----------------------------------------------------------------------
    (State or other jurisdiction of incorporation or organization)

                             44-0520907
----------------------------------------------------------------------
                (I.R.S. Employer Identification No.)

1600 W. Phelps Street, P.O. Box 828, Springfield, Missouri  65801-0828
----------------------------------------------------------------------
         (Address of principal executive offices)           (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 re-
ports 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 November 7, 1997:  1,168,021


<PAGE>   2

PART I	-	FINANCIAL INFORMATION

The condensed financial statements included herein have been prepared 
by the Company 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 Company 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 Company's 
latest annual report on Form 10-K.  This report reflects all adjust-
ments of a normal recurring nature which are, in the opinion of 
management, necessary for a fair statement of the results for the 
interim period.

                                  2

<PAGE>   3

                PAUL MUELLER COMPANY AND SUBSIDIARIES
                CONSOLIDATED CONDENSED BALANCE SHEETS
                       (Dollars in Thousands)
<TABLE>
<CAPTION>
                                                   Sept. 30  Dec. 31
                                                     1997      1996
                                                   --------  --------
                                                 (Unaudited)
<S>                                                <C>       <C>
ASSETS
Current Assets:
  Cash and short-term investments, at cost         $  1,463  $  2,221
  Available-for-sale investments, at market          11,863    14,605
  Accounts and notes receivable, less reserve 
    of $581 at September 30, 1997, and $698
    at December 31, 1996, for doubtful accounts      16,931    15,329
  Inventories (Note 2) -
    Raw materials and components                   $  6,112  $  3,768
    Work-in-process                                   3,312       719
    Finished goods                                    1,984     1,498
                                                   --------  --------
                                                   $ 11,408  $  5,985

  Prepayments                                           546       403
                                                   --------  --------
      Total Current Assets                         $ 42,211  $ 38,543

Other Assets                                          3,492     3,486

Property, Plant & Equipment, at cost               $ 49,688  $ 47,107
  Less - Accumulated depreciation                    37,458    35,951
                                                   --------  --------
                                                   $ 12,230  $ 11,156
                                                   --------  --------
                                                   $ 57,933  $ 53,185
                                                   ========  ========

LIABILITIES AND SHAREHOLDERS' INVESTMENT

Current Liabilities:
  Accounts payable                                 $  4,142  $  2,283
  Accrued expenses (Note 5)                           6,962     6,093
  Advance billings                                    6,589     4,085
                                                   --------  --------
      Total Current Liabilities                    $ 17,693  $ 12,461

Other Long-Term Liabilities (Note 4)                    964     1,188

Contingencies (Note 6)                             

Shareholders' Investment:
  Common Stock, par value $1 per share -- 
    Authorized 20,000,000 shares --
    Issued 1,342,325 shares                        $  1,342  $  1,342
  Preferred Stock, par value $1 per share -- 
    Authorized 1,000,000 shares -- 
    No shares issued                                      -         -
  Paid-in surplus                                     4,307     4,307
  Retained earnings                                  36,181    36,441
                                                   --------  --------
                                                   $ 41,830  $ 42,090
Less - Treasury stock, 174,304 shares at 
       September 30, 1997, and December 31, 1996, 
       at cost                                        2,554     2,554
                                                   --------  --------
                                                   $ 39,276  $ 39,536
                                                   --------  --------
                                                   $ 57,933  $ 53,185
                                                   ========  ========
</TABLE>
 The accompanying notes are an integral part of these balance sheets.

                                  3

<PAGE>   4

                PAUL MUELLER COMPANY AND SUBSIDIARIES
             CONSOLIDATED CONDENSED STATEMENTS OF INCOME
           (Dollars in Thousands Except Per Share Amounts)
                             (Unaudited)
<TABLE>
<CAPTION>
                               Three Months Ended   Nine Months Ended
                                  September 30        September 30
                               ------------------  ------------------
                                 1997      1996      1997      1996
                               --------  --------  --------  --------
<S>                            <C>       <C>       <C>       <C>
Net Sales                      $ 23,404  $ 21,187  $ 62,480  $ 61,403
Cost of Sales                    18,418    15,761    47,864    46,885
                               --------  --------  --------  --------
    Gross Profit               $  4,986  $  5,426  $ 14,616  $ 14,518
Selling, General and
  Administrative Expenses         4,217     3,919    12,351    11,417
                               --------  --------  --------  --------
    Operating Income           $    769  $  1,507  $  2,265  $  3,101

Other Income (Expense):
  Interest income              $    172  $    195  $    548  $    523
  Interest expense (Note 4)          (2)      (30)       (7)      (87)
  Other, net (Note 5)              (529)       69      (205)      335
                               --------  --------  --------  --------
                               $   (359) $    234  $    336  $    771
                               --------  --------  --------  --------

Income from Operations before 
  Provision for Income Taxes   $    410  $  1,741  $  2,601  $  3,872
Provision for Income Taxes           50       570       758     1,230
                               --------  --------  --------  --------
    Net Income                 $    360  $  1,171  $  1,843  $  2,642
                               ========  ========  ========  ========

Earnings per 
  Common Share (Note 3)          $ 0.31    $ 1.00    $ 1.58    $ 2.26
                                 ======    ======    ======    ======
</TABLE>
   The accompanying notes are an integral part of these statements.

                                  4

<PAGE>   5

                PAUL MUELLER COMPANY AND SUBSIDIARIES
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                       (Dollars in Thousands)
                            (Unaudited)
<TABLE>
<CAPTION>
                                                   Nine Months Ended
                                                     September 30
                                                 --------------------
                                                   1997        1996
                                                 --------    --------
<S>                                              <C>         <C>
Cash Flows from Operating Activities:
  Net income                                     $  1,843    $  2,642
  Adjustments to reconcile net income to net 
   cash provided by operating activities:
    Bad debt expense                                  (24)        211
    Depreciation and amortization                   1,692       1,896
    (Gain) on sales of fixed assets                    (9)         (2)
    Changes in assets and liabilities -
      Decrease (increase) in interest receivable       57         (60)
      (Increase) in accounts and notes receivable  (1,578)       (410)
      (Increase) decrease in inventory             (5,423)      3,075
      (Increase) in prepayments                      (143)        (33)
      (Increase) decrease in other assets             (57)         23
      Increase in accounts payable                  1,859         865
      Increase in accrued expenses                    869       1,624
      Increase (decrease) in advance billings       2,504      (1,739)
      (Decrease) in other liabilities                (224)       (190)
                                                 --------    --------
        Net Cash Provided by Operations          $  1,366    $  7,902

Cash Flows Provided (Requirements) from 
Investing Activities:
  Proceeds from maturities of investments        $ 12,990    $ 15,590
  Purchases of investments                        (10,305)    (19,340)
  Proceeds from sale of equipment                      12           2
  Additions to property, plant and equipment       (2,719)     (1,569)
                                                 --------    --------
        Net Cash (Required) from 
          Investing Activities                   $    (22)   $ (5,317)

Cash Flows (Requirements) from 
    Financing Activities:
  Dividends paid                                 $ (2,102)   $ (1,752)
                                                 --------    --------
        Net Cash (Required) by 
          Financing Activities                   $ (2,102)   $ (1,752)
                                                 --------    --------
Net (Decrease) Increase in Cash                  $   (758)   $    833

Cash at Beginning of Period                         2,221       2,491
                                                 --------    --------
Cash at End of Period                            $  1,463    $  3,324
                                                 ========    ========

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period for:
    Interest                                     $      9    $     89
    Income taxes                                    1,534         756

</TABLE>
  The accompanying notes are an integral part of these statements.

                                  5

<PAGE>   6

                PAUL MUELLER COMPANY AND SUBSIDIARIES
               NOTES TO CONDENSED FINANCIAL STATEMENTS
                     SEPTEMBER 30, 1997 AND 1996
                             (Unaudited)

1. The condensed financial statements include the accounts of Paul 
   Mueller Company (Company) and its wholly owned subsidiaries, 
   Mueller International Sales Corporation and Mueller Transporta-
   tion, Inc.  A summary of the significant accounting policies is 
   included in Note 1 to the consolidated financial statements in-
   cluded in the Company's annual report on Form 10-K for the year 
   ended December 31, 1996.

2. Inventory is recorded at the lower of cost, last-in, first-out 
   (LIFO), 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, in-
   cluding those at September 30, 1997, 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 September 30, 1997, are estimates based on management's 
   knowledge of the Company's production cycle, the costs associated 
   with this cycle and the sales and purchasing volume of the Company.

3. The net income per share of common stock has been computed on the 
   basis of weighted average shares outstanding:  1,168,021 for 
   periods ended September 30, 1997, and September 30, 1996.  State-
   ment of Financial Accounting Standards (SFAS) No. 128, "Earnings 
   per Share," was issued March 1997 and is effective for the Com-
   pany's 1997 calendar year.  Adoption of SFAS No. 128 will not 
   affect the calculation of earnings per share.

4. The $3,000,000 Floating Rate Weekly Demand Industrial Development 
   Revenue Bond issue due on December 1, 1996, was repaid as required.

5. The Company was the defendant in a breach-of-contract / breach-of-
   warranty lawsuit concerning reactor vessels sold in 1992 in Tarrant 
   County, Texas (Alcon Laboratories, Inc. -vs- Paul Mueller Company).  
   As a result of a trial that ended September 19, 1997, the Company 
   received an adverse decision, and the final judgment awarded 
   damages, interest, and attorney's fees totaling $1,700,000 to the 
   plaintiff.  Management believes the decision was incorrect and, 
   based on the advice of legal counsel, will appeal the decision.  As 
   a result of the decision, a provision of $775,000 was made for a 
   reserve for the ultimate resolution of the matter and is included 
   in Other, net on the accompanying Consolidated Condensed Statements 
   of Income, and the related reserve is included as Accrued expenses 
   on the Consolidated Condensed Balance Sheet.  If the decision is 
   upheld on appeal, the Company's liability will exceed the reserve.

6. The Company currently employs about 900 people, of which approxi-
   mately 400 are represented by the Sheet Metal Workers Union.  The 
   International Union called a strike beginning July 25, 1995, and 
   22 employees are currently participating.

   The Company is a defendant in two lawsuits pending at September 30, 
   1997.  In the opinion of management, after consultation with legal 
   counsel, the outcome of these lawsuits will not have a material 
   adverse effect on the Company's consolidated financial statements.

                                  6

<PAGE>   7

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

The following is Management's Discussion and Analysis of the signifi-
cant factors which have affected the Companies' financial condition 
and operating results reflected in the accompanying Consolidated 
Condensed Financial Statements.

The information discussed below in Management's Discussion and Analy-
sis 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 con-
solidation and other factors affecting the profitability of dairy 
farmers, the price of stainless steel, actions of competitors, labor 
strife, 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

Net sales for the third quarter ended September 30, 1997, were 
$23,404,000 compared to $21,187,000 for the third quarter of 1996.  
Sales were higher for both Processing Equipment and Dairy Farm Equip-
ment.  Processing Equipment sales were higher by $1,372,000, and 
this consisted of a large order for Thermal Products Equipment that 
shipped during the quarter, coupled with reduced sales of Food Pro-
cessing Equipment and Accu-Therm Plate Heat Exchangers.  A lower 
backlog of Food Processing Equipment at December 31, 1996, compared 
to the prior year end, adversely affected sales.  Also, lower order 
entry for Accu-Therm Plate Heat Exchangers during 1997 versus 1996 
led to reduced sales.  Dairy Farm Equipment sales improved by 
$845,000, with virtually all of the increase due to higher export 
shipments, primarily to Canada, Uruguay, and the United Kingdom.

The gross profit rate was 21.3% for the third quarter of 1997 versus 
25.6% for the third quarter of 1996.  The reduced gross profit rate 
was the result of lower overall gross margins and higher manufac-
turing burden.  Lower gross margins were recorded for Food and 
Pharmaceutical Processing Equipment and for Thermal Products, which 
reduced the overall gross margin rate for the quarter.  Manufacturing 
burden was higher in the third quarter of 1997 compared to the third 
quarter of 1996, as sales were higher and there was an increase in 
direct labor incurred and the related variable manufacturing burden 
expenses.

Selling, general, and administration expenses were higher by $298,000 
for the three months ended September 30, 1997, compared to the same 
period of a year ago. Expenditures were higher for personnel costs, 
travel expense, trade show expense, and service costs.

Interest income for the third quarter of 1997 was lower than the third 
quarter of 1996 due primarily to the lower average level of invest-
able funds.  Interest expense decreased for 1997 versus 1996 as a 
$3,000,000 industrial revenue bond issue was retired in December 1996.  
Other, net was unfavorably affected as a provision of $775,000 was 
made for a reserve that was established as the result of an adverse 
decision in a breach-of-contract / breach-of-warranty lawsuit that was 
tried in September 1997 in Tarrant County, Texas (Alcon Laboratories, 
Inc. -vs- Paul Mueller Company). In the final judgment assessed 


                                  7

<PAGE>   8

against the Company, the plaintiff was awarded damages, interest, and 
attorney's fees totaling $1,700,000.  Management believes the deci-
sion was incorrect and, based on advice of legal counsel, will appeal 
the decision.  If the decision is upheld on appeal, the Company's 
liability will exceed the reserve that has been established for the 
ultimate resolution of the matter.

The effective tax rate for the third quarter of 1997 and the third 
quarter of 1996 varied from the statutory rate (34%) primarily as a 
result of tax-exempt income and the lower effective tax rate for the 
Foreign Sales Corporation (FSC).

Net sales for the nine months ended September 30, 1997, were 
$62,480,000 versus $61,403,000 for the same period of a year ago.  
Processing Equipment sales declined by $1,969,000, while Dairy Farm 
Equipment sales improved by $3,046,000.  The decline in Processing 
Equipment sales was primarily attributable to reduced sales in Food 
and Pharmaceutical Processing Equipment and in Accu-Therm Plate Heat 
Exchangers.  The reduction in Food and Pharmaceutical Processing 
Equipment sales was due to the lower beginning backlog for 1997 as 
compared to 1996.  The decline in Accu-Therm Plate Heat Exchanger 
sales was due to the lower rate of order entry for 1997 as compared 
to 1996.  The increase in Dairy Farm Equipment sales was 60% in the 
domestic market, with the balance in export markets.  The increase 
in domestic Dairy Farm Equipment sales was due to the higher backlog 
at December 31, 1996 (which was the result of a sales promotion dur-
ing the fourth quarter of 1996), an increase in the size of domestic 
coolers sold, and an expansion of larger dairy operations (primarily 
in the southwestern market of the United States).  The improvement 
in export sales was due primarily to increased shipments to Canada, 
the United Kingdom, Mexico, and Uruguay.

The gross profit rate was 23.4% for the nine months ended September 
30, 1997, compared to 23.6% for the nine months ended September 30, 
1996.  The overall gross margin rates for both periods were compar-
able, and the manufacturing burden expense during the periods was at 
approximately the same level.

Selling, general and administrative expenses were $934,000 higher for 
the nine months ended September 30, 1997, versus the same period of 
a year ago.  Higher expenditures were incurred for personnel, media 
advertising, trade shows, manufacturers' representative's commis-
sions, and travel.  A portion of the increase for 1997 was also due 
to the receipt of a $312,000 group life insurance premium refund 
during the first quarter of 1996, of which $234,000 was credited to 
general and administrative expense.

Interest income for the first nine months of 1997 was higher than for 
the comparable period of 1996 due to a higher average interest rate.  
Interest expense decreased for 1997 versus 1996, as the $3,000,000 
industrial revenue bond issue was retired in December 1996.  The 
variance in Other, net was due to the provision of $775,000 discussed 
above.

The effective tax rate for the first nine months of 1997 and the 
first nine months of 1996 varied from the statutory rate (34%) pri-
marily as a result of tax exempt income and the lower effective tax 
rate for the FSC.

As previously reported, the labor contract with the Sheet Metal 
Workers Union (which covers a portion of the employees at the Spring-
field, Missouri, plant) expired on June 11, 1994.  Negotiations with 
union representatives continued until an impasse was reached, and the 
Company implemented specific provisions of its final offer effective 
September 19, 1994.  In November 1994, the Regional Director of the 
National Labor Relations Board (NLRB) also concluded that a lawful 
impasse had been reached in negotiations prior to the Company's imple-
mentation of its offer.

However, on December 22, 1994, the Regional Director of the NLRB 
issued an unfair labor practice complaint against the Company for 
refusing to supply information to union representatives about the 

                                  8

<PAGE>   9

personal health insurance claims of individual employees and their 
dependents and reversed his previous decision regarding the implemen-
tation of changes in wages and benefits.  A hearing on these and other 
unfair labor practice issues was held in August 1996 by an administra-
tive law judge of the NLRB.  The administrative law judge issued his 
decision on May 21, 1997, and, on the major issues, found that a law-
ful impasse had been reached in negotiations prior to the Company's 
implementation of its offer, and that the Company was entitled to 
refuse to supply information to union representatives about personal 
health insurance claims of individual employees and their dependents.  
The administrative law judge, however, ruled against the Company on 
some other unfair labor practice issues, and the Company and the union 
both have appealed the decision to the NLRB.  A decision by the NLRB 
is not expected for several months, and there can be an appeal from 
any NLRB decision, either by the Company or the union.  An additional 
hearing before an administrative law judge of the NLRB will be held 
November 20, 1997, on other unfair labor practice issues.  A final 
determination of all charges may take up to two years, however; and 
management believes, based on an evaluation by counsel, that there is 
no significant financial exposure to the Company.

The Company currently employs about 900 people, of which approximately 
400 at the Springfield, Missouri, facility are represented by the 
Sheet Metal Workers Union.  The International Union called a strike 
beginning on July 25, 1995, and currently there are still 22 employees 
participating.  No action has been taken by the union to prevent non-
striking employees from working.

The Company has implemented the provisions of its revised and final 
offer effective April 1, 1996, which remains open for the union's 
acceptance, and no further negotiations are scheduled.

The Company has facilities located in Springfield, Missouri and 
Osceola, Iowa.  There are approximately 800 employees assigned to 
the Springfield facility, and there are an additional 100 employees 
at the Osceola facility (none of which are represented by a labor 
union).

Looking to the balance of 1997, there are factors that could affect 
the results of operations.  If there is expanded employee partici-
pation for an extended period of time in the strike mentioned above, 
this could have an adverse effect on the level of production and the 
ability to secure orders.  Stainless steel prices are expected to 
remain relatively stable for the balance of 1997.  Domestically, milk 
prices paid to dairy farmers are projected to decrease over the next 
several months and at the same time feed prices are expected to 
moderate.  The lower milk prices may have an adverse effect on sales 
of Dairy Farm Equipment.  The recent financial crisis in Southeast 
Asia may adversely affect demand for the Company's products in that 
market.

In support of the Company's efforts to expand its marketing of 
brewery systems, the Company has elected to open a microbrewery and 
brewpub operation in Springfield, Missouri.  The operation will 
showcase the Company's brewery technology capability, while also 
functioning as a training and product development facility for 
brewery equipment.  Beer will be distributed locally in draft and 
sold at retail in the brewpub.  Completion of the project is sche-
duled for late 1997.

The backlog of sales at September 30, 1997, was $27,500,000 compared 
to $19,500,000 at September 30, 1996.  The September 30, 1997, back-
log primarily represents orders that will be completed and shipped 
over the next twelve months.

FINANCIAL CONDITION

The consolidated financial condition and the liquidity of the Company 
at September 30, 1997, have not changed significantly since December 
31, 1996.  There are no significant commitments for capital expen-
ditures at September 30, 1997.

                                  9

<PAGE>   10

PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K.

          a. Exhibits
                                                          Sequentially
             Exhibit                                        Numbered
             Number                 Exhibit                   Page
             ------  -------------------------------------  --------

              (27)   Financial Data Schedule..............     11

          b. Reports on Form 8-K -- There were no reports on Form 8-K 
             filed for the three months ended September 30, 1997.

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

DATE:  November 7, 1997     /S/           DONALD E. GOLIK
       ----------------     ------------------------------------------
                            Donald E. Golik, Senior Vice President and
                                      Chief Financial Officer

                                  10