<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

         [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities 
             Exchange Act of 1934 for the Fiscal Year Ended January 2, 1999

         [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                        Commission file number 333-29141

                               MMI PRODUCTS, INC.
             (Exact Name of Registrant as Specified in Its Charter)

      DELAWARE                                      74-1622891
(State or Other Jurisdiction of          (I.R.S. Employer Identification No.)
Incorporation or Organization)

                         515 West Greens Road, Suite 710
                              Houston, Texas 77067
                    (Address of Principal Executive Offices)

                                 (281) 876-0080
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

              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 by check mark if disclosure of delinquent filers pursuant to
 Item 405 of Regulation S-K is not contained herein, and will not be contained,
    to the best of registrant's knowledge, in definitive proxy or information
     statements incorporated by reference in Part III of this Form 10-K or
                      any amendment to this Form 10-K. [X]

              There were 252,000 shares of the Registrant's Class A
                   Common Stock outstanding as of the close of
                business on April 1, 1999, all of which are held
                      by Merchants Metals Holding Company.

                   DOCUMENTS INCORPORATED BY REFERENCE - NONE

<PAGE>   2


                                     PART I

ITEM 1.  BUSINESS

GENERAL

MMI Products, Inc. (MMI), a Delaware corporation and a wholly-owned subsidiary
of Merchants Metals Holding Company (Holding), was organized in 1953. MMI was
acquired by Citicorp Venture Capital, Ltd. and members of MMI's management in
1986.

MMI is a leading manufacturer and distributor of products used in the
residential, commercial and infrastructure construction industries. MMI has
established leading market positions in the fence and concrete construction
industries by combining efficient manufacturing, high quality and broad product
offerings and extensive distribution capabilities. MMI employs a combination of
state-of-the-art and traditional production methods to achieve cost efficiencies
in its manufacturing processes. In addition, while MMI's manufacturing
facilities are geared primarily toward high-volume, standardized production to
promote efficiencies, many of MMI's manufacturing facilities are capable of
producing customized products in response to specific customer requirements or
applications that are unique to particular geographic regions of the United
States. Consequently, each plant is configured to serve as both a high-volume
producer of standard products and a job lot producer of specialty products. MMI
also benefits from raw material purchasing efficiencies because the majority of
manufactured products are produced from the same raw material.

MMI has developed an extensive and well positioned distribution network,
consisting of 72 company-operated distribution centers, located in 31 states.
MMI's distribution network services over 5,000 customers, including construction
contractors, fence wholesalers, industrial manufacturers, highway construction
contractors and fabricators of concrete reinforcing bar. In addition to serving
customers nationwide, distribution centers and production facilities are well
positioned to serve areas of high population and construction growth. MMI
currently has manufacturing or distribution facilities in each of the ten states
with the largest projected increases in population through 2025. MMI
manufactures its products from 18 principal manufacturing facilities
strategically located throughout the United States.

ACQUISITIONS

Historically, a significant portion of MMI's growth has been achieved through
acquisitions. Since 1989, MMI has completed twelve acquisitions, including eight
in the past four years, which have substantially increased MMI's net sales and
EBITDA. In 1998, MMI completed three acquisitions.

On February 18, 1998, MMI acquired the assets and assumed certain liabilities of
The Burke Group L.L.C. ("Burke"), a manufacturer of hardware devices and
processor of chemicals used in the concrete construction industry. The
acquisition expanded the breadth of MMI's concrete accessories product line. The
total purchase price was $20.6 million, which was funded by MMI's revolving
credit facility. On September 4, 1998, MMI sold the chemical processing
operations included in the Burke acquisition for approximately $3.6 million in
cash.


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On March 2, 1998, MMI purchased substantially all of the assets of Wholesale
Fencing Supply, Inc. and affiliated entities for approximately $2.1 million, of
which $1.1 million was funded by the revolving credit facility and $1.0 million
by a note payable to seller. The operations acquired include a manufacturer of
ornamental iron fencing in Tacoma, Washington, and distributors of fence
products in Tacoma, Washington, and two Oregon locations.

On October 6, 1998, MMI purchased all the issued and outstanding capital stock
of Security Fence Supply Co., Inc., a Maryland corporation ("Security Fence")
for cash of approximately $24.4 million, which was funded by the revolving
credit facility. Immediately following the purchase, the real property acquired
was sold to the former principals of Security Fence for approximately $3.6
million in cash and leased back to MMI for a term of five years at approximate
market rental rates. Security Fence specializes in commercial and industrial
fencing. It manufactures chain link and vinyl coated chain link fabric as well
as ornamental iron and vinyl fence products.

BUSINESS SEGMENTS

MMI reports the results of its operations in two business segments: Fence and
Concrete Construction Products. Financial information for each business segment
is disclosed in Note 12 of Notes to Consolidated Financial Statements.

Both the Fence and Concrete Construction Products segments share common factors
in relation to seasonality of business and raw materials.

Seasonality and Cyclicality. MMI's products are used in the residential,
commercial and infrastructure construction industries. These industries are both
cyclical and seasonal, and changes in demand for construction services have a
material impact on sales and profitability. Although MMI believes that a
cyclical downturn is inevitable, MMI has implemented the following strategies
which it believes will mitigate the impact of any such downturn on its future
operating results and liquidity:

     o    Increased the focus on products used in the commercial and
          infrastructure construction industries, which historically have been
          less cyclical than the residential construction industry.

     o    Positioned Concrete Construction Products segment to benefit from
          anticipated increases in infrastructure spending.

     o    Expanded distribution network to serve diverse areas of high
          population growth, as well as to limit the effects of any regional
          economic downturns.

As a result of seasonality, the highest level of sales and profitability occur
during the times of the year when climatic conditions are most conducive to
construction activity. Accordingly, sales will typically be higher in the second
and third quarter.

Raw Materials. MMI's manufactured products are produced primarily from steel
rod. Because both business segments require large quantities of the same raw
material, MMI purchases steel rod in significantly larger quantities than would
be the case if the business segments were part of separate stand-alone
enterprises. Because of such large volume purchases, MMI believes that it
typically purchases steel rod at a cost below industry standard. Since steel rod
cost comprises a substantial portion of cost of goods sold (approximately 33% 
in fiscal year 1998), MMI believes such cost savings provide a significant
competitive advantage.




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In recent years, more than 50% of the steel rod purchased has been produced
overseas. Most of the purchases of foreign steel rod are made through Mannesmann
Pipe and Steel Corporation, which arranges the importation of rod from various
overseas sources. Major suppliers of steel rod in the United States include
Ameristeel, Atlantic Steel, Co-Steel Raritan, Keystone Steel, and North Star
Steel.

MMI generally negotiates quantities and pricing on a quarterly basis for both
domestic and foreign steel rod purchases. Because all agreements for the
purchase of steel rod, whether foreign or domestic, are denominated in United
States dollars, there is no exposure to significant risks of fluctuations in
foreign currency exchange rates with respect to such agreements.

Fence Segment

The Fence segment is made up of three operating entities, Merchants Metals,
Security Fence and Anchor Die Cast. Merchants Metals is headquartered in
Houston, Texas with the operations segregated and managed by geographic
divisions. Security Fence is a manufacturer and distributor of a variety of
fence products and is located in Bladensburg, Maryland. Anchor Die Cast, a small
manufacturer and distributor of fence fittings, is located in Harrison,
Arkansas. The Fence segment contributed 49.7%, 51.2% and 58.2% of consolidated
net sales in fiscal years 1998, 1997 and 1996, respectively.

Products. The Fence segment manufactures galvanized and vinyl coated chain link
fence fabric, a full line of aluminum die cast and galvanized pressed steel
fittings, and vinyl coated colored pipe, ornamental iron fence products, and
vinyl fencing. These products are manufactured at seven principal facilities.

The segment also distributes a variety of fence products that it purchases from
third parties. Such products include pipe, tubing, wood, vinyl, aluminum, and
ornamental iron fence products, gates, hardware, and other related products. The
segment also assembles wooden fence panels for residential fences at several of
its facilities.

Fence products are used in a variety of applications. The chain link fence
products primarily serve as security fencing at residential, commercial and
governmental facilities, including manufacturing and other industrial
facilities, warehouses, schools, airports, correctional institutions, military
facilities, recreational facilities, swimming pools and dog kennels. PVC color
coated wire, together with vinyl coated colored pipe, tubing and fittings, are
used primarily for tennis courts and other residential applications. The segment
also offers other fence products that are used primarily in the construction of
wood, vinyl, aluminum or ornamental iron fence systems, and in the construction
of all sizes and styles of fence gates for the residential and commercial
markets.

In fiscal year 1998, approximately 46% of the Fence segment sales represented
products manufactured by the segment. The remaining fence products were
purchased as finished goods from third parties for distribution. Purchases of
finished fence products are primarily from domestic manufacturers. MMI believes
that its full line of fence products provides a competitive advantage by
enabling it to provide "one-stop shopping" to its customers, thereby promoting
customer loyalty.


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Production Process. The chain link fence manufacturing process is virtually the
same at each manufacturing facility. The dominant manufacturing process, which
is known as "GAW" or "galvanized after weaving", involves three steps.

     o    The first step, wire drawing, transforms steel rod into steel wire,
          primarily ranging in thickness from 12.5 gauge (.095 inches) to 6.0
          gauge (.192 inches).

     o    In the second step, the wire is woven into chain link fabric by
          automated fabric weaving machines pre-set to a specific width (which
          ranges from three to 20 feet) of chain link fence fabric and to a
          specific "diamond" size ranging from 3/8 inch to 2 3/8 inches.

     o    The third step consists of the galvanizing process which involves
          coating the surface of the steel wire with zinc to provide, among
          other things, corrosion protection.

The segment also produces other types of coated wire fabric, including polyvinyl
chloride or "PVC" coated, aluminum coated, and galvanized before weaving
("GBW"). In addition, vinyl coatings are applied to the pipe, tubing, and
fittings used with vinyl coated chain link fabric. Anchor Die Cast manufactures
a full line of aluminum die cast and galvanized pressed steel fittings.

Sales and Marketing; Principal Customers. The Fence segment sells fence products
principally to fence wholesalers and residential and commercial contractors.
Although some sales of fence products are through home centers, such sales are
not a primary focus of sales efforts. No one customer accounted for more than
10% of the Fence segment revenues in fiscal year 1998.

The segment's dedicated sales force consists of approximately 81 employees whose
sales territories cover the 48 contiguous states. Sales generally are made
through 53 regional distribution centers (seven of which are located at
manufacturing facilities), which are located in 30 states. Because customer
orders typically require rapid turn-around time, the distribution centers are
strategically located near customers' facilities. The segment also distributes
its fence products through a network of 338 authorized dealers located
throughout the country.

Competition. The Fence segment's major national competitor is Master-Halco,
Inc., which has a more extensive distribution network than MMI. MMI believes,
however, that its more extensive fence manufacturing capabilities provide an
advantage to some major accounts. The segment also competes with two strong
regional competitors, one of which operates primarily on the East Coast, with
particular emphasis on Florida, and one of which operates only manufacturing
facilities (with no internal distribution network) primarily east of the Rocky
Mountains. The remaining competitors are smaller regional manufacturers and
wholesalers.

Although the ability to sell fence products at a competitive price is an
important competitive factor, MMI believes that other factors, such as perceived
quality of product and service and ability to deliver products to customers
quickly, are also important to its fence customers. MMI believes that its
reputation for quality and service and its ability to deliver product quickly
due to the locations of its 53 fence distribution centers, enable MMI to obtain
a slight premium in its sales price for fence products, as compared to its
principal competitors.

Concrete Construction Products Segment

The Concrete Construction Products segment is made up of two operating entities,
Ivy Steel and Wire and Meadow-Burke Products. Ivy is headquartered in Houston,
Texas and Meadow-Burke


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is headquartered in Tampa, Florida. Both companies segregate their management
and operations by geographic region. The Concrete Construction Products segment
contributed 50.3%, 48.8% and 41.8% of consolidated net sales in fiscal years
1998, 1997 and 1996, respectively.

Products. Concrete construction products include various classes of wire mesh,
which serve as a structural reinforcing grid for concrete construction,
including concrete pipe, roads, bridges, runways and sewage and drainage
projects. In addition, the segment produces over 2,000 specialized accessories
used in concrete construction, including products used to position and install
steel reinforcing bar and wire mesh reinforcing grid.

The segment manufactures three principal classes of wire mesh, consisting of
commodity building mesh (Class B-2), pipe mesh (Class C), and structural mesh
(Class D). The wire mesh is produced from wire that ranges in size from 1/8-inch
diameter to 3/4-inch diameter, in both smooth and deformed patterns.

Class B-2 mesh is a commodity building mesh used in housing and light commercial
construction, including driveways, slab foundations and concrete walls. Class C
mesh is used to construct reinforced concrete pipe for, among other things,
drainage and sewage systems and water treatment facilities. Ivy has been
producing pipe mesh for over 40 years. Class D mesh is a structural wire mesh
that is designed as an alternative to steel reinforcing bar for certain types of
concrete construction, including roads, bridges and other heavy construction
projects. Structural mesh is marketed as a cost-effective alternative to steel
reinforcing bars. Although structural mesh has a higher initial cost to the
customer than does steel reinforcing bar, MMI believes that the overall
construction cost to the customer is generally lower if structural mesh is
utilized. The segment also manufactures galvanized strand wire which is used by
manufacturers and processors of all types of wire products, including shelving,
household and automotive products.

The concrete accessory products include supports for steel reinforcing bars and
wire mesh, form ties and related products, basket assemblies (including welded
and loose dowel basket assemblies), anchors and inserts (including imbedded
attachments and lifting devices, composite structural wire members and prestress
strand hold down anchors) and bracing devices for holding in place tilt-up
concrete walls. Although the segment manufactures most of its concrete
accessories, certain products, such as plastic supports for steel reinforcing
bar and certain types of form ties, are purchased from third parties for
distribution by the segment. New products are continually introduced in an
effort to provide a full line of concrete accessories to customers.

Concrete accessories are used in a variety of applications. Supports are used to
position and install steel reinforcing bars and wire mesh in the construction of
roads, bridges and other heavy construction projects. Welded and loose dowel
basket assemblies are used to reinforce joints between concrete pieces in the
paving of roads, highways, and runways. Anchors and inserts are used to fasten
and lift precast panels and floor panels in the construction of, among other
things, commercial buildings.

In fiscal year 1998, approximately 93% of the segments sales represented
manufactured products. The remaining 7% of segment sales were purchased as
finished goods for resale through 22 regional distribution facilities.

Production Process. The Concrete Construction Products segment manufactures its
products at 11 principal facilities, which are strategically located throughout
the United States. 


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Wire mesh is manufactured with wire that ranges in size from 1/8-inch diameter
to 3/4-inch diameter, in both smooth and deformed patterns. The wire mesh is
manufactured from low-carbon steel rod, which is cleaned by removing "mill
scale" by passing the rod through a series of pulleys that mechanically descales
the rod. The rod is then pulled through a die that reduces the area of the rod
approximately 30 percent. This "cold working" process produces wire that is
clean, uniform in diameter and nearly 100 percent stronger than the original
rod. The wire is then processed into the finished product using automatic
welding machines. This method of welding, known as electrical resistance
welding, produces a very strong welded joint without weakening the steel as much
as electrode welding.

Certain aspects of the production process vary depending on the class of mesh
being produced. Commodity building mesh generally is produced in roll and sheet
form and is made with small diameter wire. Pipe mesh generally is custom-made to
customer specifications. Additional steps in the process of producing structural
wire mesh often include bending the mesh to precise shapes, cutting the exact
sizes and preparing the surface to allow for the application of special
coatings.

The concrete accessory manufacturing process also consists of drawing steel rod
into wire which is then fed into automatic forming and resistance welding
machines which produce the finished product. Additional manufacturing processes
include various punch press operations, threading, machining, painting and
plastic and epoxy coating of products. In addition to steel rod, which is the
primary raw material for concrete accessories, other raw materials are used such
as round bar stock, slit steel coils, reinforcing steel bars and paints,
plastisol and epoxy powder used for various coatings.

Sales and Marketing; Principal Customers. The segment sells its products
principally to construction products distributors, industrial manufacturers
(such as pre-casters of concrete products), large reinforcing bar fabricators,
commercial building supply dealers and construction contractors.

The specialized sales force for the wire mesh product line consists of
approximately 13 employees whose sales territories cover the 48 contiguous
states. Members of the wire mesh sales force generally have engineering
backgrounds which permit them to consult with customers regarding product
specifications. Because orders for wire mesh products typically do not require
the quick turn-around time that is required for concrete accessories, wire mesh
products are shipped directly from one of the six wire mesh manufacturing
facilities to the customer, generally in truckload quantities. Most wire mesh
production is in response to particular customer orders. Light wire mesh used
for residential construction, however, is produced in standard patterns in
anticipation of customer orders.

The dedicated sales force for concrete accessories consists of approximately 35
employees whose sales territories cover the 48 contiguous states. Concrete
accessories are distributed primarily through 16 regional distribution centers
(five of which are located at concrete accessories manufacturing facilities).
Because orders for concrete accessories typically require rapid turn-around
time, these distribution centers are strategically located near customers'
facilities.

No one customer accounted for more than 10% of the Concrete Construction
Products segment revenues in fiscal year 1998.


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Competition. The segment's major competitor for wire mesh is Insteel Wire
Products, Inc. The segment faces strong regional competitors in Midwestern,
Southeastern, and Mid-Atlantic states. There is also competition from smaller
regional manufacturers and wholesalers of wire mesh products.

The concrete accessories product line faces competition from several significant
competitors. Dayton-Superior Corporation is the leading full line national
participant in the concrete accessories market, with a market share greater than
that of MMI. The segment also faces strong full line competition from a regional
competitor and from two other significant competitors, who offer a more limited
number of products.

MMI believes that its ability to produce a greater variety of wire mesh products
in a wider geographical area provides an advantage to major accounts. MMI
believes that its willingness and ability to provide custom-made products that
fit its customers' individual needs provide a competitive advantage. For
concrete accessories, MMI believes that price, extensive product selection and
ability to deliver product quickly are the principal competitive factors.

MMI believes that its raw material costs (which MMI believes are lower than many
of its competitors) enhance the segment's ability to compete effectively with
respect to product price in the concrete construction market.

REGULATION

Environmental Regulation. MMI is subject to extensive and changing federal,
state and local Environmental Laws including laws and regulations that (i)
relate to air and water quality, (ii) impose limitations on the discharge of
pollutants into the environment, and (iii) establish standards for the
treatment, storage, and disposal of toxic and hazardous wastes. Stringent fines
and penalties may be imposed for non-compliance with these Environmental Laws.
In addition, Environmental Laws could impose liability for costs associated with
investigating and remediating contamination at MMI's facilities or at
third-party facilities at which MMI has arranged for the disposal treatment of
hazardous materials.

Although no assurances can be given, MMI believes that MMI and its operations
are in compliance in all material respects with all Environmental Laws and MMI
is not aware of any non-compliance or obligation to investigate or remediate
contamination that could reasonably be expected to result in material liability.
This being said, Environmental Laws continue to be amended and revised to impose
stricter obligations. MMI cannot predict the effect such future requirements, if
enacted, would have on MMI although MMI believes that such regulations would be
enacted over time and would affect the industry as a whole.

Health and Safety Matters. MMI's facilities and operations are governed by laws
and regulations, including the federal Occupational Safety and Health Act,
relating to worker health and workplace safety. MMI believes that appropriate
precautions are taken to protect employees and others from workplace injuries
and harmful exposure to materials handled and managed at its facilities. While
it is not anticipated that MMI will be required in the near future to expend
material amounts by reason of such health and safety laws and regulations, MMI
is unable to predict the ultimate cost of compliance with these changing
regulations.


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EMPLOYEES

As of January 2, 1999, MMI had approximately 2,200 full time employees. MMI is a
party to seven collective bargaining agreements with five unions, of which a
total of 284 employees are members. Such collective bargaining agreements cover
employees of the Baltimore, Maryland; Tampa, Florida; Whittier, California;
Hackensack, New Jersey; Chicago, Illinois; and Oregon, Ohio facilities. MMI
considers its relations with its employees to be good.

AVAILABLE INFORMATION

MMI files annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements
and other information filed by MMI at the SEC's public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549, or at the SEC offices in New York,
New York and Chicago, Illinois. Please call (800) SEC-0330 for further
information on the public reference rooms. MMI's filings are also available to
the public from commercial document retrieval services and at the web site
maintained by the SEC at http://www.sec.gov.

ITEM 2.  PROPERTIES

                  MMI's principal executive offices are located in approximately
11,000 square feet of leased space in Houston, Texas.

                  The operating facilities of MMI can be broken down into two
categories, manufacturing plants and distribution centers. The majority of the
manufacturing plants are owned by MMI. The majority of the distribution centers
are leased from third parties. The following table sets forth the facilities
general information by operating segment:

<TABLE>
<CAPTION>
Type of facility                                            States                 Size*
----------------------------------------------------        -------       ---------------------
<S>                                                           <C>           <C>                
Fence Manufacturing Plants                                    7             609,100 square feet
Fence Distribution Centers                                    30            537,974 square feet
Concrete Construction Products Manufacturing Plants           11          1,116,875 square feet
Concrete Construction Products Distribution Centers           11            149,567 square feet
</TABLE>

* Does not include square footage of outside storage and other outdoor areas.

ITEM 3.  LEGAL PROCEEDINGS

MMI is involved in various claims and lawsuits incidental to its business. MMI
does not believe that these claims and lawsuits in the aggregate will have a
material adverse affect on MMI's business, financial condition and results of
operations.

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

         Not applicable.

PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Not applicable.




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ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth selected historical financial data derived from
MMI's audited consolidated financial statements and should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations and the Consolidated Financial Statements and Notes
thereto, included elsewhere herein.

<TABLE>
<CAPTION>
                                                                  Fiscal Years
(In Thousands)                             1998          1997          1996          1995           1994
                                         ---------     ---------     ---------     ---------     ---------
<S>                                      <C>           <C>           <C>           <C>           <C>      
INCOME STATEMENT DATA:
Net sales                                $ 418,355     $ 346,905     $ 283,402     $ 233,284     $ 197,617
Gross profit                                67,394        50,906        44,963        37,161        34,144
Nonrecurring expenses (1)                     --            --           3,106          --            --
Net income                                  10,930         7,737         6,337         6,346         7,512
BALANCE SHEET DATA
 (AT PERIOD END):
Working capital                          $  58,854     $  50,308     $  33,511     $  36,563     $  29,222
Total assets                               220,226       152,818       135,263       103,856        86,498
Total long-term debt and capital
 leases, including current maturities      160,437       123,867        55,278        49,485        44,454
Stockholder's equity (deficit)             (13,007)      (20,873)       28,534        15,606         9,260
CASH FLOW DATA:
Net cash provided by operating
 activities                              $  15,161     $   2,396     $  15,491     $  12,745     $  11,516
Net cash used in investing
 activities                                (47,886)       (4,976)      (24,314)      (14,741)       (2,452)
Net cash provided by (used in)
 financing activities                       31,195         5,855         6,894         3,681        (8,891)

EBITDA (2)                               $  42,781     $  31,423     $  25,547     $  21,613     $  19,997
Cash dividends (3)                           1,292        57,105          --            --             308
</TABLE>

     (1)  In fiscal year 1996, MMI recorded nonrecurring expense resulting from
          the modification of stock options granted in previous years as part of
          the Recapitalization of MMI and Merchant Metals Holding Company 
          ("Holding"). See Note 2 to the audited consolidated financial 
          statements included elsewhere herein.

     (2)  EBITDA is defined as the sum of income before interest expense, income
          taxes, depreciation and amortization, and certain nonrecurring
          expenses (see note (1) above). EBITDA is presented because it is a
          widely accepted financial indicator of a company's ability to service
          and incur debt. EBITDA should not be considered in isolation from or
          as a substitute for net income or cash flow measures prepared in
          accordance with generally accepted accounting principles or as a
          measure of a company's profitability or liquidity.

     (3)  Cash dividends of $308,000 in fiscal year 1994 represent amounts
          required to redeem the equity interests in Holding held by former
          stockholders which had received equity interests in Holding upon the
          sale to MMI of certain assets acquired for the fence product line. In
          fiscal year 1997, $57.1 million was distributed to Holding for the
          redemption by Holding of certain of its equity interests. In fiscal
          year 1998, $1.3 million was distributed to Holding to finalize the
          1997 redemption of certain of its equity interests.


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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The following is an analysis of the financial condition and results of
operations of MMI. This analysis should be read in conjunction with MMI's
Consolidated Financial Statements and Notes thereto, appearing elsewhere herein.

GENERAL

MMI is a leading manufacturer and distributor of products used in the
residential, commercial and infrastructure construction industries. Earnings,
including business segment earnings were as follows:

<TABLE>
<CAPTION>
(In Thousands)                                                 Fiscal Years
                                                   ----------------------------------
                                                     1998         1997         1996
                                                   --------     --------     --------
<S>                                                <C>          <C>          <C>     
Fence segment earnings                             $ 14,043     $ 11,290     $  9,261
Concrete Construction Products segment earnings      22,315       14,980       12,289
Corporate (1)                                          (764)        (354)      (3,557)
                                                   --------     --------     --------
Earnings before interest and income taxes            35,594       25,916       17,993
Interest expense                                     17,320       13,018        7,429
                                                   --------     --------     --------
Earnings before income taxes                         18,274       12,898       10,564
Income taxes                                          7,344        5,161        4,227
                                                   --------     --------     --------
Net income                                         $ 10,930     $  7,737     $  6,337
                                                   ========     ========     ========
</TABLE>

(1)  Corporate represents only amortization of intangible assets and 
     non-recurring charges. Corporate general and administrative expenses
     are allocated to the segments based upon proportional net sales.

On a consolidated basis MMI's significant growth in net sales and earnings
result primarily from business acquisitions, the expansion of the fence
segment's distribution network, strong activity in the commercial and
infrastructure construction markets and increase in market share. Net sales
increased 20.6% in 1998 and 22.4% in 1997. Net income increased 41.3% in 1998
and 22.1% in 1997. In 1998, the primary contribution to net income growth was
the increased sales of concrete accessory products. The acquisition of The Burke
Group in early 1998 contributed additional sales of concrete accessories which
generally carry a higher gross profit margin than other company products.

Interest expense increased $4.3 million in 1998 and $5.6 million in 1997. The
increase is primarily due to the issuance of $120 million 11.25% Senior
Subordinated Notes in April 1997. If the proceeds from the issuance of the notes
had been available at the beginning of fiscal year 1997, pro forma interest
expense for fiscal year 1997 would have been $15.4 million. 1998 interest
expense is $1.9 million higher than 1997 pro forma interest due to an increase
in borrowings from the credit facility primarily for funding of acquisitions and
capital expenditures. Pro forma interest expense is based on the 11.25% rate on
the Senior Subordinated Notes plus the amortization of deferred financing costs
over the life of the debt.

The effective income tax rate remained flat for fiscal years 1996 and 1997 and
increased slightly in fiscal year 1998 as a result of the non-deductible
goodwill associated with the Security Fence acquisition in October 1998.


                                       11
<PAGE>   12

FENCE SEGMENT

<TABLE>
<CAPTION>
(In Thousands)                                           Fiscal Years
                                             ----------------------------------
                                               1998         1997         1996
                                             --------     --------     --------
<S>                                          <C>          <C>          <C>     
Net sales                                    $208,117     $177,640     $164,971
Gross profit                                   30,893       25,464       23,461
Gross profit margin                              14.8%        14.3%        14.2%
SG&A and other expense                       $ 16,850     $ 14,174     $ 14,200
Earnings before interest and income taxes      14,043       11,290        9,261
EBITDA                                         16,962       13,722       11,441
</TABLE>

Net Sales. Net sales increased 17.2% in 1998 and 7.7% in 1997. These increases
are primarily due to acquisitions and the opening of new distribution centers.
Also contributing to 1998 increases were favorable weather conditions and
increased housing starts. Net sales for the fourth quarter of 1998 had a 16.0%
increase over the fourth quarter 1997 exclusive of the Security Fence
acquisition in October 1998. Total fourth quarter growth including three months
of Security Fence operations was 33.9%. The opening of a new fence distribution
center in January 1997 and an acquisition in late 1997 contributed to the
majority of the 1997 net sales increase.

Gross Profit. The fence segment's gross profit margin percentage has remained
relatively flat over the last three years. The increase in 1998 was primarily
due to lower steel rod prices and higher margin products introduced in the
fourth quarter from the Security Fence acquisition.

SG&A and other expense. SG&A and other expense ("SG&A") increased 18.9% in 1998
and remained flat in 1997. SG&A as a percentage of sales was 8.1%, 8.0%, and
8.6% for 1998, 1997, and 1996, respectively. The increase in expense in 1998 was
principally due to business acquisitions and the opening of distribution
centers. SG&A as a percentage of sales was relatively flat in 1998 and 1997. The
higher 1996 ratio to sales was primarily the result of an increase in the
allowance for doubtful accounts.

CONCRETE CONSTRUCTION PRODUCTS SEGMENT

<TABLE>
<CAPTION>
(In Thousands)                                          Fiscal Years
                                             ----------------------------------
                                               1998         1997         1996
                                             --------     --------     --------
<S>                                          <C>          <C>          <C>     
Net sales                                    $210,238     $169,265     $118,431
Gross profit                                   36,501       25,442       21,502
Gross profit margin                              17.4%        15.0%        18.1%
SG&A and other expense                       $ 14,186     $ 10,462     $  9,213
Earnings before interest and income taxes      22,315       14,980       12,289
EBITDA                                         25,819       17,701       14,106
</TABLE>

Net Sales. Net sales increased 24.2% in 1998 and 42.9% in 1997. Increases are
primarily the result of acquisitions and strong activity in commercial and
infrastructure construction markets. In 1998, the Burke Group acquisition
contributed $23.9 million, a 14.1% increase in net sales. Also impacting 1998
was increased sales to the segment's largest customer, a company which has also
grown through acquisitions. Three acquisitions in the second half of 1996
contributed significantly to the 1997 sales increases. The mesh product line
provided the majority of the 1997 increase, 86.6%, which was principally due to
the full twelve month impact of two of the 


                                       12
<PAGE>   13

1996 acquisitions. The concrete accessory product line sales increase in 1997
was also primarily due to an acquisition in the fourth quarter of 1996.

Gross Profit. Gross profit increased 43.5% in 1998 and 18.3% in 1997. Gross
profit margins increased to 17.4% in 1998 from 15.0% in 1997. The 1998 increase
in gross profit was primarily due to the increase in mix of higher margin
concrete accessories. This increase was partially offset by a slight decrease in
the mesh products margin due to fluctuations in raw material costs. Rapidly
declining costs of purchased steel rod and competitive pressure reduced mesh
prices early in 1998 when the company still held in inventory rod purchased at
higher costs in 1997. The 1997 gross profit margin decreased from 18.1% in 1996
to 15.0%. This decrease was principally due to increased sales of lower margin
products in both the mesh and concrete accessory lines, combined with the start
up of a new concrete accessory plant and the incurrence of higher raw material
costs.

SG&A expense. SG&A expenses increased 35.6% in 1998 and 13.6% in 1997. As a
percentage of sales, SG&A expense was 6.7%, 6.2% and 7.8% in 1998, 1997, and
1996, respectively. The increase in SG&A expenses was primarily due to the
growth in sales from acquisitions. The increase in SG&A expense as a percentage
of sales in 1998 is principally due to the higher selling costs related to the
Burke Group concrete accessory products. The decrease in SG&A expense as a
percentage of sales in 1997 is due to growth in the made-to-order wire mesh
product line, which has a lower relative sales cost, and efficiencies achieved
from integrating acquired businesses into the segment's operations.

LIQUIDITY AND CAPITAL RESOURCES

Operating activities generated $15.2 million of cash in 1998 compared with $2.4
million and $15.5 million in 1997 and 1996, respectively. Net income adjusted
for non-cash items such as depreciation, amortization, and other non-cash
charges provided $18.6 million, $16.2 million and $13.9 million in 1998, 1997,
and 1996, respectively. Net income adjusted for non-cash items was utilized
primarily to support growth in operating assets. Excluding acquired assets,
accounts receivable and inventory increased $20.5 million, $10.2 million and
$10.0 million in 1998, 1997, and 1996, respectively. Additional cash was
provided by an increase in payables and accrued liabilities, especially in 1998,
which had an increase of $17.7 million due to internal growth in the business.

Investing activities utilized $47.9 million, $5.0 million and $24.3 million in
1998, 1997 and 1996, respectively. In 1998 and 1996 the majority of this cash
was used for acquisitions. The three acquisitions in 1998 utilized $37.7 million
and three acquisitions in 1996 used $20.9 million. Capital expenditures for
expansion, improvement and replacement of property plant and equipment was $10.2
million, $4.6 million and $3.5 million in 1998, 1997 and 1996, respectively.
Capital expenditures in 1998 included $3.2 million for a wire mesh plant
facility which replaced a previously leased building, and $1.9 million for
rental equipment, a new product line resulting from the Burke acquisition.

Financing activities provided $31.2 million in 1998 compared to $5.9 million and
$6.9 million in 1997 and 1996, respectively. The increase in 1998 was due to the
funding of acquisitions, particularly the Security Fence acquisition in October
1998. Financing cash flow in 1997 included the issuance of senior subordinated
notes and the use of their net proceeds as discussed below.


                                       13
<PAGE>   14
Although EBITDA should not be considered in isolation from or as a substitute
for cash flow measures prepared in accordance with generally accepted accounting
principles or as a measure of a company's liquidity, it is a widely accepted
financial indicator of a company's ability to incur and service debt. EBITDA is
defined as the sum of income before interest expense, income taxes, depreciation
and amortization, and non-recurring expenses. EBITDA was $42.8 million, $31.4
million and $25.5 million in 1998, 1997, and 1996, respectively. The increase in
EBITDA is primarily the result of higher net sales and gross profit resulting
from acquisitions and other changes as discussed in the segment analysis above.

Senior Subordinated Notes. On April 16, 1997, MMI issued $120 million of 11.25%
senior subordinated notes due 2007 (the "Senior Subordinated Notes"). The net
proceeds of $116.0 million, after fees and expenses, were used (i) to distribute
$57.1 million to Holding for the redemption by Holding of certain of its equity
interests, (ii) to repay the entire $10 million principal amount, plus accrued
interest, on a senior subordinated secured note payable, (iii) to repay MMI's
remaining indebtedness under a term loan facility of $11.4 million and (iv) to
reduce MMI's indebtedness under the revolving credit facility. As a result, of
the issuance MMI's interest expense increased $4.3 million in 1998
(approximately $2.4 million is from the full twelve month impact of the notes)
and $5.6 million in 1997. If the proceeds from the notes had been available at
the beginning of fiscal year 1997, pro forma interest expense for fiscal year
1997 would have been $15.4 million, an increase of $2.4 million over the $13.0
million actually incurred. Pro forma interest expense is based on the 11.25%
rate on the notes plus the amortization of deferred financing costs over the
life of the debt less interest expense on debt that would have been retired.

On February 9, 1999, MMI issued $30 million of a new series of the 11.25% Senior
Subordinated Notes in a private offering. The net proceeds were approximately
$31.1 million, including original issuance premium after expenses. MMI intends
to use the net proceeds to reduce its borrowings under the revolving credit
facility. A portion of the outstanding borrowings under the revolver are subject
to interest rate swap agreements maturing from February 21, 1999 through April
9, 1999. Pending the expiration of such agreements, MMI will invest a portion of
the net proceeds in short-term investments.

MMI's capital expenditure budget for fiscal year 1999 is $10.0 million and will
be funded by the revolving credit facility.

In fiscal 1998, MMI made capital expenditures in excess of the limits
established in the revolving credit facility and did not satisfy certain
reporting requirements to its lenders during fiscal 1998 and subsequent to year
end. MMI has obtained waivers from the lenders for each of these items. In March
1999, the revolving credit facility was amended to modify certain reporting
requirements through August 1999. MMI believes that it will be able to comply
with the amended reporting requirements and other restrictive covenants in the
revolving credit facility throughout its fiscal year 1999.

MMI expects that cash flows from operations and the borrowing availability under
its bank revolving credit facility will provide sufficient liquidity to meet its
normal operating requirements, capital expenditure plans, existing debt service,
and business acquisition strategy over the near term.


                                       14
<PAGE>   15

MMI has pursued and intends to continue to pursue a strategy of business
acquisitions that will broaden its distribution network, complement or extend
its existing product lines or increase its production capacity. The borrowing
availability under its bank revolving credit facility is also expected to be
available to finance such acquisitions. It is possible that, depending upon
MMI's future operating cash flows and the size of potential acquisitions, MMI
will seek additional sources of financing subject to limitations set forth in
its senior subordinated notes indenture.

EFFECT OF INFLATION

The impact of inflation on MMI's operations has not been significant in recent
years. There can be no assurance, however, that a high rate of inflation in the
future will not have an adverse effect on MMI's operating results.

IMPACT OF YEAR 2000

State of Readiness. MMI completed an assessment and has completed or is in the
process of modifying or replacing portions of its software so that its computer
systems will function properly with respect to dates in the Year 2000 and
beyond. In October 1998, MMI replaced its general ledger, accounts payable,
accounts receivable, sales analysis, and financial reporting systems with
software which is Year 2000 compliant. Year 2000 compliance in other systems is
to be achieved through modification of internally developed programs and is
scheduled to be completed by the third quarter of 1999.

Third Party Relationships. MMI does not expect any significant disruption of
operations in the event that any of its suppliers or customers fail to achieve
Year 2000 compliance.

Contingency Plans. Programming changes of internally developed systems may
require a reduction in the scope of modifications and/or the enlistment of third
party resources if the scheduled completion date appeared to be in jeopardy.
Specific contingency plans have been identified for all of the outstanding
projects.

Risks and Uncertainties. Based on the completion of several software and
hardware replacement projects, internal plans for remaining system modification
projects, limited exposure to reliance on third party Year 2000 compliance and
completion of contingency plans, MMI believes that it will experience at most,
isolated and minor disruptions of business processes as a result of the Year
2000 issue. Such disruptions are not expected to have a material effect on MMI's
business, consolidated financial position or results of operations. However, the
magnitude of all Year 2000 disturbances cannot be predicted. Failure to complete
these programs as planned could result in a system failure or miscalculations
causing disruptions of operations, including among other things, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities, all of which could have a material impact on MMI's
business, consolidated financial position or results of operations.

Costs. MMI's growth in recent years has required system software and hardware
upgrades and improvements that were planned for and initiated in 1996. The costs
of the purchased software and hardware upgrades related to these projects
incurred through January 2, 1999 was approximately $700,000 and has been
capitalized in property, plant and equipment in the accompanying consolidated
balance sheets. MMI has also incurred costs of approximately $450,000 through
January 2, 1999 related to these projects for software implementation and
modification of existing programs that has been expensed as incurred. In fiscal
year 1999, MMI expects to incur approximately $240,000 to complete these
projects, including Year 2000 specific modifications. Because the costs of
software and hardware upgrades were already being incurred, and planned
modification of internal systems is primarily for improvement and increased
capacity, the actual cost for Year 2000 specific upgrades and modifications is
not expected to exceed $100,000 and will be expensed as incurred.


                                       15
<PAGE>   16

NEW ACCOUNTING STANDARDS

As of January 4, 1998, MMI adopted Financial Accounting Standards Board
Statement No. 130, Reporting Comprehensive Income (Statement 130) and Statement
No. 131, Disclosures about Segments of an Enterprise and Related Information
(Statement 131).

Statement 130 establishes new rules for reporting and display of comprehensive
income and its components; however, the adoption of Statement 130 had no impact
on MMI's consolidated net income or stockholder's equity. Prior year financial
statements have been reclassified to conform to the requirements of Statement
130.

Statement 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. Statement 131 also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. The adoption of Statement 131 did not affect MMI's consolidated
results of operations or financial position. See Note 12 of Notes to
Consolidated Financial Statements.

FORWARD LOOKING INFORMATION

The statements contained in this report which are not historical facts,
including, but not limited to, statements found under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" above,
are forward looking statements that involve a number of risks and uncertainties.
The actual results of the future events described in such forward looking
statements in this report could differ materially from those contemplated by
such forward looking statements. Among the factors that could cause actual
results to differ materially are the risks and uncertainties discussed in the
report, including without limitations, the portions of such statements under the
caption referenced above, and the uncertainties set forth from time to time in
MMI's other public reports and filings and public statements.


                                       16
<PAGE>   17

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MMI is subject to market risk exposure related to changes in interest rates on
its revolving credit facility and its senior subordinated notes. Borrowings
under the credit facility bear interest, at the option of MMI, at either the
bank's base rate plus 0.25 percent or Eurodollar rate plus 1.5 percent. For
fiscal year 1998, the weighted average balance outstanding under this credit
facility was $26.2 million. Based on this balance, a one percent change in the
interest rate would cause a change in interest expense of approximately
$262,000. MMI is exposed to changes in the fair value of it's $120 million
11.25% fixed rate senior subordinated notes. At January 2, 1999, the fair value
of the notes was approximately 108% of par, or $129.6 million. At January 3,
1998, the fair value of the notes was approximately 109% of par, or $130.8
million. Although the fair value of these notes has not fluctuated much, the
variation in fair value is a function of market interest rate changes and the
investor perception of the investment quality of the senior subordinated notes.

MMI also has exposure to price fluctuations associated with steel rod, its
primary raw material. MMI negotiates purchase commitments from one to nine
months in advance to limit its exposure to price fluctuation and ensure
availability of the materials. Approximately 50% of steel rod is purchased from
foreign sources.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>                                                                                       <C>
Report of Independent Auditors                                                            18

Consolidated Balance Sheet at fiscal year end 1998 and 1997                               19

Consolidated Statement of Operations for fiscal years 1998, 1997 and 1996                 20

Consolidated Statement of Changes in Stockholder's Equity (Deficit) for fiscal
years 1998, 1997 and 1996                                                                 21

Consolidated Statement of Cash Flows for fiscal years 1998, 1997 and 1996                 22

Notes to Consolidated Financial Statements                                                23 - 38
</TABLE>


                                       17
<PAGE>   18

                         REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and Stockholder of
MMI Products, Inc.

We have audited the accompanying consolidated balance sheets of MMI Products,
Inc. and subsidiary as of January 2, 1999 and January 3, 1998, and the related
consolidated statements of operations, stockholder's equity and cash flows for
each of the three fiscal years in the period ended January 2, 1999. Our audits
also included the financial statement schedule listed in the index at Item
14(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of MMI Products, Inc.
and subsidiary at January 2, 1999 and January 3, 1998, and the consolidated
results of their operations and their cash flows for each of the three fiscal
years in the period ended January 2, 1999, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.


                                                           /s/ ERNST & YOUNG LLP

Houston, Texas
March 31, 1999


                                       18
<PAGE>   19


                               MMI PRODUCTS, INC.
                           CONSOLIDATED BALANCE SHEET
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                    January 2,    January 3, 
                                     ASSETS                           1999           1998
                                                                    ----------    ----------
<S>                                                                 <C>           <C>      
Current assets:
  Cash and cash equivalents                                         $   1,979     $   3,509
  Accounts receivable, net of allowance for doubtful accounts of
    $1,926 and $1,876,  respectively                                   58,633        38,940
  Inventories                                                          62,347        48,938
  Income tax receivable                                                    --         1,710
  Deferred income taxes                                                 1,495         1,178
  Prepaid expenses                                                      1,443         1,206
                                                                    ---------     ---------
               Total current assets                                   125,897        95,481
Property, plant and equipment
  Land                                                                  4,814         4,814
  Buildings and improvements                                           17,890        16,473
  Machinery and equipment                                              69,669        50,343
                                                                    ---------     ---------
                                                                       92,373        71,630
  Less accumulated depreciation                                        31,456        25,712
                                                                    ---------     ---------
               Property, plant and equipment, net                      60,917        45,918
Intangible assets                                                      29,123         5,831
Deferred charges and other assets                                       4,289         5,588
                                                                    ---------     ---------
               Total assets                                         $ 220,226     $ 152,818
                                                                    =========     =========

                     LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
  Accounts payable                                                  $  50,328     $  27,276
  Accrued interest                                                      3,238         3,172
  Accrued liabilities                                                  11,175        10,025
  Income tax payable                                                      672            --
  Due to Holding, net                                                      --         3,573
  Current maturities of long-term obligations                           1,630         1,127
                                                                    ---------     ---------
               Total current liabilities                               67,043        45,173
Long-term obligations                                                 158,807       122,740
Deferred income taxes and other long-term liabilities                   7,383         5,778

Commitments and contingencies

Stockholder's deficit
  Common stock, $1 par value; 500,000 shares authorized;
    252,000 shares issued and outstanding                                 252           252
  Additional paid-in capital                                           13,009        14,711
  Accumulated other comprehensive income, net of tax of $148 and
    $105, respectively                                                   (221)         (151)
  Retained deficit                                                    (26,047)      (35,685)
                                                                    ---------     ---------
               Total stockholder's deficit                            (13,007)      (20,873)
                                                                    ---------     ---------
               Total liabilities and stockholder's deficit          $ 220,226     $ 152,818
                                                                    =========     =========
</TABLE>

        The accompanying notes are an integral part of the consolidated
                             financial statements.


                                       19
<PAGE>   20

                               MMI PRODUCTS, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                           Fiscal Years Ended
                                                 ---------------------------------------
                                                 January 2,    January 3,   December 28, 
                                                   1999           1998         1996
                                                 ----------    ----------   ------------
<S>                                              <C>           <C>          <C>      
Net sales                                        $ 418,355     $ 346,905    $ 283,402
Cost of sales                                      350,961       295,999      238,439
                                                 ---------     ---------    ---------
    Gross profit                                    67,394        50,906       44,963
Selling, general and administrative expense         31,874        24,843       23,143
Nonrecurring expense - stock options (Note 2)           --            --        3,106
Other (income) expense, net                            (74)          147          721
                                                 ---------     ---------    ---------
Income before interest and income taxes             35,594        25,916       17,993
Interest expense:
     Affiliates                                         --            --        2,046
     Other                                          17,320        13,018        5,383
                                                 ---------     ---------    ---------
                                                    17,320        13,018        7,429
                                                 ---------     ---------    ---------
Income before income taxes                          18,274        12,898       10,564
Provision for income taxes                           7,344         5,161        4,227
                                                 ---------     ---------    ---------
               Net income                        $  10,930     $   7,737    $   6,337
                                                 =========     =========    =========
</TABLE>


        The accompanying notes are an integral part of the consolidated
                             financial statements.


                                       20
<PAGE>   21

                               MMI PRODUCTS, INC.
            CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (DEFICIT)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         Total
                                               Additional    Retained     Other        Stockholder's
                                     Common     Paid-In      Earnings   Comprehensive    Equity
                                     Stock      Capital      (Deficit)    Income       (Deficit)
                                    --------   ----------    ---------  -------------  -------------
<S>                                 <C>         <C>          <C>        <C>            <C>     
Balance at December 30, 1995        $    252    $  8,008     $  7,346     $     --     $ 15,606
 Net income                               --          --        6,337           --        6,337
 Contribution of capital
   - Recapitalization (Note 1)            --       3,485           --           --        3,485
   - stock options (Note 2)               --       3,106           --           --        3,106
                                    --------    --------     --------     --------     --------
Balance at December 28, 1996             252      14,599       13,683           --       28,534
 Net income                               --          --        7,737           --        7,737
 Additional minimum pension
   liability                              --          --           --         (151)        (151)
                                                                                       --------
 Comprehensive income                     --          --           --           --        7,586
                                                                                       --------
 Contribution of capital
   - stock options                        --         112           --           --          112
 Distribution to Holding                  --          --      (57,105)          --      (57,105)
                                    --------    --------     --------     --------     --------
Balance at January 3, 1998               252      14,711      (35,685)        (151)     (20,873)
 Net income                               --          --       10,930           --       10,930
 Additional minimum pension
   liability                              --          --           --          (70)         (70)
                                                                                       --------
 Comprehensive income                     --          --           --           --       10,860
                                                                                       --------
 Adjustment to 1996 Contribution
   of capital (Note 1)                    --      (1,702)          --           --       (1,702)
 Dividend to Holding (Note 1)             --          --       (1,292)          --       (1,292)
                                    --------    --------     --------     --------     --------
Balance at January 2, 1999          $    252    $ 13,009     $(26,047)    $   (221)    $(13,007)
                                    ========    ========     ========     ========     ========
</TABLE>


         The accompanying notes are an integral part of the consolidated
                             financial statements.


                                       21
<PAGE>   22



                               MMI PRODUCTS, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                  Fiscal Years Ended
                                                                       ---------------------------------------
                                                                       January 2,    January 3,    December 28,
                                                                         1999          1998           1996
                                                                       ----------    ----------    ------------
<S>                                                                    <C>           <C>           <C>      
OPERATING ACTIVITIES
Net income                                                             $  10,930     $   7,737     $   6,337
Adjustments to reconcile net income to net cash provided by
operating activities:
  Depreciation and amortization                                            7,187         5,507         4,448
  Nonrecurring expenses - stock options                                       --            --         3,106
  Provision for losses on accounts receivable                                234            --           879
  Deferred income taxes                                                      340         2,886        (1,088)
  (Gain) loss on sale of equipment                                           (81)          (22)          193
  Other                                                                       --           112            --
Changes in operating assets and liabilities, net of effects of
acquired businesses:
  Increase in accounts receivable                                        (12,914)       (3,139)       (8,339)
  Increase in inventories                                                 (7,546)       (7,029)       (1,668)
  Decrease in prepaid expenses and other assets                              333           272         2,068
  Increase in accounts payable and accrued liabilities                    17,701         1,109         9,762
  Increase (decrease) in income taxes                                      2,629        (2,800)          372
  Decrease in deferred interest payable - affiliates                          --            --        (6,389)
  Increase (decrease) in due to Holding                                   (3,652)       (2,237)        5,810
                                                                       ---------     ---------     ---------
Net cash provided by operating activities                                 15,161         2,396        15,491
                                                                       ---------     ---------     ---------
INVESTING ACTIVITIES:
  Capital expenditures                                                   (10,226)       (4,560)       (3,545)
  Proceeds from sale of equipment                                             52           101            89
  Acquisitions, net of cash acquired                                     (37,721)         (552)      (20,858)
  Other                                                                        9            35            --
                                                                       ---------     ---------     ---------
Net cash used in investing activities                                    (47,886)       (4,976)      (24,314)
                                                                       ---------     ---------     ---------
FINANCING ACTIVITIES:
  Proceeds from long-term obligations                                    187,316       157,854       122,033
  Payments on long-term obligations                                     (153,127)      (90,943)     (103,824)
  Payments on subordinated notes payable - affiliates                         --            --       (14,800)
  Contribution of capital from Holding                                    (1,702)           --         3,485
  Dividend to Holding                                                     (1,292)           --            --
  Distribution to Holding                                                     --       (57,105)           --
  Debt offering costs                                                         --        (3,951)           --
                                                                       ---------     ---------     ---------
Net cash provided by financing activities                                 31,195         5,855         6,894
                                                                       ---------     ---------     ---------
               Net change in cash and cash equivalents                    (1,530)        3,275        (1,929)
Cash and cash equivalents, beginning of period                             3,509           234         2,163
                                                                       ---------     ---------     ---------
Cash and cash equivalents, end of period                               $   1,979     $   3,509     $     234
                                                                       =========     =========     =========

Supplemental Cash Flow Information:
  Supplemental disclosure of noncash investing activities
     Issuance of capital lease obligations for capital expenditures    $   1,385     $   1,678     $   1,443
  Cash paid for interest                                               $  16,721     $  10,441     $  13,530
  Cash paid for income taxes                                           $   4,371     $   4,822     $   4,938
</TABLE>


         The accompanying notes are an integral part of the consolidated
                             financial statements.


                                       22
<PAGE>   23

                               MMI PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JANUARY 2, 1999


1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

The consolidated financial statements include the accounts of MMI Products, Inc.
and its wholly-owned subsidiary, Security Fence Supply Co. Inc. (since its
acquisition on October 6, 1998) (collectively, "MMI" or the "Company"). MMI
Products, Inc. is a wholly-owned subsidiary of Merchants Metals Holding Company
("Holding") which is substantially wholly-owned by MMI Products, L.L.C. MMI is a
manufacturer and distributor of products used in the residential, commercial and
infrastructure construction industries within the United States. The
manufactured products in each of MMI's product lines are produced primarily from
the same raw material, steel rod. MMI's customers include contractors, fence
wholesalers, industrial manufacturers, highway construction contractors and
fabricators of reinforcing bar.

On December 13, 1996, MMI and Holding completed a recapitalization transaction
(the "Recapitalization"). Pursuant to the Recapitalization, (i) Holding made an
additional capital contribution to MMI of approximately $3.5 million in cash and
loaned MMI approximately $5.8 million, (ii) MMI borrowed an additional $5.0
million in senior subordinated secured notes payable from a supplier and an
additional $1.0 million in other long-term debt, and (iii) MMI repaid the full
amount of subordinated notes payable to affiliates of $14.8 million plus accrued
interest.

A former stockholder of Holding exercised its appraisal rights and filed a
lawsuit against Holding with respect to the value of the common and preferred
stock redeemed in connection with the Recapitalization. In January 1997, Holding
paid the stockholder $2.2 million with respect to the value of the preferred
stock, the original value offered in the Recapitalization. In October 1998,
Holding paid $6.45 million, including accrued interest of $1.04 million, to
settle the value of the common stock redeemed. The $ 1.7 million increase in the
original value offered in the Recapitalization has been charged to Additional
Paid-in-Capital to reflect finalization of the December 1996 change in capital
contributions by Holding. MMI declared a dividend of $1.3 million to Holding
during the fourth quarter of 1998 to settle the interest and legal expenses paid
on Holding's behalf by MMI. The $6.45 million settlement was funded by MMI's
revolving credit facility and had no effect on the operating results of MMI.

On April 16, 1997, MMI issued $120 million of senior subordinated notes due
2007. The net proceeds of $116.0 million, after fees and expenses, were used (i)
to distribute $57.1 million to Holding for the redemption by Holding of certain
of its equity interests, (ii) to repay the entire $10 million principal amount,
plus accrued interest, on an MMI senior subordinated secured note payable, (iii)
to repay MMI's remaining indebtedness under a term loan facility of $11.4
million and (iv) to reduce MMI's indebtedness under the revolving credit
facility. See Note 7.



                                       23
<PAGE>   24


                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)


1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Fiscal Year

MMI follows a 52-53 week fiscal year ending on the Saturday closest to December
31st. The 1998, 1997, and 1996 fiscal years refer to the fifty-two week period
ended January 2, 1999, the fifty-three week period ended January 3, 1998 and the
fifty-two week period ended December 28, 1996, respectively.

Revenue Recognition

MMI records sales when its products are shipped.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Cash and Cash Equivalents

MMI considers all demand deposits and time deposits with original maturities of
three months or less when purchased to be cash equivalents.

Inventories

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

Property, Plant and Equipment

Property, plant and equipment are stated at historical cost except for assets
acquired in business combinations which are recorded at fair market value at the
date of acquisition. Depreciation is computed on the straight-line method using
rates based on the estimated useful lives of the related assets. Estimated
useful lives used for depreciation purposes are as follows:

Building and improvements                   10 to 31 years
Machinery and equipment                     2 to 20 years

Depreciation expense was $6,423,000, $5,153,000 and $3,997,000 for fiscal years
1998, 1997 and 1996, respectively.

Major capital upgrades are capitalized. Maintenance, repairs and minor upgrades
are expensed as incurred. Gains and losses from dispositions are included in the
results from operations.


                                       24
<PAGE>   25
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

MMI leases certain machinery and equipment under capital leases. Assets recorded
under capital leases are amortized over the lives of the respective leases with
the related amortization included in depreciation expense. Assets under these
obligations, totaling $3,574,000 and $3,427,000 (net of accumulated amortization
of $3,560,000 and $2,344,000) at January 2, 1999 and January 3, 1998,
respectively, are included in property, plant and equipment in the accompanying
consolidated balance sheets.

Goodwill

Goodwill represents the excess cost of companies acquired over the fair value of
their net identifiable assets. Goodwill is being amortized on a straight-line
basis over periods ranging from 20 to 40 years. The carrying value of goodwill,
as well as the related amortization periods, is periodically evaluated to
determine whether adjustments to the carrying value or related lives are
required. This evaluation is based on MMI's projection of undiscounted cash
flows of the acquired operations over the remaining amortization period. To the
extent such projections indicate that future undiscounted cash flows are not
sufficient to recover the carrying amounts of the related goodwill, the
underlying assets are written down by charges to expense so that the carrying
amount is equal to fair value, primarily determined based on future discounted
cash flows.

Impairment of Long-Lived Assets

The carrying values of long-lived assets, principally identifiable intangibles,
property, plant and equipment and any related goodwill, are reviewed for
potential impairment when events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable, as determined based on
the estimated future undiscounted cash flows. If such assets are considered to
be impaired, the carrying value of the related assets would be reduced to their
estimated fair value.

Concentration of Credit Risk

Financial instruments that could potentially subject MMI to concentrations of
credit risk are accounts receivable. MMI continuously evaluates the
creditworthiness of its customers and generally does not require collateral. No
customer accounted for 10% or more of consolidated revenues for fiscal years
1998, 1997 or 1996.

Fair Value of Financial Instruments

MMI considers the recorded value of its monetary assets and liabilities, which
consist primarily of cash and cash equivalents, accounts receivable, and
accounts payable, to approximate their respective fair values at January 2, 1999
and January 3, 1998. The estimated fair value of MMI's long-term debt is
approximately $129.6 million and $130.8 million at January 2, 1999 and January
3, 1998, respectively, based on the quoted market price.


                                       25
<PAGE>   26
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Reclassifications

Certain reclassifications have been made to the 1996 and 1997 financial
statements in order to conform to the 1998 presentation.

New Accounting Standards

As of January 4, 1998, MMI adopted Financial Accounting Standards Board
Statement No. 130, Reporting Comprehensive Income (Statement 130) and Statement
No. 131, Disclosures about Segments of an Enterprise and Related Information
(Statement 131).

Statement 130 establishes new rules for reporting and display of comprehensive
income and its components; however, the adoption of Statement 130 had no impact
on MMI's consolidated net income or shareholder's equity. Prior year financial
statements have been reclassified to conform to the requirements of Statement
130.

Statement 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. Statement 131 also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. The adoption of Statement 131 did not affect MMI's consolidated
results of operations or financial position. See Note 12.

2. NONRECURRING EXPENSES - STOCK OPTIONS

Effective December 13, 1996 in connection with the Recapitalization, MMI
incurred nonrecurring charges relating to Holding's stock options granted in
previous years to certain employees and a supplier of MMI. The aggregate effect
of these expenses was $3.1 million for fiscal year 1996.

Under Holding's 1988 Stock Option Plan, certain employees of MMI received
noncompensatory stock options for shares of Holding common stock. The options
expired generally 10 years from the date of grant. None of these options were
exercised. Effective December 13, 1996, Holding amended the 1988 Stock Option
Plan to convert the outstanding options for common stock into options for a
total of 22,895 shares of Holding's junior series preferred stock. As a result
of the amendment, which changed the underlying securities of the options and
resulted in a new measurement date, MMI accrued $2.1 million in compensation
expense in 1996. On April 16, 1997, MMI redeemed all of the outstanding options
for Holding's junior series preferred stock held by employees for a total value
of $2.2 million.

In 1989, in connection with issuing a senior subordinated secured note to a
supplier, Holding granted the supplier stock options for shares of Holding
common stock which were to expire December 31, 1996. None of these options were
exercised. Effective December 13, 1996, Holding amended the supplier's option
agreement in connection with the Recapitalization to


                                       26
<PAGE>   27
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

2. NONRECURRING EXPENSES - STOCK OPTIONS - (CONTINUED)

extend the expiration date of the options three years and to convert the options
for common stock into options for 9,893 shares of Holding's junior series
preferred stock. As a result, MMI accrued $964,000 in expense in 1996. On April
16, 1997, MMI redeemed all of the outstanding options held by this supplier for
a total value of $998,000.

3. ACQUISITIONS OF BUSINESSES

During fiscal year 1998, MMI made the acquisitions set forth below, each of
which has been accounted for under the purchase method of accounting. The
accompanying consolidated financial statements include the operating results of
each of the acquired businesses from the date of the acquisition.

In February, 1998, MMI acquired certain net assets of The Burke Group L.L.C.
("Burke"), a manufacturer of hardware devices and processor of chemicals used in
the concrete construction industry with facilities in Converse, Texas and Long
Beach, California. The purchase price was $20.6 million with assets acquired of
$12.1 million and liabilities assumed of $3.4 million. The excess of the
purchases price over the fair value of the net assets acquired was $11.9 million
and is being amortized over 40 years. In September 1998, MMI sold the chemical
processing business for approximately $3.6 million in cash, the book value of
the net assets sold.

In March 1998, MMI acquired certain assets of a fence manufacturer and
distributor for $2.1 million, of which $1.1 million was funded by the revolving
credit facility and $1.0 million by a note payable to seller.

In October 1998, MMI acquired all of the issued and outstanding capital stock of
Security Fence Supply Co., Inc. ("Security"), for cash of approximately $24.4
million. Immediately following the purchase, MMI sold the real property acquired
to the former principals of Security for $3.6 million and leased it back for a
term of five years at rates which approximate market. Security is a manufacturer
of commercial and industrial fencing located in Bladensburg, Maryland. Assets
acquired were $13.8 million and liabilities assumed were $4.1 million. The
excess of the purchase price over the fair value of the net assets acquired was
$11.1 million and is being amortized over 40 years.

The following table reports the unaudited pro forma consolidated results of
operations as though Burke and Security had been acquired as of the beginning of
fiscal year 1997:

<TABLE>
<CAPTION>
(In Thousands)      Fiscal Years
                --------------------
                  1998        1997
                --------    --------
<S>             <C>         <C>     
Net sales       $442,701    $404,274
Gross profit      72,653      64,410
Net income        11,582       8,663
</TABLE>


                                       27
<PAGE>   28
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)


4. INVENTORIES

Inventories consisted of the following:

<TABLE>
<CAPTION>
(In Thousands)        January 2, 1999  January 3, 1998
                      ---------------  ---------------
<S>                      <C>              <C>    
Raw materials            $17,024          $11,188
Work-in-process            1,150              255
Finished goods            44,173           37,495
                         -------          -------
                         $62,347          $48,938
                         =======          =======
</TABLE>

MMI has a procurement agreement with a purchasing agent who brokers purchases of
imported steel rod. The agreement requires MMI to purchase from the agent an
average of 100,000 tons of steel rod annually through fiscal year 2001. During
fiscal years 1998, 1997 and 1996, 46%, 65% and 63%, respectively, of MMI's steel
rod purchases were from this supplier. At January 2, 1999, approximately $9.9
million of steel rod inventory owned by this agent had been consigned for MMI's
use. Actual steel rod purchase commitments at January 2, 1999, for this
supplier, and others was approximately $27 million.

5. INTANGIBLE ASSETS

Intangible assets consisted of the following:

<TABLE>
<CAPTION>
(In Thousands)                        January 2, 1999  January 3, 1998   Estimated Lives
                                       -------------    -------------    -------------
<S>                                    <C>              <C>              <C>
Goodwill                               $      29,997    $       6,597    20 - 40 years
Customer lists and other                       2,451            1,760     3 - 20 years
                                       -------------    -------------
                                              32,448            8,357
Less accumulated amortization                  3,325            2,526
                                       -------------    -------------
Intangible assets, net                 $      29,123    $       5,831
                                       =============    =============
</TABLE>

Intangible assets are amortized on a straight-line basis over their respective
estimated lives (the period when benefits are expected to be derived). Total
amortization expense for fiscal years 1998, 1997 and 1996 was $764,000, $354,000
and $451,000, respectively.


6. ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

<TABLE>
<CAPTION>
(In Thousands)                    January 2, 1999   January 3, 1998
                                  ---------------   ---------------
<S>                                  <C>              <C>    
Accrued compensation                 $ 5,114          $ 3,472
Accrued insurance                      1,606            2,254
Accrued retirement benefits            1,356            1,553
Other accrued liabilities              3,099            2,746
                                     -------          -------
                                     $11,175          $10,025
                                     =======          =======
</TABLE>


                                       28
<PAGE>   29
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

7.       LONG-TERM DEBT

Long-term debt, including capital lease obligations, consisted of the following:

<TABLE>
<CAPTION>
(In Thousands)                                             January 2, 1999   January 3, 1998
                                                           ---------------   ---------------
<S>                                                          <C>               <C>     
Revolving credit facility                                    $ 35,422          $     --
11.25% Senior subordinated notes, due 2007,
   interest payable semi-annually in arrears on
   April 15 and October 15                                    120,000           120,000
Capital lease obligations                                       4,019             3,867
Other notes payable                                               996                --
                                                             --------          --------
                                                              160,437           123,867
Less current maturities                                         1,630             1,127
                                                             --------          --------
Long-term obligations                                        $158,807          $122,740
                                                             ========          ========
</TABLE>

11.25% Senior Subordinated Notes

On April 16, 1997, MMI issued $120 million of senior subordinated notes due
2007. The net proceeds of $116.0 million, after fees and expenses, were used (i)
to distribute $57.1 million to Holding for the redemption by Holding of certain
of its equity interests, (ii) to repay the entire $10.0 million principal
amount, plus accrued interest, on a senior subordinated secured note payable,
(iii) to repay MMI's remaining indebtedness under a term loan facility of $11.4
million and (iv) to reduce MMI's indebtedness under the revolving credit
facility. The senior subordinated notes are general unsecured obligations of MMI
and are subordinated to MMI's revolving credit facility.

On February 9, 1999, MMI issued in a private offering, $30 million of senior
subordinated notes due 2007. This is a second series of the subordinated notes
issued on April 16, 1997. The net proceeds were approximately $31.1 million,
including original issuance premium after expenses.

Revolving Credit Facility

MMI's revolving credit facility provides for maximum borrowings of $48.5 million
(due December 2001) with interest payable at the bank's base rate plus 0.25
percent or Eurodollar rate plus 1.5 percent (the bank's base rate plus 0.25
percent or Eurodollar rate plus 2.0 percent at January 3, 1998). Approximately
$33 million of MMI's outstanding borrowings at year end are subject to interest
rate swap agreements maturing from February 24, 1999 through April 9, 1999. As
of January 2, 1999, the average interest rate was 7.01 percent. MMI is required
to pay a commitment fee of 1/2 of 1.0 percent of the unused portion of the
credit facility on a monthly basis. The revolving credit facility is secured by
all assets and stock of MMI and guaranteed by Holding. Borrowing availability
under the revolving credit facility at January 2, 1999, after taking into
account borrowing base restrictions and outstanding letters of credit, was $46.1
million. MMI had outstanding letters of credit (which cannot exceed $20 million)
totaling $2.4 million and $1.1 million at January 2, 1999 and January 3, 1998,
respectively.


                                       29
<PAGE>   30
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

7. LONG-TERM DEBT - (CONTINUED)

The terms of the revolving credit facility contain, among other provisions,
affirmative and negative covenants that require MMI to maintain certain
financial ratios, limit the amount of additional indebtedness, limit the
creation or existence of liens and set certain restrictions on acquisitions,
mergers and sales of assets. MMI's distribution of dividends to Holding is not
permitted under the revolving credit facility other than in limited
circumstances as set forth in the loan agreement. The 1998 dividend to Holding
was permitted under the terms of the revolving credit facility as it related to
expenses paid on behalf of Holding in final settlement of the 1996
Recapitalization discussed in Note 1.

In fiscal 1998, MMI made capital expenditures in excess of the limits
established in the revolving credit facility and did not satisfy certain
reporting requirements to the lenders during fiscal 1998 and subsequent to year
end. MMI has obtained waivers from the lenders for each of these items. In March
1999, the revolving credit facility was amended to modify certain reporting
requirements through August 1999. MMI believes that it will be able to comply
with the amended reporting requirements and other restrictive covenants in the
revolving credit facility throughout its fiscal year 1999.

Scheduled maturities of long-term debt, including capital lease obligations, are
as follows:

<TABLE>
<CAPTION>
(In Thousands)                           Long-Term Debt    Capital Leases
                                         --------------    --------------
<S>                                        <C>               <C>     
1999                                       $    332          $  1,551
2000                                            332             1,419
2001                                         35,754             1,001
2002                                             --               525
2003 and thereafter                         120,000                99
                                           --------          --------
                                            156,418             4,595
Less amount representing interest                --               576
                                           --------          --------
                                           $156,418          $  4,019
                                           ========          ========
</TABLE>

On or prior to April 15, 2000, MMI may, at its option, redeem at any time or
from time to time up to 35% of the aggregate original principal amount of the
senior subordinated notes issued at a redemption price equal to 111.25% of the
principal amount thereof, plus accrued and unpaid interest and liquidated
damages, if any, thereon to the redemption date, with the net cash proceeds of
one or more public equity offerings; provided, however, that at least $78.0
million in aggregate principal amount of the senior subordinated notes remain
outstanding following each such redemption and such redemption shall occur not
later than 60 days after the date of the closing of any such public equity
offering.



                                       30
<PAGE>   31
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

8. LONG-TERM DEBT - (CONTINUED)

The senior subordinated notes will be redeemable at the option of MMI, in whole
or in part, at any time on or after April 15, 2002 at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and liquidated damages, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on April
15 of the years indicated below:

<TABLE>
<CAPTION>
Year                                    Percentage
----                                    ----------
<S>                                      <C>     
2002                                     105.625%
2003                                     103.750%
2004                                     101.875%
2005 and thereafter                      100.000%
</TABLE>

8. OPERATING LEASES

MMI leases warehouse and office space and certain machinery and equipment under
operating leases. Future minimum lease payments on noncancelable operating
leases with remaining terms of one or more years consisted of the following at
January 2, 1999 (in thousands):

<TABLE>
<CAPTION>
<S>                                     <C>    
1999                                    $ 3,607
2000                                      3,045
2001                                      2,049
2002                                      1,144
2003 and thereafter                       1,042
                                       --------
   Total                               $ 10,887
                                       ========
</TABLE>

Total rental expense for fiscal years 1998, 1997 and 1996 was $5,103,000,
$4,225,000 and $3,572,000, respectively.

9. EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

401(k) Plan. MMI maintains the MMI Products, Inc. 401(k) Savings Plan (the
"401(k) Plan"). All Company employees are eligible to participate in the 401(k)
Plan after one year of employment. Employees may elect to make pre-tax
contributions up to the applicable statutory maximum limits to the 401(k) Plan.
MMI makes matching contributions (subject to statutory limits) in an amount
equal to 25% of the employee's contributions up to 2% of the employee's
compensation. In addition, MMI may make additional contributions in such amounts
as it may elect. Company contributions are vested over four years at a rate of
25% for each year of service.

Pension Plan. MMI maintains the MMI Products, Inc. Pension Plan (the "Pension
Plan"), which is a money purchase defined contribution plan. Employees of MMI
(other than employees covered by a collective bargaining agreement) generally
are eligible to participate in the Pension Plan after one year of employment.


                                       31
<PAGE>   32
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

9. EMPLOYEE BENEFIT PLANS - (CONTINUED)

MMI makes annual contributions to the Pension Plan for each eligible employee in
accordance with a formula that is based on the participant's age and level of
compensation. The Pension Plan provides for 100% vesting after five years of
service.

MMI's contributions to the 401(k) Plan and the Pension Plan for fiscal years
1998, 1997 and 1996 were $1,385,000, $1,285,000 and $1,042,000, respectively.

Defined Benefit Plans

MMI maintains a retirement plan which covers certain employees under a
collective bargaining agreement. Plan benefits are based primarily on years of
service. It is the policy of MMI to fund this plan currently based upon
actuarial determinations, and applicable tax regulations.

<TABLE>
<CAPTION>
(In Thousands)                                               Fiscal Years
                                                      -----------------------
                                                       1998            1997
                                                      -------         -------
<S>                                                   <C>             <C>    
Reconciliation of benefit obligation
Obligation at beginning of year                       $ 2,142         $ 1,817
Service cost                                               65              61
Interest cost                                             157             133
Plan amendments                                             0             107
Actuarial loss                                            387             138
Benefit payments                                         (329)           (114)
Settlements                                              (189)              0
                                                      -------         -------
Obligation at end of year                               2,233           2,142
                                                      -------         -------
Reconciliation of fair value of plan assets
Fair value of plan assets at beginning of year          1,437           1,178
Actual return on plan assets                              137             111
Employer contributions                                    407             311
Actuarial gain (loss)                                     286             (49)
Benefit payments                                         (329)           (114)
Settlements                                              (246)              0
                                                      -------         -------
Fair value of plan assets at end of year (1)            1,692           1,437
                                                      -------         -------
Funded status
Funded status at end of year                             (541)           (705)
Unrecognized prior-service cost                            96             107
Unrecognized loss                                         369             256
                                                      -------         -------
Net amount recognized                                 $   (76)        $  (342)
                                                      -------         -------
</TABLE>

(1) Plan assets are comprised of various equity, debt and government securities.


                                       32
<PAGE>   33

                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

9. EMPLOYEE BENEFIT PLANS - (CONTINUED)

The following table provides the amounts recognized in the statement of
financial position :

<TABLE>
<CAPTION>
(In Thousands)                            January 2, 1999     January 3, 1998
                                          ---------------     ---------------
<S>                                           <C>                <C>   
Accrued benefit liability                     $(541)             $(705)
Intangible asset                                 96                107
Accumulated other comprehensive income          369                256
                                              -----              -----
Net amount recognized                         $ (76)             $(342)
                                              =====              =====
</TABLE>                                                 

The plan's accumulated benefit obligation was $2,233 and $2,142 for fiscal years
1998 and 1997, respectively.

<TABLE>
<CAPTION>
(In Thousands)                                Fiscal Years
                                          -------------------
                                          1998          1997
                                          -----         -----
<S>                                       <C>           <C>  
Service cost                              $  65         $  61
Interest cost                               157           133
Expected return on plan assets             (137)          (62)
Amortization of prior-service cost           11             0
Amortization of net (gain) loss               5           (49)
                                          -----         -----
Net periodic benefit cost                 $ 101         $  83
                                          =====         =====
</TABLE>

The amount included within other comprehensive income arising from changes in
the additional minimum pension liability was $70,000 and $151,000 for fiscal
years 1998 and 1997, respectively.

The prior-service costs are amortized on a straight-line basis over the average
remaining working lifetime of participants. Gains and losses in excess of 10% of
the greater of benefit obligation and the market-related value of assets are
amortized over the average remaining working lifetime of participants expected
to receive benefits.

<TABLE>
<CAPTION>
                                                            Fiscal Years
                                                     -----------------------
                                                      1998            1997
                                                     -------         -------
<S>                                                   <C>             <C>  
Weighted average assumptions:
  Discount rate                                         7.00%           7.50%
  Expected long-term rate of return on assets           8.50%           8.50%
</TABLE>

MMI also contributes to certain multi-employer, defined benefit plans covering
certain employees under other collective bargaining agreements. Total expenses
for these plans were $280,000, $245,000 and $125,000 for fiscal years 1998, 1997
and 1996, respectively.


                                       33
<PAGE>   34
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

9. EMPLOYEE BENEFIT PLANS - (CONTINUED)

Stock Options

On December 13, 1996, Holding issued noncompensatory options for 17,890 shares
of Holding common stock to certain employees of MMI. These options, exercisable
for $1 per share, the fair value of the common stock at the date of grant, vest
over a four-year period and expire five years from the date of grant. On June
27, 1997, Holding issued noncompensatory options for 1,000 shares of Holding
common stock to a director of MMI, such options having the identical terms as
those issued to employees on December 13, 1996. During 1997, Holding issued
3,230 shares of common stock pursuant to exercises of stock options. In 1998, no
options were issued or exercised.

Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
(SFAS 123) establishes alternative methods of accounting and disclosure for
employee stock-based compensation arrangements. MMI uses the intrinsic value
method of accounting as prescribed by Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees, for Holding's stock options
granted to MMI's employees. This method does not result in the recognition of
compensation expense when employee stock options are granted if the exercise
price of the option equals or exceeds the fair market value of the stock at the
date of grant.

If the accounting provisions of SFAS 123 had been used in fiscal years 1996, 
1997, and 1998, earnings would not have been materially different than reported.
Further, based on current and anticipated use of stock options by Holding, it is
not envisioned that the impact of the accounting provisions of SFAS 123 would be
material in any future period.

10. INCOME TAXES

Significant components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
(In Thousands)                        Fiscal Years
                         --------------------------------------
                          1998           1997            1996
                         -------        -------         -------
<S>                      <C>            <C>             <C>    
Current:
  Federal                $ 5,759        $ 1,871         $ 4,206
  State and local          1,245            404           1,109
                         -------        -------         -------
                           7,004          2,275           5,315
Deferred:
  Federal                    280          2,412            (845)
  State and local             60            474            (243)
                         -------        -------         -------
                             340          2,886          (1,088)
                         -------        -------         -------
Total                    $ 7,344        $ 5,161         $ 4,227
                         =======        =======         =======
</TABLE>



                                       34
<PAGE>   35
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

10. INCOME TAXES - (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Net deferred tax
liabilities increased $1,034,000 in fiscal year 1998 due to the Security Fence
acquisition. As of December 30, 1995, MMI had a minimum tax credit carryforward
of $1,031,000, which reduced 1996 federal regular income taxes.

Significant components of MMI's deferred tax liabilities and assets are as
follows:

<TABLE>
<CAPTION>
(In Thousands)                          January 2,1999   January 3,1998
                                        --------------   --------------
<S>                                        <C>             <C>   
Deferred tax liabilities:
  Tax over book depreciation               $5,049          $4,259
  Trade receivables valuation                 837           1,116
  Other                                     2,107           1,285
                                           ------          ------
Total deferred tax liabilities              7,993           6,660
Deferred tax assets:
  Inventory valuation                         771             752
  Allowance for doubtful accounts             715             695
  Self-insurance accruals                     667             709
  Other                                       417             410
                                           ------          ------
Total deferred tax assets                   2,570           2,566
                                           ------          ------
     Net deferred tax liabilities          $5,423          $4,094
                                           ======          ======
</TABLE>

The reconciliation of income tax computed at the U.S. federal statutory tax rate
to income tax expense is as follows for fiscal years 1998, 1997 and 1996:

<TABLE>
<CAPTION>
(In Thousands)                                                             Fiscal Years
                                                              --------------------------------------
                                                               1998            1997            1996
                                                              ------          ------          ------
<S>                                                           <C>             <C>             <C>   
Tax at U.S. statutory rate                                    $6,396          $4,514          $3,697
State and local income taxes, net of federal benefit             844             572             512
Other, net                                                       104              75              18
                                                              ------          ------          ------
Total                                                         $7,344          $5,161          $4,227
                                                              ======          ======          ======
</TABLE>

11. CONTINGENCIES

MMI is involved in a number of legal actions arising in the ordinary course of
business. MMI believes that the various asserted claims and litigation in which
it is involved will not materially affect its financial position or future
operating results, although no assurance can be given with respect to the
ultimate outcome of any such claim or litigation.


                                       35
<PAGE>   36
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)


12. SEGMENT REPORTING

MMI has five operating units that are aggregated into two reportable segments;
Fence and Concrete Construction Products. The Fence Segment has three operating
units that offer similar products and services. The Concrete Construction
Products Segment has two operating units that offer complimentary products and
services within the concrete construction industry.

Fence Segment. The Fence Segment manufactures chain link fence fabric, a full
line of aluminum die cast and galvanized pressed steel fittings, ornamental iron
products, PVC color coated wire and vinyl coated color pipe, tubing and
fittings. In addition, the segment also distributes a variety of fence products
including pipe, tubing, wood, vinyl, aluminum, and ornamental iron fence
products, gates, hardware, and other related products. The fence products are
used in a variety of residential and commercial applications.

Concrete Construction Products Segment. The Concrete Construction Products
Segment manufactures wire mesh and a variety of concrete accessories. Concrete
accessories include supports for steel reinforcing bars and wire mesh, form
ties, basket assemblies, anchors and inserts. The concrete construction products
are used in the construction of roads, bridges and other heavy construction
projects including commercial buildings.


The accounting policies of the reportable segments are the same as those
described in Note 1 of the Notes to Consolidated Financial Statements. MMI
evaluates the performance of its operating segments based upon income before
interest expense, income taxes, depreciation, amortization and nonrecurring
items.

Summarized financial information concerning the reportable segments is shown in
the following table. The Corporate column for earnings before interest and
income taxes represents only amortization of intangibles and nonrecurring items.
Corporate general and administrative expenses are allocated to the segments
based upon proportional net sales.

12. SEGMENT REPORTING - (CONTINUED)

<TABLE>
<CAPTION>
(In Thousands)                                                        Fiscal Year 1998
                                             ---------------------------------------------------------------
                                              Fence            Concrete          Corporate            Total
                                                             Construction
                                             --------        ------------        ---------          --------
<S>                                          <C>               <C>               <C>                <C>     
External sales                               $208,117          $210,238          $     --           $418,355
Earnings before interest and income
   taxes                                       14,043            22,315              (764)            35,594
Interest expense                                   --                --            17,320             17,320
Income taxes                                       --                --             7,344              7,344
Net income                                     14,043            22,315           (25,428)            10,930
Depreciation                                    2,919             3,504                --              6,423
EBITDA (1)                                     16,962            25,819                --             42,781
Segment Assets (2)                             89,304            92,700            38,222            220,226
Capital Expenditures                            1,606             8,325               295             10,226
</TABLE>


                                       36
<PAGE>   37

                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)


<TABLE>
<CAPTION>
                                                                     Fiscal Year 1997
                                             ---------------------------------------------------------------
                                              Fence            Concrete          Corporate            Total
                                                             Construction
                                             --------        ------------        ---------          --------
<S>                                            <C>               <C>              <C>                  <C>  
External sales                               $177,640          $169,265          $     --           $346,905
Earnings before interest and income
   taxes                                       11,290            14,980              (354)            25,916
Interest expense                                   --                --            13,018             13,018
Income taxes                                       --                --             5,161              5,161
Net income                                     11,290            14,980           (18,533)             7,737
Depreciation                                    2,432             2,721                --              5,153
EBITDA (1)                                     13,722            17,701                --             31,423
Segment Assets (2)                             63,200            69,683            19,935            152,818
Capital Expenditures                            1,277             3,126               157              4,560
</TABLE>

<TABLE>
<CAPTION>
                                                                     Fiscal Year 1997
                                             ---------------------------------------------------------------
                                              Fence            Concrete          Corporate            Total
                                                             Construction
                                             --------        ------------        ---------          --------
<S>                                          <C>               <C>               <C>                <C>     
External sales                               $164,971          $118,431          $     --           $283,402
Nonrecurring expenses (3)                          --                --             3,106              3,106
Earnings before interest and income
   taxes                                        9,261            12,289            (3,557)            17,993
Interest expense                                   --                --             7,429              7,429
Income taxes                                       --                --             4,227              4,227
Net income                                      9,261            12,289           (15,213)             6,337
Depreciation                                    2,180             1,817                --              3,997
EBITDA (1)                                     11,441            14,106                --             25,547
Segment Assets (2)                             57,734            63,658            13,871            135,263
Capital Expenditures                            1,295             1,839               411              3,545
</TABLE>

(1)  EBITDA is defined as the sum of income before interest expense, income 
     taxes, depreciation and amortization, and certain nonrecurring expenses 
     (see note (3) below). EBITDA is presented because it is a widely accepted 
     financial indicator of a company's ability to service and incur debt. 
     EBITDA should not be considered in isolation from or as a substitute for 
     net income or cash flow measures prepared in accordance with generally
     accepted accounting principles or as a measure of a company's profitability
     or liquidity.

(2)  Segment assets include substantially all accounts receivable, inventory and
     property, plant and equipment. Corporate assets include all other 
     components of total consolidated assets.

(3)  Nonrecurring expense resulting from the modification of stock options
     granted in previous years as part of recapitalization of MMI and Holding.


                                       37
<PAGE>   38
                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)

13. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
(In Thousands)                    1998 (by fiscal quarter)
                   -----------------------------------------------------
                      1              2              3              4
                   --------       --------       --------       --------
<S>                <C>            <C>            <C>            <C>     
Net sales          $ 86,308       $116,181       $114,062       $101,804
Gross profit         12,041         18,829         19,233         17,291
Net income              389          3,897          4,236          2,408
</TABLE>






<TABLE>
<CAPTION>
                                1997 (by fiscal quarter)
                   -------------------------------------------------
                      1             2             3             4
                   -------       -------       -------       -------
<S>                <C>           <C>           <C>           <C>    
Net sales          $69,587       $99,044       $94,698       $83,576
Gross profit         9,161        15,266        14,383        12,096
Net income             832         3,634         2,722           549
</TABLE>



                                       38
<PAGE>   39

                               MMI PRODUCTS, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
                                  (CONTINUED)



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information regarding MMI's directors
and executive officers, including their respective ages.

<TABLE>
<CAPTION>
          Name                 Age                        Position
------------------------       ---      -------------------------------------------------------
<S>                            <C>      <C>
Julius S. Burns                66       President and Chief Executive Officer; Director
Thomas F. McWilliams           56       Director
Carl L. Blonkvist              62       Director
Robert N. Tenczar              49       Vice President, Chief Financial Officer and Secretary
James M. McCall                56       Vice President - General Manager - Mesh
Davy J. Wilkes                 61       Vice President - General Manager - Concrete Accessories
Mike W. Weaver                 51       Vice President - General Manager - Fence
</TABLE>

Julius S. Burns has been President and Chief Executive Officer and a director of
MMI since February 1989. Prior to February 1989, Mr. Burns served as President
and General Manager of Ivy Steel & Wire Company, Inc., a predecessor to MMI, for
13 years. Mr. Burns has 33 years of related industry experience.

Thomas F. McWilliams has been a director of MMI since 1992. Mr. McWilliams is
Managing Director of CVC, a small business investment company, and has been
affiliated with CVC since 1983. Mr. McWilliams is a member of CVC's three-person
investment committee. Mr. McWilliams is a director of Chase Brass Industries,
Inc., a metals processing company, Ergo Science Corporation, a pharmaceutical
product development company and various other private companies.

Carl L. Blonkvist has been a director of MMI since April 1997. Mr. Blonkvist is
Senior Vice President of Operations for the Brinkmann Corporation, and has been
affiliated with the Brinkmann Corporation since June 1996. Mr. Blonkvist was
Senior Vice President of Coca-Cola Foods from January 1994 to April 1996, and
was a Senior Partner of Computer Science Corporation, a consulting firm, from
1991 to 1994. In 1984, Mr. Blonkvist formed Paragon Consulting Group, a
consulting firm specializing in operations strategy, which was purchased by
Computer Science Corporation in 1991.

Robert N. Tenczar has been Vice President, Chief Financial Officer and Secretary
of MMI since May 1993. From 1985 to 1993, Mr. Tenczar was employed by Baker
Hughes Incorporated, Houston, Texas, his last assignment as Vice President
Finance of its EnviroTech Controls division.

James M. McCall has been employed with MMI and its predecessors in various
management positions of increasing responsibility since 1975, most recently as
MMI's Vice President - General Manager - Mesh since 1989. Mr. McCall has 35
years of related industry experience.

Davy J. Wilkes has been employed by MMI and its predecessors since 1974, most
recently as MMI's Vice President - General Manager - Concrete Accessories since
November 1992. Mr. Wilkes has 39 years of related industry experience.

Mike W. Weaver has been employed by MMI and its predecessors since 1971, most
recently as MMI's Vice President - General Manager - Fence since September 1998.
Mr. Weaver has 28 years of related industry experience.

Each director holds office until the next annual meeting of stockholders of MMI
or until their successor is duly elected and qualified. All officers are elected
annually and serve at the direction of the Board of Directors. The bylaws of MMI
provide for a three member Board of Directors. Directors of MMI are reimbursed
for all expenses actually incurred for each Board 


                                       39
<PAGE>   40

meeting which they attend. One member of the Board of Directors receives a fee
of $2,000 per meeting he attends. The other members of the Board of Directors do
not receive a fee for any meetings they attend. The executive officers of MMI
are elected by the Board of Directors to serve at the discretion of the Board.

Indemnification of Directors

MMI has entered into Indemnification Agreements with certain of its directors
and executive officers pursuant to which it will indemnify such persons against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement incurred as a result of the fact that such person in his or her
capacity as a director or officer, is made or threatened to be made a party to
any suit or proceeding. Such persons will be indemnified to the fullest extent
now or hereafter permitted by the General Corporation Law of the State of
Delaware. The Indemnification Agreements also provide for the advancement of
certain expenses to such directors and officers in connection with any such suit
or proceeding.


                                       40
<PAGE>   41


ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the compensation for fiscal years 1998 and 1997
awarded to or earned by the chief executive officer of MMI and the four other
most highly compensated executive officers of MMI whose salary and bonus
exceeded $100,000 for services rendered in all capacities.

                           SUMMARY COMPENSATION TABLE

   
<TABLE>
<CAPTION>
                                                                        Annual Compensation (1)           All Other
Name and Principal Position                                             Salary           Bonus           Compensation
---------------------------                                           ----------       ----------       --------------
<S>                                                                   <C>              <C>              <C>
Julius S. Burns                                                1998   $  275,040       $1,230,726       $   28,399 (2)
 President and Chief Executive Officer; Director               1997      250,020          450,000           27,639 (3)
James M. McCall                                                1998      160,500           90,652           12,637 (4)
 Vice President - General Manager - Mesh                       1997      150,000           90,000           10,759 (4)
Robert N. Tenczar                                              1998      136,940           78,012            6,956 (5)
 Vice President, Chief Financial Officer and Secretary         1997      125,480           69,840            5,733 (5)
Davy J. Wilkes                                                 1998      132,850           77,652           16,378 (6)
 Vice President - General Manager - Concrete Accessories       1997      124,170           68,040           14,143 (6)
Mike W. Weaver                                                 1998      131,090           55,710            7,461 (7)
 Vice President - General Manager - Fence                     
</TABLE>
    

(1) The named executive officers did not receive annual compensation not
properly categorized as salary or bonus, except for certain perquisites and
other personal benefits which are not shown because the aggregate amount of such
compensation for each of the named executive officers during the fiscal year did
not exceed the lesser of $50,000 or 10% of total salary and bonus reported for
such executive officer. 

(2) Represents annual contribution to the Pension Plan (as defined in Note 9).

(3) Represent a $1,344 annual contribution to the 401(k) Plan and a $26,295
annual contribution to the Pension Plan.

(4) Represents a $1,089 and $794 annual contribution to the 401(k) Plan and a
$11,548 and $9,965 annual contribution to the Pension Plan, in 1998 and 1997,
respectively.

(5) Represents a $1,029 and $763 annual contribution to the 401(k) Plan and a
$5,927 and $4,970 annual contribution to the Pension Plan, in 1998 and 1997,
respectively.

(6) Represents a $1,003 and $928 annual contribution to the 401(k) Plan and a
$15,375 and $13,215 annual contribution to the Pension Plan, in 1998 and 1997,
respectively.

(7) Represents a $842 annual contribution to the 401(k) Plan and a $6,619 
annual contribution to the Pension Plan.

None of the executive officers named in the Summary Compensation table were
granted options to purchase any capital stock of Holding during fiscal years
1998 or 1997.

MERCHANTS METALS HOLDING COMPANY 1988 STOCK OPTION PLAN

Certain eligible employees and non-employee directors of MMI and Holding may be
granted options to purchase up to an aggregate of 30,000 Holding Class A Common
Stock (as defined herein) pursuant to the Merchants Metals Holding Company 1988
Stock Option Plan (the "Holding Stock Option Plan"). The Holding Stock Option
Plan is administered by the Administration Committee, the members of which are
appointed by the Board of Directors of Holding. 


                                       41
<PAGE>   42

Presently, the members of the Administration Committee consists of the current
members of the Board of Directors of Holding (which are the same persons who
constitute the Board of Directors of MMI).

The Administration Committee has the ability to determine, among other things,
which individuals will be granted options under the Holding Stock Option Plan
and such committee has the ability to determine the exercise price, term (up to
ten years) and vesting schedule of the options granted under the Holding Stock
Option Plan.

Any unexpired and unexercised options (or portion thereof) will be forfeited if
an employee ceases to be in the employ of MMI by reason of disability or upon
retirement, any unexercised options (or portions thereof) shall terminate on the
date that is three months from the date of such employee's termination by reason
of disability or retirement, as applicable (unless such option expires by its
terms on an earlier date).

In the event an employee dies while in the employ of MMI, any options granted to
such employee pursuant to the Holding Stock Option Plan will be exercisable
during the three month period commencing on the date following the date of his
death (unless it expires sooner under its terms). Such options will terminate at
the end of such three month period to the extent such options were not exercised
during such three month period.

As of January 2, 1999, there were outstanding options to purchase 15,660 shares
of Holding Class A Common Stock at an exercise price of $1.00 per share.

401(k) PLAN

MMI maintains the MMI Products, Inc. 401(k) Savings Plan (the "401(k) Plan").
All Company employees are eligible to participate in the 401(k) Plan after one
year of employment. Employees may elect to make pre-tax contributions up to the
applicable statutory maximum limits to the 401(k) Plan. MMI makes matching
contributions (subject to statutory limits) in an amount equal to 25% of the
employee's contributions up to 2% of the employee's compensation. In addition,
MMI may make additional contributions in such amounts as it may elect. Company
contributions are vested at a rate of 25% for each year of service.

PENSION PLAN

MMI maintains the MMI Products, Inc. Pension Plan (the "Pension Plan"), which is
a money purchase defined contribution plan. Employees of MMI (other than
employees covered by a collective bargaining agreement) generally are eligible
to participate in the Pension Plan after one year of employment. MMI makes
annual contributions to the Pension Plan for each eligible employee in
accordance with a formula that is based on the participant's age and level of
compensation. The Pension Plan provides for 100% vesting after five years of
service.


                                       42
<PAGE>   43


EMPLOYMENT AGREEMENT

Julius S. Burns, MMI's President and Chief Executive Officer, has entered into
an employment agreement with MMI that will expire (unless renewed) on December
31, 1999. The agreement provides for a base salary of $250,000 per year, which
may be increased annually in the discretion of the Board of directors, and a
discretionary annual bonus based on performance criteria established from time
to time by the Board of Directors.

If Mr. Burns' employment is terminated as a result of his death or total
disability, then Mr. Burns (or his estate in the event of his death) shall be
entitled to receive Mr. Burns' base salary accrued through the date of
termination of employment plus bonus payment prorated to the date of termination
based on Mr. Burns' bonus for the previous year.

If Mr. Burns' employment is terminated by MMI for Cause (as defined therein),
Mr. Burns will be entitled to receive only his base salary accrued through the
date of termination of employment. If Mr. Burns' employment is terminated by MMI
other than for Cause, Mr. Burns will be entitled to receive, as a lump sum
payment, the amounts to which he (or his estate) would have been entitled in the
event of his death or total disability, plus monthly severance equal to his base
salary for the lesser of twelve months or the remaining term of the employment
agreement.

If Mr. Burns' employment is terminated by MMI within one year following a
"change of control," then, in addition to the compensation to which Mr. Burns
would be entitled in the event of termination other than for Cause (and in lieu
of any other bonus payment), Mr. Burns will be entitled to receive a bonus
payment prorated for the lesser of twelve months or the remaining term of the
Employment Agreement.

PUT AGREEMENT

Upon Julius S. Burn's death, any common units of MMI Products, L.L.C. (which
owns approximately 98% of Holding) that Mr. Burns owns will automatically be
exchanged for a like number of shares of Holding common stock. Mr. Burns has
entered into the Amended and Restated Put Agreement (the "Burns Put Agreement")
pursuant to which Mr. Burns' estate will have, upon satisfaction of certain
conditions, the option during the ninety day period following his death to cause
Holding (or its designee) to repurchase the number of shares of Holding common
stock held by Mr. Burns at such time of his death as have a fair market value of
up to $2.0 million (the "Put Right"). The Put Right may be exercised only if at
the time of Mr. Burns' death: (a) Mr. Burns was an employee of Holding or any of
its subsidiaries; (b) Mr. Burns had either (i) retired at or after age 67, (ii)
voluntarily terminated his employment with Holding or any of its subsidiaries
for Good Reason (as defined therein) within six months following a Change in
Control (as defined therein), (iii) been terminated by Holding or any of its
subsidiaries without Cause (as defined therein) or (iv) otherwise retired with
the consent of the Board of Directors of Holding; or (c) Mr. Burns was no longer
employed by Holding due to a disability recognized by the Board of Directors of
Holding.

The purchase price to be paid by Holding upon the exercise of the Put Right
shall be payable through the application of proceeds payable under certain life
insurance contracts purchased by MMI (with a maximum aggregate premium of up to
$100,000) to provide funds to pay the maximum purchase price of $2,000,000. The
Burns Put Agreement will terminate on 


                                       43
<PAGE>   44

December 31, 2000, unless earlier terminated in accordance with its terms.
Holding, in its sole discretion, may elect to terminate the Burns Put Agreement,
at any time prior to Mr. Burns' death, if Mr. Burns is in material default of
his obligations under that certain Non-Competition Agreement dated as of
December 31, 1994, between Mr. Burns and MMI.

NON-COMPETITION AGREEMENT

Julius S. Burns has entered into a Non-Competition Agreement with MMI under
which he has agreed not to: (i) disclose, during or after the term of his
employment, any of the Confidential Information (as defined therein) to any
person or entity for any reason or purpose whatsoever, (ii) solicit or induce
for a period of two years following termination any person employed by, or the
agent of, MMI to terminate his contract of employment or agency with MMI and
(iii) compete with MMI in any business in which MMI is engaged in at the date of
termination in any state in the United States of America in which MMI has made
sales during the twelve months immediately preceding termination for a period of
two years following termination. If Mr. Burns is terminated by the Board of
Directors of MMI by written or oral notice, Mr. Burns' non-competition
restriction will apply only for a period of one year, plus the number of months
MMI elects to pay monthly severance payments to Mr. Burns after the expiration
of such one year period.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors of MMI is responsible for determining executive officer
compensation. Julius S. Burns currently serves as both a director and the
President and Chief Executive Officer of MMI.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

MMI is a wholly owned subsidiary of Holding. Approximately 98% of the capital
stock of Holding is owned by MMI Products, L.L.C. ("Parent"). No director or
named executive officer owns shares of Holding capital stock. The following
table and the accompanying footnotes set forth, as of January 2, 1999, the
beneficial ownership of Parent's equity interests by (i) each person who is
known to MMI to own beneficially more than 5% of either class of Parent's
outstanding Common Units, (ii) each director and named executive officer, and
(iii) all directors and officers as a group. On all matters submitted to a vote
of the members of Parent, holders of Parent Class A Common Units and Parent
Class B Common Units (as defined herein) are entitled to cast, in the aggregate,
(i) 50.5% of the total number of votes and (ii) 49.5% of the total number of
votes, respectively, entitled to be cast by holders of all of the Parent Common
Units then outstanding.



                                       44
<PAGE>   45

<TABLE>
<CAPTION>
                                              Number of               Percent of Class
                                            Common Units               of Common Units        
                                       ----------------------       -------------------       Percent of Total
                                       Class A     Class B(1)       Class A      Class B      Voting Power (2)
                                       -------     ----------       -------      -------      ----------------
<S>                                     <C>                            <C>                       <C>  
Julius S. Burns                         58,902          --             52.2%        --           26.3%
 c/o MMI Products, Inc. 
 515 W. Greens Rd., Ste. 710
 Houston, Texas 77067

Thomas F. McWilliams                        --      17,014(3)          --            2.6%         1.3%
 c/o Citicorp Venture Capital Ltd. 
 399 Park Avenue
 14th Floor, Zone 4
 New York, NY 10043

Robert N. Tenczar                        7,500          --              6.6%        --            3.4%
 c/o MMI Products, Inc. 
 515 W. Greens Rd., Ste. 710
 Houston, Texas 77067

James M. McCall                         13,850          --             12.3%        --            6.2%
 c/o MMI Products, Inc. 
 515 W. Greens Rd., Ste. 710
 Houston, Texas 77067

Davy J. Wilkes                          10,450          --              9.3%        --            4.7%
 c/o Meadow Steel Products
 5110 Santa Fe Road
 Tampa, Florida 33619

Citicorp Venture Capital Ltd.               --     497,473(4)          --           76.3%        37.8%
 399 Park Avenue
 14th Floor, Zone 4
 New York, NY 10043

CCT Partners III                            --      87,789(5)          --           13.5%         6.7%
 c/o Citicorp Venture Capital Ltd. 
 399 Park Avenue
 14th Floor, Zone 4
 New York, NY 10043

William T. Comfort                          --      34,154             --            5.2%         2.6%
 c/o Citicorp Venture Capital Ltd. 
 399 Park Avenue
 14th Floor, Zone 4
 New York, NY 10043

Michael W. Babcock                       7,520          --              6.7%        --            3.4%
 c/o Merchants Metals
 71347 CR 23
 New Paris, Indiana 46553

Michael Weaver                           9,160          --              8.1%        --            4.1%
 4901 Langley Road
 Houston, Texas 77093

All Directors and Executive
 Officers as a Group                    90,702      17,014             80.3%         2.6%        41.8%0
</TABLE>



                                      45

<PAGE>   46

(1)  Each Parent Class B Common Unit is convertible at any time, at the option
     of the holder, into one Parent Class A Common Unit.

(2)  Represents the total voting power represented by the Parent Class A Common
     Units or Parent Class B Common Units held by each of the indicated persons.

(3)  Includes 4,006 Parent Class B Common Units owned of record by Alchemy,
     L.P., an affiliate of Mr. McWilliams.

(4)  Does not include 87,789 Parent Class B Common Units held by CCT Partners
     III, an affiliate of CVC, as to which CVC disclaims beneficial ownership.

(5)  Does not include 497,473 Parent Class B Common Units held by CVC, an
     affiliate of CCT Partners III, as to which CCT Partners III disclaims
     beneficial ownership.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Recapitalization

On December 13, 1996, MMI and Holding completed a recapitalization transaction
(the "Recapitalization"). The purposes of the Recapitalization included (i) the
cash-out of stockholders of Holding that were no longer actively associated with
Holding's business, (ii) the retirement of high coupon (as compared to current
market rates) debt and preferred stock and (iii) the issuance of new Holding
Common Stock (or options to acquire new Holding Common Stock) to members of
management who had not previously owned Holding Common Stock, at affordable
prices and without a dilutive (both numerical and economic) impact on existing
holders of Holding Common Stock.

In structuring the Recapitalization, the Board of Directors of Holding utilized
a valuation prepared by a nationally recognized accounting firm. The valuation
report determined that Holding had an enterprise value between $105 million and
$115 million. This enterprise value was then reduced by the implied value of the
outstanding debt (principal plus unpaid interest) and preferred stock
(redemption price plus unpaid dividends) to arrive at the range of implied value
of common equity of $30,967,000 to $40,967,000 for Holding Common Stock prior to
Recapitalization. At the mid-point, and after taking into account "in-the-money"
options, the valuation per share of Holding Common Stock immediately prior to
the Recapitalization was $39.57.

In connection with the Recapitalization, and as result of a merger of a newly
formed "shell" company into Holding (the "Recapitalization Merger"), all of the
old Holding Common Stock was either paid out in cash (at $39.57 per share) or
exchanged for new subordinated, non-convertible preferred stock with a
redemption price equal to the value of the exchanged Holding Common Stock. In
addition, certain investors and management of MMI purchased new shares of a new
class of Holding Common Stock for $1.00 per share. Because all of the old
Holding Common Stock was either cashed out or exchanged for new preferred stock
with a redemption price equal to the pre-Recapitalization value of the old
Holding Common Stock, the full common equity value of Holding before the
Recapitalization bears no relationship to the common equity value of Holding
after the Recapitalization. The value of the new class of Holding Common Stock
issued in the Recapitalization equaled the cash proceeds received ($1.00 per
share).


                                       46
<PAGE>   47

Immediately following the Recapitalization, Holding issued new Holding Common
Stock options to certain employees for an aggregate 17,890 shares of the new
class of Holding Common Stock, which options vest over a four year period.
Because Holding's Board of Directors did not intend for the new options to be
compensatory, the exercise price per share was set at $1.00, which represented
the fair market value per share of the new Holding Common Stock at the date of
grant, consistent with the price paid for new shares of Holding Common Stock in
the Recapitalization.

Pursuant to the Recapitalization, MMI repaid (i) approximately $192,000 of MMI's
subordinated indebtedness (plus accrued but unpaid interest) held by Thomas F.
McWilliams, a director of MMI, and (ii) approximately $14,250,000 of MMI's
subordinated indebtedness (plus accrued but unpaid interest) held by CVC and an
affiliate of CVC.

Also pursuant to the Recapitalization, as a result of the Recapitalization
Merger, the capital stock of Holding outstanding prior to the Recapitalization
Merger was converted into the right to receive cash.. As a result, (i) CVC
became entitled to receive approximately $37,355,000, (ii) Thomas F. McWilliams
became entitled to receive approximately $822,000, (iii) Julius S. Burns, MMI's
President and Chief Executive Officer and a director of MMI, became entitled to
receive approximately $1,749,000, (iv) James M. McCall and Davy J. Wilkes, who
are executive officers of MMI, became entitled to receive approximately $485,000
and $373,000, respectively, and (v) Michael W. Babcock and Michael Weaver, each
of whom owns in excess of 5% of the Holding Class A Common Stock, became
entitled to receive approximately $182,000 and $63,000, respectively.

Immediately following the Recapitalization Merger, pursuant to the
Recapitalization, (i) CVC and an affiliate of CVC purchased shares of Holding
Common Stock and Holding Preferred Stock for an aggregate of approximately
$46,709,000 and (ii) Messrs. McWilliams (together with an affiliated limited
partnership), Burns, Tenczar, McCall, Wilkes, Babcock, Weaver and Comfort
purchased shares of Holding Common Stock and Holding Preferred Stock for
aggregate purchase prices of approximately $1,149,000, $1,487,000, $8,000,
$342,000, $289,000, $150,000, $72,000 and $1,279,000, respectively.

Redemption of Holding Preferred Stock and Repurchase of Stock Options

A portion of the proceeds of the $120 million senior subordinated notes issued
on April 16, 1997 was used to distribute to Holding sufficient funds to permit
Holding to redeem all of the outstanding Series A Junior Preferred Stock, par
value $.01 per share, of Holding (the "Holding Series A Junior Preferred Stock")
and the Series B Senior Preferred Stock, par value $.01 per share, of Holding
(the "Holding Series B Senior Preferred Stock," together with the Holding Series
A Junior Preferred Stock, the "Holding Preferred Stock"), and to repurchase
certain options held by Mannesmann Pipe and Steel Corporation and members of
MMI's management that were exercisable for shares of Holding Series A Junior
Preferred Stock. The number of shares of Holding Series A Junior Preferred Stock
for which such options were exercisable increased automatically as dividends
accrued with respect to shares of outstanding Holding Series A Junior Preferred
Stock. Upon completion of the senior subordinated notes offering, Thomas F.
McWilliams, Julius S. Burns, James M. McCall, Davy J. Wilkes, CVC, CCT Partners
III, William T. Comfort, Michael W. Babcock, and Michael Weaver received in the
aggregate approximately $1,170,000, $2,281,000, $539,000, $411,000, $40,545,000,



                                       47
<PAGE>   48

$7,155,000, $1,287,000, $288,000 and $143,000, respectively, for their shares of
Holding Preferred Stock and their options.

Contribution of Holding Common Stock to Parent

On June 12, 1997, in connection with the formation of Parent, holders of Holding
Common Stock representing more than 98% of the voting power of Holding
contributed (the "Contribution") all of their respective shares of Holding
Common Stock to Parent in exchange for the same number of Parent Common Units.
As a result of the Contribution, Parent owns more than 98% of Holding Common
Stock (representing more than 98% of the voting power of Holding).

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      1.   Financial Statements
              Included in Part II of this report:

                  Report of Independent Auditors

                  Consolidated Balance Sheets at fiscal year end 1998 and 1997

                  Consolidated Statements of Operations for fiscal years 1998,
                  1997 and 1996

                  Consolidated Statements of Changes in Stockholder's Equity for
                  fiscal years 1998, 1997 and 1996

                  Consolidated Statements of Cash Flows for fiscal years 1998,
                  1997 and 1996

                  Notes to Consolidated Financial Statements

         2.   Financial Statement Schedule 
              Included in Part IV of this report:

                  Schedule II -    Valuation and Qualifying Accounts

              Other schedules are omitted because of the absence of conditions
              under which they are required or because the required information
              is given in the financial statements or notes thereto.



                                       48
<PAGE>   49



3. Exhibits

         3.1     Restated Certificate of Incorporation of MMI Products, Inc. (1)
                 
         3.2     Amended and Restated By-laws of MMI Products, Inc. (1)
                 
         4.1     Indenture dated as of April 16, 1997 between MMI Products,
                 Inc. and U.S. Trust Company of Texas, N.A. (1)
                 
         10.1    Registration Rights Agreement dated as of April 16, 1997 among
                 MMI Products, Inc. and Bear, Stearns & Co. Inc. (1)
                 
         10.2    Registration Rights Agreement dated as of February 12, 1999 
                 among MMI Products, Inc. and Bear, Stearns & Co. Inc. (2)
                 
         10.3    Amended and Restated Loan and Security Agreement dated as of
                 December 13, 1996 among MMI Products, Inc., Fleet Capital
                 Corporation, as a lender and collateral agent, and
                 Transamerica Business Credit Corporation, as amended. (1)
                 
         10.4    Stockholders Agreement dated as of December 13, 1996 by and
                 among Merchant Metals Holding Company and certain of its
                 stockholders. (1)
                 
         10.5    Employment Agreement dated as of December 31, 1994 by and
                 among MMI Products, Inc. and Julius S. Burns, as amended. (1)
                 
         10.6    MMI Products, Inc. Pension Plan, as amended. (1)
                 
         10.7    Amended and Restated Put Agreement dated as of June 11, 1997,
                 between Merchants Metals Holding Company and Julius S. Burns.
                 (1)
                 
         10.8    Procurement Agreement dated as of December 13, 1996 between
                 MMI Products, Inc. and Mannesmann Pipe & Steel Corporation, as
                 amended. (1)
                 
         10.9    The Merchants Metals Holding Company 1988 Stock Option Plan
                 dated as of December 12, 1988, as amended. (1)
                 
         10.10   The MMI Products, Inc. 401(k) Savings Plan, as amended. (1)
                 
         10.11   Non-Competition Agreement dated as of December 31, 1994
                 between MMI Products, Inc. and Julius S. Burns. (1)
                 
         10.12   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and Julius S. Burns. (1)
                 
         10.13   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and Carl L. Blonkvist. (1)
                 
         10.14   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and Thomas F. McWilliams. (1)
                 
         10.15   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and James M. McCall. (1)
                 
         10.16   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and Davy J. Wilkes. (1)
                 
         10.17   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and Robert N. Tenczar. (1)
                 
         10.18   Purchase Agreement dated as of April 11, 1997 among MMI
                 Products, Inc. and Bear, Stearns & Co. Inc. (1)
                 
         10.19   Limited Liability Company Agreement of MMI Products, L.L.C. (1)
                 
         10.20   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and Julius S.
                 Burns. (1)


                                       49
<PAGE>   50
                 
         10.21   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and Robert N.
                 Tenczar. (1)
                 
         10.22   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and James M.
                 McCall. (1)
                 
         10.23   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and Davy J.
                 Wilkes. (1)
                 
         10.24   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and William T.
                 Stewart. (1)
                 
         10.25   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and Michael W.
                 Babcock. (1)
                 
         10.26   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and Michael
                 Weaver. (1)
                 
         10.27   Asset Purchase Agreement by and between MMI Products, Inc. and
                 Atlantic Steel Industries, Inc., dated as of June 10, 1996. (3)
                 
         10.28   Asset Purchase Agreement by and between MMI Products, Inc. and
                 The Burke Group, L.L.C., dated as of December 12, 1997. (3) 
                 
         21.1    None
                 
         27      Financial Data Schedule (2)
                 
         99.1    Purchase Agreement dated as of February 9, 1999 among MMI 
                 Products, Inc. and Bear, Stearns & Co. Inc. (2)

    (1)  Incorporated by reference to the Exhibits filed with MMI Products, 
         Inc.'s Registration Statement on Form S-4 (Registration No. 333-29141)
   
    (2)  Filed herewith

    (3)  Incorporated by reference to the Exhibits filed with MMI Products,
         Inc.'s Form 10-K for 1997.   

(b) Reports on Form 8-K
   
    Current Report on Form 8-K/A dated October 6, 1998, with respect to the 
    acquisition of Security Fence Supply Co., Inc.

   


                                       50
<PAGE>   51


SIGNATURES

Pursuant to the requirements of Section 13 and 15(d) 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.

                                    MMI PRODUCTS, INC.

                                    By: /s/ ROBERT N. TENCZAR
                                       ------------------------------
                                    Robert N. Tenczar, Vice President
                                    and Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
is signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.


Date:  April 2, 1999         By:             *
                                ------------------------------------------------
                                    Julius S. Burns, President
                                    and Chief Executive Officer
                                    (principal executive officer)

Date:  April 2, 1999         By:    /s/ ROBERT N. TENCZAR
                                ------------------------------------------------
                                    Robert N. Tenczar, Vice President
                                    and Chief Financial Officer
                                    (principal financial and accounting officer)

Date:  April 2, 1999         By:             *
                                ------------------------------------------------
                                    Thomas F. McWilliams, Director


Date:  April 2, 1999         By:             *
                                ------------------------------------------------
                                    Carl L. Blonkvist, Director



*        By: /s/ ROBERT N. TENCZAR
            ------------------------------
                 Robert N. Tenczar
                 Attorney-in-fact


                                       51
<PAGE>   52


SCHEDULE II

                               MMI PRODUCTS, INC.
                        VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                               Balance at    Charged to                        Balance at
                                               Beginning     Costs and                         End of
                                               of Period     Expenses         Deductions       Period
                                               ---------     ----------       ----------       ----------
<S>                                             <C>         <C>                <C>            <C>  
Fiscal Year Ended January 2, 1999:
   Allowance for Doubtful Accounts              $ 1,876      $   234          $   184(1)       $ 1,926
   Reserve for damaged and
     slow-moving inventory                          946          103(3)           415(2)           634

Fiscal Year Ended January 3, 1998:
   Allowance for Doubtful Accounts              $ 1,701      $    --          $  (175)(1)      $ 1,876
   Reserve for damaged and
     slow-moving inventory                        1,833         (620)(3)          267(2)           946

Fiscal Year Ended December 28, 1996:
   Allowance for Doubtful Accounts              $ 1,314      $   879          $   492(1)       $ 1,701
   Reserve for damaged and
     slow-moving inventory                          417        1,558              142(2)         1,833
</TABLE>


(1)      Uncollectible accounts written off, net of recoveries.

(2)      Write off of inventory.

(3)      Reversal of reserves due to changes in estimates.




                                       52
<PAGE>   53

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                   DESCRIPTION
-------                  -----------
<S>              <C>
         3.1     Restated Certificate of Incorporation of MMI Products, Inc. (1)
                 
         3.2     Amended and Restated By-laws of MMI Products, Inc. (1)
                 
         4.1     Indenture dated as of April 16, 1997 between MMI Products,
                 Inc. and U.S. Trust Company of Texas, N.A. (1)
                 
         10.1    Registration Rights Agreement dated as of April 16, 1997 among
                 MMI Products, Inc. and Bear, Stearns & Co. Inc. (1)
                 
         10.2    Registration Rights Agreement dated as of February 12, 1999 
                 among MMI Products, Inc. and Bear, Stearns & Co. Inc. (2)
                 
         10.3    Amended and Restated Loan and Security Agreement dated as of
                 December 13, 1996 among MMI Products, Inc., Fleet Capital
                 Corporation, as a lender and collateral agent, and
                 Transamerica Business Credit Corporation, as amended. (1)
                 
         10.4    Stockholders Agreement dated as of December 13, 1996 by and
                 among Merchant Metals Holding Company and certain of its
                 stockholders. (1)
                 
         10.5    Employment Agreement dated as of December 31, 1994 by and
                 among MMI Products, Inc. and Julius S. Burns, as amended. (1)
                 
         10.6    MMI Products, Inc. Pension Plan, as amended. (1)
                 
         10.7    Amended and Restated Put Agreement dated as of June 11, 1997,
                 between Merchants Metals Holding Company and Julius S. Burns.
                 (1)
                 
         10.8    Procurement Agreement dated as of December 13, 1996 between
                 MMI Products, Inc. and Mannesmann Pipe & Steel Corporation, as
                 amended. (1)
                 
         10.9    The Merchants Metals Holding Company 1988 Stock Option Plan
                 dated as of December 12, 1988, as amended. (1)
                 
         10.10   The MMI Products, Inc. 401(k) Savings Plan, as amended. (1)
                 
         10.11   Non-Competition Agreement dated as of December 31, 1994
                 between MMI Products, Inc. and Julius S. Burns. (1)
                 
         10.12   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and Julius S. Burns. (1)
                 
         10.13   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and Carl L. Blonkvist. (1)
                 
         10.14   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and Thomas F. McWilliams. (1)
                 
         10.15   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and James M. McCall. (1)
                 
         10.16   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and Davy J. Wilkes. (1)
                 
         10.17   Indemnification Agreement dated as of April 16, 1997 between
                 MMI Products, Inc. and Robert N. Tenczar. (1)
                 
         10.18   Purchase Agreement dated as of April 11, 1997 among MMI
                 Products, Inc. and Bear, Stearns & Co. Inc. (1)
                 
         10.19   Limited Liability Company Agreement of MMI Products, L.L.C. (1)
                 
         10.20   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and Julius S.
                 Burns. (1)
</TABLE>



<PAGE>   54
<TABLE>
<S>              <C>
         10.21   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and Robert N.
                 Tenczar. (1)
                 
         10.22   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and James M.
                 McCall. (1)
                 
         10.23   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and Davy J.
                 Wilkes. (1)
                 
         10.24   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and William T.
                 Stewart. (1)
                 
         10.25   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and Michael W.
                 Babcock. (1)
                 
         10.26   Amended and Restated Repurchase Agreement dated as of June 12,
                 1997 between Merchants Metals Holding Company and Michael
                 Weaver. (1)
                 
         10.27   Asset Purchase Agreement by and between MMI Products, Inc. and
                 Atlantic Steel Industries, Inc., dated as of June 10, 1996. (3)
                 
         10.28   Asset Purchase Agreement by and between MMI Products, Inc. and
                 The Burke Group, L.L.C., dated as of December 12, 1997. (3)
                 
         21.1    None
                 
         27      Financial Data Schedule (2)
                 
         99.1    Purchase Agreement dated as of February 9, 1999 among MMI 
                 Products, Inc. and Bear, Stearns & Co. Inc. (2)
</TABLE>

    (1)  Incorporated by reference to the Exhibits filed with MMI Products, 
         Inc.'s Registration Statement on Form S-4 (Registration No. 333-29141)

    (2)  Filed Herewith

    (3)  Incorporated by reference to the Exhibits filed with MMI Products,
         Inc.'s Form 10-K for 1997.