<PAGE>
                 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: December 31, 2000

Commission File Number:  0-4791

                        PAUL MUELLER COMPANY
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       (exact name of registrant as specified in its charter)

                              Missouri
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   (state or other jurisdiction of incorporation or organization)

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

         1600 West Phelps, Springfield, Missouri    65802
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        (address of principal executive offices)  (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

-----------------------  -------------------------------------------
 (title of each class)   (name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

                Common Stock par value $1 per share
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                          (Title of class)

Indicate by check mark whether the Registrant (1) has filed all re-
ports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days: Yes [X] No [ ]

Indicate 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]

The aggregate market value of the voting stock of the Registrant
held by nonaffiliates on February 28, 2001, was $28,100,594.  As of
March 16, 2001, there were 1,179,721 shares of common stock, $1 par
value, of the Registrant outstanding.

Portions of the Proxy Statement for the annual meeting of shareholders
to be held May 7, 2001, are incorporated by reference into Part III.

                                   1

<PAGE>   2
PART I

ITEM 1. - DESCRIPTION OF BUSINESS

     A.   GENERAL DEVELOPMENT OF BUSINESS

          The Registrant was incorporated under the laws of Missouri
          in 1946 as the successor to a business begun in 1940 to
          perform general sheet metal work, primarily for the build-
          ing industry.  In the mid-1940's, the Registrant expanded
          its operations to include the manufacture of poultry pro-
          cessing equipment and stainless steel cheese-making vats
          for dairy plants.  The Registrant, in 1955, began manufac-
          turing stainless steel milk coolers for dairy farms and in
          1960 began manufacturing stainless steel storage tanks and
          discontinued its sheet metal operations.  The Registrant
          purchased a water purification product line in January
          1987.  Today, the Registrant is one of the world's largest
          manufacturers of milk coolers for dairy farms.  The Regis-
          trant is also one of the nation's leading manufacturers of
          custom-made stainless steel processing equipment for the
          food, dairy, beverage, chemical, pharmaceutical, and other
          industries.  The Registrant's products are incorporated
          into a wide variety of industrial applications, including
          food and beverage processing, pharmaceutical and chemical
          processing, water distillation, heat transfer, HVAC, heat
          recovery, process cooling, and thermal energy storage.  The
          Registrant opened a microbrewery and brewpub operation in
          December 1997 to showcase its brewery technology capability
          and expand its marketing of brewery systems.

          The Registrant entered into a license agreement in February
          1994 under which it acquired the rights to manufacture and
          market evaporator assemblies used in liquid-ice systems.
          The agreement provides the Registrant an exclusive license
          to manufacture and to sell or to sublicense its rights for
          the following applications:  HVAC; gas turbine; process
          cooling of food and chemicals; and concentration of milk,
          fruit juices, and acid solutions.  The exclusive license is
          restricted to specific territories defined by application.
          The license is exclusive until expiration of the patents,
          but may become nonexclusive if royalties fail to equal spe-
          cified minimum levels for any calendar year.  The Regis-
          trant is also the sole licensee of the technology for milk
          cooling on dairy farm applications with no minimum annual
          royalties required.  The Registrant began manufacturing
          and marketing equipment in 1995.

          The Registrant has a license agreement with a Dutch company
          which allows for the production and sale of milk coolers
          in Europe and which provides royalties for the Registrant.
          The license can be terminated by either party on 60-days
          written notice.

          The Registrant entered into a license agreement in April
          1998 under which it acquired the right to manufacture and
          market cross-flow heat exchangers on an exclusive basis
          in the U.S. and Canada.  The license is subject to the
          licensor's nonexclusive right and license to sell cross-
          flow heat exchangers in the U.S. and Canada for food,
          dairy, and beverage applications.  The Registrant also
          has a nonexclusive right to manufacture and sell cross-
          flow heat exchangers in any country outside the U.S. and
          Canada.  The agreement has an initial term of five years
          and will automatically renew unless either party provides
          a one-year notification of nonrenewal.  The Registrant is
          required to purchase, only from the licensor, the compo-
          nents necessary to fabricate the cross-flow heat exchanger
          as long as it has exclusivity.

                                   2

<PAGE>   3
          The Registrant formed Mueller Field Operations, Inc., a
          wholly owned subsidiary, during 1998 to perform field
          fabrication, installation, and erection services.

          The Registrant established a joint venture during 1999 when
          it acquired 50% of the common stock of Mueller Montana de
          Mexico, S.A. de C.V., a Mexican fabricator of processing
          equipment.

     B.   FINANCIAL INFORMATION ABOUT SEGMENTS

          Information about the earnings data by segment and sales
          by product category are covered in Note 6 of the Notes to
          Consolidated Financial Statements found in Part II, Item 8,
          and is incorporated herein by reference.

     C.   NARRATIVE DESCRIPTION OF BUSINESS

          The Registrant's segments include Dairy Farm Equipment and
          Industrial Equipment.

          The Dairy Farm Equipment segment includes standard products
          that are built to stock and are available for sale from
          inventory.  The Dairy Farm Equipment segment sells milk-
          cooling and storage equipment and accessories, refrigera-
          tion units, and heat-recovery equipment for use on dairy
          farms to independent dealers for resale.  Sales are made
          to the domestic and export markets.

          The Industrial Equipment segment includes products that
          are designed and built to customer specifications.  The
          Industrial Equipment segment sells the following products
          directly to industrial customers:  food, beverage, chemi-
          cal, and pharmaceutical processing equipment; tank compo-
          nents; industrial heat transfer equipment; pure water
          equipment; thermal energy storage equipment; and comer-
          cial refrigeration equipment.  Food processing equipment
          includes stainless steel storage and mixing tanks, food
          processors, cookers and coolers, and a variety of other
          custom-fabricated tanks.  Beverage processing equipment
          includes stainless steel storage and fermentation tanks,
          brewhouse equipment, and other special equipment for brew-
          eries, wineries, distilleries, and soft-drink bottlers.
          Chemical and pharmaceutical processing equipment includes
          stainless steel and other alloy pressure vessels.  Other
          Industrial Equipment products include water purification
          equipment, heat transfer equipment, thermal energy storage
          equipment, and commercial refrigeration equipment.  The
          Industrial Equipment segment includes sales to the domestic
          and export markets.

          Raw materials used in the fabrication of the Registrant's
          products are readily available from sources in the United
          States.  The Registrant purchases components from two Euro-
          pean vendors under agreements for its heat transfer product
          line.

          Patents held by the Registrant generally are not considered
          significant to the successful conduct of each segment's
          business.  Trademarks are registered for the Registrant's
          name for certain products sold in the Industrial Equipment
          segment and for the products sold in the Dairy Farm Equip-
          ment segment in the key markets served by the Registrant.
          Trademarks are considered significant to the successful
          conduct of the Dairy Farm Equipment segment business.  Key
          license agreements that are maintained by the Registrant
          have been discussed in Section A above.

                                   3

<PAGE>   4
          In general, the seasonality of the Registrant's business
          segments is not material.

          The Registrant carries a significant inventory of standard
          sizes of stainless steel coil and plate used in the manu-
          facture of its products.  For large Industrial Equipment
          orders that will be completed over several months, stain-
          less steel is specifically ordered for the project when
          the project is secured.  The Registrant provides extended
          payment terms primarily for export orders with payment
          secured generally by a letter of credit and to qualifying
          domestic Dairy Farm Equipment dealers.  The Registrant
          requires down payments and/or progress payments on signi-
          ficant Industrial Equipment orders.

          Sales of the Registrant's products are distributed among
          several customers, and sales to any one customer are not
          significant to total consolidated sales.  Sales to any
          one customer did not exceed 10% of the Registrant's con-
          solidated sales during 2000.  However, the Dairy Farm
          Equipment segment has a customer, the loss of which may
          have an adverse effect on that segment's profitability
          if the sales volume could not be replaced.

          The backlog of sales was approximately $35,231,000 at Feb-
          ruary 28, 2001, compared to approximately $37,041,000 at
          February 29, 2000.  It is anticipated that substantially
          all of the February 28, 2001, backlog will be shipped
          during the current fiscal year.

          In the Industrial Equipment segment, there are several com-
          petitors, most of which are smaller than the Registrant.
          Many Industrial Equipment projects are bid among several
          possible suppliers, which tends to make pricing very com-
          petitive.  The principal methods of competition are price,
          quality, delivery, and service.  In the Dairy Farm Equip-
          ment segment, there are relatively few competitors, and
          the Registrant is one of the largest manufacturers of
          dairy farm milk coolers in the world.

          Stainless steel prices increased rapidly during 2000.
          Also, due to the increase in and the volatility of prices
          of nickel and chromium, stainless steel suppliers operated
          on a policy of price-in-effect-at-time-of-shipment, and
          they implemented surcharges to account for this.  Stain-
          less steel prices began declining during the latter part
          of 2000 and have decreased significantly.  Surcharges are
          still in effect, but the total delivered price of stain-
          less steel during 2001 is expected to be significantly
          below the price incurred in 2000.  Stainless steel prices
          are expected to be more stable during 2001 than during
          2000.

          The Registrant spent $1,044,800 in 2000, $1,100,000 in
          1999, and $978,900 in 1998 on research activities relating
          to the development of new products or services and the im-
          provement of existing products or services.  Fourteen full-
          time administrative employees are engaged in this activity.

          It is not anticipated that compliance with Federal, State,
          and local provisions, which have been enacted or adopted
          regulating the discharge of materials into the environment
          or otherwise relating to the protection of the environment,
          will have a material effect upon the capital expenditures,
          earnings, or competitive position of the Registrant and its
          subsidiaries.

          The total number of employees at December 31, 2000, was 870
          for the Registrant and its wholly owned subsidiaries.

          As previously reported, the labor contract with the Sheet

                                   4

<PAGE>   5
          Metal Workers Union (which covers a portion of the em-
          ployees at the Springfield, Missouri, plant) expired on
          June 11, 1994.  Extensive negotiations were conducted with
          union representatives, but a new contract was not achieved.
          The International Union called a strike in July 1995, which
          ended in December 2000.

          The union filed several unfair labor-practice charges dur-
          ing the course of its strike.  During 2000, the National
          Labor Relations Board ("NLRB") ruled in the Registrant's
          favor on the only important questions of the 26 issues
          before it.  Two cases involving minor issues remain pend-
          ing before the NLRB, and the final determination may take
          a year.  Management believes, based on evaluation by coun-
          sel, that there is no material financial exposure to the
          Registrant.  The Registrant and the union are currently
          in negotiations and are attempting to reach agreement on
          a contract.

          The Registrant currently employs about 870 people, of
          which approximately 390 are represented by the Sheet Metal
          Workers Union.  The Registrant has facilities located in
          Springfield, Missouri, and Osceola, Iowa.  There are ap-
          proximately 770 employees assigned to the Springfield
          facility; and at the Osceola facility, there are an addi-
          tional 100 employees, none of which are represented by a
          labor union.

     D.   FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
          AND EXPORT SALES

          Information about the amounts of export sales is covered in
          Note 6 of the Notes to Consolidated Financial Statements
          found in Part II, Item 8, and is incorporated herein by
          reference.

ITEM 2. - PROPERTIES

     The Registrant's primary domestic manufacturing facilities are
     located in Springfield, Missouri, and occupy approximately
     720,000 square feet on 50 acres of land.  These facilities are
     owned by the Registrant, as is all of the equipment it uses.
     The original section of the present Springfield plant was built
     in 1950 and consisted of 23,720 square feet.  Since then, the
     Registrant has added to this facility many times in the course
     of a continuing program for enlarging and modernizing its facil-
     ities and increasing its capabilities.  An addition of approxi-
     mately 14,100 square feet was made in 1981.  The latest addition
     of about 6,000 square feet was made in 1999.

     In February 1987, the Registrant acquired an additional manufac-
     turing facility in Osceola, Iowa, which contains approximately
     216,000 square feet.

     In February 1997, the Registrant purchased land and a building,
     which contains about 21,000 square feet, in downtown Springfield,
     Missouri, for the purpose of operating a microbrewery and brew-
     pub.

                                   5

<PAGE>   6
ITEM 3. - LEGAL PROCEEDINGS

     There are no material pending legal proceedings, other than
     ordinary routine litigation incidental to the business or mat-
     ters for which insurance coverage is adequate, which involves
     the Registrant, nor is any director, officer, or any management
     security holder involved in any litigation that could adversely
     affect the Registrant.

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

     The Registrant did not submit any matter to a vote of security
     holders, through a solicitation of proxies or otherwise, during
     the fourth quarter of 2000.

ITEM 10. (from PART III) - EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>
            Name          Age       Position(s) with Registrant
     -------------------  ---  -------------------------------------
     <S>                  <C>  <C>
     Paul Mueller<F1>     85   Chairman of the Board and Director
     Daniel C. Manna<F1>  54   President and Director
     Donald E. Golik<F1>  57   Senior Vice President and Chief Finan-
                                 cial Officer, Secretary and Director
<FN>
<F1> Individual has been employed by the Registrant for more than the
     past five years.
</FN>
</TABLE>

     Each of the above officers was elected to serve until the next
     annual meeting of the Board of Directors, which will be held
     on May 7, 2001, and until his successor shall have been duly
     elected and qualified or until his earlier resignation or
     removal.

                                   6

<PAGE>   7
PART II

ITEM 5. - MARKET PRICE FOR THE REGISTRANT'S COMMON STOCK
          AND RELATED SECURITY HOLDER MATTERS

     The Registrant's common stock is traded on The Nasdaq Stock Mar-
     ket(R) under the symbol MUEL.  As of December 31, 2000, there
     were approximately 260 shareholders of record and approximately
     600 beneficial shareholders.

     Market high and low prices and quarterly cash dividends in 2000
     and 1999 were as follows:

<TABLE>
<CAPTION>
                   2000 Quarter Ended               1999 Quarter Ended
             ------------------------------   ------------------------------
             Mar 31  Jne 30  Spt 30  Dec 31   Mar 31  Jne 30  Spt 30  Dec 31
             ------  ------  ------  ------   ------  ------  ------  ------
     MARKET PRICE OF STOCK
     <S>     <C>     <C>     <C>     <C>      <C>     <C>     <C>     <C>
     High... 31      29      29-7/8  29       40-3/8  35-3/4  36      33-1/4
     Low.... 26      21      23-5/8  22-1/2   33-3/8  31      31-1/4  28-5/8
<CAPTION>
     CASH DIVIDENDS
     <S>     <C>     <C>     <C>     <C>      <C>     <C>     <C>     <C>
     Declared
     per
     share.. $0.60   $0.60   $0.60   $0.60    $0.60   $0.60   $0.60   $0.60
</TABLE>

ITEM 6. - SELECTED FINANCIAL DATA

<TABLE>
                      SELECTED FINANCIAL DATA - FIVE-YEAR SUMMARY
<CAPTION>
                       2000        1999        1998        1997        1996
                   ----------- ----------- ----------- ----------- -----------
     <S>          <C>          <C>         <C>         <C>         <C>
     Net sales....$102,113,496 $92,571,835 $89,745,547 $86,693,022 $83,950,990
     Net income...$  3,847,397 $ 1,870,659 $ 3,134,301 $ 2,944,540 $ 4,424,019
     Basic and
      diluted
      earnings
      per common
      share.......      $ 3.29      $ 1.60      $ 2.68      $ 2.52      $ 3.79
     Common shares
      outstanding.   1,173,721   1,174,021   1,168,021   1,168,021   1,168,021
     Dividends
      declared
      per common
      share.......      $ 2.40      $ 2.40      $ 2.40      $ 2.40      $ 2.10
     Total assets.$ 55,687,051 $55,622,768 $55,137,271 $56,547,290 $53,184,971
     Long-term
      debt........$    162,366 $   162,366 $   161,434 $   161,434 $   161,434
</TABLE>

                                   7

<PAGE>   8
ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          OPERATING RESULTS AND FINANCIAL CONDITION

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

     OPERATING RESULTS

     The increase in sales between 2000 and 1999 was the most signi-
     ficant factor leading to improved results between the years

     SALES  -  Comparative consolidated sales for the past three
     years were as follows:

<TABLE>
<CAPTION>
                                              Sales
                                 ------------------------------
                                    (in thousands of dollars)
                                   2000       1999       1998
                                 --------   --------   --------
        <S>                      <C>        <C>        <C>
        Dairy Farm Equipment.... $ 23,818   $ 23,946   $ 19,193
        Industrial Equipment....   78,295     68,626     70,553
                                 --------   --------   --------
                                 $102,113   $ 92,572   $ 89,746
                                 ========   ========   ========
</TABLE>

     Sales of Dairy Farm Equipment were down slightly in 2000 com-
     pared to 1999.  Domestic sales of Dairy Farm Equipment declined
     by 7% during 2000, while export sales were higher than in the
     previous year.  In comparison to 1999, milk cooler unit sales
     decreased in the domestic market during 2000 by approximately
     20%, while, at the same time, the average size of milk cooler
     sold increased by 16%.  Milk cooler pricing varies directly
     with size, and sales of larger coolers helped to offset the
     loss of sales revenue from a decrease in the number of units.

     The significant factor affecting sales of domestic Dairy Farm
     Equipment during 2000 was the milk price paid to farmers.
     Domestic milk production once again grew significantly in 2000
     after a very strong year in 1999.  The effect of the high level
     of production was a surplus of milk, which led to a significant
     decrease in the milk price.  The average milk price was 21.5%
     less during 2000 than during 1999.  Although feed prices re-
     mained favorable, the significant reduction in the milk price
     led to a decline in sales of milk-cooling and storage equipment
     in the domestic market.  The substantial backlog at the begin-
     ning of the year helped to offset the effect of low milk prices
     on sales of domestic Dairy Farm Equipment during 2000.

     Export sales of Dairy Farm Equipment, on the other hand, ex-
     perienced an increase of 27% during 2000, with a 35% increase
     in the number of milk-cooling units sold, as the average size
     cooler sold was less during 2000 versus 1999.  The increase in
     export sales during 2000 was achieved in countries in North
     America and Asia where exchange rates were relatively stable

                                   8

<PAGE>   9
     during 2000.  Additionally, expanded market coverage in those
     countries also contributed to higher sales, as did the signifi-
     cantly higher backlog as of the beginning of 2000 versus the
     beginning of 1999.

     During 1999, sales of Dairy Farm Equipment increased by
     $4,753,000 compared to 1998.  All of the improvement was attri-
     butable to sales in the domestic market, which were up by 42%
     as export sales declined from the prior year.  Economic condi-
     tions in the domestic dairy farm industry were favorable, which
     accounted for a significant increase in milk production during
     1999, when milk prices for most of the year were relatively
     high and feed costs remained low.  Also contributing to the
     increase in production was a buildup in the number of dairy
     cows, as well as higher output per cow.  These conditions led
     to the significantly higher sales of milk-cooling and storage
     equipment.  With the favorable economic conditions, unit sales
     of milk coolers in the domestic market increased by approxi-
     mately 45% during 1999 compared to 1998.  However, export
     sales of Dairy Farm Equipment experienced a decline of 15%
     during 1999, with a 25% decline in the number of milk-cooling
     units sold.  The reduction in sales related directly to the
     continuing economic problems in key foreign markets, coupled
     with the strength of the U.S. dollar during 1999.  The decline
     in export sales was primarily due to decreased sales to coun-
     tries in Asia, North America, Europe, and Africa.

     For 2001, domestic milk prices are expected to remain low, as
     production is expected to continue at very high levels.  Milk
     prices will remain low until production can be brought more in
     balance with the demand.  Although higher milk prices are ex-
     pected during the latter half of 2001, projections are for only
     modest gains over the 2000 average price.  Additionally, feed
     costs are expected to increase slightly during 2001.  These
     conditions will put economic pressure on dairymen and, as a
     result, could limit the expansion of dairies and the acquisi-
     tion of capital equipment in 2001.  This would have an adverse
     effect on order entry in 2001 for Dairy Farm Equipment and,
     coupled with a significantly lower starting backlog, would
     reduce the likelihood that domestic sales for 2001 would reach
     the level achieved in 2000.  Dairy Farm Equipment exports for
     2001 should improve somewhat over 2000, as exchange rates are
     expected to remain stable in key markets; and there should be
     increased sales opportunities in Mexico, Japan, and South
     Africa.  However, foot-and-mouth disease may adversely affect
     sales in some of our export markets.

     In the domestic Dairy Farm Equipment market, the number of
     dairy farms continues to decline, as small high-production-cost
     dairies are being eliminated.  This process leaves fewer, but
     larger, dairy farm operations that will require larger milk-
     cooling and storage capacity.  The Registrant is well positioned
     to meet the cooling and storage requirements of this changing
     marketplace; and any impact on revenues and profitability will
     depend upon the rate at which farm consolidation continues.

     Although Industrial Equipment order entry improved by only 2.1%
     during 2000 compared to the prior year, the segment experienced
     an increase in sales of 14% or $9,669,000 during 2000 compared
     to 1999.  One of the most significant factors affecting sales
     during 2000 was a large beginning backlog of $28,242,000, which
     represented an increase of 41% over the prior year's beginning
     backlog.  The product lines having the most impact on the in-
     crease in sales were pharmaceutical processing equipment and
     PyroPure(TM) equipment.  Several large pharmaceutical projects
     were secured during the year, both for factory-built tanks and
     for field-erected tanks, which contributed to the increase in
     sales.  A major portion of PyroPure sales for the year was due
     to an order that we received during 1999 for a modular fluid-
     media-handling system for installation in a new biopharmaceuti-
     cal facility.  The project was in excess of $4,000,000 and was
     completed and delivered to the customer during the third quar-
     ter of the year.  The successful completion of the project
     contributed positively to the results of the Industrial Equip-
     ment segment during 2000.

     During 1999, sales of Industrial Equipment declined by
     $1,927,000 from the prior year in spite of the fact that order

                                   9

<PAGE>   10
     entry for the Industrial Equipment segment reached a record
     level.  Although order entry during 1999 for the Industrial
     Equipment segment increased by 14% over the prior year, sales
     during 1999 were adversely affected by several factors.  Backlog
     at the beginning of 1999 for this segment of our business was
     11% lower than at the beginning of the preceding year.  Addi-
     tionally, processing equipment (our most significant product
     line within the Industrial Equipment segment) began 1999 with
     a backlog that was 30% lower than the preceding year.  Further-
     more, during 1999, production was hampered by customer delays
     and changes to orders already entered, which resulted in a fluc-
     tuating workload and poor shop labor efficiency.  Also, the
     timing of order entry during 1999, particularly for processing
     equipment, was such that there were periods of low work and then
     insufficient time for several large projects to be completed and
     shipped by year-end.

     Looking forward to 2001, the overall growth rate for the U.S.
     economy is projected to be lower than it was in 2000.  Corpor-
     ate profits are expected to remain flat or to decrease when
     compared to 2000; and, as a result, the forecasted capital
     expenditure growth rate for 2001 is down considerably.  We are
     currently seeing very competitive conditions for the jobs that
     are available, particularly for processing equipment, our lar-
     gest product line in the Industrial Equipment segment.  We
     anticipate that this will continue until the economy begins
     to strengthen.  Margins for Industrial Equipment and particu-
     larly for our traditional tank-shop work will be under pressure
     during 2001 because of the economic slowdown.  Competitors are
     aggressively lowering prices to secure work and maintain their
     market share.  The backlog for the Industrial Equipment segment
     as of the beginning of 2001 was $29,944,000, or an increase of
     6% over the prior year.  However, field-fabrication projects,
     which involve both shop and fieldwork, make up a major portion
     of this backlog.  Field-fabrication projects tend to be material
     intensive and typically have lower margins than our traditional
     tank-shop work.

     The price of stainless steel has dropped significantly from the
     high levels experienced during 2000.  During 2000, the price of
     stainless steel escalated rapidly as the mills increased the
     base price and also implemented surcharges due to the increase
     in and the volatility of the market prices of nickel and chro-
     mium.  Although the surcharges are still in effect, the total
     price of stainless steel is expected to remain at a much lower
     level and to be more stable during 2001 compared to 2000.

     As previously reported, the labor contract with the Sheet Metal
     Workers Union (which covers a portion of the employees at the
     Springfield, Missouri, plant) expired on June 11, 1994.  Exten-
     sive negotiations were conducted with union representatives,
     but a new contract was not achieved.  The International Union
     called a strike in July 1995, which ended in December 2000.

     The union filed several unfair labor-practice charges during
     the course of its strike.  During 2000, the National Labor Rela-
     tions Board ("NLRB") ruled in the Registrant's favor on the
     only important questions of the 26 issues before it.  Two cases
     involving minor issues remain pending before the NLRB; but
     management believes, based on evaluation by counsel, that there
     is no material financial exposure to the Registrant.  The
     Registrant and the union are currently in negotiations and are
     attempting to reach agreement on a contract.

     The Registrant currently employs about 870 people, of which
     approximately 390 are represented by the Sheet Metal Workers
     Union.  The Registrant has facilities located in Springfield,
     Missouri, and Osceola, Iowa.  There are approximately 770 em-
     ployees assigned to the Springfield facility; and at the Osceola
     facility, there are an additional 100 employees, none of which
     are represented by a labor union.

                                  10

<PAGE>   11
     Sales backlog totaled $31,703,000 at December 31, 2000, versus
     $34,533,000 and $22,008,000 at the end of 1999 and 1998, re-
     spectively.  The backlog for the Industrial Equipment segment-
     ment was $29,944,000, $28,242,000, and $20,081,000 at the end
     of 2000, 1999, and 1998, respectively.  The backlog for the
     Dairy Farm Equipment segment was $1,759,000, $6,291,000, and
     $1,927,000 at the end of 2000, 1999, and 1998, respectively.
     Substantially all of the December 31, 2000, backlog will be
     shipped during the current year.

     OPERATING INCOME  -  Operating income for 2000 was $4,472,000
     versus $3,155,000 for 1999.  The major factor contributing
     to the higher operating income was the increase in sales of
     $9,541,000.  The positive effect on profitability of the in-
     creased volume, contributed solely by the Industrial Equip-
     ment segment, was more than enough to offset the effects of
     a lower gross margin rate, an unfavorable LIFO provision, and
     higher operating expenses.  The overall gross margin rate was
     lower for 2000 compared to 1999.  While the gross margin rate
     for the Industrial Equipment segment was slightly higher, the
     decrease in the Dairy Farm Equipment segment gross margin rate,
     due to higher stainless steel prices, more than offset the
     increased rate in the other segment.  During 2000, the LIFO
     reserve was increased by $474,000, which directly reduced the
     operating income.  In contrast, for 1999, there was a reduction
     in the required LIFO reserve, which had the effect of increasing
     operating income by $1,127,000.  Manufacturing burden was higher
     for 2000 compared to the prior year, as the variable components
     of manufacturing burden were greater due to the higher sales
     volume.  Additionally, a much lower work-in-process inventory
     at December 31, 2000, versus December 31, 1999, contributed to
     more manufacturing burden being expensed during 2000.  Selling,
     general, and administrative expenses were greater during 2000
     compared to 1999, as expenditures were higher for personnel,
     warranty and service, and consulting.  Also, the increased ac-
     tivity of Mueller Field Operations, Inc., contributed to higher
     selling, general, and administrative expenses.

     Operating income for 1999 was $3,155,000 versus $3,890,000 for
     1998.  Although sales were higher for 1999 compared to 1998,
     there was a reduction in the required LIFO reserve that had the
     effect of increasing operating income by $1,127,000.  However,
     operating income was adversely affected by lower margins and
     higher operating expenses.  Overall, margins were lower for
     1999 compared to 1998.  The product line contributing to lower
     overall margins was processing equipment, our largest product
     line.  Processing equipment margins were lower due to very com-
     petitive pricing conditions, the addition of field-fabrication
     work that has inherently lower margins, and plant labor effi-
     ciency that was adversely affected by the fluctuating workload
     during 1999.

     Operating expenses for 1999 were also higher than those for
     1998.  Manufacturing burden was approximately 7% higher for
     1999 compared to 1998.  This was due to a higher level of
     production during 1998 than during 1999, which resulted in a
     greater deferral of manufacturing burden in inventory in 1998
     versus 1999.  Selling, general, and administrative expenses
     were higher in 1999 compared to 1998, as expenditures were
     higher for personnel costs, warranty and service, medical ex-
     penses, and product development costs.  Additionally, selling,
     general, and administrative expenses were higher due to the
     increased activity of Mueller Field Operations, Inc.

     The profitability of the Industrial Equipment segment is lower
     than that for the Dairy Farm Equipment segment as the segment
     is more resource intensive and pricing is more competitive.
     Generally, all Industrial Equipment projects are engineered-to-
     order, and the projects require much greater support from the
     sales, engineering, and manufacturing areas, as well as a higher
     degree of skill to fabricate.  Also, the risks of manufacturing
     are greater because the products are custom-designed and built;
     and the chances of misinterpretation, errors, and mistakes are,
     in general, much greater than with a standard product.  Many of
     the Industrial Equipment projects are bid among several possible

                                  11

<PAGE>   12
     suppliers, which tends to make pricing very competitive.  On the
     other hand, the Dairy Farm Equipment segment sells standard pro-
     ducts; and engineering designs have been well defined and manu-
     facturing methods have been refined for efficiency.  The proprie-
     tary nature of the products also permits more attractive pricing.
     There are relatively few competitors, and the Registrant is one
     of the largest manufacturers of dairy farm milk coolers.

     Inflation is a factor that affects the cost of operations, and
     the Registrant seeks ways to minimize the effect on operating
     results.  To the extent permitted by competitive conditions,
     higher material prices, labor costs, and operating costs are
     passed on to the customer by increasing prices.  The Registrant
     uses the LIFO method of accounting for inventories; and under
     this method, the cost of products sold, as reported in the fi-
     nancial statements, approximates the current replacement cost.
     Additionally, the Registrant uses accelerated depreciation
     methods in charging depreciation expense to current operations,
     which, to a certain extent, reflects the effect of the increased
     cost of replacement productive capacity.

     OTHER INCOME (EXPENSE)  -  Interest income for 2000 was $294,000
     versus $322,000 for 1999.  Although the average interest rate
     was higher for 2000 compared to the prior year, the average
     level of investable funds for 2000 was about 50% less than for
     1999, which contributed to lower interest income.  The 1999
     average level of investable funds was lower than 1998, which
     resulted in lower interest income.

     The significant difference between other, net for 2000 and for
     1999 was a lawsuit settlement during 1999.  The Registrant was
     the defendant in a breach-of-contract/breach-of-warranty law-
     suit concerning reactor vessels sold in 1992 (Alcon Labora-
     tories, Inc., versus Paul Mueller Company).  The Registrant
     received an adverse decision at the trial in September of 1997,
     and the final judgment awarded damages, interest, and attorney's
     fees totaling $1,700,000 to the plaintiff.  The decision also
     provided that interest at 10% compounded annually would accrue
     on the judgment amount until paid.  Management believed that
     this decision was incorrect and, based on advice of legal coun-
     sel, appealed the decision.  A decision on the appeal was ren-
     dered by the Court of Appeals on May 27, 1999; and the trial
     court's decision was upheld.  After consultation with legal
     counsel, the Registrant decided not to pursue an additional
     appeal.  On June 21, 1999, the Registrant was able to reach
     a settlement with Alcon Laboratories, Inc., in the amount of
     $1,875,000.  As a result of the settlement, the Registrant
     increased its reserve in 1999 by $734,000 to fully accrue for
     its liability.  Compared to results for 2000, other, net for
     1999 was also adversely affected by lower results of the truck-
     ing operation and microbrewery/brewpub.

     Other, net for 1999 compared to 1998 was adversely affected by
     the lawsuit settlement mentioned in the preceding paragraph,
     lower royalty income, and lower results for the trucking opera-
     tion.

     PROVISION FOR INCOME TAXES  -  The effective tax rates for 2000,
     1999, and 1998 were 21.2%, 23.1%, and 28.5%, respectively; and
     they were below the statutory rate (34%) due primarily to tax
     credits and the lower effective tax rate for the foreign sales
     corporation

     YEAR 2000 ISSUE  -  The Registrant experienced no significant
     Year 2000 problems.  The AS/400 computer operating system and
     all major business systems, including the financial, design en-
     gineering, and manufacturing software systems, have functioned
     properly.  A few minor problems were encountered, but they were
     corrected immediately.  All noninformation technology systems
     and equipment within the Registrant's facilities performed with-
     out problems.  The Registrant has not experienced any problems
     with either suppliers or customers related to Year 2000 issues.

                                  12

<PAGE>   13
     FINANCIAL CONDITION

     LIQUIDITY - CAPITAL RESOURCES  -  Working capital was
     $18,202,000 as of December 31, 2000, compared to $18,223,000
     as of December 31, 1999.  The current ratio, a measure of
     liquidity, was 2.26 as of December 31, 2000, versus 2.20 as
     of December 31, 1999.  The Registrant has no significant
     amount of long-term debt.

     Net cash provided by operations was $4,525,000 in 2000 compared
     to $2,928,000 in 1999 and $2,495,000 in 1998.  The 2000 cash
     flow was primarily attributable to net income, depreciation and
     amortization, and an increase in accounts payable.  The 1999
     cash flow was primarily attributable to net income, depreciation
     and amortization, and an increase in advance billings.  The 1998
     cash flow was primarily attributable to net income and to depre-
     ciation and amortization expense.

     Capital expenditures for the most recent three years were
     $3,510,000 in 2000, $2,520,000 in 1999, and $4,769,000 in 1998.
     Capital expenditures during the three years ended December 31,
     2000, included a substantial portion to improve production effi-
     ciency and to reduce throughput time.  The level of capital ex-
     penditures for 2001 is initially planned at about $4,000,000.
     Anticipated expenditures will be primarily for critical plant
     equipment to enhance capabilities, maintain quality, and im-
     prove efficiency.

     The Registrant has a $6,000,000 bank-borrowing facility that
     expires on May 31, 2002.  Management believes that cash flow
     provided by operations and the cash and investment position
     will continue to be sufficient to satisfy the Registrant's
     working capital requirements, normal capital expenditure
     levels, and anticipated dividends.  A policy of requiring
     down payments and/or progress payments on large Industrial
     Equipment segment projects provides a favorable effect on
     cash flow.  Management expects that internally generated funds
     will be sufficient to finance operations, and this is consis-
     tent with historical performance.

     Market risks relating to the Registrant's operations result pri-
     marily from changes in foreign-exchange rates, interest rates,
     as well as stainless steel prices.  The Registrant periodically
     enters into foreign-exchange forward or spot contracts to hedge
     the exposure to foreign-currency-denominated purchase transac-
     tions.  Forward contracts generally have maturities of less
     than three months.  Foreign-currency-denominated purchases were
     approximately $2,500,000, $3,700,000, and $3,700,000 for 2000,
     1999, and 1998, respectively.  There were no foreign-exchange
     forward contracts outstanding or currencies held at December 31,
     2000 or 1999.  The Registrant's financial instruments that are
     exposed to interest rate risk consist of available-for-sale in-
     vestments that are recorded at market value and were $581,904
     and $2,295,696 at December 31, 2000, and December 31, 1999,
     respectively.

     Available-for-sale investments are maintained in high-quality
     securities that consist of tax-exempt bonds, a taxable bond
     fund, and a taxable variable-rate preferred-stock fund.  Tax-
     exempt bonds generally have maturities of from three to twelve
     months.  Unrealized holding gains and losses were not material
     as of December 31, 2000 or 1999, and there were no significant
     realized gains or losses during 2000, 1999, or 1998.  The Regis-
     trant does not use financial instruments for trading purposes.
     The risk of significant changes in stainless steel pricing for
     Industrial Equipment segment projects that extend over several
     months is managed by contracting for the stainless steel at the
     time the project is obtained.

     Concentration of credit risk, with respect to receivables, is
     limited due to the large number of customers and their disper-
     sion across a wide geographic area.  The Registrant performs

                                  13

<PAGE>   14
     credit evaluations of all new customers and periodically reviews
     the financial condition of existing customers.  For Industrial
     Equipment segment orders, down payments and/or progress payments
     are generally required based on the dollar value of the order
     and customer creditworthiness.  Foreign receivables generally
     are secured by irrevocable letters of credit confirmed by a
     major U.S. bank.

     Statement of Financial Accounting Standards ("SFAS") No. 137,
     "Accounting for Derivative Instruments and Hedging Activities -
     deferral of the effective date of FASB Statement No. 133," is-
     sued in June 1999 and effective for the Registrant's 2001 fiscal
     year, is not expected to have a material effect on the Regis-
     trant's financial position or results of operations.

ITEM 7.A. - QUALITATIVE AND QUANTITATIVE DISCLOSURES
            ABOUT MARKET RISK

     Certain information concerning market risk is set forth in
     Item 7, page 13, and is incorporated herein by reference.  Other
     disclosure requirements are not submitted because they are not
     applicable or they are not material

                                  14

<PAGE>   15
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
                         CONSOLIDATED BALANCE SHEETS
                         December 31, 2000 and 1999
<CAPTION>
                                                          2000         1999
                                                      -----------  -----------
<S>                                                   <C>          <C>
ASSETS
------
Current Assets:
Cash and cash equivalents...........................  $   667,441  $   699,936
  Available-for-sale investments, at market.........      581,904    2,295,696
  Accounts and notes receivable, less reserve
      for doubtful accounts of $689,831 in 2000
      and $518,414 in 1999..........................   18,909,688   18,811,372
  Inventories -
    Raw materials and components....................  $ 7,641,574  $ 6,794,576
    Work-in-process.................................    2,912,549    3,114,494
    Finished goods..................................    1,439,322    1,149,512
                                                      -----------  -----------
                                                      $11,993,445  $11,058,582
  Prepayments.......................................      458,474      570,322
                                                      -----------  -----------
          Total Current Assets......................  $32,610,952  $33,435,908
Property, Plant, and Equipment - at cost -
  Land and land improvements........................  $ 3,504,825  $ 3,323,629
  Buildings.........................................   13,850,962   13,731,764
  Shop equipment....................................   31,379,957   29,486,115
  Transportation, office, and other equipment.......   13,298,617   12,614,093
  Construction-in-progress..........................      779,497      599,660
                                                      -----------  -----------
                                                      $62,813,858  $59,755,261
  Less - Accumulated depreciation...................   43,622,248   41,301,338
                                                      -----------  -----------
                                                      $19,191,610  $18,453,923
Other Assets........................................    3,884,489    3,732,937
                                                      -----------  -----------
                                                      $55,687,051  $55,622,768
                                                      ===========  ===========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
----------------------------------------
Current Liabilities:
  Accounts payable..................................  $ 4,619,653  $ 3,484,162
  Accrued expenses -
    Income taxes....................................      216,964      230,365
    Payrolls........................................    2,475,626    2,165,912
    Vacations.......................................    2,373,643    2,045,825
    Other...........................................      793,516      695,671
  Advance billings..................................    3,929,838    6,591,154
                                                      -----------  -----------
          Total Current Liabilities.................  $14,409,240  $15,213,089
Other Long-Term Liabilities.........................    1,165,755    1,401,052
Contingencies.......................................
Shareholders' Investment:
  Common stock, par value $1 per share -
    Authorized 20,000,000 shares - Issued
    1,348,325.......................................  $ 1,348,325  $ 1,348,325
  Preferred stock, par value $1 per share -
    Authorized 1,000,000 shares - No shares issued..            -            -
  Paid-in surplus...................................    4,493,932    4,495,728
  Retained earnings.................................   36,999,955   35,969,849
                                                      -----------  -----------
                                                      $42,842,212  $41,813,902
  Less - Treasury stock, 174,604 shares in 2000
           and 174,304 shares in 1999, at cost......    2,561,987    2,554,033
         Deferred compensation......................      126,588      172,250
         Accumulated other comprehensive loss.......       41,581       78,992
                                                      -----------  -----------
                                                      $40,112,056  $39,008,627
                                                      -----------  -----------
                                                      $55,687,051  $55,622,768
                                                      ===========  ===========
</TABLE>
              The accompanying notes are an integral part of
                    these consolidated balance sheets.

                                  15

<PAGE>   16
<TABLE>
                    CONSOLIDATED STATEMENTS OF INCOME
          For the Years Ended December 31, 2000, 1999, and 1998

                                         2000          1999          1998
                                     ------------  ------------  ------------
<S>                                  <C>           <C>           <C>
Net Sales........................... $102,113,496  $ 92,571,835  $ 89,745,547
Cost of Sales.......................   78,770,528    71,155,331    68,173,874
                                     ------------  ------------  ------------
  Gross profit...................... $ 23,342,968  $ 21,416,504  $ 21,571,673
Selling, General, and Administrative
  Expenses..........................   18,871,089    18,261,099    17,682,108
                                     ------------  ------------  ------------
  Operating income.................. $  4,471,879  $  3,155,405  $  3,889,565
Other Income (Expense):
  Interest income................... $    293,708  $    322,327  $    403,564
  Interest expense..................      (12,191)      (10,054)      (14,635)
  Other, net........................       33,789      (964,729)      104,807
                                     ------------  ------------  ------------
                                     $    315,306  $   (652,456) $    493,736
                                     ------------  ------------  ------------
      Income before provision
        for income taxes............ $  4,787,185  $  2,502,949  $  4,383,301
Provision for Income Taxes..........    1,017,000       577,000     1,249,000
                                     ------------  ------------  ------------
Income before Equity in Income
     (Loss) of Joint Venture........ $  3,770,185  $  1,925,949  $  3,134,301
Equity in Income (Loss) of
     Joint Venture..................       77,212       (55,290)            -
                                     ------------  ------------  ------------
Net Income.......................... $  3,847,397  $  1,870,659  $  3,134,301
                                     ============  ============  ============
Basic and Diluted Earnings
  per Common Share..................       $ 3.29        $ 1.60        $ 2.68
                                           ======        ======        ======
</TABLE>
             The accompanying notes are an integral part of
                     these consolidated statements.

                                  16

<PAGE>   17
<TABLE>
           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
          For the Years Ended December 31, 2000, 1999, and 1998
<CAPTION>
                          Common        Paid-in      Retained      Treasury
                           Stock        Surplus      Earnings        Stock
                        -----------   -----------   -----------   -----------
<S>                     <C>           <C>           <C>           <C>
Balance - 12-31-1997..  $ 1,342,325   $ 4,306,728   $36,582,189   $(2,554,033)

Add (Deduct):
  Net income..........            -             -     3,134,301             -
  Dividends - $2.40
    per common share..            -             -    (2,803,250)            -
                        -----------   -----------   -----------   -----------
Balance - 12-31-1998..  $ 1,342,325   $ 4,306,728   $36,913,240   $(2,554,033)

Add (Deduct):
  Net income..........            -             -     1,870,659             -
  Other comprehensive
      income, net
      of tax:
    Unrealized net
      loss on
      investments.....            -             -             -             -
    Foreign currency
      translation
      adjustment......            -             -             -             -
 Comprehensive
   income.............            -             -             -             -
  Dividends - $2.40
    per common share..            -             -    (2,814,050)            -
  Restricted stock
    issued............        6,000       189,000             -             -
  Amortization........            -             -             -             -
                        -----------   -----------   -----------   -----------
Balance, 12-31-1999...  $ 1,348,325   $ 4,495,728   $35,969,849   $(2,554,033)

Add (Deduct):
  Net income..........            -             -     3,847,397             -
  Other comprehensive
      income, net
      of tax:
    Unrealized net
      gain on
      investments.....            -             -             -             -
    Foreign currency
      translation
      adjustment......            -             -             -             -
 Comprehensive
   income.............            -             -             -             -
  Dividends - $2.40
    per common share..            -             -    (2,817,291)            -
  Restricted stock
    forfeiture........            -        (1,796)            -        (7,954)
  Amortization........            -             -             -             -
                        -----------   -----------   -----------   -----------
Balance, 12-31-2000...  $ 1,348,325   $ 4,493,932   $36,999,955   $(2,561,987)
                        ===========   ===========   ===========   ===========
</TABLE>
<TABLE>
<CAPTION>
(continuation of table above)
                                      Accumulated
                                         Other
                          Deferred     Comprehen-
                        Compensation   sive Loss      Total
                        -----------   -----------   -----------
<S>                     <C>           <C>           <C>
Balance - 12-31-1997..  $         -   $         -   $39,677,209

Add (Deduct):
  Net income..........            -             -     3,134,301
  Dividends - $2.40
    per common share..            -             -    (2,803,250)
                        -----------   -----------   -----------
Balance - 12-31-1998..  $         -   $         -   $40,008,260

Add (Deduct):
  Net income..........            -             -     1,870,659
  Other comprehensive
      income, net
      of tax:
    Unrealized net
      loss on
      investments.....            -       (66,066)      (66,066)
    Foreign currency
      translation
      adjustment......            -       (12,926)      (12,926)
                                                    -----------
  Comprehensive
   income.............            -             -   $ 1,791,667
  Dividends - $2.40
    per common share..            -             -    (2,814,050)
  Restricted stock
    issued............     (195,000)            -             0
  Amortization........       22,750             -        22,750
                        -----------   -----------   -----------
Balance, 12-31-1999...  $  (172,250)  $   (78,992)  $39,008,627

Add (Deduct):
  Net income..........            -             -     3,847,397
  Other comprehensive
      income, net
      of tax:
    Unrealized net
      loss on
      investments.....            -        49,705        49,705
    Foreign currency
      translation
      adjustment......            -       (12,294)      (12,294)
                                                    -----------
  Comprehensive
   income.............            -             -   $ 3,884,808
  Dividends - $2.40
    per common share..            -             -    (2,817,291)
  Restricted stock
    issued............        7,800             -        (1,950)
  Amortization........       37,862             -        37,862
                        -----------   -----------   -----------
Balance, 12-31-2000...  $  (126,588)  $   (41,581)  $40,112,056
                        ===========   ===========   ===========
</TABLE>
              The accompanying notes are an integral part of
                      these consolidated statements.

                                  17

<PAGE>   18
<TABLE>
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
           For the Years Ended December 31, 2000, 1999, and 1998
<CAPTION>
                                            2000         1999         1998
                                        -----------  -----------  -----------
<S>                                     <C>          <C>          <C>
Cash Flows from Operating Activities:
  Net income........................... $ 3,847,397  $ 1,870,659  $ 3,134,301
  Adjustments to reconcile net income
      to net cash provided by
      operating activities:
    Equity in (income) loss of
      joint venture....................     (77,212)      55,290            -
    Bad debt expense (recovery)........       9,980       13,579       (4,834)
    Depreciation and amortization......   2,818,314    2,914,562    2,687,894
    (Gain) on sales of equipment.......         (89)      (7,878)      (8,328)
    Changes in assets and liabilities -
      Decrease in interest receivable..      26,564       49,298       70,684
      (Increase) decrease in accounts
        and notes receivable...........    (108,296)  (2,794,813)      87,935
      (Increase) in inventories........    (934,863)    (745,849)  (2,280,324)
      Decrease (increase) in
        prepayments....................     132,259      (86,323)      36,823
      (Increase) decrease in
        other assets...................    (107,854)     173,866      511,984
      Increase (decrease) in
        accounts payable...............   1,135,491      406,970   (1,218,492)
      Increase (decrease) in
        accrued expenses...............     721,976   (1,240,724)     129,148
      (Decrease) increase in
        advance billings...............  (2,661,316)   2,077,630     (711,488)
      (Decrease) increase in other
        long-term liabilities..........    (277,680)     241,254       59,762
                                        -----------  -----------  -----------
        Net Cash Provided by
          Operating Activities......... $ 4,524,671  $ 2,927,521  $ 2,495,065

Cash Flows (Requirements) from
    Investing Activities:
  Proceeds from maturities
    of investments..................... $ 4,416,132  $ 9,814,379  $15,508,981
  Purchases of investments.............  (2,650,007)  (7,010,016) (12,486,663)
  Investment in joint venture..........           -   (1,082,793)           -
  Proceeds from sales of equipment.....       4,375       26,920       10,923
  Additions to property,
    plant, and equipment...............  (3,510,375)  (2,520,085)  (4,768,523)
                                        -----------  -----------  -----------
        Net Cash (Required) by
          Investing Activities......... $(1,739,875) $  (771,595) $(1,735,282)
Cash Flows (Requirements)
    from Financing Activities:
  Dividends paid....................... $(2,817,291) $(2,814,050) $(2,803,250)
                                        -----------  -----------  -----------
        Net Cash (Required) by
          Financing Activities......... $(2,817,291) $(2,814,050) $(2,803,250)
                                        -----------  -----------  -----------
Net (Decrease) in Cash................. $   (32,395) $  (658,124) $(2,043,467)
Cash and Cash Equivalents
  at Beginning of Year.................     699,936    1,358,060    3,401,527
                                        -----------  -----------  -----------
Cash and Cash Equivalents
  at End of Year....................... $   667,441  $   699,936  $ 1,358,060
                                        ===========  ===========  ===========
</TABLE>
              The accompanying notes are an integral part of
                      these consolidated statements.

                                  18

<PAGE>   19
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   December 31, 2000, 1999, and 1998

(1) SUMMARY OF ACCOUNTING POLICIES:

    LINES OF BUSINESS AND PRINCIPLES OF CONSOLIDATION -- Paul Mueller
    Company ("Registrant") specializes in the manufacture of high-
    quality stainless steel tanks and industrial processing equip-
    ment.  The Registrant serves the food, beverage, chemical,
    pharmaceutical, and other process industries and the dairy farm
    market.  The financial statements include the accounts of the
    Registrant and its wholly owned subsidiaries:  Mueller Inter-
    national Sales Corporation, a foreign sales corporation ("FSC");
    Mueller Transportation, Inc.; and Mueller Field Operations, Inc.
    ("Companies").  All significant intercompany accounts and trans-
    actions have been eliminated in consolidation.

    USE OF ESTIMATES  -  The preparation of financial statements,
    in conformity with generally accepted accounting principles, re-
    quires management to make estimates and assumptions that affect
    the reported amounts of assets and liabilities, the 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.

    JOINT VENTURE  -  On August 17, 1999, the Registrant established
    a joint venture when it acquired 50% of the common stock of
    Mueller Montana de Mexico, S.A. de C.V. ("Mueller Montana"), a
    Mexican fabricator of processing equipment, for a price of
    $1,083,000.  One-half of the price was a contribution to the
    capital of Mueller Montana for the benefit of all shareholders
    and the balance was paid to former shareholders.  The investment
    is accounted for under the equity method and is included in
    other assets on the Consolidated Balance Sheets.

    REVENUE RECOGNITION AND RETAINAGES  -  Revenue from sales of
    manufactured products is recognized upon passage of title to
    the customer.  Passage of title to goods may occur at the Regis-
    trant's dock, at the customer's location, or when work is com-
    pleted in the field and accepted by the customer.  Contracts
    with some customers provide for a portion of the sales amount
    to be retained by the customer for a period of time after com-
    pletion of the contract.  Retainages included in accounts re-
    ceivable were $900,100 at December 31, 2000, and $635,200 at
    December 31, 1999.

    INVENTORIES  -  The Registrant's inventories are recorded at the
    lower of cost on a last-in, first-out ("LIFO") basis or market.
    Cost of subsidiary inventories is determined on a first-in,
    first-out ("FIFO") method; and they are not significant to the
    Consolidated Financial Statements.  Cost includes material,
    labor, and manufacturing burden required in the production of
    products.

    Under the FIFO method of accounting, which approximates current
    cost, Registrant inventories would have been $6,756,721,
    $6,282,819, and $7,409,602 higher than those reported at Decem-
    ber 31, 2000, 1999, and 1998, respectively.

    RESEARCH AND DEVELOPMENT  -  Research and development expenses
    are charged to expense as incurred and were $1,044,800 in 2000,
    $1,100,000 in 1999, and $978,900 in 1998.

    DEPRECIATION POLICIES  -  The Companies provide for depreciation
    expense using principally the double-declining balance method for
    new items and the straight-line method for used

                                  19

<PAGE>   20
    items.  The economic useful lives for the more significant items
    within each property classification are as follows:

<TABLE>
<CAPTION>
                                                        Years
                                                       -------
          <S>                                          <C>
          Buildings...................................      40
          Land improvements........................... 10 - 20
          Shop equipment..............................  5 - 10
          Transportation, office, and other equipment..  3 - 10
</TABLE>

    Maintenance and repairs are charged to expense as incurred.  The
    cost and accumulated depreciation of assets retired are removed
    from the accounts, and any resulting gains or losses are re-
    flected in net income currently.

    EARNINGS PER COMMON SHARE  -  The following table sets forth the
    computation of basic and diluted earnings per common share:

<TABLE>
<CAPTION>
                                              2000        1999        1998
                                           ----------  ----------  ----------
    <S>                                    <C>         <C>         <C>
    Net income............................ $3,847,397  $1,870,659  $3,134,301
                                           ==========  ==========  ==========
    Shares for basic earnings per
      Common share - Weighted average
      shares outstanding..................  1,168,021   1,168,021   1,168,021
    Effect of restricted stock issued.....        220         254           -
                                           ----------  ----------  ----------
    Shares for diluted earnings per
      common share - Adjusted weighted
      average shares outstanding..........  1,168,241   1,168,275   1,168,021
                                           ==========  ==========  ==========
    Basic earnings per common share.......     $ 3.29      $ 1.60      $ 2.68
                                               ======      ======      ======
    Diluted earnings per common share.....     $ 3.29      $ 1.60      $ 2.68
                                               ======      ======      ======
</TABLE>

    COMPREHENSIVE INCOME  -  The components of comprehensive income
    for the years ended December 31, 2000 and 1999, were as follows:

<TABLE>
<CAPTION>
                                                           2000       1999
                                                        ---------  ---------
    <S>                                                 <C>        <C>
    Unrealized net gain (loss) on investments.......... $  78,897  $(104,867)
    Tax expense (benefit)..............................    29,192    (38,801)
                                                        ---------  ---------
    Unrealized net gain (loss) on investments,
      net of tax....................................... $  49,705  $ (66,066)

    Foreign currency translation adjustment............ $ (19,515) $ (20,517)
    Tax (benefit)......................................    (7,221)    (7,591)
                                                        ---------  ---------
    Foreign currency translation adjustment,
      net of tax....................................... $ (12,294) $ (12,926)
                                                        ---------  ---------
    Accumulated other comprehensive income (loss)...... $  37,411  $ (78,992)
                                                        =========  =========

    INVESTMENTS  -  The Registrant classifies its investments as
    available-for-sale and records them at market value.  The invest-
    ments are a part of the Registrant's asset/liability management
    program and may be sold in response to capital or liquidity
    needs.  Available-for-sale investments on the accompanying Con-
    solidated Balance Sheets at December 31, 2000 and 1999, include:


</TABLE>
<TABLE>
<CAPTION>
                                                 2000         1999
                                             -----------  -----------
    <S>                                      <C>          <C>
    Tax-exempt bonds........................ $         -  $ 1,770,955
    Taxable bond fund.......................     581,224      497,497
    Accrued interest........................         680       27,244
                                             -----------  -----------
                                             $   581,904  $ 2,295,696
                                             ===========  ===========
</TABLE>

                                  20

<PAGE>   21
    Unrealized holding gains and losses were not material at Decem-
    ber 31, 2000 and 1999, and there were no significant realized
    gains or losses during 2000, 1999, or 1998.

    STATEMENTS OF CASH FLOWS  -  For purposes of the Statements of
    Cash Flows, the Registrant considers investments with a maturity
    of three months or less to be cash equivalents.

    Interest and income tax payments for each of the three years dur-
    ing the period ended December 31, 2000, were as follows:

<TABLE>
<CAPTION>
                                   2000         1999         1998
                                ----------   ----------   ----------
    <S>                         <C>          <C>          <C>
    Interest payments.......... $   12,200   $   10,000   $   14,600
    Income tax payments........ $1,053,200   $  139,000   $1,420,500
</TABLE>

    SHAREHOLDERS' INVESTMENT  -  The following table sets forth the
    analysis of common stock issued and held as treasury stock:

<TABLE>
<CAPTION>
                                                        Shares
                                                  ------------------
                                                    Common
                                                    Stock    Treasury
                                                    Issued    Stock
                                                  ---------  -------
    <S>                                           <C>        <C>
    Balance, December 31, 1997..................  1,342,325  174,304
                                                  ---------  -------
    Balance, December 31, 1998..................  1,342,325  174,304
    Restricted stock issued.....................      6,000        -
                                                  ---------  -------
    Balance, December 31, 1999..................  1,348,325  174,304
    Restricted stock forfeiture.................          -      300
                                                  ---------  -------
    Balance, December 31, 2000..................  1,348,325  174,604
                                                  =========  =======
</TABLE>

(2) RETIREMENT PLANS:

    The Registrant has a Profit Sharing and Retirement Savings Plan
    [401(k) plan] in which substantially all employees are eligible
    to participate.  The plan provides for a match of employees' con-
    tributions up to a specified limit.  The plan also has a profit-
    sharing feature whereby an additional match is made if net income
    reaches predetermined levels established annually by the Board of
    Directors.  The funds of the plan are deposited with an insurance
    company and are invested at the employee's option in one or more
    investment funds.  The Registrant's contributions to the plan
    were $502,200 for 2000, $422,200 for 1999, and $415,300 for 1998.

    The Registrant has pension plans covering substantially all em-
    ployees.  Benefits under the plans are based either on final
    average pay or a flat benefit formula.

    Total pension expense under the plans was $348,500 in 2000,
    $723,300 in 1999, and $781,800 in 1998.  Management's policy is
    to fund pension expense that is currently deductible for tax pur-
    poses.

    The following table sets forth the required disclosures for the
    pension plans at December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                         2000         1999
                                                     -----------  -----------
    <S>                                              <C>          <C>
    Change in Benefit Obligation
      Benefit obligation at beginning of year....... $30,723,500  $32,532,200
      Service cost..................................   1,040,300    1,234,400
      Interest cost.................................   2,499,000    2,332,200
      Actuarial loss (gain).........................   3,610,200   (4,133,900)
      Benefits paid and expenses....................  (1,410,600)  (1,241,400)
                                                     -----------  -----------
      Benefit obligation at end of year............. $36,462,400  $30,723,500
                                                     ===========  ===========

                                  21

<PAGE>   22
<CAPTION>
                                                         2000         1999
                                                     -----------  -----------
    <S>                                              <C>          <C>
    Change in Plan Assets
      Fair value of plan assets
        at beginning of year........................ $38,179,900  $36,293,600
      Actual return on plan assets..................     829,400    2,420,900
      Employer contribution.........................     783,100      706,800
      Benefits paid and expenses....................  (1,410,600)  (1,241,400)
                                                     -----------  -----------
      Fair value of plan assets at end of year...... $38,381,800  $38,179,900
                                                     ===========  ===========
    Reconciliation
      Funded status................................. $ 1,919,400  $ 7,456,400
      Unrecognized net actuarial (gain).............  (2,270,400)  (8,111,700)
      Unrecognized transition (asset)...............    (109,400)    (459,900)
      Unrecognized prior service cost...............   1,550,900    1,771,100
                                                     -----------  -----------
      Prepaid benefit cost.......................... $ 1,090,500  $   655,900
                                                     ===========  ===========
<CAPTION>
                                            2000         1999         1998
                                        -----------  -----------  -----------
    <S>                                 <C>          <C>          <C>
    Components of Pension Expense
      Service cost..................... $ 1,040,300  $ 1,234,400  $ 1,172,900
      Interest cost....................   2,499,000    2,332,200    2,129,600
      Expected return on plan assets...  (2,948,700)  (2,712,500)  (2,388,500)
      Amortization of
        transition (asset).............    (350,500)    (350,500)    (350,500)
      Amortization of
        prior service cost.............     220,200      220,200      220,200
      Recognized net actuarial (gain)..    (111,800)        (500)      (1,900)
                                        -----------  -----------  -----------
      Pension expense.................. $   348,500  $   723,300  $   781,800
                                        ===========  ===========  ===========
</TABLE>

    Prepaid pension assets of $2,510,200 and $2,405,500 at December
    31, 2000 and 1999, respectively, are included in other assets on
    the accompanying Consolidated Balance Sheets.  Pension liabili-
    ties of $1,419,700 and $1,749,600 at December 31, 2000 and 1999,
    respectively, are included in current and other long-term liabil-
    ities on the accompanying Consolidated Balance Sheets.

    The weighted average expected long-term rate of return on plan
    assets used in the determination of annual pension expense was
    8.5% for 2000, 1999, and 1998.  The weighted average assumed
    discount rate used to measure the benefit obligation was 7.5%
    at December 31, 2000, and 8% at December 31, 1999.  The assumed
    rate of compensation increase used to measure the benefit obliga-
    tion was 4.5% at December 31, 2000 and 1999, for the applicable
    plan.

(3) INCOME TAXES:

    The provision for taxes on income from operations includes:

<TABLE>
<CAPTION>
                                      2000        1999        1998
                                   ----------  ----------  ----------
    <S>                            <C>         <C>         <C>
    Current tax expense........... $1,006 600  $  201,600  $1,037,200
    Deferred, net.................     10,400     375,400     211,800
                                   ----------  ----------  ----------
                                   $1,017,000  $  577,000  $1,249,000
                                   ==========  ==========  ==========
</TABLE>

    The deferred tax consequences of temporary differences in report-
    ing items for financial statement and income tax purposes are
    recognized in the Consolidated Financial Statements.  Net de-
    ferred tax liabilities of $20,200 at December 31, 2000, and
    $42,600 at December 31, 1999, are included on the accompanying
    Consolidated Balance Sheets.  Components of the deferred tax

                                  22

<PAGE>   23
    assets and liabilities as of December 31 are as follows:

<TABLE>
<CAPTION>
                                                  2000        1999
                                               ----------  ----------
    <S>                                        <C>         <C>
    Deferred Tax Assets:
        Insurance............................. $  112,500  $   90,800
        Vacation..............................    828,000     681,000
        Warranty..............................     20,400      18,500
        Doubtful accounts.....................    117,500     191,800
        Healthcare benefits...................    188,200     176,900
        Other.................................    150,100     130,300
                                               ----------  ----------
                                               $1,416,700  $1,289,300
                                               ==========  ==========
    Deferred Tax Liabilities:
        Depreciation.......................... $  946,500  $  815,300
        Pensions..............................    438,200     439,100
        Other.................................     52,200      77,500
                                               ----------  ----------
                                               $1,436,900  $1,331,900
                                               ==========  ==========
</TABLE>

    A reconciliation between the statutory federal income tax rate
    (34%) and the effective rate of income tax expense for each of
    the three years during the period ended December 31, 2000,
    follows:

<TABLE>
<CAPTION>
                               2000              1999              1998
                         ----------------  ----------------  ----------------
                           Amount      %     Amount      %     Amount      %
                         ----------  ----  ----------  ----  ----------  ----
    <S>                  <C>         <C>   <C>         <C>   <C>         <C>
    Statutory federal
     income tax......... $1,627,600  34.0  $  851,000  34.0  $1,490,300  34.0
    Increase (decrease)
      in taxes resulting
      from:
     Tax credits........   (602,700)(12.6)   (261,100)(10.4)    (27,200) (0.6)
     FSC exempt income..   (104,700) (2.2)    (98,400) (3.9)   (170,900) (3.9)
     State tax, net of
      federal benefit...     48,600   1.0      49,500   2.0      65,400   1.5
     Other, net.........     48,200   1.0      36,000   1.4    (108,600) (2.5)
                         ----------  ----  ----------  ----  ----------  ----
                         $1,017,000  21.2  $  577,000  23.1  $1,249,000  28.5
                         ==========  ====  ==========  ====  ==========  ====
</TABLE>

    As of December 31, 2000, tax credit carry-forwards of approxi-
    mately $317,000 are available to offset future federal income
    taxes and can be utilized over the next twenty years.  Tax credit
    carry-forwards of approximately $62,000 are available to offset
    future state income taxes and can be utilized over the next five
    years.  The Registrant expects to generate future taxable income
    sufficient to utilize these credits.

(4) LAWSUIT SETTLEMENT:

    The Registrant was the defendant in a breach-of-contract/breach-
    of-warranty lawsuit concerning reactor vessels sold in 1992 in
    Tarrant County, Texas (Alcon Laboratories, Inc., versus Paul
    Mueller Company).  As a result of a trial that ended in Septem-
    ber 1997, the Registrant received an adverse decision; and the
    final judgment awarded damages, interest, and attorney's fees
    totaling $1,700,000 to the plaintiff.  The decision also pro-
    vided that interest at 10% compounded annually would accrue on
    the judgment amount until paid.

    Management believed the decision was incorrect and, based on the
    advice of legal counsel, appealed the decision.  A decision on
    the appeal was rendered by the Court of Appeals on May 27, 1999,
    and the trial court's decision was upheld.  After consultation
    with legal counsel, the Registrant decided not to pursue an addi-
    tional appeal.

                                  23

<PAGE>   24
    On June 21, 1999, the Registrant was able to reach a settlement
    with Alcon Laboratories, Inc., in the amount of $1,875,000.  As
    a result of the settlement, the Registrant increased its reserve
    for the lawsuit.  The addition to the reserve was $734,000, and
    it is included in other, net on the Consolidated Statements of
    Income.  Payment was made during the second quarter of 1999 to
    fully satisfy the liability for the lawsuit.

(5) CONTINGENCIES:

    The Registrant is involved in legal proceedings incident to the
    conduct of its business.  It is management's opinion that none
    of these matters will have a materially adverse effect on the
    consolidated financial position, results of operations, or cash
    flows.

    The Registrant employs nearly 870 people, of which approximately
    390 are represented by the Sheet Metal Workers Union.  The In-
    ternational Union called a strike in July 1995, which ended in
    December 2000.  However, two cases involving minor issues remain
    before the National Labor Relations Board, and the final deter-
    mination of these cases may take a year.  Management believes,
    based on evaluation by counsel, that there is no material finan-
    cial exposure to the Registrant.

(6) SEGMENT DATA:

    The Registrant has two reportable segments:  Industrial Equipment
    and Dairy Farm Equipment.  The Registrant's Industrial Equipment
    segment sells the following products directly to industrial cus-
    tomers:  food, beverage, chemical, and pharmaceutical processing
    equipment; industrial heat transfer equipment; pure water equip-
    ment; thermal energy storage equipment; and commercial refriger-
    ation equipment.  The Registrant's Dairy Farm Equipment segment
    sells milk-cooling and storage equipment and accessories, refri-
    geration units, and heat-recovery equipment for use on dairy
    farms to independent dealers for resale.

    Management evaluates performance and allocates resources based
    on operating income or loss before income taxes.  The accounting
    policies of the reportable segments are the same as those des-
    cribed in Summary of Accounting Policies in Note 1 to these
    Consolidated Financial Statements.  There were no significant
    intersegment sales.

    The Registrant's reportable segments are managed separately be-
    cause they offer different products and serve different markets.
    Industrial Equipment products have been aggregated because they
    are designed and built to a customer's specifications, and they
    use common processes and resources in the manufacturing opera-
    tion.  Similar economic conditions affect the long-term finan-
    cial performance of the product lines included in the Industrial
    Equipment segment.  The Dairy Farm Equipment segment includes
    standard products that are built to stock and are available for
    sale from inventory.  The demand for Dairy Farm Equipment pro-
    ducts is affected by the economic factors that influence the
    profitability of dairy farmers.

<TABLE>
<CAPTION>
                                                2000
                       ------------------------------------------------------
                        Dairy Farm    Industrial     Other /
                        Equipment     Equipment     Corporate    Consolidated
                       ------------  ------------  ------------  ------------
    <S>                <C>           <C>           <C>           <C>
    Revenues from
    external
    customers......... $ 23,818,217  $ 78,295,279  $          -  $102,113,496

    Depreciation
    and amortization
    expense........... $    435,419  $  2,115,615  $    267,280  $  2,818,314

    Income before
    income tax........ $  3,644,167  $    827,712  $    315,306  $  4,787,185

    Assets............ $ 11,586,956  $ 37,521,165  $  6,578,930  $ 55,687,051

    Additions to
    property, plant,
    and equipment..... $    302,177  $  2,877,559  $    330,639  $  3,510,375

                                  24

<PAGE>   25
<CAPTION>
                                                1999
                       ------------------------------------------------------
                        Dairy Farm    Industrial     Other /
                        Equipment     Equipment     Corporate    Consolidated
                       ------------  ------------  ------------  ------------
    <S>                <C>           <C>           <C>           <C>
    Revenues from
    external
    customers......... $ 23,945,695  $ 68,626,140  $          -  $ 92,571,835

    Depreciation
    and amortization
    expense........... $    513,628  $  2,102,469  $    298,465  $  2,914,562

    Income (loss)
    before income
    tax............... $  3,178,878  $     (9,715) $   (666,214) $  2,502,949

    Assets ........... $ 11,231,703  $ 35,812,296  $  8,578,769  $ 55,622,768

    Additions to
    property, plant,
    and equipment..... $    285,793  $  2,099,130  $    135,162  $  2,520,085

<CAPTION>
                                                1998
                       ------------------------------------------------------
                        Dairy Farm    Industrial     Other /
                        Equipment     Equipment     Corporate    Consolidated
                       ------------  ------------  ------------  ------------
    <S>                <C>           <C>           <C>           <C>
    Revenues from
    external
    customers......... $ 19,192,965  $ 70,552,582  $          -  $ 89,745,547

    Depreciation
    and amortization
    expense........... $    506,320  $  1,866,868  $    314,706  $  2,687,894

    Income (loss)
    before income
    tax............... $  2,472,637  $  2,105,629  $   (194,965) $  4,383,301

    Assets............ $ 10,761,132  $ 32,806,912  $ 11,569,227  $ 55,137,271

    Additions to
    property, plant,
    and equipment..... $    426,789  $  4,030,797  $    310,937  $  4,768,523
</TABLE>

    Revenues from external customers by product category for the three
    years ended December 31, 2000, were:

<TABLE>
<CAPTION>
                                         2000          1999          1998
                                     ------------  ------------  ------------
    <S>                              <C>           <C>           <C>
    Milk-cooling and
      storage equipment............. $ 21,747,491  $ 21,444,848  $ 17,144,400
    Processing equipment............   51,657,026    44,006,909    47,613,127
    Other industrial equipment......   28,708,979    27,120,078    24,988,020
                                     ------------  ------------  ------------
                                     $102,113,496  $ 92,571,835  $ 89,745,547
                                     ============  ============  ============
</TABLE>

    Revenues by geographic location are attributed to countries based
    on the location of the customer and for the three years ended
    December 31, 2000, were:

<TABLE>
<CAPTION>
                                         2000          1999          1998
                                     ------------  ------------  ------------
    <S>                              <C>           <C>           <C>
    United States................... $ 82,784,078  $ 75,222,015  $ 65,914,311
    North America
      (excluding the U.S.)..........    8,597,638     8,153,251     6,935,491
    Asia and the Far East...........    4,793,788     4,352,378    13,385,745
    Central and South America.......    4,234,872     2,274,852       599,606
    Other areas.....................    1,703,120     2,569,339     2,910,394
                                     ------------  ------------  ------------
                                     $102,113,496  $ 92,571,835  $ 89,745,547
                                     ============  ============  ============
</TABLE>

    During the years presented, 1998 included export sales to Japan
    ($10,358,984) that were in excess of 10% of consolidated sales.

    All long-lived assets owned by the Registrant and its subsidi-
    aries are located in the United States.

    During 2000, 1999, and 1998, sales to any one customer were not
    in excess of 10% of consolidated sales.

(7) LONG-TERM INCENTIVE PLAN:

    Under the 1999 Long-Term Incentive Plan (the "Plan"), two types
    of awards are provided for executives and key employees:  re-
    stricted stock and nonqualified stock options.  An aggregate of

                                  25

<PAGE>   26
    180,000 shares of common stock can be issued under the Plan,
    with 55,000 shares being the aggregate maximum number of shares
    that may be granted as restricted stock.

    In May 1999, 6,000 shares of restricted stock were granted to
    certain executives and key employees.  Currently, 5,700 shares
    of restricted stock remain outstanding, and they will vest five
    years after grant.  Compensation expense was computed by multi-
    plying the number of shares granted by the fair market value of
    the common stock on the date of grant.  The expense is being
    recognized ratably over the vesting period.

    In May 1999, nonqualified stock options for 20,400 shares of
    common stock were granted; and as of December 31, 2000, nonqua-
    lified stock options for 19,400 shares were outstanding.  These
    stock options have an exercise price of $36.00 per share, which
    was above fair market value on the date of grant.  The options
    vest and are exercisable five years after the date of grant, and
    they must be exercised no later than ten years from the date of
    grant.

    The Registrant applies Accounting Principles Board Opinion No.
    25, "Accounting for Stock Issued to Employees," to account for
    employee stock options.  Accordingly, no compensation expense
    has been recognized for nonqualified stock options.

    Pro forma net income and earnings per share information (as re-
    quired by SFAS No. 123, "Accounting for Stock-Based Compensa-
    tion") has been determined as if the Registrant had accounted
    for employee stock options under the fair value method described
    by SFAS No. 123.

    The fair value of these options was estimated at the date of
    grant using the Black-Scholes Option Pricing Model with the fol-
    lowing weighted average assumptions:  expected life of option -
    7.5 years, expected price volatility of the Registrant's common
    stock - 53.4%, expected dividend yield - 7.4%, and risk-free
    interest rate - 5.8%.  The fair value of options granted during
    1999 was $8.60 per option.

    The Black-Scholes Option Pricing Model was developed for use
    in estimating the fair value of traded options that have no ves-
    ting restrictions and that are fully transferable.  In addition,
    option-pricing models require the input of subjective assump-
    tions, including the expected stock price volatility.  Because
    the Registrant's options have characteristics different from
    those of traded options, the model, in the opinion of management,
    does not necessarily provide a reliable single measure of the
    fair value of its options.

    For purposes of pro forma disclosures, the estimated fair value
    of the options is being amortized to expense ratably over the
    vesting period.  The pro forma disclosures, required by SFAS No.
    123, are not likely to be representative of the effects on re-
    ported net income or losses for future years.  The pro forma
    information follows:

<TABLE>
<CAPTION>
                                                2000        1999
                                             ----------  ----------
    <S>                                      <C>         <C>
    Pro forma net income.................... $3,825,922  $1,856,848
                                             ==========  ==========
    Pro forma earnings per share -
        Basic...............................     $ 3.28      $ 1.59
        Diluted.............................     $ 3.27      $ 1.59
</TABLE>

                                  26

<PAGE>   27
(8) SHAREHOLDER RIGHTS PLAN:

    On January 26, 2001, the Board of Directors of the Registrant
    adopted an Amended and Restated Rights Agreement ("Rights Agree-
    ment") and declared a dividend distribution of one Common Share
    Purchase Right ("Right") for each share of the Registrant's com-
    mon stock outstanding on February 15, 2001.  The Rights distri-
    buted under the Registrant's 1991 Rights Agreement expired on
    January 29, 2001.

    The rights will be exercisable only if a person or group acquires
    15% or more of the Registrant's common stock (an "Acquiring Per-
    son") or announces a tender offer that would result in owner ship
    of 15% or more of the Registrant's common stock.  Initially, each
    Right will entitle shareholders to buy one share of the Regis-
    trant's common stock at an exercise price of $117.25.

    If the Registrant is acquired in a merger or other business com-
    bination and its common stock is changed or exchanged, or if 50%
    or more of its consolidated assets or earning power is sold,
    each Right will entitle its holder to purchase, at the Right's
    then-current exercise price, shares of the acquiring company's
    common stock having a market value of twice the exercise price.
    Also, if an Acquiring Person acquires 15% or more of the Regis-
    trant's outstanding common stock, each Right will entitle its
    holder to purchase, at the Right's then-current exercise price,
    common stock of the Registrant having a market value of twice
    the exercise price.  Under either situation, Rights owned by
    an Acquiring Person will become null and void.

    Prior to acquisition by an Acquiring Person of 15% or more of
    the Registrant's common stock, the Rights are redeemable at the
    option of the independent members (as defined in the Rights
    Agreement) of the Board of Directors at $0.01 per Right.  The
    Rights will expire on January 29, 2011.

    Until a Right is exercised, the holder thereof, as such, has no
    rights as a shareholder of the Registrant, including the right
    to vote or to receive dividends.  The issuance of the Rights
    alone has no dilutive effect and does not affect reported earn-
    ings per share.

                                  27

<PAGE>   28
<TABLE>
                  FINANCIAL HIGHLIGHTS BY QUARTER (UNAUDITED)
                     (In Thousands, Except Per Share Data)
<CAPTION>
                                     Quarter Ended
              ---------------------------------------------------------------
                  March 31        June 30       September 30    December 31
              --------------- --------------- --------------- ---------------
                2000    1999    2000    1999    2000    1999    2000    1999
              ------- ------- ------- ------- ------- ------- ------- -------
                                        <F2>                    <F3>    <F4>
<S>           <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Net sales.... $22,473 $18,884 $27,203 $24,181 $28,588 $23,603 $23,849 $25,904
Gross
 profit<F1>.. $ 5,519 $ 4,398 $ 6,230 $ 5,968 $ 6,319 $ 4,399 $ 5,275 $ 6,652
Net income
 (loss)...... $   822 $   167 $ 1,085 $   466 $ 1,069 $  (150)$   871 $ 1,388
Basic and
 diluted
 earnings
 (loss) per
 common
 share.......  $ 0.70  $ 0.14  $ 0.93  $ 0.40  $ 0.92  $(0.13) $ 0.74  $ 1.19
<FN>
<F1> Because the inventory determination under the LIFO method can
     only be made at the end of each fiscal year based on the inven-
     tory levels and costs at that point, interim LIFO determinations
     must be based on management's estimate of expected year-end in-
     ventory levels and costs

<F2> On June 21, 1999, the Registrant settled its breach-of-contract/
     breach-of-warranty lawsuit for $1,875,000.  As a result of the
     settlement, the Registrant increased its reserve for the lawsuit
     to fully accrue for the liability.  Net income for the three
     months ended June 30, 1999, was unfavorably affected by the in-
     crease in the reserve of $462,000, after tax, or $0.40 per share.

<F3> Net income for the fourth quarter of 2000 was favorably affected
     by a LIFO adjustment.  The effect of the LIFO adjustment in-
     creased net income by $779,000, or $0.67 per share.

<F4> Net income for the fourth quarter of 1999 was favorably affected
     by a LIFO adjustment and unfavorably affected by large health-
     care claims.  The effect of the LIFO adjustment increased net
     income by $804,000, or $0.69 per share.  The healthcare claims
     decreased net income by $218,000, or $0.19 per share.
</FN>
</TABLE>

                                  28

<PAGE>   29
               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Paul Mueller Company:

We have audited the accompanying consolidated balance sheets of PAUL
MUELLER COMPANY (a Missouri corporation) AND SUBSIDIARIES as of De-
cember 31, 2000 and 1999, and the related consolidated statements
of income, shareholders' investment, and cash flows for each of the
three years in the period ended December 31, 2000.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial state-
ments based on our audits.

We conducted our audits in accordance with auditing standards gener-
ally accepted in the United States.  Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and signifi-
cant 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 financial position of Paul
Mueller Company and Subsidiaries as of December 31, 2000 and 1999,
and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole.  Schedule II is pre-
sented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required
to be set forth therein in relation to the basic financial statements
taken as a whole.

/s/  ARTHUR ANDERSEN LLP

Kansas City, Missouri,
February 9, 2001

ITEM 9. - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     There have been no disagreements on accounting principles or
     financial statement disclosure with the independent public
     accountants.

                                  29

<PAGE>   30
PART III

ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information as to Directors of the Registrant required by Item
     10 is included on pages 5, 6, and 7 of the Registrant's Proxy
     Statement for the annual meeting of shareholders to be held
     May 7, 2001, and is incorporated herein by reference.  The in-
     formation concerning executive officers is set forth on page 6
     of Part I hereof.

ITEM 11. - EXECUTIVE COMPENSATION

     Information as to executive compensation required by Item 11 is
     included on pages 10 and 11 of the Registrant's Proxy Statement
     for the annual meeting of shareholders to be held May 7, 2001,
     and is incorporated herein by reference.

ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
           AND MANAGEMENT

     Information as to security ownership of certain beneficial
     owners and management required by Item 12 is included on pages
     4 and 6 of the Registrant's Proxy Statement for the annual
     meeting of shareholders to be held May 7, 2001, and is incor-
     porated herein by reference.

ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information as to certain relationships and related transactions
     required by Item 13 is included on page 7 of the Registrant's
     Proxy Statement for the annual meeting of shareholders to be
     held May 7, 2001, and is incorporated herein by reference.

                                  30

<PAGE>   31
PART IV

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

     A. The financial statements and schedules, required under Part
        II - Item 8, are as follows:

        1. The consolidated financial statements of the Registrant
           and its subsidiaries, for the year ended December 31,
           2000:

           - Consolidated Balance Sheets..........December 31, 2000
                                                  and 1999

           - Consolidated Statements of Income....For years ended
                                                  December 31, 2000,
                                                  1999, and 1998

           - Consolidated Statements of
             Shareholders' Investment.............For years ended
                                                  December 31, 2000,
                                                  1999, and 1998

           - Consolidated Statements of
             Cash Flows...........................For years ended
                                                  December 31, 2000,
                                                  1999, and 1998

           - Notes to Consolidated
             Financial Statements.................December 31, 2000,
                                                  1999, and 1998

           - Financial Highlights by Quarter......For years ended
                                                  December 31, 2000
                                                  and 1999

           - Report of Independent
             Public Accountants

        2. Additional financial statement schedules included herein:

           -  Schedule II - Valuation and
              Qualifying Accounts.............................Page 33

           -  All other schedules are not submitted because they are
              not applicable or not required, or because the required
              information is included in the financial statements
              notes or thereto.

        3. The exhibits set forth in the Exhibit Index found on pages
           34 through 36.

     B. No reports on Form 8-K were filed by the Registrant during
        the last quarter of 2000.

                                  31

<PAGE>   32
SIGNATURES -

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Re-
port to be signed on its behalf by the undersigned, thereunto duly
authorized.

                            PAUL MUELLER COMPANY

DATE   March 10, 2001       BY     /S/    DANIEL C. MANNA
       --------------          --------------------------------------
                                          Daniel C. Manna
                                             President
                                     (Chief Executive Officer)

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

DATE   March 10, 2001       BY     /S/    DANIEL C. MANNA
       --------------          --------------------------------------
                                          Daniel C. Manna
                                       President and Director
                                     (Chief Executive Officer)

DATE   March 10, 2001       BY     /S/      PAUL MUELLER
       --------------          --------------------------------------
                                            Paul Mueller
                                        Chairman of the Board
                                            and Director

DATE   March 10, 2001       BY     /S/    DONALD E. GOLIK
       --------------          --------------------------------------
                                          Donald E. Golik
                               Senior Vice President, Chief Financial
                                  Officer, Secretary and Director

DATE   March 10, 2001       BY     /S/     DAVID T. MOORE
       --------------          --------------------------------------
                                           David T. Moore
                                              Director

DATE   March 10, 2001       BY     /S/   WILLIAM B. JOHNSON
       --------------          --------------------------------------
                                         William B. Johnson
                                              Director

DATE   March 10, 2001       BY     /S/  WILLIAM R. PATTERSON
       --------------          --------------------------------------
                                        William R. Patterson
                                              Director

                                  32

<PAGE>   33
<TABLE>
                                                              SCHEDULE II
                   PAUL MUELLER COMPANY AND SUBSIDIARIES
                     VALUATION AND QUALIFYING ACCOUNTS
                FOR THE THREE YEARS ENDED DECEMBER 31, 2000
<CAPTION>
            Balance at   Charged to    Charged                   Balance
            Beginning    Costs and     to Other                 at End of
            of Period     Expenses     Accounts    Deductions     Period
             --------     --------     --------     --------     --------
RESERVE FOR DOUBTFUL ACCOUNTS
<S>          <C>          <C>          <C>          <C>          <C>
12-31-2000.. $518,414     $297,635     $      -     $126,218<F1> $689,831
12-31-1999.. $641,899     $(85,087)    $      -     $ 38,398<F1> $518,414
12-31-1998.. $559,261     $125,703     $      -     $ 43,065<F1> $641,899
<FN>
<F1> Accounts written off during the year.
</FN>
</TABLE>

                                  33

<PAGE>   34
<TABLE>
                               EXHIBIT INDEX
<CAPTION>
Number                          Description                          Page No.
------  -----------------------------------------------------------  --------
 <S>    <C>                                                             <C>
  (3)   ARTICLES OF INCORPORATION AND BY-LAWS -

        (a) The Restated Articles of Incorporation of the Regis-
            trant filed with the Secretary of State on May 20,
            1991, and the Restated Bylaws of the Registrant dated
            May 6, 1991, attached as Exhibit (3), page 19, of the
            Registrant's Form 10-K for the year ended December 31,
            1991, are incorporated herein by reference.

        (b) The following amendments were attached as Exhibit (3)
            of the Registrant's Form 10-Q for the quarter ended
            September 30, 1999, and are incorporated herein by
            reference:

<C> CAPTION
                              Description                  Page No.
            ---------------------------------------------  --------
            <S><C>                                            <C>
            1. Amendment One to the Restated Bylaws of
               Paul Mueller Company, adopted May 6, 1991,
               was approved by the Board of Directors on
               May 1, 1995...............................     16

            2. Amendment Two to the Restated Bylaws of
               Paul Mueller Company, adopted May 6, 1991,
               was approved by the Board of Directors on
               October 27, 1999..........................     17

 <S>    <C>                                                             <C>
  (4)   INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS -

        (a) A specimen stock certificate (unlimited denomination)
            representing shares of the common stock, par value $1
            per share, attached as Exhibit (4), page 69, of the
            Registrant's Form 10-K for the year ended December 31,
            1981, is incorporated herein by reference.

        (b) The Amended and Restated Shareholder Rights Plan,
            dated January 27, 2001, between Paul Mueller Company
            and United Missouri Bank of Kansas City, n.a., is
            incorporated by reference to Form 8-A under the Securi-
            ties Exchange Act of 1934, dated January 30, 2001, and
            filed with the Securities and Exchange Commission on
            January 31, 2001.

 (10)   MATERIAL CONTRACTS -

        (a) The Paul Mueller Company Noncontract Employees Retire-
            ment Plan, amended and restated effective January 1,
            2000, and adopted by the Board of Directors of the
            Registrant on January 27, 2000, was attached as Exhi-
            bit (10), page 36, of the Registrant's Form 10-K for
            the year ended December 31, 1999, and is incorporated
            herein by reference.

                                  34

<PAGE>   35
<CAPTION>
Number                          Description                          Page No.
------  -----------------------------------------------------------  --------
 <S>    <C>                                                             <C>

        (b) The Exclusive License Agreement between the Registrant
            and Superstill Technology, Inc., dated January 9, 1992,
            Addendum No. 1 dated January 28, 1992, and Addendum
            No. 2 dated June 15, 1992, were attached as Exhibit
            (10), page 30, of the Registrant's Form 10-K for the
            year ended December 31, 1996, and is incorporated here-
            in by reference.

        (c) The following Material Contracts, attached as Exhibit
            (10) of the Registrant's Form 10-Q for the quarter
            ended September 30, 1995, are incorporated herein by
            reference:
<C> CAPTION
                              Description                  Page No.
            ---------------------------------------------  --------
            <S><C>                                            <C>
            1. The Paul Mueller Company Tax Savings Plan
               and Trust, effective January 1, 1996,
               and adopted by the Board of Directors on
               August 2, 1995............................     11

            2. The Paul Mueller Company Dependent Care
               Assistant Plan, effective January 1, 1996,
               and adopted by the Board of Directors on
               August 2, 1995............................     22

 <S>    <C>                                                             <C>
        (d) The Paul Mueller Company Employee Benefit Plan, amended
            and restated effective June 1, 1998, and adopted by
            the Trustees on August 5, 1998, was attached as Exhi-
            bit (10), page 33, of the Registrant's Form 10-Q for
            the quarter ended September 30, 1998, and is incor-
            porated herein by reference.

        (e) The Paul Mueller Company Profit Sharing and Retirement
            Savings Plan, restated effective January 1, 1993, and
            adopted by the Trustees on June 22, 1994, was attached
            as Exhibit (10), page 15, of the Registrant's Form 10-K
            for the year ended December 31, 1994.  The First Amend-
            ment, effective September 1, 1997, and executed on
            August 14, 1997, was attached as Exhibit (10), page 32,
            of the Registrant's Form 10-K for the year ended Decem-
            ber 31, 1997, and is incorporated herein by reference.

        (f) The Paul Mueller Company Contract Employees Retirement
            Plan, restated effective January 1, 1992, and adopted
            November 17, 1992, was attached as Exhibit (10), page
            22, of the Registrant's Form 10-K for the year ended
            December 31, 1992, and is incorporated herein by refer-
            ence.  Amendment Number One, effective September 19,
            1994, was executed October 20, 1994, and Amendment
            Number Two, effective January 1, 1993, was executed
            December 2, 1994, and both were attached as Exhibit
            (10), page 67, of the Registrant's Form 10-K for the
            year ended December 31, 1994, and are incorporated
            herein by reference.  Amendment Number Three, executed
            April 10, 1996, was attached as Exhibit (10), page 10,
            of the Registrant's Form 10-Q for the quarter ended
            March 31, 1996, and is incorporated herein by reference.
            Amendment Number Four, executed July 26, 1996, was at-
            tached as Exhibit (10), page 11, of the Registrant's
            Form 10-Q for the quarter ended September 30, 1996, and
            is incorporated herein by reference.

                                  35

<PAGE>   36
<CAPTION>
Number                          Description                          Page No.
------  -----------------------------------------------------------  --------
 <S>    <C>                                                             <C>
        (g) The Agreement and Declaration of Trust for the Paul
            Mueller Company Employee Benefit Plan, dated May 2,
            1988, was attached as Exhibit (10), page 107, of the
            Registrant's Form 10-K for the year ended December 31,
            1988, and is incorporated herein by reference.

        (h) The following Executive Compensation Plans and Arrange-
            ments:

             i. The Paul Mueller Company 1999 Long-Term Incentive
                Plan, effective January 26, 1999, and adopted by
                the Board of Directors of the Registrant on Janu-
                ary 26, 1999, was attached as Exhibit A to the
                Registrant's 1999 Proxy Statement filed with the
                Commission on March 26, 1999, and is incorporated
                herein by reference.

            ii. The Paul Mueller Company Supplemental Executive Re-
                tirement Plan, effective January 1, 1996, adopted
                by the Board of Directors on February 8, 1996, was
                attached as Exhibit (10), page 30, of the Regis-
                trant's Form 10-K for the year ended December 31,
                1995, and is incorporated herein by reference.

           iii. The Executive Short-Term Incentive Plan, adopted
                January 31, 1995, was attached as Exhibit (10), page
                71, of the Registrant's Form 10-K for the year ended
                December 31, 1994, and is incorporated herein by
                reference.

 (21)   SUBSIDIARIES OF THE REGISTRANT.............................     37
</TABLE>

                                  36