UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

FORM 10-Q

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

For the quarterly period ended March 28, 2015April 2, 2016Commission file number 1–6770

Mueller Industries, Inc. logo
MUELLER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

Delaware
25-0790410
(State or other jurisdiction(I.R.S. Employer
of incorporation or organization)Identification No.)

8285 Tournament Drive, Suite 150 
Memphis, Tennessee
38125
(Address of principal executive offices)(Zip Code)

(901) 753-3200
(Registrant’sRegistrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yesx  Noo☐

 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yesx  Noo☐
 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large"large accelerated filer”filer", “accelerated filer”"accelerated filer", and “smaller"smaller reporting company”company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer   x☒
Accelerated filer   o☐
Non-accelerated filer   o☐
Smaller reporting company   o☐
 
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yeso  Nox☒

The number of shares of the Registrant’sRegistrant's common stock outstanding as of April 20, 2015,25, 2016, was 56,969,586.

57,126,707.

Index
INDEX
MUELLER INDUSTRIES, INC.

FORM 10-Q

For the Quarterly Period Ended March 28, 2015
April 2, 2016

__________________________

As used in this report, the terms “Company,” “Mueller,”"Company," "Mueller," and “Registrant”"Registrant" mean Mueller Industries, Inc. and its consolidated subsidiaries taken as a whole, unless the context indicates otherwise.

__________________________

INDEX


  
Page
Number
Part I.  Financial Information
Item 1.  – Financial Statements (Unaudited)
 
   
 
a.)  Condensed ConsolidatedItem 1.  – Financial Statements of Income(Unaudited)
3
b.)  Condensed Consolidated Statements of Comprehensive Income
4
c.)  Condensed Consolidated Balance Sheets
5
d.)  Condensed Consolidated Statements of Cash Flows
6
e.)  Notes to Condensed Consolidated Financial Statements
7
Item 2.  – Management’s Discussion and Analysis of Financial Condition and Results of Operations
16
Item 3.  – Quantitative and Qualitative Disclosures About Market Risk
23
Item 4.  – Controls and Procedures
24
Part II.  Other Information
 
   
 
Item 1.  – Legal Proceedingsa.)  Condensed Consolidated Statements of Income
25
3
   
 
Item 1A. – Risk Factorsb.)  Condensed Consolidated Statements of Comprehensive Income
25
4
   
 
c.)  Condensed Consolidated Balance Sheets
5
d.)  Condensed Consolidated Statements of Cash Flows
6
e.)  Notes to Condensed Consolidated Financial Statements
7
Item 2.  – Management's Discussion and Analysis of Financial Condition and Results of Operations
16
Item 3.  – Quantitative and Qualitative Disclosures About Market Risk
24
Item 4.  – Controls and Procedures
26
Part II.  Other Information
Item 1.  – Legal Proceedings
26
Item 1A. – Risk Factors
27
Item 2.  – Unregistered Sales of Equity Securities and Use of Proceeds
26
27
   
 
Item 6.  – Exhibits
27
28
 
Signatures
28
29
 

2
IndexINDEX

 
PART I
FINANCIAL INFORMATION
Item 1.
Financial Statements

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

  For the Quarter Ended 
    
 (In thousands, except per share data) March 28, 2015  March 29, 2014 
       
       
Net sales $537,242  $  574,374 
         
Cost of goods sold  460,834   495,777 
Depreciation and amortization  7,853   8,107 
Selling, general, and administrative expense  32,831   32,183 
         
Operating income  35,724   38,307 
         
Interest expense  (2,076)  (1,026)
Other income, net  105   88 
         
Income before income taxes  33,753   37,369 
         
Income tax expense  (11,413)  (12,415)
         
Consolidated net income  22,340   24,954 
         
Net income attributable to noncontrolling interest  (362)  (248)
         
Net income attributable to Mueller Industries, Inc. $21,978  $24,706 
         
Weighted average shares for basic earnings per share  56,193   55,918 
Effect of dilutive stock-based awards  731   853 
         
Adjusted weighted average shares for diluted earnings per share  56,924   56,771 
         
Basic earnings per share $0.39  $0.44 
         
Diluted earnings per share $0.39  $0.44 
         
Dividends per share $0.075  $0.075 
         
         
See accompanying notes to condensed consolidated financial statements. 
  For the Quarter Ended 
 (In thousands, except per share data) April 2, 2016  March 28, 2015 
       
Net sales $532,809  $537,242 
         
Cost of goods sold  446,642   460,834 
Depreciation and amortization  8,920   7,853 
Selling, general, and administrative expense  35,780   32,831 
         
Operating income  41,467   35,724 
         
Interest expense  (1,848)  (2,076)
Other income, net  245   105 
         
Income before income taxes  39,864   33,753 
         
Income tax expense  (14,121)  (11,413)
Income from unconsolidated affiliates  2,922   — 
         
Consolidated net income  28,665   22,340 
         
Net income attributable to noncontrolling interest  (35)  (362)
         
Net income attributable to Mueller Industries, Inc. $28,630  $21,978 
         
Weighted average shares for basic earnings per share  56,467   56,193 
Effect of dilutive stock-based awards  495   731 
         
Adjusted weighted average shares for diluted earnings per share  56,962   56,924 
         
Basic earnings per share $0.51  $0.39 
         
Diluted earnings per share $0.50  $0.39 
         
Dividends per share $0.075  $0.075 
         
See accompanying notes to condensed consolidated financial statements. 
 
3
Index
INDEX
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

  For the Quarter Ended 
    For the Quarter Ended 
(In thousands)  March 28, 2015 March 29, 2014  April 2, 2016  March 28, 2015 
            
     
Consolidated net income $22,340 $24,954  $28,665  $22,340 
             
Other comprehensive (loss) income, net of tax:     
Other comprehensive income (loss), net of tax:        
Foreign currency translation (8,404)   1,167   (1,111)  (8,404)
Net change with respect to derivative instruments and hedging activities, net of tax of $274 in 2015 and $590 in 2014 (198) (1,116)
Net actuarial loss on pension and postretirement obligations, net of tax of $(501) in 2015 and $28 in 2014 1,416 3 
Net change with respect to derivative instruments and hedging activities, net of tax of $(221) in 2016 and $274 in 2015  594   (198)
Net actuarial loss on pension and postretirement obligations, net of tax of $(398) in 2016 and $(501) in 2015  1,172   1,416 
Other, net  (27)  (15)  14   (27)
              
     
Total other comprehensive (loss) income  (7,213)  39 
      
Total other comprehensive income (loss)  669   (7,213)
             
Comprehensive income 15,127 24,993   29,334   15,127 
Comprehensive loss (income) attributable to noncontrolling interest  345   (253)
      
Comprehensive loss attributable to noncontrolling interest  739   345 
             
Comprehensive income attributable to Mueller Industries, Inc.  $15,472 $24,740  $30,073  $15,472 
              
     
See accompanying notes to condensed consolidated financial statements.See accompanying notes to condensed consolidated financial statements. See accompanying notes to condensed consolidated financial statements. 
 
4
IndexINDEX
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data) March 28, 2015  December 27, 2014 
Assets      
Current assets:      
Cash and cash equivalents $326,894  $352,134 
Accounts receivable, less allowance for doubtful accounts of $565 in 2015 and $666 in 2014  307,984   275,065 
Inventories  246,395   256,585 
Other current assets  59,858   57,429 
         
Total current assets  941,131   941,213 
         
Property, plant, and equipment, net  244,909   245,910 
Goodwill  102,582   102,909 
Other assets  36,208   38,064 
         
Total assets $1,324,830  $1,328,096 
         
Liabilities      
Current liabilities:      
Current portion of debt $31,676  $36,194 
Accounts payable  100,813   100,735 
Accrued wages and other employee costs  30,070   41,595 
Other current liabilities  61,601   59,545 
         
Total current liabilities  224,160   238,069 
         
Long-term debt, less current portion  205,000   205,250 
Pension liabilities  18,461   20,070 
Postretirement benefits other than pensions  21,368   21,486 
Environmental reserves  21,832   21,842 
Deferred income taxes  23,100   24,556 
Other noncurrent liabilities  3,107   1,389 
         
Total liabilities  517,028   532,662 
         
Equity        
Mueller Industries, Inc. stockholders’ equity:        
Preferred stock - $1.00 par value; shares authorized 5,000,000; none outstanding  —   — 
Common stock - $.01 par value; shares authorized 100,000,000; issued 80,183,004; outstanding 56,943,098 in 2015 and 56,901,445 in 2014  802   802 
Additional paid-in capital  269,636   268,575 
Retained earnings  1,010,505   992,798 
Accumulated other comprehensive loss  (49,429)  (42,923)
Treasury common stock, at cost  (456,651)  (457,102)
         
Total Mueller Industries, Inc. stockholders’ equity  774,863   762,150 
Noncontrolling interest  32,939   33,284 
         
Total equity  807,802   795,434 
         
Commitments and contingencies  —   — 
         
Total liabilities and equity $1,324,830  $1,328,096 
         
See accompanying notes to condensed consolidated financial statements. 
5
Index

MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

  For the Quarter Ended 
    
 (In thousands) March 28, 2015  March 29, 2014 
       
     
Cash flows from operating activities        
Consolidated net income $22,340  $24,954 
Reconciliation of consolidated net income to net cash provided by (used in) operating activities:        
Depreciation and amortization  8,015   8,165 
Stock-based compensation expense  1,349   1,194 
Loss (gain) on disposal of properties  1   (1,413)
Deferred income taxes  (570)  (1,484)
Income tax benefit from exercise of stock options  (69)  (156)
Changes in assets and liabilities, net of business acquired:        
Receivables  (36,692)  (49,482)
Inventories  7,534   (10,055)
Other assets  9,257   (14,467)
Current liabilities  (7,389)  (1,337)
Other liabilities  (131)  (989)
Other, net  245   398 
         
Net cash provided by (used in) operating activities  3,890   (44,672)
         
Cash flows from investing activities        
Acquisition of business  —   (30,137)
Capital expenditures  (7,392)  (9,199)
Net (deposits into) withdrawals from restricted cash  (12,593)  1,771 
Proceeds from the sale of assets  492   4,833 
         
Net cash used in investing activities  (19,493)  (32,732)
         
Cash flows from financing activities        
Repayments of long-term debt  (250)  (250)
Dividends paid to stockholders of Mueller Industries, Inc.  (4,216)  (4,196)
Repayment of debt by joint venture, net  (3,817)  (1,407)
Issuance of debt  —   4,373 
Net cash received to settle stock-based awards  93   224 
Income tax benefit from exercise of stock options  69   156 
         
Net cash used in financing activities  (8,121)  (1,100)
         
Effect of exchange rate changes on cash  (1,516)  179 
         
Decrease in cash and cash equivalents  (25,240)  (78,325)
Cash and cash equivalents at the beginning of the period  352,134   311,800 
         
         
Cash and cash equivalents at the end of the period $326,894  $233,475 
         
         
See accompanying notes to condensed consolidated financial statements.
(In thousands, except share data) April 2, 2016  December 26, 2015 
Assets      
Current assets:      
Cash and cash equivalents $270,149  $274,844 
Accounts receivable, less allowance for doubtful accounts of $496 in 2016 and $623 in 2015  275,881   251,571 
Inventories  240,608   239,378 
Other current assets  34,123   34,608 
         
Total current assets  820,761   800,401 
         
Property, plant, and equipment, net  278,481   280,224 
Goodwill, net  121,112   120,252 
Intangible assets, net  40,617   40,636 
Investment in unconsolidated affiliates  68,822   65,900 
Other assets  31,227   31,388 
         
Total assets $1,361,020  $1,338,801 
         
Liabilities        
Current liabilities:        
Current portion of debt $4,583  $11,760 
Accounts payable  98,324   88,051 
Accrued wages and other employee costs  27,974   35,636 
Other current liabilities  71,727   73,982 
         
Total current liabilities  202,608   209,429 
         
Long-term debt, less current portion  206,000   204,250 
Pension liabilities  16,319   17,449 
Postretirement benefits other than pensions  17,396   17,427 
Environmental reserves  20,932   20,943 
Deferred income taxes  8,310   7,161 
Other noncurrent liabilities  2,973   2,440 
         
Total liabilities  474,538   479,099 
         
Equity        
Mueller Industries, Inc. stockholders' equity:        
Preferred stock - $1.00 par value; shares authorized 5,000,000; none outstanding  —   — 
Common stock - $.01 par value; shares authorized 100,000,000; issued 80,183,004; outstanding 57,126,707 in 2016 and 57,158,608 in 2015  802   802 
Additional paid-in capital  273,576   271,158 
Retained earnings  1,087,927   1,063,543 
Accumulated other comprehensive loss  (53,547)  (54,990)
Treasury common stock, at cost  (453,954)  (453,228)
         
Total Mueller Industries, Inc. stockholders' equity  854,804   827,285 
Noncontrolling interest  31,678   32,417 
         
Total equity  886,482   859,702 
         
Commitments and contingencies  —   — 
         
Total liabilities and equity $1,361,020  $1,338,801 
         
See accompanying notes to condensed consolidated financial statements. 
65

Index
INDEX
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

  For the Quarter Ended 
 (In thousands) April 2, 2016  March 28, 2015 
    
Cash flows from operating activities      
Consolidated net income $28,665  $22,340 
Reconciliation of consolidated net income to net cash provided by operating activities:        
Depreciation and amortization  9,011   8,015 
Stock-based compensation expense  1,236   1,349 
Equity in earnings of unconsolidated affiliates  (2,922)  — 
(Gain) loss on disposal of properties  (23)  1 
Deferred income taxes  1,895   (570)
Income tax benefit from exercise of stock options  (96)  (69)
Changes in assets and liabilities:        
Receivables  (25,089)  (36,692)
Inventories  (1,631)  7,534 
Other assets  (370)  9,257 
Current liabilities  655   (7,389)
Other liabilities  (704)  (131)
Other, net  (291)  245 
         
Net cash provided by operating activities  10,336   3,890 
         
Cash flows from investing activities        
Capital expenditures  (5,892)  (7,392)
Net withdrawals from (deposits into) restricted cash  84   (12,593)
Proceeds from the sale of assets  1   492 
         
Net cash used in investing activities  (5,807)  (19,493)
         
Cash flows from financing activities        
Repayments of long-term debt  (250)  (250)
Dividends paid to stockholders of Mueller Industries, Inc.  (4,236)  (4,216)
Repayment of debt by joint venture, net  (7,024)  (3,817)
Issuance of debt  2,000   — 
Net cash received to settle stock-based awards  361   93 
Income tax benefit from exercise of stock options  96   69 
         
Net cash used in financing activities  (9,053)  (8,121)
         
Effect of exchange rate changes on cash  (171)  (1,516)
         
Decrease in cash and cash equivalents  (4,695)  (25,240)
Cash and cash equivalents at the beginning of the period ��274,844   352,134 
         
Cash and cash equivalents at the end of the period $270,149  $326,894 
         
See accompanying notes to condensed consolidated financial statements. 
6
INDEX
MUELLER INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

General

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted.  Results of operations for the interim periods presented are not necessarily indicative of results which may be expected for any other interim period or for the year as a whole.  This Quarterly Report on Form 10-Q should be read in conjunction with the Company’sCompany's Annual Report on Form 10-K, including the annual financial statements incorporated therein.

The accompanying unaudited interim financial statements include all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods included herein.  The fiscal quarter ended April 2, 2016 contained 14 weeks, while the fiscal quarter ended March 28, 2015 contained 13 weeks.

Note 1 – Earnings per Common Share

Basic per share amounts have been computed based on the average number of common shares outstanding.  Diluted per share amounts reflect the increase in average common shares outstanding that would result from the assumed exercise of outstanding stock options and vesting of restricted stock awards, computed using the treasury stock method.  Approximately 579 thousand and 180 thousand stock-based awards were excluded from the computation of diluted earnings per share for the quarterquarters ended April 2, 2016 and March 28, 2015, respectively, because they were antidilutive.

Note 2 – Commitments and Contingencies–Segment Information

TheDuring the first quarter of 2016, the Company is involved in certain litigationmade changes to its management reporting structure as a result of claims that arosea change in the ordinary course ofway the Chief Executive Officer, who serves as the Chief Operating Decision Maker, manages and evaluates the business, which management believes will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.  The Company may also realize the benefit of certain legal claimsmakes key operating decisions, and litigation in the future; these gain contingencies are not recognized in the Condensed Consolidated Financial Statements.

United States Department of Commerce Antidumping Review
On December 23, 2009, the Department of Commerce (DOC) initiated an antidumping administrative review of the antidumping duty order covering circular welded non-alloy steel pipe and tube from Mexico for the November 1, 2008  through October 31, 2009 period of review.  The DOC selected Mueller Comercial de Mexico, S. de R.L. de C.V. (Mueller Comercial) as a respondent in the review.  On June 21, 2011, the DOC published the final results of the review and assigned Mueller Comercial an antidumping duty rate of 19.8 percent.  On August 22, 2011,allocates resources.  Previously, the Company appealed the final results to the U.S. Court of International Trade (CIT).  On December 21, 2012, the CIT issued a decision upholding the DOC’s final results in part.  The CIT issued its final judgment on May 2, 2013. On May 6, 2013, the Company appealed the CIT decision to the U.S. Court of Appeals for the Federal Circuit (Federal Circuit).  On May 29, 2014, the Federal Circuit issued its decision vacating the CIT’s decision and remanding the case back to the DOC to reconsider the Company’s rate.  The Company and the United States have reached an agreement to settle the appeal.  In accordance with that agreement, on February 18, 2015, the DOC published the amended final results of the review and assigned Mueller Comercial an amended antidumping rate of 13.70 percent.  The Company anticipates that certain of its subsidiaries will incur antidumping duties on subject imports made during the period of review and, as such, has previously established a reserve of approximately $1.1 million for this matter.
Subsequent to October 31, 2009, Mueller Comercial did not ship subject merchandise to the United States.  Therefore, there is zero antidumping duty liability for periods of review after October 31, 2009.

Guarantees

Guarantees, in the form of letters of credit, are issued by the Company generally to assure the payment of insurance deductibles and certain retiree health benefits.  The terms of the Company’s guarantees are generally one year but are renewable annually as required.  These letters are primarily backed by the Company’s revolving credit facility.  The maximum payments that the Company could be required to make under its guarantees at March 28, 2015 were $10.2 million.

7
Index
Note 3 – Inventories

(In thousands) March 28, 2015  December 27, 2014 
       
Raw materials and supplies $53,327  $53,586 
Work-in-process  30,912   39,707 
Finished goods  167,033   168,481 
Valuation reserves  (4,877)  (5,189)
         
Inventories $246,395  $256,585 
         
         
Note 4 – Industry Segments

The Company’shad two reportable segments aresegments: Plumbing & Refrigeration and Original Equipment Manufacturers (OEM).  For disclosure purposes, as permitted under Accounting Standards Codification (ASC) 280, Segment ReportingOEM.  During the quarter, the Company realigned its operating segments into three reportable segments: Piping Systems, Industrial Metals, and Climate.  ,Management has recast certain prior period amounts to conform the current period presentation. Each of the reportable segments is composed of certain operating segments that are aggregated into reportable segments.  The Plumbing & Refrigeration segmentprimarily by the nature of products offered as follows:

Piping Systems

Piping Systems is composed of Standard Products (SPD),the following operating segments: Domestic Piping Systems Group, Canadian Operations, European Operations, Trading Group, and Mexican Operations.Mueller-Xingrong, the Company's Chinese joint venture.  The OEM segment is composed of Industrial Products (IPD), Engineered Products (EPD), and Jiangsu Mueller–Xingrong Copper Industries Limited (Mueller-Xingrong).  These segments are classified primarily by the markets for their products.  Performance of segments is generally evaluated by their operating income.  

SPDDomestic Piping Systems Group manufactures copper tube and fittings, plastic fittings, and line sets.  These products are manufactured in the U.S.   SPD alsoOutside the U.S., the Canadian Operations manufacture copper tube and line sets in Canada and sell the products primarily in the U.S. and Canada, and the European Operations manufacture copper tube, which is sold primarily in Europe.  The Trading Group manufactures pipe nipples and imports and resells brass and plastic plumbing valves, malleable iron fittings, faucets, and plumbing specialty products.  Outsideproducts in the U.S., the Company’s European Operations manufacture and Mexico.  Mueller-Xingrong manufactures engineered copper tube which is sold primarily for air-conditioning applications in Europe.  Mexican Operations consist of pipe nipple manufacturing and import distribution businesses including product lines of malleable iron fittings and other plumbing specialties.China.  The Plumbing & Refrigeration segment’sPiping System segment's products are sold primarily to plumbing, refrigeration, and air-conditioning wholesalers, hardware wholesalers and co-ops, and building product retailers. For the quarter ended March 29, 2014, cost of goods sold included a decrease in accruals related to import duties of $3.1 million.retailers, and air-conditioning OEMs.

IPD manufacturesIndustrial Metals

Industrial Metals is composed of the following operating segments: Brass Rod & Copper Bar Products, Impacts & Micro Gauge, and Brass Value-Added Products.  These businesses manufacture brass rod, impact extrusions, and forgings, as well as a wide variety of end products including plumbing brass, automotive components, valves, fittings, and fittings.  EPD manufacturesgas assemblies.  These products are manufactured in the U.S. and fabricatessold primarily to OEMs in the U.S, many of which are in the industrial, construction, heating, ventilation, and air-conditioning, plumbing, and refrigeration markets.

7
INDEX
Climate

Climate is composed of the following operating segments: Refrigeration Products, Fabricated Tube Products, Westermeyer, and Turbotec.  These domestic businesses manufacture and fabricate valves and assemblies primarily for the heating, ventilation, air-conditioning, and refrigeration air-conditioning, gas appliance, and barbecue grill markets and specialty copper, copper-alloy, and aluminum tube.  Mueller-Xingrong manufactures engineered copper tube primarily for air-conditioning applications.  These products are sold primarily to OEM customers.in the U.S.

8
Index

Summarized segment information is as follows:

 For the Quarter Ended March 28, 2015 
    For the Quarter Ended April 2, 2016 
(In thousands) Plumbing & Refrigeration Segment 
OEM
Segment
 Corporate and Eliminations Total  Piping Systems  Industrial Metals  Climate  Corporate and Eliminations  Total 
         
                        
Net sales $305,017 $235,317 $(3,092) $537,242  $368,890  $134,521  $30,706  $(1,308) $532,809 
                             
Cost of goods sold 260,463 203,433 (3,062) 460,834   313,792   109,229   23,705   (84)  446,642 
Depreciation and amortization 4,523 2,855 475 7,853   5,649   2,135   599   537   8,920 
Selling, general, and administrative expense  20,540  6,481  5,810  32,831   18,290   3,245   2,523   11,722   35,780 
                             
Operating income 19,491 22,548 (6,315) 35,724   31,159   19,912   3,879   (13,483)  41,467 
                             
Interest expense       (2,076)                  (1,848)
Other income, net        105                   245 
                             
Income before income taxes       $33,753 
         
         
Income before taxes                 $39,864 

 For the Quarter Ended March 29, 2014 
    For the Quarter Ended March 28, 2015 
(In thousands) Plumbing & Refrigeration Segment 
OEM
Segment
 Corporate and Eliminations Total  Piping Systems  Industrial Metals  Climate  Corporate and Eliminations  Total 
         
                        
Net sales $338,027 $240,030 $(3,683) $574,374  $361,482  $151,036  $25,811  $(1,087) $537,242 
           ��                 
Cost of goods sold 289,025 210,403 (3,651) 495,777   312,690   127,724   21,267   (847)  460,834 
Depreciation and amortization 4,420 3,083 604 8,107   5,187   1,655   425   586   7,853 
Selling, general, and administrative expense  20,697  5,258  6,228  32,183   17,346   2,698   1,854   10,933   32,831 
                             
Operating income 23,885 21,286 (6,864) 38,307   26,259   18,959   2,265   (11,759)  35,724 
                             
Interest expense       (1,026)                  (2,076)
Other income, net        88                   105 
                             
Income before income taxes       $37,369 
         
         
Income before taxes                 $33,753 






98
INDEX
 
(In thousands) April 2, 2016  December 26, 2015 
       
Segment assets:      
Piping Systems $815,400  $811,343 
Industrial Metals  193,662   174,897 
Climate  41,172   39,876 
General Corporate  310,786   312,685 
         
  $1,361,020  $1,338,801 
Note 3 – Inventories

(In thousands) April 2, 2016  December 26, 2015 
       
Raw materials and supplies $53,983  $58,987 
Work-in-process  37,656   25,161 
Finished goods  154,592   161,410 
Valuation reserves  (5,623)  (6,180)
         
Inventories $240,608  $239,378 
         

Note 4 – Derivative Instruments and Hedging Activities

The Company's earnings and cash flows are subject to fluctuations due to changes in commodity prices, foreign currency exchange rates, and interest rates.  The Company uses derivative instruments such as commodity futures contracts, foreign currency forward contracts, and interest rate swaps to manage these exposures.

All derivatives are recognized in the Condensed Consolidated Balance Sheets at their fair value.  On the date the derivative contract is entered into, it is either a) designated as (i) a hedge of a forecasted transaction or the variability of cash flow to be paid (cash flow hedge), or (ii) a hedge of the fair value of a recognized asset or liability (fair value hedge) or b) not designated in a hedge accounting relationship, even though the derivative contract was executed to mitigate an economic exposure, as the Company does not enter into derivative contracts for trading purposes (economic hedge).  Changes in the fair value of a derivative instrument that is qualified, designated and highly effective as a cash flow hedge are recorded in accumulated other comprehensive income (AOCI), to the extent effective, until they are reclassified to earnings in the same period or periods during which the hedged transaction affects earnings.  Changes in the fair value of a derivative instrument that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged recognized asset or liability that is attributable to the hedged risk, are recorded in current earnings.  Changes in the fair value of undesignated derivative instruments and the ineffective portion of designated derivative instruments are reported in current earnings.

The Company documents all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions.  This process includes linking all derivatives that are designated as fair value hedges to specific assets and liabilities in the Condensed Consolidated Balance Sheets and linking cash flow hedges to specific forecasted transactions or variability of cash flow.

The Company also assesses, both at the hedge's inception and on an ongoing basis, whether the designated derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow or fair values of hedged items.  When a derivative is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable of occurring, hedge accounting is discontinued prospectively, in accordance with the derecognition criteria for hedge accounting.

Commodity Futures Contracts

Copper and brass represent the largest component of the Company's variable costs of production.  The cost of these materials is subject to global market fluctuations caused by factors beyond the Company's control.  The Company occasionally enters into forward fixed-price arrangements with certain customers; the risk of these arrangements is generally managed with commodity futures contracts.   These futures contracts have been designated as cash flow hedges.  

At April 2, 2016, the Company held open futures contracts to purchase approximately $23.7 million of copper over the next nine months related to fixed price sales orders.  The fair value of those futures contracts was a $21 thousand net gain position, which was determined by obtaining quoted market prices (level 1 within the fair value hierarchy).  In the next twelve months, the Company will reclassify into earnings realized gains or losses relating to cash flow hedges.  At April 2, 2016, this amount was approximately $105 thousand of deferred net losses, net of tax.

The Company may also enter into futures contracts to protect the value of inventory against market fluctuations.  At April 2, 2016, the Company held open futures contracts to sell approximately $21.0 million of copper over the next four months related to copper inventory. The fair value of those futures contracts was a $307 thousand loss position, which was determined by obtaining quoted market prices (level 1 within the fair value hierarchy).  

9
IndexINDEX
Foreign Currency Forward Contracts

The Company has entered into certain contracts to purchase heavy machinery and equipment denominated in euros.
In anticipation of entering into these contracts, the Company entered into forward contracts to purchase euros to protect itself against adverse foreign exchange rate fluctuations.  

At April 2, 2016, the Company held open forward contracts to purchase approximately 2.7 million euros over the next eight months.  The fair value of these contracts, which was determined by obtaining quoted market prices (level 1 within the fair value hierarchy), was an $88 thousand gain position. At April 2, 2016, there was $184 thousand of deferred net gains, net of tax, included in AOCI that are expected to be reclassified into depreciation expense over the useful life of the heavy machinery and equipment.

Interest Rate Swap

On February 20, 2013, the Company entered into a two-year forward-starting interest rate swap agreement with an effective date of January 12, 2015, and an underlying notional amount of $200.0 million, pursuant to which the Company receives variable interest payments based on one-month LIBOR and pays fixed interest at a rate of 1.4 percent.  Based on the Company's current variable premium pricing on its Term Loan Facility, the all-in fixed rate as of the effective date is 2.7 percent.  The interest rate swap will mature on December 11, 2017, and is structured to offset the interest rate risk associated with the Company's floating-rate, LIBOR-based Term Loan Facility Agreement.  The swap was designated and accounted for as a cash flow hedge from inception.

The fair value of the interest rate swap is estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rate and the expected cash flows at the current market interest rate using observable benchmarks for LIBOR forward rates at the end of the period (level 2 within the fair value hierarchy).  Interest payable and receivable under the swap agreement is accrued and recorded as an adjustment to interest expense.  The fair value of the interest rate swap was a $2.3 million loss position at April 2, 2016, and there was $1.5 million of deferred net losses, net of tax, included in AOCI that are expected to be reclassified into interest expense over the term of the hedged item.



10
INDEX
The Company presents its derivative assets and liabilities in our Condensed Consolidated Balance Sheets on a net basis by counterparty. The following table summarizes the location and fair value of the derivative instruments and disaggregates our net derivative assets and liabilities into gross components on a contract-by-contract basis:

 Asset Derivatives Liability Derivatives 
    Fair Value   Fair Value 
(In thousands)Balance Sheet Location April 2, 2016  December 26, 2015 Balance Sheet Location April 2, 2016  December 26, 2015 
Hedging instrument:              
  Commodity contracts - gainsOther current assets $654  $60 Other current liabilities $122  $238 
  Commodity contracts - lossesOther current assets  (82)  — Other current liabilities  (979)  (1,864)
  Foreign currency contracts - gainsOther current assets  88   — Other current liabilities  —   34 
  Foreign currency contracts - lossesOther current assets  —   — Other current liabilities  —   (75)
  Interest rate swapOther assets  —   — Other liabilities  (2,319)  (1,692)
                   
Total derivatives (1)
  $660  $60   $(3,176) $(3,359)
                   
(1) Does not include the impact of cash collateral provided to counterparties.
 

The following tables summarize the effects of derivative instruments in our Condensed Consolidated Statements of Income:
    Three Months Ended 
(In thousands)Location April 2, 2016 March 28, 2015 
Fair value hedges:      
  (Loss) gain on commodity contracts (qualifying)Cost of goods sold $(50) $213 
  Gain (loss) on hedged item - InventoryCost of goods sold  62   (247)
          
Undesignated derivatives:         
  Gain on commodity contracts (nonqualifying)Cost of goods sold $494  $234 

The following tables summarize amounts recognized in and reclassified from AOCI during the period:

  Three Months Ended April 2, 2016 
(In thousands) Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax Classification Gains (Losses) 
Loss (Gain)
Reclassified from AOCI (Effective Portion), Net of Tax
 
Cash flow hedges:       
Commodity contracts $873 Cost of goods sold $68 
Foreign currency contracts  66 Depreciation expense  — 
Interest rate swap  (470)Interest expense  69 
Other  (12)Other  — 
Total $457 Total $137 

11
INDEX
  Three Months Ended March 28, 2015 
(In thousands) Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax Classification Gains (Losses) 
Loss (Gain)
Reclassified from AOCI (Effective Portion), Net of Tax
 
Cash flow hedges:       
Commodity contracts $274 Cost of goods sold $571 
Foreign currency contracts  (55)Depreciation expense  — 
Interest rate swap  (1,032)Interest expense  68 
Other  (24)Other  — 
Total $(837)Total $639 

The Company enters into futures and forward contracts that closely match the terms of the underlying transactions.  As a result, the ineffective portion of the open hedge contracts through April 2, 2016 was not material to the Condensed Consolidated Statements of Income.

The Company primarily enters into International Swaps and Derivatives Association master netting agreements with major financial institutions that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits the Company or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions.  The master netting agreements generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.  The Company does not offset fair value amounts for derivative instruments and fair value amounts recognized for the right to reclaim cash collateral.  At April 2, 2016 and December 26, 2015, the Company had recorded restricted cash in other current assets of $2.7 million and $2.6 million, respectively, as collateral related to open derivative contracts under the master netting arrangements.

Note 5 –Benefits– Investment in Unconsolidated Affiliates

The Company owns a 50 percent interest in Tecumseh Products Holdings LLC (Joint Venture), an unconsolidated affiliate that acquired Tecumseh Products Company (Tecumseh) during 2015.  The Company also owns 50 percent interest in a second unconsolidated affiliate that provided financing to Tecumseh in conjunction with the acquisition.  These investments are accounted for using the equity method of accounting as the Company can exercise significant influence but does not own a majority equity interest or otherwise control the repective entities.  Under the equity method of accounting, these investments are stated at initial cost and are adjusted for subsequent additional investments and the Company's  proportionate share of earnings or losses and distributions.

The Company records its proportionate share of the investee's net income or loss one quarter in arrears as income (loss) from unconsolidated affiliates in the Condensed Consolidated Statements of Income.   

The following tables present summarized financial information derived from the Company's equity method investees' combined consolidated financial statements, which are prepared in accordance with U.S. GAAP.  

(In thousands) December 31, 2015 September 30, 2015 
      
Current assets $225,500  $251,389 
Noncurrent assets  118,600   112,156 
Current liabilities  138,781   178,784 
Noncurrent liabilities  71,700   63,643 
         
 
 
 
 
        
12
INDEX
       
       
 For the Quarter Ended 
(In thousands)December 31, 2015 September 30, 2015 
       
Net sales $151,600  $— 
Gross profit  18,000   — 
Net income  5,843   — 

Included in the equity method investees' net income for the quarter ended December 31, 2015 is a gain of $17.1 million that resulted from the allocation of the purchase price, which was finalized during the quarter.  That gain was offset by restructuring and impairment charges of $5.3 million and operating losses of $6.0 million.

Note 6 – Benefits Plans

The Company sponsors several qualified and nonqualified pension plans and other postretirement benefit plans for certain of its employees.  The components of net periodic benefit cost (income) are as follows:

 For the Quarter Ended 
    For the Quarter Ended 
(In thousands) March 28, 2015 March 29, 2014  April 2, 2016  March 28, 2015 
     
      
Pension benefits:            
Service cost $272 $222  $195  $272 
Interest cost 2,054 2,068   1,975   2,054 
Expected return on plan assets (2,654) (3,201)  (2,466)  (2,654)
Amortization of net loss  714  188   774   714 
             
Net periodic benefit cost (income) $386  $(723)
Net periodic benefit cost $478  $386 
             
Other benefits:             
Service cost $96 $89  $62  $96 
Interest cost 196 177   156   196 
Amortization of prior service cost 2 — 
Amortization of net loss (gain)  3   (64)
Amortization of prior service (credit) cost  (224)  2 
Amortization of net loss  2   3 
             
Net periodic benefit cost $297 $202 
Net periodic benefit (income) cost $(4) $297 
             
     
Note 6 – Income Taxes

The Company’s effective tax rate for the first quarter of 2015 was 34 percent compared with 33 percent for the same period last year.  The difference between the effective tax rate and the amount computed using the U.S. federal statutory tax rate for the first quarter of 2015 was primarily attributable to reductions for the U.S. production activities deduction of $1.0 million and the effect of foreign tax rates lower than statutory tax rates of $0.5 million.  These items were partially offset by the provision for state income taxes, net of the federal benefit, of $0.8 million.

For the first quarter of 2014, the difference between the effective tax rate and what would be computed using the U.S. federal statutory tax rate was attributable to reductions related to the U.S. production activities deduction of $1.2 million and decreases in valuation allowances of $0.9 million. These items were partially offset by the provision for state income taxes, net of the federal benefit, of $1.3 million.

The Company files a consolidated U.S. federal income tax return and numerous consolidated and separate-company income tax returns in many state, local, and foreign jurisdictions.  The statute of limitations is open for the Company’s federal tax return and most state income tax returns for 2011 and all subsequent years and is open for certain state and foreign returns for earlier tax years due to ongoing audits and differing statute periods.  The Internal Revenue Service has audited the 2012 federal income tax return, the results of which were immaterial to the Company’s financial position, results of operations, and cash flows.  While the Company believes that it is adequately reserved for possible future audit adjustments, the final resolution of these examinations cannot be determined with certainty and could result in final settlements that differ from current estimates.

Note 7 – Derivative InstrumentsCommitments and Hedging ActivitiesContingencies

The Company’s earningsCompany is involved in certain litigation as a result of claims that arose in the ordinary course of business, which management believes will not have a material adverse effect on the Company's financial position, results of operations, or cash flows.  It may also realize the benefit of certain legal claims and cash flowslitigation in the future; these gain contingencies are subject to fluctuations due to changes in commodity prices, foreign currency exchange rates, and interest rates. The Company uses derivative instruments such as commodity futures contracts, foreign currency forward contracts, and interest rate swaps to manage these exposures.

10
Index
All derivatives arenot recognized in the Condensed Consolidated Balance Sheets at their fair value. OnFinancial Statements.

Guarantees

Guarantees, in the dateform of letters of credit, are issued by the derivative contract is entered into, it is designated as (i) a hedgeCompany generally to assure the payment of a forecasted transaction or the variability of cash flow to be paid (cash flow hedge), or (ii) a hedgeinsurance deductibles and certain retiree health benefits.  The terms of the fair valueguarantees are generally one year but are renewable annually as required.  These letters are primarily backed by the Company's revolving credit facility.  The maximum payments that the Company could be required to make under its guarantees at April 2, 2016 were $6.6 million.

Note 8 – Income Taxes

The Company's effective tax rate for the first quarter of a recognized asset or liability (fair value hedge). Changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge are recorded in accumulated other comprehensive income (AOCI), to the extent effective, until they are reclassified to earnings in2016 was 35 percent compared with 34 percent for the same period or periods during whichlast year.  The items impacting the hedged transaction affects earnings. Changes ineffective tax rate for the fair valuefirst quarter of a derivative that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged recognized asset or liability that is2016 were primarily attributable to reductions for the hedged risk, are recorded in current earnings.  Changes in the fair valueU.S. production activities deduction of undesignated derivative instruments$0.9 million and the ineffective portioneffect of designated derivative instruments are reportedforeign tax rates lower than statutory tax rates of $1.1 million.  These items were partially offset by the provision for state income taxes, net of the federal benefit, of $0.8 million and the recording of the basis difference in  current earnings.unconsolidated affiliates of $1.0 million.

13
INDEX
The difference between the effective tax rate and the amount computed using the U.S. federal statutory tax rate for the first quarter of 2015 was primarily attributable to reductions for the U.S. production activities deduction of $1.0 million and the effect of foreign tax rates lower than statutory tax rates of $0.5 million.  These items were partially offset by the provision for state income taxes, net of the federal benefit, of $0.8 million.

The Company documentsfiles a consolidated U.S. federal income tax return and numerous consolidated and separate-company income tax returns in many state, local, and foreign jurisdictions.  The statute of limitations is open for the Company's federal tax return and most state income tax returns for 2012 and all relationships between hedging instrumentssubsequent years and hedged items, as well asis open for certain state and foreign returns for earlier tax years due to ongoing audits and differing statute periods.  The Internal Revenue Service is currently auditing the risk-management objectiveCompany's 2013 federal tax return.  While the Company believes that it is adequately reserved for possible future audit adjustments, the final resolution of these examinations cannot be determined with certainty and strategy for undertaking various hedge transactions. This process includes linking all derivativescould result in final settlements that are designated as fair value hedges to specific assets and liabilities in the Condensed Consolidated Balance Sheets and linking cash flow hedges to specific forecasted transactions or variability of cash flow.differ from current estimates.

The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the designated derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow or fair values of hedged items.  When a derivative is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable of occurring, hedge accounting is discontinued prospectively, in accordance with the derecognition criteria for hedge accounting.

Commodity Futures Contracts

Copper and brass represent the largest component of the Company’s variable costs of production.  The cost of these materials is subject to global market fluctuations caused by factors beyond the Company’s control.  The Company occasionally enters into forward fixed-price arrangements with certain customers; the risk of these arrangements is generally managed with commodity futures contracts.   These futures contracts have been designated as cash flow hedges.  

At March 28, 2015, the Company held open futures contracts to purchase approximately $32.4 million of copper over the next nine months related to fixed price sales orders.  The fair value of those futures contracts was a $354 thousand net gain position, which was determined by obtaining quoted market prices (Level 1 hierarchy as defined by ASC 820, Fair Value Measurements and Disclosures (ASC 820)). In the next twelve months, the Company will reclassify into earnings realized gains or losses relating to cash flow hedges. At March 28, 2015, this amount was approximately $317 thousand of deferred net gains, net of tax.

The Company may also enter into futures contracts to protect the value of inventory against market fluctuations.   These futures contracts have been designated as fair value hedges.  

At March 28, 2015, the Company held open futures contracts to sell approximately $20.1 million of copper over the next four months related to copper inventory. The fair value of those futures contracts was a $181 thousand gain position, which was determined by obtaining quoted market prices (Level 1 hierarchy as defined by ASC 820).  

Foreign Currency Forward Contracts

The Company has entered into certain contracts to purchase heavy machinery and equipment denominated in euros. In anticipation of entering into these contracts, the Company entered into forward contracts to purchase euros to protect itself against adverse foreign exchange rate fluctuations.  

At March 28, 2015, the Company held open forward contracts to purchase approximately 326 thousand euros over the next four months.  The fair value of these contracts, which was determined by obtaining quoted market prices (Level 1 hierarchy as defined by ASC 820), was a $9 thousand loss position. At March 28, 2015, there was $101 thousand of deferred gains, net of tax, included in AOCI that are expected to be reclassified into depreciation expense over the useful life of the heavy machinery and equipment.

11
Index
Interest Rate Swap

On February 20, 2013, the Company entered into a two-year forward-starting interest rate swap agreement with an effective date of January 12, 2015, and an underlying notional amount of $200.0 million, pursuant to which the Company receives variable interest payments based on one-month LIBOR and pays fixed interest at a rate of 1.4 percent.  Based on the Company’s current variable premium pricing on its Term Loan Facility, the all-in fixed rate on the effective date was 2.7 percent.  The interest rate swap will mature on December 11, 2017, and is structured to offset the interest rate risk associated with the Company’s floating-rate, LIBOR-based Term Loan Facility Agreement.  The swap was designated and accounted for as a cash flow hedge from inception.

The fair value of the interest rate swap is estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rate and the expected cash flows at the current market interest rate using observable benchmarks for LIBOR forward rates at the end of the period (Level 2 hierarchy as defined by ASC 820).  Interest payable and receivable under the swap agreement is accrued and recorded as an adjustment to interest expense.  The fair value of the interest rate swap was a $2.4 million loss position at March 28, 2015, and there was $1.6 million of deferred net losses, net of tax, included in AOCI that are expected to be reclassified into interest expense over the term of the hedged item.

We present our derivative assets and liabilities in our Condensed Consolidated Balance Sheets on a net basis by counterparty. The following table summarizes the location and fair value of the derivative instruments and disaggregates our net derivative assets and liabilities into gross components on a contract-by-contract basis:

 Asset Derivatives Liability Derivatives 
     
   Fair Value   Fair Value 
         
(In thousands)Balance Sheet Location March 28, 2015  December 27, 2014 Balance Sheet Location March 28, 2015  December 27, 2014 
               
Hedging instrument:              
  Commodity contracts - gainsOther current assets $941  $99 Other current liabilities $310  $15 
  Commodity contracts - lossesOther current assets  (102)  (4)Other current liabilities  (614)  (832)
  Foreign currency contractsOther current assets  —   — Other current liabilities  (9)  (81)
  Interest rate swapOther assets  —   — Other liabilities  (2,436)  (927)
                   
Total derivatives (1)
  $839  $95   $(2,749) $(1,825)
                   
                   
(1) Does not include the impact of cash collateral provided to counterparties.
 

The following tables summarize the effects of derivative instruments in our Condensed Consolidated Statements of Income:
   Three Months Ended 
     
(In thousands)Location March 28, 2015  March 29, 2014 
        
Fair value hedges:       
  Gain on commodity contracts (qualifying)Cost of goods sold $213  $6,291 
  Loss on hedged item - InventoryCost of goods sold  (247)  (5,800)
          
Undesignated derivatives:         
  Gain on commodity contracts (nonqualifying)Cost of goods sold $234  $1,538 


12
Index
The following tables summarize amounts recognized in and reclassified from AOCI during the period:

  Three Months Ended March 28, 2015  
     
(In thousands) Gain (Loss) Recognized in AOCI (Effective Portion), Net of Tax  Classification Gains (Losses)  
Loss (Gain)
Reclassified from AOCI (Effective Portion), Net of Tax
  
           
Cash flow hedges:           
Commodity contracts $274  Cost of goods sold $571  
Foreign currency contracts  (55) Depreciation expense  —  
Interest rate swap  (1,032) Interest expense  68  

  Three Months Ended March 29, 2014  
     
(In thousands) (Loss) Gain Recognized in AOCI (Effective Portion), Net of Tax  Classification Gains (Losses)  
Loss (Gain)
Reclassified from AOCI (Effective Portion), Net of Tax
  
           
Cash flow hedges:           
Commodity contracts $(1,010) Cost of goods sold $291  
Foreign currency contracts  22  Depreciation expense  (174) 
Interest rate swap  (245) Interest expense   —  

The Company enters into futures and forward contracts that closely match the terms of the underlying transactions.  As a result, the ineffective portion of the open hedge contracts through March 28, 2015 was not material to the Condensed Consolidated Statements of Income.

The Company primarily enters into International Swaps and Derivatives Association (ISDA) master netting agreements with major financial institutions that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits the Company or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions. The master netting agreements generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.  The Company does not offset fair value amounts for derivative instruments and fair value amounts recognized for the right to reclaim cash collateral.  At March 28, 2015 and December 27, 2014, the Company had recorded restricted cash in other current assets of $1.7 million and $0.5 million, respectively, as collateral related to open derivative contracts under the master netting arrangements.



13
Index
Note 89 – Accumulated Other Comprehensive Income

AOCI includes certain foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, net deferred gains and losses on certain derivative instruments accounted for as cash flow hedges, adjustments to pension and OPEB liabilities, and unrealized gains and losses on marketable securities classified as available-for-sale.

The following table provides changes in AOCI by component, net of taxes and noncontrolling interest (amounts in parentheses indicate debits to AOCI):

For the Quarter Ended March 28, 2015 
   For the Quarter Ended April 2, 2016 
(In thousands)Cumulative Translation Adjustment Unrealized (Losses)/Gains on Derivatives Minimum Pension/OPEB Liability Adjustment Unrealized Gains on Equity Investments Total  Cumulative Translation Adjustment  Unrealized (Losses)/Gains on Derivatives  Minimum Pension/OPEB Liability Adjustment  Unrealized Gains on Equity Investments  Total 
                         
           
Balance at December 27, 2014 $(7,076)  $(953)  $(35,164)  $270  $(42,923)
Balance at December 26, 2015 $(24,773) $(2,009) $(28,429) $221  $(54,990)
                                
Other comprehensive income (loss) before reclassifications (7,697) (837) 895 (27) (7,666)  (337)  457   760   14   894 
Amounts reclassified from accumulated OCI —  639  521  —   1,160   —   137   412   —   549 
                               
Net current-period other comprehensive income (7,697)   (198)   1,416  (27)  (6,506)  (337)  594   1,172   14   1,443 
                               
Balance at March 28, 2015 $(14,773)  $ (1,151)  $ (33,748)   $243  $(49,429)
           
Balance at April 2, 2016 $(25,110) $(1,415) $(27,257) $235  $(53,547)

 For the Quarter Ended March 29, 2014 
   
(In thousands)Cumulative Translation Adjustment  Unrealized (Losses)/Gains on Derivatives  Minimum Pension/OPEB Liability Adjustment  Unrealized Gains on Equity Investments  Total 
               
                
Balance at December 28, 2013 $ (462)  $1,546  $(12,158)  $255  $(10,819)
                    
Other comprehensive income (loss) before reclassifications 1,162   (1,233)  (107)  (15)  (193)
Amounts reclassified from accumulated OCI —   117   110   —   227 
                    
Net current-period other comprehensive income 1,162   (1,116)   3   (15)  34 
                    
Balance at March 29, 2014 $700  $ 430  $ 
 
(12,155
)   $240   $(10,785)
                    




14
INDEX
 

Index
  For the Quarter Ended March 28, 2015 
(In thousands) Cumulative Translation Adjustment  Unrealized (Losses)/Gains on Derivatives  Minimum Pension/OPEB Liability Adjustment  Unrealized Gains on Equity Investments  Total 
                
Balance at December 27, 2014 $(7,076) $(953) $(35,164) $270  $(42,923)
                     
Other comprehensive income (loss) before reclassifications  (7,697)  (837)  895   (27)  (7,666)
Amounts reclassified from accumulated OCI  —   639   521   —   1,160 
                     
Net current-period other comprehensive income  (7,697)  (198)  1,416   (27)  (6,506)
                     
Balance at March 28, 2015 $(14,773) $(1,151) $(33,748) $243  $(49,429)

 
Reclassification adjustments out of accumulated OCIAOCI were as follows:

 Amount reclassified from AOCI
  
 For the Quarter Ended  Amount reclassified from AOCI
     For the Quarter Ended  
(In thousands) March 28, 2015 March 29, 2014 Affected line item April 2, 2016  March 28, 2015 Affected line item
           
Unrealized losses/(gains) on derivatives:               
Commodity contracts $762 $357 Cost of goods sold $237  $762 Cost of goods sold
Foreign currency contracts 
—
  (276)Depreciation Expense
Interest rate swap 106 — Interest expense  108   106 Interest expense
  (229)  36 Income tax (expense) benefit
 639 117 Net of tax  (208)  (229)Income tax expense
  —  — Noncontrolling interest  137   639 Net of tax
        —   — Noncontrolling interest
 $639 $117 
Net of tax and noncontrolling
  interest
              
       $137  $639 
Net of tax and noncontrolling
  interest
                    
Amortization of net loss and prior service cost on employee benefit plans $719 $124 
Selling, general, and administrative
  expense
 $552  $719 
Selling, general, and administrative
  expense
  (198)  (14)Income tax expense  (140)  (198)Income tax expense
 521 110 Net of tax  412   521 Net of tax
  —  — Noncontrolling interest  —   — Noncontrolling interest
                    
 $521 $110 
Net of tax and noncontrolling
  interest
 $412  $521 
Net of tax and noncontrolling
  interest
      

Note 9 – Acquisitions

On October 18, 2013, the Company entered into a definitive agreement with KME Yorkshire Limited to acquire certain assets and assume certain liabilities of its copper tube business.  Yorkshire Copper Tube (Yorkshire) produces European standard copper distribution tubes.  This transaction received regulatory approval in the United Kingdom on February 11, 2014 and closed on February 28, 2014.  The purchase price was approximately $30.1 million, paid in cash.  The acquisition of Yorkshire complements the Company’s existing copper tube businesses in the Plumbing & Refrigeration segment.  In 2012, Yorkshire had annual revenue of approximately $196.1 million.  During the third quarter of 2014, the purchase price allocation, including all fair value measurements, was finalized.  The fair value of the assets acquired totaled $20.7 million, consisting primarily of inventories of $17.6 million, property, plant, and equipment of $2.1 million, and other current assets of $1.0 million.  The fair value of the liabilities assumed totaled $15.6 million, consisting primarily of accounts payable and accrued expenses of $15.2 million and other current liabilities of $0.4 million.  Of the remaining purchase price, $8.1 million was allocated to tax-deductible goodwill and $16.9 million was allocated to other intangible assets.

The Company expects to recognize approximately $2.7 million of severance costs related to the reorganization of Yorkshire during the remainder of 2015.

On March 30, 2015, subsequent to the end of the first quarter, the Company entered into a Stock Purchase Agreement with Turbotec Products, Inc. (Turbotec) providing for the purchase of all of the outstanding capital stock of Turbotec for approximately $14.2 million in cash, net of working capital adjustments. Turbotec manufactures coaxial heat exchangers and twisted tubes for the HVAC, geothermal, refrigeration, swimming pool heat pump, marine, ice machine, commercial boiler, and heat reclamation markets.  The acquisition of Turbotec complements the Company’s existing refrigeration business, a component of the OEM segment.  For the twelve months ended March 31, 2015, Turbotec’s net sales were approximately $21.8 million.


15
Index

Note 10 – Recently Issued Accounting Standards

In May 2014,March 2016, the Financial Accounting Standards Board (FASB) issued ASU (Accounting Standards Update) No. 2015-09, Compensation – Stock Compensation (Topic 718): Improvement to Employee Share-Based Payment Accounting Standards Update (ASU)(ASU 2016-09).  The ASU requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled.  It will also allow a company to make a policy election to account for forfeitures as they occur.  The guidance is effective for public business entities in interim and fiscal periods beginning after December 15, 2016.  Early adoption is permitted, but all of the guidance must be adopted in the same period.  The Company is in the process of evaluating the impact of ASU 2016-09 on its Condensed Consolidated Financial Statements.

15
INDEX
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02).  ASU 2016-02 requires an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months.  Recognition, measurement and presentation of expenses will depend on classification as a financing or operating lease.  The amendments also require certain quantitative and qualitative disclosures about leasing arrangements.  The ASU will be effective for interim and fiscal periods beginning after December 15, 2018.  Early adoption is permitted.  The updated guidance requires a modified retrospective adoption.  The Company is still evaluating the effects that the provision of ASU 2016-02 will have on its Condensed Consolidated Financial Statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Topic 835-30): Simplifying the Presentation of Debt Issue Costs (ASU 2015-03).  The ASU simplifies the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability rather than as a separate asset.  In circumstances in which there is not an associated debt liability amount recorded in the financial statements when the debt issuance costs are incurred, they will be reported on the balance sheet as an asset until the debt liability is recorded.  The guidance is effective for public business entities in interim and fiscal periods beginning after December 15, 2015.  Retrospective application is required.  The Company adopted ASU 2015-03 effective December 27, 2015.  The adoption of the ASU did not have a material impact on the Company's Condensed Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09).  The ASU will supersede virtually all existing revenue recognition guidance under U.S. GAAP and will be effective for annual reporting periods beginning after December 15, 2016.2017.  The fundamental principles of the new guidance are that companies should recognize revenue in a manner that reflects the timing of the transfer of services to customers and the amount of revenue recognized reflects the consideration that a company expects to receive for the goods and services provided.  The new guidance establishes a five-step approach for the recognition of revenue.  The Company is in the process of evaluating the impact of ASU 2014-09 on its Condensed Consolidated Financial Statements.

Note 11 – Subsequent Event

In February 2016, the Company entered into an agreement providing for the purchase of a 60 percent equity interest in Jungwoo Metal Ind. Co., LTD (Jungwoo) for KRW 25 billion or approximately $22.0 million.  Jungwoo is a manufacturer of copper-based pipe joining products headquartered in Seoul, South Korea and serves markets worldwide.  The transaction was subject to certain closing conditions, including Korean regulatory approval, and was completed on April 26, 2016.

Item 2.
Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations

General Overview

We are a leading manufacturer of plumbing, HVAC, refrigeration,copper, brass, aluminum, and industrialplastic products.  The range of these products is broad:  copper tube and fittings; line sets; brass and copper alloy rod, bar, and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; plastic fittings and valves; refrigeration valves and fittings; fabricated tubular products; and steel nipples.  We also resell imported brass and plastic plumbing valves, malleable iron fittings, faucets and plumbing specialty products.  Mueller’sMueller's operations are located throughout the United States and in Canada, Mexico, Great Britain, and China.

The Company’s businesses
16
INDEX
During the first quarter of 2016, the Company made changes to its management reporting structure as a result of a change in the way the Chief Executive Officer, who serves as the Chief Operating Decision Maker, manages and evaluates the business, makes key operating decisions, and allocates resources.  Previously, the Company had two reportable segments: Plumbing & Refrigeration and OEM.  During the quarter, the Company realigned its operating segments into three reportable segments: Piping Systems, Industrial Metals, and Climate.  Management has recast certain prior period amounts to conform to the current period presentation. Each of the reportable segments is composed of certain operating segments that are aggregated into two reportable segments:primarily by the nature of products offered as follows:

●·Plumbing & Refrigeration:
Piping Systems:  The Plumbing & RefrigerationPiping Systems segment is composed of SPD,Domestic Piping Systems Group, Canadian Operations, European Operations, Trading Group, and Mexican Operations.  SPDMueller-Xingrong, our Chinese joint venture.  The Domestic Piping Systems Group manufactures and sells copper tube, copper and plastic fittings, line sets, and valves in North AmericaAmerica.  The Canadian Operations manufacture copper tube and sourcesline sets in Canada and sells the products for import distributionprimarily in North America.the U.S. and Canada. European Operations manufacture copper tube in the United Kingdom, which is sold throughout Europe.  Mexican Operations consist ofThe Trading Group manufactures pipe nipple manufacturingnipples and sources products for import distribution businesses including product lines of malleable iron fittings and other plumbing specialties.in North America.  Mueller-Xingrong manufactures engineered copper tube primarily for air-conditioning applications; these products are sold primarily to OEMs located in China.  The Plumbing & RefrigerationPiping Systems segment sells products to wholesalers in the HVAC, plumbing and refrigeration markets, to distributors to the manufactured housing and recreational vehicle industries, and to building material retailers.retailers, and air-conditioning OEMs.

●·OEM:Industrial Metals:  The OEMIndustrial Metals segment is composed of IPD, EPD,Brass Rod & Copper Bar Products, Impacts & Micro Gauge, and Mueller-Xingrong, the Company’s Chinese joint venture.Brass-Value Added Products.  The OEM segment manufactures and sells brass and copper alloy rod, bar, and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; refrigeration valves and fittings; fabricated tubular products; and gas valves and assemblies.   Mueller-XingrongThe segment manufactures engineered copper tube primarily for air-conditioning applications; theseand sells its products are sold primarily to domestic OEMs located in China.the industrial, construction, heating, ventilation, and air-conditioning, plumbing, and refrigeration markets.

·Climate: The OEMClimate segment is composed of Refrigeration Products, Fabricated Tube Products, Westermeyer, and Turbotec.  The segment manufactures and sells refrigeration valves and fittings and fabricated tubular products.  The segment sells its products primarily to original equipment manufacturers, many of which arethe heating, ventilation, air-conditioning, and refrigeration markets in the HVAC, plumbing, and refrigeration markets.U.S.

New housing starts and commercial construction are important determinants of the Company’sCompany's sales to the HVAC,heating, ventilation, and air-conditioning, refrigeration, and plumbing markets because the principal end use of a significant portion of our products is in the construction of single and multi-family housing and commercial buildings.  Repairs and remodeling projects are also important drivers of underlying demand for these products.  

Residential construction activity in 2014 and into the first quarter of 2015 has shown improvement in recent years, but remains at levels below long-term historical averages.  Continued improvement is expected, but may be tempered by continuing low labor participation rates, the pace of household formations, higher interest rates, and tighter lending standards.  Per the U.S. Census Bureau, the March 20152016 seasonally adjusted annual rate of new housing starts was 0.91.1 million compared with the March 20142015 rate of 1.0 million.  While mortgageMortgage rates have risen in 2015 and 2014, they remain at historically low levels, as the average 30-year fixed mortgage rate was 3.723.74 percent for the first three months of 20152016 and 4.173.85 percent for the twelve months ended December 2014.2015. 

16
Index
The private non-residential construction sector, which includes offices, industrial, health care and retail projects, began showing modest improvement in 20152016 and 20142015 after declines in previous years.  Per the U.S. Census Bureau, the actual (not seasonally adjusted) value of private non-residential construction put in place was $337.6$389.0 billion in 20142015 compared to $304.9$347.7 billion in 2013.2014.  The seasonally adjusted annual value of private non-residential construction put in place was $348.4$398.3 billion in February 20152016 compared to the December 20142015 rate of $354.8$392.8 billion and the February 20142015 rate of $328.9$360.2 billion.  The Company expectsWe expect that most of these conditions will gradually improve, but at an irregular pace.continue to improve.

Profitability of certain of the Company’sCompany's product lines depends upon the “spreads”"spreads" between the cost of raw material and the selling prices of its products.  The open market prices for copper cathode and scrap, for example, influence the selling price of copper tube, a principal product manufactured by the Company.  The Company attemptsWe attempt to minimize the effects on profitability from fluctuations in material costs by passing through these costs to itsour customers.  The Company’sOur earnings and cash flow are dependent upon these spreads that fluctuate based upon market conditions.

Earnings and profitability are also impacted by unit volumes that are subject to market trends, such as substitute products, imports, technologies, and market share.  In core product lines, the Companywe intensively manages itsmanage our pricing structure while attempting to maximize itsour profitability.  From time-to-time, this practice results in lost sales opportunities and lower volume.  For plumbing systems, plastics are the primary substitute product; these products represent an increasing share of consumption.  U.S. consumption of copper tube is still predominantly supplied by U.S. manufacturers.  For certain air-conditioning and refrigeration applications, aluminum based systems are the primary substitution threat.  The CompanyWe cannot predict the acceptance or the rate of switching that may occur.  In recent years, brass rod consumption in the U.S. has declined due to the outsourcing of many manufactured products from offshore regions.

17
INDEX
Results of Operations

Consolidated Results

The following table compares summary operating results for the first quarter of 20152016 and 2014:2015:

 Three Months Ended Percent Change 
      Three Months Ended Percent Change 
(In thousands) March 28, 2015 March 29, 2014 2015 vs. 2014  April 2, 2016 March 28, 2015 2016 vs. 2015 
       
              
Net sales  $537,242 $574,374 (6.5)% $532,809  $537,242   (0.8)%
Operating income 35,724 38,307 (6.7)   41,467   35,724   16.1 
Net income 21,978 24,706 (11.0)  28,630   21,978   30.3 

The following are components of changes in net sales compared to the prior year:

  20152016 vs. 20142015
  
   
Net selling price in core product lines (9.114.0)%
Unit sales volume in core product lines (1.15.5) 
DispositionsAcquisitions14.0  (2.8)
Other (0.1)
0.3   
  (6.50.8)%
     

The decreaseincrease in net sales was primarily due to (i)$57.3 million of sales recorded by Great Lakes Copper Ltd. (Great Lakes), acquired in July 2015, $12.3 million of sales recorded by Sherwood Valve Products, LLC (Sherwood), acquired in June 2015, and $5.6 million of sales recorded by Turbotec Products, Inc. (Turbotec), acquired in March 2015. These increases were offset by lower net selling prices of $52.2$75.4 million in our core product lines, primarily copper tube and brass rod, and (ii) the absence of sales of $15.9 million recorded by Primaflow, a businessproducts.  In addition, we sold during November 2014.  These decreases were offset by higherhad an increase in unit sales volume of $34.3 million in the Company’s core products.product lines in our domestic Piping Systems segment that was offset by lower unit sales volume in the Industrial Metals segment and at Mueller-Xingrong.

17
Index
Net selling prices generally fluctuate with changes in raw material costs.  Changes in raw material costs are generally passed through to customers by adjustments to selling prices.  The following graph shows the Comex average copper price per pound by quarter for the current and prior fiscal years:
 
Average Copper Price Per Pound


18
INDEX
The following tables compare cost of goods sold and operating expenses as dollar amounts and as a percent of net sales for the first quarter of 20152016 and 2014:2015:

 Three Months Ended 
    Three Months Ended 
(In thousands) March 28, 2015 March 29, 2014  April 2, 2016  March 28, 2015 
     
           
Cost of goods sold $460,834  $495,777  $446,642  $460,834 
Depreciation and amortization  7,853   8,107   8,920   7,853 
Selling, general, and administrative expense  32,831   32,183   35,780   32,831 
             
Operating expenses $501,518  $536,067  $491,342  $501,518 
     

 Three Months Ended 
   
 March 28, 2015 March 29, 2014  Three Months Ended 
      April 2, 2016 March 28, 2015 
          
Cost of goods sold  85.8%  86.3%  83.8%  85.8%
Depreciation and amortization  1.5   1.4   1.7   1.5 
Selling, general, and administrative expense  6.1   5.6   6.7   6.1 
             
Operating expenses  93.4%  93.3%  92.2%  93.4%
     

The decrease in cost of goods sold was primarily due to the decrease in the average cost of copper, our principal raw material, partially offset by anthe increase in sales volume.  In addition, duringvolume related to the businesses acquired.  Depreciation and amortization increased in the first quarter of 2014 we recognized2016 primarily as a decrease in accruals related to import dutiesresult of $3.1 million that positively impacted cost of goods sold.  Depreciationdepreciation and amortization of long-lived assets for the first quarter of 2015 was consistent with the expense recorded for the first quarter of 2014.  businesses acquired.  Selling, general, and administrative expenses increased slightly for the first quarter of 2015,2016 primarily due to the absenceas a result of the $1.4 million gain recordedincremental expenses associated with businesses acquired during 2015.

Interest expense decreased slightly in the first quarter of 2014 on the sale of the land and building in Portage, Michigan and higher net periodic pension costs of $0.6 million.  This was offset by a decrease in other employment costs primarily related to the sale of Primaflow.

Interest expense increased in the first quarter of 20152016 primarily as a result of (i) additional costs of $0.5 million due to the terms of our interest rate swap agreement that became effective in January 2015, and (ii) increaseddecreased borrowing costs of $0.5 million at Mueller-Xingrong to fund working capital.Mueller-Xingrong.  Other income, net, for the first quarter of 20152016 was consistent with the first quarter of 2014.  2015.

18
Index
Our effective tax rate for the first quarter of 20152016 was 3435 percent compared with 3334 percent for the same period last year.  Factors that explain theThe difference between the effective tax rate and what would bethe amount computed using the U.S. federal statutory tax rate for the first quarter of 2016 was primarily attributable to reductions for the U.S. production activities deduction of $0.9 million and the effect of foreign tax rates lower than statutory tax rates of $1.1 million.  These items were partially offset by the provision for state income taxes, net of the federal benefit, of $0.8 million and the recording of the basis difference in  unconsolidated affiliates of $1.0 million.

The difference between the effective tax rate and the amount computed using the U.S. federal statutory tax rate for the first quarter of 2015 werewas primarily attributable to reductions related tofor the U.S. production activities deduction of $1.0 million and the effect of foreign tax rates lower than statutory tax rates of $0.5 million.  These items were partially offset by the provision for state income taxes, net of the federal benefit, of $0.8 million.

Plumbing & RefrigerationWe own a 50 percent interest in Tecumseh Products Holdings LLC, an unconsolidated affiliate that acquired Tecumseh Products Company (Tecumseh) during the third quarter of 2015.  We also own a 50 percent interest in a second unconsolidated affiliate that provided financing to Tecumseh in conjunction with the acquisition.  We account for these investments using the equity method of accounting.  For the first quarter of 2016, we recognized $2.9 million of income on these investments.  Included in income from unconsolidated affiliates is a gain that resulted from the allocation of purchase price, which was finalized during the quarter.  That gain was offset by restructuring and impairment charges and operating losses.


19
INDEX

Piping Systems Segment

The following table compares summary operating results for the first quarter of 20152016 and 20142015 for the businesses comprising our Plumbing & RefrigerationPiping Systems segment:

 Three Months Ended Percent Change 
     Three Months Ended Percent Change 
(In thousands) March 28, 2015 March 29, 2014 2015 vs. 2014 April 2, 2016 March 28, 2015 2016 vs. 2015 
              
       
Net sales  $305,017 $338,027 (9.8)% $368,890  $361,482   2.0%
Operating income 19,491 23,885 (18.4)   31,159   26,259   18.7 

The following are components of changes in net sales compared to the prior year:

  20152016 vs. 20142015 
 
    
Net selling price in core product lines (9.914.7)%
Unit sales volume in core product lines 5.5
Dispositions0.9  (4.8
Acquisitions)15.9
Other (0.60.1)
2.0% 
   
The increase in net sales was primarily due to (i) $57.3 million of sales recorded by Great Lakes and (ii) higher unit sales volume in the segment's domestic core product lines, primarily copper tube.  These increases were offset by (i) lower net selling prices of $53.0 million in the segment's core product lines and (ii) a decrease in sales by the segment's other product lines, primarily Mueller-Xingrong.

The following tables compare cost of goods sold and operating expenses as dollar amounts and as a percent of net sales for the first quarter of 2016 and 2015:

  Three Months Ended 
(In thousands) April 2, 2016  March 28, 2015 
       
Cost of goods sold $313,792  $312,690 
Depreciation and amortization  5,649   5,187 
Selling, general, and administrative expense  18,290   17,346 
         
Operating expenses $337,731  $335,223 

  Three Months Ended 
  April 2, 2016  March 28, 2015 
         
Cost of goods sold  85.1%  86.5%
Depreciation and amortization  1.5   1.4 
Selling, general, and administrative expense  5.0   4.8 
         
Operating expenses  91.6%  92.7%

The increase in cost of goods sold was primarily due to the increase in volume related to Great Lakes, largely offset by the decrease in the average cost of copper.  Depreciation and amortization increased slightly as a result of depreciation and amortization of the long-lived assets acquired at Great Lakes.Selling, general, and administrative expenses increased for the first quarter of 2016 primarily as a result of incremental expenses associated with Great Lakes of $1.6 million.  This was offset by a reduction of $0.4 million of equipment relocation costs related to the rationalization of Yorkshire Copper Tube in 2015 as well as foreign currency transaction gains of $0.5 million in the current quarter. 

20
INDEX
Industrial Metals Segment

The following table compares summary operating results for the first quarter of 2016 and 2015 for the businesses comprising our Industrial Metals segment:

 Three Months Ended Percent Change 
(In thousands)April 2, 2016 March 28, 2015 2016 vs. 2015 
        
Net sales $134,521  $151,036   (10.9)%
Operating income  19,912   18,959   5.0 

The following are components of changes in net sales compared to the prior year:

2016 vs. 2015
Net selling price in core product lines(9.814.7)%
Unit sales volume in core product lines(6.0)
Acquisitions8.1
Other1.7
(10.9)% 
     
The decrease in net sales was primarily due to (i) lower net selling prices of $33.0$22.2 million and (ii) lower unit sales volume of $9.1 million in the segment’ssegment's core product lines, primarily copper tube, and (ii) the absencebrass rod. This was offset by $12.3 million of sales of $15.9 million recorded by Primaflow, disposed of during November 2014.  These decreases were offset by higher unit sales volume of $18.3 million in the segment’s core products.Sherwood.

The following tables compare cost of goods sold and operating expenses as dollar amounts and as a percent of net sales for the first quarter of 20152016 and 2014:2015:

 Three Months Ended 
    Three Months Ended 
(In thousands) March 28, 2015 March 29, 2014  April 2, 2016  March 28, 2015 
     
           
Cost of goods sold $260,463  $289,025  $109,229  $127,724 
Depreciation and amortization  4,523   4,420   2,135   1,655 
Selling, general, and administrative expense  20,540   20,697   3,245   2,698 
             
        
Operating expenses $285,526  $314,142  $114,609  $132,077 
     


  Three Months Ended 
  April 2, 2016  March 28, 2015 
         
Cost of goods sold  81.2%  84.6%
Depreciation and amortization  1.6   1.1 
Selling, general, and administrative expense  2.4   1.7 
         
Operating expenses  85.2%  87.4%
1921
Index
  Three Months Ended 
    
  March 28, 2015  March 29, 2014 
       
Cost of goods sold  85.4%  85.5%
Depreciation and amortization  1.5   1.3 
Selling, general, and administrative expense  6.7   6.1 
         
         
Operating expenses  93.6%  92.9%
         

The decrease in cost of goods sold was primarily due to the decrease in the average cost of raw materials, primarily copper, offset by an increase in sales volume.  In addition, during the first quarter of 2014 we recognized a decrease in accruals related to import duties of $3.1 million that positively impacted cost of goods sold.  Depreciation and amortization increased slightly as a result of depreciation and amortization of businesses acquired.  Selling, general, and administrative expenses for the first quarter of 2015 was consistent with the expense recorded for the first quarter of 2014.  In the first quarter of 2014, we recorded a $1.4 million gain on the sale of the land and building in Portage, Michigan, which was offset by lower employment costs in the first quarter of 2015 primarily due to the sale of Primaflow.

OEM Segment

The following table compares summary operating results for the first quarter of 2015 and 2014 for the businesses comprising our OEM segment:

  Three Months Ended  Percent Change 
       
(In thousands) March 28, 2015  March 29, 2014  2015 vs. 2014 
          
           
Net sales  $235,317  $240,030   (2.0)%
Operating income  22,548   21,286   5.9 

The following are components of changes in net sales compared to the prior year:

2015 vs. 2014
Net selling price in core product lines(8.0)%
Unit sales volume in core product lines5.7
Other0.3
(2.0)%
The decrease in net sales was primarily due to lower net selling prices of $19.2 million in the segment’s core product lines, primarily brass rod. This was offset by an increase in unit sales volume of $16.0 million in the segment’s core product lines, primarily the segment’s Chinese joint venture.



20
Index
INDEX
 
The following tables compare operating expenses as dollar amounts and as a percent of net sales for the first quarter of 2015 and 2014:

  Three Months Ended 
    
(In thousands) March 28, 2015  March 29, 2014 
         
Cost of goods sold $203,433  $210,403 
Depreciation and amortization  2,855   3,083 
Selling, general, and administrative expense  6,481   5,258 
         
Operating expenses $212,769  $218,744 
         

  Three Months Ended 
    
  March 28, 2015  March 29, 2014 
       
Cost of goods sold  86.5%  87.7%
Depreciation and amortization  1.2   1.3 
Selling, general, and administrative expense  2.7   2.1 
         
Operating expenses  90.4%  91.1%
         

The decrease in cost of goods sold was related to factors consistent with those noted regarding changes in net sales.  Depreciation and amortization decreasedincreased as a result of several fixeddepreciation and amortization of the long-lived assets becoming fully depreciated.  acquired at Sherwood and recent capital expenditures.Selling, general, and administrative expenses increased primarily as a result of higherincremental expenses associated with Sherwood of $0.7 million.  This was offset by lower net periodic pension costs of $0.5 million$0.2 million. 

Climate Segment

The following table compares summary operating results for the first quarter of 2016 and other employment costs2015 for the businesses comprising our Climate segment:

 Three Months Ended Percent Change 
(In thousands)April 2, 2016 March 28, 2015 2016 vs. 2015 
        
Net sales $30,706  $25,811   19.0%
Operating income  3,879   2,265   71.3 

The increase in net sales was primarily due to additional sales recorded by Turbotec, acquired in June 2015.

The following tables compare cost of $0.4goods sold and operating expenses as dollar amounts and as a percent of net sales for the first quarter of 2016 and 2015:

  Three Months Ended 
(In thousands) April 2, 2016  March 28, 2015 
       
Cost of goods sold $23,705  $21,267 
Depreciation and amortization  599   425 
Selling, general, and administrative expense  2,523   1,854 
         
Operating expenses $26,827  $23,546 

  Three Months Ended 
  April 2, 2016  March 28, 2015 
         
Cost of goods sold  77.2%  82.4%
Depreciation and amortization  2.0   1.6 
Selling, general, and administrative expense  8.2   7.2 
         
Operating expenses  87.4%  91.2%

The increase in cost of goods sold was related to the increase in volume, offset by improved margins and product mix within the segment.  Depreciation and amortization increased slightly as a result of depreciation and amortization of the long-lived assets acquired at Turbotec.  Selling, general, and administrative expenses increased primarily as a result of incremental expenses associated with Turbotec of $0.6 million. 




22
INDEX


Liquidity and Capital Resources

The following table presents selected financial information for the first quarter of 20152016 and 2014:2015:

(In thousands) 2015 2014  2016  2015 
           
Cash and cash equivalents $326,894  $233,475  $270,149  $326,894 
Property, plant, and equipment, net  244,909   243,905   278,481   244,909 
Total debt  236,676   238,085   210,583   236,676 
Working capital, net of cash and current debt 421,753 448,392   352,587   421,753 
             
Cash provided by (used in) operating activities 3,890 (44,672)
Cash provided by operating activities  10,336   3,890 
Cash used in investing activities (19,493) (32,732)  (5,807)  (19,493)
Cash used in financing activities  (8,121)  (1,100)  (9,053)  (8,121)

Management believes that cash provided by operations, funds available under the credit agreement, and cash on hand of $326.9 million will be adequate to meet the Company’s normal future capital expenditure and operational needs.  Our current ratio (current assets divided by current liabilities) was 4.2 to 1 as of March 28, 2015.

The Company has significant environmental remediation obligations expected to occur over future years.  Cash used for environmental remediation activities was approximately $0.3 million during the first three months of 2015.  We expect to spend approximately $0.6 million for the remainder of 2015 for ongoing environmental remediation activities.  The timing of a potential payment for a $9.5 million settlement offer related to the Southeast Kansas Sites has not yet been determined.

Our Board of Directors declared and paid a quarterly cash dividend of 7.5 cents per common share in the first quarter of 2015 and 2014.  Payment of dividends in the future is dependent upon the Company’s financial condition, cash flows, capital requirements, earnings, and other factors.  

On March 30, 2015, the Company entered into a Stock Purchase Agreement with Turbotec Products, Inc. (Turbotec) providing for the purchase of  all of the outstanding capital stock of Turbotec for approximately $14.2 million in cash, net of working capital adjustments.

21
Index

Cash Provided by Operating Activities

During the three months ended April 2, 2016, cash provided by operating activities was primarily attributable to consolidated net income of $28.7 million and depreciation and amortization of $9.0 million.  This was partially offset by increased receivables of $25.1 million primarily due to a net increase in working capital needs related to higher sales at the end of the first quarter.

During the three months ended March 28, 2015, cash provided by operating activities was primarily attributable to consolidated net income of $22.3 million, depreciation and amortization of $8.0 million, decreased other assets of $9.3 million, and decreased inventories of $7.5 million, partially offset by increased receivables of $36.7 million and decreased current liabilities of $7.4 million.  These fluctuations are primarily due to a net increase in working capital needs related to higher sales at the end of the first quarter.

During the three months ended March 29, 2014, cash used in operating activities was primarily attributable to increased receivables of $49.5 million, other assets of $14.5 million, and inventories of $10.1 million, partially offset by consolidated net income of $25.0 million plus depreciation and amortization of $8.2 million.  The fluctuations in receivables, other assets, and inventories are primarily due to increased sales volume in certain businesses in the first quarter of 2014.

Cash Used in Investing Activities

Net cash used in investing activities in the first three months of 2016 was primarily related to capital expenditures of $5.9 million.

The major components of net cash used in investing activities in the first three months of 2015 included net deposits into restricted cash balances of $12.6 million and capital expenditures of $7.4 million.

The major componentsCash Used in Financing Activities

For the first quarter of 2016, net cash used in investingfinancing activities inconsisted primarily of repayment of debt by Mueller-Xingrong of $7.0 million and payment of regular quarterly dividends to stockholders of the first three monthsCompany of 2014 included $30.1 million for the acquisition of Yorkshire and capital expenditures of $9.2$4.2 million, offset by $4.8 million in proceeds from the saleissuance of properties and net withdrawals from restricted cash balancesdebt of $1.8$2.0 million.

Cash Used in Financing Activities

For the first quarter of 2015, net cash used in financing activities consisted primarily of $4.2 million used for payment of regular quarterly dividends to stockholders of the Company and $3.8 million used for the repayment of debt by Mueller-Xingrong.

ForLiquidity and Outlook

Management believes that cash provided by operations, funds available under the credit agreement, and cash and cash equivalents on hand will be adequate to meet our liquidity needs, including working capital, capital expenditures, and debt payment obligations.  Our current ratio was 4.1 to 1 as of April 2, 2016.

We have significant environmental remediation obligations which we expect to pay over future years.  Cash used for environmental remediation activities was approximately $0.2 million during the first three months of 2016.  We expect to spend approximately $0.5 million for the remainder of 2016 for ongoing environmental remediation activities.  
23
INDEX
The Company declared and paid a quarterly cash dividend of 7.5 cents per common share in the first quarter of 2014, net2016 and 2015.  Payment of dividends in the future is dependent upon our financial condition, cash used in financing activities consisted primarily of $4.2 million used for payment of regular quarterly dividends to stockholders offlows, capital requirements, earnings, and other factors.  

In February 2016, the Company and $1.4 million usedentered into an agreement providing for the repaymentpurchase of debt by Mueller-Xingrong, partially offset by $4.4 million receiveda 60 percent equity interest in Jungwoo Metal Ind. Co., LTD (Jungwoo) for the issuanceKRN 25 billion or approximately $22.0 million.  Jungwoo is a manufacturer of debt by Mueller Europe, Limited (MEL).copper-based pipe joining products headquartered in Seoul, South Korea and serves markets worldwide.  The transaction was subject to certain closing conditions, including Korean regulatory approval, and was completed on April 26, 2016.

Long-Term Debt

The Company’sCompany's credit agreement provides for an unsecured $200.0 million revolving credit facility (the Revolving Credit Facility) and a $200.0 million Term Loan Facility, both maturingof which mature on December 11, 2017.  The Revolving Credit Facility backed approximately $10.2$6.6 million in letters of credit at the end of the quarter.  

On February 2, 2015,March 23, 2016, Mueller-Xingrong entered into a new secured revolving credit agreementarrangement with a total borrowing capacity of RMB 230150 million (or approximately $37.0$24.1 million).  In addition, Mueller-Xingrong occasionally finances working capital through various accounts receivable and bank draft discount arrangements.  Borrowings are secured by the real property and equipment and bank draft receivables of Mueller-Xingrong and bear interest at the latest base-lending rate published by the People's Bank of China, which was 4.35 percent as of April 2, 2016.  Total borrowings at Mueller-Xingrong were $30.7$3.6 million as of March 28, 2015.April 2, 2016.

As of March 28, 2015,April 2, 2016, the Company’sCompany's total debt was $236.7$210.6 million or 22.719.2 percent of its total capitalization.

Covenants contained in the Company’sCompany's financing obligations require, among other things, the maintenance of minimum levels of tangible net worth and the satisfaction of certain minimum financial ratios.  As of March 28, 2015,April 2, 2016, the Company was in compliance with all of its debt covenants.

22
IndexShare Repurchase Program

Share Repurchase Program

The Company’sOur Board of Directors has extended, until October 2015,2016, its authorization to repurchase up to 20 million shares of the Company’sCompany's common stock through open market transactions or through privately negotiated transactions.  The Company has no obligation to repurchase any shares and may cancel, suspend, or extend the time period for the repurchase of shares at any time.  Any repurchases will be funded primarily through existing cash and cash from operations.  The Company may hold any shares repurchased in treasury or use a portion of the repurchased shares for employee benefit plans, as well as for other corporate purposes.  From its initial authorization in 1999 through March 28, 2015,April 2, 2016, the Company hadhas repurchased approximately 4.7 million shares under this authorization.  

Contractual Cash Obligations

There have been no significant changes in the Company’sCompany's contractual cash obligations reported at December 27, 2014.26, 2015 other than the aforementioned commitment to purchase Jungwoo for $22.0 million, which was funded during the second quarter of 2016.

Item 3.
Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from changes in raw material and energy costs, interest rates, and foreign currency exchange rates.  To reduce such risks, the Company may periodically use financial instruments.  Hedging transactions are authorized and executed pursuant to policies and procedures.  Further, the Company does not buy or sell financial instruments for trading purposes.

Cost and Availability of Raw Materials and Energy

Raw materials, primarily copper and brass, represent the largest component of the Company’sCompany's variable costs of production.  The cost of these materials is subject to global market fluctuations caused by factors beyond our control.  Significant increases in the cost of metal, to the extent not reflected in prices for our finished products, or the lack of availability could materially and adversely affect the Company’sour business, results of operations and financial condition.

24
INDEX
 
The Company occasionally enters into forward fixed-price arrangements with certain customers.  We may utilize futures contracts to hedge risks associated with these forward fixed-price arrangements.  We may also utilize futures contracts to manage price risk associated with inventory.  Depending on the nature of the hedge, changes in the fair value of the futures contracts will either be offset against the change in fair value of the inventory through earnings or recognized as a component of accumulated other comprehensive income (AOCI) and reflected in earnings upon the sale of inventory.  Periodic value fluctuations of the contracts generally offset the value fluctuations of the underlying fixed-price transactions or inventory.  At quarter-end, the Companywe held open futures contracts to purchase approximately $32.4$23.7 million of copper over the next nine months related to fixed-price sales orders and to sell approximately $20.1$20.8 million of copper over the next four months related to copper inventory.

We may enter into futures contracts or forward fixed-price arrangements with certain vendors to manage price risk associated with natural gas purchases.  The effective portion of gains and losses with respect to futures positions are deferred in equity as a component of AOCI and reflected in earnings upon consumption of natural gas.  Periodic value fluctuations of the futures contracts generally offset the value fluctuations of the underlying natural gas prices.  There were no open futures contracts to purchase natural gas at March 28, 2015.April 2, 2016.

Interest Rates

At March 28, 2015,April 2, 2016, the Company had variable-rate debt outstanding of $236.7$210.6 million.  At these borrowing levels, a hypothetical 10 percent increase in interest rates would have had an insignificant unfavorable impact on the Company’sCompany's pretax earnings and cash flows.  The primary interest rate exposures on floating-rate debt are based on LIBOR and the base-lending rate published by the People’sPeople's Bank of China, and the base-lending rate published by HSBC.China.  There was no fixed rate debt outstanding as of March 28, 2015.April 2, 2016.

Included in the variable-rate debt outstanding is the Company's $200.0 million Term Loan Facility which bears interest based on LIBOR.  We have reduced our exposure to increases in LIBOR by entering into interest rate swap contracts.  These contracts have been designated as cash flow hedges.  The fair value of these contracts has been recorded in the Condensed Consolidated Balance Sheets, and the related gains and losses on the contracts are deferred in stockholders’stockholders' equity as a component of AOCI.  Deferred gains or losses on the contracts arewill be recognized in interest expense in the period in which the related interest payment being hedged is expensed.  The interest rate swap agreement had an effective date of January 12, 2015.

23
Index

Foreign Currency Exchange Rates

Foreign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than an entity’sentity's functional currency.  The Company and its subsidiaries generally enter into transactions denominated in their respective functional currencies.  The CompanyWe may utilize certain futures or forward contracts with financial institutions to hedge foreign currency transactional exposures.  Gains and losses with respect to these positions are deferred in stockholders’ equity as a component of AOCI and reflected in earnings upon collection of receivables or payment of commitments.  At March 28, 2015,April 2, 2016, the Company had open forward contracts with a financial institution to sell approximately 4.22.7 million euros, 15.68.1 million Swedish kronor, and 6.19.0 million Norwegian kroner through June 2015.July 2016.  It also held open forward contracts to buy approximately 0.32.7 million euros over the next four months.through November 2016.

The Company’sCompany's primary foreign currency exposure arises from foreign-denominated revenues and profits and their translation into U.S. dollars.  The primary currencies to which we are exposed include the Canadian dollar, the British pound sterling, the euro, the Mexican peso, and the Chinese renminbi.  The Company generally views as long-term its investments in foreign subsidiaries with a functional currency other than the U.S. dollar.dollar as long-term.  As a result, we generally do not hedge these net investments.

Cautionary Statement Regarding Forward Looking Information

Statements in thisThis Quarterly Report contains various forward-looking statements and includes assumptions concerning the Company's operations, future results, and prospects.  These forward-looking statements are based on Form 10-Q thatcurrent expectations and are not strictly historicalsubject to risk and uncertainties, and may be “forward-looking” statements, which involve risksinfluenced by factors that could cause actual outcomes and uncertainties.  These include economic and currency conditions, continued availability of raw materials and energy, market demand, pricing, competitive and technological factors, and the availability of financing, among others, as set forth in the Company’s filings with the Securities and Exchange Commission (SEC).results to be materially different from those predicted.  The words “pro forma,” “outlook,” “estimate,” “project,” “intend,” “expect,” “believe,” “target,” “encourage,” “anticipate,” and similar expressions are intended to identify forward-looking statements.  The reader should not place undue reliance on forward-looking statements which speak onlyreflect knowledge and information available as of the date of this report.  Thepreparation of the Quarterly Report, and the Company hasundertakes no obligation to publicly update or revise anythese forward-looking statements.  We identify the forward-looking statements by using the words "anticipates," "believes," "expects," "intends" or similar expressions in such statements.

25
INDEX
In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statement identifying important economic, political, and technological factors, among others, which could cause actual results or events to reflect events afterdiffer materially from those set forth in or implied by the dateforward-looking statements and related assumptions.  In addition to those factors discussed under "Risk Factors" in this Annual Report on Form 10-K, such factors include: (i) the current and projected future business environment, including interest rates and capital and consumer spending; (ii) the domestic housing and commercial construction industry environment; (iii) availability and price fluctuations in commodities (including copper, natural gas, and other raw materials, including crude oil that indirectly affects plastic resins); (iv) competitive factors and competitor responses to the Company's initiatives; (v) stability of this report.government laws and regulations, including taxes; (vi) availability of financing; and (vii) continuation of the environment to make acquisitions, domestic and foreign, including regulatory requirements and market values of candidates.

Item 4.
Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure information required to be disclosed in Company reports filed under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized, and reported within the time periods specified in the SEC’sSEC's rules and forms.  Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’sCompany's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’sCompany's management, with the participation of the Company’sCompany's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’sCompany's disclosure controls and procedures pursuant to Rule 13a-15(e) of the Exchange Act as of March 28, 2015.April 2, 2016.  Based on that evaluation, the Company’sCompany's Chief Executive Officer and Chief Financial Officer have concluded that the Company’sCompany's disclosure controls and procedures are effective as of March 28, 2015April 2, 2016 to ensure that information required to be disclosed in Company reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to management, including the Company’sCompany's principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.



24
Index

Changes in Internal Control over Financial Reporting

There were no changes in the Company’sCompany's internal control over financial reporting during the Company’sits fiscal quarter ending March 28, 2015,April 2, 2016, that have materially affected, or are reasonably likely to materially affect, the Company’sCompany's internal control over financial reporting.

PART II
OTHER INFORMATION
Item 1.
Legal Proceedings

General

The Company is involved in certain litigation as a result of claims that arose in the ordinary course of business.  Additionally, the Company may realize the benefit of certain legal claims and litigation in the future; these gain contingencies are not recognized in the Condensed Consolidated Financial Statements.

For a description of material pending legal proceedings, see “Note 2 – Commitments and Contingencies” in the Notes to Condensed Consolidated Financial Statements, which is incorporated herein by reference.
26
INDEX

Item 1A.
Risk Factors

The Company is exposed to risk as it operates its businesses.  To provide a framework to understand the operating environment of the Company, we have provided a brief explanation of the more significant risks associated with our businesses in our 20142015 Annual Report on Form 10-K.  There have been no material changes in risk factors that were previously disclosed in our 20142015 Annual Report on Form 10-K.

25
Index
Item 2.
2.		Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The Company’sCompany's Board of Directors has extended, until October 2015,2016, its authorization to repurchase up to 20 million shares of the Company’sCompany's common stock through open market transactions or through privately negotiated transactions.  The Company has no obligation to repurchase any shares and may cancel, suspend, or extend the time period for the repurchase of shares at any time.  Any repurchases will be funded primarily through existing cash and cash from operations.  The Company may hold any shares repurchased in treasury or use a portion of the repurchased shares for employee benefit plans, as well as for other corporate purposes.  From its initial authorization in 1999 through March 28, 2015,April 2, 2016, the Company had repurchased approximately 4.7 million shares under this authorization.   Below is a summary of the Company’sCompany's stock repurchases for the period ended March 28, 2015.April 2, 2016.

  (a) (b)  (c) (d) 
  Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs 
          
          
          15,287,060(1)
            
December 28, 2014 – January 24, 2015 — $— —    
            
January 25 – February 21, 2015 20,562(2)  $34.74 —    
            
February 22 – March 28, 2015 3,573 (2)  $35.52 —    
            
(1) Shares available to be purchased under the Company’s 20 million share repurchase authorization until October 2015.  The extension of the authorization was announced on October 24, 2014.
            
(2) Shares tendered to the Company by holders of stock-based awards in payment of the purchase price and/or withholding taxes upon exercise and/or vesting.
  (a)   (b)  (c)  (d)  
  Total Number of Shares Purchased   Average Price Paid per Share  Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs  Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs  
               
             15,287,060 
(1) 
                
December 27, 2015 – January 30, 2016  — 
(2) 
 $—   —      
                   
January 31 – February 27, 2016  1,013 
(2) 
 $26.16   —      
                   
February 28 – April 2, 2016  83,290 
(2) 
 $20.77   —      
                   
 Total  84,303                
                   
(1) Shares available to be purchased under the Company's 20 million share repurchase authorization until October 2016. The extension of the authorization was announced on October 21, 2015. 
                   
(2) Shares tendered to the Company by holders of stock-based awards in payment of the purchase price and/or withholding taxes upon exercise and/or vesting. Also includes shares resulting from restricted stock forfeitures. 




2627
Index
INDEX
 

Item 6.
Exhibits
 
10.1 Separation and Release Agreement, by and between the Company and Douglas J. Murdock, dated as of March 11, 2016 (Incorporated herein by reference to Exhibit 10.1 of the Regristrant's Current Report on Form 8-K, dated March 15, 2016).
 31.1Certification of Chief Executive Officer pursuant to Section 302Rule 13a-14(a) and Rule 15d-14(a) of the Sarbanes-OxleySecurities Exchange Act of 2002.1934, as amended. 
    
 31.2Certification of Chief Financial Officer pursuant to Section 302Rule 13a-14(a) and Rule 15d-14(a) of the Sarbanes-OxleySecurities Exchange Act of 2002.1934, as amended. 
    
 32.1Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 
    
 32.2Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 
    
 101.CALXBRL Taxonomy Extension Calculation Linkbase 
    
 101.DEFXBRL Taxonomy Extension Definition Linkbase  
    
 101.INSXBRL Instance Document 
    
 101.LABXBRL Taxonomy Extension Label Linkbase  
    
 101.PREXBRL Presentation Linkbase Document 
    
 101.SCHXBRL Taxonomy Extension Schema  

Items 3, 4, and 5 are not applicable and have been omitted.
 

2728
INDEX
Index

SIGNATURESSIGNATURES


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



 MUELLER INDUSTRIES, INC.
  
  
 
/s/ Jeffrey A. Martin
 Jeffrey A. Martin
April 23, 201527, 2016
Chief Financial Officer and Treasurer
Date(Principal Financial and Accounting Officer)
  
  
 
/s/ Anthony J. Steinriede
April 23, 201527, 2016
Anthony J. Steinriede
DateVice President – Corporate Controller
  
  
  
  
  
  
  
  
  
  


2829

INDEX
 
EXHIBIT INDEX
  
Exhibits
Description
  
31.1Certification of Chief Executive Officer pursuant to Section 302Rule 13a-14(a) and Rule 15d-14(a) of the Sarbanes-OxleySecurities Exchange Act of 2002.1934, as amended.
  
31.2Certification of Chief Financial Officer pursuant to Section 302Rule 13a-14(a) and Rule 15d-14(a) of the Sarbanes-OxleySecurities Exchange Act of 2002.1934, as amended.
  
32.1Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  
32.2Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  
101.CALXBRL Taxonomy Extension Calculation Linkbase
  
101.DEFXBRL Taxonomy Extension Definition Linkbase 
  
101.INSXBRL Instance Document
  
101.LABXBRL Taxonomy Extension Label Linkbase 
  
101.PREXBRL Presentation Linkbase Document
  
101.SCHXBRL Taxonomy Extension Schema