TO OUR STOCKHOLDERS, CUSTOMERS, AND EMPLOYEES
The first quarter of 2001 was a "good news - bad news" story for
Mueller. The bad news was that sales and earnings declined as the overall
economy slowed. Net earnings were $15.5 million, or 42 cents per diluted
share, compared with 69 cents per diluted share for the same quarter last
year. Also, net sales for the first quarter were $276.6 million compared
with sales of $309.3 million for the first quarter of 2000.
The good news was that Mueller remained solidly profitable with
excellent cash flow and a strong balance sheet that continued to
strengthen. Moreover, we are optimistic that business will improve in the
second quarter. Our optimism is fueled by several factors:
* the severe winter weather (which we had been spared for several years)
constrained construction activity, but it is now behind us;
* the inventory adjustments made by our customers are now largely complete;
* significant steps have been taken to reduce our costs; and,
* the construction industry has shown remarkable resiliency, due, in part,
to declining mortgage rates
The theme of Mueller's Annual Report this year is "looking ahead." We
selected this theme because it reflects our strategy of building basic
shareholder value over the long term rather than embracing short-term
palliatives. This strategy has succeeded over the past decade and we are
convinced it is the best strategy going forward.
In 2000, Mueller invested over $63 million in capital improvement
projects. We expect to invest approximately $50 million during 2001, of
which approximately $20 million relates to the modernization of our European
tube mills. By year-end this project will be completed and our conversion
costs in Europe should be sharply reduced. We anticipate that capital
expenditures in future years will be restrained, as we focus on realizing
the full potential of the many projects we have implemented in recent years.
Our Annual Stockholders' Meeting will be held at Mueller's headquarters
in Memphis, Tennessee on May 10, 2001. You should have already received the
notice of meeting, as well as proxy material and the 2000 Annual Report. We
hope you can attend, but if you cannot, we urge you to sign and return your
proxy card.
Sincerely,
/S/HARVEY L. KARP
Harvey L. Karp
Chairman of the Board
/S/WILLIAM D. O'HAGAN
William D. O'Hagan
President and Chief Executive Officer
April 17, 2001
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Historical Analysis (1994-2001) of Quarterly
Earnings Before Tax and Earnings Per Share
[GRAPH]
First Quarter Diluted Earnings Per Share
1994 $0.10
1995 0.27
1996 0.34
1997 0.40
1998 0.49
1999 0.55
2000 0.69
2001 0.42
Earnings Before Tax (in millions)
Quarter
------------------------------------------------ Total
1st 2nd 3rd 4th Year
1994 $ 6.7 $ 9.1 $ 12.0 $ 13.0 $ 40.8
1995 14.7 15.6 17.0 17.2 64.5
1996 19.3 20.1 23.4 25.6 88.4
1997 23.1 23.6 25.8 28.3 100.8
1998 28.5 29.0 26.1 25.7 109.3
1999 31.2 37.4 38.2 38.9 145.7
2000 42.1 47.2 30.6 27.0 146.9
2001 25.0
Diluted Earnings Per Share
Quarter
------------------------------------------------ Total
1st 2nd 3rd 4th Year
1994 $ 0.10 $ 0.14 $ 0.22 $ 0.25 $ 0.71
1995 0.27 0.28 0.30 0.32 1.17
1996 0.34 0.36 0.41 0.46 1.57
1997 0.40 0.42 0.46 0.50 1.78
1998 0.49 0.50 0.47 0.45 1.90
1999 0.55 0.64 0.66 0.66 2.51
2000 0.69 0.78 0.50 0.46 2.43
2001 0.42
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For the Quarter Ended
March 31, 2001 March 25, 2000
Net sales $ 276,578 $ 309,336
Cost of goods sold 218,116 233,500
Depreciation and amortization 10,527 9,042
Selling, general, and
administrative expense 22,556 24,290
---------- ----------
Operating income 25,379 42,504
Interest expense (1,424) (2,627)
Environmental reserves (761) -
Other income, net 1,766 2,224
---------- ----------
Income before income taxes 24,960 42,101
Income tax expense (9,491) (15,535)
---------- ----------
Net income $ 15,469 $ 26,566
========== ==========
Earnings per share:
Basic:
Weighted average shares outstanding 33,368 34,844
========== ==========
Basic earnings per share $ 0.46 $ 0.76
========== ==========
Diluted:
Weighted average shares outstanding
plus assumed conversions 37,134 38,753
========== ==========
Diluted earnings per share $ 0.42 $ 0.69
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31, 2001 December 30, 2000
ASSETS
Cash and cash equivalents $ 87,615 $ 100,268
Accounts receivable, net 172,878 152,157
Inventories 129,874 142,325
Other current assets 9,259 10,421
---------- ----------
Total current assets 399,626 405,171
Property, plant, and equipment, net 377,449 379,885
Other assets 130,279 125,220
---------- ----------
$ 907,354 $ 910,276
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 5,265 $ 5,909
Accounts payable 38,760 43,733
Other current liabilities 65,800 68,207
---------- ----------
Total current liabilities 109,825 117,849
Long-term debt 94,946 100,975
Other noncurrent liabilities 78,720 77,050
---------- ----------
Total liabilities 283,491 295,874
Minority interest in subsidiaries 297 297
Stockholders' equity 623,566 614,105
---------- ----------
$ 907,354 $ 910,276
========== ==========
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