Exhibit 19.1
TO OUR STOCKHOLDERS, CUSTOMERS, AND EMPLOYEES
Mueller's third quarter ended September 27, 2003, evidenced an encouraging
trend in volume and in copper tube margins. It was the best performance we
have achieved in the last four quarters.
For the third quarter of this year, our earnings per diluted share from
continuing operations were 53 cents compared with 70 cents for the third
quarter of 2002. Income from continuing operations was $19.7 million
compared with $25.8 million for the third quarter of fiscal 2002. Net sales
for the quarter were $251.1 million compared with net sales of $227.3
million for the third quarter of 2002. We shipped approximately 175.0
million pounds of product verses 164.4 million pounds of product for the
same quarter last year.
During the third quarter of 2003, our Company recognized a deferred income
tax benefit related to a 1999 tax operating loss that resulted from the sale
of a subsidiary in that tax year. Without this deferred income tax benefit,
the Company's income from continuing operations would have been
approximately $10.4 million, or 28 cents per diluted share.
In the prior year third quarter, the Company sold the Utah Railway Company.
This transaction generated a capital gain for income tax purposes. Without
this capital gain and the income tax benefits related to the transaction,
the Company's income from continuing operations would have been
approximately $13.1 million, or 36 cents per diluted share.
Net sales in the first nine months of 2003 were $731.3 million compared with
sales of $736.9 million in the 2002 period. Year-to-date, income from
continuing operations was $33.2 million compared with $62.4 million for the
same period of 2002. Earnings per diluted share from continuing operations
were 89 cents for the first nine months of 2003 compared with $1.68 reported
a year ago.
Mueller's financial position remains strong. We ended the quarter with
$219.3 million of cash on hand which significantly exceeds our total debt of
$15.2 million. Our current ratio is nearly 5 to 1 and our working capital
is $432.4 million.
We are cautiously optimistic that the business outlook for the fourth
quarter will be one of improvement. Our long standing strategy of being the
low cost manufacturer means that we are well positioned to take advantage of
growth in demand and margins.
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
October 14, 2003
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Quarter Ended
September 27, 2003 September 28, 2002
(Unaudited)
Net sales $ 251,053 $ 227,294
Cost of goods sold 201,960 176,302
Depreciation and amortization 9,777 9,277
Selling, general, and
administrative expense 24,301 21,280
---------- ----------
Operating income 15,015 20,435
Nonoperating income, net 253 301
---------- ----------
Income from continuing operations
before income taxes 15,268 20,736
Income tax benefit (expense) 4,469 5,086
---------- ----------
Income from continuing operations 19,737 25,822
Discontinued operations, net of tax 1,699 20,810
---------- ----------
Net income $ 21,436 $ 46,632
========== ==========
Basic earnings per share:
Weighted average shares outstanding 34,267 34,269
========== ==========
From continuing operations $ 0.58 $ 0.75
From discontinued operations 0.05 0.61
---------- ----------
Basic earnings per share $ 0.63 $ 1.36
========== ==========
Diluted earnings per share:
Weighted average shares outstanding
plus assumed conversions 36,857 36,837
========== ==========
From continuing operations $ 0.53 $ 0.70
From discontinued operations 0.05 0.57
---------- ----------
Diluted earnings per share $ 0.58 $ 1.27
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Nine Months Ended
September 27, 2003 September 28, 2002
(Unaudited)
Net sales $ 731,296 $ 736,854
Cost of goods sold 597,336 569,459
Depreciation and amortization 29,239 27,516
Selling, general, and
administrative expense 71,172 65,635
---------- ----------
Operating income 33,549 74,244
Nonoperating income, net 1,925 2,100
---------- ----------
Income from continuing operations
before income taxes 35,474 76,344
Income tax benefit (expense) (2,298) (13,941)
---------- ----------
Income from continuing operations 33,176 62,403
Discontinued operations, net of tax 1,160 20,630
---------- ----------
Net income $ 34,336 $ 83,033
========== ==========
Basic earnings per share:
Weighted average shares outstanding 34,262 33,905
========== ==========
From continuing operations $ 0.97 $ 1.84
From discontinued operations 0.03 0.61
---------- ----------
Basic earnings per share $ 1.00 $ 2.45
========== ==========
Diluted earnings per share:
Weighted average shares outstanding
plus assumed conversions 36,812 37,123
========== ==========
From continuing operations $ 0.89 $ 1.68
From discontinued operations 0.04 0.56
---------- ----------
Diluted earnings per share $ 0.93 $ 2.24
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 27, 2003 December 28, 2002
(Unaudited)
Assets
Cash and cash equivalents $ 219,280 $ 217,601
Accounts receivable, net 162,352 132,427
Inventories 145,433 142,953
Other current assets 11,131 7,366
---------- ----------
Total current assets 538,196 500,347
Property, plant, and equipment, net 349,007 352,469
Other assets 140,250 135,131
---------- ----------
$ 1,027,453 $ 987,947
========== ==========
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 3,711 $ 4,161
Accounts payable 37,326 41,004
Other current liabilities 64,718 61,186
---------- ----------
Total current liabilities 105,755 106,351
Long-term debt 11,486 14,005
Other noncurrent liabilities 116,416 113,647
---------- ----------
Total liabilities 233,657 234,003
Minority interest in subsidiaries 248 421
Stockholders' equity 793,548 753,523
---------- ----------
$ 1,027,453 $ 987,947
========== ==========
Statements in this release that are not strictly historical may be
"forward-looking" statements, which involve risks and uncertainties. These
include economic and currency conditions, market demand, pricing, and
competitive and technological factors, among others, as set forth in the
Company's SEC filings.
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