1
TO OUR STOCKHOLDERS
We are pleased to report that Mueller's earnings rose 37 percent for the
second quarter of 1994 compared with the same quarter of 1993. Our company
has now had 10 consecutive quarters of strong earnings performance and it
remains in excellent financial condition.
Earnings for the second quarter of 1994 were $7.3 million, or 72 cents
per share on 10,176,000 average shares outstanding, compared to earnings of
$5.3 million, or 51 cents per share on 10,443,000 average shares outstanding
for the second quarter of 1993. For the first six months of 1994, earnings
were $12.9 million, or $1.26 per share compared to earnings of $9.5 million,
or 92 cents per share for the same period in 1993.
Our earnings continue to benefit from favorable market conditions,
increases in productivity and a reduction of selling, general and
administrative expenses.
Net sales for the second quarter of 1994 totalled $136.6 million,
compared to $127.3 million for the same quarter of 1993. Our sales volume
reflects changes in the cost of copper which are basically passed on to our
customers in the selling prices of our finished products. Pounds of product
shipped is a more relevant indicator of our sales activity, and pounds
increased during the second quarter of 1994 by 6 percent over 1993 levels.
Our previously reported capital improvement programs continue to make
excellent progress. In addition, we recently finalized plans to construct a
new plant in Fulton, Mississippi to manufacture high volume wrot copper
fittings. The plant's location, adjacent to our tube mill, will result in
substantial cost savings and production efficiencies. The cost of the
equipment, approximately $18 million, has been financed through the use of the
State of Mississippi, Industrial Revenue Bonds.
Recently, Mueller entered into a $30 million unsecured line-of-credit
agreement with 6 mid-west banks. We are confident that a substantially larger
line-of-credit could have been negotiated, but at this time, it is not needed.
On June 3, 1994, Mueller purchased 924,875 shares of its common stock
from Quantum Fund for $25.9 million, thereby reducing our issued and
outstanding stock by 10 percent. This purchase will have a positive impact on
earnings per share by reducing the shares outstanding.
Messrs. Gary S. Gladstein and Paul Soros, Directors of the Company for
approximately the past 3 1/2 years, resigned earlier this month. Both men had
originally been nominated as Directors by Quantum Fund N.V., then our largest
stockholder. With Quantum no longer a Mueller shareholder, they submitted
their resignations.
2
We are optimistic about the outlook for the balance of 1994. Housing
starts, the most significant indictor of trends in our business, are currently
at a level which signals continued brisk business.
Sincerely,
/s/Harvey L. Karp /s/William D. O'Hagan
Harvey L. Karp William D. O'Hagan
Chairman of the Board President and Chief Executive Officer
July 20, 1994
3
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except share data)
For the Quarter Ended For the Six-months Ended
June 25, June 26, June 25, June 26,
1994 1993 1994 1993
Net sales $136,576 $127,321 $257,388 $258,358
Costs and expenses 124,441 117,341 235,302 240,530
------- ------- ------- -------
Operating income 12,135 9,980 22,086 17,828
Non operating expense, net 595 1,271 1,587 2,134
------- ------- ------- -------
Income before taxes 11,540 8,709 20,499 15,694
Income tax expense 4,240 3,397 7,562 6,169
------- ------- ------- -------
Net income $ 7,300 $ 5,312 $ 12,937 $ 9,525
======= ======= ======= =======
Earnings per common and
common equivalent share:
Primary $ .72 $ .51 $ 1.26 $ .92
======= ======= ======= =======
Fully diluted $ .72 $ .51 $ 1.26 $ .91
======= ======= ======= =======
4
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
June 25, 1994 December 25, 1993
Assets
Current assets $ 192,837 $ 194,411
Property, plant and equipment, net 158,643 154,403
Other assets 32,182 20,929
------- -------
$ 383,662 $ 369,743
======= =======
Liabilities and Stockholders' Equity
Current liabilities $ 67,924 $ 50,906
Long-term debt 66,355 54,320
Other noncurrent liabilities 40,748 42,403
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Total liabilities 175,027 147,629
------- -------
Stockholders' equity:
Common stock 100 100
Paid-in capital, common 236,255 236,406
Retained earnings (Accumulated deficit)
since January 1, 1991 6,998 (5,939)
Cumulative translation adjustments (2,611) (1,944)
Treasury common stock at cost (32,107) (6,509)
------- -------
Total stockholders' equity 208,635 222,114
------- -------
$ 383,662 $ 369,743
======= =======
Book value per share $ 24.05 $ 23.18
======= =======
5
DIRECTORS AND OFFICERS
DIRECTORS
Harvey L. Karp Chairman of the Board
Mueller Industries, Inc.
Rodman L. Drake (2) (3) President of Rodman L. Drake & Co., Inc.
Allan Mactier (1) (3) Private Investor
William D. O'Hagan President and Chief Executive Officer
Mueller Industries, Inc.
Robert J. Pasquarelli (1) Chief Executive Officer of
New Jersey Steel Corporation
OFFICERS
Harvey L. Karp Chairman of the Board
William D. O'Hagan President and Chief Executive Officer
Earl W. Bunkers Executive Vice President and
Chief Financial Officer
Harvey W. Clements Vice President and General Manager -
Tube Division
John B. Hansen Vice President and General Manager-
Fittings Division
William H. Hensley Vice President, General Counsel
and Secretary
Lee R. Nyman Vice President - Manufacturing/
Management Engineering
James H. Rourke Vice President and General Manager -
Industrial Division
Roy C. Harris Corporate Controller
Kent A. McKee Treasurer and Assistant Secretary
Mueller Industries, Inc./2959 N. Rock Road/Wichita, KS 67226/(316)636-6300
[FN]
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating Committee