TO OUR SHAREHOLDERS:
We are pleased to report that Mueller's earnings rose 85 percent for the
second quarter of 1995 compared with the same quarter of 1994. This is the
fourth record quarter in a row and the 14th consecutive quarter of strong
earnings performance.
Earnings for the second quarter of 1995 were $10.7 million, or $1.12 per share
compared to earnings of $5.8 million, or 57 cents per share for the second
quarter of 1994.
Net sales for the second quarter of 1995 totaled $181.4 million, compared to
$136.6 million for the second quarter of 1994. Pounds of product shipped
during the quarter rose to a new all time high of 106.3 million, a 9.6 percent
increase over 1994 levels for the same period.
The first half of 1995 has clearly been the best six months in our Company's
history. Earnings for the first half totaled $20.7 million or $2.18 per
share. It is noteworthy that our earnings growth was achieved despite a
softening in the housing market. New housing starts declined during the first
five months of 1995 by approximately 12 percent. Mueller offset the effects
of this decline with increased productivity, cost reductions and increased
volume. However, competitive pressure continued to depress margins in our
copper tube and plastic fittings businesses. We believe margins in these
businesses are likely to improve during the second half of 1995 on the
assumption that the housing market will strengthen as the year progresses.
At this writing, the 30 year fixed mortgage rate is 7.4 percent, which is
approximately 180 basis points lower than it was at the end of 1994.
Historically, such low mortgage rates have stimulated home purchases as well
as new home construction.
We continue to make excellent progress on our capital improvement programs.
We expect the modernization of our copper tube facility in Fulton,
Mississippi, the construction of a high-volume copper fittings plant, also in
Fulton, Mississippi, and the installation of a new indirect extrusion press at
our brass rod mill in Port Huron, Michigan, to be completed by the end of this
year. Another important ongoing program, the modernization of our copper
fittings plant in Covington, Tennessee, should also be completed by mid-1996.
These programs will enable Mueller to improve product availability and
customer service while at the same time reducing manufacturing costs. Thus
far, we have realized only modest benefits from our capital programs, but in
1996, we expect to reap many more benefits.
Recently, Mueller entered into a $50 million unsecured line-of-credit
agreement with eight 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.
2
Our annual shareholders meeting was held on May 9, 1995, and our shareholders
re-elected all Board members and approved the reappointment of our independent
auditors.
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
July 19, 1995
3
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except share data)
For the Quarter Ended For the Six-Months Ended
July 1, June 25, July 1, June 25,
1995 1994 1995 1994
Net sales $181,380 $136,576 $353,150 $257,388
Costs and expenses 165,759 126,846 322,932 240,019
------- ------- ------- -------
Operating income 15,621 9,730 30,218 17,369
Non operating income
(expense), net (32) (595) 64 (1,587)
------- ------- ------- -------
Income before taxes 15,589 9,135 30,282 15,782
Income tax expense 4,926 3,357 9,569 5,822
------- ------- ------- -------
Net income $ 10,663 $ 5,778 $ 20,713 $ 9,960
======= ======= ======= =======
Earnings per common and
common equivalent share:
Primary $ 1.12 $ 0.57 $ 2.18 $ 0.97
======= ======= ======= =======
Fully diluted $ 1.11 $ 0.57 $ 2.15 $ 0.97
======= ======= ======= =======
4
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share data)
July 1, 1995 December 31, 1994
Assets
Current assets $ 202,100 $ 183,551
Property, plant and equipment, net 212,963 196,772
Other assets 38,970 50,432
------- -------
$ 454,033 $ 430,755
======= =======
Liabilities and Stockholders' Equity
Current liabilities $ 79,243 $ 67,221
Long-term debt 69,151 76,125
Other noncurrent liabilities 44,715 45,461
------- -------
Total liabilities 193,109 188,807
------- -------
Stockholders' equity:
Common stock 100 100
Paid-in capital, common 254,044 254,251
Retained earnings since January, 1991 42,700 21,987
Cumulative translation adjustments (2,612) (2,832)
Treasury common stock at cost (33,308) (31,558)
------- -------
Total stockholders' equity 260,924 241,948
------- -------
$ 454,033 $ 430,755
======= =======
Book value per share $ 30.18 $ 27.81
======= =======
5
DIRECTORS AND OFFICERS
DIRECTORS
Harvey L. Karp Chairman of the Board
Mueller Industries, Inc.
Robert B. Hodes (1)(3) Partner
Willkie Farr & Gallagher
Allan Mactier (1)(2)(3) Private Investor
William D. O'Hagan President and Chief Executive Officer
Mueller Industries, Inc.
Robert J. Pasquarelli (1)(2) 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
Richard G. Miller Vice President and Chief Information Officer
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