TO OUR STOCKHOLDERS, CUSTOMERS AND EMPLOYEES
We are pleased to report that Mueller's earnings rose 30 percent for the
second quarter of 1996 compared with the same quarter of 1995. Gross profit,
net earnings, pounds of product produced and shipped, and earnings per share
all reached record levels. This is our eighth record quarter in a row and the
18th consecutive quarter of strong earnings performance.
Earnings for the second quarter of 1996 were $13.9 million, or 71 cents
per share compared to earnings of $10.7 million or 56 cents per share for the
same quarter of 1995.
Net sales for the second quarter of 1996 totaled $189.6 million, an
increase of 4.5 percent over net sales of $181.4 million for the second
quarter of 1995. Also, we shipped 114.3 million pounds of product in the
second quarter, or 7.5 percent more than in the same period the year before.
Our manufacturing operations showed excellent improvement during the
second quarter. We were particularly pleased with the results of our plastic
products business. We continue to refine the implementation of our major
capital improvement programs which should result in increased productivity,
efficiency, and yield.
The price of copper, our principal raw material, gyrated widely during
the quarter, reaching a high of $1.30 per pound in May and a low of 91 cents
per pound at the end of the quarter. The LIFO method of inventory valuation
insulated our earnings from an inventory write-down related to this decline.
Our practice is to limit our exposure to the fluctuations in the price of
copper by largely tying our copper purchases to pounds of product sold. In
essence, we endeavor to lock in a spread between the selling prices of our
products less the cost of metal.
Mueller's business is currently strong, and we believe it will remain so
provided interest rates do not spike upwards. Although long-term mortgage
rates have recently moved up, they are still quite attractive by historical
standards.
Our Annual Stockholders' meeting was held in Memphis, Tennessee on
May 8, 1996 and our stockholders reelected all Board members, approved an
increase in the number of authorized shares of common stock to 50,000,000 from
20,000,000, 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 18, 1996
2
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For the Quarter Ended For the Six-Months Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
Net sales $189,557 $181,380 $370,072 $353,150
Cost of goods sold 149,536 149,587 293,068 290,147
Depreciation and amortization 4,571 3,763 9,021 7,409
Selling, general, and
administrative expense 14,919 12,409 28,823 25,376
------- ------- ------- -------
Operating income 20,531 15,621 39,160 30,218
Interest expense (1,473) (1,134) (2,713) (2,511)
Other income, net 1,060 1,102 2,940 2,575
------- ------- ------- -------
Income before taxes 20,118 15,589 39,387 30,282
Income tax expense (6,221) (4,926) (12,198) (9,569)
------- ------- ------- -------
Net income $ 13,897 $ 10,663 $ 27,189 $ 20,713
======= ======= ======= =======
Net income per share:
Primary:
Average shares outstanding 19,525 19,099 19,457 19,012
======= ======= ======= =======
Net income $ 0.71 $ 0.56 $ 1.40 $ 1.09
======= ======= ======= =======
Fully diluted:
Average shares outstanding 19,550 19,201 19,550 19,227
======= ======= ======= =======
Net income $ 0.71 $ 0.56 $ 1.39 $ 1.08
======= ======= ======= =======
3
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)
June 29, 1996 December 30, 1995
ASSETS
Cash and cash equivalents $ 52,804 $ 48,357
Accounts receivable, net 107,218 83,712
Inventories 68,379 66,360
Other current assets 15,956 12,609
------- -------
Total current assets 244,357 211,038
Property, plant and equipment, net 223,699 221,012
Other assets 16,084 18,785
------- -------
$ 484,140 $ 450,835
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 16,177 $ 16,249
Accounts payable 24,479 16,931
Other current liabilities 41,460 34,704
------- -------
Total current liabilities 82,116 67,884
Long-term debt 52,900 59,653
Other noncurrent liabilities 35,495 37,423
------- -------
Total liabilities 170,511 164,960
Minority interest in subsidiares 325 -
Stockholders' equity 313,304 285,875
------- -------
$ 484,140 $ 450,835
======= =======
Book value per share $ 18.02 $ 16.48
======= =======
4
CORPORATE NEWS
Mueller Adds "Line Sets" to Product Line
The Company entered the line sets business during the second quarter by
acquiring the assets of Vanguard Industries, Inc. This product, which is used
for controlling the flow of refrigerant gases, is sold to both OEMs and
wholesalers. Line sets are a logical extension of our product line as they
utilize copper tube and can be distributed by our present sales organization.