TO OUR STOCKHOLDERS, CUSTOMERS, AND EMPLOYEES
Mueller's net earnings increased 39 percent for the third quarter of
1996 compared with the same quarter of 1995. Gross profit, operating income,
net earnings, and earnings per share all reached record levels. This is our
ninth record quarter in a row and the 19th consecutive quarter of strong
earnings performance.
Earnings for the third quarter of 1996 were $16.2 million, or 83 cents per
share, compared to earnings of $11.6 million, or 60 cents per share, for the
same quarter of 1995. Our pretax earnings this quarter are after a charge
of $1.9 million to increase environmental reserves.
Net sales in the third quarter of 1996 totaled $176.0 million, compared
to net sales of $171.5 million for the third quarter of 1995. Furthermore,
we shipped 113.1 million pounds of product in the third quarter, or 24
percent more than in the same period the year before. The selling price of a
majority of our products is significantly related to the cost of raw
materials, particularly copper products. COMEX copper prices averaged 91
cents per pound in the third quarter of 1996 compared with $1.36 per pound in
the same quarter of 1995. This reduction affected the dollar amount of net
sales; however, as noted above, unit sales substantially increased.
Mueller's manufacturing operations continue to show excellent
improvement. Our production increased 29 percent over the same quarter of
1995. The improvement, in part, reflects increased yield and productivity at
our plants as we continue to realize incremental benefits from our $100
million investment in major capital improvements. Further implementation
and refinement of these capital programs should result in additional benefits
for the future.
The demand in the marketplace for Mueller's products remains strong.
This is due to several factors which have favorably impacted the housing
market. These factors include: low mortgage rates; high levels of consumer
confidence; continued improvement in the home buyer affordability indices;
and rising home valuation trends.
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 16, 1996
2
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except share data)
For the Quarter Ended
September 28, September 30,
1996 1995
Net sales $ 175,991 $ 171,549
Costs of goods sold 133,204 137,410
Depreciation and amortization 4,697 4,098
Selling, general, and administrative expense 12,809 13,011
----------- -----------
Operating income 25,281 17,030
Interest expense (1,400) (820)
Environmental reserves (1,945) (955)
Other income, net 1,424 1,736
----------- -----------
Income before income taxes 23,360 16,991
Income tax expense (7,178) (5,386)
----------- -----------
Net income $ 16,182 $ 11,605
=========== ===========
Net income per share:
Primary:
Average shares outstanding 19,520 19,263
Net income $ 0.83 $ 0.60
=========== ===========
Fully diluted:
Average shares outstanding 19,550 19,263
Net income $ 0.83 $ 0.60
=========== ===========
3
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except share data)
For the Nine-Months Ended
September 28, September 30,
1996 1995
Net sales $ 546,063 $ 524,699
Costs of goods sold 426,272 427,557
Depreciation and amortization 13,718 11,507
Selling, general, and administrative expense 41,632 38,387
----------- -----------
Operating income 64,441 47,248
Interest expense (4,113) (3,331)
Environmental reserves (1,945) (955)
Other income (expense), net 4,364 4,311
----------- -----------
Income before income taxes 62,747 47,273
Income tax expense (19,376) (14,955)
----------- -----------
Net income $ 43,371 $ 32,318
=========== ===========
Net income per share:
Primary:
Average shares outstanding 19,477 19,115
Net income $ 2.23 $ 1.69
=========== ===========
Fully diluted:
Average shares outstanding 19,534 19,256
Net income $ 2.22 $ 1.68
=========== ===========
4
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
September 28, 1996 December 30, 1995
ASSETS
Cash and cash equivalents $ 77,528 $ 48,357
Accounts receivable, net 104,468 83,712
Inventories 69,692 66,360
Other current assets 12,882 12,609
--------- ---------
Total current assets 264,570 211,038
Property, plant and equipment, net 221,171 221,012
Other assets 16,681 18,785
--------- ---------
$ 502,422 $ 450,835
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 15,234 $ 16,249
Accounts payable 22,069 16,931
Other current liabilities 45,032 34,704
--------- ---------
Total current liabilities 82,335 67,884
Long-term debt 51,327 59,653
Other noncurrent liabilities 37,800 37,423
--------- ---------
Total liabilities 171,462 164,960
Minority interest in subsidiaries 459 -
Stockholders' equity 330,501 285,875
--------- ---------
$ 502,422 $ 450,835
========= =========
Book value per share $ 18.96 $ 16.48
========= =========
5
DIRECTORS AND OFFICERS
BOARD OF DIRECTORS
Harvey L. Karp Chairman of the Board
Mueller Industries, Inc.
Robert B. Hodes (1) (3) Counsel,
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) Steel Industry Consultant
CORPORATE 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
William H. Hensley Vice President General Counsel
and Secretary
Lowell J. Hill Vice President Human Resources
Kent A. McKee Vice President Business
Development/Investor Relations
Richard G. Miller Vice President and
Chief Information Officer
Lee R. Nyman Vice President Manufacturing/
Management Engineering
James H. Rourke Group Vice President
Industrial Products Division
[FN]
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating Committee