TO OUR STOCKHOLDERS, CUSTOMERS AND EMPLOYEES
It is a pleasure to report that the first quarter of 1999 was the best
quarter in Mueller's history. Net earnings rose 13 percent compared with
the same quarter of 1998. Net sales, pounds shipped and operating income
all posted double digit gains. Net earnings were $21.7 million, or 55
cents per diluted share, compared to $19.3 million, or 49 cents per
diluted share, for the first quarter of 1998.
Net sales for the first quarter were $287.8 million, an increase of 27
percent over sales of $226.7 million for the same quarter of 1998. We
shipped 208 million pounds of product, compared with 156 million pounds in
the first quarter of 1998. This increase in product shipments includes
volume from businesses acquired in 1998.
Mueller invested $55 million in capital additions and improvements in
1998. An additional $50 million has been budgeted for 1999. Our largest
proposed project is the modernization of our recently-acquired tube mill
in Wynne, Arkansas.
We are pleased to report that our new copper casting facility in Fulton,
Mississippi is now operating. This facility permits the use of a mix of
copper scrap and cathode which can result in savings when the spread
between the cost of scrap and the cost of cathode widens.
B&K Industries, Inc., acquired in August 1998, is proving to be an
excellent complement to Mueller's manufacturing operations. B&K's
expertise in serving the retail marketplace has already allowed Mueller to
establish major new national accounts.
Our European tube businesses are continuing to improve operationally; we
expect these businesses to break even by the second half of this year.
In December 1998, we completed a $125 million unsecured bank financing on
attractive terms. In addition, we have available a $100 million line of
credit, none of which has been drawn against.
The U.S. housing industry continues to be vibrant. Housing starts are
running at an annual rate of 1.8 million units, nine percent above the
rate one year ago. Mortgage rates remain very attractive, at around seven
percent for a 30-year loan. Consumer confidence is high and the index of
leading indicators has risen for the last five months. These signs
indicate continuing underlying strength for the U.S. housing industry,
which bodes well for our business.
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Our Annual Stockholders' Meeting will be held at Mueller's headquarters in
Memphis, Tennessee on May 6, 1999. You should have already received the
notice of the meeting, as well as proxy material and the 1998 Annual
Report. We hope you can attend, but if you cannot, we urge you to sign and
return your proxy card.
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
April 14, 1999
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Historical Analysis (1994-1999) of Quarterly
Earnings Before Tax and Earnings Per Share
Mueller's earnings have grown substantially over the past five years. In
the first quarter of 1999, our Company earned $31.2 million before tax,
compared with $6.7 million for the same quarter of 1994, an increase of 366
percent. Diluted earnings per share have risen 450 percent, from $0.10 to
$0.55.
[GRAPH]
First Quarter Diluted Earnings Per Share
1994 $0.10
1995 0.27
1996 0.34
1997 0.40
1998 0.49
1999 0.55
Earnings Before Tax (millions)
Quarter
------------------------------------------------ Total
1st 2nd 3rd 4th Year
1994 $ 6.7 $ 9.1 $ 12.0 $ 13.0 $ 40.8
1995 14.7 15.6 17.0 17.2 64.5
1996 19.3 20.1 23.4 25.6 88.4
1997 23.1 23.6 25.8 28.3 100.8
1998 28.5 29.0 26.1 25.7 109.3
1999 31.2
Diluted Earnings Per Share
Quarter
------------------------------------------------ Total
1st 2nd 3rd 4th Year
1994 $ 0.10 $ 0.14 $ 0.22 $ 0.25 $ 0.71
1995 0.27 0.28 0.30 0.32 1.17
1996 0.34 0.36 0.41 0.46 1.57
1997 0.40 0.42 0.46 0.50 1.78
1998 0.49 0.50 0.47 0.45 1.90
1999 0.55
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For the Quarter Ended
March 27,1999 March 28,1998
Net sales $ 287,840 $ 226,652
Cost of goods sold 221,740 175,457
Depreciation and amortization 8,990 5,584
Selling, general, and
administrative expense 25,179 17,842
---------- ----------
Operating income 31,931 27,769
Interest expense (2,861) (1,352)
Environmental reserves - (600)
Other income, net 2,129 2,723
---------- ----------
Income before taxes 31,199 28,540
Income tax expense (9,516) (9,275)
---------- ----------
Net income $ 21,683 $ 19,265
========== ==========
Earnings per share:
Basic:
Weighted average shares outstanding 35,833 35,100
========== ==========
Basic earnings per share $ 0.61 $ 0.55
========== ==========
Diluted:
Weighted average shares outstanding 39,615 39,547
========== ==========
Diluted earnings per share $ 0.55 $ 0.49
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 27,1999 Dec. 26, 1998
ASSETS
Cash and cash equivalents $ 90,133 $ 80,568
Accounts receivable, net 181,598 155,601
Inventories 123,548 134,732
Other current assets 9,342 11,423
---------- ----------
Total current assets 404,621 382,324
Property, plant and equipment, net 376,632 379,082
Other assets 107,717 113,288
---------- ----------
$ 888,970 $ 874,694
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 32,577 $ 19,980
Accounts payable 50,356 46,641
Other current liabilities 68,660 75,953
---------- ----------
Total current liabilities 151,593 142,574
Long-term debt 156,909 174,569
Other noncurrent liabilities 58,349 55,075
---------- ----------
Total liabilities 366,851 372,218
Minority interest in subsidiaries 354 354
Stockholders' equity 521,765 502,122
---------- ----------
$ 888,970 $ 874,694
========== ==========
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