TO OUR STOCKHOLDERS, CUSTOMERS AND EMPLOYEES
We are pleased to report that Mueller had an outstanding third quarter.
The Company's earnings increased by 40 percent, compared with the same
quarter of 1998.
Net earnings were $26.3 million, or 66 cents per diluted share, in the
third quarter of 1999, compared to $18.8 million, or 47 cents per diluted
share, in the same quarter of 1998.
Mueller shipped 196.0 million pounds of product in the third quarter,
generating $287.9 million in net sales. This compares to 150.7 million
pounds shipped and $212.7 million in net sales in the comparable period of
1998.
Mueller's manufacturing operations performed well during the quarter.
Copper tube enjoyed excellent results on favorable pricing and good volume.
Copper and plastic fittings continue to deliver solid sales and
profitability. Brass rod posted good volume and a modest rise in earnings
versus the same period last year.
Despite achieving significant cost reductions, our Europe operations
continued to incur losses in the third quarter due to competitive pricing.
However, we are optimistic that pricing conditions will improve in the near
term.
The Company has initiated a $10 million capital investment at our Port
Huron, Michigan brass rod mill. This investment, which is expected to be
completed near the end of 2000, will increase our casting capacity, improve
yield and reduce conversion costs.
In addition, major capital improvements are under way at our Wynne,
Arkansas copper tube mill. Our casting facility in Fulton, Mississippi is
complete, enabling substantial savings in material costs under the right
market conditions.
On August 30, 1999 Mueller repurchased 500,000 of its common
shares. The shares were bought for $29.15 each, slightly below the closing
price on the New York Stock Exchange on that date.
Economic indicators continue to be positive for the U.S. economy and
housing industry. This bodes well for our business for the balance of 1999,
and into the year 2000.
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
October 12, 1999
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Historical Analysis (1994-1999) of Quarterly
Earnings Before Tax and Earnings Per Share
Mueller's earnings continue to grow. In the third quarter of 1999, our
Company earned $38.2 million before tax, compared with $12.0 million for the
same quarter of 1994, an increase of 218 percent. Diluted earnings per share
have risen 200 percent, from $0.22 per share to $0.66 per share.
[GRAPH]
Third Quarter Diluted Earnings Per Share
1994 $0.22
1995 0.30
1996 0.41
1997 0.46
1998 0.47
1999 0.66
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 37.4 38.2
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 0.64 0.66
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For the Quarter Ended
September 25, 1999 September 26, 1998
Net sales $ 287,880 $ 212,746
Cost of goods sold 216,341 163,952
Depreciation and amortization 9,268 5,650
Selling, general, and
administrative expense 23,162 17,692
---------- ----------
Operating income 39,109 25,452
Interest expense (3,078) (1,158)
Environmental reserves - -
Other income, net 2,143 1,809
---------- ----------
Income before taxes 38,174 26,103
Income tax expense (11,834) (7,338)
---------- ----------
Net income $ 26,340 $ 18,765
========== ==========
Earnings per share:
Basic:
Weighted average shares outstanding 35,683 35,689
========== ==========
Basic earnings per share $ 0.74 $ 0.53
========== ==========
Diluted:
Weighted average shares outstanding
plus assumed conversions 39,814 39,800
========== ==========
Diluted earnings per share $ 0.66 $ 0.47
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For the Nine Months Ended
September 25, 1999 September 26, 1998
Net sales $ 869,062 $ 665,265
Cost of goods sold 658,421 512,927
Depreciation and amortization 27,606 16,923
Selling, general, and
administrative expense 74,229 53,946
---------- ----------
Operating income 108,806 81,469
Interest expense (9,086) (3,701)
Environmental reserves - (600)
Other income, net 7,093 6,513
---------- ----------
Income before taxes 106,813 83,681
Income tax expense (33,345) (25,941)
---------- ----------
Net income $ 73,468 $ 57,740
========== ==========
Earnings per share:
Basic:
Weighted average shares outstanding 35,772 35,338
========== ==========
Basic earnings per share $ 2.05 $ 1.63
========== ==========
Diluted:
Weighted average shares outstanding
plus assumed conversions 39,751 39,686
========== ==========
Diluted earnings per share $ 1.85 $ 1.45
========== ==========
-4-
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 25, 1999 December 26, 1998
ASSETS
Cash and cash equivalents $ 156,619 $ 80,568
Accounts receivable, net 170,464 155,601
Inventories 111,807 134,732
Other current assets 4,385 11,423
---------- ----------
Total current assets 443,275 382,324
Property, plant and equipment, net 375,939 379,082
Other assets 105,608 113,288
---------- ----------
$ 924,822 $ 874,694
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 28,705 $ 19,980
Accounts payable 51,795 46,641
Other current liabilities 93,302 75,953
---------- ----------
Total current liabilities 173,802 142,574
Long-term debt 131,427 174,569
Other noncurrent liabilities 61,208 55,075
---------- ----------
Total liabilities 366,437 372,218
Minority interest in subsidiaries 354 354
Stockholders' equity 558,031 502,122
---------- ----------
$ 924,822 $ 874,694
========== ==========
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