<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 25, 1993 Commission file number 1-569
MUELLER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 25-0790410
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2959 N. ROCK ROAD
WICHITA, KANSAS 67226-1191
(Address of principal executive offices)
Registrant's telephone number, including area code: (316) 636-6300
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $0.01 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.[___].
The number of shares of the Registrant's common stock outstanding as of March
11, 1994 was 9,596,193, excluding 403,807 treasury shares. The aggregate
market value of the 7,320,894 shares of common stock held by non affiliates of
the Registrant was $246,165,000 at March 11, 1994 (based on the closing price
on the consolidated transaction reporting system on that date).
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes /X/ No / /
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference into this
Report: (1) Registrant's Annual Report to Shareholders for the year ended
December 25, 1993 (Part I and II); Registrant's Definitive Proxy Statement for
the 1994 Annual Meeting of Stockholders, scheduled to be mailed on or about
March 18, 1994 (Part III).
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MUELLER INDUSTRIES, INC.
As used in this report, the terms "Company," "Mueller" and "Registrant" mean
Mueller Industries, Inc. and its consolidated subsidiaries taken as a whole,
unless the context indicates otherwise.
TABLE OF CONTENTS
Page
PART I
Item 1. Business 3
Item 2. Properties 14
Item 3. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 15
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters 15
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 15
PART III
Item 10. Directors and Executive Officers of the Registrant 16
Item 11. Executive Compensation 16
Item 12. Security Ownership of Certain Beneficial Owners
and Management 16
Item 13. Certain Relationships and Related Transactions 16
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 16
Signatures 26
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PART I
ITEM 1. BUSINESS
INTRODUCTION
The Company is a leading fabricator of brass, bronze, copper, plastic
and aluminum products. The range of these products is broad: copper tube and
fittings; brass and copper alloy rods, bars and shapes; brass and bronze
forgings; aluminum and copper impact extrusions; plastic fittings and valves;
and refrigeration valves, driers and flare fittings. These operations (the
"Manufacturing Segment") accounted for approximately 95.3% of the Company's
total net sales and 88.7% of total identifiable assets on a consolidated basis
in 1993. The Company markets these products to the heating and air
conditioning, refrigeration, plumbing, hardware and other industries. Mueller
Brass Co. ("MBCo") and its subsidiaries operate eight production facilities in
four states and Canada and has distribution facilities nationwide and sales
representation worldwide.
The Company's natural resource operations are conducted through its
wholly-owned subsidiary Arava Natural Resources Company, Inc. ("Arava") and
the Company's 85% owned subsidiary Alaska Gold Company ("Alaska Gold").
Natural resource operations consist principally of the operation of a short
line railroad and placer gold mining.
The Company was incorporated in 1990. Upon the reorganization of Sharon
Steel Corporation ("Sharon") under Title 11, Chapter 11 of the United States
Code (the "Bankruptcy Code") on December 28, 1990, Mueller became the
successor to Sharon for purposes of the Bankruptcy Code. (See "Reorganization
Under Chapter 11 of the Bankruptcy Code" below).
Information concerning net sales, operating income or loss, and
identifiable assets of each segment appears under "Note 13 - Industry
Segments" on page 31 in the Notes to Consolidated Financial Statements in
Mueller's Annual Report to Stockholders for the year ended December 25, 1993.
Such information is incorporated herein by reference.
MANUFACTURING SEGMENT
Mueller's standard products include a broad line of copper tube, which
ranges in size from 1/8 inch to 8 inch diameter, and is sold in various
straight lengths and coils. Mueller is a market leader in the air
conditioning, refrigeration and dehydrated tube markets. Additionally,
Mueller supplies a variety of hard drawn water tube in straight lengths, as
well as capped soft coils both used for plumbing applications in virtually
every type of construction project.
Other standard products include wrot, cast and plastic fittings and
related components for the plumbing and heating industry that are used in
water distribution systems, heating systems, air conditioning and
refrigeration applications, and drainage, waste, and vent systems.
Additionally, valves, wrot copper and brass fittings, filter driers and other
related assemblies are manufactured for commercial air conditioning and
refrigeration applications such as vending machines, ice machines, walk-in
coolers, and numerous refrigeration applications. The refrigeration product
line also includes products for the refrigeration and air conditioning
installation and service after-markets. A major portion of Mueller's products
are ultimately used in the domestic residential and commercial construction
markets and, to a lesser extent, in the automotive and heavy on and off-the-
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road vehicle markets.
Mueller's industrial products include brass rod, nonferrous forgings and
impact extrusions that are sold primarily to OEM customers in the plumbing,
refrigeration, fluid power, industrial valves and fittings and automotive
industries, as well as other manufacturers and distributors. The Port Huron,
Michigan mill extrudes brass, bronze and copper alloy rod in sizes ranging
from 3/8 inches to 4 inches in diameter. These alloys are used in
applications that require a high degree of machinability, wear and corrosion
resistance, and electrical conductivity. Mueller bronze and aluminum forgings
are used in a wide variety of end products, including automotive components,
brass fittings, industrial machinery, valve bodies, gear blanks, computer
hardware, and fire fighting equipment. The Company also serves the
automotive, military ordnance, aerospace and general manufacturing industries
with cold-formed aluminum and copper impact extrusions. Typical applications
for impacts are high-strength ordnance, high-conductivity electrical
components, builders' hardware, hydraulic systems, automotive parts and other
uses where toughness must be combined with varying complexities of design and
finish. Other applications for these products include screw machine parts,
fabricated tube products, gears, bearings, hydraulic pumps, automobile parts,
ordnance components, home appliances, air conditioning and refrigeration
products and many others.
Mueller's standard products are marketed primarily through its own sales
organization, which maintains sales offices throughout the United States and
in Canada. Additionally, these products are sold and marketed through a
network of agents, which, when combined with the Company's sales organization,
provide the Company broad geographic market representation. Industrial
products are sold, primarily, direct to customers on an OEM basis. Outside of
North America, the Company sells its products through various channels
including exclusive distributors, agents and direct sales channels in over 65
countries, primarily in Europe, the Far East and the Middle East.
The businesses in which Mueller is engaged are highly competitive. The
principal methods of competition for Mueller's products are price, quality and
service. No material portion of Mueller's business is dependent upon a single
customer or a small group of related customers. The total amount of order
backlog for Mueller's products on December 25, 1993 and December 26, 1992 was
not significant.
The Company competes with various companies depending on the product
line. In copper tubing, there are more than five (5) domestic competitors and
many actual and potential foreign competitors. Additionally, it competes with
a large number of manufacturers of substitute products made from plastic, iron
and steel. In the copper fittings market, competitors include Elkhart
Products, a division of AMCAST, and NIBCO, Inc. The plastic fittings market
competitors include more than a dozen companies. The brass rod market
competitors include Cerro Brass, Chase Brass, Extruded Metals and others. As
illustrated above, no one competitor offers the range of products as does the
Company. Management believes that the Company's ability to offer such a wide
ranging product line is a competitive advantage in some markets.
Mueller's products are manufactured in its own plants located in Port
Huron, Michigan; Fulton, Mississippi; Covington, Tennessee; Marysville,
Michigan; Hartsville, Tennessee; Upper Sandusky, Ohio; and Strathroy, Ontario,
Canada. During 1993 and 1992, the Company's Fulton copper tube mill and Port
Huron rod mill operated at near capacity. New drawing and finishing equipment
at the Fulton facility became fully operational in the fourth quarter of 1993
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which increased annual plant capacity by 12 to 15 million pounds. The other
plants operated at high levels. The Company's facilities have a combined
annual capacity of approximately 425 million pounds of industrial and standard
products, which varies depending on product mix.
In addition, Mueller leases office and regional warehouse space for its
standard products distribution network. Mueller's four factory warehouses
service eight regional warehouses and stocking agents warehouses located in
key marketing areas throughout the United States. Products are shipped from
manufacturing plants to distribution centers and customer locations using a
combination of Mueller's own trucking fleet and common carriers.
The major portion of Mueller's base metal requirements (primarily
copper) are normally obtained through short-term supply contracts with
competitive pricing provisions. Other raw materials used in the production of
brass, including brass scrap, zinc, tin and lead are obtained from zinc and
lead producers, open-market dealers and customers with brass process scrap.
Raw materials used in the fabrication of aluminum and plastic products are
purchased in the open market from major producers.
Effective January 13, 1990, Mueller acquired Mueller Plastics Holding
Company, Inc. (then known as U-Brand Corporation) which, at that time,
manufactured malleable iron and plastic fittings. The malleable iron fittings
portion of that business was not profitable and on November 1, 1992, most of
its assets were sold. The remaining iron related assets, primarily plant
buildings and equipment, have been idled pending their orderly liquidation.
The iron fittings business accounted for approximately $20.0 million of the
Company's net sales in 1992.
NATURAL RESOURCES SEGMENT
Mueller, through its subsidiaries Arava and Alaska Gold, is engaged in
the operation of a short line railroad and placer gold mining. It also owns
interests in other natural resource properties.
Short Line Railroad
Utah Railway Company ("Utah Railway"), a wholly-owned subsidiary of
Arava, operates approximately 100 miles of railroad track in Utah. Utah
Railway serves four major customers pursuant to long-term contracts. Utah
Railway transports almost 4 million tons of coal per year to an interchange
point at Provo, Utah. The coal is then transported by connecting railroads to
various customers including electric utilities, cement plants, west coast
export facilities and others at destinations throughout the West.
Gold Mining
Alaska Gold, an 85% owned subsidiary of the Company, mines placer gold
in Nome, Alaska. Historically, operations have been conducted using floating
bucket-line dredges. The Company plans to cease operating one of two dredges
at the end of the 1994 season. The remaining operating dredge will operate as
long as it is feasible to do so. Alaska Gold produced 22,440 net ounces of
gold in 1993, 17,965 net ounces of gold in 1992, 19,016 net ounces of gold in
1991, 20,771 net ounces in 1990 and 22,412 net ounces in 1989, at a net
production cost of $280 per ounce in 1993, $306 per ounce in 1992, $407 per
ounce in 1991, $415 per ounce in 1990 and $332 per ounce in 1989.
<PAGE> 6
Properties consist of approximately 14,500 acres in and adjacent to
Nome. In addition, Alaska Gold owns or has patented claims on approximately
10,400 acres in the Fairbanks, Alaska area, and approximately 3,000 acres in
the Hogatza, Alaska area.
During 1992-93, Alaska Gold undertook a pilot project to evaluate open
pit mining in the Nome area. Under this method of mining, pay gravel is
removed during the winter months then processed the following summer after
natural thawing has occurred. The results of the initial project were not
satisfactory and, consequently, Alaska Gold is conducting a second test pit
during the 1993-94 winter. Based on the results of past exploratory drilling,
Alaska Gold believes there may be scattered areas available on its properties
to sustain open pit mining for ten years. Processing of the stock piled pay
gravel from the 1993 pilot project in the summer of 1994 should confirm
whether or not this method of mining is viable.
Coal Mining
Prior to March 1993, United States Fuel Company ("U.S. Fuel"), a wholly-
owned subsidiary of Arava, mined steam coal by the deep-mine process at its
coal properties located in Carbon and Emery Counties, Utah. Coal sales
totaled 68,000 net tons in 1993, 97,000 net tons in 1992, 179,000 net tons in
1991, 636,000 net tons in 1990, and 704,000 net tons in 1989.
U.S. Fuel's coal properties include approximately 12,700 acres of which
approximately 10,000 acres are owned and 2,700 acres are leased. In early
1993, U.S. Fuel sold its rights under its only remaining coal supply contract.
Coal production has declined substantially to 13,000 net tons in 1993. As
these properties are now undergoing environmental remediation, U.S. Fuel does
not expect to produce any additional coal from these properties.
Other Natural Resources Properties
The Company also has interests in various mineral properties located in
nine states and Canada. None of these mineral properties are significant to
the Company's business, and may be sold or leased in the near future. During
1992, the Company sold its copper mine and mill located in Grant County, New
Mexico. This mine had been idled since January, 1982.
In 1992, Ruby Hill Mining Company ("Ruby Hill") entered into a four-year
Exploration Agreement with Purchase Option (the "Exploration Agreement") with
Homestake Mining Company of California ("Homestake") for its property near
Eureka, Nevada. Total lease payments due over the four years are $475,000,
unless Homestake elects to terminate the Exploration Agreement or exercise its
purchase option. Homestake has a substantial exploration and drilling program
underway on the property. Should Homestake exercise its option to purchase
the property, the total purchase price is $4 million payable over up to a six-
year period depending on timing of production decisions and commencement of
production. If Homestake produces a total of 500,000 ounces of gold or "gold
equivalents" of other metals from this property, Ruby Hill is thereafter
entitled to a three percent net smelter return royalty, after deduction for
certain taxes and transportation. Arava owns 81% of the stock of Richmond-
Eureka Mining Company, which owns 75% of the stock of Ruby Hill.
<PAGE> 7
LABOR RELATIONS
The Company employs approximately 2,000 employees of which approximately
975 are represented by various unions. A majority of the unionized employees
are under contracts which expire in 1996 through 1999.
RAW MATERIAL AND ENERGY AVAILABILITY
Adequate supplies of raw material are available to the Company.
Sufficient energy in the form of natural gas, fuel oils and electricity are
available to operate the Company's production facilities. While temporary
shortages of raw material and fuels may occur occasionally, they have not
materially hampered the Company's operations.
ENVIRONMENTAL MATTERS
The Company is subject to various federal, state and local laws and
regulations relating to environmental quality. Compliance with these laws and
regulations is a matter of high priority for the Company's management, not
only with respect to existing operations and remediation of sites associated
with past operations, but also as an integral part of its planning for future
growth.
Mueller's expenditures for compliance with federal, state and local laws
and regulations governing the discharge of materials into the environment, or
otherwise relating to the protection of the environment during 1991, included
a charge to operations of $2.7 million in connection with a consent decree
(See "Michigan Settlement" below). In 1993, the Company increased its
environmental reserves by $1.1 million, which was charged to operations.
Except as discussed below, the Company does not anticipate that it will need
to make material expenditures for such compliance activities during the
remainder of the 1994 fiscal year, or for the next two fiscal years.
Michigan Settlement
On April 22, 1991, MBCo was named defendant in a private enforcement
action filed in the United States District Court, Eastern District of
Michigan. The suit alleged violations of the Clean Water Act related to
operations at MBCo's Port Huron, Michigan facility. In May, 1991, the State
of Michigan also gave informal notice of its intent to file a similar action
based upon the same alleged violations.
On February 25, 1992, MBCo entered into a Consent Decree in the Circuit
Court of Ingham County, Michigan. Pursuant to the Consent Decree, in 1992
MBCo contributed $1.0 million towards environmental mitigation projects in
Michigan and paid a cash penalty of $500,000 to the State of Michigan. MBCo
paid $0.3 million in 1993, $0.1 million in 1994, and will pay another $0.2
million, plus interest, through March, 1995.
Since 1992, as required by the Consent Decree, MBCo initiated steps to
eliminate all potential pollution sources while undertaking a full site
investigation into possible contamination at its Port Huron facility. Total
costs for these activities were approximately $485,000 in 1993 and $300,000 in
1992. Although total future costs for completion of these projects and
related necessary remediation cannot be reliably estimated until the
investigation and remediation plans are completed, the Company believes MBCo's
established reserves should be adequate to cover anticipated site
investigation and remediation costs.
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Alaska Gold
Alaska Gold requires water for its thawing and dredging operation at
Nome, Alaska and must comply with federal and state laws in connection with
the appropriation from and discharge into the Snake River. Such operations
are under the concurrent jurisdiction of the EPA and the State of Alaska
Department of Environmental Conservation ("ADEC"). Effective October 15,
1991, the State of Alaska established land reclamation standards and
obligations, and created a mandatory system for posting reclamation bonds.
Total cost related to reclamation activities are not expected to exceed
$125,000 for 1994 and 1995.
Currently, Alaska Gold is engaged in one ongoing site investigation
related to past mining operations. Gold processing activities were conducted
in and around the old "gold house" in Fairbanks between 1924 and 1964.
Tailings containing arsenopyrite and mercury were generated as a by-product of
the process. In 1992, Alaska Gold submitted a plan to the ADEC for clean-up
and remediation of the contaminated soil at this site. Alaska Gold proposed
to excavate and remove the soil to a pre-approved offsite location owned by
Alaska Gold. In 1993, the Company received approval from the ADEC for its
remediation proposal. The Company was also granted a special use permit by
the Borough Council of Fairbanks ("Council") related to the project. However,
the Council's decision to grant the permit was appealed by opponents of Alaska
Gold's remediation proposal. In response to the opposition to its remediation
proposal, Alaska Gold sought and obtained approval from the ADEC to remove the
soil to the Borough landfill. Alaska Gold believes that this alternative may
alleviate the concerns of those opposing Alaska Gold's current plan. Further,
the anticipated costs of this proposed alternative are comparable to the
projected costs of the original remediation proposal. Investigation and
preparation costs to date are approximately $100,000. If approved, Alaska
Gold estimates its plan can be fully implemented for less than $400,000. If
the Council does not allow Alaska Gold to implement its proposal, a more
costly remedial alternative may be required. In addition, Alaska Gold is
aware that the ADEC has proposed to use State funds to conduct a comprehensive
Phase I environmental assessment of contamination in an industrial area in
downtown Fairbanks. Alaska Gold's Fairbanks properties referred to above are
included within this industrial area. The effect, if any, of this assessment
on Alaska Gold is unknown.
Mining Remedial Recovery Company
Pursuant to Sharon's plan of reorganization, the subsidiaries of Sharon
were realigned and certain stock and assets transferred to Mining Remedial
Recovery Company ("MRRC"), a wholly-owned subsidiary of Arava. MRRC was
formed for the purpose of managing the remediation of certain properties and
the appropriate disposition thereof including sites described below. In
addition to the stock of certain subsidiaries and certain other property, MRRC
was capitalized with a $7.85 million cash contribution. Pursuant to a finding
of the bankruptcy court, such cash contribution together with the other assets
contributed to MRRC constituted adequate capitalization of MRRC (See
"Reorganization Under Chapter 11 of the Bankruptcy Code" below). MRRC has
instituted efforts to recover expenditures from insurance companies and third
parties that allegedly contributed to the environmental conditions requiring
remediation. It appears that MRRC will be up to a few million dollars short
of having sufficient funds to complete remediation at all its sites, due to
cost overruns, unanticipated expenditures, and changing environmental
regulations that, in some cases, have increased the costs of remediation,
absent some recoveries from insurance companies, third parties or the sale of
<PAGE> 9
assets. MRRC cannot reasonably estimate the timing or amount of such proceeds
or additional costs. If any more of MRRC's sites are included on CERCLA's
National Priorities List (see discussion below), MRRC's legal and, perhaps,
remediation costs, would be likely to increase.
1. Cleveland Mill Site
In January, 1990, Sharon received a notice from the United States that
it was potentially responsible under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") for the costs of removal or
remediation actions incurred or to be incurred by the United States for an
approximately 18 acre site located five miles northeast of Silver City, New
Mexico (the "Cleveland Mill site"), which has been placed on CERCLA's National
Priorities List. At that time, Sharon, which had never operated the mill at
this site, denied liability for response costs. In November, 1993, the EPA
notified Mueller, Arava, MRRC and other unaffiliated entities that they may be
potentially responsible parties ("PRPs") at the Cleveland Mill site. The EPA
demanded reimbursement for the EPAs past and future response costs and
notified the PRPs that they had 60-days to enter into negotiations with the
EPA regarding this site. MRRC and Bayard Mining Corporation, a subsidiary of
Arava, together with an unaffiliated former owner/operator of the site, have
entered into negotiations with the EPA and confirmed to the EPA that they are
prepared to go forward with the negotiation and implementation of a consent
decree and the statement of work for remedial design and remedial action at
the site. In its September, 1993, Record of Decision, the EPA estimated the
costs of its selected remedy at approximately $6 million, in addition to the
$1.2 million previously incurred by the EPA at this site. The text of the
consent decree has yet to be finalized, and there are substantive differences
that are yet to be resolved with the EPA, as well as outstanding allocation
issues to be resolved among the various PRPs. If no consent decree is entered
into with the EPA, MRRC believes it likely that the EPA would either (i)
unilaterally implement its selected remedy and subsequently seek recovery of
its costs under CERCLA from the various PRPs or (ii) issue an order requiring
the PRPs to implement the selected remedy.
2. Hanover and Bullfrog Sites
MRRC is the current owner of 80 acres located in Grant County, New
Mexico, called the Hanover site. About 2.7 million cubic yards of mill
tailings are concentrated in several sites on the property. No potentially-
responsible party notices have been received from the United States under
CERCLA, although the New Mexico authorities have done a preliminary study of
the Hanover site to possibly include the site within a much larger area,
called the Central Mining District, to be proposed for CERCLA's National
Priorities List. A substantial majority of the tailings at the Hanover site
were deposited by an unaffiliated former operator of the mill, which is a
financially solvent entity. Costs associated with capping these tailings on
site and regrading the soil are estimated at approximately $1.0 million. MRRC
is also the current owner of 148 acres located nearby also in Grant County,
New Mexico, called the Bullfrog site. The Bullfrog site is also within the
Central Mining District. This site is similar to the Hanover site, except
that the volume of tailings is only two-thirds as large. None of the tailings
were deposited by unaffiliated solvent entities. Costs associated with
capping and regrading at this site are estimated at $0.9 million.
<PAGE> 10
3. U.S.S. Lead
U.S.S. Lead Refinery, Inc. ("Lead Refinery") is a subsidiary of MRRC.
Lead Refinery has executed two partial Interim Agreed Orders (the "Orders"),
to settle two administrative enforcement cases, in which the State of Indiana
alleged that Lead Refinery violated (i) certain solid waste management,
storage and disposal provisions under state law; and (ii) certain water
discharge provisions that limit the amount of lead that may be discharged into
waters adjacent to the Lead Refinery facility. Two other appeals filed by
Lead Refinery challenging the State's permitting and waste management actions,
which relate to the two enforcement cases, were deferred pending
implementation of the Orders.
Pursuant to the Orders, Lead Refinery submitted a closure plan for the
site. In phase 1 of 4 of the closure plan, Lead Refinery removed flue dust
and calcium sulfate piles from the site. A certification for closure for
phase 1 was submitted to the State of Indiana. Lead Refinery also submitted a
site assessment plan as phase 2 of the closure plan. As discussed below, the
State of Indiana has deferred consideration of the site assessment plan as a
result of the execution of a corrective action order between the EPA and Lead
Refinery. The appropriateness of imposing any civil penalties on Lead
Refinery has been deferred pending implementation of the Orders.
On May 17, 1985, the U.S. Department of Justice, on behalf of the EPA,
filed a complaint against Lead Refinery in the U.S. District Court for the
Northern District of Indiana, alleging that Lead Refinery violated the Federal
Clean Water Act by exceeding certain discharge limitations of Lead Refinery's
NPDES water discharge permit. On May 28, 1991, the parties signed a consent
decree whereby Lead Refinery agreed to pay a civil penalty of $40,000 within
one year, with an additional $15,000 depending on resumption of operations or
sale of the property, and to cover all existing baghouse dust and calcium
sulfate waste piles at the facility.
In February, 1991, Lead Refinery received a request from EPA under
Superfund for information on whether Lead Refinery arranged for the disposal
of hazardous substances at a site located in Pedricktown, New Jersey. Lead
Refinery provided information responsive to EPA's request. Lead Refinery has
been informed by the former owner and operator that it intends to seek CERCLA
response costs for alleged shipments of hazardous substances to the
Pedricktown Superfund site. Lead Refinery has executed a tolling agreement
with the former owner/operator regarding the Pedricktown site, which extends
the statute of limitations, until such time as either party gives notice of
termination of the agreement. There have been no communications from the
former owner/operator since the execution of the tolling agreement in late
1989. In Aril, 1992, Lead Refinery also received a request from EPA under
Superfund for information on whether Lead Refinery arranged for the disposal
of hazardous substances in the vicinity of the Grand Calumet River/Indiana
Harbor Ship Canal. Lead Refinery responded to that information request. In
September 1991, EPA requested information under Superfund regarding the Lead
Refinery site in East Chicago, Indiana. Lead Refinery also submitted a
response to that request. In February, 1992, EPA advised Lead Refinery of its
intent to list the property as a Superfund site. Lead Refinery filed a
written response opposing such listing.
<PAGE> 11
In September, 1993, Lead Refinery signed a negotiated Administrative
Order on Consent (the "Consent Order") with the EPA Region V pursuant to
Section 3008(h) of the Resource Conservation and Recovery Act ("RCRA"). The
Consent Order, which the EPA executed in November, 1993, covers remediation
activities at the site in East Chicago, Indiana. The Consent Order provides
for Lead Refinery to complete certain on-site interim remedial activities and
studies that extend off site. Lead Refinery has submitted certain workplans
to implement the remedial activities and is awaiting approval from EPA to
commence the required corrective actions. The costs for the studies and
interim clean up efforts are expected to be between $2.0 million and $2.4
million, the majority of which would be required to be expended in 1994. Once
these activities are completed, additional work would likely be needed to
remediate any contamination not addressed by the Consent Order. Lead Refinery
lacks the financial resources needed to complete remediation and intends to
seek financial assistance from other PRPs to permit Lead Refinery to conduct a
private-party cleanup under RCRA.
Lead Refinery has also received an administrative order from EPA to
perform response actions under Superfund with respect to a site located in
Granite City, Illinois. It is the position of Lead Refinery that it did not
arrange for the disposal of hazardous substances at that site. In August,
1991, the U.S. Department of Justice, on behalf of the EPA, filed suit against
several owners and operators of the site and numerous alleged generators of
hazardous waste at the site. Lead Refinery was not named as a defendant in
that lawsuit.
By letter dated June 23, 1992, the EPA informed Lead Refinery that it is
a responsible party under Superfund for the H. Browne site, located in Walker,
Michigan, and invited Lead Refinery to execute a de minimus settlement
agreement with the agency. By letter dated August 3, 1992, Lead Refinery
declined to execute the de minimus settlement agreement.
Miscellaneous
In April, 1992, Mueller received a notice from the State of Indiana,
addressed to Sharon c/o Mueller, notifying Sharon that it had sixty days to
coordinate with other potentially responsible parties ("PRPs") and present a
"good faith" proposal to the State regarding a site in Indiana. Sharon is one
of nearly two hundred PRPs at a site in Indiana due to disposal of electric
arc furnace dust and solvents. Sharon is alleged to have contributed less
than 1% of the hazardous wastes at this site. On January 26, 1994, Mueller
submitted a proposal to join the PRP Site Participation Agreement along with
an addendum preserving its defenses as successor to Sharon, including among
other things, Sharon's prior release and discharge in the Bankruptcy Court and
the assumption of the Designated Steel Liabilities as more fully set forth in
Sharon's Reorganization Plan and the Purchase Agreement and related Documents.
(See "Reorganization Under Chapter 11 of the Bankruptcy Code, Disposition of
the Steel Business" below.) Based upon Sharon's estimated allocated share of
liability and estimated total response costs, Mueller's response liability in
this matter is estimated at less than $250,000.
In November, 1992, Mueller was added as one of more than one hundred
third-party defendants to a complaint filed by the Government in 1990 pursuant
to CERCLA against 26 corporations alleged to have disposed of hazardous
materials at a site in Pennsylvania. Mueller is not required to file an
answer and is deemed automatically to have denied any liability. Based on
preliminary site clean-up costs and the number of PRPs involved in this site,
it does not appear that these proceedings will have any material affect on
<PAGE> 12
Mueller.
On August 26, 1993, the EPA served notice to MBCo that it is one of 70
PRPs in the Stoller Chemical Company Site investigation in Jericho, South
Carolina. In response to the notice, MBCo filed its response to the EPA's
information request in a timely manner and joined a PRP steering committee
which was formed to coordinate response activities. On January 21, 1994, the
EPA issued a Unilateral Administrative Order pursuant to Section 106(a) of
CERCLA setting forth scheduled response activities to be undertaken by the
PRPs. Although no estimates of total response costs have been made, the
Company does not anticipate that MBCo's allocated share of costs will be
material.
On March 7, 1994, the Company received notice from the EPA that MBCo was
a PRP at the Jack's Creek/Sitkin Smelting Superfund Site in Eastern
Pennsylvania. The site is a former smelting facility which received materials
from MBCo in the 1970s. MBCo is one of seventy-five de maximus PRPs and is
alleged to have contributed less than 1 percent of the hazardous wastes at
this site. Approximately 470 de minimus PRPs are also included in the
investigation. No estimated cleanup or response costs are known at this time,
and no immediate action has been required. A PRP steering committee is
expected to be formed within the next two months.
In October, 1986, the EPA notified Sharon that it may be considered a
PRP with respect to allegedly hazardous wastes released from past mining
operations conducted by UV Industries, Inc. ("UV") in Cherokee County, Kansas.
The EPA asserted that under CERCLA, Sharon was potentially responsible for the
cost of investigation, clean-up and remediation of the wastes allegedly
deposited circa 1917 during leasehold operations conducted by UV. Sharon
denied liability under CERCLA on the grounds that it was neither the owner nor
operator when allegedly hazardous substances were being disposed of at the
site and for the reason that UV's leasehold interest had expired prior to the
time that Sharon acquired UV's assets. Mueller has never been contacted
concerning this site and does not know the estimated costs of remediation of
this site.
OTHER BUSINESS FACTORS
The Registrant's business is not materially dependent on patents,
trademarks, licenses, franchises or concessions held. In addition,
expenditures for company-sponsored research and development activities were
not material during 1993, 1992 or 1991. No material portion of the
Registrant's business involves governmental contracts.
REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
On April 17, 1987, Sharon filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for
the Western District of Pennsylvania, Erie Division (the "Bankruptcy Court"),
and was assigned Case No. 87-00207E. On November 21, 1990, the Bankruptcy
Court confirmed a plan of reorganization for Sharon proposed by Quantum
Overseas, N.V. and Castle Harlan, Inc. (the "Reorganization Plan"). The
Reorganization Plan, previously filed with the SEC as Exhibit 2.1 to the
Company's 1990 Annual Report on Form 10-K, is incorporated by reference in its
entirety herein, and the summary of the Reorganization Plan set forth below is
qualified in its entirety by reference thereto. The Reorganization Plan was
consummated on December 28, 1990 (the "Consummation Date"). Upon consummation
of the Reorganization Plan, Mueller became a successor to Sharon for purposes
<PAGE> 13
of the Bankruptcy Code, and assumed the reporting obligations of Sharon under
Section 12 of the Securities Exchange Act of 1934.
Pursuant to the Reorganization Plan, on the Consummation Date, Sharon
sold its steel business to Sharon Specialty Steel, Inc. ("New Steelco"), a
Delaware corporation and was reorganized under Chapter 11 of the Bankruptcy
Code through a recapitalization of the remaining non-steel businesses
(consisting primarily of the copper and brass fabrication business and
Sharon's natural resources operations) into a holding company structure. In
connection with the recapitalization of Sharon, Sharon merged into its wholly-
owned subsidiary, Mueller, realigned its subsidiaries, obtained a $50 million
infusion of capital and retained approximately $12.7 million of cash. The
proceeds from the capital infusion and such cash were then used by Sharon to
make payments to settle certain third party claims. In addition, pursuant to
the Reorganization Plan, a $7.85 million capital contribution was made to MRRC
(See "Environmental Matters - Mining Remedial Recovery Company" above).
Except as set forth in the next two sentences and as provided in the
Reorganization Plan and certain other related agreements, consummation of the
Reorganization Plan operated to discharge all claims against Sharon's Chapter
XI case arising before the entry of the Confirmation Order or otherwise settle
or resolve all of Sharon's liabilities through the assumption by New Steelco
or its subsidiaries of certain Designated Steel Liabilities (as defined in the
Purchase Agreement) or otherwise as more fully set forth in the Reorganization
Plan (including, without limitation, certain pension fund liabilities,
employee-related liabilities and environmental liabilities). Pursuant to the
Reorganization Plan, Mueller assumed certain liabilities and obligations on
the Consummation Date with respect to the following: a $19 million retiree
obligation to employees and retirees of Sharon's steel division; a $9 million
pension plan obligation; Mueller's $25 million principal amount of Delayed
Distribution Notes; certain tax obligations requiring Mueller to pay, over a
period of up to six years from the date of assessment of certain tax claims,
an amount estimated at $6.5 million which have subsequently been reduced to
approximately $5.3 million through negotiations; Mueller's obligation to
purchase from Quantum Fund, certain New Steelco securities for a purchase
price of $5 million plus interest; and Mueller's obligation to provide up to a
$16.5 million guarantee to finance New Steelco's anticipated acquisition of a
continuous caster. In Article X of the Midvale Consent Decree, the Company
agreed that all non-Midvale EPA claims, whether stated in a proof of claim or
not, would be excepted from discharge, unless otherwise compromised or settled
under the Reorganization Plan.
Pursuant to the Reorganization Plan, on the Consummation Date all of
Sharon's Old Common Stock was canceled. In connection with the Reorganization
Plan, Mueller issued 10,000,000 shares of its common stock, par value $.01 per
share ("Common Stock"), and $25,000,000 aggregate principal amount of its
Delayed Distribution Notes (the "Delayed Distribution Notes"). On March 25,
1991, Mueller prepaid in full the Delayed Distribution Notes.
Pursuant to the Reorganization Plan, 7,000,000 of the shares of
Mueller's Common Stock and $17,500,000 principal amount of Mueller's Delayed
Distribution Notes were issued and distributed on a pro rata basis to the
holders of the Allowed General Unsecured Claims in Class 6 (as defined in the
Reorganization Plan) or otherwise held in a Disputed Claims Reserve (as
defined in the Reorganization Plan) in full satisfaction of such Claims.
Through March 16, 1994, 6,931,030 of the 7,000,000 shares of Mueller's Common
Stock and approximately $17,327,944 on account of Delayed Distribution Notes
have been distributed and 68,970 shares and approximately $172,056 on account
<PAGE> 14
of Delayed Distribution Notes remain in escrow with Mueller's disputed claims
agent (the "Disputed Claims Agent"). The Company anticipates that subsequent
distribution of its Common Stock and cash on account of the Delayed
Distribution Notes will be made to holders of record of Allowed General
Unsecured Claims as of November 21, 1990 once the remaining claims still in
dispute are resolved. Subsequent distributions, if any, will be de minimus.
Since consummation of the Reorganization Plan, Mueller negotiated court-
approved settlements of all substantial unsecured claims filed against Sharon.
In addition, all material administrative claims have been either consensually
settled or otherwise disposed of by Bankruptcy Court order. Mueller has,
moreover, paid or is currently paying all material priority tax claims in
accordance with the Reorganization Plan or pursuant to negotiated agreements.
The Company believes that all material outstanding claims and bankruptcy
related matters have been resolved.
The foregoing summary of the Reorganization Plan and related agreements
as well as subsequent settlements related thereto is qualified in its entirety
by reference to the following Exhibits which are incorporated by reference in
their entirety herein: The Midvale Consent Decree, previously filed as
Exhibit 28.7 to the Company's 1990 Report on Form 10-K, the Purchase Agreement
and the Tax Benefits Agreement, previously filed as Exhibit 2.6 and 10.5,
respectively, to the Company's 1990 Annual Report on Form 10-K. For the terms
of actual settlement agreements and related consent decrees, reference is made
to Exhibits 28.3 to 28.21 of the Company's Annual Report on Form 10-K, dated
March 29, 1991, for the year ended December 31, 1990, Exhibit 28.22 and
Exhibits 28.24 to 28.26 of the Company's Annual Report on Form 10-K, dated
March 25, 1992, for the year ended December 28, 1991 and Exhibits 28.27
through 28.33 of the Company's Annual Report on Form 10-K, dated March 17,
1993, for the year ended December 26, 1992.
ITEM 2. PROPERTIES
Information pertaining to the Registrant's operating facilities is
included under "Business" in Item 1, which is incorporated herein by
reference. Except as noted in Item 1, all of the Registrant's principal
properties are owned by it. The Registrant's plants are in satisfactory
condition and are suitable for the purpose for which they were designed and
are now being used.
ITEM 3. LEGAL PROCEEDINGS
Canco Litigation
In 1989, Canco Oil & Gas Ltd. ("Canco"), a Canadian subsidiary,
instituted litigation in the Court of Queen's Bench for Saskatchewan
contending that Canco's royalty interests continued against mineral titles
transferred to the Government of Saskatchewan (the "Government") or Scurry
Rainbow Oil Limited ("Scurry") or, alternatively, that Scurry had breached its
contractual obligations to Canco. In December, 1991, Canco filed a second
suit against the Government in the same court seeking a recalculation of
royalties against the Government on other expropriated properties. In the
Fall of 1992, the Government enacted legislation that expropriated Canco's
rights to royalties. At the same time, the Government agreed to stay the
implementation of this legislation and indicated a willingness to negotiate a
settlement with Canco, provided all issues between the Government, Scurry and
Canco under litigation were resolved. All of these have been settled and as
part of this settlement Canco has agreed to sell its oil and gas royalty
<PAGE> 15
interests in consideration for cash and properties valued at approximately
$3.0 million. Closing is anticipated on or about March 25, 1994.
Chapter 11 Proceedings
Reference is made to "Reorganization Under Chapter 11 of the Bankruptcy
Code" in Item 1 of this Report, which is incorporated herein by reference, for
a description of Sharon's voluntary petition for relief filed under Chapter 11
of the Bankruptcy Code on April 17, 1987.
Environmental Proceedings
Reference is made to "Environmental Matters" in Item 1 of this Report,
which is incorporated herein by reference, for a description of environmental
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The information required by Item 5 of this Report is included under the
caption "Capital Stock Information" on page 35 of the Registrant's Annual
Report to Stockholders for the year ended December 25, 1993, which information
is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data are included under the caption "Selected
Financial Data" on page 36 of the Registrant's Annual Report to Stockholders
for the year ended December 25, 1993, which selected financial data is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and results
of operations is contained under the caption "Financial Review" on pages 9
through 11 of the Registrant's Annual Report to Stockholders for the year ended
December 25, 1993 and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Supplemental Financial Information
on page 28 to 33 of this Annual Report on Form 10-K which is incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
<PAGE> 16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is contained under the caption
"Ownership of Common Stock by Directors and Officers and Information about
Director Nominees" in the Company's Proxy Statement for its 1994 Annual
Meeting of Stockholders to be filed with the Securities and Exchange
Commission on or about March 17, 1994 and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is contained under the caption
"Executive Compensation" in the Company's Proxy Statement for its 1994 Annual
Meeting of Stockholders to be filed with the Securities and Exchange
Commission on or about March 17, 1994 and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is contained under the captions
"Principal Stockholders" and "Ownership of Common Stock by Directors and
Officers and Information about Director Nominees" in the Company's Proxy
Statement for its 1994 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission on or about March 17, 1994 and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is contained under the caption
"Certain Relationships and Transactions with Management" in the Company's
Proxy Statement for its 1993 Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission on or about March 17, 1994 and is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements: the financial statements, notes, and report of
independent auditors described in item 8 of this report, which are
incorporated by reference.
2. Financial Statement Schedules: the financial statement schedules, if
any, described in Item 8 of this report which are incorporated herein by
reference.
3. Exhibits:
2.1 (i) Third Amended and Restated Plan of Reorganization for Sharon
Steel Corporation dated September 27, 1990, proposed by Quantum
Overseas, N.V. and Castle Harlan, Inc. (Incorporated herein by
reference to Exhibit 2.1 of the Registrant's Current Report on
Form 8-K dated December 28, 1990), and (ii) Motion of Quantum
Overseas, N.V. and Castle Harlan, Inc. pursuant to 11 U.S.C.
1127(a) and Bankruptcy Rule 3019 for an Order approving
modification of such plan (as so modified, the "Plan")
<PAGE> 17
(Incorporated herein by reference to Exhibit 2.2 of the
Registrant's Current Report on Form 8-K dated December 28, 1990).
2.2 Order of the Bankruptcy Court confirming the Plan, dated November
20, 1990, entered by the Bankruptcy Court on November 21, 1990
(Incorporated herein by reference to Exhibit 2.3 of the
Registrant's Current Report on Form 8-K dated December 28, 1990).
2.3 Order of the Bankruptcy Court pursuant to 11 U.S. C. 1142(b),
Bankruptcy Rule 3020(d) and Article XIII.E. of the Plan, in aid of
consummation of the Plan, dated December 19, 1990. (Incorporated
herein by reference to Exhibit 2.3 of the Registrant's Report on
Form 10-K, dated March 29, 1991, for the year ended December 31,
1990).
2.4 Order of the Bankruptcy Court pursuant to 11 U.S.C. 1142(b),
Bankruptcy Rule 3020(d) and Article XIII.E. of the Plan, in aid of
consummation of the Plan, dated February 28, 1991 (Incorporated
herein by reference to Exhibit 28.1 of the Registrant's Current
Report on Form 8-K dated January 28, 1991).
2.5 Order of the Bankruptcy Court pursuant to 11 U.S.C. 1142(b),
Bankruptcy Rule 3020(d) and Article XIII.E. of the Plan, in aid of
consummation of the Plan, dated February 19, 1991 (Incorporated
herein by reference to Exhibit 28.2 of the Registrant's Current
Report on Form 8-K dated February 13, 1991).
2.6 Asset Purchase Agreement, dated as of December 28, 1990, by and
among Sharon, Inc., Franklin E. Agnew III, as Chapter 11 trustee,
and Sharon Steel Corporation (which was merged with and into
Mueller Industries, Inc.) (Incorporated herein by reference to
Exhibit 2.5 of the Registrant's Current Report on Form 8-K dated
December 28, 1990).
3.1 Certificate of Incorporation of Mueller Industries, Inc. and all
amendments thereto (Incorporated herein by reference to Exhibit
3.1 of the Registrant's Current Report on Form 8-K dated December
28, 1990).
3.2 By-laws of Mueller Industries, Inc., as amended and restated,
effective October 31, 1991. (Incorporated herein by reference to
Exhibit 3.2 of the Registrants Annual Report on Form 10-K, dated
March 25, 1992, for the year ended December 28, 1991.)
4.1 Common Stock Specimen (Incorporated herein by reference to Exhibit
4.1 of the Registrant's Current Report on Form 8-K dated December
28, 1990).
4.2 Certain instruments with respect to long-term debt of the Company
have not been filed as Exhibits to the Report since the total
amount of securities authorized under any such instrument does not
exceed 10 percent of the total assets of the Company and its
subsidiaries on a consolidated basis. The Company agrees to
furnish a copy of each such instrument upon request of the
Securities and Exchange Commission.
<PAGE> 18
10.1 Registration Rights Agreement, dated as of December 28, 1990, by
and between Quantum Overseas, N.V. (which assigned its rights
thereunder to Quantum Fund, N.V.) and Mueller Industries, Inc.
(Incorporated herein by reference to Exhibit 10.1 of the
Registrant's Report on Form 10-K, dated March 29, 1991, for the
year ended December 31, 1990).
10.2 Agreement Regarding Retiree Obligation, dated as of December 28,
1990, made by Sharon Steel Corporation (which was merged with and
into Mueller Industries, Inc.) in favor of Sharon's retiree plans
referred to therein (Incorporated herein by reference to Exhibit
10.2 of the Registrant's Report on Form 10-K, dated March 29,
1991, for the year ended December 31, 1990).
10.3 Pension Plan Contribution Agreement, dated as of December 28,
1990, by and among Sharon, Inc., Mueller Industries, Inc. and
Sharon Steel Corporation (which was merged with and into Mueller
Industries, Inc.) (Incorporated herein by reference to Exhibit
10.3 of the Registrant's Report on Form 10-K, dated March 29,
1991, for the year ended December 31, 1990).
10.4 Caster Letter Agreement, dated as of December 28, 1990, by and
between Sharon, Inc. and Mueller Industries, Inc. (Incorporated
herein by reference to Exhibit 10.4 of the Registrant's Report on
Form 10-K, dated March 29, 1991, for the year ended December 31,
1990).
10.5 Tax Benefits Agreement, dated as of December 28, 1990, by and
between Mueller Industries, Inc. and Sharon, Inc. (Incorporated
herein by reference to Exhibit 10.5 of the Registrant's Report on
Form 10-K, dated March 29, 1991, for the year ended December 31,
1990).
10.6 Repurchase Agreement, dated December 28, 1990, by and between
Mueller Industries, Inc. and Quantum Overseas, N.V. (which
assigned its rights thereunder to Quantum Fund, N.V.)
(Incorporated herein by reference to Exhibit 10.6 of the
Registrant's Report on Form 10-K, dated March 29, 1991, for the
year ended December 31, 1990).
10.7 Amended and Restated Credit Agreement, dated as of March 25, 1991,
by and among Mueller Brass Co., Mueller Industries, Inc. and
Michigan National Bank (Incorporated herein by reference to
Exhibit 10.7 of the Registrant's Report on Form 10-K, dated March
29, 1991, for the year ended December 31, 1990).
10.8 Guaranty Agreement, made as of March 25, 1991, by Mueller
Industries, Inc. in favor of Michigan National Bank (Incorporated
herein by reference to Exhibit 10.8 of the Registrant's Report on
Form 10-K, dated March 29, 1991, for the year ended December 31,
1990).
10.9 Amended and Restated Loan Agreement, dated as of March 25, 1991,
by and between Michigan National Bank and U-Brand Corporation
(Incorporated herein by reference to Exhibit 10.9 of the
Registrant's Report on Form 10-K, dated March 29, 1991, for the
year ended December 31, 1990).
<PAGE> 19
10.10 Amended and Restated Guaranty Agreement, made as of March 25, 1991
by Mueller Brass Co. in favor of Michigan National Bank
(Incorporated herein by reference to Exhibit 10.10 of the
Registrant's Report on Form 10-K, dated March 29, 1991, for the
year ended December 31, 1990).
10.11 Asset Purchase Agreement, dated as of December 28, 1990, by and
among Sharon, Inc., Franklin E. Agnew III, as Chapter 11 trustee,
and Sharon Steel Corporation (which was merged with and into
Mueller Industries, Inc.) (Incorporated herein by reference to
Exhibit 2.5 of the Registrant's Current Report on Form 8-K, dated
December 28, 1990).
10.12 Employment Agreement, effective October 1, 1991 by and between
Mueller Industries, Inc. and Harvey L. Karp (Incorporated herein
by reference to Exhibit 10.3 of the Registrant's Current Report on
Form 8-K dated November 22, 1991).
10.13 Stock Option Agreement, dated December 4, 1991 by and between
Mueller Industries, Inc. and Harvey L. Karp (Incorporated herein
by reference to Exhibit 10.4 of the Registrant's Current Report on
Form 8-K dated November 22, 1991).
10.14 Indemnification Agreement, dated October 1, 1991 by and between
Quantum Fund, N.V. and Harvey L. Karp (Incorporated herein by
reference to Exhibit 10.5 of the Registrant's Current Report on
Form 8-K dated November 22, 1991).
10.15 Employment Agreement, effective November 26, 1991 by and between
Mueller Industries, Inc. and William H. Hensley (Incorporated
herein by reference to Exhibit 10.6 of the Registrant's Current
Report on Form 8-K dated November 22, 1991).
10.16 Mueller Industries, Inc. 1991 Employee Stock Purchase Plan
(Incorporated herein by reference to Exhibit 4(a) of the
Registrant's Registration Statement on Form S-8 dated June 28,
1991).
10.17 Mueller Industries, Inc. 1991 Incentive Stock Option Plan
(Incorporated herein by reference to Exhibit 4(a) of the
Registrant's Registration Statement on Form S-8 dated April 17,
1992).
10.18 Employment Agreement, effective June 3, 1992 by and between
Mueller Industries, Inc. and William D. O'Hagan (Incorporated
herein by reference to Exhibit 10.1 of the Registrant's Current
Report on Form 8-K dated June 3, 1992).
10.19 Note Purchase Agreement dated as of August 1, 1992, between Utah
Railway Company and John Hancock Mutual Life Insurance Company
(Incorporated herein by reference to Exhibit 10.1 of the
Registrant's Current Report on Form 8-K dated August 20, 1992).
10.20 Term Loan Agreement dated as of August 20, 1992, between Sharon
Steel Corporation and the Company (Incorporated herein by
reference to Exhibit 10.2 of the Registrant's Current Report on
Form 8-K dated August 20, 1992).
<PAGE> 20
10.21 Stock Option Agreement dated as of August 20, 1992, between the
Company and Sharon Specialty Steel, Inc. (Incorporated herein by
reference to Exhibit 10.3 of the Registrant's Current Report on
Form 8-K dated August 20, 1992).
10.22 Exchange Agreement dated August 20, 1992, between the Company and
Sharon Specialty Steel, Inc. (Incorporated herein by reference to
Exhibit 10.4 of the Registrant's Current Report on Form 8-K dated
August 20, 1992).
10.23 Intercreditor Agreement dated as of August 20, 1992, by and among
Sharon Specialty Steel, Inc., Sharon Steel Corporation, Citibank,
N.A., as agent, and the Company (Incorporated herein by reference
to Exhibit 10.5 of the Registrant's Current Report on Form 8-K
dated August 20, 1992).
10.24 Bankruptcy Court Order, dated August 19, 1992 (Incorporated herein
by reference to Exhibit 10.6 of the Registrant's Current Report on
Form 8-K dated August 20, 1992).
10.25 Releases, dated August 20, 1992, executed by Sharon Specialty
Steel, Inc., Sharon Steel Corporation and the Company
(Incorporated herein by reference to Exhibit 10.7 of the
Registrant's Current Report on Form 8-K dated August 20, 1992).
10.26 Credit Agreement dated October 1, 1992, between Michigan National
Bank and Mueller Industries, Inc. (Incorporated herein by
reference to Exhibit 10.27 of the Registrant's Report on Form 10-
K, dated March 17, 1993, for the fiscal year ended December 26,
1992.)
10.27 Summary description of the Registrant's 1994 bonus plan for
certain key employees.
10.28 Amendment to Employment Agreement, effective January 1, 1994, to
Employment Agreement by and between Mueller Industries, Inc. and
Harvey L. Karp.
10.29 Employment Agreement, effective as of January 1, 1994, by and
between Mueller Industries, Inc. and William D. O'Hagan.
10.30 Amendment to Employment agreement, effective as of July 23, 1993,
by and between Mueller Industries, Inc. and William H. Hensley.
13.0 Mueller Industries, Inc.'s Annual Report to Shareholders for the
year ended December 26, 1993. Such report, except to the extent
incorporated herein by reference, is being furnished for the
information of the Securities and Exchange Commission only and is
not to be deemed filed as a part of this Annual Report on Form 10-
K.
21.0 Subsidiaries of the Registrant.
23.0 Consent of Independent Auditor. (Includes report on Supplemental
Financial Information.)
<PAGE> 21
99.1 Nominee Agreement, dated as of December 29, 1990, as amended by
Amendment No. 1 to Nominee Agreement, dated as of January 28, 1991
and Amendment No. 2 to Nominee Agreement dated as of February 19,
1991 (Incorporated herein by reference to Exhibit 28.1 of the
Registrant's Current Report on Form 8-K, dated December 28, 1990).
99.2 Disputed Claims Agency Agreement, dated as of December 27, 1990 by
and between Mueller Industries, Inc. and Bernhard Schaffler, as
disputed claims agent (Incorporated herein by reference to Exhibit
28.2 of the Registrant's Report on Form 10-K, dated March 29,
1991, for the year ended December 31, 1990).
99.3 Master PBGC Agreement, dated as of December 21, 1990, by and among
Castle Harlan, Inc., Quantum Overseas, N.V., Franklin E. Agnew
III, as Chapter 11 Trustee (the "Chapter 11 Trustee") on behalf of
Sharon Steel Corporation and the Pension Benefit Guaranty
Corporation (Incorporated herein by reference to Exhibit 28.3 of
the Registrant's Report on Form 10-K, dated March 29, 1991, for
the year ended December 31, 1990).
99.4 IRS Settlement Agreement, dated as of December 21, 1990, by and
between the Chapter 11 Trustee on behalf of Sharon Steel
Corporation and Thomas Corbett, United States Attorney, on behalf
of the Commissioner of Internal Revenue (Incorporated herein by
reference to Exhibit 28.4 of the Registrant's Report on Form 10-K,
dated March 29, 1991, for the year ended December 31, 1990).
99.5 Partial Consent Decree, lodged with the United States District
Court for the District of Utah (the "Utah District Court") on
August 20, 1990, by and among the United States of America on
behalf of the United States Environmental Protection Agency, the
State of Utah, and Sharon Steel Corporation by and through its
Chapter 11 Trustee (the "Midvale Consent Decree") (Incorporated
herein by reference to Exhibit 28.5 of the Registrant's Report on
Form 10-K, dated March 29, 1991, for the year ended December 31,
1990).
99.6 (i) Order, dated November 13, 1990, approving the Midvale Consent
Decree and (ii) Notice of Approval of Midvale Consent Decree
(Incorporated herein by reference to Exhibit 28.6 of the
Registrant's Report on Form 10-K, dated March 29, 1991, for the
year ended December 31, 1990).
99.7 (i) Midvale Settlement Agreement made as of October 22, 1990, by
and among the United States of America on behalf of the United
States Environmental Protection Agency, the State of Utah, Sharon
Steel Corporation by and through its Chapter 11 Trustee, Castle
Harlan, Inc., Quantum Overseas, N.V., Walter Sieckman and Wolfgang
Jansen and (ii) Order, dated November 13, 1990, Authorizing
Trustee to Enter Into and Render Performance in Accordance with
Midvale Consent Decree and Proposed Midvale Settlement Agreement
(Incorporated herein by reference to Exhibit 28.7 of the
Registrant's Report on Form 10-K, dated March 29, 1991, for the
year ended December 31, 1990).
<PAGE> 22
99.8 (i) Partial Consent Decree, lodged with the Utah District Court on
November 13, 1990, by and among the United States of America on
behalf of the United States Environmental Protection Agency, UV
Industries, Inc. Liquidating Trust, UV Industries, Inc. and the
State of Utah (the "UV Consent Decree") and (ii) Order, dated
November 13, 1990, approving the UV Consent Decree (Incorporated
herein by reference to Exhibit 28.8 of the Registrant's Report on
Form 10-K, dated March 29, 1991, for the year ended December 31,
1990).
99.9 (i) UV Settlement Agreement, dated as of October 15, 1990, between
UV Industries, Inc. Liquidating Trust, the Chapter 11 Trustee and
Sharon Steel Corporation (the "UV Settlement Agreement") and (ii)
Order, dated November 13, 1990, approving the UV Settlement
Agreement (Incorporated herein by reference to Exhibit 28.9 of the
Registrant's Report on Form 10-K, dated March 29, 1991, for the
year ended December 31, 1990).
99.10 (i) Order, dated November 15, 1990, pursuant to which Atlantic
Richfield Company agreed to withdraw with prejudice its claim and
all proceedings against Sharon Steel Corporation, (ii) Withdrawal,
dated November 15, 1990, with Prejudice of Claim of Atlantic
Richfield Company, (iii) Order, dated November 15, 1990,
dismissing with prejudice Atlantic Richfield Company's Adversary
Proceeding (No. 90-42) against Sharon Steel Corporation, and (iv)
Withdrawal, dated November 14, 1990, with prejudice of Objection
of Atlantic Richfield Company to Disclosure Statement
(Incorporated herein by reference to Exhibit 28.10 of the
Registrant's Current Report on Form 8-K, dated December 28, 1990).
99.11 (i) Motion, dated November 6, 1990, to approve Settlement and
Findings of Fact and Conclusions of Law -- Motion for
Consolidation (the "Carpentertown Settlement") and (ii) Order,
dated November 13, 1990, approving Carpentertown Settlement
(Incorporated herein by reference to Exhibit 28.11 of the
Registrant's Report on Form 10-K, dated March 29, 1991, for the
year ended December 31, 1990).
99.12 (i) Settlement Agreement, dated November 1990, by and among Sharon
Steel Corporation and National Union Fire Insurance Company of
Pittsburgh, PA, Landmark Insurance Company and Lexington Insurance
Company (the "Insurance Settlement") and (ii) Order, dated
November 13, 1990, authorizing Trustee to Enter into and Render
Performance in accordance with the Insurance Settlement
(Incorporated herein by reference to Exhibit 28.12 of the
Registrant's Annual Report on Form 10-K, dated March 29, 1991, for
the year ended December 31, 1990).
99.13 (i) Settlement Agreement, dated November 20, 1990, by and among
IBJ Schroder Bank & Trust Company, Mellon Bank, N.A., Kirkpatrick
& Lockhart and Raymond H. Wechsler and/or Robert J. Brown as
attorney(s)-in-fact ("Mellon Settlement Agreement") and (ii) Order
dated November 20, 1990, approving Mellon Settlement Agreement
(Incorporated herein by reference to Exhibit 28.13 of the
Registrant's Annual Report on Form 10-K, dated March 29, 1991, for
the year ended December 31, 1990).
<PAGE> 23
99.14 (i) Stipulation of Settlement, dated as of February 12, 1991,
Relating to the Claims of IBJ Schroder Bank & Trust Company
("Schroder") entered into by and among Bernhard Schaffler, as
Disputed Claims Agent pursuant to the Plan, Mueller Industries,
Inc., and Schroder ("Schroder Settlement") and (ii) Order, dated
February 22, 1991, approving the Schroder Settlement (Incorporated
herein by reference to Exhibit 28.14 of the Registrant's Annual
Report on Form 10-K, dated March 29, 1991, for the year ended
December 31, 1990).
99.15 (i) Order and Stipulation of Settlement, dated September 21, 1990,
Relating to the claims of the Cleveland-Cliffs Iron Company,
Cliffs TIOP Inc. and Tilden Iron Ore Partnership ("Cleveland-
Cliffs Settlement") and (ii) Order, dated November 13, 1990,
approving Cleveland-Cliffs Settlement (Incorporated herein by
reference to Exhibit 28.15 of the Registrant's Annual Report on
Form 10-K, dated March 29, 1991, for the year ended December 31,
1990).
99.16 (i) Settlement Agreement by and among the Trustee, Sharon Steel
Corporation (including certain subsidiaries of Sharon identified
therein), the Official Committee of Unsecured Creditors of Sharon
Steel and the Posner Affiliates (the "Posner Settlement") and (ii)
Order, dated October 19, 1990, approving the Posner Settlement
(Incorporated herein by reference to Exhibit 28.16 of the
Registrant's Annual Report on Form 10-K, dated March 29, 1991, for
the year ended December 31, 1990).
99.17 (i) Stipulation of Settlement, dated December 21, 1990, by and
among Rockwell International Corp., the Chapter 11 Trustee,
Quantum Overseas, N.V. and Castle Harlan, Inc. ("Rockwell
Settlement") and (ii) Order, dated December 26, 1990, approving
Rockwell Settlement. (Not filed pursuant to seal order entered by
the Bankruptcy Court).
99.18 (i) Stipulation, dated February 14, 1991, settling Claims 1198 and
1199 of Liquid Air Corporation, Bulk Gas Division ("Liquid Air
Corporation Settlement") and (ii) Order, dated February 15, 1991,
approving Liquid Air Corporation Settlement (Incorporated herein
by reference to Exhibit 28.18 of the Registrant's Annual Report on
Form 10-K, dated March 29, 1991, for the year ended December 31,
1990).
99.19 Consent Order, dated March 4, 1991, entered into by and among the
Disputed Claims Agent, Mueller Industries, Inc. and Insurance
Company of North America ("INA"), settling the Claims of INA
(Incorporated herein by reference to Exhibit 28.19 of the
Registrant's Annual Report on Form 10-K, dated March 29, 1991, for
the year ended December 31, 1990).
99.20 Consent Order, dated March 5, 1991, entered into by and among the
Disputed Claims Agent, Mueller Industries, Inc. and Atlas Energy
Group, Inc. ("Atlas"), settling the Claims of Atlas (Incorporated
herein by reference to Exhibit 28.20 of the Registrant's Annual
Report on Form 10-K, dated March 29, 1991, for the year ended
December 31, 1990).
<PAGE> 24
99.21 (i) Stipulation, dated December 11, 1990, conditionally settling
claims of Blue Cross of Western Pennsylvania and Pennsylvania Blue
Shield, and (ii) Letter of Understanding, dated February 8, 1991,
finalizing the Stipulation Conditionally Settling Claims of Blue
Cross of Western Pennsylvania and Pennsylvania Blue Shield
(Incorporated herein by reference to Exhibit 28.21 of the
Registrant's Annual Report on Form 10-K, dated March 29, 1991, for
the year ended December 31, 1990).
99.22 Disputed Claims Agency Agreement, dated February 4, 1992, by and
between Mueller Industries, Inc. and James E. Browne, as disputed
claims agent. (Incorporated herein by reference to Exhibit 28.22
of the Registrant's Annual Report on Form 10-K, dated March 25,
1992, for the year ended December 28, 1991.)
99.23 Consent Decree, dated February 25, 1992, entered into by and among
Mueller Brass Co., the State of Michigan, and PIRGIM Public
Interest Lobby. (Incorporated herein by reference to Exhibit
28.23 of the Registrant's Annual Report on Form 10-K, dated March
25, 1992, for the year ended December 28, 1991.)
99.24 Consent Order, dated June 26, 1991, entered into by and among the
Disputed Claims Agent, Mueller Industries, Inc. and Texas-New
Mexico Power Company ("TNMP"), settling the claims of TNMP.
(Incorporated herein by reference to Exhibit 28.24 of the
Registrant's Annual Report on Form 10-K, dated March 25, 1992, for
the year ended December 28, 1991.)
99.25 Consent Order, dated December 5, 1991, entered into by and among
the Disputed Claims Agent, Mueller Industries, Inc. and Harbison-
Walker Refractories ("HWR"), settling the claims of HWR.
(Incorporated herein by reference to Exhibit 28.25 of the
Registrant's Annual Report on Form 10-K, dated March 25, 1992, for
the year ended December 28, 1991.)
99.26 Consent Order, dated January 24, 1992, entered into by and among
the Disputed Claims Agent, Mueller Industries, Inc. and Luria
Brothers, settling the claims of Luria Brothers. (Incorporated
herein by reference to Exhibit 28.26 of the Registrant's Annual
Report on Form 10-K, dated March 25, 1992, for the year ended
December 28, 1991.)
99.27 Consent Order, dated November 16, 1992, entered into by and among
the Disputed Claims Agent, Mueller Industries, Inc. and Drexel
Burnham Lambert, Inc. ("Drexel"), settling the claims of Drexel.
(Incorporated herein by reference to Exhibit 28.27 of the
Registrant's Annual Report on Form 10-K, dated March 17, 1993, for
the fiscal year ended December 26, 1992.)
99.28 Consent Order, dated April 3, 1992, entered into by and among the
Disputed Claims Agent, Mueller Industries, Inc. and United States
Department of Treasury, Internal Revenue Service (the "IRS"),
settling the claims of the IRS. (Incorporated herein by reference
to Exhibit 28.28 of the Registrant's Annual Report on Form 10-K,
dated March 17, 1993, for the fiscal year ended December 26,
1992.)
<PAGE> 25
99.29 Consent Order, dated April 3, 1992, entered into by and among the
Disputed Claims Agent, Mueller Industries, Inc. and Commonwealth
of Pennsylvania, Department of Revenue ("Commonwealth"), settling
the claims of the Commonwealth. (Incorporated herein by reference
to Exhibit 28.29 of the Registrant's Annual Report on Form 10-K,
dated March 17, 1993, for the fiscal year ended December 26,
1992.)
99.30 Consent Order, dated November 6, 1992, entered into by and among
the Disputed Claims Agent, Mueller Industries, Inc. and the State
of California, Regional Water Quality Board (the "State of
California"), settling the claims of the State of California.
(Incorporated herein by reference to Exhibit 28.30 of the
Registrant's Annual Report on Form 10-K, dated March 17, 1993, for
the fiscal year ended December 26, 1992.)
99.31 Consent Order, dated April 9, 1992, entered into by and among the
Disputed Claims Agent, Mueller Industries, Inc. and the State of
Ohio Bureau of Workers Compensation (the "Bureau"), settling the
claims of the Bureau. (Incorporated herein by reference to
Exhibit 28.31 of the Registrant's Annual Report on Form 10-K,
dated March 17, 1993, for the fiscal year ended December 26,
1992.)
99.32 Consent Order, dated May 28, 1992, entered into by and among the
Disputed Claims Agent, Mueller Industries, Inc. and U.V.
Industries, Inc., Liquidating Trust ("U.V. Trust"), settling
claims of U.V. Trust. (Incorporated herein by reference to
Exhibit 28.32 of the Registrant's Annual Report on Form 10-K,
dated March 17, 1993, for the fiscal year ended December 26,
1992.)
99.33 Consent Order, dated April 14, 1992, entered into by and among the
Disputed Claims Agent, Mueller Industries, Inc. and Travelers
Indemnity Company ("Travelers"), settling the claims of Travelers.
(Incorporated herein by reference to Exhibit 28.33 of the
Registrant's Annual Report on Form 10-K, dated March 17, 1993, for
the fiscal year ended December 26, 1992.)
(b) During the three months ended December 25, 1993, no Current Reports on
Form 8-K were filed.
<PAGE> 26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 23,
1994.
MUELLER INDUSTRIES, INC.
/s/ HARVEY L. KARP
Harvey L. Karp, Chairman of The Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
/S/HARVEY L. KARP Chairman of the Board, and Director March 23, 1994
Harvey L. Karp
/S/RAY C. ADAM Director March 23, 1994
Ray C. Adam
/S/RODMAN L. DRAKE Director March 23, 1994
Rodman L. Drake
/S/GARY S. GLADSTEIN Director March 23, 1994
Gary S. Gladstein
/S/J. ALLAN MACTIER Director March 23, 1994
J. Allan Mactier
/S/WILLIAM D. O'HAGAN President, Chief Executive Officer, March 23, 1994
William D. O'Hagan Director
/S/ROBERT PASQUARELLI Director March 23, 1994
Robert Pasquarelli
/S/PAUL SOROS Director March 23, 1994
Paul Soros
<PAGE> 27
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person on behalf of the
Registrant and in the capacities and on the date indicated.
Signature and Title Date
/S/EARL W. BUNKERS March 23, 1994
Earl W. Bunkers
Chief Financial Officer
(Principal Accounting Officer)
/S/KENT A. MCKEE March 23, 1994
Kent A. McKee
Treasurer and Assistant Secretary
/S/ROY C. HARRIS March 23, 1994
Roy C. Harris
Corporate Controller
<PAGE> 28
INDEX TO FINANCIAL STATEMENTS
The consolidated financial statements, together with the report thereon
of Ernst & Young dated February 14, 1994, appearing on page 12 through and
including 36, of the Company's 1993 Annual Report to Stockholders are
incorporated by reference in this Annual Report on Form 10-K. With the
exception of the aforementioned information, no other information appearing in
the 1993 Annual Report to Stockholders is deemed to be filed as part of this
Annual Report on Form 10-K under Item 8. The following Consolidated Financial
Statement Schedules should be read in conjunction with the consolidated
financial statements in such 1993 Annual Report to Stockholders. Consolidated
Financial Statement Schedules not included with this Annual Report on Form 10-
K have been omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes
thereto.
SUPPLEMENTAL FINANCIAL INFORMATION
Page
Schedules for the fiscal years ended December 25, 1993,
December 26, 1992 and December 28, 1991.
Property, Plant and Equipment (Schedule V) 29
Accumulated Depreciation, Depletion and Amortization
of Property, Plant and Equipment (Schedule VI) 30
Valuation and Qualifying Accounts (Schedule VIII) 31
Short-term Borrowings (Schedule IX) 32
Supplementary Statement of Operations Information (Schedule X) 33
<PAGE> 29
<TABLE>
MUELLER INDUSTRIES, INC.
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
Years Ended December 25, 1993, December 26, 1992, and December 28, 1991
(In thousands)
<CAPTION>
Balance at Balance
Beginning of Additions at Other at end
Classification Period cost Retirements Changes of Period
- --------------------------------- ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year Ended December 25, 1993
Land and land improvements $ 6,737 $ 3 $ (104) $ (267) $ 6,369
Mineral Reserves 2,296 -- -- -- 2,296
Buildings, machinery and equipment 165,625 10,029 (3,315) (1,286) 171,053
Construction in progress 3,379 1,051 (1) -- -- 4,430
------------ ------------ ----------- ----------- -----------
$ 178,037 $ 11,083 $ (3,419) $ (1,553) (2) $ 184,148
============ ============ =========== =========== ===========
Year Ended December 26, 1992
Land and land improvements $ 12,110 $ 307 $ (231) $ (5,449) $ 6,737
Mineral Reserves 2,245 -- -- 51 2,296
Buildings, machinery and equipment 156,122 11,972 (4,215) 1,746 165,625
Construction in progress 5,022 (1,327) (1) (316) -- 3,379
Idle facilities 4,661 -- (4,661) -- --
------------ ------------ ----------- ----------- -----------
$ 180,160 $ 10,952 $ (9,423) $ (3,652) (3) $ 178,037
============ ============ =========== =========== ===========
Year Ended December 28,1991
Land and land improvements $ 12,839 $ 271 $ -- $ (1,000) $ 12,110
Mineral Reserves 2,576 -- (326) (5) 2,245
Buildings, machinery and equipment 146,770 11,647 (610) (1,685) 156,122
Construction in progress 5,115 (93) (1) -- -- 5,022
Idle facilities 19,803 -- -- (15,142) 4,661
------------ ------------ ----------- ----------- -----------
$ 187,103 $ 11,825 $ (936) $ (17,832) (4) $ 180,160
============ ============ =========== =========== ===========
<FN>
(1) Represents net change.
(2) Includes $218 thousand for foreign currency translation adjustments and other reclass items of $1.3 million.
(3) Includes $3.4 million for the write-off of U-Brand Iron assets that were not sold and $5.5 million reclass for Utah
Railway Thistle Track from Land to Buildings, Machinery and Equipment.
(4) Primarily write downs for permanent impairment.
</TABLE>
<PAGE> 30
<TABLE>
MUELLER INDUSTRIES, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
Years Ended December 25, 1993, December 26, 1992, and December 28, 1991
(In thousands)
<CAPTION>
Additions
Balance at Charged to Balance
Beginning of Costs and Other at end
Description Period Expenses Retirements Changes of Period
- --------------------------------- ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year Ended December 25, 1993
Operating properties $ 21,355 $ 10,955 $ (1,664) $ (901) $ 29,745
------------ ------------ ----------- ----------- -----------
$ 21,355 $ 10,955 $ (1,664) $ (901) (1) $ 29,745
============ ============ =========== =========== ===========
Year Ended December 26, 1992
Operating properties $ 10,875 $ 11,502 $ (1,217) $ 195 $ 21,355
------------ ------------ ----------- ----------- -----------
$ 10,875 $ 11,502 $ (1,217) $ 195 $ 21,355
============ ============ =========== =========== ===========
Year Ended December 28, 1991
Operating properties $ 0 $ 10,679 $ (25) $ 221 $ 10,875
------------ ------------ ----------- ----------- -----------
$ 0 $ 10,679 $ (25) $ 221 $ 10,875
============ ============ =========== =========== ===========
<FN>
NOTE: Depletion of mineral reserves is generally computed using the units-of-production method. Depreciation is
computed by the straight-line method based on the following useful lives:
Land improvements 10-20 years
Machinery and equipment 5-20 years
Buildings 20-40 years
(1) Includes $66 thousand for foreign currency translation adjustments and other reclass items of $835 thousand.
</TABLE>
<PAGE> 31
<TABLE>
MUELLER INDUSTRIES, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 25, 1993, December 26, 1992, and December 28, 1991
(In thousands)
<CAPTION>
Additions
-------------------------------
Balance at Charged to Deductions Balance
beginning of costs and Other from at end
Year expenses Additions reserves of year
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1993
Allowance for Doubtful Accounts $ 4,473 $ 59 $ 0 $ 1,037 $ 3,495
Environmental Reserves $ 9,185 $ 1,060 $ 1,000 (5) $ 2,598 $ 8,647
Restructuring Reserves $ 6,968 $ (363) $ 0 $ 1,300 $ 5,305
Other Reserves (2) $ 13,149 $ 0 $ (1,000) (5) $ 146 $ 12,003
Valuation Allowance for Deferred
Tax Assets $ 88,081 $ 0 $ 0 $ 2,743 $ 85,338
1992
Allowance for Doubtful Accounts $ 6,925 $ 2,794 $ 0 $ 5,246 $ 4,473
Environmental Reserves $ 11,458 $ 253 $ 2,500 (1) $ 5,026 $ 9,185
Restructuring Reserves $ 16,744 $ 2,279 $ 0 $ 12,055 $ 6,968
Other Reserves (2) $ 18,200 $ 6,588 $ (2,500) (1) $ 9,139 $ 13,149
Valuation Allowance for Deferred
Tax Assets $ 0 $ 0 $ 88,081 (3) $ 0 $ 88,081
1991
Allowance for Doubtful Accounts $ 1,985 $ 6,344 $ 0 $ 1,404 $ 6,925
Environmental Reserves $ 9.850 $ 2,700 $ 0 $ 1,092 $ 11,458
Restructuring Reserves $ 18,404 $ 4,074 $ 1,869 (4) $ 7,603 $ 16,744
Other Reserves (2) $ 18,633 $ 10,438 $ 0 $ 10,871 $ 18,200
<FN>
(1) US Fuel Reclamation reserve classified as "Other Reserve" in 1991, "Environmental Reserve" in 1992.
(2) Other reserves are included in the balance sheet captions "Other current liabilities" and "Other noncurrent liabilities."
(3) Valuation reserve for certain income tax attributes that remain unrecognized. The amount results from the adoption of
SFAS No. 109 as of the beginning of 1992.
(4) Remaining restructuring reserves established upon the acquisition of U-Brand in January 1990. Balances were previously
classified as other liabilities.
(5) Reclass from Other Reserves to Environmental Reserves.
</TABLE>
<PAGE> 32
<TABLE>
MUELLER INDUSTRIES, INC.
SCHEDULE IX - SHORT-TERM BORROWINGS
Years Ended December 25, 1993, December 26, 1992, and December 28, 1991
(In thousands)
<CAPTION>
Weighted Maximum Average Weighted
average amount amount average
Balance at interest rate outstanding outstanding interest rate
end of year at end of year during the year for the year (1) for the year (2)
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1993
Borrowings under
revolving credit facility -- -- -- -- --
1992
Borrowings under
revolving credit facility -- -- $ 17,000 $ 11,112 6.46%
1991
Borrowings under
revolving credit facility $ 14,000 6.25% $ 14,000 $ 1,156 6.90%
- -----------------
<FN>
(1) The average amount outstanding is computed by multiplying the amount of each draw against the revolving
credit facility by the number of days outstanding divided by the days in the year.
(2) The average interest rate for the year is computed by dividing the total interest expense on short-term
borrowings for the year by average amount outstanding for the year.
</TABLE>
<PAGE> 33
<TABLE>
MUELLER INDUSTRIES, INC.
SCHEDULE X - SUPPLEMENTARY STATEMENT OF OPERATIONS INFORMATION
Years Ended December 25, 1993, December 26, 1992, and December 28, 1991
(In thousands)
<S> <C>
Year ended December 25, 1993
Maintenance and repairs $ 6,628
Amortization of intangible assets $ 2,357
Year ended December 26, 1992
Maintenance and repairs $ 4,981
Amortization of intangible assets $ 1,003
Year ended December 28, 1991
Maintenance and repairs $ 3,651
Amortization of intangible assets $ 2,615
<FN>
Note: Taxes other than payroll and income taxes, royalties and advertising costs were each less than 1% of total sales and
revenues for 1991, 1992 and 1993.
</TABLE>
<PAGE> 34
EXHIBIT INDEX
Exhibits Description Page
4.2 Certain instruments with respect to long-term debt of
the Company have not been filed as Exhibits to the
Report since the total amount of securities authorized
under any such instrument does not exceed 10 percent of
the total assets of the company and its subsidiaries on
a consolidated basis. The Company agrees to furnish a
copy of each such instrument upon request of the
Securities and Exchange Commission.
10.27 Summary description of the Registrant's 1994 bonus plan
for certain key employees.
10.28 Amendment to Employment Agreement, effective January 1,
1994, to Employment Agreement by and between Mueller
Industries, Inc. and Harvey L. Karp.
10.29 Employment Agreement, effective as of January 1, 1994,
by and between Mueller Industries, Inc. and William D.
O'Hagan.
10.30 Amendment to Employment agreement, effective as of July
23, 1993, by and between Mueller Industries, Inc. and
William H. Hensley.
13.0 Mueller Industries, Inc.'s Annual Report to
Stockholders for the year ended December 25, 1993.
Such report, except to the extent incorporated herein
by reference, is being furnished for the information of
the Securities and Exchange Commission only and is not
to be deemed filed as a part of this Annual Report on
Form 10-K.
21.0 Subsidiaries of the Registrant.
23.0 Consent of Independent Auditor. (Includes report on
Supplemental Financial Information.)
<PAGE> 1
1994 BONUS PLAN FOR CERTAIN KEY EMPLOYEES
The Company has a discretionary bonus program under which exempt
salaried employees (other than the CEO and Chairman) will be paid bonuses up
to amounts ranging from 7-1/2% to 60% of base annual salary. The CEO and
Chairman participate in this plan, with bonuses specifically determined by the
board of directors, but on a percentage of base salary at least equal to the
percentage bonus that will be payable to senior management under the 1994
Bonus Plan. The bonus percent is based on a variety of guidelines including
performance levels of the Company measured by earnings before tax.
<PAGE> 1
AMENDMENT
AMENDMENT, effective as of January 1, 1994, to EMPLOYMENT AGREEMENT by
and between MUELLER INDUSTRIES, INC., a Delaware corporation having its
principal address at 2959 North Rock Road, Wichita, Kansas 67226 (the
"Employer"), and HARVEY KARP, an individual residing at West End Road (P.O.
Box 30), East Hampton, New York 11937 (the "Executive").
WITNESSETH:
WHEREAS, the parties desire to amend the Employment Agreement, effective
as of October 1, 1991, between Employer and Executive ( the "Employment
Agreement"; the Employment Agreement, as amended by this Amendment, being
hereinafter called the "Agreement").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto covenant and agree as follows:
1. Section 3 a (i) of the Agreement shall be revised to increase
Employee's base salary to $550,000 per annum.
2. Section 3 a (iii) of the Agreement shall be revised to read as
follows: "a discretionary cash incentive bonus (the "Bonus") for the period
ending on December 25, 1993, based on a percentage of base salary at least
equal to the percentage bonus that will be payable to senior management (level
10 and up) under the Employer's existing 1993 bonus program, and for each
subsequent calendar year or part thereof during which the Executive is
employed, the amount of such Bonus to be consistent with the executive bonus
program which Employer establishes for other key employees."
3. Section 4 e (i) and (ii) of the Agreement shall be revised to
provide that Bonus for calendar years do not need to be paid by Employer on
December 31 of the calendar year in which the Bonus is earned, but may, at
Employer's option, be paid to Executive within ninety days of said date.
4. Executive existing option agreements shall be automatically amended
to provide that Executive may exercise his options from time to time by paying
(i) cash or, at Executive's option, executing a promissory note in favor of
the Employer, in the form attached hereto as Exhibit A, and containing the
following terms: (i) the note would be secured by the stock, which could not
otherwise be sold, assigned, pledged, encumbered, transferred or otherwise
hypothecated by Executive as long as the note was outstanding, provided,
however, that Executive would be free to sell any or all such shares so long
as the Executive paid down the note in an amount equal to the option price
times the number of shares sold; (ii) the note would be due in three years
from the date of exercise of the option; (iii) interest would be payable
quarterly; (iv) the interest rate would be fixed at the higher of (x) the
three year treasury rate in effect when the options were exercised, and (y)
the rate at which Employer is itself then able to borrow funds having a three
year term; and (v) the note would be prepayable, at any time, in whole or in
part without penalty.
<PAGE> 2
5. Employer agrees that, at Employer's cost, it will file a
Registration Statement on Form S-8 (or its equivalent) relating to Executive's
existing options. Executive agrees to provide Employer with reasonable notice
of Executive's desire to have such a Registration Statement prepared and filed
with the Securities and Exchange Commission..
6. Executive shall receive six months severance pay, if Employer elects
not to continue Executive's employment under the Agreement as provided in
Section 1 of the Agreement.
7. Except as expressly amended by this Amendment, the remaining terms
and provisions of the Employment Agreement shall remain unchanged and continue
in full force and effect.
8. This Amendment may be executed in counterparts, each of which shall
be deemed an original but which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Amendment as of the date first above written.
MUELLER INDUSTRIES, INC.
By: /s/ William D. O'Hagan /s/ Harvey L. Karp
Name: William D. O'Hagan Harvey Karp
Title: President Date: 11/9/93
Date: 11/8/93
<PAGE> 3
EXHIBIT A
[Form of Promissory Note(s)]
PROMISSORY NOTE
$____[1]________ ____[2]_____, 199_
Harvey L. Karp, an individual living at ___________[3]_______________
("Borrower"), hereby promises to pay to Mueller Industries, Inc., a Delaware
corporation ("Mueller") the principal sum of
______________[1]_______________________ ($___[1]______), on
________[4]_______ and to pay interest (computed on the basis of a 360-day
year) on the unpaid principal balance thereof from the date of this Note at
the rate of ___________[5]_____ percent (___[5]%) per annum, quarterly on the
last day of each March, June, September and December in each year, until the
principal amount hereof shall be come due and payable.
Payments of principal and interest shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts to the address designated
by Mueller.
This Note shall be secured by common stock of Mueller Industries, Inc.,
which stock is being acquired by Borrower through issuance of this Note in
favor of Mueller. Borrower shall deliver such stock to Mueller at the time
this Note is executed. Borrower agrees that he will not otherwise sell,
assign, pledge, encumber, transfer or otherwise hypothecate said stock so long
as this Note is outstanding, provided, however, that Borrower is free to sell
any or all such shares so long as the Borrower pays down this Note in an
amount equal to the option price times the number of shares sold. Borrower
and Mueller agree to cooperate, in the event of a partial sale, in order to
facilitate such a sale, while preserving Mueller's security interest in the
remaining shares.
This Note may be prepaid, at any time, in whole or in part, without
penalty.
THIS NOTE IS GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, INTERNAL NEW YORK LAW.
-------------------
Harvey L. Karp
(1) Principal amount of Note is equal to the purchase price for shares
acquired by Borrower through exercise of options issued by Mueller to Borrower
in 1991 and 1992 which are to be paid for through issuance of the Note.
(2) Date shall be date Borrower exercises options issued by Mueller to
Borrower during 1991 and/or 1992 which are to be paid for through issuance of
the Note.
(3) Borrower's then current residential address shall be inserted.
<PAGE> 4
(4) The due date shall be the third anniversary of the date inserted in (2).
(5) The interest rate shall be the higher of (i) the three year treasury rate
in effect when said options are exercised, and (ii) the rate at which Mueller
is itself then able to borrow funds having a three year term.
<PAGE> 1
EMPLOYMENT AGREEMENT, effective as of January 1, 1994, by and between
MUELLER INDUSTRIES, INC., a Delaware corporation having its principal address
at 2959 North Rock Road, Wichita, Kansas 67226 (the "Employer"), and William
D. O'Hagan, an individual residing at 1104 North Linden Circle, Wichita,
Kansas 67206 (the "Executive").
WITNESSETH:
WHEREAS, the parties desire to provide for the employment of the
Executive by the Employer as set forth in this agreement (this agreement being
hereinafter called the "Agreement").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto covenant and agree as follows:
1. Term of Employment.
The employer agrees to employ the Executive, and the Executive hereby
accepts such employment, as President and Chief Executive Officer of the
Employer, for a term commencing as of January 1, 1994, and ending on December
31, 1996 (the "Term"). The preceding sentence notwithstanding, the
Executive's employment hereunder may be terminated earlier in accordance with
Section 4 hereof. Subject to earlier termination as provided in Section 4
hereof, the Executive's term of employment hereunder, as extended by any
temporary leave of absence, is hereinafter referred to as the "Employment
Period."
2. Duties and Authority.
During the Employment Period the Executive shall serve as President and
Chief Executive Officer of the Employer. The Executive shall devote his best
efforts and full working time and attention to services for the Employer. The
Executive agrees to hold any other office or position with the Employer or any
of the Employer's subsidiaries without additional compensation if elected or
appointed to such office or position.
3. Compensation.
a. As compensation for the Executive' services in all
capacities during the Employment Period, the Employer shall pay the Executive
the following:
i. a base salary for the first calendar year at a rate of
$375,000.00 per annum to be paid in equal installments in accordance with
normal payroll practices of the Employer but not less frequently than monthly,
and for each subsequent calendar year or part thereof during which the
Executive is employed, a base salary to be determined by the Employer acting
in good faith, but not less than the base salary in the first calendar year
(the "Base Salary");
<PAGE> 2
ii. a discretionary cash incentive bonus (the "Bonus"),
for the period ending on December 25, 1993, based on a percentage of base
salary at least equal to the percentage bonus that will be payable to senior
management (level 10 and up) under the Employer's existing 1993 bonus program,
and for each subsequent calendar year or part thereof during which the
Executive is employed, the amount of such Bonus to be consistent with the
executive bonus program which Employer establishes for other key executives.
iii. an option (the "Option") to acquire fifty thousand
(50,000) shares of common stock of the Employer pursuant to the 1991 Incentive
Stock Option Plan, such option to be in the form and subject to the terms and
conditions expressed in Exhibit A attached hereto.
b. The Executive shall be entitled to reimbursement for
reasonable business and travel expenses incurred in the performance of his
duties in accordance with the Employer's normal reimbursement practices.
c. Subject to the terms of the applicable plan and/or program,
the Executive shall participate in all bonus, incentive, stock option,
pension, disability and health plans and programs and all fringe benefit plans
maintained by or on behalf of the Employer and in which senior executives of
the Employer are entitled to participate.
d. Employer agrees that, at Employer's cost, it will file a
Registration Statement on Form S-8 (or its equivalent) relating to Executive's
existing options to acquire 100,000 shares of common stock of the Employer.
Executive agrees to provide Employer with reasonable notice of Executive's
desire to have such a Registration Statement prepared and filed with the
Securities and Exchange Commission.
4. Termination of Employment.
a. The Executive's employment hereunder shall terminate upon
the Executive's death, and the Employer shall have the right to terminate the
Executive's employment upon his permanent disability. A permanent disability
is a physical or mental disability which results in the Executive's inability
to substantially perform his duties hereunder for a period of 90 consecutive
days or for a period of 120 days within any period of 12 consecutive months,
except that a permanent disability shall not include a physical or mental
disability which occurs in connection with the Executive's employment
hereunder. In the event of termination by reason of death or permanent
disability, the Employer's obligation to pay further compensation hereunder
shall cease on the date of termination, except that the Executive (or, in the
case of death, his beneficiaries, or his estate if no beneficiary has been
named) shall be entitled to receive his Base Salary and Bonus prorated on a
calendar day basis through the date of such termination.
b. The Employer may terminate the Executive's employment
hereunder for Cause (as defined below) upon not less than 30 days prior
written notice specifying such cause. If the Executive's employment hereunder
is terminated for Cause, the Executive shall forfeit the Option effective as
of the date of the termination of his employment, but the Option shall remain
exercisable for the 30 day period following the Executive's receipt of written
notice required under this Section 4(b). For purposes of this Agreement, the
term "Cause" shall mean (i) the Executive's willful and continued failure to
substantially perform his duties hereunder, (ii) the engaging by the
<PAGE> 3
Executive in willful misconduct which is demonstrably and materially injurious
to the Employer, or (iii) the Executive's conviction of a felony for a crime
of moral turpitude. For purposes of this Section 4(b), no act, or failure to
act, on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interest of the Employer. The
Executive shall not be terminated for Cause in the case of actions or
omissions described in clauses (i) or (ii) of this Section 4(b) unless the
Employer shall have given the Executive an opportunity to cure any such
actions or omissions during the 30 day period after the Executive's receipt of
written notice required under this Section 4(b).
c. If the Executive's employment shall terminate by expiration
of the Employment Period in accordance with Section 1 hereof, or if his
employment is terminated for Cause pursuant to Section 4(b), or if the
Executive shall voluntarily resign for any reason, the Executive's right to
receive the Base Salary (except any accrued and unpaid salary), the Bonus, and
any other compensation and benefits to which he would otherwise be entitled
under this Agreement shall be forfeited as of the date of termination of
employment.
(i) If the Executive's employment hereunder shall terminate
by expiration of the Employment Period, in accordance with Section 1 hereof,
on December 31, 1996, and Employer and Executive have not entered into a new
employment agreement on mutually satisfactory terms, the Executive shall be
entitled to receive the Bonus for calendar year 1996 in accordance with
Section 3(a)(ii) hereof. Employer shall be entitled to make required
withholdings from any such payment.
d. If Executive and Employer shall not have entered into a new
employment agreement on mutually satisfactory terms on or prior to December
31, 1996, the Executive shall be placed on a temporary leave of absence for
six months. During said time period, Executive shall (i) remain as an
employee of the Company, and (ii) continue to receive Base Salary payments,
but Employer shall have the right, at its sole election, to replace Executive
as the Chief Executive Officer and President. During this leave of absence,
Executive shall not be precluded by this Agreement from seeking or obtaining
new full time employment. At the end of said six month temporary leave of
absence, if Executive and Employer shall not have entered into a new
employment arrangement, Executive's employment shall be automatically
terminated. In such event, Executive shall not be entitled to any severance
payments.
e. The Executive's death shall not affect his rights under the
Option.
5. Notices.
Any notice or other communication hereunder shall be made in
writing by hand-delivery and shall be deemed to have been delivered and
received when delivered by hand, if personally delivered, as follows: (a) if
to the Executive at the address shown at the beginning of this Agreement or to
such other person(s) or address(es) as the Executive shall have furnished to
the Employer in writing, and (b) if to the Employer at the address shown at
the beginning of this Agreement, attention of the Board of Directors, with a
copy to the Employer at the same address, Attention: General Counsel, or to
such other person(s) or address(es) as such persons or the Company shall have
furnished to the Executive in writing
<PAGE> 4
6. Assignability.
This Agreement shall not be assignable by the Employer except to a
majority-owned subsidiary or parent entity of the Employer and shall be
binding upon and inure to the benefit of the Employer and its successors and
assigns. This Agreement shall not be assignable by the Executive, but it
shall be binding upon, and to the extent provided in Section 4(a) shall inure
to the benefit of, the Executive's heirs, executors, administrators and legal
representatives.
7. Entire Agreement.
This Agreement supersedes all prior understandings between the
Executive and the Employer as to the subject matter hereof.
8. Waivers, Amendments and Further Agreements.
Neither this Agreement nor any term or condition hereof, including
without limitation the terms and conditions of this Section 8, may be waived,
modified or amended in whole or in part as against the Employer or the
Executive except by written instrument executed by each of the parties
expressly stating that it is intended to operate as a waiver, modification or
amendment of this Agreement or the applicable term or condition hereof. Each
of the parties hereto agrees to execute all such further instruments and
documents and to take all such further action as the other party may
reasonably require in order to effectuate the terms and purposes of this
Agreement.
9. Severability.
In case one or more of the provisions contained in this Agreement
shall be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
10. No Conflicting Obligations.
The executive represents and warrants to the Employer that the
Executive is not now under any obligation to anyone other than the Employer
and other entities of which he is a non-executive director and has no interest
which is inconsistent or in conflict with this Agreement, or would prevent,
limit or impair, in any way, the Executive's performance of any of the
covenants or duties hereinabove set forth. However, subject to Section 2
hereof, nothing herein shall be deemed to limit the Executive's participation
in, or pursuit of, non-conflicting business interests.
11. Survival.
Except as otherwise provided herein, the covenants, agreements,
representations and warranties contained in or made pursuant to this Agreement
shall survive the Executive's termination of employment, irrespective of any
investigation made by or on behalf of any party.
12. Governing Law.
This agreement shall be governed by and construed and enforced in
accordance with the law of the State of Kansas.
<PAGE> 5
13. Arbitration.
Any dispute, controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be finally settled by arbitration
by a single arbitrator in accordance with the rules then in effect of the
American Arbitration Association in an arbitration in Wichita, Kansas.
Judgment upon an award rendered by the arbitrator may be entered in any court
of competent jurisdiction.
14. Headings.
The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation
of this Agreement.
15. Counterparts.
This Agreement may be executed in counterparts each of which shall
be deemed an original but which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Agreement effective as of the date first above written.
MUELLER INDUSTRIES, INC.
By: /S/HARVEY L. KARP
Name:
Title:CEO & CHAIRMAN OF B/D
Date:11/9/93
/S/WILLIAM D. O'HAGAN
William D. O'Hagan
Date:11/8/93
<PAGE> 6
EXHIBIT A
1. Except as provided in the next sentence, vesting would occur ratably
over a five year term, with the first 20% vesting on January 1, 1995. If
Employer and Executive do not enter into a new employment agreement prior to
September 30, 1996, all remaining unvested options shall become immediately
exercisable on that date.
2. Executive may exercise his options from time to time by paying (i) cash
or, at Executive's option, (ii) executing a promissory note in favor of the
Employer, in the form attached hereto as Exhibit 1, and containing the
following terms: (i) the note would be secured by the stock, which could not
otherwise be sold, assigned, pledged, encumbered, transferred or otherwise
hypothecated by Executive so long as the note was outstanding, provided,
however, that Executive would be free to sell any or all such shares so long
as the Executive paid down the note in an amount equal to the option price
times the number of shares sold; (ii) the note would be due in three years
from the date of exercise of the option; (iii) interest would be payable
quarterly; (iv) the interest rate would be fixed at the higher of (x) the
three year treasury rate in effect when the options were exercised and (y) the
rate at which Employer is itself then able to borrow funds having a three year
term; and (v) the note would be prepayable, at any time, in whole or in part
without penalty.
3. If Executive elects to pay cash, shares acquired by Executive shall be
immediately able to be sold, assigned, pledged, encumbered, transferred or
otherwise hypothecated by Executive.
<PAGE> 7
EXHIBIT 1
[Form of Promissory Note(s)]
PROMISSORY NOTE
$____[1]________ ____[2]_____, 199_
William D. O'Hagan, an individual living at
___________[3]_______________ ("Borrower"), hereby promises to pay to Mueller
Industries, Inc., a Delaware corporation ("Mueller") the principal sum of
______________[1]_______________________ ($___[1]______), on
________[4]_______ and to pay interest (computed on the basis of a 360-day
year) on the unpaid principal balance thereof from the date of this Note at
the rate of ___________[5]_____ percent (___[5]%) per annum, quarterly on the
last day of each March, June, September and December in each year, until the
principal amount hereof shall be come due and payable.
Payments of principal and interest shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts to the address designated
by Mueller.
This Note shall be secured by common stock of Mueller Industries, Inc.,
which stock is being acquired by Borrower through issuance of this Note in
favor of Mueller. Borrower shall deliver such stock to Mueller at the time
this Note is executed. Borrower agrees that he will not otherwise sell,
assign, pledge, encumber, transfer or otherwise hypothecate said stock so long
as this Note is outstanding, provided, however, that Borrower is free to sell
any or all such shares so long as the Borrower pays down this Note in an
amount equal to the option price times the number of shares sold. Borrower
and Mueller agree to cooperate, in the event of a partial sale, in order to
facilitate such a sale, while preserving Mueller's security interest in the
remaining shares.
This Note may be prepaid, at any time, in whole or in part, without
penalty.
THIS NOTE IS GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, INTERNAL KANSAS LAW.
----------------------------------
William D. O'Hagan
(1) Principal amount of Note is equal to the purchase price for shares
acquired by Borrower through exercise of options issued by Mueller to Borrower
on November 4, 1993 which are to be paid for through issuance of the Note.
(2) Date shall be date Borrower exercises options issued by Mueller to
Borrower on November 4, 1993 which are to be paid for through issuance of the
Note.
(3) Borrower's then current residential address shall be inserted.
<PAGE> 8
(4) The due date shall be the third anniversary of the date inserted in (2).
(5) The interest rate shall be the higher of (i) the three year treasury rate
in effect when said options are exercised, and (ii) the rate at which Mueller
is itself then able to borrow funds having a three year term.
<PAGE> 1
AMENDMENT TO EMPLOYMENT AGREEMENT
WHEREAS, effective as of November 26, 1991, William H. Hensley
("Executive") and Mueller Industries, Inc. ("Employer"), entered into an
Employment Agreement (the "Agreement"); and
WHEREAS, Executive and Employer desire to extend the term of the
Agreement and make other modifications;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. The Employment term shall be extended from December 31, 1993, to
December 31, 1995 (such two year period being called the "Extension Term").
2. All other provisions of the Agreement shall remain unchanged, except
(i) for the Extension Term, (ii) that, during the Extension Term, Executive is
not entitled to any signing bonus, any guaranteed bonus, or any additional
options under Employer's 1991 Incentive Stock Option Plan, and (iii) that if,
following the Extension Term, Employer elects not to extend Executive's
employment, Executive shall not automatically be entitled to six months
severance payments.
3. It is understood and agreed that this agreement satisfies Employer's
obligation as set forth in Section 4 e of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of July 23, 1993.
MUELLER INDUSTRIES, INC.
By:/s/ Harvey L. Karp
Name:
Title: CEO
Date: July 23, 1993
/s/ William H. Hensley
William H. Hensley
Date: August 3, 1993
<PAGE> 1 EXHIBIT 13.0
Mueller Industries, Inc. is a leading fabricator of brass, bronze, copper,
plastic and aluminum products.
The range of these products is broad: copper tube and fittings; brass and
copper alloy rods, bars and shapes; brass and bronze forgings; aluminum and
copper impact extrusions; plastic fittings and valves; and refrigeration
valves, driers and flare fittings.
The Company also owns a short line railroad in Utah and natural resource
properties in the Western United States, Alaska and Canada.
Mueller operates eight factories in the United States and Canada, and has
distribution facilities nationwide and sales representation worldwide.
CONTENTS
Financial Highlights 2
Long-Term Goals & Strategies 3
Report to Stockholders 4
Profile of Businesses 6
Financial Review 8
Consolidated Financial Statements
Statements of Operations 12
Balance Sheets 13
Statements of Cash Flows 15
Statements of Stockholders' Equity 17
Notes to Consolidated Financial Statements 18
Report of Independent Auditors 34
Capital Stock Information 35
Selected Financial Data 36
Corporate Information 37
<PAGE> 2 EXHIBIT 13.0
<TABLE>
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share data)
<CAPTION>
1993 1992
<S> <C> <C>
SUMMARY OF OPERATIONS
Net sales $ 501,885 $ 517,339
Sales of manufactured products
in millions of pounds 362 329
Net income $ 21,136 $ 16,666
Average shares outstanding 10,443 10,055
Net income per share- primary $ 2.02 $ 1.66
SIGNIFICANT YEAR-END DATA
Cash and cash equivalents $ 77,336 $ 44,459
Ratio of current assets to
current liabilities 3.8 to 1 3.0 to 1
Working capital $ 143,505 $ 120,855
Long-term debt (including current portion) $ 62,711 $ 69,477
Debt as a percent of capitalization 22.0% 25.4%
Stockholders' equity $ 222,114 $ 204,421
Book value per share $ 23.18 $ 21.21
Capital expenditures $ 11,083 $ 10,952
Number of employees 2,010 2,055
</TABLE>
<PAGE> 3 EXHIBIT 13.0
LONG-TERM GOALS & STRATEGIES
Mueller has grown and prospered for over 75 years. The Company
manufactures products of world class quality and provides customers with
superior service. We are proud of this heritage, but are determined to achieve
even higher standards in the future. To realize this goal, we will pursue the
following strategies:
* Reduce our Costs to be a low cost supplier to our customers;
* Employ the Best Technology to assure our customers of quality products and
service;
* Broaden our Product Lines through internal growth and acquisitions; and
* Leverage our Distribution Network by increasing product offerings to our
domestic and international customers.
Management believes these goals are realistic and achievable. Our
objective is to enhance the value of our stockholders' investment.
<PAGE> 4 EXHIBIT 13.0
A REPORT TO OUR STOCKHOLDERS
It is a pleasure to report that Mueller Industries, Inc. achieved record
earnings in 1993. Net income was $21.1 million compared with $16.7 million in
1992, a 27 percent increase. Earnings per share increased to $2.02 in 1993,
compared with $1.66 in 1992. Perhaps the best indicator of our Company's
earnings momentum was the 30 percent increase in our operating profit to $38.0
million compared with $29.3 million in 1992.
Net sales totaled $501.9 million in 1993 compared with $517.3 million in
1992. This sales decline was directly attributable to a significant drop in
copper prices. The most relevant measure of the Company's sales activity is
total pounds shipped which improved 10 percent in 1993.
STRONG FINANCIAL CONDITION:
Mueller continues to gain in financial strength. Our cash position at
year-end was $77.3 million, with a current asset to current liability ratio of
3.8 to 1. By the end of 1993, our stockholders' equity increased to $222.1
million and working capital climbed to $143.5 million. Our debt to total
capitalization remained conservative at 22 percent at the close of
1993.
MANUFACTURING OPERATIONS CONTINUE TO IMPROVE:
Our manufacturing operations had a highly successful year. The copper tube
mill exceeded all prior production records. In part, this was the result of a
capital improvement program which increased annual capacity by 12 to 15
million pounds. The added capacity became fully available in the fourth
quarter of 1993 and, consequently, its full benefit will be realized in 1994.
We also have scheduled a follow-up capital improvement program for the tube
mill. This new program will cost approximately $20 million and should be
completed by mid-1995. Our objective is to improve efficiency, productivity
and yields as well as add capacity.
Our fittings plant in Covington, Tennessee operated near full capacity
during the latter part of 1993, and at times the demand for our wrot copper
products exceeded our ability to supply them. We are, of course, taking steps
to increase our production capacity. In fact, we are in the planning phase of
a multi-year program to expand and modernize our wrot copper fittings
business. We could see the initial benefits from this program as early as
1994, and even more in the following years.
The Company's plastic fittings business increased its sales and production
during 1993, but nonetheless, operated at a loss. This was due to a sharp
decline in the selling prices of these products. We believe this price decline
is economically unsound and will be reversed in due course. In recent months,
prices have increased somewhat although they remain below the average prices
of the last three years.
Our brass rod mill had an outstanding year. Production and shipments were
the best in its 75 year history. The rod mill is an excellent example of the
benefits of teamwork and hard work. We now produce the finest quality brass
rod in the industry and are backing it up with the best service. However, we
are confident that we can do even more. In 1994, we start the installation of
an indirect extrusion press. The costs of the press and related improvements
will be approximately $15 million. The press will significantly reduce our
conversion costs while increasing capacity. Installation of the new press,
which is anticipated to be completed in mid-1995, should not interfere with
current production.
The impacts, forgings and refrigeration businesses also had a successful
1993. These businesses have untapped potentials and it is our mission to
explore and exploit these opportunities for growth.
Our export business held its own in 1993, despite the severe recession
in Europe. Our Canadian subsidiary also was affected by the downturn of
European economies, but nonetheless, was solidly profitable.
<PAGE> 5 EXHIBIT 13.0
A REPORT TO OUR STOCKHOLDERS (Continued)
NATURAL RESOURCE PROPERTIES:
The Utah Railway Company increased its tonnage of coal shipments by
approximately 18 percent during 1993 with a comparable increase in operating
profits. We are proud of our Utah employees who operate, what we believe to
be, one of the most efficient short haul railroads in the United States.
Alaska Gold Company, our 85 percent owned subsidiary, located in Nome,
Alaska sold 22,396 ounces of gold in 1993 at an average price of $375 per
ounce. In 1994, Alaska Gold will be operating a second pilot program to
determine the feasibility of open pit mining. By next year, we expect to know
whether this method of mining for gold is cost effective.
Early in 1993, we ceased coal mining operations in Hiawatha, Utah and sold
our rights under our remaining coal supply contract. This mining property is
undergoing reclamation and will be offered for sale in about one year.
We are proceeding with our previously announced plan to divest certain of
our natural resource properties.
OUTLOOK:
The principal market for our manufactured products is the housing
industry. In 1993, new housing starts totaled 1,285,000 units, a 7 percent
increase over 1992.
Many housing analysts believe there is a considerable pent-up demand for
housing due to continued improvement in the national economy, renewed consumer
confidence, continued low interest rates, mortgage rates near 25 year lows,
the deferred demand from the 1990-1991 downturn, and an increase in the rate
of household formations. Consequently, we expect the housing industry to
experience vigorous growth over the next two to three years. Housing analysts
are currently projecting housing starts of 1,400,000 units in both 1994 and
1995. Such increases should provide Mueller with a favorable business climate.
Effective as of January 1, 1994, Mueller's Board of Directors appointed
William D. O'Hagan, C.E.O. of the Company. Harvey L. Karp will continue to
serve the Company on a full-time basis as Chairman of the Board.
Our Company's progress during 1993 would not have been possible without
the dedication, ability and enthusiasm of our employees. They are the soul and
the substance of our Company and the reason for our optimism about Mueller's
future.
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
March 17, 1994
<PAGE> 6 EXHIBIT 13.0
INDUSTRIAL PRODUCTS
The Industrial Products Division includes the rod mill and forging
facility in Port Huron, Michigan and the impact extrusion plant in Marysville,
Michigan. The rod mill is a leading extruder of free-cutting brass bar stock
and also produces special purpose copper alloy rod. The forging operation
produces brass, bronze and aluminum hot, closed-die forgings in a broad range
of sizes and shapes. Mueller cold forgings (impact extrusions) represent one
of the most efficient and economical manufacturing methods available for
component parts that deliver significant savings in both labor and
materials.
Mueller rod products, hot forgings and impact extrusions are found in a
variety of end products ranging from plumbing brass, automotive components,
valves and fittings, and industrial machinery and equipment. Industrial
products are sold largely to OEM customers in the plumbing, refrigeration,
fluid power, industrial valves and fittings, and automotive industries.
Mueller is upgrading the rod mill manufacturing processes with a $15
million expansion that includes the installation of an indirect extrusion
press, new billet heating furnaces, rod coilers, runout conveyors and material
handling systems. Mueller's objective is to become the low cost producer of
free cutting brass rod in North America.
COPPER TUBE PRODUCTS
The Fulton, Mississippi plant produces more than 200 copper tube products
which is one of the broadest lines offered by a single manufacturer. Tube
products include dehydrated coils and nitrogen-charged ACR hard drawn straight
lengths used primarily for refrigeration and air conditioning. Hard drawn
water tube in straight lengths and capped soft coils are used in plumbing
applications in a wide range of construction projects. Copper tube products
are sold to plumbing and refrigeration wholesalers and OEM customers in North
America and exported to numerous foreign countries.
The Fulton facility again operated at a record production level in 1993,
aided by the completion of a $3 million capital improvement project. An
additional $20 million of capital improvements are planned including the
installation of state-of-the-art tube drawing technology. This relatively new
method of tube drawing will replace the conventional methods used today.
FITTINGS PRODUCTS
Mueller Streamline wrot copper pressure and drain, waste and vent (DWV)
fittings are manufactured at plants in Covington, Tennessee, Strathroy,
Ontario, Canada and Port Huron, Michigan. Copper fittings are converted from
tube produced at the Fulton tube mill into a wide variety of over 1,500
different sizes and shapes. Injection molding equipment at the Upper Sandusky,
Ohio plant produces over one thousand different parts from a variety of
plastic compounds in diameters ranging from 1/2 to 6 inches.
Plastic and copper fittings are found in virtually all installations of
water distribution systems, heating systems, air-conditioning and
refrigeration applications, and DWV systems in residential, office and
commercial settings. The Strathroy facility focuses on the Canadian and
European markets and is ISO certified. The Covington and Upper Sandusky
products are sold primarily to plumbing and refrigeration and hardware
wholesalers in the United States, Mexico and abroad.
<PAGE> 7 EXHIBIT 13.0
REFRIGERATION PRODUCTS
We manufacture a broad line of valves, fittings, filters, filter driers
and custom OEM products for refrigeration and air-conditioning applications in
the Hartsville, Tennessee plant. Many Hartsville products are machined and
assembled from rod stock and forgings produced in our Port Huron plants. These
fittings and assemblies are used in refrigeration applications such as
residential and commercial air-conditioning systems, walk-in coolers, and ice
and vending machines.
Customers for Mueller refrigeration products include large and small OEMs
and refrigeration wholesalers domestically and throughout the world.
During 1993, in preparation for ISO certification, Hartsville instituted
demand flow manufacturing technology to optimize management of inventory,
manufacturing flow, and quality control.
NATURAL RESOURCE PROPERTIES
The Utah Railway Company, which operates 100 miles of track in Utah, hauls
coal to and connects with national carriers. The Utah Railway hauled 3.9
million tons in 1993, an 18 percent increase over 1992.
Gold sales of our 85 percent owned Alaska Gold Company totaled 22,396
ounces in 1993, a 6 percent increase over 1992. Alaska Gold continues to test
methods for economically extracting gold reserves in the Nome area.
Over the past several years, the Company entered into agreements with
various mining companies to explore properties which we own in the Western
United States. These agreements, which provide for royalty payments and
purchase options, hold the potential for consequential profits should the
exploration efforts prove fruitful.
<PAGE> 8 EXHIBIT 13.0
FINANCIAL REVIEW
GENERAL OVERVIEW
The Company's principal business is the manufacture and sale of copper
tube, brass rod, fittings and other products made of copper, brass, bronze,
plastic and aluminum. These core manufacturing businesses have been in
operation for over 75 years. New housing starts and commercial construction
are important determinants of the Company's sales to the air-conditioning,
refrigeration and plumbing markets because the principal end use of a
significant portion of the Company's products is in the construction of single
and multi-family housing units and commercial buildings.
Profitability of certain of the Company's product lines is dependent upon
the "spreads" between the cost of metal and the gross selling prices of its
products. The open market price for grade A copper cathode, for example,
directly influences the selling price for copper tubing, a principal product
manufactured by the Company. The Company attempts to minimize the effects of
changes in copper prices by passing through to its customers base metal costs.
The market price of copper does, however, effect the carrying value (FIFO
basis) of the Company's copper inventories and, to a lesser extent, brass
inventories. These inventories customarily total between 30 to 35 million
pounds. "Spreads" fluctuate based upon competitive market conditions. In 1993
and 1992, "spreads" were favorable by historical standards.
The Company also owns various natural resource properties in the Western
United States and Canada. It operates a short line railroad in Utah and a
placer gold mining company in Alaska. Additionally, certain other natural
resource properties produce royalty income or are available for sale.
The Company is the successor to Sharon Steel Corporation, which emerged
from Chapter 11 bankruptcy on December 28, 1990, pursuant to a Plan of
Reorganization. Under the Plan, the Company's steel assets were sold to a new,
unaffiliated company at the time of reorganization. The Plan is further
described in the Company's 1993 consolidated financial statements and Annual
Report on Form 10-K.
RESULTS OF OPERATIONS
1993 Performance Compared to 1992:
Consolidated net sales of $501.9 million in 1993 compares with $517.3
million in 1992. This 3 percent decline is directly attributable to lower
copper prices, which are generally passed through to customers. During 1993,
spot copper averaged 85 cents per pound, or 17 percent less than the 1992
average of $1.03. In 1993, the Company's core manufacturing businesses shipped
362.1 million pounds of product compared to 329.5 million pounds (excluding
shipments from our discontinued business) in 1992. This 10 percent improvement
in shipments is due to improved housing starts and general business
conditions.
Cost of goods sold as a percent of net sales improved to 80.5 percent in
1993 from 83.1 percent in 1992 due primarily to improved sales prices in
certain markets and productivity improvements at the Company's manufacturing
plants.
Depreciation, depletion, and amortization totaled $14.2 million in 1993
which is slightly higher than 1992's level of $12.5 million. This change is
mainly due to higher amortization of deferred preparation costs at Alaska Gold
associated with operating both dredging and open-pit methods of mining during
1993.
Selling, general and administrative expenses were $45.9 million in 1993
compared with $45.8 million in 1992, despite a 10 percent increase in pounds
of product shipped.
<PAGE> 9 EXHIBIT 13.0
FINANCIAL REVIEW (Continued)
Interest expense totalled $5.8 million in 1993, up slightly from $5.7
million in 1992. Debt amounted to 22 percent of total capitalization at the
end of 1993 compared to 25 percent in 1992.
Environmental reserves were increased by $1.1 million in 1993 and charged
to operations.
Charges to operations for unusual items in 1993 totaled $2.0 million, down
from $5.6 million in 1992. The 1993 charge includes $1.4 million for an
increase in pension liability and $0.6 million in connection with the
settlement of lawsuits.
Manufacturing Group
During 1993, net sales of the Company's manufacturing segment were $478.3
million. This compares to net sales (excluding the malleable iron business,
which was sold in 1992), of $474.1 million in 1992. The change in net sales
was primarily attributable to product volume increases of 10 percent offset by
price decreases. The latter was due to lower raw material costs (price of
copper) in 1993 which, generally, are passed through to customers in certain
product lines. The Company's core manufacturing businesses shipped 362.1
million pounds of product in 1993 which compares to 329.5 million pounds
(excluding malleable iron) in 1992.
Operating income increased primarily due to: (i) productivity improvements
at the manufacturing plants; (ii) selective price increases in the copper
fittings and brass rod markets; (iii) cost reductions in the areas of selling,
general and administrative expenses; and (iv) elimination of certain costs
associated with the malleable iron business.
Volatility of copper prices in 1993 did not materially affect average
"spreads." Rapid inventory turns of the Company's products that are sensitive
to copper market prices moderate the impact of such volatility.
Natural Resources Group
Net sales of the natural resources segment were $23.6 million in 1993
compared to $22.6 million in 1992. Transportation revenues of the Utah Railway
increased 10 percent in 1993 over 1992. The Utah Railway hauled 3.9 million
tons in 1993, compared with 3.3 million tons in 1992. Gold sales were $8.7
million (22,396 ounces) in 1993 compared to $7.0 million (21,200 ounces) in
1992.
Alaska Gold continues to search for lower cost methods of mining gold in
Alaska including the open pit method of mining. Based on current plans and
economic conditions, Alaska Gold will phase out dredging operations in 1994 or
soon thereafter. Alaska Gold has adequate reserves on its books to discontinue
the dredging operations without incurring a material loss.
1992 Performance Compared to 1991:
Consolidated net sales were $517.3 million in 1992, up $75.9 million or 17
percent from net sales of $441.4 million in 1991. Thirteen out of this
seventeen point increase in sales was due to improved volume in our key
manufactured product lines. The remaining 4 percent increase resulted largely
from price changes caused partially by changes in base metal prices. The sales
volume increase was primarily due to a 19 percent increase in housing starts
in the United States, and the general improvement in the overall U.S. economy.
Natural resources sales declined to $22.6 million in 1992 or 20 percent
from 1991's level due mainly to lower coal sales by our subsidiary United
States Fuel Company (U.S. Fuel).
<PAGE> 10 EXHIBIT 13.0
FINANCIAL REVIEW (Continued)
Cost of goods sold dropped to 83.1 percent of net sales in 1992 compared
with 88.1 percent in 1991. This improvement resulted primarily from increased
spreads. The Company also achieved cost reductions in its manufacturing
operations. A lower provision for doubtful accounts in 1992 also contributed
to the improvement. In addition, fewer expenses relating to reorganization
matters were incurred in 1992.
Depreciation, depletion, and amortization totaled $12.5 million in 1992
compared with $13.3 million in 1991. This decline was due primarily to lower
amortization of thawfield expenses related to the Alaska Gold operation.
Selling, general and administrative expenses were $45.8 million in 1992,
or 8.9 percent of net sales compared to 9.3 percent of net sales in 1991.
The $44.4 million write-off of unusual items in 1991 pertained to the
write-down of certain natural resources and other assets. By comparison, the
Company incurred a $5.6 million charge for unusual items in 1992. This
included a $2.0 million write-down of preferred stock of Sharon Specialty
Steel, Inc., which was acquired pursuant to the 1990 reorganization, and a
$3.6 million reserve for other potential losses relating to Sharon.
Interest expense totaled $5.7 million in 1992 down $.4 million from 1991
primarily because of lower interest rates on new debt financing which occurred
in August and October of 1992. Other income increased to $6.3 million in 1992
from $5.1 million in 1991. This 1992 increase was a result of a $3.8 million
gain on the sale of the Company's Bayard Mining Corporation (Bayard) assets
which the Company sold on December 15, 1992, offset by a $1.1 million drop of
rent and royalty income, and a $1.0 million decline in interest income.
The Company provided $8.1 million for income taxes in 1992, of which $3.0
million was deferred. The current tax expense of $5.1 million for 1992
increased due to higher taxable income, particularly under the alternative
minimum tax laws. The Company also adopted the asset and liability method of
accounting for income taxes required by SFAS No. 109, Accounting for Income
Taxes, which resulted in a $.4 million benefit for recognition of post-
reorganization net operating loss carryforwards.
MANUFACTURING GROUP
Net sales by the manufacturing segment increased 20 percent to $494.7
million in 1992 compared to $413.2 million in 1991. Higher copper tube, rod,
aluminum impacts and refrigeration sales offset slightly lower iron fitting
sales in 1992. Improved volume accounted for over 75 percent of the 1992
increase. Selling prices of the Company's products are adjusted, to the extent
that competitive pressures permit, by fluctuations in metal prices,
particularly copper.
The Company sold its malleable iron fitting business in 1992. This
business accounted for approximately $20.0 million of the Group's 1992 net
sales. Sale of the malleable iron assets generated approximately $7.7 million
of cash. The Company also relocated formed tube manufacturing from a separate
plant in Port Huron, Michigan and consolidated it with copper fittings
manufacturing at the Company's Covington, Tennessee plant.
NATURAL RESOURCES GROUP
Net sales of the Company's natural resources segment were $22.6 million in
1992 compared to $28.2 million in 1991. This decline was due to lower coal
sales by U.S. Fuel. Its coal shipments dropped to 97,020 tons in 1992 from
179,000 tons in 1991. Transportation revenues of Utah Railway were $12.1
million in 1992, almost even with 1991 sales of $11.9 million. Utah Railway
hauled 3.3 million tons of coal in 1992, which was comparable to 1991's level.
This company continues to be profitable. Gold sales decreased to $7.0 million
(21,200 ounces) in 1992 from $7.4 million (18,304 ounces) in 1991.
<PAGE> 11 EXHIBIT 13.0
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $51.0 million in 1993.
Depreciation of $11.1 million and deferred income taxes of $9.0 million were
the primary non-cash adjustments. Major changes in working capital included a
$16.5 million decrease in inventories offset by a $13.2 million decrease in
current liabilities. Other minor fluctuations accounted for the remainder of
the change.
Net cash used for investing activities in 1993 was $8.8 million, $11.1
million for capital expenditures offset by $2.3 million received from the sale
of properties. Capital expenditures were primarily related to cost reductions,
increased productivity, quality improvements, and capacity expansion in
manufacturing businesses as well as expenditures for corporate activities.
Net cash used by financing activities was $9.4 million which includes $3.1
million for the purchase of treasury stock and $7.2 million for repayment of
debt.
The Company has an unsecured line-of-credit agreement (the Credit
Facility) which expires on September 30, 1994, but may be extended to
September 30, 1995 at the Company's option. Borrowings bear interest at prime
less 1/2 of one percent.
On December 28, 1993, subsequent to fiscal year end, the Company agreed to
reduce its borrowing availability under the Credit Facility to $7.0 million
concurrently with a transaction whereby it entered into an Industrial Revenue
Bond obligation (IRBs). At December 25, 1993, the Company's total debt was
$62.7 million or 22 percent of its capitalization. On a pro forma basis
including the IRBs, total debt would be $82.7 million, or 27 percent of its
capitalization.
The Company's financing obligations contain various covenants which
require, among other things, the maintenance of minimum levels of working
capital, tangible net worth, and debt service coverage ratios. Additionally,
certain notes issued by its wholly-owned subsidiary restrict the amount of
cash that may be loaned or dividended by that subsidiary. The Company is in
compliance with all debt covenants.
Management believes that cash provided by operations and currently
available cash of $77.3 million will be adequate to meet the Company's normal
future capital expenditure and operational needs. The Company's current ratio
is 3.8 to 1.
The Company has approved two major capital expenditure projects and is
evaluating a third for the following plants: (i) Fulton, Mississippi copper
tube mill; (ii) Port Huron, Michigan brass rod mill; and (iii) Covington,
Tennessee copper fittings plant. These projects will require capital of
approximately $15.0 to $20.0 million each. The primary objective of these
projects is to improve efficiency and productivity as well as add some
capacity.
The Fulton project was financed by IRBs which were issued subsequent to
fiscal year end. The Company is also evaluating various forms of funding the
other two projects including cash from operations and debt financing.
IMPACT OF INFLATION
The impact of inflation on the Company's operations in 1993, 1992 and 1991
was minimal.
OUTLOOK
New housing starts and commercial construction are important determinants
of Mueller's sales to plumbing, air conditioning and refrigeration markets.
Many housing analysts and economists are currently projecting new housing
starts of 1.4 million units in 1994 and 1995, and should that occur, our sales
by the manufacturing group should remain strong.
<PAGE> 12 EXHIBIT 13.0
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 25, 1993, December 26, 1992 and December 28, 1991
<TABLE>
(In thousands, except per share data)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Net sales $ 501,885 $ 517,339 $ 441,431
Cost of goods sold 403,775 429,707 388,863
Depreciation, depletion, and amortization 14,160 12,505 13,294
Selling, general, and administrative
expense 45,923 45,809 40,912
-------- -------- --------
Operating income (loss) 38,027 29,318 (1,638)
Interest expense (5,759) (5,694) (6,114)
Environmental reserves (1,060) -- (2,700)
Unusual items (2,024) (5,636) (44,400)
Other income, net 4,259 6,311 5,117
-------- -------- --------
Income (loss) before income taxes
and cumulative effect of change
in accounting for income taxes 33,443 24,299 (49,735)
Income tax (expense) benefit (12,307) (8,079) 5,994
-------- -------- --------
Income (loss) before cumulative
effect of accounting change 21,136 16,220 (43,741)
Cumulative effect of change in
method of accounting for income taxes -- 446 --
-------- -------- --------
Net income (loss) $ 21,136 $ 16,666 $ (43,741)
======== ======== ========
Net income (loss) per share:
Primary:
Average shares outstanding 10,443 10,055 9,746
Income (loss) before cumulative
effect of accounting change $ 2.02 $ 1.61 $ (4.49)
Cumulative effect of accounting
change -- 0.05 --
-------- -------- --------
Net income (loss) $ 2.02 $ 1.66 $ (4.49)
======== ======== ========
Net income (loss) per share:
Fully diluted:
Average shares outstanding 10,498 10,274 9,746
Income (loss) before cumulative
effect of accounting change $ 2.01 $ 1.58 $ (4.49)
Cumulative effect of accounting
change -- 0.04 --
-------- -------- --------
Net income (loss) $ 2.01 $ 1.62 $ (4.49)
======== ======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 13 EXHIBIT 13.0
<TABLE>
CONSOLIDATED BALANCE SHEETS
As of December 25, 1993 and December 26, 1992
(In thousands, except share data)
<CAPTION>
1993 1992
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 77,336 $ 44,459
Accounts receivable, less allowance for doubtful
accounts of $3,495 in 1993 and $4,473 in 1992 59,197 59,802
Inventories 53,118 69,623
Current deferred income taxes 3,242 4,099
Other current assets 1,518 4,398
-------- --------
Total current assets 194,411 182,381
Property, plant and equipment, net 154,403 156,682
Deferred income taxes 12,751 21,757
Other assets 8,178 11,727
-------- --------
TOTAL ASSETS $ 369,743 $ 372,547
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 14 EXHIBIT 13.0
<TABLE>
CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands except share data)
<CAPTION>
1993 1992
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 8,391 $ 7,101
Accounts payable 15,637 25,674
Accrued wages and other employee costs 11,787 10,478
Restructuring reserves 5,305 6,968
Current deferred income taxes 446 1,169
Other current liabilities 9,340 10,136
-------- --------
Total current liabilities 50,906 61,526
Long-term debt 54,320 62,376
Pension liabilities 9,336 9,665
Postretirement benefits other than pensions 9,498 8,688
Environmental reserves 8,648 9,185
Deferred income taxes 3,810 3,924
Other noncurrent liabilities 11,111 12,762
-------- --------
Total liabilities 147,629 168,126
======== ========
Stockholders' equity
Preferred stock - shares authorized
5,000,000; none outstanding -- --
Common stock - $.01 par value; shares
authorized 20,000,000; issued 10,000,000 100 100
Additional paid-in capital, common 236,406 236,391
Accumulated deficit since January 1, 1991 (5,939) (27,075)
Cumulative translation adjustments (1,944) (1,094)
Treasury common stock at cost,
416,807 shares in 1993 and
361,756 shares in 1992 (6,509) (3,901)
-------- --------
Total stockholders' equity 222,114 204,421
Commitments and contingencies -- --
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 369,743 $ 372,547
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 15 EXHIBIT 13.0
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 25, 1993, December 26, 1992 and December 28, 1991
(In thousands)
<CAPTION>
1993 1992 1991
<C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 21,136 $ 16,666 $(43,741)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Cumulative effect of change
in method of accounting for
income taxes -- (446) --
Provisions for unusual items 2,024 5,636 44,400
Depreciation, depletion and
amortization of intangibles 11,123 11,590 10,729
Amortization of deferred
preparation costs 3,037 915 2,565
Provision for doubtful accounts
receivable 59 2,794 6,344
Deferred income taxes 9,026 3,016 (8,476)
Gain on disposal of properties (91) (3,417) (33)
Changes in assets and liabilities:
Receivables 546 (4,133) (10,966)
Inventories 16,505 12,695 15,363
Other assets 3,224 2,177 3,326
Current liabilities (13,211) (10,541) (961)
Other liabilities (1,707) 2,254 (13,137)
Other, net (684) (492) 205
-------- -------- --------
Net cash provided by operating activities 50,987 38,714 5,618
-------- -------- --------
INVESTING ACTIVITIES
Capital expenditures (11,083) (10,952) (11,825)
Proceeds from sales of properties 2,332 11,478 1,092
Purchase of preferred stock -- -- (5,112)
Issuance of notes receivable -- (4,125) --
-------- -------- --------
Net cash used by investing activities (8,751) (3,599) (15,845)
-------- -------- --------
FINANCING ACTIVITIES
Net borrowings under revolving credit
facility -- (14,000) 14,000
Proceeds from issuance of long-term debt 386 45,000 --
Repayments of long-term debt (7,152) (28,933) (8,352)
Payment of Delayed Distribution Notes -- -- (25,000)
Acquisition of treasury stock (3,100) (505) (3,608)
Proceeds from the sale of treasury stock 507 241 --
-------- -------- --------
Net cash provided (used) by
financing activities (9,359) 1,803 (22,960)
-------- -------- --------
<PAGE> 16 EXHIBIT 13.0
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 25, 1993, December 26, 1992 and December 28, 1991
(In thousands)
<CAPTION>
1993 1992 1991
<C> <C> <C>
Increase (decrease) in cash and
cash equivalents 32,877 36,918 (33,187)
Cash and cash equivalents at the
beginning of the year 44,459 7,541 40,728
-------- -------- --------
Cash and cash equivalents at the
end of the year $ 77,336 $ 44,459 $ 7,541
======== ======== ========
<FN>
For supplemental disclosures of cash flow information, and non-cash investing
and financing activities, see Notes 1, 4, and 6.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 17 EXHIBIT 13.0
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 25, 1993, December 26, 1992 and December 28, 1991
<TABLE>
(In thousands, except share data)
<CAPTION>
Retained
Common Stock Additional Earnings Cumulative Treasury Stock
Number Paid-In (Accumulated Translation Number
of Shares Amount Capital Deficit) Adjustments of Shares Cost Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990 10,000,000 $ 100 $ 199,900 $ -- $ -- -- $ -- $200,000
Repurchase of common stock -- -- -- -- -- 339,013 (3,608) (3,608)
Net loss -- -- -- (43,741) -- -- -- (43,741)
Cumulative translation
adjustments -- -- -- -- (42) -- -- (42)
---------- ---- ------- -------- -------- -------- ------- --------
Balance, December 28, 1991 10,000,000 100 199,900 (43,741) (42) 339,013 (3,608) 152,609
Repurchase of common stock -- -- -- -- -- 42,452 (505) (505)
Net income -- -- -- 16,666 -- -- -- 16,666
Issuance of shares under
employee stock purchase plan -- -- 29 -- -- (19,709) 212 241
Recognition of income tax
benefits of preconfirmation
net operating loss carry-
forwards -- -- 36,462 -- -- -- -- 36,462
Cumulative translation adjustments -- -- -- -- (1,052) -- -- (1,052)
---------- ---- ------- -------- -------- -------- ------- --------
Balance, December 26, 1992 10,000,000 100 236,391 (27,075) (1,094) 361,756 (3,901) 204,421
Repurchase of common stock -- -- -- -- -- 100,000 (3,100) (3,100)
Net income -- -- -- 21,136 -- -- -- 21,136
Issuance of shares under
employee stock purchase plan -- -- 75 -- -- (24,449) 263 338
Issuance of shares under
incentive stock option plan -- -- (60) -- -- (20,500) 229 169
Cumulative translation
adjustments -- -- -- -- (850) -- -- (850)
---------- ---- ------- -------- -------- -------- ------- --------
Balance, December 25, 1993 10,000,000 $ 100 $ 236,406 $ (5,939) $ (1,944) 416,807 $ (6,509) $ 222,114
========== ==== ======= ======== ======== ======== ======= ========
<FN>
See accompanying notes to consolidated financial statements.
<PAGE> 18 EXHIBIT 13.0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reorganization
Mueller Industries, Inc. was formed for the purpose of merging with Sharon
Steel Corporation, the predecessor company, pursuant to the Third Amended and
Restated Plan of Reorganization filed with the United States Bankruptcy Court
for the Western District of Pennsylvania, Erie Division and confirmed on
November 21, 1990. Upon consummation of the Plan on December 28, 1990, Mueller
Industries, Inc. became the successor to Sharon Steel for purposes of the
Bankruptcy Code.
Principles of Consolidation
The consolidated financial statements include the accounts of Mueller
Industries, Inc. and its subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
Inventories
The Company's inventories are valued at the lower of cost or market on a
first-in, first-out (FIFO) basis. Generally, inventory costs include
materials, labor costs and manufacturing overhead.
Depreciation, Depletion and Amortization
In general, depreciation and amortization of buildings, machinery and
equipment is provided on the straight-line method over the estimated useful
lives ranging from 20 to 40 years for buildings and 5 to 20 years for
machinery and equipment. Depletion of mineral properties is generally computed
using the units of production method.
Maintenance and Repairs
Routine maintenance and repairs are normally charged to operations.
Expenditures that materially increase values, change capacities or extend
useful lives are capitalized. Capitalized renewals or replacements are charged
to the property accounts, in which event, the properties that are replaced are
removed from the property accounts.
Revenue Recognition
Revenue from the sale of products is recognized upon passage of title to
the customer, which, in most cases, coincides with shipment of the related
products to customers.
Employee Benefits
The Company sponsors certain defined benefit pension plans that are
noncontributory, and cover certain union employees. The plans provide pension
benefits based on years of service and stated benefit amounts for each year of
service.
In addition to providing pension benefits, the Company sponsors certain
postretirement health and life insurance programs for certain union and
salaried employees, which are accounted for on the accrual method in
accordance with SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other than Pensions. These benefits are funded on a pay-as-you-go
basis and the cost is recognized as earned during the active service life of
employees. Certain retirees pay a premium which is based on the amount of
benefits paid during the year less an agreed upon amount that is paid by the
Company.
<PAGE> 19 EXHIBIT 13.0
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Common Share
Primary earnings per common share are based upon the weighted average
number of common and common equivalent shares outstanding during each period.
Fully diluted earnings per share are based upon the weighted average number of
common shares outstanding plus the dilutive effects of all outstanding stock
options.
Income Taxes
Effective at the beginning of 1992, the Company adopted SFAS No. 109 and
has reported the cumulative effect of that change in the method of accounting
for income taxes in the 1992 consolidated statement of operations. Prior
years' financial statements have not been restated.
Cash Equivalents
Temporary investments with maturities of three months or less are
considered to be cash equivalents. These investments are stated at cost. At
December 25, 1993 and December 26, 1992, temporary investments consisted of
certificates of deposit, commercial paper, bank repurchase agreements, and
U.S. and Foreign Government securities totaling $76.0 million and $42.9
million, respectively. These carrying amounts approximate fair
value.
Concentrations of Credit and Market Risk
Concentrations of credit risk with respect to accounts receivable are
limited due to the large number of customers comprising the Company's customer
base, and their dispersion across different industries, including air
conditioning, refrigeration and plumbing wholesalers, hardware retailers,
automotive, original equipment manufacturers and others.
The Company minimizes its market risk of base metal price fluctuations
through various strategies. Generally, the Company prices an equivalent amount
of copper under flexible pricing arrangements it maintains with its suppliers,
at the time it determines the selling price to its customer.
The Company occasionally hedges portions of its inventories against price
fluctuations through the purchase of option contracts. Gains and losses on
hedging transactions are recognized in income at the time the underlying
inventory is sold.
The Company's sales are principally denominated in and collected in U.S.
currency. Certain sales of the Company's foreign operations are collected in
foreign currencies. The market risk regarding foreign currency exchange rate
fluctuations is hedged using forward contracts.
Reclassification
Certain amounts in the 1992 and 1991 consolidated financial statements
have been reclassified to conform with the 1993 presentation.
<PAGE> 20 EXHIBIT 13.0
NOTE 2 INVENTORIES
Inventories are valued at the lower of cost or market on a first-in,first-out
(FIFO) basis as follows:
</TABLE>
<TABLE>
(In thousands)
<CAPTION>
1993 1992
<S> <C> <C>
Raw materials and supplies $ 5,704 $ 5,224
Work-in-process 16,501 16,393
Finished goods 30,913 48,006
-------- --------
$ 53,118 $ 69,623
======== ========
</TABLE>
NOTE 3 PROPERTIES
Properties stated at fair value as of December 28, 1990, with subsequent
additions recorded at cost, are as follows:
<TABLE>
(In thousands)
<CAPTION>
1993 1992
<S> <C> <C>
Land and land improvements $ 6,369 $ 6,737
Mineral reserves 2,296 2,296
Buildings, machinery and equipment 171,053 165,625
Construction in progress 4,430 3,379
-------- --------
184,148 178,037
Less accumulated depreciation,
depletion and amortization (29,745) (21,355)
-------- --------
$ 154,403 $ 156,682
========= ========
</TABLE>
<PAGE> 21 EXHIBIT 13.0
NOTE 4 LONG TERM DEBT
Long term debt consists of the following:
<TABLE>
(In thousands)
<CAPTION>
1993 1992
<S> <C> <C>
8.38% Notes, due through 2000,secured by
subsidiary common stock $ 25,000 $ 25,000
7.54% Unsecured Note Payable, due through 1999 20,000 20,000
Retiree Obligation, due through 1995 with imputed
interest at 10% 6,365 9,554
Contribution Agreement, due through 1996 with
imputed interest at 10% 4,994 5,469
10.1% Note Payable due through 1999,
secured by certain railroad trackage 3,128 3,536
Pollution Control Revenue Bonds, interest
at 8% to 8.125%, due through 2001 2,880 3,110
9% Industrial Revenue Bonds, due through 1993,
secured by certain property and equipment -- 2,800
Other, including capitalized lease obligations 344 8
-------- --------
62,711 69,477
Less current portion of long-term debt 8,391 7,101
-------- --------
Long-term debt $ 54,320 $ 62,376
======== ========
</TABLE>
Aggregate annual maturities of such debt are $12.9 million, $11.3 million,
$8.6 million and $8.6 million for the years 1995 through 1998, respectively.
Interest paid in 1993, 1992 and 1991 was $6.0 million, $4.8 million and $5.4
million, respectively. Using a discounted cash flow analysis, the book value
of the Company's long-term debt approximates fair value, based on the
estimated current incremental borrowing rates for similar types of borrowing
arrangements.
At December 25, 1993, the Company had available up to $20.0 million (see
subsequent event discussed below) under the terms of a line-of-credit facility
(Credit Facility) which expires on September 30, 1994, but may be extended,
solely at the Company's option, to September 30, 1995. Borrowings under the
Credit Facility bear interest, at the Company's option, at (i) prime rate less
1/2 of one percent, (ii) certificate of deposit rate plus 1.35%, or (iii)
LIBOR plus 1.125%. An annual commitment fee of 1/4 of one percent per annum on
the unused portion of the Credit Facility is payable monthly. Currently, the
Company has no outstanding borrowings under the Credit Facility. Availability
of funds under the Credit Facility is reduced by the amount of certain
outstanding letters of credit, which currently total $1.0 million.
Borrowings under the above agreements require the Company, among other
things, to maintain certain minimum levels of net worth and working capital,
and meet certain minimum financial ratios. The Company is in compliance with
all covenants.
<PAGE> 22 EXHIBIT 13.0
NOTE 4 LONG TERM DEBT (Continued)
The Company leases certain facilities and equipment under operating leases
expiring on various dates through 2001. The lease payments under these
agreements aggregate to approximately $3.3 million in 1994, $3.1 million in
1995, $3.0 million in 1996, $2.8 million in 1997, $2.8 million in 1998 and
$5.2 million thereafter. Total rent expense amounted to $5.0 million in 1993,
$5.8 million in 1992 and $3.4 million in 1991.
On December 28, 1993, subsequent to year end, the Company, through a
wholly owned subsidiary, issued $20.0 million of 6.95% taxable Industrial
Development Revenue Bonds due December 15, 2000 (the 6.95% Bonds). The 6.95%
Bonds are due in quarterly installments of $0.7 million beginning March 15,
1994 through December 15, 2000. Interest on the 6.95% Bonds is payable
quarterly commencing March 15, 1994. The 6.95% Bonds are secured by $10
million of cash and securities on deposit in an investment account with the
lender. The $10 million of cash security will reduce to zero in 1996. Proceeds
of the 6.95% Bonds will be used to fund a modernization project at the
Company's Fulton, Mississippi facility. The 6.95% Bonds were purchased by the
same financial institution that provided the Credit Facility. Concurrently,
the Company agreed to reduce availability under the Credit Facility to $7.0
million to accommodate the lender's internal policy limits. Availability is
restored as the Company repays its obligations held by that institution.
NOTE 5 STOCKHOLDERS' EQUITY
The Company and Quantum Fund are parties to a standstill agreement, dated
as of July 1, 1993 (the Standstill Agreement), pursuant to which Quantum Fund
has agreed, except with the prior written approval of the Company's Chairman
of the Board and Chief Executive Officer not to offer, sell, contract to sell,
grant any option to purchase or pledge, hypothecate or otherwise dispose of
any Common Stock of the Company prior to December 31, 1994. Pursuant to the
Standstill Agreement, Quantum Fund has also agreed, except with respect to
matters which may be specifically excluded from the provisions of the
Standstill Agreement by the Company's Chairman of the Board and Chief
Executive Officer, that at all annual and special meetings of the Company's
stockholders, and in all consents of such stockholders in lieu of any such
annual or special meeting, Quantum Fund will vote all shares of Common Stock
of the Company then owned by Quantum Fund in proportion to the manner in which
all Common Stock of the Company other than the shares of Common Stock then
owned by Quantum Fund shall be voted (or abstain from voting) at such annual
or special meeting or pursuant to such consent with respect to each matter to
be acted upon by such stockholders.
In 1991, the Board of Directors authorized the Company to repurchase up to
700,000 shares of its common stock. As of December 25, 1993, a total of
481,465 shares had been repurchased under this authorization, of which 64,658
shares were reissued to optionees under the Company's stock option plans.
<PAGE> 23 EXHIBIT 13.0
NOTE 6 INCOME TAXES
The Company adopted SFAS No. 109 as of the beginning of 1992. The
cumulative effect of this change in accounting for income taxes of $.4 million
was determined as of the beginning of 1992 and was reported separately in the
consolidated statement of operations for the year ended December 26, 1992.
Additionally, the adoption resulted in recognition of a $36.9 million deferred
tax asset of which $36.5 million was a direct addition to additional paid-in
capital.
The components of income (loss) before income taxes and cumulative effect
of change in accounting principal were taxed under the following
jurisdictions:
<TABLE>
(In thousands)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Domestic $ 30,955 $ 20,839 $ (52,556)
Foreign 2,488 3,460 2,821
-------- -------- --------
$ 33,443 $ 24,299 $ (49,735)
======== ======== ========
</TABLE>
Income tax expense (benefit) consists of the following:
<TABLE>
(In thousands)
<CAPTION>
1993 1992 1991
<C> <C> <C>
Current tax expense:
Federal $ 153 $ 1,313 $ --
Foreign 1,108 1,350 979
State and local 2,020 2,400 1,503
-------- -------- --------
Total current 3,281 5,063 2,482
======== ======== ========
Deferred tax expense (benefit):
Federal 9,863 5,716 (7,445)
State and local (837) (2,700) (1,031)
-------- -------- --------
Total deferred 9,026 3,016 (8,476)
-------- -------- --------
Total provision (benefit) for
income taxes $ 12,307 $ 8,079 $ (5,994)
======== ======== ========
</TABLE>
<PAGE> 24 EXHIBIT 13.0
NOTE 6 INCOME TAXES (continued)
The difference between the reported provision for income taxes and a tax
determined by applying the applicable U.S. federal statutory income tax rate
to income (loss) before taxes, is reconciled as follows:
<TABLE>
(In thousands)
<CAPTION> 1993 1992 1991
<S> <C> <C> <C>
Expected income tax expense (benefit) $ 11,705 $ 8,262 $ (16,910)
State and local income tax 538 (1,115) 990
Foreign income taxes 237 891 20
Financial operating loss carryforwards -- -- 9,906
Effect of enacted tax rate change (337) -- --
Other, net 164 41 --
-------- -------- --------
$ 12,307 $ 8,079 $ (5,994)
======== ======== ========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
<TABLE>
(In thousands)
<CAPTION>
1993 1992
<S> <C> <C>
Deferred tax assets:
Accounts receivable $ 2,977 $ 3,678
Inventories 782 1,066
Preferred stock 44,881 44,649
Pension and OPEB obligations 10,538 6,667
Other accruals and reserves 17,921 22,220
Net operating loss carryforwards 64,884 74,329
Alternative minimum tax credit carryforwards 4,188 3,442
Investment tax credit carryforwards -- 9,432
-------- --------
Total gross deferred tax assets 146,171 165,483
Less valuation allowance (85,338) (88,081)
-------- --------
Deferred tax assets, net of valuation
allowance 60,833 77,402
-------- --------
Deferred tax liabilities:
Property, plant and equipment 46,296 53,684
Undistributed income of foreign subsidiaries 1,931 1,931
Other 869 1,024
-------- --------
Total gross deferred tax liabilities 49,096 56,639
-------- --------
Net deferred tax asset $ 11,737 $ 20,763
======== ========
</TABLE>
<PAGE> 25 EXHIBIT 13.0
NOTE 6 INCOME TAXES (Continued)
As a result of the ownership change which occurred in connection with the
reorganization on December 28, 1990 (see Note 1), the Company's net operating
loss carryforwards for federal income tax purposes that expire prior to 2005
are subject to an annual limitation of approximately $14.4 million.
As of December 25, 1993, the Company had net operating loss carryforwards
available to offset future federal taxable income of $185.4 million which
expire as follows: $4.5 million in 1998, $94.9 million in 2000, $6.6 million
in 2001, $6.5 million in 2002, $66.5 million in 2005, and $6.4 million in
2006. In addition, the Company has alternative minimum tax credit
carryforwards of approximately $4.2 million which are available to reduce
future federal regular income taxes, if any, over an indefinite period.
Income taxes paid (relating to both current and prior years) were
approximately $4.9 million in 1993, $2.5 million in 1992 and $2.0 million in
1991.
NOTE 7 EMPLOYEE BENEFITS
Pension cost for the defined benefit plans sponsored by the Company
includes the following components:
<TABLE>
(In thousands)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Service cost of benefits earned
during the year $ 277 $ 358 $ 396
Interest cost on the projected
benefit obligation 2,947 3,068 4,242
Return on plan assets:
Actual (6,066) (2,434) (3,092)
Deferred gain (loss) 3,381 3 35
Net amortization 58 -- 8
-------- -------- --------
Net periodic pension cost $ 597 $ 995 $ 1,589
======== ======== ========
</TABLE>
Generally, the Company contributes such amounts as are necessary to pay
benefits to plan participants and to meet ERISA minimum funding requirements.
The plans' investments are held by a bank administered trust fund.
The Company terminated one plan in 1992 and three plans during 1991. All
plan participants became fully vested effective with the plan terminations;
annuity contracts and/or cash payments were made to settle such obligations.
The effect of these terminations was recognized during 1990.
In 1993, pursuant to a collective bargaining agreement covering
approximately 65 employees, future participation in one of the Company's
single employer pension plans was curtailed in favor of participation in the
union multiemployer plan. Effective July 1, 1993, all future service accrues
in the multiemployer plan; service earned prior to that date remains the
obligation of the single employer plan.
<PAGE> 26 EXHIBIT 13.0
NOTE 7 EMPLOYEE BENEFITS (Continued)
A reconciliation of the funded status of the plans at December 25, 1993
and December 26, 1992, respectively, to the amounts recognized in the
consolidated balance sheet is as follows:
<TABLE>
(In thousands)
<CAPTION>
1993 1992
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ (38,186) $ (35,406)
-------- --------
Accumulated benefit obligation (40,836) (38,130)
-------- --------
Projected benefit obligation (40,836) (38,130)
Plan assets at fair value held in the pension
plan trusts, primarily listed stocks and
U.S. Government obligations 34,771 31,233
-------- --------
Plan assets less than projected
benefit obligation (6,065) (6,897)
Unrecognized net gain from past experience
different from that assumed and effects
of changes in assumptions (4,576) (3,566)
Prior service cost not yet recognized in
net periodic pension cost 456 --
-------- --------
Accrued pension cost $ (10,185) $ (10,463)
======== ========
</TABLE>
The assumed discount rate used in determining the actuarial present value
of the projected benefit obligations presented above was 7.0% for 1993 and
8.25% for 1992. For purposes of determining pension cost, the assumed weighted
average long-term rate of return on plan assets was 8.5% for 1993, 1992 and
1991.
The Company makes contributions to certain multiemployer defined benefit
pension plan trusts that cover union employees based on collective bargaining
agreements. Contributions by employees are not required nor are they
permitted. Pension expense under the multiemployer defined benefit pension
plans was $0.2 million in 1993 and $0.3 million in 1992 and 1991. At December
25, 1993, the accrued pension cost presented above does not include $1.4
million relating to potential statutory withdrawal liability under the 1974
United Mine Workers of America Pension Trust. This provision is classified as
Unusual Items (see Note 9). The withdrawal liability arises due to the
curtailment of coal mining operations at U.S. Fuel.
Postretirement Benefits Other Than Pensions
In addition to providing pension benefits, the Company provides a fixed
portion of the costs of medical and life insurance benefits to certain retired
hourly and salary employees. Contribution rates are dictated by the employees'
retirement plan which is subject to periodic contract renegotiation. The
Company also provides the full cost of medical and life benefits to certain
United Mine Workers of America (UMWA) retirees.
<PAGE> 27 EXHIBIT 13.0
NOTE 7 EMPLOYEE BENEFITS (Continued)
In October, 1992, the Coal Industry Retiree Health Benefit Act of 1992
(the Act) was enacted. The Act mandates a method of providing for
postretirement benefits to UMWA current and retired employees, including some
retirees who were never employed by the Company. In October, 1993,
beneficiaries were assigned to the Company and the Company began its mandated
contributions to the UMWA Combined Benefit Fund, a multiemployer trust. The
ultimate amount of this liability will vary due to factors which include,
among other things, the validity, interpretation and regulation of the Act,
its joint and several obligation, the number of valid beneficiaries assigned,
and the extent to which funding for this obligation will be satisfied by
transfers of excess assets from the 1950 UMWA pension plan and transfers from
the Abandoned Mine Reclamation Fund. Nonetheless, the Company believes it has
an adequate reserve for this liability, which is classified as other
noncurrent liabilities.
The following table shows funded status reconciled with the amounts
recognized in the Company's financial statements:
<TABLE>
(In thousands)
<CAPTION>
1993 1992
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ (8,152) $ (7,982)
Fully eligible active plan participants (392) (409)
Other active plan participants (476) (432)
-------- --------
(9,020) (8,823)
Plan assets at fair value -- 30
-------- --------
Accumulated postretirement benefit obligation
in excess of plan assets (9,020) (8,793)
Unrecognized net gain 151 --
-------- --------
Accrued postretirement benefit cost $ (8,869) $ (8,793)
======== ========
</TABLE>
Net periodic postretirement benefit cost was $0.7 million in 1993, $0.5
million in 1992 and $1.4 million in 1991.
The cost of medical and life insurance benefits for retired employees
reflected above does not include $0.6 million at December 25, 1993 and $0.5
million at December 26, 1992 related to the provision of medical and other
welfare benefits under certain defined benefit multiemployer plans. The
actuarially determined present value of the accumulated postretirement benefit
obligation was calculated using a discount rate ranging from 7.0% to 7.5% for
1993 and from 7.5% to 8.25% for 1992.
The assumed weighted-average annual rate of increase in the per capita
cost of covered benefits ranges from 10.45% to 11.80% for 1994 and is assumed
to decrease to an ultimate rate of 5.5% by 2003 and remain at that level
thereafter. A one percentage point increase in the assumed trend rates for
each year would not have a significant effect on the expected postretirement
benefit obligation.
Included in the caption "Accrued wages and other employee costs" is the
current portion of postretirement benefit obligation of $0.7 million in 1993
and $0.6 million in 1992.
<PAGE> 28 EXHIBIT 13.0
NOTE 8 COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL
The Company is subject to environmental standards imposed by federal,
state and local environmental laws and regulations. It has provided and
charged to income $1.1 million in 1993, and $2.7 million in 1991 for pending
environmental matters. No charges were required for 1992. Management believes
that the outcome of pending environmental matters will not materially affect
the overall financial position of the Company.
PURCHASE COMMITMENTS
Subsequent to fiscal year-end, the Company committed to capital
expenditures of approximately $20.0 million, for a major project to modernize
the copper tube mill in Fulton, Mississippi. In February, 1994, the Board
approved a $15.0 million modernization project for the brass rod mill in Port
Huron, Michigan. Both of these approved major projects should become fully
operational in mid-1995. No other material purchase commitments for capital
expenditures exist.
NOTE 9 UNUSUAL ITEMS
During 1993, the Company recognized a $1.4 million charge for a potential
pension withdrawal liability for its U.S. Fuel subsidiary. See Note 7 for
additional discussion. Additionally, a provision of $0.6 million was
recognized for the settlement of certain litigation.
On November 30, 1992, Sharon Specialty Steel, Inc. (together with its
subsidiaries, collectively Sharon) filed for relief under Chapter 11 of the
Federal Bankruptcy Code. Consequently, the Company recognized a charge of $5.6
million consisting of (i) a $2.0 million write-off of the preferred stock of
Sharon, and (ii) a $3.6 million reserve for the $4.125 million loan to Sharon
that was funded pursuant to the Caster Guarantee settlement, and other matters
associated with potential losses relating to Sharon or Sharon Steel.
During 1991, the Company recognized a charge of $27.9 million for
permanent impairment in the value of certain natural resource assets which it
owns. The impairment relates to certain mining and mineral properties.
Management believes these write-downs were necessary to reflect realizable
values. While the book value of these assets, prior to the write-downs, was
significant, their contribution to operations is not material.
The Company also recognized a charge of $13.0 million in 1991, to reduce
its carrying cost of preferred stock of Sharon. Pursuant to the Plan, one
series of preferred stock was purchased from the Quantum Fund in 1991 at which
time Quantum Fund was a 46 percent stockholder. The Company has not recognized
unpaid dividend income accruing to the preferred stock. Additionally, the
Company recognized a charge of $2.5 million for priority tax claims that
pertained to the reorganization. An additional $1.0 million charge was also
recognized for other non-operating assets.
<PAGE> 29 EXHIBIT 13.0
NOTE 10 OTHER INCOME
"Other income, net" included in the consolidated statements of
operations consists of the following:
<TABLE>
(In thousands)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Rent & royalties $ 1,275 $ 2,072 $ 3,251
Interest income 2,187 822 1,834
Gain on disposal of properties, net 1,262 3,417 32
Other (465) -- --
-------- -------- --------
$ 4,259 $ 6,311 $ 5,117
======== ======== ========
On December 15, 1992, the Company's subsidiary, Bayard Mining Corporation,
sold its Continental Mine and related assets located in Grant County, New
Mexico for a net gain of $3.8 million. The mine had been idle since 1982.
In 1992, the Company sold certain assets of its U-Brand malleable iron
business. In 1993, the Company recognized a gain of approximately $1.2 million
as a result of that transaction which provided for additional payments
contingent upon certain sales performance criteria.
</TABLE>
NOTE 11 LITIGATION
In addition to the matters described below, the Company is involved in
certain litigation as a result of claims that arise in the ordinary course of
business, which management believes will not have a material adverse affect on
the Company's financial condition.
Michigan Settlement
In April, 1991, a suit was initiated against Mueller Brass Co. (Mueller
Brass), a wholly-owned subsidiary of the Company, alleging the violation of
certain environmental laws and regulations. In February, 1992, Mueller Brass
entered into a consent decree pursuant to which Mueller Brass will conduct a
planned site investigation and will subsequently perform any required cleanup.
Mueller Brass will also remove contaminants from storm water within six months
of receiving a discharge permit. Mueller Brass paid $1.5 million in penalties
and contributions towards environmentally oriented projects in Michigan in
1992, $0.3 million in 1993, and will pay another $0.3 million, plus interest,
through March, 1995. These amounts were accrued as of December 28, 1991.
Caster Guarantee
As part of the Plan (see Note 1), the Company agreed to provide a $16.5
million guarantee (the Caster Guarantee) of the financing and start-up by
Sharon Specialty Steel, Inc. (Sharon) of a continuous caster slab facility. In
early 1992, the Company and Sharon instituted declaratory judgment actions to
determine whether the Company's obligations under the Caster Guarantee had
expired. This litigation was settled on August 20, 1992. The settlement
provided for a $4.125 million loan to Sharon and the granting of options to
Sharon to purchase all equity securities of Sharon owned by the Company.
<PAGE> 30 EXHIBIT 13.0
NOTE 12 STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLANS
Under the 1991 Incentive Stock Option Plan (ISO Plan), the Company may
grant options to purchase up to 250,000 shares of common stock at prices not
less than the fair market value of the stock on the date of grant. Generally,
any unexercised options expire after not more than ten years. No options may
be granted under this plan after ten years from the date the ISO Plan was
adopted.
On December 4, 1991, the Company authorized a special stock option grant
of 500,000 shares to induce Mr. Harvey L. Karp to enter into an employment
agreement with the Company. The exercise price, $8.25 per share, was the fair
market value on the date of grant. Generally, the options expire one year
after Mr. Karp's separation from employment with the Company unless Mr. Karp
is terminated for cause. On January 30, 1992, the Board approved and
authorized a transaction whereby Mr. Karp was granted options to purchase an
additional 500,000 shares, which was subsequently reduced by 100,000 option
shares which the Company issued to secure the employment of Mr. William D.
O'Hagan as its chief operating officer. Mr. Karp's additional grant of options
is on the same terms and conditions, and at the same price, as the original
grant. Although neither Mr. Karp's nor Mr. O'Hagan's options were granted
under the ISO Plan, the terms and conditions of Mr. O'Hagan's options are
generally similar to those granted under the ISO Plan.
Following is a summary of incentive stock option data:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Outstanding at beginning of year 1,167,500 500,000
Granted 75,000 782,500
Exercised (20,500) --
Expired, cancelled, or surrendered (31,500) (115,000)
--------- ---------
Outstanding at year-end 1,190,500 1,167,500
========= =========
Options exercisable at year-end 933,500 905,000
========= =========
Option prices per share outstanding at year-end $7.25-$32.50 $7.25-$14.00
========= =========
</TABLE>
Under the Amended and Restated Mueller Industries, Inc. 1991 Employee
Stock Purchase Plan (the EMSP Plan), the Company may offer to eligible
employees (generally all full-time employees) options to purchase up to three
shares of the company's common stock for each $1,000 of compensation. The
option price is the lower of (i) 85% of the fair value of the stock on the
offering date, or (ii) 85% of the fair value of the stock on the last day of
the one-year offering period. The maximum number of shares which shall be made
available for sale under the EMSP Plan during all offerings shall be 450,000
shares. Under the EMSP Plan, 44,158 shares have been issued. During the
offering period beginning July 1, 1993, options for 25,379 shares were
granted. Of the grants, 3,653 share options were cancelled or surrendered due
to participant terminations and voluntary withdrawals as provided by the EMSP
Plan. At December 25, 1993, options to purchase 21,726 shares were outstanding
at the exercise price of $28.69 per share under the EMSP Plan.
<PAGE> 31 EXHIBIT 13.0
NOTE 13 INDUSTRY SEGMENTS
The Company is engaged in the manufacture and sale of copper, brass,
bronze, aluminum, and plastic products, and in natural resource operations
consisting principally of placer gold mining, as well as the operation of a
Class III short line railroad. Income and expenses not allocated to industry
segments in computing operating income include general corporate income and
expense, interest expense and interest income. General corporate assets are
principally cash and temporary investments and corporate headquarter
facilities. There are no intersegment sales. The Company does not have
significant foreign operations and, accordingly, geographical segment
information is not presented.
<TABLE>
(In thousands)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Net sales:
Manufacturing $ 478,287 $ 494,704 $ 413,210
Natural resources 23,598 22,635 28,221
-------- -------- --------
Consolidated net sales 501,885 517,339 441,431
-------- -------- --------
Operating income (loss):
Manufacturing 38,052 26,419 5,629
Natural resources 5,534 4,252 1,214
General corporate (5,559) (1,353) (8,481)
-------- -------- --------
Consolidated operating income (loss) 38,027 29,318 (1,638)
Non-operating income (expense)* 1,175 675 (41,983)
Interest expense (5,759) (5,694) (6,114)
Consolidated income (loss) before taxes
and accounting change $ 33,443 $ 24,299 $ (49,735)
======== ======== ========
Provision for depreciation, depletion
and amortization:
Manufacturing $ 9,172 $ 9,198 $ 8,825
Natural resources 3,791 2,332 4,284
General corporate 1,197 975 185
-------- -------- --------
Consolidated provision for depreciation,
depletion and amortization $ 14,160 $ 12,505 $ 13,294
======== ======== ========
Capital expenditures:
Manufacturing $ 8,039 $ 6,930 $ 7,670
Natural resources 356 80 762
General corporate 2,688 3,942 3,393
-------- -------- --------
Consolidated capital expenditures $ 11,083 $ 10,952 $ 11,825
======== ======== ========
<PAGE> 32 EXHIBIT 13.0
NOTE 13 INDUSTRY SEGMENTS (Continued)
</TABLE>
<TABLE>
(In thousands)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Identifiable assets:
Manufacturing $ 269,189 $ 278,524 $ 282,143
Natural resources 34,316 40,768 48,246
-------- -------- --------
Total identifiable assets 303,505 319,292 330,389
General corporate assets 66,238 53,255 4,397
-------- -------- --------
Consolidated assets $ 369,743 $ 372,547 $ 334,786
======== ======== ========
<FN>
*The sum of unusual items (of which $27.9 million related to Natural Resources
and $16.5 million related to general corporate in 1991),environmental reserves
and other income items.
</TABLE>
<PAGE> 33 EXHIBIT 13.0
NOTE 14 QUARTERLY FINANCIAL INFORMATION (Unaudited)
Financial results by quarter are as follows:
<TABLE>
(In thousands, except per share data)
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1993
Net sales $ 131,037 $ 127,321 $ 122,106 $ 121,421
Gross profit (1) $ 22,781 $ 23,898 $ 25,777 $ 25,654
Net income $ 4,213 $ 5,312 $ 5,635 $ 5,976(2)
Net income per share $ .41 $ .51 $ .54 $ .57
1992
Net sales $ 117,895 $ 130,882 $ 147,670 $ 120,892
Gross profit (1) $ 20,487 $ 20,662 $ 24,531 $ 21,952
Net income before
cumulative effect $ 3,560 $ 4,002 $ 4,220 $ 4,438
Cumulative effect of
accounting change 446 -- -- --
-------- -------- -------- --------
Net income $ 4,006 $ 4,002 $ 4,220 $ 4,438(2)
======== ======== ======== ========
Net income before
cumulative effect per share $ .37 $ .40 $ .42 $ .43
Cumulative effect of
accounting change .05 -- -- --
-------- -------- -------- --------
Net income per share $ .42 $ .40 $ .42 $ .43
======== ======== ======== ========
<FN>
(1) Gross profit is net sales less cost of goods sold, which excludes
depreciation, depletion and amortization.
(2) A change in inventory estimate was recognized in addition to the items
described in Notes 9 and 10.
</TABLE>
<PAGE> 34 EXHIBIT 13.0
REPORT OF INDEPENDENT AUDITORS
The Stockholders of Mueller Industries, Inc.
We have audited the accompanying consolidated balance sheets of Mueller
Industries, Inc. as of December 25, 1993 and December 26, 1992 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 25, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Mueller
Industries, Inc. at December 25, 1993 and December 26, 1992, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 25, 1993, in conformity with
generally accepted accounting principles.
ERNST AND YOUNG
Wichita, Kansas
February 14, 1994
<PAGE> 35 EXHIBIT 13.0
<TABLE>
CAPITAL STOCK INFORMATION
The high, low and closing prices on the New York Stock Exchange for
each fiscal quarter of 1993 and 1992 were as follows:
<CAPTION>
1993 High Low Close
<S> <C> <C> <C>
Fourth quarter $ 35 $ 31-1/4 $ 33-3/4
Third quarter $ 34-1/4 $ 27-1/8 $ 31-7/8
Second quarter $ 34-3/4 $ 23-5/8 $ 32-3/8
First quarter $ 27-1/8 $ 20 $ 24-3/8
<CAPTION>
1992 High Low Close
<S> <C> <C> <C>
Fourth quarter $ 21-7/8 $ 15-5/8 $ 21-3/8
Third quarter $ 16-3/4 $ 12-3/8 $ 16-3/8
Second quarter $ 15-3/8 $ 11-5/8 $ 14-1/8
First quarter $ 13-7/8 $ 7 $ 12-1/8
</TABLE>
The principal market for Mueller's common stock is the New York
Stock Exchange under the symbol MLI. As of March 1, 1994, the number of
holders of record of Mueller's common stock was 4,190. The New York
Stock Exchange's closing price for Mueller's common stock on March 1,
1994 was $35-3/8.
The Company has paid no dividends on its common stock and presently
does not anticipate paying cash dividends in the near future.
<PAGE> 36 EXHIBIT 13.0
SELECTED FINANCIAL DATA
<TABLE>
(In thousands, except share data)
<CAPTION>
1993 1992 1991 1990(1) 1989(1)
<S> <C> <C> <C> <C> <C>
For the fiscal year: | (Predecessor)
Net sales $ 501,885 $ 517,339 $ 441,431 |$ 505,376 $ 510,537
Operating income (loss) $ 38,027 $ 29,318 $ (1,638) |$ (4,491) $ 22,643
Income (loss) from |
continuing operations $ 21,136(2) $ 16,220(3) $ (43,741)(4)|$ (9,342) $ 14,041
Income (loss) from |
continuing operations |
per common share $ 2.02(2) $ 1.61(3) $ (4.49)(4)| * *
- ---------------------------------------------------------------------------------------------
At Year End: |(Predecessor)
Total assets $ 369,743 $ 372,547 $ 334,786 $ 415,603| *
Long-term debt $ 54,320 $ 62,376 $ 45,156 $ 54,003| *
- ---------------------------------------------------------------------------------------------
At December 31, 1990, the Company adopted AICPA SOP 90-7, Financial Reporting by Entities
in Reorganization under the Bankruptcy Code. The SOP requires that the financial statements be
prepared on the basis that a new reporting entity is created and that assets and liabilities
should be recorded at their fair values as of the reorganization date based on the specific
elements of the Plan. Since December 31, 1990, the consolidated financial statements have been
prepared as if the Company is a new reporting entity, and therefore a black line has been
presented between years which have not been prepared on a comparable basis.
<FN>
* Amounts are not comparable due to the reorganization of the Company.
(1) Previously reported consolidated financial information has been restated to reflect the
discontinuance and disposition of the steel segment of the Company's businesses on
December 28, 1990.
(2) Includes a charge for unusual items of $2.0 million, or $.19 per common share.
(3) Includes a charge for unusual items of $5.6 million, or $.56 per common share.
(4) Includes a charge for unusual items of $44.4 million, or $4.56 per common share.
</TABLE>
<PAGE> 37 EXHIBIT 13.0
CORPORATE INFORMATION
DIRECTORS
Harvey L. Karp Chairman of the Board
Mueller Industries, Inc.
Ray C. Adam (1) (2) Private Investor
Rodman L. Drake (2) (3) President of Rodman L. Drake & Co., Inc.
Gary S. Gladstein (1) (2) Managing Director of Soros Fund Management
Allan Mactier (1) (3) Private Investor
William D. O'Hagan President and Chief Executive Officer
Mueller Industries, Inc.
Robert J. Pasquarelli (1) Chief Executive Officer of New Jersey
Steel Corporation
Paul Soros Private Investor
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
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
<PAGE> 38 EXHIBIT 13.0
Corporate Headquarters 2959 North Rock Road, Wichita, Kansas, 67226
P.O. Box 789761, Wichita, Kansas, 67278-9761
(316) 636-6300
Annual Meeting The Annual Meeting of Stockholders will be
held at the Wichita Marriott, 9100 Corporate
Hills Drive, Wichita, Kansas 67207 at 10:00
a.m. local time, May 12, 1994.
Form 10-K Copies of the Company's Annual Report on Form
10-K are available upon written request from
the Treasurer, Mueller Industries, Inc.,
P.O. Box 789761, Wichita, Kansas 67278-9761.
Common Stock Mueller common stock is traded on the NYSE -
Symbol MLI.
Independent Auditors Ernst & Young, Wichita, Kansas.
Legal Counsel Willkie Farr & Gallagher, One Citicorp
Center, 153 E. 53rd Street,
New York, New York 10022
Transfer Agent and Registrar Continental Stock Transfer & Trust Co.,
2 Broadway, New York, New York 10004
Stockholder Inquiries To notify the Company of address changes or
lost certificates, stockholders can call
Continental Stock Transfer & Trust Co.
at (212) 509-4000.
[FN]
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating Committee
<PAGE> 1
MUELLER INDUSTRIES, INC.
List of Subsidiaries
State or Country
Subsidiary * of Incorporation
Mueller Brass Co. Michigan
Mueller Industrial Realty Company Michigan
Itawamba Industrial Gas Company, Inc. Mississippi
Streamline Copper & Brass Ltd. Canada
Mueller Plastic Holding Company, Inc. Ohio
Mueller Plastic Corporation Delaware
U-Brand Foundry, Inc. Delaware
U-Brand Machine Shop, Inc. Delaware
Mueller Formed Tube Company, Inc. Delaware
Mueller Copper Tube, Inc. Delaware
Mueller Streamline Co. Delaware
Mueller Refrigeration Products Company, Inc. Delaware
Mueller Impacts Company, Inc. Delaware
Mueller Brass Forgings Company, Inc. Delaware
Mueller East, Inc. Delaware
Mueller West, Inc. Delaware
Mueller Copper Fittings Company, Inc. Delaware
Mueller Streamline FSC, Ltd. Virgin Islands
Arava Natural Resources Company, Inc. Delaware
United States Fuel Company Nevada
King Coal Company Utah
Utah Railway Company Utah
Canco Oil & Gas Ltd. Alberta, Canada
Aegis Oil & Gas Ltd. Alberta, Canada
Bayard Mining Corporation Delaware
Washington Mining Company Maine
Amwest Exploration Company Delaware
USSRAM Exploration Company Maine
Richmond Eureka Mining Company (81%) Maine
Ruby Hill Mining Company (75%) Maine
White Knob Mining Idaho
Arava Exploration Company Colorado
Summit Systems, Inc. Delaware
Kennet Company, Ltd. Bermuda
Mining Remedial Recovery Company Delaware
Carpentertown Coal & Coke Company Pennsylvania
USS Lead Refinery, Inc. Maine
Leon Water Enterprises, Inc. (50%) Texas
Alaska Gold Company (85%) Delaware
Macomber Construction Company Ohio
Macomber Incorporated Ohio
Sharon Building & Land Corporation Delaware
* All subsidiaries are 100% owned, except as shown.
<PAGE> 1
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Mueller Industries, Inc. of our report dated February 14, 1994, included in
the 1993 Annual Report to Stockholders of Mueller Industries, Inc.
Our audits also included the consolidated financial statement schedules of
Mueller Industries, Inc. listed in Item 14(a). These schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, the financial statement
schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
We also consent to the incorporation by reference in the Registration
Statements (Forms S-8 No. 33-41478 and No. 33-47307) pertaining to the 1991
Employee Stock Purchase Plan and the 1991 Incentive Stock Option Plan of
Mueller Industries, Inc., respectively, of our report dated February 14, 1994,
with respect to the financial statements incorporated herein by reference, and
our report included in the preceding paragraph with respect to the financial
statement schedules included in this Annual Report (Form 10-K) of Mueller
Industries, Inc.
ERNST & YOUNG
Wichita, Kansas
March 18, 1994
