<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 31, 1994 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
7, 1995 was 8,642,732, excluding 1,357,268 treasury shares. The aggregate
market value of the 7,558,943 shares of common stock held by non affiliates of
the Registrant was $239,996,440 at March 7, 1995 (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 31, 1994 (Part I and II); Registrant's Definitive Proxy Statement for
the 1995 Annual Meeting of Stockholders, scheduled to be mailed on or about
March 17, 1995 (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 13
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 16
Item 8. Financial Statements and Supplementary Data 16
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 16
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 17
Signatures 21
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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 97% of the Company's
total net sales and 89% of total identifiable assets on a consolidated basis
in 1994. The Company markets its products to the heating and air
conditioning, refrigeration, plumbing, hardware and other industries. Mueller
Brass Co. ("MBCo") and its subsidiaries operate twelve factories in five
states and Canada and have 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, and other natural resource properties.
Information concerning net sales, operating income or loss, and
identifiable assets of each segment appears under "Note 12 - Industry
Segments" on page 33 in the Notes to Consolidated Financial Statements in
Mueller's Annual Report to Stockholders for the year ended December 31, 1994.
Such information is incorporated herein by reference.
Manufacturing Segment
Products and Manufacturing Operations
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 and refrigeration tube markets. Additionally, Mueller supplies a
variety of water tube in straight lengths and coils used for plumbing
applications in virtually every type of construction project.
Other standard products include copper 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 (DWV) 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-road vehicle
markets.
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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, 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 brass 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.
Marketing and Distribution
Mueller's standard products are marketed primarily through its own sales
and distribution organization, which maintains sales offices and distribution
centers 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.
Competition
The businesses in which Mueller is engaged are highly competitive. The
principal methods of competition for Mueller's products are service, quality
and price. 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 31, 1994 and December 25,
1993 was not significant.
The Company competes with various companies depending on the product
line. In copper tubing, there are more than five domestic competitors
including Cerro Copper Products Co., Inc., Halstead Industries, Inc., Reading
Tube Corporation, and Wolverine Tube, Inc. as well as 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 Industrial Corporation, and NIBCO, Inc. The plastic fittings
competitors include more than a dozen companies. The brass rod competitors
include Cerro Metal Products Company, Inc., Chase Brass Industries, Inc.,
Extruded Metals Inc., 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.
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Properties and Facilities
Mueller's products are manufactured in its own plants located in Port
Huron, Michigan (three plants); Fulton, Mississippi (two plants); Covington,
Tennessee; Marysville, Michigan; Hartsville, Tennessee; Upper Sandusky, Ohio;
and Strathroy, Ontario, Canada. Additionally in 1994, the Company acquired
certain assets consisting of two DWV plastic fittings manufacturing
facilities. These facilities are located in Kalamazoo, Michigan and Cerritos,
California. During 1994, 1993, and 1992, the Company's Fulton copper tube
mill and Port Huron rod mill operated at near capacity. The other plants
operated at high levels during 1994.
In addition, Mueller leases office and regional warehouse space for its
standard products distribution network. Products are shipped from
manufacturing plants to distribution centers and customer locations using a
combination of Mueller's own trucking fleet and common carriers. Mueller's
factory warehouses service eight regional warehouses and stocking agents'
warehouses located in key marketing areas throughout the United States.
Raw Materials and Supplies
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.
Other
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 have since been sold.
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 over approximately 100 miles of railroad track in Utah. Utah
Railway serves four major customers pursuant to long-term contracts which
account for more than 75% of tonnage hauled. Utah Railway transports
approximately four million tons of coal per year to an interchange point at
Provo, Utah, although annual tonnage may vary significantly due to
fluctuations in the demand for export coal. 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.
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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. Alaska Gold expects limited dredge operations in 1995.
Alaska Gold produced 14,173 net ounces of gold in 1994, 22,440 net ounces of
gold in 1993, 17,965 net ounces of gold in 1992, 19,016 net ounces of gold in
1991, and 20,771 net ounces in 1990, at a net production cost of $376 per
ounce in 1994, $280 per ounce in 1993, $306 per ounce in 1992, $407 per ounce
in 1991, and $415 per ounce in 1990.
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 when the ground is frozen. It is then
processed the following summer after natural thawing has occurred. The
results of the initial project were inconclusive. Consequently, Alaska Gold
conducted a second test pit during the 1993-94 winter; processing of the stock
piled pay gravel from this pilot project confirmed that this method of mining
is viable. Therefore, the Company purchased additional equipment in 1994 to
conduct full scale open-pit mining operations which started in the fourth
quarter of 1994. Alaska Gold plans to move approximately 1.5 million cubic
yards of dirt in 1995, about three times as much as last year. Based on the
results of past exploratory drilling, Alaska Gold believes there may be
various areas available on its properties to sustain open pit mining for ten
years.
Coal Properties
In 1994, United States Fuel Company ("U.S. Fuel"), a wholly-owned
subsidiary of Arava, entered into an agreement to sell the majority of its
assets. The sale is expected to close in 1995 pending approval by regulatory
agencies and the completion of an environmental audit by the purchaser. The
sale is expected to result in a small gain. Prior to March 1993, U.S. Fuel
mined steam coal by the deep-mine process at its coal properties located in
Carbon and Emery Counties, Utah.
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. Following
the proposed sale, U.S. Fuel will own approximately 1,100 acres.
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, developed, or leased in the near
future. During 1992, the Company sold its copper mine and mill located in
Grant County, New Mexico.
Canco Oil & Gas Ltd. ("Canco"), a wholly-owned Canadian subsidiary, owns
petroleum and natural gas rights to approximately 30,000 net acres in
Saskatchewan, Canada. The Company has embarked upon a limited drilling
program to determine the development potential of these properties.
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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. Homestake has a substantial exploration and drilling program
underway on the property. In 1994, Homestake exercised 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.
Labor Relations
The Company employs approximately 2,250 employees of which approximately
925 are represented by various unions. A majority of the unionized employees
are under contracts which expire in 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 is
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 provisions 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 include $2.9 million
in 1994, and $1.1 million in 1993. Management believes that the outcome of
pending environmental matters will not materially affect the overall financial
position of the Company. 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 1995 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. Pursuant to a Consent
Decree, since 1992 MBCo has contributed $1.0 million towards environmental
mitigation projects in Michigan and paid cash penalties of approximately $1.0
million. Beginning in 1992, MBCo has 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 $.3 million in 1994, $.5 million in 1993 and $.3
million in 1992. The Company believes MBCo's established reserves should be
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adequate to cover anticipated site investigation and remediation costs.
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 1995 and 1996.
In 1994, Alaska Gold completed its site investigation and remediation
related to past mining operations in and around the old "gold house" in
Fairbanks. In 1994, Alaska Gold removed the soil to a landfill and received a
"No Further Action Required" letter from the ADEC indicating that the project
had been satisfactorily completed. Total cleanup costs were approximately
$425,000. The property was subsequently sold. 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. The 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 loans and advances from the Company and/or some recoveries from
insurance companies, third parties or the sale of assets. MRRC cannot
reasonably estimate the timing or amount of such proceeds. 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
On November 24, 1993, the EPA issued Special Notice letters to all known
potentially responsible parties ("PRPs") regarding the Cleveland Mill
Superfund Site in Grant County, New Mexico. In response to the Special
Notice, MRRC, Bayard Mining Corp. ("Bayard"), a wholly-owned subsidiary of
Arava, and another third party affiliated with a former owner/operator of the
site, filed a good faith offer to implement the remedy set forth in the EPA's
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Record of Decision ("ROD") issued in September, 1993. Total costs for
remediating the site are uncertain, but were estimated by the EPA in the ROD
at approximately $6.2 million in addition to the $1.2 million previously
incurred by the EPA at the site. During the third quarter of 1994, MRRC and
Bayard, along with said third party, executed a consent decree relating to the
site. The consent decree has yet to be executed by the governmental entities
or entered by the federal district court, which is anticipated to occur in
1995. MRRC, Bayard and said third party have agreed to an allocation formula
at this site which will (i) require Bayard and MRRC to pay 33.33% of past
response costs, and (ii) require Bayard and MRRC to pay 29.20% of future
costs. The third party will pay the remaining costs. Mueller has guaranteed
Bayard's and MRRC's payment obligations under this allocation agreement. The
site is currently owned by MRRC and Bayard.
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 PRP Notices
have been received from the United States under CERCLA, although New Mexico
authorities have done a 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. Costs associated with capping the
tailings on site and regrading the soil are estimated at approximately $1.0
million. MRRC and the same third party involved in the Cleveland Mill site
have agreed that said third party will pay for 62.50% of all costs incurred
since July 8, 1994, and MRRC will pay 37.50% of such costs, except that should
such costs exceed $1.0 million, MRRC will pay all costs in excess of $1.0
million to complete voluntary remediation, unless completion is prevented or
hindered by a third party. Mueller will guarantee MRRC's performance under
this allocation agreement. MRRC is also the current owner of 148 acres
located nearby also in Grant County, New Mexico, called the Bullfrog site.
During 1994, MRRC substantially completed its voluntary plan to regrade and
cap the soil at the Bullfrog site. Costs associated with capping and
regrading the site were approximately $0.9 million.
3. Mammoth Mine Site
MRRC owns title to some mines in Shasta County, California, which have
been inactive since the 1920s. Since acquiring title, MRRC has continued a
program begun in the late 1980s of sealing mine portals with concrete plugs in
mine adits which were discharging water. While the sealing program has
achieved over a 90% reduction in the metal load in discharges from these
adits, historically the thresholds identified in MRRC's National Pollutant
Discharge Elimination System Permit No. 81876 have not at all times been met.
To date, MRRC has expended in excess of $1.75 million in implementing the
sealing program, and has installed plugs at all adits that were discharging.
MRRC intends to cooperate with governmental authorities in completing its
bulkhead construction, rehabilitation and monitoring portions of the sealing
program. In addition, the EPA and California Bureau of Water Quality have
recently commissioned a study concerning the historic mine waste in the area,
some of which is on MRRC property. Whether or not, following the completion
of this study and its results, the regulatory agencies will require any
reclamation of mine waste dumps is unknown.
On October 14, 1994, MRRC received Notice of a Compliant filed against
it in the United States District Court for the Eastern District of California.
The action is a citizens suit brought under the authority of the Clean Water
Act by the California Sportfishing Protection Alliance (the "Alliance"). The
<PAGE> 10
plaintiff's complaint alleges several instances of acid mine drainage and
discharges from mine adits from property owned by MRRC in Shasta County,
California. The plaintiffs allege that these activities are in violation of
MRRC's National Pollutant Discharge Elimination System Permit. MRRC has filed
its answer denying liability and raising various affirmative defenses. MRRC
has also met with the Alliance to discuss resolving this matter outside of
litigation. In January, 1995, MRRC and the Company each received a letter
from counsel representing another mining company, notifying MRRC and the
Company of alleged potential liability under various federal and state laws
for contamination of water in Shasta County, California, caused by releases of
hazardous substances from inactive mines in the form of acid mine drainage.
The Company and MRRC have replied that they do not intend to contribute to
abatement costs at nearby mines, although MRRC, as a mine owner, has also
indicated a willingness to cooperate with all parties to achieve a broader
remediation in this area.
4. U.S.S. Lead
U.S.S. Lead Refinery, Inc. ("Lead Refinery") is a subsidiary of MRRC.
In 1991, Lead Refinery 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
<PAGE> 11
former owner/operator since the execution of the tolling agreement in late
1989. In April, 1991, 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 and, as of March 1, 1995, EPA has
deferred such listing.
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 $2.5
million, the majority of which would be required to be expended in 1995. 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 the additional 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
substances 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. Brown 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.
By letter dated September 28, 1994, EPA informed Lead Refinery that it
is a PRP at the Conservation Chemical Company site located in Gary, Indiana.
In November, 1994, representatives from Lead Refinery attended a meeting
between the EPA and numerous PRPs to discuss the agency's demands regarding
cleanup of the Conservation Chemical Company site and reimbursement of past
response costs (approximately $2.8 million through March, 1993). EPA
indicated that it would prepare and transmit an administrative settlement
proposal to the PRPs, seeking reimbursement of past response costs and cleanup
of the site. No proposal has yet been received. Lead Refinery has been
invited to join a de minimus PRP committee, but has not yet done so.
<PAGE> 12
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 was not required to file an
answer and was deemed automatically to have denied any liability. Based on
preliminary site clean-up costs and the number of PRPs involved in this site,
the Company estimates that its allocated share will be less than $100,000.
Disposition of the complaint is scheduled to go forward in 1995. Mueller has
joined a de minimus joint defense group which is pursuing a settlement
involving the payment of a nominal amount by each member of the group.
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. Preliminary total estimated costs of remediation at this site are $5
million and 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. The EPA has advised that its estimated cleanup costs would be
approximately $40 million. Additionally, the EPA has already incurred
response costs of $5.0 million. Based upon MBCo.'s estimated allocation
ranking, its share of costs would be approximately $400,000.
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
<PAGE> 13
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 1994, 1993, or 1992. No material portion of the
Registrant's business involves governmental contracts.
Reorganization Under Chapter 11 of the Bankruptcy Code
Reference is made to "Reorganization Under Chapter 11 of the Bankruptcy
Code" in Item 3 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.
ITEM 2. PROPERTIES
Information pertaining to the Registrant's major operating facilities is
included below (some additional information is also included under "Business"
in Item 1, which is incorporated herein by reference). Except as noted, the
Registrant owns all of its principal properties. The Registrant's plants are
in satisfactory condition and are suitable for the purpose for which they were
designed and are now being used.
Location Property Size Description
Port Huron, MI 260,000 sq. ft. (1) Brass rod mill. Facility includes
23.19 acres casting, extruding, and finishing
equipment to produce brass rods
and bars, in various shapes and
sizes.
Port Huron, MI 46,500 sq. ft. Forgings plant. Produces brass
and aluminum forgings.
Marysville, MI 62,500 sq. ft. Aluminum and Copper Impacts plant.
6.72 acres Produces made to order parts using
cold impact processes.
Port Huron, MI 13,500 sq. ft. Formed tube plant.
5.11 acres Produces copper fittings using
cold heading equipment.
Fulton, MS 405,500 sq. ft. (1) Copper tube mill.
60.70 acres Facility includes casting,
extruding and finishing equipment
to produce copper tubing,
including tube feed stock for the
Company's copper fittings plants.
<PAGE> 14
Fulton, MS 70,500 sq. ft. (1) (2) Copper fittings plant. High-
volume facility is being
constructed to produce copper
fittings using tube feed stock
from the Company's copper tube
mill beginning in 1995.
Covington, TN 159,500 sq. ft. Copper fittings plant.
40.88 acres Facility produces copper fittings
using tube feed stock from the
Company's copper tube mill.
Strathroy, Ontario
Canada 54,000 sq. ft. Copper fittings plant.
4.67 acres Facility produces copper fittings
for the Canadian domestic markets
and for export to European
markets.
Upper Sandusky, OH 82,000 sq. ft. Plastic fittings plant.
7.52 acres Produces DWV fittings using
injection molding equipment.
Kalamazoo, MI 130,000 sq. ft. (2) Plastic fittings plant. Produces
DWV fittings using injection
molding equipment.
Cerritos, CA 115,000 sq. ft. (2) Plastic fittings plant. Produces
DWV fittings using injection
molding equipment.
Hartsville, TN 78,000 sq. ft. Refrigeration Products plant.
4.51 acres Produces products used in
refrigeration applications such as
ball valves, line valves,
compressor valves, and filter
driers.
In addition, the Company owns and/or leases other properties used as
distribution centers and corporate offices.
(1) Includes facility expansion to be complete and operational in
latter half of 1995.
(2) Facility is leased under long-term lease agreement, with option to
purchase.
ITEM 3. LEGAL PROCEEDINGS
Canco Litigation
In 1989, Canco instituted litigation in Saskatchewan contending that
Canco's royalty interests continued against mineral titles transferred to the
Government of Saskatchewan (the "Government") and Scurry Rainbow Oil Limited
("Scurry") or, alternatively, that Scurry had breached its contractual
obligations to Canco. In 1991, Canco instituted another lawsuit against the
Government. In 1994, these lawsuits were settled. As part of this
settlement, Canco sold its oil and gas royalty interests. The Company
recognized a gain of approximately $.6 million as a result of the settlement.
<PAGE> 15
Reorganization Under Chapter 11 of the Bankruptcy Code
On April 17, 1987, Sharon Steel Corporation ("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
(the "Reorganization Plan"). The Reorganization Plan, filed as Exhibit 2.1,
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, Mueller became a successor to Sharon
for purposes 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., a Delaware
corporation, pursuant to an Asset Purchase Agreement filed as Exhibit 2.3, 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.
Pursuant to 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. As of March 1, 1995, all disputed claims were resolved
and the final pro rate distributions were paid.
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 36 of the Registrant's Annual
Report to Stockholders for the year ended December 31, 1994, 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 37 of the Registrant's Annual Report to Stockholders
for the year ended December 31, 1994, which selected financial data is
incorporated herein by reference.
<PAGE> 16
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 8
through 12 of the Registrant's Annual Report to Stockholders for the year ended
December 31, 1994 and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Supplemental Financial Information
on pages 22 and 23 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.
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 1995 Annual
Meeting of Stockholders to be filed with the Securities and Exchange
Commission on or about March 17, 1995 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 1995 Annual
Meeting of Stockholders to be filed with the Securities and Exchange
Commission on or about March 17, 1995 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 1995 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission on or about March 17, 1995 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 1995 Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission on or about March 17, 1995 and is
incorporated herein by reference.
<PAGE> 17
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")
(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 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 November 10, 1994. (Incorporated herein by reference to
Exhibit 3 (ii) of the Registrant's Current Report on Form 8-K,
dated November 14, 1994.)
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).
<PAGE> 18
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.
10.1 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).
10.2 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).
10.3 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).
10.4 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).
10.5 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).
10.6 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).
10.7 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).
10.8 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).
10.9 Summary description of the Registrant's 1995 bonus plan for
certain key employees.
<PAGE> 19
10.10 Amendment to Employment Agreement, effective January 1, 1994,
to Employment Agreement by and between Mueller Industries, Inc.
and Harvey L. Karp. (Incorporated herein by reference to Exhibit
10.28 of the Registrant's Report on Form 10-K, dated March 23,
1994, for the fiscal year ended December 25, 1993.)
10.11 Employment Agreement, effective as of January 1, 1994, by and
between Mueller Industries, Inc. and William D. O'Hagan.
(Incorporated herein by reference to Exhibit 10.29 of the
Registrant's Report on Form 10-K, dated March 23, 1994, for the
fiscal year ended December 25, 1993.)
10.12 Amendment to Employment agreement, effective as of July 23,
1993, by and between Mueller Industries, Inc. and William H.
Hensley. (Incorporated herein by reference to Exhibit 10.30 of
the Registrant's Report on Form 10-K, dated March 23, 1994, for
the fiscal year ended December 25, 1993.)
10.13 Mueller Industries, Inc. 1994 Stock Option Plan.
10.14 Mueller Industries, Inc. 1994 Non-Employee Director Stock
Option Plan.
13.0 Mueller Industries, Inc.'s Annual Report to Shareholders for
the year ended December 31, 1994. 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.)
99.1 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.)
99.2 Rights Agreement, dated as of November 10, 1994, between the
Registrant and Continental Stock Transfer and Trust Company, as
Rights Agent, which includes the Form of Certificate of
Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock of the Registrant, as Exhibit A, the
Form of Rights Certificate, as Exhibit B, and the Summary of
Rights to Purchase Preferred Stock, as Exhibit C. (Incorporated
by reference to Exhibit 99.1 of the Registrant's Current Report on
Form 8-K, dated November 14, 1994.)
<PAGE> 20
(b) During the three months ended December 31, 1994, the following
Current Reports on Form 8-K were filed:
(i) Current Report on Form 8-K, dated November 10, 1994,
which reported (i) the adoption of a shareholder rights plan,
and (ii) the amendment of the Company's By-Laws implementing
procedures for stockholder proposals and for nominations for
election of directors to be considered at annual or special
meetings.
<PAGE> 21
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 17,
1995.
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 17, 1995
Harvey L. Karp
/S/ROBERT B. HODES Director March 17, 1995
Robert B. Hodes
Director March __, 1995
Allan Mactier
/S/WILLIAM D. O'HAGAN President, Chief Executive Officer, March 17, 1995
William D. O'Hagan Director
/S/ROBERT J. PASQUARELLI Director March 17, 1995
Robert J. Pasquarelli
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 17, 1995
Earl W. Bunkers
Chief Financial Officer
(Principal Accounting Officer)
/S/KENT A. MCKEE March 17, 1995
Kent A. McKee
Treasurer and Assistant Secretary
/S/ROY C. HARRIS March 17, 1995
Roy C. Harris
Corporate Controller
<PAGE> 22
INDEX TO FINANCIAL STATEMENTS
The consolidated financial statements, together with the report thereon
of Ernst & Young LLP dated February 8, 1995, appearing on page 13 through and
including 35, of the Company's 1994 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 1994 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 Schedule should be read in conjunction with the consolidated
financial statements in such 1994 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
Schedule for the fiscal years ended December 31, 1994,
December 25, 1993, and December 26, 1992.
Valuation and Qualifying Accounts (Schedule II) 23
<PAGE> 23
<TABLE>
MUELLER INDUSTRIES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1994, December 25, 1993, and December 26, 1992
(In thousands)
<CAPTION>
Additions
-------------------------------
Balance at Charged to Balance
beginning costs and Other at end
of Year expenses Additions Deductions of year
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1994
Allowance for Doubtful Accounts $ 3,495 $ 186 $ - $ 345 $ 3,336
Environmental Reserves (1) $ 10,448 $ 2,914 $ 125 (2) $ 2,309 $ 11,178
Other Reserves (1) (3) $ 15,508 $ 4,062 $ (125) (2) $ 3,295 $ 16,150
Valuation Allowance for Deferred
Tax Assets $ 85,338 $ - $ - $ 19,411 $ 65,927
1993
Allowance for Doubtful Accounts $ 4,473 $ 59 $ - $ 1,037 $ 3,495
Environmental Reserves (1) $ 10,985 $ 1,060 $ 1,000 (2) $ 2,597 $ 10,448
Other Reserves (1) (3) $ 18,317 $ (363) $ (1,000) (2) $ 1,446 $ 15,508
Valuation Allowance for Deferred
Tax Assets $ 88,081 $ - $ - $ 2,743 $ 85,338
1992
Allowance for Doubtful Accounts $ 6,925 $ 2,794 $ - $ 5,246 $ 4,473
Environmental Reserves (1) $ 13.258 $ 253 $ 2,500 (4) $ 5,026 $ 10,985
Other Reserves (1) (3) $ 33,144 $ 8,867 $ (2,500) (4) $ 21,194 $ 18,317
Valuation Allowance for Deferred
Tax Assets $ - $ - $ 88,081 (5) $ - $ 88,081
<FN>
(1) Of the amounts previously classified as Restructuring Reserves, $1.8 million
was reclassified to Environmental Reserves, the remainder was reclassified
to Other Reserves.
(2) Reclass from Other Reserves to Environmental Reserves.
(3) Other Reserves are included in the balance sheet captions Other
Current Liabilities and Other Noncurrent Liabilities
(4) US Fuel Reclamation reserve classified as Other Reserve in 1991,
Environmental Reserve in 1992
(5) 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.
</TABLE>
<PAGE> 24
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.
10.9 Summary description of the Registrant's 1995 bonus plan
for certain key employees.
10.13 Mueller Industries, Inc. 1994 Stock Option Plan.
10.14 Mueller Industries, Inc. 1994 Non-Employee Director
Stock Option Plan.
13.0 Mueller Industries, Inc.'s Annual Report to
Stockholders for the year ended December 31, 1994.
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
1995 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 1995
Bonus Plan. The bonus percent is based on a variety of guidelines including
performance levels of the Company measured by earnings before tax. Under a
special one-time arrangement, certain operating division executives may earn
up to an additional 12-1/2% to 30% of base annual salary if certain
performance levels of their division are achieved.
<PAGE> 1
MUELLER INDUSTRIES, INC.
1994 STOCK OPTION PLAN
1. Purposes.
The Mueller Industries, Inc. 1994 Stock Option Plan (the "Plan") is
intended to attract and retain the best available personnel for positions of
substantial responsibility with Mueller Industries, Inc., a Delaware
corporation (the "Company"), and its subsidiary corporations, and to provide
additional incentive to such persons to exert their maximum efforts toward the
success of the Company and its subsidiary corporations. The above aims will be
effectuated through the granting of certain options ("Options") to purchase
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"). Under the Plan, the Company may grant "incentive stock options"
("ISOs") within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended, or Options which are not intended to be ISOs ("Non-Qualified
Options").
2. Administration of the Plan.
The Plan shall be administered by a committee (the "Committee")
consisting of at least two persons, appointed by the Board of Directors of the
Company (the "Board of Directors"), each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 (the "Exchange Act"). The Committee may exercise the power and authority
vested in the Board of Directors under the Plan. Within the limits of the
express provisions of the Plan, the Committee shall have the authority, in its
discretion, to take the following actions under the Plan:
(a) to determine the individuals to whom, and the time or times at
which, Options shall be granted, the number of shares of Common Stock
to be subject to each Option and whether such Options shall be ISOs
or Non-Qualified Options;
(b) to interpret the Plan;
(c) to prescribe, amend and rescind rules and regulations relating
to the Plan;
(d) to determine the terms and provisions of the respective stock
option agreements granting Options, including the date or dates upon
which Options shall become exercisable, which terms need not be
identical;
(e) to accelerate the vesting of any outstanding Options; and
(f) to make all other determinations and take all other actions
necessary or advisable for the administration of the Plan.
<PAGE> 2
In making such determinations, the Committee may take into account the
nature of the services rendered by such individuals, their present and
potential contributions to the Company's success, and such other factors as
the Committee, in its discretion, shall deem relevant. An individual to whom
an Option has been granted under the Plan is referred to herein as an
"Optionee". The Committee's determinations on the matters referred to in this
Section 2 shall be conclusive.
3. Shares Subject to the Plan.
The total number of shares of Common Stock which shall be subject to
Options granted under the Plan shall not exceed 200,000, subject to adjustment
as provided in Section 7 hereof. The Company shall at all times while the
Plan is in force reserve such number of shares of Common Stock as will be
sufficient to satisfy the requirements of outstanding Options. The shares of
Common Stock to be issued upon exercise of Options shall be authorized and
unissued or reacquired shares of Common Stock. The shares of Common Stock
relating to the unexercised portion of any expired, terminated or cancelled
Option shall thereafter be available for the grant of Options under the Plan.
4. Eligibility.
(a) Options may be granted under the Plan only to (i) employees of
the Company and (ii) employees of any "subsidiary corporation" (a
"Subsidiary") of the Company within the meaning of Section 424(f) of
the Code. The term "Company," when used in the context of an
Optionee's employment, shall be deemed to include Subsidiaries of the
Company.
(b) Nothing contained in the Plan shall be construed to limit the
right of the Company to grant stock options otherwise than under the
Plan for proper corporate purposes.
5. Terms of Options.
The terms of each Option granted under the Plan shall be determined by
the Committee consistent with the provisions of the Plan, including the
following:
(a) The purchase price of the shares of Common Stock subject to
each Option shall be fixed by the Committee, in its discretion, at
the time such Option is granted; provided, however, that in no event
shall such purchase price be less than the Fair Market Value (as
defined in paragraph (g) of this Section 5) of the shares of Common
Stock as of the date such Option is granted.
(b) The dates on which each Option (or portion thereof) shall be
exercisable shall be fixed by the Committee, in its discretion, at
the time such Option is granted.
(c) The expiration of each Option shall be fixed by the Committee,
in its discretion, at the time such Option is granted. No Option
shall be exercisable after the expiration of ten (10) years from the
date of its grant and each Option shall be subject to earlier
termination as determined by the Committee, in its discretion, at the
time such Option is granted.
<PAGE> 3
(d) Options shall be exercised by the delivery to the Company at
its principal office or at such other address as may be established
by the Committee (Attention: Corporate Treasurer) of written notice
of the number of shares of Common Stock with respect to which the
Option is being exercised accompanied by payment in full of the
purchase price of such shares. Unless otherwise determined by the
Committee at the time of grant, payment for such shares may be made
(i) in cash, (ii) by certified check or bank cashier's check payable
to the order of the Company in the amount of such purchase price,
(iii) by delivery to the Company of shares of Common Stock having a
Fair Market Value equal to such purchase price, (iv) by irrevocable
instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds necessary to pay such purchase price
and to sell the shares of Common Stock to be issued upon exercise of
the Option and deliver the cash proceeds less commissions and
brokerage fees to the Optionee or to deliver the remaining shares of
Common Stock to the Optionee, or (v) by any combination of the
methods of payment described in (i) through (iv) above.
(e) An Optionee shall not have any of the rights of a holder of the
Common Stock with respect to the shares of Common Stock subject to an
Option until such shares are issued to such Optionee upon the
exercise of such Option.
(f) An Option shall not be transferable, except by will or the laws
of descent and distribution, and may be exercised, during the
lifetime of an Optionee, only by the Optionee. No Option granted
under the Plan shall be subject to execution, attachment or other
process.
(g) For purposes of the Plan, as of any date when the Common Stock
is quoted on the National Association of Securities Dealers Automated
Quotation System National Market System ("NASDAQ-NMS") or listed on
one or more national securities exchanges, the "Fair Market Value" of
the Common Stock as of any date shall be deemed to be the mean
between the highest and lowest sale prices of the Common Stock
reported on the NASDAQ-NMS or the principal national securities
exchange on which the Common Stock is listed and traded on the
immediately preceding date, or, if there is no such sale on that
date, then on the last preceding date on which such a sale was
reported. If the Common Stock is not quoted on the NASDAQ-NMS or
listed on an exchange, or representative quotes are not otherwise
available, the "Fair Market Value" of the Common Stock shall mean the
amount determined by the Committee to be the fair market value based
upon a good faith attempt to value the Common Stock accurately.
(h) In no event shall any single Optionee be granted under the Plan
Options covering more than 50,000 shares of Common Stock during the
life of the Plan.
6. Special Provisions Applicable to ISOs.
The following special provisions shall be applicable to ISOs granted
under the Plan.
(a) No ISOs shall be granted under the Plan after ten (10) years
from the earlier of (i) the date the Plan is adopted, or (ii) the
date the Plan is approved by the holders of the Common Stock.
<PAGE> 4
(b) ISOs may not be granted to a person who owns stock possessing
more than 10% of the total combined voting power of all classes of
stock of the Company, any of its Subsidiaries, or any "parent
corporation" (a "Parent") of the Company within the meaning of
Section 424(e) of the Code.
(c) If the aggregate Fair Market Value of the Common Stock with
respect to which ISOs are exercisable for the first time by any
Optionee during a calendar year (under all plans of the Company and
its Parents and Subsidiaries) exceeds $100,000, such ISOs shall be
treated, to the extent of such excess, as Non-Qualified Options. For
purposes of the preceding sentence, the Fair Market Value of the
Common Stock shall be determined at the time the ISOs covering such
shares were granted.
7. Adjustment upon Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are
changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, combination or
exchange of shares and the like, or dividends payable in shares of
Common Stock, an appropriate adjustment shall be made by the
Committee in the aggregate number of shares of Common Stock available
under the Plan and in the number of shares of Common Stock and price
per share of Common Stock subject to outstanding Options. If the
Company shall be reorganized, consolidated, or merged with another
corporation, or if all or substantially all of the assets of the
Company shall be sold or exchanged, an Optionee shall at the time of
issuance of the stock under such corporate event be entitled to
receive upon the exercise of his Option the same number and kind of
shares of stock or the same amount of property, cash or securities as
he would have been entitled to receive upon the occurrence of any
such corporate event as if he had been, immediately prior to such
event, the holder of the number of shares of Common Stock covered by
his Option.
(b) Any adjustment under this Section 7 in the number of shares of
Common Stock subject to Options shall apply proportionately to only
the unexercised portion of any Option granted hereunder. If fractions
of a share would result from any such adjustment, the adjustment
shall be revised to the next lower whole number of shares.
8. Further Conditions of Exercise.
(a) Unless prior to the exercise of an Option the shares of Common
Stock issuable upon such exercise are the subject of a registration
statement filed with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended (the "Securities Act"), and
there is then in effect a prospectus filed as part of such
registration statement meeting the requirements of Section 10(a)(3)
of the Securities Act, the notice of exercise with respect to such
Option shall be accompanied by a representation or agreement of the
Optionee to the Company to the effect that such shares are being
acquired for investment only and not with a view to the resale or
distribution thereof, or such other documentation as may be required
by the Company, unless, in the opinion of counsel to the Company,
such representation, agreement or documentation is not necessary to
comply with the Securities Act.
<PAGE> 5
(b) Anything in subparagraph (a) of this Section 8 to the contrary
notwithstanding, the Company shall not be obligated to issue or sell
any shares of Common Stock until they have been listed on each
securities exchange on which the shares of Common Stock may then be
listed and until and unless, in the opinion of counsel to the
Company, the Company may issue such shares pursuant to a
qualification or an effective registration statement, or an exemption
from registration, under such state and federal laws, rules or
regulations as such counsel may deem applicable. The Company shall
use reasonable efforts to effect such listing, qualification and
registration, as the case may be.
9. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan)
shall terminate ten (10) years from the date of its adoption by the
Board of Directors, and no Option shall be granted after termination
of the Plan.
(b) The Plan may at any time be terminated or, from time to time,
be modified or amended by (i) the affirmative vote of the holders of
a majority of the shares of the capital stock of the Company present
in person or by proxy and entitled to vote at the meeting; and (ii)
the Board of Directors; provided, however, that the Board of
Directors shall not, without approval by the affirmative vote of the
holders of a majority of the shares of the capital stock of the
Company present in person or by proxy and entitled to vote at the
meeting, increase (except as provided by Section 7) the maximum
number of shares of Common Stock as to which Options may be granted
under the Plan or change the class of persons eligible to receive
Options under the Plan.
(c) No termination, modification or amendment of the Plan may
adversely affect the rights conferred by any Options without the
consent of the affected Optionee.
10. Effectiveness of the Plan.
The Plan shall become effective upon adoption by the Board of Directors
of the Company, subject to the approval by the shareholders of the Company.
Options may be granted under the Plan prior to receipt of such approval,
provided that, in the event such approval is not obtained, the Plan and all
Options granted under the Plan shall be null and void and of no force and
effect.
11. Not a Contract of Employment.
Nothing contained in the Plan or in any stock option agreement executed
pursuant hereto shall be deemed to confer upon any Optionee any right to
remain in the employ of the Company or of any Subsidiary.
12. Governing Law.
The Plan shall be governed by the laws of the State of Delaware without
reference to principles of conflict of laws thereof.
<PAGE> 6
13. Withholding.
As a condition to the exercise of any Option, the Committee may require
that an Optionee satisfy, through withholding from other compensation or
otherwise, the full amount of all federal, state and local income and other
taxes required to be withheld in connection with such exercise.
<PAGE> 1
MUELLER INDUSTRIES, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. The 1994 Non-Employee Director Stock Option Plan
(the "Plan") is intended to promote the interests of Mueller Industries, Inc.
(the "Company") by providing an inducement to obtain and retain the services
of qualified persons who are neither employees nor officers of the Company to
serve as members of the Board of Directors and to demonstrate the Company's
appreciation for their service upon the Company's Board of Directors.
2. Rights to be Granted. Under the Plan, options are granted
that give an Optionee the right for a specified time period to purchase a
specified number of shares of common stock, par value $0.01, of the Company
(the "Common Shares"). The option price is determined in each instance in
accordance with the terms of the Plan.
3. Available Shares. The total number of Common Shares for which
options may be granted shall not exceed twenty-five thousand (25,000), subject
to adjustment in accordance with Section 13 hereof. Shares subject to the Plan
are authorized but unissued shares or shares that were once issued and
subsequently reacquired by the Company. If any options granted under the Plan
are surrendered before exercise or lapse without exercise, in whole or in
part, the shares reserved therefor revert to the option pool and continue to
be available for grant under the Plan.
4. Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee"). The Committee shall, subject to the provisions of the Plan and
Section 1 7 hereof in particular, have the power to construe the Plan, to
determine all questions thereunder, and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem desirable.
5. Option Agreement. Each option granted under the provisions of
the Plan shall be evidenced by an Option Agreement, in such form as may be
approved by the Board, which Agreement shall be duly executed and delivered on
behalf of the Company and by the individual to whom such option is granted.
The Agreement shall contain such terms, provisions, and conditions not
inconsistent with the Plan as may be determined by the Board.
6. Eligibility and Limitations. Options may be granted pursuant
to the Plan only to nonemployee members of the Board of Directors of the
Company.
7. Option Price. The purchase price of the Common Shares covered
by an option granted pursuant to the Plan shall be 100% of the Fair Market
Value of such shares on the day the option is granted. The option price will
be subject to adjustment in accordance with the provisions of Section 13
hereof. For purposes of the Plan, as of any date when the Common Shares are
quoted on the National Association of Securities Dealers Automated Quotation
System National Market System ("NASDAQ-NMS") or listed on one or more national
securities exchanges, the "Fair Market Value" of the shares shall be deemed to
be the mean between the highest and lowest sale prices of the Common shares
reported on the NASDAQ-NMS or the principal national securities exchange on
which the Common Shares are listed and traded on the immediately preceding
<PAGE> 2
date, or, if there is no such sale on that date, then on the last preceding
date on which such a sale was reported. If the Common Shares are not quoted on
the NASDAQ-NMS or listed on an exchange, or representative quotes are not
otherwise available, the "Fair Market Value" of the Common Shares shall mean
the amount determined by the Committee to be the fair market value based upon
a good faith attempt to value the Common Shares accurately.
8. Automatic Grant of Options. Each year, on the date of the
Company's Annual Meeting of Stockholders, each member of the Company's Board
of Directors who is neither an employee nor an officer of the Company shall be
automatically granted on such date without further action by the Board an
option to purchase five hundred (500) Common Shares. Anything in the Plan to
the contrary notwithstanding, the effectiveness of the Plan and of the grant
of all options hereunder is in all respects subject to, and the Plan and
options granted under it shall be of no force and effect unless and until, and
no option granted hereunder shall in any way vest or become exercisable in any
respect unless and until the approval of the Plan by the affirmative vote of a
majority of the Company's shares present in person or by proxy and entitled to
vote at a meeting of shareholders at which the Plan is presented for approval.
9. Period of Option. The options granted hereunder shall expire
on a date which is five (5) years after the date of grant of the options and
the Plan shall terminate when all options granted hereunder have terminated.
10. Exercise of Option. Options shall be exercised by the
delivery to the Company at its principal office or at such other address as
may be established by the Committee (Attention: Corporate Treasurer) of
written notice of the number of Common Shares with respect to which the Option
is being exercised accompanied by payment in full of the purchase price of
such shares. Unless otherwise determined by the Committee at the time of
grant, payment for such shares may be made (i) in cash, (ii) by certified
check or bank cashier's check payable to the order of the Company in the
amount of such purchase price, (iii) by delivery to the Company of Common
Shares having a Fair Market Value equal to such purchase price, (iv) by
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds necessary to pay such purchase price and to
sell the Common Shares to be issued upon exercise of the Option and deliver
the cash proceeds less commissions and brokerage fees to the Optionee or to
deliver the remaining Common Shares to the Optionee, or (v) by any combination
of the methods of payment described in (i) through (iv) above.
11. Vesting of Shares and Non-Transferability of Options.
(a) Vesting. Options granted under the Plan shall be fully
vested and exercisable on the date of grant.
(b) Legend on Certificates. The certificates representing such
shares shall carry such appropriate legend, and such written instructions
shall be given to the Company's transfer agent, as may be deemed necessary or
advisable by counsel to the Company in order to comply with the requirements
of the Securities Act of 1933 or any state securities laws.
(c) Non-Transferability. Any option granted pursuant to the Plan
shall not be assignable or transferable other than by will or the laws of
descent and distribution, and shall be exercisable during the Optionee's
lifetime only by him.
<PAGE> 3
12. Termination of Option Rights.
(a) In the event an Optionee ceases to be a member of the Board of
Directors of the Company for any reason other than death or disability, any
then unexercised options granted to such Optionee may be exercised, within a
period of ten (10) days following such time the Optionee so ceases to be a
member of the Board of Directors, but in no event later than the expiration of
the option.
(b) In the event that an Optionee ceases to be a member of the
Board of Directors of the Company by reason of his or her disability or death,
any option granted to such Optionee may be exercised (by the Optionee's
personal representative, heir or legatee, in the event of death) during the
period ending one hundred eighty (180) days after the date the Optionee so
ceases to be a member of the Board of Directors, but in no event later than
the expiration date of the option.
13. Adjustments Upon Changes in Capitalization and other Matters.
In the event that the outstanding Common Shares are changed into or exchanged
for a different number or kind of shares or other securities of the Company or
of another corporation by reason of any reorganization, merger, consolidation,
recapitalization or reclassification, or in the event of a stock split,
combination of shares or dividends payable in capital stock, automatic
adjustment shall be made in the number and kind of shares as to which
outstanding options or portions thereof then unexercised shall be exercisable
and in the available shares set forth in Section 3 hereof, to the end that the
proportionate interest of the option holder shall be maintained as before the
occurrence of such event. Such adjustment in outstanding options shall be made
without change in the total price applicable to the unexercised portion of
such options and with a corresponding adjustment in the option price per
share.
If an option hereunder shall be assumed, or a new option substituted
therefor, as a result of sale of the Company, whether by a corporate merger,
consolidation or sale of property or stock, then membership on the Board of
Directors of such assuming or substituting corporation or by a parent
corporation or a subsidiary thereof shall be considered for purposes of an
option to be membership on the Board of Directors of the Company.
14. Restrictions on Issuance of Shares. Notwithstanding the
provisions of Sections 8 and 10 hereof, the Company shall have no obligation
to deliver any certificate or certificates upon exercise of an option until
the following conditions shall be satisfied:
(i) The shares with respect to which the option has been exercised
are at the time of the issue of such shares effectively registered under
applicable Federal and state securities acts as now in force or hereafter
amended; or
(ii) Counsel for the Company shall have given an opinion that such
shares are exempt from registration under Federal and state securities acts as
now in force or hereafter amended;
and the Company has complied with all applicable laws and regulations,
including without limitation all regulations required by any stock exchange
upon which the Common Shares are then listed.
<PAGE> 4
The Company shall use its best efforts to bring about compliance with
the above conditions within a reasonable time, except that the Company shall
be under no obligation to cause a registration statement or a post-effective
amendment to any registration statement to be prepared at its expense solely
for the purpose of covering the issue of shares in respect of which any option
may be exercised.
15. Representation of Optionee. The Company shall require the
Optionee to deliver written warranties and representations upon exercise of
the option that are necessary to show compliance with Federal and state
securities laws including to the effect that a purchase of shares under the
option is made for investment and not with a view to their distribution (as
that term is used in the Securities Act of 1933).
16. Approval of Stockholders. The effectiveness of this Plan and
of the grant of all options hereunder is in all respects subject to approval
by the Company's shareholders as more fully set forth in Section 8 hereof.
17. Termination and Amendment of Plan. The Board may at any time
terminate the Plan or make such modification or amendment thereof as it deems
advisable, provided, however, that (i) the Board may not, without approval by
the affirmative vote of the holders of a majority of the shares present in
person or by proxy and entitled to vote at the meeting, (a) increase the
maximum number of shares for which options may be granted under the Plan or
the number of shares for which an option may be granted to any participating
directors hereunder; (b) change the provisions of the Plan regarding the
termination of the options or the time when they may be exercised; (c) change
the period during which any options may be granted or remain outstanding or
the date on which the Plan shall terminate; (d) change the designation of the
class of persons eligible to receive options; (e) change the price at which
options are to be granted; or (f) materially increase benefits accruing to
option holders under the Plan; and (ii) the foregoing provisions of the Plan
shall in no event be amended more than once every six months other than to
comport with changes in the Internal Revenue Code. Termination or any
modification or amendment of the Plan shall not, without consent of a
participant, affect his rights under an option previously granted to him.
<PAGE> 1 EXHIBIT 13.0
MUELLER INDUSTRIES, INC. COMPANY PROFILE
Mueller Industries, Inc. is a leading and diversified 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, a placer gold mining
operation in Alaska, and other natural resource properties.
Mueller operates twelve factories in the United States and Canada, and has
distribution facilities nationwide and sales representation worldwide.
TABLE OF CONTENTS PAGE
Financial Highlights 2
A Report to Stockholders 3
Profile of Businesses 6
Financial Review 8
Consolidated Financial Statements
Statements of Income 13
Balance Sheets 14
Statements of Cash Flows 16
Statements of Stockholders' Equity 18
Notes to Consolidated Financial Statements 19
Report of Independent Auditors 35
Capital Stock Information 36
Selected Financial Data 37
Corporate and Stockholder Information 38
<PAGE> 2 EXHIBIT 13.0
<TABLE>
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales $ 550,003 $ 501,885 $ 517,339
Sales of manufactured products
in millions of pounds 380.6 362.1 329.5
Net income $ 27,926 $ 21,136 $ 16,666
Average shares outstanding
(in thousands) 9,890 10,443 10,055
Net income per share - primary $ 2.82 $ 2.02 $ 1.66
SIGNIFICANT YEAR-END DATA
Cash and cash equivalents $ 34,492 $ 77,336 $ 44,459
Ratio of current assets to
current liabilities 2.7 to 1 4.1 to 1 3.1 to 1
Working capital $ 116,330 $ 146,981 $ 124,355
Long-term debt (including
current portion) $ 94,736 $ 62,711 $ 69,477
Debt as a percent of
capitalization 28.1% 22.0% 25.4%
Stockholders' equity $ 241,948 $ 222,114 $ 204,421
Book value per share $ 27.81 $ 23.18 $ 21.21
Capital expenditures $ 48,152 $ 11,083 $ 10,952
Number of employees 2,256 2,010 2,055
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE(1) $ 2.82 $ 2.02 $ 1.66
TOTAL STOCKHOLDERS EQUITY(2) $ 241,948 $ 222,114 $ 204,421
<FN>
(1) Earnings per share increased forty percent in 1994 and twenty-two percent
in 1993.
(2) Total stockholders' equity has increased substantially, notwithstanding
the purchase of treasury stock of $25.9 million in 1994 and $3.1 million
in 1993.
</TABLE>
<PAGE> 3 EXHIBIT 13.0
A REPORT TO OUR STOCKHOLDERS
Nineteen hundred ninety-four was an excellent year for Mueller
Industries, Inc. For the second consecutive year, our Company achieved record
earnings. Net income was $27.9 million in 1994 compared with $21.1 million in
1993, a 32 percent increase. Earnings per share increased to $2.82 for 1994,
or 40 percent higher than the $2.02 per share earned in 1993.
Net sales increased in 1994 to $550.0 million compared to $501.9 million
in 1993. This increase was partly due to the rise in the price of copper, our
primary raw material. Where possible, our Company endeavors to adjust the
selling price of finished products to reflect increases or decreases in the
price of copper. Measured in pounds of product sold, sales increased by five
percent in 1994.
Copper prices were particularly volatile during 1994, rising from a low
of 80 cents per pound early in the year to a high of $1.39 per pound at year-
end. In response to this volatility, our Company elected in the third quarter
to value the copper component of our inventories on a last-in, first-out
(LIFO) basis, instead of the first-in, first-out (FIFO) basis previously used.
This has the effect of more closely matching current costs of copper with
current selling prices. Adoption of LIFO decreased 1994 reported annual
earnings, but resulted in the establishment of a copper LIFO inventory reserve
of $13.1 million at year-end. LIFO will mitigate the income statement effect
of future copper price fluctuations.
MANUFACTURING OPERATIONS STRONG
Our manufacturing operations had their busiest and most productive year
ever. Our brass rod mill located in Port Huron, Michigan operated at full
capacity for the entire year. A major competitor's labor stoppage during the
fourth quarter exacerbated an already tight market situation, but by working
around the clock, our employees kept our customers supplied with product. We
are in the process of expanding the rod mill's capacity through the
installation of an indirect extrusion press and related improvements. All of
the required equipment has been ordered and installation is scheduled to be
completed by mid-1995. We are confident that this investment will reduce our
conversion costs and increase yields and through-put. The added capacity will
assure our customers a continuation of the best service in the industry.
Our wrot copper fittings business had a banner year in 1994. We sold
every pound of product we were able to manufacture. Demand for copper
fittings continues to be brisk and we have taken appropriate steps to ramp-up
production. We are well along in the construction of a new high-volume copper
fittings plant in Fulton, Mississippi, which will significantly enhance our
production capacity for the most popular fittings. This plant should be
operational by mid-1995.
In addition, our copper fittings plant in Covington, Tennessee is in the
midst of a modernization program. Here our objective is to reduce conversion
costs as well as increase capacity. We expect to see benefits from this
investment in 1995. Also, our Canadian copper fittings plant, located in
Strathroy, Ontario had a strong 1994. Its shipments increased due primarily
to the upward trend in Canadian and European markets.
<PAGE> 4 EXHIBIT 13.0
A REPORT TO OUR STOCKHOLDERS (Continued)
During 1994, Mueller acquired plastic fittings manufacturing operations
located in California and Michigan. This acquisition significantly increased
our market presence in the DWV (drain, waste and vent) business, and we are
now in a position to supply our customers with a full plastic fittings product
line on a national basis. We believe our combined plastic operations will
achieve greater economies of scale and will make a meaningful contribution to
future profitability.
Our copper tube business, located in Fulton, Mississippi had a solid year
in 1994, although somewhat less profitable than in the prior year. Despite a
strong demand for tube products, competitive pressures suppressed our margins.
Our strategy going forward is to invest in state-of-the-art operating
equipment for this business with the objective of being one of the low cost
manufacturers in the industry. Our investment program, which will exceed $20
million, is nearing completion and we will begin to see benefits during the
latter half of 1995.
Mueller's impacts, forgings and refrigeration businesses also made good
progress during 1994. All three of these businesses have demonstrated the
ability to grow and prosper and we are confident they will continue to do so.
NATURAL RESOURCE OPERATIONS
The Utah Railway Company increased its tonnage of coal shipments by 27
percent during 1994 to the highest level in its history. Its operating profit
also increased comparably. The railroad's offices have been consolidated and
are now located in Helper, Utah.
We are also in the process of completing the sale of our United States
Fuel Company coal mining property located in Hiawatha, Utah for a small
profit. The new owner plans to resume mining and eventually develop adjoining
coal reserves. Should this occur, it will result in added business for the
Utah Railway Company.
Alaska Gold Company, our 85 percent owned subsidiary located in Nome,
Alaska, determined in 1994 that the open-pit method of mining gold was cost-
effective. Consequently, we acquired equipment needed for open-pit operations
and they are currently underway.
During 1994, we neared completion of our three year program to divest
and/or lease other miscellaneous natural resource properties. We do not
expect to generate significant additional income in 1995 from dispositions of
remaining miscellaneous properties.
OUTLOOK
We are optimistic about prospects for 1995 for the following reasons:
Our Company is in the process of investing approximately $100 million in
new plant and equipment in 1994 and 1995 to improve efficiency and
productivity of our operations. Three major programs are currently on
schedule. They should favorably affect operations by the latter part of 1995;
<PAGE> 5 EXHIBIT 13.0
A REPORT TO OUR STOCKHOLDERS (Continued)
Our employees are determined to make us a RESOURCE -- not just a source -
- - for our customers;
The national economy is continuing to expand. Consumer confidence is
high, unemployment is low and inflation appears to be under control. Also,
the economies in Europe and the Far East are showing more vitality and this
should aid our export business; and
The housing industry, the most important market for our products,
continues to show strength. In 1994, new housing starts in the United States
totalled 1.45 million units, a 13 percent increase over 1993. This increase
occurred even though 30 year fixed-rate mortgage rates climbed close to 200
basis points. While we believe this indicates that there is a considerable
pent-up demand for new housing, further increases in mortgage rates could
adversely impact the housing industry.
We are gratified with the Company's progress over the past three years;
however, there is no shortage of opportunities in the years ahead. We look
forward to 1995 and beyond with enthusiasm and purpose.
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, 1995
<PAGE> 6 EXHIBIT 13.0
PROFILE OF BUSINESSES
STANDARD PRODUCTS
COPPER TUBE PRODUCTS
The Fulton, Mississippi plant produces one of the broadest lines of
copper tube products 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. Copper water tube in
straight lengths and 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 1994.
The previously announced $20 million capital improvement project to upgrade
technology and install state-of-the-art tube drawing equipment is anticipated
to be operational during the third quarter of 1995.
COPPER AND PLASTIC FITTINGS PRODUCTS
Mueller's Streamline wrot copper pressure and drain, waste and vent (DWV)
fittings are manufactured at plants in Covington, Tennessee, Port Huron,
Michigan and Strathroy, Ontario, Canada. These fittings are converted from
copper tube produced at the Fulton tube mill and other outside sources into a
wide variety of over 1,500 different sizes and shapes. Mueller is
constructing a new high-volume fittings plant in Fulton, Mississippi, adjacent
to its tube mill. This plant, which should be operational by mid-1995, will
significantly increase Mueller's production capacity for its most popular
fittings. Mueller is simultaneously undertaking a modernization program at
its Covington, Tennessee copper fittings facility, to reduce conversion costs
as well as expand capacity of its lower volume fittings.
In September, 1994, Mueller acquired DWV plastic fittings manufacturing
operations located in Kalamazoo, Michigan and Cerritos, California. Our
existing plant located in Upper Sandusky, Ohio, together with the acquired
operations, enable Mueller to supply a full DWV plastic fittings product line.
Injection molding equipment at the three plants produces over 1,000 different
parts from a variety of plastic compounds in various diameters. We plan to
rationalize production at the three plants, increase operational efficiencies,
and achieve greater economies of scale. Our goal is to become a low cost
producer of plastic fittings and to better supply more of our customers'
needs.
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. Products from the U.S. plants are sold
primarily to plumbing, refrigeration and hardware wholesalers in the United
States, Mexico and abroad.
<PAGE> 7 EXHIBIT 13.0
REFRIGERATION PRODUCTS
Mueller manufactures a broad line of valves, fittings, filters, driers
and custom OEM products for refrigeration and air-conditioning applications at
its 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.
INDUSTRIAL PRODUCTS
Industrial products 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. Cold forgings (impact extrusions) represent one of the most
efficient and economical manufacturing methods available for certain component
parts where toughness must be combined with varying complexities of design and
finish.
Mueller rod products, hot forgings and impact extrusions are found in a
variety of end products including 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 its 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. This project is scheduled for completion in the latter half
of 1995.
NATURAL RESOURCE PROPERTIES
The Utah Railway Company (Utah Railway), which was established in 1912,
operates on approximately 100 miles of track in Utah. Utah Railway hauls
coal, mined primarily in Carbon and Emery Counties, Utah, to and connects with
national carriers. In 1994, approximately 3.2 million tons of coal were
shipped under long-term contracts, with the balance consisting of spot
shipments destined for the domestic or export markets.
In 1994, our 85 percent owned Alaska Gold Company (Alaska Gold) concluded
that it could economically extract gold from reserves in the Nome area using
an open-pit method of mining. A full scale open-pit program is currently
underway. Alaska Gold plans to move approximately 1.5 million cubic
yards of dirt, about three times as much as last year.
During 1994, the Company substantially completed its program of divesting
and/or leasing miscellaneous natural resource properties. The Company has in
place 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
completed products. The open market price for copper cathode, for example,
directly influences the selling price of copper tubing, a principal product
manufactured by the Company. The Company attempts to minimize the effects of
changes in copper prices by passing base metal costs through to its customers.
In 1994, the Company adopted the LIFO method of accounting for the copper
component of its copper tube and fittings inventories. Management believes
the LIFO method results in a better matching of current costs with current
revenues. The market price of copper does, however, indirectly effect the
carrying value (FIFO basis) of the Company's brass inventories. The Company's
copper and brass inventories customarily total between 30 to 35 million
pounds. "Spreads" fluctuate based upon competitive market conditions.
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.
RESULTS OF OPERATIONS
1994 Performance Compared to 1993:
Consolidated net sales were $550.0 million in 1994, up $48.1 million or
9.6 percent from net sales of $501.9 million in 1993. In the core
manufacturing businesses, sales reached 380.6 million pounds, a 5.1 percent
increase over the prior year. Natural resources sales declined to $16.6
million in 1994 or 29.6 percent from 1993's level due mainly to lower gold
sales.
Cost of goods sold increased $44.7 million to $448.5 million. This
increase is primarily attributable to higher raw material costs, mostly
copper. The Company's gross profit increased $3.4 million to $101.5 million.
This increased gross profit is reflective of price improvements in certain
product lines, as well as cost reductions and yield improvements in the
Company's manufacturing operations. The gross profit improvements were offset
somewhat by lower margins on copper tube. Selling, general, and
administrative expense declined $1.0 million despite higher sales activity.
Depreciation, depletion, and amortization totalled $12.7 million in 1994
compared with $14.2 million in 1993. This decline was due primarily to lower
amortization of thawfield expenses related to the Alaska Gold operation.
<PAGE> 9 EXHIBIT 13.0
FINANCIAL REVIEW (Continued)
With the adoption of the LIFO method of inventory accounting, management
believes the Company's operating results will better reflect operating
performance by removing inventory gains and losses that result from wide
fluctuations in copper raw material prices. Nevertheless, comparisons of
operating results to pre-LIFO periods must be analyzed carefully as the pro
forma effects on prior periods are not reasonably determinable. Had the
Company not adopted LIFO effective at the beginning of fiscal 1994, operating
income would have been $57.1 million in 1994.
Provisions for environmental reserves were $2.9 million in 1994
consisting of $2.5 million for Mueller's Mining Remedial Recovery Company and
$.4 million for Mueller's estimated share of costs relating to a Superfund
site in Pennsylvania. This additional provision was judged necessary based on
updated information and the results of ongoing environmental remediation and
monitoring programs for its natural resource operations.
Unusual items in 1994 pertained primarily to certain outstanding
insurance matters related to estimated workers compensation claims for years
prior to 1993. Other income increased to $7.6 million in 1994 from $4.3
million in 1993. This increase is primarily attributable to gains on the sale
of certain of the Company's natural resource properties which totalled
approximately $3.2 million, plus a $.7 million increase in interest income.
Interest expense totalled $6.7 million in 1994, a $1.0 million increase
from 1993 primarily because of new IRB debt financings for the Fulton,
Mississippi copper tube and copper fittings plant capital improvement
projects.
The Company provided $12.9 million for income taxes in 1994, of which
$4.7 million was deferred. The current tax expense of $8.2 million for 1994
increased due to higher taxable income. During 1994, the effective tax rate
declined to 31.6 percent primarily due to the recognition of certain tax
attributes discussed in Note 6 and favorable state tax credits related to IRB
financings. During 1994, the Company entered into a closing agreement with
the IRS. This led to the recognition of additional tax benefits of $17.9
million which were allocated as a direct addition to paid-in capital.
In 1994, earnings per share was favorably effected by the purchase of
treasury stock aggregating 924,875 shares, or 9.6 percent of shares
outstanding at the beginning of the year.
Manufacturing Group
In 1994, net sales increased $55.1 million to $533.4 million, an 11.5
percent increase over 1993. Of the increase, $24.3 million is attributable to
volume increases and $30.8 million is attributable to price changes. Pricing
changes include the pass through of raw material costs.
Operating income increased primarily due to (i) productivity and yield
improvements in manufacturing operations; (ii) selective price increases in
fittings; (iii) cost reductions in selling, general, and administrative
expenses; and (iv) offset by lower margins on copper tube.
<PAGE> 10 EXHIBIT 13.0
FINANCIAL REVIEW (Continued)
Natural Resources Group
Net sales of the Company's natural resources segment were $16.6 million
in 1994 compared to $23.6 million in 1993. This decline was primarily due to
lower gold sales, offset by increased revenues at Utah Railway.
Transportation revenues of Utah Railway were $16.0 million in 1994, a 20.9
percent increase over 1993. Utah Railway hauled 4.9 million tons of coal in
1994, which was a 27.5 percent increase over 1993. Gold sales decreased to
$.3 million (594 ounces) in 1994 from $8.7 million (22,396 ounces) in 1993.
At year-end, 14,475 ounces of gold remained in inventory.
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 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 totalled $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.
Interest expense totalled $5.8 million in 1993, up slightly from $5.7
million in 1992. Environmental reserves were increased by $1.1 million in
1993 and charged to operations. Charges to operations for unusual items in
1993 totalled $2.0 million, down from $5.6 million in 1992. The 1993 charge
includes $1.4 million for an increase in pension liability and $.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: (i) sale of the malleable iron business; (ii)
product volume increases (excluding malleable iron) of 10 percent; and (iii)
pricing decreases due to lower average 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.
<PAGE> 11 EXHIBIT 13.0
FINANCIAL REVIEW (Continued)
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 Utah Railway
increased 10 percent in 1993 over 1992. 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.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $22.0 million in 1994.
Depreciation of $12.1 million and deferred income taxes of $4.7 million were
the primary non-cash adjustments. Major changes in working capital included a
$20.8 million increase in inventories offset by a $7.9 million increase in
current liabilities. Additionally, receivables increased $7.9 million which
relates primarily to higher carrying costs associated with significantly
higher copper prices at the end of 1994. Other minor fluctuations accounted
for the remainder of the change.
Net cash used for investing activities in 1994 was $71.7 million, $48.2
million for capital expenditures and $12.8 million for the acquisition of DWV
plastic fittings manufacturing operations, offset by $5.3 million received
from the sale of natural resource properties. Capital expenditures were
primarily related to improvements in manufacturing technology, cost
reductions, increased productivity and yield, quality improvements, and
capacity expansion. The majority of these expenditures is associated with the
Company's three major capital improvement programs currently underway in its
manufacturing businesses. Additionally, $16.1 million of financing proceeds
classified as other assets remain escrowed until required by long-term capital
improvement project funding.
Net cash provided by financing activities totalled $6.9 million which
includes proceeds from debt issuances of $45.3 million, offset by $25.9
million for the purchase of treasury stock, and $13.3 million for repayment of
debt. In 1994, the Company entered into IRB financing agreements for two
major capital projects in the State of Mississippi. These IRB financing
obligations totalled $38.0 million of which $16.1 million remains in escrow at
the 1994 year-end.
<PAGE> 12 EXHIBIT 13.0
FINANCIAL REVIEW (Continued)
The Company has a $30.0 million unsecured line-of-credit agreement
(Credit Facility) which expires on June 30, 1996, but may be extended for
successive one year periods by agreement of the parties. At the Company's
option, borrowings bear interest at prime less 1/2 of one percent. There are
no outstanding borrowings under the Credit Facility. At December 31, 1994,
the Company's total debt was $94.7 million or 28.1 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. The Company is
in compliance with all debt covenants.
Management believes that cash provided by operations and currently
available cash of $34.5 million will be adequate to meet the Company's normal
future capital expenditure and operational needs. The Company's current ratio
is 2.7 to 1.
As part of its ongoing strategic planning process, the Company has
approved three major capital expenditure projects: (i) a modernization
project at its Fulton, Mississippi copper tube mill; (ii) a modernization
project at its Port Huron, Michigan brass rod mill; and (iii) a new high-
volume copper fittings plant in Fulton, Mississippi. These projects will
require capital of approximately $57.0 million. As mentioned above, the two
Fulton, Mississippi projects have been financed by IRBs. The primary
objective of these projects is to improve efficiency, yield and productivity
as well as add some capacity.
Additionally, the Company has identified and is evaluating various other
capital improvement projects that could further enhance productivity and/or
add capacity. Various funding alternatives for such projects are also being
considered.
IMPACT OF INFLATION
The impact of inflation on the Company's operations in 1994, 1993 and
1992 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 slight to
moderate decreases in new housing starts for 1995 and 1996. Nonetheless, we
remain optimistic about 1995. We believe that our capital improvement programs
will be completed on schedule. Should that occur, we anticipate that this
will favorably affect our operations by the latter half of 1995 as these
projects will improve manufacturing efficiency and productivity.
<PAGE> 13 EXHIBIT 13.0
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 1994, December 25, 1993 and December 26, 1992
<TABLE>
(In thousands, except per share data)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Net sales $ 550,003 $ 501,885 $ 517,339
Cost of goods sold 448,467 403,775 429,707
-------- -------- --------
Gross profit 101,536 98,110 87,632
Depreciation, depletion, and amortization 12,689 14,160 12,505
Selling, general, and administrative
expense 44,895 45,923 45,809
-------- -------- --------
Operating income 43,952 38,027 29,318
Interest expense (6,718) (5,759) (5,694)
Environmental reserves (2,914) (1,060) --
Unusual items, net (1,140) (2,024) (5,636)
Other income, net 7,644 4,259 6,311
-------- -------- --------
Income before income taxes 40,824 33,443 24,299
Income tax expense (12,898) (12,307) (7,633)
-------- -------- --------
Net income $ 27,926 $ 21,136 $ 16,666
======== ======== ========
Net income per share:
Primary
Average shares outstanding 9,890 10,443 10,055
Net income $ 2.82 $ 2.02 $ 1.66
Fully diluted
Average shares outstanding 9,890 10,498 10,274
Net income $ 2.82 $ 2.01 $ 1.62
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 14 EXHIBIT 13.0
<TABLE>
CONSOLIDATED BALANCE SHEETS
As of December 31, 1994 and December 25, 1993
(In thousands, except share data)
<CAPTION>
1994 1993
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 34,492 $ 77,336
Accounts receivable, less allowance for doubtful
accounts of $3,336 in 1994 and $3,495 in 1993 66,925 59,197
Inventories 74,368 53,118
Current deferred income taxes 4,491 3,242
Other current assets 3,275 1,518
-------- --------
Total current assets 183,551 194,411
Property, plant and equipment, net 196,772 154,403
Deferred income taxes 23,797 12,751
Other assets 26,635 8,178
-------- --------
TOTAL ASSETS $ 430,755 $ 369,743
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 15 EXHIBIT 13.0
<TABLE>
CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands except share data)
<CAPTION>
1994 1993
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 18,611 $ 8,391
Accounts payable 21,607 15,637
Accrued wages and other employee costs 13,105 11,787
Current deferred income taxes 366 446
Other current liabilities 13,532 11,169
-------- --------
Total current liabilities 67,221 47,430
Long-term debt 76,125 54,320
Pension liabilities 9,499 9,336
Postretirement benefits other than pensions 8,946 9,498
Environmental reserves 11,178 10,448
Deferred income taxes 3,016 3,810
Other noncurrent liabilities 12,822 12,787
-------- --------
Total liabilities 188,807 147,629
======== ========
Stockholders' equity
Preferred stock - shares authorized 4,985,000;
none outstanding - -
Series A junior participating preferred stock-
$1.00 par value; shares authorized 15,000;
none outstanding - -
Common stock - $.01 par value; shares authorized
20,000,000; issued 10,000,000; outstanding
8,698,977 in 1994 and 9,583,193 in 1993 100 100
Additional paid-in capital, common 254,251 236,406
Retained earnings (accumulated deficit) since
January 1, 1991 21,987 (5,939)
Cumulative translation adjustments (2,832) (1,944)
Treasury common stock, at cost (31,558) (6,509)
-------- --------
Total stockholders' equity 241,948 222,114
Commitments and contingencies - -
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 430,755 $ 369,743
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 16 EXHIBIT 13.0
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1994, December 25, 1993, and December 26, 1992
(In thousands)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 27,926 $ 21,136 $ 16,666
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provisions for unusual items 1,140 2,024 5,636
Depreciation, depletion, and
amortizationof intangibles 12,097 11,123 11,590
Amortization of deferred
preparation costs 592 3,037 915
Provision for doubtful accounts
receivable 186 59 2,794
Deferred income taxes 4,748 9,026 2,570
Gain on disposal of properties (3,159) (91) (3,417)
Changes in assets and liabilities:
Receivables (7,914) 546 (4,133)
Inventories (20,835) 16,505 12,695
Other assets (382) 3,224 2,177
Current liabilities 7,926 (13,187) (11,241)
Other liabilities 111 (1,731) 2,954
Other, net (473) (684) (492)
-------- -------- --------
Net cash provided by operating activities 21,963 50,987 38,714
-------- -------- --------
INVESTING ACTIVITIES:
Acquisition of business (12,815) - -
Capital expenditures (48,152) (11,083) (10,952)
Proceeds from sales of properties 5,333 2,332 11,478
Escrowed IRB proceeds (16,078) - -
Issuance of notes receivable - - (4,125)
-------- -------- --------
Net cash used by investing activities (71,712) (8,751) (3,599)
-------- -------- --------
FINANCING ACTIVITIES:
Net borrowings under revolving
credit facility - - (14,000)
Proceeds from issuance of long-term debt 45,343 386 45,000
Repayments of long-term debt (13,318) (7,152) (28,933)
Acquisition of treasury stock (25,897) (3,100) (505)
Proceeds from the sale of treasury stock 777 507 241
-------- -------- --------
Net cash provided (used) by
financing activities 6,905 (9,359) 1,803
-------- -------- --------
<PAGE> 17 EXHIBIT 13.0
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31, 1994, December 25, 1993, and December 26, 1992
(In thousands)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Increase (decrease) in cash and
cash equivalents (42,844) 32,877 36,918
Cash and cash equivalents at the
beginning of the year 77,336 44,459 7,541
Cash and cash equivalents at the
end of the year $ 34,492 $ 77,336 $ 44,459
<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> 18 EXHIBIT 13.0
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1994, December 25, 1993, and December 26, 1992
<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 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
Repurchase of common stock -- -- -- -- -- 924,875 (25,897) (25,897)
Net income -- -- -- 27,926 -- -- -- 27,926
Issuance of shares under
employee stock purchase plan -- -- 103 -- -- (21,212) 515 618
Recognition of income tax
benefits of preconfirmation
net operating loss carry-
forwards -- -- 17,916 -- -- -- -- 17,916
Issuance of shares under
incentive stock option plan -- -- (174) -- -- (19,447) 333 159
Cumulative translation adjustments -- -- -- -- (888) -- -- (888)
---------- ---- ------- -------- -------- --------- ------- --------
Balance, December 31, 1994 10,000,000 $ 100 $ 254,251 $ 21,987 $ (2,832) 1,301,023 $(31,558) $ 241,948
========== ==== ======= ======== ======== ========= ====== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. At
December 31, 1994, the material component of its copper tube and copper
fittings inventories was valued on a last-in, first-out (LIFO) basis. Other
inventories and the non-material components of copper tube and copper fittings
inventories were valued on a first-in, first-out (FIFO) basis. Generally,
inventory costs include materials, labor costs and manufacturing overhead.
Prior to 1994, all inventories were accounted for on a FIFO basis. See Note 2
for discussion of the accounting change.
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.
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.
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.
<PAGE> 20
INCOME TAXES
The Company accounts for income taxes under the liability method required
by SFAS No. 109, Accounting for Income Taxes.
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 31, 1994 and December 25, 1993, temporary investments consisted of
certificates of deposit, commercial paper, bank repurchase agreements, and
U.S. and Foreign Government securities totalling $39.7 million and $76.0
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 raw material 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. At year-end there were no open hedge transactions.
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. Generally, the market risk regarding foreign currency
exchange rate fluctuations is hedged using forward contracts. At year-end
there were no open forward contracts.
FOREIGN CURRENCY TRANSLATION
For foreign subsidiaries whose functional currency is the local foreign
currency, balance sheet accounts are translated at exchange rates in effect at
the end of the year and income statement accounts are translated at average
exchange rates for the year. Translation gains and losses are included as a
separate component of stockholders' equity. Transaction gains and losses
included in the statement of income were not significant.
RECLASSIFICATION
Certain amounts in the 1993 and 1992 consolidated financial statements
have been reclassified to conform with the 1994 presentation.
<PAGE> 21
NOTE 2 INVENTORIES
In 1994, inventories are valued at the lower of cost or market on a last-
in, first-out (LIFO) basis for the copper component of copper tube and copper
fittings inventories, and on a first-in, first-out (FIFO) basis for other
components of inventories. In 1993, all inventories were valued at the lower
of cost or market on a FIFO basis.
<TABLE>
(In thousands, except share data)
<CAPTION>
1994 1993
<S> <C> <C>
Raw materials and supplies $ 20,043 $ 8,662
Work-in-process 18,251 12,179
Finished goods 36,074 32,277
-------- --------
$ 74,368 $ 53,118
======== ========
</TABLE>
Raw materials includes $4.6 million of gold inventory in 1994 and $.1
million in 1993.
During the third quarter of 1994, the Company elected to change the
method of valuing the material component of its copper tube and copper
fittings inventory, from the FIFO method, to the LIFO method. This change in
accounting principle was applied retroactively to the beginning of fiscal
1994. Management believes the LIFO method results in a better matching of
current costs with current revenues. Additionally, the LIFO method is widely
used within the copper tube and fittings industry. The effect of this change
reduced net income for the year-ended December 31, 1994, by $9.0 million (or
91 cents per share).
The cumulative effect of this accounting change and the pro forma effects
on prior years' earnings have not been included because such effects are not
reasonably determinable.
At December 31, 1994, $20.9 million of inventories were valued using the
LIFO method. The approximate FIFO current cost of such inventories was $34.0
million at December 31, 1994.
<PAGE> 22
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>
1994 1993
<S> <C> <C>
Land and land improvements $ 6,503 $ 6,369
Mineral reserves 1,485 2,296
Buildings, machinery and equipment 196,211 171,053
Construction in progress 32,953 4,430
-------- --------
237,152 184,148
Less accumulated depreciation,
depletion, and amortization (40,380) (29,745)
-------- --------
$ 196,772 $ 154,403
======== ========
</TABLE>
NOTE 4 LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
(In thousands)
<CAPTION>
1994 1993
<S> <C> <C>
8.38% Notes, due through 2000 $ 21,429 $ 25,000
7.54% Unsecured Note Payable, due through 1999 20,000 20,000
1993 Series IRBs with interest at 6.95%, due
through 2000 17,143 -
1994 Series IRBs with interest at 8.825%, due
through 2001 16,714 -
Contribution Agreement, due through 1996 with
imputed interest at 10% 4,340 4,994
10.1% Note Payable, due through 1999, secured
by certain railroad trackage 2,678 3,128
Pollution Control Revenue Bonds, interest
at 8% to 8.125%, due through 2001 2,630 2,880
Retiree Obligation, due through 1995 with
imputed interest at 10% 2,617 6,365
Other, including capitalized lease obligations 7,185 344
-------- --------
94,736 62,711
Less current portion of long-term debt (18,611) (8,391)
-------- --------
Long-term debt $ 76,125 $ 54,320
======== ========
</TABLE>
<PAGE> 23
Aggregate annual maturities of such debt are $18.6 million, $17.5
million, $14.9 million, $15.0 million and $14.3 million for the years 1995
through 1999, respectively. Interest paid in 1994, 1993 and 1992 was $8.1
million, $6.0 million, and $4.8 million, respectively. During 1994, the
Company capitalized interest of $.7 million related to its major capital
improvement programs. 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.
On December 28, 1993, the Company, through a wholly owned subsidiary,
issued $20.0 million of 6.95% taxable Industrial Development Revenue Bonds due
December 15, 2000 (the 1993 Series IRBs). The 1993 Series IRBs are due in
quarterly installments of $.7 million plus interest beginning March 15, 1994
through December 15, 2000. Proceeds of the 1993 Series IRBs are being used to
fund a modernization project at the Company's Fulton, Mississippi copper tube
mill.
On June 28, 1994, the Company entered into agreement with a syndicate of
six banks to provide for (i) an unsecured line-of-credit facility (Credit
Facility) and (ii) the issuance of unsecured taxable Industrial Revenue Bonds
(the 1994 Series IRBs).
The Credit Facility provides availability of up to $30 million which
expires on June 30, 1996, but may be extended for successive one year periods
by agreement of the parties. Borrowings under the Credit Facility bear
interest, at the Company's option, at (i) prime rate less 1/2 of one percent,
(ii) LIBOR plus .8%, (iii) certificate of deposit rate plus 1.35%, or (iv)
Federal Funds Rate plus 1.8%. An annual commitment fee of 1/4 of one percent
per annum on the unused portion of the Credit Facility is payable quarterly.
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
approximately $3.5 million.
On June 28, 1994, the Company, through a wholly owned subsidiary, issued
an aggregate of $18.0 million of the 1994 Series IRBs which bear interest at
8.825%. The 1994 Series IRBs are due in quarterly installments of $.6 million
plus interest beginning September, 1994 through June, 2001. Proceeds of the
1994 Series IRBs are being used to fund a new high-volume copper fittings
plant adjacent to the Company's existing copper tube mill in Fulton,
Mississippi.
On December 22, 1994, the Company entered into an assumption agreement in
regards to the existing 8.38% Notes whereby the security (including the common
stock of a wholly owned subsidiary) was released in favor of guarantees by
certain wholly-owned subsidiaries. The terms on rate and maturity remained
unchanged.
Borrowings under the above agreements require the Company, among other
things, to maintain certain minimum levels of net worth and meet certain
minimum financial ratios. The Company is in compliance with all covenants.
The Company leases certain facilities and equipment under operating
leases expiring on various dates through 2004. The lease payments under these
agreements aggregate to approximately $4.4 million in 1995, $4.4 million in
1996, $4.3 million in 1997, $4.3 million in 1998, $3.9 million in 1999 and
$5.6 million thereafter. Total rent expense amounted to $6.9 million in 1994,
$5.0 million in 1993 and $5.8 million in 1992.
<PAGE> 24
NOTE 5 STOCKHOLDERS' EQUITY
On June 3, 1994, the Company purchased 924,875 shares of its common
stock, for an aggregate purchase price of approximately $25.9 million. These
shares were placed in treasury and may be used for general corporate purposes,
such as requirements for future exercises of options under various option
plans.
On November 10, 1994, the Board of Directors declared a dividend
distribution of one Right for each outstanding share of the Company's common
stock. Each Right entitles the holder to purchase one unit consisting of one-
thousandth of a share of Series A Junior Participating Preferred Stock at a
purchase price of $160 per unit, subject to adjustment. The Rights will not
be exercisable, or transferable apart from the Company's common stock, until
ten (10) days following an announcement that a person or affiliated group has
acquired, or obtained the right to acquire, beneficial ownership of fifteen
percent (15%) or more of its common stock other than pursuant to certain
offers for all shares of the Company's common stock that have been determined
to be fair to, and in the best interest of, the Company's stockholders. The
Rights, which do not have voting rights, will be exercisable by all holders
(except for a holder or affiliated group beneficially owning 15% or more of
the Company's common stock, whose Rights will be void) so that each holder of
a Right shall have the right to receive, upon the exercise thereof, at the
then current exercise price, the number of shares of the Company's common
stock having a market value of two times the exercise price of the Rights.
All Rights expire on November 10, 2004, and may be redeemed by the Company at
a price of $.01 at any time prior to either their expiration or such time that
the Rights become exercisable.
In the event that the Company is acquired in a merger or other business
combination or certain other events occur, provision shall be made so that
each holder of a Right (except Rights previously voided) shall have the right
to receive, upon exercise thereof at the then current exercise price, the
number of shares of common stock of the surviving company which at the time of
such transaction would have a market value of two times the exercise price of
the Right.
In 1991, the Board of Directors authorized the Company to repurchase up
to 700,000 shares of its common stock. As of December 31, 1994, a total of
481,465 shares had been repurchased under this authorization, of which 105,317
shares were reissued to optionees under the Company's stock option plans.
As of December 31, 1994, the Company had reserved 1,819,683 shares of its
common stock for issuance pursuant to certain stock option plans.
Additionally, the Company had reserved 15,000 shares of preferred stock for
issuance pursuant to the Shareholder Rights Plan.
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 was $.4
million. 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.
<PAGE> 25
The components of income before income taxes were taxed under the
following jurisdictions:
<TABLE>
(In thousands)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Domestic $ 35,641 $ 30,955 $ 20,839
Foreign 5,183 2,488 3,460
-------- -------- --------
$ 40,824 $ 33,443 $ 24,299
======== ======== ========
</TABLE>
Income tax expense consists of the following:
<TABLE>
(In thousands)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Current tax expense:
Federal $ 4,172 $ 153 $ 1,313
Foreign 2,476 1,108 1,350
State and local 1,502 2,020 2,400
-------- -------- --------
Current tax expense 8,150 3,281 5,063
-------- -------- --------
Deferred tax expense (benefit):
Federal 5,621 9,863 5,270
State and local (873) (837) (2,700)
-------- -------- --------
Deferred tax expense 4,748 9,026 2,570
-------- -------- --------
$ 12,898 $ 12,307 $ 7,633
======== ======== ========
</TABLE>
The difference between the reported income tax expense and a tax
determined by applying the applicable U.S. federal statutory income tax rate
to income before taxes, is reconciled as follows:
<TABLE>
(In thousands)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Expected income tax expense $ 14,288 $ 11,705 $ 8,262
State and local income tax 976 538 (1,115)
Foreign income taxes 641 237 891
Valuation allowance (1,495) - -
Changes in estimated basis differences (1,065) - -
Effect of enacted tax rate change - (337) -
Cumulative effect of change in method of
accounting for income taxes - - (446)
Other, net (447) 164 41
-------- -------- --------
$ 12,898 $ 12,307 $ 7,633
======== ======== ========
</TABLE>
<PAGE> 26
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>
1994 1993
<S> <C> <C>
Deferred tax assets:
Accounts receivable $ 1,849 $ 2,977
Inventories 4,856 782
Preferred stock 44,881 44,881
Pension, OPEB and accrued payroll items 11,798 10,538
Other accruals and reserves 16,068 17,921
Net operating loss carryforwards 52,140 64,884
Alternative minimum tax credit
carryforwards 4,243 4,188
-------- --------
Total deferred tax assets 135,835 146,171
Less valuation allowance (65,927) (85,338)
-------- --------
Deferred tax assets, net of
valuation allowance 69,908 60,833
-------- --------
Deferred tax liabilities:
Property, plant and equipment 41,798 46,296
Undistributed income of
foreign subsidiaries 1,931 1,931
Other 1,273 869
-------- --------
45,002 49,096
-------- --------
Net deferred tax asset $ 24,906 $ 11,737
======== ========
</TABLE>
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. This annual limitation is, among other things,
based upon the Company's value and certain statutory interest rates in effect
at the time a "change in ownership" occurs. According to information
available to the Company, a "change of ownership," based upon cumulative
change over a three year period, occurred in June, 1994. Nevertheless, the
annual limitation of $14.4 million will remain available. A future "change in
ownership" could result in further limitations under certain circumstances.
The Internal Revenue Service (IRS) audit for 1992 and prior years was
concluded in 1994 and resulted in no material changes. Following the
conclusion of that audit, the Company entered into a Closing Agreement with
the IRS. This agreement is a definitive determination on certain tax
attributes, including NOLs. Following execution of this agreement, the
Company revised its estimates with respect to realization of the related
deferred tax assets in future years. The Company recognized $17.9 million of
these tax attributes, which reduced the valuation allowance and allocated the
benefit to paid-in capital. As additional NOLs are utilized, the Company
expects to recognize additional tax attributes over the next several years by
reducing the valuation allowance. The tax effect of future recognition of any
of the remaining NOLs of approximately $47.8 million will reduce the deferred
income tax provisions in the periods recognized.
<PAGE> 27
As of December 31, 1994, the Company had net operating loss carryforwards
available to offset future federal taxable income of $149.0 million which
expire as follows: $55.2 million in 2000, $20.7 million in 2001, $6.5 million
in 2002, $59.8 million in 2005, and $6.8 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 were approximately $7.8 million in 1994, $4.9 million
in 1993 and $2.5 million in 1992.
NOTE 7 EMPLOYEE BENEFITS
PENSION PLANS
Pension cost for the defined benefit plans sponsored by the Company
includes the following components:
<TABLE>
(In thousands)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Service cost of benefits earned
during the year $ 377 $ 277 $ 358
Interest cost on the projected
benefit obligation 3,144 2,947 3,068
Actual return on plan assets (2,863) (6,066) (2,434)
Net amortization and deferral 309 3,439 3
-------- -------- --------
Net periodic pension cost $ 967 $ 597 $ 995
======== ======== ========
</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. All plan participants became
fully vested effective with the plan termination; annuity contracts and/or
cash payments were made to settle such obligations. The effect of the
termination was recognized during 1990.
In 1993, pursuant to a collective bargaining agreement then 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. Effective December 31, 1994, this
plan was merged with another single employer defined benefit pension plan.
Each participant's accrued pension benefit, on the effective date of the
merger, was transferred to the surviving plan. Future service accruals were
not effected by this merger; they remain as dictated by the respective pension
plan documents.
Effective April 1, 1994, pursuant to a collective bargaining agreement,
one of the Company's single employer pension plans was amended, increasing the
accumulated benefit obligation. The effect of the amendment is reflected in
the table below.
<PAGE> 28
A reconciliation of the funded status of the plans at December 31, 1994
and December 25, 1993, respectively, to the amounts recognized in the
consolidated balance sheet is as follows:
<TABLE>
(In thousands)
<CAPTION>
1994 1993
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ (40,935) $ (38,186)
-------- --------
Accumulated benefit obligation (44,016) (40,836)
-------- --------
Projected benefit obligation (44,016) (40,836)
Plan assets at fair value held in the pension
plan trusts, primarily listed stocks and
U.S. Government obligations 32,106 34,771
-------- --------
Plan assets less than projected benefit obligation (11,910) (6,065)
Unrecognized net gain from past experience
different from that assumed and effects of
changes in assumptions (3,002) (4,576)
Prior service cost not yet recognized in net
periodic pension cost 4,560 456
-------- --------
Accrued pension cost $ (10,352) $ (10,185)
======== ========
</TABLE>
The range of assumed discount rates used in determining the actuarial
present value of the projected benefit obligations presented above was 7.0% to
7.75% for 1994 and 7.0% for 1993. For purposes of determining pension cost,
the assumed weighted average long-term rate of return on plan assets was 8.5%
for 1994, 1993 and 1992.
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 $.3 million in 1994, $.2 million in 1993, and $.3 million in 1992.
At December 31, 1994, the accrued pension cost presented above does not
include $1.1 million relating to potential statutory withdrawal liability
under the 1974 United Mine Workers of America Pension Trust. The withdrawal
liability arises due to the curtailment of coal mining operations at United
States Fuel Company.
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> 29
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.
During 1994, the Company was required to begin making contributions for
assigned beneficiaries under an additional multiemployer trust created by the
Act, the UMWA 1992 Benefit Plan. 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>
1994 1993
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ (8,679) $ (8,152)
Fully eligible active plan participants (500) (392)
Other active plan participants (433) (476)
-------- --------
(9,612) (9,020)
Plan assets at fair value - -
-------- --------
Accumulated postretirement benefit obligation
in excess of plan assets (9,612) (9,020)
Unrecognized net loss 647 151
-------- --------
Accrued postretirement benefit cost $ (8,965) $ (8,869)
======== ========
</TABLE>
Net periodic postretirement benefit cost was $.8 million in 1994, $.7
million in 1993 and $.5 million in 1992.
The cost of medical and life insurance benefits for retired employees
reflected above does not include $1.1 million at December 31, 1994 and $.6
million at December 25, 1993 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 rates ranging from 7.0% to 8.5% for
1994 and from 7.0% to 7.5% for 1993.
The assumed weighted-average annual rate of increase in the per capita
cost of covered benefits ranges from 9.98% to 11.18% for 1995 and is assumed
to ultimately decrease to rate of 6.25% 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.
<PAGE> 30
Included in the caption "Accrued wages and other employee costs" is the
current portion of postretirement benefit obligation of $.7 million in 1994
and 1993.
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 $2.9 million in 1994 and $1.1 million in 1993 for pending
environmental matters related to natural resources operations. No charges
were required for 1992. Of the 1994 charge, $2.5 million pertains to
previously identified locations requiring remediation. The basis for the
increase is updated information and results of ongoing remediation and
monitoring programs. Management believes that the outcome of pending
environmental matters will not materially affect the overall financial
position of the Company.
PURCHASE COMMITMENTS
The Company has committed to capital expenditures for the following
projects: (i) approximately $20.0 million to modernize the copper tube mill
in Fulton, Mississippi; (ii) approximately $15.0 million to modernize the
brass rod mill in Port Huron, Michigan; and (iii) approximately $22.0 million
to construct a new high-volume copper fitting facility adjacent to the
Company's copper tube mill in Fulton, Mississippi. As of December 31, 1994,
$27.1 million has been incurred of which $22.7 million was funded with
proceeds of the 1993 and 1994 Series IRBs. At December 31, 1994, $16.1
million of the IRB proceeds remain escrowed, until required for funding the
projects, and are classified as other assets. These approved major projects
should become fully operational in 1995. No other material purchase
commitments for capital expenditures exist.
LITIGATION
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.
NOTE 9 UNUSUAL ITEMS
During 1994, the Company recognized a $1.1 million charge for outstanding
insurance matters primarily related to estimated workers compensation claims
for years prior to 1993.
During 1993, the Company recognized a $1.4 million charge for the
potential pension withdrawal liability of its United States Fuel Company
subsidiary. See Note 7 for additional discussion. Additionally, a provision
of $.6 million was recognized for the settlement of certain litigation.
In 1992, the Company recognized a charge of $5.6 million consisting of
(i) a $2.0 million write-off of preferred stock, and (ii) a $3.6 million
reserve for a note receivable.
<PAGE> 31
NOTE 10 OTHER INCOME
"Other income, net" included in the consolidated statements of income
consists of the following:
<TABLE>
(In thousands)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Rent and royalties $ 1,068 $ 1,275 $ 2,072
Interest income 2,865 2,187 822
Gain on disposal of properties, net 3,159 1,262 3,417
Other 552 (465) -
-------- -------- --------
$ 7,644 $ 4,259 $ 6,311
======== ======== ========
</TABLE>
In 1994, the gain on disposal of properties was primarily due to various
sales of non operating natural resource properties.
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 and 1994, the Company recognized gains of approximately
$1.2 million and $.8 million respectively as a result of that transaction
which provided for additional payments contingent upon certain sales
performance criteria.
NOTE 11 STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLANS
During 1994, the stockholders approved the adoption of the 1994 Stock
Option Plan (SOP Plan). Under this plan, the Company may grant options to
purchase up to 200,000 shares of common stock at prices not less than the fair
market value of the stock on the day of the 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 SOP Plan was adopted. The
stockholders also approved the adoption of the 1994 Non-Employee Director
Stock Option Plan (Directors Plan). Options to purchase up to 25,000 shares
of common stock may be granted under this plan at a price not less than the
fair market value of the stock on the day of the grant. Generally, any
unexercised options granted under this plan shall expire on a date which is
five years from the date of option grant.
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.
<PAGE> 32
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. 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>
1994 1993
<S> <C> <C>
Outstanding at beginning of year 1,190,500 1,167,500
Granted 99,000 75,000
Exercised (19,447) (20,500)
Expired, cancelled, or surrendered (4,000) (31,500)
--------- ---------
Outstanding at year-end 1,266,053 1,190,500
--------- ---------
Options exercisable at year-end 976,353 933,500
--------- ---------
Option prices per share outstanding at year-end $7.25 - $35.75 $7.25 - $32.50
------------- -------------
</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, 65,370 shares have been issued. During
the offering period beginning July 1, 1994, options for 26,173
shares were granted. Of the grants, 1,821 share options were cancelled or
surrendered due to participant terminations and voluntary withdrawals as
provided by the EMSP Plan. At December 31, 1994, options to purchase 24,352
shares were outstanding at the exercise price of $24.97 per share under the
EMSP Plan.
<PAGE> 33
NOTE 12 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. Industry segment information is as follows:
<TABLE>
(In thousands)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Net sales:
Manufacturing $ 533,389 $ 478,287 $ 494,704
Natural resources 16,614 23,598 22,635
-------- -------- --------
$ 550,003 $ 501,885 $ 517,339
======== ======== ========
Operating income:
Manufacturing $ 47,932 $ 38,052 $ 26,419
Natural resources 1,651 5,534 4,252
General corporate (5,631) (5,559) (1,353)
-------- -------- --------
43,952 38,027 29,318
Non-operating income, net 3,590 1,175 675
Interest expense (6,718) (5,759) (5,694)
-------- -------- --------
Consolidated income before income taxes $ 40,824 $ 33,443 $ 24,299
======== ======== ========
Provision for depreciation, depletion
and amortization:
Manufacturing $ 9,845 $ 9,172 $ 9,198
Natural resources 1,159 3,791 2,332
General corporate 1,685 1,197 975
-------- -------- --------
$ 12,689 $ 14,160 $ 12,505
======== ======== ========
Capital expenditures:
Manufacturing $ 37,095 $ 8,039 $ 6,930
Natural resources 4,028 356 80
General corporate 7,029 2,688 3,942
-------- -------- --------
$ 48,152 $ 11,083 $ 10,952
======== ======== ========
Identifiable assets:
Manufacturing $ 318,351 $ 269,189 $ 278,524
Natural resources 38,042 34,316 40,768
-------- -------- --------
356,393 303,505 319,292
General corporate 74,362 66,238 53,255
-------- -------- --------
$ 430,755 $ 369,743 $ 372,547
======== ======== ========
</TABLE>
<PAGE> 34
NOTE 13 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>
1994
Net sales $ 120,812 $ 136,576 $ 137,975 $ 154,640
Gross profit (1) $ 21,027 $ 24,131 $ 24,722 $ 31,656
Net income $ 4,182 $ 5,778 $ 8,518 $ 9,448
Net income per share $ .40 $ .57 $ .90 $ 1.00
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
<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> 35 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 31, 1994 and December 25, 1993 and the related
consolidated statements of income, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1994. 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 31, 1994 and December 25, 1993, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, in 1994
the Company changed its method of accounting for the material component of
some inventories.
ERNST AND YOUNG LLP
Wichita, Kansas
February 8, 1995
<PAGE> 36 EXHIBIT 13.0
<TABLE>
CAPITAL STOCK INFORMATION
The high, low and closing prices on the New York Stock Exchange for each
fiscal quarter of 1994 and 1993 were as follows:
<CAPTION>
1994 High Low Close
<S> <C> <C> <C>
Fourth quarter $ 34 $ 26-7/8 $ 29-7/8
Third quarter $ 35-1/2 $ 28-1/2 $ 33-3/4
Second quarter $ 35-1/8 $ 30-1/8 $ 30-1/8
First quarter $ 38-5/8 $ 32-3/4 $ 34-1/2
<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
</TABLE>
The principal market for Mueller's common stock is the New York Stock
Exchange under the symbol MLI. As of March 1, 1995, the number of holders of
record of Mueller's common stock was 4,025. The New York Stock Exchange's
closing price for Mueller's common stock on March 1, 1995 was $31 1/2.
The Company has paid no dividends on its common stock and presently does
not anticipate paying cash dividends in the near future.
<PAGE> 37 EXHIBIT 13.0
SELECTED FINANCIAL DATA
<TABLE>
(In thousands, except share data)
<CAPTION>
1994 1993 1992 1991 1990(1)
<S> <C> <C> <C> <C> <C>
For the fiscal year: | (Predecessor)
|
Net sales $ 550,003 $ 501,885 $ 517,339 $ 441,431 |$ 505,376
Operating income (loss)(2) $ 43,952 $ 38,027 $ 29,318 $ (1,638) |$ (4,491)
Income (loss) from |
continuing operations(3) $ 27,926 $ 21,136 $ 16,666 $ (43,741) |$ (9,342)
Income (loss) from |
continuing operations |
per common share (3) $ 2.82 $ 2.02 $ 1.66 $ (4.49) | *
- ---------------------------------------------------------------------------------------------
At Year End:
Total assets $ 430,755 $ 369,743 $ 372,547 $ 334,786 $ 415,603
Long-term debt $ 76,125 $ 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) In 1994, the Company changed its method of accounting for the copper component of its copper tube
and copper fittings inventories to the LIFO method.
(3) Includes charges for unusual items of $1.1 million, or $.12 per common share, in 1994, $2.0
million, or $.19 per common share, in 1993, $5.6 million, or $.56 per common share, in 1992, and
$44.4 million, or $4.56 per common share, in 1991.
</TABLE>
<PAGE> 38 EXHIBIT 13.0
CORPORATE AND STOCKHOLDER INFORMATION
BOARD OF DIRECTORS
Harvey L. Karp Chairman of the Board
Mueller Industries, Inc.
Robert B. Hodes (1) (3) Partner, Willkie Farr & Gallagher
Allan Mactier (1) (2) (3) Private Investor
William D. O'Hagan President and Chief Executive Officer
Mueller Industries, Inc.
Robert J. Pasquarelli (1) (2) Chief Executive Officer of New Jersey
Steel Corporation
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
Richard G. Miller Vice President and Chief Information
Officer
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
[FN]
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating Committee
<PAGE> 39 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 9, 1995.
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 LLP, Wichita, Kansas.
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.
<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
MPC Foundry, Inc. Delaware
MPC 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 Copper Fittings Company, Inc. Delaware
Mueller Streamline FSC, Ltd. Virgin Islands
Mueller West, Inc. Delaware
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
Macomber 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 8, 1995, included in
the 1994 Annual Report to Stockholders of Mueller Industries, Inc.
Our audit also included the consolidated financial statement schedule of
Mueller Industries, Inc. listed in Item 14(a). This schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, the financial statement
schedule 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. 33-54705, No. 33-41478, and No. 33 47307) pertaining
to the 1994 Stock Option Plan and 1994 Non-Employee Director Stock Option
Plan, the 1991 Employee Stock Purchase Plan and the 1991 Incentive Stock
Option Plan of Mueller Industries, Inc., respectively, of our report dated
February 8, 1995, with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the preceding
paragraph with respect to the financial statement schedule included in this
Annual Report (Form 10-K) of Mueller Industries, Inc.
ERNST & YOUNG LLP
Wichita, Kansas
March 15, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000089439
<NAME> MUELLER INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 34,492
<SECURITIES> 0
<RECEIVABLES> 70,261
<ALLOWANCES> 3,336
<INVENTORY> 74,368
<CURRENT-ASSETS> 183,551
<PP&E> 237,152
<DEPRECIATION> 40,380
<TOTAL-ASSETS> 430,755
<CURRENT-LIABILITIES> 67,221
<BONDS> 76,125
<COMMON> 100
0
0
<OTHER-SE> 241,848
<TOTAL-LIABILITY-AND-EQUITY> 430,755
<SALES> 550,003
<TOTAL-REVENUES> 550,003
<CGS> 448,467
<TOTAL-COSTS> 448,467
<OTHER-EXPENSES> 57,584
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,718
<INCOME-PRETAX> 40,824
<INCOME-TAX> 12,898
<INCOME-CONTINUING> 27,926
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,926
<EPS-PRIMARY> 2.82
<EPS-DILUTED> 2.82
</TABLE>
