<PAGE>
1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended June 27, 1998 Commission file number 1-6770
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.)
6799 GREAT OAKS ROAD
MEMPHIS, TN 38138-2572
(Address of principal executive offices)
Registrant's telephone number, including area code: (901) 753-3200
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 / /
The number of shares of the Registrant's common stock outstanding as of
July 15, 1998 was 35,613,294.
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<PAGE>
MUELLER INDUSTRIES, INC.
FORM 10-Q
For the Period Ended June 27, 1998
INDEX
Part I. Financial Information Page
Item 1. Financial Statements (Unaudited)
a.) Consolidated Statements of Income
for the quarters and six-months ended
June 27, 1998 and June 28, 1997......................3
b.) Consolidated Balance Sheets
as of June 27, 1998 and December 27, 1997............4
c.) Consolidated Statements of Cash Flows
for the six-months ended June 27, 1998
and June 28, 1997....................................6
d.) Notes to Consolidated Financial Statements...........7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................9
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders......11
Item 6. Exhibits and Reports on Form 8-K.........................12
Signatures...........................................................13
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
MUELLER INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<CAPTION>
For the Quarter Ended For the Six-Months Ended
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $225,867 $215,437 $452,519 $416,803
Cost of goods sold 173,518 172,685 348,975 328,469
------- ------- ------- -------
Gross profit 52,349 42,752 103,544 88,334
Depreciation and amortization 5,689 4,984 11,273 9,816
Selling, general, and
administrative expense 18,412 15,234 36,254 30,730
------- ------- ------- -------
Operating income 28,248 22,534 56,017 47,788
Interest expense (1,191) (1,118) (2,543) (2,296)
Environmental reserves - - (600) (2,000)
Other income, net 1,981 2,166 4,704 3,196
------- ------- ------- -------
Income before income taxes 29,038 23,582 57,578 46,688
Current income tax expense (7,709) (6,929) (16,242) (13,657)
Deferred income tax expense (1,619) (314) (2,361) (934)
------- ------- ------- -------
Total income tax expense (9,328) (7,243) (18,603) (14,591)
------- ------- ------- -------
Net income $ 19,710 $ 16,339 $ 38,975 $ 32,097
======= ======= ======= =======
Weighted average shares
for basic earnings per share 35,225 35,011 35,163 34,979
Effect of dilutive stock options 4,487 4,147 4,466 4,248
------- ------- ------- -------
Adjusted weighted average shares
for diluted earnings per share 39,712 39,158 39,629 39,227
------- ------- ------- -------
Basic earnings per share $ 0.56 $ 0.47 $ 1.11 $ 0.92
======= ======= ======= =======
Diluted earnings per share $ 0.50 $ 0.42 $ 0.98 $ 0.82
======= ======= ======= =======
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
MUELLER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<CAPTION>
June 27, 1998 December 27, 1997
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 87,914 $ 69,978
Accounts receivable, less allowance
for doubtful accounts of $3,488 in
1998 and $3,680 in 1997 136,106 128,902
Inventories:
Raw material and supplies 16,871 19,960
Work-in-process 24,293 20,283
Finished goods 54,910 57,531
Gold 2,327 407
--------- ---------
Total inventories 98,401 98,181
Current deferred income taxes 4,510 5,023
Other current assets 8,691 6,967
--------- ---------
Total current assets 335,622 309,051
Property, plant and equipment, net 284,688 260,364
Deferred income taxes 5,831 7,837
Other assets 29,089 33,524
--------- ---------
$ 655,230 $ 610,776
========= =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
MUELLER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
<CAPTION>
June 27, 1998 December 27, 1997
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 18,027 $ 18,980
Accounts payable 32,687 30,530
Accrued wages and other employee costs 20,215 21,095
Other current liabilities 38,390 29,952
--------- ---------
Total current liabilities 109,319 100,557
Long-term debt 45,172 53,113
Pension and postretirement liabilities 14,523 14,222
Environmental reserves 9,919 10,368
Deferred income taxes 1,882 2,040
Other noncurrent liabilities 13,410 11,745
--------- ---------
Total liabilities 194,225 192,045
--------- ---------
Minority interest in subsidiaries 390 691
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 100,000,000; issued
40,000,000; outstanding 35,613,294
in 1998 and 35,017,416 in 1997 400 200
Additional paid-in capital, common 255,040 253,928
Retained earnings
(Since January 1, 1991) 236,728 197,753
Cumulative translation adjustment (4,589) (3,232)
Treasury common stock, at cost (26,964) (30,609)
--------- ---------
Total stockholders' equity 460,615 418,040
Commitments and contingencies (Note 2) - -
--------- ---------
$ 655,230 $ 610,776
========= =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
MUELLER INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
For the Six-Months Ended
June 27, 1998 June 28, 1997
<S> <C> <C>
Cash flows from operating activities
Net income $ 38,975 $ 32,097
Reconciliation of net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 11,273 9,816
Minority interest in subsidiaries (301) 244
Deferred income taxes 2,361 934
Gain on disposal of properties (1,517) (452)
Changes in assets and liabilities:
Receivables (7,772) (27,149)
Inventories (650) (10,228)
Other assets (4,463) (14,732)
Current liabilities 3,115 6,848
Other liabilities 310 109
Other, net (75) (276)
-------- --------
Net cash provided by (used in)
operating activities 41,256 (2,789)
-------- --------
Cash flows from investing activities
Businesses acquired - (37,743)
Capital expenditures (23,812) (16,468)
Proceeds from sales of properties 1,619 1,344
Escrowed IRB proceeds 6,082 -
Note receivable (4,484) -
-------- --------
Net cash used in investing activities (20,595) (52,867)
-------- --------
Cash flows from financing activities
Repayments of long-term debt (8,894) (5,442)
Proceeds from stock options exercised
including related tax benefits 6,357 581
-------- --------
Net cash used in financing activities (2,537) (4,861)
-------- --------
Effect of exchange rate changes on cash (188) -
-------- --------
Increase (decrease) in cash and cash equivalents 17,936 (60,517)
Cash and cash equivalents at the
beginning of the period 69,978 96,956
-------- --------
Cash and cash equivalents at the
end of the period $ 87,914 $ 36,439
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
MUELLER INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
General
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Results of
operations for the interim periods presented are not necessarily indicative
of results which may be expected for any other interim period or for the
year as a whole. This quarterly report on Form 10-Q should be read in
conjunction with the Company's Annual Report on Form 10-K, including the
annual financial statements incorporated therein by reference.
The accompanying unaudited interim financial statements include all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented.
Note 1 - Earnings Per Common Share
Basic per share amounts have been computed based on the average number
of common shares outstanding. Diluted per share amounts reflect the
increase in average common shares outstanding that would result from the
assumed exercise of outstanding stock options, computed using the treasury
stock method.
Note 2 - Commitments and Contingencies
The Company is subject to normal environmental standards imposed by
federal, state, local, and foreign environmental laws and regulations.
Based upon information currently available, management believes that the
outcome of pending environmental matters will not materially affect the
overall financial position and results of operations of the Company.
In addition, the Company is involved in certain litigation as either
plaintiff or defendant as a result of claims that arise in the ordinary
course of business which management believes will not have a material
effect on the Company's financial condition.
Note 3 - Comprehensive Income
During 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income
(SFAS No. 130). The Company adopted this Statement as of the beginning of
1998. SFAS No. 130 established new rules for the reporting and display of
comprehensive income and its components; however, the adoption of this
Statement had no impact on the Company's net income or stockholders'
equity. SFAS No. 130 requires foreign currency translation adjustments,
which prior to adoption were reported separately in stockholders' equity,
to be included in other comprehensive income.
Total comprehensive income was $18,963,000 and $16,773,000 for the
quarters ending June 27, 1998, and June 28, 1997, respectively and was
$37,618,000 and $32,270,000 for the six-month periods ending June 27, 1998
and June 28, 1997, respectively.
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<PAGE>
Note 4 - Stockholders' Equity
During the second quarter of 1998, the Company's Board of Directors
declared a two-for-one stock split to be effected in the form of a 100
percent stock dividend. The record date was May 12, 1998. Presentations
of share data herein, including earnings per share, have been adjusted to
reflect the split for all periods presented (except for Item 4. Submission
of Matters to a Vote of Security Holders).
Note 5 - Acquisitions
During the first half of 1997, the Company acquired the assets and
certain liabilities of Precision Tube Company, Inc., the assets of
Wednesbury Tube Company, and Desnoyers S.A. These acquisitions were
accounted for using the purchase method. Therefore, the results of
operations of the acquired businesses are included in the consolidated
financial statements of the Company from the date of acquisition.
The following condensed pro forma consolidated results of operations
are presented as if the acquisitions had occurred at the beginning of 1997.
This information combines the historical results of operations of the
Company and the acquired businesses after the effects of estimated purchase
accounting adjustments. The pro forma information does not purport to be
indicative of the results that would have been obtained if the operations
had actually been combined during the period presented.
For the Six-Months Ended
June 28, 1997
Net sales $ 478,286
Net income 28,056
Basic earnings per share 0.80
Diluted earnings per share 0.72
The final assessment of fair values of the assets and reserves
associated with the Desnoyers S.A. acquisition was completed during the
second quarter of 1998. The determination of final fair values resulted in
adjustments consisting of changes from initially recorded values. These
adjustments increased property, plant and equipment, and other current
liabilities of approximately $12.4 million and $8.6 million respectively,
and decreased other assets of approximately $3.8 million.
Note 6 - Stock Option Exercise
On June 15, 1998, the Company loaned $4.5 million, on a full recourse
basis, to an officer. Proceeds of $1.4 million were used by the officer to
exercise options on the Company's stock. That portion of the loan has been
classified as a reduction of additional paid-in capital, while the
remaining balance of the loan is included in other assets in the Company's
consolidated financial statements. The entire loan is secured by common
stock of the Company.
The tax benefit associated with the exercise of these options reduced
taxes payable, classified as other current liabilities, by $3.8 million.
Such benefits are reflected as additions to additional paid-in capital.
-8-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Overview
The Company's principal business is the manufacture and sale of copper
tube, brass rod, copper and plastic fittings, forgings, valves, and other
products made of copper, brass, bronze, plastic and aluminum. 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 and commercial buildings. The Company's product is sold to
wholesalers in the plumbing, air-conditioning and refrigeration markets and
to OEMs in these and other markets. Mueller's plants are located
throughout the United States and in Canada, France and Great Britain. The
Company also owns a short line railroad in Utah and natural resource
properties in the Western U.S.
Profitability of certain of the Company's product lines depends upon
the "spreads" between the cost of material and the selling prices of its
completed products. The open market prices for copper cathode and scrap,
for example, influence the selling price of copper tubing, a principal
product manufactured by the Company. The Company attempts to minimize the
negative effects of fluctuations in material costs by passing these costs
through to its customers. "Spreads" fluctuate based upon competitive
market conditions.
During 1997, the Company acquired two European copper tube
manufacturers. Wednesbury Tube is located in Bilston, England, and
Desnoyers S.A. is located near Paris, France. These acquisitions give the
Company a major manufacturing and sales presence in Europe.
The Company uses the LIFO method to value the copper component of
certain of its copper tube and fittings inventories in the United States.
The market price of copper also indirectly affects the carrying value (FIFO
basis) of the Company's brass and other metal inventories.
Results of Operations
Net income was $19.7 million, or 50 cents per diluted share, for the
second quarter of 1998, which compares with net income of $16.3 million, or
42 cents per diluted share, for the same period of 1997. Year-to-date, net
income was $39.0 million, or 98 cents per diluted share, which compares to
net income of $32.1 million, or 82 cents per diluted share, for 1997.
-9-
<PAGE>
During the second quarter of 1998, the Company's net sales were $225.9
million, which compares to net sales of $215.4 million, or a 4.9 percent
increase over the same period of 1997. Net sales were $452.5 million in
the first half of 1998 versus $416.8 million in 1997. During the second
quarter of 1998, the Company's manufacturing businesses shipped 159.2
million pounds of product compared to 132.7 million pounds in the same
quarter of 1997. The Company's manufacturing businesses shipped 315.3
million pounds of product in the first half of 1998, or 22.4 percent more
than the same period of 1997. Pounds shipped grew by a larger percent than
net sales because the average price of copper was lower in 1998 than in
1997. Second quarter and first half operating income increased primarily
due to: (i) productivity improvements at the Company's North American
manufacturing operations; (ii) higher sales volumes particularly at brass
rod and plastics; and (iii) spread improvements primarily in domestic
copper tube. Mueller's European operations, which were acquired during
1997, operated approximately at break-even for the second quarter and first
half of 1998. Selling, general, and administrative expense increased
primarily due to acquired businesses.
Interest expense for the second quarter of 1998 totaled $1.2 million
compared to $1.1 million in the same quarter of 1997. For the first six-
months of 1998, interest expense was $2.5 million compared to $2.3 million
for the same period of 1997. Total interest in the first half of 1998
increased due to the increase in long-term debt following the issuance of
Industrial Development Revenue Bonds in the third quarter of 1997,
partially offset by scheduled reductions in other long-term debt. During
the first half of 1998, the Company capitalized $0.3 million of interest
related to capital improvement programs compared to none in 1997.
The effective tax rate of 32.1 percent in the second quarter and 32.3
percent in the first six-months of 1998 reflect the benefits of a lower
federal provision relating to the recognition of net operating loss carry
forwards and a lower state provision associated with incentive IRB
financings.
Liquidity and Capital Resources
Cash provided by operating activities during the first half of 1998
totaled $41.3 million which is primarily attributable to net income and
depreciation. During the first half of 1998, the Company used $20.6
million in investing activities, consisting primarily of $23.8 million in
capital expenditures offset by $6.1 million proceeds from escrowed IRB
funds. Cash used in investing activities was funded with existing cash
balances, cash from operations, plus escrowed IRB proceeds.
The Company has a $100.0 million unsecured line-of-credit agreement
(the Credit Facility) which expires in May 2001, but which 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 .50 percent, (ii) LIBOR plus .27 percent, or (iii) Federal
Funds Rate plus .65 percent. There are no outstanding borrowings under the
Credit Facility. At June 27, 1998, funds available under the Credit
Facility were reduced by $3.8 million for outstanding letters of credit.
At June 27, 1998, the Company's total debt was $63.2 million or 12.1
percent of its total capitalization.
-10-
<PAGE>
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 $87.9 million will be adequate to meet the Company's
normal future capital expenditure and operational needs. Additionally,
certain capital improvements are being funded with escrowed IRB proceeds.
The Company's current ratio remains strong at 3.1 to 1.
The Company has approved a $25.3 million capital improvement project
at its Fulton copper tube mill to improve the utilization of scrap metal
and enhance the mill's refining processes. This project is also expected
to improve yield and productivity and increase casting capacity. Moreover,
the project, when completed in early 1999, will allow the Fulton tube mill
to use more scrap copper when market conditions warrant.
Another important ongoing program is the modernization of the
Company's copper fittings plant in Covington, Tennessee. Modernization of
this facility, which produces a broad range of low-volume copper fittings,
is estimated to require approximately $7.3 million in capital improvements
and will be completed in 1999. This project, when completed, will also
increase output and improve efficiency.
Mueller also has programs underway to make near-term improvements at
its European operations. Further, the Company is also considering various
long-term capital investments for these businesses which will further
improve their cost structure and productivity.
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 7, 1998, the Company held its Annual Meeting of Stockholders at
which four proposals were voted upon: (i) election of directors; (ii)
increase the number of authorized shares of common stock from 50,000,000 to
100,000,000; (iii) adoption of the Company's 1998 Stock Option Plan; and
(iv) the appointment of auditors.
The following persons were duly elected to serve, subject to the
Company's Bylaws, as Directors of the Company until the next Annual
Meeting, or until election and qualification of their successors:
Votes in Favor Votes Withheld
Robert B. Hodes 14,893,054 101,522
Harvey L. Karp 14,863,696 130,880
Allan Mactier 14,909,822 84,754
William D. O'Hagan 14,893,028 101,548
Robert J. Pasquarelli 14,911,114 83,462
-11-
<PAGE>
The proposal to increase the number of authorized shares of common
stock to 100,000,000 was approved by 14,463,461 vote in favor, 500,372
votes against, with 30,743 votes abstaining. The proposal to approve the
adoption of the Company's 1998 Stock Option Plan was approved by 12,343,092
vote in favor, 2,574,114 votes against, with 77,370 votes abstaining. The
proposal to approve the appointment of Ernst & Young LLP as the Company's
auditors was ratified by 14,959,992 votes in favor, 14,131 votes against,
and 20,453 votes abstaining.
There were no broker non-votes pertaining to these proposals.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
19.1 Mueller Industries, Inc.'s Quarterly Report to Stockholders
for the quarter ended June 27, 1998. Such report is being
furnished for the information of the Securities and Exchange
Commission only and is not to be deemed filed as part of this
Quarterly Report on Form 10-Q.
(b) During the quarter ended June 27, 1998, the Registrant filed
no Current Reports on Form 8-K.
Items 1, 2, 3 and 5 are not applicable and have been omitted.
-12-
<PAGE>
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 July 23, 1998.
MUELLER INDUSTRIES, INC.
/S/ EARL W. BUNKERS
Earl W. Bunkers, Executive Vice
President and Chief Financial Officer
/S/ KENT A. MCKEE
Kent A. McKee
Vice President Business
Development/Investor Relations
/S/ RICHARD W. CORMAN
Richard W. Corman
Director of Corporate Accounting
-13-
<PAGE>
EXHIBIT INDEX
Exhibits Description
19.1 Quarterly Report to Stockholders
27.1 Financial Data Schedule for the period ended June 27, 1998
(EDGAR filing only)
27.2 Restated Financial Data Schedule for the period
ended March 28, 1998 (EDGAR filing only)
27.3 Restated Financial Data Schedule for the period
ended December 27, 1997 (EDGAR filing only)
27.4 Restated Financial Data Schedule for the period
ended September 27, 1997 (EDGAR filing only)
27.5 Restated Financial Data Schedule for the period
ended June 28, 1997 (EDGAR filing only)
27.6 Restated Financial Data Schedule for the period
ended March 29, 1997 (EDGAR filing only)
27.7 Restated Financial Data Schedule for the period
ended December 28, 1996 (EDGAR filing only)
27.8 Restated Financial Data Schedule for the period
ended December 30, 1995 (EDGAR filing only)
27.9 Restated Financial Data Schedule for the period
ended December 31, 1994 (EDGAR filing only)
-14-
TO OUR STOCKHOLDERS, CUSTOMERS, AND EMPLOYEES
Mueller's net earnings increased 21 percent in the second quarter of 1998
over the same quarter of 1997. Gross profit, net earnings, and pounds of
product produced and shipped all reached record levels. Earnings for the
second quarter were $19.7 million, or 50 cents per diluted share, compared
to $16.3 million, or 42 cents per diluted share, for the second quarter of
1997.
Net sales for the second quarter of 1998 totaled $225.9 million, compared
with $215.4 million for the same quarter of 1997. This increase in net
sales was especially gratifying since the price of copper declined by 32
percent compared with the same period in 1997. The selling price of many
of Mueller's products tends to fluctuate based on the price of copper.
Mueller's manufacturing operations performed well during the second
quarter. The Fulton copper tube mill operated near full capacity and the
same was true of our Port Huron brass rod mill. Our plastic and copper
fittings businesses showed continued strength and margins were good.
Business was also brisk at our other manufacturing operations.
The bulk of Mueller's earnings increase was achieved in the U.S.
marketplace. We are taking important steps to rationalize our European
manufacturing operations, and in due course we expect to obtain increasing
benefits in efficiency and profitability.
We remain optimistic about our business for the balance of 1998. Long-term
mortgage rates in the United States are currently under 7 percent. Consumer
confidence remains high and inflation is at a low level. Moreover, most
leading economic indicators continue strong. We believe these favorable
factors signal a positive business outlook for the Company going forward.
In April, Mueller declared a two-for-one split of our common stock. The
stock commenced trading on a post-split basis on May 28, 1998. Accordingly,
all per share amounts in this report have been adjusted to reflect the
split.
Our Annual Stockholders' meeting was held in Memphis on May 7, 1998. At
the meeting, our stockholders reelected all Board members, approved an
increase in the number of authorized shares of common stock to 100,000,000
from 50,000,000, approved the adoption of a 1998 stock option plan, and
approved the reappointment of our independent auditors.
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
July 16, 1998
-1-
<PAGE>
<TABLE>
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<CAPTION>
For the Quarter Ended For the Six Months Ended
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $225,867 $215,437 $452,519 $416,803
Cost of goods sold 173,518 172,685 348,975 328,469
Depreciation and amortization 5,689 4,984 11,273 9,816
Selling, general, and
administrative expense 18,412 15,234 36,254 30,730
------- ------- ------- -------
Operating income 28,248 22,534 56,017 47,788
Interest expense (1,191) (1,118) (2,543) (2,296)
Environmental reserves - - (600) (2,000)
Other income, net 1,981 2,166 4,704 3,196
------- ------- ------- -------
Income before taxes 29,038 23,582 57,578 46,688
Income tax expense (9,328) (7,243) (18,603) (14,591)
------- ------- ------- -------
Net income $ 19,710 $ 16,339 $ 38,975 $ 32,097
======= ======= ======= =======
Earnings per share:
Basic:
Weighted average
shares outstanding 35,225 35,011 35,163 34,979
======= ======= ======= =======
Basic earnings per share $ 0.56 $ 0.47 $ 1.11 $ 0.92
======= ======= ======= =======
Diluted:
Weighted average shares
outstanding plus
assumed conversions 39,712 39,158 39,629 39,227
======= ======= ======= =======
Diluted earnings per share $ 0.50 $ 0.42 $ 0.98 $ 0.82
======= ======= ======= =======
</TABLE>
-2-
<PAGE>
<TABLE>
MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
<CAPTION>
June 27, 1998 Dec. 27, 1997
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 87,914 $ 69,978
Accounts receivable, net 136,106 128,902
Inventories 98,401 98,181
Other current assets 13,201 11,990
--------- ---------
Total current assets 335,622 309,051
Property, plant and equipment, net 284,688 260,364
Other assets 34,920 41,361
--------- ---------
$ 655,230 $ 610,776
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 18,027 $ 18,980
Accounts payable 32,687 30,530
Other current liabilities 58,605 51,047
--------- ---------
Total current liabilities 109,319 100,557
Long-term debt 45,172 53,113
Other noncurrent liabilities 39,734 38,375
--------- ---------
Total liabilities 194,225 192,045
Minority interest in subsidiaries 390 691
Stockholders' equity 460,615 418,040
--------- ---------
$ 655,230 $ 610,776
========= =========
</TABLE>
-3-
<PAGE>
Historical Analysis (1994-1998) of Quarterly
Earnings Before Tax and Earnings Per Share
Mueller's earnings have grown substantially over the past four years. In
the second quarter of 1998, our Company earned $29.0 million before tax,
compared with $9.1 million for the same quarter of 1994, an increase of 219
percent. Diluted earnings per share have risen 257 percent, from $0.14 to
$0.50.
[GRAPH]
Second Quarter Diluted Earnings Per Share
1994 $0.14
1995 0.28
1996 0.36
1997 0.42
1998 0.50
A similar progression is evident in each of the quarters from 1994 to the
present:
<TABLE>
Earnings Before Tax (millions)
<CAPTION>
Quarter
------------------------------------------------ Total
1st 2nd 3rd 4th Year
<S> <C> <C> <C> <C> <C>
1994 $ 6.7 $ 9.1 $ 12.0 $ 13.0 $ 40.8
1995 14.7 15.6 17.0 17.2 64.5
1996 19.3 20.1 23.4 25.6 88.4
1997 23.1 23.6 25.8 28.3 100.8
1998 28.5 29.0
</TABLE>
<TABLE>
Diluted Earnings Per Share (restated to reflect two-for-one stock split
effective May 28, 1998)
<CAPTION>
Quarter
------------------------------------------------ Total
1st 2nd 3rd 4th Year
<S> <C> <C> <C> <C> <C>
1994 $ 0.10 $ 0.14 $ 0.22 $ 0.25 $ 0.71
1995 0.27 0.28 0.30 0.32 1.17
1996 0.34 0.36 0.41 0.46 1.57
1997 0.40 0.42 0.46 0.50 1.78
1998 0.49 0.50
</TABLE>
-4-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE FISCAL PERIOD ENDED JUNE 27, 1998 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> 6-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> JUN-27-1998
<CASH> 87,914
<SECURITIES> 0
<RECEIVABLES> 139,594
<ALLOWANCES> 3,488
<INVENTORY> 98,401
<CURRENT-ASSETS> 335,622
<PP&E> 384,725
<DEPRECIATION> 100,037
<TOTAL-ASSETS> 655,230
<CURRENT-LIABILITIES> 109,319
<BONDS> 45,172
0
0
<COMMON> 400
<OTHER-SE> 460,215
<TOTAL-LIABILITY-AND-EQUITY> 655,230
<SALES> 452,519
<TOTAL-REVENUES> 452,519
<CGS> 348,975
<TOTAL-COSTS> 348,975
<OTHER-EXPENSES> 47,527
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,543
<INCOME-PRETAX> 57,578
<INCOME-TAX> 18,603
<INCOME-CONTINUING> 38,975
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,975
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 0.98
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE, RESTATED TO REFLECT THE EFFECTS OF A TWO-FOR-
ONE STOCK SPLIT, CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL QUARTER ENDED
MARCH 28, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000089439
<NAME> MUELLER INDUSTRIES, INC.
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> MAR-28-1998
<CASH> 76,082
<SECURITIES> 0
<RECEIVABLES> 146,979
<ALLOWANCES> 3,331
<INVENTORY> 93,624
<CURRENT-ASSETS> 327,112
<PP&E> 363,860
<DEPRECIATION> 94,674
<TOTAL-ASSETS> 636,363
<CURRENT-LIABILITIES> 108,866
<BONDS> 49,508
0
0
<COMMON> 200
<OTHER-SE> 437,206
<TOTAL-LIABILITY-AND-EQUITY> 636,363
<SALES> 226,652
<TOTAL-REVENUES> 226,652
<CGS> 175,457
<TOTAL-COSTS> 175,457
<OTHER-EXPENSES> 23,426
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,352
<INCOME-PRETAX> 28,540
<INCOME-TAX> 9,275
<INCOME-CONTINUING> 19,265
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,265
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.49
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE, RESTATED TO REFLECT THE EFFECTS OF A TWO-FOR-
ONE STOCK SPLIT, CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
DECEMBER 27, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000089439
<NAME> MUELLER INDUSTRIES, INC.
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> DEC-27-1997
<CASH> 69,978
<SECURITIES> 0
<RECEIVABLES> 132,582
<ALLOWANCES> 3,680
<INVENTORY> 98,181
<CURRENT-ASSETS> 309,051
<PP&E> 349,502
<DEPRECIATION> 89,138
<TOTAL-ASSETS> 610,776
<CURRENT-LIABILITIES> 100,557
<BONDS> 53,113
0
0
<COMMON> 200
<OTHER-SE> 417,840
<TOTAL-LIABILITY-AND-EQUITY> 610,776
<SALES> 888,997
<TOTAL-REVENUES> 888,997
<CGS> 704,801
<TOTAL-COSTS> 704,801
<OTHER-EXPENSES> 84,487
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,968
<INCOME-PRETAX> 100,821
<INCOME-TAX> 31,051
<INCOME-CONTINUING> 69,770
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,770
<EPS-PRIMARY> 1.99
<EPS-DILUTED> 1.78
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE, RESTATED TO REFLECT THE EFFECTS OF A TWO-FOR-
ONE STOCK SPLIT, CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL QUARTER ENDED
SEPTEMBER 27, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000089439
<NAME> MUELLER INDUSTRIES, INC.
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> SEP-27-1997
<CASH> 44,333
<SECURITIES> 0
<RECEIVABLES> 142,483
<ALLOWANCES> 3,229
<INVENTORY> 113,162
<CURRENT-ASSETS> 310,132
<PP&E> 352,417
<DEPRECIATION> 96,026
<TOTAL-ASSETS> 609,643
<CURRENT-LIABILITIES> 109,382
<BONDS> 61,094
0
0
<COMMON> 200
<OTHER-SE> 396,986
<TOTAL-LIABILITY-AND-EQUITY> 609,643
<SALES> 645,936
<TOTAL-REVENUES> 645,936
<CGS> 509,845
<TOTAL-COSTS> 509,845
<OTHER-EXPENSES> 61,259
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,114
<INCOME-PRETAX> 72,475
<INCOME-TAX> 22,327
<INCOME-CONTINUING> 50,148
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,148
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.28
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE, RESTATED TO REFLECT THE EFFECTS OF A TWO-FOR-
ONE STOCK SPLIT, CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL QUARTER ENDED
JUNE 28, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000089439
<NAME> MUELLER INDUSTRIES, INC.
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> JUN-28-1997
<CASH> 36,439
<SECURITIES> 0
<RECEIVABLES> 122,248
<ALLOWANCES> 3,223
<INVENTORY> 101,315
<CURRENT-ASSETS> 273,292
<PP&E> 320,428
<DEPRECIATION> 80,133
<TOTAL-ASSETS> 548,780
<CURRENT-LIABILITIES> 88,667
<BONDS> 39,335
0
0
<COMMON> 200
<OTHER-SE> 380,737
<TOTAL-LIABILITY-AND-EQUITY> 548,780
<SALES> 416,803
<TOTAL-REVENUES> 416,803
<CGS> 328,469
<TOTAL-COSTS> 328,469
<OTHER-EXPENSES> 40,546
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,296
<INCOME-PRETAX> 46,688
<INCOME-TAX> 14,591
<INCOME-CONTINUING> 32,097
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,097
<EPS-PRIMARY> 0.92
<EPS-DILUTED> 0.82
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE, RESTATED TO REFLECT THE EFFECTS OF A TWO-FOR-
ONE STOCK SPLIT, CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL QUARTER ENDED
MARCH 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000089439
<NAME> MUELLER INDUSTRIES, INC.
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> MAR-29-1997
<CASH> 67,189
<SECURITIES> 0
<RECEIVABLES> 118,655
<ALLOWANCES> 3,210
<INVENTORY> 89,603
<CURRENT-ASSETS> 287,333
<PP&E> 307,815
<DEPRECIATION> 75,475
<TOTAL-ASSETS> 535,738
<CURRENT-LIABILITIES> 88,739
<BONDS> 42,193
0
0
<COMMON> 200
<OTHER-SE> 363,952
<TOTAL-LIABILITY-AND-EQUITY> 535,738
<SALES> 201,366
<TOTAL-REVENUES> 201,366
<CGS> 155,784
<TOTAL-COSTS> 155,784
<OTHER-EXPENSES> 20,328
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,178
<INCOME-PRETAX> 23,106
<INCOME-TAX> 7,348
<INCOME-CONTINUING> 15,758
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,758
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.40
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE, RESTATED TO REFLECT THE EFFECTS OF A TWO-FOR-
ONE STOCK SPLIT, CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
DECEMBER 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000089439
<NAME> MUELLER INDUSTRIES, INC.
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> DEC-28-1996
<CASH> 96,956
<SECURITIES> 0
<RECEIVABLES> 92,093
<ALLOWANCES> 3,188
<INVENTORY> 76,647
<CURRENT-ASSETS> 274,712
<PP&E> 290,763
<DEPRECIATION> 70,908
<TOTAL-ASSETS> 509,357
<CURRENT-LIABILITIES> 78,956
<BONDS> 44,806
0
0
<COMMON> 200
<OTHER-SE> 347,882
<TOTAL-LIABILITY-AND-EQUITY> 509,357
<SALES> 718,312
<TOTAL-REVENUES> 718,312
<CGS> 554,570
<TOTAL-COSTS> 554,570
<OTHER-EXPENSES> 73,280
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,346
<INCOME-PRETAX> 88,412
<INCOME-TAX> 27,239
<INCOME-CONTINUING> 61,173
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,173
<EPS-PRIMARY> 1.76
<EPS-DILUTED> 1.57
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE, RESTATED TO REFLECT THE EFFECTS OF A TWO-FOR-
ONE STOCK SPLIT, CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
DECEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000089439
<NAME> MUELLER INDUSTRIES, INC.
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 48,357
<SECURITIES> 0
<RECEIVABLES> 86,698
<ALLOWANCES> 2,986
<INVENTORY> 66,360
<CURRENT-ASSETS> 211,038
<PP&E> 275,301
<DEPRECIATION> 54,289
<TOTAL-ASSETS> 450,835
<CURRENT-LIABILITIES> 67,884
<BONDS> 59,653
0
0
<COMMON> 200
<OTHER-SE> 285,675
<TOTAL-LIABILITY-AND-EQUITY> 450,835
<SALES> 678,838
<TOTAL-REVENUES> 678,838
<CGS> 549,884
<TOTAL-COSTS> 549,884
<OTHER-EXPENSES> 64,943
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,168
<INCOME-PRETAX> 64,549
<INCOME-TAX> 19,726
<INCOME-CONTINUING> 44,823
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,823
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE, RESTATED TO REFLECT THE EFFECTS OF A TWO-FOR-
ONE STOCK SPLIT, CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS 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.
<RESTATED>
<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
0
0
<COMMON> 100
<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> 0.77
<EPS-DILUTED> 0.71
</TABLE>
