Mueller Industries, Inc. Announces Agreement to Repurchase 27.2% of Its Outstanding Shares

MEMPHIS, Tenn., Sept. 24, 2012 /PRNewswire/ -- Mueller Industries, Inc. (NYSE: MLI) announced today that it has entered into an agreement to repurchase 10,422,859 shares of Mueller common stock owned by Leucadia National Corporation (and its subsidiaries) (NYSE: LUK) at a negotiated price per share of $41.00, for an aggregate purchase price of $427,337,219.  The shares to be purchased in the repurchase transaction equate to approximately 27.2% of Mueller's common shares currently outstanding and constitute Leucadia's entire ownership stake in Mueller.  Ian M. Cumming and Joseph S. Steinberg, Leucadia's designees to the Company's Board of Directors, will resign from the Board upon the closing of the repurchase, which is expected to occur on or before September 26, 2012, subject to customary closing conditions.  The repurchase was approved by the Board following the recommendation of the directors not affiliated with Leucadia and will be funded using a combination of the Company's available cash on hand and borrowings under the Company's existing line of credit.

Gregory L. Christopher, Mueller's CEO said, "We are pleased to announce this repurchase transaction.  We believe that a repurchase transaction of this magnitude represents a highly attractive opportunity to achieve immediate and significant accretion to our earnings, while still maintaining prudent levels of leverage and liquidity."

For the second quarter of 2012, the Company previously reported income of 47 cents per diluted share which compares with pro forma basis income of 59 cents per diluted share.  The appended unaudited condensed balance sheet and income statement illustrate the impact of the transaction on a pro forma basis.

Mueller Industries, Inc. is a leading manufacturer of copper tube and fittings; brass and copper alloy rod, bar and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; plastic fittings and valves; refrigeration valves and fittings; and fabricated tubular products.  Mueller's operations are located throughout the United States and in Canada, Mexico, Great Britain, and China.  Mueller's business is importantly linked to (1) the construction of new homes; (2) the improvement and reconditioning of existing homes and structures; and (3) the commercial construction market which includes office buildings, factories, hotels, hospitals, etc. 

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Statements in this release that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties.  These include economic and currency conditions, continued availability of raw materials and energy, market demand, pricing, competitive and technological factors, and the availability of financing, among others, as set forth in the Company's SEC filings.  The words "pro forma," "outlook," "estimate," "project," "intend," "expect," "believe," "target," and similar expressions are intended to identify forward-looking statements.  The reader should not place undue reliance on forward-looking statements, which speak only as of the date of this report.  The Company has no obligation to publicly update or revise any forward-looking statements to reflect events after the date of this report.

 

MUELLER INDUSTRIES, INC.

PRO FORMA CONDENSED BALANCE SHEET

AS OF JUNE 30, 2012

(in thousands)









The following table illustrates the effects of the stock repurchase transaction (10,422,859 shares at $41.00 per share) on the reported balance sheet as if it had occurred on June 30, 2012.  Cash and cash equivalents, long-term debt, and stockholders' equity including the effects of the stock repurchase transaction are measurements not derived in accordance with generally accepted accounting principles.  Including the effects of the stock repurchase transaction is useful as it measures the effects of increased borrowings and decreased available cash on hand on the financial position of the Company.  The reconciliation of the balance sheet information including the effects of the stock repurchase transaction to the balance sheet as reported for June 30, 2012 is as follows:












As of June 30, 2012






Effect of






As


Stock






Reported


Repurchase


Pro forma




(Unaudited)


ASSETS








Cash and cash equivalents


$       373,680


$     (227,337)

 (a) 

$       146,343


Other current assets


570,370


-


570,370










    Total current assets


944,050


(227,337)


716,713










Other assets


328,390


-


328,390












$    1,272,440


$     (227,337)


$    1,045,103










LIABILITIES AND STOCKHOLDERS' EQUITY







Total current liabilities


240,386


-


240,386










Long-term debt


7,800


200,000

 (b) 

207,800


Other noncurrent liabilities


89,807


-


89,807










    Total liabilities


337,993


200,000


537,993










Total Mueller Industries, Inc. stockholders' equity


904,343


(427,337)

 (c) 

477,006


Noncontrolling interest


30,104


-


30,104










    Total equity


934,447


(427,337)


507,110












$    1,272,440


$     (227,337)


$    1,045,103









 (a) 

 

Represents the amount of the purchase price for the stock repurchase transaction that will be funded with

available cash on hand.









 (b) 

 

Represents the amount of the purchase price for the stock repurchase transaction that will initially be funded with borrowings under the Company's existing line of credit.









 (c) 

Represents the total purchase price for the stock repurchase transaction.

 

MUELLER INDUSTRIES, INC.

PRO FORMA CONDENSED STATEMENTS OF INCOME

QUARTER ENDED JUNE 30, 2012

(In thousands, except per share data)










The following table illustrates the effects of the stock repurchase transaction (10,422,859 shares at $41.00 per share) on reported earnings as if it had occurred on the first day of the second quarter of 2012.  Earnings including the effects of the stock repurchase transaction is a measurement not derived in accordance with generally accepted accounting principles.  Including the effects of the stock repurchase transaction is useful as it measures the effects of increased borrowings and decreased available cash on hand to the operating results, and measures the impact of the decreased share count in the weighted average shares computation.  These adjustments are helpful in illustrating the impact of these transactions on the reported earnings and diluted earnings per share.  The reconciliation of earnings including the effects of the stock repurchase transaction to net income as reported is as follows:














For the Quarter Ended June 30, 2012
















Effect of







As


Stock







Reported


Repurchase


Pro forma





(Unaudited)












Operating income


$          29,842


$                  -


$          29,842












Interest expense


(2,721)


(1,875)

 (d) 

(4,596)



Other income, net


490


(121)

 (e) 

369












Income before income taxes


27,611


(1,996)


25,615



Income tax expense


(9,071)


699


(8,372)












Consolidated net income


18,540


(1,297)


17,243












Net income attributable to
 noncontrolling interest


(623)


-


(623)












Net income attributable to Mueller 
 Industries, Inc.


$          17,917


$          (1,297)


$          16,620












Weighted average shares









for basic earnings per share


38,029


(10,423)


27,606



Effect of dilutive stock-based awards


436


-


436












Adjusted weighted average shares









for diluted earnings per share


38,465


(10,423)


28,042












Diluted earnings per share


$             0.47


$             0.12


$             0.59





























 (d) 

 

Represents the estimated increase in interest expense for the quarter, assuming an all-in borrowing rate of 3.75% applied to the amount borrowed to fund the stock repurchase transaction.











 (e) 

 

Represents the estimated decrease in interest income for the quarter, assuming a weighted average return of 0.21% on the amount of the cash portion of the repurchase transaction.











SOURCE Mueller Industries, Inc.