Exhibit 19.1
To Our Stockholders, Customers, and Employees
For the second quarter of 2003, net income was $9.0 million, or 24
cents per diluted share, compared with $18.5 million, or 50 cents per
diluted share, for the same quarter last year. Net sales for the second
quarter of 2003, were $248.2 million compared with $260.5 million for the
same quarter 2002. We shipped 175.5 million pounds of product versus the
186.6 million pounds in the second quarter of 2002.
The decline in earnings was principally due to disappointing results in
our copper tube business. Copper tube margins have remained low for the
past year, but lately, we have seen signs that margins have bottomed out,
and are cautiously optimistic that an improvement in copper tube margins may
occur sooner rather than later.
Compared with the first quarter of 2003, the second quarter showed
improvement. Earnings per diluted share more than doubled from the 11 cents
earned in the first quarter of 2003. Moreover, gross profit improved by 12
percent in the second quarter of 2003.
Our financial position is excellent. Mueller ended the quarter with
$207.4 million in cash on hand and total debt of only $16.1 million.
The business outlook remains good. Housing fundamentals are positive.
Low mortgage rates continue to stimulate new home construction and
purchasing. Also, building permits, an excellent indicator of future
housing activity, remain at a high level. Household growth, the primary
driver of housing demand, projected at 12 million for the decade, combined
with demand for replacements and second homes, could result in another
strong decade of demand for our products. A rebound in the commercial
construction sector could result in an additional upswing in demand.
We are pleased to report that Michael O. Fifer joined our company in
June as Executive Vice President. Mike has significant experience in our
industry and was educated at Harvard Business School and the U.S. Naval
Academy.
Our Annual Stockholders' Meeting was held at Mueller's headquarters in
Memphis, Tennessee on May 1, 2003. The stockholders elected Messrs. Fulvio,
Gladstein, Hermanson, Hodes, Karp, and O'Hagan as directors, and approved
the appointment of Ernst & Young LLP as 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 15, 2003
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Quarter Ended
June 28, 2003 June 29, 2002
(Unaudited)
Net sales $ 248,221 $ 260,507
Cost of goods sold 203,461 201,351
Depreciation and amortization 9,722 9,163
Selling, general, and
administrative expense 23,575 22,374
---------- ----------
Operating income 11,463 27,619
Nonoperating income (expense), net 1,633 841
---------- ----------
Income from continuing operations
before income taxes 13,096 28,460
Income tax expense (4,117) (9,744)
---------- ----------
Income from continuing operations 8,979 18,716
Loss from discontinued operations,
net of tax - (251)
---------- ----------
Net income $ 8,979 $ 18,465
========== ==========
Basic earnings per share:
Weighted average shares outstanding 34,263 33,940
========== ==========
From continuing operations $ 0.26 $ 0.55
From discontinued operations - (0.01)
---------- ----------
Basic earnings per share $ 0.26 $ 0.54
========== ==========
Diluted earnings per share:
Weighted average shares outstanding
plus assumed conversions 36,803 37,198
========== ==========
From continuing operations $ 0.24 $ 0.50
From discontinued operations - -
---------- ----------
Diluted earnings per share $ 0.24 $ 0.50
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Six Months Ended
June 28, 2003 June 29, 2002
(Unaudited)
Net sales $ 480,243 $ 509,560
Cost of goods sold 395,376 393,157
Depreciation and amortization 19,462 18,239
Selling, general, and
administrative expense 46,871 44,355
---------- ----------
Operating income 18,534 53,809
Nonoperating income (expense), net 1,672 1,799
---------- ----------
Income from continuing operations
before income taxes 20,206 55,608
Income tax expense (6,767) (19,027)
---------- ----------
Income from continuing operations 13,439 36,581
Loss from discontinued operations,
net of tax (539) (180)
---------- ----------
Net income $ 12,900 $ 36,401
========== ==========
Basic earnings per share:
Weighted average shares outstanding 34,260 33,724
========== ==========
From continuing operations $ 0.40 $ 1.09
From discontinued operations (0.02) (0.01)
---------- ----------
Basic earnings per share $ 0.38 $ 1.08
========== ==========
Diluted earnings per share:
Weighted average shares outstanding
plus assumed conversions 36,787 37,267
========== ==========
From continuing operations $ 0.36 $ 0.98
From discontinued operations (0.01) -
---------- ----------
Diluted earnings per share $ 0.35 $ 0.98
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 28, 2003 December 28, 2002
(Unaudited)
Assets
Cash and cash equivalents $ 207,354 $ 217,601
Accounts receivable, net 160,105 132,427
Inventories 139,586 142,953
Other current assets 6,759 7,366
---------- ----------
Total current assets 513,804 500,347
Property, plant, and equipment, net 350,970 352,469
Other assets 141,189 135,131
---------- ----------
$ 1,005,963 $ 987,947
========== ==========
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 3,711 $ 4,161
Accounts payable 37,717 41,004
Other current liabilities 61,606 61,186
---------- ----------
Total current liabilities 103,034 106,351
Long-term debt 12,410 14,005
Other noncurrent liabilities 118,584 113,647
---------- ----------
Total liabilities 234,028 234,003
Minority interest in subsidiaries 248 421
Stockholders' equity 771,687 753,523
---------- ----------
$ 1,005,963 $ 987,947
========== ==========
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, market demand, pricing, and
competitive and technological factors, among others, as set forth in the
Company's SEC filings.
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