Exhibit 19.1 TO OUR STOCKHOLDERS, CUSTOMERS, AND EMPLOYEES Mueller's third quarter ended September 27, 2003, evidenced an encouraging trend in volume and in copper tube margins. It was the best performance we have achieved in the last four quarters. For the third quarter of this year, our earnings per diluted share from continuing operations were 53 cents compared with 70 cents for the third quarter of 2002. Income from continuing operations was $19.7 million compared with $25.8 million for the third quarter of fiscal 2002. Net sales for the quarter were $251.1 million compared with net sales of $227.3 million for the third quarter of 2002. We shipped approximately 175.0 million pounds of product verses 164.4 million pounds of product for the same quarter last year. During the third quarter of 2003, our Company recognized a deferred income tax benefit related to a 1999 tax operating loss that resulted from the sale of a subsidiary in that tax year. Without this deferred income tax benefit, the Company's income from continuing operations would have been approximately $10.4 million, or 28 cents per diluted share. In the prior year third quarter, the Company sold the Utah Railway Company. This transaction generated a capital gain for income tax purposes. Without this capital gain and the income tax benefits related to the transaction, the Company's income from continuing operations would have been approximately $13.1 million, or 36 cents per diluted share. Net sales in the first nine months of 2003 were $731.3 million compared with sales of $736.9 million in the 2002 period. Year-to-date, income from continuing operations was $33.2 million compared with $62.4 million for the same period of 2002. Earnings per diluted share from continuing operations were 89 cents for the first nine months of 2003 compared with $1.68 reported a year ago. Mueller's financial position remains strong. We ended the quarter with $219.3 million of cash on hand which significantly exceeds our total debt of $15.2 million. Our current ratio is nearly 5 to 1 and our working capital is $432.4 million. We are cautiously optimistic that the business outlook for the fourth quarter will be one of improvement. Our long standing strategy of being the low cost manufacturer means that we are well positioned to take advantage of growth in demand and margins. 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 October 14, 2003 -1- MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data)
For the Quarter Ended September 27, 2003 September 28, 2002 (Unaudited) Net sales $ 251,053 $ 227,294 Cost of goods sold 201,960 176,302 Depreciation and amortization 9,777 9,277 Selling, general, and administrative expense 24,301 21,280 ---------- ---------- Operating income 15,015 20,435 Nonoperating income, net 253 301 ---------- ---------- Income from continuing operations before income taxes 15,268 20,736 Income tax benefit (expense) 4,469 5,086 ---------- ---------- Income from continuing operations 19,737 25,822 Discontinued operations, net of tax 1,699 20,810 ---------- ---------- Net income $ 21,436 $ 46,632 ========== ========== Basic earnings per share: Weighted average shares outstanding 34,267 34,269 ========== ========== From continuing operations $ 0.58 $ 0.75 From discontinued operations 0.05 0.61 ---------- ---------- Basic earnings per share $ 0.63 $ 1.36 ========== ========== Diluted earnings per share: Weighted average shares outstanding plus assumed conversions 36,857 36,837 ========== ========== From continuing operations $ 0.53 $ 0.70 From discontinued operations 0.05 0.57 ---------- ---------- Diluted earnings per share $ 0.58 $ 1.27 ========== ==========
-2- MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data)
For the Nine Months Ended September 27, 2003 September 28, 2002 (Unaudited) Net sales $ 731,296 $ 736,854 Cost of goods sold 597,336 569,459 Depreciation and amortization 29,239 27,516 Selling, general, and administrative expense 71,172 65,635 ---------- ---------- Operating income 33,549 74,244 Nonoperating income, net 1,925 2,100 ---------- ---------- Income from continuing operations before income taxes 35,474 76,344 Income tax benefit (expense) (2,298) (13,941) ---------- ---------- Income from continuing operations 33,176 62,403 Discontinued operations, net of tax 1,160 20,630 ---------- ---------- Net income $ 34,336 $ 83,033 ========== ========== Basic earnings per share: Weighted average shares outstanding 34,262 33,905 ========== ========== From continuing operations $ 0.97 $ 1.84 From discontinued operations 0.03 0.61 ---------- ---------- Basic earnings per share $ 1.00 $ 2.45 ========== ========== Diluted earnings per share: Weighted average shares outstanding plus assumed conversions 36,812 37,123 ========== ========== From continuing operations $ 0.89 $ 1.68 From discontinued operations 0.04 0.56 ---------- ---------- Diluted earnings per share $ 0.93 $ 2.24 ========== ==========
-3- MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
September 27, 2003 December 28, 2002 (Unaudited) Assets Cash and cash equivalents $ 219,280 $ 217,601 Accounts receivable, net 162,352 132,427 Inventories 145,433 142,953 Other current assets 11,131 7,366 ---------- ---------- Total current assets 538,196 500,347 Property, plant, and equipment, net 349,007 352,469 Other assets 140,250 135,131 ---------- ---------- $ 1,027,453 $ 987,947 ========== ========== Liabilities and Stockholders' Equity Current portion of long-term debt $ 3,711 $ 4,161 Accounts payable 37,326 41,004 Other current liabilities 64,718 61,186 ---------- ---------- Total current liabilities 105,755 106,351 Long-term debt 11,486 14,005 Other noncurrent liabilities 116,416 113,647 ---------- ---------- Total liabilities 233,657 234,003 Minority interest in subsidiaries 248 421 Stockholders' equity 793,548 753,523 ---------- ---------- $ 1,027,453 $ 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. -4-