Exhibit 19.1
To Our Stockholders, Customers, and Employees
We are pleased to report that operating income increased more than sixty
percent to $24.5 million for the third quarter of 2004 which compares with
$15.0 million in the third quarter of 2003. For the third quarter of 2004,
earnings per diluted share were 51 cents compared with 58 cents in the third
quarter of 2003. Income from continuing operations was $18.8 million for the
third quarter of 2004 compared with $19.7 million for the third quarter of
fiscal 2003. Net sales for the three months ended September 25, 2004, were
$322.5 million compared with net sales of $251.1 million for the same quarter
of last year. Mueller's third quarter was solid and our financial position
remains excellent.
During the third quarter of 2003, the Company recognized a deferred
income tax benefit of $9.3 million 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 third quarter of 2003.
Net sales in the first nine months of 2004 were $1.05 billion compared
with net sales of $731.3 million for the same period of 2003. Year-to-date,
net income was $63.8 million, or $1.73 per diluted share, compared with $34.3
million, or 93 cents per diluted share, for the same period last year.
Our national economy is growing, capital investment is rising, and
housing starts and permits remain positive. Thirty-year fixed rate mortgages
are below 6 percent. These conditions are consistent with a strong
continuing demand for Mueller's products.
Special Dividend
The Company's previously announced special dividend will be paid on
October 26, 2004 to stockholders of record on October 12, 2004. In declaring
the special dividend, the Board of Directors considered many factors,
including Mueller's capital structure. By recapitalizing Mueller through
this special dividend, the Company is returning to its stockholders the
significant value that has accumulated from recent years' operations.
Further, the Company's return on equity should improve substantially by
reducing the capital employed. Upon distribution of the special dividend,
stockholders' equity will be reduced to approximately $333 million, cash will
decrease by approximately $240 million, long-term debt will increase by
approximately $305 million, and interest expense will increase by
approximately $18 million annually. After the distribution, the Company
expects to have the financial resources to meet ordinary capital expenditure,
working capital and operating requirements, although from time to time
additional borrowings may be necessary. The Company has posted on its website
(muellerindustries.com) additional information about the special dividend in
the form of questions and answers.
Sincerely,
/s/Harvey L. Karp /s/William D. O'Hagan
Harvey L. Karp William D. O'Hagan
Chairman of the Board President and Chief Executive Officer
October 14, 2004
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Quarter Ended
September 25, 2004 September 27, 2003
(Unaudited)
Net sales $ 322,512 $ 251,053
Cost of goods sold 263,188 201,960
Depreciation and amortization 10,278 9,777
Selling, general, and
administrative expense 24,529 24,301
Impairment charge - -
---------- ----------
Operating income 24,517 15,015
Nonoperating income, net 1,121 253
---------- ----------
Income from continuing operations
before income taxes 25,638 15,268
Income tax (expense) benefit (6,884) 4,469
---------- ----------
Income from continuing operations 18,754 19,737
Discontinued operations, net of tax - 1,699
---------- ----------
Net income $ 18,754 $ 21,436
========== ==========
Basic earnings per share:
Weighted average shares
outstanding 35,283 34,267
========== ==========
From continuing operations $ 0.53 $ 0.58
From discontinued operations - 0.05
---------- ----------
Basic earnings per share $ 0.53 $ 0.63
========== ==========
Diluted earnings per share:
Weighted average shares
outstanding plus assumed
conversions 36,914 36,857
========== ==========
From continuing operations $ 0.51 $ 0.53
From discontinued operations - 0.05
---------- ----------
Diluted earnings per share $ 0.51 $ 0.58
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (continued)
(In thousands, except per share data)
For the Nine Months Ended
September 25, 2004 September 27, 2003
(Unaudited)
Net sales $ 1,049,293 $ 731,296
Cost of goods sold 847,937 597,336
Depreciation and amortization 30,402 29,239
Selling, general, and
administrative expense 79,410 71,172
Impairment charge 3,941 -
---------- ----------
Operating income 87,603 33,549
Nonoperating income, net 4,502 1,925
---------- ----------
Income from continuing operations
before income taxes 92,105 35,474
Income tax (expense) benefit (28,343) (2,298)
---------- ----------
Income from continuing operations 63,762 33,176
Discontinued operations, net of tax - 1,160
---------- ----------
Net income $ 63,762 $ 34,336
========== ==========
Basic earnings per share:
Weighted average shares
outstanding 34,973 34,262
========== ==========
From continuing operations $ 1.82 $ 0.97
From discontinued operations - 0.03
---------- ----------
Basic earnings per share $ 1.82 $ 1.00
========== ==========
Diluted earnings per share:
Weighted average shares
outstanding plus assumed
conversions 36,905 36,812
========== ==========
From continuing operations $ 1.73 $ 0.89
From discontinued operations - 0.04
---------- ----------
Diluted earnings per share $ 1.73 $ 0.93
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 25, 2004 December 27, 2003
(Unaudited)
Assets
Cash and cash equivalents $ 291,915 $ 255,088
Accounts receivable, net 183,957 163,006
Inventories 182,564 140,548
Other current assets 17,746 11,713
---------- ----------
Total current assets 676,182 570,355
Property, plant, and equipment, net 328,636 345,537
Other assets 145,425 139,292
---------- ----------
$ 1,150,243 $ 1,055,184
========== ==========
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 260 $ 2,835
Accounts payable 56,478 42,081
Other current liabilities 83,559 68,590
---------- ----------
Total current liabilities 140,297 113,506
Long-term debt 11,236 11,437
Pension and postretirement liabilities 32,437 31,643
Environmental reserves 9,734 9,560
Deferred income taxes 68,418 63,734
Other noncurrent liabilities 10,182 10,238
---------- ----------
Total liabilities 272,304 240,118
Minority interest in subsidiaries 57 208
Stockholders' equity 877,882 814,858
---------- ----------
$ 1,150,243 $ 1,055,184
========== ==========
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, market demand, pricing, and competitive and technological factors,
among others, as set forth in the Company's SEC filings. These filings are
available through our website at www.muellerindustries.com.
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