UNITED STATES 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 quarterly period ended March 29, 2008 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.) 8285 Tournament Drive, Suite 150 Memphis, Tennessee 38125 (Address of principal executive offices) (Zip Code) (901) 753-3200 (Registrant's telephone number, including area code) Indicate by 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 [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ X ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ ] Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ] The number of shares of the Registrant's common stock outstanding as of April 23, 2008, was 37,102,898. -1- MUELLER INDUSTRIES, INC. FORM 10-Q For the Quarterly Period Ended March 29, 2008 INDEX Part I. Financial Information Page Item 1. Financial Statements (Unaudited) a.) Condensed Consolidated Statements of Income for the quarters ended March 29, 2008 and March 31, 2007 3 b.) Condensed Consolidated Balance Sheets as of March 29, 2008 and December 29, 2007 4 c.) Condensed Consolidated Statements of Cash Flows for the quarters ended March 29, 2008 and March 31, 2007 6 d.) Notes to Condensed Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk 21 Item 4. Controls and Procedures 22 Part II. Other Information Item 1. Legal Proceedings 23 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 28 Item 6. Exhibits 29 Signatures 30 -2- Part I. FINANCIAL INFORMATION Item 1. Financial Statements MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For the Quarter Ended March 29, 2008 March 31, 2007 (In thousands, except per share data) Net sales $ 704,108 $ 609,782 Cost of goods sold 611,797 536,578 ---------- ---------- Gross profit 92,311 73,204 Depreciation and amortization 10,984 10,966 Selling, general, and administrative expense 38,291 34,927 ---------- ---------- Operating income 43,036 27,311 Interest expense (5,467) (5,494) Other income, net 4,017 4,953 ---------- ---------- Income before income taxes 41,586 26,770 Income tax expense (14,231) (7,857) ---------- ---------- Net income $ 27,355 $ 18,913 ========== ========== Weighted average shares for basic earnings per share 37,089 37,027 Effect of dilutive stock options 192 117 ---------- ---------- Adjusted weighted average shares for diluted earnings per share 37,281 37,144 ---------- ---------- Basic earnings per share $ 0.74 $ 0.51 ========== ========== Diluted earnings per share $ 0.73 $ 0.51 ========== ========== Dividends per share $ 0.10 $ 0.10 ========== ==========
See accompanying notes to condensed consolidated financial statements. -3- MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
March 29, 2008 December 29, 2007 (In thousands) Assets Current assets: Cash and cash equivalents $ 274,280 $ 308,618 Accounts receivable, less allowance for doubtful accounts of $7,138 2008 and $5,015 in 2007 386,607 323,003 Inventories 273,596 269,032 Other current assets 47,256 39,694 ---------- ---------- Total current assets 981,739 940,347 Property, plant, and equipment, net 306,982 308,383 Goodwill 153,713 153,263 Other assets 47,537 47,211 ---------- ---------- $ 1,489,971 $ 1,449,204 ========== ==========
See accompanying notes to condensed consolidated financial statements. -4- MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (continued) (Unaudited)
March 29, 2008 December 29, 2007 (In thousands, except share data) Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt $ 69,885 $ 72,743 Accounts payable 151,840 140,497 Accrued wages and other employee costs 29,178 39,984 Other current liabilities 95,935 81,829 ---------- ---------- Total current liabilities 346,838 335,053 Long-term debt, less current portion 282,242 281,738 Pension liabilities 14,458 14,805 Postretirement liabilities other than pensions 21,345 21,266 Environmental reserves 8,893 8,897 Deferred income taxes 52,287 52,156 Other noncurrent liabilities 1,949 2,029 ---------- ---------- Total liabilities 728,012 715,944 ---------- ---------- Minority interest in subsidiary 24,171 22,765 Stockholders' equity: Preferred stock - shares authorized 5,000,000; none outstanding - - Common stock - $.01 par value; shares authorized 100,000,000; issued 40,091,502; outstanding 37,096,674 in 2008 and 37,079,903 in 2007 401 401 Additional paid-in capital 260,241 259,611 Retained earnings 508,180 484,534 Accumulated other comprehensive income 34,458 31,808 Treasury common stock, at cost (65,492) (65,859) ---------- ---------- Total stockholders' equity 737,788 710,495 ---------- ---------- Commitments and contingencies - - ---------- ---------- $ 1,489,971 $ 1,449,204 ========== ==========
See accompanying notes to condensed consolidated financial statements. -5- MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Quarter Ended March 29, 2008 March 31, 2007 (In thousands) Cash flows from operating activities Net income $ 27,355 $ 18,913 Reconciliation of net income to net cash (used in) provided by operating activities: Depreciation and amortization 11,110 11,012 Minority interest in subsidiary 552 402 Gain on early retirement of debt (2,408) - Deferred income taxes (429) (1,156) Loss (gain) on disposal of properties 339 (3,132) Stock-based compensation expense 731 628 Income tax benefit from exercise of stock options - (66) Changes in assets and liabilities, net of business acquired: Receivables (62,218) (59,857) Inventories (3,664) 66,512 Other assets (6,780) (314) Current liabilities 14,264 13,445 Other liabilities 2,566 23 Other, net (2,708) 719 ---------- ---------- Net cash (used in) provided by operating activities (21,290) 47,129 ---------- ---------- Cash flows from investing activities Capital expenditures (8,573) (8,725) Acquisition of business, net of cash received - (31,970) Proceeds from sales of properties - 3,032 Net withdrawals from restricted cash balances 85 - ---------- ---------- Net cash used in investing activities (8,488) (37,663) ---------- ----------
See accompanying notes to condensed consolidated financial statements. -6- MUELLER INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited)
For the Quarter Ended March 29, 2008 March 31, 2007 (In thousands) Cash flows from financing activities Dividends paid $ (3,709) $ (3,703) Repayments of long-term debt (22,979) (17,429) Issuance of debt by joint venture 21,032 5,434 Issuance of shares under incentive stock option plans from treasury 266 155 Income tax benefit from exercise of stock options - 66 ---------- ---------- Net cash used in financing activities (5,390) (15,477) ---------- ---------- Effect of exchange rate changes on cash 830 29 ---------- ---------- Decrease in cash and cash equivalents (34,338) (5,982) Cash and cash equivalents at the beginning of the period 308,618 200,471 ---------- ---------- Cash and cash equivalents at the end of the period $ 274,280 $ 194,489 ========== ==========
See accompanying notes to condensed consolidated financial statements. -7- MUELLER INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) General Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States 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. The accompanying unaudited interim financial statements include all normal recurring 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 involved in certain litigation as a result of claims that arose in the ordinary course of business, which management believes will not have a material adverse effect on the Company's financial position or results of operations. Additionally, the Company may realize the benefit of certain legal claims and litigation in the future; these gain contingencies are not recognized in the Condensed Consolidated Financial Statements. Guarantees, in the form of letters of credit, are issued by the Company generally to guarantee the payment of insurance deductibles and retiree health benefits. The terms of the Company's guarantees are generally one year but are renewable annually as required. The maximum potential amount of future payments the Company could have been required to make under its guarantees at March 29, 2008 was $10.1 million. -8- Note 3 - Inventories
March 29, 2008 December 29, 2007 (In thousands) Raw material and supplies $ 61,604 $ 82,875 Work-in-process 69,959 51,898 Finished goods 262,173 232,404 LIFO reserve (114,456) (91,127) Valuation reserves (5,684) (7,018) ---------- ---------- Inventories $ 273,596 $ 269,032 ========== ==========
The Company has deferred recognizing potential gains resulting from liquidation of LIFO inventories during the first three months of 2008. The Company expects to replenish these inventories by the end of 2008 and, as such, has not recognized the effects of liquidating LIFO layers. Note 4 - Industry Segments The Company's reportable segments are Plumbing & Refrigeration and OEM. For disclosure purposes, as permitted under Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information," certain operating segments are aggregated into reportable segments. The Plumbing & Refrigeration segment is composed of Standard Products (SPD), European Operations, and Mexican Operations. The OEM segment is composed of Industrial Products (IPD), Engineered Products (EPD), and Mueller-Xingrong, the Company's Chinese joint venture. These segments are classified primarily by the markets for their products. Performance of segments is generally evaluated by their operating income. SPD manufactures copper tube, copper and plastic fittings, plastic pipe, and line sets. These products are manufactured in the U.S. SPD also imports and resells in North America brass and plastic plumbing valves, malleable iron fittings, faucets, and plumbing specialty products. European Operations consist of copper tube manufacturing, with such products being sold in Europe and the Middle East, and import distribution of fittings, valves, and plumbing specialties primarily in the U.K. and Ireland. Mexican Operations consist of pipe nipple manufacturing and import distribution businesses including product lines of malleable iron fittings and other plumbing specialties. The Plumbing & Refrigeration segment's products are sold primarily to plumbing, refrigeration, and air- conditioning wholesalers, hardware wholesalers and co-ops, and building product retailers. -9- IPD manufactures brass rod, impact extrusions, and forgings as well as a variety of end products including plumbing brass; automotive components; valves and fittings; and specialty copper, copper-alloy, and aluminum tubing. EPD manufactures and fabricates valves and assemblies for the refrigeration, air-conditioning, gas appliance, and barbecue grill markets. The OEM segment sells its products primarily to original equipment manufacturers, many of which are in the HVAC, plumbing, and refrigeration markets. Included in the OEM segment are the results of operations of Extruded Metals, Inc. since its acquisition on February 27, 2007. Summarized segment information is as follows:
Quarter Ended March 29, 2008 Plumbing & Refrigeration OEM Corporate and Segment Segment Eliminations Total (In thousands) Net sales $ 383,884 $ 326,207 $ (5,983) $ 704,108 Cost of goods sold 327,999 289,481 (5,683) 611,797 ---------- ---------- ---------- ---------- Gross profit 55,885 36,726 (300) 92,311 Depreciation and amortization 7,258 3,450 276 10,984 Selling, general, and administrative expense 23,543 7,702 7,046 38,291 ---------- ---------- ---------- ---------- Operating income 25,084 25,574 (7,622) 43,036 Interest expense (5,467) Other income, net 4,017 ---------- Income before income taxes $ 41,586 ==========
-10-
Quarter Ended March 31, 2007 Plumbing & Refrigeration OEM Corporate and Segment Segment Eliminations Total (In thousands) Net sales $ 369,996 $ 243,730 $ (3,944) $ 609,782 Cost of goods sold 311,496 229,457 (4,375) 536,578 ---------- ---------- ---------- ---------- Gross profit 58,500 14,273 431 73,204 Depreciation and amortization 7,339 3,350 277 10,966 Selling, general, and administrative expense 24,307 5,429 5,191 34,927 ---------- ---------- ---------- ---------- Operating income 26,854 5,494 (5,037) 27,311 Interest expense (5,494) Other income, net 4,953 ---------- Income before income taxes $ 26,770 ==========
-11- Note 5 - Comprehensive Income Comprehensive income is as follows:
For the Quarter Ended March 29, 2008 March 31, 2007 (In thousands) Net income $ 27,355 $ 18,913 Other comprehensive income, net of tax Foreign currency translation 1,850 1,393 Amortization of prior service cost included in pension expense 65 - Amortization of actuarial gains and losses included in pension expense 97 - Change in the fair value of derivatives 638 518 ---------- ---------- Other comprehensive income 2,650 1,911 ---------- ---------- Comprehensive income $ 30,005 $ 20,824 ========== ==========
The change in cumulative foreign currency translation adjustment primarily relates to the Company's investment in its foreign subsidiaries and fluctuations in exchange rates between their local currencies and the U.S. dollar, plus the tax effect of certain intercompany transactions. During the first quarter of 2008, the value of the Mexican peso and the Chinese renminbi increased 2.0 percent and 3.7 percent, respectively, compared to the U.S. dollar. -12- Note 6 - Other Income, Net
For the Quarter Ended March 29, 2008 March 31, 2007 (In thousands) Gain on early retirement of debt $ 2,408 $ - Interest income 2,385 2,272 (Loss) gain on disposal of properties, net (339) 3,132 Minority interest in income of subsidiary (552) (402) Environmental expense, non-operating properties (118) (111) Other 233 62 ---------- ---------- Other income, net $ 4,017 $ 4,953 ========== ==========
During the first quarter of 2008, the Company repurchased and extinguished $25.5 million of its 6% Subordinated Debentures for $23.0 million. The Company also wrote off $0.1 million of debt issuance costs in connection with this transaction, resulting in a net gain of approximately $2.4 million. -13- Note 7 - Employee Benefits The Company sponsors several qualified and nonqualified pension plans and other postretirement benefit plans for certain of its employees. The components of net periodic benefit cost (income) are as follows:
For the Quarter Ended March 29, 2008 March 31, 2007 (In thousands) Pension benefits: Service cost $ 739 $ 539 Interest cost 3,417 2,131 Expected return on plan assets (4,922) (2,796) Amortization of prior service cost 102 93 Amortization of net loss 54 233 ---------- ---------- Net periodic benefit (income) cost $ (610) $ 200 ========== ========== Other benefits: Service cost $ 80 $ 76 Interest cost 379 158 Amortization of prior service cost 1 2 Amortization of net loss 56 46 ---------- ---------- Net periodic benefit cost $ 516 $ 282 ========== ==========
The Company anticipates contributions to its pension plans for 2008 to be approximately $2.4 million. During the first quarter of 2008, approximately $0.6 million of contributions have been made to certain pension plans. Note 8 - Acquisitions On February 27, 2007, the Company acquired 100 percent of the outstanding stock of Extruded Metals, Inc. (Extruded) for $32.8 million in cash, including transaction costs of $0.8 million. Extruded, located in Belding, Michigan, manufactures brass rod products, and during 2006 had annual sales of approximately $360 million. The acquisition of Extruded complements the Company's existing brass rod product line. The total estimated fair values of the assets acquired totaled $74.5 million, consisting primarily of receivables of $29.5 million, inventories of $29.1 million, property, plant, and equipment of $5.8 million, and prepaid pension asset of $6.9 million. The total estimated fair values of liabilities assumed totaled $41.7 million, consisting primarily of a working capital debt facility of $10.0 million, accounts payable and accrued expenses of $24.0 million, and postretirement obligations of $7.5 million. The debt assumed was extinguished by the Company immediately following the acquisition. -14- The results of operations for Extruded are reported in the Company's OEM segment and have been included in the accompanying Condensed Consolidated Financial Statements from the acquisition date. The following table presents condensed pro forma consolidated results of operations as if the Extruded acquisition had occurred at the beginning of the prior period presented. This information combines the historical results of operations of the Company and Extruded after the effects of 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 periods presented and is not necessarily indicative of operating results to be expected in future periods.
For the Quarter Ended March 31, 2007 (In thousands) Net sales $ 667,210 Net income 18,844 Pro Forma earnings per share: Basic earnings per share $ 0.51 Diluted earnings per share $ 0.51
Note 9 - Income Taxes The Company's effective tax rate for the first quarter of 2008 was 34.2 percent compared with 29.4 percent for the same period last year. Factors that explain the difference between the effective tax rate and what would be computed using the U.S. Federal statutory tax rate for the first quarter of 2008 were (i) the effect of foreign statutory rates different from the U.S. and other foreign adjustments of $0.2 million, (ii) the U.S. production activities deduction effect of $0.7 million, and (iii) other items totaling $0.6 million. These items were partially offset by state and local income tax expense, net of federal benefit, of $1.2 million. The difference between the effective tax rate and the statutory tax rate for the first quarter of 2007 was primarily related to a net reduction to certain valuation allowances. Changes in tax contingencies had an immaterial effect on the effective tax rate during the first quarter of 2008. Total unrecognized tax benefits at the end of first quarter were $11.3 million, without consideration of any applicable federal benefit, and this amount includes $2.2 million of accrued interest. The Company includes interest and penalties related to income tax matters as a component of income tax expense. Of the $11.3 million, approximately $9.3 million would impact the effective tax rate, if recognized. A benefit of $0.4 million, without consideration of any applicable federal benefit, was recorded as a result of various audit settlements and was partially offset by interest accruals for the quarter on other unrecognized tax benefits of $0.3 million. Due to ongoing federal and state income tax audits and potential lapses of the statutes of limitations in various taxing jurisdictions, it is reasonably possible that this reserve may change in the next twelve months by up to $5.5 million. -15- The Company files a consolidated U.S. Federal income tax return and files numerous consolidated and separate income tax returns in many state, local, and foreign jurisdictions. The Company is no longer subject to U.S. Federal income tax examinations for years before 2004 and with few exceptions is no longer subject to state, local, or foreign income tax examinations by tax authorities for years before 2001. The Internal Revenue Service is currently examining the Company's 2005 consolidated U.S. Federal income tax return. Additionally, various state taxing authorities are currently examining a number of the Company's state income tax returns for years from 2002 forward. The results of these examinations are not expected to have a material impact on the Company's financial position or results of operations. Note 10 - Recently Issued Accounting Standards In 2006, the Financial Accounting Standards Board (FASB) Issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans" (SFAS No. 158). SFAS No. 158 requires employers to recognize the funded status of all pension and other postretirement plans in the statement of financial position, and requires employers to use its fiscal year-end as the measurement date for assets and liabilities of all its defined benefit pension and postretirement plans. Any adjustment as a result of the adoption of the measurement period provisions of SFAS No. 158 would be recorded as an adjustment to retained earnings. The Company adopted the measurement and disclosure provisions of SFAS No. 158 on December 30, 2006. The measurement period provisions of SFAS No. 158 are required to be adopted in fiscal years ending after December 15, 2008. In prior years, the Company used November 30 as the measurement date for the majority of its pension and postretirement plans. The Company will adopt the measurement period provisions for its fiscal year-end in 2008 and does not expect the impact of the adoption to be material. Effective December 30, 2007, the Company adopted SFAS No. 157, "Fair Value Measurements," which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure about fair value measurements. The impact of adoption was not material. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General Overview The Company is a leading manufacturer of copper, brass, plastic, and aluminum products. The range of these products is broad: copper tube and fittings; brass and copper alloy rod, bar, and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; plastic pipe, fittings and valves; refrigeration valves and fittings; fabricated tubular products; and steel nipples. The Company also resells imported brass and plastic plumbing valves, malleable iron fittings, faucets and plumbing specialty products. The Company's operations are located throughout the United States, and in Canada, Mexico, Great Britain, and China. -16- The Company's businesses are aggregated into two reportable segments: the Plumbing & Refrigeration segment and the OEM segment. For disclosure purposes, as permitted under SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," certain operating segments are aggregated into reportable segments. The Plumbing & Refrigeration segment is composed of the Standard Products Division (SPD), European Operations, and Mexican Operations. The OEM segment is composed of the Industrial Products Division (IPD) and Engineered Products Division (EPD). These reportable segments are described in more detail below. SPD manufactures and sells copper tube, copper and plastic fittings, plastic pipe, and valves in North America and sources products for import distribution in North America. European Operations manufactures copper tube in Europe, which is sold in Europe and the Middle East; activities also include import distribution in the U.K. and Ireland. Mexican Operations include pipe nipple manufacturing and import distribution businesses including product lines of malleable iron fittings and other plumbing specialties. The Plumbing & Refrigeration segment sells products to wholesalers in the HVAC (heating, ventilation, and air-conditioning), plumbing, and refrigeration markets, to distributors to the manufactured housing and recreational vehicle industries, and to building material retailers. The OEM segment manufactures and sells brass and copper alloy rod, bar, and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; refrigeration valves and fittings; fabricated tubular products; and gas valves and assemblies. The Company's Chinese joint venture (Mueller- Xingrong) manufactures engineered copper tube for refrigeration applications; these products are sold primarily to OEM's located in China and its results are included in the OEM segment. The OEM segment sells its products primarily to original equipment manufacturers, many of which are in the HVAC, plumbing, and refrigeration markets. New housing starts and commercial construction are important determinants of the Company's sales to the HVAC, 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. Repairs and remodeling projects are also important factors affecting the underlying demand for these products. Profitability of certain of the Company's product lines depends upon the "spreads" between the cost of raw 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 effects on profitability from fluctuations in material costs by passing through these costs to its customers. The Company's earnings and cash flow are dependent upon these spreads that fluctuate based upon market conditions. Earnings and profitability are also subject to market trends such as substitute products and imports. Plastic plumbing systems are the primary substitute product; these products represent an increasing share of consumption. U.S. consumption of copper tubing is still predominantly supplied by U.S. manufacturers, although imports from Mexico is a significant factor. Brass rod consumption in the U.S. has steadily declined over the past five years, due to the outsourcing of many manufactured products. -17- Results of Operations During the first quarter of 2008, the Company's net sales were $704.1 million, a 15 percent increase over the same period of 2007. The increase in net sales is primarily due to the acquisition of Extruded Metals, Inc. (Extruded) on February 27, 2007, which contributed net sales in the first quarter of 2008 of $111.4 million compared with $32.1 million in the first quarter of 2007. The increase is also due to the higher cost of copper, the Company's principal raw material, which was largely passed through to customers, offset by reduced unit sales volume primarily in SPD and European Operations. The COMEX average price of copper was $3.53 per pound in the first quarter of 2008, a 31 percent increase over the first quarter of 2007. Cost of goods sold increased from $536.6 million in the first quarter of 2007 to $611.8 million in the same period of 2008. This increase was primarily attributable to higher material costs and increased volume from the acquisition of Extruded. Gross profit increased from $73.2 million to $92.3 million due primarily to increased volume following the acquisition of Extruded, and higher spreads in the brass rod business. The Company has deferred recognizing potential gains resulting from liquidation of LIFO inventories during the first three months of 2008. The Company expects to replenish these inventories by the end of 2008 and, as such, has not recognized the effects of liquidating LIFO layers. Depreciation and amortization expense for the first quarter of 2008 was $11.0 million, which is comparable to the first quarter of 2007. Selling, general, and administrative expense was $38.3 million for the first quarter of 2008 compared with $34.9 million for the same period of 2007. The increase was primarily attributable to $0.7 million from the acquisition of Extruded and additional bad debt provision of $1.9 million in 2008. Interest expense totaled $5.5 million in the first quarter of 2008 and 2007. The Company incurred lower interest following the early extinguishment of $25.5 million of its 6% Subordinated Debentures; however, this decrease was offset by interest from increased borrowings at Mueller- Xingrong. Other income, net was $4.0 million for the first quarter of 2008 compared with $5.0 million for the same period of 2007. The decrease was primarily due to the nonrecurring items included in each period. During the first quarter of 2007, the Company recognized a $3.1 million gain from the sale of non-operating royalty producing properties, and during the first quarter of 2008 the Company extinguished $25.5 million in principal value of its 6% Subordinated Debentures resulting in a net gain of $2.4 million. The Company's effective tax rate for the first quarter of 2008 was 34.2 percent compared with 29.4 percent for the same period last year. Factors that explain the difference between the effective tax rate and what would be computed using the U.S. Federal statutory tax rate for the first quarter of 2008 were (i) the effect of foreign statutory rates different from the U.S. and other foreign adjustments of $0.2 million, (ii) the U.S. production activities deduction effect of $0.7 million, and (iii) other items totaling $0.6 million. These items were partially offset by state and local income tax expense, net of federal benefit, of $1.2 million. The -18- difference between the effective tax rate and the statutory tax rate for the first quarter of 2007 was primarily related to a net reduction to certain valuation allowances. Plumbing & Refrigeration Segment Net sales by the Plumbing & Refrigeration segment were $383.9 million in the first quarter of 2008 compared with $370.0 million in the first quarter of 2007. The increase is primarily due to the increase in the cost of copper, partially offset by lower unit sales volume in the majority of the segment's product lines. Cost of goods sold increased from $311.5 million in 2007 to $328.0 million in 2008 due primarily to the increased price of copper. Gross margin decreased from $58.5 million in 2007 to $55.9 million in 2008 due to reduced sales volume and lower spreads in copper tube and DWV plastic fittings, partially offset by increased spreads in other product lines. Depreciation and amortization remained consistent at approximately $7.3 million in 2007 and in 2008. Selling, general, and administrative expenses declined from $24.3 million in 2007 to $23.5 million in 2008 due primarily to lower sales and distribution expense resulting from lower sales unit volume. OEM Segment The OEM segment's net sales were $326.2 million in the first quarter of 2008 compared with $243.7 million in the first quarter of 2007. The increase is primarily due to the acquisition of Extruded, which contributed net sales in 2008 of $111.4 million compared with $32.1 million in 2007, and the increase in the raw material cost which was passed on to customers. Cost of goods sold increased from $229.4 million in 2007 to $289.5 million in 2008 due to the acquisition of Extruded and increased cost of raw material. Gross margin increased from $14.3 million in 2007 to $36.7 million in 2008 due primarily to increased volume following the acquisition of Extruded and higher spreads at our brass rod operations. Depreciation and amortization for the OEM segment remained consistent in the first quarter of 2008 compared to 2007 at $3.4 million. Selling, general, and administrative expenses increased from $5.4 million in 2007 to $7.7 million in the first quarter of 2008 resulting primarily from increased bad debt expense in 2008 and additional expense following the acquisition of Extruded. Liquidity and Capital Resources Cash used in operating activities in the first quarter of 2008 totaled $21.3 million, which is primarily attributable to a significant increase in receivables and inventory, partially offset by an increase in current liabilities. Fluctuations in the cost of copper and other raw materials affect the Company's liquidity. Changes in material costs directly impact components of working capital, primarily inventories and accounts receivable. During the first three months of 2008, the average COMEX copper price was approximately $3.53 per pound, which represents a 31 percent increase over the average price during the first three months of 2007. This rise in the price of cathode has also resulted in increases in the open market price for copper scrap and, to a lesser extent, the price of brass scrap. Subsequent to the end of the first quarter, copper prices -19- continued to rise, trading above $4.00 per pound. Consequently, the Company has funded increases in inventories and accounts receivable with cash on hand. During the first quarter of 2008, cash used in investing activities totaled $8.5 million, which consisted primarily of capital expenditures. Cash used in financing activities during the first quarter totaled $5.4 million. During the quarter, the Company repurchased and extinguished $25.5 million of its 6% Subordinated Debentures for $23.0 million, which after inclusion of the write-off of related debt issuance costs, resulted in a net gain of approximately $2.4 million. Additionally, the Company used $3.7 million in cash during the quarter for the payment of dividends. These decreases in cash were partially offset by $21.0 million of increased borrowings by Mueller-Xingrong. The Company has a $200 million unsecured line-of-credit (Credit Facility) which expires in December 2011. At March 29, 2008, the Company had no borrowings against the Credit Facility. Approximately $9.7 million in letters of credit were backed by the Credit Facility and $0.4 million in letters of credit were backed by cash deposits at the end of the first quarter of 2008. As of March 29, 2008, the Company's total debt was $352.1 million or 32 percent of its total capitalization. During the first quarter of 2008, Mueller-Xingrong's credit agreement, which was scheduled to mature in April 2008, was extended for a period of 90 days. Covenants contained in the Company's financing obligations require, among other things, the maintenance of minimum levels of tangible net worth and the satisfaction of certain minimum financial ratios. As of March 29, 2008, the Company was in compliance with all of its debt covenants. The Company declared and paid a regular quarterly cash dividend of ten cents per common share in the first quarter of 2008. Payment of dividends in the future is dependent upon the Company's financial condition, cash flows, capital requirements, earnings, and other factors. On May 1, 2008, the Company will pay approximately $8.2 million in interest on its 6% Subordinated Debentures. Management believes that cash provided by operations and currently available cash of $274.3 million will be adequate to meet the Company's normal future capital expenditures and operational needs. The Company's current ratio was 2.8 to 1 at March 29, 2008. The Company's Board of Directors has extended, until October 2008, its authorization to repurchase up to ten million shares of the Company's Common Stock through open market transactions or through privately negotiated transactions. The Company has no obligation to purchase any shares and may cancel, suspend, or extend the time period for the purchase of shares at any time. Any purchases will be funded primarily through existing cash and cash from operations. The Company may hold any shares purchased in treasury or use a portion of the repurchased shares for employee benefit plans, as well as for other corporate purposes. From its initial authorization in 1999 through March 29, 2008, the Company had repurchased approximately 2.4 million shares under this authorization. -20- There have been no significant changes in the Company's contractual cash obligations reported at December 29, 2007. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to market risk from changes in raw material and energy costs, interest rates, and foreign currency exchange rates. To reduce such risks, the Company may periodically use financial instruments. All hedging transactions are authorized and executed pursuant to policies and procedures. Further, the Company does not buy or sell financial instruments for trading purposes. Cost and Availability of Raw Materials and Energy Copper and brass represent the largest component of the Company's variable costs of production. The cost of these materials is subject to global market fluctuations caused by factors beyond the Company's control. Significant increases in the cost of metal, to the extent not reflected in prices for the Company's finished products, or the lack of availability could materially and adversely affect the Company's business, results of operations and financial condition. The Company occasionally enters into forward fixed-price arrangements with certain customers. The Company may utilize forward contracts to hedge risks associated with forward fixed-price arrangements. The Company may also utilize forward contracts to manage price risk associated with inventory. Depending on the nature of the hedge, changes in the fair value of the forward contracts will either be offset against the change in fair value of the inventory through earnings or recognized as a component of comprehensive income and reflected in earnings upon the sale of inventory. Periodic value fluctuations of the contracts generally offset the value fluctuations of the underlying fixed-price transactions or inventory. At March 29, 2008, the Company held open forward contracts to purchase approximately $13.2 million of copper over the next four months related to fixed-price sales orders. Futures contracts may also be used to manage price risk associated with natural gas purchases. The effective portion of gains and losses with respect to these positions are deferred in stockholders' equity as a component of comprehensive income and reflected in earnings upon consumption of natural gas. Periodic value fluctuations of the contracts generally offset the value fluctuations of the underlying natural gas prices. At March 29, 2008, the Company held no open forward contracts to purchase natural gas. Interest Rates At March 29, 2008, the Company had variable-rate debt outstanding of $72.1 million, the majority of which was related to the debt issued by Mueller-Xingrong. At these borrowing levels, a hypothetical 10 percent increase in interest rates would have had an insignificant unfavorable impact on the Company's pretax earnings and cash flows. The primary interest rate exposure on floating-rate debt is based on LIBOR and on the base-lending rate published by the People's Bank of China. -21- Foreign Currency Exchange Rates Foreign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than an entity's functional currency. The Company and its subsidiaries generally enter into transactions denominated in their respective functional currencies. Foreign currency exposures arising from transactions denominated in currencies other than the functional currency are not material; however, the Company may utilize certain forward fixed- rate contracts to hedge such transactional exposures. Gains and losses with respect to these positions are deferred in stockholders' equity as a component of comprehensive income and reflected in earnings upon collection of receivables. At March 29, 2008, the Company held no open forward contracts to hedge transactional exposures. The Company's primary foreign currency exposure arises from foreign- denominated revenues and profits and their translation into U.S. dollars. The primary currencies to which the Company is exposed include the Canadian dollar, the British pound sterling, the Euro, the Mexican peso, and the Chinese renminbi. The Company generally views as long-term its investments in foreign subsidiaries with a functional currency other than the U.S. dollar. As a result, the Company generally does not hedge these net investments. Cautionary Statement Regarding Forward Looking Information Statements in this Quarterly Report on Form 10-Q 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 filings with the Securities and Exchange Commission (the SEC). The words "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. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures designed to ensure information required to be disclosed in Company reports filed under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. -22- The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act as of the end of the period covered by this report. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of March 29, 2008 to ensure that information required to be disclosed in Company reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to management, including the Company's principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control over Financial Reporting There were no changes in the Company's internal control over financial reporting during the Company's fiscal quarter ending March 29, 2008, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. However, during the first quarter of 2008, the Company began its implementation of an upgrade to its transaction processing system. The implementation process is ongoing. Part II. OTHER INFORMATION Item 1. Legal Proceedings General The Company is involved in certain litigation as a result of claims that arose in the ordinary course of business. Additionally, the Company may realize the benefit of certain legal claims and litigation in the future; these gain contingencies are not recognized in the Condensed Consolidated Financial Statements. Copper Tube Antitrust Litigation The Company has been named as a defendant in several pending litigations (the Copper Tube Actions) brought by direct and indirect purchasers of various forms of copper tube. The Copper Tube Actions allege anticompetitive activities with respect to the sale of copper plumbing tubes (copper plumbing tubes) and/or copper tubes used in, among other things, the manufacturing of air-conditioning and refrigeration units (ACR copper tubes). All of the Copper Tube Actions seek monetary and other relief. Direct-Purchaser Plumbing Tube Action Two Copper Tube Actions were filed in September and October of 2004 in the United States District Court for the Western District of Tennessee and were consolidated to become the Direct-Purchaser Plumbing Tube Action. The Direct-Purchaser Plumbing Tube Action was a purported class action brought on behalf of direct purchasers of copper plumbing tubes in the United -23- States and alleged anticompetitive activities with respect to the sale of copper plumbing tubes. Wholly owned Company subsidiaries, WTC Holding Company, Inc. (WTC Holding Company), Deno Holding Company, Inc. (Deno Holding Company), and Mueller Europe Ltd. (Mueller Europe), were named in the Direct-Purchaser Plumbing Tube Action. In September 2006, the Direct-Purchaser Plumbing Tube Action was dismissed as to Mueller Europe for lack of personal jurisdiction. In October 2006, the Direct-Purchaser Plumbing Tube Action was dismissed in its entirety for lack of subject matter jurisdiction as to all defendants. Although plaintiffs in the Direct-Purchaser Plumbing Tube Action filed a motion for reconsideration of the dismissal of Mueller Europe, the court held that such motion was mooted by its dismissal of the case for lack of subject matter jurisdiction. Plaintiffs filed a motion to alter or amend the judgment dismissing the complaint for lack of subject matter jurisdiction, which the court denied in May 2007. In June 2007, plaintiffs filed with the United States Court of Appeals for the Sixth Circuit a notice of appeal from the judgment and orders dismissing the complaint in the Direct-Purchaser Plumbing Tube Action. The Company, WTC Holding Company, Inc., Deno Holding Company, Inc., and Mueller Europe filed notices of cross-appeal in July 2007. In September 2007, plaintiffs filed with the United States District Court for the Western District of Tennessee a motion to vacate the judgment and orders dismissing the complaint in the Direct-Purchaser Plumbing Tube Action, which the court denied in November 2007. In November 2007, plaintiffs filed a notice of appeal from the order denying the motion to vacate. In March 2008, the parties filed, and the court granted, a joint motion and stipulation to dismiss all appeals in the Direct-Purchaser Plumbing Tube Action. Indirect-Purchaser Plumbing Tube Action Four Copper Tube Actions were filed in October 2004 in state court in California and were consolidated to become the Indirect-Purchaser Plumbing Tube Action. The Indirect-Purchaser Plumbing Tube Action is a purported class action brought on behalf of indirect purchasers of copper plumbing tubes in California and alleges anticompetitive activities with respect to the sale of copper plumbing tubes. WTC Holding Company, Deno Holding Company, Mueller Europe, and Deno Acquisition Eurl are named in the Indirect-Purchaser Plumbing Tube Action. Deno Acquisition Eurl has not been served with the complaint in the Indirect-Purchaser Plumbing Tube Action. The claims against WTC Holding Company and Deno Holding Company have been dismissed without prejudice in the Indirect-Purchaser Plumbing Tube Action. Mueller Europe has not yet been required to respond in the Indirect-Purchaser Plumbing Tube Action. The Company's demurrer to the complaint has been filed in the Indirect-Purchaser Plumbing Tube Action. The court overseeing the Indirect-Purchaser Plumbing Tube Action has stayed that action conditioned upon the parties' submitting periodic status reports on the status of the Direct-Purchaser Plumbing Tube Action. -24- Direct-Purchaser ACR Tube Action Three Copper Tube Actions were filed in April 2006 in the United States District Court for the Western District of Tennessee and were consolidated to become the Direct-Purchaser ACR Tube Action. The Direct- Purchaser ACR Tube Action was a purported class action brought on behalf of direct purchasers of ACR copper tubes in the United States and alleged anticompetitive activities with respect to the sale of ACR copper tubes. The Company and Mueller Europe were named in the Direct-Purchaser ACR Tube Action. In July 2007, the Direct-Purchaser ACR Tube Action was dismissed in its entirety for lack of subject matter jurisdiction as to all defendants. In August 2007, plaintiffs filed with the United States Court of Appeals for the Sixth Circuit a notice of appeal from the judgment and order dismissing the complaint in the Direct-Purchaser ACR Tube Action. The Company and Mueller Europe filed notices of cross-appeal in August 2007. In December 2007, plaintiffs filed with the United States Court of Appeals for the Sixth Circuit a motion to dismiss the cross-appeals in the Direct- Purchaser ACR Tube Action. That motion was still pending when, in March 2008, the parties filed, and the court granted, a joint motion and stipulation to dismiss all appeals in the Direct-Purchaser ACR Tube Action. Indirect-Purchaser ACR Tube Action Two Copper Tube Actions were filed in June and August 2006 in the United States District Court for the Western District of Tennessee and were consolidated to become the Indirect-Purchaser ACR Tube Action. The Indirect-Purchaser ACR Tube Action is a purported class action brought on behalf of indirect purchasers of ACR copper tubes in the United States and alleges anticompetitive activities with respect to the sale of ACR copper tubes. The Company and Mueller Europe are named in the Indirect-Purchaser ACR Tube Action. The Company and Mueller Europe have been served, but have not yet been required to respond, in the Indirect-Purchaser ACR Tube Action. Carrier ACR Tube Action A Copper Tube Action (the Carrier ACR Tube Action) was filed in March 2006 in the United States District Court for the Western District of Tennessee by Carrier Corporation, Carrier S.A., and Carrier Italia S.p.A. (collectively, Carrier). The Carrier ACR Tube Action alleges anticompetitive activities with respect to the sale to Carrier of ACR copper tubes. The Company and Mueller Europe are named in the Carrier ACR Tube Action. In July 2007, the Carrier ACR Tube Action was dismissed in its entirety for lack of subject matter jurisdiction as to all defendants. In August 2007, plaintiffs filed with the United States Court of Appeals for the Sixth Circuit a notice of appeal from the judgment and order dismissing the complaint in the Carrier Action. The Company and Mueller Europe filed notices of cross-appeal in August 2007. -25- In October 2007, Carrier filed with the United States Court of Appeals for the Sixth Circuit a motion to dismiss the cross-appeals, which the Court denied in December 2007. All appeals in the Carrier ACR Tube Action remain pending. Indirect-Purchaser Copper Tube Action A Copper Tube Action (the Indirect-Purchaser Copper Tube Action) was filed in July 2006 in the United States District Court for the Northern District of California. The Indirect-Purchaser Copper Tube Action is a purported class action brought on behalf of indirect purchasers of copper plumbing tubes and ACR copper tubes in the United States and alleges anticompetitive activities with respect to the sale of both copper plumbing tubes and ACR copper tubes. The Company, Mueller Europe, WTC Holding Company, Deno Holding Company, and Deno Acquisition Eurl are named in the Indirect-Purchaser Copper Tube Action. The Company, Mueller Europe, WTC Holding Company, and Deno Holding Company have been served, but have not yet been required to respond, in the Indirect-Purchaser Copper Tube Action. Although the Company believes that the claims for relief in the Copper Tube Actions are without merit, due to the procedural stage of the Copper Tube Actions, the Company is unable to determine the likelihood of a materially adverse outcome in the Copper Tube Actions or the amount or range of a potential loss in the Copper Tube Actions. Canadian Dumping and Countervail Investigation In June 2006, the Canada Border Services Agency (CBSA) initiated an investigation into the alleged dumping of certain copper pipe fittings from the United States and from South Korea, and the dumping and subsidizing of these same goods from China. The Company and certain affiliated companies were identified by the CBSA as exporters and importers of these goods. On January 18, 2007, the CBSA issued a final determination in its investigation. The Company was found to have dumped subject goods during the CBSA's investigation period. On February 19, 2007, the Canadian International Trade Tribunal (CITT) concluded that the dumping of the subject goods from the United States had caused injury to the Canadian industry. As a result of these findings, exports of subject goods to Canada by the Company made on or after October 20, 2006 will be subject to antidumping measures. Under Canada's system of prospective antidumping enforcement, the CBSA has issued normal values to the Company. Antidumping duties will be imposed on the Company's Canadian customers only to the extent that the Company's future exports of copper pipe fittings are made at net export prices which are below these normal values. If net export prices for subject goods exceed normal values, no antidumping duties will be payable. These measures will remain in place for five years, at which time an expiry review will be conducted by Canadian authorities to determine whether these measures should be maintained for another five years or allowed to expire. -26- On July 16, 2007, the CBSA completed a review process pursuant to which revised normal values were issued to exporters of subject goods, including the Company. The Company does not anticipate any substantial impairment of its ability to compete in Canada compared to the situation that existed prior to July 16, 2007. On April 1, 2008, the CBSA initiated a new review process, which will result in the issuance of revised normal values on or before August 27, 2008. Depending on the level of these revised normal values, the Company's ability to compete in Canada could be affected. However, given the small percentage of its products that are sold for export to Canada, the Company does not anticipate any material adverse effect on its financial condition as a result of the antidumping case in Canada. Employment Litigation On June 1, 2007, the Company filed a lawsuit in the Circuit Court of Dupage County, Illinois against Peter D. Berkman and Jeffrey A. Berkman, former executives of the Company and B&K Industries, Inc. (B&K), a wholly- owned subsidiary of the Company, relating to their alleged breach of fiduciary duties and contractual obligations to the Company through, among other things, their involvement with a supplier of B&K during their employment with B&K. The lawsuit alleges appropriation of corporate opportunities for personal benefit, failure to disclose competitive interests or other conflicts of interest, and unfair competition, as well as breach of employment agreements in connection with the foregoing. The lawsuit seeks compensatory and punitive damages, and other appropriate relief. In August, the defendants filed an answer to the complaint admitting Peter Berkman had not sought authorization to have an ownership interest in a supplier, and a counterclaim against the Company, B&K and certain of the Company's officers and directors alleging defamation, tortious interference with prospective economic relations, and conspiracy, and seeking damages in unspecified amounts. In September, Homewerks Worldwide LLC, an entity formed by Peter Berkman, filed a complaint as an intervenor based on substantially the same allegations included in the Berkmans' counterclaim. In October, the Company filed a motion seeking to have the Berkmans' counterclaim dismissed as a matter of law. On January 3, 2008 the Court overruled that motion and the case is proceeding to discovery of the relevant facts. The Company believes that these counterclaims are without merit and intends to defend them vigorously. The Company does not anticipate any material adverse effect on its business or financial condition as a result of this litigation. -27- Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Issuer Purchases of Equity Securities The Company's Board of Directors has extended, until October 2008, its authorization to repurchase up to ten million shares of the Company's Common Stock through open market transactions or through privately negotiated transactions. The Company has no obligation to purchase any shares and may cancel, suspend, or extend the time period for the purchase of shares at any time. Any purchases will be funded primarily through existing cash and cash from operations. The Company may hold any shares purchased in treasury or use a portion of the repurchased shares for employee benefit plans, as well as for other corporate purposes. From its initial authorization in 1999 through March 29, 2008, the Company had repurchased approximately 2.4 million shares under this authorization. Below is a summary of the Company's stock repurchases for the period ended March 29, 2008.
(a) (b) (c) (d) Total Number of Maximum Shares Number of Purchased Shares that as Part of May Yet Be Total Publicly Purchased Number of Average Announced Under the Shares Price Paid Plans or Plans or Purchased per Share Programs Programs 7,647,030(1) December 30, 2007 - January 26, 2008 - $ - January 27 - February 23, 2008 - - February 24 - March 29, 2008 - - (1) Shares available to be purchased under the Company's 10 million share repurchase authorization until October 2008. The extension of the authorization was announced on October 26, 2007.
-28- Item 6. Exhibits 19.1 Mueller Industries, Inc.'s Quarterly Report to Stockholders for the quarter ended March 29, 2008. 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. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Items 1A, 3, 4 and 5 are not applicable and have been omitted. -29- SIGNATURES Pursuant to the requirements 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. MUELLER INDUSTRIES, INC. April 25, 2008 /s/ Kent A. McKee Date Kent A. McKee Executive Vice President and Chief Financial Officer April 25, 2008 /s/ Richard W. Corman Date Richard W. Corman Vice President - Controller -30- EXHIBIT INDEX Exhibits Description 19.1 Mueller Industries, Inc.'s Quarterly Report to Stockholders for the quarter ended March 29, 2008. 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. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.