TO OUR STOCKHOLDERS, CUSTOMERS AND EMPLOYEES
We are pleased to report that Mueller's net earnings rose 19 percent in
the first quarter of 1997 over the same quarter of 1996. Earnings for the
first quarter of 1997 were $15.8 million, or 80 cents per share, compared to
earnings of $13.3 million or 69 cents per share for the first quarter of
1996. Our pretax earnings in the first quarter of this year included a
$2.0 million charge to increase environmental reserves based on updated
information at a previously identified site.
Net sales for the first quarter of 1997 totaled $201.4 million or
12 percent over net sales of $180.5 million in the first quarter of 1996.
Measured in pounds, we shipped 14 percent more product in the first quarter
of 1997 than was sold in the same period of 1996. As we have reported
previously, the selling price of many of our products, particularly our
copper products, varies with the cost of raw materials. COMEX copper prices
averaged $1.11 per pound in the first quarter of 1997 compared to $1.17 per
pound in the same quarter of last year.
Our manufacturing operations continue to show the benefits of our major
capital improvement programs. We are particularly pleased with our plastic
fittings business as margins have improved, along with sales and production
volumes. Our brass rod business fits this same pattern. The new indirect
extrusion press, which became operational at our brass mill in 1996, has
improved yield, efficiency and production. Copper fittings and copper tube
sales were strong during the quarter, and we were gratified with their
operating results.
During the first quarter of 1997, Mueller made two significant
acquisitions. At the beginning of the year, we purchased Precision Tube
Company, Inc. located in North Wales, Pennsylvania, and Salisbury, Maryland.
And, on February 28, 1997, we acquired Wednesbury Tube Company located in
Bilston, England. Both of these were asset purchases and they are profiled
in the "Corporate News" section of this report.
We remain optimistic about our business for the balance of 1997.
Long-term mortgage rates remain near 8 percent. In addition, consumer
confidence remains high and inflation is at a low level. We believe these
factors will translate into a sound economic scenario going forward.
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Our Annual Stockholders' meeting will be held in Memphis, Tennessee, on
May 7, 1997. By now, you should have received the notice of our meeting,
the proxy material, and our 1996 Annual Report. We welcome your attendance,
but if you cannot attend, we urge you to sign and return your proxy card.
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
April 17, 1997
CORPORATE NEWS
MUELLER COMMENCES MANUFACTURING OPERATIONS IN EUROPE BY ACQUIRING WEDNESBURY
TUBE COMPANY
During the first quarter of 1997, Mueller acquired Wednesbury Tube Company,
a copper tube manufacturer located in Bilston, England. Wednesbury posted
net sales of approximately $94 million in 1996, shipping 50 million pounds
of copper tube. Wednesbury has a significant presence in the United Kingdom
and Europe. Wednesbury represents a logical extension of our copper tube
manufacturing interests into the European market. The long-term prospects
for Wednesbury are promising. With appropriate investment, we believe we
can substantially improve and enhance the operating results and value of
this business.
MUELLER ACQUIRES PRECISION TUBE COMPANY, INC.
Mueller acquired the assets of Precision Tube Company, Inc. at the beginning
of 1997. Precision Tube manufactures copper tubing, copper alloy tubing,
aluminum tubing, and fabricated tubular products at its mill in North Wales,
Pennsylvania, and semi-rigid and flexible coaxial cables and assemblies at
its coaxitube division in Salisbury, Maryland. Precision Tube's net sales
were approximately $20 million in 1996. We have confidence in the Precision
management team, and we plan to make capital improvements to enhance
Precision's business.
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For the Quarter Ended
March 29, 1997 March 30, 1996
Net sales $ 201,366 $ 180,515
Cost of goods sold 155,784 143,532
Depreciation and amortization 4,832 4,450
Selling, general, and
administrative expense 15,496 13,904
---------- ----------
Operating income 25,254 18,629
Interest expense (1,178) (1,240)
Environmental reserves (2,000) -
Other income, net 1,030 1,880
---------- ----------
Income before taxes 23,106 19,269
Income tax expense (7,348) (5,977)
---------- ----------
Net income $ 15,758 $ 13,292
========== ==========
Net income per share:
Primary:
Average shares outstanding 19,592 19,368
Net income $ 0.80 $ 0.69
========== ==========
Fully diluted:
Average shares outstanding 19,592 19,464
Net income $ 0.80 $ 0.68
========== ==========
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)
March 29, 1997 December 28, 1996
ASSETS
Cash and cash equivalents $ 67,189 $ 96,956
Accounts receivable, net 115,445 88,905
Inventories 89,603 76,647
Other current assets 15,096 12,204
---------- ----------
Total current assets 287,333 274,712
Property, plant and equipment, net 232,340 219,855
Other assets 16,065 14,790
---------- ----------
$ 535,738 $ 509,357
========== ==========
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 14,925 $ 14,844
Accounts payable 25,193 18,305
Other current liabilities 48,621 45,807
---------- ----------
Total current liabilities 88,739 78,956
Long-term debt 42,193 44,806
Other noncurrent liabilities 40,257 37,116
---------- ----------
Total liabilities 171,189 160,878
Minority interest in subsidiaries 397 397
Stockholders' equity 364,152 348,082
---------- ----------
$ 535,738 $ 509,357
========== ==========
Book value per share $ 20.80 $ 19.96
========== ==========
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