TO OUR STOCKHOLDERS, CUSTOMERS AND EMPLOYEES
Mueller's net earnings increased 18 percent in the second quarter of
1997 over the same quarter of 1996. Earnings for the second quarter were
$16.3 million, or 83 cents per share, compared to $13.9 million, or 71 cents
per share, for the second quarter of 1996.
Net sales for the second quarter of 1997 totaled $215.4 million,
compared with $189.6 million for the same quarter of 1996. Pounds shipped
increased by 16 percent.
These second quarter results were achieved despite experiencing our
lowest spreads in the copper tube business in the last five years. The
breadth of our product line once again moderated the effect of fluctuations
in individual businesses.
On May 15, Mueller completed the acquisition of Desnoyers S.A., a
copper tube manufacturer with two plants near Paris, France. This
acquisition, coupled with the recent purchase of the assets of Wednesbury
Tube & Fittings Company in Great Britain, gives Mueller a major
manufacturing presence in Europe. We have begun the process of integrating
these operations, with teams from Desnoyers, Wednesbury, and the United
States working together to maximize efficiency and productivity. Combined,
these two European acquisitions sold approximately $195 million of copper
tube in 1996. The market for copper tube in Europe constitutes a
significant opportunity for our company.
Improving our core businesses remains a top priority. During 1997, we
will invest approximately $50 million in capital improvement programs,
affecting many of our businesses. One important initiative is a $25 million
copper refinery project in Fulton, Mississippi. When completed in 1999,
this refinery will allow our Fulton tube mill to use a lower cost mix of
copper scrap and copper cathode.
We are continuing to harvest the benefits from the capital improvement
projects completed in recent months and years. Capacity and yield are still
rising at our manufacturing operations, with the prospect of further
improvements.
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Although new housing starts softened slightly during the second
quarter, the housing market remains strong, buoyed by fixed 30-year mortgage
rates below 8 percent. Consequently, we are optimistic that Mueller's
business will continue to be sound for the balance of 1997.
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 17, 1997
CORPORATE NEWS
MUELLER ACQUIRES DESNOYERS S.A.
During the second quarter of 1997, Mueller acquired Desnoyers S.A., a
copper tube manufacturer based in France. Desnoyers operates two factories
near Paris, in Laigneville and Longueville. In 1996, Desnoyers posted net
sales of approximately $100 million on product shipments of approximately 60
million pounds.
The acquisition of Desnoyers solidifies Mueller's position in the
European copper tube market. The combined strength of Desnoyers and our
operations in the United Kingdom through Wednesbury Tube & Fittings Company,
will provide us a significant position in the years ahead.
In July, Mueller appointed Mr. Robert Gillespie as General Manager of
European Operations. Mr. Gillespie has industry experience, is fluent in
both French and English, and will lead the effort to integrate Mueller's
European Operations.
Through appropriate capital investments, we are confident we can
improve the operating results of our European businesses in the long-term.
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
For the Quarter Ended For the Six-Months Ended
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
Net sales $215,437 $189,557 $416,803 $370,072
Cost of goods sold 172,685 149,536 328,469 293,068
Depreciation and amortization 4,984 4,571 9,816 9,021
Selling, general, and
administrative expense 15,234 14,919 30,730 28,823
------- ------- ------- -------
Operating income 22,534 20,531 47,788 39,160
Interest expense (1,118) (1,473) (2,296) (2,713)
Environmental reserves - - (2,000) -
Other income, net 2,166 1,060 3,196 2,940
------- ------- ------- -------
Income before taxes 23,582 20,118 48,688 39,387
Income tax expense (7,243) (6,221) (14,591) (12,198)
------- ------- ------- -------
Net income $ 16,339 $ 13,897 $ 32,097 $ 27,189
======= ======= ======= =======
Net income per share:
Primary:
Average shares outstanding 19,579 19,525 19,614 19,457
======= ======= ======= =======
Net income $ 0.83 $ 0.71 $ 1.64 $ 1.40
======= ======= ======= =======
Fully diluted:
Average shares outstanding 19,615 19,550 19,640 19,550
======= ======= ======= =======
Net income $ 0.83 $ 0.71 $ 1.63 $ 1.39
======= ======= ======= =======
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MUELLER INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)
June 28, 1997 December 28, 1996
ASSETS
Cash and cash equivalents $ 36,439 $ 96,956
Accounts receivable, net 119,025 88,905
Inventories 101,315 76,647
Other current assets 16,513 12,204
------- -------
Total current assets 273,292 274,712
Property, plant and equipment, net 240,295 219,855
Other assets 35,193 14,790
------- -------
$ 548,780 $ 509,357
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 14,914 $ 14,844
Accounts payable 28,269 18,305
Other current liabilities 45,484 45,807
------- -------
Total current liabilities 88,667 78,956
Long-term debt 39,335 44,806
Other noncurrent liabilities 39,200 37,116
------- -------
Total liabilities 167,202 160,878
Minority interest in subsidiares 641 397
Stockholders' equity 380,937 348,082
------- -------
$ 548,780 $ 509,357
======= =======
Book value per share $ 21.76 $ 19.96
======= =======
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