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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 26, 1998 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)
Registrant's telephone number, including area code: (901) 753-3200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $0.01 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by a 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.[___].
The number of shares of the Registrant's common stock outstanding as of March
10, 1999 was 35,851,396, excluding 4,240,106 treasury shares. The aggregate
market value of the 34,945,190 shares of common stock held by non-affiliates
of the Registrant was $705,456,023 at March 10, 1999 (based on the closing
price on the consolidated transaction reporting system on that date).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference into this
Report: (1) Registrant's Annual Report to Stockholders for the year ended
December 26, 1998 (Part I and II); Registrant's Definitive Proxy Statement for
the 1999 Annual Meeting of Stockholders, scheduled to be mailed on or about
March 17, 1999 (Part III).
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MUELLER INDUSTRIES, INC.
As used in this report, the terms "Company", "Mueller" and "Registrant"
mean Mueller Industries, Inc. and its consolidated subsidiaries taken as a
whole, unless the context indicates otherwise.
TABLE OF CONTENTS
Page
PART I
Item 1. Business..................................................3
Item 2. Properties............................................... 9
Item 3. Legal Proceedings........................................11
Item 4. Submission of Matters to a Vote of Security Holders......11
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters...................................11
Item 6. Selected Financial Data..................................12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................12
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk...........................................12
Item 8. Financial Statements and Supplementary Data..............12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...................12
PART III
Item 10. Directors and Executive Officers of the Registrant.......12
Item 11. Executive Compensation...................................12
Item 12. Security Ownership of Certain Beneficial Owners
and Management........................................12
Item 13. Certain Relationships and Related Transactions...........13
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K...........................................13
Signatures..............................................................17
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PART I
ITEM 1. BUSINESS
Introduction
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 fittings and
valves; refrigeration valves and fittings; and fabricated tubular
products. Mueller's plants are located throughout the United States, and
in Canada, France and Great Britain. The Company also owns a short line
railroad in Utah and natural resource properties in the Western U.S.
The Company's businesses are managed and organized into three
segments: (i) Standard Products Division ("SPD"); (ii) Industrial Products
Division ("IPD"); and (iii) Other Businesses. SPD manufactures and sells
copper tube, and copper and plastic fittings and valves. Outside of the
United States, SPD manufactures copper tube in Europe and copper fittings
in Canada. SPD sells these products to wholesalers in the HVAC (heating,
ventilation and air-conditioning), plumbing and refrigeration markets, and
to distributors to the manufactured housing and recreational vehicle
industries. IPD 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. IPD sells its products primarily
to original equipment manufacturers ("OEMs"), many of which are in the
HVAC, plumbing and refrigeration markets. Other Businesses include Utah
Railway Company, Alaska Gold Company and other natural resource properties
and interests. SPD and IPD account for more than 96 percent of
consolidated net sales and more than 86 percent of consolidated net
assets. The majority of the Company's manufacturing facilities operated
at high levels during 1998, 1997 and 1996.
Information concerning segments appears under "Note 13 - Industry
Segments" in the Notes to Consolidated Financial Statements in Mueller's
Annual Report to Stockholders for the year ended December 26, 1998. Such
information is incorporated herein by reference.
Standard Products Division
Mueller's Standard Products Division includes a broad line of copper
tube, which ranges in size from 1/8 inch to 8 inch diameter, and is sold
in various straight lengths and coils. Mueller is a market leader in the
air-conditioning and refrigeration tube markets. Additionally, Mueller
supplies a variety of water tube in straight lengths and coils used for
plumbing applications in virtually every type of construction project.
SPD also includes copper and plastic fittings and related components
for the plumbing and heating industry that are used in water distribution
systems, heating systems, air-conditioning and refrigeration applications,
and drainage, waste, and vent systems. A major portion of Mueller's
products are ultimately used in the domestic residential and commercial
construction markets and, to a lesser extent, in the automotive and heavy
on and off-the-road vehicle markets.
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During the fourth quarter of 1998, the Company acquired Halstead
Industries, Inc. ("Halstead"), with 1998 sales of approximately $200
million. Halstead operates a tube mill in Wynne, Arkansas, and a line
sets factory in Clinton, Tennessee. This acquisition expands the
Company's copper tube and line sets businesses and should create
opportunities for rationalization of production and distribution. In
addition, in August 1998, the Company acquired B&K Industries, Inc.
("B&K"), an import distributor of residential and commercial plumbing
products with 1998 sales of approximately $60 million. The acquisition of
B&K will facilitate the sale of Mueller's manufactured products in the
large, and growing, retail marketplace. In 1997, the Company acquired
copper tube manufacturing operations in England and France. These
acquisitions established a significant manufacturing and sales presence in
Europe for the Company's operations.
SPD markets primarily through its own sales and distribution
organization, which maintains sales offices and distribution centers
throughout the United States and in Canada, Great Britain and France.
Additionally, products are sold and marketed through a network of agents,
which, when combined with the Company's sales organization, provide the
Company broad geographic market representation.
The businesses in which SPD is engaged are highly competitive. The
principal methods of competition for Mueller's products are customer
service and availability. No material portion of Mueller's business is
dependent upon a single customer or a small group of related customers.
The total amount of order backlog for SPD as of December 26, 1998 was not
significant.
The Company competes with various companies depending on the product
line. In the U.S. copper tubing business, the domestic competition
includes Cerro Copper Products Co., Inc., Reading Tube Corporation and
Wolverine Tube, Inc. as well as many actual and potential foreign
competitors. In the European copper tubing business, Mueller competes with
more than ten European-based manufacturers of copper tubing as well as
foreign-based manufacturers. Additionally, the Company's copper tube
businesses compete with a large number of manufacturers of substitute
products made from plastic, iron and steel. In the copper fittings
market, competitors include Elkhart Products, a division of Amcast
Industrial Corporation, and NIBCO, Inc. The plastic fittings competitors
include NIBCO, Inc., Charlotte Pipe & Foundry and other companies. No
single competitor offers such a wide-ranging product line; management
believes that this is a competitive advantage in some markets.
Industrial Products Division
Mueller's Industrial Products Division includes brass rod, nonferrous
forgings and impact extrusions that are sold primarily to OEMs in the
plumbing, refrigeration, fluid power and automotive industries, as well as
to other manufacturers and distributors. The Port Huron, Michigan mill
extrudes brass, bronze and copper alloy rod in sizes ranging from 3/8
inches to 4 inches in diameter. These alloys are used in applications
that require a high degree of machinability, wear and corrosion
resistance, and electrical conductivity. IPD also manufactures brass and
aluminum forgings which are used in a wide variety of end products,
including automotive components, brass fittings, industrial machinery,
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valve bodies, gear blanks, computer hardware and fire fighting equipment.
The Company also serves the automotive, military ordnance, aerospace and
general manufacturing industries with cold-formed aluminum and copper
impact extrusions. Typical applications for impacts are high strength
ordnance, high-conductivity electrical components, builders' hardware,
hydraulic systems, automotive parts and other uses where toughness must be
combined with varying complexities of design and finish. Other products
include valves and custom OEM products for refrigeration and air-
conditioning applications and shaped and formed tube, produced to tight
tolerances, for baseboard heating, appliances, medical instruments, etc.
The total amount of order backlog for IPD as of December 26, 1998 was not
significant.
In September 1998, the Company acquired Lincoln Brass Works, Inc.
("Lincoln"), which operates manufacturing facilities in Jacksboro,
Tennessee and Waynesboro, Tennessee. Lincoln produces custom control
valve assemblies, custom metal assemblies, gas delivery systems and
tubular products primarily for the gas appliance market. Lincoln, with
1998 sales of approximately $35 million, is a large consumer of the
Company's brass rod and forgings.
IPD primarily sells direct to OEM customers. Competitors, primarily
in the brass rod market, include Cerro Metal Products Company, Inc., Chase
Industries, Inc., Extruded Metals Inc. and others both domestic and
foreign. Outside of North America, IPD sells products through various
channels.
Other Businesses
Mueller, through its subsidiaries Arava Natural Resources Company,
Inc. ("Arava") and Alaska Gold Company ("Alaska Gold"), is engaged in the
operation of a short line railroad in Utah and placer gold mining in
Alaska. It also owns interests in other natural resource properties.
Short Line Railroad
Utah Railway Company ("Utah Railway"), a wholly-owned subsidiary of
Arava, operates on approximately 100 miles of railroad track in Utah.
Utah Railway serves four major customers pursuant to long-term contracts
which account for more than 75 percent of coal tonnage hauled. The Utah
Railway transports coal to an interchange point at Provo, Utah. Although
annual tonnage may vary significantly due to fluctuations in the
production from the coal mines on the Utah Railway's lines and the demand
for export coal, in recent years, annual tonnage ranged between four and
six million tons. From Provo, Utah, the coal is transported by connecting
railroads to various customers including electric utilities, cement
plants, west coast export facilities and others at destinations throughout
the West.
In addition to railway operations discussed above, Union Pacific
Railroad granted limited rights to Utah Railway for operations over Union
Pacific tracks to Grand Junction, Colorado and access to additional coal
customers. Also, Utah Railway conducts switching operations primarily in
the Salt Lake City, Ogden and Provo, Utah, metropolitan areas. Switching
operations consist of accepting freight from other railroad carriers for
delivery to customers and/or accepting loads of freight from such
customers for delivery to long haul railroad carriers to be transported to
final destinations.
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In late 1998, there was a fire at one of the coal mines served by
Utah Railway. We expect the mine to re-open in 1999, though this is not
certain. Extensive delays would have a negative impact on the future
profitability of the railroad.
Gold Mining
Alaska Gold mines placer gold in Nome, Alaska. Its properties
consist of approximately 14,500 acres in and adjacent to Nome, plus
patented claims on approximately 10,400 acres in the Fairbanks, Alaska
area, and approximately 3,000 acres in the Hogatza, Alaska area.
Continuing low gold prices have caused suspension of Alaska Gold's winter
open pit mining operations, although summer mining activity will continue.
Separately, the Company has entered into an agreement to sell Alaska Gold,
subject to various contingencies.
Other Properties
In early 1998, Ruby Hill Mining Company ("Ruby Hill") received a
final $1.0 million installment payment from Homestake Mining Company of
California ("Homestake") for Ruby Hill's mining property near Eureka,
Nevada. As of December 26, 1998, the Company has received and recognized
as gains $4.0 million from this transaction. If Homestake produces a
total of 500,000 ounces of gold or "gold equivalents" of other metals from
this property, Ruby Hill is thereafter entitled to a three percent net
smelter return royalty, after deduction for certain taxes and
transportation.
Labor Relations
At December 26, 1998, the Company employed approximately 4,800
employees of which approximately 2,700 were represented by various unions.
The union contracts that cover employees at the Company's Port Huron
facilities expire April 1, 1999. The union contract that covers employees
at the newly acquired Wynne copper tube mill expires November 30, 1999.
The Company expects to renew these contracts without material disruption
of its operations. Union contracts at the Company's European operations
are renewed annually. Other contracts expire on various dates from July
2000 to August 2002.
On December 30, 1998, the Company began implementing the social plan
related to the closure of its Laigneville, France, facility. Management
anticipates a net reduction of 125 positions as operations are
rationalized in Europe.
Raw Material and Energy Availability
The major portion of Mueller's base metal requirements (primarily
copper) are normally obtained through short-term supply contracts with
competitive pricing provisions. Other raw materials used in the
production of brass, including brass scrap, zinc, tin and lead, are
obtained from zinc and lead producers, open-market dealers and customers
with brass process scrap. Raw materials used in the fabrication of
aluminum and plastic products are purchased in the open market from major
producers.
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Adequate supplies of raw material are available to the Company.
Sufficient energy in the form of natural gas, fuel oils and electricity is
available to operate the Company's production facilities. While temporary
shortages of raw material and fuels may occur occasionally, they have not
materially hampered the Company's operations.
Environmental Matters
Compliance with environmental laws and regulations is a matter
of high priority. Mueller's provision for environmental compliance
includes charges of $2.1 million in 1998, $3.1 million in 1997 and $2.0
million in 1996. Except as discussed below, the Company does not
anticipate that it will need to make material expenditures for such
compliance activities during the remainder of the 1999 fiscal year, or for
the next two fiscal years.
In 1998 and 1997, in connection with acquisitions, the Company
established environmental reserves to fund the cost of remediation at
sites currently or formerly owned by various acquired entities. The
Company, through its acquired subsidiaries, is engaged in ongoing
remediation and site characterization studies.
Mining Remedial Recovery Company ("MRRC"), a wholly-owned subsidiary
of Arava, was formed for the purpose of managing the remediation of
certain properties and the appropriate disposition thereof.
1. Mammoth Mine Site
MRRC owns title to certain inactive mines in Shasta County,
California. MRRC has continued a program, begun in the late 1980s, of
sealing mine portals with concrete plugs in mine adits which were
discharging water. The sealing program has achieved a reduction in the
metal load in discharges from these adits; however, additional reductions
are being required. In response to a 1996 Order issued by the California
Regional Water Quality Control Board ("QCB"), MRRC completed a feasibility
study in 1997 describing measures designed to mitigate the effects of acid
rock drainage. In December 1998, the QCB issued a new order extending
MRRC's time to comply with water quality standards until December 1, 2003.
MRRC agreed to continue remedial activities to reduce or prevent discharge
of acid mine drainage and submit a use attainability analysis for review
by July 1, 2000. MRRC estimates it will spend between $1.0 and $2.0
million on planned remedial activities and the use attainability analysis.
Further remediation may be required depending on how effective MRRC's
remedial options are in reducing acid rock drainage.
2. U.S.S. Lead
In 1991, U.S.S. Lead Refinery, Inc. ("Lead Refinery"), responded to
an information request from EPA under Superfund for information on whether
Lead Refinery arranged for the disposal of hazardous substances in the
vicinity of the Grand Calumet River/Indiana Harbor Ship Canal. By letter
dated February 4, 1997, the Indiana Department of Environmental Management
("IDEM") notified Lead Refinery that a preassessment screening of the
Grand Calumet River and the Indiana Harbor Canal conducted pursuant to
Superfund had identified releases of hazardous substances from Lead
Refinery and other potentially responsible parties ("PRPs") that had
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adversely impacted natural resources. Based on the prescreening
assessment, IDEM has requested that Lead Refinery agree to fund the
preparation of an assessment plan which will, in part, quantify the loss
of natural resources. By letter dated March 11, 1997, Lead Refinery
responded to the February 4 letter and without waiving its affirmative
defenses, stated its willingness to participate in the preparation of an
assessment plan. In 1991, Lead Refinery also responded to an information
request under Superfund regarding the Lead Refinery site in East Chicago,
Indiana. In 1992, EPA advised Lead Refinery of its intent to list the
property as a Superfund site; however, as of March 17, 1999, EPA has
deferred such listing.
In 1993, Lead Refinery entered into a Consent Order with the EPA
pursuant to Section 3008(h) of the Resource Conservation and Recovery Act
("RCRA"). The Consent Order covers remediation activities at the East
Chicago, Indiana site and provides for Lead Refinery to complete certain
on-site interim remedial activities and studies that extend off-site. In
November 1996, the EPA approved, with modifications, the Interim
Stabilization Measures Workplan and designated a Corrective Action
Management Unit ("CAMU") at the Lead Refinery site. Site activities,
based on the approval, began during December 1996. Costs for studies and
interim clean up efforts were estimated at approximately $4.5 million in
the first quarter of 1997. In the process of remediating the site, Lead
Refinery subsequently identified suspected petroleum contamination on
site. As a result, Lead Refinery installed a slurry wall at a cost of
approximately $1.0 million around the CAMU and initiated characterization
of areas suspected to have petroleum contamination. Lead Refinery is
evaluating whether and how to address remediation of this contamination as
part of the CAMU. Once these activities are completed, additional work
would likely be needed to investigate and remediate any contamination not
addressed by the Consent Order. Lead Refinery, without additional
assistance from MRRC, lacks the financial resources needed to complete the
additional remediation and intends to seek financial assistance from other
PRPs to permit Lead Refinery to conduct a private-party cleanup under
RCRA.
Lead Refinery has been informed by the former owner and operator of a
Superfund site located in Pedricktown, New Jersey that it intends to seek
CERCLA response costs for alleged shipments of hazardous substances to the
site. Lead Refinery has executed an agreement regarding that site, which
indefinitely extends the statute of limitations. By letter dated January
26, 1996, Lead Refinery and other PRPs received from EPA a proposed
Administrative Order on Consent to perform the remedial design for
operable Unit 1 of the Pedricktown Superfund Site. Lead Refinery
determined not to execute the Administrative Order on Consent. Several
other PRPs, however, executed the agreement and are conducting the
remedial design.
Miscellaneous
In 1994, the Company received notice from the EPA that Mueller Brass
Co. was a PRP at the Jack's Creek/Sitkin Smelting Superfund Site in
Eastern Pennsylvania. Mueller Brass Co. is alleged to have contributed
less than 1 percent of the hazardous wastes at this site. Based upon its
estimated allocation ranking, its share of the EPA's estimated cleanup
costs would be less than $400,000. Clean-up commenced in 1998.
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Other Business Factors
The Registrant's business is not materially dependent on patents,
trademarks, licenses, franchises or concessions held. In addition,
expenditures for company-sponsored research and development activities
were not material during 1998, 1997 or 1996. No material portion of the
Registrant's business involves governmental contracts.
ITEM 2. PROPERTIES
Information pertaining to the Registrant's major operating facilities
is included below. Except as noted, the Registrant owns all of its
principal properties. The Registrant's plants are in satisfactory
condition and are suitable for the purpose for which they were designed and
are now being used.
Approximate
Location Property Size Description
____________ _____________ _________________________________
Fulton, MS 418,000 sq. ft. Copper tube mill. Facility
52.37 acres includes casting, extruding and
finishing equipment to produce
copper tubing, including tube feed
stock for the Company's copper
fittings plants, Line sets plant,
and Precision Tube factory.
Fulton, MS 103,000 sq. ft. Casting facility. Facility
11.9 acres includes casting equipment to
produce copper billets used in the
adjoining copper tube mill.
Wynne, AR 682,000 sq. ft. Copper tube mill. Facility
39.2 acres includes extrusion and finishing
equipment to produce copper
tubing, including feed stock for
the Clinton, TN line sets plant.
Clinton, TN 166,000 sq. ft.(1) Line sets plant. Produces copper
8.5 acres tube line sets using tube feed
stock from the Company's copper
tube mills and other mills.
Fulton, MS 58,500 sq. ft. Line sets plant. Production of
15.53 acres line sets has been moved from this
facility and merged into the newly
acquired Clinton, TN facility.
This facility is now used to package
and bar code copper tube and
fittings.
Fulton, MS 70,000 sq. ft.(2) Copper fittings plant. High-
7.68 acres volume facility that produces
copper fittings using tube feed
stock from the Company's copper
tube mill.
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Covington, TN 159,500 sq. ft. Copper fittings plant. Facility
40.88 acres produces copper fittings using
tube feed stock from the Company's
copper tube mill.
Port Huron, MI 40,000 sq. ft. Formed tube plant. Produces
5.11 acres copper fittings using cold heading
equipment.
Strathroy, 54,000 sq. ft. Copper fittings plant. Facility
Ontario Canada 4.67 acres produces copper fittings for the
Canadian domestic markets and for
export to European markets.
Kalamazoo, MI 205,000 sq. ft. Plastic fittings plant. Produces
18 acres DWV fittings using injection
molding equipment.
Cerritos, CA 115,000 sq. ft. Plastic fittings plant. Produces
5.1 acres DWV fittings using injection
molding equipment.
Upper Sandusky, 82,000 sq. ft. Plastic fittings plant. Produces
OH 7.52 acres DWV fittings using injection
molding equipment.
Bilston, England 402,500 sq. ft. Copper tube mill. Facility
United Kingdom 14.95 acres includes casting, extruding and
finishing equipment to produce
copper tubing.
Longueville, 332,500 sq. ft. Copper tube mill. Facility
France 16.3 acres includes extrusion and finishing
equipment to produce copper
tubing.
Laigneville, 387,500 sq. ft. Copper tube mill. Facility
France 18.8 acres includes drawing and finishing
equipment to produce copper
tubing. Operations at this
facility were discontinued in
December 1998.
Port Huron, MI 322,500 sq. ft. Brass rod mill. Facility includes
71.5 acres casting, extruding and finishing
equipment to produce brass rods
and bars, in various shapes and
sizes.
Port Huron, MI 127,500 sq. ft. Forgings plant. Produces brass
and aluminum forgings.
Marysville, MI 81,500 sq. ft. Aluminum and copper impacts plant.
6.72 acres Produces made-to-order parts using
cold impact processes.
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Hartsville, TN 78,000 sq. ft. Refrigeration products plant.
4.51 acres Produces products used in
refrigeration applications such as
ball valves, line valves and
compressor valves.
Jacksboro, TN 65,066 sq. ft. Bending and fabricating facility.
11.78 acres Produces gas burners, supply tubes
and manifolds for the gas appliance
industry.
Waynesboro, TN 57,000 sq. ft. (3) Gas valve plant. Facility produces
5.0 acres brass valves and assemblies for the
gas appliance industry.
North Wales, PA 174,000 sq. ft. Precision Tube factory. Facility
18.9 acres fabricates copper tubing, copper
alloy tubing, aluminum tubing and
fabricated tubular products.
Salisbury, MD 12,000 sq. ft. (4) Coaxial cable plant. Facility
manufactures semi-rigid coaxial
cable and high-performance cable
assemblies.
In addition, the Company owns and/or leases other properties used as
distribution centers and corporate offices.
(1) Facility is leased under an operating lease, with an option to
purchase.
(2) Facility is leased under long-term lease agreement, with option to
purchase at nominal cost.
(3) Facility is leased from a local municipality for a nominal amount.
(4) Facility is leased under operating lease.
ITEM 3. LEGAL PROCEEDINGS
Environmental Proceedings
Reference is made to "Environmental Matters" in Item 1 of this
Report, which is incorporated herein by reference, for a description of
environmental proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The information required by Item 5 of this Report is included under
the caption "Capital Stock Information" in the Registrant's Annual Report
to Stockholders for the year ended December 26, 1998, which information is
incorporated herein by reference.
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ITEM 6. SELECTED FINANCIAL DATA
Selected financial data are included under the caption "Selected
Financial Data" in the Registrant's Annual Report to Stockholders for the
year ended December 26, 1998, which selected financial data is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and
results of operations is contained under the caption "Financial Review" in
the Registrant's Annual Report to Stockholders for the year ended December
26, 1998 and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and qualitative disclosures about market risk are
contained in the caption "Financial Review" in the Registrant's Annual
Report to Stockholders for the year ended December 26, 1998 and is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Supplemental Financial
Information of this Annual Report on Form 10-K which is incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is contained under the caption
"Ownership of Common Stock by Directors and Executive Officers and
Information about Director Nominees" in the Company's Proxy Statement for
its 1999 Annual Meeting of Stockholders to be filed with the Securities
and Exchange Commission on or about March 17, 1999 and is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is contained under the caption
"Executive Compensation" in the Company's Proxy Statement for its 1999
Annual Meeting of Stockholders to be filed with the Securities and
Exchange Commission on or about March 17, 1999 and is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by Item 12 is contained under the captions
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"Principal Stockholders" and "Ownership of Common Stock by Directors and
Executive Officers and Information about Director Nominees" in the
Company's Proxy Statement for its 1999 Annual Meeting of Stockholders to
be filed with the Securities and Exchange Commission on or about March 17,
1999 and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is contained under the caption
"Certain Relationships and Transactions with Management" in the Company's
Proxy Statement for its 1999 Annual Meeting of Stockholders to be filed
with the Securities and Exchange Commission on or about March 17, 1999 and
is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) The following documents are filed as part of this report:
1. Financial Statements: the financial statements, notes, and report
of independent auditors described in Item 8 of this report, which
are incorporated by reference.
2. Financial Statement Schedule: the financial statement schedule
described in Item 8 of this report which is incorporated herein by
reference.
3. Exhibits:
2.1 Amended and Restated Agreement and Plan of Merger among
Mueller Industries, Inc., Mueller Acquisition Corp. and
Halstead Industries, Inc., dated as of October 30, 1998
(Incorporated herein by reference to Exhibit 2.1 of the
Registrant's Report on Form 10-Q, dated November 6, 1998 for
the quarter ended September 26, 1998).
2.2 Form of Stock Purchase Agreement with William B. Halstead
(Incorporated herein by reference to Exhibit 2.2 of the
Registrant's Report on Form 10-Q, dated November 6, 1998 for
the quarter ended September 26, 1998).
2.3 Form of Stock Purchase Agreement with remaining Halstead
stockholders (Incorporated herein by reference to Exhibit 2.3
of the Registrant's Report on Form 10-Q, dated November 6,
1998 for the quarter ended September 26, 1998).
3.1 Certificate of Incorporation of Mueller Industries, Inc. and
all amendments thereto.
3.2 By-laws of Mueller Industries, Inc., as amended and
restated, effective November 10, 1994 (Incorporated herein by
reference to Exhibit 3 (ii) of the Registrant's Current Report
on Form 8-K, dated November 14, 1994).
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4.1 Common Stock Specimen (Incorporated herein by reference to
Exhibit 4.1 of the Registrant's Current Report on Form 8-K
dated December 28, 1990).
4.2 Rights Agreement, dated as of November 10, 1994, between the
Registrant and Continental Stock Transfer and Trust Company,
as Rights Agent, which includes the Form of Certificate of
Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock of the Registrant, as Exhibit A,
the Form of Rights Certificate, as Exhibit B, and the Summary
of Rights to Purchase Preferred Stock, as Exhibit C
(Incorporated by reference to Exhibit 99.1 of the Registrant's
Current Report on Form 8-K, dated November 14, 1994).
10.1 Credit Agreement among Mueller Industries, Inc. (as
Borrower) and Michigan National Bank and other banking
institutions and Michigan National Bank (as Agent) dated as of
June 1, 1994 (Incorporated herein by reference to Exhibit 4.3
of the Registrant's Report on Form 10-K, dated March 20, 1997,
for the fiscal year ended December 28, 1996).
10.2 First Amendment to Credit Agreement among Mueller
Industries, Inc. (as Borrower) and Michigan National Bank and
other banking institutions and Michigan National Bank (as
Agent) dated as of December 14, 1994 (Incorporated herein by
reference to Exhibit 4.4 of the Registrant's Report on Form
10-K, dated March 20, 1997, for the fiscal year ended December
28, 1996).
10.3 Second Amendment to Credit Agreement among Mueller
Industries, Inc. (as Borrower) and Michigan National Bank and
other banking institutions and Michigan National Bank (as
Agent) dated as of June 1, 1995 (Incorporated herein by
reference to Exhibit 4.5 of the Registrant's Report on Form
10-K, dated March 20, 1997, for the fiscal year ended December
28, 1996).
10.4 Third Amendment to Credit Agreement among Mueller Industries,
Inc. (as Borrower) and Michigan National Bank and other
banking institutions and Michigan National Bank (as Agent)
dated as of December 18, 1996 (Incorporated herein by
reference to Exhibit 4.6 of the Registrant's Report on Form
10-K, dated March 20, 1997, for the fiscal year ended December
28, 1996).
10.5 Fourth Amendment to Credit Agreement among Mueller Industries,
Inc. (as Borrower) and Michigan National Bank and other
banking institutions and Michigan National Bank (as Agent)
dated December 31, 1997 (Incorporated herein by reference to
Exhibit 4.7 of the Registrant's Report on Form 10-K, dated
March 19, 1998, for the fiscal year ended December 27, 1997).
10.6 Fifth Amendment to Credit Agreement among Mueller
Industries, Inc. (as Borrower) and Michigan National Bank and
other banking institutions and Michigan National Bank (as
Agent) dated November 20, 1998.
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10.7 Amended and Restated Credit Agreement among Mueller
Industries, Inc. (as Borrower) and Michigan National Bank and
other banking institutions and Michigan National Bank (as
Agent) dated December 30, 1998.
10.8 Certain instruments with respect to long-term debt of the
Company have not been filed as Exhibits to the Report since
the total amount of securities authorized under any such
instrument does not exceed 10 percent of the total assets of
the Company and its subsidiaries on a consolidated basis. The
Company agrees to furnish a copy of each such instrument upon
request of the Securities and Exchange Commission.
10.9 Employment Agreement, effective October 1, 1991 by and
between Mueller Industries, Inc. and Harvey L. Karp
(Incorporated herein by reference to Exhibit 10.3 of the
Registrant's Current Report on Form 8-K dated November 22,
1991).
10.10 Stock Option Agreement, dated December 4, 1991 by and
between Mueller Industries, Inc. and Harvey L. Karp
(Incorporated herein by reference to Exhibit 10.4 of the
Registrant's Current Report on Form 8-K dated November 22,
1991).
10.11 Mueller Industries, Inc. 1991 Incentive Stock Option Plan
(Incorporated herein by reference to Exhibit 4(a) of the
Registrant's Registration Statement on Form S-8 dated April
17, 1992).
10.12 Summary description of the Registrant's 1999 bonus plan
for certain key employees.
10.13 Amended and Restated Employment Agreement, effective as of
September 17, 1997, by and between Mueller Industries, Inc.
and Harvey L. Karp (Incorporated herein by reference to
Exhibit 10.1 of the Registrant's Report on Form 10-Q, dated
October 21, 1997, for the quarter ended September 27, 1997).
10.14 Amended and Restated Employment Agreement, effective as of
September 17, 1997, by and between Mueller Industries, Inc.
and William D. O'Hagan (Incorporated herein by reference to
Exhibit 10.2 of the Registrant's Report on Form 10-Q, dated
October 21, 1997, for the quarter ended September 27, 1997).
10.15 Mueller Industries, Inc. 1994 Stock Option Plan
(Incorporated herein by reference to Exhibit 10.13 of the
Registrant's Report on Form 10-K, dated March 17, 1995, for
the fiscal year ended December 31, 1994).
10.16 Mueller Industries, Inc. 1994 Non-Employee Director Stock
Option Plan (Incorporated herein by reference to Exhibit 10.14
of the Registrant's Report on Form 10-K, dated March 17, 1995,
for the fiscal year ended December 31, 1994).
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10.17 Mueller Industries, Inc. Deferred Compensation Plan,
effective January 1, 1997 (Incorporated herein by reference to
Exhibit 10.12 of the Registrant's Report on Form 10-K, dated
March 20, 1997, for the fiscal year ended December 28, 1996).
10.18 Mueller Industries, Inc. 1998 Stock Option Plan.
(Incorporated herein by reference to Exhibit A of the
Registrant's Definitive Proxy Statement, dated March 18,
1998).
10.19 Stock Option Agreement, dated May 7, 1997 by and between
Mueller Industries, Inc. and William D. O'Hagan.
10.20 Stock Option Agreement, dated October 9, 1998 by and between
Mueller Industries, Inc. and William D. O'Hagan.
13.0 Mueller Industries, Inc.'s Annual Report to Stockholders
for the year ended December 26, 1998. Such report, except to
the extent incorporated herein by reference, is being
furnished for the information of the Securities and Exchange
Commission only and is not to be deemed filed as a part of
this Annual Report on Form 10-K.
21.0 Subsidiaries of the Registrant.
23.0 Consent of Independent Auditor (Includes report on
Supplemental Financial Information).
(b) During the three months ended December 26, 1998, no Current
Reports on Form 8-K were filed.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on
March 23, 1999.
MUELLER INDUSTRIES, INC.
/s/ HARVEY L. KARP
Harvey L. Karp, Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
/S/HARVEY L. KARP Chairman of the Board, and Director March 23, 1999
Harvey L. Karp
/S/ROBERT B. HODES Director March 23, 1999
Robert B. Hodes
/S/G.E. MANOLOVICI Director March 23, 1999
G.E. Manolovici
/S/WILLIAM D. O'HAGAN President, Chief Executive Officer, March 23, 1999
William D. O'Hagan Director
/S/ROBERT J. PASQUARELLI Director March 23, 1999
Robert J. Pasquarelli
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
Registrant and in the capacities and on the date indicated.
Signature and Title Date
/S/ EARL W. BUNKERS March 23, 1999
Earl W. Bunkers
Executive Vice President
Chief Financial Officer
(Principal Accounting Officer)
/S/ KENT A. MCKEE March 23, 1999
Kent A. McKee
Vice President
/S/ RICHARD W. CORMAN March 23, 1999
Richard W. Corman
Corporate Controller
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INDEX TO FINANCIAL STATEMENTS
The consolidated financial statements, together with the report
thereon of Ernst & Young LLP dated February 5, 1999, appearing
on page 23 through and including 49, of the Company's 1998 Annual Report to
Stockholders are incorporated by reference in this Annual Report on Form
10-K. With the exception of the aforementioned information, no other
information appearing in the 1998 Annual Report to Stockholders is deemed
to be filed as part of this Annual Report on Form 10-K under Item 8. The
following Consolidated Financial Statement Schedule should be read in
conjunction with the consolidated financial statements in such 1998 Annual
Report to Stockholders. Consolidated Financial Statement Schedules not
included with this Annual Report on Form 10-K have been omitted because
they are not applicable or the required information is shown in the
consolidated financial statements or notes thereto.
SUPPLEMENTAL FINANCIAL INFORMATION
Page
Schedule for the fiscal years ended December 26, 1998,
December 27, 1997 and December 28, 1996.
Valuation and Qualifying Accounts (Schedule II) 19
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MUELLER INDUSTRIES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 26, 1998, December 27, 1997 and December 28, 1996
(In thousands)
Additions
-------------------------------
Balance at Charged to Balance
beginning costs and Other at end
of year expenses additions Deductions of year
------------ ------------ ----------- ----------- -----------
1998
Allowance for doubtful accounts $ 3,680 $ 556 $ 1,197 (1) $ 504 $ 4,929
Environmental reserves $ 10,368 $ 2,133 $ 7,472 (1) $ 3,652 $ 16,321
Severance and related $ - $ - $ 9,464 (1) $ 198 $ 9,266
Other reserves (2) $ 10,448 $ 200 $ 6,838 (1) $ 1,738 $ 15,748
Valuation allowance for deferred
tax assets $ 52,073 $ - $ - $ 5,481 $ 46,592
1997
Allowance for doubtful accounts $ 3,188 $ 107 $ 677 (1) $ 292 $ 3,680
Environmental reserves $ 9,105 $ 3,100 $ 3,949 (1) $ 5,786 $ 10,368
Other reserves (2) $ 10,368 $ 250 $ 2,089 (1) $ 2,259 $ 10,448
Valuation allowance for deferred
tax assets $ 56,299 $ - $ - $ 4,226 $ 52,073
1996
Allowance for doubtful accounts $ 2,986 $ 435 $ - $ 233 $ 3,188
Environmental reserves $ 9,585 $ 2,045 $ - $ 2,525 $ 9,105
Other reserves (2) $ 10,051 $ 828 $ - $ 511 $ 10,368
Valuation allowance for deferred
tax assets $ 60,921 $ - $ - $ 4,622 $ 56,299
(1) Resulted from acquisitions during 1998 and 1997.
(2) Other reserves are included in the balance sheet captions "Other
current liabilities" and "Other noncurrent liabilities".
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EXHIBIT INDEX
Exhibits Description Page
3.1 Certificate of Incorporation of Mueller Industries, Inc. and
all amendments thereto.
10.6 Fifth Amendment to Credit Agreement among Mueller
Industries, Inc. (as Borrower) and Michigan National Bank and
other banking institutions and Michigan National Bank (as
Agent) dated November 20, 1998.
10.7 Amended and Restated Credit Agreement among Mueller
Industries, Inc. (as Borrower) and Michigan National Bank and
other banking institutions and Michigan National Bank (as
Agent) dated December 30, 1998.
10.12 Summary description of the Registrant's 1999 bonus plan
for certain key employees.
10.19 Stock Option Agreement, dated May 7, 1997 by and between
Mueller Industries, Inc. and William D. O'Hagan.
10.20 Stock Option Agreement, dated October 9, 1998 by and between
Mueller Industries, Inc. and William D. O'Hagan.
13.0 Mueller Industries, Inc.'s Annual Report to
Stockholders for the year ended December 26, 1998.
Such report, except to the extent incorporated
herein by reference, is being furnished for the
information of the Securities and Exchange
Commission only and is not to be deemed filed as a
part of this Annual Report on Form 10-K.
21.0 Subsidiaries of the Registrant.
23.0 Consent of Independent Auditor (Includes report
on Supplemental Financial Information).
27.0 Financial Data Schedule (EDGAR filing only)
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