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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 for the fiscal year ended December 31, 2006,
 OR
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 for the transition period from  to .
 Commission file number 1-12164
 WOLVERINE TUBE, INC.
  Delaware
    
    63-0970812(State of Incorporation)
    
    (IRS Employer Identification No.)200 Clinton Avenue West, 10th FloorHuntsville, Alabama
    
    35801(Address of principal executive offices)
    
    (Zip Code)
 (256) 353-1310
  Title of each class:
    
    Name of exchange on which registered:Common Stock, $0.01 par value
    
    New York Stock Exchange (a)
 (a)
    
    On January 4, 2007, the New York Stock Exchange (NYSE) suspended trading of these
securities, and on March 7, 2007, the NYSE
filed a Form 25 to remove these securities from listing and registration on the NYSE effective
March 19, 2007.
  o þ
 o þ
 þ o
 o
  o þ o
 o þ
   Class
    
    Outstanding as of March 9, 2007Common Stock, $0.01 par value
    
    15,089,934 Shares




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##### 



Page No.PART IItem 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    15Item 1B.
    
    Unresolved Staff Comments
    
    
    29Item 2.
    
    Properties
    
    
    29Item 3.
    
    Legal Proceedings
    
    
    32Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    32PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    32Item 6.
    
    Selected Financial Data
    
    
    33Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    36Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    61Item 8.
    
    Financial Statements and Supplementary Data
    
    
    61Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    62Item 9A.
    
    Controls and Procedures
    
    
    62Item 9B.
    
    Other Information
    
    
    62PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    63Item 11.
    
    Executive Compensation
    
    
    63Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    63Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    63Item 14.
    
    Principal Accounting Fees and Services
    
    
    63PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    64EX-10.53  VAN GERWEN AGREEMENTEX-21.1 LIST OF SUBSIDIARIESEX-23.1 CONSENT OF KPMG LLPEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO




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PART I
 
 Item 1. Business
 General
    Available Information
 www.wlv.com
 http://www.sec.gov
 Competition
  3




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Product Segments
  Commercial Products
  4




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Industrial Tube
 Value Added Strategic Sourcing Program
 Technical Tube
  Copper Alloy Tube
   Fabricated Products
  5




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Metal Joining Products
   Wholesale Products
   Rod, Bar and Other Products
   Sales and Marketing
  6




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North America
  International
  Industry Segments and Foreign Operations,
 Energy Efficiency and Governmental Regulations
   7




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Markets
  Products
    
    Major MarketsCommercial Products:Technical Tube
    
    Commercial air conditioning manufacturers, power and process
industry, heat exchanger manufacturers, water, swimming pool and spa heater
manufacturers and oil cooler manufacturers.Industrial Tube
    
    Residential and light commercial air conditioning
manufacturers, appliance manufacturers, automotive manufacturers, industrial
equipment manufacturers, refrigeration equipment manufacturers plumbing fittings
and fixture manufacturers, and redraw mills (which further process the tube).Copper Alloy Tube
    
    Utilities and other power generating companies, refining and
chemical processing companies, heat exchanger manufacturers and shipbuilders.Fabricated Products
    
    Commercial and residential air conditioning manufacturers,
refrigeration manufacturers and consumer appliance manufacturers, automotive,
controls, welding, electrical, marine, building, heat transfer industries and other
general industrial applications.Metal Joining Products
    
    Residential and commercial air conditioning
manufacturers, plumbing, electronic, lighting, shipbuilding, aerospace, catalysts,
jewelry and other metal joining industries.Wholesale Products
    
    Plumbing and refrigeration service wholesalers and
distributors.Rod,
Bar and Other Products
    
    Electrical equipment, power generation and
automotive parts manufacturers, locomotive, aluminum smelting and other industrial
equipment manufacturers and metal service centers.
 8




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Key Customers
  Backlog
  Manufacturing Processes
  Raw Materials, Suppliers and Pricing
   9




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Summary of Significant Accounting Policies  Derivatives and Hedging Activities Derivatives
 Financing Arrangements and Debt,
 Value Added Strategic Sourcing Program
  Research and Development
  10




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Ô
 Patents and Trademarks
  Environmental Matters
    11




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Employees
  12




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Executive Officers of the Registrant
  Name
    
    Age
    
    Position with our CompanyJohann R. Manning,
Jr.(1)
    
    
    46
    
    
    President and Chief Executive OfficerJames E. Deason
    
    
    59
    
    
    Senior Vice President, Chief Financial Officer, and SecretaryGarry K. Johnson
    
    
    51
    
    
    Senior Vice President, SalesDoug Morse (2)
    
    
    55
    
    
    Vice President  OperationsJohn H.Van Gerwen
    
    
    49
    
    
    Vice President  OperationsKeith I. Weil
    
    
    49
    
    
    Senior Vice President, International and Strategic DevelopmentAllan J. Williamson
    
    
    59
    
    
    Corporate Controller
 
 (1)
    
    Mr. Manning resigned on February 16, 2007(2)
    
    Mr. Morse resigned on February 22, 2007    13




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14




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Item 1A. Risk Factors
   Our business and financial condition will suffer if we are unable to execute our recapitalization
plan and achieve our plan of operations.
 Managements Discussion and Analysis of Financial
Condition and Results of Operations  Recapitalization Plan
  15




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Our ability to complete the recapitalization plan is subject to a number of conditions, some of
which are beyond our control.
    We may need additional financing after completion of our recapitalization plan, which may be
unavailable or costly.
  16




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If we are unable to renew or replace our current liquidity facilities as they expire or if we are
unable to refinance the senior notes as they mature, our financial condition and ability to operate
our business will be significantly affected.
     17




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If we are not able to meet the conditions in our receivables sale facility and our secured
revolving credit facility, the counterparties to these facilities may restrict our access to
available amounts thereunder.
   If we are unable to comply with the operating and financial covenants contained in the indentures
for our outstanding senior notes and in our other liquidity facilities, which impose significant
restrictions on our ability to capitalize on business opportunities and take some corporate
actions, we could face an acceleration of our debt.
  
    
    incur other indebtedness;
    
    engage in transactions with affiliates;
    
    create or incur liens to secure debt;
    
    prepay or repurchase indebtedness;
    
    make certain restricted payments;
    
    enter into certain business combinations and asset sale transactions; and
    
    make investments.
  18




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Significant debt levels may limit our future ability to obtain additional financing and to pursue
business opportunities.
   
    
    a substantial portion of any cash generated from operating activities must be used
to pay principal and interest and other fees on our debt and related obligations and
may not be available for other purposes, thereby reducing the availability of such
available cash flow to fund working capital, capital expenditures, research and
development efforts and other general corporate purposes;
    
    our ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions or other purposes may be limited;
    
    our flexibility in planning for, or reacting to, changes in our business and the
industry in which we operate may be limited;
    
    adverse economic or industry conditions are more likely to have a negative effect on
our business;
    
    we may be at a competitive disadvantage to our competitors that have relatively less
indebtedness;
    
    our ability to make acquisitions, develop new technologies and products and take
advantage of significant business opportunities may be negatively affected; and
    
    the need to use available cash from operating activities to service and pay our debt
and for operating expenses may limit or impair our future ability to pay dividends, if
any, on our common stock.
 19




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Variable interest rates, or other variable liquidity costs, may increase substantially.
  Changes in payment terms applicable to our commercial customers may cause these customers to move
their business to competitors who, because of their greater financial resources, may offer more
generous payment terms.
   Our business is dependent upon the availability and price of raw materials, particularly copper.
Significant disruptions in the supply of raw materials or continued periods of historically high
copper prices will materially adversely affect our operating results.
   20




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Costs for energy and other natural resources may adversely affect our profitability.
   Our customers operate in industries that are subject to cyclical and seasonal demand and that are
affected by other global economic and regulatory conditions, which can adversely affect our sales
volumes and profitability.
    21




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We face significant competition in many cases from competitors that have manufacturing and
financial resources greater than ours.
    Increasing competition from Asian competitors who sell both within China and for export to other
parts of the world may negatively impact our business and adversely affect our revenue and
operating results.
  The loss of any of our major customers could adversely affect our revenues and financial health.
  Risks associated with the operation of our manufacturing facilities may have a material adverse
effect on our business.
 22




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
    
    the breakdown, failure or substandard performance of equipment;
    
    inclement weather and natural disasters;
    
    the need to comply with directives of, and maintain all necessary permits from,
governmental agencies;
    
    raw material supply disruptions;
    
    labor force shortages, work stoppages, or other labor difficulties; and
    
    transportation disruptions.
  We may engage in divestitures that could have a negative impact on our operations and financial
results and the availability under certain of our current liquidity facilities.
  Currency fluctuations may place us at a competitive disadvantage and reduce our revenue.
  Our international operations expose us to various risks that other companies that are not global
may not face.
  23




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
    
    economic downturns;
    
    changes in or interpretations of local law, governmental policy or regulation,
particularly in countries with developing legal systems such as China;
    
    restrictions on the transfer of funds into or out of the country;
    
    import and export duties and quotas and other trade barriers;
    
    domestic and foreign customs and tariffs;
    
    varying tax systems;
    
    different regimes controlling the protection of our intellectual property;
    
    political unrest;
    
    military outbreaks;
    
    government instability;
    
    nationalization of foreign assets;
and government protectionism.
  We, and some of our major customers, have unionized employees and could be adversely affected by
labor disputes.
  If we are unable to attract and retain key personnel, our ability to operate effectively may be
impaired.
  24




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We could incur significant costs, including remediation costs, as a result of complying with
environmental laws.
  Our competitive advantage could be reduced if our intellectual property becomes known by our
competitors, or if technological changes reduce our customers need for our products.
  If our internal computer network and applications suffer disruptions or fail to operate as
designed, our operations will be disrupted and our business may be harmed.
 25




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Current U.S. military action and any future armed conflict or terrorist activities may cause the
economic conditions in the U.S. or abroad to deteriorate, which could harm our business.
  We have experienced net losses in recent periods and we may experience net losses in the future.
  Our decision to close two of our manufacturing plants will result in certain charges and may cause
disruption.
  26




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Our stock price may be volatile.
  
    
    quarterly variations in our operating results;
    
    our ability to meet our liquidity needs;
    
    changes in revenue or earnings estimates or publication of research reports by
analysts;
    
    failure to meet analysts or our own revenue or earnings estimates;
    
    speculation in the press or investment community;
    
    strategic actions by us or our competitors, such as acquisitions or restructurings;
    
    the impact of the risks discussed herein and our ability to react effectively to
those risks;
    
    limited trading volume of our common stock;
    
    a change in technology that may add to manufacturing costs;
    
    actions by institutional stockholders;
    
    general market conditions; and
    
    domestic and international economic factors unrelated to our performance.
  Limited trading volume of our common stock may contribute to its price volatility.
  27




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Future issuances of our equity securities, or sales of our securities by stockholders in the public
market, may cause the price of our common stock to decline or impair our ability to raise capital
in the equity markets.
   Our new preferred stock investors have the ability to exert significant influence over our affairs
and may have interests that differ from those of our other stockholders.
  Provisions in our charter documents, Delaware law and in other agreements, coupled with the
preferred stock investors ownership of a significant amount of our voting power, may delay or
prevent an acquisition of Wolverine that some stockholders may consider attractive.
  28




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We will not pay any dividends on our common stock in the foreseeable future.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  Domestic Facilities
 Property
    
    
    
    
    
    
    
    
    
    Number ofOwned/
    
    Size
    
    Plant Size
    
    Year
    
    Employees atLocation
    
    Leased
    
    (acres)
    
    (square feet)
    
    Opened
    
    Dec. 31, 2006
    
    DescriptionDecatur, AL
    
    Owned
    
    
    165
    
    
    
    620,000
    
    
    
    1948
    
    
    
    471
    
    
    Produces many of
our copper tube
product lines. A
significant portion
of production is
industrial tube as
well as wholesale
tube products.
Decatur also
produces smooth
feedstock tube for
the Ardmore,
Carrollton and
Altoona facilities.
The Decatur
facility also
houses a portion of
our corporate
staff.Shawnee, OK
    
    Owned
    
    
    51
    
    
    
    309,000
    
    
    
    1974
    
    
    
    484
    
    
    Produces a majority
of our copper tube
product lines. A
significant portion
of production is
 29




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Property
    
    
    
    
    
    
    
    
    
    Number ofOwned/
    
    Size
    
    Plant Size
    
    Year
    
    Employees atLocation
    
    Leased
    
    (acres)
    
    (square feet)
    
    Opened
    
    Dec. 31, 2006
    
    Descriptionindustrial and
technical tube.
Shawnee also
produces wholesale
tube products. It
produces feedstock
tube for the
Ardmore and
Carrollton
facilities, and fin
blanks for
Monterrey, Mexico.
Shawnee is also
capable of
supplying tube to
Altoona.Jackson, TN(1)
    
    Leased
    
    
    35
    
    
    
    112,000
    
    
    
    1998
    
    
    
    16
    
    
    Produced welded
copper enhanced
surface industrial
tube. Production
ceased in November
2006.Altoona, PA (2)
    
    Owned/
Leased
    
    
    32
    
    
    
    210,000
    
    
    
    1956
    
    
    
    212
    
    
    A redraw facility
that produces
higher value added
commercial
products, primarily
precision drawn and
cut tubular
products.Carrollton, TX
    
    Owned
    
    
    9
    
    
    
    165,000
    
    
    
    1999
    
    
    
    255
    
    
    Designs,
manufactures and
provides outsource
project management
of tubular
fabricated products
and assemblies
using various
materials including
copper, copper
alloy, aluminum,
steel and
outsourced
components.
Fabrication
capabilities range
from a single
operation to
complex brazed
assemblies.Booneville, MS
    
    Owned
    
    
    30
    
    
    
    152,000
    
    
    
    1989
    
    
    
    29
    
    
    This facility,
partially closed in
December 2003,
produces feedstock
for our Carrollton,
TX facility, redraw
base tube for our
Altoona, PA and
Decatur, AL
facilities and some
customer redraw
base tube.Warwick, RI
    
    Owned
    
    
    3
    
    
    
    70,000
    
    
    
    1978
    
    
    
    141
    
    
    Produces brazing
filler metals,
fluxes and other
specialty alloys.Ardmore, TN
    
    Owned
    
    
    28
    
    
    
    65,000
    
    
    
    1974
    
    
    
    77
    
    
    A redraw facility
that produces
higher margin
commercial products
such as capillary
tube and specialty
fabricated
components, as well
as aluminum tubing.
 
 (1)
    
    We sold the Jackson, Tennessee facility in December 2005, but continued production in
the facility under a lease arrangement until November 2006. The lease expires on April 1,
2007 but may continue on a month-to-month basis.(2)
    
    Leased a portion of the facility from an industrial development agency at a cost of
$3,500 annually in perpetuity. 30




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International Facilities
 Number ofOwned/
    
    Property
    
    Plant Size
    
    Year
    
    Employees atLocation
    
    Leased
    
    Size (acres)
    
    (square feet)
    
    Opened
    
    Dec. 31, 2006
    
    DescriptionMontreal, Quebec
    
    Owned
    
    
    25
    
    
    
    424,000
    
    
    
    1942
    
    
    
    5
    
    
    Produces wholesale
tube products,
copper and copper
alloy tube and
copper and copper
alloy rod and bar
and extruded
shapes. Production
ceased in November
2006.London, Ontario
    
    Owned
    
    
    45
    
    
    
    195,000
    
    
    
    1958
    
    
    
    255
    
    
    Produces wholesale
tube products and
industrial tube.
London also houses
corporate offices
for Wolverine Tube
(Canada) Inc.Shanghai, China
    
    Leased
    
    
    3
    
    
    
    61,300
    
    
    
    1998
    
    
    
    231
    
    
    Produces technical
copper and copper
alloy tube from
feedstock supplied
by local copper
tube manufacturers
and also produces
brazed assemblies.Esposende, Portugal
    
    Owned
    
    
    3
    
    
    
    33,000
    
    
    
    2001
    
    
    
    69
    
    
    Produces technical
copper and copper
alloy tube from
feedstock supplied
by European copper
and copper alloy
tube manufacturers
and brazed
assemblies.Monterrey, Mexico
    
    Leased
    
    
    8
    
    
    
    130,000
    
    
    
    2004
    
    
    
    263
    
    
    Produces fabricated
components and
brazed assemblies
from feedstock
supplied by the
Shawnee, OK and
Decatur, AL
facilities. Began
producing technical
copper and copper
alloy tube from
feedstock supplied
by the Shawnee, OK
and Montreal,
Quebec facilities
in 2005.
   31




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Item 3. Legal Proceedings
 Environmental Remediation
 
 Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
     2006
    
    2005Period
    
    High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    6.85
    
    
    $
    3.28
    
    
    $
    13.34
    
    
    $
    8.44Second Quarter
    
    
    4.18
    
    
    
    2.51
    
    
    
    8.85
    
    
    
    5.31Third Quarter
    
    
    5.59
    
    
    
    2.73
    
    
    
    8.55
    
    
    
    5.35Fourth Quarter
    
    
    3.16
    
    
    
    1.02
    
    
    
    7.75
    
    
    
    4.38
 32




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Item 6. Selected Financial Data
 Managements Discussion and Analysis of Financial Condition
and Results of Operations
  33




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Year Ended December 31,Statement of Operations Data:
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002(In thousands, except per share amounts)Net sales (a)
    
    $
    1,403,042
    
    
    $
    873,505
    
    
    $
    797,875
    
    
    $
    596,324
    
    
    $
    550,523Cost of goods sold (a)
    
    
    1,348,508
    
    
    
    851,862
    
    
    
    734,194
    
    
    
    555,498
    
    
    
    492,082Gross profit
    
    
    54,534
    
    
    
    21,643
    
    
    
    63,681
    
    
    
    40,826
    
    
    
    58,441Selling, general and administrative expenses (b)
    
    
    31,173
    
    
    
    37,074
    
    
    
    37,259
    
    
    
    32,103
    
    
    
    30,616Restructuring and other charges (c)
    
    
    65,036
    
    
    
    1,416
    
    
    
    2,536
    
    
    
    15,057
    
    
    
    Operating income/(loss) from continuing operations
    
    
    (41,675
    )
    
    
    (16,847
    )
    
    
    23,886
    
    
    
    (6,334
    )
    
    
    27,825Other expense/(income):Interest expense, net
    
    
    25,570
    
    
    
    20,727
    
    
    
    20,860
    
    
    
    21,218
    
    
    
    19,681Loss/(gain) on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    3,009
    
    
    
    
    
    
    
    (1,349
    )Amortization and other, net (d)
    
    
    2,595
    
    
    
    2,802
    
    
    
    1,261
    
    
    
    1,856
    
    
    
    1,008Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,153
    
    
    
    Income/(loss) from continuing operations before income taxes
    
    
    (69,840
    )
    
    
    (40,376
    )
    
    
    (1,244
    )
    
    
    (52,561
    )
    
    
    8,485Income tax provision/(benefit) (e)
    
    
    9,384
    
    
    
    (1,760
    )
    
    
    (1,888
    )
    
    
    (13,577
    )
    
    
    1,315Income/(loss) from continuing operations (f)
    
    
    (79,224
    )
    
    
    (38,616
    )
    
    
    644
    
    
    
    (38,984
    )
    
    
    7,170Income/(loss) from discontinued operations, net of tax (g)
    
    
    
    
    
    
    
    
    
    
    (262
    )
    
    
    (1,637
    )
    
    
    (1,610
    )Net income/(loss) (h)
    
    $
    (79,224
    )
    
    $
    (38,616
    )
    
    $
    382
    
    
    $
    (40,621
    )
    
    $
    5,560Income/(loss) per common share-basic:Continuing operations
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.05
    
    
    $
    (3.18
    )
    
    $
    0.58Discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (0.02
    )
    
    
    (0.13
    )
    
    
    (0.13
    )Net income/(loss) per share
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.03
    
    
    $
    (3.31
    )
    
    $
    0.45Basic weighted average common shares
    
    
    15,071
    
    
    
    15,022
    
    
    
    13,650
    
    
    
    12,275
    
    
    
    12,231Income/(loss) per common share-diluted:Continuing operations
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.05
    
    
    $
    (3.18
    )
    
    $
    0.58Discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (0.02
    )
    
    
    (0.13
    )
    
    
    (0.13
    )Net income/(loss) per share
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.03
    
    
    $
    (3.31
    )
    
    $
    0.45Diluted weighted average common and
common equivalent shares
    
    
    15,071
    
    
    
    15,022
    
    
    
    13,992
    
    
    
    12,275
    
    
    
    12,362
 Year Ended December 31,Other Data:
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002(In thousands, except per pound amounts)Pounds shipped
    
    
    343,551
    
    
    
    320,568
    
    
    
    339,417
    
    
    
    327,354
    
    
    
    310,240Depreciation and amortization
    
    $
    16,977
    
    
    $
    17,049
    
    
    $
    17,407
    
    
    $
    19,009
    
    
    $
    18,416Capital expenditures
    
    
    5,798
    
    
    
    10,009
    
    
    
    11,302
    
    
    
    5,969
    
    
    
    7,747Average monthly COMEX price
of copper per pound (a), (i)
    
    
    3.09
    
    
    
    1.68
    
    
    
    1.29
    
    
    
    0.81
    
    
    
    0.72
 December 31,Balance Sheet Data:
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002(In thousands)Total assets
    
    $
    455,330
    
    
    $
    568,765
    
    
    $
    587,458
    
    
    $
    553,258
    
    
    $
    550,720Total long-term debt
    
    
    238,362
    
    
    
    234,920
    
    
    
    237,022
    
    
    
    254,284
    
    
    
    255,712Stockholders equity
    
    
    89,176
    
    
    
    163,302
    
    
    
    209,502
    
    
    
    179,351
    
    
    
    200,635
 (a)
    
    2006 copper prices reached historical high levels. The 84% increase in the 2006 average
monthly COMEX over 2005 accounted for $483 million, or 53% and 97%, of the year over year
increase in net sales and cost of goods sold, respectively.(b)
    
    In 2005, our Company recorded charges to selling, general and administrative expenses
totaling $3.6 million related to the termination of our Supplemental Executive Retirement
Plan, the freezing of our U.S. defined benefit and restoration benefit pension plans, and
accelerated restricted stock vesting. In addition, salaries were down $1.7 million in 2006
from 2005 as a result of restructuring and headcount reductions.(c)
    
    In 2006, 2005, 2004 and 2003, restructuring and other charges of $65.0 million ($51.4 after
tax), $1.4 million ($0.9 million after tax), $2.5 million ($1.7 million after tax) and $15.1
million ($9.9 million after tax), respectively were incurred (see Note 23, Restructuring and
Other Charges, of the Notes to Consolidated Financial Statements). Restructuring charges in
2006 related to the closing of the Montreal and Jackson facilities. 34




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##### Table of Contents



(d)
    
    In December 2005, we entered into a sales arrangement for our Jackson, Tennessee facility.
Included in the 2005 results is a $1.9 million loss associated with the write-down and sale of
the property.(e)
    
    In 2006 and 2005, we established valuation allowances related to our tax assets in the amount
of $35.8 million and $12.6 million respectively.(f)
    
    Income/(loss) from continuing operations for 2006, was negatively impacted by $51.4 million
and $12.6 million, respectively, (after tax) in restructuring and other charges.(g)
    
    The operating results of Wolverine Ratcliffs, Inc. include losses of $0.3 million, $1.6
million and $1.6 million (in each case net of tax) for the years ended 2004, 2003 and 2002,
respectively, and was classified as discontinued operations.(h)
    
    Net income/(loss) in 2004, 2003, and 2002 included losses associated with Wolverine
Ratcliffs, which was classified as discontinued operations.(i)
    
    Source: Metals Week. 35




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  
    
    Business Overview
    
    Recapitalization Plan
    
    Strategic Initiatives
    
    Results of Continuing Operations
    
    Liquidity and Capital Resources
    
    Off-Balance Sheet Arrangements
    
    Contractual Obligations and Commercial Commitments
    
    Financing Arrangements
    
    Market Risks
    
    Environmental Matters
    
    Critical Accounting Policies
  Business Overview
   36




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##### Table of Contents



Recapitalization Plan
   37




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##### Table of Contents



38




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##### Table of Contents



Strategic Initiatives
  Customers First
  39




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##### Table of Contents



Path to Profitability
  
    
    First, we increased our liquidity and cash flow by significantly improving our inventory
turns from 9 to 11 by reducing inventory on hand and decreasing our receivables days sales
outstanding by 10 days by reducing payment terms.
    
    Second, with the assistance of outside consultants we began to analyze our business
operations and developed strategies for pricing, cost reductions, increased productivity,
and improved flexibility in our operations.
    
    Third, we addressed the globalization of our business and rationalized our existing
manufacturing facilities by closing two underperforming manufacturing facilities.
    
    Fourth, we focused on increasing productivity and output through lean manufacturing
initiatives.
    
    Fifth, we embarked on a plan to restructure our balance sheet which resulted in the
recapitalization plan previously described.
    
    Sixth, we continued to capitalize on our customers outsourcing initiatives by providing
expanded services and products.
    
    Seventh, we stepped up quality and yield initiatives with our Six Sigma initiatives.
    
    And finally, we expanded our value added strategic sourcing opportunities by extending
our value added strategic sourcing contract with our supplier in China.
 Profitably Grow Our Company
  
    
    Finalizing our recapitalization.
    
    Continuing to grow through customers outsourcing and value added strategic sourcing
opportunities.
    
    Further building our capabilities in lean manufacturing, quality and yield.
    
    Driving productivity improvements.
    
    Providing complete solutions to customers through our research and product development.
    
    Pursuing international growth opportunities by leveraging our investments and business
alliances in Mexico, China, and other foreign locations.
 40




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##### Table of Contents



Results of Continuing Operations
 Executive Summary
 
    
    Net sales for 2006 were $1.4 billion. This 60.6% increase over 2005 reflected the price
of copper that was driven to record high levels during 2006.
    
    We increased the number of pounds of product shipped to approximately 344 million
pounds, a 7.2% increase in 2006 over the previous year.
    
    Our gross profit in 2006 was 3.9% of net sales as compared with 2.5% in 2005. This was
largely driven by the market conditions in the second quarter of 2006 which improved
selling prices for commodity products.
    
    Our selling, general and administrative expenses for 2006 decreased by 15.9% from 2005.
    
    At the end of 2006, we closed two underperforming manufacturing facilities, while moving
the production to other existing facilities and stepping away from unprofitable product
offerings.
    
    Net interest expense was $25.6 million as compared to $20.7 million in 2005 as a result
of the increased usage of our liquidity facilities over 2005 to fund working capital due to
higher copper prices and other related working capital requirements during the year.
    
    The net loss for 2006 of $79.2 million reflects the impact of recording estimated
restructuring costs of $57.6 million before taxes for plant closures and other charges of
approximately $7.4 million for professional consulting fees related to our business
restructuring initiatives.
    
    During 2006, we invested $5.8 million in capital improvements, a reduction from the
$10.0 million invested in 2005.
 Year-Ended December 31, 2006, Compared with Year-Ended December 31, 2005
  Total Pounds Shipped
    
    For the Year Ended December 31,(In thousands, except for
    
    
    
    
    
    
    
    
    
    Increase
    
    % Increasepercentages)
    
    2006
    

    
    2005
    
    
    (Decrease)
    
    (Decrease)Commercial products
    
    
    247,437
    
    
    
    213,962
    
    
    
    33,475
    
    
    
    15.6
    %Wholesale products
    
    
    79,114
    
    
    
    88,455
    
    
    
    (9,340
    )
    
    
    (10.6
    )%Rod, bar and other products
    
    
    17,000
    
    
    
    18,151
    
    
    
    (1,151
    )
    
    
    (6.3
    )%Total
    
    
    343,551
    
    
    
    320,568
    
    
    
    22,984
    
    
    
    7.2
    %
 41




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##### Table of Contents



Net Sales
    
    For the Year Ended December 31,(In thousands, except for
    
    
    
    
    
    
    
    
    
    
    
    
    
    %percentages)
    
    2006
    
    
    2005
    
    
    Increase
    
    IncreaseCommercial products
    
    $
    1,009,343
    
    
    $
    619,159
    
    
    $
    390,184
    
    
    
    63.0
    %Wholesale products
    
    
    310,993
    
    
    
    195,325
    
    
    
    115,667
    
    
    
    59.2
    %Rod, bar and other products
    
    
    82,706
    
    
    
    59,021
    
    
    
    23,685
    
    
    
    40.1
    %Total
    
    $
    1,403,042
    
    
    $
    873,505
    
    
    $
    529,537
    
    
    
    60.6
    %
   42




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##### Table of Contents



Gross Profit
    
    For the Year Ended December 31,
    %(In thousands, except for
    
    
    
    
    
    
    
    
    
    Increase
    
    Increasepercentages)
    
    2006
    

    
    2005
    
    
    (Decrease)
    
    (Decrease)Commercial products
    
    $
    30,912
    
    
    $
    19,422
    
    
    $
    11,491
    
    
    
    59.2
    %Wholesale products
    
    
    22,656
    
    
    
    650
    
    
    
    22,006
    
    
    
    N/MRod, bar and other products
    
    
    966
    
    
    
    1,571
    
    
    
    (605
    )
    
    
    (38.5
    )%Total
    
    $
    54,534
    
    
    $
    21,643
    
    
    $
    32,891
    
    
    
    152.0
    %
 
 NM  Not meaningful   Restructuring and Other Charges
   43




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##### Table of Contents



Year-Ended December 31, 2005, Compared with Year-Ended December 31, 2004
  Total Pounds Shipped
    
    For the Year Ended December 31,(In thousands, except for
    
    
    
    
    
    
    
    
    
    
    
    
    
    %percentages)
    
    2005
    
    
    2004
    
    
    (Decrease)
    
    (Decrease)Commercial products
    
    
    213,962
    
    
    
    225,996
    
    
    
    (12,034
    )
    
    
    (5.3
    )%Wholesale products
    
    
    88,455
    
    
    
    89,078
    
    
    
    (623
    )
    
    
    (0.7
    )%Rod, bar and other products
    
    
    18,151
    
    
    
    24,343
    
    
    
    (6,192
    )
    
    
    (25.4
    )%Total
    
    
    320,568
    
    
    
    339,417
    
    
    
    (18,849
    )
    
    
    (5.5
    )%
   44




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##### Table of Contents



Net Sales
    
    For the Year Ended December 31,(In thousands, except for
    
    
    
    
    
    
    
    
    
    Increase
    
    % Increasepercentages)
    
    2005
    
    
    2004
    
    
    (Decrease)
    
    (Decrease)Commercial products
    
    $
    619,159
    
    
    $
    570,666
    
    
    $
    48,493
    
    
    
    8.5
    %Wholesale products
    
    
    195,325
    
    
    
    165,215
    
    
    
    30,110
    
    
    
    18.2
    %Rod, bar and other products
    
    
    59,021
    
    
    
    61,994
    
    
    
    (2,973
    )
    
    
    (4.8
    )%Total
    
    $
    873,505
    
    
    $
    797,875
    
    
    $
    75,630
    
    
    
    9.5
    %
   45




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##### Table of Contents



Gross Profit(In thousands, except for
    
    For the Year Ended December 31,percentages)
    
    2005
    
    
    2004
    
    
    (Decrease)
    
    % (Decrease)Commercial products
    
    $
    19,422
    
    
    $
    52,918
    
    
    $
    (33,496
    )
    
    
    (63.3
    )%Wholesale products
    
    
    650
    
    
    
    5,924
    
    
    
    (5,274
    )
    
    
    (89.0
    )%Rod, bar and other products
    
    
    1,571
    
    
    
    4,839
    
    
    
    (3,268
    )
    
    
    (67.5
    )%Total
    
    $
    21,643
    
    
    $
    63,681
    
    
    $
    (42,038
    )
    
    
    (66.0
    )%
      46




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##### Table of Contents



Liquidity and Capital Resources
  December 31,
    
    December 31,(In thousands)
    
    2006
    
    2005Cash and cash equivalents
    
    $
    23,733
    
    
    $
    27,329Working capital
    
    $
    150,605
    
    
    $
    181,427Total debt
    
    $
    240,000
    
    
    $
    235,168Current ratio
    
    
    3.15
    
    
    
    2.70
 Overview and Outlook
   47




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##### Table of Contents



Recapitalization Plan
 Sources of Liquidity
 Recapitalization Plan
 Cash and cash equivalents
  48




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##### Table of Contents



Cash provided by operations.
 Amounts available under liquidity facilities. Financing Arrangements and Debt Receivables Sale
Facility,
 Borrowings under our secured revolving credit facility.
 Cash from our receivables sale facility
 Borrowings under our liquidity facility in The Netherlands .
 49




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##### Table of Contents



Uses of Liquidity
  Working capital needs.
 Capital expenditures.
 Payments related to our outstanding debt and other financing facilities.
 Funding of pension obligations.
   50




---



##### Table of Contents



Off-Balance-Sheet Arrangements
    51




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##### Table of Contents



Receivables Sale Facility,
  Contractual Obligations and Commercial Commitments
  Payments due or expiring by periodLess than 1
    
    
    
    
    
    
    
    
    
    
    More than(In thousands)
    
    Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsContractual obligations:Long-term debt
    
    $
    237,987
    
    
    $
    1,638
    
    
    $
    236,349
    
    
    $
    
    
    
    $
    Operating leases
    
    
    5,860
    
    
    
    3,043
    
    
    
    2,466
    
    
    
    347
    
    
    
    4Commitments for capital expenditures
    
    
    120
    
    
    
    120
    
    
    
    
    
    
    
    
    
    
    
    Estimated interest and fee payments
on senior notes, liquidity
facilities and other debt
    
    
    46,380
    
    
    
    20,522
    
    
    
    25,858
    
    
    
    
    
    
    
    Estimated payments for U.S. defined
benefit pension plan
    
    
    24,629
    
    
    
    7,462
    
    
    
    9,850
    
    
    
    7,317
    
    
    
    Estimated payments for Canadian
defined pension plans
    
    
    3,100
    
    
    
    3,100
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    318,076
    
    
    $
    35,885
    
    
    $
    274,523
    
    
    $
    7,664
    
    
    $
    4Other commercial commitments (by
scheduled expiration dates):
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Standby letters of credit
    
    $
    6,784
    
    
    $
    6,784
    
    
    
    
    
    
    
    
    
    
    
    
 52




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##### Table of Contents



Financing
Arrangements
 Financing Arrangements and Debt Receivables Sale Facility
 Financing Arrangements
and Debt,
 Market Risks
  53




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##### Table of Contents



Commodity
Price Risk
 Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative
Instruments and Certain Hedging Activities Amendment of Statement 133 on Derivative Instruments and Hedging Activities
 For the Year Ended December 31,(In millions)
    
    2006
    
    2005Gain arising from ineffectiveness included in operations
    
    $
    2.5
    
    
    $
    1.4Gains reclassed from other comprehensive income (OCI)
to operations
    
    $
    7.6
    
    
    $
    3.4
 December 31,(In millions)
    
    2006
    
    2005Aggregate notional value of derivatives outstanding
    
    $
    3.7
    
    
    $
    8.8Period through which derivative positions currently exist
    
    December 2007
    
    December 2006Gain in fair value of derivatives
    
    $
    0.3
    
    
    $
    2.8The change in fair value due to the effect of a 10%
adverse change in
commodity prices to current fair value
    
    $
    (0.7
    )
    
    $
    (1.2
    )Deferred gains/(losses) included in OCI
    
    $
    (1.4
    )
    
    $
    2.3Gains/(losses) included in OCI to be recognized in the
next 12 months
    
    $
    (1.4
    )
    
    $
    2.3Number of months over which gain in OCI is to be recognized
    
    
    12
    
    
    
    12
  54




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##### Table of Contents



For the Year Ended December 31,(In millions)
    
    2006
    
    2005Loss arising from ineffectiveness included in operations
    
    $
    (2.0
    )
    
    $
    (1.3
    )Losses reclassed from OCI to operations
    
    $
    (0.1
    )
    
    $
    (4.2
    )
 December 31,(In millions)
    
    2006
    
    2005Aggregate notional value of derivatives outstanding
    
    $
    8.2
    
    
    $
    5.6Period through which derivative positions currently exist
    
    March 2007
    
    January 2006Loss in fair value of derivatives
    
    $
    (0.6
    )
    
    $
    The change in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    (0.8
    )
    
    $
    (0.6
    )Deferred gains included in OCI
    
    $
    0.9
    
    
    $
    0.2Gains included in OCI to be recognized in the next 12 months
    
    $
    0.9
    
    
    $
    0.2Number of months over which gain in OCI is to be recognized
    
    
    3
    
    
    
    1
  For the Year Ended December 31,(In millions)
    
    2006
    
    2005Losses arising from ineffectiveness included in operations
    
    $
    (3.2
    )
    
    $
    (2.7
    )
 December 31,(In millions)
    
    2006
    
    2005Aggregate notional value of derivatives outstanding
    
    $
    9.1
    
    
    $
    29.6Period through which derivative positions currently exist
    
    March 2007
    
    March 2006Gains/(losses) in fair value of derivatives
    
    $
    1.8
    
    
    $
    (2.4
    )The change in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    (0.7
    )
    
    $
    (3.2
    )
  55




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##### Table of Contents



For the Year Ended December 31,(In millions)
    
    2006Gain arising from ineffectiveness included in operations
    
    $
    0.1
 (In millions)
    
    2006Aggregate notional value of derivatives outstanding
    
    $
    12.9Period through which derivative positions currently exist
    
    January 2007Loss in fair value of derivatives
    
    $
    (0.4
    )The change in fair value due to the effect of a 10% adverse
change in commodity prices to current fair value
    
    $
    (1.3
    )
  For the Year Ended December 31,(In millions)
    
    2006
    
    2005Gains/(losses) arising from ineffectiveness included in operations
    
    $
    (0.3
    )
    
    $
    2.3Gains/(losses ) reclassed from OCI to operations
    
    $
    (2.2
    )
    
    $
    3.1
 December 31,(In millions)
    
    2006
    
    2005Aggregate notional value of derivatives outstanding
    
    $
    7.8
    
    
    $
    12.2Period through which derivative positions currently exist
    
    December 2008
    
    December 2008Gains/(losses) in fair value of derivatives
    
    $
    (1.2
    )
    
    $
    1.9The change in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    (0.7
    )
    
    $
    (1.4
    )Deferred losses included in OCI
    
    $
    (2.7
    )
    
    $
    (0.3
    )Gains/(losses) included in OCI to be recognized in the
next 12 months
    
    $
    (1.3
    )
    
    $
    0.5Number of months over which gain in OCI is to be recognized
    
    
    24
    
    
    
    36
 Foreign Currency Exchange Risk
  56




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##### Table of Contents



Interest Rate Risk
     Environmental Matters
 Environmental Remediation
 57




---



##### Table of Contents



Critical Accounting Policies
 Summary of Significant Accounting
Policies
  Inventory
  Derivatives and Hedging Activities
 Accounting for Derivative Instruments and Hedging
Activities Accounting for
Certain Derivative Instruments and Certain Hedging Activities Amendment of Statement 133 on Derivative Instruments and Hedging
Activities Foreign Currency Translation.
 58




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##### Table of Contents



Long-lived Assets
  Goodwill and Other Intangible
Assets,
 Income Taxes
 Accounting for Income Taxes
 Pension and Postretirement Benefit Costs
    59




---



##### Table of Contents



Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans Summary of Significant Account Policies, and , Retirement and Pension Plans
 Stock
Options
    60




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures about Market Risk
 Managements Discussion and
Analysis of Financial Condition and Results of Operations,
 
 Item 8. Financial Statements and Supplementary Data
 PageConsolidated Statements of OperationsFor the years ended December
31, 2006, 2005 and 2004
    
    
    72Consolidated Balance SheetsDecember 31, 2006 and 2005
    
    
    73Consolidated Statements of Stockholders EquityFor the years ended
December 31, 2006, 2005 and 2004
    
    
    74Consolidated Statements of Cash FlowsFor the years ended December
31, 2006, 2005 and 2004
    
    
    75Notes to Consolidated Financial Statements
    
    
    76Report of Independent Registered Public Accounting Firm
    
    
    140Report of Independent Registered Public Accounting Firm
    
    
    141
 61




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  Managements Report on Internal Control over Financial Reporting
 Internal Control-Integrated Framework
  
 Item 9B. Other Information
  62




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##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
   
 Item 11. Executive Compensation
  
 Item 12.
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
  63




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
  (1)
    
    The following consolidated financial statements and reports are included hereof:Consolidated Statements of Operations  For the years ended December 31, 2006, 2005, and
2004.Consolidated Balance Sheets  December 31, 2006 and 2005.Consolidated Statements of Stockholders Equity  For the years ended December 31, 2006,
2005, and 2004.Consolidated Statements of Cash Flows  For the years ended December 31, 2006, 2005, and
2004.Notes to Consolidated Financial Statements.Report of Independent Registered Public Accounting Firm.Report of Independent Registered Public Accounting Firm.Report of Independent Registered Public Accounting Firm.(2)
    
    The following consolidated financial statement schedule of our Company is included
hereof:SCHEDULE II           Valuation and Qualifying Accounts
  (3)
    
    Exhibits required by Item 601 of Regulation S-K:The following exhibits are included in this Form 10-K:
 Exhibit No.
    
    Description10.53*
    
    2001 Change in Control, Severance and Non-Competition
Agreement, dated as of March 23, 2001, by and between the
Company and John Van Gerwen.21
    
    List of Subsidiaries.23.1
    
    Consent of KPMG LLP, Independent Registered Public Accounting
Firm.31.1
    
    Certification of the Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Principal 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 the Principal Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 64




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Exhibit No.
    
    Description3.1
    
    Restated Certificate of Incorporation of the Company, as
amended through May 1, 1998 (incorporated by reference to
Exhibit 3.1 to the Companys Quarterly Report on Form 10-Q
for the period ended July 4, 1998).3.2
    
    Secretarys Certificate, dated February 6, 2004, attached to
a complete copy of the Bylaws of the Company, as amended May
22, 1997 (incorporated by reference to Exhibit 3.3 to the
Companys Annual Report on Form 10-K for the period ended
December 31, 2003).3.3
    
    Certificate of Designations of Series A Convertible Preferred
Stock, dated as of February 16, 2007 (incorporated by
reference to Exhibit A of the Preferred Stock Purchase
Agreement, filed as Exhibit 10.1 to the Companys Current
Report on Form 8-K filed on February 5, 2007).4.1
    
    Indenture, dated as of August 4, 1998, among the Company,
certain of the Companys subsidiaries and Wachovia Bank,
National Association (successor to First Union National Bank)
as Trustee (incorporated by reference to Exhibit 4.1 to the
Companys Quarterly Report on Form 10-Q for the period ended
July 4, 1998).4.2
    
    Indenture, dated as of March 27, 2002, among the Company,
certain of the Companys subsidiaries and Wachovia Bank,
National Association (successor to First Union National
Bank), as Trustee (incorporated by reference to Exhibit 4.3
to the Companys Annual Report on Form 10-K for the period
ended December 31, 2001).10.1
    
    Amended and Restated Credit Agreement, dated as of April 28,
2005, among the Company, its U.S. subsidiaries, the lenders
named therein and Wachovia Bank, National Association, as
administrative agent (incorporated by reference to Exhibit
10.3 to the Companys Quarterly Report on Form 10-Q for the
period ended July 3, 2005).10.2
    
    Amendment No. 1 to Amended and Restated Credit Agreement,
dated as of August 1, 2005, among the Company, its U.S.
subsidiaries, the lenders named therein and Wachovia Bank,
National Association, as administrative agent (incorporated
by reference to Exhibit 10.1 to the Companys Current Report
on Form 8-K filed on August 5, 2005).
 65




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##### Table of Contents



Exhibit No.
    
    Description10.3
    
    Amendment No. 2 to Amended and Restated Credit Agreement,
effective September 30, 2005, among the Company, its U.S.
subsidiaries, the lenders named therein and Wachovia Bank,
National Association, as administrative agent (incorporated
by reference to Exhibit 10.1 to the Companys Current Report
on Form 8-K filed on October 31, 2005).10.4
    
    Amendment No. 3 to Amended and Restated Credit Agreement,
dated as of February 22, 2006, among the Company, its U.S.
subsidiaries, the lenders named therein and Wachovia Bank,
National Association, as administrative agent (incorporated
by reference to Exhibit 10.1 to the Companys Current Report
on Form 8-K filed on February 28, 2006).10.5
    
    Amendment No. 4 to Amended and Restated Credit Agreement,
dated as of April 4, 2006, among the Company and its U.S.
subsidiaries, the lenders named therein and Wachovia Bank,
National Association, as administrative agent (incorporated
by reference to Exhibit 10.4 to the Companys Current Report
on Form 8-K filed on April 11, 2006).10.6
    
    Amendment No. 5 to Amended and Restated Credit Agreement,
dated as of June 9, 2006, among the Company and its U.S.
subsidiaries, the lenders named therein and Wachovia Bank,
National Association, as administrative agent (incorporated
by reference to Exhibit 10.2 to the Companys Current Report
on Form 8-K filed on June 13, 2006).10.7
    
    Amendment No. 6 to Amended and Restated Credit Agreement,
dated as of December 15, 2006, among the Company and its U.S.
subsidiaries, the lenders named therein and Wachovia Bank,
National Association, as administrative agent (incorporated
by reference to Exhibit 10.5 to the Companys Current Report
on Form 8-K filed on December 21, 2006).10.8
    
    Amendment No. 7 to Amended and Restated Credit Agreement,
dated as of February 16, 2007, among the Company and its U.S.
subsidiaries, the lenders named therein and Wachovia Bank,
National Association, as administrative agent (incorporated
by reference to Exhibit 10.1 to the Companys Current Report
on Form 8-K filed on February 23, 2007).10.9
    
    Amendment No. 8 to Amended and Restated Credit Agreement and
Consent, dated as of February 16, 2007, among the Company and
its U.S. subsidiaries, the lenders named therein and Wachovia
Bank, National Association, as administrative agent
(incorporated by reference to Exhibit 10.3 to the Companys
Current Report on Form 8-K filed on February 23, 2007).10.10
    
    Consignment Agreement, dated February 16, 2007, by and
between HSBC Bank USA, National Association, Wolverine Tube,
Inc. and Wolverine Joining Technologies, LLC (incorporated by
reference to Exhibit 10.2 to the Companys Current Report on
Form 8-K filed on February 23, 2007).10.11
    
    Receivables Sale Agreement (U.S.), dated as of April 28,
2005, among the Company, Small Tube Manufacturing, LLC, Tube
Forming, L.P. and DEJ 98 Finance, LLC (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on
Form 8-K filed on May 4, 2005).
 66




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Exhibit No.
    
    Description10.12
    
    Amendment No. 1 to Receivables Sale Agreement (U.S.), dated
as of April 24, 2006, among the Company, Tube Forming, L.P.,
Small Tube Manufacturing, LLC and DEJ 98 Finance, LLC
(incorporated by reference to Exhibit 10.3 to the Companys
Current Report on Form 8-K filed on April 11, 2006).10.13
    
    Amendment No. 2 to Receivables Sale Agreement (U.S.) and
Amended and Restated Performance Undertaking, effective as of
December 15, 2006, among Wolverine Tube, Inc., Tube Forming,
L.P., Small Tube Manufacturing LLC, Wolverine Joining
Technologies, LLC and DEJ Finance, LLC (incorporated by
reference to Exhibit 10.3 to the Companys Current Report on
Form 8-K filed on December 21, 2006).10.14
    
    Canadian Receivables Sale Agreement, dated as of April 4,
2006, between Wolverine Tube (Canada) Inc. and DEJ 98
Finance, LLC (incorporated by reference to Exhibit 10.1 to
the Companys Current Report on Form 8-K filed on April 11,
2006).10.15
    
    Amended and Restated Receivables Purchase Agreement, dated as
of April 4, 2006, among DEJ 98 Finance, LLC, Wolverine
Finance, LLC, the Company, Variable Funding Capital Company
LLC, The CIT Group/Business Credit, Inc., individually and as
co-agent, and Wachovia Bank, National Association,
individually and as co-agent (incorporated by reference to
Exhibit 10.2 to the Companys Current Report on Form 8-K
filed on April 11, 2006).10.16
    
    Amendment No. 1 to Amended and Restated Receivables Purchase
Agreement, effective as of June 9, 2006, among DEJ 98
Finance, LLC, Wolverine Finance, LLC, the Company, Variable
Funding Capital Company LLC, The CIT Group/Business Credit,
Inc., individually and as co-agent, and Wachovia Bank,
National Association, individually and as co-agent
(incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed on June 13, 2006).10.17
    
    Amendment No. 2 to Amended and Restated Receivables Purchase
Agreement, effective as of December 15, 2006, among DEJ
Finance, LLC, Wolverine Finance, LLC, Wolverine Tube, Inc.,
Variable Funding Capital Company LLC, The CIT Group/Business
Credit, Inc. and Wachovia Bank, National Association
(incorporated by reference to Exhibit 10.4 to the Companys
Current Report on Form 8-K filed on December 21, 2006).10.18
    
    Amendment No. 3 to Amended and Restated Receivables Purchase
Agreement, dated as of February 16, 2007, among DEJ 98
Finance, LLC, Wolverine Finance, LLC, Wolverine Tube, Inc.,
Variable Funding Capital Company, LLC, The CIT Group/Business
Credit, Inc., individually and as co-agent, and Wachovia
Bank, National Association, individually and as agent
(incorporated by reference to Exhibit 10.4 to the Companys
Current Report on Form 8-K filed on February 23, 2007).10.19
    
    Preferred Stock Purchase Agreement, dated as of January 31,
2007, by and among Wolverine Tube, Inc., The Alpine Group,
Inc. and Plainfield Special Situations Master Fund Limited
(incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed on February 5, 2007).
 67




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Exhibit No.
    
    Description10.20
    
    Registration Rights Agreement, dated as of February 16, 2007,
by and among Wolverine Tube, Inc., The Alpine Group, Inc. and
Plainfield Special Situations Master Fund Limited (attached
as Exhibit B to the Preferred Stock Purchase Agreement filed
as Exhibit 10.1 to the Companys Current Report on Form 8-K
filed on February 5, 2007).10.21
    
    Management Agreement, dated as of February 16, 2007, by and
between The Alpine Group, Inc. and Wolverine Tube, Inc.
(attached as Exhibit C to the Preferred Stock Purchase
Agreement filed as Exhibit 10.1 to the Companys Current
Report on Form 8-K filed on February 5, 2007).10.22*
    
    Consulting Agreement, dated as of February 16, 2007, by and
between Wolverine Tube, Inc. and Johann R. Manning, Jr.
(attached as Exhibit E-1 to the Preferred Stock Purchase
Agreement filed as Exhibit 10.1 to the Companys Current
Report on Form 8-K filed on February 5, 2007).10.23*
    
    Separation Agreement, dated as of February 16, 2007, by and
between Wolverine Tube, Inc. and Johann R. Manning, Jr.
(attached as Exhibit E-2 to the Preferred Stock Purchase
Agreement filed as Exhibit 10.1 to the Companys Current
Report on Form 8-K filed on February 5, 2007).10.24
    
    Voting Agreement, dated as of February 16, 2007, by and among
Wolverine Tube, Inc., The Alpine Group, Inc. and Plainfield
Special Situations Master Fund Limited (attached as Exhibit G
to the Preferred Stock Purchase Agreement filed as Exhibit
10.1 to the Companys Current Report on Form 8-K filed on
February 5, 2007).10.25*
    
    Wolverine Tube, Inc. 1993 Equity Incentive Plan (incorporated
by reference to Exhibit 10.7 to the Companys Registration
Statement on Form S-1 (File No. 33-65148)).10.26*
    
    Form of Non-Qualified Option Agreement under the Wolverine
Tube, Inc. 1993 Equity Incentive Plan (incorporated by
reference to Exhibit 10.15 to the Companys Quarterly Report
on Form 10-Q for the period ended July 2, 1994).10.27*
    
    1993 Stock Option Plan for Outside Directors of Wolverine
Tube, Inc. (incorporated by reference to Exhibit 10.8 to the
Companys Registration Statement on Form S-1 (File No.
33-65148)).10.28*
    
    Amendment One to Amended and Restated 1993 Stock Option Plan
for Outside Directors of Wolverine Tube, Inc. (incorporated
by reference to Exhibit 10.1 to the Companys Quarterly
Report on Form 10-Q for the period ended April 1, 2001).10.29*
    
    2001 Stock Option Plan for Outside Directors of Wolverine
Tube, Inc. (incorporated by reference to Appendix B to the
Companys Proxy Statement dated April 12, 2001).10.30*
    
    Form of Non-Qualified Option Agreement under the Companys
1993 Stock Option Plan for Outside Directors and 2001 Stock
Option Plan for Outside Directors (incorporated by reference
to Exhibit 10.1 to the Companys Quarterly Report on Form
10-Q for the period ended October 3, 2004).
 68




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##### Table of Contents



Exhibit No.
    
    Description10.31*
    
    Wolverine Tube, Inc. 2003 Equity Incentive Plan (incorporated
by reference to Exhibit 10.1 to the Companys Quarterly
Report on Form 10-Q for the period ended June 29, 2003).10.32*
    
    First Amendment to the Wolverine Tube, Inc. 2003 Equity
Incentive Plan (incorporated by reference to Exhibit 10.2 to
the Companys Quarterly Report on Form 10-Q for the period
ended June 29, 2003).10.33*
    
    Form of Non-Qualified Option Agreement under the Wolverine
Tube, Inc. 2003 Equity Incentive Plan (incorporated by
reference to Exhibit 10.2 to the Companys Quarterly Report
on Form 10-Q for the period ended October 3, 2004).10.34*
    
    Form of Restricted Stock Agreement under the Wolverine Tube,
Inc. 2003 Equity Incentive Plan, (incorporated by reference
to Exhibit 10.1 to the Companys Current Report on Form 8-K
filed on May 25, 2005).10.35*
    
    Form of SAR Agreement under the Wolverine Tube, Inc. 2003
Equity Incentive Plan (incorporated by reference to Exhibit
10.4 to the Companys Quarterly Report on Form 10-Q for the
period ended October 3, 2004).10.36*
    
    Wolverine Tube, Inc. Long Term Incentive Plan (incorporated
by reference to Exhibit 10.2 to the Companys Quarterly
Report on Form 10-Q for the period ended April 3, 1999).10.37*
    
    Wolverine Tube, Inc. Annual Performance Incentive Plan
(incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed on April 11, 2006).10.38*
    
    Wolverine Tube, Inc. Supplemental Benefit Restoration Plan
(incorporated by reference to Exhibit 10.1 of the Companys
Quarterly Report on Form 10-Q for the period ended June 30,
2002).10.39*
    
    Deferred Compensation Trust Agreement, dated February 13,
2001, by and between the Company and AmSouth Bank, as Trustee
(incorporated by reference to Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q for the period ended March 30,
2003).10.40*
    
    Amendment Number One to Deferred Compensation Trust
Agreement, dated May 7, 2003, by and between the Company and
AmSouth Bank, as Trustee (incorporated by reference to
Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q
for the period ended March 30, 2003).10.41*
    
    2002 Change in Control, Severance and Non-Competition
Agreement, dated as of July 12, 2002, by and between the
Company and Johann R. Manning, Jr. (incorporated by reference
to Exhibit 10.5 to the Companys Quarterly Report on Form
10-Q for the period ended June 30, 2002).10.42*
    
    2002 Change in Control, Severance and Non-Competition
Agreement, dated as of July 12, 2002, by and between the
Company and Keith Weil (incorporated by reference to Exhibit
10.6 to the Companys Quarterly Report on Form 10-Q for the
period ended June 30, 2002).10.43*
    
    2002 Change in Control, Severance and Non-Competition
Agreement, dated as of July 12, 2002, by and between the
Company and Garry K. Johnson (incorporated by reference to
Exhibit 10.40 to the Companys Annual Report on Form 10-K for
the period ended December 31, 2006).
 69




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##### Table of Contents



Exhibit No.
    
    Description10.44*
    
    Consultant Agreement, dated as of February 10, 2005, by and
between the Company and James E. Deason (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on
Form 8-K filed on February 16, 2005).10.45*
    
    Offer Letter, dated as of November 7, 2005, between the
Company and James E. Deason (incorporated by reference to
Exhibit 10.2 to the Companys Current Report on Form 8-K
filed on November 9, 2005).10.46*
    
    Letter Agreement between Wolverine Tube, Inc. and Garry K.
Johnson, dated March 1, 2007 (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K
filed on March 7, 2007).10.47*
    
    Summary of Non-Employee Director Compensation (incorporated
by reference to Exhibit 10.2 to the Companys Current Report
on Form 8-K filed on May 25, 2005).10.48*
    
    Summary of Named Executive Officer Compensation (incorporated
by reference to Exhibit 10.9 to the Companys Quarterly
Report on Form 10-Q for the period ended July 2, 2006).10.49*
    
    Form of Director Indemnification Agreement, dated as of
February 10, 2005 (incorporated by reference to Exhibit 10.2
to the Companys Current Report on Form 8-K filed on February
16, 2005).10.50*
    
    Form of Officer Indemnification Agreement, dated as of
February 10, 2005 (incorporated by reference to Exhibit 10.3
to the Companys Current Report on Form 8-K filed on February
16, 2005).10.51*
    
    Form of Letter for Amendment to Split Dollar Agreement Dated
May 1, 1999 (incorporated by reference to Exhibit 10.41 to
the Companys Annual Report on Form 10-K for the period ended
December 31, 2005).10.52*
    
    Form of Letter for Amendment to Vesting of Underwater
Options, dated as of October 24, 2005 (incorporated by
reference to Exhibit 10.42 to the Companys Annual Report on
Form 10-K for the period ended December 31, 2005).
 
 *
    
    Management contract or compensatory plan or arrangement. 70




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##### Table of Contents



SIGNATURES
  WOLVERINE TUBE, INC.By:

/s/ James E. DeasonName:
    

    James E. DeasonTitle:
    
    Senior Vice President, Chief
Financial Officer, and Secretary  Signature

    
    Title
    
    DateBy:
    
    /s/ Harold M. Karp

Harold M. Karp
    
    President and Chief Operating Officer
and Director
(Principal Executive Officer)
    
    March 15, 2007By:
    
    /s/ James E. Deason

James E. Deason
    
    Senior Vice President, Chief Financial
Officer, and Secretary
(Principal Financial Officer and
Principal Accounting Officer)
    
    March 15, 2007By:
    
    /s/ Steven S. Elbaum

Steven S. Elbaum
    
    Non-Executive Chairman of the
Board and Director
    
    March 15, 2007By:
    
    /s/ John L. Duncan

John L. Duncan
    
    Director
    
    March 15, 2007By:
    
    /s/ David M. Gilchrist, Jr.

David M. Gilchrist, Jr.
    
    Director
    
    March 15, 2007By:
    
    /s/ William C. Griffiths

William C. Griffiths
    
    Director
    
    March 15, 2007By:
    
    /s/ Alan Kestenbaum

Alan Kestenbaum
    
    Director
    
    March 15, 2007By:
    
    /s/ K. Mitchell Posner

K. Mitchell Posner
    
    Director
    
    March 15, 2007By:
    
    /s/ Brett Young

Brett Young
    
    Director
    
    March 15, 2007
 71




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Wolverine Tube, Inc. and Subsidiaries
 
 Consolidated Statements of Operations
 Year ended December 31,(In thousands except per share amounts)
    
    2006
    
    2005
    
    2004Net sales
    
    $
    1,403,042
    
    
    $
    873,505
    
    
    $
    797,875Cost of goods sold
    
    
    1,348,508
    
    
    
    851,862
    
    
    
    734,194Gross profit
    
    
    54,534
    
    
    
    21,643
    
    
    
    63,681Selling, general and administrative expenses
    
    
    31,173
    
    
    
    37,074
    
    
    
    37,259Advisory fees and expenses
    
    
    7,434
    
    
    
    
    
    
    
    Restructuring and other charges
    
    
    57,602
    
    
    
    1,416
    
    
    
    2,536Operating income/(loss) from continuing operations
    
    
    (41,675
    )
    
    
    (16,847
    )
    
    
    23,886Other expenseInterest expense, net
    
    
    25,570
    
    
    
    20,727
    
    
    
    20,860Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    3,009Amortization and other, net
    
    
    2,595
    
    
    
    2,802
    
    
    
    1,261(Loss) from continuing operations before income taxes
    
    
    (69,840
    )
    
    
    (40,376
    )
    
    
    (1,244
    )Income tax expense/(benefit)
    
    
    9,384
    
    
    
    (1,760
    )
    
    
    (1,888
    )Income/(loss) from continuing operations
    
    
    (79,224
    )
    
    
    (38,616
    )
    
    
    644Loss from discontinued operations, net of income tax
benefit of ($0.1) million
    
    
    
    
    
    
    
    
    
    
    (262
    )Net income/(loss)
    
    $
    (79,224
    )
    
    $
    (38,616
    )
    
    $
    382Income/(loss) per sharebasic:Continuing operations
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.05Discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Net income/(loss) per sharebasic
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.03Basic weighted average number of shares
    
    
    15,071
    
    
    
    15,022
    
    
    
    13,650Income/(loss) per sharediluted:Continuing operations
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.05Discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Net income/(loss) per sharediluted
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.03Diluted weighted average number of common and common
equivalent shares
    
    
    15,071
    
    
    
    15,022
    
    
    
    13,992
 The accompanying notes are an integral part of the consolidated financial statements.
 72




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Wolverine Tube, Inc. and Subsidiaries
 
 Consolidated Balance Sheets
 December 31,(In thousands except share and per share amounts)
    
    2006
    
    2005AssetsCurrent assetsCash and equivalents
    
    $
    23,733
    
    
    $
    27,329Accounts receivable, net of allowance for doubtful accounts of
$0.5 million in 2006 and $0.4 million in 2005
    
    
    62,529
    
    
    
    104,186Inventories
    
    
    122,943
    
    
    
    146,705Prepaid expenses and other
    
    
    11,417
    
    
    
    10,209Total current assets
    
    
    220,622
    
    
    
    288,429Property, plant and equipment, net
    
    
    133,259
    
    
    
    181,238Goodwill, net
    
    
    77,243
    
    
    
    77,064Deferred charges, net
    
    
    7,108
    
    
    
    7,734Deferred income taxes, non-current
    
    
    5,199
    
    
    
    13,469Assets held for sale
    
    
    11,135
    
    
    
    Notes receivable
    
    
    764
    
    
    
    831Total assets
    
    $
    455,330
    
    
    $
    568,765Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    40,507
    
    
    $
    71,802Accrued liabilities
    
    
    26,992
    
    
    
    34,952Deferred income taxes
    
    
    880
    
    
    
    Short-term borrowings
    
    
    1,638
    
    
    
    248Total current liabilities
    
    
    70,017
    
    
    
    107,002Long-term debt
    
    
    238,362
    
    
    
    234,920Pension liabilities
    
    
    28,504
    
    
    
    42,889Postretirement benefit obligation
    
    
    17,485
    
    
    
    19,722Accrued environmental remediation
    
    
    11,786
    
    
    
    930Total liabilities
    
    
    366,154
    
    
    
    405,463Stockholders equityCommon Stock, par value $0.01 per share; 40,000,000 shares
authorized, 15,090,843 and 15,058,803 shares issued as of
December 31, 2006 and 2005, respectively
    
    
    151
    
    
    
    151Additional paid-in capital
    
    
    91,904
    
    
    
    91,387Retained earnings
    
    
    6,510
    
    
    
    85,734Accumulated other comprehensive loss, net
    
    
    (9,389
    )
    
    
    (13,970
    )Total stockholders equity
    
    
    89,176
    
    
    
    163,302Total liabilities and stockholders equity
    
    $
    455,330
    
    
    $
    568,765
 The accompanying notes are an integral part of the consolidated financial statements.
 73




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
 
 Consolidated Statements of Stockholders Equity
and Comprehensive Income/(Loss)
 AccumulatedOther
    
    
    
    
    
    TotalAdditional
    
    
    
    
    
    Compre-
    
    
    
    
    
    Stock-Common Stock
    
    Paid-In
    
    Retained
    
    hensive
    
    Treasury
    
    holders(In thousands except number of shares)
    
    Shares
    
    Amount
    
    Capital
    
    Earnings
    
    Income (Loss)
    
    Stock
    
    EquityBalance at December 31, 2003
    
    
    14,344,806
    
    
    $
    143
    
    
    $
    103,167
    
    
    $
    123,926
    
    
    $
    (10,510
    )
    
    $
    (37,375
    )
    
    $
    179,351Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    382
    
    
    
    
    
    
    
    
    
    
    
    382Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    7,565
    
    
    
    
    
    
    
    7,566Change in fair value of derivatives
and reclassification adjustments, net
of tax of $118
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,433
    )
    
    
    
    
    
    
    (1,433
    )Minimum pension liability, net of tax
expense of $454
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (881
    )
    
    
    
    
    
    
    (881
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,634Common stock issued
    
    
    2,450,000
    
    
    
    25
    
    
    
    22,808
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,833Retirement of treasury stock
    
    
    (2,063,800
    )
    
    
    (21
    )
    
    
    (37,354
    )
    
    
    
    
    
    
    
    
    
    
    37,375
    
    
    
    Exercise of non-qualified stock
options, including income tax benefits
    
    
    155,482
    
    
    
    2
    
    
    
    1,314
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,316Issuance of restricted stock award and
amortization of unearned compensation
    
    
    41,089
    
    
    
    
    
    
    
    327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    327Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    41Balance at December 31, 2004
    
    
    14,927,577
    
    
    
    149
    
    
    
    90,262
    
    
    
    124,350
    
    
    
    (5,259
    )
    
    
    
    
    
    
    209,502Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,616
    )
    
    
    
    
    
    
    
    
    
    
    (38,616
    )Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165
    
    
    
    
    
    
    
    165Change in fair value of derivatives
and reclassification adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,024
    
    
    
    
    
    
    
    2,024Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,900
    )
    
    
    
    
    
    
    (10,900
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,327
    )Exercise of non-qualified stock
options, including income tax benefits
    
    
    88,125
    
    
    
    1
    
    
    
    501
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    503Issuance of restricted stock award and
amortization of unearned compensation
    
    
    43,101
    
    
    
    1
    
    
    
    624
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    624Balance at December 31, 2005
    
    
    15,058,803
    
    
    
    151
    
    
    
    91,387
    
    
    
    85,734
    
    
    
    (13,970
    )
    
    
    
    
    
    
    163,302Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,224
    )
    
    
    
    
    
    
    
    
    
    
    (79,224
    )Translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,625
    
    
    
    
    
    
    
    4,625Change in fair value of derivatives
and reclassification adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,675
    )
    
    
    
    
    
    
    (5,675
    )Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,970
    
    
    
    
    
    
    
    3,970Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,304
    )Exercise of non-qualified stock
options, including income tax benefits
    
    
    417
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Issuance of restricted stock award and
amortization of unearned compensation
    
    
    31,623
    
    
    
    
    
    
    
    515
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    515Adjustment to initially apply SFAS
158, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,661
    
    
    
    
    
    
    
    1,661Balance at December 31, 2006
    
    
    15,090,843
    
    
    $
    151
    
    
    $
    91,904
    
    
    $
    6,510
    
    
    $
    (9,389
    )
    
    $
    
    
    
    $
    89,176
 The accompanying notes are an integral part of these consolidated financial statements.
 74




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Wolverine Tube, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 Year ended December 31,(In thousands)
    
    2006
    
    2005
    
    2004Operating ActivitiesNet Income/(loss)
    
    $
    (79,224
    )
    
    $
    (38,616
    )
    
    $
    382Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    262Income/(loss) from continuing operations
    
    
    (79,224
    )
    
    
    (38,616
    )
    
    
    644Adjustments to reconcile income/(loss) from continuing
operations to net cash provided by operating activities:Depreciation
    
    
    14,626
    
    
    
    15,412
    
    
    
    15,862Amortization
    
    
    2,351
    
    
    
    1,636
    
    
    
    1,545Deferred income taxes
    
    
    9,139
    
    
    
    (4,574
    )
    
    
    (4,954
    )Stock compensation expense
    
    
    549
    
    
    
    548
    
    
    
    304Loss on disposal of fixed assets
    
    
    22
    
    
    
    2,027
    
    
    
    Impairment of assets
    
    
    34,291
    
    
    
    
    
    
    
    Non-cash environmental and other restructuring
    
    
    14,235
    
    
    
    661
    
    
    
    1,821Loss/(gain) on retirement of Senior Notes
    
    
    
    
    
    
    
    
    
    
    3,009Changes in operating assets and liabilities:Accounts receivable, net
    
    
    17,083
    
    
    
    (29,617
    )
    
    
    (5,499
    )Sale of accounts receivable
    
    
    24,882
    
    
    
    19,000
    
    
    
    Inventories
    
    
    16,382
    
    
    
    5,368
    
    
    
    (41,668
    )Refundable income taxes
    
    
    (560
    )
    
    
    1,307
    
    
    
    838Prepaid expenses and other
    
    
    (3,955
    )
    
    
    (5,047
    )
    
    
    1,409Accounts payable
    
    
    (32,516
    )
    
    
    12,381
    
    
    
    11,714Accrued liabilities, including pension, postretirement
benefit and environmental
    
    
    (15,402
    )
    
    
    14,632
    
    
    
    6,333Net cash provided by/(used for) operating activities
    
    
    1,903
    
    
    
    (4,882
    )
    
    
    (8,642
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (5,798
    )
    
    
    (10,009
    )
    
    
    (11,728
    )Disposal of assets
    
    
    91
    
    
    
    5,412
    
    
    
    2,926Funds received from/(investment in) rabbi trust
    
    
    
    
    
    
    4,413
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    82Net cash used for investing activities
    
    
    (5,707
    )
    
    
    (184
    )
    
    
    (8,720
    )Financing ActivitiesFinancing fees and expenses paid
    
    
    (3,213
    )
    
    
    (1,101
    )
    
    
    (151
    )Net borrowings from /(repayments of) revolving credit facilities
    
    
    3,177
    
    
    
    (2,222
    )
    
    
    1,009Retirement of Senior Notes
    
    
    
    
    
    
    
    
    
    
    (20,510
    )Issuance of common stock
    
    
    2
    
    
    
    503
    
    
    
    24,164Other financing activities
    
    
    (14
    )
    
    
    33
    
    
    
    (346
    )Net cash provided by/(used for) financing activities
    
    
    (48
    )
    
    
    (2,787
    )
    
    
    4,166Effect of exchange rate on cash and equivalents
    
    
    256
    
    
    
    165
    
    
    
    2,386Net cash used for continuing operations
    
    
    (3,596
    )
    
    
    (7,688
    )
    
    
    (10,810
    )Cash flows of discontinued operations (Revised  See Note 2)Operating cash flows
    
    
    
    
    
    
    
    
    
    
    (262
    )Net cash provided by/(used for) discontinued operations
    
    
    
    
    
    
    
    
    
    
    (262
    )Net decrease in cash and equivalents
    
    
    (3,596
    )
    
    
    (7,688
    )
    
    
    (11,072
    )Cash and equivalents at beginning of year
    
    
    27,329
    
    
    
    35,017
    
    
    
    46,089Cash and equivalents at end of year
    
    $
    23,733
    
    
    $
    27,329
    
    
    $
    35,017Supplemental disclosure of cash flow:Interest paid
    
    $
    22,849
    
    
    $
    21,100
    
    
    $
    21,549Income taxes paid/(refunded), net
    
    $
    175
    
    
    $
    466
    
    
    $
    (173
    )
 The accompanying notes are an integral part of the consolidated financial statements.
 75




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Wolverine Tube, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 1. Nature of Operations
     76




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77




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##### Table of Contents



2. Summary of Significant Accounting Policies
  Principles of Consolidation
  Uses of Estimates
  Revenue Recognition Policy
  Cash Equivalents
  Allowance for Doubtful Accounts
  78




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Sales of Accounts Receivable
 Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities
 Inventories
   (In thousands)
    
    2006
    
    2005Finished products
    
    $
    46,499
    
    
    $
    58,000Work-in-process
    
    
    30,811
    
    
    
    38,983Raw materials
    
    
    23,021
    
    
    
    23,545Supplies
    
    
    22,612
    
    
    
    26,177Totals
    
    $
    122,943
    
    
    $
    146,705
 Property, Plant and Equipment
  Impairment of Long-Lived Assets
 Accounting
for the Impairment or Disposal of Long-Lived Assets
 79




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Employment-Related Benefits
    Employers Accounting for Defined Benefit Pension and Other Postretirement Plans
 Income Taxes
 Accounting for Income
Taxes
 80




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##### Table of Contents



Goodwill
 Goodwill and Other Intangible Assets
 Deferred Charges
 Earnings/(Loss) Per Common Share
  Derivatives and Hedging Activities
  Accounting for
Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Certain Hedging Activities Amendment of Statement 133 on
Derivative Instruments and Hedging Activities
 81




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##### Table of Contents



Foreign
Currency Translation.
 Fair Values of Financial Instruments
  Cash and equivalents, accounts receivable and accounts payable
 Revolving credit facility and long-term debt:
 Derivatives:
  Assets/(liabilities)
    
    2006
    
    2005(In thousands)
    
    Carrying value
    
    Fair value
    
    Carrying value
    
    Fair valueInvestments in Rabbi Trust
(trading portfolio)
    
    
    
    
    
    
    
    
    
    $
    14
    
    
    $
    14Senior Notes
    
    $
    (235,718
    )
    
    $
    (199,143
    )
    
    $
    (235,518
    )
    
    $
    (177,523
    )Other debt
    
    $
    (4,282
    )
    
    $
    (4,282
    )
    
    $
    (1,220
    )
    
    $
    (1,220
    )Interest rate swap
    
    
    
    
    
    
    
    
    
    $
    (1,570
    )
    
    $
    (1,570
    )Foreign currency exchange contracts
    
    $
    (7
    )
    
    $
    (7
    )
    
    $
    19
    
    
    $
    19Commodity forward contracts
    
    $
    (118
    )
    
    $
    (118
    )
    
    $
    2,268
    
    
    $
    2,268
 Environmental Expenditures
  82




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Stock Options
  Accounting for Stock
Issued to Employees
 Year ended
    
    Year ended(in thousands except per share data)
    
    December 31, 2005
    
    December 31, 2004Net income/(loss), as reported
    
    $
    (38,616
    )
    
    
    382Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects
    
    
    (677
    )
    
    
    (494
    )Pro forma net (loss)
    
    $
    (39,293
    )
    
    
    (112
    )(Loss) per share:Basic  as reported
    
    $
    (2.57
    )
    
    $
    0.03Basic  pro forma
    
    $
    (2.62
    )
    
    $
    (0.01
    )Diluted  as reported
    
    $
    (2.57
    )
    
    $
    0.03Diluted  pro forma
    
    $
    (2.62
    )
    
    $
    (0.01
    )
 Translation to U.S. Dollars
  83




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Research and Development Costs
  Reclassifications
  Recent Accounting Pronouncements
  Inventory Costs, an amendment of ARB No. 43, Chapter 4
 Accounting for Conditional
Asset Retirement Obligations
 Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
 84




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##### Table of Contents



Fair Value Measurements
  3. Discontinued Operations
  (In thousands)
    
    2004Loss before income tax benefit
    
    $
    (389
    )Income tax benefit
    
    
    (127
    )Net loss
    
    $
    (262
    )
 4. Prepaid Expenses and Other
  (In thousands)
    
    2006
    
    2005Prepaid expenses
    
    $
    8,310
    
    
    $
    4,713Other assets recording the fair value of hedging
instruments (Note 5)
    
    
    3,107
    
    
    
    5,496Totals
    
    $
    11,417
    
    
    $
    10,209
 5. Derivatives
 Commodity
Price Risk
  85




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Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative
Instruments and Certain Hedging Activities Amendment of Statement 133 on Derivative Instruments and Hedging Activities
  For the Year Ended December 31,(In millions)
    
    2006
    
    2005Gain arising from ineffectiveness included in operations
    
    $
    2.5
    
    
    $
    1.4Gains reclassed from other comprehensive income (OCI)
to operations
    
    $
    7.6
    
    
    $
    3.4
 December 31,(In millions)
    
    2006
    
    2005Aggregate notional value of derivatives outstanding
    
    $
    3.7
    
    
    $
    8.8Period through which derivative positions currently exist
    
    December 2007
    
    December 2006Gain in fair value of derivatives
    
    $
    0.3
    
    
    $
    2.8The change in fair value due to the effect of a 10%
adverse change in
commodity prices to current fair value
    
    $
    (0.7
    )
    
    $
    (1.2
    )Deferred gains/(losses) included in OCI
    
    $
    (1.4
    )
    
    $
    2.3Gains/(losses) included in OCI to be recognized in the
next 12 months
    
    $
    (1.4
    )
    
    $
    2.3Number of months over which gain in OCI is to be recognized
    
    
    12
    
    
    
    12
  86




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For the Year Ended December 31,(In millions)
    
    2006
    
    2005Loss arising from ineffectiveness included in operations
    
    $
    (2.0
    )
    
    $
    (1.3
    )Losses reclassed from OCI to operations
    
    $
    (0.1
    )
    
    $
    (4.2
    )
 December 31,(In millions)
    
    2006
    
    2005Aggregate notional value of derivatives outstanding
    
    $
    8.2
    
    
    $
    5.6Period through which derivative positions currently exist
    
    March 2007
    
    January 2006Loss in fair value of derivatives
    
    $
    (0.6
    )
    
    $
    0.0The change in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    (0.8
    )
    
    $
    (0.6
    )Deferred gains included in OCI
    
    $
    0.9
    
    
    $
    0.2Gains included in OCI to be recognized in the next 12 months
    
    $
    0.9
    
    
    $
    0.2Number of months over which gain in OCI is to be recognized
    
    
    3
    
    
    
    1
  For the Year Ended December 31,(In millions)
    
    2006
    
    2005Losses arising from ineffectiveness included in operations
    
    $
    (3.2
    )
    
    $
    (2.7
    )
 December 31,(In millions)
    
    2006
    
    2005Aggregate notional value of derivatives outstanding
    
    $
    9.1
    
    
    $
    29.6Period through which derivative positions currently exist
    
    March 2007
    
    March 2006Gains/(losses) in fair value of derivatives
    
    $
    1.8
    
    
    $
    (2.4
    )The change in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    (0.7
    )
    
    $
    (3.2
    )
  For the Year Ended December 31,(In millions)
    
    2006Gain arising from ineffectiveness included in operations
    
    $
    0.1
 87




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##### Table of Contents



(In millions)
    
    2006Aggregate notional value of derivatives outstanding
    
    $
    12.9Period through which derivative positions currently exist
    
    January 2007Loss in fair value of derivatives
    
    $
    (0.4
    )The change in fair value due to the effect of a 10% adverse
change in commodity prices to current fair value
    
    $
    (1.3
    )
  For the Year Ended December 31,(In millions)
    
    2006
    
    2005Gains/(losses) arising from ineffectiveness included in operations
    
    $
    (0.3
    )
    
    $
    2.3Gains/(losses ) reclassed from OCI to operations
    
    $
    (2.2
    )
    
    $
    3.1
 December 31,(In millions)
    
    2006
    
    2005Aggregate notional value of derivatives outstanding
    
    $
    7.8
    
    
    $
    12.2Period through which derivative positions currently exist
    
    December 2008
    
    December 2008Gains/(losses) in fair value of derivatives
    
    $
    (1.2
    )
    
    $
    1.9The change in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    (0.7
    )
    
    $
    (1.4
    )Deferred losses included in OCI
    
    $
    (2.7
    )
    
    $
    (0.3
    )Gains/(losses) included in OCI to be recognized in the
next 12 months
    
    $
    (1.3
    )
    
    $
    0.5Number of months over which gain in OCI is to be recognized
    
    
    24
    
    
    
    36
 Foreign Currency Exchange Risk
  88




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Interest Rate Risk
     89




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##### Table of Contents



6. Property, Plant and Equipment
  (In thousands)
    
    2006
    
    2005Land and improvements
    
    $
    9,955
    
    
    $
    13,995Building and improvements
    
    
    44,417
    
    
    
    51,065Machinery and equipment
    
    
    241,309
    
    
    
    294,077Construction-in-progress
    
    
    2,998
    
    
    
    2,914298,679
    
    
    
    362,051Less accumulated depreciation
    
    
    (165,420
    )
    
    
    (180,813
    )Totals
    
    $
    133,259
    
    
    $
    181,238
 7. Assets Held for Sale
    Fixed Asset Impairment Charge
 US WholesaleDistribution
    
    Jackson,
    
    Montreal,(in thousands)
    
    Combined
    
    Facility
    
    Tennessee
    
    QuebecLand
    
    $
    1,273
    
    
    $
    
    
    
    $
    
    
    
    $
    1,273Building
    
    
    2,183
    
    
    
    71
    
    
    
    
    
    
    
    2,112Equipment
    
    
    26,171
    
    
    
    
    
    
    
    14,760
    
    
    
    11,411Total
    
    $
    29,627
    
    
    $
    71
    
    
    $
    14,760
    
    
    $
    14,796
 90




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##### Table of Contents



Assets Held for Sale
 US WholesaleDistribution
    
    Jackson,
    
    Montreal,(in thousands)
    
    Combined
    
    Facility
    
    Tennessee
    
    QuebecLand
    
    $
    3,238
    
    
    $
    
    
    
    $
    
    
    
    $
    3,238Building
    
    
    873
    
    
    
    
    
    
    
    
    
    
    
    873Equipment
    
    
    7,024
    
    
    
    
    
    
    
    6,622
    
    
    
    402Total
    
    $
    11,135
    
    
    $
    
    
    
    $
    6,622
    
    
    $
    4,513
 8. Deferred Charges
   (In thousands)
    
    2006
    
    2005Deferred debt issuance costs
    
    $
    12,468
    
    
    $
    10,975Swap termination fee
    
    
    1,720
    
    
    
    Patents and other
    
    
    2,084
    
    
    
    1,897Unrecognized prior service cost for
pensions
    
    
    
    
    
    
    1,50716,272
    
    
    
    14,379Less accumulated amortization
    
    
    (9,164
    )
    
    
    (6,645
    )Totals
    
    $
    7,108
    
    
    $
    7,734
  91




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9. Accrued Liabilities
  (In thousands)
    
    2006
    
    2005Interest
    
    $
    7,282
    
    
    $
    7,304Taxes
    
    
    2,813
    
    
    
    3,388Reserve for restructuring
    
    
    2,650
    
    
    
    785Fair value of derivatives and unsettled derivative
liabilities
    
    
    3,507
    
    
    
    10,962Other accrued operating expenses
    
    
    10,740
    
    
    
    12,513Totals
    
    $
    26,992
    
    
    $
    34,952
 10. Financing Arrangements and Debt
  (In thousands)
    
    2006
    
    2005Secured revolving credit facility, due March 2007
    
    $
    2,000
    
    
    $
    Senior Notes, 7.375%, due August 2008
    
    
    136,750
    
    
    
    135,180Discount on 7.375% Senior Notes, original issue
discount amortized over 10 years
    
    
    (46
    )
    
    
    (75
    )Senior Notes, 10.5%, due April 2009
    
    
    99,400
    
    
    
    99,400Discount on 10.5% Senior Notes, original issue
discount amortized over 7 years
    
    
    (386
    )
    
    
    (557
    )Netherlands facility, 5.13%, due on demand
    
    
    1,176
    
    
    
    4Other foreign facilities
    
    
    1,020
    
    
    
    1,104Capitalized leases
    
    
    86
    
    
    
    112240,000
    
    
    
    235,168Less short-term borrowings
    
    
    (1,638
    )
    
    
    (248
    )Totals
    
    $
    238,362
    
    
    $
    234,920
  (In thousands)2007
    
    $
    1,6382008
    
    
    139,3362009
    
    
    99,026Totals
    
    $
    240,000
 Liquidity Facilities
 Receivables Sale Facility
 92




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##### Table of Contents



Secured Revolving Credit Facility
  
    
    On February 22, 2006, we adjusted the borrowing base to include certain billet
inventory and up to $11 million of eligible equipment;
    
    On April 4, 2006 and June 9, 2006, we amended the facility to permit the amendments
to our receivables sale facility described in Note 11, Receivables Sale Facilityof the
Notes to Consolidated Financial Statements; and
    
    On December 15, 2006, we amended the facility to permit certain adjustments to our
former silver consignment and forward contracts facility and our receivables facility
in preparation for the ultimate termination of the silver facility in December 2006.
 Financing Arrangements and Debt
  Availability.
 Borrowing Base
 93




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##### Table of Contents



Interest and Fees
 Maturity
 Security
 Covenants
 
    
    a requirement that consolidated Earnings Before Interest, Depreciation and
Amortization (EBITDA) for our Company and all of our consolidated subsidiaries (the
Consolidated Parties) must be greater than or equal to $32.0 million, calculated on a
rolling four quarter basis, commencing with the fiscal quarter of the Consolidated
Parties ending closest to June 30, 2007 and for each fiscal quarter thereafter
(consolidated EBITDA is calculated as the sum of (a) consolidated net income after
taxes of the Consolidated Parties for such period excluding extraordinary items of
income and as adjusted for certain non-cash items relating to changes in accounting
methods and hedge gains and losses, plus (b) the aggregate amount of depreciation and
amortization charges made in calculating consolidated net income for such period, plus
(c) aggregate consolidated interest expense (net of interest income) for such period,
plus (d) the aggregate amount of all income taxes reflected on the consolidated income
statements of the Consolidated Parties for such period, plus (e) any backwardation
losses between $1.3 and $3.0 million in the last three production months of 2005, plus
(f) up to $12.0 million in aggregate non-cash
 94




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##### Table of Contents



restructuring charges and up to $6.0 million in aggregate cash restructuring charges
through December 31, 2006);
    
    a requirement that the Consolidated Parties shall not make consolidated capital
expenditures (current expenditures for fixed or capital assets as reflected on the
financial statements of the Consolidated Parties) in excess of $15.0 million during any
fiscal year; and
    
    a requirement that, during any period beginning on the date on which the outstanding
obligations under the secured revolving credit facility equal or exceed $18.0 million
(the February 2007 amendments changed this threshold to $25 million) and continuing
until the termination of the facility and repayment of such obligations, the
Consolidated Parties shall maintain a fixed charge coverage ratio of not less than the
following amounts as of the last day of each month in the periods indicated below:
 Period
    
    Ratio4th Fiscal Quarter 2006 through 2nd
Fiscal Quarter 2007
    
    
    1.10 to 1.03rd Fiscal Quarter 2007
    
    
    1.15 to 1.04th Fiscal Quarter 2007 and thereafter
    
    
    1.20 to 1.0
 (the fixed charge coverage ratio is calculated as the ratio of the following (measured
for the 12 consecutive month period ending on the measurement date): (a) consolidated
EBITDA less certain unfinanced capital expenditures, taxes paid in cash by the
Consolidated Parties and cash dividends paid by our Company, to (b) total consolidated
cash interest expense (net of interest income) plus the sum of all scheduled principal
payments on consolidated funded debt (other than intercompany debt) for the 12
consecutive months beginning on the measurement date).
 Events of Default and Acceleration.
  95




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Silver Consignment and Forward Contracts Facility
  New Silver Consignment Facility
   96




---



##### Table of Contents



10.5% Senior Notes due 2009
  Year
    
    PercentageApril 1, 2007
    
    
    105.250
    %April 1, 2008
    
    
    102.625
    %April 1, 2009 and thereafter
    
    
    100.000
    %
 97




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##### Table of Contents



7.375% Senior Notes due 2008
    Other Credit Facilities
   98




---



##### Table of Contents



11. Receivables Sale Facility
  
    
    On February 22, 2006, we instituted a weekly reporting and collections system and
made certain adjustments to concentration and reserve calculations that effectively
increased availability within the existing $45.0 million commitment;
    
    On April 4, 2006, we included certain Canadian accounts receivable in the
receivables sale facility and increased the maximum amount available under the facility
from $45.0 million to $70.0 million;
    
    On June 9, 2006, we increased the maximum amount available under the facility from
$70.0 million to $90.0 million; and
    
    On December 15, 2006, we included accounts receivable originated by Wolverine
Joining Technologies, LLC in the facility, which increased availability within the
existing $90.0 million commitment.
  Structure
  99




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##### Table of Contents



Available Amounts
  Costs
 Representations, Warranties, Covenants and Indemnities
 Termination.
 100




---



##### Table of Contents



,
  12. Interest Expense
  Year Ended December 31,(in thousands)
    
    2006
    
    2005
    
    2004Interest expense  bonds and other
    
    $
    21,242
    
    
    $
    20,862
    
    
    $
    22,002Interest expense  asset securitization
    
    
    4,397
    
    
    
    640
    
    
    
    Interest expense  revolver
    
    
    89
    
    
    
    165
    
    
    
    344Effect of interest rate swap
    
    
    637
    
    
    
    388
    
    
    
    (655
    )Interest income
    
    
    (691
    )
    
    
    (1,064
    )
    
    
    (637
    )Capitalized interest
    
    
    (104
    )
    
    
    (264
    )
    
    
    (194
    )Interest expense, net
    
    $
    25,570
    
    
    $
    20,727
    
    
    $
    20,860
 13. Retirement and Pension Plans
 Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  an amendment of
FASB Statements No. 87, 88, 106 and 132(R)
 101




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##### Table of Contents



Before
    
    
    
    
    
    AfterImplementation of
    
    Change due
    
    Implementation ofSFAS 158
    
    to SFAS 158
    
    SFAS 158AssetsDeferred income taxes, non-current
    
    $
    4,508
    
    
    $
    691
    
    
    $
    5,199Total Assets
    
    $
    454,639
    
    
    $
    691
    
    
    $
    455,330Liabilities and Stockholders EquityAccounts payable
    
    $
    39,402
    
    
    $
    1,105
    
    
    $
    40,507Total current liabilities
    
    $
    68,912
    
    
    $
    1,105
    
    
    $
    70,017Pension liabilities
    
    $
    28,928
    
    
    $
    (424
    )
    
    $
    28,504Post retirement benefit obligation
    
    $
    19,136
    
    
    $
    (1,651
    )
    
    $
    17,485Total liabilities
    
    $
    367,124
    
    
    $
    (970
    )
    
    $
    366,154Accumulated other comprehensive loss, net
    
    $
    (11,050
    )
    
    $
    1,661
    
    
    $
    (9,389
    )Total stockholders equity
    
    $
    87,515
    
    
    $
    1,661
    
    
    $
    89,176Total liabilities and
equity
    
    $
    454,639
    
    
    $
    691
    
    
    $
    455,330
  102




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Employers
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination
Plans
  (In thousands)
    
    2006
    
    
    2005
    
    
    2004401(k) employer match
    
    $
    589
    
    
    $
    678
    
    
    $
    7493% defined contribution
    
    
    1,617
    
    
    
    
    
    
    
    Success share
    
    
    1,637
    
    
    
    
    
    
    
    Transition credit
    
    
    936
    
    
    
    
    
    
    
    Total
    
    $
    4,779
    
    
    $
    678
    
    
    $
    749
  U.S. Qualified Retirement Plan
   2006
    
    2005Equity securities
    
    
    59
    %
    
    
    59
    %Debt securities
    
    
    39
    
    
    
    40Cash and equivalents
    
    
    2
    
    
    
    1Total
    
    
    100
    %
    
    
    100
    %
  103




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##### Table of Contents



SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Accrued benefit liability   noncurrent
    
    $
    (27,411
    )
    
    $
    (33,372
    )Intangible asset
    
    
    N/A
    
    
    
    Accumulated other comprehensive loss
    
    
    N/A
    
    
    
    29,071Net amount recognized
    
    $
    (27,411
    )
    
    $
    (4,301
    )
   SFAS 158
    
    SFAS 872006
    
    2005Discount rate *
    
    
    5.92
    %
    
    
    5.75
    %Rate of increase in compensation
    
    
    3.00
    %
    
    
    3.00
    %
 
 *
    
    Historically, we used Moodys Aa Corporate Bond Index as a
discount rate. Beginning in 2006, we began using the Hewitt Yield
Curve, believing it to be a more accurate method to determine bond yield
rates. The effect of changing this method increased the discount rate
by 0.17%. Had our Company continued to use the Moodys Aa rate index,
the benefit obligation for the qualified pension plan would be $3.4
million higher at December 31, 2006. 104




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SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005
    
    2004Service cost
    
    $
    795
    
    
    $
    4,960
    
    
    $
    4,358Interest cost
    
    
    9,162
    
    
    
    9,928
    
    
    
    9,371Expected return on plan assets
    
    
    (10,593
    )
    
    
    (11,541
    )
    
    
    (11,194
    )Amortization of prior service cost
    
    
    
    
    
    
    120
    
    
    
    120Amortization of net actuarial loss
    
    
    942
    
    
    
    1,763
    
    
    
    1,236Effect of curtailment
    
    
    
    
    
    
    645
    
    
    
    Net periodic pension cost
    
    $
    306
    
    
    $
    5,875
    
    
    $
    3,891
    SFAS 158
    
    SFAS 872006
    
    2005
    
    2004Discount rate
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    6.25
    %Rate of increase in compensation
    
    
    3.00
    %
    
    
    3.50
    %
    
    
    3.50
    %Expected long-term rate of return on
plan assets
    
    
    8.25
    %
    
    
    9.00
    %
    
    
    9.00
    %
  105




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##### Table of Contents



SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Benefit obligation at the beginning of the year
    
    $
    164,662
    
    
    $
    165,004Service costs
    
    
    795
    
    
    
    4,960Interest costs
    
    
    9,162
    
    
    
    9,928Actuarial loss/(gain)
    
    
    (4,926
    )
    
    
    10,858Benefits paid
    
    
    (8,020
    )
    
    
    (7,361
    )Curtailment
    
    
    
    
    
    
    (18,727
    )Benefit obligation at the end of the year
    
    $
    161,673
    
    
    $
    164,662
   SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Fair value of plan assets at the beginning of the year
    
    $
    131,257
    
    
    $
    131,149Accrued expenses
    
    
    
    
    
    
    (18
    )Accrued interest
    
    
    
    
    
    
    738Company contributions
    
    
    1,829
    
    
    
    Actual return on plan assets
    
    
    9,196
    
    
    
    6,749Benefits paid
    
    
    (8,020
    )
    
    
    (7,361
    )Fair value of plan assets at the end of the year
    
    $
    134,262
    
    
    $
    131,257
   SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Funded Status
    
    $
    (27,411
    )
    
    $
    (33,405
    )Unrecognized net actuarial loss
    
    
    N/A
    
    
    
    29,104Unrecognized prior service costs
    
    
    N/A
    
    
    
    Funded Status*
    
    $
    (27,411
    )
    
    $
    (4,301
    )
 
 *
    
    Note: SFAS 158 requires the recording of funded status
without detail as required in prior years under SFAS 87. 106




---



##### Table of Contents



(in thousands)2007
    
    $
    8,1212008
    
    
    8,5452009
    
    
    8,8842010
    
    
    9,2082012
    
    
    9,5322013 - 2016
    
    
    52,918
 U.S. Nonqualified Pension Plans
   107




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##### Table of Contents



SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Accrued benefit liability  current
    
    $
    (80
    )
    
    $
    Accrued benefit liability  noncurrent
    
    
    (1,093
    )
    
    
    (6,913
    )Accumulated other comprehensive loss
    
    
    
    
    
    
    234Net amount recognized
    
    
    
    
    
    $
    (6,679
    )
   SFAS 158
    
    SFAS 872006
    
    2005Discount rate*
    
    
    5.83
    %
    
    
    5.75
    %Rate of increase in compensation
    
    
    3.00
    %
    
    
    3.00
    %
 
 *
    
    Historically, we used Moodys Aa Corporate Bond Index as a
discount rate. Beginning in 2006, we began using the Hewitt Yield
Curve, believing it to be a more accurate method to determine bond yield
rates. The effect of changing this method increased the discount rate
by 0.17%. Had our Company continued to use the Moodys Aa rate index,
the benefit obligation for the nonqualified pension plan would be $10
thousand higher at December 31, 2006.  SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005
    
    2004Service cost
    
    $
    7
    
    
    $
    216
    
    
    $
    202Interest cost
    
    
    66
    
    
    
    472
    
    
    
    494Amortization of prior service cost
    
    
    
    
    
    
    368
    
    
    
    367Amortization of net actuarial loss
    
    
    2
    
    
    
    49
    
    
    
    43Curtailment
    
    
    
    
    
    
    2,784
    
    
    
    Settlement
    
    
    102
    
    
    
    261
    
    
    
    Net periodic pension cost
    
    $
    177
    
    
    $
    4,150
    
    
    $
    1,106
  108




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##### Table of Contents



SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Benefit obligation at the beginning of the year
    
    $
    6,923
    
    
    $
    8,485Service costs
    
    
    7
    
    
    
    216Interest costs
    
    
    66
    
    
    
    472Actuarial loss
    
    
    (8
    )
    
    
    210Settlement
    
    
    (5,735
    )
    
    
    Curtailment
    
    
    
    
    
    
    (806
    )Benefits paid
    
    
    (80
    )
    
    
    (1,654
    )Benefit obligation at the end of the year
    
    $
    1,173
    
    
    $
    6,923
  SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Fair value of plan assets at the beginning of the year
    
    $
    
    
    
    $
    Company contributions
    
    
    5,815
    
    
    
    1,654Benefits paid
    
    
    (80
    )
    
    
    (1,654
    )Settlement
    
    
    (5,735
    )
    
    
    Fair value of plan assets at the end of the year
    
    $
    
    
    
    $
    
   SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Funded Status
    
    
    (1,173
    )
    
    
    (6,923
    )Unrecognized net actuarial loss
    
    
    N/A
    
    
    
    244Unrecognized prior service costs
    
    
    N/A
    
    
    
    Funded Status*
    
    
    (1,173
    )
    
    
    (6,679
    )
 
 *
    
    Note: SFAS 158 requires the recording of funded status
without detail as required in prior years under SFAS 87. 109




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(in thousands)2007
    
    $
    802008
    
    
    812009
    
    
    822010
    
    
    802011
    
    
    822012 - 2016
    
    
    430
 Canadian Plans
   Employers Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Plans
   110




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##### Table of Contents



Minimum
    
    MaximumDebt securities
    
    
    47
    %
    
    
    53
    %Cash and equivalents
    
    
    47
    %
    
    
    53
    %
    Salaried Plan
    
    Operational PlanYears 1  10
    
    
    4.75
    %
    
    
    4.75
    %Years Thereafter
    
    
    4.50
    %
    
    
    4.50
    %
 Salaried Plan
  SFAS 158
    
    SFAS 872006
    
    2005Canadian equity securities
    
    
    
    %
    
    
    31
    %Foreign equity securities
    
    
    
    %
    
    
    29
    %Debt securities
    
    
    50
    %
    
    
    39
    %Cash and equivalents
    
    
    50
    %
    
    
    1
    %Total
    
    
    100
    %
    
    
    100
    %
 111




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##### Table of Contents



SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Accrued benefit liability  current
    
    $
    (1,176
    )
    
    $
    Accrued benefit liability  noncurrent
    
    
    
    
    
    
    (281
    )Accumulated other comprehensive loss
    
    
    N/A
    
    
    
    1,802Net amount recognized
    
    
    N/A
    
    
    $
    1,521
   SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005
    
    2004Service cost
    
    $
    301
    
    
    $
    233
    
    
    $
    200Interest cost
    
    
    598
    
    
    
    553
    
    
    
    486Expected return on plan assets
    
    
    (684
    )
    
    
    (588
    )
    
    
    (501
    )Effect of Curtailment
    
    
    1,256
    
    
    
    
    
    
    
    Amortization of net actuarial loss
    
    
    132
    
    
    
    85
    
    
    
    100Net periodic pension cost
    
    $
    1,603
    
    
    $
    283
    
    
    $
    285
   SFAS 158
    
    SFAS 872006
    
    2005
    
    2004Discount rate
    
    
    5.5
    %
    
    
    6.00
    %
    
    
    6.25
    %Expected long-term rate of return on plan assets
    
    
    7.0
    %
    
    
    7.00
    %
    
    
    7.50
    %
 112




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##### Table of Contents



SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Benefit obligation at the beginning of the year
    
    $
    10,809
    
    
    $
    9,461Service costs
    
    
    301
    
    
    
    233Interest costs
    
    
    598
    
    
    
    553Actuarial loss
    
    
    
    
    
    
    1,062Benefits paid
    
    
    (1,069
    )
    
    
    (845
    )Effect of Curtailment
    
    
    1,256
    
    
    
    Foreign currency exchange rate changes
    
    
    (24
    )
    
    
    345Benefit obligation at the end of the year
    
    $
    11,871
    
    
    $
    10,809
  SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Fair value of plan assets at the beginning of the year
    
    $
    9,573
    
    
    $
    8,618Actual return on plan assets
    
    
    1,281
    
    
    
    963Company contribution
    
    
    936
    
    
    
    532Benefits paid
    
    
    (1,069
    )
    
    
    (845
    )Foreign currency exchange rate changes
    
    
    (26
    )
    
    
    305Fair value of plan assets at the end of the year
    
    $
    10,695
    
    
    $
    9,573
   SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Funded status
    
    $
    (1,176
    )
    
    $
    (1,236
    )Unrecognized net actuarial loss
    
    
    N/A
    
    
    
    2,757Funded Status *
    
    $
    (1,176
    )
    
    $
    1,521
 
 *
    
    Note: SFAS 158 requires the recording of funded status
without detail as required in prior years under SFAS 87.  (in thousands)2007
    
    $
    11,8712008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012 - 2016
    
    
    
 113




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##### Table of Contents



Operational Plan
  SFAS 158
    
    SFAS 872006
    
    2005Canadian equity securities
    
    
    
    
    
    
    31
    %Foreign equity securities
    
    
    
    
    
    
    29Debt securities
    
    
    50
    %
    
    
    40Cash and equivalents
    
    
    50
    %
    
    
    Total
    
    
    100
    %
    
    
    100
    %
  SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Accrued benefit liability
    
    $
    (1,599
    )
    
    $
    (2,323
    )Intangible asset
    
    
    N/A
    
    
    
    1,507Accumulated other comprehensive loss
    
    
    N/A
    
    
    
    696Net amount recognized
    
    
    N/A
    
    
    $
    (120
    )
   SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005
    
    2004Service cost
    
    $
    606
    
    
    $
    415
    
    
    $
    355Interest cost
    
    
    1,027
    
    
    
    987
    
    
    
    908Expected return on plan assets
    
    
    (1,158
    )
    
    
    (974
    )
    
    
    (897
    )Effect of Curtailment
    
    
    2,987
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    146
    
    
    
    115
    
    
    
    94Net periodic pension cost
    
    $
    3,608
    
    
    $
    543
    
    
    $
    460
  114




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##### Table of Contents



SFAS 158
    
    SFAS 872006
    
    2005
    
    2004Discount rate
    
    
    5.50
    %
    
    
    6.00
    %
    
    
    6.25
    %Expected long-term rate of return on plan
assets
    
    
    7.00
    %
    
    
    7.00
    %
    
    
    7.50
    %
  SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Benefit obligation at the beginning of the year
    
    $
    18,183
    
    
    $
    16,629Service costs
    
    
    606
    
    
    
    415Interest costs
    
    
    1,027
    
    
    
    987Amendments
    
    
    
    
    
    
    533Actuarial loss
    
    
    
    
    
    
    458Benefits paid
    
    
    (1,255
    )
    
    
    (1,416
    )Effect of Curtailment
    
    
    1,582
    
    
    
    Foreign currency exchange rate changes
    
    
    (44
    )
    
    
    577Benefit obligation at the end of the year
    
    $
    20,099
    
    
    $
    18,183
  SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Fair value of plan assets at the beginning of the year
    
    $
    15,859
    
    
    $
    14,418Actual return on plan assets
    
    
    2,227
    
    
    
    1,764Company contribution
    
    
    1,735
    
    
    
    590Benefits paid
    
    
    (1,255
    )
    
    
    (1,416
    )Foreign currency exchange rate changes
    
    
    (66
    )
    
    
    503Fair value of plan assets at the end of the year
    
    $
    18,500
    
    
    $
    15,859
   SFAS 158
    
    SFAS 87(In thousands)
    
    2006
    
    2005Funded status
    
    $
    (1,599
    )
    
    $
    (2,323
    )Unrecognized net actuarial loss
    
    
    N/A
    
    
    
    696Unrecognized prior service costs
    
    
    N/A
    
    
    
    1,507Funded Status*
    
    $
    (1,599
    )
    
    $
    (120
    )
 
 *
    
    Note: SFAS 158 requires the recording of funded status
without detail as required in prior years under SFAS
87. 115




---



##### Table of Contents



(in thousands)2007
    
    $
    20,0992008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012 - 2016
    
    
    
 14. Postretirement Benefit Obligation
   (In thousands)
    
    2006
    
    2005
    
    2004Service cost
    
    $
    383
    
    
    $
    753
    
    
    $
    676Interest cost
    
    
    1,018
    
    
    
    1,167
    
    
    
    1,081Amortization of prior service cost
    
    
    (49
    )
    
    
    164
    
    
    
    179Amortization of deferred gain
    
    
    
    
    
    
    
    
    
    
    (7
    )Amortization of net actuarial loss (gain)
    
    
    (449
    )
    
    
    64
    
    
    
    Effect of special termination benefits
    
    
    
    
    
    
    6
    
    
    
    328Net periodic postretirement benefit cost
    
    $
    903
    
    
    $
    2,154
    
    
    $
    2,257
 116




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##### Table of Contents



(In thousands)
    
    2006
    
    2005Benefit obligation at the beginning of the year
    
    $
    21,961
    
    
    $
    19,908WRI Adjustment
    
    
    
    
    
    
    512Service cost
    
    
    383
    
    
    
    753Interest cost
    
    
    1,018
    
    
    
    1,167Participants contributions
    
    
    697
    
    
    
    791Amendments
    
    
    
    
    
    
    (420
    )Actuarial loss / (gain)
    
    
    (2,186
    )
    
    
    1,066Benefits paid
    
    
    (1,848
    )
    
    
    (2,213
    )Special termination benefits
    
    
    
    
    
    
    6Reduction in ABO due to curtailment gain
    
    
    (1,214
    )
    
    
    Foreign currency exchange rate changes
    
    
    (279
    )
    
    
    391Benefit obligation at the end of the year
    
    $
    18,532
    
    
    $
    21,961
  SFAS 158
    
    SFAS 106(In thousands)
    
    2006
    
    2005Prepaid/(Accrued) Benefit Cost
    
    
    N/A
    
    
    $
    21,961Unrecognized Net Actuarial Loss/(Gain)
    
    
    N/A
    
    
    
    (2,373
    )Unrecognized Prior Service Cost
    
    
    N/A
    
    
    
    134Funded Status *
    
    $
    18,532
    
    
    $
    19,722
 
 *
    
    Note: SFAS 158 requires the recording of unfunded status without detail as
required in prior years under SFAS 106.  Expected Future Benefit Payments
 Payments2007
    
    $
    1,3622008
    
    
    1,3852009
    
    
    1,3312010
    
    
    1,3612011
    
    
    1,3812012 - 2016
    
    $
    6,124
  (in thousands)
    
    2006
    
    2005Fair value at beginning of year
    
    $
    
    
    
    $
    Company contributions
    
    
    878
    
    
    
    1,214Plan participants contributions
    
    
    911
    
    
    
    1,014Benefits paid
    
    
    (1,789
    )
    
    
    (2,228
    )Fair value at end of year
    
    $
    
    
    
    $
    
 117




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##### Table of Contents



Summary of Significant Accounting Policies
  (In thousands)
    
    2006Net transition (asset) / obligation
    
    $
    Prior service cost
    
    
    (86
    )Net (gain) / loss
    
    
    (5,421
    )Total accumulated comprehensive income
    
    $
    (5,507
    )
  (In thousands)
    
    2007Amortization of Transition (Asset) / Obligation
    
    $
    Amortization of Prior Service Costs
    
    
    (49
    )Amortization of Net (Gain) / Loss
    
    
    (599
    )Total Expected Fiscal Year 2007 Contribution
    
    $
    (648
    )
    118




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##### Table of Contents



(In thousands)
    
    1% Increase
    
    1% DecreaseU.S. PlanEffect on total of service and interest cost components
    
    $
    12
    
    
    $
    (11
    )Effect on postretirement benefit obligation
    
    $
    150
    
    
    $
    (140
    )Canadian PlanEffect on total of service and interest cost components
    
    $
    887
    
    
    $
    (797
    )Effect on postretirement benefit obligation
    
    $
    11,997
    
    
    $
    (10,893
    )
 15. Environmental Matters
      119




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##### Table of Contents



16. Litigation
 Environmental Remediation,
 17. Income Taxes
  (In thousands)
    
    2006
    
    2005
    
    2004U.S.
    
    $
    (29,945
    )
    
    $
    (35,945
    )
    
    $
    (9,000
    )Foreign
    
    
    (39,895
    )
    
    
    (4,431
    )
    
    
    7,756Total
    
    $
    (69,840
    )
    
    $
    (40,376
    )
    
    $
    (1,244
    )
  (In thousands)
    
    2006
    
    2005
    
    2004Continuing operationsCurrent expense/(benefit):U.S. Federal
    
    $
    
    
    
    $
    349
    
    
    $
    21Foreign
    
    
    215
    
    
    
    2,633
    
    
    
    (441
    )State
    
    
    30
    
    
    
    30
    
    
    
    60Total current
    
    
    245
    
    
    
    3,012
    
    
    
    (360
    )Deferred expense/(benefit):U.S.
    
    
    
    
    
    
    
    
    
    
    (3,444
    )Foreign
    
    
    9,139
    
    
    
    (4,772
    )
    
    
    1,916Total deferred
    
    
    9,139
    
    
    
    (4,772
    )
    
    
    (1,528
    )Total income tax expense/(benefit)
continuing operations
    
    
    9,384
    
    
    
    (1,760
    )
    
    
    (1,888
    )Income tax benefit  discontinued operations
    
    
    
    
    
    
    
    
    
    
    (127
    )Total income tax expense/(benefit)
    
    $
    9,384
    
    
    $
    (1,760
    )
    
    $
    (2,015
    )
  120




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##### Table of Contents



(In thousands)
    
    2006
    
    2005Deferred tax liabilities:Basis of property, plant and equipment
    
    $
    (30,735
    )
    
    $
    (31,823
    )Goodwill
    
    
    (4,428
    )
    
    
    (3,647
    )Other
    
    
    (4,971
    )
    
    
    (1,206
    )Total deferred tax liabilities
    
    
    (40,134
    )
    
    
    (36,676
    )Deferred tax assets:Environmental remediation reserves
    
    
    3,879
    
    
    
    902Net operating loss carryforward
    
    
    56,058
    
    
    
    38,204Restructuring reserves
    
    
    15,646
    
    
    
    3,953Inventory valuations
    
    
    
    
    
    
    2,427Pension obligation
    
    
    19,676
    
    
    
    21,603Other
    
    
    5,533
    
    
    
    3,104Total deferred tax assets
    
    
    100,792
    
    
    
    70,193Valuation allowance
    
    
    (56,339
    )
    
    
    (20,048
    )Total deferred tax assets net of valuation allowance
    
    
    44,453
    
    
    
    50,145Net deferred tax asset
    
    $
    4,319
    
    
    $
    13,469
  (In thousands)
    
    2006
    
    2005
    
    2004Income tax benefit at federal statutory rate
    
    $
    (24,444
    )
    
    $
    (14,131
    )
    
    $
    (423
    )Increase/(decrease) in taxes resulting from:State and local taxes, net of federal benefit
    
    
    (1,185
    )
    
    
    20
    
    
    
    40Effect of difference in U.S. and foreign rates
    
    
    (929
    )
    
    
    (754
    )
    
    
    (1,309
    )Other permanent differences
    
    
    (145
    )
    
    
    (420
    )
    
    
    (218
    )Foreign dividend repatriation
    
    
    
    
    
    
    537
    
    
    
    Increase in valuation allowance
    
    
    35,813
    
    
    
    12,637
    
    
    
    Other
    
    
    274
    
    
    
    351
    
    
    
    22Income tax expense/(benefit) continuing
operations
    
    $
    9,384
    
    
    $
    (1,760
    )
    
    $
    (1,888
    )
   121




---



##### Table of Contents



Accounting for Income Taxes  Special Areas
 Application of SFAS 109,
Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities provided by
the American Jobs Creation Act of 2004
 18. Accumulated Other Comprehensive Loss
  Foreign
    
    
    
    
    
    Minimum PensionCurrency
    
    Unrealized Gain
    
    LiabilityTranslation
    
    (Loss) on Cash Flow
    
    Adjustment,
    
    Accumulated Other(In thousands)
    
    Adjustment
    
    Hedges, Net of Tax
    
    Net of Tax
    
    Comprehensive LossBalance at December 31, 2003
    
    $
    (417
    )
    
    $
    1,662
    
    
    $
    (11,755
    )
    
    $
    (10,510
    )Activity in 2004
    
    
    7,565
    
    
    
    229
    
    
    
    (881
    )
    
    
    6,913Reclassification adjustment
for realized cash flow hedge
losses
    
    
    
    
    
    
    (1,662
    )
    
    
    
    
    
    
    (1,662
    )Balance at December 31, 2004
    
    $
    7,148
    
    
    $
    229
    
    
    $
    (12,636
    )
    
    $
    (5,259
    )Activity in 2005
    
    
    165
    
    
    
    2,253
    
    
    
    (10,900
    )
    
    
    (8,482
    )Reclassification adjustment
for realized cash
flow hedge losses
    
    
    
    
    
    
    (229
    )
    
    
    
    
    
    
    (229
    )Balance at December 31, 2005
    
    $
    7,313
    
    
    $
    2,253
    
    
    $
    (23,536
    )
    
    $
    (13,970
    )Activity in 2006
    
    
    4,736
    
    
    
    (3,424
    )
    
    
    3,861
    
    
    
    5,173Adjustment to initially apply
SFAS 158, net of
taxes
    
    
    
    
    
    
    
    
    
    
    1,661
    
    
    
    1,661Reclassification adjustment
for realized cash
flow hedge losses
    
    
    
    
    
    
    (2,253
    )
    
    
    
    
    
    
    (2,253
    )Balance at December 31, 2006
    
    $
    12,049
    
    
    $
    (3,424
    )
    
    $
    (18,014
    )
    
    $
    (9,389
    )
 122




---



##### Table of Contents



19. Common Stock
   20. Stock-Based Compensation Plans
     123




---



##### Table of Contents



2003 Equity
    
    2001
    
    1993
    
    1993 Equity
    
    
    
    
    
    Weighted-Incentive
    
    Directors
    
    Directors
    
    Incentive
    
    
    
    
    
    Average ExercisePlan
    
    Plan
    
    Plan
    
    Plan
    
    Option Price
    
    Price(Number of Shares)Outstanding at
December 31, 2003
    
    
    2,000
    
    
    
    127,882
    
    
    
    161,184
    
    
    
    1,499,233
    
    
    $
    4.05 - $25.25
    
    
    $
    9.30Granted
    
    
    239,245
    
    
    
    6,000
    
    
    
    
    
    
    
    
    
    
    $
    10.54 - $10.74
    
    
    $
    10.55Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (168,247
    )
    
    $
    4.05 - $11.90
    
    
    $
    6.64Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (41,354
    )
    
    $
    4.05 - $22.25
    
    
    $
    10.39Outstanding at December
31, 2004
    
    
    241,245
    
    
    
    133,882
    
    
    
    161,184
    
    
    
    1,289,632
    
    
    $
    4.05 - $25.25
    
    
    $
    9.70Granted
    
    
    326,399
    
    
    
    45,000
    
    
    
    
    
    
    
    
    
    
    $
    4.93 - $  8.95
    
    
    $
    8.13Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,125
    )
    
    $
    4.05 - $  8.60
    
    
    $
    6.70Forfeited
    
    
    (62,445
    )
    
    
    
    
    
    
    
    
    
    
    (135,656
    )
    
    $
    4.05 - $25.25
    
    
    $
    10.29Outstanding at December
31, 2005
    
    
    505,199
    
    
    
    178,882
    
    
    
    161,184
    
    
    
    1,065,851
    
    
    $
    4.05 -  $25.25
    
    
    $
    9.47Granted
    
    
    110,550
    
    
    
    8,000
    
    
    
    
    
    
    
    
    
    
    $
    2.76 - $ 3.90
    
    
    $
    3.82Exercised
    
    
    
    
    
    
    
    
    
    
    (417
    )
    
    
    
    
    
    $
    4.05 - $ 4.05
    
    
    $
    4.05Forfeited
    
    
    (37,200
    )
    
    
    (66,760
    )
    
    
    (90,572
    )
    
    
    (50,399
    )
    
    $
    3.88 - $22.25
    
    
    $
    9.05Outstanding at December
31, 2006
    
    
    578,549
    
    
    
    120,122
    
    
    
    70,195
    
    
    
    1,015,452
    
    
    $
    2.94  $22.25
    
    
    $
    9.15Exercisable at:December 31, 2004
    
    
    667
    
    
    
    133,882
    
    
    
    161,184
    
    
    
    1,000,464
    
    
    $
    4.05 - $25.25
    
    
    $
    10.60December 31, 2005
    
    
    454,032
    
    
    
    158,882
    
    
    
    161,184
    
    
    
    1,014,609
    
    
    $
    4.05 - $22.25
    
    
    $
    9.79December 31, 2006
    
    
    436,633
    
    
    
    106,790
    
    
    
    72,611
    
    
    
    1,013,236
    
    
    $
    2.94 - $22.25
    
    
    $
    9.60
 124




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##### Table of Contents



125




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##### Table of Contents



Year Ended
    
    Year Ended(in thousands)
    
    December 31, 2006
    
    December 31, 2005Stock-based compensation expense:Non-qualified stock options
    
    $
    273
    
    
    $
    Restricted stock
    
    
    276
    
    
    
    624Total stock-based compensation expense
    
    $
    549
    
    
    $
    624
   Average RemainingNon-vested
    
    Recognition Period(in thousands)
    
    Compensation
    
    (Months)Non-qualified stock options
    
    $
    222
    
    
    
    33Restricted stock awards
    
    $
    280
    
    
    
    27Total
    
    $
    502
    
    
    
    30
  Year Ended      
Decmber 31, 2006Expected stock price
volatility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32.0%-50
    %Expected life (in years)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Risk-free interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    


    
    4.79
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    
    0
    %
 126




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##### Table of Contents



Weighted Average
    
    Intrinsic Value ofWeighted Average
    
    Remaining Life
    
    Unexercised in theShares
    
    Exercise Price
    
    (Years)
    
    Money OptionsOptions outstanding  January 1, 2006
    
    
    1,905,792
    
    
    $
    9.46
    
    
    
    5.7
    
    
    $
    Granted
    
    
    118,550
    
    
    $
    3.81
    
    
    
    5.0
    
    
    
    Exercised
    
    
    (417
    )
    
    $
    4.05
    
    
    
    
    
    
    
    Cancelled or expired
    
    
    (239,607
    )
    
    $
    9.05
    
    
    
    
    
    
    
    Options outstanding  December 31, 2006
    
    
    1,784,318
    
    
    $
    9.15
    
    
    
    5.5
    
    
    $
    Unvested
    
    
    (155,048
    )
    
    $
    4.33
    
    
    
    9.1
    
    
    
    Options exercisable  December 31, 2006
    
    
    1,629,270
    
    
    $
    9.60
    
    
    
    5.5
    
    
    $
    
  WeightedNumber of
    
    Number of
    
    AverageExercisable
    
    Outstanding
    
    RemainingWeighted Average Exercise Price
    
    Options
    
    Options
    
    Life (Years)$2.94 - $4.11
    
    
    208,309
    
    
    
    315,359
    
    
    
    7.3$4.12 - $8.23
    
    
    95,762
    
    
    
    143,760
    
    
    
    7.7$8.24 - $12.34
    
    
    1,062,683
    
    
    
    1,062,683
    
    
    
    5.3$12.35 - $16.45
    
    
    241,516
    
    
    
    241,516
    
    
    
    3.1$16.46 - $20.57
    
    
    15,000
    
    
    
    15,000
    
    
    
    2.9$20.58 - $24.68
    
    
    6,000
    
    
    
    6,000
    
    
    
    2.1Totals
    
    
    1,629,270
    
    
    
    1,784,318
    
    
    
    5.5
  Weighted AverageGrant Date FairShares
    
    Value per AwardUnvested restricted stock awards  January 1, 2006
    
    
    80,467
    
    
    $
    7.51Granted
    
    
    65,925
    
    
    $
    3.88Vested
    
    
    (44,389
    )
    
    $
    8.26Cancelled or expired
    
    
    (5,086
    )
    
    $
    7.10Unvested restricted stock awards  December 31,
2006
    
    
    96,917
    
    
    $
    4.67
 21. Commitments
   127




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22. Industry Segments and Foreign Operations
  Summary of Significant Accounting Policies,
  Rod, Bar(In thousands)
    
    Commercial
    
    Wholesale
    
    & Other
    
    ConsolidatedYear ended December 31, 2006:Sales
    
    $
    1,009,343
    
    
    $
    310,993
    
    
    $
    82,706
    
    
    $
    1,403,042Gross profit
    
    
    30,912
    
    
    
    22,656
    
    
    
    966
    
    
    
    54,534Year ended December 31, 2005:Sales
    
    $
    619,159
    
    
    $
    195,325
    
    
    $
    59,021
    
    
    $
    873,505Gross profit
    
    
    19,422
    
    
    
    650
    
    
    
    1,571
    
    
    
    21,643Year ended December 31, 2004:Sales
    
    $
    570,666
    
    
    $
    165,215
    
    
    $
    61,994
    
    
    $
    797,875Gross profit/(loss)
    
    
    52,918
    
    
    
    5,924
    
    
    
    4,839
    
    
    
    63,681
   128




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##### Table of Contents



Other Foreign(In thousands)
    
    U.S.
    
    Canada
    
    Operations
    
    ConsolidatedYear ended December 31, 2006:Sales
    
    $
    1,010,572
    
    
    $
    294,016
    
    
    $
    98,454
    
    
    $
    1,403,042Long-lived assets
    
    
    193,269
    
    
    
    21,503
    
    
    
    19,936
    
    
    
    234,708Year ended December 31, 2005:Sales
    
    $
    623,450
    
    
    $
    190,897
    
    
    $
    59,158
    
    
    $
    873,505Long-lived assets
    
    
    215,487
    
    
    
    47,738
    
    
    
    17,111
    
    
    
    280,336Year ended December 31, 2004:Sales
    
    $
    558,892
    
    
    $
    186,680
    
    
    $
    52,303
    
    
    $
    797,875Long-lived assets
    
    
    238,992
    
    
    
    34,831
    
    
    
    18,063
    
    
    
    291,886
  (In thousands)
    
    2006
    
    2005
    
    2004Commercial Products:Tube Products
    
    $
    723,107
    
    
    $
    404,753
    
    
    $
    362,955Fabricated Products
    
    
    189,299
    
    
    
    140,732
    
    
    
    130,117Other Products
    
    
    96,937
    
    
    
    73,674
    
    
    
    77,594Sub-total
    
    
    1,009,343
    
    
    
    619,159
    
    
    
    570,666Wholesale Products
    
    
    310,993
    
    
    
    195,325
    
    
    
    165,215Rod, bar and other
    
    
    82,706
    
    
    
    59,021
    
    
    
    61,994Total
    
    $
    1,403,042
    
    
    $
    873,505
    
    
    $
    797,875
  23. Restructuring and Other Charges
  129




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##### Table of Contents



(In thousands)
    
    2006
    
    2005
    
    2004Roxboro, NC closing
    
    $
    
    
    
    $
    (75
    )
    
    $
    1,413Booneville, MS closing
    
    
    
    
    
    
    (420
    )
    
    
    623Employee severance
    
    
    
    
    
    
    1,297
    
    
    
    500Sale of Company aircraft
    
    
    
    
    
    
    614
    
    
    
    Montreal, Quebec closing
    
    
    40,745
    
    
    
    
    
    
    
    Jackson, Tennessee closing
    
    
    16,475
    
    
    
    
    
    
    
    U.S. Wholesale dist. relocation
    
    
    429
    
    
    
    
    
    
    
    Other
    
    
    (47
    )
    
    
    0
    
    
    
    Totals
    
    $
    57,602
    
    
    $
    1,416
    
    
    $
    2,536
  Montreal, Quebec Closing
 Charges Incurred as ofMajor Type Costs
    
    Estimated Charges
    
    December 31,Impair and Liquidate current assets
    
    $
    9,322
    
    
    $
    3,918Employee related costs
    
    
    9,932
    
    
    
    9,640Environmental remediation
    
    
    11,538
    
    
    
    11,538Wind down & Carrying costs
    
    
    4,629
    
    
    
    814Other costs
    
    
    438
    
    
    
    39Fixed asset impairment
    
    
    14,796
    
    
    
    14,796Total
    
    $
    50,655
    
    
    $
    40,745
 130




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##### Table of Contents



Jackson, Tennessee Closing
 Charges Incurred asMajor Type Costs
    
    Estimated Charges
    
    of December 31,Impair and Liquidate current assets
    
    $
    762
    
    
    $
    746Employee related costs
    
    
    388
    
    
    
    301Environmental remediation
    
    
    75
    
    
    
    75Wind down & Carrying costs
    
    
    339
    
    
    
    334Other costs
    
    
    695
    
    
    
    259Fixed asset impairment
    
    
    14,760
    
    
    
    14,760Total
    
    $
    17,019
    
    
    $
    16,475
 Wholesale Distribution Relocation
 Charges Incurred as ofMajor Type Costs
    
    Estimated Charges
    
    December 31,Cost to move inventory
    
    $
    40
    
    
    $
    30Building lease termination
    
    
    328
    
    
    
    328Other costs
    
    
    5Fixed asset impairment
    
    
    71
    
    
    
    71Total
    
    $
    444
    
    
    $
    429
  24. Earnings/(Loss) Per Share
  2006
    
    
    2005
    
    
    2004(In thousands, except per share amounts)Income/(loss) from continuing operations
    
    $
    (79,224
    )
    
    $
    (38,616
    )
    
    $
    644Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (262
    )Net income/(loss) available to common shares
    
    $
    (79,224
    )
    
    $
    (38,616
    )
    
    $
    382Basic weighted average common shares
    
    
    15,071
    
    
    
    15,022
    
    
    
    13,650Dilutive stock options
    
    
    
    
    
    
    
    
    
    
    342Diluted weighted average common and common
equivalent shares
    
    
    15,071
    
    
    
    15,022
    
    
    
    13,992Earnings/(loss) per common sharebasic:Continuing operations
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.05Discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Net income/(loss) per common share basic
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.03Earnings/(loss) per common sharediluted (1):Continuing operations
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.05Discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Net income/(loss) per common share diluted
    
    $
    (5.26
    )
    
    $
    (2.57
    )
    
    $
    0.03
 131




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##### Table of Contents



(1)
    
    To the extent that stock options and unvested restricted stock are anti-dilutive, they
are excluded from the calculation of diluted earnings/(loss) per share in accordance with SFAS 128.
   25. Quarterly Results of Operations (Unaudited)
  2006
    
    April 2
    
    July 2
    
    October 1
    
    December 31(In thousands, except per share amounts)Net sales
    
    $
    298,312
    
    
    $
    417,984
    
    
    $
    396,100
    
    
    $
    290,646Gross profit
    
    
    10,882
    
    
    
    29,137
    
    
    
    9,771
    
    
    
    4,744Net income/(loss)
    
    $
    (2,117
    )
    
    $
    6,409
    
    
    $
    (49,520
    )
    
    $
    (33,996
    )Basic income/(loss) per common share:
    
    $
    (0.14
    )
    
    $
    0.43
    
    
    $
    (3.29
    )
    
    $
    (2.25
    )Diluted earnings/(loss) per common share:
    
    $
    (0.14
    )
    
    $
    0.42
    
    
    $
    (3.29
    )
    
    $
    (2.25
    )
 2005
    
    April 3
    
    July 3
    
    October 2
    
    December 31(In thousands, except per share amounts)Net sales
    
    $
    213,482
    
    
    $
    196,321
    
    
    $
    225,704
    
    
    $
    237,998Gross profit
    
    
    10,060
    
    
    
    5,654
    
    
    
    (1,911
    )
    
    
    7,840Net income/(loss)
    
    $
    (2,482
    )
    
    $
    (5,682
    )
    
    $
    (11,198
    )
    
    $
    (19,254
    )Basic income/(loss) per common share:
    
    $
    (0.17
    )
    
    $
    (0.38
    )
    
    $
    (0.74
    )
    
    $
    (1.28
    )Diluted income/(loss) per common share:
    
    $
    (0.17
    )
    
    $
    (0.38
    )
    
    $
    (0.74
    )
    
    $
    (1.28
    )
 26. Condensed Consolidating Financial Information
  132




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Year Ended December 31, 2006
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    865,339
    
    
    $
    215,653
    
    
    $
    442,446
    
    
    $
    (120.396
    )
    
    $
    1,403,042Cost of goods sold
    
    
    843,865
    
    
    
    193,965
    
    
    
    431,074
    
    
    
    (120,396
    )
    
    
    1,348,508Gross profit
    
    
    21,474
    
    
    
    21,688
    
    
    
    11,372
    
    
    
    
    
    
    
    54,534Selling, general and administrative expenses
    
    
    23,137
    
    
    
    3,013
    
    
    
    5,023
    
    
    
    
    
    
    
    31,173Advisory fees and expenses
    
    
    7,434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,434Restructuring and other charges
    
    
    16,822
    
    
    
    (7
    )
    
    
    40,787
    
    
    
    
    
    
    
    57,602Operating income/(loss)
    
    
    (25,919
    )
    
    
    18,682
    
    
    
    (34,438
    )
    
    
    
    
    
    
    (41,675
    )Other expenses (income):Interest expense, net
    
    
    21,474
    
    
    
    (6
    )
    
    
    4,102
    
    
    
    
    
    
    
    25,570Amortization and other, net
    
    
    9,612
    
    
    
    (10,127
    )
    
    
    3,110
    
    
    
    
    
    
    
    2,595Equity in earnings/(loss) of subsidiaries
    
    
    (31,371
    )
    
    
    
    
    
    
    
    
    
    
    31,371
    
    
    
    Income/(loss) before income taxes
    
    
    (88,376
    )
    
    
    28,815
    
    
    
    (41,650
    )
    
    
    31,371
    
    
    
    (69,840
    )Income tax expense/(benefit) provision
    
    
    (9,152
    )
    
    
    9,795
    
    
    
    8,741
    
    
    
    
    
    
    
    9,384Net income/(loss)
    
    $
    (79,224
    )
    
    $
    19,020
    
    
    $
    (50,391
    )
    
    $
    31,371
    
    
    $
    (79,224
    )
 133




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Year Ended December 31, 2005
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    504,481
    
    
    $
    163,890
    
    
    $
    282,657
    
    
    $
    (77,523
    )
    
    $
    873,505Cost of goods sold
    
    
    500,930
    
    
    
    148,779
    
    
    
    279,676
    
    
    
    (77,523
    )
    
    
    851,862Gross profit
    
    
    3,551
    
    
    
    15,111
    
    
    
    2,981
    
    
    
    
    
    
    
    21,643Selling, general and administrative expenses
    
    
    29,050
    
    
    
    3,210
    
    
    
    4,814
    
    
    
    
    
    
    
    37,074Restructuring and other charges
    
    
    1,179
    
    
    
    73
    
    
    
    164
    
    
    
    
    
    
    
    1,416Operating income/(loss)
    
    
    (26,678
    )
    
    
    11,828
    
    
    
    (1,997
    )
    
    
    
    
    
    
    (16,847
    )Other expenses (income):Interest expense, net
    
    
    20,708
    
    
    
    (38
    )
    
    
    57
    
    
    
    
    
    
    
    20,727Amortization and other, net
    
    
    7,068
    
    
    
    (5,431
    )
    
    
    1,165
    
    
    
    
    
    
    
    2,802Equity in earnings/(loss) of subsidiaries
    
    
    10,318
    
    
    
    
    
    
    
    
    
    
    
    (10,318
    )
    
    
    Income/(loss) before income taxes
    
    
    (44,136
    )
    
    
    17,297
    
    
    
    (3,219
    )
    
    
    (10,318
    )
    
    
    (40,376
    )Income tax expense/(benefit) provision
    
    
    (5,520
    )
    
    
    5,850
    
    
    
    (2,090
    )
    
    
    
    
    
    
    (1,760
    )Net income (loss)
    
    $
    (38,616
    )
    
    $
    11,447
    
    
    $
    (1,129
    )
    
    $
    (10,318
    )
    
    $
    (38,616
    )
 Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Year Ended December 31, 2004
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    434,851
    
    
    $
    157,620
    
    
    $
    268,198
    
    
    $
    (62,794
    )
    
    $
    797,875Cost of goods sold
    
    
    408,699
    
    
    
    138,304
    
    
    
    249,985
    
    
    
    (62,794
    )
    
    
    734,194Gross profit
    
    
    26,152
    
    
    
    19,316
    
    
    
    18,213
    
    
    
    
    
    
    
    63,681Selling, general and administrative expenses
    
    
    29,414
    
    
    
    3,346
    
    
    
    4,499
    
    
    
    
    
    
    
    37,259Restructuring and other charges
    
    
    2,563
    
    
    
    (27
    )
    
    
    
    
    
    
    
    
    
    
    2,536Operating income/(loss) from continuing
operations
    
    
    (5,825
    )
    
    
    15,997
    
    
    
    13,714
    
    
    
    
    
    
    
    23,886Other expenses (income):Interest expense, net
    
    
    21,736
    
    
    
    (39
    )
    
    
    (837
    )
    
    
    
    
    
    
    20,860Loss on extinguishment of debt
    
    
    3,009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,009Amortization and other, net
    
    
    7,788
    
    
    
    (13,069
    )
    
    
    6,542
    
    
    
    
    
    
    
    1,261Equity in earnings/(loss) of subsidiaries
    
    
    24,953
    
    
    
    
    
    
    
    
    
    
    
    (24,953
    )
    
    
    Income/(loss) from continuing operations
before income taxes
    
    
    (13,405
    )
    
    
    29,105
    
    
    
    8,009
    
    
    
    (24,953
    )
    
    
    (1,244
    )Income tax expense/(benefit) provision
    
    
    (13,787
    )
    
    
    10,448
    
    
    
    1,451
    
    
    
    
    
    
    
    (1,888
    )Income/(loss) from continuing operations
    
    
    382
    
    
    
    18,657
    
    
    
    6,558
    
    
    
    (24,953
    )
    
    
    644Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (262
    )
    
    
    
    
    
    
    (262
    )Net income
    
    $
    382
    
    
    $
    18,657
    
    
    $
    6,296
    
    
    $
    (24,953
    )
    
    $
    382
 134




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, 2006
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)AssetsCurrent assetsCash and equivalents
    
    $
    7,470
    
    
    $
    
    
    
    $
    16,263
    
    
    $
    
    
    
    $
    23,733Accounts receivable, net
    
    
    8,426
    
    
    
    338
    
    
    
    53,765
    
    
    
    
    
    
    
    62,529Inventories
    
    
    47,211
    
    
    
    46,537
    
    
    
    29,195
    
    
    
    
    
    
    
    122,943Prepaid expenses and other
    
    
    9,472
    
    
    
    1,381
    
    
    
    564
    
    
    
    
    
    
    
    11,417Total current assets
    
    
    72,579
    
    
    
    48,256
    
    
    
    99,787
    
    
    
    
    
    
    
    220,622Property, plant and equipment, net
    
    
    81,119
    
    
    
    24,346
    
    
    
    27,794
    
    
    
    
    
    
    
    133,259Goodwill, net
    
    
    
    
    
    
    75,504
    
    
    
    1,739
    
    
    
    
    
    
    
    77,243Deferred charges, net
    
    
    5,560
    
    
    
    65
    
    
    
    1,483
    
    
    
    
    
    
    
    7,108Deferred taxes, non-current
    
    
    7,385
    
    
    
    (7,385
    )
    
    
    5,199
    
    
    
    
    
    
    
    5,199Assets held for resale
    
    
    6,622
    
    
    
    
    
    
    
    4,513
    
    
    
    
    
    
    
    11,135Notes receivable
    
    
    
    
    
    
    
    
    
    
    764
    
    
    
    
    
    
    
    764Investments in subsidiaries
    
    
    456,087
    
    
    
    325
    
    
    
    
    
    
    
    (456,412
    )
    
    
    Total assets
    
    $
    629,352
    
    
    $
    141,111
    
    
    $
    141,279
    
    
    $
    (456,412
    )
    
    $
    455,330Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    19,922
    
    
    $
    4,064
    
    
    $
    16,521
    
    
    $
    
    
    
    $
    40,507Accrued liabilities
    
    
    (3,455
    )
    
    
    22,825
    
    
    
    7,622
    
    
    
    
    
    
    
    26,992Short-term borrowings
    
    
    (63
    )
    
    
    87
    
    
    
    1,614
    
    
    
    
    
    
    
    1,638Deferred income Taxes
    
    
    (1,686
    )
    
    
    1696
    
    
    
    870
    
    
    
    
    
    
    
    880Intercompany Balances
    
    
    251,944
    
    
    
    (227,000
    )
    
    
    (24,944
    )
    
    
    
    
    
    
    Total current liabilities
    
    
    266,662
    
    
    
    (198,328
    )
    
    
    1,683
    
    
    
    
    
    
    
    70,017Long-term debt
    
    
    237,719
    
    
    
    33
    
    
    
    610
    
    
    
    
    
    
    
    238,362Pension liabilities
    
    
    28,504
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,504Postretirement benefit obligation
    
    
    6,478
    
    
    
    
    
    
    
    11,007
    
    
    
    
    
    
    
    17,485Accrued environmental remediation
    
    
    813
    
    
    
    
    
    
    
    10,973
    
    
    
    
    
    
    
    11,786Total liabilities
    
    
    540,176
    
    
    
    (198,295
    )
    
    
    24,273
    
    
    
    
    
    
    
    366,154Stockholders equity
    
    
    89,176
    
    
    
    339,406
    
    
    
    117,006
    
    
    
    (456,412
    )
    
    
    89,176Total liabilities and stockholders equity
    
    $
    629,352
    
    
    $
    141,111
    
    
    $
    141,279
    
    
    $
    (456,412
    )
    
    $
    455,330
 135




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, 2005
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)AssetsCurrent assetsCash and equivalents
    
    $
    4,571
    
    
    $
    
    
    
    $
    22,758
    
    
    $
    
    
    
    $
    27,329Accounts receivable, net
    
    
    7,965
    
    
    
    6,930
    
    
    
    89,291
    
    
    
    
    
    
    
    104,186Inventories
    
    
    64,418
    
    
    
    44,631
    
    
    
    37,656
    
    
    
    
    
    
    
    146,705Prepaid expenses and other
    
    
    7,425
    
    
    
    1,528
    
    
    
    1,256
    
    
    
    
    
    
    
    10,209Total current assets
    
    
    84,379
    
    
    
    53,089
    
    
    
    150,961
    
    
    
    
    
    
    
    288,429Property, plant and equipment, net
    
    
    108,275
    
    
    
    27,001
    
    
    
    45,962
    
    
    
    
    
    
    
    181,238Goodwill, net
    
    
    
    
    
    
    75,505
    
    
    
    1,559
    
    
    
    
    
    
    
    77,064Deferred charges, net
    
    
    5,382
    
    
    
    125
    
    
    
    2,227
    
    
    
    
    
    
    
    7,734Deferred taxes, non-current
    
    
    7,174
    
    
    
    (7,174
    )
    
    
    13,469
    
    
    
    
    
    
    
    13,469Notes receivable
    
    
    
    
    
    
    
    
    
    
    831
    
    
    
    
    
    
    
    831Investments in subsidiaries
    
    
    484,383
    
    
    
    325
    
    
    
    
    
    
    
    (484,708
    )
    
    
    Total assets
    
    $
    689,593
    
    
    $
    148,871
    
    
    $
    215,009
    
    
    $
    (484,708
    )
    
    $
    568,765Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    35,364
    
    
    $
    18,635
    
    
    $
    17,803
    
    
    $
    
    
    
    $
    71,802Accrued liabilities
    
    
    9,350
    
    
    
    17,969
    
    
    
    7,633
    
    
    
    
    
    
    
    34,952Short-term borrowings
    
    
    
    
    
    
    24
    
    
    
    224
    
    
    
    
    
    
    
    248Intercompany balances
    
    
    195,247
    
    
    
    (209,227
    )
    
    
    13,980
    
    
    
    
    
    
    
    Total current liabilities
    
    
    239,961
    
    
    
    (172,599
    )
    
    
    39,640
    
    
    
    
    
    
    
    107,002Long-term debt
    
    
    233,948
    
    
    
    58
    
    
    
    914
    
    
    
    
    
    
    
    234,920Pension liabilities
    
    
    40,285
    
    
    
    
    
    
    
    2,604
    
    
    
    
    
    
    
    42,889Postretirement benefit obligation
    
    
    11,167
    
    
    
    
    
    
    
    8,555
    
    
    
    
    
    
    
    19,722Accrued environmental remediation
    
    
    930
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    930Total liabilities
    
    
    526,291
    
    
    
    (172,541
    )
    
    
    51,713
    
    
    
    
    
    
    
    405,463Stockholders equity
    
    
    163,302
    
    
    
    321,412
    
    
    
    163,296
    
    
    
    (484,708
    )
    
    
    163,302Total liabilities and stockholders equity
    
    $
    689,593
    
    
    $
    148,871
    
    
    $
    215,009
    
    
    $
    (484,708
    )
    
    $
    568,765
 136




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Year Ended December 31, 2006
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Operating ActivitiesNet income/(loss)
    
    $
    (79,224
    )
    
    $
    19,020
    
    
    $
    (50,391
    )
    
    $
    31,371
    
    
    $
    (79,224
    )Depreciation and amortization
    
    
    9,742
    
    
    
    3,042
    
    
    
    4,193
    
    
    
    
    
    
    
    16,977Deferred income taxes
    
    
    (1,896
    )
    
    
    1,906
    
    
    
    9,129
    
    
    
    
    
    
    
    9,139Stock compensation expense
    
    
    549
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    549Loss on disposal of fixed assets
    
    
    26
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    22Impairment of assets
    
    
    15,577
    
    
    
    
    
    
    
    18,714
    
    
    
    
    
    
    
    34,291Non-cash environmental and other restructuring
    
    
    842
    
    
    
    (8
    )
    
    
    13,401
    
    
    
    
    
    
    
    14,235Sale of accounts receivable
    
    
    
    
    
    
    
    
    
    
    24,882
    
    
    
    
    
    
    
    24,882Equity in earnings of subsidiaries
    
    
    31,371
    
    
    
    
    
    
    
    
    
    
    
    (31,371
    )
    
    
    Changes in operating assets and liabilities
    
    
    16,635
    
    
    
    (44,310
    )
    
    
    8,707
    
    
    
    
    
    
    
    (18,968
    )Net cash provided by/(used for) operating
activities
    
    
    (6,378
    )
    
    
    (20,354
    )
    
    
    28,635
    
    
    
    
    
    
    
    1,903Investing ActivitiesAdditions to property, plant and equipment, net
    
    
    (2,748
    )
    
    
    (306
    )
    
    
    (2,744
    )
    
    
    
    
    
    
    (5,798
    )Disposal of assets
    
    
    31
    
    
    
    7
    
    
    
    53
    
    
    
    
    
    
    
    91Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash used for investing activities
    
    
    (2,717
    )
    
    
    (299
    )
    
    
    (2,691
    )
    
    
    
    
    
    
    (5,707
    )Financing ActivitiesFinancing fees and expenses paid
    
    
    (1,910
    )
    
    
    
    
    
    
    (1,303
    )
    
    
    
    
    
    
    (3,213
    )Intercompany borrowings (payments)
    
    
    12,355
    
    
    
    20,616
    
    
    
    (32,971
    )
    
    
    
    
    
    
    Issuance of common stock
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Net borrowings/(payments) on credit facilities
    
    
    1,938
    
    
    
    37
    
    
    
    1,202
    
    
    
    
    
    
    
    3,177Other
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )Net cash provided by/(used for) financing activities
    
    
    12,371
    
    
    
    20,653
    
    
    
    (33,072
    )
    
    
    
    
    
    
    (48
    )Effect of exchange rate on cash and equivalents
    
    
    (377
    )
    
    
    
    
    
    
    633
    
    
    
    
    
    
    
    256Net cash provided by/(used for) continuing
operations
    
    
    2,899
    
    
    
    
    
    
    
    (6,495
    )
    
    
    
    
    
    
    (3,596
    )Net increase/decrease in cash and equivalents
    
    
    2,899
    
    
    
    
    
    
    
    (6,495
    )
    
    
    
    
    
    
    (3,596
    )Cash and equivalents at beginning of period
    
    
    4,571
    
    
    
    
    
    
    
    22,758
    
    
    
    
    
    
    
    27,329Cash and equivalents at end of period
    
    $
    7,470
    
    
    $
    
    
    
    $
    16,263
    
    
    $
    
    
    
    $
    23,733
 137




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Year Ended December 31, 2005
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Operating ActivitiesNet income/(loss)
    
    $
    (38,616
    )
    
    $
    11,447
    
    
    $
    (1,129
    )
    
    $
    (10,318
    )
    
    $
    (38,616
    )Depreciation and amortization
    
    
    10,395
    
    
    
    3,035
    
    
    
    3,618
    
    
    
    
    
    
    
    17,048Deferred income taxes
    
    
    19
    
    
    
    
    
    
    
    (4,593
    )
    
    
    
    
    
    
    (4,574
    )Stock compensation expense
    
    
    548
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    548Loss on disposal of fixed assets
    
    
    1,886
    
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    2,027Non-cash portion of restructuring and other
    
    
    349
    
    
    
    133
    
    
    
    179
    
    
    
    
    
    
    
    661Sale of accounts receivable
    
    
    
    
    
    
    
    
    
    
    19,000
    
    
    
    
    
    
    
    19,000Equity in earnings of subsidiaries
    
    
    (10,318
    )
    
    
    
    
    
    
    
    
    
    
    10,318
    
    
    
    Changes in operating assets and liabilities
    
    
    22,096
    
    
    
    13,260
    
    
    
    (36,332
    )
    
    
    
    
    
    
    (976
    )Net cash provided by/(used for) operating
activities
    
    
    (13,641
    )
    
    
    27,875
    
    
    
    (19,116
    )
    
    
    
    
    
    
    (4,882
    )Investing ActivitiesAdditions to property, plant and equipment, net
    
    
    (4,426
    )
    
    
    (1,535
    )
    
    
    (4,048
    )
    
    
    
    
    
    
    (10,009
    )Disposal of assets
    
    
    5,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,412Other
    
    
    4,367
    
    
    
    171
    
    
    
    (125
    )
    
    
    
    
    
    
    4,413Net cash used for investing activities
    
    
    5,353
    
    
    
    (1,364
    )
    
    
    (4,173
    )
    
    
    
    
    
    
    (184
    )Financing ActivitiesFinancing fees and expenses paid
    
    
    (438
    )
    
    
    
    
    
    
    (663
    )
    
    
    
    
    
    
    (1,101
    )Intercompany borrowings (payments)
    
    
    (8,267
    )
    
    
    (26,487
    )
    
    
    34,754
    
    
    
    
    
    
    
    Issuance of common stock
    
    
    503
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    503Net borrowings/(payments) on credit facilities
    
    
    (1,000
    )
    
    
    (24
    )
    
    
    (1,198
    )
    
    
    
    
    
    
    (2,222
    )Other
    
    
    10,224
    
    
    
    
    
    
    
    (10,191
    )
    
    
    
    
    
    
    33Net cash provided by/(used for) financing activities
    
    
    1,022
    
    
    
    (26,511
    )
    
    
    22,702
    
    
    
    
    
    
    
    (2,787
    )Effect of exchange rate on cash and equivalents
    
    
    646
    
    
    
    
    
    
    
    (481
    )
    
    
    
    
    
    
    165Net cash provided by/(used for) continuing
operations
    
    
    (6,620
    )
    
    
    
    
    
    
    (1,068
    )
    
    
    
    
    
    
    (7,688
    )Net increase/decrease in cash and equivalents
    
    
    (6,620
    )
    
    
    
    
    
    
    (1,068
    )
    
    
    
    
    
    
    (7,688
    )Cash and equivalents at beginning of period
    
    
    11,191
    
    
    
    
    
    
    
    23,826
    
    
    
    
    
    
    
    35,017Cash and equivalents at end of period
    
    $
    4,571
    
    
    $
    
    
    
    $
    22,758
    
    
    $
    
    
    
    $
    27,329
 138




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Year Ended December 31, 2004
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Operating ActivitiesIncome/(loss) from continuing operations
    
    $
    382
    
    
    $
    18,657
    
    
    $
    6,558
    
    
    $
    (24,953
    )
    
    $
    644Depreciation and amortization
    
    
    10,766
    
    
    
    3,454
    
    
    
    3,187
    
    
    
    
    
    
    
    17,407Stock compensation expense
    
    
    304
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    304Loss on early retirement of debt
    
    
    3,009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,009Other non-cash items
    
    
    100
    
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    156Equity in earnings of subsidiaries
    
    
    (24,953
    )
    
    
    
    
    
    
    
    
    
    
    24,953
    
    
    
    Changes in operating assets and liabilities
    
    
    (19,114
    )
    
    
    (2,381
    )
    
    
    (8,667
    )
    
    
    
    
    
    
    (30,162
    )Net cash provided by/(used for) operating activities
    
    
    (29,506
    )
    
    
    19,786
    
    
    
    1,078
    
    
    
    
    
    
    
    (8,642
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (6,329
    )
    
    
    (1,284
    )
    
    
    (4,115
    )
    
    
    
    
    
    
    (11,728
    )Disposal of assets
    
    
    2,926
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,926Investment in WLV Latin America
    
    
    (703
    )
    
    
    (36
    )
    
    
    739
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    
    
    
    
    82Net cash used for investing activities
    
    
    (4,106
    )
    
    
    (1,238
    )
    
    
    (3,376
    )
    
    
    
    
    
    
    (8,720
    )Financing ActivitiesFinancing fees and expenses paid
    
    
    (151
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (151
    )Intercompany borrowings (payments)
    
    
    29,408
    
    
    
    (17,271
    )
    
    
    (12,137
    )
    
    
    
    
    
    
    Issuance of common stock
    
    
    21,898
    
    
    
    
    
    
    
    2,266
    
    
    
    
    
    
    
    24,164Retirement of Senior Notes
    
    
    (20,510
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,510
    )Other
    
    
    2,279
    
    
    
    (1,277
    )
    
    
    (339
    )
    
    
    
    
    
    
    663Net cash provided by/(used for) financing activities
    
    
    32,924
    
    
    
    (18,548
    )
    
    
    (10,210
    )
    
    
    
    
    
    
    4,166Effect of exchange rate on cash and equivalents
    
    
    3,349
    
    
    
    
    
    
    
    (963
    )
    
    
    
    
    
    
    2,386Net cash provided by/(used for) continuing
operations
    
    
    2,661
    
    
    
    
    
    
    
    (13,471
    )
    
    
    
    
    
    
    (10,810
    )Net cash used for discontinued operations
    
    
    
    
    
    
    
    
    
    
    (262
    )
    
    
    
    
    
    
    (262
    )Net increase/decrease in cash and equivalents
    
    
    2,661
    
    
    
    
    
    
    
    (13,733
    )
    
    
    
    
    
    
    (11,072
    )Cash and equivalents at beginning of period
    
    
    8,530
    
    
    
    
    
    
    
    37,559
    
    
    
    
    
    
    
    46,089Cash and equivalents at end of period
    
    $
    11,191
    
    
    $
    
    
    
    $
    23,826
    
    
    $
    
    
    
    $
    35,017
 139




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     Internal ControlIntegrated
Framework .
  
 140




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
  , Internal ControlIntegrated Framework
    141




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##### Table of Contents



Internal ControlIntegrated Framework . Internal ControlIntegrated Framework .
   
 142




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries  Schedule IIValuation and Qualifying Accounts
 Balance
    
    Charged to
    
    Charged to
    
    
    
    
    
    Balance atBeginning of
    
    Cost and
    
    Other
    
    
    
    
    
    End ofDescription
    
    Period
    
    Expenses
    
    Accounts
    
    Deductions
    
    Period(In thousands)Year ended December 31, 2006:Deducted from assets accounts:Reserve for sales returns and allowances
    
    $
    892
    
    
    $
    1
    
    
    $
    
    
    
    $
    (688
    )(1)
    
    $
    205Allowances for doubtful accounts
    
    
    427
    
    
    
    244
    
    
    
    
    
    
    
    (211
    )(2)
    
    
    460Deferred tax valuation allowance
    
    
    20,048
    
    
    
    36,291
    
    
    
    
    
    
    
    
    
    
    
    56,339Year ended December 31, 2005:Deducted from assets accounts:Reserve for sales returns and allowances
    
    $
    510
    
    
    $
    404
    
    
    $
    1
    
    
    $
    (23
    )(1)
    
    $
    892Allowances for doubtful accounts
    
    
    449
    
    
    
    245
    
    
    
    1
    
    
    
    (268
    )(2)
    
    
    427Deferred tax valuation allowance
    
    
    3,569
    
    
    
    12,637
    
    
    
    3,842
    
    
    
    
    
    
    
    20,048Year ended December 31, 2004:Deducted from assets accounts:Reserve for sales returns and allowances
    
    $
    658
    
    
    $
    10
    
    
    $
    
    
    
    $
    (158
    )(1)
    
    $
    510Allowances for doubtful accounts
    
    
    437
    
    
    
    350
    
    
    
    
    
    
    
    (338
    )(2)
    
    
    449Deferred tax valuation allowance
    
    
    3,569
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,569
 (1)
    
    Reduction of reserve, net of translation adjustments, for actual sales
returns and allowances.(2)
    
    Uncollectible accounts written off from both continuing and discontinued
operations, net of translation adjustments and recoveries.
 143




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Description10.53*
    
    2001 Change in Control, Severance and Non-Competition
Agreement, dated as of March 23, 2001, by and between the
Company and John Van Gerwen.21
    
    List of Subsidiaries23.1
    
    Consent of KPMG, LLP, Independent Registered Public
Accounting Firm31.1
    
    Certification of the Principal Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Principal Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Principal 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 the Principal Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 144