##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 for the quarterly period ended October 1, 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, Suite 1000
Huntsville, Alabama
    
    35801(Address of Principal Executive Offices)
    
    (Zip Code)
  
  þ o
 þ o
  Class
    
    Outstanding as of November 3, 2006Common Stock, $0.01 Par Value
    
    15,073,267 Shares




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##### 



FORM 10-Q
 QUARTERLY REPORT
 TABLE OF CONTENTS
 Page No.PART I - Financial InformationItem 1.
    
    Financial StatementsCondensed Consolidated Statements of Operations (Unaudited) - Three and Nine months ended October 1, 2006 and October 2, 2005
    
    
    1Condensed Consolidated Balance Sheets - October 1, 2006 (Unaudited) and December 31, 2005
    
    
    2Condensed Consolidated Statements of Cash Flows (Unaudited)  Nine months ended October 1, 2006 and October 2, 2005
    
    
    3Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 4.
    
    Controls and Procedures
    
    
    45PART II  Other InformationItem 1A.
    
    Risk Factors
    
    
    46Item 6.
    
    Exhibits
    
    
    48Ex-31.1 Section 302 CertificationEx-31.2 Section 302 CertificationEx-32.1 Section 906 CertificationEx-32.2 Section 906 Certification




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##### Table of Contents



PART I. Financial Information
 
 Item 1. Financial Statements
 Wolverine Tube, Inc. and Subsidiaries
 
 Condensed Consolidated Statements of Operations
  Three months ended
    
    Nine months endedOctober 1,
    
    October 2,
    
    October 1,
    
    October 2,2006
    
    2005
    
    2006
    
    2005(In thousands except per share amounts)Net sales
    
    $
    396,100
    
    
    $
    225,704
    
    
    $
    1,112,396
    
    
    $
    635,507Cost of goods sold
    
    
    386,329
    
    
    
    227,615
    
    
    
    1,062,607
    
    
    
    621,704Gross profit / (loss)
    
    
    9,771
    
    
    
    (1,911
    )
    
    
    49,789
    
    
    
    13,803Selling, general and administrative expenses
    
    
    6,535
    
    
    
    8,795
    
    
    
    23,928
    
    
    
    25,747Advisory fees and expenses
    
    
    1,792
    
    
    
    
    
    
    
    3,907
    
    
    
    Restructuring charges
    
    
    55,580
    
    
    
    1,849
    
    
    
    55,571
    
    
    
    1,903Operating loss
    
    
    (54,136
    )
    
    
    (12,555
    )
    
    
    (33,617
    )
    
    
    (13,847
    )Other expenses:Interest expense, net
    
    
    6,908
    
    
    
    5,235
    
    
    
    19,521
    
    
    
    15,801Amortization and other, net
    
    
    (775
    )
    
    
    323
    
    
    
    1,484
    
    
    
    765Loss before income taxes
    
    
    (60,269
    )
    
    
    (18,113
    )
    
    
    (54,622
    )
    
    
    (30,413
    )Income tax benefit
    
    
    (10,749
    )
    
    
    (6,915
    )
    
    
    (9,393
    )
    
    
    (11,051
    )Net loss
    
    $
    (49,520
    )
    
    $
    (11,198
    )
    
    $
    (45,229
    )
    
    $
    (19,362
    )Per share data:Net loss per common share  basic
    
    $
    (3.29
    )
    
    $
    (0.74
    )
    
    $
    (3.00
    )
    
    $
    (1.29
    )Basic weighted average number of common shares
    
    
    15,072
    
    
    
    15,034
    
    
    
    15,068
    
    
    
    15,015Net loss per common share  diluted
    
    $
    (3.29
    )
    
    $
    (0.74
    )
    
    $
    (3.00
    )
    
    $
    (1.29
    )Diluted weighted average number of common and
common equivalent shares
    
    
    15,072
    
    
    
    15,034
    
    
    
    15,068
    
    
    
    15,015
 The accompanying notes are an integral part of these condensed consolidated financial statements
 1




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Wolverine Tube, Inc. and Subsidiaries
 
 Condensed Consolidated Balance Sheets
 October 1, 2006
    
    December 31, 2005(In thousands except share and per share amounts)
    
    (Unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    24,491
    
    
    $
    27,329Accounts
receivable, net of allowance for doubtful accounts of $0.4 million in 2006 and $0.6 million in 2005
    
    
    93,875
    
    
    
    104,186Inventories
    
    
    171,552
    
    
    
    146,705Prepaid expenses and other
    
    
    11,050
    
    
    
    10,209Total current assets
    
    
    300,968
    
    
    
    288,429Property, plant and equipment, net
    
    
    145,003
    
    
    
    181,238Deferred charges, net
    
    
    7,363
    
    
    
    7,726Goodwill, net
    
    
    77,174
    
    
    
    77,064Deferred income taxes
    
    
    23,579
    
    
    
    13,469Notes receivable
    
    
    815
    
    
    
    831Assets held for sale
    
    
    1,116
    
    
    
    Investments
    
    
    22
    
    
    
    8Total assets
    
    $
    556,040
    
    
    $
    568,765Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    96,428
    
    
    $
    71,802Accrued liabilities
    
    
    46,266
    
    
    
    34,952Deferred income taxes
    
    
    751
    
    
    
    Short-term borrowings
    
    
    2,655
    
    
    
    248Total current liabilities
    
    
    146,100
    
    
    
    107,002Long-term debt
    
    
    235,041
    
    
    
    234,920Pension liabilities
    
    
    34,569
    
    
    
    42,889Postretirement benefit obligation
    
    
    19,731
    
    
    
    19,722Accrued environmental remediation
    
    
    837
    
    
    
    930Total liabilities
    
    
    436,278
    
    
    
    405,463Stockholders equityCommon stock, par value $0.01 per share; 40,000,000 shares
authorized; 15,073,267 and 15,058,803 shares issued and
outstanding as of October 1, 2006 and December 31, 2005,
respectively
    
    
    151
    
    
    
    151Additional paid-in capital
    
    
    91,769
    
    
    
    91,711Retained earnings
    
    
    40,506
    
    
    
    85,734Unearned compensation
    
    
    
    
    
    
    (324
    )Accumulated other comprehensive loss, net of tax
    
    
    (12,664
    )
    
    
    (13,970
    )Total stockholders equity
    
    
    119,762
    
    
    
    163,302Total liabilities and stockholders equity
    
    $
    556,040
    
    
    $
    568,765
 The accompanying notes are an integral part of these condensed consolidated financial statements.
 2




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Wolverine Tube, Inc. and Subsidiaries
 
 Condensed Consolidated Statements of Cash Flows
  Nine months endedOctober 1,
    
    October 2,2006
    
    2005(In thousands)Operating ActivitiesNet loss
    
    $
    (45,229
    )
    
    $
    (19,362
    )Adjustments to reconcile net (loss) to net cash used
for operating activities:Depreciation and amortization
    
    
    12,982
    
    
    
    12,803Deferred income taxes
    
    
    (11,201
    )
    
    
    (10,526
    )Restructuring charges
    
    
    21,369
    
    
    
    Asset Impairment
    
    
    34,202
    
    
    
    Other non-cash items
    
    
    132
    
    
    
    4,119Changes in operating assets and liabilities:Sale of accounts receivable
    
    
    42,096
    
    
    
    18,500Accounts receivable, net
    
    
    (31,854
    )
    
    
    (34,274
    )Inventories
    
    
    (31,690
    )
    
    
    19,771Income taxes payable
    
    
    (1,681
    )
    
    
    (1,673
    )Prepaid expenses and other
    
    
    (519
    )
    
    
    (1,776
    )Accounts payable
    
    
    26,472
    
    
    
    9,792Accrued liabilities including pension,
postretirement benefit and environmental
    
    
    (17,534
    )
    
    
    2,071Net cash used for operating activities
    
    
    (2,455
    )
    
    
    (555
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (3,760
    )
    
    
    (7,639
    )Disposal of property, plant and equipment
    
    
    72
    
    
    
    861Net cash used for investing activities
    
    
    (3,688
    )
    
    
    (6,778
    )Financing ActivitiesFinancing fees and expenses paid
    
    
    (1,062
    )
    
    
    (1,032
    )Net (payments)/borrowings on revolving credit facilities
    
    
    2,383
    
    
    
    (2,093
    )Issuance of common stock
    
    
    62
    
    
    
    430Other financing activities
    
    
    
    
    
    
    35Net cash (used for)/provided by financing activities
    
    
    1,383
    
    
    
    (2,660
    )Effect of exchange rate on cash and cash equivalents
    
    
    1,922
    
    
    
    443Net decrease in cash and cash equivalents
    
    
    (2,838
    )
    
    
    (9,550
    )Cash and cash equivalents at beginning of period
    
    
    27,329
    
    
    
    35,017Cash and cash equivalents at end of period
    
    $
    24,491
    
    
    $
    25,467
 The accompanying notes are an integral part of these condensed consolidated financial statements.
 3




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Wolverine Tube, Inc. and Subsidiaries
 
 Notes to Unaudited Condensed Consolidated Financial Statements
 (1) Basis of Reporting for Interim Financial Statements
      4




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Share-Based Payment, Inventory Costs, an amendment of ARB No. 43, Chapter 4
 Fair Value Measurements
 Employers Accounting for Defined Benefit Pension and Other Postretirement Plans
   5




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(2) Cash and Cash Equivalents
   (3) Inventories
  October 1,
    
    December 31,2006
    
    2005(In thousands)Finished products
    
    $
    72,467
    
    
    $
    58,000Work-in-process
    
    
    46,545
    
    
    
    38,983Raw materials
    
    
    30,266
    
    
    
    23,545Supplies
    
    
    22,274
    
    
    
    26,177Totals
    
    $
    171,552
    
    
    $
    146,705
  (4) Earnings/ (Loss) Per Share
  6




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Earnings Per Share
  Three months ended
    
    Nine months endedOctober 1,
    
    October 2,
    
    October 1,
    
    October 2,2006
    
    2005
    
    2006
    
    2005(In thousands, except per share data)Net loss
    
    $
    (49,520
    )
    
    $
    (11,198
    )
    
    $
    (45,229
    )
    
    $
    (19,362
    )Weighted average shares and share equivalents
outstanding:Basic shares
    
    
    15,072
    
    
    
    15,034
    
    
    
    15,068
    
    
    
    15,015Dilutive stock options and restricted shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted weighted average shares and share equivalents
    
    
    15,072
    
    
    
    15,034
    
    
    
    15,068
    
    
    
    15,015Net loss per common share  basic
    
    $
    (3.29
    )
    
    $
    (0.74
    )
    
    $
    (3.00
    )
    
    $
    (1.29
    )Net loss per common share  diluted
    
    $
    (3.29
    )
    
    $
    (0.74
    )
    
    $
    (3.00
    )
    
    $
    (1.29
    )
  (5) Stock-Based Compensation Plans
    7




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Three Months
    
    
    Nine MonthsEnded
    
    
    Ended(in thousands)
    
    October 1, 2006
    
    
    October 1, 2006Stock-based compensation expense:Non-qualified stock options
    
    $
    71
    
    
    $
    198Restricted stock
    
    
    70
    
    
    
    224Total stock-based compensation expense
    
    $
    141
    
    
    $
    422
 Accounting for Stock Issued to Employees
 8




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Three Months
    
    Nine MonthsEnded
    
    EndedOctober 2, 2005
    
    October 2, 2005(In thousands, except per share amounts)Net (loss), as reported
    
    $
    (11,198
    )
    
    $
    (19,362
    )Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects
    
    
    (160
    )
    
    
    (363
    )Pro forma net (loss)
    
    $
    (11,358
    )
    
    $
    (19,725
    )(Loss) per share:Basic  as reported
    
    $
    (0.74
    )
    
    $
    (1.29
    )Basic  pro forma
    
    $
    (0.76
    )
    
    $
    (1.31
    )Diluted  as reported
    
    $
    (0.74
    )
    
    $
    (1.29
    )Diluted  pro forma
    
    $
    (0.76
    )
    
    $
    (1.31
    )
   Average RemainingNon-vested
    
    
    Recognition Period(in thousands)
    
    Compensation
    
    
    (Months)Non-qualified stock options
    
    $
    283
    
    
    
    30Restricted stock awards
    
    $
    333
    
    
    
    30Total
    
    $
    616
    
    
    
    30
  For theQuarterly PeriodEndedOctober 1, 2006Expected stock price volatility
    
    
    49.80
    %Expected life (in years)
    
    
    5Risk-free interest rate
    
    
    4.94
    %Expected dividend yield
    
    
    0
    %Weighted average fair value
    
    $
    1.71
 9




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WeightedWeighted
    
    
    Average
    
    
    Intrinsic Value ofAverage
    
    
    Remaining
    
    
    Unexercised inExercise
    
    
    Life
    
    
    the MoneyShares
    
    
    Price
    
    
    (Years)
    
    
    Options(in thousands)Options outstanding
- January 1, 2006
    
    
    1,911,116
    
    
    $
    9.46
    
    
    
    5.7
    
    
    $
    216Granted
    
    
    108,550
    
    
    $
    3.84
    
    
    
    5.0
    
    
    
    Exercised
    
    
    (417
    )
    
    $
    4.05
    
    
    
    
    
    
    
    Cancelled or expired
    
    
    (170,720
    )
    
    $
    9.04
    
    
    
    
    
    
    
    Options outstanding
- October 1, 2006
    
    
    1,848,529
    
    
    $
    9.17
    
    
    
    5.6
    
    
    $
    Unvested
    
    
    (168,549
    )
    
    $
    4.48
    
    
    
    9.4
    
    
    
    Options exercisable
 October 1, 2006
    
    
    1,679,980
    
    
    $
    9.64
    
    
    
    5.2
    
    
    $
    
  WeightedNumber of
    
    Number of
    
    AverageExercisable
    
    Outstanding
    
    RemainingWeighted Average Exercise Price
    
    Options
    
    Options
    
    Life (Years)$3.00 - $4.11
    
    
    208,809
    
    
    
    308,859
    
    
    
    7.48$4.12 - $8.23
    
    
    98,181
    
    
    
    166,680
    
    
    
    6.89$8.24 - $12.34
    
    
    1,099,824
    
    
    
    1,099,824
    
    
    
    5.39$12.35 - $16.45
    
    
    249,166
    
    
    
    249,166
    
    
    
    3.25$16.46 - $20.57
    
    
    18,000
    
    
    
    18,000
    
    
    
    3.05$20.58 - $24.68
    
    
    6,000
    
    
    
    6,000
    
    
    
    2.31Totals
    
    
    1,679,980
    
    
    
    1,848,529
    
    
    
    5.55
  WeightedAverageGrant DateFair ValueShares
    
    
    per AwardUnvested restricted stock awards  January 1, 2006
    
    
    80,467
    
    
    $
    7.51Granted
    
    
    65,425
    
    
    $
    3.88Vested
    
    
    (33,574
    )
    
    $
    8.87Cancelled or expired
    
    
    (5,086
    )
    
    $
    7.10Unvested restricted stock awards  October 1, 2006
    
    
    107,232
    
    
    $
    4.89
 10




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(6) Interest Expense
  Three months ended
    
    Nine months endedOctober 1,
    
    October 2,
    
    October 1,
    
    October 2,2006
    
    2005
    
    2006
    
    2005(in thousands)Interest expense
    
    $
    6,988
    
    
    $
    5,329
    
    
    $
    19,480
    
    
    $
    16,147Interest income
    
    
    (195
    )
    
    
    (176
    )
    
    
    (521
    )
    
    
    (355
    )Effect of interest rate swap
    
    
    140
    
    
    
    143
    
    
    
    637
    
    
    
    214Capitalized interest
    
    
    (25
    )
    
    
    (61
    )
    
    
    (75
    )
    
    
    (205
    )Interest expense, net
    
    $
    6,908
    
    
    $
    5,235
    
    
    $
    19,521
    
    
    $
    15,801
 (7) Debt
  October 1, 2006
    
    December 31, 2005(In thousands)Senior Notes, 7.375%, due August 2008
    
    $
    135,104
    
    
    $
    135,180Discount on 7.375% Senior Notes, original
issue discount amortized over 10 years
    
    
    (55
    )
    
    
    (75
    )Senior Notes, 10.5%, due April 2009
    
    
    99,400
    
    
    
    99,400Discount on 10.5% Senior Notes, original
issue discount amortized over 7 years
    
    
    (429
    )
    
    
    (557
    )Capitalized leases
    
    
    121
    
    
    
    112Netherlands facility, 5.1%, due on demand
    
    
    2,501
    
    
    
    4Other foreign facilities
    
    
    1,054
    
    
    
    1,104237,696
    
    
    
    235,168Less short-term borrowings
    
    
    (2,655
    )
    
    
    (248
    )Total
    
    $
    235,041
    
    
    $
    234,920
   11




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(8) Receivables Sale Facility
  12




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Accounting for Transfers and Servicing of Financial Assets
 (9) Contingencies
  (10) Comprehensive Income/(Loss)
  Three months ended
    
    Nine months endedOctober 1,
    
    October 2,
    
    October 1,
    
    October 2,2006
    
    2005
    
    2006
    
    2005(In thousands)Net (loss)
    
    $
    (49,520
    )
    
    $
    (11,198
    )
    
    $
    (45,229
    )
    
    $
    (19,362
    )Translation adjustment for financial statements
denominated in a foreign currency
    
    
    (323
    )
    
    
    4,995
    
    
    
    6,396
    
    
    
    1,059Unrealized gain/(loss) on cash flow hedges, net of tax
    
    
    73
    
    
    
    3,213
    
    
    
    (5,017
    )
    
    
    4,705Minimum pension liability adjustment, net of tax
    
    
    1
    
    
    
    (37
    )
    
    
    (76
    )
    
    
    (25
    )Comprehensive (loss)
    
    $
    (49,769
    )
    
    $
    3,027
    )
    
    $
    (43,926
    )
    
    $
    (13,623
    )
 13




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(11) Advisory Fees and Expenses
  (12) Restructuring Charges
  Accounting for Costs Associated with Exit or Disposal Activities
 Accounting for the Impairment
or Disposal of Long-Lived Assets
  14




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(13) Industry Segments
   Rod, BarCommercial
    
    Wholesale
    
    & Other
    
    Consolidated(In thousands)Three months ended October
1, 2006Pounds shipped
    
    
    65,366
    
    
    
    15,397
    
    
    
    4,111
    
    
    
    84,874Net sales
    
    $
    301,223
    
    
    $
    72,424
    
    
    $
    22,453
    
    
    $
    396,100Gross profit/(loss)
    
    $
    11,983
    
    
    $
    (2,352
    )
    
    $
    140
    
    
    $
    9,771Three months ended October 2, 2005Pounds shipped
    
    
    54,452
    
    
    
    22,846
    
    
    
    5,498
    
    
    
    82,796Net sales
    
    $
    158,424
    
    
    $
    51,017
    
    
    $
    16,263
    
    
    $
    225,704Gross profit/(loss)
    
    $
    (1,429
    )
    
    $
    (1,425
    )
    
    $
    943
    
    
    $
    (1,911
    )Nine months ended October 1, 2006Pounds shipped
    
    
    198,599
    
    
    
    66,660
    
    
    
    13,733
    
    
    
    278,992Net sales
    
    $
    788,633
    
    
    $
    261,743
    
    
    $
    62,020
    
    
    $
    1,112,396Gross profit/(loss)
    
    $
    28,081
    
    
    $
    22,101
    
    
    $
    (393
    )
    
    $
    49,789Nine months ended October 2, 2005Pounds shipped
    
    
    162,174
    
    
    
    65,628
    
    
    
    12,735
    
    
    
    240,537Net sales
    
    $
    458,375
    
    
    $
    135,044
    
    
    $
    42,088
    
    
    $
    635,507Gross profit/(loss)
    
    $
    13,662
    
    
    $
    (1,727
    )
    
    $
    1,868
    
    
    $
    13,803
 15




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Three months ended
    
    Nine months endedOctober 1,
    
    October 2,
    
    October 1,
    
    October 2,2006
    
    2005
    
    2006
    
    2005(In thousands)Commercial Products:Tube Products
    
    $
    222,003
    
    
    $
    105,152
    
    
    $
    560,880
    
    
    $
    295,761Fabricated Products
    
    
    54,492
    
    
    
    35,180
    
    
    
    152,207
    
    
    
    107,764Other Products
    
    
    24,729
    
    
    
    18,092
    
    
    
    75,546
    
    
    
    54,850Sub-total
    
    
    301,224
    
    
    
    158,424
    
    
    
    788,633
    
    
    
    458,375Wholesale Products
    
    
    72,424
    
    
    
    51,017
    
    
    
    261,743
    
    
    
    135,044Rod, bar and other
    
    
    22,452
    
    
    
    16,263
    
    
    
    62,020
    
    
    
    42,088Total
    
    $
    396,100
    
    
    $
    225,704
    
    
    $
    1,112,396
    
    
    $
    635,507
  (14) Pension Expense
 Defined Contribution Plans
  U.S. Qualified Retirement Plan
   16




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##### Table of Contents



Three months ended
    
    Nine months endedOctober 1,
    
    October 2,
    
    October 1,
    
    October 2,2006
    
    2005
    
    2006
    
    2005(In thousands)Service cost/(benefit)
    
    $
    (210
    )
    
    $
    1,195
    
    
    $
    628
    
    
    $
    3,657Interest cost/(benefit)
    
    
    (4,413
    )
    
    
    2,438
    
    
    
    7,043
    
    
    
    7,454Expected return on plan assets
    
    
    4,931
    
    
    
    (2,833
    )
    
    
    (8,037
    )
    
    
    (8,663
    )Amortization of prior service cost
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    90Amortization of net actuarial loss
    
    
    (570
    )
    
    
    434
    
    
    
    802
    
    
    
    1,327Net periodic pension cost/(benefit)
    
    $
    (262
    )
    
    $
    1,264
    
    
    $
    436
    
    
    $
    3,865
 U.S. Nonqualified Retirement Plan
  Three months ended
    
    Nine months endedOctober 1,
    
    October 2,
    
    October 1,
    
    October 2,2006
    
    2005
    
    2006
    
    2005(In thousands)Service cost
    
    $
    5
    
    
    $
    64
    
    
    $
    12
    
    
    $
    192Interest cost
    
    
    26
    
    
    
    122
    
    
    
    61
    
    
    
    365Amortization of prior service cost
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    276Amortization of loss
    
    
    1
    
    
    
    19
    
    
    
    2
    
    
    
    58FAS 88 settlement
    
    
    39
    
    
    
    94
    
    
    
    94
    
    
    
    281Net periodic pension cost
    
    $
    71
    
    
    $
    391
    
    
    $
    169
    
    
    $
    1,172
 Canadian Plans
  Three months ended
    
    Nine months endedOctober 1,
    
    October 2,
    
    October 1,
    
    October 2,2006
    
    2005
    
    2006
    
    2005(In thousands)Service cost
    
    $
    230
    
    
    $
    209
    
    
    $
    683
    
    
    $
    562Interest cost
    
    
    417
    
    
    
    510
    
    
    
    1,238
    
    
    
    1,369Expected return on plan assets
    
    
    (473
    )
    
    
    (526
    )
    
    
    (1,404
    )
    
    
    (1,413
    )Amortization of prior service cost
    
    
    37
    
    
    
    33
    
    
    
    110
    
    
    
    89Amortization of net actuarial loss
    
    
    34
    
    
    
    28
    
    
    
    100
    
    
    
    76Net periodic pension cost
    
    $
    245
    
    
    $
    254
    
    
    $
    727
    
    
    $
    683
 Postretirement Benefit Obligation
  17




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##### Table of Contents



Three months ended
    


Nine months endedOctober 1,
    
    October 2,
    
    October 1,
    
    October 2,2006
    
    2005
    
    2006
    
    2005(In thousands)Service cost
    
    $
    130
    
    
    $
    184
    
    
    $
    388
    
    
    $
    553Interest cost
    
    
    287
    
    
    
    283
    
    
    
    856
    
    
    
    848Amortization of prior service cost
    
    
    (12
    )
    
    
    38
    
    
    
    (37
    )
    
    
    115Amortization of deferred gain
    
    
    (3
    )
    
    
    11
    
    
    
    (11
    )
    
    
    33Net periodic cost
    
    $
    402
    
    
    $
    516
    
    
    $
    1,196
    
    
    $
    1,549
 (15) Assets Held for Sale
  (16) Income Taxes
  Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
 18




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##### Table of Contents



(17) Litigation
  (18) Condensed Consolidating Financial Information
   19




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Operations
For the Three Months Ended October 1, 2006
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    254,990
    
    
    $
    59,954
    
    
    $
    119,976
    
    
    $
    (38,820
    )
    
    $
    396,100Cost of goods sold
    
    
    256,483
    
    
    
    54,615
    
    
    
    114,051
    
    
    
    (38,820
    )
    
    
    386,329Gross profit/(loss)
    
    
    (1,493
    )
    
    
    5,339
    
    
    
    5,925
    
    
    
    
    
    
    
    9,771Selling, general and administrative expenses
    
    
    4,518
    
    
    
    782
    
    
    
    1,235
    
    
    
    
    
    
    
    6,535Advisory fees and expenses
    
    
    1,792
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,792Restructuring Expenses
    
    
    16,466
    
    
    
    
    
    
    
    39,114
    
    
    
    
    
    
    
    55,580Operating income/(loss)
    
    
    (24,269
    )
    
    
    4,557
    
    
    
    (34,424
    )
    
    
    
    
    
    
    (54,136
    )Other expense/(income):Interest expense/(income), net
    
    
    5,323
    
    
    
    (2
    )
    
    
    1,587
    
    
    
    
    
    
    
    6,908Amortization and other, net
    
    
    1,703
    
    
    
    (3,122
    )
    
    
    644
    
    
    
    
    
    
    
    (775
    )Equity in earnings/(loss) of subsidiaries
    
    
    (20,915
    )
    
    
    
    
    
    
    
    
    
    
    20,915
    
    
    
    Income/(loss) before income taxes
    
    
    (52,210
    )
    
    
    7,681
    
    
    
    (36,655
    )
    
    
    20,915
    
    
    
    (60,269
    )Income tax provision/(benefit)
    
    
    (2,690
    )
    
    
    2,612
    
    
    
    (10,671
    )
    
    
    
    
    
    
    (10,749
    )Net income/(loss)
    
    $
    (49,520
    )
    
    $
    5,069
    
    
    $
    (25,984
    )
    
    $
    20,915
    
    
    $
    (49,520
    )
 Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Operations
For the Three Months Ended October 2, 2005
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    131,394
    
    
    $
    40,964
    
    
    $
    73,358
    
    
    $
    (20,012
    )
    
    $
    225,704Cost of goods sold
    
    
    138,569
    
    
    
    37,401
    
    
    
    71,657
    
    
    
    (20,012
    )
    
    
    227,615Gross profit/(loss)
    
    
    (7,175
    )
    
    
    3,563
    
    
    
    1,701
    
    
    
    
    
    
    
    (1,911
    )Selling, general and administrative expenses
    
    
    6,790
    
    
    
    787
    
    
    
    1,218
    
    
    
    
    
    
    
    8,795Restructuring charges
    
    
    1,769
    
    
    
    73
    
    
    
    7
    
    
    
    
    
    
    
    1,849Operating income/(loss)
    
    
    (15,734
    )
    
    
    2,703
    
    
    
    476
    
    
    
    
    
    
    
    (12,555
    )Other expense/(income):Interest expense/(income), net
    
    
    5,184
    
    
    
    (10
    )
    
    
    61
    
    
    
    
    
    
    
    5,235Amortization and other, net
    
    
    1,487
    
    
    
    (1,664
    )
    
    
    500
    
    
    
    
    
    
    
    323Equity in earnings/(loss) of subsidiaries
    
    
    2,996
    
    
    
    
    
    
    
    
    
    
    
    (2,996
    )
    
    
    Income/(loss) before income taxes
    
    
    (19,409
    )
    
    
    4,377
    
    
    
    (85
    )
    
    
    (2,996
    )
    
    
    (18,113
    )Income tax provision/(benefit)
    
    
    (8,211
    )
    
    
    1,459
    
    
    
    (163
    )
    
    
    
    
    
    
    (6,915
    )Net income/(loss)
    
    $
    (11,198
    )
    
    $
    2,918
    
    
    $
    78
    
    
    $
    (2,996
    )
    
    $
    (11,198
    )
 20




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Operations
For the Nine Months Ended October 1, 2006
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    690,167
    
    
    $
    171,540
    
    
    $
    348,050
    
    
    $
    (97,361
    )
    
    $
    1,112,396Cost of goods sold
    
    
    668,683
    
    
    
    151,865
    
    
    
    339,420
    
    
    
    (97,361
    )
    
    
    1,062,607Gross profit
    
    
    21,484
    
    
    
    19,675
    
    
    
    8,630
    
    
    
    
    
    
    
    49,789Selling, general and administrative expenses
    
    
    17,883
    
    
    
    2,261
    
    
    
    3,784
    
    
    
    
    
    
    
    23,928Advisory fees and expenses
    
    
    3,907
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,907Restructuring Expenses
    
    
    16,422
    
    
    
    (7
    )
    
    
    39,156
    
    
    
    
    
    
    
    55,571Operating income/(loss)
    
    
    (16,728
    )
    
    
    17,421
    
    
    
    (34,130
    )
    
    
    
    
    
    
    (33,617
    )Other expense/(income):Interest expense/(income), net
    
    
    16,117
    
    
    
    (6
    )
    
    
    3,410
    
    
    
    
    
    
    
    19,521Amortization and other, net
    
    
    7,586
    
    
    
    (7,928
    )
    
    
    1,826
    
    
    
    
    
    
    
    1,484Equity in earnings/(loss) of subsidiaries
    
    
    (12,967
    )
    
    
    
    
    
    
    
    
    
    
    12,967
    
    
    
    Income/(loss) before income taxes
    
    
    (53,398
    )
    
    
    25,355
    
    
    
    (39,546
    )
    
    
    12,967
    
    
    
    (54,622
    )Income tax provision/(benefit)
    
    
    (8,169
    )
    
    
    8,620
    
    
    
    (9,844
    )
    
    
    
    
    
    
    (9,393
    )Net income/(loss)
    
    $
    (45,229
    )
    
    $
    16,735
    
    
    $
    (29,702
    )
    
    $
    12,967
    
    
    $
    (45,229
    )
 Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Operations
For the Nine Months Ended October 2, 2005
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    366,613
    
    
    $
    126,371
    
    
    $
    199,337
    
    
    $
    (56,814
    )
    
    $
    635,507Cost of goods sold
    
    
    370,626
    
    
    
    114,429
    
    
    
    193,463
    
    
    
    (56,814
    )
    
    
    621,704Gross profit
    
    
    (4,013
    )
    
    
    11,942
    
    
    
    5,874
    
    
    
    
    
    
    
    13,803Selling, general and administrative expenses
    
    
    19,605
    
    
    
    2,443
    
    
    
    3,699
    
    
    
    
    
    
    
    25,747Restructuring charges
    
    
    1,681
    
    
    
    73
    
    
    
    149
    
    
    
    
    
    
    
    1,903Operating income/(loss)
    
    
    (25,299
    )
    
    
    9,426
    
    
    
    2,026
    
    
    
    
    
    
    
    (13,847
    )Other expense/(income):Interest expense/(income), net
    
    
    15,968
    
    
    
    (29
    )
    
    
    (138
    )
    
    
    
    
    
    
    15,801Amortization and other, net
    
    
    3,616
    
    
    
    (4,339
    )
    
    
    1,488
    
    
    
    
    
    
    
    765Equity in earnings/(loss) of subsidiaries
    
    
    10,196
    
    
    
    
    
    
    
    
    
    
    
    (10,196
    )
    
    
    Income/(loss) before income taxes
    
    
    (34,687
    )
    
    
    13,794
    
    
    
    676
    
    
    
    (10,196
    )
    
    
    (30,413
    )Income tax provision/(benefit)
    
    
    (15,325
    )
    
    
    4,661
    
    
    
    (387
    )
    
    
    
    
    
    
    (11,051
    )Net income/(loss)
    
    $
    (19,362
    )
    
    $
    9,133
    
    
    $
    1,063
    
    
    $
    (10,196
    )
    
    $
    (19,362
    )
 21




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Balance Sheets
October 1, 2006
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)AssetsCurrent assetsCash and cash equivalents
    
    $
    8,452
    
    
    $
    
    
    
    $
    16,039
    
    
    $
    
    
    
    $
    24,491Accounts receivable, net
    
    
    7,377
    
    
    
    11,306
    
    
    
    75,192
    
    
    
    
    
    
    
    93,875Inventories
    
    
    81,079
    
    
    
    48,816
    
    
    
    41,657
    
    
    
    
    
    
    
    171,552Prepaid expenses and other
    
    
    7,534
    
    
    
    1,496
    
    
    
    2,020
    
    
    
    
    
    
    
    11,050Total current assets
    
    
    104,442
    
    
    
    61,618
    
    
    
    134,908
    
    
    
    
    
    
    
    300,968Property, plant and equipment, net
    
    
    87,489
    
    
    
    24,878
    
    
    
    32,636
    
    
    
    
    
    
    
    145,003Deferred charges, net
    
    
    4,438
    
    
    
    80
    
    
    
    2,845
    
    
    
    
    
    
    
    7,363Deferred taxes, non-current
    
    
    7,385
    
    
    
    (7,385
    )
    
    
    23,579
    
    
    
    
    
    
    
    23,579Goodwill, net
    
    
    
    
    
    
    75,504
    
    
    
    1,670
    
    
    
    
    
    
    
    77,174Assets held for resale
    
    
    1,116
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,116Notes receivable
    
    
    
    
    
    
    
    
    
    
    815
    
    
    
    
    
    
    
    815Prepaid pension and other
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22Investments in subsidiaries
    
    
    477,544
    
    
    
    325
    
    
    
    
    
    
    
    (477,869
    )
    
    
    Total assets
    
    $
    682,414
    
    
    $
    155,020
    
    
    $
    196,475
    
    
    $
    (477,869
    )
    
    $
    556,040Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    55,752
    
    
    $
    17,783
    
    
    $
    22,893
    
    
    $
    
    
    
    $
    96,428Accrued liabilities
    
    
    (4,348
    )
    
    
    23,134
    
    
    
    27,480
    
    
    
    
    
    
    
    46,266Short-term borrowings
    
    
    (98
    )
    
    
    123
    
    
    
    2,630
    
    
    
    
    
    
    
    2,655Deferred income taxes
    
    
    (1,695
    )
    
    
    1,695
    
    
    
    751
    
    
    
    
    
    
    
    751Intercompany balances
    
    
    234,297
    
    
    
    (224,888
    )
    
    
    (9,409
    )
    
    
    
    
    
    
    Total current liabilities
    
    
    283,908
    
    
    
    (182,153
    )
    
    
    44,345
    
    
    
    
    
    
    
    146,100Long-term debt
    
    
    234,021
    
    
    
    39
    
    
    
    981
    
    
    
    
    
    
    
    235,041Pension liabilities
    
    
    33,258
    
    
    
    
    
    
    
    1,311
    
    
    
    
    
    
    
    34,569Postretirement benefit obligation
    
    
    10,626
    
    
    
    
    
    
    
    9,105
    
    
    
    
    
    
    
    19,731Accrued environmental remediation
    
    
    837
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    837Total liabilities
    
    
    562,650
    
    
    
    (182,114
    )
    
    
    55,742
    
    
    
    
    
    
    
    436,278Stockholders equity
    
    
    119,764
    
    
    
    337,134
    
    
    
    140,733
    
    
    
    (477,869
    )
    
    
    119,762Total liabilities and stockholders equity
    
    $
    682,414
    
    
    $
    155,020
    
    
     $
    196,475
    
    
    $
    (477,869
    )
    
    $
    556,040
 22




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Balance Sheets
December 31, 2005
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)AssetsCurrent assetsCash and cash 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
    
    
    
    
    
    
    
    181,238Deferred charges, net
    
    
    
    
    
    
    75,505
    
    
    
    1,559
    
    
    
    
    
    
    
    77,064Deferred taxes, non-current
    
    
    5,368
    
    
    
    125
    
    
    
    2,233
    
    
    
    
    
    
    
    7,726Goodwill, net
    
    
    7,174
    
    
    
    (7,174
    )
    
    
    13,469
    
    
    
    
    
    
    
    13,469Assets held for sale
    
    
    
    
    
    
    
    
    
    
    831
    
    
    
    
    
    
    
    831Prepaid pension and other
    
    
    14
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    8Investments 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
 23




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Cash Flows
For the Nine Months Ended October 1, 2006
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Operating ActivitiesNet income /(loss)
    
    $
    (45,229
    )
    
    $
    16,735
    
    
    $
    (29,702
    )
    
    $
    12,967
    
    
    $
    (45,229
    )Depreciation and amortization
    
    
    7,387
    
    
    
    2,344
    
    
    
    3,251
    
    
    
    
    
    
    
    12,982Deferred income taxes
    
    
    (1,906
    )
    
    
    1,906
    
    
    
    (11,201
    )
    
    
    
    
    
    
    (11,201
    )Restructuring /Non-recurring
    
    
    2,731
    
    
    
    (8
    )
    
    
    18,646
    
    
    
    
    
    
    
    21,369Other non-cash items
    
    
    91
    
    
    
    45
    
    
    
    (4
    )
    
    
    
    
    
    
    132Asset impairment
    
    
    13,691
    
    
    
    
    
    
    
    20,511
    
    
    
    
    
    
    
    34,202Equity in earnings of subsidiaries
    
    
    12,967
    
    
    
    
    
    
    
    
    
    
    
    (12,967
    )
    
    
    Changes in receivables sale facility
    
    
    
    
    
    
    
    
    
    
    42,096
    
    
    
    
    
    
    
    42,096Changes in operating assets and liabilities
    
    
    20,960
    
    
    
    (43,773
    )
    
    
    (33,993
    )
    
    
    
    
    
    
    (56,806
    )Net cash provided by/(used for) operating activities
    
    
    10,692
    
    
    
    (22,751
    )
    
    
    9,604
    
    
    
    
    
    
    
    (2,455
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (1,515
    )
    
    
    (169
    )
    
    
    (2,076
    )
    
    
    
    
    
    
    (3,760
    )Disposals of property, plant and equipment
    
    
    31
    
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    72Net cash used for investing activities
    
    
    (1,484
    )
    
    
    (169
    )
    
    
    (2,035
    )
    
    
    
    
    
    
    (3,688
    )Financing ActivitiesIssuance of common stock
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62Financing fees and expenses paid
    
    
    (191
    )
    
    
    
    
    
    
    (871
    )
    
    
    
    
    
    
    (1,062
    )Net borrowings/(payments) on revolving credit
facilities
    
    
    (98
    )
    
    
    80
    
    
    
    2,401
    
    
    
    
    
    
    
    2,383Intercompany borrowings/(payments)
    
    
    (6,338
    )
    
    
    22,840
    
    
    
    (16,502
    )
    
    
    
    
    
    
    Net cash provided by/(used for) financing activities
    
    
    (6,565
    )
    
    
    22,920
    
    
    
    (14,972
    )
    
    
    
    
    
    
    1,383Effect of exchange rate on cash and cash equivalents
    
    
    1,238
    
    
    
    
    
    
    
    684
    
    
    
    
    
    
    
    1,922Net increase/(decrease) in cash and cash equivalents
    
    
    3,881
    
    
    
    
    
    
    
    (6,719
    )
    
    
    
    
    
    
    (2,838
    )Cash and cash equivalents at beginning of period
    
    
    4,571
    
    
    
    
    
    
    
    22,758
    
    
    
    
    
    
    
    27,329Cash and cash equivalents at end of period
    
    $
    8,452
    
    
    $
    
    
    
    $
    16,039
    
    
    $
    
    
    
    $
    24,491
 24




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Cash Flows
For the Nine Months Ended October 2, 2005
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Operating ActivitiesNet income /(loss)
    
    $
    (19,362
    )
    
    $
    9,133
    
    
    $
    1,063
    
    
    $
    (10,196
    )
    
    $
    (19,362
    )Depreciation and amortization
    
    
    7,902
    
    
    
    2,287
    
    
    
    2,614
    
    
    
    
    
    
    
    12,803Deferred income taxes
    
    
    (10,339
    )
    
    
    
    
    
    
    (187
    )
    
    
    
    
    
    
    (10,526
    )Other non-cash items
    
    
    3,796
    
    
    
    118
    
    
    
    205
    
    
    
    
    
    
    
    4,119Equity in earnings of subsidiaries
    
    
    (10,196
    )
    
    
    
    
    
    
    
    
    
    
    10,196
    
    
    
    Changes in receivables sale facility
    
    
    18,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,500Changes in operating assets and liabilities
    
    
    3,926
    
    
    
    16,489
    
    
    
    (26,504
    )
    
    
    
    
    
    
    (6,089
    )Net cash provided by/(used for) operating activities
    
    
    (5,773
    )
    
    
    28,027
    
    
    
    (22,809
    )
    
    
    
    
    
    
    (555
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (3,162
    )
    
    
    (1,256
    )
    
    
    (3,221
    )
    
    
    
    
    
    
    (7,639
    )Other
    
    
    634
    
    
    
    230
    
    
    
    (3
    )
    
    
    
    
    
    
    861Net cash used for investing activities
    
    
    (2,528
    )
    
    
    (1,026
    )
    
    
    (3,224
    )
    
    
    
    
    
    
    (6,778
    )Financing ActivitiesIssuance of common stock
    
    
    430
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    430Deferred financing fees
    
    
    (362
    )
    
    
    
    
    
    
    (670
    )
    
    
    
    
    
    
    (1,032
    )Net payments on revolving credit facilities
    
    
    (1,000
    )
    
    
    (18
    )
    
    
    (1,075
    )
    
    
    
    
    
    
    (2,093
    )Intercompany borrowings (payments)
    
    
    (2,307
    )
    
    
    (26,983
    )
    
    
    29,290
    
    
    
    
    
    
    
    Other financing activities
    
    
    10,225
    
    
    
    
    
    
    
    (10,190
    )
    
    
    
    
    
    
    35Net cash provided by/(used for) financing activities
    
    
    6,986
    
    
    
    (27,001
    )
    
    
    17,355
    
    
    
    
    
    
    
    (2,660
    )Effect of exchange rate on cash and cash equivalents
    
    
    709
    
    
    
    
    
    
    
    (266
    )
    
    
    
    
    
    
    443Net decrease in cash and cash equivalents
    
    
    (606
    )
    
    
    
    
    
    
    (8,944
    )
    
    
    
    
    
    
    (9,550
    )Cash and cash equivalents at beginning of period
    
    
    11,191
    
    
    
    
    
    
    
    23,826
    
    
    
    
    
    
    
    35,017Cash and cash equivalents at end of period
    
    $
    10,585
    
    
    $
    
    
    
    $
    14,882
    
    
    $
    
    
    
    $
    25,467
 25




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 This report contains forward-looking statements made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all
statements that do not relate solely to current or historical fact, but address events or
developments that we anticipate will occur in the future. Forward-looking statements include
statements regarding our goals, beliefs, plans or current expectations, taking into account the
information currently available to our management. When we use words such as anticipate,
intend, expect, believe, plan, may, should or would or other words that convey
uncertainty of future events or outcome, we are making forward-looking statements. Statements
relating to future sales, earnings, operating performance, restructuring strategies, capital
expenditures and sources and uses of cash, for example, are forward-looking statements.
 These forward-looking statements are subject to various risks and uncertainties which could
cause actual results to differ materially from those stated or implied by such forward-looking
statements. We undertake no obligation to publicly release any revision of any forward-looking
statements contained herein to reflect events and circumstances occurring after the date hereof, or
to reflect the occurrence of unanticipated events. Information concerning risk factors is
contained under Item 1A Risk Factors in our Annual Report on Form 10-K for the year ended
December 31, 2005, as well as in the section entitled Risk Factors in Part II, Item 1A of this
report. You should carefully consider all of the risks and all other information contained in or
incorporated by reference in this report and in our filings with the SEC. These risks are not the
only ones we face. Additional risks and uncertainties not presently known to us, or which we
currently consider immaterial, also may adversely affect us. If any of these risks actually occur,
our business, financial condition and results of operations could be materially and adversely
affected.
 Company Overview
  Results of Operations
  26




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##### Table of Contents



Executive Summary
      27




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##### Table of Contents



Stock-based Compensation Expense
   For the Three Months Ended October 1, 2006 Compared to the Three Months Ended October 2, 2005
  Pounds ShippedIn thousands, except for
    

    For the Three Months Ended
    
    
    Increase
    
    
    % Increasepercentages
    
    October 1, 2006
    
    
    October 2, 2005
    
    
    (Decrease)
    
    
    (Decrease)Commercial products
    
    
    65,366
    
    
    
    54,452
    
    
    
    10,914
    
    
    
    20.0
    %Wholesale products
    
    
    15,397
    
    
    
    22,846
    
    
    
    (7,449
    )
    
    
    (32.6
    )Rod, bar and other products
    
    
    4,111
    
    
    
    5,498
    
    
    
    (1,387
    )
    
    
    (25.2
    )Total
    
    
    84,874
    
    
    
    82,796
    
    
    
    2,078
    
    
    
    2.5
    %
   28




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##### Table of Contents



Net SalesIn thousands, except for
    
    For the Three Months Endedpercentages
    
    October 1, 2006
    
    
    October 2, 2005
    
    
    $ Increase
    
    
    % IncreaseCommercial products
    
    $
    301,223
    
    
    $
    158,424
    
    
    $
    142,799
    
    
    
    90.1
    %Wholesale products
    
    
    72,424
    
    
    
    51,017
    
    
    
    21,407
    
    
    
    42.0Rod, bar and other products
    
    
    22,453
    
    
    
    16,263
    
    
    
    6,190
    
    
    
    38.1Total
    
    $
    396,100
    
    
    $
    225,704
    
    
    $
    170,396
    
    
    
    75.5
    %
   29




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##### Table of Contents



Gross Profit/(Loss)In thousands, except for
    
    For the Three Months Ended
    
    
    $ Increasepercentages
    
    October 1, 2006
    
    
    October 2, 2005
    
    
    (Decrease)
    
    
    % (Decrease)Commercial products
    
    $
    11,983
    
    
    $
    (1,429
    )
    
    $
    13,412
    
    
    
    *NMWholesale products
    
    
    (2,352
    )
    
    
    (1,425
    )
    
    
    (927
    )
    
    
    (65.1
    )Rod, bar and other products
    
    
    140
    
    
    
    943
    
    
    
    (803
    )
    
    
    (85.2
    )Total
    
    $
    9,771
    
    
    $
    (1,911
    )
    
    $
    11,682
    
    
    
    *NM
 *
    
    NM  Not Meaningful
     30




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##### Table of Contents



For the Nine Months Ended October 1, 2006 Compared to the Nine Months Ended October 2, 2005
  Pounds ShippedIn thousands, except for
    
    For the Nine Months Endedpercentages
    
    October 1, 2006
    
    
    October 2, 2005
    
    
    Increase
    
    
    % IncreaseCommercial products
    
    
    198,599
    
    
    
    162,174
    
    
    
    36,425
    
    
    
    22.5
    %Wholesale products
    
    
    66,660
    
    
    
    65,628
    
    
    
    1,032
    
    
    
    1.6Rod, bar and other products
    
    
    13,733
    
    
    
    12,735
    
    
    
    988
    
    
    
    7.8Total
    
    
    278,992
    
    
    
    240,537
    
    
    
    38,455
    
    
    
    16.0
    %
 31




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##### Table of Contents



Net SalesIn thousands, except for
    
    For the Nine Months Endedpercentages
    October 1, 2006
    
    
    October 2, 2005
    
    
    $ Increase
    
    
    % IncreaseCommercial products
    
    $
    788,633
    
    
    $
    458,375
    
    
    $
    330,258
    
    
    
    72.0
    %Wholesale products
    
    
    261,743
    
    
    
    135,044
    
    
    
    126,699
    
    
    
    93.8Rod, bar and other products
    
    
    62,020
    
    
    
    42,088
    
    
    
    19,932
    
    
    
    47.4Total
    
    $
    1,112,396
    
    
    $
    635,507
    
    
    $
    476,889
    
    
    
    75.0
    %
    32




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##### Table of Contents



Gross Profit/(Loss)In thousands, except for
    
    For the Nine Months Ended
    
    
    $ Increase
    
    
    % Increasepercentages
    
    October 1, 2006
    
    
    October 2, 2005
    
    
    (Decrease)
    
    
    (Decrease)Commercial products
    
    $
    28,081
    
    
    $
    13,662
    
    
    $
    14,419
    
    
    
    105.5
    %Wholesale products
    
    
    22,101
    
    
    
    (1,727
    )
    
    
    23,828
    
    
    
    *NMRod, bar and other products
    
    
    (393
    )
    
    
    1,868
    
    
    
    (2,261
    )
    
    
    *NMTotal
    
    $
    49,789
    
    
    $
    13,803
    
    
    $
    35,986
    
    
    
    260.7
    %
 * NM  Not Meaningful
    33




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##### Table of Contents



Restructuring
  Accounting for Costs Associated with Exit or Disposal Activities
 34




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##### Table of Contents



Accounting for the Impairment
or Disposal of Long-Lived Assets
  Liquidity and Capital Resources
  October 1, 2006(Unaudited)
    
    December 31, 2005(In thousands)Cash and cash equivalents
    
    $
    24,491
    
    
    $
    27,329Working capital
    
    
    153,069
    
    
    
    181,427Total debt
    
    
    237,696
    
    
    
    235,168Current ratio
    
    
    2.03
    
    
    
    2.70
 Overview and Outlook
  35




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##### Table of Contents



36




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##### Table of Contents



37




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##### Table of Contents



Sources of Liquidity
  Cash and cash equivalents.
  Cash used for operations.
 Cash from our receivables sale facility
 Uses of Liquidity
  38




---



##### Table of Contents



Funding Operations and working capital needs.
 Capital expenditures.
 Payments related to our outstanding debt and other financing facilities.
  Funding of pension obligations
 39




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##### Table of Contents



Off-Balance Sheet Arrangements
   Liquidity Facilities
    40




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##### Table of Contents



Environmental Matters
  41




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Commodity Price Risks
 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
 Three months
    
    Nine monthsended
    
    ended(In millions)
    
    October 1, 2006
    
    October 1, 2006Gains arising from ineffectiveness included in earnings
    
    $
    0.8
    
    
    $
    2.2Gains reclassed from other comprehensive income (OCI) to earnings
    
    $
    2.3
    
    
    $
    6.2
 (In millions)
    
    October 1, 2006
    
    October 2, 2005Aggregate notional value of derivatives outstanding
    
    $
    9.8
    
    
    $
    8.4Period through which derivative positions currently exist
    
    December 2007
    
    December 2006Fair value of derivatives  asset
    
    $
    1.3
    
    
    $
    2.0Increase/(decrease) in fair value due to the effect of a
10% adverse change in
commodity prices to current fair value
    
    $
    0.8
    
    
    $
    (1.0
    )Deferred gains included in OCI
    
    $
    2.1
    
    
    $
    1.7Gains included in OCI to be recognized in the next 12 months
    
    $
    2.0
    
    
    $
    1.6Number of months over which gain in OCI is to be recognized
    
    
    15
    
    
    
    15
  42




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##### Table of Contents



Three months
    
    Nine monthsended
    
    ended(In millions)
    
    October 1, 2006
    
    October 1, 2006(Losses) arising from ineffectiveness included in earnings
    
    $
    (3.3
    )
    
    $
    (1.8
    )Gain/(loss) reclassed from other comprehensive income
(OCI) to earnings
    
    $
    0.4
    
    
    $
    (1.8
    )
 (In millions)
    
    October 1, 2006
    
    October 2, 2005Aggregate notional value of derivatives outstanding
    
    $
    4.1
    
    
    $
    3.9Period through which derivative positions currently exist
    
    December 2006
    
    December 2005Fair value of derivatives  asset
    
    $
    2.1
    
    
    $
    Increase/(decrease) in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    0.6
    
    
    $
    (0.4
    )Deferred gains/(losses) included in OCI
    
    $
    0.5
    
    
    $
    (0.1
    )(Losses) included in OCI to be recognized in the next 12 months
    
    $
    (0.5
    )
    
    $
    (0.1
    )Number of months over which (loss) in OCI is to be recognized
    
    
    3
    
    
    
    3
  Three months
    
    Nine monthsended
    
    ended(In millions)
    
    October 1, 2006
    
    October 1, 2006(Losses) arising from ineffectiveness included in earnings
    
    $
    (1.0
    )
    
    $
    (3.1
    )
 (In millions)
    
    October 1, 2006
    
    October 2, 2005Aggregate notional value of derivatives outstanding
    
    $
    24.7
    
    
    $
    26.0Period through which derivative positions currently exist
    
    December 2006
    
    December 2005Fair value of derivatives  asset/(liability)
    
    $
    0.1
    
    
    $
    (1.5
    )(Decrease) in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    (2.5
    )
    
    $
    (2.7
    )
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Three months
    
    Nine monthsended
    
    ended(In millions)
    
    October 1, 2006
    
    October 1, 2006Gains arising from ineffectiveness included in earnings
    
    $
    0.6
    
    
    $
    1.8(Losses) reclassed from other comprehensive income (OCI) to earnings
    
    $
    (0.7
    )
    
    $
    (1.3
    )
 (In millions)
    
    October 1, 2006
    
    October 2, 2005Aggregate notional value of derivatives outstanding
    
    $
    9.7
    
    
    $
    3.6Period through which derivative positions currently exist
    
    December 2008
    
    December 2006Fair value of derivatives  asset/(liability)
    
    $
    (1.2
    )
    
    $
    3.8(Decrease) in fair value due to the effect of a 10% adverse change
in commodity prices to current fair value
    
    $
    (0.8
    )
    
    $
    (0.7
    )Deferred gains/(losses) included in OCI
    
    $
    (4.8
    )
    
    $
    5.8Gains/(losses) included in OCI to be recognized in the next 12 months
    
    $
    (2.4
    )
    
    $
    5.0Number of months over which gain/(loss) in OCI is to be recognized
    
    
    27
    
    
    
    15
 Foreign Currency Exchange Risk
   Interest Rate Risk
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Material Limitations
   
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1A. Risk Factors
  Recent 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.
  During the second quarter of 2006, wholesale demand was strong and wholesale pricing rose to record
high levels, neither of which may be sustained in future quarters.
  If we are unable to secure a suitable replacement for our silver consignment and forward contracts
facility provider when it exits the market, our cash requirements will significantly increase
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##### Table of Contents



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##### Table of Contents



Item 3. Exhibits
 10.1*
    
    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).31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes- Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  *
    
    Management contract or compensatory plan or arrangement
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##### Table of Contents



SIGNATURE
  WOLVERINE TUBE, INC.Dated:  November 9, 2006
    By:
    /s/ James E. DeasonName:
    James E. DeasonTitle:
    Senior Vice President, Chief Financial
Officer and Secretary 49