##### 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 July 3, 2005
 OR
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 for the transition period fromto .
 COMMISSION FILE NUMBER 1-12164
 WOLVERINE TUBE, INC.
  Delaware(State of Incorporation)
    
    63-0970812(IRS Employer Identification No.)
 200 Clinton Avenue West, Suite 1000
Huntsville, Alabama(Address of Principal Executive Offices)
    
    35801(Zip Code)
 (Registrants Telephone Number, including Area Code)
 þ o
 þ o
  Class
    
    Outstanding as of August 8, 2005Common Stock, $0.01 Par Value
    
    15,051,908 Shares




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FORM 10-Q
 QUARTERLY REPORT
 TABLE OF CONTENTS
 Page No.PART IItem 1. Financial StatementsCondensed Consolidated Statements of Operations (Unaudited)  Three and six months ended July 3, 2005 and July 4, 2004
    
    
    1Condensed Consolidated Balance Sheets  July 3, 2005 (Unaudited) and December 31, 2004
    
    
    2Condensed Consolidated Statements of Cash Flows (Unaudited)  Six months ended July 3, 2005 and July 4, 2004
    
    
    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
    
    
    46Item 4. Controls and Procedures
    
    
    50PART IIItem 4. Submission of Matters to a Vote of Security Holders
    
    
    50Item 5. Other Information
    
    
    51Item 6. Exhibits
    
    
    52EX-10.3  AMENDED AND RESTATED CREDIT AGREEMENTEX-10.8  2005 BASE SALARIES AND OTHER COMPENSATIONEX-31.1  SECTION 302 CEO CERTIFICATIONEX-31.2  SECTION 302 CFO CERTIFICATIONEX-32.1  SECTION 906 CEO CERTIFICATIONEX-32.2  SECTION 906 CFO 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
    
    Six months endedJuly 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004(In thousands except per share amounts)Net sales
    
    $
    196,321
    
    
    $
    214,080
    
    
    $
    409,803
    
    
    $
    419,885Cost of goods sold
    
    
    190,667
    
    
    
    192,499
    
    
    
    394,089
    
    
    
    380,819Gross profit
    
    
    5,654
    
    
    
    21,581
    
    
    
    15,714
    
    
    
    39,066Selling, general and administrative expenses
    
    
    8,644
    
    
    
    10,062
    
    
    
    16,952
    
    
    
    19,499Restructuring charges
    
    
    136
    
    
    
    294
    
    
    
    54
    
    
    
    865Operating income/(loss) from continuing operations
    
    
    (3,126
    )
    
    
    11,225
    
    
    
    (1,292
    )
    
    
    18,702Other expenses:Interest expense, net
    
    
    5,244
    
    
    
    5,760
    
    
    
    10,566
    
    
    
    10,830Amortization and other, net
    
    
    430
    
    
    
    1,106
    
    
    
    442
    
    
    
    1,774Income/(loss) from continuing operations before
income taxes
    
    
    (8,800
    )
    
    
    4,359
    
    
    
    (12,300
    )
    
    
    6,098Income tax provision/(benefit)
    
    
    (3,118
    )
    
    
    1,059
    
    
    
    (4,136
    )
    
    
    1,430Income/(loss) from continuing operations
    
    
    (5,682
    )
    
    
    3,300
    
    
    
    (8,164
    )
    
    
    4,668Loss from discontinued operations, net of income tax
    
    
    
    
    
    
    (252
    )
    
    
    
    
    
    
    (252
    )Net income/(loss)
    
    $
    (5,682
    )
    
    $
    3,048
    
    
    $
    (8,164
    )
    
    $
    4,416Per share data:Earnings/(loss) per common share  basic:Continuing operations
    
    $
    (0.38
    )
    
    $
    0.26
    
    
    $
    (0.54
    )
    
    $
    0.37Discontinued operations
    
    
    
    
    
    
    (0.02
    )
    
    
    
    
    
    
    (0.02
    )Net income /(loss)
    
    $
    (0.38
    )
    
    $
    0.24
    
    
    $
    (0.54
    )
    
    $
    0.35Basic weighted average number of common shares
    
    
    15,051
    
    
    
    12,648
    
    
    
    15,014
    
    
    
    12,469Earnings/(loss) per common share  diluted:Continuing operations
    
    $
    (0.38
    )
    
    $
    0.25
    
    
    $
    (0.54
    )
    
    $
    0.37Discontinued operations
    
    
    
    
    
    
    (0.02
    )
    
    
    
    
    
    
    (0.02
    )Net income /(loss)
    
    $
    (0.38
    )
    
    $
    0.23
    
    
    $
    (0.54
    )
    
    $
    0.35Diluted weighted average number of common and
common equivalent shares
    
    
    15,051
    
    
    
    13,063
    
    
    
    15,014
    
    
    
    12,764
 The accompanying notes are an integral part of these condensed consolidated financial
statements.
 1




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
 
 Condensed Consolidated Balance Sheets
 July 3,
    
    December 31,2005
    
    2004(In thousands except share and per share amounts)
    
    (Unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    13,988
    
    
    $
    35,017Accounts receivable, net of allowance for doubtful accounts of
$0.6 million in 2005 and $0.4 million in 2004
    
    
    100,159
    
    
    
    93,964Inventories
    
    
    143,509
    
    
    
    151,979Prepaid expenses and other
    
    
    12,020
    
    
    
    6,905Deferred income taxes current
    
    
    11,563
    
    
    
    7,707Total current assets
    
    
    281,239
    
    
    
    295,572Property, plant and equipment, net
    
    
    190,557
    
    
    
    194,966Deferred charges, net
    
    
    12,625
    
    
    
    11,892Goodwill, net
    
    
    77,078
    
    
    
    77,312Deferred income taxes, non-current
    
    
    840
    
    
    
    1,008Notes receivable
    
    
    821
    
    
    
    Assets held for sale
    
    
    
    
    
    
    1,147Investments
    
    
    5,733
    
    
    
    5,561Total assets
    
    $
    568,893
    
    
    $
    587,458Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    55,784
    
    
    $
    59,912Accrued liabilities
    
    
    27,591
    
    
    
    32,476Short-term borrowings
    
    
    948
    
    
    
    1,219Total current liabilities
    
    
    84,323
    
    
    
    93,607Long-term debt
    
    
    235,728
    
    
    
    237,022Pension liabilities
    
    
    29,656
    
    
    
    27,915Postretirement benefit obligation
    
    
    18,770
    
    
    
    18,422Accrued environmental remediation
    
    
    897
    
    
    
    990Total liabilities
    
    
    369,374
    
    
    
    377,956Stockholders equityCommon stock, par value $0.01 per share; 40,000,000 shares
authorized; 15,051,908 and 14,927,577 shares issued and
outstanding as of July 3, 2005 and December 31, 2004,
respectively
    
    
    150
    
    
    
    149Additional paid-in capital
    
    
    91,409
    
    
    
    90,571Retained earnings
    
    
    116,186
    
    
    
    124,350Unearned compensation
    
    
    (535
    )
    
    
    (309
    )Accumulated other comprehensive loss
    
    
    (7,691
    )
    
    
    (5,259
    )Total stockholders equity
    
    
    199,519
    
    
    
    209,502Total liabilities and stockholders equity
    
    $
    568,893
    
    
    $
    587,458
 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
  Six months endedJuly 3, 2005
    
    July 4, 2004(In thousands)Operating ActivitiesNet income/(loss) from continuing operations
    
    $
    (8,164
    )
    
    $
    4,668Adjustments to reconcile net income/(loss) to net
cash used for operating activities:Depreciation and amortization
    
    
    8,546
    
    
    
    9,033Deferred income taxes
    
    
    (4,750
    )
    
    
    972Loss on disposal of fixed assets
    
    
    141
    
    
    
    Other non-cash items
    
    
    1,717
    
    
    
    Changes in operating assets and liabilities:Changes in receivables sale facility
    
    
    4,500
    
    
    
    Accounts receivable, net
    
    
    (12,040
    )
    
    
    (31,397
    )Inventories
    
    
    7,130
    
    
    
    (5,268
    )Refundable income taxes
    
    
    (306
    )
    
    
    (808
    )Prepaid expenses and other
    
    
    (5,907
    )
    
    

    (6,051
    )Accounts payable
    
    
    (2,585
    )
    
    
    13,844Accrued liabilities including pension,
postretirement benefit and
environmental
    
    
    (2,617
    )
    
    
    (1,639
    )Net cash used for operating activities
    
    
    (14,335
    )
    
    
    (16,646
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (5,494
    )
    
    
    (4,167
    )Disposal of property, plant and equipment
    
    
    244
    
    
    
    280Net cash used for investing activities
    
    
    (5,250
    )
    
    
    (3,887
    )Financing ActivitiesDeferred financing fees
    
    
    (554
    )
    
    
    Net payments on revolving credit facilities
    
    
    (1,265
    )
    
    
    (715
    )Issuance of Common Stock
    
    
    421
    
    
    
    22,942Retirement of senior notes
    
    
    
    
    
    
    (4,125
    )Other financing activities
    
    
    36
    
    
    
    (105
    )Net cash provided by/(used for) financing activities
    
    
    (1,362
    )
    
    
    17,997Effect of exchange rate on cash and cash equivalents
    
    
    (82
    )
    
    
    (605
    )Net cash used for continuing operations
    
    
    (21,029
    )
    
    
    (3,141
    )Net cash provided used for discontinued operations
    
    
    
    
    
    
    (299
    )Net decrease in cash and cash equivalents
    
    
    (21,029
    )
    
    
    (3,440
    )Cash and cash equivalents at beginning of period
    
    
    35,017
    
    
    
    46,089Cash and cash equivalents at end of period
    
    $
    13,988
    
    
    $
    42,649
 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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##### Table of Contents



(2) Inventories
  July 3, 2005
    December 31, 2004(In thousands)Finished products
    
    $
    52,797
    
    
    $
    61,376Work-in-process
    
    
    36,820
    
    
    
    35,920Raw materials
    
    
    27,189
    
    
    
    27,653Supplies
    
    
    26,703
    
    
    
    27,030Totals
    
    $
    143,509
    
    
    $
    151,979
 (3) Earnings/(Loss) Per Share
 Earnings Per Share
  Three months ended
    
    Six months endedJuly 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004(In thousands, except per share data)Income /(loss) from continuing operations
    
    $
    (5,682
    )
    
    $
    3,300
    
    
    $
    (8,164
    )
    
    $
    4,668Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (252
    )
    
    
    
    
    
    
    (252
    )Net income/(loss)
    
    $
    (5,682
    )
    
    $
    3,048
    
    
    $
    (8,164
    )
    
    $
    4,416Weighted average shares and share equivalents
outstanding:Basic shares
    
    
    15,051
    
    
    
    12,648
    
    
    
    15,014
    
    
    
    12,469Dilutive stock options and restricted shares
    
    
    
    
    
    
    415
    
    
    
    
    
    
    
    295Diluted weighted average shares and share equivalents
    
    
    15,051
    
    
    
    13,063
    
    
    
    15,014
    
    
    
    12,764Earnings/(loss) per common share  basic:Continuing operations
    
    $
    (0.38
    )
    
    $
    0.26
    
    
    $
    (0.54
    )
    
    $
    0.37Discontinued operations
    
    
    
    
    
    
    (0.02
    )
    
    
    
    
    
    
    (0.02
    )Net income/(loss)
    
    $
    (0.38
    )
    
    $
    0.24
    
    
    $
    (0.54
    )
    
    $
    0.35Earnings/(loss) per common share  diluted:Continuing operations
    
    $
    (0.38
    )
    
    $
    0.25
    
    
    $
    (0.54
    )
    
    $
    0.37Discontinued operations
    
    
    
    
    
    
    (0.02
    )
    
    
    
    
    
    
    (0.02
    )Net income/(loss)
    
    $
    (0.38
    )
    
    $
    0.23
    
    
    $
    (0.54
    )
    
    $
    0.35
  5




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(4) Stock-Based Compensation Plans
 Accounting for Stock Issued to Employees Accounting for Stock-Based
Compensation
 Three months ended
    
    Six months endedJuly 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004(In thousands, except per share amounts)Net income/(loss), as reported
    
    $
    (5,682
    )
    
    $
    3,048
    
    
    $
    (8,164
    )
    
    $
    4,416Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects
    
    
    (163
    )
    
    
    (216
    )
    
    
    (299
    )
    
    
    (272
    )Pro forma net income/(loss)
    
    $
    (5,845
    )
    
    $
    2,832
    
    
    $
    (8,463
    )
    
    $
    4,144Earnings/(loss) per share:Basic  as reported
    
    $
    (0.38
    )
    
    $
    0.24
    
    
    $
    (0.54
    )
    
    $
    0.35Basic  pro forma
    
    $
    (0.39
    )
    
    $
    0.22
    
    
    $
    (0.56
    )
    
    $
    0.33Diluted  as reported
    
    $
    (0.38
    )
    
    $
    0.23
    
    
    $
    (0.54
    )
    
    $
    0.35Diluted  pro forma
    
    $
    (0.39
    )
    
    $
    0.22
    
    
    $
    (0.56
    )
    
    $
    0.33
 Share-Based Payment
  6




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(5) Interest Expense
  Three months ended
    
    Six months endedJuly 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004(in thousands)Interest expense
    
    $
    5,405
    
    
    $
    6,327
    
    
    $
    10,818
    
    
    $
    11,803Interest income
    
    
    (112
    )
    
    
    (339
    )
    
    
    (179
    )
    
    
    (436
    )Effect of interest rate swap
    
    
    26
    
    
    
    (153
    )
    
    
    71
    
    
    
    (437
    )Capitalized interest
    
    
    (75
    )
    
    
    (75
    )
    
    
    (144
    )
    
    
    (100
    )Interest expense, net
    
    $
    5,244
    
    
    $
    5,760
    
    
    $
    10,566
    
    
    $
    10,830
 (6) Debt
  July 3, 2005
   
    December 31, 2004(In thousands)Secured revolving credit facility, due April 2008
    
    $
    
    
    
    $
    1,000Senior Notes, 7.375%, due August 2008
    
    
    135,859
    
    
    
    136,097Discount on 7.375% Senior Notes, original issue
discount amortized over 10 years
    
    
    (89
    )
    
    
    (103
    )Senior Notes, 10.5%, due April 2009
    
    
    99,400
    
    
    
    99,400Discount on 10.5% Senior Notes, original issue
discount amortized over 7 years
    
    
    (643
    )
    
    
    (729
    )Capitalized leases
    
    
    122
    
    
    
    106Netherlands facility, 5.1%, due on demand
    
    
    696
    
    
    
    976Other foreign facilities
    
    
    1,331
    
    
    
    1,494236,676
    
    
    
    238,241Less short-term borrowings
    
    
    (948
    )
    
    
    (1,219
    )Total
    
    $
    235,728
    
    
    $
    237,022
   7




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Amended and Restated Credit Agreement
 Availability.
 Borrowing Base
 Interest and Fees
 Maturity
 8




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##### Table of Contents



Security
 Covenants
   Events of Default and Acceleration.
 9




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##### Table of Contents



Amended and Restated Consignment Agreement
  Fees.
 10




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##### Table of Contents



Security
 Representations, Warranties and Covenants
 Termination and Events of Default
 11




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##### Table of Contents



(7) Receivables Sale Facility
  Structure
  12




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##### Table of Contents



Available Amounts
  Costs
 Representations, Warranties, Covenants and Indemnities
 Termination.
  13




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Accounting for Transfers and Servicing of Financial Assets
  (a)
    
    an amendment to the consolidated EBITDA requirement for the second fiscal
quarter of 2005 in order to bring the Company into compliance with this requirement for
that period, as well as a prospective adjustment to the consolidated EBITDA test, both
consistent with the revised consolidated EBITDA covenant contained in the August
amendment to the Amended and Restated Credit Agreement;(b)
    
    the addition or enhancement of certain financial and operational reporting
obligations, including those obligations required under the August amendment to the
Amended and Restated Credit Agreement;(c)
    
    an adjustment to the loss reserve and dilution reserve formulas that are used
in the availability calculation; and(d)
    
    the elimination of the obligation to comply with the $5 million excess
availability requirement under the Amended and Restated Credit Agreement.
  14




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(8) Contingencies
  (9) Comprehensive Income/(Loss)
  Three months ended
    
    Six months endedJuly 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004(In thousands)Net income/(loss)
    
    $
    (5,682
    )
    
    $
    3,048
    
    
    $
    (8,164
    )
    
    $
    4,416Translation adjustment for financial statements
denominated in a foreign currency
    
    
    (2,131
    )
    
    
    (892
    )
    
    
    (3,936
    )
    
    
    (2,711
    )Unrealized gain/(loss) on cash flow hedges, net of tax
    
    
    (429
    )
    
    
    (2,551
    )
    
    
    1,492
    
    
    
    265Minimum pension liability adjustment, net of tax
    
    
    6
    
    
    
    11
    
    
    
    12
    
    
    
    37Comprehensive income/(loss)
    
    $
    (8,236
    )
    
    $
    (384
    )
    
    $
    (10,596
    )
    
    $
    2,007
 (10) Restructuring Charges
   Three months ended
    
    Six months ended(In thousands)
    
    July 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004Booneville, MS closing
    
    $
    68
    
    
    $
    139
    
    
    $
    (134
    )
    
    $
    469Montreal restructuring
    
    
    56
    
    
    
    
    
    
    
    142
    
    
    
    Employee severance
    
    
    
    
    
    
    160
    
    
    
    
    
    
    
    401Other
    
    
    12
    
    
    
    (5
    )
    
    
    46
    
    
    
    (5
    )Totals
    
    $
    136
    
    
    $
    294
    
    
    $
    54
    
    
    $
    865
 15




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##### Table of Contents



(11) Industry Segments
   Rod, BarCommercial
    
    Wholesale
    
    & Other
    
    Consolidated(In thousands)Three months ended July 3, 2005Pounds shipped
    
    
    52,267
    
    
    
    19,371
    
    
    
    2,344
    
    
    
    73,982Net sales
    
    $
    146,881
    
    
    $
    38,446
    
    
    $
    10,994
    
    
    $
    196,321Gross profit/(loss)
    
    $
    5,472
    
    
    $
    (178
    )
    
    $
    360
    
    
    $
    5,654Three months ended July 4, 2004Pounds shipped
    
    
    62,302
    
    
    
    22,886
    
    
    
    6,164
    
    
    
    91,352Net sales
    
    $
    155,024
    
    
    $
    43,109
    
    
    $
    15,947
    
    
    $
    214,080Gross profit
    
    $
    16,081
    
    
    $
    3,501
    
    
    $
    1,999
    
    
    $
    21,581Six months ended July 3, 2005Pounds shipped
    
    
    107,722
    
    
    
    42,782
    
    
    
    7,237
    
    
    
    157,741Net sales
    
    $
    299,951
    
    
    $
    84,027
    
    
    $
    25,825
    
    
    $
    409,803Gross profit/(loss)
    
    $
    15,091
    
    
    $
    (302
    )
    
    $
    925
    
    
    $
    15,714Six months ended July 4, 2004Pounds shipped
    
    
    123,372
    
    
    
    48,817
    
    
    
    12,515
    
    
    
    184,704Net sales
    
    $
    299,951
    
    
    $
    88,683
    
    
    $
    31,251
    
    
    $
    419,885Gross profit
    
    $
    30,998
    
    
    $
    5,248
    
    
    $
    2,820
    
    
    $
    39,066
 16




---



##### Table of Contents



Three months ended
    
    Six months endedJuly 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004(In thousands)Commercial Products:Tube Products
    
    $
    93,235
    
    
    $
    97,153
    
    
    $
    190,610
    
    
    $
    186,480Fabricated Products
    
    
    36,514
    
    
    
    37,696
    
    
    
    72,584
    
    
    
    71,873Other Products
    
    
    17,132
    
    
    
    20,175
    
    
    
    36,757
    
    
    
    41,598Sub-total
    
    
    146,881
    
    
    
    155,024
    
    
    
    299,951
    
    
    
    299,951Wholesale Products
    
    
    38,446
    
    
    
    43,109
    
    
    
    84,027
    
    
    
    88,683Rod, bar and other
    
    
    10,994
    
    
    
    15,947
    
    
    
    25,825
    
    
    
    31,251Total
    
    $
    196,321
    
    
    $
    214,080
    
    
    $
    409,803
    
    
    $
    419,885
  (12) Pension Expense
 U.S. Qualified Retirement Plan
  Three months ended
    
    Six months endedJuly 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004(In thousands)Service cost
    
    $
    1,224
    
    
    $
    954
    
    
    $
    2,461
    
    
    $
    2,178Interest cost
    
    
    2,495
    
    
    
    2,052
    
    
    
    5,017
    
    
    
    4,684Expected return on plan assets
    
    
    (2,899
    )
    
    
    (2,451
    )
    
    
    (5,830
    )
    
    
    (5,594
    )Amortization of prior service cost
    
    
    30
    
    
    
    26
    
    
    
    61
    
    
    
    60Amortization of net actuarial loss
    
    
    444
    
    
    
    271
    
    
    
    893
    
    
    
    618PBGC premium (underfunded plan)
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    114Net periodic pension cost
    
    $
    1,294
    
    
    $
    902
    
    
    $
    2,602
    
    
    $
    2,060
 U.S. Nonqualified Retirement Plan
  17




---



##### Table of Contents



Three months ended
    
    Six months endedJuly 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004(In thousands)Service cost
    
    $
    64
    
    
    $
    48
    
    
    $
    128
    
    
    $
    96Interest cost
    
    
    122
    
    
    
    115
    
    
    
    244
    
    
    
    230Amortization of prior service cost
    
    
    92
    
    
    
    92
    
    
    
    184
    
    
    
    184Amortization of loss
    
    
    19
    
    
    
    
    
    
    
    38
    
    
    
    FAS 88 settlement
    
    
    94
    
    
    
    
    
    
    
    188
    
    
    
    Net periodic pension cost
    
    $
    391
    
    
    $
    255
    
    
    $
    782
    
    
    $
    510
 Canadian Plans
  Three months ended
    
    Six months endedJuly 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004(In thousands)Service cost
    
    $
    149
    
    
    $
    147
    
    
    $
    353
    
    
    $
    297Interest cost
    
    
    361
    
    
    
    351
    
    
    
    859
    
    
    
    708Expected return on plan assets
    
    
    (373
    )
    
    
    (319
    )
    
    
    (887
    )
    
    
    (644
    )Amortization of prior service cost
    
    
    23
    
    
    
    24
    
    
    
    56
    
    
    
    49Amortization of net actuarial loss
    
    
    20
    
    
    
    43
    
    
    
    47
    
    
    
    87Net periodic pension cost
    
    $
    180
    
    
    $
    246
    
    
    $
    428
    
    
    $
    497
 Postretirement Benefit Obligation
  Three months ended
    
    Six months endedJuly 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004(In thousands)Service cost
    
    $
    184
    
    
    $
    182
    
    
    $
    368
    
    
    $
    365Interest cost
    
    
    283
    
    
    
    252
    
    
    
    566
    
    
    
    507Amortization of prior service cost
    
    
    38
    
    
    
    38
    
    
    
    76
    
    
    
    76Amortization of deferred gain
    
    
    11
    
    
    
    5
    
    
    
    22
    
    
    
    10Net periodic pension cost
    
    $
    516
    
    
    $
    477
    
    
    $
    1,032
    
    
    $
    958
 (13) Assets Held for Sale
  18




---



##### Table of Contents



(14) Income Taxes
  (15) Litigation
  (16) Condensed Consolidating Financial Information
   19




---



##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
 Condensed Consolidating Statements of Operations
For the Three Months Ended July 3, 2005
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    115,047
    
    
    $
    43,092
    
    
    $
    55,636
    
    
    $
    (17,454
    )
    
    $
    196,321Cost of goods sold
    
    
    114,872
    
    
    
    38,616
    
    
    
    54,633
    
    
    
    (17,454
    )
    
    
    190,667Gross profit
    
    
    175
    
    
    
    4,476
    
    
    
    1,003
    
    
    
    
    
    
    
    5,654Selling, general and administrative expenses
    
    
    6,556
    
    
    
    853
    
    
    
    1,235
    
    
    
    
    
    
    
    8,644Restructuring charges
    
    
    79
    
    
    
    
    
    
    
    57
    
    
    
    
    
    
    
    136Operating income/(loss) from continuing operations
    
    
    (6,460
    )
    
    
    3,623
    
    
    
    (289
    )
    
    
    
    
    
    
    (3,126
    )Other expense/(income):Interest expense, net
    
    
    5,305
    
    
    
    (8
    )
    
    
    (53
    )
    
    
    
    
    
    
    5,244Amortization and other, net
    
    
    (1,141
    )
    
    
    949
    
    
    
    622
    
    
    
    
    
    
    
    430Equity in earnings of subsidiaries
    
    
    1,435
    
    
    
    
    
    
    
    
    
    
    
    (1,435
    )
    
    
    Income/(loss) before income taxes
    
    
    (9,189
    )
    
    
    2,682
    
    
    
    (858
    )
    
    
    (1,435
    )
    
    
    (8,800
    )Income tax provision/(benefit)
    
    
    (3,507
    )
    
    
    911
    
    
    
    (522
    )
    
    
    
    
    
    
    (3,118
    )Net income/(loss)
    
    $
    (5,682
    )
    
    $
    1,771
    
    
    $
    (336
    )
    
    $
    (1,435
    )
    
    $
    (5,682
    )
 Wolverine Tube, Inc. and Subsidiaries
 Condensed Consolidating Statements of Operations
For the Three Months Ended July 4, 2004
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    114,009
    
    
    $
    45,535
    
    
    $
    72,551
    
    
    $
    (18,015
    )
    
    $
    214,080Cost of goods sold
    
    
    104,209
    
    
    
    40,022
    
    
    
    66,283
    
    
    
    (18,015
    )
    
    
    192,499Gross profit
    
    
    9,800
    
    
    
    5,513
    
    
    
    6,268
    
    
    
    
    
    
    
    21,581Selling, general and administrative expenses
    
    
    8,142
    
    
    
    900
    
    
    
    1,020
    
    
    
    
    
    
    
    10,062Restructuring charges
    
    
    294
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    294Operating income
    
    
    1,364
    
    
    
    4,613
    
    
    
    5,248
    
    
    
    
    
    
    
    11,225Other expense/(income):Interest expense, net
    
    
    6,136
    
    
    
    (9
    )
    
    
    (367
    )
    
    
    
    
    
    
    5,760Amortization and other, net
    
    
    (198
    )
    
    
    (3,369
    )
    
    
    4,673
    
    
    
    
    
    
    
    1,106Equity in earnings of subsidiaries
    
    
    6,032
    
    
    
    
    
    
    
    
    
    
    
    (6,032
    )
    
    
    Income/(loss) from continuing operations
before income taxes
    
    
    1,458
    
    
    
    7,991
    
    
    
    942
    
    
    
    (6,032
    )
    
    
    4,359Income tax provision/(benefit)
    
    
    (1,590
    )
    
    
    2,885
    
    
    
    (236
    )
    
    
    
    
    
    
    1,059Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (252
    )
    
    
    
    
    
    
    (252
    )Net income/(loss)
    
    $
    3,048
    
    
    $
    5,106
    
    
    $
    926
    
    
    $
    (6,032
    )
    
    $
    3,048
 20




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
 Condensed Consolidating Statements of Operations
For the Six Months Ended July 3, 2005
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    235,219
    
    
    $
    85,407
    
    
    $
    125,979
    
    
    $
    (36,802
    )
    
    $
    409,803Cost of goods sold
    
    
    232,055
    
    
    
    77,028
    
    
    
    121,808
    
    
    
    (36,802
    )
    
    
    394,089Gross profit
    
    
    3,164
    
    
    
    8,379
    
    
    
    4,171
    
    
    
    
    
    
    
    15,714Selling, general and administrative expenses
    
    
    12,816
    
    
    
    1,656
    
    
    
    2,480
    
    
    
    
    
    
    
    16,952Restructuring charges
    
    
    (88
    )
    
    
    
    
    
    
    142
    
    
    
    
    
    
    
    54Operating income/(loss) from continuing operations
    
    
    (9,564
    )
    
    
    6,723
    
    
    
    1,549
    
    
    
    
    
    
    
    (1,292
    )Other expense/(income):Interest expense, net
    
    
    10,784
    
    
    
    (19
    )
    
    
    (199
    )
    
    
    
    
    
    
    10,566Amortization and other, net
    
    
    2,219
    
    
    
    (2,674
    )
    
    
    987
    
    
    
    
    
    
    
    442Equity in earnings of subsidiaries
    
    
    7,200
    
    
    
    
    
    
    
    
    
    
    
    (7,200
    )
    
    
    Income/(loss) before income taxes
    
    
    (15,277
    )
    
    
    9,416
    
    
    
    761
    
    
    
    (7,200
    )
    
    
    (12,300
    )Income tax provision/(benefit)
    
    
    (7,113
    )
    
    
    3,201
    
    
    
    (224
    )
    
    
    
    
    
    
    (4,136
    )Net income/(loss)
    
    $
    (8,164
    )
    
    $
    6,215
    
    
    $
    985
    
    
    $
    (7,200
    )
    
    $
    (8,164
    )
 Wolverine Tube, Inc. and Subsidiaries
 Condensed Consolidating Statements of Operations
For the Six Months Ended July 4, 2004
 Subsidiary
    
    Non-GuarantorParent
    
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    223,015
    
    
    $
    87,455
    
    
    $
    143,145
    
    
    $
    (33,730
    )
    
    $
    419,885Cost of goods sold
    
    
    206,936
    
    
    
    75,452
    
    
    
    132,161
    
    
    
    (33,730
    )
    
    
    380,819Gross profit
    
    
    16,079
    
    
    
    12,003
    
    
    
    10,984
    
    
    
    
    
    
    
    39,066Selling, general and administrative expenses
    
    
    15,691
    
    
    
    1,667
    
    
    
    2,141
    
    
    
    
    
    
    
    19,499Restructuring charges
    
    
    865
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    865Operating income/(loss) from continuing operations
    
    
    (477
    )
    
    
    10,336
    
    
    
    8,843
    
    
    
    
    
    
    
    18,702Other expense/(income):Interest expense, net
    
    
    11,347
    
    
    
    (19
    )
    
    
    (498
    )
    
    
    
    
    
    
    10,830Amortization and other, net
    
    
    2,830
    
    
    
    (6,663
    )
    
    
    5,607
    
    
    
    
    
    
    
    1,774Equity in earnings of subsidiaries
    
    
    14,047
    
    
    
    
    
    
    
    
    
    
    
    (14,047
    )
    
    
    Income/(loss) from continuing operations before
income taxes
    
    
    (607
    )
    
    
    17,018
    
    
    
    3,734
    
    
    
    (14,047
    )
    
    
    6,098Income tax provision/(benefit)
    
    
    (5,023
    )
    
    
    6,141
    
    
    
    312
    
    
    
    
    
    
    
    1,430Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (252
    )
    
    
    
    
    
    
    (252
    )Net income/(loss)
    
    $
    4,416
    
    
    $
    10,877
    
    
    $
    3,170
    
    
    $
    (14,047
    )
    
    $
    4,416
 21




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
 Condensed Consolidating Balance Sheets
July 3, 2005
 Subsidiary
    
    Non-GuarantorParent
    

    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)AssetsCurrent assetsCash and cash equivalents
    
    $
    5,610
    
    
    $
    
    
    
    $
    8,378
    
    
    $
    
    
    
    $
    13,988Accounts receivable, net
    
    
    7,412
    
    
    
    8,043
    
    
    
    84,704
    
    
    
    
    
    
    
    100,159Inventories
    
    
    67,604
    
    
    
    38,057
    
    
    
    37,848
    
    
    
    
    
    
    
    143,509Prepaid expenses and other
    
    
    7,870
    
    
    
    2,654
    
    
    
    1,496
    
    
    
    
    
    
    
    12,020Deferred taxes, current
    
    
    11,927
    
    
    
    211
    
    
    
    (575
    )
    
    
    
    
    
    
    11,563Total current assets
    
    
    100,423
    
    
    
    48,965
    
    
    
    131,851
    
    
    
    
    
    
    
    281,239Property, plant and equipment, net
    
    
    118,382
    
    
    
    27,706
    
    
    
    44,469
    
    
    
    
    
    
    
    190,557Deferred charges, net
    
    
    9,880
    
    
    
    155
    
    
    
    2,590
    
    
    
    
    
    
    
    12,625Deferred taxes, non-current
    
    
    (982
    )
    
    
    (7,385
    )
    
    
    9,207
    
    
    
    
    
    
    
    840Goodwill, net
    
    
    
    
    
    
    75,505
    
    
    
    1,573
    
    
    
    
    
    
    
    77,078Notes receivable
    
    
    
    
    
    
    
    
    
    
    821
    
    
    
    
    
    
    
    821Prepaid pension and other
    
    
    4,325
    
    
    
    
    
    
    
    1,408
    
    
    
    
    
    
    
    5,733Investments in subsidiaries
    
    
    477,641
    
    
    
    325
    
    
    
    
    
    
    
    (477,966
    )
    
    
    Total assets
    
    $
    709,669
    
    
    $
    145,271
    
    
    $
    191,919
    
    
    $
    (477,966
    )
    
    $
    568,893Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    23,265
    
    
    $
    18,489
    
    
    $
    14,030
    
    
    $
    
    
    
    $
    55,784Accrued liabilities
    
    
    6,462
    
    
    
    17,232
    
    
    
    3,897
    
    
    
    
    
    
    
    27,591Short-term borrowings
    
    
    
    
    
    
    24
    
    
    
    924
    
    
    
    
    
    
    
    948Intercompany balances
    
    
    206,601
    
    
    
    (205,710
    )
    
    
    (891
    )
    
    
    
    
    
    
    Total current liabilities
    
    
    236,328
    
    
    
    (169,965
    )
    
    
    17,960
    
    
    
    
    
    
    
    84,323Long-term debt
    
    
    234,527
    
    
    
    70
    
    
    
    1,131
    
    
    
    
    
    
    
    235,728Pension liabilities
    
    
    27,555
    
    
    
    
    
    
    
    2,101
    
    
    
    
    
    
    
    29,656Postretirement benefit obligation
    
    
    10,843
    
    
    
    
    
    
    
    7,927
    
    
    
    
    
    
    
    18,770Accrued environmental remediation
    
    
    897
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    897Total liabilities
    
    
    510,150
    
    
    
    (169,895
    )
    
    
    29,119
    
    
    
    
    
    
    
    369,374Stockholders equity
    
    
    199,519
    
    
    
    315,166
    
    
    
    162,800
    
    
    
    (477,966
    )
    
    
    199,519Total liabilities and stockholders equity
    
    $
    709,669
    
    
    $
    145,271
    
    
    $
    191,919
    
    
    $
    (477,966
    )
    
    $
    568,893
 22




---



##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
 Condensed Consolidating Balance Sheets
December 31, 2004
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)AssetsCurrent assetsCash and cash equivalents
    
    $
    11,191
    
    
    $
    
    
    
    $
    23,826
    
    
    $
    
    
    
    $
    35,017Accounts receivable, net
    
    
    6,822
    
    
    
    59,750
    
    
    
    27,392
    
    
    
    
    
    
    
    93,964Inventories
    
    
    73,423
    
    
    
    39,681
    
    
    
    38,875
    
    
    
    
    
    
    
    151,979Prepaid expenses and other
    
    
    3,677
    
    
    
    1,400
    
    
    
    1,828
    
    
    
    
    
    
    
    6,905Deferred taxes, current
    
    
    8,175
    
    
    
    211
    
    
    
    (679
    )
    
    
    
    
    
    
    7,707Total current assets
    
    
    103,288
    
    
    
    101,042
    
    
    
    91,242
    
    
    
    
    
    
    
    295,572Property, plant and equipment, net
    
    
    120,889
    
    
    
    28,672
    
    
    
    45,405
    
    
    
    
    
    
    
    194,966Deferred charges, net
    
    
    9,930
    
    
    
    300
    
    
    
    1,662
    
    
    
    
    
    
    
    11,892Deferred taxes, non-current
    
    
    (982
    )
    
    
    (7,385
    )
    
    
    9,375
    
    
    
    
    
    
    
    1,008Goodwill, net
    
    
    
    
    
    
    75,390
    
    
    
    1,922
    
    
    
    
    
    
    
    77,312Assets held for sale
    
    
    
    
    
    
    
    
    
    
    1,147
    
    
    
    
    
    
    
    1,147Prepaid pension and other
    
    
    4,316
    
    
    
    
    
    
    
    1,245
    
    
    
    
    
    
    
    5,561Investments in subsidiaries
    
    
    445,423
    
    
    
    325
    
    
    
    (2,288
    )
    
    
    (443,460
    )
    
    
    Total assets
    
    $
    682,864
    
    
    $
    198,344
    
    
    $
    149,710
    
    
    $
    (443,460
    )
    
    $
    587,458Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    23,725
    
    
    $
    16,919
    
    
    $
    19,268
    
    
    $
    
    
    
    $
    59,912Accrued liabilities
    
    
    13,204
    
    
    
    13,882
    
    
    
    5,390
    
    
    
    
    
    
    
    32,476Short-term borrowings
    
    
    
    
    
    
    24
    
    
    
    1,195
    
    
    
    
    
    
    
    1,219Intercompany balances
    
    
    163,267
    
    
    
    (141,515
    )
    
    
    (21,752
    )
    
    
    
    
    
    
    Total current liabilities
    
    
    200,196
    
    
    
    (110,690
    )
    
    
    4,101
    
    
    
    
    
    
    
    93,607Long-term debt
    
    
    235,665
    
    
    
    82
    
    
    
    1,275
    
    
    
    
    
    
    
    237,022Pension liabilities
    
    
    25,705
    
    
    
    
    
    
    
    2,210
    
    
    
    
    
    
    
    27,915Postretirement benefit obligation
    
    
    10,806
    
    
    
    
    
    
    
    7,616
    
    
    
    
    
    
    
    18,422Accrued environmental remediation
    
    
    990
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    990Total liabilities
    
    
    473,362
    
    
    
    (110,608
    )
    
    
    15,202
    
    
    
    
    
    
    
    377,956Stockholders equity
    
    
    209,502
    
    
    
    308,952
    
    
    
    134,508
    
    
    
    (443,460
    )
    
    
    209,502Total liabilities and stockholders equity
    
    $
    682,864
    
    
    $
    198,344
    
    
    $
    149,710
    
    
    $
    (443,460
    )
    
    $
    587,458
 23




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
 Condensed Consolidating Statements of Cash Flows
For the Six Months Ended July 3, 2005
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Operating ActivitiesIncome /(loss) from continuing operations
    
    $
    (8,164
    )
    
    $
    6,215
    
    
    $
    985
    
    
    $
    (7,200
    )
    
    $
    (8,164
    )Depreciation and amortization
    
    
    5,373
    
    
    
    1,528
    
    
    
    1,645
    
    
    
    
    
    
    
    8,546Deferred income taxes
    
    
    (4,520
    )
    
    
    
    
    
    
    (230
    )
    
    
    
    
    
    
    (4,750
    )Loss on disposal of fixed assets
    
    
    
    
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    141Other non-cash items
    
    
    1,671
    
    
    
    30
    
    
    
    16
    
    
    
    
    
    
    
    1,717Equity in earnings of subsidiaries
    
    
    (7,200
    )
    
    
    
    
    
    
    
    
    
    
    7,200
    
    
    
    Changes in receivables sale facility
    
    
    4,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,500Changes in operating assets and liabilities
    
    
    (19,299
    )
    
    
    12,289
    
    
    
    (9,315
    )
    
    
    
    
    
    
    (16,325
    )Net cash provided by/(used for) operating activities
    
    
    (27,639
    )
    
    
    20,062
    
    
    
    (6,758
    )
    
    
    
    
    
    
    (14,335
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (2,581
    )
    
    
    (788
    )
    
    
    (2,125
    )
    
    
    
    
    
    
    (5,494
    )Other
    
    
    177
    
    
    
    226
    
    
    
    (159
    )
    
    
    
    
    
    
    244Net cash used for investing activities
    
    
    (2,404
    )
    
    
    (562
    )
    
    
    (2,284
    )
    
    
    
    
    
    
    (5,250
    )Financing ActivitiesIssuance of common stock
    
    
    421
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    421Deferred financing fees
    
    
    (554
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (554
    )Net payments on revolving credit facilities
    
    
    (1,000
    )
    
    
    (12
    )
    
    
    (253
    )
    
    
    
    
    
    
    (1,265
    )Intercompany borrowings (payments)
    
    
    15,415
    
    
    
    (19,483
    )
    
    
    4,068
    
    
    
    
    
    
    
    Other financing activities
    
    
    10,225
    
    
    
    (6
    )
    
    
    (10,183
    )
    
    
    
    
    
    
    36Net cash provided by/(used for) financing activities
    
    
    24,507
    
    
    
    (19,501
    )
    
    
    (6,368
    )
    
    
    
    
    
    
    (1,362
    )Effect of exchange rate on cash and cash equivalents
    
    
    (45
    )
    
    
    1
    
    
    
    (38
    )
    
    
    
    
    
    
    (82
    )Net decrease in cash and cash equivalents
    
    
    (5,581
    )
    
    
    
    
    
    
    (15,448
    )
    
    
    
    
    
    
    (21,029
    )Cash and cash equivalents at beginning of period
    
    
    11,191
    
    
    
    
    
    
    
    23,826
    
    
    
    
    
    
    
    35,017Cash and cash equivalents at end of period
    
    $
    5,610
    
    
    $
    
    
    
    $
    8,378
    
    
    $
    
    
    
    $
    13,988
 24




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Wolverine Tube, Inc. and Subsidiaries
 Condensed Consolidating Statements of Cash Flows
For the Six Months Ended July 4, 2004
 Subsidiary
    
    Non-GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Operating ActivitiesIncome /(loss) from continuing operations
    
    $
    4,416
    
    
    $
    10,877
    
    
    $
    3,422
    
    
    $
    (14,047
    )
    
    $
    4,668Depreciation and amortization
    
    
    5,703
    
    
    
    1,767
    
    
    
    1,563
    
    
    
    
    
    
    
    9,033Other non-cash items
    
    
    917
    
    
    
    27
    
    
    
    28
    
    
    
    
    
    
    
    972Equity in earnings of subsidiaries
    
    
    (14,047
    )
    
    
    
    
    
    
    
    
    
    
    14,047
    
    
    
    Changes in operating assets and liabilities
    
    
    (5,524
    )
    
    
    (15,275
    )
    
    
    (10,520
    )
    
    
    
    
    
    
    (31,319
    )Net cash used for operating activities
    
    
    (8,535
    )
    
    
    (2,604
    )
    
    
    (5,507
    )
    
    
    
    
    
    
    (16,646
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (2,807
    )
    
    
    (903
    )
    
    
    (457
    )
    
    
    
    
    
    
    (4,167
    )Disposals of fixed assets
    
    
    
    
    
    
    269
    
    
    
    11
    
    
    
    
    
    
    
    280Net cash used for investing activities
    
    
    (2,807
    )
    
    
    (634
    )
    
    
    (446
    )
    
    
    
    
    
    
    (3,887
    )Financing ActivitiesNet borrowings/(payments) on revolving credit
facilities
    
    
    
    
    
    
    
    
    
    
    (715
    )
    
    
    
    
    
    
    (715
    )Intercompany borrowings/(payments)
    
    
    1,202
    
    
    
    3,807
    
    
    
    (5,009
    )
    
    
    
    
    
    
    Issuance of common stock
    
    
    22,942
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,942Retirement of senior notes
    
    
    (4,125
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,125
    )Other financing activities
    
    
    703
    
    
    
    (569
    )
    
    
    (239
    )
    
    
    
    
    
    
    (105
    )Net cash provided by/(used for) financing activities
    
    
    20,722
    
    
    
    3,238
    
    
    
    (5,963
    )
    
    
    
    
    
    
    17,997Effect of exchange rate on cash and cash equivalents
    
    
    (261
    )
    
    
    
    
    
    
    (344
    )
    
    
    
    
    
    
    (605
    )Net cash provided by/(used for) continuing operations
    
    
    9,119
    
    
    
    
    
    
    
    (12,260
    )
    
    
    
    
    
    
    (3,141
    )Net cash used for discontinued operations
    
    
    
    
    
    
    
    
    
    
    (299
    )
    
    
    
    
    
    
    (299
    )Net increase/(decrease) in cash and cash equivalents
    
    
    9,119
    
    
    
    
    
    
    
    (12,559
    )
    
    
    
    
    
    
    (3,440
    )Cash and cash equivalents at beginning of period
    
    
    8,530
    
    
    
    
    
    
    
    37,559
    
    
    
    
    
    
    
    46,089Cash and cash equivalents at end of period
    
    $
    17,649
    
    
    $
    
    
    
    $
    25,000
    
    
    $
    
    
    
    $
    42,649
 25




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Company Overview
  RESULTS OF OPERATIONS
  Executive Summary
  26




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##### Table of Contents



For the Three Months Ended July 3, 2005 Compared to the Three Months Ended July 4, 2004
  Pounds ShippedFor the Three Months EndedIn thousands, except forpercentages
    
    July 3, 2005
    
    July 4, 2004
    
    Decrease
    
    % DecreaseCommercial products
    
    
    52,267
    
    
    
    62,302
    
    
    
    10,035
    
    
    
    16.1
    %Wholesale products
    
    
    19,371
    
    
    
    22,886
    
    
    
    3,515
    
    
    
    15.4Rod, bar and other products
    
    
    2,344
    
    
    
    6,164
    
    
    
    3,820
    
    
    
    62.0Total
    
    
    73,982
    
    
    
    91,352
    
    
    
    17,370
    
    
    
    19.0
    %
   Net SalesFor the Three Months EndedIn thousands, except for
    
    
    
    
    
    
    
    
    
    $
    
    %percentages
    
    July 3, 2005
    
    July 4, 2004
    
    Decrease
    
    DecreaseCommercial products
    
    $
    146,881
    
    
    $
    155,024
    
    
    $
    8,143
    
    
    
    5.3
    %Wholesale products
    
    
    38,446
    
    
    
    43,109
    
    
    
    4,663
    
    
    
    10.8Rod, bar and other products
    
    
    10,994
    
    
    
    15,947
    
    
    
    4,953
    
    
    
    31.1Total
    
    $
    196,321
    
    
    $
    214,080
    
    
    $
    17,759
    
    
    
    8.3
    %
   27




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##### Table of Contents



Gross Profit/(Loss)For the Three Months EndedIn thousands, except forPercentages
    
    July 3, 2005
    
    July 4, 2004
    
    $ Decrease
    
    % DecreaseCommercial products
    
    $
    5,472
    
    
    $
    16,081
    
    
    $
    10,609
    
    
    
    66.0
    %Wholesale products
    
    
    (178
    )
    
    
    3,501
    
    
    
    3,679
    
    
    
    105.1Rod, bar and other products
    
    
    360
    
    
    
    1,999
    
    
    
    1,639
    
    
    
    82.0Total
    
    $
    5,654
    
    
    $
    21,581
    
    
    $
    15,927
    
    
    
    73.8
    %
     28




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##### Table of Contents



For the Six Months Ended July 3, 2005 Compared to the Six Months Ended July 4, 2004
  Pounds ShippedFor the Six Months EndedIn thousands, except for
    
    
    
    
    
    
    
    
    
    
    
    
    
    %percentages
    
    July 3, 2005
    
    July 4, 2004
    
    Decrease
    
    DecreaseCommercial products
    
    
    107,722
    
    
    
    123,372
    
    
    
    15,650
    
    
    
    12.7
    %Wholesale products
    
    
    42,782
    
    
    
    48,817
    
    
    
    6,035
    
    
    
    12.4Rod, bar and other products
    
    
    7,237
    
    
    
    12,515
    
    
    
    5,278
    
    
    
    42.2Total
    
    
    157,741
    
    
    
    184,704
    
    
    
    26,963
    
    
    
    14.6
    %
   Net SalesFor the Six Months EndedIn thousands, except for
    
    
    
    
    
    
    
    
    
    $
    
    %percentages
    
    July 3, 2005
    
    July 4, 2004
    
    Decrease
    
    DecreaseCommercial products
    
    $
    299,951
    
    
    $
    299,951
    
    
    $
    
    
    
    
    
    %Wholesale products
    
    
    84,027
    
    
    
    88,683
    
    
    
    4,656
    
    
    
    5.3Rod, bar and other products
    
    
    25,825
    
    
    
    31,251
    
    
    
    5,426
    
    
    
    17.4Total
    
    $
    409,803
    
    
    $
    419,885
    
    
    $
    10,082
    
    
    
    2.4
    %
 29




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##### Table of Contents



Gross Profit/(Loss)For the Six Months EndedIn thousands, except forpercentages
    
    July 3, 2005
    
    July 4, 2004
    
    $ Decrease
    
    % DecreaseCommercial products
    
    $
    15,091
    
    
    $
    30,998
    
    
    $
    15,907
    
    
    
    51.3
    %Wholesale products
    
    
    (302
    )
    
    
    5,248
    
    
    
    5,550
    
    
    
    105.8Rod, bar and other products
    
    
    925
    
    
    
    2,820
    
    
    
    1,895
    
    
    
    67.2Total
    
    $
    15,714
    
    
    $
    39,066
    
    
    $
    23,352
    
    
    
    59.8
    %
    30




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##### Table of Contents



Restructuring and Other Charges
   Three months ended
    
    Six months ended(In thousands)
    
    July 3, 2005
    
    July 4, 2004
    
    July 3, 2005
    
    July 4, 2004Booneville, MS closing
    
    $
    68
    
    
    $
    139
    
    
    $
    (134
    )
    
    $
    469Montreal restructuring
    
    
    56
    
    
    
    
    
    
    
    142
    
    
    
    Employee severance
    
    
    
    
    
    
    160
    
    
    
    
    
    
    
    401Other
    
    
    12
    
    
    
    (5
    )
    
    
    46
    
    
    
    (5
    )Totals
    
    $
    136
    
    
    $
    294
    
    
    $
    54
    
    
    $
    865
 LIQUIDITY AND CAPITAL RESOURCES
  31




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##### Table of Contents



July 3, 2005
    
    December 31,(Unaudited)
    
    2004(In thousands)Cash and cash equivalents
    
    $
    13,988
    
    
    $
    35,017Working capital
    
    
    196,916
    
    
    
    201,965Total debt
    
    
    236,676
    
    
    
    238,241Current ratio
    
    
    3.34
    
    
    
    3.16
 Sources of Liquidity
  Cash and cash equivalents.
  Cash used for operations.
  32




---



##### Table of Contents



Uses of Liquidity
  Working capital needs.
 Capital expenditures.
 Payments related to our outstanding debt.
 Outlook
  Liquidity Facilities
  33




---



##### Table of Contents



Amended and Restated Credit Agreement
 Availability.
 Borrowing Base
 Interest and Fees
 34




---



##### Table of Contents



Maturity
 Security
 Covenants
  35




---



##### Table of Contents



Events of Default and Acceleration.
   Amended and Restated Consignment Agreement
  36




---



##### Table of Contents



Fees.
 Security
 Representations, Warranties and Covenants
 Termination and Events of Default
 37




---



##### Table of Contents



Structure
  38




---



##### Table of Contents



Available Amounts
  Costs
 Representations, Warranties, Covenants and Indemnities
 Termination.
 39




---



##### Table of Contents



Accounting for Transfers and Servicing of Financial Assets
  (e)
    
    an amendment to the consolidated EBITDA requirement for the second fiscal
quarter of 2005 in order to bring the Company into compliance with this requirement for
that period, as well as a prospective adjustment to the consolidated EBITDA test, both
consistent with the revised consolidated EBITDA covenant contained in the August
amendment to the Amended and Restated Credit Agreement;(f)
    
    the addition or enhancement of certain financial and operational reporting
obligations, including those obligations required under the August amendment to the
Amended and Restated Credit Agreement;(g)
    
    an adjustment to the loss reserve and dilution reserve formulas that are used
in the availability calculation; and
 40




---



##### Table of Contents



(h)
    
    the elimination of the obligation to comply with the $5 million excess
availability requirement under the Amended and Restated Credit Agreement.
  Environmental Matters
  Decatur, Alabama
    41




---



##### Table of Contents



Ardmore, Tennessee
    Altoona, Pennsylvania
  Risk Factors That May Affect Future Performance
  42




---



##### Table of Contents



Our inability to comply with the debt covenants contained in the indentures for our outstanding
notes and in our other liquidity agreements could lead to an acceleration of our debt and possibly
bankruptcy.
  
    
    incur other indebtedness;
    
    engage in transactions with affiliates;
    
    incur liens;
    
    make certain restricted payments;
    
    enter into certain business combinations and asset sale transactions; and
    
    make investments.
  43




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##### Table of Contents



Our significant debt levels may limit our future ability to obtain additional financing and to
pursue business opportunities.
  Despite our significant debt levels, we and our subsidiaries may be able to incur substantially
more debt. This could further exacerbate the risks described above.
    44




---



##### Table of Contents



We may not have access to funds under our receivables sale facility, our amended and restated
secured revolving credit facility, or our amended and restated consignment and forward contracts
facility if we are not able to meet the conditions in those facilities, or to renew on acceptable
terms upon expiration of those facilities in April 2008, or to obtain alternative financing to
satisfy working capital needs.
  Increasing competition from Chinese 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
  Continued historically high copper prices are having, and may continue to have, a substantial
impact upon both demand and pricing for our wholesale products which may continue to negatively
impact our business and adversely affecting our revenues and operating margins.
  45




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##### Table of Contents



Current conditions in the copper forward markets have been unusual and may have a significant
impact on our financial results.
  
 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
    
    
    Six monthsended
    
    
    ended(In millions)
    
    July 3, 2005
    
    
    July 3, 2005Gain/(loss) arising from ineffectiveness included in earnings
    
    $
    (0.1
    )
    
    $
    Gains/(losses) reclassed from other comprehensive income
(OCI) to earnings
    
    $
    0.5
    
    
    $
    1.0
 46




---



##### Table of Contents



(In millions)
    
    July 3, 2005
    
    
    July 4, 2004Aggregate notional value of derivatives outstanding
    
    $
    12.7
    
    
    $
    10.8Period through which derivative positions currently exist
    
    December 2006
    
    
    July 2005Fair value of derivatives  asset/(liability)
    
    $
    0.9
    
    
    $
    2.4Increase/(decrease) in fair value due to the effect of a 10%
adverse change in commodity
prices to current fair value
    
    $
    (1.4
    )
    
    $
    (1.3
    )Deferred gains/(losses) included in OCI
    
    $
    0.6
    
    
    $
    1.4Gains/(losses) included in OCI to be recognized in future periods
    
    $
    0.6
    
    
    $
    1.4Number of months over which gain/(loss) in OCI is to be recognized
    
    
    12
    
    
    
    12
  Three months
    
    
    Six monthsended
    
    
    ended(In millions)
    
    July 3, 2005
    
    
    July 3, 2005Gain/(loss) arising from ineffectiveness included in earnings
    
    $
    (0.2
    )
    
    $
    (0.7
    )Gains/(losses) reclassed from other comprehensive income
(OCI) to earnings
    
    $
    (0.7
    )
    
    $
    (1.6
    )
 (In millions)
    
    July 3, 2005
    
    
    July 4, 2004Aggregate notional value of derivatives outstanding
    
    $
    8.3
    
    
    $
    6.5Period through which derivative positions currently exist
    
    September 2005
    
    
    October 2004Fair value of derivatives  asset/(liability)
    
    $
    (8.6
    )
    
    $
    (0.1
    )Increase/(decrease) in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    (0.9
    )
    
    $
    (0.7
    )Deferred gains/(losses) included in OCI
    
    $
    0.4
    
    
    $
    (0.1
    )Gains/(losses) included in OCI to be recognized in future periods
    
    $
    0.4
    
    
    $
    (0.1
    )Number of months over which gain/(loss) in OCI is to be recognized
    
    
    3
    
    
    
    4
  47




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##### Table of Contents



Three months
    
    
    Six monthsended
    
    
    ended(In millions)
    
    July 3, 2005
    
    
    July 3, 2005Gain/(loss) arising from ineffectiveness included in earnings
    
    $
    0.2
    
    
    $
    (0.3
    )
 (In millions)
    
    July 3, 2005
    
    
    July 4, 2004Aggregate notional value of derivatives outstanding
    
    $
    53.3
    
    
    $
    45.4Period through which derivative positions currently exist
    
    September 2005
    
    
    September 2004Fair value of derivatives  asset/(liability)
    
    $
    (2.3
    )
    
    $
    (0.5
    )Increase/(decrease) in fair value due to the effect of a
10% adverse change in commodity prices to current fair
value
    
    $
    (5.6
    )
    
    $
    (4.6
    )
  Three months
    
    
    Six monthsended
    
    
    ended(In millions)
    
    July 3, 2005
    
    
    July 3, 2005Gain/(loss) arising from ineffectiveness included in earnings
    
    $
    (0.2
    )
    
    $
    0.5Gains/(losses) reclassed from other comprehensive income
(OCI) to earnings
    
    
    
    
    
    
    
 (In millions)
    
    July 3, 2005
    
    
    July 4, 2004Aggregate notional value of derivatives outstanding
    
    $
    5.6
    
    
    $
    2.4Period through which derivative positions currently exist
    
    December 2006
    
    
    December 2004Fair value of derivatives  asset/(liability)
    
    $
    7.1
    
    
    $
    0.8Increase/(decrease) in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    (0.7
    )
    
    $
    (0.3
    )Deferred gains/(losses) included in OCI
    
    $
    1.7
    
    
    $
    0.7Gains/(losses) included in OCI to be recognized in future periods
    
    $
    1.2
    
    
    $
    0.7Number of months over which gain/(loss) in OCI is to be recognized
    
    
    12
    
    
    
    7
 Foreign Currency Exchange Risk
  48




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##### Table of Contents



Interest Rate Risk
   Material Limitations
  49




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 4. Submission of Matters to a Vote of Security Holders
   Votes For
    
    Votes Against
    
    Votes WithheldGail O. Neuman
    
    
    13,416,671
    
    
    
    
    
    190,446W. Barnes Hauptfuhrer
    
    
    13,417,171
    
    
    
    
    
    189,946
  50




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##### Table of Contents



Votes For
    
    Votes Against
    
    Votes Withheld13,498,187
    
    
    89,758
    
    
    
    19,172
 
 Item 5. Other Information
 Board of Director Changes
   2005 Base Salaries
  Name and Position
    
    2005 Base SalaryDennis J. Horowitz
Chairman and Chief Executive Officer
    
    $
    615,000Johann R. Manning, Jr.
President and Chief Operating Officer
    
    $
    340,080Thomas B. Sabol
Senior Vice President, Chief Financial Officer and Secretary
    
    $
    250,000Keith I. Weil
Senior Vice President, International and Strategic Development
    
    $
    234,066Massoud Neshan
Senior Vice President, Technology
    
    $
    210,087
  51




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##### Table of Contents



Other Executive Compensation
  
 Item 6. Exhibits
  10.1
    
    Receivables Sale Agreement, 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).10.2
    
    Receivables Purchase Agreement, dated as of April 28, 2005, among DEJ 98
Finance, LLC, Wolverine Finance, LLC, the Company, Blue Ridge Asset Funding
Corporation, the liquidity banks from time to time party thereto and Wachovia Bank,
National Association, as agent (incorporated by reference to Exhibit 10.2 to the
Companys Current Report on Form 8-K filed on May 4, 2005).10.3
    
    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.10.4
    
    Amended and Restated Consignment Agreement, dated as of April 28, 2005, among
the Company, Wolverine Joining Technologies, LLC and Fleet Precious Metals Inc.,
operating as Bank of America Precious Metals (incorporated by reference to Exhibit 10.4
to the Companys Current Report on Form 8-K filed on May 4, 2005).10.5
    
    Form of Restricted Stock Agreement under the Wolverine Tube, Inc. 2003 Equity
Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed on May 25, 2005).10.6
    
    Form of Director Indemnification Agreement (incorporated by reference to
Exhibit 10.2 to the Companys Current Report on Form 8-K filed on February 16, 2005).
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##### Table of Contents



10.7
    
    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).10.8
    
    2005 Base Salaries and Other Compensation of Named Executive Officers.10.9
    

    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).10.10
    
    Amendment No. 1 to Receivables Purchase Agreement, dated as of August 1, 2005,
among DEJ 98 Finance, LLC, Wolverine Finance, LLC, the Company, Blue Ridge Asset
Funding Corporation and Wachovia Bank, National Association, individually and as agent
(incorporated by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K
filed on August 5, 2005).10.11
    
    First Amendment to Amended and Restated Consignment Agreement, dated as of
August 1, 2005, among the Company, Wolverine Joining Technologies, LLC and Fleet
Precious Metals Inc., operating as Bank of America Precious Metals (incorporated by
reference to Exhibit 10.3 to the Companys Current Report on Form 8-K filed on August
5, 2005).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.
 53




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##### Table of Contents



SIGNATURE
  WOLVERINE TUBE, INC.Dated: August 12, 2005
    By :
    /s/ Thomas B. SabolName:
    Thomas B. SabolTitle:
    Senior Vice President, Chief
Financial Officer and Secretary 54