##### 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 2, 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)
 (256) 353-1310
 þ o
  o þ o
 o þ
  Class
    
    Outstanding as of August 8, 2006Common Stock, $0.01 Par Value
    
    15,071,391




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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 2, 2006 and July 3, 2005
    
    
    1Condensed Consolidated Balance Sheets - July 2, 2006 (Unaudited) and December 31, 2005
    
    
    2Condensed Consolidated Statements of Cash Flows (Unaudited) - Six months ended July 2, 2006 and July 3, 2005
    
    
    3Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    25Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 4.
    
    Controls and Procedures
    
    
    46PART IIItem 1A.
    
    Risk Factors
    
    
    47Item 2.
    
    Unregistered Sales of Securities and Use of Proceeds
    
    
    48Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    48Item 5.
    
    Other Information
    
    
    49Item 6.
    
    Exhibits
    
    
    49Ex-10.9 Summary of Named Executive Officer CompensationEX-31.1 Section 302 Certification of the CEOEX-31.2 Section 302 Certification of the CFOEX-32.1 Section 906 Certification of the CEOEX-32.2 Section 906 Certification of the CFO




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##### 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 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005(In thousands except per share amounts)Net sales
    
    $
    417,984
    
    
    $
    196,321
    
    
    $
    716,296
    
    
    $
    409,803Cost of goods sold
    
    
    388,847
    
    
    
    190,667
    
    
    
    676,277
    
    
    
    394,089Gross profit
    
    
    29,137
    
    
    
    5,654
    
    
    
    40,019
    
    
    
    15,714Selling, general and administrative expenses
    
    
    9,764
    
    
    
    8,644
    
    
    
    17,393
    
    
    
    16,952Advisory fees and expenses
    
    
    2,119
    
    
    
    
    
    
    
    2,106
    
    
    
    Restructuring charges
    
    
    
    
    
    
    136
    
    
    
    
    
    
    
    54Operating income/(loss)
    
    
    17,254
    
    
    
    (3,126
    )
    
    
    20,520
    
    
    
    (1,292
    )Other expenses:Interest expense, net
    
    
    6,780
    
    
    
    5,244
    
    
    
    12,613
    
    
    
    10,566Amortization and other, net
    
    
    1,551
    
    
    
    430
    
    
    
    2,260
    
    
    
    442Income/(loss) before income taxes
    
    
    8,923
    
    
    
    (8,800
    )
    
    
    5,647
    
    
    
    (12,300
    )Income tax provision/(benefit)
    
    
    2,514
    
    
    
    (3,118
    )
    
    
    1,355
    
    
    
    (4,136
    )Net income/(loss)
    
    $
    6,409
    
    
    $
    (5,682
    )
    
    $
    4,292
    
    
    $
    (8,164
    )Per share data:Net income /(loss) per common share  basic
    
    $
    0.43
    
    
    $
    (0.38
    )
    
    $
    0.28
    
    
    $
    (0.54
    )Basic weighted average number of common shares
    
    
    15,073
    
    
    
    15,051
    
    
    
    15,066
    
    
    
    15,014Net income /(loss) per common share  diluted
    
    $
    0.42
    
    
    $
    (0.38
    )
    
    $
    0.28
    
    
    $
    (0.54
    )Diluted weighted average number of common and
common equivalent shares
    
    
    15,183
    
    
    
    15,051
    
    
    
    15,161
    
    
    
    15,014
 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
 July 2, 2006
    
    December 31, 2005(In thousands except share and per share amounts)
    
    (Unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    21,505
    
    
    $
    27,329Accounts receivable, net of allowance for doubtful accounts of
$0.5 million in 2006 and $0.6 million in 2005
    
    
    103,464
    
    
    
    104,186Inventories
    
    
    182,139
    
    
    
    146,705Prepaid expenses and other
    
    
    19,560
    
    
    
    10,209Total current assets
    
    
    326,668
    
    
    
    288,429Property, plant and equipment, net
    
    
    176,342
    
    
    
    181,238Deferred charges, net
    
    
    7,783
    
    
    
    7,726Goodwill, net
    
    
    77,181
    
    
    
    77,064Deferred income taxes
    
    
    12,340
    
    
    
    13,469Notes receivable
    
    
    834
    
    
    
    831Assets held for sale
    
    
    1,021
    
    
    
    Investments
    
    
    41
    
    
    
    8Total assets
    
    $
    602,210
    
    
    $
    568,765Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    99,282
    
    
    $
    71,802Accrued liabilities
    
    
    39,980
    
    
    
    34,952Deferred income taxes
    
    
    680
    
    
    
    Short-term borrowings
    
    
    949
    
    
    
    248Total current liabilities
    
    
    140,891
    
    
    
    107,002Long-term debt
    
    
    234,642
    
    
    
    234,920Pension liabilities
    
    
    36,270
    
    
    
    42,889Postretirement benefit obligation
    
    
    20,157
    
    
    
    19,722Accrued environmental remediation
    
    
    887
    
    
    
    930Total liabilities
    
    
    432,847
    
    
    
    405,463Stockholders equityCommon stock, par value $0.01 per share; 40,000,000 shares
authorized; 15,071,391 and 15,058,803 shares issued and
outstanding as of July 2, 2006 and December 31, 2005,
respectively
    
    
    151
    
    
    
    151Additional paid-in capital
    
    
    92,025
    
    
    
    91,711Retained earnings
    
    
    90,026
    
    
    
    85,734Unearned compensation
    
    
    (425
    )
    
    
    (324
    )Accumulated other comprehensive loss, net of tax
    
    
    (12,414
    )
    
    
    (13,970
    )Total stockholders equity
    
    
    169,363
    
    
    
    163,302Total liabilities and stockholders equity
    
    $
    602,210
    
    
    $
    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
  Six months endedJuly
2, 2006
    
    July 3, 2005(In thousands)Operating ActivitiesNet income/(loss)
    
    $
    4,292
    
    
    $
    (8,164
    )Adjustments to reconcile net income/(loss) to net cash
used for operating activities:Depreciation and amortization
    
    
    8,614
    
    
    
    8,546Deferred income taxes
    
    
    (29
    )
    
    
    (4,750
    )Other non-cash items
    
    
    (3,660
    )
    
    
    1,717Write down of assets held for sale
    
    
    1,021
    
    
    
    Changes in operating assets and liabilities:Sale of accounts receivable
    
    
    56,794
    
    
    
    4,500Accounts receivable, net
    
    
    (56,052
    )
    
    
    (12,040
    )Inventories
    
    
    (33,706
    )
    
    
    7,130Income taxes payable
    
    
    (1,497
    )
    
    
    (306
    )Prepaid expenses and other
    
    
    (6,384
    )
    
    
    (5,907
    )Accounts payable
    
    
    26,977
    
    
    
    (2,585
    )Accrued liabilities including pension,
postretirement benefit and environmental
    
    
    (1,564
    )
    
    
    (2,476
    )Net cash used for operating activities
    
    
    (5,194
    )
    
    
    (14,335
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (2,584
    )
    
    
    (5,494
    )Disposal of property, plant and equipment
    
    
    54
    
    
    
    244Net cash used for investing activities
    
    
    (2,530
    )
    
    
    (5,250
    )Financing ActivitiesFinancing fees and expenses paid
    
    
    (993
    )
    
    
    (554
    )Net (payments)/borrowings on revolving credit facilities
    
    
    667
    
    
    
    (1,265
    )Issuance of common stock
    
    
    63
    
    
    
    421Other financing activities
    
    
    
    
    
    
    36Net cash used for financing activities
    
    
    (263
    )
    
    
    (1,362
    )Effect of exchange rate on cash and cash equivalents
    
    
    2,163
    
    
    
    (82
    )Net decrease in cash and cash equivalents
    
    
    (5,824
    )
    
    
    (21,029
    )Cash and cash equivalents at beginning of period
    
    
    27,329
    
    
    
    35,017Cash and cash equivalents at end of period
    
    $
    21,505
    
    
    $
    13,988
 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
     Share-Based Payment, Inventory Costs, an amendment of ARB No. 43, Chapter 4
  4




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(2) Cash and Cash Equivalents
   (3) Inventories
  July 2, 2006
    
    December 31, 2005(In thousands)Finished products
    
    $
    79,570
    
    
    $
    58,000Work-in-process
    
    
    46,531
    
    
    
    38,983Raw materials
    
    
    29,316
    
    
    
    23,545Supplies
    
    
    26,722
    
    
    
    26,177Totals
    
    $
    182,139
    
    
    $
    146,705
  5




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##### Table of Contents



(4) Earnings/(Loss) Per Share
 Earnings Per Share
  Three months ended
    
    Six months endedJuly 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005(In thousands, except per share data)Net income/(loss)
    
    $
    6,409
    
    
    $
    (5,682
    )
    
    $
    4,292
    
    
    $
    (8,164
    )Weighted average shares and share equivalents outstanding:Basic shares
    
    
    15,073
    
    
    
    15,051
    
    
    
    15,066
    
    
    
    15,014Dilutive stock options and restricted shares
    
    
    110
    
    
    
    
    
    
    
    95
    
    
    
    Diluted weighted average shares and share equivalents
    
    
    15,183
    
    
    
    15,051
    
    
    
    15,161
    
    
    
    15,014Net income/(loss) per common share  basic
    
    $
    0.43
    
    
    $
    (0.38
    )
    
    $
    0.28
    
    
    $
    (0.54
    )Net income/(loss) per common share  diluted
    
    $
    0.42
    
    
    $
    (0.38
    )
    
    $
    0.28
    
    
    $
    (0.54
    )
  (5) Stock-Based Compensation Plans
  6




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Three Months
    
    
    Six MonthsEnded
    
    
    Ended(in thousands)
    
    July 2, 2006
    
    
    July 2, 2006Stock-based compensation expense:Non-qualified stock options
    
    $
    58
    
    
    $
    115Restricted stock
    
    
    76
    
    
    
    153Total stock-based compensation expense
    
    $
    134
    
    
    $
    268
 Accounting for Stock Issued to Employees
 7




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##### Table of Contents



Three Months
    
    Six MonthsEnded
    
    EndedJuly 3, 2005
    
    July 3, 2005(In thousands, except per share amounts)Net loss, as reported
    
    $
    (5,682
    )
    
    $
    (8,164
    )Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax
effects
    
    
    (163
    )
    
    
    (299
    )Pro forma net income/(loss)
    
    $
    (5,845
    )
    
    $
    (8,463
    )Loss per share:Basic  as reported
    
    $
    (0.38
    )
    
    $
    (0.54
    )Basic  pro forma
    
    $
    (0.39
    )
    
    $
    (0.56
    )Diluted  as reported
    
    $
    (0.38
    )
    
    $
    (0.54
    )Diluted  pro forma
    
    $
    (0.39
    )
    
    $
    (0.56
    )
   Average RemainingNon-vested
    
    
    Recognition Period(in thousands)
    
    Compensation
    
    
    (Months)Non-qualified stock options
    
    $
    363
    
    
    
    33Restricted stock awards
    
    $
    390
    
    
    
    33Total
    
    $
    753
    
    
    
    33
  8




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For theQuarterlyPeriod EndedJuly 2, 2006Expected stock price volatility
    
    
    45.00
    %Expected life (in years)
    
    
    5Risk-free interest rate
    
    
    4.79
    %Expected dividend yield
    
    
    0
    %Weighted average fair value
    
    $
    1.78
  IntrinsicValue ofWeighted
    
    Weighted
    
    UnexercisedAverage
    
    Average
    
    in theExercise
    
    Remaining Life
    
    MoneyShares
    
    Price
    
    (Years)
    
    OptionsthousandsOptions outstanding  January 1, 2006
    
    
    1,911,116
    
    
    
    $9.47
    
    
    
    5.7
    
    
    $
    216Granted
    
    
    102,550
    
    
    
    $3.88
    
    
    
    5.0
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cancelled or expired
    
    
    (95,361
    )
    
    
    $9.09
    
    
    
    
    
    
    
    Options outstanding  July 2, 2006
    
    
    1,918,305
    
    
    
    $9.18
    
    
    
    5.7
    
    
    $
    Options
exercisable  July 2, 2006
    
    
    1,743,755
    
    
    
    $9.65
    
    
    
    5.3
    
    
    $
    
  WeightedNumber of
    
    Number of
    
    AverageExercisable
    
    Outstanding
    
    RemainingWeighted Average Exercise Price
    
    Options
    
    Options
    
    Life (Years)$3.88 - $4.11
    
    
    206,057
    
    
    
    308,607
    
    
    
    7.69$4.12 - $8.23
    
    
    118,100
    
    
    
    190,100
    
    
    
    6.28$8.24 - $12.34
    
    
    1,135,032
    
    
    
    1,135,032
    
    
    
    5.56$12.35 - $16.45
    
    
    259,066
    
    
    
    259,066
    
    
    
    3.42$16.46 - $20.57
    
    
    18,500
    
    
    
    18,500
    
    
    
    3.35$20.58 - $24.68
    
    
    7,000
    
    
    
    7,000
    
    
    
    2.56Totals
    
    
    1,743,755
    
    
    
    1,918,305
    
    
    
    5.65
 9




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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
    
    
    (2,500
    )
    
    
    $7.10Unvested restricted stock awards  July 2, 2006
    
    
    109,818
    
    
    
    $4.90
 (6) Interest Expense
  Three months ended
    
    Six months endedJuly 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005(in thousands)Interest expense
    
    $
    6,713
    
    
    $
    5,405
    
    
    $
    12,493
    
    
    $
    10,818Interest income
    
    
    (205
    )
    
    
    (112
    )
    
    
    (326
    )
    
    
    (179
    )Effect of interest rate swap
    
    
    298
    
    
    
    26
    
    
    
    497
    
    
    
    71Capitalized interest
    
    
    (26
    )
    
    
    (75
    )
    
    
    (51
    )
    
    
    (144
    )Interest expense, net
    
    $
    6,780
    
    
    $
    5,244
    
    
    $
    12,613
    
    
    $
    10,566
 (7) Debt
  July 2, 2006
    
    December 31, 2005(In thousands)Senior Notes, 7.375%, due August 2008
    
    $
    134,744
    
    
    $
    135,180Discount on 7.375% Senior Notes, original
issue discount amortized over 10 years
    
    
    (60
    )
    
    
    (75
    )Senior Notes, 10.5%, due April 2009
    
    
    99,400
    
    
    
    99,400Discount on 10.5% Senior Notes, original
issue discount amortized over 7 years
    
    
    (471
    )
    
    
    (557
    )Capitalized leases
    
    
    129
    
    
    
    112Netherlands facility, 5.1%, due on demand
    
    
    792
    
    
    
    4Other foreign facilities
    
    
    1,057
    
    
    
    1,104235,591
    
    
    
    235,168Less short-term borrowings
    
    
    (949
    )
    
    
    (248
    )Total
    
    $
    234,642
    
    
    $
    234,920
  10




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(8) Receivables Sale Facility
   11




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##### Table of Contents



Accounting for Transfers and Servicing of Financial Assets
 (9) Contingencies
  12




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(10) Comprehensive Income/(Loss)
  Three months ended
    
    Six months endedJuly 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005(In thousands)Net income/(loss)
    
    $
    6,409
    
    
    $
    (5,682
    )
    
    $
    4,292
    
    
    $
    (8,164
    )Translation adjustment for financial statements
denominated in a foreign currency
    
    
    6,151
    
    
    
    (2,131
    )
    
    
    6,721
    
    
    
    (3,936
    )Unrealized gain/(loss) on cash flow hedges, net of tax
    
    
    (2,201
    )
    
    
    (429
    )
    
    
    (5,089
    )
    
    
    1,492Minimum pension liability adjustment, net of tax
    
    
    (78
    )
    
    
    6
    
    
    
    (76
    )
    
    
    12Comprehensive income/(loss)
    
    $
    10,281
    
    
    $
    (8,236
    )
    
    $
    5,848
    
    
    $
    (10,596
    )
 (11) Advisory Fees and Expenses
  (12) Industry Segments
  13




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##### Table of Contents



Rod, BarCommercial
    
    Wholesale
    
    & Other
    
    Consolidated(In thousands)Three months ended July 2, 2006Pounds shipped
    
    
    68,453
    
    
    
    28,480
    
    
    
    4,981
    
    
    
    101,914Net sales
    
    $
    272,810
    
    
    $
    123,454
    
    
    $
    21,720
    
    
    $
    417,984Gross profit/(loss)
    
    $
    7,790
    
    
    $
    22,286
    
    
    $
    (940
    )
    
    $
    29,137Three 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
    
    
    $
    5,654Six months ended July 2, 2006Pounds shipped
    
    
    133,233
    
    
    
    51,263
    
    
    
    9,622
    
    
    
    194,118Net sales
    
    $
    487,409
    
    
    $
    189,320
    
    
    $
    39,567
    
    
    $
    716,296Gross profit/(loss)
    
    $
    16,098
    
    
    $
    24,454
    
    
    $
    (533
    )
    
    $
    40,019Six 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
    
    
    $
    15,714
  Three months ended
    
    Six months endedJuly 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005(In thousands)Commercial Products:Tube Products
    
    $
    192,959
    
    
    $
    93,235
    
    
    $
    338,878
    
    
    $
    190,610Fabricated Products
    
    
    52,782
    
    
    
    36,514
    
    
    
    97,714
    
    
    
    72,584Other Products
    
    
    27,069
    
    
    
    17,132
    
    
    
    50,817
    
    
    
    36,757Sub-total
    
    
    272,810
    
    
    
    146,881
    
    
    
    487,409
    
    
    
    299,951Wholesale Products
    
    
    123,454
    
    
    
    38,446
    
    
    
    189,320
    
    
    
    84,027Rod, bar and other
    
    
    21,720
    
    
    
    10,994
    
    
    
    39,567
    
    
    
    25,825Total
    
    $
    417,984
    
    
    $
    196,321
    
    
    $
    716,296
    
    
    $
    409,803
  14




---



##### Table of Contents



(13) Pension Expense
 Defined Contribution Plans
  U.S. Qualified Retirement Plan
  Three months ended
    
    Six months endedJuly 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005(In thousands)Service cost
    
    $
    (91
    )
    
    $
    1,224
    
    
    $
    1,005
    
    
    $
    2,461Interest cost
    
    
    (1,018
    )
    
    
    2,495
    
    
    
    11,284
    
    
    
    5,017Expected return on plan assets
    
    
    1,162
    
    
    
    (2,899
    )
    
    
    (12,876
    )
    
    
    (5,830
    )Amortization of prior service cost
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    61Amortization of net actuarial loss
    
    
    (116
    )
    
    
    444
    
    
    
    1,285
    
    
    
    893Net periodic pension cost
    
    $
    (63
    )
    
    $
    1,294
    
    
    $
    698
    
    
    $
    2,602
 U.S. Nonqualified Retirement Plan
  15




---



##### Table of Contents



Three months ended
    
    Six months endedJuly 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005(In thousands)Service cost
    
    $
    3
    
    
    $
    64
    
    
    $
    6
    
    
    $
    128Interest cost
    
    
    15
    
    
    
    122
    
    
    
    33
    
    
    
    244Amortization of prior service cost
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    184Amortization of loss
    
    
    1
    
    
    
    19
    
    
    
    1
    
    
    
    38FAS 88 settlement
    
    
    23
    
    
    
    94
    
    
    
    51
    
    
    
    188Net periodic pension cost
    
    $
    42
    
    
    $
    391
    
    
    $
    91
    
    
    $
    782
 Canadian Plans
  Three months ended
    
    Six months endedJuly 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005(In thousands)Service cost
    
    $
    230
    
    
    $
    149
    
    
    $
    453
    
    
    $
    353Interest cost
    
    
    418
    
    
    
    361
    
    
    
    822
    
    
    
    859Expected return on plan assets
    
    
    (474
    )
    
    
    (373
    )
    
    
    (932
    )
    
    
    (887
    )Amortization of prior service cost
    
    
    37
    
    
    
    23
    
    
    
    73
    
    
    
    56Amortization of net actuarial loss
    
    
    34
    
    
    
    20
    
    
    
    66
    
    
    
    47Net periodic pension cost
    
    $
    245
    
    
    $
    180
    
    
    $
    482
    
    
    $
    428
 Postretirement Benefit Obligation
   Three months ended
    
    Six months endedJuly 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005(In thousands)Service cost
    
    $
    130
    
    
    $
    184
    
    
    $
    258
    
    
    $
    368Interest cost
    
    
    287
    
    
    
    283
    
    
    
    569
    
    
    
    566Amortization of prior service cost
    
    
    (12
    )
    
    
    38
    
    
    
    (25
    )
    
    
    76Amortization of deferred gain
    
    
    (3
    )
    
    
    11
    
    
    
    (7
    )
    
    
    22Net periodic cost
    
    $
    402
    
    
    $
    516
    
    
    $
    795
    
    
    $
    1,032
 16




---



##### Table of Contents



(14) Assets Held for Sale
  (15) Income Taxes
  Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
 (16) Litigation
  (17) Condensed Consolidating Financial Information
  17




---



##### Table of Contents



18




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Operations
For the Three Months Ended July 2, 2006
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    257,248
    
    
    $
    60,527
    
    
    $
    131,826
    
    
    $
    (31,617
    )
    
    $
    417,984Cost of goods sold
    
    
    240,281
    
    
    
    52,025
    
    
    
    128,158
    
    
    
    (31,617
    )
    
    
    388,847Gross profit
    
    
    16,967
    
    
    
    8,502
    
    
    
    3,668
    
    
    
    
    
    
    
    29,137Selling, general and administrative expenses
    
    
    7,678
    
    
    
    689
    
    
    
    1,397
    
    
    
    
    
    
    
    9,764Advisory fees and expenses
    
    
    2,119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,119Operating income
    
    
    7,170
    
    
    
    7,813
    
    
    
    2,271
    
    
    
    
    
    
    
    17,254Other expense/(income):Interest expense/(income), net
    
    
    5,415
    
    
    
    (1
    )
    
    
    1,366
    
    
    
    
    
    
    
    6,780Amortization and other, net
    
    
    4,142
    
    
    
    (3,132
    )
    
    
    541
    
    
    
    
    
    
    
    1,551Equity in earnings of subsidiaries
    
    
    5,530
    
    
    
    
    
    
    
    
    
    
    
    (5,530
    )
    
    
    Income/(loss) before income taxes
    
    
    3,143
    
    
    
    10,946
    
    
    
    364
    
    
    
    (5,530
    )
    
    
    8,923Income tax provision/(benefit)
    
    
    (3,266
    )
    
    
    3,720
    
    
    
    2,060
    
    
    
    
    
    
    
    2,514Net income/(loss)
    
    $
    6,409
    
    
    $
    7,226
    
    
    $
    (1,696
    )
    
    $
    (5,530
    )
    
    $
    6,409
 Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Operations
For the Three Months Ended July 3, 2005
 Non-Subsidiary
    
    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)
    
    
    (6,460
    )
    
    
    3,623
    
    
    
    (289
    )
    
    
    
    
    
    
    (3,126
    )Other expense/(income):Interest expense/(income), 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
    )
 19




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Operations
For the Six Months Ended July 2, 2006
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Net sales
    
    $
    435,177
    
    
    $
    111,586
    
    
    $
    228,074
    
    
    $
    (58,541
    )
    
    $
    716,296Cost of goods sold
    
    
    412,199
    
    
    
    97,250
    
    
    
    225,369
    
    
    
    (58,541
    )
    
    
    676,277Gross profit
    
    
    22,978
    
    
    
    14,336
    
    
    
    2,705
    
    
    
    
    
    
    
    40,019Selling, general and administrative expenses
    
    
    13,364
    
    
    
    1,480
    
    
    
    2,549
    
    
    
    
    
    
    
    17,393Advisory fees and expenses
    
    
    2,072
    
    
    
    (7)
    
    
    
    41
    
    
    
    
    
    
    
    2,106Operating income/(loss)
    
    
    7,542
    
    
    
    12,863
    
    
    
    115
    
    
    
    
    
    
    
    20,520Other expense/(income):Interest expense/(income), net
    
    
    10,795
    
    
    
    (4
    )
    
    
    1,822
    
    
    
    
    
    
    
    12,613Amortization and other, net
    
    
    5,884
    
    
    
    (4,807
    )
    
    
    1,183
    
    
    
    
    
    
    
    2,260Equity in earnings of subsidiaries
    
    
    7,948
    
    
    
    
    
    
    
    
    
    
    
    (7,948
    )
    
    
    Income/(loss) before income taxes
    
    
    (1,189
    )
    
    
    17,674
    
    
    
    (2,890
    )
    
    
    (7,948
    )
    
    
    5,647Income tax provision/(benefit)
    
    
    (5,481
    )
    
    
    6,009
    
    
    
    827
    
    
    
    
    
    
    
    1,355Net income/(loss)
    
    $
    4,292
    
    
    $
    11,665
    
    
    $
    (3,717
    )
    
    $
    (7,948
    )
    
    $
    4,292
 Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Operations
For the Six Months Ended July 3, 2005
 Non-Subsidiary
    
    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)
    
    
    (9,564
    )
    
    
    6,723
    
    
    
    1,549
    
    
    
    
    
    
    
    (1,292
    )Other expense/(income):Interest expense/(income), net
    
    
    10,784
    
    
    
    (19
    )
    
    
    (199
    )
    
    
    
    
    
    
    10,566Amortization and other, net
    
    
    2,129
    
    
    
    (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
    )
 20




---



##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Balance Sheets
July 2, 2006
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)AssetsCurrent assetsCash and cash equivalents
    
    $
    3,771
    
    
    $
    
    
    
    $
    17,734
    
    
    $
    
    
    
    $
    21,505Accounts receivable, net
    
    
    931
    
    
    
    11,926
    
    
    
    90,607
    
    
    
    
    
    
    
    103,464Inventories
    
    
    98,419
    
    
    
    44,368
    
    
    
    39,352
    
    
    
    
    
    
    
    182,139Prepaid expenses and other
    
    
    15,457
    
    
    
    1,382
    
    
    
    2,721
    
    
    
    
    
    
    
    19,560Total current assets
    
    
    118,578
    
    
    
    57,676
    
    
    
    150,414
    
    
    
    
    
    
    
    326,668Property, plant and equipment, net
    
    
    103,019
    
    
    
    25,700
    
    
    
    47,623
    
    
    
    
    
    
    
    176,342Deferred charges, net
    
    
    4,673
    
    
    
    95
    
    
    
    3,015
    
    
    
    
    
    
    
    7,783Deferred taxes, non-current
    
    
    7,385
    
    
    
    (7,385
    )
    
    
    12,340
    
    
    
    
    
    
    
    12,340Goodwill, net
    
    
    
    
    
    
    75,504
    
    
    
    1,677
    
    
    
    
    
    
    
    77,181Assets held for resale
    
    
    1,021
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,021Notes receivable
    
    
    
    
    
    
    
    
    
    
    834
    
    
    
    
    
    
    
    834Prepaid pension and other
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    41Investments in subsidiaries
    
    
    498,466
    
    
    
    325
    
    
    
    
    
    
    
    (498,791
    )
    
    
    Total assets
    
    $
    733,142
    
    
    $
    151,915
    
    
    $
    215,944
    
    
    $
    (498,791
    )
    
    $
    602,210Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    60,799
    
    
    $
    19,020
    
    
    $
    19,463
    
    
    $
    
    
    
    $
    99,282Accrued liabilities
    
    
    9,791
    
    
    
    21,120
    
    
    
    9,069
    
    
    
    
    
    
    
    39,980Short-term borrowings
    
    
    (130
    )
    
    
    156
    
    
    
    923
    
    
    
    
    
    
    
    949Deferred income taxes
    
    
    (1,696
    )
    
    
    1,696
    
    
    
    680
    
    
    
    
    
    
    
    680Intercompany balances
    
    
    214,629
    
    
    
    (222,187
    )
    
    
    7,558
    
    
    
    
    
    
    
    Total current liabilities
    
    
    283,393
    
    
    
    (180,195
    )
    
    
    37,693
    
    
    
    
    
    
    
    140,891Long-term debt
    
    
    233,612
    
    
    
    45
    
    
    
    985
    
    
    
    
    
    
    
    234,642Pension liabilities
    
    
    34,787
    
    
    
    
    
    
    
    1,483
    
    
    
    
    
    
    
    36,270Postretirement benefit obligation
    
    
    11,100
    
    
    
    
    
    
    
    9,057
    
    
    
    
    
    
    
    20,157Accrued environmental remediation
    
    
    887
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    887Total liabilities
    
    
    563,779
    
    
    
    (180,150
    )
    
    
    49,218
    
    
    
    
    
    
    
    432,847Stockholders equity
    
    
    169,363
    
    
    
    332,065
    
    
    
    166,726
    
    
    
    (498,791
    )
    
    
    169,363Total liabilities and stockholders equity
    
    $
    733,142
    
    
    $
    151,915
    
    
    $
    215,944
    
    
    $
    (498,791
    )
    
    $
    602,210
 21




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Balance Sheets
December 31, 2005
 Non-Subsidiary
    
    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
    
    
    
    2,223
    
    
    
    
    
    
    
    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
 22




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##### Table of Contents



Wolverine Tube, Inc. and Subsidiaries
Condensed Consolidating Statements of Cash Flows
For the Six Months Ended July 2, 2006
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Operating ActivitiesNet income /(loss)
    
    $
    4,292
    
    
    $
    11,665
    
    
    $
    (3,717
    )
    
    $
    (7,948
    )
    
    $
    4,292Depreciation and amortization
    
    
    4,937
    
    
    
    1,564
    
    
    
    2,113
    
    
    
    
    
    
    
    8,614Deferred income taxes
    
    
    (1,906
    )
    
    
    1,906
    
    
    
    (29
    )
    
    
    
    
    
    
    (29
    )Other non-cash items
    
    
    (3,737
    )
    
    
    12
    
    
    
    65
    
    
    
    
    
    
    
    (3,660
    )Write down of assets
    
    
    1,021
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,021Equity in earnings of subsidiaries
    
    
    (7,948
    )
    
    
    
    
    
    
    
    
    
    
    7,948
    
    
    
    Changes in receivables sale facility
    
    
    
    
    
    
    
    
    
    
    56,794
    
    
    
    
    
    
    
    56,794Changes in operating assets and liabilities
    
    
    28,107
    
    
    
    (40,606
    )
    
    
    (59,727
    )
    
    
    
    
    
    
    (72,226
    )Net cash provided by/(used for) operating activities
    
    
    24,766
    
    
    
    (25,459
    )
    
    
    (4501
    )
    
    
    
    
    
    
    (5,194
    )Investing ActivitiesAdditions to property, plant and equipment
    
    
    (974
    )
    
    
    (252
    )
    
    
    (1,388
    )
    
    
    
    
    
    
    (2,584
    )Disposals of property, plant and equipment
    
    
    31
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    54Net cash used for investing activities
    
    
    (943
    )
    
    
    (222
    )
    
    
    (1,365
    )
    
    
    
    
    
    
    (2,530
    )Financing ActivitiesIssuance of common stock
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63Financing fees and expenses paid
    
    
    (122
    )
    
    
    
    
    
    
    (871
    )
    
    
    
    
    
    
    (993
    )Net borrowings/(payments) on revolving credit
facilities
    
    
    (132
    )
    
    
    119
    
    
    
    680
    
    
    
    
    
    
    
    667Intercompany borrowings/(payments)
    
    
    (26,009
    )
    
    
    25,562
    
    
    
    447
    
    
    
    
    
    
    
    Net cash provided by/(used for) financing activities
    
    
    (26,200
    )
    
    
    25,681
    
    
    
    256
    
    
    
    
    
    
    
    (263
    )Effect of exchange rate on cash and cash equivalents
    
    
    1,577
    
    
    
    
    
    
    
    586
    
    
    
    
    
    
    
    2,163Net increase/(decrease) in cash and cash equivalents
    
    
    (800
    )
    
    
    
    
    
    
    (5,024
    )
    
    
    
    
    
    
    (5,824
    )Cash and cash equivalents at beginning of period
    
    
    4,571
    
    
    
    
    
    
    
    22,758
    
    
    
    
    
    
    
    27,329Cash and cash equivalents at end of period
    
    $
    3,771
    
    
    $
    
    
    
    $
    17,734
    
    
    $
    
    
    
    $
    21,505
 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
 Non-Subsidiary
    
    GuarantorParent
    
    Guarantors
    
    Subsidiaries
    
    Eliminations
    
    Consolidated(In thousands)Operating ActivitiesNet income /(loss)
    
    $
    (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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##### 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
  25




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Results of Operations
  Executive Summary
   26




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##### Table of Contents



Stock-based Compensation Expense
    27




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For the Three Months Ended July 2, 2006 Compared to the Three Months Ended July 3, 2005
  For the Three Months Ended
 In thousands, except for percentages
    
    July 2, 2006
    
    July 3, 2005
    
    Increase
    
    % IncreaseCommercial products
    
    
    68,453
    
    
    
    52,267
    
    
    
    16,186
    
    
    
    31.0
    %Wholesale products
    
    
    28,480
    
    
    
    19,371
    
    
    
    9,109
    
    
    
    47.0Rod, bar and other products
    
    
    4,981
    
    
    
    2,344
    
    
    
    2,637
    
    
    
    112.5Total
    
    
    101,914
    
    
    
    73,982
    
    
    
    27,932
    
    
    
    37.8
    %
   28




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##### Table of Contents



For the Three Months Ended
 In thousands, except for percentages
    
    July 2, 2006
    
    July 3, 2005
    
    $ Increase
    
    % IncreaseCommercial products
    
    $
    272,810
    
    
    $
    146,881
    
    
    $
    125,929
    
    
    
    85.7
    %Wholesale products
    
    
    123,454
    
    
    
    38,446
    
    
    
    85,008
    
    
    
    221.1Rod, bar and other products
    
    
    21,720
    
    
    
    10,994
    
    
    
    10,726
    
    
    
    97.6Total
    
    $
    417,984
    
    
    $
    196,321
    
    
    $
    221,663
    
    
    
    112.9
    %
   29




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##### Table of Contents



For the Three Months Ended
 $ IncreaseIn thousands, except for percentages
    
    July 2, 2006
    
    July 3, 2005
    
    (Decrease)
    
    % IncreaseCommercial products
    
    $
    7,790
    
    
    $
    5,472
    
    
    $
    2,318
    
    
    
    42.4
    %Wholesale products
    
    
    22,286
    
    
    
    (178
    )
    
    
    22,464
    
    
    *NMRod, bar and other products
    
    
    (940
    )
    
    
    360
    
    
    
    (1,300
    )
    
    *NMTotal
    
    $
    29,137
    
    
    $
    5,654
    
    
    $
    23,483
    
    
    
    415.3
    %
 *
    
    NM  Not Meaningful
      30




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##### Table of Contents



Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
 For the Six Months Ended July 2, 2006 Compared to the Six Months Ended July 3, 2005
  For the Six Months Ended
 In thousands, except for percentages
    
    July 2, 2006
    
    July 3, 2005
    
    Increase
    
    % IncreaseCommercial products
    
    
    133,233
    
    
    
    107,722
    
    
    
    25,511
    
    
    
    23.7
    %Wholesale products
    
    
    51,263
    
    
    
    42,782
    
    
    
    8,481
    
    
    
    19.8Rod, bar and other products
    
    
    9,622
    
    
    
    7,237
    
    
    
    2,385
    
    
    
    33.0Total
    
    
    194,118
    
    
    
    157,741
    
    
    
    36,377
    
    
    
    23.1
    %
   31




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##### Table of Contents



For the Six Months Ended
 In thousands, except for percentages
    
    July 2, 2006
    
    July 3, 2005
    
    $ Increase
    
    % IncreaseCommercial products
    
    $
    487,409
    
    
    $
    299,951
    
    
    $
    187,458
    
    
    
    62.5
    %Wholesale products
    
    
    189,319
    
    
    
    84,027
    
    
    
    105,292
    
    
    
    125.3Rod, bar and other products
    
    
    39,567
    
    
    
    25,825
    
    
    
    13,742
    
    
    
    53.2Total
    
    $
    716,296
    
    
    $
    409,803
    
    
    $
    306,493
    
    
    
    74.8
    %
   32




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##### Table of Contents



For the Six Months Ended
 $ IncreaseIn thousands, except for percentages
    
    July 2, 2006
    
    July 3, 2005
    
    (Decrease)
    
    % IncreaseCommercial products
    
    $
    16,098
    
    
    $
    15,091
    
    
    $
    1,007
    
    
    
    6.7
    %Wholesale products
    
    
    24,454
    
    
    
    (302
    )
    
    
    24,756
    
    
    *NMRod, bar and other products
    
    
    (533
    )
    
    
    925
    
    
    
    (1,458
    )
    
    *NMTotal
    
    $
    40,019
    
    
    $
    15,714
    
    
    $
    24,305
    
    
    
    154.7
    %
 *
    
    NM  Not Meaningful
       33




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##### Table of Contents



Liquidity and Capital Resources
  July 2, 2006(Unaudited)
    
    December 31, 2005(In thousands)Cash and cash equivalents
    
    $
    21,505
    
    
    $
    27,329Working capital
    
    
    185,777
    
    
    
    181,427Total debt
    
    
    235,591
    
    
    
    235,168Current ratio
    
    
    2.32
    
    
    
    2.70
 Overview and Outlook
    34




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##### Table of Contents



35




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##### Table of Contents



Sources of Liquidity
  Cash and cash equivalents.
  Cash used for operations.
 Cash from our receivables sale facility
 36




---



##### Table of Contents



Uses of Liquidity
  Working capital needs.
 Capital expenditures.
 Payments related to our outstanding debt and other financing facilities.
 Funding of pension obligations
 37




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##### Table of Contents



Off-Balance Sheet Arrangements
      Liquidity Facilities
  38




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##### Table of Contents



39




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##### Table of Contents



Environmental Matters
  40




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##### Table of Contents



Decatur, Alabama
     Ardmore, Tennessee
    41




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##### Table of Contents



Altoona, Pennsylvania
  
 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
 42




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##### Table of Contents



Three months
    
    Six monthsended
    
    ended(In millions)
    
    July 2, 2006
    
    July 2, 2006Gains arising from ineffectiveness included in earnings
    
    $
    0.5
    
    
    $
    1.4Gains reclassed from other comprehensive income (OCI) to earnings
    
    $
    2.7
    
    
    $
    3.9
 (In millions)
    
    July 2, 2006
    
    July 3, 2005Aggregate notional value of derivatives outstanding
    
    $
    15.4
    
    
    $
    12.7Period through which derivative positions currently exist
    
    December 2007
    
    December 2006Fair value of derivatives  asset/(liability)
    
    $
    0.6
    
    
    $
    0.9Increase/(decrease) in fair value due to the effect of a
10% adverse change in
commodity prices to current fair value
    
    $
    1.5
    
    
    $
    (1.4
    )Deferred gains included in OCI
    
    $
    4.2
    
    
    $
    0.6Gains included in OCI to be recognized in the next 12 months
    
    $
    4.1
    
    
    $
    0.6Number of months over which gain in OCI is to be recognized
    
    
    18
    
    
    
    12
  Three months
    
    Six monthsended
    
    ended(In millions)
    
    July 2, 2006
    
    July 2, 2006Gain arising from ineffectiveness included in earnings
    
    $
    1.7
    
    
    $
    1.5(Losses) reclassed from other comprehensive income
(OCI) to earnings
    
    $
    (1.9
    )
    
    $
    (2.2
    )
 (In millions)
    
    July 2, 2006
    
    July 3, 2005Aggregate notional value of derivatives outstanding
    
    $
    5.7
    
    
    $
    8.3Period through which derivative positions currently exist
    
    September 2006
    
    September 2005Fair value of derivatives  asset/(liability)
    
    $
    4.0
    
    
    $
    (8.6
    )Increase/(decrease) in fair value due to the effect of a 10% adverse
change in commodity prices to current fair value
    
    $
    1.0
    
    
    $
    (0.9
    )Deferred gains/(losses) included in OCI
    
    $
    (2.7
    )
    
    $
    0.4Gains/(losses) included in OCI to be recognized in the next 12 months
    
    $
    (2.7
    )
    
    $
    0.4Number of months over which gain/(loss) in OCI is to be recognized
    
    
    3
    
    
    
    3
  43




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##### Table of Contents



Three months
    
    Six monthsended
    
    ended(In millions)
    
    July 2, 2006
    
    July 2, 2006Gain/(loss) arising from ineffectiveness included in earnings
    
    $
    0.2
    
    
    $
    (2.1
    )
 (In millions)
    
    July 2, 2006
    
    July 3, 2005Aggregate notional value of derivatives outstanding
    
    $
    13.1
    
    
    $
    53.3Period through which derivative positions currently exist
    
    September 2006
    
    September 2005Fair value of derivatives  asset/(liability)
    
    $
    (6.7
    )
    
    $
    (2.3
    )(Decrease) in fair value due to the effect of a 10%
adverse change in commodity prices to current fair value
    
    $
    (2.0
    )
    
    $
    (5.6
    )
  Three months
    
    Six monthsended
    
    ended(In millions)
    
    July 2, 2006
    
    July 2, 2006Gains arising from ineffectiveness included in earnings
    
    $
    0.4
    
    
    $
    1.2(Losses) reclassed from other comprehensive income (OCI) to earnings
    
    $
    (0.6
    )
    
    $
    (0.6
    )
 (In millions)
    
    July 2, 2006
    
    July 3, 2005Aggregate notional value of derivatives outstanding
    
    $
    8.1
    
    
    $
    5.6Period through which derivative positions currently exist
    
    December 2008
    
    December 2006Fair value of derivatives  asset/(liability)
    
    $
    (0.8
    )
    
    $
    7.1(Decrease) in fair value due to the effect of a 10% adverse change
in commodity prices to current fair value
    
    $
    (0.7
    )
    
    $
    (0.7
    )Deferred gains/(losses) included in OCI
    
    $
    (4.0
    )
    
    $
    1.7Gains/(losses) included in OCI to be recognized in the next 12 months
    
    $
    (2.0
    )
    
    $
    1.2Number of months over which gain/(loss) in OCI is to be recognized
    
    
    30
    
    
    
    12
 Foreign Currency Exchange Risk
  44




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##### Table of Contents



Interest Rate Risk
   Material Limitations
   45




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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
  46




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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.
  47




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of Shares
    
    Approximate DollarTotal Number
    
    
    
    
    
    Purchased as Part of
    
    Value (in Millions) thatof Shares
    
    Average Price
    
    Publicly Announced
    
    May Yet Be PurchasedPurchased
    
    Paid Per Share
    
    Plans
    
    Under the Plans orPeriod
    
    (1)
    
    (2)
    
    or Programs
    
    Programs4/03/06  4/30/06
    
    
    3,534
    
    
    
    5.64
    
    
    
    
    
    
    
    5/01/06  5/28/06
    
    
    218
    
    
    
    2.98
    
    
    
    
    
    
    
    5/29/06  7/02/06
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    3,752
    
    
    
    5.49
    
    
    
    
    
    
    
    
 (1)
    
    Shares surrendered to the Company by employees to satisfy individual tax withholding
obligations upon vesting of previously issued shares of restricted Common Stock. Shares are
not part of any Company repurchase plan.(2)
    
    Average price paid per share reflects the closing price of the Common Stock on the
business day the shares were surrendered by employee stockholders.
 
 Item 4. Submission of Matters to a Vote of Security Holders
  (1)
    
    Election of three Class I Directors:
 Votes For
    
    Votes WithheldStephen E. Hare
    
    
    13,226,428
    
    
    
    309,608William C. Griffiths
    
    
    13,226,428
    
    
    
    309,608David M. Gilchrist, Jr.
    
    
    13,226,420
    
    
    
    309,616
  (2)
    
    Ratification of the appointment of KPMG, LLP as the Companys independent
auditors for the fiscal year ending December 31, 2006:
 Votes For
    
    Votes Against
    
    Votes Withheld13,363,809
    
    
    121,663
    
    
    
    50,564
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##### Table of Contents



Item 5. Other Information.
  
 Item 6. Exhibits
 10.1
    
    Receivables Sale Agreement, dated as of April 4, 2006, between Wolverine Tube
(Canada) Inc. and DEJ 98 Finance, LLC (incorporated by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K filed on April 11, 2006).10.2
    
    Amendment No. 1 to Receivables Sale Agreement (U.S.), dated as of April 4,
2006, among the Company, Tube Forming, L.P., Small Tube Manufacturing LLC and DEJ 98
Finance, LLC (incorporated by reference to Exhibit 10.3 to the Companys Current Report
on Form 8-K filed on April 11, 2006).10.3
    
    Amended and Restated Receivables Purchase Agreement, dated as of April 4, 2006,
among DEJ 98 Finance, LLC, Wolverine Finance, LLC, the Company, Variable Funding
Capital Company LLC, The CIT Group/Business Credit, Inc., individually and as co-agent,
and Wachovia Bank, National Association, individually and as agent (incorporated by
reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed on April
11, 2006).10.4
    
    Amendment No. 4 to Amended and Restated Credit Agreement, dated as of April 4,
2006, among the Company and its U.S. subsidiaries, the lenders named therein and
Wachovia Bank, National Association, as administrative agent (incorporated by reference
to Exhibit 10.4 to the Companys Current Report on Form 8-K filed on April 11, 2006).10.5
    
    Amendment No. 1 to Amended and Restated Receivables Purchase Agreement,
effective as of June 9, 2006, among DEJ 98 Finance, LLC, Wolverine Finance, LLC, the
Company, Variable Funding Capital Company LLC, The CIT Group/Business Credit, Inc.,
individually and as co-agent, and Wachovia Bank, National Association, individually and
as agent (incorporated by reference to Exhibit 10.1 to the Companys Current Report on
Form 8-K filed on June 13, 2006).
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##### Table of Contents



10.6
    
    Amendment No. 5 to Amended and Restated Credit Agreement, dated as of June 9,
2006, among the Company and its U.S. subsidiaries, the lenders named therein and
Wachovia Bank, National Association, as administrative agent (incorporated by reference
to Exhibit 10.2 to the Companys Current Report on Form 8-K filed on June 13, 2006).10.7*
    
    Wolverine Tube, Inc. Annual Performance Incentive Plan (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed on April
11, 2006).10.8*
    
    Change in Control Severance Agreement, dated May 26, 2006, between the Company
and Allan J. Williamson, (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed on May 30, 2006).10.9*
    
    Summary of Named Executive Officer Compensation.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: August 10, 2006
    
    By:
    
    /s/ James E. DeasonName:
    
    James E. DeasonTitle:
    
    Senior Vice President, ChiefFinancial Officer and Secretary
 51