UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
METALS USA, INC. 401 (K) PLAN
(Full title of the Plan)
METALS USA, INC.
(Name of Issuer of the Securities Held Pursuant to the Plan)
COMMISSION FILE NUMBER 1-13123
DELAWARE 76-0533626
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
THREE RIVERWAY, SUITE 600
HOUSTON, TEXAS 77056
(Address of Issuer's Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 965-0990
<PAGE>
METALS USA, INC.
401 (K) PLAN
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1998
<PAGE>
METALS USA, INC.
401 (K) PLAN
INDEX
- ------------------------------------------------------------------------------
PAGE
Financial Statements:
Report of Independent Accountants..................................... 1
Statement of Net Assets Available for Benefits, with Fund Information. 2-3
Statement of Changes in Net Assets Available for Benefits,
with Fund Information.............................................. 4-5
Notes to Financial Statements......................................... 6-12
Supplemental Schedules:
Schedule I - Schedule of Assets Held for Investment Purposes.......... 13-14
Schedule II - Schedule of Reportable Transactions..................... 15
Signatures............................................................... 16
Index to Exhibits........................................................ 17
Consent of Independent Accountants....................................... 18
(ii)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator
of the Metals USA, Inc. 401 (k) Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Metals USA, Inc. 401 (k) Plan at December 31, 1998, and the changes in
net assets available for benefits for the period June 1, 1998 to December 31,
1998, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
Our audit was conducted for the purpose of performing an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes and reportable transactions are presented
for the purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in the
statement of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. These supplemental
schedules and Fund Information are the responsibility of the Plan's management.
The supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
The schedule of reportable transactions that accompanies the Plan's financial
statements does not disclose the historical cost of certain plan assets.
Disclosure of this information is required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974.
PRICEWATERHOUSECOOPERS LLP
June 16, 1999
Hartford, Connecticut
1
<PAGE>
METALS USA, INC.
401(K) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
<TABLE>
<CAPTION>
FUND INFORMATION
DECEMBER 31, 1998
----------------------------------------------------------------------------
CHARTER WARBURG
LARGE CHARTER FIDELITY PINCUS
CHARTER COMPANY CHARTER GLOBAL ADVISOR ADVISOR
GUARANTEED STOCK INDEX GROWTH & STOCK EQUITY EMERGING
INCOME FUND FUND INCOME FUND FUND GROWTH FUND GROWTH FUND
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
CIGNA Charter Guaranteed Income Fund ............ $13,673,610
CIGNA Charter Large Company Stock Index Fund .... $ 2,622,607
CIGNA Charter Growth & Income Fund .............. $ 9,334,411
CIGNA Charter Global Stock Fund ................. $3,037,801
CIGNA Fidelity Advisor Equity Growth Fund ....... $16,590,663
CIGNA Warburg Pincus Advisor Emerging Growth Fund $ 4,268,623
CIGNA INVESCO Total Return Fund .................
CIGNA Janus Fund ................................
CIGNA Neuberger Berman Partners Trust ...........
Employer contributions receivable ................... 302,956 64,084 57,384 27,609 83,343 20,088
Employee contributions receivable ................... 200,712 42,661 30,841 18,844 54,610 12,529
Cash equivalents .................................... 19,344
----------- ----------- ----------- ---------- ----------- -----------
Net assets available for benefits ................... $14,196,622 $ 2,729,352 $ 9,422,636 $3,084,254 $16,728,616 $ 4,301,240
=========== =========== =========== ========== =========== ===========
<CAPTION>
FUND INFORMATION
DECEMBER 31, 1998
----------------------------------
NEUBERGER
INVESCO BERMAN
TOTAL JANUS PARTNERS
RETURN FUND FUND TRUST
----------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Investments, at fair value
CIGNA Charter Guaranteed Income Fund ............
CIGNA Charter Large Company Stock Index Fund ....
CIGNA Charter Growth & Income Fund ..............
CIGNA Charter Global Stock Fund .................
CIGNA Fidelity Advisor Equity Growth Fund .......
CIGNA Warburg Pincus Advisor Emerging Growth Fund
CIGNA INVESCO Total Return Fund ................. $ 3,849,149
CIGNA Janus Fund ................................ $2,865,317
CIGNA Neuberger Berman Partners Trust ........... $ 636,970
Employer contributions receivable ................... 20,858 83,723 27,199
Employee contributions receivable ................... 16,078 41,011 21,631
Cash equivalents ....................................
----------- ---------- ---------
Net assets available for benefits ................... $ 3,886,085 $2,990,051 $ 685,800
=========== ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
METALS USA, INC.
401(K) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
(CONTINUED)
<TABLE>
<CAPTION>
FUND INFORMATION
DECEMBER 31, 1998
----------------------------------------------------------
LIFETIME20 LIFETIME30 LIFETIME40 LIFETIME50 LIFETIME60
FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
CIGNA Charter Guaranteed Income Fund ............
CIGNA Charter Large Company Stock Index Fund ....
CIGNA Charter Growth & Income Fund ..............
CIGNA Charter Global Stock Fund .................
CIGNA Fidelity Advisor Equity Growth Fund .......
CIGNA Warburg Pincus Advisor Emerging Growth Fund
CIGNA INVESCO Total Return Fund .................
CIGNA Janus Fund ................................
CIGNA Neuberger Berman Partners Trust ...........
CIGNA Lifetime20 Fund ........................... $ 176,840
CIGNA Lifetime30 Fund ........................... $ 166,236
CIGNA Lifetime40 Fund ........................... $5,118,704
CIGNA Lifetime50 Fund ........................... $ 224,684
CIGNA Lifetime60 Fund ........................... $ 672,141
Metals USA, Inc. Common Stock ...................
Ohio National Life Fixed Accumulation Account ...
Employer contributions receivable ................... 17,454 20,222 17,333 7,285 2,813
Employee contributions receivable ................... 10,991 13,474 17,032 10,361 5,445
Cash equivalents ....................................
Participant notes receivable ........................
---------- ---------- ---------- ---------- ----------
Net assets available for benefits ................... $ 205,285 $ 199,932 $5,153,069 $ 242,330 $ 680,399
========== ========== ========== ========== ==========
<CAPTION>
FUND INFORMATION
DECEMBER 31, 1998
-------------------------------------------------
METALS
USA, INC. PARTICIPANT
COMMON FIXED NOTES
STOCK FUND RECEIVABLE TOTAL
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value
CIGNA Charter Guaranteed Income Fund ............ $1,288,733 $14,962,343
CIGNA Charter Large Company Stock Index Fund .... 2,622,607
CIGNA Charter Growth & Income Fund .............. 9,334,411
CIGNA Charter Global Stock Fund ................. 3,037,801
CIGNA Fidelity Advisor Equity Growth Fund ....... 16,590,663
CIGNA Warburg Pincus Advisor Emerging Growth Fund 4,268,623
CIGNA INVESCO Total Return Fund ................. 3,849,149
CIGNA Janus Fund ................................ 2,865,317
CIGNA Neuberger Berman Partners Trust ........... 636,970
CIGNA Lifetime20 Fund ........................... 176,840
CIGNA Lifetime30 Fund ........................... 166,236
CIGNA Lifetime40 Fund ........................... 5,118,704
CIGNA Lifetime50 Fund ........................... 224,684
CIGNA Lifetime60 Fund ........................... 672,141
Metals USA, Inc. Common Stock ................... $11,324,990 11,324,990
Ohio National Life Fixed Accumulation Account ... 1,234,583 1,234,583
Employer contributions receivable ................... 25,766 119,003 897,120
Employee contributions receivable ................... 26,248 36,258 558,726
Cash equivalents .................................... 19,344
Participant notes receivable ........................ $ 1,744,935 1,744,935
----------- ---------- ----------- -----------
Net assets available for benefits ................... $11,377,004 $2,678,577 $ 1,744,935 $80,306,187
=========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
METALS USA, INC.
401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
<TABLE>
<CAPTION>
FUND INFORMATION
FOR THE PERIOD JUNE 1, 1998 TO DECEMBER 31, 1998
-------------------------------------------------------------------
CHARTER
LARGE
COMPANY CHARTER FIDELITY
CHARTER STOCK CHARTER GLOBAL ADVISOR
GUARANTEED INDEX GROWTH & STOCK EQUITY
INCOME FUND FUND INCOME FUND FUND GROWTH FUND
------------ ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest ......................................... $ 299,150
Net appreciation (depreciation) in fair
value of investments ........................... $ 337,227 $ 854,399 $ 79,959 $ 1,917,513
------------ ---------- ----------- ----------- ------------
299,150 337,227 854,399 79,959 1,917,513
------------ ---------- ----------- ----------- ------------
Contributions
Employer ......................................... 681,809 121,623 100,235 51,731 144,925
Employee ......................................... 1,259,678 235,543 152,970 95,283 246,047
------------ ---------- ----------- ----------- ------------
1,941,487 357,166 253,205 147,014 390,972
------------ ---------- ----------- ----------- ------------
Total additions ........................................ 2,240,637 694,393 1,107,604 226,973 2,308,485
Deductions from net assets attributed to:
Benefit payments ................................... 789,251 5,468 254,942 16,414 270,885
Transaction charge ................................. 1,858 255 439 352 711
Transfer to affiliated plan ........................ 56,105 6,068 55,708 52,143
------------ ---------- ----------- ----------- ------------
Total deductions ....................................... 847,214 11,791 311,089 16,766 323,739
Change in forfeiture reserve, net ...................... (8,792) 1,098 1,098 136 2,150
------------ ---------- ----------- ----------- ------------
Net increase (decrease) prior to interfund transfers
and plan mergers .................................... 1,384,631 683,700 797,613 210,343 1,986,896
Interfund transfers, net ............................... 858,263 412,022 (307,215) (210,557) (1,545,986)
Transfer of assets due to plan mergers ................. 11,953,728 1,633,630 8,932,238 3,084,468 16,287,706
------------ ---------- ----------- ----------- ------------
Net increase ........................................... 14,196,622 2,729,352 9,422,636 3,084,254 16,728,616
Net assets available for benefits at beginning of period
------------ ---------- ----------- ----------- ------------
Net assets available for benefits at end of period ..... $ 14,196,622 $2,729,352 $ 9,422,636 $ 3,084,254 $ 16,728,616
============ ========== =========== =========== ============
<CAPTION>
FUND INFORMATION
FOR THE PERIOD JUNE 1, 1998 TO DECEMBER 31, 1998
------------------------------------------------
WARBURG
PINCUS NEUBERGER
ADVISOR INVESCO BERMAN
EMERGING TOTAL JANUS PARTNERS
GROWTH FUND RETURN FUND FUND TRUST
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest .........................................
Net appreciation (depreciation) in fair
value of investments ........................... $ (112,969) $ 228,364 $ 445,035 $ 61,055
----------- ----------- ---------- ---------
(112,969) 228,364 445,035 61,055
----------- ----------- ---------- ---------
Contributions
Employer ......................................... 37,127 42,664 137,920 50,517
Employee ......................................... 63,039 97,171 224,662 87,533
----------- ----------- ---------- ---------
100,166 139,835 362,582 138,050
----------- ----------- ---------- ---------
Total additions ........................................ (12,803) 368,199 807,617 199,105
Deductions from net assets attributed to:
Benefit payments ................................... 96,607 42,776 45,031 3,223
Transaction charge ................................. 195 303 177 57
Transfer to affiliated plan ........................ 20,476 2,602 435
----------- ----------- ---------- ---------
Total deductions ....................................... 117,278 43,079 47,810 3,715
Change in forfeiture reserve, net ...................... 613 136 68
----------- ----------- ---------- ---------
Net increase (decrease) prior to interfund transfers
and plan mergers .................................... (129,468) 325,256 759,875 195,390
Interfund transfers, net ............................... (947,020) 1,131 420,116 158,165
Transfer of assets due to plan mergers ................. 5,377,728 3,559,698 1,810,060 332,245
----------- ----------- ---------- ---------
Net increase ........................................... 4,301,240 3,886,085 2,990,051 685,800
Net assets available for benefits at beginning of period
----------- ----------- ---------- ---------
Net assets available for benefits at end of period ..... $ 4,301,240 $ 3,886,085 $2,990,051 $ 685,800
=========== =========== ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
METALS USA, INC.
401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FUND INFORMATION
FOR THE PERIOD JUNE 1, 1998 TO DECEMBER 31, 1998
-------------------------------------------------------------
LIFETIME20 LIFETIME30 LIFETIME40 LIFETIME50 LIFETIME60
FUND FUND FUND FUND FUND
---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest .........................................
Net appreciation (depreciation) in fair
value of investments ........................... $ 10,691 $ 14,197 $ (56,282) $ 8,210 $ 37,909
---------- ---------- ----------- ---------- ----------
10,691 14,197 (56,282) 8,210 37,909
---------- ---------- ----------- ---------- ----------
Contributions
Employer ......................................... 32,773 40,483 40,760 22,174 9,814
Employee ......................................... 63,812 77,669 144,262 148,773 27,538
---------- ---------- ----------- ---------- ----------
96,585 118,152 185,022 170,947 37,352
---------- ---------- ----------- ---------- ----------
Total additions ........................................ 107,276 132,349 128,740 179,157 75,261
Deductions from net assets attributed to:
Benefit payments ................................... 905 22,482 6,453 96
Transaction charge ................................. 25 78 894
Participant notes receivable terminated
due to withdrawal of participant .................
Transfer to affiliated plan ........................ 172 2,177 17,515
---------- ---------- ----------- ---------- ----------
Total deductions ....................................... 1,102 24,737 7,347 17,611
Change in forfeiture reserve, net ...................... 613
---------- ---------- ----------- ---------- ----------
Net increase (decrease) prior to interfund transfers
and plan mergers .................................... 106,174 108,225 121,393 161,546 75,261
Interfund transfers, net ............................... 40,745 50,220 (1,135,226) 78,783 604,973
Transfer of assets due to plan mergers ................. 58,366 41,487 6,166,902 2,001 165
---------- ---------- ----------- ---------- ----------
Net increase ........................................... 205,285 199,932 5,153,069 242,330 680,399
Net assets available for benefits at beginning of period
---------- ---------- ----------- ---------- ----------
Net assets available for benefits at end of period ..... $ 205,285 $ 199,932 $ 5,153,069 $ 242,330 $ 680,399
========== ========== =========== ========== ==========
<CAPTION>
FUND INFORMATION
FOR THE PERIOD JUNE 1, 1998 TO DECEMBER 31, 1998
-------------------------------------------------------
METALS USA,
INC. PARTICIPANT
COMMON FIXED NOTES
STOCK FUND RECEIVABLE TOTAL
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest ......................................... $ 62,403 $ 43,617 $ 405,170
Net appreciation (depreciation) in fair
value of investments ........................... $ (841,914) 2,983,394
------------ ----------- ----------- ------------
(841,914) 62,403 43,617 3,388,564
------------ ----------- ----------- ------------
Contributions
Employer ......................................... 71,692 159,273 1,745,520
Employee ......................................... 172,004 130,333 3,226,317
------------ ----------- ----------- ------------
243,696 289,606 4,971,837
------------ ----------- ----------- ------------
Total additions ........................................ (598,218) 352,009 43,617 8,360,401
Deductions from net assets attributed to:
Benefit payments ................................... 78,654 106,358 1,739,545
Transaction charge ................................. 10,985 607 16,936
Participant notes receivable terminated
due to withdrawal of participant ................. 93,388 93,388
Transfer to affiliated plan ........................ 1,102 214,503
------------ ----------- ----------- ------------
Total deductions ....................................... 90,741 106,965 93,388 2,064,372
Change in forfeiture reserve, net ...................... 627 (2,253)
------------ ----------- ----------- ------------
Net increase (decrease) prior to interfund transfers
and plan mergers .................................... (688,332) 245,044 (49,771) 6,293,776
Interfund transfers, net ............................... 1,300,739 (198,010) 418,857
Transfer of assets due to plan mergers ................. 10,764,597 2,631,543 1,375,849 74,012,411
------------ ----------- ----------- ------------
Net increase ........................................... 11,377,004 2,678,577 1,744,935 80,306,187
Net assets available for benefits at beginning of period
------------ ----------- ----------- ------------
Net assets available for benefits at end of period ..... $ 11,377,004 $ 2,678,577 $ 1,744,935 $ 80,306,187
============ =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
METALS USA, INC.
401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
ITEM 1. DESCRIPTION OF PLAN
The following description of the Metals USA, Inc. 401(k) Plan (the "Plan")
provides only general information. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan established effective June 1, 1998.
Each employee who was a participant in a plan that was merged into the Plan
shall become an eligible employee as of the date of merger. Other, non-union
employees of Metals USA, Inc. (the "Company") become eligible to participate
upon completing six months of service. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA").
CONTRIBUTIONS
Participants may contribute an amount equal to not less than one percent nor
more than fifteen percent of their compensation for the contribution period. The
Company will make a matching contribution in an amount equal to $.50 for each
$1.00 contributed by an employee up to a maximum of six percent of the
participant's compensation. The Company may also make discretionary nonelective
contributions and profit sharing contributions.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution
and allocation of the Company's contribution and Plan earnings. Earnings are
allocated by fund based on the ratio of a participant's account invested in a
particular fund to all participants' investments in that fund. The benefit to
which a participant is entitled is limited to the benefit that can be provided
from that participant's vested account.
VESTING
Participants are immediately vested in their voluntary contributions,
qualified nonelective contributions and qualified matching contributions plus
actual earnings thereon. The balance of vesting in the participants' account is
based on years of service. With the exception of balances transferred from the
Pacific Metal Company Amended and Restated Employee Stock Ownership Plan and
Trust, a participant becomes 25 percent vested after one year of service, 50
percent vested after two years of service, 75 percent vested after three years
of service and 100 percent vested after four years of service. The balance of
vesting in the participants' accounts transferred from the Pacific Metal Company
Amended and Restated Employee Stock Ownership Plan and Trust is based on years
of service. A participant becomes 20 percent vested after three years of
service, 40 percent vested after four years of service, 60 percent vested after
five years of service, 80 percent vested after six years of service and 100
percent vested after seven years of service. However, if an active participant
dies or becomes disabled prior to attaining the normal retirement age, the
participant's account becomes 100 percent vested.
6
<PAGE>
METALS USA, INC.
401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may currently direct contributions
among any of the following investment options:
CHARTER GUARANTEED INCOME FUND - Funds are invested in the CIGNA Charter
Guaranteed Income Fund, which provides a guaranteed rate of return reset
semiannually.
CHARTER LARGE COMPANY STOCK INDEX FUND - Funds are invested in the CIGNA
Charter Large Company Stock Index Fund, which is a separate account which
provides an investment portfolio designed to reflect the composition of the
Standard & Poor's 500 Composite Stock Price Index.
CHARTER GROWTH & INCOME FUND - Funds are invested in the CIGNA Charter Growth
& Income Fund, which invests primarily in Standard & Poor's 500 common stocks.
CHARTER GLOBAL STOCK FUND - Funds are invested in the CIGNA Charter Global
Stock Fund, which invests primarily in common stock, preferred shares,
convertible debt and other equity related securities traded on recognized
exchanges throughout the world.
FIDELITY ADVISOR EQUITY GROWTH FUND - Funds are invested solely in units of
the CIGNA Fidelity Advisor Equity Growth Fund, which in turn invests solely in
shares of the Fidelity Advisor Equity Growth Fund.
WARBURG PINCUS ADVISOR EMERGING GROWTH FUND - Funds are invested solely in
units of the CIGNA Warburg Pincus Advisor Emerging Growth Fund, which in turn
invests solely in shares of the Warburg Pincus Advisor Emerging Growth Fund.
INVESCO TOTAL RETURN FUND - Funds are invested solely in units of the CIGNA
INVESCO Total Return Fund, which in turn invests solely in shares of the INVESCO
Total Return Fund.
JANUS FUND - Funds are invested solely in units of the CIGNA Janus Fund, which
in turn invests solely in shares of the Janus Fund.
NEUBERGER BERMAN PARTNERS TRUST - Funds are invested solely in units of the
CIGNA Neuberger Berman Partners Trust, which in turn invests solely in shares of
the Neuberger Berman Partners Trust.
LIFETIME20 FUND - Funds are invested in five actively managed separate
accounts including the CIGNA Fidelity Advisor Growth Opportunities Fund, CIGNA
Warburg Pincus Advisor Emerging Growth Fund, CIGNA Warburg Pincus Advisor
International Equity Fund, CIGNA Charter Actively Managed (Core) Fixed Income
Fund, and the CIGNA Charter High Yield Bond Fund.
LIFETIME30 FUND - Funds are invested in six actively managed separate accounts
including the CIGNA Fidelity Advisor Growth Opportunities Fund, CIGNA Charter
Growth & Income Fund, CIGNA Warburg Pincus Advisor Emerging Growth Fund, CIGNA
Warburg Pincus Advisor International Equity Fund, CIGNA Charter Actively Managed
(Core) Fixed Income Fund, and the CIGNA Charter High Yield Bond Fund.
LIFETIME40 FUND - Funds are invested in seven actively managed separate
accounts including the CIGNA Fidelity Advisor Growth Opportunities Fund, CIGNA
Vanguard Growth & Income Fund, CIGNA Charter Growth & Income Fund, CIGNA Warburg
Pincus Advisor Emerging Growth Fund, CIGNA Warburg Pincus Advisor
7
<PAGE>
METALS USA, INC.
401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
International Equity Fund, CIGNA Charter Actively Managed (Core) Fixed Income
Fund, and the CIGNA Charter High Yield Bond Fund.
LIFETIME50 FUND - Funds are invested in seven actively managed separate
accounts including the CIGNA Fidelity Advisor Growth Opportunities Fund, CIGNA
Charter Growth & Income Fund, CIGNA Vanguard Growth & Income Fund, CIGNA Warburg
Pincus Advisor Emerging Growth Fund, CIGNA Warburg Pincus Advisor International
Equity Fund, CIGNA Charter Actively Managed (Core) Fixed Income Fund, and the
CIGNA Charter High Yield Bond Fund.
LIFETIME60 FUND - Funds are invested in five actively managed separate
accounts including the CIGNA Charter Growth & Income Fund, CIGNA Vanguard Growth
& Income Fund, CIGNA Warburg Pincus Advisor International Equity Fund, CIGNA
Charter Short-Term Fixed Income Fund, and the CIGNA Charter Actively Managed
(Core) Fixed Income Fund.
METALS USA, INC. COMMON STOCK - Funds are invested solely in shares of the
Metals USA, Inc. Common Stock.
FIXED FUND - Funds are invested in the CIGNA Charter Guaranteed Income Fund,
which provides a guaranteed rate of return reset semi-annually. Funds are also
invested in the Ohio National Life Insurance Company ("ONLIC") Fixed
Accumulation Account, which provides a guaranteed rate of return.
Participants may change their investment options at any time.
PAYMENT OF BENEFITS
On termination of service, a participant may elect to receive either a
lump-sum amount equal to the value of his or her account, a distribution in the
form of an annuity, or a combination of both. Distributions are subject to the
applicable provisions of the Plan agreement.
PARTICIPANT NOTES RECEIVABLE
Participants may borrow up to the lesser of $50,000 or 50 percent of the
vested portion of their account balance, subject to certain restrictions, in
accordance with interest rates and collateral requirements established by the
Company.
CASH EQUIVALENTS
Contributions received prior to year end awaiting investment in the
appropriate investment option at December 31, 1998 are invested in the CIGNA
Charter Guaranteed Short-Term
8
<PAGE>
METALS USA, INC.
401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Account, which is recorded at fair value, and are included as cash equivalents
within the fund in which units are subsequently purchased.
ITEM 2. SUMMARY OF ACCOUNTING POLICIES
METHOD OF ACCOUNTING
The Plan's financial statements are prepared on the accrual basis of
accounting, and reflect management's estimates and assumptions, such as those
regarding fair value, that affect the recorded amounts. Significant estimates
used are discussed throughout the notes to financial statements.
INVESTMENTS
Investments in pooled separate accounts (CIGNA Charter Large Company Stock
Index Fund, CIGNA Charter Growth & Income Fund, CIGNA Charter Global Stock Fund,
CIGNA Fidelity Advisor Equity Growth Fund, CIGNA Warburg Pincus Advisor Emerging
Growth Fund, CIGNA INVESCO Total Return Fund, CIGNA Janus Fund, CIGNA Neuberger
Berman Partners Trust, CIGNA Lifetime20 Fund, CIGNA Lifetime30 Fund, CIGNA
Lifetime40 Fund, CIGNA Lifetime50 Fund and CIGNA Lifetime60) are recorded at
fair value, as determined by the unit value as reported by the Connecticut
General Life Insurance Company ("CG Life"). The investments in the CIGNA Charter
Guaranteed Income Fund and the ONLIC Fixed Accumulation Account are non-fully
benefit responsive and are recorded at fair value. The Company stock is valued
at its quoted market price.
CONTRIBUTIONS
Employee contributions are recorded in the period during which the Company
makes payroll deductions from the participants' earnings. Matching Company
contributions are recorded monthly. Discretionary nonelective and profit sharing
contributions, if any, are recorded when received.
BENEFITS
Benefit claims are recorded as expenses when they have been approved for
payment and paid by the Plan.
ITEM 3. DEPOSITS WITH INSURANCE COMPANIES
The Plan participates in a contract with CG Life via an investment in the
CIGNA Charter Guaranteed Income Fund. CG Life commingles the assets of the CIGNA
Charter Guaranteed Income Fund with other assets. For the Plan's investment in
the CIGNA Charter Guaranteed Income Fund the Plan is credited with interest at
the rate specified in the contract, which was 5.35% for the period June 1, 1998
to December 31, 1998, net of asset charges. CG Life
9
<PAGE>
METALS USA, INC.
401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
prospectively guaranteed the interest rates credited for the CIGNA Charter
Guaranteed Income Fund for six months. The Plan participates in a contract with
ONLIC via an investment in the ONLIC Fixed Accumulation Account. For the Plan's
investment in the ONLIC Fixed Accumulation Account, the Plan is credited with
interest at the rate specified in the contract which was 6.30% for the period
June 1, 1998 to December 31, 1998, net of asset charges. As discussed in Note 2,
the CIGNA Charter Guaranteed Income Fund and the ONLIC Fixed Accumulation
Account are included in the financial statements at fair value which,
principally because of the periodic rate reset process, approximates contract
value.
ITEM 4. INVESTMENTS
Investments that represent 5 percent or more of the Plan's net assets are
separately identified below.
DECEMBER 31,
1998
------------
CIGNA CHARTER GUARANTEED INCOME FUND $13,673,610
interest rate, 5.35%
CIGNA Charter Growth & Income Fund 9,334,411
units, 308,678
CIGNA Fidelity Advisor Equity Growth Fund 16,590,663
units, 856,513
CIGNA Warburg Pincus Advisor Emerging Growth Fund 4,268,623
units, 221,747
CIGNA Lifetime40 Fund 5,118,704
units, 61,141
Metals USA, Inc. Common Stock 11,324,990
shares, 1,161,537
ITEM 5. PARTICIPANT NOTES RECEIVABLE
Under the terms of the Plan, participants may borrow from their accounts up
to the lesser of $50,000 or 50% of their vested account balance. Loan
transactions are treated as a transfer to/from the investment fund from/to
Participant Notes Receivable. A loan is secured by the balance in the
participant's account and bears interest at a rate commensurate with market
rates for similar loans, as defined (6.75% to 11.50% for the period June 1, 1998
to December 31, 1998).
ITEM 6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of
10
<PAGE>
METALS USA, INC.
401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ERISA. In the event of Plan termination, participants will become 100 percent
vested in their accounts.
ITEM 7. INCOME TAXES
As of December 31, 1998, the Plan had filed for, but had not yet received, a
determination letter from the Internal Revenue Service which would determine
that the Plan is designed in accordance with applicable sections of the Internal
Revenue Code ("IRC"). However, the Plan's administrator and tax counsel believe
the Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
ITEM 8. RECONCILIATION OF PLAN FINANCIAL STATEMENTS TO THE FORM 5500
The Annual Return/Report of Employee Benefit Plan (the "Form 5500") is
prepared on the modified cash basis. Accordingly, certain balances included on
lines 31 and 32 of the Form 5500 differ from those included in these financial
statements. Contributions in the statement of changes in net assets available
for benefits differ from contributions in the Form 5500 by the amount of
contributions accrued at December 31. The ending net asset balances are
reconciled as follows:
DECEMBER 31,
1998
---------------
NET ASSETS, REFLECTED ON FORM
5500 $ 78,850,341
Add: Employer contributions receivable 897,120
Employee contributions receivable 558,726
---------------
Net assets, reflected in the financial
statements $ 80,306,187
---------------
ITEM 9. PLAN MERGERS
During 1998, the Company made a significant number of acquisitions and
assets of several plans were merged into the Plan and effected participants
became eligible to participate in the Plan subject to the provisions of the Plan
agreement.
ITEM 10. FORFEITURES
The net change in forfeiture reserve represents the net change in the
available forfeiture reserve balance from the prior year plus the current year
forfeitures generated. Forfeitures result
11
<PAGE>
METALS USA, INC.
401(K) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
from nonvested benefit payments remaining in the Plan for all terminated
employees. Upon reaching the break-in-service requirement, as defined in the
Plan agreement, forfeitures generated are added to the forfeiture reserve
balance. The forfeiture reserve of $126,991 at December 31, 1998, is included in
the CIGNA Charter Guaranteed Income Fund and is available to offset
contributions, which would be otherwise payable by the Company or reallocated to
the participants, in accordance with the Plan agreement. In 1998, Company cash
contributions were offset by $9,064 from forfeited nonvested accounts.
ITEM 11. TRANSFER TO AFFILIATED PLAN
In 1998, certain employees and their participant balances were transferred
from the Plan to an affiliated Plan.
12
<PAGE>
METALS USA, INC. SUPPLEMENTAL SCHEDULE
401(K) PLAN SCHEDULE I
LINE 27A FORM 5500 - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
(c)
(b) Description of investment including
Identity of Issue, borrower, maturity date, rate of interest, (d) (e)
(a) lessor, or similar party collateral, par or maturity value Cost Current value
<S> <C> <C> <C> <C>
Connecticut General Life CIGNA Charter Guaranteed Income
* Insurance Company Fund
5.35% 13,673,610 $ 13,673,610
Connecticut General Life CIGNA Charter Large Company Stock
* Insurance Company Index Fund
$65.25/unit 2,313,304 2,622,607
Connecticut General Life CIGNA Charter Growth & Income Fund
* Insurance Company $30.24/unit 8,354,274 9,334,411
Connecticut General Life CIGNA Charter Global Stock Fund
* Insurance Company $10.01/unit 2,911,234 3,037,801
Connecticut General Life CIGNA Fidelity Advisor Equity
* Insurance Company Growth Fund
$19.37/unit 14,537,558 16,590,663
Connecticut General Life CIGNA Warburg Pincus Advisor
* Insurance Company Emerging Growth Fund
$19.25/unit 4,081,640 4,268,623
Connecticut General Life CIGNA INVESCO Total Return Fund
* Insurance Company $18.67/unit 3,624,745 3,849,149
Connecticut General Life CIGNA Janus Fund
* Insurance Company $18.22/unit 2,429,304 2,865,317
Connecticut General Life CIGNA Neuberger Berman Partners Trust
* Insurance Company $16.66/unit 580,931 636,970
Connecticut General Life CIGNA Lifetime20 Fund
* Insurance Company $39.35/unit 165,339 176,840
</TABLE>
* Indicates an identified person known to be a party-in-interest to the Plan.
13
<PAGE>
METALS USA, INC. SUPPLEMENTAL SCHEDULE
401(K) PLAN SCHEDULE I
LINE 27A FORM 5500 - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
(c)
(b) Description of investment including
Identity of Issue, borrower, maturity date, rate of interest, (d) (e)
(a) lessor, or similar party collateral, par or maturity value Cost Current value
<S> <C> <C> <C> <C>
Connecticut General Life CIGNA Lifetime30 Fund
* Insurance Company $46.97/unit $ 153,615 $ 166,236
Connecticut General Life CIGNA Lifetime40 Fund
* Insurance Company $83.72/unit 5,035,961 5,118,704
Connecticut General Life CIGNA Lifetime50 Fund
* Insurance Company $21.52/unit 211,454 224,684
Connecticut General Life CIGNA Lifetime60 Fund
* Insurance Company $48.51/unit 636,379 672,141
National Financial Services Metals USA, Inc. Common Stock
* Corporation $9.75/share 12,167,286 11,324,990
Connecticut General Life CIGNA Charter Guaranteed Income Fund
* Insurance Company 5.35% 1,288,733 1,288,733
Ohio National Life ONLIC Fixed Accumulation Account
* Insurance Company 6.30% 1,234,583 1,234,583
Connecticut General Life Cash Equivalents (CIGNA Charter
* Insurance Company Guaranteed Short-Term Account) 19,344 19,344
* Participant Notes Receivable 6.75% - 11.50% 1,744,935 1,744,935
</TABLE>
* Indicates an identified person known to be a party-in-interest to the Plan.
14
<PAGE>
METALS USA, INC. SUPPLEMENTAL SCHEDULE
401(K) PLAN SCHEDULE II
LINE 27D FORM 5500 - SCHEDULE OF REPORTABLE TRANSACTIONS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
(b)
Description of asset (f) (h)
(include interest Expense Current value
(a) rate (c) (d) (e) incurred (g) of asset on (i)
Identity of party and maturity in case Purchase Selling Lease with Cost of transaction Net gain
involved of a loan) price price rental transaction asset date (loss)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Connecticut General Purchases into CIGNA
Life Insurance Charter Guaranteed
Company Income Fund $ 15,698,826 N/A N/A N/A $ 15,698,826 $ 15,698,826 --
Connecticut General Sales from CIGNA
Life Insurance Charter Guaranteed
Company Income Fund N/A $2,305,479 N/A N/A 2,305,479 2,305,479 --
Connecticut General Purchases into CIGNA
Life Insurance Charter Growth &
Company Income Fund 9,581,358 N/A N/A N/A 9,581,358 9,581,358 --
Connecticut General Sales from CIGNA
Life Insurance Charter Growth &
Company Income Fund N/A 1,101,346 N/A N/A * 1,101,346 *
Connecticut General Purchases into CIGNA
Life Insurance Fidelity Advisor
Company Equity Growth Fund 17,771,140 N/A N/A N/A 17,771,140 17,771,140 --
Connecticut General Sales from CIGNA
Life Insurance Fidelity Advisor
Company Equity Growth Fund N/A 3,097,990 N/A N/A * 3,097,990 *
Purchases into CIGNA
Connecticut General Warburg Pincus
Life Insurance Advisor Emerging
Company Growth Fund 5,475,444 N/A N/A N/A 5,475,444 5,475,444 --
Sales from CIGNA
Connecticut General Warburg Pincus
Life Insurance Advisor Emerging
Company Growth Fund N/A 1,093,852 N/A N/A * 1,093,852 *
Connecticut General
Life Insurance Purchases into CIGNA
Company Lifetime40 Fund 6,486,162 N/A N/A N/A 6,486,162 6,486,162 --
Connecticut General
Life Insurance Sales from CIGNA
Company Lifetime40 Fund N/A 1,311,176 N/A N/A 1,491,710 1,311,176 $(180,534)
Purchases into
National Financial Metals USA, Inc.
Services Corporation Common Stock 12,328,508 N/A N/A N/A 12,328,508 12,328,508 --
Sales from
National Financial Metals USA, Inc.
Services Corporation Common Stock N/A 161,600 N/A N/A 161,153 161,600 447
</TABLE>
* Cost information is not currently available from Connecticut General Life
Insurance Company.
15
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
METALS USA, INC.
METALS USA, INC. 401 (k) PLAN
June 25, 1999 By: /S/ TERRY L. FREEMAN
Terry L. Freeman
Vice President & Corporate Controller
16
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page No.
1 Consent of PricewaterhouseCoopers LLP 1
2 Plan Agreement for the Metals USA, Inc. 401(k)
Plan Incorporated by reference to Exhibit 4.1 to the
Registration Statement filed under cover of
Form S-8 (Registration Number 333-62361) on
August 27, 1998
17
EXHIBIT 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-62361) of Metals USA, Inc. of our report dated
June 16, 1999 relating to the financial statements of the Metals USA, Inc. 401
(k) Plan, which appears in this Form 11-K.
PRICEWATERHOUSECOOPERS LLP
Hartford, Connecticut
June 25, 1999
