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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the quarterly period ended April 4, 1998
---------------
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the transition period from ______________________ to _____________________
Commission file number 1-12164
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WOLVERINE TUBE INC.
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(Exact name of registrant as specified in its charter)
Delaware 63-0970812
- ------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1525 Perimeter Parkway, Suite 210
Huntsville, Alabama 35806
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(Address of Principal executive offices) (Zip Code)
(205) 353-1310
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each class of common stock, as of
the latest practicable date:
Class Outstanding at April 30, 1998
----------- -----------------------------
Common Stock, par value $0.01 per share 14,104,004 shares
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WOLVERINE TUBE, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C> <C>
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Income (unaudited) -
Three Month Periods Ended April 4, 1998 and
March 29, 1997.................................................................2
Condensed Consolidated Balance Sheets (unaudited) -
April 4, 1998 and December 31, 1997............................................3
Condensed Consolidated Statements of Cash Flows (unaudited) -
Three Month Periods Ended April 4, 1998 and
March 29, 1997.................................................................4
Notes to Condensed Consolidated
Financial Statements (unaudited)...............................................5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................................8
PART II. Other Information
Item 1. Legal Proceedings..............................................................15
Item 6. Exhibits and Reports on Form 8-K...............................................15
</TABLE>
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WOLVERINE TUBE, INC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three - Month Period Ended:
------------------------------
April 4, March 29,
1998 1997
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<S> <C> <C>
Net sales ..................................... $ 170,299 $ 173,576
Cost of goods sold ............................ 145,504 151,981
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Gross profit .................................. 24,795 21,595
Selling, general and administrative expenses .. 6,435 5,406
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Income from operations ........................ 18,360 16,189
Other expenses:
Interest expense ............................ 1,586 2,424
Amortization and other, net ................. 245 254
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Income before income taxes .................... 16,529 13,511
Income taxes .................................. 5,954 4,674
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Net income .................................... 10,575 8,837
Less: preferred stock dividends ............... (70) (70)
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Net income applicable to common shares ........ $ 10,505 $ 8,767
========= =========
Earnings per common share - basic:
Net income per share ........................ $ 0.75 $ 0.63
========= =========
Basic weighted average number of common
shares .................................. 14,085 13,980
========= =========
Earnings per common share - diluted:
Net income per share ........................ $ 0.74 $ 0.62
========= =========
Diluted weighted average number of common and
common equivalent shares ................ 14,272 14,240
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
2
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WOLVERINE TUBE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands,except share data)
<TABLE>
<CAPTION>
ASSETS
April 4, December 31,
1998 1997
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(Unaudited) (Note)
<S> <C> <C>
Current assets:
Cash and equivalents ................................................................................. $ 16,707 $ 15,096
Accounts receivable, net ............................................................................. 88,603 71,879
Inventories .......................................................................................... 84,150 87,829
Prepaid expenses and other ........................................................................... 1,227 1,067
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Total current assets .............................................................................. 190,687 175,871
Property, plant and equipment, net ...................................................................... 157,159 153,917
Deferred charges and intangible assets, net ............................................................. 86,969 87,937
Prepaid pensions ........................................................................................ 7,685 7,197
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Total assets ...................................................................................... $ 442,500 $ 424,922
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ..................................................................................... $ 35,345 $ 39,937
Accrued liabilities .................................................................................. 15,589 6,429
Deferred income taxes ................................................................................ 3,875 3,659
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Total current liabilities ......................................................................... 54,809 50,025
Deferred income taxes ................................................................................... 26,879 27,057
Long-term debt .......................................................................................... 100,078 98,411
Postretirement benefit obligations ...................................................................... 12,046 12,126
Accrued environmental remediation ....................................................................... 2,540 2,540
--------- ---------
Total liabilities ................................................................................. 196,352 190,159
Redeemable cumulative preferred stock, par value $1 per share; 20,000
shares issued and outstanding at April 4, 1998 and
December 31, 1997 .................................................................................... 2,000 2,000
Stockholders' equity:
Cumulative preferred stock, par value $1 per share;
500,000 shares authorized ........................................................................... -- --
Common stock, par value $.01 per share; 20,000,000 shares
authorized, 14,100,550 and 14,069,064 shares issued and outstanding
at April 4, 1998 and December 31, 1997, respectively ................................................ 141 141
Additional paid-in capital ........................................................................... 100,482 100,064
Retained earnings .................................................................................... 153,578 143,073
Accumulated currency translation adjustment .......................................................... (10,053) (10,515)
--------- ---------
Total stockholders' equity ........................................................................ 244,148 232,763
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Total liabilities, redeemable cumulative preferred stock
and stockholders' equity........................................................................... $ 442,500 $ 424,922
========= =========
</TABLE>
Note: The Balance Sheet at December 31, 1997 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements.
3
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WOLVERINE TUBE, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Three - month period ended:
---------------------------
April 4, March 29,
1998 1997
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<S> <C> <C>
OPERATING ACTIVITIES
Net income ...................................................... $ 10,575 $ 8,837
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization ................................ 4,604 4,448
Changes in operating assets and liabilities:
Accounts receivable ......................................... (16,894) (14,622)
Inventories ................................................. 3,794 (3,436)
Prepaid expenses and other .................................. (346) (510)
Accounts payable ............................................ (4,049) 4,666
Accrued liabilities including pension, postretirement benefit
and environmental .......................................... 8,589 (574)
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Net cash provided (used) by operating activities ................ 6,273 (1,191)
INVESTING ACTIVITIES
Additions to property, plant and equipment ...................... (6,485) (7,239)
Other ........................................................... (166) --
-------- --------
Net cash used by investing activities ........................... (6,651) (7,239)
FINANCING ACTIVITIES
Net borrowings from revolving credit facility ................... 2,009 8,295
Issuance of common stock ........................................ 418 --
Principal payments on long-term debt ............................ (351) (152)
Dividends paid .................................................. (70) (70)
-------- --------
Net cash provided by financing activities ...................... 2,006 8,073
Effect of exchange rate on cash and equivalents ................. (17) (32)
-------- --------
Net increase (decrease) in cash and equivalents ................. 1,611 (389)
Cash and equivalents beginning of period ........................ 15,096 2,967
-------- --------
Cash and equivalents end of period .............................. $ 16,707 $ 2,578
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
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WOLVERINE TUBE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 4, 1998
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries after
elimination of significant intercompany accounts and transactions. The
accompanying condensed consolidated financial statements have been prepared in
accordance with instructions to Form 10-Q and do not include all the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying condensed consolidated financial
statements (and all information in this report) have not been examined by
independent auditors; but, in the opinion of management all adjustments, which
consist of normal recurring accruals necessary for a fair presentation of the
results for the periods, have been made. The results of operations for the
three-month period ended April 4, 1998 are not necessarily indicative of the
results of operations that may be expected for the year ending December 31,
1998. For further information, refer to the consolidated financial statements
and footnotes included in the Company's annual report on Form 10-K for the year
ended December 31, 1997.
The Company uses its internal operational reporting cycle for quarterly
financial reporting.
NOTE 2 - CONTINGENCIES
The Company is subject to extensive U.S. and Canadian federal, state,
provincial and local environmental laws and regulations. These laws, which are
constantly changing, regulate the discharge of materials into the environment.
The Company has received various communications from regulatory
authorities concerning certain environmental matters and has currently been
named as a potentially responsible party ("PRP") at various waste disposal
sites. The Company believes that its potential liability with respect to these
waste disposal sites is not material.
The Company has accrued environmental remediation costs of $2,520,000
as of April 4, 1998, consisting primarily of $38,000 for estimated remediation
costs for the London and Fergus, Canada, facilities, $1,272,500 for the Decatur,
Alabama facility, $399,500 for the Greenville, Mississippi facility, and an
aggregate of $810,000 for the Ardmore, Tennessee facility and the Shawnee,
Oklahoma facility (with respect to the Double Eagle Refinery site). Based on
information currently available, the Company believes that the costs of these
matters are not reasonably likely to have a material adverse effect on the
Company's consolidated financial condition, results of operations or liquidity.
5
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NOTE 3 - INVENTORIES
Inventories are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
April 4, December 31,
1998 1997
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(In thousands)
<S> <C> <C>
Finished products $18,968 $21,235
Work-in-progress 23,848 23,515
Raw materials and supplies 41,334 43,079
- -------------------------------------------------------------------------------
$84,150 $87,829
===============================================================================
</TABLE>
NOTE 4 - INTEREST EXPENSE, NET
Interest expense is net of interest income and capitalized interest of
$292,000 and $60,000 for the three-month period ended April 4, 1998,
respectively, and $94,000 and $29,000 for the three-month period ended March 29,
1997, respectively.
NOTE 5 - INTEREST RATE INSTRUMENTS
The Company has entered into two interest rate swap agreements with a
certain lender providing bank financing. The agreements effectively fixed the
interest rate on $82,000,000 in principal amount of floating debt provided under
the New Credit Agreement at a rate of 6.82% and 5.86% respectively, plus the
specified margin from the New Credit Agreement of .25% to .875%. The interest
rate swaps expire on May 7, 2002 and February 7, 1999 and are based on 3-month
LIBOR. These interest rate swaps are accounted for as a hedge; the differential
to be paid as interest rates change is accrued and recognized as an adjustment
to interest expense.
NOTE 6 - COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Financial Accounting
Standards Board Statement 130, Reporting Comprehensive Income ("Statement 130").
Statement 130 establishes new rules for the reporting and display of
comprehensive income and its components; however, the adoption of Statement 130
had no impact on the Company's net income or shareholders' equity. Statement 130
requires unrealized gains or losses on the Company's foreign currency
translation adjustments, which prior to adoption were reported separately in
stockholders' equity to be included in other comprehensive income. Prior year
financial statements have been reclassified to conform to the requirements of
Statement 130. During the first quarters of 1998 and 1997, total comprehensive
income amounted to $10,894,000 and $8,579,000, respectively.
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NOTE 7 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three-month period ended:
- ------------------------------------------------------------------
April 4, March 29,
1998 1997
- ------------------------------------------------------------------
(In thousands, except
per share data)
<S> <C> <C>
Net income $ 10,575 $ 8,837
Preferred dividends (70) (70)
- ------------------------------------------------------------------
Net income applicable to
Common shares $ 10,505 $ 8,767
==================================================================
Basic weighted common
shares outstanding 14,085 13,980
Employee stock options 187 260
- ------------------------------------------------------------------
Diluted weighted average common
and common equivalent shares
outstanding 14,272 14,240
==================================================================
Net income per common
share-basic $ .75 $ .63
==================================================================
Net income per common
share-diluted $ .74 $ .62
==================================================================
</TABLE>
7
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WOLVERINE TUBE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three-Month Period Ended April 4, 1998 Compared to
Three-Month Period Ended March 29, 1997
For the three-month period ended April 4, 1998 consolidated net sales
were $170.3 million compared with $173.6 million in the three-month period ended
March 29, 1997. The decrease in sales for the three-month period this year
versus last year was attributable to a decrease in copper prices which was
partially offset by an increase in pounds of product shipped and an increase in
unit fabrication charges. The average Comex price of copper was $0.77 per pound
in the most recent three-month period compared with $1.11 per pound in the same
period a year ago. The primary impact to Wolverine of lower copper prices is
lower net sales and costs of goods sold. The Company uses various strategies to
minimize the effect of copper prices on the Company's earnings.
Total pounds shipped for the three-month period of 1998 increased by
10.8 million pounds to 95.6 million pounds compared with 84.8 million pounds in
the three-month period a year ago. Shipments of commercial tube products
increased 7.9%, primarily as a result of increased shipments of industrial tube
used in the residential air conditioning industry and increased shipments of
technical tube as the CFC phase-out continues. Shipments of the Company's
wholesale products increased 23.1% to 23.1 million pounds as unit fabrication
charges increased in the United States and Canadian markets. Shipments of rod,
bar and strip products increased 22.1% as shipments of these products to
Canadian service centers increased during the quarter.
Consolidated gross profit increased 14.8% to $24.8 million in the
three-month period of 1998 compared to $21.6 million in the three-month period
of 1997. This increase is primarily the result of increased shipments of
commercial products, which are generally the Company's highest margin product.
In addition, the increase in shipments of wholesale products resulted in an
increase in fabrication charges, thus an increase in gross profit for these
products during the three-month period in 1998 as compared to the three-month
period in 1997.
Consolidated selling, general and administrative expenses for the
three-month period of 1998 were $6.4 million as compared to $5.4 million in the
three-month period in 1997. This increase was primarily the result of additional
employee incentive expenses as a result of the Company's increase in
profitability during the period as well as professional fees associated with the
Company's conversion of its computer system.
8
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Consolidated net interest expense for the three-month period in 1998
decreased to $1.6 million from $2.4 million in the three-month period in 1997.
This decrease is primarily the result of reduced interest expense achieved
through the Company's April 1997 refinancing and the related repayment of its 10
1/8% Senior Subordinated Notes due 2002 ("Notes").
The effective tax rate for the three-month period ended April 4, 1998
was 36.0%, compared with 34.6% in the three-month period a year ago. During the
first quarter of 1997, the Company reached a favorable settlement with the
Internal Revenue Service regarding audits of prior year tax returns, which
resulted in the reduction of the effective tax rate for the three-month period
ended March 29, 1997.
Consolidated net income for the three-month period in 1998 was $10.6
million or $0.74 per diluted share, or $0.75 per basic share, compared to $8.8
million or $0.62 per diluted share, or $0.63 per basic share, in the three-month
period a year ago.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities totaled $6.3 million in the
first three-months of 1998 compared to net cash used by operating activities of
$1.2 million in the first three-months of 1997. The increase in cash provided by
operations in the first three months of 1998 was primarily due to increased net
income and accrued liabilities and the decrease in inventory. This increase was
partially offset by a decrease in accounts payable and the increase in accounts
receivable. The $16.9 million increase in net accounts receivable from December
31, 1996 is primarily due to increased sales which was partially offset by
decreases in Comex copper prices over the prevailing prices at year end 1997.
The Company's $200 million unsecured credit agreement (the "Credit
Agreement") (i) provides for an aggregate available revolving credit facility of
$200 million, including a $20 million sub-limit facility available to Wolverine
Tube (Canada) Inc., (ii) matures in full in April 2002, and (iii) provides for
an interest rate, at the Company's selection, at a floating base rate that is
either (a) the higher of the federal funds effective rate plus .50% or the prime
rate or (b) LIBOR plus a specified margin of .25% to .875%. As of April 4, 1998
the Company had approximately $102 million in outstanding borrowings and
obligations under the Credit Agreement and approximately $98 million in
additional borrowing availability thereafter.
The Company adopted the 1997 Voluntary Early Retirement Program (the
"Plan"). This Plan rewards certain eligible employees who elected on a voluntary
basis to take early retirement from the Company between March 26, 1997 and May
12, 1997. After the execution of a binding Voluntary Early Retirement Agreement
and General Release by each eligible employee, the Company paid each such
employee an early retirement payment and provided certain other considerations.
The payment was an amount equal to four weeks' base pay plus one additional
week's pay for each year of service, up to a maximum of twenty-six weeks' total,
less applicable taxes and withholdings required by law. Twenty-six employees
from various locations and departments throughout the Company elected to
participate in the Plan. At the end of the second quarter in 1997, the
implementation of the Plan was completed. The Company expects to realize
approximately $2.0 million in reduced salary and related expenses per year as
9
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a result of the Plan. Implementation of the Plan resulted in an approximate $1.8
million charge that was included in the Company's non-recurring charge and
recognized in the second quarter of 1997. The primary components of the charge
relating to the Plan include approximately $1.0 million relating to severance
and vacation pay and $0.6 million in increased pension expense and $0.2 million
for professional fees and miscellaneous expenses resulting from these early
retirements.
In the ordinary course of business the Company enters into various
types of transactions that involve contracts and financial instruments with
off-balance sheet risk. The Company enters into these financial instruments to
manage financial market risk, including foreign exchange risk, commodity price
risk for certain customers and interest rate risk. The Company is exposed to
loss on the forward contracts in the event of non-performance by the customer
whose orders are covered by such contracts. However, the Company does not
anticipate non-performance by such customers. The Company accounts for its
interest rate swap as a hedge, accordingly, gains and losses are recognized as
interest expense. The Company enters into these financial instruments utilizing
over-the-counter as opposed to exchange traded instruments. The Company
mitigates the risk that counter parties to these over-the-counter agreements
will fail to perform by only entering into agreements with major international
financial institutions.
Capital expenditures were $6.5 million for the first three months of
1998 compared to $7.2 million for the first three months of 1997. The Company
currently expects to spend approximately $40 million in the aggregate in 1998
under its existing capital program. The Company believes that it will be able to
satisfy its existing working capital needs, interest obligations and capital
expenditure requirements with cash flow from operations and funds available from
the Credit Agreement.
IMPACT OF YEAR 2000
The Company utilizes a number of computer software programs and operating
systems throughout its organization, including applications used in order
processing, shipping and receiving, accounts payable and receivable processing,
financial reporting and in various other administrative functions. The Company
recognizes the need to ensure that its operations will not be adversely impacted
by applications and processing issues related to the upcoming calendar year 2000
(the "Year 2000 Issue"). The Year 2000 Issue is the result of computer programs
that have been written to recognize two digit, rather than four digit, date
codes to define the applicable year. To the extent that the Company's software
applications contain source codes that are unable to appropriately interpret a
code using "00" as the upcoming year 2000 rather than 1900, the Company could
experience system failures or miscalculations that could disrupt operations and
cause a temporary inability to process transactions, send and process invoices
or engage in similar normal business activities.
Based on a recent assessment of its systems, the Company has determined that it
will be required to modify or replace significant portions of its software so
that its computer systems will function properly with respect to dates in the
year 2000 and thereafter. The Company presently believes that with modifications
to its existing software and certain conversions to new software, the Year 2000
Issue will not pose significant operational problems for its computer systems.
In addition, the Company's systems and operations are dependent, in part, on
interaction with systems operated or provided by vendors or
10
<PAGE> 12
other third-parties, and the Company is surveying those parties about their
progress in identifying and addressing problems that their computer systems may
face in connection with the Year 2000 Issue. The Company estimates that it has
no exposure for contingencies related to the Year 2000 Issue for the products it
has sold.
The Company will utilize both internal and external resources to reprogram, or
replace, and test its software for Year 2000 modifications. The Company
anticipates completing the modifications necessary to make its systems Year 2000
compliant by March 31, 1999, which is prior to any anticipated impact on its
operating systems. The total cost of the Year 2000 project is estimated at $5.5
million and is being funded through operating cash flow. Of the total project
cost, approximately $5.3 million is attributable to the purchase of new
software, which will be capitalized. The remaining $0.2 million, which will be
expensed as incurred, is not expected to have a material effect on the results
of operations. To date, the Company has incurred approximately $1.0 million in
expenses related to the assessment of, and preliminary efforts on, its Year 2000
modification project, the development of the plan for the purchase of new
systems and system modifications.
The costs of the project and the timeframe in which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources, third-party modification plans
and other factors. Specific factors that might result in additional costs or
time delays include, but are not limited to, the availability and cost of
personnel trained in this area, the ability to locate and correct all relevant
computer codes, and similar uncertainties. Based upon the Company's current
estimates, the Company does not anticipate that the cost of compliance with the
Year 2000 Issue will be material to its business, financial condition or results
of operations; however, there can be no assurance that the Company's systems, or
those of its vendors, customers or other third parties, will be made Year 2000
compliant in a timely manner or that the impact of the failure to achieve such
compliance will not have a material adverse effect on the Company's business,
financial condition or results of operations.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain of the statements and subject areas contained herein that are
not based upon historical or current facts deal with or may be impacted by
potential future circumstances and developments. Such statements and the
discussion of such subject areas involve, and are therefore qualified by, the
inherent risks and uncertainties surrounding future expectations generally, and
also may materially differ from the Company's actual future experience involving
any one or more of such subject areas. The Company has attempted to identify, in
context, certain of the factors that it currently believes may cause actual
future experience and results to differ from current expectations regarding the
relevant statement or subject area. The Company's operations and results also
may be subject to the effect of other risks and uncertainties in addition to the
relevant qualifying factors identified elsewhere herein, including, but not
limited to, cyclicality and seasonality in the industries to which the Company
sells its products, the impact of competitive products and pricing,
extraordinary fluctuations in the pricing and supply of the Company's raw
materials, volatility of commodities markets, unanticipated developments in the
areas of environmental compliance, and other risks and uncertainties identified
from time to time in the Company's reports filed with the Securities and
Exchange Commission.
11
<PAGE> 13
ENVIRONMENTAL
The Company's facilities and operations are subject to extensive
environmental laws and regulations. During the three-month period ended April
4,1998, the Company spent approximately $0.1 million on environmental matters
which include remediation costs, monitoring costs and legal and other costs. The
Company has a reserve of $2.5 million for environmental remediation costs which
is reflected in the Company's Condensed Consolidated Balance Sheet. The Company
has approved $0.4 million for capital expenditures relating to environmental
matters during 1998, of which $0.3 million has been spent through April 4, 1998.
Based upon information currently available, the Company believes that the costs
of the environmental matters described below are not reasonably likely to have a
material adverse effect on the Company's consolidated financial condition,
results of operations or liquidity.
Oklahoma City, Oklahoma
The Company is one of a number of Potentially Responsible Parties
("PRP's") named by the Environmental Protection Agency ("EPA") with respect to
the soil and groundwater contamination at the Double Eagle Refinery Superfund
site in Oklahoma City, Oklahoma. The costs associated with the cleanup of this
site will be entirely borne by the PRP group (the "Group"), as the site owner
has filed for bankruptcy protection. In March 1993, twenty-three PRP's named
with respect to the soil contamination of the site, including the Company,
submitted a settlement offer to the EPA. Settlement negotiations between the
Group and the EPA are continuing, but currently contemplate a settlement and
consent order among the PRP's, the EPA and the State of Oklahoma, which would
provide for each PRP's liability to be limited to a prorata share of an
aggregate amount based upon the EPA's worst-cast cost scenario to remediate the
site. Under the current proposal, the Company's settlement amount is estimated
to be $390,000.
Decatur, Alabama
The Company is subject to an order under Section 3008(h) of the
Resource Conservation and Recovery Act ("RCRA") to perform a facilities
investigation of its site in Decatur, Alabama, including a portion of the site
where wastes were buried (the "Burial Site"). Should the EPA decide to order
remediation, the remaining monitoring, legal and other costs are estimated to be
$1.2 million. Under an agreement between the Company and an affiliate of the
Henley Group, Inc. (collectively, "Henley"), the prior owner of the property,
Henley took control of investigation and any required cleanup of the Burial
Site. In February 1997, the Company exercised its option to release Henley from
liability for further remediation, monitoring and related costs with respect to
the Burial Site in exchange for a settlement payment, all pursuant to the terms
of the existing agreements with Henley. In June 1997, the Company released
Henley from liability of the Burial Site following the receipt of the settlement
payment. The Company is currently awaiting comments and approval from the EPA on
a Corrective Measures Study ("CMS") that Henley had submitted to the EPA
regarding the Burial Site. The cost to the Company to comply with the CMS, as
currently presented, will not have an adverse effect on the Company's financial
position, results of operations or liquidity.
12
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Ardmore, Tennessee
On December 28, 1995, the Company entered into a Consent Order and
Agreement with the Tennessee Division of Superfund (the "Tennessee Division"),
relating to the Ardmore facility, under which the Company agreed to conduct a
preliminary investigation regarding whether volatile organics detected in and
near the municipal drinking water supply are related to the Ardmore facility
and, if necessary, to undertake an appropriate response. That investigation has
disclosed contamination, including elevated concentrations of certain volatile
organic compounds, in soils of certain areas of the Ardmore facility and also
has disclosed elevated levels of certain volatile organic compounds in the
shallow residuum groundwater zone at the Ardmore facility. Under the terms of
the Consent Order and Agreement, the Company submitted a Remedial Investigation
and Feasibility Study ("RI/FS") work plan, which was accepted by the Tennessee
Division, and the Company has initiated the RI/FS. Based on the available
information, and recognizing that the nature and scope of remediation will be
affected by the results of the RI/FS, the Company preliminarily estimates a
range of between $1,255,000 and $2,055,000 to complete the investigation and
remediation of this site, of which approximately $835,000 has been spent.
A recent report of a 1995 EPA site inspection of the Ardmore facility
recommended further action for the site. The Company believes, however, that
because the Tennessee Division is actively supervising an ongoing investigation
of the Ardmore facility, it is unlikely that EPA will intervene and take
additional action. If the EPA should intervene, however, the Company could incur
additional costs for any further investigation or remedial action required.
Greenville, Mississippi
Following the Company's acquisition of its Greenville, Mississippi
facility, (the "Greenville facility"), a preliminary investigation disclosed
volatile organic contaminants in soil and groundwater at the site. Based on
further investigation, it appears that the contamination has not spread
off-site. The Company entered into a Consent Order with the Mississippi
Department of Environmental Quality ("MDEQ") for a pilot study program which
will help determine the effectiveness of certain technology tentatively
identified for remediation and which will also help define the scope of
remediation for the site. The pilot study program concluded on June 1, 1997. The
Company entered into a final consent agreement with the MDEQ on July 15, 1997.
Remediation efforts began in the third quarter of 1997 and are expected to
continue for approximately three years. However, there can be no assurance that
remediation efforts will be allowed to be discontinued after three years, and
operations, maintenance and other expenses of the remediation system may
continue for a longer period of time. The remaining total investigative and
remedial costs could total $799,000 under the remediation plan the Company
adopted, and it could increase further if the remediation system is required to
operate for more than three years. Applicable costs of testing and remediation
required at the Greenville facility are being shared with the former owners of
the facility on a dollar-for-dollar basis, not to exceed $750,000, pursuant to
the terms of an Escrow Agreement established at the time the facility was
acquired. Any remediation costs in excess of the shared amount would be the sole
responsibility of the Company.
13
<PAGE> 15
Other
The Company has been identified by the EPA as one of a number of PRP's
at Superfund sites in Athens, Alabama and in Criner, Oklahoma. The Company
believes that its potential liability with respect to these Superfund sites is
not material. However, there can be no assurance that the Company will not be
named a PRP at additional Superfund sites in the future or that the costs
associated with those sites would not be substantial.
The Company believes that it faces no significant liability for the
Athens, Alabama site because it has removed all of the material that it
contributed to the site. The Company believes that it faces no significant
liability for the Criner, Oklahoma site because Henley, the prior owner of the
site, has retained liability for all cleanup costs resulting from past disposal
of used oil at the Criner, Oklahoma site pursuant to an indemnification
agreement between the Company and Henley. Henley, which is not affiliated with
the Company, has discharged these obligations to date.
14
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There were no material legal proceeding developments during the
three-month period ended April 4, 1998.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Severance Agreement dated March 23, 1998 by and
between the Company and Dennis Horowitz
10.2 Consulting Agreement dated May 8, 1998 by and
between the Company and John M. Quarles
27.1 Financial Data Schedule (for SEC use only)
27.2 Financial Data Schedule (for SEC use only)
(b) Reports
No reports on Form 8-K were filed by the Company during the
three-month period ended April 4, 1998.
15
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereto duly authorized.
Wolverine Tube, Inc.
(registrant)
Dated: May 15, 1998 By: /s/ James E. Deason
------------------------------
James E. Deason
Executive Vice President
Chief Financial Officer
16
<PAGE> 1
EXHIBIT 10.1
HOROWITZ SEVERANCE AGREEMENT
AGREEMENT, dated as of March 23, 1998 by and between Wolverine
Tube, Inc., a Delaware corporation ("Wolverine"), and Dennis J. Horowitz, an
individual residing at 553 Bridgeview Drive, Lemoyne, PA 17043 (the
"Executive").
W I T N E S S E T H:
WHEREAS, Wolverine recognizes the Executive's expertise in
connection with his employment by Wolverine or its subsidiaries or affiliates
(collectively, the "Company"); and
WHEREAS, the Company desires to provide the Executive with
severance benefits or the opportunity for continued employment in a different
position if the Executive's employment in his current position is terminated for
the reasons set forth herein and the Executive refrains from engaging in certain
activities in the event his employment is terminated, upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto hereby agree as follows:
1. Termination of Employment.
(a) Termination for Cause; Resignation Without Good Reason.
(i) If the Executive's employment is terminated by the Company
for Cause, as defined in Section 1(a)(ii) hereof, or if the Executive resigns
from his employment hereunder, other than for Good Reason, as defined in Section
1(a)(iii) hereof, the Executive shall be entitled to only (A) severance benefits
as provided by the Company procedure and practice and (B) payment of the pro
rata portion of the Executive's salary through and including the date of
termination or resignation.
(ii) For purposes of this Agreement, termination for "Cause"
shall mean termination of the Executive's employment by the Company because of
(A) the Executive's conviction for, or guilty plea to, a felony or a crime
involving moral turpitude, (B) the Executive's commission of an act of
substantial personal dishonesty in connection with his employment by the
Company, (C) a substantial breach of fiduciary duty in connection with his
employment with the Company which shall include, but not be limited to, (1)
investment in any person or organization with the knowledge that such person or
organization has or proposes to have dealings with the Company, such person or
organization competes with the Company, or the Company is considering an
investment in such person or organization. (The reference to "organization"
excludes federal credit unions, publicly owned insurance companies and
corporations the stock of which is listed on a national securities exchange or
quoted on
<PAGE> 2
NASDAQ if the direct and beneficial stock ownership of the Executive, including
members of his immediate family, is not more than one percent (1%) of the total
outstanding stock of such corporation); (2) a loan (including a guaranty of a
loan) from or to any person or organization having or proposing any dealings
with the Company or in competition with the Company; (3) participation directly
or indirectly in any transaction involving the Company other than as an officer
or employee of the Company; (4) acceptance from any person or organization
having or proposing any dealings with the Company or in competition with the
Company of any gratuity, gift, entertainment or favor which exceeds either
nominal value or common courtesies which are generally accepted business
practice; or (5) service as an officer, director, partner or employee of, or
consultant to, any person or organization having or proposing dealings with the
Company or in competition with the Company; (D) the Executive's failure to
execute or follow the written policies of the Company; or (E) the Executive's
repeated failure to follow reasonable management directives or instruction as
provided by the Board of Directors of the Company (the "Board").
(iii) For purposes of this Agreement, resignation for "Good
Reason" shall mean the resignation of the Executive after (A) notice in writing
is given to him of his relocation, without the Executive's consent, to a place
of business more than 35 miles from the location of the Company's headquarters
in Huntsville, Alabama, (B) a reduction in the Executive's benefits or pay or
(C) a substantial adverse alteration occurs in the nature or status of the
Executive's responsibilities from those in effect on the date hereof,
disregarding change in title only.
(iv) The date of termination for Cause shall be the date of
receipt by the Executive of written notice of such termination. The date of
resignation without Good Reason shall be the date of receipt by the Company of a
written notice of such resignation.
(b) Termination Without Cause; Resignation for Good Reason.
(i) If the Executive's employment is terminated by the Company
Without Cause, or if the Executive resigns from his employment for Good Reason,
subject to the Executive's continuing compliance with Section 2 of this
Agreement, the Executive shall be entitled to receive the following benefits:
(A) The Company shall pay to the Executive (x) in the
event of such termination or resignation within one (1) year following a Change
in Control, as defined in Section 1(b)(v) hereof, an amount equal to two (2)
year's salary; or (y) in all other such events, an amount equal to two (2)
year's salary; in either case to be paid at the rate in effect immediately prior
to the Severance Date (as defined in Section 1(b)(iii)) plus pay at the same
rate for all vacation time accrued during the calendar year in which the
Severance Date occurs, with such payment either, at Executive's option:
(X) as a lump sum within 30 days after the
Severance Date, or
(Y) as a series of payments in accordance
with the Company's normal payroll procedures following the Severance Date.
2
<PAGE> 3
(B) The Company shall reimburse the Executive for any
costs incurred by the Executive in electing COBRA continuation coverage under
only the Company's medical plan and maintaining life insurance coverage
comparable to that maintained for him by the Company for the period from the
Severance Date until the earlier to occur of:
(X) the date which is 12 months after the
Severance Date (18 months if Section 1(b) applies, or
(Y) the date on which the Executive is
covered under the medical plan of another employer.
(ii) The Executive shall have no further right under this
Agreement or otherwise to receive any bonus or other compensation with respect
to the year in which such termination or resignation occurs and later years.
(iii) The date of termination of employment without Cause
shall be the date specified in a written notice of termination to the Executive
and the date of resignation for Good Reason shall be the date of receipt by the
Company of written notice of resignation (both such dates hereinafter referred
to as the "Severance Date").
(iv) Termination of the Executive's employment as a result of
his death or disability (if such Executive is eligible for benefits under the
Company's long-term disability plan) shall constitute a termination by the
Company with Cause for purposes of this Agreement.
(v) For purposes of this Agreement, "Change in Control" shall
mean:
(A) The Company is merged, consolidated or
reorganized into or with another corporation or other legal person, and as a
result of such merger, consolidation or reorganization less than a majority of
the combined voting power of the then-outstanding securities of such corporation
or person immediately after such transaction are held in the aggregate by the
holders of Voting Stock (as that term is hereafter defined) of the Company
immediately prior to such transaction;
(B) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal person,
and as a result of such sale or transfer less than a majority of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such sale or transfer is held in the aggregate by the holders
of Voting Stock of the Company immediately prior to such sale or transfer;
(C) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), disclosing that (x) any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial
owner (as the term "beneficial owner" is defined under
3
<PAGE> 4
Rule 13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 15% or more of the combined voting power of the
then-outstanding securities entitled to vote generally in the election of
directors of the Company ("Voting Stock"), or (y) any person has, during any
period, increased the number of shares of Voting Stock beneficially owned by
such person by an amount equal to or greater than 15% of the outstanding shares
of Voting Stock; provided, however, that transfers of shares of Voting Stock
between a person and the affiliates or associates (as such terms are defined
under Rule 12b-2 or any successor rule or regulation promulgated under the
Exchange Act) of such person shall not be considered in determining any increase
in the number of shares of Voting Stock beneficially owned by such person;
(D) The Company files a report or proxy statement
with the Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) that a change in control of the Company has
occurred or will occur in the future pursuant to any then-existing contract or
transaction; or
(E) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority thereof;
provided, however, that for purposes of this clause (v) each Director who is
first elected, or first nominated for election by the Company's stockholders, by
a vote of at least two-thirds of the Directors of the Company (or a committee
thereof) then still in office who were Directors of the Company at the beginning
of any such period will be deemed to have been a Director of the Company at the
beginning of such period.
Notwithstanding the foregoing provisions of Sections (C) or (D) unless otherwise
determined in a specific case by majority vote of the Board, a "Change in
Control" shall not be deemed to have occurred for purposes of Sections (C) or
(D) solely because (1) the Company, (2) an entity in which the Company directly
or indirectly beneficially owns 50% or more of the voting securities (a
"Subsidiary"), or (3) any employee stock ownership plan or any other employee
benefit plan of the Company or any Subsidiary either files or becomes obligated
to file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) under the Exchange Act disclosing beneficial ownership
by it of shares of Voting Stock, whether in excess of 15% or otherwise, or
because the Company reports that a change in control of the Company has occurred
or will occur in the future by reason of such beneficial ownership.
4
<PAGE> 5
2. Secrecy and Non-Solicitation.
(a) Confidentiality. The Executive recognizes that the services
performed by him are special, unique and extraordinary in that, by reason of his
employment, he may acquire confidential information and trade secrets concerning
the operation of the Company, the use or disclosure of which could cause the
Company substantial loss and damages which could not be readily calculated and
for which no remedy at law would be adequate. Accordingly, the Executive
covenants and agrees with the Company that for a period of at least three (3)
years after his termination from the Company for any reason, he will not, except
in performance of the Executive's obligations to the Company, or with the prior
written consent of the Company pursuant to the authority granted by a resolution
of the Board, directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his association with
the Company or use any such information. The term "confidential information"
includes, without limitation, information not previously disclosed to the public
or to the trade by the Company's management with respect to the Company's
products, facilities and methods, trade secrets and other intellectual property,
systems, procedures, manuals, confidential reports, products price lists,
customer lists, financial information (including the revenues, costs or profits
associated with any of the Company's products), business plans, prospects,
employee or employees, compensation, or opportunities but shall exclude any
information already in the public domain which has been disclosed to the public
during the normal course of the Company's business.
(b) Customer Protection. During the Executive's employment and for a
period of two (2) years following the termination of the Executive's employment
for any reason, the Executive covenants and agrees that he will not solicit or
attempt to solicit any business from the Company's customers, including actively
sought prospective customers, with whom the Executive had Material Contact
during his employment, for the purpose of providing products or services
competitive with those provided by the Company. Material Contacts exist between
the Executive and each customer or prospective customers with whom the Executive
has dealt within the twelve months prior to the last day worked, whose dealings
with Wolverine were coordinated or supervised by the Executive, or about whom
the Executive obtained trade secrets or confidential information as a result of
the Executive's association with the Company.
(c) Nonsolicitation of Employees. The Executive further agrees that,
during the Executive's employment and for a period of two (2) years following
the termination of the Executive's employment for any reason, the Executive
shall not directly or indirectly, on his behalf or on behalf of any person or
other entity, solicit or induce, or attempt to solicit or induce, any person
who, on the date hereof or at anytime during the term of this Agreement, is an
employee of the Company, to terminate his or her employment with the Company,
whether expressed in a written or oral agreement or understanding or is
otherwise an "at-will" employee.
(d) The Company shall be entitled to obtain a temporary restraining
order and/or a preliminary or permanent injunction restraining the Executive
from engaging in activities prohibited by this Section 2 or such other relief as
may be required to specifically enforce any of the covenants in this Section 2.
5
<PAGE> 6
3. Amendment; Waiver. This Agreement may not be modified, amended or waived in
any manner except by an instrument in writing signed by both parties hereto;
provided, however, that any such modification, amendment or waiver on the part
of the Company shall have been previously approved by the Board. The waiver by
either party of compliance with any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any other provision of
this Agreement, or of any subsequent breach by such party of a provision of this
Agreement.
4. Withholding. Payments to the Executive of all compensation contemplated under
this Agreement shall be subject to all applicable legal requirements with
respect to the withholding of taxes and similar deductions.
5. Governing Law. All matters affecting this Agreement, including the validity
thereof, are to be governed by, and interpreted and construed in accordance
with, the laws of the State of Alabama applicable to contracts executed in and
to be performed in that State. Nothing in this agreement shall affect the rights
of either party under state or federal laws affecting employment.
6. Notices. Any notice hereunder by either party to the other shall be given in
writing by personal delivery or certified mail, return receipt requested. If
addressed to the Executive, the notice shall be delivered or mailed to the
Executive at the address first set forth above, or if addressed to the Company,
the notice shall be delivered or mailed to Perimeter Corporate Park, Suite 210,
1525 Perimeter Parkway, Huntsville, Alabama 35806, or such address as the
Company or the Executive may designate by written notice at any time or from
time to time to the other party. A notice shall be deemed given, if by personal
delivery, on the date of such delivery or, if by certified mail, on the date
shown on the applicable return receipt.
7. Supersedes Previous Agreements. This Agreement supersedes all prior or
contemporaneous negotiations, commitments, agreements and writings with respect
to the subject matter hereof, all such other negotiations, commitments,
agreements and writings will have no further force or effect, and the parties to
any such other negotiation, commitment, agreement or writing will have no
further rights or obligations thereunder.
8. Counterparts. This Agreement may be executed by either of the parties hereto
in counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
9. Headings. The headings of sections herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, the Company has caused the Agreement to be
signed by its officer pursuant to the authority of its Board, and the Executive
has executed this Agreement, as of the day and year first written above.
WOLVERINE TUBE, INC.
By: /s/ John M. Quarles
-----------------------------------------
Name: John M. Quarles
Title: Chairman
EXECUTIVE
/s/ Dennis J. Horowitz
-----------------------------------------
Dennis J. Horowitz
7
<PAGE> 1
Exhibit 10.2
May 8, 1998
RE: Consulting Agreement
Dear John:
This letter, upon your written acceptance and return to me of a copy
hereof, will confirm our understanding and constitute as agreement between
Wolverine Tube, Inc. (the "Company") and John M. Quarles ("Consultant")
pursuant to which Consultant will provide consulting services to the Company
that are in addition to those services provided by Consultant in his capacity
as a non-executive Chairman of the Board of Directors ("Board") and certain
committees of the Board (the "Agreement"), as follows:
1) Consultant agrees to provide consulting services to the Company
concerning management succession and such other tasks as may be discussed with
him by the Chief Executive Officer of the Company (the "Services"). Consultant
will provide these services on days on which the Board or a committee on which
Consultant is a member does not meet. Consultant agrees that during the term of
this Agreement he will make reasonable efforts to make himself available to the
Company to provide such Services upon the request of the Chief Executive
Officer of the Company.
2) This agreement is for an indefinite term commencing on the date hereof.
Either party, however, with ten (10) days' written notice, may terminate the
Agreement.
3) For Services rendered under this Agreement, the Company agrees to pay
to Consultant a fee of two thousand dollars ($2,000.00) per day. The Company
further agrees to reimburse Consultant for reasonable expenses incurred by
Consultant in providing the Services.
4) Payment of the fees earned by Consultant pursuant to this Agreement
will be deferred until the date specified by Consultant on the attached
Deferral Election form. With respect to future fees, Consultant may modify his
Deferral Election form by providing written notice to the Company. A modified
Deferral Election form will be effective only with respect to fees earned in
calendar years that follow the calendar year in which the modified Deferral
Election form is delivered to the Company.
<PAGE> 2
Mr. John M. Quarles
May 8, 1998
Page 2
5) Fees earned will be treated as if they were set aside in an account on
the date the fees would otherwise have been paid to Consultant. Such account
will be credited with interest computed quarterly (based on calendar quarters)
at the applicable federal rate for short-term obligations under section 1274(d)
of the Internal Revenue Code of 1986, as amended, on the first day of the
following quarter. The obligation of the Company to make payments of amounts
reflected in Consultant's account constitutes an unsecured promise of the
Company to make payments from its general assets.
6) The amount of Consultant's account will be paid in a lump sum or in a
number of approximately equal quarterly installments as designated by
Consultant in his Deferral Election form. The amount remaining unpaid will
continue to bear interest, as provided in Paragraph 5. The lump sum payment or
the first quarterly installment, as the case may be, will be made as soon as
practicable following the end of the period of deferral as specified in
Paragraph 4.
7) In the event of the death of Consultant, the amount of his account will
be paid to the beneficiary or beneficiaries designated in the attached
Beneficiary Designation form. A Beneficiary Designation form may be changed at
any time prior to his death by the execution and delivery of a new Beneficiary
Designation form. The Beneficiary Designation form on file with the Company
that bears the latest date at the time of the Consultant's death will govern.
8) This Agreement constitutes the entire understanding between the parties
and supersedes any prior agreement between the Company and Consultant.
If the above accurately expresses our agreement, please sign one copy of
this letter and return it to me.
Sincerely,
WOLVERINE TUBE, INC.
By: /s/ Dennis J. Horowitz
------------------------
The undersigned hereby agrees to the matters set forth herein.
Date: May 8, 1998 /s/ John M. Quarles
------------- -----------------------------
John M. Quarles
<PAGE> 3
BENEFICIARY DESIGNATION
In accordance with the terms and conditions of the Consulting
Agreement dated _____________, 1998, between Wolverine Tube, Inc. and the
undersigned (the "Agreement"), I hereby designate the person's indicated below
as my beneficiary(ies) to receive the amounts payable under said Agreement.
Name ___________________________________________
Address ___________________________________________
___________________________________________
___________________________________________
Social Securities Nos. of Beneficiary(ies) __________________
Relationship(s) _____________________________________________
Date(s) of Birth ____________________________________________
In the event that the above-named beneficiary(ies)
predecease(s) me, I hereby designate the following person as beneficiary(ies):
Name ___________________________________________
Address ___________________________________________
___________________________________________
___________________________________________
Social Soc. Nos. of Beneficiary(ies) ________________________
Relationship(s) _____________________________________________
Date(s) of Birth ____________________________________________
I hereby expressly revoke all prior designations of
beneficiary(ies), reserve the right to change the beneficiary(ies) herein
designated and agree that the rights of said beneficiary(ies) shall be subject
to the terms of the Agreement. In the event that there is no beneficiary living
at the time of my death, I understand that the amounts payable under the
Agreement will be paid to my estate.
________________________ __________________________________________
Date John M. Quarles
<PAGE> 4
DEFERRAL ELECTION
I, John M. Quarles, hereby elect to defer payment of the fees which I
otherwise would be entitled to receive under the Consulting Agreement dated May
8, 1998, between Wolverine Tube, Inc. (the "Company") and me as follows:
1. Please make payment of the fees together with all accrued interest
reflected in my account as follows:
a. Pay in lump sum [ ]
b. Pay in _____ approximately equal quarterly installments [ ].
2. Please defer payment or make payment of first installments as follows:
a. Defer until the date I cease to provide services to the
Company [ ]
b. Defer until _____________ [ ] (specify date)
____________________ ___________________________________
Date John M. Quarles
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME OF WOLVERINE TUBE, INC. FOR THE
THREE MONTH PERIOD ENDED APRIL 4, 1998 AND THE CONDENSED CONSOLIDATED BALANCE
SHEET OF WOLVERINE TUBE, INC. AT APRIL 4, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS AS FILED IN THE FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> APR-04-1998
<CASH> 16,707
<SECURITIES> 0
<RECEIVABLES> 88,603<F1>
<ALLOWANCES> 0
<INVENTORY> 84,150
<CURRENT-ASSETS> 190,687
<PP&E> 157,159<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 442,500
<CURRENT-LIABILITIES> 54,809
<BONDS> 100,078
0
2,000
<COMMON> 141
<OTHER-SE> 244,007
<TOTAL-LIABILITY-AND-EQUITY> 244,148
<SALES> 170,299
<TOTAL-REVENUES> 170,299
<CGS> 145,504
<TOTAL-COSTS> 145,504
<OTHER-EXPENSES> 6,680
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,586
<INCOME-PRETAX> 16,529
<INCOME-TAX> 5,954
<INCOME-CONTINUING> 10,575
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,575
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.74
<FN>
<F1>The Values for the Tags Receivables and PP&E are shown net of their
respective allowance accounts.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME OF WOLVERINE TUBE, INC. FOR THE
THREE MONTH PERIOD ENDED MARCH 29, 1997, AND THE CONDENSED CONSOLIDATED BALANCE
SHEET OF WOLVERINE TUBE, INC. AT MARCH 29, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-29-1997
<CASH> 2,578
<SECURITIES> 0
<RECEIVABLES> 93,733<F1>
<ALLOWANCES> 0
<INVENTORY> 76,862
<CURRENT-ASSETS> 173,878
<PP&E> 151,018<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 417,470
<CURRENT-LIABILITIES> 55,558
<BONDS> 100,465
0
2,000
<COMMON> 140
<OTHER-SE> 217,468
<TOTAL-LIABILITY-AND-EQUITY> 417,470
<SALES> 173,576
<TOTAL-REVENUES> 173,576
<CGS> 151,981
<TOTAL-COSTS> 151,981
<OTHER-EXPENSES> 5,660
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,424
<INCOME-PRETAX> 13,511
<INCOME-TAX> 4,674
<INCOME-CONTINUING> 8,837
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,837
<EPS-PRIMARY> 0.63
<EPS-DILUTED> 0.62
<FN>
<F1>THE VALVES FOR THE TAGS RECEIVABLES AND PP&E ARE SHOWN NET OF THEIR RESPECTIVE
ALLOWANCE ACCOUNTS.
</FN>
</TABLE>
