UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
| | þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2006 |
or
| | ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ________ to ________. |
COMMISSION FILE NUMBER: 1-12164
| A. | Full title of the plan and address of the plan, if different from that of the issuer named below: |
WOLVERINE TUBE, INC. SAVINGS PLAN
WOLVERINE TUBE SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
(together, as successors to the Wolverine Tube, Inc. Savings Plan, the “Plan”)
| B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
WOLVERINE TUBE, INC.
200 Clinton Avenue West, Suite 1000
Huntsville, Alabama 35801
WOLVERINE TUBE, INC. SAVINGS PLAN
Financial Statements and Supplemental Schedules
(Modified Cash Basis)
December 31, 2006 and 2005
(With Report of Independent Registered Public Accounting Firm)
WOLVERINE TUBE, INC. SAVINGS PLAN
Financial Statements and Supplemental Schedules
(Modified Cash Basis)
December 31, 2006 and 2005
Table of Contents
Report of Independent Registered Public Accounting Firm
Wolverine Tube, Inc.
Savings Plan:
We have audited the accompanying statements of net assets available for benefits (modified cash basis) of Wolverine Tube, Inc. Savings Plan (the Plan) as of December 31, 2006 and 2005, and the related statements of changes in net assets available for benefits (modified cash basis) for the years then ended. 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 audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As described in note 2, the financial statements and supplemental schedule were prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits (modified cash basis) of the Plan at December 31, 2006 and 2005, and the changes in its net assets available for benefits (modified cash basis) for the years then ended, on the basis of accounting described in note 2.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental schedule of assets (held at end of year) (modified cash basis) as of December 31, 2006 is presented for purposes of additional analysis and is not a required part of the financial statements but is 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. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements for the year ended December 31, 2006 and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ KPMG LLP
Birmingham, Alabama
June 28, 2007
WOLVERINE TUBE, INC. SAVINGS PLAN
Statements of Net Assets Available for Benefits
(Modified Cash Basis)
December 31, 2006 and 2005
| | | | | | |
| | | 2006 | | 2005 |
Assets: | | | | | | |
Investments: | | | | | | |
Wolverine Tube, Inc. common stock | | $ | 198,774 | | $ | 603,107 |
Pooled separate accounts | | | 30,327,705 | | | 26,511,745 |
Guaranteed investment contracts | | | 17,140,214 | | | 19,458,998 |
Loans to participants | | | 2,204,689 | | | 2,520,245 |
| | | | | | |
Total investments | | | 49,871,382 | | | 49,094,095 |
| | |
Cash | | | 212 | | | 158 |
| | | | | | |
Net assets available for benefits | | $ | 49,871,594 | | $ | 49,094,253 |
| | | | | | |
See accompanying notes to financial statements.
2
WOLVERINE TUBE, INC. SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
(Modified Cash Basis)
Years ended December 31, 2006 and 2005
| | | | | | |
| | | 2006 | | 2005 |
Additions: | | | | | | |
Dividends and interest | | $ | 567,094 | | $ | 546,804 |
Loan interest | | | 162,333 | | | 139,094 |
Net appreciation in fair value of investments | | | 2,783,660 | | | 810,262 |
Contributions: | | | | | | |
Participant | | | 3,394,404 | | | 3,443,879 |
Employer | | | 2,113,176 | | | 674,805 |
Other | | | 85,992 | | | — |
| | | | | | |
Total additions | | | 9,106,659 | | | 5,614,844 |
| | | | | | |
Deductions: | | | | | | |
Distributions | | | 5,949,939 | | | 5,057,379 |
Administrative expenses | | | 7,691 | | | 16,529 |
| | | | | | |
Total deductions | | | 5,957,630 | | | 5,073,908 |
Transfer to other plan (note 1) | | | 2,371,688 | | | — |
| | | | | | |
Net increase | | | 777,341 | | | 540,936 |
Net assets available for benefits, beginning of year | | | 49,094,253 | | | 48,553,317 |
| | | | | | |
Net assets available for benefits, end of year | | $ | 49,871,594 | | $ | 49,094,253 |
| | | | | | |
See accompanying notes to financial statements.
3
WOLVERINE TUBE, INC. SAVINGS PLAN
Notes to Financial Statements
(Modified Cash Basis)
December 31, 2006 and 2005
| (1) | Description of the Plan |
The following description of Wolverine Tube, Inc. Savings Plan (the Plan) provides only general information. Participants should refer to the Plan Document and Summary Plan Description for a more complete description of the Plan’s provisions.
The Plan is a defined contribution plan covering substantially all United States employees of Wolverine Tube, Inc. (the Company), except for employees of the Jackson, Tennessee and Carrollton, Texas locations. Eligibility is based on hire date and participation in the Plan is available 45 days from hire date. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
In 2006, the Company established the Wolverine Tube Savings Plan for the Carrollton and Jackson Locations. On March 1, 2006, the Plan transferred to the Wolverine Tube Savings Plan for the Carrollton and Jackson Locations all assets and liabilities associated with Carrollton, Texas and Jackson, Tennessee participants, representing net assets of $2,371,688.
Effective April 30, 2006, no new contributions are invested in Wolverine Tube, Inc. common stock and no transfers are permitted to Wolverine Tube, Inc. common stock.
Prudential Bank and Trust, F.S.B., is the Trustee of the Plan. The Plan is administered by the Company. See also note 6.
Subject to regulatory limitations, participants may contribute up to 50% of annual pre-tax and after-tax compensation, as defined in the Plan. Effective March 1, 2006, the Company makes discretionary matching contributions and contributes 50% of the first 2% of a participant’s contribution. The Company also makes Safe Harbor contributions equal to 3% of a participant’s compensation for qualified employees.
In addition, effective March 1, 2006, the Company at its discretion may make Success Share contributions. These contributions are based on the Company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBIDTA) performance against predetermined targets set annually. Success Share contributions are distributed based on the ratio of a participant’s eligible compensation as defined by the Plan to the aggregate of such compensation for all eligible participants. There were no Success Share contributions for 2006.
WOLVERINE TUBE, INC. SAVINGS PLAN
Notes to Financial Statements
(Modified Cash Basis)
December 31, 2006 and 2005
Finally, effective March 1, 2006 through December 31, 2010, the Company makes Transition contributions to the Plan for all eligible employees who have met the allocation requirements for the Transition contribution. The amount of this contribution is equal to a percentage of a participant’s compensation determined in accordance with the following schedule established to include age and credited length of service:
| | | |
Transition years: | | Percentage | |
Less than 50 | | 0 | % |
50-54 | | 0.50 | % |
55-59 | | 1.00 | % |
60-64 | | 1.60 | % |
65-69 | | 2.30 | % |
70-74 | | 3.10 | % |
75 or more | | 4.00 | % |
There were no Transition contributions made in 2006.
Prior to March 1, 2006, the Company made discretionary matching contributions and contributed 38% of the first 3% and 20% of the next 2% of participants’ contributions, except for participants employed at the Small Tube Products Co., Inc. Division. For the Small Tube Products Co., Inc. Division, the Company contributed 25% of participants’ contributions up to 7.5% of participants’ compensation.
Prior to March 1, 2006, the Plan also provided for Company discretionary profit sharing contributions. No such discretionary contributions were made in 2006 or 2005.
Upon enrollment, participants may direct employee and Company contributions to any of the Plan’s fund options, except for Wolverine Tube, Inc. common stock (see Note 1(a)). Participants may change their investment options at any time with the exception of investments in the Company’s stock, where such change is limited to once every 30 days.
Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan earnings or losses. Allocations of earnings or losses are based on account balances as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s account.
WOLVERINE TUBE, INC. SAVINGS PLAN
Notes to Financial Statements
(Modified Cash Basis)
December 31, 2006 and 2005
Participants are immediately vested in their contributions, allocated earnings or losses thereon, Safe Harbor matching contributions, and amounts transferred from other plans. A participant forfeits the balance of his or her employer contributions account if he or she terminates employment for reasons other than disability or death with less than one year of employment. After attaining one year of credited service, a participant’s employer matching contributions becomes vested as follows:
| | | |
Years of credited service | | Percentage
of employer
account
vested | |
Less than 1 | | 0 | % |
1, but less than 2 | | 25 | |
2, but less than 3 | | 50 | |
3, but less than 4 | | 75 | |
4 or more | | 100 | |
A participant is 0% vested in his or her Success Share and Transition contributions, including allocated earnings or losses thereon, until the completion of five years of service at which time a participant is 100% vested.
Participants may borrow from their accounts a minimum of $1,000, up to the lesser of $50,000 or 50% of their vested account balances. Loan terms range from 1-5 years or up to 10 years for the purchase of a primary residence. Participant loans are secured by the balances in their accounts. Interest is charged on participant loans at the prime rate plus 1.5%. Principal and interest on participant loans are paid ratably through payroll deductions.
Distributions to participants or their beneficiaries take place upon separation of service, retirement, permanent and total disability, or death. Distributions may be in lump sum amounts or in a series of equal installment payments over a period not to exceed the life expectancy of the participant or the designated beneficiary.
At December 31, 2006 and 2005, forfeited nonvested accounts totaled $10,088 and $4,772, respectively. These accounts will first be used to pay Plan expenses and then used to reduce future employer contributions. In 2006 and 2005, Plan expenses and employer contributions were reduced by $30,316 and $132,102, respectively.
WOLVERINE TUBE, INC. SAVINGS PLAN
Notes to Financial Statements
(Modified Cash Basis)
December 31, 2006 and 2005
| | (i) | Administrative Expenses |
Most administrative expenses of the Plan (including legal, accounting and trustee fees) are paid by the Company.
| (2) | Summary of Significant Accounting Policies |
The accompanying financial statements have been prepared on the modified cash basis of accounting, which is an acceptable alternative method of reporting under regulations issued by the Department of Labor. Investments are reported at fair value as prescribed by the Department of Labor. Dividend and interest income and contributions are recorded when received rather than when earned. Unrealized appreciation or depreciation in the fair value of investments is recognized currently.
The preparation of financial statements on the modified cash basis requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
The Plan’s investments are stated at fair value. The fair values of units owned by the Plan in pooled separate accounts are based on quoted redemption values on the last trade date of the Plan year. Common stock is valued at the close price on the last trade date of the Plan year. Participant loans are valued at their outstanding balances, which approximate fair value.
Investment contracts held in the Guaranteed Income Fund of Prudential Retirement Insurance Company are recorded at their contract value. As described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the “FSP”) investment contracts held by a defined-contribution plan are required to be reported at fair value. The Plan adopted FSP AAG INV-1 in 2006. The adoption did not have a material effect on the Plan’s financial statements as interest rates are adjusted to market semi-annually. Accordingly, contract value, which represents net contributions plus interest at the contract rate, approximates fair value. The contracts are fully benefit responsive.
Investment contracts held in the Guaranteed Income Fund of Prudential Retirement Insurance Company are credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The guaranteed investment contract issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan. The fair value of the investment contracts held by the Guaranteed Income Fund approximates contract value.
As described in Note 1, because the guaranteed investment contract is fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the guaranteed investment contract.
WOLVERINE TUBE, INC. SAVINGS PLAN
Notes to Financial Statements
(Modified Cash Basis)
December 31, 2006 and 2005
Contract value, as reported to the Plan by Prudential, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investments at contract value.
There are no reserves against contract value for credit risk of the contract issuer or otherwise. The crediting interest rate is based on a formula agreed upon with the issuer, but it may not be less than 1.5%. Such interest rates are reviewed on a semi-annual basis for resetting.
Certain events limit the ability of the Plan to transact at contract value with the issuer. Such events include the following: (1) amendments to the Plan documents, (2) changes to the Plan’s prohibition on competing investment options or deletion of equity wash provisions, (3) bankruptcy of the Plan sponsor or other plan sponsor events that cause a significant withdrawal from the Plan, or (4) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under Employee Retirement Income Security Act of 1974. The Plan administrator does not believe that the occurrence of any such value event, which would limit the Plan’s ability to transact at contract value with participants, is probable.
The guaranteed investment contract does not permit the insurance company to terminate the agreement prior to the scheduled maturity date.
| | | | | | |
| | | 2006 | | | 2005 | |
Average yields: | | | | | | |
Based on actual earnings | | 3.50 | % | | 3.00 | % |
Based on interest rate credited to participants | | 3.50 | % | | 3.00 | % |
The Plan presents in the statement of changes in net assets available for benefits the net appreciation in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation on those investments. Purchases and sales of investments are recorded on a trade date basis.
Benefits are recorded when paid.
WOLVERINE TUBE, INC. SAVINGS PLAN
Notes to Financial Statements
(Modified Cash Basis)
December 31, 2006 and 2005
At December 31, 2006 and 2005, the Plan’s investments were held by Prudential Retirement Services, Inc.
During 2006 and 2005, the Plan’s investments (including investments bought, sold, as well as held during the year) appreciated (depreciated) in fair value as determined by quoted market prices as follows:
| | | | | | | | |
| | | 2006 | | | 2005 | |
Common stock | | $ | (574,582 | ) | | $ | (576,495 | ) |
Pooled separate accounts | | | 3,358,242 | | | | 1,386,757 | |
| | | | | | | | |
| | $ | 2,783,660 | | | $ | 810,262 | |
| | | | | | | | |
The fair values of individual investments that represent 5% or more of the Plan’s net assets are as follows:
| | | |
2006 | | Fair value |
| |
Investment contracts, at contract value: | | | |
Guaranteed Income Fund | | $ | 17,140,214 |
Pooled separate accounts, at fair value: | | | |
Large Cap Growth/Goldman Sachs Fund | | | 5,088,251 |
Small Cap Growth/Times Square Fund | | | 2,960,062 |
Dryden S&P 500 Index Fund | | | 6,716,662 |
| |
2005 | | |
Investment contracts, at contract value: | | | |
Guaranteed Income Fund | | $ | 19,458,998 |
Pooled separate accounts, at fair value: | | | |
Large Cap Growth/Goldman Sachs Fund | | | 5,167,120 |
Small Cap Growth/Times Square Fund | | | 2,914,377 |
State Street Global Advisor Intermediate Bond Fund | | | 2,737,496 |
Dryden S&P 500 Index Fund | | | 6,875,687 |
| (4) | Risks and Uncertainties |
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.
WOLVERINE TUBE, INC. SAVINGS PLAN
Notes to Financial Statements
(Modified Cash Basis)
December 31, 2006 and 2005
The Internal Revenue Service has determined and informed the Company by a letter dated November 25, 2005, that the Plan and related trust are designed in accordance with the applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable provisions of the IRC.
| (6) | Related Party Transactions |
Plan investments are managed or sub-advised by Prudential Investment Management, LLC, an affiliate of Prudential Financial. The Plan’s purchase of investment products and services from Prudential qualify as party-in-interest transactions.
At December 31, 2006 and 2005, the Plan owned $198,774 (162,930 shares) and $603,107 (119,191 shares), respectively, in Wolverine Tube, Inc. common stock.
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 ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
10
WOLVERINE TUBE, INC. SAVINGS PLAN
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
(Modified Cash Basis)
December 31, 2006
| | | | | | | |
(a) | | (b) Identity of issue, borrower, lessor, or similar party | | (c) Description of investment, including maturity date, rate of interest, collateral, par or maturity value | | (e) Current
value |
| | Common stock: | | | | | |
* | | Wolverine Tube, Inc. | | Common stock (162,930 shares held) | | $ | 198,774 |
| | | |
| | Guaranteed income account: | | | | | |
* | | Prudential Retirement Insurance and Annuity Company | | Guaranteed Income Fund | | | 17,140,214 |
| | | |
| | Pooled separate accounts: | | | | | |
* | | Prudential Retirement Insurance and Annuity Company | | Dryden S&P 500 Index Fund | | | 6,716,662 |
| | | | Oppenheimer Global Fund | | | 2,260,762 |
| | | | Large Cap Growth/Goldman Sachs Fund | | | 5,088,251 |
| | | | Small Cap Growth/Times Square Fund | | | 2,960,062 |
| | | | Mid Cap Growth/Artisan Fund | | | 2,404,226 |
| | | | Large Cap Value/AJO Fund | | | 2,364,426 |
| | | | Mid Cap Value/Wellington Management Fund | | | 1,321,270 |
| | | | Small Cap Value Fund/Integrity | | | 549,072 |
| | | | Intern Equity Fund/Julius Baer | | | 760,768 |
| | | | High Grade Bond Fund/BSAM | | | 1,565,835 |
| | | | Core Plus Bond Fund/PIMCO | | | 1,643,558 |
| | | | Prudential Direct Fund | | | 725,187 |
| | | | Prudential Lifetime Income & Equity Fund | | | 214,685 |
| | | | Prudential Lifetime Growth Fund | | | 301,826 |
| | | | Prudential Lifetime Conservative Fund | | | 440,371 |
| | | | Prudential Lifetime Balanced Fund | | | 1,010,744 |
* | | Participant loans | | Participant loans: | | | |
| | | | Various maturities through 2014, balance collateralized by participant accounts, interest rates ranging from 5.50% to 11% | | | 2,204,689 |
| | | | | | | |
| | | | | | $ | 49,871,382 |
| | | | | | | |
Column (d) has not been presented as all investments are participant directed.
See accompanying report of independent registered public accounting firm.
11
WOLVERINE TUBE SAVINGS PLAN FOR THE CARROLLTON AND
JACKSON LOCATIONS
Financial Statements and Supplemental Schedules
(Modified Cash Basis)
December 31, 2006
(With Report of Independent Registered Public Accounting Firm)
WOLVERINE TUBE SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
Financial Statements and Supplemental Schedules
(Modified Cash Basis)
December 31, 2006
Table of Contents
Report of Independent Registered Public Accounting Firm
Wolverine Tube Savings Plan for the Carrollton and Jackson Locations:
We have audited the accompanying statement of net assets available for benefits (modified cash basis) of Wolverine Tube Savings Plan for the Carrollton and Jackson Locations (the Plan) as of December 31, 2006, and the related statement of changes in net assets available for benefits (modified cash basis) for the period from March 1, 2006 (inception) to December 31, 2006. 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 in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in note 2, the financial statements and supplemental schedule were prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than U.S. generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits (modified cash basis) of the Plan at December 31, 2006, and the changes in its net assets available for benefits (modified cash basis) for the period from March 1, 2006 (inception) to December 31, 2006, on the basis of accounting described in note 2.
Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental schedule of assets (held at end of year) (modified cash basis) as of December 31, 2006 is presented for purposes of additional analysis and is not a required part of the financial statements but is 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. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements for the period from March 1, 2006 (inception) to December 31, 2006 and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ KPMG LLP
Birmingham, Alabama
June 28, 2007
WOLVERINE TUBE SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
Statement of Net Assets Available for Benefits
(Modified Cash Basis)
December 31, 2006
| | | |
Assets: | | | |
Investments: | | | |
Guaranteed income fund | | $ | 1,499,224 |
Pooled separate accounts | | | 803,735 |
Participant loans | | | 183,249 |
Common Stock | | | 17,687 |
| | | |
Net assets available for benefits | | $ | 2,503,895 |
| | | |
See accompanying notes to financial statements.
2
WOLVERINE TUBE SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
Statement of Changes in Net Assets Available for Benefits
(Modified Cash Basis)
Period from March 1, 2006 (inception) to December 31, 2006
| | | |
Additions: | | | |
Investment income: | | | |
Dividends and interest | | $ | 43,212 |
Loan interest | | | 9,994 |
Net appreciation in fair value of investments | | | 33,282 |
| | | |
Total investment income | | | 86,488 |
| | | |
Contributions: | | | |
Participant | | | 297,637 |
Employer | | | 80,574 |
| | | |
Total contributions | | | 378,211 |
| | | |
Transfer from another plan (note 1) | | | 2,371,688 |
| | | |
Total additions | | | 2,836,387 |
| | | |
Deductions: | | | |
Benefits paid to participants or beneficiaries | | | 329,540 |
Administrative expenses | | | 2,952 |
| | | |
Total deductions | | | 332,492 |
| | | |
Net increase | | | 2,503,895 |
Net assets available for benefits, March 1, 2006 (inception) | | | — |
| | | |
Net assets available for benefits, December 31, 2006 | | $ | 2,503,895 |
| | | |
See accompanying notes to financial statements.
3
WOLVERINE TUBE SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
Notes to Financial Statements
(Modified Cash Basis)
Period from March 1, 2006 (inception) to December 31, 2006
| (1) | Description of the Plan |
The following description of Wolverine Tube Savings Plan for the Carrollton and Jackson Locations (the Plan) provides only general information. Participants should refer to the Plan Document and Summary Plan Description for a more complete description of the Plan’s provisions.
Established March 1, 2006, the Plan is a defined contribution plan covering substantially all employees of the Carrollton, Texas and Jackson, Tennessee locations of Wolverine Tube, Inc. (the Company). On March 1, 2006, the Wolverine Tube, Inc. Savings Plan transferred to the Plan all assets and liabilities associated with Carrollton, Texas and Jackson, Tennessee participants. Eligibility is based on hire date and entry into the Plan is available 45 days from hire date. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
Effective April 30, 2006, no new contributions are invested in Wolverine Tube, Inc. common stock and no transfers are permitted to Wolverine Tube, Inc. common stock.
Prudential Bank and Trust, F.S.B., is the Trustee of the Plan. The Plan is administered by the Company. See also note 6.
Subject to regulatory limitations, participants may contribute up to 50% of annual pre-tax and after-tax compensation as defined in the Plan. The Company makes discretionary matching contributions and contributes 38% of the first 3% plus 20% of the next 2% of a participant’s contribution.
In addition, the Company at its discretion may make Success Share contributions. These contributions are based on the Company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) performance against predetermined targets set annually. Success Share contributions are distributed based on the ratio of a participant’s eligible compensation as defined by the Plan to the aggregate of such compensation for all eligible participants. There were no Success Share contributions for 2006.
Upon enrollment, participants may direct participant and Company contributions to any of the Plan’s fund options, except for Wolverine Tube, Inc. common stock (see note 1(a)). Participants may change their investment options at any time with the exception of investments in the Company’s stock, where such change is limited to once every 30 days.
Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan earnings or losses. Allocations of earnings or losses are based on account balances as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
WOLVERINE TUBE SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
Notes to Financial Statements
(Modified Cash Basis)
Period from March 1, 2006 (inception) to December 31, 2006
Participants are immediately vested in their contributions, allocated earnings or losses thereon and amounts transferred from other plans. A participant forfeits the balance of his or her employer contributions account if he or she terminates employment for reasons other than disability or death with less than one year of employment. After attaining one year of credited service, the participant’s employer profit sharing and regular matching contributions becomes vested as follows:
| | | |
Years of credited service | | Percentage
of employer
account
vested | |
Less than 1 | | 0 | % |
1, but less than 2 | | 25 | |
2, but less than 3 | | 50 | |
3, but less than 4 | | 75 | |
4 or more | | 100 | |
A participant is 0% vested in his or her Success Share contribution until the completion of five years of service at which time a participant is 100% vested.
Participants may borrow from their accounts a minimum of $1,000, up to the lesser of $50,000 or 50% of their vested account balances. Loan terms range from 1-5 years or up to 10 years for the purchase of a primary residence. Participant loans are secured by the balances in their accounts. Interest is charged on participant loans at the prime rate plus 1.5%. Principal and interest on participant loans are paid ratably through payroll deductions.
Distributions to participants or their beneficiaries take place upon separation of service, retirement, permanent and total disability, or death. Distributions may be in lump sum amounts or in a series of equal installment payments over a period not to exceed the life expectancy of the participant or the designated beneficiary.
At December 31, 2006, forfeited nonvested accounts totaled $5,825. These accounts will first be used to pay Plan expenses and then used to reduce future employer contributions. In 2006, Plan expenses and employer contributions were reduced by $696.
WOLVERINE TUBE SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
Notes to Financial Statements
(Modified Cash Basis)
Period from March 1, 2006 (inception) to December 31, 2006
| | (i) | Administrative Expenses |
The Plan records administrative expenses when paid. The Plan Sponsor elects to pay certain administrative expenses of the Plan (including legal, accounting and trustee fees).
| (2) | Summary of Significant Accounting Policies |
The accompanying financial statements have been prepared on the modified cash basis of accounting, which is an acceptable alternative method of reporting under regulations issued by the Department of Labor. Investments are reported at fair value as prescribed by the Department of Labor. Dividend and interest income and contributions are recorded when received rather than when earned. Unrealized appreciation or depreciation in the fair value of investments is recognized currently.
The preparation of financial statements on the modified cash basis requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
The Plan’s investments are stated at fair value. The fair values of units owned by the Plan in pooled separate accounts are based on quoted redemption values on the last trade date of the Plan year. Common stock is valued at the close price on the last trade date of the Plan year. Participant loans are valued at their outstanding balances, which approximate fair value.
Investment contracts held in the Guaranteed Income Fund of Prudential Retirement Insurance Company are recorded at their contract value. As described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AIVCPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the “FSP”) investment contracts held by a defined-contribution plan are required to be reported at fair value. The Plan adopted FSP AAG INV-1 in 2006. The adoption did not have a material effect on the Plan’s financial statements as interest rates are adjusted to market semi-annually. Accordingly, contract value, which represents net contributions plus interest at the contract rate, approximates fair value. The contracts are fully benefit-responsive.
Investment contracts held in the Guaranteed Income Fund of Prudential Retirement Insurance Company are credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The guaranteed investment contract issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan. The fair value of the investment contracts held by the Guaranteed Income fund approximates fair value.
WOLVERINE TUBE SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
Notes to Financial Statements
(Modified Cash Basis)
Period from March 1, 2006 (inception) to December 31, 2006
As described in Note 1, because the guaranteed investment contract is fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the guaranteed investment contract. Contract value, as reported to the Plan by Prudential, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investments at contract value.
There are no reserves against contract value for credit risk of the contract issuer or otherwise. The crediting interest rate is based on a formula agreed upon with the issuer, but it may not be less than 1.5%. Such interest rates are reviewed on a semi-annual basis for resetting.
Certain events limit the ability of the Plan to transact at contract value with the issuer. Such events include the following: (1) amendments to the Plan documents, (2) changes to the Plan’s prohibition on competing investment options or deletion of equity wash provisions, (3) bankruptcy of the Plan sponsor or other Plan sponsor events that cause a significant withdrawal from the plan, or (4) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under Employee Retirement Income Security Act of 1974. The Plan administrator does not believe that the occurrence of any such value event, which would limit the Plan’s ability to transact at contract value with participants, is probable.
The guaranteed investment contract does not permit the insurance company to terminate the agreement prior to the scheduled maturity date.
| | | |
| | | 2006 | |
Average yields: | | | |
Based on actual earnings | | 3.50 | % |
Based on interest rate credited to participants | | 3.50 | % |
The Plan presents in the statement of changes in net assets available for benefits the net appreciation in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation on those investments. Purchases and sales of investments are recorded on a trade date basis.
Benefits are recorded when paid.
WOLVERINE TUBE SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
Notes to Financial Statements
(Modified Cash Basis)
Period from March 1, 2006 (inception) to December 31, 2006
At December 31, 2006, the Plan’s investments were held by Prudential Retirement Services, Inc.
During 2006, the Plan’s investments (including investments bought, sold, as well as held during the period from March 1, 2006 (inception) to December 31, 2006) appreciated (depreciated) in fair value as determined by quoted market prices as follows:
| | | | |
Common stock | | $ | (34,903 | ) |
Pooled separate accounts | | | 68,185 | |
| | | | |
| | $ | 33,282 | |
| | | | |
At December 31, 2006, the fair value of individual investments that represent 5% or more of the Plan’s net assets are as follows:
| | | |
| | | Fair value |
Guaranteed Income Fund | | $ | 1,499,224 |
Large Cap Growth/Goldman Sachs Fund | | | 148,169 |
Dryden S&P 500 Index Fund | | | 159,286 |
| (4) | Risks and Uncertainties |
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.
The Plan has not yet obtained a determination letter from the Internal Revenue Service stating that the Plan and related trust are designed in accordance with the applicable sections of the Internal Revenue Code (IRC). However, the plan administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable provisions of the IRC.
| (6) | Related Party Transactions |
Plan investments are managed or sub-advised by Prudential Investment Management, LLC, an affiliate of Prudential Financial. The Plan’s purchase of investment products and services from Prudential qualify as party-in-interest transactions.
At December 31, 2006, the Plan owned $17,687 (14,497 shares) in Wolverine Tube, Inc. common stock.
WOLVERINE TUBE SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
Notes to Financial Statements
(Modified Cash Basis)
Period from March 1, 2006 (inception) to December 31, 2006
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 ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
| (8) | Closure of Jackson, Tennessee Location |
Effective September 13, 2006, and as a result of the closure of the Jackson, Tennessee location, a partial plan termination occurred. In connection therewith, employees of the Jackson, Tennessee location, who were active participants in the Plan on September 13, 2006, became fully vested in their employer contributions upon the partial plan termination.
WOLVERINE TUBE, INC. SAVINGS PLAN FOR THE
CARROLLTON AND JACKSON LOCATIONS
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
(Modified Cash Basis)
December 31, 2006
| | | | | | | |
(a) | | (b) Identity of issue, borrower, lessor, or similar party | | (c) Description of investment, including maturity date, rate of interest, collateral, par or maturity value | | (e) Current
value |
| | Common stock: | | | | | |
* | | Wolverine Tube, Inc. | | Common stock (14,497 shares held) | | $ | 17,687 |
| | | |
| | Guaranteed income account: | | | | | |
| | | |
* | | Prudential Retirement Insurance and Annuity Company | | Guaranteed Income Fund | | | 1,499,224 |
| | | |
| | Pooled separate accounts: | | | | | |
* | | Prudential Retirement Insurance and Annuity Company | | Dryden S&P 500 Index Fund | | | 159,286 |
| | | | Large Cap Growth/Goldman Sachs Fund | | | 148,169 |
| | | | Small Cap Growth/Times Square Fund | | | 24,950 |
| | | | Mid Cap Growth/Artisan Fund | | | 72,131 |
| | | | Large Cap Value/AJO Fund | | | 86,625 |
| | | | Mid Cap Value/Wellington | | | |
| | | | Management Fund | | | 81,322 |
| | | | Small Cap Value Fund/Integrity | | | 15,620 |
| | | | Intern Equity Fund/Julius Baer | | | 19,784 |
| | | | High Grade Bond Fund/BSAM | | | 41,420 |
| | | | Oppenheimer Global Fund | | | 36,544 |
| | | | Core Plus Bond Fund/PIMCO | | | 41,331 |
| | | | Prudential Lifetime Growth Fund | | | 30,947 |
| | | | Prudential Lifetime Conservative Fund | | | 4,073 |
| | | | Prudential Lifetime Balanced Fund | | | 41,533 |
| | | |
* | | Participant loans | | Participant loans: | | | |
| | | | Various maturities through 2014, balance collateralized by participant accounts, interest rates ranging from 5.50% to 10% | | | 183,249 |
| | | | | | | |
| | | | | | $ | 2,503,895 |
| | | | | | | |
Column (d) has not been presented as all investments are participant directed.
See accompanying report of independent registered public accounting firm.
10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this Annual Report to be signed on their behalf by the undersigned hereto duly authorized.
Dated: June 28, 2007
| | | | |
| | WOLVERINE TUBE, INC. SAVINGS PLAN |
| | WOLVERINE TUBE SAVINGS PLAN FOR THE CARROLLTON AND JACKSON LOCATIONS |
| | (as successors to the Wolverine Tube, Inc. Savings Plan) |
By: | | WOLVERINE TUBE, INC. |
| | |
| | By: | | /s/ James E. Deason |
| | | | |
| | | | James E. Deason Senior Vice President, Chief Financial Officer, Secretary and Plan Committee Member |
EXHIBIT INDEX
| | |
| Exhibit No. | | Description |
| |
| 23.1 | | Consent of Independent Registered Public Accounting Firm. |
| |
| 23.2 | | Consent of Independent Registered Public Accounting Firm. |
