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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For The Fiscal Year Ended September 30, 1997
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No fee required)
For the transition period from _____________ to ______________
COMMISSION FILE NUMBER 1-10651
MAVERICK TUBE CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 43-1455766
(State of Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Chesterfield Center, Second Floor
Chesterfield, Missouri 63017
(Address of principal executive offices) (Zip Code)
(314) 537-1314
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.01 per
share
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 XX No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
The aggregate market value of the 15,291,072 shares of Common Stock held by
non affiliates of the Registrant as of December 3 was $495,048,456 based
upon the closing price as reported on the NASDAQ National Market on that
date. As of December 3, 1997, the Registrant had 15,437,474 outstanding
shares of Common Stock.
----------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
As provided herein, portions of the documents listed below are incorporated
herein by reference:
Document Part - Form 10-K
-------- ----------------
Annual Report to Stockholders for the Year Ended September 30, 1997 Parts I, II and IV
Proxy Statement for the 1998 Annual Meeting of Stockholders Part III
MAVERICK TUBE CORPORATION AND SUBSIDIARY
INDEX
PART I.
Item 1. BUSINESS
Item 2. PROPERTIES
Item 3. LEGAL PROCEEDINGS
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Item 4 A. EXECUTIVE OFFICERS OF THE REGISTRANT
PART II.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Item 6. SELECTED FINANCIAL DATA
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
PART III.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Item 11. EXECUTIVE COMPENSATION
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
SIGNATURES
EXHIBIT INDEX
This Form 10-K contains certain forward-looking statements within the meaning of
the federal securities laws which, while reflective of management's beliefs or
expectations, involve certain risks and uncertainties, many of which are beyond
the control of the Company. Accordingly, the Company's actual results and the
timing of certain events could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include, but are not
limited to, oil and gas price volatility, steel price volatility and those other
factors discussed in the Sections captioned "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
those risk factors discussed in Exhibit 99.1 hereto.
PART I
ITEM I
BUSINESS
General
Maverick Tube Corporation, together with its subsidiaries, Maverick Investment
Corporation, Maverick Tube, L.P. and Maverick Tube International, Inc.,
("Maverick" or the "Company") manufactures electric resistance welded ("ERW")
pipe used in the energy industry for drilling and production applications ("oil
country tubular goods" or "OCTG") and line pipe for surface handling and
transportation of oil and natural gas. OCTG and line pipe products are produced
through both ERW and seamless processes, and ERW pipe is generally a lower
priced, comparable quality alternative to seamless pipe in many applications.
The Company believes it is one of the leading domestic producers of OCTG
products.
The Company also manufactures structural tubing (shapes and rounds) and standard
pipe. Structural tubing is ERW products used predominately in construction,
transportation, agricultural, material handling and recreational applications.
Standard pipe, as in OCTG, are produced through both ERW and seamless processes,
with the significant majority of producers being ERW. Standard pipe is generally
used in various industrial applications.
For information with regard to total revenue, operating profit or loss and
identifiable assets attributable to each of the energy and industrial product
segments, see Note 9 to the Consolidated Financial Statements on pages 23 and 24
of the Company's 1997 Annual Report to Stockholders ("Annual Report"), portions
of which are filed as Exhibit 13, hereto.
Effective October 1, 1997, the operating assets and related liabilities of the
Company's two operating divisions (i.e. its Texas division and its Arkansas
Division), which constitutes substantially all of the assets and liabilities of
the Company, were contributed to Maverick Tube, L.P., a limited partnership (the
"Operating Company"). Maverick Tube Corporation holds a five percent equity
interest in the Operating Company as the sole general partner thereof. Maverick
Investment Corporation, a wholly-owned subsidiary of Maverick Tube Corporation,
holds the ninety-five percent equity interest in the Operating Company as the
sole limited partner thereof. This restructure was effected to more accurately
reflect the manner in which the Company conducts its business. As a result of
this restructure, Maverick now conducts substantially all of its operations
through the Operating Company.
The Energy Pipe Industry
OCTG products are finished pipe which are used in drilling, completion and
production applications in the energy industry. The domestic consumption of OCTG
products depends on several factors, the most significant being the number of
oil and natural gas wells being drilled. In addition, OCTG production tubing may
be periodically replaced during the life of a producing well. OCTG consumption
is satisfied by domestic production, imports and draw-downs of inventories owned
by manufacturers, distributors and end users.
A significant factor affecting the market for production of OCTG products is the
level of industry inventories maintained by manufacturers, distributors and end
users. For calendar year 1995, inventory liquidations of the 1993 inventory
build continued at a decreasing rate with a resulting market penetration of
0.1%. For calendar year 1996 and the nine months ended September 30, 1997,
increasing industry inventory levels added 4.7% and 17.3% in OCTG demand.
Despite this build, the Company believes that inventory levels at September 30,
1997 resulted in a lesser percentage increase in inventory per rig of only 13.3%
during the same period..
OCTG products are produced in numerous sizes, weights, grades and end finishes.
The Company believes that most OCTG products are produced to American Petroleum
Institute ("API") specifications. In addition, the Company and other producers
manufacture pipe in certain custom or proprietary grades. The grade of pipe used
in a particular application depends on technical requirements for strength,
corrosion resistance and other performance qualities. OCTG products are
generally classified into groupings of "carbon" and "alloy" grades. Carbon
grades of OCTG (yield strength levels of 75,000 pounds per square inch or less)
are generally used in oil and natural gas wells drilled to depths of
approximately 8,000 to 11,000 feet. Alloy grades of OCTG (yield strength levels
of 75,000 pounds per square inch or more) are generally used in oil and natural
gas wells drilled to depths in excess of 11,000 feet.
Carbon and alloy grades of OCTG products are available from both ERW and
seamless producers. ERW pipe is produced by processing flat rolled steel into
strips which are cold-formed, welded, heat-treated or seam-annealed and
end-finished with threads and couplings. Seamless products are produced by
individually heating and piercing solid steel billets into pipe and then end
finishing such pipe into OCTG in a manner similar to ERW. The Company believes
the seamless manufacturing process involves higher costs than the ERW process
and that, as a result, seamless products are generally priced higher than
comparable ERW products.
Based on published industry statistics, ERW products, which did not have
significant market penetration prior to the mid-1970's, now account for
approximately forty-nine percent of the tonnage of domestic OCTG products
consumed annually. The Company believes ERW products have captured a significant
majority of the carbon grade OCTG market, while seamless products retain a
significant majority of the alloy grade OCTG market. The Company believes that
further significant market penetration of ERW products will depend upon
increased market acceptance of ERW products and technological advances in the
types of raw materials and equipment utilized in the ERW manufacturing process.
Line pipe, which is principally used for surface transmission of oil, natural
gas and other fluids, is produced principally by companies with capabilities to
produce OCTG products and is produced in both ERW and seamless form. Line pipe
markets are dependent not only on the factors which influence the OCTG market,
but also on the level of pipe line construction activity, line pipe replacement
requirements, new residential construction and utility purchasing programs. The
Company shipped 26,501 tons of line pipe in fiscal 1997, as compared to 30,112
tons and 41,458 tons of line pipe in fiscal 1996 and 1995, respectively. The
decreased sales by the Company of line pipe in the past two years was
principally due to a shift in manufacturing capacity as it concentrated on the
improving OCTG market.
Products
The Company produces both OCTG and line pipe products. Prior to 1994, OCTG
products constituted approximately 90% of the Company's net sales. During fiscal
1995, this percentage decreased to 58% primarily because of the Company's entry
into the structural tube market. During fiscal 1996, the percentage was 65% due
to the improving OCTG demand. During fiscal 1997, the percentage continued to
increase to 71.8% due to continued improvements in OCTG demand and increases by
the Company in the number of OCTG products offered.
OCTG products include production tubing, which is used to convey oil and natural
gas to the surface of a well, production casing, which is used to line a newly
completed well, and surface casing, which is used to protect water-bearing
formations during the drilling of a well. Generally, deeper wells drilled to
depths greater than 15,000 feet require products that presently cannot be made
by the Company's ERW process. Line pipe products are used for surface production
flow lines, gathering systems and pipeline transportation and distribution
systems for oil, natural gas and other fluids. The Company's energy products
meet API or other proprietary standards. The Company's proprietary OCTG and line
pipe products are generally designed to be utilized in similar applications as
products meeting API standards and are engineered to provide performance
features comparable to products meeting API standards. The Company warrants its
API casing and tubing to be free of defects in material or workmanship in
accordance with applicable API specifications and warrants its proprietary grade
products against defects in accordance with the Company's standards which are
disclosed to customers in connection with their purchase of such products. The
Company has not incurred significant costs in connection with this warranty. The
Company maintains insurance coverage against potential claims in an amount which
it believes to be adequate.
The Company manufactures finished products in both carbon and alloy steel
grades. Virtually all of the Company's products are fully completed or
"end-finished" at the Company's facilities, in contrast to certain of the
Company's competitors which do not end-finish their products or which end-finish
their products at different locations, thus adding to their freight and handling
costs. The end-finish process includes, as appropriate, upsetting, beveling,
threading, pressure testing and the application of couplings. The Company's
fully finished OCTG products are ready to be installed in oil or natural gas
wells. By end-finishing its products, the Company is better able to control
quality, cost and service to customers. Both of the Company's energy facilities
provide heat-treatment capabilities necessary for the production of alloy grade
pipe. The Company's alloy grade tubing and casing products accounted for 23%,
27% and 23% of net sales in fiscal 1997, 1996 and 1995, respectively.
Marketing
The Company sells its products primarily throughout the United States and Canada
to numerous distributors which resell the pipe to major and independent oil and
natural gas production, gathering and pipeline companies. During the fiscal
years ended September 30, 1997, 1996 and 1995, sales by the Company to Canadian
customers constituted $26.3 million, $12.9 million and $12.1 million,
respectively. Sales to other foreign customers in fiscal 1997, 1996 and 1995
made up an additional $400,000 $300,000, and $900,000, respectively. The
Company's marketing philosophy emphasizes delivering competitively priced
quality products and providing a high level of service to its customers. The
Company maintains inventories of finished goods which are housed at both of its
production facilities and at field locations close to areas of drilling activity
which allows the Company to provide timely delivery of its products. As of
September 30, 1997, 1996 and 1995, the Company's backlog orders (including bill
and hold sales not yet shipped) were approximately $62.7 million, $57.6 million
and $20.4 million, respectively. All of the backlog orders as of September 30,
1997 are expected to be filled in fiscal 1998. The Company's backlog orders as
of any particular date may not be indicative of the Company's actual operating
results for any fiscal period. There can be no assurance that the amount of
backlog at any particular date ultimately will be realized.
In fiscal 1997, 1996 and 1995, one distributor, National Oilwell, accounted for
14%, 16% and 12% of the Company's net sales, respectively. In fiscal 1997,
another distributor, Master Tubulars, Inc. accounted for 11% of the Company's
net sales. The Company currently utilizes several distributors of its products
and believes that additional qualified distributors are available to assist the
Company in meeting the end-user's needs. While the Company believes that it
could replace any one distributor of its products, including National Oilwell or
Master Tubulars, Inc. with other qualified distributors, no assurance can be
given that the loss of National Oilwell or Master Tubulars, Inc. would not have
an adverse effect on the Company's net sales or results of operations.
Raw Materials
All steel purchases are made centrally at the Company's headquarters in order to
optimize the Company's ability to influence pricing, quality, availability and
delivery considerations. The Company consumes approximately 2% of the total
amount of hot rolled steel produced annually in the United States and believes
it is generally considered to be a significant purchaser by its suppliers. The
Company presently purchases substantially all of its steel from several domestic
suppliers, with virtually all of the Arkansas facilities' steel purchases and
approximately 72% of consolidated purchases made from Nucor Corporation. The
Company maintains favorable working relationships with its steel suppliers and
believes that is it treated favorably with respect to volume allocations and
deliveries. To date, the Company has not experienced any significant disruption
in its supply of raw materials.
Manufacturing
The Company manufactures OCTG and line pipe products at its facilities in
Conroe, Texas and Hickman, Arkansas. The facilities are strategically located to
serve the energy markets in the United States. The Company can currently produce
at a consolidated maximum rate of approximately 600,000 tons of pipe per year
with approximately 420,000 currently dedicated to energy production The Company
is currently operating its facilities at a capacity utilization of approximately
92%. Substantially all of the Company's energy products are finished on site for
immediate drilling, production or line pipe applications.
In order to control its manufacturing costs, the Company attempts to maximize
production yields from purchased steel and reduce unit labor costs. Purchased
steel represents approximately 70% of the Company's cost of goods sold. Labor
costs are controlled by automation of certain activities and by optimizing
product throughput. For fiscal 1997, direct and indirect labor costs accounted
for approximately 9% of the cost of goods sold. The Company maintains an
innovative compensation plan at both of its manufacturing facilities, whereby
employees receive quarterly bonuses for superior productivity and cost savings.
In addition, some employees are eligible to receive annual profitability bonuses
based upon the Company's consolidated earnings. The maximum achievable
incentives and bonuses range from 15% to 75% of an employee's annual
pre-incentive, pre-bonus gross wages.
During fiscal 1997, the Company spent $8.4 million on new capital equipment,
excluding equipment for its structural tube facility. These capital expenditures
are expected to result in manufacturing cost savings, quality improvements and
expanding or maintaining production capabilities.
Competition
The market for OCTG and line pipe products is highly competitive. The Company
believes that the principal competitive factors affecting its business are
price, quality, delivery, availability and service. The Company believes it
enjoys an excellent reputation for quality products and outstanding customer
service. The Company competes with approximately nine domestic and numerous
foreign producers of OCTG products, some of which have greater financial
resources than the Company. The Company's more significant ERW pipe OCTG
competitors are Lone Star Steel Co. and Newport Steel Co. and its more
significant seamless pipe OCTG competitors include United States Steel
Corporation, North Star Steel Co. and C F & I Limited Partnership. The Company
also competes in the line pipe market against these same competitors, and with
foreign producers of OCTG products, most of which are units of large foreign
steel makers. During calendar year 1995, 1996 and the first nine months of 1997,
domestic OCTG market penetration by imports was 11.6%, 11.8% and 18.9%,
respectively, of tons consumed.
The Structural Tube and Standard Pipe Industry
Structural tubing products are used in construction, transportation,
agricultural, material handling and recreational applications. The uses for
structural tubing include handrails, building columns, walkway components,
bridge frames, recreational vehicle frameworks, boat trailers, farm implement
components, tillage equipment, storage rack systems, conveying systems support
and exercise equipment. Demand for structural tubing is believed to be
influenced primarily by the level of general economic activity in the United
States. In addition, structural tubing is an attractive alternative to other
structural steel forms, such as I-beams and H-beams, as tubing products offer
strength and other product characteristics similar to beams, but with less steel
content, resulting in lower costs to the end user in certain applications.
The Company believes that domestic consumption of structural tubing during
calendar 1996, 1995 and 1994 was 1.4 million, 1.5 million and 1.4 million tons,
respectively. Based on published industry statistics, the Company believes that
the types of structural tubing products it is capable of manufacturing accounts
for more than 85% of the domestic tonnage of all types of domestic structural
tubing products consumed annually.
Standard pipe products are used in industrial applications such as steam, water,
air and gas lines, and plumbing and heating. Demand for standard pipe is
believed to be influenced primarily by the level of general economic activity in
the United States. In recent years, standard pipe has faced limited new
competition from plastic pipe in certain applications.
The Company believes that domestic consumption of standard pipe during calendar
1996, 1995 and 1994 was 2.6 million, 2.6 million, and 2.3 million tons,
respectively. Based on published industry statistics, the Company believes that
the types of standard products it is capable of manufacturing accounts for
approximately 30% of the domestic tonnage of all types of domestic standard pipe
products consumed annually.
Products
The Company is currently producing structural tubing square and rectangular
shaped products on two tubing mills in the structural tube facility located in
Hickman, Arkansas. The larger mill is utilized to manufacture pipe up to 8 inch
square and up to 0.500 inch thick, and the smaller mill is utilized to
manufacture pipe of up to 3 inch square and up to 0.250 inch thick. The Company
is currently producing structural round tubing products and standard pipe at its
two energy facilities in Conroe, Texas and Hickman, Arkansas. Because of the
large number of applications for structural tubing and standard pipe, the number
of different structural tubing and standard pipe products produced for the
market is considerably larger than that produced for the OCTG market. The
Company expects to produce square, rectangular and round structural tubing at
its facilities in sizes ranging from one and one half to eight inch square (and
the equivalent sizes in rectangular and round tubing) and in thicknesses of
0.120 to 0.500 inches. The annual capacity of this facility dedicated to
structural tubing is approximately 180,000 tons. The Company is currently
operating at approximately 82% of capacity.
Marketing
The structural tubing and standard pipe markets are somewhat regional in nature,
primarily because order sizes are smaller and lead time requirements are shorter
than for OCTG products. The Company currently sells principally to distributors,
but during fiscal 1997 significantly increased its sales to large end-user
customers. As in the case of OCTG products, the Company's marketing strategy
emphasizes delivering competitively priced quality products and providing a high
level of service to its customers. As indicated above, the application of
structural tubing and standard pipe products is diverse, and a short lead time
is required for customer satisfaction. Consequently, the Company maintains
inventory levels comparable to those for OCTG products (in terms of months
supply), but such finished goods inventory will consist of a larger number of
stock keeping units than in the case of OCTG. The Company is utilizing several
experienced agency firms in its sales efforts. As of September 30, 1997, the
Company's backlog orders was approximately $9.0 million. All of the backlog
orders as of September 30, 1997 are expected to be filled in fiscal 1998. The
Company's backlog orders as of any particular date may not be indicative of the
Company's actual operating results for any fiscal period. There can be no
assurance that the amount of backlog at any given time ultimately will be
realized.
Manufacturing
The manufacturing process for structural tubing and standard pipe products is
similar to the process of manufacturing plain-end OCTG products. The machinery
and equipment used for the manufacture of structural tubing products is similar
to equipment used for the manufacture of OCTG products. Structural tubing and
standard pipe is not, however, subject to the same degree of tolerances as are
OCTG products, which results in lower production costs relating to testing and
inspection than for OCTG products. Moreover, structural tubing does not require
end finishing, flash elimination from the welding process or seam annealing.
Because less finishing is required of structural tubing products as compared to
OCTG, the average cost per ton to convert steel into structural tubing is
significantly less than OCTG. Unlike OCTG products, all structural tubing
products are ERW.
Consistent with its manufacturing strategy for OCTG production, the Company
intends to become a low-cost, high-volume producer of quality structural tubing
and standard pipe products. The Company believes that the application of its
efficient manufacturing process developed for the production of OCTG products,
the labor costs at its Arkansas facility and the strategic location of the
facility provides a conversion cost advantage relative to the majority of
existing structural tubing and standard pipe manufacturers.
During fiscal 1997, the Company spent approximately $363,000 on additional
equipment needed for manufacturing and information needs.
Competition
Although a significant market for structural tubing is located within a 400 mile
radius of the new facility, no other major structural tubing facility is
currently located within this area. Foreign competition, primarily from Canada,
represented 26%, 29% and 23% of total domestic sales of structural tubing in
calendar 1996, 1995 and 1994. The Company competes primarily against
approximately seven domestic and numerous foreign producers of structural
tubing. The Company's more significant structural tube competitors are Leavitt
Tube Company, Inc., Welded Tube Corporation of America, Copperweld, Bull Moose
Tube Corporation and Ex-L-Tube, Inc.
A significant market for standard pipe also exists. Foreign competition has had
a large presence in the standard pipe market despite earlier progress on unfair
trade cases. Foreign competition represented approximately 25%, 29% and 50% of
total domestic sales of standard pipe in calendar 1996, 1995 and 1994. The
Company's more significant domestic competitors are Wheatland Tube Company,
Armco, Inc. Sawhill Tubular Division, Laclede Steel Company and IPSCO Tubulars,
Inc.
Employees
As of September 30, 1997, the Company had approximately 1,079 employees, of whom
approximately 20% were salaried and approximately 80% were employed on an hourly
basis. None of the Company's employees are represented by a union. The Company
considers its employee relations to be excellent.
ITEM 2
PROPERTIES
The Company leases approximately 17,000 square feet of office space in
Chesterfield, Missouri for its executive offices pursuant to a lease which
expires in August 1999. The Company owns a 21,000 square foot office facility
located on a 14 acre site in Union, Missouri which is leased to an unaffiliated
third-party. The Company's 160 acre site in Hickman, Arkansas includes two
buildings with approximately 315,000 square foot of OCTG manufacturing and
storage space, utilizing 55 acres. The 275,000 square feet structural tube
manufacturing plant is located adjacent to the existing OCTG facility.
Approximately 120,000 square feet of this facility is utilized for manufacturing
with the remainder used for inventory and material storage and shipping.
Approximately 80 acres remain in Hickman, Arkansas for future expansion. Both
facilities are leased with purchase options exercisable on the expiration dates
of the leases. The expiration dates are August 1, 2007 for the OCTG facility and
February 1, 2004 for the structural tube facility. The Company also owns 117
acres and a 244,000 square foot manufacturing facility located in Conroe, Texas.
Of the 117 acres, approximately 30 acres are used for manufacturing and storage
and 60 acres are available for future expansion. Each manufacturing facility
operated by the Company is served by truck, has its own rail spur and is within
close proximity of barge facilities.
The Company believes the facilities are in good condition, are adequately
insured and are adequate and suitable for its planned level of operations.
ITEM 3
LEGAL PROCEEDINGS
From time to time the Company is involved in litigation relating to claims
arising out of its operations in the normal course of its business. The Company
maintains insurance coverage against potential claims in an amount which it
believes to be adequate. The Company believes that it is not presently a party
to any litigation in which the outcome would have a material adverse effect on
its business or operations.
The Company is subject to federal, state and local environmental laws and
regulations concerning, among other things, waste water disposal and air
emissions. The Company believes it is currently in compliance with all
applicable environmental regulations.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted during the fourth quarter of fiscal 1997 covered
by this Report to a vote of the Company's security holders through the
solicitation of proxies or otherwise.
ITEM 4A
EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Title
Gregg Eisenberg 47 Chairman of the Board
President and
Chief Executive Officer
Charles O. Struckhoff 48 Vice President - Finance and
Administration, Treasurer,
Secretary and Chief
Financial Officer
Sudhakar Kanthamneni 50 Vice President - Manufacturing
and Technology
T. Scott Evans 50 Vice President - Commercial
Operations
Set forth below are descriptions of the backgrounds of the executive officers of
the Company and their principal occupations for the last five years:
Mr. Eisenberg has served as Chairman of the Board since February 1996. He has
served as President, Chief Executive Officer and a director of the Company since
1988. He is a former director and past chairman of the Committee on Pipe and
Tube Imports.
Mr. Struckhoff has served as Vice President - Finance and Administration and
Chief Financial Officer since November 1993 and as Secretary of the Company
since 1988. From 1988 to November 1993, Mr. Struckhoff also served as Vice
President - Administration of the Company.
Mr. Kanthamneni has served as Vice President - Manufacturing and Technology of
the Company since August 1992. From May 1991 to August 1992, Mr. Kanthamneni
served as the Company's Vice President - Manufacturing.
Mr. Evans has served as Vice President - Commercial Operations of the Company
since September 1992.
PART II
ITEM 5
MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information regarding Maverick's Common Stock included on page 28 of Maverick's
1997 Annual Report under the captions "Market for the Company's Common Equity"
and "Related Stockholder Matters" is incorporated herein by this reference.
ITEM 6
SELECTED FINANCIAL DATA
Selected Financial Data included on page 27 of the Annual Report is incorporated
herein by this reference.
ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations included on pages 12 through 16 of the Annual Report is incorporated
herein by this reference.
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, the notes thereto and the Report of Ernst
& Young, LLP included on pages 17 through 26 of the Annual Report is
incorporated herein by this reference.
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
None.
PART III
ITEM 10
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated herein by reference from the
Registrant's proxy statement which is being filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's most recent
fiscal year. See also, Part I, Item 4A hereof.
ITEM 11
EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by reference from the
Registrant's proxy statement which is being filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's most recent
fiscal year.
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated herein by reference from the
Registrant's proxy statement which is being filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's most recent
fiscal year.
ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated herein by reference from the
Registrant's proxy statement which is being filed with the Securities and
Exchange Commission within 120 days of the end of the Registrant's most recent
fiscal year.
PART IV
ITEM 14
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a. 1. Financial Statements
The following consolidated financial statements of Maverick Tube
Corporation and Subsidiary, included in the annual report of the
Registrant to its shareholders for the year ended September 30,
1997, are incorporated herein by reference in Item 8:
Report of Independent Auditors.
Consolidated Balance Sheets as of September 30, 1997
and 1996.
Consolidated Statements of Operations for the years
ended September 30, 1997, 1996 and 1995.
Consolidated Statements of Stockholders' Equity for
the years ended September 30, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years
ended September 30, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements as of
September 30, 1997.
2. Financial Statement Schedules
The following consolidated financial statement schedule of
Maverick Tube Corporation and subsidiary is included with the
annual report on Form 10-K:
Schedule II Valuation and qualifying
accounts for the years ended
September 30, 1997, 1996 and 1995.
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission
are not required under the related instructions or are
inapplicable, and therefore have been omitted.
3. Exhibits:
See Exhibit Index.
The following is a list of each management contract
or compensatory plan or arrangement required to be
filed as an exhibit to this Annual Report on Form
10-K pursuant to Item 14(c) of this Report:
Maverick Tube Corporation Amended and Restated 1990
Stock Option Plan
Maverick Tube Corporation Savings for Retirement
Plan as revised on January 1, 1993
Amended Maverick Tube Corporation 1994 Stock Option
Plan
Amended Maverick Tube Corporation 1994 Director Stock
Option Plan
Form of Deferred Compensation Agreement with
Certain Executive Officers
b. Reports on 8-K:
No Reports of Form 8-K were filed during the fourth
quarter of the Registrant's fiscal year ended
September 30, 1997
Maverick Tube Corporation
and Subsidiary
Schedule II - Valuation and Qualifying Accounts
(In thousands)
Additions
-----------------------------
Balance at Charged to Charged
beginning cost and to other Deductions Balance at
Classification of year expenses accounts describe end of year
- -----------------------------------------------------------------------------------------------------------------
Year ended September 30, 1995: Deducted from asset accounts:
Accounts receivable allowances $ 253 $ 53 $ -- $ -- $ 306
Valuation allowance for deferred
taxes $1,643 $ -- $ -- $1,094 (1) $2,737
Year ended September 30, 1996: Deducted from asset accounts:
Accounts receivable allowances $ 306 $ 339 $ -- $ 125 (3) $ 629
Valuation allowance for deferred
taxes $2,737 $ -- $ -- $(1,590)(2) $1,147
Year ended September 30, 1997: Deducted from asset accounts:
Accounts receivable allowances $ 629 $ 44 $ -- $ 285 (3) $ 388
Valuation allowance for deferred
taxes $1,147 $ -- $ -- $(1,147)(2) $ --
(1) Resulted from an additional net operating loss carryforward generated
from the current year which was not valued for financial statement
purposes.
(2) Resulted from the utilization of net operating and alternative
minimum loss carryforwards and re-evaluation of remaining deferred
tax assets.
(3) Uncollectible accounts written off, net of recoveries.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized on December 5, 1997.
Maverick Tube Corporation
(registrant)
December 5, 1997 /s/ Gregg M. Eisenberg
-------------------------------
Gregg M. Eisenberg, Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed on behalf of the Company by the following persons in the
capacities on the dates indicated.
December 5,1997 /s/ Gregg M. Eisenberg
-------------------------------------
Gregg M. Eisenberg, Chairman, President
and Chief Executive Officer
December 5, 1997 /s/ Charles O. Struckhoff
-------------------------------------
Charles O. Struckhoff, Vice President
Finance and Administration (Principal
Financial and Accounting Officer)
December 5, 1997 /s/ William E. Macaulay
-------------------------------------
William E. Macaulay, Director
December 5, 1997 /s/ John M. Fox
-------------------------------------
John M. Fox, Director
December 5, 1997 /s/ C, Robert Bunch
-------------------------------------
C. Robert Bunch, Director
December 5, 1997 /s/ C. Adams Moore
-------------------------------------
C. Adams Moore, Director
December 5, 1997 /s/ David H. Kennedy
-------------------------------------
David H. Kennedy, Director
December 5, 1997 /s/ Wayne P. Mang
------------------------------------
Wayne P. Mang, Director
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
3.1 Amended and Restated Certificate of Incorporation of the N/A
Registrant, incorporated herein by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form S-1, File No. 33-37363
(the "1991 Registration Statement").
3.2 Amended and Restated Bylaws of the Registrant, incorporated N/A
herein by reference to Exhibit 3.3 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 30, 1991 (the "1991
Form 10-K.")
4.1 Form of Stock Certificate for Common Stock, incorporated herein by N/A
reference to Exhibit 4.1 to the 1991 Registration Statement.
10.1 Secured Credit Agreement ("Secured Credit Agreement") dated May
15, N/A 1992, by and among the Registrant, Harris Trust and
Savings Bank ("Harris Trust") and Mercantile Bank of St. Louis,
N.A. ("Mercantile Bank"), incorporated herein by reference to
Exhibit 10.4 to the Registrant's Annual Report for the fiscal year
ended September 30, 1992 (the "1992 Form 10-K.")
10.2 Lease and Agreement dated July 24, 1992, by and between the Registrant N/A
and the Arkansas Development Finance Authority (the "Authority"),
incorporated herein by reference to Exhibit 10.7 to the 1992 Form 10-K.
10.3 Maverick Tube Corporation Amended and Restated 1990 Stock Option
N/A Plan, incorporated herein by reference to Exhibit 10.21 to the
1991 Form 10-K.
10.4 First Amendment to Secured Credit Agreement dated as of April 30,
N/A 1993, incorporated herein by reference to Exhibit 10.9 of the
Registrant's Registration Statement on Form S-2, File No. 33-80096
(the "1994 Registration Statement").
10.5 Second Amendment to Secured Credit Agreement dated as of N/A
December 31, 1993, incorporated herein by reference to Exhibit 10.10
of the 1994 Registration Statement.
10.6 Third Amendment to Secured Credit Agreement dated as of N/A
May 26, 1994, incorporated herein by reference to Exhibit 10.11 of
the 1994 Registration Statement.
10.7 Maverick Tube Corporation Savings for Retirement Plan effective on N/A
February 15, 1988, as amended, incorporated herein by reference
to Exhibit 10.11 to the 1993 Form 10-K.
10.8 Lease Agreement dated as of March 1, 1994, between the Authority, N/A
as lessor, and the Registrant as lessee, related to the New Facility,
incorporated herein by reference to Exhibit 10.14 to the 1994
Registration Statement.
10.9 First Supplemental Trust Indenture to Lease Agreement between the N/A
Authority, as lessor and the Registrant, as lessee relating to the
New Facility dated July 1, 1994, incorporated by reference to Exhibit
10.1 to the June 30, 1994 Form 10-Q
10.10 Fourth Amendment to Secured Credit Agreement dated as of June 29, N/A
1994, incorporated herein by reference to Exhibit 10.13 of the 1994
Form 10-K.
10.11 Supplement to the Second Term Loan Agreement dated December 15,
1994, N/A incorporated herein by reference to Exhibit 10.16 of the
1994 Form 10-K.
10.12 Maverick Tube Corporation 1994 Stock Option Plan, incorporated
herein N/A by reference to Exhibit 10.17 of the 1994 Form 10-K.
10.13 Maverick Tube Corporation Director Stock Option Plan, incorporated
N/A herein by reference to Exhibit 10.18 of the 1994 Form 10-K.
10.14 Fifth Amendment to Secured Credit Agreement dated as of November
10, 1995, N/A incorporated herein by reference to Exhibit 10.19 of
the 1995 Form 10-K.
10.15 Sixth Amendment to Secured Credit Agreement dated as of October
16, 1996, N/A incorporated herein by reference to Exhibit 10.21 of
the 1996 Form 10-K.
10.16 Form of Deferred Compensation Agreement between the Registrant and
N/A Messrs. Gregg M. Eisenberg, T. Scott Evans and Sudhakar
Kanthamneni Dated October 1, 1995, incorporated herein by
reference to Exhibit 10.22 of the 1996 Form 10-K.
10.17 Amendment #1 to Maverick Tube Corporation's Director Stock Option N/A
Plan, incorporated herein by reference to Exhibit 10. 24 of the 1996 Form 10-K.
10.18 Seventh Amendment to Secured Credit Agreement dated as of April 27
1997, N/A incorporated herein by reference to Exhibit 10 of the
1997 Form 10-Q for the period ended June 30, 1997.
10.19 Eighth Amendment to Secured Credit Agreement dated as of August 12, 1997,
filed herewith.
10.20 Ninth Amendment to Secured Credit Agreement dated as of October 1, 1997,
filed herewith
10.21 Amendment #1 to Maverick Tube Corporation's 1994 Stock Option Plan,
filed herewith
11.1 Statement re: Computation of Per Share Earnings (Loss).
13 Portions of Registrant's 1997 Annual Report to Shareholders which are incorporated by
reference herein.
21 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, independent auditors.
27.1 Financial Data Schedule
99.1 Risk Factors