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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, 1999.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to ______________.
COMMISSION FILE NUMBER 0-30146
MAVERICK TUBE CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 43-1455766
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16401 Swingley Ridge Road
Seventh Floor
Chesterfield, Missouri 63017
(Address of principal executive offices) (Zip Code)
(636) 733-1600
(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
Preferred Share Purchase Rights
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. (X)
The aggregate market value of the 17,603,072 shares of Common Stock held by
non-affiliates of the Registrant as of December 9, 1999 was $374,065,280 based
upon the closing price as reported on the NASDAQ National Market on that date.
As of December 9, 1999, the Registrant had 17,768,474 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 Fiscal
Year Ended September 30, 1999 Parts I, II and IV
Proxy Statement for the 2000 Annual Meeting of Stockholders Part III
MAVERICK TUBE CORPORATION AND SUBSIDIARIES
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 4A. 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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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
We make forward-looking statements in this Form 10-K and in our public documents
that are incorporated by reference, which represent our expectations or beliefs
about future events and financial performance. You can identify these statements
by forward-looking words such as "expect," "believe," "anticipate," "goal,"
"plan," "intend," "estimate," "may," "will" or similar words. Forward-looking
statements are subject to known and unknown risks, uncertainties and
assumptions, including:
* oil and gas price volatility;
* steel price volatility;
* domestic and foreign competitive pressures;
* fluctuations in industry-wide inventory levels;
* the presence or absence of governmentally imposed trade restrictions;
* asserted and unasserted claims;
* our ability and the ability of entities with which we do business to modify or
redesign our and their computer systems to work properly in the year 2000;
and
* those other risks and uncertainties discussed in Exhibit 99.1 of this Form
10-K and elsewhere in this and our other filings with the Securities and
and Exchange Commission.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed may not occur. In addition, actual results could differ
materially from those suggested by the forward-looking statements. Accordingly,
you should not place undue reliance on the forward-looking statements. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
PART I
ITEM 1
BUSINESS
General
As used herein, unless the context otherwise requires, the terms "we," "us,"
"our" or "Maverick" refer to Maverick Tube Corporation and its subsidiaries.
Maverick Tube Corporation, together with its three subsidiaries Maverick
Investment Corporation, Maverick Tube, L.P. and Maverick Tube International,
Inc. comprise the entire corporate entity. Maverick Tube Corporation was
incorporated in Missouri in 1977 and reincorporated in Delaware in 1987.
Maverick Investment Corporation and Maverick Tube, L.P. are both Delaware
entities while Maverick Tube International, Inc. is incorporated in Barbados.
In October 1997, we contributed the operating assets and related liabilities of
our two operating divisions (i.e. our Texas Division and our Arkansas Division),
which constituted substantially all of our assets and liabilities, to Maverick
Tube, L.P., a limited partnership (the "Operating Company"). Maverick Tube
Corporation holds a 5% equity interest in the Operating Company as its sole
general partner. Maverick Investment Corporation, a wholly-owned subsidiary of
Maverick Tube Corporation, holds a 95% equity interest in the Operating Company
as its sole limited partner. This restructure was effected to more accurately
reflect the manner in which we conduct our business. As a result of this re-
structure, Maverick now conducts substantially all of its operations through the
Operating Company.
Our Company
We are a leading domestic producer of tubular steel products used in energy and
industrial applications. We manufacture "oil country tubular goods," which are
steel tubular products used in the completion and production of oil and natural
gas wells. We also serve the energy industry by manufacturing line pipe, which
is used primarily in the transportation of oil and natural gas. For industrial
applications, we manufacture structural tubing and standard pipe. We also
recently began producing "cold drawn tubing" in our industrial products segment,
which is used as a component of high quality products that require close
tolerances. During fiscal 1999, energy products accounted for approximately 59%
of our total revenues.
To further our growth and enhance our ability to compete in our energy and
industrial businesses, we plan to expand our current product lines to include
larger diameter pipe and tubing products. As the focal point to this expansion,
we intend to construct and equip a new large-diameter facility immediately
adjacent to our current facilities in Hickman, Arkansas, at an estimated cost of
$40.0 million. We have chosen this strategic location for the new facility to
achieve significant cost-saving advantages. These advantages include:
* utilization of lower-cost, non-union labor;
* access to rail, truck and barge transportation;
* proximity to the Nucor Corporation steel mill, Maverick's
primary steel supplier; and
* shared overhead.
Based principally on historical product relationships and our assumptions about
markets, we estimate that our current product size range allows us to compete
for approximately 49% of the total tons consumed in all of the markets we serve.
Similarly, we estimate that our expansion into the production of larger diameter
pipe and tubing products should allow us to compete for approximately 67% of the
total tons consumed in these markets. This represents an estimated increase of
approximately 37% of the total tons consumed for which we can compete in the
markets we serve. We believe we will begin limited production of select
industrial and energy products at the new facility by July 2000 with full
production capability of all products by October 2000.
The following table summarizes our current manufacturing facilities and the
products they produce:
Facility Products Sizes (1)
Hickman, Arkansas Oil country tubular goods 1 1/2" - 5 1/2"
Line pipe 1 1/2" - 5 9/16"
Standard pipe 2" - 5"
Hickman, Arkansas Structural tubing 1 1/2" - 8"
Conroe, Texas Oil country tubular goods 4 1/2" - 9 5/8"
Line pipe 4 1/2" - 8"
Structural tubing 4 1/2" - 8"
Standard pipe 6" - 8"
Beaver Falls, Pennsylvania Cold drawn tubular products 1 7/8" - 12"
(1) Represents outside diameter measurement. Structural tubing can have a
square, rectangular or round cross-section.
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 11 to the Consolidated Financial Statements on page 24 of our
Annual Report to Stockholders for the Fiscal Year Ended September 30, 1999
("1999 Annual Report"), portions of which are filed as Exhibit 13, hereto.
Our Business Strategy
Increase Market Share By Expanding Our Existing Product Lines. We believe that
the expansion of our product lines in both the energy and industrial segments of
our business will allow us to increase our market share by capitalizing on our
existing customer relationships to market additional products. Our planned
construction and equipping of the new large-diameter facility is an important
part of this strategy.
Identify And Enter New Markets. We continually seek and make acquisitions and
capital expenditures to enter new markets as evidenced by our entry into the
structural tube market in 1994, our recent entry into the cold drawn tubular
market and our planned expansion of our product lines. We intend to seek
additional opportunities to expand our business to new markets where we believe
we can compete effectively and profitably.
Continually Improve The Efficiency Of Our Manufacturing Process. We intend to
continue to pursue our objective of being a low-cost, high-volume producer of
quality steel tubular products by seeking to:
* maintain product manufacturing cost controls;
* maximize production yields from raw materials;
* make capital expenditures designed to lower costs and improve quality;
* minimize unit production costs through effective utilization of plant
capacity; and
* minimize freight costs.
Deliver Quality Products And Service To Our Customers. We believe that we have
achieved an excellent reputation with our existing customers. We intend to
continue to build long-term customer relationships with new and existing
customers by seeking to:
* offer broad-based product lines;
* focus on product availability;
* deliver competitively priced quality products; and
* provide a high level of customer support before and after the sale.
The Energy Pipe Industry
General. Oil country tubular goods consist of drill pipe, production casing,
surface casing and production tubing. Drill pipe is used and may be reused to
drill wells. Production casing forms the structural wall in oil and gas wells to
provide support and prevent caving during drilling operations and is generally
not removed after its has been installed in a well. Surface casing is used to
protect water-bearing formations during the drilling of a well. Production
tubing is placed within the casing and is used to convey oil and natural gas to
the surface and may be replaced during the life of a producing well.
The domestic oil country tubular goods market is affected by several factors,
the most significant being the number of oil and natural gas wells being
drilled. The level of drilling activity is largely a function of current prices
for oil and natural gas and the industry's future price expectations. The prices
are determined by various supply and demand factors, such as consumption levels,
current inventory levels, weather, import levels, production economics and
future expectations. The following chart shows the price of oil and natural gas
since October 1996:
WTI Oil Price Avg. U.S. Natural Gas Price
10/96 $24.90 $2.12
11/96 $23.79 $2.76
12/96 $25.27 $3.77
1/97 $25.23 $3.56
2/97 $22.61 $2.44
3/97 $22.54 $1.77
4/97 $19.60 $1.88
5/97 $20.87 $2.09
6/97 $19.30 $2.13
7/97 $19.46 $2.09
8/97 $19.97 $2.29
9/97 $19.77 $2.72
10/97 $21.56 $2.94
11/97 $20.57 $3.17
12/97 $18.54 $2.29
1/98 $16.58 $2.08
2/98 $16.54 $2.08
3/98 $15.11 $2.17
4/98 $15.47 $2.37
5/98 $15.09 $2.13
6/98 $13.76 $2.05
7/98 $14.04 $2.19
8/98 $13.65 $1.84
9/98 $14.69 $1.83
10/98 $14.55 $1.91
11/98 $13.51 $2.01
12/98 $11.21 $1.69
1/99 $12.53 $1.80
2/99 $11.94 $1.71
3/99 $14.80 $1.69
4/99 $17.27 $1.99
5/99 $18.04 $2.21
6/99 $17.73 $2.22
7/99 $20.18 $2.18
8/99 $21.20 $2.70
9/99 $23.39 $2.58
The most commonly cited indicator of the level of domestic drilling activity is
the Baker Hughes rig count which represents the number of active oil and natural
gas rigs currently being operated in the U.S. Since July 1987, the Baker Hughes
rig count hit a high in December 1990 of 1,179 rigs and a low in April 1999 of
488. However, by September 30, 1999, the active rig count increased 49.6% from
this low to 730 rigs. The following chart shows the U.S. rig count at each month
end since October 1996 and our shipments of oil country tubular goods for the
same period:
Baker Hughes Maverick Oil Country
Rig Count Tubular Goods Shipments
10/96 837 25,658
11/96 850 19,655
12/96 852 26,873
1/97 822 21,492
2/97 849 23,957
3/97 897 22,799
4/97 897 23,182
5/97 935 24,924
6/97 976 28,125
7/97 974 30,156
8/97 993 28,255
9/97 1,009 32,355
10/97 996 28,117
11/97 983 26,797
12/97 1,011 32,398
1/98 991 23,177
2/98 974 19,514
3/98 932 20,599
4/98 884 16,133
5/98 850 16,480
6/98 854 14,807
7/98 816 13,814
8/98 792 15,591
9/98 774 14,719
10/98 734 13,058
11/98 688 8,294
12/98 653 15,619
1/99 594 8,959
2/99 542 7,784
3/99 526 9,227
4/99 495 11,159
5/99 516 14,213
6/99 562 16,575
7/99 590 16,728
8/99 645 18,796
9/99 711 24,822
The domestic oil country tubular goods market is also affected by the level of
industry inventories maintained by manufacturers, distributors and end users.
When customers draw-down on inventory rather than purchase new products, this
has an adverse effect on the demand for new production. Conversely, when
distributors and end users increase inventory levels, this has a positive effect
on the demand for new production. For calendar years 1996 and 1997, increasing
industry inventory levels added an estimated 4.3% and 14.6%, respectively, to
oil country tubular goods demand for new production. However, for calendar year
1998, declining industry inventory levels satisfied 8.5% of oil country tubular
goods consumption. Management believes that at September 30, 1999 industry
inventories are at or below normal levels in relation to demand, as months of
supply of inventory has decreased from 8.3 months at fiscal year end 1998 to 5.4
months at fiscal year end 1999, a decrease of 34.9%.
Import levels of foreign oil country tubular goods also significantly affect
the domestic oil country tubular goods market. High levels of imports reduce the
volume sold by domestic producers and tend to suppress selling prices. We
believe that domestic import levels are affected by, among other things, overall
world demand for oil country tubular goods, the trade practices of and
government subsidies to foreign producers and the presence or absence of
governmentally imposed trade restrictions in the U.S. Since 1986, the level of
imports of oil country tubular goods from Canada and Taiwan has been reduced by
the existence of duties imposed by the United States government. The U.S.
International Trade Commission is in the process of reviewing these duties in
1999. In addition, since 1995, the level of imports of oil country tubular goods
from Argentina, Italy, Japan, Korea and Mexico has also been reduced by the
existence of anti-dumping duties. The U.S. International Trade Commission is
scheduled to review these duties in 2000. If these duties expire or are renewed
on a less stringent basis, we could be exposed to increased competition from
imports.
The following table illustrates certain factors related to industry-wide
domestic drilling activity, domestic oil country tubular goods consumption,
shipments, imports and inventories during the calendar years presented:
Year Ended December 31,
----------------------
1998 1997 1996
----------------------
U.S. drilling activity
Average rig count 831 943 779
===== ===== ======
U.S. oil country tubular goods consumption
(in thousands of tons):
U.S. producer shipments 1,217 2,097 1,742
Imports 343 412 231
Inventory (increase)/decrease 156 (349) (84)
Used pipe 111 223 78
-----------------------
Total U.S. consumption 1,827 2,383 1,967
=======================
The rig count in the table is based on weekly rig count reporting from Baker
Hughes, Inc. U.S. consumption of oil country tubular goods is based on our
estimate of per rig consumption of oil country tubular goods multiplied by the
Baker Hughes rig count. Total U.S. consumption (in thousands of tons) as
reported by Pipe Logix, Inc., an independent domestic oil country tubular goods
industry reporting service for calendar 1996, 1997 and 1998 was 1,775, 2,025 and
1,668, respectively. Imports are as reported by Duane Murphy and Associates in
"The OCTG Situation Report." Inventory (increase)/decrease are management
estimates based upon independent research by Duane Murphy and Associates.
Inventory (increase)/decrease (in thousands of tons) as reported by Pipe Logix,
Inc. for calendar years 1998, 1997 and 1996 was 136, (671) and (366),
respectively. Used pipe quantities are calculated by multiplying 8.3 recoverable
tubing and casing tons (as determined by independent research performed by Duane
Murphy and Associates) by the number of abandoned oil and gas wells as
determined by the completed wells per year as reported by the American Petroleum
Institute adjusted for the net change in active wells as reported by World Oil.
U.S. producer shipments are calculated using the above components.
Manufacturers produce oil country tubular goods in numerous sizes, weights,
grades and end finishes. We believe that most oil country tubular goods are
produced to American Petroleum Institute specifications. The grade of pipe used
in a particular application depends on technical requirements for strength,
corrosion resistance and other performance qualities. Oil country tubular goods
are generally classified into groupings of "carbon" and "alloy" grades. Carbon
grades of oil country tubular goods have yield strength levels of 75,000 pounds
per square inch or less and are generally used in oil and natural gas wells
drilled to depths less than 8,000 feet. Alloy grades of oil country tubular
goods have yield strength levels of 75,000 pounds per square inch or more and
are generally used in oil and natural gas wells drilled to depths in excess of
8,000 feet, or for high temperature wells, highly corrosive wells or critical
applications.
Carbon and alloy grades of oil country tubular goods are available from both
electric resistance welded and seamless pipe producers. Electric resistance
welded 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 oil
country tubular goods in a manner similar to electric resistance welded pipe. We
believe that the seamless manufacturing process involves higher costs than the
welded process and that, as a result, seamless products are generally priced
higher than comparable welded products.
Based on published industry statistics, electric resistance welded products,
which did not have significant market penetration prior to the mid-1970's, now
account for approximately half of the tonnage of domestic oil country tubular
goods consumed annually. We believe electric resistance welded products have
captured a significant majority of the carbon grade oil country tubular goods
market, while seamless products retain a significant majority of the alloy grade
oil country tubular goods market. We also believe that further significant
market penetration of welded products will depend upon increased market
acceptance of welded products and technological advances in the types of raw
materials and equipment utilized in the electric resistance welding 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. Line pipe is produced in both welded and seamless form. Line pipe
markets are dependent not only on the factors which influence the oil country
tubular goods market, but also on the level of pipe line construction activity,
line pipe replacement requirements, new residential construction and utility
purchasing programs.
Our Products. We manufacture oil country tubular goods used for production
tubing, production casing and surface casing, and we also manufacture line pipe.
We do not make drill pipe. We produce all of our oil country tubular goods and
line pipe using only the electric resistance welding process.
The following table shows our oil country tubular goods and line pipe shipments
in tons, net sales and as a percentage of overall net sales measured in dollars:
Oil Country Tubular Goods Line Pipe
------------------------------- ------------------------------
Net Sales % of Net Sales % of
Period Tons (000's) Net Sales Tons (000's) Net Sales
- ----------- ------- --------- --------- ------ --------- ---------
Fiscal 1999 165,200 $ 93,331 54.1% 19,758 $ 8,533 4.9%
Fiscal 1998 242,146 173,329 65.3 21,097 11,496 4.3
Fiscal 1997 308,427 208,932 71.8 26,501 14,947 5.1
Our decreased sales of oil country tubular goods in fiscal 1998 were due to
declining demand and a smaller industry inventory increase. Our decreased sales
of oil country tubular goods in fiscal 1999 were due to declining demand and
draw-downs of industry inventories. Our decreased sales of line pipe in fiscal
1998 and 1999 were due in large part to competition from imported pipe.
Our energy products meet or exceed applicable American Petroleum Institute
standards. In addition, similar to other producers, we manufacture oil country
tubular goods in custom or proprietary grades. We design and engineer our custom
and proprietary oil country tubular goods to be used in similar applications as
products meeting American Petroleum Institute standards and to provide
performance features comparable to products meeting those standards. We warrant
our American Petroleum Institute casing and tubing to be free of defects in
material or workmanship in accordance with the Institute's applicable
specifications. In addition, we warrant our proprietary grade products to be
free of defects in accordance with our published standards. We have not incurred
significant costs in connection with these warranties. We maintain insurance
coverage against potential claims in an amount which we believe to be adequate.
We manufacture finished goods in both carbon and alloy steel grades. Virtually
all of our products are fully completed or "end-finished" at our facilities. In
contrast, some of our competitors outsource the end-finishing of their products
or do not end-finish their products at all, 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. Our
fully finished oil country tubular goods are ready to be installed in oil or
natural gas wells. By end-finishing our products, we are better able to control
quality, cost and service to customers. Both of our energy facilities provide
heat-treatment capabilities necessary for the production of alloy grade pipe.
Our alloy grade tubing and casing products accounted for 24%, 24% and 21% of the
tons of energy products sold in fiscal 1999, 1998 and 1997. Carbon grade tubing
and casing accounted for the balance of these tons.
We manufacture oil country tubular goods and line pipe ranging in size from 1
1/2" to 9 5/8" in outside diameter. Excluding drill pipe, which we do not
manufacture, approximately 61% of the total oil country tubular goods and line
pipe tonnage produced in the western hemisphere in calendar 1997 fell into this
size range. Approximately 19% of the total tonnage produced was greater than 9
5/8" through 16" in outside diameter, and the remaining 20% was outside this
size range.
Our planned construction and enhancement of the large-diameter facility will
enable us to manufacture oil country tubular goods and line pipe in sizes
ranging from 1 1/2" to 16" in diameter. This capability will broaden our pro-
duct line of oil country tubular goods and line pipe. We expect the product
line expansion to allow us to increase market share by selling to our existing
customers with minimal increases in cost, improve our bargaining position with
existing distributors and increase complementary product sales of existing pro-
ducts by offering larger sizes.
Marketing. We sell oil country tubular goods and line pipe primarily throughout
the United States and Canada to numerous distributors, which then resell the
pipe to major and independent oil and natural gas production, gathering and
pipeline companies. Sales to Canadian customers in fiscal 1999, 1998 and 1997
were $11.3 million, $17.9 million and $26.3 million, respectively. Sales to
other foreign customers in fiscal 1999, 1998 and 1997 made up an additional
$200,000, $900,000 and $400,000, respectively. Our marketing philosophy
emphasizes delivering competitively priced quality products and providing a high
level of service to our customers. With the completion of our new large diameter
facility, we plan to also market ourselves as a broad line supplier of oil
country tubular goods and line pipe products. We maintain inventories of
finished goods that are housed at both of our production facilities and at field
locations close to the areas of drilling activity which allows us to provide
timely delivery of our products.
As of September 30, 1999 and 1998, our backlog orders (including bill and hold
orders not yet shipped) for oil country tubular goods and line pipe products
were approximately $47.6 million and $19.5 million, respectively. All of the
backlog orders as of September 30, 1999 are expected to be filled by the end of
fiscal 2000. We consider only $3.7 million and $3.6 million of our backlog
orders, respectively, to be firm as remaining orders may generally be cancelled
without penalty. Our backlog orders, as of any particular date, may not be in-
dicative of our actual operating results for any fiscal period. We cannot
give any assurance that the amount of backlog at any particular date will
ultimately be realized.
At June 1, 1999 the average price we charged for our oil country tubular goods
had decreased to $559 per ton from $665 per ton in November 1998 and $760 per
ton in late 1997. At September 30, 1999 the average price charged increased to
$579 per ton due to a price increase of $20 per ton effective June 30, 1999. On
September 1, 1999, we increased the price of our oil country tubular goods
another $80 per ton. These increases have allowed us to increase our price per
ton to levels close to the November 1998 level or just over one-half of the
total decrease since late 1997. We cannot assure you that any of our price
increases will hold.
In fiscal 1999, four distributors, including National-Oilwell, Inc. combined to
become Sooner Pipe & Supply Corp. ("Sooner"), one of the largest distribu-
tors of oil country tubular goods. Sooner accounted for 13% of our net
sales for fiscal 1999. Also, in fiscal 1999, another distributor, McJunkin
Appalachian Oilfield accounted for an additional 13%of our net sales. In fiscal
1998 and 1997, one distributor, National-Oilwell, Inc., accounted for 14% of our
net sales in each year. In fiscal 1997, another distributor, Master Tubulars,
Inc., accounted for 11% of our net sales. We currently use several distribu-
tors and believe that additional qualified distributors are available to assist
us in meeting the end-users' needs. While we believe that we could replace any
one distributor, including Sooner or Master Tubulars, with other qualified
distributors, the loss of Sooner or Master Tubulars could have a material ad-
verse effect on our net sales or results of operations.
Manufacturing. We manufacture oil country tubular goods and line pipe products
at our facilities in Hickman, Arkansas and Conroe, Texas. We believe we will
begin limited production of select industrial and energy products at our new
large diameter facility adjacent to our Hickman, Arkansas facilities, by July
2000 with full production capability of all products by October 2000. The
facilities are strategically located to serve the energy markets in the United
States. We can currently produce at a consolidated maximum rate of approximately
669,000 tons of finished products per year with approximately 477,000 tons
currently dedicated to energy related products. After completion of our new
large-diameter facility, we expect these amounts to increase to 919,000 tons and
627,000 tons per year, respectively. We operated our energy facilities at a
capacity utilization of approximately 40% during fiscal 1999 and approximately
55% during fiscal 1998.
In order to control our manufacturing costs, we attempt to maximize production
yields from purchased steel and reduce unit labor costs. In fiscal 1999 and
fiscal 1998, purchased steel represented approximately 61% and 67%,
respectively, of our cost of goods sold. For fiscal 1999 and fiscal 1998, direct
and indirect labor costs accounted for approximately 12% and 10%, respectively,
of our cost of goods sold. We control labor costs by automating some of our
activities and by seeking to optimize product throughput and scheduling. We
maintain an innovative compensation plan at our Hickman, Arkansas and Conroe,
Texas facilities, whereby employees receive quarterly bonuses for superior
productivity and cost savings. In addition, some employees are eligible to
receive annual profitability bonuses based on our consolidated earnings. The
maximum achievable incentives and bonuses range from 15% to 75% of an employee's
salary and wages.
During fiscal 1999 and fiscal 1998, we spent $3.0 million and $7.5 million,
respectively, on new capital equipment for our energy facilities. Our capital
budget for fiscal 2000 is $4.0 million. We expect these capital expenditures to
result in manufacturing cost savings, quality improvements and/or expanding or
maintaining production capabilities and product lines. In addition, we expect to
spend approximately $40.0 million to construct and equip the new large-diameter
facility that will produce, in part, oil country tubular goods and line pipe in
larger sizes than we currently produce.
Competition. The suppliers of oil country tubular goods and line pipe products
face a highly competitive market. We believe that the principal competitive
factors affecting our business are price, quality, delivery, availability and
service. We believe we enjoy an excellent reputation for quality products and
outstanding customer service. We compete with several domestic and numerous
foreign producers of oil country tubular goods, some of which have greater
financial resources than we do. In the oil country tubular goods market, our
more significant competitors are Lone Star Steel Company and Newport Steel
Company, which produce electric resistance welded pipe, and United States Steel
Corporation and North Star Steel Company, which primarily produce seamless pipe.
We also compete in the line pipe market with these same competitors, and with
foreign producers of oil country tubular goods, most of which are units of large
foreign steel makers. During calendar years 1997 and 1998 and the first nine
months of 1999, we estimate that domestic oil country tubular goods market pene-
tration of tons consumed by imports was 17.3%, 18.8% and 9.0%, respectively.
The Structural Tube and Standard Pipe Industry
General. Our structural tubing products are used in the following applications:
* construction, including handrails, building columns and bridge frames;
* transportation, including boat trailers;
* agricultural, including farm implement components and tillage equipment;
* material handling, including storage rack systems and conveying systems
support; and
* recreational, including exercise equipment.
In addition, structural tubing is an attractive alternative to other structural
steel forms, such as I-beams and H-beams. Structural 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 many applications.
Structural tubing and standard pipe are produced by processing flat rolled steel
into strips which are cold-formed, welded and heat-treated or seam-annealed. The
machinery and equipment used for the manufacture of structural tubing products
are similar to that used for the manufacture of oil country tubular goods.
Structural tubing and standard pipe are not, however, subject to the same degree
of tolerances as are oil country tubular goods, which results in lower
production costs related to testing and inspection than for oil country tubular
goods. Moreover, structural tubing does not require end finishing, flash
elimination for the welding process or seam-annealing. Because less finishing is
required of structural tubing products as compared to oil country tubular goods,
the average cost per ton to convert steel into structural tubing is
significantly less than oil country tubular goods.
We believe that demand for structural tubing is influenced primarily by the
level of general economic activity in the United States. We estimate that
domestic consumption of structural tubing during calendar years 1998, 1997 and
1996 was 2.0 million, 1.9 million and 1.7 million tons, respectively.
Standard pipe products are used in industrial applications such as steam, water,
air and gas lines, and plumbing and heating. As with structural tubing, we
believe that demand for standard pipe is influenced primarily by the level of
general economic activity in the United States. We estimate that domestic
consumption of standard pipe during calendar years 1998, 1997 and 1996 was 2.6
million, 2.7 million and 2.6 million tons, respectively. In recent years,
standard pipe has faced limited new competition from plastic pipe in certain
applications.
Our Products. We produce square, rectangular and round structural tubing at our
facilities in sizes ranging from 1 1/2 to 8" square and the equivalent sizes
in rectangular and round tubing. Our products range from .120 to .0500 inches in
thickness. Because of the large number of applications for structural tubing
and standard pipe, the number of different products produced for the industrial
market is considerably larger than that produced for the oil country tubular
goods market. The annual capacity at our Hickman structural facility is
approximately 192,000 tons. We were operating at approximately 86% of our
structural capacity during fiscal 1998 and 67% of capacity during fiscal 1999.
The following table shows our structural tubing and standard pipe shipments in
tons, net sales and as a percentage of overall net sales measured in dollars:
Structural Tubing Standard Pipe
------------------------------ ------------------------------
Net Sales % of Net Sales % of
Period Tons (000's) Net Sales Tons (000's) Net Sales
- ----------- ------- --------- --------- ------ --------- ---------
Fiscal 1999 129,829 $56,369 32.7% 18,447 $ 8,414 4.9%
Fiscal 1998 142,779 68,892 26.0 22,196 11,632 4.4
Fiscal 1997 111,735 54,639 18.8 23,294 12,542 4.3
Completion of the new large-diameter facility will increase the size range of
our structural tube and standard pipe offerings, thus allowing us to market a
broader line of products for industrial applications. As a result of this new
facility, we expect to gain additional complementary sales by offering larger
sizes, while limiting the amount of additional expenses. We also believe this
new facility will allow us to market ourselves as a broad line producer of
structural tubing and standard pipe.
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 oil country tubular goods. We currently sell principally to
distributors, but since fiscal 1997, we significantly increased our sales to
large end-user customers. As in the case of oil country tubular goods, our
marketing strategy emphasizes delivering competitively priced quality products
and providing a high level of service to our customers. In addition, we expect
our marketing ability will be enhanced by the addition of larger diameter pipe
and tubing that we will produce upon completion of our large-diameter facility.
Because the application of structural tubing and standard pipe products is
diverse, and a short lead time is required for customer satisfaction, we
maintain inventory levels, in terms of months of supply, comparable to those for
oil country tubular goods. This finished goods inventory will consist of a
larger number of items than in the case of oil country tubular goods. We use
experienced manufacturing representatives in our sales efforts.
As of September 30, 1999 and 1998, our backlog of orders for structural tubing
and standard pipe was $6.1 million and $5.5 million, respectively. All of the
backlog orders as of September 30, 1999 are expected to be filled by the end of
fiscal 2000. We do not consider any of our backlog orders to be firm as they may
generally be cancelled without penalty. Our backlog orders as of any particular
date may not be indicative of our actual operating results for any fiscal
period. We cannot give any assurance that the amount of backlog at any given
time ultimately will be realized.
Manufacturing. We are currently producing structural square and rectangular
shaped tubing products in our structural tube facility located in Hickman,
Arkansas. We are also currently producing structural round tubing products and
standard pipe at our two energy facilities in Hickman, Arkansas and Conroe,
Texas and expect to begin production of larger sized structural tubing and
standard pipe upon completion of our large diameter facility to be located
adjacent to our Hickman, Arkansas location by July 2000.
Based upon historical product relationships and our assumptions about the
market, we estimate that the sizes of structural tubing products we currently
are capable of manufacturing account for 85% of the domestic tonnage of all
sizes of domestic structural tubing products consumed. Similarly, after
completing the new large diameter facility, we estimate that we should be
capable of manufacturing sizes that account for more than 97% of domestic
tonnage consumed.
Based on an industry source, we believe that the types of standard pipe products
we are capable of manufacturing account for approximately 25% of the domestic
tonnage of all types of standard pipe products consumed. After completing the
new large diameter facility, we expect to be capable of manufacturing more than
41% of the domestic tonnage of all sizes of products consumed.
Consistent with our manufacturing strategy for oil country goods production, we
believe we are a low-cost, high-volume producer of quality structural tubing and
standard pipe products. We believe that the application of our efficient
manufacturing process originally developed for the production of oil country
tubular goods, the labor costs at our Arkansas facility and the strategic
location of the facility provide a conversion cost advantage relative to the
majority of existing domestic structural tubing and standard pipe manufacturers.
During fiscal 1999 and fiscal 1998, we spent $1.5 million and $722,000,
respectively, on additional equipment needed for manufacturing of structural
tubing and standard pipe products. Our capital budget for fiscal 2000 is $3.0
million. We expect these capital expenditures to result in manufacturing cost
savings and quality improvements.
Competition. Although a significant market for structural tubing is located
within a 400 mile radius of our Hickman structural facility, no other major
structural tubing facility is currently located within this area. Foreign
competition, primarily from Canada, represented 23%, 22% and 23% of total
domestic sales of structural tubing in calendar years 1998, 1997 and 1996,
respectively. We compete primarily against several domestic and numerous foreign
producers of structural tubing. Our 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. Foreign competition represented
approximately 31%, 24% and 25% of total domestic sales of standard pipe in
calendar years 1998, 1997 and 1996, respectively. Our more significant standard
pipe competitors are Wheatland Tube Company, Armco, Inc., Sawhill Tubular
Division, Laclede Steel Company and IPSCO Tubulars, Inc.
We believe that the principal competitive factors affecting our structural
tubing and standard pipe businesses are price, product availability, delivery
and service.
The Cold Drawn Tubing Market
General. The cold drawn tubing market is made up of mechanical or pressure
tubing used for applications that require closer tolerances and/or a better
surface finish than ordinary electrical resistance welded or seamless tubing.
The following table describes some of these applications:
Industrial Uses Oilfield Uses Consumer Uses
- ------------------------- ---------------------- --------------------
Hydraulic, pneumatic Mud pumps Motorcycle forks
and gas cylinder stock
Precision pumps Exercise equipment
Power takeoff and auger
shafts Perforating tubes Office furniture
Electric motor housings Subsurface pump shells Playground equipment
Conveyor rollers Coupling stock Bicycles
Axles Boat trailers
Cold drawn tubing starts with either a plain-end electric resistance welded or
seamless tube. The source tube is then pulled through a die and over a mandrel
to create precise outside and inside diameters or wall tolerances and to create
a smoother finish.
The cold drawn tubing market is driven primarily by the general economy. Other
factors include agricultural prices and infrastructure construction due to the
large quantity of cold drawn tubing consumed in cylinder manufacturing for
agriculture and construction machinery. We believe the market size is currently
about 516,000 tons per year. Imports have typically satisfied 5% of consumption.
The market is made up of three segments based upon outside diameter and wall
thickness of the tube, as follows:
Outside Diameter Wall Thickness
----------------- --------------
Group 1 through 4" through .134"
Group 2 4" through 7 1/2" through .320"
Group 3 above 7 1/2" all
Our Products. We primarily manufacture and sell cold drawn tubing products in
the Group 2 and Group 3 market segments as shown above. As of September 30,
1999, the sales of our cold drawn tubing products had not reached material
levels.
Marketing. Our current customer base for cold drawn tubing is primarily made up
of service centers. Generally, because cold drawn tubing products are components
of larger products, order sizes range from 5,000 to 10,000 pounds, which is
smaller than our typical order sizes for structural tubing or oil country
tubular goods. We almost always manufacture cold drawn tubing products to order
resulting in a finished goods inventory that is smaller than our finished goods
inventory of structural or energy products. Currently, the industry lead time
for cold drawn tubing is approximately six to seven weeks.
As of September 30, 1999, our backlog of cold drawn tubing orders was
approximately $900,000. We do not consider any of our backlog firm. Our backlog
orders as of any particular date may not be indicative of our actual operating
results for any fiscal period. We cannot give any assurance that the amount of
backlog at any given time ultimately will be realized.
Manufacturing. In fiscal 1998, we acquired the assets used in the production of
cold drawn tubular products at our production facility in Beaver Falls,
Pennsylvania. This facility began production during the first quarter of fiscal
1999. We expect to supply approximately 75% of this facility's raw material
requirements from our other production facilities. We purchase the remainder
from outside sources, which include both smaller diameter pipe that is less than
1 9/10" and larger diameter pipe that is greater than 10", and seamless pipe.
During fiscal 1999, we spent approximately $2.7 million on additional equipment
for the Beaver Falls facility. Our capital budget for fiscal 2000 is $2.0
million. We expect these capital expenditures to result in manufacturing cost
savings and quality improvements. We currently have approximately 75,000 tons of
drawing capacity annually.
Competition. A significant market for drawn tubing is located within a 500 mile
radius of the Pennsylvania facility. Our primary competitors in this market are
Alliance Midwest, Copperweld, Lone Star Steel, LTV, Metal Matic, Pacific Tube,
Plymouth Tube, Pittsburgh Tube, Vision Metals and Webco. We believe that the
principal competitive factors affecting our drawn tubular products are price,
quality, product availability, delivery and service.
Raw Materials
We make all steel purchases at our headquarters in order to optimize pricing,
quality, availability and delivery of our raw materials. During 1998, we
consumed approximately 2.0% of the total amount of hot rolled steel produced in
the United States. Accordingly, we believe that we are generally considered to
be a significant purchaser by our steel suppliers. We maintain favorable working
relationships with our steel suppliers and believe that we are treated favorably
with respect to volume allocations and deliveries. We presently purchase the
majority of our steel from several domestic suppliers, with approximately 75% of
consolidated purchases made from Nucor Corporation. Nucor's mill in Hickman,
Arkansas is directly connected by rail to our Hickman facilities, thus
eliminating our raw material freight costs for raw materials purchased from
Nucor. To date, we have not experienced any significant disruption in our supply
of raw materials.
Employees
As of September 30, 1999, we employed approximately 1,035 persons, of whom
approximately 20% were salaried and approximately 80% were employed on an hourly
basis. None of our employees are represented by a union. We consider our
employee relations to be excellent.
ITEM 2
PROPERTIES
We lease approximately 40,000 square feet of office space in Chesterfield,
Missouri for our executive offices under a lease which expires in 2008. We use
110 acres of our 160 acre site in Hickman, Arkansas for two facilities with
approximately 315,000 square feet of oil country tubular goods manufacturing
and storage space which utilizes 55 acres. A 275,000 square foot structural tube
manufacturing plant is located adjacent to the existing oil country tubular
goods facility. Approximately 120,000 square feet of this facility is utilized
for manufacturing with the remainder used for inventory and material storage and
shipping. We occupy both facilities under separate leases, each providing us an
option to purchase which is exercisable on the expiration dates of the leases.
The expiration dates are August 1, 2007 for the oil country tubular goods
facility and February 1, 2004 for the structural tube facility. Approximately 50
acres remain in Hickman, Arkansas for future expansion, including the 40 acres
required for the new large-diameter facility. We also own 117 acres and a
244,000 square foot manufacturing facility located in Conroe, Texas. Of the 117
acres, approximately 30 acres is used for manufacturing and storage and 60
acres is available for future expansion. We lease a 21 acre site and a 370,000
square foot manufacturing facility in Beaver Falls, Pennsylvania for the
production of cold drawn tubing, with an option to purchase which is exercisable
on September 17, 2001 which is the expiration date of the lease. Each manu-
facturing facility operated by Maverick is served by truck, has its own rail
spur, other than the Beaver Falls facility, and is within close proximity of
barge facilities.
We believe each of our facilities is in good condition, is adequately insured
and is adequate and suitable for our planned level of operations.
ITEM 3
LEGAL PROCEEDINGS
General. From time to time, we are involved in litigation relating to claims
arising out of our operations in the normal course of our business. We maintain
insurance coverage against potential claims in an amount which we believe to be
adequate. We believe that we are not presently a party to any litigation in
which the outcome would have a material adverse effect on our business or
operations.
Environmental Matters. We are subject to federal, state and local environmental
laws and regulations concerning, among other things, waste water disposal and
air emissions. We believe we are 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 1999
covered by this report, to a vote of our security holders through the solicita-
tion of proxies or otherwise.
ITEM 4A
OUR EXECUTIVE OFFICERS
Name Age Title
- -------------------------------------------------------------------------------
Gregg M. Eisenberg 49 Chairman of the Board, President and
Chief Executive Officer
Barry R. Pearl 50 Vice President - Finance and Administration,
Treasurer, Secretary and Chief Financial Officer
Sudhakar Kanthamneni 52 Vice President - Manufacturing and Technology
T. Scott Evans 52 Vice President - Commercial Operations
Set forth below are descriptions of the backgrounds of our executive officers
and their principal occupations for at least the last five years:
Gregg M. Eisenberg has served as Chairman of the Board since February 1996. He
has served as President, Chief Executive Officer and a director of Maverick
since 1988. Prior to joining Maverick in 1983, he was employed with Central
Steel Tube Company for six years. He is a former director and past chairman of
the Committee on Pipe and Tube Imports.
Barry R. Pearl has served as Vice President - Finance and Administration,
Treasurer, Secretary and Chief Financial Officer since June 1998. He was
formerly employed by Santa Fe Pacific Pipeline Partners, L.P. in Orange,
California where he was the Senior Vice President and Chief Financial Officer
from January 1995 until March 1998 and Senior Vice President, Business
Development from 1992 to January 1995.
Sudhakar Kanthamneni has served as Vice President - Manufacturing and Technology
of Maverick since August 1992. From May 1991 to August 1992, Mr. Kanthamneni
served as Maverick's Vice President - Manufacturing. Prior to joining Maverick
in 1987, he was employed with Central Steel Tube Company for ten years.
T. Scott Evans has served as Vice President - Commercial Operations of Maverick
since September 1992. Prior to joining Maverick in 1988 as General Sales
Manager, he was employed with Wolverine Tube Corporation. From January 1981 to
June 1986, Mr. Evans was employed with Republic Steel Corporation.
PART II
ITEM 5
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information regarding Maverick's Common Stock included on page 28 of the 1999
Annual Report under the caption "MARKET FOR OUR COMMON EQUITY AND RELATED STOCK-
HOLDER MATTERS" is incorporated herein by this reference.
ITEM 6
SELECTED FINANCIAL DATA
Selected Financial Data included on page 27 under the caption "Historical
Financial Information" of the 1999 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 17 of the 1999 Annual Report is
incorporated herein by this reference.
ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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 1999 Annual Report are
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 our
definitive proxy statement which is being filed with the Securities and Exchange
Commission within 120 days of the end of our 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 our
definitive proxy statement which is being filed with the Securities and Exchange
Commission within 120 days of the end of our 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 our
definitive proxy statement which is being filed with the Securities and Exchange
Commission within 120 days of the end of our most recent fiscal year.
ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated herein by reference from our
definitive proxy statement which is being filed with the Securities and Exchange
Commission within 120 days of the end of our 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 Subsidiaries, included in the 1999 Annual Report,
are incorporated herein by reference in Item 8:
Report of Independent Auditors.
Consolidated Balance Sheets as of September 30, 1999 and
1998.
Consolidated Statements of Operations for the years ended
September 30, 1999, 1998 and 1997.
Consolidated Statements of Stockholders' Equity for the
years ended September 30, 1999, 1998 and 1997.
Consolidated Statements of Cash Flows for the years ended
September 30, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements as of September
30, 1999.
2. Financial Statement Schedule
The following consolidated financial statement schedule of
Maverick Tube Corporation and Subsidiaries is included with this
Annual Report on Form 10-K:
Schedule II Valuation and Qualifying Accounts for the years
ended September 30, 1999, 1998 and 1997.
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 Director Stock Option Plan
Form of Deferred Compensation Agreement with Certain
Executive Officers
Employment Agreement with Barry R. Pearl
Form of Severance Agreement with Executive Officers
b. Reports on Form 8-K:
No Reports of Form 8-K were filed during the fourth quarter
of the Registrant's fiscal year ended September 30, 1999.
Maverick Tube Corporation and Subsidiaries
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, 1997:
Deducted from asset accounts:
Accounts receivable allowances $ 629 $ 44 $ -- $ 285 (1) $ 388
Valuation allowance for deferred taxes $1,147 $ -- $ -- $(1,147) (2) $ --
Year ended September 30, 1998:
Deducted from asset account:
Accounts receivable allowances $ 388 $ 3 $ -- $ -- $ 391
Year ended September 30, 1999:
Deducted from asset account:
Accounts receivable allowances $ 391 $151 $ -- $ -- $ 542
(1) Uncollectible accounts written off, net of recoveries.
(2) Resulted from the utilization of net operating and alternative minimum loss
carryforwards and reevaluation of remaining deferred tax assets.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Maverick Tube Corporation
(registrant)
December 15, 1999 /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 below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
December 15, 1999 /s/ Gregg M. Eisenberg
----------------------------------------------
Gregg M. Eisenberg, Chairman, President and
Chief Executive Officer and Director
(Principal Executive Officer)
December 15, 1999 /s/ Barry R. Pearl
----------------------------------------------
Barry R. Pearl, Vice President - Finance and
Administration
(Principal Financial and Accounting Officer)
December 15, 1999 /s/ William E. Macaulay
----------------------------------------------
William E. Macaulay, Director
December 15, 1999 /s/ John M. Fox
----------------------------------------------
John M. Fox, Director
December 15, 1999 /s/ C. Robert Bunch
----------------------------------------------
C. Robert Bunch, Director
December 15, 1999 /s/ C. Adams Moore
----------------------------------------------
C. Adams Moore, Director
December 15, 1999 /s/ David H. Kennedy
----------------------------------------------
David H. Kennedy, Director
December 15, 1999 /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 Registrant
dated March 18, 1991, as amended by a Certificate of Amendment of
Certificate of Incorporation dated September 1, 1998, filed herewith.
3.2 Certificate of Designations of Rights, Preferences and Privileges of
Series I Junior Participating Preferred Stock, incorporated herein by
reference to Exhibit 3.2 to the Registrant's Registration Statement
on Form S-3, File No. 333-87045.
3.3 Amended and Restated Bylaws of the Registrant, as amended,
incorporated herein by reference to Exhibit 3.2 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended September 30,
1998 (the "1998 Form 10-K").
4.1 Shareholder Rights Agreement dated as of July 24, 1998 between the
Registrant and Harris Trust and Savings Bank as Rights Agent
incorporated herein by reference to Exhibit 1 of the Registrant's
Form 8-A filed on August 5, 1998, as amended by the Registrant's
Form 8-A/A (Amendment No. 1), filed on July 7, 1999.
4.2 Form of Stock Certificate for Common Stock, incorporated herein by
reference to Exhibit 4.1 to the Registrant's Registration Statement
on Form S-1, File No. 33-37363.
10.1 Lease and Agreement dated July 24, 1992, by and between the
Registrant and the Arkansas Development Finance Authority (the
"Authority"), incorporated herein by reference to Exhibit 10.7 to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1992.
10.2 Maverick Tube Corporation Amended and Restated 1990 Stock Option
Plan, incorporated herein by reference to Exhibit 10.21 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
September 30, 1991.
10.3 Maverick Tube Corporation Savings for Retirement Plan effective on
February 15, 1988, as amended, incorporated herein by reference to
Exhibit 10.11 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended September 30, 1993.
10.4 Lease Agreement dated as of March 1, 1994, between the Authority,
as lessor, and the Registrant as lessee, related to the Registrant's
Arkansas Structural Facility, incorporated herein by reference to
Exhibit 10.14 to the Registrant's Registration Statement on Form S-2,
File number 33-80096.
10.5 First Supplemental Trust Indenture to Lease Agreement between the
Authority, as lessor and the Registrant, as lessee relating to the
Registrant's Arkansas Structural Facility, dated July 1, 1994,
incorporated herein by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the period ended June 30, 1994.
10.6 Supplement to the Second Term Loan Agreement dated December 15, 1994,
incorporated herein by reference to Exhibit 10.16 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September 30,
1994 (the "1994 Form 10-K").
10.7 The Maverick Tube Corporation 1994 Stock Option Plan, incorporated
herein by reference to Exhibit 10.17 of the 1994 Form 10-K.
10.8 The Maverick Tube Corporation Director Stock Option Plan,
incorporated herein by reference to Exhibit 10.18 of the 1994
Form 10-K.
10.9 Form of Deferred Compensation Agreement between the Registrant and
Messrs. Gregg M. Eisenberg, T. Scott Evans and Sudhakar Kanthamneni
dated October 1, 1995, incorporated herein by reference to Exhibit
10.22 of the Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1996 (the "1996 Form 10-K").
10.10 Form of Severance Agreement dated December 10, 1998, by and among
the Registrant and Gregg M. Eisenberg, Barry R. Pearl, Sudhakar
Kanthamneni and T. Scott Evans, incorporated herein by reference to
Exhibit 10.16 of the 1998 Form 10-K.
10.11 Amendment #1 to the Maverick Tube Corporation Director Stock Option
Plan, incorporated herein by reference to Exhibit 10.24 of the 1996
Form 10-K.
10.12 Amendment #1 to the Maverick Tube Corporation 1994 Stock Option Plan,
incorporated herein by reference to Exhibit 10.21 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September 30, 1997.
10.13 Employment Agreement of Barry R. Pearl, incorporated herein by
reference to Exhibit 10 of the Registrant's Quarterly Report on Form
10-Q for the period ended June 30, 1998.
10.14 Agreement of Limited Partnership between the Registrant, Maverick
Investment Corporation and Maverick Tube, L.P., incorporated herein
by reference to Exhibit 10.13 of the 1998 Form 10-K.
10.15 Secured Credit Agreement ("Secured Credit Agreement") dated
September 18, 1998, 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
10.14 of the 1998 Form 10-K.
10.16 First Amendment to Secured Credit Agreement dated as of December 10,
1998, incorporated herein by reference to Exhibit 10.17 of the 1998
Form 10-K.
10.17 Second Amendment to Secured Credit Agreement dated as of June 30,
1999, incorporated herein by reference to Exhibit 10 of the
Registrant's Quarterly Report on Form 10-Q for the period ended
June 30, 1999.
10.18 Third Amendment to Secured Credit Agreement dated as of December 8,
1999, filed herewith.
13 Portions of Registrant's 1999 Annual Report to Stockholders which
are incorporated by reference herein, filed herewith.
21 Subsidiaries of the Registrant, filed herewith.
23.1 Consent of Ernst & Young LLP, independent auditors, filed herewith.
27.1 Financial Data Schedule, filed herewith.
99.1 Risk Factors, filed herewith.