| Wolverine Tube, Inc. (OTCBB:WLVT) today reported results for the second quarter 2008. The net loss for the second quarter of 2008 was $3.2 million compared to net income of $13.3 million in the same period of 2007. The 2007 results include $7.1 million of non-cash income from the adjustment to fair value of the conversion price embedded in a Preferred Stock Purchase Agreement.
Net income for the first half of 2008 was $1.8 million compared to $10.9 million for the same period in 2007. The 2008 results include a $5.0 million gain on the sale of a minority interest in our China subsidiary. The 2007 six month period results included an $11.2 million non-cash gain from adjustment to fair value of the Preferred Stock described above.
Net sales for the second quarter of 2008 were $245.5 million, as compared to $297.6 million for the second quarter of 2007. A total of 46.5 million pounds of copper tubing was shipped in the second quarter of 2008 compared to 66.4 million in the 2007 quarter. The comparative decrease in shipments was due primarily to the Company's withdrawal from the domestic wholesale plumbing tube business and closure of its Decatur, Alabama manufacturing facility in late 2007. The gross margin was 3.2% for the second quarter of 2008 compared to 5.1% for the second quarter of 2007, for the comparable remaining commercial products segment. Gross margin was adversely affected in 2008 by lower production and shipping volumes, resulting from declines in the residential housing market and related demand weakness for HVAC and appliance products.
Net sales for the first half of 2008 were $447 million compared to $518.9 million for the same period in 2007. A total of 87.1 million pounds of copper tubing was shipped in the first half of 2008 compared to 119.2 million in the 2007 half. Eighty-percent of the comparative decrease is due to the withdrawal from the domestic wholesale plumbing tube business, and the balance due to the reduction in demand for HVAC and appliance products used in residential markets.
As previously reported, the Company recently discovered certain errors associated with valuing and accounting for inventory and cost of sales at its fabricated products' plant in Carrollton, Texas. In addition, the Company recorded an adjustment to certain foreign currency accounts in the first quarter of 2008 that related to translation adjustments errors recorded in prior periods. This item was unrelated to the aforementioned errors in inventory accounting. Correction of these errors has resulted in revisions to the previously issued financial statements for 2007 and the first quarter of 2008. The Company's Audit Committee has completed an independent investigation of these matters. Appropriate, corrective action has been taken and management is in the process of enhancing internal accounting procedures and controls to prevent any recurrence. |
