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UNITED STATES UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
METALS USA, INC. UNION 401 (K) PLAN
(FULL TITLE OF THE PLAN)
METALS USA, INC.
(Name of Issuer of the Securities Held Pursuant to the Plan)
COMMISSION FILE NUMBER 1-13123
DELAWARE 76-0533626
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
THREE RIVERWAY, SUITE 600
HOUSTON, TEXAS 77056
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 965-0990
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METALS USA, INC. UNION 401(k) PLAN
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 AND
SUPPLEMENTAL SCHEDULE FOR THE YEAR ENDED DECEMBER 31, 2002, AND INDEPENDENT
AUDITORS' REPORT
METALS USA, INC.
UNION 401(k)PLAN
INDEX
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE* -
Schedule H, Line 4i - Schedule of Assets (Held at End of Year),
December 31, 2002 9-10
OTHER
Signatures 11
Index to Exhibits 12
* Other supplemental schedules required by Section 2520-103.1 of the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 ("ERISA") have been omitted
because they are not applicable.
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of
Metals USA, Inc. 401(k) Union Plan
Houston, Texas
We have audited the financial statements of Metals USA, Inc. 401(k) Union Plan
(the "Plan") as of December 31, 2002 and 2001, and for the years then ended,
listed in the table of contents. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits as of December 31, 2002 and
2001, and the changes in net assets available for benefits for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule as listed in
the table of contents is presented for the purpose of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule is the responsibility of the Plan's management.
Such supplemental schedule has been subjected to the auditing procedures applied
in our audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
Deloitte & Touche LLP
Houston, Texas
June 27, 2003
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METALS USA, INC.
UNION 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 2002 AND 2001
2002 2001
ASSETS:
Investments, at fair value $ 1,244,548 $ 1,687,573
Receivables:
Employer contributions 2,228 1,463
Employee contributions 5,965 13,703
Participant notes 80,941 102,459
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NET ASSETS AVAILABLE FOR BENEFITS $ 1,333,682 $ 1,805,198
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The accompanying notes are an integral part of these financial statements.
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METALS USA, INC.
UNION 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
ADDITIONS (DEDUCTIONS) TO NET ASSETS ATTRIBUTED TO:
Investment income (loss):
Interest $ 41,666 $ 55,257
Dividends 303
Net depreciation in fair value of investments (161,518) (162,169)
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Total investment loss (119,852) (106,609)
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Contributions:
Employer 30,729 46,966
Employee 147,682 225,207
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Total contributions 178,411 272,173
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Total additions 58,559 165,564
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments 484,872 203,078
Administrative expense 2,715 1,508
Participant notes receivable terminated due to
withdrawal of participant 34,190 13,535
Transfer to affiliated plan 8,298 55,473
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Total deductions 530,075 273,594
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NET DECREASE (471,516) (108,030)
NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF YEAR 1,805,198 1,913,228
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NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $ 1,333,682 $ 1,805,198
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The accompanying notes are an integral part of these financial statements.
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METALS USA, INC.
UNION 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
1. DESCRIPTION OF PLAN
The following description of the Metals USA, Inc. Union 401(k) Plan (the
"Plan") provides only general information. Participants should refer to the
plan agreement for a more complete description of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan established effective
October 1, 1998, which was amended and restated in its entirety and was
effective as of January 1, 2000. Union employees of Metals USA, Inc. (the
"Company") become eligible to participate upon completing six months of
service. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").
CONTRIBUTIONS - Participants may contribute an amount equal to not less
than 1% nor more than 15% of their compensation for the contribution
period. Participants direct the investment of their contributions into
various investment options offered by the Plan. The Plan currently offers a
general account, 18 pooled separate accounts and Company stock as
investment options for participants. Employee contributions are recorded in
the period during which the Company makes payroll deductions from the
participant's earnings.
The Company may make matching contributions to participant's accounts as
determined by the terms of collective bargaining agreements. The Company
may also make discretionary nonelective and profit- sharing contributions.
Matching company contributions, if any, are recorded monthly. Discretionary
nonelective and profit-sharing contributions, if any, are recorded
annually. For the year ended December 31, 2002 and 2001 discretionary
nonelective and profit-sharing contributions were $2,228 and $14,562,
respectively.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contribution and allocation of the Company's contribution and
plan earnings. Earnings are allocated by fund based on the ratio of a
participant's account invested in a particular fund to all participants'
investments in that fund. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's vested account.
VESTING - Participants are immediately vested in their own voluntary
contributions plus actual earnings thereon. The balance of vesting in the
participants' accounts is based on years of service. Unless otherwise
designated by a collective bargaining agreement, a participant becomes 25%
vested after one years of service, 50% vested after two years of service,
75% vested after three years of service and 100% vested after four years of
service. However, if an active participant dies prior to attaining the
normal retirement age, the participant's account becomes 100% vested.
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BENEFITS PAYMENT - On termination of service, a participant may elect to
receive either a lump-sum amount equal to the value of the vested portion
of his or her account, a distribution in the form of an annuity, or
installment payments. Distributions are subject to the applicable
provisions of the plan agreement. Benefits claims are recorded as
distributions when they have been approved for payment and paid by the
Plan.
PARTICIPANT NOTES RECEIVABLE - A participant may borrow up to a maximum of
$50,000 or 50% of the vested portion of his or her account balance,
whichever is less. Loans are treated as a transfer to/from the investment
fund from/to Participant Notes Receivable. A loan is secured by the balance
in the participant's account and bears interest at a rate comparable with
market rates for similar loans, as defined (5.25% to 10.50% and 6.00% to
10.50% for the years ended December 31, 2002 and 2001, respectively).
ADMINISTRATIVE EXPENSES - The expenses of administration of the Plan,
including the expenses of the administrator and fees of the trustee, shall
be paid from the Plan, unless the Plan sponsor elects to make payment.
BASIS OF PRESENTATION - The accompanying plan financial statements have
been prepared on the going concern basis of accounting, which contemplates
the realization of assets and the satisfaction of liabilities in the
ordinary course of business. On November 14, 2001, the Company and all of
its U.S. subsidiaries (collectively, the "Debtors") filed voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code
(the "Bankruptcy Code") in the U.S. Bankruptcy Court for the Southern
District of Texas (the "Bankruptcy Court") and began operating their
business as debtors-in-possession pursuant to the Bankruptcy Code. On
October 31, 2002, the Company's Reorganization Plan became effective, and
the Successor Company emerged from bankruptcy court protection.
2. SUMMARY OF ACCOUNTING POLICIES
METHOD OF ACCOUNTING - The Plan's financial statements are prepared on the
accrual basis of accounting. The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and changes
therein. Actual results could differ from these estimates.
INVESTMENT VALUATION - Investments in the general account are nonfully
benefit responsive and are stated at fair value. Investments in pooled
separate accounts are stated at fair value, as determined by the unit value
reported by Connecticut General Life Insurance Company ("CG Life").
Participant notes receivable are valued at cost which approximates fair
value. The Company Stock is valued at its quoted market price.
The Plan assets include approximately 42,741 shares of the Company stock at
December 31, 2002. Pursuant to the Company's Reorganization Plan, which
became effective October 31, 2002, all holders of Metals USA common stock
were entitled to receive warrants in exchange for their shares in an
approximate ratio of 1 warrant for every 10 shares of stock. On April 30,
2003, the Company initiated the exchange of warrants for the stock. The
Plan received approximately 4,300 warrants. The warrants were allocated to
participants who may direct the usage of the warrants. Each warrant
entitles to holder to purchase 1 share of the new Metals USA stock at a
cost of $18.50/share through October 31, 2007. The warrants trade on the
American Stock Exchange under the sticker symbol MLT.WS.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
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RISK AND UNCERTAINTIES - The Plan provides for investments in various
securities through the investment funds offered to participants, including
but not limited to, foreign and domestic equity securities, bonds and
obligations of the U.S. government, among others. Investment securities, in
general, are exposed to various risks, such as interest rate, credit and
overall market volatility risk. Due to the level of risk associated with
certain investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term.
3. INVESTMENTS
Investments that represent 5% or more of the Plan's net assets are
separately identified below.
DECEMBER 31,
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2002 2001
CIGNA Guaranteed Income Fund $ 753,305 $ 944,419
CIGNA Fidelity Advisor Equity Growth Fund 103,800 181,491
CIGNA S&P 500 Index Fund 78,409 133,638
CIGNA Lifetime40 Fund 78,448 132,100
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INVESTMENT PERFORMANCE - During the years ended December 31, 2002 and 2001,
the Plan's investments (including interest, dividends, realized gains and
losses on investments bought and sold and unrealized gains and losses on
investments held during the year) (depreciated) appreciated in value as
follows:
DECEMBER 31,
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2002 2001
General Account -
CIGNA Guaranteed Income Fund $ 35,574 $ 44,409
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Pooled Separate Accounts:
CIGNA Charter Balanced Fund I (7,032)
CIGNA Fidelity Advisor Equity Growth Fund (54,748) (35,559)
CIGNA Global Value/Morgan Stanley (1,783) (1,210)
CIGNA Growth & Income Fund/Multi-Manager (17,075) (11,842)
CIGNA Janus Fund (19,134) (20,945)
CIGNA Large Cap Value Fund/Levin & Co. (7,406) 748
CIGNA Lifetime20 Fund (1,227) (1,020)
CIGNA Lifetime30 Fund (3,820) (2,372)
CIGNA Lifetime40 Fund (12,130) 58
CIGNA Lifetime50 Fund (2,219) (1,019)
CIGNA Lifetime60 Fund (35)
CIGNA Mid-size Blend Fund/Cadence (759) (1)
CIGNA Mid-size Growth Fund/Artisan (7,479) 1,949
CIGNA Mid-size Value Fund/Wellington (1,023) 90
CIGNA Neuberger Berman Partners Fund Trust
Class (1,373)
CIGNA S&P 500 Index Fund (25,471) (29,361)
CIGNA Small Cap Value Fund/Sterling (489) 23
CIGNA Warburg Pincus Emerging Growth Fund
(Advisor Shares) (10,456)
CIGNA Small Cap Growth Fund/Timessquare* (333)
CIGNA AMER Cent Intl. Growth Account* (51)
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Total (155,147) (119,357)
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Common Stock - Metals USA Stock (6,371) (42,509)
Participant Notes Receivable 6,092 10,848
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Net decrease $ (119,852) $ (106,609)
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*Added to Plan in 2002
4. INVESTMENT CONTRACT
The Plan participates in a contract with CG Life via an investment in the
CIGNA Guaranteed Income Fund. CG Life commingles the assets of the CIGNA
Guaranteed Income Fund with other assets. For the Plan's investment in the
CIGNA Guaranteed Income Fund, the Plan is credited with interest at the
rate specified in the contract which was 3.90% and 5.05% for the years
ended December 31, 2002 and 2001, respectively, net of asset charges. CG
Life prospectively guaranteed the interest rate credited for the CIGNA
Guaranteed Income Fund for six months. As discussed in Note 2, the CIGNA
Guaranteed Income Fund is included in the financial statements at fair
value which principally, because of the periodic rate reset process,
approximates contract value.
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5. RELATED-PARTY TRANSACTIONS
Plan assets include investments in funds managed by CG Life. CG Life is the
Plan's trustee and as such, transactions with the trustee qualify as
party-in-interest transactions. Personnel and facilities of the Company
have been used to perform administrative functions for the Plan at no
charge to the Plan. In addition, the Plan holds shares of Metals USA, Inc.,
the plan sponsor, who also qualifies as a party-in-interest.
6. PLAN TERMINATION
The Company has the right under the Plan to discontinue its contributions
at any time and to terminate the Plan subject to the provisions of ERISA.
In the event of plan termination, participants will become 100% vested in
their accounts.
7. TAX STATUS
The Plan is a tax-qualified retirement plan under the Internal Revenue Code
(the "Code") Section 401(a), with a qualified cash or deferred arrangement
under Code Section 401(k) ("CODA") and is subject to the provisions of the
Employee Retirement Income Security Act of 1974.
The Plan is an adopted form of the PDS Tax Qualified 401(k) Savings Plan &
Trust Agreements Volume Submitter Plan (the "Volume Submitter Plan"), a
nonstandarized profit sharing plan with CODA. The Volume Submitter Plan
obtained an opinion letter from the IRS dated November 20, 2000, which
stated that the Volume Submitter Plan was in compliance with the applicable
requirements of the Code. The Company is in the process of applying for a
determination letter covering the adoption agreement of the Volume
Submitter Plan. The Company believes that the Plan is currently being
administered in compliance with the applicable requirements of the Code.
Therefore, no provision for income taxes has been including in the Plan's
financial statements.
8. TRANSFER TO AFFILIATED PLAN
During 2002 and 2001, certain employees and their participant balances were
transferred from the Plan to the Metals USA, Inc. 401(k) Plan, an
affiliated plan.
9. FORFEITURES
Forfeitures result from nonvested company contributions remaining in the
Plan for all terminated employees. Upon reaching the break-in-service
requirement, as defined in the plan agreement, forfeitures generated are
added to the forfeiture reserve balance. There was no forfeiture reserve
balance at December 31, 2002. Forfeitures of $619 were generated and
utilized to reduce employer contributions in 2002. There were no
forfeitures generated in 2001.
******
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METALS USA, INC.
UNION 401(k) PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR),
DECEMBER 31, 2002
(a) (b) (c) (d) (e)
DESCRIPTION OF
INVESTMENT, INCLUDING
IDENTITY OF ISSUE, MATURITY DATE, RATE
BORROWER, LESSOR OR OF INTEREST, COLLATERAL, CURRENT
SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE
* Connecticut General Life
Insurance Company CIGNA Guaranteed Income Fund N/A** $ 753,305
* Connecticut General Life CIGNA Global Value Fund/Morgan
Insurance Company Stanley N/A** 8,319
* Connecticut General Life CIGNA Growth & Income Fund/
Insurance Company Multi-Manager N/A** 33,426
* Connecticut General Life
Insurance Company CIGNA S&P 500 Index Fund N/A** 78,409
* Connecticut General Life CIGNA Fidelity Advisor Equity Growth
Insurance Company Fund N/A** 103,800
* Connecticut General Life
Insurance Company CIGNA Janus Fund N/A** 53,283
* Connecticut General Life
Insurance Company CIGNA Lifetime20 Fund N/A** 8,514
* Connecticut General Life
Insurance Company CIGNA Lifetime30 Fund N/A** 33,056
* Connecticut General Life
Insurance Company CIGNA Lifetime40 Fund N/A** 78,448
* Connecticut General Life
Insurance Company CIGNA Lifetime50 Fund N/A** 28,818
* Connecticut General Life CIGNA Large Cap Value Fund/
Insurance Company Levin & Co. N/A** 22,393
(Continued)
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METALS USA, INC.
UNION 401(k) PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR),
DECEMBER 31, 2002
(a) (b) (c) (d) (e)
DESCRIPTION OF
INVESTMENT, INCLUDING
IDENTITY OF ISSUE, MATURITY DATE, RATE
BORROWER, LESSOR OR OF INTEREST, COLLATERAL, CURRENT
SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE
* Connecticut General Life
Insurance Company CIGNA Mid-size Value Fund/Wellington N/A** $ 7,403
* Connecticut General Life
Insurance Company CIGNA Mid-size Blend Fund/Cadence N/A** 3,308
* Connecticut General Life
Insurance Company CIGNA Mid-size Growth Fund/Artisan N/A** 26,257
* Connecticut General Life
Insurance Company CIGNA Small Cap Value Fund/Sterling N/A** 2,773
* Connecticut General Life CIGNA Small Cap Growth Fund/
Insurance Company Timessquare N/A** 1,960
* Connecticut General Life CIGNA American Century International
Insurance Company Growth Fund N/A** 221
* National Financial
Services Corporation Metal USA, Inc. Common Stock N/A** 855
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Total Investments 1,224,548
* Plan Participants Participant Note Receivable
bearing interest at 6% to 10.5% N/A** 80,941
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$ 1,305,489
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* Indicates an identified person known to be a party-in-interest to the Plan.
** Cost information has been omitted for participant directed investments.
(Concluded)
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SIGNATURES
The Plan, pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
METALS USA, INC.
METALS USA, INC. UNION 401(k) PLAN
July 1, 2003 By: /S/ TERRY L. FREEMAN
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Terry L. Freeman
Senior Vice President and
Chief Financial Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
4 Plan Agreement for the Metals USA, Inc. Union 401(k) Plan as restated
January 1, 2000 incorporated by reference to Exhibit 4 to the Metals
USA, Inc. Union 401(k) Plan Period Report on Form 11-K (File No.
1-13123), filed with the Commission on November 19, 2002.
99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
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