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, 2004
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)
One Riverway, Suite 1100
Houston, Texas 77056
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 965-0990
Metals USA, Inc.
Union 401(k) Plan
Financial Statements for the Years Ended
December 31, 2004 and 2003 and Supplemental Schedule for the Year Ended
December 31, 2004 and Report of Independent Registered Public
Accounting Firm
METALS USA, INC.
UNION 401(k) PLAN
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits, December 31, 2004 and 2003 2
Statements of Changes in Net Assets Available for Benefits for the
Years ended December 31, 2004 and 2003 2
Notes to Financial Statements 3
SUPPLEMENTAL SCHEDULE* -
Schedule H, Line 4i - Schedule of Assets (Held at End of Year),
December 31, 2004 7
* 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.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Participants of
Metals USA, Inc. Union 401(k) Plan
Houston, Texas
We have audited the accompanying statements of net assets available for benefits
of Metals USA, Inc. Union 401(k) Plan (the "Plan") as of December 31, 2004 and
2003, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Plan is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Plan's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly in all material
respects, the net assets available for benefits as of December 31, 2004 and
2003, 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 of assets
(held at end of year) as of December 31, 2004 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 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.
1
DELOITTE & TOUCHE LLP
Houston, Texas
June 28, 2005
METALS USA, INC.
UNION 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS, DECEMBER 31, 2004 AND 2003
2004 2003
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ASSETS:
Investments, at fair value . . . . . . . . . . . . . . . . . . . . . . . . $704,386 $1,083,722
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 -
Receivables:
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 1,207 -
Employee contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 3,076 12,101
Other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140 -
Participant loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,194 40,930
-------- ----------
Total Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,617 53,031
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NET ASSETS AVAILABLE FOR BENEFITS . . . . . . . . . . . . . . . . . . . . . $726,320 $1,136,753
======== ==========
The accompanying notes are an integral part of these financial statements.
METALS USA, INC.
UNION 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
2004 2003
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ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income:
Net appreciation in pooled separate accounts and mutual funds $ 68,223 $ 115,631
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,440 21,712
Company securities. . . . . . . . . . . . . . . . . . . . . . 12,544 4,732
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Total investment income . . . . . . . . . . . . . . . . . . . 83,207 142,075
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Contributions:
Employer. . . . . . . . . . . . . . . . . . . . . . . . . . . 28,840 32,972
Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . 78,793 94,828
----------- -----------
Total contributions . . . . . . . . . . . . . . . . . . . . . 107,633 127,800
----------- -----------
Total additions . . . . . . . . . . . . . . . . . . . . . . . 190,840 269,875
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments. . . . . . . . . . . . . . . . . . . . . . . 8,932 389,920
Administrative expense. . . . . . . . . . . . . . . . . . . . 270 1,041
Participant loans receivable terminated due to withdrawal
of participants . . . . . . . . . . . . . . . . . . . . . . . - 50,845
Transfer to affiliated plan . . . . . . . . . . . . . . . . . 592,071 24,998
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Total deductions. . . . . . . . . . . . . . . . . . . . . . . 601,273 466,804
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NET DECREASE . . . . . . . . . . . . . . . . . . . . . . . . . (410,433) (196,929)
NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING
OF YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,136,753 1,333,682
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR . . . . . . . . $ 726,320 $1,136,753
=========== ===========
2
The accompanying notes are an integral part of these financial statements.
METALS USA, INC.
UNION 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
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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, and was amended and restated in its entirety effective as
of January 1, 2000. Union employees of Metals USA, Inc. (the "Company")
become eligible to participate upon completing six months of service, if
covered by a collective bargaining agreement which provides for
participation. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
Contributions - During 2003, participants could contribute an amount equal
to not less than 1% or more than 15% of their compensation for the
contribution period. During 2003, the Plan was amended to permit
participant contributions of up to 25% of their compensation, effective
January 1, 2004. Participants direct the investment of their contributions
into various investment options offered by the Plan. At December 31, 2004,
the Plan offered a number mutual funds and a stable value fund 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 non-elective or profit sharing contributions.
Matching company contributions, if any, are recorded monthly. Discretionary
non-elective and profit-sharing contributions, if any, are recorded when
received. For the years ended December 31, 2004 and 2003, no discretionary
contributions were made.
Participant Accounts - Each participant's account is credited with the
participant's contribution, the Company's matching contribution, an
allocation of Plan earnings, and an allocation of any Company discretionary
qualified non-elective and profit sharing contributions. 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 100% 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 year 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 a participant dies, becomes disabled, or attains early
or normal retirement age as defined by the Plan, prior to attaining the
normal retirement age, the participant's account becomes 100% vested, if
still employed by the Plan sponsor as of such date.
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, partial
payments, 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.
3
Participant Loans 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 (5.0% to 9.50% for the years
ended December 31, 2004 and 2003).
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.
Forfeitures - Forfeitures result from non-vested company contributions
remaining in the Plan for all terminated employees. Upon reaching the
break-in-service requirement, as defined in the Plan document, forfeitures
generated are added to the forfeiture reserve balance, which can be
utilized to reduce Company contributions. Forfeiture reserve
balances at December 31, 2004 and 2003 were $4,918 and $2,031,
respectively. No forfeitures were utilized in 2004 or 2003.
2. SUMMARY OF ACCOUNTING POLICIES
Method of Accounting - The Plan's financial statements are prepared on the
accrual basis of accounting in accordance with accounting principles
generally accepted in the United States of America.
Use of Estimates - 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 stable value fund and pooled
separate accounts are stated at fair value, as determined by the unit value
reported by the Plan's trustee. The investment in the CIGNA Guaranteed
Income Fund is non-fully benefit responsive and stated at fair value. The
term "non-fully benefit responsive" generally relates to investments that
have or could have possible conditions, limitations or restrictions on
participant initiated transactions. Participant loans receivable are valued
at the outstanding loan balance, which approximates fair value. The mutual
funds and warrants for the Company's common stock are valued at quoted
market prices.
The Plan assets at December 31, 2004 and 2003 include warrants which are
traded on the NASDAQ national market quotation system under the sticker
symbol "MUSAW." 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.
As a result of this exchange, the Plan received 4,300 warrants that were
allocated to plan participants who may direct the usage of the warrants.
The participants may sell the warrants and use the cash received to invest
in any of the other plan asset options or take the cash as a distribution.
At December 31, 2004 and 2003, the Plan held 3,941 and 4,043 warrants,
respectively.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date. Interest income is recorded
as earned.
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 and that
such changes could materially affect the amounts reported in the financial
statements.
3. INVESTMENTS
Investments that represent 5% or more of the Plan's net assets are
separately identified below.
December 31,
--------------------
2004 2003
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GMCM Stable Value $ 180,490 $ -
MFS Strategic Value Fund/A 124,839 -
Growth Fund of America/R3 123,435 -
Templeton Foreign Fund/A 78,216 -
MFS Research Bond Fund/A 70,596 -
CIGNA Guaranteed Income Fund - 606,187
CIGNA Fidelity Advisor Equity Growth Fund - 71,865
CIGNA Lifetime40 Fund - 68,486
4
During the years ended December 31, 2004 and 2003, 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)
appreciated (depreciated) in value as follows:
December 31,
--------------------
2004 2003
-------- ----------
General Account - CIGNA Charter Guaranteed Income Fund $ 836 $ 20,661
Participant Loans Receivable . . . . . . . . . . . . . 1,604 1,051
-------- ----------
Total interest income . . . . . . . . . . . . . . 2,440 21,712
-------- ----------
Mutual funds:
American Century Small Cap . . . . . . . . . . . . . . 4,310 -
Fidelity Advisor Small Cap/A . . . . . . . . . . . . . 2,468 -
GMCM Stable Value. . . . . . . . . . . . . . . . . . . 7,854 -
Growth Fund of America/R3. . . . . . . . . . . . . . . 7,093 -
JP Morgan Mid Cap Value/A. . . . . . . . . . . . . . . 2,335 -
MFS Research Bond Fund/A . . . . . . . . . . . . . . . 3 -
MFS Strategic Value Fund/A . . . . . . . . . . . . . . 13,333 -
State Street S&P 500 Index . . . . . . . . . . . . . . 1,141 -
T. Rowe Price Mid Cap Growth/R . . . . . . . . . . . . 2,988 -
Templeton Fund Foreign Fund/A. . . . . . . . . . . . . 8,635 -
Nationwide S&P 500/ Index/Svc Class. . . . . . . . . . 68 -
-------- ----------
50,228 -
Pooled separate accounts:
CIGNA Fidelity Advisor Equity Growth Fund. . . . . . . 4,524 22,833
CIGNA Global Value/Morgan Stanley. . . . . . . . . . . 279 2,567
CIGNA Growth & Income Fund/Multi-Manager . . . . . . . 715 7,851
CIGNA Janus Fund . . . . . . . . . . . . . . . . . . . 1,627 14,874
CIGNA Large Cap Value Fund/Levin & Co... . . . . . . . 337 6,623
CIGNA Lifetime20 Fund. . . . . . . . . . . . . . . . . 194 2,986
CIGNA Lifetime30 Fund. . . . . . . . . . . . . . . . . 834 6,080
CIGNA Lifetime40 Fund. . . . . . . . . . . . . . . . . 1,849 12,734
CIGNA Lifetime50 Fund. . . . . . . . . . . . . . . . . 951 5,848
CIGNA Mid-Cap Blend Fund/Cadence . . . . . . . . . . . - 1,200
CIGNA Mid-Cap Growth Fund/Artisan. . . . . . . . . . . 3,625 8,725
CIGNA Mid-Cap Value Fund/Wellington. . . . . . . . . . 424 3,427
CIGNA S&P 500 Index Fund . . . . . . . . . . . . . . . 1,220 15,936
CIGNA Small Cap Value Fund/Sterling. . . . . . . . . . 908 2,800
CIGNA Small Cap Growth Fund/Times Square . . . . . . . 294 876
CIGNA AMER Cent Intl. Growth Account . . . . . . . . . 214 271
-------- ----------
17,995 115,631
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Total Mutual funds and pooled separate accounts . . . . 68,223 115,631
Company securities:
Warrants to Purchase Metals USA Common Stock . . . . . 12,544 4,732
-------- ----------
Total company securities . . . . . . . . . . . . . . 12,544 4,732
-------- ----------
Total investment income . . . . . . . . . . . . . . . . $ 83,207 $ 142,075
=========== ========
5
4. INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
The Plan participated in 2003 and through January 20, 2004, in a contract
with Cigna Guaranteed Life ("CG Life") via an investment in the CIGNA
Guaranteed Income Fund. CG Life commingled the assets of the CIGNA
Guaranteed Income Fund with other assets. For the Plan's investment in the
CIGNA Guaranteed Income Fund, the Plan was credited with interest at the
rate specified in the contract, which was 3.0% for the year ended December
31, 2003, net of asset charges. CG Life guaranteed the interest rates
credited for the CIGNA Charter Income Fund for six months. As discussed in
Note 2, the CIGNA Guaranteed Income Fund was included in the financial
statements at fair value which principally, because of the periodic rate
reset process, approximates contract value. On January 21, 2004 Nationwide
Trust Company FSB ("Nationwide") became the Plan's trustee. Nationwide did
not offer a Guaranteed Income Fund as one of its investment options.
5. RELATED-PARTY TRANSACTIONS
Plan assets in 2003 and through January 20, 2004, included investments in
funds managed by CG Life, a wholly owned subsidiary of CIGNA. CG Life was
the Plan's trustee and as such, transactions with the trustee qualify as
party-in-interest transactions. Nationwide became the Plan's trustee on
January 21, 2004, and there have been no party-in-interest transactions
between the Plan and Nationwide.
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 securities of Metals USA, Inc., the Plan sponsor,
which also qualifies as a party-in-interest.
6. PLAN TERMINATION
Although it has expressed no intention to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of plan
termination, participants will become 100% vested in their accounts.
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
ERISA. 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 April 21,
2003, 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. TRANSFERS
During 2004 and 2003, certain employees and their participant balances were
transferred to an affiliated plan from the Plan.
9. SUBSEQUENT EVENT
On May 18, 2005, the Company announced that it had entered into a
definitive merger agreement pursuant to which an affiliate of Apollo
Management L.P. will acquire 100% of the common stock of Metals USA at
$22.00 per share. The consummation of the merger is subject to approval by
the stockholders and customary regulatory review, and is expected to close
on or before September 30, 2005. Members of the Company's management will
remain with the Company after closing, and will participate in the
transaction as equity holders in the surviving corporation of the merger.
There are no planned changes to the Plan resulting from the change in
ownership of the Company. If the shareholder approval is obtained and the
other conditions to the transactions are satisfied then, on or about the
effective time of the merger, the Company expects to repurchase any
warrants that are held by plan participants in their respective individual
accounts, for a purchase price that would equal the difference between the
merger consideration ($22.00 per share) and the warrant price of $18.50 per
share, which effectively becomes $3.50 per warrant. The Company expects to
pay all transaction costs associated with the repurchase.
******
6
METALS USA, INC.
UNION 401(k) PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR),
DECEMBER 31, 2004
(a) (b) (c) (d) (e)
Identity of Issue, Borrower, Description of Investment Including Cost Current Value
Lessor, or Similar Party Maturity Date, Rate of Interest, Collateral,
Par or Maturity Value
* Metals USA, Inc. Metals USA Warrants $ 5,791 $17,656
American Century Investment, Inc. American Century Small Cap Value N/A** 30,194
Fidelity Advisor Fidelity Advisor Small Cap/A N/A** 16,440
Gartmore Morley Trust Company GMCM Stable Value N/A** 180,490
Capital Research & Management Company Growth Fund of America/R3 N/A** 123,435
J P Morgan Investment Management Inc. JP Morgan Mid Cap Value/A N/A** 15,510
Massachusetts Financial Services Company MFS Research Bond Fund/A N/A** 70,596
Massachusetts Financial Services Company MFS Strategic Value Fund/A N/A** 124,839
State Street Global Advisors State Street S&P 500 Index N/A** 20,086
T. Rowe Price T. Rowe Price Mid Cap Growth/R N/A** 26,924
Templeton Global Advisors Ltd. Templeton Foreign Fund/A N/A** 78,216
-----------
Investments, at fair value 704,386
* Outstanding Participant Loans Interest Bearing Participant Notes Receivable N/A** 17,194
-----------
$ 721,580
============
* Indicates an identified person known to be a party-in-interest to the
Plan.
** Cost information has been omitted for participant directed investments.
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
June 28, 2005 By: /S/ TERRY L. FREEMAN
-----------------------
Terry L. Freeman
Senior Vice President and
Chief Financial Officer
7
INDEX TO EXHIBITS
Exhibit
Number Description
4 Adoption Agreement and Restated Plan Agreement for the Metals USA, Inc.
Union 401(k) Plan dated July 8, 2004 incorporated herein by reference to
Exhibit 4 to the Plan's Report on Form 11-K (File No. 1-13123) filed with
the Commission on July 9, 2004.
8