-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SqyTQ+sU7++Np9ySNl/SEEqHFXiIqnxhonhfFFMLFzSUJkpD+1KyO6O2lHNCikex j+3SgBR1JbstNMMNs4V7Wg== 0000950129-97-002542.txt : 19970625 0000950129-97-002542.hdr.sgml : 19970625 ACCESSION NUMBER: 0000950129-97-002542 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970624 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUANEX CORP CENTRAL INDEX KEY: 0000276889 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 381872178 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05725 FILM NUMBER: 97628895 BUSINESS ADDRESS: STREET 1: 1900 W LOOP SOUTH STE 1500 STREET 2: ATTN THOMAS M BEWLEY CITY: HOUSTON STATE: TX ZIP: 77027 BUSINESS PHONE: 7139614600 MAIL ADDRESS: STREET 1: 1900 WEST LOOP SOUTH STREET 2: SUITE 1500 CITY: HOUSTON STATE: TX ZIP: 77027 11-K 1 QUANEX CORPORATION (NICHOLS HOMESHIELD 401K) 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the fiscal year ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from __________ to ___________. Commission File Number 1-5725 A. Full title of the plan and the address of the plan, if different from that of the issuer name below: Nichols-Homeshield 401(k) Savings Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Quanex Corporation 1900 West Loop South, Suite 1500 Houston, Texas 77027 (713) 961-4600 2 INDEPENDENT AUDITORS' REPORT The Benefits Committee Quanex Corporation Houston, Texas Re: Nichols-Homeshield 401(k) Savings Plan We have audited the accompanying statements of net assets available for benefits of the Nichols-Homeshield 401(k) Savings Plan (the "Plan") as of December 31, 1996 and 1995, 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 generally accepted auditing standards. 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 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 of the Plan as of December 31, 1996 and 1995, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of (1) investments as of December 31, 1996 and (2) 5% reportable transactions for the year ended December 31, 1996 are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are 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. These schedules are the responsibility of the Plan's management. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 1996 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. /s/ DELOITTE & TOUCHE LLP - -------------------------- DELOITTE & TOUCHE LLP May 9, 1997 3 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k) SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, ------------------------- 1996 1995 ----------- ----------- Investments at fair value: Mutual fund assets: Fidelity Puritan Fund $ 368,260 $ 127,812 Fidelity Magellan Fund 4,613,459 4,590,045 Fidelity Contrafund 3,436,148 2,281,286 Fidelity Growth & Income Fund 5,722,217 4,483,709 Fidelity Overseas Fund 339,269 495,052 Fidelity Balanced Fund 1,441,746 1,255,353 Fidelity Government Money Market Fund 6,587,993 6,416,031 Templeton Foreign Fund 58,309 - Quanex Corporation common stock 518,125 611,774 Common/commingled trust 764,169 439,555 Loans to participants 1,067,089 752,684 ----------- ----------- Total investments 24,916,784 21,453,301 ----------- ----------- Contributions Receivable: Employer 96,848 102,285 Employee 126,604 139,177 ----------- ----------- Total 223,452 241,462 ----------- ----------- Net assets available for benefits $25,140,236 $21,694,763 =========== ===========
See notes to financial statements 4 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k) SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
December 31, ------------------------- 1996 1995 ----------- ----------- Investment income: Interest and dividends $ 1,760,124 $ 1,135,097 Net appreciation in fair value of investments 1,044,037 2,291,096 ----------- ----------- Total income 2,804,161 3,426,193 ----------- ----------- Contributions: Employer 1,302,003 1,202,902 Less forfeitures 34,342 25,176 ----------- ----------- 1,267,661 1,177,726 Employee 1,464,390 1,496,737 ----------- ----------- Total contributions 2,732,051 2,674,463 ----------- ----------- Interest on participant loans 69,555 61,206 ----------- ----------- Total additions 5,605,767 6,161,862 ----------- ----------- Benefit payments 2,154,169 1,643,823 Administrative fees 6,125 4,918 ----------- ----------- Total deductions 2,160,294 1,648,741 ----------- ----------- Increase in net assets available for benefits 3,445,473 4,513,121 Net assets available for benefits: Beginning of year 21,694,763 17,181,642 ----------- ----------- End of year $25,140,236 $21,694,763 =========== ===========
See notes to financial statements 5 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(K) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1996 AND 1995 A. DESCRIPTION OF THE PLAN The following description of the Nichols-Homeshield 401(k) Savings Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan document for more complete information. (1) General. The Plan was established on October 1, 1987, and was amended and restated effective January 1, 1989, as a defined contribution plan under Section 401(k) of the Internal Revenue Code ("IRC") which covers substantially all salaried and non-union hourly employees at the Nichols-Homeshield division of Quanex Corporation (the "Company") and bargaining unit employees at the Lincolnshire, Illinois plant. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The assets of the Plan are held in trust by Fidelity Management Trust Company ("Fidelity" or the "Trustee"). The Benefits Committee (the "Committee"), appointed by the Company's Board of Directors, serves as the Plan administrator. (2) Contributions. Employees are eligible to make salary deferral contributions to the Plan on the entry date next following the date that the employee completes one month of service. Participants may elect salary deferrals between 1% and 15% of compensation as defined by the Plan agreement. The Company makes contributions on behalf of employees who have at least one year of service. The Company contribution is based on Company profits and is calculated based on a percentage of the employee's compensation. (3) Participant Accounts. Each participant's account is credited with the participant's contribution, the employer's contribution, and an allocation of investment income. Investment income allocations are based upon individual participant account balances as of the end of the period in which the income was earned. (4) Investment Options. Participants may direct allocation of their contributions to investment funds and Quanex stock as follows: Government Money Market Fund - composed of short-term government obligations. Balanced Fund - invested and reinvested in common and preferred stocks and bonds. Growth and Income Fund - invested and reinvested in equity and debt securities of foreign and domestic companies. Magellan Fund - invested and reinvested in equity and debt securities of foreign and domestic companies. Contrafund - invested and reinvested in equities of foreign and domestic companies. Overseas Fund - invested and reinvested in foreign securities. Puritan Fund - invested and reinvested in common and preferred stocks and bonds. Templeton Foreign Fund - invested and reinvested in foreign securities. Quanex Corporation Common Stock - invested and reinvested exclusively in the common stock of Quanex Corporation. Common/Commingled Trust - invested and reinvested in investment contracts issued by insurance companies, banks and other financial institutions. 6 (5) Vesting. Participants are immediately vested in their voluntary contributions and earnings thereon. Vesting in the employer contribution is based on years of credited service. A participant is 20% vested for each year of credited service and fully vested after five years. If a participant terminates employment prior to becoming fully vested, the nonvested portion of the employer contributions are immediately forfeited by the participant and utilized to reduce future employer contributions. (6) Payment of Benefits. The Plan is intended for long-term savings but provides for early withdrawals and loan arrangements under certain conditions. Upon termination of service, a participant may elect to receive a cash lump-sum distribution equal to the amount of vested benefits in his or her account. As of December 31, 1996 and 1995, net assets available for benefits included benefits of $22,530 and $69,484, respectively, due to participants who have withdrawn from participation in the Plan. (7) Loans. Loans may be granted to a participant of the Plan at the Committee's discretion. Any loan authorized by the Committee shall be subject to a term not to exceed five years. The Committee may agree to a longer term (up to seven years) only if the proceeds of the loan are to be used to purchase a dwelling. The loans bear a reasonable rate of interest established by the Committee. Interest on the loan is allocated to the borrower's participant account. (B) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (1) Accounting Basis. The financial statements of the Plan are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. (2) Administrative Expenses. Administrative expenses of the Plan are paid by the Company. Loan set up fees and carrying fees are paid by the participant. (3) Investment Valuation. The Plan recognizes net appreciation or depreciation in the fair value of its investments. Investments are reflected at fair value in the financial statements. Fair value of mutual fund assets is determined using a quoted net asset value. Fair value for Quanex Corporation common stock, which is listed on the New York Stock Exchange, is determined by using the last recorded sales price. The fair value of the common/commingled trust is at face value. (4) Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of changes in the net assets available for benefits during the reporting period. The Plan's financial statements include amounts that are based on management's best estimates and judgments. Actual results could differ from those estimates. (5) Payment of Benefits. Benefit payments are recorded when paid. (C) PLAN TERMINATION Although it has not expressed any intention to do so, the Company has the right under the Plan to terminate the Plan at any time subject to the provisions set forth in ERISA. In the event of plan termination, the assets held by the Trustee under the Plan will be valued and fully vested, and each participant will be entitled to distributions respecting his or her account. (D) FEDERAL INCOME TAX STATUS The Plan is subject to specific rules and regulations related to employee benefit plans under the Department of Labor and the Internal Revenue Service ("IRS"). The Plan is a qualified trust under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code") and, as a result, is exempt from taxation under Sections 501(a) of the Code. The Plan received a favorable determination letter from the IRS dated December 22, 1994. The Company believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, it believes the Plan was qualified and the related trust was tax-exempt as of the financial statement dates. 7 E. RELATED PARTY TRANSACTIONS During the years ended December 31, 1996 and 1995, the Plan purchased and sold shares of Quanex Corporation common stock, as shown below:
1996 1995 ---- ---- Shares Cost Sales Price Shares Cost Sales Price ------ ---- ----------- ------ ---- ----------- Purchases 6,087 $145,904 21,420 $410,186 Sales 18,735 370,590 $435,319 121 2,554 $ 2,618
During the years ended December 31, 1996 and 1995, the Plan purchased and sold shares of Fidelity mutual funds, as shown below:
1996 1995 ---- ---- Shares Cost Sales Price Shares Cost Sales Price ------ ---- ----------- ------ ---- ----------- Purchases 2,158,747 $12,577,957 2,217,167 $9,843,629 Sales 1,918,003 10,179,781 $10,508,116 2,500,093 7,931,353 $8,215,994
During the years ended December 31, 1996 and 1995, the Plan purchased and sold shares of Fidelity Common/Commingled Trust, as shown below:
1996 1995 ---- ---- Shares Cost Sales Price Shares Cost Sales Price ------ ---- ----------- ------ ---- ----------- Purchases 5,950,598 $5,950,598 3,458,959 $3,458,959 Sales 5,625,983 5,625,983 $5,625,983 3,320,803 3,320,803 $3,320,803
8 F. SUPPLEMENTAL FUND INFORMATION Contributions, benefit payments and investment income by fund were as follows for the years ended December 31:
1996 1995 ---------- ---------- Employee Contributions: Fidelity Puritan Fund $ 24,360 $ 34,362 Fidelity Magellan Fund 339,683 353,686 Fidelity Contrafund 220,724 236,354 Fidelity Growth and Income Fund 333,733 297,674 Fidelity Overseas Fund 41,056 35,253 Fidelity Balanced Fund 129,715 157,288 Fidelity Government Money Market Fund 303,711 314,095 Templeton Fund 4,847 - Quanex Corporation common stock 28,928 19,116 Common/commingled trust 37,633 48,909 ---------- ---------- $1,464,390 $1,496,737 ========== ==========
1996 1995 ---------- ---------- Employer Contributions: Fidelity Puritan Fund $ 20,637 $ 17,977 Fidelity Magellan Fund 268,954 265,178 Fidelity Contrafund 182,916 164,793 Fidelity Growth and Income Fund 247,719 221,139 Fidelity Overseas Fund 24,525 18,633 Fidelity Balanced Fund 121,618 141,918 Fidelity Government Money Market Fund 345,797 312,536 Templeton Foreign Fund 2,311 - Quanex Corporation common stock 25,760 16,809 Common/commingled trust 27,424 18,743 ---------- ---------- $1,267,661 $1,177,726 ========== ==========
9
1996 1995 ---------- ---------- Benefit payments: Fidelity Puritan Fund $ 42,523 $ 4,042 Fidelity Magellan Fund 393,328 395,607 Fidelity Contrafund 73,823 209,350 Fidelity Growth and Income Fund 455,730 348,748 Fidelity Overseas Fund 121,544 402 Fidelity Balanced Fund 197,261 24,874 Fidelity Government Money Market Fund 842,522 659,346 Templeton Foreign Fund - - Quanex Corporation common stock 11,667 122 Common/commingled trust 15,771 1,332 ---------- ---------- $2,154,169 $1,643,823 ========== ==========
1996 1995 ----------- ----------- Investment income: Fidelity Puritan Fund $ 39,483 $ 19,349 Fidelity Magellan Fund 483,131 1,151,140 Fidelity Contrafund 573,106 525,713 Fidelity Growth and Income Fund 937,521 1,147,352 Fidelity Overseas Fund 74,008 51,666 Fidelity Balanced Fund 118,163 156,063 Fidelity Government Money Market Fund 331,052 362,824 Templeton Foreign Fund 5,015 - Quanex Corporation common stock 210,499 (21,219) Common/commingled trust 32,183 33,305 ----------- ----------- $ 2,804,161 $ 3,426,193 =========== ===========
10 ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES EIN: 38-1872178; PN 017 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(K) SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF INVESTMENTS DECEMBER 31, 1996
Shares/ Current Par Value Cost Value --------- ---- ------- Mutual Fund Assets - Fidelity Investments: - ------------------------------------------ Contrafund* 81,522 $ 2,842,393 $ 3,436,148 Government Money Market Fund* 6,587,993 6,587,993 6,587,993 Puritan Fund* 21,361 363,973 368,260 Growth and Income Fund* 186,209 4,377,320 5,722,217 Magellan* 57,203 4,188,048 4,613,459 Overseas Fund* 11,001 319,150 339,269 Balanced Fund* 102,397 1,343,059 1,441,746 Templeton Foreign Fund* 5,628 55,431 58,309 ----------- ----------- Total mutual fund assets 20,077,367 22,567,401 Quanex Corporation common stock* 18,927 422,598 518,125 Common/commingled trust* 764,169 764,169 764,169 Participant loans (bearing interest rates from 7.85% to 11%) 1,067,089 1,067,089 ----------- ----------- Total investments $22,331,223 $24,916,784 =========== ===========
*Party-in-Interest 11 ITEM 27D - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS EIN 38-1872178; PN 017 NICHOLS-HOMESHIELD 401(K) SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF 5% REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1996
Single Transactions ------------------- Current Total Number of Total Number Value on Net Purchases During Purchase of Sales During Selling Cost of Transaction Gain Description Plan Year Price Plan Year Price Asset Date (Loss) - ----------- ----------------- --------- --------------- ------- ------- ------------ ------ None
Series of Transactions ---------------------- Current Total Number of Total Number Value on Net Purchases During Purchase of Sales During Selling Cost of Transaction Gain Description Plan Year Price Plan Year Price Asset Date (Loss) - ----------- ----------------- --------- --------------- ------- ------- ------------ ------ *Magellan Fund 124 $1,599,339 94 $1,345,826 $1,279,285 $1,345,826 $ 66,541 *Contrafund 112 1,225,157 58 378,427 331,323 378,427 47,104 *Growth & Income Fund 130 1,365,280 80 784,945 626,404 784,945 158,541 *Overseas Fund 84 5,737,666 41 5,947,091 5,904,611 5,947,091 42,480 *Government Money Market Fund 109 1,809,772 94 1,637,810 1,637,810 1,637,810 0 *Common/Commingled Trust 86 5,950,598 55 5,625,983 5,625,983 5,625,983 0
- ----------------------- *Party-in-interest 12 SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Nichols-Homeshield 401(k) Savings Plan Date: June 24, 1997 /s/ Joseph K. Peery ------------------ --------------------------------------- Joseph K. Peery, Benefits Committee 13 INDEX TO EXHIBITS 23.1 Independent Auditor's Consent EX-23.1 2 INDEPENDENT AUDITOR'S CONSENT 1 EXHIBIT 23.1 INDEPENDENT AUDITOR'S CONSENT We consent to the incorporation by reference in Registration Statement No. 33-54081 of Quanex Corporation on Form S-8 of our report dated May 9, 1997 appearing in the Annual Report on Form 11-K of the Nichols-Homeshield, Inc. 401(k) Savings Plan for the year ended December 31, 1996. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Houston, Texas June 24, 1997 -----END PRIVACY-ENHANCED MESSAGE-----