-----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, R1xBlnqrhK5CZireg1zWKwQMPjIAV4GkK1ZqWSNaPEo9jCLadOBh1OcRk2yzWHlP JgtJJ8gNVM7uOOGhLFaT+g== 0000950129-98-002731.txt : 19980630 0000950129-98-002731.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950129-98-002731 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980629 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: SEC FILE NUMBER: 001-05725 FILM NUMBER: 98655687 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 BARGAINING UNIT SAVINGS PLAN 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, 1997 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: Quanex Corporation Hourly Bargaining Unit Employees 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 [DELOITTE & TOUCHE LLP LETTERHEAD] INDEPENDENT AUDITORS' REPORT The Benefits Committee Quanex Corporation Houston, Texas Re: Quanex Corporation Hourly Bargaining Unit Employees Savings Plan We have audited the accompanying statements of net assets available for benefits of the Quanex Corporation Hourly Bargaining Unit Employees Savings Plan (the "Plan") as of December 31, 1997 and 1996 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, 1997 and 1996 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, 1997 and (2) 5% reportable transactions for the year ended December 31, 1997 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 1997 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 22, 1998 3 QUANEX CORPORATION HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, ------------------------------------- 1997 1996 ---------- ---------- Assets: Investments, at fair value: Mutual fund assets: Fidelity Puritan Fund $1,430,212 $1,268,634 Fidelity Magellan Fund 2,681,622 2,326,232 Fidelity Contrafund 446,311 399,810 Fidelity Growth & Income Fund 792,874 624,189 Fidelity Overseas Fund 450,127 562,072 Fidelity Balanced Fund 76,979 143,087 Templeton Foreign Fund 72,104 41,980 Fidelity Government Money Market Fund 2,295,174 2,450,167 Quanex Corporation Common Stock 247,035 291,588 Fidelity Common/Commingled Trust 57,239 147,525 ---------- ---------- Total 8,549,677 8,255,284 ---------- ---------- Employee contributions receivable 49,534 162,502 Employer contributions receivable - 12,396 ---------- ---------- Total 49,534 174,898 ---------- ---------- Net Assets Available for Benefits $8,599,211 $8,430,182 ========== ==========
See notes to financial statements. 4 QUANEX CORPORATION HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, ------------------------ 1997 1996 ---------- ---------- Investment income: Interest and dividends $ 593,142 $ 672,045 Net appreciation in fair value of investments 920,890 143,494 ---------- ---------- Total income 1,514,032 815,539 ---------- ---------- Contributions: Employer 33,347 105,566 Less forfeitures 115 56 ---------- ---------- 33,232 105,510 Employee 1,392,270 1,786,138 ---------- ---------- Total contributions 1,425,502 1,891,648 ---------- ---------- Total additions 2,939,534 2,707,187 ---------- ---------- Benefit payments 635,122 404,320 LaSalle asset transfer 2,135,383 -- ---------- ---------- Total deductions 2,770,505 404,320 ---------- ---------- Increase in net assets available for benefits 169,029 2,302,867 Net assets available for benefits: Beginning of year 8,430,182 6,127,315 ---------- ---------- End of year $8,599,211 $8,430,182 ========== ==========
See notes to financial statements. 5 QUANEX CORPORATION HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997 AND 1996 A. DESCRIPTION OF THE PLAN The following description of the Quanex Corporation Hourly Bargaining Unit Employees Savings Plan (the "Plan") is provided for general informational purposes only. Participants should refer to the Plan document for more complete information. (1) General. The Plan, originally named the Quanex Corporation Hourly Employees Savings Plan, became effective January 1, 1989 and is sponsored by Quanex Corporation (the "Company"). The Plan began receiving contributions in April 1989. The Plan is a defined contribution plan which is subject to the Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan is a voluntary savings plan in which hourly employees of certain divisions of the Company are eligible to participate after completing three months of active service. 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. Participants may elect to contribute up to 15% of their before-tax or after-tax compensation as defined by the Plan agreement. The Plan was amended effective July 1, 1994 to include LaSalle Steel Company hourly employees (Note E). All plan provisions apply to the LaSalle Steel Company hourly employees with the addition of an employer matching contribution that does not exceed 5% of the member's considered compensation. (3) Participant Accounts. Each participant's account is credited with the participant's contribution and an allocation of investment income, which is based on individual participant account balances as of the end of the period in which the income is earned. (4) Investment Options. The Plan has the following investment funds managed by the Trustee: 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. 6 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 with insurance companies, banks and other financial institutions. (5) Vesting. Participants are immediately vested in their contributions and the related earnings. Vesting in the employer's matching contributions for Lasalle Steel Company employees is 0% for less than one year of service graduating to 100% for five or more years. Upon death, retirement or total and permanent disability, the participant or beneficiary becomes immediately vested in the employer's contribution. In the event of termination, nonvested portions of employer's contributions are immediately forfeited by participants and utilized to reduce future employer matching contributions. (6) Payment of Benefits. Upon termination of service, the participant may elect to receive a lump sum distribution equal to the total amount of vested benefits in his or her account. As of December 31, 1997 and 1996, net assets available for benefits included benefits of $7,794 and $5,632, respectively, due to participants who had withdrawn from participation in the Plan. 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) 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 using the last recorded sales price. The fair value of the common/commingled trust is at face value. (3) 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 these estimates. (4) Administrative Expenses. The Company pays all administrative expenses. (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. 7 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 (the "IRS"). The Plan has received a favorable letter of tax determination dated April 25, 1997. As such, 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 federal income tax under Section 501 (a) of the Code. The Company believes the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. The Company believes the Plan was qualified and the related trust was tax-exempt as of the financial statement dates. E. TRANSFER OF ASSETS Effective April 18, 1997, Quanex Corporation sold its LaSalle Steel Company subsidiary ("LaSalle") to Niagara Corporation. On December 1, 1997, assets of the Plan in the amount of $2,135,383 were transferred to the trustee of the LaSalle Steel Company Hourly Bargaining Unit Employees Savings Plan. F. RELATED PARTY TRANSACTIONS During the years ended December 31, 1997 and 1996, the Plan purchased and sold shares of Quanex Corporation common stock, as shown below:
1997 1996 ---- ---- Shares Cost Sales Price Shares Cost Sales Price ------ ---- ----------- ------ ---- ----------- Purchases 4,038 $109,945 3,306 $75,789 Sales 5,906 141,059 $167,646 2,351 50,315 $54,568
During the years ended December 31, 1997 and 1996, the Plan purchased and sold shares of Fidelity mutual fund assets as shown below:
1997 1996 ---- ---- Shares Cost Sales Price Shares Cost Sales Price ------ ---- ----------- ------ ---- ----------- Purchases 786,686 $2,734,223 711,273 $2,842,364 Sales 947,926 2,821,811 $3,212,731 320,094 754,693 $785,068
During the years ended December 31, 1997 and 1996, the Plan purchased and sold shares of Fidelity Common/Commingled Trust as shown below:
1997 1996 ---- ---- Shares Cost Sales Price Shares Cost Sales Price ------ ---- ----------- ------ ---- ----------- Purchases 68,202 $ 68,202 87,559 $87,559 Sales 158,488 158,488 $158,488 35,292 35,292 $35,292
G. SUBSEQUENT EVENTS On December 3, 1997, Michigan Seamless Tube Company, the Gulf States Tube and the Tube Group Office divisions of Quanex Corporation (the "Tube Group") were sold to Vision Metals, Inc. In plan year 1998, the net assets attributable to the Tube Group employees will be transferred to the new qualified savings plan established by Vision Metals, Inc. 8 H. SUPPLEMENTAL FUND INFORMATION Contributions, benefit payments and investment income by fund were as follows for the years ended December 31:
1997 1996 ---------- ---------- Employee Contributions: Fidelity Puritan Fund $ 214,527 $ 258,650 Fidelity Magellan Fund 342,660 453,847 Fidelity Contrafund 92,752 91,666 Fidelity Growth and Income Fund 139,049 146,079 Fidelity Overseas Fund 94,260 148,714 Fidelity Balanced Fund 33,599 59,839 Fidelity Government Money Market Fund 377,817 491,386 Templeton Foreign Fund 22,511 4,812 Quanex Corporation Common Stock 34,129 63,562 Fidelity Common/Commingled Trust 40,966 67,583 ---------- ---------- $1,392,270 $1,786,138 ========== ========== 1997 1996 ---------- ---------- Employer Contributions: Fidelity Puritan Fund $ 4,883 $ 15,152 Fidelity Magellan Fund 6,982 21,803 Fidelity Contrafund 2,104 6,119 Fidelity Growth and Income Fund 3,727 10,918 Fidelity Overseas Fund 3,169 10,289 Fidelity Balanced Fund 2,170 7,296 Fidelity Government Money Market Fund 5,660 18,902 Templeton Foreign Fund 142 104 Quanex Corporation Common Stock 1,750 6,047 Fidelity Common/Commingled Trust 2,645 8,880 ---------- ---------- $ 33,232 $ 105,510 ========== ========== 1997 1996 ---------- ---------- Benefit Payments: Fidelity Puritan Fund $ 76,324 $ 41,028 Fidelity Magellan Fund 146,690 121,150 Fidelity Contrafund 20,279 5,210 Fidelity Growth and Income Fund 36,649 14,286 Fidelity Overseas Fund 37,990 9,593 Fidelity Balanced Fund 11,892 7,915 Fidelity Government Money Market Fund 268,779 171,595 Templeton Foreign Fund -- -- Quanex Corporation Common Stock 23,893 4,863 Fidelity Common/Commingled Trust 12,626 28,680 ---------- ---------- $ 635,122 $ 404,320 ========== ==========
9 1997 1996 ---------- ---------- Investment Income: Fidelity Puritan Fund $ 294,604 $ 149,359 Fidelity Magellan Fund 637,945 243,707 Fidelity Contrafund 98,587 51,197 Fidelity Growth and Income Fund 225,857 86,323 Fidelity Overseas Fund 56,810 58,357 Fidelity Balanced Fund 34,599 11,564 Fidelity Government Money Market Fund 132,873 115,993 Templeton Foreign Fund 2,690 3,593 Quanex Corporation Common Stock 20,390 88,680 Fidelity Common/Commingled Trust 9,677 6,766 ---------- ---------- $1,514,032 $ 815,539 ========== ==========
10 ITEM 27-A SCHEDULE OF ASSETS HELD FOR INVESTMENTS PURPOSES EIN: 38-1872178; PN 015 QUANEX CORPORATION HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1997
Shares/ Current Par Value Cost Value --------- ---- ----- Mutual Fund Assets - Fidelity Investments: Puritan Fund* 73,798 $1,246,497 $1,430,212 Magellan* 28,148 2,175,266 2,681,622 Contrafund* 9,571 405,764 446,311 Growth and Income Fund* 20,810 591,811 792,874 Overseas Fund* 13,833 406,378 450,127 Balanced Fund* 5,041 73,710 76,979 Templeton Foreign Fund* 7,247 75,119 72,104 Government Money Market Fund* 2,295,174 2,295,174 2,295,174 ------------------------ Total Mutual Fund Assets 7,269,719 8,245,403 Quanex Corporation Common Stock* 8,783 202,788 247,035 Fidelity Common/Commingled Trust* 57,239 57,239 57,239 ------------------------ Total Investments $7,529,746 $8,549,677 ========================
* Party-in-Interest 11 ITEM 27-D - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS EIN 38-1872178; PN 015 QUANEX CORPORATION HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF 5% REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Series of Transactions ---------------------- Current Total Number of Total Number of Value on Purchases During Purchase Sales During the Selling Cost of Transaction Net Description the Plan Year Price Plan Year Price Asset Date Gain ----------- ---------------- -------- ---------------- ------- ------- ----------- ---- Fidelity Investments: Puritan* 67 $441,338 45 $447,736 $388,133 $447,736 $ 59,603 Magellan* 71 670,769 49 773,603 $635,924 773,603 137,679 Contrafund* 52 264,403 21 270,715 $223,485 270,715 47,230 Growth & Income* 67 331,910 32 344,457 $259,160 344,457 85,297 Overseas* 48 163,876 32 310,582 $273,191 310,582 37,391 Gov't Money Market* 77 725,156 61 880,149 $880,149 880,149 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. Quanex Corporation Hourly Bargaining Unit Employees Savings Plan Date: June 29, 1998 /s/ Wayne M. Rose --------------------------------- Wayne M. Rose, Benefits Committee 13 INDEX TO EXHIBITS
23.1 Independents Auditor's Consent
EX-23.1 2 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 23.1 INDEPENDENT AUDITOR'S CONSENT We consent to the incorporation by reference in Registration Statement No. 33-46824 of Quanex Corporation on Form S-8 of our report dated May 22, 1998 appearing in the Annual Report of Form 11-K of the Quanex Corporation Hourly Bargaining Unit Employees Savings Plan for the year ended December 31, 1997. /s/ DELOITTE & TOUCHE LLP - ------------------------- DELOITTE & TOUCHE LLP Houston, Texas June 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----