-----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, E9rkqBmul9Zw+FpiwZ1IkIrEB/xkZeAWzfaS5wG7lLXHtI6q5hi+bAQkxPxstOrJ ISBRH+wRBKTM41Ft3RfF0w== 0000950129-98-002735.txt : 19980630 0000950129-98-002735.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950129-98-002735 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: 98655692 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 401(K) 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: Nichols-Homeshield 401(k) Savings Plan - Davenport 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: Nichols Homeshield 401(k) Savings Plan - Davenport We have audited the accompanying statements of net assets available for benefits of the Nichols Homeshield 401(k) Savings Plan - Davenport (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 NICHOLS-HOMESHIELD 401(k) SAVINGS PLAN - DAVENPORT STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, ------------------------- 1997 1996 ----------- ----------- Assets: Investments, at fair value: Mutual fund assets: Fidelity Puritan Fund $ 179,217 $ 110,980 Fidelity Magellan Fund 2,375,863 1,760,422 Fidelity Contrafund 1,600,841 1,246,208 Fidelity Growth and Income Fund 4,034,185 2,559,618 Fidelity Overseas Fund 162,891 137,732 Fidelity Balanced Fund 860,519 596,493 Fidelity Government Money Market Fund 2,952,770 2,734,735 Templeton Foreign Fund 41,351 6,157 Quanex Corporation Common Stock 75,423 133,135 Fidelity Common/Commingled Trust 170,695 54,097 ----------- ----------- 12,453,755 9,339,577 Participant loans 714,210 648,344 ----------- ----------- Total 13,167,965 9,987,921 ----------- ----------- Employee contributions receivable 55,672 58,327 Employer contributions receivable 73,098 64,956 ----------- ----------- Total 128,770 123,283 ----------- ----------- Net assets available for benefits $13,296,735 $10,111,204 =========== ===========
See notes to financial statements. 4 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k) SAVINGS PLAN - DAVENPORT STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, ------------------------- 1997 1996 ----------- ----------- Investment income: Interest and dividends $ 761,522 $ 650,015 Net appreciation in fair value of investments 1,199,903 383,311 ----------- ----------- Total income 1,961,425 1,033,326 ----------- ----------- Contributions: Employer 705,375 650,140 Less forfeitures 8,290 6,058 ----------- ----------- 697,085 644,082 Employee 731,024 656,881 ----------- ----------- Total contributions 1,428,109 1,300,963 ----------- ----------- Interest on participant loans 50,003 43,543 ----------- ----------- Total additions 3,439,537 2,377,832 ----------- ----------- Benefit payments 251,373 460,800 Administrative fees 2,633 2,909 ----------- ----------- Total deductions 254,006 463,709 ----------- ----------- Increase in net assets available for benefits 3,185,531 1,914,123 Net assets available for benefits: Beginning of year 10,111,204 8,197,081 ----------- ----------- End of year $13,296,735 $10,111,204 =========== ===========
See notes to financial statements. 5 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k) SAVINGS PLAN - DAVENPORT NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997 AND 1996 A. DESCRIPTION OF THE PLAN The following description of the Nichols-Homeshield 401(k) Savings Plan - Davenport (the "Plan") is provided for general informational purposes only. Participants should refer to the Plan document for more complete information. (1) General. The Plan, sponsored by Quanex Corporation (the "Company"), was established on October 1, 1987 and was amended and restated in its entirety in January 1993. The Plan is a defined contribution plan, which covers substantially all union hourly employees of the Davenport, Iowa facilities. The Plan permits eligible employees to elect a deferral of compensation under Section 401(k) of the Internal Revenue Code ("Code"). 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. Participants may elect to reduce the current level of his/her compensation from 1% to 15% by contributing on a pre-tax basis as defined by the Plan agreement. Participants may also contribute in half percentages. Company contributions are made based on a percentage of the employee's compensation for each individual with at least 1,000 hours of employment service. (3) Participant Accounts. Each participant's account is credited with the participant's contribution, the employer's contribution, and the participant's pro rata share of investment earnings. Investment earnings allocations are based on individual participant account balances as of the end of the period in which the income is earned. (4) Investment Options. Participants may direct allocations of their contributions to the following funds: 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. 6 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. (5) Vesting. Participants are immediately vested in their 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 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 $155,121 and $-0-, respectively, due to participants who had withdrawn from participation in the Plan. (7) Loans. Loans may be granted to a participant of the Plan at the Committee's discretion. Loan terms range up to five years or seven years if used for the purchase of a primary residence. The loans bear a reasonable rate of interest established by the Committee. Interest on the loan is allocated to the borrower's participant account. Loan set up fees and carrying fees are paid by the participant to Fidelity. 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 to Fidelity. (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 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 these estimates. (5) Payment of Benefits. Benefit payments are recorded when paid. 7 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 Code and, as a result, is exempt from taxation under Section 501(a) of the Code. The Plan received a favorable determination letter dated June 18, 1993 from the IRS. 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. E. 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 2,101 $ 60,399 2,080 $ 47,343 Sales 4,284 96,290 $ 135,865 2,566 57,083 $ 68,951
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 6,215,536 $16,876,202 2,530,179 $ 6,546,751 Sales 5,946,135 14,851,548 $15,003,060 2,579,692 5,143,714 $ 5,203,939
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 1,810,215 $1,810,215 41,203 $41,203 Sales 1,693,615 1,693,615 $1,693,615 7,481 7,481 $7,481
8 F. 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 $ 18,633 $ 16,657 Fidelity Magellan Fund 143,283 118,572 Fidelity Contrafund 101,205 106,112 Fidelity Growth and Income Fund 190,051 145,427 Fidelity Overseas Fund 15,451 14,133 Fidelity Balanced Fund 54,252 55,282 Fidelity Government Money Market Fund 168,639 159,436 Templeton Foreign Fund 4,892 321 Quanex Corporation Common Stock 22,566 15,366 Fidelity Common/Commingled Trust 12,052 25,575 ---------- ---------- $ 731,024 $ 656,881 ========== ==========
1997 1996 ---------- ---------- Employer Contributions: Fidelity Puritan Fund $ 15,179 $ 11,933 Fidelity Magellan Fund 114,616 101,857 Fidelity Contrafund 80,449 70,259 Fidelity Growth and Income Fund 180,793 157,327 Fidelity Overseas Fund 15,443 13,193 Fidelity Balanced Fund 52,073 54,252 Fidelity Government Money Market Fund 205,532 212,614 Templeton Foreign Fund 2,083 144 Quanex Corporation Common Stock 19,083 11,896 Fidelity Common/Commingled Trust 11,834 10,607 ---------- ---------- $ 697,085 $ 644,082 ========== ==========
1997 1996 ---------- ---------- Benefit payments: Fidelity Puritan Fund $ 3,750 $ 130 Fidelity Magellan Fund 46,245 39,625 Fidelity Contrafund 4,335 3,339 Fidelity Growth and Income Fund 37,597 115,206 Fidelity Overseas Fund 616 150 Fidelity Balanced Fund 32,967 1,525 Fidelity Government Money Market Fund 120,192 297,894 Templeton Foreign Fund 0 0 Quanex Corporation Common Stock 5,448 2,931 Fidelity Common/Commingled Trust 223 0 ---------- ---------- $ 251,373 $ 460,800 ========== ==========
9
1997 1996 ---------- ---------- Investment income: Fidelity Puritan Fund $ 30,478 $ 11,416 Fidelity Magellan Fund 458,867 162,646 Fidelity Contrafund 290,428 193,172 Fidelity Growth and Income Fund 846,425 403,556 Fidelity Overseas Fund 12,335 12,496 Fidelity Balanced Fund 147,765 51,461 Fidelity Government Money Market Fund 149,401 141,568 Templeton Foreign Fund 33 280 Quanex Corporation Common Stock 20,355 54,625 Fidelity Common/Commingled Trust 5,338 2,106 ---------- ---------- $1,961,425 $1,033,326 ========== ==========
10 ITEM 27-a SCHEDULE OF ASSETS HELD FOR INVESTMENTS PURPOSES EIN: 38-1872178; PN 016 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k) SAVINGS PLAN - DAVENPORT SUPPLEMENTAL SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1997
Shares/ Current Par Value Cost Value ----------- ----------- ----------- Mutual Fund Assets - Fidelity Investments: Puritan Fund* 9,248 $ 162,091 $ 179,217 Magellan Fund* 24,938 1,950,232 2,375,863 Contrafund* 34,331 1,333,106 1,600,841 Growth and Income Fund* 105,884 2,861,887 4,034,185 Overseas Fund* 5,006 152,515 162,891 Balanced Fund* 56,354 782,384 860,519 Government Money Market Fund* 2,952,770 2,952,770 2,952,770 Templeton Foreign Fund* 4,156 45,920 41,351 ------------------------- Total Mutual Fund Assets 10,240,905 12,207,637 Quanex Corporation Common Stock* 2,682 70,209 75,423 Fidelity Common/Commingled Trust* 170,696 170,696 170,695 Participant loans (bearing interest rates from 7.85% to 11%) 714,210 714,210 ------------------------- Total Investments $11,196,020 $13,167,965 =========================
* Party-in-Interest 11 ITEM 27-d - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS EIN 38-1872178; PN 016 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k)SAVINGS PLAN - DAVENPORT 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 Net Purchases During Purchase Sales During the Selling Cost of Transaction Gain Description the Plan Year Price Plan Year Price Asset Date (Loss) ----------- ---------------- ---------- ---------------- ---------- ---------- ----------- ---------- Fidelity Investments: Magellan* 117 $3,310,975 63 $3,003,401 $2,983,238 $ 3,003,401 $ 20,163 Contrafund* 82 2,165,668 41 1,948,333 1,884,708 1,948,333 63,625 Growth & Income* 111 2,775,714 50 1,976,951 1,917,732 1,976,951 59,219 Overseas* 57 1,547,796 26 1,526,159 1,526,856 1,526,159 (697) Balanced* 57 991,248 33 773,492 766,520 773,492 6,972 Gov't Money Mkt* 109 5,938,396 96 5,720,361 5,720,361 5,720,361 0 Common/Commingled 59 1,810,215 24 1,693,615 1,693,615 1,693,615 0 Trust*
* 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 - Davenport 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. 33-54085 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 Nichols-Homeshield 401 (k) Savings Plan Davenport for the year ended December 31, 1997. /s/ DELOITTE & TOUCHE LLP - ---------------------------------- DELOITTE & TOUCHE LLP Houston, Texas June 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----