11-K 1 h98071ae11vk.txt QUANEX CORPORATION - FISCAL YEAR DECEMBER 31, 2001 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K [X] Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2001 Commission File Number 1-5725 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Quanex Corporation Hourly Bargaining Unit Employees Saving Plan B. Name of the 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, TX 77027 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, 2001 and 2000, 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 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 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, 2001 and 2000, 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 accompanying supplemental schedule of investments as of December 31, 2001 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. This supplemental schedule has been subjected to the auditing procedures applied in our audits of the basic 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 Houston, Texas June 19, 2002 QUANEX CORPORATION HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, --------------------------- 2001 2000 ------------ ------------ Assets: Investments at fair value (see Note C) $ 13,579,018 $ 13,828,011 Employee contributions receivable 77,594 103,096 ------------ ------------ Net assets available for benefits $ 13,656,612 $ 13,931,107 ============ ============
See notes to financial statements. QUANEX CORPORATION HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, ---------------------------- 2001 2000 ------------ ------------ Investment income: Interest and dividends $ 318,277 $ 812,878 Net appreciation (depreciation) in fair value of investments (see Note C) (940,098) (937,078) ------------ ------------ (621,821) (124,200) Employee contributions 1,308,895 1,423,908 ------------ ------------ Total additions 687,074 1,299,708 ------------ ------------ Benefit payments 960,133 491,247 Administrative fee (see Note D) 74 12 ------------ ------------ Total deductions 960,207 491,259 ------------ ------------ Transfers between plans (see Note G) (1,362) 6,134,964 ------------ ------------ Increase (decrease) in net assets available for benefits (274,495) 6,943,413 Net assets available for benefits: Beginning of year 13,931,107 6,987,694 ------------ ------------ End of year $ 13,656,612 $ 13,931,107 ============ ============
See notes to financial statements. SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR EIN: 38-1872178; PN 015 QUANEX CORPORATION HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF INVESTMENTS DECEMBER 31, 2001
Shares/ Current Par Value Cost Value ------------ ------------ ------------ * Fidelity Puritan Fund 61,772 $ 1,127,610 $ 1,091,521 * Fidelity Magellan Fund 38,578 4,240,191 4,020,657 * Fidelity Contrafund 14,120 743,686 603,937 * Fidelity Growth & Income Fund 28,614 1,191,731 1,069,597 * Fidelity Independence Fund 71,821 1,775,717 1,132,616 * Fidelity Overseas Fund 8,118 291,328 222,603 * Fidelity Balanced Fund 14,164 216,362 211,042 * Fidelity Blue Chip Fund 13,046 648,841 560,219 * Fidelity Asset Manager Fund 847 13,987 13,127 * Fidelity Low-Priced Stock Fund 3,250 81,419 89,126 * Fidelity Government Money Market Fund 3,075,143 3,075,143 3,075,143 Templeton Foreign Fund 14,344 143,667 132,682 Neuberger & Berman Partners Trust Fund 2,493 41,905 39,940 ------------ ------------ Total Mutual Fund Assets 13,591,587 12,262,210 * Quanex Corporation unitized common stock 64,739 642,793 857,146 * Fidelity Common/Commingled trust 459,662 459,662 459,662 ------------ ------------ Total Investments $ 14,694,042 $ 13,579,018 ============ ============
* Party-in-Interest QUANEX CORPORATION HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2001 AND 2000 A. DESCRIPTION OF THE PLAN The following description of the Quanex Corporation Hourly Bargaining Unit Employees Savings Plan (the "Plan") provides only general information. Participants should refer to the Plan document for more complete information. (1) General. The Plan became effective January 1, 1989 and is sponsored by Quanex Corporation (the "Company"). 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 union hourly employees of the MACSTEEL divisions of the Company are eligible to participate after completing three months of active service. Fidelity Management Trust Company ("Fidelity" or the "Trustee") holds the assets of the Plan in trust. 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 percent of their before-tax or after-tax compensation as defined by the Plan agreement. (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) Vesting. Participants are immediately vested in their contributions and the related earnings. (5) 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. Terminated participants with an account balance of less than $5,000 will automatically receive a lump sum distribution. 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 unitized common stock, which is listed on the New York Stock Exchange, is determined using the last recorded sales price. The recorded value of the common/commingled trust is at face value, which is fair value. (3) Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities. Actual results could differ from these estimates. (4) Administrative Expenses. The Company pays all administrative expenses, except redemption fees imposed on certain Fidelity funds. (5) Payment of Benefits. Benefit payments are recorded when paid. C. INVESTMENTS The following are investments that represent 5 percent or more of the Plan's net assets.
December 31, 2001 December 31, 2000 Shares Amount Shares Amount ---------- ---------- ---------- ---------- Fidelity Puritan Fund 61,772 $1,091,521 57,341 $1,079,732 Fidelity Magellan Fund 38,578 4,020,657 36,176 4,315,771 Fidelity Growth & Income Fund 28,614 1,069,597 25,405 1,069,545 Fidelity Independence Fund 71,821 1,132,616 62,121 1,367,275 Fidelity Government Money Market Fund 3,075,143 3,075,143 2,265,178 2,265,178 Quanex unitized common stock 64,739 857,146 191,488 1,842,114
During the years ended December 31, 2001 and 2000, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated / (depreciated) in value as follows:
2001 2000 ------------ ------------ Mutual funds $ (1,373,859) $ (1,435,579) Quanex unitized common stock 433,761 498,501 ------------ ------------ $ (940,098) $ (937,078) ============ ============
D. RELATED PARTY TRANSACTIONS Certain Plan investments are shares of mutual funds managed by Fidelity. Fidelity is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. In addition, the Plan invests in shares of Quanex Corporation unitized common stock. Quanex Corporation is the Plan sponsor as defined by the Plan and, therefore, these transactions also qualify as party-in-interest transactions. As of December 31, 2001 and 2000, the value of Quanex Corporation common stock held by the Plan was $857,146 and $1,842,114, respectively. E. 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. F. 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 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. G. TRANSFER OF ASSETS Account balances of the employees at MACSTEEL's Fort Smith, Arkansas facility who were covered by a collective bargaining agreement, which totaled $6,134,964, were transferred from the Quanex Corporation Employee Savings Plan on June 30, 2000. During 2001, account balances of $1,362 were transferred between the Plan and the Quanex Corporation Employee Saving Plan. 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 28, 2002 /s/ Viren M. Parikh ------------------- Viren M. Parikh, Benefits Committee INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------ ----------- 23.1 Independent Auditor's Consent