-----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, JARp52JPxduMqFoElmDuVXUt+A7m7RvEe1hdsYKqndLrF1ezgz6nBJbMiIZE4nVh uA015Qs3OBTIu8mbXCnBFg== 0000950129-98-002732.txt : 19980630 0000950129-98-002732.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950129-98-002732 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: 98655688 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 EMPLOYEE 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 Employee 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 Employee Savings Plan We have audited the accompanying statements of net assets available for benefits of the Quanex Corporation Employee 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 EMPLOYEE SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, ------------------------------------- 1997 1996 ------------ ------------ Assets: Investments, at fair value: Mutual fund assets: Fidelity Puritan Fund $ 8,682,374 $ 7,990,942 Fidelity Magellan Fund 10,370,199 9,025,079 Fidelity Contrafund 4,796,863 3,106,854 Fidelity Growth & Income Fund 6,782,645 4,187,289 Fidelity Overseas Fund 1,995,616 2,151,256 Fidelity Balanced Fund 527,322 272,553 Templeton Foreign Fund 488,227 476,234 Fidelity Government Money Market Fund 9,327,810 10,265,488 Quanex Corporation Common Stock 1,457,181 1,822,006 Fidelity Common/Commingled Trust 1,662,256 807,949 ------------ ------------ Total 46,090,493 40,105,650 ------------ ------------ Employee contributions receivable 405,287 446,619 Employer contributions receivable 113,412 142,213 ------------ ------------ Total 518,699 588,832 ------------ ------------ Net Assets Available for Benefits $ 46,609,192 $ 40,694,482 ============ ============
See notes to financial statements. 4 QUANEX CORPORATION EMPLOYEE SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, --------------------------- 1997 1996 ----------- ----------- Investment income: Interest and dividends $ 3,039,538 $ 3,420,494 Net appreciation in fair value of investments 4,220,737 1,154,013 ----------- ----------- Total income 7,260,275 4,574,507 ----------- ----------- Contributions: Employer 959,634 1,003,456 Less forfeitures 24,328 13,691 ----------- ----------- 935,306 989,765 Employee 3,623,254 3,671,185 ----------- ----------- Total contributions 4,558,560 4,660,950 ----------- ----------- Total additions 11,818,835 9,235,457 Benefit payments 5,904,125 2,261,229 ----------- ----------- Increase in net assets available for benefits 5,914,710 6,974,228 Net assets available for benefits: Beginning of year 40,694,482 33,720,254 ----------- ----------- End of year $46,609,192 $40,694,482 =========== ===========
See notes to financial statements. 5 QUANEX CORPORATION EMPLOYEE SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997 AND 1996 A. THE PLAN The following brief description of the Quanex Corporation Employee Savings Plan (the "Plan") is provided for general informational purposes only. Participants should refer to the Plan agreement for more complete information. (1) General. The Plan became effective April 1, 1986, as amended and restated effective January 1, 1989, and is sponsored by Quanex Corporation (the "Company"). The Plan is a defined contribution plan that is subject to the Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan is a voluntary savings plan in which employees of the Company and its subsidiaries, excluding the Nichols-Homeshield division and Piper Impact subsidiary, and those Quanex employees who are covered by a collective bargaining agreement, 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 Board of Directors of the Company, serves as the Plan administrator. (2) Contributions. Participants may elect to contribute up to 15% of their pre-tax annual compensation or up to 15% of their after-tax annual compensation limited to 15% of considered compensation as defined by the Plan agreement. The Company matches 50% of the employee's contribution up to, but not in excess of, 2.5% of the employee's annual compensation. (3) Participants Account. Each participant's account is credited with the participant's contribution, the Company's matching contribution, and an allocation of investment income, which is based on the participant's account balance as of the end of the period in which the income is earned. (4) Investment Options. The Plan offers the following investment funds, all managed by the Trustee, as follows: Government Money Market Fund - composed of short-term government obligations. Puritan Fund - invested and reinvested in common and preferred stocks and bonds. Magellan Fund - invested and reinvested in equity and debt securities of foreign and domestic companies. Growth and Income Fund - invested and reinvested in equity and debt securities of foreign and domestic companies. Overseas Fund - invested and reinvested in foreign securities. Balanced Fund - invested and reinvested in common and preferred stocks and bonds. Contrafund - invested and reinvested in equities of foreign and preferred stock. 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 voluntary contributions and the related earnings. Vesting in the employer's matching contributions for 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 100% 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 amount equal to the amount of vested benefits in his or her account. As of December 31, 1997 and 1996, net assets available for benefits included benefits of $46,482 and $30,852, respectively, due to participants who had withdrawn from participation in the Plan. Effective April 18, 1997, Quanex sold its LaSalle Steel Company ("LaSalle") subsidiary to Niagara Corporation. LaSalle employees in the Plan had the option of leaving their benefits in the Plan or receiving a lump-sum distribution, which could be rolled over into an individual retirement account, or into a new qualified retirement plan set up by LaSalle. As of December 31, 1997, $2,020,517 had been withdrawn from the Plan by LaSalle employees. 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 standards. (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. 7 C. PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to terminate the Plan, subject to the provisions of ERISA. In the event of termination of the Plan, 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 ("Code") and, as a result, is exempt from taxation under Section 501(a) of the Code. The Plan received a favorable determination letter from the IRS dated October 3, 1996. 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 15,184 $440,782 18,195 $403,216 Sales 29,930 629,783 $870,900 30,076 618,301 $741,499
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 7,010,550 $22,115,775 3,781,125 $15,764,549 Sales 7,886,016 19,551,882 $20,775,858 4,142,244 8,854,715 $9,179,359
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 2,269,094 $2,269,094 396,185 $396,185 Sales 1,414,786 1,414,786 $1,414,786 833,229 833,229 $833,229
F. SUBSEQUENT EVENT 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. The Tube Group employees in the Plan will have the option of leaving their benefits in the Plan or receiving a lump-sum distribution, which could be rolled over into an individual retirement account, or into a new qualified savings plan set up by Vision Metals, Inc. 8 G. SUPPLEMENTAL FUND INFORMATION Contributions, benefit payments and investment income by fund are as follows for the years ended December 31:
1997 1996 ---------- ---------- Employee Contributions: Fidelity Puritan Fund $ 597,524 $ 631,064 Fidelity Magellan Fund 716,695 909,697 Fidelity Contrafund 450,107 325,350 Fidelity Growth and Income Fund 538,186 381,285 Fidelity Overseas Fund 219,539 227,957 Fidelity Balanced Fund 67,979 40,829 Fidelity Government Money Market Fund 735,626 953,608 Templeton Foreign Fund 71,702 17,898 Quanex Corporation Common Stock 120,540 117,769 Fidelity Common/Commingled Trust 105,356 65,728 ---------- ---------- $3,623,254 $3,671,185 ========== ==========
1997 1996 ---------- ---------- Employer Contributions: Fidelity Puritan Fund $ 157,777 $ 172,119 Fidelity Magellan Fund 192,569 242,159 Fidelity Contrafund 112,759 83,610 Fidelity Growth and Income Fund 129,559 95,579 Fidelity Overseas Fund 58,043 60,383 Fidelity Balanced Fund 17,119 11,115 Fidelity Government Money Market Fund 191,436 268,082 Templeton Foreign Fund 16,435 4,332 Quanex Corporation Common Stock 35,832 37,089 Fidelity Common/Commingled Trust 23,777 15,297 ---------- ---------- $ 935,306 $ 989,765 ========== ==========
1997 1996 ---------- ---------- Benefit payments: Fidelity Puritan Fund $1,268,575 $ 331,862 Fidelity Magellan Fund 1,143,858 529,329 Fidelity Contrafund 193,382 29,696 Fidelity Growth and Income Fund 504,526 116,336 Fidelity Overseas Fund 226,282 57,153 Fidelity Balanced Fund 67,717 2,476 Fidelity Government Money Market Fund 2,232,996 859,097 Templeton Foreign Fund 39,954 292 Quanex Corporation Common Stock 149,028 92,241 Fidelity Common/Commingled Trust 77,807 242,747 ---------- ---------- $5,904,125 $2,261,229 ========== ==========
9
1997 1996 ---------- ---------- Investment income: Fidelity Puritan Fund $1,719,159 $1,005,808 Fidelity Magellan Fund 2,213,591 977,164 Fidelity Contrafund 815,658 443,202 Fidelity Growth and Income Fund 1,450,917 591,891 Fidelity Overseas Fund 215,404 241,670 Fidelity Balanced Fund 113,599 22,680 Fidelity Government Money Market Fund 517,602 515,358 Templeton Foreign Fund 46,464 30,573 Quanex Corporation Common Stock 102,136 685,994 Fidelity Common/Commingled Trust 65,745 60,167 ---------- ---------- $7,260,275 $4,574,507 ========== ==========
10 ITEM 27-A SCHEDULE OF ASSETS HELD FOR INVESTMENTS PURPOSES EIN: 38-1872178; PN 012 QUANEX CORPORATION EMPLOYEE SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1997
Shares/ Current Par Value Cost Value --------- ----------- ----------- Mutual Fund Assets - Fidelity Investments: Puritan Fund* 448,007 $ 7,403,135 $ 8,682,374 Magellan Fund* 108,851 8,444,019 10,370,199 Contrafund* 102,871 4,284,525 4,796,863 Growth and Income Fund* 178,022 5,230,360 6,782,645 Overseas Fund* 61,328 1,791,184 1,995,616 Balanced Fund* 34,533 491,382 527,322 Templeton Foreign Fund* 49,068 513,213 488,227 Government Money Market Fund* 9,327,811 9,327,810 9,327,810 --------------------------- Total Mutual Fund Assets 37,485,628 42,971,056 Quanex Corporation Common Stock* 51,811 1,212,348 1,457,181 Fidelity Common/Commingled Trust* 1,662,256 1,662,256 1,662,256 --------------------------- Total Investments $40,360,232 $46,090,493 ===========================
* Party-in-Interest 11 ITEM 27D - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS EIN 38-1872178; PN 012 QUANEX CORPORATION EMPLOYEE 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* 131 $2,341,611 88 $2,630,084 $2,342,812 $2,630,084 $ 287,272 Magellan* 168 3,780,714 112 3,972,236 3,599,399 3,972,236 372,837 Contrafund* 154 3,231,474 84 1,906,348 1,765,865 1,906,348 140,483 Growth & Income* 174 4,183,721 85 2,736,100 2,447,586 2,736,100 288,514 Gov't Money Market* 156 6,528,452 141 7,466,130 7,466,130 7,466,130 0 Common/ Commingled Trust* 108 2,269,094 67 1,414,786 1,414,786 1,414,786 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 Employee 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. 33-38702 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 Employee 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-----