-----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, FyTGMa9ETiPQFyIVU9hFrDS+wGb7ylOCcvXjDzjfMoyUpfMI16BCZG8vH+4tV1In HV/KeGAUpjaQkQB88OGX0w== 0000950129-98-002733.txt : 19980630 0000950129-98-002733.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950129-98-002733 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: 98655690 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 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 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, 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 STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, -------------------------- 1997 1996 ----------- ----------- Assets: Investments, at fair value: Mutual fund assets: Fidelity Puritan Fund $ 397,572 $ 368,260 Fidelity Magellan Fund 6,336,645 4,613,459 Fidelity Contrafund 4,445,215 3,436,148 Fidelity Growth and Income Fund 8,237,910 5,722,217 Fidelity Overseas Fund 935,104 339,269 Fidelity Balanced Fund 1,951,329 1,441,746 Fidelity Government Money Market Fund 6,234,283 6,587,993 Templeton Foreign Fund 237,963 58,309 Quanex Corporation Common Stock 708,813 518,125 Fidelity Common/Commingled Trust 682,073 764,169 ----------- ----------- 30,166,907 23,849,695 Participant loans 1,311,591 1,067,089 ----------- ----------- Total 31,478,498 24,916,784 ----------- ----------- Employee contributions receivable 170,839 126,604 Employer contributions receivable 107,102 96,848 ----------- ----------- Total 277,941 223,452 ----------- ----------- Net assets available for benefits $31,756,439 $25,140,236 =========== ===========
See notes to financial statements. 4 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k) SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, -------------------------- 1997 1996 ----------- ----------- Investment income: Interest and dividends $ 1,924,289 $ 1,760,124 Net appreciation in fair value of investments 3,025,902 1,044,037 ----------- ----------- Total income 4,950,191 2,804,161 ----------- ----------- Contributions: Employer 1,375,887 1,302,003 Less forfeitures 36,396 34,342 ----------- ----------- 1,339,491 1,267,661 Employee 1,766,898 1,464,390 ----------- ----------- Total contributions 3,106,389 2,732,051 ----------- ----------- Interest on participant loans 90,456 69,555 ----------- ----------- Total additions 8,147,036 5,605,767 ----------- ----------- Benefit payments 1,524,355 2,154,169 Administrative fees 6,478 6,125 ----------- ----------- Total deductions 1,530,833 2,160,294 ----------- ----------- Increase in net assets available for benefits 6,616,203 3,445,473 Net assets available for benefits: Beginning of year 25,140,236 21,694,763 ----------- ----------- End of year $31,756,439 $25,140,236 =========== ===========
See notes to financial statements. 5 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k) SAVINGS PLAN 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 (the "Plan") is provided for general informational 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 ("Code") 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 on individual participant account balances as of the end of the period in which the income is earned. (4) Investment Options. Participants may direct allocation of their contributions to the following funds: Government Money Market Fund - invested and reinvested in 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, 1997 and 1996, net assets available for benefits included benefits of $3,479 and $22,530, 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 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 these 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. 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 ("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 December 22, 1994 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 11,896 $334,213 6,087 $145,904 Sales 5,620 138,365 $175,262 18,735 370,590 $435,319
During the years ended December 31, 1997 and 1996, the Plan purchased and sold shares of Fidelity mutual funds, as shown below:
1997 1996 ---- ---- Shares Cost Sales Price Shares Cost Sales Price --------- ---------- ----------- --------- ---------- ----------- Purchases 2,068,366 $27,387,956 2,158,747 $12,577,957 Sales 2,308,384 23,537,694 $24,173,502 1,918,003 10,179,781 $10,508,116
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 17,350,916 $17,350,916 5,950,598 $5,950,598 Sales 17,433,012 17,433,012 17,433,012 5,625,983 5,625,983 $5,625,983
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 $ 48,109 $ 24,360 Fidelity Magellan Fund 366,386 339,683 Fidelity Contrafund 293,331 220,724 Fidelity Growth and Income Fund 404,124 333,733 Fidelity Overseas Fund 50,026 41,056 Fidelity Balanced Fund 161,137 129,715 Fidelity Government Money Market Fund 301,382 303,711 Templeton Fund 30,357 4,847 Quanex Corporation Common Stock 37,702 28,928 Fidelity Common/Commingled Trust 74,344 37,633 ---------- ---------- $1,766,898 $1,464,390 ========== ========== 1997 1996 ---------- ---------- Employer Contributions: Fidelity Puritan Fund $ 24,300 $ 20,637 Fidelity Magellan Fund 287,744 268,954 Fidelity Contrafund 205,277 182,916 Fidelity Growth and Income Fund 274,829 247,719 Fidelity Overseas Fund 26,937 24,525 Fidelity Balanced Fund 126,436 121,618 Fidelity Government Money Market Fund 322,674 345,797 Templeton Foreign Fund 11,331 2,311 Quanex Corporation Common Stock 28,513 25,760 Fidelity Common/Commingled Trust 31,450 27,424 ---------- ---------- $1,339,491 $1,267,661 ========== ========== 1997 1996 ---------- ---------- Benefit payments: Fidelity Puritan Fund $ 27,309 $ 42,523 Fidelity Magellan Fund 265,735 393,328 Fidelity Contrafund 173,081 73,823 Fidelity Growth and Income Fund 362,756 455,730 Fidelity Overseas Fund 21,351 121,544 Fidelity Balanced Fund 75,691 197,261 Fidelity Government Money Market Fund 547,972 842,522 Templeton Foreign Fund 842 -- Quanex Corporation Common Stock 2,853 11,667 Fidelity Common/Commingled Trust 46,765 15,771 ---------- ---------- $1,524,355 $2,154,169 ========== ==========
9 1997 1996 ---------- ---------- Investment income: Fidelity Puritan Fund $ 69,603 $ 39,483 Fidelity Magellan Fund 1,263,804 483,131 Fidelity Contrafund 784,366 573,106 Fidelity Growth and Income Fund 1,835,146 937,521 Fidelity Overseas Fund 207,707 74,008 Fidelity Balanced Fund 358,885 118,163 Fidelity Government Money Market Fund 336,082 331,052 Templeton Foreign Fund 3,587 5,015 Quanex Corporation Common Stock 44,145 210,499 Fidelity Common/Commingled Trust 46,866 32,183 ---------- ---------- $4,950,191 $2,804,161 ========== ==========
10 ITEM 27-A SCHEDULE OF ASSETS HELD FOR INVESTMENTS PURPOSES EIN: 38-1872178; PN 017 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k) SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1997
Shares/ Current Par Value Cost Value ---------- ----------- ---------- Mutual Fund Assets - Fidelity Investments: Puritan Fund* 20,515 $ 365,283 $ 397,572 Magellan Fund* 66,512 5,145,551 6,336,645 Contrafund* 95,330 3,608,428 4,445,215 Growth and Income Fund* 216,218 5,648,968 8,237,910 Overseas Fund* 28,737 901,385 935,104 Balanced Fund* 127,788 1,766,041 1,951,329 Government Money Market Fund* 6,234,283 6,234,283 6,234,283 Templeton Foreign Fund* 23,916 257,691 237,963 ------------------------- Total Mutual Fund Assets 23,927,630 28,776,021 Quanex Corporation Common Stock* 25,202 618,447 708,813 Fidelity Common/Commingled Trust* 682,073 682,073 682,073 Participant loans (bearing interest rates from 7.85% to 11%) 1,311,591 1,311,591 ------------------------- Total Investments $26,539,741 $31,478,498 =========================
* Party-in-Interest 11 ITEM 27-D - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS EIN 38-1872178; PN 017 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k)SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF 5% REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997
Current 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* 133 $1,631,892 81 $ 772,845 $ 674,389 $ 772,845 $ 98,456 Contrafund* 111 1,865,383 67 1,215,906 1,099,347 1,215,906 116,559 Growth & Income* 140 3,665,022 90 2,618,499 2,393,374 2,618,499 225,125 Overseas* 135 17,597,648 69 17,164,239 17,015,413 17,164,239 148,826 Balanced* 85 899,035 55 510,783 476,053 510,783 34,730 Common/Commingled Trust* 148 17,350,916 79 17,433,012 17,433,012 17,433,012 0 Gov't Money Market* 106 1,288,607 98 1,642,318 1,642,318 1,642,318 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 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. 33-54081 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 for the year ended December 31, 1997. /s/ DELOITTE & TOUCHE LLP - ------------------------- DELOITTE & TOUCHE LLP Houston, Texas June 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----