-----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, FGA21yHXUGVx922zJ2kFBHWScfUvfnXpxxrnF9BShs8YNQItkpx/FVSibqhzh+oM xWz40bZOaS2HVFejpClLKg== 0000950129-99-002842.txt : 19990629 0000950129-99-002842.hdr.sgml : 19990629 ACCESSION NUMBER: 0000950129-99-002842 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990628 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: 99653245 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 PIPER IMPACT 401(K) SAVINGS PLAN 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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: Piper Impact 401(k) Savings Plan B. Name of issuer of the securities held pursuant to the Plan and the address of the principal executive office: Quanex Corporation 1900 West Loop South, Suite 1500 Houston, Texas 77027 (713) 961-4600 2 INDEPENDENT AUDITORS' REPORT The Benefits Committee Quanex Corporation Houston, Texas Re: Piper Impact 401(k) Savings Plan We have audited the accompanying statements of net assets available for benefits of the Piper Impact 401(k) Savings Plan (the "Plan") as of December 31, 1998 and 1997 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, 1998 and 1997 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, 1998 and (2) 5% reportable transactions for the year ended December 31, 1998 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. The supplemental information by fund in the statements on net assets available for benefits is presented for the purpose of additional analysis rather than to present the net assets available for benefits of the individual funds. The supplemental schedules and the supplemental information by fund is the responsibility of the Plan's management. Such supplemental schedules and supplemental information by fund have been subjected to the auditing procedures applied in our audit 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 June 1, 1999 3 QUANEX CORPORATION PIPER IMPACT 401(k) SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31 ------------------------- 1998 1997 ---------- ---------- Assets: Investment at fair value: Mutual fund assets: Fidelity Puritan Fund $ 500,091 $ 393,816 Fidelity Magellan Fund 29,180 -- Fidelity Contrafund 949,606 522,991 Fidelity Growth & Income Fund 32,894 -- Fidelity Intermediate Bond Fund -- 171,180 Fidelity Retirement Growth Fund 446,819 254,730 Fidelity Overseas Fund 2,178 -- Fidelity Balanced Fund 5,826 -- Fidelity Blue Chip Fund 2,241,863 1,399,981 Fidelity Asset Manager Fund 307,494 216,111 Fidelity Low-Priced Stock Fund 136 -- Fidelity Retirement Money Market Fund -- 273,551 Fidelity Government Money Market Fund 398,700 -- Templeton Foreign Fund 2,327 -- Neuberger & Berman Partners Trust Fund 2,540 -- Quanex Corporation common stock 69,928 42,176 Common/commingled trust 406,465 150,845 ---------- ---------- 5,396,047 3,425,381 ---------- ---------- Participant loans 198,115 146,425 ---------- ---------- 5,594,162 3,571,806 ---------- ---------- Employee contributions receivable 161,998 176,609 Employer contributions receivable 29,398 27,343 ---------- ---------- 191,396 203,952 ---------- ---------- Net Assets Available for Benefits $5,785,558 $3,775,758 ========== ==========
See notes to financial statements. 4 QUANEX CORPORATION PIPER IMPACT 401(k) SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
December 31, ------------------------- 1998 1997 ---------- ---------- Investment income: Interest and dividends $ 348,633 $ 231,919 Net appreciation in fair value of investments 674,906 252,778 ---------- ---------- 1,023,539 484,697 ---------- ---------- Contributions: Employer 239,388 240,468 Less forfeitures 29,413 9,434 ---------- ---------- 209,975 231,034 Employee 1,235,569 1,247,453 ---------- ---------- 1,445,544 1,478,487 ---------- ---------- Interest on participant loans 14,340 6,290 ---------- ---------- Total additions 2,483,423 1,969,474 ---------- ---------- Benefit payments 468,421 163,966 Loan processing fees 5,202 4,914 ---------- ---------- Total deductions 473,623 168,880 ---------- ---------- Increase in net assets available for benefits 2,009,800 1,800,594 Net assets available for benefits: Beginning of year 3,775,758 1,975,164 ---------- ---------- End of year $5,785,558 $3,775,758 ========== ==========
See notes to financial statements. 5 QUANEX CORPORATION PIPER IMPACT 401(k) SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998 AND 1997 A. DESCRIPTION OF THE PLAN The following description of the Piper Impact 401(k) Plan (the "Plan") is provided for general informational purposes only. Participants should refer to the Plan document for a more complete description of the Plan's provisions. (1) General. The Plan is a defined contribution plan which covers substantially all full-time employees of Piper Impact, Inc. (the "Company"), a subsidiary of Quanex Corporation. 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"). The Benefits Committee (the "Committee"), appointed by Quanex Corporation's Board of Directors, serves as the Plan administrator. (2) Contributions. Participants may contribute to the Plan by electing salary deferrals between 1% and 15% of compensation as defined by the Plan document. The Company contributes 25% of the first 6% of base compensation that a participant contributes to the Plan. Contributions are subject to certain limitations. Additional amounts may be contributed at the option of the Company's Board of Directors. (3) Participant Accounts. Each participant's account is credited with the participant's contribution and allocations of the Company's contribution and Plan earnings, and charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. Forfeited balances of terminated participants' non-vested accounts are used to reduce current or future Company contributions. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. (4) Investment Options. Participants may direct allocation of their contributions to the following funds: Fidelity Puritan Fund - invests in domestic and foreign common stocks, preferred stocks and bonds. Fidelity Magellan Fund - invests in equity and debt securities of foreign and domestic companies. Fidelity Contrafund - invests in equities of foreign and domestic companies. Fidelity Growth and Income Fund - invests in equity and debt securities of foreign and domestic companies. Fidelity Retirement Growth Fund - invests in common stocks and other securities. Fidelity Overseas Fund - invests in foreign equity and debt securities. Fidelity Balanced Fund - invests in common and preferred stocks and bonds. 6 Fidelity Blue Chip Fund - invests in domestic and foreign common stocks. Fidelity Asset Manager Fund - invests in domestic and foreign stocks, bonds and short-term obligations. Fidelity Low-Priced Stock Fund - invests in domestic and foreign stocks. Fidelity Government Money Market Fund - composed of short-term U.S. government obligations. Templeton Foreign Fund - invests in foreign securities. Neuberger & Berman Partner Trust Fund - invests in common stocks. Quanex Corporation Common Stock - invests exclusively in the common stock of Quanex Corporation. Common/Commingled Trust - invests 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 Company's matching and discretionary contribution portion of their accounts plus actual earnings thereon is based on years of continuous service. A participant is 20% vested for each year of credited service beginning with his or her second year and is 100% vested after six years of credited service. (6) Payment of Benefits. The Plan is intended for long-term savings but provides for early withdrawals and loan arrangements under certain conditions. In accordance with the Code, 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, 1998 and 1997, net assets available for benefits included benefits of $23,075 and $9,913, 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 ten 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. The participant pays loan set up fees and carrying fees 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) 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. (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 7 management's best estimates and judgments. Actual results could differ from these estimates. (4) Administrative Expense. The Company pays all administrative expenses. (5) Payments 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 of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts. 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 from the IRS dated September 30, 1998. 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, 1998 and 1997, the Plan purchased and sold shares of Fidelity mutual fund assets, as shown below:
1998 1997 ---- ---- Shares Cost Sales Price Shares Cost Sales Price ------- ---------- ----------- ------- ---------- ----------- Purchases 583,981 $2,306,480 250,854 $1,705,534 Sales 442,597 1,215,903 $1,312,890 86,413 373,734 $408,988
During the years ended December 31, 1998 and 1997, the Plan purchased and sold shares of Fidelity Common/Commingled Trust, as shown below:
1998 1997 ---- ---- Shares Cost Sales Price Shares Cost Sales Price ------- ---------- ----------- ------- ---------- ----------- Purchases 351,332 $ 351,332 105,387 $ 105,387 Sales 95,712 95,712 $ 95,712 37,741 37,741 $ 37,741
During the years ended December 31, 1998 and 1997, the Plan purchased and sold shares of Quanex Corporation common stock as shown below:
1998 1997 ---- ---- Shares Cost Sales Price Shares Cost Sales Price ------- ---------- ----------- ------- ---------- ----------- Purchases 2,189 $ 57,468 1,555 $ 48,030 Sales 589 17,873 $ 16,263 55 1,682 $ 1,588
8 F. SUPPLEMENTAL FUND INFORMATION Contributions, benefit payments and investment income by fund were as follows for the years ended December 31:
1998 1997 ----------- ----------- Employer contributions: Fidelity Puritan Fund $ 24,329 $ 26,783 Fidelity Magellan Fund 1,405 -- Fidelity Contrafund 39,573 37,704 Fidelity Growth & Income Fund 876 -- Fidelity Intermediate Bond Fund -- 13,701 Fidelity Retirement Growth Fund 19,362 18,608 Fidelity Overseas Fund 109 -- Fidelity Balanced Fund 251 -- Fidelity Blue Chip Fund 85,239 87,097 Asset Manager Fund 13,831 14,557 Fidelity Low-Priced Stock Fund 92 -- Fidelity Retirement Money Market Fund (2,866) 14,576 Fidelity Government Money Market Fund (3,762) -- Templeton Foreign Fund 140 -- Neuberger & Berman Partners Trust Fund 197 -- Quanex Corporation common stock 8,309 5,045 Common/commingled trust 22,890 12,963 ----------- ----------- $ 209,975 $ 231,034 =========== ===========
1998 1997 ----------- ----------- Employee contributions: Fidelity Puritan Fund $ 129,257 $ 139,215 Fidelity Magellan Fund 9,575 -- Fidelity Contrafund 214,892 204,631 Fidelity Growth & Income Fund 5,319 -- Fidelity Intermediate Bond Fund -- 67,476 Fidelity Retirement Growth Fund 99,432 95,104 Fidelity Overseas Fund 511 -- Fidelity Balanced Fund 2,205 -- Fidelity Blue Chip Fund 420,740 444,602 Asset Manager Fund 73,368 76,557 Fidelity Low-Priced Stock Fund 857 -- Fidelity Retirement Money Market Fund -- 121,081 Fidelity Government Money Market Fund 118,789 -- Templeton Foreign Fund 603 -- Neuberger & Berman Partners Trust Fund 940 -- Quanex Corporation common stock 44,715 35,632 Common/commingled trust 114,366 63,155 ----------- ----------- $ 1,235,569 $ 1,247,453 =========== ===========
9
1998 1997 ----------- ----------- Benefit payments: Fidelity Puritan Fund $ 72,628 $ 17,800 Fidelity Magellan Fund 4,417 -- Fidelity Contrafund 61,411 15,905 Fidelity Growth & Income Fund 1,374 -- Fidelity Intermediate Bond Fund -- 8,822 Fidelity Retirement Growth Fund 38,880 9,986 Fidelity Overseas Fund -- -- Fidelity Balanced Fund -- -- Fidelity Blue Chip Fund 182,786 55,029 Asset Manager Fund 37,117 8,957 Fidelity Low-Priced Stock Fund -- -- Fidelity Retirement Money Market Fund -- 32,630 Fidelity Government Money Market Fund 26,303 -- Templeton Foreign Fund -- -- Neuberger & Berman Partners Trust Fund 83 -- Quanex Corporation common stock 5,784 1,419 Common/commingled trust 37,638 13,418 ----------- ----------- $ 468,421 $ 163,966 =========== ===========
1998 1997 ----------- ----------- Investment income: Fidelity Puritan Fund $ 71,598 $ 62,162 Fidelity Magellan Fund 4,357 -- Fidelity Contrafund 209,626 80,320 Fidelity Growth & Income Fund 3,853 -- Fidelity Intermediate Bond Fund 2,277 10,824 Fidelity Retirement Growth Fund 109,577 32,386 Fidelity Overseas Fund 7 -- Fidelity Balanced Fund 507 -- Fidelity Blue Chip Fund 555,258 250,281 Asset Manager Fund 40,480 34,017 Fidelity Low-Priced Stock Fund (123) -- Fidelity Retirement Money Market Fund 566 11,626 Fidelity Government Money Market Fund 16,718 -- Templeton Foreign Fund (229) -- Neuberger & Berman Partners Trust Fund 16 -- Quanex Corporation common stock (11,867) (3,830) Common/commingled trust 20,918 6,911 ----------- ----------- $ 1,023,539 $ 484,697 =========== ===========
10 ITEM 27-a SCHEDULE OF ASSETS HELD FOR INVESTMENTS PURPOSES EIN: 76-0396886; PN 001 PIPER IMPACT, INC. PIPER IMPACT 401(k) SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF INVESTMENTS DECEMBER 31, 1998
Shares/ Current Par Value Cost Value --------- ---------- --------- Fidelity Mutual Fund Assets: Puritan Fund* 24,917 460,975 500,091 Magellan Fund* 242 25,926 29,180 Contrafund* 16,721 777,692 949,606 Growth & Income Fund* 718 30,502 32,894 Retirement Growth Fund* 21,785 409,372 446,819 Overseas Fund* 61 2,212 2,178 Balance Fund* 356 5,397 5,826 Blue Chip Fund* 44,490 1,643,103 2,241,863 Asset Manager Fund* 17,682 308,997 307,494 Low-Priced Stock Fund* 6 131 136 Government Money Market Fund* 398,700 398,700 398,700 Templeton Foreign Fund 277 2,760 2,327 Neuberger & Berman Partners Trust Fund 141 2,596 2,540 ---------- ---------- Total Mutual Fund Assets $4,068,363 $4,919,654 Quanex Corporation common stock* 3,099 85,943 69,928 Common/commingled trust* 406,465 406,465 406,465 Participant loans (bearing interest rates from 7.85% to 11%) 198,115 198,115 ---------- ---------- Total Investments $4,758,886 $5,594,162 ========== ==========
* Party-in-Interest 11 ITEM 27-d - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS EIN 76-0396886; PN 001 PIPER IMPACT 401(k) SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF 5% REPORTABLE TRANSACTIONS DECEMBER 31, 1998
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) ----------- ----------------- ------------- ---------------- ------------ ------------ ------------ ------------ Puritan* 65 $ 224,354 44 $ 140,328 $ 126,604 $ 140,328 $ 13,724 Contrafund* 65 367,587 38 80,756 70,718 80,756 10,038 Intermediate Bond* 4 10,244 3 183,265 180,349 183,265 2,916 Retirement Growth* 53 191,777 31 64,971 60,906 64,971 4,065 Blue Chip* 99 743,314 67 368,386 306,655 368,386 61,731 Asset Manager* 58 170,085 37 65,334 60,869 65,334 4,465 Retirement Money Mkt* 6 18,350 4 291,901 291,901 291,901 -- Government Money Mkt* 70 507,885 47 109,185 109,185 109,185 -- Common Trust* 64 351,332 53 95,712 95,712 95,712 --
* 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. Piper Impact 401(k) Savings Plan Date: June 28, 1999 /s/ Viren M. Parikh -------------------------------- Viren M. Parikh, Benefits Committee 13 INDEX TO EXHIBITS NUMBER DESCRIPTION - ------ ----------- 23.1 Independent Auditor's Consent
EX-23.1 2 INDEPENDENT AUDITOR'S CONSENT 1 EXHIBIT 23.1 INDEPENDENT AUDITOR'S CONSENT We consent to the incorporation by reference in Registration Statement No. 333-22977 of Quanex Corporation on Form S-8 of our report dated June 1, 1999, appearing in the Annual Report of Form 11-K of the Piper Impact 401(k) Savings Plan for the year ended December 31, 1998. /s/ DELOITTE & TOUCHE LLP - ------------------------------ DELOITTE & TOUCHE LLP Houston, Texas June 28, 1999 -----END PRIVACY-ENHANCED MESSAGE-----