-----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, EZ11ES+6GuHOL8erIuOhCnJVpQIW7ZMrUu7a4UrB377ZlC1bXiiyth1AcJmmbBMd Em4LWwsqdwdsxRIsfJ2L3g== 0000950129-99-002844.txt : 19990629 0000950129-99-002844.hdr.sgml : 19990629 ACCESSION NUMBER: 0000950129-99-002844 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: 99653248 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 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: Quanex Corporation Employee 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: 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, 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 EMPLOYEE SAVINGS STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, --------------------------- 1998 1997 ------------ ------------ Assets: Investment at fair value: Mutual fund assets: Fidelity Puritan Fund $ 7,236,131 $ 8,682,374 Fidelity Magellan Fund 10,870,892 10,370,199 Fidelity Contrafund 4,591,344 4,796,863 Fidelity Growth & Income Fund 7,068,547 6,782,645 Fidelity Retirement Growth Fund 224,938 -- Fidelity Overseas Fund 1,537,557 1,995,616 Fidelity Balanced Fund 407,967 527,322 Fidelity Blue Chip Fund 857,460 -- Fidelity Asset Manager Fund 47,290 -- Fidelity Low-Priced Stock Fund 162,209 -- Fidelity Government Money Market Fund 9,272,125 9,327,810 Templeton Foreign Fund 329,986 488,227 Newberger & Berman Partners Trust Fund 33,874 -- Quanex Corporation common stock 2,710,088 1,457,181 Common/commingled trust 1,911,158 1,662,256 ------------ ------------ 47,261,566 46,090,493 ------------ ------------ Employee contributions receivable 291,616 405,287 Employer contributions receivable 92,112 113,412 ------------ ------------ 383,728 518,699 ------------ ------------ Net Assets Available for Benefits $ 47,645,294 $ 46,609,192 ============ ============
See notes to financial statements. 4 QUANEX CORPORATION EMPLOYEE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, --------------------------- 1998 1997 ------------ ------------ Investment income: Interest and dividends $ 2,862,491 $ 3,039,538 Net appreciation in fair value of investments 4,939,364 4,220,737 ------------ ------------ 7,801,855 7,260,275 ------------ ------------ Contributions: Employer 714,161 959,634 Less forfeitures 13,954 24,328 ------------ ------------ 700,207 935,306 Employee 2,672,086 3,623,254 ------------ ------------ Total contributions 3,372,293 4,558,560 ------------ ------------ Total additions 11,174,148 11,818,835 Benefit payments 10,138,046 5,904,125 ------------ ------------ Increase in net assets available for benefits 1,036,102 5,914,710 Net assets available for benefits: Beginning of year 46,609,192 40,694,482 ------------ ------------ End of year $ 47,645,294 $ 46,609,192 ============ ============
See notes to financial statements. 5 QUANEX CORPORATION EMPLOYEE SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998 AND 1997 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. 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. 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. 6 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 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, 1998 and 1997, net assets available for benefits included benefits of $520,601 and $46,482, 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. Effective 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 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 savings plan set up by Vision Metals, Inc. As of December 31, 1998, $7,130,851 had been withdrawn from the Plan by Tube Group 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. 7 (4) Administrative Expenses. The Company pays all administrative expenses. (5) Payment of Benefits. Benefit payments are recorded when paid. 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, 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 86,676 $1,778,903 15,184 $440,782 Sales 18,375 446,176 $534,218 29,930 629,783 $870,900
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 10,773,586 $27,640,471 7,010,550 $22,115,775 Sales 10,971,840 30,398,411 $32,827,451 7,886,016 19,551,882 $20,775,858
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 3,188,117 $3,188,117 2,269,094 $2,269,094 Sales 2,939,215 2,939,215 $ 2,939,215 1,414,786 1,414,786 $1,414,786
8 F. SUPPLEMENTAL FUND INFORMATION Contributions, benefit payments and investment income by fund are as follows for the years ended December 31:
1998 1997 ------------ ------------ Employer contributions: Fidelity Puritan Fund $ 97,039 157,777 Fidelity Magellan Fund 153,663 192,569 Fidelity Contrafund 71,939 112,759 Fidelity Growth and Income Fund 110,469 129,559 Fidelity Retirement Growth Fund 2,596 0 Fidelity Overseas Fund 30,233 58,043 Fidelity Balanced Fund 12,747 17,119 Fidelity Blue Chip Fund 16,097 0 Fidelity Asset Manager Fund 1,048 0 Fidelity Low-Priced Stock Fund 6,255 0 Fidelity Government Money Market Fund 132,083 191,436 Templeton Foreign Fund 8,961 16,435 Newberger & Bermann Partners Trust Fund 3,076 0 Quanex Corporation common stock 33,438 35,832 Common/commingled trust 20,563 23,777 ------------ ------------ $ 700,207 $ 935,306 ============ ============
1998 1997 ------------ ------------ Employee contributions: Fidelity Puritan Fund $ 360,793 $ 597,524 Fidelity Magellan Fund 560,045 716,695 Fidelity Contrafund 302,918 450,107 Fidelity Growth and Income Fund 453,818 538,186 Fidelity Retirement Growth Fund 10,356 -- Fidelity Overseas Fund 123,337 219,539 Fidelity Balanced Fund 46,381 67,979 Fidelity Blue Chip Fund 75,469 -- Fidelity Asset Manager Fund 4,338 -- Fidelity Low-Priced Stock Fund 36,332 -- Fidelity Government Money Market Fund 476,659 735,626 Templeton Foreign Fund 31,000 71,702 Newberger & Bermann Partners Trust Fund 16,624 -- Quanex Corporation common stock 102,208 120,540 Common/commingled trust 71,806 105,356 ------------ ------------ $ 2,672,086 $ 3,623,254 ============ ============
9
1998 1997 ------------ ------------ Benefit payments: Fidelity Puritan Fund $ 1,825,829 $ 1,268,575 Fidelity Magellan Fund 2,122,706 1,143,858 Fidelity Contrafund 1,256,466 193,382 Fidelity Growth and Income Fund 1,554,712 504,526 Fidelity Retirement Growth Fund 808 -- Fidelity Overseas Fund 400,241 226,282 Fidelity Balanced Fund 126,538 67,717 Fidelity Blue Chip Fund 59,667 -- Fidelity Asset Manager Fund -- -- Fidelity Low-Priced Stock Fund 30,694 -- Fidelity Government Money Market Fund 2,195,695 2,232,996 Templeton Foreign Fund 97,879 39,954 Newberger & Bermann Partners Trust Fund -- -- Quanex Corporation common stock 132,381 149,028 Common/commingled trust 334,430 77,807 ------------ ------------ $ 10,138,046 $ 5,904,125 ============ ============
1998 1997 ------------ ------------ Investment income: Fidelity Puritan Fund $ 1,162,589 $ 1,719,159 Fidelity Magellan Fund 2,896,519 2,213,591 Fidelity Contrafund 1,115,512 815,658 Fidelity Growth and Income Fund 1,592,651 1,450,917 Fidelity Retirement Growth Fund 25,337 -- Fidelity Overseas Fund 216,018 215,404 Fidelity Balanced Fund 87,512 113,599 Fidelity Blue Chip Fund 125,080 -- Fidelity Asset Manager Fund 2,952 -- Fidelity Low-Priced Stock Fund (7,458) -- Fidelity Government Money Market Fund 449,773 517,602 Templeton Foreign Fund (9,876) 46,464 Newberger & Bermann Partners Trust Fund 19 -- Quanex Corporation common stock 51,140 102,136 Common/commingled trust 94,087 65,745 ------------ ------------ $ 7,801,855 $ 7,260,275 ============ ============
10 ITEM 27-a SCHEDULE OF ASSETS HELD FOR INVESTMENTS PURPOSES EIN: 38-1872178; PN 012 QUANEX CORPORATION EMPLOYEES SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF INVESTMENTS DECEMBER 31, 1998
Shares/ Current Par Value Cost Value ----------- ----------- ----------- Fidelity Mutual Assets Funds: Puritan Fund* 360,545 $ 6,094,698 $ 7,236,131 Magellan* 89,976 7,352,043 10,870,892 Contrafund* 80,848 3,660,871 4,591,344 Growth and Income Fund* 154,200 4,986,781 7,068,547 Retirement Growth Fund* 10,967 217,583 224,938 Overseas Fund* 42,734 1,275,960 1,537,557 Balanced Fund* 24,937 371,700 407,967 Blue Chip Fund* 17,016 757,806 857,460 Asset Manager Fund* 2,719 51,144 47,290 Low-Priced Stock Fund* 7,099 173,735 162,209 Government Money Market Fund* 9,272,125 9,272,125 9,272,125 Templeton Foreign Fund 39,331 399,533 329,986 Newberger & Berman Partners Trust Fund 1,875 33,389 33,874 ----------- ----------- Total Mutual Fund Assets $34,647,368 $42,640,320 Quanex Corporation common stock* 120,112 2,545,075 2,710,088 Common/commingled trust* 1,911,158 1,911,158 1,911,158 ----------- ----------- Total Investments $39,103,601 $47,261,566 =========== ===========
* Party-in-Interest 11 ITEM 27-d - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS EIN 38-1872178; PN 012 QUANEX CORPORATION EMPLOYEES SAVINGS PLAN SUPPLEMENTAL SCHEDULE OF 5% REPORTABLE TRANSACTIONS DECEMBER 31, 1998
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 ----------- ---------------- -------- ---------------- ------- ------- ----------- ---- Puritan* 115 $1,746,039 91 $ 3,544,988 3,054,476 $ 3,544,988 $490,512 Magellan* 183 4,768,945 114 6,621,029 5,860,920 6,621,029 760,109 Contrafund* 159 2,811,779 99 3,792,117 3,435,433 3,792,117 356,684 Growth & Income* 170 4,306,353 110 5,221,325 4,549,932 5,221,325 671,393 Blue Chip* 131 1,792,570 53 1,027,613 1,034,764 1,027,613 (7,151) Gov't Money Market* 159 10,347,619 139 10,403,305 10,403,305 10,403,305 -- Common Trust* 116 3,188,117 91 2,939,215 2,939,215 2,939,215 -- Quanex Common Stk* 48 1,778,903 32 534,218 446,176 534,218 88,042
* 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 28, 1999 /s/ Viren M. Parikh --------------------------------------- Viren M. Parikh, Benefits Committee 13 INDEX TO EXHIBITS 23.1 Independents 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. 33-38702 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 Quanex Corporation Employee 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-----