-----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, MPjy4DKg36mo7iNhdavXtJE3lc5QWOzxC4vHUxS+rePtOmVC91JpwAA8lI00Pl53 sDRSBVUUmWO0YqshTfpZ7g== 0000950129-99-002867.txt : 19990630 0000950129-99-002867.hdr.sgml : 19990630 ACCESSION NUMBER: 0000950129-99-002867 CONFORMED SUBMISSION TYPE: 11-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 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/A SEC ACT: SEC FILE NUMBER: 001-05725 FILM NUMBER: 99654038 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/A 1 NICHOLAS-HOMESHIELD 401(K) SAVINGS PLAN 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K/A 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: Nichols-Homeshield 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: 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, 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 NICHOLS-HOMESHIELD 401(K) SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, ------------------------------- 1998 1997 ------------ ------------ Assets: Investments at fair value Mutual fund assets: Fidelity Puritan Fund $ 446,080 $ 397,572 Fidelity Magellan Fund 8,491,981 6,336,645 Fidelity Contrafund 5,061,757 4,445,215 Fidelity Growth and Income Fund 10,278,570 8,237,910 Fidelity Retirement Growth Fund 75,555 -- Fidelity Overseas Fund 511,026 935,104 Fidelity Balanced Fund 2,331,697 1,951,329 Fidelity Blue Chip Fund 170,690 -- Fidelity Asset Manager Fund 19,368 -- Fidelity Low Priced Stock Fund 12,177 -- Fidelity Government Money Market Fund 6,824,432 6,234,283 Templeton Foreign Fund 184,526 237,963 Neuberger & Berman Partners Trust Fund 9,241 -- Quanex Corporation common stock 1,785,718 708,813 Common/commingled trust 1,823,429 682,073 ------------ ------------ 38,026,247 30,166,907 Participant loans 1,229,915 1,311,591 ------------ ------------ Total 39,256,162 31,478,498 ------------ ------------ Employee contributions receivable 234,379 170,839 Employer contributions receivable 164,861 107,102 ------------ ------------ Total 399,240 277,941 ------------ ------------ Net assets available for benefits $ 39,655,402 $ 31,756,439 ============ ============
See notes to financial statements. 4 QUANEX CORPORATION NICHOLS-HOMESHIELD 401(k) SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
December 31, ------------------------------- 1998 1997 ------------ ------------ Investment income: Interest and dividends $ 2,080,681 $ 1,924,289 Net appreciation in fair value of investments 4,948,885 3,025,902 ------------ ------------ Total income 7,029,566 4,950,191 ------------ ------------ Contributions: Employer 1,488,307 1,375,887 Less forfeitures 71,552 36,396 ------------ ------------ 1,416,755 1,339,491 Employee 1,811,540 1,766,898 ------------ ------------ Total contributions 3,228,295 3,106,389 ------------ ------------ Interest on participant loans 101,302 90,456 ------------ ------------ Total additions 10,359,163 8,147,036 ------------ ------------ Benefit payments 2,454,009 1,524,355 Loan processing fees 6,191 6,478 ------------ ------------ Total deductions 2,460,200 1,530,833 ------------ ------------ Increase in net assets available for benefits 7,898,963 6,616,203 Net assets available for benefits: Beginning of year 31,756,439 25,140,236 ------------ ------------ End of year $ 39,655,402 $ 31,756,439 ============ ============
See notes to financial statements 5 QUANEX CORPORATION NICHOLS-HOMESHIELD 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 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: 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. 6 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 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, 1998 and 1997, net assets available for benefits included benefits of $321,162 and $3,479, 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. 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) Administrative Expenses. The Company pays the administrative expenses of the Plan. (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. 7 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. 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, 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 62,027 $ 1,262,916 11,896 $ 334,213 Sales 8,086 190,640 $ 238,257 5,620 138,365 $ 175,262
During the years ended December 31, 1998 and 1997, the Plan purchased and sold shares of Fidelity mutual funds, as shown below:
1998 1997 ---- ---- Shares Cost Sales Price Shares Cost Sales Price ------ ---- ------------ ------ ---- ------------ Purchases 3,016,797 $ 42,968,889 2,068,366 $ 27,387,956 Sales 2,410,436 40,918,790 $ 42.206.577 2,308,384 23,537,694 $ 24,173,502
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 34,826,675 $ 34,826,675 17,350,916 $ 17,350,916 Sales 33,685,319 33,685,319 $ 33,685,319 17,433,012 17,433,012 $ 17,433,012
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 $ 35,282 $ 24,300 Fidelity Magellan Fund 328,759 287,744 Fidelity Contrafund 204,725 205,277 Fidelity Growth and Income Fund 303,491 274,829 Fidelity Retirement Growth Fund 2,797 -- Fidelity Overseas Fund 26,434 26,937 Fidelity Balanced Fund 125,467 126,436 Fidelity Blue Chip Fund 7,473 -- Fidelity Asset Manager Fund 1,220 -- Fidelity Low-Priced Stock Fund 1,788 -- Fidelity Government Money Market Fund 295,714 322,674 Templeton Foreign Fund 13,161 11,331 Neuberger & Berman Partners Trust Fund 1,210 -- Quanex Corporation common stock 32,658 28,513 Common/commingled trust 36,576 31,450 ----------- ----------- $ 1,416,755 $ 1,339,491 =========== ===========
1998 1997 ----------- ----------- Employee Contributions: Fidelity Puritan Fund $ 44,212 $ 48,109 Fidelity Magellan Fund 393,153 366,386 Fidelity Contrafund 286,530 293,331 Fidelity Growth and Income Fund 427,033 404,124 Fidelity Retirement Growth Fund 5,705 -- Fidelity Overseas Fund 46,670 50,026 Fidelity Balanced Fund 140,135 161,137 Fidelity Blue Chip Fund 32,934 -- Fidelity Asset Manager Fund 4,738 -- Fidelity Low-Priced Stock Fund 8,656 -- Fidelity Government Money Market Fund 288,720 301,382 Templeton Foreign Fund 25,348 30,357 Neuberger & Berman Partners Trust Fund 3,938 -- Quanex Corporation common stock 52,661 37,702 Common/commingled trust 51,107 74,344 ----------- ----------- $ 1,811,540 $ 1,766,898 =========== ===========
9
1998 1997 ----------- ----------- Benefit payments: Fidelity Puritan Fund $ 16,974 $ 27,309 Fidelity Magellan Fund 494,247 265,735 Fidelity Contrafund 455,611 173,081 Fidelity Growth and Income Fund 473,940 362,756 Fidelity Retirement Growth Fund 162 -- Fidelity Overseas Fund 101,398 21,351 Fidelity Balanced Fund 110,637 75,691 Fidelity Blue Chip Fund 2,157 -- Fidelity Asset Manager Fund 220 -- Fidelity Low-Priced Stock Fund -- -- Fidelity Government Money Market Fund 550,151 547,972 Templeton Foreign Fund 5,714 842 Neuberger & Berman Partners Trust Fund -- -- Quanex Corporation common stock 70,806 2,853 Common/commingled trust 171,992 46,765 ----------- ----------- $ 2,454,009 $ 1,524,355 =========== ===========
1998 1997 ----------- ----------- Investment income: Fidelity Puritan Fund $ 62,780 $ 69,603 Fidelity Magellan Fund 2,145,849 1,263,804 Fidelity Contrafund 1,288,892 784,366 Fidelity Growth and Income Fund 2,301,995 1,835,146 Fidelity Retirement Growth Fund 7,889 -- Fidelity Overseas Fund 338,220 207,707 Fidelity Balanced Fund 393,028 358,885 Fidelity Blue Chip Fund 23,861 -- Fidelity Asset Manager Fund 2,539 -- Fidelity Low-Priced Stock Fund (100) -- Fidelity Government Money Market Fund 336,310 336,082 Templeton Foreign Fund (6,592) 3,587 Neuberger & Berman Partners Trust Fund 2 -- Quanex Corporation common stock 75,842 44,145 Common/commingled trust 59,051 46,866 ----------- ----------- $ 7,029,566 $ 4,950,191 =========== ===========
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 DECEMBER 31, 1998
Shares/ Current Par Value Cost Value ------------ ------------ ------------ Fidelity Mutual Fund Assets: Puritan Fund* 22,226 $ 404,723 $ 446,080 Magellan* 70,286 5,743,954 8,491,981 Contrafund* 89,131 3,633,160 5,061,757 Growth and Income Fund* 224,227 6,381,217 10,278,570 Retirement Growth Fund * 3,684 75,142 75,555 Overseas Fund* 14,203 458,399 511,026 Balanced Fund* 142,524 2,013,907 2,331,697 Blue Chip Fund* 3,387 151,837 170,690 Asset Manager Fund* 1,114 20,175 19,368 Low-Priced Stock Fund* 533 13,092 12,177 Government Money Market Fund* 6,824,432 6,824,432 6,824,432 Templeton Foreign Fund 21,994 230,033 184,526 Neuberger & Berman Partners Trust Fund 511 9,468 9,241 ------------ ------------ Total Mutual Fund Assets $ 25,959,539 $ 34,417,100 Quanex Corporation Common Stock* 79,144 1,690,723 1,785,718 Common/Commingled Trust* 1,823,429 1,823,429 1,823,429 Participant loans (bearing interest rates from 7.85% to 11%) 1,229,915 1,229,915 ------------ ------------ Total Investments $ 30,703,606 $ 39,256,162 ============ ============
11 ITEM 27-D - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS EIN 38-1872178; PN 017 NICHOLS-HOMESHIELD 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) ----------- ---------------- ----------- ---------------- ----------- ----------- ----------- --------- Magellan* 104 $ 1,572,487 69 $ 1,162,852 $ 974,084 $ 1,162,852 $ 188,768 Contrafund* 97 1,715,401 63 2,013,205 1,980,680 2,013,205 32,525 Growth & Income* 135 4,709,800 85 4,402,232 3,977,551 4,402,232 424,681 Overseas* 137 31,972,258 73 32,727,270 32,415,244 32,727,270 312,026 Commingled Fund* 155 34,826,675 91 33,685,319 33,685,319 33,685,319 -- Gov't Money Mkt* 90 1,882,259 76 1,292,110 1,292,110 1,292,110 -- * 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 28, 1999 /s/ Viren M. Parikh ------------------- Viren M. Parikh, Benefits Committee 13 INDEX TO EXHIBITS
Exhibit No. Description - ------- ----------- 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. 33-54081 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 Nichols-Homeshield 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-----