SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 2000
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 401 (k) Savings Plan
B. Name of the 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, TX 77027
INDEPENDENT AUDITORS' REPORT
The Benefits Committee
Quanex Corporation
Houston, Texas
Re: Quanex Corporation 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Quanex Corporation 401(k) Savings Plan ("the Plan") as of December 31,
2001 and 2000, 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 auditing standards generally accepted
in the United States of America. 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,
2001 and 2000, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
investments as of December 31, 2001 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements but is
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 schedule is the responsibility of the
Plan's management. This supplemental schedule has been subjected to the auditing
procedures applied in our audits 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
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DELOITTE & TOUCHE, LLP
Houston, Texas
June 19, 2002
QUANEX CORPORATION
QUANEX CORPORATION 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
---------------------------
2001 2000
------------ ------------
Assets:
Investments at fair value (see Note C) $ 50,742,841 $ 50,179,949
Participant loans 1,670,509 1,745,996
Employee contributions receivable 261,698 317,473
Employer contributions receivable 254,788 206,740
------------ ------------
516,486 524,213
------------ ------------
Net assets available for benefits $ 52,929,836 $ 52,450,158
============ ============
See notes to financial statements.
QUANEX CORPORATION
QUANEX CORPORATION 401(k) SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS
DECEMBER 31,
----------------------------
2001 2000
------------ ------------
Investment income:
Interest and dividends $ 1,126,935 $ 3,697,748
Net appreciation (depreciation) in fair value
of investments (see Note C) (4,009,823) (4,605,444)
------------ ------------
(2,882,888) (907,696)
------------ ------------
Contributions:
Employer (net of forfeitures) 2,933,084 2,069,235
Employee 3,065,957 5,255,888
------------ ------------
5,999,041 7,325,123
------------ ------------
Interest on participant loans 150,458 126,481
------------ ------------
Total additions 3,266,611 6,543,908
------------ ------------
Benefit payments 2,924,878 4,335,196
Administrative fees (see Note D) 8,472 6,997
------------ ------------
Total deductions 2,933,350 4,342,193
------------ ------------
Transfers between plans (see Note G) 146,417 94,851
------------ ------------
Increase in net assets available
for benefits 479,678 2,296,566
Net assets available for benefits:
Beginning of year 52,450,158 50,153,592
------------ ------------
End of year $ 52,929,836 $ 52,450,158
============ ============
See notes to financial statements.
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
EIN: 38-1872178; PN 017
QUANEX CORPORATION
QUANEX CORPORATION 401(k) SAVINGS PLAN
SUPPLEMENTAL SCHEDULE OF INVESTMENTS
DECEMBER 31, 2001
Shares/ Current
Par Value Cost Value
------------ ------------ ------------
* Fidelity Puritan Fund 41,486 $ 776,868 $ 733,061
* Fidelity Magellan Fund 107,541 10,898,924 11,207,877
* Fidelity Contrafund 132,259 6,188,904 5,656,719
* Fidelity Growth & Income Fund 248,051 8,318,123 9,272,135
* Fidelity Independence Fund 161,278 3,697,162 2,543,358
* Fidelity Overseas Fund 18,856 679,352 517,032
* Fidelity Balanced Fund 227,559 3,365,875 3,390,623
* Fidelity Blue Chip Fund 46,212 2,405,232 1,984,341
* Fidelity Asset Manager Fund 15,146 259,546 234,764
* Fidelity Low-Priced Stock Fund 44,452 1,130,129 1,218,883
* Fidelity Government Money Market Fund 8,515,042 8,515,042 8,515,042
Templeton Foreign Fund 44,768 454,086 414,102
Neuberger & Berman Partners Trust Fund 8,681 147,301 139,064
------------ ------------
Total Mutual Fund Assets 46,836,544 45,827,001
* Quanex Corporation unitized common stock 166,106 1,685,586 2,199,246
* Fidelity Common/Commingled trust 2,716,594 2,716,594 2,716,594
Participant loans (bearing interest rates from
7.85% to 10.50%, maturing within five to seven years) 1,670,509 1,670,509
------------ ------------
Total Investments $ 52,909,233 $ 52,413,350
============ ============
* Party-in-Interest
QUANEX CORPORATION
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001 AND 2000
A. DESCRIPTION OF THE PLAN
The following description of the Quanex Corporation 401(k) Savings Plan
(the "Plan"), formerly the Nichols 401(k) Savings Plan, provides only
general information. Participants should refer to the Plan document for
more complete information.
(1) General. The Plan, sponsored by Quanex Corporation (the
"Company"), was established on October 1, 1987, and was
amended and restated in its entirety effective January 1,
1998. The Plan is a defined contribution plan that is subject
to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"). It covers substantially all salaried
and non-union hourly employees at the Nichols Aluminum
divisions and Engineered Products divisions, employees of
Temroc Metals, Inc., and bargaining unit employees at the
Lincolnshire, Illinois plant. 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.
Effective February 14, 2000, the employees of Nichols
Aluminum - Golden, Inc. became participants in the Plan.
Effective June 1, 2000, the employees of Imperial Products,
Inc. became participants in the Plan. Effective July 1, 2001,
the employees of Temroc Metals, Inc. became participants in
the Plan.
(2) Contributions. Beginning January 1, 2002, participants may
elect to contribute up to 50% of compensation (15% before
January 1, 2002) as defined by the Plan agreement. The
Bargaining unit employees at the Lincolnshire, Illinois plant
are limited to a 15% contribution of compensation. 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) 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.
(5) 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. Terminated participants with account balances of
less than $5,000 will automatically receive a lump sum
distribution.
(6) 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.
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 recorded value of
the common/commingled trust is at face value, which is fair
value.
(3) Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
changes therein and disclosure of contingent assets and
liabilities. Actual results could differ from these estimates.
(4) Administrative Expenses. The Company pays the administrative
expenses of the Plan, except loan set up and carrying fees and
redemption fees imposed on certain Fidelity funds.
(5) Payment of Benefits. Benefit payments are recorded when paid.
C. INVESTMENTS
The following are investments that represent 5 percent or more of the
Plan's net assets.
December 31, 2001 December 31, 2000
Shares Amount Shares Amount
------------ ------------ ------------ ------------
Fidelity Magellan Fund 107,541 $ 11,207,877 90,729 $ 10,823,981
Fidelity Contrafund 132,259 5,656,719 124,184 6,106,141
Fidelity Growth & Income Fund 248,051 9,272,135 233,125 9,814,545
Fidelity Independence Fund 161,278 2,543,358 141,445 3,113,197
Fidelity Balanced Fund 227,559 3,390,623 191,699 2,911,908
Fidelity Government Money Market Fund 8,515,042 8,515,042 7,954,206 7,954,206
Fidelity Common/Commingled Trust 2,716,594 2,716,594 1,022,009 1,022,009
Quanex unitized common stock 166,106 2,199,246 474,485 4,564,544
During the years ended 2001 and 2000, the Plan's investments (including
gains and losses on investments bought and sold, as well as held during
the year) appreciated / (depreciated) in value as follows:
2001 2000
------------ ------------
Mutual funds $ (4,850,622) $ (4,757,756)
Quanex unitized common stock 840,799 152,312
------------ ------------
$ (4,009,823) $ (4,605,444)
============ ============
D. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by
Fidelity. Fidelity is the trustee as defined by the Plan and,
therefore, these transactions qualify as party-in-interest
transactions. Fees paid by the Plan for the investment management
services amounted to $8,472 and $6,997 for the years ended December 31,
2001 and 2000, respectively. In addition, the Plan invests in shares of
Quanex Corporation unitized common stock. Quanex Corporation is the
Plan sponsor as defined by the Plan and, therefore, these transactions
also qualify as party-in-interest transactions. As of December 31, 2001
and 2000, the value of Quanex Corporation unitized common stock held by
the Plan was $2,199,246 and $4,564,544, respectively.
E. 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.
F. 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. The Plan has received a favorable letter of tax
determination dated December 22, 1994. As such, the Plan is a qualified
trust under Sections 401(a) and 401(k) of the Internal Revenue Code
(the "Code") and, as a result, is exempt from federal income tax under
Section 501(a) of the Code. The Company believes the Plan is currently
designed and being operated in compliance with the applicable
requirements of the Code. The Company believes the Plan was qualified
and the related trust was tax-exempt as of the financial statement
dates.
G. TRANSFER OF ASSETS
Account balances of $(183,855) and $94,851 were transferred between the
Plan and the Quanex Corporation 401(k) Savings Plan for Hourly
Employees in plan years 2001 and 2000, respectively.
The assets of the Temroc Metals, Inc. Nonbargaining unit Employees'
401(k) Plan, totaling $330,272, were transferred to the Plan on July 2,
2001.
H. SUBSEQUENT EVENT
Effective June 1, 2002, the employees of Colonial Craft, Inc. became
participants in the Plan.
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 401 (k) Savings Plan
Date: June 28, 2002 /s/ Viren M. Parikh
-------------------
Viren M. Parikh, Benefits Committee
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
23.1 Independent Auditor's Consent
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 19, 2002,
appearing in this Annual Report on Form 11-K of the Quanex Corporation 401 (k)
Savings Plan for the year ended December 31, 2001.
/s/ DELOITTE & TOUCHE LLP
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DELOITTE & TOUCHE LLP
Houston, Texas
June 28, 2002
