UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K/A

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) December 9, 2004

QUANEX CORPORATION

(Exact name of registrant as specified in its charter)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01.  Completion of Acquisition or Disposition of Assets

On December 9, 2004, Quanex Corporation (the “Company”) completed the acquisition of all of the outstanding stock, through a subsidiary merger, of Mikron Industries, Inc. (“Mikron”), a privately-held Washington corporation.  Mikron, an industry-leading manufacturer of engineered vinyl and thermoplastic alloy composite (MikronWood™) window components, window coverings and door components, serves the residential building and remodeling markets.  Headquartered in the Seattle suburb of Kent, WA, Mikron operates modern and highly automated extrusion facilities located in the Kent area; Winnebago, IL; and Richmond, KY.

Pursuant to the terms of the Merger Agreement dated effective as of December 9, 2004 (the “Merger Agreement”); Quanex paid total cash consideration of approximately $205 million, which is subject to certain post-closing adjustments.  The Merger Agreement is by and among the Company, QUANEX FOUR, INC., a Delaware corporation and wholly owned subsidiary of Buyer, MIKRON INDUSTRIES, INC., a Washington corporation, and Jeffrey S. Sandwith, Susan Sandwith Crader, David A. Sandwith, Mark A. Sandwith, The W. Ronald Sandwith Special Purpose Revocable Trust pursuant to Indenture of Trust dated February 21, 2003, Jeffrey Sandwith, trustee, The Perpetual Asset Shield Trust FBO Jeffrey S. Sandwith pursuant to Indenture of Trust dated August 31, 2004, Jeffrey S. Sandwith, family trustee, The Perpetual Asset Shield Trust FBO Mark A. Sandwith pursuant to Indenture of Trust dated August 31, 2004, Mark A. Sandwith, family trustee, The Perpetual Asset Shield Trust FBO David A. Sandwith pursuant to Indenture of Trust dated August 31, 2004, David A. Sandwith, family trustee, and The Perpetual Asset Shield Trust FBO Susan Sandwith Crader pursuant to Indenture of Trust dated August 31, 2004, Susan Sandwith Crader, family trustee.  The Merger Agreement was filed as Exhibit 2.1 to the Current Report on Form 8-K filed on December 14, 2004, and incorporated herein by reference.

The Company financed the acquisition through cash on hand and borrowings from its $310 million revolving credit facility with Comerica Bank and a syndicate of other banks.  Prior to the execution of the Merger Agreement, there was no material relationship between Mikron and the Company, any affiliate of the Company, or any director or officer of the Company, and, to the knowledge of the Company, there was no material relationship between Mikron and any associate of any director or officer of the Company.  A press release, dated December 9, 2004, announcing the acquisition was attached as exhibit 99.1 to the Current Report on Form 8-K filed on December 14, 2004, and incorporated herein by reference.

Item 9.01.  Financial Statements and Exhibits

On December 14, 2004, the Company filed a Current Report on Form 8-K disclosing the completion of the acquisition of Mikron.  Such Form 8-K was filed without the financial statements and pro forma financial information as required by Items 210.3-05(a) and (b) of Regulation S-X.  This Current Report on Form 8-K provides such required information.

(a) Financial Statements of Business Acquired.

The audited financial statements of Mikron Industries, Inc. as of and for the years ended December 31, 2002 and 2003 are attached as Exhibit 99.1.  The unaudited financial statements of Mikron Industries, Inc. as of September 30, 2004 and for the nine months ended September 30, 2003 and 2004 are attached as Exhibit 99.2.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed combined financial statements of Quanex Corporation as of and for the year ended October 31, 2004 are attached as Exhibit 99.3.

(c) Exhibits

Exhibit 23.1                                    Consent of Independent Auditor.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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INDEX TO EXHIBITS

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Exhibit 23.1

CONSENT OF INDEPENDENT AUDITOR

We consent to the incorporation by reference in Registration Statement Nos. No. 33-29585, No. 33-22550, No. 33-35128, No. 33-38702, No. 33-46824, No. 33-57235, No. 33-54081, No. 33-54085, No. 33-54087, No. 333-18267, No. 333-22977, No. 333-36635, No. 333-89853, No. 333-66777, 333-45624 and No. 333-108687 of Quanex Corporation of our report dated March 15, 2004, with respect to the financial statements of Mikron Industries, Inc. for the year ended December 31, 2003 appearing in this Current Report on Form 8-K/A of Quanex Corporation.

Exhibit 99.1

MIKRON INDUSTRIES, INC.

FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2003 AND 2002

CONTENTS

March 15, 2004

Board of Directors

Mikron Industries, Inc.

Kent, Washington

Independent Auditor’s Report

We have audited the accompanying balance sheet of Mikron Industries, Inc. as of December 31, 2003 and 2002, and the related statements of earnings and retained earnings and cash flows for the years then ended.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with U.S. 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, the financial statements present fairly, in all material respects, the financial position of Mikron Industries, Inc. as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

MIKRON INDUSTRIES, INC.

BALANCE SHEET

See notes to financial statements.

MIKRON INDUSTRIES, INC.

STATEMENT OF EARNINGS AND RETAINED EARNINGS

See notes to financial statements.

MIKRON INDUSTRIES, INC.

STATEMENT OF CASH FLOWS

See notes to financial statements.

MIKRON INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of business -

Mikron Industries, Inc. is a Washington State corporation primarily involved in the manufacture and sale of vinyl and composite profile extrusions used in the construction of  windows and doors sold throughout the United States and Canada.  A substantial portion of the company’s sales and the subsequent collection of the receivables generated from these sales are dependent upon the customers’ sales in the construction, remodel and do-it-yourself industries.  A substantial portion of the company’s raw materials is acquired from a single vendor.  The company’s common stock consists of 3 different series with respect to voting rights.  In addition, 100,000 shares of no-par reserved common stock are authorized, with none issued and outstanding.  The accompanying financial statements include only the accounts of Mikron Industries, Inc., and do not include the accounts of other entities related through common ownership and management (Note P).

Cash and cash equivalents -

Cash and cash equivalents include all cash and short-term debt instruments, including certificates of deposit, purchased with original maturities of three months or less.  The company had $4,536,181 and $17,100,911 of cash equivalents as of December 31, 2003 and 2002, respectively, which consisted of short-term commercial paper that is not insured by the Federal Deposit Insurance Corporation (FDIC).  The company maintains its cash accounts at commercial banks located in Seattle, Washington, Richmond, Kentucky and Winnebago, Illinois.  At December 31, 2003 the company had $1,885,055 that was held in one commercial bank, not including outstanding checks.  These accounts are secured by the FDIC for up to $100,000.

Receivables –

Accounts receivable are stated at the amount management expects to collect from outstanding balances.  The company conducts ongoing credit evaluations of its customers’ financial conditions and limits the amount of trade credit extended when deemed necessary.  The company uses the allowance method for recording anticipated credit losses.  Management’s estimate of an allowance for doubtful accounts is based on a review of outstanding receivables, historical collection information, and existing economic conditions.  Delinquent receivables are written off based on individual credit evaluation and specific circumstances of the customer.

Investments -

The equity method of accounting is used for all investments in associated companies in which the Company’s interest is 20% or more.  Under the equity method, the company recognizes its share in the net earnings or losses of these associated companies as they occur rather than as distributions are received.  Distributions received are accounted for as a reduction of the investment rather than as income.

The company’s investments in debt securities, which typically mature in one year or less, are held to maturity and valued at cost, which approximates fair value.  The aggregate fair value at December 31, 2002 was $3,000,000 for investments in corporate debt securities.

Depreciation and amortization -

Depreciation of property, equipment, leasehold improvements and buildings is provided on the basis of the estimated useful lives of the individual assets using the straight-line method.  The estimated useful lives range from three to five years for transportation equipment, two to fifteen years for machinery and equipment, office furniture and leasehold improvements and thirty to thirty-nine years for buildings.  A 25% salvage value is used when deemed appropriate by management.  These same useful life estimates are used for assets acquired under capital leases.

The company records lease-purchase contracts, a method of financing property and equipment acquisitions, as assets and obligations at amounts based upon the cash purchase price of the assets involved at the beginning of the lease term.  Depreciation expense includes amortization of property and equipment recorded under capital leases on the basis of the estimated useful lives of the assets using the straight-line method.

Loan fees are amortized on the straight-line method over the life of the loans.

Sales -

Substantially all sales are made under the provision of five-year exclusive sales contracts that expire at various dates and are automatically renewed for one-year periods, unless notification of cancellation is received one year in advance.  The company has agreements with many of its customers to offer sole vendor and volume discounts for the purchase of the company’s products.  Subsequent to year-end, the total accrued discounts are refunded or credited to the applicable customer accounts and ultimately offset by past and/or future sales.

Insurance expense -

Certain insurance premiums are based upon payroll, sales and other factors subject to insurance company audit and any additional premium or credit is recorded during the period in which the insurance company completes its audit.

The company is 100% self-insured for Washington State industrial insurance.  The state of Washington requires Mikron Industries, Inc. to post a $150,000 bond, which is secured by a letter of credit issued by Bank of America. The company has insurance to cover claims in excess of $275,000 per claim or $500,000 in the aggregate each year.

The company provides dental benefits ranging between 50% to 100% of the first $1,000 per employee per year and medical benefits for each employee that are capped at $1,000,000 in a lifetime.  The first $90,000 of medical benefits for each employee is self-insured by Mikron Industries, Inc.

Management believes that all significant uninsured liabilities at December 31, 2003 and 2002 have been accrued.

Advertising -

Advertising costs are charged to operations when incurred.

Federal taxes on income -

As the stockholders of the company have elected, under Subchapter S of the Internal Revenue Code, to report the earnings or losses of the corporation on their personal income tax returns, no provision has been made for Federal taxes on income (Note O).

Estimates -

Management uses estimates and assumptions in preparing financial statements in accordance with U.S. generally accepted accounting principles.  Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.  Actual results could vary from the estimates that were used.

NOTE B - INVENTORY:

Inventory is comprised of the following:

Washington and Kentucky inventories are stated at the lower of cost or market, with cost determined by the LIFO method.  If the FIFO method had been used, inventories would have been approximately $665,000 and $1,041,000 higher at December 31, 2003 and 2002, respectively.

Illinois inventories are stated at the lower of cost or market, with cost determined by the FIFO method.

NOTE C - PROPERTY HELD UNDER CAPITAL LEASES:

The company is the lessee of land, plant and equipment under capital leases expiring in various years through 2020.

Property held under capital leases is as follows:

Depreciation expense on assets held under capital leases was $284,662 and $367,505 for the years ended December 31, 2003 and 2002, respectively.

NOTE D - NOTES RECEIVABLE:

NOTE E - OTHER ASSETS:

NOTE F - INVESTMENT IN HC FRANZHEIM ASSOCIATES, LLC (A LIMITED LIABILITY COMPANY):

In July 2000, Mikron Industries, Inc. invested $5,100 in cash and equipment for a 51% capital interest in HC Franzheim Associates, LLC, a limited liability company primarily involved in consulting.  The company’s investment has been accounted for on the equity method.  A summary statement of the net assets of HC Franzheim Associates, LLC as of December 31, 2003 and 2002 and the net income for the years then ended, from unaudited accounting records prepared for tax purposes, follows -

NOTE G - INVESTMENT IN MIKRONWOOD, LLC (A LIMITED LIABILITY COMPANY):

In June 2000, Mikron Industries, Inc. contributed $330,000 of intellectual property for a 20% profit interest in MikronWood, LLC, a limited liability company primarily involved in the licensing of intellectual property. The company’s investment has been accounted for on the equity method.  The contribution was based on the estimated fair market value of the intellectual property, which had no basis on the books of Mikron.  Eighty percent of the Limited Liability Company’s profit interest is owned equally by the four minority shareholders of Mikron Industries, Inc. The company will receive an 8% annual guaranteed payment of $21,200 based on equity contributed.  The company has entered into a licensing agreement with MikronWood, LLC allowing it to use the intellectual property in exchange for a licensing fee.  A summary statement of the net assets of MikronWood, LLC as of December 31, 2003 and 2002 and the net income for the years then ended, from unaudited accounting records prepared for tax purposes, follows -

NOTE H - NOTE PAYABLE:

The company maintains a $25,000,000 unsecured line-of-credit arrangement with Bank of America.  The arrangement expires June 1, 2005 and carries an interest rate that varies at the company’s choice of the prime rate or the bank’s adjusted London Interbank Offered Rate (LIBOR) plus a margin based on the company’s debt to worth ratio.  The arrangement contains various covenants including maintenance of working capital and various financial ratios. There were no outstanding advances on the line-of-credit at December 31, 2003 or 2002.  In addition, the arrangement provides for a $7,281,151 letter of credit to support a capital lease agreement (Note J), which is collateralized by the leased assets.

NOTE I - DEFERRED REVENUE:

During 2002, the company entered into an agreement with Hurd Millwork Co., Inc. to develop new dies.  Hurd Millwork Co., Inc. agreed to pay $520,000 initially for the development of the dies.  Future purchases of product from these dies will have a reduced sales price of five cents per pound until the entire initial payment of $520,000 is absorbed.  The amount of the initial payment will be recognized as income as product is purchased.

In connection with the sale of the company’s line of single-screw extruders to Pacific Plastics, Inc. on May 26, 1993, the company entered into a non-compete agreement whereby they agreed not to compete for ten years in the single-screw product line in North America and Mexico.  In consideration for this agreement the company received $250,000.  This amount was being recognized as income over the term of the agreement, becoming fully amortized in 2003.

NOTE J - OBLIGATIONS DUE UNDER CAPITAL LEASES:

In 2003, the company renegotiated the payment terms of its lease-purchase contract payable to U.S. Bank Corporate Trust Services.  The following payment schedule reflects this change,  which eliminated a principal payment in 2005.  The company has a $7,281,151 outstanding letter of credit with Bank of America securing the lease-purchase contract payable to U.S. Bank Corporate Trust Services.

Future payments to be made by the company on the obligations due under capital leases, based on interest rates in effect at December 31, 2003, are as follows -

NOTE K - LONG-TERM NOTES PAYABLE:

The note agreements with Prudential Insurance Company of America and Pruco Life Insurance Company contain various covenants including maintenance of working capital and various financial ratios. The note agreements include options to prepay the notes subject to a yield maintenance formula.

Scheduled future payments to be made on the long-term notes, based on interest rates in effect at December 31, 2003, are as follows:

Interest expense of $2,173,283 and $2,166,436 was recorded during the years ended December 31, 2003 and 2002, respectively.

NOTE L - INVESTMENT IN VL INVESTORS I, LLC (A LIMITED LIABILITY COMPANY):

In October 2003, Mikron Industries, Inc. contributed $233,520 of cash for 233,520 Class A equity units in VL Investors I, LLC, a limited liability company.  At December 31, 2003, this contribution constitutes a 76% interest in the profits, losses and capital of the LLC and a 100% interest in the voting rights.  The remaining 24% interest in VL Investors I, LLC is owned by a Co-President of Mikron Industries, Inc.  The company’s investment has been accounted for on the equity method.  A summary statement of the net assets of VL Investors I, LLC as of December 31, 2003 and the net loss for the year then ended, from unaudited accounting records prepared for tax purposes, follows -

NOTE M - REVENUE:

In the year ended December 31, 2003, revenues of $66,689,650 were derived from two major customers.  In the year ended December 31, 2002, revenues of $35,986,086 were derived from one major customer.  Major customers are defined as customers whose sales exceeded 10% of total company sales in 2003 or 2002.

NOTE N - LOSS ON ASSET IMPAIRMENT:

During the year ended December 31, 2002, several extrusion lines and related components that management expected to sell in 2003 were removed from service.  Based on a pending sale, management estimates the fair market value of the remaining unsold assets to be $20,000.  As the carrying value of these assets was in excess of the expected cash flows resulting from their sales, impairment losses have been recognized.

NOTE O - DIVIDENDS:

Dividends paid and accrued in 2003 and 2002 included $3,445,527 and $3,733,469, respectively, for estimated stockholder taxes on company earnings.  It is anticipated that the company will declare dividends during 2004 to pay estimated taxes on 2004 company earnings taxable to the stockholders.

NOTE P - RELATED PARTY TRANSACTIONS:

During the years ended December 31, 2003 and 2002, the company recorded the following related party transactions with various stockholders, MikronWood, LLC, owned by the company and stockholders of the company (Note G), HC Franzheim Associates, LLC, owned by the company and an employee of the company (Note F), VL Investors I, LLC, owned by the company and an officer of the company (Note L) and The W.R. Sandwith and M.G. Ritter Partnership, owned in part by the Estate of W.R. Sandwith and Sandwith Family, LLC:

The accompanying financial statements include the following balances with respect to related parties not disclosed elsewhere: