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, 2001
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 Hourly Bargaining Unit Employees Saving
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 Hourly Bargaining Unit Employees Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Quanex Corporation Hourly Bargaining Unit Employees 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
HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
---------------------------
2001 2000
------------ ------------
Assets:
Investments at fair value (see Note C) $ 13,579,018 $ 13,828,011
Employee contributions receivable 77,594 103,096
------------ ------------
Net assets available for benefits $ 13,656,612 $ 13,931,107
============ ============
See notes to financial statements.
QUANEX CORPORATION
HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS
DECEMBER 31,
----------------------------
2001 2000
------------ ------------
Investment income:
Interest and dividends $ 318,277 $ 812,878
Net appreciation (depreciation) in fair value
of investments (see Note C) (940,098) (937,078)
------------ ------------
(621,821) (124,200)
Employee contributions 1,308,895 1,423,908
------------ ------------
Total additions 687,074 1,299,708
------------ ------------
Benefit payments 960,133 491,247
Administrative fee (see Note D) 74 12
------------ ------------
Total deductions 960,207 491,259
------------ ------------
Transfers between plans (see Note G) (1,362) 6,134,964
------------ ------------
Increase (decrease) in net assets available
for benefits (274,495) 6,943,413
Net assets available for benefits:
Beginning of year 13,931,107 6,987,694
------------ ------------
End of year $ 13,656,612 $ 13,931,107
============ ============
See notes to financial statements.
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
EIN: 38-1872178; PN 015
QUANEX CORPORATION
HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN
SUPPLEMENTAL SCHEDULE OF INVESTMENTS
DECEMBER 31, 2001
Shares/ Current
Par Value Cost Value
------------ ------------ ------------
* Fidelity Puritan Fund 61,772 $ 1,127,610 $ 1,091,521
* Fidelity Magellan Fund 38,578 4,240,191 4,020,657
* Fidelity Contrafund 14,120 743,686 603,937
* Fidelity Growth & Income Fund 28,614 1,191,731 1,069,597
* Fidelity Independence Fund 71,821 1,775,717 1,132,616
* Fidelity Overseas Fund 8,118 291,328 222,603
* Fidelity Balanced Fund 14,164 216,362 211,042
* Fidelity Blue Chip Fund 13,046 648,841 560,219
* Fidelity Asset Manager Fund 847 13,987 13,127
* Fidelity Low-Priced Stock Fund 3,250 81,419 89,126
* Fidelity Government Money Market Fund 3,075,143 3,075,143 3,075,143
Templeton Foreign Fund 14,344 143,667 132,682
Neuberger & Berman Partners Trust Fund 2,493 41,905 39,940
------------ ------------
Total Mutual Fund Assets 13,591,587 12,262,210
* Quanex Corporation unitized common stock 64,739 642,793 857,146
* Fidelity Common/Commingled trust 459,662 459,662 459,662
------------ ------------
Total Investments $ 14,694,042 $ 13,579,018
============ ============
* Party-in-Interest
QUANEX CORPORATION
HOURLY BARGAINING UNIT EMPLOYEES 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 Hourly Bargaining
Unit Employees Savings Plan (the "Plan") provides only general
information. Participants should refer to the Plan document for more
complete information.
(1) General. The Plan became effective January 1, 1989 and is
sponsored by Quanex Corporation (the "Company"). The Plan is a
defined contribution plan, which is subject to the Employee
Retirement Income Security Act of 1974 ("ERISA"). The Plan is
a voluntary savings plan in which union hourly employees of
the MACSTEEL divisions of the Company are eligible to
participate after completing three months of active service.
Fidelity Management Trust Company ("Fidelity" or the
"Trustee") holds the assets of the Plan in trust. The Benefits
Committee (the "Committee"), appointed by the Company's Board
of Directors, serves as the Plan administrator.
(2) Contributions. Participants may elect to contribute up to 15
percent of their before-tax or after-tax compensation as
defined by the Plan agreement.
(3) Participant Accounts. Each participant's account is credited
with the participant's contribution and an allocation of
investment income, which is 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
contributions and the related earnings.
(5) Payment of Benefits. Upon termination of service, the
participant may elect to receive a lump sum distribution equal
to the total amount of vested benefits in his or her account.
Terminated participants with an account balance of less than
$5,000 will automatically receive a lump sum distribution.
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 unitized common
stock, which is listed on the New York Stock Exchange, is
determined 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 all administrative
expenses, except 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 Puritan Fund 61,772 $1,091,521 57,341 $1,079,732
Fidelity Magellan Fund 38,578 4,020,657 36,176 4,315,771
Fidelity Growth & Income Fund 28,614 1,069,597 25,405 1,069,545
Fidelity Independence Fund 71,821 1,132,616 62,121 1,367,275
Fidelity Government Money Market Fund 3,075,143 3,075,143 2,265,178 2,265,178
Quanex unitized common stock 64,739 857,146 191,488 1,842,114
During the years ended December 31, 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 $ (1,373,859) $ (1,435,579)
Quanex unitized common stock 433,761 498,501
------------ ------------
$ (940,098) $ (937,078)
============ ============
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. 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 common stock held by the Plan was
$857,146 and $1,842,114, 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 April 25, 1997. 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 the employees at MACSTEEL's Fort Smith, Arkansas
facility who were covered by a collective bargaining agreement, which
totaled $6,134,964, were transferred from the Quanex Corporation
Employee Savings Plan on June 30, 2000. During 2001, account balances
of $1,362 were transferred between the Plan and the Quanex Corporation
Employee Saving 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 Hourly Bargaining Unit Employees
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.
33-46824 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 Hourly
Bargaining Unit Employees 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
