1
Securities And Exchange Commission
Washington, D.C. 20549
FORM 11-K
(Mark One)
/X/ Annual Report Pursuant to Section 15(d) Of The Securities
Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1995
OR
/ / Transition Report Pursuant To Section 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the transition period from __________ to __________.
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 Savings
Plan
B. Name of 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, Texas 77027
Phone: (713) 961-4600
2
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 Employee Savings Plan
(the "Plan") as of December 31, 1995 and 1994, 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,
1995 and 1994, 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, 1995 and (2) 5% reportable transactions
for the year ended December 31, 1995 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. These schedules are the responsibility
of the Plan's management. Such schedules have been subjected to the auditing
procedures applied in our audit of the basic 1995 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
May 3, 1996
3
QUANEX CORPORATION
HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
----------------------------------------
1995 1994
------------ ------------
Assets:
Investments, at fair value -
Mutual fund assets:
Fidelity Puritan Fund $ 835,000 $ 479,342
Fidelity Magellan Fund 1,843,510 990,913
Fidelity Contrafund 127,661 21,161
Fidelity Growth and Income Fund 328,455 126,277
Fidelity Overseas Fund 369,562 221,045
Fidelity Balanced Fund 74,250 16,594
Fidelity Government Money Market Fund 2,119,423 1,551,467
Quanex Corporation common stock 187,886 132,707
Common/commingled trust 95,257 20,091
Deposits with insurance company,
at contract value - 131,294
---------- ----------
Total 5,981,004 3,690,891
---------- ----------
Employee contributions receivable 136,120 117,866
Employer contributions receivable 10,191 6,951
---------- ----------
Total 146,311 124,817
---------- ----------
Net assets available for benefits $6,127,315 $3,815,708
========== ==========
See notes to financial statements.
4
QUANEX CORPORATION
HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS
December 31,
----------------------------------------
1995 1994
------------ ------------
Investment income:
Interest and dividends $ 298,232 $ 142,094
Net appreciation (depreciation) in
fair value of investments 467,045 (80,190)
---------- ----------
Total 765,277 61,904
---------- ----------
Contributions:
Employee 1,637,214 1,157,814
Employer 98,350 72,075
---------- ----------
Total 1,735,564 1,229,889
---------- ----------
Total additions 2,500,841 1,291,793
Benefit payments 189,234 96,950
---------- ----------
Increase in net assets available
for benefits 2,311,607 1,194,843
Net assets available for
Beginning of year 3,815,708 2,620,865
---------- ----------
End of year $6,127,315 $3,815,708
========== ==========
See notes to financial statements.
5
QUANEX CORPORATION
HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
A. DESCRIPTION OF THE PLAN
The following description of the Quanex Corporation Hourly Bargaining
Unit Employees' Savings Plan (the "Plan") is provided for general
information purposes only. Participants should refer to the Plan
document for more complete information.
(1) General. The Plan, originally named the Quanex Corporation
Hourly Employee Savings Plan, became effective January 1, 1989
and is sponsored by Quanex Corporation (the "Company"). The
Plan began receiving contributions in April 1989. 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 hourly employees of certain
divisions of the Company 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 Company's Board of Directors,
serves as the Plan administrator.
(2) Contributions. Participants may elect to contribute up to 15%
of their before-tax or after-tax compensation as defined by
the Plan agreement. The Plan was amended effective July 1,
1994 to include LaSalle Steel Company hourly employees. All
plan provisions apply to the LaSalle Steel Company hourly
employees with the addition of an employer matching
contribution that does not exceed 5% of the member's
considered compensation. During the 1994 Plan year, LaSalle
Steel Company made a Supplemental Employer Contribution of
$100 on behalf of each member who was employed by LaSalle
Steel Company on May 15, 1994 and also on behalf of each
member who was first hired by LaSalle Steel Company after May
15, 1994, and completed 720 hours of service.
(3) Participant Accounts. Each participant's account is credited
with the participant's contribution and an allocation of
investment income, which is based upon individual participant
account balances as of the end of the period in which the
income was earned.
(4) Investment Options. The Plan has eight investment funds and a
Quanex stock fund managed by the Trustee, as follows:
Government Money Market Fund - composed of short-term
government obligations.
Balanced Fund - invested and reinvested in common and
preferred stocks and bonds.
Growth and Income Fund - invested and reinvested in equity and
debt securities of foreign and domestic companies.
6
Magellan Fund - invested and reinvested in equity and debt
securities of foreign and domestic companies.
Contrafund - invested and reinvested in equities of foreign
and domestic companies.
Overseas Fund - invested and reinvested in foreign securities.
Common/Commingled Trust - invested and reinvested in
investment contracts with insurance companies, banks and other
financial institutions.
Puritan Fund - invested and reinvested in common and preferred
stocks and bonds.
Quanex Corporation Common Stock - invested and reinvested
exclusively in the common stock of Quanex Corporation.
Additionally, the Plan had investments in a series of
guaranteed investment contracts, which matured January 1,
1995. Refer to Note C for further discussion.
(5) Vesting. Participants are immediately vested in their
contributions and the related earnings. Vesting in the
employer's matching contributions for employees is 0% for less
than one year of services graduating to 100% for five or more
years. Upon death, retirement or total permanent disability,
the participant or beneficiary becomes immediately 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 distribution equal
to the total amount of vested benefits in his or her account.
See further discussion of benefits payable in Note G.
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 using the last recorded sales
price.
(3) Administrative Expenses. The Company pays all administrative
expenses.
(4) Payment of Benefits. Benefit payments are recorded when paid.
7
C. DEPOSITS WITH INSURANCE COMPANY
In 1989, the Plan entered into a series of guaranteed investment
contracts with Metropolitan Life Insurance Company ("Metropolitan").
The contracts provided a guaranteed rate of return on principal
invested which was credited to the Plan for the length of the
contracts. The contracts were reduced for Plan withdrawals. The
contracts are included in the financial statements at the December 31,
1994 contract values as reported to the Plan by Metropolitan. The
contracts matured on January 1, 1995. The contracts provided an
interest rate of 8.3%.
D. 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 anytime 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.
E. 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 "IRS"). The Plan has received a favorable letter
of tax determination dated September 15, 1995. 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. Subsequent to year-end, the Plan received a
favorable determination letter dated January 29, 1996, which
supersedes the letter dated September 15, 1995.
F. RELATED PARTY TRANSACTIONS
During the years ended December 31, 1995 and 1994, the Plan purchased
shares of Quanex Corporation common stock, as shown below:
1995 1994
---- ----
Shares Cost Shares Cost
-------- -------- -------- --------
4,243 $92,529 5,096 $110,023
During the years ended December 31, 1995 and 1994, the Plan sold 347
and 194 shares of Quanex Corporation common stock for $7,457 (cost
$7,997) and $5,392 (cost $4,682), respectively.
During the years ended December 31, 1995 and 1994, the Plan purchased
shares of Fidelity mutual fund assets as shown below:
1995 1994
---- ----
Shares Cost Shares Cost
-------- -------- -------- --------
879,682 $2,278,180 824,831 $1,914,365
8
During the years ended December 31, 1995 and 1994, the Plan sold
270,825 and 321,719 shares of Fidelity mutual fund assets for
$484,054 (cost $456,173) and $819,960 (cost $825,438), respectively.
During the years ended December 31, 1995 and 1994, the Plan purchased
shares of Fidelity Common/Commingled Trust as shown below:
1995 1994
---- ----
Shares Cost Shares Cost
------ ---- ------ ----
82,554 $82,554 20,091 $20,091
During the year ended December 31, 1995, the Plan sold 7,387 shares of
Fidelity Common/Commingled Trust for $7,387 (cost $7,387). No shares
were sold during the year ended December 31, 1994.
G. BENEFITS PAYABLE
As of December 31, 1995 and 1994, net assets available for benefits
included benefits of $16,875 and $22,867, respectively, due to
participants who had withdrawn from participation in the Plan. As of
December 31, 1994, benefits payable of $22,867 were reported as a
liability on the ERISA Form 5500, resulting in a difference between
net assets available for benefits presented within this report of
$3,815,708 and the net assets recorded on Form 5500 of $3,792,841.
During 1995, the Department of Labor clarified its definition of
benefits payable, which resulted in no liability for benefits payable
on Form 5500 as of December 31, 1995. The following is a
reconciliation of benefit payments according to the financial
statements to Form 5500 for the year ended December 31, 1995:
Benefit payments per the financial statements $189,234
Amounts allocated to withdrawing participants at
December 31, 1994 (22,867)
--------
Benefit payments per Form 5500 $166,367
========
9
H. SUPPLEMENTAL FUND INFORMATION
Contributions, benefit payments and investment income by fund were as
follows for the years ended December 31:
1995 1994
------------ ------------
Employee Contributions:
Fidelity Puritan Fund $ 225,346 $ 174,607
Fidelity Magellan Fund 419,024 331,770
Fidelity Contrafund 44,860 14,595
Fidelity Growth and Income Fund 114,399 59,278
Fidelity Overseas Fund 144,420 90,740
Fidelity Balanced Fund 48,443 14,912
Fidelity Government Money Market Fund 508,585 384,265
Fidelity Short-Intermediate
Government Fund - 26,042
Quanex Corporation common stock 62,267 40,789
Common/commingled trust 69,870 20,816
------------ ------------
$ 1,637,214 $ 1,157,814
============ ============
1995 1994
------------ ------------
Employer Contributions:
Fidelity Puritan Fund $ 13,810 $ 5,164
Fidelity Magellan Fund 19,431 7,337
Fidelity Contrafund 4,379 1,596
Fidelity Growth and Income Fund 9,598 3,637
Fidelity Overseas Fund 10,578 4,515
Fidelity Balanced Fund 6,954 2,602
Fidelity Government Money Market Fund 18,045 40,897
Quanex Corporation common stock 6,177 2,628
Common/commingled trust 9,378 3,699
------------ ------------
$ 98,350 $ 72,075
============ ============
See notes to financial statements.
10
1995 1994
------------ -------------
Benefit payments:
Fidelity Puritan Fund $ 26,984 $ 13,530
Fidelity Magellan Fund 51,315 28,461
Fidelity Contrafund 214
Fidelity Growth and Income Fund 5,381 523
Fidelity Overseas Fund 2,595 4,168
Fidelity Balanced Fund 2,498
Fidelity Government Money Market Fund 94,128 41,686
Fidelity Short-Intermediate
Government Fund - 958
Quanex Corporation common stock 3,993 3,574
Common/commingled trust 2,340 -
Guaranteed investment contract - 3,836
------------ ------------
$ 189,234 $ 96,950
============ ============
1995 1994
------------- -------------
Investment income:
Fidelity Puritan Fund $ 129,241 $ 4,259
Fidelity Magellan Fund 431,859 (15,476)
Fidelity Contrafund 17,439 231
Fidelity Growth and Income Fund 69,343 1,881
Fidelity Overseas Fund 26,530 (102)
Fidelity Balanced Fund 6,251 (175)
Fidelity Government Money Market Fund 105,725 50,313
Fidelity Short-Intermediate
Government Fund - (3,306)
Quanex Corporation common stock (24,578) 13,729
Common/commingled trust 3,467 218
Guaranteed investment contract - 10,332
------------- -------------
$ 765,277 $ 61,904
============= =============
See notes to financial statements.
11
Item 27a - Schedule of Assets Held for Investment Purposes
EIN: 38-1872178; PN 015
QUANEX CORPORATION
HOURLY BARGAINING UNIT
EMPLOYEES SAVINGS PLAN
SUPPLEMENTAL SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
Shares/ Current
Par Value Cost Value
--------- -------- -------
Mutual Fund Assets - Fidelity Investments:
- ------------------------------------------
Government Money Market Fund* 2,119,423 $2,119,423 $2,119,423
Balanced Fund* 5,492 70,877 74,250
Puritan Fund* 49,089 771,267 835,000
Growth and Income Fund* 12,143 279,626 328,455
Magellan* 21,441 1,561,677 1,843,510
Contrafund* 3,358 120,263 127,661
Overseas Fund* 12,713 346,504 369,562
---------- ----------
Total Mutual Fund Assets 5,269,637 5,697,861
Quanex Corporation Common Stock* 9,697 208,427 187,886
Common/Commingled Trust* 95,257 95,257 95,257
---------- ----------
Total investments $5,573,321 $5,981,004
========== ==========
*Party-in-Interest
12
Item 27d - Schedule of Reportable (5%) Transactions EIN 38-1872178; PN 015
QUANEX CORPORATION HOURLY BARGAINING UNIT EMPLOYEES SAVINGS PLAN
SUPPLEMENTAL SCHEDULE OF 5% REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
Series of Transactions
Current
Total Number of Total Number Value on Net
Purchases During Purchase of Sales During Selling Cost of Transaction Gain
Description Plan Year Price Plan Year Price Asset Date (Loss)
- ----------- ---------------- -------- -------------- ------- -------- ----------- ---------
Puritan Fund 42 $316,129
16 $48,047 $45,811 $48,047 $2,236
Magellan Fund 54 640,704
25 113,644 92,232 113,644 21,412
Overseas Fund 31 167,351
15 36,872 34,637 36,872 2,235
Government Money 67 832,186
Market Fund 49 264,231 264,231 264,231 0
13
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 Employee Savings Plan
Date June 24, 1996 /s/ JOSEPH K. PEERY
---------------------------- ---------------------------------------
Joseph K. Peery, Benefits Committee
14
INDEX TO EXHIBITS
23.1 -- Independent Auditor's Consent
1
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 May 3, 1996
appearing in the Annual Report of Form 11-K of the Quanex Corporation Hourly
Bargaining Unit Employee Savings Plan for the year ended December 31, 1995.
/s/ DELOITTE & TOUCHE LLP
- -------------------------------
Deloitte & Touche LLP
Houston, Texas
June 24, 1996
