QUANEX CORP - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended April 30, 2004

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

For the transition period from to .

Commission File Number 1-5725

QUANEX CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE		38-1872178
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1900 West Loop South, Suite 1500, Houston, Texas 77027
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (713) 961-4600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at April 30, 2004
Common Stock, par value $0.50 per share		16,438,490

QUANEX CORPORATION

INDEX

PART I.		FINANCIAL INFORMATION

	Item 1:	Financial Statements
		Consolidated Balance Sheets–April 30, 2004 and October 31, 2003
		Consolidated Statements of Income-Three Months and Six Months Ended April 30, 2004 and 2003
		Consolidated Statements of Cash Flow–Six Months Ended April 30, 2004 and 2003
		Notes to Consolidated Financial Statements

	Item 2:	Management’s Discussion and Analysis of Results of Operations and Financial Condition

	Item 3:	Quantitative and Qualitative Disclosure about Market Risk

	Item 4:	Controls and Procedures

PART II.		OTHER INFORMATION

	Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds

	Item 4:	Submission of Matters to a Vote of Security Holders

	Item 6:	Exhibits and Reports on Form 8-K

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

QUANEX CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	April 30, 2004			October 31, 2003
	(In thousands)
ASSETS
Current assets:
Cash and equivalents	$	5,290		$	22,108
Accounts and notes receivable, net of allowance for doubtful accounts of $7,933 and $7,222	195,813			123,185
Inventories	139,683			79,322
Deferred income taxes	9,533			6,366
Other current assets	4,258			1,750
Total current assets	354,577			232,731
Property, plant and equipment	882,357			794,000
Less accumulated depreciation and amortization	(483,784		)	(458,096		)
Property, plant and equipment, net	398,573			335,904
Goodwill, net	137,756			66,436
Cash surrender value insurance policies, net	24,991			24,536
Intangible assets	28,718			2,755
Other assets	5,999			3,501
	$	950,614		$	665,863
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	143,226		$	89,435
Accrued liabilities	46,460			39,209
Income taxes payable	6,400			7,381
Current maturities of long-term debt	3,751			3,877
Other current liabilities	16			46
Total current liabilities	199,853			139,948
Long-term debt	215,817			15,893
Deferred pension credits	2,299			8,323
Deferred postretirement welfare benefits	7,782			7,845
Deferred income taxes	44,005			34,895
Non-current environmental reserves	13,352			13,517
Other liabilities	2,586			283
Total liabilities	485,694			220,704

Stockholders’ equity:
Preferred stock, no par value, shares authorized 1,000,000; issued and outstanding none	—			—
Common stock, $0.50 par value, shares authorized 50,000,000; issued 16,526,059 and 16,519,271	8,263			8,260
Additional paid-in-capital	189,073			187,114
Retained earnings	274,675			264,067
Unearned compensation	(815		)	(164		)
Accumulated other comprehensive income	(3,636		)	(3,641		)
	467,560			455,636
Less common stock held by rabbi trust, 55,521 and 47,507 shares	(1,644		)	(1,317		)
Less cost of shares of common stock in treasury, 32,048 and 294,803 shares	(996		)	(9,160		)
Total stockholders’ equity	464,920			445,159
	$	950,614		$	665,863

QUANEX CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended April 30,					Six Months Ended April 30,
	2004		2003			2004			2003
	(In thousands, except per share amounts)

Net sales	$	405,993	$	254,610		$	687,149		$	484,119
Cost and expenses:
Cost of sales	354,222		213,773			599,308			407,898
Selling, general and administrative expense	17,578		14,340			30,686			27,595
Depreciation and amortization	14,419		12,027			27,149			24,041
Gain on sale of land	—		(405		)	(454		)	(405		)
Operating income	19,774		14,875