Table of Contents
SECURITIES AND EXCHANGE COMMISSION
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 26-1561397 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
(Address of principal executive offices and zip code)
Large accelerated filero | Accelerated filero | Non-accelerated filerþ | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
Class | Outstanding at May 26, 2009 | |
Common Stock, par value $0.01 per share | 37,653,350 |
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(Unaudited)
April 30, | October 31, | |||||||
2009 | 2008 | |||||||
(In thousands except share data) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and equivalents | $ | 85,406 | $ | 67,413 | ||||
Accounts receivable, net of allowance of $1,668 and $1,892 | 52,584 | 101,211 | ||||||
Inventories | 36,918 | 63,848 | ||||||
Deferred income taxes | 9,314 | 10,932 | ||||||
Prepaid and other current assets | 6,712 | 6,239 | ||||||
Total current assets | 190,934 | 249,643 | ||||||
Property, plant and equipment, net | 151,639 | 157,389 | ||||||
Deferred income taxes | 58,013 | 3,875 | ||||||
Goodwill | 25,189 | 196,338 | ||||||
Intangible assets, net | 48,868 | 62,476 | ||||||
Other assets | 10,586 | 11,126 | ||||||
Total assets | $ | 485,229 | $ | 680,847 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 36,402 | $ | 79,512 | ||||
Accrued liabilities | 28,224 | 38,316 | ||||||
Current maturities of long-term debt | 323 | 363 | ||||||
Total current liabilities | 64,949 | 118,191 | ||||||
Long-term debt | 2,143 | 2,188 | ||||||
Non-current environmental reserves | 1,887 | 2,485 | ||||||
Other liabilities | 14,327 | 10,155 | ||||||
Total liabilities | 83,306 | 133,019 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, no par value, shares authorized 1,000,000; issued and outstanding none | — | — | ||||||
Common stock, $0.01 par value, shares authorized 125,000,000; issued 37,755,475 and 37,760,016 | 378 | 378 | ||||||
Additional paid-in-capital | 231,720 | 230,316 | ||||||
Retained earnings | 171,337 | 318,648 | ||||||
Accumulated other comprehensive income (loss) | (142 | ) | (144 | ) | ||||
403,293 | 549,198 | |||||||
Less common stock held by rabbi trust, 102,125 shares | (1,370 | ) | (1,370 | ) | ||||
Total stockholders’ equity | 401,923 | 547,828 | ||||||
Total liabilities and stockholders’ equity | $ | 485,229 | $ | 680,847 | ||||
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(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Net sales | $ | 113,206 | $ | 207,338 | $ | 226,094 | $ | 382,250 | ||||||||
Cost and expenses: | ||||||||||||||||
Cost of sales (exclusive of items shown separately below) | 104,387 | 170,776 | 211,051 | 317,853 | ||||||||||||
Selling, general and administrative expense | 12,846 | 43,637 | 28,627 | 63,680 | ||||||||||||
Impairment of goodwill and intangible assets | 45,263 | — | 182,562 | — | ||||||||||||
Depreciation and amortization | 7,929 | 9,147 | 16,634 | 18,106 | ||||||||||||
Operating income (loss) | (57,219 | ) | (16,222 | ) | (212,780 | ) | (17,389 | ) | ||||||||
Interest expense | (109 | ) | (100 | ) | (231 | ) | (238 | ) | ||||||||
Other, net | 177 | 4,242 | 299 | 4,550 | ||||||||||||
Income (loss) from continuing operations before income taxes | (57,151 | ) | (12,080 | ) | (212,712 | ) | (13,077 | ) | ||||||||
Income tax (expense) benefit | 17,005 | 4,765 | 52,153 | 5,153 | ||||||||||||
Income (loss) from continuing operations | (40,146 | ) | (7,315 | ) | (160,559 | ) | (7,924 | ) | ||||||||
Income (loss) from discontinued operations, net of tax | — | 1,982 | — | 5,675 | ||||||||||||
Net income (loss) | $ | (40,146 | ) | $ | (5,333 | ) | $ | (160,559 | ) | $ | (2,249 | ) | ||||
Basic and diluted earnings per common share: | ||||||||||||||||
Earnings (loss) from continuing operations | $ | (1.08 | ) | $ | (0.20 | ) | $ | (4.30 | ) | $ | (0.21 | ) | ||||
Income (loss) from discontinued operations | — | 0.06 | — | 0.15 | ||||||||||||
Earnings (loss) per share | $ | (1.08 | ) | $ | (0.14 | ) | $ | (4.30 | ) | $ | (0.06 | ) | ||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic and diluted | 37,333 | 37,265 | 37,333 | 37,215 |
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(Unaudited)
Six Months Ended | ||||||||
April 30, | ||||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Operating activities: | ||||||||
Net income (loss) | $ | (160,559 | ) | $ | (2,249 | ) | ||
(Income) loss from discontinued operations | — | (5,675 | ) | |||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Impairment of goodwill and intangible assets | 182,562 | — | ||||||
Depreciation and amortization | 16,668 | 18,111 | ||||||
Deferred income taxes | (34,730 | ) | 2,999 | |||||
Stock-based compensation | 1,403 | 24,936 | ||||||
Changes in assets and liabilities, net of effects from acquisitions and dispositions: | ||||||||
Decrease (increase) in accounts receivable | 47,103 | (5,896 | ) | |||||
Decrease (increase) in inventory | 26,913 | (3,127 | ) | |||||
Decrease (increase) in other current assets | (188 | ) | (4,872 | ) | ||||
Increase (decrease) in accounts payable | (43,190 | ) | 954 | |||||
Increase (decrease) in accrued liabilities | (5,522 | ) | (2,294 | ) | ||||
Increase (decrease) in income taxes | (19,729 | ) | (646 | ) | ||||
Other, net | 3,869 | (2,773 | ) | |||||
Cash provided by (used for) operating activities from continuing operations | 14,600 | 19,468 | ||||||
Cash provided by (used for) operating activities from discontinued operations | — | 25,127 | ||||||
Cash provided by (used for) operating activities | 14,600 | 44,595 | ||||||
Investing activities: | ||||||||
Capital expenditures, net of retirements | (9,567 | ) | (6,941 | ) | ||||
Cash provided by (used for) investing activities from continuing operations | (9,567 | ) | (6,941 | ) | ||||
Cash provided by (used for) investing activities from discontinued operations | — | 34,113 | ||||||
Cash provided by (used for) investing activities | (9,567 | ) | 27,172 | |||||
Financing activities: | ||||||||
Repayments of long-term debt | (163 | ) | (1,264 | ) | ||||
Common stock dividends paid | (2,260 | ) | — | |||||
Funding from Separation | 15,401 | 27,755 | ||||||
Other, net | (290 | ) | ||||||
Cash provided by (used for) financing activities from continuing operations | 12,978 | 26,201 | ||||||
Cash provided by (used for) financing activities from discontinued operations | — | (46,183 | ) | |||||
Cash provided by (used for) financing activities | 12,978 | (19,982 | ) | |||||
Effect of exchange rate changes on cash equivalents | (18 | ) | (56 | ) | ||||
Less: (Increase) decrease in cash and equivalents from discontinued operations | — | (13,057 | ) | |||||
Increase (decrease) in cash and equivalents from continuing operations | 17,993 | 38,672 | ||||||
Cash and equivalents at beginning of period | 67,413 | 1,778 | ||||||
Cash and equivalents at end of period | $ | 85,406 | $ | 40,450 | ||||
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(Unaudited)
Accumulated | ||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||
Common | Paid-in | Retained | Comprehensive | Rabbi | Stockholders’ | |||||||||||||||||||
Six months Ended April 30, 2009 | Stock | Capital | Earnings | Income (Loss) | Trust | Equity | ||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||
Balance at October 31, 2008 | $ | 378 | $ | 230,316 | $ | 318,648 | $ | (144 | ) | $ | (1,370 | ) | $ | 547,828 | ||||||||||
Net income (loss) | (160,559 | ) | (160,559 | ) | ||||||||||||||||||||
Common dividends ($0.06 per share) | (2,260 | ) | (2,260 | ) | ||||||||||||||||||||
Stock-based compensation activity: | ||||||||||||||||||||||||
Stock-based compensation earned | 1,403 | 1,403 | ||||||||||||||||||||||
Restricted stock awards | 1 | (1 | ) | — | ||||||||||||||||||||
Separation from Quanex Corporation | 15,508 | 15,508 | ||||||||||||||||||||||
Other | (1 | ) | 2 | 2 | 3 | |||||||||||||||||||
Balance at April 30, 2009 | $ | 378 | $ | 231,720 | $ | 171,337 | $ | (142 | ) | $ | (1,370 | ) | $ | 401,923 | ||||||||||
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In thousands) | ||||||||||||||||
Net sales | $ | — | $ | 298,939 | $ | — | $ | 571,578 | ||||||||
Transaction expenses and other related Separation costs, before tax | $ | — | $ | (15,231 | ) | $ | — | $ | (18,972 | ) | ||||||
Income from discontinued operations before tax | $ | — | $ | 5,797 | $ | — | $ | 18,745 | ||||||||
Income tax expense | — | (3,815 | ) | — | (13,070 | ) | ||||||||||
Income from discontinued operations, net of tax | $ | — | $ | 1,982 | $ | — | $ | 5,675 | ||||||||
• | Transaction expenses and other related Separation costs for the three months ended April 30, 2008 include $10.1 million of transaction costs (primarily investment banking fees, legal fees and accounting fees for the merger and discontinued operations’ portion of spin costs) and $4.9 million of expense related to the modification of Quanex Corporation stock based-compensation awards. The six-month figure reflects an additional $3.7 million of transaction related deal costs. See Note 11 for additional discussion of the modification of Quanex Corporation’s stock-based compensation awards in connection with the Separation. |
• | With respect to inventories valued using the LIFO method, the vehicular products business (i.e. discontinued operations) recognized $15.3 million of LIFO expense during the three and six months ended April 30, 2008. |
• | During the first fiscal quarter of 2008, certain holders elected to convert $9.4 million principal of Debentures. Quanex Corporation paid $18.8 million to settle these conversions, including the premium which Quanex Corporation opted to settle in cash. Quanex Corporation recognized a $9.7 million loss on early extinguishment which represents the conversion premium and the non-cash write-off of unamortized debt issuance costs. This loss is reported in discontinued operations before tax above. |
• | Discontinued operations’ effective tax rate for the six months ended April 30, 2008 was 69.7% as a result of the predominately nondeductible pretax loss on early extinguishment of the Debentures coupled with transaction costs which are largely nondeductible for tax purposes. |
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
Engineered | Aluminum | |||||||||||
Building | Sheet Building | |||||||||||
Products | Products | Consolidated | ||||||||||
Balance at October 31, 2008 | $ | 175,949 | $ | 20,389 | $ | 196,338 | ||||||
Impairment | (150,266 | ) | (20,389 | ) | (170,655 | ) | ||||||
Other | (494 | ) | — | (494 | ) | |||||||
Balance at April 30, 2009 | $ | 25,189 | $ | — | $ | 25,189 | ||||||
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
As of April 30, 2009 | As of October 31, 2008 | |||||||||||||||
Gross | Gross | |||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Amortized intangible assets: | ||||||||||||||||
Customer relationships | $ | 21,200 | $ | 4,701 | $ | 23,691 | $ | 6,588 | ||||||||
Trademarks and trade names | 33,150 | 7,013 | 37,930 | 7,089 | ||||||||||||
Patents | 11,560 | 5,328 | 17,328 | 4,996 | ||||||||||||
Total | $ | 65,910 | $ | 17,042 | $ | 78,949 | $ | 18,673 | ||||||||
Intangible assets not subject to amortization: | ||||||||||||||||
Trade name | $ | — | $ | 2,200 |
Estimated | ||||
Fiscal Years Ending October 31, | Amortization | |||
2009 (remaining six months) | $ | 1,503 | ||
2010 | $ | 3,006 | ||
2011 | $ | 3,006 | ||
2012 | $ | 3,006 | ||
2013 | $ | 2,944 |
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
April 30, | October 31, | |||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Raw materials | $ | 16,517 | $ | 30,221 | ||||
Finished goods and work in process | 17,606 | 30,732 | ||||||
34,123 | 60,953 | |||||||
Supplies and other | 2,795 | 2,895 | ||||||
Total | $ | 36,918 | $ | 63,848 | ||||
April 30, | October 31, | |||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
LIFO | $ | 14,449 | $ | 32,947 | ||||
FIFO | 22,469 | 30,901 | ||||||
Total | $ | 36,918 | $ | 63,848 | ||||
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In thousands) | ||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||
Net income (loss) | $ | (40,146 | ) | $ | (5,333 | ) | $ | (160,559 | ) | $ | (2,249 | ) | ||||
Pension related | 2 | — | — | — | ||||||||||||
Foreign currency translation adjustment | 23 | (6 | ) | 2 | (107 | ) | ||||||||||
Total comprehensive income (loss), net of taxes | $ | (40,121 | ) | $ | (5,339 | ) | $ | (160,557 | ) | $ | (2,356 | ) | ||||
April 30, | October 31, | |||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Revolving Credit Facility | $ | — | $ | — | ||||
City of Richmond, Kentucky Industrial Building Revenue Bonds | 1,100 | 1,250 | ||||||
Scott County, Iowa Industrial Waste Recycling Revenue Bonds | 1,200 | 1,200 | ||||||
Capital lease obligations and other | 166 | 101 | ||||||
Total debt | $ | 2,466 | $ | 2,551 | ||||
Less maturities due within one year included in current liabilities | 323 | 363 | ||||||
Long-term debt | $ | 2,143 | $ | 2,188 | ||||
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In thousands) | ||||||||||||||||
Pension Benefits: | ||||||||||||||||
Service cost | $ | 489 | $ | 1,105 | $ | 1,408 | $ | 2,293 | ||||||||
Interest cost | 177 | 575 | 282 | 1,193 | ||||||||||||
Expected return on plan assets | (140 | ) | (747 | ) | (204 | ) | (1,550 | ) | ||||||||
Amortization of unrecognized prior service cost | — | — | — | — | ||||||||||||
Amortization of unrecognized net loss | — | — | — | — | ||||||||||||
Net periodic pension cost | $ | 526 | $ | 933 | $ | 1,486 | $ | 1,936 | ||||||||
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In thousands) | ||||||||||||||||
Net Sales: | ||||||||||||||||
Engineered Products | $ | 65,249 | $ | 92,494 | $ | 130,067 | $ | 179,770 | ||||||||
Aluminum Sheet Products | 50,356 | 118,281 | 101,164 | 210,348 | ||||||||||||
Intersegment Eliminations | (2,399 | ) | (3,437 | ) | (5,137 | ) | (7,868 | ) | ||||||||
Consolidated | $ | 113,206 | $ | 207,338 | $ | 226,094 | $ | 382,250 | ||||||||
Operating Income (Loss): | ||||||||||||||||
Engineered Products | $ | (46,135 | ) | $ | 5,296 | $ | (167,750 | ) | $ | 7,190 | ||||||
Aluminum Sheet Products | (11,558 | ) | 9,982 | (39,762 | ) | 15,585 | ||||||||||
Corporate & Other1 | 474 | (31,500 | ) | (5,268 | ) | (40,164 | ) | |||||||||
Consolidated | $ | (57,219 | ) | $ | (16,222 | ) | $ | (212,780 | ) | $ | (17,389 | ) | ||||
1 | Corporate & Other includes transaction-related expenditures of $25.7 million and $26.4 million during the three and six months ended April 30, 2008, respectively, compared to $0.1 million during the six months ended April 30, 2009. There were no transaction-related expenditures during the three months ended April 30, 2009. For the three months ended April 30, 2008, transaction-related expenditures were comprised of $1.9 million for the Company’s share of spin-off transaction costs, $22.8 million non-cash expense related to the modification of stock-based compensation awards and $1.0 million related to the acceleration of executive incentive and other benefits. The six months ended April 30, 2008 reflects an additional $0.7 million of spin-off transaction costs from the first quarter of 2008. For additional discussion of the stock-based compensation modification impact, see also Note 11. |
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
April 30, | October 31, | |||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Identifiable Assets: | ||||||||
Engineered Products | $ | 273,150 | $ | 440,172 | ||||
Aluminum Sheet Products | 120,891 | 197,436 | ||||||
Corporate, Intersegment Eliminations & Other | 91,188 | 43,239 | ||||||
Consolidated | $ | 485,229 | $ | 680,847 | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In thousands) | ||||||||||||||||
Modification — stock options | $ | — | $ | 21,696 | $ | — | $ | 21,696 | ||||||||
Modification — restricted stock | — | 1,061 | — | 1,061 | ||||||||||||
Modification — expense associated with the Separation | — | 22,757 | — | 22,757 | ||||||||||||
Stock option expense | 313 | 1,202 | 782 | 1,783 | ||||||||||||
Restricted stock amortization | 260 | 112 | 621 | 316 | ||||||||||||
Restricted stock units | 32 | 12 | 20 | 80 | ||||||||||||
Stock-based compensation expense | $ | 605 | $ | 24,083 | $ | 1,423 | $ | 24,936 | ||||||||
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
Weighted- | ||||||||
Average Grant- | ||||||||
Date Fair Value | ||||||||
Shares | Per Share | |||||||
Non-vested at October 31, 2008 | 324,923 | $ | 15.18 | |||||
Granted | 124,890 | 7.82 | ||||||
Forfeited | (129,431 | ) | 14.82 | |||||
Non-vested at April 30, 2009 | 320,382 | $ | 12.46 | |||||
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
Grants during | ||||||||
Six Months Ended April 30, | ||||||||
2009 | 2008 | |||||||
Weighted-average expected volatility | 47.0 | % | 39.0 | % | ||||
Expected term (in years) | 4.9-5.1 | 4.9-5.1 | ||||||
Risk-free interest rate | 1.6-1.7 | % | 3.0 | % | ||||
Expected dividend yield over expected term | 1.0 | % | 1.0 | % | ||||
Weighted-average grant-date fair value per share | $ | 3.03 | $ | 5.28 |
Weighted- | Weighted- | |||||||||||||||
Average | Average | Aggregate | ||||||||||||||
Exercise | Remaining | Intrinsic | ||||||||||||||
Price | Contractual | Value | ||||||||||||||
Shares | Per Share | Term (in years) | (000s) | |||||||||||||
Outstanding at October 31, 2008 | 1,214,839 | $ | 14.88 | |||||||||||||
Granted | 508,175 | 7.82 | ||||||||||||||
Forfeited | (343,452 | ) | 14.74 | |||||||||||||
Outstanding at April 30, 2009 | 1,379,562 | 12.32 | 9.0 | $ | 1,261 | |||||||||||
Vested or expected to vest at April 30, 2009 | 1,299,559 | 12.31 | 9.0 | $ | 1,191 | |||||||||||
Exercisable at April 30, 2009 | 320,343 | $ | 14.07 | 7.9 | $ | 57 | ||||||||||
Weighted- | ||||||||
Average Grant- | ||||||||
Date Fair Value | ||||||||
Shares | Per Share | |||||||
Non-vested at October 31, 2008 | 1,112,734 | $ | 5.34 | |||||
Granted | 508,175 | 3.03 | ||||||
Forfeited | (343,452 | ) | 5.16 | |||||
Vested | (218,238 | ) | 5.30 | |||||
Non-vested at April 30, 2009 | 1,059,219 | $ | 4.30 | |||||
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (continued)
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
April 30, | October 31, | |||||||
2009 | 2008 | |||||||
(In thousands) | ||||||||
Current | $ | 1,820 | $ | 1,800 | ||||
Non-current | 1,887 | 2,485 | ||||||
Total environmental reserves | 3,707 | 4,285 | ||||||
Receivable for recovery of remediation costs | $ | 4,034 | $ | 4,671 | ||||
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(continued)
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||||||||||||||||||
2009 | 2008 | Change | % | 2009 | 2008 | Change | % | |||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Net sales | $ | 113.2 | $ | 207.3 | $ | (94.1 | ) | (45.4 | )% | $ | 226.1 | $ | 382.3 | $ | (156.2 | ) | (40.9 | )% | ||||||||||||||
Cost of sales1 | 104.4 | 170.8 | (66.4 | ) | (38.9 | ) | 211.1 | 317.9 | (106.8 | ) | (33.6 | ) | ||||||||||||||||||||
Selling, general and administrative | 12.8 | 43.6 | (30.8 | ) | (70.6 | ) | 28.6 | 63.7 | (35.1 | ) | (55.1 | ) | ||||||||||||||||||||
Impairment of goodwill and intangibles | 45.3 | — | 45.3 | 100.0 | 182.6 | — | 182.6 | 100.0 | ||||||||||||||||||||||||
Depreciation and amortization | 7.9 | 9.1 | (1.2 | ) | (13.2 | ) | 16.6 | 18.1 | (1.5 | ) | (8.3 | ) | ||||||||||||||||||||
Operating income | (57.2 | ) | (16.2 | ) | (41.0 | ) | (253.1 | ) | (212.8 | ) | (17.4 | ) | (195.4 | ) | (1,123.0 | ) | ||||||||||||||||
Operating income margin | (50.5 | )% | (7.8 | )% | (42.7 | )% | (94.1 | )% | (4.6 | )% | (89.5 | )% | ||||||||||||||||||||
Interest expense | (0.1 | ) | (0.1 | ) | — | — | (0.2 | ) | (0.2 | ) | — | — | ||||||||||||||||||||
Other, net | 0.2 | 4.2 | (4.0 | ) | (95.2 | ) | 0.3 | 4.5 | (4.2 | ) | (93.3 | ) | ||||||||||||||||||||
Income tax expense | 17.0 | 4.8 | 12.2 | 254.2 | 52.2 | 5.2 | 47.0 | 903.8 | ||||||||||||||||||||||||
Income (Loss) from continuing operations | $ | (40.1 | ) | $ | (7.3 | ) | $ | (32.8 | ) | ** | $ | (160.5 | ) | $ | (7.9 | ) | $ | (152.6 | ) | ** | ||||||||||||
1 | Exclusive of items shown separately below. | |
** | Percentage change not meaningful due to impairment of goodwill and intangible assets. |
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Three Months Ended April 30 | Six Months Ended April 30 | |||||||||||||||||||||||||||||||
2009 | 2008 | Change | % | 2009 | 2008 | Change | % | |||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Net sales | $ | 65.3 | $ | 92.5 | $ | (27.2 | ) | (29.4 | )% | $ | 130.1 | $ | 179.8 | $ | (49.7 | ) | (27.6 | )% | ||||||||||||||
Cost of sales1 | 52.6 | 70.2 | (17.6 | ) | (25.1 | ) | 107.8 | 139.5 | (31.7 | ) | (22.7 | ) | ||||||||||||||||||||
Selling, general and administrative | 7.7 | 10.2 | (2.5 | ) | (24.5 | ) | 16.0 | 19.6 | (3.6 | ) | (18.4 | ) | ||||||||||||||||||||
Impairment of goodwill and intangibles | 45.3 | — | 45.3 | 100.0 | 162.2 | — | 162.2 | 100.0 | ||||||||||||||||||||||||
Depreciation and amortization | 5.8 | 6.8 | (1.0 | ) | (14.7 | ) | 11.8 | 13.5 | (1.7 | ) | (12.6 | ) | ||||||||||||||||||||
Operating income | $ | (46.1 | ) | $ | 5.3 | $ | (51.4 | ) | ** | $ | (167.7 | ) | $ | 7.2 | $ | (174.9 | ) | ** | ||||||||||||||
1 | Exclusive of items shown separately below. | |
** | Percentage change not meaningful due to impairment of goodwill and intangible assets. |
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Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||||||||||||||||||
2009 | 2008 | Change | % | 2009 | 2008 | Change | % | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Net sales | $ | 50.3 | $ | 118.3 | $ | (68.0 | ) | (57.5 | )% | $ | 101.1 | $ | 210.4 | $ | (109.3 | ) | (51.9 | )% | ||||||||||||||
Cost of sales1 | 58.6 | 104.0 | (45.4 | ) | (43.7 | ) | 112.6 | 186.2 | (73.6 | ) | (39.5 | ) | ||||||||||||||||||||
Selling, general and administrative | 1.2 | 2.0 | (0.8 | ) | (40.0 | ) | 3.2 | 4.1 | (0.9 | ) | (22.0 | ) | ||||||||||||||||||||
Impairment of goodwill and intangibles | — | — | — | — | 20.4 | — | 20.4 | 100.0 | ||||||||||||||||||||||||
Depreciation and amortization | 2.1 | 2.3 | (0.2 | ) | (8.7 | ) | 4.7 | 4.5 | 0.2 | 4.4 | ||||||||||||||||||||||
Operating income | $ | (11.6 | ) | $ | 10.0 | $ | (21.6 | ) | (216.0 | ) | $ | (39.8 | ) | $ | 15.6 | $ | (55.4 | ) | ** | |||||||||||||
Shipped pounds | 43.6 | 71.7 | (28.1 | ) | (39.2 | )% | 79.6 | 130.3 | (50.7 | ) | (38.9 | )% |
1 | Exclusive of items shown separately below. | |
** | Percentage change not meaningful due to impairment of goodwill and intangible assets. |
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Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||||||||||||||||||
2009 | 2008 | Change | % | 2009 | 2008 | Change | % | |||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Net sales | $ | (2.4 | ) | $ | (3.5 | ) | $ | 1.1 | (31.4 | )% | $ | (5.1 | ) | $ | (7.9 | ) | $ | 2.8 | (35.4 | )% | ||||||||||||
Cost of sales1 | (6.8 | ) | (3.4 | ) | (3.4 | ) | 100.0 | (9.3 | ) | (7.8 | ) | (1.5 | ) | 19.2 | ||||||||||||||||||
Selling, general and administrative | 3.9 | 31.4 | (27.5 | ) | (87.6 | ) | 9.4 | 40.0 | (30.6 | ) | (76.5 | ) | ||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 0.1 | 0.1 | — | — | ||||||||||||||||||||||||
Operating income | $ | 0.5 | $ | (31.5 | ) | $ | 32.0 | (101.6 | )% | $ | (5.3 | ) | $ | (40.2 | ) | $ | 34.9 | (86.8 | )% | |||||||||||||
1 | Exclusive of items shown separately below. |
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Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Quanex Building Product’s share of spin-off transaction costs | $ | — | $ | 1.9 | $ | 0.1 | $ | 2.6 | ||||||||
Stock-based compensation expense — modification impact | — | 22.8 | — | 22.8 | ||||||||||||
Acceleration of executive incentives and other benefits | — | 1.0 | — | 1.0 | ||||||||||||
Total transaction related expense | $ | — | $ | 25.7 | $ | 0.1 | $ | 26.4 | ||||||||
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Sources of Funds
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Six Months Ending April 30, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Cash flows from operating activities | $ | 14.6 | $ | 19.5 | ||||
Cash flows from investing activities | $ | (9.6 | ) | $ | (6.9 | ) | ||
Cash flows from financing activities | $ | 13.0 | $ | 26.2 |
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In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS 157), which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements. SFAS 157, as it relates to financial assets and financial liabilities, becomes effective for fiscal years beginning after November 15, 2007 (as of November 1, 2008 for the Company). The provisions of SFAS 157 are to be applied prospectively with limited exceptions. The adoption of the financial asset and financial liabilities portion of this Statement did not have an impact on the Company’s consolidated financial statements, since the Company already applies its basic concepts in measuring fair values. The standard describes three levels of inputs that may be used to measure fair value:
Level 1 — instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.
Level 2 — instrument valuations are obtained from readily-available pricing sources for comparable instruments.
Level 3 — instrument valuations are obtained without observable market values and require a high level of judgment to determine the fair value.
The Company holds Treasury Money Market Fund investments that are classified as cash equivalents and are measured at fair value on a recurring basis, based on quoted prices in active markets for identical assets (Level 1). The Company had cash equivalent investments totaling approximately $82.6 million at April 30, 2009.
On February 12, 2008, the FASB issued FSP No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which delays the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on at least an annual basis, until fiscal years beginning after November 15, 2008 (as of November 1, 2009 for the Company). The Company is currently evaluating the impact of adopting SFAS 157 on its consolidated financial statements for the remainder of SFAS 157 regarding nonfinancial assets and nonfinancial liabilities.
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Votes For | Votes Withheld | |||||||
Donald G. Barger, Jr. | 24,843,108 | 10,049,175 | ||||||
David D. Petratis | 33,476,523 | 1,415,761 |
Votes | Votes | Votes | Broker | |||||||||||||
For | Against | Abstained | Nonvotes | |||||||||||||
Shares voted | 30,226,882 | 2,350,686 | 2,314,715 | — |
Exhibit | ||||
Number | Description of Exhibits | |||
3.1 | Certificate of Incorporation of the Registrant dated as of December 12, 2007, filed as Exhibit 3.1 of the Registrant’s Registration Statement on Form 10 (Reg. No. 001-33913) as filed with the Securities and Exchange Commission on January 11, 2008, and incorporated herein by reference. | |||
3.2 | Amended and Restated Bylaws of the Registrant dated as of August 28, 2008, filed as Exhibit 3.2 of the Registrant’s Quarterly Report on Form 10-Q (Reg. No. 001-33913) for the quarter ended July 31, 2008, and incorporated herein by reference. | |||
4.1 | Form of Registrant’s Common Stock certificate, filed as Exhibit 4.1 of Amendment No. 1 to the Registrant’s Registration Statement on Form 10 (Reg. No. 001-33913) as filed with the Securities and Exchange Commission on February 14, 2008, and incorporated herein by reference. | |||
4.2 | Credit Agreement dated as of April 23, 2008, among the Company, certain of its subsidiaries as guarantors, Wells Fargo Bank, National Association, in its capacity as administrative agent, and certain lender parties, filed as Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (Reg. No. 001-33913) dated April 23, 2008, and incorporated herein by reference. | |||
* 31.1 | Certification by chief executive officer pursuant to Rule 13a-14(a)/15d-14(a). | |||
* 31.2 | Certification by chief financial officer pursuant to Rule 13a-14(a)/15d-14(a). | |||
* 32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Filed herewith |
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QUANEX BUILDING PRODUCTS CORPORATION | ||||
/s/ Brent L. Korb | ||||
Senior Vice President — Finance and Chief Financial Officer | ||||
Date: May 29, 2009 | (Principal Financial Officer) |
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Exhibit | ||||
Number | Description of Exhibits | |||
3.1 | Certificate of Incorporation of the Registrant dated as of December 12, 2007, filed as Exhibit 3.1 of the Registrant’s Registration Statement on Form 10 (Reg. No. 001-33913) as filed with the Securities and Exchange Commission on January 11, 2008, and incorporated herein by reference. | |||
3.2 | Amended and Restated Bylaws of the Registrant dated as of August 28, 2008, filed as Exhibit 3.2 of the Registrant’s Quarterly Report on Form 10-Q (Reg. No. 001-33913) for the quarter ended July 31, 2008, and incorporated herein by reference. | |||
4.1 | Form of Registrant’s Common Stock certificate, filed as Exhibit 4.1 of Amendment No. 1 to the Registrant’s Registration Statement on Form 10 (Reg. No. 001-33913) as filed with the Securities and Exchange Commission on February 14, 2008, and incorporated herein by reference. | |||
4.2 | Credit Agreement dated as of April 23, 2008, among the Company, certain of its subsidiaries as guarantors, Wells Fargo Bank, National Association, in its capacity as administrative agent, and certain lender parties, filed as Exhibit 10.1 of the Registrant’s Current Report on Form 8-K (Reg. No. 001-33913) dated April 23, 2008, and incorporated herein by reference. | |||
* 31.1 | Certification by chief executive officer pursuant to Rule 13a-14(a)/15d-14(a). | |||
* 31.2 | Certification by chief financial officer pursuant to Rule 13a-14(a)/15d-14(a). | |||
* 32.1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Filed herewith |
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