UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 1, 2014

 

 

Quanex Building Products Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-33913		26-1561397
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
1800 West Loop South, Suite 1500, Houston, Texas				77027
(Address of principal executive offices)				(Zip Code)

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

(Former name or former address, if changed since last report.)

 

 

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:

 

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

 

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

 

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

 

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

 

 

 

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Item 1.01 Entry into a Material Definitive Agreement.

As previously announced, on February 7, 2014, Quanex Building Products Corporation, a Delaware corporation (the “Company”), and its wholly owned subsidiary Nichols Aluminum, LLC, a Delaware limited liability company (“Nichols”), entered into a Limited Liability Company Interest Purchase Agreement (“Purchase Agreement”) with Aleris International, Inc., a Delaware corporation (“Buyer”), pursuant to which the Company agreed to sell to Buyer all of the issued and outstanding limited liability company interests of Nichols and Nichols’ wholly owned subsidiary, Nichols Aluminum-Alabama, LLC, a Delaware limited liability company (“Nichols Alabama”).

On April 1, 2014, the Company, Nichols and Buyer entered into the First Amendment to Limited Liability Company Interest Purchase Agreement (the “Amendment”). Pursuant to the Amendment, the Company agreed to sell all of the issued and outstanding limited liability company interests of Nichols to Aleris Rolled Products, Inc., a wholly-owned subsidiary of Buyer, and the Company agreed to cause Nichols to sell all of the issued and outstanding limited liability company interests of Nichols Alabama to UWA Acquisition Co., a wholly-owned subsidiary of Buyer.

The foregoing description of the Amendment is qualified in its entirety by reference to the full text of such Amendment, which is attached to this Form 8-K as Exhibit 10.1 and is incorporated herein by reference in its entirety.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On April 1, 2014, the Company completed its previously announced sale of all of the issued and outstanding limited liability company interests of its wholly-owned subsidiaries, Nichols and Nichols Alabama, to Buyer and Buyer’s affiliates, pursuant to the terms of the Purchase Agreement. The sale of such limited liability company interests was completed for a purchase price in cash of $110,000,000, which amount is subject to adjustment as described in the Purchase Agreement.

The foregoing description does not purport to be a complete statement of the parties’ rights and obligations under the Purchase Agreement and the transactions contemplated thereby or a complete explanation of the material terms thereof. The foregoing description is subject to and qualified in its entirety by reference to the text of the Purchase Agreement, a copy of which was attached as Exhibit 2.1 to the Current Report on Form 8-K filed by the Company on February 10, 2014, and which is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(b) Pro forma financial information: Exhibit 99.1 attached hereto and incorporated by reference herein includes the following unaudited pro forma financial statements giving effect to the transaction pursuant to the Purchase Agreement described under Item 2.01 above:

 

•

Unaudited pro forma condensed consolidated balance sheet as of January 31, 2014;

 

•

Unaudited pro forma condensed consolidated statements of income (loss) for the three months ended January 31, 2014, and the years ended October 31, 2013, 2012 and 2011; and

 

•

Notes to unaudited pro forma condensed consolidated financial statements

(d) Exhibits: The following exhibits are filed or furnished as part of this report:

Exhibits

 

2.1		Limited Liability Company Interest Purchase Agreement dated February 7, 2014, by and among Quanex Building Products Corporation, Nichols Aluminum, LLC and Aleris International Inc. (included as Exhibit 2.1 to Quanex Building Products Corporation’s Current Report on Form 8-K filed on February 10, 2014, and incorporated herein by reference).
10.1		First Amendment to Limited Liability Company Interest Purchase Agreement dated March 24, 2014, by and among Quanex Building Products Corporation, Nichols Aluminum, LLC and Aleris International, Inc.
99.1		Unaudited pro forma condensed consolidated financial information.

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SIGNATURE

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

 

		QUANEX BUILDING PRODUCTS CORPORATION
Date: April 7, 2014		By:		/s/ Brent L. Korb
				Brent L. Korb
				Senior Vice President — Finance and Chief Financial Officer

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EXHIBIT INDEX

 

Exhibit Number		Description
2.1		Limited Liability Company Interest Purchase Agreement dated February 7, 2014, by and among Quanex Building Products Corporation, Nichols Aluminum, LLC and Aleris International Inc. (included as Exhibit 2.1 to Quanex Building Products Corporation’s Current Report on Form 8-K filed on February 10, 2014, and incorporated herein by reference).
10.1		First Amendment to Limited Liability Company Interest Purchase Agreement dated March 24, 2014, by and among Quanex Building Products Corporation, Nichols Aluminum, LLC and Aleris International, Inc.
99.1		Unaudited pro forma condensed consolidated financial information.

Exhibit 10.1

Execution Version

FIRST AMENDMENT TO

LIMITED LIABILITY COMPANY INTEREST PURCHASE AGREEMENT

THIS FIRST AMENDMENT TO LIMITED LIABILITY COMPANY INTEREST PURCHASE AGREEMENT (this “Amendment”) is made and entered into as of April 1, 2014, by and among Quanex Building Products Corporation, a Delaware corporation (“Seller”), Nichols Aluminum, LLC, a Delaware limited liability company (the “Company”) and Aleris International Inc., a Delaware corporation (“Buyer”).

RECITALS

WHEREAS, Buyer, Seller and the Company are parties (the “Parties”) to that certain Limited Liability Company Interest Purchase Agreement, dated as of February 7, 2014 (the “Agreement”);

WHEREAS, in accordance with Section 10.09 of the Agreement, the Parties desire to amend the Agreement as herein set forth; and

WHEREAS, in accordance with Section 2.03 of the Agreement, the Parties also desire to specify the Closing Date.

AGREEMENTS

NOW THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Parties, the Parties agree as follows:

1. Section 2.01 of the Agreement is hereby deleted and restated in its entirety as follows:

“Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, for the consideration specified in Section 2.02, (i) Seller shall sell to Aleris Rolled Products, Inc., a wholly owned subsidiary of Seller, all of Seller’s right, title and interest in and to the LLC Interests, and (ii) the Seller shall cause the Company to sell to UWA Acquisition Co., a wholly owned subsidiary of Seller, all of the Company’s right, title and interest to the limited liability company interests of Nichols Aluminum – Alabama, LLC (which consideration shall be paid directly to Seller and not Company).”

2. Section 2.02(c)(i) of the Agreement is hereby deleted and restated in its entirety as follows:

“(i)(A) an assignment of the LLC Interests to Aleris Rolled Products, Inc. in form and substance satisfactory to Buyer and duly executed by Seller, and (B) an assignment of the Company’s right, title and interest to the limited liability company interests of Nichols Aluminum – Alabama, LLC to UWA Acquisition Co. in form and substance satisfactory to Buyer and duly executed by Company (collectively, the “Assignment”); and

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Execution Version

 

3. Section 8.02(e) of the Agreement is hereby amended and restated in its entirety as follows:

“(i) the Seller’s amendment of the Union 401(k) Plan described in Section 6.05(e) and (ii) operational plan failures relating to either the Union 401(k) Plan or the Seller 401(k) Plan for periods prior to the Closing, notwithstanding correction of any such plan failures made by the Company prior the Closing.”

4. Section 8.03 of the Agreement is hereby amended to add the following clause to the end thereof:

“or (e) the restructuring of the transactions contemplated by this Agreement as reflected in the First Amendment to the Limited Liability Company Purchase Agreement dated as of April 1, 2014.”

5. In accordance with Section 2.03 of the Agreement, the Closing shall take place on April 1, 2014, to be effective as of 12:01 A.M. on April 1, 2014, at the offices of Norton Rose Fulbright, Fulbright Tower, 1301 McKinney, Suite 5100, Houston, Texas 77010.

6. This Amendment may be executed in one or more counterparts (delivery of which may be by facsimile), each of which shall be deemed an original, but all of which together shall constitute one and the same instruments.

7. Except as expressly amended by this Amendment, all other terms and provisions of the Agreement shall remain in full force and effect. This Amendment shall in no way reduce or limit the obligations of Buyer under the Agreement.

8. Capitalized terms not defined herein shall have the meanings given to them in the Agreement.

[Signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

 

 

Signature Page to First Amendment to Limited Liability Company

Interest Purchase Agreement

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Signature Page to First Amendment to Limited Liability Company

Interest Purchase Agreement

Exhibit 99.1

Unaudited Pro Forma Condensed Consolidated Financial Information

Basis of Presentation

The accompanying unaudited pro forma condensed consolidated balance sheet and statements of income (loss) were prepared based on the Company’s historical financial information, and gives effect to the sale of Nichols to the Buyer on April 1, 2014, for $110.0 million in cash, subject to customary purchase price adjustments. The Company will provide certain transition services through May 31, 2014. No pro forma adjustments are presented herein with respect to the transition services agreement, as the amount is not deemed to be significant to the Company.

The unaudited pro forma balance sheet at January 31, 2014, reflects the pro forma effect of the Nichols disposition as if the transaction was consummated on that date. The unaudited pro forma condensed consolidated statements of income (loss) for the three months ended January 31, 2014 and the years ended October 31, 2013, 2012 and 2011, reflect the pro forma effect of the Nichols disposition as if the transaction was consummated on November 1, 2010. The historical balance sheet and statement of income (loss) for the three months ended January 31, 2014 were included in the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2014. The historical statements of income (loss) for the years ended October 31, 2013, 2012 and 2011 were provided in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2013. The accompanying unaudited pro forma condensed consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the referenced filings.

The unaudited pro forma condensed consolidated balance sheet and statements of income (loss) are presented in tabular format as follows: (i) historical consolidated results, as previously filed; (ii) less results of Nichols (the disposal group); (iii) plus pro forma adjustments, to arrive at the pro forma results. The results for Nichols were adjusted for LIFO inventory reserve, incurred but not reported costs related to workers’ compensation insurance and an effective tax rate adjustment in order to present the disposal group on a stand-alone basis for this pro forma presentation.

The unaudited pro forma condensed consolidated balance sheet and statements of income (loss) include pro forma adjustments which reflect transactions and events that are directly attributable to the sale and are factually supportable. These pro forma adjustments are described in the notes which accompany these unaudited pro forma condensed consolidated financial statements.

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QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JANUARY 31, 2014

 

		Consolidated As Reported				Disposal Group				Pro Forma Adjustments				Pro Forma
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	25,807			$	2			$	110,000	(a)		$	135,805
Accounts receivable, net			72,459				31,110				—				41,349
Inventories, net			74,498				21,314				—				53,184
Deferred income taxes			24,769				2,102				—				22,667
Prepaid and other current assets			7,352				5,970				—				1,382
Total current assets			204,885				60,498				110,000				254,387
Property, plant and equipment, net			160,531				50,342				—				110,189
Deferred income taxes			13,277				7,713				—				5,564
Goodwill			71,838				—				—				71,838
Intangible assets, net			76,969				—				—				76,969
Other assets			13,543				8,179				—				5,364
Total assets		$	541,043			$	126,732			$	110,000			$	524,311
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	67,278			$	29,702			$	—			$	37,576
Accrued liabilities			29,679				7,997				2,500	(a)			24,182
Income tax payable			—				—				9,930	(a)			9,930
Current maturities of long-term debt			187				24				—				163
Total current liabilities			97,144				37,723				12,430				71,851
Long-term debt			721				35				—				686
Deferred pension and postretirement benefits			4,506				310				—				4,196
Liability for uncertain tax positions			5,435				—				—				5,435
Non-current environmental reserves			8,862				8,862				—				—
Other liabilities			12,114				673				—				11,441
Total liabilities			128,782				47,603				12,430				93,609
Commitments and contingencies
Stockholders’ equity			412,261				79,129				97,570	(a)			430,702
Total liabilities and stockholders’ equity		$	541,043			$	126,732			$	110,000			$	524,311

See accompanying notes to unaudited pro forma condensed consolidated financial statements

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QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

FOR THE THREE MONTHS ENDED JANUARY 31, 2014

 

		Consolidated As Reported				Disposal Group				Pro Forma Adjustments				Pro Forma
		(In thousands, except per share data)
Net sales		$	202,362			$	79,491			$	3,508	(b)		$	126,379
Cost and expenses:
Cost of sales (exclusive of items shown separately below)			171,904				80,319				3,508	(b)			95,093
Selling, general and administrative			24,767				2,264				221	(c)			22,724
Depreciation and amortization			10,294				1,750				—				8,544
Asset impairment charges			510				505				—				5
Operating income (loss)			(5,113	)			(5,347	)			(221	)			13
Non-operating income (expense):
Interest expense			(158	)			(17	)			—				(141	)
Other, net			96				—				—				96
Income (loss) before income taxes			(5,175	)			(5,364	)			(221	)			(32	)
Income tax benefit (expense)			1,275				1,984				77	(c)			(632	)
Net income (loss)		$	(3,900	)		$	(3,380	)		$	(144	)		$	(664	)
Earnings(loss) per common share:
Basic		$	(0.11	)										$	(0.02	)
Diluted		$	(0.11	)										$	(0.02	)
Weighted-average common shares outstanding:
Basic			37,003												37,003
Diluted			37,003												37,003
Cash dividends declared per share		$	0.04											$	0.04

See accompanying notes to unaudited pro forma condensed consolidated financial statements

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QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

FOR THE YEAR ENDED OCTOBER 31, 2013

 

		Consolidated As Reported				Disposal Group				Pro Forma Adjustments				Pro Forma
		(In thousands, except per share data)
Net sales		$	952,642			$	410,380			$	12,718	(b)		$	554,980
Cost and expenses:
Cost of sales (exclusive of items shown separately below)			799,077				391,948				12,718	(b)			419,847
Selling, general and administrative			109,325				10,357				2,172	(c)			101,140
Depreciation and amortization			60,504				6,983				—				53,521
Asset impairment charges			1,465				—				—				1,465
Operating income (loss)			(17,729	)			1,092				(2,172	)			(20,993	)
Non-operating income (expense):
Interest expense			(640	)			(19	)			—				(621	)
Other, net			168				(2	)			—				170
Income (loss) before income taxes			(18,201	)			1,071				(2,172	)			(21,444	)
Income tax benefit (expense)			6,498				(391	)			760	(c)			7,649
Net income (loss)		$	(11,703	)		$	680			$	(1,412	)		$	(13,795	)
Earnings(loss) per common share:
Basic		$	(0.32	)										$	(0.37	)
Diluted		$	(0.32	)										$	(0.37	)
Weighted-average common shares outstanding:
Basic			36,864												36,864
Diluted			36,864												36,864
Cash dividends declared per share		$	0.16											$	0.16

See accompanying notes to unaudited pro forma condensed consolidated financial statements

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QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

FOR THE YEAR ENDED OCTOBER 31, 2012

 

		Consolidated As Reported				Disposal Group				Pro Forma Adjustments				Pro Forma
		(In thousands, except per share data)
Net sales		$	828,976			$	362,315			$	11,917	(b)		$	478,578
Cost and expenses:
Cost of sales (exclusive of items shown separately below)			703,844				360,092				11,917	(b)			355,669
Selling, general and administrative			111,577				10,692				1,812	(c)			102,697
Depreciation and amortization			37,596				7,621				—				29,975
Asset impairment charges			912				—				—				912
Operating income (loss)			(24,953	)			(16,090	)			(1,812	)			(10,675	)
Non-operating income (expense):
Interest expense			(454	)			(23	)			—				(431	)
Other, net			222				(3	)			—				225
Income (loss) before income taxes			(25,185	)			(16,116	)			(1,812	)			(10,881	)
Income tax benefit (expense)			8,651				6,143				634	(c)			3,142
Net income (loss)		$	(16,534	)		$	(9,973	)		$	(1,178	)		$	(7,739	)
Earnings(loss) per common share:
Basic		$	(0.45	)										$	(0.21	)
Diluted		$	(0.45	)										$	(0.21	)
Weighted-average common shares outstanding:
Basic			36,622												36,622
Diluted			36,622												36,622
Cash dividends declared per share		$	0.16											$	0.16

See accompanying notes to unaudited pro forma condensed consolidated financial statements

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QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

FOR THE YEAR ENDED OCTOBER 31, 2011

 

		Consolidated As Reported				Disposal Group				Pro Forma Adjustments				Pro Forma
		(In thousands, except per share data)
Net sales		$	848,294			$	440,495			$	12,459	(b)		$	420,258
Cost and expenses:
Cost of sales (exclusive of items shown separately below)			712,091				408,785				12,459	(b)			315,765
Selling, general and administrative			83,994				8,075				133	(c)			76,052
Depreciation and amortization			33,932				8,542				—				25,390
Asset impairment charges			1,799				—				—				1,799
Operating income			16,478				15,093				(133	)			1,252
Non-operating income (expense):
Interest expense			(449	)			(19	)			—				(430	)
Other, net			(514	)			(4	)			—				(510	)
Income from continuing operations before income taxes			15,515				15,070				(133	)			312
Income tax benefit (expense)			(6,437	)			(5,580	)			47				(810	)
Income from continuing operations			9,078				9,490				(86	)			(498	)
Loss from discontinued operations, net of taxes			(12	)			—				—				(12	)
Net income		$	9,066			$	9,490			$	(86	)(c)		$	(510	)
Basic earnings per common share:
Basic earnings from continuing operations		$	0.24											$	(0.01	)
Basic earnings (loss) from discontinued operations			—												—
Basic earnings per share		$	0.24											$	(0.01	)
Diluted earnings per common share:
Diluted earnings from continuing operations		$	0.24											$	(0.01	)
Diluted earnings (loss) from discontinued operations			—												—
Diluted earnings per share		$	0.24											$	(0.01	)
Weighted-average common shares outstanding:
Basic			37,007												37,007
Diluted			37,537												37,007	(d)
Cash dividends declared per share		$	0.16											$	0.16

See accompanying notes to unaudited pro forma condensed consolidated financial statements

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Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

The following adjustments are included in the unaudited pro forma condensed consolidated balance sheet and/or statements of income (loss):

 

(a)

The unaudited pro forma condensed consolidated balance sheet at January 31, 2014 presents anticipated proceeds from the sale of $110.0 million, less net assets (presented as an adjustment to stockholders’ equity), less estimated transaction fees of $2.5 million, resulting in a gain on the sale, with tax effect recorded at the statutory rate of 35%. The impact of this net gain on net income, estimated at $18.5 million, is a component of the change in stockholder’s equity at January 31, 2014. However, this net gain is not included in the unaudited pro forma condensed consolidated statements of income (loss) presented as the transaction does not have a continuing impact to the ongoing operations of the Company.

 

(b)

Historically, intercompany sales between Nichols and other subsidiaries of the Company have been eliminated in consolidation. The Nichols historical results include these intercompany sales. Therefore, an adjustment is required to add back the sales and a corresponding amount for cost of sales, in order to properly present the pro forma consolidated results.

 

(c)	Historically, the Company has allocated certain information technology (IT) and other costs to Nichols. This adjustment increases the Company’s pro forma consolidated expense equal to the amount of this allocation, and records the related tax effect calculated at the statutory rate of 35%.

 

(d)

Diluted weighted-average share calculations include the dilutive effect of employee stock options and unvested restricted stock. For the year ended October 31, 2011, after pro forma adjustments, the Company is in a loss position, so these stock-based compensation instruments are deemed anti-dilutive and have been removed from the weighted-average share calculation for that year.