SEC Filing - Quanex Building Products Corporation

QUANEX BUILDING PRODUCTS CORPORATION

Date: August 21, 2015

/s/ Brent L. Korb

Brent L. Korb

Senior Vice President — Finance and

Chief Financial Officer

View:

Download DOC

Download PDF

Download XLS

Form 8-K Amendment No. 1

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 15, 2015

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))

Item 2.01 Completion of Acquisition or Disposition of Assets.

On June 16, 2015, Quanex Building Products Corporation, a Delaware corporation (“we,” “us,” “our,” “Quanex” or the “Company”), filed a Current Report on Form 8-K announcing a Share Purchase Agreement, effective June 15, 2015, by and among Quanex and the shareholders of Flamstead Holdings Limited, a company incorporated and registered in England and Wales (“Flamstead”): Roger Hartshorn, Janet Hartshorn, Garner Properties Limited, Michael Bosworth, and Joan Bosworth. Under the Purchase Agreement, concurrently with execution, Quanex purchased from the shareholders all of the outstanding ownership shares of Flamstead (the “Purchase”). Following the pre-sale reorganization and Purchase, Flamstead became a wholly-owned subsidiary of Quanex and we acquired, as a result thereof, the following wholly-owned subsidiaries of Flamstead, each of which is incorporated and registered in England and Wales: HL Plastics Limited; Vintage Windows Limited; Wegoma Machinery Sales Limited; and Liniar Limited (collectively, the “Subsidiaries”). The Purchase Agreement was filed as Exhibit 2.1 to the Current Report on Form 8-K filed by the Company on June 16, 2015, and is incorporated herein by reference.

This transaction constituted the purchase of a “significant amount of assets,” as such phrase is defined in Instruction 4 to Item 2.01 of Form 8-K, and therefore requires disclosure of certain financial information. We are amending our Current Report on Form 8-K filed on June 16, 2015 to provide the financial statements and pro forma financial information required by the Securities and Exchange Commission Rules.

Item 9.01 Financial Statements and Exhibits

(a) Financial statements of businesses acquired: Exhibit 99.1 attached hereto and incorporated by reference herein includes the audited financial statements for the periods specified in Rule 3-05(b) of Regulation S-X (17 CFR 210.3-05(b), including the Independent Auditor’s Report thereon.

(b) Pro forma financial information: Exhibit 99.2 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 April 30, 2015;

•

Unaudited pro forma condensed consolidated statements of income (loss) for the six months ended April 30, 2015, and the year ended October 31, 2014; 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		Share Purchase Agreement relating to Flamstead Holdings Limited, dated June 15, 2015, by and among Quanex Building Products Corporation and the shareholders of Flamstead Holdings Limited (included as Exhibit 2.1 to Quanex Building Products Corporation’s Current Report on Form 8-K filed on June 16, 2015, and incorporated herein by reference).

23.1*		Consent of KPMG LLP

99.1*		Audited combined financial statements of Combined Flamstead Group as of December 31, 2014 and 2013 and for each of the years in the three-year period ended December 31, 2014.

99.2*		Unaudited pro forma condensed consolidated financial information.

*	Attached hereto

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.

EXHIBIT INDEX


Exhibit Number		Description

2.1		Share Purchase Agreement relating to Flamstead Holdings Limited, dated June 15, 2015, by and among Quanex Building Products Corporation and the shareholders of Flamstead Holdings Limited (included as Exhibit 2.1 to Quanex Building Products Corporation’s Current Report on Form 8-K filed on June 16, 2015, and incorporated herein by reference).

23.1*		Consent of KPMG LLP

99.1*		Audited combined financial statements of Combined Flamstead Group as of December 31, 2014 and 2013 and for each of the years in the three-year period ended December 31, 2014.

99.2*		Unaudited pro forma condensed consolidated financial information.

*	Attached hereto

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

The Board of Directors

Flamstead Holdings Limited

We consent to the incorporation by reference in the registration statements (No. 333-150392, 333-173245 and 333-194812) on Form S-8 of Quanex Building Products Corporation of our report dated August 21, 2015, with respect to the combined balance sheets of the Combined Flamstead Group as of December 31, 2014 and 2013, and the related combined profit and loss accounts and cash flow statements for each of the years in the three-year period ended December 31, 2014, which report appears in the Form 8-K/A of Quanex Building Products Corporation to be filed on August 21, 2015.

(Signed) KPMG LLP

Nottingham, United Kingdom

August 21, 2015

EX-99.1

Exhibit 99.1

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Contents


Independent auditor’s report			1

Combined profit and loss account			2

Combined balance sheet			3

Combined cash flow statement			4

Notes			5

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Independent auditor’s report

We have audited the accompanying combined financial statements of the Combined Flamstead Group which comprise the combined balance sheets as of December 31, 2014, and December 31, 2013, and the related combined statements of profit and loss and cash flows for each of the years in the three-year period ended December 31, 2014 and the related notes to the combined financial statements, which, as described in Note 1 to the combined financial statements, have been prepared on the basis of generally accepted accounting practice in the United Kingdom.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these combined financial statements in accordance with U.K. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these combined 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 combined financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of the Combined Flamstead Group as of December 31, 2014, and December 31, 2013, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2014, in accordance with generally accepted accounting principles in the United Kingdom.

Emphasis of matter

As discussed in Note 1 to the combined financial statements, the Combined Flamstead Group prepared its combined financial statements in accordance with generally accepted accounting practice in the United Kingdom which differs from U.S. generally accepted accounting principles. Our opinion is not modified with respect to this matter.


Nottingham, United Kingdom		(signed) KPMG LLP

August 21, 2015

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Combined profit and loss account

for the years ended 31 December 2012, 2013 and 2014


	Note		2012			2013			2014
			£			£			£

Group turnover		2		43,068,562			50,870,572			61,555,823

Changes in stocks of finished goods and work in progress				1,099,181			(358,974	)		775,380
Own work capitalised				354,881			216,143			202,305
Raw materials and consumables				(23,502,810	)		(26,053,395	)		(32,461,927	)
Staff costs		4		(9,306,445	)		(11,259,576	)		(12,825,816	)
Depreciation and amortisation		8,9		(2,150,417	)		(2,565,666	)		(2,801,025	)
Other operating charges				(6,420,451	)		(6,559,195	)		(6,908,164	)

Operating profit		3		3,142,501			4,289,909			7,536,576

Interest receivable		5		15,673			—			325
Interest payable and similar charges		6		(917,062	)		(954,885	)		(871,028	)

Profit on ordinary activities before taxation				2,241,112			3,335,024			6,665,873

Tax on profit on ordinary activities		7		(507,897	)		(448,739	)		(1,353,482	)

Profit for the period				1,733,215			2,886,285			5,312,391

There were no recognised gains and losses other than those disclosed in the profit and loss account, and therefore no separate statement of total recognised gains and losses has been presented.

There were no discontinued activities in any of the years.

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Combined balance sheet

as at 31 December 2013 and 2014


	Note		2013			2014
			£			£
Fixed assets
Intangible assets		8		291,684			537,052
Tangible assets		9		22,468,569			24,787,381
Investment property		10		—			238,492

				22,760,253			25,562,925
Current assets
Stocks		11		4,828,226			5,989,966
Debtors: amounts falling due within one year		12		6,791,239			8,004,237
Debtors: amounts falling due after more one year		12		—			191,135
Cash at bank and in hand				110,519			2,808,201

				11,729,984			16,993,539

Creditors: amounts falling due within one year		13		(13,406,114	)		(16,210,648	)

Net current assets / (liabilities)				(1,676,130	)		782,891

Total assets less current assets				21,084,123			26,345,816

Creditors: amounts falling due after more than one year		14		(8,657,836	)		(8,588,221	)

Provisions for liabilities		15		(673,668	)		(917,912	)

Net assets and invested equity		16		11,752,619			16,839,683

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Combined cash flow statement

for the year ended 31 December 2012, 2013 and 2014


	Note		2012			2013			2014
			£			£			£

Net cash flow from operating activities		17		4,634,075			6,585,095			8,816,812
Return on investments and servicing of finance		18		(901,389	)		(954,885	)		(1,096,030	)
Taxation				(6,410	)		(83,736	)		(241,352	)
Capital expenditure and financial investment		18		(2,802,951	)		(2,955,759	)		(3,001,281	)

Cash inflow before financing				923,325			2,590,715			4,478,149

Financing		18		228,579			(2,893,050	)		(1,780,467	)

Increase/(decrease) in cash in the period				1,151,904			(302,335	)		2,697,682

Reconciliation of net cash flow to movement in net debt

for the year ended 31 December 2012, 2013 and 2014


	Note		2012			2013			2014
			£			£			£

Increase/(decrease) in cash in the year				1,151,904			(302,335	)		2,697,682
Cash outflow from decrease in debt and lease financing				(222,180	)		2,893,050			1,780,467

Change in net debt resulting from cash flows				929,724			2,590,715			4,478,149

New finance lease				(1,535,983	)		(1,941,902	)		(2,636,719	)
Debt to equity conversion				750,000			122,370			—

Movement in net debt in the year				143,741			771,183			1,841,430

Net debt at start of year		19		(14,972,702	)		(14,828,961	)		(14,057,778	)

Net debt at end of year		19		(14,828,961	)		(14,057,778	)		(12,216,348	)

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes

(forming part of the financial statements)

1	Accounting policies

Basis of preparation

These combined financial statements have been prepared for the purpose of meeting the requirements of Rule 3-05 of Regulation S-X of the Securities Act of 1933, as amended, in connection with the filing of a Form 8-K/A by Quanex Building Products Corporation (‘Quanex’).

Throughout the periods presented, the Combined Flamstead Group did not exist as a legally constituted group. The combined financial statements have therefore been derived from the combination of the financial statements of the following entities:

•

Flamstead Holdings limited

•

H L Plastics Limited

•

Vintage Windows Limited

•

Wegoma Machinery Sales Limited

•

Liniar Limited

•

Tarpey Harris Limited

•

Flamstead Investments Limited

•

H L Ravenscroft Limited,

and presented in accordance with Generally Accepted Accounting Practice in the United Kingdom (‘UK GAAP’), to represent the financial position of the Combined Flamstead Group as though it were a single economic entity.

UK GAAP varies in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in note 26 to the Combined financial statements.

The directors of Flamstead Holdings Limited determined that this presentation represents the Combined Flamstead Group most appropriately based on several factors including that (1) Quanex acquired substantially all of the pre-acquisition business of the Combined Flamstead Group, and (2) the entities forming Flamstead, with the exception of Wegoma Machinery Sales Limited, which has been included from the acquisition date (see Note 24), have been under common control and management throughout the period covered by the financial statements.

The combined financial statements comprise an aggregation of the earnings, financial position and cash flows of the above mentioned entities after eliminating outstanding balances, investments, transactions and cash flows between such entities.

On August 21, 2015, the Board of Directors of Flamstead Holdings Limited approved the combined financial statements of the Combined Flamstead Group and authorised their issue.

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

1	Accounting policies (continued)

Subsidiary undertakings

A subsidiary undertaking is an undertaking where the Company holds, either directly or indirectly, a controlling interest. These interests are included using the acquisition method of accounting. Under this method the results of subsidiary undertakings acquired or sold during the period are included in the combined profit and loss account from the date of acquisition or up to the date of disposal.

Joint venture undertakings

A joint venture undertaking is an undertaking where the Company does not hold a controlling interest but is one in which the Company has a long-term interest and where it can exercise joint control. In these instances the Group’s share of the profits or losses of joint ventures is included in the combined profit and loss account and its interest in the net assets is included under investments in the combined balance sheet.

Turnover

Turnover comprises revenue recognised by the company in respect of services supplied, exclusive of Value Added Tax and trade discounts. Turnover is recognised upon the transfer of risks and rewards to the customer. Additionally equipment is sold to certain profile customers on hire purchase terms and as the substantial risks and rewards of ownership have passed to the customer upon delivery, turnover and an associated hire purchase debtor are recognised in respect of these sales.

Intangible assets and goodwill

Purchased goodwill and development costs are stated at cost less amortisation. Amortisation is calculated so as to write off the cost of an asset over the useful economic life of that asset as follows:


Goodwill	-	5% - 20% on cost
Development costs	-	10% - 33% on cost
Customer lists	-	33% on cost

Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:


Leasehold improvements	-	over the term of the lease
Freehold buildings	-	2.5% on cost
Plant and machinery	-	8%-25% on cost
Fixtures and fittings	-	7%-33% on cost

Freehold land is not depreciated.

Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

1	Accounting policies (continued)

Investment property

Investment properties are interests in land and buildings held for their investment potential with income to the company arising from the rental of such properties and capital appreciation.

Investment properties are included in the balance sheet at their open market value and are not subject to depreciation.

Formal valuations by an independent qualified surveyor are carried out every 5 years or when the directors consider that a significant change in valuation could reasonably have arisen. At intervening period ends the valuation is determined by the directors.

Changes in the valuation of investment properties are taken to the statement of total recognised gains and losses and recognised in an investment revaluation reserve within capital and reserves on the balance sheet.

Hire purchase

Assets acquired under finance leases are capitalised and the outstanding future lease obligations are shown in creditors net of the finance charge allocated to future periods.

Operating lease rentals are charged to the profit and loss account on a straight line basis over the period of the lease.

Stocks

Stocks are stated at the lower of cost and net realisable value after making due allowance for obsolete and slow moving stocks on the following basis:

Raw materials, consumables and goods for resale are valued on a first in, first out basis.

For work in progress and finished goods, cost is taken as production cost, which includes an appropriate proportion of attributable overheads.

Deferred taxation

Full provision is made for deferred tax assets and liabilities arising from all timing differences between the recognition of gains and losses in the financial statements and recognition in the tax computation.

A net deferred tax asset is recognised when it is more likely than not that there will be future taxable profits.

Provision is made at the tax rates expected to apply at the time the liabilities crystallise.

Foreign currencies

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at rates of exchange ruling at the balance sheet date.

Transactions in foreign currencies are translated into sterling at the rate ruling on the date of the transaction.

Pension contributions

The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The amount charged to the profit and loss account represents the contributions payable to the scheme in respect of the accounting period.

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

2	Turnover

The geographical analysis of turnover is as follows:


	2012		2013		2014
	£		£		£

United Kingdom		40,564,819		47,697,362		58,382,364
Other European Union		2,082,536		2,930,657		3,014,273
Rest of World		421,207		242,553		159,186

		43,068,562		50,870,572		61,555,823

3	Operating profit


	2012			2013			2014
	£			£			£
*Operating profit is stated after charging/(crediting)*
Amortisation of intangible assets		216,636			278,596			173,208
Depreciation of tangible assets:
Owned by the group		1,475,122			1,588,369			1,944,160
Held under finance leases		458,659			698,701			683,657
Loss / (profit) on sale of fixed assets		(1,667	)		(42,601	)		18,188
Foreign exchange losses/(gains)		(6,695	)		62,374			(59,353	)
Operating lease rentals:
Plant and machinery		100,907			195,572			207,642
Other		213,750			375,000			331,050

4	Staff costs

Group staff costs, including directors’ remuneration, were as follows:


	2012		2013		2014
	£		£		£

Wages and salaries		8,334,865		9,834,420		11,499,081
Social security costs		825,667		963,988		1,085,978
Other pension costs		145,913		461,168		240,757

		9,306,445		11,259,576		12,825,816

The average number of employees, including directors, during the year was as follows:


	2012		2013		2014
	Number		Number		Number

Management		3		3		5
Administration		27		27		35
Selling and distribution		31		38		42
Production (including management)		277		332		393

		338		400		475

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

5	Interest receivable


	2012		2013		2014
	£		£		£

Other interest receivable		15,673		—		325

6	Interest payable and similar charges


	2012		2013		2014
	£		£		£

On bank loans and overdrafts		558,555		558,225		454,242
On other loans		553		—		15,228
On hire purchase contracts		182,362		212,437		240,996
Other interest (see note 14)		175,592		184,223		160,562

		917,062		954,885		871,028

7	Taxation

Analysis of tax charge in the year


	2012			2013			2014
	£			£			£
UK corporation tax
Current tax on income for the year		85,839			242,936			1,119,397
Adjustments in respect of prior years		30,585			(2,103	)		(6,159	)

Total current tax		116,424			240,833			1,113,238

Deferred tax charge
Origination/reversal of timing differences		391,482			213,375			152,018
Adjustments in respect of prior years		(9	)		(5,469	)		88,226

Tax on profit on ordinary activities		507,897			448,739			1,353,482

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

7	Taxation (continued)

Factors affecting tax charge for the year

The tax assessed for the year is lower (2013: lower; 2012: lower) than the standard rate of corporation tax in the UK of 21.45% (2013: 23.25%; 2012: 24.5%). The differences are explained below:


	2012			2013			2014
	£			£			£

Profit on ordinary activities before tax		2,241,112			3,335,024			6,665,873

Current tax at 21.49% (2013: 23.25%, 2012: 24.5%)		548,712			774,237			1,431,697

Effects of:
Expenses not deductible for tax purposes		59,226			48,828			40,801
Capital allowances in excess of depreciation		(39,018	)		(105,155	)		(25,525	)
Other timing differences		25,740			57,037			(9,773	)
Research and development tax credits		(118,130	)		(201,157	)		(99,818	)
Deduction for profits attributable to patented products		—			(55,792	)		(204,840	)
Losses utilised		(381,959	)		(288,953	)		(10,449	)
Fixed asset differences		—			17,483			—
Benefit of small companies rate band		—			(3,592	)		(2,696	)
Marginal relief		(8,732	)		—			—
Adjustments in respect of prior years		30,585			(2,103	)		(6,159	)

Current tax charge for the period		116,424			240,833			1,113,238

Factors that may affect future tax charges

The group has no further trading losses to carry forward (2013: £462,000; 2012: £1,766,000).

The Budget on 20 March 2013 announced that the UK corporation tax rate will reduce to 20% by 2015.

Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. This will reduce the company’s future tax rate accordingly. The deferred tax liability as at 31 December 2014 has been calculated based on the rate of 20% substantively enacted at the balance sheet date.

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

8	Intangible fixed assets


	Customer				Development
	lists		Goodwill		costs		Total
	£		£		£		£
*Cost*
At 1 January 2013		81,642		241,317		684,038		1,006,997
Additions		—		—		8,280		8,280

At 31 December 2013		81,642		241,317		692,318		1,015,277

At 1 January 2014		81,642		241,317		692,318		1,015,277
Additions		—		150,000		268,576		418,576

At 31 December 2014		81,642		391,317		960,894		1,433,853

*Accumulated amortisation*
At 1 January 2013		34,057		90,640		320,300		444,997
Charge for the year		15,328		12,090		251,178		278,596

At 31 December 2013		49,385		102,730		571,478		723,593

At 1 January 2014		49,385		102,730		571,478		723,593
Charge for the year		15,329		17,090		140,789		173,208

At 31 December 2014		64,714		119,820		712,267		896,801

*Net book value*
At 31 December 2013		32,257		138,587		120,840		291,684

At 31 December 2014		16,928		271,497		248,627		537,052

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

9	Tangible fixed assets


	Land and			Plant and			Fixtures			Assets under
	buildings			equipment			and fittings			construction			Total
	£			£			£			£			£
*Cost*
At 1 January 2013		7,982,006			17,743,930			3,386,032			300,991			29,412,959
Additions		581,752			4,068,658			196,417			173,415			5,020,242
Commissioned		—			335,685			—			(335,685	)		—
Disposals		(57,999	)		(725,537	)		(227,124	)		(33,360	)		(1,044,020	)

At 31 December 2013		8,505,759			21,422,736			3,355,325			105,361			33,389,181

At 1 January 2014		8,505,759			21,422,736			3,355,325			105,361			33,389,181
Acquisitions		—			11,575			—			—			11,575
Additions		95,461			4,330,131			635,139			25,000			5,085,731
Commissioned		—			91,564			—			(91,564	)		—
Disposals		—			(613,019	)		—			(13,797	)		(626,816	)

At 31 December 2014		8,601,220			25,242,987			3,990,464			25,000			37,859,671

*Accumulated depreciation*
At 1 January 2013		656,905			7,312,669			1,619,728			—			9,589,302
Charge for the year		194,731			1,684,717			407,622			—			2,287,070
Disposals		(53,366	)		(688,859	)		(213,535	)		—			(955,760	)

At 31 December 2013		798,270			8,308,527			1,813,815			—			10,920,612

At 1 January 2014		798,270			8,308,527			1,813,815			—			10,920,612
Charge for the year		209,975			1,986,242			431,600			—			2,627,817
Disposals		—			(476,139	)		—			—			(476,139	)

At 31 December 2014		1,008,245			9,818,630			2,245,415			—			13,072,290

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

9	Tangible fixed assets (continued)

Land and

Plant and

Fixtures

Assets under

buildings

equipment

and fittings

construction

Total

Net book value

At 31 December 2013

7,707,489

13,114,209

1,541,510

105,361

22,468,569

At 31 December 2014

7,592,975

15,424,357

1,745,049

25,000

24,787,381

Included above are assets held under finance leases or hire purchase contracts as follows:


	2013		2014
	£		£
Plant and machinery:
Net book values		5,720,226		5,777,366

10	Investment property


	Valuation
	£
*Cost*
At 1 January 2014		—
Additions		238,492

At 31 December 2014		238,492

The property was purchased during the year and as such the directors consider that there is no change in valuation between date of purchase and the year end.

11	Stocks and work in progress


	2013		2014
	£		£
Group

Raw materials and consumables		1,052,292		1,443,166
Work in progress		254,761		253,880
Finished goods and goods for resale		3,521,173		4,292,920

		4,828,226		5,989,966

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

12	Debtors


	2013		2014
	£		£
Due within one year:
Trade debtors		5,352,809		6,114,055
Hire purchase debtors		321,303		140,792
Owed by associated undertakings		219,535		112,000
Other debtors		407,524		1,197,687
Prepayments and accrued income		490,068		439,703

		6,791,239		8,004,237
Due after more than one year:
Hire purchase debtors		—		191,135

		6,791,239		8,195,372

Certain of the Group’s trade debtors are secured under an invoice discounting facility.

13	Creditors: amounts falling due within one year


	2013		2014
	£		£

Shareholder loans		120,000		120,000
Finance leases		1,038,216		1,313,402
Bank loan		456,594		683,906
Trade finance facility		4,051,816		4,419,020
Trade creditors		4,474,223		4,993,551
Owed to associated undertakings		29,800		—
Corporation tax		242,936		1,114,822
Social security and other taxes		1,649,060		1,812,694
Other creditors		183,913		156,085
Accruals and deferred income		1,159,556		1,597,168

		13,406,114		16,210,648

The finance leases and other loans are secured on the fixed assets to which they relate.

14	Creditors: amounts falling due after more than one year


	2013		2014
	£		£

Shareholder loans		2,216,015		1,945,602
Bank loans		3,163,060		2,629,086
Finance leases		1,754,626		2,913,533
Other loans and related party loans		1,367,970		1,000,000
Other creditors		156,165		100,000

		8,657,836		8,588,221

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

14	Creditors: amounts falling due after more than one year (continued)

Included within the above are amounts falling due as follows:


	2013 £		2014 £
Between one and two years:
Bank loans		456,594		383,813
Shareholder loans		120,000		120,000
Other creditors		156,165		30,000
Other loans		367,970		—

Between two and five years
Bank loans		1,265,082		1,240,890
Shareholder loans		360,000		360,000
Other creditors		—		70,000

Over five years:
Bank loans		1,441,384		1,004,383
Shareholder loans		1,736,015		1,465,602
Related party loans		1,000,000		1,000,000

Net obligations under hire purchase contracts are secured on the fixed assets to which they relate and are all due within five years.

The shareholder loans falling due after one year represent £0.6 million (2013: £0.5 million) and £1.4 million (2013: £1.6 million) due to Mr M Bosworth and Mr R L Hartshorn, respectively. The related party loan represents £0.5 million due to each of Mr Bosworth’s sons. The shareholder and the related party charged interest of £160,649 on their outstanding loans (2013: £175,643; 2012: £175,592)

15	Provisions for liabilities


	2013 £		2014 £

Deferred taxation liability		673,668		913,912
Property related provisions		—		4,000

		673,668		917,912

Provision for deferred taxation


	Provision £
At 31 December 2012		465,762
Charge to the profit and loss account		207,906

At 31 December 2013		673,668
Charge to the profit and loss account		240,244

At 31 December 2014		913,912

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

15	Provisions for liabilities (continued)

The provision is made up as follows:


	2013			2014
	£			£

Accelerated capital allowances		881,474			974,798
Tax losses		(138,141	)		—
Other short term timing differences		(69,665	)		(60,886	)

		673,668			913,912

16	Reconciliation of movement in invested equity


	2013		2014
	£		£

Profit for the period		2,886,285		5,312,391
Contributions from/(distributions to) investors		122,370		(225,327	)

Net movement in invested equity		3,008,655		5,087,064
Opening invested equity		8,743,964		11,752,619

Closing invested equity		11,752,619		16,839,683

17	Net cash flow from operating activities


	2012			2013			2014
	£			£			£

Operating profit		3,142,501			4,289,909			7,536,576
Amortisation of intangible fixed assets		216,636			278,596			173,208
Depreciation of tangible fixed assets		1,933,781			2,287,070			2,627,817
Loss/(profit) on disposal of tangible fixed assets		(1,667	)		(42,601	)		18,188
(Increase)/decrease in stocks		(1,124,325	)		430,449			(1,015,625	)
(Increase)/decrease in debtors		(1,719,085	)		57,585			(1,404,133	)
Increase/(decrease) in creditors		2,186,234			(715,913	)		880,781

Net cash inflow from operating activities		4,634,075			6,585,095			8,816,812

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

18	Analysis of cash flows for headings netted in cash flow statement


	2012			2013			2014
	£			£			£
Returns on investments and servicing of finance
Interest received		15,673			—			325
Interest paid		(917,062	)		(954,885	)		(871,028	)
Dividend paid		—			—			(225,327	)

		(901,389	)		(954,885	)		(1,096,030	)

Capital expenditure and financial investment
Acquisition of business		—			—			(177,690	)
Purchase of intangible fixed assets		(68,200	)		(8,280	)		(268,576	)
Purchase of tangible fixed assets		(2,859,418	)		(3,078,340	)		(2,687,504	)
Sale of tangible fixed assets		124,667			130,861			132,489

		(2,802,951	)		(2,955,759	)		(3,001,281	)

Financing
New secured loans		523,500			—			152,750
Repayment of bank loans		(328,137	)		(445,211	)		(459,412	)
Repayment of other loans		(332,686	)		(513,181	)		(637,021	)
New other loans (movement on asset-based borrowings)		1,374,603			(639,441	)		365,842
Repayment of finance lease		(1,008,701	)		(1,295,217	)		(1,202,626	)

		228,579			(2,893,050	)		(1,780,467	)

19	Analysis of change in net debt


	1 January 2012 £			Cash flow £			Other changes £			31 December 2012 £

Cash at bank and in hand		52,942			542,576			—			595,518
Bank overdraft		(791,992	)		609,328			—			(182,664	)

		(739,050	)		1,151,904			—			412,854

Debt
Finance leases		(1,618,875	)		1,008,701			(1,535,983	)		(2,146,157	)
Debts due:
Within one year		(4,935,268	)		(319,634	)		—			(5,254,902	)
After more than one year		(7,679,509	)		(911,247	)		750,000			(7,840,756	)

		(14,972,702	)		929,724			(785,983	)		(14,828,961	)

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

19	Analysis of change in net debt (continued)


	1 January 2013 £			Cash flow £			Other changes £			31 December 2013 £

Cash at bank and in hand		595,518			(484,999	)		—			110,519
Bank overdraft		(182,664	)		182,664			—			—

		412,854			(302,335	)		—			110,519

Debt
Finance leases		(2,146,157	)		1,295,217			(1,941,902	)		(2,792,842	)
Debts due:
Within one year		(5,254,902	)		626,492			—			(4,628,410	)
After more than one year		(7,840,756	)		971,341			122,370			(6,747,045	)

		(14,828,961	)		2,590,715			(1,819,532	)		(14,057,778	)


	1 January 2014 £			Cash flow £			Other changes £			31 December 2014 £

Cash at bank and in hand		110,519			2,697,682			—			2,808,201

		110,519			2,697,682			—			2,808,201
Debt
Finance leases		(2,792,842	)		1,202,626			(2,636,719	)		(4,226,935	)
Debts due:
Within one year		(4,628,410	)		(594,516	)		—			(5,222,926	)
After more than one year		(6,747,045	)		1,172,357			—			(5,574,688	)

		(14,057,778	)		4,478,149			(2,636,719	)		(12,216,348	)

Net debt includes £3.1 million of shareholder/related party loans (2013: £3.3 million 2012: £3.6 million).

20	Capital commitments

At 31 December, the Group had capital commitments as follows:


	2012 £		2013 £		2014 £

Contracted for but not provided for in these financial statements		1,329,416		667,216		928,421

21	Pensions

The Group operates a defined contribution scheme. The assets of the scheme are held separately from those of the company in an independently administered fund.


	2012 £		2013 £		2014 £

Pension costs		145,913		461,168		240,757

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

22	Operating lease commitments

At 31 December, the Group was committed to making the following payments under non-cancellable operating leases in the following year:


	Land and buildings						Equipment hire
	2012 £		2013 £		2014 £		2012 £		2013 £		2014 £
Expiring:
Within one year		96,250		—		—		5,505		41,170		41,116
Within two to five years		120,000		120,000		148,000		89,754		124,637		36,863
Over five years		255,000		255,000		255,000		—		—		—

		471,250		375,000		403,000		95,259		165,807		77,979

23	Related party transactions

Advantage has been taken of the exemption provided by FRS 8 not to disclose transactions with fellow group companies.

Warehouse and land rental payments of £141,500 were made to Garner Investments LLP (a company owned by Mr & Mrs R Hartshorn) in full settlement in respect of the year ended 31 December 2014 (2013: £255,000; 2012: £63,750).

Warehouse and land rental payments of £141,500 were made to Garner Properties Limited (a company owned by Mr & Mrs R Hartshorn) in full settlement in respect of the year ended 31 December 2014 (2013: £nil, 2012: £nil).

Premises rental payments of £120,000 were made to Marlborough House Properties (a company owned by Mr R Hartshorn and Mr M Bosworth) in full settlement in respect of the year ended 31 December 2014 (2013: £120,000; 2012: £54,176).

The group traded with Mr L A and Mrs S Hartshorn, a business controlled by Mr R Hartshorn’s father and mother.

The transactions during the period, which were on an arm’s length basis, are as follows:


	2012 £		2013 £		2014 £

Purchases		5,476		10,227		5,242
Creditor at 31 December				981		820

In 2012 a portion of land on the Denby site was sold at cost for £116,667 to Garner Investments LLP, a company owned by Mr & Mrs Hartshorn. This debt was transferred to Garner Properties Limited on 30 June 2014. The amount of £112,000 (including VAT at 20%) remains outstanding as at 31 December 2014.

Goods were purchased in the year from Mr Gary Cooke, who is the brother of Mr Alan Cooke (a Director of Vintage Windows) to the value of £1,000 (2013: £nil; 2012: £nil). The balance outstanding at the year end, and included within trade creditors, is £1,000 (2013: £nil).

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

24	Acquisitions

On 1 May 2014 Wegoma Machinery Sales Limited acquired 51% of the trade and assets of Wegoma GB Limited. The resulting goodwill of £150,000 was capitalised and will be written off over 20 years. The reasons for selecting that period are that the directors expect the benefits arising from the acquisition to continue for an extended period.


	Book value £000		Fair value £000
Fixed assets
Tangible		11,575		11,575

Current assets
Stock		146,115		146,115

Total assets		157,690		157,690

Goodwill				150,000

				307,690

Purchase consideration and costs of acquisition
Cash on completion				157,690
Deferred cash consideration				150,000

				307,690

No fair value adjustments arose. Deferred consideration is payable in equal annual instalments of £30,000.

25	Post balance sheet events

On 15 June 2015, Quanex Building Products Corporation, a Delaware corporation, acquired, following a pre-sale reorganization, substantially all of the Combined Flamstead Group for a consideration of £95 million. The results of the acquired entities forming substantially all of the Combined Flamstead Group from 15 June 2015 are consolidated within the financial statements of Quanex Building Products Corporation.

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

26	Summary of significant differences between accounting practice generally accepted in the United Kingdom (UK GAAP) and accounting principles generally accepted in the United States of America (US GAAP)

The accompanying combined financial statements of the Flamstead Group have been prepared in accordance with UK GAAP as described in Note 1. UK GAAP differs in certain respects from the requirements of US GAAP. The effects of the application of US GAAP to the combined Flamstead results and invested equity and cash flow as determined under UK GAAP are set out below:


	Profit and loss
	Year ended 31 December
	2013			2014
	£			£

UK GAAP
Profit after taxation for the year		2,886,285			5,312,391
US GAAP adjustments
1. Goodwill		12,090			17,090
2. Research and development		1,634			5,226
3. Finance leases		(565	)		(227	)
4. Derivatives		—			(19,997	)
5. Provisions		8,517			12,834


Total US GAAP adjustments		21,676			14,926


Results under US GAAP		2,907,961			5,327,317


	Invested equity
	Year ended 31 December
	2013			2014
	£			£

UK GAAP
Invested equity		11,752,619			16,839,683
US GAAP adjustments
1. Goodwill		102,730			119,820
2. Research and development		(8,870	)		(3,644	)
3. Finance leases		(10,051	)		(10,278	)
4. Derivatives		—			(19,997	)
5. Provisions		8,517			21,351


Total US GAAP adjustments		92,326			107,252


Invested equity under US GAAP		11,844,945			16,946,935


	Cash flow Year ended 31 December
				2013									2014
	Operating			Investing			Financing			Operating			Investing			Financing
	activities			activities			activities			activities			activities			activities
	£			£			£			£			£			£

UK GAAP		6,585,095			(2,955,759	)		(2,893,050	)		8,816,812			(3,001,281	)		(1,780,467	)
US GAAP adjustments Reclassifications
Dividends paid		—			—			—			—			—			(225,327	)
Interest received		—			—			—			325			—			—
Interest paid		(954,885	)		—			—			(871,028	)		—			—
Tax paid		(83,736	)		—			—			(241,352	)		—			—

2 Research and development		(3,304	)		3,304			—			—			—			—
3 Finance leases		74,575			(1,500	)		(73,075	)		85,158			—			(85,158	)


Total US GAAP adjustments		(967,350	)		1,804			(73,075	)		(1,026,897	)		—			(310,485	)



Cash flows under US GAAP		5,617,745			(2,953,955	)		(2,966,125	)		7,789,915			(3,001,281	)		(2,090,952	)

Combined Flamstead Group

Combined financial statements

3 years ended 31 December 2014

Notes (continued)

26	Summary of significant differences between accounting practice generally accepted in the United Kingdom and accounting principles generally accepted in the United States of America (continued)

1. Goodwill

Under UK GAAP, goodwill is amortised over its estimated economic life, not to exceed 20 years.

Under US GAAP, goodwill is not amortised but instead tested at least annually for impairment or more frequently if impairment indicators exist. The adjustment reverses the goodwill previously amortised.

2. Research and development

Under UK GAAP it is permissible to capitalise research and development expenditure if certain criteria are met with the capitalised expenditure then amortised over the period to which economic benefit is expected to be derived.

Under US GAAP expenditure on research and development is typically expensed. The adjustment removes the previously capitalised expenditure and reverses the amortisation that was charged.

3. Finance leases

Under UK GAAP leases are classified as either operating or finance leases based on the guidance in SSAP21 Accounting for leases and hire purchase contracts.

Under US GAAP leases are classified in accordance with ASC 840-10-25. This sets out particular criteria and bright line tests that indicate the existence of a finance lease. Utilising the criteria in ASC 840-10-25 a number of leases have been reclassified from operating leases to finance leases resulting in an increase in recorded liabilities and an additional charge to the profit and loss account.

4. Derivatives

Under UK GAAP derivatives are not required to be carried at fair value.

Under US GAAP derivatives must be measured and recorded at their fair value. The adjustment represents the fair value of foreign currency derivatives held at 31 December.

5. Provisions

Under UK GAAP the provision for credit notes is based on historic credit note rates and is not specific to individual sales.

Under US GAAP provisions must be specific in nature and the adjustment removes these provisions.

6. Taxation

No adjustments have been included for tax, as given the value of these GAAP differences, the amounts involved are not considered material.

EX-99.2

Exhibit 99.2

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 historical financial information of Quanex, Flamstead and the Subsidiaries, and gives effect to the purchase transaction which occurred on June 15, 2015, for $133.0 million in cash, net of cash acquired, subject to customary purchase price adjustments.

Prior to the transaction, Flamstead Holdings Limited held 100% of the outstanding equity interests in HL Plastics Limited; Flamstead Investments Limited; HL Ravenscroft Limited; Tarpey-Harris Limited; and Liniar Limited; as well as a majority interest in Wegoma Machinery Sales Limited and a 50% joint venture interest in Vintage Windows Limited. As described in the Purchase Agreement and immediately prior to the transaction, Flamstead Holdings Limited acquired the minority interest in Wegoma Machinery Sales Limited and the remaining 50% joint venture interest in Vintage Windows Limited (referred collectively as the (“Combined Flamstead Group”), and sold its interest in Flamstead Investments Limited, HL Ravenscroft Limited and Tarpey-Harris Limited (referred to as the “Entities Not Acquired”). Results for the Combined Flamstead Group less the Entities Not Acquired are deemed to be “Acquired Flamstead”. We evaluated this acquisition in accordance with the “significance tests” prescribed by the Securities and Exchange Commission Rules, and determined that the acquisition is significant to us. In addition, we determined that we acquired substantially all of the net assets of the Flamstead Group.

Quanex and the Combined Flamstead Group have different fiscal year ends (October 31 and December 31, respectively). In addition, the financial information of the Combined Flamstead Group has historically been reported under generally accepted accounting principles in the United Kingdom and denominated in British pounds sterling. For purposes of our pro forma presentation, we have adjusted these results to reflect generally accepted accounting principles in the United States of America, and have converted to our reporting currency, United States dollars. Consistent with our accounting policy, we translate the balance sheet at the exchange rate on the balance sheet date, and translate the statements of income (loss) using the average exchange rate for the applicable period.

The unaudited pro forma balance sheet at April 30, 2015, reflects the pro forma effect of the purchase transaction as if the transaction was consummated on that date. The unaudited pro forma condensed consolidated statements of income (loss) for the six month period and the twelve-month period reflect the pro forma effect of the purchase transaction as if the transaction was consummated on November 1, 2013. In order to present a consolidated pro forma balance sheet, we have included the historical balance sheet of Quanex, which was included in our Quarterly Report on Form 10-Q for the quarter ended April 30, 2015, and the combined balance sheet for the Acquired Flamstead as of June 15, 2015, which was prepared from historical information. To present the pro forma consolidated statements of income (loss) for the six-month period, we have included the historical statement of income (loss) for Quanex for the six months ended April 30, 2015 and the combined statement of income (loss) for the Acquired Flamstead for the period January 1, 2015, through June 15, 2015. We determined that it was impractical to obtain the full six-month period ended June 30, 2015 as combined financial information for the Combined Flamstead Group was not available, from which to derive amounts for the Entities Not Acquired. If we had included the results for the Acquired Flamstead for the full six-month period ended June 30, 2015, we project that the pro forma impact would have been an increase in revenue of $4.6 million and an increase in pro forma net income of $0.7 million. In order to present the pro forma consolidated statements of income (loss) for the year ended October 31, 2014, we have included the historical statement of income (loss) of Quanex for the year ended October 31, 2014 which was included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014, and the combined statement of income (loss) for the Acquired Flamstead for the year ended December 31, 2014 (as derived from audited financial statements of the Combined Flamstead Group, adjusted for the unaudited results of the Entities Not Acquired, adjusted to align with presentation under generally accepted accounting principles in the United States of America, and translated to United States dollars). The accompanying unaudited pro forma condensed consolidated financial information for Quanex should be read in conjunction with the consolidated financial statements and notes thereto included in the referenced filings, and the audited combined financial statements of the Combined Flamstead Group accompanying this amended Current Report on Form 8-K/A.

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) plus results of the Combined Flamstead Group; (iii) less results of the Entities Not Acquired; (iv) plus pro forma adjustments, to arrive at the pro forma results.

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 transaction and are factually supportable. These pro forma adjustments are described in the notes which accompany these unaudited pro forma condensed consolidated financial statements.

QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF APRIL 30, 2015


	Quanex As Reported		Combined Flamstead Group		Entities Not Acquired			Pro Forma Adjustments (a)			Pro Forma
	As of 4/30/15		As of 6/15/15		As of 6/15/15			As of 4/30/15			As of 4/30/15
	(In thousands)

ASSETS

Current assets:

Cash and cash equivalents	$	60,030	$	1,869	$	(390	)	$	(41,645	)	$	19,864

Accounts receivable, net		50,210		19,391		(1,087	)		(6,200	)		62,314

Inventories, net		62,994		11,180		(433	)		4,555			78,296

Deferred income taxes		23,684		—		—			—			23,684

Prepaid and other current assets		5,433		798		(75	)		—			6,156


Total current assets		202,351		33,238		(1,985	)		(43,290	)		190,314

Property, plant and equipment, net		111,113		41,131		(12,891	)		50			139,403

Deferred income taxes		7,367		—		—			—			7,367

Goodwill		68,788		754		(132	)		60,137			129,547

Intangible assets, net		65,648		317		—			62,004			127,969

Other assets		5,620		1,680		—			—			7,300


Total assets	$	460,887	$	77,120	$	(15,008	)	$	78,901		$	601,900


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable	$	36,328	$	9,760	$	(385	)	$	—		$	45,703

Accrued liabilities		26,006		16,547		(8,577	)		(1,354	)		32,622

Income tax payable		—		1,221		(246	)		(27	)		948

Current maturities of long-term debt		179		2,406		—			—			2,585


Total current liabilities		62,513		29,934		(9,208	)		(1,381	)		81,858

Long-term debt		455		5,440		(173	)		91,359			97,081

Deferred pension and postretirement benefits		5,949		—		—			—			5,949

Liability for uncertain tax positions		548		—		—			—			548

Long-term deferred tax liabilities		—		1,417		(44	)		13,349			14,722

Other liabilities		11,174		8,394		314			1,611			21,493


Total liabilities		80,639		45,185		(9,111	)		104,938			221,651

Commitments and contingencies

Stockholders’ equity		380,248		31,935		(5,897	)		(26,037	)		380,249


Total liabilities and stockholders’ equity	$	460,887	$	77,120	$	(15,008	)	$	78,901		$	601,900

See accompanying notes to unaudited pro forma condensed consolidated financial statements

QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

FOR THE SIX-MONTH PERIOD


	Quanex As Reported			Combined Flamstead Group			Entities Not Acquired			Pro Forma Adjustments			Pro Forma
	Six Months Ended 4/30/15			Period 1/1/15 to 6/15/15			Period 1/1/15 to 6/15/15			Six Months Ended 4/30/15			Six-Month Period
	(In thousands, except per share data)

Net sales	$	269,863		$	45,002		$	(2,087	)	$	—		$	312,778

Cost and expenses:
Cost of sales (exclusive of items shown separately below)		216,616			30,003			(1,262	)		—			245,357

Selling, general and administrative		39,134			5,798			(455	)		—			44,477

Depreciation and amortization		16,039			2,278			(254	)		1,549	(b)		19,612

Asset impairment charges		—			—			—			—			—


Operating income (loss)		(1,926	)		6,923			(116	)		(1,549	)		3,332

Non-operating income (expense):

Interest income (expense)		(286	)		(438	)		116			(498	) (c)		(1,106	)

Other, net		(266	)		592			(7	)		118	(d)		437


Income (loss) before income taxes		(2,478	)		7,077			(7	)		(1,929	)		2,663

Income tax benefit (expense)		1,678			(1,197	)		46			443	(e)		970


Net income (loss) from continuing operations	$	(800	)	$	5,880		$	39		$	(1,486	)	$	3,633


Earnings (loss) per common share:

Basic	$	(0.02	)										$	0.11

Diluted	$	(0.02	)										$	0.10

Weighted-average common shares outstanding:

Basic		34,362												34,362

Diluted		34,362												34,921

See accompanying notes to unaudited pro forma condensed consolidated financial statements

QUANEX BUILDING PRODUCTS CORPORATION

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)

FOR THE TWELVE-MONTH PERIOD


	Consolidated As Reported			Combined Flamstead Group (f)			Entities Not Acquired			Pro Forma Adjustments			Pro Forma
	Year Ended 10/31/14			Year Ended 12/31/14			Year Ended 12/31/14			Year Ended 10/31/14			Twelve-Month Period
	(In thousands, except per share data)

Net sales	$	595,384		$	101,524		$	(5,418	)	$	—		$	691,490

Cost and expenses:
Cost of sales (exclusive of items shown separately below)		464,584			71,719			(3,087	)		—			533,216

Selling, general and administrative		82,150			12,733			(840	)		—			94,043

Depreciation and amortization		33,869			4,708			(568	)		2,215	(b)		40,224

Asset impairment charges		505			—			—			—			505


Operating income (loss)		14,276			12,364			(923	)		(2,215	)		23,502

Non-operating income (expense):

Interest income (expense)		(562	)		(1,449	)		506			(1,135	) (c)		(2,640	)

Other, net		92			98			(1	)		5,622	(d)		5,811


Income (loss) before income taxes		13,806			11,013			(418	)		2,272			26,673

Income tax benefit (expense)		(5,468	)		(2,231	)		216			(1,127	) (e)		(8,610	)


Net income (loss)	$	8,338		$	8,782		$	(202	)	$	1,145		$	18,063


Earnings (loss) per common share:

Basic	$	0.22											$	0.49

Diluted	$	0.22											$	0.48

Weighted-average common shares outstanding:

Basic		37,128												37,128

Diluted		37,679												37,679

See accompanying notes to unaudited pro forma condensed consolidated financial statements

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 April 30, 2015 presents the preliminary purchase price allocation for the purchase reflecting consideration paid of $133.0 million, net of cash acquired, resulting in goodwill of approximately $60.1 million, other intangible assets of approximately $62.0 million, long-term deferred tax liabilities of $13.3 million, an increase in other long-term liabilities, and certain working capital changes. The funding reflects the use of cash on hand of $46.3 million and additional debt borrowings of $91.4 million. The unaudited pro forma condensed consolidated statements of income (loss) presented excludes estimated transaction fees of $3.5 million and the impact of the step-up of inventory to fair value of $4.6 million, as these items are not deemed to have a continuing impact to the ongoing operations of Quanex.

(b)

Incremental depreciation and amortization expense is associated with the step-up of fixed assets to fair value and the defined-term intangible assets identified at the date of the acquisition of $60.2 million, assuming the transaction occurred on the first day of each of the respective reporting periods.

(c)	Incremental interest expense has been calculated based on an increase in debt of $91.4 million applying our incremental borrowing rate, assuming the transaction occurred on the first day of each of the respective reporting periods.

(d)

This adjustment reflects a foreign exchange transaction gain on the unhedged foreign exchange position associated with the debt borrowed to fund the transaction. This gain was calculated by converting the debt balance at the exchange rate in effect as of the first day of the period (assuming the transaction occurred on the first day of the reporting period) compared to the debt balance converted at the exchange rate in effect on the last day of the period. This difference is then extended at an average rate for the period to calculate the foreign exchange gain or loss.

(e)

This adjustment represents the tax effect associated with the pro forma adjustments referenced above applying the statutory rate in the United Kingdom of 20% with regard to the incremental depreciation and amortization expense, and applying the statutory rate of 35% in the United States with regard to the incremental interest expense and foreign exchange gain.

(f)	The following table reconciles the audited combined profit and loss account for the Combined Flamstead Group for the year ended December 31, 2014 to the amounts included in the unaudited pro forma condensed consolidated statement of income (loss) for the Combined Flamstead Group:


Description--UK GAAP	Combined Flamstead Group (in GBPs)			Translate to USD (at 1.6484)			GAAP Adjustments & Reclasses (USD)			Combined Flamstead Per Pro Forma (USD)			Description--US GAAP
Group turnover		61,556			101,469			55			101,524		Net sales
													Cost and expenses:
Changes in stocks of finished goods and work in progress		(775	)		(1,278	)		72,997			71,719		Cost of sales
Own work capitalised		(202	)		(333	)		13,066			12,733		Selling, general and administrative
Raw materials and consumables		32,462			53,510			(53,510	)		—
Staff cost		12,826			21,142			(21,142	)		—
Depreciation and amortization		2,801			4,617			91			4,708		Depreciation and amortization
Other operating costs		6,908			11,387			(11,387	)		—		Asset impairment charges

Operating profit		7,536			12,424			(60	)		12,364		Operating income (loss)
													Non-operating income (expense):
Interest receivable		—			—			—			—
Interest payable and similar charges		(871	)		(1,436	)		(13	)		(1,449	)	Interest expense
		—			—			98			98		Other, net

Profit on ordinary activities before taxation		6,665			10,988			25			11,013		Income (loss) from continuing operations before income taxes
Tax on profit on ordinary activities		(1,353	)		(2,230	)		(1	)		(2,231	)	Income tax benefit (expense)

Profit for the period		5,312			8,758			24			8,782		Income (loss) from continuing operations

Adjustments made to convert from U.K. GAAP to U.S. GAAP were relatively immaterial and are summarized in the combined financial statements of the Combined Flamstead Group included in Exhibit 99.1, excluding certain reclassifications to present cost of sales and selling, general and administrative expense consistent with U.S. GAAP. These reclassifications had no impact on pro forma income (loss) from continuing operations.