-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IejKXwxLCwgbe8EkD2Yy59IlNX+zS3eQqvywUa1cBJzAUZxfoYc/AKFiohx7m+x6 j8bgV21hds73iEpPBLT2iQ== 0000075644-96-000007.txt : 19960816 0000075644-96-000007.hdr.sgml : 19960816 ACCESSION NUMBER: 0000075644-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZEMEX CORP CENTRAL INDEX KEY: 0000075644 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 135496920 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00228 FILM NUMBER: 96613476 BUSINESS ADDRESS: STREET 1: CT TOWER, BCE PLACE STREET 2: 161 BAY ST, STE 3750 P O BOX 703 CITY: TORONTO ONTARIO M5J STATE: A6 BUSINESS PHONE: 4163658080 MAIL ADDRESS: STREET 1: CANADA TRUST TOWER STREET 2: BCE PLACE 161 BAY ST,# 3750 PO BOX 703 CITY: TORONTO ONTARIO M5J STATE: A6 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC TIN CONSOLIDATED CORP DATE OF NAME CHANGE: 19860720 10-Q 1 QUARTER ENDING JUNE 30, 1996 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 Commission file number 1-228 ZEMEX CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 13-5496920 (State or other jurisdiction (I.R.S. Employer Identification Number) of incorporation or organization) Canada Trust Tower, BCE Place 161 Bay Street, Suite 3750 Toronto, Ontario, Canada, M5J 2S1 (address of principal executive offices) (416) 365-8080 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act New York Stock Exchange Capital Stock, $1.00 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO As of August 9, 1996, there were 8,076,837 shares of capital stock outstanding. Page 2 Part I - FINANCIAL INFORMATION Item 1 - Financial Statements ZEMEX CORPORATION CONSOLIDATED BALANCE SHEETS June 30, 1996 December 31, 1995 (unaudited) ASSETS Current assets Cash and cash equivalents $ 1,216,000 $ 1,653,000 Accounts receivable 14,890,000 13,165,000 Inventories 21,854,000 20,176,000 Prepaid expenses 686,000 841,000 Total current assets 38,646,000 35,835,000 Property, plant and equipment 54,977,000 50,271,000 Other assets 10,561,000 10,575,000 Total assets $104,184,000 $ 96,681,000 LIABILITIES Current liabilities Bank indebtedness $ 5,449,000 $ 3,220,000 Accounts payable and accrued liabilities 11,067,000 10,259,000 Accrued income taxes 189,000 269,000 Current portion of long term debt 2,152,000 2,378,000 Total current liabilities 18,857,000 16,126,000 Long term debt 14,042,000 7,485,000 Other non-current liabilities 638,000 605,000 Deferred income taxes 1,616,000 1,565,000 Total liabilities 35,153,000 25,781,000 SHAREHOLDERS' EQUITY Common stock 8,840,000 8,785,000 Paid-in capital 50,700,000 50,436,000 Retained earnings 19,508,000 18,683,000 Note receivable from shareholder (1,749,000) (1,749,000) Cumulative translation adjustment (1,218,000) (1,218,000) Treasury stock at cost (7,050,000) (4,037,000) Total shareholders' equity 69,031,000 70,900,000 Total liabilities and shareholders' equity $104,184,000 $96,681,000 Page 3 ZEMEX CORPORATION CONSOLIDATED STATEMENTS OF INCOME Three Months Ended June 30 Six Months Ended June 30 1996 1995 1996 1995 (unaudited) Net sales $21,356,000 $21,439,000 $43,761,000 $42,544,000 Costs and expenses Cost of goods sold 15,960,000 15,982,000 32,978,000 32,135,000 Selling, general and administrative 2,732,000 2,085,000 5,140,000 4,143,000 Depreciation, depletion and amortization 1,152,000 907,000 2,209,000 1,678,000 19,844,000 18,974,000 40,327,000 37,956,000 Operating income before reorganizaion costs 1,512,000 2,465,000 3,434,000 4,588,000 Reorganization costs _ _ 1,752,000 _ Operating income 1,512,000 2,465,000 1,682,000 4,588,000 Interest expense, net 206,000 125,000 400,000 154,000 Other, net 26,000 94,000 (8,000) (45,000) 232,000 219,000 392,000 109,000 Income before provision for income taxes 1,280,000 2,246,000 1,290,000 4,479,000 Provision for income taxes 461,000 63,000 465,000 777,000 Net income $ 819,000 $ 2,183,000 $ 825,000 $ 3,702,000 Net income per share $ 0.10 $ 0.28 $ 0.10 $ 0.48 Average common shares outstanding 7,997,064 7,965,434 8,107,326 7,747,786 Page 4 ZEMEX CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1996 1995 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 825,000 $ 3,702,000 Adjustments to reconcile net income to net cash flows Depreciation, depletion and amortization 2,209,000 1,678,000 Increase (decrease) in deferred income taxes 50,000 (42,000) Share of net income of investees _ (87,000) Increase in other assets (168,000) _ Increase (decrease) in other non-current liabilities 34,000 (3,000) Changes in non-cash working capital items (2,519,000) (1,529,000) Net cash provided by operating activities 431,000 3,719,000 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (6,724,000)(12,249,000) Proceeds from sale of asset _ 134,000 Cash acquired in acquisition _ 688,000 Insurance recovery _ 450,000 Additions to other assets _ (800,000) Net cash used in investing activities (6,724,000)(11,777,000) CASH FLOWS FROM FINANCING ACTIVITIES Net increase in long term debt 6,330,000 3,576,000 Net increase (decrease) in bank indebtedness 2,230,000 (180,000) Issuance of common stock 314,000 727,000 Purchase of common stock (3,011,000) _ Net cash provided by financing activities 5,863,000 4,123,000 EFFECT OF EXCHANGE RATE CHANGES ON CASH (7,000) 11,000 NET DECREASE IN CASH (437,000) (3,924,000) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,653,000 8,343,000 CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,216,000 $4,419,000 Page 5 Notes to the Consolidated Financial Statements The consolidated financial statements include the accounts of Zemex Corporation and its wholly owned subsidiaries (the "Corporation"). The financial data for the three months ended June 30, 1996 and 1995 and the six months ended June 30, 1996 and 1995 are unaudited but, in the opinion of the management of the Corporation, reflect all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of financial position and results of operations. All material intercompany transactions have been eliminated. 1. The Corporation absorbed reorganization costs of $1.8 million in the first quarter of 1996 in connection with the writedown of its inventory in Brazil and the reorganization of its industrial minerals segment. 2. Effective February 15, 1995, the operations of Alumitech, Inc. ("Alumitech") were consolidated with the accounts of the Corporation. Prior to February 15, 1995, the investment in Alumitech was accounted for under the equity method and contributed $87,000 in equity income. 3. On May 15, 1995, the Corporation, through its wholly owned subsidiary, Suzorite Mineral Products, Inc., purchased the fixed assets and inventory of Benwood Limestone Company, Inc. ("Benwood") for approximately $3.5 million. Item 2 - Management's Discussion and Analysis of the Financial Condition and Results of Operations of the Corporation The following is a discussion and analysis of the financial condition and results of operations of the Corporation for the three months ended June 30, 1996 and the three months ended June 30, 1995, and the six months ended June 30, 1996 and the six months ended June 30, 1995, and certain factors that may affect the Corporation's prospective financial condition and results of operations. The following should be read in conjunction with the Consolidated Financial Statements and related notes thereto. Results of Operations Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995 Net Sales The Corporation's net sales for the three months ended June 30, 1996 were $21.4 million, virtually unchanged from the comparable period in 1995. Net sales in the industrial minerals segment for the three month period ended June 30, 1996 increased by $0.9 million, or 9.5 %, over the 1995 period. The increase reflects the contribution of Benwood (see Note 3) for the full quarter as well as increased sales of a new low-iron sand product, partially offset by lower sales of sodium feldspar into the sanitaryware industry sand into the construction industry. Net sales in the metal products segment for the three months ended June 30, 1996 were $11.1 million, a decrease of $1.0 million, or 8.1%, from the comparable period in 1995. The decrease is attributable to (i) decreased sales of atomized metal products as the result of a 20% decrease in industry shipments of Page 6 this product to the automotive industry; (ii) low aluminum prices - - $0.20 per pound below last year at this time; and (iii) lower metal content of aluminum dross feedstock than previously experienced. Cost of Goods Sold Cost of goods sold for the three months ended June 30, 1996 was $16.0 million, also virtually unchanged from the comparable period in 1995. As a percent of net sales, cost of goods sold increased slightly to 74.7% for the three months ended June 30, 1996 from 74.5% for the same period in 1995. Selling, General and Administrative Expense Selling, general, and administrative ("SG&A") expense for the three months ended June 30, 1996 increased by 31.0% from the comparable 1995 period to $2.7 million. The increase is due to expenses arising as a result of the 1995 acquisitions of Alumitech and Benwood. As a percentage of net sales, SG&A expense increased from 9.7% in the 1995 period to 12.8% in the 1996 period. Depreciation, Depletion and Amortization Depreciation, depletion and amortization ("DD&A") for the three months ended June 30, 1996 was $1.2 million, an increase of $0.2 million, or 27.0%, over the comparable period in 1995. The increase was due to assets acquired during 1995 and the first half of 1996. Operating Income Operating income for the three month period ended June 30, 1996 was $1.5 million, a decrease of $1.0 million, or 38.7%, from the comparable period in 1995. The decrease was due to the reasons discussed above. Interest Expense, Net Interest expense for the three months ended June 30, 1996 was $0.2 million, up from $0.1 million for the comparable period in 1995 as the result of a $3.8 million increase in long term debt and a $5.4 million increase in bank indebtedness. Provision for Income Taxes The Corporation's provision for income taxes for the three months ended June 30, 1996 increased to $0.5 million from $63,000 in the comparable period in 1995. The increase is partially due to an increase in the provision for foreign taxes; however, the bulk of the change relates to the Corporation's loss carryforwards. In 1995, the Corporation had enough loss carryforwards to shelter its income and, therefore, the amount included in income taxes was for foreign taxes only. As most of the Corporation's unrestricted loss carryforwards have been utilized, the effective income tax rate going forward is 35%. Page 7 Net Income As a result of the factors discussed above, net income for the three months ended June 30, 1996 was $0.8 million, a decrease of $1.4 million, or 62.5%, from the comparable period in 1995. Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995 Net Sales The Corporation's net sales for the six months ended June 30, 1996 were $43.8 million, an increase of $1.2 million, or 2.9%, from the comparable period in 1995. Sales increased by $1.0 million as a result of the acquisition of Benwood in May 1995 (see Note 3). Net sales in the industrial minerals segment for the six month period ended June 30, 1996 increased by $1.8 million, or 9.6%, compared to the 1995 period. As previously noted, the increase reflects the contribution of Benwood (see Note 3) for the full quarter as well as increased sales of a new low-iron sand product, partially offset by lower sales of sodium feldspar into the sanitaryware industry and sand into the construction industry. Net sales in the metal products segment for the six months ended June 30, 1996 were $23.6 million, a decrease of $0.5 million, or 2.3%, from the comparable period in 1995. Sales were basically flat due to a sluggish powdered metals market and low aluminum prices. Although Alumitech actually processed more feedstock during the first six months of 1996, aluminum prices are $0.20 per pound below last year at this time and the metal content of the feedstock is lower than previously experienced. Cost of Goods Sold Cost of goods sold for the six months ended June 30, 1996 was $33.0 million, an increase of $0.8 million, or 2.6%, from the comparable period in 1995. As a percent of net sales, cost of goods sold decreased to 75.4% for the six months ended June 30, 1996 from 75.5% for the same period in 1995. Selling, General and Administrative Expense SG&A expense for the six months ended June 30, 1996 increased by $1.0 million, or 24.1%, from the comparable 1995 period to $5.1 million. The increase is due to expenses arising as a result of the 1995 acquisitions of Alumitech and Benwood. As a percentage of net sales, SG&A expense increased from 9.7% in the 1995 period to 11.7% in the 1996 period. Depreciation, Depletion and Amortization Depreciation, depletion and amortization for the six months ended June 30, 1996 was $2.2 million, an increase of 31.6% over the comparable period in 1995. The increase was due to assets acquired during 1995 and the first half of 1996. Operating Income Operating income for the six month period ended June 30, 1996 was $1.6 million, a decrease of $2.9 million, or 63.3%, from the comparable period in 1995. The decrease was due to the reasons discussed above and to a $1.8 million writedown taken in the first quarter of 1996 (see Note 1). Page 8 Interest Expense, Net Interest expense for the six months ended June 30, 1996 was $0.4 million, up from $0.2 million for the comparable period in 1995 as the result of the increased carrying costs associated with a $3.8 million increase in long term debt and a $5.4 million increase in bank indebtedness. Provision for Income Taxes The Corporation's provision for income taxes for the six months ended June 30, 1996 decreased to $0.5 million from $0.7 million in the comparable period in 1995. The decrease is due to lower pre-tax income in the first six months of 1996. Net Income As a result of the factors discussed above, net income for the six months ended June 30, 1996 was $0.8 million, a decrease of $2.9 million, or 77.7% , from the comparable period in 1995. Liquidity and Capital Resources Cash Flow from Operations During first half of 1996, the Corporation generated cash flow from operations of $0.4 million as compared to $3.7 million for the first six months of 1995. The decrease of $3.3 million is primarily due to lower net income in the 1996 period. In 1996, non-cash working capital items used $2.5 million of the cash otherwise generated from operations as compared to $1.5 million for the corresponding period of 1995, as a result of increases in accounts receivable and inventories. The Corporation had $19.8 million of working capital at June 30, 1996, compared to $19.7 million at December 31, 1995. It is the opinion of management that there are sufficient sources of funds available to meet its anticipated cash requirements. Page 9 PART II - OTHER INFORMATION Item 4 - Submission of Matters To A Vote of Security Holders At the Corporation's 1996 Annual Meeting of Shareholders held on May 13, 1996, the following actions were taken and votes tabulated: 1. Nine directors were elected for the ensuing year. Name Votes For Votes Withheld Paul A. Carroll 6,823,316 18,348 Morton A. Cohen 6,823,326 18,338 John M. Donovan 6,823,326 18,338 Thomas B. Evans, Jr. 6,823,326 18,338 Ned Goodman 6,823,316 18,348 Peter Lawson-Johnston 6,823,316 18,348 Richard L. Lister 6,823,326 18,338 Patrick H. O'Neill 6,822,306 19,358 William J. vanden Heuvel 6,823,010 18,654 2. The appointment of Deloitte & Touche as independent auditors of the accounts of the Corporation and its subsidiaries for the fiscal year ending December 31, 1996 was ratified. Abstentions Votes For Votes Against (Including Broker Non-Votes) 6,776,119 62,586 12,959 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 hereunto duly authorized. Dated this 14th day of August, 1996. ZEMEX CORPORATION (Registrant) By: /s/ Allen J. Palmiere _______________________________ Allen J. Palmiere Vice President and Chief Financial Officer EX-27 2
5 1 6-MOS DEC-31-1996 JUN-30-1996 1,216,000 0 15,287,000 (397,000) 21,854,000 38,646,000 85,606,000 (30,629,000) 104,184,000 18,857,000 0 0 0 8,840,000 60,191,000 104,184,000 43,761,000 43,761,000 32,978,000 42,079,000 (8,000) 0 400,000 1,290,000 465,000 825,000 0 0 0 825,000 0.10 0
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