-----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, HCkWOEaUfuUwRXGO6fXBbueOivgnLYsHTCaS+IvTxiGQHQy8RvlRQOthL4VKEa2q aPSeOFT0pJF8CYG/F3sWFg== 0000075644-97-000004.txt : 19970507 0000075644-97-000004.hdr.sgml : 19970507 ACCESSION NUMBER: 0000075644-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970506 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: 97595955 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 10Q - MARCH 31, 1997 CONFORMED 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 March 31, 1997 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 checkmark 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 May 1, 1997, there were 8,291,971 shares of capital stock outstanding. Part I - FINANCIAL INFORMATION Item 1 - Financial Statements ZEMEX CORPORATION CONSOLIDATED BALANCE SHEETS March 31, 1997 December 31, 1996 (unaudited) ASSETS Current Assets Cash and cash equivalents $ 2,250,000 $ 2,279,000 Accounts receivable 15,842,000 15,003,000 Inventories 17,338,000 18,171,000 Prepaid expenses 1,381,000 1,388,000 Deferred income taxes 1,013,000 1,013,000 Total Current Assets 37,824,000 37,854,000 Property, Plant and Equipment 63,782,000 62,084,000 Other Assets 9,668,000 9,438,000 Total Assets $111,274,000 $109,376,000 LIABILITIES Current Liabilities Bank indebtedness $4,000,000 $ 6,590,000 Accounts payable 6,667,000 7,091,000 Accrued liabilities 4,124,000 2,983,000 Accrued income taxes 146,000 301,000 Current portion of long term debt 1,818,000 2,201,000 Total Current Liabilities 16,755,000 19,166,000 Long Term Debt 20,851,000 17,797,000 Other Non-Current Liabilities 813,000 599,000 Deferred Income Taxes 784,000 817,000 Total Liabilities 39,203,000 38,379,000 SHAREHOLDERS' EQUITY Common stock 8,975,000 8,950,000 Paid-in capital 51,457,000 51,304,000 Retained earnings 20,901,000 20,040,000 Note receivable from shareholder (1,749,000) (1,749,000) Cumulative translation adjustment (1,140,000) (1,175,000) Treasury stock at cost (6,373,000) (6,373,000) Total Shareholders' Equity 72,071,000 70,997,000 Total Liabilities and Shareholders' Equity $111,274,000 $109,376,000 ZEMEX CORPORATION CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1997 1996 (unaudited) NET SALES $23,700,000 $22,405,000 COSTS AND EXPENSES Cost of goods sold 17,486,000 17,018,000 Selling, general and administrative 3,001,000 2,408,000 Depreciation, depletion and amortization 1,447,000 1,057,000 21,934,000 20,483,000 OPERATING INCOME BEFORE REORGANIZATION COSTS 1,766,000 1,922,000 Reorganization costs _ 1,752,000 OPERATING INCOME 1,766,000 170,000 Interest expense, net 447,000 194,000 Other, expense (income) (15,000) (34,000) 432,000 160,000 INCOME BEFORE PROVISION FOR INCOME TAXES 1,334,000 10,000 Provision for income taxes 472,000 4,000 NET INCOME $ 862,000 $ 6,000 NET INCOME PER SHARE $ 0.11 _ AVERAGE COMMON SHARES AND COMMON SHARE EQUIVALENTS OUTSTANDING 8,025,200 8,221,507 ZEMEX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE THREE MONTHS ENDED MARCH 31, 1997 1996 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 862,000 $ 6,000 Adjustments to reconcile income from operations to net cash flows from operating activities Depreciation, depletion and amortization 1,472,000 1,077,000 (Decrease) increase in deferred income taxes (34,000) 39,000 Increase in other assets (321,000) (358,000) Increase in non-current liabilities 214,000 2,000 Gain on sale of property, plant and equipment (39,000) _ Changes in non-cash working capital items 563,000 (1,584,000) Net cash provided by (used in) operating activities 2,717,000 (818,000) CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (3,079,000) (2,521,000) Proceeds from sale of assets 88,000 _ Net cash used in investing activities (2,991,000) (2,521,000) CASH FLOWS FROM FINANCING ACTIVITIES Net increase in long term debt 2,671,000 6,996,000 Net (decrease) increase in bank indebtedness (2,590,000) 1,140,000 Issuance of common stock 158,000 209,000 Purchase of common stock _ (1,583,000) Net cash provided by financing activities 239,000 6,762,000 EFFECT OF EXCHANGE RATE CHANGES ON CASH 6,000 (9,000) NET INCREASE (DECREASE) IN CASH (29,000) 3,414,000 CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,279,000 1,653,000 CASH & CASH EQUIVALENTS AT END OF PERIOD $2,250,000 $5,067,000 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 March 31, 1997 and 1996 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. During the first quarter of 1996, the Corporation recognized reorganization costs of $1.8 million in connection with the reorganization of its industrial minerals division, a write-down to market of inventory held in Brazil and the recognition of a provision for anticipated costs associated with storing and selling the material. The Brazilian enterprise was unsuccessful primarily due to rapidly deteriorating market prices which made market penetration extremely difficult. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations The following is a discussion and analysis of the financial condition and results of operations of the Corporation for the three months ended March 31, 1997 and the three months ended March 31, 1996, 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 March 31, 1997 Compared to Three Months Ended March 31, 1996 Net Sales The Corporation's net sales for the three months ended March 31, 1997 were $23.7 million, an increase of $1.3 million, or 5.8%, from the comparable period in 1996. The increase reflects an 8.2% increase in sales of the Corporation's industrial minerals and a 3.9% increase in sales of its metal products. Net sales in the industrial minerals segment for the three month period ended March 31, 1997 increased by $0.8 million, or 8.2%, compared to the 1996 period. This increase was due to a 10.4% increase in the volume of the Corporation's industrial mineral products sold offset by a slightly unfavorable product mix. Net sales in the metal products segment for the three months ended March 31, 1997 were $13.0 million, an increase of $0.5 million, or 3.9%, from the comparable period in 1996. The increase was due to an increase in sales of atomized products and a marginal increase in aluminum prices offset slightly by lower sales of sponge iron. Cost of Goods Sold Cost of goods sold for the three months ended March 31, 1997 was $17.5 million, an increase of $0.5 million, or 2.8%, from the comparable period in 1996. The corresponding gross margin increased to 26.2% for the three months ended March 31, 1997 from 24.0% for the three months ended March 31, 1996 due to an improved contribution by the feldspar group and a marginal increase in the price of aluminum. Selling, General and Administrative Expense Selling, general, and administrative expense ("SG&A") for the three months ended March 31, 1997 increased to $3.0 million, an increase of 24.7% over the comparable 1996 period. As a percentage of net sales, SG&A increased from 10.8% in the 1996 period to 12.7% in the 1997 period. The increase is attributable primarily to increased staffing. Depreciation, Depletion and Amortization Depreciation, depletion and amortization for the three months ended March 31, 1997 was $1.4 million, an increase of 36.9% over the comparable period in 1996. This increase is primarily due to depreciation of recent Spruce Pine expenditures which, prior to its completion in 1996, were being capitalized. Operating Income Operating income for the three month period ended March 31, 1997 was $1.8 million, an increase of $1.6 million from the comparable period in 1996. In the first quarter of 1996, the Corporation recognized a $1.8 million charge in connection with the reorganization of its industrial minerals segment, a write-down to market of its Brazilian inventory, and the recognition of a provision for storage costs and selling expenses in connection thereto. Interest Expense, Net Interest expense for the three months ended March 31, 1997 was $0.4 million, up from $0.2 for the comparable period in 1996, as the result of slightly higher interest rates and the completion of the Spruce Pine expansion. Interest expense related thereto was capitalized during the construction period. Provision for Income Taxes The Corporation's provision for income taxes for the three months ended March 31, 1997 increased to $0.5 million from $4,000 in the comparable period in 1996, due to an increase in pre-tax income. Net Income As a result of the factors discussed above, net income for the three months ended March 31, 1997 was $0.9 compared to $6,000 for the three months ended March 31, 1996. Liquidity and Capital Resources Cash Flow from Operations During the first quarter of 1997, the Corporation generated positive cash flow from operations of $2.7 million as compared to a negative cash flow of $0.8 million for the first quarter of 1996. In 1997, a decrease in non-cash working capital items generated $0.6 million of the cash from operations whereas in the corresponding period in 1996 non-cash working capital items used $1.6 million of cash. The change is a result of increases in accrued liabilities. The Corporation had $21.1 million of working capital at March 31, 1997, compared to $18.7 million at December 31, 1996. It is the opinion of management that there are sufficient sources of funds available to meet its anticipated cash requirements. 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 5th day of May, 1997. ZEMEX CORPORATION (Registrant) By: /s/ ALLEN J. PALMIERE Allen J. Palmiere Vice President and Chief Financial Officer EX-27 2
5 3-MOS DEC-31-1996 MAR-31-1997 2,250,000 0 16,291,000 (449,000) 17,338,000 37,824,000 97,509,000 33,727,000 111,274,000 16,755,000 0 0 0 8,975,000 63,096,000 111,274,000 23,700,000 23,700,000 17,486,000 21,934,000 (15,000) 0 447,000 1,334,000 472,000 862,000 0 0 0 862,000 0.11 0
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