-----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, I0UPMdYs3aGipew7XE+K3WsVW+/6koMt2ndvohim317PAD6qsu+qM74K+ytzSUhv T05J1GXhJ0TKVMHAOPd/Qw== 0000075644-97-000005.txt : 19970815 0000075644-97-000005.hdr.sgml : 19970815 ACCESSION NUMBER: 0000075644-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 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: 97660834 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 - JUNE 30, 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 June 30, 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 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 1, 1997, there were 8,304,252 shares of capital stock outstanding. Part I - FINANCIAL INFORMATION Item 1 - Financial Statements ZEMEX CORPORATION CONSOLIDATED BALANCE SHEETS - ----------------------------------------------------------------------------- June 30, 1997 December 31, 1996 - ----------------------------------------------------------------------------- ASSETS (unaudited) Current Assets Cash and cash equivalents $ 2,439,000 $ 2,279,000 Accounts receivable 15,570,000 15,003,000 Inventories 17,291,000 18,171,000 Prepaid expenses 1,138,000 1,388,000 Deferred income taxes 1,025,000 1,013,000 - ----------------------------------------------------------------------------- 37,463,000 37,854,000 - ----------------------------------------------------------------------------- Property, Plant and Equipment 65,417,000 62,084,000 Other Assets 9,249,000 9,438,000 - ----------------------------------------------------------------------------- Total Assets $112,129,000 $109,376,000 - --------------------------------------------------------------------------- LIABILITIES Current Liabilities Bank indebtedness $ 3,000,000 $ 6,590,000 Accounts payable 6,525,000 7,091,000 Accrued liabilities 4,531,000 2,983,000 Accrued income taxes 598,000 301,000 Current portion of long term debt 1,810,000 2,201,000 - ----------------------------------------------------------------------------- 16,464,000 19,166,000 Long Term Debt 21,133,000 17,797,000 Other Non-Current Liabilities 785,000 599,000 Deferred Income Taxes 750,000 817,000 - ----------------------------------------------------------------------------- 39,132,000 38,379,000 - ----------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Common stock 8,995,000 8,950,000 Paid-in capital 51,416,000 51,304,000 Retained earnings 21,966,000 20,040,000 Note receivable from shareholder (1,749,000) (1,749,000) Cumulative translation adjustment (1,151,000) (1,175,000) Treasury stock at cost (6,480,000) (6,373,000) - ---------------------------------------------------------------------------- 72,997,000 70,997,000 - ---------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $112,129,000 $109,376,000 - ---------------------------------------------------------------------------- ZEMEX CORPORATION CONSOLIDATED STATEMENTS OF INCOME - ---------------------------------------------------------------------------- Three Months Ended June 30 Six Months Ended June 30 1997 1996 1997 1996 - ---------------------------------------------------------------------------- (unaudited) NET SALES $25,199,000 $21,356,000 $48,899,000 $43,761,000 - ---------------------------------------------------------------------------- COSTS AND EXPENSES Cost of goods sold 18,161,000 15,960,000 35,648,000 32,978,000 Selling, general and administrative 3,380,000 2,732,000 6,381,000 5,140,000 Depreciation, depletion and amortization 1,403,000 1,152,000 2,850,000 2,209,000 - ----------------------------------------------------------------------------- 22,944,000 19,844,000 44,879,000 40,327,000 - ----------------------------------------------------------------------------- OPERATING INCOME BEFORE REORGANIZATION COSTS 2,255,000 1,512,000 4,020,000 3,434,000 Reorganization costs _ _ _ 1,752,000 - ----------------------------------------------------------------------------- OPERATING INCOME 2,255,000 1,512,000 4,020,000 1,682,000 - ----------------------------------------------------------------------------- Interest expense, net 562,000 206,000 1,009,000 400,000 Other, net 39,000 26,000 24,000 (8,000) - ----------------------------------------------------------------------------- 601,000 232,000 1,033,000 392,000 - ----------------------------------------------------------------------------- INCOME BEFORE PROVISION FOR INCOME TAXES 1,654,000 1,280,000 2,987,000 1,290,000 Provision for income taxes 590,000 461,000 1,061,000 465,000 - ----------------------------------------------------------------------------- NET INCOME $ 1,064,000 $ 819,000 $1,926,000 $ 825,000 - ----------------------------------------------------------------------------- NET INCOME PER SHARE $0.13 $0.10 $0.24 $0.10 - ----------------------------------------------------------------------------- AVERAGE COMMON SHARES AND COMMON SHARE EQUIVALENTS OUTSTANDING 8,063,034 7,997,064 8,038,448 8,107,326 - ----------------------------------------------------------------------------- ZEMEX CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, - ----------------------------------------------------------------------------- 1997 1996 - ----------------------------------------------------------------------------- (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,926,000 $ 825,000 Adjustments to reconcile net income to net cash flows Depreciation, depletion and amortization 2,850,000 2,209,000 Amortization of deferred financing costs 65,000 _ (Decrease) increase in deferred income taxes (80,000) 50,000 Increase in other assets (59,000) (168,000) Increase in other non-current liabilities 186,000 34,000 Changes in non-cash working capital items 1,843,000 (2,519,000) Gain on sale of property, plant and equipment (70,000) _ - ----------------------------------------------------------------------------- Net cash provided by operating activities 6,661,000 431,000 - ----------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (6,081,000) (6,724,000) Proceeds from sale of assets 151,000 _ - ----------------------------------------------------------------------------- Net cash used in investing activities (5,930,000) (6,724,000) - ----------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase in long term debt 2,945,000 6,330,000 Net (decrease) increase in bank indebtedness (3,589,000) 2,230,000 Issuance of common stock 323,000 314,000 Purchase of common stock (274,000) (3,011,000) - ----------------------------------------------------------------------------- Net cash (used in) provided by financing activities (595,000) 5,863,000 - ----------------------------------------------------------------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 24,000 (7,000) - ----------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH 160,000 (437,000) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,279,000 1,653,000 - ----------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,439,000 $1,216,000 - ----------------------------------------------------------------------------- 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 June 30, 1997 and 1996 and for the six months ended June 30, 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 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, 1997 and the three months ended June 30, 1996, and for the six months ended June 30, 1997 and the six months ended June 30, 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 June 30, 1997 Compared to Three Months Ended June 30, 1996 Net Sales The Corporation's net sales for the three months ended June 30, 1997 were $25.2 million compared to $21.4 million for the three months ended June 30, 1996, reflecting an 11.3% increase in sales of industrial minerals and a 24.2% increase in the sales of metal products. Net sales in the industrial minerals segment for the three month period ended June 30, 1997 increased by $1.2 million to $11.4 million from $10.3 million in the corresponding period of 1996. The growth is a result of increased sales of feldspar, talc and mica netted against a decrease in sales of low iron sand. Net sales of the Corporation's metal products were $13.8 million for the three months ended June 30, 1997, an increase of $2.7 million from the comparable period in 1996. The increase was due primarily to an increase in the price of aluminum and to an increase in sales of atomized products, partially offset by a decrease in sales of sponge iron products. Cost of Goods Sold Cost of goods sold for the three months ended June 30, 1997 was $18.2 million, compared to $16.0 million for the second quarter of 1996. As a percentage of net sales, gross margin increased from 25.3% in 1996 to 27.9% for the three months ended June 30, 1997, reflecting improved cost efficiencies and an increase in the price of aluminum. Selling, General and Administrative Expense Selling, general, and administrative ("SG&A") expense for the three months ended June 30, 1997 increased by 23.7% to $3.4 million from $2.7 million in the like period of 1996. As a percentage of net sales, SG&A expense increased to 13.4% in the second quarter of 1997 from 12.8% in the same period in 1996. The increase is attributable primarily to increased staffing. Depreciation, Depletion and Amortization Depreciation, depletion and amortization ("DD&A") for the three months ended June 30, 1997 was $1.4 million, an increase of $0.2 million, or 21.8%, over the corresponding period in 1996. This increase is primarily due to the depreciation of the recent capital expenditures at the Corporation's sodium feldspar facility in Spruce Pine, North Carolina which, prior to 1996, were being capitalized. Operating Income Operating income for the three month period ended June 30, 1997 was $2.3 million, an increase of $0.8 million, or 49.2%, from the comparable period in 1996. The increase was due to the reasons discussed above. Interest Expense, Net Interest expense for the three months ended June 30, 1997 was $0.6 million, up from $0.2 million for the three months ended June 30, 1996 as the result of a $7.9 million increase in long term debt partially offset by a $2.4 million decrease in bank indebtedness. The increase is also attributable to the completion of the Spruce Pine expansion and the interest expense related thereto. Prior to 1997 during the period of construction interest expense was being capitalized. Provision for Income Taxes The Corporation's provision for income taxes for the three months ended June 30, 1997 increased to $0.6 million from $0.5 million in the second quarter of 1996 due to a 29.2% increase in pre-tax income. Net Income As a result of the factors discussed above, net income for the three months ended June 30, 1997 was $1.1 million, an increase of $0.3 million, or 30.0%, from the comparable period in 1996. Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996 Net Sales The Corporation's net sales for the six months ended June 30, 1997 were $48.9 million, an increase of $5.1 million, or 11.7%, from 1996. The increase is due to an 11.2% volume increase in sales of industrial minerals, an increase in the price of aluminum, and a 16.9% increase in the sales volume of metal products. Net sales in the industrial minerals segment for the six month period ended June 30, 1997 increased by $2.0 million, or 9.8%, compared to the 1996 period. The increase is due to higher sales volume of feldspar and talc, offset in part by decreased sales of low iron sand. Net sales in the metal products segment for the six months ended June 30, 1997 were $26.7 million, an increase of $3.1 million, or 13.4%, from the comparable period in 1996. Sales increased due to a recovery in aluminum prices and increased throughput. Cost of Goods Sold Cost of goods sold for the six months ended June 30, 1997 was $35.6 million, an increase of $2.6 million, or 8.1%, from the comparable period in 1996. As a percent of net sales, gross margin increased to 27.1% for the six months ended June 30, 1997 from 24.6% for the same period in 1996. The increase is primarily due to improved operating efficiencies and higher aluminum prices. Selling, General and Administrative Expense SG&A expense for the six months ended June 30, 1997 increased to $6.4 million from $5.1 million in 1996, an increase of $1.3 million, or 24.1%. As a percentage of net sales, SG&A expense increased from 11.7% in the 1996 period to 13.0% in the 1997 period, reflecting an increase in staffing and the purchase of certain of the assets and liabilities of a small manufacturer of heat containment systems utilizing ceramic fiber. Depreciation, Depletion and Amortization DD&A for the six months ended June 30, 1997 was $2.8 million, an increase of $0.6 million, or 29.0%, over the comparable period in 1996. The increase is attributable to the depreciation expense associated with the Spruce Pine expansion; prior to 1997, the project was not complete and therefore was not being depreciated. Operating Income Operating income for the six month period ended June 30, 1997 was $4.0 million, an increase of $2.3 million, or 139.0%, 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 six months ended June 30, 1997 was $1.0 million, up from $0.4 million for the comparable period in 1996 as the result of an increase in long term debt, 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 six months ended June 30, 1997 increased to $1.1 million from $0.5 million in the comparable period in 1996. The increase is due to higher pre-tax income in the first six months of 1997. Net Income As a result of the factors discussed above, net income for the six months ended June 30, 1997 was $1.9 million, an increase of $1.1 million, or 133.5%, from the comparable period in 1996. Liquidity and Capital Resources Cash Flow from Operations During first half of 1997, the Corporation generated cash flow from operations of $6.7 million as compared to $0.4 million for the first six months of 1996. The increase of $6.3 million is primarily due to higher net income in the 1997 period. In 1997, non-cash working capital items generated $1.8 million of the cash otherwise generated from operations as compared to a use of $2.5 million for the corresponding period of 1996 as a result of a decrease in inventories and an increase in accrued liabilities. The Corporation had $21.0 million of working capital at June 30, 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. PART II - OTHER INFORMATION Item 4 - Submission of Matters To A Vote of Security Holders At the Corporation's 1997 Annual Meeting of Shareholders held on May 12, 1997, 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 7,322,028 10,954 Morton A. Cohen 7,322,028 10,954 John M. Donovan 7,322,028 10,954 Thomas B.Evans, Jr. 7,322,028 10,954 Ned Goodman 7,322,027 10,955 Peter Lawson-Johnston 7,322,026 10,956 Richard L. Lister 7,322,027 10,955 Patrick H. O'Neill 7,322,026 10,956 William J. vanden Heuvel 7,322,028 10,954 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, 1997 was ratified. Abstentions Votes For Votes Against (Including Broker Non-Votes) --------- ------------- ----------------- 7,301,833 19,896 11,253 3. The proposal to increase the number of authorized shares available to be purchased pursuant to the Corporation's Employee Stock Purchase Plan from 250,000 shares to 500,000 shares was approved. Abstentions Votes For Votes Against (Including Broker Non-Votes) --------- ------------- ----------------- 7,164,579 157,585 10,818 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, 1997. ZEMEX CORPORATION (Registrant) By: /s/ Allen J. Palmiere ------------------------------- Allen J. Palmiere Vice President and Chief Financial Officer EX-27 2
5 6-MOS DEC-31-1996 JUN-30-1997 2,439,000 0 16,030,000 (460,000) 17,291,000 37,463,000 100,282,000 (34,865,000) 112,129,000 16,464,000 0 0 0 8,995,000 64,002,000 112,129,000 48,899,000 48,899,000 35,648,000 44,879,000 24,000 0 1,009,000 2,987,000 1,061,000 1,926,000 0 0 0 1,926,000 0.24 0
-----END PRIVACY-ENHANCED MESSAGE-----