UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 May 2, 1996, there were 8,734,061 shares of capital stock
outstanding.
(Page 2)
Part I - FINANCIAL INFORMATION
Item 1 - Financial Statements
ZEMEX CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, 1996December 31, 1995
(unaudited)
ASSETS
Current Assets
Cash and Cash Equivalents $ 5,067,000 $ 1,653,000
Accounts Receivable 15,716,000 13,165,000
Inventories 19,919,000 20,176,000
Prepaid Expenses 914,000 841,000
Total Current Assets 41,616,000 35,835,000
Property, Plant and Equipment 51,820,000 50,271,000
Other Assets 10,842,000 10,575,000
Total Assets $104,278,000 $ 96,681,000
LIABILITIES
Current Liabilities
Bank Indebtedness $ 4,359,000 $ 3,220,000
Accounts Payable and Accrued
Liabilities 11,318,000 10,259,000
Accrued Income Taxes (8,000) 269,000
Current Portion of Long Term Debt 2,329,000 2,378,000
Total Current Liabilities 17,998,000 16,126,000
Long Term Debt 14,531,000 7,485,000
Other Non-Current Liabilities 607,000 605,000
Deferred Income Taxes 1,604,000 1,565,000
Total Liabilities 34,740,000 25,781,000
SHAREHOLDERS' EQUITY
Common Stock 8,731,000 8,785,000
Paid-In Capital 49,868,000 50,436,000
Retained Earnings 18,689,000 18,683,000
Note Receivable from Shareholder (1,749,000) (1,749,000)
Cumulative Translation Adjustment (1,214,000) (1,218,000)
Treasury Stock at Cost (4,787,000) (4,037,000)
Total Shareholders' Equity 69,538,000 70,900,000
Total Liabilities and
Shareholders' Equity $104,278,000 $ 96,681,000
(Page 3)
ZEMEX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH PERIOD ENDED MARCH 31,
1996 1995
(unaudited)
NET SALES $22,405,000$21,105,000
COSTS AND EXPENSES
Cost of Goods Sold 17,018,000 16,153,000
Selling, General and Administrative 2,408,000 2,058,000
Depreciation, Depletion and Amortization 1,057,000 771,000
20,483,000 18,982,000
OPERATING INCOME BEFORE
REORGANIZATION COSTS 1,922,000 2,123,000
Reorganization Costs 1,752,000 _
OPERATING INCOME 170,000 2,123,000
Interest Expense, Net 194,000 29,000
Other, Expense (Income) (34,000) (139,000)
160,000 (110,000)
INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES
AND MINORITY INTEREST 10,000 2,233,000
Provision for Income Taxes 4,000 714,000
Minority Interest _ 60,000
NET INCOME $ 6,000 $1,459,000
NET INCOME PER SHARE _ $0.19
AVERAGE COMMON SHARES AND
COMMON SHARE EQUIVALENTS OUTSTANDING 8,221,507 7,526,759
ZEMEX CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
1996 1995
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Income from operations $ 6,000 $1,459,000
Adjustments to reconcile income
to net cash flows from operating activities
Depreciation, depletion and amortization 1,077,000 771,000
Increase (decrease) in deferred income taxes 39,000 (102,000)
Share of net income of investees _ (87,000)
Minority interest in subsidiary earnings _ 60,000
Increase in other assets (358,000) _
Increase (decrease) in non-current liabilities 2,000 (26,000)
Changes in non-cash working capital items (1,584,000) 1,263,000
Net cash provided by (used in) operating
activities (818,000) 3,338,000
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and
equipment (2,521,000) (4,122,000)
Proceeds from sale of assets _ 133,000
Cash acquired in acquisition _ 688,000
Additions to other assets _ (218,000)
Net cash used in investing activities (2,521,000) (3,519,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in long term debt 6,996,000 (604,000)
Net increase (decrease) in bank
indebtedness 1,140,000 (180,000)
Issuance of common stock 209,000 15,000
Purchase of common stock (1,583,000) _
Net cash provided by (used in) financing
activities 6,762,000 (769,000)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (9,000) 3,000
NET DECREASE IN CASH 3,414,000 (947,000)
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,653,000 8,343,000
CASH & CASH EQUIVALENTS AT END OF PERIOD $5,067,000 $7,396,000
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, 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.
The Corporation had a writedown 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.
Effective February 15, 1995 the operations of Alumitech, Inc.
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.
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, 1996 and the three months ended
March 31, 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
included elsewhere herein.
Results of Operations
Three Months Ended March 31, 1996 Compared to Three Months Ended
March 31, 1995
Net Sales
The Corporation's net sales for the three months ended March 31,
1996 were $22.4 million, an increase of $1.3 million, or 6.2%,
from the comparable period in 1995. The increase reflects the
consolidation of Alumitech for the full quarter and marginally
higher sales volumes of the Corporation's industrial minerals,
partially offset by a decrease in sales of metal powders.
Net sales in the industrial minerals segment for the three month
period ended March 31, 1996 increased by $0.9 million, or 10%,
compared to the 1995 period. This increase was due to a slight
increase in demand for the Corporation's talc and mica products
and to the addition of a new low iron sand product.
Net sales in the metal products segment for the three months
ended March 31, 1996 were $12.5 million, an increase of $0.4
million, or 3.5%, from the comparable period in 1995. The
increase was due to the consolidation of Alumitech for the full
quarter in 1996, partially offset by a decrease in sales of
ferrous and non ferrous metal powders.
Cost of Goods Sold
Cost of goods sold for the three months ended March 31, 1996 was
$17.0 million, an increase of $0.9 million, or 5.4%, from the
comparable period in 1995. As a percent of net sales, cost of
goods sold decreased to 76% for the three months ended March 31,
1996 from 76.5% for the three months ended March 31, 1995,
virtually unchanged quarter over quarter.
Selling, General and Administrative Expense
Selling, general, and administrative expense for the three months
ended March 31, 1996 increased to $2.4 million, an increase of
17% over the comparable 1995 period. The increase was due
primarily to the consolidation of Alumitech for the full quarter.
As a percentage of net sales, selling, general and adminstrative
expense increased from 9.7% in the 1995 period to 10.7% in the
1996 period.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization for the three months
ended March 31, 1996 was $1.1 million, an increase of 37.1% over
the comparable period in 1995, as the result of assets acquired in 1995.
Operating Income
Operating income for the three month period ended March 31, 1996
was $0.2 million, a decrease of $1.9 million from the comparable
period in 1995. The decrease is due to a writedown of $1.8
million in the first quarter of 1996 of the Corporation's sodium
feldspar inventory in Brazil and the reorganization of its
industrial minerals segment.
Interest Expense, Net
Interest expense for the three months ended March 31, 1996 was
$0.2 million, up from $29,000 for the comparable period in 1995,
as the result of an increase in debt from $8.3 million at March
31, 1995 to $21.2 million at March 31, 1996.
Provision for Income Taxes
The Corporation's provision for income taxes for the three months
ended March 31, 1996 decreased to $4,000 from $0.7 million in the
comparable period in 1995, due to a decrease in pre-tax income.
Net Income
As a result of the factors discussed above, net income for the
three months ended March 31, 1996 was $6,000 compared to $1.5
million for the first quarter of 1995.
Liquidity and Capital Resources
Cash Flow from Operations
During the first quarter of 1996, the Corporation generated
negative cash flow from operations of $0.8 million as compared to
a positive cash flow of $3.3 million for the first quarter of
1995. In 1996, non-cash working capital items used $1.6 million
of the cash otherwise generated from operations as compared to
$1.3 million for the corresponding period of 1995, as a result of
increases in accounts receivable, accounts payable and accrued
liabilities and a reduction of prepaid expenses and accrued
income taxes.
The Corporation had $23.6 million of working capital at March 31,
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.
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 28th day of May, 1996.
ZEMEX CORPORATION
(Registrant)
By /s/ALLEN PALMIERIE
:
Allen J. Palmiere
Vice President and Chief
Financial Officer
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