[ZEMEX LOGO]
NEWS RELEASE FOR
IMMEDIATE RELEASE
ZEMEX CORPORATION ANNOUNCES
FIRST QUARTER 2003 EARNINGS RESULTS
TORONTO, ONTARIO - APRIL 23, 2003 - ZEMEX CORPORATION (NYSE, TSE: ZMX) announced
today that net income of $0.01 per share for the first quarter ended March 31,
2003 unchanged from the first quarter of 2002. Revenue increased 35% from $15.0
million in the first quarter of 2002 to $20.2 million in the first quarter of
2003. Of the increase, 73% or $3.8 million was due to acquisitions completed in
February and March of 2002. Operating income increased from $100,000 for the
first quarter of 2002 to $600,000 for the current year period. Operating income
was adversely impacted by operational problems experienced at the Spruce Pine
feldspar plant and one time legal expenses associated with settlement of the
Hecla Mining litigation.
R. Peter Gillin, President of the Corporation, said, "In general, the industrial
minerals business has been steady in most of our product lines and appears to be
following seasonal patterns and strengthening into the second quarter." Our
aluminum recycling group had a good first quarter continuing the turnaround that
began in the third quarter of 2002.
As previously announced, a Special Meeting of Securityholders is scheduled to be
held on May 5, 2003 with respect to a proposed Plan of Arrangement. The proposed
Plan of Arrangement, if approved by shareholders and optionholders and the
court, will result in the acquisition by a controlled affiliate of Cementos
Pacasmayo S.A.A. ("Pacasmayo") of all of the outstanding common shares and
in-the-money options of Zemex on the basis of a cash price of US$8.80 per share.
Pacasmayo is a publicly listed corporation on the Lima Stock Exchange (LSE),
Peru and is related to the Hochschild Organization.
Following approval by Securityholders, Zemex will seek court approval. The
transaction is expected to be effective May 8, 2003.
Zemex Corporation (http://www.zemex.com) is a diversified producer of industrial
minerals and specialty products and, through its Alumitech division, reprocesses
aluminum drosses. Zemex currently operates facilities across the United States
and Canada. Its products are used in a variety of commercial applications and
are sold throughout the United States, Canada and Europe.
For further information, please contact: Peter Gillin
President and Chief
Executive Officer
416-815-3171
Allen J. Palmiere
Vice President and Chief
Financial Officer
416-365-8091
This press release may contain "Forward-Looking Statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. These forward
statements include statements regarding the intent, belief or current
expectation of the Corporation and members of its senior management team,
including, without limitation, expectations regarding completion of the
acquisition. Investors are cautioned that any such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties,
and that actual results may differ materially from those contemplated by the
Corporation.
- tables follow -
ZEMEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(All amounts are in thousands of U.S. dollars)
- ----------------------------------------------------------------------------------------------------------------------------
MARCH 31, 2003 December 31, 2002
- ----------------------------------------------------------------------------------------------------------------------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 3,165 $ 635
Accounts receivable 12,191 11,987
Inventories 17,033 17,611
Prepaid expenses and other current assets 858 755
Income taxes receivable 6 -
Future income tax benefits 1,954 1,954
- ----------------------------------------------------------------------------------------------------------------------------
35,207 32,942
PROPERTY, PLANT AND EQUIPMENT 69,064 68,715
GOODWILL 2,787 2,787
OTHER ASSETS 1,029 918
FUTURE INCOME TAX BENEFITS (NON-CURRENT) 8,068 8,068
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 116,155 $ 113,430
============================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank indebtedness $ 8,250 $ 6,000
Accounts payable 4,090 4,202
Accrued liabilities 5,854 5,970
Income taxes payable - 171
Current portion of long term debt 393 381
- ----------------------------------------------------------------------------------------------------------------------------
18,587 16,724
LONG TERM DEBT 20,342 20,358
OTHER NON-CURRENT LIABILITIES 2,468 2,434
FUTURE INCOME TAX OBLIGATIONS 1,518 1,413
- ----------------------------------------------------------------------------------------------------------------------------
42,915 40,929
- ----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common stock 51,791 51,644
Retained earnings 23,396 23,330
Cumulative translation adjustment (1,947) (2,473)
- ----------------------------------------------------------------------------------------------------------------------------
73,240 72,501
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 116,155 $ 113,430
============================================================================================================================
Prepared in accordance with Canadian GAAP
ZEMEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31
(All amounts are in thousands of U.S. dollars,
except share and per share amounts)
- ----------------------------------------------------------------------------------------------------------------------------
2003 2002
- ----------------------------------------------------------------------------------------------------------------------------
(unaudited)
NET SALES $ 20,217 $ 14,973
- ----------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of goods sold 14,665 10,606
Selling, general and administrative 3,393 2,728
Depreciation, depletion and amortization 1,599 1,511
- ----------------------------------------------------------------------------------------------------------------------------
19,657 14,845
- ----------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 560 128
- ----------------------------------------------------------------------------------------------------------------------------
Interest income 4 31
Interest expense (261) (214)
Other, net (20) 4
- ----------------------------------------------------------------------------------------------------------------------------
(277) (179)
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE PROVISION FOR (RECOVERY OF) INCOME TAXES 283 (51)
Provision for (recovery of) income taxes 217 (101)
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 66 $ 50
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE
BASIC $ 0.01 $ 0.01
DILUTED $ 0.01 $ 0.01
============================================================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC 7,900,318 7,921,320
DILUTED 7,910,672 7,959,990
============================================================================================================================
Prepared in accordance with Canadian GAAP
ZEMEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(All amounts are in thousands of U.S. dollars)
- ----------------------------------------------------------------------------------------------------------------------------
2003 2002
- ----------------------------------------------------------------------------------------------------------------------------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 66 $ 50
Adjustments to reconcile net income to net cash flows from
operating activities
Depreciation, depletion and amortization 1,599 1,511
Increase (decrease) in future income tax obligations 105 (1)
Gain on sale of assets (25) -
Increase in other assets (118) (266)
Increase in other non-current liabilities 34 1
Changes in non-cash working capital items (134) (1,579)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 1,527 (284)
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (1,613) (1,172)
Acquisitions, net of cash acquired - (14,706)
Proceeds from sale of assets 86 4
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,527) (15,874)
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in bank indebtedness 2,250 16,000
Net decrease in long term debt (4) (106)
Issuance of common stock 147 115
Purchase of common stock - -
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 2,393 16,009
- ----------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 137 (2)
- ----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 2,530 (151)
CASH AT BEGINNING OF PERIOD 635 532
- ----------------------------------------------------------------------------------------------------------------------------
CASH AT END OF PERIOD $ 3,165 $ 381
============================================================================================================================
Prepared in accordance with Canadian GAAP