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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
Commission file number 1-228
ZEMEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1031 13-5496920
(State or other (Primary standard (I.R.S. employer
jurisdiction of industrial identification
incorporation or classification code number)
organization) number)
Canada Trust Tower, BCE Place, 161 Bay Street, Suite 3750
Toronto, Ontario, Canada M5J 2S1
(416) 365-8080
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive
offices)
Securities registered pursuant to Section 12(b) of the Act
New York Stock Exchange Common 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.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of the
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
The aggregate market value of the registrant's voting stock
(Common Stock, $1.00 par value) held by non-affiliates as of
March 7, 1997 (based on the closing sale price of $7.125 on
the New York Stock Exchange) was $27,646,140.
As of March 7, 1997, 9,041,946 shares of the registrant's
Common Stock, $1.00 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for the Year Ended December 31,
1996 Part II
Definitive Proxy Statement filed with the Commission pursuant
to Regulation 14A with respect to the Annual Meeting of
Shareholders Part III
FORM 10-K
ANNUAL REPORT
TABLE OF CONTENTS
AND
CROSS-REFERENCE SHEET
PART I
Page
Item 1. Business 1
Item 2. Properties 7
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security
Holders 8
Item 10. Executive and Other Officers of the Registrant(A) 8
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters(B) 9
Item 6. Selected Financial Data(C) 9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation(D) 9
Item 8. Financial Statements and Supplementary Data(E) 10
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 10
PART III
Item 10. Directors of the Registrant(F) *
Item 11. Executive Compensation(F) *
Item 12. Security Ownership of Certain Beneficial
Owners and Management(F) *
Item 13. Certain Relationships and Related Transactions(F) *
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 11
_________________________
(A)
Included in Part I pursuant to Instruction 3 of Item
401(b) of Regulation S-K.
(B)
Information responsive to this Item is set forth on
page 16 of the registrant's Annual Report to
Shareholders for the year ended December 31, 1996 (the
"Annual Report to Shareholders") and is incorporated
herein by reference. The Annual Report to
Shareholders is included as Exhibit 13 to this Form 10-
K Annual Report. The Annual Report to Shareholders,
except for those portions thereof which are expressly
incorporated by reference herein, is furnished for the
information of the Commission and is not to be deemed
"filed" as part of this Form 10-K report.
(C)
Information responsive to this Item is set forth
on page 41 of the Annual Report to Shareholders and is
incorporated herein by reference.
(D)
Information responsive to this Item is set forth
on pages 10 through 16 of the Annual Report to
Shareholders and is incorporated herein by reference.
(E)
Financial statements responsive to this Item are
set forth on pages 17 through 40 of the Annual Report
to Shareholders and are incorporated herein by
reference. The Supplementary Schedule required by
this Item is set forth on page S-1 of this Form 10-K
Annual Report.
(F)
Information responsive to this Item is set forth
in the registrant's definitive proxy statement to be
filed with the Commission pursuant to Regulation 14A
and in the Annual Report to Shareholders on Page 39
(Note 15) and is incorporated herein by reference.
PART I
ITEM 1. BUSINESS
General
Zemex Corporation (the "Corporation" or "Zemex"), a Delaware
corporation, was incorporated in 1985 as the successor to
Pacific Tin Corporation. Zemex is a niche producer of
industrial minerals and metal products. Its principal
businesses are industrial minerals, metal powders, and
aluminum waste recycling. Its major products include
feldspar, feldspathic minerals, kaolin, sand, mica, talc,
ferrous and non ferrous powders, and aluminum dross
derivatives.
Industrial Minerals
The Corporation's industrial minerals segment consists of
three wholly-owned subsidiaries: The Feldspar Corporation
("TFC"), Suzorite Mica Products Inc. ("Suzorite") and
Suzorite Mineral Products, Inc. ("SMP"). The group is
collectively referred to as Zemex Industrial Minerals, Inc.,
a company which was incorporated under the laws of the State
of Delaware in December 1996.
TFC has mining and processing facilities in Edgar, Florida;
Monticello, Georgia; and Spruce Pine, North Carolina. Using
classical methods, TFC mines sodium feldspar from two
different ore deposits in the Spruce Pine area; potassium
feldspar is mined from two deposits close to the Monticello
plant. TFC's kaolin and sand products are produced by
dredging and wet separation at the Edgar property.
TFC produces numerous products, including sodium and
potassium feldspar, silica, low iron sand, muscovite mica
and kaolin clay, at its operating plants in TFC supplies its
products primarily to the glass and ceramics industries.
Feldspathic minerals and certain grades of industrial sand
are used to manufacture bottles, jars, and other glass
containers, fiberglass, paints and plastics, and television
picture tubes. Feldspar and kaolin are major raw materials
for the ceramic industry, and are incorporated into the
production of ceramic floor and wall tiles, dinnerware,
plumbing fixtures, glazes and electrical insulators.
Industrial sand is used for filter, filler, beach, blasting
and concrete applications. TFC also produces a low iron sand
product for use in specialized glass applications.
Suzorite mines phlogopite mica in an open pit mining
operation in Suzor Township, Quebec, Canada, approximately
200 miles north of Montreal, Quebec. The ore is mined by
standard, open pit methods and delivered to a siding for
ultimate transportation by rail to the processing plant,
which is located in Boucherville, Quebec, a suburb of
Montreal. Suzorite's phlogopite mica is processed into
products of various particle sizes. Because of its distinct
thermal stability advantage over competitive materials,
phlogopite mica is used in technological plastic and high
temperature plastic applications; Suzorite's phlogopite mica
is used as a partial or complete substitute for asbestos in
fire retardation, friction materials, oil well drilling
needs, caulking and molding compounds, coatings, plasters
and plastics. The principal markets served by Suzorite are
the automobile, construction and oil drilling industries.
These products are marketed under the trade names Suzorite
Mica and Suzorex.
SMP, which was acquired by the Corporation in late 1994, has
talc operations in Natural Bridge, New York; Murphy, North
Carolina; Van Horn, Texas; and Benwood, West Virginia. SMP
purchases raw materials for conversion and processing at its
plant in Natural Bridge; these products are directed
primarily into the cosmetic and pharmaceutical industries.
The production facility in Van Horn processes mined ores for
sale into the coatings, plastics and ceramics industries.
The Benwood operation imports raw materials and processes a
variety of calcium carbonates as well as a wide range of
talc products for ultimate use in the plastics industry.
In late 1996, SMP substantially completed the construction
of a new mill at its facility in West Virginia. This new
fine grind milling capacity is part of SMP's strategy to
develop a niche in the talc marketplace by offering very
finely divided high purity talc products to industrial
markets. SMP believes that it is one of the few talc
producers in North America to produce products of this
purity and fineness. The products, which will see
application in performance plastic parts, high end coatings
and other niche markets, are currently being tested and
appraised by a select group of customers. With the addition
of these new fine grind products, Benwood will have the
ability to produce a broad spectrum of high purity talc
products.
Demand for the Corporation's industrial minerals is related
to the pace of the general economy and, particularly, to the
automotive industry, and residential and commercial
construction industries. The Corporation's industrial
minerals sales were $40.5 million in 1996, compared with
$37.1 million in 1995 and $30.4 million in 1994. This
business segment reported operating income, before
reorganization and/or restructuring charges of $3.1 million
in 1996, $4.6 million in 1995 and $3.9 million in 1994.
During 1996, considerable efforts were put into product
development, marketing, capital expansion projects and
product quality improvement. The Corporation expects these
efforts will bear fruit in the future.
Capital expenditures were $11.9 million in 1996 compared to
$9.7 million in 1995 and $2.1 million in 1994. Major
capital spending in 1996 included construction of a low iron
sand plant in Spruce Pine, North Carolina, completion of an
expansion at TFC's sodium feldspar operation also in Spruce
Pine, and installation of a new fine grind mill at its plant
in Benwood, West Virginia.
Metal Products
The metal products segment consists of Pyron Corporation and
Pyron Metal Powders, Inc. (together, "Pyron") and Alumitech,
Inc., Aluminum Waste Technology, Inc. and Engineered Thermal
Systems, Inc. (collectively, "Alumitech"), all of which are
wholly-owned subsidiaries of Zemex.
Pyron operates plants located in Niagara Falls, New York;
St. Marys, Pennsylvania; and Greenback, Tennessee. In 1994,
Pyron purchased the assets of Greenback Industries, Inc.,
giving it the ability to produce a wide range of high
quality copper and copper alloy powders. These products
complement Pyron's iron and steel powder products and are
sold through Pyron's marketing and sales organization.
Until 1996, Pyron also operated a metal powder facility in
Maryville, Tennessee. However, in order to optimize
production efficiencies and lower operating costs, the
Maryville process was amalgamated with the one at Greenback
in early 1996. In addition, a new water atomized copper
powder process was successfully commissioned at the
Greenback location in late 1996.
Pyron's major products include iron, steel, copper, copper
alloy powders and manganese sulfide. The primary
application of metal powders is in the fabrication of
precision metal parts using powder metallurgy. Powder
metallurgy is an efficient, economical process for the
production of complex components used in the automotive,
farm, garden and lawn equipment, and business machine
industries. Key features of powder metallurgy technology
are low scrap ratios and lower production costs than other
conventional metal working processes such as machining,
casting and forging. In addition, in recent years, metal
powder use in automotive and rail braking systems has grown
rapidly as a replacement for asbestos, achieving better
performance and improved environmental and health
conditions. Metal powders are also used in the production
of welding rods, for cutting and scarfing of steel ingots
and billets, for the inspection of oil field pipe and
tubing, and in food supplements.
In 1995, Pyron completed construction of a blending plant in
St. Marys, Pennsylvania. Through its new blending plant,
Pyron is able to provide warehousing, custom pre-packaged
powders and just-in-time service to its customers.
In 1996, Pyron completed construction of a designated
facility for the production of manganese sulfide at its
Greenback, Tennessee location. Pyron's new product,
Manganese Sulfide Plus (MnS+TM), was developed in Pyron's
laboratory and is used as an additive by the powder
metallurgical industry to enhance tool life and aid in
machinability. Manganese Sulfide Plus is now commercially
available and response from customers has been very
positive. Although not a significant contributor to
earnings, manganese sulfide is a natural complement to
Pyron's core ferrous and non-ferrous businesses. It further
broadens Pyron's product line, serving to enhance customer
relationships
The Corporation acquired its initial interest in Alumitech
in 1994 and increased its ownership to 100 percent in 1995.
Alumitech has two processing plants: an aluminum dross
reprocessing plant in Cleveland, Ohio and a ceramic fiber
production plant in Streetsboro, Ohio. Alumitech is an
aluminum dross reprocessor that has developed, patented and
is in the process of commercializing its proprietary
aluminum dross recycling technology. Using its patented
process, Alumitech has the ability to transform chloride-
based drosses received from secondary aluminum producers
into a number of commercial applications, including
refractory ceramic fiber and other metallurgical products.
Currently, competitive processes landfill anywhere from 40
percent-75 percent of the volume of dross received, whereas
Alumitech's recycling process will virtually eliminate the
need for landfill.
Aluminum dross is a waste by-product produced by primary and
secondary aluminum smelters. Secondary dross, which is high
in chloride content, forms the primary feedstock for
Alumitech's Cleveland plant. Conventional dross processors
extract the contained metallic aluminum and landfill the
balance. Using its proprietary process, Alumitech has the
ability to extract the metallic aluminum and residual fines
as exothermics, crystallize the sodium, potassium, and
magnesium chlorides, and convert the balance into non-
metallic products ("NMP") to be used in the production of
commercial products. The result is the elimination of the
need for landfill. With its ability to convert NMP into
commercially saleable products, Alumitech is considered the
industry leader in the development of alternative uses for
NMP. Alumitech's patents on its technology to process NMP
have a remaining life of about fourteen years.
Alumitech also operates a ceramic fiber plant in
Streetsboro, Ohio. At this facility, NMP can be melted in
an electric arc furnace and converted into refractory
ceramic fiber. The fiber is blown into a blanket and cut to
dimension. The final product is an insulation material with
a temperature degradation of as high as 2000 degrees F.
In November 1996, the Corporation signed a letter of intent
to form a joint venture with IMCO Recycling Inc., the
world's largest aluminum recycler. Assuming that a joint
venture agreement is signed in the first half of 1997,
management expects that construction of a new dross
reprocessing facility will begin in late 1997 or early 1998.
Sales for the metal products group decreased to $46.0
million in 1996 from $48.0 million in 1995. Sales were $24.9
million in 1994. The decrease from 1995 to 1996 was due to
lower volumes of ferrous and non ferrous metal powders and
lower aluminum prices. During the same interval, operating
income before reorganization and/or restructuring charges
decreased from $3.7 million in 1995 to $1.9 million in 1996.
Operating income before reorganization and/or restructuring
charges was $3.9 million in 1994. Management anticipates
improved margins in this segment in 1997 as a result of
higher metal powder production, new products, continuing
cost reductions, efficiency improvement programs, and higher
aluminum prices.
Capital expenditures for the metal products group were $6.0
million in 1996 as compared to $5.8 million in 1995 and $0.9
million in 1994. The expenditures were primarily incurred
to construct a manganese sulfide operation at the plant in
Greenback, Tennessee and to improve the dross processing and
ceramic production facilities at the Cleveland plant. In
1997, capital expenditures are anticipated to be higher due
to the retrofitting of the Cleveland facility from a pilot
plant to a full-scale commercial operation and the
construction of a new dross processing facility with IMCO
Recycling Inc. ("IMCO"). The latter is subject to the
signing of a joint venture agreement with IMCO in the first
half of 1997.
Raw Materials and Other Requirements
In recent years, the Corporation has not experienced any
substantial difficulty in satisfying the raw materials
requirements for its metal products operations, which is the
segment that consumes, rather than supplies, raw materials.
However, no assurance can be given that any shortages of
these or other necessary materials or equipment will not
develop or that increased prices will not adversely affect
the Corporation's business in the future.
Seasonality
The efficiency and productivity of the Corporation's
operations can be affected by unusually severe weather
conditions. During the winter of 1996, there were minor
production outages at the Corporation's operating facilities
in North Carolina and New York States due to inclement
weather, but they were not significant enough to materially
affect 1996 operating results.
Competition
All of the Corporation's products are sold in highly
competitive markets which are influenced by price, product
performance, customer location, service, foreign
competition, material substitution and general economic
conditions. The Corporation competes with other companies
active in industrial minerals and metal products. No
material part of the Corporation's business is dependent
upon any single customer, or upon very few customers, the
loss of any one of which could have a material adverse
impact on the Corporation.
Industrial mineral prices, generally, are not subject to the
price fluctuations typical of commodity metals. Demand for
industrial minerals is primarily related to general economic
conditions, particularly in the automotive, housing and
construction industries. In the United States, there are
three major feldspathic mineral producers, including the
Corporation. The Corporation is the only North American
producer of phlogopite mica and one of many talc producers.
Markets for industrial mineral products are sensitive not
only to service, product performance, and price, but also to
competitive pressures and transportation costs.
The Corporation is one of five North American producers of
metal powders. The market for metal powders is affected
primarily by product performance, consistency of product
quality and price. To some extent, competition in the metal
powders industry is affected by imports of finished metal
powder parts. Product prices over the last several years
have been strongly influenced by costs of powder production
and available capacity. Demand for metal powders is a
function of general economic conditions, particularly in the
automotive market.
There are numerous aluminum dross processors in the United
States, however, only Alumitech has patented technology
which enables it to process aluminum dross without the
necessity for landfill. While the Corporation competes for
the supply of aluminum dross with a number of other
operations, the major factor affecting the supply of dross
is the level of activity of the secondary aluminum smelting
industry. In addition, as aluminum is one of the products
of aluminum dross reprocessing, commodity price fluctuations
of aluminum may have a negative impact on the earnings of
the Corporation.
Research and Development
The Corporation carries on an active program of product
development and improvement. Research and development
expense was $0.6 million in 1996, $0.3 million in 1995 and
$0.3 million in 1994.
Financial information about industry segments is set forth
on pages 39 and 40 of the Annual Report to Shareholders and
is incorporated herein by reference.
Environmental Considerations
Laws and regulations currently in force which do or may
affect the Corporation's domestic operations include the
Federal Clean Air Act of 1970, the National Environmental
Policy Act of 1969, the Solid Waste Disposal Act (including
the Resource Conservation and Recovery Act of 1976), the
Toxic Substances Control Act, CERCLA (superfund) and
regulations under these Acts, the environmental protection
regulations of various governmental agencies (e.g. the
Bureau of Land Management Surface Management Regulations,
Forest Service Regulations, and Department of Transportation
Regulations), laws and regulations with respect to
permitting of land use, various state and local laws and
regulations concerned with zoning, mining techniques,
reclamation of mined lands, air and water pollution and
solid waste disposal. Currently, the Corporation is not
aware of any materially adverse environmental problems or
issues.
Employees
The approximate number of Corporation employees as of
December 31, 1996 is set forth below:
Industrial Minerals 275
Metal Products 235
Corporate 6
----
Total 516
----
Approximately 59 employees at the Corporation's metal powder
operations in Niagara Falls, New York, are covered by a
collective bargaining agreement. The current three-year
agreement expires April 15, 1998. At the ferrous metal
powder facility in Greenback, Tennessee, approximately 39
employees are covered by a three-year agreement which
expires February 28, 1998. Approximately 22 employees at
Suzorite are covered by a three-year collective bargaining
agreement that expires December 12, 1999. The agreement is
for three years and should be signed by the end of March
1997. At Alumitech, approximately 42 employees are covered
by two collective bargaining agreements, one agreement
expiring April 30, 1998 and one agreement expiring December
31, 1998. The Corporation considers its labor relations to
be good.
Foreign Operations
The Corporation's international operations are located in
Canada whose institutions and governmental policies are
similar to those of the United States. Although there can
be no assurance as to future conditions, the Corporation has
experienced no political activities, social upheavals,
currency restrictions or similar factors which have had any
material adverse effect to date on the results of its
operations or financial condition.
Export Sales
The Corporation's industrial minerals and metal products
operations sell their products internationally to a wide
variety of customers including the ceramics, glass and
powder metallurgy industries. Export sales in these two
segments were less than 7 percent of total sales.
Cautionary "Safe Harbor" Statement Under the
United States Private Securities Litigation Reform Act of
1995
With the exception of historical matters, the matters
discussed in this report are forward looking statements that
involve risks and uncertainties that could cause actual
results to differ materially from targeted or projected
results. Factors that could cause actual results to differ
materially include, among others, fluctuations in aluminum
prices, problems regarding unanticipated competition,
processing, access and transportation of supplies,
availability of materials and equipment, force majeure
events, the failure of plant equipment or processes to
operate in accordance with specifications or expectations,
accidents, labor relations, delays in start-up dates,
environmental costs and risks, the outcome of acquisition
negotiations and general domestic and international economic
and political conditions, as well as other factors described
herein or in the Corporation's filings with the Commission.
Many of these factors are beyond the Corporation's ability
to predict or control. Readers are cautioned not to put
undue reliance on forward looking statements.
ITEM 2. PROPERTIES
The industrial minerals segment has operations and mines in
Edgar, Florida; Monticello, Georgia; Boucherville, Quebec;
Suzor Township, Quebec; Natural Bridge, New York; Murphy,
North Carolina; Spruce Pine, North Carolina; Van Horn,
Texas; and Benwood, West Virginia. This segment owns
approximately 391,500 square feet of office and plant floor
space. As well, the processing facility in Benwood, West
Virginia has approximately twelve acres of land. In 1996,
The Feldspar Corporation purchased 655 acres with 20 years
additional ore reserves for its Spruce Pine, North Carolina
facility. The mineral deposits at the mines currently
operated by the industrial minerals segment are estimated by
the Corporation to be at least 25 years, except in the case
of the mica mine in Suzor Township where reserves are
estimated to be in excess of 100 years. All of the
Corporation's mining properties are either owned or leased,
with the leases expiring from 1998 to 2018.
The metal products group has operations in Niagara Falls,
New York; St. Marys, Pennsylvania; Greenback, Tennessee;
Cleveland, Ohio; and Streetsboro, Ohio. At its facility in
Niagara Falls, Pyron Corporation utilizes approximately
79,000 square feet of office and plant floor space which it
leases from the Niagara County Industrial Development
Agency. The lease was established as part of the Industrial
Development Revenue Bond issued in November 1989 to finance
the construction of an atomized steel powder plant. Lease
payments are to be sufficient to pay the debt service on the
Industrial Development Revenue Bond. The atomized plant
utilizes approximately 16,000 square feet of floor space and
is adjacent to the existing facility. The blending plant in
St. Marys, Pennsylvania, which was built in 1995, has 32,000
square feet of plant, office and storage space and is
situated on 3.4 acres of land. The Greenback facility is
situated on 27.5 acres of land of which 6 acres is actively
used in the operations. General office space comprises
approximately 6,300 square feet; there is approximately
87,000 square feet of production, storage and
shipping/receiving space. The aluminum dross processing
plant in Cleveland, Ohio owns 6.1 acres and has buildings
totaling 51,000 square feet. The Streetsboro, Ohio
operation owns 6.0 acres on which there is a 36,000 square
foot building of plant and office space.
All facilities are maintained in good operating condition.
ITEM 3. LEGAL PROCEEDINGS
On February 11, 1993, The Feldspar Corporation and other non-
affiliated companies were named as defendants in a civil
action brought by Dryvit Systems, Inc. ("Dryvit") in the
State of Rhode Island captioned Dryvit Systems, Inc. v. The
Feldspar Corporation, Taggart Sand Products Corp., Surface
Systems, Inc., The Morie Company, Inc., Eriez Magnetics,
Inc., and Law Engineering, Inc., C.A. No. KC 93-108, State
of Rhode Island, Kent. Dryvit alleges that between
approximately 1985 and 1990, sand purchased from TFC and
other suppliers utilized by Dryvit to manufacture exterior
insulation finishes for the exterior of buildings developed
rust stains because the sand contained pyrite and magnetic
materials. Dryvit seeks unspecified monetary damages and
costs, including the costs associated with the repair of the
damaged structures.
TFC denies such allegations and claims and the Corporation
believes that it is remote that this litigation will result
in any material adverse effect to the Corporation's
financial condition or results of operations. The
Corporation strongly believes that this action is without
merit, however, no assurance can be made as to the outcome
of this litigation. Although the Corporation's primary
insurer has attempted to limit its coverage, the Corporation
believes that its primary and excess liability insurance is
sufficient to cover any potentially unfavorable outcome.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 10. EXECUTIVE AND OTHER OFFICERS OF THE REGISTRANT
Served in
Officer Position Age Position Since
Peter Lawson-Johnston Chairman of the
Board of Directors 70 1975
Richard L. Lister President and
Chief Executive Officer 58 1993
Allen J. Palmiere Vice President,
Chief Financial Officer 44 1993
and Assistant Secretary
Peter J. Goodwin Vice President,
Zemex Corporation 46 1994
President, Industrial Minerals
Terrance J. Hogan President, Alumitech, Inc. 41 1995
G. Russell Lewis President, Metal Powders 67 1986
Patricia K. Moran Assistant
Secretary-Treasurer 31 1995
There are no family relationships between the officers
listed above. The term of office of each executive officer
is until his/her respective successor is elected and has
qualified, or until his/her death, resignation or removal.
Officers are elected or appointed by the board of directors
annually at its first meeting following the annual meeting
of shareholders. The following are the current officers of
the Corporation and a description of their business
activities if less than five years in their present
position.
Mr. Lister, who was elected to the board of directors on May
30, 1991, assumed his duties as Vice Chairman of the Board
of Directors on July 23, 1991 and as President and Chief
Executive Officer on June 1, 1993. Mr. Lister was Vice
Chairman of Dundee Bancorp Inc. from October 1991 to May
1993.
Mr. Palmiere assumed the duties of Chief Financial Officer
in October 1993. From April 1992 to October 1993 he was a
self-employed consultant. From October 1990 to April 1991
he was the Chief Financial Officer and Vice President of
Breakwater Resources Ltd. and from May 1991 to April 1992
was the Chief Executive Officer of Breakwater Resources Ltd.
Mr. Goodwin became a Vice President of the Corporation in
August 1994. From May 1993 to August 1994, Mr. Goodwin was
a self-employed consultant. Mr. Goodwin was President and
Chief Executive Officer of Miller and Co. from August 1990
to May 1993.
Mr. Hogan became President of Alumitech, Inc. in May 1995.
Prior to becoming President, Mr. Hogan was Chief Operating
Officer of Alumitech's subsidiary, Aluminum Waste
Technology, Inc., from December 1992 to May 1995. Prior to
December 1992, Mr. Hogan was the Vice President and Chief
Financial Officer of American Recovery Technology Systems,
Inc.
Ms. Moran assumed the duties of Assistant Secretary-
Treasurer in February 1995 and has served in various
capacities with the Corporation since 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Information responsive to this Item is set forth on page 16
of registrant's Annual Report to Shareholders for the year
ended December 31, 1996 and is incorporated herein by
reference. The Annual Report to Shareholders is included as
Exhibit 13 to this Form 10-K Annual Report. The Annual
Report to Shareholders, except for those portions thereof
which are expressly incorporated by reference herein, is
furnished for the information of the Commission and is not
to be deemed "filed" as part of this Form 10-K report.
ITEM 6. SELECTED FINANCIAL DATA
Information responsive to this item is set forth on page 41
of the Annual Report to Shareholders and is incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Information responsive to this Item is set forth on pages 10
through 16 of the Annual Report to Shareholders and is
incorporated herein by reference.
In addition to the information incorporated herein by
reference, on March 12, 1997, the Corporation signed an
amendment to its credit agreement with NationsBank and The
Chase Manhattan Bank (see Exhibit 4(q)). The amendment
provides for an incremental $20 million increase in credit
available for acquisitions, capital programs and general
corporate purposes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements responsive to this Item are set forth
on pages 17 through 40 of the Annual Report to Shareholders
and are incorporated herein by reference. The Supplementary
Schedule required by this Item is set forth on page S-1 of
this Form 10-K Annual Report. See Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
1. Financial statements and independent auditor's report
filed as part of this report:
(a) Consolidated Balance Sheets at December 31,
1996 and 1995, which information is incorporated
by reference under Item 8 of this report;
(b) Consolidated Statements of Shareholders'
Equity for the three years ended December 31,
1996, which information is incorporated by
reference under Item 8 of this report;
(c) Consolidated Statements of Income for the
three years ended December 31, 1996, which
information is incorporated by reference under
Item 8 of this report;
(d) Consolidated Statements of Cash Flows for the
three years ended December 31, 1996, which
information is incorporated by reference under
item 8 of this report;
(e) Notes to the Consolidated Financial
Statements, which information is incorporated by
reference under Item 8 of this report; and
(f) Independent Auditors' Report, which
information is incorporated by reference under
Item 8 of this report.
2. Financial statement schedules and independent auditors'
report filed as part of this report:
Schedule
Number Description
- Report of Independent
Accountants
Schedule IX Valuation and Qualifying
Accounts
and Reserves (page S-1)
All other financial statements and schedules not listed have
been omitted since the required information is included in
the consolidated financial statements or the related notes
thereto, or is not applicable or required.
3. EXHIBITS
(3)(a) Certificate of Incorporation (Incorporated by
reference from Exhibit 4(a) of the Corporation's
Registration Statement on Form S-2, Registration No.
33-7774, filed on August 5, 1986)
(3)(b) By-Laws (Incorporated by reference from Exhibit 3 of
the Corporation's Quarterly Report on Form 10-Q
filed on May 13, 1988)
(3)(c) Amended and Restated Certificate of Incorporation
(Incorporated by reference from Exhibit A of the
Corporation's Definitive Proxy Statement, filed on
March 29, 1995)
(4)(a) Indenture of Trust dated as of November 1, 1989
between Niagara County Industrial Development Agency
and The Bank of New York as trustee for Pyron
Corporation (Incorporated by reference from Exhibit
(4)(a) of the Corporation's Annual Report on Form 10-
K filed March 31, 1990)
(4)(b) Agency Mortgage and Security Agreement dated as of
November 1, 1989 from Pyron Corporation and Niagara
County Industrial Development Agency to The Bank of
New York (Incorporated by reference from Exhibit
(4)(b) of the Corporation's Annual Report on Form 10-
K filed March 31, 1990)
(4)(c) Letter of Credit Reimbursement Agreement dated as of
November 1, 1989 between Pyron Corporation and
Chemical Bank (Incorporated by reference from
Exhibit (4)(c) of the Corporation's Annual Report on
Form 10-K filed March 31, 1990)
(4)(d) First Amendment to Letter of Credit Reimbursement
Agreement dated as of November 1, 1989 between Pyron
Corporation and Chemical Bank (Incorporated by
reference from Exhibit (4)(d) of the Corporation's
Annual Report on Form 10-K filed March 31, 1990)
(4)(e) Second Amendment to Letter of Credit Reimbursement
Agreement dated as of March 15, 1995 between Pyron
Corporation and Chemical Bank (Incorporated by
reference from Exhibit (4)(e) of the Corporation's
Annual Report on Form 10-K filed March 30, 1995)
(4)(f) Bank Mortgage and Security Agreement dated as of
November 1, 1989 from Pyron Corporation and Niagara
County Industrial Development Agency to Chemical
Bank (Incorporated by reference from Exhibit (4)(e)
of the Corporation's Annual Report on Form 10-K
filed March 31, 1990)
(4)(g) Building Loan Agreement dated as of November 1, 1989
between Chemical Bank and Pyron Corporation
(Incorporated by reference from Exhibit (4)(f) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1990)
(4)(h) Security Agreement dated as of November 1, 1989
between Pyron Corporation and Chemical Bank
(Incorporated by reference from Exhibit (4)(g) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1990)
(4)(i) Corporate Guaranty dated as of November 1, 1989 from
Zemex Corporation to Chemical Bank (Incorporated by
reference from Exhibit (4)(h) of the Corporation's
Annual Report on Form 10-K filed March 31, 1990)
(4)(j) First Amendment to Corporate Guaranty dated as of
November 1, 1989 of Zemex Corporation to Chemical
Bank (Incorporated by reference from Exhibit (4)(i)
of the Corporation's Annual Report on Form 10-K
filed March 31, 1990)
(4)(k) Second Amendment to Corporate Guaranty dated as of
March 14, 1991 of Zemex Corporation to Chemical Bank
(Incorporated by reference from Exhibit (4)(j) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1991)
(4)(l) Third Amendment to Corporate Guaranty dated as of
February 25, 1992 of Zemex Corporation to Chemical
Bank (Incorporated by reference from Exhibit (4)(m)
of the Corporation's Annual Report on Form 10-K
filed March 31, 1993)
(4)(m) Fourth Amendment to Corporate Guaranty dated as of
March 8, 1993 of Zemex Corporation to Chemical Bank
(Incorporated by reference from Exhibit (4)(o) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1993)
(4)(n) Fifth Amendment to Corporate Guaranty dated as of
March 15, 1995 of Zemex Corporation to Chemical Bank
(Incorporated by reference from Exhibit (4)(n) of
the Corporation's Annual Report on Form 10-K filed
March 30, 1995)
(4)(o) Irrevocable Standby Letter of Credit between Florida
Gas Utility and The Feldspar Corporation dated
December 16, 1992 (Incorporated by reference from
Exhibit (4)(q) of the Corporation's Annual Report on
Form 10-K filed March 31, 1993)
(4)(p) Loan and Security Agreement dated as of March 15,
1995 among Zemex Corporation and The Feldspar
Corporation and NationsBank of Tennessee, N.A. and
Chemical Bank and NationsBank of Tennessee, N.A., as
Agent (Incorporated by reference from Exhibit (4)(p)
of the Corporation's Annual Report on Form 10-K
filed March 30, 1995)
(4)(q) Amendment No. 1 dated as of March 12, 1997 to the
Loan and Security Agreement dated as of March 15,
1995 among Zemex Corporation and The Feldspar
Corporation and NationsBank of Tennessee, N.A. and
Chemical Bank and NationsBank of Tennessee, N.A., as
Agent
*(10)(a) Key Executive Common Stock Purchase Plan
(Incorporated by reference from Exhibit (10)(b) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1991)
(10)(b)Consent to Assignment of Lease and to Agreement
Sublease, and permission to Make Payments dated
November 7, 1978 each from Joberta Enterprises, Inc.
to NL Industries, Inc. and The Feldspar Corporation
(Incorporated by reference from Exhibit 10(pp) to
the Corporation's Registration Statement on Form S-
2, Registration No. 33-7774, filed on August 5,
1986)
(10)(c)Additional Lease Agreement dated as of November 1,
1989 between Niagara County Industrial Development
Agency and Pyron Corporation (Incorporated by
reference from Exhibit (10)(ll) of the Corporation's
Annual Report on Form 10-K filed March 31, 1990)
*(10)(d) Employment Agreement dated February 5, 1991
between Zemex Corporation and Robert W. Morris
(Incorporated by reference from Exhibit (10)(ll) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1992)
*(10)(e) Option Agreement with Paul Carroll dated
September 17, 1991 (Incorporated by reference from
Exhibit (10)(ll) of the Corporation's Annual Report
on Form 10-K filed March 31, 1992)
*(10)(f) Option Agreement with Peter Lawson-Johnston
dated September 17, 1991 (Incorporated by reference
from Exhibit (10)(ll) of the Corporation's Annual
Report on Form 10-K filed March 31, 1992)
*(10)(g) Option Agreement with John Donovan dated
September 17, 1991 (Incorporated by reference from
Exhibit (10)(ll) of the Corporation's Annual Report
on Form 10-K filed March 31, 1992)
*(10)(h) Subscription Agreement with Richard L. Lister
dated November 26, 1991 (Incorporated by reference
from Exhibit (5)(a) of the Corporation's Annual
Report on Form 10-K filed March 31, 1992)
(10)(i)Ligonier Purchase Agreement and Second Plan of
Reorganization dated March 2, 1992 among Pyron Metal
Powders, Inc., a wholly-owned subsidiary of Zemex
Corporation, Purchaser, and Ligonier Powders, Inc.,
Seller (Incorporated by reference from Exhibit
(5)(a) of the Corporation's Annual Report on Form 10-
K filed March 31, 1993)
(10)(j)1995 Stock Option Plan (Incorporated by reference
from Exhibit B of the Corporation's 1995 Definitive
Proxy Statement, filed on March 29, 1995)
(10)(k)Stock Purchase Agreement dated August 10, 1993
between Zemex Corporation, Zemex Canada Inc., an
Ontario corporation and a direct wholly-owned
subsidiary of Zemex Corporation, Dundee Bancorp
Inc., an Ontario corporation, and Dundee Bancorp
International Inc., a Delaware corporation, and a
direct wholly-owned subsidiary of Dundee Bancorp
Inc., with respect to the acquisition of Suzorite
Mica Products Inc. (Incorporated by reference from
Exhibit 2 of the Corporation's Current Report on
Form 8-K filed September 7, 1993)
(10)(l)Capital Stock Purchase Warrant dated September 14,
1993 issued to Dundee Bancorp International Inc.
pursuant to the Stock Purchase Agreement referred to
in 10(m). (Incorporated by reference from Exhibit
4(a) of the Corporation's Current Report on Form 8-K
filed September 7, 1993)
(10)(m)Registration Rights Agreement dated September 14,
1993 between Zemex Corporation and Dundee Bancorp
International Inc. (Incorporated by reference from
Exhibit 4(b) of the Corporation's Current Report on
Form 8-K filed September 7, 1993)
(10)(n)Asset Purchase Agreement dated September 3, 1993
between U.S. Silica Company, The Feldspar
Corporation and Zemex Corporation with respect to
the sale of the Virginia aplite facility
(Incorporated by reference from Exhibit 10(at) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1994)
(10)(o)Stock Purchase Agreement dated November 15, 1993
between Americo Malay Mineral Company and Zemex
Corporation with respect to the sale of 2,500,002
common shares of Perangsang Pasifik Senderian
Berhad, a corporation organized and existing under
the laws of the Federal Republic of Malaysia
(Incorporated by reference from Exhibit 10(au) of
the Corporation's Annual Report on Form 10-K filed
March 31, 1994)
(10)(p)Suzorite Mica Product Inc.'s Mining Lease dated
August 25, 1975 between the Province of Quebec and
Marietta Resources International Ltd. (Incorporated
by reference from Exhibit 10(av) of the
Corporation's Annual Report on Form 10-K filed March
31, 1994)
(10)(q)Employee Stock Purchase Plan (Incorporated by
reference as Exhibit A to the Corporation's Proxy
Statement filed May 6, 1994)
(10)(r)Stockholders Agreement dated June 10, 1994 among
Alumitech, Inc., Clarion Capital Corporation, DCC
Equities Limited and Moshe Dan Yerushalmi, John
Hocevar and Terrance Hogan and Zemex Corporation
(Incorporated by reference as Exhibit 10(ax) to the
Corporation's Registration Statement on Form S-1,
Registration No. 33-82638, filed on August 22, 1994)
(10)(s)Asset Purchase Agreement dated December 7, 1994
between Whittaker, Clark & Daniels, Inc., Clark
Minerals, Inc., Cherokee Minerals, Inc. and Pioneer
Talc Company and Suzorite Mineral Products, Inc. and
Zemex Corporation (Incorporated by reference from
Exhibit 10(u) of the Corporation's Annual Report on
Form 10-K filed March 30, 1995)
(13) 1996 Annual Report to Shareholders
(22) Subsidiaries of the Registrant
(24)(a)Consent of Deloitte & Touche
The Corporation will furnish copies of these documents to
requesting shareholders upon payment of $10.80 per document.
* Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ZEMEX CORPORATION
By:/s/RICHARD L. LISTER
---------------------------------
Dated: March 27, 1997 Richard L. Lister
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report is signed below by the following
persons on behalf of the registrant and in the capacities
and on the date indicated:
Signature Title Date
/s/ PETER LAWSON-JOHNSTON Chairman of the Board March 27, 1997
Peter Lawson-Johnston and Director
/s/ RICHARD L. LISTER President and Chief
Richard L. Lister Executive March 27, 1997
Officer and Director
(Principal Executive
Officer)
/s/ PAUL A. CARROLL Director March 27,1997
Paul A. Carroll
/s/ MORTON A. COHEN Director March 27,1997
Morton A. Cohen
/s/ JOHN M. DONOVAN Director March 27,1997
John M. Donovan
/s/ THOMAS B. EVANS, JR. Director March 27, 1997
Thomas B. Evans, Jr.
Title
/s/ NED GOODMAN Director March 27, 1997
Ned Goodman
/s/ PATRICK H. O'NEILL Director March 27, 1997
Patrick H. O'Neill
/s/ WILLIAM J. VANDEN HEUVEL Director March 27, 1997
William J. vanden Heuvel
/s/ ALLEN J. PALMIERE Vice President,
Allen J. Palmiere Chief Financial March 27, 1997
Officer and
Assistant Secretary
(Principal Financial and
Accounting Officer)
LIST OF EXHIBITS
Exhibit (4)(q) Amendment No. 1 dated as of March 12, 1997 to
the Loan and Security Agreement among Zemex
Corporation and The Feldspar Corporation and
NationsBank of Tennessee, N.A., and Chemical
Bank and NationsBank of Tennessee, N.A., as
Agent
Exhibit 13 1996 Annual Report to Shareholders
Exhibit 22
SUBSIDIARIES OF THE REGISTRANT
The subsidiaries listed below are wholly-owned and all are
consolidated in the financial statements.
State or Country
in Which
Subsidiary Name Incorporated or Organized
Alumitech, Inc. Delaware
The Feldspar Corporation North Carolina
Pyron Corporation New York
Pyron Metal Powders, Inc. Delaware
Suzorite Mica Products Inc.Ontario, Canada
Suzorite Mineral Products, Inc.Delaware
Zemex Industrial Minerals, Inc.Delaware
Exhibit 24(a)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of Zemex Corporation
We have audited the consolidated financial statements of
Zemex Corporation and its Subsidiaries as of December 31,
1996 and for the year then ended, and have issued our report
thereon dated January 31, 1997; such consolidated financial
statements and report are included in your 1996 Annual
Report to Shareholders and are incorporated herein by
reference. Our audit also included the consolidated
financial statement schedule of Zemex Corporation, listed in
Item 14. This consolidated financial statement schedule is
the responsibility of the Corporation's management. Our
responsibility is to express an opinion based on our audit.
In our opinion, such consolidated financial statement
schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE
Toronto, Ontario
March 31, 1997
ZEMEX CORPORATION
And Subsidiaries
SCHEDULE IX - VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
For the Year Ended December 31,
Column A Column Column Column Column Column
B C D E F
Additio
Balance ns Balance
at Charged Other At End
Description Beginni to Additio Deducti of
ng Costs ns ons Period
of and
Period Expense
s
1996
Reserves
Other $605,00 $100,00 _ $106,00 $599,00
0 0 0 0
Allowance for
$5,000
Uncollectable 386,000 148,000 87,000 452,000
Accounts
1995
Reserves
Other $549,00 $154,00 _ $ $605,00
0 0 98,000 0
Allowance for
$2,000
Uncollectable 414,000 77,000 107,000 386,000
Accounts
1994
Reserves
Employee _ _ _ $ _
Severance $ $255,00 _ 80,000 $549,00
Other 80,000 0 188,000 0
482,000
Allowance for _
85,000 42,000 414,000
Uncollectable 371,000
Accounts
S-1