10-Q 1 t07622e10vq.txt FORM 10-Q - QUARTERLY PERIOD ENDED JUNE 30, 2002 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, 2002 Commission file number 1-228 [ZEMEX LOGO] ZEMEX CORPORATION (Exact name of registrant as specified in its charter) CANADA NONE (State or other jurisdiction (I.R.S. Employer Identification Number) of incorporation or organization) 95 WELLINGTON STREET WEST, SUITE 2000 TORONTO, ONTARIO, CANADA M5J 2N7 (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 TORONTO STOCK EXCHANGE/NEW YORK STOCK EXCHANGE CAPITAL STOCK, NO 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 July 23, 2002, there were 8,210,518 shares of capital stock outstanding. PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS ZEMEX CORPORATION CONSOLIDATED BALANCE SHEETS (US$)

Prepared in accordance with Canadian GAAP - 2 - ZEMEX CORPORATION CONSOLIDATED STATEMENTS OF INCOME (US$)

Prepared in accordance with Canadian GAAP - 3 - ZEMEX CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (US$)

Prepared in accordance with Canadian GAAP (a) Employee Stock Purchase Plan ("ESPP") (b) See note 7 - 4 - ZEMEX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (US$)

Prepared in accordance with Canadian GAAP - 5 - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PREPARATION The consolidated financial statements prepared in accordance with Canadian GAAP, include the accounts of Zemex Corporation and its subsidiaries (the "Corporation"). The financial data for the three months ended June 30, 2002 and 2001 and for the six months ended June 30, 2002 and 2001 is unaudited but, in the opinion of management, reflects all adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows. The results of operations and cash flows for the three-month and six-month periods ended June 30, 2002 are not necessarily indicative of operations for the entire year. All material intercompany transactions have been eliminated. The following should be read in conjunction with the audited Consolidated Financial Statements and related notes thereto for the year ended December 31, 2001. The Corporation is a diversified producer of specialty materials and products for use in a variety of industrial applications. The Corporation operates in two principal business segments: (i) industrial minerals, which includes The Feldspar Corporation, Suzorite Mica Products Inc., Suzorite Mineral Products, Inc., Zemex Industrial Minerals, Inc., Zemex Mica Corporation and Zemex Attapulgite, LLC; and (ii) aluminum recycling, which includes Alumitech, Inc., Alumitech of Cleveland, Inc., Alumitech of Wabash, Inc., Alumitech of West Virginia, Inc., ETS Schaefer Corporation and AWT Properties, Inc. 2. ACQUISITIONS AND DISPOSITIONS a. On March 27, 2002, the Corporation purchased through a newly formed subsidiary, Alumitech of West Virginia, Inc., the assets of Resource Recovery Industries, LLC, an aluminum dross processor located in Friendly, West Virginia. The purchase price was approximately $3.1 million and was financed by a drawdown on the Corporation's credit facility. As contingent consideration for the purchase, the Corporation issued Series A and Series B warrants which are exercisable for cash consideration into shares of Alumitech, Inc., or into shares of the Corporation if Alumitech, Inc. is not publicly listed by December 31, 2006. The warrants, which vest in 2005 and 2006 respectively, will terminate if certain earnings targets are not met by the aluminum operations of Alumitech by the beginning of these fiscal years. b. On February 1, 2002, the Corporation acquired, through Zemex Attapulgite, LLC, a newly incorporated subsidiary under the industrial minerals group, the assets of an attapulgite clay operation from Milwhite, Inc. The Corporation paid approximately $11.6 million for the acquisition and funded it by a drawdown from its existing credit facility. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of the acquisition. As a result of third party valuation reports completed in the second quarter, the Corporation has revised its initial allocation of the purchase price, reclassifying $2.8 million from capital assets to goodwill. - 6 - =========================================================================== Current assets $ 1,123,000 Capital assets 8,840,000 Goodwill 2,787,000 --------------------------------------------------------------------------- Total assets 12,750,000 Current liabilities 991,000 Other non-current liabilities 180,000 --------------------------------------------------------------------------- Net assets acquired $ 11,579,000 ===========================================================================

c. On March 20, 2001, the Corporation completed the sale of its Natural Bridge, New York talc facility and its 60% interest in Zemex Fabi-Benwood, LLC for approximately $7.5 million to IMI Fabi S.p.A. ("IMI Fabi"). The Corporation recognized a pre-tax gain of $0.3 million from this transaction which was recorded as other income in the first quarter of 2001. Of the sale proceeds, $3.7 million was received in March 2001 and applied to reduce the Corporation's outstanding borrowings under its credit facilities. The balance, which was originally included in accounts receivable, was received in September 2001. 3. DEFERRED REVENUE Included in accrued liabilities at June 30, 2002 is deferred revenue of $1.9 million related to a "take-or-pay" arrangement with a customer. The Corporation recognizes revenue when goods are delivered to customers or when all significant contractual obligations have been satisfied. 4. SEGMENTED INFORMATION The Corporation carries on its commercial activities in two principal lines of business and is organized into two distinct operating units based on product lines: (i) industrial minerals; and (ii) aluminum recycling. Information pertaining to sales and earnings (loss) from operations and assets by business segment appears below:

- 7 -

5. COMMON SHARES AND STOCK OPTIONS Shares Outstanding As at June 30, 2002, the Corporation's authorized capital stock consists of an unlimited number of first preference shares without par value and an unlimited number of common shares without par value. There were no preference shares and 8,210,518 common shares issued and outstanding as of July 23, 2002. The Corporation did not repurchase any common shares in the second quarter of 2002 as compared to 195,600 common shares repurchased in the same quarter of 2001, at an average price of $7.02 per share. The Corporation did not repurchase any shares during the six months ended June 30, 2002, compared to 261,000 common shares repurchased in the same period in 2001, at an average price of $6.67 per share. Stock Options Outstanding The Corporation provides stock option incentive plans, which are intended to provide long-term incentives and rewards to executive officers, directors and other key employees contingent upon an increase in the market value of the Corporation's common shares. The options vest and are exercisable from the beginning of the second year subsequent to the date of issuance. There were 1,120,650 options outstanding as of July 23, 2002 of which 871,900 are exercisable as of July 23, 2002. - 8 - The following is a summary of option transactions under the Corporation's stock option plans for the three months and six months ended June 30, as follows:

The options expire from 2002 to 2010. The following table summarizes information about the stock options outstanding at June 30, 2002:

6. STOCK BASED COMPENSATION The Corporation does not recognize compensation expense for its stock-based compensation plans. Had compensation cost for the stock option plans been determined based upon fair value at the grant date for awards under these plans, the Corporation's net income and earnings per share would have been reduced by approximately $129,000 or $0.02 per share in the second quarter of 2002, and $56,000 or $0.01 per share in the same period of 2001. For the six-month periods ended June 30, the Corporation's net income and earnings per share would have been reduced by $129,000 or $0.02 per share in 2002, and $514,000 or $0.06 - 9 - per share in 2001. The fair value of the options granted during 2002 and 2001 is estimated to be $129,000 and $514,000, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2002 and 2001: dividend yield of 0%; expected volatility of 28% and 29%; risk-free interest rates varying from 4.18% to 5.17%; and an expected life of 5 years. 7. GOODWILL AND OTHER INTANGIBLE ASSETS In 2001, the Canadian Institute of Chartered Accountants issued Section 3062 "Goodwill and Other Intangible Assets". This standard was effective January 1, 2002 and requires, among other things, the discontinuance of goodwill amortization. The Corporation's net income would have increased by $50,000 for the three-month period ended June 30, 2001 and $100,000 for the six-month period ended June 30, 2001 had goodwill not been amortized during these periods. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles such as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. It also requires the Corporation to complete a transitional goodwill impairment test six months from the date of adoption. This implementation review was completed as at June 30, 2002 for the goodwill that had been recorded by the Corporation's aluminum recycling group, the operation of which collectively comprise a reporting unit, on the acquisition of S&R Enterprises, Inc. The review indicated an impairment of goodwill. The impairment has arisen as a result of the fair market value of the reporting unit declining due to the depressed nature of the secondary aluminum industry. An amount of $1.7 million (net of tax of $1.0 million), representing the goodwill impairment, was charged to opening retained earnings effective January 1, 2002 in accordance with the transitional provisions of this standard. 8. DIFFERENCES FROM UNITED STATES ACCOUNTING PRINCIPLES These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada ("Canadian GAAP"). The differences between Canadian and U.S. generally accepted accounting principles ("U.S. GAAP") do not have a material effect on the Corporation's reported financial position or net income or cash flows except as follows: a. Income Statements The implementation of the American Institute of Certified Public Accountants Statement of Position 98-5 ("SOP 98-5") requires costs of start-up activities and organization costs to be expensed as incurred. Canadian GAAP permits the deferral and amortization of such costs. The implementation of Section 3062 of the CICA Handbook, "Goodwill and Other Intangible Assets", and Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", requires the assessment of potential impairments of goodwill and where an impairment exists, the elimination of the goodwill. For the purpose of CICA Section 3062 the impaired goodwill is charged against opening retained earnings; however, for the purpose of SFAS No. 142 the charge is recognized in the income statement as a cumulative change in accounting policy. - 10 - The following summarizes the income statement amounts in accordance with U.S. GAAP where different from the amounts reported under Canadian GAAP.

b. Balance Sheets Under U.S. GAAP, SOP 98-5 requires that the costs of start-up activities and organization costs be expensed in the period incurred rather than be deferred. Under U.S. GAAP, the provision for asset impairment for property, plant and equipment should be based on discounted future cash flows from impaired properties. Under Canadian GAAP, future cash flows from impaired properties are not discounted. This difference in methodology had an impact on reported results of operations of $1,439,000 in the year in which the impairment was recognized. The following summarizes the balance sheet amounts in accordance with U.S. GAAP where different from the amounts reported under Canadian GAAP.

- 11 - c. Statements of Comprehensive (Loss) Income U.S. GAAP requires a statement of comprehensive (loss) income as follows:

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 June 30, 2002 and the three months ended June 30, 2001, and for the six months ended June 30, 2002 and the six months ended June 30, 2001, 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 for the year ended December 31, 2001. CRITICAL ACCOUNTING POLICIES Impairment of Long-Lived Assets and Valuation of Deferred Tax Assets The fair value of the long-lived assets is dependent on the performance of the operations which the Corporation owns. In assessing potential impairment for these assets the Corporation will consider this factor as well as the forecasted financial performance. If the forecast is not met and the outlook does not provide for sufficient cash flow to recoup the investments, the Corporation may have to record additional impairment charges not previously recognized. In assessing the recoverability of the Corporation's goodwill and other intangibles the Corporation must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. If these estimates or their related assumptions change in the future, the Corporation may be required to record impairment charges for these assets not previously recorded. Carrying value of the Corporation's net deferred tax assets assumes that the Corporation will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Corporation may be required to record additional valuation allowance against its deferred tax assets resulting in additional income tax expense in the Corporation's consolidated statement of operations. Management evaluates the realizability of the deferred tax assets quarterly and assesses the need for additional valuation allowance quarterly. Use of Estimates The preparation of financial statements in conformity with Canadian generally accepted accounting principals requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial - 12 - statements and the reported amounts of revenues and expenses during the reporting period. Examples include provisions for bad debts, inventory reserves, reclamation reserves and pension liabilities. Actual results could differ from those estimates. The Corporation considers certain accounting policies relating to impairment of long-lived assets and valuation of deferred tax assets to be critical policies due to the estimation processes involved in each. RESULTS OF OPERATIONS There are three main factors that have impacted the results of operations in 2002: o Effective February 28, 2001, the Corporation sold its Natural Bridge, New York talc facility and 60% interest in Fabi-Benwood, LLC. o On February 1, 2002, the Corporation acquired certain assets of an attapulgite clay operation located in Attapulgus, Georgia. o In 2001, the Corporation produced, as a co-product of its sodium feldspar operation, feedstock for its low iron sand operation. In 2002, due to a change in mining plan, the Corporation is producing a low value industrial sand as a by-product. This has had an adverse impact on cost of goods sold of approximately $0.9 million. Additionally, sales of low iron sand are currently well behind budget. As this material is the subject of a "take-or-pay" contract, management anticipates that revenue will be on budget by year end. THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THREE MONTHS ENDED JUNE 30, 2001 Net Sales The Corporation's net sales from operations for the three months ended June 30, 2002 were $18.1 million compared to $14.5 million for the three months ended June 30, 2001, an increase of $3.6 million, or 24.6%. Net sales in the industrial minerals group for the three months ended June 30, 2002 were $12.5 million compared to $9.8 million in 2001. The increase of $2.7 million, or 27.4%, in revenue was mainly due to the revenue generated from the newly acquired attapulgite clay operation and increased sales revenue generated from the Suzorite Mica operation. The increase was offset by a $0.4 million decrease in low iron sand sales during the current quarter. Net sales for the aluminum recycling group were $5.6 million for the quarter ended June 30, 2002, compared to $4.7 million for the same period in 2001. The increase of 18.9% in revenue was primarily due to revenue from the newly acquired aluminum dross processor located in Friendly, West Virginia in part offset by the decrease in revenue generated from heat containment systems. The heat containment operation remains depressed due to the condition of the steel industry. Cost of Goods Sold Cost of goods sold for the quarter ended June 30, 2002 was $12.8 million, an increase of 38.8%, from the comparable period in 2001. Of the $3.6 million increase, the industrial minerals group accounted for $2.7 million and the aluminum recycling group accounted for $0.9 million. The increase from the industrial minerals group was due to the acquisition of clay operation in the first quarter of 2002 and the change in the quarry being utilized in feldspar operation. In 2002 the Feldspar operation generates low value industrial sand as a by-product rather than the high value low iron sand produced last year. The increase attributable to the aluminum recycling group was primarily due to the acquisition of the West Virginia aluminum dross - 13 - processor in March 2002. As a result of reasons discussed above, the gross margin as a percentage of sales for the quarter ended June 30, 2002 decreased by 19.7% from 36.6% to 29.4%. Selling, General and Administrative Expense Selling, general and administrative expense ("SG&A") for the three-month period ended June 30, 2002 was $3.0 million, effectively unchanged from the corresponding period in 2001. SG&A expense as a percentage of revenue decreased from 21.1% in 2001 to 16.8% in 2002. Depreciation, Depletion and Amortization Depreciation, depletion and amortization ("DD&A") for the three months ended June 30, 2002 was $1.6 million, an increase of 8.2% over the comparable period in 2001 as a result of the acquisition of Zemex Attapulgite, LLC which was completed in the first quarter of 2002. Operating Income Operating income for the three-month period ended June 30, 2002 was $0.7 million, a decrease of 12.0% from the comparable period in 2001. The decline in low iron sand sales resulted in a shortfall of $0.2 million which changed the variance from a positive 12% to a negative 12%. Interest Income Interest income for the three months ended June 30, 2002 was $3,000 as compared to $17,000 for the same period in 2001. Interest Expense Interest expense for the three months ended June 30, 2002 was $0.3 million, effectively unchanged from the comparable period in 2001. Total bank indebtedness was $25.3 million as of June 30, 2002, as compared to $14.6 million as of June 30, 2001. The increase in indebtedness arose from the two acquisitions that occurred in the first quarter of 2002. Both acquisitions were funded from the Corporation's credit facilities. Interest expense will increase prospectively. The increased level of indebtedness was offset by lower interest rates. Other Income, Net During the second quarter of 2001, the Corporation received a settlement of a long outstanding business interruption insurance claim relating to the previously sold metal powders operation. $0.3 million was recognized as other income. Provision for Income Taxes The Corporation recorded $0.3 million as provision for income taxes for the three months ended June 30, 2002 as compared to $0.2 million recorded in the same period of 2001. Net Income As a result of the factors discussed above, the Corporation recorded net income for the three months ended June 30, 2002 of $0.1 million compared to $0.5 million for the three months ended June 30, 2001. - 14 - SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO SIX MONTHS ENDED JUNE 30, 2001 Net Sales The Corporation's net sales for the six months ended June 30, 2002 increased to $33.0 million, or 6.4%, from $31.0 million in the corresponding period in 2001. Of the $2.0 million increase, the industrial minerals group contributed $1.4 million and aluminum recycling group, $0.6 million. Net sales in the industrial minerals group were $23.0 million for the six-month period ended June 30, 2002, compared to $21.6 million in 2001. The increase arose from several factors: an acquisition of the attapulgite clay operation in the first quarter of 2002, the sale of Natural Bridge, New York talc facility and the Benwood, West Virginia talc joint venture in the first quarter of 2001 and improved sales revenue generated from the mica operation. Net sales in the aluminum recycling group was $10.0 million for the period ended June 30, 2002 versus $9.4 million for the same period in 2001. The revenue generated from the newly purchased aluminum dross processor was offset by the decrease in sales from the heat containment unit. Cost of Goods Sold Cost of goods sold for the six months ended June 30, 2002 was $23.4 million, compared to $20.6 million in 2001. The increase was mainly due to the acquisitions that occurred in the first quarter of 2002 and the dispositions of the talc facilities in 2001. The change in low iron sand feedstock production has also adversely impacted cost of goods sold. Gross margin as percentage of sales decreased from 33.7% in 2001 to 29.3% in 2002. Selling, General and Administrative Expense SG&A expense for the six-month period ended June 30, 2002 was $5.8 million, marginally down from the same period in 2001. Depreciation, Depletion and Amortization DD&A for the six months ended June 30, 2002 was $3.1 million, effectively unchanged from the corresponding period in 2001. Operating Income Operating income for the six-month period ended June 30, 2002 was $0.8 million, a decrease of $0.7 million, or 48.2%, from the comparable period in 2001. Interest Income Interest income for the six months ended June 30, 2002 was $34,000 versus $67,000 for the same period in 2001. Interest Expense Interest expense for the six months ended June 30, 2002 was $0.5 million, 9.6% lower than in the same period in 2001. Total indebtedness was $25.3 million as of June 30, 2002, versus $14.6 million as of June 30, 2001. The increase in indebtedness was mainly due to the drawdown of credit facilities to fund the two acquisitions in 2002, compared to the paydown of credit facilities in 2001 as a result of sale of talc facilities. - 15 - Other Income, Net The Corporation recorded other income of $0.6 million for the six months ended June 30, 2001, compared to $43,000 for the same period in 2002. The 2001 income arose from the sale of the talc plants and insurance proceeds as previously discussed. Provision for Income Taxes The Corporation recorded an income tax provision of $0.2 million for the six months ended June 30, 2002, as compared to $0.4 million recorded in the corresponding period in 2001. Net Income As a result of the factors discussed above, the Corporation recorded a net income of $0.2 million for the six months ended June 30, 2002 compared to $1.2 million for the same period ended June 30, 2001. LIQUIDITY AND CAPITAL RESOURCES Cash Flow from Operations During the first two quarters of 2002, the Corporation generated cash flow from operations of $3.2 million as compared to $0.9 million for the first six months of 2001. Non-cash working capital generated $60,000 in the period ended June 30, 2002, versus an outflow of $3.0 million in the same period of 2001. The Corporation had a working capital deficit of $3.9 million at June 30, 2002 compared to a $10.1 million working capital at December 31, 2001. The decrease was mainly due to the drawdown under the credit facility to fund the acquisitions in 2002. Because the credit facility is a 364 day facility, all the bank debt is considered current. The Corporation's current credit facility expires on July 31, 2002. As part of the renewal negotiations, the banks have agreed to split the facility into two tranches. The first $10 million tranche will remain a 364 day facility. The second $20 million tranche will be for a two year term. Additionally the banks have agreed to a short-term increase in the leverage covenant to provide the Corporation with additional flexibility. There are no proposed changes to the current pricing grid. Documentation is expected to be finalized shortly. It is the opinion of management that there are sufficient sources of funds available to meet its anticipated cash requirements. ITEM 3 - MARKET RISK Market risk represents the risk of loss that may impact the consolidated financial statements of the Corporation due to adverse changes in financial market prices and rates. The Corporation's market risk is primarily a function of potential fluctuations in interest rates and aluminum prices. Management monitors the movements in interest rates and performs a periodic sensitivity analysis on aluminum prices and, on that basis, decides on the appropriate measures to take. Current prices and interest rates are such that management believes that no measures need be taken at this time. - 16 - The Corporation does not hold or issue financial instruments for trading purposes. A discussion of the Corporation's financial instruments is included in the financial instruments note to the Consolidated Financial Statements in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2001. 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 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Corporation's 2002 Annual Meeting of Shareholders held on June 14, 2002, the following actions were taken and votes tabulated: 1. Nine directors were elected for the ensuing year.

2. The appointment of Deloitte & Touche LLP as independent auditors of the accounts of the Corporation and its subsidiaries for the fiscal year ending December 31, 2002 was ratified.

- 17 - PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS Refer to the 2001 Annual Report filed on Form 10-K. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K Exhibits None * * * * * 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 24th day of July, 2002. ZEMEX CORPORATION (Registrant) By: /s/ ALLEN J. PALMIERE -------------------------------------------- Allen J. Palmiere Vice President, Chief Financial Officer and Corporate Secretary (Principal Financial and Accounting Officer and authorized signatory) - 18 -

ZEMEX CORP 10-Q