For Immediate Release

TOR Minerals Announces Fourth Quarter and Full Year 2007 Financial Results

CORPUS CHRISTI, Texas, February 20, 2008-- TOR Minerals International (Nasdaq:TORM), producer of synthetic TIO2 color pigments, specialty aluminas, and other high performance mineral fillers today announced its financial results for the fourth quarter and year ended December 31, 2007. The company reported net income available to common shareholders of $11,000, or $0.00 per diluted share, on net sales of $27,961,000 for the year ended December 31, 2007. This compares with net income available to common shareholders of $33,000, or $0.00 per share, on net sales of $26,079,000 for the year ended December 31, 2006.

Sales of specialty alumina products increased by 35 percent in 2007, reflecting the successful introduction of new, high value-added alumina products and gaining several new customers. Hitox sales declined 2 percent and other revenue was flat year-over-year, resulting in a 7 percent increase in net sales for 2007.

Net sales for the fourth quarter ended December 31, 2007, was $5,969,000 compared to $5,355,000 for the fourth quarter ended December 31, 2006. The net loss available to common shareholders was $230,000, or ($0.03) per diluted share, for the fourth quarter of 2007 compared to a net loss of $275,000, or ($0.04) per share, for the fourth quarter of 2006.

The 11 percent increase in fourth quarter net sales was primarily due to a 27 percent growth in specialty alumina sales. At 6 percent growth, Hitox sales returned to positive growth for the quarter. All other product sales grew 7 percent.

The company said that it experienced significant raw material, energy and freight cost pressure during 2007, but was able to offset these costs by making improvements to revenue mix, processing technologies and tightly controlling operating expenses.

“2007 was a year of significant innovation in product development. With the successful introduction of new high value-added specialty alumina products, we restored growth and profitability to that business. Our newly developed colored pigments are currently in testing with two dozen customers, and are expected to lay the foundation for resumed growth and profitability for our Ti02 pigment business in 2008,” said Dr. Olaf Karasch, Chief Executive Officer of TOR Minerals. “Looking forward, we plan to continue to introduce innovative high value-added products and look for ways to further leverage marketing and manufacturing opportunities in our global operations.”

The company announced operational changes that will reduce synthetic rutile stocking levels by 50 percent while continuing to support future growth and customer service levels. As a result of these changes, the company will temporarily idle synthetic rutile production, which is expected to have a negative affect on fixed cost absorption and result in a loss in the first quarter of 2008. “While idling synthetic rutile production will temporarily sacrifice profitability in the first quarter, the operational changes lower inventory stocking requirements, improve cash flow, and improve returns going forward,” said Steve Parker, Chief Financial Officer of TOR Minerals.

During 2008, the company expects specialty alumina sales to continue to post double digit sales increases and the new TiO2 colored pigment products to contribute significantly to growth in the second half of 2008. During 2008, the company expects profitability to ramp in each quarter of the year as new products are introduced and processes are improved.

TOR Minerals will host a conference call at 4:00 p.m. Central Time on February 20, 2008 to further discuss fourth quarter results. The call will be simultaneously webcast, and can be accessed via the News section on the company's website at www.torminerals.com. Interested parties may also access the conference call via telephone by dialing 877-407-9210.

Headquartered in Corpus Christi, Texas, TOR Minerals is a global manufacturer and marketer of specialty mineral and pigment products for high performance applications with manufacturing and regional offices located in the United States, Netherlands and Malaysia.

This statement provides forward-looking information as that term is defined in the Private Securities Litigation Reform Act of 1995, and, therefore, is subject to certain risks and uncertainties. There can be no assurance that the actual results, business conditions, business developments, losses and contingencies and local and foreign factors will not differ materially from those suggested in the forward-looking statements as a result of various factors, including market conditions, general economic conditions, including the present slow down in U.S. construction and the risks of a general business slow down or recession, the increasing cost of energy, raw materials and labor, competition, the receptivity of the markets for our anticipated new products, advances in technology, changes in foreign currency rates, freight price increase, commodity price increases, delays in delivery of required equipment and other factors.

Contact for Further Information:
David Mossberg
Beacon Street Group, LLC
(817) 310-0051

TOR Minerals International, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
 
 
Three Months
Ended December 31,
Twelve Months
Ended December 31,
 
2007
(Unaudited)
2007
(Unaudite)
2007
(Unaudited)
2006
NET SALES
$5,969
$5,355
$27,961
$26,079
  Cost of sales
5,029
4,547
22,768
20,939
GROSS MARGIN
940
808
5,193
5,140
  Technical services and research and development
62
54
245
239
  General, administrative and selling expenses
1,014
928
4,290
4,160
  (Gain) loss on disposal of assets
(12)
1
(12)
1
OPERATING INCOME (LOSS)
(124)
(175)
670
740
OTHER INCOME (EXPENSE):
  Interest income
7
2
18
17
  Interest expense
(166)
(148)
(684)
(547)
  Loss on foreign currency exchange rate
9
(81)
25
(135)
  Other, net
20
20
INCOME (LOSS) BEFORE INCOME TAX
(274)
(382)
29
95
  Income tax expense (benefit)
(59)
(122)
(42)
2
NET INCOME (LOSS)
$(215)
$(260)
$71
$93
  Less: Preferred Stock Dividends
15
15
60
60
  Income (Loss) Available to Common Shareholders
$(230)
$(275)
$11
$33
 
  Income (loss) per common share:
    Basic
$(0.03)
$(0.04)
$0.00
$0.00
    Diluted
$(0.03)
$(0.04)
$0.00
$0.00
  Weighted average common shares outstanding:
    Basic
7,849
7,839
7,849
7,836
    Diluted
7,849
7,839
7,885
7,873

 

TOR Minerals International, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except per share amounts)
 
   
December 31,
2007
(Unaudited)
2006
 
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents
$376
$896
  Trade accounts receivable, net
3,791
3,593
  Inventories
11,392
10,949
  Other current assets
578
555
    Total current assets
16,137
15,993
PROPERTY, PLANT AND EQUIPMENT, net
20,421
20,034
GOODWILL
2,131
1,927
OTHER ASSETS
47
57
   
$38,736
$38,011
       
 
LIABILITIES AND SHAREHOLDERS' EQUITY
   
CURRENT LIABILITIES:    
  Accounts payable
$1,992
$2,036
  Accrued expenses
1,266
2,062
  Notes payable under lines of credit
4,576
811
  Current deferred tax liability
16
401
  Current maturities - Capital Leases
80
65
  Current maturities of long-term debt
  - Financial Institutions
907
580
  Current maturities of long-term debt
  - Related Parties
-
400
    Total current liabilities
8,837
6,355
LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES
  Capital Leases
213
254
  Long-term debt - Financial Institutions
2,678
2,835
  Notes payable under lines of credit
-
3,525
DEFERRED TAX LIABILITY
603
213
  Total liabilities
12,331
13,182
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
  Series A 6% convertible preferred stock
$.01 par value: authorized, 5,000
shares; 200 shares issued and
outstanding at 12/31/07 and 12/31/06

2
2
  Common stock $.25 par value: authorized,
10,000 shares; 7,869 and 7,839 shares
issued and outstanding at 12/31/07 and
at 12/31/06, respectively
1,967
1,960
  Additional paid-in capital
22,874
22,652
  Accumulated deficit
(2,589)
(2,600)
  Accumulated other comprehensive
(loss) income:
  Unrealized gain (loss) on derivatives
(1)
81
  Cumulative translation adjustment
4,152
2,734
    Total shareholders' equity
26,405
24,829
   
$38,736
$38,011

 

TOR Minerals International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
 
   
December 31,
2007
(Unaudited)
2006
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income
$71
$93
  Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
    Depreciation
1,785
1,496
    Share-based compensation
172
163
    Gain on disposal of assets
(12)
-
    Deferred income taxes
6
77
    Provision for bad debts
-
11
  Changes in working capital:
    Trade accounts receivables
(49)
441
    Inventories
61
(3,396)
    Other current assets
(79)
(163)
    Accounts payable and accrued expenses
(1,056)
382
      Net cash provided by (used in)
      operating activities
899
(896)
   
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant and equipment
(1,037)
(759)
  Proceeds from sales of property, plant and equipment
16
3
    Net cash used in investing activities
(1,021)
(756)
   
CASH FLOWS FROM FINANCING ACTIVITIES:    
  Net proceeds from lines of credit
154
1,819
  Proceeds from capital lease
12
-
  Payments on capital lease
(72)
(61)
  Proceeds from long-term bank debt
1,057
241
  Payments on long-term bank debt
(1,134)
(683)
  Payments on related party long-term debt
(400)
(100)
  Loan origination costs
11
(10)
  Proceeds from the issuance of preferred
stock, common stock and exercise of
common stock options
57
25
  Preferred stock dividends paid
(60)
(60)
    Net cash provided by (used in)
  financing activities
(375)
1,171
Effect of exchange rate fluctuations on
cash and cash equivalents
(23)
97
Net decrease in cash and cash
equivalents
(520)
(384)
Cash and cash equivalents at beginning of year
896
1,280
Cash and cash equivalents at end of year
$376
$896
   
Supplemental cash flow disclosures:
  Interest paid
$684
$543
  Income taxes paid
$10
$15