0000950135-95-001722.txt : 19950815 0000950135-95-001722.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950135-95-001722 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER GROUP INC CENTRAL INDEX KEY: 0000733060 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 135657669 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08841 FILM NUMBER: 95562085 BUSINESS ADDRESS: STREET 1: 60 STATE ST CITY: BOSTON STATE: MA ZIP: 02109-1820 BUSINESS PHONE: 8008211239 MAIL ADDRESS: STREET 1: 60 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109-1820 10-Q 1 THE PIONEER GROUP, INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the three months ended June 30, 1995 Commission File No. 0-8841 The Pioneer Group, Inc. ----------------------- (exact name of registrant as specified in its charter) Delaware 13-5657669 ------------------------------- ------------------- (State of other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 60 State Street, Boston, Massachusetts 02109 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 742-7825 -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changes since last report. 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 at least the past 90 days. X Yes No --- --- As of June 30, 1995, there were 24,816,628 shares of the Registrant's Common Stock, $.10 par value per share, issued and outstanding. 2 Part I Financial Information Item 1. Financial Statements THE PIONEER GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars in Thousands Except Per Share Amounts)
6/30/95 12/31/94 ------- -------- ASSETS (unaudited) CURRENT ASSETS: Cash and cash equivalents, at cost which approximates market value.................... $ 14,349 $ 23,118 Investment in marketable securities, at value......................................... 9,338 6,458 Receivables: From securities brokers and dealers for sales of mutual fund shares................................................... 7,416 7,406 For gold shipments.................................................................. 3,521 4,393 Other............................................................................... 10,113 10,168 Mining inventory...................................................................... 16,775 11,881 Other current assets.................................................................. 4,662 4,695 -------- -------- Total current assets.............................................................. 66,174 68,119 -------- -------- NONCURRENT ASSETS: Mining operations: Mining equipment and facilities (net of accumulated depreciation of $36,002 in 1995 and $29,793 in 1994)......................... 45,250 44,337 Deferred mining development costs (net of accumulated amortization of $10,166 in 1995 and $9,022 in 1994).......................... 10,039 11,061 Cost in excess of net assets of minority interest acquired (net of accumulated amortization of $1,592 in 1995 and $1,405 in 1994)............................ 2,154 2,341 Cost of acquisition in excess of net assets (net of accumulated amortization of $3,517 in 1995 and $2,458 in 1994)............................................... 21,827 22,789 Long-term venture capital investments, at value (cost $16,456 in 1995 and $18,181 in 1994).......................................... 21,692 19,835 Timber project in development: Deferred timber development costs................................................... 12,616 6,765 Timber equipment and facilities..................................................... 9,350 5,384 Furniture, equipment, and leasehold improvements (net of accumulated depreciation and amortization of $8,686 in 1995 and $9,724 in 1994)................. 12,051 9,837 Dealer advances....................................................................... 9,583 4,399 Investment in Russian Voucher Fund.................................................... 10,000 -- Investment in management company of Russian Voucher Fund.............................. 8,022 -- Other assets (including federal and state deferred income taxes, net)................. 10,385 7,642 -------- -------- Total noncurrent assets........................................................... 172,969 134,390 -------- -------- $239,143 $202,509 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Payable to funds for shares sold...................................................... $7,394 $7,075 Accrued expenses and accounts payable................................................. 14,373 13,675 Accrued employees' compensation....................................................... 4,549 1,547 Accrued income taxes.................................................................. 5,622 748 Deferred revenues..................................................................... 1,603 -- Current portion of notes payable...................................................... 32,053 13,597 -------- -------- Total current liabilities......................................................... 65,594 36,642 -------- -------- Noncurrent liabilities: Notes payable, net of current portion................................................. 14,075 9,101 Deferred foreign income taxes......................................................... 10,651 17,331 -------- -------- Total noncurrent liabilities..................................................... 24,726 26,432 -------- -------- Total liabilities................................................................ 90,320 63,074 -------- -------- Minority interest..................................................................... 5,489 5,013 -------- -------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, $.10 par value; authorized 60,000,000 shares; issued 24,816,628 shares in 1995 and 24,697,960 shares in 1994 ................. 2,482 2,470 Paid-in capital................................................................... 6,164 3,599 Retained earnings................................................................. 138,880 130,715 Treasury stock at cost, 0 shares in 1995 and 28,772 shares in 1994................ 0 (167) -------- -------- 147,526 136,617 Less - Deferred cost of restricted common stock issued............................ (4,192) (2,195) -------- -------- Total stockholders' equity....................................................... 143,334 134,422 -------- -------- $239,143 $202,509 ======== ========
The Company's annual report on Form 10-K should be read in conjunction with these financial statements. 3 THE PIONEER GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Revenues and sales: Investment management fees................................... $15,341 $16,389 $30,413 $31,890 Underwriting commissions and other fees...................... 1,893 2,077 3,675 9,760 Shareholder services fees.................................... 5,561 4,899 11,105 9,782 Trustee fees and other income................................ 1,678 1,893 3,700 3,408 ---------- ---------- ---------- ---------- Revenues from financial services businesses................ 24,473 25,258 48,893 54,840 Gold sales................................................... 22,080 14,558 43,339 27,534 ---------- ---------- ---------- ---------- Total revenues and sales................................... 46,553 39,816 92,232 82,374 ---------- ---------- ---------- ---------- Costs and expenses: Management, distribution, shareholder service and administrative expenses................................ 21,752 18,714 42,743 37,236 Gold mining operating costs and expenses..................... 16,242 9,383 30,655 18,904 ---------- ---------- ---------- ---------- Total costs and expenses................................... 37,994 28,097 73,398 56,140 ---------- ---------- ---------- ---------- Other (income) expense: Unrealized and realized losses (gains) on venture capital and marketable securities investments, net......... (4,148) (651) (4,659) 128 Interest expense............................................. 99 225 531 432 Minority interest............................................ 355 424 838 1,080 Other, net................................................... 182 302 354 521 ---------- ---------- ---------- ---------- Total other (income) expense............................... (3,512) 300 (2,936) 2,161 ---------- ---------- ---------- ---------- Income before provision for federal, state and foreign income taxes......................................... 12,071 11,419 21,770 24,073 ---------- ---------- ---------- ---------- Federal, state and foreign income taxes: Provision for federal, state and foreign income taxes........ 4,742 4,572 8,644 9,766 Cumulative deferred foreign income tax adjustment............ -- -- -- (4,431) ---------- ---------- ---------- ---------- Net provision for federal, state and foreign income taxes....... 4,742 4,572 8,644 5,335 ---------- ---------- ---------- ---------- Net income...................................................... $7,329 $6,847 $13,126 $18,738 ========== ========== ========== ========== Earnings per share ............................................. $0.29 $0.27 $0.52 $0.74 ========== ========== ========== ========== Dividends per share............................................. $0.10 $0.075 $0.20 $0.135 ========== ========== ========== ========== Weighted average common and common equivalent shares outstanding ........................... 25,310,000 25,352,000 25,260,000 25,320,000 ========== ========== ========== ==========
The Company's annual report on Form 10-K should be read in conjunction with these financial statements. 4 THE PIONEER GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (DOLLARS IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 1994 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income..................................................................................... $13,126 $18,738 ------- ------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............................................................... 10,851 7,992 Unrealized and realized (gains) losses on venture capital and marketable securities,net..... (4,659) 128 (Equity in earnings of) other investments................................................... (501) (760) Restricted stock plan expense............................................................... 584 506 Deferred income taxes....................................................................... (4,481) (4,202) Deferred revenues........................................................................... 1,603 1,781 Minority interest........................................................................... 838 1,078 Changes in operating assets and liabilities: Receivable from securities brokers and dealers for sales of mutual fund shares.............. (10) 179 Receivables for gold shipments.............................................................. 872 (592) Other receivables........................................................................... 55 (595) Mining inventory............................................................................ (4,894) (2,290) Other current assets ....................................................................... 33 (553) Dealer advances............................................................................. (5,950) (925) Other assets ............................................................................... (745) (311) Payable to funds for shares sold............................................................ 319 (174) Accrued expenses and accounts payable....................................................... 698 1,166 Accrued employees' compensation............................................................. 3,002 1,452 Accrued income taxes........................................................................ 4,874 1,332 ------- ------- TOTAL ADJUSTMENTS.................................................................... 2,489 5,212 ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES............................................ 15,615 23,950 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to furniture, equipment and leasehold improvements.................................. (3,691) (2,733) Investments in marketable securities.......................................................... (5,179) (13,947) Proceeds from sale of marketable securities................................................... 2,782 15,808 Long-term venture capital investments......................................................... (1,662) (2,170) Proceeds from sale of venture capital investments............................................. 3,981 2,928 Deferred timber development costs............................................................. (5,851) (4,623) Timber equipment and facilities............................................................... (3,966) (1,253) Other investments............................................................................. (3,696) (2,591) Cost of acquisition in excess of net assets................................................... (96) (88) Purchase of mining equipment and facilities................................................... (7,132) (7,207) Deferred mining development costs, net........................................................ (122) (506) Investment in Russian Voucher Fund............................................................ (10,000) -- Investment in Management Company of Russian Voucher Fund...................................... (2,022) -- ------- ------- NET CASH USED IN INVESTING ACTIVITIES................................................ (36,654) (16,382) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid................................................................................ (4,961) (3,329) Distributions to minority interest holder of gold mining subsidiary........................... (350) -- Distributions to limited partners of venture capital subsidiary............................... (12) (33) Exercise of stock options..................................................................... 151 100 Restricted stock plan award................................................................... 12 5 Repayments of notes payable................................................................... (12,321) (1,969) Borrowings.................................................................................... 29,751 -- Reclassification of restricted cash........................................................... -- 398 ------- ------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES.................................. 12,270 (4,828) ------- ------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS............................................. (8,769) 2,740 ------- ------- CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................................................. 23,118 19,242 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD....................................................... $14,349 $21,982 ======= =======
THE COMPANY'S ANNUAL REPORT ON FORM 10-K SHOULD BE READ IN CONJUNCTION WITH THESE FINANCIAL STATEMENTS. 5 THE PIONEER GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1995 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of The Pioneer Group, Inc. and its subsidiaries (the "Company") conform to generally accepted accounting principles. The Company has not changed any of its principal accounting policies from those stated in the Annual Report on Form 10-K for the year ended December 31, 1994. The footnotes to the financial statements reported in the 1994 Annual Report on Form 10-K are incorporated herein by reference, except to the extent that any such footnote is updated by the following: Certain reclassifications have been made to the accompanying 1994 consolidated financial statements to conform with the 1995 presentation. Income taxes paid were $7,948,000 and $8,145,000 for the six months ended June 30, 1995, and June 30, 1994, respectively. In addition, interest paid was $1,089,000 for the six months ended June 30, 1995, and $437,000 for the six months ended June 30, 1994. NOTE 2 - MINING INVENTORY Mining inventories consist of the following:
June 30, December 31, 1995 1994 ---- ---- (Dollars in Thousands) Gold-in-process $ 1,125 $ 1,125 Materials and supplies 15,650 10,756 -------- -------- $ 16,775 $ 11,881 ======== ========
6 NOTE 3 - MINING EQUIPMENT
June 30, December 31, 1995 1994 ---- ---- (Dollars in Thousands) Processing plant and equipment $22,875 $22,485 Mining equipment (rolling stock) 30,358 26,958 Buildings and housing units 4,402 3,718 Leach pads and ponds 12,841 10,026 Construction in progress 564 1,010 All other equipment 10,212 9,933 ------- ------- 81,252 74,130 Less: accumulated depreciation (36,002) (29,793) ------- ------- Total mining equipment $45,250 $44,337 ======= =======
NOTE 4 - INCOME TAXES The Company adopted the accounting and disclosure rules specified by Statement of Financial Accounting Standards ("SFAS No. 109") "Accounting for Income Taxes" as of January 1, 1993. Under SFAS No. 109, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. The amounts of deferred tax assets or liabilities are based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. Deferred tax assets consist principally of deferred interest on debt paid to the Company by Teberebie Goldfields Limited, deferred rent expense, foreign tax credits and restricted stock plans' temporary differences. Deferred tax liabilities include principally deferred foreign income taxes, dealer advances and cumulative unrealized gains related to the Company's venture capital investment portfolio. NOTE 5 -- RESTRICTED STOCK PLANS AND STOCK OPTION PLAN The Company has a Restricted Stock Plan (the "1995 Plan") to provide incentives to certain employees who have contributed and are expected to contribute materially to the success of the Company and its subsidiaries. An aggregate total of 600,000 shares of the Company's stock may be awarded to participants under the 1995 Plan at a price to be determined by the Board of Directors, generally $.10 per share. The 1995 Plan expires in January 2000. The Company's 1990 Restricted Stock Plan (the "1990 Plan") expired in January 1995. The Company's 1981 Restricted Stock Plan (the "1981 Plan") expired in January 1990. The 1995 Plan, the 1990 Plan and the 1981 Plan are collectively referred to as the "Plans." 7 The following tables summarize restricted stock plan activity for the Plans during the first six months of 1995.
UNVESTED SHARES --------------- 1995 Plan 1990 Plan 1981 Plan Total --------- --------- --------- ----- Balance at 12/31/94 ---- 419,264 15,684 434,948 Awarded 600 123,400 ---- 124,000 Vested ---- (127,700) (15,684) (143,384) Forfeited ---- (1,560) ---- (1,560) ---- -------- ------- -------- Balance at 6/30/95 600 413,404 ---- 414,004 ==== ======== ======= ========
VESTED SHARES ------------- 1995 Plan 1990 Plan 1981 Plan Total --------- -------- --------- ----- Balance at 12/31/94 ---- 219,000 1,489,648 1,708,648 Vested ---- 127,700 15,684 143,384 ---- ------- --------- --------- Balance at 6/30/95 ---- 346,700 1,505,332 1,852,032 ==== ======= ========= =========
The Company awarded 101,460 shares in 1994 and 164,800 shares in 1993 under the 1990 Plan. The participant's right to resell the awarded stock, under the Plans, is generally restricted as to 100% of the shares awarded during the first two years following the award, 60% during the third year and 20% less each year thereafter. The Company may repurchase unvested restricted shares at $.10 per share upon termination of employment. Awards under the Plans are compensatory, and, accordingly, the difference between the award price and the market value of the shares under the Plans at the award date, less the applicable tax benefit, is being amortized on a straight-line basis over a five year period. The Company also maintains the 1988 Stock Option Plan (the "Option Plan"), pursuant to which options on the Company's stock may be granted to key employees of the Company. The Company has reserved an aggregate of 2,400,000 shares for issuance under the Option Plan. Both incentive stock options intended to qualify under Section 422A of the Internal Revenue Code of 1986 and non- statutory options not intended to qualify for incentive stock option treatment ("non-statutory options") may be granted under the Option Plan. The Option Plan is administered by the Board of Directors or a committee of disinterested directors designated by the Board (the "Committee") and unless the Option Plan is earlier terminated, no option may be granted after August 1, 1998. The option price per share is determined by the Board of Directors or the Committee, but (i) in the case of incentive stock options, may not be less than 100% of the fair market value of such shares on the date of option grant, and (ii) in the case of non-statutory options, may not be less than 90% of the fair market value on the date of option grant. Options issuable under the Option Plan become exercisable as determined by the Board of Directors or the 8 Committee not to exceed ten years from the date of grant. Options granted to date vest over five years at an annual rate of 20% on each anniversary date of the date of the grant. The following table summarizes all stock option activity since December 31, 1992.
Number of Exercise shares price per share ---------- ----------------- Outstanding at December 31, 1992 1,570,800 $4.188 - $ 7.063 Granted 139,000 $ 12.00 Terminated (12,000) $ 4.188 Exercised (62,800) $ 4.188 --------- ----------------- Outstanding at December 31, 1993 1,635,000 $4.188 - $ 12.00 Granted 191,500 15.875 - $ 21.25 Exercised (32,000) $ 4.188 --------- ----------------- Outstanding at December 31, 1994 1,794,500 $4.188 - $ 21.25 Exercised (25,000) $6.00 - $ 6.125 --------- ----------------- Outstanding at June 30, 1995 1,769,500 $4.188 - $ 21.25 ========= =================
At June 30, 1995, options to purchase 1,118,800 shares of Common Stock had vested under the Option Plan. NOTE 6 - NET CAPITAL As a broker-dealer, Pioneer Funds Distributor, Inc. ("PFD"), is subject to the Securities and Exchange Commission's regulations and operating guidelines which, among other things, require PFD to maintain a specified amount of net capital, as defined, and a ratio of aggregate indebtedness to net capital, as defined, not exceeding 15 to 1. Net capital and the related ratio of aggregate indebtedness to net capital may fluctuate on a daily basis. PFD's net capital, as computed under Rule 15c3-1, was $2,667,867 at June 30, 1995, which exceeded required net capital of $706,170 by $1,961,697. The ratio of aggregate indebtedness to net capital at June 30, 1995, was 3.97 to 1. PFD is exempt from the reserve requirements of Rule 15c3-3, since its broker-dealer transactions are limited to the purchase, sale and redemption of redeemable securities of registered investment companies. All customer funds are promptly transmitted and all securities received in connection with activities as a broker-dealer are promptly delivered. PFD does not otherwise hold funds or securities for, or owe money or securities to, customers. NOTE 7 - BENEFIT PLANS The Company and its subsidiaries have two defined contribution benefit plans for eligible employees: a retirement benefit plan and a savings and investment plan qualified under section 401(k) of the Internal Revenue Code of 1986. The Company makes contributions to a trustee, on behalf of eligible employees, to fund both the retirement benefit and the savings and investment plans. The Company's expenses under these plans were $1,015,000 for the six months ended June 30, 1995, and $926,000 for the six months ended June 30, 1994. 9 Both of the Company's qualified plans described above cover all full-time employees who have met certain age and length of service requirements. Regarding the retirement benefit plan, the Company contributes an amount which would purchase a certain targeted monthly pension benefit at the participant's normal retirement date. In connection with the savings and investment plan, participants can voluntarily contribute up to 8% of their compensation to the plan, and the Company will match this contribution up to 2%. NOTE 8 - RELATED PARTY TRANSACTIONS Certain officers and/or directors of the Company and its subsidiaries are officers and/or trustees of the Pioneer mutual funds. Investment management fees earned from the mutual funds were approximately $28,836,000 for the six months ended June 30, 1995, and $30,947,000 for the six months ended June 30, 1994. Underwriting commissions and other fees earned from the sale of mutual funds shares were approximately $3,675,000 for the six months ended June 30, 1995, and $9,760,000 for the six months ended June 30, 1994, respectively. Shareholder services fees earned from the mutual funds were approximately $11,105,000 for the six months ended June 30, 1995, and $9,782,000 for the six months ended June 30, 1994. Within the Pioneer mutual funds, revenues from Pioneer II were approximately $15,628,000 for the six months ended June 30, 1995, and $15,714,000 for the six months ended June 30, 1994. Revenues from Pioneer Fund were $7,909,000 for the six months ended June 30, 1995, and $7,653,000 for the six months ended June 30, 1994. Certain partners of Hale and Dorr, the Company's legal counsel, are officers and/or directors of the Company and its subsidiaries. Amounts paid to Hale and Dorr for legal services were $959,000 for the six months ended June 30, 1995, and $742,000 for the six months ended June 30, 1994. At December 31, 1994, the Company had a receivable from an officer in the amount of $109,000. This receivable was fully paid in the second quarter of 1995. NOTE 9 - COMMITMENTS AND CONTINGENCIES Rental expense was $2,238,000 for the six months ended June 30, 1995, and $1,588,000 for the six months ended June 30, 1994. Future minimum payments amount to approximately $1,469,000 for the last six months of 1995, $3,051,000 in 1996, $3,129,000 in 1997, $3,220,000 in 1998, $3,342,000 in 1999, $3,197,000 in 2000 and $5,393,000 thereafter. These future minimum payments include estimated annual operating expenses of approximately $667,000 in the last six months of 1995, and $1,330,000 thereafter. In September 1993, TGL executed a commitment letter with the Overseas Private Investment Corporation ("OPIC") pursuant to which OPIC will provide loan guarantees for up to $5.0 million. The commitment terminates in December 1995 and carries commitment fees of 0.5% per year on the undisbursed and uncanceled amount of the guarantee commitment. At June 30, 1995, the full amount of the guarantee commitment remained undisbursed. The Company is contingently liable to the Investment Company Institute Mutual Insurance Company for unanticipated expenses or losses in an amount not to exceed $500,000. Two thirds of this amount is secured by an irrevocable standby letter of credit with a bank. 10 NOTE 10- NOTES PAYABLE Notes payable of the Company consists of the following:
June 30, December 31, 1995 1994 ---- ---- (Dollars in Thousands) Line of Credit.......................................... $30,000 $10,000 Preferred option financing for acquisition of management company of Russian Voucher Fund, principal payable in three annual installments of $2,000,000 through 1998, interest payable at 5%......... 6,000 --- Small Business Administration ("SBA") financing, notes payable to a bank, interest payable semi-annually at rates ranging from 6.12% to 9.8%, due in 1998 through 2003................................ 4,950 4,950 Note payable to a bank guaranteed by the Swedish Exports Credits Guarantee Board, principal payable in six semi-annual installments of $812,000 through March 31, 1997, interest payable at 5.77%, secured by equipment............................................... 3,247 4,059 Notes payable to a bank, guaranteed by the Overseas Private Investment Corporation ("OPIC")................. -0- 1,544 Notes payable to a bank, guaranteed by the Company, principal payable in semi-annual installments, of $214,000 through November 30, 1999, no interest payable, secured by equipment............... 1,931 2,145 ------- ------- 46,128 22,698 Less: Current portion.................................. (32,053) (13,597) ------- ------- $14,075 $ 9,101 ======= =======
In December 1991, OPIC certified that all conditions of a Project Completion Agreement had been satisfied pursuant to which the Company would no longer be required to guarantee TGL's loan guaranteed by OPIC. Among the conditions was the establishment of an escrow account covering six months of all third party debt service payments. OPIC waived the condition of the Project Completion Agreement at December 31, 1994, which had previously required that TGL maintain the escrow account balance. The balance of such escrow account was $1.8 million at June 30, 1994. 11 In 1994, TGL prepaid a note payable to a supplier and a note payable to a bank with a remaining principal balance of approximately $761,000. Maturities of notes payable at June 30, 1995 for each of the next five years and thereafter are as follows (dollars in thousands): 1995 $32,053 1996 4,053 1997 2,429 1998 3,629 1999 214 Thereafter 3,750 ------- $46,128 =======
On February 28, 1995, the Company entered into an agreement with a commercial bank providing for a $30 million unsecured line of credit. Advances under the line bear interest at the Company's option at the higher of the bank's base lending rate or the federal funds rate plus 0.50%, the London Interbank Offered Rate plus 1.10% or at a money market rate set by the bank. The Company is required to pay additional interest to the bank at the rate of 0.25% per year of the unused portion of the line. At June 30, 1995 the Company had $30,000,000 outstanding on the line. The line expires February 27, 1996. On July 26, 1995, the Company entered into a second agreement with the commercial bank providing for an additional $10 million unsecured line of credit with substantially the same terms as the first agreement. This additional facility also expires on February 27, 1996. NOTE 11 - MAJOR CUSTOMERS AND EXPORT SALES During the six months ended June 30, 1995, gold sales aggregated $43.3 million. During this period, gold shipments from TGL in Ghana to two unaffiliated European refiners accounted for $24.4 million and $18.9 million of total gold sales, respectively, representing 100% of such total gold sales. During the six months ended June 30, 1994, gold sales aggregated $27.5 million. During this period, gold shipments from TGL in Ghana to two unaffiliated European refiners accounted for $17.8 million and $9.7 million of total gold sales, respectively, representing 100% of such total gold sales. NOTE 12 - ACQUISITION OF MUTUAL OF OMAHA FUND MANAGEMENT COMPANY On December 1, 1993, the Company completed its acquisition of Mutual of Omaha Fund Management Company ("FMC"). The Company financed this acquisition through working capital in the amount of $23,500,000. The Company also incurred additional costs associated with the acquisition in the amount of $1,854,000. 12 The Company has allocated cost in excess of net assets acquired in the amount of $25,344,000, as set forth below. This cost is being amortized on a straight-line basis beginning December 1, 1993, over the following periods:
Amount at Estimated June 30, 1995 Useful Life ------------- ----------- (Dollars in Thousands) Goodwill $21,844 15 years Non-compete agreement 3,300 5 years Consulting 200 7 months ------- $25,344 Less: accumulated amortization 3,517 ------- Cost of acquisition in excess of net assets, net $21,827 =======
The Company also agreed to pay up to an additional $3 million in three years if certain conditions, as defined in the purchase agreement, are met. NOTE 13 - DEALER ADVANCES During 1994, certain of the Pioneer Family of Mutual Funds introduced a multi-class share structure, whereby the participant funds offer both the traditional front-end load shares and back-end load shares (B-shares). B-shares do not require the investor to pay any sales charge unless there is a redemption before the expiration of the minimum holding period which ranges from three to six years. However, the Company pays upfront sales commissions (dealer advances) to broker-dealers ranging from 2% to 4%. The Company capitalizes and amortizes dealer advances for book purposes over periods which range from three to six years depending on the participating fund. The Company deducts the dealer advances in full for tax purposes in the year such advances are paid. In the first six months of 1995, the Company paid dealer advances in the amount of $6.0 million. Dealer advances, net of amortization, were $9.6 million at June 30, 1995. NOTE 14 - FINANCIAL INFORMATION BY BUSINESS SEGMENT Total revenues and income (loss) by business segment, excluding intersegment transactions, were as follows: 13 NOTE 14 - FINANCIAL INFORMATION BY BUSINESS SEGMENT (DOLLARS IN THOUSANDS) (UNAUDITED)
MUTUAL FUND INVESTMENT UNDERWRITING VENTURE CAPITAL SHAREHOLDER MANAGEMENT AND OTHER INVESTMENTS SERVICES ---------- ------------ --------------- ----------- SIX MONTHS ENDED 6/30/95 6/30/94 6/30/95 6/30/94 6/30/95 6/30/94 6/30/95 6/30/94 ------- ------- ------- ------- ------- ------- ------- ------- REVENUES & OTHER INCOME $30,467 $32,133 $6,994 $12,580 $285 $297 $11,147 $9,830 ======= ======= ======== ======= ======= ======= ======= ====== INCOME (LOSS) BEFORE INCOME TAXES $19,851 $22,025 ($12,983)(1) ($6,040)(1) $2,650(2) ($221)(2) $1,272 $1,680 ======= ======= ======== ======= ======= ======= ======= ====== DEPRECIATION & AMORTIZATION $519 $435 $2,537 $1,793 $53 $42 $775 $394 ======= ======= ======== ======= ======= ======= ======= ====== CAPITAL EXPENDITURES $199 $71 $1,666 $1,020 $35 $5 $1,791 $1,637 ======= ======= ======== ======= ======= ======= ======= ====== IDENTIFIABLE ASSETS AT QUARTER END $33,483 $42,380 $35,222 $40,295 $52,198 $26,320 $7,665 $5,304 ======= ======= ======== ======= ======= ======= ======= ====== GOLD MINING OTHER CONSOLIDATED ----------- ----- ------------ SIX MONTHS ENDED 6/30/95 6/30/94 6/30/95 6/30/94 6/30/95 6/30/94 ------- ------- ------- ------- ------- ------- REVENUES & OTHER INCOME $43,339 $27,534 $0 $0 $92,232 $82,374 ======= ======= ======= ====== ======== ======== INCOME (LOSS) BEFORE INCOME TAXES $11,334(3) $7,150(3) ($354)(4) ($521)(4) $21,770 $24,073 ======= ======= ======= ====== ======== ======== DEPRECIATION & AMORTIZATION $7,551 $5,834 $0 $0 $11,435 $8,498 ======= ======= ======= ====== ======== ======== CAPITAL EXPENDITURES $7,132 $7,228 $3,966 $0 $14,789 $9,961 ======= ======= ======= ====== ======== ======== IDENTIFIABLE ASSETS AT QUARTER END $79,168 $66,470 $31,407 $8,448 $239,143 $189,217 ======= ======= ======= ====== ======== ========
(1) Net of interest expense related to third parties of approximately $152,000 for the six months ended June 30, 1995 and $0 for the six months ended June 30, 1994. (2) Net of minority interest and interest expense related to third parties of approximately $1,000 and $200,000 respectively, for the six months ended June 30, 1995, and $44,000 and $200,000 for the six months ended June 30, 1994. (3) Net of minority interest and interest expense related to third parties of approximately $837,000 and $179,000 for the six months ended June 30, 1995 and $1,036,000 and $232,000 for the six months ended June 30, 1994. (4) Net of interest expense related to third parties of approximately $0 and expense related to the Company of $0 for the six months ended June 30, 1995 and $0 and $425,000 for the six months ended June 30, 1994. 14 PART I - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SUMMARY OF OPERATIONS The Pioneer Group, Inc. (the "Company") reported second quarter 1995 earnings of 29 cents per share, an increase of 2 cents per share over earnings in the second quarter of 1994. Current year second quarter results included increased earnings from venture capital operations of 7 cents per share and increased gold mining earnings of 3 cents per share. The higher earnings were partially offset by decreased worldwide investment management businesses earnings of 7 cents per share, of which 4 cents represented decreased earnings from Polish operations. Earnings per share have been adjusted to reflect the 2 for 1 stock split effected by the payment of a 100% stock dividend on December 9, 1994. Earnings of 52 cents per share for the six months ended June 30, 1995, were 22 cents lower than earnings during the comparable 1994 period. Earnings for the first half of 1994 included a favorable deferred income tax rate adjustment of 16 cents per share relating to Teberebie Goldfields Limited ("TGL"), the Company's 90% owned gold mining subsidiary. A 10 cent per share increase in gold mining earnings (exclusive of the deferred income tax rate adjustment) and a 6 cent increase in venture capital earnings only partially offset a 22 cent decline in earnings from worldwide investment management businesses. A significant portion of this decline relates to an 18 cent decline in earnings from Polish operations. Assets in the Company's Polish mutual fund, however, appeared to have stabilized somewhat during the second quarter. FINANCIAL SERVICES BUSINESSES REVENUES. Revenues from the financial services businesses of $24.5 million in the second quarter of 1995 were $0.8 million lower than the comparable 1994 period, resulting principally from lower management fees from the Company's Polish mutual fund. Revenues of $48.9 million for the six months ended June 30, 1995, were $5.9 million lower than revenues in the comparable 1994 period, as significantly lower Polish mutual fund sales resulted in lower underwriting commissions. Management fees of $15.3 million in the second quarter of 1995 were $1.0 million, or 6%, lower than management fees in the second quarter of 1994. The $1.3 million increase in management fees derived from the U.S. registered mutual funds was more than offset by a $2.3 million decrease in management fees derived from the Company's Polish mutual fund. For the six months ended June 30, 1995, management fees of $30.4 million were $1.5 million, or 5%, lower than management fees in the comparable 1994 period. The $1.8 million increase in management fees derived from the U.S. registered mutual funds 15 was more than offset by a $3.3 million decrease in management fees derived from the Company's Polish mutual fund. Assets under management of $12.4 billion at June 30, 1995, increased by $1.3 billion over the 1994 year-end level. This increase was primarily attributable to strong equity market performance. Underwriting commissions and other fees of $1.9 million in the second quarter of 1995 were $0.2 million lower than underwriting commissions and other fees in the second quarter of 1994. The Company's U.S. registered mutual fund sales (including reinvested dividends) of $410 million in the second quarter of 1995 were 6% higher than sales during the prior year's comparable period, while redemptions of $269 million increased by 31%. The Company had net sales of $141 million in the second quarter of 1995 compared to $183 million in the second quarter of 1994. The Company had sales of $10 million from its Polish mutual fund in the second quarter of 1995 compared to $72 million in the second quarter of 1994. For the first six months of 1995, underwriting commissions and other fees of $3.7 million were $6.1 million lower than underwriting commissions and other fees in the same period in 1994 as a result of significantly lower Polish mutual fund sales. Sales of units of the Polish mutual fund were $14 million in the first six months of 1995 and redemptions were $297 million compared to sales of $693 million in the first six months of 1994 and redemptions of $234 million. U.S. registered mutual fund sales of $783 million in the six months ended June 30, 1995 were slightly higher (1%) than sales during the prior year's comparable period, while redemptions of $518 million increased by 16%. Net sales of U.S. registered mutual funds were $265 million in the six months ended June 30, 1995, compared to net sales of $329 million in the six months ended June 30, 1994. Shareholder services fees of $5.6 million and $11.1 million for the second quarter of 1995 and six months ended June 30, 1995, increased by $0.7 million and $1.3 million, respectively, over the comparable 1994 periods as a result of an increase in the number of shareholder accounts and a fee increase effective January 1, 1995. COSTS AND EXPENSES. Worldwide financial services businesses costs and expenses of $21.8 million and $42.7 million for the second quarter of 1995 and six months ended June 30, 1995 increased by $3.0 million and $5.5 million, respectively, over the comparable 1994 periods. Virtually all of the increase resulted from higher payroll costs related to increased staffing in the investment management, marketing and shareholder servicing groups, higher costs related to additional office space and higher costs related to mutual fund distribution. OTHER INCOME AND EXPENSE. The Company reported net venture capital investment portfolio gains (excluding operating expenses) of $4.0 million and $4.2 million for the second quarter and six months ended June 30, 1995, respectively, compared to net gains of $0.8 million and $0.6 million for the comparable 1994 periods. The Company's investments in its own mutual funds during their startup phase contributed net gains of $0.1 million and $0.5 million for the second quarter and six months ended June 30, 1995, respectively, compared to net losses of $0.2 million and $0.7 million, respectively, during the same periods in 1994. 16 TAXES. The Company's effective tax rate for the financial services businesses of 43% for the first six months of 1995 was slightly higher (1%) than the rate for the comparable 1994 period. GOLD MINING BUSINESS Earnings for the gold mining business of 14 cents per share in the second quarter of 1995 were 3 cents per share higher than earnings in the second quarter of 1994. In 1994, the gold mining business benefited from a 10% reduction in the Ghanaian income tax rate levied on mining companies which contributed, in part, to earnings of 35 cents per share in the first half of 1994. Excluding a related 16 cents per share reduction in deferred taxes recorded in prior years, earnings of 29 cents per share for the first half of 1995 were 10 cents per share over last year's first half earnings. Revenues increased by 52% from the second quarter of 1994 to $22.1 million as gold sales increased by 50% to 57,200 ounces while the average realized price of gold increased by 1% to $386 per ounce. Revenues increased by 57% over the first half of 1994 to $43.3 million as gold sales increased by 57% to 113,300 ounces while the average realized price of gold was essentially flat at $383 per ounce. The production target for 1995 has been decreased by 25,000 ounces to approximately 240,000 ounces primarily because it has taken more time to locate and train equipment operators and mine supervisors than was originally anticipated. TGL produced 176,400 ounces in 1994. The following table compares the cash and total cost per ounce for the three and six months ended June 30, 1995 with the corresponding periods in 1994:
Three Months ended Six Months ended ------------------ ------------------ June 30, June 30, ------------------ ------------------ 1995 1994 1995 1994 ---- ---- ---- ---- Cash Costs: Production Costs $174 $111 $158 $119 Royalties 12 15 11 15 ---- ---- ---- ---- 186 126 169 134 General and administrative 28 35 27 37 ---- ---- ---- ---- CASH COST PER OUNCE 214 161 196 171 Non Cash: Depreciation and Amortization 65 78 67 81 Other -0- 2 4 3 ---- ---- ---- ---- COST OF PRODUCTION PER OUNCE 279 241 267 255 Interest and other costs 9 9 10 14 ---- ---- ---- ---- TOTAL COST PER OUNCE $288 $250 $277 $269 ==== ==== ==== ====
17 Production costs represent costs attributable to mining ore and waste and processing the ore through crushing, leaching, and processing facilities. These costs increased by $63 per ounce and $39 per ounce compared with the respective three and six months ended June 30, 1994 principally because of higher stripping ratios and the mining of lower grade ore. As a result, material hauled more than doubled during the three and six months ended June 30, 1995, and ore processed increased by 65% and 84%, respectively, over the corresponding periods in 1994. In addition, in the second quarter of 1995, TGL recorded a one-time physical inventory adjustment and a salary adjustment (retroactive to January 1, 1995) associated with the June 30, 1995 collective bargaining agreement increasing the total cost per ounce by $8 and $6, respectively. Cost increases were experienced in several mining and processing categories including drilling and blasting costs, equipment maintenance, fuel costs, cement, and crushing costs. Royalty payments to the government of Ghana are linked to TGL's operating profits and tax depreciation and were estimated at 4% of revenue during the first half of 1994. Actual royalty payments were 3% of revenue in 1994 and are estimated at 3% of revenue for 1995. The decrease in the royalty estimate had the effect of decreasing the cost per ounce during the three and six months ended June 30, 1995 by $3 and $4, respectively. General and administrative costs consist principally of administrative salaries and related benefits, travel expenses, insurance, utilities, legal costs, employee meals, rents and vehicle expenditures. Since these costs are relatively fixed and unrelated to production levels, the cost per ounce decreases for the three and six months ended June 30, 1995 compared with the corresponding 1994 periods (approximately $14 and $16 per ounce, respectively,) were attributable to higher production levels. The effect of higher production was offset partially by increases in salaries and employee benefits, commercial insurance premiums, and customs duties and clearing costs (aggregating approximately $7 per ounce and $6 per ounce, respectively). Depreciation and amortization is calculated using units of production and straight-line methods designed to fully depreciate property, plant and equipment over the lesser of their estimated useful lives or ten years. Development cost amortization for the three and six months ended June 30, 1995 decreased by $8 per ounce compared with the corresponding 1994 periods primarily because incremental development costs for the West Plant expansion were significantly lower than development costs for the East Plant resulting in lower overall amortization. Development costs are amortized by plant over 950,000 ounces. In addition, pad and pond depreciation decreased for the three and six months ended June 30, 1995 by $4 per ounce and $2 per ounce, respectively, compared with the corresponding 1994 periods because East Plant leaching pads used in the second quarter of 1995 were fully depreciated in March 1995 and West Plant pads and ponds are now being depreciated over estimated useful lives of one year and five years, respectively, rather than on an accelerated basis over 120,000 ounces. 18 Interest expense and other costs during the six months ended June 30, 1995 decreased by $4 per ounce compared with the six months ended June 30, 1994 principally because of a decrease in gold price floor program costs and an increase in interest income. In addition to interest expense and premiums for the gold price floor program, political risk insurance premiums, goodwill amortization and foreign exchange gains and losses are also included in this category. Exclusive of the $4.4 million first quarter 1994 adjustment to deferred taxes recorded in prior years, accrued income taxes for the first half of 1995 and 1994 were $4.1 million and $2.6 million, respectively. During these periods, the effective tax rate of the gold mining business was 36%; slightly above the Ghanaian statutory rate of 35% because of non-deductible expenses such as minority interest and goodwill amortization. LIQUIDITY AND CAPITAL RESOURCES FINANCIAL SERVICES BUSINESSES Internal Revenue Service regulations require that, in order to serve as trustee, the Company must maintain a net worth of at least 2% of the assets of Individual Retirement Accounts and other qualified retirement plans accounts at year end. At June 30, 1995, the Company served as trustee for $4.0 billion of qualified plan assets and the ratio of net worth to qualified assets was 3.6%. The Company's stockholders' equity of $143.3 million at June 30, 1995, would permit it to serve as trustee for up to an additional $3.2 billion of qualified plan assets. The Company completed the acquisition of Mutual of Omaha Fund Management Company ("FMC") on December 1, 1993. If certain asset targets are reached, the Company would be obligated to pay up to $3 million of additional consideration to FMC's former owner in 1996. For certain funds in the Pioneer Family of Mutual Funds, the Company has introduced a multi-class share structure. Under the multi-class share structure, which was first introduced in April 1994, the participating funds offer both traditional front-end load shares and back-end load shares. On back-end load shares, the investor does not pay any sales charge unless there is a redemption before the expiration of the minimum holding period which ranges from three to six years. The Company, however, pays "up front" commissions to broker-dealers related to sales and service of the back-end load shares ranging from 2% to 4% of the sales transaction amount. The participating funds pay the Company distribution fees of 0.75%, and service fees of 0.25%, per annum of their respective net assets, subject to annual renewal by the trustees of the funds. Sales of back-end load shares were $167 million in the first six months of 1995 and new dealer advances totaled $6.0 million. Dealer advances, net of amortization, were $9.6 million at June 30, 1995. In 1995, the Company intends to finance this program through working capital and the line of credit facilities described below. 19 On April 11, 1995, the Company acquired approximately 51% of the shares of First Investment Voucher Fund (the "Voucher Fund"), one of the largest investment funds established in Russia in connection with that country's privatization program. The shares were issued by the Voucher Fund to two newly-formed subsidiaries of Pioneer Omega, Inc. ("Pioneer Omega"), a Delaware corporation in which the Company holds an approximate 70% direct interest. The $10 million cash purchase price paid for the Voucher Fund shares was financed through the line of credit facilities described below. In addition to acquiring shares in the Voucher Fund, Pioneer Omega, acting through its subsidiary, Pioneer First Russia, Inc. ("PFR"), acquired a Russian company that holds rights to manage the Voucher Fund's investments under a management agreement. Subsidiaries of PFR also acquired shares in First Voucher Bank, a Russian bank. PFR and the Voucher Fund together own approximately 90% of the shares in the bank. Through its ownership of controlling interests in the Voucher Fund and the management company, Pioneer Omega will also effectively acquire the rights to carry out share distribution, investment and brokerage activities under the Voucher Fund umbrella. These activities will be carried out by newly-established subsidiaries of PFR. Pioneer Omega paid $2.0 million in cash and issued shares (the "Omega shares") valued at $6 million as consideration for the acquisition of the management company and related rights. The cash portion of the purchase price was financed through the line of credit facilities described below. The Omega shares represent the approximate 30% of the shares of Pioneer Omega not currently owned by the Company. The holder of the Omega shares has the right to cause the Company to purchase such shares (the "put option") and the Company has a corresponding right to purchase such shares from the holder (the "call option"). The put and call options are each exercisable with respect to one-third of the Omega shares on the first, second and third anniversaries of the closing of the transaction. The put and call option exercise price is $2 million per tranche, plus a 5% per annum premium on the option exercise price. If the put and/or call option is exercised in full, the Company will pay a total of $6.6 million for the Omega shares over a three-year period. Any dividends paid by Pioneer Omega to the holder of the Omega shares with respect to such shares during the three-year put/call option period will be treated as prepayments of a portion of the put/call option price. GOLD MINING BUSINESS TGL's cash balances decreased by $2.2 million to $1.3 million during the six months ended June 30, 1995. Cash generated from operating activities aggregated $11.2 million while capital expenditures and loan principal payments were $7.3 million and $2.6 million, respectively. In addition, TGL declared and paid its first dividend of $3.5 million during the first quarter of 1995. TGL generated sufficient operating cash flow to fund all of its scheduled third party debt service payments and short-term cash commitments. 20 At the end of the second quarter of 1995, direct investment in TGL aggregated $7.1 million, comprised of $5.2 million of third party debt and $1.9 million of direct equity investment by the Company. Of such third party debt, $1.9 million was guaranteed by the Company. Scheduled third party debt service for the remainder of 1995 is expected to aggregate $1.1 million, all of which is expected to be funded from mining operations revenues. In July 1995, TGL received an independent geological certification of additional gold reserves at its mining concession in Ghana. Proven and probable reserves were established based on mapping, sampling, drilling, assaying, and evaluation techniques typical of those that are generally employed in the mining industry. At July 31, 1995, remaining in-situ proven and probable reserves were approximately 9.4 million ounces, an increase of approximately 2.7 million ounces over reported proven and probable gold reserves of 6.7 million ounces at March 31, 1995. Proven and probable reserves comprise approximately 9.2 million ounces from ore which will be processed through crushing and heap leaching operations and approximately 0.2 million which will be leached directly utilizing run of mine dump leaching techniques. The minimum cut-off grade (based on a gold price of $385 per ounce) for crushed and run-of-mine ore was approximately .015 and .008 ounces per tonne, respectively. Based on current heap leaching technology at the mine, it is estimated that recoverable gold from these open-pit reserves will aggregate approximately 7.5 million ounces. TGL is continuing its development drilling program to increase proven and probable reserves and to gain additional information for future mine planning. The Company maintains $67.1 million of "political risk" insurance, principally from the Overseas Private Investment Corporation ("OPIC"), covering 90% of its equity and loan guarantees. The political risk insurance contract also covers 90% of the Company's proportionate share of cumulative retained earnings and provides up to $11.1 million in stand-by insurance, subject to semiannual coverage elections, to cover increases in retained earnings. TGL also secured business interruption insurance coverage of up to $19.0 million for losses associated with machinery breakdown and property damage and continuing infrastructure and interest costs. TGL maintained a gold price floor program to limit its exposure to a decline in market prices to $310 per ounce. In July 1995, the Company's Board of Directors approved a mine expansion plan for TGL pursuant to which TGL would seek to increase gold production to a rate of at least 400,000 ounces per annum in 1998. The Company will replicate existing mining and processing technology while utilizing an in-pit gyratory crusher. Capital expenditures in 1996 are estimated at approximately $65 million, including approximately $46 million related to the proposed expansion. TGL expects to finance approximately $45 million of 1996 capital expenditures from third party sources, with the balance financed with cash from TGL's operations. In July 1995, the Company announced that it had engaged an international securities house to underwrite the sale, in a global offering, of a minority interest in TGL's parent, Pioneer Goldfields Limited ("PGL"), currently a wholly-owned subsidiary of the Company. The 21 final structure, terms and timing of any such global offering and sale, as well as the countries in which any such global offering and sale would take place, have not been determined, although the Company does not anticipate selling more than a 20% interest in PGL. It is expected that, if such global offering and sale proceeds, application will be made to list PGL's shares on the London and Ghana stock exchanges. In the event that the Company does conduct such global offering and sale, any securities sold in the United States will not be registered under the Securities Act of 1933, as amended (the "Act"), and may not be offered or sold in the United States absent registration under the Act or an applicable exemption from the Act's registration requirements. There can be no assurance, however, that, if such global offering and sale does commence, it will be successful or that any securities of PGL will be admitted for listing on any stock exchange. OTHER NATURAL RESOURCE BUSINESS The Company's Russian venture, Forest Starma, in which the Company has a 55% direct interest (recently increased from 50%) and a 5.8% indirect interest is pursuing the development of timber production under a 50-year lease of 33,000 hectares (82,000 acres) with annual cutting rights of 130,000 cubic meters awarded to the venture in the Khabarovsk Territory of Russia. The venture also expects to acquire a lease of additional forest land. Forest Starma has developed a site, including a jetty, from which its timber production would be exported primarily to the Japanese market. Timber production commenced in the first quarter of 1995 and it is expected that shipments will commence in the third quarter of 1995. Forest Starma now estimates that 1995 timber production and shipments will be approximately 70,000 cubic meters. Capital required by this venture is now projected at approximately $23.0 million (net of an assumed Value Added Tax recovery on imports) of which $9.3 million would be financed pursuant to a conditional loan commitment already in place. The loan, which initially would be guaranteed by the Company, would cease to be guaranteed when the project meets certain production and cash flows tests. The Company expects to provide financing of $13.6 million in the form of equity and subordinated debt. Investments by the Company in the venture totaled $21.7 million (net of an assumed Value Added Tax recovery on imports) at June 30, 1995, some of which is considered bridge financing by the Company. The Company is also in the process of securing political risk insurance which would protect 90% of the Company's equity investment and loans and a proportionate share of cumulative retained earnings. A second venture with similar but not identical ownership is negotiating a lease of another large tract of forest land in the Khabarovsk Territory. GENERAL The Company's liquid assets consisting of cash and marketable securities (exclusive of gold mining operations) decreased by $3.7 million in the first six months of 1995 to $22.4 million, as result of the investments described above. 22 On February 28, 1995, the Company entered into an agreement with a commercial bank providing for a $30 million unsecured line of credit. Advances under the line bear interest, at the Company's option, at (a) the higher of the bank's base lending rate or the federal funds rate plus 0.50%, (b) the London Interbank Offered Rate plus 1.10%, or (c) at a money market rate set by the bank. The line, which expires on February 27, 1996, provides that the Company must pay additional interest to the bank at the rate of 0.25% per annum of the unused portion of the line. On July 26, 1995, the Company entered into a second agreement with the commercial bank providing for a $10 million unsecured line of credit with substantially the same terms as the first agreement including applicable interest rates and expiration date. At June 30, 1995, the Company had $30 million outstanding under the lines. THE COMPANY BELIEVES THAT IT IS IN SOUND FINANCIAL CONDITION, THAT IT HAS SUFFICIENT LIQUIDITY TO COVER SHORT-TERM COMMITMENTS AND CONTINGENCIES AND THAT IT HAS ADEQUATE CAPITAL RESOURCES TO PROVIDE FOR LONG-TERM COMMITMENTS AND TO TAKE ADVANTAGE OF INVESTMENT OPPORTUNITIES. 23 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The 1995 Annual Meeting of Stockholders (the "Annual Meeting") was held on May 4, 1995. At the Annual Meeting, the following persons were elected to serve as directors until the next Annual Meeting of Stockholders and thereafter until their successors are duly elected and qualified: Robert L. Butler, Philip L. Carret, John F. Cogan, Jr., Maurice Engleman, Jaskaran S. Teja, David D. Tripple and John H. Valentine. At the Annual Meeting, the stockholders also voted (i) to increase from 33,000,000 to 60,000,000 the number of shares of Common Stock of the Company authorized for issuance, (ii) to ratify and approve the Company's 1995 Employee Stock Purchase Plan, (iii) to ratify and approve the Company's 1995 Restricted Stock Plan, and (iv) to ratify the selection of Arthur Andersen LLP as the Company's independent accountants for the 1995 fiscal year. The following is a summary of the voting at the meeting:
For Withheld --- -------- Election of Directors Robert L. Butler 17,006,512 172,212 Philip L. Carret 17,148,272 30,452 John F. Cogan, Jr. 17,053,352 125,372 Maurice Engleman 17,103,392 75,332 Jaskaran S. Teja 17,149,752 28,972 David D. Tripple 17,054,612 124,112 John H. Valentine 17,102,600 76,124
For Against Abstain --- ------- ------- Approval of Amendment to Certificate of Incorporation Increasing Authorized Common Stock 15,773,977 683,233 721,514 Ratification and approval of 1995 Employee Stock Purchase Plan 16,041,394 290,770 846,560 Ratification and approval of 1995 Restricted Stock Plan 15,890,097 388,143 900,484 Ratification of Arthur Andersen LLP as independent accountants for 1995 fiscal year 17,133,992 17,196 27,536
24 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. 10.1 Collective Agreement between Teberebie Goldfields Limited and the Ghana Mineworkers' Union of T.U.C. 10.2 Letter Agreement dated July 26, 1995 between the Company and The First National Bank of Boston 11 Computation of earnings per share 27 Financial Data Schedule (b) Reports filed on form 8-K. During the fiscal quarter ended June 30, 1995, the Company filed a Current Report on Form 8-K, dated May 3, 1995, reporting that it had informed the government of the Republic of Ghana, the minority owner of Teberebie Goldfields Limited ("TGL"), the Company's 90%-owned gold mining subsidiary, that the Company is exploring the possibility of selling to the public a minority interest in TGL's parent, Pioneer Goldfields Limited, currently a wholly-owned subsidiary of the Company. SIGNATURES It is the opinion of management that the financial information contained in this report reflects all adjustments necessary to a fair statement of results for the period report, but such results are not necessarily indicative of results to be expected for the year due to the effect that stock market fluctuations may have on assets under management. All accounting policies have been applied consistently with those of prior periods. Such financial information is subject to year-end adjustments and annual audit by independent public accountants. 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 thereunto duly authorized. THE PIONEER GROUP, INC. /s/ William H. Keough --------------------- William H. Keough Senior Vice President Chief Financial Officer and Treasurer 25 EXHIBIT INDEX 10.1 Collective Agreement between Teberebie Goldfields Limited and the Ghana Mineworkers' Union of T.U.C. 10.2 Letter Agreement dated July 26, 1995 between The Company and The First National Bank of Boston 11 Computation of earnings per share. 27 Financial Data Schedule EX-10.1 2 COLLECTIVE AGREEMENT 1 Exhibit 10.1 ------------ COLLECTIVE AGREEMENT between TEBEREBIE GOLDFIELDS LIMITED and GHANA MINEWORKERS' UNION OF T.U.C. CONDITIONS OF SERVICE and RATE OF PAY SCHEDULE negotiated between TEBEREBIE GOLDFIELDS LIMITED and THE GHANA MINEWORKERS' UNION OF T.U.C. JULY, 1995 2
Article Content Page 0.00 Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.00 General Basis of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.00 Trades Union Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3.00 Engagement Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4.00 Working Time Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 5.00 Pay Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 6.00 Allowance Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 7.00 Leave Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 8.00 Disciplinary Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 9.00 Grievance and Trade Dispute Procedures . . . . . . . . . . . . . . . . . . . . . 19 10.00 Leave the Service of the Company . . . . . . . . . . . . . . . . . . . . . . . . 21 11.00 Compensation for Loss of Employment. . . . . . . . . . . . . . . . . . . . . . . 24 12.00 Transfer Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 13.00 Medical Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 14.00 Accidents and Workmen's Compensation. . . . . . . . . . . . . . . . . . . . . . 26 15.00 Training. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 16.00 Safety, Health and Environment . . . . . . . . . . . . . . . . . . . . . . . . . 28 17.00 Profident Fund Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 18.00 Teberebie Employees Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . 30 19.00 Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 20.00 Constitution and Rules of the Mines Standing Negotiating Committee-Teberebie Goldfields Ltd. . . . . . . . . . . . . . . . . 31 21.00 Constitution and Rules of a Sub-Committee of the Mines Standing Negotiating Committee- Teberebie Goldfields Limited . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Rate of Pay Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Labour Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Wage/Salary Points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Position Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
i 3 COLLECTIVE AGREEMENT BETWEEN TEBEREBIE GOLDFIELDS LIMITED AND THE GHANA MINEWORKERS' UNION OF T.U.C. CONDITIONS OF SERVICE 0.00 PREAMBLE Collective Bargaining Certificate In the exercise of the powers conferred on the Registrar of Trades Union Section 3 of the Industrial Relations Act, 1965 (Act 299), I hereby certify that to the extent set out herein, the GHANA MINEWORKERS' UNION, a duly registered Union is appointed as the appropriate representative to conduct with the employer mentioned in the schedule hereto collective bargaining on behalf of all its members. SCHEDULE: Teberebie Goldfields Ltd. 23rd September, 1991 (Patrick Obeng-Fosu) Registrar of Trades Union ARTICLE 1 - GENERAL BASIS OF AGREEMENT 1.01 Parties to the Agreement ------------------------ (a) This Agreement made this 7th day of July, 1995 between Teberebie Goldfields Limited (hereinafter referred to as the Company) and the Ghana Mineworkers' Union of TUC Ghana (hereinafter referred to as the Union) officially certified under the Industrial Relations Act, 1965 (Act 299) and any amendment thereto as the sole and exclusive collective bargaining representative of the employees and the sole negotiating body, provides for the terms and conditions of employment and non-employment and the conditions of labour which shall apply to all employees of the said Company for whom the Union has been certified to negotiate. 1 4 1.02 Purpose, Object and Scope of the Agreement ------------------------------------------ (a) The purpose of this agreement is to regulate the relationship between the Company and Union, as well as the various aspects of Collective Bargaining processes and the relationship between the Company and employees who are members of the Union. (b) The parties of this Agreement, having the common goal for the successful operation of the Company, are to do all within their power to promote stability and productivity of employment by ensuring a harmonious and peaceful industrial relations to the mutual benefit of the Company and its employees. (c) The Company's relations with its employees shall be governed by the terms of the Industrial Relations Act, 1965 (Act 299), the Labour Decree, 1967 (NLCD. 157), the Mining Regulations, 1970 (L.I. 665, 666), the Workmen's Compensation Law, 1987 (PNDCL. 187), the Social Security Law, 1991 (PNDCL. 247), the Labour Regulations, 1969 (L.I. 632), Public Holidays Law, 1989 (PNDCL. 220) and any amendments thereto. (d) This Agreement shall cover all Monthly Rated Employees of the Company. (e) Two copies of the agreement shall be lodged with the Registrar of Trades Union in terms with the provisions of the Industrial Relations Act, 1965 (299). 1.03 Duration and Effective Date of the Agreement -------------------------------------------- (a) The Agreement shall be for a term of three (3) years from the effective date except for Rate of Pay Schedule (Appendix 1) which shall be reviewed annually and shall be effective 1st January. (b) The effective date of the Conditions of Service in this Agreement shall be 1st July, 1995. (c) If after the expiration of this Agreement no new Agreement has been concluded the provisions herein shall continue to apply until a new Agreement is concluded or until this Agreement is terminated by either party in terms of the provisions of the Industrial Relations Act 1965 (Act 299). 2 5 1.04 Interpretation of the Agreement ------------------------------- If the interpretation of any part of this Agreement is disputed and agreement cannot be reached by the two parties the term in dispute shall be dealt with in accordance with the provisions of the Industrial Relations Act, 1965 (Act 299). 1.05 Definitions ----------- For the purpose of this Agreement the term: (a) Employee/Employees shall apply to all employees for whom the Union has been certified to negotiate. (b) Casual Labour shall apply to any person employed to work for not more than three (3) months. Casual labour shall be engaged to do work as agreed to by the Company and the Branch Union. (c) Temporary Employee shall apply to any employee who has been employed for a specific job of a temporary nature not exceeding six (6) months. If the temporary employee is transferred to a permanent job, his employment shall commence from the date on which he was employed as a temporary employee. (d) Branch Union shall apply to the Teberebie Goldfields Limited Branch of the Ghana Mineworkers' Union of T.U.C. (Ghana). (e) Basic pay means wages/salaries as shown in the Rate of Pay Schedule (1/27th of the Monthly Basic Pay shall be taken as the Daily Basic Pay calculated to the nearest Cedi), (f) Monthly Rated Employee shall apply to any employee whose basic pay is expressed as an amount per month and who is non-exempt from overtime pay. (g) Registered Dependents shall mean an employee's, up to two (2) wives/a husband and up to eight (8) children under 18 years of age who are neither employed nor married and up to 24 years of age if they are in continuous attendance in an institution of higher education. (h) Occupational disease/illness means any work-related abnormal condition or disorder, other than one resulting from a work injury, caused by or mainly caused by exposure at work. 3 6 (i) Occupational injury is an injury which results from a workplace accident/incident causing injury to the employee. (j) Reference to the Masculine Gender in this Agreement shall also include the Feminine Gender where appropriate. ARTICLE 2 - TRADES UNION ACTIVITIES 2.01 Freedom of Union Activities --------------------------- The Company shall recognise the activities of the Union and its members and shall not treat any Union member against his interest because he has conducted Union activities. 2.02 Branch Union Officials ---------------------- (a) The Company shall recognise the right of the Union to designate Branch Union Officials including Executive Members and Shop Stewards. (b) The Branch Union shall inform the Company of the names, number, and distribution of the Executive Members and Shop Stewards. The Company shall recognise only the employees so designated on the current list. (c) An Executive Member or a Shop Steward transferred to a new area shall cease to be so designated until he is elected to serve the new area. 2.03 Full-Time Union Official ------------------------ (a) The Company shall recognise the assignment by the Union of a Union member as a full-time Union official. (b) The Union shall notify the Company of the name of a full-time Union official. (c) The Company shall release a Branch Union official who is seconded to either the Branch or National Union as a full-time Union official for a period of not more than four (4) years. This may be reviewed before or after the four-year period. However, the period of his assignment as a full-time Union official shall not be included in the length of his employment. (d) All earnings and benefits of a full-time Union official during the period of his assignment shall be paid by the Branch Union. 4 7 (e) When a full-time Union official has been relieved of his assignment, he shall return to the job he held when he became the full-time Union official. If the job does not exist, the Company and the Union shall decide what job he is qualified to do. 2.04 Union Activities During Working Hours ------------------------------------- (a) The Branch Union officials shall carry out Union activities during working hours with approval of the Company, but they must not leave their work without first obtaining permission from their immediate Supervisor. (b) Branch Union officials shall be granted permission to participate in the following: 1. Matters concerning the handling of grievances and trade union disputes. 2. MSNC-TGL meetings and Sub-Committee meetings. 3. Other labour management consultations and meetings. (c) The Union shall notify the Company of the names of Union officials when the Union requires them to participate in Union activities set forth in Article 2.04(b), 2 & 3. (d) When any Union member has engaged in Union activities as stated above and during working hours, the Company shall treat him as being on duty. 2.05 Leave of Absence - Trade Union Courses -------------------------------------- The Company shall grant leave of absence without pay to any Union Member who is offered scholarship by the Union to undertake a Trade Union course either in Ghana or overseas. Under special circumstances the Company may grant this leave of absence with pay. 2.06 Transfer of Branch Union Officials ---------------------------------- The Company shall consult with the Union in the event it becomes unavoidable to transfer Branch Union officials. 2.07 Utilisation of Company-Owned Facilities --------------------------------------- (a) The Company will endeavour to approve the use of its facilities by the Branch Union for Union activities. 5 8 (b) The Company shall allow the Union to install bulletin boards. The number and location of bulletin boards shall be decided by the Company. (c) The Company will furnish a room in which the Branch Union may conduct their business. ARTICLE 3 - ENGAGEMENT REGULATIONS 3.01 General Provisions ------------------ (a) The Company shall give a copy of the Collective Agreement to each employee. (b) Upon employment, an employee shall be notified in writing of employment indicating: 1. Job Title, 2. Job Description, 3. Department Assigned, 4. Wage/Salary Scale, 5. Wage/Salary Points, 6. Effective Date, and 7. Probation Period. 3.02 New Engagements --------------- (a) Employment shall be at the discretion of the Company. (b) A new employee shall normally be paid at a minimum rate shown for his particular category. But in the case of an employee with previous experience of the work and/or requisite qualifications, a starting salary somewhere within the appropriate scale, not necessarily at the bottom of it, may be paid. 3.03 Medical Examinations -------------------- (a) All employment shall be made subject to medical fitness. (b) A new employee is required to pass a medical examination by the Company Medical Officer and to supply personal details for record purposes. (c) Periodic medical examinations may be required by an employee or by the Company during the course of his employment. (d) An employee shall undergo a medical examination at the termination of his employment. 6 9 (e) All medical examinations shall be made free of charge by the Company and such examinations shall take place during normal working hours. (f) An employee shall not refuse to undergo a medical examination. 3.04 Security Examination --------------------- Employment shall be made subject to passing security check. A new employee is required to furnish employment history so that his background may be checked by the Company Security and Personnel Departments. 3.05 Probationary Period ------------------- (a) Every new employee shall undergo a probationary period of three (3) months. If no adverse report is submitted during the period, the employee shall be deemed to be confirmed in his employment. (b) Where there is doubt of the employee's suitability, the Company may write to the employee concerned, with a copy to the Branch Union to extend the probationary period for a further three (3) months. (c) During the period of probation, an employee's service may be terminated with one (1) month basic pay. (d) No employee shall be terminated whilst receiving medical treatment, or until the Company Medical Officer declares him unfit. 3.06 Temporary/Alternative Job Assignments ------------------------------------- (a) Where an employee is not used in his normal job assignment, he may be assigned to any job for which he is trained or qualified. (b) While the employee is assigned to a temporary/alternative job, he will be paid his regular rate of pay even though the temporary/alternative work requires less qualification. (c) An employee who is classified as a trainee may be used on temporary job assignments for the purpose of training. (d) No employee may refuse a temporary/alternative job assignment for which the employee is trained or qualified. 7 10 (e) Assignment to a lower category shall not be made for punitive or disciplinary reasons. 3.07 Nomination of Beneficiary (Next-of-Kin) --------------------------------------- (a) Every employee shall give to the Company, at the time of his employment, the name and address of the nominee whom he wishes to receive any entitlements or benefits due him from the Company in the event of death. (b) The employee will, however, have the right at any time to change the name of his beneficiary and the Company shall only give to the beneficiary last nominated by the deceased employee any benefits that might have accrued to the deceased. 3.08 Promotions ---------- (a) As far as possible, and depending on suitable candidates being found, all vacancies shall be filled by promotion within the Company. (B) In the event of a new post being created within the Company, such post shall first be internally advertised for qualified employees to apply. (c) Promotion to a higher category shall be on merit tempered with seniority where merit is equal. ARTICLE 4 - WORKING TIME REGULATIONS 4.01 Hours of Work ------------- (a) The normal working week shall be a week of 40 hours, worked over five (5) days of eight (8) hours a day for all employees. (b) The normal working schedule shall be adjusted to suit the conditions within the requirements of the Company and shall be agreed between the Company and the Branch Union. (c) Five (5) working days shall normally be followed by two (2) rest days on the sixth and seventh day. 4.02 Overtime -------- (a) The Company may have the right to schedule a regular work schedule of six (6) shifts per week and up to ten (10) hours per shift. All 8 11 employees shall be required to work on those schedules. Any time scheduled over eight (8) hours per shift or the 6th and 7th working day will be paid at the appropriate overtime rate. (b) An employee shall have the right to refuse overtime except: 1. on regular schedules; 2. on a breakdown; 3. in case of accident or emergency; 4. if his replacement has not arrived in the case of a shift worker. 4.03 Overtime Rates -------------- Overtime worked at the request of the Company shall be paid as follows: 1. Hourly rate - 1/8 of daily basic pay 2. All hours in excess of eight (8) hours per working day - 1.5 3. Sixth working day worked - 2 4. Seventh working day worked - 2.5 4.04 Attendance at Work ------------------ Days absent from work due to causes outside the control of the employee may not normally be paid. Absence due to sickness authenticated by the Company Medical Officer shall be paid. 4.05 Public Holidays --------------- (a) The statutory Public Holidays are as follows: New Year's Day - 1st January Independence Day - 6th March Good Friday - March/April Easter Monday - March/April Republic Day - 1st July Christmas Day - 25th December Boxing Day - 26th December (b) Any other day declared a public holiday by the Government. (c) The Company will recognise Holy Saturday and Easter Sunday as paid holidays.
9 12 (d) All essential employees may be required to work on public holidays and holidays. Failure to attend may result in disciplinary action being taken. The essential employees shall be determined by the Company and the Branch Union. (e) If any other employee is required to work on a public holiday or holiday, it shall be entirely voluntary. 4.06 Payment for Holidays Worked --------------------------- (a) Any employee who works on a public holiday or a holiday at the request of the Company shall be paid his daily basic pay plus 2.5 times his hourly rate for all hours worked. (b) If a public holiday falls on an employee's scheduled rest day, he shall receive one extra day of basic pay. 4.07 Reporting Pay (Sixth and Seventh Day) ------------------------------------- If an employee reports for work on a scheduled day and due to a breakdown or problem with materials he is requested to go home, the time he was at the mine would be considered as hours worked and overtime at the appropriate rate shall be paid. 4.08 Paid Meal Times --------------- An employee shall be entitled to one (1) hour paid meal time on the working site as part of the normal scheduled shift. The meal time will be arranged by his Supervisor. ARTICLE 5 - PAY REGULATIONS 5.01 Scales/Rates of Pay ------------------- (a) Every employee shall receive rate of basic pay appropriate to his job classification as shown in the Rate of Pay Schedule. (b) An employee's rate of pay will be the highest rate for which the employee is trained and qualified by the Company, unless his performance in that job is adjudged unsatisfactory. (c) Should a new job be created subsequent to the date of this Agreement or should any existing job be so substantially changed in its duties or responsibilities that the old rate of basic pay and salary scale are no longer appropriate, the Company and the Union shall meet and agree on a new rate of basic pay and salary scale for that 10 13 job. 5.02 Basic Pay Rates --------------- Negotiations for the basic rates of pay will be between the Company and the Ghana Mineworkers' Union and shall be shown in the Rate of Pay Schedule. 5.03 Annual Increments ----------------- (a) An annual increment shall be granted automatically to an employee who has completed a year's continuous service in his present category at the rate shown in the Rate of Pay Schedule. (b) In exceptional cases of outstanding ability, an employee shall be awarded an unspecified number of merit increment(s) over and above the normal increment in any one (1) year. 5.04 Payment of Earnings and Advances -------------------------------- (a) Payment of earnings shall be made monthly. Every monthly pay packet shall contain the employee's earnings statement. (b) Payday will be five (5) week days, excluding Saturdays, Sundays and holidays, after the 20th of each month. If the 5th day falls on a Saturday, Sunday or holiday, then the following Monday, or next appropriate day, is payday. (c) Employees shall be paid by bank transfer unless they wish to take cash payment. (d) On the 10th of each month, an advance may be paid to each employee. The Company in consultation with the Branch Union will determine the amount of advance and each employee will be entitled to receive the same amount of advance. If the 10th of the month falls on a Saturday, Sunday or holiday, the advance will be paid the following day or next appropriate day. (e) The advance, if made, shall be recoverable by the Company from the employee's total earnings. 5.05 Deductions from Earnings ------------------------ (a) The TUC dues of employees who are members of the Ghana Mineworkers' Union shall be deducted by the Company from the employees earnings. The deductions so made shall be distributed by the Company as may be directed from time to time by the TUC. 11 14 (b) No other deductions shall be made except Income Tax, Social Security and Provident Fund Contributions, Basic Local Rates, repayment of Advances and Loans received by the employees from the Company and other deductions as agreed to by the Company and the Branch Union. 5.06 Paid Sick Leave (Non-Occupational) ---------------------------------- (a) If a worker is absent from work due to sickness or the effects of accident (to which the provisions of the Workmen's Compensation Law 1987 (PNDCL 187) do not apply) and his absence is duly authenticated by a certificate of a Registered Medical Practitioner, he shall be paid sickness benefit as stated in (b) below. (b) Subject to (a) above, the paid sick leave shall be as follows:
Length of Service Sick Leave Benefit ----------------- ------------------ 1. 0 - 3 months No benefit 2. 3 months - 5 years 6 months basic pay 3. Over 5 years 8 months basic pay
(c) However, if at any time the Company Medical Officer is of the opinion that further medical care may not benefit the sick employee, all untaken paid sick leave under (b) above shall be paid to the employee and he shall be terminated on medical grounds. (d) In the case where the company Medical Officer recommends further treatment after the maximum sick leave period has been exhausted, the Company shall extend the leave period without pay to enable the sick employee to recover. (e) In the case where the Company Medical Officer recommends discontinuation of treatment, the sick employee may elect to take up to six (6) months leave, with unpaid wages and benefits, in order to find time to seek treatment on his own. At the expiration of this leave, the employee may opt to go back to his job if found to be medically fit or to be retired on medical grounds if found to be unfit to work. If he does not return at the end of the leave period, the employee shall be considered discharged from the date the leave started. 12 15 ARTICLE 6 - ALLOWANCE REGULATIONS 6.01 Out-of-Station Allowance ------------------------ (a) An employee who is required in the course of his duties to travel and travels away from his usual place of work shall be given: 1. Meals while out of station. 2. Accommodation if required to stay overnight. 3. Transportation. (b) In lieu of the above, such employee shall be paid allowance as follows: 1. Breakfast C1,500.00 per day 2. Lunch C3,000.00 per day 3. Supper 03,000.00 per day 4. Accommodation C30,000.00 per day
(c) Transport expenses incurred by the employee shall be reimbursed to him by the Company upon presentation of valid receipts where possible. 6.02 Funeral Undertaking ------------------- (a) In the event of the death of an employee, the Company shall provide a coffin of an acceptable standard determined by the Company and the Branch Union. (b) The Company shall bear the cost of mortuary bills, if any. (c) Where the family of the deceased employee wish to transport the body to his hometown, the Company shall provide free transport to convey the deceased employee to his hometown within Ghana. (d) A cash donation of C300,000.00 together with four (4) bottles schnapps, four (4) cartons beer and four (4) crates soft drinks shall be made to the spouse of the deceased employee or in absence of a spouse, to the head of the deceased family. (e) The Company shall provide a coffin as well as transport to convey a deceased spouse of an employee to the spouse's hometown within Ghana. In addition, a cash donation of C150,000.00 together with two (2) bottles schnapps, two (2) cartons beer and two (2) crates soft drinks shall be made to the bereaved employee. 13 16 (f) In the case of the death of any other Registered Dependant of an employee, the Company shall provide a coffin and a cash donation of C60,000.00, one (1) bottle schnapps, one (1) carton beer and one (1) crate soft drinks as well as transport to convey the corpse to a local cemetery within the Tarkwa area. 6.04 Shift Allowance --------------- (a) A night shift allowance of C2,400.00 shall be paid to an employee who works 50 per cent or more of the recognised period for the night shift. This shall not apply to Watchmen. (b) The recognised hours of the night shift shall be from 10:00 p.m. to 6:00 a.m. 6.05 Tools ----- It shall be the responsibility of the Company to provide all the tools necessary for use by the employees. 6.06 Canteen/Meal ------------ The Company shall provide suitable canteen facilities for all its employees as well as one free meal per shift worked for each employee. An employee who is held to work overtime for more than 50 per cent of another shift shall be entitled to another meal for that period. 6.07 Transfer Allowance ------------------ A transfer allowance of two (2) month's basic pay shall be paid to an employee who proceeds on permanent transfer at the request of the Company. 6.08 Call-in Allowance ----------------- An employee called-in from home outside his normal shift shall be entitled to and be paid called-in allowance of 25 per cent of his basic daily pay in addition to overtime. 6.09 Transport --------- The Company shall provide all employees with transport to and from their places of work. Designated collection points shall be decided by the Company and Branch Union. 14 17 ARTICLE 7 - LEAVE REGULATIONS 7.O1 Paid Annual Leave ----------------- (a) On completion of one (1) year's continuous service with the Company, an employee shall be entitled to annual leave. Annual leave entitlements shall be as follows:
Years of Service Leave Entitlements ---------------- ------------------ 1 - 5 years 5 Working Weeks Over 5 years 6 Working Weeks
(b) Annual paid leave shall be taken when the employee requests it, following the anniversary date of employment. (c) The employee may sell up to 1/2 of his leave. (d) The employee must take all leave due him before his next anniversary date, except for (c), (e) and (f) herein. (e) Leave may be suspended or deferred at the request of the Company in writing. An employee whose leave is suspended or deferred may either reschedule his leave or be paid for the time of the leave. (f) Leave may be interrupted at any time if the exigencies of service demand that an employee should return to work before the expiry of his leave time; an employee whose leave is interrupted by the Company may take the rest of his leave at a later date or have the days worked paid at 2.5 times his daily basic rate. The Company will pay any additional travel expenses incurred. (g) Any employee who is prevented by ill-health from returning to duty at the end of his leave should notify his head of department and in any case not later than seven (7) working days after the end of leave. On resumption of duty, the employee shall submit to the Company a medical certificate endorsed by a Registered Medical Practitioner authenticating the employee's ill-health. (h) Holidays falling within the period of leave shall extend the period of paid leave. (i) The Company shall prepare a departmental leave roster annually showing dates its employees proceed on leave and number of days for each employee. 15 18 7.02 Leave Pay on Leaving Employment ------------------------------- When an employee ceases to be employed by the Company for any cause, he shall receive leave pay for any earned leave not taken, and the pro-rated amount of leave earned since his last anniversary date. 7.03 Maternity Leave --------------- (a) On production of a Medical Certificate signed by the Company's Medical Officer, or where circumstances demand, by a Registered Medical Officer, or Registered Midwife, a pregnant female employee with not less than one year continuous service shall be granted maternity leave with pay. (b) Subject to sub-section (a) above, a pregnant female employee shall be eligible for maternity leave as follows: (1) 6 weeks before confinement (2) 6 weeks after confinement (3) The period of confinement shall be extended to ten (10) weeks where the confinement is abnormal or where in the course of the confinement two (2) or more babies are born. (4) Accrued unspent leave may be taken. (5) In addition, a further four (4) weeks unpaid leave may be taken either before or after confinement. (6) A nursing mother shall be placed on the appropriate shift for a period not exceeding twelve (12) months after her confinement. (c) On resumption of duty, a nursing mother shall be granted 45 minutes twice a day for nursing her child for a period up to twelve (12) months. 7.04 Bereavement/Casual Leave ------------------------ (a) An employee faced with bereavement involving the death of his father, father-in-law, mother, mother-in-law, spouse or child shall be granted up to fifteen (15) working days leave with pay in a calendar year. (b) An employee faced with bereavement involving a blood relative of the employee or his spouse shall be granted, up to three (3) working days with pay and seven (7) working days without pay 16 19 leave in a calendar year. (c) An employee shall, on request, be granted casual leave of up to 5 working days without pay in a calendar year. 7.05 Study/Examination Leave ----------------------- (a) Where an employee is sponsored by the Company to further his education on an approved course either in Ghana or abroad in a higher institution, he shall be granted study leave with pay. (b) The question of granting study leave with or without pay to an employee who is desirous of furthering his education on an approved course either in Ghana or abroad in a higher institution shall be decided by the Company. (c) An employee shall be granted examination leave to enable him take an examination on presentation of valid documents to that effect. The question of leave with or without pay shall be decided by the Company in consultation with the Branch Union. ARTICLE 8 - DISCIPLINARY REGULATIONS 8.01 Introduction ------------ (a) The Sub-Committee of (MSNC-TGL) shall deal with all issues under this regulation. (b) The Company shall not terminate an employee's employment without due consideration of his record. (c) Disciplinary measures shall be taken in accordance with the gravity of the offence and after a review by the Company and the Branch Union in the presence of the employee involved. (d) A schedule of offences that may constitute grounds for termination, summary dismissal and other disciplinary action shall be as agreed to by the Company and Branch Union. 8.02 Interdiction Procedure ---------------------- (a) If an employee is suspected of having committed an offence which would require investigation, he shall be interdicted on half pay pending the outcome of the investigation or final disposal of the case. 17 20 (b) A period of up to thirty (30) calendar days from the date the employee was interdicted shall be allowed for the final disposal of the case. (c) If the employee is exonerated after the investigation, he shall be paid in full for the period of his interdiction. 8.03 Disciplinary Procedure ---------------------- (a) Where an employee commits an offence, he shall be disciplined in accordance with the Schedule of Offence. The offence shall be stated in writing. (b) Before the above disciplinary action is taken, a discussion will be held with the employee regarding the offence. During this time, the employee shall be given an opportunity to make a statement or defend himself in the presence of a representative of the Branch Union. (c) A warning or suspension from work or termination or summary dismissal may be imposed as a result of the findings. (d) After receiving three (3) warnings or suspensions, the employee may normally be terminated from employment on committing a fourth offence within a period of twelve (12) calendar months. (e) The Company shall furnish copies of written warnings/suspensions, terminations and dismissals to the Branch Union. 8.04 Legal Assistance for Employees ------------------------------ In the event of court proceedings being taken against an employee for an offence he committed during the course of his lawful duties, the Company shall ensure that defence council is available to defend the employee. 8.05 Absence from Work/Absenteeism Penalties --------------------------------------- (a) No employee shall be absent from work on any scheduled working day without permission. (b) The offence of unauthorised absence from work shall be dealt with by the issue of a series of warning notices, followed by termination. The following series of warning notices shall apply. (1) Three (3) absences without permission in a period not exceeding twelve (12) calendar months. (FIRST WARNING) 18 21 (2) Two (2) additional absences without permission in a period not exceeding 12 calendar months. (SECOND WARNING) (3) Two (2) additional absences without permission (making a total of 7) accumulated within 12 calendar months. (TERMINATION) (c) Where an employee has been continuously absent for seven (7) working days, he shall be deemed to have resigned from the employment of the Company. (d) In exceptional circumstances and for bonafide reasons, the Company may agree that absence without permission shall not be counted towards the issue of warning or termination. ARTICLE 9 - GRIEVANCE AND TRADE DISPUTE PROCEDURES 9.01 Introduction ------------ It is recognised that there are two (2) kinds of disputes which might develop between the Company and the Union during or at the expiration of this Collective Bargaining Agreement. The first kind of possible dispute shall be termed a "Grievance". The second kind of possible dispute shall be termed a "Trade Dispute". It is the purpose of Article 9 to provide procedures whereby the parties to this Collective Bargaining Agreement can be assured of prompt and equitable settlement of all such disputes. 9.02 Grievance --------- (a) A grievance shall be defined as the cause for complaint or protest. This may arise as a result of a decision by the Company connected with the non-compliance with the employee's terms and conditions of employment, in the interpretation, application and violation of this Collective Bargaining Agreement. (b) The parties to this Collective Bargaining Agreement recognise that the grievance should be resolved promptly and as close to the lowest level as possible and the following procedures shall accordingly be observed in settling all grievances: 19 22 Step 1: Where an employee is dissatisfied with any decision by the Company on any matter affecting his conditions of employment and he wishes to register a grievance he shall, in the first place, report his grievance or the causes of his dissatisfaction direct to his Supervisor and his Shop Steward. The Supervisor and the Shop Steward shall investigate and deal with the matter within two (2) working days of receiving the grievance. Step 2: Where the employee is still dissatisfied with the findings of the investigation, he may refer it to the Department Supervisor in writing within two (2) working days after receiving the findings. The Department Supervisor shall endeavour to resolve the matter and give the employee his findings in writing within four (4) working days. Step 3: In the event the employee is still dissatisfied with the findings, the employee may submit the grievance in writing to the Operations Manager and he shall invite the employee, the Branch Union and other appropriate personnel to review the grievance. The Operations Manager shall deal with the matter within a period of one (1) week. Step 4: In the event the employee is still dissatisfied with the decision, the Branch Union may refer the issue to the Union who may arrange to meet the General Manager or his representative to resolve the grievance within two (2) weeks. Step 5: If the issue is still unresolved, either party to this Collective Bargaining Agreement may request a meeting of the Mines Standing Negotiating Committee-Teberebie Goldfields Limited (MSNC-TGL) to resolve the issue. Step 6: If the issue can still not be resolved, the issue may be referred to conciliation in accordance with Section 16 of the Industrial Relations Act, 1965, (Act 299), 9.03 Trade Dispute ------------- (a) A Trade Dispute shall be defined as: 1. Complaint by employees on an issue affecting 20 23 their employment which is not covered by the Collective Bargaining Agreement. 2. Dispute over interest: i.e. when the two parties to the Collective Bargaining Agreement are unable to agree on an issue to be included in the Collective Bargaining Agreement and/or any issue outside the Collective Bargaining Agreement. (b) In the event of a Trade Dispute between the two parties, they shall resolve the dispute in fairness to both parties as promptly as practicable. (c) In the event where they are unable to revolve the dispute, it shall be dealt with in accordance with the provision of the Industrial Relations Act of 1965 (Act 299). 9.04 Action in Trade Dispute ----------------------- (a) Action in Trade Dispute shall be defined as a strike by the Union or a lock-out by the Company to enforce compliance with demands made on the other party. (b) Neither the Company nor the Union shall cause, countenance or support any lock-out or strike until the procedure set out in Section 18 of the Industrial Relations Act, 1965 (Act 299) has been carried through. (c) When the Union or the Company stages or suspends any Action in a Trade Dispute, it shall notify the other party. (d) The Union shall recognise that employees who fall under the following categories shall not participate in action in Trade Dispute: 1. Security personnel 2. Medical staff (e) In the event of the mine carrying on production during Action in Trade Dispute, the Union shall have the right to withdraw immediately all employees mentioned in (d) above. ARTICLE 10 - LEAVING THE SERVICE OF THE COMPANY 10.01 Introduction ------------ (a) The modes by which an employee may leave the service of the Company shall be as follows: 21 24 1. by termination of employment 2. by summary dismissal 3. on resignation 4. on reaching retirement 5. by retirement on medical grounds 6. upon incident of death 7. on being declared redundant/or through severance (b) The Company shall, upon request, give a certificate of service to any employee who leaves the service of the Company. 10.02 Termination of Employment ------------------------- In cases other than gross misconduct, the Company may terminate the employment of a confirmed employee by giving him one (1) month notice or pay in lieu of notice. 10.03 Summary Dismissal ----------------- In the event of an employee being found guilty of an offence under gross misconduct in accordance with the Schedule of Offences, he shall be summarily dismissed. 10.04 Resignation ----------- A confirmed employee who wishes to resign from the service of the Company shall give a month's notice. 10.05 Retirement ---------- (a) Retirement from the service of the Company shall either be voluntary or compulsory. (b) The statutory age for retirement shall be as prescribed in the Social Security Law, 1991 (PNDCL 247). (c) An employee who wishes to retire voluntarily shall give the Company three (3) months notice. (d) When the employee has reached the statutory age for compulsory retirement, he shall be so informed by the Company three (3) months prior to the date of the retirement. 10.06 Retirement on Medical Grounds ----------------------------- An employee may be retired on medical grounds by the Company Medical Officer when found unfit to carry out his duties as a result of ill-health occasioned either by occupational or non-occupational injury/disease. 22 25 10.07 Repatriation ------------ (a) When an employee has completed five (5) years service and leaves the Company for reasons other than summary dismissal, upon request, he shall be repatriated to his hometown. The employee's registered dependents and their personal effects shall also be repatriated by the Company. (b) When an employee leaves the service of the Company by retirement, redundancy, or for medical reasons, upon request, the Company shall repatriate the employee, his registered dependents and their personal effects to the employee's hometown in Ghana. (c) If the service to the Company is terminated by death of the employee, the deceased employee's spouse(s), registered dependents and their personal effects shall be returned to their hometown in Ghana, if they so request. 10.08 Redundancy/Severance -------------------- (a) In the event of redundancy or severance, three (3) months notice shall be given. (b) On receipt of the notice, the Union shall enter into discussion with the Company on the matter. During this period, the Company undertakes that no notice of termination shall be given to any employee regarding redundancy. (c) When new employment occurs, preference may be given to an employee whose employment was terminated as a result of redundancy/severance. (d) Should the Company find it necessary to fill any vacancy in a particular classification within six (6) months of terminating an employee's employment of similar classification on grounds of redundancy/severance, such vacancy shall as far as practicable be filled with redundant employee. (e) All personal emoluments due from the Company shall be paid to the employee before he is laid off. (f) No employee's employment shall be terminated by the Company during his absence on authortsed leave. 23 26 ARTICLE 11 - COMPENSATION FOR LOSS OF EMPLOYMENT (a) In the case of redundancy/severance, the Company and the Union will determine the amount of compensation to be paid to the affected employee with consideration of his benefits in the Provident and Trust funds. (b) In the case of retirement on grounds of non-occupational ill-health, the affected employee shall be paid six (6) months basic pay. (c) In the case of retirement on grounds of occupational ill-health, the affected employee shall be paid thirty-six (36) months basic pay; but where the employee becomes totally disabled as a result of occupational injury/disease, the Company and the Union will in addition to the thirty-six (36) months pay decide on his re-settlement. (d) In the case of death resulting from occupational accident, the deceased employee's beneficiary shall be paid thirty (30) months basic pay of the employee. ARTICLE 12 - TRANSFER REGULATIONS 12.01 Departmental Transfer --------------------- (a) A departmental transfer may be effected: 1. If the transfer is necessitated by redeployment and involves changing the employee's trade or job, the employee shall be given the option to accept the new trade or job or be terminated on grounds of redundancy. 2. If the transfer is necessitated by occupational injury/disease and involves changing the employee's trade or job, the employee shall be given the option to accept the new trade or job or be retired on medical grounds. (b) If an employee wishes to improve his employment by means of transfer to another department, the Company may facilitate such transfer where practicable. ARTICLE 13 - MEDICAL REGULATION 13.01 Extent of Free Medical Treatment -------------------------------- (a) The Company shall provide free medical treatment 24 27 for a11 employees and their registered dependents at the mine Clinic or designated hospital. (b) In cases of employees whose work places and residences are far away from the mine Clinic, the Company shall make arrangements for free medical treatment for the employees and their registered dependents, (c) The Company may reserve the right not to provide free medical treatment for the following: 1. Repeated infections with sexually transmitted diseases. 2. Chronic alcoholism or use of stimulants, drugs or narcotics except when prescribed by a Physician. 13.02 Medical Expenses Outside the Mine Clinic ---------------------------------------- The cost of medical treatment, including board, lodging and transport expenses incurred by an employee or his registered dependent at any registered hospital/clinic should he be away on duty or leave or in case of emergency, shall be reimbursed by the Company on the production of a medical certificate and valid receipts. 13.03 Referred Medical Cases ---------------------- (a) A sick employee who is referred by the Company Medical Officer to another hospital outside his place of work shall have his transport expenses reimbursed. The sick employee shall also be paid an out of station allowance where the Company does not provide board and lodging. (b) In the case of the employee's registered dependent or where the Company Medical Officer recommends that a person should accompany the sick employee or registered dependent, the Company shall reimburse their transport expenses and pay a subsistence allowance of C30,000.00 per night where the Company does not provide board and lodging. 13.04 Dental/Optical/Ophthalmic Treatment ----------------------------------- (a) Free dental, optical and ophthalmic treatment shall be provided by the Company for employees and their registered dependents when the treatment is prescribed by the Company Medical Officer. 25 28 (b) The Company will reimburse an employee for the cost of prescription spectacles which have industrial frames and safety lenses. (c) Dentures and spectacles when prescribed by the Company Medical Officer due to accidents involving Company vehicles will be provided by the Company. 13.05 Periodic Medical Examination ---------------------------- (a) The Company may require an employee or any member of his registered dependents to be examined if the Company considers it necessary. (b) In the above case, the examination shall be conducted at Company's expense. ARTICLE 14 - ACCIDENTS AND WORKMEN'S COMPENSATION (a) In his own interest and that of others, every employee is expected to take care in his work and endeavour to prevent accidents. (b) No employee shall work or operate or drive any equipment or vehicle unless he has been trained and qualified to operate that piece of equipment or unless he is under the direct supervision of a qualified Trainer. (c) No employee shall be assigned to work that is likely to cause injury or manifestly in excess of his strength. (d) An employee shall comply with instructions given for his own safety and health and those of others. (e) No employee shall work under any conditions which are hazardous or dangerous. (f) All accidents must be reported as soon as possible to the employee's immediate Supervisor. (g) The Company shall as soon as possible notify the Branch Union of all accidents which are likely to lead to an inquiry or an inquest into the death of an employee in the course of his employment. (h) An employee who may sustain injury or contract an occupational disease arising out of and in the course of his employment shall be treated by the Company until such a time that he is fit to resume work or is retired on medical grounds. The employee shall be paid his full basic pay and other allowances during the period he was off 26 29 work. (i) If the employee is unable to perform his normal job as a result of injury/disease after he has been declared fit by the Company's Medical Officer, he may be re-trained for the purpose of redeployment. (j) Compensation is paid in accordance with the Workmen's Compensation Law, 1987, (PNDCL.187). ARTICLE 15 - TRAINING 15.01 General ------- (a) No employee shall be employed in work of any description in the mine unless that employee has received the necessary instructions and training including safety and health so as to be able to do the work competently and safely. (b) Individual records of all such training, and where necessary re-training shall be maintained at the mine. (c) The nature and period of training or re-training for all the various categories of employment shall be made known to the employees concerned. 15.02 In-Service Training ------------------- (a) Internal training in the form of periodic lectures and demonstrations shall be provided by the Company to impart additional production/maintenance and administrative techniques to employees to improve upon their skills. (b) The Company undertakes to train its employees for promotion. 15.03 Financial Assistance for Education ---------------------------------- Where an employee is taking a correspondence course approved by the Company, the educational cost shall be borne by the Company. 15.04 Scholarships to Employee's Children ----------------------------------- (a) The Company undertakes to award scholarships in Ghana to children of employees. (b) The conditions for the scholarship and the extent of financial obligation on the part of the Company shall be determined by the Company and the Branch Union from time to time. 27 30 ARTICLE 16 - SAFETY, HEALTH AND ENVIRONMENT 16.01 General Provisions ------------------ (a) The Company and the Union are committed to improving the quality of life of all employees/members by: 1. elimination of injuries and accidents; 2. ensuring a safer working environment; 3. developing safe working practices. (b) The Company will work within the framework of its environmental action plan. (c) Copies of the relevant portion of the Mining Regulation and the Company's safety and health policy shall be given to an employee upon commencement of employment. 16.02 First Aid Requirements and Training ----------------------------------- (a) Facilities for first aid and emergency treatment in case of accident shall be provided at points where mining operations are performed. (b) As far as reasonably practicable, all employees shall undergo a training programme to enable them to qualify for a recognised first aid certificate. 16.03 General Welfare --------------- (a) The Company shall provide adequate and suitable sanitary conveniences conveniently accessible to all employees at their work places. These shall be maintained, kept clean and effective provision shall be made for their lighting and ventilation. (b) The Company shall provide adequate supply of wholesome drinking water and properly maintained at suitable points conveniently accessible to all employees at their work places. (c) The Company shall provide adequate facilities for changing, washing, storage and laundering of clothes for the use of all employees at their work places, and these shall be maintained in clean and orderly conditions. (d) Where practicable, the Company shall provide suitable protective shelters for employees who work in the open air. 28 31 (e) The Company will endeavour to provide a system of transport to convey the dependents of employees to schools, hospitals and shopping centres at times agreed to between the Company and the Union. 16.04 Free Protective Clothing and Equipment -------------------------------------- (a) The Company shall provide the following protective clothing and devices which shall be worn by the employees concerned. If the employee refuses to wear protective equipment, he shall be subject to discipline. (1) Suitable protective clothing to employees who are exposed to wet, cold, heat, noise, airborne dust, harmful physical and chemical agents, and harmful gases/fumes. (2) Safety belts and lines where there is a danger of falling. (3) Life jacket where there is danger of falling into water. (b) The protective clothing and devices shall conform with such standards as may be specified by the Mines Department. (c) The Company shall replace worn out protective clothing and equipment when a worn out item is returned to the Company. (d) If an employee loses protective equipment, he shall pay the Company full cost of replacement. This shall be deducted at source over six (6) months instalments. 16.05 Uniforms -------- (a) The Company shall furnish free uniforms to each employee. (b) Each employee will receive two (2) uniforms. The uniform will be replaced when a worn out uniform is returned to the Company. (c) The Company in consultation with the Branch Union shall decide what uniform shall be worn by each employee. (d) If an employee loses or wilfully destroys a uniform, he shall pay the Company the full cost of replacement. This shall be deducted over six (6) months instalments. 29 32 16.06 Safety Committee ---------------- The Sub-Committee of the Mines Standing Negotiating Committee-Teberebie Goldfields Limited (MSNC-TGL) shall deal with all matters concerning Safety, including: (a) Safety inspections (b) The enforcement of safety rules (c) Safety education (d) Co-ordinating safety and health activities ARTICLE 17 - PROVIDENT FUND SCHEME (a) Every employee of the Company on employment shall become a member of the Provident Fund Scheme. (b) The contribution towards the Provident Fund Scheme shall be as follows: 1. by an employee - 5% of the employee's monthly basic salary 2. by the Company - 10% of the employee's monthly basic salary (c) The Scheme shall be managed by a Board of Trustees. ARTICLE 18 - TEBEREBIE EMPLOYEES TRUST FUND (a) The Company and the Union shall jointly establish a Teberebie Employees' Trust Fund for the benefit of the employees. (b) Primary purpose of the Trust Fund is for employees to own their own houses. (c) Secondary purpose is to provide loans for employees. (d) The Company and the Union shall establish rules and regulations to govern the Trust Fund. (e) The Company will contribute: 1. 14% of the employee's monthly basic salary in the first year of the contract. 2. Additional 3% making a total of 17% of the employee's monthly basic salary for the second year of the contract. 3. Additional 3% making a total of 20% of the employee's monthly basic salary for the third year of the contract. 30 33 (f) Any accrued benefit standing to the credit of the employee at the end of his service shall be reverted to the employee. ARTICLE 19 - MISCELLANEOUS PROVISIONS 19.01 Interest Free Loans ------------------- (a) An employee may apply for a compassionate loan from the Company. (b) The rules and regulations of the loans shall be determined by the Company in consultation with the Branch Union. 19.02 Bonus ----- The Company may pay an annual/production bonus. The details of the bonus will be discussed by the Company and the Branch Union. 19.03 Awards ------ (a) The Company shall institute a long service award. The conditions and types of awards shall be determined by the Company and the Branch Union. (b) The Company shall also establish awards to recognise outstanding performance, safety and other meritorious achievements as the Company and the Branch Union deem appropriate. 19.04 Recreational Facilities ----------------------- The Company shall promote the development of recreational activities for its employees. 19.06 Press Announcement ------------------ While negotiations are in progress, there shall be no press release except those mutually agreed by the Company and the Union in writing. ARTICLE 20 - CONSTITUTION AND RULES OF THE MINES STANDING NEGOTIATING COMMITTEE-TEBEREBIE GOLDFIELDS LTD. 20.01 Constitution ------------ (a) There shall be a Mines Standing Negotiating Committee-Teberebie Goldfields Limited (MSNC-TGL) consisting of not more than seven (7) members from either party of this Collective Bargaining Agreement. (b) Each side may bring an additional person for the purpose only of recording the proceedings; he shall not take part in the discussions. 31 34 (c) The Chairman shall be appointed by the Company and he shall act as such for all meetings. (d) The Recording secretary of the MSNC-TGL shall be provided by the Company. (e) There shall be no other observer unless both parties agree that the presence of any other individual is desirable. 20.02 Functions --------- The functions of the MSNC-TGL shall be to consider such matters as connected with the employment, non-employment, with the terms of the employment or with the conditions of labour of any of the employees of the class described in the certificate. 20.03 Agenda, Meetings and Minutes ---------------------------- (a) The MSNC-TGL shall hold such Ordinary Meetings as may be required within two months prior to the expiration of this Collective Bargaining Agreement. 1. Once a year, for the purpose of reviewing the Rates of Pay Schedule. 2. Once every three (3) years, for the purpose of reviewing the other Conditions of Service. (b) A request by either party for an Extraordinary meeting in times of emergency shall be submitted in writing to the other party, specifying the purpose of such proposed meeting. The party who receives such request shall within 14 days of such receipt make mutually acceptable arrangements in consultation with the other party to convene the requested meeting. (c) The Secretary shall be responsible for issuing the agenda and writing the minutes of the meetings. (d) Items for the agenda for Ordinary Meetings shall be submitted in writing to the Secretary and copied to the other party by not later than three (3) months prior to the expiration of the applicable section of this agreement. A copy of the agenda shall be submitted to each side not less than 14 days before such meetings. (e) The agenda for such meetings shall be approved by both parties not less than 7 days before the meeting. 32 35 (f) Draft minutes of all meetings of the MSNC-TGL shall be sent to the General Secretary of the Ghana Mineworkers' Union and the Chairman of the MSNC-TGL or their representatives for their comments before the final minutes are issued. (g) Any Agreement concluded shall be reduced to writing and signed on behalf of Teberebie Goldfields Limited by the Chairman or his representative and on behalf of the Ghana Mineworkers' Union by the General Secretary or his representative. (h) The final minutes when confirmed shall be signed on behalf of the Company by the Chairman of MSNC-TGL or his representative and on behalf of the Union by the General Secretary or his representative. (i) Copies of the Agreement shall be made available to the Union. (j) The MSNC-TGL shall appoint a Sub-Committee with the constitution and rules as hereinafter set out for the Company and the Branch Union in accordance with Section 5(3) of the Industrial Relations Act, 1965 (Act 299). (k) In no circumstances shall a strike or lock-out take place whilst discussions are in progress. Strictly in compliance with the provisions of the Industrial Relations Act, 1965 (Act 299) four (4) weeks notice shall be given before any strike or lock-out takes place. ARTICLE 21 - CONSTITUTION AND RULES OF A SUB-COMMITTEE, OF THE MINES STANDING NEGOTIATING COMMITTEE-TEBEREBIE GOLDFIELDS LIMITED. 21.01 Object ------ The object of the appointment of a Sub-Committee of the Mines Standing Negotiating Committee shall be to provide a recognised means of communication, joint consultation and negotiation with delegated power between the Branch Union and the Company. 21.02 Functions --------- The functions of the Sub-Committee of the MSNC-TGL. (a) Local application of MSNC-TGL decisions or agreements and any other schedules of the MSNC-TGL. 33 36 (b) Safety appliances, first aid, welfare measures. (c) Disciplinary measures. 21.03 Questions Excluded ------------------ The Sub-Committee shall not take any decisions or arrive at any agreements which shall have the effect of varying those of the MSNC-TGL. 21.04 Composition ----------- (a) A Sub-Committee shall be composed of not more than three (3) representatives from either party. (b) The Chairman and recording secretary for each meeting shall be appointed by the Company. 21.05 Agenda, Meetings and Minutes ---------------------------- (a) Items for the agenda shall be submitted in writing to the Secretary not less than seven (7) days before the date of the appropriate meetings. (b) Copies of the agenda as finally drawn shall be submitted to each party not less than three (3) days before such meetings. Meetings shall be held at least quarterly. Extraordinary meetings may be arranged at the request of either party. (c) The minutes shall be signed by the Chairman or his representative on behalf of the Company and by the Branch Secretary or his representative on behalf of the Branch Union. Copies of the minutes shall be sent to each party. Information copies shall also be sent to the General Secretary of the Union. 21.06 Procedures ---------- (a) Decision shall be arrived at by consensus between the two parties. (b) Where no decision is reached, the matter in dispute may be referred to the MSNC-TGL by either party for consideration. 34 37 COLLECTIVE AGREEMENT BETWEEN TEBEREBIE GOLDFIELDS LIMITED AND THE GHANA MINEWORKERS' UNION OF T.U.C. RATE OF PAY SCHEDULE 35 38 TEBEREBIE GOLDFIELDS LIMITED RATE OF PAY SCHEDULE FOR: MONTHLY RATED EMPLOYEES REPRESENTED BY THE UNION EFFECTIVE JULY 1, 1995 ==========================================================================================================
Inter Departmental Category Common Mining Processing Classification Operations Operations Maintenance ---------------------------------------------------------------------------------------------------------- 1 Equip Optor A Crusher Operator A Lead Mechanic ---------------------------------------------------------------------------------------------------------- 2 ADR Operator A Mechanic A Equip Optor B Crusher Operator B Welder A Equip Operator B Electrician A ---------------------------------------------------------------------------------------------------------- 3 Driver A Equip Optor C ADR Operator B Mechanic B Site Clerk A Cert Blaster Crusher Operator C Welder B Equip Operator C Electrician B ---------------------------------------------------------------------------------------------------------- 4 Driver B Equip Optor D ADR Operator C Mechanic C Site Clerk B Blast Help A Crusher Operator D Welder C Equip Operator D Electrician C Serviceman A ---------------------------------------------------------------------------------------------------------- 5 Driver C Blast Help B ADR Operator D Serviceman B Site Clerk C Crusher Operator E Lead Laborer Trainee A ---------------------------------------------------------------------------------------------------------- 6 Laborer A Trainee B ---------------------------------------------------------------------------------------------------------- 7 Laborer B ==========================================================================================================
36 39 TEBEREBIE GOLDFIELDS LIMITED RATE OF PAY SCHEDULE FOR: MONTHLY RATED EMPLOYEES REPRESENTED BY THE UNION EFFECTIVE JULY 1, 1995 ============================================================================================================
Warehouse Geology Category & Laboratory & Security Administration Engineering ------------------------------------------------------------------------------------------------------------- 1 ------------------------------------------------------------------------------------------------------------- Lead Senior Staff 2 Warehouseman Lab Tech A Sergeant ------------------------------------------------------------------------------------------------------------- 3 Warehouseman A Lab Tech B Staff Sergeant ------------------------------------------------------------------------------------------------------------- Instrumentman 4 Warehouseman B Lab Tech C Sergeant Draftsman ------------------------------------------------------------------------------------------------------------- Rodman 5 Warehouseman C Lab Tech D Corporal Sampler ------------------------------------------------------------------------------------------------------------- Senior 6 Warehouseman D Securityman ------------------------------------------------------------------------------------------------------------- Securityman 7 Watchman =============================================================================================================
37 40 Appendix 1 TEBEREBIE GOLDFIELDS LIMITED RATE OF PAY SCHEDULE WAGES/SALARY POINTS (INCREMENTS) EFFECTIVE JANUARY 1, 1995 ==================================================================================================================
Category A B C D E ------------------------------------------------------------------------------------------------------------------ 1 281,600 286,100 290,600 295,100 299,600 2 250,400 254,900 259,400 263,950 268,400 3 219,200 223,700 228,200 232,700 237,200 4 200,000 202,250 204,500 206,750 209,000 5 182,200 184,450 186,700 188,950 191,200 6 164,400 166,650 168,900 171,150 173,400 7 154,000 155,125 156,250 157,375 158,500 ------------------------------------------------------------------------------------------------------------------
38 41 POSITION DESCRIPTIONS COMMON CLASSIFICATION Category 3 Driver A = Qualified to operate a heavy duty truck and trailer, tie down, and transport. Site Clerk A = Clerk responsible for all departmental records. This Clerk could have other Clerks reporting to him. Category 4 Driver B = Qualified to operate a heavy duty truck and trailer, service truck, tipper truck or powder truck. Site Clerk B = Clerk responsible for time card, maintenance records, or other departmental records. This Clerk may report to a Site Clerk A. Category 5 Driver C = Qualified to operate light vehicles, patrols, and the fuel truck. Site Clerk C = Clerk responsible for filing and minimum record-keeping while learning the duties to advance to Site Clerk B. Lead Laborer = Responsible for and directs a labour crew in a specific area or job. Trainee A = A trainee who is in the last stages of training before becoming qualified for a higher job classification. Category 6 Laborer A = Unskilled worker including beltman, sampleman, tallyman, cleaner, trenchman, line cutters, etc. Trainee B = A new hire who has been hired to train for a higher classification. Category 7 Laborer B = Entry level for unskilled worker. MINING CLASSIFICATION Category 1 Equip. Operator A = Qualified to operate the Front Shovel, or the 992 Loader plus one other major piece of equipment. Category 2 Equip. Operator B = Qualifed to operate the 992 Loader or 245 Backhoe or two other major pieces of equipment. 39 42 Category 3 Equip. Operator C = Qualified to operate the 966 Loader or 225 Backhoe, or a major piece of equipment. Certified Blaster = Blaster that holds a Blasting Certificate. Category 4 Equip. Operator D = Qualified to operate a minor piece of equipment - 416 Backhoe, D6 Dozer, Roller, RC60 Forklift, and other minor equipment. Blast Helper A = Qualifed to assist the Certified Blaster in charging holes. Category 5 Blaster Helper B = Qualified to assist on the blasting crew. DEFINITION OF EQUIPMENT MAJOR MINOR ----- ----- DRILLS Prakla Drill Atlas Copco Driltech Drill Drill LOADER Front Shovel 966 992 225 245 215 HAUL TRUCK 785 777 HEAVY EQUIPMENT *D10 Dozer D6 Dozer *D7 Brush Dozer 416 Backhoe 631 Scraper and RC60 Forklift 631 Water Truck Roller Grader Crane 834 Dozer Note: *D10 and D7 are considered one type of major equipment. ----- MAINTENANCE CLASSIFICATION Category 1 Lead Mechanic = Responsible for a crew of men in a specific area or job at the maintenance shop or at process maintenance. 40 43 Category 2 Mechanic A = Mine maintenance or process Mechanic capable of diagnosing problems and performing maintenance required on any equipment. Welder A = Mine maintenance of process Welder capable of arc welding, gas welding, cutting, burning, lay-out and fabrication. Electrician A = Mine maintenance or process Electrician qualified to work on and handle both high voltage and low voltage systems and circuits. Category 3 Mechanic B = Mine maintenance or process Mechanic capable of performing instructed maintenance or equipment. Welder B = Mine maintenance or process Welder capable of arc welding, gas welding, cutting and burning. Electrician B = Mine maintenance Electrician qualified to work on and handle low voltage or automotive system and circuits. Category 4 Mechanic C = Mine maintenance or process employee who assists a Mechanic and who is learning to be a Mechanic. Welder C = Mine maintenance or process employee who assists a Welder and who is learning to be a Welder. Electrician C = Mine maintenance or process/crusher employee who assists an Electrician and who is learning to be an Electrician. Serviceman A = Capable of fueling, servicing and lubricating equipment, or a skilled tradesman such as a Carpenter or Vulcanizer. Category 5 Serviceman B = Capable of assisting a Serviceman A or skilled tradesman. ENGINEERING CLASSIFICTIONS Category 4 Instrumentman = Qualified to operate a survey instrument and to assist a Surveyor in the performance of survey and calculations. Draftsman = Qualified to hand draft plans, designs and charts. 41 44 Category 5 Rodman = Qualified to assist an Instrumentman or Surveyor in conducting a survey. GEOLOGY CLASSIFICATION Category 5 Sampler = Qualified to direct a crew of laborers in a sampling project, record samples, and prepare samples. PROCESSING CLASSIFICATIONS Note: Processing is Crushing and ADR Category 1 Crusher Operator A = Qualified to operate all crusher components as a system from the control room. Category 2 Crusher Operator B = Qualified to operate all individual crusher components. ADR Operator A = Qualified to operate all ADR circuits and equipment. Equip. Operator B = Same as Mining. Category 3 Crusher Operator C = Qualified to operate two major crusher components. ADR Operator B = Qua1ified to operate adsorption/desorption and reagent mix equipment OR all refinery equipment OR supervise leach pad piping and plastic work. Equip. Operator C = Same as Mining. Category 4 Crusher Operator D = Qualified to operate one major crusher component. ADR Operator C = Qualified to mix reagents or install and maintain spray distribution system and plastic liner. Equip. Operator D = Same as Mining. Category 5 Crusher Operator E = Assists in crusher operations. ADR Operator D = Assists in ADR and leach pad operations. LABORATORY CLASSIFICATIONS Category 2 Lab, Technician A = Ability to operate all four lab sections and perform leadman supervision. 42 45 Category 3 Lab. Technician B = Ability to operate sample prep plus two other sections. Category 4 Lab. Technician C = Ability to operate sample prep plus one other section. Category 5 Lab. Technician D = Ability to operate sample prep. Lab Sections: Sample Prep Wet Analytical Instrumentation Fire Assay WAREHOUSE & ADMINISTRATION CLASSIFICATION Category 2 Lead Warehouseperson = Able to manage warehouse functions. Able to establish proper priorities. Include issuing, receiving, checking and stocking. Establish reorder points, control fuel, parts and component inventories with warehouse supervision direction. Understand warehouse computer applications and procedures. Able to function with a minimum of Exempt supervision. Category 3 Warehouseperson A = Able to recognise areas requiring immediate attention. Handle warehouse functions, issue receipts, develop reorders from stock within warehouse area and input purchase orders, issue slips, and fuel data to the computer. Assist maintenance and operations in locating items at reorder time and requisitioning them through Purchasing. Assist in all inventory activities. Able to operate all warehouse equipment and have required licenses and permits. Category 4 Warehouseperson B = Work with minimum of Exempt and non-Exempt supervision. Able to input issues, receipts and print standard reports. Assist in taking inventory. Category 5 Warehouseperson C = Learn under close supervision to operate forklifts and other moveable equipment. Able to 43 46 receive all material including fuel and cement. Able to issue all material by locating the item in the computer, computer printout, and in bins or yard. Requires supervision. Category 6 Warehouseperson D = Learn under supervision to handle warehouse equipment such as ladders, hammers, bars, etc. efficiently and safely. Assist in receiving, checking and stocking. Handles general housekeeping for all areas, i,e., yard, warehouses, and office. Must understand; read and write in the English language well. Must have computer or typing education and experience. Does general labor as directed. Requires much supervision. SECURITY CLASSIFICATION Category 2 Snr Staff Sergeant = Equivalent in rank to Chief Inspector on other local Mines. The Senior MRE in the Security Department. Responsible to the DCSO for supervision and discipline of all other security personnel. Category 3 Staff Sergeant = Equivalent to rank of Inspector on other local Mines. Responsible to DCSO for specific areas of security including anti-illicit mining duties, security in respect of entry/exit to the refinery, and supervision of shift security. Category 4 Sergeant = Responsible to DCSO and Senior Staff Sergeants for specific areas of responsibility including Main Gate, Residential house, Refinery, Administration. Category 5 Corporal/Driver C = Responsible to Senior Staff Sergeants for sub area of responsibility including ADR gate, Magazine, relief for Sergeant. 44 47 Category 6 Senior Securityman = Responsible to Sergeants for security of specific item of Company property. More experienced than securityman. Category 7 Securityman = Entry level for Security. Watchman = Night shift duties only. Responsible for security of specific item of Company property. The effective date of this Collective Agreement shall be 1st of July, 1995. As WITNESS the hands of the PARTIES: On behalf of Teberebie Goldfields Limited Sgd. Stephen C. Rapchak /s/ Stephen C. Rapchak ...................................... (General Manager) On behalf of Ghana Mineworkers' Union Sgd. Robert K. Cole /s/ Robert K. Cole ......................................... (General Secretary) 45 EX-10.2 3 LETTER AGREEMENT DATED JULY 26, 1995 1 Exhibit 10.2 [BANK OF BOSTON LOGO] July 20, 1995 Mr. William H. Keough SVP, CFO and Treasurer The Pioneer Group, Inc. 60 State St. Boston, MA 02110 Dear Bill: We are pleased to confirm that The First National Bank of Boston, (the "Bank") holds available an unsecured $10,000,000.00 line of credit for The Pioneer Group, Inc. (the "Company") through February 27, 1996. This facility supersedes and replaces the $5,000,000 line of credit established on May 22, 1995. 1. Term. This line of credit shall commence July 20, 1995 and expire on February 27, 1996. 2. Notice and Manner of Borrowings. Each loan made under this line of credit must be in a minimum amount of $1,000,000.00 or any larger amount which is an integral multiple of $100,000.00, and aggregate loans outstanding may not exceed $10,000,000.00. Requests by the Company for loans must be received by the Bank no later than 12:00 noon (Boston time) on the day of the requested loan (in the case of Alternate Base Loans or Money Market Loans) or two business days prior to such date (in the case of Eurodollar Rate Loans). Promptly upon receipt of such notice, and provided that the condition set forth in paragraph 10 has been satisfied, the Bank will make the requested loans by crediting the proceeds thereof to the demand deposit account of the Company maintained with the Bank. 3. Evidence of Indebtedness. All Alternate Base Rate Loans and Eurodollar Rate Loans will be evidenced by a promissory note (a "Note") in the form attached hereto as Exhibit I. All Money Market Loans will be evidenced by a promissory note in the form attached hereto as Exhibit II (also a "Note"). The Company hereby authorizes the Bank to record each loan and the corresponding information on the schedule forming part of the applicable Note, and, absent manifest error, this record shall be conclusive and binding. 4. Interest Rates. Subject to the terms and conditions hereof, the Company may elect in its request for a loan to have interest thereon accrue at any of the following interest rate options: (a) a rate per annum equal to the higher of the rate of interest announced from time to time by the Bank at its head office as its Base Rate, or the overnight Federal Funds Rate plus 1/2% (the "Alternate Base Rate"); or (b) a rate quoted by the Bank in its sole discretion (it being understood that the Bank is under no obligation to quote such rate) to the Company as the fixed rate of interest at which it is willing to make a "money market" advance to the Company in the amount and for the period of the requested loan (the "Money Market Rate"); or (c) a rate quoted by the Bank to the Company as the prevailing rate per annum at which U.S. dollar deposits are offered to the Bank by first class banks in the interbank Eurodollar market in which it regularly participates at approximately 10:00 a.m. (Boston time) two business days before the date of 2 2 the requested loan in the amount and for an interest period approximately equal to that of the requested loan, adjusted for reserve requirements, plus 1.10% per annum. Loans bearing interest as provided in paragraphs (a), (b) and (c) of this section 5 shall be referred to herein as "Alternate Base Rate Loans", "Money Market Loans", and "Eurodollar Rate Loans", respectively. Money Market Loans may be requested for interest periods of up to 180 days; Eurodollar Rate Loans may be requested for interest periods of one, two or three months; and no loan shall have an interest period that extends beyond the expiration of this line of credit. In the event that the Company fails to specify an interest period in its request for a loan, the interest period for Money Market Loans shall be deemed to be 30 days and the interest period for Eurodollar Rate Loans shall be deemed to be one month. Interest on each loan shall be calculated on the basis of a 360-day year for the actual number of days elapsed and shall be payable as set forth in the Notes. 5. Additional Interest. The Company shall pay to the Bank additional interest at the rate of .25 of 1% per annum on the unused amount of the line of credit. Additionally, such interest shall be payable quarterly in arrears at the end of each March, June, September, and December of any year. 6. Payments and Prepayments. Base Rate Loans shall be payable on demand. Money Market Loans and Eurodollar Rate Loans shall be payable on the last day of the interest period applicable thereto. The Company may prepay Alternate Base Rate Loans, in whole or in part, at any time and without prepayment penalties, but prepayments of Money Market Loans will not be permitted. Your ability to prepay Eurodollar Rate Loans is subject to the requirement that you compensate us for any funding losses and other costs (including lost profits) incurred as a result of such prepayment. If the Company for any reason makes any payment with respect to a Money Market Loan or Eurodollar Rate Loan before its maturity, or fails to borrow a Money Market Loan or Eurodollar Rate Loan requested by the Company pursuant to Section 2, the Company will be required to pay any costs, losses or liabilities incurred by the Bank as a result thereof, including any losses incurred in obtaining, liquidating or employing deposits with reference to which the rate of interest for such loan was determined, upon presentation by the Bank of a statement in the amount and setting forth the Bank's calculation thereof, which statement shall be deemed true and correct absent manifest error. 7. Changed Circumstances; Increased Costs (a) In the event that any law, regulation, treaty or official directive or the interpretation or application thereof by any court or governmental authority or the compliance with any guideline or request of any central bank or other governmental authority (whether or not having the force of law): (i) subjects the Bank to any tax with respect to any amounts payable hereunder by the Company or otherwise with respect to the transactions contemplated hereunder (except for taxes on the overall net income of the Bank imposed by the United States of America or any political subdivision thereof), or (ii) imposes, modifies or deems applicable any deposit insurance, reserve, special deposit, capital maintenance or similar requirement against assets held by, or deposits in or for the account of, or loans or commitments to make loans by, the Bank (other than such requirements the effect of which is included in the determination of the interest rates for loans made hereunder), or (iii) imposes upon the Bank any other condition with respect to the loans made hereunder, 3 3 and the result of any of the foregoing is to increase the cost to the Bank, reduce the income receivable by or return on equity of the Bank or impose any expense upon the Bank with respect to any loans or commitments to make loans hereunder, the Bank shall so notify the Company. The Company agrees to pay to the Bank the amount of such increase in costs, reduction in income, reduced return on equity or additional expense as and when such cost, reduction or expense is incurred or determined, upon presentation by the Bank of a statement in the amount and setting forth the Bank's calculation thereof, which statement shall be deemed true and correct absent manifest error. 8. Loan Participations. The Bank may sell, transfer or grant participations in the Note without the prior consent of the Company, and the Company agrees that any transferee or participant shall be entitled to the benefits of paragraph 7 and 8 hereof to the same extent as if such transferee or participant were the Bank hereunder. 9. Availability of Loans. The availability of loans under this facility is subject to (a) the Bank's usual condition that the Bank continue to be satisfied that there shall have been no material adverse change in the assets, liabilities, financial condition, business operations or prospects of the Company or the Guarantor since the date, hereof; and b) any substantive changes in government regulations or monetary policies. Sincerely, The First National Bank of Boston By: /s/ Stewart P. Neff ------------------------------ Title: Managing Director Acknowledged and Accepted The Pioneer Group, Inc. By: /s/ William H. Keough ------------------------------- Title: Senior Vice President and Chief Financial Officer Date: July 26, 1995 4 4 EXHIBIT I THE PIONEER GROUP, INC. PROMISSORY NOTE Boston, Massachusetts July 20, 1995 FOR VALUE RECEIVED, the undersigned hereby promises to pay to THE FIRST NATIONAL BANK OF BOSTON (the "Bank"), or order, at the head office of the Bank in Boston, Massachusetts, the aggregate principal amount of all loans made by the Bank to the undersigned pursuant to the letter agreement between the Bank and the undersigned dated July 20, 1995, as shown in the schedule attached hereto (the "Note Schedule"), together with interest on each loan from the date such loan is made until the maturity thereof at the applicable rate set forth in the Note Schedule. The principal amount of each loan shall be payable on demand or on the maturity date of such loan as indicated in the Note Schedule, and in any event, the aggregate outstanding principal amount of all loans hereunder shall be due and payable on February 27, 1996. Interest on the principal amount of each loan shall be payable in arrears on the same day as the principal amount is due, provided that (i) interest on each loan bearing interest at the Alternate Base Rate shall be payable on the last day of each quarter, beginning on the first of such dates occurring after the date of such loan and when such loan is due, and (ii) if the maturity of any loan is more than 90 days from the date of such loan, then interest shall be payable at intervals of 90 days and when such loan is due. Loans which are shown as bearing interest at the Alternate Base Rate shall bear interest at a rate per annum equal to the greater of (i) the rate of interest announced from time to time by the Bank at its head office as its "Base Rate", and (ii) the rate equal to the weighted average of the published rates on overnight Federal Funds transactions with members of the Federal Reserve System plus 1/2%, in each case plus the applicable margin, if any, which interest rate shall change as and when the Alternate Base Rate changes. Interest shall be computed on the basis of a 360 day year and paid for the actual number of days elapsed. All payments shall be made in lawful currency of the United States of America in immediately available funds. Overdue payments of principal of any loan (whether at stated maturity, by acceleration or otherwise), and, to the extent permitted by law, overdue interest, shall bear interest, payable on demand and compounded daily, at a rate per annum equal to two percent (2%) above the greater of (i) the Alternate Base Rate and (ii) the rate applicable to such loan prior to the date such loan was due. If any of the following events of default shall occur ("Defaults"): (a) default in the payment of any amounts due hereunder or performance of any of the Obligations or of any obligations of any Obligor to others for borrowed money or in respect of any extension of credit or accommodations; (b) failure of any representation or warranty, statement or information in any documents or financial statements delivered to the Bank for the purpose of inducing it to make or maintain any loan under this Note to be true and correct; (c) failure of the undersigned to file any tax return, or to pay or remit any tax, when due; (d) failure to furnish the holder promptly on request with financial information about, or to permit inspection by the holder of books, records and properties of, any Obligor; (e) loss, theft substantial damage, sale or encumbrance to or of any property constituting any collateral for the Obligations, or the making of any levy, seizure or attachment thereof or thereon or the failure to pay when due any tax thereon or, with respect to any insurance policy, any premium therefore; (f) default under any instrument constituting, or under any agreement relating to, any collateral; (g) Any Obligor generally not paying its debts as they become due; h) death, dissolution, termination of existence, insolvency, business failure, appointment of a 5 5 receiver or other custodian of any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceedings under any bankruptcy or insolvency laws by or against, any Obligor; (i) change in the condition or affairs (financial or otherwise) of which in the opinion of the holder will impair its security or increase its risk; then immediately and automatically with respect to any Defaults set forth in clauses (g) and (h) above, and thereupon or at any time thereafter with respect to each other Default (such Default not having been previously cured), at the option of the holder, all Obligations of the undersigned shall become immediately due and payable without notice or demand and, if there is any collateral for the Obligations, the holder shall then have in any jurisdiction where enforcement hereof is sought, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code of Massachusetts. Any sums from time to time credited by or due from the holder to any Obligor, and any property of the undersigned or any guarantor in which the holder has from time to time any security interest or which from time to time may be in the possession of the holder for any purpose shall constitute collateral security for the payment or performance of the Obligations of the undersigned or such guarantor hereunder, and the undersigned hereby grants the holder a security interest in such sums and property. Regardless of the adequacy of any collateral, the holder may apply such sums or property or realizations upon any such security interest against such Obligations at any time in the case of the primary Obligor but only against matured Obligations in the case of a secondary Obligor. The undersigned hereby waives presentment, demand, notice of dishonor, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note. Each Obligor waives presentment, demand, notice of dishonor protest and all other demands and notices in connection with the delivery, acceptance, performance, default and enforcement of this Note or of any collateral, and assents to any extension or postponement of the time of payment or any other indulgence under this Note or with respect to any collateral, to any substitution, exchange or release of any collateral and/or to the addition or release of any other party or person primarily or secondarily liable hereunder. As used herein "Obligor" means any person primarily or secondarily liable hereunder or in respect hereto; "Obligation" means any obligation hereunder or otherwise of any Obligor to the holder whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising; and "holder" means the payee or any endorsee of this Note who is in possession of it, or the bearer hereof if this Note is at the time payable to the bearer. The undersigned will pay on demand all costs of collection and attorneys' fees paid or incurred by the holder in enforcing the Obligations of any Obligor. This instrument shall have the effect of an instrument executed under seal and shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. The Pioneer Group, Inc. By: /s/ William H. Keough -------------------------------- Title: Senior Vice President and Chief Financial Officer 6 NOTE SCHEDULE TO $10,000,000 PROMISSORY NOTE OF THE PIONEER GROUP, INC. DATED July 20, 1995
Date and Amount of Principal Payment Notation Made Date of Loan Amount of Loan Maturity Date Interest Rate Received By --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------
7 7 EXHIBIT II THE PIONEER GROUP, INC. PROMISSORY NOTE (MONEY MARKET NOTE) July 20, 1995 Boston, Massachusetts FOR VALUE RECEIVED, the undersigned hereby promises to pay to THE FIRST NATIONAL BANK OF BOSTON (the "Bank"), or order, at the head office of the Bank in Boston, Massachusetts, the aggregate principal amount of all loans made by the Bank to the undersigned pursuant to the letter agreement between the Bank and the undersigned dated July 20, 1995, as shown in the schedule attached hereto (the "Note Schedule"), together with interest at the rate or rates set forth in the Note Schedule. The principal amount of each loan as shown on the Note Schedule shall be payable on the maturity date set forth therein, and interest with respect to such principal amount is due. Interest shall be computed on the basis of a 360-day year and paid for the actual number of days elapsed in any interest period. All payments shall be made in lawful currency of the United States of America in immediately available funds. No prepayment of the principal amount of any loan shall be permitted. Upon the occurrence of any of the following events of default: (a) default in the payment or performance of any of the Obligations or of any obligations of any Obligor to others for borrowed money or in respect of any extension of credit or accommodation; (b) failure of any representation and warranty hereunder or of any representation or warranty, statement or information in any documents or financial statements delivered to the Bank for the purpose of inducing it to make or maintain the loans under this Note to be true and correct; (c) failure to furnish the holder promptly on request with financial information about, or to permit inspection by the holder of books, records and properties of, any Obligor; (d) any Obligor generally not paying its debts as they become due; (e) death, dissolution, termination of existence, insolvency, business failure, appointment of a receiver or other custodian of any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceedings under any bankruptcy or insolvency laws by or against, any Obligor; then the unpaid principal balance of this Note, plus accrued interest may, at the option of the Bank, be declared immediately due and payable. As used herein "Obligor" means any person primarily or secondarily liable hereunder or in respect hereto; "Obligation" means any obligation hereunder or otherwise of any Obligor to the holder whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising; and "holder" means the payee or any endorsee or assignee of this Note. Overdue payments of principal (whether at stated maturity, by acceleration or otherwise), and, to the extent by law, overdue interest, shall bear interest, payable on demand and compounded monthly, at a rate per annum equal to two percent (29%) above the rate of interest announced from time to time by the First National Bank of Boston at its head office as its Base Rate (the "Base Rate"), which rate shall change as the Base Rate changes. The parties hereunder, including the undersigned, hereby waive presentment, demand, notice of dishonor, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note. 8 8 The undersigned agrees to pay all charges of the Bank in connection with the collection or enforcement of this Note, including reasonable attorneys' fees. This instrument shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. THE PIONEER GROUP, INC., By: /s/ William H. Keough ---------------------------------------- Title: Senior Vice President and Chief Financial Officer 9 9 NOTE SCHEDULE TO $10,000,000 PROMISSORY NOTE OF THE PIONEER GROUP, INC. DATED July 20, 1995
Date and Amount of Principal Payment Notation Made Date of Loan Amount of Loan Maturity Date Interest Rate Received By --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------
EX-11 4 COMPUTATION OF EARNINGS PER SHARE 1 Exhibit 11 THE PIONEER GROUP, INC. COMPUTATION OF EARNINGS PER SHARE (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
COMPUTATION FOR CONSOLIDATED STATEMENT OF INCOME THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------ --------------------------- ------------------------- 1995 1994 1995 1994 ---- ---- ---- ---- NET INCOME (1) $7,329 $6,847 $13,126 $18,738 ========== ========== ========== ========== SHARES Weighted average number of common shares outstanding (2) 24,805,000 24,664,000 24,798,000 24,660,000 Dilutive effect of stock options and restricted stock proceeds as common stock equivalents computed under the treasury stock method using the average price during the period (2) 505,000 688,000 462,000 660,000 ---------- ---------- ---------- ---------- WEIGHTED AVERAGE NUMBER OF SHARES outstanding as adjusted (1) (2) 25,310,000 25,352,000 25,260,000 25,320,000 ========== ========== ========== ========== EARNINGS PER SHARE (1) (2) $0.29 $0.27 $0.52 $0.74 ========== ========== ========== ==========
(1) These amounts agree with the related amounts in the Consolidated Statement of Income. (2) Adjusted for December 1, 1994, 2-for-1 stock split effected in the form of a 100% stock dividend. EX-27 5 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 1.00000 14,349 9,338 21,050 0 16,775 66,174 111,339 (44,688) 239,143 65,594 0 2,482 0 0 140,852 239,143 0 92,232 0 73,398 (3,467) 0 531 21,770 8,644 0 0 0 0 13,126 0.520 0.520