-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, DX9ODFtekMHBjUZtiIdRXTMWPp99j19UqPJDQ7/NX6txwLO+O6HB2phY+9aqPs4h NYwEKblkGYU6r7RyTIFYLg== 0000814429-94-000004.txt : 19940525 0000814429-94-000004.hdr.sgml : 19940525 ACCESSION NUMBER: 0000814429-94-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FMC GOLD CO CENTRAL INDEX KEY: 0000814429 STANDARD INDUSTRIAL CLASSIFICATION: 1040 IRS NUMBER: 880226676 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09569 FILM NUMBER: 94528544 BUSINESS ADDRESS: STREET 1: 5011 MEADOWOOD WAY CITY: RENO STATE: NV ZIP: 89502 BUSINESS PHONE: 7028273777 10-Q 1 (NOTIFY) 72731,347 (CONTACT-NAME) David A. Kain (CONTACT-PHONE) (312) 861-6050 PAGE 0 DOCUMENT HEADER DOCUMENT TYPE 1 COUNT 13 SECTIONS Financial Statements 2 Notes To Financial Statements 6 Management's Discussion 7 Accountants' Reports 10 Other Information 12 Signatures 13 PAGE 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (x) Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1994 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 1-9569 FMC Gold Company (Exact name of registrant as specified in its charter) Delaware 88-0226676 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5011 Meadowood Way, Reno, Nevada 89502 (Address of principal executive offices) (Zip Code) (702) 827-3777 Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at March 31, 1994 Common Stock, par value $0.01 per share 73,484,395 PAGE 2 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FMC Gold Company Consolidated Statements of Income (Unaudited) (In thousands, except per share data) THREE MONTHS ENDED MARCH 31 1994 1993 Sales $ 22,301 $35,471 Costs and expenses Cost of sales 15,053 30,098 Exploration costs 3,005 2,436 Selling, general and administrative expenses 1,511 1,567 Total costs and expenses 19,569 34,101 Earnings before interest and taxes 2,732 1,370 Interest income 2,168 2,090 Income before income taxes 4,900 3,460 Provision for income taxes 252 649 Net income $ 4,648 $ 2,811 Earnings per common share $ 0.06 $ 0.04 Number of common shares used in earnings per share computation 73,484 73,484 See accompanying notes to consolidated financial statements. PAGE 3 FMC Gold Company Consolidated Balance Sheets (In thousands, except per share data) March 31 1994 December 31 Assets (Unaudited) 1993 Current assets: Cash $ 99 $ - Loans due from FMC Corporation 166,500 167,326 Amounts due from FMC Corporation 1,114 - Trade receivables 1,936 2,527 Inventories (Note 2) 4,822 3,776 Other current assets 970 1,236 Total current assets 175,441 174,865 Property, plant and equipment, net 60,830 60,605 Deferred income taxes 2,527 2,527 Other assets 794 638 Total assets $239,592 $238,635 Liabilities and Stockholders' Equity Current liabilities: Outstanding checks in excess of bank balances $ - $ 542 Accounts payable, trade and other 5,063 8,206 Accrued and other liabilities 13,046 11,935 Amounts due to FMC Corporation - 1,069 Income taxes payable 5,173 4,922 Total current liabilities 23,282 26,674 Other long-term liabilities 12,017 12,316 Stockholders' equity: Preferred stock, $1.00 par value, authorized 100,000 shares; none issued or outstanding - - Common stock, $0.01 par value, authorized 150,000,000 shares; issued and outstanding 73,484,395 shares 735 735 Capital in excess of par value 68,609 68,609 Retained earnings 134,949 130,301 Total stockholders' equity 204,293 199,645 Total liabilities and stockholders' equity $239,592 $238,635 See accompanying notes to consolidated financial statements. PAGE 4 FMC Gold Company Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands) Three Months Ended March 31 1994 1993 Increase (Decrease) in Cash and Cash Equivalents Net cash provided by operating activities $ 2,731 $ 9,813 Cash flows from investing activities: Capital spending (2,881) (1,717) Disposal of property, plant and equipment, net 121 4 Increase in other assets (156) (15) Net cash used in investing activities (2,916) (1,728) Increase (decrease) in cash and cash equivalents (185) 8,085 Cash and cash equivalents, beginning of period 166,784 154,316 Cash and cash equivalents, end of period $166,599 $162,401 Reconciliation of Net Income to Net Cash Provided by Operations Net income $ 4,648 $ 2,811 Adjustments to reconcile net income to net cash provided by operating activities: Provision for depreciation and amortization 2,535 9,125 (Increase) decrease in assets: Trade receivables 591 (107) Inventories (1,046) 187 Other current assets 266 (214) (Decrease) increase in liabilities: Accounts payable, trade and other (3,143) (164) Accrued and other liabilities 1,111 143 Amounts due to FMC Corporation (2,183) (815) Income taxes payable 251 (676) Other long-term liabilities (299) (477) Net cash provided by operating activities $ 2,731 $ 9,813 See accompanying notes to consolidated financial statements. PAGE 5 FMC Gold Company Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands) Supplemental disclosure of cash flow information: Cash and cash equivalents consists of: March 31 (Unaudited) December 31 1994 1993 1993 1992 Loans due from FMC Corporation $166,500 $162,500 $167,326 $154,826 Cash 99 - - - Outstanding checks in excess of bank balances - (99) (542) (510) Total cash and cash equivalents $166,599 $162,401 $166,784 $154,316 PAGE 6 FMC Gold Company Notes to Consolidated Financial Statements (Unaudited) Note 1: Financial Information The consolidated balance sheet at March 31, 1994, and the related statements of income and cash flows for the interim periods ended March 31, 1994 and 1993 have been reviewed by the company's independent auditors. The review is discussed more fully in their report included herein. In the opinion of management, such financial statements have been prepared in conformity with generally accepted accounting principles and reflect all adjustments necessary for a fair statement of the results of operations for the interim periods. All such adjustments are of a normal recurring nature. The results of operations for the three-month periods ended March 31, 1994 and 1993 are not necessarily indicative of the results of operations for the full year. The accounting policies followed by the company are set forth in Note 1 to the company's financial statements in the 1993 FMC Gold Company Annual Report, which is incorporated by reference in Form 10- K. Note 2: Inventories Inventories included in current assets were: (In Thousands) March 31 December 31 1994 1993 Gold and silver dore $ 1,523 $ 482 Materials and supplies 3,299 3,294 $ 4,822 $ 3,776 Gold and silver inventories are in the form of dore which is suitable for delivery to precious metal treatment facilities. These inventories are generally sold to and further processed by these facilities into forms suitable for end uses. Note 3: Accounting Standards Adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" was implemented by the company effective January 1, 1994. Statement No. 112 requires accrual of the expected cost of providing certain benefits to former or inactive employees after employment but before retirement. The effect of implementation was not material, and accordingly, has been included as part of costs and expenses. PAGE 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Cash to meet the company's operating needs, finance capital expenditures and fund exploration activities was generated primarily from operations. Cash generated in excess of these requirements is loaned to FMC Corporation ("FMC") at varying maturities, repayable on demand. As of March 31, 1994, loans to FMC totalled $166.5 million. As of March 31, 1994, FMC's cash on hand and available credit lines were more than adequate to allow for repayment of these loans. Known cash requirements for the remainder of 1994 are approximately $63 million for planned capital expenditures, $10 million for exploration costs and $3.7 million for dividends, based on the current dividend rate. The company expects to fund these requirements from existing cash and cash equivalents and cash flow from operations. The company believes any unexpected cash requirements could be funded through borrowings. On March 31, 1994, FMC increased its ownership interest in the company to 80 percent. Due to this increased ownership percentage, the company is now required to be included in FMC's federal tax return. The company has filed separate consolidated returns for tax periods beginning May 16, 1990 and will continue to do so through the March 31, 1994 tax period. For tax periods beginning April 1, 1994, the company will be included in FMC's federal tax return under a tax sharing agreement whereby the company will pay to FMC amounts generally equal to the tax the company would have been required to pay had it filed a separate return. On May 4, 1994, the company announced plans to invest $57 million to develop the Beartrack property located near Salmon, Idaho. The decision to proceed with the development was based largely on improved project economics related to increased labor and capital equipment efficiencies and a ruling by the National Marine Fisheries Service (NMFS) that the project is "not likely to jeopardize" the Chinook Salmon which has been designated a threatened species. The Beartrack project encompasses approximately 30 square miles of mining claims, contains approximately one million ounces of proven and probable reserves, and is expected to start production in 1995. First Quarter of 1994 Compared with First Quarter of 1993 Sales in the first quarter of 1994 were $22.3 million, $13.2 million lower than last year's quarter due to lower gold production and a 87 percent decline in silver production. Realized gold prices climbed from $329 per ounce to $383 per ounce. Net income was $4.6 million, or $0.06 per share, compared with net income of $2.8 million, or $0.04 per share in 1993 due primarily to the increase in gold prices. First quarter gold production was 62,000 ounces compared with 102,000 in the first quarter of 1993. Production from the Paradise Peak mine was 20,000 ounces, down 39,000 ounces due to the mill closure in 1993. The company's 30 percent share of production from the Jerritt Canyon mine remained at 29,000 ounces as higher throughput offset declines in grades and recoveries. Production from the Royal Mountain King mine declined by 1,000 ounces due to declines in recoveries, partially offset by high mill throughput. PAGE 8 Silver production was 63,000 ounces in the first quarter of 1994 compared with 492,000 ounces in the prior year period due to the mill closure at Paradise Peak and the expected decline in grades. Cost of sales declined to $15.1 million. Costs at Paradise Peak declined $12.3 million, reflecting the cessation of milling and mining in 1993. Royal Mountain King mine had costs $2.5 million lower due to reduced mine operating costs. Exploration costs in the first quarter of 1994 were $3.0 million and included continuing work within the vicinity of the Jerritt Canyon operating property, as well as exploration and evaluation of grassroots properties in the United States, Mexico and Chile. Administrative expenses were $0.1 million lower than the year ago period. The company remains debt free with interest income of $2.2 million earned on cash loaned to FMC. Interest income was $0.1 million higher than in 1993 reflecting the higher loan balances. The provision for income tax of $0.3 million was $0.4 million lower than the prior year period. The 5.1 percent effective tax rate is based on the latest forecast for 1994. PAGE 9 Following is a summary of key operating data for the company for the three-month periods ended March 31, 1994 and 1993: FMC Gold Company Operating Data (Unaudited) THREE MONTHS ENDED MARCH 31 1994 1993 Tons of ore processed (thousands) Paradise Peak - Mill - 399 - Heap Leach - 830 Total - 1,229 Jerritt Canyon (FMC Gold share) 230 223 Royal Mountain King 332 323 Ore grade (ounces per ton milled) Paradise Peak - Gold - 0.107 - Silver - 1.905 Jerritt Canyon 0.135 0.153 Royal Mountain King 0.055 0.055 Mill recoveries Paradise Peak - Gold - 91.5% - Silver - 59.2% Jerritt Canyon 88.9% 89.8% Royal Mountain King 74.6% 76.8% Production (thousands of ounces) Gold Paradise Peak 20 59 Jerritt Canyon 29 29 Royal Mountain King 13 14 Total 62 102 Silver 63 492 Cash cost of production ($ per gold equivalent ounce) Paradise Peak $ 68 $ 128 Jerritt Canyon $ 236 $ 217 Royal Mountain King $ 324 $ 367 Average $ 201 $ 183 PAGE 10 INDEPENDENT ACCOUNTANTS' REPORT A report by KPMG Peat Marwick, the company's independent accountants, on the financial statements included in Form 10-Q for the quarter ended March 31, 1993 is included on page 11. PAGE 11 INDEPENDENT AUDITOR'S REPORT The Board of Directors FMC Gold Company: We have reviewed the condensed consolidated balance sheet of FMC Gold Company and consolidated subsidiaries as of March 31, 1994, and the related condensed consolidated statements of income and cash flows for the three-month period ended March 31, 1994 and 1993, in accordance with the standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of FMC Gold Company and consolidated subsidiaries as of December 31, 1993, and the related consolidated statements of income, cash flows and changes in stockholders' equity for the year then ended (not presented herein); and in our report dated January 24, 1994, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1993, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Salt Lake City, Utah April 22, 1994 PAGE 12 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. PAGE 13 SIGNATURES 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. FMC GOLD COMPANY (Registrant) Date: May 13, 1994 Steven E. Baginski Vice President Finance -----END PRIVACY-ENHANCED MESSAGE-----