<PAGE> 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.
<PAGE> 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)
<TABLE>
<CAPTION>
6/30/95 12/31/94
------- --------
ASSETS (unaudited)
<S> <C> <C>
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
======== ========
</TABLE>
The Company's annual report on Form 10-K should be read in conjunction with
these financial statements.
<PAGE> 3
THE PIONEER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
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
========== ========== ========== ==========
</TABLE>
The Company's annual report on Form 10-K should be read in conjunction with
these financial statements.
<PAGE> 4
THE PIONEER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1995 1994
---- ----
<S> <C> <C>
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
======= =======
</TABLE>
THE COMPANY'S ANNUAL REPORT ON FORM 10-K SHOULD BE READ IN CONJUNCTION WITH
THESE FINANCIAL STATEMENTS.
<PAGE> 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:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
(Dollars in Thousands)
<S> <C> <C>
Gold-in-process $ 1,125 $ 1,125
Materials and supplies 15,650 10,756
-------- --------
$ 16,775 $ 11,881
======== ========
</TABLE>
<PAGE> 6
NOTE 3 - MINING EQUIPMENT
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
(Dollars in Thousands)
<S> <C> <C>
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
======= =======
</TABLE>
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."
<PAGE> 7
The following tables summarize restricted stock plan activity for the Plans
during the first six months of 1995.
<TABLE>
<CAPTION>
UNVESTED SHARES
---------------
1995 Plan 1990 Plan 1981 Plan Total
--------- --------- --------- -----
<S> <C> <C> <C> <C>
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
==== ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
VESTED SHARES
-------------
1995 Plan 1990 Plan 1981 Plan Total
--------- -------- --------- -----
<S> <C> <C> <C> <C>
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
==== ======= ========= =========
</TABLE>
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
<PAGE> 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.
<TABLE>
<CAPTION>
Number of Exercise
shares price per share
---------- -----------------
<S> <C> <C>
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
========= =================
</TABLE>
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.
<PAGE> 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.
<PAGE> 10
NOTE 10- NOTES PAYABLE
Notes payable of the Company consists of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
(Dollars in Thousands)
<S> <C> <C>
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
======= =======
</TABLE>
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.
<PAGE> 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):
<TABLE>
<S> <C>
1995 $32,053
1996 4,053
1997 2,429
1998 3,629
1999 214
Thereafter 3,750
-------
$46,128
=======
</TABLE>
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.
<PAGE> 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:
<TABLE>
<CAPTION>
Amount at Estimated
June 30, 1995 Useful Life
------------- -----------
(Dollars in Thousands)
<S> <C> <C>
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
=======
</TABLE>
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:
<PAGE> 13
NOTE 14 - FINANCIAL INFORMATION
BY BUSINESS SEGMENT
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MUTUAL FUND
INVESTMENT UNDERWRITING VENTURE CAPITAL SHAREHOLDER
MANAGEMENT AND OTHER INVESTMENTS SERVICES
---------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
======= ======= ======== ======= ======= ======= ======= ======
<CAPTION>
GOLD MINING OTHER CONSOLIDATED
----------- ----- ------------
<S> <C> <C> <C> <C> <C> <C>
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
======= ======= ======= ====== ======== ========
</TABLE>
(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.
<PAGE> 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
<PAGE> 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.
<PAGE> 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:
<TABLE>
<CAPTION>
Three Months ended Six Months ended
------------------ ------------------
June 30, June 30,
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
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
==== ==== ==== ====
</TABLE>
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<PAGE> 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
<PAGE> 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.
<PAGE> 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.
<PAGE> 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:
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
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
</TABLE>
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 2
<TABLE>
<CAPTION>
Article Content Page
<S> <C>
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
</TABLE>
i
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<S> <C> <C>
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
<FN>
(b) Any other day declared a public holiday by the Government.
(c) The Company will recognise Holy Saturday and Easter Sunday as paid holidays.
</TABLE>
9
<PAGE> 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
<PAGE> 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
<PAGE> 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.
<TABLE>
(b) Subject to (a) above, the paid sick leave shall be as
follows:
<CAPTION>
Length of Service Sick Leave Benefit
----------------- ------------------
<S> <C> <C>
1. 0 - 3 months No benefit
2. 3 months - 5 years 6 months basic pay
3. Over 5 years 8 months basic pay
</TABLE>
(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
<PAGE> 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.
<TABLE>
(b) In lieu of the above, such employee shall be paid
allowance as follows:
<S> <C> <C>
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
</TABLE>
(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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
Years of Service Leave Entitlements
---------------- ------------------
<S> <C>
1 - 5 years 5 Working Weeks
Over 5 years 6 Working Weeks
</TABLE>
(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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 37
COLLECTIVE AGREEMENT
BETWEEN
TEBEREBIE GOLDFIELDS LIMITED
AND
THE GHANA MINEWORKERS' UNION OF T.U.C.
RATE OF PAY SCHEDULE
35
<PAGE> 38
<TABLE>
TEBEREBIE GOLDFIELDS LIMITED
RATE OF PAY SCHEDULE
FOR: MONTHLY RATED EMPLOYEES REPRESENTED BY THE UNION
EFFECTIVE JULY 1, 1995
==========================================================================================================
<CAPTION>
Inter
Departmental
Category Common Mining Processing
Classification Operations Operations Maintenance
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
==========================================================================================================
</TABLE>
36
<PAGE> 39
<TABLE>
TEBEREBIE GOLDFIELDS LIMITED
RATE OF PAY SCHEDULE
FOR: MONTHLY RATED EMPLOYEES REPRESENTED BY THE UNION
EFFECTIVE JULY 1, 1995
============================================================================================================
<CAPTION>
Warehouse Geology
Category & Laboratory & Security
Administration Engineering
-------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
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
=============================================================================================================
</TABLE>
37
<PAGE> 40
<TABLE>
Appendix 1
TEBEREBIE GOLDFIELDS LIMITED
RATE OF PAY SCHEDULE
WAGES/SALARY POINTS (INCREMENTS)
EFFECTIVE JANUARY 1, 1995
==================================================================================================================
<CAPTION>
Category A B C D E
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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,
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 6
NOTE SCHEDULE TO $10,000,000 PROMISSORY NOTE OF
THE PIONEER GROUP, INC.
DATED July 20, 1995
<TABLE>
<CAPTION>
Date and
Amount of
Principal Payment Notation Made
Date of Loan Amount of Loan Maturity Date Interest Rate Received By
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
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</TABLE>
<PAGE> 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.
<PAGE> 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
<PAGE> 9
9
NOTE SCHEDULE TO $10,000,000 PROMISSORY NOTE OF
THE PIONEER GROUP, INC.
DATED July 20, 1995
<TABLE>
<CAPTION>
Date and
Amount of
Principal Payment Notation Made
Date of Loan Amount of Loan Maturity Date Interest Rate Received By
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
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</TABLE>
<PAGE> 1
Exhibit 11
THE PIONEER GROUP, INC.
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMPUTATION FOR CONSOLIDATED
STATEMENT OF INCOME THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------ --------------------------- -------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
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
========== ========== ========== ==========
</TABLE>
(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.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1.00000
<CASH> 14,349
<SECURITIES> 9,338
<RECEIVABLES> 21,050
<ALLOWANCES> 0
<INVENTORY> 16,775
<CURRENT-ASSETS> 66,174
<PP&E> 111,339
<DEPRECIATION> (44,688)
<TOTAL-ASSETS> 239,143
<CURRENT-LIABILITIES> 65,594
<BONDS> 0
<COMMON> 2,482
0
0
<OTHER-SE> 140,852
<TOTAL-LIABILITY-AND-EQUITY> 239,143
<SALES> 0
<TOTAL-REVENUES> 92,232
<CGS> 0
<TOTAL-COSTS> 73,398
<OTHER-EXPENSES> (3,467)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 531
<INCOME-PRETAX> 21,770
<INCOME-TAX> 8,644
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,126
<EPS-PRIMARY> 0.520
<EPS-DILUTED> 0.520
</TABLE>
