UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1998
HOMESTAKE 401(k)
RETIREMENT SAVINGS PLAN
(Full title of Plan)
HOMESTAKE MINING COMPANY
(Issuer of Securities Held Pursuant to the Plan)
650 California Street
San Francisco, California 94108
(Address of principal executive offices)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
By /s/ T.H. Wong
----------------------------
T.H. Wong
Assistant Treasurer and
Assistant Secretary
June 25, 1999
<PAGE>
Item 1. Financial Statements and Exhibits
a. Financial Statements for the years ended December 31, 1998
and 1997 and Supplemental Schedules as of and for the year
ended December 31, 1998 and Independent Accountants'
Report.
b. Exhibit No. 23
Independent Accountants' Consent
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
-------
FINANCIAL STATEMENTS
as of December 31, 1998 and 1997
and for the year ended December 31, 1998
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
-------
TABLE OF CONTENTS
Pages
Financial Statements:
Report of Independent Accountants 2
Statements of Net Assets Available for Benefits
as of December 31, 1998 and 1997 3
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 1998 4
Notes to Financial Statements 5-13
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1998 14
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1998 15
<PAGE>
Report of Independent Accountants
Homestake Mining Company
San Francisco, CA
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Homestake 401(k) Retirement Savings Plan (the "Plan") at December 31,
1998 and December 31, 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PRICEWATERHOUSECOOPERS LLP
San Francisco, CA
June 10, 1999
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
as of December 31, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
ASSETS 1998 1997
<S> <C> <C>
Investments:
Homestake Mining Company Stock Fund $ 410 $ 486
Norwest Advantage Income Equity Fund 2,681 2,953
Norwest Advantage Growth Balanced Fund 2,680 2,922
Norwest Stable Return Fund 2,164 2,899
Norwest Short Term Investment Fund 667 639
Norwest Advantage Growth Equity Fund 1,364 1,596
Participant loans 458 692
---------------- ---------------
Total investments 10,424 12,187
Net assets available for benefits $10,424 $12,187
================ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
for the year ended December 31, 1998
(in thousands)
<TABLE>
<CAPTION>
<S> <C>
Additions to net assets attributed to:
Interest and dividends $247
Net appreciation in fair value of investments 1,321
-----------------
1,568
-----------------
Contributions:
Company, in cash 1,120
Participants, in cash 318
-----------------
1,438
-----------------
Total additions 3,006
-----------------
Deductions from net assets attributed to:
Benefits paid to participants 4,769
-----------------
Total deductions 4,769
-----------------
Net decrease (1,763)
Net assets available for benefits:
Beginning of year 12,187
-----------------
End of year $10,424
=================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
-------
1. Description of Plan:
The following description of the Homestake 401(k) Retirement Savings
Plan (the Plan) provides only general information. Participants should
refer to the full Plan document for a more complete description of the
Plan's provisions.
General:
The Plan is a defined contribution profit sharing plan (designed to be
qualified under Internal Revenue Code Sections 401(a) and 401(k))
covering all employees of the Company's mining operations in Lead, South
Dakota who are covered by a collective bargaining agreement and have
completed three months of service. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA), as
amended.
The Plan is administered by the Company. Effective January 1, 1997, the
Plan's trustee, recordkeeper, and investment advisor is Norwest Bank
Minnesota, N.A. ("Norwest Bank"). Prior to January 1, 1997, the Plan's
trustee, recordkeeper, and investment advisor was Norwest Bank, South
Dakota. On November 2, 1998, Wells Fargo & Company and Norwest
Corporation, the parent company of Norwest Bank, merged to form Wells
Fargo. The Norwest name change to Wells Fargo will occur during 1999.
Contributions:
Participation is voluntary. Participants may make pre-tax contributions
only of between 1% and 16% of compensation subject to Internal Revenue
Code limitations. Participant contributions not exceeding 6% of wages or
of salary are matched 35% by the Company.
Participants may make a rollover contribution to the Plan of amounts
previously contributed to another qualified plan. Rollover contributions
are not matched by the Company.
Following the May 31, 1998 ratification of a new collective bargaining
agreement, the Company's matching contribution will be increased from
35% to 50% of a participant's contributions, not exceeding 6% of wages
or of salary, effective January 1, 1999.
Each participant may cause some or all of its current or cumulative
contributions, including any amounts contributed by the Company to match
contributions, to be invested in one or more of the investments made
available through the Plan.
5
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
-------
1. Description of the Plan, continued:
Participants' Accounts:
A separate account is maintained for each participant. Each
participant's account is directly credited with the participant's
contribution and the Company's matching contribution. Net earnings from
each investment fund, including appreciation in fair value, are
allocated to each participant's account based on the ratio which the
participant's account balance in that investment fund bears to the total
of all participants' account balances in that investment fund.
Vesting:
Participant contributions and any income (loss) thereon are fully vested
at all times. Company matching contributions and any income (loss)
thereon are vested 60% after three years of service, 80% after four
years of service, and 100% after five years of service, on attainment of
age 65, or on the occurrence of death or disability.
Payment of Benefits:
The Plan permits withdrawal of contributions upon:
(1) Termination of employment;
(2) Attainment of age 59 1/2;
(3) Death (with vested account balance paid to designated
beneficiary);
(4) Hardship.
Distribution of benefits can be made, at the election of the participant
in the form of a single lump-sum cash payment or partial payment made in
a lump-sum with the remainder paid later.
Participant Loans:
Participants may borrow from their vested accounts between $1,000 and
$50,000 but not more than 50% of the value of such accounts. The loan
term cannot exceed five years unless the loan is for the purchase of a
principal residence, in which case, it cannot exceed ten years. These
loans bear interest at prime rate plus 1%. Loans are collateralized by
the borrower's vested account in the Plan and repayments are made
through payroll deductions on at least a monthly basis.
6
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
-------
1. Description of the Plan, continued:
Forfeitures:
Forfeitures of Company matching contributions made on behalf of former
employees whose employment was terminated before such contributions were
vested are allocated to active participants at the end of each Plan
year. The forfeitures are allocated in proportion to the Company
contributions made to the individual participant accounts during the
Plan year.
2. Significant Accounting Policies:
Basis of Accounting:
The financial statements of the Plan are prepared under the accrual
basis of accounting in accordance with generally accepted accounting
principles.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of net assets available for
benefits at the date of the financial statements and the reported
amounts of changes in net assets available for benefits during the
reporting period. Actual results could differ from those estimates.
Investment Valuation and Income Recognition:
Shares and units in investment funds are valued at quoted market prices,
representing the net asset value of the shares or units held by the Plan
at year end.
Participant loans are valued at cost, which approximates market value.
Purchases and sales of securities are recorded on a trade-date basis,
utilizing the average cost method in determining the basis of
investments sold. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date.
7
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
-------
2. Significant Accounting Policies, continued:
Withdrawals:
Withdrawals of securities from the Homestake Mining Company Common Stock
Fund may be made in cash, common stock, or both, and are reported at
market value. Withdrawals from the Norwest Advantage Income Equity Fund,
the Norwest Advantage Growth Balanced Fund, the Norwest Stable Return
Fund, the Norwest Short Term Investment Fund, and the Norwest Advantage
Growth Equity Fund are made in cash.
Net Appreciation (Depreciation) in Fair Value of Investments:
The Plan presents in the statement of changes in net assets available
for benefits the net appreciation (depreciation) in the fair value of
its investments, which consists of realized gains (losses) and the
unrealized appreciation (depreciation).
3. Risks and Uncertainties:
All Plan investments are managed by Norwest Bank. Plan performance is
dependent upon the ability of Norwest Bank to manage the funds.
A portion of the Plan's assets is invested in the Homestake Mining
Company Common Stock Fund and is, therefore, subject to fluctuations in
the market value of such stock, which is, in turn, impacted by the price
of gold.
Plan assets are invested in collective trust and mutual funds, and other
investment securities. Investments are exposed to various risks, such as
interest rate, market and credit. Due to the level of risk associated
with certain investments and the level of uncertainty related to changes
in the value of such investments, it is possible that changes in the
value of one or more of such investments in the near term could
materially affect participants' account balances, the amounts reported
in the statements of net assets available for Plan benefits, and the
statement of changes in net assets available for Plan benefits.
4. Plan Termination:
Although the Company has not expressed any intent to do so, it has the
right under the Plan and subject to applicable law, to discontinue its
matching contributions at any time and to terminate the Plan. In the
event of Plan termination, all accumulated plan benefits will be fully
vested and will be distributed to participants based on their respective
account balances.
8
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
-----
5. Plan Tax Status:
The Plan obtained its latest determination letter in July 1991, in which
the Internal Revenue Service stated that the Plan, as then designed, was
in compliance with Sections 401(a) and 401(k) of the Internal Revenue
Code. The Plan has been amended since receiving the determination
letter; however, the Plan administrator and the Plan's tax counsel are
not aware of circumstances creating a material risk of Plan
disqualification. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
Participants are not subject to federal income taxes on their pre-tax
contributions, Company matching contributions, or investment earnings
allocated to their accounts until withdrawals are made.
6. Related Party Transactions:
Certain Plan investments are units in investment funds managed by the
Trustee. Therefore, these transactions are transactions with
parties-in-interest.
7. Administrative Expenses:
Certain administrative expenses of the Plan are paid for by the Company.
9
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
8. Investments
Investments at December 31, 1998 and 1997 are comprised of the following:
<TABLE>
<CAPTION>
December 31, 1998
-----------------------------------------------------------------
Number of Value Fair
Shares or Per Value
Units Held Unit (in thousands)
<S> <C> <C> <C>
Homestake Mining Company Stock Fund 44,922 $9.12 $410
* Norwest Advantage Income Equity Fund 62,530 42.87 2,681
* Norwest Advantage Growth Balanced Fund 89,794 29.84 2,680
* Norwest Stable Return Fund 80,921 26.74 2,164
* Norwest Short Term Investment Fund 667,404 1.00 667
* Norwest Advantage Growth Equity Fund 38,793 35.15 1,364
Participant loans - - 458
----------------
$10,424
<CAPTION>
================
December 31, 1997
-----------------------------------------------------------------
Number of Value Fair
Shares or Per Value
Units Held Unit (in thousands)
<S> <C> <C> <C>
Homestake Mining Company Stock Fund 54,783 $ 8.87 $486
* Norwest Advantage Income Equity Fund 79,947 36.94 2,953
* Norwest Advantage Growth Balanced Fund 113,543 25.73 2,922
* Norwest Stable Return Fund 115,469 25.11 2,899
* Norwest Short Term Investment Fund 639,333 1.00 639
* Norwest Advantage Growth Equity Fund 49,733 32.08 1,596
* Participant loans - - 692
----------------
$12,187
================
* Represents 5% or more of the net assets available for benefits.
</TABLE>
10
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
-------
8. Investments, continued:
All earnings on the investment funds are reinvested in and credited to
each fund daily. These earnings include interest, dividends, and net
appreciation (depreciation) in fair value.
The Homestake Mining Company Stock Fund invests in shares of Homestake
Mining Company.
The Advantage Income Equity Fund's objective is to achieve a high level
of current income with moderate appreciation through investment in
equity securities.
The Advantage Growth Balanced Fund's objective is to maximize growth
through appreciation from quality stocks, while moderating risk by
investing in intermediate maturity bonds, including corporate, U.S.
government and mortgage-backed and related securities.
The Stable Return Fund's objective is to achieve reasonable and
consistent current income by investing in fixed income securities and
other investments.
The Short Term Investment Fund consists of short term and floating rate
investments.
The Advantage Growth Equity Fund invests in U.S. and international
equity securities.
11
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
_______
9. Changes in Net Assets Available for Benefits by Investment Type (in
thousands):
During the year ended December 31, 1998, changes in net assets available
for benefits are allocated among the Plan's investment funds as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1998
-----------------------------------------------------
Norwest
Homestake Advantage Norwest
Mining Income Advantage Norwest
Company Equity Growth Stable
Stock Stock Balanced Return
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Interest and dividends $ 6 $ 36 - $152
Net appreciation in the fair
value of investments 61 457 $ 561 -
Contributions:
Company, in cash 43 301 227 203
Participants, in cash 9 88 73 53
----------- ---------- ---------- ----------
Total Additions 119 882 861 408
----------- ---------- ---------- ----------
Deductions to net assets attributed to:
Benefits paid to participants 196 964 994 1,379
----------- ---------- ---------- ----------
Total Deductions 196 964 994 1,379
----------- ---------- ---------- ----------
Interfund Transfers 1 (190) (109) 236
----------- ---------- ---------- ----------
Net increase (decrease) (76) (272) (242) (735)
Net assets available for benefits:
Beginning of year 486 2,953 2,922 2,899
----------- ---------- ---------- ----------
End of year $410 $2,681 $2,680 $2,164
=========== ========== ========== ==========
Table continued:
<CAPTION>
Year Ended December 31, 1998
-----------------------------------------------------
Norwest
Norwest Advantage
Short Term Growth
Investment Equity Participant
Fund Fund Loans Total
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Interest and dividends $ 35 $ 1 $17 $ 247
Net appreciation in the fair
value of investments - 242 - 1,321
Contributions:
Company, in cash 123 223 - 1,120
Participants, in cash 34 61 - 318
---------- ---------- -------- -----------
Total Additions 192 527 17 3,006
---------- ---------- -------- -----------
Deductions to net assets attributed to:
Benefits paid to participants 305 702 229 4,769
---------- ---------- -------- -----------
Total Deductions 305 702 229 4,769
---------- ---------- -------- -----------
Interfund Transfers 141 (57) (22) -
---------- ---------- -------- -----------
Net increase (decrease) 28 (232) (234) (1,763)
Net assets available for benefits:
Beginning of year 639 1,596 692 12,187
---------- ---------- -------- -----------
End of year $667 $1,364 $458 $10,424
========== ========== ======== ===========
</TABLE>
12
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
10. Acceleration of Vesting Percentages:
Homestake Mine
On January 27, 1998, the Homestake mine was restructured and the
employment of a number of Plan participants was terminated. Effective
January 27, 1998, the vesting percentages of all such Plan participants
whose employment was terminated and whose vesting percentages were less
than 100% were accelerated to 100% upon termination.
11. Subsequent Events:
Successor Trustee
On January 5, 1999, Charles Schwab Retirement Plan Services, Inc.
replaced Merrill Lynch & Co. as the Plan's recordkeeper and investment
advisor. In addition, Charles Schwab Trust Company replaced Merrill
Lynch Trust Company as trustee. Charles Schwab Retirement Plan Services,
Inc. and Charles Schwab Trust Company continue to offer investment
products and services similar to the prior service providers.
13
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
as of December 31, 1998
<TABLE>
<CAPTION>
(c) Description of
Investment (including
(b) Identity of Maturity Date, Rate
Issuer, Borrower, of Interest, (e) Current
Lessor, or Collateral, Par (d) Cost Value
(a) Similar Party or Maturity Value) (in thousands) (in thousands)
<S> <C> <C> <C> <C>
* Norwest Bank Homestake Mining Company Stock $ 557 $ 410
Fund (44,922 units)
* Norwest Bank Norwest Advantage Income 1,902 2,681
Equity Fund
(62,530 units)
* Norwest Bank Norwest Advantage Growth 2,007 2,680
Balanced Fund
(89,794 units)
* Norwest Bank Norwest Stable Return Fund 1,766 2,164
(80,921 units)
* Norwest Bank Norwest Short Term 667 667
Investment Fund
(667,404 units)
* Norwest Bank Norwest Advantage Growth 1,228 1,364
Equity Fund (38,793 units)
* Participant notes (Repayable over five years 458 458
unless it is for purchase
of a principal residence
which is repayable over ten
years. Rate during 1998
ranged from 7% to 10%.)
----------------- ----------------
$8,585 $10,424
================= ================
</TABLE>
14
* Represents party-in-interest to plan.
<PAGE>
HOMESTAKE 401(k) RETIREMENT SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1998
($ in thousands)
<TABLE>
<CAPTION>
(c) Description of Asset
(b) Identity of (Include Interest Rate and (d) Purchase (e) Selling (f) Cost
(a) Party Involved Maturity in Case of a Loan) Price Price of Asset
<S> <C> <C> <C> <C> <C>
* Norwest Bank Advantage Income Equity Fund $634 - -
- $1,343 $965
* Norwest Bank Advantage Growth Balanced Fund $515 - -
- $1,180 $906
* Norwest Bank Stable Return Fund $665 - -
- $1,552 $1,261
* Norwest Bank Advantage Growth Equity Fund $473 - -
- $866 $764
* Norwest Bank Short Term Investment Fund $479 - -
- $451 $451
Table continued:
<CAPTION>
(g) Current
Value of (h) Net (i) Number
(c) Description of Asset Asset on Gain of
(b) Identity of (Include Interest Rate and Transaction or Sales/
(a) Party Involved Maturity in Case of a Loan) Date (Loss) Purchases
<S> <C> <C> <C> <C> <C>
* Norwest Bank Advantage Income Equity Fund $634 - 70
$1,343 $378 83
* Norwest Bank Advantage Growth Balanced Fund $515 - 50
$1,180 $274 91
* Norwest Bank Stable Return Fund $665 - 57
$1,552 $291 76
* Norwest Bank Advantage Growth Equity Fund $473 - 56
$866 $102 73
* Norwest Bank Short Term Investment Fund $479 - 64
$451 - 56
* Represents party-in-interest to Plan.
</TABLE>
15
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in (i) Registration Statement of
Homestake Mining Company (333-17357) and (ii) Post-Effective Amendment No. 5 to
the Registration Statement of Homestake Mining Company on Form S-8 (File No.
33-32174) of our report dated June 10, 1999, on our audits of the financial
statements and financial statement schedules of the Homestake 401(k) Retirement
Savings Plan as of December 31, 1998 and 1997 and for the year ended December
31, 1998, which report is included in this Annual Report on Form 11-K.
/s/ PricewaterhouseCoopers LLP
- ---------------------------------------
PRICEWATERHOUSECOOPERS LLP
San Francisco, California
June 25, 1999
