<PAGE> 1
- -------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-9666
BATTLE MOUNTAIN GOLD COMPANY
(Exact name of the Registrant as specified in its charter)
Nevada 76-0151431
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 Clay Street, 42nd Floor, Houston, Texas 77002
(Address of principal executive offices including Zip Code)
(713) 650-6400
(Registrant's telephone number, including area code)
NONE
(former name, former address and former fiscal year if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X__ No _____
Number of shares of Common Stock outstanding as of the latest
practicable date, November 6, 1996: 112,213,337. In addition, as of such date
there were outstanding 117,369,770 Exchangeable Shares of Battle Mountain
Canada, Ltd. which entitle their holders to dividend and other rights
economically equivalent to those of the Common Stock, and through a voting
trust, to vote at meetings of stockholders of the Registrant.
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<PAGE> 2
BATTLE MOUNTAIN GOLD COMPANY
INDEX
Page
----
Part I. Financial Information (Unaudited)
Condensed Consolidated Balance Sheet at
September 30, 1996, and December 31, 1995 1
Condensed Consolidated Statement of Income for the
three and nine months ended September 30, 1996 and 1995 2
Condensed Consolidated Statement of Cash Flows
for the nine months ended September 30, 1996 and 1995 3
Notes to Condensed Consolidated Financial Statements 4
Statistical Information 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information 15
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(in thousands)
September 30, December 31,
1996 1995
------------- ------------
Assets
Current assets
Cash and cash equivalents $ 81,506 $ 142,202
Accounts and notes receivable 39,238 30,591
Inventories 14,698 6,286
Materials and supplies, at average cost 32,125 31,695
Other current assets 10,044 13,031
---------- ----------
Total current assets 177,611 223,805
Investments 244,939 244,352
Property, plant and equipment, net 583,486 640,764
Other assets 37,164 36,063
----------- -----------
Total assets $1,043,200 $1,144,984
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities
Short term borrowings $ - $ 14,835
Current maturities of long-term debt 13,671 13,427
Accounts payable and accrued liabilities 37,982 34,869
Income and mining taxes payable 9,102 10,358
Other current liabilities 5,791 5,049
----------- -----------
Total current liabilities 66,546 78,538
Long-term debt 145,857 169,175
Deferred income and mining taxes 105,518 109,754
Other liabilities 38,824 34,536
----------- -----------
Total liabilities 356,745 392,003
Minority interest 111,990 123,569
Shareholders' equity 574,465 629,412
----------- -----------
Total liabilities and shareholders' equity $1,043,200 $1,144,984
=========== ===========
1
<PAGE> 4
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------------- --------------------------
1996 1995 1996 1995
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Sales $ 90,957 $ 75,171 $ 316,315 $ 294,764
--------- --------- ---------- ----------
Costs and expenses
Production costs 55,556 47,077 183,060 160,292
Depreciation, depletion and amortization 20,228 16,901 66,409 59,404
Exploration, evaluation and other lease costs 9,573 9,529 26,867 21,576
Merger expense 19,244 - 19,977 -
Asset write-downs 38,451 545 38,451 3,646
General and administrative expenses 4,072 4,302 12,930 12,245
--------- --------- ---------- ----------
Total costs and expenses 147,124 78,354 347,714 257,163
--------- --------- ---------- ----------
Operating (loss) income (56,167) (3,183) (31,399) 37,601
Investment income 3,487 3,048 8,198 9,233
Interest (expense), net (2,888) (2,076) (6,133) (5,460)
Other income, net 2,312 354 2,881 6,068
Minority interest in net (income) loss 10,235 (742) 11,899 (3,768)
--------- --------- ---------- ----------
(Loss) income before income taxes (43,021) (2,599) (14,554) 43,674
Income tax expense (benefit) 2,186 (2,936) 12,482 9,403
Mining tax expense (benefit) 1,933 (699) 9,689 6,330
--------- --------- ---------- ----------
Net (loss) income (47,140) 1,036 (36,725) 27,941
Preferred dividends 1,869 1,869 5,606 5,607
--------- --------- ---------- ----------
Net (loss) income to common shares $ (49,009) $ (833) $ (42,331) $ 22,334
========= ========= ========= =========
(Loss) income per common share $ (.21) $ - $ (.18) $ .10
========= ========= ========= =========
Dividends per common share $ .025 $ .025 $ .05 $ .05
========= ========= ========= =========
Average common shares outstanding
for income per share purposes 229,872 229,031 229,554 233,045
========= ========= ========= =========
</TABLE>
2
<PAGE> 5
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
--------------------------
1996 1995
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $(36,725) $ 27,941
Adjustments to reconcile net (loss) income to cash flows
from operating activities:
Depreciation, depletion and amortization 66,409 59,404
Gain on sale of assets (243) (4,590)
Asset write-downs 38,451 3,646
Deferred income tax (benefit) expense (4,390) 1,481
Change in current assets and liabilities (16,846) (60,876)
Other changes, net (5,959) 5,546
------- ----------
Total Adjustments 77,422 4,611
------- ----------
Net cash flows from operating activities 40,697 32,552
------- ----------
Cash flows used in investing activities:
Proceeds from sale of assets 633 4,843
Capital expenditures (40,148) (132,608)
Other, net (7,804) (657)
-------- -----------
Net cash flows (used in) investing activities (47,319) (128,422)
-------- -----------
Cash flows (used in) from financing activities:
(Decrease) increase in short term borrowings (12,979) 31,472
Proceeds from issuance of long-term debt 18,779 -
Proceeds from stock issuances 1,948 2,966
Cash dividend payments (20,700) (16,939)
Debt repayments (43,711) (15,473)
Other, net 74 (155)
-------- -----------
Net cash flows (used in) from financing activities (56,589) 1,871
-------- -----------
Effect of exchange rate changes on cash and cash equivalents 2,515 7,328
-------- -----------
Net decrease in cash and cash equivalents (60,696) (86,671)
Cash and cash equivalents at beginning of period 142,202 218,316
-------- -----------
Cash and cash equivalents at end of period $ 81,506 $ 131,645
======= =========
</TABLE>
3
<PAGE> 6
BATTLE MOUNTAIN GOLD COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. General Information
The unaudited condensed consolidated financial statements
included herein have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission and include all adjustments, consisting only
of normal recurring accruals, which are, in the opinion of the management of
Battle Mountain Gold Company (BMG), necessary for a fair presentation. These
financial statements include the accounts of BMG and its wholly-owned and
majority-owned subsidiaries (the "Company"). Certain information and footnote
disclosures required by generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. These financial
statements should be read in conjunction with the financial statements and the
notes thereto which are included in the Company's Annual Report on Form 10-K/A
(Amendment No. 3) (File No. 1-9666) for the year ended December 31, 1995.
Business combination
On July 19, 1996, Hemlo Gold Mines Inc. ("Hemlo Gold") was combined
with Battle Mountain Gold Company. The combination is being accounted for as a
pooling of interests, and accordingly, the accompanying financial statements
have been restated to include the accounts and operations of Hemlo Gold for all
periods prior to the merger.
Merger expenses
In connection with the combination of Battle Mountain Gold Company and
Hemlo Gold Mines Inc., $19.2 million of merger costs and expenses ($17.8 million
after-tax) were incurred and charged to expense during the third quarter of
1996. The merger expenses consisted primarily of legal, accounting and
investment banking fees and merger related payments made to BMG employees.
Note 2. Income Per Common Share
The effect of common stock equivalents is not included in the
calculation of income per share for the three and nine months ended September
30, 1996 because the effect is antidilutive. Fully diluted income per share is
not presented because the effect of other potentially dilutive securities is
antidilutive for the periods presented. The Exchangeable Shares of Battle
Mountain Canada Ltd. are treated as identical to shares of BMG's Common Stock
for income per common share calculation purposes.
Note 3. Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," with an effective date for fiscal years beginning
after December 15, 1995. As permitted under SFAS No. 123, the Company has
elected to continue to measure compensation costs for stock-based employee
compensation plans as prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees." The Company will comply with the pro
forma disclosure requirements of SFAS No. 123 in 1996 as required under the
pronouncement.
4
<PAGE> 7
Note 4. Asset Write-downs
In September 1996, the Company determined that long-lived assets at two
of its operating mines (Reona and San Cristobal) were impaired. In accordance
with the provisions of SFAS No. 121 and the Company's impairment policy, the
carrying value of the Reona mine was written down by $17.5 million before and
after tax and the carrying value of the San Cristobal mine owned by Niugini
Mining was written down by $17.6 million ($8.9 million net of minority
interests) before and after tax. The fair value of the assets was determined by
using the present value of the estimated future net cash flows from the project
discounted at 10%.
Note 5. Income and mining taxes.
Due to the recording of a valuation allowance for deferred tax assets in
accordance with the provisions of SFAS No. 109, the Company recorded income tax
expense of $2.2 million and $12.5 million for the three and nine months ended
September 30, 1996, respectively, even though the Company incurred net losses of
$43 million and $15 million for the three and nine months ended September 30,
1996, respectively. The valuation allowance is related to both current period
net operating losses and foreign tax credits. The increased valuation allowance
is a direct result of BMG's decision to repatriate retained and future earnings
from the Company's newly acquired Canadian subsidiary. These earnings are taxed
at rates that are in excess of the U.S. federal income tax rate and will result
in excess foreign tax credits in the future. The Company does not foresee the
realization of all tax benefits related to these excess credits.
5
<PAGE> 8
SUPPLEMENTAL INFORMATION
BATTLE MOUNTAIN GOLD COMPANY
OPERATING DATA (Unaudited)*
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
1996 1995** 1996 1995**
------ ------- ------ -------
<S> <C> <C> <C> <C>
GOLDEN GIANT
Gold recovered (000s oz)*** 83 11 285 198
Silver recovered (000s oz) 4 2 12 12
Gold sold (000s oz) 83 11 285 198
Silver sold (000s oz) 4 2 12 12
- ----------------------------------------------------------------------------------------------------------------------------
Cost Per Gold Ounce Sold***
Cash production costs $151 $ 67 $132 $119
Depreciation, depletion and amortization 66 26 62 53
Reclamation and mine closure costs 3 - 2 2
---- ---- ---- ----
Total Production costs $220 $ 93 $196 $174
- ----------------------------------------------------------------------------------------------------------------------------
KORI KOLLO
Gold recovered BMG share (000s oz) 67 78 203 222
Silver recovered BMG share (000s oz) 203 268 630 839
Gold recovered (000s oz) 76 88 231 252
Silver recovered (000s oz) 231 305 715 953
Gold sold BMG share (000s oz) 69 79 208 223
Silver sold BMG share (000s oz) 210 270 648 847
Gold sold (000s oz) 79 90 237 253
Silver sold (000s oz) 238 307 736 963
- ----------------------------------------------------------------------------------------------------------------------------
Cost Per Gold Ounce Sold***
Cash production costs $231 $178 $226 $175
Depreciation, depletion and amortization 106 88 102 87
Reclamation and mine closure costs 3 3 3 3
---- ---- ---- ----
Total Production costs $340 $269 $331 $265
- ----------------------------------------------------------------------------------------------------------------------------
BATTLE MOUNTAIN COMPLEX
Gold recovered (000s oz) 17 18 53 56
Silver recovered (000s oz) 45 50 171 153
Gold sold (000s oz) 16 18 51 56
Silver sold (000s oz) 42 50 168 153
- ----------------------------------------------------------------------------------------------------------------------------
Cost Per Gold Ounce Sold***
Cash production costs $344 $307 $326 $305
Depreciation, depletion and amortization 67 69 70 58
Reclamation and mine closure costs 61 4 31 4
---- ---- ---- ----
Total Production costs $472 $380 $427 $367
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*, **, *** See page 8
6
<PAGE> 9
SUPPLEMENTAL INFORMATION
BATTLE MOUNTAIN GOLD COMPANY
OPERATING DATA (Unaudited)*
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------- ----------------------
1996 1995** 1996 1995**
------ ------ ------ ------
<S> <C> <C> <C> <C>
SAN LUIS
Gold recovered (000s oz) 15 18 48 54
Silver recovered (000s oz) 9 8 28 23
Gold sold (000s oz) 15 18 48 55
Silver sold (000s oz) 9 8 28 23
- ----------------------------------------------------------------------------------------------------------------------------
Cost Per Gold Ounce Sold
Cash production costs $273 $268 $286 $257
Depreciation, depletion and amortization 133 105 101 99
Reclamation and mine closure costs 13 9 15 8
----- ----- ----- -----
Total Production costs $419 $382 $402 $364
- ----------------------------------------------------------------------------------------------------------------------------
PAJINGO
Gold recovered (000s oz) 7 10 27 26
Silver recovered (000s oz) 14 5 24 38
Gold sold (000s oz) 7 10 27 26
Silver sold (000s oz) 14 8 24 42
- ----------------------------------------------------------------------------------------------------------------------------
Cost Per Gold Ounce Sold
Cash production costs $186 $206 $243 $164
Depreciation, depletion and amortization 12 193 82 107
Reclamation and mine closure costs - 2 2 5
----- ----- ----- -----
Total Production costs $198 $401 $327 $276
- ----------------------------------------------------------------------------------------------------------------------------
SAN CRISTOBAL
Gold recovered BMG share (000s oz) 9 10 30 32
Silver recovered BMG share (000s oz) 22 27 74 73
Gold recovered (000s oz) 18 20 59 62
Silver recovered (000s oz) 43 54 146 144
Gold sold BMG share (000s oz) 9 10 30 32
Silver sold BMG share (000s oz) 21 26 73 72
Gold sold (000s oz) 18 20 59 62
Silver sold (000s oz) 42 52 144 142
- ----------------------------------------------------------------------------------------------------------------------------
Cost Per Gold Ounce Sold***
Cash production costs $372 $302 $356 $303
Depreciation, depletion and amortization 102 92 99 90
Reclamation and mine closure costs - - - -
----- ----- ----- -----
Total Production costs $474 $394 $455 $393
- ----------------------------------------------------------------------------------------------------------------------------
SILIDOR JOINT VENTURE (1)
Gold recovered (000s oz) 6 8 19 22
Silver recovered (000s oz) - - - -
Gold sold (000s oz) 6 8 19 22
Silver sold (000s oz) - - - -
- ----------------------------------------------------------------------------------------------------------------------------
Cost Per Gold Ounce Sold
Cash production costs $334 $315 $347 $336
Depreciation, depletion and amortization 106 68 70 66
Reclamation and mine closure costs 10 7 3 8
----- ----- ----- -----
Total Production costs $450 $390 $420 $410
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*, **, ***, (1) See page 8
7
<PAGE> 10
SUPPLEMENTAL INFORMATION
BATTLE MOUNTAIN GOLD COMPANY
OPERATING DATA (Unaudited)*
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------- ----------------------
1996 1995** 1996 1995**
------ ------ ------ ------
<S> <C> <C> <C> <C>
RED DOME
Gold recovered BMG share (000s oz) 10 14 33 40
Silver recovered BMG share (000s oz) 53 59 213 242
Gold recovered (000s oz) 20 29 65 78
Silver recovered (000s oz) 105 116 421 474
Copper recovered (000s lb) 1,775 1,964 6,936 8,267
Gold sold BMG share (000s oz) 3 7 23 29
Silver sold BMG share (000s oz) 5 7 153 154
Gold sold (000s oz) 6 13 46 57
Silver sold (000s oz) 10 12 303 300
Copper sold (000s lb) - - 4,515 5,258
- ----------------------------------------------------------------------------------------------------------------------------
Cost Per Gold Ounce Sold
Cash production costs $280 $157 $235 $150
Depreciation, depletion and amortization 81 112 133 142
Reclamation and mine closure costs 31 5 11 (3)
----- ----- ----- -----
Total Production costs $392 $274 $379 $289
- ----------------------------------------------------------------------------------------------------------------------------
AGGREGATE DATA
Gold recovered BMG share (000s oz) 215 168 698 649
Gold sold BMG share (000s oz) 208 161 691 641
Gold recovered (000s oz) 243 202 787 748
Gold sold (000s oz) 230 188 771 729
Average price per oz realized $388 $386 $394 $383
- ----------------------------------------------------------------------------------------------------------------------------
Silver recovered BMG share (000s oz) 350 420 1,151 1,380
Silver sold BMG share (000s oz) 304 372 1,105 1,304
Silver recovered (000s oz) 451 541 1,517 1,797
Silver sold (000s oz) 359 440 1,415 1,634
Average price per oz realized $5.06 $5.09 $5.30 $5.19
- ----------------------------------------------------------------------------------------------------------------------------
Weighted Average Cost Per Gold Ounce Sold***
Cash production costs $226 $212 $216 $190
Depreciation, depletion and amortization 87 91 85 81
Reclamation and mine closure costs 8 3 6 2
----- ----- ----- -----
Total Production costs $321 $306 $307 $273
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Effective in the second quarter of 1996, BMG began reporting its operating
costs on the basis adopted earlier this year by The Gold Institute. As a
result, in addition to mining, milling and plant level G&A expenses, cash
production costs include royalties, freight, smelting costs and allowances
and production taxes. Credits for by-product silver and copper are offset
against these cash production costs. This new North American standard also
provides for reporting on a cost per gold ounce basis, rather than cost per
equivalent gold ounce.
** Restated to conform with new operating cost reporting standard.
*** Excludes asset write-downs in 1996 and 1995 and ounces produced and
costs incurred at the Golden Giant mine during the 1995 strike.
(1) This joint venture is owned 55% by the Company and is proportionately
consolidated in the financial statements, therefore, the amounts presented
represent only the Company's share of ounces and costs.
8
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Company's Annual Report on Form 10-K/A (File No. 1-9666) for the
year ended December 31, 1995 and the historical condensed consolidated financial
statements and notes thereto preceding this discussion.
Liquidity and Capital Resources
Summary - At September 30, 1996, the Company had cash and cash equivalents of
$81.5 million, of which $45.4 million was held by BMG and its wholly-owned
subsidiaries, $25.6 million was held by Niugini Mining and $10.5 million was
held by Inti Raymi.
Operating Activities - The Company generated cash flow of $40.7 million from
operating activities during the nine months ended September 30, 1996, compared
with $32.6 million for the nine months ended September 30, 1995. The $8.1
million increase in cash flows from operations for the Company was primarily the
result of increased gold sales from the Golden Giant mine in 1996 compared with
1995 and was net of approximately $20 million in merger related expenses. Gold
production and sales were higher in 1996 because the mine had experienced a
strike during the third quarter of 1995. Cash flows for 1995 were also impacted
by the payment of the final installment of 1994 Canadian income taxes.
Investing Activities - The Company used cash of $40 million for capital
expenditures during the nine months ended September 30, 1996. Other, net
investing activities include $6 million in capitalized interest related to the
Company's investment in Lihir Gold Limited.
On July 19, 1996, the Company consummated a combination with Hemlo
Gold. Under the terms of the agreement Hemlo Gold became a wholly-owned
subsidiary of BMG and Hemlo Gold's shareholders received, for each share held,
1.48 shares of a newly issued class of exchangeable shares of Battle Mountain
Canada Ltd., the new name for the former Hemlo Gold. At the option of the
holder, each exchangeable share is exchangeable for one share of BMG common
stock and entitles its holder to dividend and other rights economically
equivalent to those of the BMG common stock and, through a voting trust, to vote
at meetings of stockholders of BMG.
On August 12, 1996, the Company announced that it would vote its 60
percent interest in Crown Butte Resources Ltd. ("Crown Butte") in favor of an
agreement entered into with the U.S. government that provides a framework for
Crown Butte to exchange its interests in the New World mining district near
Yellowstone National Park for government owned property interests having a value
of $65 million. Crown Butte would set aside $22.5 million from the sale of the
exchange property into an escrow account for reclamation purposes in the New
World district. Crown Butte would suspend permitting efforts pending the
completion of the exchange of property interests and such exchange would result
in the settlement of litigation under the Clean Water Act relating to historic
mining impacts and releases between the parties as to any further environmental
liabilities. The Company's decision was based on, among other things, reduced
economic expectations as a result of protracted permitting and potential
environmental liabilities related to historic mining at New World. The agreement
contains a number of conditions including the identification of the exchange
property by the U.S. government and acceptance by Crown Butte management and
subsequent approval by Crown Butte shareholders. Crown Butte may terminate the
agreement as early as February 1997 if acceptable exchange property is not
identified.
Financing Activities - During the nine months ended September 30, 1996, BMG
repaid all amounts outstanding under its revolving credit facilities and
terminated its $75 million revolving credit facility. BMG received $7.7 million
in dividends from Inti Raymi, net of applicable Bolivian withholding taxes,
during the period. Further dividends are expected from Inti Raymi as earnings
and cash become available. The Company is currently negotiating a new revolving
credit facility.
9
<PAGE> 12
Conclusion - The Company expects cash on hand, along with cash flows from
operations to be adequate to meet its cash needs at least through the end of
1997.
Forward Sales and Hedging - The Company has limited involvement with derivative
financial instruments and does not use them for trading purposes.
At September 30, 1996, Inti Raymi was party to three interest rate cap
agreements which were effective June 1, 1994, each with a term of three years.
The agreements entitle Inti Raymi to receive from counterparties on a quarterly
basis the amounts, if any, by which Inti Raymi's interest payments on a portion
of its LIBOR based floating-rate Kori Kollo project financing exceed various
fixed rates over the term of the caps.
The Company uses fixed forward sales contracts and spot deferred sales
contracts and may use put options to hedge anticipated sales of gold, silver and
copper. The following table summarizes such open contracts of the Company at
September 30, 1996:
Average Price
Amount Per Unit Period
------------ ------------- ---------------
BMG
Forward sales contracts
Gold 107,000 oz $410 Oct 96 - Jul 97
Niugini Mining
Forward sales contracts
Gold 48,000 oz A$563 Oct 96 & Dec 96
44,000 oz $401 Oct 96
Copper 5,291,088 lb $1.11 Sep 96 & Feb 97
Inti Raymi
Forward sales contracts
Gold 28,000 oz $403 Oct 96 - Nov 96
The aggregate amount by which the net market value of open forward
sales contracts of the Company is greater than the spot price of $378 per ounce
of gold and $.86 per pound of copper, as of September 30, 1996 is $9.5 million,
of which $2.7 million is attributable to minority interests. The foregoing
amounts were calculated assuming conversion of Australian dollar contracts to
U.S. dollars at the September 1996 month end exchange rate of US$.79 to A$1.
Foreign Operations - The identifiable assets attributable to operations of the
Company outside the U.S. and Canada as of September 30, 1996, were approximately
$541 million and mining operations outside the U.S. and Canada represented
approximately 50 percent of the total gross revenues of the Company for the nine
months ended September 30, 1996. As a result, the Company is exposed to risks
normally associated with operations located outside the U.S. and Canada,
including political, economic, social and labor instabilities, as well as
foreign exchange controls, currency fluctuations and taxation changes.
10
<PAGE> 13
RESULTS OF OPERATIONS
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
Gold sales (ounces - 100%) 230,000 188,000 771,000 729,000
Gold sales realized per ounce $388 $386 $394 $383
Average London PM fix per ounce $385 $384 $391 $384
Sales - Sales increased for the three and nine months ended September 30, 1996,
compared with the same periods of 1995 primarily because of increased sales
volumes from the Golden Giant mine. The increase in sales volumes at the Golden
Giant mine was partially offset by decreased sales from the Kori Kollo, Red Dome
and San Luis mines. Sales volumes for 1995 were unusually low at the Golden
Giant mine because of a strike during the third quarter of 1995, and 1996 sales
volumes increased to more normal levels. Sales volumes decreased at the Kori
Kollo and Red Dome mines because of reduced production caused by the mining and
processing of lower grade ore. An increase in the average realized price of gold
for the three and nine months ended September 30, 1996, compared with the same
periods of 1995 also contributed to the increase in sales. The average realized
price of gold increased for the three and nine months ended September 30, 1996,
primarily because of increased spot gold prices. Average realized prices for the
three and nine month periods ended September 30, 1996, were higher than the
average London PM fix because of the Company's practice of pricing its gold
shipments 20 to 45 days in advance of shipment and gains realized from the
Company's hedging program.
In the second quarter of 1996, the Company began reporting its
operating costs on the basis adopted earlier this year by The Gold Institute. As
a result, in addition to mining, milling and plant level G&A expenses, cash
production costs include royalties, freight, smelting costs and allowances and
production taxes. Credits for by-product silver and copper are offset against
these cash production costs. This new North American standard also provides for
reporting on a cost per gold ounce basis, rather than cost per equivalent gold
ounce.
Consolidated Production Costs Per Ounce
(per ounce of gold sold):
- ---------------------------------------
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Direct mining costs $ 216 $ 205 $ 211 $ 192
Deferred stripping adjustments - 3 2 -
Third party smelting, refining and transportation costs 3 5 5 7
By-product credits included in sales (8) (13) (17) (21)
------- ------- ------- -------
Cash operating costs 211 200 201 178
Royalties 15 10 13 11
Production taxes - 2 2 1
------- ------- ------- -------
Total cash costs 226 212 216 190
Depreciation, depletion and amortization 87 91 85 81
Reclamation and mine closure costs 8 3 6 2
------- ------- ------- -------
Total production costs $ 321 $ 306 $ 307 $ 273
======= ======= ======= =======
</TABLE>
11
<PAGE> 14
Reconciliation of Total Cash Costs per Ounce to Financial Statements
(in thousands, except per ounce amounts):
-----------------------------------------
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------ --------------------------
1996 1995 1996 1995
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Production costs per financial statements $ 55,556 $ 47,077 $ 183,060 $ 160,292
By-product credits included in sales (1,813) (2,421) (12,300) (15,186)
Operating costs during strike - (4,084) - (5,009)
Reclamation and mine closure costs (1,885) (608) (4,385) (1,805)
Other 89 (26) (16) (94)
--------- ---------- ---------- ---------
Production costs for per ounce calculation purposes $ 51,947 $ 39,938 $ 166,359 $138,198
========= ========= ========== ========
Gold ounces sold 230 188 771 729
========= ========= ========= ========
Total cash costs per gold ounce sold $ 226 $ 212 $ 216 $ 190
========== ========= ========= ========
</TABLE>
Production Costs - Production costs increased on a total and per ounce of gold
sold basis for the three and nine month periods ended September 30, 1996,
compared with the corresponding periods of 1995. Total production costs
increased primarily because of the processing of an increased number of tons of
ore and because of increased materials costs. Per ounce production costs
increased at all of the Company's mines for the nine months ended September 30,
1996. The most significant increases in unit costs were at the Golden Giant and
Kori Kollo mines and resulted from lower mill head grades. Increases in
materials costs also contributed to the increase in unit costs at the Kori Kollo
mine. A change in the mine sequence, which resulted from the shut down of the
Golden Giant mine for shaft repairs in the fall of 1995, caused the lower head
grades at that mine.
The Company has been conducting additional drilling and other studies,
on factors such as ore control procedures, in an attempt to determine the
reasons for the lower mill head grades and any potential impact this may have
on, among other things, operating costs and estimated reserves at the Kori Kollo
mine.
Depreciation, depletion and amortization - Depreciation, depletion and
amortization (DD&A) increased in total and on the basis of cost per gold ounce
sold for the nine months ended September 30, 1996, compared with the
corresponding period of 1995. DD&A increased in total primarily as a result of
increased gold production and sales. DD&A increased on a per ounce sold basis
for the nine months ended September 30, 1996, primarily because of increased
DD&A per ounce sold at the Kori Kollo mine. The milling of more tons of ore than
last year to produce fewer ounces of gold caused the increase in DD&A per ounce
at the Kori Kollo mine. DD&A per ounce of gold sold decreased for the three
months ended September 30, 1996, compared with the three months ended September
30, 1995, primarily because of decreased DD&A at the Pajingo mine complex. These
unit costs decreased at the Pajingo complex because the assets were fully
depreciated, depleted and amortized upon completion of the processing of ore
from the Cindy deposit at the end of the second quarter. Third quarter gold and
silver production came from low-grade ore stockpiles remaining from the Scott
Lode deposit which had previously been fully depleted. The write-down of the
Reona mine assets and the San Cristobal mine assets will result in the reduction
of DD&A over the remaining useful lives of those assets.
Exploration, evaluation and other lease costs - Exploration, evaluation and
other lease costs increased for the nine months ended September 30, 1996,
because of the Company's increased exploration activities in Australia and South
America.
Merger expenses - In connection with the combination of BMG and Hemlo Gold,
$19.2 million of merger costs and expenses ($17.8 million after-tax, or $.08
per share) were
12
<PAGE> 15
incurred and charged to expense during the third quarter of 1996. The merger
expenses consisted primarily of legal, accounting and investment banking fees
and merger related payments made to BMG employees.
Asset write-downs - The Company has determined that long-lived assets at two of
its operating mines (Reona and San Cristobal) were impaired and, in accordance
with the provisions of SFAS No. 121 and the Company's impairment accounting
policy, the carrying value of the Reona mine as of September 30, 1996 was
written down by $17.5 million before and after tax and the carrying value of the
San Cristobal mine as of September 30, 1996 owned by Niugini Mining was written
down by $17.6 million ($8.9 million net of minority interests) before and after
tax. The Company also wrote down, as of the same date, certain receivables and
obsolete material in the amount of approximately $3 million. The write-down of
Reona was necessitated by lower performance expectations resulting from an
analysis of actual heap leach performance in the last six months of operations,
updated projections of heap leach performance as contrasted with previously
anticipated performance and higher estimates of reclamation and closure costs.
The write-down of San Cristobal was necessitated by recent detailed mine studies
and a review of related projects.
Other income, net - The Company had other income, net in the amount of $2.3
million and $2.9 million for the three and nine months ended September 30, 1996,
respectively, compared with other income, net of $.3 million and $6.1 million
for the three and nine months ended September 30, 1995. Other income, net for
the three months ended September 30, 1996, included gains on the sale of certain
exploration assets of the Company. Other income, net decreased for the nine
months ended September 30, 1996, compared with the nine months ended September
30, 1995, primarily because of the $4.2 million gain on the sale of the Plutonic
Bore exploration project in Australia during the second quarter of 1995. The
gains on the sale of exploration projects during the nine months ended September
30, 1996, were less than those in the same period of 1995. The 1996 gains were
also partially offset by other expense resulting primarily from foreign exchange
losses incurred in the first half of 1996 in the amount of approximately $2.1
million. Most of these foreign exchange losses resulted from losses recorded on
U.S. dollar cash deposits maintained by Niugini Mining (Australia) Pty. Ltd.
("NMA"), an Australian dollar functional currency subsidiary of Niugini Mining.
The losses occurred because of the strengthening of the Australian dollar
compared with the US dollar during the first quarter of 1996.
Income and mining taxes - Due to the recording of a valuation allowance for
deferred tax assets in accordance with the provisions of SFAS No. 109, the
Company recorded income tax expense of $2.2 million and $12.5 million for the
three and nine months ended September 30, 1996, respectively, even though the
Company incurred net losses of $43 million and $15 million for the three and
nine months ended September 30, 1996, respectively. The valuation allowance is
related to both current period net operating losses and foreign tax credits. The
increased valuation allowance is a direct result of BMG's decision to repatriate
retained and future earnings from the Company's newly acquired Canadian
subsidiary. These earnings are taxed at rates that are in excess of the U.S.
federal income tax rate and will result in excess foreign tax credits in the
future. The Company does not foresee the realization of all tax benefits related
to these excess credits. The effective income tax rate for 1995 was affected by
the recognition of deferred tax assets related to foreign tax credits.
Minority interest in net (income) loss - Net loss (income) attributable to
minority interests increased for the three and nine months ended September 30,
1996, compared with the same periods of 1995, primarily because of the
aforementioned write-down of the long-lived assets at Niugini Mining`s San
Cristobal mine.
"SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
With the exception of historical matters, the matters discussed in this report
are forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from projected results. Such
forward-looking statements include statements regarding expected commencement
dates of mining operations, projected quantities of future metal production,
projected capital costs, projected production rates, costs and expenditures and
projected demand or supply for the products the Company produces. Factors that
could cause actual results to differ materially include, among others: risks and
uncertainties relating to general domestic and international economic and
political conditions, the cyclical and volatile prices of gold, silver and
copper, political and economic risks associated with foreign operations,
unanticipated ground and water
13
<PAGE> 16
conditions, unanticipated grade and geological problems, metallurgical and other
processing problems, availability of materials and equipment, the delays in the
receipt of or failure to receive necessary governmental permits, changes in laws
or regulations or the interpretation and enforcement thereof, the occurrence of
unusual weather or operating conditions, force majeure events, lower than
expected ore grades, the failure of equipment or processes to operate in
accordance with specifications or expectations, labor relations, accidents,
delays in anticipated start-up dates, environmental risks, the results of
financing efforts and financial market conditions, and other risk factors
detailed in the Company's Securities and Exchange Commission filings. Many of
such factors are beyond the Company's ability to control or predict. Readers are
cautioned not to put undue reliance on forward-looking statements. The Company
disclaims any intent or obligations to update publicly these forward-looking
statements, whether as a result of new information, future events or otherwise.
14
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
*2(a) Plan of Arrangement of Hemlo Gold Mines Inc.
under Section 182 of the Business
Corporations Act (Ontario)
(Annex D to Exhibit 20(a), Joint Management
Information Circular and Proxy Statement,
to the Company's Current Report on Form 8-K
dated June 11, 1996, File No. 1-9666).
*2(b) Combination Agreement effective as of March
11, 1996 by and between the Company and
Hemlo Gold Mines Inc. (Annex C to Exhibit
20(a), Joint Management Information Circular
and Proxy Statement, to the Company's
Current Report on Form 8-K dated June 11,
1996, File No. 1-9666).
*3(a)(1) Restated Articles of Incorporation of the
Company, as amended and restated through May
11, 1988 (Exhibit 4(a)(1) to the Company's
Current Report on Form 8-K dated July 19,
1996, File No. 1-9666).
*3(a)(2) Certificate of Amendment to Restated
Articles of Incorporation of the Company
(Exhibit 4(a)(1) to the Company's Current
Report on Form 8-K dated July 19, 1996, File
No. 1-9666).
*3(b) Certificate of Resolution Establishing
Designation, Preferences and Rights of $3.25
Convertible Preferred Stock (Exhibit 4(b) to
the Company's Current Report on Form 8-K
dated July 19, 1996, File No. 1-9666).
*3(c) Certificate of Amendment of Certificate of
Resolution Establishing Designation,
Preferences and Rights of Series A Junior
Participating Preferred Stock (Exhibit 4(c)
to the Company's Current Report on Form 8-K
dated July 19, 1996, File No. 1-9666).
*3(d) Bylaws of the Company, as amended through
July 19, 1996 (Exhibit 4(d) to the Company's
Current Report on Form 8-K dated July 19,
1996, File No. 1-9666).
*4(a) Rights Agreement, dated November 10, 1988,
as amended and restated as of July 19, 1996,
between the Company and The Bank of New
York, as Rights Agent (Exhibit 4(e) to the
Company's Current Report on Form 8-K dated
July 19, 1996, File No. 1-9666).
*4(b) Rights Agreement, dated July 19, 1996, between
Battle Mountain Canada Ltd. and The R-M
Trust Company, as Rights Agent (Exhibit
4(f) to the Company's Current Report on
Form 8-K dated July 19, 1996, File
No. 1-9666).
*4(c) Voting, Support and Exchange Trust Agreement
dated as of July 19, 1996 between the
Company, Hemlo Gold Mines Inc. and The R-M
Trust Company (Annex E to Exhibit 20(a),
Joint Management Information Circular and
Proxy Statement, to the Company's Current
Report on Form 8-K dated June 11, 1996, File
No. 1-9666).
15
<PAGE> 18
11 Computation of Earnings per Share.
12 Computation of Ratio of Earnings to Fixed Charges
and Earnings to Combined Fixed Charges and
Preferred Dividends.
27 Financial Data Schedule for the six month period
ended September 30, 1996.
- ---------------------
* Incorporated by reference as indicated.
(b) Reports on Form 8-K
Form 8-K dated July 19, 1996.
16
<PAGE> 19
SIGNATURE
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.
BATTLE MOUNTAIN GOLD COMPANY
Date: November 14, 1996 /s/ R. Dennis O'Connell
-------------------------------------
R. Dennis O'Connell, Executive Vice
President, Finance and Corporate
Development (Principal Financial and
Chief Accounting Officer)
17
<PAGE> 20
INDEX OF EXHIBITS
Exhibit Description
*2(a) Plan of Arrangement of Hemlo Gold Mines Inc. under
Section 182 of the Business Corporations
Act (Ontario) (Annex D to Exhibit 20(a),
Joint Management Information Circular and
Proxy Statement, to the Company's Current
Report on Form 8-K dated June 11, 1996,
File No. 1-9666).
*2(b) Combination Agreement effective as of March
11, 1996 by and between the Company and
Hemlo Gold Mines Inc. (Annex C to Exhibit
20(a), Joint Management Information Circular
and Proxy Statement, to the Company's
Current Report on Form 8-K dated June 11,
1996, File No. 1-9666).
*3(a)(1) Restated Articles of Incorporation of the
Company, as amended and restated through May
11, 1988 (Exhibit 4(a)(1) to the Company's
Current Report on Form 8-K dated July 19,
1996, File No. 1-9666).
*3(a)(2) Certificate of Amendment to Restated
Articles of Incorporation of the Company
(Exhibit 4(a)(1) to the Company's Current
Report on Form 8-K dated July 19, 1996, File
No. 1-9666).
*3(b) Certificate of Resolution Establishing Designation,
Preferences and Rights of $3.25
Convertible Preferred Stock (Exhibit 4(b)
to the Company's Current Report on
Form 8-K dated July 19, 1996,
File No. 1-9666).
*3(c) Certificate of Amendment of Certificate of
Resolution Establishing Designation,
Preferences and Rights of Series A Junior
Participating Preferred Stock (Exhibit 4(c)
to the Company's Current Report on Form 8-K
dated July 19, 1996, File No.
1-9666).
*3(d) Bylaws of the Company, as amended through
July 19, 1996 (Exhibit 4(d) to the Company's
Current Report on Form 8-K dated July 19,
1996, File No. 1-9666).
*4(a) Rights Agreement, dated November 10, 1988,
as amended and restated as of July 19, 1996,
between the Company and The Bank of New
York, as Rights Agent (Exhibit 4(e) to the
Company's Current Report on Form 8-K dated
July 19, 1996, File No. 1-9666).
*4(b) Rights Agreement, dated July 19, 1996, between
Battle Mountain Canada Ltd. and The R-M
Trust Company, as Rights Agent (Exhibit
4(f) to the Company's Current Report on
Form 8-K dated July 19, 1996,
File No. 1-9666).
*4(c) Voting, Support and Exchange Trust Agreement
dated as of July 19, 1996 between the
Company, Hemlo Gold Mines Inc. and The R-M
Trust Company (Annex E to Exhibit 20(a),
Joint Management Information Circular and
Proxy Statement, to the Company's Current
Report on Form 8-K dated June 11, 1996, File
No. 1-9666).
11 Computation of Earnings per Share.
12 Computation of Ratio of Earnings to Fixed Charges
and Earnings to Combined Fixed Charges
and Preferred Dividends.
27 Financial Data Schedule for the six month
period ended September 30, 1996.
- ---------------------
* Incorporated by reference as indicated.
<PAGE> 1
Exhibit 11
BATTLE MOUNTAIN GOLD COMPANY
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------ -------------------------
1996 1995 1996 1995
----------- ---------- -------- -----------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Earnings
Net (loss) income $ (47,140) $ 1,036 $ (36,725) $ 27,941
Deduct dividends on preferred shares 1,869 1,869 5,606 5,607
------------ ------------ ------------ ------------
Net (loss) income applicable to common stock $ (49,009) $ (833) $ (42,331) $ 22,334
============ ============ ============ ============
Shares
Weighted average number of common shares outstanding 229,872,415 229,031,157 229,554,353 227,535,349
Assuming exercise of stock options reduced by the number of shares
which could have been purchased with the proceeds from exercise of
such options - - - 661,226
Assuming conversion of 6% convertible debentures - - - 4,848,485
------------ ------------ ------------ ------------
Weighted average number of common shares outstanding,
as adjusted 229,872,415 229,031,157 229,554,353 233,045,060
============ ============ ============ ============
Primary (loss) earnings per common share $ (.21) $ - $ (.18) $ .10
============ ============ ============ ============
FULLY DILUTED EARNINGS PER SHARE (1)
Earnings
Net (loss) income $ (47,140) $ 1,036 $ (36,725) $ 27,941
============ ============ ============ ============
Shares
Weighted average number of common shares outstanding 229,872,415 229,031,157 229,554,353 227,535,349
Assuming exercise of stock options reduced by the number of shares
which could have been purchased with the proceeds from exercise of
such options 422,590 652,220 515,271 691,609
Assuming conversion of 6% convertible debentures 4,847,515 4,848,485 4,847,515 4,848,485
Assuming conversion of preferred stock 10,952,505 10,952,600 10,952,543 10,952,600
------------ ------------ ------------ ------------
Weighted average number of common shares outstanding, as
adjusted 246,095,025 245,484,462 245,869,683 244,028,043
============ ============ ============ ============
Net (loss) income per common share assuming full dilution $ (.19) $ - $ (.15) $ .11
============ ============ ============ =============
ADDITIONAL PRIMARY COMPUTATION (1)
Net income (loss) applicable to common stock, as adjusted per
primary computation above $ (49,009) $ (833) $ (42,331)
============ ============ ============
Weighted average number of shares outstanding, as adjusted per
primary computation above 229,872,415 229,031,157 229,554,353
Anti-dilutive effect of outstanding options (as determined by the
application of the treasury stock method) 422,590 652,225 484,762
Anti-dilutive effect of conversion of 6% convertible debentures 4,847,515 4,848,485 4,847,515
------------ ------------ ------------
Weighted average number of common shares, as adjusted 235,142,520 234,531,867 234,886,631
============ ============ ============
Primary (loss) earnings per share, as adjusted $ (.21) $ - $ (.18)
============ ============ ============
</TABLE>
(1) These calculations are submitted in accordance with Regulation S-K Item
601(b)(11) although it is contrary to paragraphs 30 and 40 of APB
Opinion No. 15 because it produces an anti-dilutive result.
<PAGE> 1
Exhibit 12
BATTLE MOUNTAIN GOLD COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
(in thousands, except ratios)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------------
1996 1995
----------- ----------
<S> <C> <C>
EARNINGS COMPUTATION USING
CONSOLIDATED INCOME STATEMENT DATA
(Loss) Income before income taxes and minority interest $ (26,453) $ 47,442
Minority interest in loss (income) of majority-owned subsidiaries 11,899 (3,768)
--------- --------
(Loss) Income before income taxes (14,554) 43,674
--------- --------
Add fixed charges included in (loss) income:
Interest expense 6,133 5,460
Amortization of deferred financing costs 186 156
Interest portion of rental expenses (33%) 1,463 679
---------- --------
Sub-total fixed charges included in (loss) income 7,782 6,295
---------- --------
(Loss) Income $ (6,772) $ 49,969
========== ========
Fixed Charges
Included in (loss) income $ 7,782 $ 6,295
Capitalized interest 4,492 5,754
--------- --------
Total fixed charges 12,274 12,049
-------- -------
Preferred dividends 2,222 8,763
--------- --------
Combined fixed charges and preferred dividends $ 14,496 $ 20,812
======== =======
Ratio of earnings to fixed charges - 4.15
Amount by which fixed charges exceed earnings $ 19,046 -
Ratio of earnings to combined fixed charges
and preferred dividends - 2.40
Amount by which combined fixed charges and
preferred dividends exceed earnings $ 21,268 -
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Battle
Mountain Gold Company's Condensed Consolidated Balance Sheet at September 30,
1996 and December 31, 1995 and Condensed Consolidated Statements of Income for
the three and nine months ended September 30, 1996 and 1995, and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 81,506
<SECURITIES> 0
<RECEIVABLES> 39,238
<ALLOWANCES> 0
<INVENTORY> 14,698
<CURRENT-ASSETS> 177,611
<PP&E> 1,011,496
<DEPRECIATION> (428,010)
<TOTAL-ASSETS> 1,043,200
<CURRENT-LIABILITIES> 66,546
<BONDS> 0
<COMMON> 10,177
0
110,578
<OTHER-SE> 453,710
<TOTAL-LIABILITY-AND-EQUITY> 1,043,200
<SALES> 316,315
<TOTAL-REVENUES> 316,315
<CGS> 183,060
<TOTAL-COSTS> 347,714
<OTHER-EXPENSES> 2,887
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (6,133)
<INCOME-PRETAX> (14,554)
<INCOME-TAX> (22,171)
<INCOME-CONTINUING> (36,725)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,725)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> 0
</TABLE>
