<PAGE>
PAGE 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(x) Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1994
or
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from ____ to ____
Commission File Number 1-9569
FMC Gold Company
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 88-0226676
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5011 Meadowood Way, Reno, Nevada 89502
-----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(702) 827-3777
------------------------------
Registrant's telephone number,
including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30, 1994
- --------------------------------------- ---------------------------------
Common Stock, par value $0.01 per share 73,484,395
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PAGE 2
PART 1 - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
FMC Gold Company
- ----------------
Consolidated Statements of Income (Unaudited)
- ---------------------------------------------
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
-------------------- -------------------
1994 1993 1994 1993
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Sales $11,928 $25,901 $52,077 $92,632
Costs and expenses
Cost of sales 13,336 21,093 44,030 77,020
Exploration costs 3,890 2,968 10,280 9,569
Selling, general and
administrative expenses 1,845 1,622 4,766 4,873
------- ------- ------- -------
Total costs and expenses 19,071 25,683 59,076 91,462
Earnings (loss) before interest and
taxes (7,143) 218 (6,999) 1,170
Interest income 2,210 2,152 6,587 6,085
------- ------- ------- -------
Income (loss) before income taxes (4,933) 2,370 (412) 7,255
Provision (benefit) for income taxes (173) (4) 25 1,076
------- ------- ------- -------
Net income (loss) $(4,760) $ 2,374 $ (437) $ 6,179
======= ======= ======= =======
Earnings (loss) per common share $ (0.06) $ 0.03 $ (0.01) $ 0.08
======= ======= ======= =======
Number of common shares used in
earnings per share computations 73,484 73,484 73,484 73,484
======= ======= ======= =======
</TABLE>
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PAGE 3
FMC Gold Company
- ----------------
Consolidated Balance Sheets
- ---------------------------
(In thousands, except per share data)
<TABLE>
<CAPTION>
September 30
1994 December 31
Assets (Unaudited) 1993
- ------ ------------- -----------
<S> <C> <C>
Current assets:
Cash $ 339 $ -
Loans due from FMC Corporation 145,000 167,326
Amounts due from FMC Corporation 1,390 -
Trade receivables, net 2,273 2,527
Inventories (Note 2) 2,906 3,776
Other current assets 1,332 1 236
-------- --------
Total current assets 153,240 174,865
-------- --------
Property, plant and equipment 258,980 246,117
Less -- accumulated depreciation 183,333 185,512
-------- --------
Net property, plant and equipment 75,647 60,605
-------- --------
Deferred income taxes 2,527 2,527
Other assets 4,740 638
-------- --------
Total assets $236,154 $238,635
======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Outstanding checks in excess of bank balances $ - $ 542
Accounts payable, trade and other 9,850 8,206
Accrued and other liabilities 8,577 11,935
Amounts due to FMC Corporation - 1,069
Income taxes payable 4,061 4,922
-------- --------
Total current liabilities 22,488 26,674
-------- --------
Other long-term liabilities 14,458 12,316
Stockholders' equity:
Preferred stock, $1.00 par value, authorized
100,000 shares; none issued or outstanding - -
Common stock, $0.01 par value, authorized
150,000,000 shares; issued and outstanding
73,484,395 shares 735 735
Capital in excess of par value 68,609 68,609
Retained earnings 129,864 130,301
-------- --------
Total stockholders' equity 199,208 199,645
-------- --------
Total liabilities and stockholders' equity $236,154 $238,635
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
PAGE 4
FMC Gold Company
- ----------------
Consolidated Statements of Cash Flows (Unaudited)
- -------------------------------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September 30
----------------------
1994 1993
-------- --------
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Net cash provided by operating activities $ 7,175 $ 24,242
-------- --------
Cash flows from investing activities:
Capital spending (24,680) (14,928)
Disposal of property, plant and equipment, net 162 57
(Increase) decrease in other assets (4,102) (205)
-------- --------
Net cash used in investing activities (28,620) (15,076)
-------- --------
Increase (decrease) in cash and cash equivalents (21,445) 9,166
Cash and cash equivalents, beginning of period 166,784 154,316
-------- --------
Cash and cash equivalents, end of period $145,339 $163,482
======== ========
Reconciliation of Net Income to Net Cash Provided by Operations
Net income (loss) $ (437) $ 6,179
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for depreciation and amortization 9,476 20,976
(Increase) decrease in assets:
Trade receivables 254 (597)
Inventories 870 1,713
Amounts due from FMC Corporation (1,390) -
Other current assets (96) (1,055)
(Decrease) increase in liabilities:
Accounts payable, trade and other 1,644 765
Accrued and other liabilities (3,358) 1,143
Amounts due to FMC Corporation (1,069) (2,112)
Income taxes payable (861) (1,019)
Other long-term liabilities 2,142 (1,751)
-------- --------
Net cash provided by operating activities $ 7,175 $ 24,242
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
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PAGE 5
FMC Gold Company
- ----------------
Consolidated Statements of Cash Flows (Unaudited)
- -------------------------------------------------
(Dollars in thousands)
Supplemental disclosure of cash flow information:
Cash and cash equivalents consists of:
<TABLE>
<CAPTION>
September 30
(Unaudited) December 31
1994 1993 1993 1992
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Loans due from FMC Corporation $145,000 $162,500 $167,326 $154,826
Cash 339 982 - -
Outstanding checks in excess of
bank balances - - (542) (510)
-------- -------- -------- --------
Total cash and cash equivalents $145,339 $163,482 $166,784 $154,316
======== ======== ======== ========
</TABLE>
<PAGE>
PAGE 6
FMC Gold Company
- ----------------
Notes to Consolidated Financial Statements (Unaudited)
- ------------------------------------------------------
Note 1: Financial Information
- ------------------------------
The consolidated balance sheet at September 30, 1994, and the related statements
of income and cash flows for the interim periods ended September 30, 1994 and
1993 have been reviewed by the company's independent auditors. The review is
discussed more fully in their report included herein. In the opinion of
management, such financial statements have been prepared in conformity with
generally accepted accounting principles and reflect all adjustments necessary
for a fair statement of the results of operations for the interim periods. All
such adjustments are of a normal recurring nature. The results of operations
for the three and nine-month periods ended September 30, 1994 and 1993 are not
necessarily indicative of the results of operations for the full year.
The accounting policies followed by the company are set forth in Note 1 to the
company's financial statements in the 1993 FMC Gold Company Annual Report, which
is incorporated by reference in Form 10-K.
Note 2: Inventories
- --------------------
Inventories included in current assets were:
<TABLE>
<CAPTION>
(In Thousands)
September 30 December 31
1994 1993
------------ -----------
<S> <C> <C>
Gold and silver dore $ 296 $ 482
Materials and supplies 2,610 3,294
------ ------
$2,906 $3,776
====== ======
</TABLE>
Gold and silver inventories are in the form of dore which is suitable for
delivery to precious metal treatment facilities. These inventories are
generally sold to and further processed by these facilities into forms suitable
for end uses.
Note 3: Accounting Standards Adopted
- -------------------------------------
Statement of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" was implemented by the company effective January 1,
1994. Statement No. 112 requires accrual of the expected cost of providing
certain benefits to former or inactive employees after employment but before
retirement. The effect of implementation was not material, and accordingly, has
been included as part of costs and expenses.
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PAGE 7
Note 4: Acquisitions
- ---------------------
In June 1994, the company agreed to purchase the remaining 14 percent interest
in the Beartrack joint venture from MINEX for $6.0 million, bringing the
company's ownership in the property to 100 percent. The first installment of
$1.5 million was made to Minex in June. Another $1.5 million payment will be
made in 1995, with the balance owed Minex paid in $1.0 million installments in
1996, 1997, and 1998. The Beartrack property is more fully described in
management's discussion and analysis of financial condition and results of
operations.
In April 1993, the company purchased the remaining 50 percent interest in the
Humboldt Gold joint venture from the TRE Management Company for $5.5 million,
bringing the company's ownership interest in all gold and precious metal-bearing
ores in the related property to 100 percent. The Humboldt Gold venture is
targeting deep gold mineralization at the "Rossi Property" on the Carlin Gold
Trend in Nevada. In addition, the company obtained certain water rights
associated with the property.
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PAGE 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION
-------------------
Cash to meet the company's operating needs, finance capital expenditures and
fund exploration activities was provided from operations and existing cash
reserves (including loans due from FMC Corporation ("FMC").) Any cash generated
in excess of these requirements is loaned to FMC at varying maturities,
repayable on demand. As of September 30, 1994, loans to FMC totalled $145.0
million. As of September 30, 1994, FMC's cash on hand and available credit
lines were more than adequate to allow for repayment of these loans.
Known cash requirements for the remainder of 1994 are approximately $25 million
for planned capital expenditures, $3 million for exploration costs and $3.7
million for dividends, based on the current dividend rate. The company expects
to fund these requirements from existing cash and cash equivalents (including
loans due from FMC) and cash flow from operations. The company believes any
unexpected cash requirements could be funded through borrowings.
During the second quarter, the company purchased put options and entered into
certain forward contracts in connection with gold production. The options were
purchased for $4 million and provide the company the right to sell gold at an
agreed upon price. The options are recorded in other assets and will be
amortized in accordance with production. The last option expires in 2001.
On March 31, 1994, FMC increased its ownership interest in the company to 80
percent. Due to this increased ownership percentage, the company is now
required to be included in FMC's federal tax return. The company has filed
separate consolidated returns for tax periods beginning May 16, 1990 and will
continue to do so through the March 31, 1994 tax period. For tax periods
beginning April 1, 1994, the company will be included in FMC's federal tax
return under a tax sharing agreement whereby the company will pay to FMC amounts
generally equal to the tax the company would have been required to pay had it
filed a separate return.
On May 4, 1994 FMC Gold Company announced plans to invest $57 million to develop
the Beartrack property located near Salmon, Idaho. The decision to proceed with
the development was based largely on improved project economics and issuance of
a biological opinion by the National Marine Fisheries Service ("NMFS") that the
proposed Beartrack mine was "not likely to jeopardize" the continued existence
of the Snake River salmon. The company has submitted a request to the Army
Corps of Engineers ("ACOE") for renewal of one of the permits necessary to
complete construction of the Beartrack mine. ACOE is studying that request at
this time, and the company is participating actively in ACOE's review.
On October 21, 1994, the Sierra Club Legal Defense Fund, Inc., ("Sierra"), on
behalf of certain other organizations, sued NMFS and other federal agencies for
violation of the Endangered Species Act (the "Act") alleging that NMFS'
biological opinion failed to satisfy the requirements of the Act.
During the third quarter of 1994, the Pacific Rivers Council and the Wilderness
Society (the "PRC"), represented by Sierra and others, in a lawsuit currently
pending in Federal District Court in Idaho (Pacific Rivers Council v. Thomas),
filed a motion seeking an injunction against all ongoing and future forest
activities which may affect endangered salmon, including mining, within various
national forests in Idaho including the Salmon National Forest in which the
Beartrack property is located. In that lawsuit, the PRC seeks to require the
U.S. Forest Service to consult under the Act with the NMFS regarding existing
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PAGE 9
land resource management plans for the subject forests and their potential
impacts on endangered salmon. If the injunction sought by the PRC were to enter,
further development and operation of the Beartrack property could be halted. The
company, along with other mining and timber companies, has been granted limited
leave to intervene in the lawsuit and has filed a memorandum in opposition to
the PRC's motion for an injunction at least as it might apply to the Beartrack
property based on, inter alia, the fact that the company has already obtained
the requisite biological opinion by NMFS and the fact that the Beartrack
property is at least 6.5 miles from the closest habitat for salmon.
The company believes that the biological opinion was carefully considered and
fully supported by the record and that it will prevail in Sierra's lawsuit and
in the PRC's broad-based attempt to enjoin further development. Accordingly,
the company intends to continue development of Beartrack.
The Beartrack property encompasses approximately 30 square miles of mining
claims and contains approximately one million ounces of proven and probable
reserves. At October 31, 1994 FMC Gold Company's investment in Beartrack was
approximately $34 million. In addition, FMC Gold had commitments of
approximately $14 million relating to Beartrack.
Third Quarter of 1994 Compared with Third Quarter of 1993
- ---------------------------------------------------------
Sales in the third quarter of 1994 were $11.9 million, $14.0 million lower than
last year's quarter, reflecting the impact of the mill shutdown at the Royal
Mountain King mine and lower heap leach production at the Paradise Peak mine.
Gold production declined 58 percent and silver production declined 66 percent.
Realized gold prices rose from $375 per ounce to $386 per ounce. Net loss was
$4.8 million, or $0.06 per share, compared with net income of $2.4 million, or
$0.03 per share in 1993.
Third quarter gold production was 29,000 ounces compared with 69,000 in the
third quarter of 1993, reflecting the July closure of the mill at Royal Mountain
King as mill grade ore reserves were exhausted. Production from the Royal
Mountain King mine was 1,000 ounces, down 14,000 ounces from the prior year
quarter. The company's 30 percent share of production from the Jerritt Canyon
mine increased to 23,000 ounces as grades improved 16 percent. Production from
the Paradise Peak mine declined by 28,000 ounces to 5,000 ounces as heap leach
operations continued to wind down. Residual heap leach production is expected
to continue through the end of 1994.
Silver production was 26,000 ounces in the third quarter of 1994 compared with
77,000 ounces in the prior year period due to the exhaustion of the higher
silver content ore reserves at Paradise Peak.
Cost of sales declined to $13.3 million for the period. Costs at Paradise Peak
declined by $3.6 million reflecting lower production. Cost of sales at the
Jerritt Canyon mine was $2.7 million higher due to higher mining, depreciation
and depletion expenses. Costs at the Royal Mountain King mine fell to $0.8
million as mining and milling operations ceased. The Royal Mountain King mill
was shut down July 7, 1994.
Exploration costs in the third quarter of 1994 were $3.9 million and included
continuing work within the vicinity of the Jerritt Canyon operating property, as
well as exploration and evaluation of grassroots properties in the United
States, Mexico and Chile.
Selling, general and administrative expenses were $0.2 million higher than the
year ago period due to increased legal expenses and bad debt recognition.
<PAGE>
PAGE 10
The company remains debt free with interest income of $2.2 million earned on
cash loaned to FMC Corporation. Interest income was essentially unchanged from
1993 as higher interest rates compensated for lower loan balances.
A tax benefit of $0.2 million was $0.2 million lower than the prior year's tax
provision, a result of the net loss for the period.
Nine Months of 1994 Compared With Nine Months of 1993
- -----------------------------------------------------
Sales in the first nine months of 1994 were $52.1 million compared with $92.6
million for the first nine months of 1993. Net loss was $0.4 million, or $0.01
per share, versus 1993 net income of $6.2 million or $0.08 per share.
Sales were $40.6 million lower than in 1993 due to decreased production at the
Paradise Peak and Royal Mountain King mines. Production at Paradise Peak was
102,000 ounces lower as heap leach production continued to wind down.
Production from the Royal Mountain King mine decreased 18,000 ounces to 26,000
ounces due to the July 1994, shutdown. The company's 30 percent share of
production from the Jerritt Canyon mine decreased 3,000 ounces to 74,000 ounces
as grades and recoveries declined.
Silver production was 128,000 ounces, down 688,000 ounces from the same period
in 1993 as a result of the exhaustion of mill ore reserves at Paradise Peak.
Profits declined as production was lower at all sites. Offsetting some of the
production declines was the favorable impact of higher gold prices. The average
realized price of gold for the first nine months of 1994 was $383 per ounce or
$31 per ounce higher than the 1993 price of $352. Exploration spending was $0.7
million higher than the 1993 level due to timing of spending. Selling, general
and administrative expenses decreased $0.1 million to $4.8 million due to lower
allocations from FMC Corporation.
The effective tax rate was 6 percent versus 15 percent in 1993, primarily
reflecting lower expected full year earnings in 1994.
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PAGE 11
Following is a summary of key operating data for the company for the three and
nine-month periods ended September 30, 1994 and 1993:
<TABLE>
<CAPTION>
FMC Gold Company
-----------------
Operating Data (Unaudited)
--------------------------
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Tons of ore processed (thousands)
Paradise Peak
- Mill - - - 587
- Heap Leach - 1,414 - 3,366
------ ------ ------ ------
Total - 1,414 - 3,953
Jerritt Canyon (FMC Gold share) 201 249 664 707
Royal Mountain King 19 337 700 993
Ore grade (ounces per ton milled)
Paradise Peak
- Gold - - - 0.115
- Silver - - - 1.900
Jerritt Canyon 0.110 0.095 0.116 0.121
Royal Mountain King 0.047 0.054 0.051 0.056
Mill recoveries
Paradise Peak
- Gold - - - 89.2%
- Silver - - - 56.7%
Jerritt Canyon 87.7% 88.7% 88.7% 89.4%
Royal Mountain King 73.2% 79.9% 72.6% 79.2%
Production (thousands of ounces)
Gold
Paradise Peak 5 33 34 136
Jerritt Canyon 23 21 74 77
Royal Mountain King 1 15 26 44
------ ------ ------ ------
Total 29 69 134 257
Silver 26 77 128 816
Cash cost of production ($ per gold
equivalent ounce)
Paradise Peak $ 212 $ 81 $ 111 $ 121
Jerritt Canyon $ 280 $ 293 $ 281 $ 244
Royal Mountain King $ 244 $ 288 $ 300 $ 327
Average $ 266 $ 189 $ 241 $ 191
</TABLE>
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PAGE 12
INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------
A report by KPMG Peat Marwick LLP, the company's independent accountants, on the
financial statements included in Form 10-Q for the quarter ended September 30,
1994 is included on page 13.
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PAGE 13
SIGNATURE
Independent Auditors' Report
----------------------------
The Board of Directors
FMC Gold Company:
We have reviewed the accompanying consolidated balance sheet of FMC Gold Company
and consolidated subsidiaries as of September 30, 1994 and the related
consolidated statements of income for the three-month and nine-month periods
ended September 30, 1994 and 1993, and the related consolidated statements of
cash flows for the nine-month periods ended September 30, 1994 and 1993. These
financial statements are the responsibility of the company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Salt Lake City, Utah
October 19, 1994
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PAGE 14
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
See Part I, Item 2 for a discussion of certain legal proceedings involving the
pending Beartrack development project.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits
<S> <C> <C>
Page Number in
Number in Document Numbering
Exhibit Table Description System
- --------------- ----------------------- --------------------
27 Financial Data Schedule Document type EX-27,
page 2
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
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PAGE 15
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FMC GOLD COMPANY
-----------------------
(Registrant)
Date: November 11, 1994 Steven E. Baginski
-------------------------- -----------------------
Chief Financial Officer
<PAGE>
PAGE 1
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page Number in
Number in Document Numbering
Exhibit Table Description System
- --------------- ----------------------- ------------------
<S> <C> <C>
27 Financial Data Schedule 2
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FMC GOLD COMPANY FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994
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-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 145,339<F1>
<SECURITIES> 0
<RECEIVABLES> 2,273
<ALLOWANCES> 0
<INVENTORY> 2,906
<CURRENT-ASSETS> 153,240
<PP&E> 258,980
<DEPRECIATION> 183,333
<TOTAL-ASSETS> 236,154
<CURRENT-LIABILITIES> 22,488
<BONDS> 0
<COMMON> 735
0
0
<OTHER-SE> 198,473
<TOTAL-LIABILITY-AND-EQUITY> 236,154
<SALES> 52,077
<TOTAL-REVENUES> 52,077
<CGS> 44,030
<TOTAL-COSTS> 44,030
<OTHER-EXPENSES> 10,280
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (412)
<INCOME-TAX> 25
<INCOME-CONTINUING> (437)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (437)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
<FN>
<F1> CASH AND CASH ITEMS CONSISTS OF CASH AND LOANS DUE FROM FMC CORPORATION OF
$145 MILLION.
</FN>
</TABLE>
