<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 March 31, 1995
or
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from ____ to ____
Commission File Number 1-9569
FMC Gold Company
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 88-0226676
--------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5011 Meadowood Way, Reno, Nevada 89502
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(702) 827-3777
-----------------------------
Registrant's telephone number,
including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 31, 1995
- --------------------------------------- --------------------------------
Common Stock, par value $0.01 per share 73,484,395
<PAGE>
Page 2 PART 1 - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
FMC Gold Company
- ----------------
Consolidated Statements of Income (Loss) (Unaudited)
- ----------------------------------------------------
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31
-------------------
1995 1994
--------- --------
<S> <C> <C>
Sales $ 9,138 $22,301
Costs and expenses
Cost of sales 9,009 15,053
Exploration costs 4,008 3,005
Selling, general and
administrative expenses 1,322 1,511
------- -------
Total costs and expenses 14,339 19,569
Earnings (loss) before interest and taxes (5,201) 2,732
Interest income 1,641 2,168
------- -------
Income (loss) before income taxes (3,560) 4,900
Provision for income taxes - 252
------- -------
Net income (loss) $(3,560) $ 4,648
======= =======
Earnings (loss) per common share $(0.05) $0.06
======= =======
Number of common shares used in earnings
per share computation 73,484 73,484
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Page 3
FMC Gold Company
- ----------------
Consolidated Balance Sheets
- ---------------------------
(In thousands, except per share data)
<TABLE>
<CAPTION>
March 31
1995 December 31
Assets (Unaudited) 1994
- ------ ----------- -----------
<S> <C> <C>
Current assets:
Loans due from FMC Corporation $104,000 $120,326
Amounts due from FMC Corporation 590 -
Trade receivables, net 162 1,496
Inventories 6,882 5,621
Other current assets 2,111 1,558
-------- --------
Total current assets 113,745 129,001
-------- --------
Property, plant and equipment at cost 314,461 298,919
Less -- accumulated depreciation 201,139 197,652
-------- --------
Net property, plant and equipment 113,322 101,267
-------- --------
Other assets 4,819 4,821
-------- --------
Total assets $231,886 $235,089
======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Outstanding checks in excess of bank balances $ 1,461 $ 1,940
Accounts payable, trade and other 12,134 11,110
Accrued and other liabilities 10,056 9,025
Amounts due to FMC Corporation - 594
Income taxes payable 1,929 1,919
-------- --------
Total current liabilities 25,580 24,588
-------- --------
Other long-term liabilities 13,744 14,379
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 123,218 126,778
-------- --------
Total stockholders' equity 192,562 196,122
-------- --------
Total liabilities and stockholders' equity $231,886 $235,089
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Page 4
<TABLE>
<CAPTION>
FMC Gold Company
- ----------------
Consolidated Statements of Cash Flows (Unaudited)
- ---------------------------------------------------
(Dollars in thousands)
Three Months
Ended March 31
-------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ (3,560) $ 4,648
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for depreciation and amortization 3,210 2,535
(Increase) decrease in assets:
Trade receivables 1,334 591
Inventories (1,261) (1,046)
Amounts due from FMC Corporation (590) -
Other current assets (553) 266
(Decrease) increase in liabilities:
Accounts payable, trade and other 1,024 (3,143)
Accrued and other liabilities 1,031 1,111
Amounts due to FMC Corporation (594) (2,183)
Income taxes payable 10 251
Other long-term liabilities (635) (299)
-------- --------
Net cash provided (used) by operating activities $ (584) $ 2,731
======== ========
Cash flows from investing activities:
Capital spending (15,664) (2,881)
Disposal of property, plant and equipment, net 399 121
(Increase) decrease in other assets 2 (156)
-------- --------
Net cash used in investing activities (15,263) (2,916)
-------- --------
Increase (decrease) in cash and cash equivalents (15,847) (185)
Cash and cash equivalents, beginning of period 118,386 166,784
-------- --------
Cash and cash equivalents, end of period $102,539 $166,599
======== ========
</TABLE>
Supplemental disclosure of cash flow information:
Cash and cash equivalents consists of cash less outstanding checks in excess of
bank balances and loans due from FMC Corporation.
See accompanying notes to consolidated financial statements.
<PAGE>
Page 5
FMC Gold Company
- ----------------
Notes to Consolidated Financial Statements (Unaudited)
- ------------------------------------------------------
Note 1: Financial Information
- ------------------------------
The consolidated balance sheet at March 31, 1995, and the related statements of
income (loss) and cash flows for the interim periods ended March 31, 1995 and
1994 have been reviewed by the company's independent auditors. The review is
discussed more fully in their report included herein. In the opinion of
management, such financial statements have been prepared in conformity with
generally accepted accounting principles and reflect all adjustments necessary
for a fair statement of the results of operations for the interim periods. All
such adjustments are of a normal recurring nature. The results of operations
for the three-month periods ended March 31, 1995 and 1994 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 1994 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)
March 31 December 31
1995 1994
-------- -----------
<S> <C> <C>
Gold and silver dore $ 196 $ 279
Leach-pad ore 4,747 2,730
Materials and supplies 1,939 2,612
------ ------
$6,882 $5,621
====== ======
</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.
<PAGE>
Page 6
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 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
March 31, 1995, loans to FMC totalled $104.0 million. As of March 31, 1995,
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 1995 are approximately $31.0
million for planned capital expenditures, $6.0 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 of 1994, the company purchased put options and entered
into certain forward contracts in connection with gold production from the
Beartrack property. The options were purchased for $4 million and provide the
company the right to sell gold at an agreed-upon price of $400 per ounce. 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 will be
included in FMC's federal tax return for tax periods beginning April 1, 1994,
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.
Results of Operations
---------------------
Sales in the first quarter of 1995 were $9.1 million, $13.2 million lower than
last year's quarter due to lower gold production resulting from the July 1994
closing of the Royal Mountain King mill and the winding down of the Paradise
Peak heap-leaching operation. Realized gold prices declined to $378 per ounce
from $383 per ounce in 1994. Net loss was $3.6 million, or $(0.05) per share,
compared with net income of $4.6 million, or $0.06 per share in 1994.
First quarter gold production was 24,000 ounces compared with 62,000 in the
first quarter of 1994. The company's 30 percent share of production from the
Jerritt Canyon mine was 22,000 ounces, down 7,000 ounces due to lower throughput
and declines in grades and recoveries. Production from the Paradise Peak mine
was 2,000 ounces, down 18,000 ounces, as heap-leach operations wound down and
reclamation activity increased. Production from the Paradise Peak operation is
expected to end in the second quarter of 1995.
Cost of sales declined to $9.0 million due mainly to the 1994 closure of the
Royal Mountain King mill. Costs at Paradise Peak declined $1.1 million
reflecting the decline in production.
Exploration costs in the first quarter of 1995 increased 33 percent to $4.0
million with the majority of spending focused on the El Penon, Chile and Rossi,
Nevada projects. Spending also included continuing work within the vicinity of
the Jerritt Canyon operation and exploration and evaluation of grassroots
properties in various countries.
<PAGE>
Page 7
Administrative expenses were $0.2 million lower than the year ago period.
The company remains debt free with interest income of $1.6 million earned on
cash loaned to FMC. Interest income was $0.6 million lower than in 1994
reflecting the lower loan balances.
The company has not tax benefited losses in the first quarter of 1995. The
effective tax rate in first quarter 1994 was 5 percent.
Beartrack Project Update
- ------------------------
At Beartrack, an injunction against all ongoing and future forest activities,
including mining, that could effect the local endangered species of salmon was
issued, stayed and subsequently dissolved early in the first quarter of 1995.
Another lawsuit filed last year by the Sierra Club Legal Defense Fund is still
pending. The lawsuit alleges that the biological opinion issued by the National
Marine Fisheries Service on the Beartrack property fails to satisfy the
requirements of the Endangered Species Act. FMC Gold believes the biological
opinion was carefully considered and is fully supported by the record.
Development at Beartrack has continued uninterrupted and production is scheduled
to begin during the second quarter of 1995.
El Penon Project: Northern Chile
- --------------------------------
FMC Gold Company's wholly owned Chilean subsidiary, Minera FMC Limitada, has
identified significant gold and silver mineralization at the El Penon project in
northern Chile. The mineralization has substantial potential to become an
economic orebody based on the primary target area that has been surface drilled
to date.
The primary target area remains open and several other target areas have been
identified elsewhere on the El Penon property. The El Penon discovery was made
by FMC Gold geologists as a result of the company's ongoing grassroots
exploration program.
The El Penon project comprises 220 square miles of mining concessions and leases
and is located 75 miles southeast of Antafogasta, Chile. There are 155
completed exploration holes on the property. In the primary target area, 33
holes have intercepted significant mineralization (at least 0.13 ounces per ton
(opt) gold for at least 13 feet). Drilling on a 100-foot spacing along a
portion of the primary target area has identified a significant resource, with
an average grade of 0.25 opt gold and 4.43 opt silver.
Thickness of the mineralization in the resource averages 50 feet to 100 feet in
a steeply dipping zone with mineable widths. The resource is oxidized, contains
minimal contaminants and is amenable to direct cyanidation. Ore grade
mineralization beyond the preliminary inferred resource has been intercepted
nearby, and additional drilling is proceeding in an attempt to link this
mineralization to the resource.
FMC Gold geologists have discovered additional high grade mineralization at four
separate target areas up to 2-1/2 miles from the primary target. Other surface
and geophysical targets at El Penon have received only minimal attention to
date.
The company expects to begin development of an underground decline into the
primary target area during the second half of this year in order to confirm
mineralization, acquire bulk metallurgical samples, conduct underground drilling
at depth across the
<PAGE>
Page 8
zone, and investigate underground mining conditions. The discoveries to date
are on concessions 100% owned, or under option by Minera FMC Limitada. In
addition, the company has acquired water rights which are expected to be
sufficient for initial mine development and future growth.
Rossi Project: Carlin Trend, Nevada
- -----------------------------------
FMC Gold Company has discovered significant gold mineralization at the Rossi
property on the northern end of the Carlin Trend in Nevada. The mineralization
occurs in the Popovich geologic formation along a strike length of 2,400 feet
between depths of 770 and 1,940 feet.
Since 1991, FMC Gold has drilled 96 holes at the Rossi property to an average
depth of 1,580 feet. 75 of these holes have focused on the primary target area
where 22 holes have resulted in 45 significant intercepts (at least 0.20 opt
gold for at least 6 feet) with an average grade of 0.47 opt gold over 18 feet.
The company has developed a preliminary geologic model of the mineralization
based on these intercepts and inferred geologic controls. Although the geologic
model indicates significant potential, additional surface drilling and
underground access will be required to confirm the potential indicated by this
model, extend the known mineralized zone and investigate underground mining
conditions. The company continues to investigate the Rossi property with an
active drilling program.
The Rossi project is comprised of approximately 11 square miles of mining
claims. The company initially focused on shallow targets but began a deep
drilling program in 1990 when the success of Barrick Gold and Newmont Gold's
deep drilling on nearby properties became known. FMC Gold acquired 100% of the
precious metals rights at the Rossi Project in 1993 from an NL Baroid affiliate.
INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------
A report by KPMG Peat Marwick, the company's independent accountants, on the
financial statements included in Form 10-Q for the quarter ended March 31, 1995
is included on page 9.
<PAGE>
Page 9
Independent Accountants' Report
-------------------------------
The Board of Directors
FMC Gold Company:
We have reviewed the accompanying consolidated balance sheet of FMC Gold and
consolidated subsidiaries as of March 31, 1995, and the related consolidated
statements of income and cash flows for the three - month periods ended
March 31, 1995 and 1994. These consolidated 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 accounting 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 consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of FMC Gold Company and consolidated
subsidiaries as of December 31, 1994, and the related consolidated statements of
income, cash flows and changes in stockholders' equity for the year then ended
(not presented herein); and in our report dated January 20, 1995, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1994, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
KPMG Peat Marwick LLP
Salt Lake City, Utah
April 13, 1995
<PAGE>
Page 10
Following is a summary of key operating data for the company for the three-month
periods ended March 31, 1995 and 1994:
FMC Gold Company
----------------
Operating Data (Unaudited)
--------------------------
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31
----------------
1995 1994
------- -------
<S> <C> <C>
Tons of ore processed (thousands)
Jerritt Canyon (FMC Gold share) 206 230
Royal Mountain King - 332
Ore grade (ounces per ton milled)
Jerritt Canyon 0.129 0.135
Royal Mountain King - 0.055
Mill recoveries
Jerritt Canyon 84.8% 88.9%
Royal Mountain King - 74.6%
Production (thousands of ounces)
Gold
Paradise Peak 2 20
Jerritt Canyon 22 29
Royal Mountain King - 13
------ ------
Total 24 62
Silver 8 63
Cash cost of production
($ per gold equivalent ounce)
Paradise Peak $ 152 $ 68
Jerritt Canyon $ 228 $ 236
Royal Mountain King $ - $ 324
Average $ 221 $ 201
</TABLE>
<PAGE>
Page 11
Part II - Other Information
---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
Page Number in
Number in Document Numbering
Exhibit Table Description System
------------- ----------- ------------------
15 Letter re: unaudited 1
interim financial
information (KPMG
Peat Marwick LLP)
27 Financial Data Schedule 2
(b) Reports on Form 8-K
-------------------
Form 8-K dated January 20, 1995 describing the announcement that FMC Gold
subsidiary filed motion to stay injunction that affects Beartrack mine.
<PAGE>
Page 12
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FMC GOLD COMPANY
------------------------------
(Registrant)
Date: May 11, 1995 Steven E. Baginski
------------ ------------------------------
Steven E. Baginski
Vice President Finance
<PAGE>
Page 1
Exhibit Index
Number in Page Number in Document
Exhibit Table Description Numbering System
- -------------- ----------- -----------------------
15 Letter re: unaudited 1
interim financial
information
(KPMG Peat Marwick LLP)
27 Financial Data Schedule 2
<PAGE>
Page 1
Exhibit 15 Letter re: Unaudited Interim Financial Information
---------------------------------------
FMC Gold
Chicago, Illinois
Gentlemen:
Re: Registration Statements No. 33-35804 and No. 33-35805 on Form S-3.
With respect to the subject registration statements, we acknowledge our
awareness of the incorporation by reference therein of our report dated April
13, 1995 related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Act.
Very truly yours,
KPMG Peat Marwick LLP
Salt Lake City, Utah
May 11, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FMC GOLD COMPANY FORM 10Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 104,000
<SECURITIES> 0
<RECEIVABLES> 456
<ALLOWANCES> 294
<INVENTORY> 6,882
<CURRENT-ASSETS> 113,745
<PP&E> 314,461
<DEPRECIATION> 201,139
<TOTAL-ASSETS> 231,886
<CURRENT-LIABILITIES> 25,580
<BONDS> 0
<COMMON> 735
0
0
<OTHER-SE> 191,827
<TOTAL-LIABILITY-AND-EQUITY> 231,886
<SALES> 9,138
<TOTAL-REVENUES> 9,138
<CGS> 9,009
<TOTAL-COSTS> 9,009
<OTHER-EXPENSES> 4,008
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,560)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,560)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,560)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
