<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
COMMISSION FILE NO. 1-2714
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1997
-------------
or
(_) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from
------------------------
to
------------------------
ATLAS CORPORATION
---------------------------------------------
(Exact name of registrant as specified
in its charter)
DELAWARE 13-5503312
- ------------------------------- --------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
370 Seventeenth Street, Suite 3050, Denver, CO 80202
----------------------------------------------------
(Address of principal executive offices)
(Zip Code)
303-629-2440
-------------------------
(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
--- ---
As of August 4, 1997, 21,127,278 shares of Common Stock, par value $1 per share,
were issued and outstanding.
Page 1 of 14
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
--------------------
Atlas Corporation
Consolidated Balance Sheets
(in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
- -----------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,027 $ 1,099
Accounts receivable - Trade 412 270
Accounts receivable - Other 533 469
Inventories 1,127 848
Prepaid expenses and other current assets 126 195
--------- ---------
Total current assets 3,225 2,881
--------- ---------
Property, plant and equipment 65,482 64,166
Less, accumulated depreciation, depletion,
Amortization and impairment (45,201) (44,779)
--------- ---------
20,281 19,387
Investment in Vista Gold Corp. (Notes 5 and 9) -- 11,542
Restricted cash and securities 6,253 6,266
Other assets 578 1,605
--------- ---------
$ 30,337 $ 41,681
========= =========
LIABILITIES
Current liabilities:
Trade accounts payable $ 1,802 $ 1,544
Accrued liabilities 1,882 2,136
Short-term debt (Note 7) 2,448 2,129
Deferred gain on joint venture agreement (Note 8) 750 --
--------- ---------
Total current liabilities 6,882 5,809
Long-term debt (Notes 6 and 9) 5,800 13,310
Other liabilities, long-term 9,503 9,505
Deferred gain on joint venture agreement (Note 8) 687 --
Minority Interest 613 685
Commitments and contingencies (Notes 4 and 11)
STOCKHOLDERS' EQUITY
Common stock (Notes 8 and 9) 27,015 24,180
Capital in excess of par value 66,882 68,514
Deficit (87,045) (77,867)
Currency translation adjustment -- (133)
Unrealized loss on investments in equity securities -- (2,322)
--------- ---------
Total stockholders' equity 6,852 12,372
--------- ---------
$ 30,337 $ 41,681
========= =========
</TABLE>
See notes to consolidated financial statements.
Page 2 of 14
<PAGE>
Atlas Corporation
Consolidated Statements of Operations
(In Thousands, Except Per Share Data, Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------------------------
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mining revenue $ 995 $ -- $ 1,649 $ --
Costs and expenses:
Production costs 778 -- 1,392 --
Depreciation, depletion and amortization 186 -- 436 --
Impairment of mineral property (Note 10) 1,225 -- 1,225 --
Shutdown and standby costs 125 279 232 561
General and administrative expenses 619 1,635 1,258 2,846
Exploration and prospecting costs 82 79 639 168
------------ ------------ ------------ -------------
Gross Operating Loss (2,020) (1,993) (3,533) (3,575)
Other (income) and expense:
Interest expense 297 214 607 637
Interest income (79) (168) (196) (329)
Equity in loss of unconsolidated
subsidiary (Note 5) -- 1,026 -- 1,722
Gain on sale of marketable securities -- -- -- (1,333)
Gain from joint venture agreement (Note 8) (63) -- (63) --
Loss on repurchase of debentures (Note 9) 5,411 -- 5,411 --
Other 62 19 (41) 13
------------ ------------ ------------ -------------
Loss from continuing operations before
taxes and minority interest (7,648) (3,084) (9,251) (4,285)
Provision for income taxes -- -- -- --
------------ ------------ ------------ -------------
Loss before minority interest (7,648) (3,084) (9,251) (4,285)
Minority interest in net loss of subsidiary 36 95 73 184
------------ ------------ ------------ -------------
Net loss $ (7,612) $ (2,989) $ (9,178) $ (4,101)
============ ============ ============ =============
Per share of common stock:
Loss from continuing operations $ (0.31) $ (0.15) $ (0.38) $ (0.20)
Loss from discontinued operations -- -- -- --
------------ ------------ ------------ -------------
Net loss $ (0.31) $ (0.15) $ (0.38) $ (0.20)
============ ============ ============ =============
Average number of common
shares outstanding 24,582 20,092 24,389 20,071
============ ============ ============ =============
</TABLE>
See notes to consolidated financial statements
Page 3 of 14
<PAGE>
Atlas Corporation
Consolidated Statements of Cash Flows
(In Thousands, Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
1997 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities:
Net loss $ (9,178) $ (4,101)
Loss from discontinued operations -- --
Add (deduct) non-cash items:
Depreciation, depletion, amortization 497 28
Impairment of mineral property 1,225 --
Equity in loss of unconsolidated subsidiary -- 1,722
Deferred gain on join venture agreement (63) --
Gain on sale of marketable securities -- (1,333)
Loss on repurchase of debentures 5,411 --
Other 15 (99)
Net change in non-cash items
Related to operations (Note 3) 24 (1,559)
--------------- ---------------
Cash used in continuing operations (2,069) (5,342)
--------------- ---------------
From discontinued operations:
Change in estimated uranium reclamation costs 27 (1,215)
--------------- ---------------
Cash provided by (used in) discontinued operations 27 (1,215)
--------------- ---------------
Cash used in operating activities (2,042) (6,557)
--------------- ---------------
Investing activities:
Additions to property, plant and equipment (2,608) (832)
Proceeds from joint venture agreement 1,500 --
Proceeds from issuance of debt released from escrow -- 10,000
Proceeds from sale of marketable securities 76 4,520
--------------- ---------------
Cash provided by (used in) investing activities (1,032) 13,688
--------------- ---------------
Financing activities:
Repayment of short-term debt -- (2,000)
Borrowings on short-term debt 319 --
Proceeds from issuance of stock 500 --
Proceeds from issuance of long-term debt 2,300 --
Costs of repurchasing of debentures (117) --
--------------- ---------------
Cash used in financing activities 3,002 (2,000)
--------------- ---------------
Increase (decrease) in cash and cash equivalents (72) 5,131
Cash and cash equivalents:
Beginning of period 1,099 1,607
--------------- ---------------
End of period $ 1,027 $ 6,738
=============== ===============
</TABLE>
See notes to consolidated financial statements.
Page 4 of 14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. There has not been any change in the
significant accounting policies of Atlas Corporation (the "Company") for the
periods presented.
In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The results for these interim periods are not necessarily
indicative of results for the entire year. These statements should be read
in conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report of Form 10-K for the fiscal year
ended December 31, 1996.
Certain of the comparative figures have been reclassified to conform with
the current year's presentation.
2. In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per
share, the dilutive effect of stock options will be excluded. The impact of
Statement 128 on the calculation of primary and fully diluted earnings per
share for the periods ended June 30, 1997 and June 30, 1996 is not expected
to be material.
There has been no dilution of earnings per share as a result of the exercise
of Option Warrants to Purchase Common Stock or stock options during the
periods presented.
3. The components of the net change in items other than cash related to
operating activities as reflected in the Consolidated Statements of Cash
Flows are as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------------
1997 1996
------------- --------------
<S> <C> <C>
Add (deduct) items other than cash:
Accounts receivable $ (206) $ 92
Inventories (279) --
Prepaid expenses and other current assets 69 (18)
Other assets 172 (167)
Trade accounts payable 125 (1,331)
Accrued liabilities 117 (50)
Other liabilities, long-term 26 (85)
============= ==============
$ 24 $ (1,559)
============= ==============
</TABLE>
Page 5 of 14
<PAGE>
4. The Company is obligated to decommission and reclaim its uranium mill site
located near Moab, Utah. The Company discontinued its uranium operations in
1984, then permanently shut them down in 1987 and accrued estimated shut-
down and reclamation costs of $17,406,000. The balance of this accrual at
June 30, 1997 was $2,732,000. Title X of The Comprehensive National Energy
Policy Act ("Title X"), enacted in October 1992, provides for the
reimbursement of decommissioning and reclamation expenses related to uranium
sites with tailings generated from Atomic Energy Commission ("AEC")
contracts. The Company's uranium reclamation costs will be reduced by this
government cost sharing program as 56% of its tailings were generated under
AEC contracts. The Company believes the accrual, when combined with
anticipated reimbursements under the Title X program, is sufficient to cover
future reclamation costs.
The Company has submitted four claims to the Department of Energy ("DOE")
under Title X for reclamation costs incurred from the fiscal year ended
June 30, 1980 through March 31, 1997. As of June 30, 1997, the status of the
four claims is as follows:
<TABLE>
<CAPTION>
Actual
Anticipated Reim-
Gross Claim Gross Amount Reimbursement bursement Anticipated
Claim Date Amount Approved Receivable Payments Balance Due
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
July 7, 1994 $4,999,000 $4,510,000 $2,530,000 $1,988,000 $ 542,000
June 16, 1995 3,638,000 2,591,000 1,454,000 990,000 464,000
May 1, 1996 3,998,000 2,987,000/1/ 1,676,000 368,000 1,308,000
May 1, 1997 2,054,000 --/2/ 1,152,000 -- 1,152,000
--------------------------------------------------------------------------------------------------
Totals $6,812,000 $3,346,000 $3,466,000
==================================================================================================
</TABLE>
/1/ Preliminary approval as of 6/30/97.
/2/ Pending.
Timing of the actual payments for approved reimbursements is a function of
Congressional appropriation of Title X funding.
5. On June 25, 1997, the Company's remaining shares in Vista Gold Corp.
("Vista") were transferred to the holders of the Company's 7% Exchangeable
Debentures as part of the repurchase of $9.8 million of such debentures (see
Note 9). Consequently, the Company no longer reports its share of Vista's
earnings in the Consolidated Statement of Operations.
With respect to the periods ended June 30, 1996, the Company reported the
financial results of Vista in which it held a 27.5% ownership interest as of
June 30, 1996, under the equity method. A summarized Statement of Operations
(Unaudited, US dollars, Canadian GAAP, in thousands) of Vista, as reported
by Vista, for the six month period ending June 30, 1996 is set forth below:
<TABLE>
<S> <C>
Revenue $ 16,408
Cost of Sales 13,805
Depreciation, depletion & amortization 4,394
------------
Gross margin $ (1,791)
Net loss $ (4,897)
============
</TABLE>
Page 6 of 14
<PAGE>
Under the equity method, the Company reported a net loss of $1,722,000 for
the six month period ended June 30, 1996. Cost in excess of Atlas' share of
Vista's net assets were allocated based upon their relative market value.
Excess costs related to producing properties were amortized on a unit of
production (gold ounces) basis and were included in the reported loss.
6. In May 1997, Arisur Inc. ("Arisur"), the Company's wholly owned Bolivian
subsidiary, completed a financing agreement with the Corporacion Andina de
Fomento ("CAF") for $3 million. The terms of the loan call for interest to
be paid semi-annually beginning in November 1997 at the six month LIBOR rate
plus 4.5% per annum (10.625% at June 30, 1997). Principal is payable in six
equal semi-annual payments commencing in November 1998. The loan is secured
by all of the assets of Arisur acquired prior to January 1, 1997. As of
June 30, 1997, Arisur had received $2.3 million of the proceeds with the
remaining $700,000 expected in the fall of 1997. The proceeds of the loan
will pay for certain expansion and development programs for the Company's
Bolivian operations.
7. In April 1997, the Company completed a $500,000 short-term financing from
CaribGold Resources Inc. ("Carib") of Toronto, secured by the Doby George
property. The note is repayable on or before October 16, 1997 at Prime Rate
plus 2% (10.5% at June 30, 1997).
8. On June 6, 1997, the Company completed an agreement with Barrick Gold
Exploration Inc. ("Barrick"), a subsidiary of Barrick Gold Corporation of
Toronto, Ontario, Canada, for the purchase from the Company of its Gold Bar
properties ("Gold Bar"). Under the terms of the agreement, Barrick purchased
from the Company more than 90% of Gold Bar with an option to acquire the
balance within two years. The Company also received $1,000,000 in cash from
Barrick and Barrick purchased 1,000,000 common shares of the Company at
$1.00 per share. By June 1999, Barrick is obligated to expend $3,000,000 in
the exploration and development of Gold Bar. Unless, at the end of the two
year period, Barrick elects to reconvey Gold Bar to the Company, the Company
will have the option to sell its remaining 10% interest and receive
$15,000,000 plus a 2% net smelter royalty, or to participate with Barrick in
the further exploration and development of the property as a 25% carried
joint venture participant. If the Company elects the joint venture
alternative, Barrick will be obligated to expend a minimum of $15,000,000
and make a development decision on the project before requiring any
contribution by the Company.
For reporting purposes, the Company has valued the common shares issued at
$.50 per share, or $500,000, with the remaining cash received of $1.5
million as a deferred gain on joint venture agreement to be amortized over
the two year option period. The unamortized balance at June 30, 1997 was
$1,437,000.
9. On June 25, 1997, the Company repurchased all of the $9,810,000 outstanding
principal amount of its 7% Exchangeable Debentures due October 25, 2000 (the
"Debentures"), together with accrued interest, from the Debenture Holders
thereof in exchange for (i) 8,313,065 common shares of Vista Gold Corp., and
(ii) 1,500,928 new issue Atlas common shares. After consideration of all
transaction fees, the Company's basis in the Vista shares and the value of
the Atlas common shares, the Company reported a loss from the repurchase of
debentures of $5,411,000 for the three and six month periods ended
June 30, 1997.
Page 7 of 14
<PAGE>
10. The Company recorded $1,225,000 as an impairment of mineral property in the
period ended June 30, 1997. The adjustment is related to the Doby George
property and is a result of the Company's evaluation of the current market
value of the property based upon discussions with possible purchasers. The
Company intends to sell the property if an acceptable offer is received.
11. On July 28, 1997, the Company, its wholly owned subsidiary Suramco Metals,
Inc. and the former shareholders' of Arisur Inc. were named defendants in a
lawsuit filed by the former owners of Cia Minera Andacaba, S.A. (the
Andacaba Mine) who are seeking additional compensation of $800,000.00 under
the terms of its December 1994 purchase and sales agreement with Suramco
Metals, Inc. and Arisur Inc. The Company is currently investigating both the
complaint and any claims it may have against third parties for
indemnification however, the outcome of this complaint currently can not be
determined.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
"SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995.
Statements which are not historical facts contained in this Form 10-Q are
forward looking statements that involve risks and uncertainties that could
cause actual results to differ from projected results. Factors that could
cause actual results to differ materially include, among others: general
economic conditions, metal and mineral prices, political events in foreign
countries, risks associated with foreign operations generally, the timing of
receipt of necessary governmental permits, climatic conditions, labor
relations, availability and cost of material and equipment, mineralization
and orientation of ore bodies, delays in anticipated start-up dates,
environmental risks, the results of financing efforts and other factors
detailed in the Company's Form 10-K and 8-K filed with the Securities and
Exchange Commission.
CAPITAL RESOURCE REQUIREMENTS
Bolivian operations
In late 1996 and early 1997, the Company began an underground mine
development program at the Andacaba, Don Francisco and Koyamayu mines and a
mill expansion program at the Don Roy mill in order to increase mine
production and milling capacity. The mill expansion was completed in April
1997, increasing capacity to 600 metric tonnes per day. The mine expansion
is expected to be completed by the end of 1997. Upon completion, operations
at Andacaba will be expanded from 220 tonnes per day ("tpd") to 400 tpd and
at Don Francisco and Koyamayu to 150 tpd. Total remaining capital costs for
the development program are expected to be funded from the CAF loan,
described in Note 6 to the Consolidated Financial Statements, and cash from
continuing operations.
The Company anticipates funding the acquisition of additional Bolivian
operations through cash flow from operations, project financing, joint
ventures, placement of additional equity or debt and/or the sale of assets.
Page 8 of 14
<PAGE>
Perlite
The Tucker Hill perlite project, purchased in December 1996 by the Company's
majority owned subsidiary, Cornerstone Industrial Minerals Corporation, is
currently in the start-up phase. Mining of perlite ore, which is stockpiled
for processing at the Tucker Hill plant (the "Plant"), commenced in December
1996. The first shipment of crushed and sized perlite was delivered in
February 1997. Subsequently, production was shut down until operating
improvements identified in the initial testing phase could be completed.
Operations at the Plant recommenced in June 1997. The Company anticipates
that remaining Plant modifications and any other capital requirements at
Tucker Hill will be funded from existing cash reserves, from cash flow from
operations or debt financing.
Gold Properties
On March 21, 1997, the Company closed on the sale of its Musgrove Creek
property to Meridian Gold Company ("Meridian") for a total sales price of
$125,000, including $25,000 received in 1996. In addition, Meridian assumed
a reclamation obligation of $55,000, and conveyed to Atlas a 1% net smelter
return royalty on claims previously owned by Atlas. In the event Meridian
places minerals at Musgrove Creek into production, Atlas will receive an
additional $100,000.
Exploration and development expenditures on the Gold Bar claim block will be
funded by Barrick as described above. With completion of the Gold Bar
agreement (Note 8), and with other cost cutting measures recently
implemented, the Company's holding costs on the property will decrease
significantly in 1997 to an estimated $350,000. These costs will be funded
from cash flow from operations, debt and equity financing and the Gold Bar
sales proceeds.
The Company is currently assessing development strategies and alternatives
for the Grassy Mountain gold property and is seeking to sell its Doby George
gold property. However, the Company has made expansion of the Bolivian
operations its immediate focus, its long term strategy is both to grow its
Bolivian operations, and to develop and expand the Company's interests in
gold properties when market conditions improve.
Reclamation Activities
Final reclamation of the uranium mill site near Moab, Utah will commence
following the issuance of a final Environmental Impact Statement on Atlas'
reclamation plan. See below, "Results of Operations - Reclamation
Activities". The total estimated cost of Atlas' proposed reclamation plan is
$12-$17 million. As the Department of Energy will reimburse 56% of all
reclamation costs under Title X, Atlas will be reimbursed for approximately
$6.7-$9.5 million in reclamation costs, leaving Atlas to fund $5.3-$7.5
million. The Company has filed claims of $6.8 million for reimbursement of
Title X reclamation costs incurred through March 1997 and has received
payments of $3.3 million, leaving $3.5 million in Title X reimbursements due
Atlas. Atlas also has $4.2 million in restricted cash securing a Nuclear
Regulatory Commission ("NRC") reclamation performance bond. Based upon the
amounts due the Company under Title X, and the restricted cash supporting
the performance bond, the Company is confident that it will be able to fund
and/or finance the anticipated costs for reclamation of its uranium mill and
tailings site.
Page 9 of 14
<PAGE>
LIQUIDITY
From the suspension of milling operations at the Gold Bar property in
September 1994 until the acquisition of Arisur in October of 1996, the
Company had no mining revenue and has funded its operating losses, capital
and working capital requirements through a combination of the issuance of
debt and equity instruments and the sale of assets.
As of June 30, 1997, the working capital deficit was $3,657,000, which
compares to working capital of $4,464,000 as of June 30, 1996. The Company's
current ratio at June 30, 1997 was .47 to 1, compared to 2.48 to 1 at
June 30, 1996. The decrease during the year is primarily a result of the
Company's cash investment in Arisur totaling $5,600,000, development and
construction costs of $3,638,000 at the Tucker Hill perlite property in
Lakeview, Oregon, the purchase of Grassy Mountain for $700,000, ongoing
general and administrative expenses of $3,100,000 and other operating and
capital expenditures of $2,500,000. These amounts have been offset by
receipts from the sale of Vista shares of $5,603,000, the Barrick purchase
transaction of $2,000,000, and the Carib loan of $500,000.
In order to fund near term capital requirements, the Company expects to
utilize current cash available, cash flow from operations and the proceeds
from the CAF loan and expected Title X receipts. Longer term capital
requirements will be satisfied from future operating cash flows, project
financing, placement of additional equity or debt and/or from the sale of
other assets.
RESULTS OF OPERATIONS
During the three and six month periods ended June 30, 1997, the Company had
mining revenue of $995,000 and $1,649,000 compared to no mining revenue in
the same periods of 1996. This is a result of the acquisition of Arisur in
October 1996, which has operating lead, zinc and silver mines in Bolivia,
South America. Mining revenue was less than expected during the six months
ended June 30, 1997 due to flooding which cut off access to Don Francisco
and Koyamayu and reduced production from Andacaba during the first quarter.
This level of flooding is uncharacteristic and production from all mines has
resumed.
Cash production costs were $778,000 and $1,392,000 during the three and six
month period ended June 30, 1997 compared to no costs during the similar
periods of 1996, for the same reasons as noted above. Production costs were
also adversely impacted by the flooding noted above resulting in lower than
expected operating cash flow of $257,000 for the six months ended June 30,
1997.
Shutdown and standby costs at Gold Bar of $125,000 and $232,000 were
incurred in the three and six month periods ended June 30, 1997 compared to
$279,000 and $571,000 for the comparable periods in 1996. The decrease is a
result of cost cutting measures implemented by the Company.
Exploration costs for the three and six month periods ending June 30, 1997
were $82,000 and $639,000 compared to $79,000 and $168,000 for the
comparable periods in 1996. The 1997 amount includes a $450,000 charge
pursuant to the Company's joint venture termination agreement with Vista
Gold Corp.
Page 10 of 14
<PAGE>
General and administrative expenses decreased during the three month period
ended June 30, 1997 to $619,000 from $1,635,000 for the comparable period in
1996. The $1,016,000 decrease during the period is due primarily to
severance costs incurred in 1996 of $530,000 associated with resignation of
David J. Birkenshaw as Chairman and CEO of the Company and also $300,000
related to costs associated with the failed merger discussions with MSV
Resources Inc. General and administrative expenses during the six month
period ended June 30, 1997 were $1,258,000 compared to $2,846,000 for the
comparable period in 1996. The 1996 amount is a result of the severance and
merger costs discussed above, Company bonuses paid during the first quarter
of 1996, an intensified property acquisition program and costs associated
with the relocation of the corporate office. These costs were eliminated in
1997 in conjunction with an overall cost reduction program, which has
resulted in the significant cost reductions for the periods noted above.
Interest expense incurred during the three and six month periods ended
June 30, 1997 was $297,000 and $607,000 compared to $214,000 and $637,000
for the same periods in 1996. The increase during the three month period
ended June 30, 1997 is principally a result of the increased debt associated
with the Bolivian operations, which include the CAF loan discussed above and
advances on future metal sales from the Company's metal trader. During the
first quarter of 1996, the Company incurred approximately $120,000 in
interest charges associated with a $2,000,000 bridge loan with First
Marathon Securities Inc. resulting in the higher interest costs for the six
months ended June 30, 1996.
Capital expenditures during the quarter ended June 30, 1997 were $1,690,000,
of which $322,000 related to the development and construction of the Tucker
Hill process facility and $1,368,000 related to the ongoing mine and mill
expansion in Bolivia. During the quarter ended June 30, 1996, the Company
incurred capital expenditures of $410,000 principally for the development of
the Tucker Hill, Doby George, and Commonwealth properties.
Reclamation Activities
On January 30, 1996, the NRC, the federal agency responsible for overseeing
decommissioning and reclamation of Atlas' uranium site located near Moab,
Utah, released for public comment a draft Environmental Impact Statement
("EIS") and draft Technical Evaluation Report ("TER") on Atlas' proposal for
in place reclamation of the uranium tailings generated by Atlas' uranium
mill from 1956 to 1984. On March 7, 1997, the NRC issued the final TER which
concluded that the Atlas plan for capping the tailings facility on-site is
in compliance with NRC's technical requirements. The final EIS is expected
in late 1997.
The Company is confident that the ultimate result of the EIS review process,
in conjunction with the supportive conclusion of the TER will be the
approval of its reclamation plan, and that its remaining accrual, when
combined with anticipated reimbursements of reclamation costs under the
Title X program and restricted cash used for surety collateral, is
sufficient to cover future reclamation costs.
Page 11 of 14
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
On July 28, 1997, the Company was served with a complaint in the matter
of Curt Goldschmidt and Ana Maria Goldschmidt vs. Atlas Corporation; Suramco
Metals, Inc.; Arisur Inc.; and Harold R. Shipes and Eileen A. Shipes in the
Superior Court of the State of Arizona in and for the County of Pima, case
number 320353. In December 1994, Suramco Metals, Inc. and Arisur Inc. purchased
all of the shares and assets of Cia Minera Andacaba S.A., which held a mining
company in La Paz, Bolivia. Subsequent to the purchase, the Company, acquired
both Suramco Metals, Inc. and Arisur Inc. Curt and Ana Maria Goldschmidt, the
former owners of Cia Minera Andacaba S.A., claim that the compensation for the
mining property under the purchase agreement was not paid in full and seek
damages in the amount of $800,000.00. The Company has not as yet responded to
the complaint and is currently investigating the claims set forth in the
complaint, as well as any claims the Company may have against third parties for
indemnification. It is premature at this time to fully analyze the Company's
potential liability, if any. Settlement discussions involving all the parties
are currently underway, but it is too early in the process to determine whether
or not the discussions will be fruitful.
Item 2. Changes in Securities
---------------------
On June 25, 1997, the Company repurchased all $9,810,000 outstanding
principal amount, plus accrued interest, of its 7% Exchangeable Debentures due
October 25, 2000 (the "Debentures"). The Exchange Agreements with the Debenture
holders provided for the entire $9,810,000 principal amount outstanding,
together with accrued interest, to be repurchased for a combination of 1,500,928
newly issued common shares of the Company and 8,313,065 Vista Gold Corp. common
shares which were owned by the Company and which had previously secured the
Debentures. The 1,500,928 newly issued common shares of the Company were issued
to Debenture holders in reliance (in the case of 585,959 of such shares) on the
exemption from registration set forth in Regulation D under the Securities Act
of 1933 (the "Act") and (in the case of 914,969 such shares) in reliance upon
the exemption from registration set forth in Regulation S under the Act. Each
Debenture holder receiving shares in reliance upon Regulation D made
representations, warranties and covenants to the Company to the effect that such
persons were Accredited Investors within the meaning of Regulation D and that
the transactions otherwise met the requirements of Regulation D.
In connection with the foregoing transaction, the Company further paid a
commission which included 294,300 shares of its common stock to Yorkton
Securities Inc., all of which shares were issued in reliance upon the exemption
from registration under Regulation S of the Act.
Page 12 of 14
<PAGE>
Item 3. Defaults upon Senior Securities
-------------------------------
On May 1, 1997, the Company did not make an interest payment on the
Debentures and an event of default was declared by The Chase Manhattan Bank (the
"Trustee") on June 2, 1997. On June 25, 1997, the Company repurchased all
$9,810,000 outstanding principal amount of the Debentures, together with accrued
interest, from the holders thereof, as described in Item 2 above and,
accordingly, the event of default became moot.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits
Exhibit No. Description
------------ -----------
27 Financial Data Schedule
b. Reports on Form 8-K
Report on Form 8-K dated April 25, 1997 containing the Company's
news release with respect to the signing of a letter agreement
by the Company and Barrick Gold Exploration Inc. ("Barrick")
with respect to the Company's Gold Bar property.
Report on Form 8-K dated June 11, 1997 containing the Company's
news release that on June 6, 1997, Barrick and the Company had
closed their transaction with respect to the purchase of 90% of
the Gold Bar property from the Company.
Report on Form 8-K dated June 27, 1997 containing the Company's
news release with respect to the repurchase by the Company of
the Debentures.
Report on Form 8-K dated July 9, 1997 pursuant to Item 2 and
Item 9 relating to the repurchase of the Debentures.
Page 13 of 14
<PAGE>
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.
ATLAS CORPORATION
-----------------
(Registrant)
By: /s/ James R. Jensen
--------------------------
James R. Jensen
Treasurer
Date: August 6, 1997 /s/ James R. Jensen
-------------- --------------------------
James R. Jensen
Treasurer (Principal Financial Officer &
Chief Accounting Officer)
Page 14 of 14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ATLAS
CORPORATION JUNE 30, 1997 CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 APR-01-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 1,027 1,027
<SECURITIES> 0 0
<RECEIVABLES> 945 945
<ALLOWANCES> 0 0
<INVENTORY> 1,127 1,127
<CURRENT-ASSETS> 3,225 3,225
<PP&E> 65,482 65,482
<DEPRECIATION> 45,201 45,201
<TOTAL-ASSETS> 30,337 30,337
<CURRENT-LIABILITIES> 6,132 6,132
<BONDS> 5,800 5,800
0 0
0 0
<COMMON> 27,015 27,015
<OTHER-SE> (18,726) (18,726)
<TOTAL-LIABILITY-AND-EQUITY> 30,337 30,337
<SALES> 1,649 995
<TOTAL-REVENUES> 1,649 995
<CGS> 1,828 964
<TOTAL-COSTS> 1,828 964
<OTHER-EXPENSES> 2,129 826
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 607 297
<INCOME-PRETAX> (8,181) (6,578)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (8,108) (6,546)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,108) (6,546)
<EPS-PRIMARY> (.33) (.27)
<EPS-DILUTED> (.33) (.27)
</TABLE>
