<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
COMMISSION FILE NO. 1-2714
(Mark One)
(X) Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended March 31, 1999 or
--------------
( ) Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _________ to ________
ATLAS CORPORATION
-------------------------------------------------
(Exact name of small business issuer 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 3140, Denver, CO 80202
-----------------------------------------------------
(Address of principal executive offices)
(Zip Code)
303-629-2440
-------------------------------
(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 _______
-----
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes X No _______
-----
As of May 10, 1999, 27,517,544 shares of Common Stock, par value $0.01 per
share, were issued and outstanding.
Transitional Small Business Disclosure Format (Check one):
Yes X No _______
-----
Page 1 of 13
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
--------------------
ATLAS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
- ----------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,003 $ 4
Accounts receivable - Trade 896 892
Title X receivable (Note 4) 552 675
Accounts receivable - Other 264 352
Asset held for sale -- 2,643
Inventories 964 914
Prepaid expenses and other current assets 71 13
---------- ---------
Total current assets 3,750 5,493
---------- ---------
Property, plant and equipment 59,364 59,205
Less: accumulated depreciation, amortization and impairment (47,310) (47,032)
---------- ---------
12,054 12,173
Restricted cash and securities 6,431 6,181
Title X receivable (Note 4) 14,232 14,109
Other assets 109 82
---------- ---------
$ 36,576 $ 38,038
========== =========
LIABILITIES
Liabilities not subject to compromise:
Current liabilities:
Trade accounts payable $ 617 $ 980
Accrued liabilities 1,025 1,161
Short-term debt 2,305 3,233
---------- ---------
Total current liabilities 3,947 5,374
---------- ---------
Long-term debt 1,216 1,216
Other liabilities, long-term 453 3,512
---------- ---------
Total long-term liabilities 1,669 4,728
Liabilities subject to compromise 33,818 30,089
---------- ---------
Total liabilities 39,434 40,191
---------- ---------
Commitments and contingencies (Note 4)
STOCKHOLDERS' DEFICIT
Common stock 275 275
Capital in excess of par value 93,788 93,788
Deficit (96,921) (96,216)
---------- ---------
Total stockholders' deficit (2,858) (2,153)
---------- ---------
$ 36,576 $ 38,038
========== =========
</TABLE>
See notes to consolidated financial statements.
Page 2 of 13
<PAGE>
ATLAS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data, Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Mining revenue $ 760 $ 1,136
Costs and expenses:
Production costs 686 973
Depreciation, depletion and 285 200
amortization
Shutdown and standby costs 99 75
General and administrative expenses 251 324
Exploration and prospecting costs 23 22
------------ ----------
Gross operating loss (584) (458)
Other (income) expense:
Interest expense 96 159
Interest income (60) (74)
Other (32) (238)
------------ ----------
Loss from continuing operations
before reorganization items and income taxes (588) (305)
Reorganization items:
Legal fees (115) --
Other (2) --
------------ ----------
Loss before income taxes (705) (305)
Provision for income taxes -- --
------------ ----------
Net loss $ (705) $ (305)
============ ==========
Basic and diluted earnings
per share of common stock:
Net loss $ (0.03) $ (0.01)
============ ==========
Average number of common shares outstanding 27,517 27,344
============ ==========
</TABLE>
See notes to consolidated financial statements.
Page 3 of 13
<PAGE>
ATLAS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------------
Operating activities:
<S> <C> <C>
Net loss $ (705) $ (305)
Add (deduct) non-cash items:
Depreciation, depletion, amortization 285 216
Gain on joint venture agreement -- (188)
Net change in non-cash items
Related to operations (Note 3) (215) 488
---------------- ---------------
Cash provided by (used in) continuing operations (635) 211
---------------- ---------------
From discontinued operations:
Change in estimated uranium reclamation costs (165) (105)
---------------- ---------------
Cash used in discontinued operations (165) (105)
---------------- ---------------
Cash provided by (used in) operating activities (800) 106
---------------- ---------------
Investing activities:
Additions to property, plant and equipment (166) (194)
Proceeds from sale of equipment -- 50
Additions to restricted cash (250) --
Investment in asset held for sale -- (191)
Proceeds from sale of asset held for sale 2,643 --
---------------- ---------------
Cash provided by (used in) investing activities 2,227 (335)
---------------- ---------------
Financing activities:
Net repayment of short-term debt (428) (263)
---------------- ---------------
Cash used in financing activities (428) (263)
---------------- ---------------
Increase (decrease) in cash and cash equivalents 999 (492)
Cash and cash equivalents:
Beginning of period 4 583
---------------- ---------------
End of period $ 1,003 $ 91
================ ===============
</TABLE>
See notes to consolidated financial statements.
Page 4 of 13
<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-QSB and Item
310(b) of Regulation S-B. 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 on Form 10-K for the fiscal year ended December 31,
1998.
2. On September 22, 1998, Atlas filed a petition for relief under Chapter 11 of
the federal bankruptcy laws in the United States Bankruptcy Court for the
District of Colorado. Under Chapter 11, certain claims against Atlas in
existence prior to the filing of the petition for relief under the federal
bankruptcy laws are stayed while Atlas continues business operations as
debtor-in-possession. These claims are reflected in the March 31, 1999 and
December 31, 1998 balance sheets as "Liabilities subject to compromise."
Additional claims (Liabilities subject to compromise) may arise subsequent to
the filing date resulting from rejection of executory contracts, including
leases, and from the determination by the court (or agreed to by parties in
interest) of allowed claims for contingencies and other disputed amounts.
Claims secured against Atlas' assets also are stayed, although the holders
of such claims have the right to move the Court for relief from stay. Secured
claims are secured primarily by restricted cash of the Company and by
performance bonds issued by insurance companies.
Two of the Company's subsidiaries, Atlas Precious Metals Inc. ("APMI") and
Atlas Gold Mining Inc. ("AGMI"), also filed for relief under Chapter 11 on
January 26, 1999. Accordingly, liabilities associated with these subsidiaries
have also been classified as Liabilities subject to compromise in the March
31, 1998 balance sheet.
The Company's other subsidiaries, Arisur Inc. ("Arisur") and Suramco Metals,
Inc. ("Suramco") have not filed for protection under Chapter 11 and there is
no intention to do so. Accordingly, liabilities associated with these
subsidiaries are included in "Liabilities not subject to compromise" along
with secured and post-petition liabilities of the Company.
Page 5 of 13
<PAGE>
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>
Three Months Ended
March 31,
-----------------------------------------
1999 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Add (deduct) items other than cash:
Accounts receivable $ 84 $ (33)
Inventories (50) 42
Prepaid expenses and other current assets (58) (60)
Other assets (27) 71
Trade accounts payable (141) 33
Accrued liabilities (28) 449
Other liabilities, long-term 5 (14)
---------------- ---------------
$(215) $ 488
================ ===============
</TABLE>
4. The Company is obligated to decommission and reclaim its uranium millsite
(the "Millsite") located near Moab, Utah. The Company discontinued its
uranium operations and permanently shut down its uranium mill and mines in
1987, and estimated shutdown expenses and reclamation costs were accrued.
Title X of "The Comprehensive National Energy Policy Act" ("Title X"),
enacted in October 1992, provides for the reimbursement of past and future
reclamation expenses related to uranium sites operated under Atomic Energy
Commission contracts. The Company's uranium reclamation costs are subsidized
by this Government cost sharing program since 56% of its tailings were
generated under government contracts. The total estimated reclamation
liability ($20,945,000) and current and future Title X receivables
($14,784,000) are shown separately in the accompanying consolidated balance
sheets leaving a net liability to the Company of $6,161,000 as of March 31,
1999.
The Company has submitted six 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, 1999. As of May 1, 1999, the status of the six
claims is as follows:
<TABLE>
<CAPTION>
Actual
Gross Anticipated Reim-
Gross Claim Amount Reimbursement bursement Anticipated
Claim Date Amount Approved Receivable Payments Balance Due 3
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
July 7, 1994 $4,999,000 $4,510,000 $2,530,000 $2,530,000 $ --
June 16, 1995 3,638,000 2,591,000 1,454,000 1,454,000 --
May 1, 1996 3,998,000 2,884,000 1,618,000 1,618,000 --
May 1, 1997 2,054,000 1,579,000 886,000 306,000 580,000
May 1, 1998 1,602,000 1,000,000 /1/2/ 561,000 -- 561,000
May 1, 1999 586,000 -- /1/ 329,000 -- 329,000
- ---------------------------------------------------------------------------------------------------------
Totals $7,378,000 $5,908,000 $1,470,000
=========================================================================================================
</TABLE>
/1/ Approval pending.
/2/ Amount is estimated.
/3/ See discussion of "MUMTA" below.
Page 6 of 13
<PAGE>
In addition to the above amounts, the Company includes in the Title X
receivable in the consolidated balance sheet an amount equal to 56% of its
future estimated reclamation costs. Timing of the remaining payments for
approved reimbursements is a function of Congressional appropriation of
Title X funding.
On April 28, 1999, the Company, along with the U.S. Nuclear Regulatory
Commission ("NRC"), the State of Utah, ACSTAR (surety provider for Atlas)
and others, executed the Moab Utah Millsite Transfer Agreement ("MUMTA'),
which absolves the Company from all future liability with respect to the
Millsite. The agreement was reached to avoid lengthy and expensive
litigation over the future of the Millsite. The agreement remains subject
to approval by the Bankruptcy Court. As consideration for this release,
Atlas has agreed to contribute certain Millsite related assets to a Trust
to be controlled by the government. The assets include the remaining Title
X receivable as of May 1, 1999, all future Title X receivables, Atlas'
water rights related to the Millsite, the land at the Millsite and
$5,250,000 of restricted cash. Elimination of the liability should coincide
with confirmation of Atlas' plan of reorganization, possibly by late
summer.
5. Liabilities subject to compromise consist of the following at March 31,
1999:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Accounts payable $ 1,708
Accrued liabilities 1,592
Convertible debenture 3,500
Estimated uranium reclamation costs 20,945 /1/
Mine reclamation accruals 3,264 /2/
Other liabilities 2,809
-------
$33,818
=======
</TABLE>
/1/ Partially secured by a reclamation bond of $6.5 million, which is
in turn secured by $4.2 million of restricted cash.
/2/ Fully secured by reclamation bonds of $3.264 million, which is in
turn secured by $1.9 million of restricted cash.
Page 7 of 13
<PAGE>
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-QSB 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, the 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, the actual
configuration of ore bodies, delays in anticipated start-up dates,
environmental risks, the results of financing efforts and other risk factors
detailed in the Company's Form 10-K and 8-K filed with the Securities and
Exchange Commission.
RECENT EVENTS
On September 22, 1998, Atlas filed a petition for relief under Chapter 11 of
the federal bankruptcy laws in the United States Bankruptcy Court for the
District of Colorado. On January 26, 1999, APMI and AGMI also filed petitions
for relief under Chapter 11. Under Chapter 11, certain claims against Atlas
in existence prior to the filing of the petition are stayed while Atlas
continues business operations as debtor-in-possession. Additional claims may
arise subsequent to the filing date resulting from rejection of executory
contracts, including leases, and from the determination by the court (or
agreed to by parties in interest) of allowed claims for contingencies and
other disputed amounts. Claims secured against Atlas' assets also are stayed,
although the holders of such claims have the right to move the court for
relief from stay. Secured claims are secured primarily by restricted cash of
the Company and by performance bonds issued by insurance companies.
Atlas does not intend to seek protection under any applicable bankruptcy laws
for Arisur Inc., its wholly owned subsidiary.
The Company continues to operate while it develops a plan for the
reorganization of the Company. The primary focus of the plan is a release
from any future liability associated with the Millsite (see CAPITAL RESOURCE
REQUIREMENTS, below) and to seek financing for the development of its Andacaba
Mine in order to increase operating cash flows. Additionally, the Company is
seeking to divest of its Gold Bar and Grassy Mountain properties and other
non-core assets to generate additional cash for operations, and as partial
satisfaction of its pre-petition liabilities.
There is no guarantee that the Company will be successful in achieving all or
any one of the above reorganization goals or, if successful, that the
creditors of the Company and the Bankruptcy Court will approve the plan as
submitted. In the event that approval of MUMTA (see, CAPITAL RESOURCE
REQUIREMENTS, below) is not granted by the Court, the Company may be forced
into expensive and lengthy litigation over the issue, which would further
deplete the Company's already limited resources. Management believes that
successful completion of the aforementioned
Page 8 of 13
<PAGE>
goals is necessary for the Company to avoid a Chapter 7 liquidation of all of
the assets of the Company.
On May 9, 1999, Arisur defaulted on a loan payment of $478,000, due under its
loan agreement with Corporacion Andina de Fomento ("CAF"). The Company has
met with representatives of CAF and has negotiated a deferral of the principal
portion of the payment ($383,000) while CAF reviews the Company's development
plans for the Andacaba mine and considers restructuring of the loan to finance
the development program (see CAPITAL RESOURCE REQUIREMENTS, below).
CAPITAL RESOURCE REQUIREMENTS
Bolivian operations
The Company has developed an operating plan for its Andacaba mine involving a
decline ramp to provide more efficient access to the orebody. This is
expected to return the head grades to historical levels, and to significantly
reduce unit costs. The Company also continues to evaluate the feasibility of
the start-up of its Comali mill which would require from $200,000 to $300,000
in capital improvements.
The Company anticipates that funding for the decline ramp will be financed
through a combination of internally generated funds, deferral of current loan
payments and additional project financing from CAF (see RECENT EVENTS, above),
or other lending institution.
Reclamation Activities
As discussed in footnote 4 to the Consolidated Financial Statements, the
Company has reached an agreement with the NRC, the State of Utah, ACSTAR and
others that absolves it from all future liability with the respect to the
Millsite. As consideration for this release, Atlas has agreed to contribute
certain Millsite related assets to a Trust to be controlled by the government.
Elimination of this liability should coincide with confirmation of Atlas' plan
of reorganization, possibly by late summer.
LIQUIDITY
As of March 31, 1999, the working capital deficit was $197,000, which compares
to positive working capital of $119,000 as of December 31, 1998. The
Company's current ratio at March 31, 1998 was .95 to 1, compared to 1.02 to 1
at December 31, 1998. The decrease during the quarter is a result of capital
expenditures of $166,000 and the operating loss during the period.
The proceeds from the sale of Cornerstone have given the Company sufficient
cash to fund its near term capital and operating needs. Longer-term capital
requirements will be satisfied from project financing, future operating cash
flows, placement of additional equity or debt and/or from the sale of other
assets.
Page 9 of 13
<PAGE>
RESULTS OF OPERATIONS
The following is a summary of production statistics at the Andacaba Mill for
the three months ended March 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Tonnes milled 29,934 26,296
Tonnes of lead concentrate produced 446 490
Grade of lead concentrate:
Lead 63.81% 64.81%
Silver (ounces per ton) 128.89 136.14
Tonnes of zinc concentrate produced 3,165 2,544
Grade of zinc concentrate:
Zinc 45.17% 46.22%
Silver (ounces per ton) 23.82 25.94
</TABLE>
During the quarter ended March 31, 1999, the Company had mining revenue of
$760,000 compared to $1,136,000 in the same period of 1998. During 1999,
shipments of concentrates from the Andacaba mine in Potosi, Bolivia were less
than produced, resulting in lower sales in 1999 than expected. Conversely,
the opposite occurred in 1998, resulting in higher than expected sales for the
first quarter of 1998. Additionally, metal prices were lower in 1999 verses
the same period in 1998. These factors resulted in a lower than expected
sales figure in 1999 compared to 1998.
Cash production costs were $672,000 in the first quarter of 1999 compared to
$973,000 during the same period of 1998. The decrease is a result of the
lower shipments of concentrates described in the preceding paragraph.
Shutdown and standby costs at Gold Bar were 99,000 during the three month
period ended March 31, 1999 compared to $75,000 for the comparable period in
1997. The increase is a result of the termination of the Barrick joint
venture agreement in December 1998. Certain holding costs were paid by
Barrick in 1998 as part of the agreement, and paid by the Company in 1999.
Exploration costs for the three-month period ending March 31, 1999 were
$23,000 compared to $22,000 for the comparable period in 1998.
General and administrative expenses for the three months ended March 31, 1999
were $251,000 compared to $324,000 for the comparable period in 1998. The
Company has continued its efforts to reduce such expenses. Legal fees have
been reduced from $90,000 in 1998 to $30,000 in 1999 as several legal actions
were resolved or settled in 1998. Accounting and auditing fees have also been
reduced from $22,000 in 1998 to $12,000 in 1999.
Interest expense incurred during the three month period ended March 31, 1999
was $96,000 compared to $159,000 for the three month period ended March 31,
1998. Interest accruals on all outstanding loans of Atlas and APMI have
ceased as a result of filing for Chapter 11, explaining the decrease.
Page 10 of 13
<PAGE>
During the quarters ended March 31, 1999 and 1998, the Company incurred
$166,000 and $194,000 in capital expenditures, substantially all of which
related to the mine and mill operation in Bolivia.
Page 11 of 13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults upon Senior Securities
-------------------------------
On May 12, 1999, the Company defaulted on a principal payment of
$383,000, due under its loan agreement with Corporacion Andina de
Fomento ("CAF"). The outstanding balance of the loan at March 31, 1999
was $1,917,000.
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
None
b. Reports on Form 8-K
None
Page 12 of 13
<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
Chief Financial Officer
Date: May 14, 1999 /s/ James R. Jensen
-----------------------
James R. Jensen
Chief Financial Officer (Principal
Financial Officer & Chief
Accounting Officer)
Page 13 of 13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,003
<SECURITIES> 0
<RECEIVABLES> 1,712
<ALLOWANCES> 0
<INVENTORY> 964
<CURRENT-ASSETS> 3,750
<PP&E> 59,364
<DEPRECIATION> (47,310)
<TOTAL-ASSETS> 36,576
<CURRENT-LIABILITIES> 3,947
<BONDS> 0
0
0
<COMMON> 275
<OTHER-SE> (3,133)
<TOTAL-LIABILITY-AND-EQUITY> 36,576
<SALES> 760
<TOTAL-REVENUES> 820
<CGS> 971
<TOTAL-COSTS> 1,344
<OTHER-EXPENSES> 85
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96
<INCOME-PRETAX> (705)
<INCOME-TAX> 0
<INCOME-CONTINUING> (705)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (705)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
