Barrick Reports Operating Results For 2001; First Year Reporting Combined Operations - Barrick/Homestake, Part 2 of 3.Part 2
Consolidated Statements of Income
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(in millions of United States dollars,
except per share data, US GAAP basis) Twelve months ended Dec. 31,
(Unaudited) 2001 2000
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Gold sales $1,989 $1,936
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Costs and expenses
Operating 1,080 950
Amortization 501 493
Administration 86 75
Exploration and business
development 103 149
Merger and related costs 117 -
Provision for mining assets
and other unusual charges 59 1,627
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1,946 3,294
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Interest and other income 32 14
Interest on long-term debt (25) (26)
Non-hedge derivative gains
(loss) 33 (5)
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Income (loss) before income
taxes and other items 83 (1,375)
Income taxes 14 209
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Income (loss) before changes
in accounting principles 97 (1,166)
Cumulative effect of changes
in accounting principles (1) (23)
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Net income (loss) for the year $96 ($1,189)
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Net income (loss) for the year
per share
Basic and fully diluted $0.18 ($2.22)
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see accompanying notes to consolidated financial statements
Consolidated Statements of Cash Flow
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(in millions of United States dollars, Twelve months ended Dec. 31,
US GAAP basis) (Unaudited) 2001 2000
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Cash provided by operating activities $721 $940
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Cash provided by (used in)
investing activities
Property, plant and equipment (607) (710)
Short-term investments (153) 130
Restricted cash (24) 2
Purchase and sale of mining
properties - (141)
Other 5 10
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Cash (used in) investing activities (779) (709)
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Cash provided by (used in)
financing activities
Capital stock 7 6
Long-term debt
Proceeds 55 236
Repayments (152) (187)
Dividends (93) (94)
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Cash (used in) financing activities (183) (39)
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Effect of exchange rate
changes on cash and equivalents (1) (6)
Increase (decrease) in cash
and equivalents (242) 186
Cash and equivalents at
beginning of year 816 630
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Cash and equivalents at end of year $574 $816
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see accompanying notes to consolidated financial statements
Consolidated Balance Sheets
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As at As at
(in millions of United States dollars, Dec. 31, Dec. 31,
US GAAP basis) (Unaudited) 2001 2000
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Assets
Current assets
Cash and equivalents $574 $816
Short-term investments 159 6
Accounts receivable 58 59
Inventories and deferred expenses 223 285
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1,014 1,166
Property, plant and equipment 3,912 3,994
Other assets 276 233
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$5,202 $5,393
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Liabilities
Accounts payable and accrued
liabilities $521 $587
Current portion of long-term
debt 9 3
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530 590
Long-term debt 793 901
Other long-term obligations 443 401
Deferred income taxes 244 311
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2,010 2,203
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Shareholders' equity
Capital stock 4,062 4,051
Deficit (763) (766)
Accumulated other
comprehensive loss (107) (95)
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3,192 3,190
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$5,202 $5,393
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Notes to Consolidated Financial Statement Consolidated financial statement A financial statement that shows all the assets, liabilities, and operating accounts of a parent company and its subsidiaries. 1. Basis of Presentation The accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. unaudited annual financial statements are prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . They do not include all of the information and disclosures required by United States GAAP for annual financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included in these financial statements. 2. Business Acquisition On December December: see month. 14, 2001, a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Barrick merged with Homestake Mining Company. Under the terms of the agreement, approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 139.5 million shares of Barrick common stock were issued in exchange for all the outstanding shares of Homestake common shares based upon an exchange ratio of 0.53:1. The merger was accounted for as a pooling-of-interests. Accordingly, the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge give retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a effect to the merger, with all periods presented as if Barrick and Homestake had always been combined. Certain reclassifications have been made to conform the presentation of Barrick and Homestake. 3. Commitments and Contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. Premium Gold Sales Program Barrick's Premium Gold Sales Program as at December 31, 2001 is made up as follows and incorporates all positions associated with the Homestake merger on December 14, 2001. The average price of the spot deferred contracts reflects the expected future value incorporating an average lease rate assumption of 2.00 percent. Lease rates are fixed on 100 percent of the position to 2005. The weighted average lease rate on the total spot deferred position is 1.97 percent. At December 31, 2001, the mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. gain on Barrick's Premium Gold Sales Program was $356 million calculated at a spot price of $279 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. , prevailing market interest rates and volatilities.
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2002 2003 2004 2005 2006 2007 2008+ Totals
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Spot Deferred
Contracts
Ounces (000) 2,800 2,600 2,800 1,400 1,500 1,500 5,600 18,200
Average Price
($/oz.) 365 340 340 340 341 343 345 345
Min-Max Contracts
Ounces (000) 1,600 1,600
Average Floor
Price ($/oz.) 272 272
Average Cap Price
($/oz.) 297 297
Short-Term Call
Options Sold
Ounces (000) 1,330 1,330
Average Strike
($/oz.) 303 303
Long-Term Call
Options Sold
Ounces (000) 425 570 550 370 190 900 3,005
Average Strike ($/oz.) 363 328 336 364 377 358 350
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All dollar amounts are in United States dollars, unless otherwise
indicated.
Silver Sales Program Barrick's Silver Sales Program as at December 31, 2001 is made up as follows: Lease rates are fixed on 100 percent of the hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. positions to their intended delivery date. At December 31, 2001, the unrealized mark-to-market gain on the Silver Sales Program was $9 million calculated at a spot price of $4.61 per ounce, prevailing market interest rates and volatilities. Spot Deferred Investments Barrick's total spot deferred position has a nominal value Nominal Value The stated value of an issued security that remains fixed, as opposed to its market value, which fluctuates. Notes: When referring to fixed-income securities, the nominal value is also the face value. of approximately $5.5 billion on which it earns an interest return. The Company achieves an interest return on this asset and the credit rating associated with this return is that of its hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. (average "AA"). The Company has conservatively diversified diversified (di·verˑ·s this investment by exchanging a portion of this return for a return based on a professionally managed diversified basket basket filled with treats, representative of feast on Easter Sunday. [Folklore: Misc.] See : Easter of bond funds/indices. At December 31, 2001, 83 percent of the position was invested with "AA" hedging counterparties and the balance of 16 percent was invested in a basket of bond funds/indices with an average credit rating of "A-". The credit quality on the entire hedge position asset of $5.5 billion is "AA-". Call Options Sold The sold options can only be exercised by the counterparties on the expiry date expiry date expire n → date f d'expiration; (on label) → à utiliser avant ... expiry date expire n → Ablauftermin m and can be converted, at Barrick's option, into spot deferred contracts and rolled forward for up to 15 years. There is no requirement for Barrick to cash settle these transactions. Credit Lines Barrick's Program is not subject to margin requirements at any market price.
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2002 2003 2004 2005+ Totals
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Spot Deferred Contracts
Ounces (000) 11,000 7,000 3,000 3,000 24,000
Average Price ($/oz) 5.00 5.10 5.10 5.10 5.05
Short-Term Call Options Sold
Ounces (000) 12,000 12,000
Average Strike ($/oz) 4.88 4.88
Long-Term Call Options Sold
Ounces (000) 3,750 2,000 2,000 7,750
Average Strike ($/oz) 5.25 5.50 5.00 5.26
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Other Items Barrick's Currency Program as at December 31, 2001 is made up as follows: At December 31, 2001, the unrealized mark-to-market loss on the Currency Program was $8 million calculated at prevailing spot prices, market interest rates and volatilities.
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2002 2003 2004 2005+ Totals
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CANADIAN DOLLAR
Forwards
C$ (millions) 16 16
Average Price (US cents) 0.63 0.63
Min-Max Contracts
C$ (millions) 80 88 168
Average Floor Price
(US cents) 0.64 0.64 0.64
Average Cap Price (US cents) 0.67 0.67 0.67
AUSTRALIAN DOLLAR
Forwards
A$ (millions) 10 10 10 20 50
Average Price (US cents) 0.52 0.52 0.52 0.52 0.52
Min-Max Contracts
A$ (millions) 20 20 20 40 100
Average Floor Price
(US cents) 0.51 0.51 0.51 0.51 0.51
Average Cap Price (US cents) 0.52 0.52 0.52 0.52 0.52
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4. Segment Information
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For the twelve months ended Dec. 31,
(in millions of United States dollars,
US GAAP basis) (Unaudited) 2001 2000
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Revenues - gold sales Goldstrike $ 823 $ 850
Pierina 319 295
Bulyanhulu 60 -
Kalgoorlie 104 111
Eskay Creek 87 88
Hemlo 83 80
Plutonic 79 71
Round Mountain 103 63
Other 331 378
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1,989 1,936
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Operating costs Goldstrike 473 401
Pierina 45 41
Bulyanhulu 35 -
Kalgoorlie 80 76
Eskay Creek 16 7
Hemlo 61 56
Plutonic 49 54
Round Mountain 77 50
Other 244 265
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1,080 950
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Amortization Goldstrike 138 128
Pierina 175 176
Bulyanhulu 17 -
Kalgoorlie 17 18
Eskay Creek 40 58
Hemlo 10 10
Plutonic 12 10
Round Mountain 18 12
Other 74 81
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501 493
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Segment income Goldstrike 212 321
before income taxes Pierina 99 78
Bulyanhulu 8 -
Kalgoorlie 7 17
Eskay Creek 31 24
Hemlo 12 14
Plutonic 18 7
Round Mountain 8 1
Other 13 31
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408 493
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Provision for mining assets & other
unusual changes
Pascua-Lama - (1,036)
Goldstrike - (300)
Pierina - (184)
Homestake - (42)
Other (59) (65)
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(59) (1,627)
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Exploration and business development (103) (149)
Merger and related costs (117) -
Corporate expenses, net (46) (92)
Income taxes 14 209
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Net income (loss) before changes in
accounting principles 97 (1,166)
Cumulative effect of changes in
accounting principles (1) (23)
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Net income (loss) $ 96 $ (1,189)
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