Purchase Contract, Requiring Restatement; Three-Year Impact Totaling
$6.5 Million Reduction in Earnings
DENVER, Oct. 23 /PRNewswire-FirstCall/ -- Newmont Mining Corporation
(NYSE: NEM; ASX, Toronto: NMC) announced that it will correct the accounting
treatment for a prepaid forward gold sales contract and a forward gold
purchase contract that it entered into in July 1999. These transactions were
fully described in the notes to Newmont's financial statements contained in
Newmont's quarterly report on Form 10-Q for the second quarter of 1999 and in
each subsequent quarterly and annual report filed by Newmont with the
Securities and Exchange Commission. Newmont will restate its financial
statements beginning with the third quarter of 1999 through the second quarter
of 2002.
The correction follows a review of Newmont's accounting policies conducted
by its new independent public accountants, PricewaterhouseCoopers LLP, in
preparation for its upcoming annual audit of Newmont's 2002 financial
statements. PricewaterhouseCoopers was appointed in May 2002 as Newmont's
independent public accountants, replacing Arthur Andersen LLP. As a result of
the review, Newmont, in consultation with PricewaterhouseCoopers, concluded
that the prepaid forward sales contract did not meet the technical criteria to
be accounted for in the manner reflected in Newmont's historical financial
statements. Newmont, therefore, has determined to account for these
transactions as a financing.
Newmont estimates that, as a result, its net loss will be increased by
approximately $3.6 million, $1.3 million and $1.1 million for 1999, 2000 and
2001, respectively, and net income for the first half of 2002 will be
decreased by $0.5 million, resulting in a $6.5 million reduction in earnings
over the three year period. Newmont's net loss per share will be increased by
$0.02 per share for 1999, $0.01 per share for 2000 and less than one cent per
share for 2001, and netincome per share will be decreased by less than one
cent per share for the first half of 2002. There will be no change in the
cash and cash equivalents previously reported by Newmont. In addition,
Newmont's long-term debt will be increased by $145.0 million, at December 31,
1999, 2000, 2001 and June 30, 2002, but its long-term liabilities will be
largely unchanged as Newmont originally accounted for the net proceeds of
$137.2 million from the prepaid forward contract as deferred revenue, which
was also classified as a long-term liability.
As shown in the attachment, over the full term of the transactions, the
total cost incurred will be the same under the new accounting treatment as
under the accounting treatment that has been used historically.
Because Arthur Andersen is unavailable to provide a current audit opinion
for Newmont's historical financial statements once they are restated,
PricewaterhouseCoopers is re-auditing Newmont's financial statements for the
three years ended December 31, 2001. Based on currently available
information, the re-audit is expected to be completed prior to the filing
deadline for Newmont's quarterly report on Form 10-Q for the third quarter of
2002. Following completion of the re-audit, Newmont will file amendments to
its annual report on Form 10-K for the year ended December 31, 2001 and its
quarterly reports on Form 10-Q for the quarterly periods ended March 31 and
June 30, 2002.
Newmont will report its third quarter 2002 financial and operating results
on Wednesday, November 13, 2002.
Newmont, based in Denver, is the world's premier gold company and the
largest gold producer with significant assets on five continents.
This news release contains "forward-looking statements" within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbor created thereby. Such forward-
looking statements include, without limitation, statements as to the expected
date of completion of the re-audit of Newmont's financial statements. These
expectations or beliefs as to future events or results are expressed in good
faith and believed to have a reasonable basis. However, such forward-looking
statements are subject to risks, uncertainties and other factors, including,
without limitation, the timely completion by PricewaterhouseCoopers of the re-
audit. The company disclaims any intention to update any forward-looking
statement.
Attachment
Comparison of Pre-tax Earnings Impact of Historic Accounting with Restated
Accounting
Pre-tax
Historic (1) Restated (2) Difference
($ million) ($ million) ($ million)
Year
1999 $-- $5.5 $5.5
2000 9.6 11.5 1.9
2001 10.0 11.7 1.7
2002 10.4 11.8 1.4
2003 10.9 11.9 1.0
2004 11.4 12.0 0.6
2005 11.8 10.2 (1.6)
2006 12.3 6.3 (6.0)
2007 6.4 1.9 (4.5)
Total $82.8 $82.8 $--
(1) Accounted for as a reduction in revenue.
(2) Accounted for as interest expense.
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SOURCE Newmont Mining Corporation
-0- 10/23/2002
/CONTACT: investors, Russell Ball, +1-303-837-5927, or Wendy Yang,
+1-303-837-6141, or media, Doug Hock, +1-303-837-5812, all of NewmontMining
Corporation/
/Web site: newmont.com
(NEM NMC.)
CO: Newmont Mining Corporation
ST: Colorado
IN: MNG
SU:
SE
-- LAW053 --
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