-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Lut48DKa9RIymD89H2VZDUdWGOjnsTJSGCfWJJHza4Dd533izGmZoLgfqg8VjYie X8UOwqEWc/a0PeIOsKrt6g== 0000908634-94-000016.txt : 19941117 0000908634-94-000016.hdr.sgml : 19941117 ACCESSION NUMBER: 0000908634-94-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COEUR D ALENE MINES CORP CENTRAL INDEX KEY: 0000215466 STANDARD INDUSTRIAL CLASSIFICATION: 1044 IRS NUMBER: 820109423 STATE OF INCORPORATION: ID FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08641 FILM NUMBER: 94559107 BUSINESS ADDRESS: STREET 1: 400 COEUR D ALENE MINES BLDG STREET 2: 505 FRONT AVE CITY: COEUR D ALENE STATE: ID ZIP: 83814 BUSINESS PHONE: 2086673511 MAIL ADDRESS: STREET 1: 400 COEUR D ALENE MINES BLDG STREET 2: 505 FRONT AVE CITY: COEUR D'ALENE STATE: ID ZIP: 83814 10-Q 1 SECURITIES AND EXCHANGE Washington, D. C. _________________ FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1994 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: 1-8641 COEUR D'ALENE MINES CORPORATION (Exact name of registrant as specified on its charter) IDAHO 82-0109423 (State or other jurisdiction of (I.R.S. Employer Ident.No.) incorporation or organization) P. O. Box I, Coeur d'Alene, Idaho 83816-0316 (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code: (208) 667-3511 ______________________________________________________________________ Former name, former address and former fiscal year, if changed since last report 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 _________________________ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of Issuer's classes of common stock, as of the latest practicable date: Common stock, par value $1.00, of which 15,419,894 shares were issued and outstanding as of November 1, 1994. COEUR D'ALENE MINES CORPORATION INDEX Page No. PART I. Financial Information: Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets -- 3-4 September 30, 1994 and December 31, 1993 Consolidated Statements of Operations -- 5-6 Three Months Ended September 30, 1994 and 1993 Nine Months Ended September 30, 1994 and 1993 Consolidated Statements of Cash Flows -- 7 Nine Months Ended September 30, 1994 and 1993 Notes to Consolidated Financial Statements 8-10 Item 2. Management's Discussion and Analysis of 11-17 Financial Condition and Results of Operations PART II. Other Information. Item 1. Legal Proceedings 17 Item 6. Exhibits and Reports on Form 8-K 17 SIGNATURES UNAUDITED COEUR D'ALENE MINES CORPORATION (An Idaho Corporation) Coeur d'Alene, Idaho CONSOLIDATED BALANCE SHEETS
ASSETS September 30, December 31, 1994 1993 CURRENT ASSETS Cash and cash equivalents $ 14,572,242 $ 14,678,097 Short-term investments 142,244,142 70,221,106 Receivables 11,073,015 7,757,910 Refundable income taxes 3,223,346 1,924,065 Inventories 35,102,267 34,670,469 ___________ ___________ Total Current Assets 206,215,012 129,251,647 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment 86,357,577 81,007,505 Less accumulated depreciation 40,078,883 35,310,111 __________ __________ 46,278,694 45,697,394 MINING PROPERTIES Operational mining properties 95,360,702 90,120,998 Less accumulated depletion 37,450,617 33,125,461 57,910,085 56,995,537 Developmental properties 92,889,287 83,536,738 ___________ ___________ 150,799,372 140,532,275 OTHER ASSETS Funds held in escrow 2,270,695 2,270,695 Notes receivable 355,069 Debt issuance costs, net of accumulated amortization 8,486,014 4,708,372 Marketable equity securities 518,448 2,422,416 Other 1,813,408 470,469 13,088,565 10,227,021 $416,381,643 $325,708,337
UNAUDITED COEUR D'ALENE MINES CORPORATION (An Idaho Corporation) Coeur d'Alene, Idaho CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDER'S EQUITY September 30, December 31, 1994 1993 CURRENT LIABILITIES Accounts payable $ 1,685,220 $ 1,946,273 Accrued liabiliti 2,803,132 5,265,232 Accrued interest payable 3,611,195 2,008,851 Accrued salaries and wages 3,727,010 2,898,486 Accrued litigation settlement 5,662,579 5,875,000 Accrued environmental settlement 1,230,000 1,230,000 Reserve for mine closure 152,406 494,800 Current portion of obligations under capital leases 2,004,779 1,899,771 __________ __________ Total Current Liabilities 20,876,321 21,618,413 OTHER LIABILITIES 6% Convertible Subordinated Debentures 50,000,000 50,000,000 7% Convertible Subordinated Debentures 75,000,000 75,000,000 6 3/8% Convertible Subordinated Debentures 100,000,000 Obligations under capital leases 2,716,928 4,233,916 Other long-term liabilities 5,075,119 2,325,764 Deferred income taxes 1,429,034 1,681,542 ___________ ___________ Total Long-Term Liabilities 234,221,081 133,241,219 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred Stock, $1.00 par value per share--authorized 10,000,000 shares, none outstanding Common Stock, $1.00 par value per share--authorized 60,000,000 shares, issued 16,479,105 at September 30, 1994 and 16,394,302 at December 31, 1993 (including 1,059,211 shares held as treasury stock) 16,479,105 16,394,302 Capital surplus 180,223,579 181,038,631 Accumulated deficit (15,390,146) (13,100,942) Repurchased and nonvested shares (13,386,722) (13,483,286) Unrealized losses on short-term investment securities (6,641,575) 161,284,241 170,848,705 ___________ ___________ $416,381,643 $325,708,337
COEUR D'ALENE MINES CORPORATION (An Idaho Corporation) Coeur d'Alene, Idaho CONSOLIDATED STATEMENTS OF OPERATIONS
3 MONTHS ENDED 9 MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1994 1993 1994 1993 INCOME From mine operations: Sales of concentrates and dore' $ 20,666,805 $ 19,951,071 $ 60,340,300 $ 45,747,077 Less cost of mine operations 16,845,383 17,565,139 51,164,223 41,274,454 Gross profits 3,821,422 2,385,932 9,176,077 4,472,623 From manufacturing operations: Sale of industrial products 2,859,173 2,650,902 8,372,312 7,499,637 Less cost of manufacturing 2,529,523 2,332,799 7,549,973 6,673,327 Gross profits 329,650 318,103 822,339 826,310 Interest and other income 5,638,711 1,196,370 10,257,550 3,914,599 _________ _________ __________ _________ Total income 9,789,783 3,900,405 20,255,966 9,213,532 EXPENSES Administrative 1,008,236 818,740 3,549,307 2,616,909 Accounting and legal 360,835 955,467 1,216,760 2,221,725 General corporate 1,330,023 1,469,494 4,076,936 3,833,891 Mining exploration 913,385 490,597 2,864,894 1,379,388 Idle facilities 385,541 540,408 1,213,285 1,889,468 Interest 3,057,175 1,312,534 8,497,293 4,069,666 Litigation settlement 976,028 5,875,000 976,028 5,875,000 Environmental settlement 1,230,000 1,230,000 Write-off of uncollectible notes receivable 2,268,564 2,268,564 _________ __________ __________ __________ Total expenses 8,031,223 14,960,804 22,394,503 25,384,611 INCOME (LOSS) BEFORE TAXES AND CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING 1,758,560 (11,060,399) (2,138,537) (16,171,079) Provision (Benefit) for income taxes 115,666 (672,492) 150,667 (2,795,352) INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING 1,642,894 (10,387,907) (2,289,204) (13,375,727) Cumulative effect of change in accounting method 5,181,188 _________ ___________ _________ _________ NET INCOME (LOSS) $ 1,642,894 $(10,387,907) $ (2,289,204) $ (8,194,539)
COEUR D'ALENE MINES CORPORATION (An Idaho Corporation) Coeur d'Alene, Idaho CONSOLIDATED STATEMENTS OF OPERATIONS
3 MONTHS ENDED 9 MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1994 1993 1994 1993 EARNINGS PER SHARE DATA Weighted average number of shares of Common Stock outstanding 15,403,346 15,354,710 15,365,817 15,332,878 Gain (loss) per share before cumulative effect of change in accounting method $ 0.11 $ (0.68) $ (0.15) $ (0.87) Cumulative effect of change in accounting method 0.34 GAIN (LOSS) PER SHARE 0.11 (0.68) (0.15) (0.53) Cash dividends per share $ 0.15 $ 0.15 See notes to consolidated financial statements.
UNAUDITED COEUR D'ALENE MINES CORPORATION (An Idaho Corporation) Coeur d'Alene, Idaho CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1994 and 1993 CASH FLOWS FROM OPERATING ACTIVITIES 1994 1993 Net loss $ (2,289,204) $ (8,194,539) Add (less) noncash items: Depreciation, depletion and amortization 13,624,038 8,802,743 Cumulative adjustment FAS 109 (5,181,188) Deferred income taxes (252,508) (2,851,208) Deferred stripping costs (578,300) Loss on disposition of fixed assets 107,730 630,187 (Gain) on foreign currency exchange (410,825) (Gain) on foreign currency hedging (1,357,379) (Gain) on disposition of securities (1,924,177) Provision for litigation settlement 976,028 5,875,000 Provision for environmental settlement 1,230,000 Write-off of uncollectible notes receivable 2,268,564 Changes in operating assets and liabilities: Accounts receivable (3,359,203) (1,106,195) Inventories (557,006) (4,932,434) Accounts payable and accrued liabilities (2,267,691) 4,576,434 Interest payable 1,602,344 _________ _________ NET CASH PROVIDED BY OPERATING ACTIVITIES 3,313,847 1,117,364 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant, and equipment (5,358,097) (33,403,808) Purchase of short-term investments (106,498,374) (52,244,949) Proceeds from sale of short-term securities 28,579,288 Proceeds from sale of assets 298,754 633,459 Expenditures on operational mining properties (5,442,448) (15,595,823) Expenditures on developmental properties (7,257,743) (15,350,468) Proceeds from other assets 460,247 85,622 __________ ___________ NET CASH USED IN INVESTING ACTIVITIES (95,218,373) (115,875,967) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from offering of 6 3/8% Convertible Subordinated Debentures 95,513,842 Retirement of obligations under capital leases (1,411,977) (1,321,306) Payment of cash dividend (2,303,194) (2,297,520) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 91,798,671 (3,618,826) DECREASE IN CASH AND CASH EQUIVALENTS (105,855) (118,377,429) Cash and cash equivalents at beginning of year 14,678,097 134,106,948 __________ __________ CASH AND CASH EQUIVALENTS AT SEPTEMBER 30, 1994 AND 1993 $ 14,572,242 $ 15,729,519 See notes to consolidated financial statements. UNAUDITED Coeur d'Alene Mines Corporation and Subsidiaries Notes to Consolidated Financial Statements NOTE A: Inventories are composed of the following: SEPTEMBER 30 DECEMBER 31 1994 1993 Mining: Ore in process and on leach pads $ 28,758,037 $ 27,958,186 Dore' inventory 1,547,782 1,947,294 Supplies 3,131,616 3,356,544 __________ __________ 33,437,435 28,384,114 Manufacturing: Raw materials 985,159 755,206 Finished goods 679,673 653,239 1,664,832 1,408,445 $ 35,102,267 $ 34,670,469 Inventories of ore on leach pads and in the milling process are valued based on actual costs incurred to place such ore into production, less costs allocated to minerals recovered through the leaching and milling process. Dore' inventory includes product at the mine site and product held by refineries. All other inventories are stated at the lower of cost or market, cost being determined using the first in, first out and weighted average cost methods. NOTE B: Effective January 1, 1994, the Company changed its method of accounting for debt and equity securities by adopting Statement of Financial Accounting Standards (FAS) 115, "Accounting for Certain Investments in Debt and Equity Securities". FAS 115 requires the use of fair value accounting. The Company has classified its short term investments and marketable securities as available for sale, according to provisions of the new pronouncement. Accordingly, unrealized holding gains and losses on such securities are excluded from earnings and reported as a separate component of shareholders' equity until realized. NOTE C: On April 30, 1993, the Company acquired Cyprus Gold New Zealand, Limited, for approximately $54 million in cash. The acquisition has been accounted for as a purchase. The following consolidated results of the Company's operations assume that the acquisition took place at the beginning of the period presented. 3 Months Ended 9 Months Ended In thousands except for September 30, September 30, per share amounts 1993 1993 Revenues $ 23,798 $ 65,064 Net loss before cumulative effect of change in accounting (11,061) (14,923) Net loss (11,061) (9,742) Earnings per share data: Loss per share before cumulative effect of change in accounting (.68) (.97) Net loss per share (.68) (.64) NOTE D: During the first quarter, the Company effected an offering of $100 million ($96,750,000 net to the Company after underwriter discount) of 6 3/8% Convertible Subordinated Debentures Due 2004 which are convertible into shares of Common Stock on or before January 31, 2004, unless previously redeemed, at a conversion price of $26.20 per share. The Company is required to make semi-annual interest payments. The debentures are redeemable at the option of the Company on or after January 31, 1997. The debentures have no other funding requirements until maturity. The debentures mature January 31, 2004. NOTE E: Effective January 1, 1993, the Company changed its method of accounting for income taxes by adopting Statement of Financial Accounting Standards (FAS) No. 109, "Accounting for Income Taxes." FAS No. 109 requires an asset and liability approach to accounting for income taxes and establishes criteria for recognizing deferred tax assets. Accordingly, the Company adjusted its existing deferred income tax assets and liabilities to reflect current statutory income tax rates and previously unrecognized tax benefits related to federal and certain state net operating loss carryforwards. The Statement also contains new requirements regarding balance sheet classification and prior business combinations. Hence, the Company adjusted the carrying values of Coeur Rochester, Inc. acquired in 1986 and CDE Chilean Mining Corp. acquired in 1989 to reflect the gross purchase value previously reported net-of- tax. The cumulative effect of the accounting change on prior years at January 1, 1993 is a non-recurring gain of $5,181,188, or $.34 per share, and is included in the accompanying Consolidated Statement of Operations for the nine months ended September 30, 1993. Other than the cumulative effect, the accounting change had no material effect on the operating results for the three months and nine months ended September 30, 1993. The Company's tax expense for the third quarter and first nine months of 1994 results primarily from state tax liabilities. There is no provision for Federal income taxes in the third quarter or first nine months of 1994 due to net operating losses incurred. NOTE F: During the quarter, the Company received updated reserve information indicating an increase in reserves at the Golden Cross Mine. Accordingly, the Company adjusted its depletion rate effective July 1, 1994 to reflect the increased reserves. The impact of the change was an increase in net income of $623,258, or $.04 per share for the three months ended September 30, 1994. NOTE G: On August 15, 1994, the Company purchased 33 1/3% of the Jualin property, for $2.9 million, bringing its ownership interest in the property to 100%. Concurrent with the acquisition, the Company sold the common stock of International Curator which it previously owned, and relinquished all of its rights with respect to the Boleo property. The Company recorded a gain on the sale of Curator stock of $2.7 million, which is reflected as a component of other income. NOTE H: On September 22, 1994, a judgment was entered against the Company in the United States District Court for the District of Idaho in a case entitled Goldberg v. Coeur d'Alene Mines Corporation in the amount of $725,688. The action involves an alleged claim by the plaintiff to recover on four promissory notes made by an predecessor of the Company. Plaintiff has filed with the court a cost bill in the approximate amount of $250,000 which has been objected to by the Company but which, if allowed, will be added to the judgment for a total judgment of $975,688, upon which interest accrues. The Company has provided for the potential loss and filed a notice of appeal to the Ninth Circuit Court of Appeals on September 29, 1994. NOTE I: Certain reclassifications of prior year balances have been made to conform to current year classifications. NOTE J: Other than as stated in the notes above, in the opinion of management, the foregoing unaudited financial statements include all adjustments, consisting of normal recurring accruals, necessary to a fair presentation of the results of operations of the periods shown. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The results of the Company's operations are significantly affected by the market prices of gold and silver which may fluctuate widely and are affected by many factors beyond the Company's control, including interest rates, expectations regarding inflation, currency values, governmental decisions regarding the disposal of precious metal stockpiles, global and regional political and economic conditions, and other factors. The Company's currently operating mines are the Rochester Mine in Nevada, which it wholly owns and operates; the Golden Cross Mine in New Zealand, in which the Company has an 80% operating interest; and the El Bronce Mine, a Chilean gold mine of which the Company acquired operating control in October 1994. In addition, in September 1994, the Company entered into an agreement under which it has the right to acquire up to a 51% operating interest in another Chilean gold mine, the Faride Mine. In October 1994, the Company announced that ASARCO Incorporated ("Asarco") and the Company are forming a new corporation to which Asarco and the Company will contribute their interests in the Galena and Coeur Mines in Idaho, at which mining activities were suspended in July 1992 and April 1991, respectively, due to then depressed silver prices, and the adjoining Caladay property, a silver exploration property. It is contemplated that the new company will invest approximately $25 million in development and exploration at the properties under a two-year plan of lengthening the existing workings, improving infrastructure and diamond drilling to increase reserves and mine life. The reopening of the Galena and Coeur Mines remains dependent upon future silver prices and the negotiation of certain contractual agreements. The Company has an option until July 1997 to increase its ownership interest in the El Bronce Mine to 51% if it invests $20.4 million and also invests a minimum of $5 million over a two-year period for exploration and mine development designed to expand ore reserves and increase annual gold production above the current level of 40,000 ounces per year. On July 19, 1994, the Company's Board of Director's approved construction of the Fachinal Project. Construction of the new mine is expected to take 18 months to complete and is expected to produce, in its first year, 41,000 ounces of gold and 2.6 million ounces of silver. Total cost to complete the project construction is expected to approximate $41.8 million. The Company plans to continue its developmental activities at the Kensington Property. A production decision relating to the Kensington Property is subject to the approval by the Company and its joint venture partner, a market price of gold of at least $400 per ounce and the receipt of certain required permits. The market price of gold (London final) on November 4, 1994 was $383.50 per ounce. With respect to the permits, the Company is unable to control the timing of their issuance. On November 8, 1994 EPA issued a draft of its Technical Assistance Report which calls for the Kensington Venture to redesign portions of its project and furnish additional data, in order to satisfy certain environmental requirements. If, in the final report, EPA adheres to the recommendations in the draft, the Company believes it is feasible to make the design changes and furnish the necessary data. It is anticipated that a final EPA Technical Assistance Report will be furnished to the Army Corps of Engineers in the first quarter of 1995, which should lead to the issuance by the Corps of its Section 404 permit in due course. The Company's business plan is to continue to acquire mining properties and/or businesses that are operational or expected to become operational in the near future so that they can reasonably be expected to contribute to the Company's near-term cash flow from operations and expand the Company's gold and/or silver production. RESULTS OF OPERATIONS Three Months Ended September 30, 1994 Compared to Three Months Ended September 30, 1993 Sales and Gross Profits Sales of concentrates and dore' in the third quarter of 1994 increased by $715,734, or 4%, over the third quarter of 1993. The increase in sales is primarily attributable to an increase in gold and silver prices. Silver and gold prices averaged $5.34 and $385.81 per ounce, respectively, in the third quarter of 1994, compared with $4.67 and $375.43 per ounce, respectively, in the third quarter of 1993. In the third quarter of 1994, the Company produced 1,582,579 ounces of silver and 31,125 ounces of gold compared to 1,598,035 ounces of silver and 34,896 ounces of gold in the third quarter of 1993. The cost of mine operations in the third quarter of 1994 decreased by $719,756, or 4%, from the prior year's comparable quarter. The decrease is primarily due to an increase in ore reserves at Golden Cross which had the effect of reducing noncash costs from $126 per gold equivalent ounce to $83 per ounce. Gross profit from mining operations in the third quarter of 1994 increased by $1,435,490, or 60%, to $3,821,422 compared to gross profit from mining operations of $2,385,932 in the third quarter of 1993. Mine operations gross profit as a percent of sales amounted to 18.5% in the third quarter of 1994, compared to 12.0% in the third quarter of 1993. The improvement in the gross profit percentage is primarily attributable to the increase in silver and gold prices and the decrease in production costs described above. The cash costs of production per ounce of gold at the Golden Cross Mine amounted to $272.10 per ounce in the quarter ended September 30, 1994, compared to $202.94 per ounce in the prior year's comparable quarter. The increase was primarily attributable to the presence of a harder grinding ore in the open pit requiring more milling and chemicals in the processing and a lower grade of ore being provided from the underground portion of the mine. The cash costs of production per ounce of silver on a silver equivalent basis at the Rochester Mine amounted to $3.43 in the quarter ended September 30, 1994, compared to $3.23 per ounce in the quarter ended September 30, 1993. Sales of industrial products, which consist of lightweight flexible hose and duct and metal tubing, in the third quarter of 1994 increased by $208,271, or 8%, over the prior year's third quarter. Cost of manufacturing in the third quarter of 1994 increased by $196,724, or 8.4%, compared to the third quarter of 1993. As a result, gross profits from manufacturing in the third quarter of 1994 increased by $11,547, or 3.6%, over the third quarter of 1993. Other Income Interest and other income in the third quarter of 1994 increased by $4,442,341, or 371%, over the third quarter of 1993. The increase is due to an increase of the Company's cash equivalents and short-term investments and a gain of $2.7 million arising from the sale by the Company of common shares of International Curator in the third quarter of 1994. Expenses Total expenses in the third quarter of 1994 decreased by $6,929,581 compared to the prior year's third quarter. The decrease is primarily due to non-recurring write-offs of $9,375,000, or $.61 per share, effected in the third quarter of 1993. The write-offs included one time provisions for litigation settlement of $5,875,000, environmental settlement of $1,230,000 and the write-off of uncollectible notes receivable of $2,268,564. The decrease is partially offset by an increase in mining exploration expense of $422,788, and an increase in interest expense of $1,744,641 associated with the completion of a 6-3/8% Convertible Subordinated Debentures offering effected in the first quarter of 1994. Net Loss As a result of the above, the Company's income before income taxes amounted to $1,758,560 in the third quarter of 1994 compared to a pre-tax loss of $11,060,399 in the third quarter of 1993. The Company provided $115,666 for income taxes in the third quarter of 1994 compared to a benefit of $672,492 in the third quarter of 1993. As a result, the Company reported net income of $1,642,894, or $.11 per share, in the third quarter of 1994 compared to a net loss of $10,387,907, or $.68 per share, in the third quarter of 1993. Nine Months Ended September 30, 1994 Compared to Nine Months Ended September 30, 1993 Sales and Gross Profits Sales of concentrates and dore' in the nine months ended September 30, 1994 increased by $14,593,223, or 32%, over the nine months ended September 30, 1993. The increase is primarily attributable to an increase in gold production and increases in metal prices. Silver and gold prices averaged $5.33 and $383.85 per ounce, respectively, in the first nine months of 1994 compared to $4.20 and $355.10 per ounce, respectively, in the same period in 1993. During the first nine months of 1994, the Company produced 4,512,157 ounces of silver and 94,225 ounces of gold compared to 4,410,154 ounces of silver and 82,646 ounces of gold in the first nine months of 1993. The increase in gold production is due to the Company's acquisition of an 80% interest in the Golden Cross Mine effective April 30, 1993. The Company's 80% interest in Golden Cross Mine production in the nine months ended September 30, 1994 amounted to 52,137 ounces of gold and 163,667 ounces of silver compared to 36,083 ounces of gold and 116,931 ounces of silver for the first nine months of 1993. The cost of mine operations in the first nine months of 1994 increased by $9,889,769, or 24%, over the first nine months of 1993. Gross profit from mine operations increased by $4,703,454, or 105%, in the first nine months of 1994 over 1993's comparable period. Mine operations gross profit as a percent of sales increased to 15.2% in the nine months ended September 30, 1994 compared to 9.8% in the nine months ended September 30, 1993. The increase was primarily attributable to the increases in silver and gold prices in 1994 over the prior year. The cash costs of production per ounce of gold at the Golden Cross Mine amounted to $280 per ounce in the nine months ended September 30, 1994, compared to $213 in the prior year's comparable nine-month period. The increase was primarily attributable to the presence of a harder grinding ore in the open pit requiring more milling and chemicals in the processing and a lower grade of ore being provided from the underground portion of the mine. The cash costs of production per ounce of silver on a silver equivalent basis at the Rochester Mine amounted to $3.58 per ounce in the nine months ended September 30, 1994, compared to $3.44 in the nine months ended September 30, 1993. Sales of industrial products in the first nine months of 1994 increased by $872,675, or 11.6%, compared to the first nine months of 1993. Cost of manufacturing increased by $876,646, or 13.1%, in the first nine months of 1994, compared to the prior year's comparable period. As a result, gross profit from manufacturing for the first nine months of 1994 decreased by $3,971, or .5%, compared to the first nine months of 1993. Other Income Interest and other income in the nine months ended September 30, 1994 increased by $6,342,951, or 162%, over the prior years' comparable period. The increase in primarily due to an increase in the level of the Company's cash and securities portfolio and unrealized foreign exchange gains on outstanding contracts at September 30, 1994 and a gain of $2.7 million arising from the sale by the Company of common shares of International Curator in the third quarter of 1994. Expenses Total expenses in the first nine months of 1994 decreased by $2,990,108, or 11.8%, from the prior year's comparable nine-month period. The decrease is primarily due to the non-recurring write-offs of $9,375,000, or $.61 per share, effected in the third quarter of 1993. The write-offs include one time provisions for litigation settlement of $5,875,000, environmental settlement of $1,230,000 and the write-off of uncollectible notes receivable of $2,268,564. The decrease was partially offset by an increase in interest expense of $4,427,627 in the first nine months of 1994, which was related to the issuance of $100 million principal amount of 6-3/8% Convertible Subordinated Debentures in the first quarter of 1994, and increases in administrative expenses of $932,398 and mining exploration of $1,485,506. Income (Loss) Before Taxes and Accounting Change As a result of the above, the Company's loss before income taxes and the cumulative effect of a change in accounting amounted to $2,138,537 in the first nine months of 1994 compared to $16,171,079 in the first nine months of 1993. The provision for income taxes amounted to $150,667 in the first nine months of 1994, compared to a benefit of $2,795,352 in the first nine months of 1993. As a result, the Company reported a net loss before the cumulative effect of a change in accounting of $2,289,204, or $.15 per share, in the first nine months of 1994, compared to $13,375,727, or $.87 per share, in the first nine months of 1993. Change in Accounting Effective January 1, 1993, the Company changed its method of accounting for income taxes by adopting the mandatory Statement of Financial Accounting Standards (FAS) 109, "Accounting for Income Taxes." FAS 109 requires an asset and liability approach to accounting for income taxes and establishes criteria for recognizing deferred tax assets. Accordingly, the Company adjusted its existing deferred income tax assets and liabilities to reflect current statutory income tax rates and previously unrecognized tax benefits related to federal and certain state net operating loss carry forwards. The cumulative effect of the accounting change on prior years at January 1, 1993, resulted in a non- recurring gain of $5,181,188, or $.34 per share, and is included in the results of operations for the nine months ended September 30, 1993. Net Income (Loss) As a result of the above, the Company reported a net loss of $2,289,204, or $.15 per share, in the first nine months of 1994, compared to a net loss of $8,194,539, or $.53 per share, in the prior year's comparable nine-month period. LIQUIDITY AND CAPITAL RESOURCES Working Capital; Cash and Cash Equivalents The Company's working capital at September 30, 1994 was approximately $185.3 million compared to $107.6 million at December 31, 1993. The ratio of current assets to current liabilities was 9.9 to one at September 30, 1994 compared to 6.0 to one at December 31, 1993. The increase in the Company's working capital at September 30, 1994 compared to December 31, 1993 is primarily attributable to the Company's sale in January and February 1994 of an aggregate of $100,000,000 principal amount of 6-3/8% Convertible Subordinated Debentures Due 2004 (the "Debentures"). The Debentures were issued by the Company in connection with an offering to "qualified institutional buyers" as defined in Rule 144A under the Securities Act and to certain non-U.S. persons in reliance upon Regulation S under the Securities Act. The Company plans to use the approximately $95.5 net proceeds from such offering for general corporate purposes, including the possible acquisition of, or investment in, additional precious metals mines, properties or businesses, and for possible developmental activities on new or existing mining properties. The Company's acquisition efforts are primarily focused upon operating precious metals mines and precious metals properties or businesses that are expected to become operational in the near future. The Company currently is engaged in the review and investigation of opportunities for expansion of its business through acquisitions, investments or other transactions. While preliminary agreements have been entered into with respect to certain proposed acquisitions, the consummation of such acquisitions is subject to significant contingencies. The Company invested the proceeds of the above offering in interest-bearing marketable securities and money market obligations, and plans to continue such investments pending the use of the proceeds of that offering as discussed above. Net cash provided by operating activities in the first nine months of 1994 was $3,313,847 compared to $1,117,364 in the first nine months of 1993. Net cash used in investing activities in the first nine months of 1994 was $95,218,373 compared to $115,875,967 in the prior year's comparable period. Net cash provided by financing activities in the first nine months of 1994 was $91,798,671, compared to $3,618,826 used in the first nine months of 1993. As a result of the above, cash and cash equivalents decreased by $105,855 in the first nine months of 1994 compared to a $118,377,429 decrease for the comparable period of 1993. For the years ended September 30, 1994 and 1993, the Company expended $1,910,525 and $2,799,358, respectively, in connection with environmental compliance activities at its operating properties. At September 30, 1994, the Company had expended a total of approximately $4.5 million on environmental and permitting activities at the Kensington property, which expenditures have been capitalized as part of its development cost. On June 24, 1994, the U.S. District Court for the District of Idaho approved the proposed settlement of Kassover v. Coeur d'Alene Mines Corporation et al (the "Lawsuit"), a class action instituted against the Company and others in 1990. Pursuant to the Settlement, a total of up to 220,083 shares of Common Stock will be issued by the Company in exchange for the claims of the members of the plaintiff class (the "Claimants") and their counsel. The number of such shares was determined by dividing $4 million by the average daily closing price of the Common Stock for the five business days preceding the "fairness hearing" relating to the Settlement held on June 16, 1994. The Company issued 66,025 shares to counsel for the Claimants in late July 1994, and plans to issue the balance of up to 154,058 shares following the processing of the Claimants' claims, which is expected to be in November or December 1994. On July 19, 1994, the Company's Board of Directors approved the construction of the Fachinal project following the completion by the independent engineering firm of Fluor Daniel Wright of a detailed feasibility study. Pursuant to that study, the cost to complete Fachinal is estimated to be $41.8 million. The Company plans to seek funding for that construction on a project financing basis. PART II. OTHER INFORMATION Item 1. Legal Proceedings. On September 22, 1994, a judgment was entered against the Company in the United States District Court for the District of Idaho in a case entitled Goldberg v. Coeur d'Alene Mines Corporation in the amount of $725,688. The action involves an alleged claim by the plaintiff to recover on four promissory notes made by an predecessor of the Company. The notes are claimed to be the obligation of the Company by virtue of successive mergers which occurred in 1974 and in 1988. Plaintiff has filed with the court a cost bill in the approximate amount of $250,000 which has been objected to by the Company but which, if allowed, will be added to the judgment for a total judgment of $975,688, upon which interest accrues. The Company filed a notice of appeal to the Ninth Circuit Court of Appeals on September 29, 1994. Item 6. Exhibits and Reports on Form 8-K (b) Reports on Form 8-K None 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. COEUR D'ALENE MINES CORPORATION (Registrant) Dated November 10, 1994 /s Dennis E. Wheeler DENNIS E. WHEELER Chairman, President and Chief Executive Officer Dated November 10, 1994 /s James A. Sabala JAMES A. SABALA Senior Vice President (Principal Financial and Accounting Officer)
EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COEUR D'ALENE MINES CORPORATION'S UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1994 SEP-30-1994 14,572,242 142,244,142 11,073,015 0 35,102,267 206,215,012 274,607,566 77,529,500 416,381,643 20,876,321 227,716,928 (16,479,105) 0 0 (144,805,136) (416,381,643) (68,712,612) (78,970,162) (58,714,196) (22,394,503) 0 0 (8,497,293) 0 150,677 (2,289,204) 0 0 0 (2,289,204) (.15) 0
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