-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hhn/XGgvHmrrsvGsmJEMxMsyC8NSh+JeDjRcZNhXDVqbeHmvrJzVRNaF9jUmiwF2 xa7NckjlpCt6z0bGd+DRVQ== 0000950134-97-003271.txt : 19970430 0000950134-97-003271.hdr.sgml : 19970430 ACCESSION NUMBER: 0000950134-97-003271 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970429 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNSHINE MINING & REFINING CO CENTRAL INDEX KEY: 0000833376 STANDARD INDUSTRIAL CLASSIFICATION: PRIMARY SMELTING & REFINING OF NONFERROUS METALS [3330] IRS NUMBER: 752231378 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10012 FILM NUMBER: 97589156 BUSINESS ADDRESS: STREET 1: 877 WEST MAIN STREET STREET 2: SUITE 600 CITY: BOISES STATE: ID ZIP: 83702 BUSINESS PHONE: 2083450660 MAIL ADDRESS: STREET 1: 877 W MAIN STREET SUITE 600 CITY: BOISE STATE: ID ZIP: 83702 FORMER COMPANY: FORMER CONFORMED NAME: SUNSHINE MINING CO /DE DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SUNSHINE HOLDINGS INC DATE OF NAME CHANGE: 19880915 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 1997 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1997 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 1-10012 SUNSHINE MINING AND REFINING COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 75-2618333 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 877 W. Main, Suite 600, Boise, Idaho 83702 - -------------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number including area code (208) 345-0660 ----------------------- - -------------------------------------------------------------------------------- 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 ----- ----- Number of Shares Outstanding Title of Each Class of Common Stock at April 25, 1997 - ----------------------------------- ------------------------------ Common Stock, $.01 par value 255,137,277 Page 1 of 10 2 SUNSHINE MINING AND REFINING COMPANY CONSOLIDATED BALANCE SHEETS MARCH 31, 1997 AND DECEMBER 31, 1996 (IN THOUSANDS)
(UNAUDITED) MARCH 31 DECEMBER 31 1997 1996 --------- --------- ASSETS Current assets: Cash and cash investments $ 10,709 $ 16,317 Silver bullion 7,995 7,989 Accounts receivable 2,347 2,624 Inventories (Note 2) 2,426 2,523 Marketable securities 7 7 Other current assets 985 1,101 --------- --------- Total current assets 24,469 30,561 Property, plant and equipment, at cost 141,613 141,409 Less accumulated depreciation, depletion and amortization (73,278) (72,124) --------- --------- 68,335 69,285 Investments and other assets 5,397 5,640 --------- --------- Total assets $ 98,201 $ 105,486 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,108 $ 987 Accrued expenses 2,555 4,015 --------- --------- Total current liabilities 3,663 5,002 Long-term debt 31,515 31,515 Accrued pension and other postretirement benefits 5,931 6,074 Other long-term liabilities and deferred credits 4,812 5,032 Stockholders' equity: Common stock--$.01 par value; 400,000 shares authorized; shares issued: March 31, 1997 - 259,803 December 31, 1996 - 259,652 2,598 2,597 Paid-in capital 704,342 704,343 Deficit (653,421) (647,832) --------- --------- 53,519 59,108 Less treasury stock, at cost: March 31, 1997 - 4,666 shares December 31, 1996 - 4,671 shares 1,239 1,245 --------- --------- 52,280 57,863 --------- --------- Total liabilities and stockholders' equity $ 98,201 $ 105,486 ========= =========
See accompanying notes. -2- 3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED March 31, 1997 and 1996 (In Thousands, Except Per Share Amounts) (Unaudited)
1997 1996 --------- --------- Operating revenues $ 6,554 $ 3,327 Mark to market gain 186 470 --------- --------- 6,740 3,797 --------- --------- Costs and expenses: Cost of revenues 6,509 3,625 Depreciation, depletion and amortization 1,308 960 Exploration 2,362 2,524 Selling, general and administrative expense 1,379 1,252 --------- --------- 11,558 8,361 --------- --------- Operating loss (4,818) (4,564) Other income (expense): Interest income 210 182 Interest and debt expense (1,016) (296) Other, net 35 57 --------- --------- (771) (57) --------- --------- Net loss (5,589) (4,621) Preferred stock dividend requirements 0 (2,471) --------- --------- 0 Loss applicable to common shares $ (5,589) $ (7,092) ========= ========= Loss per common share ($ 0.02) ($ 0.04) ========= ========= Weighted average common shares outstanding 255,059 191,989 ========= =========
See accompanying notes. -3- 4 SUNSHINE MINING AND REFINING COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 (In Thousands) (Unaudited)
1997 1996 -------- -------- Cash used by operating activities: Net loss $ (5,589) $ (4,621) Adjustments to reconcile net loss to net cash used by operations: Depreciation, depletion and amortization 1,308 960 Exploration costs charged to operations 2,362 2,524 Amortization of debt issuance costs 121 -- Realized and unrealized gains on marketable equity securities -- (60) Net (increase) decrease in: Silver bullion (6) (420) Accounts receivable 277 (108) Inventories 97 (472) Other assets and deferred charges 25 69 Net increase (decrease) in: Accounts payable and accrued expenses (1,279) 570 Accrued pension and other postretirement benefits (143) 143 Other liabilities and deferred credits (214) (328) -------- -------- Net cash used by operations (3,041) (1,743) -------- -------- Cash provided (used) by investing activities: Additions to property, plant and equipment and exploration expenditures (2,720) (3,098) Proceeds from investments 213 630 -------- -------- Net cash used by investing activities (2,507) (2,468) -------- -------- Cash provided (used) by financing activities: Proceeds from issuance of common stock upon exercise of stock options and warrants -- 1 Proceeds from issuance of long term debt -- 30,000 Debt issuance costs (60) (2,047) -------- -------- Net cash provided (used) by financing activities (60) 27,954 -------- -------- Increase (decrease) in cash and cash investments (5,608) $ 23,743 Cash and cash investments, January 1 16,317 12,837 -------- -------- Cash and cash investments, March, 31, $ 10,709 $ 36,580 ======== ======== Supplemental cash flow information - Interest paid in cash $ 1,308 166 ======== ========
See accompanying notes. -4- 5 SUNSHINE MINING AND REFINING COMPANY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS March 31, 1997 1. BASIS OF PRESENTATION The accompanying unaudited consolidated condensed financial statements of Sunshine Mining and Refining Company ("Sunshine" or the "Company") 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. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in Sunshine's report on Form 10-K for the year ended December 31, 1996. 2. INVENTORIES The components of inventory consist of the following:
March 31 December 31 1997 1996 ------ ------ Precious Metals Inventories: Work in process $1,103 $1,144 Finished goods 298 405 Materials and supplies inventories 1,025 974 ------ ------ $2,426 $2,523 ====== ======
5 6 3. RECENT ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" which becomes effective for the Company's 1997 consolidated financial statements beginning in the fourth quarter of 1997. SFAS No. 128 will eliminate the disclosure of primary earnings per share which includes the dilutive effect of stock options, warrants and other convertible securities ("Common Stock Equivalents") and instead requires reporting of "basic" earnings per share, which will exclude Common Stock Equivalents. Additionally, SFAS No. 128 changes the methodology for fully diluted earnings per share. In the opinion of the Company's management, it is not anticipated that the adoption of this new accounting standard will have a material effect on the reported earnings per share of the Company. 6 7 SUNSHINE MINING AND REFINING COMPANY Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three Months Ended March 31, 1997 and 1996 LIQUIDITY AND CAPITAL RESOURCES As the price of silver since 1985 has been only slightly in excess of, or less than, the Company's cash cost to produce an ounce of silver, the Company's operations have not been able to generate cash flow sufficient to cover its costs of exploration, research, general and administrative expenses, and interest, as well as non-cash charges such as depreciation, depletion, and amortization. Until such time as the price of silver increases significantly or higher production is achieved at a lower cost, the Company will continue to generate a negative cash flow from operations. The Company anticipates capital expenditures in 1997 at the Sunshine Mine to be approximately $1.3 million, including $366 thousand expended in the first quarter. For 1997, the Company has also budgeted approximately $5.5 million for exploration activities at the Pirquitas Mine in Argentina and the Sunshine Mine. Exploration expenditures for the first three months of 1997 totaled approximately $2.4 million. Operating, Investing, and Financing Activities Cash used in operating activities in the first quarter of 1997 was $3.0 million compared to $1.7 million in the first quarter of 1996. The $1.3 million increase was primarily due to the $1.2 million semi-annual interest payment in March, 1997 on the $30 million of Eurobonds issued March 22, 1996, and a cash operating loss increase in the first quarter of 1997 of $0.7 million, partially offset by changes in working capital components. The cash operating loss increased primarily due to the $0.7 million increase in interest and debt expense related to the Eurobonds. Approximately $2.5 million of cash was used by investing activities in both quarters. Cash provided by financing activities was $28.0 million in the first quarter of 1996 as a result of the Company's Notes Offering. 7 8 RESULTS OF OPERATIONS THE THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1996 Consolidated operating revenues increased approximately $3.2 million for the first quarter of 1997 compared to the first quarter of 1996, while mark to market gains on work in process inventories and investment bullion decreased $284 thousand. The increase in operating revenues resulted from an increase in silver sales volumes (1,033,000 ounces of silver in the 1997 quarter compared to 500,000 ounces in the 1996 quarter) and a $738 thousand increase in by-product revenue partially offset by a $0.54 (9.5%) decrease in average silver price received per ounce. The silver sales volume increase primarily resulted from a 347,000 ounce (63%) increase in production in the 1997 quarter, a 53 thousand ounce increase in sales volume of finished silver and a build up of work in process inventory in the 1996 quarter. Cost of revenues increased $2.9 million (80%) (from $3.6 million in the first quarter of 1996 to $6.5 million in the first quarter of 1997) primarily due to the 63% increase in production in 1997, increased sales of retail silver and the 1996 build up of work in process inventories, partially offset by lower unit production costs. Unit production costs decreased $.88 (14.7%) to $5.11 per ounce of silver primarily due to the increase in silver production and a 1.9 ounce (10%) increase in average grades from 1996 to 1997 (901 thousand ounces produced from 45,799 tons at 20.33 ounces per ton in 1997 versus 554 thousand ounces from 31,037 tons at 18.42 ounces per ton in 1996) and increased by-product credits of $0.48 per ounce of silver. Exploration expense was approximately the same for the 1997 and 1996 periods pursuant to the Company's plans for exploration spending primarily at the Pirquitas Mine in Argentina and the Sunshine Mine. Depreciation, depletion and amortization increased by approximately $348 thousand as a result of increased production in the 1997 period. Interest and debt expense increased $720 thousand due to the debt issued in March, 1996. 8 9 SUNSHINE MINING AND REFINING COMPANY PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The litigation commenced on March 29, 1995 against the Company in Delaware Chancery Court, New Castle County, by Harbor Finance Partners, a Colorado Partnership, was dismissed with prejudice on March 11, 1997, pursuant to a stipulation between the parties. The Company agreed to pay plaintiff's counsel fees and expenses of $47,500 to resolve their claim for services rendered in the litigation. ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None 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 9 10 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 hereto duly authorized. SUNSHINE MINING AND REFINING COMPANY Dated: April 28, 1997 By: s/WILLIAM W. DAVIS ------------------------------------ William W. Davis Executive Vice President and Chief Financial Officer 10 11 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- EX-27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997 (UNAUDITED) AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 10,709 7 2,347 0 2,426 24,469 141,613 73,278 98,201 3,663 31,514 0 0 2,598 49,682 98,201 6,554 6,740 6,509 7,817 2,362 0 1,016 (5,589) 0 (5,589) 0 0 0 (5,589) (0.02) (0.02)
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