-----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, NNsW7qfO1O3gtgeMDNliaDeqPheRrtVqdP1Y4TinqdJGiWNV002xyBpNyowf54kj EWN/Wl2Ap32kxp00FIgGgg== 0000950134-98-003486.txt : 19980424 0000950134-98-003486.hdr.sgml : 19980424 ACCESSION NUMBER: 0000950134-98-003486 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980423 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNSHINE MINING & REFINING CO CENTRAL INDEX KEY: 0000833376 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 752231378 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10012 FILM NUMBER: 98599409 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, 1998 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, 1998 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 22, 1998 ----------------------------------- ---------------------------- Common Stock, $.01 par value 256,707,629
2 SUNSHINE MINING AND REFINING COMPANY CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited)
March 31 December 31 1998 1997 ---------- ---------- ASSETS Current assets: Cash and cash investments $ 11,158 $ 15,985 Silver bullion 8,361 7,739 Accounts receivable 4,832 2,801 Inventories (Note 2) 3,738 3,627 Other current assets 1,825 1,739 ---------- ---------- Total current assets 29,914 31,891 Property, plant and equipment, at cost 144,579 143,192 Less accumulated depreciation, depletion and amortization (79,134) (77,727) ---------- ---------- 65,445 65,465 Investments and other assets 5,724 4,245 ---------- ---------- Total assets $ 101,083 $ 101,601 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,223 $ 1,351 Accrued expenses 3,145 3,581 ---------- ---------- Total current liabilities 4,368 4,932 Long-term debt 41,510 42,265 Accrued pension and other postretirement benefits 5,629 5,672 Other long-term liabilities and deferred credits 3,818 4,236 Stockholders' equity: Common stock -- $.01 per value; 600,000 shares authorized; shares issued: March 31, 1998 -- 261,193 December 31, 1997 -- 259,818 2,612 2,598 Paid-in capital 712,369 711,192 Deficit (668,084) (668,155) ---------- ---------- 46,897 45,635 Less treasury stock, at cost: March 31, 1998 -- 4,586 shares December 31, 1997 -- 4,586 shares 1,139 1,139 ---------- ---------- 45,758 44,496 ---------- ---------- Total liabilities and stockholders' equity $ 101,083 $ 101,601 ========== ==========
See accompanying notes. -2- 3 SUNSHINE MINING AND REFINING COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31,1998 AND 1997 (In Thousands, Except Per Share Amounts) (Unaudited)
1998 1997 ---------- ---------- Operating revenues $ 9,740 $ 5,732 Mark to market gain 792 186 ---------- ---------- 10,532 5,918 ---------- ---------- Costs and expenses: Cost of revenues 6,950 5,688 Depreciation, depletion and amortization 1,395 1,308 ---------- ---------- 8,345 6,996 ---------- ---------- Operating margin (loss) 2,187 (1,078) Other income (expense) Exploration (1,045) (2,362) Selling, general and administrative expense (1,206) (1,380) Interest income 219 210 Interest and debt expense (1,685) (1,360) Other, net 1,601 37 ---------- ---------- (2,116) (4,855) ---------- ---------- Net Income (loss) $ 71 $ (5,933) ========== ========== Basic and fully diluted income (loss) per common share: $ 0.00 $ (0.02) Weighted average common shares outstanding 255,684 255,059 ========== ==========
See accompanying notes. -3- 4 SUNSHINE MINING AND REFINING COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited)
Three Months Ended March 31 1998 1997 ---------- ---------- Cash used by operating activities: Net Income $ 71 $ (5,933) Adjustments to reconcile net loss to net cash used by operations: Depreciation, depletion and amortization 1,395 1,308 Amortization of debt issuance costs and accretion of debt discount 587 464 Net (increase) decrease in: Silver bullion (622) (6) Accounts receivable (2,031) 277 Inventories (111) 97 Other assets and deferred charges (1,762) 25 Net increase (decrease) in: Accounts payable and accrued expenses (557) (1,279) Accrued pension and other postretirement benefits (43) (143) Other liabilities and deferred credits (419) (214) ---------- ---------- Net cash used by operations (3,492) (5,404) ---------- ---------- Cash provided (used) by investing activities: Additions to property, plant and equipment (1,375) (358) Proceeds from investments 0 213 ---------- ---------- Net cash used by investing activities (1,375) (145) ---------- ---------- Cash provided (used) by financing activities: Proceeds from issuance of common stock upon exercise of stock options and warrants 46 0 Debt issuance costs (6) (60) ---------- ---------- Net cash provided (used) by financing activities 40 (60) ---------- ---------- Increase (decrease) in cash and cash investments (4,827) (5,609) Cash and cash investments, January 1 15,985 16,317 ---------- ---------- Cash and cash investments, Match 31 $ 11,158 $ 10,708 ========== ========== Supplemental cash flow information -- Interest paid in cash $ 1,274 $ 1,308 ========== ==========
See accompanying notes. -4- 5 SUNSHINE MINING AND REFINING COMPANY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS March 31, 1998 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. Certain previously reported amounts have been reclassified to conform to the March 31, 1998 presentation. Operating results for the three-month period ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. 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, 1997. 2. INVENTORIES The components of inventory consist of the following:
March 31 December 31 1998 1997 ---------- ---------- Precious Metals Inventories: Work in process $ 2,353 $ 2,171 Finished goods 190 264 Materials and supplies inventories 1,195 1,192 ---------- ---------- $ 3,738 $ 3,627 ========== ==========
SUNSHINE MINING AND REFINING COMPANY Management's Discussion and Analysis of Financial Condition and Results Of Operations for the Three Months Ended March 31, 1998 and 1997 LIQUIDITY AND CAPITAL RESOURCES Working capital at March 31, 1998 totaled $25.5 million including $11.2 million in cash and cash investments and $8.4 million in silver bullion. The Company anticipates capital expenditures in 1998 at the Sunshine Mine to be approximately $2.7 million, including $419 thousand expended in the first quarter. For 1998, the Company has also budgeted approximately $3.8 million for exploration activities primarily at the La Joya del Sol Mine in Argentina and the Sunshine Mine. Exploration expenditures for the first three months of 1998 totaled approximately $1.0 million. Additionally, $4.4 million is budgeted for development of the Pirquitas Mine in Argentina, of which $900 thousand was spent in the first quarter. Cash and working capital are considered adequate to fund ongoing operations for the foreseeable future. Development of the Pirquitas Mine will require approximately $100 million. The Company is currently reviewing financing options, including debt and/or equity offerings, to determine the most appropriate financing for the development of the property. Although the Company believes it will be successful in obtaining adequate financing for the development of Pirquitas, no assurance can be given as to the availability of adequate financing. -5- 6 Operating, Investing, and Financing Activities Cash used in operating activities in the first quarter of 1998 was $3.5 million compared to $5.4 million in the first quarter of 1997. The $1.9 million decrease was primarily due to a $2.0 million cash operating income in the first quarter of 1998 compared to a $4.2 million cash operating loss in the first quarter of 1997, partially offset by changes in working capital components. The cash operating income resulted primarily from increased silver production and an increase in average per ounce silver price received for silver sold. Accounts receivable increased primarily due to increased sales volumes. Investments increased primarily due to the reduction in the valuation reserve previously booked against certain investments. Investing activities in the first quarter of 1998 used approximately $1.4 million of cash including $900 thousand for the development of Pirquitas and $419 thousand of capital expenditures at the Sunshine Mine. RESULTS OF OPERATIONS THE THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1997 Consolidated operating revenues increased approximately $4 million (69.9%) for the first quarter of 1998 compared to the first quarter of 1997, while mark to market gains on work in process inventories and investment bullion increased $606 thousand. The increase in operating revenues primarily resulted from an increase in silver sales volumes and average price received per ounce of silver sold (1,311,000 ounces of silver at an average of $6.43 per ounce in the 1998 quarter compared to 937,000 ounces at an average of $5.14 per ounce in the 1997 quarter). The silver sales volume increase primarily resulted from a 400,000 ounce (44%) increase in production in the 1998 quarter. Cost of revenues increased $1.3 million (22.2%) (from $5.7 million in the first quarter of 1997 to $6.95 million in the first quarter of 1998) primarily due to the 44% increase in production in 1998, partially offset by lower unit production costs. Unit production costs decreased $.69 per ounce (13.5%) to $4.42 per ounce of silver primarily due to the increase in silver production and a 3.34 ounce per ton (16.4%) increase in average grades from 1997 to 1998 (1.3 million ounces produced from 56,700 tons at 23.67 ounces per ton in 1998 versus 0.9 million ounces from 45,799 tons at 20.33 ounces per ton in 1997) partially offset by a decrease in by-product credits of $0.25 per ounce of silver. The decrease in by-products credit per ounce of silver resulted primarily from a decrease in copper and lead prices in the 1998 quarter compared to the 1997 quarter. Operating margin in the 1998 period totaled $2.2 million in the 1998 quarter compared to an operating loss of $1.1 million in the 1997 quarter. Exploration expense decreased $1.3 million in 1998 compared to 1997 primarily due to the fact that work carried out at the Pirquitas Mine in Argentina is largely being capitalized as the property is now considered to be in the development stage. As a result, approximately $900 thousand of expenditures at Pirquitas during 1998 have been capitalized. Selling, general and administrative expense decreased $173 thousand (12.6%) due to a variety of cost reductions. Interest and debt expense increased $326 thousand primarily due to the debt issued in November 1997. Other, net increased $1.6 million primarily due to the reduction of the valuation reserves previously recorded against certain investments as a result of restructuring and performance of certain investments. -6- 7 SUNSHINE MINING AND REFINING COMPANY PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None 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 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 23, 1998 By: /s/ WILLIAM W. DAVIS ------------------------------------- William W. Davis Executive Vice President and Chief Financial Officer -7- 8 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1998 AND UNAUDITED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998, AND IS QUAILIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 11,158 0 4,832 0 3,738 29,914 144,579 79,134 101,083 4,368 41,510 0 0 2,612 43,146 101,083 9,740 10,532 6,950 8,345 1,045 0 1,685 71 0 71 0 0 0 71 0 0
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