SECURITIES AND EXCHANGE COMMISSION
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 June 30, 1995
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 16,657,995 shares
were issued and outstanding as of July 28, 1995.
COEUR D'ALENE MINES CORPORATION
INDEX
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Page No.
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PART I. Financial Information:
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -- 3-4
June 30, 1995 and December 31, 1994
Consolidated Statements of Operations -- 5-6
Three Months Ended June 30, 1995 and 1994
Six Months Ended June 30, 1995 and 1994
Consolidated Statements of Cash Flows -- 7-8
Six Months Ended June 30, 1995 and 1994
Notes to Consolidated Financial Statements 9-10
Item 2. Management's Discussion and Analysis of 11-16
Financial Condition and Results of Operations
PART II. Other Information.
Item 4. Submission of Matters to a Vote of Security-Holders 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 June 30, December 31,
1995 1994
------------ -------------
CURRENT ASSETS
Cash and cash equivalents $ 47,134,926 $ 14,707,278
Short-term investments 75,595,470 128,112,407
Receivables 12,218,238 7,677,269
Refundable income taxes 2,700,569 3,435,649
Inventories 33,389,973 34,215,127
------------ ------------
Total Current Assets 171,039,176 188,147,730
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 105,586,930 83,872,789
Less accumulated depreciation 39,678,981 37,394,296
------------- -------------
65,907,949 46,478,493
MINING PROPERTIES
Operational mining properties 109,268,067 102,571,977
Less accumulated depletion 35,249,459 38,162,432
------------- -------------
74,018,608 64,409,545
Developmental properties 104,796,475 95,896,774
------------- -------------
178,815,083 160,306,319
Net assets of discontinued operations 159,501 6,000,741
OTHER ASSETS
Funds held in escrow 2,270,695 2,270,695
Notes receivable 6,000,000
Debt issuance costs, net of
accumulated amortization 7,775,776 8,240,209
Other 994,998 917,206
------------- -------------
17,041,469 11,428,110
------------- -------------
$432,963,178 $412,361,393
============= =============
3
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31,
1995 1994
------------ -------------
CURRENT LIABILITIES
Accounts payable $ 4,584,088 $ 2,289,808
Accrued liabilities 4,905,483 4,426,925
Accrued interest payable 3,165,251 4,634,961
Accrued salaries and wages 3,595,420 3,867,801
Accrued litigation settlement 800,000
Short term project financing 5,000,000
Current portion of obligations
under capital leases 2,115,592 2,041,057
------------ -------------
Total Current Liabilities 23,365,834 18,060,552
OTHER LIABILITIES
6% Convertible Subordinated
Debentures 50,000,000 50,000,000
7% Convertible Subordinated
Debentures 74,987,000 75,000,000
6 3/8% Convertible Subordinated
Debentures 100,000,000 100,000,000
Obligations under capital leases 1,116,092 2,192,856
Other long-term liabilities 5,691,133 5,234,899
Limited Recourse Project Financing 11,091,007
Deferred income taxes 1,173,643 1,580,804
------------ -------------
Total Long-Term Liabilities 244,058,875 234,008,559
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 and outstanding
16,657,995 and 16,633,163 shares
(including 1,058,453 held as
treasury stock) 16,657,995 16,633,163
Capital surplus 180,937,624 182,881,071
Accumulated deficit (16,811,270) (17,043,506)
Repurchased and nonvested shares (13,304,677) (13,358,309)
Unrealized losses on short-
term investment securities (1,941,203) (8,820,137)
------------ -------------
165,538,469 160,292,282
------------ -------------
$432,963,178 $412,361,393
============= =============
4
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF OPERATIONS
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
----------------------------- ---------------------------
1995 1994 1995 1994
------------- ------------- ------------- ------------
INCOME
From mine operations:
Sales of concentrates
and dore' $ 23,620,545 $ 19,463,913 $ 41,511,714 $ 39,673,495
Less cost of mine
operations 17,931,591 16,485,944 33,972,120 33,825,493
-------------- -------------- -------------- --------------
Gross profits 5,688,954 2,977,969 7,539,594 5,848,002
Interest and other income 2,060,983 2,670,250 4,447,416 4,038,529
$ 23,620,545 $ 19,463,913 $ 41,511,714 $ 39,673,495
Total income 7,749,937 5,648,219 11,987,010 9,886,531
EXPENSES
Administration 1,001,307 950,362 1,965,678 2,541,071
Accounting and legal 488,701 434,985 856,670 855,925
General corporate 1,737,903 1,379,807 3,201,190 2,746,913
Mining exploration 856,581 1,215,186 1,992,684 1,951,510
Idle facilities 583,289 415,400 1,124,300 827,744
Interest 2,634,905 2,935,536 5,616,770 5,440,118
-------------- -------------- -------------- --------------
Total expenses 7,302,686 7,331,276 14,757,292 14,363,281
-------------- -------------- -------------- --------------
Net Income (loss) from
Continuing operations
before taxes 447,251 (1,683,057) (2,770,282) (4,476,750)
Benefit for
income taxes (791,744) (122,677) (642,321) (196,860)
-------------- -------------- -------------- --------------
Net Income (loss) from
Continuing operations 1,238,995 (1,560,380) (2,127,961) (4,279,890)
Income from discontinued
Operations (Net of
taxes) 2,168,533 225,581 2,360,196 347,792
------------- ------------- ------------- ------------
NET INCOME (LOSS) $ 3,407,528 $ (1,334,799) $ 232,235 $ (3,932,098)
============== ============== ============== ==============
5
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF OPERATIONS
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
----------------------------- ---------------------------
1995 1994 1995 1994
------------- ------------- ------------- ------------
EARNINGS PER SHARE DATA
Primary Earnings Per Share:
Weighted average number
of shares of Common
Stock outstanding 15,613,687 15,354,627 15,597,131 15,346,742
=========== =========== =========== ===========
Income (Loss) per share
from continuing
operations $ .08 $ (.10) $ (.14) $ (.28)
Income per share from
discontinued operations .14 .01 .15 .02
----------- ----------- ----------- -----------
NET INCOME(LOSS) PER SHARE $ .22 $ (.09) $ .01 $ (.26)
=========== =========== =========== ===========
Fully Diluted Earnings Per Share:
Weighted average number
of shares of Common
Stock outstanding 26,136,722
===========
Income (Loss) per share
from continuing
operations $ .11
Income per share from
discontinued operations .08
----------
NET INCOME(LOSS) PER SHARE $ .19
===========
Cash dividends per share $ 0.15 $ 0.15
========== ==========
See notes to consolidated financial statements.
6
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
CASH FLOWS FROM OPERATING ACTIVITIES 1995 1994
-------------- --------------
Income (loss) from continuing operations $ (2,127,961) $ (4,279,890)
Add (less) noncash items:
Depreciation, depletion and
amortization 8,494,450 8,803,022
Deferred income taxes (1,980,625) (484,369)
(Gain)Loss on disposition
of fixed assets 177,545 128,153
Gain on foreign currency transactions (549,237) (1,193,959)
Loss on sale of short-term
investments 1,128,405 575,245
Change in operating assets and liabilities:
Accounts receivable (3,828,194) (1,329,242)
Inventories 825,154 (148,917)
Accounts payable and
accrued liabilities 280,391 (722,884)
Interest payable (1,469,710) 1,229,329
-------------- --------------
950,218 2,576,488
Income (loss) from discontinued operations 2,360,196 347,792
Add (less) noncash items:
Depreciation, depletion and amortization 85,381 140,561
(Gain) loss on disposition of
discontinued operations (3,877,636)
Deferred income taxes 1,573,464 231,861
Change in operating assets and Liabilities:
Accounts receivable 601,242 (11,277)
Inventories (30,661) (450,794)
Accounts payable and accrued liabilities (109,218) 70,267
-------------- --------------
602,768 328,410
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 1,552,986 $ 2,904,898
7
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
1995 1994
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment (1,831,149) (3,257,526)
Purchase of short-term investments (2,409,976) (102,093,405)
Proceeds from sale of short-term securities 60,012,234 17,560,691
Proceeds from sale of assets 550,846 253,784
Proceeds from sale of discontinued operations 2,854,766
Expenditures on operational
mining properties (12,511,283) (4,363,811)
Expenditures on developmental properties (29,294,873) (5,434,533)
Other 314,065 96,404
-------------- --------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 17,684,630 (97,238,396)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from offering of 6 3/8%
Convertible Subordinated Debentures 95,647,541
Proceeds from project financing 16,091,007
Retirement of obligations under capital
leases (1,002,229) (932,853)
Payment of cash dividends (2,339,376) (2,303,194)
-------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 12,749,402 92,411,494
-------------- --------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 31,987,018 (1,922,004)
Cash and cash equivalents at beginning of year:
relating to continuing operations 14,707,278 14,388,998
relating to discontinued operations 440,630 289,099
-------------- --------------
$ 47,134,926 $ 12,756,093
CASH AND CASH EQUIVALENTS AT END OF PERIOD:
RELATING TO CONTINUING OPERATIONS 47,134,926 12,302,015
RELATING TO DISCONTINUED OPERATIONS 454,078
-------------- --------------
$ 47,134,926 $ 12,756,093
See notes to consolidated financial statements.
8
UNAUDITED
Coeur d'Alene Mines Corporation
and Subsidiaries
Notes to Consolidated Financial Statements
NOTE A:
Other than as stated in the following notes, in the opinion of
management, the foregoing unaudited financial statements include all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the results of operations for the periods shown. The Second
Quarter Form 10-Q Report should be read in conjunction with the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.
NOTE B: Inventories are composed of the following:
JUNE 30, DECEMBER 31,
1995 1994
------------ ------------
Mining:
Ore in process and on leach pads $28,121,283 $28,895,419
Dore' inventory 1,667,074 1,748,207
Supplies 3,601,616 3,571,501
------------ ------------
$33,389,973 $34,215,127
============ ============
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 processes.
Inherent in this valuation is an estimate of the percentage of the minerals on
leach pads and in process that will ultimately be recovered. Management
evaluates this estimate on an ongoing basis. Adjustments to the recovery are
accounted for prospectively. All other inventories are stated at the lower
cost or market cost being determined using first in, first out and weighted
average cost methods. Dore' inventory includes product at the mine site and
product held by refineries.
NOTE C:
On May 2, 1995, the Company sold the assets of its flexible hose and tubing
division, The Flexaust Company, and shares of a related subsidiary for
approximately $10.0 million payable in cash, of which approximately $4 million
was paid at the time of closing and the balance is payable over the next five
years. The results of operations and the gain on sale of Flexaust
manufacturing segment are presented as "Discontinued Operations." The Company
recorded a pre-tax gain on the sale of approximately $3.9 million ($2.2
million net of income taxes) during the second quarter of 1995.
9
NOTE D:
On July 7, 1995, the Company became the operator of, and acquired the
remaining 50% of the Kensington property near Juneau, Alaska, held by its
joint venture partner, Echo Bay Mines, Ltd. for $32.5 million plus a scaled
royalty on 1 million ounces of future gold production after Coeur recoups its
purchase price and expenditures remaining to place the property into
production. The Company plans to continue its development activities at the
Kensington property.
NOTE E:
Benefit for income taxes related to income from continuing operations is
primarily related to the realization of net operating loss carryforwards,
which offset taxes incurred on income from discontinued operations. The
benefit for income taxes is partially offset by amounts paid as a result of
Internal Revenue Service adjustments which were settled in the first quarter
of 1995.
NOTE F:
On January 1, 1995, the Company entered into an agreement with Asarco
Incorporated and formed a new company called Silver Valley Resources
Corporation. Both Coeur and Asarco contributed their respective interests in
the Galena and Coeur Mines, as well as other assets and waived certain cash
flow entitlements at the Galena Mine in return for shares of capital stock of
Silver Valley Resources Corporation. Coeur's 50% investment is included on the
balance sheet as operational mining properties. The transaction resulted in no
gain or loss to the Company.
NOTE G:
On April 19, 1995, the Company completed a limited recourse project
financing agreement with a bank syndicate lead by N.M. Rothschild & Sons, Ltd.
The agreement provides for the borrowing of up to $24 million for use in the
construction of the Fachinal project, contains various covenants and is
dependent upon attainment of certain completion tests. Furthermore, the
agreement restricts the recourse of the bank in the event of default to the
assets of the Company's Chilean subsidiary, Compania Minera CDE Fachinal
Limitada. The Company is required to guarantee repayment of the borrowing
until the project reaches defined completion, after which the project alone is
liable for repayment. The interest rate prior to completion is equal to LIBOR
plus 1.5% and increase to LIBOR plus 2.75% after completion. The borrowing is
repayable in eight equal remaining semiannual installments after project
completion.
NOTE H:
Certain reclassifications of prior year balances have been made to
conform to current year classifications.
10
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, which it wholly owns and operates, the
Golden Cross Mine, in which the Company has an 80% operating interest and the
El Bronce Mine in which the Company has a 51% operating interest.
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 be
completed in the fourth quarter of 1995 and is expected to produce, in its
first full year, 41,000 ounces of gold and 2.6 million ounces of silver. Total
project construction is expected to cost $41.8 million.
On July 7, 1995, the Company acquired the remaining 50% of the Kensington
property held by its joint venture partner, Echo Bay Mines, Ltd., for $32.5
million plus a net smelter return royalty that varies dependent upon gold
prices of at least $400 per ounce.
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, 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 July 28, 1995 was $383.00 per ounce. With respect to
the permits, the Company is unable to control the timing of their issuance.
However, on June 15, 1995 an EPA Final Technical Assistance Report was
furnished to the Army Corps of Engineers which will lead to the conditional
issuance by the Corps of its section 404 permit in due course.
The Company plans, in connection with its ongoing evaluation of potential
acquisition candidates, to focus primarily upon mining properties and
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.
11
RESULTS OF OPERATIONS
Three Months Ended June 30, 1995, Compared to Three Months Ended
June 30, 1994
Sales and Gross Profits
Sales of concentrates and dore' increased by $4,156,632, or 21%, for the
second quarter of 1995 over the same quarter of 1994 and was primarily
attributable to increased production and increases in metals prices. Silver
and gold prices averaged $5.48 and $387.94 per ounce, respectively, in the
second quarter of 1995 compared with $5.38 and $381.44 per ounce,
respectively, in the second quarter of 1994. In the second quarter of 1995,
the Company produced 1,679,814 ounces of silver and 41,822 ounces of gold
compared to 1,419,181 ounces of silver and 31,523 ounces of gold in the second
quarter of 1994.
The cost of mine operations for the second quarter of 1995 increased by
$1,445,647, or 8.8%, above the prior year's comparable quarter. Mine
operations gross profit as a percent of sales increased from 15% in the
quarter ended June 30, 1994 to 24% in the quarter ended June 30, 1995. As a
result, gross profits from mine operations increased by $2,710,985, or 91%.
The cash costs of production per ounce of gold at the Golden Cross Mine
amounted to $198.35 per ounce in the quarter ended June 30, 1995, compared to
$259.36 per ounce in the prior year's comparable quarter. The decrease was
primarily attributable to improved underground ore grades and lower negotiated
contract mining costs. The cash costs of production per ounce of silver on a
silver equivalent basis at the Rochester Mine amounted to $3.65 in the quarter
ended June 30, 1995, compared to $3.63 per ounce in the quarter ended June 30,
1994. The cash costs of production per ounce of gold at the El Bronce Mine
were $337.03 during the second quarter.
Interest and Other Income
Interest and other income decreased by $609,267, or 23%, in the second
quarter of 1995 compared to the second quarter of 1994. The difference is
primarily the result of a decrease in the level of the Company's cash and
securities portfolio.
Total Income
As a result of the above, the Company's total income increased by
$2,101,718, or 37%, in the second quarter of 1995 compared to the second
quarter of 1994.
12
Expenses
For the second quarter of 1995, total expenses decreased by $28,590, or
less than 1%, below the prior year's comparable quarter. The decrease is
primarily due to decreases in interest expense of $300,631 and mining
exploration expenses of $358,605 offset by an increase in general corporate
expenses of $358,096.
Income (Loss) From Continuing Operations Before Taxes
As a result of the above, the Company's income from continuing operations
before income taxes amounted to $447,251 for the second quarter of 1995
compared to a loss from continuing operations before income taxes of
$1,683,057 for the second quarter of 1994. The Company reported an income tax
benefit for the second quarter of 1995 of $791,744 compared to $122,677 for
the same period of 1994. As a result, the Company reported net income from
continuing operations of $1,238,995, or $.08 per primary share, for the second
quarter of 1995 compared to a loss from continuing operations of $1,560,380,
or $.10 per share, for 1994's comparable quarter.
Income (Loss) From Discontinued Operations
On May 2, 1995, The Company sold the Flexaust division, a manufacturer of
flexible hose and tubing, for $10 million payable in cash of which $4 million
was paid at closing and the remainder is payable in five annual installments.
In the second quarter of 1995, the Company realized $2,168,533 from
discontinued operations (net of taxes) compared with $225,581 in the second
quarter of 1994.
Net Income
As a result of the above, the Company reported net income (loss) of
$3,407,528, or $.22 per primary share ($.19 per fully diluted share), for the
second quarter of 1995 compared with $(1,334,799), or $(.09) per share, for
the second quarter of 1994.
Six Months Ended June 30, 1995, Compared to Six Months Ended June 30, 1994
Sales and Gross Profits
Sales of concentrates and dore' increased by $1,838,219, or 5%, for the
six months ended June 30, 1995 over the same period of 1994 and was primarily
attributable to increased production in 1995 compared to the same period in
1994. During the first six months of 1995, the Company produced 3,208,631
ounces of silver and 78,394 ounces of gold compared to 2,929,578 ounces of
silver and 63,100 ounces of gold in the first six months of 1994. Silver and
gold prices averaged $5.09 and $383.52 per ounce, respectively, in the first
six months of 1995 compared to $5.33 and $382.87 per ounce, respectively, in
the same period in 1994.
13
The cost of mine operations in the first six months of 1995 increased by
$146,627, or less than 1%, over the first six months of 1994. As a result,
gross profit from mine operations increased by $1,691,592, or 29%, in the
first six months of 1995 from 1994's comparable period. Mine operations gross
profit as a percent of sales increased from 15% in the six months ended June
30, 1994 to 18% in the six months ended June 30, 1995. The increase was
primarily attributable to the increases in the number of ounces of silver and
gold produced and sold during the six months ended June 30, 1995, from the
prior year's comparable period.
The cash costs of production per ounce of gold at the Golden Cross Mine
amounted to $217.27 per ounce in the six months ended June 30, 1995, compared
to $283.26 in the prior year's comparable six month period. The decrease was
primarily attributable to improved underground mine ore grades and lower
renegotiated contract mining costs. The cash costs of production per ounce of
silver on a silver equivalent basis at the Rochester Mine amounted to $3.80
per ounce in the six months ended June 30, 1995, compared to $3.64 in the six
months ended June 30, 1994. The cash costs of production per ounce of gold at
the El Bronce Mine were $303.12 for the six months ended June 30, 1995.
Interest and Other Income
Interest and other income in the first half of 1995 increased by $408,887,
or 10%, compared to the first half of 1994. The increase was primarily a
result of management fee income resulting from the Company's interest in the
El Bronce Mine acquired on September 30, 1994, partially offset by reduced
interest income primarily a result of a decrease in the levels of the
Company's cash and securities portfolio.
Total Income
As a result of the above, the Company's total income increased by
$2,100,479, or 21%, in the six months ended June 30, 1995, over the prior
year's comparable quarter.
Expenses
Total expenses in the first half of 1995 increased by $394,011, or 3%,
over the prior year's comparable six-month period. The increase is primarily
attributable to increases of $296,556 in idle facilities expenses, $454,277 in
general corporate expenses and $176,652 in interest expenses, offset in part
by a decrease of $575,393 in administration expenses.
14
Income (Loss) From Continuing Operations Before Taxes
As a result of the above, the Company's loss from continuing operations
before income taxes amounted to $2,770,282 in the first six months of 1995
compared to $4,476,750 in the first six months of 1994. The Company reported
an income tax benefit of $642,321 for the first six months of 1995, compared
to $196,860 in the first six months of 1994. As a result, the Company reported
a net loss from continuing operations of $2,127,961, or $.14 per share, in the
first six months of 1995, compared to a net loss of $4,279,890, or $.28 per
share, in the first six months of 1994.
Income From Discontinued Operations
As stated earlier, on May 2, 1995, the Company sold the Flexaust division,
a manufacturer of flexible hose and tubing. In the six months ended June 30,
1995, the Company reported income from discontinued operations (net of taxes)
of $2,360,196, or $.15 per share compared with $347,792, or $.02 per share,
for the six moths ended June 30, 1994.
Net Income (Loss)
As a result of the above, the Company reported a net income of $232,235,
or $.01 per share, in the first six months of 1995, compared to net loss of
$3,932,098, or $.26 per share, in the prior year's comparable six-month
period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 30, 1995 was approximately $147.7
million compared to approximately $170.1 million at December 31, 1994. The
ratio of current assets to current liabilities was 7.3 to 1 at June 30, 1995,
compared with 10.4 to 1 at December 31, 1994. The decrease in the Company's
working capital at June 30, 1995 compared to December 31, 1994 is primarily
attributable to the Company's investment in development stage properties.
Net cash provided by operating activities for the first six months of 1995
was $1,552,986 compared with $2,904,898 for the first six months of 1994. A
total of $17,684,630 of cash was provided by investing activities in the six
months of 1995 compared to $97,238,396 used in investing activities in the
first six months of 1994. Of the $97,238,396 used in investing activities
during the first six months of 1994, $102.1 million relates to the purchase of
investment grade intermediate term investments. The Company's financing
activities provided $12,749,402 of cash during the first six months of 1995
compared with $92,411,494 for the first six months of 1994. As a result of the
above, the Company's net cash increase for the first six months of 1995 was
$31,987,018 compared with a net cash decrease of $1,922,004 for the first six
months of 1994.
15
For the years ended June 30, 1995 and 1994, the Company expended
$1,278,667 and $1,055,695 respectively, in connection with environmental
compliance activities at its operating properties. At June 30, 1995, the
Company had expended a total of approximately $4.9 million on environmental
and permitting activities at the Kensington property, which expenditures have
been capitalized as part of its development cost.
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 Flour Daniel Wright of a detailed feasibility
study. Pursuant to that study, the cost to complete Fachinal is estimated to
be $41.8 million. On April 19, 1995, the Company completed a limited recourse
project financing agreement with a bank syndicate lead by N.M. Rothschild &
Sons, Ltd. The agreement provides for the borrowing of up to $24 million for
use in the construction of the Fachinal project, contains various covenants
and is dependent upon attainment of certain completion tests. Furthermore, the
agreement restricts the recourse of the bank in the event of default to the
assets of the Company's Chilean subsidiary, Compania Minera CDE Fachinal
Limitada. The Company is required to guarantee repayment of the borrowing
until the project reaches defined completion, after which the project alone is
liable for repayment. The interest rate prior to completion of the project is
equal to LIBOR plus 1.5% and increases to LIBOR plus 2.75% after completion.
The borrowing is repayable in eight equal remaining semiannual installments
after project completion.
The Company and its wholly-owned subsidiary, Callahan Mining Corporation
("Callahan"), were advised by the Fish and Wildlife Service (the "Service") of
the U.S. Department of the Interior on July 18, 1995 that they were identified
as potentially responsible parties for damages resulting from injury to
federal natural resources with respect to the Bunker Hill Superfund Site. By
letter dated July 24, 1995, the Company and Callahan requested the Service to
identify the federal natural resources allegedly injured, set forth the basis
for the assertion that they are potentially responsible parties and quantify
the dollar amount of the alleged damages. The Company and Callahan presently
cannot state whether or estimate the extent to which, if any, they will be
liable for damages in connection with the matter.
16
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
The Company's Annual Meeting of Shareholders was held on May 9, 1995.
Messrs. Dennis E. Wheeler, Joseph C. Bennett, Duane B. Hagadone, James J.
Curran, James A. Sabala, James A. McClure, Jeffery T. Grade and Cecil D.
Andrus were nominated and elected to serve as members of the Board for one
year or until their successors are elected and qualified, by a vote of
12,730,655 shares for and 140,053 shares abstaining.
Shareholders ratified the selection of Ernst & Young to serve as the
Company's public accountants for the current fiscal year by a vote of
12,758,737 shares for, 47,592 shares against, with 64,379 shares abstaining.
Shareholders ratified the amendment of the Company's Executive
Compensation Program authorizing an additional 500,000 shares of Common Stock
by a vote of 11,578,310 shares for, and 1,086,257 shares against, with 206,111
shares abstaining.
Shareholders ratified the proposed Non-Employee Directors' Stock Option
Plan and to authorized 200,000 shares of Common Stock for issuance pursuant
thereto, by a vote of 11,644,237 shares for, 1,001,875 shares against, with
224,596 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed herewith:
Exhibit No. Document
------------- --------
10(a) Credit Agreement, dated June 8, 1994 between
Registrant/Seattle-First National Bank.
10(b) Limited Recourse Project Financing Agreement dated April 19,
1995 between Registrant and N.M. Rothschild & Sons, Ltd.
11 Statement regarding computation of per share earnings.
(b) Reports on Form 8-K
The current Report of Registrant dated May 2, 1995 and filed May 17,
1995 reported the sale of the Flexaust Company division of Callahan
Mining Company, a wholly-owned subsidiary of the Company. Amendment
No. 1 to that report was filed on June 6, 1995.
17
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 August 8, 1995 /s/ Dennis E. Wheeler
--------------------
DENNIS E. WHEELER
Chairman, President and
Chief Executive Officer
Dated August 8, 1995 /s/ James A. Sabala
------------------
JAMES A. SABALA
Senior Vice President
(Principal Financial and
Accounting Officer)