Exhibit 99.1
STILLWATER MINING REPORTS 2004 FOURTH QUARTER AND YEAR-END RESULTS
BILLINGS, Mont., March 31 /PRNewswire-FirstCall/ -- STILLWATER MINING
COMPANY (NYSE: SWC) announced today its results for the fourth quarter of 2004
and for the year ended December 31, 2004.
Highlights of 2004
* Record annual revenues of $447.5 million;
* Sales to end-users of 375,000 ounces of the palladium received in the
2003 Norilsk Nickel transaction;
* Annual net income of $29.8 million or $0.33 per diluted share;
* New bank credit facility, with longer repayment terms and improved
rates;
* Safety improvement recognized by MSHA, OSHA;
* As-planned completion of furnace rebricking;
* Expansion of PGM recycling activities; and
* Change in accounting method for amortization of capitalized mine
development costs.
For the fourth quarter of 2004, the Company reported net income of
$3.4 million, or $0.04 per diluted share, on revenue of $118.1 million, compared
to a net loss of $300.6 million, or $3.35 per diluted share, on revenue of $65.0
million for the fourth quarter of 2003. The Company changed its accounting
method for amortizing capitalized mine development costs during the fourth
quarter of 2004, resulting in additional non-cash depreciation and amortization
charges in the fourth quarter of 2004 and for the year 2004. As a result of the
accounting change, the Company has amended its Quarterly Reports on Form 10-Q
for the first three quarters of 2004. The effect of this change in accounting
method was to reduce previously reported earnings for the nine months ended
September 30, 2004 by $10.2 million, or $0.12 per share (comprised of a benefit
of $6.0 million attributable to the cumulative effect adjustment and a charge of
$16.2 million attributable to additional amortization for the period), as
compared to the $15.0 million charge to earnings originally estimated by the
Company in its March 17, 2005 announcement.
The fourth quarter 2003 results included a non-cash $390.3 million asset
impairment charge ($234.3 million or $2.61 per share after tax) that reduced the
carrying value of the Company's mining assets to their estimated fair value, and
a non-cash charge of $70.3 million, or $0.78 per share, that reduced the
carrying value of deferred tax assets to realizable value. Before the asset
impairment and deferred tax asset charges, net income for the fourth quarter of
2003 was $4.0 million or $0.04 per diluted share.
The 2004 fourth quarter operating results, compared to the fourth quarter of
2003, reflect higher revenues due to higher realized PGM prices in 2004 and a
doubling in total metal sold as a result of the Company's increased PGM
recycling activities and sales from the palladium inventory received in the MMC
Norilsk Nickel transaction.
For the full year 2004, the Company reported net income of $29.8 million, or
$0.33 per diluted share, on revenues of $447.5 million, compared to a net loss
of $323.3 million, or $4.77 per diluted share, on revenue of $255.8 million for
the year 2003. The Company changed its accounting method for amortizing
capitalized mine development costs in the fourth quarter of 2004 resulting in
increased 2004 amortization costs. Prior to the effects of the fourth quarter
2003 asset impairment and tax valuation charges and the tax and
transaction-related costs incurred in connection with the Norilsk Nickel
transaction, the Company would have shown a small loss for the year 2003 of $0.2
million or less than $0.01 per diluted share. The 2003 results included non-cash
charges of $390.3 million for asset impairment ($234.3 million or $3.46 per
share after tax) and $70.3 million or $1.04 per share to reduce the carrying
value of deferred tax assets to realizable value. The 2003 Norilsk Nickel
transaction-related charges included a $16.7 million, or $0.25 per share,
non-cash charge to income taxes relating to a portion of the Company's tax
losses that will not be utilized because of the ownership change, and $3.0
million ($1.8 million, or $0.03 per share, net of tax) of transaction related
costs.
OPERATING RESULTS
During the fourth quarter of 2004, the Company's mining operations produced
a total of 153,000 ounces of palladium and platinum, which included 118,000
ounces of palladium and 35,000 ounces of platinum, a 4% increase compared to the
fourth quarter of 2003.
The Company's average realized prices per ounce for mine production during
the fourth quarter of 2004 were $371 for palladium and $822 for platinum,
compared to $351 and $675, respectively, in the fourth quarter of 2003. The
Company's average combined realized price per ounce for palladium and platinum
mine production during the fourth quarter of 2004 was $468 or approximately 35%
above the combined market price per ounce of $346 for the same period, and was
approximately 10% higher than the $424 combined price realized for mine
production in the same period in 2003. Palladium realizations in both periods
benefited from price floors in the Company's long-term sales agreements.
The Company uses certain non-GAAP measures as indicators of the efficiency
of its operations. Total cash costs per ounce mined on a consolidated basis
incurred during the fourth quarter of 2004 were $295 per ounce compared to $287
per ounce for the same period in 2003. Total consolidated production costs per
ounce incurred in the fourth quarter of 2004 were $401 as compared to $358 for
the same period of 2003 due primarily to an increase in depreciation and
amortization from the accounting change. These non-GAAP measures are discussed
more fully in the Company's 2004 Annual Report on Form 10-K being filed today.
For the full year 2004, the Company's mining operations produced a total of
569,000 ounces of palladium and platinum, which included 439,000 ounces of
palladium and 130,000 ounces of platinum compared to 584,000 ounces for the year
2003, which included 450,000 ounces of palladium and 134,000 ounces of platinum.
The Company's average realized prices per ounce for its mine production in 2004
were $376 for palladium and $839 for platinum, compared to $352 and $603,
respectively, for 2003. The Company's average combined realized price per ounce
of palladium and platinum mine production was $480 per ounce for 2004, or
approximately 30% higher than the combined market price of $368 per ounce in
2004, and was approximately 18% higher than the $408 per ounce combined price
realized in 2003 for mine production. Palladium realizations in both years
benefited from price floors in the Company's long-term sales agreements.
Total consolidated cash costs per ounce, a non-GAAP measure used as an
indicator of operating efficiency, for the year 2004 were $297 compared to $283
for 2003. The higher consolidated cash costs were due to lower than expected
production at the Stillwater Mine for the year and higher royalties and taxes
due to higher PGM prices. Stillwater Mine's production in 2004 was adversely
affected by a union strike that occurred during the third quarter. Total
consolidated production costs per ounce, another non-GAAP measure, increased to
$402 in 2004, compared to $354 in 2003 primarily due to an increase in royalties
and taxes of $9 per ounce as a result of higher revenues, and an increase in
depreciation and amortization costs of $34 per ounce primarily from the 2004
change in accounting method.
CHAIRMAN'S COMMENTS
Discussing the Company's 2004 results, Stillwater Chairman and Chief
Executive Officer, Francis R. McAllister said, "Our PGM mine production for 2004
of 569,000 ounces was about 50,000 ounces or 8% below that projected at the
beginning of the year; approximately 25,000 ounces of this shortfall resulted
from the union strike at the Stillwater Mine and an additional 25,000 ounces
from a delayed ramp-up of the East Boulder Mine. However, mine productivity
improved in the fourth quarter, resulting in production of 153,000 ounces of
PGMs. Ramp-up of production at East Boulder to a 1,650 ore tons per day rate has
been delayed to mid-2006, although we believe that advances on development
during 2004 now provide greater certainty of meeting or exceeding this level of
production on a sustained basis."
He continued, "In 2004 we had record PGM sales totaling 1.1 million ounces,
including mine production, recycling activities and palladium inventory sales.
Sales of mine production continued under our long-term contracts with Ford,
General Motors and Mitsubishi Motors and we continued to benefit from the floor
prices established in those contracts. PGM recycling activity increased
substantially during the year, more than doubling from 2003 levels. During 2004
the Company processed 165,000 ounces of recycled PGMs, including 99,000 ounces
of platinum, 53,000 ounces of palladium and 13,000 ounces of rhodium, of which
122,000 ounces of PGMs were sold during the year. And, during the first quarter
of 2004, the Company commenced sales of its palladium inventory received in the
Norilsk Nickel transaction under contracts with Mitsubishi International,
Daimler Chrysler and Engelhard Industries, delivering 375,000 ounces out of the
877,169 ounces of palladium inventory at an average price of $231 per ounce."
Mr. McAllister further stated, "At the beginning of 2004 it appeared that
our products would benefit from strong upward price trends for metals in
general, based on exceptionally strong worldwide demand for commodity metals.
The prices of palladium and platinum had strengthened along with other metals
during the last half of 2003. Palladium, which had reached a low of $148 per
ounce during 2003, began 2004 at $195 per ounce. Platinum, which had averaged
$691 per ounce for the year 2003, began 2004 at $813 per ounce. And, during the
first few months of 2004 both prices strengthened further, palladium to a high
of $333 per ounce and platinum to a high of $936 per ounce, both in April."
"Platinum sustained these improved levels, averaging $846 per ounce for the
year and closing the year at $860 per ounce. But, after initial market
speculation fueled by reports of switching from platinum to palladium, new
applications for palladium in diesel catalysts and diminished auto company
inventories, palladium fell back averaging $230 per ounce for the year and
closing the year at $184 per ounce."
"The continued strength of platinum during the year has resulted in a
historic price differential between palladium and platinum that is hard to
explain considering the broad substitutability of the metals in industrial
applications. We have been pleased to note that there is a rapidly growing
market for palladium jewelry developing, led by China and now beginning to spill
over into Europe and the USA. This is an area of growth that we are helping to
encourage."
"So the marketing effort we have embarked upon for palladium is just
beginning. We are continuing to follow carefully the advances of palladium in
diesel catalysts, new electronic technologies, such as SED large screen
television, and the advent of palladium in jewelry."
"With the wide market price differential between platinum and palladium, we
believe there is a possibility that platinum prices could weaken going forward
if future consumption is driven by substitution toward palladium at the expense
of platinum. As a result, the Company has hedged about half its monthly platinum
mine production in the forward market by locking in pricing for the period from
January 2005 through December 2006. As of December 31, 2004, a total of 143,300
ounces of anticipated platinum sales from mine production is hedged with an
overall average price of about $808 per ounce," stated Mr. McAllister.
Lastly, Mr. McAllister reported, "For the year 2005, the Company expects PGM
mine production of between 550,000 ounces and 570,000 ounces, with total
consolidated cash costs of approximately $315 to $320 per ounce. Production from
the Stillwater Mine is expected to average 1,900 ore tons per day during 2005.
Production from the East Boulder Mine is expected to average approximately 1,375
ore tons per day during the year, while by mid-2006 the mining rate is expected
to reach approximately 1,650 ore tons per day. The Company's capital
expenditures for 2005 are expected to be approximately $100 million. The capital
budget has been increased approximately $25 million from 2004 in order to extend
the developed state and infrastructure of both mines."
ORE RESERVES
As of December 31, 2004, the Company's total proven and probable ore
reserves were 41.6 million tons with an average grade of 0.57 ounce per ton
containing 23.9 million ounces of palladium and platinum at an in situ 3.6 to 1
ratio, an increase of approximately 300,000 contained ounces from ore reserves
at December 31, 2003. Virtually all of this increase in ore reserves was at the
East Boulder Mine where proven ore reserves almost doubled during 2004,
increasing by 273,000 contained ounces due to favorable definition drilling and
development activities during 2004. Ore reserves at the Stillwater Mine remained
essentially unchanged.
STILLWATER MINE
At the Stillwater Mine, total palladium and platinum production was 112,000
ounces in the fourth quarter of 2004, up from 106,000 ounces in the fourth
quarter of 2003 as a result of the higher mining rates, offset slightly by lower
grades. During the quarter, a total of 219,000 tons were milled with a combined
mill head grade of 0.56 ounce per ton; in the fourth quarter of 2003, the mill
processed 205,000 total tons with a combined mill head grade of 0.57 ounce per
ton. Total mill recovery for the fourth quarter of 2004 was 92%, compared to 91%
for the same period last year. The mining rate during the fourth quarter of 2004
averaged approximately 2,380 tons per day of ore.
For the year 2004 the mine produced a total of 405,000 ounces of palladium
and platinum compared to 428,000 ounces for 2003. The lower 2004 production was
the result primarily of the union strike in the third quarter of 2004.
Turning to non-GAAP measures of operating efficiency, total cash costs per
ounce for the fourth quarter of 2004 were $271 compared with $273 for the same
period in 2003. Total production costs per ounce in the fourth quarter 2004
increased $26 to $360 from $334 as compared to the same period of 2003. The
increase is due to the reduction in total cash costs and an increase in
depreciation and amortization costs due to the accounting change.
For the year 2004, total cash costs per ounce were $264, up from $262 for
2003 due to lower production levels as a result of the union strike and higher
royalties and production taxes due to the higher PGM prices in 2004. Total
consolidated production costs per ounce produced increased to $330 from $322 in
2004 as compared to 2003.
During the fourth quarter of 2004 capital expenditures at the Stillwater
Mine were $12.4 million and total capital spending for the year was $47.1
million of which $10.9 million and $43.2 million, respectively, were incurred in
connection with capitalized mine development.
At the Stillwater Mine, as of December 31, 2004, proven and probable ore
reserves totaled 18.1 million tons at a grade of 0.63 ounce per ton, containing
11.4 million ounces of palladium and platinum at an in situ ratio of 3.4 to 1.
Development and exploration drilling essentially replaced the contained ounces
of ore reserves mined during the year.
For 2005, the Company expects the Stillwater Mine to produce approximately
385,000 ounces of palladium and platinum from mining ore at an average rate of
approximately 1,900 ore tons per day. Total cash costs are expected to be
approximately $300 per ounce, while capital expenditures are expected to be
approximately $60 million.
EAST BOULDER MINE
During the fourth quarter of 2004, the East Boulder Mine produced
41,000 ounces of palladium and platinum, essentially the same as in the fourth
quarter in 2003. The mining rate averaged 1,350 ore tons per day for the fourth
quarter of 2004. A total of 122,000 tons of ore were milled at the East Boulder
Mine with a mill head grade of 0.38 ounce per ton in the fourth quarter of 2004,
similar to the comparable quarter last year. Total mill recovery during the
fourth quarter 2004 was 89%, the same as a year ago.
For the year 2004 the East Boulder Mine produced 164,000 ounces of palladium
and platinum compared to 156,000 ounces for 2003. The increase in production is
the result of capital spent in ramping up ore production rates at the mine. The
mine produced at an average of 1,326 ore tons per day, compared to 1,247 ore
tons per day in 2003.
In terms of non-GAAP measures of operating efficiency, total cash costs per
ounce in the fourth quarter of 2004 increased 11%, to $359 compared to $322 per
ounce for the same period in 2003, primarily due to benefits costs recorded in
the fourth quarter of 2004. Total production costs per ounce in the fourth
quarter 2004 increased to $511 from $420 for the same period of 2003 primarily
due to the accounting change.
For the year 2004, total cash costs per ounce were flat at $344 and total
production costs per ounce increased to $491 from $441 per ounce in 2003 as a
result of the change in accounting method for amortization.
Capital expenditures at the mine for fourth quarter were $7.7 million and
for the full year totaled $25.1 million of which $6.1 million and $19.1 million,
respectively, were incurred in connection with capitalized mine development.
During 2004, proven and probable ore reserves at the East Boulder Mine
increased by 305,000 contained ounces. As of December 31, 2004, the total ore
reserves at East Boulder are 23.5 million tons at a grade of 0.53 ounce per ton,
containing 12.4 million ounces of palladium and platinum at an in situ ratio of
3.7 to 1. The proven and probable ore reserve increase is due to the increased
underground development and diamond drilling activities during 2004, which
resulted in almost doubling the proven ore reserve tonnage, increasing the
average grade to 0.46 ounce per ton from 0.43 ounce per ton and adding 273,000
contained ounces of palladium and platinum. The balance of the increase was in
the probable ore reserve category as both tonnage and contained ounces
increased.
At East Boulder for 2005, the mine is expected to operate at an average rate
of 1,375 ore tons per day, and produce about 175,000 ounces of PGMs at an
expected total cash cost of approximately $350 per ounce. Capital expenditures
for 2005 are expected to be approximately $40 million.
The rate of production at the East Boulder Mine is expected to average about
the same as in 2004, but is expected to be increasing as equipment is added and
new ventilation shafts are completed through the year so that by mid-2006 the
mining rate is expected to be at approximately 1,650 ore tons per day. Advances
in development during 2004 increase the Company's ability to reach or exceed
that level of production.
FINANCES AND LIQUIDITY
The Company changed its accounting method for amortizing capitalized mine
development costs in the fourth quarter of 2004. These mine development costs
include the initial costs incurred to gain primary access to the ore reserves,
plus the ongoing development costs of footwall laterals and ramps driven
parallel to the reef that are used to access and provide support for the mining
stopes in the reef.
Prior to 2004, the Company amortized all such capitalized development costs
at its mines over all proven and probable ore reserves at each mine. Following
the asset impairment writedown at the end of 2003, the Company revisited its
assumptions and estimates for amortizing capitalized mine development costs. The
Company concluded to continue amortizing the cost of all of the mine development
that had been placed in service through 2003 over all proven and probable ore
reserves, because in management's view these remaining unamortized costs related
to infrastructure that would be used for the entire life of the mine. However,
for development placed in service after 2003, the Company concluded to use a
shorter life, amortizing the cost of this new development over only the ore
reserves in the immediate and relevant vicinity of the new development. This
approach was reflected in the Company's consolidated financial statements for
the first three quarters of 2004.
Following a routine review of its filings by the Securities and Exchange
Commission, the Company recently determined it would change its method of
accounting for development costs as follows:
* Unamortized costs of the shaft at the Stillwater Mine and the initial
development at the East Boulder Mine will continue to be treated as
life-of-mine infrastructure costs, to be amortized over total proven and
probable ore reserves at each location, and
* All ongoing development costs of footwall laterals and ramps, including
similar development costs incurred before 2004, are to be amortized over
the ore reserves in the immediate and relevant vicinity of the
development.
This change in accounting method required the Company to measure the effect
of the change at January 1, 2004, as if the new method of amortization had been
used in all prior years. The credit for the cumulative effect of the change for
all years prior to 2004 of $6.0 million, is shown as the "Cumulative Effect of
Accounting Change" in the Consolidated Statement of Operations and Comprehensive
Income (Loss) for the year ended December 31, 2004. The Company also has
reflected the effect of the new accounting method of amortization on the
Company's quarterly financial statements for each of the first three quarters of
2004 by amending its previously filed Quarterly Reports on Form 10-Q. The
Company's financial statements also include the pro forma effect of the
accounting change on its 2003 and 2002 financial results.
The effect of this change in accounting method was to reduce previously
reported earnings for the nine months ended September 30, 2004 by $10.2 million,
comprised of a benefit of $6.0 million attributable to the cumulative effect
adjustment, and a charge of $16.2 million attributable to additional
amortization for the period, as compared to the $15.0 million charge to earnings
originally estimated by the Company in its March 17, 2005 announcement.
Total revenues were $118.1 million for the fourth quarter of 2004, compared
with $65.0 million for the fourth quarter of 2003. The $53.1 million increase in
revenues resulted from higher realized PGM prices overall in 2004, the benefit
of expanded secondary processing revenues under the Company's recycling
contract, plus sales out of the 877,169-ounce palladium inventory the Company
received from Norilsk Nickel in connection with its stock purchase transaction
in 2003. The sales of 40,000 ounces of PGMs from recycling of catalysts
generated sales revenue of $24.4 million while the sale of 110,000 ounces of the
palladium inventory and associated metals contributed $31.7 million to revenue
for the fourth quarter of 2004.
For the full year 2004, revenues totaled $447.5 million, compared with
$255.8 million for 2003. This 75% increase in revenues is primarily due to an
increase in sales of mine production because of higher PGM prices, contributing
$266.7 million, the increase in sales associated with the recycling of spent
catalysts, contributing $76.4 million, and the sale of approximately 375,000
ounces of palladium inventory received in the Norilsk Nickel transaction and
associated metals, contributing $104.5 million.
Altogether, the total volume of PGMs sold increased 74% to approximately 1.1
million ounces during 2004, compared with 614,000 ounces for the same period of
2003. Palladium sales from mine production decreased to approximately 432,000
ounces during 2004 compared to 459,000 ounces in 2003. Platinum sales from mine
production also decreased to approximately 125,000 ounces during 2004, compared
to approximately 131,000 ounces for the same period of 2003. The 2004 decrease
in sales of mine production is primarily due to the 10-day union strike at
Stillwater Mine and the processing facilities during the third quarter. As
already noted, this decrease in mined ounces sold was more than offset by growth
in the Company's recycling activities and sales out of the palladium inventory
received in the Norilsk Nickel transaction.
Net cash provided by operating activities for the fourth quarter of 2004 was
$36.8 million, compared to $10.5 million for the same period of 2003. This $26.3
million increase in cash provided from operations was primarily driven by an
increase in sales out of the palladium inventory received in the Norilsk Nickel
transaction and secondary reprocessing.
For the year ended December 31, 2004, net cash provided by operating
activities was $136.8 million, compared to $47.2 million for the same period of
2003. The $89.6 million increase in cash provided by operating activities was
primarily due to the 375,000 ounces sold during 2004 from the palladium
inventory received in the Norilsk Nickel transaction and associated metals and
to changes in operating assets and liabilities, which resulted in a source of
cash of $40.0 million for the year compared to $7.5 million for same period last
year. The change in working capital is primarily related to a $48.6 million
decrease in inventory levels attributed to the sale of a portion of the
palladium inventory received from Norilsk Nickel and secondaries, offset by an
increase in metal sales receivables of $14.4 million on these palladium sales.
Capital expenditures totaled $20.9 million for the fourth quarter of 2004,
which includes $17.0 million incurred in connection with capitalized mine
development activities; compared to a total of $14.3 million, which included
$12.7 million incurred in connection with capitalized mine development
activities in the same period of 2003.
For the year 2004, capital expenditures totaled $76.7 million, which
includes $62.3 million incurred in connection with capitalized mine development
activities; compared to $55.3 million, which includes $48.8 million incurred in
connection with capitalized mine development activities in 2003. The increase in
capital spending is mostly driven by the expansion program at the East Boulder
Mine.
During 2004, the Company entered into a new $180 million credit facility
with a syndicate of financial institutions, replacing the Company's previous
$250 million bank facility, as it announced previously, on August 3, 2004. The
new credit facility provides for a $140 million six-year term loan facility and
a $40 million five-year revolving line of credit. Amortization of the term loan
facility commenced on August 31, 2004.
As of December 31, 2004, the Company has $131.5 million outstanding under
the new term facility bearing interest at a variable rate plus a margin (LIBOR
plus 325 basis points, or 5.5%). During 2004, the Company obtained a letter of
credit in the amount of $7.5 million provided as surety for its long-term
reclamation obligation at East Boulder Mine, which reduced amounts available
under the revolving credit facility to $32.5 million at December 31, 2004.
Undrawn letters of credit issued under this facility as of December 31, 2004
carry an annual fee of 3.125%. The remaining amount available under the
revolving credit facility bears an annual commitment fee of 0.75%
At December 31, 2004, cash and cash equivalents were $96.1 million, and
$32.5 million was available to the Company under its revolving credit facility.
The Company's net working capital at December 31, 2004 was $236.4 million,
compared to $154.7 million at December 31, 2003. The increase in operating
capital resulted primarily from an increase in the Company's cash balance and
the reclassification of part of the current portion of long-term debt as a
long-term obligation. The ratio of current assets to current liabilities was 4.5
at December 31, 2004, as compared to 2.4 at December 31, 2003.
METALS MARKET
During the fourth quarter of 2004 palladium traded as high as $234 per ounce
and as low as $178 per ounce and the average market price was $209 per ounce,
while platinum traded as high as $884 per ounce and as low as $821 per ounce and
the average market price was $848 per ounce.
The combined average market price per ounce of palladium and platinum for
the fourth quarter of 2004 was $346 compared to $325 for the fourth quarter of
2003. The combined average market price for the two metals for the year 2004 was
$368 per ounce compared to $309 per ounce for the same period in 2003.
Stillwater Mining Company will host its fourth quarter 2004 results
conference call at 12 p.m. (noon) EST on March 31, 2005. The conference call
dial-in number is (800) 611-1147 (U.S.) and (612) 332-0718 (International). The
conference call will be simultaneously Web cast on the Internet via the
Company's Web site at www.stillwatermining.com. To access the conference call on
the Company's Web site go to the Investor Relations Section under Presentations
and click on the link to the Conference Call. A replay of the conference call
will be available on the Company's Web site or by a telephone replay, dial-in
number (800) 475-6701 (US) and (320) 365-3844 (International), access code
776510, through April 7, 2005.
Stillwater Mining Company is the only U.S. producer of palladium and
platinum and is the largest primary producer of platinum group metals outside of
South Africa and Russia. The Company's shares are traded on the New York Stock
Exchange under the symbol SWC. Information on Stillwater Mining can be found at
its Web site: www.stillwatermining.com.
Some statements contained in this news release are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
and, therefore, involve uncertainties or risks that could cause actual results
to differ materially. These statements may contain words such as "believes,"
"anticipates," "plans," "expects," "intends," "estimates" or similar
expressions. These statements are not guarantees of the Company's future
performance and are subject to risks, uncertainties and other important factors
that could cause our actual performance or achievements to differ materially
from those expressed or implied by these forward-looking statements. Such
statements include, but are not limited to, comments regarding expansion plans,
costs, grade, production and recovery rates, permitting, financing needs, the
terms of future credit facilities and capital expenditures, increases in
processing capacity, cost reduction measures, safety, timing for engineering
studies, and environmental permitting and compliance, litigation, labor matters
and the palladium and platinum market. Additional information regarding factors,
which could cause results to differ materially from management's expectations,
is found in the section entitled "Risk Factors" in the Company's 2004 Annual
Report on Form 10-K. The Company intends that the forward-looking statements
contained herein be subject to the above-mentioned statutory safe harbors.
Investors are cautioned not to rely on forward-looking statements. The Company
disclaims any obligation to update forward-looking statements.
Stillwater Mining Company
Proven and Probable Ore Reserves*
December 31, 2004
Contained
Tons Oz/Ton Ounces
(000) Pd + Pt (000)
------------ ------------ ------------
Stillwater Mine
Proven Reserves 1,971 0.65 1,279
Probable Reserves 16,108 0.63 10,138
Total Stillwater Mine 18,079 0.63 11,417
East Boulder Mine
Proven Reserves 1,225 0.46 558
Probable Reserves 22,302 0.53 11,886
Total East Boulder Mine 23,527 0.53 12,444
Total Proven and Probable 41,606 0.57 23,861
* In calculating ore reserves at December 31, 2004, the Company has
applied the trailing 12-quarter combined average PGM market price of
$357 which consists of a palladium price of $256 and platinum price of
$693, compared to $428, $379 and $586, respectively at December 31,
2003.
Mineralized J-M Reef Material**
December 31, 2004
Tons Oz/Ton
(000) Pd + Pt
------------ ------------
Stillwater Mine
Mineralized J-M Reef Material 65,000 0.52
East Boulder Mine
Mineralized J-M- Reef Material 63,700 0.49
Total Mineralized Material 128,700 0.51
** Mineralized material is defined as a mineralized body which has been
delineated by appropriately spaced drilling and/or underground sampling
to support a sufficient tonnage and average grade of metals. Such a
deposit does not qualify as a reserve until a comprehensive evaluation
based upon unit cost, grade, recoveries, and other material factors
conclude legal and economic feasibility.
Three months ended Twelve months ended
Stillwater Mining Company December 31, December 31,
Key Factors (unaudited) ----------------------- -----------------------
OPERATING AND COST DATA FOR MINE PRODUCTION 2004 2003 2004 2003
- ------------------------------------------- ---------- ---------- ---------- ----------
Consolidated:
Ounces produced (000)
Palladium 118 113 439 450
Platinum 35 34 130 134
Total 153 147 569 584
Tons milled (000) 325 305 1,212 1,185
Mill head grade (ounce per ton) 0.51 0.52 0.51 0.53
Sub-grade tons milled (000) (1) 16 21 58 84
Sub-grade mill head grade
(ounce per ton) 0.22 0.23 0.22 0.20
Total tons milled (000) (1) 341 326 1,270 1,269
Combined mill head grade
(ounce per ton) 0.49 0.50 0.50 0.51
Total mill recovery (%) 91 91 91 91
Total operating costs per ounce
(Non-GAAP) $ 260 $ 250 $ 254 $ 249
Total cash costs per ounce (Non-GAAP)
(2), (3) $ 295 $ 287 $ 297 $ 283
Total production costs per ounce
(Non-GAAP) (2), (3) $ 401 $ 358 $ 402 $ 354
Total operating costs per ton milled
(Non-GAAP) $ 117 $ 113 $ 114 $ 115
Total cash costs per ton milled
(Non-GAAP) (2), (3) $ 132 $ 130 $ 133 $ 130
Total production costs per ton milled
(Non-GAAP) (2), (3) $ 180 $ 162 $ 180 $ 163
Stillwater Mine:
Ounces produced (000)
Palladium 86 81 311 328
Platinum 26 25 94 100
Total 112 106 405 428
Tons milled (000) 203 184 729 730
Mill head grade (ounce per ton) 0.58 0.61 0.59 0.62
Sub-grade tons milled (000) (1) 16 21 58 84
Sub-grade mill head grade
(ounce per ton) 0.22 0.23 0.22 0.20
Total tons milled (000) (1) 219 205 787 814
Combined mill head grade
(ounce per ton) 0.56 0.57 0.56 0.58
Total mill recovery (%) 92 91 92 91
Total operating costs per ounce
(Non-GAAP) $ 240 $ 239 $ 238 $ 231
Total cash costs per ounce (Non-GAAP)
(2), (3) $ 271 $ 273 $ 264 $ 262
Total production costs per ounce
(Non-GAAP) (2), (3) $ 360 $ 334 $ 330 $ 322
Total operating costs per ton milled
(Non-GAAP) $ 123 $ 124 $ 123 $ 121
Total cash costs per ton milled
(Non- GAAP) (2), (3) $ 138 $ 141 $ 144 $ 138
Total production costs per ton milled
(Non-GAAP) (2), (3) $ 184 $ 173 $ 181 $ 169
East Boulder Mine:
Ounces produced (000)
Palladium 32 32 128 122
Platinum 9 9 36 34
Total 41 41 164 156
Tons milled (000) 122 121 483 455
Mill head grade (ounce per ton) 0.38 0.39 0.39 0.39
Sub-grade tons milled (000) (1) -- -- -- --
Sub-grade mill head grade
(ounce per ton) -- -- -- --
Total tons milled (000) (1) 122 121 483 455
Combined mill head grade
(ounce per ton) 0.38 0.39 0.39 0.39
Total mill recovery (%) 89 89 88 89
Total operating costs per ounce
(Non-GAAP) $ 314 $ 279 $ 294 $ 299
Total cash costs per ounce (Non-GAAP)
(2), (3) $ 359 $ 322 $ 344 $ 343
Total production costs per ounce
(Non-GAAP) (2), (3) $ 511 $ 420 $ 491 $ 441
Total operating costs per ton milled
(Non-GAAP) $ 106 $ 95 $ 100 $ 103
Total cash costs per ton milled
(Non-GAAP) (2), (3) $ 121 $ 110 $ 117 $ 118
Total production costs per ton milled
(Non-GAAP) (2), (3) $ 173 $ 143 $ 167 $ 151
Twelve months ended Three months ended
Stillwater Mining Company December 31, December 31,
Key Factors (continued) ----------------------- -----------------------
(unaudited) 2004 2003 2004 2003
- --------------------------------------------- ---------- ---------- ---------- ----------
SALES AND PRICE DATA
Ounces sold (000)
Mine Production:
Palladium 104 111 432 459
Platinum 29 32 125 131
Total 133 143 557 590
Other PGM activities: (6)
Palladium 125 2 418 5
Platinum 26 5 77 18
Rhodium 7 1 21 1
Total 158 8 516 24
Average realized price per ounce (4)
Mine Production:
Palladium $ 371 $ 351 $ 376 $ 352
Platinum $ 822 $ 675 $ 839 $ 603
Combined (5) $ 468 $ 424 $ 480 $ 408
Other PGM activities:
Palladium $ 209 $ 205 $ 231 $ 216
Platinum $ 833 $ 690 $ 817 $ 666
Rhodium $ 1,227 $ 488 $ 1,032 $ 512
Average market price per ounce (4)
Palladium $ 209 $ 199 $ 230 $ 201
Platinum $ 848 $ 764 $ 846 $ 691
Combined (5) $ 346 $ 325 $ 368 $ 309
(1) Sub-grade tons milled includes reef waste material only. Total tons
milled includes ore tons and sub-grade tons only.
(2) Total operating costs include costs of mining, processing and
administrative expenses at the mine site (including mine site
overhead, and credits for metals produced other than palladium and
platinum from mine production). Total cash costs include total
operating costs plus royalties, taxes other than income tax and other.
Total production costs include total cash costs plus asset retirement
costs and depreciation and amortization. Income taxes, corporate
general and administrative expenses, asset impairment writedowns, gain
or loss on disposal of property, plant and equipment, restructuring
costs, Norilsk transaction expenses and interest income and expense
are not included in total operating costs, total cash costs or total
production costs.
(3) Operating cost per ton, operating cost per ounce, cash cost per ton
and cash cost per ounce, production cost per ton and production cost
per ounce represent non-U.S. Generally Accepted Accounting Principles
(GAAP) measurements that management uses to monitor and evaluate the
performance of its mining operations. Management believes cash costs
per ounce and per ton provide an indicator of profitability and
efficiency at each location and on a consolidated basis, as well as
provide a meaningful basis to compare our results with those of other
mining companies and other mining operating properties. See table
"Reconciliation of Non-GAAP measures to cost of revenues."
(4) The company's average realized price represents revenues which include
the impact of contract floor and ceiling prices and hedging gains and
losses realized on commodity instruments and exclude contract
discounts, divided by ounces sold. The average market price represents
the average London PM Fix for the actual months of the period.
(5) The company reports a combined average realized and market price of
palladium and platinum at the same ratio as ounces that are produced
from the refinery.
(6) Ounces sold and average realized price per ounce from other PGM
activities primarily relate to ounces produced from secondary
processing of catalyst material and palladium received in the Norilsk
Nickel transaction.
Reconciliation of Non-GAAP measures to cost of revenues
The company internally utilizes certain Non-GAAP measures as indicators in
assessing the performance of its mining and processing operations during any
period. Because of the processing time required to complete the extraction of
finished PGM products, there are typically lags from one to three months between
ore production and sale of the finished product. Sales in any period
appropriately include some portion of material mined and processed from prior
periods as the revenue recognition process is completed. Consequently, while
cost of revenues (a GAAP measure included in the company's Consolidated
Statement of Operations and Comprehensive Income/(Loss)) appropriately reflects
the expense associated with the materials sold in any period, the company has
developed certain Non-GAAP measures to assess the costs associated with its
producing and processing activities in a particular period and to compare those
costs between periods.
While the company believes that these Non-GAAP measures may also be of value
to outside readers, both as general indicators of the company's mining
efficiency from period to period and as insight into how the company internally
measures its operating performance, these Non-GAAP measures are not standardized
across the mining industry and in most cases will not be directly comparable to
similar measures that may be provided by other companies. These Non-GAAP
measures are only useful as indicators of relative operational performance in
any period, and because they do not take into account the inventory timing
differences that are included in cost of revenues, they cannot meaningfully be
used to develop measures of profitability. A reconciliation of these measures to
cost of revenues for each period shown is provided as part of the following
tables, and a description of each Non-GAAP measure is provided below.
Total cost of revenues: For the company on a consolidated basis, this
measure is equal to consolidated cost of revenues, as reported in the
Consolidated Statement of Operations and Comprehensive Income/(Loss). For the
Stillwater Mine, East Boulder Mine, and other PGM activities, the company
segregates the expenses within cost of revenues that are directly associated
with each of these activities and then allocates the remaining facility and
inventory costs included in cost of revenues in proportion to the monthly
volumes from each activity. The resulting total cost of revenues measures for
Stillwater Mine, East Boulder Mine and other PGM activities are equal in total
to consolidated cost of revenues as reported in the company's Consolidated
Statement of Operations and Comprehensive Income/(Loss).
Total Production Costs (Non-GAAP): Calculated as total cost of revenues (for
each mine or consolidated) adjusted to exclude gains or losses on asset
dispositions, costs and profit from secondary recycling, and changes in product
inventories. This Non-GAAP measure provides an indication of the total costs
incurred in association with production and processing in a period, before
taking into account the timing differences resulting from inventory changes and
before any effect of asset dispositions or secondary recycling activities. It is
used by the company as a comparative measure of the level of total production
and processing activities in a period, and may be compared to prior periods or
between the company's mines. As noted above, because this measure does not take
into account the inventory timing differences that are included in cost of
revenues, it cannot meaningfully be used to develop measures of earnings or
profitability.
When divided by the total tons milled in the respective period, Total
Production Cost per Ton Milled (Non-GAAP) -- measured for each mine or
consolidated -- provides an indication of the cost per ton milled in that
period. Because of variability of ore grade in the company's mining operations,
production efficiency underground is frequently measured against ore tons
produced rather than contained PGM ounces. And because ore tons are first
actually weighed as they are fed into the mill, mill feed is the first point at
which production tons are measured precisely. Consequently, Total Production
Cost per Ton Milled (Non-GAAP) is a general measure of production efficiency,
and is affected both by the level of Total Production Costs (Non-GAAP) and by
the volume of tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the
respective period, Total Production Cost per Ounce (Non-GAAP) -- measured for
each mine or consolidated -- provides an indication of the cost per ounce
produced in that period. Recoverable PGM ounces from production are an
indication of the amount of PGM product extracted through mining in any period.
Because extracting PGM material is ultimately the objective of mining, the cost
per ounce of extracting and processing PGM ounces in a period is a useful
measure for comparing extraction efficiency between periods and between the
company's mines. Consequently, Total Production Cost per Ounce (Non-GAAP) in any
period is a general measure of extraction efficiency, and is affected by the
level of Total Production Costs (Non-GAAP), by the grade of the ore produced and
by the volume of ore produced in the period.
Total Cash Costs (Non-GAAP): This Non-GAAP measure is calculated by
excluding the depreciation and amortization and asset retirement costs from
Total Production Costs (Non-GAAP) for each mine or consolidated. The company
uses this measure internally as a comparative indication of the cash costs
related to production and processing in any period. As noted above, because this
measure does not take into account the inventory timing differences that are
included in cost of revenues, it cannot meaningfully be used to develop measures
of earnings or profitability.
When divided by the total tons milled in the respective period, Total Cash
Cost per Ton Milled (Non-GAAP) -- measured for each mine or consolidated --
provides an indication of the level of cash costs incurred per ton milled in
that period. Because of variability of ore grade in the company's mining
operations, production efficiency underground is frequently measured against ore
tons produced rather than contained PGM ounces. And because ore tons are first
actually weighed as they are fed into the mill, mill feed is the first point at
which production tons are measured precisely. Consequently, Total Cash Cost per
Ton Milled (Non-GAAP) is a general measure of production efficiency, and is
affected both by the level of Total Cash Costs (Non-GAAP) and by the volume of
tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the
respective period, Total Cash Cost per Ounce (Non-GAAP) -- measured for each
mine or consolidated -- provides an indication of the level of cash costs
incurred per PGM ounce produced in that period. Recoverable PGM ounces from
production are an indication of the amount of PGM product extracted through
mining in any period. Because ultimately extracting PGM material is the
objective of mining, the cost per ounce of extracting and processing PGM ounces
in a period is a useful measure for comparing extraction efficiency between
periods and between the company's mines. Consequently, Total Cash Cost per Ounce
(Non-GAAP) in any period is a general measure of extraction efficiency, and is
affected by the level of Total Cash Costs (Non-GAAP), by the grade of the ore
produced and by the volume of ore produced in the period.
Total Operating Costs (Non-GAAP): This Non-GAAP measure is derived from
Total Cash Costs (Non-GAAP) for each mine or consolidated by excluding royalty,
tax and insurance expenses from Total Cash Costs (Non-GAAP). Royalties, taxes
and insurance costs are contractual or governmental obligations outside of the
control of the company's mining operations, and in the case of royalties and
most taxes, are driven more by the level of sales realizations rather than by
operating efficiency. Consequently, Total Operating Costs (Non-GAAP) is a useful
indicator of the level of production and processing costs incurred in a period
that are under the control of mining operations. As noted above, because this
measure does not take into account the inventory timing differences that are
included in cost of revenues, it cannot meaningfully be used to develop measures
of earnings or profitability.
When divided by the total tons milled in the respective period, Total
Operating Cost per Ton Milled (Non-GAAP) -- measured for each mine or
consolidated -- provides an indication of the level of controllable cash costs
incurred per ton milled in that period. Because of variability of ore grade in
the company's mining operations, production efficiency underground is frequently
measured against ore tons produced rather than contained PGM ounces. And because
ore tons are first actually weighed as they are fed into the mill, mill feed is
the first point at which production tons are measured precisely. Consequently,
Total Operating Cost per Ton Milled (Non-GAAP) is a general measure of
production efficiency, and is affected both by the level of Total Operating
Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.
When divided by the total recoverable PGM ounces from production in the
respective period, Total Operating Cost per Ounce (Non-GAAP) -- measured for
each mine or consolidated -- provides an indication of the level of controllable
cash costs incurred per PGM ounce produced in that period. Recoverable PGM
ounces from production are an indication of the amount of PGM product extracted
through mining in any period. Because ultimately extracting PGM material is the
objective of mining, the cost per ounce of extracting and processing PGM ounces
in a period is a useful measure for comparing extraction efficiency between
periods and between the company's mines. Consequently, Total Operating Cost per
Ounce (Non-GAAP) in any period is a general measure of extraction efficiency,
and is affected by the level of Total Operating Costs (Non-GAAP), by the grade
of the ore produced and by the volume of ore produced in the period.
Stillwater Mining Company
Key Factors (continued) (unaudited)
OPERATING AND COST DATA RECONCILIATION
Three months ended Twelve months ended
December 31, December 31,
(in thousands, except per ounce ----------------------- -----------------------
and per ton costs) 2004 2003 2004 2003
- --------------------------------------------- ---------- ---------- ---------- ----------
Consolidated:
Total operating costs $ 39,801 $ 36,766 $ 144,589 $ 145,452
Total cash costs $ 45,136 $ 42,238 $ 168,915 $ 165,528
Total production costs $ 61,344 $ 52,653 $ 228,940 $ 206,570
Divided by total ounces 153 147 569 584
Divided by total tons milled 341 326 1,270 1,269
Total operating cost
per ounce $ 260 $ 250 $ 254 $ 249
Total cash cost per ounce $ 295 $ 287 $ 297 $ 283
Total production cost
per ounce $ 401 $ 358 $ 402 $ 354
Total operating cost
per ton milled $ 117 $ 113 $ 114 $ 115
Total cash cost per ton milled $ 132 $ 130 $ 133 $ 130
Total production cost
per ton milled $ 180 $ 162 $ 180 $ 163
Reconciliation to cost
of revenues:
Total operating costs $ 39,801 $ 36,766 $ 144,589 $ 145,452
Royalties, taxes and other 5,335 5,472 24,326 20,076
Total cash costs $ 45,136 $ 42,238 $ 168,915 $ 165,528
Asset retirement costs 180 88 457 342
Depreciation and amortization 16,028 10,327 59,568 40,700
Total production costs $ 61,344 $ 52,653 $ 228,940 $ 206,570
Change in product inventory 19,839 (2,716) 78,258 13,844
Costs of secondary recycling 23,120 4,309 71,326 7,988
Secondary recycling
depreciation 13 17 48 71
Add: secondary recycling
credit 1,553 282 6,096 881
Loss or (gain) on sale
of assets and other costs -- (11) -- 93
Total cost of revenues $ 105,869 $ 54,534 $ 384,668 $ 229,447
Stillwater Mine:
Total operating costs $ 26,807 $ 25,245 $ 96,382 $ 98,722
Total cash costs $ 30,281 $ 28,909 $ 112,464 $ 111,938
Total production costs $ 40,206 $ 35,310 $ 148,366 $ 137,670
Divided by total ounces 112 106 405 428
Divided by total tons milled 219 205 787 814
Total operating cost
per ounce $ 240 $ 239 $ 238 $ 231
Total cash cost per ounce $ 271 $ 273 $ 264 $ 262
Total production cost
per ounce $ 360 $ 334 $ 330 $ 322
Total operating cost
per ton milled $ 123 $ 124 $ 123 $ 121
Total cash cost per ton milled $ 138 $ 141 $ 144 $ 138
Total production cost
per ton milled $ 184 $ 173 $ 181 $ 169
Stillwater Mining Company
Key Factors (continued) (unaudited)
OPERATING AND COST DATA RECONCILIATION (CONTINUED)
Three months ended Twelve months ended
December 31, December 31,
(in thousands, except per ----------------------- -----------------------
ounce and per ton costs) 2004 2003 2004 2003
- --------------------------------------------- ---------- ---------- ---------- ----------
Stillwater Mine (continued):
Reconciliation to cost
of revenues:
Total operating costs $ 26,807 $ 25,245 $ 96,382 $ 98,722
Royalties, taxes and other 3,474 3,664 16,082 13,216
Total cash costs $ 30,281 $ 28,909 $ 112,464 $ 111,938
Asset retirement costs 79 72 305 280
Depreciation and amortization 9,846 6,329 35,597 25,452
Total production costs $ 40,206 $ 35,310 $ 148,366 $ 137,670
Change in product inventory (6,198) (2,564) (3,765) 6,156
Add: secondary recycling
credit 1,118 204 4,267 659
Loss or (gain) on sale
of assets and other costs -- (5) -- 70
Total cost of revenues $ 35,126 $ 32,945 $ 148,868 $ 144,555
East Boulder Mine:
Total operating costs $ 12,994 $ 11,521 $ 48,207 $ 46,730
Total cash costs $ 14,855 $ 13,329 $ 56,451 $ 53,590
Total production costs $ 21,138 $ 17,343 $ 80,574 $ 68,900
Divided by total ounces 41 41 164 156
Divided by total tons milled 122 121 483 455
Total operating cost per ounce $ 314 $ 279 $ 294 $ 299
Total cash cost per ounce $ 359 $ 322 $ 344 $ 343
Total production cost per ounce $ 511 $ 420 $ 491 $ 441
Total operating cost
per ton milled $ 106 $ 95 $ 100 $ 103
Total cash cost per ton milled $ 121 $ 110 $ 117 $ 118
Total production cost
per ton milled $ 173 $ 143 $ 167 $ 151
Reconciliation to cost
of revenues:
Total operating costs $ 12,994 $ 11,521 $ 48,207 $ 46,730
Royalties, taxes and other 1,861 1,808 8,244 6,860
Total cash costs $ 14,855 $ 13,329 $ 56,451 $ 53,590
Asset retirement costs 101 16 152 62
Depreciation and amortization 6,182 3,998 23,971 15,248
Total production costs $ 21,138 $ 17,343 $ 80,574 $ 68,900
Change in product inventory (1,627) (152) (379) 960
Add: secondary recycling
credit 435 78 1,829 222
Loss or (gain) on sale
of assets and other costs -- (6) -- 23
Total cost of revenues $ 19,946 $ 17,263 $ 82,024 $ 70,105
Other PGM activities
Reconciliation to cost
of revenues:
Change in product inventory $ 27,664 $ -- $ 82,402 $ 6,728
Secondary recycling
depreciation 13 17 48 71
Costs of secondary recycling 23,120 4,309 71,326 7,988
Total cost of revenues $ 50,797 $ 4,326 $ 153,776 $ 14,787
Stillwater Mining Company
Consolidated Statements of Operations and Comprehensive
Income (Loss) (unaudited)
Three months ended Twelve months ended
December 31, December 31,
----------------------- -----------------------
(in thousands, except per share data) 2004 2003 2004 2003
- --------------------------------------------- ---------- ---------- ---------- ----------
REVENUES
Mine production $ 62,002 $ 60,478 $ 266,684 $ 240,406
Secondary processing 24,378 4,534 76,388 8,866
Sales of palladium
received in Norilsk
Nickel transaction
and other 31,682 -- 104,455 6,551
Total revenue 118,062 65,012 447,527 255,823
COSTS AND EXPENSES Cost of metals sold:
Mine Production 39,045 39,881 171,324 173,960
Secondary Processing 23,120 4,309 71,326 7,988
Sales of palladium
received in Norilsk
Nickel transaction
and other 27,664 -- 82,402 6,728
Total costs of
metals sold 89,829 44,190 325,052 188,676
Depreciation and
amortization:
Mine Production 16,027 10,327 59,568 40,700
Secondary Processing 13 17 48 71
Total depreciation
and amortization 16,040 10,344 59,616 40,771
Total costs
of revenues 105,869 54,534 384,668 229,447
General and administrative 5,415 4,378 19,739 14,700
Loss on disposal of
property, plant and
equipment 1,698 -- 3,640 --
Impairment of property,
plant and equipment -- 390,295 -- 390,295
Norilsk Nickel transaction
related expenses -- -- -- 3,043
Restructuring costs, net -- (966) -- (966)
Total costs
and expenses 112,982 448,241 408,047 636,519
OPERATING INCOME (LOSS) 5,080 (383,229) 39,480 (380,696)
OTHER INCOME (EXPENSE)
Interest income 1,058 187 2,218 500
Interest expense (2,755) (3,979) (17,892) (17,595)
INCOME (LOSS) BEFORE
INCOME TAXES AND
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 3,383 (387,021) 23,806 (397,791)
Income tax benefit
(provision) before
provision for valuation
allowance and reduction
of deferred tax assets -- 158,218 (3) 161,921
Provision for valuation
allowance for net
deferred tax assets -- (70,304) -- (70,304)
Reduction of deferred tax
asset for net operating
loss carry forwards
resulting from ownership
change -- (1,507) -- (16,678)
Total income tax
benefit (provision) -- 86,407 (3) 74,939
INCOME (LOSS) BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 3,383 (300,614) 23,803 (322,852)
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE,
NET OF INCOME TAX
BENEFIT OF $0, $264 -- -- 6,035 (408)
NET INCOME (LOSS) 3,383 (300,614) 29,838 (323,260)
Other comprehensive
income (loss),
net of tax (1,956) (157) (4,145) 585
COMPREHENSIVE INCOME (LOSS) $ 1,427 $ (300,771) $ 25,693 $ (322,675)
Pro-forma amounts assuming
the new amortization is
applied retroactively:
NET INCOME (LOSS) $ 23,803 $ (241,729)
Stillwater Mining Company
Consolidated Statements of Operations and Comprehensive
Income (Loss) (Unaudited)
(Continued)
Three months ended Twelve months ended
December 31, December 31,
----------------------- -----------------------
(in thousands, except per share data) 2004 2003 2004 2003
- --------------------------------------------- ---------- ---------- ---------- ----------
BASIC AND DILUTED EARNINGS
PER SHARE
Income (loss) before
cumulative effect of
accounting change $ 3,383 $ (300,614) $ 23,803 $ (322,852)
Cumulative effect of
accounting change -- -- 6,035 (408)
Net income (loss) $ 3,383 $ (300,614) $ 29,838 $ (323,260)
Weighted Average Common
Shares Outstanding
Basic 90,384 89,783 90,180 67,807
Diluted 90,847 89,783 90,540 67,807
Basic Earnings (Loss)
Per Share
Income (loss) before
cumulative effect of
accounting change $ 0.04 $ (3.35) $ 0.26 $ (4.76)
Cumulative effect of
accounting change -- -- 0.07 (0.01)
Net income (loss) $ 0.04 $ (3.35) $ 0.33 $ (4.77)
Diluted Earnings (Loss)
Per Share
Income (loss) before
cumulative effect of
accounting change $ 0.04 $ (3.35) $ 0.26 $ (4.76)
Cumulative effect of
accounting change -- -- 0.07 (0.01)
Net income (loss) $ 0.04 $ (3.35) $ 0.33 $ (4.77)
Pro-forma amounts assuming
the new amortization method
is applied retroactively:
Basic earnings (loss) per share
Net income (loss) $ 0.26 $ (3.56)
Diluted earning (loss) per share
Net income (loss) $ 0.26 $ (3.56)
Stillwater Mining Company
Consolidated Balance Sheets (unaudited)
December 31, December 31,
(in thousands, except share and per share amounts) 2004 2003
- -------------------------------------------------- ------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 96,052 $ 35,661
Restricted cash equivalents 2,650 2,650
Investments 13,150 11,850
Inventories 159,942 202,485
Accounts receivable 18,186 3,777
Deferred income taxes 6,247 4,313
Other current assets 7,428 4,270
Total current assets 303,655 265,006
Property, plant and equipment, net 434,924 419,528
Other noncurrent assets 6,139 6,054
Total assets $ 744,718 $ 690,588
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 15,029 $ 9,781
Accrued payroll and benefits 13,395 10,654
Property, production and franchise
taxes payable 9,183 8,504
Current portion of long-term debt
and capital lease obligations 1,986 1,935
Portion of debt repayable upon
liquidation of finished palladium
in inventory 19,076 74,106
Fair value of derivative instruments 4,965 1,353
Accrued restructuring costs 577 680
Other current liabilities 3,027 3,257
Total current liabilities 67,238 110,270
Long-term debt and capital lease
obligations 143,028 85,445
Deferred income taxes 6,247 4,313
Other noncurrent liabilities 15,476 11,263
Total liabilities 231,989 211,291
Commitments and Contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value,
1,000,000 shares authorized, none issued -- --
Common stock, $0.01 par value,
200,000,000 shares authorized;
90,433,655 and 89,849,239 shares
issued and outstanding 904 899
Paid-in capital 604,177 592,974
Accumulated Deficit (83,918) (113,756)
Accumulated other comprehensive loss (4,965) (820)
Unearned compensation - restricted
stock awards (3,469) --
Total stockholders' equity 512,729 479,297
Total liabilities and
stockholders' equity $ 744,718 $ 690,588
Stillwater Mining Company
Consolidated Statements of Cash Flows (Unaudited)
Three months ended Twelve months ended
December 31, December 31,
----------------------- -----------------------
(in thousands) 2004 2003 2004 2003
- --------------------------------------------- ---------- ---------- ---------- ----------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $ 3,383 $ (300,614) $ 29,838 $ (323,260)
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 16,040 10,390 59,616 40,771
Deferred income taxes -- (86,418) -- (74,733)
Cumulative effect of
accounting change -- -- (6,035) 672
Restructuring costs, net -- (966) -- (966)
Cash paid on accrued
restructuring costs (46) (3) (103) (280)
Impairment of property,
plant and equipment -- 390,295 -- 390,295
Loss on disposal of
property, plant and
equipment 1,698 -- 3,640 --
Stock issued under
employee benefit plans 1,078 1,167 3,934 3,456
Amortization of debt
issuance costs 155 280 4,857 3,069
Amortization of
restricted stock
compensation 385 -- 1,071 670
Changes in operating
assets and liabilities:
Inventories 9,340 (12,433) 48,578 (2,214)
Accounts receivable 335 1,680 (14,409) 14,870
Accounts payable 2,521 (90) 5,248 (4,529)
Restricted cash -- -- -- (400)
Other 1,878 7,164 605 (206)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 36,767 10,452 136,840 47,215
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures (20,943) (14,280) (76,739) (55,256)
Proceeds from sale/
leaseback transactions -- -- -- --
Proceeds from disposal
of property, plant
and equipment 24 -- 238 --
Purchases of
investments (15,550) (4,200) (40,650) (18,775)
Proceeds from sale of
investments 27,650 3,800 39,350 19,875
NET CASH USED IN
INVESTING ACTIVITIES (8,819) (14,680) (77,801) (54,156)
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of long-term
debt -- -- 140,000 --
Payments on long-term
debt and capital lease
obligations (8,337) (563) (137,544) (59,191)
Issuance of common stock
related to Norilsk
Nickel transaction (1) -- -- -- 100,000
Stock issuance costs
related to Norilsk
Nickel transaction -- -- -- (9,801)
Issuance of common
stock, net of stock
issue costs 1 91 2,734 175
Payments for debt
issuance costs -- -- (3,838) (1,606)
Other -- -- -- 62
NET CASH PROVIDED BY
FINANCING ACTIVITIES (8,336) (472) 1,352 29,639
CASH AND CASH EQUIVALENTS
Net increase 19,612 (4,700) 60,391 22,698
Balance at beginning
of period 76,440 40,361 35,661 12,963
BALANCE AT END OF YEAR $ 96,052 $ 35,661 $ 96,052 $ 35,661
(1) Non-cash financing
activities
Fair value of common
stock issued $ -- $ -- $ -- $ 248,213
Inventory received in
connection with the
Norilsk Nickel
transaction -- -- -- (148,213)
Issuance of common
stock related to
Norilsk Nickel
transaction $ -- $ -- $ -- $ 100,000
SOURCE Stillwater Mining Company
-0- 03/31/2005
/CONTACT: John W. Pearson of Stillwater Mining Company, +1-406-373-8742/
/First Call Analyst: /
/FCMN Contact: earthun@stillwatermining.com /
/Web site: http://www.stillwatermining.com