SECURITIES AND EXCHANGE
Washington, D. C.
_________________
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ___________________
Commission File Number: 1-8641
COEUR D'ALENE MINES CORPORATION
(Exact name of registrant as specified on its charter)
IDAHO 82-0109423
(State or other jurisdiction of (I.R.S. Employer Ident.No.)
incorporation or organization)
P. O. Box I, Coeur d'Alene, Idaho 83816-0316
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (208) 667-3511
______________________________________________________________________
Former name, former address and former fiscal year, if changed since
last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
_________________________
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of Issuer's classes of common stock, as of the
latest practicable date: Common stock, par value $1.00, of which
15,419,894 shares were issued and outstanding as of November 1, 1994.<PAGE>
COEUR D'ALENE MINES CORPORATION
INDEX
Page No.
PART I. Financial Information:
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -- 3-4
September 30, 1994 and December 31, 1993
Consolidated Statements of Operations -- 5-6
Three Months Ended September 30, 1994 and 1993
Nine Months Ended September 30, 1994 and 1993
Consolidated Statements of Cash Flows -- 7
Nine Months Ended September 30, 1994 and 1993
Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of 11-17
Financial Condition and Results of Operations
PART II. Other Information.
Item 1. Legal Proceedings 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES
<PAGE>
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS September 30, December 31,
1994 1993
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 14,572,242 $ 14,678,097
Short-term investments 142,244,142 70,221,106
Receivables 11,073,015 7,757,910
Refundable income taxes 3,223,346 1,924,065
Inventories 35,102,267 34,670,469
___________ ___________
Total Current Assets 206,215,012 129,251,647
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 86,357,577 81,007,505
Less accumulated depreciation 40,078,883 35,310,111
__________ __________
46,278,694 45,697,394
MINING PROPERTIES
Operational mining properties 95,360,702 90,120,998
Less accumulated depletion 37,450,617 33,125,461
57,910,085 56,995,537
Developmental properties 92,889,287 83,536,738
___________ ___________
150,799,372 140,532,275
OTHER ASSETS
Funds held in escrow 2,270,695 2,270,695
Notes receivable 355,069
Debt issuance costs, net of
accumulated amortization 8,486,014 4,708,372
Marketable equity securities 518,448 2,422,416
Other 1,813,408 470,469
13,088,565 10,227,021
$416,381,643 $325,708,337
</TABLE>
<PAGE>
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY September 30, December 31,
1994 1993
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 1,685,220 $ 1,946,273
Accrued liabiliti 2,803,132 5,265,232
Accrued interest payable 3,611,195 2,008,851
Accrued salaries and wages 3,727,010 2,898,486
Accrued litigation settlement 5,662,579 5,875,000
Accrued environmental settlement 1,230,000 1,230,000
Reserve for mine closure 152,406 494,800
Current portion of obligations
under capital leases 2,004,779 1,899,771
__________ __________
Total Current Liabilities 20,876,321 21,618,413
OTHER LIABILITIES
6% Convertible Subordinated
Debentures 50,000,000 50,000,000
7% Convertible Subordinated
Debentures 75,000,000 75,000,000
6 3/8% Convertible Subordinated
Debentures 100,000,000
Obligations under capital leases 2,716,928 4,233,916
Other long-term liabilities 5,075,119 2,325,764
Deferred income taxes 1,429,034 1,681,542
___________ ___________
Total Long-Term Liabilities 234,221,081 133,241,219
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock, $1.00 par value per
share--authorized 10,000,000
shares, none outstanding
Common Stock, $1.00 par value per
share--authorized 60,000,000
shares, issued 16,479,105 at
September 30, 1994 and 16,394,302
at December 31, 1993 (including
1,059,211 shares held as
treasury stock) 16,479,105 16,394,302
Capital surplus 180,223,579 181,038,631
Accumulated deficit (15,390,146) (13,100,942)
Repurchased and nonvested shares (13,386,722) (13,483,286)
Unrealized losses on short-term
investment securities (6,641,575)
161,284,241 170,848,705
___________ ___________
$416,381,643 $325,708,337
</TABLE>
<PAGE>
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
3 MONTHS ENDED 9 MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1994 1993 1994 1993
<S> <C> <C> <C> <C>
INCOME
From mine operations:
Sales of concentrates
and dore' $ 20,666,805 $ 19,951,071 $ 60,340,300 $ 45,747,077
Less cost of mine
operations 16,845,383 17,565,139 51,164,223 41,274,454
Gross profits 3,821,422 2,385,932 9,176,077 4,472,623
From manufacturing
operations:
Sale of industrial
products 2,859,173 2,650,902 8,372,312 7,499,637
Less cost of
manufacturing 2,529,523 2,332,799 7,549,973 6,673,327
Gross profits 329,650 318,103 822,339 826,310
Interest and other
income 5,638,711 1,196,370 10,257,550 3,914,599
_________ _________ __________ _________
Total income 9,789,783 3,900,405 20,255,966 9,213,532
EXPENSES
Administrative 1,008,236 818,740 3,549,307 2,616,909
Accounting and legal 360,835 955,467 1,216,760 2,221,725
General corporate 1,330,023 1,469,494 4,076,936 3,833,891
Mining exploration 913,385 490,597 2,864,894 1,379,388
Idle facilities 385,541 540,408 1,213,285 1,889,468
Interest 3,057,175 1,312,534 8,497,293 4,069,666
Litigation settlement 976,028 5,875,000 976,028 5,875,000
Environmental settlement 1,230,000 1,230,000
Write-off of uncollectible
notes receivable 2,268,564 2,268,564
_________ __________ __________ __________
Total expenses 8,031,223 14,960,804 22,394,503 25,384,611
INCOME (LOSS) BEFORE TAXES
AND CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING 1,758,560 (11,060,399) (2,138,537) (16,171,079)
Provision (Benefit) for
income taxes 115,666 (672,492) 150,667 (2,795,352)
INCOME (LOSS) BEFORE
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING 1,642,894 (10,387,907) (2,289,204) (13,375,727)
Cumulative effect of
change in accounting
method 5,181,188
_________ ___________ _________ _________
NET INCOME (LOSS) $ 1,642,894 $(10,387,907) $ (2,289,204) $ (8,194,539)
</TABLE>
<PAGE>
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
3 MONTHS ENDED 9 MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1994 1993 1994 1993
<S> <C> <C> <C> <C>
EARNINGS PER SHARE DATA
Weighted average number
of shares of Common
Stock outstanding 15,403,346 15,354,710 15,365,817 15,332,878
Gain (loss) per share
before cumulative
effect of change in
accounting method $ 0.11 $ (0.68) $ (0.15) $ (0.87)
Cumulative effect of
change in accounting
method 0.34
GAIN (LOSS) PER SHARE 0.11 (0.68) (0.15) (0.53)
Cash dividends per share $ 0.15 $ 0.15
See notes to consolidated financial statements.
</TABLE>
<PAGE>
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the nine months ended September 30, 1994 and 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES 1994 1993
Net loss $ (2,289,204) $ (8,194,539)
Add (less) noncash items:
Depreciation, depletion and
amortization 13,624,038 8,802,743
Cumulative adjustment FAS 109 (5,181,188)
Deferred income taxes (252,508) (2,851,208)
Deferred stripping costs (578,300)
Loss on disposition
of fixed assets 107,730 630,187
(Gain) on foreign currency exchange (410,825)
(Gain) on foreign currency hedging (1,357,379)
(Gain) on disposition of securities (1,924,177)
Provision for litigation settlement 976,028 5,875,000
Provision for environmental settlement 1,230,000
Write-off of uncollectible notes
receivable 2,268,564
Changes in operating assets and
liabilities:
Accounts receivable (3,359,203) (1,106,195)
Inventories (557,006) (4,932,434)
Accounts payable and
accrued liabilities (2,267,691) 4,576,434
Interest payable 1,602,344
_________ _________
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,313,847 1,117,364
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment (5,358,097) (33,403,808)
Purchase of short-term investments (106,498,374) (52,244,949)
Proceeds from sale of short-term securities 28,579,288
Proceeds from sale of assets 298,754 633,459
Expenditures on operational
mining properties (5,442,448) (15,595,823)
Expenditures on developmental properties (7,257,743) (15,350,468)
Proceeds from other assets 460,247 85,622
__________ ___________
NET CASH USED IN INVESTING ACTIVITIES (95,218,373) (115,875,967)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from offering of 6 3/8%
Convertible Subordinated Debentures 95,513,842
Retirement of obligations under capital
leases (1,411,977) (1,321,306)
Payment of cash dividend (2,303,194) (2,297,520)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 91,798,671 (3,618,826)
DECREASE IN CASH AND
CASH EQUIVALENTS (105,855) (118,377,429)
Cash and cash equivalents at beginning
of year 14,678,097 134,106,948
__________ __________
CASH AND CASH EQUIVALENTS AT
SEPTEMBER 30, 1994 AND 1993 $ 14,572,242 $ 15,729,519
See notes to consolidated financial statements.
<PAGE>
UNAUDITED
Coeur d'Alene Mines Corporation
and Subsidiaries
Notes to Consolidated Financial Statements
NOTE A: Inventories are composed of the following:
SEPTEMBER 30 DECEMBER 31
1994 1993
Mining:
Ore in process and on leach pads $ 28,758,037 $ 27,958,186
Dore' inventory 1,547,782 1,947,294
Supplies 3,131,616 3,356,544
__________ __________
33,437,435 28,384,114
Manufacturing:
Raw materials 985,159 755,206
Finished goods 679,673 653,239
1,664,832 1,408,445
$ 35,102,267 $ 34,670,469
Inventories of ore on leach pads and in the milling process are
valued based on actual costs incurred to place such ore into production,
less costs allocated to minerals recovered through the leaching and
milling process. Dore' inventory includes product at the mine site and
product held by refineries. All other inventories are stated at the
lower of cost or market, cost being determined using the first in, first
out and weighted average cost methods.
NOTE B:
Effective January 1, 1994, the Company changed its method of
accounting for debt and equity securities by adopting Statement of
Financial Accounting Standards (FAS) 115, "Accounting for Certain
Investments in Debt and Equity Securities". FAS 115 requires the use of
fair value accounting. The Company has classified its short term
investments and marketable securities as available for sale, according
to provisions of the new pronouncement. Accordingly, unrealized holding
gains and losses on such securities are excluded from earnings and
reported as a separate component of shareholders' equity until realized.
NOTE C:
On April 30, 1993, the Company acquired Cyprus Gold New Zealand,
Limited, for approximately $54 million in cash. The acquisition has been
accounted for as a purchase. The following consolidated results of the
Company's operations assume that the acquisition took place at the
beginning of the period presented.
<PAGE>
3 Months Ended 9 Months Ended
In thousands except for September 30, September 30,
per share amounts 1993 1993
Revenues $ 23,798 $ 65,064
Net loss before
cumulative effect of
change in accounting (11,061) (14,923)
Net loss (11,061) (9,742)
Earnings per share data:
Loss per share before
cumulative effect of change
in accounting (.68) (.97)
Net loss per share (.68) (.64)
NOTE D:
During the first quarter, the Company effected an offering of $100
million ($96,750,000 net to the Company after underwriter discount) of
6 3/8% Convertible Subordinated Debentures Due 2004 which are convertible
into shares of Common Stock on or before January 31, 2004, unless
previously redeemed, at a conversion price of $26.20 per share. The
Company is required to make semi-annual interest payments. The
debentures are redeemable at the option of the Company on or after
January 31, 1997. The debentures have no other funding requirements
until maturity. The debentures mature January 31, 2004.
NOTE E:
Effective January 1, 1993, the Company changed its method of
accounting for income taxes by adopting Statement of Financial Accounting
Standards (FAS) No. 109, "Accounting for Income Taxes." FAS No. 109
requires an asset and liability approach to accounting for income taxes
and establishes criteria for recognizing deferred tax assets.
Accordingly, the Company adjusted its existing deferred income tax assets
and liabilities to reflect current statutory income tax rates and
previously unrecognized tax benefits related to federal and certain state
net operating loss carryforwards. The Statement also contains new
requirements regarding balance sheet classification and prior business
combinations. Hence, the Company adjusted the carrying values of Coeur
Rochester, Inc. acquired in 1986 and CDE Chilean Mining Corp. acquired
in 1989 to reflect the gross purchase value previously reported net-of-
tax.
The cumulative effect of the accounting change on prior years at
January 1, 1993 is a non-recurring gain of $5,181,188, or $.34 per share,
and is included in the accompanying Consolidated Statement of Operations
for the nine months ended September 30, 1993. Other than the cumulative
effect, the accounting change had no material effect on the operating
results for the three months and nine months ended September 30, 1993.
The Company's tax expense for the third quarter and first nine months
of 1994 results primarily from state tax liabilities. There is no
provision for Federal income taxes in the third quarter or first nine
months of 1994 due to net operating losses incurred.
NOTE F:
During the quarter, the Company received updated reserve information
indicating an increase in reserves at the Golden Cross Mine.
Accordingly, the Company adjusted its depletion rate effective July 1,
1994 to reflect the increased reserves. The impact of the change was an
increase in net income of $623,258, or $.04 per share for the three
months ended September 30, 1994.
NOTE G:
On August 15, 1994, the Company purchased 33 1/3% of the Jualin
property, for $2.9 million, bringing its ownership interest in the
property to 100%. Concurrent with the acquisition, the Company sold the
common stock of International Curator which it previously owned, and
relinquished all of its rights with respect to the Boleo property. The
Company recorded a gain on the sale of Curator stock of $2.7 million,
which is reflected as a component of other income.
NOTE H:
On September 22, 1994, a judgment was entered against the Company in
the United States District Court for the District of Idaho in a case
entitled Goldberg v. Coeur d'Alene Mines Corporation in the amount of
$725,688. The action involves an alleged claim by the plaintiff to
recover on four promissory notes made by an predecessor of the Company.
Plaintiff has filed with the court a cost bill in the approximate amount
of $250,000 which has been objected to by the Company but which, if
allowed, will be added to the judgment for a total judgment of $975,688,
upon which interest accrues.
The Company has provided for the potential loss and filed a notice of
appeal to the Ninth Circuit Court of Appeals on September 29, 1994.
NOTE I:
Certain reclassifications of prior year balances have been made to
conform to current year classifications.
NOTE J:
Other than as stated in the notes above, in the opinion of
management, the foregoing unaudited financial statements include all
adjustments, consisting of normal recurring accruals, necessary to a fair
presentation of the results of operations of the periods shown.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
The results of the Company's operations are significantly affected by
the market prices of gold and silver which may fluctuate widely and are
affected by many factors beyond the Company's control, including interest
rates, expectations regarding inflation, currency values, governmental
decisions regarding the disposal of precious metal stockpiles, global and
regional political and economic conditions, and other factors. The
Company's currently operating mines are the Rochester Mine in Nevada,
which it wholly owns and operates; the Golden Cross Mine in New Zealand,
in which the Company has an 80% operating interest; and the El Bronce
Mine, a Chilean gold mine of which the Company acquired operating control
in October 1994. In addition, in September 1994, the Company entered
into an agreement under which it has the right to acquire up to a 51%
operating interest in another Chilean gold mine, the Faride Mine.
In October 1994, the Company announced that ASARCO Incorporated
("Asarco") and the Company are forming a new corporation to which Asarco
and the Company will contribute their interests in the Galena and Coeur
Mines in Idaho, at which mining activities were suspended in July 1992
and April 1991, respectively, due to then depressed silver prices, and
the adjoining Caladay property, a silver exploration property. It is
contemplated that the new company will invest approximately $25 million
in development and exploration at the properties under a two-year plan
of lengthening the existing workings, improving infrastructure and
diamond drilling to increase reserves and mine life. The reopening of
the Galena and Coeur Mines remains dependent upon future silver prices
and the negotiation of certain contractual agreements.
The Company has an option until July 1997 to increase its ownership
interest in the El Bronce Mine to 51% if it invests $20.4 million and
also invests a minimum of $5 million over a two-year period for
exploration and mine development designed to expand ore reserves and
increase annual gold production above the current level of 40,000 ounces
per year.
On July 19, 1994, the Company's Board of Director's approved
construction of the Fachinal Project. Construction of the new mine is
expected to take 18 months to complete and is expected to produce, in its
first year, 41,000 ounces of gold and 2.6 million ounces of silver.
Total cost to complete the project construction is expected to
approximate $41.8 million.
The Company plans to continue its developmental activities at the
Kensington Property. A production decision relating to the Kensington
Property is subject to the approval by the Company and its joint venture
partner, a market price of gold of at least $400 per ounce and the
receipt of certain required permits. The market price of gold (London
final) on November 4, 1994 was $383.50 per ounce. With respect to the
permits, the Company is unable to control the timing of their issuance.
On November 8, 1994 EPA issued a draft of its Technical Assistance Report
which calls for the Kensington Venture to redesign portions of its
project and furnish additional data, in order to satisfy certain
environmental requirements. If, in the final report, EPA adheres to the
recommendations in the draft, the Company believes it is feasible to make
the design changes and furnish the necessary data. It is anticipated
that a final EPA Technical Assistance Report will be furnished to the
Army Corps of Engineers in the first quarter of 1995, which should lead
to the issuance by the Corps of its Section 404 permit in due course.
The Company's business plan is to continue to acquire mining
properties and/or businesses that are operational or expected to become
operational in the near future so that they can reasonably be expected
to contribute to the Company's near-term cash flow from operations and
expand the Company's gold and/or silver production.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1994 Compared to Three Months
Ended September 30, 1993
Sales and Gross Profits
Sales of concentrates and dore' in the third quarter of 1994
increased by $715,734, or 4%, over the third quarter of 1993. The
increase in sales is primarily attributable to an increase in gold and
silver prices. Silver and gold prices averaged $5.34 and $385.81 per
ounce, respectively, in the third quarter of 1994, compared with $4.67
and $375.43 per ounce, respectively, in the third quarter of 1993. In
the third quarter of 1994, the Company produced 1,582,579 ounces of
silver and 31,125 ounces of gold compared to 1,598,035 ounces of silver
and 34,896 ounces of gold in the third quarter of 1993.
The cost of mine operations in the third quarter of 1994 decreased by
$719,756, or 4%, from the prior year's comparable quarter. The decrease
is primarily due to an increase in ore reserves at Golden Cross which had
the effect of reducing noncash costs from $126 per gold equivalent ounce
to $83 per ounce. Gross profit from mining operations in the third
quarter of 1994 increased by $1,435,490, or 60%, to $3,821,422 compared
to gross profit from mining operations of $2,385,932 in the third quarter
of 1993. Mine operations gross profit as a percent of sales amounted to
18.5% in the third quarter of 1994, compared to 12.0% in the third
quarter of 1993. The improvement in the gross profit percentage is
primarily attributable to the increase in silver and gold prices and the
decrease in production costs described above.
The cash costs of production per ounce of gold at the Golden Cross
Mine amounted to $272.10 per ounce in the quarter ended September 30,
1994, compared to $202.94 per ounce in the prior year's comparable
quarter. The increase was primarily attributable to the presence of a
harder grinding ore in the open pit requiring more milling and chemicals
in the processing and a lower grade of ore being provided from the
underground portion of the mine. The cash costs of production per ounce
of silver on a silver equivalent basis at the Rochester Mine amounted to
$3.43 in the quarter ended September 30, 1994, compared to $3.23 per
ounce in the quarter ended September 30, 1993.
Sales of industrial products, which consist of lightweight flexible
hose and duct and metal tubing, in the third quarter of 1994 increased
by $208,271, or 8%, over the prior year's third quarter. Cost of
manufacturing in the third quarter of 1994 increased by $196,724, or
8.4%, compared to the third quarter of 1993. As a result, gross profits
from manufacturing in the third quarter of 1994 increased by $11,547, or
3.6%, over the third quarter of 1993.
Other Income
Interest and other income in the third quarter of 1994 increased by
$4,442,341, or 371%, over the third quarter of 1993. The increase is due
to an increase of the Company's cash equivalents and short-term
investments and a gain of $2.7 million arising from the sale by the
Company of common shares of International Curator in the third quarter
of 1994.
Expenses
Total expenses in the third quarter of 1994 decreased by $6,929,581
compared to the prior year's third quarter. The decrease is primarily
due to non-recurring write-offs of $9,375,000, or $.61 per share,
effected in the third quarter of 1993. The write-offs included one time
provisions for litigation settlement of $5,875,000, environmental
settlement of $1,230,000 and the write-off of uncollectible notes
receivable of $2,268,564. The decrease is partially offset by an
increase in mining exploration expense of $422,788, and an increase in
interest expense of $1,744,641 associated with the completion of a 6-3/8%
Convertible Subordinated Debentures offering effected in the first
quarter of 1994.
Net Loss
As a result of the above, the Company's income before income taxes
amounted to $1,758,560 in the third quarter of 1994 compared to a pre-tax
loss of $11,060,399 in the third quarter of 1993. The Company provided
$115,666 for income taxes in the third quarter of 1994 compared to a
benefit of $672,492 in the third quarter of 1993. As a result, the
Company reported net income of $1,642,894, or $.11 per share, in the
third quarter of 1994 compared to a net loss of $10,387,907, or $.68 per
share, in the third quarter of 1993.
Nine Months Ended September 30, 1994 Compared to Nine Months
Ended September 30, 1993
Sales and Gross Profits
Sales of concentrates and dore' in the nine months ended September
30, 1994 increased by $14,593,223, or 32%, over the nine months ended
September 30, 1993. The increase is primarily attributable to an
increase in gold production and increases in metal prices. Silver and
gold prices averaged $5.33 and $383.85 per ounce, respectively, in the
first nine months of 1994 compared to $4.20 and $355.10 per ounce,
respectively, in the same period in 1993. During the first nine months
of 1994, the Company produced 4,512,157 ounces of silver and 94,225
ounces of gold compared to 4,410,154 ounces of silver and 82,646 ounces
of gold in the first nine months of 1993. The increase in gold
production is due to the Company's acquisition of an 80% interest in the
Golden Cross Mine effective April 30, 1993. The Company's 80% interest
in Golden Cross Mine production in the nine months ended September 30,
1994 amounted to 52,137 ounces of gold and 163,667 ounces of silver
compared to 36,083 ounces of gold and 116,931 ounces of silver for the
first nine months of 1993.
The cost of mine operations in the first nine months of 1994
increased by $9,889,769, or 24%, over the first nine months of 1993.
Gross profit from mine operations increased by $4,703,454, or 105%, in
the first nine months of 1994 over 1993's comparable period. Mine
operations gross profit as a percent of sales increased to 15.2% in the
nine months ended September 30, 1994 compared to 9.8% in the nine months
ended September 30, 1993. The increase was primarily attributable to the
increases in silver and gold prices in 1994 over the prior year.
The cash costs of production per ounce of gold at the Golden Cross
Mine amounted to $280 per ounce in the nine months ended September 30,
1994, compared to $213 in the prior year's comparable nine-month period.
The increase was primarily attributable to the presence of a harder
grinding ore in the open pit requiring more milling and chemicals in the
processing and a lower grade of ore being provided from the underground
portion of the mine. The cash costs of production per ounce of silver
on a silver equivalent basis at the Rochester Mine amounted to $3.58 per
ounce in the nine months ended September 30, 1994, compared to $3.44 in
the nine months ended September 30, 1993.
Sales of industrial products in the first nine months of 1994
increased by $872,675, or 11.6%, compared to the first nine months of
1993. Cost of manufacturing increased by $876,646, or 13.1%, in the
first nine months of 1994, compared to the prior year's comparable
period. As a result, gross profit from manufacturing for the first nine
months of 1994 decreased by $3,971, or .5%, compared to the first nine
months of 1993.
Other Income
Interest and other income in the nine months ended September 30, 1994
increased by $6,342,951, or 162%, over the prior years' comparable
period. The increase in primarily due to an increase in the level of the
Company's cash and securities portfolio and unrealized foreign exchange
gains on outstanding contracts at September 30, 1994 and a gain of $2.7
million arising from the sale by the Company of common shares of
International Curator in the third quarter of 1994.
Expenses
Total expenses in the first nine months of 1994 decreased by
$2,990,108, or 11.8%, from the prior year's comparable nine-month period.
The decrease is primarily due to the non-recurring write-offs of
$9,375,000, or $.61 per share, effected in the third quarter of 1993.
The write-offs include one time provisions for litigation settlement of
$5,875,000, environmental settlement of $1,230,000 and the write-off of
uncollectible notes receivable of $2,268,564. The decrease was partially
offset by an increase in interest expense of $4,427,627 in the first nine
months of 1994, which was related to the issuance of $100 million
principal amount of 6-3/8% Convertible Subordinated Debentures in the
first quarter of 1994, and increases in administrative expenses of
$932,398 and mining exploration of $1,485,506.
Income (Loss) Before Taxes and Accounting Change
As a result of the above, the Company's loss before income taxes and
the cumulative effect of a change in accounting amounted to $2,138,537
in the first nine months of 1994 compared to $16,171,079 in the first
nine months of 1993. The provision for income taxes amounted to $150,667
in the first nine months of 1994, compared to a benefit of $2,795,352 in
the first nine months of 1993. As a result, the Company reported a net
loss before the cumulative effect of a change in accounting of
$2,289,204, or $.15 per share, in the first nine months of 1994, compared
to $13,375,727, or $.87 per share, in the first nine months of 1993.
Change in Accounting
Effective January 1, 1993, the Company changed its method of
accounting for income taxes by adopting the mandatory Statement of
Financial Accounting Standards (FAS) 109, "Accounting for Income Taxes."
FAS 109 requires an asset and liability approach to accounting for income
taxes and establishes criteria for recognizing deferred tax assets.
Accordingly, the Company adjusted its existing deferred income tax assets
and liabilities to reflect current statutory income tax rates and
previously unrecognized tax benefits related to federal and certain state
net operating loss carry forwards. The cumulative effect of the
accounting change on prior years at January 1, 1993, resulted in a non-
recurring gain of $5,181,188, or $.34 per share, and is included in the
results of operations for the nine months ended September 30, 1993.
Net Income (Loss)
As a result of the above, the Company reported a net loss of
$2,289,204, or $.15 per share, in the first nine months of 1994, compared
to a net loss of $8,194,539, or $.53 per share, in the prior year's
comparable nine-month period.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital; Cash and Cash Equivalents
The Company's working capital at September 30, 1994 was approximately
$185.3 million compared to $107.6 million at December 31, 1993. The
ratio of current assets to current liabilities was 9.9 to one at
September 30, 1994 compared to 6.0 to one at December 31, 1993.
The increase in the Company's working capital at September 30, 1994
compared to December 31, 1993 is primarily attributable to the Company's
sale in January and February 1994 of an aggregate of $100,000,000
principal amount of 6-3/8% Convertible Subordinated Debentures Due 2004
(the "Debentures"). The Debentures were issued by the Company in
connection with an offering to "qualified institutional buyers" as
defined in Rule 144A under the Securities Act and to certain non-U.S.
persons in reliance upon Regulation S under the Securities Act. The
Company plans to use the approximately $95.5 net proceeds from such
offering for general corporate purposes, including the possible
acquisition of, or investment in, additional precious metals mines,
properties or businesses, and for possible developmental activities on
new or existing mining properties. The Company's acquisition efforts are
primarily focused upon operating precious metals mines and precious
metals properties or businesses that are expected to become operational
in the near future. The Company currently is engaged in the review and
investigation of opportunities for expansion of its business through
acquisitions, investments or other transactions. While preliminary
agreements have been entered into with respect to certain proposed
acquisitions, the consummation of such acquisitions is subject to
significant contingencies. The Company invested the proceeds of the
above offering in interest-bearing marketable securities and money market
obligations, and plans to continue such investments pending the use of
the proceeds of that offering as discussed above.
Net cash provided by operating activities in the first nine months of
1994 was $3,313,847 compared to $1,117,364 in the first nine months of
1993. Net cash used in investing activities in the first nine months of
1994 was $95,218,373 compared to $115,875,967 in the prior year's
comparable period. Net cash provided by financing activities in the
first nine months of 1994 was $91,798,671, compared to $3,618,826 used
in the first nine months of 1993. As a result of the above, cash and
cash equivalents decreased by $105,855 in the first nine months of 1994
compared to a $118,377,429 decrease for the comparable period of 1993.
For the years ended September 30, 1994 and 1993, the Company expended
$1,910,525 and $2,799,358, respectively, in connection with environmental
compliance activities at its operating properties. At September 30,
1994, the Company had expended a total of approximately $4.5 million on
environmental and permitting activities at the Kensington property, which
expenditures have been capitalized as part of its development cost.
On June 24, 1994, the U.S. District Court for the District of Idaho
approved the proposed settlement of Kassover v. Coeur d'Alene Mines
Corporation et al (the "Lawsuit"), a class action instituted against the
Company and others in 1990. Pursuant to the Settlement, a total of up
to 220,083 shares of Common Stock will be issued by the Company in
exchange for the claims of the members of the plaintiff class (the
"Claimants") and their counsel. The number of such shares was determined
by dividing $4 million by the average daily closing price of the Common
Stock for the five business days preceding the "fairness hearing"
relating to the Settlement held on June 16, 1994. The Company issued
66,025 shares to counsel for the Claimants in late July 1994, and plans
to issue the balance of up to 154,058 shares following the processing of
the Claimants' claims, which is expected to be in November or December
1994.
On July 19, 1994, the Company's Board of Directors approved the
construction of the Fachinal project following the completion by the
independent engineering firm of Fluor Daniel Wright of a detailed
feasibility study. Pursuant to that study, the cost to complete Fachinal
is estimated to be $41.8 million. The Company plans to seek funding for
that construction on a project financing basis.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
On September 22, 1994, a judgment was entered against the Company in
the United States District Court for the District of Idaho in a case
entitled Goldberg v. Coeur d'Alene Mines Corporation in the amount of
$725,688. The action involves an alleged claim by the plaintiff to
recover on four promissory notes made by an predecessor of the Company.
The notes are claimed to be the obligation of the Company by virtue of
successive mergers which occurred in 1974 and in 1988. Plaintiff has
filed with the court a cost bill in the approximate amount of $250,000
which has been objected to by the Company but which, if allowed, will be
added to the judgment for a total judgment of $975,688, upon which
interest accrues.
The Company filed a notice of appeal to the Ninth Circuit Court of
Appeals on September 29, 1994.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
COEUR D'ALENE MINES CORPORATION
(Registrant)
Dated November 10, 1994 /s Dennis E. Wheeler
DENNIS E. WHEELER
Chairman, President and
Chief Executive Officer
Dated November 10, 1994 /s James A. Sabala
JAMES A. SABALA
Senior Vice President
(Principal Financial and
Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COEUR
D'ALENE MINES CORPORATION'S UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED
SEPTEMBER 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 14,572,242
<SECURITIES> 142,244,142
<RECEIVABLES> 11,073,015
<ALLOWANCES> 0
<INVENTORY> 35,102,267
<CURRENT-ASSETS> 206,215,012
<PP&E> 274,607,566
<DEPRECIATION> 77,529,500
<TOTAL-ASSETS> 416,381,643
<CURRENT-LIABILITIES> 20,876,321
<BONDS> 227,716,928
<COMMON> (16,479,105)
0
0
<OTHER-SE> (144,805,136)
<TOTAL-LIABILITY-AND-EQUITY> (416,381,643)
<SALES> (68,712,612)
<TOTAL-REVENUES> (78,970,162)
<CGS> (58,714,196)
<TOTAL-COSTS> (22,394,503)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8,497,293)
<INCOME-PRETAX> 0
<INCOME-TAX> 150,677
<INCOME-CONTINUING> (2,289,204)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,289,204)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> 0
</TABLE>
