SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
-----------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ___________________
Commission File Number: 1-8641
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
--------------------------------- ----------
(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 21,890,568 shares
were issued and outstanding as of August 8, 1997.
<PAGE>
COEUR D'ALENE MINES CORPORATION
<TABLE>
INDEX
<CAPTION>
Page No.
--------
<S> <C>
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -- 3-4
June 30, 1997 and December 31, 1996
Consolidated Statements of Operations -- 5
Six Months Ended June 30, 1997 and 1996
Consolidated Statements of Cash Flows -- 6
Six Months Ended June 30, 1997 and 1996
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of 9-16
Financial Condition and Results of Operations
PART II. Other Information.
Item 1. Legal Proceedings 16
Item 4. Submission of Matters to a Vote of Security-Holders 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES
</TABLE>
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
UNAUDITED
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1997 1996
-------------------------------------
(In Thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 60,261 $ 43,455
Short-term investments 77,875 124,172
Receivables 11,237 11,573
Inventories 35,976 31,992
--------- ---------
TOTAL CURRENT ASSETS 185,349 211,192
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 119,354 118,993
Less accumulated depreciation 55,094 50,743
--------- ---------
64,260 68,250
MINING PROPERTIES
Operational mining properties 236,449 171,517
Less accumulated depletion 48,552 38,264
--------- ---------
187,897 133,253
Developmental properties 126,634 110,985
--------- ---------
314,531 244,238
OTHER ASSETS
Investment in unconsolidated affiliate 48,231
Notes receivable 8,605 4,000
Debt issuance costs, net of accumulated
amortization 3,769 4,081
Marketable equity securities and other 2,257 338
--------- ---------
14,631 56,650
--------- ---------
$578,771 $580,330
========= =========
</TABLE>
-3-
<PAGE>
UNAUDITED
<TABLE>
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1997 1996
-------------------------------------
(In Thousands)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 6,945 $ 4,327
Accrued liabilities 5,981 4,976
Accrued interest payable 3,536 4,968
Accrued salaries and wages 5,363 5,242
Bank loans 8,932 8,021
Current portion of remediation costs 8,500 3,500
Other current liabilities 407 532
--------- ---------
TOTAL CURRENT LIABILITIES 39,664 31,566
LONG-TERM LIABILITIES
6% subordinated convertible debentures 49,840 49,840
6 3/8% subordinated convertible debentures 100,000 100,000
Long-term borrowings 41,724 39,900
Other long-term liabilities 8,836 12,826
--------- ---------
TOTAL LONG-TERM LIABILITIES 200,400 202,566
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Mandatory Adjustable Redeemable Convertible
Securities (MARCS), par value $1.00 per
share,(a class of preferred stock) -
authorized 7,500,000 shares, 7,077,833
issued and outstanding 7,078 7,078
Common Stock, par value $1.00 per share-
authorized 60,000,000 shares, issued
22,950,182 shares (including 1,059,211
shares held in treasury) 22,950 22,950
Capital surplus 394,921 400,187
Accumulated deficit (72,454) (70,459)
Unrealized losses on short-term
investments (598) (352)
Repurchased and nonvested shares (13,190) (13,206)
--------- ---------
338,707 346,198
--------- ---------
$578,771 $580,330
========= =========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE>
UNAUDITED
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
Three Months Ended June 30, 1997 and 1996
Six Months Ended June 30, 1997 and 1996
<CAPTION>
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
----------------------------- -----------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(In thousands except for per share data)
<S> <C> <C> <C> <C>
INCOME
Sales of concentrates and dore' $ 33,659 $ 18,752 $ 58,129 $ 41,361
Less cost of mine operations 35,508 18,546 62,574 38,142
---------- ---------- ---------- ----------
Gross Profit (Loss) (1,849) 206 (4,445) 3,219
OTHER INCOME
Interest and other 9,780 2,223 17,586 4,154
---------- ---------- ---------- ----------
Total Income 7,931 2,429 13,141 7,373
EXPENSES
Administration 1,212 967 2,339 2,055
Accounting and legal 463 369 885 643
General corporate 1,934 1,750 3,555 3,400
Interest 2,087 776 4,348 1,460
Mining exploration 2,512 1,656 4,011 2,695
Write down of mining
properties 54,382 54,382
---------- ---------- ---------- ---------
Total Expenses 8,208 59,900 15,138 64,635
---------- ---------- ---------- ----------
NET LOSS FROM CONTINUING
OPERATIONS BEFORE TAXES (277) (57,471) (1,997) (57,262)
Income tax benefit 2 590 2 514
---------- ---------- ---------- ----------
NET LOSS $ (275) $(56,881) $ (1,995) $ (56,748)
========== ========== ========== ==========
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS $ (2,908) $(59,549) $ (7,261) $(59,879)
========== ========== ========== ==========
EARNINGS PER SHARE DATA
Earnings per share data:
Weighted average number
of shares of Common Stock
and equivalents used in
calculation 21,891 21,620 21,891 21,043
========== ========== ========== ==========
Net Loss Per Share $ (.01) $ (2.63) $ (.09) (2.70)
========== ========== ========== ==========
Net Loss per share
attributable to Common Shareholders $ (.13) $ (2.75) $ (.33) $ (2.85)
========== ========== ========== ==========
</TABLE>
-5-
<PAGE>
UNAUDITED
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
COEUR D'ALENE MINES CORPORATION AND SUBSIDIARIES
Six months ended June 30, 1997 and 1996
<CAPTION>
1997 1996
----------- -----------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,995) $ (56,748)
Add (less) noncash items:
Depreciation, depletion and amortization 13,455 5,521
Loss on disposition of assets 54,301
Other changes 1,324 (100)
----------- -----------
CASH PROVIDED BY OPERATING ACTIVITIES BEFORE
WORKING CAPITAL CHANGES 12,824 2,974
Change in working capital:
Receivables 2,717 (227)
Inventories (3,157) 1,090
Accounts payable and accrued liabilities (4,074) (3,786)
Interest payable (1,432) (1,194)
----------- -----------
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 6,878 (1,143)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in mining company (14,643) (18,629)
Purchase of property, plant, and equipment (1,264) (1,727)
Purchase of short-term investments (54,790) (114,973)
Proceeds from sales of marketable securities 100,675 33,959
Expenditures on developmental properties (6,758) (5,851)
Expenditures on operational mining properties (8,383) (19,988)
Proceeds from sale of discontinued operations 1,420
Other assets 814 115
----------- -----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 15,651 (125,674)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from MARCS issuance 144,644
Proceeds from bank loans 18,900
Retirement of obligations under capital leases (1,077)
Payment of cash dividends (5,266) (5,762)
Other (457)
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (5,723) 156,705
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 16,806 29,888
Cash and cash equivalents at beginning of year 43,455 16,485
----------- -----------
CASH AND CASH EQUIVALENTS AT
JUNE 30, 1997 AND 1996 $ 60,261 $ 46,373
=========== ===========
</TABLE>
See notes to consolidated financial statements.
-6-
<PAGE>
Coeur d'Alene Mines Corporation
and Subsidiaries
Notes to Consolidated Financial Statements
NOTE A: Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three- and
six-month periods ended June 30, 1997 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1997. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Coeur d'Alene Mines Corporation annual report on Form
10-K for the year ended December 31, 1996.
NOTE B: Inventories are comprised of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- --------
(In Thousands)
<S> <C> <C>
In process and on leach pads $ 20,175 $ 19,948
Concentrate inventory 5,152 4,996
Dore' inventory 4,839 739
Supplies 5,810 6,309
--------- --------
$ 35,976 $ 31,992
========= ========
</TABLE>
Inventories of ore on leach pads and in the milling process are valued
based on actual costs incurred to place such ore into production, less costs
allocated to minerals recovered through the leaching and milling processes.
Inherent in this valuation is an estimate of the percentage of the minerals on
leach pads and in process that will ultimately be recovered. Management
evaluates this estimate on an ongoing basis. Adjustments to the recovery are
-7-
<PAGE>
accounted for prospectively. All other inventories are stated at the lower of
cost or market with cost being determined using first in, first out and
weighted average cost methods. Dore' inventory includes product at the mine
site and product held by refineries.
NOTE C:
On June 6, 1997, the Company acquired, for approximately US$14.6 million
in cash, an additional 14% interest in Gasgoyne Gold Mines NL of Australia,
increasing its total ownership to 50%. The acquisition has been accounted for
as a purchase. Effective June 6, 1997, the investment in Gasgoyne will be
accounted for on a proportionate consolidation basis.
NOTE D:
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share, which is required to be adopted in the
fourth quarter of 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating primary earnings per
share, the dilutive effect of stock options will be excluded. Adoption of the
standard would have had no effect on the net loss per share for the
three-month period ended June 30, 1997 and the six-month period ended June 30,
1996. The Company has not yet determined what the impact of Statement 128 will
be on the calculation of fully diluted earnings per share.
NOTE E:
The Company has not recorded an income tax benefit for the three- and
six-month periods ended June 30, 1997 as it is currently not assured of the
realizability of operating loss carryforwards. The related deferred tax asset
has been fully reserved.
NOTE F:
Certain reclassifications of prior year balances have been made to
conform to current year classifications.
-8-
<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 metals 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; the El Bronce Mine, a wholly-owned Chilean gold mine;
and the Fachinal Mine, a Chilean gold mine wholly-owned by the Company.
The Company also has significant interests in other companies that
operate gold and silver mines. The Company owns 50% of Silver Valley Resources
Corporation ("Silver Valley"), which owns and operates the Coeur Mine (where
operations resumed in June 1996 and are expected to continue until early 1999)
and the Galena Mine (where operations resumed in June 1997) in the Coeur
d'Alene Mining District of Idaho. In May 1996, the Company acquired 35% of
Gasgoyne Gold Mines NL, an Australian gold mining company ("Gasgoyne"), which
owns a 50% interest in the Yilgarn-Star Gold Mine in Australia. In June 1997,
the Company increased its ownership interest in Gasgoyne to 50%.
A production decision at the Kensington Property, a wholly-owned
developmental gold property in Alaska, is subject to 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 August 8, 1997 was $323.70 per ounce.
The Company has been advised that the U.S. Forest Service approved the Final
Supplemental Environmental Impact Statement and issued the Record of Decision
for the project. Coeur expects that all remaining key permits will be received
during the third quarter of 1997.
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
-9-
<PAGE>
expected to contribute to the Company's near-term cash flow from operations
and expand the Company's gold and/or silver production.
This report contains certain forward-looking statements relating to the
Company's gold and silver mining business, including estimated production
data, expected operating schedules and other operating data. Actual
production, operating schedules and results of operations could differ
materially from those projected in the forward-looking statements. The factors
that could cause actual results to differ materially from those projected in
the forward-looking statements include (i) changes in the market prices of
gold and silver, (ii) the uncertainties inherent in the Company's production,
exploratory and developmental activities, including risks related to
permitting and regulatory delays, (iii) the uncertainties inherent in the
estimation of gold and silver ore reserves, (iv) changes that could result
from the Company's future acquisition of new mining properties or businesses,
(v) the risks and hazards inherent in the mining business (including
environmental hazards, industrial accidents, weather or geologically related
conditions), (vi) the effects of environmental and other governmental
regulations, and (vii) the risks inherent in the ownership or operation of or
investment in mining properties or businesses in foreign countries. Readers
are cautioned not to put undue reliance on forward-looking statements. The
Company disclaims any intent or obligation to update publicly these
forward-looking statements, whether as a result of new information, future
events or otherwise.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS
ENDED JUNE 30, 1996.
---------------------------------------------------------------------
SALES AND GROSS PROFITS
Sales of concentrates and dore' increased by $14,907,000, or 79%, for the
second quarter of 1997 over the same quarter of 1996. The increase is
primarily attributable to increased sales of metals produced at the Fachinal
and El Bronce Mines due to i) the classification of the Fachinal Mine as an
operating property for accounting purposes as of January 1, 1997, and ii) the
company's increased ownership of the El Bronce Mine from 50% to 100%
commencing in the third quarter of 1996. In the second quarter of 1997, the
Company produced a total of 2,716,566 ounces of silver and 74,053
-10-
<PAGE>
ounces of gold compared to 1,953,220 ounces of silver and 44,260 ounces of
gold in the second quarter of 1996. Silver and gold market prices averaged
$4.76 and $343.03 per ounce, respectively, in the second quarter of 1997
compared with $5.30 and $390.02 per ounce, respectively, in the second quarter
of 1996. On August 6, 1997, the market price of gold (London final) was
$319.35 per ounce, the lowest market price since 1985. In the second quarter
of 1997, the Company realized average silver and gold prices of $4.79 and
$344.78, respectively.
The cost of mine operations for the second quarter of 1997 increased by
$16,962,000, or 91%, compared to the second quarter of 1996. The increase is
primarily attributable to the fact that i) the Company increased its ownership
in the El Bronce Mine from 50% to 100% commencing in the third quarter of
1996, which resulted in a proportionate increase in cost of mine operations in
the second quarter of 1997, and ii) the Company classified the Fachinal mine
as an operating property for accounting purposes as of January 1, 1997 and
began recording cost of mine operations at the Fachinal Mine on that date. Of
the approximately $17.0 million increase in the cost of operations, $3.8
million or 22% were non-cash expenses attributable to the 160% increase in
depreciation, depletion and amortization expense recorded in the second
quarter of 1997 over the prior year's second quarter. The increase in these
non-cash expenses primarily resulted from the Company's increased El Bronce
ownership interest and the fact that no such expenses were being recorded by
Fachinal in the second quarter of 1996.
Gross losses from mining operations in the second quarter of 1997
amounted to $1.8 million compared to a gross profit from mining operations of
$206,000 in the second quarter of 1996. The $2.1 million decrease in gross
profits is due to the above mentioned changes in sales and cost of mine
operations coupled with substantially lower gold and silver prices realized in
the second quarter of 1997.
INTEREST AND OTHER INCOME
Interest and other income increased by $7,557,000, or 340%, in the second
quarter of 1997 compared to the second quarter of 1996. The increase is
primarily the result of the receipt of $8 million of insurance proceeds
received in connection with the business interruption and property damage at
the Golden Cross Mine.
-11-
<PAGE>
EXPENSES
For the second quarter of 1997, total expenses decreased by $51,692,000,
or 86%, below the prior year's comparable quarter. The 1996 results include a
$54,382,000 writedown of the Golden Cross Mine. This decrease was partially
offset by an increase in interest expense of $1,311,000 attributable to the
classification, effective January 1, 1997, of the Fachinal Mine as an
operating property for accounting purposes. Prior to January 1, 1997, interest
expense related to the Fachinal construction loan was capitalized. The other
major change related to mining exploration expense which increased by $856,000
over 1996 levels.
NET INCOME (LOSS)
As a result of the above factors, the Company's loss before taxes
amounted to $277,000 in the second quarter of 1997 compared to a net loss
before taxes of $57.5 million in the second quarter of 1996. The Company also
reported a net loss of $275,000, or $.01 per share ($.13 attributable to
common shareholders), for the second quarter of 1997 compared with a loss of
$56,881,000, or $2.63 per share ($2.75 attributable to common shareholders),
for the second quarter of 1996.
SIX MONTHS ENDED JUNE 30, 1997, COMPARED TO SIX MONTHS ENDED
JUNE 30, 1996
---------------------------------------------------------------------
SALES AND GROSS PROFITS
Sales of concentrates and dore' increased by $16,768,000, or 41%, for the
six months ended June 30, 1997 compared with the same period of 1996. The
increase was primarily attributable to increased sales of metals produced at
the Fachinal and El Bronce Mines due to i) the fact that the Company increased
its ownership in the El Bronce Mine from 50% to 100% during the third quarter
of 1996, and ii) the classification of the Fachinal Mine as an operating
property for accounting purposes as of January 1, 1997. During the first six
months of 1997, the Company achieved record production of 5,258,855 ounces of
silver and 134,016 ounces of gold compared to 4,144,905 ounces of silver and
89,462 ounces of gold in the first six months of 1996. Silver and gold market
prices averaged $4.89 and $347.10 per ounce, respectively, in the first six
months of 1997 compared to $5.42 and $395.08 per ounce, respectively, in the
same period in
-12-
<PAGE>
1996. On August 6, 1997, the market price of gold (London final) was $319.35
per ounce, the lowest market price since 1985. In the first six months of
1997, the Company realized average silver and gold prices of $4.89 and
$350.78, respectively.
The cost of mine operations in the first six months of 1997 increased by
$24,432,000, or 64%, compared with the first six months of 1996. The increase
is primarily attributable to the fact that the Company increased its ownership
in the El Bronce Mine from 50% to 100% commencing in the third quarter of
1996, which resulted in a proportionate increase in cost of mine operations in
the first six months of 1997. In addition, Fachinal was classified as an
operating property for accounting purposes as of January 1, 1997 and began
recording cost of mine operations on that date. Of the $24.4 million increase
in the cost of operations, approximately $6.9 million or 28% was attributable
to increases in depreciation, depletion and amortization recorded in the first
six months of 1997 over the prior year's comparable period.
As a result of the above, gross losses from mine operations amounted to
$4,445,000, in the first six months of 1997 compared to gross profits of
$3,219,000 from mine operations during the six months ended June 30, 1996. The
$7,664,000 decrease in gross profits from mine operations is due to the above
mentioned changes in sales and cost of mine operations in the six-month period
ended June 30, 1997.
OTHER INCOME
Other income in the first half of 1997 increased by $13,432,000 or 323%,
compared to the first half of 1996. The increase is primarily a result of i)
the receipt of $8 million of insurance proceeds for business interruption and
property damage at the Golden Cross Mine, and ii) a gain of $5.3 million
arising from the sale of gold purchased on the open market which was delivered
pursuant to fixed-price forward contracts in the first quarter of 1997.
EXPENSES
Total expenses in the first half of 1997 decreased by $49,497,000, or
77%, compared with the prior year's six-month period. The decrease is
primarily attributable to the writedown of the Golden Cross Mine during the
second quarter of 1996. In the first six months of 1997, interest expense
increased by $2,888,000, primarily
-13-
<PAGE>
attributable to the reclassification of the Fachinal Mine from a
developmental-stage property to an operating property. Effective in 1997,
interest expense on the Fachinal construction loan, which was previously
capitalized during the development stage, is now charged to operating expense.
Mining exploration expense for the first six months of 1997 increased by
$1,316,000, or 49%, over the prior year's comparable period.
NET LOSS
As a result of the above, the Company's loss before income taxes amounted
to $1,997,000 in the first six months of 1997 compared to a net loss before
taxes of $57.3 million during the same period last year. The Company also
reported a net loss of $1,995,000, or $.09 per share ($.33 attributable to
common shareholders) in the first six months of 1997, compared to net loss of
$56,748,000, or $2.70 per share ($2.85 attributable to common shareholders),
in the prior year's comparable six-month period.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL; CASH AND CASH EQUIVALENTS
The Company's working capital at June 30, 1997 was approximately $145.7
million compared to $179.6 million at December 31, 1996. The ratio of current
assets to current liabilities was 4.7 to one at June 30, 1997 compared to 6.7
to one at December 31, 1996.
Net cash provided by operating activities for the first six months of
1997 increased by $8.0 million to $6.9 million from $1.1 million used in
operating activities during the first six months of 1996, attributable largely
to movements in working capital items and the proceeds of the Golden Cross
insurance recovery. A total of $15.7 million of cash was provided by investing
activities in the first six months of 1997 compared to $125.7 million used in
investing activities in the first six months of 1996. Of the $125.7 million
used in investing activities during the first six months of 1996, $115.0
million relates to the purchase of investment grade intermediate term
investments. The Company's financing activities used $5.7 million of cash
during the first six months of 1997 compared with $156.7 million provided by
financing activities for the first six months of 1996. As a result of the
above, the Company's net cash increase for the first six months of 1997 was
$16.8 million
-14-
<PAGE>
compared with a net cash increase of $29.9 million for the first six months of
1996.
For the six months ended June 30, 1997 and 1996, the Company expended
$2,329,000 and $1,315,000, respectively, in connection with environmental
compliance activities at its operating properties. For the six months ended
June 30, 1997, the Company expended a total of approximately $1.7 million on
environmental and permitting activities at the Kensington property, which
expenditures have been capitalized as part of its development cost.
FEDERAL NATURAL RESOURCES ACTION
On March 22, 1996, an action was filed in the United States District
Court for the District of Idaho (Civ. No. 96-0122-N-EJL) by the United States
against various defendants, including the Company, asserting claims under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
and the Clean Water Act for alleged damages to Federal natural resources in
the Coeur d'Alene River Basin of northern Idaho as a result of releases of
hazardous substances from mining activities conducted in the area since the
late 1800s. No specific monetary damages are identified in the complaint.
However, in July 1996, the government indicated damages may approximate $982
million. The United States asserts that the defendants are jointly and
severally liable for costs and expenses incurred by the United States in
investigation, removal and remedial action and the restoration or replacement
of affected natural resources. In 1986 and 1992 the Company had settled
similar issues with the State of Idaho and the Coeur d'Alene Indian Tribe,
respectively, and believes that those prior settlements exonerate it of
further involvement with alleged natural resource damage in the Coeur d'Alene
River Basin. Accordingly, the Company intends to vigorously defend this matter
and, in March 1997, filed a motion for summary judgment which is pending
decision by the court. At this initial stage it is not possible to predict its
ultimate outcome.
INCREASE IN INTEREST IN GASGOYNE
In February 1997, Gasgoyne effected a selective reduction of capital by
repurchasing its publicly held shares from those shareholders other than Coeur
and Sons of Gwalia, as a result of which Coeur's ownership interest increased
from 35% to 36% of Gasgoyne's outstanding shares. On June 6, 1997, the Company
acquired, for approximately US$14.6 million in cash,
-15-
<PAGE>
an additional 14% interest in Gasgoyne increasing its total ownership to 50%.
The acquisition has been accounted for as a purchase. Effective June 6, 1997,
the investment in Gasgoyne will be accounted for on a proportionate
consolidation basis.
PART II. Other Information.
ITEM 1. LEGAL PROCEEDINGS
On July 2, 1997 a complaint was filed in Federal District Court for the
District of Colorado naming the Company as a defendant. The plaintiff is Queen
Uno Limited Partnership of Chicago, Illinois. The complaint alleges that the
Company violated the Securities Exchange Act of 1934 during the period January
1, 1995 to July 11, 1996, and asserts that it is a class action. The class
members are alleged to be those persons who purchased publicly traded debt and
equity securities of the Company during the time period stated. The action
seeks unspecified compensatory damages, pre-judgment and post-judgment
interest, attorney's fees and costs of litigation. In addition to the Company,
Dennis E. Wheeler and James A. Sabala, officers and directors of the Company,
as well as Ernst & Young, the Company's independent auditors are named as
defendants. The complaint asserts that the defendants knew or had access to
material adverse non-public information about the Company's financial results
which was not disclosed, and which related to the Golden Cross and Fachinal
Mines; and that the defendants intentionally and fraudulently disseminated
false statements which were misleading and failed to disclose material facts.
The Company believes the allegations are without merit and intends to
vigorously defend against them.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Company's Annual Meeting of Shareholders was held on May 3, 1997.
Messrs. Dennis E. Wheeler, Joseph C. Bennett, Duane B. Hagadone, James J.
Curran, James A. Sabala, James A. McClure, Jeffery T. Grade and Cecil D.
Andrus were nominated and elected to serve as members of the Board for one
year or until their successors are elected and qualified, by a vote of
25,047,582 shares for and 275,741 shares abstaining.
Shareholders ratified the selection of Ernst & Young to serve as the
Company's public accountants for the current fiscal year by a vote of
25,178,802 shares for, 84,414 shares against, with 60,107 shares abstaining.
-16-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
No. 27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
None
-17-
<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 August 13, 1997 /s/DENNIS E. WHEELER
-----------------------
Dennis E. Wheeler
Chairman, President and
Chief Executive Officer
Dated August 13, 1997 /s/JAMES A. SABALA
-----------------------
James A. Sabala
Senior Vice President and
Chief Financial Officer
-18-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000215466
<NAME> COEUR D'ALENE MINES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 60,261
<SECURITIES> 77,875
<RECEIVABLES> 11,237
<ALLOWANCES> 0
<INVENTORY> 35,976
<CURRENT-ASSETS> 185,349
<PP&E> 482,437
<DEPRECIATION> 103,646
<TOTAL-ASSETS> 578,771
<CURRENT-LIABILITIES> 34,664
<BONDS> 149,840
7,078
0
<COMMON> 22,950
<OTHER-SE> 308,679
<TOTAL-LIABILITY-AND-EQUITY> 578,771
<SALES> 58,129
<TOTAL-REVENUES> 75,715
<CGS> 62,574
<TOTAL-COSTS> 77,712
<OTHER-EXPENSES> 10,790
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,348
<INCOME-PRETAX> (1,997)
<INCOME-TAX> (2)
<INCOME-CONTINUING> (1,995)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,995)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> 0
</TABLE>
