<PAGE> 1
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended 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 1-10012
SUNSHINE MINING AND REFINING COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-2618333
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
877 W. Main, Suite 600, Boise, Idaho 83702
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(Address of principal executive offices)
Registrant's telephone number including area code (208) 345-0660
--------------
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Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Number of Shares Outstanding
Title of Each Class of Common Stock at August 4, 1997
- ----------------------------------- ----------------------------
Common Stock, $.01 par value 255,137,312
Page 1 of 9
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SUNSHINE MINING AND REFINING COMPANY
AMENDMENT NO. 1 TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
The undersigned registrant hereby amends the following items, exhibits
or other portions of its Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1997, as set forth in the pages attached hereto:
PART 1
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART III
Item 6. Exhibits and Report on Form 8-K.
Exhibit No. 27.1
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
SUNSHINE MINING AND REFINING COMPANY
By: /s/ William W. Davis
--------------------------------------------
William W. Davis
Executive Vice President and Chief
Financial Officer
October 16, 1997
Dallas, Texas
2
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SUNSHINE MINING AND REFINING COMPANY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash investments $ 7,157 $ 16,317
Silver bullion 7,765 7,989
Accounts receivable 1,277 2,624
Inventories (Note 2) 2,598 2,523
Other current assets 1,400 1,108
------------ ------------
Total current assets 20,197 30,561
Property, plant and equipment, at cost 142,261 141,409
Less accumulated depreciation,
depletion and amortization (74,448) (72,124)
------------ ------------
67,813 69,285
Investments and other assets 5,078 5,640
------------ ------------
Total assets $ 93,088 $ 105,486
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,611 $ 987
Accrued expenses 3,720 4,015
------------ ------------
Total current liabilities 5,331 5,002
Long-term debt 26,494 25,780
Accrued pension and other postretirement benefits 5,959 6,074
Other long-term liabilities and deferred credits 4,613 5,032
Stockholders' equity:
Common stock--$.01 par value;
600,000 shares authorized; shares issued:
June 30, 1997 - 259,803
December 31, 1996 - 259,652 2,598 2,597
Paid-in capital 711,092 711,093
Deficit (661,760) (648,847)
------------ ------------
51,930 64,843
Less treasury stock, at cost:
June 30, 1997 - 4,666 shares
December 31, 1996 - 4,671 shares 1,239 1,245
------------ ------------
50,691 63,598
------------ ------------
Total liabilities and stockholders' equity $ 93,088 $ 105,486
============ ============
</TABLE>
See accompanying notes.
3
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SUNSHINE MINING AND REFINING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating revenues $ 4,758 $ 4,025 $ 11,312 $ 7,352
Mark to market loss (372) (1,074) (186) (604)
-------- -------- -------- --------
4,386 2,951 11,126 6,748
-------- -------- -------- --------
Costs and expenses:
Cost of revenues 5,456 4,580 11,964 8,205
Depreciation, depletion
and amortization 1,214 1,061 2,522 2,021
Exploration 2,048 1,950 4,410 4,474
Selling, general and
administrative expense 1,461 1,367 2,841 2,619
-------- -------- -------- --------
10,179 8,958 21,737 17,319
-------- -------- -------- --------
Operating loss (5,793) (6,007) (10,611) (10,571)
Other income (expense):
Interest income 200 429 410 611
Interest and debt expense (1,384) (1,309) (2,743) (1,639)
Other, net (4) 25 31 83
-------- -------- -------- --------
(1,188) (855) (2,302) (945)
-------- -------- -------- --------
Net loss (6,980) (6,862) (12,913) (11,516)
Gain on retirement and exchange
of preferred stock -- 40,124 -- 40,124
Preferred stock dividend requirements -- (150) -- (2,622)
-------- -------- -------- --------
Income (loss) applicable to common shares $ (6,980) $ 33,112 $(12,913) $ 5,986
======== ======== ======== ========
Income (loss) per common share:
Primary $ (0.03) $ 0.16 $ (0.05) $ 0.13
======== ======== ======== ========
Fully diluted $ (0.03) $ 0.15 $ (0.05) $ 0.12
======== ======== ======== ========
Weighted average common shares outstanding 255,137 212,471 255,100 202,230
======== ======== ======== ========
</TABLE>
See accompanying notes.
4
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SUNSHINE MINING AND REFINING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
-------- --------
<S> <C> <C>
Cash used by operating activities:
Net loss $(12,913) $(11,516)
Adjustments to reconcile net loss
to net cash used by operations:
Depreciation, depletion and amortization 2,522 2,021
Amortization of debt issuance costs
and accretion of debt discount 1,037 548
Other -- (60)
Net (increase) decrease in:
Silver bullion 224 601
Accounts receivable 1,347 (135)
Inventories (74) (586)
Other assets and deferred charges (328) (340)
Net increase (decrease) in:
Accounts payable and accrued expenses 479 1,862
Accrued pension and other postretirement benefits (114) 79
Other liabilities and deferred credits (413) (749)
-------- --------
Net cash used by operations (8,233) (8,275)
-------- --------
Cash provided (used) by investing activities:
Additions to property, plant and equipment (1,050) (1,723)
Proceeds from investments 273 700
-------- --------
Net cash used by investing activities (777) (1,023)
-------- --------
Cash provided (used) by financing activities:
Costs associated with conversion of preferred stock
into common stock -- (1,028)
Proceeds from issuance of common stock upon exercise
of stock options and warrants -- 1
Proceeds from issuance of long term debt -- 30,000
Debt issuance costs (150) (2,320)
-------- --------
Net cash provided (used) by financing activities (150) 26,653
-------- --------
Increase (decrease) in cash and cash investments (9,160) $ 17,355
Cash and cash investments, January 1 16,317 12,837
-------- --------
Cash and cash investments, June 30 $ 7,157 $ 30,192
======== ========
Supplemental cash flow information -
Interest paid in cash $ 1,411 876
======== ========
</TABLE>
See accompanying notes.
5
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SUNSHINE MINING AND REFINING COMPANY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1997
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements of
Sunshine Mining and Refining Company ("Sunshine" or the "Company") have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six month period 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 Sunshine's report on Form
10-K for the year ending December 31, 1996.
Exploration costs, previously reported in the consolidated statements of
cash flows as investing activities, have been included in cash used in
operating activities.
2. INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
------- -----------
<S> <C> <C>
Precious Metals Inventories:
Work in process $1,169 $1,144
Finished goods 309 405
Materials and supplies inventories 1,120 974
------ ------
$2,598 $2,523
====== ======
</TABLE>
3. RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per Share" which becomes effective for the Company's 1997 consolidated
financial statements beginning in the fourth quarter of 1997. SFAS No. 128
will eliminate the disclosure of primary earnings per share which includes
the dilutive effect of stock options, warrants and other convertible
securities ("Common Stock Equivalents") and instead requires reporting of
"basic" earnings per share, which will exclude Common Stock Equivalents.
Additionally, SFAS No. 128 changes the methodology for fully diluted
earnings per share. In the opinion of the Company's management, it is not
anticipated that the adoption of this new accounting standard will have a
material effect on the reported earnings per share of the Company.
6
<PAGE> 7
4. LONG-TERM DEBT
Recently, the Securities and Exchange Commission advised the Company that
the 22 1/2% additional payment which will be required to be paid on the
Company's $30 million Senior Exchangeable Notes due 2000 (Eurobonds) in
the event the market price of the Company's common stock does not equal or
exceed 133% of the exchange price of the common stock for 45 consecutive
stock exchange business days; during the period from May 1, 1996 through
May 1, 1999, should be accounted for as an increase in the effective
interest rate on the Eurobonds.
Accordingly, the Company has restated its financial statements for the
first two quarters of 1997 and calendar year 1996 to reflect a discount on
the notes and additional paid in capital, as well as increased interest
expense. As a result, at June 30, 1997, long-term debt was decreased by
$5,021 and paid in capital was increased by $6,750. Net loss was increased
by $370 and $714, respectively (less than $.01 per share) for the three
months and six months ended June 30, 1997. Accumulated deficit was
increased $1,729 at June 30, 1997.
7
<PAGE> 8
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THE THREE MONTHS ENDED JUNE
30, 1996
Consolidated operating revenues increased approximately $0.7 million for
the second quarter of 1997 compared to the second quarter of 1996. The increase
in operating revenues resulted from an increase in silver sales volumes
(764,000 ounces of silver in the 1997 quarter compared to 655,000 ounces in the
1996 quarter) and the associated $0.6 million increase in by-product revenue
partially offset by a $0.52 (10.1%) decrease in average silver price received
per ounce. The silver sales volume increase primarily resulted from a 145,000
ounce (22%) increase in production in the 1997 quarter. Mark to market losses
on silver in work-in-process inventories and investment silver bullion
decreased $0.7 million. The mark to market losses were caused by declines in
the silver price during the periods, resulting in writedowns of the value of
the Company's work-in-process inventories and silver bullion held for
investment.
Cost of revenues increased $0.9 million (19%) (from $4.6 million in the
1996 quarter to $5.5 million in the 1997 quarter) primarily due to the 22%
increase in production in 1997, partially offset by lower unit production
costs. Unit production costs decreased $.58 (9.4%) to $5.60 per ounce of silver
primarily due to the increase in silver production from 1996 to 1997 (803
thousand ounces produced from 37,867 tons at 21.98 ounces per ton in 1997
versus 659 thousand ounces from 28,077 tons at 24.17 ounces per ton in 1996).
Depreciation, depletion and amortization increased by approximately $153
thousand as a result of increased production in the 1997 period.
Interest income decreased $229 thousand due to lower average invested cash
balances.
THE SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
1996
Consolidated operating revenues increased approximately $4.0 million
(53.9%) for the first six months of 1997 compared to the first six months of
1996 primarily due to an increase in sales volume (1.8 million ounces of silver
in the first six months of 1997 compared to 1.2 million ounces of silver in the
same period of 1996) and the associated $1.3 million increase in by-product
revenue. The increase in sales volumes primarily resulted from a 491,000 ounce
(40.5%) increase in production in 1997 compared to 1996, and a 53 thousand
ounce increase in sales volume of finished silver. Mark to market losses on
work-in-process silver inventories and silver bullion held for investment
amounted to $186 thousand and $604 thousand in 1997 and 1996, respectively. The
losses were due to declines in the per ounce silver price during the periods,
from $4.74 to $4.60 between December 31, 1996 and June 30, 1997; and from $5.28
to $4.98 between December 31, 1995 to June 30, 1996. The price per ounce has
declined further since June 30, 1997 and additional mark to market losses will
be incurred in the third quarter if the price does not recover.
Cost of revenues increased $3.8 million (46%) (from $8.2 million in the
first six months of 1996 to $12.0 million in the first six months of 1997)
primarily due to the 40.5% increase in production in 1997, partially offset by
lower unit production costs. Unit production costs decreased $.75 (12.3%) to
$5.34 primarily due to the 40.5% increase in silver production (1.7 million
ounces produced from 83,667 tons at 21.08 ounces per ton in 1997 versus 1.2
million ounces from 58,317 tons at 21.46 ounces per ton in 1996).
Depreciation, depletion and amortization increased by approximately $501
thousand as a result of increased production figures in the 1997 period.
Interest income decreased by $201 thousand due to lower average invested
cash balances.
Interest and debt expense increased $1.1 million due to the Company's
Notes Offering completed in March, 1996. See Note 4 Long-term Debt.)
8
<PAGE> 9
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
27 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1997 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<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> 7,157
<SECURITIES> 0
<RECEIVABLES> 7,277
<ALLOWANCES> 0
<INVENTORY> 2,598
<CURRENT-ASSETS> 20,197
<PP&E> 142,261
<DEPRECIATION> 74,448
<TOTAL-ASSETS> 93,088
<CURRENT-LIABILITIES> 5,331
<BONDS> 26,494
0
0
<COMMON> 2,597
<OTHER-SE> 48,094
<TOTAL-LIABILITY-AND-EQUITY> 93,088
<SALES> 11,312
<TOTAL-REVENUES> 11,126
<CGS> 11,964
<TOTAL-COSTS> 14,486
<OTHER-EXPENSES> 4,410
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,743
<INCOME-PRETAX> (12,913)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,913)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,913)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
