<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 2000.
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 0-25090
-------
STILLWATER MINING COMPANY
-------------------------
(Exact name of registrant as specified in its charter)
Delaware 81-0480654
_____________________________________ ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Tabor Center
1200 Seventeenth Street, Suite 900
Denver, Colorado 80202
_____________________________________ ------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 352-2060
----------------------------------------------------
(Registrant's telephone number, including area code)
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
--- ---
At October 10, 2000, 38,622,848 shares of common stock, $0.01 par value per
share, were issued and outstanding.
1
<PAGE>
STILLWATER MINING COMPANY
FORM 10-Q
QUARTER ENDED September 30, 2000
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements............................... 3
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations...... 9
Item 3 Quantitative and Qualitative Disclosures About
Market Risk........................................ 17
PART II - OTHER INFORMATION
Item 1 Legal Proceedings.................................. 19
Item 2 Changes in Securities and Use of Proceeds.......... 19
Item 3 Defaults Upon Senior Securities.................... 19
Item 4 Submission of Matters to a Vote of Security Holders 19
Item 5 Other Information.................................. 19
Item 6 Exhibits and Reports on Form 8-K................... 19
SIGNATURES ................................................... 20
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Stillwater Mining Company
Consolidated Balance Sheet
(in thousands, except share and per share amounts)
(Unaudited)
September 30, December 31,
2000 1999
-------------------- -------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 12,395 $ 2,846
Funds held in escrow 8,940 -
Inventories 18,532 11,658
Accounts receivable 38,629 26,248
Deferred income taxes 2,400 1,945
Other current assets 2,494 3,013
-------------------- -------------------
Total current assets 83,390 45,710
-------------------- -------------------
Property, plant and equipment, net 566,902 428,252
Other noncurrent assets 4,341 4,876
-------------------- -------------------
Total assets $ 654,633 $ 478,838
==================== ===================
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 31,051 $ 20,157
Accrued payroll and benefits 4,548 5,511
Property, production and franchise taxes payable 5,944 4,322
Current portion of debt and capital lease obligations 123,233 2,628
Income taxes payable 416 642
Metals leases payable 13,552 -
Other current liabilities 7,750 3,729
-------------------- -------------------
Total current liabilities 186,494 36,989
-------------------- -------------------
Long-term liabilities
Long-term debt and capital lease obligations 32,129 84,404
Deferred income taxes 47,417 29,042
Other noncurrent liabilities 6,933 5,299
-------------------- -------------------
Total liabilities 272,973 155,734
-------------------- -------------------
Shareholders' equity
Preferred stock, $0.01 par value, 1,000,000 shares
authorized, none issued - -
Common stock, $0.01 par value, 50,000,000 shares
authorized, 38,622,585 and 37,917,973 shares
issued and outstanding, respectively 386 379
Paid-in capital 283,523 272,173
Retained earnings 97,751 50,552
-------------------- -------------------
Total shareholders' equity 381,660 323,104
-------------------- -------------------
Total liabilities and shareholders' equity $ 654,633 $ 478,838
==================== ===================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
Stillwater Mining Company
Consolidated Statement of Operations
(Unaudited)
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
------------------------------------- -------------------------------------
2000 1999 2000 1999
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues $ 52,555 $ 32,204 $ 162,455 $ 107,079
Costs and expenses
Cost of metals sold 26,688 18,921 78,956 58,320
Depreciation and amortization 4,196 3,543 12,708 9,802
---------------- ---------------- ---------------- ----------------
Total cost of sales 30,884 22,464 91,664 68,122
General and administrative expense 1,831 2,497 6,129 5,041
---------------- ---------------- ---------------- ----------------
Total costs and expenses 32,715 24,961 97,793 73,163
---------------- ---------------- ---------------- ----------------
Operating income 19,840 7,243 64,662 33,916
Other income (expense)
Interest income 418 201 882 868
Interest expense, net of capitalized interest
of $4,958, $1,377, $10,037 and $3,029 - - - (137)
---------------- ---------------- ---------------- ----------------
Income before income taxes 20,258 7,444 65,544 34,647
Income tax provision (5,665) (2,345) (18,345) (10,914)
---------------- ---------------- ---------------- ----------------
Net income and comprehensive income $ 14,593 $ 5,099 $ 47,199 $ 23,733
================ ================ ================ ================
Earnings per share
Basic $ 0.38 $ 0.14 $ 1.23 $ 0.65
================ ================ ================ ================
Diluted $ 0.37 $ 0.13 $ 1.20 $ 0.62
================ ================ ================ ================
Weighted average common shares
outstanding
Basic 38,561 37,771 38,450 36,372
Diluted 39,159 38,564 39,230 38,592
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
Stillwater Mining Company
Consolidated Statement of Cash Flows
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
--------------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 47,199 $ 23,733
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,708 9,802
Deferred income taxes 17,920 8,860
Changes in operating assets and liabilities:
Inventories (6,874) (2,483)
Accounts receivable (12,381) 105
Accounts payable 10,894 9,480
Other 20,694 3,349
---------- ----------
Net cash provided by operating activities 90,160 52,846
---------- ----------
Cash flows from investing activities
Capital expenditures (151,358) (134,194)
---------- ----------
Net cash used in investing activities (151,358) (134,194)
---------- ----------
Cash flows from financing activities
Issuance of long-term debt 61,435 56,000
Payments on long-term debt and capital lease
obligations (2,045) (13,811)
Issuance of common stock 11,357 2,966
Payments for debt issuance costs - (2,657)
Payments for conversion costs of 7%
convertible notes - (309)
---------- ----------
Net cash provided by financing activities 70,747 42,189
---------- ----------
Cash and cash equivalents
Net increase (decrease) 9,549 (39,159)
Balance at beginning of period 2,846 49,811
---------- ----------
Balance at end of period $ 12,395 $ 10,652
========== ==========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
Stillwater Mining Company
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - General
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the company's financial
position as of September 30, 2000 and the results of its operations for the
three and nine month periods ended September 30, 2000 and 1999 and cash flows
for the nine month periods ended September 30, 2000 and 1999. Certain prior
year amounts have been reclassified to conform with the current year
presentation. The results of operations for the three and nine month periods
are not necessarily indicative of the results to be expected for the full year.
The accompanying consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the
company's 1999 Annual Report on Form 10-K.
Note 2 - New Accounting Standards
In December 1999, the Securities and Exchange Commission (SEC) released
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial
Statements. The objective of this SAB is to provide further guidance on revenue
recognition issues in the absence of authoritative literature addressing a
specific arrangement or a specific industry. In March 2000, the SEC released
SAB No. 101A, which delayed the implementation date of SAB 101 for registrants
with fiscal years that begin between December 16, 1999 and March 15, 2000 until
the second fiscal quarter of the first fiscal year beginning after December 15,
1999. In June 2000, in response to requests from a number of groups asking for
additional time to assess the effect of SAB 101, the SEC released SAB 101B,
which delays the implementation date of SAB 101 until no later than the fourth
fiscal quarter of fiscal years beginning after December 15, 1999. The company
is currently assessing the impact of SAB 101. Its effect on the company's
financial position or results of operations has not yet been determined. Any
changes resulting from the implementation of SAB 101 will be reported as a
change in accounting principle with the cumulative effect of the change on
retained earnings at the beginning of the fiscal year included in restated net
income of the first interim period of the fiscal year in which the change is
made.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. In June 2000, the FASB issued
SFAS No. 138, Accounting for Derivative Instruments and Certain Hedging
Activities, an amendment to FASB SFAS No. 133. SFAS Nos. 133 and 138 are
required to be adopted for fiscal years beginning after June 15, 2000. SFAS
Nos. 133 and 138 require that derivatives be reported on the balance sheet at
fair value and, if the derivative is not designated as a hedging instrument,
changes in fair value must be recognized in earnings in the period of change.
If the derivative is designated as a hedge and to the extent such hedge is
determined to be effective, changes in fair value are either (a) offset by the
change in fair value of the hedged asset or liability (if applicable) or (b)
reported as a component of other comprehensive income in the period of change,
and subsequently recognized in earnings when the offsetting hedged transaction
occurs. The definition of derivatives has also been expanded to include
contracts that require physical delivery if the contract allows for net cash
settlement. The company primarily uses derivatives to hedge metal prices. Such
derivatives are reported at cost, if any, and gains and losses on such
derivatives are reported when the hedged transaction occurs. Accordingly, the
company's adoption of SFAS Nos. 133 and 138 will have an impact on the reported
financial position of the company, and although such impact has not been
determined, it is currently not believed to be material. Adoption of SFAS Nos.
133 and 138 should have no significant impact on reported earnings, but could
materially affect comprehensive income.
In May 2000, the FASB Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 00-14, Accounting for Certain Sales Incentives (the
consensus). The consensus requires the reduction in or
6
<PAGE>
refund of the selling price of the product or service resulting from any cash
sales incentive to be classified as a reduction of revenue. The consensus is
effective for all reporting periods beginning after May 18, 2000. In July 2000,
the EITF reconsidered the transition provisions of Issue No. 00-14. The EITF
concluded that a registrant should apply the consensus no later than the
required implementation date for SAB 101 (i.e. no later than the fourth quarter
of the registrant's fiscal year beginning after December 15, 1999). The company
currently classifies sales discounts associated with its long-term sales
contracts as components of cost of metals sold. Accordingly, the company's
application of the consensus will have an impact on the reported revenues and
cost of metals sold, and although such impact has not been determined, it is
currently not believed to be material. Application of the consensus should have
no impact on reported earnings, comprehensive income, or financial position.
Note 3 - Inventories
Inventories consisted of the following (in thousands):
(Unaudited)
September 30, December 31,
2000 1999
------------- ------------
Metals inventory
Raw ore $ 2,436 $ 187
Concentrate and in-process 10,966 7,079
------------- ------------
13,402 7,266
Materials and supplies 5,130 4,392
------------- ------------
$ 18,532 $ 11,658
============= ============
Note 4 - Long-Term Debt
Scotiabank Credit Facility
In March 1999, the company entered into a seven-year $175 million credit
facility ("Scotiabank Credit Facility") from a syndicate of banks led by the
Bank of Nova Scotia. The Scotiabank Credit Facility provides for a $125 million
term loan facility and a $50 million revolving credit facility. Borrowings may
be made under the term loan facility until December 29, 2000 and amortization of
the term loan facility will commence on March 31, 2001. The final maturity of
the term loan facility and revolving credit facility is December 30, 2005. As
of September 30, 2000, the company had $76.4 million outstanding under the term
loan facility and $44.2 million outstanding under the revolving credit facility.
The loans are required to be repaid from excess cash flow, proceeds from
asset sales and any issuance of debt or equity securities, subject to specific
exceptions. Proceeds of the term loan facility are used to finance a portion of
the expansion plan. The original Scotiabank Credit Facility provided interest at
London Interbank Offered Rates (LIBOR) or an alternate base rate, in each case
plus a margin of 1.00% to 1.75%, which is adjusted depending upon the company's
ratio of debt to operating cash flow. At September 30, 2000, the borrowings
outstanding under the Scotiabank Credit Facility bear interest at 8.75%.
Substantially all the property and assets of the company are pledged as security
for the Scotiabank Credit Facility.
During 1999 and 2000, as a result of problems encountered with our
expansion plans, the company did not comply with certain production covenants
under the Scotiabank Credit Facility. The bank syndicate has granted waivers of
these covenants that are effective until April 30, 2001 and provided that the
Facility would bear interest at the rates of LIBOR plus a margin of 2.00%. In
addition, borrowings under the facility are limited to $125 million until the
existing agreement is renegotiated. The company is seeking to renegotiate,
refinance or replace the credit facility. As a result, the debt has been
classified as a current liability as of September 30, 2000 and the amortization
period for the related debt issuance costs has been reduced. The company is in
compliance with all other aspects of the credit agreement as of September 30,
2000.
7
<PAGE>
Exempt Facility Revenue Bonds
On July 6, 2000, the company completed a $30 million offering of Exempt
Facility Revenue Bonds, Series 2000, through the State of Montana Board of
Investments. The bonds were issued by the State of Montana Board of Investments
to finance a portion of the costs of constructing and equipping certain sewage
and solid waste disposal facilities at both the Stillwater Mine and the East
Boulder Project. The bonds mature on July 1, 2020 and have an interest rate of
8% with interest paid semi-annually. Net proceeds from the offering were $28.7
million, with $8.9 million of the funds held in escrow pending the expenditure
of funds for allowable costs as of September 30, 2000.
Convertible Subordinated Notes
On May 1, 1999, the company completed the underwritten call for redemption
of its $51.4 million outstanding principal amount of 7% Convertible Subordinated
Notes. Substantially all of the notes were converted into common stock. The
notes were redeemed at a conversion price of $17.87 per share with cash paid in
lieu of fractional shares. The company issued approximately 2.9 million shares
of common stock in connection with the conversion of the notes. Underwriters'
fees and other costs associated with the call for redemption were approximately
$0.3 million.
Note 5 - Earnings per Share
The company follows SFAS No. 128, Earnings per Share, which requires the
presentation of basic and diluted earnings per share.
The effect of outstanding stock options on diluted weighted average shares
outstanding was 598,636 and 793,854 shares for the three month periods ending
September 30, 2000 and 1999, respectively. Outstanding options to purchase
326,625 and 532,925 shares of common stock were excluded from the computation of
diluted earnings per share for the three month periods ended September 30, 2000
and 1999, respectively, because the effect of inclusion would have been
antidilutive using the treasury stock method.
The effect of outstanding stock options on diluted weighted average shares
outstanding was 780,564 and 960,411 shares for the nine month periods ending
September 30, 2000 and 1999, respectively. Outstanding options to purchase
39,725 and 84,575 shares of common stock were excluded from the computation of
diluted earnings per share for the nine month periods ended September 30, 2000
and 1999, respectively, because the effect of inclusion would have been
antidilutive using the treasury stock method.
The effect of the company's Convertible Subordinated Notes on diluted
weighted average shares outstanding was 1,258,736 shares for the nine month
period ended September 30, 1999.
Note 6 - Income Taxes
Income taxes for the three and nine month periods ended September 30, 2000,
have been provided at the expected annualized rate of 28%.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Stillwater Mining Company
Key Factors
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------------------------- -------------------------------
2000 1999 2000 1999
-------------- ---------------- -------------- -----------
<S> <C> <C> <C> <C>
Ounces produced (000)
Palladium 75 72 236 230
Platinum 23 22 72 69
-------------- ---------------- -------------- -----------
Total 98 94 308 299
Tons mined (000) 171 152 488 501
Tons milled (000) 152 152 470 503
Mill head grade (ounce per ton) 0.69 0.68 0.70 0.66
Total mill recovery (%) 90 91 91 91
Sub-grade tons milled (000) 29 - 73 -
Sub-grade mill head grade (ounce per ton) 0.21 - 0.23 -
Total tons milled 181 152 543 503
Combined mill head grade (ounce per ton) 0.61 0.68 0.63 0.66
Cash costs per total ton milled $ 168 $ 134 $ 151 $ 116
Cash costs per ounce(1) $ 310 $ 217 $ 266 $ 195
Depreciation and amortization 43 38 42 33
-------------- ---------------- -------------- -----------
Total costs per ounce produced $ 353 $ 255 $ 308 $ 228
Ounces sold (000)(2)
Palladium 71 69 232 231
Platinum 21 21 70 70
-------------- ---------------- -------------- -----------
Total 92 90 302 301
Average realized price per ounce(3)
Palladium $ 595 $ 359 $ 557 $ 353
Platinum $ 491 $ 364 $ 474 $ 364
Combined(2) $ 571 $ 360 $ 538 $ 356
Average market price per ounce(3)
Palladium $ 732 $ 345 $ 641 $ 343
Platinum $ 577 $ 357 $ 528 $ 359
Combined(2) $ 696 $ 348 $ 614 $ 347
</TABLE>
(1) Cash costs include cash costs of mine operations, processing and
administrative expenses at the mine site (including overhead, taxes other
than income taxes, royalties, and credits for metals produced other than
palladium and platinum). Total costs of production include cash costs plus
depreciation and amortization. Income taxes, corporate general and
administrative expense and interest income and expense are not included in
either total or cash costs.
(2) Stillwater Mining reports a combined average realized price of palladium
and platinum at the same ratio as ounces are produced from the base metals
refinery. The same ratio is applied to the combined average market price.
The combined average market price represents the London PM Fix for the
actual months of the period.
(3) Revenue is recognized when product is shipped from the company's base
metals refinery to external refiners. Sales are recorded and later
adjusted when sales prices are finalized. The differences between realized
prices and market prices occur due to contract obligations, hedge
positions, and timing differences between recorded sales and deliveries.
9
<PAGE>
Results of Operations
Three months ended September 30, 2000 compared to three months ended September
------------------------------------------------------------------------------
30, 1999
--------
PGM Production
--------------
During the third quarter of 2000, the company produced approximately 75,000
ounces of palladium and approximately 23,000 ounces of platinum compared with
production of approximately 72,000 ounces of palladium and 22,000 ounces of
platinum in the third quarter of 1999.
Revenues
--------
Revenues were $52.6 million for the third quarter of 2000 compared to $32.2
million for the third quarter of 1999, an increase of 63%. The increase is
primarily attributable to a 59% increase in realized metal prices and a 2%
increase in the quantity of metals sold as compared to the same period of 1999.
Palladium and platinum sales increased to approximately 71,000 ounces and
21,000 ounces, respectively, for the third quarter of 2000 compared with
palladium and platinum sales of approximately 69,000 ounces and 21,000 ounces,
respectively, in the third quarter of 1999.
The average realized price per ounce of palladium and platinum sold in the
third quarter of 2000 increased 59% to $571 per ounce, compared to $360 per
ounce in the third quarter of 1999. The average market price of palladium and
platinum doubled to $696 per ounce in the third quarter of 2000 compared to $348
per ounce in the third quarter of 1999. The average realized price per ounce of
palladium sold was $595 in the third quarter of 2000, compared to $359 per ounce
in the third quarter of 1999, while the average market price of palladium was
$732 per ounce in the third quarter of 2000 compared to $345 per ounce in the
third quarter of 1999. The average realized price per ounce of platinum sold
was $491 per ounce in the third quarter of 2000, compared to $364 per ounce in
the third quarter of 1999. The platinum average market price was $577 per ounce
in the third quarter of 2000 compared to $357 per ounce in the third quarter of
1999. The differences between realized prices and market prices occur due to
contract obligations, hedge positions, and timing differences between recorded
sales and deliveries.
Costs and Expenses
------------------
Cost of sales increased by $8.4 million, or 37%, to $30.9 million in the
third quarter of 2000 compared with $22.5 million in the third quarter of 1999.
Cash production costs per ounce in the third quarter of 2000 increased $93 or
43%, to $310 per ounce from $217 per ounce in the third quarter of 1999. The
increase is primarily the result of the following items: (1) Total stope mining
cash costs per ounce in the third quarter of 2000 included an additional $26 per
ounce, primarily related to contract mining activities, compared to the third
quarter of 1999; (2) Cash production costs per ounce for the third quarter of
2000 also included an additional $9 per ounce of maintenance costs as compared
to the prior year's period related to ongoing expansion activities and the
implementation of a preventative maintenance system; (3) An additional $27 per
ounce associated with higher general and administrative expenses primarily due
to increased bussing, recruiting, hiring and training expenses; (4) An
additional $20 of cash costs per ounce were also incurred in the third quarter
of 2000 compared to the third quarter of 1999 for royalties and production taxes
associated with higher realized PGM prices; and (5) Cash production costs per
ounce for the third quarter of 2000 also included an additional $12 per ounce of
costs primarily due to concentrator repairs performed in the third quarter of
2000 compared to the third quarter of 1999. Total production costs per ounce in
the third quarter of 2000 increased $98 or 38% to $353 per ounce from $255 per
ounce in the third quarter of 1999. This increase is also primarily due to the
items noted above. Depreciation and amortization increased $5 per ounce, or 13%
to $43 per ounce from $38 per ounce in the third quarter of 1999 due to certain
assets acquired for the expansion being placed into service.
10
<PAGE>
General and Administrative Expense
----------------------------------
For the third quarter of 2000, general and administrative costs were $1.8
million compared to $2.5 million in the third quarter of 1999. The decrease is
primarily attributable to severance costs and higher consulting fees incurred in
the third quarter of 1999.
Income Tax Provision
--------------------
The company has provided for income taxes of $5.7 million, or 28% of pretax
income, for the third quarter of 2000 compared to $2.3 million, or 31.5% of
pretax income, for the third quarter of 1999. A review of the company's
projected benefit from statutory depletion resulted in the reduction of the
third quarter of 2000 tax rate to 28% from the rate of 31.5% accrued in the
third quarter of 1999.
Nine months ended September 30, 2000 compared to nine months ended September 30,
--------------------------------------------------------------------------------
1999
----
PGM Production
--------------
During the first nine months of 2000, production increased 3% to
approximately 236,000 ounces of palladium and 72,000 ounces of platinum compared
with production of approximately 230,000 ounces of palladium and 69,000 ounces
of platinum in the first nine months of 1999.
Revenues
--------
Revenues for the first nine months of 2000 increased $55.4 million, or 52%,
to $162.5 million compared to $107.1 million in the first nine months of 1999.
The increase in revenue was primarily due to a 51% increase in the combined
average realized price per ounce of palladium and platinum for the first nine
months of 2000 as compared to the first nine months of 1999.
During the first nine months of 2000, the company sold approximately
232,000 ounces of palladium and 70,000 ounces of platinum at average realized
prices of $557 and $474, respectively, compared with sales of approximately
231,000 ounces of palladium and 70,000 ounces of platinum at average realized
prices of $353 and $364, respectively, in the prior year's comparable period.
During the first nine months of 2000, the average market prices of palladium and
platinum were $641 and $528, respectively. The differences between realized
prices and market prices occur due to contract obligations, hedge positions, and
timing differences between recorded sales and deliveries.
Costs and Expenses
------------------
Cost of sales increased by $23.5 million, or 35%, to $91.6 million in the
first nine months of 2000 from $68.1 million in the first nine months of 1999.
Cash production costs per ounce for the nine months ended September 30, 2000
increased $71 per ounce, or 36%, to $266 per ounce from $195 per ounce in the
first nine months of 1999. This increase is primarily due to the following:
(1) Total stope mining cash costs per ounce in the first nine months of 2000
included an additional $32 per ounce, primarily related to contract mining
activities, compared to the first nine months of 1999; (2) Cash production
costs per ounce for the first nine months of 2000 also included an additional $6
per ounce of maintenance costs as compared to the prior year's period related to
ongoing expansion activities and the implementation of a preventative
maintenance system; (3) An additional $14 per ounce associated with higher
general and administrative expenses primarily due to increased bussing,
recruiting, hiring and training expenses (4) An additional $14 of cash costs per
ounce were also incurred in the first nine months of 2000 compared to the first
nine months of 1999 for royalties and production taxes associated with higher
realized PGM prices; and (5) Cash production costs per ounce for the first nine
months of 2000 also included an additional $9 per ounce of costs primarily due
to concentrator repairs performed in the first nine months of 2000 compared to
the same period in 1999. In addition, by-product credits increased $4 per ounce
in the first nine months of 2000 compared to the same period in 1999, due to
higher metal prices. Depreciation and amortization increased $9 or 27% to $42
per ounce in the first nine months of 2000 from $33 per ounce in the first nine
months of
11
<PAGE>
1999 due to certain assets acquired for the expansion being placed into service.
Total production costs per ounce in the first nine months of 2000 increased $80
or 35% to $308 per ounce from $228 in the first nine months of 1999 and is
primarily due to the items noted above.
General and Administrative Expense
----------------------------------
For the first nine months of 2000, general and administrative costs were
$6.1 million compared to $5.0 million for the same period of 1999. The increase
was primarily a result of consulting and other outside service costs incurred in
the first nine months of 2000 in connection with our expansion effort.
Income Tax Provision
--------------------
The company has provided for income taxes of $18.3 million, or 28% of
pretax income, for the nine months ended September 30, 2000, compared to $10.9
million, or 31.5% of pretax income, for the same period of 1999. A review of
the company's projected benefit from statutory depletion resulted in the
reduction in the tax rate to 28% for the first nine months of 2000, compared to
the tax rate of 31.5% accrued in the first nine months of 1999.
Liquidity and Capital Resources
The company's working capital at September 30, 2000 was $(103.1) million
compared to $8.7 million at December 31, 1999. The ratio of current assets to
current liabilities was 0.45 at September 30, 2000, compared to 1.2 at December
31, 1999. The decrease in working capital reflects the reclassification of
$120.6 million borrowed under the existing credit facility from a long-term
liability to current liabilities in connection with a waiver extension to April
30, 2001 effective on September 29, 2000. The company is seeking to renegotiate,
refinance or replace the existing credit facility prior to April 30, 2001.
Net cash provided by operations for the nine months ended September 30,
2000, was $90.2 million compared with $52.8 million for the comparable period of
1999, an increase of $37.4 million. The increase was primarily a result of an
increase in net income and changes in operating assets and liabilities. The
increase in operating assets and liabilities is primarily due to outstanding
palladium leasing transactions of approximately $13.6 million as of September
30, 2000. The company periodically leases metals to third parties and records a
liability when the cash is received. The outstanding balance will subsequently
be repaid to the lessee in the fourth quarter of 2000.
A total of $151.4 million was used in investing activities in the first
nine months of 2000 compared to $134.2 million in the same period of 1999. The
increase was primarily due to increased capital expenditures as a result of the
development of the East Boulder project and the Stillwater Mine expansion.
For the nine months ended September 30, 2000, cash flow provided by
financing activities was $70.7 million compared to $42.2 million for the
comparable period of 1999. The increase of $28.5 million was primarily due to a
draw of $20.3 million on the $30 million exempt facility revenue bonds and an
additional $8.4 million in proceeds received from the issuance of common stock
in connection with the company's incentive stock option plans.
As a result of the above, cash and cash equivalents increased by $9.5
million for the first nine months of 2000, compared with a decrease of $39.2
million for the comparable period of 1999.
Cash flow from operating activities is expected to be sufficient to cover
remaining 2000 capital expenditures. Based on cash on hand and expected cash
flows from operations, along with the remaining credit of $4.4 million available
at September 30, 2000 under the existing credit facility and the proceeds from
the $30 million Tax Exempt Facility Revenue Bond offering completed in July,
management believes there is sufficient liquidity to meet 2000 operating and
capital needs. In addition, the company may, from time to time, also seek to
raise additional capital from the public or private securities markets or from
other sources for general corporate purposes and for investments beyond the
scope of the current phase of the current expansion plans.
12
<PAGE>
Although the waiver extension under the company's existing credit facility
does not expire until April 30, 2001, at which time the company will be required
to renegotiate, refinance or replace the credit facility, the company may be
required to secure alternative financing before such time in order to meet 2001
operating and capital needs.
On July 6, 2000, the company completed a $30 million offering of Exempt
Facility Revenue Bonds, Series 2000, through the State of Montana Board of
Investments. The bonds are being issued to finance a portion of the costs of
constructing and equipping certain sewage and solid waste disposal facilities at
both the Stillwater Mine and the East Boulder Project. The bonds mature on July
1, 2020 and have an interest rate of 8% with interest paid semi-annually.
In March 1999, the company obtained a seven-year $175 million credit
facility from a syndicate of banks led by the Bank of Nova Scotia. The facility
provides for a $125 million term loan facility and a $50 million revolving
credit facility. Borrowings may be made under the term loan facility until
December 29, 2000 and amortization of the term loan facility will commence on
March 31, 2001. The final maturity of the term loan facility and revolving
credit facility is December 31, 2005.
The loans are required to be repaid from excess cash flow, proceeds from
asset sales and the issuance of debt or equity securities, subject to specified
exceptions. Proceeds of the term loan facility are being used to finance a
portion of the expansion plan. The original credit facility bears interest at
the London Interbank Offered Rate (LIBOR) or an alternate base rate, in each
case plus a margin of 1.00% to 1.75% which is adjusted depending upon the
company's ratio of debt to operating cash flow. Substantially all the property
and assets of the company are pledged as security for the credit facility.
Covenants in the Scotiabank Credit Facility restrict: (1) additional
indebtedness; (2) payment of dividends or redemption of capital stock; (3)
liens; (4) investments, acquisitions, dispositions or mergers; (5) transactions
with affiliates; (6) capital expenditures (other than those associated with the
expansion plan); (7) refinancing or prepayment of subordinated debt (excluding
the underwritten call of the company's 7% Convertible Subordinated Notes); (8)
changes in the nature of business conducted or ceasing operations at the
principal operating properties; and (9) commodities hedging to no more than 90%
of annual palladium production and 75% of annual platinum production (excluding
the sales covered by the company's marketing contracts and similar agreements).
The company is also subject to financial covenants, including a debt to
operating cash flow ratio, a debt service coverage ratio and a debt to equity
ratio.
Events of default include: (1) a cross-default to other indebtedness of the
company or its subsidiaries; (2) any material modification to the life-of-mine
plan for the Stillwater Mine; (3) a change of control of the company; (4) the
failure to maintain annual palladium production of at least 315,000 ounces in
the year 2000 and at least 490,000 ounces each year thereafter or (5) any breach
or modification of any of the sales contracts.
During 1999 and 2000, as a result of delays in the expansion plan, the
company did not comply with certain production covenants set forth in the credit
facility. The bank syndicate has granted waivers of these covenants that are
effective until April 30, 2001, and consented to the $30 million offering of Tax
Exempt Facility Revenue Bonds, Series 2000, through the State of Montana Board
of Investments. The company is currently seeking to refinance the credit
facility, however, there can be no assurance that the company will be
successful. The company is in compliance with all other aspects of the credit
agreement, including all financial covenants as of September 30, 2000.
New Accounting Standards
In December 1999, the Securities and Exchange Commission (SEC) released
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial
Statements. The objective of this SAB is to provide further guidance on revenue
recognition issues in the absence of authoritative literature addressing a
specific arrangement or a specific industry. In March 2000, the SEC released
SAB No. 101A, which
13
<PAGE>
delayed the implementation date of SAB 101 for registrants with fiscal years
that begin between December 16, 1999 and March 15, 2000 until the second fiscal
quarter of the first fiscal year beginning after December 15, 1999. In June
2000, in response to requests from a number of groups asking for additional time
to assess the effect of SAB 101, the SEC released SAB 101B, which delays the
implementation date of SAB 101 until no later than the fourth fiscal quarter of
fiscal years beginning after December 15, 1999. The company is currently
assessing the impact of SAB 101. Its effect on the company's financial position
or results of operations has not yet been determined. Any changes resulting from
the implementation of SAB 101 will be reported as a change in accounting
principle with the cumulative effect of the change on retained earnings at the
beginning of the fiscal year included in restated net income of the first
interim period of the fiscal year in which the change is made.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. In June 2000, the FASB issued
SFAS No. 138, Accounting for Derivative Instruments and Certain Hedging
Activities, an amendment to FASB SFAS No. 133. SFAS Nos. 133 and 138 are
required to be adopted for fiscal years beginning after June 15, 2000. SFAS
Nos. 133 and 138 require that derivatives be reported on the balance sheet at
fair value and, if the derivative is not designated as a hedging instrument,
changes in fair value must be recognized in earnings in the period of change.
If the derivative is designated as a hedge and to the extent such hedge is
determined to be effective, changes in fair value are either a) offset by the
change in fair value of the hedged asset or liability (if applicable) or b)
reported as a component of other comprehensive income in the period of change,
and subsequently recognized in earnings when the offsetting hedged transaction
occurs. The definition of derivatives has also been expanded to include
contracts that require physical delivery if the contract allows for net cash
settlement. The company primarily uses derivatives to hedge metal prices. Such
derivatives are reported at cost, if any, and gains and losses on such
derivatives are reported when the hedged transaction occurs. Accordingly, the
company's adoption of SFAS Nos. 133 and 138 will have an impact on the reported
financial position of the company, and although such impact has not been
determined, it is currently not believed to be material. Adoption of SFAS Nos.
133 and 138 should have no significant impact on reported earnings, but could
materially affect comprehensive income.
In May 2000, the FASB Emerging Issues Task Force (EITF) reached a consensus
on Issue No. 00-14, Accounting for Certain Sales Incentives (the consensus).
The consensus requires the reduction in or refund of the selling price of the
product or service resulting from any cash sales incentive to be classified as a
reduction of revenue. The consensus is effective for all reporting periods
beginning after May 18, 2000. In July 2000, the EITF reconsidered the transition
provisions of Issue No. 00-14. The EITF concluded that a registrant should
apply the consensus no later than the required implementation date for SAB 101
(i.e. no later than the fourth quarter of the registrant's fiscal year beginning
after December 15, 1999). The company currently classifies sales discounts
associated with its long-term sales contracts as components of cost of metals
sold. Accordingly, the company's application of the consensus will have an
impact on the reported revenues and cost of metals sold, and although such
impact has not been determined, it is currently not believed to be material.
Application of the consensus should have no impact on reported earnings,
comprehensive income, or financial position.
Forward Looking Statement; Factors That May Affect Future Results and Financial
Condition
This Form 10-Q contains 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. Such statements include comments
regarding development and other activities associated with the expansion plan,
anticipated capital expenditures and sources of financing for capital
expenditures, renegotiation of our credit facility and our future compliance
thereunder and the effect of new accounting rules. In addition to factors
discussed below, the factors that could cause actual results to differ
materially include, but are not limited to, the following: supply and demand of
palladium and platinum, loss of a significant customer, our dependence upon a
few significant customers, labor difficulties, inadequate insurance coverage,
government regulations, property title uncertainty, unexpected events during
expansion, fluctuations in ore grade, tons mined, crushed or milled, complexity
of processing platinum group metals, difficulty of estimating reserves
accurately, dependence upon a single mine, amounts and
14
<PAGE>
prices of the company's forward metals sales under hedging and supply contracts
and geological, technical, permitting, mining or processing issues. For a more
detailed description of risks attendant to the business and operations of
Stillwater and to the mining industry in general, please see the risks set forth
below, and the company's other SEC filings, in particular the company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999.
Vulnerability to Metals Price Declines--Changes in supply and demand could
reduce market prices and significantly impact profitability.
Since the company's sole source of revenue is the sale of platinum group
metals, changes in the market price of platinum group metals significantly
impact revenues and profitability. The prices for platinum group metals have
recently risen significantly. As a result of such price increases, the
company's revenues and profitability in 1999 increased despite a decrease in
overall production. A decline in the market price of platinum group metals
could materially adversely affect the revenues and profitability of the company
and could limit the company's ability to successfully implement and finance its
current expansion plans. Furthermore, if platinum group metals prices should
decline below the company's cash costs of production and remain at such levels
for any sustained period, the company could determine that it is not
economically feasible to continue commercial production. The company's cash
costs of production per ounce of metal were $199 for the year ended December 31,
1999 and $310 for the quarter ended September 30, 2000. The company's total
costs of production per ounce of metal were $232 for the year ended December 31,
1999 and $353 for the quarter ended September 30, 2000. The recent increase in
platinum group metals prices is illustrated in the following table which sets
forth the average daily closing prices for palladium and platinum for the
periods indicated:
<TABLE>
<CAPTION>
2000 (through
1996 1997 1998 1999 September 30)
------------------- -------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Palladium ($ per ounce) $ 128 $ 177 $ 284 $ 358 $641
Platinum ($ per ounce) $ 397 $ 396 $ 372 $ 377 $528
</TABLE>
Many factors beyond the company's control influence the market prices of
these metals. These factors include global supply and demand, demand changes for
products that use the company's metals, speculative activities, international
political and economic conditions and production levels and costs in other
platinum group metal producing countries, particularly Russia and South Africa.
A series of expansions in platinum mining in South Africa are projected to occur
over the next few years. Any such mining expansions may significantly increase
overall South African platinum production and may deliver more palladium as a
by-product. If this occurs, increased global supply may have a depressive effect
on market prices from platinum and palladium.
Current economic and political events in Russia could result in declining
market prices. Russia has a significant stockpile of platinum group metals. If
Russia disposes of substantial amounts of platinum group metals from stockpiles
or otherwise, the increased supply could significantly reduce the market prices
of palladium and platinum. Political instability in Russia and potential
economic problems make Russian shipments difficult to predict and the risk of
sales from stockpiles more significant. Volatility was evident during 1997,
1998 and 1999 when apparent tightness in the market for platinum group metals
led to high prices for current delivery contracts and "backwardation," a
condition in which delivery prices for metals in the near term are higher than
delivery prices for metals to be delivered in the future.
Continued high PGM prices may lead users of PGMs to substitute other base
metals and other materials for palladium and platinum. The automobile,
electronics and dental industries are the three largest sources of palladium
demand. In response to supply questions and high market prices for palladium,
some auto companies may seek alternatives to their consumption of palladium.
Although there are lower cost alternatives to high palladium content dental
alloys, there appears to have been only limited substitution to date. There has
been some substitution of other base metals for palladium in electronics
applications. Substitution in all of these industries may increase
significantly if PGM market price continues to rise.
15
<PAGE>
The company enters into hedging contracts from time to time in an effort to
reduce the negative effect of price changes on the company's cash flow. These
hedging activities typically consist of contracts that require the company to
deliver specific quantities of metal in the future at specific prices and the
sale of call options and the purchase of put options in tandem. In addition, the
company has entered into long-term sales contracts that provide floor and
ceiling prices for sales of a portion of the company's production.
Expansion Plan Risks--Achievement of the company's long-term goals is subject to
significant uncertainties.
The company's achievement of its long-term expansion goals depends upon its
ability to increase production substantially at the Stillwater Mine and related
facilities and its ability to develop the East Boulder mine. Each of these
tasks will require the company to construct mine and processing facilities and
to commence and maintain production within budgeted levels. Construction of
mines is a very complicated process. During 1998, the company developed an
expansion plan with the goal of reaching an annualized rate of PGM production of
1.2 million ounces before the end of 2001. The key components of this plan were
to increase mine production at the Stillwater Mine from 2,000 to 3,000 tons of
ore per day, develop the new East Boulder Mine with a capacity of 2,000 tons of
ore per day, construct a tailings facility and expand the smelter and base
metals refinery to accommodate the anticipated increased throughput.
In January 2000, the company announced that it expects to reach the
annualized 1.2 million ounce production by the end of 2002, approximately one
year behind the original schedule. During 1999 and 2000, the company
experienced difficulties in the expansion of the Stillwater Mine associated with
the need to remove and dispose of large quantities of rock in order to correct
the shortfall of developed working faces and convert the company's probable
reserves into proven reserves, materials handling bottlenecks and increased
dilution resulting from narrower ore width and lower mine productivity.
Among the major risks to successful completion of our current expansion
plans are:
. potential cost overruns during development of new mine operations and
construction of new facilities;
. uncertainty regarding ore grades in expansion areas prior to conversion
of such areas from probable to proven reserves;
. possible delays and unanticipated costs resulting from difficulty in
obtaining the required permits; and
. the inability to recruit sufficient numbers of skilled underground
miners.
In addition, a decrease in the market price for platinum group metals would
significantly limit the company's ability to successfully implement and finance
our current expansion plans.
Based on the complexity and uncertainty involved in development projects at
this early stage, it is extremely difficult to provide reliable time and cost
estimates. The company cannot be certain that either the Stillwater Mine
expansion or the development of East Boulder will be completed on time or at
all, that the expanded operations will achieve the anticipated production
capacity, that the construction costs will not be higher than estimated, that
the expected operating cost levels will be achieved or that funding will be
available from internal and external sources in necessary amounts or on
acceptable terms. Furthermore, the Stillwater Mine has never been operated at a
rate of 3,000 tons of ore per day. In the course of seeking to increase
production to reach that level, the company has experienced difficulties
resulting from development shortfalls and productions constraints including
underground materials haulage constraints, equipment unavailability, operational
inconsistencies and service interruptions. Due to these difficulties, the
company's production decreased from approximately 444,000 ounces in 1998 to
409,000 ounces in 1999. During 1999 the company retained Bechtel Corporation and
MRDI, USA, a division of AGRA Simons Limited, to assist it in re-evaluating the
project development schedule, mine planning, and capital
16
<PAGE>
and operating cost estimates. The company concluded its analysis with respect to
the Stillwater Mine and announced its revised production goals, cost estimates
and the anticipated expansion schedule for the Stillwater Mine. The company
cannot be certain that it will not continue to experience difficulties and
delays as it increases production.
East Boulder is a development project and has no operating history. Thus,
estimates of future cash operating costs at East Boulder are based largely on
the company's operating experience at the Stillwater Mine portion of the J-M
Reef. Actual production, cash operating costs and economic returns may differ
significantly from those currently estimated or those established in future
studies and estimates. New mining operations often experience unexpected
problems during the development and start-up phases, which can result in
substantial delays in reaching commercial production.
The company has also retained Bechtel Corporation and MRDI, USA to conduct
a review of the East Boulder project. The company expects to conclude this
analysis with respect to the East Boulder Mine by the end of the first quarter
of 2001 when the company expects to announce any changes in production goals,
cost estimates and anticipated expansion schedule for the East Boulder mine,
which changes may be significant.
Compliance with Bank Credit Agreement
The company's agreement with the syndicate of banks, led by the Bank of
Nova Scotia, provides a credit facility that is being used to finance a portion
of the expansion plan and contains certain covenants relating to the
accomplishment of project milestones and certain other production covenants.
During 1999 and 2000, as a result of problems encountered with our expansion
plans, the company did not comply with certain production covenants. The bank
syndicate has granted waivers of these covenants that are effective until April
30, 2001. The company is seeking to renegotiate, refinance or replace the
credit facility. As a result the debt has been classified as a current
liability as of September 30, 2000. In the event the company is unable to
renegotiate, refinance or replace the existing credit facility by April 30,
2001, it may not be able to obtain an additional waiver of the production
covenants from the bank syndicate. If this occurs, the company would be in
default under the existing credit facility and would be required to seek
alternative financing, which may not be available, and which could adversely
impact operating and capital costs or affect project completion.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The company is exposed to market risk, including the effects of adverse changes
in metal prices and interest rates as discussed below.
Commodity Price Risk
The company produces and sells palladium, platinum and associated by-
product metals directly to its customers and also through third parties. As a
result, financial results are materially affected when prices for these
commodities fluctuate. In order to manage commodity price risk and to reduce
the impact of fluctuation in prices, the company enters into long-term contracts
and uses various derivative financial instruments. The company may also lease
metal to counterparties to earn interest on excess metal balances. All
derivatives are off-balance sheet and therefore have no carrying value. Because
the company hedges only with instruments that have a high correlation with the
value of the hedged transactions, changes in derivatives' fair value are
expected to be offset by changes in the value of the hedged transaction.
As of September 30, 2000, the company had sold forward 4,000 ounces of
platinum for delivery in 2000 at an average price of $402.50 per ounce pursuant
to forward sales contracts. The company has also sold forward 27,500 and 2,500
ounces of palladium to be delivered in 2001 and 2002, respectively, at an
average price of $695.50 per ounce pursuant to forward sales contracts. The
fair value of the company's forward sales contracts resulted in an unrealized
loss of approximately $0.7 million at September 30, 2000. For anticipated
production in the fourth quarter of 2000, the company has established put and
call options on 15,000 ounces of palladium production at $324 and $419,
respectively. For anticipated production in the
17
<PAGE>
year 2001, the company has established put and call options on 5,000 ounces of
palladium at $324 and $419, respectively. The fair value of the company's put
and call options resulted in an unrealized loss of approximately $6.4 million at
September 30, 2000. These put and call options work together as collars under
which the company receives the difference between the put price and market price
only if the market price is below the put price and the company pays the
difference between the call price and the market price only if the market price
is above the call price. The company's put and call options are settled at
maturity.
In addition, the company has entered into long-term sales contracts with
General Motors Corporation, Ford Motor Company and Mitsubishi Corporation
covering the sale of palladium and platinum over the five-year period from
January 1999 through December 2003. Under these contracts, the company has
committed all of its annual palladium production and approximately 20% of its
platinum production. Furthermore, the company's contract with General Motors
Corporation provides for automatic extension of the contract until the company
has delivered an aggregate of 1.4 million ounces of palladium if it fails to
meet this threshold by December 31, 2003. Each contract with General Motors,
Ford and Mitsubishi represents over 10% of the company's revenues and together
represent approximately 75%. The contracts provide for a floor price on 45% of
the company's palladium production sold under the contracts at $225 per ounce,
and a floor price of $230 per ounce on the remaining 55% of palladium production
sold. The contracts also provide for a ceiling price of $400 per ounce on
approximately 30% of the company's palladium production sold under the
contracts. These contracts provide for floor prices for platinum production
sold under these contracts at $350 per ounce and ceiling prices ranging from
$425 to $430 per ounce on our platinum production sold under these contracts.
At September 30, 2000, the market prices for palladium and platinum were $712
and $569 per ounce, respectively. If market prices of palladium and platinum
continue substantially above the price ceilings provided for in these contacts,
the company will forego significant revenue.
The sales contracts contain termination provisions that allow the
purchasers to terminate in the event the company breaches certain provisions of
the contract and the breach is not cured within periods ranging from ten to
thirty days of notice by the purchaser. In addition, the contracts contain
force majeure provisions that allow for the suspension and, in one instance, the
termination of the contract upon the occurrence of certain events, such as "acts
of God," that are beyond the control of a contracting party and that limit the
party's ability to perform the contract. The company is subject to its
customers' compliance with the terms of the contracts, their ability to
terminate or suspend the contracts and their willingness and ability to pay. In
the event the company becomes involved in a disagreement with one or more of its
customers, their compliance with these contracts may be at risk. For example,
the company has negotiated floor prices that are well above historical low
prices for palladium. In the event of a substantial decline in the market price
of palladium, one or more of these customers could seek to renegotiate the
prices or fail to honor the contracts. In such an event, the company's current
expansion plans could be threatened. Although the company believes it has
adequate legal remedies if a customer fails to perform, a customer's termination
or breach could have a material adverse effect on the company's expansion plans
and results of operations.
Interest Rate Risk
At the present time, the company has no financial instruments in place to
manage the impact of changes in interest rates. Therefore, it is exposed to
changes in interest rates that effect the credit facility which carries a
variable interest rate based upon LIBOR or an alternative base rate. At
September 30, 2000, approximately $120.6 million had been borrowed at an
interest rate of 8.75%.
18
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The company is involved in various claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a
material adverse effect on the company's consolidated financial
position, results of operations or liquidity.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
19
<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.
STILLWATER MINING COMPANY
(Registrant)
Date: October 17, 2000 By: /s/ William E. Nettles
------------------------------------------
William E. Nettles
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: October 17, 2000
By: /s/ James A. Sabala
------------------------------------------
James A. Sabala
Vice President and Chief Financial Officer
(Principal Financial Officer)
20
