Segment Reporting

6 Months Ended

Jun. 30, 2011

NOTE 18 — SEGMENT REPORTING

Operating segments are defined as components of an enterprise about which separate financial information is available that are evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision-making group is comprised of the Chief Executive Officer and Chief Financial Officer, the Senior Vice President of Operations and the President of South American Operations.

The operating segments are managed separately because each segment represents a distinct use of Company resources and a separate contribution to the Company’s cash flows. The Company’s reportable operating segments include the Palmarejo, San Bartolomé, Martha, Rochester, Kensington, and Endeavor mining properties. All operating segments are engaged in the discovery or mining of gold and silver and generate the majority of their revenues from the sale of these precious metal concentrates or refined precious metals. The Martha mine sells precious metal concentrates, typically under long-term contracts, to smelters located in Mexico. The Kensington mine sells precious metal concentrates, typically under long-term contracts, to smelters in China and Germany. Refined gold and silver produced by the Rochester, Palmarejo and San Bartolomé mines are principally sold on a spot basis to precious metals trading banks, such as Standard Bank, Mitsubishi, Auramet, Valcambi, International Commodities, and Mitsui. Concentrates produced at the Endeavor mine are sold to Nyrstar (formerly Zinifex), an Australia smelter. The Company’s exploration programs are reported in its other segment. The other segment also includes the corporate headquarters, elimination of intersegment transactions and other items necessary to reconcile to consolidated amounts. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies above. The Company evaluates performance and allocates resources based on profit or loss before interest, income taxes, depreciation and amortization, unusual and infrequent items, and extraordinary items.

Revenues from silver sales were $158.8 million and $73.3 million in the three months ended June 30, 2011 and 2010, respectively. Revenues from silver sales were $271.3 million and $133.3 million in the six months ended June 30, 2011, and 2010, respectively. Revenues from gold sales were $72.3 million and $27.7 million in the three months ended June 30, 2011 and 2010, respectively. Revenues from gold sales were $159.4 million and $56.0 million in the six months ended June 30, 2011 and 2010, respectively.

Financial information relating to the Company’s segments is as follows (in thousands):


	Palmarejo			San Bartolomé			Kensington			Rochester			Martha			Endeavor
Three months ended June 30, 2011	Mine			Mine			Mine			Mine			Mine			Mine			Other			Total
Sales of metals	$	123,727		$	55,598		$	26,012		$	14,434		$	4,769		$	6,550		$	—		$	231,090

Productions costs applicable to sales		(37,770	)		(14,126	)		(12,844	)		(5,341	)		(3,749	)		(3,272	)		—			(77,102	)
Depreciation and depletion		(41,753	)		(5,182	)		(9,890	)		(584	)		747			(865	)		(114	)		(57,641	)

Gross profit (loss)		44,204			36,290			3,278			8,509			1,767			2,413			(114	)		96,347

Exploration expense		1,276			31			320			340			1,527			—			583			4,077
Other operating expenses		—			70			116			11,025			—			—			1,720			12,931

OPERATING INCOME (LOSS)		42,928			36,189			2,842			(2,856	)		240			2,413			(2,417	)		79,339

Interest and other income		539			180			2			5			(179	)		—			2,216			2,763
Interest expense		(6,112	)		(2	)		(1,360	)		—			(68	)		—			(1,726	)		(9,268	)
Loss on debt extinguishment		—			—			—			—			—			—			(389	)		(389	)
Fair value adjustments, net		(13,731	)		—			2,374			—			—			—			(1,075	)		(12,432	)
Income tax benefit (expense)		(6,286	)		(12,109	)		—			—			(410	)		(3	)		(2,594	)		(21,402	)

Net income (loss)	$	17,338		$	24,258		$	3,858		$	(2,851	)	$	(417	)	$	2,410		$	(5,985	)	$	38,611


Segment assets (A)	$	2,095,411		$	269,439		$	507,531		$	35,606		$	19,341		$	40,760		$	16,201		$	2,984,289
Capital expenditures (B)	$	10,278		$	3,276		$	7,365		$	4,201		$	573		$	—		$	71		$	25,764


	Palmarejo			San Bartolomé			Kensington			Rochester			Martha			Endeavor
Three months ended June 30, 2010	Mine			Mine			Mine			Mine			Mine			Mine			Other			Total
Sales of metals	$	44,834		$	31,275		$	—		$	12,416		$	9,187		$	3,306		$	—		$	101,018

Productions costs applicable to sales		(32,100	)		(15,340	)		—			(5,595	)		(4,132	)		(1,423	)		—			(58,590	)
Depreciation and depletion		(20,291	)		(6,032	)		—			(458	)		(2,619	)		(450	)		(133	)		(29,983	)

Gross profit (loss)		(7,557	)		9,903			—			6,363			2,436			1,433			(133	)		12,445

Exploration expense		1,307			—			229			20			1,205			—			400			3,161
Other operating expenses		38			—			—			601			—			—			6,785			7,424

OPERATING INCOME (LOSS)		(8,902	)		9,903			(229	)		5,742			1,231			1,433			(7,318	)		1,860

Interest and other income		(1,903	)		(105	)		—			1			(2,180	)		—			366			(3,821	)
Interest expense		(5,401	)		(92	)		—			—			(17	)		—			(136	)		(5,646	)
Loss on debt extinguishment		—			—			—			—			—			—			(4,050	)		(4,050	)
Fair value adjustments, net		(32,633	)		—			(6,089	)		—			—			—			(3,794	)		(42,516	)
Income tax benefit (expense)		(4,006	)		(3,909	)		—			—			(2,160	)		—			19,447			9,372
Net loss from discontinued operations		—			—			—			—			—			—			(5,943	)		(5,943	)

Net income (loss)	$	(52,845	)	$	5,797		$	(6,318	)	$	5,743		$	(3,126	)	$	1,433		$	(1,428	)	$	(50,744	)


Segment assets (A)	$	2,140,633		$	274,156		$	477,800		$	28,625		$	26,269		$	39,210		$	10,683		$	2,997,376
Capital expenditures (B)	$	10,811		$	1,325		$	33,195		$	86		$	11		$	—		$	39		$	45,467


	Palmarejo			San Bartolomé			Kensington			Rochester			Martha			Endeavor
Six months ended June 30, 2011	Mine			Mine			Mine			Mine			Mine			Mine			Other			Total
Sales of metals	$	211,892		$	101,919		$	74,122		$	28,696		$	4,455		$	9,630		$	—		$	430,714

Productions costs applicable to sales		(75,139	)		(28,244	)		(45,764	)		(12,698	)		(3,359	)		(4,372	)		—			(169,576	)
Depreciation and depletion		(75,428	)		(10,325	)		(19,255	)		(1,098	)		155			(1,484	)		(247	)		(107,682	)

Gross profit (loss)		61,325			63,350			9,103			14,900			1,251			3,774			(247	)		153,456

Exploration expense		1,912			35			366			362			2,823			—			1,341			6,839
Other operating expenses		—			108			136			14,561			—			—			13,931			28,736

OPERATING INCOME (LOSS)		59,413			63,207			8,601			(23	)		(1,572	)		3,774			(15,519	)		117,881

Interest and other income		1,828			787			3			51			(489	)		—			2,484			4,664
Interest expense		(11,815	)		(36	)		(2,607	)		—			(413	)		—			(3,702	)		(18,573	)
Loss on debt extinguishment		—			—			—			—			—			—			(856	)		(856	)
Fair value adjustments, net		(20,041	)		—			1,676			—			—			—			665			(17,700	)
Income tax benefit (expense)		(10,062	)		(22,146	)		(20	)		—			(369	)		(3	)		(1,741	)		(34,341	)

Net income (loss)	$	19,323		$	41,812		$	7,653		$	28		$	(2,843	)	$	3,771		$	(18,669	)	$	51,075


Segment assets (A)	$	2,095,411		$	269,439		$	507,531		$	35,606		$	19,341		$	40,760		$	16,201		$	2,984,289
Capital expenditures (B)	$	15,359		$	6,812		$	12,734		$	5,869		$	824		$	—		$	83		$	41,681


	Palmarejo			San Bartolomé			Kensington			Rochester			Martha			Endeavor
Six months ended June 30, 2010	Mine			Mine			Mine			Mine			Mine			Mine			Other			Total
Sales of metals	$	90,448		$	45,867		$	—		$	23,167		$	24,207		$	5,618		$	—		$	189,307

Productions costs applicable to sales		(60,767	)		(24,743	)		—			(11,384	)		(11,458	)		(2,041	)		—			(110,393	)
Depreciation and depletion		(41,084	)		(9,209	)		—			(923	)		(5,104	)		(1,110	)		(272	)		(57,702	)

Gross profit (loss)		(11,403	)		11,915			—			10,860			7,645			2,467			(272	)		21,212

Exploration expense		1,787			—			242			41			2,415			—			1,196			5,681
Other operating expenses		351			—			—			773			—			—			13,402			14,526

OPERATING INCOME (LOSS)		(13,541	)		11,915			(242	)		10,046			5,230			2,467			(14,870	)		1,005

Interest and other income		261			(144	)		—			1			(2,950	)		—			744			(2,088	)
Interest expense		(10,868	)		(163	)		—			—			(55	)		—			(365	)		(11,451	)
Loss on debt extinguishment		—			—			—			—			—			—			(11,908	)		(11,908	)
Fair value adjustments, net		(36,179	)		—			(6,552	)		—			—			—			(4,043	)		(46,774	)
Income tax benefit (expense)		2,857			(4,501	)		—			—			(2,173	)		—			20,187			16,370
Net loss from discontinued operations		—			—			—			—			—			—			(8,755	)		(8,755	)

Net income (loss)	$	(57,470	)	$	7,107		$	(6,794	)	$	10,047		$	52		$	2,467		$	(19,010	)	$	(63,601	)


Segment assets (A)	$	2,140,633		$	274,156		$	477,800		$	28,625		$	26,269		$	39,210		$	10,683		$	2,997,376
Capital expenditures (B)	$	27,319		$	1,871		$	63,097		$	87		$	3		$	—		$	279		$	92,656


^(A)		Segment assets consist of receivables, prepaids, inventories, property, plant and equipment, and mining properties

^(B)		Balance represents cash flow amounts


	June 30,		December 31,
	2011		2010
Assets
Total assets for reportable segments	$	2,984,289	$	3,000,389
Cash and cash equivalents		106,830		66,118
Receivables, non-current portion		40,941		42,866
Restricted assets		29,711		29,028
Debt issuance costs, net		3,167		4,333
Other assets		24,033		14,793

Total consolidated assets	$	3,188,971	$	3,157,527

Geographic Information


	June 30,		December 31,
	2011		2010
Long Lived Assets:
United States	$	487,434	$	487,961
Mexico		1,967,852		2,028,864
Bolivia		230,301		234,306
Australia		35,663		37,147
Argentina		2,838		1,882
Chile		19		14
Other countries		143		143

Total	$	2,724,250	$	2,790,317


	Three months ended				Six months ended
	June 30,				June 30,
	2011		2010		2011		2010
Revenues:
United States	$	40,446	$	12,416	$	102,818	$	23,167
Mexico		123,727		44,834		211,892		90,448
Bolivia		55,598		31,275		101,919		45,867
Australia		6,550		3,306		9,630		5,618
Argentina		4,769		9,187		4,455		24,207

Total	$	231,090	$	101,018	$	430,714	$	189,307