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Note 14 - Guarantor Subsidiaries
 9 Months Ended
Sep. 30, 2013
Guarantor Subsidiaries [Abstract]  
Guarantor Subsidiaries [Text Block]

Note 14.    Guarantor Subsidiaries


Presented below are the Company’s condensed consolidating financial statements as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934, as amended, resulting from the guarantees by certain of the Company's subsidiaries (the "Guarantors") of the $500 million aggregate principal amount of the Company's senior notes due on May 1, 2021 (the "Notes", see Note 9 for more information). The Guarantors consist of the following of the Company's 100%-owned subsidiaries: Hecla Limited; Silver Hunter Mining Company; Rio Grande Silver, Inc.; RHL Holdings, Inc.; Hecla MC Subsidiary, LLC; Hecla Silver Valley, Inc.; Burke Trading, Inc.; Hecla Alaska LLC; Hecla Greens Creek Mining Company; Hecla Admiralty Company; and Hecla Juneau Mining Company. The Company completed the offering of the Notes on April 21, 2013.


The condensed consolidating financial statements below have been prepared from the Company’s financial information on the same basis of accounting as the consolidated financial statements. Investments in the subsidiaries are accounted for under the equity method. Accordingly, the entries necessary to consolidate the Company and the Guarantors are reflected in the intercompany eliminations column. In the course of preparing consolidated financial statements, we eliminate the effects of various transactions conducted between our subsidiaries. While valid at an individual subsidiary level, such activities are eliminated in consolidation because, when taken as a whole, they do not represent business activity with third-party customers, vendors, and other parties. Examples of such eliminations include the following.


 

•

Investments in subsidiaries. The acquisition of a company results in an investment on the records of the parent company and a contribution of capital on the records of the subsidiary. Such investments and capital contributions are eliminated in consolidation.


 

•

Capital contributions. Other of our subsidiaries do not generate cash flow, and their cash requirements are routinely met with inter-company advances from their parent companies. On an annual basis, the boards of directors of such parent companies declare contributions of capital to their subsidiary companies, which increase the parent's investment and the subsidiaries' additional paid-in capital. In consolidation, investments in subsidiaries and related additional paid-in capital are eliminated.


 

•

Deferred taxes. Our ability to realize deferred tax assets and liabilities is considered on a consolidated basis for subsidiaries within the United States, with all subsidiaries' estimated future taxable income contributing to the ability to realize all such assets and liabilities. However, when our subsidiaries are viewed independently, we use the separate return method to assess the realizability of each subsidiary's deferred tax assets and whether a valuation allowance is required against such deferred tax assets. In some instances, a parent company or subsidiary may possess deferred tax assets whose realization depends on the future taxable incomes of other subsidiaries on a consolidated-return basis, but would not be considered realizable if such parent or subsidiary filed on a separate stand-alone basis. In such a situation, a valuation allowance is assessed on that subsidiary's deferred tax assets, with the resulting adjustment reported in the eliminations column of the guarantor and parent's financial statements, as is the case in the financial statements set forth below. The separate return method can result in significant eliminations of deferred tax assets and liabilities and related income tax provisions and benefits. Non-current deferred tax asset balances are included in other non-current assets on the condensed consolidating balance sheets and make up a large portion of that item, particularly for the guarantor balances.


Condensed Consolidating Balance Sheets


   

As of September 30, 2013

 
   

Parent

   

Guarantor

   

Non-Guarantor

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Assets

                                       

Cash and cash equivalents

  $ 116,255     $ 29,864     $ 91,717     $ —     $ 237,836  

Other current assets

    11,317       103,839       34,650       2,244       152,050  

Properties, plants, and equipment - net

    498       1,041,328       734,728       —       1,776,554  

Intercompany receivable (payable)

    540,038       (120,727

)

    (570,606

)

    151,295       —  

Investments in subsidiaries

    1,196,577       —       —       (1,196,577

)

    —  

Other non-current assets

    11,894       163,073       12,658       (85,053

)

    102,572  

Total assets

  $ 1,876,579     $ 1,217,377     $ 303,147     $ (1,128,091

)

  $ 2,269,012  

Liabilities and Shareholders' Equity

                                       

Current liabilities

  $ 27,973     $ 144,897     $ 18,028     $ (12,994

)

  $ 177,904  

Long-term debt

    490,417       12,559       44       —       503,020  

Non-current portion of accrued reclamation

    —       38,061       11,801       —       49,862  

Non-current deferred tax liability

    —       14,124       77,016       80,120       171,260  

Other non-current liabilities

    30,403       8,033       744       —       39,180  

Shareholders' equity

    1,327,786       999,703       195,514       (1,195,217

)

    1,327,786  

Total liabilities and shareholders' equity

  $ 1,876,579     $ 1,217,377     $ 303,147     $ (1,128,091

)

  $ 2,269,012  

   

As of December 31, 2012

 
   

Parent

   

Guarantor

   

Non-Guarantor

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Assets

                                       

Cash and cash equivalents

  $ 132,266     $ 57,075     $ 1,643     $ —     $ 190,984  

Other current assets

    7,399       65,658       766       18,091       91,914  

Properties, plants, and equipment - net

    —       991,476       5,183       —       996,659  

Intercompany receivable (payable)

    113,234       (64,893

)

    (74,450

)

    26,109       —  

Investments in subsidiaries

    918,526       —       —       (918,526

)

    —  

Other non-current assets

    3,059       164,913       7,600       (76,839

)

    98,733  

Total assets

  $ 1,174,484     $ 1,214,229     $ (59,258

)

  $ (951,165

)

  $ 1,378,290  

Liabilities and Shareholders' Equity

                                       

Current liabilities

  $ 3,726     $ 121,221     $ 1,016     $ (30,976

)

  $ 94,987  

Long-term debt

    —       11,875       60       —       11,935  

Non-current portion of accrued reclamation

    —       92,825       545       —       93,370  

Other non-current liabilities

    32,807       8,651       252       (1,663

)

    40,047  

Shareholders' equity

    1,137,951       979,657       (61,131

)

    (918,526

)

    1,137,951  

Total liabilities and shareholders' equity

  $ 1,174,484     $ 1,214,229     $ (59,258

)

  $ (951,165

)

  $ 1,378,290  

Condensed Consolidating Statements of Operations


   

Three Months Ended September 30, 2013

 
   

Parent

   

Guarantor

   

Non-Guarantor

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Revenues

  $ (2,447

)

  $ 81,687     $ 27,389     $ —     $ 106,629  

Cost of sales

    —       (45,342

)

    (21,595

)

    —       (66,937

)

Depreciation, depletion, amortization

    —       (15,736

)

    (3,270

)

    —       (19,006

)

General and administrative

    (3,550

)

    (3,636

)

    (534

)

    —       (7,720

)

Exploration and pre-development

    (42

)

    (6,551

)

    (2,648

)

    —       (9,241

)

Gain/(loss) on derivative contracts

    (4,564

)

    —       —       —       (4,564

)

Aurizon acquisition costs

    (268

)

    —       (500

)

    —       (768

)

Equity in loss of subsidiaries

    82,896       —       —       (82,896

)

    —  

Other (expense) income

    (80,483

)

    (811

)

    (15,800

)

    87,701       (9,393

)

Income (loss) before income taxes

    (8,458

)

    9,611       (16,958

)

    4,805       (11,000

)

(Provision) benefit from income taxes

    —       (3,795

)

    92,351       (86,014

)

    2,542  

Net income (loss)

    (8,458

)

    5,816       75,393       (81,209

)

    (8,458

)

Preferred stock dividends

    (138

)

    —       —       —       (138

)

Income (loss) applicable to common shareholders

    (8,596

)

    5,816       75,393       (81,209

)

    (8,596

)

Net income (loss)

    (8,458

)

    5,816       75,393       (81,209

)

    (8,458

)

Changes in comprehensive income (loss)

    2,489       (5,078

)

    (1,079

)

    6,157       2,489  

Comprehensive income (loss)

  $ (5,969

)

  $ 738     $ 74,314     $ (75,052

)

  $ (5,969

)


   

Nine Months Ended September 30, 2013

 
   

Parent

   

Guarantor

   

Non-Guarantor

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Revenues

  $ 338     $ 230,562     $ 37,509     $ —     $ 268,409  

Cost of sales

    —       (133,944

)

    (29,826

)

    —       (163,770

)

Depreciation, depletion, amortization

    —       (46,630

)

    (6,594

)

    —       (53,224

)

General and administrative

    (11,015

)

    (10,183

)

    (943

)

    —       (22,141

)

Exploration and pre-development

    (459

)

    (23,299

)

    (7,500

)

    —       (31,258

)

Gain/(loss) on derivative contracts

    23,516       —       —       —       23,516  

Aurizon acquisition costs

    (14,416

)

            (11,952

)

            (26,368

)

Equity in earnings of subsidiaries

    68,198       —       —       (68,198

)

       

Other (expense) income

    (88,384

)

    1,132       (19,757

)

    87,701       (19,308

)

Income (loss) before income taxes

    (22,222

)

    17,638       (39,063

)

    19,503       (24,144

)

(Provision) benefit from income taxes

    —       (9,049

)

    98,672       (87,701

)

    1,922  

Net income (loss)

    (22,222

)

    8,589       59,609       (68,198

)

    (22,222

)

Preferred stock dividends

    (414

)

    —       —       —       (414

)

Income (loss) applicable to common shareholders

    (22,636

)

    8,589       59,609       (68,198

)

    (22,636

)

Net income (loss)

    (22,222

)

    8,589       59,609       (68,198

)

    (22,222

)

Changes in comprehensive income (loss)

    (2,286

)

    (1,248

)

    (4,909

)

    6,157       (2,286

)

Comprehensive income (loss)

  $ (24,508

)

  $ 7,341     $ 54,700     $ (62,041

)

  $ (24,508

)


   

Three Months Ended September 30, 2012

 
   

Parent

   

Guarantor

   

Non-Guarantor

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Revenues

  $ (1,758

)

  $ 83,629     $ —     $ —     $ 81,871  

Cost of sales

    —       (32,961

)

    —       —       (32,961

)

Depreciation, depletion, amortization

    —       (11,601

)

    —       —       (11,601

)

General and administrative

    (2,968

)

    (2,658

)

    (69

)

    —       (5,695

)

Exploration and pre-development

    (727

)

    (14,081

)

    (2,323

)

    —       (17,131

)

Gain on derivative contracts

    (9,053

)

    —       —       —       (9,053

)

Closed operations

    —       2,692       1,721       —       4,413  

Equity in earnings of subsidiaries

    4,619       —       —       (4,619

)

    —  

Other expense

    9,002       (7,187

)

    (2,735

)

    (9,794

)

    (10,714

)

Income (loss) before income taxes

    (885

)

    17,833       (3,406

)

    (14,413

)

    (871

)

(Provision) benefit from income taxes

    —       (9,808

)

    —       9,794       (14

)

Net income (loss)

    (885

)

    8,025       (3,406

)

    (4,619

)

    (885

)

Preferred stock dividends

    (138

)

    —       —       —       (138

)

Income (loss) applicable to common shareholders

    (1,023

)

    8,025       (3,406

)

    (4,619

)

    (1,023

)

Net income (loss)

    (885

)

    8,025       (3,406

)

    (4,619

)

    (885

)

Changes in comprehensive income (loss)

    3,085       226       2,859       (3,085

)

    3,085  

Comprehensive income (loss)

  $ 2,200     $ 8,251     $ (547

)

  $ (7,704

)

  $ 2,200  

   

Nine Months Ended September 30, 2012

 
   

Parent

   

Guarantor

   

Non-Guarantor

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Revenues

  $ (1,880

)

  $ 241,923     $ —     $ —     $ 240,043  

Cost of sales

    —       (99,423

)

    —       —       (99,423

)

Depreciation, depletion, amortization

    —       (31,141

)

    —       —       (31,141

)

General and administrative

    (8,632

)

    (6,906

)

    (185

)

    —       (15,723

)

Exploration and pre-development

    (1,128

)

    (29,123

)

    (6,474

)

    —       (36,725

)

Gain/(loss) on derivative contracts

    (8,113

)

    —       —       —       (8,113

)

Closed operations

    —       —       —       —       —  

Equity in earnings of subsidiaries

    18,466       —       —       (18,466

)

       

Other (expense) income

    15,498       (20,456

)

    (4,161

)

    (17,566

)

    (26,685

)

Income (loss) before income taxes

    14,211       54,874       (10,820

)

    (36,032

)

    22,233  

(Provision) benefit from income taxes

    —       (25,588

)

    —       17,566       (8,022

)

Net income (loss)

    14,211       29,286       (10,820

)

    (18,466

)

    14,211  

Preferred stock dividends

    (414

)

    —       —       —       (414

)

Income (loss) applicable to common shareholders

    13,797       29,286       (10,820

)

    (18,466

)

    13,797  

Net income (loss)

    14,211       29,286       (10,820

)

    (18,466

)

    14,211  

Changes in comprehensive income (loss)

    2,280       (909

)

    2,729       (1,820

)

    2,280  

Comprehensive income (loss)

  $ 16,491     $ 28,377     $ (8,091

)

  $ (20,286

)

  $ 16,491  

Condensed Consolidating Statements of Cash Flows


   

Nine Months Ended September 30, 2013

 
   

Parent

   

Guarantor

   

Non-Guarantor

   

Eliminations

   

Consolidated

 
                                         

Cash flows from operating activities

  $ (7,020

)

  $ 57,833     $ (45,733

)

          $ 5,080  

Cash flows from investing activities:

                                       

Additions to properties, plants, and equipment

    (1,169

)

    (88,807

)

    (22,830

)

            (112,806

)

Acquisition of Aurizon Mines

    (498,705

)

            177,588               (321,117

)

Other investing activities, net

    —       103       (3,979

)

    —       (3,876

)

Cash flows from financing activities:

                                       

Dividends paid to shareholders

    (5,548

)

    —       —               (5,548

)

Borrowings on debt

    490,000       —       —               490,000  

Proceeds from (payments on) debt

    —       (5,171

)

    —               (5,171

)

Other financing activity, net

    6,431       7,936       (15,897

)

    —       (1,530

)

Effect of exchange rates on cash

    —       —       1,820       —       1,820  

Changes in cash and cash equivalents

    (16,011

)

    (28,106

)

    90,969       —       46,852  

Beginning cash and cash equivalents

    132,266       57,970       748               190,984  

Ending cash and cash equivalents

  $ 116,255     $ 29,864     $ 91,717     $ —     $ 237,836  

   

Nine Months Ended September 30, 2012

 
   

Parent

   

Guarantor

   

Non-Guarantor

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Cash flows from operating activities

  $ 36,246     $ 38,749     $ (6,436

)

  $ (2,071

)

  $ 66,488  

Cash flows from investing activities:

                                       

Additions to properties, plants, and equipment

    (519

)

    (80,313

)

    (486

)

            (81,318

)

Acquisition of Aurizon Mines

    —               —               —  

Other investing activities, net

    (45,528

)

    3,403       (5,920

)

    45,528       (2,517

)

Cash flows from financing activities:

                                       

Dividends paid to shareholders

    (11,114

)

    —       —               (11,114

)

Borrowings on debt

    —       —       —               —  

Proceeds from (payments on) debt

    —       (4,554

)

    (7

)

            (4,561

)

Other financing activity, net

    46,135       (17,312

)

    13,387       (43,457

)

    (1,247

)

Changes in cash and cash equivalents

    25,220       (60,027

)

    538               (34,269

)

Beginning cash and cash equivalents

    97,850       168,433       180               266,463  

Ending cash and cash equivalents

  $ 123,070     $ 108,406     $ 718             $ 232,194