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Note 16 - Guarantor Subsidiaries
 12 Months Ended
Dec. 31, 2014
Guarantor Subsidiaries [Abstract]  
Guarantor Subsidiaries [Text Block]

Note 16:  Guarantor Subsidiaries


Presented below are Hecla’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 Hecla's subsidiaries (the "Guarantors") of the Notes (see Note 6 for more information). The Guarantors consist of the following of Hecla'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. We completed the initial offering of the Notes on April 12, 2013, and a related exchange offer for virtually identical notes registered with the SEC on January 3, 2014.


The condensed consolidating financial statements below have been prepared from our 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 Hecla, the Guarantors, and Non-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 Hecla's 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. Certain of Hecla's 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 parents' investment and the subsidiaries' additional paid-in capital. In consolidation, investments in subsidiaries and related additional paid-in capital are eliminated.


 

•

Dividends. Certain of Hecla's subsidiaries which generate cash flow routinely provide cash to their parent companies through inter-company transfers. On an annual basis, the boards of directors of such subsidiary companies declare dividends to their parent companies, which reduces the subsidiaries' retained earnings and increases the parents' dividend income. In consolidation, such activity is eliminated.


 

•

Debt. Inter-company debt agreements have been established between certain of Hecla's subsidiaries and their parents. The related debt liability and receivable balances, accrued interest expense and income activity, and payments of principal and accrued interest amounts by the subsidiary companies to their parents are eliminated in consolidation.


 

•

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 Hecla's 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.


Separate financial statements of the Guarantors are not presented because the guarantees by the Guarantors are joint and several and full and unconditional, except for certain customary release provisions, including: (1) the sale or disposal of all or substantially all of the assets of the Guarantor; (2) the sale or other disposition of the capital stock of the Guarantor; (3) the Guarantor is designated as an unrestricted entity in accordance with the applicable provisions of the indenture; (4) Hecla ceases to be a borrower as defined in the indenture; and (5) upon legal or covenant defeasance or satisfaction and discharge of the indenture.


Condensed Consolidating Balance Sheets


   

As of December 31, 2014

 
   

Parent

   

Guarantors

   

Non-Guarantors

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Assets

                                       

Cash and cash equivalents

  $ 146,885     $ 33,824     $ 28,956     $ —     $ 209,665  

Other current assets

    7,115       48,981       23,165       27,433       106,694  

Properties, plants, and equipment - net

    1,572       1,079,658       750,334       —       1,831,564  

Intercompany receivable (payable)

    470,306       (123,671

)

    (392,880

)

    46,245       —  

Investments in subsidiaries

    1,317,969       —       —       (1,317,969

)

    —  

Other non-current assets

    8,644       189,014       4,620       (88,137

)

    114,141  

Total assets

  $ 1,952,491     $ 1,227,806     $ 414,195     $ (1,332,428

)

  $ 2,262,064  

Liabilities and Stockholders' Equity

                                       

Current liabilities

  $ 14,143     $ 54,918     $ 21,996     $ (72

)

  $ 90,985  

Long-term debt

    498,479       10,597       3,053       —       512,129  

Non-current portion of accrued reclamation

    —       43,314       12,305       —       55,619  

Non-current deferred tax liability

    —       14,387       153,300       (14,387

)

    153,300  

Other non-current liabilities

    42,895       11,126       (964

)

    —       53,057  

Stockholders' equity

    1,396,974       1,093,464       224,505       (1,317,969

)

    1,396,974  

Total liabilities and stockholders' equity

  $ 1,952,491     $ 1,227,806     $ 414,195     $ (1,332,428

)

  $ 2,262,064  

   

As of December 31, 2013

 
   

Parent

   

Guarantors

   

Non-Guarantors

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Assets

                                       

Cash and cash equivalents

  $ 126,271     $ 40,009     $ 45,895     $ —     $ 212,175  

Other current assets

    4,795       75,083       33,129       18,453       131,460  

Properties, plants, and equipment - net

    803       1,052,102       738,696       —       1,791,601  

Intercompany receivable (payable)

    528,290       (112,815

)

    (464,634

)

    49,159       —  

Investments in subsidiaries

    1,195,076       —       —       (1,195,076

)

    —  

Other non-current assets

    5,249       164,563       11,115       (84,044

)

    96,883  

Total assets

  $ 1,860,484     $ 1,218,942     $ 364,201     $ (1,211,508

)

  $ 2,232,119  

Liabilities and Stockholders' Equity

                                       

Current liabilities

  $ 10,058     $ 117,421     $ 24,000     $ —     $ 151,479  

Long-term debt

    490,726       14,292       40       —       505,058  

Non-current portion of accrued reclamation

    —       38,426       8,340       —       46,766  

Non-current deferred tax liability

    —       16,430       164,861       (16,430

)

    164,861  

Other non-current liabilities

    33,281       4,043       212       —       37,536  

Stockholders' equity

    1,326,419       1,028,330       166,748       (1,195,078

)

    1,326,419  

Total liabilities and stockholders' equity

  $ 1,860,484     $ 1,218,942     $ 364,201     $ (1,211,508

)

  $ 2,232,119  

Condensed Consolidating Statements of Operations


   

Year Ended December 31, 2014

 
   

Parent

   

Guarantors

   

Non-Guarantors

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Revenues

  $ 1,473     $ 333,460     $ 165,848     $ —     $ 500,781  

Cost of sales

    —       (194,600

)

    (109,846

)

    —       (304,446

)

Depreciation, depletion, amortization

    —       (72,937

)

    (38,197

)

    —       (111,134

)

General and administrative

    (17,667

)

    (12,694

)

    (1,177

)

    —       (31,538

)

Exploration and pre-development

    (252

)

    (7,088

)

    (12,327

)

    —       (19,667

)

Gain on derivative contracts

    9,134       —       —       —       9,134  

Aurizon acquisition costs

    —       —       —       —       —  

Equity in earnings of subsidiaries

    72,407       —       —       (72,407

)

    —  

Other (expense) income

    (47,271

)

    29,753       3,267       (16,295

)

    (30,546

)

Income (loss) before income taxes

    17,824       75,894       7,568       (88,702

)

    12,584  

(Provision) benefit from income taxes

    —       (10,565

)

    (490

)

    16,295       5,240  

Net income (loss)

    17,824       65,329       7,078       (72,407

)

    17,824  

Preferred stock dividends

    (552

)

    —       —       —       (552

)

Income (loss) applicable to common stockholders

    17,272       65,329       7,078       (72,407

)

    17,272  

Net income (loss)

    17,824       65,329       7,078       (72,407

)

    17,824  

Changes in comprehensive income (loss)

    (5,732

)

    (1,329

)

    1,152       177       (5,732

)

Comprehensive income (loss)

  $ 12,092     $ 64,000     $ 8,230     $ (72,230

)

  $ 12,092  

   

Year Ended December 31, 2013

 
   

Parent

   

Guarantors

   

Non-Guarantors

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Revenues

  $ 3,044     $ 304,423     $ 75,122     $ —     $ 382,589  

Cost of sales

    —       (179,491

)

    (55,825

)

    —       (235,316

)

Depreciation, depletion, amortization

    —       (63,097

)

    (18,030

)

    —       (81,127

)

General and administrative

    (14,441

)

    (13,174

)

    (1,310

)

    —       (28,925

)

Exploration and pre-development

    (576

)

    (24,990

)

    (12,084

)

    —       (37,650

)

Loss on derivative contracts

    17,979       —       —       —       17,979  

Closed operations

    (14,444

)

    —       (11,953

)

    —       (26,397

)

Equity in earnings of subsidiaries

    (15,807

)

    —       —       15,807       —  

Other (expense) income

    (885

)

    1,345       (9,616

)

    (16,922

)

    (26,078

)

Income (loss) before income taxes

    (25,130

)

    25,016       (33,696

)

    (1,115

)

    (34,925

)

(Provision) benefit from income taxes

    —       (14,171

)

    7,044       16,922       9,795  

Net income (loss)

    (25,130

)

    10,845       (26,652

)

    15,807       (25,130

)

Preferred stock dividends

    (552

)

    —       —       —       (552

)

Income (loss) applicable to common stockholders

    (25,682

)

    10,845       (26,652

)

    15,807       (25,682

)

Net income (loss)

    (25,130

)

    10,845       (26,652

)

    15,807       (25,130

)

Changes in comprehensive income (loss)

    (2,381

)

    (7

)

    (4,587

)

    4,594       (2,381

)

Comprehensive income (loss)

  $ (27,511

)

  $ 10,838     $ (31,239

)

  $ 20,401     $ (27,511

)


   

Year Ended December 31, 2012

 
   

Parent

   

Guarantors

   

Non-Guarantors

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Revenues

  $ (1,346

)

  $ 322,489     $ —     $ —     $ 321,143  

Cost of sales

    —       (134,105

)

    —       —       (134,105

)

Depreciation, depletion, amortization

    —       (43,522

)

    —       —       (43,522

)

General and administrative

    (11,519

)

    (9,519

)

    (215

)

    —       (21,253

)

Exploration and pre-development

    (1,262

)

    (38,700

)

    (9,776

)

    —       (49,738

)

Gain on derivative contracts

    (10,457

)

    —       —       —       (10,457

)

Closed operations

    —       (2,259

)

    (2,393

)

    —       (4,652

)

Equity in earnings of subsidiaries

    21,246       —       —       (21,246

)

    —  

Other (expense) income

    18,292       (27,747

)

    (3,207

)

    (20,921

)

    (33,583

)

Income (loss) before income taxes

    14,954       66,637       (15,591

)

    (42,167

)

    23,833  

(Provision) benefit from income taxes

    —       (29,802

)

    —       20,923       (8,879

)

Net income (loss)

    14,954       36,835       (15,591

)

    (21,244

)

    14,954  

Preferred stock dividends

    (552

)

    —       —       —       (552

)

Income (loss) applicable to common stockholders

    14,402       36,835       (15,591

)

    (21,244

)

    14,402  

Net income (loss)

    14,954       36,835       (15,591

)

    (21,244

)

    14,954  

Changes in comprehensive income (loss)

    (420

)

    (911

)

    1,438       (527

)

    (420

)

Comprehensive income (loss)

  $ 14,534     $ 35,924     $ (14,153

)

  $ (21,771

)

  $ 14,534  

Condensed Consolidating Statements of Cash Flows


   

Year Ended December 31, 2014

 
   

Parent

   

Guarantors

   

Non-Guarantors

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Cash flows from operating activities

  $ 38,270     $ 61,900     $ 58,277     $ (75,323

)

  $ 83,124  

Cash flows from investing activities:

                                       

Additions to properties, plants, and equipment

    (1,336

)

    (68,859

)

    (52,342

)

    —       (122,537

)

Other investing activities, net

    —       417       3,765               4,182  

Cash flows from financing activities:

                                       

Dividends paid to stockholders

    (4,099

)

    —       —       —       (4,099

)

Payments on debt

    —       (9,137

)

    —       —       (9,137

)

Other financing activity

    (12,221

)

    9,494       (22,856

)

    75,323       49,740  

Effect of exchange rate changes on cash

    —       —       (3,783

)

            (3,783

)

Changes in cash and cash equivalents

    20,614       (6,185

)

    (16,939

)

    —       (2,510

)

Beginning cash and cash equivalents

    126,271       40,009       45,895               212,175  

Ending cash and cash equivalents

  $ 146,885     $ 33,824     $ 28,956     $ —     $ 209,665  

   

Year Ended December 31, 2013

 
   

Parent

   

Guarantors

   

Non-Guarantors

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Cash flows from operating activities

  $ (9,958

)

  $ 17,940     $ (20,129

)

  $ 38,791     $ 26,644  

Cash flows from investing activities:

                                       

Additions to properties, plants, and equipment

    (1,535

)

    (107,893

)

    (41,308

)

    —       (150,736

)

Acquisition of Aurizon Mines Ltd.

    (498,705

)

    —       177,588       —       (321,117

)

Other investing activities, net

    —       (11

)

    (3,633

)

    —       (3,644

)

Cash flows from financing activities:

                                       

Dividends paid to stockholders

    (6,543

)

    —       —       —       (6,543

)

Borrowings on debt

    490,000       —       —       —       490,000  

Payments on debt

    —       (7,039

)

    —       —       (7,039

)

Other financing activity

    20,746       79,937       (63,361

)

    (38,791

)

    (1,469

)

Effect of exchange rate changes on cash

    —       —       (4,905

)

    —       (4,905

)

Changes in cash and cash equivalents

    (5,995

)

    (17,066

)

    44,252       —       21,191  
                                         

Beginning cash and cash equivalents

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

Ending cash and cash equivalents

  $ 126,271     $ 40,009     $ 45,895     $ —     $ 212,175  

   

Year Ended December 31, 2012

 
   

Parent

   

Guarantors

   

Non-Guarantors

   

Eliminations

   

Consolidated

 
   

(in thousands)

 

Cash flows from operating activities

  $ 49,295     $ 42,957     $ (14,296

)

  $ (8,940

)

  $ 69,016  

Cash flows from investing activities:

                                       

Additions to properties, plants, and equipment

    (618

)

    (107,425

)

    (5,053

)

    —       (113,096

)

Other investing activities

    (48,815

)

    891       (5,835

)

    48,817       (4,942

)

Cash flows from financing activities:

                                       

Dividends paid to stockholders

    (17,673

)

    —       —       —       (17,673

)

Payments on debt

    —       (5,878

)

    (12

)

    —       (5,890

)

Other financing activity

    52,227       (41,903

)

    26,659       (39,877

)

    (2,894

)

Changes in cash and cash equivalents

    34,416       (111,358

)

    1,463       —       (75,479

)

Beginning cash and cash equivalents

    97,850       168,433       180       —       266,463  

Ending cash and cash equivalents

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