Note 3 - Revision of Previously Issued Financial Statements for Immaterial Misstatements

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Error Correction [Text Block]

Note 3. Revision of Previously Issued Financial Statements for Immaterial Misstatements

Casa Berardi DDA

In the third quarter of 2021, we determined accumulated DDA and DDA expense at Casa Berardi, an operation within our Hecla Quebec Inc. subsidiary, were overstated for the periods from June 1, 2013 through June 30, 2021 as a result of errors in calculation from the date of acquisition of Casa Berardi. DDA was overstated by approximately $38.2 million in the aggregate over 8 years as a result of errors in the calculation of straight-line depreciation on machinery, equipment and buildings.

We assessed the materiality of the effect of the errors on our prior quarterly and annual financial statements, both quantitatively and qualitatively, in accordance with the SEC’s Staff Accounting Bulletin (“SAB”) No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” and concluded the errors were not material to any of our previously issued financial statements. Consequently, we concluded we would correct these errors prospectively and revise our financial statements when the consolidated balance sheets, statements of operations and comprehensive income and cash flows for such prior periods are included in future filings (the “Revisions”). The Revisions had no net impact on our sales or net cash provided by operating activities for any period presented. The impact of these misstatements on prior periods is more fully disclosed below.

Reclassification of State Mining Income Taxes

We reclassified certain state mining income taxes from Cost of sales and other direct production costs to Income and mining tax provision effective January 1, 2021. In connection with the revision of our historical financial statements for the correction of the DDA adjustment described above, we revised our previously issued financial statements for this reclassification that required us to recognize previously unrecognized deferred taxes.

The following tables present a summary of the impact, by financial statement line item, of the Revisions as of and for the years ended December 31, 2020 and 2019:

	As of and for the Year Ended December 31, 2020
(in thousands, except per share amounts)	As Previously Reported			Adjustment			As Revised
Consolidated Balance Sheet
Inventories: Concentrates, doré, and stockpiled ore	$	57,936		$	(369	)	$	57,567
Total current assets		284,681			(369	)		284,312
Properties, plants, equipment and mineral interests, net		2,345,219			32,855			2,378,074
Total assets		2,667,724			32,486			2,700,210
Accrued taxes		8,349			(2,575	)		5,774
Total current liabilities		149,785			(2,575	)		147,210
Deferred tax liability		132,475			23,616			156,091
Total liabilities		965,384			21,041			986,425
Accumulated deficit		(379,519	)		11,445			(368,074	)
Total shareholders' equity		1,702,340			11,445			1,713,785
Total liabilities and shareholders' equity		2,667,724			32,486			2,700,210
Consolidated Statements of Operations and Comprehensive Income (Loss)
Cost of sales and other direct production costs		389,040			(6,377	)		382,663
Depreciation, depletion and amortization		157,130			(9,020	)		148,110
Total cost of sales		546,170			(15,397	)		530,773
Gross profit		145,703			15,397			161,100
Income from operations		51,581			15,397			66,978
Loss before income and mining taxes		(16,655	)		15,397			(1,258	)
Income and mining tax provision		(135	)		(8,064	)		(8,199	)
Net loss		(16,790	)		7,333			(9,457	)
Loss applicable to common shareholders		(17,342	)		7,333			(10,009	)
Comprehensive loss		(12,369	)		7,333			(5,036	)
Basic loss per common share after preferred dividends		(0.03	)		0.01			(0.02	)
Diluted loss per common share after preferred dividends		(0.03	)		0.01			(0.02	)
Consolidated Statements of Cash Flows
Net loss		(16,790	)		7,333			(9,457	)
Depreciation, depletion and amortization		164,026			(9,020	)		155,006
Deferred income taxes		(5,505	)		1,687			(3,818	)
Cash provided by operating activities		180,793			—			180,793

	As of and for the Year Ended December 31, 2019
(in thousands, except per share amounts)	As Previously Reported			Adjustment			As Revised
Consolidated Balance Sheet
Inventories: Concentrates, doré, and stockpiled ore	$	30,364		$	(286	)	$	30,078
Total current assets		179,124			(286	)		178,838
Properties, plants, equipment and mineral interests, net		2,423,698			23,752			2,447,450
Total assets		2,637,308			23,466			2,660,774
Deferred tax liability		138,282			19,355			157,637
Total liabilities		944,885			19,355			964,240
Accumulated deficit		(353,331	)		4,111			(349,220	)
Total shareholders' equity		1,692,423			4,111			1,696,534
Total liabilities and shareholders' equity		2,637,308			23,466			2,660,774
Consolidated Statements of Operations and Comprehensive Income (Loss)
Cost of sales and other direct production costs	$	450,349		$	(2,364	)	$	447,985
Depreciation, depletion and amortization		199,518			(8,067	)		191,451
Total cost of sales		649,867			(10,431	)		639,436
Gross profit		23,399			10,431			33,830
Loss from operations		(57,109	)		10,431			(46,678	)
Loss before income and mining taxes		(123,658	)		10,431			(113,227	)
Income and mining tax benefit		24,101			(5,783	)		18,318
Net loss		(99,557	)		4,648			(94,909	)
Loss applicable to common shareholders		(100,109	)		4,648			(95,461	)
Comprehensive loss		(94,398	)		4,648			(89,750	)
Basic loss per common share after preferred dividends		(0.20	)		0.01			(0.19	)
Diluted loss per common share after preferred dividends		(0.20	)		0.01			(0.19	)
Consolidated Statements of Cash Flows
Net loss		(99,557	)		4,648			(94,909	)
Depreciation, depletion and amortization		204,475			(8,067	)		196,408
Deferred income taxes		(33,387	)		3,419			(29,968	)
Cash provided by operating activities		120,866			—			120,866