CDE-06.30.15 10Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
___________________________________________ 
FORM 10-Q
___________________________________________
þ
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2015
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 001-08641
____________________________________________ 
COEUR MINING, INC.
(Exact name of registrant as specified in its charter)
____________________________________________
Delaware
 
82-0109423
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
104 S. Michigan Ave., Suite 900 Chicago, Illinois
 
60603
(Address of principal executive offices)
 
(Zip Code)
(312) 489-5800
(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  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
þ
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ
The Company has 300,000,000 shares of common stock, par value of $0.01, authorized of which 137,114,122 shares were issued and outstanding as of July 31, 2015.


COEUR MINING, INC.
INDEX
 
 
Page
Part I.
 
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
 
 
 
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
 
 
 
Condensed Consolidated Balance Sheets
 
 
 
 
Condensed Consolidated Statement of Changes in Stockholders' Equity
 
 
 
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
 
 
 
 
 
 
 
 
Consolidated Financial Results
 
 
 
 
Results of Operations
 
 
 
 
Liquidity and Capital Resources
 
 
 
 
Non-GAAP Financial Performance Measures
 
 
 
 
 
 
 
 
 
 
 
Part II.
 
 
 
 
 
 
 
 
 
Item 1A. Risk Factors
 
 
 
 
 
 
 
 
Item 6. Exhibits
 
 
 
Signatures





2

PART I. Financial Information
Item 1. Financial Statements

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2015
 
2014
 
2015
 
2014
 
Notes
In thousands, except share data
Revenue
3
$
166,263

 
$
164,562

 
$
319,219

 
$
324,195

COSTS AND EXPENSES
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
3
119,097

 
118,687

 
234,160

 
225,583

Amortization
 
38,974

 
41,422

 
72,064

 
81,849

General and administrative
 
8,451

 
9,398

 
17,286

 
23,294

Exploration
 
3,579

 
5,153

 
7,845

 
9,370

Pre-development, reclamation, and other
 
2,267

 
8,760

 
9,030

 
15,775

Total costs and expenses
 
172,368

 
183,420

 
340,385

 
355,871

OTHER INCOME (EXPENSE), NET
 
 
 
 
 
 
 
 
Fair value adjustments, net
9
2,754

 
(8,282
)
 
(2,130
)
 
(19,717
)
Impairment of equity securities
12
(31
)
 
(934
)
 
(1,545
)
 
(3,522
)
Interest income and other, net
 
(2,821
)
 
(116
)
 
(3,817
)
 
(2,100
)
Interest expense, net of capitalized interest
17
(10,734
)
 
(12,310
)
 
(21,499
)
 
(25,365
)
Total other income (expense), net
 
(10,832
)
 
(21,642
)
 
(28,991
)
 
(50,704
)
Income (loss) before income and mining taxes
 
(16,937
)
 
(40,500
)
 
(50,157
)
 
(82,380
)
Income and mining tax (expense) benefit
7
260

 
(2,621
)
 
192

 
2,068

NET INCOME (LOSS)
 
$
(16,677
)
 
$
(43,121
)
 
$
(49,965
)
 
$
(80,312
)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
 
 
 
 
 
 
 
 
Unrealized gain (loss) on equity securities, net of tax of $7 for the three months ended June 30, 2015 and $487 and $253 for the three and six months ended June 30, 2014, respectively
 
(1,312
)
 
(773
)
 
(2,813
)
 
(401
)
Reclassification adjustments for impairment of equity securities, net of tax of $(362) and $(1,363) for the three and six months ended June 30, 2014, respectively
 
31

 
572

 
1,545

 
2,159

Reclassification adjustments for realized loss on sale of equity securities, net of tax of $(10) for the three and six months ended June 30, 2014, respectively
 
904

 
17

 
904

 
17

Other comprehensive income (loss)
 
(377
)
 
(184
)
 
(364
)
 
1,775

COMPREHENSIVE INCOME (LOSS)
 
$
(17,054
)
 
$
(43,305
)
 
$
(50,329
)
 
$
(78,537
)
 
 
 
 
 
 
 
 
 
NET INCOME (LOSS) PER SHARE
8
 
 
 
 
 
 
 
Basic
 
$
(0.12
)
 
$
(0.42
)
 
$
(0.42
)
 
$
(0.78
)
 
 
 
 
 
 
 
 
 
Diluted
 
$
(0.12
)
 
$
(0.42
)
 
$
(0.42
)
 
$
(0.78
)
(1) Excludes amortization.
The accompanying notes are an integral part of these condensed consolidated financial statements.


3

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2015
 
2014
 
2015
 
2014
 
Notes
In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(16,677
)
 
$
(43,121
)
 
$
(49,965
)
 
(80,312
)
Adjustments:
 
 
 
 
 
 
 
 
Amortization
 
38,974

 
41,422

 
72,064

 
81,849

Accretion
 
3,526

 
4,502

 
6,676

 
9,093

Deferred income taxes
 
(5,053
)
 
(3,844
)
 
(7,237
)
 
(15,705
)
Loss on termination of revolving credit facility
 
—

 
—

 
—

 
3,035

Fair value adjustments, net
 
(2,754
)
 
8,282

 
2,130

 
19,717

Stock-based compensation
5
2,604

 
2,385

 
4,754

 
4,950

Impairment of equity securities
12
31

 
934

 
1,545

 
3,522

Foreign exchange and other
 
4,224

 
(54
)
 
5,303

 
(869
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
Receivables
 
(2,342
)
 
4,921

 
214

 
10,544

Prepaid expenses and other current assets
 
160

 
3,551

 
(1,167
)
 
(4,558
)
Inventory and ore on leach pads
 
4,649

 
(1,606
)
 
5,333

 
(15,519
)
Accounts payable and accrued liabilities
 
9,521

 
13,118

 
(6,759
)
 
5,117

CASH PROVIDED BY OPERATING ACTIVITIES
 
36,863

 
30,490

 
32,891

 
20,864

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
Capital expenditures
 
(23,677
)
 
(15,356
)
 
(41,297
)
 
(27,292
)
Acquisitions, net of cash acquired
11
(9,152
)
 
(2,250
)
 
(111,170
)
 
(2,250
)
Other
 
(103
)
 
12

 
(1,676
)
 
(13
)
Purchase of short-term investments and equity securities
 
(1,597
)
 
(2,139
)
 
(1,873
)
 
(48,360
)
Sales and maturities of short-term investments
 
399

 
800

 
469

 
890

CASH USED IN INVESTING ACTIVITIES
 
(34,130
)
 
(18,933
)
 
(155,547
)
 
(77,025
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
Issuance of notes and bank borrowings
17
100,000

 
—

 
153,500

 
153,000

Payments on debt, capital leases, and associated costs
 
(66,626
)
 
(2,851
)
 
(75,220
)
 
(6,962
)
Gold production royalty payments
 
(9,754
)
 
(12,345
)
 
(20,122
)
 
(27,028
)
Other
 
(72
)
 
(160
)
 
(495
)
 
(406
)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
 
23,548

 
(15,356
)
 
57,663

 
118,604

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
26,281

 
(3,799
)
 
(64,993
)
 
62,443

Cash and cash equivalents at beginning of period
 
179,587

 
272,932

 
270,861

 
206,690

Cash and cash equivalents at end of period
 
$
205,868

 
$
269,133

 
$
205,868

 
$
269,133


The accompanying notes are an integral part of these condensed consolidated financial statements.

4

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
June 30, 2015
(Unaudited)
 
December 31,
2014
ASSETS
Notes
 
In thousands, except share data
CURRENT ASSETS
 
 
 
 
 
Cash and cash equivalents
 
 
$
205,868

 
$
270,861

Receivables
13
 
112,159

 
116,921

Inventory
14
 
109,207

 
114,931

Ore on leach pads
14
 
67,458

 
48,204

Deferred tax assets

 
7,262

 
7,364

Prepaid expenses and other
 
 
17,442

 
15,523

 
 
 
519,396

 
573,804

NON-CURRENT ASSETS
 
 
 
 
 
Property, plant and equipment, net
15
 
254,574

 
227,911

Mining properties, net
16
 
864,884

 
501,192

Ore on leach pads
14
 
32,663

 
37,889

Restricted assets
 
 
8,377

 
7,037

Equity securities
12
 
4,216

 
5,982

Receivables
13
 
26,738

 
21,686

Deferred tax assets

 
64,120

 
60,151

Other
 
 
11,681

 
9,915

TOTAL ASSETS
 
 
$
1,786,649

 
$
1,445,567

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
Accounts payable
 
 
$
42,522

 
$
49,052

Accrued liabilities and other
 
 
47,590

 
51,513

Debt
17
 
9,121

 
17,498

Royalty obligations
9
 
41,999

 
43,678

Reclamation
4
 
3,786

 
3,871

Deferred tax liabilities

 
8,078

 
8,078

 
 
 
153,096

 
173,690

NON-CURRENT LIABILITIES
 
 
 
 
 
Debt
17
 
538,589

 
451,048

Royalty obligations
9
 
12,675

 
27,651

Reclamation
4
 
87,538

 
66,943

Deferred tax liabilities

 
223,868

 
111,006

Other long-term liabilities
 
 
43,233

 
29,911

 
 
 
905,903

 
686,559

STOCKHOLDERS’ EQUITY
 
 
 
 
 
Common stock, par value $0.01 per share; authorized 300,000,000 shares, issued and outstanding 137,122,762 at June 30, 2015 and authorized 150,000,000 shares, issued and outstanding 103,384,408 at December 31, 2014
 
 
1,371

 
1,034

Additional paid-in capital
 
 
2,982,019

 
2,789,695

Accumulated other comprehensive income (loss)
 
 
(3,172
)
 
(2,808
)
Accumulated deficit
 
 
(2,252,568
)
 
(2,202,603
)
 
 
 
727,650

 
585,318

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
$
1,786,649

 
$
1,445,567


The accompanying notes are an integral part of these condensed consolidated financial statements.


5

COEUR MINING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
In thousands
Common
Stock
Shares
 
Common
Stock Par
Value
 
Additional
Paid-In Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Balances at December 31, 2014
103,384

 
$
1,034

 
$
2,789,695

 
$
(2,202,603
)
 
$
(2,808
)
 
$
585,318

Net income (loss)
—

 
—

 
—

 
(49,965
)
 
—

 
(49,965
)
Other comprehensive income (loss)
—

 
—

 
—

 
—

 
(364
)
 
(364
)
Common stock issued for the acquisition of Paramount Gold and Silver Corp.
32,667

 
327

 
188,490

 
—

 
—

 
188,817

Common stock issued under stock-based compensation plans, net
1,071

 
10

 
3,834

 
—

 
—

 
3,844

Balances at June 30, 2015 (Unaudited)
137,122

 
$
1,371

 
$
2,982,019

 
$
(2,252,568
)
 
$
(3,172
)
 
$
727,650

The accompanying notes are an integral part of these condensed consolidated financial statements.

6
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 1 -
BASIS OF PRESENTATION
The interim condensed consolidated financial statements of Coeur Mining, Inc. and its subsidiaries (collectively "Coeur" or "the Company") are unaudited. In the opinion of management, all adjustments and disclosures necessary for the fair presentation of these interim statements have been included. The results reported in these interim statements may not be indicative of the results which will be reported for the year ending December 31, 2015. The condensed consolidated December 31, 2014 balance sheet data was derived from audited consolidated financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recent Accounting Standards
In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs," which requires that debt issuance costs related to a recognized debt liability be presented as a reduction to the carrying amount of that debt liability, not as an asset. The updated guidance became effective under early adoption for the Company's fiscal year beginning January 1, 2015, and resulted in a reclassification of amounts from Other Non-current Assets to Debt in the current and prior periods.

In February 2015, the FASB issued ASU 2015-02, "Amendments to the Consolidation Analysis," which amends the consolidation requirements in ASC 810. These changes become effective for the Company's fiscal year beginning January 1, 2016. The Company is currently evaluating the potential impact of these changes on the Company's consolidated financial position, results of operations, and cash flows.
    
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." The updated guidance provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. These changes become effective for the Company's fiscal year beginning January 1, 2018. The Company is currently evaluating the potential impact of these changes on the Company's consolidated financial position, results of operations, and cash flows.    

NOTE 3 – SEGMENT REPORTING
The Company’s operating segments include the Palmarejo, San Bartolomé, Rochester, Kensington, and Wharf mines, and Coeur Capital. All operating segments are engaged in the discovery and mining of gold and silver and generate the majority of their revenues from the sale of these precious metals with the exception of Coeur Capital, which holds the Endeavor silver stream and other precious metals royalties. Other includes the La Preciosa project, Joaquin project, Martha mine, corporate office, elimination of intersegment transactions, and other items necessary to reconcile to consolidated amounts.

7
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

Financial information relating to the Company’s segments is as follows (in thousands):
Three months ended June 30, 2015
Palmarejo
 
San Bartolomé
 
Kensington
 
Rochester
 
Wharf
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
38,875

 
$
23,366

 
$
42,468

 
$
36,340

 
$
20,373

 
$
3,083

 
$
—

 
$
164,505

Royalties
—

 
—

 
—

 
—

 
—

 
1,758

 
—

 
1,758

 
38,875

 
23,366

 
42,468

 
36,340

 
20,373

 
4,841

 
—

 
166,263

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
30,112

 
19,157

 
27,452

 
24,392

 
16,632

 
1,352

 
—

 
119,097

Amortization
9,046

 
5,271

 
12,684

 
5,387

 
3,491

 
2,619

 
476

 
38,974

Exploration
1,837

 
43

 
432

 
501

 
—

 
75

 
691

 
3,579

Other operating expenses
324

 
241

 
526

 
307

 
506

 
13

 
8,801

 
10,718

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income and other, net
(505
)
 
420

 
(14
)
 
—

 
37

 
(924
)
 
(1,866
)
 
(2,852
)
Interest expense, net
(844
)
 
(293
)
 
(57
)
 
(205
)
 
—

 
—

 
(9,335
)
 
(10,734
)
Fair value adjustments, net
429

 
—

 
—

 
1,137

 
—

 
—

 
1,188

 
2,754

Income and mining tax (expense) benefit
837

 
195

 
(994
)
 
(350
)
 
(274
)
 
(623
)
 
1,469

 
260

Net income (loss)
$
(2,527
)
 
$
(1,024
)
 
$
309

 
$
6,335

 
$
(493
)
 
$
(765
)
 
$
(18,512
)
 
$
(16,677
)
Segment assets(2)
$
657,448

 
$
173,451

 
$
197,241

 
$
190,704

 
$
131,990

 
$
55,896

 
$
78,395

 
$
1,485,125

Capital expenditures
$
10,723

 
$
994

 
$
4,714

 
$
5,915

 
$
1,244

 
$
—

 
$
87

 
$
23,677

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Three months ended June 30, 2014
Palmarejo
 
San Bartolomé
 
Kensington
 
Rochester
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
72,446

 
$
29,078

 
$
29,018

 
$
31,193

 
$
1,971

 
$
—

 
$
163,706

Royalties
—

 
—

 
—

 
—

 
856

 
—

 
856

 
72,446

 
29,078

 
29,018

 
31,193

 
2,827

 
—

 
164,562

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
49,551

 
20,695

 
23,218

 
24,381

 
842

 
—

 
118,687

Amortization
18,044

 
4,855

 
11,566

 
5,025

 
1,419

 
513

 
41,422

Exploration
1,637

 
57

 
1,636

 
738

 
109

 
976

 
5,153

Other operating expenses
325

 
194

 
199

 
844

 
263

 
16,333

 
18,158

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income and other, net
(1,202
)
 
691

 
4

 
32

 
(964
)
 
389

 
(1,050
)
Interest expense, net
(2,771
)
 
(11
)
 
(53
)
 
(261
)
 
—

 
(9,214
)
 
(12,310
)
Fair value adjustments, net
(4,989
)
 
—

 
—

 
(1,837
)
 
—

 
(1,456
)
 
(8,282
)
Income and mining tax (expense) benefit
1,342

 
(2,204
)
 
—

 
(419
)
 
263

 
(1,603
)
 
(2,621
)
Net income (loss)
$
(4,731
)
 
$
1,753

 
$
(7,650
)
 
$
(2,280
)
 
$
(507
)
 
$
(29,706
)
 
$
(43,121
)
Segment assets(2)
$
1,133,851

 
$
309,565

 
$
331,151

 
$
206,665

 
$
67,864

 
$
522,632

 
$
2,571,728

Capital expenditures
$
5,589

 
$
1,711

 
$
3,989

 
$
3,956

 
$
—

 
$
111

 
$
15,356

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests

8
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)



Six months ended June 30, 2015
Palmarejo
 
San Bartolomé
 
Kensington
 
Rochester
 
Wharf
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
78,269

 
$
44,913

 
$
86,506

 
$
80,371

 
$
20,373

 
$
5,028

 
$
—

 
$
315,460

Royalties
—

 
—

 
—

 
—

 
—

 
3,759

 
—

 
3,759

 
78,269

 
44,913

 
86,506

 
80,371

 
20,373

 
8,787

 
—

 
319,219

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
64,603

 
38,284

 
56,871

 
55,785

 
16,632

 
1,985

 
—

 
234,160

Amortization
16,380

 
9,961

 
24,238

 
12,230

 
3,491

 
4,770

 
994

 
72,064

Exploration
2,960

 
79

 
2,094

 
1,223

 
—

 
150

 
1,339

 
7,845

Other operating expenses
638

 
485

 
761

 
1,448

 
671

 
30

 
22,283

 
26,316

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income and other, net
(1,608
)
 
872

 
(18
)
 
(40
)
 
54

 
(2,449
)
 
(2,173
)
 
(5,362
)
Interest expense, net
(2,184
)
 
(574
)
 
(120
)
 
(430
)
 
—

 
—

 
(18,191
)
 
(21,499
)
Fair value adjustments, net
(1,116
)
 
—

 
—

 
(1,155
)
 
—

 
—

 
141

 
(2,130
)
Income and mining tax (expense) benefit
(534
)
 
(1,211
)
 
(994
)
 
(700
)
 
412

 
(24
)
 
3,243

 
192

Net income (loss)
$
(11,754
)
 
$
(4,809
)
 
$
1,410

 
$
7,360

 
$
45

 
$
(621
)
 
$
(41,596
)
 
$
(49,965
)
Segment assets(2)
$
657,448

 
$
173,451

 
$
197,241

 
$
190,704

 
$
131,990

 
$
55,896

 
$
78,395

 
$
1,485,125

Capital expenditures
$
19,907

 
$
1,943

 
$
8,859

 
$
9,170

 
$
1,295

 
$
—

 
$
123

 
$
41,297

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests
Six months ended June 30, 2014
Palmarejo
 
San Bartolomé
 
Kensington
 
Rochester
 
Coeur Capital
 
Other
 
Total
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Metal sales
$
140,434

 
$
56,632

 
$
65,079

 
$
55,347

 
$
4,860

 
$
—

 
$
322,352

Royalties
—

 
—

 
—

 
—

 
1,843

 
—

 
1,843

 
140,434

 
56,632

 
65,079

 
55,347

 
6,703

 
—

 
324,195

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs applicable to sales(1)
93,126

 
39,595

 
51,749

 
39,089

 
2,024

 
—

 
225,583

Amortization
36,702

 
9,313

 
22,275

 
9,476

 
3,121

 
962

 
81,849

Exploration
2,642

 
82

 
2,680

 
1,912

 
312

 
1,742

 
9,370

Other operating expenses
622

 
335

 
390

 
2,189

 
504

 
35,029

 
39,069

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income and other, net
(2,772
)
 
1,373

 
4

 
51

 
(3,512
)
 
(766
)
 
(5,622
)
Interest expense, net
(5,595
)
 
(31
)
 
(75
)
 
(266
)
 
—

 
(19,398
)
 
(25,365
)
Fair value adjustments, net
(15,225
)
 
—

 
—

 
(2,510
)
 
—

 
(1,982
)
 
(19,717
)
Income and mining tax (expense) benefit
5,171

 
(4,969
)
 
—

 
(419
)
 
(25
)
 
2,310

 
2,068

Net income (loss)
$
(11,079
)
 
$
3,680

 
$
(12,086
)
 
$
(463
)
 
$
(2,795
)
 
$
(57,569
)
 
$
(80,312
)
Segment assets(2)
$
1,133,851

 
$
309,565

 
$
331,151

 
$
206,665

 
$
67,864

 
$
522,632

 
$
2,571,728

Capital expenditures
$
9,331

 
$
3,152

 
$
8,700

 
$
4,915

 
$
—

 
$
1,194

 
$
27,292

(1) Excludes amortization
(2) Segment assets include receivables, prepaids, inventories, property, plant and equipment, and mineral interests

Assets
June 30, 2015

December 31, 2014
Total assets for reportable segments
$
1,485,125

 
$
1,084,257

Cash and cash equivalents
205,868

 
270,861

Other assets
95,656

 
90,449

Total consolidated assets
$
1,786,649

 
$
1,445,567



9
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

Geographic Information
Long-Lived Assets
June 30, 2015

December 31, 2014
United States
$
355,289

 
$
275,594

Mexico
620,011

 
298,101

Bolivia
100,386

 
107,960

Australia
18,252

 
21,362

Argentina
10,937

 
10,970

Other
14,583

 
15,116

Total
$
1,119,458

 
$
729,103

 

Revenue
Three months ended June 30,
 
Six months ended June 30,
2015
 
2014
 
2015
 
2014
United States
$
99,180

 
$
60,212

 
$
187,249

 
$
120,427

Mexico
39,443

 
72,657

 
79,584

 
141,167

Bolivia
23,366

 
29,078

 
44,913

 
56,632

Australia
3,083

 
1,971

 
5,028

 
4,860

Other
1,191

 
644

 
$
2,445

 
$
1,109

Total
$
166,263

 
$
164,562

 
$
319,219

 
$
324,195


NOTE 4 – RECLAMATION
Reclamation and mine closure costs are based principally on legal and regulatory requirements. Management estimates costs associated with reclamation of mining properties. The Company uses assumptions about future costs, mineral prices, mineral processing recovery rates, production levels, capital costs, and reclamation costs. On an ongoing basis, management evaluates its estimates and assumptions, and future expenditures could differ from current estimates.
Changes to the Company’s asset retirement obligations for operating sites are as follows: 
 
Three months ended June 30,
 
Six months ended June 30,
In thousands
2015
 
2014
 
2015
 
2014
Asset retirement obligation - Beginning
$
86,059

 
$
58,460

 
$
67,214

 
$
57,454

Accretion
1,990

 
1,435

 
3,614

 
2,752

Additions and changes in estimates
—

 
—

 
18,270

 
—

Settlements
(448
)
 
(100
)
 
(1,497
)
 
(411
)
Asset retirement obligation - Ending
$
87,601

 
$
59,795

 
$
87,601

 
$
59,795

The increase in asset retirement obligations in the six months ended June 30, 2015 is due to the acquisition of the Wharf gold mine. The Company has accrued $3.7 million and $3.6 million at June 30, 2015 and December 31, 2014, respectively, for reclamation liabilities related to former mining activities, which are included in Reclamation.

NOTE 5 – STOCK-BASED COMPENSATION
The Company has stock incentive plans for executives and eligible employees. Stock awards include stock options, restricted stock, and performance shares. Stock-based compensation expense for the three and six months ended June 30, 2015 and 2014 was $2.6 million and $2.4 million and $4.8 million and $5.0 million, respectively. At June 30, 2015, there was $13.7 million of unrecognized stock-based compensation cost expected to be recognized over a period of 1.7 years. During the six months ended June 30, 2015, the supplemental incentive accrual increased $0.4 million to $1.4 million.
The following table summarizes the grants awarded during the six months ended June 30, 2015:
Grant date
 
Restricted
stock
 
Grant date fair
value of
restricted stock
 
Stock options
 
Grant date
fair value of
stock
options
 
Performance
shares
 
Grant date fair
value of
performance
shares
May 13, 2015
 
1,217,814

 
$
5.57

 
310,128

 
$
2.65

 
809,293

 
$
6.97


10
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

The following options and stock appreciation rights were exercisable during the six months ended June 30, 2015:
Award Type
 
Number of 
Exercised Units
 
Weighted Average
Exercised Price
 
Number of Exercisable Units
 
Weighted Average
Exercisable Price
Options
 
—

 
$
—

 
331,181

 
$
19.62

Stock Appreciation Rights
 
—

 
$
—

 
46,572

 
$
14.06


NOTE 6 – RETIREMENT SAVINGS PLAN
The Company has a 401(k) retirement savings plan that covers all eligible U.S. employees. Eligible employees may elect to contribute up to 75% of base salary, subject to ERISA limitations. In addition, the Company has a deferred compensation plan for employees whose benefits under the 401(k) plan are limited by federal regulations. The Company makes matching contributions equal to 100% of the employee’s contribution up to 4% of the employee's salary. The Company may also provide a voluntary, noncontributory defined contribution based on an eligible employee's salary. Company contributions for the three and six months ended June 30, 2015 and 2014 were $1.6 million and $1.6 million and $3.2 million and $3.0 million, respectively.

NOTE 7 – INCOME AND MINING TAXES
The following table summarizes the components of Income and mining tax (expense) benefit for the three and six months ended June 30, 2015 and 2014 by significant jurisdiction:
 
Three months ended June 30,
 
Six months ended June 30,
 
2015

2014
 
2015
 
2014
In thousands
Income (loss) before tax
Tax (expense) benefit
 
Income (loss) before tax
Tax (expense) benefit
 
Income (loss) before tax
Tax (expense) benefit
 
Income (loss) before tax
Tax (expense) benefit
United States
$
(9,764
)
$
319


$
(31,370
)
$
(146
)
 
$
(30,471
)
$
2,204

 
$
(60,214
)
$
(292
)
Argentina
(656
)
(1
)

(688
)
(349
)
 
(1,352
)
(2
)
 
(2,892
)
4,083

Mexico
(5,582
)
548


(12,710
)
107

 
(15,255
)
(716
)
 
(28,716
)
3,828

Bolivia
(1,219
)
196


3,957

(2,205
)
 
(3,598
)
(1,211
)
 
8,649

(4,969
)
Other jurisdictions
284

(802
)
 
311

(28
)
 
519

(83
)
 
793

(582
)

$
(16,937
)
$
260

 
$
(40,500
)
$
(2,621
)
 
$
(50,157
)
$
192

 
$
(82,380
)
$
2,068


The Company’s effective tax rate is impacted by recurring items, such as the full valuation allowance on the deferred tax assets relating to losses in the United States and certain foreign jurisdictions, mining tax expense, foreign exchange rates on deferred tax balances and uncertain tax position accruals. In addition, the Company's consolidated effective income tax rate is a function of the combined effective tax rates and foreign exchange rates in the jurisdictions in which it operates. Variations in the jurisdictional mix of income and loss and foreign exchange rates result in significant fluctuations in our consolidated effective tax rate.

A valuation allowance is provided for deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. Each quarter, the Company analyzes its deferred tax assets and if it is determined that the Company will not realize all or a portion of its deferred tax assets, it will record or increase a valuation allowance. Conversely, if it is determined that the Company will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of risk factors that could impact the Company’s ability to realize its deferred tax assets. For additional information, see Part II, Item IA of this Report.
    
The Company or one of its subsidiaries files income tax returns in the U.S. Federal jurisdiction, and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal income tax examination by tax authorities for years before 2012 and is no longer subject to examination by certain foreign jurisdictions by tax authorities for years before 2005. As a result of statutes of limitation that will begin to expire within the next 12 months in various jurisdictions and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by up to $0.5 million in the next 12 months.

As of June 30, 2015 and December 31, 2014, the Company had $17.8 million and $16.1 million of total gross unrecognized tax benefits, respectively. If recognized, these unrecognized tax benefits would positively impact the Company’s effective income tax rate. The Company’s continuing practice is to recognize potential interest and/or penalties related to unrecognized tax benefits

11
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

as part of its income tax expense. At June 30, 2015 and December 31, 2014, the amount of accrued income-tax-related interest and penalties was $8.1 million and $6.9 million, respectively.
NOTE 8 – NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For the three and six months ended June 30, 2015 and 2014, 3,375,337 and 2,147,989 shares and 3,415,129 and 2,147,390, respectively, of common stock equivalents related to equity-based awards were not included in the diluted per share calculation as the shares would be antidilutive.
The 3.25% Convertible Senior Notes were not included in the computation of diluted net income (loss) per share for the three and six months ended June 30, 2015 and 2014 because there is no excess value upon conversion over the principal amount of the Notes.
 
Three months ended June 30,
 
Six months ended June 30,
In thousands except per share amounts
2015
 
2014
 
2015
 
2014
Net income (loss) available to common stockholders
$
(16,677
)
 
$
(43,121
)
 
$
(49,965
)
 
$
(80,312
)
Weighted average shares:
 
 
 
 
 
 
 
Basic
135,036

 
102,444

 
118,897

 
102,405

Diluted
135,036

 
102,444

 
118,897

 
102,405

Income (loss) per share:
 
 
 
 
 
 
 
Basic
$
(0.12
)
 
$
(0.42
)
 
$
(0.42
)
 
$
(0.78
)
Diluted
$
(0.12
)
 
$
(0.42
)
 
$
(0.42
)
 
$
(0.78
)

NOTE 9 – FAIR VALUE MEASUREMENTS
The following table presents the components of Fair value adjustments, net:
 
 
Three months ended June 30,
 
Six months ended June 30,
In thousands
 
2015
 
2014
 
2015
 
2014
Palmarejo royalty obligation embedded derivative
 
$
385

 
$
(5,061
)
 
$
(1,160
)
 
$
(15,296
)
Rochester net smelter royalty (NSR) royalty obligation
 
1,137

 
(1,837
)
 
(1,155
)
 
(2,510
)
Silver and gold options
 
1,232

 
(1,374
)
 
185

 
(2,868
)
Foreign exchange contracts
 
—

 
(10
)
 
—

 
957

Fair value adjustments, net
 
$
2,754

 
$
(8,282
)
 
$
(2,130
)
 
$
(19,717
)
Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), secondary priority to quoted prices in inactive markets or observable inputs (Level 2), and the lowest priority to unobservable inputs (Level 3).

12
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
 
Fair Value at June 30, 2015
In thousands
Total
 
Level 1
 
Level 2
 
Level 3  
Assets:
 
 
 
 
 
 
 
Equity securities
$
4,216

 
$
4,127

 
$
—

 
$
89

Silver and gold options
1,250

 
—

 
1,250

 
—

 
$
5,466

 
$
4,127

 
$
1,250

 
$
89

Liabilities:
 
 
 
 
 
 
 
Palmarejo royalty obligation embedded derivative
$
15,281

 
$
—

 
$
—

 
$
15,281

Rochester NSR royalty obligation
13,905

 
—

 
—

 
13,905

Silver and gold options
123

 
—

 
123

 
—

Other derivative instruments, net
513

 
—

 
513

 
—

 
$
29,822

 
$
—

 
$
636

 
$
29,186

 
 
Fair Value at December 31, 2014
In thousands
Total
 
Level 1
 
Level 2
 
Level 3  
Assets:
 
 
 
 
 
 
 
Equity securities
$
5,982

 
$
4,603

 
$
—

 
$
1,379

Silver and gold options
3,882

 
—

 
3,882

 
—

 
$
9,864

 
$
4,603

 
$
3,882

 
$
1,379

Liabilities:
 
 
 
 
 
 
 
Palmarejo royalty obligation embedded derivative
$
21,912

 
$
—

 
$
—

 
$
21,912

Rochester NSR royalty obligation
15,370

 
—

 
—

 
15,370

Silver and gold options
1,039

 
—

 
1,039

 
—

Other derivative instruments, net
805

 
—

 
805

 
—

 
$
39,126

 
$
—

 
$
1,844

 
$
37,282

The Company’s investments in equity securities are recorded at fair market value in the financial statements based primarily on quoted market prices. Such instruments are classified within Level 1 of the fair value hierarchy. For certain of the equity securities quoted market prices are not available. These securities are valued using pricing models which require the use of observable and unobservable inputs. These securities are classified within Level 3 of the fair value hierarchy.
The Company’s silver and gold options and other derivative instruments, net, which relate to concentrate sales contracts and foreign exchange contracts, are valued using pricing models, which require inputs that are derived from observable market data, including contractual terms, forward market prices, yield curves, credit spreads, and other unobservable inputs. The model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
The fair values of the Palmarejo royalty obligation embedded derivative and Rochester NSR royalty obligation were estimated based on observable market data including contractual terms, forward silver and gold prices, yield curves, and credit spreads, as well as the Company’s current mine plan which is considered a significant unobservable input. Therefore, the Company has classified these obligations as Level 3 financial liabilities. Based on current mine plans, expected royalty durations of 1.2 years and 2.8 years were used to estimate the fair value of the Palmarejo royalty obligation embedded derivative and Rochester NSR royalty obligation, respectively, at June 30, 2015.

13
Coeur Mining, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

No assets or liabilities were transferred between fair value levels in the six months ended June 30, 2015.
The following tables present the changes in the fair value of the Company's Level 3 financial liabilities for the three and six months ended June 30, 2015:
 
Three months ended June 30, 2015
In thousands
Balance at the beginning of the period
 
Revaluation
 
Settlements
 
Balance at the
end of the
period
Palmarejo royalty obligation embedded derivative
$
19,250

 
$
(385
)
 
$
(3,584
)
 
$
15,281

Rochester NSR royalty obligation
16,522

 
(1,137
)
 
(1,480
)
 
13,905

Equity securities
1,379

 
(904
)
 
(386
)
 
89

 
Six months ended June 30, 2015
In thousands
Balance at the beginning of the period
 
Revaluation
 
Settlements
 
Balance at the
end of the
period
Palmarejo royalty obligation embedded derivative
$
21,912

 
$
1,159

 
$
(7,790
)
 
$
15,281

Rochester NSR royalty obligation
15,370

 
1,155

 
(2,620
)
 
13,905

Equity securities
1,379

 
(904
)
 
(386
)
 
89


The fair value of financial assets and liabilities carried at book value in the financial statements at June 30, 2015 and December 31, 2014 is presented in the following table:
 
June 30, 2015
In thousands
Book Value
 
Fair Value
 
Level 1
 
Level 2
 
Level 3  
Liabilities:
 
 

 
 
 
 
 
 
3.25% Convertible Senior Notes due 2028
$
712

 
$
689

 
$
—

 
$
689

 
$
—

7.875% Senior Notes due 2021
435,234

 
367,701

 
—

 
367,701

 
—

Term Loan due 2020
100,000

 
100,000

 
—

 
100,000

 
—

San Bartolomé Line of Credit
9,141

 
9,141

 
—

 
9,141

 
—

Palmarejo gold production royalty obligation
25,488

 
27,903

 
—

 
—

 
27,903

 
December 31, 2014
In thousands
Book Value
 
Fair Value
 
Level 1
 
Level 2
 
Level 3  
Liabilities: