UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| [X] | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
OR
| [ ] | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission file number 0-25090
STILLWATER MINING COMPANY
| Delaware | 81-0480654 | |
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| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 536 East Pike Avenue Columbus, Montana |
59019 | |
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| (Address of principal executive offices) | (Zip Code) |
(406) 322-8700
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 [X] NO [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2): YES [X] NO [ ]
At October 23, 2003 the company had outstanding 89,736,441 shares of common stock, par value $0.01 per share.
STILLWATER MINING COMPANY
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2003
INDEX
| PAGE | ||||||
| PART I – FINANCIAL INFORMATION | ||||||
| Item 1. | Financial Statements | 3 | ||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | ||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 22 | ||||
| Item 4. | Controls and Procedures | 23 | ||||
| PART II – OTHER INFORMATION | ||||||
| Item 1. | Legal Proceedings | 24 | ||||
| Item 2. | Changes in Securities | 24 | ||||
| Item 3. | Defaults Upon Senior Securities | 24 | ||||
| Item 4. | Submission of Matters to a Vote of Security Holders | 25 | ||||
| Item 5. | Other Information | 26 | ||||
| Item 6. | Exhibits and Reports on Form 8-K | 26 | ||||
| SIGNATURES | 27 | |||||
| CERTIFICATION | 29 | |||||
2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Stillwater Mining Company
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)
| September 30, | December 31, | ||||||||||
| 2003 | 2002 | ||||||||||
ASSETS |
|||||||||||
Current assets |
|||||||||||
Cash and cash equivalents |
$ | 51,811 | $ | 25,913 | |||||||
Restricted cash equivalents |
2,650 | 2,250 | |||||||||
Inventories |
190,052 | 52,058 | |||||||||
Accounts receivable |
5,457 | 18,647 | |||||||||
Deferred income taxes |
2,623 | 5,779 | |||||||||
Other current assets |
8,381 | 7,828 | |||||||||
Total current assets |
260,974 | 112,475 | |||||||||
Property, plant and equipment, net |
805,933 | 794,019 | |||||||||
Other noncurrent assets |
6,414 | 7,720 | |||||||||
Total assets |
$ | 1,073,321 | $ | 914,214 | |||||||
LIABILITIES and STOCKHOLDERS’ EQUITY |
|||||||||||
Current liabilities |
|||||||||||
Accounts payable |
$ | 9,871 | $ | 14,310 | |||||||
Accrued payroll and benefits |
7,435 | 10,071 | |||||||||
Property, production and franchise taxes payable |
7,520 | 10,998 | |||||||||
Current portion of long-term debt and capital lease
obligations |
1,926 | 21,461 | |||||||||
Long-term debt secured by finished goods inventory |
74,106 | — | |||||||||
Accrued restructuring costs |
1,649 | 1,926 | |||||||||
Other current liabilities |
3,388 | 7,017 | |||||||||
Total current liabilities |
105,895 | 65,783 | |||||||||
Long-term debt and capital lease obligations |
86,011 | 198,866 | |||||||||
Deferred income taxes |
89,144 | 80,615 | |||||||||
Other noncurrent liabilities |
13,522 | 9,736 | |||||||||
Total liabilities |
294,572 | 355,000 | |||||||||
Commitments and Contingencies |
|||||||||||
Stockholders’ equity |
|||||||||||
Preferred stock, $0.01 par value, 1,000,000 shares
authorized; none issued |
— | — | |||||||||
Common stock, $0.01 par value, 100,000,000 shares
authorized; 89,736,441 and 43,587,107 shares
issued and outstanding |
897 | 436 | |||||||||
Paid-in capital |
591,655 | 351,605 | |||||||||
Retained earnings |
186,860 | 209,504 | |||||||||
Accumulated other comprehensive loss |
(663 | ) | (1,405 | ) | |||||||
Unearned compensation – restricted stock awards |
— | (926 | ) | ||||||||
Total stockholders’ equity |
778,749 | 559,214 | |||||||||
Total liabilities and stockholders’ equity |
$ | 1,073,321 | $ | 914,214 | |||||||
See notes to consolidated financial statements.
3
Stillwater Mining Company
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(in thousands, except per share amounts)
| Three months ended | Nine months ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
Revenues |
$ | 58,221 | $ | 65,970 | $ | 179,751 | $ | 216,954 | |||||||||||
Costs and expenses |
|||||||||||||||||||
Cost of metals sold |
40,726 | 42,364 | 133,409 | 130,028 | |||||||||||||||
Depreciation and amortization |
10,126 | 10,078 | 30,569 | 29,654 | |||||||||||||||
Total cost of sales |
50,852 | 52,442 | 163,978 | 159,682 | |||||||||||||||
General and administrative expenses |
3,331 | 3,853 | 10,198 | 10,578 | |||||||||||||||
Norilsk Nickel transaction related expenses |
— | — | 3,043 | — | |||||||||||||||
Restructuring costs (reversal) |
— | — | — | (5,938 | ) | ||||||||||||||
Total costs and expenses |
54,183 | 56,295 | 177,219 | 164,322 | |||||||||||||||
Operating income |
4,038 | 9,675 | 2,532 | 52,632 | |||||||||||||||
Other income (expense) |
|||||||||||||||||||
Interest income |
136 | 263 | 315 | 744 | |||||||||||||||
Interest expense |
(4,021 | ) | (4,050 | ) | (13,616 | ) | (12,578 | ) | |||||||||||
Income (loss) before income taxes and cumulative effect
of accounting change |
153 | 5,888 | (10,769 | ) | 40,798 | ||||||||||||||
Income tax benefit (provision) |
(590 | ) | (1,229 | ) | 3,702 | (8,514 | ) | ||||||||||||
Reduction of deferred tax asset for net operating loss
carryforwards resulting from ownership change |
(1,191 | ) | — | (15,170 | ) | — | |||||||||||||
Total income tax provision |
(1,781 | ) | (1,229 | ) | (11,468 | ) | (8,514 | ) | |||||||||||
Income (loss) before cumulative effect of accounting change |
(1,628 | ) | 4,659 | (22,237 | ) | 32,284 | |||||||||||||
Cumulative effect of change in accounting for asset
retirement obligations, net of $264 income tax benefit |
— | — | (408 | ) | — | ||||||||||||||
Net income (loss) |
(1,628 | ) | 4,659 | (22,645 | ) | 32,284 | |||||||||||||
Other comprehensive income (loss), net of tax |
390 | (2,215 | ) | 742 | (6,092 | ) | |||||||||||||
Comprehensive income (loss) |
$ | (1,238 | ) | $ | 2,444 | $ | (21,903 | ) | $ | 26,192 | |||||||||
Basic earnings (loss) per share |
|||||||||||||||||||
Income (loss) before cumulative effect of accounting change |
$ | (0.02 | ) | 0.11 | $ | (0.28 | ) | $ | 0.76 | ||||||||||
Cumulative effect of accounting change |
— | — | (0.01 | ) | — | ||||||||||||||
Net income (loss) |
$ | (0.02 | ) | $ | 0.11 | $ | (0.29 | ) | $ | 0.76 | |||||||||
Diluted earnings (loss) per share |
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Income (loss) before cumulative effect of accounting change |
$ | (0.02 | ) | $ | 0.11 | $ | (0.28 | ) | $ | 0.75 | |||||||||
Cumulative effect of accounting change |
— | — | (0.01 | ) | — | ||||||||||||||
Net income (loss) |
$ | (0.02 | ) | $ | 0.11 | $ | (0.29 | ) | $ | 0.75 | |||||||||
Weighted average common shares outstanding |
|||||||||||||||||||
Basic |
89,662 | 43,306 | 77,265 | 42,712 | |||||||||||||||
Diluted |
89,662 | 43,365 | 77,265 | 42,851 | |||||||||||||||
See notes to consolidated financial statements.
4
Stillwater Mining Company
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
| Three months ended | Nine months ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
Cash flows from operating activities |
|||||||||||||||||
Net income (loss) |
$ | (1,628 | ) | $ | 4,659 | $ | (22,645 | ) | $ | 32,284 | |||||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
|||||||||||||||||
Depreciation and amortization |
10,126 | 10,078 | 30,569 | 29,654 | |||||||||||||
Deferred income taxes |
2,034 | 529 | 11,685 | 4,478 | |||||||||||||
Cumulative effect of change in accounting for
asset retirement obligations |
— | — | 672 | — | |||||||||||||
Reversal of restructuring costs |
— | — | — | (5,938 | ) | ||||||||||||
Cash paid on accrued restructuring costs |
(60 | ) | (469 | ) | (277 | ) | (2,970 | ) | |||||||||
Stock issued under employee benefit plans |
924 | 998 | 2,786 | 2,548 | |||||||||||||
Amortization of debt issuance costs |
273 | 256 | 2,789 | 759 | |||||||||||||
Amortization of restricted stock compensation |
— | 116 | 670 | 543 | |||||||||||||
Changes in operating assets and liabilities: |
|||||||||||||||||
Inventories |
(478 | ) | (317 | ) | 10,219 | (3,554 | ) | ||||||||||
Accounts receivable |
902 | 3,840 | 13,190 | (1,758 | ) | ||||||||||||
Accounts payable |
(9,075 | ) | 2,572 | (4,439 | ) | (7,650 | ) | ||||||||||
Other |
(2,266 | ) | (3,010 | ) | (8,460 | ) | (2,332 | ) | |||||||||
Net cash provided by operating activities |
752 | 19,252 | 36,759 | 46,064 | |||||||||||||
Cash flows used in investing activities |
|||||||||||||||||
Capital expenditures |
(14,780 | ) | (16,409 | ) | (40,975 | ) | (39,607 | ) | |||||||||
Proceeds from sale/leaseback transactions |
— | — | — | 1,282 | |||||||||||||
Net cash used in investing activities |
(14,780 | ) | (16,409 | ) | (40,975 | ) | (38,325 | ) | |||||||||
Cash flows from financing activities |
|||||||||||||||||
Issuance of common stock related to Norilsk Nickel
transaction, net of issue costs(1) |
— | — | 90,284 | — | |||||||||||||
Issuance of common stock, net of issue costs |
64 | 16 | 64 | 56,047 | |||||||||||||
Payments on long-term debt and capital lease obligations |
(492 | ) | (2,345 | ) | (58,628 | ) | (36,474 | ) | |||||||||
Payments for debt issuance costs |
— | — | (1,606 | ) | — | ||||||||||||
Net cash provided (used) by financing activities |
(428 | ) | (2,329 | ) | 30,114 | 19,573 | |||||||||||
Cash and cash equivalents |
|||||||||||||||||
Net increase (decrease) |
(14,456 | ) | 514 | 25,898 | 27,312 | ||||||||||||
Balance at beginning of period |
66,267 | 41,709 | |||||||||||||||