| [X] | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 | |
| For the Fiscal Year Ended December 31, 2009 |
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Page No.
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Signatures
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F-3
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(a)
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Financial Statements:
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Report of Independent Registered
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Public Accounting Firm
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F-4
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Statements of Net Assets Available
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for Benefits
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F-5
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Statements of Changes in Net Assets
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Available for Benefits
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F-6
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Summary of Significant Accounting Policies
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F-7
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Notes to Financial Statements
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F-10
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Schedules:
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Schedule of Assets Held for Investment
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Purposes at Year End
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F-17
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Schedules I, II and III have been omitted
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as provided under SEC Release No. 33-6867.
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(b)
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Exhibits:
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23 Consent of BDO Seidman, LLP to
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incorporation by reference of their report
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dated June 29, 2010, on the audit of the
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financial statements of the Hecla Mining
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Company Capital Accumulation Plan.
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F-19
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| HECLA MINING COMPANY CAPITAL ACCUMULATION PLAN | |||||
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By:
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/s/ James Sabala | Date: | June 29, 2010 | ||
| James Sabala, Senior Vice President and | |||||
| Chief Financial Officer | |||||
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December 31,
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2009
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2008
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Assets
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Investments, at fair market value:
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Money market funds
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$ | 3,526,771 | $ | 3,521,828 | ||||
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Mutual funds
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23,934,601 | 16,218,096 | ||||||
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Common stock of Hecla Mining Company,
including cash of $25,938 and $5,765
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3,197,217 | 1,152,760 | ||||||
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Participant loans
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1,164,353 | 878,190 | ||||||
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Total investments
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31,822,942 | 21,770,874 | ||||||
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Receivables:
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Employer contributions
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— | 61,042 | ||||||
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Participant contributions
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— | 5,056 | ||||||
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Total receivables
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— | 66,098 | ||||||
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Net assets available for benefits
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$ | 31,822,942 | $ | 21,836,972 | ||||
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Years ended December 31,
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2009
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2008
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||||||
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Investment income (loss):
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Interest income – money market
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$ | 19,328 | $ | 48,048 | ||||
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Interest income – participant loans
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64,345 | 39,585 | ||||||
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Dividend income
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486,993 | 539,788 | ||||||
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Net appreciation (depreciation) in fair market value ofinvestments
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6,187,452 | (8,898,919 | ) | |||||
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Total investment income (loss)
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6,758,118 | (8,271,498 | ) | |||||
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Contributions:
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||||||||
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Participants
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3,052,057 | 2,231,241 | ||||||
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Employer matching
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1,921,263 | 1,216,189 | ||||||
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Rollovers
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254,721 | 837,110 | ||||||
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Additions to net assets
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11,986,159 | (3,986,958 | ) | |||||
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Deductions:
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Distributions to participants
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(2,000,189 | ) | (784,552 | ) | ||||
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Total deductions from net assets
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(2,000,189 | ) | (784,552 | ) | ||||
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Net increase (decrease) in net assets available for benefits
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9,985,970 | (4,771,510 | ) | |||||
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Assets transferred into the plan
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— | 16,053,846 | ||||||
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Net assets available for benefits:
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Beginning of year
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21,836,972 | 10,554,636 | ||||||
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End of year
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$ | 31,822,942 | $ | 21,836,972 | ||||
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Basis of Accounting
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The Hecla Mining Company Capital Accumulation Plan (“Plan”) financial statements are presented on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.
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Investment Valuation and Income Recognition
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Investments in mutual funds are reported at quoted market value for the number of shares held by the Plan at year-end. Money market funds are recorded at cost, which approximates fair value. Hecla Mining Company common stock is valued at its quoted market price, per the New York Stock Exchange. Participant loans are stated at their outstanding balances, which approximates fair value.
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The Plan presents in the statement of changes in net assets available for benefits the net appreciation or depreciation in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation or depreciation on those investments. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
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Payment of Benefits
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Benefits are recorded when paid.
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Use of Estimates
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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein, and disclosures of contingent assets and liabilities. Actual results could differ materially from those estimates.
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Risks and Uncertainties
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The Plan invests in funds that invest in a combination of stocks, bonds, fixed income securities and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits.
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The fair value of the Plan’s investment in Hecla Mining Company common stock amounted to $3,197,217 and $1,152,760 as of December 31, 2009 and 2008, respectively. Such investments represented 10% and 5% of the Plan’s total net assets available for Plan benefits as of December 31, 2009 and 2008, respectively. For risks and uncertainties regarding Hecla Mining Company, participants should refer to the December 31, 2009, Form 10-K and March 31, 2010, Form 10-Q of Hecla Mining Company filed with the Securities and Exchange Commission.
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The Plan’s investment options include funds that invest in securities of foreign companies, which involve special risks and considerations not typically associated with investing in U.S. companies. These risks include devaluation of currencies, less reliable information about issuers, different securities transaction clearance and settlement practices, and possible adverse political and economic developments. Moreover, securities of many foreign companies and their markets may be less liquid and their prices more volatile than securities of comparable U.S. companies.
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New Accounting Pronouncements
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In January 2010, the FASB issued updated guidance to improve disclosures regarding fair value measurements. This update requires entities to (i) disclose the amounts of and reasons for significant transfers in and out of Levels 1 and 2 and (ii) present separately information (i.e., on a gross basis rather than as one net number), information about purchases, sales, issuances, and settlements in Level 3 fair value measurements. The update requires fair value disclosures by class of assets and liabilities rather than by major category or line item in the statement of financial position. Disclosures regarding the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for assets and liabilities in both Level 2 and Level 3 are also required. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. As this guidance is only disclosure-related, it will not have a material impact on the Plan’s financial statements.
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In May 2009, the FASB issued guidance on subsequent events that standardizes accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In February 2010, the FASB amended its guidance on subsequent events. As a SEC filer, the Plan is required to evaluate subsequent events through the date its financial statements are issued. These rules became effective for the Plan during the Plan year ended December 31, 2009, and did not have a material impact on the Plan.
In June 2009, the FASB issued FAS 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – replacement of FAS 162” (the “Codification”). The Codification supersedes all existing accounting and reporting standards other than the rules of the Securities and Exchange Commission (the “SEC”). Updates to the Codification are being issued as Accounting Standards Updates, which will also provide background information about the guidance, and provide the basis for conclusions on changes in the Codification. The Codification became effective for the Plan during the Plan year end December 31, 2009, and did not have a material impact on the Plan.
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1.
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Description of Plan
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The following descriptions and disclosures about the Plan provide only general information. Participants should refer to the most recent version of the summary Plan description and the Plan document for a more complete description of its provisions.
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General
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The Plan is a defined contribution plan, which originally became effective on January 1, 1986. The Plan provides for incentive savings through investments, which qualify under the Internal Revenue Service of the United States of America (“IRS”) section 401(a) for tax deferral status. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.
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Eligible Employees
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Effective April 25, 2008, all salaried and substantially all non-union hourly employees of Hecla Mining Company (the “Company”), and its subsidiaries, who are residents of the United States are immediately eligible to enroll in the plan upon employment. Prior to that date employees were required to have more than two months of service to be eligible to enroll in the Plan effective the first day of the next payroll period. Non-resident aliens that have no earned income from the company within the U.S., hourly employees at the company’s Lucky Friday Mine who are included in the United Steelworkers of America Local 5114, and leased employees are not allowed to participate in the Plan.
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Contributions
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Effective April 25, 2008, the plan was amended to allow non-highly and highly compensated employees, as defined by the plan, to contribute from 1% to 50% of their compensation. Prior to that date non-highly and highly compensated participants, as defined in the Plan, could contribute from 2% to 15% and 2% to 10% of their compensation, respectively. Employees who do not affirmatively specify their instructions with regard to participation in the Plan will automatically have 3% of their compensation reduced for contribution. Total pre-tax contributions may not exceed $16,500 and $15,500 for the years ended December 31, 2009 and 2008, respectively. Contributions may be suspended at any time upon thirty days written notice by the participant. Reinstatement and changes in contributions are effective for the following payroll period. Participants may also contribute amounts to the Plan previously contributed to another qualified plan.
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As of the April 25, 2008, amendment date, the Company makes matching contributions equal to 100% of deferred contributions, up to 6% of the participant’s compensation. Prior to April 25, 2008, the Company made matching contributions equal to 25%, of deferred contributions, up to 6% of the participant's compensation. The Company may also make a discretionary profit sharing contribution for any plan year. For the years ended December 31, 2009 and 2008 the Company made profit sharing contributions of $0.
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Participant Accounts
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Individual accounts are maintained for each participant. Each participant’s account is credited with the participant’s contribution, employer’s matching contribution, if eligible, earnings within the Plan and an allocation of the Company’s discretionary profit-sharing contribution, if any. Allocations of the Company’s contribution and plan earnings are based on participant account balances, as defined in the Plan document. The participant’s benefit is limited to the benefit that has accumulated in the participant’s account. Participants may direct the investment of their account balances into the investment options offered by the Plan. Currently the Plan offers sixteen investment options for participants. Participants may elect to change the amounts invested in any one or all of the individual options at any time.
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Vesting
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Participant contributions and the Company’s matching and discretionary contributions are 100% vested at all times.
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Payment of Benefits
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Distributions are made upon termination of employment, death, disability or retirement. Participants or their beneficiaries will receive payment of benefits as follows: (a) balances of $5,000 or less will be distributed as soon as administratively feasible, or (b) balances greater than $5,000 in various optional forms of distribution with written request to the Company for payment. Withdrawals from the Plan may also be made upon circumstances of financial hardship or termination of the Plan, in accordance with provisions specified in the Plan.
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Participant Loans
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Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance. The loans are secured by the balance in the participant’s account and bear interest at a rate commensurate with prevailing rates as determined by the Plan administrator, which currently range from 4.25% to 9.25%. Principal and interest are repaid ratably through payroll deductions over periods ranging up to 5 years, unless the loan is for the purchase of the participant’s principal residence, in which case the Plan Administrator may permit a longer repayment term.
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Administrative Expenses
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Expenses for administration of the Plan are paid directly by the Company. The loan application fee is paid by the participant.
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2.
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Investments
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All of the plan’s assets are managed and held by Vanguard Fiduciary Trust Company, the Trustee, which operates under the direction of certain officers of the company. Participants may invest in one or more of the various mutual funds and money market funds sponsored by the Trustee.
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The following investments represent 5% or more of the Plan’s net assets:
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December 31,
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2009
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2008
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||||||
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Mutual Funds:
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Vanguard Prime Money Market
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$ | 3,526,771 | $ | 3,521,828 | ||||
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Vanguard Target Retirement 2025
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$ | 4,014,532 | $ | 2,987,561 | ||||
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Vanguard Target Retirement 2015
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$ | 3,236,692 | $ | 2,502,511 | ||||
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Vanguard Target Retirement 2020
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$ | 2,740,177 | $ | 1,903,320 | ||||
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Vanguard Target Retirement 2030
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$ | 1,810,062 | $ | * | ||||
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Vanguard Target Retirement 2035
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$ | 2,043,093 | $ | 1,296,264 | ||||
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Vanguard Growth & Income
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$ | * | $ | 1,266,028 | ||||
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Common Stock:
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Hecla Mining Company Common
Stock Fund
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$ | 3,197,217 | $ | 1,152,760 | ||||
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*Less than 5%
The net appreciation and depreciation of the fair value of mutual funds for 2009 and 2008 was $4,198,716 and $7,707,836, respectively. The net appreciation in the fair value of the common stock of Hecla Mining Company for 2009 was $1,988,736, while the net depreciation was $1,191,083 in 2008.
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3.
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Plan Termination
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Although it has not expressed intent to do so, the Company has the right, under the Plan, to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. All assets remaining in the Plan after payment of any expenses properly chargeable against the Plan shall be paid to participants in such a manner as the Plan Administrator shall determine.
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4.
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Party-in-Interest Transactions
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Certain Plan investments are shares of mutual funds managed by Vanguard Fiduciary Trust Company, the trustee, and therefore, these transactions qualify as party-in-interest transactions. Certain Plan investments are shares in Hecla Mining Company common stock; therefore, these transactions also qualify as party-in-interest transactions.
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5.
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Income Tax Status
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The Plan received a letter from the IRS dated March 31, 2008, informing it that the Plan is qualified and exempt under Section 401(a) of the Internal Revenue Code. The Plan has been amended since receiving the determination letter; however, management of the Company and the Plan Administrator believe the Plan is designed and is currently being operated in compliance with the applicable requirements of the Internal Revenue Code.
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6.
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Fair Value Measurement
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The following is a description of the valuation methodologies used for Plan assets, as well as the general classification of such items pursuant to the fair value hierarchy:
Money Market Funds—The fair values of the Money Market Funds are determined by the quoted share price on active markets as of the last day of the plan year and are included in Level 1 of the fair value hierarchy.
Mutual Funds—The fair values of the Mutual Funds are determined by the quoted share price on active markets as of the last day of the plan year and are included in Level 1 of the fair value hierarchy.
Common Stock of Hecla Mining Company—The fair value of the Hecla Common Stock is determined by the quoted share price on active markets as of the last day of the plan year and are included in Level 1 of the fair value hierarchy.
Participant Loans—The Participant loans are valued at amortized cost, which approximates fair value and are included in Level 3 of the fair value hierarchy.
The table below sets forth our assets that were accounted for at fair value as of December 31, 2009, and the fair value calculation input hierarchy level that applies to each asset category.
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Description
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Balance at
December 31,
2009
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Quoted prices in active market for identical assets (Level 1)
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Significant unobservable inputs
(Level 3)
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Mutual Funds:
|
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Blended Funds
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$ | 21,224,214 | 21,224,214 | — | ||||||||
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Bond Funds
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$ | 1,127,542 | 1,127,542 | — | ||||||||
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Growth Funds
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$ | 1,000,264 | 1,000,264 | — | ||||||||
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Value Funds
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$ | 582,581 | 582,581 | — | ||||||||
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Total Mutual Funds
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$ | 23,934,601 | 23,934,601 | — | ||||||||
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Money Market Funds
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$ | 3,526,771 | 3,526,771 | — | ||||||||
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Common Stock-Hecla
Mining Company
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$ | 3,197,217 | 3,197,217 | — | ||||||||
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Participant Loans
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$ | 1,164,353 | — | 1,164,353 | ||||||||
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Total
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$ | 31,822,942 | 30,658,589 | 1,164,353 | ||||||||
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Description
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Balance at
December 31,
2008
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Quoted prices in active market for identical assets (Level 1)
|
Significant unobservable inputs
(Level 3)
|
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Mutual Funds:
|
||||||||||||
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Blended Funds
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$ | 14,475,705 | 14,475,705 | — | ||||||||
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Bond Funds
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$ | 536,242 | 536,242 | — | ||||||||
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Growth Funds
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$ | 841,307 | 841,307 | — | ||||||||
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Value Funds
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$ | 364,842 | 364,842 | — | ||||||||
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Total Mutual Funds
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$ | 16,218,096 | 16,218,096 | — | ||||||||
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Money Market Funds
|
$ | 3,521,828 | 3,521,828 | — | ||||||||
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Common Stock-Hecla
Mining Company
|
$ | 1,152,760 | 1,152,760 | — | ||||||||
|
Participant Loans
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$ | 878,190 | — | 878,190 | ||||||||
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Total
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$ | 21,770,874 | 20,892,684 | 878,190 | ||||||||
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The table below sets forth a summary of changes in the fair value of the Plan’s Level 3 assets for the year ended December 31, 2009.
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Balance, beginning of year
|
$ | 878,190 | ||
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Loan withdrawals, repayments and transfers from other plans, net
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286,163 | |||
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Balance, end of year
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$ | 1,164,353 |
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No changes were made to the valuation methodologies used for Plan assets, as well as the general classification of such items pursuant to the fair value hierarchy in 2009.
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7.
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Assets Transferred
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On April 16, 2008, the Company completed the acquisition of all of the equity of the Rio Tinto, PLC subsidiaries that held a 70.3% interest in the Greens Creek mine, thus consolidating the Company’s ownership. The Company’s wholly-owned subsidiary, Hecla Alaska LLC, previously owned an undivided 29.7% joint venture interest in the assets of Greens Creek. The acquisition gives the Company’s subsidiaries control of 100% of the Greens Creek mine. As a result, the employees of the Greens Creek mine were given the option to rollover their balances into the Hecla Mining Company Capital Accumulation Plan of which 262 participants exercised this option and transferred approximately $16.1 million into the Plan.
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7.
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Subsequent Events
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The Plan has evaluated all events subsequent to the balance sheet date of December 31, 2009. Plan management has determined that there are no subsequent events that require recognition or disclosure in these financial statements.
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EIN: 77-0664171
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Plan Number: 004
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(c)
|
||||||||||||
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Description of Investment
|
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(b)
|
Including Maturity Date,
|
(e)
|
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Identity of Issuer, Borrower,
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Rate of Interest, Collateral,
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(d)
|
Current
|
|||||||||
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(a)
|
Lessor or Similar Party
|
Par or Maturity Value
|
Cost **
|
Value
|
||||||||
|
*
|
Vanguard Prime Money Market Fund
|
Cash equivalents at various interest rates averaging 0.53% in 2009
|
** | $ | 3,526,771 | |||||||
|
*
|
Vanguard Total Bond Market Index Fund
|
Mutual fund consisting of 108,941 units
|
** | $ | 1,127,543 | |||||||
|
American Funds Growth Fund of America
|
Mutual fund consisting of 36,897 shares
|
** | $ | 1,000,264 | ||||||||
|
*
|
Vanguard 500 Index Fund
|
Mutual fund consisting of 6,474 shares
|
** | $ | 664,636 | |||||||
|
*
|
Vanguard Windsor II Fund
|
Mutual fund consisting of 14,870 shares
|
** | $ | 352,129 | |||||||
|
*
|
Vanguard Growth and Income Fund
|
Mutual fund consisting of 62,701 shares
|
** | $ | 1,465,940 | |||||||
|
*
|
Vanguard Target Retirement 2005 Fund
|
Mutual fund consisting of 8,713 shares
|
** | $ | 95,668 | |||||||
|
*
|
Vanguard Target Retirement 2015 Fund
|
Mutual fund consisting of 286,180 shares
|
** | $ | 3,236,692 | |||||||
|
*
|
Vanguard Target Retirement 2025 Fund
|
Mutual fund consisting of 354,641 shares
|
** | $ | 4,014,532 | |||||||
|
*
|
Vanguard Target Retirement 2035 Fund
|
Mutual fund consisting of 175,826 shares
|
** | $ | 2,043,093 | |||||||
|
*
|
Vanguard Target Retirement 2045 Fund
|
Mutual fund consisting of 65,560 shares
|
** | $ | 788,028 | |||||||
|
*
|
Vanguard Target Retirement 2010 Fund
|
Mutual fund consisting of 42,724 shares
|
** | $ | 876,702 | |||||||
|
*
|
Vanguard Target Retirement 2020 Fund
|
Mutual fund consisting of 137,283 shares
|
** | $ | 2,740,177 | |||||||
|
*
|
Vanguard Target Retirement 2030 Fund
|
Mutual fund consisting of 93,737 shares
|
** | $ | 1,810,062 | |||||||
|
*
|
Vanguard Target Retirement 2040 Fund
|
Mutual fund consisting of 43,669 shares
|
** | $ | 831,887 |
|
EIN: 77-0664171
|
||||||||||||
|
Plan Number: 004
|
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|
(c)
|
||||||||||||
|
Description of Investment
|
||||||||||||
|
(b)
|
Including Maturity Date,
|
(e)
|
||||||||||
| Identity of Issuer, Borrower, |
Rate of Interest, Collateral,
|
(d)
|
Current
|
|||||||||
|
(a)
|
Lessor or Similar Party
|
Par or Maturity Value
|
Cost **
|
Value
|
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|
*
|
Vanguard Target Retirement 2050 Fund
|
Mutual fund consisting of 40,440 shares
|
** | $ | 772,816 | |||||||
|
Artisan International Fund
|
Mutual fund consisting of 55,632 shares
|
** | $ | 1,149,348 | ||||||||
|
*
|
Vanguard Strategic Equity Fund
|
Mutual fund consisting of 43,611 shares
|
** | $ | 666,371 | |||||||
|
Third Avenue Small-Cap Value Fund
|
Mutual fund consisting of 12,669 shares
|
** | $ | 230,452 | ||||||||
|
*
|
Vanguard Target Retirement Income
|
Mutual fund consisting of 6,446 shares
|
** | $ | 68,261 | |||||||
|
*
|
Hecla Mining Company Common Stock
|
Common stock of the Company consisting of 515,886 shares, par value of $0.25
|
** | $ | 3,197,217 | |||||||
|
*
|
Participant loans
|
132 loans with interest rates ranging from 4.25% - 9.25% maturing through February 2026
|
** | $ | 1,164,353 | |||||||
|
* Represents party-in-interest to the Plan
|
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|
** The cost of participant directed investments is not required to be disclosed.
|
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