|
[X]
|
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
|
|
Hecla Mining Company
6500 North Mineral Drive, Suite 200
Coeur d'Alene, ID 83815-9408
|
| Page No. | |||
|
Signatures
|
F-3
|
||
| (a) |
Financial Statements:
|
||
|
Report of Independent Registered Public Accounting Firm
|
F-4
|
||
|
Statements of Net Assets Available for Benefits
|
F-5
|
||
|
Statements of Changes in Net Assets Available for Benefits
|
F-6
|
||
|
Notes to Financial Statements
|
F-7
|
||
|
Schedules:
|
|||
|
Schedule of Assets Held for Investment Purposes at Year End
|
F-14
|
||
|
Schedules I, II and III have been omitted as provided under SEC Release No. 33-6867.
|
|||
| (b) |
Exhibits:
|
||
| 23 |
Consent of BDO USA, LLP to incorporation by reference of their report dated June 27, 2012, on the audit of the financial statements of the Hecla Mining Company Capital Accumulation Plan.
|
F-16 | |
| By: | /s/ James Sabala | Date: | June 27, 2012 |
|
James Sabala,
Senior Vice President and Chief Financial Officer
|
|
December 31,
|
2011
|
2010
|
||||||
|
Assets
|
||||||||
|
Investments, at Fair Value
|
||||||||
|
Money market funds
|
$ | 5,296,378 | $ | 4,981,838 | ||||
|
Mutual funds
|
30,802,198 | 30,338,541 | ||||||
|
Common stock of Hecla Mining Company, including money market funds of $31,124 and $30,771
|
3,358,351 | 4,047,193 | ||||||
|
Total Investments
|
39,456,927 | 39,367,572 | ||||||
|
Receivables
|
||||||||
|
Employer contributions
|
2,553 | 2,336 | ||||||
|
Participant contributions
|
3,715 | 3,273 | ||||||
|
Notes due from participants
|
1,670,775 | 1,529,033 | ||||||
|
Total Receivables
|
1,677,043 | 1,534,642 | ||||||
|
Net Assets Available for Benefits
|
$ | 41,133,970 | $ | 40,902,214 | ||||
|
Years ended December 31,
|
2011
|
2010
|
||||||
|
Investment Income
|
||||||||
|
Interest income – money market
|
$ | 2,295 | $ | 2,651 | ||||
|
Interest income – notes due from participants
|
75,466 | 71,987 | ||||||
|
Dividend income
|
704,808 | 618,177 | ||||||
|
Net appreciation (depreciation) in fair value of investments
|
(3,384,913 | ) | 4,900,849 | |||||
|
Total Investment Income
|
(2,602,344 | ) | 5,593,664 | |||||
|
Contributions
|
||||||||
|
Participants
|
3,611,638 | 3,508,885 | ||||||
|
Employer matching
|
2,230,953 | 2,128,395 | ||||||
|
Rollovers
|
455,628 | 159,903 | ||||||
|
Other additions
|
1,408 | 597 | ||||||
|
Additions to net assets
|
3,697,283 | 11,391,444 | ||||||
|
Deductions
|
||||||||
|
Distributions to participants
|
(3,465,527 | ) | (2,312,172 | ) | ||||
|
Total Deductions from Net Assets
|
(3,465,527 | ) | (2,312,172 | ) | ||||
|
Net increase in net assets available for benefits
|
231,756 | 9,079,272 | ||||||
|
Net Assets Available for Benefits
|
||||||||
|
Beginning of year
|
40,902,214 | 31,822,942 | ||||||
|
End of year
|
$ | 41,133,970 | $ | 40,902,214 | ||||
|
1. Summary of Accounting Policies
Basis of Accounting
|
|
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.
|
|
Investment Valuation and Income Recognition
|
|
Investments in mutual funds and money market funds are reported at quoted market value for the number of shares held by the Plan at year-end. Hecla Mining Company common stock is valued at its quoted market price, per the New York Stock Exchange.
|
|
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.
|
|
Payment of Benefits
|
|
Benefits are recorded when paid.
|
|
Use of Estimates
|
|
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.
|
|
Risks and Uncertainties
|
|
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.
|
|
The fair value of the Plan’s investment in Hecla Mining Company common stock amounted to $3,358,351 and $4,047,193 as of December 31, 2011 and 2010, respectively. Such investments represented 8.2% and 9.9% of the Plan’s total net assets available for Plan benefits as of December 31, 2011 and 2010, respectively. For risks and uncertainties regarding Hecla Mining Company, participants should refer to the December 31, 2011, Form 10-K and March 31, 2012, Form 10-Q of Hecla Mining Company filed with the Securities and Exchange Commission.
|
|
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.
|
|
New Accounting Pronouncements
|
|
In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, which amends Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures,” to provide for common principles and requirements for fair value measurements and disclosures between accounting principles generally accepted in the United States of America and International Financial Reporting Standards. The amendments explain how to measure fair value. They do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments change the wording used to describe fair value measurement requirements and disclosures, but often do not result in a change in the application of current guidance. Certain amendments clarify the intent about the application of existing fair value measurement requirements, while certain other amendments change a principle or requirement for fair value measurement disclosure. This guidance is effective for interim and annual periods beginning after December 15, 2011. The Plan does not anticipate that the adoption of this guidance will have an impact on the Plan’s financial statement.
|
|
2. Description of Plan
|
|
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.
|
|
General
|
|
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.
|
|
Eligible Employees
|
|
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. 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.
|
|
Contributions
|
|
The plan allows non-highly and highly compensated employees, as defined by the plan, to contribute from 1% to 50% of their compensation. 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 for the years ended December 31, 2011 and 2010. Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions. Contributions may be suspended at any time upon thirty days written notice by the participant, with reinstatement and changes in suspended contributions effective for the following payroll period. Participants may also contribute amounts to the Plan previously contributed to another qualified plan.
|
|
The Company makes matching contributions equal to 100% 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, 2011 and 2010, the Company did not make any profit sharing contributions.
|
|
Participant Accounts
|
|
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 twenty-two investment options for participants. Participants may elect to change the amounts invested in any one or all of the individual options at any time.
|
|
Vesting
|
|
Participant contributions and the Company’s matching and discretionary contributions are 100% vested at all times.
|
|
Payment of Benefits
|
|
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.
|
|
Notes Due From Participants
|
|
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.
|
|
Administrative Expenses
|
|
Expenses for administration of the Plan are paid directly by the Company. The loan application fee is paid by the participant.
|
|
3. Investments
|
|
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, money market funds, and Hecla common stock fund sponsored by the Trustee.
|
|
The following investments represent 5% or more of the Plan’s net assets:
|
|
December 31,
|
2011
|
2010
|
||||||
|
Vanguard Prime Money Market
|
$ | 5,296,378 | $ | 4,981,838 | ||||
|
Mutual Funds
|
||||||||
|
Vanguard Target Retirement 2025
|
$ | 5,292,499 | $ | 5,081,848 | ||||
|
Vanguard Target Retirement 2020
|
$ | 3,740,298 | $ | 3,230,552 | ||||
|
Vanguard Target Retirement 2015
|
$ | 3,354,822 | $ | 3,838,700 | ||||
|
Vanguard Target Retirement 2035
|
$ | 3,110,556 | $ | 2,773,244 | ||||
|
Vanguard Target Retirement 2030
|
$ | 2,991,367 | $ | 2,646,416 | ||||
|
Common Stock
|
||||||||
|
Hecla Mining Company Common Stock Fund
|
$ | 3,358,351 | $ | 4,047,193 | ||||
|
The net depreciation of the fair value of mutual funds for 2011 was $787,025 and the net appreciation of the fair value of mutual funds for 2010 was $2,720,627. The net depreciation in the fair value of common stock of Hecla Mining Company for 2011 was $2,597,888, while the net appreciation was $2,180,222 in 2010.
|
|
4. Plan Termination
|
|
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.
|
|
5. Party-in-Interest Transactions
|
|
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 of Hecla Mining Company common stock; therefore, these transactions also qualify as party-in-interest transactions.
|
|
6. Income Tax Status
|
|
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.
|
|
7. Fair Value Measurement
|
||||||||
|
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, including Money Market Funds—The fair value of the Hecla Common Stock Fund is determined through the use of models or other valuation methodologies and is included in Level 2 of the fair value hierarchy.
There have been no changes in the methodology used at December 31, 2011 and 2010.
|
||||||||
|
The tables below sets forth our assets that were accounted for at fair value as of December 31, 2011 and 2010, and the fair value calculation input hierarchy level that applies to each asset category.
|
|
Description
|
Balance at December 31, 2011
|
Quoted prices in active market for identical assets (Level 1)
|
Significant other observable inputs
(Level 2)
|
|||||||||
|
Mutual Funds
|
||||||||||||
|
Blended Funds
|
$ | 28,010,176 | $ | 28,010,176 | $ | — | ||||||
|
Bond Funds
|
1,044,151 | 1,044,151 | — | |||||||||
|
Growth Funds
|
1,080,736 | 1,080,736 | — | |||||||||
|
Value Funds
|
667,135 | 667,135 | — | |||||||||
|
Total Mutual Funds
|
30,802,198 | 30,802,198 | — | |||||||||
|
Money Market Funds
|
5,296,378 | 5,296,378 | — | |||||||||
|
Common Stock-Hecla Mining Company
|
3,358,351 | — | 3,358,351 | |||||||||
|
Total
|
$ | 39,456,927 | $ | 36,098,576 | $ | 3,358,351 | ||||||
|
Description
|
Balance at December 31, 2010
|
Quoted prices in active market for identical assets (Level 1)
|
Significant other observable inputs
(Level 2)
|
|||||||||
|
Mutual Funds
|
||||||||||||
|
Blended Funds
|
$ | 27,098,712 | $ | 27,098,712 | $ | — | ||||||
|
Bond Funds
|
1,437,726 | 1,437,726 | — | |||||||||
|
Growth Funds
|
1,136,890 | 1,136,890 | — | |||||||||
|
Value Funds
|
665,213 | 665,213 | — | |||||||||
|
Total Mutual Funds
|
30,338,541 | 30,338,541 | — | |||||||||
|
Money Market Funds
|
4,981,838 | 4,981,838 | — | |||||||||
|
Common Stock-Hecla Mining Company
|
4,047,193 | — | 4,047,193 | |||||||||
|
Total
|
$ | 39,367,572 | $ | 35,320,379 | $ | 4,047,193 | ||||||
|
EIN: 77-0664171
|
||||||
|
Plan Number: 004
|
||||||
|
(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
|
||
|
Artisan International Fund
|
Mutual fund consisting of 45,342 shares
|
**
|
$
|
899,129
|
||
|
American Funds Growth Fund of America
|
Mutual fund consisting of 37,894 shares
|
**
|
$
|
1,080,736
|
||
|
Third Avenue Small-cap Value Fund
|
Mutual fund consisting of 12,434 shares
|
**
|
$
|
245,819
|
||
|
*
|
Vanguard 500 Index Fund
|
Mutual fund consisting of 10,124 shares | ** | $ | 1,172,395 | |
|
*
|
Vanguard Growth and Income Fund
|
Mutual fund consisting of 62,397 shares
|
**
|
$
|
1,652,260
|
|
|
*
|
Vanguard Prime Money Market Fund
|
Cash equivalents at various interest rates averaging 0.05% in 2011
|
**
|
$
|
5,296,378
|
|
|
*
|
Vanguard Strategic Equity Fund
|
Mutual fund consisting of 49,516 shares
|
**
|
$
|
908,127
|
|
|
*
|
Vanguard Total Bond Market Index Fund
|
Mutual fund consisting of 94,923 units
|
**
|
$
|
1,044,151
|
|
|
*
|
Vanguard Target Retirement 2005 Fund
|
Mutual fund consisting of 11,430 shares
|
**
|
$
|
136,932
|
|
|
*
|
Vanguard Target Retirement 2010 Fund
|
Mutual fund consisting of 9,091 shares
|
**
|
$
|
203,905
|
|
|
*
|
Vanguard Target Retirement 2015 Fund
|
Mutual fund consisting of 272,750 shares
|
**
|
$
|
3,354,822
|
|
|
*
|
Vanguard Target Retirement 2020 Fund
|
Mutual fund consisting of 172,443 shares
|
**
|
$
|
3,740,298
|
|
|
*
|
Vanguard Target Retirement 2025 Fund
|
Mutual fund consisting of 431,336 shares
|
**
|
$
|
5,292,499
|
|
|
*
|
Vanguard Target Retirement 2030 Fund
|
Mutual fund consisting of 142,991 shares
|
**
|
$
|
2,991,367
|
|
|
*
|
Vanguard Target Retirement 2035 Fund
|
Mutual fund consisting of 248,646 shares
|
**
|
$
|
3,110,556
|
|
|
*
|
Vanguard Target Retirement 2040 Fund
|
Mutual fund consisting of 62,367 shares
|
**
|
$
|
1,278,515
|
|
|
*
|
Vanguard Target Retirement 2045 Fund
|
Mutual fund consisting of 106,326 shares
|
**
|
$
|
1,368,415
|
|
|
*
|
Vanguard Target Retirement 2050 Fund
|
Mutual fund consisting of 59,703 shares
|
**
|
$
|
1,218,533
|
|
|
*
|
Vanguard Target Retirement 2055 Fund
|
Mutual fund consisting of 589 shares
|
**
|
$
|
12,866
|
|
|
*
|
Vanguard Windsor II Fund
|
Mutual fund consisting of 16,343 shares
|
**
|
$
|
421,315
|
|
|
EIN: 77-0664171
|
||||||
|
Plan Number: 004
|
||||||
|
(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
|
||
|
*
|
Vanguard Target Retirement Income
|
Mutual fund consisting of 58,071 shares
|
**
|
$
|
669,558
|
|
|
*
|
Hecla Mining Company Common Stock Fund
|
Common stock of the Company consisting of 639,228 shares, par value of $0.25
|
**
|
$
|
3,358,351
|
|
| * |
Notes due from Participants
|
200 notes from participants with interest rates ranging from 4.25% - 9.25% maturing through march 2026
|
** | $ |
1,670,775
|
|
|
* Represents party-in-interest to the Plan
|
|
** The cost of participant directed investments is not required to be disclosed.
|