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Note 5 - Income Taxes | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 5: Income Taxes Major components of our income tax (provision) benefit for the years ended December 31, 2016, 2015 and 2014 are as follows (in thousands):
|  | 2016 |  |  | 2015 |  |  | 2014 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | (10,702 | ) |  | $ | 3,892 |  |  | $ | 7,761 |
Foreign |  |  | (13,713 | ) |  |  | (5,376 | ) |  |  | (619 | )
Total current income tax (provision) benefit |  |  | (24,415 | ) |  |  | (1,484 | ) |  |  | 7,142 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  |  | 7,480 |  |  |  | (75,456 | ) |  |  | (1,572 | )
Foreign |  |  | (10,493 | ) |  |  | 20,630 |  |  |  | (330 | )
Total deferred income tax (provision) benefit |  |  | (3,013 | ) |  |  | (54,826 | ) |  |  | (1,902 | )
Total income tax benefit (provision) |  | $ | (27,428 | ) |  | $ | (56,310 | ) |  | $ | 5,240 |
Domestic and foreign components of (loss) income before income taxes for the years ended December 31, 2016, 2015 and 2014 are as follows (in thousands):
|  | 2016 |  |  | 2015 |  |  | 2014 |
Domestic |  | $ | 41,014 |  |  | $ | (65,895 | ) |  | $ | (1,505 | )
Foreign |  |  | 55,961 |  |  |  | 35,237 |  |  |  | 14,089 |
Total |  | $ | 96,975 |  |  | $ | (30,658 | ) |  | $ | 12,584 |
The annual tax (provision) benefit is different from the amount that would be provided by applying the statutory federal income tax rate to our pretax (loss) income. The reasons for the difference are (in thousands):
|  | 2016 |  |  | 2015 |  |  | 2014 |
Computed “statutory” benefit (provision) |  | $ | (33,941 | ) |  |  | 35 | % |  | $ | 10,731 |  |  |  | 35 | % |  | $ | (4,405 | ) |  |  | 35 | %
Percentage depletion |  |  | 8,114 |  |  |  | (8 | ) |  |  | 2,432 |  |  |  | 8 |  |  |  | 6,034 |  |  |  | (48 | )
Change in valuation allowance |  |  | 11,336 |  |  |  | (12 | ) |  |  | (84,951 | ) |  |  | (277 | ) |  |  | (6,314 | ) |  |  | 50 |
State taxes, net of federal taxes |  |  | (565 | ) |  |  | 1 |  |  |  | (3,639 | ) |  |  | (12 | ) |  |  | 1,671 |  |  |  | (13 | )
Foreign currency remeasurement of monetary assets and liabilities |  |  | (4,598 | ) |  |  | 5 |  |  |  | 28,184 |  |  |  | 92 |  |  |  | 16,368 |  |  |  | (130 | )
Rate differential on foreign earnings |  |  | (6,853 | ) |  |  | 7 |  |  |  | (4,746 | ) |  |  | (15 | ) |  |  | (5,938 | ) |  |  | 47 |
Compensation |  |  | (1,311 | ) |  |  | 1 |  |  |  | (815 | ) |  |  | (3 | ) |  |  | (1,308 | ) |  |  | 10 |
Other |  |  | 390 |  |  |  | (1 | ) |  |  | (3,506 | ) |  |  | (12 | ) |  |  | (868 | ) |  |  | 7 |
Total |  | $ | (27,428 | ) |  |  | 28 | % |  | $ | (56,310 | ) |  |  | (184 | )% |  | $ | 5,240 |  |  |  | (42 | )%
We evaluated the positive and negative evidence available to determine the amount of valuation allowance required on our deferred tax assets. At December 31, 2016 and 2015, the balances of our valuation allowances were approximately $100 million and $116 million, respectively, primarily related to net operating losses and tax credit carryforwards. The amount of the deferred tax asset considered recoverable, however, could be reduced in the near term if estimates of future taxable income are reduced. At December 31, 2016 and 2015, the net deferred tax liability was approximately $87 million and $66 million, respectively. The individual components of our net deferred tax assets and liabilities are reflected in the table below (in thousands).
|  | December 31, |
|  | 2016 |  |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued reclamation costs |  | $ | 30,188 |  |  | $ | 26,473 |
Deferred exploration |  |  | 26,785 |  |  |  | 29,120 |
Foreign net operating losses |  |  | 1,058 |  |  |  | 21,140 |
Domestic net operating losses |  |  | 82,359 |  |  |  | 82,116 |
AMT credit carryforwards |  |  | 20,405 |  |  |  | 11,607 |
Pension and benefit obligation |  |  | 18,115 |  |  |  | 18,916 |
Foreign exchange loss |  |  | 34,977 |  |  |  | 38,779 |
Foreign tax credit carryforward |  |  | 7,283 |  |  |  | 6,692 |
Miscellaneous |  |  | 30,166 |  |  |  | 27,205 |
Total deferred tax assets |  |  | 251,336 |  |  |  | 262,048 |
Valuation allowance |  |  | (99,602 | ) |  |  | (115,806 | )
Total deferred tax assets |  |  | 151,734 |  |  |  | 146,242 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Miscellaneous |  |  | (3,046 | ) |  |  | (2,394 | )
Properties, plants and equipment |  |  | (235,700 | ) |  |  | (209,577 | )
Total deferred tax liabilities |  |  | (238,746 | ) |  |  | (211,971 | )
Net deferred tax liability |  | $ | (87,012 | ) |  | $ | (65,729 | )
We plan to permanently reinvest earnings from foreign subsidiaries, with the exception of Hecla Quebec Inc., our wholly-owned subsidiary which owns our Casa Berardi mine and other interests in Quebec, Canada, and Minera Hecla, our wholly-owned subsidiary which owns our San Sebastian mine and other interests in Durango, Mexico. For the years 2016, 2015 and 2014, we had no unremitted foreign earnings. Foreign net operating losses carried forward are shown above as a deferred tax asset, with a partial valuation allowance as discussed below. We recorded a valuation allowance to reflect the estimated amount of deferred tax assets, which may not be realized principally due to the forecasted expiration of net operating losses and tax credit carryforwards. A portion of the valuation allowance relating to foreign net operating loss carryforwards was released in 2015 as we determined that it was more likely than not that a portion of the benefit of the net operating loss carryforwards would be realized as a result of operating activities at San Sebastian. There was also significant utilization of deferred tax assets in the U.S. and Mexico. As of December 31, 2016, a $96 million valuation allowance remains in U.S. jurisdictions, $2 million in Hecla Canada Limited and $1 million in Minera Hecla S.A. de C.V. There is no valuation allowance at Hecla Quebec, Inc. The changes in the valuation allowance for the years ended December 31, 2016, 2015 and 2014, are as follows (in thousands):
|  | 2016 |  |  | 2015 |  |  | 2014 |
Balance at beginning of year |  | $ | (115,806 | ) |  | $ | (32,094 | ) |  | $ | (27,155 | )
Increase related to non-utilization of net operating loss carryforwards and non-recognition of deferred tax assets due to uncertainty of recovery |  |  | (2,868 | ) |  |  | (92,393 | ) |  |  | (6,314 | )
Decrease related to utilization and expiration of deferred tax assets, other |  |  | 19,072 |  |  |  | 8,681 |  |  |  | 1,375 |
Balance at end of year |  | $ | (99,602 | ) |  | $ | (115,806 | ) |  | $ | (32,094 | )
As of December 31, 2016, for U.S. income tax purposes, we have federal and state net operating loss carryforwards of $244 million and $84 million, respectively. These net operating loss carryforwards have a 20 year expiration period, the earliest of which could expire in 2020. We have foreign and provincial net operating loss carryforwards of approximately $4 million each, which expire between 2017 and 2036. We have approximately $20 million in alternative minimum tax credit carryforwards which do not expire and are eligible to reduce future U.S. tax liabilities. Our utilization of U.S. net operating loss carryforwards may be subject to annual limitations if there is a change in control as defined under Internal Revenue Code Section 382. At December 31, 2016 and 2015 we had $22 million and $20 million, respectively, of federal net operating loss carryovers relating to excess tax benefits from the exercise of employee stock options and the vesting of restricted stock awards. These amounts are not reflected in our deferred tax asset for net operating loss carryovers. We recognize the excess tax benefits from the exercise of employee stock options and the vesting of restricted stock awards in the period in which these tax benefits reduce income taxes payable, after net operating loss carryforwards are fully utilized. We file income tax returns in the U.S. federal jurisdiction, various state and foreign jurisdictions. We are no longer subject to income tax examinations by U.S. federal and state tax authorities for years prior to 2000, or examinations by foreign tax authorities for years prior to 2010. We currently have no tax years under examination. We had no unrecognized tax benefits as of December 31, 2016 or 2015. Due to the net operating loss carryover provision, coupled with the lack of any unrecognized tax benefits, we have not provided for any interest or penalties associated with any uncertain tax positions. If interest and penalties were to be assessed, our policy is to charge interest to interest expense, and penalties to other operating expense. It is not anticipated that there will be any significant changes to unrecognized tax benefits within the next 12 months. As discussed in Note 15 , we acquired Mines Management, Inc. in September 2016. In accounting for this acquisition, we adopted a policy to consider the recoverability of deferred tax assets acquired in the acquisition before considering the recoverability of the acquirer’s existing deferred tax assets.

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