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Note 5 - Income Taxes | 12 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 5: Income Taxes Major components of our income tax provision for the years ended December 31, 2017, 2016 and 2015 are as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 22,171 |  |  | $ | (10,702 | ) |  | $ | 3,892 |
Foreign |  |  | (22,526 | ) |  |  | (13,713 | ) |  |  | (5,376 | )
Total current income tax provision |  |  | (355 | ) |  |  | (24,415 | ) |  |  | (1,484 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  |  | (30,766 | ) |  |  | 7,480 |  |  |  | (75,456 | )
Foreign |  |  | 11,242 |  |  |  | (10,493 | ) |  |  | 20,630 |
Total deferred income tax provision |  |  | (19,524 | ) |  |  | (3,013 | ) |  |  | (54,826 | )
Total income tax provision |  | $ | (19,879 | ) |  | $ | (27,428 | ) |  | $ | (56,310 | )
Domestic and foreign components of (loss) income before income taxes for the years ended December 31, 2017, 2016 and 2015 are as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Domestic |  | $ | (7,920 | ) |  | $ | 41,014 |  |  | $ | (65,895 | )
Foreign |  |  | 4,280 |  |  |  | 55,961 |  |  |  | 35,237 |
Total |  | $ | (3,640 | ) |  | $ | 96,975 |  |  | $ | (30,658 | )
The annual tax provision 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):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Computed “statutory” benefit (provision) |  | $ | 1,274 |  |  |  | 35 | % |  | $ | (33,941 | ) |  |  | 35 | % |  | $ | 10,731 |  |  |  | 35 | %
Percentage depletion |  |  | 5,174 |  |  |  | 142 |  |  |  | 8,114 |  |  |  | (8 | ) |  |  | 2,432 |  |  |  | 8 |
Change in valuation allowance |  |  | 24,464 |  |  |  | 672 |  |  |  | 11,336 |  |  |  | (12 | ) |  |  | (84,951 | ) |  |  | (277 | )
Federal rate change |  |  | (37,546 | ) |  |  | (1,031 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
State taxes, net of federal taxes |  |  | 1,112 |  |  |  | 30 |  |  |  | (565 | ) |  |  | 1 |  |  |  | (3,639 | ) |  |  | (12 | )
Foreign currency remeasurement of monetary assets and liabilities |  |  | (10,357 | ) |  |  | (284 | ) |  |  | (4,598 | ) |  |  | 5 |  |  |  | 28,184 |  |  |  | 92 |
Rate differential on foreign earnings |  |  | (1,438 | ) |  |  | (39 | ) |  |  | (6,853 | ) |  |  | 7 |  |  |  | (4,746 | ) |  |  | (15 | )
Compensation |  |  | (661 | ) |  |  | (18 | ) |  |  | (1,517 | ) |  |  | 1 |  |  |  | (1,014 | ) |  |  | (3 | )
Foreign withholding taxes |  |  | (278 | ) |  |  | (8 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Expiration of U.S. foreign tax credits |  |  | (2,300 | ) |  |  | (63 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  | 677 |  |  |  | 18 |  |  |  | 596 |  |  |  | (1 | ) |  |  | (3,307 | ) |  |  | (12 | )
Total provision |  | $ | (19,879 | ) |  |  | (546 | )% |  | $ | (27,428 | ) |  |  | 28 | % |  | $ | (56,310 | ) |  |  | (184 | )%
On January 1, 2017 we adopted ASU No. 2015 - 17 Income Taxes - Balance Sheet Classification of Deferred Taxes (Topic 740 ). Accordingly, all deferred income tax assets and liabilities are classified as non-current in the consolidated balance sheet. Upon adoption, we classified, as non-current, previously reported current deferred tax assets of $12.3 million and current deferred tax liabilities of $1.3 million. We evaluated the positive and negative evidence available to determine the amount of valuation allowance required on our deferred tax assets. At December 31, 2017 and 2016, the balances of our valuation allowances were approximately $79 million and $100 million, respectively, primarily related to net operating losses and tax credit carryforwards. Due to the changes to tax laws under the Tax Cuts and Jobs Act, we determined it is more likely than not that we will not realize our U.S. net deferred tax assets. Accordingly, we have applied a full valuation allowance. At December 31, 2017 and 2016, the net deferred tax liability was approximately $120 million and $87 million, respectively. The individual components of our net deferred tax assets and liabilities are reflected in the table below (in thousands).
|  | December 31, |
|  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued reclamation costs |  | $ | 21,812 |  |  | $ | 30,188 |
Deferred exploration |  |  | 17,426 |  |  |  | 26,785 |
Foreign net operating losses |  |  | 1,003 |  |  |  | 1,058 |
Domestic net operating losses |  |  | 130,186 |  |  |  | 82,359 |
AMT credit carryforwards |  |  | 584 |  |  |  | 20,405 |
Pension and benefit obligation |  |  | 12,584 |  |  |  | 18,115 |
Foreign exchange loss |  |  | 18,112 |  |  |  | 34,977 |
Foreign tax credit carryforward |  |  | 4,983 |  |  |  | 7,283 |
Miscellaneous |  |  | 25,411 |  |  |  | 30,166 |
Total deferred tax assets |  |  | 232,101 |  |  |  | 251,336 |
Valuation allowance |  |  | (78,684 | ) |  |  | (99,602 | )
Total deferred tax assets |  |  | 153,417 |  |  |  | 151,734 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Miscellaneous |  |  | (4,978 | ) |  |  | (3,046 | )
Properties, plants and equipment |  |  | (268,476 | ) |  |  | (235,700 | )
Total deferred tax liabilities |  |  | (273,454 | ) |  |  | (238,746 | )
Net deferred tax liability |  | $ | (120,037 | ) |  | $ | (87,012 | )
For the year 2017, we recorded a liability of $0.3 million related to withholding taxes on unremitted earnings at Minera Hecla S.A. de C.V., our wholly-owned subsidiary which owns our San Sebastian mine and other interests in Durango, Mexico. For the years 2016 and 2015, we had no unremitted foreign earnings. Foreign net operating losses carried forward are shown above as a deferred tax asset, with a valuation allowance as discussed below. We recorded a valuation allowance in the U.S. to reflect the estimated amount of deferred tax assets, which may not be realized principally due to the more likely than not expiration of net operating losses and tax credit carryforwards. A portion of the valuation allowance relating to exploration and other deferred tax assets was released in 2017 as we determined that it was more likely than not that the benefit would be realized as a result of operating activities at San Sebastian. As of December 31, 2017, a $76 million valuation allowance remains in U.S. jurisdictions, $2 million in Hecla Canada Ltd. 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, 2017, 2016 and 2015, are as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Balance at beginning of year |  | $ | (99,602 | ) |  | $ | (115,806 | ) |  | $ | (32,094 | )
Increase related to non-utilization of net operating loss carryforwards and non-recognition of deferred tax assets due to uncertainty of recovery |  |  | (14,964 | ) |  |  | (2,868 | ) |  |  | (92,393 | )
Decrease related to utilization and expiration of deferred tax assets, other |  |  | 35,882 |  |  |  | 19,072 |  |  |  | 8,681 |
Balance at end of year |  | $ | (78,684 | ) |  | $ | (99,602 | ) |  | $ | (115,806 | )
As of December 31, 2017, for U.S. income tax purposes, we have federal and state net operating loss carryforwards of $506 million and $366 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 2018 and 2037. 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, 2017 and 2016 we had $0 million and $22 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. In 2017, we adopted ASU 2016 - 09 Stock Compensation: Improvements to Employee Share-Based Payment Accounting. As a result, the deferred tax asset related to our NOL increased by $5 million due to the inclusion of additional NOLs related to excess tax benefits. The increase in the deferred tax asset was fully offset by a valuation allowance, resulting in no change to our recognized net deferred tax assets. 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 2011. We currently have no tax years under examination. We had no unrecognized tax benefits as of December 31, 2017 or 2016. 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. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the "Act") resulting in significant modifications to existing law. We have completed the accounting for the effects of the Act during the quarter ended December 31, 2017. Our financial statements for the year ended December 31, 2017, reflect certain effects of the Act which includes a reduction in the corporate tax rate from 35% to 21% as well as other changes. As a result of the changes to tax laws and tax rates under the Act, we incurred incremental income tax expense of $30 million during the year ended December 31, 2017, which consisted primarily of the remeasurement of deferred tax assets and liabilities from 35% to 21% and application of a full valuation allowance. We have not accrued a one -time transition tax on unrepatriated foreign earnings due to an estimated net deficit in foreign earnings from all foreign jurisdictions. As discussed in Note 15 , we acquired Mines Management, Inc. in September 2016. In accounting for the 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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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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