Quarterly Financial Report of the United States Mint
Commemorative Coin Program
P. L. 104-208, as of June 30, 2000
INTRODUCTION
Public Law 104-208, the Commemorative Coin Reform Act of 1996, requires the Mint to report the quarterly status of commemorative coin programs. In general effect, the law makes coin program beneficiaries partners in bearing the risks and marketplace realities of commemorative coin programs, and it assures that the U.S. Mint recovers its costs of operating coin programs. In addition, the law requires beneficiaries to file audited financial statements, and it requires the Mint to report quarterly on the status of commemorative coin programs. In compliance, this—the Mint’s fourteenth quarterly commemorative coin report—discusses programs reporting significant program activity April 1 through June 30, 2000.
PROGRAM-WIDE ISSUES
Commemorative coin sales through our web catalog continue to increase. Revenues generated, as of June 30, 2000, through Internet orders for the Yellowstone National Park and Library of Congress Commemorative Coin Programs comprise over twenty percent of each program’s sales. Given the growing number of people with Internet access worldwide, we anticipate online sales will play an
ever-increasing role in future commemorative coin sales. We are directing our efforts accordingly, and plan an upgrade of our commemorative coin web pages within the near future.
Sales for the Dolley Madison Commemorative Coin Program ended December 31, 1999, generating slightly over $10 million in revenues. A final surcharge payment of $1,032,567 was made on May 30, 2000, to the National Trust for Historic Preservation, the designated recipient organization, bringing total surcharges paid to $3,134,570.
The enactment of Public Law 104-208 on September 28, 1996, mandated several provisions reforming the U.S. Mint Commemorative Coin Program. Among these is the requirement to restrict the number of commemorative coin programs to no more than two per calendar year. An ambitious layout of suggested commemorative coin programs for the next few years has prompted a note of warning from the Citizen’s Commemorative Coin Advisory Committee
(CCCAC) regarding the number of proposed programs. The CCCAC cautioned against a weakening of congressional commitment to support restrictions imposed by Congress in the Committee’s annual report to Congress released March 21, 2000.
FINANCIAL REPORTING
The attached financial statements provide quarterly and cumulative program data. The Commemorative Coin Reform Act of 1996 requires us to withhold surcharges until all program costs are recovered and beneficiaries submit audited financial statements indicating funds raised privately equal maximum possible surcharges. We, again, report that the U.S. Black Revolutionary War Patriots Commemorative Coin Program closed December 31, 1998, with a deficit. The beneficiary has not submitted the required documentation and therefore does not qualify to receive surcharges. The Foundation has not told us of its plans for meeting these requirements.
YELLOWSTONE NATIONAL PARK
Program Highlights
In commemoration of the 125th anniversary of Yellowstone as the first U.S. National Park, Public Law 104-329 authorized the issuance of 500,000 silver dollars. Product options included individual proof and uncirculated coins and a two-coin set containing both. Surcharges will be divided equally between the National Park Foundation and Yellowstone National Park.
Marketing Activities
The Yellowstone National Park Commemorative Coin was unveiled July 15, 1999, at the Department of Interior Museum. Program sales will continue through July 15, 2000. A promotion with Unilever, launched in April, features Yellowstone two-coin sets as prizes for purchases of Snuggle® Fabric Softener. Unilever purchased over 400 two-coin sets for this promotion.
Analysis of Financial Position
On June 30, 2000, sales exceeded 264,000 coins, generating revenues over $8.5 million including surcharges of $2,623,290. Estimated profits of $ 1.3 million exceed potential unrecovered expenses of roughly $67,000. Cost of goods sold totaled $2,446,78 and selling, general & administrative expenses were $2,162,199.
Manufacturing/Packaging Operations
A total of 1,695 acceptable silver proof coins and 3,733 acceptable silver uncirculated coins were produced during the quarter ending June 30, 2000, representing reject rates of 15% and 3% for the proof and uncirculated coins respectively.
LIBRARY OF CONGRESS BICENTENNIAL
Program Highlights
To commemorate the bicentennial of the Library of Congress on April 24, Congress authorized the production of 500,000 silver dollars and 100,000 gold $5 coins. Legislation permits substituting 200,000 $10 gold-and-platinum coins for the gold $5, and we exercised the option to strike the Nation’s first bimetallic commemorative coin. Designs finalized and reviewed by the Citizens Commemorative Coin Advisory Committee (CCCAC) and the Commission of Fine Arts depict the Library’s Thomas Jefferson Building. Surcharges will be paid to the Library of
Congress Trust Fund Board for bicentennial programs, educational outreach and other activities of the Library of Congress.
Marketing Activities
Available April 24, 2000, the Library of Congress silver dollar and bimetallic ten-dollar commemorative coins offer collectors the opportunity to enhance their collection with “The Coin of Many Firsts”. So titled, this program introduces the first U.S. Mint commemorative coins of the 21st century as well as the first commemorative coins to honor a library. The ten-dollar coin is the first gold and platinum bimetallic coin struck by the United States Mint. Promotional mailings targeted high potential customer segments identified within the U.S. Mint customer database. Additional mailings were directed towards affinity listings provided by the Library of Congress including donors to the Library, recipients of the monthly Calendar of Events, and the Music Division’s annual concert season program. A mailing of 3.5 million inserts with IRS refund checks generated an additional $225,000 in revenue.
The bimetallic coin was featured on the “Rosie O’Donnell Show” along with American Eagle platinum coins. A follow-up contact is planned for this fall to pursue featuring the Library of Congress coins on the show once more. The Mint staffed two sales locations at the April 24 launch event at the Library. Record-breaking on-site sales included a total of 2,764 silver dollars and 336 bimetallic $10 coins. Additional promotional support was provided through the distribution of 15,000 posters of the coins at the annual American Library Association (ALA) conference in July. Brochures were developed for distribution at the launch event, for Library mailings and for the Library’s Visitors’ Center. In addition, the coins will be prominently featured within the Mint’s fall catalog and at the annual American Numismatic Association (ANA) conference in August.
Analysis of Financial Position
As of June 30, 2000, sales of nearly 249,000 coins were realized generating revenues exceeding $13.4 million, including surcharges of nearly $2 million. Estimated profits of $2.2 million exceed potential unrecovered expenses of $309,128. Cost of goods sold totaled $6,284,286. Selling, general & administrative expenses equaled $2,925,074.
Manufacturing/Packaging Operations
A total of 27,350 acceptable bimetallic proof coins and 8,246 acceptable bimetallic uncirculated coins were produced during the quarter ending June 30, 2000, representing reject rates of 40% and 11% for the proof and uncirculated coins respectively. A total of 168,535 acceptable silver proof coins and 44,124 acceptable silver uncirculated coins were produced during the quarter ending
June 30, 2000, representing reject rates of 6% and 4% for the proof and uncirculated coins respectively. The unusually high reject rate for the bimetallic proof coins can be attributed to difficulties encountered in the production of a bimetallic coin, which represents a new minting technology for the U.S. Mint.
LEIF ERICSON MILLENIUM
Program Highlights
The second and final U.S. commemorative coin program of 2000, the Leif Ericson Millennium Commemorative Coin Program commemorates the 1000-year anniversary of Leif Ericson’s voyage to the New World in 1000 A.D. Public Law 106-126 authorizes the issuance of up to
500,000 U.S. silver dollars in conjunction with the issuance of an Icelandic 1000 krónur
silver coin. Surcharges will be paid to the Leifur Eiriksson Foundation for the purpose of funding student exchanges between students of the United States and students of Iceland.
This program represents an historic “first of its kind” for the U.S. Mint commemorative coin program – providing collectors with the opportunity to purchase jointly issued domestic and foreign commemorative coins. The silver dollar and 1000 krónur silver coin, designed by the U.S. Mint and the Republic of Iceland respectively, each portray a heroic representation of Leif Ericson on the obverse. The reverse of the U.S. coin depicts his Viking ship under full sail. The reverse of the Icelandic 1000 krónur portrays the eagle, dragon, bull and giant from the Icelandic Coat of Arms. By request, the U.S. Mint will produce and market the Icelandic 1000 krónur silver coin on behalf of the Governors of the Central Bank of Iceland. A mintage limit of 500,000 was established for the U.S. coin, which will be available in both proof and uncirculated condition. A mintage limit of 150,000 coins was established for the Icelandic krónur, available in proof silver only.
Marketing Activities
The Leif Ericson Millennium Commemorative Coins became available by mail June 21, and online on June 26.
Analysis of Financial Position
This commemorative coin program was launched June 21, ten days prior to the end of the third quarter. Normal program start-up costs of approximately $500,000 were incurred in the third quarter, which we fully expect will be offset by revenues from sales beginning in the fourth quarter FY 2000.
Manufacturing/Packaging Operations
A total of 17,021 acceptable proof silver dollars and 3,481 acceptable uncirculated silver dollars were produced during the quarter ending June 30, 2000, representing reject rates of 3% and 2% for the proof and uncirculated coins respectively. A total of 6,827 acceptable Icelandic proof 1000 krónur were produced during the quarter, representing a reject rate of 11%. The proof 1000 krónur design proved difficult in its production. In addition to problems with metal flow, the higher reject rate for the Icelandic coin can be attributed to production errors not commonly encountered in the production of U.S. commemorative coins.
U.S. CAPITOL VISITOR CENTER
Authorized by Public Law 106-126, the U.S. Capitol Visitor Center Commemorative Coin Program commemorates the first convening of the Congress in the Capitol building. Mintages of 100,000 gold or 200,000 bimetallic coins; 500,000 silver dollar coins; and 750,000 clad half-dollar coins have been established. Surcharges from the sale of the coins will go toward the construction, maintenance and preservation of a Capitol Visitor Center. The program is scheduled to launch in January 2001.
CONCLUSION
The third quarter has experienced a number of numismatic “firsts” within the Mint’s Commemorative Coin Program. This quarter witnessed the introduction of the first U.S. Mint bimetallic commemorative coin with the issuance of the Library of Congress gold and platinum ten-dollar proof coin. In addition, the launch of the final commemorative coin program for 2000 took place late in the quarter with the introduction of the Leif Ericson Millennium Commemorative Silver Dollar and 1000 Krónur Silver Coin. This program represents another historic first – the joint issue of a domestic and a foreign commemorative coin. Commemorative Coin Program revenues of nearly $22 million were reported through the third quarter of FY 2000.