Quarterly Financial Report of the United States Mint
Commemorative Coin Program,
P. L. 104-208, as of March 31, 2001
INTRODUCTION
Public Law 104-208, the Commemorative Coin Reform Act of 1996, requires the Mint to report the quarterly status of commemorative coin programs. The law makes coin program beneficiaries partners in bearing the risks 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. This—the Mint’s seventeenth quarterly commemorative coin report—discusses programs reporting significant activity from January 1 to March 31, 2001.
PROGRAM-WIDE SUMMARY
Modern commemorative coins authorized by Congress and produced by the U.S. Mint date from the introduction of the George Washington 250th Anniversary Half Dollar in 1982. Congress authorized a total of 36 commemorative coin programs between 1982-2001, honoring American people, places, events, and institutions. Surcharges from the sales of these coins help fund a variety of organizations and projects that benefit the community at large. Any profits generated through the sale of modern commemorative coins are placed in the Mint’s Public Enterprise Fund, which returns any gains exceeding the Mint’s operating requirements to the Department of the Treasury’s General Fund; these profits then benefit the American people by reducing the amount of new Federal debt issued. Close to $2 billion in revenues have been raised through the sale of U.S. Mint commemorative coins over the past 19 years, generating nearly $412 million in surcharges for many worthy foundations.
Public Law 104-208, the Commemorative Coin Reform Act of 1996, links public funding of special projects to demonstrated private support. The law makes coin program beneficiaries partners in bearing the risks of commemorative coin programs, and it assures that the U.S. Mint recovers its costs of operating coin programs. Commemorative coins are a benefit, not only to numismatic enthusiasts and the recipient organizations but also by reaffirming our history, to our Nation as a whole. While the commemorative coin programs are currently enjoying a period of recovery, program well-being remains fragile. To ensure the commemorative programs continue to reap the benefits of the 1996 reforms, continued vigilance will be necessary.
As of March 31, 2001, revenues of $34.5 million were generated through sales of the Library of Congress, Leif Ericson, and Capitol Visitors Center (CVC) Commemorative Coin Programs. Coin sales for the Library of Congress Bicentennial ended effective December 31, 2000, as directed by the authorizing legislation, with final sales of $20.9 million. Sales of the Leif Ericson Millennium ended February 28, 2001, with total sales of $8.9 million. The most recent program, the U.S. Capitol Visitor Center, generated $4.7 million in sales.
A surcharge payment of $831,683.75 was made February 7, 2001, to the Library of Congress Trust Fund Board, bringing the total surcharge payments to $2.2 million. Initial surcharge payment was due to the Leifur Eiriksson Foundation in December 2000; however, as of the date of this report, the Foundation has not met the matching funds criterion established by the Commemorative Coin Reform Act of 1996, and accordingly no surcharge payments have yet been made. The Act stipulates that the Mint withhold surcharges until the Mint recovers all program operating costs and until the designated beneficiary has raised other monies from private sources equal to the maximum potential program surcharges. In accordance with the drop date of February 28, 2001 for the Capitol Visitors Center, the initial surcharge payment would be due to the U.S. Capitol Preservation Commission in August 2001.
Work is underway on the American Buffalo Commemorative Coin, 2002 Winter Olympic Games and the United States Military Academy Bicentennial commemorative programs.
FINANCIAL REPORTING
The attached financial statements provide quarterly and cumulative program data.
LIBRARY OF CONGRESS BICENTENNIAL
Program Highlights
To commemorate the bicentennial of the Library of Congress on April 24, 2000, Congress authorized the production of 500,000 silver dollars and 100,000 $5 gold coins. Legislation permitted the Secretary of the Treasury to substitute 200,000 $10 gold-and-platinum coins for the $5 gold coins. With the urging of the Library of Congress, the Secretary approved of this substitution and the Mint struck the nation’s first-ever bimetallic platinum and gold commemorative coin. Designs finalized and reviewed by the Citizens Commemorative Coin Advisory Committee (CCCAC) and the Commission of Fine Arts depict various themes emblematic of the Library of Congress, including the beautiful platinum and gold depiction of Minerva and the Torch of Learning and the magnificent Thomas Jefferson Building. Surcharges will be paid to the Library of Congress Trust Fund Board for bicentennial programs, educational outreach and other activities.
Marketing Activities
Library of Congress Commemorative Coin Production ended on December 31, 2000, as required by P.L. 105-268.
The majority of sales were generated by the U.S. Mint’s Library of Congress direct mail package sent to approximately 999,000 Mint customers and 12,000 Library of Congress customers. The direct mail package was mailed on April 24, 2000, to coincide with the Library of Congress Bicentennial celebration date. The mailing was supported with full-page direct response print advertising in select numismatic trade publications. Additionally, the Mint began marketing the Library of Congress Coin Program on its website on April 24, 2000.
In cooperation with the Library of Congress, the Mint helped organize a formal launch ceremony that took place in the Library of Congress’ Great Hall on April 24, 2000. United States Treasurer Mary Ellen Withrow and Deputy Mint Director John Mitchell were featured speakers along with Dr. James Billington, Librarian of Congress. The U.S. Mint engravers who worked on the Library of Congress coins attended the ceremony and signed autographs while Mint sales staff sold the coins in an adjoining room.
The coins were prominently featured in the Mint’s 2000 Holiday Catalog and a series of
last-chance-to-purchase print advertisements were run in select numismatic trade publications shortly before the sales period ended. Four-color, point-of-purchase take-one brochures and posters were developed and distributed to the recipient organization.
Analysis of Financial Position
As of March 31, 2001, more than 286,000 coins were sold, generating revenues of approximately $20.9 million including surcharges of nearly $3.0 million. Estimated profits of $3.8 million exceed potential unrecovered expenses of $226,000. These profits will be returned to the Department of the Treasury’s General Fund. Cost of goods sold totaled $9.7 million. Selling, general and administrative expenses equaled slightly over $4.3 million. Approximately $2.2 million in surcharges have been distributed to the recipient organization to date.
Manufacturing/Packaging Operations
Production period ended on December 31, 2000, as required by P.L. 105-268.
LEIF ERICSON MILLENIUM
Program Highlights
The Leif Ericson Commemorative Coin Program was formally launched on June 21, 2000, at the Smithsonian’s National Museum for Natural History at its popular Viking Exhibit. Approximately 842,000 customers were selected, based on their expected propensity to purchase, to receive the Leif Ericson direct mail package. This was supported with direct response print advertisements in numismatic trade publications.
The second 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. Public Law 106-126 authorized the mintage of up to 500,000 U.S. silver dollar coins (proof silver and uncirculated versions) in conjunction with the issuance of up to 150,000 Icelandic 1000 krónur silver coins (proof silver only). Qualifying surcharges will be paid to the Leifur Eiriksson Foundation for the purpose of funding student exchanges between the United States and students of Iceland.
This program represents a historic “first of its kind” for the U.S. Mint – providing collectors with the opportunity to purchase jointly-issued domestic and foreign commemorative coins. The silver dollar and 1000 krónur silver coins, designed by the U.S. Mint and the Republic of Iceland respectively, each portrays 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 produced and marketed the Icelandic 1000 krónur silver coin on behalf of the Governors of the Central Bank of Iceland.
Marketing Activities
The Leif Ericson Millenium Commemorative Coins were prominently featured in the Mint’s Holiday 2000 catalog. Part of the coins’ launch involved the Mint’s participation in the welcoming of the Viking Ship Icelander in New York Harbor on October 5, 2000. A two-coin set, featuring proof versions of both the U.S. and Icelandic silver coins, was presented by the Mint to the captain of the Icelander during the ship’s stopover in New York City. In addition to appearing in our catalog, the coins were featured in a multi-product e-tailing print advertisement that ran nationally in several Tribune-owned newspapers. In accordance with the authorizing legislation, coin production for this commemorative program ended December 31, 2000. The remaining coins were sold through February 2001. Per the Memorandum of Understanding signed between the United States Mint and the Central Bank of Iceland, the U.S. Mint recently transferred all Icelandic coin dies, hubs, and plasters to the Republic of Iceland.
Analysis of Financial Position
As of March 31, 2001 sales of over 274,000 coins were realized, generating revenues of nearly $8.9 million, including surcharges in excess of $2.7 million. Estimated profits of nearly $1.2 million exceed potential unrecovered expenses of approximately $130,000. Cost of goods sold totaled $2.6 million. Selling, general and administrative expenses were $2.3 million. As of this report, the Foundation has not met the matching funds criterion established by the Commemorative Coin Reform Act of 1996. That requirement stipulates that the Mint must withhold surcharges until all program operating costs have been recovered, and until the designated beneficiary has raised other monies from private sources equal to the maximum potential program surcharges. Profits in excess of potential unrecovered expenses will be deposited to the Department of the Treasury’s General Fund.
Manufacturing/Packaging Operations
Coin production for this commemorative program ended December 31, 2000, as authorized by P.L. 106-126.
U.S. CAPITOL VISITOR CENTER – FY 2001
Program Highlights
Authorized by Public Law 106-126, the U.S. Capitol Visitor Center Commemorative Coin Program commemorates the first convening of Congress in the Capitol building. Mintages of 100,000 gold coins; 500,000 silver dollar coins; and 750,000 clad half-dollar coins have been established. Design concepts for the U.S. Capitol Visitor Center Commemorative Coins were selected by the Secretary of the Treasury and were reviewed by the Citizens Commemorative Coin Advisory Committee (CCCAC), the Commission of Fine Arts, and the U.S. Capitol Preservation Commission. Program promotional artwork features William Russell Birch’s 1803 watercolor depicting the first Capitol’s completed north wing. The Birch watercolor is one of the few remaining pieces of artwork that depicts the Capitol building when Congress first convened there. The Senate and House of Representatives of the second session of the Sixth Congress met on November 22, 1800, for a joint session addressed by President John Adams. Surcharges from the sale of the coins will go toward the construction, maintenance and preservation of the U.S. Capitol Visitor Center.
Marketing Activities
The recipient organization held a formal Capitol Visitor Center Commemorative Coin launch ceremony in Statuary Hall at the U.S. Capitol on March 7, 2001. Guest speakers included Speaker of the House Dennis Hastert, Senate Majority Leader Trent Lott, Treasury Secretary Paul O’Neill, and Jay Johnson, Director of the U.S. Mint. The U.S. Mint provided launch support materials in the form of coin blow-ups, information kits and Capitol Visitor Center Commemorative Coins for display.
The U.S. Mint began marketing the Capitol Visitor Center Commemorative Coin program on its website approximately one week prior to the direct mail drop. A four-color Capitol Visitor Center Commemorative Coin direct mail package was produced and mailed to 889,000 U.S. Mint customers on March 7th. A second mailing to the same customer list was sent out on April 4th. The brochure offered customers a total of 14 different product options all at varying price points. The direct mail drop was supported with full-page direct response advertising in select numismatic trade publications. Colorful four-color point-of-purchase display materials were also developed and delivered to the recipient organization for their use in affinity mailings and the U.S. Capitol gift shops.
Analysis of Financial Position
As of March 31, 2001, over 101,000 coins were sold, generating revenues of more than $4.7 million, including surcharges of $1.2 million. Estimated profits of $551,000 did not cover the potential unrecovered expenses of $576,000. We anticipate that future program revenues will likely offset the potential unrecovered expenses, as the program was recently launched. Cost of goods sold totaled $1.8 million. Selling, general and administrative expenses were $1.2 million. As of this report, the U.S. Capitol Preservation Commission has not met the matching funds criterion established by the Commemorative Coin Reform Act of 1996. That requirement stipulates that the U.S. Mint must withhold surcharges until all program operating costs have been recovered, and until the designated beneficiary has raised other monies from private sources equal to the maximum potential program surcharges. Initial surcharge payments are due August 2001 if the requirements of the Act are met.
Manufacturing/Packaging Operations
The West Point Mint produced 38,566 acceptable proof coins and 4,949 acceptable uncirculated coins during the quarter ending March 31, 2001, representing reject rates of 8% and 1% for the proof and uncirculated coins respectfully.
AMERICAN BUFFALO COMMEMORATIVE COIN – FY 2001
Program Highlights
Authorized by Public Law 106-375, the American Buffalo Commemorative Coin Act of 2000 commemorates the opening of the Smithsonian Institution’s National Museum of the American Indian. A mintage limit of 500,000 silver dollar coins has been established. The second commemorative coin program of 2001, the American Buffalo Silver Dollar will feature a reproduction of one of the most famous and beloved designs among coin collectors – the James Earle Fraser Buffalo nickel.
Surcharges will be paid to the National Museum of the American Indian to commemorate the opening of the museum and to supplement the museum’s endowment and educational outreach funds. U.S. Mint marketing officials recently met for the first time with program sponsors to discuss program parameters and potential promotional plans. In addition, a panel of numismatists and buffalo nickel experts was convened to discuss the importance of maintaining the integrity of the original James Earle Fraser Buffalo nickel design. The proposed coin designs were reviewed and endorsed by the Citizens Commemorative Coin Advisory Committee (CCCAC) and the Commission of Fine Arts and approved by the Secretary of the Treasury. The initial program mailing is scheduled for June 2001. The ceremony will take place in Denver on May 4, 2001; guests will include Senator Ben Nighthorse Campbell, Representative Frank Lucas and Elizabeth Duggal, National Campaign Director for the Smithsonian National Museum of the American Indian (NMAI). Coins will go on sale June 7, 2001 for phone and mail orders, and June 11, 2001 for online orders at www.usmint.gov.
2002 WINTER OLYMPIC GAMES
The 2002 Winter Olympic Commemorative Coin Act, P.L. 106-435, authorizes the production of 400,000 silver dollar coins and 80,000 gold five-dollar coins. In the spirit of the 1996 commemorative coin reform legislation to curb proliferation of commemorative coin programs, the U.S. Olympic Committee has been very responsive to past concerns, and the 2002 Games will feature a single coin design for the obverse and reverse of each silver dollar and gold five-dollar coins. [By contrast, the 1996 Olympic Games in Atlanta included a total of 16 designs. With 18 million coins authorized, sales fell well short of that level and coin collectors began an active boycott of the commemorative coin program, leading in part to passage of the 1996 CCRA legislation]. The final design selection will be made by the Secretary of the Treasury in consultation with the Commission of Fine Arts, the United States Olympic Committee, the CCCAC, and the Olympic Properties of the United States—Salt Lake 2002, L.L.C. Surcharges from the sale of the coins will be divided equally between the Salt Lake Organizing Committee for the Olympic Winter Games of 2002 and the U.S. Olympic Committee. U.S. Mint officials recently met with program sponsors to discuss program parameters and potential promotional plans. Issuance of the coin is targeted for January 1, 2002. Previous U.S. Mint Commemorative coin programs honoring the Olympics have raised over $130.0 million for our Olympic athletes and programs.
UNITED STATES MILITARY ACADEMY BICENTENNIAL
The United States Military Academy Bicentennial Commemorative Coin Act, P.L. 103-328, authorizes the production of 500,000 silver dollar coins. Surcharges from the sale of the coins will go to the Association of Graduates, United States Military Academy, to assist the Association of Graduates’ efforts to provide direct support to the academic, military, physical, moral, and ethical development programs of the Corps of Cadets, United States Military Academy. The coins will be struck at the U.S. Bullion Depository at West Point. Issuance of the coin is targeted for March 16, 2002. Coin design concepts were presented to and reviewed by the Commission of Fine Arts on April 19, 2001. These designs are being sent to the Secretary of the Treasury for review and approval.
CONCLUSION
Two commemorative coin programs were sold during the second quarter of FY 2001. The Leif Ericson Millenium program reported a profit this quarter, and has generated nearly $9 million in revenues to date. The CVC program is still in its early stages and has not yet shown a profit, but it has generated $4.7 million in revenue. To date, the recipient organizations for the Leif Ericson and the U.S. Black Revolutionary War Patriots Commemorative Coin Programs have not met the matching funds criterion established by the Commemorative Coin Reform Act of 1996. The U.S. Black Revolutionary War Patriots Commemorative Coin Program closed December 31, 1998, with a deficit. The Mint looks forward to working in partnership for the American Buffalo, 2002 Winter Olympic Games and the United States Military Academy to help commemorate these programs and to maximize the returns to the benefiting organizations and the American public.