Quarterly Financial Report of the United States Mint
Commemorative Coin Program,
P. L. 104-208, as of June 30, 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 promotes and enhances recipient organization fundraising efforts by apportioning the financial risks of commemorative coin programs between the recipient organization and the U.S. Mint’s Public Enterprise Fund. The law also assures that the U.S. Mint recovers the costs of operating these coin programs. In addition, the law requires recipient organizations to file audited financial statements, and it requires the Mint to report quarterly on the status of commemorative coin programs. This—the Mint’s eighteenth quarterly commemorative coin report—discusses programs reporting significant activity from April 1 to June 30, 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 39 commemorative coin programs between 1982-2001, honoring American people, places, events, and institutions. Surcharges from the sales of these coins helped fund a variety of organizations and projects that benefit the community at large. Profits generated through the sale of modern commemorative coins are placed in the Mint’s Public Enterprise Fund, which returns 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. U.S. Mint commemorative coins have generated nearly $412.8 million in surcharges over the past 19 years 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 the Nation as a whole. While the commemorative coin programs currently are increasing in their popularity following the 1996 reforms, the program’s well-being remains fragile. To ensure that commemorative programs continue to reap the benefits of the reforms, the U.S. Mint must continue to execute and oversee them in a conscientious, prudent, and businesslike manner.
As of June 30, 2001, sales of the Library of Congress, Leif Ericson, Capitol Visitor Center (CVC), and Buffalo Commemorative Coin Programs generated revenues of $44.3 million. Coin sales for the Library of Congress Bicentennial ended on December 31, 2000, as directed by the authorizing legislation, with final sales of nearly $20.8 million. Sales of the Leif Ericson Millennium ended February 28, 2001, with total sales of $8.9 million. The U.S. Capitol Visitor Center coin program has generated $11.4 million in sales. The most recent program, the American Buffalo Silver Dollar, generated $3.2 million in sales for orders shipped this quarter. It is expected total sales for this program will reach $16.5 million.
Total surcharge payments disbursed as of June 30, 2001 are $2.21 million. The breakdown of surcharges disbursed from program inception through the third quarter ended June 30, 2001 is as follows:
| Benefiting Organization | Surcharge Disbursed |
|---|---|
| Library of Congress | $ 2,205,642 |
| Leif Ericson | 0 |
| Capitol Visitor Center | 0 |
| Buffalo | 0 |
| Total Surcharge Disbursed | $ 2,205,642 |
There were no surcharge disbursements during the third quarter ending June 30, 2001.
On May 4, 2001, United States Mint Director Jay W. Johnson hosted a ceremony at the U.S. Mint in Denver to strike the first American Buffalo Commemorative Coin. The Mint made the coin available through its website on June 11, and the coin sold out within the first two weeks after being offered. A portion of the proceeds from the sale of the one dollar silver commemorative coin will help fund the opening of the National Museum of the American Indian. Work is underway on the 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 are paid to the Library of Congress Trust Fund Board for bicentennial programs, educational outreach and other activities.
Marketing Activities
Since the Library of Congress Commemorative Coin Production ended on December 31, 2000, as required by P.L. 105-268, there were neither marketing nor sales activities to report during third quarter.
Analysis of Financial Position
As of June 30, 2001, more than 286,500 coins were sold, generating revenues of approximately $20.8 million including surcharges of $2.99 million. Estimated profits of $3.7 million exceed potential unrecovered expenses of $341,800. The Mint will return these profits to the Department of the Treasury’s General Fund. Cost of goods sold totaled $9.7 million. Selling, general and administrative expenses were $4.4 million. The Mint has distributed approximately $2.21 million in surcharges 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
In accordance with the authorizing legislation, coin production for this commemorative program ended December 31, 2000. The remaining coins were sold through February 2001. Consequently, no marketing or sales activates occurred during the third quarter. 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 June 30, 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 $1.5 million exceed potential unrecovered expenses of approximately $121,000. Cost of goods sold totaled $2.4 million. Selling, general and administrative expenses were $2.2 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. However, in keeping with the Mint’s memorandum of understanding with the Central Bank of Iceland, surcharges earned on the Iceland version of the coin amounted to $1 million. 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 VISITORS CENTER – FY 2001
Program Highlights
Authorized by Public Law 106-126, the U.S. Capitol Visitor Center (CVC) Commemorative Coin Program commemorates the first convening of Congress in the Capitol building. Congress has established mintages of 100,000 gold coins; 500,000 silver dollar coins; and 750,000 clad half-dollar coins. The Secretary of the Treasury selected design concepts for the U.S. Capitol Visitor Center Commemorative Coins after the Citizens Commemorative Coin Advisory Committee (CCCAC), the Commission of Fine Arts, and the U.S. Capitol Preservation Commission reviewed them. 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 go toward the construction, maintenance and preservation of the U.S. Capitol Visitor Center.
Marketing Activities
The three-coin CVC Commemorative Coin Program went on sale March 7, 2001, and remained on sale through the third quarter. The pre-issue period for this program ended on April 20, 2001.
The Mint supported the first CVC mailing using direct response advertising in select numismatic trade publications. In addition, the Mint conducted a second mailing to its mailing list addressees in an effort to stimulate sales before the end of the pre-issue period.
As stated in our last report, 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 CVC program was also prominently featured on the Mint’s home page with a special permanent banner posted on the home page to help purchasers find the CVC coins easily.
The Mint also printed and distributed custom-designed “take-one” brochures for the Capitol Visitor Center Working Group for use in their affinity mailings.
Analysis of Financial Position
As of June 30, 2001, the Mint shipped nearly 270,000 coins, generating program revenues of more than $11.4 million, including surcharges of nearly $2.9 million. Estimated profits of $930,000 covered the potential unrecovered expenses of $316,000. Cost of goods sold totaled $4.1 million. Selling, general and administrative expenses were $3.5 million. Third quarter revenues posted a profit of nearly $370,000. 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 it recovers all program operating costs, and until the designated beneficiary has raised other monies from private sources equal to the maximum potential program surcharges.
Manufacturing/Packaging Operations
The West Point Mint produced only uncirculated CVC commemorative coins during the quarter ending June 30, 2001. Of the 2085 uncirculated coins produced, 2033 were acceptable coins and 52 were unacceptable, representing a reject rate of 2.4%.
AMERICAN BUFFALO COMMEMORATIVE COIN – FY 2001
Program Highlights
Authorized by Public Law 106-375, the American Buffalo Coin Commemorative Coin Act of 2000 commemorates the opening of the Smithsonian Institution’s National Museum of the American Indian. Congress established a mintage limit of 500,000 silver dollar coins. The second commemorative coin program of 2001, the American Buffalo Silver Dollar features a reproduction of one of the most famous and beloved designs among coin collectors – the James Earle Fraser Buffalo nickel.
Congress directed the Mint to pay the surcharges from this coin program to the National Museum of the American Indian (NMAI) to commemorate the opening of the museum and to supplement the museum’s endowment and educational outreach funds. The Mint convened a panel of numismatists and buffalo nickel experts to discuss the importance of maintaining the integrity of the original James Earle Fraser Buffalo nickel design. The Citizens Commemorative Coin Advisory Committee (CCCAC) and the Commission of Fine Arts reviewed and endorsed the proposed coin designs, and the Secretary of the Treasury approved them.
Marketing Activities
The U.S. Mint formally launched the second and final modern commemorative coin for 2001on June 7, 2001. On the day of the launch, Fox Morning News and the Today Show featured the coin, helping it receive national exposure. Online sales for the American Buffalo Coin began on June 11th at www.usmint.gov.
As a result of the pre-launch publicity generated for the program, the Mint was able to successfully sell out the entire 500,000-coin mintage within the first two weeks of the pre-issue period. The unprecedented demand experienced by this program resulted in its becoming the fastest-selling U.S. Mint modern commemorative coin in the Mint’s history.
The Mint mailed a four-color, direct mail package featuring Native American and western themes to its active commemorative coin customer list. The Mint supported the direct mail piece with direct response print advertising in the major numismatic publications. In addition, the Mint placed a small number of special affinity ads in the following magazines/newspapers: Cowboys and Indians, Native Peoples, Indian Country, and the Lakota Journal.
Analysis of Financial Position
As of June 30, 2001, the Mint shipped over 98,000 coins, generating revenues of more than $3.2 million for the quarter, including surcharges of nearly $984,000. The Mint anticipates shipping all of the coins by the end of August. Estimated profits of $22,000 failed to cover the potential unrecovered expenses of $460,000. Because the Mint only recently launched this program, it anticipates that future program revenues likely will offset the potential unrecovered expenses. In fact, total program revenues are estimated at $16.5 million. Cost of goods sold totaled $1.0 million. Selling, general and administrative expenses were $1.2 million. The Mint posted third quarter profits of $22,000 for this program. As of this report, NMAI has not met the matching funds criterion established by the Commemorative Coin Reform Act of 1996. That requirement specifies that the U.S. Mint must withhold surcharges until it has recovered all program operating costs, and until the designated beneficiary has raised other monies from private sources equal to the maximum potential program surcharges.
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.
The Citizen’s Commemorative Coin Advisory Committee and the Commission for Fine Arts reviewed the coin designs for the upcoming 2002 Winter Olympic Commemorative Coin Program. The Mint presented the coin design concepts to the Commission of Fine Arts on June 21, 2001. The Mint submitted final design concepts to the Secretary of the Treasury for final approval.
Congress directed the Mint to divide the surcharges from the sale of the coins equally between the Salt Lake Organizing Committee for the Olympic Winter Games of 2002 and the U.S. Olympic Committee. 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 in providing direct support to the academic, military, physical, moral, and ethical development programs of the Corps of Cadets, United States Military Academy. The U.S. Bullion Depository at West Point will strike the coins. Issuance of the coin is targeted for March 16, 2002. The Mint presented the coin design concepts to the Commission of Fine Arts on April 19, 2001. The Secretary of the Treasury has approved the designs.
CONCLUSION
The Mint marketed two commemorative coin programs during the third quarter of FY 2001. The Capitol Visitor Center Commemorative Coin program reported a profit this quarter of $369,000 and has generated $11.4 million in revenues to date. Similarly, the American Buffalo Coin Commemorative Coin program reported a profit of $22,000 and sold out within the first two weeks of the pre-issue period. To date, the Capitol Visitor Center has generated surcharges from the sale of coins of nearly $3.0 million as established by the Commemorative Coin Reform Act of 1996. Surcharges for the American Buffalo Coin Commemorative Coin program will be reported in the next quarterly report. The Mint looks forward to working in partnership with the Salt Lake Organizing Committee for the 2002 Winter Olympic Games Commemorative Coin, and the United States Military Academy Association of Graduates for the United States Military Academy Bicentennial Commemorative Coin, to help commemorate these programs and to maximize the returns to the benefit of these organizations and the American public.