Commemorative Coin Reform Act Report to Congress, FY 2001 Fourth Quarter

For the quarter ending September 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 $417 million in surcharges over the past 19 years for many worthy foundations.

America’s commemorative coin program links public funding of special projects to demonstrated private support. The Commemorative Coin Reform Act of 1996 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 coin programs continue to reap the benefits of the reforms, the U.S. Mint must continue to execute and oversee these coin programs in a conscientious, prudent, and businesslike manner.

As of September 30, 2001, cumulative sales for the Capitol Visitor Center (CVC), and Buffalo Commemorative Coin Programs generated revenues of $28.4 million. The U.S. Capitol Visitor Center coin program has generated $11.8 million in sales revenue since the program began. The most recent program, the American Buffalo Silver Dollar, generated $16.6 million in cumulative sales revenue for total orders shipped.

Commemorative Coin Program Surcharge

Total surcharge payments disbursed as of September 30, 2001 are $3.2 million. The breakdown of surcharges disbursed from program inception through the fourth quarter ended September 30, 2001 is as follows:

Benefiting Organization Surcharge Disbursed
Library of Congress $ 2,994,135
Leif Ericson $ 1,020,830
Capitol Visitor Center 0
Buffalo 0
Total Surcharge Disbursed $ 4,014,965

The first commemorative coin program of 2001, Public Law 106-126, the U.S. Capitol Visitor Center (CVC) Commemorative Coin Program was authorized to commemorate the first convening of Congress in the Capitol building. Congress established mintages of 100,000 gold coins; 500,000 silver dollar coins; and 750,000 clad half-dollar coins. Surcharges from the sale of the coins are authorized to go toward the construction, maintenance and preservation of the U.S. Capitol Visitor Center.

Marketing Activities

A follow-on direct response print advertising campaign was launched in the Numismatic Trade Press from mid-July through mid-October. The purpose of this campaign was to support fourth quarter sales efforts. In addition, customized color CVC program buck slips were printed in August. One hundred thousand of these went to the Federal Government’s document distribution center in Pueblo, CO., and two hundred thousand went to the Mint’s order fulfillment center to be sent out along with customer orders.

The Mint continues to feature the CVC Program on the Mint’s home page with a special permanent banner to help purchasers find the CVC coins easily.

Analysis of Financial Position

As of September 30, 2001, the Mint shipped nearly 319,250 coins, generating total program revenues of more than $11.8 million, including surcharges of nearly $3.0 million. Estimated profits of $0.7 million covered the potential unrecovered expenses of $299,400. Cost of goods sold totaled $4.2 million. Selling, general and administrative expenses were $3.6 million. Fourth quarter revenues posted a profit of nearly $76,600. 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 Philadelphia Mint produced 1,050 acceptable silver proof coins and 1,400 acceptable silver uncirculated coins during the quarter ending September 30, 2001, representing a reject rate of 1.8% and 4.2%, respectively.

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.

Surcharges from sales of this coin program are authorized for payment 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.

Coins were released to the public in June. The program was so popular that all 50,000 of the American Buffalo Coin and Currency sets sold out in just five days, and the entire authorized mintage of 500,000 Buffalo Silver Dollars sold out in just two weeks.

Also, the United States Mint received numerous inquiries regarding replicas of the new American Buffalo Commemorative Silver Dollar now flooding the numismatic and collectors markets. The replicas are not authentic U.S. coins and are not sponsored or endorsed by the United States Government. The American public was informed they may be entitled to a refund or redress from the firm that sold the replica if they were bought with the understanding that the replica purchased was a genuine U.S. Mint product.

Marketing Activities

There were no marketing activities during the fourth quarter ending September 30, 2001.

Analysis of Financial Position

As of September 30, 2001, the Mint shipped over 496,000 coins1, generating total program revenues of nearly $16.6 million, including surcharges of nearly $5.0 million. Cost of goods sold totaled $6.0 million. Selling, general and administrative expenses were $2.9 million. The Mint posted fourth quarter profits of $2.6 million 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.

Manufacturing/Packaging Operations

The Philadelphia Mint produced 135,706 acceptable silver proof coins during the quarter ending September 30, 2001, representing a reject rate of 1.4%. There were no uncirculated American Buffalo Commemorative Coins produced at the Philadelphia Mint during the fourth quarter.

The Denver Mint produced 229,710 acceptable uncirculated coins during the quarter ending September 30, 2001, representing reject rates of 21.1%. Currently, Denver does not produce any proof coins.

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 Secretary of the Treasury approved final designs for the 2002 Winter Olympic Commemorative Coin Program on August 9, 2001. The 2002 Winter Olympic Commemorative Coins are featured in the Mint’s fall catalog.

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 million for our Olympic athletes and programs.

U.S. MILITARY ACADEMY BICENTENNIAL

The U.S. 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, U.S. Military Academy, to assist efforts to provide direct support to the academic, military, physical, moral, and ethical development programs of the Corps of Cadets, U.S. 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 Secretary of the Treasury approved final designs for the U.S. Military Academy Bicentennial Commemorative Coin Program on May 30, 2001.

FUTURE COMMEMORATIVE COIN PROGRAMS

2003 First Flight Centennial Commemorative Coins Program (Gold, Silver, Clad)

This gold, silver and clad series will commemorate the 100th anniversary of the Wright brothers’ first flight on December 17, 1903 in Kitty Hawk, NC. The Mint engraving staff and sponsoring organization will meet in the near future to review source materials and to discuss design concepts. A meeting date and location must be selected.

Program surcharges will go to the First Flight Foundation for the purposes of repairing, refurbishing, and maintaining the Wright Brothers Monument on the Outer Banks of North Carolina and, expanding or, if necessary, replacing and maintaining the visitor center and other facilities at the Wright Brothers National Memorial Park.

2004 Thomas Alva Edison Commemorative Coins Program (Silver)

This commemorative silver dollar will commemorate the 125th anniversary of the invention of the light bulb. Design concepts for this coin will be provided at a later date.

Program surcharges will be shared as follows: (1) MUSEUM OF ARTS AND HISTORY- Up to 1/8 to the Museum of Arts and History, in the city of Port Huron, Michigan, for the endowment and construction of a special museum on the life of Thomas A. Edison in Port Huron.
(2) EDISON BIRTHPLACE ASSOCIATION- Up to 1/8 to the Edison Birthplace Association, Incorporated, in Milan, Ohio, to assist in the efforts of the association to raise an endowment as a permanent source of support for the repair and maintenance of the Thomas A. Edison birthplace, a national historic landmark.

(3) NATIONAL PARK SERVICE- Up to 1/8 to the National Park Service, for use in protecting, restoring, and cataloguing historic documents and objects at the `invention factory’ of Thomas A. Edison in West Orange, New Jersey.

(4) EDISON PLAZA MUSEUM- Up to 1/8 to the Edison Plaza Museum in Beaumont, Texas, for expanding educational programs on Thomas A. Edison and for the repair and maintenance of the museum.

(5) EDISON WINTER HOME AND MUSEUM- Up to 1/8 to the Edison Winter Home and Museum in Fort Myers, Florida, for historic preservation, restoration, and maintenance of the historic home and chemical laboratory of Thomas A. Edison.

(6) EDISON INSTITUTE- Up to 1/8 to the Edison Institute, otherwise known as `Greenfield Village,’ in Dearborn, Michigan, for use in maintaining and expanding displays and educational programs associated with Thomas A. Edison.

(7) EDISON MEMORIAL TOWER- Up to 1/8 to the Edison Memorial Tower in Edison, New Jersey, for the preservation, restoration, and expansion of the tower and museum.

(8) HALL OF ELECTRICAL HISTORY- Up to 1/8 to the Schenectady Museum Association in Schenectady, New York, for the historic preservation of materials of Thomas A. Edison and for the development of educational programs associated with Thomas A. Edison.

2004 Lewis and Clark Commemorative Coins Program (Silver)

The commemorative silver dollar will commemorate the bicentennial of the incredible expedition conducted by the Corps of Discovery. The expedition departed St. Louis, Missouri on May 14, 1804. Design concepts for this coin will be provided, once Mint engravers and the sponsoring organization meet. The date and time for the meeting must be determined.

Program surcharges will go to the Lewis and Clark Bicentennial Council (2/3), and the National Park Service (1/3), for activities associated with commemorating the bicentennial of the Lewis and Clark Expedition.

CONCLUSION

Of the two commemorative coin programs authorized for 2001, only the CVC Program remained on sale through the fourth quarter of FY 2001. The American Buffalo Commemorative Coin sold out two weeks after its launch date. The Capitol Visitors Center Commemorative Coin program reported a profit this quarter of $76,600 and has generated $1.0 million in profit to date. Similarly, the American Buffalo Coin Commemorative Coin program reported fourth quarter profits of $2.6 million and sold out within the first two weeks of the pre-issue period. As of this report, neither the Capitol Visitor Center nor the National Museum of the American Indian has met the matching funds criterion established by the Commemorative Coin Reform Act of 1996. Consequently, no surcharge payments were made to either organization.

The Mint looks forward to working in partnership with the Salt Lake Organizing Committee for the 2002 Winter Olympic Games Commemorative Coin, and the U.S. Military Academy Association of Graduates for the U.S. 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.

1The variance between program mintage of 500,000 coins and the 496,000 coins shipped as of September 30, 2001 is due to one of two situations: 1) a small number of shipments were made after the close of the fourth quarter, or 2) a small number of returns received at the Customer Care Center had not yet been processed for possible sale.

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