ASARCO Reports Third Quarter Results.NEW YORK--(BUSINESS WIRE)--Oct. 19, 1998--ASARCO Incorporated (NYSE NYSE See: New York Stock Exchange :AR) today reported a net loss of $15.6 million, or 39 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , for the quarter ended September September: see month. 30, 1998, compared with net earnings of $45.8 million, or $1.09 per common share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, for the quarter ended September 30, 1997. The loss reported for the third quarter of 1998 was largely the result of lower copper prices compared with the third quarter of last year. Results for the third quarter of 1997 include an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain of $31.7 million ($48.8 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ), from the sale of shares of Grupo Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , S.A. de C.V. (Grupo Mexico), Mexico's largest mining company, partially offset by a charge in connection with a refinancing Refinancing An extension and/or increase in amount of existing debt. of certain outstanding debt. For the nine months ended September 30, 1998, Asarco reported a net loss of $61.9 million, or $1.56 per share, compared with net income of $138.3 million, or $3.24 per diluted share, for the nine months ended September 30, 1997. Results for the first nine months of 1998 include after-tax charges of $16.0 million ($23.2 million pre-tax), or 40 cents per share, related to the sale of the Company's Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. Lead
business and for severance The act of dividing, or the state of being divided.The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs associated with a cost-reduction program. Results for the first nine months of 1997 included after-tax gains totaling $47.6 million ($73.2 million pre-tax) from the sale of shares of Grupo Mexico. Sales of products and services were $545.6 million in the third quarter of 1998 compared with $661.3 million in the same period of 1997. Sales of products and services for the first nine months of 1998 were $1,781.3 million compared with $2,117.9 million for the same period of 1997. The average price for copper on the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Commodity Exchange (COMEX COMEX A division of the New York Mercantile Exchange (NYMEX). Formerly known as the Commodity Exchange, COMEX is the leading US market for metals futures and options trading. COMEX See New York Mercantile Exchange (NYM). ) in the third quarter of 1998 was 75 cents per pound compared with $1.02 per pound in the third quarter of 1997. The average London Metal Exchange London Metal Exchange (LME) A market for trading base metals, where traded options contracts are available against the underlying futures contract. (LME See London Metal Exchange. LME See London Metal Exchange (LME). ) copper price was 74 cents per pound in the third quarter of 1998 compared with $1.03 per pound in the year earlier period. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 58% of Asarco's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: copper sales in the third quarter of 1998 were based on the LME price with the balance based on COMEX quotations. Except for silver which averaged $5.22 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. in the third quarter of 1998 compared with $4.53 in the same period of the prior year, the prices for the Company's other metals were also lower in the third quarter of 1998 compared with the year earlier period. Announcing the Company's results, Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a de J. Osborne Os·borne , John James 1929-1994. British playwright and member of the Angry Young Men who is best known for his first play, Look Back in Anger (1956). Noun 1. , Chairman of the Board said, "The net loss reported by Asarco in the third quarter is the result of substantially lower prices for the Company's primary metals compared with the third quarter of last year. The price of copper, the Company's principal product, was 27 cents per pound lower on the COMEX and 29 cents lower on the LME compared with the same period of the prior year. The effect of the lower metal prices in the third quarter of 1998 is estimated to have resulted in a reduction in earnings of approximately $53.0 million compared with the corresponding period in 1997. Much of the impact of the price declines was offset by higher production and lower costs from the Company's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. copper operations as a result of operating efficiencies and the effect of a cost-reduction program instituted earlier this year. The Company's specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. and aggregates businesses continued to perform well despite some weakness in the markets for specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. chemicals' products. "In January January: see month. the Company announced a cost-reduction program designed to reduce expenses by $50 million annually. Southern Peru Copper Corporation (SPCC SPCC abbr. Society for the Prevention of Cruelty to Children SPCC (US) n abbr (= Society for the Prevention of Cruelty to Children) → Kinderschutzbund m ), a 54.3%-owned subsidiary of the Company, implemented a similar program early in the second quarter of 1998 designed to reduce its expenses by $30 million annually. Both of these cost-reduction programs are working well. Asarco's cost-reduction program is estimated to have produced pre-tax savings of $16.0 million in the third quarter, and the Company's beneficial interest in SPCC's cost-reduction program is estimated to have produced an additional $6.0 million in pre-tax savings. For the first nine months of 1998 the cost-reduction programs, including the Company's beneficial interest in SPCC's program, have produced approximately $52.0 million in pre-tax savings. Both cost-reduction programs include operational improvements and expense reductions. "The Company's beneficial interest in mined copper production in the third quarter of 1998 increased to 264.5 million pounds, 4.5% above the year-earlier period. Production at the Company's North American copper operations increased 9.8% in the third quarter of 1998 as the Company's low-cost solvent solvent, constituent of a solution that acts as a dissolving agent. In solutions of solids or gases in a liquid, the liquid is the solvent. In all other solutions (i.e. extraction/electrowinning (SX/EW) operations at its Ray mine and its 75%-owned Silver Bell mine continued to record production gains. Mined copper production at SPCC declined 5.6% in the third quarter primarily as a result of lower throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. associated with the integration of new equipment as the expansion program at SPCC's Cuajone mine nears completion. For the nine months ended September 30, 1998, the Company's beneficial interest in mined copper production was 754.6 million pounds, an increase of 5.3% compared with the prior year. "On September 1, the Company completed the sale of its Missouri Lead business to the Doe Run Company 'The Doe Run Company, based in St. Louis, Mo., is a wholly owned subsidiary of the Renco Group, and one of the largest mining, smelting, and refining operations in the world. , a subsidiary of the Renco Group Renco Group is a holding company controlled by Ira Rennert. It owned AM General, maker of the Hummer SUV, until a recent deal handed control to Rennert's neighbor, Ronald Perelman. Another Renco subsidiary, U.S. , Inc. The transaction had no impact on third quarter results since the Company provided for the effect of the sale in the first quarter of 1998. In addition to the more than $55.0 million in cash that the Company realized as a result of the sale, the Company retains a royalty interest royalty interest The proportional ownership interest by the owner of oil and gas rights in income produced by the asset. See also overriding royalty interest. in the property. "Profits from the Company's specialty chemicals business were $6.9 million in the third quarter of 1998, down slightly from $7.4 million in the third quarter of last year. Weakness in the Asian economies resulted in lower demand in that sector and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. for some of its products. "Profits from the Company's aggregates business rose by 4% to $4.9 million continuing the pattern of growth established by the business and reflecting good demand in its markets in the Southeast Southeast or south east is the ordinal direction halfway between south and east. It the opposite of northwest. Southeast or South East can refer to: Commenting on the Company's outlook for the balance of 1998 and 1999 Osborne said, "The uncertainties associated with the recent instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability of the world's financial markets, and the weakness of the Asian economies have had a depressing effect on the prices for copper and most other commodities. While inventories of copper in terminal market warehouses have increased as expected during the seasonally slower third quarter, they represent only about 4 1/2 weeks of consumption. We believe that supply and consumption of copper are in balance and that an improvement in the general economic outlook will quickly be reflected in the copper price." ASARCO Incorporated is one of the world's leading integrated producers of copper, as well as a producer of other metals, specialty chemicals and aggregates. -0-
ASARCO Incorporated
and Subsidiaries
SUMMARY OF EARNINGS
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
Sales $ 545.6 $ 661.3 $ 1,781.3 $ 2,117.9
Earnings (loss) before taxes,
minority interest and $ (6.6) $ 42.9 $ (30.5) $ 227.4
non-recurring items
Taxes on income (benefit) (0.9) 9.5 (9.7) 58.5
Earnings (loss) before
minority interests
and non-recurring items (5.7) 33.4 (20.8) 168.9
Minority interests (9.9) (19.3) (25.1) (75.7)
Earnings (loss) before (15.6) 14.1 (45.9) 93.2
non-recurring items
Non-recurring items, - 31.7 (16.0) 45.1
net of taxes
Net earnings (loss) $ (15.6) $ 45.8 $ (61.9) $ 138.3
Weighted average common shares 39.7 41.8 39.7 42.5
outstanding (Basic)
Weighted average common shares 39.7 42.0 39.7 42.6
outstanding (Diluted)
Net earnings (loss) $ (0.39) $ 1.10 $ (1.56) $ 3.26
per share (Basic)
Net earnings (loss) $ (0.39) $ 1.09 $ (1.56) $ 3.24
per share (Diluted)
ASARCO Incorporated
and Subsidiaries
Third Quarter and Nine Months Results
Three Nine
Months Months
Ended Ended
September 30, September 30,
(in millions) (in millions)
1998 1997 1998 1997
Segment Sales
Copper $ 395.7 $ 494.9 $ 1,220.4 $ 1,585.1
Lead, Zinc & Precious Metals $ 43.2 $ 67.2 $ 250.4 $ 235.7
Specialty Chemicals $ 86.6 $ 77.5 $ 259.6 $ 241.0
Aggregates $ 16.8 $ 16.3 $ 41.4 $ 40.5
Exploration $ -- $ -- $ -- $ --
All Other $ 3.3 $ 5.4 $ 9.5 $ 15.6
Segment Operating Income
(incl. Equity Earnings)
Copper $ 10.9 $ 59.4 $ 11.1 $ 287.2
Lead, Zinc & Precious Metals $ (9.2) $ (1.0) $ (43.1) $ (12.0)
Specialty Chemicals $ 6.9 $ 7.4 $ 22.8 $ 21.7
Aggregates $ 4.9 $ 4.7 $ 10.5 $ 10.2
Exploration $ (3.9) $ (8.1) $ (14.1) $ (22.1)
All Other $ (2.5) $ (6.6) $ (10.6) $ (21.9)
ASARCO Incorporated
and Subsidiaries
Average Metal Prices
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
Copper
(per pound - COMEX) $0.75 $1.02 $0.77 $1.09
Copper
(per pound - LME) $0.74 $1.03 $0.77 $1.09
Lead
(per pound - LME) $0.24 $0.28 $0.24 $0.29
Silver
(per ounce -
Handy & Harman) $5.22 $4.53 $5.73 $4.77
Zinc
(per pound - LME) $0.46 $0.73 $0.48 $0.62
Molybdenum
(per pound -
Metals Week Dealer Oxide) $3.20 $4.27 $3.65 $4.35
Metal Production and Sales
Three Months Ended September 30,
1998 1997
Mined Refined Sales Mined Refined Sales
Copper
(000s pounds)
Asarco 182,800 242,600 281,500 166,500 277,500 274,300
SPCC 159,000 163,400 215,900 168,400 154,800 199,600
Consoli- 341,800 406,000 497,400 334,900 432,300 473,900
dated
Asarco 264,500 326,700 393,600 253,200 357,000 378,800
Beneficial
Interest
Lead
(000s pounds)
Asarco 35,100 39,900 35,600 60,200 61,200 70,900
Silver
(000s ounces)
Asarco 1,644 4,675 1,943 1,553 4,143 3,340
SPCC 742 698 910 907 641 818
Consolidated 2,386 5,373 2,853 2,460 4,784 4,158
Asarco 2,039 5,046 2,427 2,031 4,481 3,771
Beneficial
Interest
Zinc
(000s pounds)
Asarco 37,700 46,000 39,500 36,600
Molybdenum
(000s pounds)
Asarco 954 1,309 1,245 1,234
SPCC 2,450 2,449 1,986 1,924
Consoli- 3,404 3,758 3,231 3,158
dated
Asarco 2,258 2,612 2,292 2,249
Beneficial
Interest
Note: SPCC presented at 100%. At September 30, 1997, Asarco's
equity ownership was 54.1% and its beneficial interest in
SPCC was 52.7%. At September 30, 1998, Asarco's equity
ownership was 54.3% and its beneficial interest in SPCC was
53.2%.
Metal Production and Sales
Nine Months Ended September 30,
1998 1997
Mined Refined Sales Mined Refined Sales
Copper
(000s
pounds)
Asarco 512,600 777,500 906,400 453,600 795,000 823,500
SPCC 469,900 485,000 553,100 503,000 454,300 555,600
Consoli- 982,500 1,262,500 1,459,500 956,600 1,249,300 1,379,100
dated
Asarco 754,600 1,027,600 1,192,700 716,400 1,032,300 1,115,600
Beneficial
Interest
Lead
(000s
pounds)
Asarco 155,400 162,300 159,400 176,200 191,700 197,500
Silver
(000s
ounces)
Asarco 4,611 18,614 20,614 3,879 14,799 15,258
SPCC 1,996 2,042 2,428 2,276 1,827 2,313
Consoli- 6,607 20,656 23,042 6,155 16,626 17,571
dated
Asarco 5,673 19,700 21,906 5,078 15,762 16,477
Beneficial
Interest
Zinc
(000s
pounds)
Asarco 121,100 121,000 118,000 109,000
Molybdenum
(000s
pounds)
Asarco 3,673 4,028 3,839 4,047
SPCC 7,914 8,030 6,382 6,412
Consoli- 11,587 12,058 10,221 10,459
dated
Asarco 7,883 8,299 7,203 7,426
Beneficial
Interest
Note: SPCC presented at 100%. At September 30, 1997, Asarco's
equity ownership was 54.1% and its beneficial interest in
SPCC was 52.7%. At September 30, 1998, Asarco's equity
ownership was 54.3% and its beneficial interest in SPCC was
53.2%.
ASARCO Incorporated
and Subsidiaries
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
(in thousands, except per share data)
Sales of products
and services $ 545,600 $ 661,294 $ 1,781,333 $ 2,117,861
Operating costs
and expenses:
Cost of products
and services 460,904 525,418 1,545,496 1,615,382
Selling,
administrative
and other 34,530 32,670 105,814 102,366
Depreciation and
depletion 36,107 34,804 108,065 96,962
Research and exploration 6,669 11,090 21,710 30,910
Environmental and other
closed plant charges,
net of recoveries 1,027 3,724 6,462 16,126
Provision for asset
impairment - - 20,000 -
-------- ------- -------- --------
Total operating
costs and expenses 539,237 607,706 1,807,547 1,861,746
Operating income (loss) 6,363 53,588 (26,214) 256,115
Interest expense, net (17,665) (20,482) (51,523) (56,414)
Other income 4,683 58,549 24,030 97,105
-------- -------- --------- --------
Earnings (loss) before
taxes on income and
minority interests (6,619) 91,655 (53,707) 296,806
Taxes on income
(benefit) (943) 26,582 (16,918) 82,806
---------- --------- -------- ---------
Earnings (loss) before
minority interests (5,676) 65,073 (36,789) 214,000
Minority interests in
net earnings of
consolidated
subsidiaries (9,921) (19,270) (25,157) (75,743)
=========== ========= ========== =========
Net earnings (loss) $ (15,597) $ 45,803 $ (61,946) $ 138,257
=========== ========= ========== =========
Per share amounts:
Net earnings (loss):
Basic $ (0.39) $ 1.10 $ (1.56) $ 3.26
=========== ======== ========== ========
Diluted $ (0.39) $ 1.09 $ (1.56) $ 3.24
============ ======== ========== ========
Cash dividends $ 0.20 $ 0.20 $ 0.60 $ 0.60
============ ======== ========== ========
Weighted average number
of shares outstanding
(Basic) 39,661 41,804 39,656 42,464
========== ====== ========== ========
Weighted average number
of shares outstanding
(Diluted) 39,661 41,970 39,656 42,630
=========== ====== ========== ========
ASARCO Incorporated
and Subsidiaries
CONSOLIDATED BALANCE SHEET
(unaudited)
September 30, December 31,
1998 1997
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 191,430 $ 210,559
Marketable securities 64,949 205,317
Accounts and notes receivable,
net 428,675 446,966
Inventories 350,714 362,119
Other assets 83,510 74,967
--------------- ----------------
Total current assets 1,119,278 1,299,928
Investments:
Available-for-sale and other
at cost 119,120 126,843
Equity 56,867 61,337
Net property 2,469,992 2,418,810
Other assets including
intangibles, net 221,762 203,484
--------------- ----------------
Total Assets $ 3,987,019 $ 4,110,402
=============== ================
LIABILITIES
Current liabilities:
Bank loans $ 43,937 $ 204
Current portion of
long-term debt 36,083 28,712
Accounts payable 353,473 352,839
Salaries and wages 30,716 35,788
Taxes on income 89,433 62,565
Reserve for closed plant and
environmental matters 47,601 43,238
Other current liabilities 45,719 50,131
--------------- ----------------
Total current liabilities 646,962 573,477
--------------- ----------------
Long-term debt 873,507 849,991
Deferred income taxes 79,748 118,289
Reserve for closed plant
and environmental matters 27,219 78,827
Postretirement benefit
obligation other than pensions 108,160 104,491
Other liabilities and reserves 127,225 157,543
--------------- ----------------
Total non-current
liabilities 1,215,859 1,309,141
---------------- ----------------
MINORITY INTERESTS 537,466 533,911
---------------- ----------------
COMMON STOCKHOLDERS' EQUITY
Common Stock (a) 522,379 522,420
Accumulated other
comprehensive income, net of tax (15,962) 3,389
Retained earnings 1,080,315 1,168,064
---------------- ----------------
Total Common Stockholders'
Equity 1,586,732 1,693,873
---------------- ----------------
Total Liabilities,
Minority Interests and
Common Stockholders' Equity $ 3,987,019 $ 4,110,402
================ ================
(a) Common Shares:
Authorized 80,000;
Outstanding: 39,661 39,663
ASARCO Incorporated
and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Condensed)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
(in thousands) (in thousands)
OPERATING ACTIVITIES
Net (loss) earnings $ (15,597) $ 45,803 $ (61,946) $ 138,257
Depreciation and depletion 36,107 34,804 108,065 96,962
(Benefit) Provision for
deferred income taxes (11,721) (28,916) (36,686) (24,558)
Net loss (gain) on sale of
investments and property 1,564 (52,616) 1,839 (73,335)
Increase (decrease) in
reserves for closed plant
and environmental matters (13,274) 19,519 (47,245) 4,925
Minority interests 9,921 19,270 25,157 75,743
Provision for asset impairment - - 20,000 -
Cash provided from
(used for) operating assets
and liabilities 8,138 96,745 69,707 42,064
Other, net 1,004 401 2,296 320
-------------------------------------------
Net cash provided from
(used for) operating
activities 16,142 135,010 81,187 260,378
-------------------------------------------
INVESTING ACTIVITIES
Capital expenditures (84,834) (74,736) (255,961) (198,485)
Net proceeds from
(purchases of) held to
maturity investments (12,432) (102,743) 140,368 (310,552)
Other, net 43,556 192,204 (1,834) 353,454
-------------------------------------------
Net cash provided from
(used for) investing
activities (53,710) 14,725 (117,427) (155,583)
-------------------------------------------
FINANCING ACTIVITIES
Debt incurred, net 18,787 (107,086) 65,853 74,838
Escrow deposits on
long-term loans (5,016) (2,963) 1,984 (14,841)
Net treasury stock
transactions (4) 66,858) (1,632) (68,781)
Net distributions to
minority interests (5,532) (15,529) (21,624) (42,374)
Dividends paid to
common stockholders (7,932) (8,377) (23,793) (25,547)
-------------------------------------------
Net cash provided from
(used for) financing
activities 303 (200,813) 20,788 (76,705)
-------------------------------------------
Effect of exchange
rate changes on cash (3,628) 2,502 (3,677) 3,042
-------------------------------------------
Increase (decrease) in
cash and cash equivalents $ (40,893) $(48,576) $(19,129) $31,132
===========================================
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