Grupo Mexico, S.A. De C.V. Second Quarter 2000 Results.Business Editors 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. D.F.--(BUSINESS WIRE)--July 28, 2000 MINING DIVISION Review of Operations and Sales - Grupo Minero Mexico (GMM GMM Generalized Method of Moments (economics) GMM Gaussian Mixture Model GMM General Membership Meeting GMM Good Mobile Messaging GMM GPRS Mobility Management GMM Global Marijuana March GMM Genetically Modified Microorganisms ) During the first six months of 2000, production volume in our main metal increased. The increase is principally the result of a normal operation in the Cananea Cananea (from the Apache term for "horse meat") is a city in the northern Mexican state of Sonora. It is the seat of the municipality of the same name. The population of the town was 30,515 as recorded by the 2000 census. mining unit and a smooth operation in the rest of the mining units.
GMM - MINE PRODUCTION
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2nd Quarter 2nd Quarter
2000 1999 Var.
Year to Date Year to Date %
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Copper (MT) 161,197 146,088 10.3
Zinc (MT) 85,273 88,093 (3.2)
Silver (Kg) 251,320 259,719 (3.2)
Gold (Kg) 452 423 6.9
Molybdenum (MT) 3,437 3,624 (5.2)
Lead (MT) 15,264 18,704 (18.4)
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Precious metals Precious Metals Valuable metals such as gold, iridium, palladium, platinum, and silver. Notes: Investing in precious metals can be done either by purchasing the physical asset, or by purchasing futures contracts for the particular metal. volumes, specifically silver and gold, also registered a significant increase of over 10% in sales with respect to last year because of the initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. of operations of the new precious metals refinery at La Caridad Caridad is a municipality in the Honduran department of Valle. , Sonora Sonora (sōnō`rä), state (1990 pop. 1,823,606), 70,484 sq mi (182,554 sq km), NW Mexico, on the Gulf of California, S of Arizona. Hermosillo is the capital. . The lower volume of copper and zinc zinc, metallic chemical element; symbol Zn; at. no. 30; at. wt. 65.38; m.p. 419.58°C;; b.p. 907°C;; sp. gr. 7.133 at 25°C;; valence +2. Zinc is a lustrous bluish-white metal. It is found in Group 12 of the periodic table. sold is due to the additional inventories in these metals caused, in the case of copper, by higher mine production that originally anticipated with respect to 1999. These metallic contents will be smelted and refined during the second half of this year, obtaining in the process, higher value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. as well as capturing any differential in the price of said commodities.
GMM - PRODUCTION SOLD
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2nd Quarter 2nd Quarter
2000 1999 Var.
Year to Date Year to Date %
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Copper (MT) 186,751 198,398 (5.9)
Zinc (MT) 73,544 79,841 (7.9)
Silver (Kg) 329,378 299,070 10.1
Gold (Kg) 1,172 1,051 11.5
Molybdenum (MT) 3,539 3,496 1.2
Lead (MT) 16,335 20,522 (20.4)
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For the three months ended June June: see month. 30th of 2000, GMM sales in dollars amounted to $291.1 million compared with $253.2 million during the same period last year, representing an increase of 15.0%. In pesos, GMM sales for the period amounted to Ps. 2,804.5 million which compares to Ps. 2,634.3 million during the second quarter last year, representing a 6.5% increase. For the six months ended on June 30th of 2000, GMM sales in dollars were 13.9% higher in dollars with respect to the same period last year.
GMM - SALES
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2nd Quarter 2nd Quarter
2000 1999 Var.
Year to Date Year to Date %
-----------------------------------
Thousands of Dollars 558,238 490,309 13.9
Thousands of Pesos 5,367,132 5,291,662 1.4
EBITDA - 000's of Dollars 112,891 78,387 44.0
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In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , GMM's EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the three months ended June 30th of 2000 amounted to $57.9 million dollars, or 19.9% of sales, compared with an EBITDA of $51.5 million dollars during the same period last year and $3 million dollars higher than the EBITDA generated during the 1st quarter of this year. The higher EBITDA was achieved despite the afore mentioned increase in copper and zinc inventories, due to higher concentrate production and to the programmed maintenance of the smelter that initiated in June and was concluded this past 24th of July July: see month. . The maintenance permitted the smelter to recover production at design capacity of over 3,000 metric tones of concentrates per day compared to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 2,500 metric tones per day obtained in the last few months; thus, increasing copper anode anode (ăn`ōd), electrode through which current enters an electric device. In electrolysis, it is the positive electrode in the electrolytic cell. anode Terminal or electrode from which electrons leave a system. production by almost 20%. For the six months ended June 30th of 2000, GMM's EBITDA amounted to $112.9 million dollars, or 20.2% of sales, compared to $78.4 million dollars last year, representing a 44.0% increase. The intensive investment program to integrate refined metals was concluded with the initiation of operations of the precious metals refinery at Caridad. The new precious metals refinery, in addition to the new smelter, the new copper refinery and the new rod mill of 150,000 tones capacity per annum Per annum Yearly. , will add additional benefits to the mining division in the following quarters. At the Cananea unit, preparation for the SX/EW refined copper plant continues. The plant will add additional copper volumes at lower unit costs and will further optimize optimize - optimisation the mineral reserve base at this unit with new productivity criteria criteria (krītēr´ē  ),n. . With respect to capital expenditures in new projects at GMM, a total of Ps. 426.5 million was invested during the semester se·mes·ter n. One of two divisions of 15 to 18 weeks each of an academic year. [German, from Latin (cursus) s of which Ps. 253.2 million was invested during the second quarter. Review of Operations and Sales - ASARCO ASARCO American Smelting and Refining Company As of June 30th of this year, the turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. of ASARCO operations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. is a reality as cost savings to date in production and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. with respect to the same period last year now exceed $60.0 million dollars. This figure was calculated on a comparative basis, eliminating the effect of the 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. , Enthone-OMI, and The American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Limestone limestone, sedimentary rock wholly or in large part composed of calcium carbonate. It is ordinarily white but may be colored by impurities, iron oxide making it brown, yellow, or red and carbon making it blue, black, or gray. The texture varies from coarse to fine. Company, that in line with our strategy to focus primarily in our core mining business, were desincorporated and sold during the first semester of this year for $506 and $219 million dollars respectively. In addition, it is important to mention that net debt at this subsidiary has been reduced from its high of $1,741 million dollars after its acquisition in November November: see month. of 1999 to a net debt of $977.9 million dollars as of June 30 of the present year, eliminating 88% of the $817 million dollar bridge loan facility used to purchase ASARCO. In the month of July of this year, the remaining balance in the amount of $100 million dollars has been entirely paid down, thus eliminating 100% of the bridge loan facility and decreasing net debt to bellow bellow one of the voices of cattle. Usually refers to the arrogant call of the bull used to announce territorial rights. Abnormalities of the voice include hoarseness as in rabies, or continuous repetition as in nervous acetonemia. See also low, moo. $880 million dollars. Because ASARCO's debt has now been reduced by over half of the original debt when operations initiated in November of 1999, we can expect an important decrease in financial costs for the second half of approximately $30 million dollars. Production volumes during this period were partially affected due to a decrease in ore grades Ore grade is a measure that describes the concentration of a valuable natural material (such as metals or minerals) in its surrounding ore. Ore grade is used to assess the economic feasibility of a mining operation: the cost of extracting a natural material from its ore is directly and by new mine plan analyses conducted to optimize reserves and operations in the future, making it necessary to increase stripping of material in the short term that will benefit results in the near future.
ASARCO - MINE PRODUCTION
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2nd Quarter 2nd Quarter
2000 1999 Var.
Year to Date Year to Date %
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Copper (MT) 140,964 155,425 (9.3)
Zinc (MT) 29,248 29,203 0.2
Silver (Kg) 500,311 523,189 (4.4)
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Lead volume sold registered an increase of 8.1% with respect to the first half of 1999 due to an increase in production of this metal in our East Helena, Montana East Helena is a city in Lewis and Clark County, Montana, about five miles east of Helena, Montana. The population was 1,642 at the 2000 census. Geography East Helena is located at (46.589856, -111. smelter. On the other hand, copper volume sold was lower than that of last year because of the shut down of the El Paso El Paso (ĕl pă`sō), city (1990 pop. 515,342), seat of El Paso co., extreme W Tex., on the Rio Grande opposite Juárez, Mex.; inc. 1873. , Texas smelter during the first half of 1999. The lower silver sales can be attributed to the sale of two silver mines, Coeur coeur (ker) [Fr.] heart. coeur en sabot (on sa-bo´) a heart whose shape on a radiograph resembles that of a wooden shoe; seen in tetralogy of Fallot. and Galena galena (gəlē`nə) or lead glance, lustrous, blue-gray mineral crystallizing usually in cubes, sometimes in octahedrons. It is the most important ore and the principal source of lead. , both located in the state of Idaho Idaho (ī`dəhō), one of the Rocky Mt. states in the NW United States. It is bordered by Montana and Wyoming (E), Utah and Nevada (S), Oregon and Washington (W), and the Canadian province of British Columbia (N). , during the month of August of 1999 as well as to lower silver production associated to the copper produced at our Amarillo, Texas “Amarillo” redirects here. For other uses, see Amarillo (disambiguation). Amarillo is the 14th-largest city in the U.S. state of Texas and the seat of Potter County. refinery. With respect to zinc, a program to reequip and improve the mines and plant in Tennessee Tennessee, state, United States Tennessee (tĕn`əsē', tĕn'əsē`), state in the south-central United States. was implemented, together with new working procedures, which will allow for increased production volumes at lower unit costs during the second half of 2000.
ASARCO - PRODUCTION SOLD
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2nd Quarter 2nd Quarter
2000 1999 Var.
Year to Date Year to Date %
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Copper (MT) 221,754 286,444 (22.6)
Zinc (MT) 26,497 32,069 (17.4)
Silver (Kg) 99,647 269,605 (63.0)
Lead (MT) 32,579 30,124 8.1
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For the three months ended June 30th of 2000, ASARCO sales in dollars amounted to $269.4 million compared with $252.9 million during the same period last year, representing an increase of 6.5%. For the six months ended on June 30th of 2000, this subsidiary's sales in dollars were 0.9% higher in dollars and 1.3% lower in pesos when compared with last year. The difference originates from the continued strength of the peso against the dollar as well as the increase in metals inventory generated through an excess in third party metals purchases that we expect to continue smelting smelting, in metallurgy, any process of melting or fusion, especially to extract a metal from its ore. Smelting processes vary in detail depending on the nature of the ore and the metal involved, but they are typified in the use of the blast furnace. and refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar in the next months.
ASARCO - SALES
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2nd Quarter 2nd Quarter
2000 1999 Var.
Year to Date Year to Date %
-----------------------------------
Thousands of Dollars 513,552 509,122 0.9
Thousands of Pesos 4,895,140 4,960,435 (1.3)
EBITDA - 000's of Dollars (3,749) (49,348) (92.4)
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In accordance with US GAAP, EBITDA for ASARCO during the three months ended June 30th of 2000 amounted to $11.5 million dollars, compared to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. plus depreciation of ($17.4) million dollars for the same period last year. It is important to underline underline an animal's ventral profile; the shape of the belly when viewed from the side, e.g. pendulous, pot-belly, tucked up, gaunt. that the second quarter of 2000 is the first time in many years that a positive EBITDA is achieved. We expect that the continued optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. of the operations will allow is to further increase EBITDA at ASARCO in the following quarters. For the six months ended June 30th of 2000, ASARCO's EBITDA amounted to ($3.7) million dollars. This figure compares to an operating loss plus depreciation of (49.3) million dollars during the same period last year. With respect to capital expenditures in new projects at ASARCO, a total of $31.2 million dollars was invested during the semester of which $13.4 million was invested during the second quarter. All of these investments were allocated on operations' optimizations that include operating and administrative cost administrative cost Managed care A cost incurred by the 'business' end of a health care facility or university–eg, staffing and personnel costs, nursing home and hospital administration, insurance, and overhead expenses. Cf Indirect costs. reductions as well as compliance with environmental agreements. Review of Operations and Sales - 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 ) Mine copper production increased 0.8% to 163,558 tones year to date compared with 162,205 tones during the same period last year. This increase was achieved because of significantly higher production at the Cuajone mine and at the solvent extraction Solvent extraction A technique, also called liquid extraction, for separating the components of a liquid solution. This technique depends upon the selective dissolving of one or more constituents of the solution into a suitable immiscible liquid solvent. electrowinning Electrowinning, also called electroextraction, is the electrodeposition of metals from their ores that have been put in solution or liquefied. Electrorefining uses a similar process to remove impurities from a metal. (SX/EW) plant at Toquepala, which will compensate for the lower ore grades caused by the implementation of new mining programs with medium and long term horizons that will allow for the optimization of mineral reserves as well as increased flexibility and safety of the mining operations.
SPCC - MINE PRODUCTION
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2nd Quarter 2nd Quarter
2000 1999 Var.
Year to Date Year to Date %
--------------------------------------
Copper (MT) 163,558 162,205 0.8
Silver (KG) 58,824 46,172 27.4
Molybdenum (MT) 3,168 2,577 22.9
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SPCC - PRODUCTION SOLD
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2nd Quarter 2nd Quarter
2000 1999 Var.
Year to Date Year to Date %
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Copper (MT) 292,888 231,963 26.3
Silver (KG) 56,457 42,021 34.4
Molybdenum (MT) 3,245 2,518 28.9
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For the three months ended June 30th of 2000, SPCC sales of products in dollars amounted to $157.0 million compared with $132.4 million during the same period last year, representing an increase of 18.6%. For the six months ended on June 30th of 2000, SPCC sales were 24.9% higher in dollars when compared with last year.
SPCC - SALES
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2nd Quarter 2nd Quarter
2000 1999 Var.
Year to Date Year to Date %
-----------------------------------
Thousands of Dollars 320,143 256,318 24.9
Thousands of Pesos 3,051,849 2,573,306 18.6
EBITDA - 000's of Dollars 93,241 49,214 89.5
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In accordance with US GAAP, EBITDA for SPCC during the three months ended June 30th of 2000 amounted to $47.9 million dollars, or 30.5% of sales, compared to an EBITDA of $25.4 million dollars for the same period last year. For the six months ended June 30th of 2000, SPCC's EBITDA amounted to $93.2 million dollars and compares to an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. plus depreciation of $49.2 million dollars for the same period in 1999. With respect to the expansion and modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, projects at SPCC; the project to protect the Cuajone mine from maximum flooding Refers to various denial-of-service techniques that saturate a critical resource, leading either to system failure or to the exclusion of legitimate access. See e-mail bombing, Fraggle attack, smurf attack and SYN-flood attack. of the Torata river continues with construction work and reached 77% completion at the end of the second quarter of 2000, with an investment of $61.3 million out of the $75.5 million budget. The Torata river was diverted di·vert v. di·vert·ed, di·vert·ing, di·verts v.tr. 1. To turn aside from a course or direction: Traffic was diverted around the scene of the accident. 2. on June 30, 2000 to allow the beginning of the Cuajone pit expansion. On another note, two proposals have been received to resume the Ilo smelter modernization and expansion project, and are currently being evaluated. Both alternatives fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. our requirements to use the most efficient proven technology, permitting a higher design capacity to smelt 1.4 million metric tones of concentrates per annum compared with 1.1 million metric tones at present, which will allow us to obtain an economic return and comply with Peruvian environmental standards. In addition, the feasibility studies The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. for expansion of the Toquepala concentrator and mine were finished and the project was started with the basic engineering. Feasibility studies for a leaching leaching, method of extraction in which a solvent is passed through a mixture to remove some desired substance from it. A simple example is the passage of boiling water through ground coffee to dissolve and carry out the chemicals necessary for producing the beverage. section and a SX/EW plant at Cuajone are currently underway. Construction of this project is expected to begin during this year. These projects will improve SPCC's production capacity by over 30% per year when completed. With respect to capital expenditures in new projects at SPCC, a total of $56.3 million dollars was invested during the semester. RAILROAD railroad or railway, form of transportation most commonly consisting of steel rails, called tracks, on which freight cars, passenger cars, and other rolling stock are drawn by one locomotive or more. DIVISION Review of Operations and Sales - Grupo Ferroviario Mexicano Noun 1. Mexicano - a Mexican (or person of Mexican descent) living in the United States Mexican-American Mexico, United Mexican States - a republic in southern North America; became independent from Spain in 1810 (GFM GFM Government-Furnished Material GfM Gesellschaft Für Musikforschung GFM Global Freight Management GFM Gruyere Fribourg Morat (Swiss / Fribourg Railways-Bus Organisation) GFM Global Force Management GFM Gram Formula Mass ). GFM continues to advance in terms of operating efficiencies. Locomotive availability increased to 91.7% as the result of programmed maintenance and the number of total accidents has dropped by 43.1% when compared to last year. Export volumes to the Unites States have increased by 19.5% when compared to last year due to the improvement of rail tracks Rail tracks are used on railways (or railroads), which, together with railroad switches (or points), guide trains without the need for steering. Tracks consist of two parallel steel rails, which are laid upon sleepers (or cross ties) that are embedded in ballast to form the and infrastructure as well as to the high number of border crossing points that our railroad services. Because of these border crossing points, our export and import clients are allowed increased flexibility in the number of routes their merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain can take, depending on their point of origin and destination, allowing them to choose the shortest distance and saving them time and money. In addition, the percentage of warnings that slow railroad traffic, up to June of 2000 has decreased to 4.9% compared to 11.6% last year. We continue with the implementation of the modernization program along the entire railroad network as agreed with the Railroad Union, which will allow for better results through the application of improved technologies that permit further optimization of human capital and technology. These improvements will translate (1) To change one language into another; for example, assemblers, compilers and interpreters translate source language into machine language. (2) In computer graphics, to move an image on screen without rotating it. into important cost reductions and efficiency gains. For the three months ended June 30th of 2000, GFM sales for services in dollars amounted to $142.2 million compared with $122.9 million during the same period last year, representing an increase of 15.7%. For the six months ended on June 30th of 2000, sales for services in dollars at GFM were 18.5% higher.
GFM - SALES FOR SERVICES
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2nd Quarter 2nd Quarter
2000 1999 Var.
Year to Date Year to Date %
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Thousands of Dollars 281,374 237,399 18.5
Thousands of Pesos 2,704,873 2,562,933 5.5
EBITDA - 000's of Dollars 73,684 51,043 44.4
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Sales for services at GFM during the first half of 2000 are higher due to a significant increase of 8.3% in volume transported with respect to last year. In accordance with US GAAP, GFM's EBITDA for the three months ended June 30th of 2000 amounted to $33.9 million dollars, or 23.8% of sales, compared with an EBITDA of $16.5 million dollars during the same period last year, a 105.5% increase. For the six months ended June 30th of 2000, the EBITDA for this division amounted to $73.7 million dollars, or 26.2% of sales, compared to $51.0 million dollars last year, also representing an important increase of 44.4%. Results were negatively impacted by the important increase in international fuel prices, particularly diesel, which registered an increase in cost of 47.1% with respect to last year. However, the impact has been significantly mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by increased operating efficiencies and increased volume transported as well as by a conservative increase in fares. With respect to capital expenditures in new projects and asset acquisitions, a total of Ps. 525 million has been invested primarily on the reconstruction Reconstruction, 1865–77, in U.S. history, the period of readjustment following the Civil War. At the end of the Civil War, the defeated South was a ruined land. of rail tracks, modernization of maintenance shops, stations, expansion of yards and acquisition of control systems. All of these projects have been fully financed from internal cash flow generated by the railroad company.
GRUPO MEXICO - Consolidated
Highlights (Expressed in Thousands of US Dollars - U.S. Gaap)
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FINANCIAL Second Quarter Year to Date
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US GAAP 2nd 2nd 2nd 2nd
Quarter Quarter Var. Quarter Quarter Var.
2000 1999 % 2000 1999 %
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Net Sales $805,299 $371,901 116.5 $1,592,110 $717,698 121.8
Operating Profit 91,302 39,061 133.7 138,178 70,612 95.7
EBITDA 156,047 66,572 134.4 270,713 134,057 101.9
Net Profit
(Majority) 45,042 32,315 39.4 6,011 44,200 (86.4)
Earnings per Share
(Majority) 0.07 0.05 40.0 0.01 0.07 (85.7)
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Highlights (Expressed in Thousands of Mexican Pesos - Mexican Gaap)
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FINANCIAL Second Quarter Year to Date
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MEXICAN GAAP 2nd 2nd 2nd 2nd
Quarter Quarter Var. Quarter Quarter Var.
2000 1999 % 2000 1999 %
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Net Sales $7,775,371 $3,870,174 100.9 $15,244,904 $7,746,577 96.8
Operating
Profit 575,218 334,697 71.9 1,048,905 877,976 19.5
EBITDA 1,390,587 841,776 65.2 2,695,906 1,848,745 45.8
Net Profit
(Majority) 9,392 547,833 (98.3) 1,007,623 1,329,107 (24.2)
Earnings
per Share
(Majority) 0.01 0.87 (98.9) 1.60 2.11 (24.2)
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METAL'S PRICES AND Second Quarter Year to Date
OTHER INFORMATION ---------------------------------------------
2nd 2nd 2nd 2nd
Quarter Quarter Var. Quarter Quarter Var.
2000 1999 % 2000 1999 %
---------------------------------------------
Copper US Cts./Lb. 80.3 67.1 19.7 81.3 65.5 24.2
Zinc US Cts./Lb. 51.4 46.3 11.2 51.4 45.7 12.5
Silver Dlls./Oz 5.0 5.1 (1.8) 5.1 5.2 (1.9)
Gold Dlls./Oz 280.2 273.5 2.5 285.2 280.1 1.8
Molybdenum US Dlls./Lb 2.7 2.6 3.8 2.6 2.6 (0.3)
Lead US Cts./Lb 18.9 23.5 (19.5) 19.8 23.2 (14.7)
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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: Financial Results Grupo Mexico (G.Mexico) consolidated financial results for the quarter ended June 30th 2000 include those of Grupo Minero Mexico (GMM) and Grupo Ferroviario Mexicano (GFM) as well as the results of ASARCO and Southern Peru Copper Corporation (SPCC) as a result of their acquisition late in 1999. In addition, because of the nature of our mining operations, whose sales are 100% denominated in US dollars, we have presented, where appropriate, figures in accordance with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP) in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, . G. Mexico's consolidated net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the first six months of 2000 in dollars and in pesos were 121.8% and 96.8% higher respectively than those reported during the same period last year. During the second quarter, sales in dollars and in pesos were 116.5% and 100.9% higher respectively than last year. The increases in sales are due, in part, to the consolidation of ASARCO and SPCC, and to higher sales from the railroad. The mining division accounted for 83% of sales and was denominated in dollars and the remaining 17% corresponded to the railroad division and was denominated in pesos. The cost of sales in US GAAP with respect to the mining division for the three months ended on June 30th of 2000 amounted to $523.5 million dollars, or 77.6% of sales, compared to $187.8 million dollars, or 74.2% of sales, reported during the same period of 1999. For the six months ended June 30th of 2000, the cost of sales for the mining division amounted to $1,052.6 million dollars compared to $386.1 million dollars reported during the same period of the previous year. The cost of sales will consistently decrease as we optimize the incorporation of our new mining subsidiaries. On the other hand, administrative cost continue to represent between 4.8% and 4.2% of sales even after the incorporation of ASARCO and SPCC. In turn, in accordance with Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum GAAP, the cost of sales with respect to the mining division for the three months ended on June 30th of 2000 amounted to Ps. 5,069.2 million, or 78.3% of sales, compared to Ps. 1,961.3 million, or 74.5% of sales, reported during the same period of 1999. For the six months ended June 30th of 2000, the cost of sales for the mining division amounted to Ps. 9,941.7 million that represents 78.6% of consolidated sales and compares to Ps. 3,820.4 million, or 72.2% of consolidated sales, reported during the same period of 1999. Cost of sales for the railroad division (GFM) in US GAAP for the three months ended June 30th of 2000 amounted to $104.4 million dollars and compares with $100.0 million dollars incurred during the second quarter last year. For the six months ended June 30th of the present year, the cost of sales for GFM amounted to $198.1 million dollars compared with $173.6 million dollars incurred during the first six months of 1999. In accordance with Mexican GAAP, the cost of sales for the railroad division during the second quarter of 2000 amounted to Ps. 981.8 million compared with Ps. 961.4 million incurred during the three months ended June 30th of 1999. For the six months ended June 30th of the present year, the cost of sales for GFM amounted to Ps. 1,900.6 million compared with Ps. 1,776.3 million incurred during the first six months of last year. In accordance with US GAAP, for the three months ended on June 30th of 2000, the operating profit amounted to $91.3 million dollars and represented 11.3% of consolidated sales and compares with an operating profit of $39.1 million dollars generated during the second quarter last year, a 133.7% increase. Operating profit plus depreciation (EBITDA) amounted to $156.0 million dollars that represented 19.4% of consolidated sales and compares with an EBITDA of $66.6 million dollars generated during the same period of 1999, representing a increase of 134.4%. For the six months ended on June 30th of 2000, operating profit amounted to $138.2 million dollars or 8.7% of consolidated sales, compared with $70.6 million dollars during the same period last year. The EBITDA during the first six months of 2000 amounted to $270.7 million dollars or 17.0% of consolidated sales and compares with $134.1 million dollars generated during the same period last year. On the other hand, in accordance with Mexican GAAP, for the three months ended on June 30th of 2000, the operating profit amounted to Ps. 575.2 million and represents 7.4% of consolidated sales. EBITDA during the second quarter amounted to Ps.1,390.6 million and represented 17.9% of consolidated sales. During the six months ended on June 30th, 2000, operating profit amounted to Ps. 1,048.9 million and represents 6.9% of consolidated sales and EBITDA amounted to Ps. 2,695.9 million or 17.7% of consolidated sales. In accordance with US GAAP, net earnings for the three months ended June 30th 2000 amounted to $45 million dollars compared with net earnings of $32.3 million dollars for the second quarter last year. For the six months ended June 30th of 2000, net earnings amounted to $6.0 million dollars, compared with net earnings of 44.2 million dollars during the same period of 1999. It is important to highlight that the net earnings obtained in the second quarter offset the net earnings loss registered during the first quarter that amounted to $39 million dollars, resulting in an accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. net profit of $6 million dollars as June 30, 2000. On the other hand, in accordance with Mexican GAAP, net earnings for three months ended June 30th 2000 amounted to Ps. 9.4 million compared with net earnings of Ps. 547.8 million for the second of 1999. For the six months ended June 30th of 2000, net earnings amounted to Ps. 1,007.6 million compared with net earnings of Ps.1,329.1 million during the same period of 1999. The lower earnings in Mexican GAAP are due to the devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the Mexican peso, despite its continued strength, against the US dollar during the second quarter of 2000. The consolidated integrated cost of financing in accordance with Mexican GAAP represented a Ps. 705.2 million loss during the first semester of 2000 due principally to the Mexican peso devaluation against the dollar by Ps. 594.4 million and a Ps. 1,013.9 million gain on monetary position. G.Mexico results were positively impacted by various factors, including higher prices of the majority of the metals that we produce compared to the same period last year and significant operating and administrative cost savings at our new subsidiaries, ASARCO and SPCC, that now amount to over $70 million dollars year to date. On the other hand, results were negatively impacted by the effect on net sales in pesos of the continued strength of the Mexican pesos against the US dollar as sales expressed in dollars rose by approximately 122% compared to a 96.8% increase in pesos for the first semester of 2000. Sales were also affected by an increase in metals inventories in GMM because of higher mine production than originally anticipated and in ASARCO because of higher inventories caused by an excess of third party metals purchases. We expect these excess inventories to continue to be processed in the following months. In addition, operating costs operating costs npl → gastos mpl operacionales were affected by an increase in energy prices such as diesel and natural gas as well as electricity. Liquidity & Leverage In accordance with Mexican GAAP, the cash balance up to June 30th of 2000, in the amount of Ps. 2,594.9 million, represents a decrease of 58.7% in real terms when compared to the same period of 1999. The decrease can be attributed to approximately $260 million dollars that G.Mexico used of its own funds to acquire ASARCO shares at the end of 1999. Total capital investment for the first six months of 2000 amounted to Ps. 1,766.9 million and was funded through the company's own operations. With respect to the funds from the disinvestments of non-mining assets at ASARCO (Specialty Chemicals and Construction Aggregates) during the first semester of 2000 in the amount of Ps. 7,052.4 million (approximately $725 million dollars), these were fully applied toward paying down the $817 million dollar bridge loan facility used for the acquisition of ASARCO. The remaining balance of the $817 million dollar facility was paid down entirely during the month of July of 2000. The benefit from the significantly lower financial leverage will be reflected in the following quarters. The aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. transactions allow G.Mexico to achieve its strategic objectives to reduce leverage and improve its debt coverage ratios. Amortization of the Excess Book Value Over the Cost of Shares for Subsidiary Companies The excess in book value over the cost of acquired shares generated in the acquisition of ASARCO and subsidiary companies' amounted to Ps. 6,427.8 million, and was reclassified from property plant & equipment into a deferred credit that will be amortized over a two-year period. The impact on the first semester results for the year 2000 represented a credit to the operating costs of G.Mexico in the amount of Ps. 1,472.8 million in accordance with Mexican GAAP (Bulletin B-8). OTHER RELEVANT INFORMATION Break Even Points The cash operating cost for the first quarter of 2000 to produce and sell a pound of copper was 44.3 cents to the dollar for GMM, 53.8 cents for SPCC and 75.0 cents for ASARCO 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. . The consolidated cash operating cost for G.Mexico in the first half of 2000 was 56.8 cents per pound of copper. This figure is below that originally anticipated and will be further reduced as the integration of our mining units is optimized. The average price of copper for the first six months of 2000, as registered in the 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). exchange, was of 81.3 cents per pound of copper. Bulletin D-4 Beginning on January January: see month. 1st of 2000, in accordance with Generally Accepted Accounting Principles in Mexico (Mexican GAAP), the new accounting bulletin D-4 denominated "Accounting Treatment for Income Tax, Asset Tax and, Workers Participation of Profits" took effect. The bulletin establishes new criteria for the measurement, recognition and presentation in financial statements of deferred taxes. The impact on G.Mexico's financial statement for the first semester of 2000 is revealed as a decrease in the book value of equity and its corresponding recognition in long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. in the amount of Ps. 5,957.4 million. With respect to its recognition in the income statement, majority net earnings were impacted by Ps. 69.0 million for the first semester of 2000.
2nd Quarter, 2000
Consolidated Financial Statements (US GAAP)
GRUPO MEXICO - CONSOLIDATED STATEMENT OF INCOME
Thousands of US Dollars as of June 30, 2000 - US GAAP
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Figures presented in US GAAP
Second Quarter Year to Date
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2do. 2do. Var. 2do. 2do. Var.
Quarter Quarter % Quarter Quarter %
2000 1999 2000 1999
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Total Sales of
Products &
Services 805,299 371,901 116.5 1,592,110 717,698 121.8
Cost of Sales 612,616 288,288 114.6 1,244,258 553,359 124.9
Administrative
Costs 36,636 17,041 115.0 77,139 30,282 154.7
Depreciation
& Amortization 64,745 27,511 113.3 132,535 63,445 108.9
------- ------- -------- -------
Operating Profit 91,302 36,219 133.7 138,178 70,612 95.7
Net Cost of Financing:
Interest earned (6,087) (33,475) (81.8) (11,454) (50,486) (77.3)
Interest paid 69,457 28,228 146.1 140,418 55,203 154.4
Conversion effect (30,332) 13,318 (327.8) (18,959) 8,718 (317.5)
------- ------- -------- -------
Net Total Cost
of Financing 33,038 8,071 309.3 110,005 13,435 718.8
Other Income 1,621 (3,115) (152.0) (7,323) (4,496) 62.9
Profit Before Taxes 56,643 34,105 66.1 35,496 61,673 (42.4)
Total Provisions
for taxes 58 (5,635) (101.0) 2,503 5,146 (51.4)
- 0.0 0.0
Profit before
minority interest 56,585 39,740 42.4 32,993 56,527 (41.6)
Participation
in associated
companies
Minority
Interest 11,543 7,425 55.5 26,982 12,327 118.9
------- ------- -------- -------
Net Profit 45,042 32,315 39.4 6,011 44,200 (86.4)
EBITDA 156,047 66,572 270,713 134,057
Earnings per Share
- Dollars 0.07 0.05 0.01 0.07
Number of Shares
in Thousands 630,225 630,000 630,225 630,000
GRUPO MEXICO - CONSOLIDATED BALANCE SHEET
Thousands of US Dollars as of June 30, 2000 - US GAAP
----------------------------------------------------------------------
2do. 2do. Var.
Quarter Quarter %
2000 1999
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ASSETS
CURRENT ASSETS
Cash and marketable securities 176,896 564,171 (68.6)
Notes and accounts receivable:
Clients 355,025 171,791 106.7
Refundable taxes 91,036 65,382 39.2
Others 45,976 22,018 108.8
Total notes and accounts
receivable 492,037 259,191 89.8
Inventories of primary and secondary
metals and byproducts 405,869 121,264 234.7
Materials and supplies 272,316 168,817 61.3
Prepaid expenses and other 58,154 9,258 528.1
Total current assets 1,405,272 1,122,701 25.2
OTHER ASSETS 351,151 181,226 93.8
PROPERTY AND EQUIPMENT NET 4,633,443 2,541,921 82.3
COMMERCIAL CREDITS 57,159 24,142 136.8
INVESTMENTS 101,207 12,190 730.2
TOTAL ASSETS 6,548,232 3,882,180 68.7
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
Interest payable 112,538 104,689 7.5
Notes payable 592,370 153,517 285.9
Accounts payable and accrued liabilities 87,834 9,109 864.3
Income taxes, asset taxes and employee
profit sharing 131,184 130,461 0.6
Total current liabilities 923,926 397,776 132.3
LONG TERM NOTES PAYABLE 2,539,293 1,221,802 107.8
VOLUNTARY RETIREMENT AND SENORITY
PREMIUMS RESERVE 120,204 6,031 1,893.1
DEFERRED TAXES AND OTHER LIABILITIES 398,238 187,256 112.7
TOTAL LIABILITIES 3,981,661 1,812,865 119.6
Minority interest in subsidiaries 813,830 257,283 216.3
STOCKHOLDERS EQUITY
Capital stock 864,488 864,377 0.0
Effect of deferred taxes
Reserve for repurchase of own shares 155,023 155,023 -
Retained earnings 733,230 792,632 (7.5)
TOTAL STOCKHOLDERS EQUITY 1,752,741 1,812,032 (3.3)
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 6,548,232 3,882,180 68.7
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