Printer Friendly

CYPRUS MINERALS REPORTS FIRST QUARTER EARNINGS OF $11.6 MILLION

    DENVER, April 27 /PRNewswire/ -- Cyprus Minerals Co. (NYSE: CYM) today reported 1993 first quarter earnings of $11.6 million, or 24 cents per share, on revenue of $375 million, compared with 1992 earnings, before the cumulative effect of accounting changes and reorganization charges, of $12.8 million, or 23 cents per share, on revenue of $398 million.  The 1993 first quarter results included a $19 million after tax loss for the effects of record heavy rains and flooding at Cyprus' Arizona copper operations and a $16 million after tax gain on the sale of 23 percent of Cyprus' LTV Steel Co., Inc. bankruptcy claim.  Including the cumulative effect of accounting changes and the reorganization charge, the 1992 first quarter loss was $94.0 million.
    In late April, Cyprus sold an additional 45 percent of its LTV claim which will result in an after tax gain of $29 million in the second quarter of 1993.
    Milton H. Ward, Cyprus Minerals' chairman, president, and chief executive officer, said, "We have made substantial progress in minimizing the impact of the rains and have filed insurance claims for the losses.  While copper prices recently dropped about 15 percent, we have a price protection program in place that ensures us of a minimum average sales realization of about 94 cents per pound on approximately 90 percent of our projected 1993 produced copper sales and 92 cents per pound on first quarter 1994 produced copper sales.  This drop in prices underscores the importance of our capital and cost reduction programs and our projects to incrementally increase low cost copper production. We continue to be optimistic about future copper prices as the economies recover in the larger copper consuming countries, including the U.S.":
    Ward added, "We continued with the program of increasing our coal business and expanding into growing Pacific Rim markets with a tender offer for McIlwraith McEacharn Ltd. of Sydney, which will give us a 40 percent interest in an 11 million ton per year coal profitable producer with expansion and cost reduction potential.
    "Our lithium business continued to post good earnings despite continued weakness in the aluminum industry, a major user of lithium. We are maintaining our focus on core businesses of copper, coal, and lithium, with the pending sales of our short-lived South Pacific gold operations and with the recently completed sales of our barite, copper scrap, and Mexican zinc interests," Ward concluded.
    Segment income is earnings before corporate overhead, interest, equity and other, and income taxes.  Segment income as discussed below excludes the 1992 reorganization charges.
    Copper's first quarter loss of $6.3 million included an adverse pretax impact of $25.1 million from the record rainfalls that fell in Arizona in late 1992 and early 1993.  The rains impacted mining conditions, diluted leach solutions, and disrupted rail transportation, causing higher first quarter costs and lower production.  The first quarter results included a charge for anticipated future costs from cleanup work and other excess costs associated with the first quarter rains.  Insurance claims have been filed which should result in recovery of most of the costs, and proceeds will be credited to income as the claims are approved.
    Excluding the impact of the rains, first quarter earnings would have been approximately $18.8 million compared with earnings of $13.4 million in the 1992 first quarter.  This $5.4 million increase over the year earlier quarter was primarily due to 4 cents per pound lower cost of sales and to higher produced copper sales.
    First quarter copper realizations averaged 99 cents per pound, 1 cent less than in the 1992 quarter.  Although copper prices have subsequently declined, the impact on 1993 will be mitigated by copper put options that Cyprus has acquired, ensuring a minimum average realization of about 94 cents per pound, based on London Metal Exchange (LME) prices, on 593 million pounds of copper sales.  About 220 million pounds of these puts are based on monthly average prices from April through December, and gains will be recognized monthly if the options are exercised.  The remainder of the puts are based on average 1993 prices with separate options protecting prices from a low of 90 cents per pound to a high of $.985 per pound.  Any gains on these contracts will be recognized in the fourth quarter if the average LME price for the year drops below the option price.
    First quarter 1993 full mine site costs, excluding the cost of smelting and the impact of molybdenum by-product credits, were reduced at each of the copper mines by an average of 4 cents per pound compared with the 1992 first quarter.  However, higher copper smelting costs and lower molybdenum prices and production resulted in net cash costs of 78 cents per pound which were 2 cents per pound higher than in 1992. Average molybdenum realizations were about 10 percent lower than the year earlier quarter, although prices have recently begun to improve significantly.
    Copper production totaled 146 million pounds for the quarter compared with 152 million pounds in 1992.  Higher ore grades and concentrate production at the Bagdad mine in Arizona were more than offset by the effect of the rains which reduced total first quarter production by 13 percent from planned rates, and by lower solvent extraction/electrowinning production at the Twin Buttes mine in Arizona due to the exhaustion of leach ore reserves.
    During the quarter, Cyprus sold 136 million pounds of produced copper, 5 million pounds more than in the 1992 first quarter which was adversely affected by the Miami smelter shutdown for the modernization and expansion project.  The expanded Miami smelter continues through its start-up phase with typical debugging activities occurring, many of which are related to ancillary facilities.  Acid plant problems earlier in the quarter caused a temporary shutdown contributing to less produced copper available for sale and higher costs than in prior periods. Consistent operation at design capacity is still expected to be reached around mid-year.
    Engineering is in progress on a new refinery at Miami with 190,000 tons of annual copper cathode capacity.  This plant is designed to make Cyprus self-sufficient in refining at current production levels and is expected to reduce cash production costs by about 3 cents per pound.  Cyprus is proceeding with plans to increase mill throughput at its Bagdad operation by about 10 percent to 82,500 tons per day and continues to evaluate the feasibility of a major expansion.  A 10 percent mill expansion is also underway at Sierrita.
    Coal reported earnings for the first quarter of $28.8 million, including a $22.6 million pre-tax gain on the sale of 23 percent of the LTV claim.  Excluding the LTV gain, earnings were $6.2 million compared with earnings of $3.9 million in 1992.  The increase was due to improved results from western operations, partly offset by a loss at the Emerald underground mine in Pennsylvania.  The Emerald mine experienced adverse mining conditions as a shale parting and pockets of limestone made cutting difficult and lowered recoveries and production.  The longwall was moved to a new panel, and better results are expected in the second quarter.  About mid-year mining will begin in a new area of the reserve where mining conditions are expected to improve.  The results in the east were also affected by reduced sales due to the effects of a major snow storm affecting mine production and deliveries.  Sales were also reduced by a utility customer's equipment outage.
    First quarter 1993 results in the west improved from the 1992 first quarter due principally to higher production, productivity rates, and earnings at the Shoshone mine in Wyoming and Twentymile mine in Colorado.  The year earlier quarter had longwall moves at both of these mines versus one in 1993 at the Plateau mine in Utah.  In general, spot markets in the west remain weak, limiting production, overall sales, and earnings growth.
    Production of 4.4 million tons in the first quarter was about the same as in 1992, while sales of 4.1 million tons were slightly lower than a year earlier.  Most of the reduced shipments in the East have been rescheduled for later in the year.
    On March 30, Cyprus Australia Coal Company, a wholly owned subsidiary, offered to acquire all the shares of McIlwraith McEacharn Ltd. of Sydney, Australia.  This acquisition would give Cyprus a 40 percent interest in Oakbridge Limited, an Australian mining company which produces approximately 11 million tons of coal a year for export to Asian and European coal consumers.  Cyprus intends to utilize its productivity improvement techniques and capital resources to realize the full potential of these properties for long-term profitable growth in expanding overseas markets.
    Other Minerals, which includes lithium, gold, iron ore, and exploration, had combined earnings for the first quarter of 1993 of $7.7 million compared with earnings of $8.0 million in 1992.  Higher lithium and iron ore earnings essentially offset the absence of earnings from talc which was sold in mid-1992.  Lithium earned $6.7 million, $1.8 million higher than 1992 due to an inventory adjustment and higher profits from record butyllithium sales.  Gold earned $3.8 million compared with $4.6 million in 1992 as lower production and realizations were partly offset by lower costs.  The Copperstone gold mine in Arizona will cease operations this month as ore reserves are exhausted. Preliminary agreements have been reached to sell the Selwyn gold mine in Australia and the Golden Cross gold mine in New Zealand.  These transactions are expected to be completed in the second quarter, and the combined after tax earnings effect is projected to be about breakeven. The Northshore iron ore operation in Minnesota showed improved results, earning $1.0 million, compared with a loss of $.6 million in the year earlier quarter due to lower costs.  Due to strengthening markets for the U.S. steel industry, Northshore is presently scheduled to operate near capacity during 1993.  Exploration expenses of $4.8 million were $1.5 million higher than in 1992 as work on a number of advanced projects continues.
    Corporate expenses, excluding incentive compensation, for the first quarter of $7.2 million were 10 percent lower than in 1992.  The 1993 quarter included a charge for incentive compensation of $1.2 million reflecting a quarter end stock price of $32 1/2 per share, while the 1992 quarter included a credit of $1.1 million.
    Interest, Equity, and Other expense was $5.0 million for the 1993 first quarter compared with expense of $2.6 million for 1992.  Higher interest expense reflected the $150 million of 8 3/8 percent 30-year bonds issued in early February and the absence of capitalized interest for the Miami smelter project in 1992.  The company also recorded a small net gain on the sale of its 40 percent interest in the Bismark zinc mine in Mexico.
    Cyprus remains in strong financial condition with a ratio of long-term debt to total capitalization of 29 percent, a ratio of current assets to current liabilities of 3.0 to 1.0, and a cash balance of $162 million at March 31.  Cyprus paid regular dividends of 20 cents per share on common stock during the quarter.  In April, Cyprus has purchased about 188,000 shares of outstanding common stock under a 2 million share repurchase program authorized by Cyprus' board in December 1992.
    Cyprus Minerals, headquartered in Englewood, Colo., is a major producer of copper, coal, and lithium.  Cyprus also produces molybdenum, gold and iron ore.
                      CYPRUS MINERALS CO.
                Consolidated Statement of Income
                  Three Months Ended March 31
              (In Millions, Except Per Share Data)
                                             Three Months Ended
                                                  March 31,
                                                1993      1992
    Revenue                                   $ 374.7    $398.4
    Costs and Expenses                          352.9     403.8
    Income (Loss) From Operations                21.8      (5.4)
    Interest Income                               1.6        .9
    Interest Expense                             (6.6)     (5.3)
    Capitalized Interest                            -       1.9
    Equity Investments and Other                    -       (.1)
    Income (Loss) Before Income Taxes            16.8      (8.0)
    Income Tax (Provision) Benefit               (5.2)      1.6
    Income (Loss) Before Cumulative Effect
     of Accounting Change                        11.6      (6.4)
    Cumulative Effect of Accounting Changes
     for Benefits (Net of Tax)                      -     (87.6)
    Net Income (Loss)                            11.6     (94.0)
    Preferred Stock Dividends                       -      (3.7)
    Income (Loss) Applicable
     to Common Shares                         $  11.6    $(97.7)
    Earnings (Loss) Per Common Share          $   .24    $(2.50)
    Excludes 1993 Sale of LTV Claim, and 1992 Reorganization
    Expenses and Cumulative Effect of Accounting for Benefits.
      Net Income (Loss)                       $  (4.4)   $ 12.8
      Preferred Stock Dividends                     -      (3.7)
      Income (Loss) Applicable
       to Common Shares                       $  (4.4)   $  9.1
    Earnings (Loss) Per Common Share          $  (.09)   $  .23
    Weighted Average Common
     Shares Outstanding (In Thousands)         47,380    39,042
    Common Shares Outstanding
     at End of Period                          47,395    39,042
    Note:        The financial results for 1992 have been restated to
                 reflect the retroactive application of accounting
                 changes for postretirement and postemployment benefits
                 (SFAS 106 and SFAS 112).
                         CYPRUS MINERALS CO.
                 Financial Summary by Business Segment
                  Excludes 1993 Sale of LTV Claim and
                1992 Reorganization Expense in Segments
                       Three Months Ended March 31
                             (In Millions)
                                   Three Months Ended March 31,
                                     Sales         Earnings from
                                   Revenue           Operations
                                 1993     1992     1993    1992
    Copper                   $209.6   $223.6    $(6.3)    $13.4
    Coal                       99.8    104.4      6.2       3.9
    Other Minerals             42.7     70.4      7.7       8.0
        Total                $352.1   $398.4    $ 7.6     $25.3
    Corporate                                    (8.4)     (6.7)
    Interest, Equity and Other                   (5.0)     (2.6)
    Income (Loss) Before Income Taxes            (5.8)     16.0
    Income Tax (Provision) Benefit                1.4      (3.2)
        Subtotal Earnings (Loss) Before
          Special Charges                        (4.4)     12.8
    Sale of LTV Claim                            16.0         -
    Reorganization Expense (Net of Tax)             -     (19.2)
        Net Income (Loss) Before Cumulative
          Effect of Accounting Changes           11.6      (6.4)
    Cumulative Effect of Accounting Changes         -     (87.6)
        Net Income (Loss)                       $11.6    $(94.0)
                 Financial Summary by Business Segment
                  Includes 1993 Sale of LTV Claim and
                1992 Reorganization Expense in Segments
                      Three Months Ended March 31
                             (In Millions)
                                 Three Months Ended March 31,
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Apr 29, 1993
Words:2337
Previous Article:CHRYSLER REPORTS U.S. AND CANADIAN ASSEMBLY PLANT SCHEDULE FOR WEEK ENDING MAY 7
Next Article:1993 HISPANIC DESIGNERS MODEL SEARCH
Topics:


Related Articles
CYPRUS MINERALS REPORTS 1991 EARNINGS OF $42.7 MILLION
CYPRUS MINERALS REPORTS SECOND QUARTER EARNINGS OF $23 MILLION, BEFORE WRITE-DOWNS
CYPRUS MINERALS REPORTS A 36 PERCENT INCREASE IN THIRD QUARTER 1992 EARNINGS
CYPRUS MINERALS REPORTS 1992 EARNINGS OF $92.5 MILLION BEFORE SPECIAL CHARGES OF $426.1 MILLION
CYPRUS MINERALS REPORTS SECOND QUARTER EARNINGS OF $82 MILLION
CYPRUS AMAX MINERALS REPORTS SECOND QUARTER EARNINGS OF $32 MILLION
CYPRUS AMAX MINERALS REPORTS THIRD QUARTER EARNINGS OF $48 MILLION
CYPRUS AMAX MINERALS REPORTS RECORD SECOND QUARTER EARNINGS OF $134 MILLION, UP 319 PERCENT FROM 1994 SECOND QUARTER
CYPRUS AMAX MINERALS REPORTS THIRD QUARTER EARNINGS OF $135 MILLION, OR $1.41 PER SHARE, BEFORE PREVIOUSLY ANNOUNCED WRITE-DOWNS
CYPRUS AMAX MINERALS REPORTS SECOND QUARTER EARNINGS OF $53 MILLION

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters