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MAGMA COPPER CO. REPORTS SECOND QUARTER, SIX MONTH RESULTS

    TUCSON, Ariz., July 22 /PRNewswire/ -- Magma Copper Co. (NYSE: MCU) today reported net income of $4.7 million, or $0.10 per share, for the three months ended June 30, 1993.  This compares to net income of $0.3 million, or $0.01 per share, for first quarter 1993 and $12.0 million, or $0.26 per share, for second quarter 1992.  Second- quarter 1992 net income includes a $3.0 million extraordinary loss on the early repayment of debt.  Per share amounts are based on fully diluted shares outstanding.
    J. Burgess Winter, Magma's president and chief executive officer, commented:  "After a disappointing first quarter and April and May of the second quarter, operations have improved and returned to normal levels.  Our net cash operating cost for the second quarter of 1993 was $0.66 per pound, compared to $0.77 for first quarter 1993 and $0.67 for second quarter 1992.  Before the effects of the rains, the net cash cost per pound for the second
quarter decreased to $0.64, compared to $0.65 for the first quarter.   We fully expect to see costs continue to improve in the second half of this year."
    Winter said Magma's earnings for the second quarter of 1993 were lower due primarily to a lower copper price.  Although the average LME (London Metals Exchange) copper price for the second quarter of 1993 was $0.84 per pound, Magma's average copper price realized was $0.93 because the company purchased LME-based copper puts in 1992 which protect its cash flow and earnings at prices below $0.95 per pound.  The same level of copper price protection is in place for the third and fourth quarters of 1993.  Magma realized $0.97 per pound for first quarter 1993 and $0.99 for second quarter 1992.
    Second quarter earnings were also negatively impacted by residual operating effects caused by extraordinary rains in the first quarter, Winter said.  As previously reported, the Pinto Valley Mining Division temporarily altered its mine plan due to flooding in a higher-grade area of its open-pit mine.  Lower ore grades and production from this division during April and May impacted second quarter 1993 after-tax earnings by five cents per share.  Operations have since returned to normal.  This, combined with the company's copper price protection, should provide for improved earnings and operating cash flow for the second half of 1993.  Earnings were also reduced by an increase in exploration, research and development expenses, Winter added.
    Six-Month Results
    Net income for the six months ended June 30, 1993, was $5.0 million, or $0.10 per share, compared to $21.8 million, or $0.47 per share, for the same period last year.  Earnings for 1993 were lower due to a lower copper price and negative effects of first quarter rains and flooding.
    Sales and Production
    Magma sold 133 million pounds of copper produced from its own mines during second quarter 1993, compared to 129 million pounds for first quarter 1993 and 149 million pounds for second quarter 1992.  Sales for second quarter 1993 were $190 million, compared to $195 million for first quarter 1993 and $204 million
for second quarter 1992.   Magma produced 52 million pounds of copper from third-party sources for second quarter 1993, compared to 58 million pounds for first quarter 1993 and 44 million pounds for second quarter 1992.
    Production from the smelting and refining operations, which includes copper processed from Magma's mines and third parties, was 152 million pounds of copper while Magma's leaching operations produced 39 million pounds of electrowon copper cathode during second quarter 1993.  This resulted in combined production of 191 million pounds compared to 194 million pounds for first quarter 1993 and 188 million pounds for second quarter 1992.
    Cash Flow and Balance Sheet
    Operating cash flow, before changes in working capital, was $20 million for second quarter 1993, compared to $15 million for first quarter 1993 and $26 million for second quarter 1992.  Capital expenditures for the quarter were $34 million.  Cash and marketable securities at the end of second quarter 1993 were $165 million, compared to $215 million at March 31, 1993.
    During July, the company issued $100 million of 5 5/8 percent Cumulative Convertible Preferred Stock with a conversion price of $14.50.  The securities are listed on the New York Stock Exchange under the symbol "MCUPRD."  The underwriters of the issue were Goldman, Sachs & Co. and Merrill Lynch & Co.
    Magma Copper Co., one of the largest primary copper producers in the United States, produces high-quality copper cathode and rod for sale to customers worldwide.  Magma has operations in San Manuel, Miami, Superior, Ariz., and Ely, Nev.  Magma Metals Co., a wholly owned subsidiary, operates Magma's smelting and refining complex located in San Manuel, and conducts the company's marketing and sales activities. Corporate headquarters are in Tucson.
    Financial and operating results follow.
                            MAGMA COPPER CO.
                 Selected Financial and Operating Data
                (In millions, except per pound amounts)
                            Three months ended         Six months ended
                         June 30, March 31, June 30,  June 30,  June 30,
                           1993     1993      1992      1993     1992
    Electrolytic pounds
     produced from:
      Magma sources-
       Electrorefined      99.6     97.6      104.3     197.2    198.8
       Electrowon (SXEW)   39.0     38.3       39.7      77.3     76.1
      Total Magma
       sources            138.6    135.9      144.0     274.5    274.9
     Custom sources-
      Purchased
       concentrates         8.0     31.0       28.5      39.0     59.3
      Other purchases      15.8     18.7        2.0      34.5      4.5
      Toll customers       28.3      8.7       13.9      37.0     36.6
     Total Custom
      sources              52.1     58.4       44.4     110.5    100.4
      Total production    190.7    194.3      188.4     385.0    375.3
    Pounds sold from:
     Magma sources        133.1    128.7      149.2     261.8    296.2
     Purchased
      concentrates          9.7     31.0       28.5      40.7     59.3
     Other purchases       45.1     18.7        2.0      63.8      4.5
      Total sales
       quantities(a)      187.9    178.4      179.7     366.3    360.0
    Sales of copper      $172.5   $176.3     $181.8    $348.8   $359.6
    Price realized
     per pound
     (excluding rod
     premium)              $.93     $.97       $.99      $.95     $.98
    Cost of products
     sold:
     Cost of copper sold-
      Magma sources       $98.8   $111.5     $112.8    $210.3   $228.2
      Custom sources-
       Purchased
        concentrates        7.1     26.2       28.4      33.3     55.6
       Other purchases     37.8     17.7        1.9      55.5      4.3
       Tolling              4.1      2.2        1.6       6.3      4.8
       Other                7.4      9.7       12.4      17.1     22.4
        Total              56.4     55.8       44.3     112.2     87.1
    Total cost of
     products sold       $155.2   $167.3     $157.1    $322.5   $315.3
    Per pound cost of
     products sold:
     Magma sources
      Before credits       $.74     $.87       $.75      $.80     $.77
      Credits(b)           (.08)    (.10)      (.08)     (.09)    (.10)
      Net                  $.66     $.77       $.67      $.71     $.67
     Purchased
      concentrates         $.73     $.85      $1.00      $.82     $.94
    (a) Excludes copper processed for toll customers.
    (b) Deductions for rod premiums and profits on by-products, custom
        processing and toll conversion.
                              MAGMA COPPER CO.
                 Summary Statements of Consolidated Income
                  (In thousands, except per share amounts)
                             Three months ended       Six months ended
                        June 30,  March 31, June 30,  June 30, June 30,
                          1993      1993      1992      1993     1992
    Sales              $190,150  $194,605  $203,852  $384,755  $403,772
    Cost of sales:
     Cost of
      products sold    (155,155) (167,332) (157,073) (322,487) (315,328)
     Depreciation,
      depletion and
      amortization      (14,861)  (14,850)  (13,928)  (29,711)  (27,453)
    Selling, general
     and administrative  (5,648)   (5,539)   (5,045)  (11,187)   (9,587)
    Exploration,
     research and
     development         (2,114)     (525)     (461)   (2,639)   (1,196)
    Income from
     operations          12,372     6,359    27,345    18,731    50,208
    Other income
     (expense):
     Interest expense    (9,563)    (9,697)  (11,838) (19,260)  (24,669)
     Interest income      1,911      2,558     2,592    4,469     4,444
     Other                1,647      1,153       931    2,800     1,908
    Income before income
     taxes and
     extraordinary item   6,367        373     19,030   6,740    31,891
    Income tax provision (1,655)       (97)    (3,981) (1,752)   (7,094)
    Income before
     extraordinary item   4,712        276     15,049   4,988    24,797
    Extraordinary item:
     Premium on early
      repayment of debt,
      net of tax            ---        ---     (3,020)    ---    (3,020)
    Net income           $4,712       $276    $12,029  $4,988   $21,777
    Preferred stock
     dividends              ---        ---     (3,425)    ---    (5,944)
    Net income available
     for common stock    $4,712       $276     $8,604  $4,988   $15,833
    Earnings per share
     of common stock,
     primary:
     Income before
      extraordinary item   $.10       $.01      $.45     $.10     $.77
     Extraordinary item:
      Premium on early
       repayment of debt,
       net of tax           ---        ---      (.09)     ---     (.09)
      Net income           $.10       $.01      $.36     $.10     $.68
      Preferred stock
       dividends            ---        ---      (.10)     ---     (.19)
      Earnings per share
       of common stock     $.10       $.01      $.26     $.10     $.49
      Average common shares
       outstanding,
       primary           48,161     49,073    33,111   48,619   32,023
    Earnings per share
     of common stock,
     fully diluted:
     Income before
      extraordinary item   $.10        $.01      $.32    $.10    $.53
     Extraordinary item:
      Premium on early
       repayment of debt,
       net of tax           ---         ---     (.06)     ---   (.06)
     Net income            $.10        $.01     $.26     $.10   $.47
     Average common shares
      outstanding, fully
      diluted            48,161      49,073   46,647   48,619 46,647
                            MAGMA COPPER CO.
                       Consolidated Balance Sheets
                            (In thousands)
                                    June 30,     Dec. 31,
    Assets                            1993         1992
    Current Assets:
     Cash                           $101,136     $121,057
     Marketable securities            63,935      121,106
     Accounts receivable              46,272       31,662
     Inventories:
      Metals                          81,756       65,980
      Materials and supplies          24,298       23,353
     Prepaid expenses                  5,861        7,029
     Total current assets            323,258      370,187
    Net property, plant and
     mine development                810,735      783,621
    Other                              5,234        2,729
     Total Assets                 $1,139,227   $1,156,537
    Liabilities and
     Stockholders' Equity
    Current Liabilities:
     Accounts payable               $24,028       $15,031
     Accrued liabilities             90,306       111,224
     Current portion of
      long-term debt                 10,332         2,856
     Income taxes payable               ---        14,280
     Total current liabilities      124,666       143,391
    Accrued Pension, Retirement
     and Other Liabilities           57,769        54,515
    Deferred Income Taxes            95,156        98,259
    Long-Term Debt                  390,179       394,998
    Stockholders' Equity:
     Common stock                       456           455
     Capital in excess of
      par value                     426,467       425,369
     Retained earnings               47,659        42,671
     Unearned stock
      grant compensation             (3,125)       (3,121)
     Total stockholders' equity     471,457       465,374
     Total Liabilities and
      Stockholders' Equity       $1,139,227    $1,156,537
                            MAGMA COPPER CO.
                 Consolidated Statements of Cash Flows
                             (In thousands)
                                Three Months Ended     Six Months Ended
                           June 30, March 31, June 30, June 30, June 30,
                             1993      1993     1992     1993     1992
    Net income              $4,712      $276  $12,029   $4,988  $21,777
    Adjustments to
     reconcile net income
     to net cash provided
     by operating activities:
     Depreciation, depletion
      and amortization      14,861    14,850   13,928   29,711   27,453
     Gain on sale of assets   (353)     (459)    (349)    (812)    (731)
     Other                     327       309      309      636      618
      Total                 19,547    14,976   25,917   34,523   49,117
     Change in certain assets
      and liabilities:
     (Increase) decrease in:
      Accounts receivable    2,243   (16,853)  (2,190) (14,610)   6,084
      Inventories          (14,823)     (551)  (8,771) (15,374)  14,169
      Prepaid expenses      (1,339)    2,507     (523)   1,168    3,806
     Increase (decrease) in:
      Accounts payable and
       accrued expenses    (10,754)   (1,166)  18,575  (11,920)  13,674
      Income taxes payable  (9,380)   (4,900)   4,156  (14,280)   4,156
      Accrued pension,
       retirement and other
       liabilities           2,471       783     (597)   3,254   (2,322)
      Deferred income taxes (1,600)   (1,503)   2,643   (3,103)   5,756
     Net change in
      certain assets and
      liabilities          (33,182)  (21,683)  13,293  (54,865)  45,323
    Net cash provided
     (used) by operating
     activities            (13,635)   (6,707)  39,210  (20,342)  94,440
    Cash flows from
     investing activities:
     Capital expenditures  (34,249)  (19,528) (15,213) (53,777) (26,349)
     Marketable securities  21,703    35,468  (58,878)  57,171  (45,142)
     Proceeds from sale of
      assets                   488       918      719    1,406    1,415
     Other                    (987)     (740)    (290)  (1,727)     691

    Net cash provided
     (used) by investing
     activities            (13,045)   16,118  (73,662)   3,073  (69,385)
    Cash flows from
     financing activities:
     Long-term debt borrowings ---       ---      ---      ---  125,000
     Long-term debt repayment (747)   (1,583)(100,000)  (2,330)(100,000)
     Debt issuance costs      (781)      ---      ---     (781)  (2,500)
     Issuance of stock
      under stock plans        220       239      200      459      380
    Net cash provided
     (used) by financing
     activities             (1,308)   (1,344) (99,800)  (2,652)  22,880
    Net increase (decrease)
     in cash               (27,988)    8,067 (134,252) (19,921)  47,935
    Cash at the beginning
     of the period         129,124   121,057  239,535  121,057   57,348
    Cash at the end
     of the period        $101,136  $129,124 $105,283 $101,136 $105,283
    Marketable securities  $63,935   $85,638  $79,142  $63,935  $79,142
    Total cash and
     marketable
     securities           $165,071  $214,762 $184,425 $165,071 $184,425
    Supplemental disclosure
     of cash flow information:
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.

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Date:Jul 22, 1993
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