<PAGE>
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
2000
First Quarter
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended MARCH 31, 2000 Commission file number 1-14066
SOUTHERN PERU COPPER CORPORATION
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3849074
-------- ----------
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
180 MAIDEN LANE, NEW YORK, N.Y. 10038
------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 212-510-2000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
As of April 30, 2000 there were outstanding 14,095,792 shares of Southern Peru
Copper Corporation common stock, par value $0.01 per share. There were also
outstanding 65,900,833 shares of Southern Peru Copper Corporation Class A common
stock, par value $0.01 per share.
<PAGE>
Southern Peru Copper Corporation
and Subsidiaries
INDEX TO FORM 10-Q
Page No.
--------
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements (unaudited)
Condensed Consolidated Statement of Earnings
Three months ended March 31, 2000 and 1999 2
Condensed Consolidated Balance Sheet
March 31, 2000 and December 31, 1999 3
Condensed Consolidated Statement of Cash Flows
Three Months ended March 31, 2000 and 1999 4
Notes to Condensed Consolidated Financial Statements 5-7
Item 2. Management's Discussion and Analysis of 8-12
Financial Condition and Results of
Operations
Report of Independent Public Accountants 13
PART II. OTHER INFORMATION:
Item 4. Submission of matters to a vote of Security Holders 14
Item 6. Exhibits on Form 10-Q 14
Signatures 15
Exhibit 15 - Independent Accountants' Awareness Letter
<PAGE>
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(unaudited)
<TABLE>
<CAPTION>
3 Months Ended
March 31,
2000 1999
--------- ---------
(in thousands, except for per
share amounts)
<S> <C> <C>
Net sales:
Stockholders and affiliates $ 16,337 $ --
Others 146,785 123,942
--------- ---------
Total net sales 163,122 123,942
--------- ---------
Operating costs and expenses:
Cost of sales 109,803 89,250
Administrative and other expenses 7,202 10,099
Depreciation and depletion 18,638 17,386
Exploration expense 732 760
--------- ---------
Total operating costs and expenses 136,375 117,495
--------- ---------
Operating income 26,747 6,447
Interest income 428 2,917
Other income 983 1,465
Interest expense (3,916) (5,052)
--------- ---------
Earnings before taxes on income
and minority interest of investment
shares 24,242 5,777
Taxes on income 7,611 1,733
Minority interest of investment shares
in income of Peruvian Branch 156 2
--------- ---------
Net earnings $ 16,475 $ 4,042
========= =========
Per common share amounts:
Net earnings - basic and diluted $ 0.21 $ 0.05
Dividends paid $ 0.06 $ 0.03
Weighted average common shares
outstanding: Basic 80,001 79,857
Diluted 80,008 79,883
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ----------
(in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 18,174 $ 10,596
Accounts receivable, net 83,569 80,664
Inventories 99,937 110,171
Other current assets 61,479 67,710
---------- ----------
Total current assets 263,159 269,141
Net property 1,265,291 1,250,887
Other assets 24,446 25,425
---------- ----------
Total Assets $1,552,896 $1,545,453
========== ==========
LIABILITIES
Current liabilities:
Current portion of long-term debt $ 27,518 $ 23,272
Accounts payable 35,849 58,413
Accrued liabilities 34,443 29,472
---------- ----------
Total current liabilities 97,810 111,157
---------- ----------
Long-term debt 205,007 199,253
Deferred income taxes 84,007 79,888
Other liabilities 14,938 15,242
---------- ----------
Total non-current liabilities 303,952 294,383
---------- ----------
Minority interest of investment shares
in the Peruvian Branch 13,521 13,975
---------- ----------
STOCKHOLDERS' EQUITY
Common stock (a) 261,584 261,584
Retained earnings 876,029 864,354
---------- ----------
Total Stockholders' Equity 1,137,613 1,125,938
---------- ----------
Total Liabilities, Minority
Interest and Stockholders' Equity $1,552,896 $1,545,453
========== ==========
(a) Common shares: Authorized 34,099 34,099
Outstanding 14,096 14,119
Class A common shares Authorized
and Outstanding 65,901 65,901
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
Southern Peru Copper Corporation
and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
3 Months Ended
March 31,
2000 1999
-------- ---------
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 16,475 $ 4,042
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and depletion 18,638 17,386
Provision for deferred income taxes 4,222 5,256
Foreign currency transaction losses 902 1,516
Minority interest of labor shares 156 2
Net changes in operating assets and liabilities:
Accounts receivable (2,821) 12,582
Inventories 10,234 1,371
Accounts payable and accrued liabilities (18,882) (6,101)
Other operating assets and liabilities 8,342 2,446
-------- ---------
Net cash provided by operating activities 37,266 38,500
-------- ---------
INVESTING ACTIVITIES
Capital expenditures (33,236) (50,314)
Purchases of held-to-maturity investments -- (24,470)
Proceeds from held-to-maturity investments -- 22,152
Sales of property 6 362
-------- ---------
Net cash used in investing activities (33,230) (52,270)
-------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings 10,000 2,000
Escrow (deposits) withdrawals on long-term loans 190 (27)
Dividends paid to common stockholders (4,800) (2,396)
Distributions to minority interest (86) (47)
Purchases of investment shares (851) (183)
-------- ---------
Net cash provided by(used in) financing activities 4,453 (653)
-------- ---------
Effect of exchange rate changes on cash (911) (737)
-------- ---------
Increase (decrease) in cash and cash equivalents 7,578 (15,160)
Cash and cash equivalents at beginning of period 10,596 175,948
-------- ---------
Cash and cash equivalents at end of period $ 18,174 $ 160,788
======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Southern Peru Copper Corporation
and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A. In the opinion of Southern Peru Copper Corporation ("the Company"), the
accompanying unaudited condensed consolidated financial statements
contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the Company's financial
position as of March 31, 2000 and the results of operations and cash
flows for the three-months ended March 31, 2000 and 1999. The condensed
financial statements as of March 31, 1999 and for the three-month
period then ended were reviewed by other accountants whose report dated
April 16, 1999 stated that they were not aware of any material
modifications that should be made to those statements in order for them
to be in conformity with generally accepted accounting principles.
Certain reclassifications have been made in the financial statements
from amounts previously reported. The financial data as of March 31,
2000 and for the three-months period then ended has been subjected to a
review by Medina, Zaldivar y Asociados Sociedad Civil, member firm of
Arthur Andersen, the Company's independent public accountants. The
results of operations for the three-month period are not necessarily
indicative of the results to be expected for the full year. The
accompanying condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes
thereto included in the Company's 1999 annual report on Form 10-K.
B. Inventories were as follows:
(in millions)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---- ----
<S> <C> <C>
Metals at lower of average cost or market:
Finished goods $ 1.2 $ 1.5
Work-in-process 39.3 48.7
Supplies at average cost, net of reserves 59.4 60.0
------- -------
Total inventories $ 99.9 $ 110.2
======= =======
</TABLE>
C. At March 31, 2000, the Company has recorded sales of 6.7 million pounds
of copper, at a provisional price of $0.80 per pound. These sales are
subject to final pricing based on the average monthly LME copper prices
in the month of settlement which will occur in the second quarter of
2000.
D. Financial Instruments:
The Company uses derivative instruments to manage its exposure to
market risk from changes in commodity prices. Derivative instruments,
which are designated as hedges, must be deemed effective at reducing
the risk associated with the exposure being hedged and must be
designated as a hedge at the inception of the contract.
5
<PAGE>
Copper: Depending on market fundamentals and other conditions, the
Company may purchase put options to reduce or eliminate the risk of
price declines below the option strike price on a portion of its
anticipated future production. Put options purchased by the Company
establish a minimum sales price for the production covered by such put
options and permit the Company to participate in price increases above
the option price. The cost of the options is amortized on a
straight-line basis during the period in which the options are
exercisable. Depending upon market conditions the Company may either
sell options it holds or exercise the options at maturity. Gains or
losses from the sale or exercise of options, net of unamortized
acquisition costs, are recognized in the period in which the underlying
production is sold and reported as a component of the underlying
transaction.
Fuel swaps: The Company may enter into fuel swap agreements to limit
the effect of changes in fuel prices on its production costs. A fuel
swap establishes a fixed price for the quantity of fuel covered by the
agreement. The difference between the published price for fuel and the
price established in the contract for the month covered by the swap is
recognized in production costs.
Foreign currency: The Company selectively uses foreign currency swaps
to limit the effects of exchange rate changes on future cash flow
obligations denominated in foreign currencies. A currency swap
establishes a fixed dollar cost for a fixed amount of foreign currency
required at a future date. The Company has entered into currency swap
agreement on a portion of its capital cost contracted in Euros.
E. Commitments and Contingencies:
Litigation
In April 1996, the Company was served with a complaint filed in Peru by
approximately 800 former employees seeking the delivery of a
substantial number of investment shares (formerly called "labor
shares")of its Peruvian Branch plus dividends. In October 1997, the
Superior Court of Lima nullified a decision of a court of first
instance, which had been adverse to the Company. The Superior Court
remanded the case for a new trial. Plaintiff filed an extraordinary
appeal before the Peruvian Supreme Court. The Supreme Court may grant
discretionary review in limited cases. In March 1999, the Company
received official notification that the Supreme Court had denied
plaintiff's extraordinary appeal and affirmed the decision of the
Superior Court of Lima which remanded the case to the lower court for
further proceedings. In December 1999, the lower court decided against
the Company, ordering the delivery of the investment shares and
dividends to plaintiffs. The Company appealed this decision in January
2000. There is also pending against the Company a similar lawsuit filed
by 127 additional former employees. In the third quarter of 1997, the
court of first instance dismissed their complaint. Upon appeal filed by
the plaintiffs, the Superior Court of Lima, in the third quarter of
1998, nullified the lower court's decision on technical grounds and
remanded the case to the lower court for further proceedings. Also in
December 1999, the lower court dismissed the complaint against the
Company. Plaintiffs appealed this decision in January 2000.
It is the opinion of management that the outcome of the legal
proceedings mentioned, as well as other miscellaneous litigation and
proceedings now pending, will not materially adversely affect the
financial position of the Company and its consolidated subsidiaries.
However, it is possible that litigation matters could have a material
effect on quarterly or annual operating results, when they are resolved
in future periods.
6
<PAGE>
F. Impact of New Accounting Standards:
In June 1998, the Financial Accounting Standards Board (FASB) issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." This statement establishes accounting and reporting
standards for derivative instruments and hedging activities. Initially,
the statement was to be effective in fiscal years beginning after June
15, 1999. In June 1999, the FASB issued SFAS No. 137 which defers the
effective date of SFAS No. 133 one year until June 15, 2000. The
Company is currently assessing the impact of SFAS No. 133.
7
<PAGE>
PART I ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company reported net earnings of $16.5 million, or 21 cents per common
share, for the first quarter ended March 31, 2000 compared with net earnings of
$4.0 million, or 5 cents per common share, for the first quarter of 1999.
The increase in earnings in the first quarter of 2000 is primarily attributable
to higher copper prices when compared with the first quarter of 1999. The
average price for copper on the London Metal Exchange (LME) in the first quarter
of 2000 was 81 cents per pound, compared with 64 cents per pound in the year
earlier period. Prices of the Company's principal by-products were lower during
the first quarter of 2000. Molybdenum averaged $2.54 per pound and silver
averaged $5.18 per ounce compared to $2.70 per pound and $5.28 per ounce,
respectively, during the first quarter of 1999.
Mine copper production decreased 0.7% to 176.3 million pounds in the first
quarter of 2000 compared with the first quarter of last year. Decreases in ore
grade at both mines and a fire in a conveyor belt at the Cuajone concentrator
were responsible for the decrease in production. These decreases were, to a
great extent, offset by improved recovery and throughput at the Cuajone mine as
a result of the expansion, and increased production of SX/EW copper. The fire at
the Cuajone concentrator disrupted first quarter 2000 production resulting in a
loss of 11.9 million pounds of copper. The Company is pursuing this loss with
its insurers. Increased SX/EW copper production of 7.6 million pounds of copper
is a result of the expansion of the plant, completed in the third quarter of
1999. The refined copper production increased 6.9% in the first quarter of 2000
to 172.6 million pounds. The increase is due to increased production
efficiencies at the Ilo refinery and the increased SX/EW production described
above.
The Company's expansion and modernization program is progressing on schedule.
Engineering studies for the Ilo smelter modernization and expansion project
continue. The Company plans to use the most efficient proven technology, looking
not only to comply with Peruvian environmental standards but also to provide
economic returns. Feasibility studies for expansion of the Toquepala
concentrator and mine, the leaching section and a SX/EW plant at Cuajone are
currently underway. Construction of these projects are expected to begin in the
year 2000 improving SPCC's production capacity to over 900 million pounds of
copper per year. The project to expand and protect the Cuajone mine from maximum
flooding of the Torata river is under construction and reached 63% completion at
the end of the first quarter of 2000, with an investment of $47.2 million out of
the $75.5 million budget. The Torata river will be diverted in June 2000 to
allow the beginning of the Cuajone pit expansion.
INFLATION AND DEVALUATION OF PERUVIAN SOL: A portion of the Company's operating
costs are denominated in Peruvian soles. Since the revenues of the Company are
primarily denominated in U.S. dollars, when inflation in Peru is not offset by a
corresponding devaluation of the sol, the financial position, results of
operations and cash flows of the Company could be adversely affected. For the
three months ended March 31, 2000 the inflation and devaluation rates were 1.1%
and (0.7%), respectively.
8
<PAGE>
NET SALES: Net sales in the first quarter of 2000 increased $39.2 million to
$163.1 million from the comparable period in 1999. The increase in net sales was
primarily the result of higher copper prices in 2000 and increased copper sales
volume of 14.8 million pounds in the first quarter of 2000.
At March 31, 2000, the Company has recorded sales on 6.7 million pounds of
copper, at a provisional price of $0.80 per pound. These sales are subject to
final pricing based on the average monthly LME copper price in the month of
settlement, which will occur in the second quarter of 2000.
PRICES: Sales prices for the Company's metals are established principally by
reference to prices quoted on the LME, the New York Commodity Exchange (COMEX)
or as published in Platt's Metals Week for dealer oxide mean prices for
molybdenum products.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
Price/Volume Data: 2000 1999
---- ----
<S> <C> <C>
Average Metal Prices:
Copper (per pound-LME) $0.81 $0.64
Molybdenum (per pound) $2.54 $2.70
Silver (per ounce-COMEX) $5.18 $5.28
Sales Volume (in thousands):
Copper (pounds) 183,500 168,700
Molybdenum (pounds) (1) 3,346 2,324
Silver (ounces) 875 633
</TABLE>
(1) The Company's molybdenum production is sold in concentrate form. Volume
represents pounds of molybdenum contained in concentrates.
FINANCIAL INSTRUMENTS:
The Company may use derivative instruments to manage its exposure to market risk
from changes in commodity prices. Derivative instruments, which are designated
as hedges, must be deemed effective at reducing the risk associated with the
exposure being hedged and must be designated as a hedge at the inception of the
contract.
Copper: Depending on market fundamentals and other conditions, the Company may
purchase put options to reduce or eliminate the risk of price declines below the
option strike price on a portion of its anticipated future production. Put
options purchased by the Company establish a minimum sales price for the
production covered by such put options and permit the Company to participate in
price increases above the option price. The cost of the options is amortized on
a straight-line basis during the period in which the options are exercisable.
Depending upon market conditions the Company may either sell options it holds or
exercise the options at maturity. Gains or losses from the sale or exercise of
options, net of unamortized acquisition costs, are recognized in the period in
which the underlying production is sold and are reported as a component of the
underlying transaction.
At March 31, 2000, the Company held no copper put options.
9
<PAGE>
Fuel swaps: The Company may enter into fuel swap agreements to limit the effect
of changes in fuel prices on its production costs. A fuel swap establishes a
fixed price for the quantity of fuel covered by the agreement. The difference
between the published price for fuel and the price established in the contract
for the month covered by the swap is recognized in production costs. As of March
31, 2000 and December 31, 1999, the Company had the following fuel swap
agreements:
<TABLE>
<CAPTION>
Weighted Average
Quantity Contract Price
Fuel Type Period (barrels) (per barrel)
--------- ------ --------- ------------
<S> <C> <C> <C>
DECEMBER 31, 1999
Residual Oil 1/00 - 12/00 1,468,800 $12.80
Diesel Fuel 1/00 - 12/00 504,000 $19.36
MARCH 31, 2000
Residual Oil 4/00 - 12/00 1,101,600 $12.80
Diesel Fuel 4/00 - 12/00 378,000 $19.50
</TABLE>
The unrealized gain in the Company's fuel swap positions at March 31, 2000 was
$9.5 million. A hypothetical 10% decrease from March 31, 2000 fuel prices, would
reduce the unrealized gain on fuel swaps by $3.1 million.
In the first quarter of 2000, the Company's production costs would have been
$4.4 million higher if this exposure had not been hedged.
Foreign currency: The Company selectively uses foreign currency swaps to limit
the effects of exchange rate changes on future cash flow obligations denominated
in foreign currencies. A currency swap establishes a fixed dollar cost for a
fixed amount of foreign currency required at a future date. The Company has
entered into currency swap agreements on a portion of its capital cost
contracted in euros.
As of March 31, 2000 the Company had the following currency swap agreements:
<TABLE>
<CAPTION>
US$ Euros Forward
MATURITY DATE (IN MILLIONS) EXCHANGE RATE
------------- ------------- -------------
<S> <C> <C> <C> <C>
7/31/2000 9.1 8.0 1.1341
10/31/2000 8.5 7.4 1.1419
12/29/2000 6.5 5.7 1.1467
3/31/2001 2.6 2.3 1.1535
4/30/2001 3.3 2.9 1.1559
</TABLE>
The unrealized loss in the Company's currency swap position at March 31, 2000
was $4.6 million. A hypothetical 10 percent decrease from March 31, 2000 rates,
would increase the unrealized loss on currency swaps by $2.5 million. The full
cost of the currency swap amount as acquired will, when exercised, be included
in the cost of the capital asset for which these swaps were obtained.
OPERATING COSTS AND EXPENSES: Operating costs and expenses were $136.4 million
in the first quarter of 2000 compared with $117.5 million in the first quarter
of 1999.
Cost of sales for the three months ended March 31, 2000 was $109.8 million
compared with $89.3 million in the comparable 1999 period. The increase of $20.6
million in 2000 includes higher volume of 8.2 million pounds of copper sold from
SPCC mines equivalent to $5.7 million. It also includes an increase of $7.9
million in copper production cost, principally due to increased power cost and
an
10
<PAGE>
increase of $3.2 million in purchased concentrates cost attributable to higher
copper prices.
Depreciation and depletion expense for the three-months ended March 31, 2000 was
$18.6 million compared with $ 17.4 million in the comparable 1999 period. The
increase in 2000 is principally due to the depreciation of the Toquepala SX/EW
plant expansion, completed in the third quarter of 1999.
NON-OPERATING ITEMS: Interest income was $0.4 million in the first quarter of
2000, compared to $2.9 million in the comparable 1999 period. The decrease
reflects lower invested balances as Company funds were used for the expansion
and modernization program.
TAXES ON INCOME: Taxes on income for the first three months ended March 31, 2000
were $7.6 million, compared with $1.7 million for the first quarter of 1999. The
increase was principally due to higher earnings in 2000.
CASH FLOWS:
Net cash provided by operating activities was $37.3 million in the first quarter
of 2000, compared with $38.5 million in the comparable 1999 period. The decrease
was attributable to increased earnings by $12.4 million mainly due to higher
realized copper prices and $1.3 million of higher depreciation and depletion,
offset by net changes in operating assets and liabilities of $14.9 million.
Net cash used in investing activities was $33.2 million in the first quarter of
2000 and is fully explained by capital expenditures. In the first quarter of
1999, net cash used in investing activities was $52.3 million and was
principally due to $50.3 million of capital expenditures and $2.3 million of net
purchases of held-to-maturity investments.
Net cash provided by financing activities in the first quarter of 2000 was $4.5
million, compared with a use of $0.7 million for the first quarter of 1999. The
first quarter of 2000 includes a dividend distribution of $4.8 million and
proceeds from borrowings of $10 million. The first quarter of 1999 included a
dividend distribution of $2.4 million and proceeds from borrowings of $2.0
million.
LIQUIDITY AND CAPITAL RESOURCES: The Company expects that it will meet its cash
requirements for 2000 and beyond from internally generated funds, cash on hand,
from borrowings under existing credit facilities and from additional external
financing.
In the first quarter of 2000, the Company paid a dividend to shareholders of
$4.8 million or 0.06 cents per share, compared with $2.4 million or 0.03 cents
per share in the same period of 1999.
Certain financing agreements contain covenants, which limit the payment of
dividends to stockholders. Under the most restrictive covenant, the Company may
pay dividends to stockholders equal to 50% of the net income of the Company for
any fiscal quarter as long as such dividends are paid by June 30 of the
following year.
IMPACT OF NEW ACCOUNTING STANDARDS: In June 1998, the Financial Accounting
Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments and hedging activities.
Initially, the statement was to be effective in fiscal years beginning after
June 15, 1999. In June 1999, the FASB issued SFAS No. 137, which defers the
effective date of SFAS No.133 one year until June 15, 2000. The Company is
currently
11
<PAGE>
assessing the impact of SFAS No. 133.
CAUTIONARY STATEMENT: Forward-looking statements in this report and in other
Company statements include statements regarding expected commencement dates of
mining or metal production operations, projected quantities of future metal
production, anticipated production rates, operating efficiencies, costs and
expenditures as well as projected demand or supply for the Company's products.
Actual results could differ materially depending upon factors including the
availability of materials, equipment, required permits or approvals and
financing, the occurrence of unusual weather or operating conditions, lower than
expected ore grades, the failure of equipment or processes to operate in
accordance with specifications, labor relations, environmental risks as well as
political and economic risk associated with foreign operations. Results of
operations are directly affected by metal prices on commodity exchanges which
can be volatile.
12
<PAGE>
Arthur Andersen
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Southern Peru Copper Corporation:
We have reviewed the accompanying condensed balance sheet of Southern Peru
Copper Corporation and subsidiaries as of March 31, 2000, and the related
condensed statements of income and cash flows for the three-month period then
ended. The condensed financial statements as of March 31, 1999 and for the
three-month period then ended were reviewed by other accountants whose report
dated April 16, 1999, stated that they were not aware of any material
modifications that should be made to those statements in order for them to be in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements, referred to above, for them to be in
conformity with accounting principles generally accepted in the United States of
America.
Medina, Zaldivar y Asociados
member firm of Arthur Andersen
Countersigned by:
/S/ MARCO ANTONIO ZALDIVAR
- --------------------------
Marco Antonio Zaldivar
C.P.C. Register No. 12477
Lima, Peru,
May 9, 2000
13
<PAGE>
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
At the annual meeting of stockholders of the Company held on May 9, 2000, the
holders of Common Stock, voting as a class, were asked to elect two directors,
the holders of Class A Common Stock, voting as a class, were asked to elect 13
directors, and both classes, voting together, were asked to approve the
selection of the independent accountants for 2000.
Votes cast in the election of directors by holders of Common Stock were as
follows:
<TABLE>
<CAPTION>
Number of Shares
NAMES FOR WITHHELD
----- --- --------
<S> <C> <C>
Amb. Everett E. Briggs 7,779,580 3,323,044
John F. McGillicuddy 7,777,260 3,325,364
</TABLE>
In the election of directors by holders of Class A Common Stock, each of the
following directors received 65,900,833 votes and no votes were withheld:
German Larrea Mota-Velasco Oscar Gonzalez Rocha
Manuel Calderon Cardenas Manuel J. Iraola
Hector Calva Ruiz Genaro Larrea Mota-Velasco
Jaime Claro Robert A. Pritzker
Alberto de la Parra Zavala Daniel Tellechea Salido
Hector Garcia de Quevedo Topete J. Steven Whisler
Xavier Garcia de Quevedo Topete
Stockholders approved the selection of the independent accountants as follows:
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD
--- ------- --------
<S> <C> <C> <C>
Common Stock 11,044,369 32,680 25,573
Class A Common Stock 329,504,165 - -
----------- -------- --------
Total 340,548,534 32,680 25,573
</TABLE>
Holders of Class A Common Stock are entitled to five votes per share when voting
together with the holders of Common Stock as one class.
Item 6 - Exhibits on Form 10-Q
15. Independent Public Accountant's Awareness Letter
14
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHERN PERU COPPER CORPORATION
(Registrant)
Date: May 12, 2000 /s/ OSCAR GONZALEZ ROCHA
------------------------
President
Date: May 12, 2000 /s/ DANIEL TELLECHEA SALIDO
---------------------------
Vice President of Finance
15
<PAGE>
Exhibit 15
Arthur Andersen
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
May 9, 2000
We are aware that our report dated May 9, 2000 on our review of the interim
financial information of Southern Peru Copper Corporation and Subsidiaries as of
March 31, 2000 and for the three-month period ended March 31, 2000 and included
in this Form 10-Q for the quarter ended March 31, 2000 is incorporated by
reference in the Company's Registration Statement on Form S-8 (File Nos.
333-02736 and 333-40293). Pursuant to Regulation C of the Securities Act of
1933, that report is not considered a part of the Registration Statement
prepared by our firm or a report prepared or certified by our firm within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
Medina, Zaldivar y Asociados
member firm of Arthur Andersen
/s/ MARCO ANTONIO ZALDIVAR
- --------------------------
Marco Antonio Zaldivar
Partner
