<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended JANUARY 31, 1999 Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
COMMISSION FILE NUMBER 333-66291
THE DOE RUN RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 13-1255630
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1801 PARK 270 DRIVE, SUITE 300
ST. LOUIS, MISSOURI 63146
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 453-7100
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 proceeding 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
Number of shares outstanding of each of the issuer's classes of common stock,
as of March 17, 1999:
COMMON STOCK, $.10 PAR VALUE 1,000 SHARES
<PAGE>
THE DOE RUN RESOURCES CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE DOE RUN RESOURCES CORPORATION
Consolidated Balance Sheets
January 31, 1999 and October 31, 1998 3
Consolidated Statements of Operations
Three Months Ended January 31, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended January 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6-17
DOE RUN PERU S.R.L.
Condensed Consolidated Balance Sheets
January 31, 1999 and October 31, 1998 18
Condensed Consolidated Statements of Operations
Three Months Ended January 31, 1999 and 1998 19
Condensed Consolidated Statements of Cash Flows
Three Months Ended January 31, 1999 and 1998 20
Notes to Condensed Consolidated Financial Statements 21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 22-30
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 31
PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 31
(a) EXHIBITS
Exhibit 27 Financial Data Schedule
SIGNATURES 32
EXHIBIT INDEX 33
</TABLE>
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE DOE RUN RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31,
1999 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 8,729 $ 4,646
Trade accounts receivable, net of
allowance for doubtful accounts 72,615 86,338
Inventories 127,532 126,467
Prepaid expenses and other current assets 32,232 30,306
--------- ---------
Total current assets 241,108 247,757
Property, plant and equipment, net 259,677 264,468
Special term deposit 125,000 125,000
Net deferred tax assets -- 8,015
Other noncurrent assets, net 17,864 18,399
--------- ---------
Total assets $ 643,649 $ 663,639
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term borrowings and current maturities
of long-term debt $ 6,238 $ 2,018
Accounts payable 43,570 53,698
Accrued liabilities 51,247 50,670
Net deferred tax liabilities -- 1,815
--------- ---------
Total current liabilities 101,055 108,201
Long-term debt, less current maturities 477,323 476,284
Postretirement benefits 12,266 12,227
Reclamation and environmental costs 32,031 32,474
Net deferred tax liabilities 3,206 2,571
Other noncurrent liabilities 13,319 13,304
--------- ---------
Total liabilities 639,200 645,061
Shareholder's equity:
Common stock, $.10 par value, 1,000 shares
authorized, issued, and outstanding -- --
Additional paid-in capital 5,000 5,000
Retained earnings (551) 13,578
--------- ---------
Total shareholder's equity 4,449 18,578
--------- ---------
Total liabilities and shareholder's equity $ 643,649 $ 663,639
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
THE DOE RUN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31,
---------------------
1999 1998
-------- --------
<S> <C> <C>
Net sales $181,718 $169,086
Costs and expenses:
Cost of sales 160,207 143,547
Depletion, depreciation and amortization 8,177 5,714
Selling, general and administrative 8,641 7,471
Exploration 992 484
-------- --------
Total costs and expenses 178,017 157,216
-------- --------
Income from operations 3,701 11,870
Other income (expense):
Interest expense (15,238) (5,869)
Interest income 3,650 365
Other, net 926 135
-------- --------
(10,662) (5,369)
-------- --------
Income (loss) before income taxes (6,961) 6,501
Income tax expense 7,168 4,527
-------- --------
Net income (loss) $(14,129) $ 1,974
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
THE DOE RUN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31,
---------------------
1999 1998
-------- --------
<S> <C> <C>
Net cash provided by operating activities $ 3,420 $ 150
Cash flows from investing activities:
Purchases of property, plant and equipment (3,815) (3,416)
-------- --------
Net cash used in investing activities (3,815) (3,416)
Cash flows from financing activities:
Proceeds from (payments on) revolving loans and
short term borrowings, net (11,365) 11,091
Payments on long-term debt (895) (845)
Proceeds from sale/leaseback transaction 17,162 --
Payment of deferred financing costs (424) (278)
-------- --------
Net cash provided by financing activities 4,478 9,968
-------- --------
Net increase in cash 4,083 6,702
Cash at beginning of period 4,646 8,943
-------- --------
Cash at end of period $ 8,729 $ 15,645
-------- --------
-------- --------
Supplemental disclosure of cash flow information -
Cash paid during the period for:
Interest, net of capitalized interest $ 2,194 $ 2,394
-------- --------
-------- --------
Income taxes $ 2,330 $ 4,204
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED INTERIM FINANCIAL STATEMENTS
These interim consolidated financial statements include the accounts of The
Doe Run Resources Corporation and its subsidiaries (the Company). The
common stock of the Company is owned by DR Acquisition Corp., a
wholly-owned subsidiary of The Renco Group, Inc (Renco). In the opinion of
management, the interim consolidated financial statements contain all
adjustments, consisting of normal recurring accruals, necessary to present
fairly the consolidated financial position as of January 31, 1999 and
results of operations for the three month periods ended January 31, 1999
and 1998. Interim periods are not necessarily indicative of results to be
expected for the year.
RECLASSIFICATIONS
Certain prior year balances have been reclassified in order to conform to
current presentation.
(2) INVENTORIES
<TABLE>
<CAPTION>
January 31, October 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
Finished metals and concentrates $ 15,824 $ 10,954
Metals and concentrates in process 62,701 70,224
Materials, supplies and repair parts 49,007 45,289
--------- ---------
$ 127,532 $ 126,467
--------- ---------
--------- ---------
</TABLE>
Materials, supplies and repair parts are stated net of reserves for
obsolescence of $4,552 and $4,559 as of January 31, 1999 and October 31,
1998, respectively.
(3) SALE/LEASEBACK TRANSACTION
In January 1999, the Company finalized an agreement for the sale and
leaseback of its oxygen plant at the La Oroya facility for $17,162. The
Company has an option to repurchase the oxygen plant at the end of the
five-year lease term for $200. This transaction has been accounted for as a
financing arrangement.
(4) CHANGE IN TAXABLE STATUS
On January 15, 1999, Renco filed an election, with the consent of its
shareholders, with the Internal Revenue Service to change its taxable
status from that of a subchapter C corporation to that of a subchapter S
corporation, effective November 1, 1998. At the same time, Renco elected
for the Company to be treated as a qualified subchapter S subsidiary
(QSSS). Most states in which the Company operates will follow similar tax
treatment. QSSS status requires the ultimate shareholders to include their
pro rata share of the Company's income or loss in their individual tax
returns. The election does not affect foreign income taxes related to the
Company's foreign subsidiaries, and the Company will continue to provide
for state and local taxes for those jurisdictions that do not recognize
QSSS status. As a result of this change in tax status, the elimination of
federal and most
6
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
state deferred tax assets and liabilities for income tax purposes resulted
in a charge to income tax expense of $6,200 for the three months ended
January 31, 1999.
(5) HEDGING
The fair market value of the Company's net hedging positions at January 31,
1999 is the difference between quoted prices at the respective period-end
and the contract settlement value. The fair market value represents the
estimated net cash the Company would receive (pay) if the contracts were
canceled on the respective dates. As management has designated these
contracts as hedges, the related gains and losses will be recognized in net
sales when the related production is sold.
The fair market value of the Company's net open hedging positions at
January 31, 1999 was ($411).
(6) ENVIRONMENTAL AND LITIGATION MATTERS
ENVIRONMENTAL
The Company has recorded a liability of $35,339 as of January 31, 1999,
which represents management's best estimate of known obligations relating
to environmental and reclamation matters, which are discussed below.
DOMESTIC OPERATIONS
The Company is subject to numerous federal, state and local environmental
laws and regulations governing, among other things, air emissions, waste
water discharge, solid and hazardous waste treatment, and storage, disposal
and remediation of releases of hazardous materials. In common with much of
the mining industry, the Company's facilities are located on sites that
have been used for heavy industrial purposes for decades and may require
remediation. The Company has made and intends to continue making the
necessary expenditures for environmental remediation and compliance with
environmental laws and regulations. Environmental laws and regulations may
become more stringent in the future which could increase costs of
compliance.
Primary smelter slag produced by and stored at the primary smelter in
Herculaneum, Missouri is currently exempt from hazardous waste regulation
under the Resource Conservation and Recovery Act of 1976, as amended
(RCRA). The Company has accrued approximately $1,200 related to the
Herculaneum smelter's operations, primarily for closure obligations. If the
slag or other wastes at the smelter were to be regulated as hazardous
waste, the Company may be required to take corrective action under RCRA at
the smelter, as well as to adopt stricter management practices for these
wastes.
The Company is working with regulators at the Herculaneum smelter to
develop a new three-year compliance plan to meet the ambient air quality
standard for lead promulgated under the federal Clean Air Act. The plan
must be completed by September 2000 and will take effect after that date to
implement the control measures identified in the plan. The Company expects
to make capital expenditures for various control measures totaling
approximately $2,900 in fiscal 1999 and anticipates additional future cash
requirements of $3,000 during the three-year compliance period. Regulators
could require that additional measures be included in the plan, which could
increase the amount of anticipated capital expenditures.
The Company has received notice that it is a potentially responsible party
(PRP) subject to liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended
7
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(CERCLA), at the following sites: four sites in St. Francois County,
Missouri, including the Big River Mine Tailings site, the Bonne Terre
site, the Federal site and the National site; the Oronogo-Durenweg site
in Jasper County, Missouri; the Cherokee County site in Cherokee County,
Kansas; the Tar Creek site in Ottawa County, Oklahoma; the Block "P"
site in Cascade County, Montana; and the Missouri Electric Works site in
Cape Girardeau, Missouri. There are four additional sites in St.
Francois County for which the Environmental Protection Agency (EPA) has
indicated it will issue notice. These sites involve historical
operations of predecessors of the Company. CERCLA provides for strict
and, in certain circumstances, joint and several liability for response
costs and natural resource damages. The Company has a reserve as of
January 31, 1999 of $15,350 for these sites, including the four
additional sites in St. Francois County, which the Company believes is
adequate based on its investigations to date. However, depending upon
the types of remediation required and certain other factors, costs at
these sites, individually or collectively, could have a material adverse
effect on the results of operations, financial condition and liquidity
of the Company.
The Company signed a voluntary Administrative Order of Consent (AOC) in
1994 with the EPA to remediate the Big River Mine Tailings site. In
February 1997, the Company signed an AOC to perform an Engineering
Evaluation/Cost Analysis (EE/CA) on the Bonne Terre site. In March 1998, an
AOC was signed to perform an EE/CA on the National site. In addition to
remediating the mine waste areas at these sites, the Company has signed an
AOC with the EPA to conduct a Remedial Investigation/Feasibility Study
(RIFS) to assess potential off-site impacts of site operations on and the
need for remediation regarding groundwater, residential soils, several
creeks and a river. The RIFS is being conducted by a third party and is
approximately one-half complete, with completion expected within two years.
The Company believes the current reserves assigned to these sites are
adequate. However, should remediation goals or areas change, requiring
substantially increased measures, there can be no assurance that the
reserves would be adequate.
The Company has been advised by the EPA that it is considering taking
certain response actions at a mine site in Madison County, Missouri known
as the LaMotte Site. A predecessor of the Company was a former operator of
the site. The EPA has not decided whether any action will be taken, but
held a meeting with the Company and two other PRPs at the site on June 17,
1998 to discuss possible future response actions. The EPA has requested
that the Company participate in a remedial investigation at the site. This
site is substantially smaller than the sites in St. Francois County where
the Company has been named a PRP, and the potential issues are less
complex. At this time, based on this preliminary meeting and an inspection
of the site, management does not believe that any future action will result
in a material adverse impact to the results of operations, financial
condition and liquidity of the Company.
The Company's recycling facility is subject to corrective action
requirements under RCRA, as a result of a storage permit for certain wastes
issued in 1989. This has required and may involve future remediation of
solid waste management units at the site. Although it is not possible to
predict whether completed actions will be approved or new actions required,
the Company has reserves as of January 31, 1999 of approximately $1,800 for
future corrective actions and $2,600 for closure costs for the permitted
storage area.
The Company's domestic operating facilities have wastewater discharge
permits issued under the federal Clean Water Act, as amended. It is
expected that stricter discharge limits than previously in effect will be
included in permits now subject to renewal. As a result, there will be
additional treatment facilities required, with anticipated total capital
expenditures of $4,000 over the next five years to meet applicable permit
requirements. Management does not expect an appreciable increase in
operating costs.
8
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The Company's mining and milling operations include seven mine waste
disposal facilities that are subject to Missouri mine closure permit
requirements. The total expected cost of closure is $14,600. The Company
has begun certain closure requirements ahead of closure and will accrue for
the cost of ultimate closure at a rate of approximately $450 per year. The
Company's mine closure reserves were approximately $7,200 as of
January 31, 1999.
FOREIGN OPERATIONS
Doe Run Peru S.R.L. (Doe Run Peru) has submitted to and received approval
from the Peruvian government for the Programa de Adecuacion y Manejo
Ambiental (Environmental Adjustment and Management Program) (the PAMA) that
consisted of an environmental impact analysis, monitoring plan and data,
mitigation measures and closure plan. The PAMA also sets forth the actions
and corresponding annual investments the concession holder agrees to
undertake in order to achieve compliance with the maximum applicable limits
prior to expiration of the PAMA (ten years for smelters, such as Doe Run
Peru's operations, and five years for any other type of mining or
metallurgical operation). The required amount of annual investment must not
be less than one percent of annual sales. Once approved, the PAMA functions
as the equivalent of an operating permit with which the operator must
comply. After expiration of the PAMA, the operator must comply with all
applicable standards and requirements.
Doe Run Peru has committed under its PAMA to implement the following
projects through December 31, 2006: (i) new sulfuric acid plants; (ii)
elimination of fugitive gases from the coke plant; (iii) use of oxygenated
gases in the anodic residue plant; (iv) water treatment plant for the
copper refinery; (v) a recirculation system for cooling waters at the
smelter; (vi) management and disposal of acidic solutions at the silver
refinery; (vii) industrial waste water treatment plant for the smelter and
refinery; (viii) containment dam for the lead muds near the zileret plant;
(ix) granulation process water at the lead smelter; (x) anode washing
system at the zinc refinery; (xi) management and disposal of lead and
copper slag wastes; and (xii) domestic waste water treatment and domestic
waste disposal. Annual spending on a calendar year basis approved in the
PAMA is as follows:
<TABLE>
<CAPTION>
ESTIMATED
YEAR COSTS
<S> <C>
1999 $ 5,050
2000 11,265
2001 13,800
2002 14,300
2003 13,180
2004 30,055
2005 34,790
2006 42,040
---------
$ 164,480
---------
---------
</TABLE>
The current estimate for the environmental projects under the PAMA and
additional related process changes for Doe Run Peru is approximately
$195,000.
Doe Run Peru's operations historically and currently exceed some of the
applicable Ministry of Energy and Mines (MEM) maximum permissible limits
pertaining to air emissions, ambient air quality and waste water effluent
quality. The PAMA projects, which are more fully discussed below, have been
designed
9
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
to achieve compliance with such requirements prior to the expiration of
the PAMA on January 13, 2007. No assurance can be given that
implementation of the PAMA projects is feasible or that their
implementation will achieve compliance with the applicable legal
requirements by the end of the PAMA period. Doe Run Peru has advised the
MEM that it intends to seek changes in certain PAMA projects that it
believes will more effectively achieve compliance. However, there can be
no assurance that the MEM will approve proposed changes to the PAMA or
that implementation of the changes will not increase the cost of
compliance. Further, there can be no assurance that the Peruvian
government will not in the future require compliance with additional
environmental obligations that could adversely affect Doe Run Peru's
business, financial condition or results of operations. Under the Doe
Run Peru purchase agreement related to the acquisition of the La Oroya
assets in October 1997, Empresa Miner del Centro del Peru S.A>
(Centromin), the previous owner of the La Oroya assets, agreed to
indemnify Doe Run Peru against environmental liability arising out of
its prior operations, and performance of the indemnity has been
guaranteed by the Peruvian government through the enactment of the
Supreme Decree No. 042-97-PCM. However, there can be no assurance that
Centromin will satisfy its environmental obligations and investment
requirements, including those in its PAMA, or that the guarantee will be
honored. Any failure by Centromin to satisfy its environmental
obligations could adversely affect Doe Run Peru's business, financial
condition or results of operations.
According to the purchase agreement, the Company has the option to continue
the use of Doe Run Peru's existing zinc ferrite disposal site until October
2000, after which it can take ownership of the site or create a new site.
If the Company chooses to take ownership of the site, it will be
responsible for its closure costs. The Company has accrued for management's
estimate of the closure costs, or $7,200. If the Company abandons the
ferrite site, it must pay this amount to Centromin.
CONSOLIDATED
The Company believes its reserves for domestic and foreign environmental
and reclamation matters are adequate, based on the information available.
Depending upon the type and extent of remediation activities required,
costs in excess of established reserves are reasonably possible. Therefore,
there can be no assurance that additional costs, both individually and in
the aggregate, would not have a material adverse effect on the results of
operations, financial condition and liquidity of the Company.
LITIGATION
The Company is a defendant in four lawsuits alleging certain damages
stemming from the operations at the Herculaneum smelter. Two of these cases
are class action lawsuits. In one case, the plaintiffs seek to have
certified two separate classes. The first class would consist of property
owners in a certain section of Herculaneum, alleging that property values
have been damaged due to the operations of the smelter. The second class
would be composed of children who lived in Herculaneum during a period of
time when they were six months to six years old, and the remedy sought is
medical monitoring for the class. The second class action similarly is
seeking certification of a class of property owners allegedly damaged by
operations from the smelter, but the purported size of the class is every
home in Herculaneum, Missouri. The other two cases are personal injury
actions by fourteen individuals who allege damages from the effects of lead
poisoning due to operations at the smelter. Punitive damages also are being
sought in each case. The Company is vigorously defending all of these
claims.
Preliminary investigation and research by the Company indicates property
values in Herculaneum are consistent with those of surrounding communities
and have not been affected by the smelter. Finally,
10
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
based on rules for class certification, the Company believes class
certification is not appropriate. However, because the cases are in
discovery, the Company is unable at this time to state with certainty
the expected outcome of and the final costs of any of these cases.
Therefore, there can be no assurance that these cases would not have a
material adverse effect, both individually and in the aggregate, on the
results of operations, financial condition and liquidity of the Company.
(7) GUARANTOR SUBSIDIARIES
The Guarantor Subsidiaries (Fabricated Products, Inc. (FPI) and DR Land
Holdings, LLC (the Domestic Guarantors) Doe Run Cayman Ltd. (Doe Run
Cayman) and certain subsidiaries, Doe Run Mining S.R.L. and its
subsidiaries Empressa Minera Cobriza S.A. and Doe Run Development S.A.C.;
and Doe Run Peru and its wholly-owned subsidiary, Doe Run Air S.A.C.) have
jointly and severally, fully, unconditionally and irrevocably guaranteed
the unsecured debt of the Company. Separate financial statements and other
disclosures concerning certain Guarantor Subsidiaries and disclosures
concerning non-Guarantor Subsidiaries have not been presented because
management has determined that such information is not material to
investors.
11
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JANUARY 31, 1999 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman
Guarantor Domestic and Certain
Subsidiaries Guarantors Subsidiaries
------------ ---------- ---------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ -- $ -- $ 25
Trade accounts receivable, net of
allowance for doubtful accounts 45,889 6,048 9,694
Inventories 45,019 1,769 8,369
Prepaid expenses and other current assets 9,405 175 4,579
Due from subsidiaries 12,240 -- 14,464
Due from parent -- -- --
--------- -------- ---------
Total current assets 112,553 7,992 37,131
Property, plant and equipment, net 146,367 8,746 3,608
Special term deposit 125,000 -- --
Net deferred tax assets -- -- --
Other noncurrent assets, net 16,806 366 275
Investment in subsidiaries 21,027 -- 160,382
--------- -------- ---------
Total assets $ 421,753 $ 17,104 $ 201,396
--------- -------- ---------
--------- -------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current maturities
of long-term debt $ -- $ -- $ 1,278
Accounts payable 15,104 3,506 1,125
Accrued liabilities 31,965 264 9,143
Net deferred tax liabilities -- -- --
Due to subsidiaries -- -- 40,936
Due to parent -- 11,342 --
--------- -------- ---------
Total current liabilities 47,069 15,112 52,482
Long-term debt, less current maturities 321,749 -- 127,595
Net deferred tax liabilites -- -- 5
Other noncurrent liabilities 48,486 1,930 --
--------- -------- ---------
Total liabilities 417,304 17,042 180,082
Shareholders' equity:
Common stock, $.10 par value, 1,000 shares
authorized, issued, and outstanding -- -- --
Common stock, $1 par value, 1,000 shares
authorized, issued, and outstanding -- 1 --
Common stock, $1 par value, 2,005,000 shares
authorized, issued and outstanding -- -- 2,005
Common stock, one nuevo sole par value, 648,672,941
shares authorized, issued and outstanding -- -- --
Additional paid in capital 5,000 1,205 --
Retained earnings (551) (1,144) 19,309
--------- -------- ---------
Total shareholders' equity 4,449 62 21,314
--------- -------- ---------
Total liabilities and shareholders' equity $ 421,753 $ 17,104 $ 201,396
--------- -------- ---------
--------- -------- ---------
<CAPTION>
Doe Run
Peru and The
Subsidiary Eliminations Company
---------- ------------ -------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 8,704 $ -- $ 8,729
Trade accounts receivable, net of
allowance for doubtful accounts 20,996 (10,012) 72,615
Inventories 71,953 422 127,532
Prepaid expenses and other current assets 19,458 (1,385) 32,232
Due from subsidiaries -- (26,704) --
Due from parent 40,936 (40,936) --
--------- ---------- ---------
Total current assets 162,047 (78,615) 241,108
Property, plant and equipment, net 100,956 -- 259,677
Special term deposit -- -- 125,000
Net deferred tax assets -- -- --
Other noncurrent assets, net 417 -- 17,864
Investment in subsidiaries -- (181,409) --
--------- ---------- ---------
Total assets $ 263,420 $ (260,024) $ 643,649
--------- ---------- ---------
--------- ---------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current maturities
of long-term debt $ 4,960 $ -- $ 6,238
Accounts payable 33,847 (10,012) 43,570
Accrued liabilities 11,260 (1,385) 51,247
Net deferred tax liabilities -- -- --
Due to subsidiaries -- (40,936) --
Due to parent 15,362 (26,704) --
--------- ---------- ---------
Total current liabilities 65,429 (79,037) 101,055
Long-term debt, less current maturities 27,979 -- 477,323
Net deferred tax liabilites 3,201 -- 3,206
Other noncurrent liabilities 7,200 -- 57,616
--------- ---------- ---------
Total liabilities 103,809 (79,037) 639,200
Shareholders' equity:
Common stock, $.10 par value, 1,000 shares
authorized, issued, and outstanding -- -- --
Common stock, $1 par value, 1,000 shares
authorized, issued, and outstanding -- (1) --
Common stock, $1 par value, 2,005,000 shares
authorized, issued and outstanding -- (2,005) --
Common stock, one nuevo sole par value, 648,672,941
shares authorized, issued and outstanding 247,926 (247,926) --
Additional paid in capital (125,000) 123,795 5,000
Retained earnings 36,685 (54,850) (551)
--------- ---------- ---------
Total shareholders' equity 159,611 (180,987) 4,449
--------- ---------- ---------
Total liabilities and shareholders' equity $ 263,420 $ (260,024) $ 643,649
--------- ---------- ---------
--------- ---------- ---------
</TABLE>
12
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF OCTOBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman
Guarantor Domestic and Certain
Subsidiaries Guarantors Subsidiaries
------------ ---------- ---------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ -- $ -- $ 89
Trade accounts receivable, net of
allowance for doubtful accounts 51,387 5,127 4,374
Inventories 39,545 1,735 6,506
Prepaid expenses and other current assets 6,966 134 3,366
Due from subsidiaries 20,434 -- 10,388
Due from parent -- -- --
--------- ---------- ---------
Total current assets 118,332 6,996 24,723
Property, plant and equipment, net 151,255 8,818 3,634
Special term deposit 125,000 -- --
Net deferred tax assets 8,015 -- --
Other noncurrent assets, net 17,274 391 286
Investment in subsidiaries 20,776 -- 156,174
--------- ---------- ---------
Total assets $ 440,652 $ 16,205 $ 184,817
--------- ---------- ---------
--------- ---------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 895 $ -- $ 1,123
Accounts payable 21,120 2,937 4,971
Accrued liabilities 28,692 366 7,107
Net deferred tax liabilities 1,815 -- --
Due to subsidiaries -- -- 22,144
Due to parent -- 11,068 811
--------- ---------- ---------
Total current liabilities 52,522 14,371 36,156
Long-term debt, less current maturities 320,689 -- 127,595
Net deferred tax liabilites -- -- 5
Other noncurrent liabilities 48,863 1,942 --
--------- ---------- ---------
Total liabilities 422,074 16,313 163,756
Shareholders' equity:
Common stock, $.10 par value, 1,000 shares
authorized, issued, and outstanding -- -- --
Common stock, $1 par value, 1,000 shares
authorized, issued, and outstanding -- 1 --
Common stock, $1 par value, 2,005,000 shares
authorized, issued and outstanding -- -- 2,005
Common stock, one nuevo sole par value, 648,672,941
shares authorized, issued and outstanding -- -- --
Additional paid in capital 5,000 935 --
Retained earnings 13,578 (1,044) 19,056
--------- ---------- ---------
Total shareholders' equity 18,578 (108) 21,061
--------- ---------- ---------
Total liabilities and shareholders' equity $ 440,652 $ 16,205 $ 184,817
--------- ---------- ---------
--------- ---------- ---------
<CAPTION>
Doe Run
Peru and The
Subsidiary Eliminations Company
---------- ------------ -------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 4,557 $ -- $ 4,646
Trade accounts receivable, net of
allowance for doubtful accounts 30,935 (5,485) 86,338
Inventories 78,150 531 126,467
Prepaid expenses and other current assets 21,923 (2,083) 30,306
Due from subsidiaries 85 (30,907) --
Due from parent 22,144 (22,144) --
--------- ---------- ---------
Total current assets 157,794 (60,088) 247,757
Property, plant and equipment, net 100,761 -- 264,468
Special term deposit -- -- 125,000
Net deferred tax assets -- -- 8,015
Other noncurrent assets, net 448 -- 18,399
Investment in subsidiaries -- (176,950) --
--------- ---------- ---------
Total assets $ 259,003 $ (237,038) $ 663,639
--------- ---------- ---------
--------- ---------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ -- $ -- $ 2,018
Accounts payable 30,155 (5,485) 53,698
Accrued liabilities 16,588 (2,083) 50,670
Net deferred tax liabilities -- -- 1,815
Due to subsidiaries -- (22,144) --
Due to parent 19,028 (30,907) --
--------- ---------- ---------
Total current liabilities 65,771 (60,619) 108,201
Long-term debt, less current maturities 28,000 -- 476,284
Net deferred tax liabilites 2,566 -- 2,571
Other noncurrent liabilities 7,200 -- 58,005
--------- ---------- ---------
Total liabilities 103,537 (60,619) 645,061
Shareholders' equity:
Common stock, $.10 par value, 1,000 shares
authorized, issued, and outstanding -- -- --
Common stock, $1 par value, 1,000 shares
authorized, issued, and outstanding -- (1) --
Common stock, $1 par value, 2,005,000 shares
authorized, issued and outstanding -- (2,005) --
Common stock, one nuevo sole par value, 648,672,941
shares authorized, issued and outstanding 247,926 (247,926) --
Additional paid in capital (125,000) 124,065 5,000
Retained earnings 32,540 (50,552) 13,578
--------- ---------- ---------
Total shareholders' equity 155,466 (176,419) 18,578
--------- ---------- ---------
Total liabilities and shareholders' equity $ 259,003 $ (237,038) $ 663,639
--------- ---------- ---------
--------- ---------- ---------
</TABLE>
13
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman Doe Run
Guarantor Domestic and Certain Peru and The
Subsidiaries Guarantors Subsidiaries Subsidiary Eliminations Company
------------ ---------- --------------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 74,686 $ 6,214 $ 8,201 $ 107,774 $ (15,157) $ 181,718
Costs and expenses:
Cost of sales 64,961 5,213 6,822 90,919 (7,708) 160,207
Depletion, depreciation and amortization 5,924 381 26 1,846 -- 8,177
Selling, general and administrative 3,773 381 3,277 8,550 (7,340) 8,641
Exploration 992 -- -- -- -- 992
--------- ------- -------- --------- --------- ---------
Total costs and expenses 75,650 5,975 10,125 101,315 (15,048) 178,017
--------- ------- -------- --------- --------- ---------
Income (loss) from operations (964) 239 (1,924) 6,459 (109) 3,701
Other income (expense):
Interest expense (10,171) (283) (3,787) (1,280) 283 (15,238)
Interest income 3,822 -- 40 71 (283) 3,650
Other, net (405) (56) 1,716 (329) -- 926
Equity in earnings of subsidiaries (19) -- 4,208 -- (4,189) --
--------- ------- -------- --------- --------- ---------
(6,773) (339) 2,177 (1,538) (4,189) (10,662)
--------- ------- -------- --------- --------- ---------
Income (loss) before income tax expense (7,737) (100) 253 4,921 (4,298) (6,961)
Income tax expense 6,392 -- -- 776 -- 7,168
--------- ------- -------- --------- --------- ---------
Net income (loss) $ (14,129) $ (100) $ 253 $ 4,145 $ (4,298) $ (14,129)
--------- ------- -------- --------- --------- ---------
--------- ------- -------- --------- --------- ---------
</TABLE>
14
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman Doe Run
Guarantor Domestic and Certain Peru and The
Subsidiaries Guarantors Subsidiaries Subsidiary Eliminations Company
------------ ---------- --------------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 56,147 $ 4,082 $ -- $111,811 $ (2,954) $ 169,086
Costs and expenses:
Cost of sales 51,369 3,950 (224) 91,148 (2,696) 143,547
Depletion, depreciation and amortization 3,893 122 42 1,657 -- 5,714
Selling, general and administrative 2,411 363 -- 4,697 -- 7,471
Exploration 484 -- -- -- -- 484
--------- ------- -------- --------- --------- ---------
Total costs and expenses 58,157 4,435 (182) 97,502 (2,696) 157,216
--------- ------- -------- --------- --------- ---------
Income (loss) from operations (2,010) (353) 182 14,309 (258) 11,870
Other income (expense):
Interest expense (3,290) (124) (2,892) (32) 469 (5,869)
Interest income 147 -- -- 342 (124) 365
Other, net 31 (22) (45) 171 -- 135
Equity in earnings of subsidiaries 16,333 -- 9,517 -- (25,850) --
--------- ------- -------- --------- --------- ---------
13,221 (146) 6,580 481 (25,505) (5,369)
--------- ------- -------- --------- --------- ---------
Income (loss) before income tax expense 11,211 (499) 6,762 14,790 (25,763) 6,501
Income tax expense 65 16 (827) 5,273 -- 4,527
--------- ------- -------- --------- --------- ---------
Net income (loss) $ 11,146 $ (515) $ 7,589 $ 9,517 $ (25,763) $ 1,974
--------- ------- -------- --------- --------- ---------
--------- ------- -------- --------- --------- ---------
</TABLE>
15
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED JANUARY 31, 1999 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman
Guarantor Domestic and Certain
Subsidiaries Guarantors Subsidiaries
------------ ---------- ---------------
<S> <C> <C> <C>
Net cash provided by (used in) operating activities $ (5,997) $ (255) $ (9,761)
Cash flows from investing activities:
Purchases of property, plant and equipment (1,755) (19) --
Investment in subsidiaries 19 -- (4,208)
--------- -------- ---------
Net cash provided by (used in) investing activities (1,736) (19) (4,208)
Cash flows from financing activities:
Proceeds from (payments on ) revolving
loans and short-term borrowings, net 858 -- --
Payments on long-term debt (895) -- --
Proceeds from sale/leaseback transaction --
Payment of deferred financing costs (424) -- --
Loans from parent/subsidiaries 8,194 274 13,905
--------- -------- ---------
Net cash provided by (used in) financing activities 7,733 274 13,905
--------- -------- ---------
Net increase (decrease) in cash -- -- (64)
Cash at beginning of period -- -- 89
--------- -------- ---------
Cash at end of period $ -- $ -- $ 25
--------- -------- ---------
--------- -------- ---------
<CAPTION>
Doe Run
Peru and The
Subsidiary Eliminations Company
---------- ------------ -------
<S> <C> <C> <C>
Net cash provided by (used in) operating activities $ 23,622 $ (4,189) $ 3,420
Cash flows from investing activities:
Purchases of property, plant and equipment (2,041) -- (3,815)
Investment in subsidiaries -- 4,189 --
--------- ---------- ---------
Net cash provided by (used in) investing activities (2,041) 4,189 (3,815)
Cash flows from financing activities:
Proceeds from (payments on ) revolving
loans and short-term borrowings, net (12,223) -- (11,365)
Payments on long-term debt -- -- (895)
Proceeds from sale/leaseback transaction 17,162 17,162
Payment of deferred financing costs -- -- (424)
Loans from parent/subsidiaries (22,373) -- --
--------- ---------- ---------
Net cash provided by (used in) financing activities (17,434) -- 4,478
--------- ---------- ---------
Net increase (decrease) in cash 4,147 -- 4,083
Cash at beginning of period 4,557 -- 4,646
--------- ---------- ---------
Cash at end of period $ 8,704 $ -- $ 8,729
--------- ---------- ---------
--------- ---------- ---------
</TABLE>
16
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED JANUARY 31, 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman
Guarantor Domestic and Certain
Subsidiaries Guarantors Subsidiaries
------------ ---------- ---------------
<S> <C> <C> <C>
Net cash provided by (used in) operating activities $ 5,145 $ (116) $ 11,211
Cash flows from investing activities:
Purchases of property, plant and equipment (2,059) (1,357) --
Investment in subsidiaries (16,333) -- (9,517)
--------- -------- ---------
Net cash provided by (used in) investing activities (18,392) (1,357) (9,517)
Cash flows from financing activities:
Proceeds from (payments on ) revolving
loans and short-term borrowings, net 14,091 -- (3,000)
Payments on long-term debt (845) -- --
Payment of deferred financing costs (278) -- --
Loans from parent/subsidiaries (334) 1,473 2,459
--------- -------- ---------
Net cash provided by financing activities 12,634 1,473 (541)
--------- -------- ---------
Net increase (decrease) in cash (613) -- 1,153
Cash at beginning of period 1,579 -- 2,351
--------- -------- ---------
Cash at end of period $ 966 $ -- $ 3,504
--------- -------- ---------
--------- -------- ---------
<CAPTION>
Doe Run
Peru and The
Subsidiary Eliminations Company
---------- ------------ -------
<S> <C> <C> <C>
Net cash provided by (used in) operating activities $ 9,760 $ (25,850) $ 150
Cash flows from investing activities:
Purchases of property, plant and equipment -- -- (3,416)
Investment in subsidiaries -- 25,850 --
--------- ---------- ---------
Net cash provided by (used in) investing activities -- 25,850 (3,416)
Cash flows from financing activities:
Proceeds from (payments on ) revolving
loans and short-term borrowings, net -- -- 11,091
Payments on long-term debt -- -- (845)
Payment of deferred financing costs -- -- (278)
Loans from parent/subsidiaries (3,598) -- --
--------- ---------- ---------
Net cash provided by financing activities (3,598) -- 9,968
--------- ---------- ---------
Net increase (decrease) in cash 6,162 -- 6,702
Cash at beginning of period 5,013 -- 8,943
--------- ---------- ---------
Cash at end of period $ 11,175 $ -- $ 15,645
--------- ---------- ---------
--------- ---------- ---------
</TABLE>
17
<PAGE>
DOE RUN PERU S.R.L.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31,
1999 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 8,704 $ 4,557
Trade accounts receivable, net of
allowance for doubtful accounts 20,996 30,935
Inventories 71,953 78,150
Prepaid expenses and other current assets 19,458 21,923
Due from parent/subsidiaries 40,936 22,229
--------- ---------
Total current assets 162,047 157,794
Property, plant and equipment, net 100,956 100,761
Other noncurrent assets, net 417 448
--------- ---------
Total assets $ 263,420 $ 259,003
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current maturities
of long-term debt $ 4,960 $ --
Accounts payable 33,847 30,155
Accrued liabilities 11,260 16,588
Due to parent 15,362 19,028
--------- ---------
Total current liabilities 65,429 65,771
Long term debt, less current maturities 27,979 28,000
Net deferred tax liabilities 3,201 2,566
Other noncurrent liabilities 7,200 7,200
--------- ---------
Total liabilities 103,809 103,537
Shareholders' equity:
Common stock, one nuevo sole par value, 648,672,941
shares authorized, issued and outstanding 247,926 247,926
Due from shareholder (125,000) (125,000)
Retained earnings 36,685 32,540
--------- ---------
Total shareholders' equity 159,611 155,466
--------- ---------
Total liabilities and shareholders' equity $ 263,420 $ 259,003
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
18
<PAGE>
DOE RUN PERU S.R.L.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED JANUARY 31,
-----------------------
1999 1998
--------- ---------
<S> <C> <C>
Net sales $ 107,774 $ 111,811
Costs and expenses:
Cost of sales 90,919 91,148
Depreciation and amortization 1,846 1,657
Selling, general and administrative 8,550 4,697
--------- ---------
Total costs and expenses 101,315 97,502
--------- ---------
Income from operations 6,459 14,309
Other income (expense):
Interest expense (1,280) (32)
Interest income 71 342
Other, net (329) 171
--------- ---------
(1,538) 481
--------- ---------
Income before income tax expense 4,921 14,790
Income tax expense 776 5,273
--------- ---------
Net income $ 4,145 $ 9,517
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
19
<PAGE>
DOE RUN PERU S.R.L.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED JANUARY 31,
-----------------------
1999 1998
--------- ---------
<S> <C> <C>
Net cash provided by operating activities $ 23,622 $ 9,760
Cash flows from investing activities:
Purchases of property, plant and equipment (2,041) --
--------- --------
Net cash provided by investing activities (2,041) --
Cash flows from financing activities:
Payments on revolving loans and short-term
borrowings, net (12,223) --
Proceeds from sale/leaseback transaction 17,162 --
Loans to parent (22,373) (3,598)
--------- --------
Net cash used in financing activities (17,434) (3,598)
--------- --------
Net increase in cash 4,147 6,162
Cash at beginning of period 4,557 5,013
--------- --------
Cash at end of period $ 8,704 $ 11,175
--------- --------
--------- --------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
20
<PAGE>
DOE RUN PERU S.R.L.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(1) BASIS OF PRESENTATION
UNAUDITED INTERIM FINANCIAL STATEMENTS
In the opinion of management, the interim condensed consolidated financial
statements contain all adjustments, consisting of normal recurring
accruals, necessary to present fairly the condensed consolidated financial
position as of January 31, 1999 and results of operations for the three
month periods ended January 31, 1999 and 1998. Interim periods are not
necessarily indicative of results to be expected for the year.
(2) INVENTORIES
<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
Refined metals and concentrates for sale $ 5,553 $ 3,857
Metals and concentrates in process 44,979 54,534
Materials, supplies and spare parts 21,421 19,759
-------- --------
$ 71,953 $ 78,150
-------- --------
-------- --------
</TABLE>
(2) SALE/LEASEBACK TRANSACTION
In January 1999, the Company finalized an agreement for the sale and
leaseback of its oxygen plant at the La Oroya facility for $17,162. The
Company has an option to repurchase the oxygen plant at the end of the
five-year lease term for $200. This transaction has been accounted for as a
financing arrangement.
21
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis includes the U.S. operations of
the Company, including FPI, and the Peruvian operations of the Company,
including Doe Run Cayman and its Peruvian subsidiaries, and should be read in
conjunction with the consolidated financial statements of the Company and the
notes thereto, and other financial information included herein.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JANUARY 31, 1999 (THE 1999 QUARTER) COMPARED TO THE
THREE MONTHS ENDED JANUARY 31, 1998 (THE 1998 QUARTER)
The Company reported a net loss of $14.1 million for the 1999 quarter
compared to net earnings of $2.0 million for the 1998 quarter. The Company's
U.S. operations reported a net loss of $18.2 million for the 1999 quarter
compared to a net loss of $5.6 million in 1998 quarter. This decrease in net
earnings was primarily due to; a write-off of deferred tax balances of $6.2
million associated with a change in tax status to a qualified subchapter S
subsidiary, increased interest expense, and lower lead, copper and zinc
prices. See "Item 1. Financial Statements Note 4 to the Company's
Consolidated Financial Statements" for a discussion of the change in tax
status. Peruvian operations contributed $4.1 million to net earnings for the
1999 quarter (excluding intercompany charges of $4.1 million) compared to net
earnings of $7.6 million in the 1998 quarter. The decrease in Peruvian net
earnings was due primarily to; increased unit production cost of silver,
resulting from a lower recovery percentage of silver from feed material,
lower treatment charges for copper, increased operating costs and increased
interest expense, partially offset by lower income taxes.
The Company's results for the 1999 quarter reflect declines in the
market prices of lead, copper, zinc, and silver from the prior year. The
following table sets forth average London Metal Exchange (LME) prices for
lead, copper and zinc and the average London Bullion Market Association
(LBMA) price for silver for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
January 31,
-------------------------
1999 1998
---------- ---------
<S> <C> <C>
Average Prices
Lead ($/ton) $ 449.80 $ 490.00
Copper ($/ton) 1,335.20 1,622.80
Zinc ($/ton) 864.80 1,019.40
Silver ($/troy ounce) 5.00 5.58
</TABLE>
22
<PAGE>
The following table sets forth the Company's production statistics for
the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
January 31,
-------------------------
1999 1998
---------- ---------
<S> <C> <C>
U.S. Operations
Lead metal - primary (short tons) 93,103 64,184
Lead metal - secondary (short tons) 27,152 26,047
Lead concentrates (metal content, short tons) 91,570 59,055
Ore Grade 5.54% 5.26%
Peruvian Operations
Refined copper (short tons) 17,351 18,170
Refined lead (short tons) 29,519 28,175
Refined zinc (short tons) 19,924 19,614
Refined silver (thousands of troy ounces) 8,067 6,322
Refined gold (thousands of troy ounces) 15 13
</TABLE>
Mine production of lead metal in concentrates for the 1999 quarter
increased by 55.1% compared to the 1998 quarter . Of this increase, 48.2% was
attributable to the acquisition of the Missouri Lead Division assets of
ASARCO Incorporated (the MLD Acquisition). Production by existing properties
was 6.9% better than the prior year primarily due to an increase in ore grade
from 5.26% in the 1998 quarter to 5.80% in the 1999 quarter. While production
exceeded the prior year, it was slightly less than planned, in spite of the
improved ore grade, due to three abnormal incidents which disrupted
production. The first incident was a broken hoist cable and destruction of
the hoisting skip at the Fletcher mine caused by ice in a hoisting shaft. The
second incident was the failure of a water discharge pipeline causing
temporary flooding in the Sweetwater mine and the third incident was an
electrical fire in the Buick mill motor control room. The Company has
installed additional alarm systems and improved monitoring procedures in an
effort to prevent similar incidents. Unanticipated difficult ground
conditions in the West Fork mine also slowed production during the 1999
quarter. The Company modified roof bolting practices to resolve this problem
and production had returned to normal by the end of the 1999 quarter.
Primary smelter production for the 1999 quarter was 45.1% greater than
the 1998 quarter. The MLD Acquisition accounted for an increase of 51.8%.
Production at the Company's Herculaneum smelter was 6.7% less than the prior
year due primarily to cooling system failures on its blast furnaces. The
resulting production shortfall generated significant unfavorable operating
cost variances in the 1999 quarter. By the end of the quarter, Herculaneum's
production rate had returned to planned levels, and the Company anticipates
recovery of the lost production by the end of the fiscal year.
Secondary smelter production in the quarter exceeded the 1998 quarter by
4.2% primarily due to scheduling of the annual reverberatory furnace rebuild
in the second quarter of 1999 versus the first quarter of 1998.
During the third quarter of 1998, La Oroya installed equipment that
increased the capacity of its silver and lead refineries by approximately
25.0% and 4.8%, respectively. These improvements along with improvements in
operating efficiency are reflected in the production results for the 1999
quarter. Refined
23
<PAGE>
silver production exceeded the first quarter of the prior year by 27.6%,
while refined lead production was up 4.8%. Copper production was slightly
lower than the first quarter of the prior year primarily due to the reduced
availability of suitable concentrates. The tight market conditions for copper
concentrates continue currently and the Company intends to partially migrate
the impact of these market conditions by maximizing production of copper
concentrates from its Cobriza.
Results of operations for the three months ended January 31, 1999 and
1998 include the results of the Company's U.S. and Peruvian operations. In
order to provide a more meaningful analysis, the results of operations
attributable to Peruvian operations will be noted and discussed separately
under "Results of Peruvian Operations".
NET SALES in the 1999 quarter were $181.7 million compared to $169.1
million in the 1998 quarter. A decrease of $3.9 million is attributable to
Peruvian operations. U. S. net sales were $16.5 million or 27.6% higher in
the 1999 quarter, compared to the 1998 quarter, primarily due to greater lead
metal and zinc concentrate sales volume associated with the MLD Acquisition,
offset by lower realized prices for lead, zinc and copper.
The following table sets forth the sales volume and realized prices for
the Company's U. S. operations for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
January 31,
-------------------------
1999 1998
---------- ---------
<S> <C> <C>
Sales volumes (short tons)
Lead metal 103,990 70,432
Zinc concentrates 22,974 14,831
Copper concentrates 3,466 5,763
Realized Prices ($/ton)
Lead metal $527.88 $581.67
Zinc concentrates 274.35 375.97
Copper concentrates 181.48 203.02
</TABLE>
Lead metal net sales increased 34.0% from $41.0 million in the 1998
quarter to $54.9 million in the first quarter of 1999. An increase of $19.5
million in lead metal net sales resulted from the volume increase discussed
above. The average LME price for lead metal decreased 8.2% in the first
quarter of 1999 compared to the corresponding period in 1998. As a result,
the Company's net realized price was 9.2% lower in the 1999 quarter reducing
net sales by $5.6 million. Net realized prices for lead metal include the
effects of changes in premiums received as well as net hedging activity.
Lower realized prices for zinc and copper concentrates, and lower copper
concentrate volume were partially offset by the increase in zinc concentrate
volume. Other sales were higher by approximately $2.6 million primarily due
to increased sales by Seafab Metals Company, a division of FPI, which
returned to full production after relocating its fabrication plant during
1998.
COST OF SALES for the 1999 quarter was $160.2 million compared to $143.5
million for the 1998 quarter. Of this increase, $1.8 million is attributable
to Peruvian operations. U.S. cost of sales for the first quarter of 1999 was
$14.9 million greater than the 1998 quarter. The increased sales volume of
lead metal and zinc concentrates discussed above accounted for a cost of
sales increase of $21.5 million, which was offset by an 11.1% reduction in
the per unit production cost for lead metal. This lower production cost is
primarily the result of programs the Company implemented during the second
quarter of 1998 to minimize the impact of metal price declines through cost
reductions and productivity and revenue enhancements. These programs, which
are ongoing, include maintenance and other expense reductions, selective
mining of higher grade ores and increased primary and secondary smelter
production, all of which contributed to improved unit production
24
<PAGE>
cost in the 1999 quarter. Also contributing to lower unit costs were certain
production efficiencies realized as a result of the MLD Acquisition.
DEPLETION, DEPRECIATION AND AMORTIZATION for the 1999 quarter increased
by $2.5 million compared to the 1998 quarter. An increase of $0.2 million was
attributable to Peruvian operations. The increase in depletion, depreciation,
and amortization for U.S. operations was $2.3 million, which was primarily
attributable to the MLD Acquisition.
SELLING, GENERAL AND ADMINISTRATIVE expenses increased by $1.2 million
in the 1999 quarter compared to the 1998 quarter. Peruvian operations
accounted for $0.2 million of this increase. Increased U.S. selling and
administrative expenses associated with Peruvian operations totaled $0.9
million for the first quarter of 1999. The cost of selling and administrative
services provided by the Company to its Peruvian subsidiaries was reimbursed
by fees collected under various services and agency agreements. These fees
have been eliminated from the Company's consolidated financial statements. An
increase in management fees paid to Renco of $0.3 million was partially
offset by savings on other expenses.
EXPLORATION expense for the 1999 quarter increased $0.5 million compared
to the 1998 quarter due to more extensive evaluation of potential mineral
properties primarily in Missouri.
INCOME FROM OPERATIONS for the 1999 quarter was $3.7 million compared to
$11.9 million for the 1998 quarter. Peruvian operations, excluding
intercompany transactions, accounted for a decrease of $5.7 million. The
decrease in U.S. income from operations is due to the factors discussed above.
INTEREST EXPENSE increased by $9.4 million from the 1998 quarter to the
1999 quarter. This increase is the result of an increase of approximately
$269.6 million in the Company's average outstanding debt balance, higher
average interest rates and increased amortization of deferred financing fees
associated with the Notes. The increase in the Company's average outstanding
debt balance was primarily the result of the $125 million required for a
deposit made in a foreign bank as collateral for a loan made to Doe Run
Mining (the Special Term Deposit), borrowing to finance the MLD Acquisition
and increased working capital required for Peruvian operations and for
operations of the assets acquired in the MLD Acquisition.
INTEREST INCOME increased $3.3 million from the 1998 quarter to the 1999
quarter primarily due to interest income on the $125.0 million Special Term
Deposit.
INCOME TAX EXPENSE for the 1999 quarter reflects the impact of a change
in tax status effective at the beginning of the fiscal year. See "Item 1.
Financial Statements--Note 4 to the Company's Consolidated Financial
Statements." As a result of this change in tax status, the elimination of
federal and most state deferred tax assets and liabilities for income tax
purposes resulted in a charge to income tax expense of $6.2 million in the
1999 quarter.
25
<PAGE>
RESULTS OF PERUVIAN OPERATIONS
THREE MONTHS ENDED JANUARY 31, 1999 (THE 1999 QUARTER) COMPARED TO THE
THREE MONTHS ENDED JANUARY 31, 1998 (THE 1998 QUARTER)
The following table set forth the operating results, sales volumes and
realized prices of the Company's Peruvian operations for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended
January 31,
-------------------------
1999 1998
---------- ---------
<S> <C> <C>
RESULTS OF OPERATIONS
Net sales $ 107,774 $ 111,811
Costs and expenses:
Cost of sales 92,746 90,924
Depreciation and amortization 1,872 1,699
Selling, general and administrative 4,487 4,697
Intercompany fees 4,071 --
--------- ---------
Total costs and expenses 103,176 97,320
--------- ---------
Income from operations 4,598 14,491
Other income (expense)
Interest expense (5,067) (2,924)
Interest income 111 342
Other, net 1,387 126
--------- ---------
(3,569) (2,456)
--------- ---------
Income before income tax expense $ 1,029 $ 12,035
--------- ---------
--------- ---------
Note: The following eliminations were made in consolidating these results with the Company.
Net sales $ 2,427 $ 2,562
Cost of sales 2,202 2,229
Intercompany fees 4,071 --
SALES VOLUMES
Copper (short tons) 17,198 17,883
Lead (short tons) 29,213 26,905
Zinc (short tons) 19,557 18,368
Silver (thousands of troy ounces) 7,836 6,509
Gold bullion (thousands of troy ounces) 15 13
REALIZED PRICES
Copper ($/ton) $1,362.95 $1,624.28
Lead ($/ton) 476.71 534.81
Zinc ($/ton) 884.59 1,068.92
Silver ($/troy ounce) 5.02 5.41
Gold bullion ($/troy ounce) 292.60 297.19
</TABLE>
26
<PAGE>
NET SALES in the 1999 quarter were $107.8 million compared to $111.8
million in the 1998 quarter. This decline is the result of lower realized
prices for refined copper, lead, zinc, silver and gold partially offset by
improved sales volumes of refined lead, zinc, silver and gold. The production
improvements discussed previously increased refined silver sales volume by
1.3 million ounces or 20.4%, increasing net sales by $7.2 million. The
average LBMA price for silver was lower by 10.4% in the first quarter of 1999
compared to the first quarter of 1998. As a result, the Company's net
realized price for refined silver was 7.2% lower in the 1999 quarter,
reducing net sales by $3.1 million. Net realized prices for silver are net of
the effects of changes in premiums and hedging activities. Refined copper net
sales were lower by $5.6 million or 19.3% in the 1999 quarter due to lower
prices and volumes. Refined zinc net sales were $2.3 million lower in the
1999 quarter compared to 1998 quarter due to a 17.2% decrease in the net
realized price partially offset by a 6.5% increase in sales volume.
COST OF SALES increased 2.0% from $90. 9 million in the 1998 quarter
$92.7 million in the 1999 quarter. The sales volume increases discussed
above, offset by lower copper volume, account for an increase of $6.9 million
in cost of sales. Higher unit production cost for silver, resulting primarily
from lower recovery, also increased cost of sales. These increases were
partially offset by lower unit production costs for copper, lead and zinc
primarily resulting from a decrease in feed cost due to lower market prices
for these metals.
DEPRECIATION AND AMORTIZATION expense increased by $0.2 million in the
1999 quarter compared to the 1998 quarter, primarily due to recent capital
additions.
INTERCOMPANY FEES for the 1999 quarter represent fees paid to the
Company under various services and agency agreements with its Peruvian
subsidiaries. These fees have been eliminated from the Company's consolidated
financial statements.
INCOME FROM OPERATIONS decreased $9.9 million in the 1999 quarter
compared to the 1998 quarter due primarily to the factors discussed above.
INTEREST EXPENSE increased $2.1 million, or 73.3%, in the 1999 quarter
compared to the 1998 quarter, primarily due to an increase of approximately
$54.6 million in the average outstanding debt balance and higher average
interest rates. Proceeds from the increase in the outstanding debt were used
to repay a $23 million intercompany loan and to finance increased working
capital, primarily inventories.
INTEREST INCOME decreased 67.5% from the 1998 quarter to the first 1999
quarter due to a reduction of cash balances.
OTHER INCOME, NET increased $1.3 million in the 1999 quarter compared to
the 1999 quarter primarily due to translation gains.
FOREIGN INCOME TAXES
The Company's foreign income tax provision reflects the provision of its
Peruvian subsidiaries at the statutory rate of 30%. Differences between the
effective and statutory rate are due primarily to book losses of certain
subsidiaries that cannot be offset against other subsidiaries' taxable income
for Peruvian income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise from its working capital
requirements, and capital investment and debt service obligations. The
Company's primary available sources of liquidity are cash provided by
operating activities and two revolving credit facilities. In the U.S., the
Company has available a revolving credit facility (the Doe Run Revolving
Credit Facility) that provides for advances by the lender to
27
<PAGE>
a maximum of $100.0 million less outstanding letters of credit, based on
specific percentages of eligible receivables and inventories. As of January
31, 1999, $22.3 million was outstanding, exclusive of $5.2 million of letters
of credit, under the Doe Run Revolving Credit Facility. In Peru, the Company
has available a revolving credit facility (the Doe Run Peru Revolving Credit
Facility) that provides for advances by the lender to a maximum of $40.0
million, less outstanding letters of credit and customs bonds based, upon
specific percentages of eligible receivables and inventories. At January 31,
1999, $13.5 million, exclusive of $5.6 million of customs bonds, was
outstanding under the Doe Run Peru Revolving Credit Facility. Net unused
availability at January 31, 1999 was $32.7 million under the Doe Run
Revolving Credit Facility and $19.3 million under the Doe Run Peru Revolving
Credit Facility. The Company also has available, in Peru, unsecured and
uncommitted credit arrangements with Peruvian banks. At January 31, 1999, $2.3
million, exclusive of $9.7 million of letters of credit and customs bonds, was
outstanding under these working capital facilities.
In the 1999 quarter, cash provided by operating activities was $3.4
million, cash used in investing activities was $3.8 million and cash provided
by financing activities was $4.5 million (this includes net proceeds of $17.2
million from the sale and leaseback of La Oroya's oxygen plant discussed
below).
On January 20, 1999, Doe Run Peru executed a sale and leaseback
agreement with two Peruvian financial institutions. The main oxygen plant at
La Oroya was sold at fair market value as determined by an independent
appraisal. The proceeds, net of value added tax, of $17.2 million were used
to reduce the outstanding balance on the Doe Run Peru Revolving Credit
Facility and to pay the outstanding balance of an obligation to the Company
of $3.8 million. The lease requires monthly payments of approximately $0.4
million and has a purchase option of $0.2 million at the end its five-year
term.
In the U.S., the Company had capital expenditures of $1.8 million for
the 1999 quarter and has projected capital expenditures of approximately $8.2
million for fiscal 1999, primarily to support ongoing operations and for
operational and environmental improvements. In addition to these capital
investments, the Company's U.S. operations expended an average of
approximately $63.4 million per year on repairs and maintenance from fiscal
1996 through fiscal 1998. As a result of these expenditures, the Company
believes that it operates and will continue to maintain modern and efficient
facilities.
As part of the acquisition of its Peruvian operations, the Company has
undertaken a capital investment program, in part to satisfy an investment
commitment of $120.0 million as set forth in the purchase agreement. The
Peruvian operations had capital expenditures of $2.0 million in the 1999
quarter and have projected capital expenditures of approximately $25.0
million for fiscal 1999, primarily to support ongoing operations and for
operational and environmental improvements.
The Company has substantial indebtedness and debt service requirements.
As of January 31, 1999, on a consolidated basis, the Company had $483.6
million of indebtedness outstanding, or $358.6 million net of the Special
Term Deposit. Management believes that cash flows from operations, in
addition to availability under the revolving credit facilities and other
working capital facilities, will be sufficient to meet the Company's
liquidity needs for the foreseeable future.
The Doe Run Revolving Credit Facility, the Doe Run Peru Revolving Credit
Facility, and the indentures governing the Notes contain numerous covenants
and restrictions, including requirements that the Company satisfy certain
financial ratios in order to incur additional indebtedness. The ability of
the Company to meet its debt service requirements and to comply with such
covenants is dependent upon future operating performance and financial
results which are subject to financial, economic, political, competitive and
other factors affecting the Company, many of which are beyond the Company's
control.
On January 15, 1999, Renco filed an election, with the consent of its
shareholders, with the Internal Revenue Service to change its taxable status
from that of a subchapter C corporation to that of a subchapter
28
<PAGE>
S corporation, effective November 1, 1998. At the same time, Renco elected
for the Company to be treated as a QSSS. As a result of such election,
generally, no provision for federal income taxes will be included in the
Company's statements of income for periods beginning after October 31, 1998.
However, under the "built-in gain" provisions of the tax law, federal and
state taxes may become payable and will be charged to our statement of
income. Such taxes are measured by the excess of the fair market value of
assets over their tax bases at the effective date of the S corporation
election if the appreciated assets are disposed of within the ten-year
post-conversion period. It is not management's present intent to trigger any
taxes under the built-in gain provisions of the tax laws. See "Item 1.
Financial Statements--Note 4 to the Company's Consolidated Financial
Statements."
YEAR 2000 MATTERS
Many information and process control systems used in the current
business environment were designed to use only two digits in the date field,
and therefore may not function properly in the year 2000. Any of the
Company's programs that have date-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000, which could result in
a major system failure or in miscalculations. The Company conducted a
comprehensive review of its computerized information systems (IS) to identify
systems that could be affected by the year 2000 problem and has implemented a
plan to resolve the issues identified. In the U.S., the Company modified its
critical programs so that a four-digit year would be recognized. These
programs were tested at the end of February 1999 and the Company identified
and began modifying programs that were not properly processing the new date
fields. Programs will continue to be monitored through normal operating
cycles to determine whether the new date fields are being processed properly.
The Company anticipates that appropriate modifications to these IS, as well
as modification of non-critical systems, will be completed by mid-year 1999.
The Company expects to spend, including spending to date, approximately $.4
million in modifying its U.S. information systems.
In Peru, the Company is in final stages of negotiations with a major
software vendor to install new year 2000 compliant software and upgrade
certain equipment to meet most of its year 2000 needs and improve its
information processing capabilities. It is anticipated that implementation
will be completed by October of 1999 at a cost of approximately $1.6 million,
which will be capitalized.
Process controls and other systems are being evaluated individually and
may require replacement software, reprogramming and other corrective actions.
The Company has not completed its evaluation of the status of these systems,
and is unable at this time to identify the required actions, if any, and
related costs of making these systems year 2000 compliant. Assessment of and
correction to these systems is targeted for completion by October 1999.
The Company is developing contingency plans for IS and non-IS systems,
as considered necessary after assessment, implementation and testing phases
are completed.
The Company's operations are dependent on various third parties. The
Company's operations depend on the availability of utility services,
primarily electricity, and transportation services. In addition, the
Company's La Oroya smelter relies on third parties for a majority of its
concentrate supply. A majority of the Company's U.S. sales are to a small
number of customers. A substantial disruption in utility services or feed
supply or decreases in orders from significant customers due to these third
parties failing to achieve year 2000 compliance could have a significant
impact on the Company's financial results. The Company is in the process of
identifying its crucial vendors and customers and requesting information from
them regarding their readiness for the year 2000. The Company intends to
create contingency plans based on the responses to these inquiries to
mitigate the risk of disruption to its operations.
29
<PAGE>
Except for the new system in Peru discussed above, the cost of achieving
year 2000 compliance will be included in the Company's operating and
administrative expenses. Management believes that the cost of these efforts
will not be material. Due to the inherent uncertainties surrounding the
effect of the year 2000, there can be no assurance that failures or
implications, including potential litigation, will not have a material
adverse effect on the Company's results of operations, financial position or
liquidity.
FORWARD-LOOKING STATEMENTS
This report includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 which involve known and
unknown risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of the Company to differ
materially from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such risks, uncertainties, and
other important factors include, among others: general economic and business
conditions; increasing industry capacity and levels of imports of non-ferrous
metals or non-ferrous metals products; industry trends, including product
pricing; competition; currency fluctuations; the loss of any significant
customer; availability of qualified personnel; effects of future collective
bargaining agreements; major equipment failures; unanticipated problems
encountered in the year 2000 readiness program; and availability of
replacement equipment to achieve year 2000 readiness. These forward-looking
statements speak only as of the date of this report. The Company expressly
disclaims any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statement contained herein to reflect any
change in the Company's expectations with regard thereto or any change in
events, conditions, or circumstances on which any such statement is based.
30
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
In the normal course of its business, the Company has used in the past,
and may use in the future, forward sales commitments and commodity put and
call option contracts to manage its exposure to fluctuations in the prices of
lead, copper, zinc and silver. Contract positions are designed to ensure that
the Company will receive a defined minimum price for certain quantities of
its production. Gains and losses, and the related costs paid or premiums
received, for option contracts which hedge the sales prices of commodities
are recognized in net sales when the related production is sold. None of the
aforementioned activities have been entered into for speculative purposes.
PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
Exhibit 27 Financial Data Schedule
31
<PAGE>
S I G N A T U R E S
Pursuant to the requirements 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.
THE DOE RUN RESOURCES CORPORATION
(Registrant)
March 17, 1999 /s/ Marvin K. Kaiser
Date Marvin. K. Kaiser
Vice President and Chief Financial Officer
(duly authorized officer and principal
financial officer)
32
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- ------------- ----------------------
<S> <C>
Exhibit 27 Financial Data Schedule
</TABLE>
33
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 8,729
<SECURITIES> 0
<RECEIVABLES> 73,499
<ALLOWANCES> (884)
<INVENTORY> 127,532
<CURRENT-ASSETS> 241,108
<PP&E> 338,343
<DEPRECIATION> (78,666)
<TOTAL-ASSETS> 643,649
<CURRENT-LIABILITIES> 101,055
<BONDS> 477,323
0
0
<COMMON> 0
<OTHER-SE> 4,449
<TOTAL-LIABILITY-AND-EQUITY> 643,649
<SALES> 181,718
<TOTAL-REVENUES> 181,718
<CGS> 160,207
<TOTAL-COSTS> 177,025
<OTHER-EXPENSES> 66
<LOSS-PROVISION> 8
<INTEREST-EXPENSE> 15,238
<INCOME-PRETAX> (6,961)
<INCOME-TAX> 7,168
<INCOME-CONTINUING> (14,129)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,129)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
