1994
Second Quarter
Form 10-Q
----------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1994 Commission file number 1-164
------------- -----
ASARCO Incorporated
---------------------
(Exact name of registrant as specified in its charter)
New Jersey 13-4924440
---------- ----------
(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 July 31, 1994 there were outstanding 41,917,830 shares of
Asarco Common Stock, without par value.
</PAGE>
ASARCO Incorporated
and Consolidated Subsidiaries
INDEX TO FORM 10-Q
-------------------
Page No.
-------
Part I. Financial Information:
- ------------------------------
Item 1. Financial Statements (unaudited)
Consolidated Statement of Earnings
Three Months and Six Months Ended 2
June 30, 1994 and 1993
Consolidated Balance Sheet
June 30, 1994 and December 31, 1993 3
Consolidated Statement of Cash Flows
Three Months and Six Months Ended 4
June 30, 1994 and 1993
Notes to Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7-8
Exhibit I - Report of Independent Accountants
Part II. Other Information:
- ---------------------------
Item 1. Legal Proceedings 9-10
Signatures 11
</PAGE>
- 1 -
<PAGE>
ASARCO Incorporated
and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF EARNINGS
-----------------------------------
(unaudited)
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
June 30, June 30,
1994 1993 1994 1993
---- ---- ---- ----
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Sales of products and services $487,756 $416,619 $930,737 $875,643
Operating costs and expenses:
Cost of products and services 440,646 390,623 848,476 833,138
Selling, administrative and
other 19,638 20,573 39,380 42,063
Provision (recovery) for bad
debts 696 603 (2,734) 1,356
Depreciation and depletion 21,481 21,510 42,331 41,484
Research and exploration 4,459 5,777 8,334 10,581
------- ------- ------- -------
Total operating costs and
expenses 486,920 439,086 935,787 928,622
------- ------- ------- -------
Operating income (loss) 836 (22,467) (5,050) (52,979)
Interest expense (14,730) (14,108) (29,001) (27,531)
Other income 267 3,192 5,511 10,099
Gain on sale of Asarco Australia
Limited - - 58,512 -
-------- -------- ------- --------
Earnings (loss) before taxes on
income and equity earnings (13,627) (33,383) 29,972 (70,411)
Taxes on income (benefit) (6,137) (9,184) 14,951 (15,414)
-------- ------- ------- -------
Earnings (loss) before equity
earnings (7,490) (24,199) 15,021 (54,997)
Equity in earnings (losses) of
nonconsolidated associated
companies, net of taxes of
$1,194 and $1,680 in 1994 12,852 108 16,947 (15)
-------- -------- ------- -------
Net earnings (loss) $ 5,362 $(24,091) $31,968 $(55,012)
======== ======== ======= ========
Per share amounts:
Net earnings (loss) (a) $ 0.13 $ (0.58) $ 0.76 $ (1.32)
======== ========= ======= =========
Cash dividends $ 0.10 $ 0.10 $ 0.20 $ 0.30
Weighted average number of
shares outstanding 41,829 41,569 41,800 41,561
</TABLE>
(a) The effect on the calculation of net earnings per common share
of the Company's Common Stock equivalents (shares under option)
was insignificant.
See notes to financial statements
</PAGE>
- 2 -
<PAGE>
ASARCO Incorporated
and Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEET
--------------------------
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
---- ----
(in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,033 $ 12,500
Accounts and notes receivable, net 389,902 312,178
Inventories 269,184 245,034
Other assets 24,408 31,537
Investment in Asarco Australia Limited - 18,573
----------- -----------
Total current assets 699,527 619,822
Investments:
Cost method 851,589 783,417
Equity method 362,811 346,927
Property 2,471,449 2,497,605
Accumulated depreciation and depletion (1,185,581) (1,192,153)
Intangible and other assets 103,186 96,880
----------- -----------
Total assets $ 3,302,981 $ 3,152,498
=========== ===========
LIABILITIES
Current liabilities:
Bank loans $ 23,604 $ 16,875
Current portion of long-term debt 15,845 14,801
Accounts payable 355,805 264,738
Salaries and wages 18,270 15,759
Taxes on income 31,225 29,516
Reserve for closed plant and
environmental matters 47,889 46,409
Other liabilities 29,197 30,582
---------- -----------
Total current liabilities 521,835 418,680
Long-term debt 826,740 868,871
Deferred income taxes 178,023 147,864
Reserve for closed plant and
environmental matters 56,905 69,694
Postretirement benefit obligations other
than pensions 91,779 92,943
Other liabilities and reserves 79,642 82,848
----------- -----------
Total liabilities 1,754,924 1,680,900
----------- -----------
COMMON STOCKHOLDERS' EQUITY
Common stock (a) 559,199 550,726
Unrealized gain on securities reported
at fair value 157,043 112,729
Retained earnings 831,815 808,143
----------- -----------
Total common stockholders' equity 1,548,057 1,471,598
----------- -----------
Total liabilities and common
stockholders' equity $ 3,302,981 $ 3,152,498
=========== ===========
(a) Common shares: authorized 80,000;
outstanding: 41,865 41,718
See notes to financial statements
</TABLE>
</PAGE>
- 3 -
<PAGE>
ASARCO Incorporated
and Consolidated Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(unaudited)
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
June 30, June 30,
1994 1993 1994 1993
---- ---- ---- ----
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) $ 5,362 $(24,091) $31,968 $(55,012)
Adjustments to reconcile net
earnings (loss) to net cash
provided from (used for) operating
activities:
Depreciation and depletion 21,796 21,510 42,970 41,484
Deferred income taxes (6,693) (9,723) 13,666 (7,708)
Treasury stock used for employee
benefits 1,151 1,242 2,442 2,487
Undistributed equity (earnings)
losses (12,062) (108) (14,127) 227
Net gain on sale of investments,
property and Asarco Australia
Limited (170) (905) (59,289) (1,579)
Decrease in reserve for closed
plant and environmental
matters (11,788) (4,519) (11,309) (10,756)
Cash provided from (used for)
operating assets and
liabilities:
Accounts and notes receivable (75,352) 90,427 (76,096) 50,952
Inventories (20,828) (40,387) (23,488) 5,131
Accounts payable and accrued
liabilities 85,106 (9,354) 92,300 (11,074)
Other operating liabilities
and reserves (7,018) (7,348) (3,743) (1,231)
Other operating assets (4,931) 1,004 (6,406) 2,481
Foreign currency transaction
losses 31 32 2,307 32
Net cash provided from (used for)
operating activities (25,396) 17,780 (8,805) 15,434
INVESTING ACTIVITIES
Capital expenditures (13,636) (35,121) (23,932) (66,762)
Proceeds from sale of securities,
property and Asarco Australia
Limited 54,499 34,260 142,162 55,748
Purchase of investments (55,144) (35,699) (63,200) (59,692)
Net cash provided from (used for)
investing activities (14,281) (36,560) 55,030 (70,706)
FINANCING ACTIVITIES
Debt incurred 45,754 99,385 45,879 337,467
Debt retired (1,573) (70,840) (80,361) (272,724)
Net treasury stock transactions 460 88 482 209
Dividends paid (4,183) (4,157) (8,361) (12,460)
------- ------- ------- -------
Net cash provided from (used for)
financing activities 40,458 24,476 (42,361) 52,492
------- ------- ------- -------
Effect of exchange rate changes on
cash (252) (3,849) (331) (1,561)
------- ------- ------- -------
Increase (decrease) in cash and
cash equivalents 529 1,847 3,533 (4,341)
Cash and cash equivalents at
beginning of period 15,504 27,060 12,500 33,248
------- ------- ------- -------
Cash and cash equivalents at end of
period $16,033 $28,907 $16,033 $28,907
======= ======= ======= =======
</TABLE>
See notes to financial statements
</PAGE>
- 4 -
<PAGE>
ASARCO Incorporated
and Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A. In the opinion of the Company, the accompanying consolidated
financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the
Company's financial position as of June 30, 1994 and the results
of operations and cash flows for the three months and six months
ended June 30, 1994 and 1993. This financial data has been
subjected to a limited review by Coopers & Lybrand, the
Company's independent accountants. Their report is filed as an
exhibit to this filing. The results of operations for the three
and six month periods are not necessarily indicative of the
results to be expected for the full year.
B. Inventories were as follows:
(in millions)
June 30, Dec. 31,
1994 1993
---- ----
Inventories of smelters, refineries and other
metal plants at LIFO cost or market $ 12.5 $ 12.7
Provisional cost of metals received for
which prices have not yet been fixed 70.9 44.2
Mine inventories at FIFO cost or market 94.7 98.6
Materials and supplies (average cost or less) 62.4 62.4
Other 28.7 27.1
------ ------
Total $269.2 $245.0
====== ======
At June 30, 1994, replacement cost exceeded inventories carried
at LIFO cost by approximately $128.1 million (December 31, 1993
- $114.1 million).
C. Supplemental disclosures of cash flow information:
(in millions)
3 Months Ended 6 Months Ended
June 30, June 30,
1994 1993 1994 1993
---- ---- ---- ----
Cash paid for:
Interest (net of amount capitalized) $13.3 $10.2 $29.9 $23.3
Income taxes 0.4 0.0 1.1 0.9
D. Taxes on income:
Taxes on income reflect tax benefits on losses before equity
earnings. The six month period ending June 30, 1994 includes
higher taxes resulting from the first quarter 1994 gain on the
sale of Asarco Australia Limited. Reported earnings from the
consolidated subsidiary Asarco Australia Limited were previously
treated as permanently reinvested.
</PAGE>
- 5 -
<PAGE>
E. Capsulized quarterly earnings information is provided below for
significant nonconsolidated associated companies carried on the
equity method:
(in millions)
Southern Peru
Copper Corporation
------------------
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1994 June 30, 1994
-------------- -------------
<S> <C> <C>
Net Sales $128.9 $252.9
======= ======
Earnings before Taxes $ 41.0 $ 56.3
Taxes on Income (15.5) (23.2)
------- -------
Net Earnings $ 25.5 $ 33.1
====== ======
Asarco's ownership percentage 52.3% 52.3%
====== ======
Asarco's equity earnings $ 13.3 $ 17.3
====== ======
</TABLE>
The Company resumed equity accounting for Southern Peru Copper
Corporation in the fourth quarter of 1993.
Equity in earnings (losses) of other nonconsolidated associated
companies included in the Consolidated Statement of Earnings for
the three months ended June 30, 1994 were $753,000 and for the
six months then ended, $1,343,000.
F. In the first quarter of 1994, the Company sold its remaining
interest in Asarco Australia Limited, its gold mining
subsidiary, for US $79.5 million. The sale resulted in a pretax
gain of $58.5 million ($31.9 million after tax).
</PAGE>
- 6 -
<PAGE>
Part I Item 2
--------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Earnings: The Company reported net earnings of $5.4 million, or $.13
per share, for the second quarter ended June 30, 1994, compared with
a net loss of $24.1 million, or $.58 per share, for the second
quarter of 1993. Net earnings in the second quarter of 1994 improved
principally due to higher metal prices for both copper and lead and
from equity earnings from the Company's investment in Southern Peru
Copper Corporation.
For the six month period ended June 30, 1994, the Company reported
net income of $32.0 million, or $.76 per share, compared with a net
loss of $55.0 million or $1.32 per share for the comparable 1993
period. Net earnings for the six month period ended June 30, 1994
were principally due to the gain on the sale of the Company's
remaining interest in Asarco Australia Limited, higher metal prices
and equity earnings from the Company's investment in Southern Peru
Copper Corporation. The loss for the prior year six month period
included the effects of the heavy rains and flooding at the Company's
Arizona copper mines.
Prices: Prices for the Company's metals are established principally
on the New York Commodity Exchange ("COMEX") or the London Metal
Exchange ("LME").
Price Volume Analysis:
- ---------------------
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
Average Realized June 30, June 30,
Price 1994 1993 1994 1993
----- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Copper (per pound) .99 .85 .94 .92
Lead (per pound) .25 .20 .24 .20
Silver (per ounce) 5.35 4.21 5.31 3.89
Zinc(1) (per pound) .43 .44 .44 .46
Gold (per ounce) 382.52 374.39 381.83 347.39
</TABLE>
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
June 30, June 30,
Sales Volume 1994 1993 1994 1993
------------ ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C>
Copper (pounds) 274,597 248,797 569,750 510,944
Lead (pounds) 111,095 103,712 202,632 200,936
Silver (ounces) 8,246 6,526 15,730 16,539
Zinc(1) (pounds) 70,363 49,262 131,849 97,729
Gold (ounces) 37 27 48 83
</TABLE>
1. The Company's zinc mine production is sold in concentrate
form. Volume represents pounds of zinc contained in
concentrate. The Company fully hedged its zinc mine
production for the six months ended June 30, 1994 and 1993
at an average price of 47 cents per pound and 54 cents per
pound, respectively.
Estimated zinc mine production for the remaining six months of 1994
has been hedged at an average price of 45 cents per pound. In July
1994, the Company purchased copper puts to cover approximately 10% of
its fourth quarter 1994 copper production and approximately 40% of
its 1995 copper production at strike prices between 90 cents and 95
cents per pound at a cost of $4.0 million or 1.7 cents per pound.
Sales: Sales in the second quarter of 1994 were $487.8 million,
compared with $416.6 million in the second quarter of 1993. The
increase in sales reflected generally higher metal prices and greater
sales volumes for all major products. Sales for the six month period
ended June 30, 1994 were $930.7 million, compared with $875.6 million
for the comparable 1993 period. The increase in sales resulted
principally from higher metal prices and increased sales volume of
copper, lead and zinc partially offset by lower precious metal sales
volume that resulted from the sale of the Company's remaining
interest in Asarco Australia Limited in January 1994 and the
temporary shutdown of the Troy silver mine in the second quarter of
1993.
</PAGE>
- 7 -
<PAGE>
Cost of Products & Services: Cost of products and services were
$440.6 million in the second quarter of 1994, compared with $390.6
million in the second quarter of 1993. The increase in costs
reflected greater sales volumes for all major products, increased
purchases of refined copper to meet customer demand and start up
costs at the recently modernized El Paso Smelter. The 1994 second
quarter reflected lower costs resulting from the sale of Asarco
Australia Limited, the temporary shutdown of the Troy silver mine in
1993 and the disposal of nonstrategic businesses which had losses in
the 1993 period.
In early 1994, the Company experienced unexpectedly low grades, wet
sticky ore which created handling problems, and unusual ore types at
the Ray mine. Unusual rain events of late 1992 and early 1993
resulted in excess stored water which limited the availability of
other ore faces to blend with these difficult ores from the west pit.
The Company has recently announced a fifteen month program to
accelerate the development of additional mining areas to provide this
flexibility. During this period the older, higher cost sections of
the Hayden Mill, approximately 43% of design capacity, will be
curtailed. The program is expected to be completed by October 1,
1995, at which time the Hayden Mill will be restored to full
capacity. The Hayden Smelter will continue to operate at full
capacity by smelting concentrates from Ray, Mission and Montana
Resources mines as well as outside purchases. During the accelerated
stripping program, Asarco's domestic mine production will be
approximately 290,000 tons annually. Refined copper production will
remain unchanged at about 500,000 tons per year.
At the El Paso smelter, the Company has redesigned and installed two
new Contop furnace reactors. In late May and early June of 1994 the
smelter undertook a major rebuild of the sulfuric acid plant which
caused a 12 day outage. Since restarting full operations in mid-June
the smelter has operated at design capacity.
Costs of products and services were $848.5 million for the six month
period ended June 30, 1994 compared with $833.1 million for the
comparable 1993 period. The second quarter and six month period
ended June 30, 1994 include increased purchases of refined copper to
meet customer demand. The Company's cost of purchased refined copper
approximates the market price at which it is sold.
Other Expenses: Selling and administrative costs for the second
quarter and six month period ended June 30, 1994 declined by $.9
million and $2.7 million, respectively, over the comparable 1993
periods as a result of cost reduction programs. Depreciation and
depletion expense reflects higher tons of copper ore mined and a
higher asset base offset by lower depreciation and depletion relating
to the temporary closure of the Troy silver mine and the sale of
Asarco Australia Limited. Research and exploration expense for the
second quarter and six month period ended June 30 1994 declined by
$1.3 million and $2.2 million, respectively over the comparable 1993
periods primarily due to reduced levels of exploration activity. The
provision (recovery) for bad debts in the first quarter of 1994
includes $4.0 million from the settlement of litigation related to a
bad debt written off in 1991.
Nonoperating Items: Interest expense for the second quarter and six
month period ended June 30, 1994 increased by $.6 million and $1.5
million, respectively, over the comparable 1993 periods as a result
of lower capitalized interest due principally to the completion of
the modernization of the El Paso copper smelter, offset in part by
lower borrowings. Other income includes dividends from Southern Peru
Copper Corporation of $2.0 million in the second quarter of 1993 and
$4.1 million for the six month period ended June 30, 1993, recorded
prior to the resumption of equity accounting in the fourth quarter
1993.
Taxes on Income: Taxes on income reflect tax benefits on losses
before equity earnings. The six month period ending June 30, 1994
includes higher taxes on the first quarter 1994 gain on the sale of
Asarco Australia Limited. Reported earnings from the consolidated
subsidiary Asarco Australia Limited were previously treated as
permanently reinvested.
Cash Flows: Net cash used for operating activities was $25.4 million
in the second quarter of 1994, compared with cash provided from
operating activities of $17.8 million in the second quarter of 1993.
Cash invested in operating assets and liabilities was principally
from higher trade receivables due to higher metal prices and sales
volumes. Net cash used for investing activities declined by $22.3
million reflecting completion of the El Paso smelter modernization in
the second quarter 1993.
Net cash used for operating activities was $8.8 million for the six
month period ended June 30, 1994, compared with cash provided from
operating activities of $15.4 million in the corresponding prior
period. An improvement in operating income substantially due to
higher metal prices and volumes in the six months ended June 30, 1994
was partially offset by an increase in cash invested in accounts
receivable. Cash provided from investing activities increased for
the six month period ended June 1994 due to the proceeds from the
sale of Asarco Australia Limited in the first quarter and lower
capital spending.
Financing activities included the prepayment of the Company's 9-3/4%
Sinking Fund Debentures at par value plus a premium of .9% in the
first quarter of 1994.
Liquidity and Capital Resources: At June 30, 1994, the Company's
debt as a percentage of total capitalization was 35.9%, compared with
38.0% at December 31, 1993. Debt at the end of the second quarter
1994 was $866.2 million, compared with $900.5 million at the end of
1993. Additional indebtedness permitted under the terms of the
Company's revolving credit loan agreements totaled $409 million at
June 30, 1994.
In April 1994, the Company negotiated a new five-year $350 million
revolving credit agreement to replace a $330 million revolving credit
agreement scheduled to reduce in amount through 1996.
The Company expects that it will meet its cash requirements for 1994
and beyond from internally generated funds, cash on hand and
borrowings under its revolving credit agreements or additional debt
financing.
In July, the Board of Directors declared a quarterly dividend on the
common stock of 10 cents per share payable September 1, 1994 to
stockholders of record at the close of business on August 12, 1994.
</PAGE> 8 -
<PAGE>
COOPERS & LYBRAND
Exhibit I
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
ASARCO Incorporated:
We have reviewed the accompanying interim consolidated condensed
balance sheet of ASARCO Incorporated and Consolidated Subsidiaries as
of June 30, 1994 and the related interim consolidated condensed
statements of earnings and cash flows for the three month and six
month periods ended June 30, 1994 and 1993. These interim
consolidated condensed 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 accompanying interim consolidated
condensed financial statements for them to be in conformity with
generally accepted accounting principles.
Coopers & Lybrand
New York, New York
July 22, 1994
</PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
1. Asarco and two of its wholly-owned subsidiaries, Lac d'Amiante
du Quebec, Ltee ("LAQ") and Capco Pipe Company, Inc. ("Capco"),
have been named as defendants, among numerous other defendants,
in additional asbestos personal injury lawsuits of the same
general nature as the lawsuits reported on Forms 10-K for 1993
and prior years and 10-Q for the first quarter of 1994. As of
June 30, 1994, after giving effect to the July 1994 settlement
referred to below, there were pending against Asarco and its
subsidiaries 529 lawsuits brought by 737 primary and 486
secondary plaintiffs in 22 states and one Canadian province
seeking substantial damages for personal injury or death
allegedly caused by exposure to asbestos. As of June 30, 1994,
LAQ, Asarco and Capco have settled or have been dismissed from a
total of 4,661 asbestos personal injury lawsuits brought by
approximately 29,059 primary and 17,779 secondary plaintiffs.
On July 14, 1994, Capco settled the claims of approximately
4,250 primary plaintiffs in Texas and Alabama; 28 Capco primary
plaintiff claims remain pending.
2. On June 17, 1994, the Company and one of its wholly-owned
subsidiaries, Encycle/Texas, Inc., were sued in state court in
Nueces County, Texas in three class actions on behalf of persons
residing in neighborhoods around the Company's Corpus Christi,
Texas property. These actions seek compensatory and punitive
damages for diminution of property values, annoyance, loss of
use and enjoyment, loss of income from commercial uses,
remediation costs, emotional distress, and medical monitoring
due to alleged contamination of plaintiffs' property by metals
emitted from the Corpus Christi facility.
3. With respect to the litigation relating to log sort yards in
Tacoma, Washington, reported on Form 10-K for 1993 and prior
years, in May 1994 the Company was sued in another case brought
by owners and operators of four log sort yards involved in that
litigation. The case seeks damages and contribution to the
costs of remediation of, and natural resource damages to, a
waterway on which the log sort yards are located. Contamination
of the waterway is also alleged to have resulted from a landfill
at which waste from the yards was deposited.
4. With respect to the citizen suit and related litigation
concerning the Company's Omaha, Nebraska plant, reported on
Forms 10-K for 1993 and 10-Q for the first quarter of 1994, on
May 9, 1994 the Company voluntarily dismissed its federal court
action against the State and filed an action seeking similar
relief in state court in Lincoln. On June 6, 1994 the Company
was issued a National Pollution Discharge Elimination System
permit. In July 1994 the Company received notice on behalf of
private citizens that the Company would be sued for failure to
operate in compliance with that permit and for failing to comply
with the Clean Water Act.
</PAGE>
- 9 -
<PAGE>
5. With respect to the Circle Smelting Superfund site in
Beckemeyer, Illinois, reported on Form 10-K for 1993, the
Company has begun a limited remediation project at the site.
Ongoing discussions regarding additional remediation are
continuing.
6. With respect to the litigation brought by Montana Mining
Properties ("MMP") charging Asarco with tortious interference
with MMP's contract with Montana Resources, Inc., reported on
Form 10-K for 1993 and prior years, in June 1994 Asarco's motion
for summary judgment dismissing the case was granted. In July
1994 MMP filed a Notice of Appeal to the Montana Supreme Court.
7. With respect to the proceeding reported on Form 10-K for 1993
relating to disposal of asbestos cement pipe at the Company's
Ray Complex, in July 1994 the Company, without admitting any
violation, paid $125,000 to the Arizona Department of
Environmental Quality to settle the State of Arizona's suit
alleging violations of the Clean Air Act.
</PAGE>
- 10 -
<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.
ASARCO Incorporated
(Registrant)
Date: August 12, 1994 /s/ Kevin R. Morano
---------------------
Kevin R. Morano
Vice President, Finance and
Chief Financial Officer
Date: August 12, 1994 /s/ Ronald J. O'Keefe
------------------------
Ronald J. O'Keefe
Controller
- 11 -
</PAGE>
<PAGE>
COOPERS & LYBRAND
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We are aware that our report dated July 22,1994 on our review of the
interim financial information of ASARCO Incorporated for the three
month and six month periods ended June 30, 1994 and included in this
Form 10-Q for the quarter then ended is incorporated by reference in
the Company's Registration Statements on Form S-8 (File Nos. 2-67732,
2-83782, and 33-34606) and Form S-3 (File No. 33-45631). Pursuant to
Rule 436(c) under the Securities Act of 1933, this report should not
be considered a part of the Registration Statements prepared or
certified by us within the meaning of Sections 7 and 11 of that Act.
Coopers & Lybrand
New York, New York
July 22, 1994
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