ASARCO Incorporated
FORM 10-K/A
December 31, 1994
<TABLE>
INDEX
Page
Number
<S> <C>
FORM 10-K/A i
ITEM 14 ii
EXHIBIT INDEX D1-D3
FORM 11-K D30-D43
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
1994 FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange on
Title of each class which registered
Common Stock, without par value New York Stock Exchange
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_____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of February 28, 1995, there were of record 42,170,882 shares of Common Stock,
without par value, outstanding, and the aggregate market value of the shares of
Common Stock (based upon the closing price of Asarco Common Stock on the New
York Stock Exchange - Composite Transactions) of ASARCO Incorporated held by
nonaffiliates was approximately $1.1 billion.
PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE:
Part III: Proxy statement in connection with the Annual Meeting to be held on
April 26, 1995. Part IV: Exhibit index is on pages D1 through D3.
<PAGE>
ASARCO Incorporated and Subsidiaries
FORM 10-K/A
December 31, 1994
The undersigned registrant hereby amends the 1994 Annual Report on Form 10-K as
set forth in the pages attached hereto to add the information, financial
statements and exhibits required by Form 11-K filed with respect to the Savings
Plan of ASARCO Incorporated and Participating Subsidiaries pursuant to Rule
15d-21.
The following item has been refiled to reflect such amendments:
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K.
As the Exhibits are considered a "discrete filing item", the Exhibits and
Exhibit Index as amended have been refiled.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
ASARCO Incorporated
By /s/ K. R. Morano
K. R. Morano
Vice President and
Chief Financial Officer
Date: June 22, 1995
i
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
ii
<PAGE>
ASARCO Incorporated
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Indexed
No. Description on Page
<S> <C> <C>
3. Certificate of Incorporation and By-Laws
(a) Certificate of Incorporation - restated, filed May 4, 1970
(Filed as an Exhibit to the Company's 1980 Annual Report on
Form 10-K and incorporated herein by reference)
(b) Certificate of Amendment to the Certificate of
Incorporation effective April 23, 1975 (Filed as an Exhibit
to the Company's 1980 Annual Report on Form 10-K and
incorporated herein by reference)
(c) Certificate of Amendment of Certificate of Incorporation
executed April 14, 1981 (Filed as an Exhibit to the
Post-Effective Amendment No. 8 to Registration Statement
No. 2-47616, filed April 30, 1981 and incorporated herein
by reference)
(d) Certificate of Amendment of Restated Certificate of
Incorporation filed on May 6, 1985 (Filed as an Exhibit to
the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1985 and incorporated herein by reference)
(e) Certificate of Amendment of Certificate of Incorporation
filed July 21, 1986 (Filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter ended June
30, 1986 and incorporated herein by reference)
(f) Certificate of Amendment of Restated Certificate of
Incorporation, as amended filed April 22, 1987 (Filed as an
Exhibit to the Company's 1987 Annual Report on Form 10-K
and incorporated herein by reference)
(g) Statement of Cancellation filed July 31, 1987 whereby
155,000 shares of Series A Cumulative Preferred Stock and
862,500 shares of $9.00 Convertible Exchangeable Preferred
Stock were cancelled (Filed as an Exhibit to the Company's
1987 Annual Report on Form 10-K and incorporated herein by
reference)
(h) Statement of Cancellation filed November 20, 1987 whereby
1,026,900 shares of Series A Cumulative Preferred Stock
were cancelled (Filed as an Exhibit to the Company's 1987
Annual Report on Form 10-K and incorporated herein by
reference)
(i) Statement of Cancellation filed December 18, 1987 whereby
1,250,000 shares of Series B Cumulative Convertible
Preferred Stock were cancelled (Filed as an Exhibit to the
Company's 1987 Annual Report on Form 10-K and incorporated
herein by reference)
</TABLE>
D1
<PAGE>
ASARCO Incorporated
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Indexed
No. Description on Page
<S> <C> <C>
(j) Statement of Cancellation filed March 3, 1988 whereby
27,000 shares of Series A Cumulative Preferred Stock were
cancelled (Filed as an Exhibit to the Company's 1987 Annual
Report on Form 10-K and incorporated herein by reference)
(k) Certificate of Amendment of Restated Certificate of
Incorporation, as amended, filed August 7, 1989 (Filed as
an Exhibit to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1989 and incorporated herein
by reference)
(l) By-Laws as last amended on June 26, 1991
(Filed as an Exhibit to the Company's 1991 Annual Report on
Form 10-K and incorporated herein by reference.)
4. Instruments defining the rights of security holders, including
indentures
(a) There are currently various separate indentures, agreements
or similar instruments under which long-term debt of Asarco
is currently outstanding. The Registrant hereby agrees to
furnish to the Commission, upon request, a copy of any of
the instruments which define the rights of holders of
long-term debt securities. None of the outstanding
instruments represent long-term debt securities in excess
of 10% of the total assets of Asarco as of December 31,
1994
(b) Form of Rights Agreement dated as of July 26, 1989, between
the Company and First Chicago Trust Company of New York, as
Rights Agent, defining the rights of shareholders under a
July 1989 Shareholders' Rights plan and dividend
declaration (Filed as an Exhibit to the Company's report on
Form 8-K filed on July 28, 1989 and incorporated herein by
reference)
(c) Rights Agreement Amendment dated as of September 24, 1992,
between the Company and The Bank of New York, as Successor
Rights Agent under the Rights Agreement listed above (Filed
as an Exhibit to the Company's 1992 Annual Report on Form
10-K and incorporated herein by reference)
(d) Second Rights Agreement Amendment dated as of February 23,
1995 between the Company and The Bank of New York (Filed as
an Exhibit to the Company's report on Form 8-K filed on
February 24, 1995 and incorporated herein by reference)
</TABLE>
D2
<PAGE>
ASARCO Incorporated
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Indexed
No. Description on Page
<S> <C> <C>
(e) Indenture Agreement dated as of February 1, 1993 between the
Company and Bankers Trust Company, as Trustee, covering the
issuance of debt securities registered by the Company in
April 1992, not to exceed $250 million (Filed as an Exhibit
to the Company's 1992 Annual Report on form 10-K and
incorporated herein by reference)
10. (a) Stock Option Plan as last amended on November 30, 1994 D9-D12
(b) Form of Employment Agreement entered into in 1985, as amended
in March and April 1989, among the Company and currently 11
of its executive officers, including Messrs. R. de J.
Osborne, F.R. McAllister, K.R. Morano, R.M. Novotny and R.J.
Muth (Filed as an Exhibit to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1989 and
incorporated herein by reference)
(c) Deferred Fee Plan for Directors, as amended through January
26, 1994 (Filed as an Exhibit to the Company's 1993 Annual
Report on Form 10-K and incorporated herein by reference)
(d) Supplemental Pension Plan for Designated Mid-Career Officers,
as amended through January 25, 1995 D13-D17
(e) Retirement Plan for Non-Employee Directors, as amended
through January 25, 1995 D18-D22
(f) Directors' Stock Award Plan, as amended through January 27,
1993 (Filed as an Exhibit to the Company's 1992 Annual Report
on Form 10-K and incorporated herein by reference)
(g) Stock Incentive Plan adopted by the Company's Shareholders
on April 25, 1990, as last amended on November 30, 1994 D23-D29
11. Statement re Computation of Earnings Per Share D4
21. Subsidiaries of the Registrant D5-D8
23. Report of Independent Accountants on Financial Statement Schedules
and Consent of Independent Accountants are included on page A63 of
this Annual Report on Form 10-K.
99. Report on Form 11-K relating to the Savings Plan for Salaried
Employees of ASARCO Incorporated and Participating Subsidiaries.
D30-D43
</TABLE>
Copies of exhibits may be acquired upon written request to the Treasurer and the
payment of processing and mailing costs.
D3
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 11-K
----------------
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
-----------------
Commission File No. 1-164
-----------------
For the fiscal year ended December 31, 1994
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
ASARCO Incorporated
180 Maiden Lane
New York, New York 10038
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Financial Statements and Schedules
December 31, 1994 and 1993
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
Report of Independent Accountants D31
Statement of Net Assets Available for
Benefits, with Fund Information at December 31, 1994 D32
Statement of Net Assets Available for
Benefits, with Fund Information at December 31, 1993 D33
Statement of Changes in Net Assets Available
for Benefits, with Fund Information for the year ended
December 31, 1994 D34
Notes to Financial Statements D35-D40
Supplemental Schedules:
Form 5500 Item 27a-Schedule of Assets Held
for Investment Purposes at December 31, 1994 D41
Form 5500 Item 27d-Schedule of Reportable
Transactions for the year ended December 31, 1994 D42
Consent of Independent Accountants D43
</TABLE>
D30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Savings Plan Committee of ASARCO Incorporated
and Participating Subsidiaries:
We have audited the accompanying statements of net assets available for benefits
of the Savings Plan of ASARCO Incorporated and Participating Subsidiaries (the
"Plan") as of December 31, 1994 and 1993, and the related statement of changes
in net assets available for benefits for the year ended December 31, 1994. These
financial statements are the responsibility of the Plan administrator. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1994 and 1993 and the changes in net assets available for benefits
for the year ended December 31, 1994 in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules, as listed in
the index on page D30, are presented for the purpose of additional analysis and
are not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the accompanying statements of net assets
available for benefits and the statement of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the statements of net assets available for benefits and changes in net assets
available for benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
COOPERS & LYBRAND L.L.P.
New York, New York
June 1, 1995
D31
<PAGE>
Savings Plan of ASARCO Incorporated and Participating Subsidiaries
Statement of Net Assets Available for Benefits, with Fund Information
at December 31, 1994
(dollars in thousands)
<TABLE>
<CAPTION>
Vanguard
Index Asarco Short Vanguard Vanguard Vanguard
Fixed Trust Common VMMR Term U.S. Vanguard Extended U.S. Windsor
Income 500 Stock Prime Treasury Wellington Market Growth II Loan
ASSETS: Fund Portfolio Fund Portfolio Portfolio Fund Fund Fund Fund Fund Total
----- ------ ---- ------- ------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at
fair value
(Notes 3 and
4):
ASARCO Common
Stock Fund
1,965,216
units (cost:
$18,612) $20,930 $20,930
Vanguard:
Money Market
Reserves Prime
Portfolio
(cost
approximates
market) $1,849 $16,907 18,756
Index Trust -
500 Portfolio
392,126 units
(cost: $16,006) $16,850 16,850
Fixed Income
Securities
Fund - Short
Term U.S.
Treasury
Portfolio
855,135 units
(cost: $8,734) $8,372 8,372
Vanguard
Wellington
Fund 291,936
units (cost:
$5,870) $5,660 5,660
Index Extended
Market Fund -
68,269 units
(cost: $1,292) $1,264 1,264
U.S. Growth
Fund 84,911
units (cost:
$1,278) $1,302 1,302
Windsor II Fund
249,901 units
(cost: $4,209) $3,953 3,953
Loans to
Participants
(Note 6) $3,750 3,750
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total
Investments 1,849 16,850 20,930 16,907 8,372 5,660 1,264 1,302 3,953 3,750 80,837
Contributions
Receivable:
Participant 139 21 84 65 81 28 20 65 503
Company 182 182
Interest 19 19
Receivable
Loans Receivable
36 6 22 16 30 6 4 16 (136)
------ ------- ------- ------- ------ ------ ------ ------ ------ ----- ------
TOTAL ASSETS 1,849 17,025 21,139 17,013 8,453 5,771 1,298 1,326 4,034 3,633 81,541
------ ------- ------- ------- ------ ------ ------ ------ ------ ------ ------
NET ASSETS
AVAILABLE FOR $1,849 $17,025 $21,139 $17,013 $8,453 $5,771 $1,298 $1,326 $4,034 $3,633 $81,541
PLAN BENEFITS ====== ======= ======= ======= ====== ====== ====== ====== ====== ====== =======
</TABLE>
See notes to financial statements.
D32
<PAGE>
Savings Plan of ASARCO Incorporated and Participating Subsidiaries
Statement of Net Assets Available for Benefits, with Fund Information
at December 31, 1993
(dollars in thousands)
<TABLE>
<CAPTION>
Vanguard Short
Index Asarco Term Vanguard Vanguard Vanguard
Fixed Trust Common VMMR U.S. Vanguard Extended U.S. Windsor
Income 500 Stock Prime Treasury Wellington Market Growth II Loan
ASSETS: Fund Portfolio Fund Portfolio Portfolio Fund Fund Fund Fund Fund Total
----- ------ ---- ------- ------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at
fair value
(Notes 3 and
4):
ASARCO
Common
Stock
Fund
1,930,424
units
(cost:
$17,873) $16,525 $16,525
Vanguard:
Money Market
Reserves Prime
Portfolio
(cost
approximates
market) $ 2,373 $12,213 14,586
Index Trust -
500 Portfolio
381,714 units
(cost: $15,320) $16,731 16,731
Fixed Income
Securities
Fund - Short -
Term U.S.
Treasury
Portfolio
780,443 units
(cost: $8,034) $8,101 8,101
Vanguard
Wellington
Fund 180,033
units (cost:
$3,614) $3,673 3,673
Index Extended
Market Fund -
37,276 units
(cost: $691) $724 724
U.S. Growth
Fund 47,733
units (cost:
$712) $713 713
Windsor II Fund
146,987 units
(cost:
$2,479) $2,505 2,505
Wachovia Bank
of North
Carolina:
Guaranteed
Investment
Contracts (at
cost plus
interest) 9,710 9,710
Loans to
Participants
(Note 6) $3,606 3,606
------ ------ ------ ------ ------ ------ ----- ---- ----- ------ -------
Total
Investments 12,083 16,731 16,525 12,213 8,101 3,673 724 713 2,505 3,606 76,874
Contributions
Receivable:
Participant 150 20 91 71 73 22 17 59 503
Company 182 182
Interest 18 18
Receivable
Loans Receivable 40 6 22 15 22 5 4 21 (135)
------- ------- ------- ------- ------ ------ ---- ---- ------ ------ ------
TOTAL 12,083 16,921 16,733 12,326 8,187 3,768 751 734 2,585 3,489 77,577
------- ------- ------- ------- ------ ------ ---- ---- ------ ------ -------
ASSETS
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS $12,083 $16,921 $16,733 $12,326 $8,187 $3,768 $751 $734 $2,585 $3,489 $77,577
======= ======= ======= ======= ====== ====== ==== ==== ====== ====== =======
</TABLE>
See notes to financial statements.
D33
<PAGE>
Savings Plan of ASARCO Incorporated and Participating Subsidiaries
Statement of Changes in Net Assets Available for Benefits, with Fund Information
at December 31, 1994
(dollars in thousands)
<TABLE>
<CAPTION>
Vanguard Short
Index Asarco Term Vanguard Vanguard Vanguard
Fixed Trust Common VMMR U.S. Vanguard Extended U.S. Windsor
Income 500 Stock Prime Treasury Wellington Market Growth II Loan
ADDITIONS: Fund Portfolio Fund Portfolio Portfolio Fund Fund Fund Fund Fund Total
----- ------ ---- ------- ------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Income (Note 3)
Dividends $ 528 $ 285 $ 624 $ 442 $ 245 $ 35 $ 15 $ 237 $ 2,411
Interest $ 301 $ 215 516
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total 301 528 285 624 442 245 35 15 237 215 2,927
Net
Appreciation
(Depreciation)
in the Fair
Value of
Investments
(Note 3) (339) 4,072 (481) (281) (57) 26 (281) 2,659
Contributions
(Notes 3, 4 &
5)
Participants 1,771 217 951 789 975 326 232 805 6,066
Company 2,177 2,177
Loan Repayments
(Note 6) 532 88 288 211 289 84 72 221 (1,785)
Transfer from
other plan 6 55 55 105 44 43 23 13 41 7 392
Interfund
transfers (9,571) 90 (93) 5,862 713 1,431 250 332 986
------ ------- ----- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL ADDITIONS (9,264) 2,637 6,801 7,830 1,718 2,702 661 690 2,009 (1,563) 14,221
DEDUCTIONS
Withdrawals 858 2,033 2,258 2,624 1,228 530 61 73 417 163 10,245
Loans (Note 6) 112 500 138 516 223 169 44 25 143 (1,870)
Other (1) 3 1 9 12
------ ------ ----- ----- ------ ---- ------ --- ---- ------ ------
TOTAL
DEDUCTIONS 970 2,533 2,395 3,143 1,452 699 114 98 560 (1,707) 10,257
Net
Increase
(Decrease) (10,234) 104 4,406 4,687 266 2,003 547 592 1,449 144 3,964
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
BEGINNING OF
YEAR 12,083 16,921 16,733 12,326 8,187 3,768 751 734 2,585 3,489 77,577
------ ------- ------ ------ ------ ------ ------ ------ ------ ------ -------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
END OF YEAR $1,849 $17,025 $21,139 $17,013 $8,453 $5,771 $1,298 $1,326 $4,034 $3,633 $81,541
====== ======= ======= ======= ====== ====== ====== ====== ====== ====== =======
</TABLE>
See notes to financial statements.
D34
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements
1. Plan Description
Effective January 1, 1980 ASARCO Incorporated (the "Company") established
the Savings Plan of ASARCO Incorporated and Participating Subsidiaries
(the "Plan"), which has been amended thereafter. Contributions were
commenced in July 1980. The Plan is a defined contribution plan and is
administered by the Savings Plan Committee in accordance with authority
delegated by the Fiduciary Committee.
The Plan is designed to provide a method of savings by eligible employees
for their retirement and other needs, and to enable them to acquire a
stock interest in the Company. In 1994, participants were able to invest
in one or a combination of eight funds: the Vanguard Index Trust-500
Portfolio; the Asarco Common Stock Fund; the Vanguard Money Market
Reserves-Prime Portfolio; the Fixed Income Securities Fund-Short term
U.S. Treasury Portfolio; the Vanguard Wellington Fund; the Vanguard
Windsor II; the Vanguard U.S. Growth Portfolio; and the Vanguard Index
Trust-Extended Market Portfolio.
Reference should be made to the Plan document for a complete description
of the Plan including eligibility requirements and vesting provisions.
2. Significant Plan Amendments
On July 27, 1994 the Plan was amended effective July 1, 1994, to change
the eligibility waiting period from one year to six months of employment;
to accept rollovers from another employer's qualified savings plan; and
to charge the cost of the loan administration fees to plan participants.
In addition, on June 1, 1994, the Enthone-OMI, Inc. Retirement Savings
Plan was merged into the Company's Plan.
On November 23, 1993, the Plan was amended effective January 1, 1994 to
comply with the Department of Labor regulations issued under Section
404(c) of ERISA and the Omnibus Budget Reconciliation Act of 1993, which
limited annual covered compensation to $150,000.
On April 28, 1993, the Plan was amended effective January 1, 1993 to
permit direct rollover to another qualified plan or IRA and to impose a
mandatory 20% withholding on the taxable portion of an in-service
withdrawal or distribution not utilizing direct rollover.
3. Summary of Significant Accounting Policies
Investments Valuation:
Investments in equity securities listed on an exchange are valued at the
latest quoted sales price on the valuation date. Securities not traded or
unlisted are valued at the mean of the latest quoted bid and asked
prices. Bond investments are valued utilizing the latest bid prices.
Short-term investments are stated at amortized cost which approximates
market. Investments in the Fixed Income Fund are valued by the investment
manager at cost plus reinvested interest. Fixed income contracts may be
valued below cost plus interest in the event that an issuer defaults
under a contract or if a penalty is assessed for early termination of a
performing contract.
D35
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
Investment Transactions and Investment Income:
Transactions are accounted for on a trade date basis. Average cost is the
basis used in the determination of gains or losses on sales of
securities. Dividend income is recorded at the ex-dividend date. Income
from other investments is recorded as earned.
The Plan presents, in the statement of changes in net assets, the net
change in the fair value of its investments which consists of realized
and unrealized gains or losses on those investments. Realized and
unrealized gains and losses disclosed in the Plan's Form 5500 are
calculated using revalued cost.
Contributions:
The Company's matching contributions are measured by reference to the
participant's contributions and are not discretionary.
Loans to Participants:
Loans to participants are presented in the Statement of Net Assets
Available for Plan Benefits as Plan assets.
Other:
The Plan uses the accrual method for recognizing contributions,
withdrawals and investment income.
4. Investment Funds
Vanguard Fiduciary Trust Company ("Vanguard") is the investment manager
and participant recordkeeper for all investment funds of the Plan.
Vanguard is also the trustee of all the funds with the exception of
certain investment contracts held in the Fixed Income Fund, for which
Wachovia Bank of North Carolina, N.A. is trustee.
Upon enrollment in the Plan participants may direct their elected
contributions to be invested in one or more of the following funds in
multiples of 5%:
o Fixed Income Fund - A fund which consists of fixed income contracts
and money market investments. At times, this fund will maintain a
significant portion of its assets in money market investments to
provide liquidity for transactions. After January 1, 1993, exchanges
and employee elected contributions were no longer invested in this
fund and it was phased out shortly after December 31, 1994.
o Vanguard Index Trust-500 Portfolio - A fund invested in all of the
stocks included in the Standard & Poor's 500 Composite Index in
approximately the same proportions as they are represented in the
index.
o Vanguard Money Market Reserves-Prime Portfolio - A fund invested in a
portfolio of high quality money market instruments with maturities of
one year or less.
D36
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
o Vanguard Fixed Income Securities Fund-Short Term U.S. Treasury
Portfolio - A fund invested primarily in short-term U.S. Treasury
securities with an average maturity of two to three years.
o Vanguard Wellington Fund - A fund invested in bonds and common stocks.
the bonds are held for relative stability of income and principal,
while the common stocks are held for potential growth of capital and
income.
o Vanguard Index Trust - Extended Market Portfolio - A fund which
provides investment results that correspond to the aggregate price and
yield performance of the Wilshire 4500 Index. the Wilshire 4500 Index
consists of over 4,500 U.S. common stocks (primarily medium and small
capitalization stocks) that are not included in the standard & Poor's
500 Composite Stock Price Index.
o Vanguard U.S. Growth Portfolio - a fund invested primarily in a
diversified portfolio of common stocks with above-average growth
potential.
o Vanguard Windsor II - A fund invested in common stocks to provide
capital appreciation and dividend income.
o Asarco Common Stock Fund - A fund that invests exclusively in ASARCO
Incorporated common stock with a small amount invested in the Vanguard
Money Market Reserves-Prime Portfolio to allow for timely
responsiveness to Plan transactions.
The Plan also maintains the following fund:
o Loan Fund - A fund designed to facilitate the recordkeeping and other
administrative functions relating to loans made to participants based
on their account balances (See Note 6). These loans are receivables of
the Plan.
There is some degree of risk with any investment, which is generally related to
fluctuation in market value or, with respect to the Vanguard Money Market
Reserves-Prime Portfolio and Fixed Income Funds, deterioration in credit
quality. Participants are advised to read a Vanguard prospectus or the Plan's
summary plan description before investing in any fund.
Vanguard as recordkeeper maintains individual account records reflecting each
participant's net interest in each fund of the Plan in which such participant
invests. Participant's net interests in each fund of the Plan are represented by
units of participation. The following schedule shows the number of units and the
net asset value per unit or per share in each fund as of December 31, 1994 and
December 31, 1993:
D37
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
<TABLE>
<CAPTION>
1994 1993
---- ----
Net Asset Net Asset
Number of Value Number of Value
Units Per Unit Units Per Unit
<S> <C> <C> <C> <C> <C>
Fixed Income Fund 1,849,115 $ 1.00 Fixed Income Fund 12,082,786* $ 1.00
Asarco Common Stock Fund 1,965,216* $10.65 Asarco Common Stock Fund 1,930,424* $ 8.56
Vanguard Index Trust - 500 Vanguard Index Trust - 500
Portfolio 392,126* $42.97 Portfolio 381,714* $43.83
Vanguard Money Market Reserves Vanguard Money Market Reserves
- Prime Portfolio - Prime Portfolio
16,907,259* $ 1.00 12,213,498* $ 1.00
Vanguard Fixed Income Vanguard Fixed Income
Securities Fund - Short Securities Fund - Short
Term U.S. Treasury Portfolio Term U.S. Treasury Portfolio
855,135* $ 9.79 780,443* $10.38
Vanguard Wellington Fund 291,936* $19.39 Vanguard Wellington Fund 180,033 $20.40
Vanguard Windsor II Fund 249,901 $15.82 Vanguard Windsor II Fund 146,987 $17.04
Vanguard U.S. Growth Fund 84,911 $15.33 Vanguard U.S. Growth Fund 47,733 $14.93
Vanguard Index Extended Vanguard Index Extended Market 37,276 $19.43
Market 68,269 $18.52
</TABLE>
*Represents 5% or more of net assets available for plan benefits.
5. Contributions
Each eligible employee wishing to participate in the Plan must elect to
authorize pre-tax contributions by payroll deduction. Contributions are
stated in whole percentages of 1% to 12% of the participant's basic
earnings, as defined. A participant may elect to decrease or suspend
the pre-tax contributions once each Plan Year. A participant may not
otherwise alter the amount of the elected pre-tax contributions until
the beginning of the next Plan Year. The Internal Revenue Code of 1986,
as amended, (the "Code") limited the maximum amount an employee may
contribute on a pre-tax basis to $9,240 and $8,994 in 1994 and 1993,
respectively.
Matching Company Contribution - The Company matches the first 6% of a
participant's monthly contribution at the rate of 50%. The matching
contribution may be made in either cash or ASARCO Common Stock and in
the case of cash, the Trustee is required to purchase ASARCO Common
Stock. Contributions for the year ended December 31, 1994 consisted of
the following:
Cash $ 160
Asarco Common Stock 2,176,840
------------
$2,177,000
============
D38
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
The Company is not obligated to make a contribution during any period
in which it has no accumulated retained earnings. The Company's
contributions are subject to all legal restrictions which may apply,
including Sections 401 and 415 of the Code, which limit the annual
contributions to an employee's account.
Participants are 100% vested upon participation.
6. Loans
The Plan provides for loans to participants who have participated in
the Plan for at least one year, subject to certain limitations. The
maximum loan allowed to each participant is limited to the lessor of
50% of the total value of the participant's accounts, or $50,000
reduced by the highest outstanding balance of any other Plan loan to
such participant during the prior twelve-month period.
A participant's loan is repayable within no more than five years or
immediately upon termination of employment. Interest is currently
accrued at the prime rate. Loans are secured by a lien on the
participant's interest in the Plan. Loan repayments are made through
payroll withholding from the participant's earnings. A participant may
pre-pay a loan at any time without penalty.
7. Tax Status
The Plan, as amended through July 1, 1994, has received a favorable
determination from the Internal Revenue Service ("IRS") that it is a
qualified plan and trust under Section 401(a) of the Code and, thus,
exempt from federal income taxes under provisions of Section 501(a) of
the Code.
8. Plan Expenses
The Company pays all administrative expenses of the Plan including
trust, recordkeeping, consulting, audit and legal fees, with the
exception of loan administration fees which are charged to
participants. In addition, the Company pays for investment fees related
to the Fixed Income contracts held by the Wachovia Bank of North
Carolina. All investment fees related to Vanguard Mutual Funds are paid
from the net assets of such funds.
All taxes (excluding transfer taxes on shares of Asarco Common Stock
distributed to participants or their beneficiaries), brokerage
commissions and expenses directly related to the investment of the Plan
assets are paid from the assets of the relevant fund of the Plan.
D39
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
9. Termination Priorities
The Company reserves the right to amend or discontinue the Plan by
action of the Board at any time. In the event of termination or partial
termination of the Plan or a complete discontinuance of matching
Company contributions under the Plan, each affected participant shall
be 100% vested in their share of the Plan net assets.
10. Executive Life Contract
All contributions and transfers to the Fixed Income Fund made from
January to December 1988 were invested in a fixed income contract
providing a 9.5% rate of interest maturing December 31, 1992 with
Executive Life Insurance Company (ELIC Contract and ELIC, respectively)
the California subsidiary of First Executive Corporation.
On April 11, 1991, the California State Insurance regulators placed
ELIC in conservatorship, freezing its assets and providing time to
evaluate alternatives such as selling the company or rehabilitating it.
During 1991, the Company made arrangements to protect participant's
interest in this contract through its commitment to pay the full
contract value as of December 31, 1991 plus interest based on the
blended rate of all contracts held in the fixed income fund after
December 31, 1991. Such rate is adjusted quarterly. The Company also
obtained a five-year irrevocable letter of credit from Barclays Bank
PLC, to further back this commitment. The Company received a Department
of Labor exemption to proceed with this transaction and to obtain an
assignment of the contract up to the amount advanced on behalf of ELIC
plus the blended rate of interest. The Department of Labor exemption
was effective as of December 2, 1991 and at that time the trustee and
investment management responsibilities were transferred from State
Street Bank and Trust Company to Wachovia Bank of North Carolina, N.A.
(ELIC Contract Trustee).
On September 3, 1993 the California Superior Court approved a
rehabilitation plan for ELIC's successor, Aurora Life Assurance
Company, in which plan sponsors were given the choice to participate in
the rehabilitation plan. As a result of this rehabilitation plan the
Fixed Income Fund received a payment from ELIC in the amount of
$577,393 on such date.
At December 31, 1993 the value of the ELIC Contract in the Plan was
$1,950,314. During February 1994, the Company and the ELIC Contract
Trustee elected not to participate in the rehabilitation plan. As a
result, on April 4, 1994, ELIC paid $1,522,386 in cash to the ELIC
Contract Trustee, who forwarded such amount to the Fixed Income Fund of
the Plan. Between January 1994 and April 6, 1994, the Company paid the
Plan an amount equivalent to the remaining contract value. This
eliminated the ELIC Contract Obligation in the Fixed Income Fund as
agreed under the assignment entered into between the Company and the
Plan pursuant to the exemption dated December 2, 1991. Any future
recoveries will be paid to the ELIC Contract Trustee and forwarded to
the Company as reimbursement for payments to the Plan since December 2,
1991 or, in the case of any excess amounts, to the Plan participants.
D40
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Form 5500 Item 27a
Schedule of Assets Held for Investment Purposes
at December 31, 1994
<TABLE>
<CAPTION>
Cost or Market Rate of
Book Value Value Interest Maturity
Date
<S> <C> <C> <C> <C>
Fixed Income Fund
Vanguard Fiduciary Trust Company:
Vanguard Money Market Reserves -
Prime Portfolio Fund $ 1,013,042 $ 1,013,042
Wachovia Bank of North Carolina, N.A.:
1990 Contract - Principal Mutual 836,076 836,076 8.9% 01/03/95
--------- ------------
Total Fixed Income Fund 1,849,118 1,849,118
Vanguard Fiduciary Trust Company:
Vanguard Index Trust - 500 Portfolio 16,006,428 16,849,665*
Asarco Common Stock Fund 18,612,474 20,929,551*
Vanguard Fixed Income Securities Fund - Short Term
U.S. Treasury Portfolio 8,734,281 8,371,771*
Vanguard Money Market Reserves - Prime Portfolio 16,907,259 16,907,259*
Vanguard Wellington Fund 5,869,957 5,660,635*
Vanguard Index Extended Market Fund 1,291,702 1,264,334
Vanguard U. S. Growth Fund 1,277,573 1,301,689
Vanguard Windsor II Fund 4,209,498 3,953,428
Loan Fund
Participants' Loans - 3,749,709 6.0%-10.5%
---------- ----------
TOTAL INVESTMENTS $74,758,290 $80,837,159
=========== ===========
</TABLE>
* Represents 5% or more of net assets available for plan benefits.
D41
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Form 5500 Item 27d
Schedule of Reportable Transactions
for the year ended December 31, 1994
<TABLE>
<CAPTION>
Number of Number of Purchase Selling Basis of Net Gain
Description of Asset Purchases Sales Price Price Asset or (Loss)
-------------------- --------- ----- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Common Stock of
ASARCO Incorporated 106 167 $4,141,324 $3,807,958 $3,265,502 $542,456
Vanguard Index Trust
500 Portfolio 93 161 $4,229,040 $3,771,398 $3,796,666 $(25,268)
Vanguard Money Market
Reserves-Prime Portfolio 177 174 $9,900,869 $5,207,108 $5,207,108 $ -
Vanguard Fixed Income
Securities Fund-Short
Term U.S. Treasury
Portfolio 135 151 $3,660,204 $2,908,260 $2,971,776 $(63,516)
Vanguard Wellington Fund 98 122 $3,596,769 $1,327,589 $1,349,723 $(22,134)
</TABLE>
D42
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectuses constituting
part of the Registration Statements of ASARCO Incorporated on Form S-3 (File
Nos. 33-45631 and 33-55993) and on Form S-8 (File Nos. 2-67732, 2-83782 and
33-34606) of our report dated June 1, 1995 on our audits of the Statements of
Net Assets Available for Benefits of the Savings Plan of ASARCO Incorporated and
Participating Subsidiaries as of December 31, 1994 and 1993, the Supplemental
Schedules as of December 31, 1994 and for the year then ended and the Statement
of Changes in Net Assets Available for Benefits for the year ended December 31,
1994, which report is included in this Annual Report on Form 11-K. We also
consent to the incorporation by reference of such report in the 1994 Annual
Report on Form 10-K of ASARCO Incorporated.
COOPERS & LYBRAND L.L.P.
New York, New York
June 1, 1995
D43
