UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 21, 1995
ASARCO Incorporated
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(Exact name of registrant as specified in its charter)
New Jersey 1-164 13-492440
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
180 Maiden Lane, New York, New York 10038
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 510-2000
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Item 2. Acquisition or Disposition of Assets.
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On April 5, 1995 ASARCO Incorporated ("Asarco" or the "Company") purchased
7,057,215 shares, representing 10.7% of the outstanding common stock, of
Southern Peru Copper Corporation at a cost of $116.4 million from Newmont Gold
Company. The purchase of these shares (the "Purchase") increased Asarco's
interest in SPCC to 63% from 52.3%.
The shares of SPCC acquired in the Purchase will enable Asarco to elect a
majority of the directors of SPCC. Accordingly, Asarco will consolidate the
financial statements of SPCC in its financial statements commencing with the
first quarter of 1995. Asarco had previously accounted for its investment in
SPCC by the equity method of accounting. The excess of the purchase price over
Asarco's interest in the net book value of SPCC attributable to the shares
acquired in the Purchase is estimated to be assigned to proven and probable
sulfide reserves, proven and probable leachable reserves and mineralized
material.
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Item 7. Financial Statements
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UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited Pro Forma Consolidated Statement of Earnings presents the pro
forma results of operations of the Company and SPCC for the year ended December
31, 1994. The unaudited Pro Forma Consolidated Statement of Earnings combines
the historical results of operations of the Company and SPCC and gives effect to
the Purchase and the resulting consolidation of the Company's 63% interest in
SPCC as though the Purchase had occurred on January 1, 1994.
The unaudited Pro Forma Consolidated Balance Sheet presents the pro forma
financial position of the Company and SPCC as of December 31, 1994. The
unaudited Pro Forma Consolidated Balance Sheet combines the historical financial
position of the Company and SPCC and gives effect to the Purchase and the
resulting consolidation of the Company's 63% interest in SPCC as though the
Purchase had occurred on December 31, 1994.
The unaudited pro forma financial information presented below is based on
management's assumptions and does not purport to represent the results that
actually would have occurred if the Purchase had, in fact, been completed on the
dates assumed or to project the results that may be achieved in the future. The
unaudited pro forma financial information should be read in conjunction with the
historical financial statements and notes thereto included in the Company's 1994
Annual Report on Form 10-K.
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<TABLE>
<CAPTION>
Unaudited Proforma Consolidated Statement of Earnings for the
Year ended December 31, 1994
(dollars in millions, except per share amounts)
Historical
Pro Forma Eliminations Pro Forma
Asarco SPCC Adjustments (e) Consolidated
<S> <C> <C> <C> <C> <C>
Sales of products and services
$2,031.8 $701.7 - $(32.9) $2,700.6
Operating costs and expenses:
Cost of products and services
1,781.1 455.3 - (32.9) 2,203.5
Selling, administrative and other
79.1 50.7 - - 129.8
Depreciation and depletion
83.1 39.8 0.9(a) - 123.8
Provision for workers' participation
- 13.9 - 13.9
Research and exploration 19.9 - - - 19.9
Provision for plan closures and
disposals - - - - -
Provision for environmental matters
51.2 - - - 51.2
------- ----- ----- ----- ----
Total operating costs and expenses
2,014.4 559.7 0.9 (32.9) 2,542.1
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Operating income (loss) 17.4 142.0 (0.9) - 158.5
Interest expense (net) (62.5) (7.8) (7.7)(b) - (78.0)
Interest income - 6.5 - - 6.5
Other income 12.3 23.2 - - 35.5
Gain on sale of Asarco Australia Limited
58.5 - - - 58.5
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Earnings (loss) before taxes, equity
earnings and cumulative effect of
changes in accounting principles
25.7 163.9 (8.6) - 181.0
Taxes on income (benefit) 9.4 54.1 (2.1)(c) 3.3 64.7
Minority interest - (18.6) 9.8(d) (43.5) (52.3)
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Earnings (loss) before equity earnings
16.3 91.2 3.3 (46.8) 64.0
Equity in earnings of nonconsolidated
associated companies, net of taxes
of $4.8
47.7 - - (44.4) 3.3
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Net earnings (loss) $ 64.0 $91.2 $ 3.3 (91.2) 67.3
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Per share amounts:
Earnings (loss) before cumulative effect
of changes in accounting principles
$ 1.53 $ 1.61
Cumulative effect of changes in
accounting principles, net of taxes
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Net earnings (loss) $ 1.53 $1.61
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Dividends paid $0.40 $0.40
Weighted average number of shares
outstanding (000's)
41,905 41,905
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Notes to Unaudited Proforma Consolidated Statement of Earnings:
(a) The excess of the purchase price over Asarco's interest in the net book
value of SPCC attributable to the shares acquired is estimated to be
assigned to proven and probable sulfide reserves has been amortized
based on actual 1994 copper production and reserves as of December 31,
1994. Amortization of the amount assigned to proven and probable
leachable reserves will begin when production commences in late 1995.
Amortization of the amount assigned to mineralized material will begin
upon completion of the drilling program and reserve analyses which are
expected to be completed by year end 1995;
(b) Interest expense on additional debt incurred in connection with the
Purchase at the Company's average interest rate for revolving credit
borrowings at April 14,1995 (6.6%). A 1% increase in interest rates
would reduce earnings per share by $0.02;
(c) Income tax benefit from amortization and additional interest expense at
applicable rates net of U.S. deferred income tax on additional
undistributed earnings of SPCC; and
(d) 1994 SPCC earnings attributable to Asarco's additional interest as a
result of the Purchase (e) To eliminate intercompany transactions and
consolidate the Company's 63% interest in SPCC.
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Unaudited Proforma Consolidated Balance Sheet
At December 31, 1994
(dollars in millions)
<TABLE>
<CAPTION>
Historical
Pro Forma
Adjtmnts (a) Pro Forma
Elmntns Consldtd
Asarco SPCC (b)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 18.3 $ 93.3 $ - $ - $ 111.6
Marketable Securities 43.0 43.0
Accounts receivable, net of allowance
for doubtful accounts of $6.2
383.7 98.8 - (3.2) 479.3
Inventories 299.2 115.2 - - 414.4
Other Assets 46.1 14.7 - - 60.8
Total Current Assets 747.3 365.0 - (3.2) 1,109.1
Investments
Cost Method 751.9 - - - 751.9
Equity Method 391.5 - 116.4 (448.5) 59.4
Total Investments 1,143.4 - 116.4 (448.5) 811.3
Property 2,509.1 1,350.4 - 48.3 3,907.8
Less: Accumulated depreciation and
depletion (1,203.6) (827.5) - - (2,031.1)
Net property 1,305.5 522.9 - 48.3 1,876.7
Intangible and other assets, net
94.8 80.6 - - 175.4
Total assets $3,291.0 968.5 116.4 (403.4) 3,972.5
LIABILITIES
Current Liabilities:
Bank Loans 5.1 - - - 5.1
Current portion of long-term debt
13.3 3.9 - - 17.2
Accounts payable 297.0 65.9 - (3.2) 359.7
Salaries and wages 20.2 8.1 - - 28.3
Taxes on income 43.2 18.4 - - 61.6
Interest - 2.4 - - 2.4
Reserve for closed plant and
environmental matters 55.9 - - - 55.9
Other current liabilities 30.8 20.1 - - 50.9
Total current liabilities 465.5 118.8 - (3.2) 581.1
Long term debt 914.6 114.1 116.4 - 1,145.1
Deferred income taxes 156.5 6.2 - - 162.7
Reserve for closed plant and
environmental matters 66.4 - - - 66.4
Postretirement benefit obligation
95.2 - - - 95.2
Minority Interest 2.4 79.8 - 234.6 316.8
Accrued severence pay - 14.8 - - 14.8
Other liabilities and reserves 73.0 - - - 73.0
Total liabilities 1,773.6 333.7 116.4 231.4 2,455.1
PREFERRED STOCKHOLDERS' EQUITY
Authorized - 10,000,000 shares without
par value; none issued
COMMON STOCKHOLDERS' EQUITY 680.0 .7 - (.7) 680.0
Authorized - 80,000,000 common shares without par value:
Issued shares: 45,039,878
Additional paid-in capital - 122.5 - (122.5) -
Unrealized gain on securities reported
at fair value, net of tax
91.6 - - - 91.6
Retained earnings 853.2 571.6 - (571.6) 853.2
Treasury stock (at cost) - common shares
- 2,937,788 (107.4) (60.0) - 60.0 (107.4)
Total common shareholders' equity
1,517.4 634.8 - (634.8) 1,517.4
Total liabilities, preferred and
common stockholders' equity
$3,291.0 $968.5 $116.4 $(403.4) $3,972.5
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Notes to Unaudited Pro Forma Consolidated Balance Sheet:
(a) To record the acquisition of an additional 10.7% interest in SPCC at a
cost of $116.4 million and the associated increase in debt.
(b) To consolidate the Company's 63% interest in SPCC and allocate the
excess of the purchase price over the net book value of SPCC
attributable to the shares acquired ($48.3 million) to property.
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASARCO Incorporated
By: s/ K.R. Morano
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K.R. Morano
Vice President and
Chief Financial Officer
Date: April 21, 1995
