SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
1996 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, 1996 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, 1997, there were of record 42,894,878 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 $1.3 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 30, 1997. Part IV: Exhibit index is on pages C1 through C4.
<PAGE>
ASARCO Incorporated
FORM 10-K/A
December 31, 1996
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
FORM 10-K/A i
ITEM 14 ii
EXHIBIT INDEX C1-C4
FORM 11-K C22-C34
</TABLE>
<PAGE>
ASARCO Incorporated and Subsidiaries
FORM 10-K/A
December 31, 1996
The undersigned registrant hereby amends the 1996 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 27, 1997
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>
C1
<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,
1996
(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)
(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)
</TABLE>
C2
<PAGE>
ASARCO Incorporated
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Indexed
No. Description on Page
<S> <C> <C>
(f) Indenture Agreement dated as of October 1, 1994 between the
Company and Chemical Bank, as Trustee covering the issuance
of debt securities registered by the Company in October
1994, not to exceed $300 million (Filed as an Exhibit to
the Company's registration statement on Form S-3 filed on
October 12, 1994, and incorporated herein by reference)
10. Material Contracts
(a) Stock Option Plan as last amended on November 30, 1994
(Filed as an Exhibit to the Company's 1994 Annual Report on
Form 10-K and incorporated herein by reference)
(b) Form of Amended Employment Agreement dated February 26,
1997, between the Company and currently 12 of its executive
officers, including Messrs. R. de J. Osborne, F.R.
McAllister, K.R. Morano, R.M. Novotny and R.J. Muth C11-C20
(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 (Filed as an
Exhibit to the Company's 1994 Annual Report on Form 10-K
and incorporated herein by reference)
(e) Retirement Plan for Non-Employee Directors, as amended
through January 25, 1995. Effective December 31, 1995, the
Company terminated the plan for current and future
directors. (Filed as an Exhibit to the Company's 1994
Annual Report on Form 10-K and incorporated herein by
reference)
(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 29, 1995
(Filed as an Exhibit to the Company's 1994 Annual Report on
Form 10-K and incorporated herein by reference)
(h) Director's Deferred Payment Plan, effective October 25,
1995 (Filed as an Exhibit to the Company's 1995 Annual
Report on Form 10-K and incorporated herein by reference)
(i) Incentive Compensation Plan for Senior Officers, effective
January 1, 1996 (Filed as an Exhibit B to the Company's
1996 Proxy Statement filed on March 12, 1996 and
incorporated herein by reference)
</TABLE>
C3
<PAGE>
ASARCO Incorporated
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Indexed
No. Description on Page
<S> <C> <C>
(j) 1996 Stock Incentive Plan, effective April 24, 1996 (Filed
as an Exhibit to the Company's Registration Statement on
Form S-8 filed on December 17, 1996, and incorporated
herein by reference)
(k) Compensation Deferral Plan, effective December 1, 1996
(Filed as an Exhibit to the Company's Registration
Statement on Form S-8 filed on November 26, 1996, and
incorporated herein by reference)
11. Statement re Computation of Earnings Per Share C5
12. Statement re Computation of Ratios C6
21. Subsidiaries of the Registrant C7-C9
23. Consent of Independent Accountants is included on page
A68 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. C22-C34
</TABLE>
Copies of exhibits may be acquired upon written request to the Treasurer and the
payment of processing and mailing costs.
C4
<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, 1996
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, 1996 and 1995
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
Report of Independent Accountants C22
Statement of Net Assets Available for
Benefits, with Fund Information at December 31, 1996 C23
Statement of Net Assets Available for
Benefits, with Fund Information at December 31, 1995 C24
Statement of Changes in Net Assets Available
for Benefits, with Fund Information for the year ended
December 31, 1996 C25
Notes to Financial Statements C26-C31
Supplemental Schedules:
Form 5500 Item 27a*-Schedule of Assets Held
for Investment Purposes at December 31, 1996 C32
Form 5500 Line 27d*-Schedule of Reportable
Transactions for the year ended December 31, 1996 C33
Consent of Independent Accountants C34
</TABLE>
* Refers to item number in Form 5500 ("Annual Return/Report of Employee
Benefit Plan") filed with the Department of Labor for the plan year
ended December 31, 1996.
C21
<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, 1996 and 1995, and the related statement of changes
in net assets available for benefits for the year ended December 31, 1996. 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, 1996 and 1995 and the changes in net assets available for benefits
for the year ended December 31, 1996 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 C21, 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 16, 1997
C22
<PAGE>
Savings Plan of ASARCO Incorporated and Participating Subsidiaries
Statement of Net Assets Available for Benefits, with Fund Information
at December 31, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Non-
Participant
Participant Directed Directed
------------------------------------------------------------------------------------------------ ------
Vanguard Vanguard
Vanguard Money Short Vanguard
Index Asarco Market Term U.S. Index Asarco
Trust Common Reserves Treasury Vanguard Extended Vanguard Vanguard Total Common
500 Stock Prime Bond Wellington Market U.S.Growth Windsor II Bond Loan Stock
Portfolio Fund Portfolio Portfolio Fund Fund Fund Fund Market Fund Fund Total
------ ---- -------- -------- ------ ---- ---- ----- ---- ---- ----- -----
ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments,
at fair
value:
ASARCO Common
Stock (cost
$23,547) $3,513 $18,506 $22,019
Shares of
registered
investment
companies:
Vanguard Money
Market
Reserves
Prime
Portfolio
(cost
approximates
market) 17 $18,728 90 18,835
Vanguard Index
Trust 500
Portfolio
(cost $19,143) $29,014 29,014
Vanguard Short
Term U.S.
Treasury
Bond
Portfolio
(cost
$7,819) $7,812 7,812
Vanguard
Wellington
Fund (cost
$8,337) $9,855 9,855
Vanguard Index
Extended
Market Fund
(cost $2,568) $3,077 3,077
Vanguard U.S.
Growth Fund
(cost
$3,187) $3,964 3,964
Vanguard
Windsor II
Fund (cost
$7,588) $9,329 9,329
Total Bond
Market
(cost $712) $716 716
Loans to
Participants $4,374 4,374
------- ------ ------ ------ ------ ------ ------ ------ ----- ------ ------- -------
Total 29,014 3,530 18,728 7,812 9,855 3,077 3,964 9,329 716 4,374 18,596 108,995
Investments
Contributions
Receivable:
Participants 164 21 71 46 89 34 43 90 4 562
Company 197 197
Interest 29 29
Receivable
Loans
Recievable 53 7 25 16 21 8 8 25 1 (164)
------- ------ ------- ------ ------ ------ ------ ------ ----- ------ ------ --------
TOTAL 29,231 3,558 18,824 7,874 9,965 3,119 4,015 9,444 721 4,239 18,793 109,783
------- ------ ------- ------ ------ ------ ------ ------ ----- ------- ------- --------
ASSETS
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS $29,231 $3,558 $18,824 $7,874 $9,965 $3,119 $4,015 $9,444 $721 $4,239 $18,793 $109,783
======= ====== ======= ====== ====== ====== ====== ====== ==== ====== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C23
<PAGE>
Savings Plan of ASARCO Incorporated and Participating Subsidiaries
Statement of Net Assets Available for Benefits, with Fund Information
at December 31, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Non-
Participant
Participant Directed Directed
------------------------------------------------------------------------------------------------ ------
Vanguard Vanguard
Vanguard Money Short Vanguard
Index Asarco Market Term U.S. Index Asarco
Trust Common Reserves Treasury Vanguard Extended Vanguard Vanguard Total Common
500 Stock Prime Bond Wellington Market U.S.Growth Windsor II Bond Loan Stock
Portfolio Fund Portfolio Portfolio Fund Fund Fund Fund Market Fund Fund Total
------ ---- -------- -------- ------ ---- ---- ----- ---- ---- ----- -----
ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments,
at fair
value:
ASARCO Common
Stock (cost
$19,784) $2,494 $21,838 $24,332
Shares of
registered
investment
companies:
Vanguard Money
Market
Reserves
Prime
Portfolio
(cost
approximates
market) 15 $19,078 129 19,222
Vanguard Index
Trust 500
Portfolio
(cost
$17,258) $23,328 23,328
Vanguard Short
Term U.S.
Treasury
Bond
Portfolio
(cost
$8,845) $8,958 8,958
Vanguard
Wellington
Fund (cost
$7,086) $8,333 8,333
Vanguard Index
Extended
Market Fund
(cost
$1,736) $2,093 2,093
Vanguard U.S.
Growth Fund
(cost
$1,897) $2,358 2,358
Vanguard
Windsor II
Fund (cost
$5,749) $6,697 6,697
Total Bond
Market
(cost $370) $382 382
Loans to
Participants $4,303 4,303
------- ----- ------ ----- ----- ----- ------ ----- ---- ------ ------- -------
Total 23,328 2,509 19,078 8,958 8,333 2,093 2,358 6,697 382 4,303 21,967 100,006
Investments
Contributions
Receivable:
Participants 145 21 87 58 83 32 29 74 2 531
Company 187 187
Interest 26 26
Receivable
Loans
Receivable 48 6 28 18 20 6 9 21 (157) 1
------- ------ ------- ------ ------ ----- ----- ------ ------ ------ ------- -------
TOTAL 23,521 2,536 19,193 9,034 8,436 2,131 2,396 6,792 384 4,172 22,155 100,750
------- ------ ------- ------ ------ ----- ----- ------ ------ ------ ------- -------
ASSETS
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS $23,521 $2,536 $19,193 $9,034 $8,436 $2,131 $2,396 $6,792 $384 $4,172 $22,155 $100,750
======= ====== ======= ====== ====== ====== ====== ====== ======= ====== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C24
<PAGE>
Savings Plan of ASARCO Incorporated and Participating Subsidiaries
Statement of Changes in Net Assets Available for Benefits, with Fund Information
for the year ended December 31, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Vanguard Vanguard
Vanguard Money Short Vanguard
Index Asarco Market Term U.S. Index
Trust Common Reserves Treasury Vanguard Extended Vanguard Vanguard Total
500 Stock Prime Bond Wellington Market U.S.Growth Windsor II Bond Loan
Portfolio Fund Portfolio Portfolio Fund Fund Fund Fund Market Fund Total
------ ---- -------- -------- ------ ---- ---- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Net Appreciation
(Depreciation)
in the Fair
Value of
Investments $4,755 $(5,685) $(134) $605 $186 $434 $1,071 $(7) $1,225
Dividends 631 660 $938 470 782 221 288 657 37 4,684
Interest $328 328
----- ------- --- --- ----- --- --- ----- --- ---- -----
Total 5,386 (5,025) 938 336 1,387 407 722 1,728 30 328 6,237
Contributions
Participants 2,015 265 939 612 1,104 430 445 1,060 46 6,916
Company 2,407 2,407
Loan Repayments 686 103 341 270 313 95 111 323 5 (2,247)
Transfer from
other plan 271 135 119 33 156 23 61 93 3 44 938
Interfund transfers (750) 1,434 (216) (1,281) (362) 183 551 180 261
------- ----- ----- ------- ----- ---- ---- ---- --- ----- ----
TOTAL
ADDITIONS 7,608 (681) 2,121 (30) 2,598 1,138 1,890 3,384 345 (1,875) 16,498
DEDUCTIONS
Withdrawals 1,282 1,543 2,142 856 766 66 181 500 2 117 7,455
Loans 617 116 344 273 301 79 90 232 7 (2,059)
General and
Administrative (1) 4 1 2 5 (1) 10
------ ------ ----- ------ ----- ------ --- ---- ---- ------ ------
TOTAL
DEDUCTIONS 1,898 1,659 2,490 1,130 1,069 150 271 732 8 (1,942) 7,465
------ ------ ------ ----- ----- ---- ---- ---- ---- ------- ------
Net Increase
(Decrease) 5,710 (2,340) (369) (1,160) 1,529 988 1,619 2,652 337 67 9,033
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
BEGINNING OF
YEAR 23,521 24,691 19,193 9,034 8,436 2,131 2,396 6,792 384 4,172 100,750
------ ------ ------- ----- ----- ----- ----- ----- ----- ----- --------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS,
END OF YEAR $29,231 $22,351 $18,824 $7,874 $9,965 $3,119 $4,015 $9,444 $721 $4,239 $109,783
======= ======= ======= ====== ====== ====== ====== ====== ====== ====== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C25
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements
1. Plan Description
The following description of the Savings Plan of Asarco Incorporated
and Participating Subsidiaries (the "Plan") provides only general
information. Reference should be made to the Plan document for a
complete description of the Plan and Plan amendments, including
eligibility requirements and vesting provisions.
General:
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 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 an
ownership interest in the Company.
Contributions:
Employees are eligible for participation in the Plan after completing
six months of service. Each eligible employee wishing to participate in
the Plan must elect to authorize pre-tax and/or post-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 increase, decrease or suspend the pre-tax or
post-tax contributions on the first day of any calendar quarter. The
Internal Revenue Code of 1986 (the "Code"), as amended, limited the
maximum amount an employee may contribute on a pre-tax basis to $9,500
in 1996 and $9,240 in 1995.
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 Plan's trustee, Vanguard Fiduciary Trust Company
("Vanguard"), is required to purchase ASARCO Common Stock. Company
contributions for the year ended December 31, 1996 consisted of the
following:
<TABLE>
<CAPTION>
<S> <C>
Cash $ 162
Asarco Common Stock 2,407,309
----------
$2,407,471
</TABLE>
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 in both their contributions and the
Company's matching contribution upon participation in the Plan.
C26
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
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 lesser of 50% of the
total value of the participant's accounts, or $50,000 reduced by the
outstanding balance of any plan loans to such participant.
A participant's loan is repayable within 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 withholdings from the
participant's earnings. A participant may pre-pay a loan at any time
without penalty.
2. Significant Plan Amendments
On June 30, 1995, the Plan was amended effective July 1, 1995 to permit
employees to increase, decrease or suspend pre-tax or post-tax
contributions as of the first day of any calendar quarter; to include a
change in the definition of Basic Earnings to recognize pre-tax
contributions made to the Company's Ben-A-Flex program; and to change the
definition of Eligible Employee to exclude employees receiving benefits
under the Company's Long-Term Disability Plan.
3. Summary of Significant Accounting Policies
Valuation of Investments:
Shares of registered investment companies and the Asarco Common Stock
Fund are valued at quoted market prices which represent the net asset
value of shares held by the Plan at year-end. Basis of Accounting:
The financial statements of the Plan are prepared under the accrual
method of accounting.
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.
Net (depreciation) appreciation in the fair value of the Plan's
investments, as shown in the statement of changes in net assets, consists
of the realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
C27
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
Contributions:
The Company's matching contributions are measured by reference to the
participant 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.
Withdrawals:
Withdrawals are recorded when paid.
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. Taxes,
excluding transfer taxes on shares of Asarco Common Stock distributed to
participants or their beneficiaries, and investment fees related to
Vanguard Funds are paid from the net assets of such funds.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make significant
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
4. Investment Funds
Vanguard is the investment manager and participant recordkeeper for all
investment funds of the Plan. Vanguard is also the trustee of all of the
funds.
Upon enrollment in the Plan throughout 1996, participants directed their
elected contributions to be invested in one or more of the following
funds in multiples of 5%:
o Vanguard Index Trust 500 Portfolio - A fund invested in all of the
stocks included in the Standard & Poor's 500 Composite Index (the
"Index") in approximately the same proportions as they are represented
in the Index. At December 31, 1996 and 1995, the number of Plan
participants who held an interest in this fund was 1,382 and 1,272
respectively.
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. At December 31, 1996 and 1995, the number of Plan
participants who held an interest in this fund was 1,137 and 1,222,
respectively.
C28
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
o Vanguard Short Term U.S. Treasury Bond Portfolio - A fund invested
primarily in short-term U.S. Treasury securities with an average
maturity of two to three years. At December 31, 1996 and 1995, the
number of Plan participants who held an interest in this fund was 615
and 680, respectively.
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. At December 31, 1996 and 1995, the number of Plan participants
who held an interest in this fund was 882 and 827, respectively.
o Vanguard Index Extended Market Fund - 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. At December 31, 1996 and 1995, the number of Plan
participants who held an interest in this fund was 451 and 403,
respectively.
o Vanguard U.S. Growth Fund - A fund invested primarily in a diversified
portfolio of common stocks with above-average growth potential. At
December 31, 1996 and 1995, the number of Plan participants who held
an interest in this fund was 481 and 362, respectively.
o Vanguard Windsor II Fund - A fund invested in common stocks to provide
capital appreciation and dividend income. At December 31, 1996 and
1995, the number of Plan participants who held an interest in this
fund was 946 and 800, respectively.
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. At December 31, 1996 and 1995,
the number of Plan participants who held an interest in this fund was
2,091 and 2,001, respectively.
o Total Bond Market - A fund that holds a combination of securities
which, taken together, are expected to perform similarly to the Total
Bond Market Portfolio of the Lehman Brothers Aggregate Bond Index. At
December 31, 1996, 74 Plan participants held an interest in this fund.
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 1). These loans are recorded as
receivables of the Plan.
C29
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
Risks and Uncertainties:
The Plan provides for investment options in various mutual funds. Investment
securities are exposed to various risks, such as interest rate, market and
credit. Due to the level of risk associated with certain investment securities
and the level of uncertainty related to changes in the value of investment
securities, it is at least reasonably possible that changes in risks in the near
term would materially affect participant's account balances and the amounts
reported in the statement of net assets available for plan benefits and the
statement of changes in the assets available for plan benefits. 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 interest in each fund of the Plan is 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:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
----------------- -----------------
Net Asset Net Asset
Number of Value Number of Value
Units Per Unit Units Per Unit
<S> <C> <C> <C> <C>
Asarco Common Stock Fund* 2,381,684 $9.29 2,048,210 $11.95
Vanguard Index Trust
500 Portfolio* 419,520 $69.16 405,004 $57.60
Vanguard Money Market Reserves Prime
Portfolio* 18,727,988 $1.00 19,078,354 $1.00
Vanguard Short Term U.S. Treasury Bond
Portfolio* 768,103 $10.17 868,060 $10.32
Vanguard Wellington Fund* 376,883 $26.14 341,107 $24.43
Vanguard Windsor II Fund* 391,461 $23.83 324,145 $20.66
Vanguard U.S. Growth Fund 166,956 $23.74 115,866 $20.35
Vanguard Index Extended
Market Fund 117,469 $26.19 86,948 $24.07
Total Bond Market 72,760 $9.84 37,632 $10.15
</TABLE>
*Represents 5% or more of net assets available for plan benefits.
C30
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
5. Net Appreciation (Depreciation) in Fair Value of Plan Investments
The net appreciation (depreciation) of the fair value of the Plan's
investments is summarized as follows:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Vanguard Index Trust
500 Portfolio $4,755,328 $5,703,219
ASARCO Common Stock Fund (5,684,656) 2,850,974
Vanguard Short Term U.S.
Treasury Bond Portfolio (133,890) 460,436
Vanguard Wellington Fund 605,107 1,579,545
Vanguard Windsor II Fund 1,071,258 1,318,851
Vanguard U.S. Growth Fund 433,725 502,178
Vanguard Index Extended Market Fund 185,663 417,047
Total Bond Market (6,978) 10,907
----------- -----------
Total $1,225,557 $12,843,157
========== ===========
</TABLE>
6. Tax Status
The Plan, as amended through July 27, 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. The Plan has been amended since receiving the determination
letter. However, the Plan administrator and the Plan's tax counsel
believe that the Plan is designed and is currently being operated in
compliance with the applicable requirements of the Code.
7. Termination Priorities
Although it has not expressed any intent to do so, 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 all amounts credited to
their account at the date of such termination, partial termination, or
complete discontinuance of matching Company contributions.
C31
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Form 5500 Item 27a
Schedule of Assets Held for Investment Purposes
at December 31, 1996
<TABLE>
<CAPTION>
Cost or Market
Identity of Issue or Borrower Book Value Value
<S> <C> <C>
Vanguard Index Trust 500 Portfolio $19,142,523 $29,014,032
Asarco Common Stock Fund 23,547,160 22,125,848
Vanguard Short Term U.S. Treasury Bond Portfolio 7,819,278 7,811,607
Vanguard Money Market Reserves Prime Portfolio 18,727,988 18,727,988
Vanguard Wellington Fund 8,336,848 9,855,486
Vanguard Index Extended Market Fund 2,568,105 3,076,515
Vanguard U.S. Growth Fund 3,187,238 3,963,530
Vanguard Windsor II Fund 7,587,552 9,328,509
Total Bond Market 712,173 715,960
Loan Fund
Participants' Loans (interest rates range from 8.25% to 8.5%)
4,374,019 4,374,019
----------- ----------
TOTAL INVESTMENTS $96,002,884 $108,993,494
=========== ============
</TABLE>
C32
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Form 5500 Line 27d
Schedule of Reportable Transactions
for the year ended December 31, 1996
<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>
Asarco Common Stock Fund 142 172 $7,521,338 $4,186,945 $3,902,180 $284,765
Vanguard Index Trust
500 Portfolio 122 177 5,061,036 4,130,592 3,176,995 953,597
Vanguard Money Market
Reserves Prime Portfolio 188 205 6,942,695 7,293,062 7,293,062 -
Vanguard Short Term U.S.
Treasury Bond Portfolio 135 164 2,358,827 3,371,717 3,384,749 (13,032)
Vanguard Wellington Fund 81 157 3,249,729 2,332,611 1,998,510 334,101
Vanguard Windsor II 110 150 3,439,504 1,879,104 1,600,870 278,234
</TABLE>
C33
<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, 33-55993 and 333-02359) and on Form S-8 (File Nos. 2-67732,
2-83782 and 33-34606, 333-16875 and 333-18083) of our report dated June 16, 1997
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, 1996 and 1995, the Supplemental Schedules as of December 31, 1996
and for the year then ended and the Statement of Changes in Net Assets Available
for Benefits for the year ended December 31, 1996, 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 1996 Annual Report on Form 10-K of ASARCO
Incorporated.
COOPERS & LYBRAND L.L.P.
New York, New York
June 16, 1997
C34
