SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
1997 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, 1997 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 27, 1998, there were of record 39,642,592 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 $0.9 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 29, 1998.
Part IV: Exhibit index is on pages C1 through C4.
<PAGE>
ASARCO Incorporated
FORM 10-K/A
December 31, 1997
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
FORM 10-K/A i
ITEM 14 ii
EXHIBIT INDEX C1-C4
FORM 11-K C49-C63
</TABLE>
<PAGE>
ASARCO Incorporated and Subsidiaries
FORM 10-K/A
December 31, 1997
The undersigned registrant hereby amends the 1997 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.
The Exhibit Index has been amended and is refiled herewith to include as
Exhibit 99 the report in 11-K relating to the Savings Plan for Salaried
Employees of ASARCO Incorporated and Participating Subsidiaries, which is filed
herewith.
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
Executive Vice President and
Chief Financial Officer
Date: June 23, 1998
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 canceled (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
canceled (Filed as an Exhibit to the Company's 1987 Annual
Report on Form 10-K and incorporated herein by reference)
</TABLE>
C1
<PAGE>
ASARCOIncorporated
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Indexed
No. on Page
<S> <C> <C>
(i) Statement of Cancellation filed December 18, 1987 whereby
1,250,000 shares of Series B Cumulative Convertible
Preferred Stock were canceled (Filed as an Exhibit to the
Company's 1987 Annual Report on Form 10-K and incorporated
herein by reference)
(j) Statement of Cancellation filed March 3, 1988 whereby 27,000
shares of Series A Cumulative Preferred Stock were canceled
(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, 1997
(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)
</TABLE>
C2
<PAGE>
ASARCO Incorporated
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Indexed
No. Description on Page
<S> <C> <C>
(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) Form of Rights Agreement dated as of January 28, 1998,
between the Company and The Bank of New York, as Rights
Agent, defining the rights of shareholders' under a January
1998 Stockholders' Rights plan and dividend declaration
(Filed as an Exhibit to the Company's Form 8-K filed on
March 2, 1998, and incorporated herein by reference)
(f) 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)
(g) 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)
Material Contracts
10. (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 A.B. Kinsolving
(Filed as an Exhibit to the Company's 1996 Annual Report on
Form 10-K and incorporated herein by reference)
(c) Deferred Fee Plan for Directors, as amended through January
28 1998 C11-C15
(d) Supplemental Pension Plan for Designated Mid-Career
Officers, as amended through January 28, 1998 C16-C24
(e) Retirement Plan for Non-Employee Directors, as amended
through January 28, 1998. Effective December 31, 1995, the
Company terminated the plan for current and future
directors. C25-C30
</TABLE>
C3
<PAGE>
ASARCO Incorporated
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Indexed
No. Description on Page
<S> <C> <C>
(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 1995 Annual Report on
Form 10-K and incorporated herein by reference)
(h) Director's Deferred Payment Plan, as amended through January
28, 1998 C31-C37
(i) Incentive Compensation Plan for Senior Officers, effective
January 1, 1996 (Filed as an Exhibit B to the Company's 1997
Proxy Statement filed on March 12, 1996 and incorporated
herein by reference)
(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, as amended through January 28,
1998 C38-C48
11. Statement re Computation of Earnings Per Share C5
12. Statement re Computation of Ratios C6
21. Subsidiaries of the Registrant C7-C10
23. Consent of Independent Accountants is included on page
A75 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. C50-C63
</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, 1997
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, 1997 and 1996
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
Report of Independent Accountants C50
Statement of Net Assets Available for
Benefits, with Fund Information at December 31, 1997 C51
Statement of Net Assets Available for
Benefits, with Fund Information at December 31, 1996 C52
Statement of Changes in Net Assets Available
for Benefits, with Fund Information for the year ended
December 31, 1997 C53
Notes to Financial Statements C54-C60
Supplemental Schedules:
Form 5500 Item 27a*-Schedule of Assets Held
for Investment Purposes at December 31, 1997 C61
Form 5500 Line 27d*-Schedule of Reportable
Transactions for the year ended December 31, 1997 C62
Consent of Independent Accountants C63
</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, 1997.
C49
<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, 1997 and 1996, and the related statement of changes
in net assets available for benefits for the year ended December 31, 1997. These
financial statements are the responsibility of the Plan's management. 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, 1997 and 1996 and the changes in net assets available for benefits
for the year ended December 31, 1997 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 the preceding page, 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 are the responsibility of the Plan's management. 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 22, 1998
C50
<PAGE>
Savings Plan of ASARCO Incorporated and Participating Subsidiaries
Statement of Net Assets Available for Benefits, with Fund Information
at December 31, 1997
(dollars in thousands)
<TABLE>
<CAPTION>
Non-
Participant
Participant Directed Directed
Vanguard
Vanguard Short
Index Vanguard Term
Trust Asarco Mny Mkt U.S. Vanguard Vanguard Vanguard Vanguard Asarco
500 Common Rsrv Treasury Vanguard Ind Ext U.S. Windsor Bond Common
Fund Stock Prm Bond Wellington Market Growth II Index Loan Stock
Portfolio Fund Portfolio Portfolio Fund Fund Fund Fund Fund Fund Fund Total
---------- ---- --------- --------- ----- ------ ----- ------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments,
at fair
value:
Asarco
Common
Stock
(cost
$25,211) $3,260 $17,763 $21,023
Registered
investment
companies:
Vanguard
Money Market
Reserves Prime
Portfolio
(cost
approximates
market) 29 $17,869 158 18,056
Vanguard
Index Trust
500
Portfolio
(cost
$22,581) $39,654 39,654
Vanguard
Short Term
U.S.
Treasury
Bond
Portfolio
(cost
$7,452) $7,476 7,476
Vanguard
Wellington
Fund (cost
$9,952) $12,282 12,282
Vanguard
Index
Extended
Market Fund
(cost
$3,113) $4,026 4,026
Vanguard
U.S. Growth
Fund (cost
$3,971) $5,399 5,399
Vanguard
Windsor II
Fund (cost
$10,560) $13,870 13,870
Vanguard
Bond Index
Fund (cost
$1,661) $1,694 1,694
Loans to
Participants $4,765 4,765
------ ----- ------ ----- ------- ----- ------ ------ ------ ----- ------ ------
Total 39,654 3,289 17,869 7,476 12,282 4,026 5,399 13,870 1,694 4,765 17,921 128,245
Investments
Contributions
Receivable:
Participants 167 22 69 39 90 35 48 101 5 576
Company 199 199
Interest
receivable 31 31
Loans
receivable 52 8 28 16 29 8 16 33 1 (191)
------- ------ ------- ------ ------ ------ ------ ------ ------ ------- ------ ------
NET ASSETS
AVAILABLE
FOR PLAN
BENEFITS $39,873 $3,319 $17,966 $7,531 $12,401 $4,069 $5,463 $14,004 $1,700 $4,605 $18,120 $129,051
======= ======== ======= ====== ======= ====== ====== ======= ====== ====== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C51
<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 US Index Vanguard Vanguard Vanguard Asarco
Trust Common Reserves Treas. Vanguard Extended U.S. Windsor Bond Common
500 Stock Prime Bond Wellinton Market Growth II Index Loan Stock
Portfolio Fund Portfolio Port. Fund Fund Fund Fund Fund Fund Fund Total
--------- ----- --------- --------- ---- ----- ---- ---- ---- ---- ---- -----
<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
Vanguard Bond
Index Fund
(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 receivable 53 7 25 16 21 8 8 25 1 (164)
-------- ------ ------- ------- ------ ------ ------ ----- ---- ------- ----- -----
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.
C52
<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, 1997
(dollars in thousands)
<TABLE>
<CAPTION>
Vanguard
Vanguard Short
Vanguard Money Term Vanguard
Index Asarco Market U.S. Index Vanguard Vanguard Vanguard
Trust Common Reserves Treasury Vanguard Extended U.S. Windsor Bond
500 Stock Prime Bond Wellington Market Growth II Index Loan
Portfolio Fund Portfolio Portfolio Fund Fund Fund Fund Fund Fund Total
ADDITIONS: --------- ---- --------- --------- ----- ---- ---- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Income
Net
appreciation
(depreciation)
in the fair
value of
investments $8,914 $(2,202) $29 $1,294 $528 $863 $1,976 $32 $11,434
Dividends 826 708 $975 437 1,048 275 207 1,268 64 5,808
Interest $354 354
----- -------- ------ ----- ------ ----- ---- ----- ---- ----- -------
Total 9,740 (1,494) 975 466 2,342 803 1,070 3,244 96 354 17,596
Contributions
Participant 2,249 244 863 514 1,225 500 633 1,243 84 7,555
Company 2,456 2,456
Loan Repayments 69 103 365 206 315 104 162 380 9 (2,341)
Transfers from 119 106 49 18 13 32 24 44 40 445
other plan
Interfund
transfers 274 (297) (369) (390) (125) (217) (123) 447 800
------ ----- ----- ---- ----- ----- ----- ----- --- ------- ------
TOTAL 13,079 1,118 1,883 814 3,770 1,222 1,766 5,358 989 (1,947) 28,052
------ ----- ----- ---- ----- ----- ----- ----- --- ------- ------
ADDITIONS
DEDUCTIONS:
Benefit 1,785 1,941 2,191 914 1,036 185 173 453 7 88 8,773
payments
General and 11
administrative 1 4 1 1 4
Loans 651 89 546 242 297 83 145 345 3 (2,401)
------ ------ ----- ------ ------ ---- ---- ---- --- ------- -------
TOTAL
DEDUCTIONS 2,437 2,030 2,741 1,157 1,334 272 318 798 10 (2,313) 8,784
------ ------ ------ ----- ------ ---- ---- ---- --- ------ ------
Net increase
(decrease) 10,642 (912) (858) (343) 2,436 950 1,448 4,560 979 366 19,268
NET ASSETS
AVAILABLE
FOR PLAN
BENEFITS,
BEGINNING
OF YEAR 29,231 22,351 18,824 7,874 9,965 3,119 4,015 9,444 721 4,239 109,783
------ ------ ------ ----- ----- ----- ----- ----- --- ------ -------
NET ASSETS
AVAILABLE
FOR PLAN
BENEFITS,
END OF YEAR $39,873 $21,439 $17,966 $7,531 $12,401 $4,069 $5,463 $14,004 $1,700 $4,605 $129,051
======= ======= ======= ====== ======= ====== ===== ======= ======== ====== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C53
<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, which has been amended thereafter. Contributions
commenced in July 1980. The Plan is a defined contribution plan and is
administered by the Company's 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 1997 and 1996.
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, 1997 consisted of the
following:
<TABLE>
<CAPTION>
<S> <C>
Cash $2,242,232
Asarco Common Stock 213,359
$2,455,591
</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.
C54
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
Participants are 100% vested in both their contributions and the
Company's matching contribution and earnings thereon upon participation
in the Plan.
Benefit Payments:
Upon retirement or termination of employment (other than by death)
prior to age 65, a participant must consent in writing to receive a
distribution of account balances. If participants do not consent in
writing, payment of a distribution is made upon the earlier of death or
attainment of age 65. Participants who retire may elect to receive
payments in annual cash installments over a period of up to 10 years.
Participants receiving lump sum distributions may choose to receive
cash equal to the value of their interest in all accounts or full
shares of Asarco Common Stock equal to all or part of their interest in
the Asarco Common Stock Fund plus cash equal to the remaining value of
their interest in all Accounts. In the event of the death of a
participant, his or her entire interest in the Plan will be paid to
their designated beneficiary in either a single lump sum or annual cash
installments not to exceed 10 years.
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 November 25, 1997, the Plan was amended, effective January 1, 1998,
to change the eligibility waiting period from six months of service to
the first day of any month following completion of 30 days of service;
to permit employees to change contribution rates on a monthly, rather
than quarterly, basis; to allow employees who have reached age 64 to
transfer Company matching contributions from the Asarco Common Stock
fund to other investment options under the Plan; to add the Vanguard
International Growth Fund as an investment option; to permit express
loans and automated withdrawals; and to increase, in accordance with
the Taxpayer Relief Act of 1997, the account balance threshold for
automatic cash-outs of terminating employees from $3,500 to $5,000. In
addition, on July 30, 1997, the Plan was amended to recognize service
by new hires with Southern Peru Copper Corporation for purposes of
satisfying eligibility requirements, and to make other technical
changes to comply with changes in law.
C55
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
3. Summary of Significant Accounting Policies
Valuation of Investments:
The Plan's investments are stated at fair value. Units of registered
investment companies are valued at quoted market prices which represent
the net asset value of shares held by the Plan at year-end. The Asarco
Common Stock Fund is valued at its year-end unit closing price (comprised
of year-end market price plus uninvested cash position). Participant
loans are valued at cost which approximates fair value.
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. Interest income is accrued when earned. Dividend income is
recorded on the ex-dividend date. Capital gain distributions are included
in dividend income.
Net appreciation (depreciation) in the fair value of the Plan's
investments, as shown in the Statement of Changes in Net Assets Available
for Benefits, consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
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.
Benefit Payments:
Benefit payments 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.
C56
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
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.
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
participants' account balances and the amounts reported in the Statement
of Net Assets Available for Benefits and the Statement of Changes in Net
Assets Available for Benefits. Participants are advised to read a
Vanguard prospectus or the Plan's summary plan description before
investing in any fund.
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 1997, 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, 1997 and
1996, the number of Plan participants who held an interest in
this fund was 1,413 and 1,382, 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, 1997 and 1996, the number of Plan participants who held an
interest in this fund was 1,055 and 1,137, respectively.
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,
1997 and 1996, the number of Plan participants who held an
interest in this fund was 540 and 615, 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, 1997 and 1996,
the number of Plan participants who held an interest in this
fund was 903 and 882, respectively.
C57
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
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, 1997 and 1996, the number of Plan
participants who held an interest in this fund was 470 and
451, 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, 1997 and 1996, the number of
Plan participants who held an interest in this fund was 555
and 481, respectively.
o Vanguard Windsor II Fund - A fund invested in common stocks to
provide capital appreciation and dividend income. At December
31, 1997 and 1996, the number of Plan participants who held an
interest in this fund was 1,014 and 946, 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, 1997 and 1996, the number of Plan participants who held an
interest in this fund was 2,105 and 2,091, respectively.
o Vanguard Bond Index Fund - A fund that holds a combination of
securities which, taken together, are expected to perform
similarly to the Lehman Brothers Aggregate Bond Index. At
December 31, 1997 and 1996, the number of Plan participants
who held an interest in this fund was 104 and 74,
respectively.
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.
C58
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
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 in each fund:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
----------------- -----------------
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* 2,530,926 $8.38 2,381,684 $9.29
Vanguard Index Trust
500 Portfolio* 440,254 $90.07 419,520 $69.16
Vanguard Money Market Reserves Prime
Portfolio* 17,869,282 $1.00 18,727,988 $1.00
Vanguard Short Term U.S. Treasury Bond
Portfolio* 732,259 $10.21 768,103 $10.17
Vanguard Wellington Fund* 417,054 $29.45 376,883 $26.14
Vanguard Windsor II Fund* 484,616 $28.62 391,461 $23.83
Vanguard U.S. Growth Fund 188,118 $28.70 166,956 $23.74
Vanguard Index Extended
Market Fund 130,939 $30.75 117,469 $26.19
Vanguard Bond Index Fund 167,917 $10.09 72,760 $9.84
</TABLE>
*Represents 5% or more of net assets available for plan benefits as of
December 31, 1997 and 1996.
C59
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Notes to Financial Statements - Continued
5. 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's management believes that the Plan is designed
and is currently being operated in compliance with the applicable
requirements of the Code.
6. 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.
7. Related Party Transactions
The Plan invests in shares of mutual funds managed by an affiliate of
Vanguard. Vanguard acts as trustee for only those investments as defined
by the Plan. Transactions in such investments qualify as
party-in-interest transactions which are exempt from the prohibited
transaction rules.
C60
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Form 5500 Item 27a
Schedule of Assets Held for Investment Purposes
at December 31, 1997
<TABLE>
<CAPTION>
Cost or Market
Identity of Issue or Borrower Book Value Value
<S> <C> <C>
Vanguard Index Trust 500 Portfolio $22,581,381 $39,653,722
Asarco Common Stock Fund 25,210,969 21,209,158
Vanguard Money Market Reserves Prime Portfolio 17,869,282 17,869,282
Vanguard Short Term U.S. Treasury Bond Portfolio 7,452,128 7,476,363
Vanguard Wellington Fund 9,951,629 12,282,228
Vanguard Index Extended Market Fund 3,112,679 4,026,362
Vanguard U.S. Growth Fund 3,970,822 5,398,987
Vanguard Windsor II Fund 10,560,398 13,869,714
Vanguard Bond Index Fund 1,660,650 1,694,280
Loan Fund
Participants' Loans (interest rates range from 6% to 9%) 4,764,953 4,764,953
TOTAL INVESTMENTS $107,134,891 $128,245,049
============ ============
</TABLE>
C61
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Form 5500 Line 27d
Schedule of Reportable Transactions
for the year ended December 31, 1997
<TABLE>
<CAPTION>
Purchase Selling Basis of
Description of Asset Price Price Asset Net Gain
<S> <C> <C> <C> <C>
Vanguard Index Trust
500 Portfolio $7,537,075 $5,811,296 $4,158,159 $1,653,137
Vanguard Money Market
Reserves Prime Portfolio 8,707,659 9,566,365 9,566,365 -
Vanguard Wellington Fund 3,518,644 2,384,779 1,942,121 442,658
Vanguard Windsor II 5,102,417 2,537,450 2,148,083 389,367
Asarco Common Stock Fund 6,654,562 5,369,546 5,001,471 368,075
</TABLE>
C62
<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, 33-34606, 333-16875, 333-18083 and 333-46181) of our report
dated June 22, 1998 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, 1997 and 1996, the Supplemental Schedules as of
December 31, 1997,and for the year then ended and the Statement of Changes in
Net Assets Available for Benefits for the year ended December 31, 1997, which
report is included in this Annual Report on Form 11-K.
COOPERS & LYBRAND L.L.P.
New York, New York
June 22, 1998
C63
