SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
1998 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, 1998 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.
As of February 26, 1999, there were of record 39,669,569 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 $0.6 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 28, 1999. Part IV: Exhibit index is on pages C1 through C3.
<PAGE>
ASARCO Incorporated
FORM 10-K/A
December 31, 1998
INDEX
Page
Number
FORM 10-K/A i
ITEM 14 ii
EXHIBIT INDEX C1-C3
FORM 11-K C44-C60
1
<PAGE>
ASARCO Incorporated and Subsidiaries
FORM 10-K/A
December 31, 1998
The undersigned registrant hereby amends the 1998 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/ W. Dowd
W. Dowd
Vice President and
Chief Financial Officer
Date: June 28, 1999
i
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
ii
<PAGE>
ASARCO Incorporated
EXHIBIT INDEX
Exhibit Indexed
No. Description on Page
3. Certificate of Incorporation and By-Laws
(a) Certificate of Incorporation - restated, filed June 26,
1998
(Filed as an Exhibit to the Company's Report on Form
10-Q for the quarter ended June 30, 1998 and incorporated
herein by reference)
(b) 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, 1998
(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)
C1
<PAGE>
ASARCO Incorporated
EXHIBIT INDEX
Exhibit Indexed
No. Description on Page
(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 11 of its
executive officers, including Messrs. R. de J. Osborne,
F.R. McAllister, K.R. Morano, 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
April 29,1998 C9-C14
(d) Director's Deferred Payment Plan, as amended through
April 29, 1998. C15-C20
(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.
C2
<PAGE>
ASARCO Incorporated
EXHIBIT INDEX
Exhibit Indexed
No. Description on Page
(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 herin by
reference)
(h) Supplemental Pension Plan for Designated Mid-Career
Officers, as amended through April 29, 1998 C21-C28
(i) Incentive Compensation Plan for Senior Officers,
effective
January 1, 1996
(Filed on Exhibit B to the Company's 1996 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 April 29,
1998 C29-C35
(l) Supplemental Retirement Plan, as amended through April
29, 1998 C36-C41
(m) Consulting agreement between the Company and Mr. R. C42-C43
de J. Osborne dated November 24, 1998
11. Statement re Computation of Earnings Per Share C4
12. Statement re Computation of Ratios C5
21. Subsidiaries of the Registrant C6-C8
23. Consent of Independent Accountants is included on page
A72 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. C44-C60
Copies of exhibits may be acquired upon written request to the Treasurer and the
payment of processing and mailing costs.
C3
<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, 1998
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
ASARCO Incorporated
180 Maiden Lane
New York, New York 10038
C44
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Financial Statements and Schedules
December 31, 1998 and 1997
C45
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
INDEX
Page
Number
Report of Independent Accountants C47
Statement of Net Assets Available for
Benefits with Fund Information at December 31, 1998 C48
Statement of Net Assets Available for
Benefits with Fund Information at December 31, 1997 C49
Statement of Changes in Net Assets Available
for Benefits with Fund Information for the year ended
December 31, 1998 C50
Notes to Financial Statements C51-C57
Supplemental Schedules:
Form 5500 Item 27a*-Schedule of Assets Held
for Investment Purposes at December 31, 1998 C58
Form 5500 Line 27d*-Schedule of Reportable
Transactions for the year ended December 31, 1998 C59
Consent of Independent Accountants C60
* 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, 1998.
C46
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
-------------
To the Participants and Administrator of the Savings Plan of ASARCO Incorporated
and Participating Subsidiaries:
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Savings Plan of ASARCO Incorporated and Participating Subsidiaries (the
"Plan") at December 31, 1998 and 1997, and the changes in net assets available
for benefits for the year ended December 31, 1998 in conformity with generally
accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted 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 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 net assets available for plan benefits and changes in net assets available
for benefits of each fund. These 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.
PricewaterhouseCoopers LLP
New York, New York
June 28, 1999
C47
<PAGE>
Savings Plan of ASARCO Incorporated and Participating Subsidiaries
Statement of Net Assets Available for Benefits with Fund Information
at December 31, 1998
(dollars in thousands)
<TABLE>
<CAPTION>
Participant Directed
----------------------------------------------------------------------------------
Vanguard Vanguard
Vanguard Vanguard Asarco Money Market Short Term U.S. Vanguard
Index International Common Reserves Treasury Bond Wellington
500 Portfolio Fund Fund Portfolio Portfolio Fund
------------- ----------- ---------- --------- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Investments, at fair value: .............. -- -- -- -- -- --
Asarco Common Stock (cost $26,211) ...... -- -- $ 3,208 -- -- --
Registered investment companies: ........ -- -- -- -- -- --
Vanguard Money Market Reserves Prime .. -- -- -- -- -- --
Portfolio (cost approximates market) . -- -- 20 $ 17,831 -- --
Vanguard Index Trust 500 Portfolio .... -- -- -- -- -- --
(cost $21,975) ....................... $ 44,654 -- -- -- -- --
Vanguard International Growth Fund .... -- -- -- -- -- --
(cost $215) .......................... -- $ 225 -- -- -- --
Vanguard Short Term U.S. Treasury ..... -- -- -- -- -- --
Bond Portfolio (cost $7,889) ......... -- -- -- -- $ 8,005 --
Vanguard Wellington Fund (cost $10,704) -- -- -- -- -- $ 12,373
Vanguard Index Extended Market Fund ... -- -- -- -- -- --
(cost $3,281) ........................ -- -- -- -- -- --
Vanguard U.S. Growth Fund (cost $5,385) -- -- -- -- -- --
Vanguard Windsor II Fund (cost $11,793) -- -- -- -- -- --
Vanguard Bond Index Fund (cost $2,457) -- -- -- -- -- --
Loans to Participants ................... -- -- -- -- -- --
-------- ------- -------- -------- -------- --------
Total Investments ................... 44,654 225 3,228 17,831 8,005 12,373
Contributions Receivable: ................ -- -- -- -- -- --
Participants ........................... 151 4 18 57 35 76
Company ................................ 1 -- -- -- -- 1
Interest receivable ...................... -- -- -- -- -- --
Loans receivable ......................... 43 -- 7 23 17 39
-------- ------- -------- -------- -------- -------
NET ASSETS AVAILABLE FOR PLAN BENEFITS ... $ 44,849 $ 229 $ 3,253 $ 17,911 $ 8,057 $ 12,489
======== ======= ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Non-
Participant
Participant Directed Directed
------------------------------------------------------------- --------------
Vanguard
Index Vanguard U.S. Vanguard Vanguard Asarco
- Extended Growth Windsor II Bond Index Loan Common
Market Fund Fund Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C> <C> <C>
----------- ---- ---- ---- ---- ---------- -----
Investments, at fair value: ..............
Asarco Common Stock (cost $26,211) ...... 12,334 $15,542
Registered investment companies: ........
Vanguard Money Market Reserves Prime .. - -- -- -- --
Portfolio (cost approximates market) . -- -- - -- -- 77 17,928
Vanguard Index Trust 500 Portfolio .... -- -- -- -- -- -- --
(cost $21,975) ....................... -- -- -- -- -- -- 44,654
Vanguard International Growth Fund .... -- -- -- -- -- -- --
(cost $215) .......................... -- -- -- -- -- -- 225
Vanguard Short Term U.S. Treasury ..... -- -- -- -- -- -- --
Bond Portfolio (cost $7,889) ......... -- -- -- -- -- -- 8,005
Vanguard Wellington Fund (cost $10,704) -- -- -- -- -- -- 12,373
Vanguard Index Extended Market Fund ... -- -- -- -- -- -- --
(cost $3,281) ........................ $ 3,994 -- -- -- -- -- 3,994
Vanguard U.S. Growth Fund (cost $5,385) -- $ 8,109 -- -- -- -- 8,109
Vanguard Windsor II Fund (cost $11,793) -- -- $ 14,911 -- -- -- 14,911
Vanguard Bond Index Fund (cost $2,457) -- -- -- $ 2,509 -- -- 2,509
Loans to Participants ................... -- -- -- -- $ 4,431 -- 4,431
-------- -------- -------- -------- -------- ------- -------
Total Investments ................... 3,994 8,109 14,911 2,509 4,431 12,411 132,681
Contributions Receivable: ................ -- -- -- -- -- -- --
Participants ........................... 28 52 87 8 -- -- 516
Company ................................ -- 1 1 -- -- 162 166
Interest receivable ...................... -- -- -- -- 27 -- 27
Loans receivable ......................... 6 10 41 1 (187) -- --
-------- -------- -------- -------- -------- ------- ------
NET ASSETS AVAILABLE FOR PLAN BENEFITS ... $ 4,028 $ 8,172 $ 15,040 $ 2,518 $ 4,271 $ 12,573 $133,390
======== ======== ======== ======== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C48
<PAGE>
<TABLE>
<CAPTION>
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)
Participant Directed Directed
-------------------------------------------------------------------------------
Vanguard Vanguard
Vanguard Asarco Money Market Short Term Vanguard
Index Common Reserves U.S. Treasury Vanguard Index
500 Portfolio Fund Portfolio Portfolio Fund Market Fund
----------- ---------- --------- --------- ---- -----------
<S> <C> <C> <C> <C> <C> <C>
Investments, at fair value: ..................... -- -- -- -- -- --
Asarco Common Stock (cost $25,211) .............. -- $ 3,260 -- -- -- --
Shares of registered investment ................. -- -- -- -- -- --
companies: ...................................... -- -- -- -- -- --
Vanguard Money Market Reserves Prime ......... -- -- -- -- -- --
Portfolio (cost approximates market) ........ -- 29 $ 17,869 -- -- --
Vanguard Index Trust 500 Portfolio ........... -- -- -- -- -- --
(cost $22,581) .............................. $ 39,654 -- -- -- -- --
Vanguard Short Term U.S. Treasury ............ -- -- -- -- -- --
Bond Portfolio (cost $7,452) ................ -- -- -- $ 7,476 -- --
Vanguard Wellington Fund (cost $9,952) ....... -- -- -- -- $ 12,282 --
Vanguard Index Extended Market Fund .......... -- -- -- -- -- --
(cost $3,113) ............................... -- -- -- -- -- $ 4,026
Vanguard U.S. Growth Fund (cost $3,971) ...... -- -- -- -- -- --
Vanguard Windsor II Fund (cost $10,560) ...... -- -- -- -- -- --
Vanguard Bond Index Fund (cost $1,661) ....... -- -- -- -- -- --
Loans to Participants ........................... _______ _______ ______ _____ ______ ______
Total Investments .......................... 39,654 3,289 17,869 7,476 12,282 4,026
Contributions Receivable: ....................... -- -- -- -- -- --
Participants .................................. 167 22 69 39 90 35
Company ....................................... -- -- -- -- -- --
Interest receivable ............................. -- -- -- -- -- --
Loans receivable ................................ 52 8 28 16 9 8
-------- -------- -------- -------- -------- --------
NET ASSETS AVAILABLE FOR PLAN BENEFITS .......... $ 39,873 $ 3,319 $ 17,966 $ 7,531 $12,401 $ 4,069
============================================================== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Non-
Participant
Participant Directed Directed Directed
------------------------------------------------------ --------------
Vanguard U.S. Vanguard Vanguard Asarco
Growth Windsor II Bond Index Loan Common
Fund Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C> <C>
--- ---- ---- ---- ---------- -----
Investments, at fair value: ...................... -- -- -- -- --
Asarco Common Stock (cost $25,211) ............... -- -- -- -- $ 17,763 $ 21,023
Shares of registered investment .................. -- -- -- -- -- --
companies: ....................................... -- -- -- -- -- --
Vanguard Money Market Reserves Prime .......... -- -- -- -- -- --
Portfolio (cost approximates market) ......... -- -- -- -- 158 18,056
Vanguard Index Trust 500 Portfolio ............ -- -- -- -- -- --
(cost $22,581) ............................... -- -- -- -- -- 39,654
Vanguard Short Term U.S. Treasury ............. -- -- -- -- -- --
Bond Portfolio (cost $7,452) ................. -- -- -- -- -- 7,476
Vanguard Wellington Fund (cost $9,952) ........ -- -- -- -- -- 12,282
Vanguard Index Extended Market Fund ........... -- -- -- -- -- --
(cost $3,113) ................................ -- -- -- -- -- 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 Investments ........................... 5,399 13,870 1,694 4,765 17,921 128,245
Contributions Receivable: ........................ -- -- -- -- -- --
Participants ................................... 48 101 5 -- -- 576
Company ........................................ -- -- -- -- 199 199
Interest receivable .............................. -- -- -- 31 -- 31
Loans receivable ................................. 16 33 1 (191) -- --
-------- --- -------- -------- ----- -------- --------
NET ASSETS AVAILABLE FOR PLAN BENEFITS ........... $ 5,463 $ $ 14,004 $ 1,700 $4,605 $ 18,120 $129,051
================================================== ======== === ======== ======== ===== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C49
<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, 1998
(dollars in thousands)
<TABLE>
<CAPTION>
Vanguar Vanguard
Vanguard Vanguard Asarco Money Marke Short Term Vanguard
Index Trust International Common Reserves Prime U.S. Treasury Wellington
ADDITIONS: 500 Portfolio Growth Fund Stock Fund Portfolio Bond Portfolio Fund
------------- ----------- ---------- --------- -------------- ----
<S> <C> <C> <C> <C> <C> <C>
Investment Income
Net appreciation (depreciation) in the -- -- -- -- -- --
fair value of investments .......... $ 10,020 $ 13 $ (7,161) -- $ 115 $ 40
Dividends and Interest ................ 723 4 695 $ 934 419 1,406
Interest (participant loans) .......... ______ ______ _______ _______ ___ _____
Total ............................... 10,743 17 (6,466) 934 534 1,446
Contributions ........................... -- -- -- -- -- --
Participants .......................... 2,130 54 258 809 447 1,073
Company ............................... 7 -- 2,354 2 -- 5
Loan Repayments ......................... 725 5 124 410 214 390
Transfers from other plan ............... 185 -- 63 24 8 --
Interfund transfers ..................... (2,254) 162 1,117 1,540 559 (792)
TOTAL ADDITIONS .................... 11,536 238 (2,550) 3,719 1,762 2,122
DEDUCTIONS:
Benefit payments ...................... 5,841 5 2,933 3,425 1,084 1,691
General and administrative ............ 1 -- -- 5 1 1
Loans ................................. 718 4 130 344 151 342
TOTAL DEDUCTIONS ................... 6,560 9 3,063 3,774 1,236 2,034
Net increase (decrease) ................. 4,976 229 (5,613) (55) 526 88
NET ASSETS AVAILABLE FOR PLAN BENEFITS, . -- -- -- -- --
BEGINNING OF YEAR .................... 39,873 0 21,439 17,966 7,531 12,401
NET ASSETS AVAILABLE FOR PLAN BENEFITS, . -- -- -- -- -- --
END OF YEAR .......................... $ 44,849 $ 229 $ 15,826 $ 17,911 $ 8,057 12,489
</TABLE>
<TABLE>
<CAPTION>
Vanguard
Index Vanguard Vanguard
Extended Vanguard U.S. Windsor II Bond Index Loan
Market Fund Growth Fund Fund Fund Fund Total
----------- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Investment Income
Net appreciation (depreciation) in the -- -- -- -- -- --
fair value of investments .......... $ (44) $ 1,724 $ 673 $ 28 -- $ 5,408
Dividends and Interest ................ 314 519 1,529 135 -- 6,678
Interest (participant loans) .......... ___ _____ _ _ __ $339 339
--
Total ............................... 270 2,243 2,202 163 339 12,425
Contributions ........................... -- -- -- -- -- --
Participants .......................... 426 639 1,273 116 -- 7,225
Company ............................... 1 4 6 -- -- 2,379
Loan Repayments ......................... 121 205 471 11 (2,488) 188
Transfers from other plan ............... 3 5 20 -- 33 341
Interfund transfers ..................... (369) 369 (1,066) 734
--------- --------- --------- --------- --------- -------
TOTAL ADDITIONS .................... 452 3,465 2,906 1,024 (2,116) 22,558
--------- --------- -------- -------- --------- ---------
DEDUCTIONS:
Benefit payments ...................... 431 631 1,575 194 399 18,209
General and administrative ............ 2 -- -- -- -- 10
Loans ................................. 60 125 295 12 (2,181)
--------- --------- --------- --------- --------- -------
TOTAL DEDUCTIONS ................... 493 _ 756 1,870 206 (1,782) 18,219
--------- --------- - -------- --------- --------- ---------
Net increase (decrease) ................. (41) 2,709 1,036 818 (334) 4,339
NET ASSETS AVAILABLE FOR PLAN BENEFITS, . -- -- -- -- -- --
BEGINNING OF YEAR .................... 4,069 5,463 14,004 1,700 4,605 129,051
--------- --------- --------- --------- --------- ---------
NET ASSETS AVAILABLE FOR PLAN BENEFITS, . -- -- -- -- -- --
END OF YEAR .......................... $ 4,028 $ 8,172 $ 15,040 $ 2,518 $ 4,271 $ 133,390
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
C50
<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 of the Board of
Directors 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
thirty days 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 17% effective October 1,1998 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 month. The Internal Revenue Code of 1986 (the "Code"), as
amended, limited the maximum amount an employee may contribute on a
pre-tax basis to $10,000 and $9,500 in 1998 and 1997, 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 Plan's trustee, Vanguard Fiduciary Trust Company
("Vanguard"), is required to purchase Asarco Common Stock. Company
contributions for the year ended December 31, 1998 consisted of cash in
the amount of $2,379,583.
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.
C51
<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 a maximum of five years or
immediately upon termination of employment. Interest is currently
accrued at the prime rate, which was in existence on the first day of
the month in which the loan was issued. 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 August 26,1998 the Plan was amended, effective October 1, 1998, to
increase the maximum permissible contribution to 17% from 12% for
salaried employees.
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.
C52
<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.
C53
<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 1998, 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, 1998 and 1997, the number of Plan
participants who held an interest in this fund was 1,322 and 1,413,
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, 1998 and 1997, the number of Plan
participants who held an interest in this fund was 897 and 1,055,
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, 1998 and 1997, the
number of Plan participants who held an interest in this fund was 484
and 540, 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, 1998 and 1997, the number of Plan participants
who held an interest in this fund was 849 and 903, respectively.
C54
<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, 1998 and 1997, the number of Plan
participants who held an interest in this fund was 435 and
470, 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, 1998 and 1997, the number of
Plan participants who held an interest in this fund was 589
and 555, respectively.
o Vanguard Windsor II Fund - A fund invested in common stocks to
provide capital appreciation and dividend income. At December
31, 1998 and 1997, the number of Plan participants who held an
interest in this fund was 954 and 1,014, 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, 1998 and 1997, the number of Plan participants who held an
interest in this fund was 1,914 and 2,105, 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, 1998 and 1997, the number of Plan participants
who held an interest in this fund was 131 and 104,
respectively.
o Vanguard International Growth Fund - This fund invests in
stocks of high quality, seasonal companies based outside the
United States. It includes stocks with records of exceptional
growth from more than 15 countries (including Japan, the
United Kingdom, the Netherlands, Switzerland and Germany.) At
December 31, 1998 and 1997, the number of plan participants
who held an interest in this fund was 39 and 0 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.
C55
<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, 1998 December 31, 1997
----------------- -----------------
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* 2,782,722 $5.62 2,530,926 $8.38
Vanguard Index Trust
500 Portfolio* 391,870 $113.95 440,254 $90.07
Vanguard International
Growth Fund 11,987 $18.77 N/A N/A
Vanguard Money Market Reserves Prime
Portfolio* 17,831,043 $1.00 17,869,282 $1.00
Vanguard Short Term U.S. Treasury Bond
Portfolio* 771,936 $10.37 732,259 $10.21
Vanguard Wellington Fund* 421,577 $29.35 417,054 $29.45
Vanguard Windsor II Fund* 499,540 $29.85 484,616 $28.62
Vanguard U.S. Growth Fund** 216,296 $37.49 188,118 $28.70
Vanguard Index Extended
Market Fund 130,441 $30.62 130,939 $30.75
Vanguard Bond Index Fund 244,273 $10.27 167,917 $10.09
</TABLE>
* Represents 5% or more of net assets available for plan benefits as of
December 31, 1998 and 1997
** Represents 5% or more of net assets available for plan benefits as of
December 31, 1998
C56
<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.
C57
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
Form 5500 Item 27a
Schedule of Assets Held for Investment Purposes
at December 31, 1998
<TABLE>
<CAPTION>
Cost or Market
Identity of Issue or Borrower Book Value Value
<S> <C> <C>
Vanguard Index Trust 500 Portfolio $21,974,805 $44,653,571
Asarco Common Stock Fund 26,211,253 15,638,899
Vanguard Money Market Reserves Prime Portfolio 17,831,043 17,831,043
Vanguard Short Term U.S. Treasury Bond Portfolio 7,888,679 8,004,979
Vanguard Wellington Fund 10,704,304 12,373,283
Vanguard Index Extended Market Fund 3,281,368 3,994,095
Vanguard U.S. Growth Fund 5,385,277 8,108,922
Vanguard Windsor II Fund 11,793,336 14,911,264
Vanguard Bond Index Fund 2,456,557 2,508,679
Vanguard International Growth Fund 214,874 225,002
Loan Fund
Participants' Loans (interest rates range from 6%
to 9%)
- 4,431,542
----------- ------------
TOTAL INVESTMENTS $107,741,496 $132,681,279
============ ============
</TABLE>
C58
<PAGE>
Savings Plan of ASARCO Incorporated
and Participating Subsidiaries
<TABLE>
<CAPTION>
Form 5500 Line 27d
Schedule of Reportable Transactions
for the year ended December 31, 1998
Purchase Selling Basis of Net
Description of Asset Price Price Asset Gain (Loss)
<S> <C> <C> <C> <C>
Vanguard Index Trust
500 Portfolio $10,016,644 $15,036,962 $10,630,214 $4,406,748
Vanguard Money Market
Reserves Prime Portfolio 11,997,908 12,036,147 12,036,147 -
Vanguard Wellington Fund 3,651,906 3,600,870 2,900,566 700,304
Vanguard Windsor II 4,082,237 3,713,661 2,853,154 860,507
Asarco Common Stock Fund 8,067,993 6,476,632 7,060,825 (584,193)
</TABLE>
C59
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in 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 28, 1999 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, 1998 and 1997,
the Supplemental Schedules as of December 31, 1998 and for the year then ended
and the Statement of Changes in Net Assets Available for Benefits for the year
ended December 31, 1998, which report is included in this Annual Report on Form
11-K.
PricewaterhouseCoopers LLP
New York, New York
June 28, 1999
C60
