SPCC REPORTS SECOND QUARTER RESULTS
NEW YORK, N.Y., July 29, 1996 - Southern Peru Copper Corporation (NYSE and
LSE:PCU) today reported net earnings of $45.2 million, or $0.56 per common share, for the
second quarter of 1996 compared with net earnings of $42.9 million or $0.65 per share, for
the second quarter of 1995. Sales of products were $173.2 million in the second quarter of
1996 compared with $212.2 million in the second quarter of 1995.
For the first six months of 1996 net earnings were $94.3 million, or $1.18 per share,
compared with net earnings of $87.2 million or $1.33 per share in the same period in 1995.
Sales of products were $369.6 million in the first six months of 1996 compared with $416.9
million in the same period in 1995.
Net earnings for the second quarter of 1996 and for the six month period reflect a
reduction in the minority interest of labor shares in the Company's Peruvian branch. An
exchange of common shares for labor shares was completed in the fourth quarter of 1995
which reduced the interest of labor shares from 17.3% to 3.3%. The exchange offer
increased the number of common shares outstanding to 80.2 million from 65.7 million in
1995.
Copper mine production in the second quarter of 1996 increased 34% over the
second quarter of 1995 to 173.1 million pounds. The increase in production is principally
attributable to higher ore grades at both the Cuajone and Toquepala mines and 22.8 million
pounds of refined copper from the new solvent extraction/electrowinning plant (SX/EW) at
the Company's Toquepala mine which commenced operations in the fourth quarter of 1995.
Copper prices were lower in the second quarter of 1996 compared with the year
earlier period. The average price for copper on the London Metal Exchange (LME) was
$1.12 per pound for the second quarter of 1996 compared with $1.31 per pound in the
second quarter of 1995. The price for molybdenum, a by-product of the Company's copper
production, was lower in the second quarter of 1996 at $3.15 per pound compared with
$7.21 per pound in the second quarter of 1995. The price for COMEX silver was $5.29 per
ounce in the second quarter of 1996 compared with $5.47 in the second quarter of 1995.
Cost of sales were $82.2 million in the second quarter of 1996 compared with $107.3
million in the second quarter of 1995. The decline in cost of sales is principally attributable
to the reduction of sales of copper produced from purchased concentrates in the second
quarter of 1996.
The Company has had in place a price protection program consisting of put options.
The Company sold a portion of its price protection for a pretax gain of $12.3 million,
representing an assured gain of 12.8 cents per pound over the future prevailing price when
the underlying production is sold. SPCC will recognize $7.9 million of the gain when the
product is sold during the second half of 1996 and $4.4 million in 1997. SPCC continues
to hold puts on 87.8 million pounds of copper for the second half of 1996 and 46.5 million
pounds for the first quarter of 1997, both at an average strike price of 95 cents.
Commenting on the Company's results, Charles G. Preble, President and Chief
Executive Officer of SPCC said, 'Second quarter results were encouraging, particularly in
view of the recent decline in the price of copper. Production and sales volumes were
significantly improved over 1995 and production costs have been reduced principally
reflecting the new SX/EW production.'
SPCC is the largest mining company in Peru and operates two mines, a smelter and
a refinery in the southern region of Peru, employing approximately 5,000 people.
Shareholders in SPCC are ASARCO Incorporated (NYSE:AR) (54.1%); a subsidiary of the
Marmon Corporation (15.0%); Phelps Dodge Overseas Capital Corporation (13.9%) and
common shareholders (17.0%).
Average Metals Prices
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|
|
|
|
|
|
1996 |
1995 |
1996 |
1995 |
Copper (per pound - LME) |
$1.12 |
$1.31 |
$1.14 |
$1.32 |
|
|
|
|
|
Silver (per ounce - COMEX) |
$5.29 |
$5.47 |
$5.42 |
$5.08 |
|
|
|
|
|
Molybdenum (per pound -
Metals Week Dealer Oxide) |
$3.15
|
$7.21
|
$3.56
|
$10.49
|
Metal Production and Sales
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|
|
|
|
|
|
1996 |
1995 |
1996 |
1995 |
Copper (000s pounds) |
|
|
|
|
Mined |
173,100 |
128,800 |
334,700 |
257,200 |
Refined |
121,600 |
108,600 |
249,000 |
214,600 |
Sales |
161,800 |
151,700 |
330,800 |
278,900 |
|
|
|
|
|
Silver (000s ounces) |
|
|
|
|
Mined |
783 |
791 |
1,434 |
1,410 |
Refined |
549 |
590 |
1,106 |
1,125 |
Sales |
726 |
931 |
1,545 |
1,598 |
|
|
|
|
|
Molybdenum (000s pounds) |
|
|
|
|
Mined |
2,058 |
2,298 |
3,827 |
3,915 |
Sales |
1,937 |
1,526 |
3,804 |
3,418 |
Southern Peru Copper Corporation and Subsidiaries
Second Quarter and Year to Date Results
(in millions, except for per share data)
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
|
|
|
|
|
|
|
Historical |
Pro Forma |
|
Historical |
Pro Forma |
|
1996 |
1995 |
1995 |
1996 |
1995 |
1995 |
|
|
|
|
|
|
|
Net sales |
$173.2 |
$212.2 |
$212.2 |
$369.6 |
$416.9 |
$416.9 |
|
|
|
|
|
|
|
Earnings before taxes on income andminority interest of labor shares |
|
68.4 |
77.2 |
76.2 |
145.8 |
158.4 |
157.4 |
|
|
|
|
|
|
|
Taxes on income |
21.8 |
25.5 |
25.2 |
48.1 |
52.3 |
52.0 |
|
|
|
|
|
|
|
Earnings before minority interest of labor shares |
|
46.6 |
51.7 |
51.0 |
97.7 |
106.1 |
105.4 |
|
|
|
|
|
|
|
Minority interest of labor shares in income of Peruvian Branch |
|
1.4 |
8.8 |
1.7 |
3.4 |
18.9 |
3.6 |
|
|
|
|
|
|
|
Net earnings |
$45.2 |
$42.9 |
$49.3 |
$94.3 |
$87.2 |
$101.8 |
|
|
|
|
|
|
|
Weighted average number of shares outstanding |
|
80.2 |
65.7 |
80.2 |
80.2 |
65.7 |
80.2 |
|
|
|
|
|
|
|
Net earnings per share |
$0.56 |
$0.65 |
$0.62 |
$1.18 |
$1.33 |
$1.27 |
|
|
|
|
|
|
|
Cash dividends paid per share |
$0.30 |
$0.11 |
$0.09 |
$0.95 |
$0.52 |
$0.43 |
Note: Pro Forma 1995 assumes that the exchange offer for labor shares was completed
January 1, 1995 and is presented for comparison purposes.
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS (unaudited)
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
(in thousands, except per share amounts) |
Net sales |
$173,169 |
$212,177 |
$369,577 |
$416,915 |
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
Cost of sales |
82,176 |
107,283 |
176,855 |
201,955 |
Administrative and other expenses |
11,249 |
11,673 |
24,254 |
26,093 |
Depreciation, amortization and depletion |
10,343 |
10,750 |
20,670 |
21,473 |
Provision for workers' participation |
4,807 |
6,528 |
10,445 |
13,918 |
Exploration expense |
492 |
591 |
1,147 |
914 |
Total operating costs and expenses |
______ 109,067 |
______ 136,825 |
______ 233,371 |
______ 264,353 |
|
|
|
|
|
Operating income |
64,102 |
75,352 |
136,206 |
152,562 |
|
|
|
|
|
Interest income |
4,901 |
3,467 |
11,070 |
6,010 |
Other income |
2,582 |
2,626 |
4,855 |
(5,788) |
Interest expense |
(3,205) |
(4,264) |
(6,337) |
(5,788) |
|
|
|
|
|
Earnings before taxes on income and minority interest of labor shares |
|
68,380 |
77,181 |
145,794 |
158,416 |
|
|
|
|
|
Taxes on income |
21,805 |
25,475 |
48,093 |
52,309 |
|
|
|
|
|
Earnings before minority interest of labor |
46,575 |
51,706 |
97,701 |
106,107 |
|
|
|
|
|
Minority interest of labor shares |
1,346 |
8,837 |
3,364 |
18,883 |
|
|
|
|
|
Net earnings |
$ 45,229 _______ |
$ 42,869 _______ |
$ 94,337 _______ |
$ 87,224 _______ |
|
|
|
|
|
Per common share amounts: |
|
|
|
|
Net earnings |
$ 0.56 _____ |
$ 0.65 _____ |
$ 1.18 _____ |
$ 1.33 _____ |
|
|
|
|
|
Cash dividends paid |
$ 0.30 |
$ 0.11 |
$ 0.95 |
$ |
|
|
|
|
|
Weighted average number of shares |
80,183 |
65,717 |
80,204 |
65 |
outstanding |
|
|
|
|
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (unaudited)
|
June 30, |
December 31, |
|
1996 |
1995 |
Current assets: |
|
|
Cash and cash equivalents |
$ 237,737 |
$ 219,646 |
Marketable securities |
- |
42,453 |
Accounts receivable: |
|
|
Trade: |
|
|
Stockholders and affiliates |
2,405 |
8,732 |
Other trade |
44,493 |
80,100 |
Other |
15,736 |
11,631 |
Inventories |
108,465 |
103,635 |
Other current assets |
6,136 |
16,648 |
Total current assets |
424,972 |
482,845 |
|
|
|
Net property |
811,345 |
779,368 |
Other assets |
19,440 |
9,488 |
Total |
$1,255,757 _________ |
$1,271,701 _________ |
|
|
|
LIABILITIES |
|
|
Current liabilities: |
|
|
Current portion of long-term debt |
$ 26,935 |
$ 17,034 |
Accounts payable - trade |
19,654 |
32,889 |
Accounts payable - other |
6,802 |
8,056 |
Accrued liabilities |
53,452 |
112,390 |
Total current liabilities |
_______ 106,843 |
_______ 170,369 |
|
|
|
Long-term debt |
105,397 |
76,828 |
Accrued severance pay |
2,648 |
6,354 |
Deferred income taxes |
45,373 |
39,677 |
Total non-current liabilities |
______ 153,418 |
______ 122,859 |
|
|
|
Minority interest of labor shares in the Peruvian Branch |
25,018 |
24,986 |
|
|
|
STOCKHOLDERS' EQUITY |
|
|
Common stock, par value $0.01(a) |
137 |
115 |
Class A common stock, par value $0.01(b) |
666 |
688 |
Additional paid-in capital |
265,745 |
265,738 |
Retained earnings |
704,713 |
686,946 |
Treasury stock at cost, 47 common shares |
(783) |
- |
Total Stockholders' Equity |
______ 970,478 |
______ 953,487 |
|
|
|
Total |
$1,255,757 _________ |
$1,271,701 _________ |
|
|
|
(a) Common shares: |
31,249 |
13,633 |
11,480 |
(b) Class A common shares: |
68,751 |
66,551 |
68,751 |
SOUTHERN PERU COPPER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
Net earnings |
$45,229 |
$42,869 |
$94,337 |
$87,224 |
Depreciation, amortization and depletion |
10,343 |
10,750 |
20,670 |
21,473 |
Minority interest of labor shares, net of distributions |
522 |
8,837 |
661 |
18,883 |
Cash provided from (used for) operating assets and liabilities |
|
11,194 |
14,130 |
(37,166) |
233 |
Other, net |
(72) |
(698) |
74 |
(2,294) |
Net cash provided from operating activities |
______ 67,216 |
______ 75,888 |
______ 78,576 |
______ 125,519 |
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
Capital expenditures |
(37,356) |
(64,343) |
(51,931) |
(07,743) |
Transfer of cash from restricted account |
- |
59,533 |
- |
5 |
Other, net |
- |
21,478 |
42,453 |
2 |
Net cash provided from (used for) investing activites |
|
(37,356) |
16,668 |
(9,478) |
(20,089) |
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
Dividends paid |
(24,054) |
(7,500) |
(76,204) |
(34,312) |
Net borrowings (repayments) |
(7,610) |
5,442 |
38,469 |
13,896 |
Escrow deposits on long-term loans |
- |
- |
(10,152) |
- |
Treasury stock and labor share purchase |
(2,682) |
- |
(3,836) |
- |
Proceeds from labor share subscription |
- |
10,944 |
- |
10,944 |
Net cash provided from (used for) |
|
|
|
|
financing activities |
(34,346) |
8,886 |
(51,723) |
(9,472) |
|
|
|
|
|
Effect of exchange rate changes on cash |
(517) |
(795) |
716 |
(408) |
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
$ (5,003) |
$100,647 |
$ 18,091 |
$ 95,550 |
|