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: 1-14066
SOUTHERN PERU COPPER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3849074
(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
Title of each class on which registered
Common Stock, par value $0.01 per share New York Stock Exchange
Lima 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 knowledge of the registrant, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K.[]
As of February 26, 1999, there were of record 13,962,062 shares of Common Stock,
par value $0.01 per share, outstanding, and the aggregate market value of the
shares of Common Stock (based upon the closing price on such date as reported on
the New York Stock Exchange - Composite Transactions) of Southern Peru Copper
Corporation held by nonaffiliates was approximately $138 million. As of the
above date, there were also 65,900,833 shares of Class A Common Stock, par value
$0.01 per share, outstanding. Class A Common Stock is convertible on a
one-to-one basis into Common Stock.
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, 1999. Part IV: Exhibit index is on page B1 through B3.
Southern Peru Copper Corporation
FORM 10-K/A
December 31, 1998
INDEX
Page
Number
FORM 10-K/A i
ITEM 14 ii
EXHIBIT INDEX B1-B3
FORM 11-K B41-B60
Southern Peru Copper Corporation 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 Southern Peru Copper Corporation 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 on Form 11-K relating to the Savings Plan for Salaried
Employees of Southern Peru Copper Corporation 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.
Southern Peru Copper Corporation
By /s/ Thomas. J. Findley, Jr.
Thomas. J. Findley, Jr.
Vice President and
Chief Financial Officer
Date: June 28, 1999
i
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
ii
Southern Peru Copper Corporation
Exhibit Index
Sequential
Exhibit Page
Number Document Description Number
3. Certificate of Incorporation and By-Laws
3.1 Restated Certificate of Incorporation, filed December 29,
1995
(Filed as Exhibit 3.1 to the Company's 1995 Annual Report
on Form 10-K and incorporated herein by reference)
3.2 Certificate of Decrease, filed February 29, 1996
(Filed as Exhibit 3.2 to the Company's 1995 Annual Report
on Form 10-K and incorporated herein by reference)
3.3 Certificate of Increase, filed February 29, 1996
(Filed as Exhibit 3.3 to the Company's 1995 Annual Report
on Form 10-K and incorporated herein by reference)
3.4 Certificate of Decrease, filed March 24, 1997
(Filed as Exhibit 3.6 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997 and
incorporated herein by reference)
3.5 Certificate of Increase, filed March 24, 1997
(Filed as Exhibit 3.5 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997 and
incorporated herein by reference)
3.6 By-Laws, as last amended on February 3, 1998
4. Instruments Defining Rights of Security Holders
4.1 Indenture, dated as of May 30, 1997, among Southern Peru
Limited, Southern Peru Copper Corporation, as guarantor,
and Citibank, N.A., as Trustee
(Filed as Exhibit 4.1(a) to the Company's Registration
Statement on Form S-4, as amended by Amendment No.1
thereto, File No. 333-34505, and incorporated herein by
reference)
4.2 Supplemental Indenture, dated as of May 30, 1997, among
Southern Peru Limited, Southern Peru Copper Corporation,
as guarantor, and Citibank, N.A., as Trustee
(Filed as Exhibit 4.1(b) to the Company's Registration
Statement on Form S-4, as amended by Amendment No.1
thereto, File No. 333-34305, and incorporated herein by
reference)
4.3 Form of Amended and Restated Collateral Trust Agreement,
dated as of July 15, 1997, between Southern Peru Limited
and Deutsche Bank AG, New York Branch, as collateral
trustee
(Filed as Exhibit 4.1(c) to the Company's Registration
Statement on Form S-4, as amended by Amendment No.1
thereto, File No. 333-34305, and incorporated herein by
reference)
B1
Southern Peru Copper Corporation
Exhibit Index
Sequential
Exhibit Page
Number Document Description Number
4.4 Form of Series A-1 Secured Export Notes due 2007
(Filed as Exhibit 4.1(d) to the Company's Registration
Statement on Form S-4, as amended by Amendment No. 1
thereto, File No. 333-34305, and incorporated herein
by reference)
4.5 Supplemental Indenture, dated as of October 15, 1998
among Southern Peru Limited, Southern Peru Copper
Corporation as guarantor, and Citibank, N.A., as Trustee B7-B12
4.6 Supplemental Indenture, dated as of December 22, 1998
between Southern Peru Copper Corporation and Citibank,
N.A. as Trustee B13-B17
10. Material Contracts
10.1 Form of Agreement Among Certain Stockholders of the
Company
(Filed as Exhibit 10.1 to the Company's Registration
Statement on Form S-4, as amended by Amendments No. 1
and 2 thereto, File No 33-97790 (the "Form S-4"), and
incorporated herein by reference)
10.2 Tax Stability Agreement, dated August 8, 1994, between
the Government of Peru and the Company regarding SX/EW
facility (and English translation)
(Filed as Exhibit 10.3 to the Company's Form S-4 and
incorporated herein by reference)
10.3 Incentive Compensation Plan of the Company
(Filed as Exhibit 10.11 to the Company's Form S-4 and
incorporated herein by reference)
10.4 Supplemental Retirement Plan of the Company, as amended
and restated as of April 30, 1998 B18-B23
10.5 Stock Incentive Plan of the Company
(Filed as an Exhibit to the Company's Registration
Statement on Form S-8 dated March 25, 1996 (Registration
No.333-2736) and incorporated herein by reference)
10.6 Form of Directors Stock Award Plan of the Company
(Filed as Exhibit 10.16 to the Company's Form S-4 and
incorporated herein by reference)
10.7 Deferred Fee Plan for Directors, as amended and restated B24-B29
as of April 30, 1998
10.8 Form of Agreement Accepting Membership in the Plan,
containing text of Retirement Plan and Trust for Selected
Employees
(Filed as Exhibit 10.17 to the Company's Form S-4 and
incorporated herein by reference)
B2
Southern Peru Copper Corporation
Exhibit Index
Sequential
Exhibit Page
Number Document Description Number
10.9 Compensation Deferral Plan, as amended and restated B30-B36
as of April 30, 1998
10.10Credit Agreement dated as of March 31, 1997 among
Southern Peru Limited, as Borrower, Southern Peru Copper
Corporation, as Guarantor, the several banks and other
financial institutions from time to time parties to the
Credit Agreement, Morgan Guaranty Trust Company of New
York, as Administrative Agent, The Chase Manhattan Bank,
as Documentation Agent, Citicorp Securities, Inc., as
Syndication Agent, and Deutsche Bank AG, New York Branch,
as Security and Collateral Agent
(Filed as Exhibit 10.9 to the Company's Registration
Statement on Form S-4, File No. 333-3405, and
incorporated herein by reference)
10.11First Amendment to the Credit Agreement, dated July 14,
1997
(Filed as Exhibit 10.10 to the Company's Registration
Statement on Form S-4, File No. 333-34305, and
incorporated herein by reference)
10.12Assignment and Assumption Agreement dated as of December
30, 1998, between Southern Peru Copper Corporation,
a Delaware Corporation, and Southern Peru Limited B37-B38
10.13Consulting Agreement between the Company and Mr. C. G.
Preble dated March 18, 1999 B39-B40
11. Statement re Computation of Earnings per Share B4
21.1 Subsidiaries of the Company B5
23.1 Consent of Independent Accountants B6
99. Report on Form 11-K relating to the Savings Plan of Southern
Peru Copper Corporation and Participating Subsidiaries B41-B60
Copies of exhibits may be acquired upon written request to the Treasurer and the
payment of processing and mailing costs.
B3
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
------------------
For the fiscal year ended December 31, 1998
------------------
Commission File No. 1-14066
Savings Plan of Southern Peru Copper Corporation
and Participating Subsidiaries
Southern Peru Copper Corporation
180 Maiden Lane
New York, New York 10038
B41
Savings Plan of Southern Peru Copper Corporation
and Participating Subsidiaries
Financial Statements and Schedules
as of December 31, 1998 and 1997
and for the year ended December 31, 1998
and the seven months ended December 31, 1997
B42
Savings Plan of Southern Peru Copper Corporation
and Participating Subsidiaries
INDEX
Page
Number
Report of Independent Accountants B44
Statement of Net Assets Available for Benefits,
with Fund Information as of December 31, 1998 B45
Statement of Net Assets Available for Benefits,
with Fund Information as of December 31, 1997 B46
Statement of Changes in Net Assets Available for Benefits,
with Fund Information for the year ended December
31, 1998 B47
Statement of Changes in Net Assets Available for Benefits,
with Fund Information for the seven months ended December
31, 1997 B48
Notes to Financial Statements B49-B55
Supplemental Schedules:
Form 5500 Item 27a*-Schedule of Assets Held
for Investment Purposes as of December 31, 1998 B56
Form 5500 Item 27a**-Schedule of Assets Held
for Investment Purposes as of December 31, 1997 B57
Form 5500 Line 27d*-Schedule of Reportable
Transactions for the year ended December 31, 1998 B58
Form 5500 Line 27d**-Schedule of Reportable
Transactions for the seven months ended December 31, 1997 B59
Consent of Independent Accountants B60
* 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.
** Refers to item number in Form 5500 ("Annual Return/Report of Employee
Benefit Plan") filed with the Department of Labor for the plan period
ended December 31, 1997.
B43
Report of Independent Accountants
-------------------
To the Participants and Administrative Committee of the Savings Plan of Southern
Peru Copper Corporation and Participating Subsidiaries
In our opinion, the accompanying statements of net assets available for
benefits, with fund information and the related statements of changes in net
assets available for benefits, with fund information present fairly, in all
material respects, the net assets available for benefits of Savings Plan of
Southern Peru Copper Corporation and Participating Subsidiaries (the "Plan") at
December 31, 1998 and December 31, 1997 and the changes in net assets available
for benefits for the year ended December 31, 1998 and the seven months ended
December 31, 1997 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 of Assets Held
for Investment Purposes and Reportable Transactions 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
B44
Savings Plan of Southern Peru Copper Corporation
and Participating Subsidiaries
Statement of Net Assets Available for Benefits, with Fund Information
as of December 31, 1998
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Participant Directed
------------------------------------------------------------------------------------------
Vanguard Vanguard
Vanguard Vanguard SPCC Money Market Short Term U.S. Vanguard
Index Trust International Common Reserves Prime Treasury Bond Wellington
500 Portfolio Growth Fund Stock Fund Portfolio Portfolio Fund
------------- ----------- ---------- --------- --------- ----
C>
Investments, at fair value:
SPCC Common Stock (cost $197,960) ...... -- -- $ 13,570 -- -- --
Registered investment companies: ....... -- -- -- -- -- --
Vanguard Money Market Reserves Prime . -- -- -- -- -- --
Portfolio (cost approximates market) -- -- 1,047 $ 230,938 -- --
Vanguard Index Trust 500 Portfolio ... -- -- -- -- -- --
(cost $590,774) ..................... $ 705,439 -- -- -- -- --
Vanguard International Growth Fund ... -- -- -- -- -- --
(cost $161,067) ..................... -- 176,739 -- -- -- --
Vanguard Short Term U.S. Treasury .... -- -- -- -- -- --
Bond Portfolio (cost $45,019) ....... -- -- -- -- $ 45,423 --
Vanguard Wellington Fund (cost ....... -- -- -- -- -- --
$411,966) $401,763
Vanguard Index Extended Market Fund .. -- -- -- -- -- --
(cost $189,132) ..................... -- -- -- -- -- --
Vanguard U.S. Growth Fund (cost ...... -- -- -- -- -- --
$458,809)
Vanguard Windsor II Fund (cost ....... -- -- -- -- -- --
$631,032)
Vanguard Bond Index Fund (cost ....... -- -- -- -- -- --
$142,178)
Loans to Participants .................. ______ ______ ______ ______ ______ ______
NET ASSETS AVAILABLE FOR PLAN BENEFITS .. $ 705,439 $ 176,739 $ 14,617 $ 230,938 $ 45,423 $ 401,763
------------------------------------------------------------------------------------
-------------------------------------------------------------------Non--------------
Participant Directed Participant
------------------------------------------------------------------------------------
Vanguard
Index Vanguard U.S. Vanguard Vanguard SPCC
Extended Growth Windsor II Bond Index Loan Common Stock
Market Fund Fund Fund Fund Fund Fund Total
----------- ---- ---- ---- ---- ---- ----
Investments, at fair value: -
SPCC Common Stock (cost $197,960) ........ -- -- -- -- -- $122,620 $136,190
Registered investment companies: ......... -- -- -- -- -- -- --
Vanguard Money Market Reserves Prime ... -- -- -- -- -- -- --
Portfolio (cost approximates market) .. -- -- -- -- -- 9,459 241,444
Vanguard Index Trust 500 Portfolio ..... -- -- -- -- -- -- --
(cost $590,774) ....................... -- -- -- -- -- -- 705,439
Vanguard International Growth Fund ..... -- -- -- -- -- -- --
(cost $161,067) ....................... -- -- -- -- -- -- 176,739
Vanguard Short Term U.S. Treasury ...... -- -- -- -- -- -- --
Bond Portfolio (cost $45,019) ......... -- -- -- -- -- -- 45,423
Vanguard Wellington Fund (cost ......... -- -- -- -- --
$411,966) -- -- -- -- -- -- 401,763
Vanguard Index Extended Market Fund .... -- -- -- -- -- -- --
(cost $189,132) ....................... $ 190,879 -- -- -- -- -- 190,879
Vanguard U.S. Growth Fund (cost ........ -- -- -- -- -- -- --
$458,809) -- $552,261 -- -- -- -- 552,261
Vanguard Windsor II Fund (cost ......... -- -- -- -- -- -- --
$631,032) -- -- $ 650,882 -- -- -- 650,882
Vanguard Bond Index Fund (cost ......... -- -- -- -- --
$142,178) -- -- -- $143,517 -- -- 143,517
Loans to Participants .................... $60,130 -- 60,130
---------- ---------- ---------- ---------- --------- ---------- ---------
---------- ---------- ---------- -------- -------- ---------- --------
NET ASSETS AVAILABLE FOR PLAN BENEFITS .... $ 190,879 $ 552,261 $ 650,882 $ 143,517 $60,130 $132,079 $3,304,667
======== ======== ========= ========== ========== ======= ==========
The accompanying notes are an integral part of these financial statements
B45
Savings Plan of Southern Peru Copper Corporation
and Participating Subsidiaries
Statement of Net Assets Available for Benefits, with Fund Information
as of December 31, 1997
Vanguard Money Loan
Market Fund Fund Total
-------------------------------------------------------
Investments, at fair value: - - -
Vanguard Money Market Fund (cost - - -
approximates market) $2,192,784 - $2,192,784
Participant Loans - $58,647 58,647
-------------------------------------------------------
Total Investments 2,192,784 58,647 2,251,431
-------------------------------------------------------
Contributions Receivable: - - -
Participants 24,883 - 24,883
Employer 10,757 - 10,757
Interest Receivable - 1,797 1,797
-------------------------------------------------------
NET ASSETS AVAILABLE - - -
FOR PLAN BENEFITS $2,228,424 $60,444 $2,288,868
=======================================================
The accompanying notes are an integral part of these financial statements.
B46
Savings Plan of Southern Peru Copper Corporation
and Participating Subsidiaries
Statement of Changes in Net Assets
Available for Benefits, with
Fund Information for the year
ended December 31, 1998
Vanguard SPCC Vanguard Vanguard
Index Vanguard Common Money Market Short Term Vanguard
Trust 500 International Stock Fund Reserves Prime U.S. Treasury Wellington
Portfolio Growth Fund Portfolio Bond Portfolio Fund
--------- ----------- -------- --------- -------------- ----
ADDITIONS:
Investment Income .................. -- -- -- -- -- --
Net appreciation ................ -- -- -- -- -- --
(depreciation) in the fair .... -- -- -- -- -- --
value of investments .......... $ 116,608 $ 15,437 $ (51,550) $ -- $ 16 $ (9,898)
Dividends ........................ 11,075 3,909 3,976 16,052 4,510 43,633
Interest .........................
Total Investment Income (Loss) ..... 127,683 19,346 (47,574) 16,052 4,526 33,735
Contributions ...................... -- -- -- -- -- --
Participant ...................... 136,108 38,425 11,744 33,163 4,374 98,726
Employer ......................... -- -- 167,144 -- -- --
Loan repayments .................... 7,783 4,186 -- 1,108 1,108 4,218
Interfund transfers ................ 476,193 114,782 18,020 268,867 35,415 282,627
TOTAL ADDITIONS ............... 747,767 176,739 149,334 319,190 45,423 419,306
DEDUCTIONS: ........................ -- -- -- -- -- --
Benefit payments ................. 30,800 -- 2,638 80,863 -- 17,543
General and administrative ....... -- -- -- -- -- --
Participant loan withdrawals ..... 11,528 -- -- 7,389 -- --
TOTAL DEDUCTIONS .............. 42,328 -- 2,638 88,252 -- 17,543
--
Net Increase (Decrease) ............ 705,439 176,739 146,696 230,938 45,423 401,763
NET ASSETS AVAILABLE FOR PLAN ...... -- -- -- -- -- --
BENEFITS, BEGINNING OF YEAR
NET ASSETS AVAILABLE FOR PLAN ...... -- -- -- -- --
BENEFITS, END OF YEAR ........... $ 705,439 $ 176,739 $ 146,696 $ 230,938 $ 45,423 $ 401,763
Vanguard Vanguard Vanguard
Index U.S. Vanguard Bond Index Vanguard Money
Extended Growth Fund Windsor Fund Market Fund Loan
Market Fund II Fund Fund Total
----------- ------- ---- -----
ADDITIONS:
Investment Income .............
Net appreciation ...........
(depreciation) in the fair
value of investments ..... $ 3,003 $ 98,013 $ 22,476 $ 1,338 $ -- $ -- $ 195,443
Dividends ................... 14,363 35,008 65,664 6,380 -- -- 204,570
Interest .................... 4,920 4,920
Total Investment Income (Loss) 17,366 133,021 88,140 7,718 -- 4,920 404,933
----------- -------- --------- ----------- -------- ----------- ----------
Contributions ................. -- -- -- -- -- -- --
Participant ................. 64,697 103,676 113,192 29,256 -- -- 633,361
Employer .................... -- -- -- -- -- -- 167,144
Loan repayments ............... 3,518 9,178 4,926 1,559 -- (37,584) --
Interfund transfers ........... 124,171 336,614 466,751 104,984 (2,228,424) -- --
----------- ----------- ----------- -------- ----------- ----------- --------
TOTAL ADDITIONS .......... 209,752 582,489 673,009 143,517 (2,228,424) (32,664) 1,205,438
----------- -------- ----------- ----------- -------- - -------- ----------
DEDUCTIONS: ................... -- -- -- -- -- -- --
Benefit payments ............ 18,094 20,295 18,917 -- -- -- 189,150
General and administrative .. 489 -- -- -- -- -- 489
Participant loan withdrawals 290 9,933 3,210 -- -- (32,350) -
----------- ----------- -------- ----------- -------- -------- ----------
TOTAL DEDUCTIONS ......... 18,873 30,228 22,127 -- -- (32,350) 189,639
----------- -------- ----------- ----------- -------- ----------- -----------
Net Increase (Decrease) ....... 190,879 552,261 650,882 143,517 (2,228,424) (314) 1,015,799
--------- ---------- ---------- ----------- -------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN .
BENEFITS, BEGINNING OF YEAR
2,228,424 60,444 2,288,868
----------- ----------- -------- ----------- ----------- -------- -----------
NET ASSETS AVAILABLE FOR PLAN . -- -- -- --
BENEFITS, END OF YEAR ...... $ 190,879 $ 552,261 $ 650,882 $ 143,517 $ -- $60,130 $3,304,667
=========== ======== =========== ======== ======== =========== ===========
The accompanying notes are an integral part of these financial statements.
B47
Savings Plan of Southern Peru Copper Corporation
and Participating Subsidiaries
Statement of Changes in Net Assets Available
for Benefits, with Fund Information
for the seven months ended December
31, 1997
-------------------------------------------------------------------------------------
T. Rowe Price
-------------------------------------------------------------------------------------
U.S.
Int'l Stock Growth Stock New New Horizons Prime Treasury
Era Reserve Money
Fund Fund Fund Fund Fund Fund
-------------------------------------------------------------------------------------
ADDITIONS: ................... -- -- -- -- -- --
Investment Income: ........... -- -- -- -- -- --
Net Appreciation ........... -- -- -- -- -- --
(depreciation) in the
fair value of investments . $ (39,113) $ 4,818 $ (8,787) $ 29,507 $ 844 $ 355
Dividends .................. 20,961 24,207 12,418 8,464 4,205 1,917
Interest ................... -- -- -- -- -- --
Total Investment Income (Loss) (18,152) 29,025 3,631 37,971 5,049 2,272
---------- ---------- ---------- ---------- ---------- ----------
Contributions: ............... -- -- -- -- -- --
Participants ............... 18,333 13,576 6,425 22,727 6,336 3,482
Employer ................... 7,457 5,590 2,196 9,855 2,144 1,206
Loan repayments .............. 2,286 940 333 1,403 534 472
Transfer between Trustees .... (392,871) (192,915) (123,398) (344,748) (175,824) (83,262)
Interfund transfers .......... (14,796) (8,335) -- 8,335 21,253 --
TOTAL ADDITIONS ......... (397,743) (152,119) (110,813) (264,457) (140,508) (75,830)
DEDUCTIONS: .................. -- -- -- -- -- --
Benefit payments ........... 26,860 26,970 4,916 17,553 21,327 355
Participant loan withdrawals 2,416 3,793 2,425 -- 207 2,160
TOTAL DEDUCTIONS ........ 29,276 30,763 7,341 17,553 21,534 2,515
Net Increase (Decrease) ...... (427,019) (182,882) (118,154) (282,010) (162,042) (78,345)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN -- -- -- -- -- --
BENEFITS, BEGINNING OF PERIOD 427,019 182,882 118,154 282,010 162,042 78,345
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN -- -- -- -- -- --
BENEFITS, END OF PERIOD ... $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------
T. Rowe Price
--------------------------------------------
Other Vanguard
Growth & Other Long-Term Money
Income Income Growth Loan Market
Fund Fund Fund Fund Fund Total
------------------------------------------------------------------------------------
ADDITIONS: ................... -- -- -- -- --
Investment Income: ........... -- -- -- -- --
Net Appreciation ........... -- -- -- -- -- --
(depreciation) in the
fair value of investments . $ 36,692 $ 459 $ (6,363) $ -- $ -- $ 18,412
Dividends .................. 26,156 570 14,056 -- -- 112,954
Interest ................... -- -- -- 6,574 -- 6,574
----------
Total Investment Income (Loss) 62,848 1,029 7,693 6,574 -- 137,940
---------- ---------- ---------- ---------- ---------- ----------
Contributions: ............... -- -- -- -- -- --
Participants ............... 23,713 9,949 81,635 -- 24,883 211,059
Employer ................... 10,536 4,149 36,148 -- 10,757 90,038
Loan repayments .............. 3,383 -- 1,974 13,140 -- 24,465
Transfer between Trustees .... (523,537) (21,780) (334,449) -- 2,192,784 --
Interfund transfers .......... -- -- (6,457) -- -- --
TOTAL ADDITIONS ......... (423,057) (6,653) (213,456) 19,714 2,228,424 463,502
---------- ---------- ---------- ---------- ---------- ----------
DEDUCTIONS: .................. -- -- -- -- -- --
Benefit payments ........... 20,893 1,063 13,777 17,715 -- 151,429
Participant loan withdrawals -- -- -- 13,464 -- 24,465
TOTAL DEDUCTIONS ........ 20,893 1,063 13,777 31,179 -- 175,894
Net Increase (Decrease) ...... (443,950) (7,716) (227,233) (11,465) 2,228,424 287,608
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN -- -- -- -- -- --
BENEFITS, BEGINNING OF PERIOD 443,950 7,716 227,233 71,909 -- 2,001,260
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN -- -- -- -- -- --
BENEFITS, END OF PERIOD ... $ -- $ -- $ -- $ 60,444 $2,228,424 $2,288,868
The accompanying notes are an integral part of these financial statements.
B48
Savings Plan of Southern Peru Copper Corporation
And Participating Subsidiaries
Notes to Financial Statements
1. Plan Description
The following description of the Savings Plan of Southern Peru Copper
Corporation 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 June 1, 1985, Southern Peru Copper Corporation (the "Company")
established the Plan, which has been amended thereafter. The Plan is a
defined contribution plan and is administered by the Administrative
Committee in accordance with authority delegated by the Board of
Directors. The Plan is designed to provide a method of savings by
eligible employees for their retirement and other needs.
Contributions:
An employee becomes eligible to participate in the Plan after the
completion of 30 days service. Each eligible employee wishing to
participate in the Plan must elect to authorize pre-tax and/or post-tax
contributions (the "contributions") by payroll deduction. Contributions
are stated in whole percentages of 1% to 12% of the participant's
earnings, as defined, or a specified dollar amount. A participant may
elect to increase, decrease or suspend the 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.
Participants are 100% vested in their contributions and earnings therein.
Matching Company Contribution - Effective January 1, 1998, the Company
matches the first 6% of a participant's monthly contribution at a rate of
50%. The matching contribution may be made in cash or Company common
stock. Company contributions for the year ended December 31, 1998
consisted of cash in the amount of $167,144.
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.
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 account or $50,000 reduced by the
highest outstanding plan loan balance to such participant during the
prior twelve-month period ending on the day before the date the loan is
made.
B49
Notes to Financial Statements - Continued
A participant's loan is repayable within a maximum of five years or
immediately upon termination of employment, if sooner. 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 collateralized
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 May 1, 1997, the Plan was amended, effective January 1, 1998, to
appoint the Vanguard Fiduciary Trust Company (Vanguard) as the Trustee,
Investment Manager and Recordkeeper of the Plan, modify the Plan year end
to be December 31, permit employees to contribute on an after-tax basis,
include non-U.S. expatriates as eligible employees, require the Company
matching contribution to be invested in the newly created Southern Peru
Copper Corporation Common Stock Fund and change the definition of
compensation used for purposes of contributions to include only base
salary.
On November 4, 1997, the Plan was further amended, effective January 1,
1998, to change the eligibility waiting period from six months of service
to 30 days of service and permit plan entry on the first day of any
month, permit only one loan at a time, include a one year participation
eligibility requirement for purposes of initiating a loan, provide for
the transferability of the Company matching contributions for
participants who attain age 64, remove existing hardship withdrawal
provisions and permit in-service withdrawals subject to certain
suspension penalties, revise the provisions relating to distribution upon
termination of employment to grandfather the Joint and Survivor Annuity
Option and frequency of installment payments for participants with
account balances as of December 31, 1997, require the immediate
distribution of account balances under $5,000, permit participants with
account balances in excess of $5,000 to elect a distribution at any time
prior to age 65 and provide for the payment of administrative expenses by
the Company with the exception of expenses pertaining to loan
administration, which shall be charged to participants with outstanding
loan balances. The Plan was also amended to be in accordance with the
Small Business Job Protection Act of 1996.
In addition, effective January 1, 1998, the Plan name was amended from
the Southern Peru Copper Corporation 401(k) Savings Plan to the Savings
Plan of Southern Peru Copper Corporation and Participating Subsidiaries.
3. Summary of Significant Accounting Policies
Investment Valuation:
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 Southern
Peru Common Stock Fund is valued at its year-end 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.
B50
Notes to Financial Statements - Continued
Investment Transactions and Investment Income:
Transactions are accounted for on a trade-date basis. Average cost is the
basis used in the determination of gains or losses on sales of
securities. Dividend income is recorded on the ex-dividend (stockholder
date of record) date. Interest income from participant loans is recorded
as earned. 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 realized gains or losses and the change in
unrealized appreciation (depreciation) on those investments.
Investment funds with balances less than five percent of the total net
assets of the Plan, as of December 31, 1998 and 1997 and similar
investment objectives have been aggregated on the Statements of Net
Assets Available for Benefits and the Statement of Changes in Net Assets
Available for Benefits.
Payment of Benefits:
Benefits are recorded when paid.
Plan Expenses:
The Company pays all administrative expenses of the Plan. The Company
also pays the fees of consultants, auditors and counsel, and transfer
taxes on shares of Southern Peru Copper Corporation Common Stock
distributed to Plan participants or their beneficiaries, with the
exception of loan administrative fees, which are charged to participants.
Investment fees related to Vanguard funds and all other taxes, brokerage
commissions and any other expenses directly relating to the investment of
the Trust Fund are paid from assets of the plan.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities as of the date of
the financial statements and the reported amounts of investment income
and deductions 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.
B51
Notes to Financial Statements - Continued
4. Investment Funds
Effective January 1, 1998, 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, the number of Plan participants who held
an interest in this fund was 78.
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, the number of Plan participants who held an
interest in this fund was 18.
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, the number of Plan participants who held an
interest in this fund was 9.
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, the number of Plan participants who held an interest
in this fund was 56.
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, the number of Plan
participants who held an interest in this fund was 35.
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, the number of Plan
participants who held an interest in this fund was 70.
o Vanguard Windsor II Fund - A fund invested in common stocks
to provide capital appreciation and dividend income. At
December 31, 1998, the number of Plan participants who held
an interest in this fund was 71.
o SPCCCommon Stock Fund - A fund that invests exclusively in
Southern Peru Copper Corporation common stock with a small
amount of short-term reserves invested in the Vanguard Money
Market Reserves Prime Portfolio to allow for timely
responsiveness to Plan transactions. At December 31, 1998,
the number of Plan participants who held an interest in this
fund was 101.
B52
Notes to Financial Statements - Continued
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, the number of Plan participants who held
an interest in this fund was 22.
o Vanguard International Growth Fund - The fund invests in
stocks of high-quality, seasoned 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, the number of Plan
participants who held an interest in this fund was 35.
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.
B53
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 or per share in each fund:
December 31, 1998 December 31, 1997
----------------- -----------------
Net Asset Net Asset
Number of Value Number of Value
Units Per Unit Units Per Unit
SPCC Common Stock Fund 20,403 $7.19
Vanguard Index Trust
500 Portfolio* 6,191 $113.95
Vanguard International
Growth Fund* 9,416 $18.77
Vanguard Money Market
Reserves Prime Portfolio* 230,938 $1.00
Vanguard Short Term U.S.
Treasury Bond Portfolio 4,380 $10.37
Vanguard Wellington Fund* 13,689 $29.35
Vanguard Windsor II Fund* 21,805 $29.85
Vanguard U.S. Growth Fund* 14,731 $37.49
Vanguard Index Extended
Market Fund* 6,234 $30.62
Vanguard Bond Index Fund 13,974 $10.27
Vanguard Money Market Fund**
2,192,784 $1.00
* Represents 5% or more of net assets available for plan benefits as
of December 31, 1998.
** Represents 5% or more of net assets available for plan benefits as of
December 31 1997.
B54
Notes to Financial Statements - Continued
5. 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.
6. Tax Status
The Plan, as amended through August 13, 1990, received a favorable
determination letter from the Internal Revenue Service ("IRS") that it is
a qualified plan and trust under Section 401(a) of the Code and, thus,
exempt from federal income taxes under provisions of Section 501(a) of
the Code. The Plan has been amended since receiving the determination
letter. However, the Plan administrator and the Plan's tax counsel
believe that the Plan is designed and is currently being operated in
compliance with the applicable requirements of the code.
7. Termination Priorities
Although it has not expressed any intent to do so, the Company reserves
the right to amend or discontinue the Plan by action of the Board at any
time. In the event of termination or partial termination of the Plan,
participants will receive the fair value of their account as of the date
of such termination or partial termination.
B55
Savings Plan of Southern Peru Copper Corporation
And Participating Subsidiaries
Form 5500 Item 27a
Schedule of Assets Held for Investment Purposes
at December 31, 1998
Cost or Market
Identity of Issue or Borrower Book Value Value
Vanguard Index Trust 500 Portfolio $ 590,774 $ 705,439
SPCC Common Stock Fund 197,960 146,696
Vanguard Money Market Reserves Prime Portfolio 230,938 230,938
Vanguard Short Term U.S. Treasury Bond Portfolio 45,019 45,423
Vanguard Wellington Fund 411,966 401,763
Vanguard Index Extended Market Fund 189,132 190,879
Vanguard U.S. Growth Fund 458,809 552,261
Vanguard Windsor II Fund 631,032 650,882
Vanguard Bond Index Fund 142,178 143,517
Vanguard International Growth Fund 161,067 176,739
Loan Fund
Participants' Loans (interest rates range from
7.75% to 8.75%) - 60,130
---------- ------------
TOTAL INVESTMENTS $ 3,058,875 $ 3,304,667
============ ============
B56
Form 5500 Item 27a
Schedule of Assets Held for Investment Purposes
as of December 31, 1997
Original Market
Identity of Issue or Borrower Cost Value
Vanguard Money Market Fund $2,192,784 $2,192,784
Loan Fund
Participants' Loans (interest
rates range from7.75% to 8.75%)
58,647
------------------- -------------------
TOTAL INVESTMENTS $2,192,784 $2,251,431
=================== ===================
B57
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)
Vanguard Index Trust
500 Portfolio $ 634,004 $ 45,173 $ 43,230 $ 1,943
Vanguard Extended Market
Index Fund 209,342 20,977 19,721 1,256
Vanguard International
Growth Fund 164,200 2,898 3,132 (234)
Vanguard Money Market
Reserves Prime
Portfolio 518,251 287,313 287,313 -
Vanguard Short-Term
Treasury Fund 147,022 101,616 102,003 (387)
Vanguard Total Bond
Market Index 142,178 - - -
Vanguard U.S. Growth 487,392 33,143 28,583 4,560
Vanguard Wellington Fund 533,051 121,391 121,085 306
Vanguard Windsor II 653,308 24,903 22,276 2,627
SPCC Common Stock Fund 200,884 2,638 2,925 (287)
B58
Form 5500 Line 27d
Schedule of Reportable Transactions
for the seven months ended December 31, 1997
Purchase Selling Basis of Net
Description of Asset Price Price Asset Gain(Loss)
T. Rowe Price
International Stock - $833,048 $734,768 $ 98,280
Fund
New Horizons Fund - 711,055 593,911 117,144
Growth Stock - 429,094 363,003 66,091
New Era - 254,136 227,035 27,101
Prime Reserve - 373,315 373,315 -
Growth & Income Fund - 1,072,106 775,126 296,980
Blue Chip Growth - 221,431 202,270 19,161
B59
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 333-02736 and 333-40293) of Southern Peru
Copper Corporation of our report dated June 28, 1999 relating to the
financial statements of the Savings Plan of Southern Peru Copper
Corporation and Participating Subsidiaries, which appears in this Form
11-K.
PricewaterhouseCoopers LLP
New York, New York
June 28, 1999
B60