SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
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ANNUAL REPORT
PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2001
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Commission File No. 1-14066
Savings Plan of Southern Peru Copper Corporation
and Participating Subsidiaries
Southern Peru Copper Corporation
2575 East Camelback Road
Phoenix, Arizona 85016
SAVINGS PLAN OF SOUTHERN PERU COPPER CORPORATION
AND PARTICIPATING SUBSIDIARIES
INDEX
Page
Number
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Report of Independent Public Accountants for the year ended December 31, 2001 B25
Report of Independent Public Accountants for the year ended December 31, 2000 B26
Statements of Net Assets In Liquidation as of December 31, 2001 and 2000 B27
Statement of Changes in Net Assets In Liquidation
for the Year Ended December 31, 2001 B28
Notes to Financial Statements B29-B34
Supplemental Schedule:
Schedule of Assets Held at the End of the Year B35
Consent of Independent Public Accountants B36
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the Savings Plan of Southern Peru Copper
Corporation and Participating Subsidiaries:
We have audited the accompanying statement of net assets in liquidation of the
Savings Plan of Southern Peru Copper Corporation and Participating Subsidiaries
(the "Plan") as of December 31, 2001, and the related statement of changes in
net assets in liquidation for the year ended December 31, 2001. These financial
statements and the schedules referred to below are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audit. The statement of net
assets in liquidation as of December 31, 2000 was audited by other auditors
whose report, dated June 22, 2001, expressed an unqualified opinion on the
statement.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As described in Note 2 to the accompanying financial statements, the Board of
Directors of Southern Peru Copper Corporation approved a plan of termination of
the Savings Plan of Southern Peru Copper Corporation and Participating
Subsidiaries on May 9, 2000. As a result, the Plan reports utilizing the
liquidation basis of accounting.
In our opinion, the 2001 financial statements referred to above present fairly,
in all material respects, the net assets in liquidation of the Plan as of
December 31, 2001, and the changes in its net assets in liquidation for the year
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America applied on the basis described in the
preceding paragraph.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedule of Assets Held at end of
year is presented for purposes of additional analysis and is not a required part
of the basic financial statements but is 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 supplemental
schedule has been subjected to the auditing procedures applied in the audit 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.
Keegan, Linscott & Kenon, P. C.
Tucson, Arizona
July 9, 2002
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the Savings Plan of Southern Peru Copper
Corporation and Participating Subsidiaries:
We have audited the accompanying statements of net assets in liquidation of the
Savings Plan of Southern Peru Copper Corporation and Participating Subsidiaries
(the "Plan") as of December 31, 2000, and the related statement of changes in
net assets in liquidation for the year ended December 31, 2000. In addition, we
have audited the statement of net assets available for benefits of the Plan as
of December 31, 1999. These financial statements and the schedules referred to
below are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
As described in Note 2 to the accompanying financial statements, the Board of
Directors of Southern Peru Copper Corporation approved a plan of termination of
the Savings Plan of Southern Peru Copper Corporation and Participating
Subsidiaries on May 9, 2000. As a result, the Plan has changed its basis of
accounting for periods subsequent to December 31, 1999 from a going-concern to a
liquidation basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of the Plan as of December
31, 2000, the net assets available for benefit of the Plan as of December 31,
1999, and the changes in its net assets in liquidation for the year ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States applied on the bases described in the preceding paragraph.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedule of Assets Held at end of
year is presented for purposes of additional analysis and is not a required part
of the basic financial statements but is 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 supplemental
schedule has been subjected to the auditing procedures applied in the audit 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.
Arthur Andersen LLP
New York, New York
June 22, 2001
THIS REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ("REPORT") IS A COPY OF THE REPORT
PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP AND HAS NOT BEEN REISSUED BY ARTHUR
ANDERSEN LLP.
B26
SAVINGS PLAN OF SOUTHERN PERU COPPER CORPORATION
AND PARTICIPATING SUBSIDIARIES
Statements of Net Assets In
Liquidation as of December 31, 2001 and 2000
2001 2000
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ASSETS:
Investments, at Fair Value
Mutual Funds $885,192 $1,918,033
Common Stock 158,116 202,811
Participant Loans
- 2,716
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Net Assets in Liquidation $1,043,308 $2,123,560
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The accompanying notes are an integral part of these financial statements.
B27
SAVINGS PLAN OF SOUTHERN PERU COPPER CORPORATION
AND PARTICIPATING SUBSIDIARIES
Statement of Changes in Net Assets In Liquidation
For The Year Ended December 31, 2001
Additions
Investment income:
Interest and dividend income, investments $ 46,409
Interest income, participant loans 36
Net depreciation in fair value of investments (219,138)
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Net investment loss (172,693)
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Deductions
Payment of benefits (907,559)
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Total deductions (907,559)
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Net decrease (1,080,252)
Net assets in liquidation, beginning of year 2,123,560
------------
Net assets in liquidation, end of year $1,043,308
============
The accompanying notes are an integral part of these financial statements.
B28
SAVINGS PLAN OF SOUTHERN PERU COPPER CORPORATION
AND PARTICIPATING SUBSIDIARIES
Notes to the Financial Statements
December 31, 2001 and 2000
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.
On May 9, 2000, the Board of Directors of the Company approved the termination
of the Plan, and the taking of any action, including amending the Plan and
giving notice to participants, to implement the termination. Effective November
15, 2000, the Plan was terminated and no further contributions from employees or
the Company were accepted after that date. The Plan received a final letter of
determination dated August 21, 2001 from the Internal Revenue Service. The
Company proceeded with the distribution of assets to Plan participants but did
not complete the distribution before December 31, 2001. At December 31, 2001
there were 34 Plan participants who had not completed the paperwork for
withdrawal and termination of their participation in the Plan. It is anticipated
that the termination will be completed before year-end 2002.
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 $10,500 in 2000.
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. There were no
Company contributions for the year ended December 31, 2001.
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.
B29
A participant's loan is repayable within a maximum of five years or immediately
upon termination of employment, if sooner. Interest is 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
a Southern Peru Copper Corporation Common Stock Fund which was created 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 withdrawals subject to certain suspension penalties, revise the
distribution provisions 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.
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.
On May 9, 2000, the Board of Directors of the Company approved the termination
of the Plan, and the taking of any action, including amending the Plan and
giving notice to participants, to implement the termination. Effective November
15, 2000 the Plan was terminated and no further contributions from employees or
the Company were accepted after that date. The Plan received a final letter of
determination dated August 21, 2001 from the Internal Revenue Service. The
Company proceeded with the distribution of assets to Plan participants but did
not complete the distribution before December 31, 2001. At December 31, 2001
there were 34 Plan participants who had not completed the paperwork for
withdrawal and termination of their participation in the Plan. It is anticipated
that the termination will be completed by year-end 2002.
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.
B30
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method of
accounting. The financial statements have changed its basis of accounting for
periods subsequent to December 31, 1999 from a going-concern to a liquidation
basis.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Transactions are accounted for on a trade-date basis. Average cost is the basis
used in the determination of gains or losses on sales of securities. Dividend
income is recorded at the ex-dividend (stockholder date of record) date. Capital
gain distributions are included in dividend income. Interest income from
participant loans is recorded as earned.
Net appreciation (depreciation) in the fair value of the Plan's investments, as
shown in the Statement of Changes in Net Assets in Liquidatiion, consists of
realized gains (losses) and unrealized appreciation (depreciation) on those
investments.
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 in the United States 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 near
term would materially affect participants' account balances and the amounts
reported in the Statement of Net Assets in Liquidation and the participants are
advised to read a Vanguard prospectus or the Plan's summary plan description
before investing in any fund.
B31
RECLASSIFICATIONS
Certain items in the 2000 financial statements have been reclassified to conform
to the presentation in the 2001 financial statements.
4. INVESTMENT FUNDS
Effective January 1, 1998, Vanguard became 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, participants directed their elected contributions
to be invested in one or more of the following funds in multiples of 5%:
- Vanguard Index 500 Fund - 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.
- Vanguard Prime Money Market Fund - A fund invested in a portfolio of high
quality money market instruments with maturities of one year or less.
- Vanguard Short-Term Treasury Fund - A fund invested primarily in
short-term U.S. Treasury securities with an average maturity of two to
three years.
- 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.
- Vanguard Extended Market Index 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.
- Vanguard U.S. Growth Fund - A fund invested primarily in a diversified
portfolio of common stocks with above-average growth potential.
- Vanguard Windsor II Fund - A fund invested in common stocks to provide
capital appreciation and dividend income.
- SPCC Common Stock Fund - A fund that invest 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.
- Vanguard Total Bond Market 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.
- 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.)
B32
The Plan also maintains the following fund:
- 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).
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 of
investments that represent 5 percent or more of the Plan's net assets:
December 31, 2001 December 31, 2000
------------------------------ ---------------------------------
Number of Investment Number of Investment
Units at Fair Value Units at Fair Value
--------- ------------- --------- --------------
SPCC Common Stock Fund 17,433 $158,116 20,759 $202,811
Vanguard 500 Index Fund 2,173 230,088 3,620 411,172
Vanguard International Growth Fund 1,661 24,928 10,036 189,370
Vanguard Wellington Fund 8,683 236,688 9,163 258,499
Vanguard Windsor II Fund 5,186 132,707 12,015 326,805
Vanguard U.S. Growth Fund 6,054 114,115 13,417 370,966
Vanguard Extended Market Index Fund 1,581 36,512 5,033 133,981
Vanguard Total Bond Market Index Fund 6,390 64,790 9,547 95,088
During 2001, the Plan's investments (including gain and losses on investments
bought and sold, as well as held during the year) depreciated in value by
$219,138 as follows:
Common stock $ (8,770)
U.S. government securities 1,721
Mutual Funds (212,089)
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$(219,138)
===========
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.
B33
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 and, as mentioned in Note 2, the
Company received a final letter of determination dated August 21, 2001 from the
Internal Revenue Service. The amendments required by said final letter of
determination were adopted effective November 15, 2001.
7. TERMINATION PRIORITIES
On May 9, 2000, the Board of Directors of Southern Peru Copper Corporation
approved the termination of the Plan. 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. At December
31, 2001 there were 34 Plan participants who had not completed the paperwork for
withdrawal and termination of their participation in the Plan. It is anticipated
that the termination will be completed before year-end 2002.
B34
SUPPLEMENTAL SCHEDULE
SAVINGS PLAN OF SOUTHERN PERU COPPER CORPORATION
AND PARTICIPATING SUBSIDIARIES
Plan EIN: 13-3849074
Schedule of Assets Held at End of Year
Market
IDENTITY OF ISSUE OR BORROWER Cost Value
----------------------------- ------------- --------------
Vanguard 500 Index Fund* $ 228,562 $ 230,088
SPCC Common Stock Fund* 167,058 158,116
Vanguard Prime Money Market Fund* 38,200 38,200
Vanguard Short-Term U.S. Treasury Fund* 6,967 7,164
Vanguard Wellington Fund* 253,618 236,688
Vanguard Extended Market Index Fund* 49,247 36,512
Vanguard U.S. Growth Fund* 196,884 114,115
Vanguard Windsor II Fund* 146,891 132,707
Vanguard Total Bond Market Index Fund* 64,435 64,790
Vanguard International Growth Fund* 30,094 24,928
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TOTAL INVESTMENTS $1,181,956 $1,043,308
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*Parties-in-interest for which a statutory exemption exists.
B35