-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Iy841Rc4tto32TQuOvPag8py+iBLG4/ZOHWwJ6KD54pIaMerA7HOVYvlbrDgq1WQ 2Ew/TVxpcRFK1IghOB0KmQ== 0000007649-98-000014.txt : 19980629 0000007649-98-000014.hdr.sgml : 19980629 ACCESSION NUMBER: 0000007649-98-000014 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASARCO INC CENTRAL INDEX KEY: 0000007649 STANDARD INDUSTRIAL CLASSIFICATION: PRIMARY SMELTING & REFINING OF NONFERROUS METALS [3330] IRS NUMBER: 134924440 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-00164 FILM NUMBER: 98655227 BUSINESS ADDRESS: STREET 1: 180 MAIDEN LN CITY: NEW YORK STATE: NY ZIP: 10038 BUSINESS PHONE: 2125102000 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN SMELTING & REFINING CO DATE OF NAME CHANGE: 19760607 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 1997 FORM 10-K/A ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 Commission file number 1-164 ASARCO Incorporated (Exact name of registrant as specified in its charter) New Jersey 13-4924440 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 180 Maiden Lane, New York, N. Y. 10038 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 510-2000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each exchange on Title of each class which registered Common Stock, without par value New York Stock Exchange Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No_____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of February 27, 1998, there were of record 39,642,592 shares of Common Stock, without par value, outstanding, and the aggregate market value of the shares of Common Stock (based upon the closing price of Asarco Common Stock on the New York Stock Exchange - Composite Transactions) of ASARCO Incorporated held by nonaffiliates was approximately $0.9 billion. PORTIONS OF THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE: Part III: Proxy statement in connection with the Annual Meeting to be held on April 29, 1998. Part IV: Exhibit index is on pages C1 through C4. ASARCO Incorporated FORM 10-K/A December 31, 1997 INDEX
Page Number FORM 10-K/A i ITEM 14 ii EXHIBIT INDEX C1-C4 FORM 11-K C49-C63
ASARCO Incorporated and Subsidiaries FORM 10-K/A December 31, 1997 The undersigned registrant hereby amends the 1997 Annual Report on Form 10-K as set forth in the pages attached hereto to add the information, financial statements and exhibits required by Form 11-K filed with respect to the Savings Plan of ASARCO Incorporated and Participating Subsidiaries pursuant to Rule 15d-21. The following item has been refiled to reflect such amendments: Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K. The Exhibit Index has been amended and is refiled herewith to include as Exhibit 99 the report in 11-K relating to the Savings Plan for Salaried Employees of ASARCO Incorporated and Participating Subsidiaries, which is filed herewith. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned thereunto duly authorized. ASARCO Incorporated By /s/ K. R. Morano K. R. Morano Executive Vice President and Chief Financial Officer Date: June 23, 1998 i PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K ii ASARCO Incorporated EXHIBIT INDEX
Exhibit Indexed No. Description on Page 3. Certificate of Incorporation and By-Laws (a) Certificate of Incorporation - restated, filed May 4, 1970 (Filed as an Exhibit to the Company's 1980 Annual Report on Form 10-K and incorporated herein by reference) (b) Certificate of Amendment to the Certificate of Incorporation effective April 23, 1975 (Filed as an Exhibit to the Company's 1980 Annual Report on Form 10-K and incorporated herein by reference) (c) Certificate of Amendment of Certificate of Incorporation executed April 14, 1981 (Filed as an Exhibit to the Post-Effective Amendment No. 8 to Registration Statement No. 2-47616, filed April 30, 1981 and incorporated herein by reference) (d) Certificate of Amendment of Restated Certificate of Incorporation filed on May 6, 1985 (Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1985 and incorporated herein by reference) (e) Certificate of Amendment of Certificate of Incorporation filed July 21, 1986 (Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1986 and incorporated herein by reference) (f) Certificate of Amendment of Restated Certificate of Incorporation, as amended filed April 22, 1987 (Filed as an Exhibit to the Company's 1987 Annual Report on Form 10-K and incorporated herein by reference) (g) Statement of Cancellation filed July 31, 1987 whereby 155,000 shares of Series A Cumulative Preferred Stock and 862,500 shares of $9.00 Convertible Exchangeable Preferred Stock were canceled (Filed as an Exhibit to the Company's 1987 Annual Report on Form 10-K and incorporated herein by reference) (h) Statement of Cancellation filed November 20, 1987 whereby 1,026,900 shares of Series A Cumulative Preferred Stock were canceled (Filed as an Exhibit to the Company's 1987 Annual Report on Form 10-K and incorporated herein by reference)
C1 ASARCOIncorporated EXHIBIT INDEX
Exhibit Description Indexed No. on Page (i) Statement of Cancellation filed December 18, 1987 whereby 1,250,000 shares of Series B Cumulative Convertible Preferred Stock were canceled (Filed as an Exhibit to the Company's 1987 Annual Report on Form 10-K and incorporated herein by reference) (j) Statement of Cancellation filed March 3, 1988 whereby 27,000 shares of Series A Cumulative Preferred Stock were canceled (Filed as an Exhibit to the Company's 1987 Annual Report on Form 10-K and incorporated herein by reference) (k) Certificate of Amendment of Restated Certificate of Incorporation, as amended, filed August 7, 1989 (Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1989 and incorporated herein by reference) (l) By-Laws as last amended on June 26, 1991 (Filed as an Exhibit to the Company's 1991 Annual Report on Form 10-K and incorporated herein by reference) 4. Instruments defining the rights of security holders, including indentures (a) There are currently various separate indentures, agreements or similar instruments under which long-term debt of Asarco is currently outstanding. The Registrant hereby agrees to furnish to the Commission, upon request, a copy of any of the instruments which define the rights of holders of long-term debt securities. None of the outstanding instruments represent long-term debt securities in excess of 10% of the total assets of Asarco as of December 31, 1997 (b) Form of Rights Agreement dated as of July 26, 1989, between the Company and First Chicago Trust Company of New York, as Rights Agent, defining the rights of shareholders under a July 1989 Shareholders' Rights plan and dividend declaration (Filed as an Exhibit to the Company's report on Form 8-K filed on July 28, 1989 and incorporated herein by reference) (c) Rights Agreement Amendment dated as of September 24, 1992, between the Company and The Bank of New York, as Successor Rights Agent under the Rights Agreement listed above (Filed as an Exhibit to the Company's 1992 Annual Report on Form 10-K and incorporated herein by reference)
C2 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 12 of its executive officers, including Messrs. R. de J. Osborne, F.R. McAllister, K.R. Morano, R.M. Novotny and A.B. Kinsolving (Filed as an Exhibit to the Company's 1996 Annual Report on Form 10-K and incorporated herein by reference) (c) Deferred Fee Plan for Directors, as amended through January 28 1998 C11-C15 (d) Supplemental Pension Plan for Designated Mid-Career Officers, as amended through January 28, 1998 C16-C24 (e) Retirement Plan for Non-Employee Directors, as amended through January 28, 1998. Effective December 31, 1995, the Company terminated the plan for current and future directors. C25-C30
C3 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 herein by reference) (h) Director's Deferred Payment Plan, as amended through January 28, 1998 C31-C37 (i) Incentive Compensation Plan for Senior Officers, effective January 1, 1996 (Filed as an Exhibit B to the Company's 1997 Proxy Statement filed on March 12, 1996 and incorporated herein by reference) (j) 1996 Stock Incentive Plan, effective April 24, 1996 (Filed as an Exhibit to the Company's Registration Statement on Form S-8 filed on December 17, 1996, and incorporated herein by reference) (k) Compensation Deferral Plan, as amended through January 28, 1998 C38-C48 11. Statement re Computation of Earnings Per Share C5 12. Statement re Computation of Ratios C6 21. Subsidiaries of the Registrant C7-C10 23. Consent of Independent Accountants is included on page A75 of this Annual Report on Form 10-K. 99. Report on Form 11-K relating to the Savings Plan for Salaried Employees of ASARCO Incorporated and Participating Subsidiaries. C50-C63
Copies of exhibits may be acquired upon written request to the Treasurer and the payment of processing and mailing costs. C4 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 11-K ------------------ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------ Commission File No. 1-164 ------------------ For the fiscal year ended December 31, 1997 Savings Plan of ASARCO Incorporated and Participating Subsidiaries ASARCO Incorporated 180 Maiden Lane New York, New York 10038 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Financial Statements and Schedules December 31, 1997 and 1996 Savings Plan of ASARCO Incorporated and Participating Subsidiaries INDEX
Page Number Report of Independent Accountants C50 Statement of Net Assets Available for Benefits, with Fund Information at December 31, 1997 C51 Statement of Net Assets Available for Benefits, with Fund Information at December 31, 1996 C52 Statement of Changes in Net Assets Available for Benefits, with Fund Information for the year ended December 31, 1997 C53 Notes to Financial Statements C54-C60 Supplemental Schedules: Form 5500 Item 27a*-Schedule of Assets Held for Investment Purposes at December 31, 1997 C61 Form 5500 Line 27d*-Schedule of Reportable Transactions for the year ended December 31, 1997 C62 Consent of Independent Accountants C63
* Refers to item number in Form 5500 ("Annual Return/Report of Employee Benefit Plan") filed with the Department of Labor for the plan year ended December 31, 1997. C49 REPORT OF INDEPENDENT ACCOUNTANTS ------------- To the Savings Plan Committee of ASARCO Incorporated and Participating Subsidiaries: We have audited the accompanying statements of net assets available for benefits of the Savings Plan of ASARCO Incorporated and Participating Subsidiaries (the "Plan") as of December 31, 1997 and 1996, and the related statement of changes in net assets available for benefits for the year ended December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1997 and 1996 and the changes in net assets available for benefits for the year ended December 31, 1997 in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules, as listed in the index on the preceding page, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The Fund Information in the accompanying statements of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the statements of net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and Fund information are the responsibility of the Plan's management. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. COOPERS & LYBRAND L.L.P. New York, New York June 22, 1998 C50 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)
Non- Participant Participant Directed Directed Vanguard Vanguard Short Index Vanguard Term Trust Asarco Mny Mkt U.S. Vanguard Vanguard Vanguard Vanguard Asarco 500 Common Rsrv Treasury Vanguard Ind Ext U.S. Windsor Bond Common Fund Stock Prm Bond Wellington Market Growth II Index Loan Stock Portfolio Fund Portfolio Portfolio Fund Fund Fund Fund Fund Fund Fund Total ---------- ---- --------- --------- ----- ------ ----- ------ ----- ----- ------ ------ Investments, at fair value: Asarco Common Stock (cost $25,211) $3,260 $17,763 $21,023 Registered investment companies: Vanguard Money Market Reserves Prime Portfolio (cost approximates market) 29 $17,869 158 18,056 Vanguard Index Trust 500 Portfolio (cost $22,581) $39,654 39,654 Vanguard Short Term U.S. Treasury Bond Portfolio (cost $7,452) $7,476 7,476 Vanguard Wellington Fund (cost $9,952) $12,282 12,282 Vanguard Index Extended Market Fund (cost $3,113) $4,026 4,026 Vanguard U.S. Growth Fund (cost $3,971) $5,399 5,399 Vanguard Windsor II Fund (cost $10,560) $13,870 13,870 Vanguard Bond Index Fund (cost $1,661) $1,694 1,694 Loans to Participants $4,765 4,765 ------ ----- ------ ----- ------- ----- ------ ------ ------ ----- ------ ------ Total 39,654 3,289 17,869 7,476 12,282 4,026 5,399 13,870 1,694 4,765 17,921 128,245 Investments Contributions Receivable: Participants 167 22 69 39 90 35 48 101 5 576 Company 199 199 Interest receivable 31 31 Loans receivable 52 8 28 16 29 8 16 33 1 (191) ------- ------ ------- ------ ------ ------ ------ ------ ------ ------- ------ ------ NET ASSETS AVAILABLE FOR PLAN BENEFITS $39,873 $3,319 $17,966 $7,531 $12,401 $4,069 $5,463 $14,004 $1,700 $4,605 $18,120 $129,051 ======= ======== ======= ====== ======= ====== ====== ======= ====== ====== ======= ========
The accompanying notes are an integral part of these financial statements. C51 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Statement of Net Assets Available for Benefits, with Fund Information at December 31, 1996 (dollars in thousands)
Non- Participant Participant Directed Directed Vanguard Vanguard Vanguard Money Short Vanguard Index Asarco Market Term US Index Vanguard Vanguard Vanguard Asarco Trust Common Reserves Treas. Vanguard Extended U.S. Windsor Bond Common 500 Stock Prime Bond Wellinton Market Growth II Index Loan Stock Portfolio Fund Portfolio Port. Fund Fund Fund Fund Fund Fund Fund Total --------- ----- --------- --------- ---- ----- ---- ---- ---- ---- ---- ----- Investments, at fair value: Asarco Common Stock (cost $23,547) $3,513 $18,506 $22,019 Shares of registered investment companies: Vanguard Money Market Reserves Prime Portfolio (cost approximates market) 17 $18,728 90 18,835 Vanguard Index Trust 500 Portfolio (cost $19,143) $29,014 29,014 Vanguard Short Term U.S. Treasury Bond Portfolio (cost $7,819) $7,812 7,812 Vanguard Wellington Fund (cost $8,337) $9,855 9,855 Vanguard Index Extended Market Fund (cost $2,568) $3,077 3,077 Vanguard U.S. Growth Fund (cost $3,187) $3,964 3,964 Vanguard Windsor II Fund (cost $7,588) $9,329 9,329 Vanguard Bond Index Fund (cost $712) $716 716 Loans to Participants $4,374 4,374 ------- ----- ------ ----- ----- ----- ----- ---- --- ----- ------ ------- Total 29,014 3,530 18,728 7,812 9,855 3,077 3,964 9,329 716 4,374 18,596 108,995 Investments Contributions Receivable: Participants 164 21 71 46 89 34 43 90 4 562 Company 197 197 Interest 29 29 receivable Loans receivable 53 7 25 16 21 8 8 25 1 (164) -------- ------ ------- ------- ------ ------ ------ ----- ---- ------- ----- ----- NET ASSETS AVAILABLE FOR PLAN BENEFITS $29,231 $3,558 $18,824 $7,874 $9,965 $3,119 $4,015 $9,444 $721 $4,239 $18,793 $109,783 ======= ====== ======= ====== ====== ====== ====== ====== ==== ====== ======= ========
The accompanying notes are an integral part of these financial statements. C52 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Statement of Changes in Net Assets Available for Benefits, with Fund Information for the year ended December 31, 1997 (dollars in thousands)
Vanguard Vanguard Short Vanguard Money Term Vanguard Index Asarco Market U.S. Index Vanguard Vanguard Vanguard Trust Common Reserves Treasury Vanguard Extended U.S. Windsor Bond 500 Stock Prime Bond Wellington Market Growth II Index Loan Portfolio Fund Portfolio Portfolio Fund Fund Fund Fund Fund Fund Total ADDITIONS: --------- ---- --------- --------- ----- ---- ---- ------ ------ ----- ------ Investment Income Net appreciation (depreciation) in the fair value of investments $8,914 $(2,202) $29 $1,294 $528 $863 $1,976 $32 $11,434 Dividends 826 708 $975 437 1,048 275 207 1,268 64 5,808 Interest $354 354 ----- -------- ------ ----- ------ ----- ---- ----- ---- ----- ------- Total 9,740 (1,494) 975 466 2,342 803 1,070 3,244 96 354 17,596 Contributions Participant 2,249 244 863 514 1,225 500 633 1,243 84 7,555 Company 2,456 2,456 Loan Repayments 69 103 365 206 315 104 162 380 9 (2,341) Transfers from 119 106 49 18 13 32 24 44 40 445 other plan Interfund transfers 274 (297) (369) (390) (125) (217) (123) 447 800 ------ ----- ----- ---- ----- ----- ----- ----- --- ------- ------ TOTAL 13,079 1,118 1,883 814 3,770 1,222 1,766 5,358 989 (1,947) 28,052 ------ ----- ----- ---- ----- ----- ----- ----- --- ------- ------ ADDITIONS DEDUCTIONS: Benefit 1,785 1,941 2,191 914 1,036 185 173 453 7 88 8,773 payments General and 11 administrative 1 4 1 1 4 Loans 651 89 546 242 297 83 145 345 3 (2,401) ------ ------ ----- ------ ------ ---- ---- ---- --- ------- ------- TOTAL DEDUCTIONS 2,437 2,030 2,741 1,157 1,334 272 318 798 10 (2,313) 8,784 ------ ------ ------ ----- ------ ---- ---- ---- --- ------ ------ Net increase (decrease) 10,642 (912) (858) (343) 2,436 950 1,448 4,560 979 366 19,268 NET ASSETS AVAILABLE FOR PLAN BENEFITS, BEGINNING OF YEAR 29,231 22,351 18,824 7,874 9,965 3,119 4,015 9,444 721 4,239 109,783 ------ ------ ------ ----- ----- ----- ----- ----- --- ------ ------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, END OF YEAR $39,873 $21,439 $17,966 $7,531 $12,401 $4,069 $5,463 $14,004 $1,700 $4,605 $129,051 ======= ======= ======= ====== ======= ====== ===== ======= ======== ====== ========
The accompanying notes are an integral part of these financial statements. C53 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Notes to Financial Statements 1. Plan Description The following description of the Savings Plan of ASARCO Incorporated and Participating Subsidiaries (the "Plan") provides only general information. Reference should be made to the Plan document for a complete description of the Plan and Plan amendments, including eligibility requirements and vesting provisions. General: Effective January 1, 1980, ASARCO Incorporated (the "Company") established the Savings Plan of ASARCO Incorporated and Participating Subsidiaries, which has been amended thereafter. Contributions commenced in July 1980. The Plan is a defined contribution plan and is administered by the Company's Savings Plan Committee in accordance with authority delegated by the Fiduciary Committee. The Plan is designed to provide a method of savings by eligible employees for their retirement and other needs, and to enable them to acquire an ownership interest in the Company. Contributions: Employees are eligible for participation in the Plan after completing six months of service. Each eligible employee wishing to participate in the Plan must elect to authorize pre-tax and/or post-tax contributions by payroll deduction. Contributions are stated in whole percentages of 1% to 12% of the participant's basic earnings, as defined. A participant may elect to increase, decrease or suspend the pre-tax or post-tax contributions on the first day of any calendar quarter. The Internal Revenue Code of 1986 (the "Code"), as amended, limited the maximum amount an employee may contribute on a pre-tax basis to $9,500 in 1997 and 1996. Matching Company Contribution - The Company matches the first 6% of a participant's monthly contribution at the rate of 50%. The matching contribution may be made in either cash or Asarco Common Stock and in the case of cash, the Plan's trustee, Vanguard Fiduciary Trust Company ("Vanguard"), is required to purchase Asarco Common Stock. Company contributions for the year ended December 31, 1997 consisted of the following:
Cash $2,242,232 Asarco Common Stock 213,359 $2,455,591
The Company is not obligated to make a contribution during any period in which it has no accumulated retained earnings. The Company's contributions are subject to all legal restrictions which may apply, including Sections 401 and 415 of the Code, which limit the annual contributions to an employee's account. C54 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Notes to Financial Statements - Continued Participants are 100% vested in both their contributions and the Company's matching contribution and earnings thereon upon participation in the Plan. Benefit Payments: Upon retirement or termination of employment (other than by death) prior to age 65, a participant must consent in writing to receive a distribution of account balances. If participants do not consent in writing, payment of a distribution is made upon the earlier of death or attainment of age 65. Participants who retire may elect to receive payments in annual cash installments over a period of up to 10 years. Participants receiving lump sum distributions may choose to receive cash equal to the value of their interest in all accounts or full shares of Asarco Common Stock equal to all or part of their interest in the Asarco Common Stock Fund plus cash equal to the remaining value of their interest in all Accounts. In the event of the death of a participant, his or her entire interest in the Plan will be paid to their designated beneficiary in either a single lump sum or annual cash installments not to exceed 10 years. Loans: The Plan provides for loans to participants who have participated in the Plan for at least one year, subject to certain limitations. The maximum loan allowed to each participant is limited to the lesser of 50% of the total value of the participant's accounts, or $50,000 reduced by the outstanding balance of any plan loans to such participant. A participant's loan is repayable within five years or immediately upon termination of employment. Interest is currently accrued at the prime rate. Loans are secured by a lien on the participant's interest in the Plan. Loan repayments are made through payroll withholdings from the participant's earnings. A participant may pre-pay a loan at any time without penalty. 2. Significant Plan Amendments On November 25, 1997, the Plan was amended, effective January 1, 1998, to change the eligibility waiting period from six months of service to the first day of any month following completion of 30 days of service; to permit employees to change contribution rates on a monthly, rather than quarterly, basis; to allow employees who have reached age 64 to transfer Company matching contributions from the Asarco Common Stock fund to other investment options under the Plan; to add the Vanguard International Growth Fund as an investment option; to permit express loans and automated withdrawals; and to increase, in accordance with the Taxpayer Relief Act of 1997, the account balance threshold for automatic cash-outs of terminating employees from $3,500 to $5,000. In addition, on July 30, 1997, the Plan was amended to recognize service by new hires with Southern Peru Copper Corporation for purposes of satisfying eligibility requirements, and to make other technical changes to comply with changes in law. C55 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Notes to Financial Statements - Continued 3. Summary of Significant Accounting Policies Valuation of Investments: The Plan's investments are stated at fair value. Units of registered investment companies are valued at quoted market prices which represent the net asset value of shares held by the Plan at year-end. The Asarco Common Stock Fund is valued at its year-end unit closing price (comprised of year-end market price plus uninvested cash position). Participant loans are valued at cost which approximates fair value. Basis of Accounting: The financial statements of the Plan are prepared under the accrual method of accounting. Investment Transactions and Investment Income: Transactions are accounted for on a trade-date basis. Average cost is the basis used in the determination of gains or losses on sales of securities. Interest income is accrued when earned. Dividend income is recorded on the ex-dividend date. Capital gain distributions are included in dividend income. Net appreciation (depreciation) in the fair value of the Plan's investments, as shown in the Statement of Changes in Net Assets Available for Benefits, consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Contributions: The Company's matching contributions are measured by reference to the participant contributions and are not discretionary. Loans to Participants: Loans to participants are presented in the Statement of Net Assets Available for Plan Benefits as Plan assets. Benefit Payments: Benefit payments are recorded when paid. Plan Expenses: The Company pays all administrative expenses of the Plan including trust, recordkeeping, consulting, audit and legal fees, with the exception of loan administration fees which are charged to participants. Taxes, excluding transfer taxes on shares of Asarco Common Stock distributed to participants or their beneficiaries, and investment fees related to Vanguard Funds are paid from the net assets of such funds. C56 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Notes to Financial Statements - Continued Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Risks and Uncertainties: The Plan provides for investment options in various mutual funds. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the Statement of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits. Participants are advised to read a Vanguard prospectus or the Plan's summary plan description before investing in any fund. 4. Investment Funds Vanguard is the investment manager and participant recordkeeper for all investment funds of the Plan. Vanguard is also the trustee of all of the funds. Upon enrollment in the Plan throughout 1997, participants directed their elected contributions to be invested in one or more of the following funds in multiples of 5%: o Vanguard Index Trust 500 Portfolio - A fund invested in all of the stocks included in the Standard & Poor's 500 Composite Index (the "Index") in approximately the same proportions as they are represented in the Index. At December 31, 1997 and 1996, the number of Plan participants who held an interest in this fund was 1,413 and 1,382, respectively. o Vanguard Money Market Reserves Prime Portfolio - A fund invested in a portfolio of high quality money market instruments with maturities of one year or less. At December 31, 1997 and 1996, the number of Plan participants who held an interest in this fund was 1,055 and 1,137, respectively. o Vanguard Short Term U.S. Treasury Bond Portfolio - A fund invested primarily in short-term U.S. Treasury securities with an average maturity of two to three years. At December 31, 1997 and 1996, the number of Plan participants who held an interest in this fund was 540 and 615, respectively. o Vanguard Wellington Fund - A fund invested in bonds and common stocks. The bonds are held for relative stability of income and principal, while the common stocks are held for potential growth of capital and income. At December 31, 1997 and 1996, the number of Plan participants who held an interest in this fund was 903 and 882, respectively. C57 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Notes to Financial Statements - Continued o Vanguard Index Extended Market Fund - A fund which provides investment results that correspond to the aggregate price and yield performance of the Wilshire 4500 Index. The Wilshire 4500 Index consists of over 4,500 U.S. common stocks (primarily medium and small capitalization stocks) that are not included in the Standard & Poor's 500 Composite Stock Price Index. At December 31, 1997 and 1996, the number of Plan participants who held an interest in this fund was 470 and 451, respectively. o Vanguard U.S. Growth Fund - A fund invested primarily in a diversified portfolio of common stocks with above-average growth potential. At December 31, 1997 and 1996, the number of Plan participants who held an interest in this fund was 555 and 481, respectively. o Vanguard Windsor II Fund - A fund invested in common stocks to provide capital appreciation and dividend income. At December 31, 1997 and 1996, the number of Plan participants who held an interest in this fund was 1,014 and 946, respectively. o Asarco Common Stock Fund - A fund that invests exclusively in ASARCO Incorporated common stock with a small amount invested in the Vanguard Money Market Reserves Prime Portfolio to allow for timely responsiveness to Plan transactions. At December 31, 1997 and 1996, the number of Plan participants who held an interest in this fund was 2,105 and 2,091, respectively. o Vanguard Bond Index Fund - A fund that holds a combination of securities which, taken together, are expected to perform similarly to the Lehman Brothers Aggregate Bond Index. At December 31, 1997 and 1996, the number of Plan participants who held an interest in this fund was 104 and 74, respectively. The Plan also maintains the following fund: o Loan Fund - A fund designed to facilitate the recordkeeping and other administrative functions relating to loans made to participants based on their account balances (See Note 1). These loans are recorded as receivables of the Plan. C58 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:
December 31, 1997 December 31, 1996 ----------------- ----------------- Net Asset Net Asset Number of Value Number of Value Units Per Unit Units Per Unit Asarco Common Stock Fund* 2,530,926 $8.38 2,381,684 $9.29 Vanguard Index Trust 500 Portfolio* 440,254 $90.07 419,520 $69.16 Vanguard Money Market Reserves Prime Portfolio* 17,869,282 $1.00 18,727,988 $1.00 Vanguard Short Term U.S. Treasury Bond Portfolio* 732,259 $10.21 768,103 $10.17 Vanguard Wellington Fund* 417,054 $29.45 376,883 $26.14 Vanguard Windsor II Fund* 484,616 $28.62 391,461 $23.83 Vanguard U.S. Growth Fund 188,118 $28.70 166,956 $23.74 Vanguard Index Extended Market Fund 130,939 $30.75 117,469 $26.19 Vanguard Bond Index Fund 167,917 $10.09 72,760 $9.84
*Represents 5% or more of net assets available for plan benefits as of December 31, 1997 and 1996. C59 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Notes to Financial Statements - Continued 5. Tax Status The Plan, as amended through July 27, 1994, has received a favorable determination from the Internal Revenue Service ("IRS") that it is a qualified plan and trust under Section 401(a) of the Code and, thus, exempt from federal income taxes under provisions of Section 501(a) of the Code. The Plan has been amended since receiving the determination letter. However, the Plan's management believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. 6. Termination Priorities Although it has not expressed any intent to do so, the Company reserves the right to amend or discontinue the Plan by action of the Board at any time. In the event of termination or partial termination of the Plan or a complete discontinuance of matching Company contributions under the Plan, each affected participant shall be 100% vested in all amounts credited to their account at the date of such termination, partial termination, or complete discontinuance of matching Company contributions. 7. Related Party Transactions The Plan invests in shares of mutual funds managed by an affiliate of Vanguard. Vanguard acts as trustee for only those investments as defined by the Plan. Transactions in such investments qualify as party-in-interest transactions which are exempt from the prohibited transaction rules. C60 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Form 5500 Item 27a Schedule of Assets Held for Investment Purposes at December 31, 1997
Cost or Market Identity of Issue or Borrower Book Value Value Vanguard Index Trust 500 Portfolio $22,581,381 $39,653,722 Asarco Common Stock Fund 25,210,969 21,209,158 Vanguard Money Market Reserves Prime Portfolio 17,869,282 17,869,282 Vanguard Short Term U.S. Treasury Bond Portfolio 7,452,128 7,476,363 Vanguard Wellington Fund 9,951,629 12,282,228 Vanguard Index Extended Market Fund 3,112,679 4,026,362 Vanguard U.S. Growth Fund 3,970,822 5,398,987 Vanguard Windsor II Fund 10,560,398 13,869,714 Vanguard Bond Index Fund 1,660,650 1,694,280 Loan Fund Participants' Loans (interest rates range from 6% to 9%) 4,764,953 4,764,953 TOTAL INVESTMENTS $107,134,891 $128,245,049 ============ ============
C61 Savings Plan of ASARCO Incorporated and Participating Subsidiaries Form 5500 Line 27d Schedule of Reportable Transactions for the year ended December 31, 1997
Purchase Selling Basis of Description of Asset Price Price Asset Net Gain Vanguard Index Trust 500 Portfolio $7,537,075 $5,811,296 $4,158,159 $1,653,137 Vanguard Money Market Reserves Prime Portfolio 8,707,659 9,566,365 9,566,365 - Vanguard Wellington Fund 3,518,644 2,384,779 1,942,121 442,658 Vanguard Windsor II 5,102,417 2,537,450 2,148,083 389,367 Asarco Common Stock Fund 6,654,562 5,369,546 5,001,471 368,075
C62 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements of ASARCO Incorporated on Form S-3 (File Nos. 33-45631, 33-55993 and 333-02359) and on Form S-8 (File Nos. 2-67732, 2-83782, 33-34606, 333-16875, 333-18083 and 333-46181) of our report dated June 22, 1998 on our audits of the Statements of Net Assets Available for Benefits of the Savings Plan of ASARCO Incorporated and Participating Subsidiaries as of December 31, 1997 and 1996, the Supplemental Schedules as of December 31, 1997,and for the year then ended and the Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 1997, which report is included in this Annual Report on Form 11-K. COOPERS & LYBRAND L.L.P. New York, New York June 22, 1998 C63 -----END PRIVACY-ENHANCED MESSAGE-----