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SOUTHERN COPPER CORP/ Annual Report (Amendment), Year Ended Dec 31, 2000

Filing Date
Filed April 30, 2001
Period End
December 31, 2000
Security
SCCO
In the record · 2016–202610-K1510-Q328-K86

SCCO filed 15 annual reports (10-K), 32 quarterly reports (10-Q) and 86 current reports (8-K) between 2016 and 2026.

  1. FY2018 annual report10-K · Mar ’19Mar ’19
  2. Leadership change8-K · Jul ’21Jul ’21
  3. Leadership change8-K · Jul ’25Jul ’25

01—Abstract

Summary

Summary of the 10-K/A filed April 30, 2001. Cited figures are marked; the original filing is the authoritative source.

Southern Peru Copper Corporation (SCCO/PCU) filed this amended 2000 Form 10-K/A primarily to insert Part III information (directors, executive officers, compensation, ownership, and related-party transactions).

The underlying financials show a strong recovery year: net sales rose to $711.1 milliona from $584.5 million, and net earnings reached $92.9 million ($1.16 per share) versus $29.4 million in 1999. Higher copper prices (LME average 82 cents per pound versus 71 cents), modestly higher volumes, and a cost-reduction program that cut operating breakeven costs to 54.0 cents per pound from 56.1 cents drove the improvement. Operating income rose to $149.6 million, and cash from operations was $183.6 million.

The balance sheet and capital plan point to heavy investment and rising leverage. Total debt increased to $347.2 millionb from $222.5 million, and the debt-to-capitalization ratio rose to 22.4% from 16.3%. Cash and equivalents climbed to $149.1 million.

Management plans about $360 millionc of 2001 capital expenditures for the Ilo smelter modernization, the Toquepala concentrator expansion, and Cuajone leaching work, with the goal of lifting output above 900 million pounds of copper per year by 2004. Dividends were $0.340 per share for 2000, and a $0.143 quarterly dividend was declared in February 2001. Investors should weigh several risks.

The company is controlled by Grupo Mexico through ASARCO and has extensive related-party sales and service arrangements. Nearly all operations are concentrated in southern Peru, exposing the company to political, currency, and inflation risk.

Peruvian tax reform could reduce the statutory rate from 30% to 20% for later years, and pending labor-share litigation and a New York personal injury lawsuit add contingent exposure. Covenants restrict dividends to 50% of quarterly net income and require minimum equity of $750 milliond.

02—Key points

Key Highlights

  1. Net earnings rose to $92.9 million ($1.16 per share) in 2000, up from $29.4 million ($0.37 per share) in 1999, driven by higher copper prices and volumes.
  2. Net sales increased 21.6% to $711.1 million, with total copper sales of 780.8 million pounds versus 749.9 million in 1999.
  3. Operating breakeven cost fell to 54.0 cents per pound from 56.1 cents, reflecting cost-reduction programs despite higher fuel prices.
  4. Total debt increased to $347.2 million from $222.5 million, lifting debt-to-capitalization to 22.4% from 16.3%, while cash rose to $149.1 million.
  5. Planned 2001 capital expenditures are about $360 million for the Ilo smelter modernization and Toquepala and Cuajone expansions, targeting over 900 million pounds of annual copper output by 2004.
  6. Dividends were $0.340 per share for 2000, and a $0.143 per share dividend was declared in February 2001.
  7. Grupo Mexico, through ASARCO's Southern Peru Holdings subsidiary, owns 54.2% of the company, and Class A shares carry five votes each, concentrating control.

03—Questions

Frequently Asked Questions

  1. Why did SPCC's earnings improve so sharply in 2000?

    Net earnings rose to $92.9 million from $29.4 million, mainly because the average LME copper price increased to 82 cents per pound from 71 cents. Sales volume also grew, and cost-reduction programs lowered operating breakeven costs to 54.0 cents per pound.

  2. How is the company funding its expansion program?

    The company combined internally generated cash, a $100 million Mitsui loan fully drawn at year-end, Peruvian bond issues totaling $50 million in 2000, and SENS notes. Debt rose to $347.2 million. Management expects to meet 2001 cash needs from operations, cash on hand, its seven-year loan facility, and additional external financing.

  3. What are the main risks to investors?

    Operations are concentrated in southern Peru, exposing the company to political, currency, and inflation risk. Control by Grupo Mexico creates related-party dealings. Covenants restrict dividends, a pending labor-share lawsuit could affect outcomes, and a proposed Peruvian tax cut is not yet confirmed.

  4. Does this amendment change the financial results?

    No. The 10-K/A was filed mainly to insert Part III items such as director and executive information, compensation, beneficial ownership, and related-party transactions. The financial statements and MD&A are reproduced from the original filing.

  5. What is the outlook for dividends and capital returns?

    The board continues to review dividend policy in light of the heavy capital investment program. A $0.143 per share dividend was declared in February 2001, and dividend payments are limited by covenants that cap distributions at 50% of quarterly net income.

04—Continue

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