Cyprus Amax Minerals Reports a 1999 Third Quarter Loss of $11 Million Before Special Charges of $64 Million
3.11.1999, 12:32
DENVER (PROTEXT) - Cyprus Amax Minerals Company (NYSE: CYM)today reported a 1999 third quarter loss of $11 million or 17cents loss per share, before special charges of $64 million, fora net loss of $75 million, or 88 cents loss per share. Thiscompared with a 1998 loss from continuing operations of $31million, or 38 cents loss per share, before after-tax gains of$26 million, for a net loss from continuing operations of $5million, or 10 cents loss per share. This improvement, excludingthe special items was primarily attributable to lower coppercosts of 13 percent, lower exploration expenses, and lower netinterest expense, partially offset by lower metal realizations. In the third quarter of 1999, Cyprus Amax recorded an after-tax charge of $64 million primarily for merger expenses withAsarco and legal settlements. In the third quarter of 1998,Cyprus Amax recorded an after-tax gain of $13 million from thesale of hedge positions by Kinross Gold Corporation, an after-taxgain of $10 million on the sale of an Oakbridge Ltd. coal mine inAustralia, and an after-tax gain of $3 million on the sale ofreal estate. For the first nine months of 1999, Cyprus Amax reported a lossfrom continuing operations of $151 million, or $1.83 loss pershare, compared with a 1998 loss from continuing operations of$58 million, or 77 cents loss per share. On September 30, 1999, Cyprus Amax announced that a definitiveagreement had been signed under which Phelps Dodge will acquireCyprus Amax for $7.61 in cash and 0.2203 Phelps Dodge shares perCyprus Amax share on a fully prorated basis. This transaction isexpected to close in the fourth quarter of 1999. Prior toentering into the agreement with Phelps Dodge, Cyprus Amaxterminated its merger agreement with Asarco Incorporated and wasrequired to pay to Asarco a $45 million break-up fee. PhelpsDodge shareholders have approved the merger and 89.6% of CyprusAmax common shares have been acquired by Phelps Dodge. A specialmeeting of shareholders of Cyprus Amax will be held on December2, 1999 in Phoenix, Arizona to approve the merger. On October 27, 1999, Cyprus Amax announced that it hadcompleted the sale of its common shares of Kinross GoldCorporation. A syndicate of underwriters purchased approximately89 million common shares of Kinross Gold at Canadian $4.00 pershare for aggregate proceeds of Canadian $356 million (US $242million). Cyprus Amax realized approximately US $233 million netof expenses from the transaction.
THIRD QUARTER HIGHLIGHTS (ALL COMPARISONS ARE VERSUS THIRDQUARTER 1998 UNLESS OTHERWISE STATED):
(Segment income is earnings before corporate overhead,interest, equity and other, income taxes, and minority interest.) COPPER/MOLYBDENUM -- Copper/Molybdenum earned $31 million, $6 million more thanin 1998. -- Copper realizations averaged 78 cents per pound, 4 centslower than in 1998. -- Copper production increased to 260 million pounds from 243million pounds. -- Copper net cash costs dropped to 52 cents per pound, areduction of 2 cents per pound. Excluding the molybdenum by-product credit; net cash costs were 7 cents per pound lower or 11percent. -- Cost of goods sold dropped to 62 cents per pound, areduction of 9 cents per pound. -- Copper price protection strategies are in place for thefourth quarter of 1999 that will ensure a minimum averagerealization on an LME basis of 69 cents per pound, at a cost of 2cents per pound, on 200 million pounds of production and for thefirst quarter of 2000 that will ensure a minimum averagerealization on an LME basis of 71 cents per pound, at a cost of 2cents per pound, on 200 million pounds of production.
-- Primary molybdenum reported a loss of $1 million, $4million lower than in 1998 primarily due to $1.01 per pound lowermolybdenum realizations and lower production volumes due to thethree-month shut- down at the Henderson mine, that began on July1, 1999 in order to change over from train haulage to the newefficient conveyor system. The start-up in early October 1999has progressed several weeks ahead of schedule. EXPLORATION -- Exploration expense was $4 million, $5 million lower thanin 1998, principally due to constraining spending. OTHER
-- All Other Minerals reported a loss of $27 million comparedto earnings of $8 million in 1998. The $35 million variance isprimarily due to settling litigation in the third quarter of1999, with Coeur d' Alene Mines Corporation for $31.5 million,relating to Cyprus Amax's sale of the Golden Cross mine in 1993. -- Revenue of $309 million was $45 million lower than in 1998due to lower copper and molybdenum realizations, and the absenceof revenues from lithium. -- Equity Investments and Other incurred a loss of $11 millioncompared with earnings of $13 million in 1998. Oakbridgereported a loss of $5 million compared with 1998 earnings of $5million. The 1998 results include a $10 million pre-tax gain onthe sale of a coal mine in Australia. Kinross reported a loss of$4 million compared with 1998 earnings of $8 million. The 1998results include a $13 million pre-tax gain for the recognition ofthe sale by Kinross Gold of the pre-merger Amax Gold hedgingportfolio. -- Corporate expenses of $67 million were $56 million higherthan in 1998 due to the Asarco merger related expenses. -- Net interest expense of $16 million was $16 million lessthan 1998 reflecting increased interest income from cash receivedfrom the coal sale and the significant reduction in debt. -- The $200 million borrowed against the Revolving CreditAgreement in the second quarter was repaid during the thirdquarter of 1999. -- On October 19, 1999 Cyprus Amax announced that it hadcalled for redemption of all its $4.00 Series A ConvertiblePreferred Stock at a redemption price of $52.4778 per share,which includes accrued and unpaid dividends of $.8778 per share.The date of redemption is November 19, 1999. -- On October 22, 1999, Phelps Dodge and Cyprus Amax enteredinto a loan agreement whereby Cyprus Amax would loan Phelps Dodge$175 million at an interest rate of 6 percent per annum. On thatdate, Phelps Dodge drew down the $175 million and the loanmatures on December 15, 1999. -- On October 27, 1999, the $100 million outstanding balanceon Cyprus Amax's Term Loan facility was repaid. Actual results may vary materially from any forward-lookingstatement the Company makes. Refer to the Cautionary Statementand Risk Factors contained in the Company's most recent Form 10-K. To obtain a faxed copy of this or any Cyprus Amax newsrelease, call 1-800-758-5804, ext. 224250. News releases canalso be accessed via the Internet at the Cyprus Amax Web Site,http://www.cyprusamax.com.
STATISTICAL PAGES FOLLOW
Cyprus Amax Minerals Company
Key Operating Data
Three and Nine Months Ended September 30
Three Months Ended Nine Months Ended
September 30,
September 30,
1999 1998 1999 1998 Copper/Molybdenum Copper Sales Volume - Millions of Lbs.
285 291 868 859 Produced Copper Sold - Millions
of Lbs.
248 254 767 748 Copper Production - Millions of Lbs.
260 243 771 710 Average Realization - $/Lb. of Copper
.78 .82 .71 .85 Cost of Sales - $/Lb.
.62 .71 .63 .73 Net Cash Cost - $/Lb.
.52 .54 .51 .56 Full Cost - $/Lb.
.65 .69 .63 .71 Molybdenum Sales - Millions of Lbs.
14
13 42
45 Molybdenum Production - Millions of Lbs.
10
15 41
46 Average Realization - $/Lb.
4.06 5.07 4.10 5.16 Cyprus Amax Minerals Company Consolidated Statement of Income Three and Nine Months Ended September 30 (In Millions, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30,
September 30,
1999
1998
1999
1998 Revenue
$ 309 $ 354 $ 869 $1,224 Costs and Expenses Cost of Sales
217
259
646
866 Selling and Administrative Expenses
105
18
139
87 Depreciation, Depletion, and Amortization
50
55
153
202 Write-Downs and Special Charges
-
-
-
4 Exploration
4
9
11
34 Total Costs and Expenses
376
341
949 1,193 Income (Loss) From Operations
(67)
13
(80)
31 Interest Income
15
3
22
10 Interest Expense
(33) (35) (102) (123) Capitalized Interest
2
-
4
1 Equity Investments and Other
(11)
13
(28)
12 Loss from Continuing Operations Before Income Taxes and Minority Interest
(94)
(6) (184)
(69) Income Tax Benefit
20
2
34
11 Minority Interest
(1)
(1)
(1)
- Loss from Continuing Operations
(75)
(5) (151)
(58) Income from Operations of Discontinued Domestic Coal Division, Net of Applicable Taxes
-
24
16
45 Loss on Disposal of Domestic Coal Division, Net of Applicable Taxes
-
-
(13)
- Net Income (Loss)
(75)
19
(148)
(13) Preferred Stock Dividends
(5)
(5)
(14)
(14) Income (Loss) Applicable to Common Shares
$ (80) $ 14 $ (162) $ (27) Earnings (Loss) Per Common Share Basic and Diluted(1) Loss from Continuing Operations
$(.88) $(.10) $(1.83) $(.77) Income from Discontinued Domestic Coal Division, Net of Taxes
$ - $ .26 $ .03 $ .49 Net Earnings (Loss) Per Common Share
$(.88) $ .16 $(1.80) $(.28) Weighted Average Common Shares Outstanding Basic
90.5 92.9
90.5
93.4 Diluted
100.9 102.5 100.5 103.0 Common Shares Outstanding at End of Period
90.6 91.2
90.6
91.2 (1) Diluted earnings (loss) per share were anti-dilutive. Cyprus Amax Minerals Company Financial Summary by Business Segment Three and Nine Months Ended September 30 (In Millions)
Three Months Ended
September 30,
Earnings (Loss)
Sales Revenue
from Operations
1999
1998
1999
1998 Copper/Molybdenum $297
$322
$ 31
$ 25 Exploration
-
-
(4)
(9) All Other Minerals
12
32
(27)
8
Total
$309
$354
-
24 Corporate
(67)
(11) Interest, Equity and Other
(27)
(19) Loss from Continuing Operations Before Income Taxes
and Minority Interest
(94)
(6) Income Tax Benefit
20
2 Minority Interest
(1)
(1) Loss from Continuing Operations
(75)
(5) Income from Operations of Discontinued Domestic
Coal Division, Net of Applicable Taxes
-
24 Loss on Disposal of Domestic Coal Division,
Net of Applicable
Taxes
-
- Net Income (Loss)
$(75)
$ 19
Nine Months Ended
September 30,
Earnings (Loss)
Sales Revenue
from Operations
1999
1998
1999
1998 Copper/Molybdenum $844
$1,011
$ 53
$ 107 Exploration
-
-
(11)
(34) All Other Minerals
25
213
(31)
(10)
Total
$869
$1,224
11
63 Corporate
(91)
(32) Interest, Equity and Other
(104)
(100)
Loss from Continuing Operations
Before Income Taxes
and Minority Interest
(184)
(69) Income Tax Benefit
34
11 Minority Interest
(1)
- Loss from Continuing Operations
(151)
(58) Income from Operations of Discontinued Domestic
Coal Division, Net of Applicable Taxes
16
45 Loss on Disposal of Domestic Coal Division,
Net of Applicable Taxes
(13)
- Net Income (Loss)
$(148)
$(13)
Cyprus Amax Minerals Company
Consolidated Balance Sheet
(In Millions)
September 30, December 31, ASSETS
1999
1998
Cash and Cash Equivalents
$ 845
$ 353
Accounts Receivable, Net
38
48
Notes Receivable, Net
53
69
Inventories
301
386
Prepaid Expenses
73
52
Deferred Income Taxes
2
13
Total Current Assets
1,312
921
Properties - At Cost, Net
2,543
3,842
Equity Investments
317
345
Other Assets
175
233
Total Assets
$4,347
$5,341 LIABILITIES and SHAREHOLDERS' EQUITY
Short-Term Debt and Current Portion
of Long-Term Debt
$ 83
$ 161
Other Current Liabilities
320
510
Long-Term Debt
1,532
1,677
Capital Lease Obligations
16
41
Deferred Employee and Retiree Benefits
178
345
Deferred Closure, Reclamation and Environmental
187
300
Deferred Income Taxes
4
57
Other Noncurrent Liabilities and Deferred Credits
29
59
Minority Interest
21
34
Total Shareholders' Equity
1,977
2,157
Total Liabilities and Shareholders' Equity
$4,347
$5,341
Cyprus Amax Minerals Company
Consolidated Statement of Cash Flows
Nine Months Ended September 30
(In Millions)
Nine Months Ended
September 30,
1999
1998 Operating Activities Net Loss
$ (148)
$ (13) Adjustments to Reconcile Net Loss to Net Cash
Provided by (Used for) Operating Activities
Depreciation, Depletion, and Amortization
195
284
Write-Downs and Special Charges
-
4
Deferred Income Taxes
(56)
-
Loss (Gain) on Sale of Assets
(4)
10
Changes in Assets and Liabilities Net of Effects
from Businesses Acquired/Sold
(125)
(95)
Other, Net
31
21 Net Cash Provided by (Used for) Operating Activities
(107)
211 Investing Activities
Capital Expenditures
(168)
(170)
Capitalized Interest
(4)
(4)
Advances and Investments,
Net to Affiliates
(12)
(62)
Collections on Notes Receivable
3
4
Net Proceeds from Sale of Assets
1,028
115
Cash Effect of Deconsolidating Amax Gold Inc.
-
(18) Net Cash Provided by (Used for) Investing Activities
847
(135) Financing Activities
Net Borrowings on Short-Term Debt
19
21
Payments on Short-Term Debt
(46)
(24)
Net Proceeds from Issuance of Long-Term Debt
39
3
Payments on Debt and Other Obligations
(172)
(51)
Payments on Capital Lease Obligations
(47)
(30)
Stock Activity, Net
-
(5)
Dividends to Minority Interests
-
(4)
Dividends Paid
(41)
(70) Net Cash Used For Financing Activities
(248)
(160) Net Increase (Decrease) in Cash and Cash Equivalents
492
(84) Cash and Cash Equivalents at Beginning of Year
353
250 Cash and Cash Equivalents at End of Period
$ 845
$ 166 otsOriginal Text Service: Cyprus Amax Minerals Company Internet:http://www.newsaktuell.de CONTACT: Gerald J. Malys, Senior VicePresident & Chief Financial Officer, 303-643-5060, or JohnTaraba, Vice President & Controller, 303-643-5244, both of CyprusAmax Minerals Company Company News On-Call:http://www.prnewswire.com/comp/224250.html or fax, 800-758-5804,ext. 224250 Web site: http://www.cyprusamax.com
Subscribers please note that material bearing the slug"PROTEXT" is not part of CTK's news service and is not to bepublished under the "CTK" slug. Protext is a commercial serviceproviding distribution of press releases from clients, who areidentified in the text of Protext reports and who bear fullresponsibility for their contents.
PROTEXT