Quarterly loss for Cyprus after corporate reorganization (May 25, 1992)

A reorganization of the company’s affairs helped push Cyprus Minerals (NYSE) into the red for the first quarter ended March 31, 1992.

The company reported a loss of US$5 million for the period on revenues of US$398 million, compared to earnings of US$21.2 million in the first quarter of 1991.

The recent loss includes a non-recurring charge of US$19.2 million relating to a 5% company-wide reduction in personnel as well as the associated costs of reorganizing, the move of Cyprus Copper Company headquarters to Phoenix, Ariz., and the reorganization of Cyprus Coal into regional units. The company expects the changes will reduce expenses by US$25 million on an annualized basis.

Cyprus’s goal is to achieve a 15% after-tax return on shareholder equity and a 20% operating cash flow return on total

assets. Calvin Campbell, president, stated the company is seeking to achieve an annualized earnings rate of at least US$100 million based on current market prices by the second half of this year.

Changes to that end include the completion of the Arizona smelter modernizations and expansion, continuing the campaign to lower electric power costs and modernizing the truck-shovel fleet.

Cyprus reported operating earnings from its copper division of US$6.1 million, including reorganization expenses of US$7.8 million. This compares with operating earnings of US$34.4 million in the first quarter of 1991. The drop in profitability was the result of a US10 cents drop in the copper price, a 25-million lb. drop in copper sales and lower molybdenum results. Lower copper sales resulted from the stockpiling of concentrates, while the Miami smelter electric furnace was repaired and modified after a fire in 1991. The smelter was restarted in late March and normal smelter operations have resumed. In

addition, the US$100-million expansion project using ISASMELT technology is on schedule for a July 1 startup. At full production, smelting capacity should increase by about 50%, making the company self-sufficient in smelting and lower costs by about five cents per lb.

Full mine production costs for copper during the first quarter were US82 cents per lb.

Coal earnings for the first quarter totalled US$1.3 million, including US$3.6 million in reorganization expenses compared with earnings in the first quarter of 1991 of US$6.2 million. Most of the earnings decline is attributed to lower coal prices.