<Page> SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 2001 Third Quarter FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended SEPTEMBER 30, 2001 Commission file number 1-14066 SOUTHERN PERU COPPER CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 13-3849074 (State or other jurisdiction of (IRS Employer Incorporation or organization) Identification No) 2575 E. CAMELBACK RD. SUITE 500, PHOENIX, AZ 85016 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: 602-977-6500 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 ---- ---- As of October 31, 2001, there were outstanding 14,103,157 shares of Southern Peru Copper Corporation common stock; par value $0.01 per share and 65,900,833 shares of Southern Peru Copper Corporation Class A common stock, par value $0.01 per share. <Page> Southern Peru Copper Corporation and Subsidiaries INDEX TO FORM 10-Q <Table> <Caption> PAGE NO. <S> <C> PART I. FINANCIAL INFORMATION: ------------------------------ Item 1. Financial Statements (unaudited) Condensed Consolidated Statement of Earnings Three Months and Nine Months ended September 30, 2001 and 2000 2 Condensed Consolidated Balance Sheet September 30, 2001 and December 31, 2000 3 Condensed Consolidated Statement of Cash Flows Three Months and Nine Months ended September 30, 2001 and 2000 4 Notes to Condensed Consolidated Financial Statements 5-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-12 Report of Independent Public Accountants 13 PART II. OTHER INFORMATION: Item 4 Submission of Matters to a Vote of Security Holders 14-15 Item 6 Exhibits on Form 10-Q 16 Signatures 17 Exhibit 10.1 -First Amendment to the Agreement among Certain Stockholders of Southern Peru Copper Corporation Exhibit 15 - Independent Public Accountants Awareness Letter </Table> - 1 - <Page> Southern Peru Copper Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (Unaudited) <Table> <Caption> 3 Months Ended 9 Months Ended September 30, September 30, 2001 2000 2001 2000 ---- ---- ---- ---- (in thousands, except for per share amounts) <S> <C> <C> <C> <C> Net sales: Stockholders and affiliates $ 1,457 $ 23,037 $ 7,470 $ 56,469 Third parties 170,042 162,018 489,284 448,729 --------- -------- -------- -------- Total net sales 171,499 185,055 496,754 505,198 --------- -------- ---------- ---------- Operating costs and expenses: Cost of sales 125,368 113,974 343,656 324,629 Administrative and other expenses 7,136 5,799 22,922 19,936 Depreciation and depletion 16,642 18,792 56,227 56,017 Exploration expense 2,473 1,685 5,703 3,795 --------- -------- --------- --------- Total operating costs and expenses 151,619 140,250 428,508 404,377 --------- -------- --------- --------- Operating income 19,880 44,805 68,246 100,821 Interest income 4,887 925 14,139 1,998 Other income 2,473 311 1,360 2,221 Interest expense (11,433) (3,702) (31,778) (11,636) --------- ------- -------- ------- Earnings before taxes on income and minority interest 15,807 42,339 51,967 93,404 Taxes on income 4,084 13,549 16,598 29,743 Minority interest in income of Peruvian Branch 150 975 640 1,356 -------- ------- ------- -------- Net earnings $ 11,573 $ 27,815 $ 34,729 $ 62,305 ======== ======= ======= ======== Per common share amounts: Net earnings - basic and diluted $ 0.14 $ 0.35 $ 0.43 $ 0.78 Dividends paid $ 0.047 $ 0.056 $ 0.288 $ 0.166 Weighted average common shares outstanding: Basic 80,002 80,001 80,001 80,000 Diluted 80,004 80,024 80,004 80,025 </Table> The accompanying notes are an integral part of these financial statements. - 2 - <Page> Southern Peru Copper Corporation and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) <Table> <Caption> September 30, December 31, 2001 2000 ---- ---- (in thousands) <S> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 462,374 $ 149,088 Accounts receivable, net 80,737 142,457 Inventories 115,251 114,931 Other assets 29,709 35,371 --------- --------- Total current assets 688,071 441,847 Net property 1,349,983 1,298,130 Other assets 59,588 30,581 --------- --------- Total Assets $2,097,642 $1,770,558 ========= ========= LIABILITIES Current liabilities: Current portion of long-term debt $ 153,324 $ 24,339 Accounts payable 62,354 68,157 Accrued liabilities 38,629 39,884 --------- --------- Total current liabilities 254,307 132,380 --------- --------- Long-term debt 508,936 322,914 Deferred income taxes 101,217 94,891 Other liabilities and reserves 15,666 14,253 --------- --------- Total non-current liabilities 625,819 432,058 --------- --------- MINORITY INTEREST 14,140 14,465 --------- --------- STOCKHOLDERS' EQUITY Common stock (a) 261,584 261,584 Retained earnings 941,792 930,071 --------- --------- Total Stockholders' Equity 1,203,376 1,191,655 --------- --------- Total Liabilities, Minority Interest and Stockholders' Equity $2,097,642 $1,770,558 ========= ========= (a) Common shares: Authorized 34,099 34,099 Outstanding 14,103 14,100 Class A common shares Authorized and Outstanding 65,901 65,901 </Table> The accompanying notes are an integral part of these financial statements. - 3 - <Page> Southern Peru Copper Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) <Table> <Caption> 3 Months Ended 9 Months Ended September 30, September 30, 2001 2000 2001 2000 ---- ---- ---- ---- (in thousands) (in thousands) <S> <C> <C> <C> <C> OPERATING ACTIVITIES Net earnings $ 11,573 $ 27,815 $ 34,729 $ 62,305 Adjustments to reconcile net earnings to net cash provided from operating activities: Depreciation and depletion 16,642 18,792 56,227 56,017 Provision for deferred income taxes 4,508 11,835 7,488 21,268 Foreign currency transaction losses (gains) (5,775) 573 (2,053) 1,330 Minority interest of investment shares 150 975 640 1,356 Net changes in operating assets and liabilities: Accounts receivable (8,694) (40,880) 61,710 (37,585) Inventories 3,499 (3,055) (320) 1,968 Accounts payable and accrued liabilities (9,685) 13,949 (7,474) (3,310) Other operating assets and liabilities 7,350 (3,181) 9,699 12,645 -------- -------- -------- -------- Net cash provided by operating activities 19,568 26,823 160,646 115,994 -------- ------- -------- -------- INVESTING ACTIVITIES Capital expenditures (44,311) (34,198) (112,056) (98,551) Sales of property 10 524 71 542 -------- -------- ------- -------- Net cash used in investing activities (44,301) (33,674) (111,985) (98,009) -------- -------- --------- -------- FINANCING ACTIVITIES Debt repayment (37,708) (2,712) (84,993) (10,897) Proceeds from borrowings - 30,000 400,000 50,000 Escrow (deposits) withdrawals on long-term loans 2,996 (5,257) (29,067) (4,127) Dividends paid to common stockholders (3,729) (4,480) (23,008) (13,280) Distributions to minority interest (59) (80) (368) (237) Purchases of investment shares 4 (194) (752) (1,236) -------- -------- ------ -------- Net cash provided by (used in) financing activities (38,496) 17,277 261,812 20,223 -------- -------- --------- -------- Effect of exchange rate changes on cash 5,959 (265) 2,813 (1,050) --------- -------- ------- -------- Increase (decrease)in cash and cash equivalents (57,270) 10,161 313,286 37,158 Cash and cash equivalents, at beginning of period 519,644 37,593 149,088 10,596 ------- -------- --------- -------- Cash and cash equivalents, at end of period $ 462,374 $ 47,754 $ 462,374 $ 47,754 ======== ======== ======== ======== </Table> The accompanying notes are an integral part of these financial statements. - 4 - <Page> Southern Peru Copper Corporation and Subsidiaries NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) A. In the opinion of Southern Peru Copper Corporation (the "Company" or "SPCC"), the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company's financial position as of September 30, 2001 and the results of operations and cash flows for the three and nine months ended September 30, 2001 and 2000. Certain reclassifications have been made in the financial statements from amounts previously reported. The condensed financial statements as of September 30, 2001 and 2000 have been subjected to a review by Andersen, the Company's independent public accountants. The results of operations for the three and nine-month periods are not necessarily indicative of the results to be expected for the full year. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2000 annual report on Form 10-K. B. Inventories were as follows: (In millions) <Table> <Caption> September 30, December 31, 2001 2000 ---- ---- <S> <C> <C> Metals at lower of average cost or market: Finished goods $ 1.7 $ 1.9 Work-in-process 48.7 46.0 Supplies at average cost, net of reserves 64.9 67.0 -------- -------- Total inventories $ 115.3 $ 114.9 -------- -------- </Table> C. At September 30, 2001, the Company has recorded sales of 21.1 million pounds of copper, at a provisional price of $0.65 per pound. These sales are subject to final pricing based on the average monthly LME and COMEX copper prices in the month of settlement, which will occur in the fourth quarter of 2001. D. Financial Instruments: The Company uses derivative instruments to manage its exposure to market risk from changes in commodity prices. Derivative instruments, which are designated as hedges, must be deemed effective at reducing the risk associated with the exposure being hedged and must be designated as a hedge at the inception of the contract. Fuel swaps: The Company may enter into fuel swap agreements to limit the effect of changes in fuel prices on its production costs. A fuel swap establishes a fixed price for the quantity of fuel covered by the agreement. The difference between the published price for fuel and the price established in the contract for the month covered by the swap is recognized in production costs. The Company held no fuel swaps at September 30, 2001. Foreign currency: The Company selectively uses foreign currency swaps to limit the effects of exchange rate changes on future cash flow obligations denominated in foreign currencies. A currency swap establishes a fixed dollar cost for a fixed amount or foreign currency required at a future date. The Company held no foreign currency swaps at September 30, 2001. E. Commitments and Contingencies: - 5 - <Page> Litigation In April 1996, the Company was served with a complaint filed in Peru by approximately 800 former employees seeking the delivery of a substantial number of investment shares (formerly called "labor shares") of its Peruvian Branch, plus dividends. In October 1997, the Superior Court of Lima nullified a decision of a court of first instance, which had been adverse to the Company. The Superior Court remanded the case for a new trial. Plaintiffs filed an extraordinary appeal before the Peruvian Supreme Court. The Supreme Court may grant discretionary review in limited cases. In March 1999, the Company received official notification that the Supreme Court had denied plaintiffs' extraordinary appeal and affirmed the decision of the Superior Court of Lima, which remanded the case to the lower court for further proceedings. In December 1999, the lower court decided against the Company, ordering the delivery of the investment shares and dividends to the plaintiffs. The Company appealed this decision in January 2000. On October 10, 2000, the Superior Court of Lima affirmed the lower court's decision, which had been adverse to the Company. The Company has filed an extraordinary appeal before the Peruvian Supreme Court. The Supreme Court may grant discretionary review in limited cases. There is also pending against the Company a similar lawsuit filed by 127 additional former employees. In the third quarter of 1997, the court of first instance dismissed their complaint. Upon appeal filed by the plaintiffs, the Superior Court of Lima, in the third quarter of 1998, nullified the lower court's decision on technical grounds and remanded the case to the lower court for further proceedings. In December 1999, the lower court dismissed the complaint against the Company. Plaintiffs appealed this decision in January 2000 before the Superior Court. By the end of year 2000 the Superior Court rejected the appeal. Plaintiffs have filed an extraordinary appeal before the Supreme Court. The Supreme Court may grant discretionary review in limited cases. On December 28, 2000, a lawsuit was filed against the Company in federal court in New York City. The lawsuit seeks unspecified compensatory and punitive damages for alleged personal injuries to eight persons resident in Peru arising from alleged releases into the environment from the Company's operations in Peru. The lawsuit is similar to a suit filed in 1995 in Texas, which was dismissed in 1996 by a U. S. district judge. That ruling was affirmed unanimously by a three-judge federal appeals court. The court made it clear that the claims of Peruvian residents should be tried in the courts of Peru, not in the United States. It is the opinion of management that the outcome of the legal proceedings mentioned, as well as other miscellaneous litigation and proceedings now pending, will not materially adversely affect the financial position of the Company and its consolidated subsidiaries. However, it is possible that litigation matters could have a material effect on quarterly or annual operating results, when they are resolved in future periods. F. Impact of New Accounting Standards: Effective January 1, 2001, the Company has adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" and SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities". Such adoption did not have a material impact on the condensed financial statements as of September 30, 2001. In September 2001, The Financial Accounting Standards Board (FASB) issued SFAS No. 142 "Goodwill and Other Intangible Assets". This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. The provisions of this statement are required to be applied, starting with fiscal years - 6 - <Page> beginning after December 15, 2001, to all goodwill and other intangible assets recognized in the financial statements at that date. Impairment losses for goodwill and indefinite-lived intangible assets that arise due to the initial application of this statement (resulting from a transitional impairment test) are to be reported as resulting from a change in accounting principle. Goodwill and intangible assets acquired after June 30, 2001 will be subject immediately to the non-amortization and amortization provisions of this statement. The Company will adopt this statement effective January 1, 2002 and its implementation will not materially affect its results of operations or financial condition. In August 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement Obligation", which will be required to be adopted effective January 1, 2003. SFAS No. 143 establishes standards for accounting for an obligation associated with the retirement of long-lived tangible assets. Management is assessing the impact of this statement on our results of operations and financial position. - 7 - <Page> PART I - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company reported net earnings of $11.6 million, or 14 cents per common share, for the quarter ended September 30, 2001 compared with net earnings of $27.8 million, or 35 cents per common share, for the third quarter of 2000. For the first nine months of 2001, net earnings were $34.7 million or 43 cents per common share, compared to $62.3 million or 78 cents per common share, for the same period in 2000. The decrease in earnings in the third quarter of 2001 is primarily a result of lower copper prices and decreased production. The average price for copper on the London Metal Exchange (LME) was 67 cents per pound for the third quarter of 2001 compared with 85 cents per pound in the third quarter of 2000. Average price for copper for the nine months ended September 30, was 74 cents in 2001 and 82 cents in 2000. The average price for copper on the New York Commodity Exchange (COMEX) was 67 cents per pound for the third quarter of 2001 compared with 87 cents per pound in the third quarter of 2000. Average price for copper for the nine-month ended September 30, was 75 cents in 2001 and 83 cents in 2000. Mine copper production decreased 1.5% to 191.5 million pounds in the third quarter of 2001 compared with the third quarter of 2000. This decrease of 2.8 million pounds included a decrease of 12.6 million pounds from the Cuajone mine, an increase of 10.5 million pounds from the Toquepala Mine and a decrease of 0.7 million pounds in solvent extraction/electrowinning (SX/EW) production. The production decrease at Cuajone was principally due to lower ore grade mined and copper recovery, which was 1% lower than last year. Increased production at Toquepala was due principally to higher throughput at the Toquepala concentrator and higher ore grades. The lower grade of pregnant leach solution (PLS) resulted in a 0.7 million pounds decrease in SX/EW production. As of September 30, 2001, 54% of the Toquepala concentrator expansion and modernization project was completed with an investment of $28.7 million out of the $69.5 million budgeted. When this project reaches its completion at the end of August 2002, there will be an increase in the milling capacity from 45,000MT to 60,000MT per day. The SX/EW expansion Phase II reached 98% completion at the end of September 2001, with an investment of $15.1 million out of the $22.5 million budgeted. This project will be completed at the end of October 2001. Cuajone upgrade leaching facilities reached 40% completion at the end of September 2001, with an investment of $5.3 million out of the $12.0 million budgeted. This project is scheduled to be finished by April 2002, and projected to bring about a production increase of 2.4MT from 13.6MT to 16MT per day. In October 2001, SPCC's Board of Directors authorized management to put in place a refinancing for $550 million. As part of the program, SPCC would increase its existing Peruvian bond placement from $200 million to $750 million. With the new financing, SPCC also plans to redeem its outstanding $150 million of Secured Export Notes issued in May 1997 and pay off and cancel the $400 million syndicated credit facility disbursed on March 30, 2001. The goal of the new program is to extend the maturity of its current debt obligations, which the Company undertook in 1997 to finance its expansion and modernization program, and to reduce interest rates. The current credit ratings of the Secured Export Notes are: Standard & Poor BB-; Moody's Baa3 and Fitch BBB-. INFLATION AND DEVALUATION OF PERUVIAN NUEVO SOL: A portion of the Company's - 8 - <Page> operating costs is denominated in Peruvian nuevos soles. Since the revenues of the Company are primarily denominated in U.S. dollars, when inflation in Peru is not offset by a corresponding devaluation of the Peruvian nuevo sol, the financial position, results of operations and cash flows of the Company could be adversely affected. For the nine month period ended September 30, 2001 the inflation and devaluation rates were 0.42% and (1.22)%, respectively, and for the nine month period ended September 30, 2000, the inflation and devaluation rates were 3.27% and (0.06)%, respectively. NET SALES: Net sales in the third quarter of 2001 decreased $13.6 million to $171.5 million from the comparable period in 2000. Net sales for the first nine months of 2001 totaled $496.8 million, compared with $505.2 million for the same period in 2000. The decrease in net sales in both the three-month and nine-month periods in 2001 was principally the result of lower copper prices. At September 30, 2001, the Company has recorded sales of 21.1 million pounds of copper, at a provisional price of $0.65 per pound. These sales are subject to final pricing based on the average monthly LME and COMEX copper prices in the month of settlement, which will occur in the fourth quarter of 2001. PRICES: Sales prices for the Company's metals are established principally by reference to prices quoted on the LME, the New York Commodity Exchange (COMEX) or published in Platt's Metals Week for dealer oxide mean prices for molybdenum products. <Table> <Caption> Three Months Ended Nine Months Ended September 30, September 30, Price/Volume Data: 2001 2000 2001 2000 ---- ---- ---- ---- <S> <C> <C> <C> <C> Average Metal Prices Copper (per pound-LME) $0.67 $0.85 $0.74 $0.82 Copper (per pound-COMEX) $0.67 $0.87 $0.75 $0.83 Molybdenum (per pound) $2.41 $2.64 $2.37 $2.62 Silver (per ounce-COMEX) $4.27 $4.93 $4.39 $5.05 Sales Volume (in thousands): Copper (pounds) 226,800 198,600 598,700 559,900 Molybdenum (pounds) (1) 4,667 4,165 12,863 11,319 Silver (ounces) 1,136 966 2,946 2,722 </Table> (1) The Company's molybdenum production is sold in concentrate form. Volume represents pounds of molybdenum contained in concentrates. FINANCIAL INSTRUMENTS: The Company may use derivative instruments to manage its exposure to market risk from changes in commodity prices. Derivative instruments, which are designated as hedges, must be deemed effective at reducing the risk associated with the exposure being hedged and must be designated as a hedge at the inception of the contract. FUEL SWAPS: The Company may enter into fuel swap agreements to limit the effect of changes in fuel prices on its production costs. A fuel swap establishes a fixed price for the quantity of fuel covered by the agreement. The difference between the published price for fuel and the price established in the contract for the month covered by the swap is recognized in production costs. The Company held no fuel swaps agreements at September 30, 2001. FOREIGN CURRENCY: The Company selectively uses foreign currency swaps to limit the effects of exchange rate changes on future cash flow obligations denominated in foreign currencies. A currency swap establishes a fixed dollar cost for a fixed amount of foreign currency required at a future date. The Company entered - 9 - <Page> into currency swap agreements on a portion of its capital cost contracted in Euros. The Company held no foreign currency swaps at September 30, 2001. OPERATING COSTS AND EXPENSES: Operating costs and expenses were $151.6 million in the third quarter of 2001 compared with $140.3 million in the third quarter of 2000. In the nine months ended September 30, 2001 and 2000, operating costs and expenses were $428.5 million and $404.4 million, respectively. Cost of sales for the three months ended September 30, 2001 was $125.4 million compared with $114.0 million in the comparable period in 2000. In the nine months ended September 30, 2001, cost of sales was $343.7 million, compared with $324.6 million in the comparable 2000 period. The increase in the three-month and the nine-month periods of 2001 was the result of higher copper sales volume and higher volume of copper sold from purchased concentrates. Administrative and other expenses were $7.1 million in the three months ended September 30, 2001 and $5.8 million in the comparable period in 2000. In the nine months ended September 30, 2001, administrative and other expenses were $22.9 million compared with $19.9 million in the nine months ended September 30, 2000. The increase in the third quarter of 2001 compared with the 2000 period is mainly due to charges for consulting and other services due to Grupo Mexico S.A. de C.V., the parent company of SPCC, being accrued on a monthly basis for 2001. In 2000 the annual fee due to Grupo Mexico for services provided to the Company were charged to the fourth quarter earnings. Depreciation and depletion expense for the three months ended September 30, 2001 was $16.6 million compared with $18.8 million in the comparable 2000 period. In the nine months ended September 30, 2001 depreciation and depletion expense was $56.2 million, compared with $56.0 million in the comparable period in 2000. The decrease in 2001 is principally due to the transfer of the mine equipment depreciation to the capitalized mine stripping cost. NON-OPERATING ITEMS: Interest income was $4.9 million in the third quarter of 2001, compared to $0.9 million in the comparable 2000 period. In the nine months ended September 30, 2001 interest income was $14.1 million compared to $2.0 million for the same period of 2000. The increase reflects higher amounts of excess cash invested in year 2001. Interest expense was $11.4 million in the third quarter of 2001, compared to $3.7 million in the comparable period in 2000. In the nine months ended September 30, 2001, interest expense was $31.8 million compared to $11.6 million for the same period in 2000. The increase reflects the interest cost of the $400 million drawdown of the Company's credit facility on March 30, 2001. TAXES ON INCOME: Taxes on income for the nine months ended September 30, 2001 were $16.6 million, compared with $29.7 million for the same period in 2000. The decrease was principally due to lower earnings in 2001, resulting from lower copper prices. CASH FLOWS: THIRD QUARTER: Net cash provided by operating activities was $19.6 million in the third quarter of 2001, compared with $26.8 million in the comparable period. The decrease was principally attributable to a decrease in operating income. Net cash used in investing activities was $44.3 million and it was due to capital expenditures made in the third quarter of 2001. In the third quarter of 2000, net cash used in investing activities was $33.7 million and was principally due to capital expenditures. Net cash used for financing activities in the third quarter of 2001 was $38.5 million, compared with a source of cash of $17.3 million in the third quarter of - 10 - <Page> 2000. The third quarter of 2001 includes a dividend distribution of $3.7 million and debt repayment of $37.7 million. NINE MONTHS: Net cash provided by operating activities was $160.6 million for the nine-month period ended September 30, 2001, compared with $116.0 million in the comparable 2000 period. The increase was attributable primarily to reimbursement of pending IGV (Value Added Taxes) drawback made by the Peruvian government. Net cash used in investing activities was $112.0 million in the nine-month period ended September 30, 2001, and was primarily due to capital expenditures. In the nine-month period ended September 30, 2000, net cash used in investing activities was $98.0 million and was principally due to capital expenditures. Cash provided by financing activities for the nine months ended September 30, 2001, was $261.8 million compared with $20.2 million in the comparable 2000 period. The nine months ended September 30, 2001 include a disbursement of $400 million under the Company's credit facility with a group of international financial institutions. LIQUIDITY AND CAPITAL RESOURCES: The Company expects that it will meet its cash requirements for 2001 and beyond from internally generated funds, cash on hand, borrowings under existing credit facilities and additional external financing. In the third quarter of 2001, the Company paid a dividend to shareholders of $3.7 million or 4.7 cents per share, compared with $4.5 million or 5.6 cents per share in the same period of 2000. Certain of the Company's financing agreements contain covenants, which limit the payment of dividends to stockholders. Under the most restrictive of these covenants, the Company may pay dividends to stockholders equal to 50% of the net income of the Company for any fiscal quarter as long as such dividends are paid by June 30 of the following year. IMPACT OF NEW ACCOUNTING STANDARDS: Effective January 1, 2001, the Company has adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" and SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities". Such adoption did not have a material impact on the condensed financial statements as of September 30, 2001. In September 2001, The Financial Accounting Standards Board (FASB) issued SFAS No. 142 "Goodwill and Other Intangible Assets". This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. The provisions of this statement are required to be applied starting with fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized in the financial statements at that date. Impairment losses for goodwill and indefinite-lived intangible assets that arise due to the initial application of this statement (resulting from a transitional impairment test) are to be reported as resulting from a change in accounting principle. Goodwill and intangible assets acquired after June 30, 2001 will be subject immediately to the non-amortization and amortization provisions of this statement. The Company will adopt this statement effective January 1, 2002 and its implementation will not materially affect its results of operations or financial condition. In August 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement Obligation", which will be required to be adopted effective January 1, 2003. SFAS No. 143 establishes standards for accounting for an obligation associated with the retirement of long-lived tangible assets. Management is assessing the impact of this statement on our results of operations and financial position. CAUTIONARY STATEMENT: Forward-looking statements in this report and in other Company statements include statements regarding expected commencement dates of mining or metal production operations, projected quantities of future metal production, anticipated production rates, operating efficiencies, costs and - 11 - <Page> expenditures as well as projected demand or supply for the Company's products. Actual results could differ materially depending upon factors including the availability of materials, equipment, required permits or approvals and financing, the occurrence of unusual weather or operating conditions, lower than expected ore grades, the failure of equipment or processes to operate in accordance with specifications, labor relations, environmental risks as well as political and economic risk associated with foreign operations. Results of operations are directly affected by metal prices on commodity exchanges, which can be volatile. - 12 - <Page> Andersen REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors of Southern Peru Copper Corporation: We have reviewed the accompanying condensed consolidated balance sheet of Southern Peru Copper Corporation and subsidiaries (a Delaware Corporation) as of September 30, 2001 and 2000, and the related condensed statements of income and cash flows for the three-month and nine-month periods ended September 30, 2001 and 2000. These financial statements and the accompanying notes are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America. ARTHUR ANDERSEN LLP Phoenix, Arizona November 13, 2001 - 13 - <Page> Part II - OTHER INFORMATION Item 4 - Submission of Matters to a Vote of Security Holders At the annual meeting of stockholders of the Company held on July 25, 2001, the holders of the Common Stock, voting as a class, were asked to elect two directors, the holders of Class A Common Stock, voting as a class, were asked to elect 13 directors, and both classes, voting together, were asked to approve the amendment to Section 4.9(a) of the Company's Restated Certificate of Incorporation and the selection of the independent accountants for 2001. Votes cast in the election of directors by holders of Common Stock were as follows: <Table> <Caption> NUMBER OF SHARES ---------------- NAMES For Withheld ----- --- -------- <S> <C> <C> Amb. Everett E. Briggs 10,245,658 157,968 John F. McGillicuddy 10,247,723 155,903 </Table> In the election of the directors by holders of Class A Common Stock, each of the following directors received 65,900,833 votes and no votes were withheld. <Table> <S> <C> German Larrea Mota-Velasco Manuel J. Iraola Manuel Calderon Cardenas Genaro Larrea Mota-Velasco Hector Calva Ruiz Robert A. Pritzker Jaime Claro Jaime Serra Puche Hector Garcia de Quevedo Topete Daniel Tellechea Salido Xavier Garcia de Quevedo Topete J. Steven Whisler Oscar Gonzalez Rocha </Table> Stockholders approved the amendment to Section 4.9(a) of the Company's Restated Certificate of Incorporation as follows: <Table> <Caption> For Against Abstain --- ------- ------- <S> <C> <C> <C> Common Stock 8,903,749 1,354,210 145,667 Class A Common Stock 329,504,165 - - ----------- --------- ------- Total 338,407,914 1,354,210 145,667 ----------- --------- ------- </Table> - 14 - <Page> Stockholders approved the selection of the independent accountants as follows: <Table> <Caption> For Against Abstain --- ------- ------- <S> <C> <C> <C> Common Stock 10,249,897 33,140 120,589 Class A Common Stock 329,504,165 - - ----------- -------- ------- Total 339,754,062 33,140 120,589 ----------- -------- ------- </Table> - 15 - <Page> Item 6 - Exhibits on form 10-Q 10.1. - First Amendment to the Agreement among Certain Stockholders of Southern Peru Copper Corporation. 15. - Independent Public Accountants Awareness Letter. - 16 - <Page> SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SOUTHERN PERU COPPER CORPORATION (Registrant) Date: November 13, 2001 /s/ Oscar Gonzalez Rocha ------------------------ President Date: November 13, 2001 /s/ Daniel Tellechea Salido --------------------------- Vice President of Finance - 17 -