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STOCKHOLDERS' EQUITY:
 9 Months Ended
Sep. 30, 2013
STOCKHOLDERS' EQUITY:  
STOCKHOLDERS' EQUITY:

NOTE 11 — STOCKHOLDERS´EQUITY:

 

Treasury Stock:

 

Activity in treasury stock in the nine-month period ended September 30, 2013 and 2012 is as follows (in millions):

 

 

 

2013

 

2012

 

Southern Copper common shares

 

 

 

 

 

Balance as of January 1,

 

$

729.8

 

$

734.1

 

Purchase of shares

 

124.0

 

132.4

 

Stock dividend

 

—

 

(151.4

)

Used for corporate purposes

 

(0.3

)

(0.3

)

Balance as of September 30,

 

853.5

 

714.8

 

 

 

 

 

 

 

Parent Company (Grupo Mexico) common shares

 

 

 

 

 

Balance as of January 1,

 

189.0

 

163.7

 

Other activity, including dividend, interest and currency translation effect

 

12.9

 

24.1

 

Balance as of September 30,

 

201.9

 

187.8

 

 

 

 

 

 

 

Treasury stock balance as of September 30,

 

$

1,055.4

 

$

902.6

 

 

The following table summarizes share distributions in the nine months of 2013 and 2012:

 

 

 

2013

 

2012

 

Southern Copper common shares

 

 

 

 

 

Directors’ Stock Award Plan

 

12,000

 

14,400

 

 

 

 

 

 

 

Parent Company (Grupo Mexico) common shares

 

 

 

 

 

Employee stock purchase plan (shares in millions)

 

4.5

 

7.0

 

 

Additional paid-in capital:

 

Delaware Court Decision Related to SCC Shareholder Derivative Lawsuit:  On October 9, 2012 the Company received from AMC, its majority shareholder, $2,108.2 million in satisfaction of the judgment issued pursuant to the decision of the Court of Chancery of Delaware, which concluded that the Company paid an excessive price to AMC in the 2005 merger between the Company and Minera Mexico, S.A. de C.V. From the aforementioned sum received from AMC, the Company paid $316.2 million of legal fees and expenses to the plaintiff’s attorneys to satisfy the court ordered award of attorneys’ fees and expenses. The effect of this award was recorded in the Company’s third quarter 2012 results. The $2,108.2 million awarded to the Company was included in the capital accounts (additional paid-in capital) on the balance sheet. Additionally, the Company recorded an operating expense of $316.2 million in its third quarter 2012 results for the legal fees related to this award.

 

Treasury Stock:

 

Southern Copper Common Shares:

 

At September 30, 2013 and 2012, there were in treasury 43,337,548 and 38,615,536 SCC’s common shares, respectively.

 

SCC share repurchase program:  In 2011, the Company´s Board of Directors authorized a $1 billion share repurchase program.  On October 17, 2013, the Board of Directors approved an increase of this program from $1 billion to $2 billion. Pursuant to this program, the Company purchased common stock as shown in the table below.  These shares are available for general corporate purposes.  The Company may purchase additional shares of its common stock from time to time, based on market conditions and other factors.  This repurchase program has no expiration date and may be modified or discontinued at any time.

 

 

 

 

 

 

 

 

 

 

 

Maximum Number

 

 

 

 

 

 

 

 

 

 

 

Total Number of

 

of Shares that May

 

 

 

 

 

 

 

Total Number of

 

Average

 

Shares Purchased as

 

Yet Be Purchased

 

 

 

Period

 

Shares

 

Price Paid

 

Part of Publicly

 

Under the Plan

 

Total Cost

 

From

 

To

 

Purchased

 

per Share

 

Announced Plan

 

@ $27.24 (*)

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2008:

 

 

 

 

 

 

 

 

 

 

 

 

 

08/11/08

 

12/31/08

 

28,510,150

 

$

13.49

 

28,510,150

 

 

 

$

384.7

 

2009:

 

 

 

 

 

 

 

 

 

 

 

 

 

01/12/09

 

09/30/09

 

4,912,000

 

14.64

 

33,422,150

 

 

 

71.9

 

2010:

 

 

 

 

 

 

 

 

 

 

 

 

 

05/05/10

 

10/14/10

 

15,600

 

29.69

 

33,437,750

 

 

 

0.5

 

2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

05/02/11

 

12/31/11

 

9,034,400

 

30.29

 

42,472,150

 

 

 

273.7

 

2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

04/10/12

 

10/31/12

 

4,442,336

 

33.17

 

46,914,486

 

 

 

147.3

 

2013:

 

 

 

 

 

 

 

 

 

 

 

 

 

04/01/13

 

04/30/13

 

1,500

 

32.96

 

46,915,986

 

 

 

0.1

 

05/01/13

 

05/31/13

 

807,100

 

32.33

 

47,723,086

 

 

 

26.1

 

06/01/13

 

06/30/13

 

1,350,000

 

29.05

 

49,073,086

 

 

 

39.2

 

Total second quarter

 

2,158,600

 

30.28

 

 

 

 

 

65.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

07/01/13

 

07/31/13

 

1,300,000

 

27.60

 

50,373,086

 

 

 

35.9

 

08/01/13

 

08/31/13

 

641,400

 

26.68

 

51,014,486

 

 

 

17.1

 

09/01/13

 

09/30/13

 

204,012

 

27.65

 

51,218,498

 

 

 

5.6

 

Total third quarter

 

2,145,412

 

27.33

 

 

 

 

 

58.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nine months 2013

 

4,304,012

 

28.81

 

 

 

 

 

124.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total purchased

 

51,218,498

 

$

19.56

 

 

 

36,635,590

 

$

1,002.1

 

 

 

(*) NYSE closing price of SCC common shares at September 30, 2013.

 

As a result of the repurchase of shares of SCC’s common stock, Grupo Mexico’s direct and indirect ownership was 81.7% as of September 30, 2013.

 

Directors’ Stock Award Plan:  The Company established a stock award compensation plan for certain directors who are not compensated as employees of the Company.  Under this plan, participants will receive 1,200 shares of common stock upon election and 1,200 additional shares following each annual meeting of stockholders thereafter. 600,000 shares of Southern Copper common stock have been reserved for this plan.  The fair value of the award is measured each year at the date of the grant.

 

The activity of the plan in the nine-month period ended September 30, 2013 and 2012 is as follows:

 

 

 

2013

 

2012

 

Total SCC shares reserved for the plan

 

600,000

 

600,000

 

 

 

 

 

 

 

Total shares granted at January 1,

 

(285,600

)

(271,200

)

Granted in the period

 

(12,000

)

(14,400

)

Total shares granted at September 30,

 

(297,600

)

(285,600

)

 

 

 

 

 

 

Remaining shares reserved

 

302,400

 

314,400

 

 

Parent Company common shares:

 

At September 30, 2013 and 2012 there were in treasury 76,343,324, and 81,377,369 of Grupo Mexico’s shares, respectively.

 

Employee Stock Purchase Plan:  In January 2007, the Company offered to eligible employees a stock purchase plan (the “Employee Stock Purchase Plan”) through a trust that acquires shares of Grupo Mexico stock for sale to its employees, employees of subsidiaries, and certain affiliated companies.  The purchase price is established at the approximate fair market value on the grant date.  Every two years employees will be able to acquire title to 50% of the shares paid for the previous two years.  The employees will pay for shares purchased through monthly payroll deductions over the eight year period of the plan.  At the end of the eight year period, the Company will grant the participant a bonus of 1 share for every 10 shares purchased by the employee.

 

If Grupo Mexico pays dividends on shares during the eight year period, the participants will be entitled to receive the dividend in cash for all shares that have been fully purchased and paid as of the date that the dividend is paid.  If the participant has only partially paid for shares, the entitled dividends will be used to reduce the remaining liability owed for purchased shares.

 

In the case of voluntary resignation of the employee, the Company will pay to the employee the fair market sales price at the date of resignation of the fully paid shares, net of costs and taxes.  When the fair market sales value of the shares is higher than the purchase price, the Company will apply a deduction over the amount to be paid to the employee based on the following schedule:

 

If the resignation occurs during:

 

% Deducted

 

1st year after the grant date

 

90

%

2nd year after the grant date

 

80

%

3rd year after the grant date

 

70

%

4th year after the grant date

 

60

%

5th year after the grant date

 

50

%

6th year after the grant date

 

40

%

7th year after the grant date

 

20

%

 

In the case of involuntary termination of the employee, the Company will pay to the employee the fair market sales price at the date of termination of employment of the fully paid shares, net of costs and taxes.  When the fair market value of the shares is higher than the purchase price, the Company will apply a deduction over the amount to be paid to the employee based on the following schedule:

 

If the termination occurs during:

 

% Deducted

 

1st year after the grant date

 

100

%

2nd year after the grant date

 

95

%

3rd year after the grant date

 

90

%

4th year after the grant date

 

80

%

5th year after the grant date

 

70

%

6th year after the grant date

 

60

%

7th year after the grant date

 

50

%

 

In case of retirement or death of the employee, the Company will render the buyer or his legal beneficiary, the fair market sales value as of the date of retirement or death of the shares effectively paid, net of costs and taxes.

 

The stock based compensation expense for the nine months ended September 30, 2013 and 2012 and the unrecognized compensation expense as of September 30, 2013 and 2012 under this plan were as follows (in millions):

 

 

 

2013

 

2012

 

Stock based compensation expense

 

$

1.6

 

$

1.6

 

Unrecognized compensation expense

 

$

2.6

 

$

4.8

 

 

The unrecognized compensation expense under this plan is expected to be recognized over the remaining year and three month period.

 

The following table presents the stock award activity of the Employee Stock Purchase Plan for the nine months ended September 30, 2013 and 2012:

 

 

 

Shares

 

Unit Weighted Average
Grant Date Fair Value

 

 

 

 

 

 

 

Outstanding shares at January 1, 2013

 

6,955,572

 

$

1.16

 

Granted

 

—

 

—

 

Exercised

 

(2,396,354

)

1.16

 

Forfeited

 

(31,159

)

1.16

 

Outstanding shares at September 30, 2013

 

4,528,059

 

$

1.16

 

 

 

 

 

 

 

Outstanding shares at January 1, 2012

 

7,270,341

 

$

1.16

 

Granted

 

—

 

—

 

Exercised

 

(208,199

)

1.16

 

Forfeited

 

(94,339

)

1.16

 

Outstanding shares at September 30, 2012

 

6,967,803

 

$

1.16

 

 

During 2010, the Company offered to eligible employees a new stock purchase plan (the “New Employee Stock Purchase Plan”) through a trust that acquires series B shares of Grupo Mexico stock for sale to its employees, employees of subsidiaries, and certain affiliated companies. The purchase price was established at 26.51 Mexican pesos (approximately $2.05) for the initial subscription.  The terms of the New Employee Stock Purchase Plan are similar to the terms of the Employee Stock Purchase Plan.

 

The stock based compensation expense for the nine months ended September 30, 2013 and 2012 and the unrecognized compensation expense as of September 30, 2013 and 2012 under this plan were as follows (in millions):

 

 

 

2013

 

2012

 

Stock based compensation expense

 

$

0.4

 

$

0.4

 

Unrecognized compensation expense

 

$

2.8

 

$

3.4

 

 

The unrecognized compensation expense under this plan is expected to be recognized over the remaining five year and three month period.

 

The following table presents the stock award activity of the New Employee Stock Purchase Plan for the nine months ended September 30, 2013 and 2012:

 

 

 

Shares

 

Unit Weighted Average
Grant Date Fair Value

 

 

 

 

 

 

 

Outstanding shares at January 1, 2013

 

2,944,742

 

$

2.05

 

Granted

 

226,613

 

2.05

 

Exercised

 

(22,470

)

2.05

 

Forfeited

 

(103,513

)

2.05

 

Outstanding shares at September 30, 2013

 

3,045,372

 

$

2.05

 

 

 

 

 

 

 

Outstanding shares at January 1, 2012

 

3,807,146

 

$

2.05

 

Granted

 

—

 

—

 

Exercised

 

(727,134

)

2.05

 

Forfeited

 

(89,554

)

2.05

 

Outstanding shares at September 30, 2012

 

2,990,458

 

$

2.05