DOE RUN RESOURCES CORP - 10-Q Quarterly Report

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THE DOE RUN RESOURCES CORPORATION INDEX TO FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

(Mark One)
ý	Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended July 31, 2003
Or
o	Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to

Commission File Number 333-66291

The Doe Run Resources Corporation
(Exact name of registrant as specified in its charter)

New York (State or other jurisdiction of incorporation or organization)		13-1255630 (IRS Employer Identification No.)
1801 Park 270 Drive, Suite 300 St. Louis, Missouri (Address of principal executive offices)		63146 (Zip Code)
Registrant's telephone number, including area code (314) 453-7100

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 proceeding 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. o Yes ý No

Note: The Registrant files pursuant to an indenture, but is not otherwise subject to the reporting requirements of Section 13 or 15(d).

Number of shares outstanding of each of the issuer's classes of common stock, as of June 4, 2004:

Common stock, $.10 par value

1,000 shares

THE DOE RUN RESOURCES CORPORATION
INDEX TO FORM 10-Q

Part I
	Item 1.	Financial Statements
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
	Item 3.	Legal Proceedings
	Item 4.	Controls and Procedures
Part II
	Item 1.	Legal Proceedings
	Item 4.	Submission of Matters to a Vote of Security Holders
	Item 6.	Exhibits and Reports on Form 8-K

Item 1. Financial Statements

THE DOE RUN RESOURCES CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)

			July 31, 2003			April 30, 2003			January 31, 2003			October 31, 2002
			*(unaudited)*			*(unaudited)*			*(unaudited)*
ASSETS
Current assets:
	Cash		$	8,024		$	3,742		$	8,209		$	7,018
	Trade accounts receivable, net of allowance for doubtful accounts			60,121			65,559			60,665			64,778
	Inventories			109,336			110,893			111,473			103,346
	Prepaid expenses and other current assets			22,463			18,647			23,008			19,593

		Total current assets		199,944			198,841			203,355			194,735
Property, plant and equipment, net				235,497			239,017			244,932			249,667
Other noncurrent assets, net				4,020			4,654			5,120			5,794

		Total assets	$	439,461		$	442,512		$	453,407		$	450,196

LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
	Short-term borrowings and current maturities of long-term debt		$	46,976		$	48,692		$	35,088		$	16,342
	Accounts payable			47,599			45,409			51,524			48,876
	Accrued liabilities			57,851			49,966			48,909			55,068

		Total current liabilities		152,426			144,067			135,521			120,286
Long-term debt, less current maturities				367,786			367,621			382,688			385,876
Other noncurrent liabilities				72,893			72,432			72,816			71,205

		Total liabilities		593,105			584,120			591,025			577,367
Series A redeemable preferred stock, $1,000 par value, 5,000 shares authorized, 2,000 shares issued and outstanding; liquidation and redemption value				21,889			21,264			20,639			20,000
Shareholder's deficit:
	Common stock, $.10 par value, 1,667 shares authorized, 1,000 shares issued and outstanding			—			—			—			—
	Additional paid-in capital			3,350			3,975			4,599			5,238
	Accumulated deficit and other comprehensive losses			(178,883	)		(166,847	)		(162,856	)		(152,409	)

		Total shareholder's deficit		(175,533	)		(162,872	)		(158,257	)		(147,171	)

		Total liabilities and shareholder's deficit	$	439,461		$	442,512		$	453,407		$	450,196

The accompanying notes are an integral part of these condensed consolidated financial statements.

THE DOE RUN RESOURCES CORPORATION
Condensed Consolidated Statements of Operations (unaudited)
(Dollars in thousands, except per share amounts)

					Nine Months Ended July 31,						Three Months Ended July 31,						Six Months Ended April 30,						Three Months Ended April 30,						Three Months Ended January 31,
					2003			2002			2003			2002			2003			2002			2003			2002			2003			2002
Net sales					$	492,325		$	489,388		$	169,204		$	172,012		$	323,121		$	317,376		$	164,110		$	160,840		$	159,011		$	156,536
Costs and expenses:
	Cost of sales					457,737			445,683			159,560			161,304			298,177			284,379			151,343			146,898			146,834			137,481
	Depreciation, depletion and amortization					23,546			22,790			7,605			7,642			15,941			15,148			7,994			7,646			7,947			7,502
	Selling, general and administrative					20,603			20,388			7,857			7,365			12,746			13,023			5,558			6,770			7,188			6,253
	Other					1,634			765			770			304			864			461			582			262			282			199
	Unrealized (gain)/loss on derivative financial instruments					1,013			(1,404	)		1,599			235			(586	)		(1,639	)		(489	)		(253	)		(97	)		(1,386	)

		Total costs and expenses				504,533			488,222			177,391			176,850			327,142			311,372			164,988			161,323			162,154			150,049

		Income (loss) from operations				(12,208	)		1,166			(8,187	)		(4,838	)		(4,021	)		6,004			(878	)		(483	)		(3,143	)		6,487
Other income (expense):
	Interest expense					(9,790	)		(42,685	)		(3,239	)		(14,514	)		(6,551	)		(28,171	)		(3,486	)		(14,201	)		(3,065	)		(13,970	)
	Interest income					23			10,619			7			3,552			16			7,067			5			3,528			11			3,539
	Other, net					(460	)		(2,237	)		(520	)		(1,423	)		60			(814	)		369			(606	)		(309	)		(208	)

						(10,227	)		(34,303	)		(3,752	)		(12,385	)		(6,475	)		(21,918	)		(3,112	)		(11,279	)		(3,363	)		(10,639	)
			Loss before income tax expense			(22,435	)		(33,137	)		(11,939	)		(17,223	)		(10,496	)		(15,914	)		(3,990	)		(11,762	)		(6,506	)		(4,152	)
Income tax expense (benefit)						—			—			—			—			—			—			—			(539	)		—			539

		Loss before cumulative effect of change in accounting principle				(22,435	)		(33,137	)		(11,939	)		(17,223	)		(10,496	)		(15,914	)		(3,990	)		(11,223	)		(6,506	)		(4,691	)
		Cumulative effect of change in accounting principle, net of income tax benefit				(3,940	)		—			—			—			(3,940	)		—			—			—			(3,940	)		—

				Net loss		(26,375	)		(33,137	)		(11,939	)		(17,223	)		(14,436	)		(15,914	)		(3,990	)		(11,223	)		(10,446	)		(4,691	)
				Cumulative preferred stock dividends		(1,889	)		—			(625	)		—			(1,264	)		—			(625	)		—			(639	)		—

				Net loss allocable to common shares	$	(28,264	)	$	(33,137	)	$	(12,564	)	$	(17,223	)	$	(15,700	)	$	(15,914	)	$	(4,615	)	$	(11,223	)	$	(11,085	)	$	(4,691	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

THE DOE RUN RESOURCES CORPORATION
Condensed Consolidated Statements of Cash Flows (unaudited)
(Dollars in thousands)

			Nine Months Ended July 31,						Six Months Ended April 30,						Three Months Ended January 31,
			2003			2002			2003			2002			2003			2002
Cash flows from operating activities:
	Net loss		$	(26,375	)	$	(33,137	)	$	(14,436	)	$	(15,914	)	$	(10,446	)	$	(4,691	)
	Cumulative effect of change in accounting principle			3,940			—			3,940			—			3,940			—
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation, depletion and amortization		23,546			22,790			15,941			15,148			7,947			7,502
		Imputed interest and amortization of deferred financing costs		1,803			2,707			469			1,811			1,062			896
		Unrealized gain on derivative financial instruments		1,013			(1,404	)		(586	)		(1,639	)		(97	)		(1,386	)
		Increase/(decrease) resulting from other changes in assets and liabilities		(1,410	)		20,768			(14,388	)		4,470			(10,529	)		(358	)

		Net cash provided by (used in) operating activities		2,517			11,724			(9,060	)		3,876			(8,123	)		1,963
Cash flows from investing activities:
	Purchases of property, plant and equipment			(12,343	)		(16,581	)		(7,828	)		(12,303	)		(5,342	)		(4,745	)

		Net cash used in investing activities		(12,343	)		(16,581	)		(7,828	)		(12,303	)		(5,342	)		(4,745	)
Cash flows from financing activities:
	Proceeds from revolving loans and short term borrowings, net			17,705			14,414			19,207			6,665			15,738			3,688
	Payments on long-term debt			(6,391	)		(3,156	)		(5,257	)		(2,131	)		(1,082	)		(1,093	)
	Payment of financing costs			(482	)		(119	)		(338	)		(119	)		—			(100	)

		Net cash provided by financing activities		10,832			11,139			13,612			4,415			14,656			2,495

		Net increase (decrease) in cash	$	1,006		$	6,282		$	(3,276	)	$	(4,012	)	$	1,191		$	(287	)

Cash at beginning of period			$	7,018		$	6,263		$	7,018		$	6,263		$	7,018		$	6,263

Cash at end of period			$	8,024		$	12,545		$	3,742		$	2,251		$	8,209		$	5,976

The accompanying notes are an integral part of these condensed consolidated financial statements.

THE DOE RUN RESOURCES CORPORATION

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands)

(1) Summary of Significant Accounting Policies

Unaudited Interim Financial Statements

These interim consolidated financial statements include the accounts of The Doe Run Resources Corporation (Doe Run) and its subsidiaries (on a consolidated basis, the Company). Doe Run's issued and outstanding common stock is owned by a subsidiary of The Renco Group, Inc. (Renco). In the opinion of management, the interim consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the consolidated financial position as of January 31, 2003, April, 30, 2003 and July 31, 2003 and results of operations for the three-month period ended January 31, 2003 and 2002, the three and six-month periods ended April 30, 2003 and 2002 and the three and nine-month periods ended July 31, 2003 and 2002. All material intercompany balances and transactions have been eliminated. Interim periods are not necessarily indicative of results to be expected for the year.

Reclassifications

Certain balances have been reclassified from their previous presentation in order to conform to the current year presentation.

(2) Financial Condition

The Company has had recurring losses over several years, primarily the result of the declining treatment charges discussed below and low metal prices, a condition exacerbated by the Company's significant interest costs prior to the restructuring of the Company's public debt in 2002. Doe Run's liquidity has been affected by these factors, as well as by Doe Run Peru's liquidity. As noted in Note 4, the Company has failed to meet certain financial covenant requirements contained in Doe Run's revolving credit agreement and a term note (the Term Note) during the first nine months of fiscal 2003, and failed a financial covenant in Doe Run Peru's revolving credit facility subsequent to the end of the third quarter. As discussed in Notes 6 and 7, the Company has uncertainties related to environmental and litigation matters. These issues combined raise substantial doubt about the Company's ability to continue as a going concern.

Doe Run Peru's results of operations and liquidity have been severely impacted by declining treatment charges that Doe Run Peru receives for processing raw materials resulting from a shortage in the global supply of concentrates. The effects of low metals prices for the past several years have also caused some of Doe Run Peru's current suppliers of concentrates to suffer financial distress, which has affected the availability of concentrate feed. During 2003, deliveries of lead and zinc concentrates to La Oroya from a major Peruvian supplier were below contracted amounts. While Doe Run Peru was able to replace a portion of this shortfall with concentrates from other suppliers, total concentrate receipts were less than expected and the resulting changes in concentrate mix and interruptions in delivery schedules adversely affected Doe Run Peru's metal production and results of operations. If one or more of Doe Run Peru's significant local suppliers were to cease delivery of concentrates, there could be no assurance La Oroya would be able to secure sufficient replacement feedstock at economically acceptable terms. If such shortages resulted in a significant interruption in feed supply, a material reduction in the production of metals from La Oroya or an interruption of production in the lead and zinc circuits could result, which could have a significant adverse effect on the Company's results of operations, financial condition and liquidity.

As discussed in Note 6, Doe Run Peru is proceeding with efforts to identify alternative methods of achieving compliance with environmental requirements. These efforts include, but are not limited to, reducing or curtailing production from a portion of the plant thus eliminating the need for the equipment presently contemplated and replacing it with another alternative. These efforts must take into consideration the impacts on profitability and liquidity, as well as other economic impacts. Doe Run Peru intends to submit a request in 2004 to modify its existing requirements. There can be no assurance that the alternatives will be approved by the Peruvian government or that they will achieve compliance in the timeframe required. If the La Oroya smelter does not operate within the required limits after December 31, 2006, Doe Run Peru could be forced to cease operations at the La Oroya smelter.

Doe Run Peru implemented cost savings during fiscal 2003 and accelerated cash receipts, as well as other measures, to improve its liquidity. In addition, the retirement of Doe Run Peru's loan from a foreign bank reduced Doe Run Peru's interest payments by approximately $14,000 per year. These changes improved Doe Run Peru's cash flow and availability of borrowings under the revolving credit agreement in the first nine months of 2003.

Doe Run Peru's ability to pay fees to Doe Run is currently limited by Doe Run Peru's revolving credit facility, unless Doe Run Peru meets an excess cash flow test. Due to Doe Run Peru's lack of liquidity, no payments for fees were made during the first nine months of 2003, although payments of $4,000 annually were allowed for 2003 under Doe Run Peru's revolving credit facility. In addition, beginning in 2003, Doe Run will not receive approximately $14,000 per year in interest income from a deposit that was surrendered to retire Doe Run Peru's loan from a foreign bank. The deposit, plus unpaid interest, was replaced in September 2002 by an intercompany note that does not bear interest during the term of Doe Run Peru's revolving credit facility. These factors along with nearly five years of low metals prices have affected Doe Run's liquidity.

Doe Run has implemented cost savings measures over the last several years to mitigate the impact of lower metal prices, including: reductions of production levels, changes in mine plans and the elimination of hourly and salaried positions. These efforts succeeded in reducing Doe Run's costs over the last several years. Management will continue to assess market and operating conditions to maximize its operating profit or limit losses, while allowing Doe Run to fulfill its environmental obligations.

(3) Inventories

Inventories consist of the following:

	July 31, 2003		April 30, 2003		January 31, 2003		October 31, 2002
Finished metals and concentrates	$	22,186	$	17,885	$	18,849	$	14,660
Metals and concentrates in process		59,901		65,424		64,285		59,814
Materials, supplies and repair parts		27,249		27,584		28,339		28,872

	$	109,336	$	110,893	$	111,473	$	103,346

Materials, supplies and repair parts are stated net of reserves for obsolescence of approximately $4,475, $5,246, $5,192 and $5,157 at July 31, 2003, April 30, 2003, January 31, 2003 and October 31, 2002, respectively.

(4) Debt

Effective March 27, 2003, Doe Run entered into an amendment to the loan agreement governing Doe Run's revolving credit facility which reduced the consolidated net worth measurement that the Company is required to maintain and waived certain events of default. Pursuant to the amendment the

lenders waived events of default at that time resulting from the failure of Doe Run to maintain financial covenants and waived the event of default resulting from the failure of Doe Run to deliver timely financial reports.

Effective March 21, 2003 Renco and the lenders of the Term Note entered into an Assignment and Acceptance Agreement whereby Renco purchased all of the rights of the agent and lenders under the Term Note. Accordingly, Renco became the agent and lender under the Term Note with the identical rights to payment of interest, principal and fees and to the same collateral, as had the previous lenders. On March 27, 2003 Renco, in its capacity as agent and lender under the Term Note, waived existing and impending defaults, including, among other things, Doe Run's failure to provide the lender with certain reports and Doe Run's failure to comply with financial covenants.

Subsequent to the waivers and amendments discussed above, certain financial and reporting covenant requirements contained in Doe Run's revolving credit agreement and the Term Note were not met. Subsequent to July 31, 2003, Doe Run Peru defaulted on its net worth covenant contained in its revolving credit agreement. These defaults continued until the agreements were amended in the second quarter of fiscal 2004. See discussion in Note 8 regarding amendments to these agreements.

(5) Segment Information

The Company's operating segments are separately managed business units that are distinguished by products, location and production processes. The primary lead segment includes integrated mining, milling and smelting operations located in Missouri. The secondary lead segment, also located in Missouri, recycles lead-bearing feed materials, primarily spent batteries. The fabricated products segment produces value-added lead products. Doe Run Peru produces an extensive product mix of non-ferrous and precious metals.

The accounting policies of the segments are the same as those of the Company, except that the primary lead, secondary lead and fabricated products segments value finished metals and concentrates, work in process and raw materials inventories at FIFO cost. Certain functions are performed at the Company's corporate office for the primary lead and secondary lead segments, such as sales and billing, as well as the general administration of the Company. Related accounts receivable and corporate overhead expenses are not allocated to operating segments.

			Three Months Ended January 31,						Three Months Ended April 30,						Six Months Ended April 30,
			2003			2002			2003			2002			2003			2002
Operating Segments—Revenues
Revenues from external customers:
	Peruvian operations		$	102,063		$	101,455		$	104,120		$	104,326		$	206,183		$	205,781
	Primary lead			36,859			33,103			39,191			33,714			76,050			66,817
	Secondary lead			15,502			16,970			16,772			18,491			32,274			35,461
	Fabricated products			4,144			4,007			3,720			4,468			7,864			8,475

		Total		158,568			155,535			163,803			160,999			322,371			316,534
Revenues from other operating segments:(1)
	Peruvian operations			243			—			195			—			438			—
	Primary lead			210			585			269			401			479			986
	Secondary lead			198			86			197			153			395			239
	Fabricated products			—			—			—			—

	Total			651			671			661			554			1,312			1,225

Total reportable segments				159,219			156,206			164,464			161,553			323,683			317,759
Other revenues/gains (losses)(2)				443			1,001			307			(159	)		750			842
Intersegment eliminations				(651	)		(671	)		(661	)		(554	)		(1,312	)		(1,225	)

Total revenues			$	159,011		$	156,536		$	164,110		$	160,840		$	323,121		$	317,376

			Three Months Ended July 31,						Nine Months Ended July 31,
			2003			2002			2003			2002
Operating Segments—Revenues
Revenues from external customers:
	Peruvian operations		$	106,934		$	109,584		$	313,117		$	315,365
	Primary lead			39,938			42,321			115,988			109,138
	Secondary lead			17,656			15,888			49,930			51,349
	Fabricated products			3,649			4,646			11,513			13,121

		Total		168,177			172,439			490,548			488,973
Revenues from other operating segments:(1)
	Peruvian operations			90			—			528			—
	Primary lead			142			482			621			1,468
	Secondary lead			217			224			612			463
	Fabricated products			—			—			—			—

	Total			449			706			1,761			1,931

Total reportable segments				168,626			173,145			492,309			490,904
Other revenues/gains (losses)(2)				1,027			(427	)		1,777			415
Intersegment eliminations				(449	)		(706	)		(1,761	)		(1,931	)

Total revenues			$	169,204		$	172,012		$	492,325		$	489,388

(1): Transactions between segments consist of metal sales recorded based on sales contracts that are negotiated between segments at market terms.
(2): Consists of metal sales not attributed to operating segments and realized gains (losses) on derivative contracts.

		Three Months Ended January 31,						Three Months Ended April 30,						Six Months Ended April 30,
		2003			2002			2003			2002			2003			2002
Operating Segments—Adjusted EBITDA
Peruvian operations		$	4,270		$	7,381		$	4,130		$	4,320		$	8,400		$	11,701
Primary lead			1,458			3,881			1,758			3,090			3,216			6,971
Secondary lead			3,410			4,381			2,196			4,231			5,606			8,612
Fabricated products			892			501			163			758			1,055			1,259

	Total reportable segments		10,030			16,144			8,247			12,399			18,277			28,543
Other income and expenses(3)			(733	)		(360	)		2,206			(1,985	)		1,473			(2,345	)
Corporate selling, general and administrative expenses			(4,398	)		(3,389	)		(2,622	)		(4,123	)		(7,020	)		(7,512	)
Intersegment eliminations			(71	)		—			53			13			(18	)		13

	Consolidated adjusted EBITDA		4,828			12,395			7,884			6,304			12,712			18,699
Depreciation, depletion and amortization			(7,947	)		(7,502	)		(7,994	)		(7,646	)		(15,941	)		(15,148	)
Interest income			11			3,539			5			3,528			16			7,067
Interest expense			(3,065	)		(13,970	)		(3,486	)		(14,201	)		(6,551	)		(28,171	)
Other			(430	)		—			(888	)		—			(1,318	)		—
Unrealized gain (loss) on derivative financial instruments			97			1,386			489			253			586			1,639

	Loss before income taxes	$	(6,506	)	$	(4,152	)	$	(3,990	)	$	(11,762	)	$	(10,496	)	$	(15,914	)

			Three Months Ended July 31,						Nine Months Ended July 31,
			2003			2002			2003			2002
Operating Segments—Adjusted EBITDA
Peruvian operations			$	(1,849	)	$	5,259		$	6,551		$	16,960
Primary lead				4,739			(628	)		7,955			6,343
Secondary lead				4,616			3,209			10,222			11,821
Fabricated products				433			853			1,488			2,112

	Total reportable segments			7,939			8,693			26,216			37,236
Other income and expenses(3)				(1,310	)		(2,384	)		163			(4,729	)
Corporate selling, general and administrative expenses				(4,976	)		(4,682	)		(11,996	)		(12,194	)
Intersegment eliminations				—			(11	)		(18	)		2

Consolidated adjusted EBITDA				1,653			1,616			14,365			20,315
Depreciation, depletion and amortization				(7,605	)		(7,642	)		(23,546	)		(22,790	)
Interest income				7			3,552			23			10,619
Interest expense				(3,239	)		(14,514	)		(9,790	)		(42,685	)
Other				(1,156	)		—			(2,474	)		—
Unrealized gain (loss) on derivative financial instruments				(1,599	)		(235	)		(1,013	)		1,404

		Loss before income taxes	$	(11,939	)	$	(17,223	)	$	(22,435	)	$	(33,137	)

(3): Other income and expenses primarily include realized gains (losses) on derivative contracts and exploration expenses.

(6) Asset Retirement and Environmental Obligations

The Company is subject to numerous federal, state and local environmental laws and regulations governing, among other things, air emissions, wastewater discharges, solid and hazardous waste treatment, storage and disposal and remediation of releases of hazardous substances. The Company's

facilities are located on sites that have been used for heavy industrial purposes for decades and may require remediation. The Company has made and intends to continue making the necessary expenditures for environmental remediation and compliance with environmental laws and regulations. Environmental laws and regulations may become more stringent in the future which could increase costs of compliance.

Asset Retirement Obligations

On November 1, 2002 the Company adopted Statement No. 143 "Accounting for Asset Retirement Obligations" (Statement No. 143). With the adoption of this Statement, asset retirement obligations (AROs) are recognized as liabilities when incurred, with the initial measurement at fair value. These liabilities will be accreted to full value over time through charges to income. In addition, an asset retirement cost was capitalized as part of the related asset's carrying value and will be depreciated over the asset's useful life.

The Company's mines and related processing facilities are subject to governance by various agencies that have established minimum standards for reclamation. The Company's primary smelter slag produced by and stored at the primary smelter in Herculaneum, Missouri is currently exempt from hazardous waste regulation under the Resource Conservation and Recovery Act of 1976, as amended (RCRA), but is subject to a state closure permit, which requires activities to contain and cover the pile. The Company's mining and milling operations are subject to Missouri mine waste closure permit requirements and lease agreements which require the Company to reclaim surface areas, including remediation of mining waste disposal areas, and to perform closure activities underground. These activities, which tend to be site specific, generally include costs for earthwork, revegetation, water treatment and demolition.

Doe Run Peru also has AROs at its Cobriza mine, related to the costs associated with closing the mine openings and covering acid rock. Doe Run Peru is also responsible for the covering and revegetation of mixed lead and copper slag stored in Huanchan, an area a short distance from the smelter where the slag is currently stored.

The following table summarizes the balance sheet impact associated with the adoption of Statement No. 143:

	October 31, 2002 As Reported			Statement No. 143 Adoption Impact			November 1, 2002 After Adoption
Property, plant and equipment	$	435,922		$	(3,137	)	$	432,785
Accumulated depreciation		(186,255	)		1,049			(185,206	)
Plant, property and equipment, net		249,667			(2,088	)		247,579
Liability for AROs		12,059			1,852			13,911
Cumulative effect of change in accounting principle		—			(3,940	)		(3,940	)

The pro forma effects of the application of Statement No. 143 as if it had been adopted on November 1, 2001 are presented below:

	Three Months Ended January 31,						Three Months Ended April 30,						Six Months Ended April 30,
	2003			2002			2003			2002			2003			2002
Loss before cumulative effect of accounting change as reported	$	(6,506	)	$	(4,691	)	$	(3,990	)	$	(11,223	)	$	(10,496	)	$	(15,914	)
Additional accretion and depreciation expense, net of tax		—			(294	)		—			(294	)		—			(588	)

Pro forma loss before cumulative effect of accounting change	$	(6,506	)	$	(4,985	)	$	(3,990	)	$	(11,517	)	$	(10,496	)	$	(16,502	)

Net loss as reported	$	(10,446	)	$	(4,691	)	$	(3,990	)	$	(11,223	)	$	(14,436	)	$	(15,914	)
Pro forma net loss	$	(6,506	)	$	(8,925	)	$	(3,990	)	$	(11,517	)	$	(10,496	)	$	(20,442	)

	Three Months Ended July 31,						Nine Months Ended July 31,
	2003			2002			2003			2002
Loss before cumulative effect of accounting change as reported	$	(11,939	)	$	(17,223	)	$	(22,435	)	$	(33,137	)
Additional accretion and depreciation expense, net of tax		—			(294	)		—			(882	)

Pro forma loss before cumulative effect of accounting change	$	(11,939	)	$	(17,517	)	$	(22,435	)	$	(34,019	)

Net loss as reported	$	(11,939	)	$	(17,223	)	$	(26,375	)	$	(33,137	)
Pro forma net loss	$	(11,939	)	$	(17,517	)	$	(22,435	)	$	(37,959	)

The pro forma asset retirement obligation liability balance at October 31, 2001 as if Statement No. 143 had been adopted at that date is $12,322.

The following illustrates the activity pertaining to the AROs for the period ended July 31, 2003.

AROs as of October 31, 2002	$	12,059
Transition adjustment		1,852
Liabilities settled		(7	)
Accretion expense		1,148

AROs as of July 31, 2003	$	15,052

The Company has a RCRA permit addressing the closure of portions of its recycling facility. The majority of the cost will arise from removing hazardous materials from the facility. The cost of closure, based on third party estimates for bonding purposes, is approximately $3,000. No ARO liability or related asset cost has been recorded, because the fair value of the obligation cannot be determined. The life of the operation is considered indeterminable because there is not currently a cost-effective alternative to the lead acid battery and because battery manufacturers are required to recycle the batteries.

Environmental Remediation—Domestic Operations

Doe Run is subject to a voluntary Administrative Order on Consent (AOC), effective May 29, 2001, to study and address issues related to the slag pile, plant property, community soils adjacent to

the primary smelter in Herculaneum, elevated blood lead levels in the community and lead releases from the plant.

Under this AOC Doe Run completed additional soil testing in the area within a mile radius of the smelter, and subsequently signed a second AOC with the U.S. EPA on December 21, 2001, which has essentially been completed. The Company signed a modification to the May 29, 2001 AOC on January 16, 2004. This modification calls for soil replacement in an estimated 129 properties where the lead content exceeds 800 ppm. The estimated costs of remediating these properties is approximately $1,740 to be spent in 2004, and $380 in the following year. The estimated costs for the properties to be completed after 2004 assumes the use of phosphate treatment to stabilize them. If the use of such treatment is not accepted by the EPA, costs of remediation will be higher than those currently estimated.

Doe Run signed a Settlement Agreement with the State of Missouri on April 26, 2002 whereby it agreed to offer to purchase approximately 160 residential properties in an area close to the smelter if the owner requests such an offer. Under the terms of the residential property purchase plan, Doe Run immediately extended offers to the owners of twenty properties having children less than 72 months old living in them. Of the remaining 140 homeowners, those that request an offer will be extended offers by the end of 2004. The amount paid to the homeowners who accept an offer is based on an appraisal of the property's value at August 31, 2001, plus, if a replacement property is purchased, an amount for owner-occupied residences representing the lesser of the difference between the appraisal amount and the cost of a similar property in another designated community or the difference between the appraisal amount and the replacement property. The estimated cost associated with the residential property purchase plan could be as high as $10,000 if all qualifying homeowners request an offer and accept the purchase offer. Through July 31, 2003, Doe Run had spent approximately $1,800 on 22 properties under the residential property purchase plan. All but two of the twenty owners of homes with children living in them have accepted Doe Run's offer. Of the seventy-one properties whose owners were given the opportunity to request purchase in calendar 2003, fifty-seven owners have requested an appraisal, and twenty-five of forty-nine offers have been accepted. Management believes that it is highly unlikely that all of the qualifying homeowners will accept the offer, but it cannot currently be estimated how many of the remaining homeowners will accept the offer, or, if the offer is accepted, what price will be paid for the property. If Doe Run does not comply with the material property purchase provisions of the settlement agreement, Doe Run will be subject to a $1,000 penalty.

Doe Run will attempt to rent out certain purchased properties, once approval is received by the regulatory agencies. The properties must remain vacant while owned by Doe Run until regulators and the city agree that re-occupancy is not a risk to human health. Management believes there is current evidence that no health risk exists as a result of smelter operations, due to soil remediation efforts and low concentrations of lead in the air in the buyout area, and that other sources of lead contamination could be remedied. Based on an analysis of information currently available, Doe Run believes it should ultimately be able to rent or sell the properties.

The Company's statement of operations reflects an impairment loss that is primarily related to properties owned in Herculaneum, as approval for reoccupancy of the properties has not yet been received and it cannot be assured that the cost of the properties will be recovered through future cash flows. If the cost of the property cannot be recovered through future cash flows, additional impairment losses will be recognized as properties are purchased. The Company's accrual for remediation does not include any future purchase costs relating to the residential property purchase plan.

On April 11, 2002, a report in the media contained allegations by former employees of improper disposal of hazardous materials on the Herculaneum site. Doe Run does not believe there has been any violation of law and is cooperating with state and federal agencies in their investigations into the allegations, including having provided equipment and an operator to the government to excavate

various areas of the Herculaneum smelter site, which excavations failed to turn up any evidence of illegal toxic dumping. The investigation is still officially open.

Doe Run, working with the Missouri DNR and the Missouri Air Conservation Commission, has developed a plan to bring the Herculaneum smelter in compliance with the ambient air quality standard for lead promulgated under the federal Clean Air Act. The plan was included in a consent judgment entered into by Doe Run and has been approved at the state level and by the U.S. EPA. Minimal capital expenditures were required in 2003 to complete the project, and the plan has been essentially implemented, and the air quality monitors have reflected compliance since July 2002.

Doe Run has received notice that it is a potentially responsible party (PRP) subject to liability under The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA) at the following sites: six sites in St. Francois County, Missouri, including the Big River Mine Tailings site, the Bonne Terre site, the Federal site, the National site, the Rivermines site and the Leadwood site; the Oronogo-Durenweg site in Jasper County, Missouri; the Cherokee County site in Cherokee County, Kansas; the Tar Creek site in Ottawa County, Oklahoma; the Block "P" site in Cascade County, Montana; and the Missouri Electric Works site in Cape Girardeau, Missouri. There are two additional sites in St. Francois County for which the EPA has indicated it will issue notice. CERCLA provides for strict and, in certain circumstances, joint and several liability for response costs and natural resource damages. The Company's estimate of the cost of this remediation is approximately $9,200 for these sites, including the two additional sites in St. Francois County, which the Company believes is adequate based on its investigations to date. However, depending upon the types of remediation required and certain other factors, costs at these sites, individually or collectively, could have a material adverse effect on the results of operations, financial condition and liquidity of the Company.

Doe Run has completed an Engineering Evaluation/Cost Analysis (EE/CA) for the Bonne Terre site, and has signed two AOCs to conduct removal actions on the west and east portions of the site. Work is completed on the West Bonne Terre site and is underway on the east side with completion expected in 2005.

Doe Run is subject to a voluntary AOC with the EPA to remediate the Big River Mine Tailings site. The remediation work required by the AOC has been substantially completed, and will continue with revegetation and ongoing monitoring and maintenance activities.

Doe Run has also signed AOCs to perform an EE/CA on each of the National, Rivermines, and Leadwood sites for remediation of mine waste areas. The National EE/CA is complete, the Rivermines EE/CA is under public review and has been submitted to the EPA for approval, and the Leadwood EE/CA is due by the end of fiscal 2004. In addition, Doe Run has signed an AOC with the EPA to conduct a Remedial Investigation/Feasibility Study (RI/FS) to assess potential off-site impacts of these site operations on and the need for remediation regarding groundwater, residential soils, several creeks and a river. The initial draft of the RI/FS was submitted in early March 2002. Doe Run has signed an order to conduct interim measures through April 2004, consisting of blood lead testing of young children, residential soil sampling, and limited soil remediation as indicated by the testing and sampling results and has signed an AOC to conduct certain additional soil remediation in the area and has included its best estimate of these efforts in its recorded liabilities. The Company believes the recorded liabilities related to these sites are adequate. However, should remediation goals or areas change, requiring substantially increased measures, there can be no assurance that the recorded liabilities would be adequate.

Doe Run has been advised that the EPA is considering taking certain response actions at a mine site in Madison County, Missouri known as the Mine LaMotte Site. Doe Run and the owner of the other 50% share of stock in the company that mined the site have signed an AOC to conduct an RI/FS at the site. This site is substantially smaller than the sites in St. Francois County where the Company has been named a PRP, and the potential issues are less complex. Doe Run has also been advised that remediation is required at a related small satellite mine site. After conducting an investigation, Doe Run has determined that it was not involved in operations at the satellite site, but further review will be required before a determination can be made as to whether it has any liability at the main site. At this time, based on preliminary information and an inspection of the sites, management does not believe that any future action will result in a material adverse impact to the results of operations, financial condition or liquidity of the Company.

Doe Run's recycling facility is subject to corrective action requirements under RCRA as a result of a storage permit for certain wastes issued in 1989. This will involve remediation of solid waste management units at the site, although the plan for corrective action is not expected to be finalized until late in fiscal 2004. The Company's estimate of the cost of this corrective action is $2,000. The storage area is also covered under the permit, but management does not believe the cost of closure is significant. While management believes that recorded liabilities are adequate based on expectations of the closure plan requirements, regulators could require that additional measures be included in the finalized plan, which could change the estimate of the costs for corrective action.

The domestic operating facilities have wastewater discharge permits issued under the federal Clean Water Act, as amended. Doe Run currently meets the effluent limits under these permits, but if compliance were not maintained, additional improvements to its treatment facilities could be required.

The Company had recorded liabilities of approximately $13,000, $13,000, $13,700 and $14,200 related to these remediation obligations as of July 31, 2003, April 30, 2003, January 31, 2003 and October 31, 2002, respectively.

Foreign Operations

Metaloroya S.A., the former owner of the La Oroya smelter, at the time a subsidiary of Centromin, received approval from the Peruvian government for an Environmental Adjustment and Management Program (PAMA) that consisted of an environmental impact analysis, monitoring plan and data, mitigation measures and closure plan. Doe Run Peru assumed the obligations under the PAMA. The PAMA also sets forth the actions and corresponding annual investments the concession holder agrees to undertake in order to achieve compliance with the maximum permissible limits prior to expiration of the PAMA (ten years for smelters, such as Doe Run Peru's operations in La Oroya, and five years for any other type of mining or metallurgical operation like Cobriza). Once approved, the PAMA, as modified from time to time, functions as the equivalent of an operating permit with which the operator must comply. After expiration of the PAMA, the operator must comply with all applicable standards and requirements. Future changes in legal rules and maximum permissible levels would not be applicable to Doe Run Peru for the remaining period of the PAMA, except for certain closure requirements. Because these costs improve the property or prevent future environmental contamination, they are capitalized.

Doe Run Peru has committed under its PAMA to implement the following projects at its La Oroya smelter through December 31, 2006:

•: New sulfuric acid plants
•: Treatment plant for the copper refinery effluent
•: Industrial wastewater treatment plant for the smelter and refinery

•: Improve the slag handling system
•: Improve Huanchan lead and copper slag deposits
•: Build an arsenic trioxide deposit
•: Improve the zinc ferrite disposal site
•: Domestic wastewater treatment and domestic waste disposal
•: Monitoring station

Through July 31, 2003, Doe Run Peru had spent approximately $36,300 on projects under the La Oroya PAMA.

Estimated annual spending on a calendar year basis for the projects approved in the La Oroya PAMA, as amended, most recently on January 25, 2002, are as follows:

Year	Estimated Cost
2003	$	9,350
2004		12,800
2005		53,500
2006		67,700

	$	143,350

The current estimate for the total to be expended on environmental projects under the PAMA and on additional related process changes for Doe Run Peru is approximately $168,000 for the remaining term of the PAMA. The PAMA provides a specific plan for achieving the applicable Ministry of Energy and Mines (MEM) maximum permissible limits pertaining to air emissions and wastewater effluent quality. The PAMA may be modified and amended as to the actual design and timing of projects to be implemented, provided compliance with the applicable maximum permissible limits is achieved by December 31, 2006. Although the PAMA currently requires Doe Run Peru to construct certain sulfuric acid plants, estimated to cost approximately $107,500, in conjunction with a portion of the PAMA in order to reduce emissions, Doe Run Peru is also proceeding with efforts to identify alternative methods of achieving compliance. These efforts include, but are not limited to, reducing or curtailing production from a portion of the plant thus eliminating the need for the equipment presently contemplated and replacing it with another alternative. These efforts must take into consideration the impacts on profitability and liquidity, as well as other economic impacts. Doe Run Peru intends to submit a request to MEM in 2004 to modify the requirements of the existing PAMA. There can be no assurance that the Peruvian government will approve the alternatives or that they will achieve compliance in the timeframe required by the PAMA. If the La Oroya smelter does not operate within the current PAMA limits after December 31, 2006, Doe Run Peru could be forced to cease operations at the La Oroya smelter.

Doe Run Peru's operations historically and currently exceed some of the applicable MEM maximum permissible limits pertaining to air emissions, ambient air quality and wastewater effluent quality. The PAMA projects have been designed to achieve compliance with such requirements prior to the expiration of the PAMA on December 31, 2006. No assurance can be given that implementation of the PAMA projects is feasible or that their implementation will achieve compliance with the applicable legal requirements by the end of the PAMA period. Further, there can be no assurance that the Peruvian government will not in the future require compliance with additional or different environmental obligations that could adversely affect Doe Run Peru's business, financial condition or results of operations. Under the purchase agreement related to the acquisition of the La Oroya assets in October 1997, Centromin, the prior owner of the La Oroya smelter and Cobriza mine, agreed to

indemnify Doe Run Peru against environmental liability arising out of its prior operations and their apportioned share of any other complaint related to emissions. Performance of the indemnity has been guaranteed by the Peruvian government through the enactment of the Supreme Decree No. 042-97-PCM. However, there can be no assurance that Centromin will satisfy its environmental obligations and investment requirements, including those in its PAMA, or that the guarantee will be honored. Any failure by Centromin to satisfy its environmental obligations could adversely affect Doe Run Peru's business, financial condition or results of operations.

The Cobriza mine has a separate PAMA in which Doe Run Peru has committed to complete projects to manage tailings, mine drainage, sewage and garbage. Doe Run Peru had spent approximately $10,000 under the PAMA as of July 31, 2003. On July 3, 2002, the government of Peru enacted the Supreme Decree No. 022-2002-EM, extending the PAMA for all companies not yet in compliance with their PAMA for a period of not less than 12 months, and up to 18 months if approved by MEM. Companies not in compliance at the end of the extension period would have an additional period to close their operations. Doe Run Peru has received approval from MEM to extend the date of required compliance with the PAMA to April of 2004, and has a request pending to extend the compliance period for the full 18 months allowed by the Supreme Decree. Doe Run Peru expects that it will complete its PAMA requirements by the end of June 2004 including a mine water treatment system and by making a surface paste fill from tailings. If the extension is not granted, Doe Run Peru may be subject to legal redress in the form of fines, which management does not believe will be material. Ore reserves are now estimated to be approximately four years at current production levels and space has been identified to store the associated tailings.

Doe Run Peru is responsible for the remediation costs relating to a zinc ferrite disposal site. The current closure plan provides for encapsulating the ferrite residues in place at Huanchan, an area a short distance from the smelter where they are currently stored, for which an environmental liability of $1,600 has been recorded as of all periods presented.

Consolidated

The Company believes its recorded liabilities for domestic and foreign environmental, mine closure and reclamation matters are adequate, based on the information currently available. Depending upon the type and extent of activities required, revisions to management's estimates of costs to perform these activities are reasonably possible in the near term. Therefore, there can be no assurance that additional costs, both individually and in the aggregate, would not have a material adverse effect on the results of operations, financial condition and liquidity of the Company.

(7) Litigation

Doe Run is a defendant in ten lawsuits alleging certain damages stemming from the operations at the Herculaneum smelter. Two of these cases are class action lawsuits. In two cases, the plaintiffs seek to have certified a class of property owners in a certain section of Herculaneum, alleging that property values have been damaged due to the operations of the smelter. In another case, plaintiffs seek to have certified a class of children who lived in Herculaneum during a period of time when they were less than six years old and children born to mothers who lived in Herculaneum during their pregnancies. The remedy sought is medical monitoring for the class. Five of the cases are personal injury actions by 24 individuals who allege damages from the effects of lead due to operations at the smelter. Punitive damages also are being sought in each case.

A resident of Herculaneum has claimed personal injuries allegedly resulting from exposure to emissions from the smelter. No suit has yet been filed in this matter.

Doe Run is a defendant in five lawsuits alleging certain damages from discontinued mine facilities in St. Francois County. Four of the cases are class action lawsuits. The first case seeks to have certified

a class consisting of property owners in Bonne Terre, Missouri, alleging that property values have been damaged due to the tailings from the discontinued operations. In the second case plaintiffs seek to have certified a class of children who lived, went to school or day care in Bonne Terre, or whose mothers lived in Bonne Terre during their pregnancies. The third and fourth cases are class actions for property damage and medical monitoring concerning alleged damages caused by chat, tailings, and related operations in six areas in St. Francois County. The fifth case alleges personal injury against two children living in St. Francois County.

A railroad carrier has communicated to Doe Run that it intends to seek contribution from Doe Run for cleanup actions at a rail car clean-out area that the carrier was ordered to take by the federal government. The carrier pled guilty to a felony and paid a criminal fine for its actions. It is Doe Run's position that Doe Run cannot be held liable for another's criminal actions. No lawsuit has been filed.

This railroad carrier has also threatened Doe Run with possible legal action for claims for indemnity allegedly arising out of contracts with Doe Run or its predecessors for payments that the railroad has made in regard to personal injury claims against the railroad by railway workers and others, including those made in 114 cases previously settled by Doe Run. Doe Run is currently in the process of investigating these claims.

Doe Run is a defendant in lawsuits alleging certain damages from past mining operations in Ottawa County, Oklahoma. Ten lawsuits have been filed alleging personal injury to twenty-five children and one adult living in Ottawa County against eight companies, including Doe Run, who allegedly, either through predecessors or subsidiaries, mined lead and zinc in Ottawa County or commercially used the chat or tailings in Ottawa County. One case is a class action lawsuit for personal injury and property damage in Ottawa County.

Doe Run, with several other defendants, has been named in four cases in Maryland, but has not yet been joined as a defendant in any of these cases. These suits seek damages, alleging personal injuries as a result of lead poisoning from exposure to lead paint and tetraethyl lead dust. The suits seek punitive damages. Doe Run was dismissed from two similar cases in which it was joined as a defendant. Until Doe Run is actually joined as a defendant in one or more of these cases, material liability from these cases is considered remote.

Doe Run and several other parties have been named defendants in a suit brought by the City of St. Louis, Missouri for costs allegedly incurred and to be incurred by the plaintiff for the care of lead-poisoned persons, education programs for children injured by exposure to lead and the abatement of lead hazards purportedly created by the defendants in the City of St. Louis. The complaint alleges that the defendants made material misrepresentations and intentional omissions of material facts to the City and/or its residents regarding the nature of lead and lead products, such as paint. The suit also seeks punitive damages.

FPI (Fabricated Products, Inc), a subsidiary of Doe Run received a judgment against it in a breach of contract/warranty action for damages arising from the sale of allegedly impure lead. The amount of the judgment was $4,300, including interest. See Note 8 for discussion of a settlement reached with the plaintiffs.

Doe Run has been named in asbestos injury suits by two individuals against numerous companies, alleging that they were exposed to asbestos, including at the St. Joe Minerals Corporation (Doe Run's predecessor) premises. Doe Run was served a Writ of Summons in a third case filed in Pennsylvania in May 2003 but has not yet been served with a complaint, so few details of the case are known, including the alleged location of the exposure.

Doe Run has been named in a suit claiming alleged damages to the property of a small business in the vicinity of Doe Run's recycling facility. Because the facility meets the required national ambient air

standard for lead and given the scope of any potential economic loss as measured by property values in the area, it is not probable that such a claim would have a material impact on Doe Run.

Doe Run has been named as a party in various lawsuits relating to certain operations of its predecessor. Fluor Corporation, the owner of Doe Run's predecessor, retained the obligation for any costs of defense or claims relating to these lawsuits. Should Fluor Corporation become unable to fulfill its contractual obligation, Doe Run could be liable for any costs or claims resulting from these lawsuits. There is no reason at this time to believe that Fluor Corporation could not fulfill its contractual obligations.

A law firm in Lima, Peru has initiated a large number of lawsuits in the Lima labor courts against various mining companies in Peru. All lawsuits allege that workers have contracted lung disease from working at the mining facilities. Currently, Doe Run Peru has 44 cases pending, with all claims totaling approximately $714. Only one case has resulted in a judgment of approximately $8 against Doe Run Peru that was upheld on appeal.

Since most of the above cases are either in the pleading or discovery stages, the Company is unable at this time to estimate the expected outcome and the final costs, except as noted, of these actions. Therefore, there can be no assurance that these cases would not have a material adverse effect, both individually and in the aggregate, on the results of operations, financial condition and liquidity of the Company. The Company has and will continue to vigorously defend itself against such claims.

(8) Subsequent Events

Environmental Issues and Litigation

An additional class action lawsuit for damages to natural resources and land owned by members of the Quapaw Tribe in Ottawa County, Oklahoma was filed on December 10, 2003 against seven companies, including Doe Run. See discussion of Ottawa County lawsuits in Note 7.

In February 2004, FPI reached a settlement of the judgment received in the breach of contract/warranty case. See discussion of this lawsuit and judgment in Note 7.

Six individuals filed an additional class action lawsuit against six companies, including Doe Run, in Ottawa County, Oklahoma on February 9, 2004. See discussion of Ottawa County lawsuits in Note 7. The Company is unable at this time to estimate the expected outcome and any final costs of this action.

In February 2004 the U.S. Department of Agriculture issued a Unilateral Administrative Order ordering certain remediation activities by Doe Run at the Block "P" millsite, discussed in Note 6. Doe Run has requested that other parties be added to the order. Doe Run will seek reimbursement from the U.S. Government and these other parties.

In March 2004, Doe Run received notice that it is a PRP subject to liability under CERCLA for contamination along roads in Iron, Dent and Reynolds counties in Missouri, along with a number of mining and trucking companies involved in the transportation of concentrates. Approximately 412 houses were identified as potentially requiring remediation. Doe Run expects that its share of the potential remediation costs will not be significant.

Recent Events

On December 26, 2003, the Peru tax authority, SUNAT notified Doe Run Peru of an income tax assessment for the 1998 tax year. The assessment primarily relates to Doe Run Peru's income tax treatment of the December 1997 merger of Doe Run Peru and Metaloroya S.A., which was purchased by Doe Run Peru in October 1997. Under the assessment by SUNAT, the tax basis of Doe Run Peru's

fixed assets acquired would decrease, resulting in lower tax depreciation expense than originally claimed and additional income taxes due.

Under the assessment, the reduction in depreciation would result in additional taxes of approximately $6,600, plus penalties and interest of $9,600 to date for the 1998 tax year. For tax years after 1998, the Company estimates that additional taxes of approximately $5,700 would be due related to the decrease in the amount of depreciation originally claimed plus penalties and interest of approximately $20,000 to date in the event SUNAT would prevail. Interest would also be assessed on the prepayments of taxes that were not made as a result of the depreciation deductions taken by Doe Run Peru in the years affected, estimated at approximately $5,800.

Furthermore, Doe Run Peru would also be required to make additional workers' profit sharing payments equal to 8% of the increase in taxable income generated by the change discussed above, or approximately $3,500.

Management of the Company believes that Doe Run Peru has followed the applicable Peruvian statutes and intends to pursue all available administrative and judicial appeals. Doe Run Peru is not required to make any payments pending the administrative appeal process. If Doe Run Peru is not successful in the administrative appeals process and were to appeal in the judicial system, some type of financial assurance would be required.

On February 16, 2004, Doe Run Peru entered into an amendment of the its revolving credit facility. The amendment lowered the levels of net worth Doe Run Peru must comply with from the date of the amendment through September 30, 2004, among other things. Based on current forecasted results, assuming metal prices higher than those experienced in fiscal 2003, management expects to remain in compliance with all covenants relating to Doe Run Peru's revolving credit facility for the foreseeable future. The amendment does not cure or waive defaults in existence before the date of the amendment. The amendment also limits payment of fees to Doe Run through September 30, 2004 to $2,800. In the event Doe Run Peru's net worth would fall to a level lower than the requirement at the quarterly reporting dates, the amendment permanently reduces the amount available under Doe Run Peru's revolving credit facility by the amount of the difference between the required and the actual net worth. If Doe Run Peru is not successful with its administrative appeal of the tax assessment discussed above, the lender can, at its discretion, require that the amount of the assessment reduce net worth as defined in Doe Run Peru's revolving credit facility amendment. Such reduction along with other factors, including metal prices and results of operations, could affect Doe Run Peru's ability to comply with the net worth requirement.

On April 9, 2004 Doe Run entered into an amendment of Doe Run's revolving credit facility. The amendment waives existing defaults and lowers the net worth requirement. The amendment became effective when waivers of default under the Term Note were received, as discussed below. Based on current projections, assuming metal prices continuing higher than those experienced during fiscal 2003, management expects to remain in compliance under Doe Run's revolving credit facility, as amended, through October 31, 2004.

On April 30, 2004 Doe Run entered into an amendment of the Term Note. The amendment waives existing defaults and amends various covenant requirements, among other things. The amendment also requires that certain information be delivered to the lender at various times within 30 days after the amendment date, which dates have subsequently been extended. Based on current projections, assuming metal prices continuing higher than those experienced during fiscal 2003, management expects to remain in compliance under the Term Note, as amended, through October 31, 2004.

On May 7, 2004, Doe Run received a notice of default from the trustee of the 11.75% Notes that it is in default of the indenture requirements. The notice gives Doe Run 30 days from the date of

receipt of the notice to remedy such defaults by filing its quarterly and annual reports for the 2003 fiscal year with the SEC and to provide a written statement from the Company's independent certified public accountants indicating whether any defaults have come to their attention. If the defaults are not remedied within 30 days of receipt of the notice, the trustee may declare all unpaid principal and interest immediately payable. Management intends to remedy the defaults in the timeframe required.

(9) Guarantor Subsidiaries

The Guarantor Subsidiaries (Fabricated Products, Inc. (FPI) and DR Land Holdings, LLC (together, the Domestic Guarantors), Buick Resource Recycling Facility, LLC (whose assets were contributed by Doe Run in April 2003), Doe Run Cayman Ltd. (Doe Run Cayman) and its subsidiary Doe Run Peru) have jointly and severally, fully, unconditionally and irrevocably guaranteed the Unsecured Notes, Secured Notes and 11.75% Notes of the Company. Doe Run Cayman has no operations separate from those of Doe Run Peru. Separate financial statements and other disclosures concerning certain Guarantor Subsidiaries and disclosures concerning non-Guarantor Subsidiaries have not been presented because management has determined that such information is not material to investors. Intercompany transactions eliminated in consolidation consist of various service and agency fees between Doe Run and Doe Run Peru and sales of metal to Doe Run by Doe Run Peru and to FPI by Doe Run.

Condensed Consolidating Balance Sheet (unaudited)
As of July 31, 2003

			The Company Excluding Guarantor Subsidiaries			Buick Resource Recycling Facility, LLC			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
ASSETS
Current assets:
	Cash		$	—		$	—		$	—		$	8,024		$	—		$	8,024
	Trade accounts receivable, net of allowance for doubtful accounts			37,396			—			3,075			19,777			(127	)		60,121
	Inventories			45,385			—			1,515			62,476			(40	)		109,336
	Prepaid expenses and other current assets			10,650			—			83			11,730			—			22,463
	Due from subsidiaries			25,683			191			—			—			(25,874	)		—

		Total current assets		119,114			191			4,673			102,007			(26,041	)		199,944
	Property, plant and equipment, net			82,548			14,304			2,703			135,942			—			235,497
	Due from subsidiaries			139,063			—			—			—			(139,063	)		—
	Other noncurrent assets, net			3,580			—			151			289			—			4,020
	Investment in subsidiaries			(2,922	)		—			—			—			2,922			—

		Total assets	$	341,383		$	14,495		$	7,527		$	238,238		$	(162,182	)	$	439,461

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
	Short-term borrowings and current maturities of long-term debt		$	44,268		$	—		$	—		$	2,708		$	—		$	46,976
	Accounts payable			16,051			—			521			31,155			(128	)		47,599
	Accrued liabilities			34,434			—			1,857			21,560			—			57,851
	Due to parent			191			—			7,966			17,716			(25,873	)		—

		Total current liabilities		94,944			—			10,344			73,139			(26,001	)		152,426
	Long-term debt, less current maturities			331,786			—			—			36,000			—			367,786
	Due to parent			—			—			—			139,063			(139,063	)		—
	Other noncurrent liabilities			68,297			—			798			3,798			—			72,893

		Total liabilities		495,027			—			11,142			252,000			(165,064	)		593,105
Series A redeemable preferred stock				21,889			—			—			—			—			21,889
Shareholders' equity (deficit):
	Common stock, $.10 par value, 1,667 shares authorized, 1,000 shares issued and outstanding			—			—			—			—			—			—
	Common stock, $1 par value, 1,000 shares authorized, issued and outstanding			—			—			1			—			(1	)		—
	Common stock, $1 par value, 2,005,000 shares authorized, issued and outstanding			—			—			—			2,005			(2,005	)		—
	Additional paid in capital			3,350			15,115			1,205			—			(16,320	)		3,350
	Retained earnings (accumulated deficit) and accumulated other comprehensive loss			(178,883	)		(620	)		(4,821	)		(15,767	)		21,208			(178,883	)

		Total shareholders' equity (deficit)		(175,533	)		14,495			(3,615	)		(13,762	)		2,882			(175,533	)

		Total liabilities and shareholders' equity (deficit)	$	341,383		$	14,495		$	7,527		$	238,238		$	(162,182	)	$	439,461

Condensed Consolidating Balance Sheet (unaudited)
As of April 30, 2003

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
ASSETS
Current assets:
	Cash		$	—		$	—		$	3,742		$	—		$	3,742
	Trade accounts receivable, net of allowance for doubtful accounts			37,194			3,575			25,106			(316	)		65,559
	Inventories			43,964			1,432			65,536			(39	)		110,893
	Prepaid expenses and other current assets			9,339			94			9,214			—			18,647
	Due from subsidiaries			24,350			—			—			(24,350	)		—

		Total current assets		114,847			5,101			103,598			(24,705	)		198,841
Property, plant and equipment, net				99,783			3,059			136,175			—			239,017
Due from subsidiaries				139,063			—			—			(139,063	)		—
Other noncurrent assets, net				4,184			148			322			—			4,654
Investment in subsidiaries				(10,268	)		—			—			10,268			—

		Total assets	$	347,609		$	8,308		$	240,095		$	(153,500	)	$	442,512

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
	Short-term borrowings and current maturities of long-term debt		$	44,866		$	—		$	3,826		$	—		$	48,692
	Accounts payable			19,383			771			25,571			(316	)		45,409
	Accrued liabilities			29,422			1,807			18,737			—			49,966
	Due to parent			—			9,049			15,301			(24,350	)		—

		Total current liabilities		93,671			11,627			63,435			(24,666	)		144,067
Long-term debt, less current maturities				327,621			—			40,000			—			367,621
Due to parent				—			—			139,063			(139,063	)		—
Other noncurrent liabilities				67,925			828			3,679			—			72,432

		Total liabilities		489,217			12,455			246,177			(163,729	)		584,120
Series A redeemable preferred stock				21,264			—			—			—			21,264
Shareholders' equity (deficit):
	Common stock, $.10 par value, 1,667 shares authorized, 1,000 shares issued and outstanding			—			—			—			—			—
	Common stock, $1 par value, 1,000 shares authorized, issued and outstanding			—			1			—			(1	)		—
	Common stock, $1 par value, 2,005,000 shares authorized, issued and outstanding			—			—			2,005			(2,005	)		—
	Additional paid in capital			3,975			1,205			—			(1,205	)		3,975
	Retained earnings (accumulated deficit) and accumulated other comprehensive loss			(166,847	)		(5,353	)		(8,087	)		13,440			(166,847	)

		Total shareholders' equity (deficit)		(162,872	)		(4,147	)		(6,082	)		10,229			(162,872	)

		Total liabilities and shareholders' equity (deficit)	$	347,609		$	8,308		$	240,095		$	(153,500	)	$	442,512

Condensed Consolidating Balance Sheet (unaudited)
As of January 31, 2003

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
ASSETS
Current assets:
	Cash		$	—		$	—		$	8,209		$	—		$	8,209
	Trade accounts receivable, net of allowance for doubtful accounts			36,966			4,239			19,864			(404	)		60,665
	Inventories			44,242			1,533			65,790			(92	)		111,473
	Prepaid expenses and other current assets			7,867			115			15,026			—			23,008
	Due from subsidiaries			22,039			—			—			(22,039	)		—

		Total current assets		111,114			5,887			108,889			(22,535	)		203,355
Property, plant and equipment, net				103,888			3,425			137,619			—			244,932
Due from subsidiaries				139,063			—			—			(139,063	)		—
Other noncurrent assets, net				4,615			149			356			—			5,120
Investment in subsidiaries				(7,763	)		—			—			7,763			—

		Total assets	$	350,917		$	9,461		$	246,864		$	(153,835	)	$	453,407

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
	Short-term borrowings and current maturities of long-term debt		$	30,551		$	—		$	4,537		$	—		$	35,088
	Accounts payable			18,767			550			32,611			(404	)		51,524
	Accrued liabilities			27,189			1,703			20,017			—			48,909
	Due to parent			—			9,160			12,879			(22,039	)		—

		Total current liabilities		76,507			11,413			70,044			(22,443	)		135,521
Long-term debt, less current maturities				344,312			—			38,376			—			382,688
Due to parent				—			—			139,063			(139,063	)		—
Other noncurrent liabilities				67,716			1,421			3,679			—			72,816

		Total liabilities		488,535			12,834			251,162			(161,506	)		591,025
Series A redeemable preferred stock				20,639			—			—			—			20,639
Shareholders' equity (deficit):
	Common stock, $.10 par value, 1,667 shares authorized, 1,000 shares issued and outstanding			—			—			—			—			—
	Common stock, $1 par value, 1,000 shares authorized, issued and outstanding			—			1			—			(1	)		—
	Common stock, $1 par value, 2,005,000 shares authorized, issued and outstanding			—			—			2,005			(2,005	)		—
	Additional paid in capital			4,599			1,205			—			(1,205	)		4,599
	Retained earnings (accumulated deficit) and accumulated other comprehensive loss			(162,856	)		(4,579	)		(6,303	)		10,882			(162,856	)

		Total shareholders' equity (deficit)		(158,257	)		(3,373	)		(4,298	)		7,671			(158,257	)

		Total liabilities and shareholders' equity (deficit)	$	350,917		$	9,461		$	246,864		$	(153,835	)	$	453,407

Condensed Consolidating Balance Sheet
As of October 31, 2002

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
ASSETS
Current assets:
	Cash		$	—		$	—		$	7,018		$	—		$	7,018
	Trade accounts receivable, net of allowance for doubtful accounts			35,428			4,247			25,261			(158	)		64,778
	Inventories			42,931			1,226			59,211			(22	)		103,346
	Prepaid expenses and other current assets			7,665			109			11,819			—			19,593
	Due from subsidiaries			20,187			—			—			(20,187	)		—

		Total current assets		106,211			5,582			103,309			(20,367	)		194,735
Property, plant and equipment, net				107,375			3,782			138,510			—			249,667
Due from subsidiaries				139,063			—			—			(139,063	)		—
Other noncurrent assets, net				5,254			151			389			—			5,794
Investment in subsidiaries				(6,478	)		—			—			6,478			—

		Total assets	$	351,425		$	9,515		$	242,208		$	(152,952	)	$	450,196

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
	Short-term borrowings and current maturities of long-term debt		$	11,932		$	—		$	4,410		$	—		$	16,342
	Accounts payable			21,645			600			26,789			(158	)		48,876
	Accrued liabilities			32,821			1,640			20,607			—			55,068
	Due to parent			—			9,615			10,572			(20,187	)		—

		Total current liabilities		66,398			11,855			62,378			(20,345	)		120,286
Long-term debt, less current maturities				347,617			—			38,259			—			385,876
Due to parent				—			—			139,063			(139,063	)		—
Other noncurrent liabilities				64,581			1,424			5,200			—			71,205

		Total liabilities		478,596			13,279			244,900			(159,408	)		577,367
Series A redeemable preferred stock				20,000			—			—			—			20,000
Shareholders' equity (deficit):
	Common stock, $.10 par value, 1,667 shares authorized, 1,000 shares issued and outstanding			—			—			—			—			—
	Common stock, $1 par value, 1,000 shares authorized, issued and outstanding			—			1			—			(1	)		—
	Common stock, $1 par value, 2,005,000 shares authorized, issued and outstanding			—			—			2,005			(2,005	)		—
	Additional paid in capital			5,238			1,205			—			(1,205	)		5,238
	Retained earnings (accumulated deficit) and accumulated other comprehensive loss			(152,409	)		(4,970	)		(4,697	)		9,667			(152,409	)

		Total shareholders' equity (deficit)		(147,171	)		(3,764	)		(2,692	)		6,456			(147,171	)

		Total liabilities and shareholders' equity (deficit)	$	351,425		$	9,515		$	242,208		$	(152,952	)	$	450,196

Condensed Consolidating Statement of Operations (unaudited)
Nine Months Ended July 31, 2003

			The Company Excluding Guarantor Subsidiaries			Buick Resource Recycling Facility, LLC			Other Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net sales			$	175,832		$	—		$	11,514		$	313,645		$	(8,666	)	$	492,325
Costs and expenses:
	Cost of sales			150,990			—			8,897			299,593			(1,743	)		457,737
	Depletion, depreciation and amortization			13,031			810			1,084			8,621			—			23,546
	Selling, general and administrative			11,558			—			1,574			14,376			(6,905	)		20,603
	Other			1,634			—			—			—			—			1,634
	Unrealized (gain)/loss on derivatives			1,121			—			—			(108	)		—			1,013

		Total costs and expenses		178,334			810			11,555			322,482			(8,648	)		504,533

		Income (loss) from operations		(2,502	)		(810	)		(41	)		(8,837	)		(18	)		(12,208	)
Other income (expense):
	Interest expense			(7,715	)		—			(446	)		(2,012	)		383			(9,790	)
	Interest income			388			—			—			18			(383	)		23
	Other, net			(510	)		191			7			(148	)		—			(460	)
	Equity in earnings of subsidiaries			(12,188	)		—			—			—			12,188			—

				(20,025	)		191			(439	)		(2,142	)		12,188			(10,227	)

		Income (loss) before income tax expense		(22,527	)		(619	)		(480	)		(10,979	)		12,170			(22,435	)
Income tax expense				—			—			—			—			—			—

	Income (loss) before cumulative effect of change in accounting principle			(22,527	)		(619	)		(480	)		(10,979	)		12,170			(22,435	)
Cumulative effect of change in accounting principle				(3,848	)		—			—			(92	)		—			(3,940	)

	Net income (loss)			(26,375	)		(619	)		(480	)		(11,071	)		12,170			(26,375	)
	Cumulative preferred stock dividends			(1,889	)		—			—			—			—			(1,889	)

	Net income (loss) allocable to common shares		$	(28,264	)	$	(619	)	$	(480	)	$	(11,071	)	$	12,170		$	(28,264	)

Condensed Consolidating Statement of Operations (unaudited)
Nine Months Ended July 31, 2002

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net sales			$	169,734		$	13,121		$	315,365		$	(8,832	)	$	489,388
Costs and expenses:
	Cost of sales			146,865			10,076			290,675			(1,933	)		445,683
	Depletion, depreciation and amortization			13,521			1,116			8,153			—			22,790
	Selling, general and administrative			12,194			956			14,139			(6,901	)		20,388
	Other			584			—			181			—			765
	Unrealized (gain)/loss on derivatives			(1,465	)		(7	)		68			—			(1,404	)

		Total costs and expenses		171,699			12,141			313,216			(8,834	)		488,222

		Income (loss) from operations		(1,965	)		980			2,149			2			1,166
Other income (expense):
	Interest expense			(30,314	)		(492	)		(12,371	)		492			(42,685	)
	Interest income			11,067			—			44			(492	)		10,619
	Other, net			(1,950	)		24			(311	)		—			(2,237	)
	Equity in earnings of subsidiaries			(9,975	)		—			—			9,975			—

				(31,172	)		(468	)		(12,638	)		9,975			(34,303	)

		Income (loss) before income tax expense		(33,137	)		512			(10,489	)		9,977			(33,137	)
Income tax expense				—			—			—			—			—

	Net income (loss)		$	(33,137	)	$	512		$	(10,489	)	$	9,977		$	(33,137	)

Condensed Consolidating Statement of Operations (unaudited)
Three Months Ended July 31, 2003

			The Company Excluding Guarantor Subsidiaries			Buick Resource Recycling Facility, LLC			Other Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net sales			$	61,345		$	—		$	3,650		$	107,024		$	(2,815	)	$	169,204
Costs and expenses:
	Cost of sales			50,718			—			2,935			106,355			(448	)		159,560
	Depletion, depreciation and amortization			3,690			810			357			2,748			—			7,605
	Selling, general and administrative			4,986			—			275			4,962			(2,366	)		7,857
	Other			770			—			—			—			—			770
	Unrealized (gain)/loss on derivatives			1,581			—			—			18			—			1,599

		Total costs and expenses		61,745			810			3,567			114,083			(2,814	)		177,391

		Income (loss) from operations		(400	)		(810	)		83			(7,059	)		(1	)		(8,187	)
Other income (expense):
	Interest expense			(2,588	)		—			(182	)		(588	)		119			(3,239	)
	Interest income			120			—			—			6			(119	)		7
	Other, net			(673	)		191			2			(40	)		—			(520	)
	Equity in earnings of subsidiaries			(8,398	)		—			—			—			8,398			—

				(11,539	)		191			(180	)		(622	)		8,398			(3,752	)

		Income (loss) before income tax expense		(11,939	)		(619	)		(97	)		(7,681	)		8,397			(11,939	)
	Income tax expense			—			—			—			—			—			—

	Net income (loss)			(11,939	)		(619	)		(97	)		(7,681	)		8,397			(11,939	)
	Cumulative preferred stock dividends			(625	)		—			—			—			—			(625	)

	Net income (loss) allocable to common shares		$	(12,564	)	$	(619	)	$	(97	)	$	(7,681	)	$	8,397		$	(12,564	)

Condensed Consolidating Statement of Operations (unaudited)
Three Months Ended July 31, 2002

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net sales			$	60,873		$	4,646		$	109,584		$	(3,091	)	$	172,012
Costs and expenses:
	Cost of sales			56,578			3,461			101,960			(695	)		161,304
	Depletion, depreciation and amortization			4,434			373			2,835			—			7,642
	Selling, general and administrative			4,682			355			4,713			(2,385	)		7,365
	Other			170			—			134			—			304
	Unrealized (gain)/loss on derivatives			361			—			(126	)		—			235

		Total costs and expenses		66,225			4,189			109,516			(3,080	)		176,850

		Income (loss) from operations		(5,352	)		457			68			(11	)		(4,838	)
Other income (expense):
	Interest expense			(10,532	)		(159	)		(3,982	)		159			(14,514	)
	Interest income			3,699			—			12			(159	)		3,552
	Other, net			(1,544	)		24			97			—			(1,423	)
	Equity in earnings of subsidiaries			(3,494	)		—			—			3,494			—

				(11,871	)		(135	)		(3,873	)		3,494			(12,385	)

		Income (loss) before income tax expense		(17,223	)		322			(3,805	)		3,483			(17,223	)
Income tax expense				—			—			—			—			—

	Net income (loss)		$	(17,223	)	$	322		$	(3,805	)	$	3,483		$	(17,223	)

Condensed Consolidating Statement of Operations (unaudited)
Six Months Ended April 30, 2003

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net sales			$	114,487		$	7,864		$	206,621		$	(5,851	)	$	323,121
Costs and expenses:
	Cost of sales			100,272			5,962			193,238			(1,295	)		298,177
	Depletion, depreciation and amortization			9,341			727			5,873			—			15,941
	Selling, general and administrative			6,572			1,299			9,414			(4,539	)		12,746
	Other			864			—			—			—			864
	Unrealized (gain)/loss on derivatives			(460	)		—			(126	)		—			(586	)

		Total costs and expenses		116,589			7,988			208,399			(5,834	)		327,142

		Income (loss) from operations		(2,102	)		(124	)		(1,778	)		(17	)		(4,021	)
Other income (expense):
	Interest expense			(5,127	)		(264	)		(1,424	)		264			(6,551	)
	Interest income			268			—			12			(264	)		16
	Other, net			163			5			(108	)		—			60
	Equity in earnings of subsidiaries			(3,790	)		—			—			3,790			—

				(8,486	)		(259	)		(1,520	)		3,790			(6,475	)

		Income (loss) before income tax expense		(10,588	)		(383	)		(3,298	)		3,773			(10,496	)
Income tax expense				—			—			—			—			—

	Income (loss) before cumulative effect of change in accounting principle			(10,588	)		(383	)		(3,298	)		3,773			(10,496	)
	Cumulative effect of change in accounting principle			(3,848	)		—			(92	)		—			(3,940	)

	Net income (loss)		$	(14,436	)	$	(383	)	$	(3,390	)	$	3,773		$	(14,436	)
	Cumulative preferred stock dividends			(1,264	)		—			—			—			(1,264	)

	Net income (loss) allocable to common shares		$	(15,700	)	$	(383	)	$	(3,390	)	$	3,773		$	(15,700	)

Condensed Consolidating Statement of Operations (unaudited)
Six Months Ended April 30, 2002

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net sales			$	108,861		$	8,475		$	205,781		$	(5,741	)	$	317,376
Costs and expenses:
	Cost of sales			90,287			6,615			188,715			(1,238	)		284,379
	Depletion, depreciation and amortization			9,087			743			5,318			—			15,148
	Selling, general and administrative			7,512			601			9,426			(4,516	)		13,023
	Other			414			—			47			—			461
	Unrealized (gain)/loss on derivatives			(1,826	)		(7	)		194			—			(1,639	)

		Total costs and expenses		105,474			7,952			203,700			(5,754	)		311,372

		Income from operations		3,387			523			2,081			13			6,004
Other income (expense):
	Interest expense			(19,782	)		(333	)		(8,389	)		333			(28,171	)
	Interest income			7,368			—			32			(333	)		7,067
	Other, net			(406	)		—			(408	)		—			(814	)
	Equity in earnings of subsidiaries			(6,481	)		—			—			6,481			—

				(19,301	)		(333	)		(8,765	)		6,481			(21,918	)

		Income (loss) before income tax expense		(15,914	)		190			(6,684	)		6,494			(15,914	)
Income tax expense				—			—			—			—			—

	Net income (loss)		$	(15,914	)	$	190		$	(6,684	)	$	6,494		$	(15,914	)

Condensed Consolidating Statement of Operations (unaudited)
Three Months Ended April 30, 2003

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net sales			$	59,044		$	3,720		$	104,315		$	(2,969	)	$	164,110
Costs and expenses:
	Cost of sales			51,165			3,063			97,830			(715	)		151,343
	Depletion, depreciation and amortization			4,690			367			2,937			—			7,994
	Selling, general and administrative			2,317			800			4,749			(2,308	)		5,558
	Other			582			—			—			—			582
	Unrealized (gain)/loss on derivatives			(466	)		—			(23	)		—			(489	)

		Total costs and expenses		58,288			4,230			105,493			(3,023	)		164,988

		Income (loss) from operations		756			(510	)		(1,178	)		54			(878	)
Other income (expense):
	Interest expense			(2,789	)		(121	)		(697	)		121			(3,486	)
	Interest income			122			—			4			(121	)		5
	Other, net			282			—			87			—			369
	Equity in earnings of subsidiaries			(2,361	)		—			—			2,361			—

				(4,746	)		(121	)		(606	)		2,361			(3,112	)

		Income (loss) before income tax expense		(3,990	)		(631	)		(1,784	)		2,415			(3,990	)
	Income tax expense			—			—			—			—			—

		Net income (loss)	$	(3,990	)	$	(631	)	$	(1,784	)	$	2,415		$	(3,990	)
		Cumulative preferred stock dividends		(625	)		—			—			—			(625	)

		Net income (loss) allocable to common shares	$	(4,615	)	$	(631	)	$	(1,784	)	$	2,415		$	(4,615	)

Condensed Consolidating Statement of Operations (unaudited)
Three Months Ended April 30, 2002

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net sales			$	54,895		$	4,468		$	104,326		$	(2,849	)	$	160,840
Costs and expenses:
	Cost of sales			46,689			3,418			97,357			(566	)		146,898
	Depletion, depreciation and amortization			4,576			371			2,699			—			7,646
	Selling, general and administrative			4,123			292			4,650			(2,295	)		6,770
	Other			215			—			47			—			262
	Unrealized (gain)/loss on derivatives			(329	)		(7	)		83			—			(253	)

		Total costs and expenses		55,274			4,074			104,836			(2,861	)		161,323

		Income (loss) from operations		(379	)		394			(510	)		12			(483	)
Other income (expense):
	Interest expense			(9,986	)		(160	)		(4,329	)		274			(14,201	)
	Interest income			3,790			—			12			(274	)		3,528
	Other, net			(359	)		—			(247	)		—			(606	)
	Equity in earnings of subsidiaries			(4,289	)		—			—			4,289			—

				(10,844	)		(160	)		(4,564	)		4,289			(11,279	)

		Income (loss) before income tax expense		(11,223	)		234			(5,074	)		4,301			(11,762	)
	Income tax benefit			—			—			(539	)		—			(539	)

		Net income (loss)	$	(11,223	)	$	234		$	(4,535	)	$	4,301		$	(11,223	)

Condensed Consolidating Statement of Operations (unaudited)
Three Months Ended January 31, 2003

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net sales			$	55,443		$	4,144		$	102,306		$	(2,882	)	$	159,011
Costs and expenses:
	Cost of sales			49,107			2,899			95,408			(580	)		146,834
	Depletion, depreciation and amortization			4,651			360			2,936			—			7,947
	Selling, general and administrative			4,255			499			4,665			(2,231	)		7,188
	Other			282			—			—			—			282
	Unrealized (gain)/loss on derivatives			6			—			(103	)		—			(97	)

		Total costs and expenses		58,301			3,758			102,906			(2,811	)		162,154

		Income (loss) from operations		(2,858	)		386			(600	)		(71	)		(3,143	)
Other income (expense):
	Interest expense			(2,338	)		(143	)		(727	)		143			(3,065	)
	Interest income			146			—			8			(143	)		11
	Other, net			(119	)		5			(195	)		—			(309	)
	Equity in earnings of subsidiaries			(1,429	)		—			—			1,429			—

				(3,740	)		(138	)		(914	)		1,429			(3,363	)

		Income (loss) before income tax expense		(6,598	)		248			(1,514	)		1,358			(6,506	)
	Income tax expense			—			—			—			—			—

		Income (loss) before cumulative effect of change in accounting principle		(6,598	)		248			(1,514	)		1,358			(6,506	)
		Cumulative effect of change in accounting principle		(3,848	)		—			(92	)		—			(3,940	)

		Net income (loss)	$	(10,446	)	$	248		$	(1,606	)	$	1,358		$	(10,446	)
		Cumulative preferred stock dividends		(639	)		—			—			—			(639	)

		Net income (loss) allocable to common shares	$	(11,085	)	$	248		$	(1,606	)	$	1,358		$	(11,085	)

Condensed Consolidating Statement of Operations (unaudited)
Three Months Ended January 31, 2002

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net sales			$	53,966		$	4,007		$	101,455		$	(2,892	)	$	156,536
Costs and expenses:
	Cost of sales			43,598			3,197			91,358			(672	)		137,481
	Depletion, depreciation and amortization			4,511			372			2,619			—			7,502
	Selling, general and administrative			3,389			309			4,776			(2,221	)		6,253
	Other			199			—			—			—			199
	Unrealized (gain)/loss on derivatives			(1,497	)		—			111			—			(1,386	)

		Total costs and expenses		50,200			3,878			98,864			(2,893	)		150,049

		Income from operations		3,766			129			2,591			1			6,487
Other income (expense):
	Interest expense			(9,796	)		(173	)		(4,060	)		59			(13,970	)
	Interest income			3,578			—			20			(59	)		3,539
	Other, net			(47	)		—			(161	)		—			(208	)
	Equity in earnings of subsidiaries			(2,192	)		—			—			2,192			—

				(8,457	)		(173	)		(4,201	)		2,192			(10,639	)

		Income (loss) before income tax expense		(4,691	)		(44	)		(1,610	)		2,193			(4,152	)
	Income tax expense			—			—			539			—			539

		Net income (loss)	$	(4,691	)	$	(44	)	$	(2,149	)	$	2,193		$	(4,691	)

Condensed Consolidating Statement of Cash Flows
Nine Months Ended July 31, 2003 (unaudited)

			The Company Excluding Guarantor Subsidiaries			Buick Resource Recycling Facility, LLC			Other Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net cash provided by (used in) operating activities			$	(15,372	)	$	(191	)	$	1,462		$	5,488		$	11,130		$	2,517
Cash flows from investing activities:
	Purchases of property, plant and equipment			(4,672	)		—			(5	)		(7,666	)		—			(12,343	)
	Investment in subsidiaries			11,130			—			—			—			(11,130	)		—

		Net cash provided by (used in) investing activities		6,458			—			(5	)		(7,666	)		(11,130	)		(12,343	)
Cash flows from financing activities:
	Proceeds from revolving loans and short-term borrowings, net			18,405			—			—			(700	)		—			17,705
	Payments on long-term debt			(3,131	)		—			—			(3,260	)		—			(6,391	)
	Payment of financing costs			(482	)		—			—			—			—			(482	)
	Due to/due from parent/subsdiaries			(5,878	)		191			(1,457	)		7,144			—			—

		Net cash provided by (used in) financing activities		8,914			191			(1,457	)		3,184			—			10,832

		Net increase in cash		—			—			—			1,006			—			1,006
Cash at beginning of period				—			—			—			7,018			—			7,018

Cash at end of period			$	—		$	—		$	—		$	8,024		$	—		$	8,024

Condensed Consolidating Statement of Cash Flows (unaudited)
Nine Months Ended July 31, 2002

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net cash provided by (used in) operating activities			$	(3,131	)	$	1,516		$	3,363		$	9,976		$	11,724
Cash flows from investing activities:
	Purchases of property, plant and equipment			(6,101	)		(105	)		(10,375	)		—			(16,581	)
	Investment in subsidiaries			9,976			—			—			(9,976	)		—

		Net cash provided by (used in) investing activities		3,875			(105	)		(10,375	)		(9,976	)		(16,581	)
Cash flows from financing activities:
	Proceeds from revolving loans and short-term borrowings, net			614			—			13,800			—			14,414
	Payments on long-term debt			(79	)		—			(3,077	)		—			(3,156	)
	Payment of deferred financing costs			(119	)		—			—			—			(119	)
	Due to/due from parent/subsdiaries			(1,160	)		(1,411	)		2,571			—			—

		Net cash provided by (used in) financing activities		(744	)		(1,411	)		13,294			—			11,139

		Net increase in cash		—			—			6,282			—			6,282
Cash at beginning of period				—			—			6,263			—			6,263

Cash at end of period			$	—		$	—		$	12,545		$	—		$	12,545

Condensed Consolidating Statement of Cash Flows (unaudited)
Six Months Ended April 30, 2003

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net cash provided by (used in) operating activities			$	(9,406	)	$	1,015		$	(4,011	)	$	3,342		$	(9,060	)
Cash flows from investing activities:
	Purchases of property, plant and equipment			(2,676	)		(1	)		(5,151	)		—			(7,828	)
	Investment in subsidiaries			3,342			—			—			(3,342	)		—

		Net cash provided by (used in) investing activities		666			(1	)		(5,151	)		(3,342	)		(7,828	)
Cash flows from financing activities:
	Proceeds from revolving loans and short-term borrowings, net			15,907			—			3,300			—			19,207
	Payments on long-term debt			(3,114	)		—			(2,143	)		—			(5,257	)
	Payment of financing costs			(338	)		—			—			—			(338	)
	Due to/due from parent/subsdiaries			(3,715	)		(1,014	)		4,729			—			—

		Net cash provided by (used in) financing activities		8,740			(1,014	)		5,886			—			13,612

		Net decrease in cash		—			—			(3,276	)		—			(3,276	)
Cash at beginning of period				—			—			7,018			—			7,018

Cash at end of period			$	—		$	—		$	3,742		$	—		$	3,742

Condensed Consolidating Statement of Cash Flows
Six Months Ended April 30, 2002 (unaudited)

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net cash provided by (used in) operating activities			$	(1,299	)	$	874		$	(2,180	)	$	6,481		$	3,876
Cash flows from investing activities:
	Purchases of property, plant and equipment			(4,363	)		(57	)		(7,883	)		—			(12,303	)
	Investment in subsidiaries			6,481			—			—			(6,481	)		—

		Net cash provided by (used in) investing activities		2,118			(57	)		(7,883	)		(6,481	)		(12,303	)
Cash flows from financing activities:
	Proceeds from revolving loans and short-term borrowings, net			(1,335	)		—			8,000			—			6,665
	Payments on long-term debt			(52	)		—			(2,079	)		—			(2,131	)
	Payment of deferred financing costs			(119	)		—			—			—			(119	)
	Due to/due from parent/subsdiaries			687			(817	)		130			—			—

		Net cash provided by (used in) financing activities		(819	)		(817	)		6,051			—			4,415

		Net decrease in cash		—			—			(4,012	)		—			(4,012	)
Cash at beginning of period				—			—			6,263			—			6,263

Cash at end of period			$	—		$	—		$	2,251		$	—		$	2,251

Condensed Consolidating Statement of Cash Flows
Three Months Ended January 31, 2003 (unaudited)

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net cash provided by (used in) operating activities			$	(12,162	)	$	456		$	2,298		$	1,285		$	(8,123	)
Cash flows from investing activities:
	Purchases of property, plant and equipment			(1,683	)		(1	)		(3,658	)		—			(5,342	)
	Investment in subsidiaries			1,285			—			—			(1,285	)		—

		Net cash provided by (used in) investing activities		(398	)		(1	)		(3,658	)		(1,285	)		(5,342	)
Cash flows from financing activities:
	Proceeds from revolving loans and short-term borrowings, net			14,438			—			1,300			—			15,738
	Payments on long-term debt			(26	)		—			(1,056	)		—			(1,082	)
	Due to/due from parent/subsdiaries			(1,852	)		(455	)		2,307			—			—

		Net cash provided by (used in) financing activities		12,560			(455	)		2,551			—			14,656

		Net increase in cash		—			—			1,191			—			1,191
Cash at beginning of period				—			—			7,018			—			7,018

Cash at end of period			$	—		$	—		$	8,209		$	—		$	8,209

Condensed Consolidating Statement of Cash Flows
Three Months Ended January 31, 2002 (unaudited)

			The Company Excluding Guarantor Subsidiaries			Domestic Guarantors			Doe Run Cayman and Subsidiary			Eliminations			The Company
Net cash provided by (used in) operating activities			$	4,180		$	1,403		$	(5,812	)	$	2,192		$	1,963
Cash flows from investing activities:
	Purchases of property, plant and equipment			(2,302	)		(5	)		(2,438	)		—			(4,745	)
	Investment in subsidiaries			2,192			—			—			(2,192	)		—

		Net cash used in investing activities		(110	)		(5	)		(2,438	)		(2,192	)		(4,745	)
Cash flows from financing activities:
	Proceeds from revolving loans and short-term borrowings, net			(4,312	)		—			8,000			—			3,688
	Payments on long-term debt			(26	)		—			(1,067	)		—			(1,093	)
	Payment of deferred financing costs			(100	)		—			—			—			(100	)
	Due to/due from parent/subsdiaries			368			(1,398	)		1,030			—			—

		Net cash provided by (used in) financing activities		(4,070	)		(1,398	)		7,963			—			2,495

		Net decrease in cash		—			—			(287	)		—			(287	)
Cash at beginning of period				—			—			6,263			—			6,263

Cash at end of period			$	—		$	—		$	5,976		$	—		$	5,976

DOE RUN PERU S.R.L.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)

			July 31, 2003			April 30, 2003			January 31, 2003			October 31, 2002
			*(unaudited)*			*(unaudited)*			*(unaudited)*
ASSETS
Current assets:
	Cash		$	8,024		$	3,742		$	8,209		$	7,018
	Trade accounts receivable, net of allowance for doubtful accounts			19,777			25,106			19,864			25,261
	Inventories			62,476			65,536			65,790			59,211
	Prepaid expenses and other current assets			11,730			9,214			15,026			11,819

		Total current assets		102,007			103,598			108,889			103,309
Property, plant and equipment, net				135,942			136,175			137,619			138,510
Other noncurrent assets, net				289			322			356			389

		Total assets	$	238,238		$	240,095		$	246,864		$	242,208

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
	Short-term borrowings and current maturities of long-term debt		$	2,708		$	3,826		$	4,537		$	4,410
	Accounts payable			31,155			25,571			32,611			26,789
	Accrued liabilities			21,560			18,737			20,017			20,607
	Due to parent			17,716			15,301			12,879			10,572

		Total current liabilities		73,139			63,435			70,044			62,378
Long-term debt, less current maturities				36,000			40,000			38,376			38,259
Due to parent				139,063			139,063			139,063			139,063
Other noncurrent liabilities				3,798			3,679			3,679			5,200

		Total liabilities		252,000			246,177			251,162			244,900
Shareholders' deficit:
	Capital stock, $0.01 par value, 15,912,083,739 shares issued and outstanding			2,005			2,005			2,005			2,005
	Accumulated deficit and other comprehensive loss			(15,767	)		(8,087	)		(6,303	)		(4,697	)

		Total shareholders' deficit		(13,762	)		(6,082	)		(4,298	)		(2,692	)

		Total liabilities and shareholders' deficit	$	238,238		$	240,095		$	246,864		$	242,208

The accompanying notes are an integral part of these consolidated financial statements.

DOE RUN PERU S.R.L.
Condensed Consolidated Statements of Operations (unaudited)
(Dollars in thousands)

			Nine Months Ended July 31,						Three Months Ended July 31,						Six Months Ended April 30,						Three Months Ended April 30,						Three Months Ended January 31,
			2003			2002			2003			2002			2003			2002			2003			2002			2003			2002
Net sales			$	313,645		$	315,365		$	107,024		$	109,584		$	206,621		$	205,781		$	104,315		$	104,326		$	102,306		$	101,455
Costs and expenses:
	Cost of sales			299,593			290,675			106,355			101,960			193,238			188,715			97,830			97,357			95,408			91,358
	Depletion, depreciation and amortization			8,621			8,153			2,748			2,835			5,873			5,318			2,937			2,699			2,936			2,619
	Selling, general and administrative			14,376			14,139			4,962			4,713			9,414			9,426			4,749			4,650			4,665			4,776
	Other			—			181			—			134			—			47			—			47			—			—
	Unrealized (gain)/loss on derivatives			(108	)		68			18			(126	)		(126	)		194			(23	)		83			(103	)		111

		Total costs and expenses		322,482			313,216			114,083			109,516			208,399			203,700			105,493			104,836			102,906			98,864

		Income (loss) from operations		(8,837	)		2,149			(7,059	)		68			(1,778	)		2,081			(1,178	)		(510	)		(600	)		2,591
Other income (expense):
	Interest expense			(2,012	)		(12,371	)		(588	)		(3,982	)		(1,424	)		(8,389	)		(697	)		(4,329	)		(727	)		(4,060	)
	Interest income			18			44			6			12			12			32			4			12			8			20
	Other, net			(148	)		(311	)		(40	)		97			(108	)		(408	)		87			(247	)		(195	)		(161	)

				(2,142	)		(12,638	)		(622	)		(3,873	)		(1,520	)		(8,765	)		(606	)		(4,564	)		(914	)		(4,201	)

		Loss before income tax expense		(10,979	)		(10,489	)		(7,681	)		(3,805	)		(3,298	)		(6,684	)		(1,784	)		(5,074	)		(1,514	)		(1,610	)
Income tax (benefit) expense				—			—			—			—			—			—			—			(539	)		—			539

		Loss before extraordinary item and cumulative effect of change in accounting principle		(10,979	)		(10,489	)		(7,681	)		(3,805	)		(3,298	)		(6,684	)		(1,784	)		(4,535	)		(1,514	)		(2,149	)
		Cumulative effect of change in accounting principle, net of income tax benefit		(92	)		—			—			—			(92	)		—			—			—			(92	)		—

		Net loss	$	(11,071	)	$	(10,489	)	$	(7,681	)	$	(3,805	)	$	(3,390	)	$	(6,684	)	$	(1,784	)	$	(4,535	)	$	(1,606	)	$	(2,149	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

DOE RUN PERU S.R.L.
Condensed Consolidated Statements of Cash Flows (unaudited)
(Dollars in thousands)

			Nine Months Ended July 31,						Six Months Ended April 30,						Three Months Ended January 31,
			2003			2002			2003			2002			2003			2002
Net cash provided by (used in) operating activities			$	5,488		$	3,363		$	(4,011	)	$	(2,180	)	$	2,298		$	(5,812	)
Cash flows from investing activities:
	Purchases of property, plant and equipment			(7,666	)		(10,375	)		(5,151	)		(7,883	)		(3,658	)		(2,438	)

		Net cash used in investing activities		(7,666	)		(10,375	)		(5,151	)		(7,883	)		(3,658	)		(2,438	)
Cash flows from financing activities:
	Proceeds from (payments on) revolving loans and short-term borrowings, net			(700	)		13,800			3,300			8,000			1,300			8,000
	Payments on long-term debt			(3,260	)		(3,077	)		(2,143	)		(2,079	)		(1,056	)		(1,067	)
	Loans with parent			7,144			2,571			4,729			130			2,307			1,030

		Net cash provided by financing activities		3,184			13,294			5,886			6,051			2,551			7,963

		Net increase/(decrease) in cash		1,006			6,282			(3,276	)		(4,012	)		1,191			(287	)
Cash at beginning of period			$	7,018		$	6,263		$	7,018		$	6,263		$	7,018		$	6,263

Cash at end of period			$	8,024		$	12,545		$	3,742		$	2,251		$	8,209		$	5,976

The accompanying notes are an integral part of these condensed consolidated financial statements.

DOE RUN PERU S.R.L
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands)

(1) Summary of Significant Accounting Policies

Unaudited Interim Financial Statements

These interim condensed consolidated financial statements include the accounts of Doe Run Peru S.R.L (Doe Run Peru or the Company). In the opinion of management, the interim consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the consolidated financial position as of January 31, 2003, April, 30, 2003 and July 31, 2003 and results of operations for the three-month period ended January 31, 2003 and 2002, the three and six-month periods ended April 30, 2003 and 2002 and the three and nine-month periods ended July 31, 2003 and 2002. All material intercompany balances and transactions have been eliminated. Interim periods are not necessarily indicative of results to be expected for the year.

Reclassifications

Certain balances have been reclassified from their previous presentation in order to conform to the current year presentation.

(2) Inventories

Inventories consist of the following:

	July 31, 2003		April 30, 2003		January 31, 2003		October 31, 2002
Finished metals and concentrates	$	5,906	$	3,246	$	3,508	$	1,495
Metals and concentrates in process		44,736		50,023		49,704		44,517
Materials, supplies and repair parts		11,834		12,267		12,578		13,199

	$	62,476	$	65,536	$	65,790	$	59,211

Materials, supplies and repair parts are stated net of reserves for obsolescence of approximately $332 at July 31, 2003, April 30, 2003, January 31, 2003 and October 31, 2002.

(3) Debt

Subsequent to July 31, 2003, Doe Run Peru defaulted on its net worth covenant contained in its revolving credit agreement. These defaults continued until the agreements were amended in the second quarter of fiscal 2004. See discussion in Note 6 regarding amendments to this agreement.

(4) Asset Retirement and Environmental Obligations

Asset Retirement Obligations

On November 1, 2002 Doe Run Peru adopted Statement No. 143 "Accounting for Asset Retirement Obligations" (Statement No. 143). With the adoption of this Statement, asset retirement obligations (AROs) are recognized as liabilities when incurred, with the initial measurement at fair value. These liabilities will be accreted to full value over time through charges to income. In addition, an asset retirement cost was capitalized as part of the related asset's carrying value and will be depreciated over the asset's useful life.

The following table summarizes the balance sheet impact associated with the adoption of Statement No. 143:

	October 31, 2002 As Reported			SFAS No. 143 Adoption Impact			November 1, 2002 After Adoption
Property, plant and equipment	$	183,910		$	(2,523	)	$	181,387
Accumulated depreciation		(45,400	)		910			(44,490	)

Property, plant and equipment, net		138,510			(1,613	)		136,897

Liability for asset retirement obligations		3,606			(1,521	)		2,085

Cumulative effect of change in accounting principle		—			(92	)		(92	)

The pro forma effects of the application of Statement No. 143 on net income/(loss) are insignificant.

The pro forma asset retirement obligation liability balance at October 31, 2001 as if Statement No. 143 had been adopted at that date is $1,740.

The following illustrates the activity pertaining to the AROs for the period ended July 31, 2003.

AROs as of October 31, 2002	$	3,606
Transition adjustment		(1,521	)
Accretion expense		119

AROs as of July 31, 2003	$	2,204

Environmental

Doe Run Peru has committed under its PAMA to implement the following projects at its La Oroya smelter through December 31, 2006:

•: New sulfuric acid plants
•: Treatment plant for the copper refinery effluent
•: Industrial wastewater treatment plant for the smelter and refinery
•: Improve the slag handling system
•: Improve Huanchan lead and copper slag deposits
•: Build an arsenic trioxide deposit
•: Improve the zinc ferrite disposal site
•: Domestic wastewater treatment and domestic waste disposal
•: Monitoring station

Through July 31, 2003, Doe Run Peru had spent approximately $36,300 on projects under the La Oroya PAMA.

Estimated annual spending on a calendar year basis for the projects approved in the La Oroya PAMA, as amended, most recently on January 25, 2002, are as follows:

Year	Estimated Cost
2003	$	9,350
2004		12,800
2005		53,500
2006		67,700

	$	143,350

the expiration of the PAMA on December 31, 2006. No assurance can be given that implementation of the PAMA projects is feasible or that their implementation will achieve compliance with the applicable legal requirements by the end of the PAMA period. Further, there can be no assurance that the Peruvian government will not in the future require compliance with additional or different environmental obligations that could adversely affect Doe Run Peru's business, financial condition or results of operations. Under the purchase agreement related to the acquisition of the La Oroya assets in October 1997, Centromin, the prior owner of the La Oroya smelter and Cobriza mine, agreed to indemnify Doe Run Peru against environmental liability arising out of its prior operations and their apportioned share of any other complaint related to emissions. Performance of the indemnity has been guaranteed by the Peruvian government through the enactment of the Supreme Decree No. 042-97-PCM. However, there can be no assurance that Centromin will satisfy its environmental obligations and investment requirements, including those in its PAMA, or that the guarantee will be honored. Any failure by Centromin to satisfy its environmental obligations could adversely affect Doe Run Peru's business, financial condition or results of operations.

(5) Financial Condition

As discussed in Note 4, Doe Run Peru is proceeding with efforts to identify alternative methods of achieving compliance with environmental requirements. These efforts include, but are not limited to, reducing or curtailing production from a portion of the plant thus eliminating the need for the equipment presently contemplated and replacing it with another alternative. These efforts must take into consideration the impacts on profitability and liquidity, as well as other economic impacts. Doe Run Peru intends to submit a request in 2004 to modify its existing requirements. There can be no assurance that the alternatives will be approved by the Peruvian government or that they will achieve compliance in the timeframe required. If the La Oroya smelter does not operate within the required limits after December 31, 2006, Doe Run Peru could be forced to cease operations at the La Oroya smelter.

Doe Run Peru's ability to pay fees to Doe Run is limited by Doe Run Peru's revolving credit facility, unless Doe Run Peru meets an excess cash flow test. Due to Doe Run Peru's lack of liquidity, no payments for fees were made during the first nine months of 2003, although payments of $4,000 annually were allowed for 2003 under Doe Run Peru's revolving credit facility. In addition, beginning in 2003, Doe Run will not receive approximately $14,000 per year in interest income from a deposit that was surrendered to retire Doe Run Peru's loan from a foreign bank. The deposit, plus unpaid interest, was replaced in September 2002 by an intercompany note that does not bear interest during the term of Doe Run Peru's revolving credit facility. These factors along with five years of low metals prices have affected Doe Run's liquidity.

(6) Subsequent Events

Management of the Company believes that Doe Run Peru has followed the applicable Peruvian statutes and intends to pursue all available administrative and judicial appeals. Doe Run Peru is not required to make any payments pending the administrative appeal process. If Doe Run Peru were to appeal in the judicial system, some type of financial assurance would be required.

On February 16, 2004 Doe Run Peru entered into an amendment of the Doe Run Peru Revolving Credit Facility. The amendment lowered the levels of net worth Doe Run Peru must comply with from the date of the amendment through September 2004, among other things. Based on current forecasted results, assuming metal prices higher than those experienced in fiscal 2003, management expects to remain in compliance for the foreseeable future. The amendment does not cure or waive defaults in existence before the date of the amendment. The amendment also limits payment of fees to Doe Run through September 30, 2004 to $2,800. In the event Doe Run Peru's net worth would fall to a level lower than the requirement at the quarterly reporting dates, the amendment permanently reduces the amount available under the Doe Run Peru Revolving Credit Facility if Doe Run Peru does not meet its required net worth by the amount of the difference between the required and the actual net worth. If Doe Run Peru is not successful with its administrative appeal of the tax assessment discussed above, the lender can, at its discretion, require that the amount of the assessment reduce net worth as defined in the Doe Run Peru Revolving Credit Facility amendment. Such reduction along with other factors, including metal prices and results of operations, could affect Doe Run Peru's ability to comply with the net worth requirement.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements of The Doe Run Resources Corporation (Doe Run and together with its subsidiaries, the Company) and the notes thereto, and other financial information included herein, as well as the Company's Form 10K for the year ended October 31, 2003 filed June 2, 2004.

Financial Position and Liquidity

A discussion of changes in the Company's financial condition and liquidity is incorporated by reference to Item 7 in the Company's Form 10K for the year ended October 31, 2003 filed June 2, 2004.

On March 21, 2003 Renco and the lenders of a term note (Term Note) entered into an Assignment and Acceptance Agreement whereby The Renco Group, Inc. (Renco), the indirect owner of all of Doe Run's capital stock, purchased all of the rights of the agent and lenders under the Term Note. Accordingly, Renco became the agent and lender under the Term Note with the identical rights to payment of interest, principal and fees and to the same collateral as had the previous lenders. Furthermore, Renco, in its capacity as agent and lender under the credit facility waived certain existing and impending defaults, including, among other things, Doe Run's failure to provide the lender with certain reports and failure to comply with a financial covenant.

Effective March 27, 2003 the Company entered into an amendment to the loan agreement governing the Doe Run's revolving credit facility, which reduced the level of consolidated net worth that the Company is required to maintain. Pursuant to the amendment, the lenders waived an event of default resulting from the failure of Doe Run to maintain a financial covenant and an event of default resulting from the failure of Doe Run to deliver timely financial reports.

During fiscal 2003, subsequent to the waivers and amendments discussed above, Doe Run failed to meet certain financial and reporting covenant requirements contained in the Doe Run's revolving credit facility and the Term Note. On April 9, 2004 Doe Run entered into an amendment of its revolving credit facility. The amendment waives existing defaults and lowers the net worth requirement. The amendment became effective when waivers of default under the Term Note were received, as discussed below. On April 30, 2004 Doe Run entered into an amendment of the Term Note. The amendment waives existing defaults and amends various covenant requirements, among other things. The amendment also requires that certain information be delivered to the lender at various times within 30 days after the amendment date, which dates have subsequently been extended. Based on current projections, assuming metal prices continuing higher than those experienced during fiscal 2003, management expects to remain in compliance under Doe Run's revolving credit facility and the Term Note, as amended, through October 31, 2004. As a result of these defaults, the balance under the Term Note is reflected in current maturities of long-term debt in the Company's balance sheet at January 31, 2003, April 30, 2003 and July 31, 2003. Because the agreement governing Doe Run's revolving credit facility requires a lockbox for cash receipts and contains a subjective acceleration clause, loans are classified as current in the Company's condensed consolidated balance sheet for all periods presented.

On May 7, 2004, Doe Run received a notice of default from the trustee of its 11.75% Notes that it is in default of the indenture requirements. The notice gives Doe Run 30 days from the date of receipt of the notice to remedy such defaults by filing its quarterly and annual reports for the 2003 fiscal year with the SEC and to provide a written statement from the Company's independent certified public accountants indicating whether any defaults have come to their attention. If the defaults are not remedied within 30 days of receipt of the notice, the trustee may declare all unpaid principal and interest immediately payable. Management intends to remedy the defaults in the timeframe required.

In fiscal 2003, after July 31, 2003, Doe Run Peru failed to meet certain financial and reporting covenant requirements contained in Doe Run Peru's revolving credit facility. On February 16, 2004, Doe Run Peru entered into an amendment of its revolving credit facility. The amendment lowered the levels of net worth Doe Run Peru must comply with from the date of the amendment through September 30, 2004, among other things. Based on current forecasted results, assuming metal prices higher than those experienced during fiscal 2003, management expects to remain in compliance with all covenants relating to Doe Run Peru's revolving credit facility for the foreseeable future. The amendment does not cure or waive defaults in existence before the date of the amendment. The amendment also limits payment of fees to Doe Run through September 30, 2004 to $2.8 million. To the extent Doe Run Peru's net worth would fall to a level lower than the requirement at the quarterly reporting dates, the amendment permanently reduces the amount available under Doe Run Peru's revolving credit facility by the amount of the difference between the required and the actual net worth.

On December 26, 2003, the Peru tax authority, SUNAT notified Doe Run Peru of an income tax assessment for the 1998 tax year. Discussion of this assessment is incorporated by reference to Item 7 in the Company's Form 10K for the year ended October 31, 2003 filed June 2, 2004. If Doe Run Peru is not successful with its administrative appeal of the tax assessment, the lender can, at its discretion, require that the amount of the assessment reduce net worth as defined in the Doe Run Peru's revolving credit facility amendment. Such reduction along with other factors, including metal prices and results of operations, could affect Doe Run Peru's ability to comply with the net worth requirement.

Results of Operations

For the nine months ended July 31, 2003 (the 2003 period) the Company reported a decreased net loss compared to the nine months ended July 31, 2002 (the 2002 period). The decreased net loss was primarily due to lower net interest expense, offset by a loss from operations in the 2003 period and a charge for the cumulative effect of change in accounting principle recorded in the 2003 period related to the adoption of Statement of Financial Accounting Standard No. 143, Accounting for Asset Retirement Obligations (Statement No. 143) See "Item 1. Financial Statements and Supplementary Data—Note 6 to the Company's Condensed Consolidated Financial Statements" for a discussion of Statement No. 143. The lower net interest expense was the result of the restructuring of the Company's public debt in October 2002. The loss from operations in the 2003 period, compared to income in the 2002 period, was the result of lower sales volume and higher costs related to a shortage of concentrates impacting production and feedstock costs at the La Oroya smelter.

The Company's realized prices for metal sales remained low through the 2003 period. The following table sets forth average London Metal Exchange (LME) prices for lead, copper and zinc and the average London Bullion Market Association (LBMA) price for silver for the periods indicated:

		Three Months Ended
		Three Months Ended												Nine Months Ended July 31,
		January 31,				April 30,				July 31,				Nine Months Ended July 31,
		2003		2002		2003		2002		2003		2002		2003		2002
Average Prices
	Lead ($/short ton)	$	402.20	$	449.20	$	414.20	$	433.60	$	438.40	$	404.67	$	418.60	$	428.73
	Copper ($/short ton)		1,460.20		1,331.20		1,491.00		1,441.80		1,526.60		1,461.40		1,493.00		1,410.49
	Zinc ($/short ton)		708.40		703.20		704.80		725.20		725.00		705.00		713.00		710.69
	Silver ($/troy ounce)		4.65		4.33		4.56		4.51		4.69		4.84		4.63		4.56

As domestic lead metal sales continued to be weak during 2003, the Company altered its marketing and production strategies for its domestic operations during the period and reduced its production increasing exports of lead metal. See discussion of the impact on net sales for the period below.

Lead prices began recovering in the third quarter after hitting a recent historic low in April 2003. Metal prices rose sharply during the fourth quarter of 2003 and have continued their increase into fiscal 2004. The recent price increase reflects a significant tightening in the worldwide lead supply.

Low lead, zinc and copper prices in the preceding five years have induced mine closures and cutbacks and slowed development of new copper, zinc and lead projects. In addition, new smelting capacity has come on stream in China and India, increasing demand for concentrates. As a result, supplies of lead, zinc and copper concentrates have been very tight. Smelters competing for concentrates in this tight market have driven treatment charges and penalties down significantly and this decline has negatively impacted profitability of the Company's La Oroya smelter.

Most of La Oroya's feed supply is secured from the Peruvian domestic market. The effects of low metals prices in the preceding five years have caused some of Doe Run Peru's suppliers to suffer financial distress, which in some cases caused production shortfalls. As a result, deliveries of lead, copper and zinc concentrates to La Oroya from the main Peruvian suppliers were significantly below the contracted amounts during the 2003 period. Doe Run Peru replaced a portion of this shortfall with concentrates from other suppliers, but the total receipts of lead, zinc and copper concentrates for the period were less than the planned amounts. In addition, the resulting changes in concentrate mix and erratic deliveries adversely affected metal production and the cost of spot purchases increased La Oroya's feed cost. With improved metal prices beginning in the fourth quarter of 2003, the financial condition of La Oroya's traditional suppliers has improved and concentrate receipts for fiscal year 2004 are expected to meet planned levels. However, current market conditions remain tight, and it is possible that the smelter could experience difficulties obtaining economically suitable concentrate feed.

The following table sets forth the Company's production statistics for the periods indicated:

		Three Months Ended
		Three Months Ended												Nine Months Ended July 31,
		January 31,				April 30,				July 31,				Nine Months Ended July 31,
		2003		2002		2003		2002		2003		2002		2003		2002
U.S. Operations
	Lead metal—primary (short tons)	71,241		71,161		69,739		72,351		73,378		72,838		214,379		216,350
	Lead metal—secondary (short tons)	36,966		38,191		33,364		38,566		39,761		36,558		110,091		113,315
	Lead concentrates (metal content, short tons)	72,018		76,961		73,174		78,577		76,581		74,803		221,773		230,341
	Ore Production (000's of dry short tons)	1,150		1,220		1,178		1,334		1,160		1,240		3,489		3,797
	Ore grade	6.41	%	6.51	%	6.37	%	6.05	%	6.80	%	6.23	%	6.53	%	6.25	%
Doe Run Peru Operations
	Refined copper (short tons)	17,122		18,215		17,750		17,756		17,294		18,254		52,166		54,225
	Refined lead (short tons)	30,042		33,280		28,147		31,739		31,483		34,089		89,672		99,108
	Refined zinc (short tons)	20,680		21,851		20,372		21,125		19,704		21,389		60,755		64,365
	Refined silver (thousands of troy ounces)	8,701		8,750		8,496		8,111		8,889		8,825		26,086		25,686
	Refined gold (thousands of troy ounces)	20		22		24		23		23		22		67		68
	Copper concentrates (metal content, short tons)	4,531		4,820		4,400		4,066		4,514		4,180		13,446		13,066
	Ore Grade (copper content)	1.10	%	1.07	%	1.12	%	1.00	%	1.07	%	0.98	%	1.10	%	1.02	%

As a part of the Company's plan to reduce production costs and improve efficiency at the Company's U.S. mining operations, manpower was reduced approximately 10% in the 2003 period compared to the respective period of the prior year. Ore production for the quarters of the 2003 period was lower than the quarters of the 2002 period, as planned in order to improve costs, while the lead grade of ore improved slightly. The Company's primary smelter operations performed well during the period.

Production at the Company's Buick secondary operation declined for the 2003 period compared to the 2002 period. Coke distribution problems in the blast furnace and mechanical problems with the reverb furnace occurred in the first quarter of 2003 with the reverb furnace being rebuilt during the second quarter of 2003, resulting in production improvement in the third quarter of 2003.

At the La Oroya metallurgical complex, production of copper, lead, zinc and gold in 2003 was less than in 2002. These declines did not result from operational problems, but were attributable to the difficulties in obtaining economically suitable feed concentrate material discussed above. At the Cobriza copper mining operation, ore grade improved and, as a result, production of metal contained in concentrates improved compared to the 2002 period.

The Company's results of operations include the results of the Company's U.S. operations and Doe Run Peru. In order to provide a more meaningful analysis, the results attributable to Doe Run Peru operations will be noted and discussed separately under "Results of Doe Run Peru Operations".

Net sales increased in the 2003 period compared to the 2002 period, due to an increase in sales volumes of lead metal for the Company's U.S. operations and partially offset by a lower realized price for lead metal and lower sales for Doe Run Peru. U.S. operation's lead metal sales volume in the first and second quarters of 2003 were 22.6% and 14.0% higher that the comparable 2002 quarters, primarily due to an increase in export sales. The benefit from the higher volumes was offset by the lower lead metal net realized prices in the first two quarters of the 2003 period than in the 2002 period. Net sales for the Company's U.S. operations were flat for the third quarter 2003 compared to the same quarter of 2002 as 2003 lead metal sales volume was 7.8% lower, due to timing of customer shipments, but the net realized price for lead was higher, due to the rise in the LME price in that quarter.

Cost of sales for the 2003 period increased compared to the 2002 period. Increases were attributable to Doe Run Peru operations as well as the U.S. operations. The increased sales volume of lead metal for the U.S. operations in the first two quarters resulted in higher cost of sales. This increase was partially offset by lower lead metal unit production costs. Spending for labor costs, outside services and repair costs were lower, offsetting increased energy costs and worker's compensation costs. Lower headcount associated with production changes in the primary operations resulted in the lower labor costs. Lower feed cost at the Buick secondary smelter also contributed to the reduction in unit production cost.

Selling, general and administrative costs increased slightly for the 2003 period, compared to the 2002 period, due primarily to the U.S. operations. The increase in selling, general and administrative expenses for U.S. operations is primarily the result of higher legal costs and the recognition of various liability claims partially offset by insurance proceeds received in the second quarter of 2003 for the reimbursement of various legal costs incurred in prior periods.

Unrealized losses on derivatives are related to the change in fair market value of derivative financial instruments. The losses in the 2003 period were generated in the third quarter of 2003 and resulted from an increase in the quantities of metal under contracts outstanding, and the increase in the LME price of lead metal in the third quarter.

Interest expense declined substantially in the 2003 period, compared to the prior year. The declines in interest expense in the U.S. are attributable to the October 29, 2002 restructuring of Doe Run's public debt and the related accounting treatment and Doe Run Peru's retirement of a $125.0 million note payable to a foreign bank on September 12, 2002.

Interest income for the 2003 period decreased compared to the 2002 period due to the tender of Doe Run's $125.0 million deposit to retire Doe Run Peru's note payable to a foreign bank.

Other, net expense in the 2003 period decreased from the 2002 period because of accrued expenses in 2002 relating to the restructuring that occurred October 29, 2002.

Cumulative effect of change in accounting principle relates to the adoption of Statement No. 143.

Results of Doe Run Peru Operations

Net sales for the 2003 period decreased compared to the 2002 period, primarily due to lower sales volumes for copper, lead, zinc and gold, partially offset by increased silver sales volume and by higher realized prices for copper, zinc, silver and gold. The volume declines, which were the result of the decrease in smelter production discussed above, reduced net sales approximately $13.5 million. Higher realized prices for gold bullion, copper and silver, following similar increases in market prices, increased net sales by $9.2 million. The higher silver sales volume resulted in an increase of $2.0 million in net sales compared to the prior year. For the first and second quarters, net sales increased modestly compared to the prior year, as the impact of higher metal prices was slightly greater than the effect of lower sales volumes. In the third quarter of 2003, silver prices declined while sales volumes continued to be unfavorable which caused net sales to decline $2.6 million in the third quarter of 2003 quarter compared to the 2002 quarter.

Cost of sales increased from the 2002 period to the 2003 period, due to higher feed cost and higher unit conversion costs at La Oroya, partially offset by reduced sales volume and lower production cost at the Cobriza copper mining operation. Feed costs were higher due to the increases in market prices for copper, zinc, silver and gold and to significantly lower treatment charges allowed the smelter for processing the concentrates purchased. Lead, zinc and copper concentrate treatment charges declined 14%, 13% and 15%, respectively in 2003, due to the very tight supply situation for concentrates in the world market. Unit conversion costs at La Oroya increased primarily due to the reduced production volume and higher fuel costs. Unit production costs at Cobriza declined approximately 10% due to a combination of increased production of metal contained in concentrates and lower operating costs. The increases in cost of sales were greater during the first and third quarters of 2003, primarily because the impact of metal price increases was more significant during those quarters. In addition, conversion costs were higher in the third quarter primarily due to increased costs for repairs and fuel.

Interest expense decreased in the 2003 period, compared to the prior year, primarily due to the retirement of the $125.0 note payable to a foreign bank, on September 12, 2002.

Cumulative effect of change in accounting principle in the 2003 period relates to the adoption of Statement No. 143.

Forward-Looking Statements

This report includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 which involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties, and other important factors include, among others: general economic and business conditions; increasing industry capacity and levels of imports of non-ferrous metals or non-ferrous metals products; industry trends, including product pricing; competition; currency fluctuations; the loss of any significant customer or suppliers; availability of qualified personnel; effects of future collective bargaining agreements; outcome of litigation; changing environmental requirements, political uncertainty, terrorism and major equipment failures. These forward-looking statements speak only as of the date of this report. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

In the normal course of its business, the Company has used in the past, and may use in the future, forward sales commitments and commodity put and call option contracts to manage its exposure to fluctuations in the prices of lead, copper, zinc and silver. Contract positions are designed to ensure that the Company will receive a defined minimum price for certain quantities of its production. None of the aforementioned activities have been entered into for speculative purposes.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the CEO and CFO, concluded the Company's disclosure controls and procedures as of July 31, 2003 were effective in ensuring information required to be disclosed in this Quarterly Report on Form 10-Q was recorded, processed, summarized and reported on a timely basis. There have been no changes in the Company's internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Part II. Other Information.

Item 1. Legal Proceedings

A discussion of litigation is incorporated by reference to Item 3 in the Company's Form 10K for the year ended October 31, 2003 filed June 2, 2004.

Item 4. Submission of Matters to a Vote of Security Holders.

A discussion of matters submitted to a vote of the security holder is incorporated by reference to Item 4 in the Company's Form 10K for the year ended October 31, 2003 filed June 2, 2004.

Item 6. Exhibits and Reports on Form 8-K.

(a): Exhibits.

31		Certifications pursuant to Section 302 of the Sarbannes-Oxley Act of 2002
32		Certifications pursuant to Section 906 of the Sarbannes-Oxley Act of 2002

(b): Reports on Form 8-K.

None

SIGNATURES

Pursuant to the requirements 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.

		THE DOE RUN RESOURCES CORPORATION Registrant
Date June 4, 2004		/s/ DAVID A. CHAPUT David A. Chaput Chief Financial Officer (duly authorized officer and principal financial officer)