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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

(Mark One)

For the quarterly period ended July 31, 2002

Or

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)

        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 certain indentures, 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 October 2, 2002:

THE DOE RUN RESOURCES CORPORATION
INDEX TO FORM 10-Q

THE DOE RUN RESOURCES CORPORATION

Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

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)

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

THE DOE RUN RESOURCES CORPORATION

Consolidated Statements of Comprehensive Income (unaudited)

(Dollars in thousands)

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)

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 and its subsidiaries (collectively, 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 July 31, 2002 and results of operations for the three and nine month periods ended July 31, 2002 and 2001. Interim periods are not necessarily indicative of results to be expected for the year.

Reclassifications

        Certain prior year balances have been reclassified in order to conform to current presentation.

(2)    Inventories

        Inventories consist of the following:

        Materials, supplies and repair parts are stated net of reserves for obsolescence of approximately $5,635 and $5,484 at July 31, 2002 and October 31, 2001, respectively.

(3)    Debt

        Due to the non-payment of interest due March 15, 2002 and the expiration of the grace period during which the Company could cure the non-payment on the 11¹/4% Senior Notes due 2005, Floating Interest Rate Senior Notes due 2003 and 11¹/4% Senior Secured Notes due 2005 (collectively, the Notes), as well as the violation of other financial covenants contained in its loan agreement relating to the U.S. revolving credit facility, the Company is in default of its covenants under the Notes indentures and its U.S. revolving credit facility. In an event of default, the lenders have the right to accelerate the payment of any unpaid principal and interest balances. As a result, the related debt balances are classified as current at July 31, 2002. No actions have been taken by the lenders to accelerate the payment of outstanding debt balances. The Company is in negotiations with lenders to execute an amended U.S. revolving credit facility and is attempting to complete a restructuring as described below.

        On September 20, 2002, the Company issued an exchange offer for the Notes (the Exchange Offer) that amended an earlier tender and exchange offer. Under the Exchange Offer, the Company is offering holders of the Notes new notes (Exchange Notes) with an aggregate principal amount of $660 for each $1,000 principal amount of the 11¹/4% Senior Secured Notes and $560 per $1,000 principal amount of the 11¹/4% Senior Notes and Floating Interest Rate Notes, in addition to warrants to purchase up to 40% of the Company's outstanding common stock (assuming 100% participation in the

Exchange Offer). In addition to the March 15, 2002 interest payment, the Company did not make the interest payment due September 15, 2002. The Company does not intend to pay the unpaid accrued interest on the Notes that will be exchanged in the Exchange Offer, and by accepting the Exchange Notes, the holders will waive the receipt of any and all accrued and unpaid interest and penalties on the Notes.

        In connection with the Exchange Offer, the Company's ultimate parent, The Renco Group, Inc. (Renco), will purchase $20,000 of the Company's preferred stock and Regiment Capital Advisors LLC (Regiment), a significant holder of the Notes, will commit to lend the Company $15,500 at a 3% discount, pursuant to a senior credit facility (the New Senior Credit Facility). The $35,035 in proceeds from the sale of preferred stock and New Senior Credit Facility will be used to pay down the U.S. revolving credit facility, to pay the accrued interest as of March 15, 2002 and September 15, 2002, including penalties thereon, on the Notes remaining outstanding, if any, after the Exchange Offer and to pay certain costs of the transactions.

        The consummation of the Exchange Offer is contingent upon a number of conditions including the participation in the Exchange Offer by holders of at least 95% of the aggregate principal amount outstanding of each tranche of the Notes (the "Minimum Tender"); the closing of the New Senior Credit Facility; the satisfactory amendment of the U.S. Revolving Credit Facility; and the sale of preferred stock to Renco. There can be no assurance that Doe Run will be able to consummate the Exchange Offer. Concurrently with the Exchange Offer, the Company is also seeking acceptances from the holders of the Notes to a prepackaged plan of bankruptcy (the "Plan") under Chapter 11 of the United States Bankruptcy Code. In the event that the Company is unable to achieve the Minimum Tender necessary to consummate the Exchange Offer consensually, but does receive the requisite acceptances needed to confirm the Plan, the Company intends to seek to have the Plan confirmed in the United States Bankruptcy Court for the Southern District of New York. Acceptances from holders of at least 66 ²/3% of the aggregate principal amount of each tranche of the Notes and a majority in number of holders of each tranche of Notes, in each case actually voting on the Plan, will be necessary to confirm the Plan. If the Plan is confirmed, the Company's obligations under the Notes will be extinguished in their entirety and holders of Notes will receive substantially the same consideration for their Notes as they would under the terms of the Exchange Offer.

        On September 17, 2002, Doe Run Peru entered into a new, three-year revolving credit facility with its lender, effective September 25, 2002. The lender has currently committed to a maximum of $40,000, and is attempting to syndicate the balance of the $58,000 provided for under the new facility. If the Exchange Offer and related transactions are not consummated by November 25, 2002, an event of default will occur under the new facility, which could result in the outstanding balance becoming immediately due and payable. As there can be no assurance that the Exchange Offer and other transactions will be completed, the balance of borrowings under the current facility at July 31, 2002 are classified as current. Under the new agreement, advance rates on certain receivables and inventory will be improved from those under the previous facility, provided that Doe Run Peru meets certain documentation requirements, which Doe Run Peru anticipates being able to accomplish.

        On March 12, 2002, Doe Run Peru, with the consent of its parent company, The Doe Run Resources Corporation, (Doe Run) did not pay $7,031 of interest due to Banco de Credito Overseas Limited (the Bank) under a Contract for a Loan in Foreign Currency. Failure to pay such interest was cured by instructing the Bank to offset the amount of such payment against the amount otherwise payable by the Bank to Doe Run under a Special Term Deposit Contract. Effective September 12, 2002, the remaining balance of the Loan in Foreign Currency, including the September 12, 2002 interest payment, was offset against the Special Term Deposit, and in return, Doe Run Peru delivered a

non-interest bearing intercompany note to Doe Run in the amount of $139,063. The obligations of Doe Run Peru under the intercompany note are subordinate to those under Doe Run Peru's new revolving credit facility.

(4)    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. The Peruvian operations produce an extensive product mix of non-ferrous and precious metals through a subsidiary, Doe Run Peru S.R.L. (Doe Run Peru).

(1)

Transactions between segments consist of metal sales recorded based on sales contracts that are negotiated between segments on terms that management feels are similar to those that would be negotiated between unrelated parties.

(2)

Other revenues consist of metal sales not attributed to operating segments and realized gains (losses) on derivative contracts. Decrease from prior year is due to the effect of lower metal prices on closed positions.

(3)

Other revenues and expenses include primarily realized gains (losses) on derivative contracts, exploration expenses, and adjustments necessary to state primary and secondary lead inventories at LIFO cost.

(5)    Hedging and Derivative Financial Instruments

        A significant portion of the Company's sales contracts are priced based on an average London Metal Exchange (LME) or other exchange prices for the respective metal plus a negotiated premium. As such, the prices of the Company's products fluctuate due to factors in the market that are beyond the Company's control. These price changes expose the Company to variability in its cash receipts. The purpose of the Company's price risk management program is to limit the Company's risk to acceptable levels, while enhancing revenue through the receipt of option premiums.

        The Company's price risk management program uses various derivative instruments in its attempt to mitigate commodity price risks. The Company uses purchased futures contracts as a fair value hedge of the change in fair value of inventory related to firm sales commitments with customers or as a cash flow hedge to lock in the price of lead purchases for its fabricated products subsidiary. In fair value hedges, the futures contracts are established at terms (quantities, prices and timing) that mirror those of the firm commitments. The Company uses sold futures contracts as a cash flow hedge to lock in the price of a portion of forecasted lead metal sales and to lock in the price of by-product sales whose prices are based on an average for a period after they are shipped.

        The Company routinely writes call options that, if exercised, will create sold futures contracts that will be designated as cash flow hedges of forecasted lead metal sales. The options generate premium income, which enhance revenues. The Company also uses futures contracts and options and combinations thereof to enhance revenue at contract prices that are acceptable to the Company, should the options be exercised. Because these instruments do not meet the requirements for hedge accounting under FAS 133, the changes in fair market value related to these instruments (including the

time value portion), which reflect market prices and volatility at the balance sheet date, are recorded in results of operations, and are expected to increase the volatility of reported results.

        The unrealized gain reflected in the consolidated statement of operations relates to the change in fair market value of derivative financial instruments that are not designated as hedges. For derivative instruments designated as hedges (futures contracts), the Company assesses effectiveness based on changes in the forward rate, and as a result, does not expect hedge ineffectiveness.

        The fair market value of the Company's derivative financial instruments reflected in the Company's balance sheet as of July 31, 2002 is the difference between quoted prices at the balance sheet date and the contract settlement value. The fair market value represents the estimated net cash the Company would receive (pay) if the contracts were canceled on the balance sheet date.

        The Company's open derivative financial instruments at July 31, 2002 were: (numbers not in thousands)

Sold (Purchased) Futures Contracts

Sold (Purchased) Call Option Contracts