SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1995
Commission File Number: 1-8124
Freeport-McMoRan Inc.
Incorporated in Delaware 13-3051048
(IRS Employer Identification No.)
1615 Poydras Street, New Orleans, Louisiana 70112
Registrant's telephone number, including area code:(504) 582-4000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
On June 30, 1995, there were issued and outstanding 167,936,373 shares of the
registrant's Common Stock, par value $1 per share.
FREEPORT-McMoRan INC.
TABLE OF CONTENTS
Page
Part I. Financial Information
Financial Statements:
Condensed Balance Sheets 3
Statements of Income 4
Statements of Cash Flow 6
Notes to Financial Statements 7
Remarks 8
Management's Discussion and Analysis
of Financial Condition and
Results of Operations 9
Part II. Other Information 13
Signature 14
Exhibit Index E-1
FREEPORT-McMoRan INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
---------------------
FREEPORT-McMoRan INC.
CONDENSED BALANCE SHEETS (Unaudited)
June 30, December 31,
1995 1994
---------- ------------
ASSETS (In Thousands)
Current assets:
Cash and short-term investments $ 31,484 $ 13,810
Accounts receivable 181,727 89,925
Inventories 105,800 109,677
Prepaid expenses and other 2,734 7,433
---------- ----------
Total current assets 321,745 220,845
Property, plant and equipment, net 988,515 964,539
Net assets of discontinued operations 317,036 328,880
Other assets 71,336 135,178
---------- ----------
Total assets $1,698,632 $1,649,442
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 198,989 $ 191,239
Current portion of long-term debt 350 314
---------- ----------
Total current liabilities 199,339 191,553
Long-term debt, less current portion 491,409 1,122,070
Accrued postretirement benefits and
pension costs 164,123 158,707
Reclamation and mine shutdown reserves 133,678 112,777
Other liabilities and deferred credits 111,654 77,034
Minority interests 205,734 217,768
Stockholders' equity (deficit) 392,695 (230,467)
---------- ----------
Total liabilities and stockholders' equity $1,698,632 $1,649,442
========== ==========
The accompanying notes are an integral part of these financial statements.
FREEPORT-McMoRan INC.
STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands, Except Per Share Amounts)
Revenues $233,398 $186,946 $487,877 $370,387
Cost of sales:
Production and delivery 165,924 140,065 338,426 272,946
Depreciation and
amortization 7,072 10,509 21,412 27,846
-------- -------- -------- --------
Total cost of sales 172,996 150,574 359,838 300,792
Exploration expenses - 1,586 - 5,904
General and administrative
expenses 13,218 14,713 30,981 31,360
-------- -------- -------- --------
Total costs and expenses 186,214 166,873 390,819 338,056
-------- -------- -------- --------
Operating income 47,184 20,073 97,058 32,331
Interest expense, net (15,519) (17,755) (31,230) (37,026)
Other income, net 440 924 651 (1,253)
-------- -------- -------- --------
Income (loss) before
income taxes and
minority interests 32,105 3,242 66,479 (5,948)
(Provision) benefit for
income taxes (5,717) 1,960 (6,557) 7,411
Minority interests in net
income of consolidated
subsidiaries (19,127) (10,023) (50,411) (16,500)
-------- -------- -------- --------
Income (loss) from
continuing operations
before extraordinary item 7,261 (4,821) 9,511 (15,037)
Discontinued operations 292,847 18,672 315,457 52,307
-------- -------- -------- --------
Income before extraordinary
item 300,108 13,851 324,968 37,270
Extraordinary loss - (3,649) - (9,108)
-------- -------- -------- --------
Net income 300,108 10,202 324,968 28,162
Preferred dividends (34,623) (5,568) (40,092) (11,155)
-------- -------- -------- --------
Net income applicable to
common stock $265,485 $ 4,634 $284,876 $ 17,007
======== ======== ======== ========
Continued on following page.
FREEPORT-McMoRan INC.
STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- --------
(In Thousands, Except Per Share Amounts)
Net income (loss) per primary share:
Continuing operations $ .05 $(.03) $ .07 $(.11)
Discontinued operations 1.98 .13 2.21 .37
Extraordinary loss - (.03) - (.06)
Preferred dividends (.23) (.04) (.28) (.08)
----- ----- ----- -----
$1.80 $ .03 $2.00 $ .12
===== ===== ===== =====
Net income (loss) per fully diluted share:
Continuing operations $ .08 $(.03) $ .14 $(.11)
Discontinued operations 1.65 .13 1.78 .37
Extraordinary loss - (.03) - (.06)
Preferred dividends (.19) (.04) (.19) (.08)
----- ----- ----- -----
$1.54 $ .03 $1.73 $ .12
===== ===== ===== =====
Average common and common equivalent
shares outstanding:
Primary 147,823 139,860 142,515 140,360
======= ======= ======= =======
Fully diluted 177,360 139,860 177,825 140,360
======= ======= ======= =======
Dividends per common share:
Cash $ - $ - $ - $ .3125
Property - .7555 .2602 .7555
----- ------ ------ -------
$ - $.7555 $.2602 $1.0680
===== ====== ====== =======
The accompanying notes are an integral part of these financial statements.
FREEPORT-McMoRan INC.
STATEMENTS OF CASH FLOW (Unaudited)
Six Months Ended
June 30,
---------------------
1995 1994
-------- --------
Cash flow from operating activities: (In Thousands)
Net income $324,968 $ 28,162
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary loss - 9,108
Depreciation and amortization 72,892 66,621
Amortization of debt discount and financing costs 15,211 16,754
Deferred income taxes 83,715 46,412
Recognition of unearned income (36,207) -
Minority interests' share of net income 133,403 57,872
Cash distribution from IMC-Agrico in excess of
interest in capital 21,347 25,457
Reclamation and mine shutdown expenditures (4,928) (7,385)
Gain on FCX securities transactions (391,224) (69,972)
Loss on recapitalization of FTX securities 43,316 -
(Increase) decrease in working capital, net
of effect of acquisition:
Accounts receivable 2,006 41,716
Inventories (21,419) (32,862)
Prepaid expenses and other 3,471 (1,146)
Accounts payable and accrued liabilities 12,078 (21,225)
Other 10,299 4,472
-------- --------
Net cash provided by operating activities 268,928 163,984
-------- --------
Cash flow from investing activities:
Capital expenditures:
FCX (308,099) (329,662)
FRP (15,484) (11,914)
Other (1,821) (22,870)
Sales of assets 375 44,735
-------- --------
Net cash used in investing activities (325,029) (319,711)
-------- --------
Cash flow from financing activities:
Proceeds from sale of:
FRP 8 3/4% Senior subordinated notes - 146,125
FCX Preferred Stock - 158,476
FCX 9 3/4% Senior subordinated notes - 116,276
FCX Class A common shares 447,006 -
Purchase of FTX, FCX and FRP equity shares (126,125) (75,733)
Distributions paid to minority interests (121,119) (113,542)
Distribution of MOXY shares - (35,441)
Proceeds from (repayments of) debt, net (65,009) 143,061
Purchase/redemption of FTX securities:
10 7/8% Senior debentures - (142,919)
ABC debentures (280,826) -
6.55% Senior notes (14,955) -
Net proceeds from infrastructure financing 228,899 -
FTX cash dividends paid:
Common stock - (44,023)
Preferred stock (6,565) (11,173)
Other (629) 2,278
-------- --------
Net cash provided by financing activities 60,677 143,385
-------- --------
Net increase (decrease) in cash and short-term
investments 4,576 (12,342)
Net (increase) decrease attributable to discontinued
operations 13,098 (8,185)
Cash and short-term investments at beginning of year 13,810 25,987
-------- --------
Cash and short-term investments at end of period $ 31,484 $ 5,460
======== ========
The accompanying notes are an integral part of these financial statements.
FREEPORT-McMoRan INC.
NOTES TO FINANCIAL STATEMENTS
1. DISCONTINUED OPERATIONS
In May 1994, Freeport-McMoRan Inc. (FTX) announced that it was taking steps to
effect the tax-free distribution to its common stockholders of all the
Freeport-McMoRan Copper & Gold Inc. (FCX) Class B common stock it owned. In
connection with a recapitalization of its liabilities, FTX sold 21.5 million
shares of FCX Class A common stock in May 1995 for $450 million cash,
recognizing a pretax gain of $391.2 million, and another 2.4 million shares in
July 1995 for $50.2 million cash (a pretax gain of approximately $43 million
will be recognized in the third quarter) to RTZ Corporation PLC (RTZ). On
July 5, 1995, the FTX Board of Directors declared a distribution of
117,909,323 shares of FCX Class B common stock to FTX common stockholders of
record on July 17, 1995. As a result, FTX no longer owns any interest in FCX.
FTX's financial statements have been restated to reflect the metals segment as
a discontinued operation. Discontinued operations results follow (in
millions):
Second Quarter Six Months
------------------ ------------------
1995 1994 1995 1994
------ ------ ------ ------
Revenues $421.5 $281.5 $830.3 $547.6
====== ====== ====== ======
Income from discontinued
operations $110.5 $46.8 $222.0 $95.3
Minority interest (43.5) (21.0) (83.0) (41.4)
Provision for taxes (49.3) (24.0) (98.6) (47.1)
------ ----- ------ -----
17.7 1.8 40.4 6.8
Gain on FCX securities
transactions 391.2 26.0 391.2 70.0
Deferred taxes no longer required 76.2 - 76.2 -
Recapitalization losses (Note 2) (43.3) - (43.3) -
Provision for taxes (149.0) (9.1) (149.0) (24.5)
------ ----- ------ -----
$292.8 $18.7 $315.5 $52.3
====== ===== ====== =====
Income from discontinued operations includes allocated interest from FTX
totaling $7.2 million and $5.1 million for the second quarter of 1995 and
1994, respectively, and $16.6 million and $9.3 million for the six-month
period of 1995 and 1994, respectively.
2. RECAPITALIZATION ACTIVITIES
In April 1995, FTX exchanged 11.4 million FTX common shares for 4 million
shares of its $4.375 Convertible Exchangeable Preferred Stock ($4.375
Preferred Stock) in accordance with an exchange offer whereby FTX temporarily
increased the FTX shares issuable upon conversion. As a result of the
exchange offer, FTX recorded a noncash charge of $33.5 million to preferred
dividends in the second quarter of 1995. As of June 30, 1995, 1 million
shares ($50.1 million) of $4.375 Preferred Stock remained outstanding and,
after adjustment for the FCX Class B share distribution, are convertible into
FTX common stock at a conversion price of $4.56 per share or the equivalent of
10.96 shares of FTX common stock for each share of $4.375 Preferred Stock.
In June 1995, FTX redeemed $749.2 million principal amount of its Zero
Coupon Convertible Subordinated Debentures (ABC Debentures) for $280.8 million
cash (equal to book value). Additionally in June 1995, FTX redeemed $16.4
million face amount of 6.55% Convertible Subordinated notes (6.55% Notes),
with a book value of $14.1 million, for $15 million of cash. Prior to the
redemption, FTX increased the number of FTX common shares that would be
received upon conversion of the 6.55% Notes to 55.95 shares per $1,000
principal amount. Holders of $356.6 million face amount of 6.55% Notes
converted their notes at the enhanced rate into 19.9 million FTX common
shares, resulting in an increase of $346.4 million to stockholders' equity.
FTX recorded a loss on recapitalization of the ABC Debentures and 6.55% Notes
totaling $43.3 million primarily because of enhancements to the conversion
rates.
3. NEW CREDIT FACILITY
In July 1995, FTX entered into a new credit facility providing $400 million of
credit, all of which is available to Freeport-McMoRan Resource Partners,
Limited Partnership (FRP) and $75 million of which is available to FTX as the
holding company. The new variable rate facility matures July 2000 and has
covenants and security requirements which are similar to FTX's previous credit
agreement. As part of the FTX restructuring, FCX assumed $90 million of the
$158.8 million guarantee of FM Properties Inc. debt and FTX agreed to pay an
annual 3 percent fee to FCX on the amount guaranteed. Also, in July 1995 FTX
received payment for an intercompany note from FCX ($97.7 million at June 30,
1995, included in accounts receivable). These funds, as well as remaining
proceeds from the sale of FCX Class A common stock to RTZ, were used to pay
debt at the FTX parent company level.
4. ACQUISITION
In January 1995, FRP acquired essentially all of the domestic assets of
Pennzoil Co.'s sulphur division. Pennzoil will receive quarterly payments
from FRP over 20 years based on the prevailing price of sulphur. The
installment payments may be terminated earlier by FRP through the exercise of
a $65 million call option or by Pennzoil through a $10 million put option.
Neither option may be exercised prior to 1999. The purchase price allocation
follows (in thousands):
Current assets $ 5,635
Current liabilities (9,522)
Property, plant and equipment 60,159
Accrued long-term liabilities (56,272)
-------
Net cash investment $ -
=======
Accrued long-term liabilities include the estimated future installment
payments based on the prevailing sulphur price upon acquisition and estimated
future reclamation and mine shutdown costs.
5. RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the first six months of 1995 was
2.7 to 1 compared with a shortfall of $14.9 million for the 1994 period. For
this calculation, earnings are income from continuing operations before income
taxes, minority interests and fixed charges. Fixed charges include interest
and that portion of rent deemed representative of interest.
-----------------
Remarks
The information furnished herein should be read in conjunction with FTX's
financial statements contained in its 1994 Annual Report to stockholders and
incorporated by reference in its Annual Report on Form 10-K.
The information furnished herein reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the results for the
periods. All such adjustments are, in the opinion of management, of a normal
recurring nature.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESTRUCTURE AND RECAPITALIZATION
On July 5, 1995, Freeport-McMoRan Inc. (FTX) declared a special tax-free
dividend of the Class B common stock of Freeport-McMoRan Copper & Gold Inc.
(FCX) to FTX common stockholders of record on July 17, 1995, representing
0.701734 share of FCX Class B common stock per FTX common share (Note 1).
Prior to the distribution, FTX completed certain recapitalization activities,
including the sale of 23.9 million shares of FCX Class A common stock for
$500.2 million (Note 1), the conversion/redemption of FTX's preferred stock
and publicly held debt securities (Note 2) and the repayment of FTX's parent
company bank borrowings (Note 3). These activities resulted in the separation
of FTX's copper/gold and agricultural minerals businesses into two independent
financial and operating entities. FTX's ongoing business operations now
essentially consist of its 51.4 percent ownership in Freeport-McMoRan Resource
Partners, Limited Partnership (FRP).
RESULTS OF OPERATIONS
Because FTX no longer owns any interest in FCX, FTX's financial results were
restated to reflect the FCX metals segment as discontinued operations.
Second Quarter Six Months
----------------- -------------------
1995 1994 1995 1994
------ ------ ------ ------
(In Millions, Except Per Share Amounts)
Revenues $233.4 $186.9 $487.9 $370.4
Operating income 47.2 20.1 97.1 32.3
Income (loss) from continuing
operations $ 7.3 $ (4.8) $ 9.5 a $(15.0)
Discontinued operations (Note 1) 292.8 18.7 315.5 52.3
Extraordinary loss - (3.7) - (9.1)
Preferred dividends (34.6)b (5.6) (40.1)b (11.2)
------ ------ ------ ------
Net income to common stock $265.5 $ 4.6 $284.9 $ 17.0
====== ====== ====== ======
Net income (loss) per primary share:
Continuing operations $ .05 $(.03) $ .07 a $(.11)
Discontinued operations 1.98 .13 2.21 .37
Extraordinary loss - (.03) - (.06)
Preferred dividends (.23)b (.04) (.28)b (.08)
----- ----- ----- -----
$1.80 $ .03 $2.00 $ .12
===== ===== ===== =====
a. Includes a $5.2 million minority interest charge ($0.04 per share)
because FTX was not paid a proportionate share of FRP distributions, as
discussed below. During the second-quarter and six-month periods of
1994, FTX recognized $15.5 million and $28.1 million, respectively, of
the gain deferred in connection with the public sale of FRP units in
1992.
b. Includes a $33.5 million charge ($0.23 per share in the second quarter
and $0.24 per share in the six-month period) for the $4.375 Convertible
Exchangeable Preferred Stock exchange offer (Note 2).
FTX benefited from significantly higher operating results from its
agricultural minerals segment during the 1995 periods, reflecting the
strengthening in the phosphate fertilizer markets which began in mid-1993 and
has continued into 1995. Subsequent to the May 1994 formation of McMoRan Oil
& Gas Co. (MOXY), FTX has not incurred any material exploration costs.
General and administrative expenses during the six-month 1995 period include a
$1.2 million charge for the reorganization of IMC-Agrico Company's marketing
function, whereas the six-month 1994 period benefited from a $2.2 million
reduction in the estimated cost of excess office space. Based upon current
market prices for FTX's common stock, third quarter general and administrative
expenses are expected to reflect a charge of approximately $10-$15 million
because of the rise in the price of FTX's common stock subsequent to June 30,
1995. Interest expense was lower in the 1995 quarter primarily because of
reductions to debt levels, which will continue to benefit future periods.
Minority interests share of net income was higher in the 1995 quarter and six-
month period because of the higher level of earnings at FRP and the minority
interest charge discussed above.
Agricultural Minerals Operations
- --------------------------------
FTX's agricultural minerals segment, which includes FRP's fertilizer and
phosphate rock operations (conducted through IMC-Agrico)and its sulphur
business, reported second-quarter 1995 operating income of $48.8 million on
revenues of $224.2 million compared with operating income of $30.4 million on
revenues of $176.5 million for the 1994 period. Operating income for the
first six months of 1995 was $104.2 million on revenues of $468.9 million
compared with operating income of $51.4 million on revenues of $349 million
for the year-ago period. Significant items impacting operating income follow
(in millions):
Second Six
Quarter Months
------- ------
Agricultural minerals operating income - 1994 $30.4 $ 51.4
----- ------
Increases (decreases):
Sales volumes 19.7 53.0
Realizations 29.2 68.1
Other (1.2) (1.2)
----- ------
Revenue variance 47.7 119.9
Cost of sales (30.3)* (67.7)*
General and administrative and other 1.0 .6
----- ------
18.4 52.8
----- ------
Agricultural minerals operating income - 1995 $48.8 $104.2
===== ======
* Includes a reduction to depreciation and amortization of $11.3 million and
$6.3 million for the second quarter of 1995 and 1994, respectively, and $16.1
million and $7.2 million for the six-month period of 1995 and 1994,
respectively, caused by FRP's disproportionate interest in IMC-Agrico cash
distributions.
FRP's second-quarter 1995 phosphate fertilizer sales volumes were
slightly higher than those of the year-ago quarter, with IMC-Agrico
experiencing improved export sales for diammonium phosphate (DAP), its
principal fertilizer product. Domestic fertilizer demand was hampered by wet
field conditions which delayed the planting of a significant portion of this
season's crop and prevented certain acreage from being planted. Despite
continued strong export shipments, lower spring domestic demand, coupled with
industry operating rates over 100 percent, caused a modest build-up in
domestic phosphate fertilizer producers' stocks in the second quarter and
contributed to about a 10 percent decline in market prices from their high
point. In response to the weakened market, IMC-Agrico temporarily closed its
Taft, Louisiana facility in May 1995 and resumed production on August 7, 1995,
and accelerated planned maintenance turnarounds at three other fertilizer
facilities. FRP's average DAP realization increased 14 percent from the year-
ago period (virtually unchanged from the previous quarter). FRP's 1995 DAP
realizations include a large first-half 1995 forward sale to China contracted
in November 1994 at then current market prices. Unit production costs
benefited from ongoing cost savings achieved at IMC-Agrico, somewhat offset by
higher raw material costs for ammonia, although down from their market highs,
and increased maintenance costs.
During the second half of 1995, FRP will benefit from a significant
forward sales agreement reached between China and IMC-Agrico. IMC-Agrico is
committed to maintaining a reasonable balance between supply and demand and
will continue to monitor market conditions and make production level
adjustments as necessary.
FRP's second-quarter 1995 phosphate rock sales volumes increased 22
percent from the 1994 period, reflecting increased demand and the addition of
a long-term supply contract in October 1994.
Main Pass sulphur production averaged 6,000 tons per day (TPD) during
the second quarter of 1995, while FRP's Culberson mine, acquired in January
1995 as part of the Pennzoil sulphur asset purchase (Note 4), produced an
average of 2,250 TPD. FRP's increased production capacity, combined with
continued strong demand from the domestic phosphate fertilizer industry,
resulted in a 52 percent increase in sales volumes. FRP also benefited from
the continued strengthening in Tampa, Florida sulphur prices. To the extent
U.S. phosphate fertilizer production remains strong, improved sulphur demand
is expected to continue, although the availability of Canadian sulphur limits
the potential for significant price increases.
Second Quarter Six Months
--------------------- ----------------------
1995 1994 1995 1994
--------- --------- --------- ---------
Phosphate fertilizers - primarily DAP
Sales (short tons)a 760,400 734,700 1,660,300 1,528,800
Average realized priceb
All phosphate fertilizers $163.53 $144.30 $163.68 $139.30
DAP 169.01 148.43 169.10 144.03
Phosphate rock
Sales (short tons)a 1,221,500 1,004,100 2,560,200 2,010,600
Average realized priceb $23.18 $23.24 $22.10 $22.47
Sulphur
Sales (long tons)c 772,700 508,100 1,533,300 1,023,600
a. Reflects FRP's 45.1 percent and 46.5 percent share of the IMC-Agrico
assets for the years ended June 30, 1995 and 1994, respectively, while
FRP received 55 percent and 58.6 percent of the cash flow generated
during such periods. FRP's share of the IMC-Agrico assets for the year
ended June 30, 1996 is 43.6 percent, while it will receive 53.1 percent
of the cash flow.
b. Represents average realization f.o.b. plant/mine.
c. Includes 189,700 tons and 187,700 tons for the second quarter of 1995
and 1994, respectively, and 368,600 tons and 374,800 tons for the six-
month periods of 1995 and 1994, respectively, which represent internal
consumption that are not included in sales for accounting purposes.
Oil And Gas Operations
- ----------------------
Prior to the May 1994 distribution of MOXY shares, FTX's oil and gas
operations included exploring for new reserves. These activities generated
losses of $2.8 million and $11.1 million for the second quarter and six month
period of 1994, respectively. FTX's only significant oil and gas operations
subsequent to the MOXY distribution are FRP's production of oil at Main Pass,
as follows:
Second Quarter Six Months
------------------ --------------------
1995 1994 1995 1994
------- ------- --------- ---------
Sales (barrels) 541,000 611,900 1,161,800 1,435,100
Average realized price $16.71 $14.52 $15.99 $12.88
Earnings (in millions) 1.4 1.0 2.5 2.0
Main Pass oil production was below the year-ago quarter level, as
expected. Net production for 1995 is estimated to total approximately 2.3
million barrels, as the benefits of a 1994 redevelopment program are expected
to partially offset declining reservoir production.
CAPITAL RESOURCES AND LIQUIDITY
Cash flow from operating activities increased during the first six months of
1995 to $268.9 million, compared with $164 million for the 1994 period,
primarily because of the significant increase in operating income. Cash flow
from operating activities included cash from discontinued operations totaling
$138.6 million and $95.9 million in 1995 and 1994, respectively. Net cash
used in investing activities was $325 million compared with $319.7 million for
the 1994 period. The 1995 period reflects lower expenditures by discontinued
operations and the 1994 period includes the early receipt of proceeds from the
geothermal notes receivable. Net cash provided by financing activities was
$60.7 million compared with $143.4 million in the 1994 period. Sales of FRP
and FCX securities totaled $420.9 million in the six-month 1994 period.
During the six-month 1995 period, FTX sold 21.5 million shares of FCX Class A
common shares to RTZ for $447 million (net of $3 million of expenses). In
July 1995, RTZ purchased an additional 2.4 million shares of FCX Class A
common stock from FTX for $50.2 million. During the 1995 period purchases of
FTX, FCX and FRP equity securities totaled $126.1 million compared with $75.7
million in the 1994 period under an established program to acquire equity
securities when warranted by market conditions. The 1995 period included net
repayments of debt totaling $65 million compared with net borrowings of $143.1
million for the 1994 period. During 1995, FTX redeemed $280.8 million of its
ABC debentures and $15 million of its 6.55% Senior notes while the 1994 period
included payments of $142.9 million for the 10 7/8% Senior debentures. During
1995, PT-FI received $228.9 million from the sale of certain of its
infrastructure assets. FTX has not paid a cash dividend during 1995, while
FTX paid an aggregate of $44 million in cash dividends on its common stock
during the 1994 period.
Publicly owned FRP units have cumulative rights to receive quarterly
distributions of 60 cents per unit through the distribution for the quarter
ending December 31, 1996 (the Preference Period) before any distributions may
be made to FTX. During the first quarter of 1995, FTX received a 26 cents per
unit distribution on the FRP units that it owned, resulting in an additional
minority interest charge of $8.8 million. During the second quarter of 1995,
FTX received 64.5 cents per unit. On July 21, 1995, FRP declared a
distribution of 60 cents per publicly held unit ($30.2 million) and 27 cents
per FTX-owned unit ($14.6 million), payable August 15, 1995 bringing the total
unpaid distribution due FTX to $368.8 million. As a result, an additional
$8.4 million minority interest charge will be recognized by FTX during the
third quarter of 1995. Unpaid distributions due FTX will be recoverable from
one-half of the excess of future quarterly FRP distributions over 60 cents per
unit for all units. The July 1995 distributable cash included $38.1 million
from IMC-Agrico. FRP's future distributions will be dependent on the
distributions received from IMC-Agrico and future cash flow from FRP's sulphur
and oil operations. In future periods, FTX's share of the reported financial
results of FRP will depend on the extent to which FTX receives its
proportionate share of FRP distributions. To the extent that public
unitholders receive a disproportionately large share of FRP distributions, FTX
will recognize a smaller share of FRP's reported earnings than would be
represented by its percentage ownership of FRP.
Because of the recapitalization and restructuring activities discussed
above, FTX's parent company obligations have been significantly reduced.
However, FTX will have certain cash requirements relating to its past business
activities including income tax settlements, oil and gas payments and employee
benefit liabilities. It potentially could also have future cash requirements
relating to its guarantee of the debt of FM Properties Inc. (Note 3). FTX
anticipates that its cash distributions from FRP and amounts available to it
under the new credit facility (Note 3) will be sufficient to meet these
obligations. The new credit facility provides $400 million of credit
available to FTX/FRP ($216 million available at July 31, 1995), and $75
million of which is available to FTX as the holding company ($75 million
available at July 31, 1995). On August 1, 1995, the FTX Board of Directors
established a new dividend policy for FTX common stock and declared a regular
quarterly cash dividend of $0.015 per common share, payable on September 1,
1995. The new dividend policy will allow FTX to use additional available
funds to repurchase FTX stock, purchase FRP units and/or invest in new growth
opportunities.
--------------------------------
The results of operations reported and summarized above are not necessarily
indicative of future operating results.
FREEPORT-McMoRan INC.
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
(a) The annual meeting of the security holders of the registrant was
held on May 2, 1995, and proxies for such meeting were solicited pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended.
(c) At the annual meeting four of the fifteen directors of the
registrant were elected to a three-year term. Each of management's nominees
was elected, and there was no solicitation in opposition to management's
nominees. Set forth immediately below is the name of each such nominee, the
number of shares voted for each such nominee, and the number of shares voted
withheld from each such nominee. There were no abstentions or broker non-
votes with respect to the election of directors.
Number of Shares
Number of Shares Voted Voted Withheld From
Name of Nominee For Nominee Nominee
-------------------------- ------------------------ ------------------
Gabrielle K. McDonald 115,171,075 958,220
James R. Moffett 115,315,045 814,250
George Putnam 115,296,851 832,444
B.M. Rankin, Jr. 113,631,159 2,498,136
At the annual meeting, the board of directors of the registrant submitted
to a vote of the security holders a proposal to ratify the appointment of
Arthur Andersen LLP as the independent auditors to audit the financial
statements of the registrant and its subsidiaries for the year 1995. The
security holders approved such proposal by an affirmative vote of 115,488,247
shares. There were 338,579 shares voted against such proposal, and holders of
302,469 shares abstained from voting with respect to such proposal. There
were no broker non-votes with respect to such proposal.
Item 6. Exhibits and Reports on Form 8-K.
- ------------------------------------------
(a) The list of exhibits appearing on page E-1 hereof and the exhibit
immediately following said page are incorporated herein by reference.
(b) Reports on Form 8-K.
One report on Form 8-K was filed by the registrant during the quarter for
which this report is filed. The Form 8-K was executed and filed on May 26,
1995, reported information under Items 2 and 7, and contained the following
financial statements for Freeport-McMoRan Inc. and its consolidated
subsidiaries: Unaudited Pro Forma Statement of Income for the Year Ended
December 31, 1994, Unaudited Pro Forma Statement of Income for the Three
Months Ended March 31, 1995, and Unaudited Pro Forma Condensed Balance Sheet
as of March 31, 1995.
FREEPORT-McMoRan INC.
SIGNATURE
----------
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.
FREEPORT-McMoRan INC.
By: /s/ John T. Eads
--------------------------
John T. Eads
Controller - Financial Reporting
(authorized signatory and
Principal Accounting Officer)
Date: August 11, 1995
FREEPORT-McMoRan INC.
EXHIBIT INDEX
Sequentially
Numbered
Number Description Page
- ------ ----------- ------------
2.1 Amendment dated May 31, 1995, to Agreement
dated as of May 2, 1995, between Freeport-
McMoRan Inc. and Freeport-McMoRan Copper & Gold
Inc., on the one hand, and The RTZ Corporation
PLC, RTZ Indonesia Limited, and RTZ America,
Inc., on the other hand
11.1 Freeport-McMoRan Inc. Computation of Net Income
per Common and Common Equivalent Share
27.1 Freeport-McMoRan Inc. Financial Data Schedule
Exhibit 2.1
Privileged and Confidential
May 31, 1995
The RTZ Corporation PLC &
RTZ Indonesia Limited
6 St. James's Square
London SW1Y 4LD
England
Attention: The Company Secretary
RTZ America, Inc.
100 Quentin Roosevelt Blvd.
Suite 503
Garden City, New York 11530
Attention: The Company Secretary
Ladies and Gentlemen:
Reference is made to the Agreement, dated as of
May 2, 1995, by and between Freeport-McMoRan Inc. ("Parent") and
Freeport-McMoRan Copper & Gold Inc. (the "Company), on the one
hand, and The RTZ Corporation PLC ("RTZ"), RTZ Indonesia Limited
(the "Purchaser") and RTZ America, Inc. ("RTZA"), on the other
hand (the "Agreement"). Capitalized terms used herein have the
meanings specified in the Agreement, unless otherwise defined
herein.
1. The parties agree that Section 9.5.1 of the
Agreement is not intended to, and does not restrict RTZ or its
Affiliates from acquiring Parent Common Stock upon conversion of
any 6.55% Notes, however such 6.55% Notes are acquired.
2. The parties agree that (a) the term
"Registrable Securities" in the Registration Rights Agreement,
dated as of May 12, 1995, by and among Parent, on the one hand,
and RTZ and RTZA, on the other hand (the "Parent Registration
Rights Agreement"), includes any shares of Parent Common Stock
acquired by RTZ or its Affiliates upon conversion of any 6.55%
Notes, however such 6.55% Notes are acquired, to the extent that
such shares of Parent Common Stock are not freely transferable by
RTZ or its Affiliates without registration under the Securities
Act and (b) the term "Registrable Securities" in the Registration
Rights Agreement, dated as of May 12, 1995, between the Company,
on the one hand, and RTZ, RTZA and the Purchaser, on the other
hand (the "Company Registration Rights Agreement") includes any
shares of Class B Common Stock acquired by RTZ and/or its
Affiliates in the Spin-Off as a result of ownership of Parent
Common Stock acquired by RTZ or its Affiliates upon conversion of
any 6.55% Notes, however such 6.55% Notes are acquired.
3. The first sentence of Schedule 9.5.2 to the
Agreement is hereby amended and restated to read in its entirety
as follows:
"RTZA, RTZ and their Affiliates will not during the
five-year period following the Spin-Off sell, exchange,
transfer or otherwise dispose of ("Dispose of") any
shares of Parent Common Stock received upon the
conversion of the 6.55% Notes or any shares of the
Class B Common Stock received in the Spin-Off with
respect thereto unless they first obtain either a
supplemental private letter ruling from the IRS or an
opinion of nationally recognized tax counsel,
reasonably satisfactory to Parent, that such sale,
exchange, transfer or other disposition (a
"Disposition") will not adversely affect the tax-free
nature of the Spin-Off or the ability of Parent to rely
on the Spin-Off Private Letter Ruling, in each case
other than with respect to Section 367(e); provided
that this restriction will not apply to the Disposition
by RTZA, RTZ and their Affiliates following the Spin-
Off of (i) shares of Parent Common Stock that, when
combined with any other shares of Parent Common Stock
Disposed of by RTZA, RTZ and their Affiliates following
the Spin-Off (other than in the manner described in
(iii) below), aggregate less than 1% of the number of
shares of Parent Common Stock outstanding immediately
following the Spin-Off, (ii) shares of Class B Common
Stock that, when combined with any other shares of
Class B Common Stock Disposed of by RTZA, RTZ and their
Affiliates following the Spin-Off (other than in the
manner described in (iii) below), aggregate less than
1% of the number of shares of Company Common Stock
outstanding immediately following the Spin-Off, or
(iii) shares of both Parent Common Stock and Class B
Common Stock where (x) such shares are Disposed of in
accordance with a single plan of disposition that has
been communicated by RTZA, RTZ or their Affiliates to a
sales agent, (y) the Disposition is completed within 60
business days from the date of the first sale of Parent
Common Stock or Class B Common Stock pursuant to such
plan and (z) the shares of Parent Common Stock and
Class B Common Stock Disposed of represent equal
percentages of the respective numbers of shares of the
Parent Common Stock and the Class B Common Stock that
RTZA, RTZ and their Affiliates, in the aggregate, held
immediately following the Spin-Off."
4. Except to the extent amended by this letter,
all of the provisions of the Agreement, the Parent Registration
Rights Agreement and the Company Registration Rights Agreement
shall continue in full force and effect and shall inure to the
benefit of and shall be binding upon the parties thereto and
their successors and permitted assigns.
If the foregoing accurately sets forth our
agreement, please so indicate by signing and returning to the
undersigned a copy of this letter, whereupon this letter
agreement shall become a binding agreement among us.
Very truly yours,
FREEPORT-McMoRan INC.
By /s/ James R. Moffett
Name: James R. Moffett
Title:Chairman of the Board
and Chief Executive Officer
FREEPORT-McMoRan COPPER &
GOLD, INC.
By /s/ Charles W. Goodyear
Name: Charles W. Goodyear
Title: Senior Vice President
and Chief Investment
Officer
ACCEPTED AND AGREED TO AS OF THE
DATE FIRST ABOVE WRITTEN:
THE RTZ CORPORATION PLC
By /s/ R. Adams
Name: Robert Adams
Title: Director
RTZ INDONESIA LIMITED
By /s/ M.M. Freeman
Name: Michael Freeman
Title: Director
RTZ AMERICA, INC.
By /s/ William M. Higgins
Name: William M. Higgins
Title: Vice President
EXHIBIT 11.1
FREEPORT-McMoRan INC.
COMPUTATION OF NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ----------------------
1995 1994 1995 1994
------- -------- -------- -------
Primary:
Net income applicable
to common stock $265,485 $ 4,634 $284,876 $17,007
======== ======== ======= =======
Average common shares
outstanding 146,921 138,860 141,814 139,360
Common stock
equivalents:
Stock options 902 1,000 701 1,000
------- ------- ------- -------
Common and common
equivalent shares 147,823 139,860 142,515 140,360
======= ======= ======= =======
Net income per common
and common
equivalent share $1.80 $.03 $2.00 $.12
===== ==== ===== ====
Fully diluted:
Net income applicable
to common stock:
Net income $265,485 $ 4,634 $284,876 $ 17,007
Plus preferred
dividends 1,096 - 6,564 -
Plus interest, net of
tax effect, on
convertible
subordinated
debentures 6,707 - 15,921 -
------- -------- -------- --------
Net income applicable
to common stock $273,288 $ 4,634 $307,361 $ 17,007
======== ======== ======== ========
Average common shares
outstanding 146,921 138,860 141,814 139,360
Common stock
equivalents:
Stock options 930 1,000 715 1,000
Convertible
securities:
Preferred stock 2,356 - 7,057 -
Convertible
subordinated
debentures 27,153 - 28,239 -
------- ------- ------ -------
Common and common
equivalent shares 177,360 139,860 177,825 140,360
======= ======= ======= =======
Net income per common
and common
equivalent share $1.54 $.03 $1.73 $.12
===== ==== ===== ====
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 31,484
<SECURITIES> 0
<RECEIVABLES> 42,212
<ALLOWANCES> 0
<INVENTORY> 105,800
<CURRENT-ASSETS> 321,745
<PP&E> 1,962,907
<DEPRECIATION> 974,392
<TOTAL-ASSETS> 1,698,632
<CURRENT-LIABILITIES> 199,339
<BONDS> 491,409
<COMMON> 197,862
0
50,084
<OTHER-SE> 144,749
<TOTAL-LIABILITY-AND-EQUITY> 1,698,632
<SALES> 487,877
<TOTAL-REVENUES> 487,877
<CGS> 359,838
<TOTAL-COSTS> 359,838
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,230
<INCOME-PRETAX> 66,479
<INCOME-TAX> 6,557
<INCOME-CONTINUING> 9,511
<DISCONTINUED> 315,457
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 284,876
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 1.73
</TABLE>
