SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 20, 1996
Freeport-McMoRan Inc.
Delaware 1-8124 13-3051048
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation or Number)
organization)
1615 Poydras Street
New Orleans, Louisiana 70112
Registrant's telephone number, including area code: (504) 582-4000
Item 5. Other Events.
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CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
From time to time, Freeport-McMoRan Inc. (the "Company") may
make certain written and oral forward-looking statements.
Important factors that could cause actual results to differ
materially from anticipated results or expectations include the
following: fluctuations in the actual or anticipated supply of
and demand for fertilizer products that are frequently affected
by rapidly changing agricultural conditions; changes in
governmental policies that affect the number of acres planted,
levels of grain stocks, the mix of crops planted and prevailing
crop prices; fluctuations in the supply of and demand for sulphur
and oil; imprecision in estimating sulphur and oil reserves;
possible increased environmental costs and liabilities arising
from the production, storage and distribution of phosphate
fertilizers and chemicals, sulphur and oil; unanticipated
industrial accidents; plant damage caused by severe weather or
natural disasters; unexpected geological conditions resulting in
cave-ins, flooding and rock-bursts and unexpected changes in rock
stability conditions; exchange rate fluctuations; fluctuations in
interest rates; unanticipated difficulties in obtaining necessary
financing; timing of necessary governmental permits and approvals
relating to operations, expansions of operations and financing of
operations; and difficulties in reaching agreements, or resolving
disputes, with joint venture partners, government officials,
suppliers or customers.
Many of these factors are beyond the Company's ability to
control or predict. Investors are therefore cautioned not to
place undue reliance upon forward-looking statements. The
Company assumes no obligation to update its forward-looking
statements, whether as a result of receiving new information, the
occurrence of future events or otherwise.
A more detailed discussion of certain of the foregoing
factors follows:
Seasonality and Volatility of Product Markets
The Company through Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP") sells its fertilizer products in the
domestic and export markets under spot market and long-term
contract terms. Agricultural demand for FRP's phosphate
fertilizers is materially affected by prevailing agricultural
conditions. Generally, FRP experiences seasonal increases in
domestic sales prior to the fall and spring planting of crops and
diminished sales after the spring planting season. Sales are
also influenced by current and projected grain inventories and
prices, quantities of fertilizers imported to and exported from
North America and various governments' agricultural policies.
Grain inventories are directly influenced by highly unpredictable
weather patterns and rapidly changing field conditions
(particularly during periods of high fertilizer consumption), and
by trends in world-wide food consumption.
Among the governmental policies that influence the
fertilizer markets are those directly or indirectly influencing
the number of acres planted, the level of grain stocks, the mix
of crops planted and crop prices. In the United States, the Farm
Bill enacted in April of 1996 ends government-guaranteed prices
for corn, other feed grains, cotton, rice and wheat, and provides
farmers with guaranteed payments that decline over seven years.
The Farm Bill also brought an immediate end to planting controls.
The Company has not yet determined whether the Farm Bill will
have an effect on its operations. The possibility that the U.S.
government or any foreign government may remove acres from
cultivation through subsidies to farmers is an important factor
influencing the demand for fertilizers.
All of the Company's major products are commodities, and the
markets and prices for such products have been volatile
historically and may continue to be volatile in the future. The
Company's operating margins and cash flow are subject to
substantial fluctuations in response to changes in supply and
demand for its products, conditions in the domestic and foreign
agriculture industry, market uncertainties and a variety of
additional factors beyond the Company's control.
Competition
The sulphur, fertilizer and phosphate rock mining industries
are highly competitive. Because competition is based largely on
price, maintaining low production costs is critical to
competitiveness. Any increases in the Company's costs or
decreases in its competitors' costs affect the Company's ability
to compete effectively. Because the market for the Company's
products is global, the Company faces intense competition from
overseas producers, most of which are state supported, especially
those in North Africa and the former Soviet Union. Additionally,
foreign competitors frequently are motivated by non-market
factors such as the need for hard currency, rather than by normal
considerations of profit and loss.
Environmental Matters
The Company's operations include exploration, mining,
development and production of natural resources, chemical
processing, and the extraction, handling, production, processing,
treatment, storage, transportation and disposal of materials and
waste products that may be toxic or hazardous. Consequently, the
Company is subject to numerous environmental laws and
regulations. The Company has incurred and will continue to
incur, significant capital expenditures and operating costs based
on these laws and regulations. Continued governmental and public
emphasis on environmental issues may result in increased capital
expenditures and operating costs in the future, although the
impact of future laws and regulations or future changes to
existing laws and regulations cannot be predicted or quantified.
Federal legislation (sometimes referred to as "Superfund"
legislation) imposes liability, without regard to fault, for
clean-up of certain waste sites, even though waste management
activities at the site may have been performed in compliance with
regulations applicable at the time. Under the Superfund
legislation, one responsible party may be required to bear more
than its proportional share of clean-up costs if payments cannot
be obtained from other responsible parties. In addition,
federal and state regulatory programs and legislation mandate
clean-up of certain wastes at operating sites. Governmental
authorities have the power to enforce compliance with these
regulations and permits, and violators are subject to civil and
criminal penalties, including fines, injunctions or both. Third
parties also have the right to pursue legal actions to enforce
compliance. Liability under these laws can be significant and
unpredictable.
The Company has received notices from governmental agencies
that it is one of many potentially responsible parties at certain
sites under relevant federal and state environmental laws. Some
of these sites involve significant cleanup costs. The ultimate
settlement of liability for the clean-up of such sites usually
occurs many years after the receipt of notices identifying
potentially responsible parties because of the many complex,
technical and financial issues associated with site clean-up.
The Company cannot predict its potential liability for the clean-
up costs that it may incur in the future.
Operating Hazards
FRP's offshore sulphur mining and oil production operations,
and its marine transportation operations, are subject to marine
perils, including collisions, fire, explosions, hurricanes and
other adverse weather conditions. FRP's mining operations are
also subject to risks such as unexpected geological conditions
resulting in cave-ins, flooding and rock-bursts and unexpected
changes in rock stability conditions. FRP's oil exploration and
production activities are subject to risks including blowouts,
cratering and fires, each of which could result in personal
injury to personnel or damage to property and the environment.
The Company's operations may be subject to significant
interruption, and the Company may be subject to significant
liability due to industrial accidents occurring at one or more of
its plants, or drilling or mining operations, or severe weather
or natural disaster damage to any one or more its plants, or
drilling or mining operations.
Foreign Sales
A significant portion of the Company's revenues come from
sales outside of the United States. The Company's foreign sales
are subject to numerous risks including changes in currency and
exchange controls, the availability of foreign exchange, laws,
regulatory policies and actions affecting foreign trade and
government subsidies, tariffs and quotas.
SIGNATURE
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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/ William J. Blackwell
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William J. Blackwell
Controller
(authorized signatory and
Principal Accounting Officer)
Date: December 20, 1996
