SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] 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 1-8124
Freeport-McMoRan Inc.
DELAWARE 13-3051048
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1615 Poydras Street
New Orleans, Louisiana 70112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 582-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
___________________ ________________
Common Stock Par Value $.01 per Share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
-----
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $1,133,832,000 on March 8, 1996.
On March 8, 1996, there were issued and outstanding 27,307,870 shares of the
Registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to stockholders for the year ended
December 31, 1995 are incorporated by reference into Parts II and IV of this
Report and portions of the registrant's Proxy Statement dated March 22, 1996,
submitted to the registrant's stockholders in connection with its 1996 Annual
Meeting to be held on April 30, 1996 are incorporated by reference into Part
III of this Report.
_______________________________________________________________________________
TABLE OF CONTENTS
Page
Part I.......................................................................1
Items 1. and 2. Business and Properties......................................1
Overview...............................................................1
General........................................................1
Recapitalization Activities and Distribution of FCX............1
Agricultural Minerals..................................................2
Introduction...................................................2
Fertilizer Business-IMC-Agrico Company.........................3
Phosphate Rock.................................................4
Phosphate Fertilizers..........................................4
Animal Feed Ingredients........................................5
Marketing......................................................5
Sulphur Business.......................................................5
Production.....................................................6
Marketing......................................................6
Oil and Natural Gas....................................................6
General................................................................7
Competition....................................................7
Operating Hazards..............................................7
Environmental Matters..........................................7
Relationship between the FTX Group and FRP.............................8
Management and Ownership.......................................8
Credit Arrangements............................................8
Conflicts of Interest..........................................9
Administrative Services Agreement..............................9
Employees..............................................................9
Item 3. Legal Proceedings...................................................10
Item 4. Submission of Matters to a Vote of Security Holders.................10
Executive Officers of the Registrant..................................10
Part II.....................................................................11
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.................................................11
Item 6. Selected Financial Data.............................................11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................11
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure................................................11
Part III....................................................................12
Item 10. Directors and Executive Officers of the Registrant.................12
Item 11. Executive Compensation.............................................12
Item 12. Security Ownership of Certain Beneficial Owners and Management.....12
Item 13. Certain Relationships and Related Transactions.....................12
Part IV.....................................................................13
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K....13
Signatures.................................................................S-1
Index to Financial Statements..............................................F-1
Report of Independent Public Accountants...................................F-1
Exhibit Index..............................................................E-1
PART I
Items 1. and 2. Business and Properties.
OVERVIEW
General
Freeport-McMoRan Inc., a Delaware corporation formed in 1981 ("FTX" or
the "Company") through Freeport-McMoRan Resource Partners, Limited Partnership
("FRP") is engaged in the mining and sale of phosphate rock, the production,
distribution and sale of phosphate-based fertilizers and animal feed
ingredients, and is the largest producer of Frasch sulphur in the world. See
"Agricultural Minerals." Through FRP, FTX is also engaged in the purchase,
transportation, terminalling and sale of sulphur and the production of oil and
natural gas. See "Oil and Natural Gas." Prior to the restructuring of FTX
completed in the third quarter of 1995, FTX also engaged in the exploration
for, and development, mining and processing of copper, gold and silver in
Indonesia and in the marketing of concentrates containing such metals
worldwide through Freeport-McMoRan Copper & Gold Inc. ("FCX"). See "-
Recapitalization Activities and Distribution of FCX."
Until December 31, 1995, FTX provided general executive, administrative
and other services to FRP, FCX, McMoRan Oil & Gas Co., a Delaware corporation
engaged in oil and natural gas exploration activities ("MOXY") and FM
Properties Operating Co., a Delaware general partnership engaged in the
acquisition, development and marketing of real estate in the Austin, Dallas,
Houston and San Antonio, Texas areas ("FMP"). Since January 1, 1996,
substantially the same services have been provided to these companies and
partnership and to FTX on substantially the same terms and conditions by FM
Services Company ("FMS"), a company owned 50% by each of FTX and FCX. See
"Relationship between the FTX Group and FRP - Administrative Services
Agreements."
Recapitalization Activities and Distribution of FCX
In July 1995 the Company divested all ownership interest in FCX through
the distribution of all shares of FCX Class B common stock owned by it to FTX
shareholders, thus completing the separation of the two principal businesses
theretofore conducted by FTX into two independent financial and operating
entities -- copper and gold conducted by FCX and its affiliates, and
agricultural minerals conducted by FRP and its affiliates. Prior to the
restructuring, FTX owned 68.9% of the outstanding common stock of FCX. As a
result of the July 1995 distribution of FCX stock, FTX no longer owns any
interest in FCX. In connection with the divestiture, FTX conducted
substantial recapitalization and restructuring activities. Certain of these
actions taken by FTX during 1995 in connection with its restructuring and
divestiture of FCX are summarized below:
- April 1995: FTX issued approximately 11.4 million shares of FTX
common stock in exchange for approximately four million shares of
its $4.375 Convertible Exchangeable Preferred Stock (the
"Preferred Stock") pursuant to an exchange offer to holders of
Preferred Stock at an exchange ratio of 2.85 shares of FTX common
stock for each share of Preferred Stock, reflecting an enhancement
of 0.5 share of FTX common stock over the Preferred Stock
conversion ratio. As of December 31, 1995, approximately one
million shares of Preferred Stock remained outstanding and
convertible into an aggregate of 1.8 million shares of FTX common
stock, after adjustment for the reverse stock split described
below. The Preferred Stock was privately placed and is not listed
for trading on any exchange.
- May and July 1995: The RTZ Corporation PLC ("RTZ") acquired from
FTX 21.5 million shares of FCX Class A common stock in May 1995
for $450 million and 2.4 million shares of FCX Class A common
stock in July 1995 for $50.2 million. The proceeds of these sales
were used to redeem certain securities described below and to
retire FTX's bank debt.
- June 1995: FTX redeemed approximately $749.2 million principal
amount of its outstanding Zero Coupon Convertible Subordinated
Debentures due 2006 (the "ABC Securities") for approximately
$280.8 million. Approximately $500,000 principal amount of ABC
securities were converted into 7,040 shares of FTX common stock
prior to the redemption. Funds for the redemption were provided
from the sale of FTX common stock to RTZ in May 1995.
- June 1995: FTX redeemed approximately $16.4 million principal
amount of its 6.55% Convertible Subordinated Notes due January
15, 2001 (the "Notes") for approximately $15 million.
Approximately $356.6 million principal amount of the Notes were
converted into 19.9 million shares of FTX common stock, reflecting
an enhanced conversion ratio of 55.95 shares of FTX common stock
for each $1,000 principal amount of Notes.
- July 1995: FTX entered into a new credit facility currently
providing $300 million of credit, all of which is available to FRP
and $75 million of which is available to FTX. See "Relationship
between the FTX Group and FRP - Credit Arrangements." FCX assumed
an obligation of FTX to guaranty up to $90 million of the
indebtedness of FMPO, and FTX agreed to pay an annual fee to FCX
for such guaranty and to guaranty up to an additional
approximately $60 million of FMPO debt. At December 31, 1995, the
indebtedness of FMPO totalled approximately $121.3 million, of
which $45.0 million was guaranteed by FTX.
- July 1995: FTX declared and paid a special tax-free distribution
of all of the approximately 118 million FCX Class B common shares
then owned by FTX to holders of its common stock. Pursuant to the
distribution, FTX stockholders received 0.701734 shares of FCX
Class B common stock per share of FTX common stock.
- September 1995: FTX sold its wholly owned subsidiary, Freeport
Copper Company ("FCC") to FCX for $25 million. FCC's sole asset
is a fifty percent interest in a joint venture controlling
approximately 7,600 acres in Arizona, which is involved in
research projects for an experimental in-situ leaching process
that would be used to mine copper.
- October 1995: FTX stockholders approved a one-for-six reverse
split of FTX common stock, reducing the number of outstanding
shares from approximately 168.4 million to 28.1 million.
In order to ensure the tax-free nature of the distribution of FCX Class
B common stock, FTX has agreed that, unless it obtains an opinion of tax
counsel or supplemental ruling from the Internal Revenue Service that the tax
free nature of the distribution would not be adversely affected, until July
17, 1997, it will (i) not dispose of any interest in FRP, (ii) use its best
efforts to remain managing general partner of FRP and cause its business to be
conducted substantially unchanged, (iii) take no affirmative steps to merge,
liquidate or, except in the ordinary course of business, sell any of its or
FRP's assets, or (iv) subject to certain permitted conditions, not redeem or
re-acquire shares of its common stock or re-acquire shares of FCX Class B
common stock. FTX and FCX also agreed to transition certain management
services to FCX by July 17, 1996. See "Relationship between the FTX Group and
FRP - Administrative Services Agreement." FTX has no present intention of
taking any action that would be inconsistent with this agreement at any time
in the future.
AGRICULTURAL MINERALS
Introduction
The Company's agricultural minerals business is conducted through FRP, a
Delaware limited partnership organized in 1986 in which FTX owned as of
December 31, 1995 an approximately 51.5% interest and served as administrative
managing general partner. Through its joint venture interest in IMC-Agrico
Company, a Delaware general partnership ("IMC-Agrico"), FRP is the world's
largest and one of the world's lowest cost producers, marketers and
distributors of phosphate fertilizer, with operations in Central Florida and
on the Mississippi River in Louisiana. FRP's Main Pass sulphur mine, offshore
Louisiana in the Gulf of Mexico, and its Culberson mine in Texas, also make
FRP the largest producer of Frasch sulphur in the world. The combined sulphur
and phosphate mining and fertilizer production operations provide FRP with the
competitive advantages of vertical integration and operating efficiencies and
reduce the sensitivity of FRP's phosphate fertilizer costs to changes in raw
materials prices.
IMC-Agrico's business includes the mining and sale of phosphate rock and
the production, marketing and distribution of phosphate fertilizers and animal
feed ingredients. IMC-Agrico was formed as a joint venture partnership in
July 1993 when FRP and IMC Global Inc. ("IMC") contributed their respective
phosphate fertilizer businesses to IMC-Agrico. FRP believes that the
combination of its internal production of raw materials, through its sulphur
division and the IMC-Agrico joint venture, and the strategic location of IMC-
Agrico's fertilizer operations provide it with a competitive advantage over
other fertilizer producers.
FRP's sulphur operations include the mining, purchase, transportation,
terminalling and marketing of sulphur. The Main Pass deposit, which was
discovered in 1988, contains the largest known sulphur reserve in North
America. FRP's Main Pass offshore mining complex is the largest structure of
its type in the Gulf of Mexico and one of the largest in the world. The
mining complex reached full design capacity of 5,500 long tons per day in
December 1993 and has since operated at or above design level. FRP has a
58.3% interest in the Main Pass mine and serves as its manager and operator.
In January 1995, FRP began operating the Culberson mine when it acquired
substantially all of the domestic assets of Pennzoil Sulphur Co. ("Pennzoil").
As of December 31, 1995, the Main Pass and Culberson mines were estimated to
contain proved and probable sulphur reserves totaling 55.2 million long tons
net to FRP.
Main Pass also contains proved oil reserves from which FRP produces and
sells oil for the Main Pass joint venture. Oil production averaged
approximately 12,400 barrels per day (6,000 barrels net to FRP) during the
year ended December 31, 1995. As of December 31, 1995, Main Pass was
estimated to contain 15.9 million barrels (6.6 million barrels net to FRP) of
proved oil reserves.
FRP continues to benefit from significant improvements in phosphate
fertilizer markets that began in late 1993 and continue into 1996. FRP's 1995
average realization for its principal fertilizer product, diammonium phosphate
("DAP"), increased approximately 55% to approximately $175 per short ton from
the 1993 average of approximately $113 per short ton. In late March 1996, the
spot market price for DAP as quoted in industry publications was approximately
$200 per short ton, FOB Central Florida.
Fertilizer Business-IMC-Agrico Company
In July 1993, FRP and IMC contributed to IMC-Agrico their respective
phosphate fertilizer businesses, including the mining and sale of phosphate
rock and the production, marketing and distribution of phosphate fertilizers.
At the time, FRP and IMC were among the largest and lowest cost phosphate
fertilizer producers in the world. The formation of IMC-Agrico has reduced
production costs by permitting the more efficient use of existing plant
capacity as well as eliminating duplicative administrative and marketing
functions.
IMC-Agrico makes quarterly cash distributions to FRP and IMC, based on
sharing ratios that vary from year to year until the fiscal year ending June
30, 1998. As a result of an agreement reached in January 1996, FRP's Current
Interest was increased by 0.85% effective as of March 1, 1996, and on July 1,
1996, FRP's Capital Interest will also be increased by 0.85%. FRP's Current
Interest and its Capital Interest as adjusted to give effect to the increases
described above, are as follows:
Fiscal Year Current Interest Capital Interest
Ending June 30 As Adjusted As Adjusted
______________ ________________ ________________
1996 . . . . . . . . . . 53.95% 43.60%
1997 . . . . . . . . . . 54.35% 43.05%
1998 and thereafter. . . 41.45% 41.45%
The IMC-Agrico policy committee establishes policies relating
to the strategic direction of IMC-Agrico and assures that its policies are
implemented. FRP and IMC have equal representation on the policy committee.
The policy committee has the sole authority to make certain decisions
affecting IMC-Agrico, including the authorization of certain expansion capital
expenditures, incurring certain indebtedness, approving significant
acquisitions and dispositions and certain other decisions.
In January 1996, IMC-Agrico's day-to-day management was
restructured so that it operates substantially as a stand-alone entity.
Included in the restructuring was the establishment of a new office of the
president of IMC-Agrico who is responsible for managing its business affairs.
The president is appointed by IMC subject to the approval of the policy
committee. An executive officer of FRP was selected as the initial president
of IMC-Agrico and has joined IMC-Agrico in that role. The president reports to
IMC who maintains responsibility for the operation of IMC-Agrico, subject to
the terms of the partnership agreement governing IMC-Agrico and the direction
of the policy committee.
Phosphate Rock
IMC-Agrico's phosphate mining operations and production
plants, located in Polk, Hillsborough, Hardee and Manatee Counties in central
Florida, produce phosphate rock principally for the manufacture of phosphate
fertilizers. IMC-Agrico sells phosphate rock to foreign distributors, domestic
animal feed manufacturers and other phosphate fertilizer producers. IMC-Agrico
uses phosphate rock internally in the production of phosphate fertilizers at
its plants located in central Florida and in Louisiana. Phosphate rock is
generally mixed with sulphuric acid to produce phosphoric acid from which
various granulated phosphate products can be produced. IMC-Agrico's annual
phosphate rock mining capacity is approximately 27 million tons per year and
currently accounts for approximately 50% of domestic phosphate rock mining
capacity and 19% of the western world's capacity. IMC-Agrico produced
approximately 25 million tons of phosphate rock during the year ended December
31, 1995.
As of December 31, 1995, FRP's share of IMC-Agrico's proved
and probable phosphate rock reserves were approximately 186.4 million short
tons that are mineable from existing operations, plus an additional 183.8
million short tons of phosphate rock deposits. Deposits are ore bodies which
require additional economic and mining feasibility studies before they can be
classified as reserves. These reserves are either owned by IMC-Agrico or
controlled by it through long-term lease or royalty arrangements.
Phosphate Fertilizers
IMC-Agrico manufactures phosphate fertilizers, principally
DAP, monoammonium phosphate ("MAP") and granular triple superphosphate
("GTSP"), and related products, including sulphuric acid, phosphoric acid,
anhydrous ammonia and urea. IMC-Agrico's fertilizer operations consist of six
phosphoric acid and fertilizer manufacturing facilities, three in central
Florida and three on the Mississippi River in Louisiana.
IMC-Agrico's New Wales, Nichols and South Pierce plants are
located in Florida. The New Wales complex, located near Mulberry, Florida,
primarily produces DAP, MAP, GTSP and merchant grade phosphoric acid. The New
Wales plant also produces animal feed ingredients (see "Animal Feed
Ingredients"). The Nichols plant, located in Nichols, Florida, produces DAP,
sulphuric acid and phosphoric acid. The South Pierce plant, located in Bartow,
Florida, produces GTSP, sulphuric acid and phosphoric acid.
IMC-Agrico's Faustina, Uncle Sam and Taft plants are located
in Louisiana. The Faustina plant, located in Donaldsonville, Louisiana,
produces DAP, MAP, anhydrous ammonia, urea, sulphuric acid and phosphoric
acid. The Uncle Sam plant, located at Uncle Sam, Louisiana, produces sulphuric
acid and phosphoric acid which is then shipped to the nearby Faustina and Taft
plants, where it is used to produce DAP and MAP. The Taft plant, located in
Taft, Louisiana, produces DAP and MAP. As market conditions dictate,
operations at Taft are suspended by IMC-Agrico to avoid building excessive
inventories.
Phosphate rock, sulphur and ammonia are the three principal
raw materials used in the production of phosphate fertilizers. Phosphate rock
is supplied by IMC-Agrico's Florida mines. FRP supplies its share of IMC-
Agrico's sulphur requirements through its production from the Main Pass and
Culberson mines and IMC supplies IMC-Agrico with its sulphur requirements from
its share of Main Pass production and purchases from third parties, including
FRP. IMC-Agrico's ammonia needs are fulfilled by internal production from its
Faustina plant and third party domestic suppliers under long-term contracts.
IMC-Agrico's phosphoric acid capacity is approximately 4.0
million tons of contained P2O5 (P2O5 is an industry term indicating a
product's phosphate content measured chemically in units of phosphorous
pentoxide), which represents approximately 32% of U.S. production capacity and
11% of world capacity. IMC-Agrico operated at approximately 97% of P2O5
capacity in 1995 as compared to 93% in 1994.
IMC-Agrico's plants have an estimated annual sustainable
capacity to produce approximately 8.2 million tons of granulated phosphates
(DAP, MAP and GTSP), 10.4 million tons of sulphuric acid, 260,000 tons of urea
and 565,000 tons of anhydrous ammonia. During 1995, IMC-Agrico produced
approximately 7.6 million tons of granulated phosphates, as compared to 7.1
million tons in 1994.
Animal Feed Ingredients
In October 1995, IMC-Agrico acquired the animal feed
ingredients business of Mallinckrodt Group Inc. for $110 million cash. Prior
to the acquisition, this business was IMC-Agrico's largest P2O5 customer,
consuming nearly 300,000 tons per year (approximately 7% of IMC-Agrico's
capacity). FRP's portion of the purchase price was $46.2 million and was
funded by borrowings under its credit facility. See "Relationship Between the
FTX Group and FRP - Credit Arrangements."
Prior to the acquisition, IMC-Agrico managed Mallinckrodt's
animal feed plant operations on a contractual basis. The principal
manufacturing facilities of the animal feed operations are located within IMC-
Agrico's New Wales complex. This newly acquired business is one of the world's
largest producers of phosphate-based animal feed ingredients and enhances IMC-
Agrico's flexibility in maximizing returns from its core phosphate production.
Marketing
IMC-Agrico sells its fertilizer products in the domestic and
export markets under spot market and long-term contract terms. IMC-Agrico
markets its products domestically throughout the eastern two-thirds of the
United States. In 1995, approximately 40% of IMC-Agrico's phosphate fertilizer
shipments were sold in the domestic market. Approximately 60% of IMC-Agrico's
phosphate rock production was used in 1995 to produce phosphate fertilizers at
its plants in Florida and Louisiana, with a majority of the remaining amount
sold in the domestic market.
Virtually all of FRP's export sales of phosphate fertilizers
are marketed through the Phosphate Chemical Export Association ("Phoschem"), a
Webb-Pomerene Act association. Since January 1995, IMC has been responsible
for marketing DAP, MAP and GTSP for PhosChem's members. This marketing
arrangement allows IMC-Agrico to interface directly with its major
international customers and enhances its ability to pursue growth and
marketing opportunities on a global basis.
Although phosphate fertilizer sales are fairly constant from
month to month, seasonal increases occur in the domestic market prior to the
fall and spring planting of crops. Generally, domestic sales taper off after
the spring planting season. However, this decline in domestic sales generally
coincides with a time when major international buyers such as China, India and
Pakistan purchase product for mid-year delivery.
In conducting business abroad, IMC-Agrico is subject to the
customary risks encountered in foreign operations, including changes in
currency and exchange controls, the availability of foreign exchange, laws,
policies and actions affecting foreign trade and government subsidies, tariffs
and quotas.
All of FRP'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. FRP'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
FRP's control.
SULPHUR BUSINESS
FRP's sulphur operations include the mining, purchase,
transportation, terminalling and sale of sulphur. In January 1995, FRP
acquired essentially all of the domestic assets of Pennzoil, including the
Culberson mine in Texas, sulphur terminals and loading facilities in
Galveston, Texas and Tampa, Florida, land and marine transportation equipment
and sales and other related commercial contracts and obligations. As a result,
FRP now produces sulphur from its Main Pass and Culberson mines for sale to
IMC-Agrico and to third parties.
Production
The Main Pass and Culberson mines utilize the Frasch mining
process, which involves drilling wells and injecting superheated water into
the underground sulphur deposit to melt the solid sulphur, which is then
brought to the surface in liquid form. FRP and its predecessors have been
using the Frasch process for over 80 years. FRP has also developed technology
that allows it to use sea water in the Frasch process. FRP is not aware of any
competitor that has developed a Frasch sulphur mine using superheated sea
water.
The Main Pass deposit was discovered by FRP in 1988. The mine
currently has the highest production rate of any sulphur mine in the world and
contains the largest known existing Frasch sulphur reserve in North America.
The Main Pass offshore complex, more than a mile in length, is one of the
largest structures of its type in the world and the largest in the Gulf of
Mexico. The Main Pass mine reached full design capacity of 5,500 long tons per
day in December 1993 and has since operated at or above design capacity.
During the year ended December 31, 1995, production averaged approximately
6,000 long tons per day. The mine is owned 58.3% by FRP, 25% by IMC and 16.7%
by Homestake Sulphur Company ("Homestake"). At December 31, 1995, the Main
Pass deposit was estimated to contain proved and probable sulphur reserves
totaling 68.1 million long tons (39.7 million long tons net to FRP).
FRP began operating the Culberson mine in January 1995 after
acquiring the mine from Pennzoil. For the year ended December 31, 1995,
production at the Culberson mine averaged approximately 2,500 long tons per
day. FRP is implementing strategies to strengthen operating efficiencies at
the Culberson mine to further reduce costs. As of December 31, 1995, the
Culberson mine was estimated to contain proved and probable sulphur reserves
totaling 15.5 million long tons.
FRP also supplements its sulphur production by purchasing
sulphur from third parties who recover sulphur in the production of oil and
natural gas and the refining of petroleum products.
Marketing
Sulphur produced at the Main Pass mine is transported by barge
in liquid form to its storage, handling and shipping facilities located at
Port Sulphur, Louisiana. Sulphur production from the Culberson mine is
transported in liquid form by unit train to Galveston where storing, handling
and shipping facilities are located. At both Port Sulphur and Galveston,
sulphur purchased from others or transported for others may also be received.
Sulphur is transported from Port Sulphur by barge to IMC-Agrico's and other
customers' plants in Louisiana on the Mississippi River. Molten sulphur is
also transported from Galveston and Port Sulphur by tanker to FRP's terminals
at Tampa. Similar facilities at Pensacola, Florida are used for storage,
handling and shipping of sulphur purchased from others or transported for
others. FRP processes and transports for a fee both IMC's and Homestake's
share of Main Pass sulphur and serves as marketing agent for Homestake.
FRP's production of sulphur accounted for an estimated 30% of
domestic and 8% of world elemental sulphur production in 1995. FRP's sulphur
is used primarily to manufacture sulphuric acid, which is used primarily to
produce phosphoric acid, one of the basic materials used to produce phosphate
fertilizers. During the year ended December 31, 1995, sales to domestic
phosphate fertilizer producers, including IMC-Agrico, accounted for
approximately 65% of FRP's total sulphur sales. A small number of companies
account for a large portion of total United States sulphur consumption.
OIL AND NATURAL GAS
The only significant FTX oil and natural gas interest is held
by FRP at Main Pass. Oil reserves are associated with the same caprock
reservoir as the sulphur reserves at Main Pass. Oil production commenced in
the fourth quarter of 1991 and averaged approximately 12,400 barrels per day
(6,000 barrels per day net to FRP) during the year ended December 31, 1995. As
of December 31, 1995, FRP estimated that the remaining proved recoverable oil
reserves at Main Pass were approximately 15.9 million barrels (6.6 million
barrels net to FRP). FRP currently does not intend to pursue oil operations
that are not related to Main Pass.
GENERAL
Competition
The sulphur, fertilizer and phosphate rock mining industries
are highly competitive. All of the FRP's products are commodities and the
markets for such products can be volatile. Because competition is based
largely on price, maintaining low production costs is critical to
competitiveness. In this global business, IMC-Agrico faces stiff competition
from overseas producers, most of which are state supported, especially those
in North Africa and the former Soviet Union. Additionally, foreign competitors
are frequently motivated by non-market factors such as the need for hard
currency. In the United States, IMC-Agrico competes against a number of major
phosphate fertilizer producers, including large cooperatives. FRP competes in
the sulphur business with a number of domestic marketers of recovered sulphur
and with Canadian, Mexican and Venezualan imports.
Operating Hazards
The production of sulphur and phosphate fertilizer involves
the handling of hazardous or toxic substances, some of which may have the
potential, if released into the environment in sufficient quantities, to
expose FRP and IMC-Agrico to significant liability. See "-Environmental
Matters."
FRP's offshore sulphur mining and oil production operations,
and its marine transportation operations, are subject to marine perils,
including hurricanes and other adverse weather conditions. FRP's mining
operations are also subject to the usual risks encountered in the Frasch
mining industry, including fires, underground subsidence and blowouts. FRP's
oil activities are subject to all of the risks normally incident to the
development and production of oil, including blowouts, cratering and fires,
each of which could result in injury to personnel and/or damage to property
and the environment.
FRP has in place programs to minimize the risks associated
with its businesses. In addition, it has the benefit of certain liability,
property damage, business interruption and other insurance coverage in types
and amounts that it considers reasonable and believes to be customary in the
FRP's business. This insurance provides protection against loss from some, but
not all, potential liabilities normally incident to the ordinary conduct of
FRP's business, including coverage for certain types of damages associated
with environmental and other liabilities that arise from sudden, unexpected
and unforeseen events, with such coverage limits as management deems prudent.
FTX also maintains a property insurance program that covers some, but not all
of the risks of physical damage to tangible property of FRP as well as the
corresponding cost of business interruption.
Environmental Matters
FTX and FRP have a history of commitment to environmental
responsibility. Since the 1940s, long before the general public recognized the
importance of maintaining environmental quality, FTX has conducted
preoperational, bioassay, marine ecological and other environmental surveys to
ensure the environmental compatibility of its operations. FTX's Environmental
Policy commits its operations to compliance with applicable laws and
regulations. FTX has implemented corporate-wide environmental programs that
include the activities of FRP and continues to study methods to reduce
discharges and emissions.
FRP's operations are subject to federal, state and local laws
and regulations relating to the protection of the environment. Exploration,
mining, development and production of natural resources, and the chemical
processing operations of IMC-Agrico, like similar operations of other
companies, may affect the environment. Moreover, such operations involve the
extraction, handling, production, processing, treatment, storage,
transportation and disposal of materials and waste products that, under
certain conditions, may be toxic or hazardous and are regulated under
environmental laws. Although significant capital expenditures and operating
costs have been and will continue to be incurred based on these requirements,
FRP does not believe these expenditures and costs have had a material adverse
effect on its business. Continued government and public emphasis on
environmental issues can be expected to result in increased capital
expenditures and operating costs in the future. However, the impact of future
laws and regulations or of future changes to existing laws and regulations
cannot be predicted or quantified.
Federal legislation (sometimes referred to as "Superfund")
imposes liability, without regard to fault, for cleanup of certain waste
sites, even though such waste management activities may have been performed in
compliance with regulations applicable at the time. Under the Superfund
legislation, one party may be required to bear more than its proportional
share of cleanup costs at a site where it has responsibility pursuant to the
legislation, if payments cannot be obtained from other responsible parties.
Other legislation mandates cleanup of certain wastes at operating sites.
States also have regulatory programs that can mandate waste cleanup. Liability
under these laws can be significant and involves inherent uncertainties.
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; however, at each of these sites other large
companies with equal or larger proportionate shares are among the potentially
responsible parties. The ultimate settlement for such sites usually occurs
several years subsequent to the receipt of notices identifying potentially
responsible parties because of the many complex technical and financial issues
associated with site cleanup. FRP believes that the aggregate costs involved
with these potential liabilities at sites for which notification has been
received will not exceed amounts accrued and expects that any resulting costs
would be incurred over a period of years.
RELATIONSHIP BETWEEN THE FTX GROUP AND FRP
Management and Ownership
FTX and FMRP serve as the managing general partners of FRP and
the directors and officers of FTX, together with FRP's officers, perform all
FRP management functions and carry out the activities of FRP. The officers of
FRP continue to be employees and officers of FTX and its other subsidiaries,
but subject to certain exceptions, are employed principally for the operation
of FRP's business. As of December 31, 1995, FTX and FMRP held partnership
interests that represented an approximate 51.5% interest in FRP. As a result
of being the administrative managing general partner and this ownership, FTX
has the ability to control all matters relating to the management of FRP,
including any determination with respect to the acquisition or disposition of
Company assets, future issuance of additional debt or other securities of FRP
and any distributions payable in respect of FRP's partnership interests. In
addition to such other obligations as it may assume, FTX has the general duty
to act in good faith and to exercise its rights of control in a manner that is
fair and reasonable to the holders of partnership interests.
Under the terms of its credit facility, the failure by FTX to
maintain control of FRP, or the direct or indirect ownership of at least 50.1%
of the partnership interests in FRP, would allow acceleration of the
indebtedness thereunder. See "-Credit Arrangements."
Publicly owned FRP units have cumulative preferential rights
to receive minimum quarterly distributions of 60 cents per unit through the
distribution to be made with respect to the quarter ending December 31, 1996
before any distributions may be made to FTX. On February 15, 1996, FRP paid a
distribution of 62.5 cents per publicly held unit ($31.3 million) and 67.35
cents per FTX owned unit ($35.9 million), which reduced the total unpaid
distribution due FTX by $2.6 million to $379.9 million. After December 31,
1996, FTX will recover this unpaid distribution on a quarterly basis from one
half of any excess of future quarterly distributions over 60 cents per unit
for all units.
Credit Arrangements
On June 30, 1995, FTX and FRP entered into a five-year
revolving line of credit maturing on June 30, 2000 (the "Credit Facility").
In February 1996, FRP sold $150 million of its 7% senior notes due 2008.
Following the sale of the notes, the committed amount under the Credit
Facility was reduced to $300 million, all of which is available to FRP and $75
million of which is available to FTX. As of March 8, 1996, $50 million was
outstanding and $250 million was available under the Credit Facility.
Under the Credit Facility, FTX is required to maintain at
least a 50.1% ownership interest in FRP and control of FRP. FRP is not
permitted to enter into any agreement restricting its ability to make
distributions and is restricted in its ability to create liens and security
interests on its assets. To secure the Credit Facility, FTX has pledged its
FRP units representing a minimum 50.1% ownership in FRP and FRP has granted a
security interest in its interest in IMC-Agrico and the Main Pass oil
reserves. The Credit Facility places restrictions on, among other things,
additional borrowings and requires FRP to maintain certain minimum working
capital levels and specified cash flow to interest coverage ratios and not
exceed a specified debt-to-capitalization ratio.
FRP has minimized amounts outstanding under the Credit
Facility by borrowing excess funds from FTX. As of December 31, 1995, $24.7
million was outstanding under this arrangement. Interest is charged based on
interest rates under the Credit Facility.
In February 1994, IMC-Agrico entered into a $75 million
revolving credit facility with a group of banks (the "IMC-Agrico Facility").
The IMC-Agrico Facility, which has a letter of credit subfacility for up to
$25 million, provides for a three-year maturity with IMC-Agrico having the
right to request one-year extensions of the revolving period. As of December
31, 1995, there were no borrowings outstanding under the IMC-Agrico Facility.
Borrowings under the IMC-Agrico Facility are unsecured, with a negative pledge
on substantially all of IMC-Agrico's assets. The IMC-Agrico Facility has
minimum net partners' capital and fixed charge coverage requirements and a
current ratio test, and places limitations on the incurrence of additional
debt. It also prohibits changes, without bank approval, to the IMC-Agrico
partnership agreement relating to distributions.
Conflicts of Interest
The nature of the respective businesses of FRP and FTX and its
affiliates may give rise to conflicts of interest between FRP and FTX.
Conflicts could arise, for example, with respect to transactions involving
potential acquisitions of businesses or mineral properties, the issuance of
additional partnership interests, the determination of distributions to be
made by FRP, the allocation of general and administrative expenses between FTX
and FRP and other business dealings between FRP and FTX and its affiliates.
Except in cases where a different standard may have been provided for, FTX has
a general duty to act in good faith and to exercise rights of control in a
manner that is fair and reasonable to the holders of FRP's partnership
interests. In resolving conflicts of interest, FRP's partnership agreement
permits FTX to consider the relative interest of each party to a potential
conflict situation which, under certain circumstances, could include the
interest of FTX and its other affiliates. The extent to which this provision
is enforceable under Delaware law is not clear.
Administrative Services Agreement
Pursuant to the terms of an Administrative Services Agreement
(the "Services Agreement"), FMS furnishes general executive, administrative,
financial, accounting, legal, environmental, insurance, personnel,
engineering, tax, research and development, sales and certain other services
to FTX in order to enable it to perform its duties as administrative managing
general partner of FRP. The nature and timing of the services provided under
the Services Agreement are similar to those historically provided directly by
FTX to FRP. FRP reimburses FTX, at FTX's cost, including allocated overhead,
for such services on a monthly basis, including amounts paid by FTX under the
Services Agreement and allocated to FRP. Such costs are allocated among FRP,
FTX and certain of FTX's other affiliates based on direct utilization whenever
possible and an allocation formula based on a combination of the operating
income, property, plant and equipment and capital expenditures of FRP, FTX and
such other affiliates.
EMPLOYEES
As of March 1, 1996, FTX had a total of 491 employees.
Item 3. Legal Proceedings.
Although the Company may be from time to time involved in
various legal proceedings of a character normally incident to the ordinary
course of its businesses, the Company believes that potential liability in any
such pending or threatened proceedings would not have a material adverse
effect on the financial condition or results of operations of the Company.
FTX maintains liability insurance to cover some, but not all, potential
liabilities normally incident to the ordinary course of its businesses as well
as other insurance coverages customary in its businesses, with such coverage
limits as management deems prudent.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Executive Officers of the Registrant.
Certain information about the executive officers of FTX as of
March 8, 1996 is set forth in the following table and accompanying text:
Name Age Position or Office
____ ___ __________________
James R. Moffett 57 Chairman of the Board
Richard C. Adkerson 49 Vice Chairman of the Board
Rene L. Latiolais 53 President and Chief Executive
Officer
Charles W. Goodyear 38 Executive Vice President and Chief
Financial Officer
Thomas J. Egan 51 Senior Vice President
W. Russell King 46 Senior Vice President
All of the Executive Officers have served the Company in
various executive capacities for at least the last five years.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The information set forth under the captions "Common Shares"
and "Common Share Dividends" on the inside back cover of FTX's Annual Report
to stockholders for the year ended December 31, 1995 is incorporated herein by
reference. As of March 8, 1996, there were 18,569 record holders of FTX's
common stock.
Item 6. Selected Financial Data.
The information set forth under the caption "Selected
Financial and Operating Data" on page 11 of FTX's Annual Report to
stockholders for the year ended December 31, 1995 is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 12 through 18 of FTX's Annual Report to stockholders for the year ended
December 31, 1995 is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The financial statements of FTX and its consolidated
subsidiaries, the notes thereto and the report thereon of Arthur Andersen LLP,
appearing on pages 20 through 37, and the report of management on page 19 of
FTX's Annual Report to stockholders for the year ended December 31, 1995 are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
Items 10. Directors and Executive Officers of the Registrant.
The information set forth under the caption "Information About
Nominees and Directors" of the Proxy Statement submitted to the stockholders
of the registrant in connection with its 1996 Annual Meeting to be held on
April 30, 1996 is incorporated herein by reference.
Items 11. Executive Compensation.
The information set forth under the captions "Director
Compensation" and "Executive Officer Compensation" of the Proxy Statement
submitted to the stockholders of the registrant in connection with its 1996
Annual Meeting to be held on April 30, 1996 is incorporated herein by
reference.
Items 12. Security Ownership of Certain Beneficial Owners and Management.
The information set forth under the captions "Securities
Ownership of Directors and Executive Officers" and "Common Stock Ownership of
Certain Beneficial Owners" of the Proxy Statement submitted to the
stockholders of the registrant in connection with its 1996 Annual Meeting to
be held on April 30, 1996 is incorporated herein by reference.
Items 13. Certain Relationships and Related Transactions.
The information set forth under the caption "Certain
Transactions" of the Proxy Statement submitted to the stockholders of the
registrant in connection with its 1996 Annual Meeting to be held on April 30,
1996 is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1), (a)(2), and (d). Financial Statements.
See Index to Financial Statements appearing on page F-1
hereof.
(a)(3) and (c). Exhibits.
See Exhibit Index beginning on page E-1 hereof.
(b). Reports on Form 8-K.
During the last quarter of the period covered by this report,
FTX filed a report on Form 8-K dated November 14, 1995 reporting an event
under item 5 thereof. No financial statements were filed.
SIGNATURES
Pursuant to the requirements of Section 13 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, on March 28, 1996.
FREEPORT-McMoRan INC.
By: /s/ James R. Moffett
___________________________
James R. Moffett
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities indicated on March 28, 1996.
Signature Title
* President, Chief Executive Officer
_____________________________ (Principal Executive Officer)
Rene L. Latiolais
* Executive Vice President and Chief
_____________________________ Financial Officer
Charles W. Goodyear (Principal Financial Officer)
* Controller - Financial Reporting
_____________________________ (Principal Accounting Officer)
John T. Eads
* Vice Chairman of the Board and
____________________________ Director
Richard C. Adkerson
* Director
____________________________
Robert W. Bruce III
* Director
____________________________
Thomas B. Coleman
* Director
____________________________
Robert A. Day
* Director
____________________________
William B. Harrison, Jr.
* Director
____________________________
Henry A. Kissinger
* Director
____________________________
Bobby Lee Lackey
* Director
____________________________
Gabrielle K. McDonald
/s/ James R. Moffett Chairman of the Board and Director
____________________________
James R. Moffett
* Director
____________________________
George Putnam
* Director
____________________________
B. M. Rankin, Jr.
* Director
____________________________
J. Taylor Wharton
* Director
____________________________
Ward W. Woods, Jr.
By: /s/ James R. Moffett
_________________________
James R. Moffett
Attorney-in-Fact
INDEX TO FINANCIAL STATEMENTS
The financial statements of FTX and its consolidated
subsidiaries, the notes thereto, and the report thereon of Arthur
Andersen LLP, appearing on pages 20 through 37, inclusive, of FTX's
1995 Annual Report to stockholders are incorporated by reference.
The financial statement schedules listed below should be read in
conjunction with such financial statements contained in FTX's 1995
Annual Report to stockholders.
Page
Report of Independent Public Accountants F-1
III-Condensed Financial Information of Registrant F-2
VIII-Valuation and Qualifying Accounts F-5
Schedules other than those listed above have been omitted since
they are either not required, not applicable or the required
information is included in the financial statements or notes thereto.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited, in accordance with generally accepted auditing
standards, the financial statements as of December 31, 1995 and 1994
and for each of the three years in the period ended December 31, 1995
included in Freeport-McMoRan Inc.'s annual report to stockholders
incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 23, 1996. Our audits were made for the
purpose of forming an opinion on those statements taken as a whole.
The schedules listed in the index above are the responsibility of the
Company's management and are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the
basic financial statements. These schedules have been subjected to
the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
Arthur Andersen LLP
New Orleans, Louisiana,
January 23, 1996
<PAGE> F-1
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
December 31,
------------------------
1995 1994
---------- ----------
ASSETS (In Thousands)
Current assets:
Current assets:
Accounts receivable from FRP $ 24,740 $ -
Accounts receivable -other 25,661 17,503
Prepaid expenses and other 807 5,833
---------- ----------
Total current assets 51,208 23,336
Property, plant and equipment-net 48,139 52,303
Investment in FCX - 328,880
Investment in FRP 211,016 229,588
Long-term receivables and
other assets 18,968 96,592
---------- ----------
Total assets $ 329,331 $ 730,699
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and
accrued liabilities $ 58,528 $ 105,860
Long-term debt - 753,433
Other liabilities and
deferred credits 78,866 101,873
Stockholders' equity 191,937 (230,467)
---------- ----------
Total liabilities and
stockholders' equity $ 329,331 $ 730,699
========== ==========
The footnotes contained in FTX's 1995 Annual Report to stockholders
are an integral part of these statements.
<PAGE> F-2
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS
Years Ended December 31,
-------------------------------------
1995 1994 1993
---------- ---------- ---------
(In Thousands)
Revenues $ 745 $ 749 $ 6,852
---------- ---------- ----------
Cost of sales 2,673 7,203 28,953
Exploration expenses - 3,738 22,067
Provision for restructuring
charges - - 12,403
Gain on valuation and sale
of assets, net - - (50,688)
General and
administrative expenses 9,816 12,664 19,785
---------- ---------- ----------
Total costs and expenses 12,489 23,605 32,520
---------- ---------- ----------
Operating loss (11,744) (22,856) (25,668)
Interest expense, net (19,908) (38,591) (52,963)
Equity in earnings (loss)
of subsidiaries 60,378 10,881 (112,722)
Other income, net 12,692 2,173 4,779
---------- ---------- ----------
Income (loss) before income taxes 41,418 (48,393) (186,574)
Income tax benefit 50,982 13,261 68,069
---------- ---------- ----------
Income (loss) from
continuing operations 92,400 (35,132) (118,505)
Discontinued operations 340,424 107,715 35,387
---------- ---------- ----------
Income (loss) before
extraordinary item and
changes in accounting principle 432,824 72,583 (83,118)
Extraordinary loss on
early extinguishment of
debt, net - (9,108) -
Cumulative effect of changes
in accounting principle:
FTX - - (5,632)
Equity subsidiaries - - (15,085)
---------- ---------- ----------
Net income (loss) 432,824 63,475 (103,835)
Preferred dividends (42,283) (22,032) (22,368)
---------- ---------- ----------
Net income (loss) applicable to
common stock $ 390,541 $ 41,443 $ (126,203)
========== ========== ==========
The footnotes contained in FTX's 1995 Annual Report to stockholders
are an integral part of these statements.
<PAGE> F-3
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOW
Years Ended December 31,
--------------------------------------
1995 1994 1993
---------- ---------- ----------
Cash flow from operating activities: (In Thousands)
Net income (loss) $ 432,824 $ 63,475 $ (103,835)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Extraordinary loss on early
extinguishment of debt - 9,108 -
Cumulative effect of changes
in accounting principle - - 20,717
Depreciation and amortization 3,767 9,073 26,180
Other noncash charges to
income, including net
reimbursements from
subsidiaries - - 27,623
Oil and gas exploration expenses 16 5,231 26,710
Amortization of debt discount
and financing costs 14,343 31,113 28,771
Equity in (earnings) losses
of subsidiaries (115,071) (64,973) 96,931
Cash distributions from
subsidiaries 141,179 92,000 85,853
Gain on sale of FCX
Class A shares (435,060) - -
Loss on recapitalization of
FTX securities 44,371 - -
Gain on conversion/distribution
of FCX securities - (114,750) (44,116)
Gain on valuation and sale of
assets, net - - (50,688)
Deferred income taxes 17,886 18,558 (54,731)
(Increase) decrease in working
capital, net of effect of
acquisitions and dispositions:
Accounts receivable (1,782) (2,146) 28,516
Prepaid expenses and other 5,276 4,694 (719)
Accounts payable and accrued
liabilities (30,936) 22,389 (30,565)
Payment to Freeport-McMoRan
Royalty Trust - (2,854) (2,296)
Other 10,391 (15,392) 6,852
---------- ---------- ----------
Net cash provided by operating
activities 87,204 55,526 61,203
---------- ---------- ----------
Cash flow from investing activities:
Capital expenditures (2,059) (32,958) (57,165)
Sale of assets 25,000 65,596 99,983
---------- ---------- ----------
Net cash provided by investing
activities 22,941 32,638 42,818
---------- ---------- ----------
Cash flow from financing activities:
Proceeds from sale of FCX
Class A shares 497,166 - -
Purchase of:
FTX common shares (44,752) (67,747) (22,229)
FCX Class A shares (58,906) (47,596) (16,482)
FRP units (2,253) - -
ABC debentures (280,826) - -
6.55% Senior notes (14,955) - -
10 7/8% Senior Debentures - (142,919) -
Distribution of MOXY shares - (35,441) -
Borrowings (repayments) of
debt-net (165,000) 155,000 3,943
(Increase) decrease in long-term
note due from FCX 800 11,470 (12,270)
(Increase) decrease in long-term
note due from FRP (24,740) 100,900 138,450
Cash dividends paid:
Common stock (5,168) (44,467) (175,890)
Preferred stock (8,757) (22,110) (22,384)
Other (2,754) 4,746 1,858
---------- ---------- ----------
Net cash used in financing
activities (110,145) (88,164) (105,004)
---------- ---------- ----------
Net decrease in cash and
short-term investments - - (983)
Cash and short-term
investments at beginning of year - - 983
---------- ---------- ----------
Cash and short-term investments
at end of year $ - $ - $ -
========== ========== ==========
The footnotes contained in FTX's 1995 Annual Report to stockholders
are an integral part of these statements.
<PAGE> F-4
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 1995, 1994 and 1993
Col. A Col. B Col. C Col. D Col. E
- ------------ ---------- ---------------------- ---------- ----------
Additions
----------------------
Balance at Charged to Charged to Balance at
Beginning of Costs and Other Other-Add End
Description Period Expenses Accounts (Deduct) of Period
- ------------ ---------- ---------- ---------- ---------- ---------
(In Thousands)
Reserves and allowances deducted from asset accounts:
Reclamation and mine shutdown reserves:
1995:
Sulphur $ 55,105 $ 2,643 $ - $ 14,206a $ 71,954
Fertilizer 37,683 2,785 - (4,537) 35,931
Oil & Gas 19,989 1,666 - (559) 21,096
---------- ---------- ---------- ---------- ----------
$ 112,777 $ 7,094 $ - $ 9,110b $ 128,981
========== ========== ========== ========== ==========
1994:
Sulphur $ 57,287 $ 1,041 $ - $ (3,223) $ 55,105
Fertilizer 38,437 2,310 - (3,064) 37,683
Oil & Gas 14,963 3,799 - 1,227 19,989
---------- ---------- ---------- ---------- ----------
$ 110,687 $ 7,150 $ - $ (5,060)b $ 112,777
========== ========== ========== ========== ==========
1993:
Sulphur $ 35,200 $ 27,562 $ - $ (5,475) $ 57,287
Fertilizer 18,543 5,365 - 14,529c 38,437
Oil & Gas 8,617 7,995 - (1,649) 14,963
---------- ---------- ---------- ---------- ----------
$ 62,360 $ 40,922 $ - $ 7,405b $ 110,687
========== ========== ========== ========== ==========
a. Includes $23.5 million of liabilities assumed in connection with
the acquisition of the sulphur assets of Pennzoil Co. (See Note 5 to
the Financial Statements).
b. Includes expenditures of $11.1 million in 1995, $9.7 million in
1994 and $14 million in 1993.
c. Includes $19.7 million which represents FRP's proportionate share of
IMC-Agrico liabilities (see Note 2 to the Financial Statements) in excess
of the FRP contributed amounts.
Exhibit Index
Sequentially
Exhibit Numbered
Number Page
_____ ____
3.1 Composite copy of Certificate of Incorporation of FTX, as
amended. Incorporated by reference to Exhibit 3.1 to the
Quarterly Report on Form 10-Q of FTX for the quarter
ended June 30, 1992 (the "FTX 1992 Second Quarter Form
10-Q").
3.2 By-Laws of FTX, as amended. Incorporated by reference to
Exhibit 3.2 to the FTX 1992 Second Quarter Form 10-Q.
4.1 Certificate of Designations of the $4.375 Convertible
Exchangeable Preferred Stock of FTX. Incorporated by
reference to Exhibit 4.1 to the Current Report on Form
8-K of FTX dated March 23, 1992.
4.2 Amended and Restated Agreement of Limited Partnership of
FRP dated as of May 29, 1987 (the "FRP Partnership
Agreement") among FTX, Freeport Phosphate Rock Company
and Geysers Geothermal Company, as general partners, and
Freeport Minerals Company ("FMC"), as general partner and
attorney-in-fact for the limited partners, of FRP.
Incorporated by reference to Exhibit B to the Prospectus
dated May 29, 1987 included in FRP's Registration
Statement on Form S-1, as amended, as filed with the
Commission on May 29, 1987 (Registration No. 33-13513).
4.3 Amendment to the FRP Partnership Agreement dated as of
December 16, 1988 effected by FMC, as Administrative
Managing General Partner, and FTX, as General Partner, of
FRP. Incorporated by reference to Exhibit 3.2 to the
Annual Report on Form 10-K of FRP for the fiscal year
ended December 31, 1994.
4.4 Amendment to the FRP Partnership Agreement dated as of
March 29, 1990 effected by FMC, as Administrative
Managing General Partner, and FTX, as Managing General
Partner, of FRP. Incorporated by reference to Exhibit
19.2 to the Quarterly Report on Form 10-Q of FRP for the
quarter ended March 31, 1990 (the "FRP 1990 First Quarter
Form 10-Q").
4.5 Amendment to the FRP Partnership Agreement dated as of
April 6, 1990 effected by FTX, as Administrative Managing
General Partner of FRP. Incorporated by reference to
Exhibit 19.3 to the FRP 1990 First Quarter Form 10-Q.
4.6 Amendment to the FRP Partnership Agreement dated as of
January 27, 1992 between FTX, as Administrative Managing
General Partner, and FMRP Inc., as Managing General
Partner of FRP. Incorporated by reference to Exhibit 3.3
to the Annual Report on Form 10-K of FRP for the fiscal
year ended December 31, 1991 (the "FRP 1991 Form 10-K").
4.7 Amendment to the FRP Partnership Agreement dated as of
October 14, 1992 between FTX, as Administrative Managing
General Partner, and FMRP Inc., as Managing General
Partner of FRP. Incorporated by reference to Exhibit 3.4
to the Annual Report on Form 10-K of FRP for the fiscal
year ended December 31, 1992 (the "FRP 1992 Form 10-K").
4.8 Deposit Agreement dated as of June 27, 1986 (the "Deposit
Agreement") among FRP, The Chase Manhattan Bank, N.A.
("Chase") and Freeport Minerals Company, as
attorney-in-fact of those limited partners and assignees
holding depositary receipts for units of limited
partnership interests in FRP ("Depositary Receipts").
Incorporated by reference to Exhibit 28.4 to the Current
Report on Form 8-K of FTX dated July 11, 1986.
4.9 Resignation dated December 26, 1991 of Chase as
Depositary under the Deposit Agreement and appointment
dated December 27, 1991 of Mellon Bank, N.A. ("Mellon")
as successor Depositary, effective January 1, 1992.
Incorporated by reference to Exhibit 4.5 to the FRP 1991
Form 10-K.
4.10 Service Agreement dated as of January 1, 1992 between FRP
and Mellon pursuant to which Mellon will serve as
Depositary under the Deposit Agreement and Custodian
under the Custodial Agreement. Incorporated by reference
to Exhibit 4.6 to the FRP 1991 Form 10-K.
4.11 Amendment to the Deposit Agreement dated as of November
18, 1992 between FRP and Mellon. Incorporated by
reference to Exhibit 4.4 to the FRP 1992 Form 10-K.
4.12 Form of Depositary Receipt. Incorporated by reference to
Exhibit 4.5 to the FRP 1992 Form 10-K.
4.13 Custodial Agreement regarding the FRP Depositary Unit
Reinvestment Plan among FTX, FRP and Chase, effective as
of April 1, 1987 (the "Custodial Agreement").
Incorporated by reference to Exhibit 19.1 to the
Quarterly Report on Form 10-Q of FRP for the quarter
ended June 30, 1987.
4.14 FRP Depositary Unit Reinvestment Plan. Incorporated by
reference to Exhibit 4.4 to the FRP 1991 Form 10-K.
4.15 Credit Agreement dated as of June 30, 1995 (the "FTX/FRP
Credit Agreement") among FTX, FRP, the various financial
institutions which are parties thereto (the "Banks"),
Chemical Bank, as Administrative Agent and Chase, as
Documentary Agent (collectively, the "Agents").
Incorporated by reference to Exhibit 4.1 to the Quarterly
Report on Form 10-Q of FRP for the quarter ended
September 30, 1995.
4.16 First Amendment dated as of January 10, 1996 to the
FTX/FRP Credit Agreement among FTX, FRP, the FTX/FRP
Banks and the Agents. Incorporated by reference to
Exhibit 10.2 to the Current Report on 8-K of FRP dated
February 13, 1996.
4.17 Subordinated Indenture as of October 26, 1990 (the
"Subordinated Indenture") between FRP and Manufacturers
Hanover Trust Company ("MHTC") as Trustee. Incorporated
by reference to Exhibit 4.11 to the Annual Report on Form
10-K of FRP for the fiscal year ended December 31, 1993.
4.18 First Supplemental Indenture dated as of February 15,
1994 between FRP and Chemical Bank, as Successor to MHTC,
as Trustee, to the Subordinated Indenture providing for
the issuance of $150,000,000 of aggregate principal
amount of 8 3/4% Senior Subordinated Notes due 2004.
Incorporated by reference to Exhibit 4.12 to the FRP 1993
Form 10-K.
4.19 Form of Senior Indenture (the "Senior Indenture") from
FRP to Chemical Bank, as Trustee. Incorporated by
reference to Exhibit 4.1 to the Current Report on Form 8-
K of FRP dated February 13, 1996.
4.20 Form of Supplemental Indenture dated February 14, 1996
from FRP to Chemical Bank, as Trustee, to the Senior
Indenture providing for the issuance of $150,000,000
aggregate principal amount of 7% Senior Notes due 2008.
Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K dated February 16, 1996 of FRP.
10.1 Contribution Agreement dated as of April 5, 1993 between
FRP and IMC (the "FRP-IMC Contribution Agreement").
Incorporated by reference to Exhibit 2.1 to the Current
Report on Form 8-K of FRP dated July 15, 1993 (the "FRP
July 15, 1993 Form 8-K").
10.2 First Amendment dated as of July 1, 1993 to the FRP-IMC
Contribution Agreement. Incorporated by reference to
Exhibit 2.2 to the FRP July 15, 1993 Form 8-K.
10.3 Amended and Restated Partnership Agreement dated as of
May 26, 1995 among IMC-Agrico GP Company, Agrico, Limited
Partnership and IMC-Agrico MP Inc. Incorporated by
reference to Exhibit 10.3 to the Annual Report on Form
10-K of FRP for the fiscal year ended December 31, 1995
(the "FRP 1995 Form 10-K").
10.4 Amendment and Agreement dated as of January 23, 1996 to
the Amended and Restated Partnership Agreement dated May
26, 1995 by and among IMC-Agrico MP, Inc., IMC Global
Operations, Inc. and IMC-Agrico Company. Incorporated by
reference to Exhibit 10.1 to the Current Report on Form
8-K dated February 13, 1996 of FRP.
10.5 Amended and Restated Parent Agreement dated as of May 26,
1995 among IMC Global Operations, Inc., FRP, FTX and IMC-
Agrico. Incorporated by reference to the FRP 1995 Form
10-K.
10.6 Asset Purchase Agreement dated as of October 22, 1994
between FRP and Pennzoil Company (the "Asset Purchase
Agreement"). Incorporated by reference to Exhibit 2.1 to
the Current Report on Form 8-K of FRP dated January 18,
1995 (the "FRP January 18, 1995 8-K").
10.7 Amendment No. 1 dated as of January 3, 1995 to the Asset
Purchase Agreement. Incorporated by reference to Exhibit
2.2 to the FRP January 18, 1995 8-K.
Executive Compensation Plans and Arrangements (Exhibits
10.8 through 10.27)
10.8 Annual Incentive Plan of FTX, as amended. Incorporated
by reference to Exhibit 10.24 to the Annual Report on
Form 10-K of FTX for the fiscal year ended December 31,
1994 (the "FTX 1994 Form 10-K").
10.9 1992 Long-Term Performance Incentive Plan of FTX, as
amended. Incorporated by reference to Exhibit 10.25 to
the FTX 1994 Form 10-K.
10.10 1987 Long-Term Performance Incentive Plan of FTX, as
amended. Incorporated by reference to Exhibit 10.26 to
the FTX 1994 Form 10-K.
10.11 FTX Variable Compensation Incentive Program, as amended.
Incorporated by reference to Exhibit 19.4 to the FTX 1991
Third Quarter Form 10-Q.
10.12 FTX Performance Incentive Awards Program, as amended.
10.13 FTX President's Award Program, as amended.
10.14 FTX 1992 Stock Option Plan. Incorporated by reference to
Exhibit 10.3 to the Quarterly Report on Form 10-Q of FCX
for the quarter ended June 30, 1992 (the "FCX 1992 Second
Quarter Form 10-Q").
10.15 1982 Stock Option Plan of FTX, as amended. Incorporated
by reference to Exhibit 10.31 to the FTX 1994 Form 10-K.
10.16 FTX 1992 Stock Incentive Unit Plan. Incorporated by
reference to Exhibit 10.2 to the FCX 1992 Second Quarter
Form 10-Q.
10.17 1988 Stock Option Plan for Non-Employee Directors of FTX,
as amended.
10.18 FTX 1991 Plan for Deferral of Directors' Fees.
Incorporated by reference to Exhibit 10.20 to the Annual
Report on Form 10-K of FTX for the fiscal year ended
December 31, 1991.
10.19 FTX Directors' Charitable Gift Program. Incorporated by
reference to Exhibit 10.29 to the Annual Report on Form
10-K of FTX for the fiscal year ended December 31, 1992
(the "FTX 1992 Form 10-K").
10.20 FTX Matching Gifts Program. Incorporated by reference to
Exhibit 10.30 to the FTX 1992 Form 10-K.
10.21 Financial Counseling and Tax Return Preparation and
Certification Program of FTX, as amended.
10.22 FTX Executive Universal Life Insurance Plan.
Incorporated by reference to Exhibit 10.32 to the FTX
1992 Form 10-K.
10.23 FM Services Company Performance Incentive Awards Program.
Incorporated by reference to Exhibit 10.14 to the Annual
Report on Form 10-K of FCX for the fiscal year ended
December 31, 1995 (the "FCX 1995 Form 10-K").
10.24 Financial Counseling and Tax Return Preparation and
Certification Program of FM Services Company.
Incorporated by reference to Exhibit 10.15 to the FCX
1995 Form 10-K.
10.25 Agreement for Consulting Services between FTX and B. M.
Rankin, Jr., effective as of January 1, 1990.
Incorporated by reference to Exhibit 19.2 to the
Quarterly Report on Form 10-Q of FTX for the quarter
ended March 31, 1990.
10.26 Consulting Agreement dated as of December 22, 1988,
between FTX and Kissinger Associates, Inc. ("Kissinger
Associates"). Incorporated by reference to Exhibit 10.35
to the FTX 1992 Form 10-K.
10.27 Letter Agreement dated May 1, 1989, between FTX and Kent
Associates, Inc. (predecessor in interest to Kissinger
Associates). Incorporated by reference to Exhibit 10.36
to the FTX 1992 Form 10-K.
11.1 FTX and Consolidated Subsidiaries Computation of Net
Income Per Common and Common Equivalent Share.
13.1 Those portions of the 1995 Annual Report to stockholders
of FTX which are incorporated herein by reference.
21.1 Subsidiaries of FTX.
23.1 Consent of Arthur Andersen LLP dated March 27, 1996.
23.2 Consent of Ernst & Young LLP dated March 27, 1996.
24.1 Certified resolution of the Board of Directors of FTX
authorizing this report to be signed on behalf of any
officer or director pursuant to a Power of Attorney.
24.2 Powers of Attorney pursuant to which this report has been
signed on behalf of certain officers and directors of
FTX.
27.1 FTX Financial Data Schedule.
99.1 Report of Ernst & Young LLP.
EXHIBIT 10.12
FREEPORT-MCMORAN INC.
PERFORMANCE INCENTIVE AWARDS PROGRAM
1. Purpose. The purpose of the Performance Incentive Awards
Program (the "Plan") of Freeport-McMoRan Inc. (the "Company") is
to provide greater incentives for certain key management,
professional and technical employees whose performance in
fulfilling the responsibilities of their positions can
significantly affect the performance of the Company or its
operating units. The Plan provides an opportunity to earn
additional compensation in the form of cash incentive payments
based on the employee's individual performance and on the results
achieved by the Company and by the operating or staff unit for
which the employee performs services.
2. Administration. The Plan shall be administered by the
Chairman of the Board of the Company who shall have full
authority to interpret the Plan and from time to time adopt rules
and regulations for carrying out the Plan, subject to such
directions as the Corporate Personnel Committee (the "Committee")
of the Company's Board of Directors may give, either as
guidelines or in particular cases. In connection with his
administration of the Plan, the Chairman of the Board may seek
the views and recommendations of the Company's Operating
Committee.
3. Eligibility for Participation. Each year the Chairman of
the Board shall select the key managerial, professional or
technical employees of the Company or of any of its subsidiaries
who shall be eligible for participation in the Plan during that
year. The Chairman of the Board may in his discretion make such
selection, in whole or in part, on the basis of minimum salary
levels, or position-point levels.
The selection of an employee for eligibility in a particular
year shall not constitute entitlement either to an incentive
payment under the Plan for that year or to selection for
eligibility in any subsequent year. Selection of employees for
eligibility in a particular year will ordinarily be made in
January of that year, but selection of any employee or employees
may be made at any subsequent time or times in such year.
No officer or employee shall receive any incentive payment
under the Plan for any year during which such officer or employee
was a participant in the Freeport-McMoRan Inc. Annual Incentive
Plan.
4. Determination of Target Incentives. At the time each
employee is selected for eligibility in the Plan for a particular
year, the Chairman of the Board shall determine a target
incentive or a target incentive range for the employee with
respect to that year. Such incentive or range shall be
indicative of the incentive payment which the employee might
expect to receive on the basis of strong performance by such
employee, by the Company and by such employee's operating or
staff unit, having regard to such performance standards and
objectives as may be established with respect to that year.
5. Cash Incentive Payments. After the end of each year the
Chairman of the Board shall evaluate, or cause to be evaluated,
the performance of each employee selected for eligibility under
the Plan for that year, as well as the performance of the Company
and the employee's operating or staff unit. Based on such
evaluation, the Chairman of the Board shall determine whether a
cash incentive payment shall be made to such employee for that
year and, if so, the amount of such payment. The aggregate
amount of all such incentive payments shall be submitted to the
Committee for its approval. Subject to such approval, each such
payment (less applicable withholding and other taxes) shall be
made at such time established by the Chairman of the Board or the
Committee after such approval, which shall in no event be later
than February 28 of the year following the year for which the
incentive payments are made. An individual who has been awarded
an incentive payment for a particular year need not be employed
by the Company or any of its subsidiaries at the time of payment
thereof to be eligible to receive such payment. Notwithstanding
any of the foregoing to the contrary, if an individual selected
for eligibility under the Plan for a particular year should cease
to be employed by the Company and its subsidiaries for any reason
prior to the end of such year, the Chairman of the Board shall
evaluate, or cause to be evaluated, the performance of such
employee and the employee's operating or staff unit for the
portion of such year prior to such cessation of employment.
Based on such evaluation, the Chairman of the Board shall
determine whether a cash incentive payment shall be made to such
employee for that year and, if so, the amount of such payment.
The aggregate amount of all such incentive payments shall be
submitted to the Committee for its approval. Subject to such
approval, each such payment (less applicable withholding and
other taxes) shall be made at such time established by the
Chairman of the Board or the Committee after such approval, which
may be made at any time during the year for which such incentive
payments are made but shall in no event be later than February 28
of the year following such year.
6. Optional Deferral of Payments. If, prior to the date
established by the Chairman of the Board or the Committee for any
year for which incentive payments are made, an employee selected
for participation in the Plan shall so elect, in accordance with
procedures established by the Chairman of the Board, all or any
part of a cash incentive payment to such employee with respect to
such year shall be deferred and paid in one or more periodic
installments, not in excess of ten, at such time or times before
or after the date of such employee's Termination of Employment
(as hereinafter defined), but not later than ten years after such
date of Termination of Employment, as shall be specified in such
election. If and only if any cash incentive payment or portion
thereof is so deferred for payment after December 31 of the year
following the year for which the incentive payment is made, such
cash incentive payment or portion thereof, as the case may be,
shall, commencing with January 1 of the year following the year
for which the incentive payment is made, be increased at a rate
equal to the prime commercial lending rate announced from time to
time by The Chase Manhattan Bank, N.A. (compounded quarterly) or
at such other rate and in such manner as shall be determined from
time to time by the Committee. If such employee's Termination of
Employment occurs for any reason other than early or normal
retirement under the retirement plan of this corporation or
retirement with the consent of this corporation outside the
retirement plan of this corporation and if, on the date of such
Termination of Employment, there remain unpaid any installments
of cash incentive payments which have been deferred as provided
in this Section 6, the Committee or the Chairman of the Board
may, in its or his discretion, direct the payment to such
employee of the aggregate amount of such unpaid installments in a
lump sum, notwithstanding such election. Solely for purposes of
this Section 6, the term "Termination of Employment" shall mean
the cessation of the rendering of services, whether or not as an
employee, to any and all of the following entities: the Company;
any subsidiary of the Company; Freeport-McMoRan Copper & Gold
Inc.; any subsidiary of Freeport-McMoRan Copper & Gold Inc.;
McMoRan Oil & Gas Co.; any subsidiary of McMoRan Oil & Gas Co.;
any corporation or other entity in which any two or more of the
aforementioned entities collectively possess, directly or
indirectly, equity interests representing at least 50% of the
total ordinary voting power or at least 50% of the total value of
all classes of equity interests of such corporation or other
entity; and any law firm rendering services to any of the
foregoing entities provided such law firm consists of at least
two or more members or associates who are or were officers of the
Company, any subsidiary of the Company, Freeport-McMoRan Copper &
Gold Inc., any subsidiary of Freeport-McMoRan Copper & Gold Inc.,
McMoRan Oil & Gas Co., or any subsidiary of McMoRan Oil & Gas Co.
7. General Provisions. The selection of an employee for
participation in the Plan shall not give such employee any right
to be retained in the employ of the Company or any of its
subsidiaries, and the right of the Company and of such subsidiary
to dismiss or discharge any such employee is specifically
reserved. The benefits provided for employees under the Plan
shall be in addition to, and in no way preclude, other forms of
compensation to or in respect of such employee.
8. Amendment or Termination. The Committee may from time to
time amend or at any time terminate the Plan.
EXHIBIT 10.13
Freeport-McMoRan Inc.
President's Award Program
Purpose
The purpose of the President's Award Program (the "Program") of
Freeport-McMoRan Inc. (the "Company") is to provide an
opportunity for discretionary cash rewards for those situations
where an outstanding individual contribution cannot properly be
or should not be rewarded with merit salary increases, annual
incentives, or promotion.
Administration
The Program shall be administered by the President and Chief
Executive Officer of the Company. The President shall have full
authority to interpret the provisions of the Program and to make
Awards thereunder.
Eligibility for and Payment of Awards
The following persons are eligible to receive Awards under the
Program: (i) any person providing services as an officer of the
Company or a Subsidiary (as hereinafter defined), whether or not
employed by such entity, but excluding any such person who is
also a director of the Company, (ii) any employee of the Company
or a Subsidiary, including bargaining-unit employees but
excluding any director who is also an employee of the Company or
a Subsidiary, (iii) any officer, employee, member, or associate
of an entity with which the Company has contracted to receive
executive, management, or professional services who provides
services to the Company or a Subsidiary through such arrangement,
and (iv) any member or associate of, or counsel to, a law firm
rendering services to the Company or a Subsidiary. For purposes
of the Program, "Subsidiary" shall mean (i) any corporation or
other entity in which the Company possesses directly or
indirectly equity interests representing at least 50% of the
total ordinary voting power or at least 50% of the total value of
all classes of equity interests of such corporation or other
entity and (ii) any other entity in which the Company has a
direct or indirect economic interest that is designated as a
Subsidiary by the President. Recommendations for a President's
Award must be made to, and in a manner prescribed by, the
President by senior executives of the Company. The aggregate
amount of all Awards granted with respect to any calendar year
may not exceed $150,000. The Awards can be granted and paid at
any time during the calendar year deemed appropriate by the
President.
General Provisions
The Program shall be funded from operating earnings of the
Company and shall not be deducted from any funds established for
the purpose of salary or incentive payments. The Program will
become effective on December 2, 1987 upon approval by the Board
of Directors of the Company and shall continue as provided herein
except as amended or terminated by the Board of Directors.
EXHIBIT 10.17
1988 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
OF FREEPORT-MCMORAN INC.
ARTICLE I
PURPOSE OF THE PLAN
This 1988 Stock Option Plan for Non-Employee Directors (this
"Plan") is intended to provide a method whereby non-employee
directors of Freeport-McMoRan Inc. (the "Company"), who are
making and will continue to make substantial contributions to the
success of the Company and its Subsidiaries (as hereinafter
defined), may be compensated for their contributions and
encouraged to acquire a proprietary interest in the Company, and
whereby prospective new directors may be persuaded to serve the
Company as directors, and to promote the interests of the Company
and all its stockholders. Accordingly, the Company will, on or
before May 1, 1997, grant to such persons as are identified in
this Plan, in the manner hereinafter provided, options
("Options") to purchase shares of the Common Stock of the Company
("Common Stock"), on the terms and subject to the conditions
hereinafter set forth.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following terms shall
have the meanings indicated:
Applicable Rate: The rate, expressed as a percentage,
determined according to the following formula:
x divided by (1 - x)
in which x equals the maximum federal income tax rate
applicable to individuals in effect on the applicable Income
Recognition Date; provided, the Applicable Rate shall never
exceed 100%.
Board: The Board of Directors of the Company.
Change in Control: A Change in Control shall be deemed
to have occurred if either (a) any person, or any two or
more persons acting as a group, and all affiliates of such
person or persons, shall own beneficially more than 20% of
the Common Stock outstanding (exclusive of shares held in
the Company's treasury or by the Company's Subsidiaries)
pursuant to a tender offer, exchange offer or series of
purchases or other acquisitions, or any combination of those
transactions, or (b) there shall be a change in the
composition of the Board at any time within two years after
any tender offer, exchange offer, merger, consolidation,
sale of assets or contested election, or any combination of
those transactions (a "Transaction"), so that (i) the
persons who were directors of the Company immediately before
the first such Transaction cease to constitute a majority of
the Board of Directors of the corporation which shall
thereafter be in control of the companies that were parties
to or otherwise involved in such Transaction, or (ii) the
number of persons who shall thereafter be directors of such
corporation shall be fewer than two-thirds of the number of
directors of the Company immediately prior to such first
Transaction. A Change in Control shall be deemed to take
place upon the first to occur of the events specified in the
foregoing clauses (a) and (b).
Code: The Internal Revenue Code of 1986, as amended
from time to time.
Election Period: The period beginning on the third
business day following a date on which the Company releases
for publication its quarterly or annual summary statements
of sales and earnings, and ending on the twelfth business
day following such date.
Eligible Director: A director of the Company who is
not, and within the preceding one year has not been, an
employee of the Company or a Subsidiary or otherwise
eligible for selection to participate in any plan of the
Company or any Subsidiary that entitles the participants
therein to acquire stock, stock options or stock
appreciation rights of the Company or its Subsidiaries.
Fair Market Value: The average of the high and low
quoted sale prices of a share of Common Stock or a
Subsidiary Equity Security on the date in question (or, if
there is no reported sale on such date, on the last
preceding date on which any reported sale occurred) on the
Composite Tape for the New York Stock Exchange-Listed Stocks
or, if on such date the Common Stock or Subsidiary Equity
Security is not quoted on such Composite Tape, on the New
York Stock Exchange.
Income Recognition Date: With respect to any share of
Common Stock purchased upon the exercise of an Option or any
Subsidiary Equity Security distributed in connection
therewith, the later of (a) the date of such exercise, or
(b) the date on which the rights of the holder of such
Option in such security become transferable and not subject
to a substantial risk of forfeiture (within the meaning of
Section 83 of the Code); provided, however, that if such
holder shall make an election pursuant to Section 83(b) of
the Code with respect to such security the Income
Recognition Date with respect thereto shall be the date of
the Option exercise.
Option Cancellation Gain: With respect to the
cancellation of an Option pursuant to Section 3 of Article
IV hereof, the sum of (a) the excess of the Fair Market
Value as of the Option Cancellation Date (as that term is
defined in Section 3 of Article IV hereof) of all the
outstanding shares of Common Stock covered by such Option,
whether or not then exercisable, over the purchase price of
such shares under such Option, (b) the Fair Market Value as
of the Option Cancellation Date of any Subsidiary Equity
Securities that would have been distributed pursuant to
Section 5 of Article VII hereof had there been an exercise
as of the Option Cancellation Date of all the outstanding
shares of Common Stock covered by such Option, whether or
not then exercisable, (c) the amount of any cash in lieu of
any Subsidiary Equity Securities and any fractional
interests therein that would have been distributed pursuant
to Section 5 of Article VII hereof had there been an
exercise as of the Option Cancellation Date of all the
outstanding shares of Common Stock covered by such Option,
whether or not then exercisable, plus (d) the amount equal
to the Applicable Rate multiplied by the total of the
amounts set forth in clauses (a), (b) and (c).
Option Gain: The sum of (a) the excess of the Fair
Market Value of the shares of Common Stock covered by the
exercise of an Option over the purchase price of such shares
under such Option, plus (b) the Fair Market Value of any
Subsidiary Equity Securities (including fractions thereof)
distributed or paid in the form of cash as a result of such
exercise pursuant to Section 5 of Article VII hereof; as
such Fair Market Values are determined in each case on (i)
the Income Recognition Date with respect to each such
security or (ii) the date of such exercise, whichever is
less.
Subsidiary: Any corporation of which stock
representing at least 50% of the ordinary voting power is
owned, directly or indirectly, by the Company and any other
entity of which equity securities or interests representing
at least 50% of the ordinary voting power or 50% of the
total value of all classes of equity securities or interests
of such entity are owned, directly or indirectly, by the
Company.
Subsidiary Equity Security: Any security or interest
in the nature of an equity security or interest, according
to generally accepted accounting principles, of a Subsidiary
or a former Subsidiary or any security or interest
representing such a security or interest; including
specifically, but without limiting the generality of the
foregoing, shares of common stock of Freeport-McMoRan Gold
Company, Freeport-McMoRan Copper Company, Inc., and
Freeport-McMoRan Oil & Gas Company and depositary units of
Freeport-McMoRan Energy Partners, Ltd. and Freeport-McMoRan
Resource Partners, Limited Partnership.
ARTICLE III
ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board. The Board will
interpret this Plan and may from time to time adopt such rules
and regulations for carrying out the terms and provisions of this
Plan as it may deem best; however, the Board shall have no
discretion with respect to the selection of directors who receive
Options, the number of shares of Common Stock subject to any
Options or the purchase price thereof. All determinations by the
Board shall be made by the affirmative vote of a majority of its
members, but any determination reduced to writing and signed by a
majority of its members shall be fully as effective as if it had
been made by a majority vote at a meeting duly called and held.
Subject to any applicable provisions of the Company's By-Laws or
of this Plan, all determinations by the Board pursuant to the
provisions of this Plan, and all related orders or resolutions of
the Board, shall be final, conclusive and binding on all persons,
including the Company and its stockholders, employees, directors
and optionees.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
SECTION 1. The shares to be issued or delivered upon
exercise of Options shall be made available, at the discretion of
the Board, either from the authorized but unissued shares of
Common Stock of the Company or from shares of Common Stock
reacquired by the Company, including shares purchased by the
Company in the open market or otherwise obtained; provided,
however, that the Company, at the discretion of the Board, may,
upon exercise of Options granted under this Plan, cause a
Subsidiary to deliver shares of Common Stock held by such
Subsidiary. Any Subsidiary Equity Securities distributed
pursuant to Section 5 of Article VII of this Plan shall be made
available from the Company's holdings of such Subsidiary Equity
Securities purchased by the Company or a Subsidiary in the open
market or otherwise obtained.
SECTION 2. Subject to the provisions of Section 3 of this
Article IV, the aggregate number of shares of Common Stock which
may be purchased pursuant to Options shall not exceed 250,000.
SECTION 3. In the event of the payment of any dividends
payable in Common Stock, or in the event of any subdivision or
combination of the Common Stock, the number of shares which may
be purchased under this Plan shall be increased or decreased
proportionately, as the case may be, and the number of shares of
Common Stock deliverable upon the exercise thereafter of any
Option theretofore granted (whether or not then exercisable)
shall be increased or decreased proportionately, as the case may
be, without change in the aggregate purchase price. In the event
the Company is merged or consolidated into or with another
corporation in a transaction in which the Company is not the
survivor, or in the event that substantially all of the Company's
assets are sold to another entity not affiliated with the
Company, any holder of an Option, whether or not then
exercisable, shall be entitled to receive (unless the Company
shall take such alternative action as may be necessary to
preserve the economic benefit of the Option for the optionee) on
the effective date of any such transaction (the "Option
Cancellation Date"), in cancellation of such Option, an amount in
cash equal to the Option Cancellation Gain relating thereto,
determined as of the Option Cancellation Date. In the event of
(i) a dividend or distribution (other than cash dividends or
distributions) with respect to any Subsidiary Equity Securities
distributable or payable in the form of cash pursuant to Section
5 of Article VII hereof, (ii) a subdivision or combination of any
such Subsidiary Equity Securities, (iii) any recapitalization,
reorganization, merger, consolidation, liquidation, or other
extraordinary event affecting any such Subsidiary Equity
Securities, or (iv) the disposition by the Company and its
Subsidiaries of all or substantially all of their holdings of any
such Subsidiary Equity Securities, the terms of any Option
theretofore granted hereunder (whether or not then exercisable)
shall be subject to such adjustment as the Board may deem
appropriate, including, without limitation, a proportional
adjustment in the number of such Subsidiary Equity Securities
deliverable upon the exercise of such Option or of any right
attached thereto or provided for therein or the substitution, on
an equitable basis, of Common Stock, other Subsidiary Equity
Securities, or a combination thereof for such Subsidiary Equity
Securities.
ARTICLE V
PURCHASE PRICE OF OPTIONED SHARES
The purchase price per share of Common Stock under each
Option shall be 100% of the Fair Market Value of a share of
Common Stock at the time such Option is granted, but in no case
shall such price be less than the par value of the Common Stock.
ARTICLE VI
ELIGIBILITY OF RECIPIENTS
Options will be granted only to individuals who are Eligible
Directors at the time of such grant. No individual who is an
employee of the Company or a Subsidiary at the time of such grant
shall be eligible to receive an Option.
ARTICLE VII
GRANT OF OPTIONS
SECTION 1. Each Option shall constitute a non-qualified
stock option which is not intended to qualify under Section 422A
of the Code.
SECTION 2. On May 1, 1988 and May 1 of each subsequent year
through and including 1997, each Eligible Director, as of each
such date, shall be granted an Option to purchase 1,664 shares of
Common Stock. Each Option shall become exercisable with respect
to 416 shares on each of the first, second, third and fourth
anniversaries of the date of grant and may be exercised by the
holder thereof with respect to all or any part of the shares
comprising each installment as such holder may elect at any time
after such installment becomes exercisable but no later than the
termination date of such Option; provided that each Option shall
become exercisable in full upon a Change in Control.
SECTION 3. The purchase price of shares subject to any
Option shall be the Fair Market Value thereof on the respective
date of grant.
SECTION 4. Each Option shall provide that, promptly
following the last Income Recognition Date with respect to an
exercise of all or any portion of such Option, the Company shall
pay to the holder of such Option an amount in cash equal to the
Option Gain multiplied by the Applicable Rate.
SECTION 5. Each Option shall provide that, upon the
exercise of such Option or portion thereof, such optionee will be
entitled to receive from the Company any Subsidiary Equity
Securities distributed or distributable in respect of the shares
of Common Stock covered by such exercise, to which the optionee
would have been entitled had such optionee been a holder of
record of such covered shares at all times from the date of grant
of such Option to the date immediately preceding the effective
date of such exercise. Any such distribution will be in kind,
with cash payment for fractional interests of any Subsidiary
Equity Security to be valued in proportion to the Fair Market
Value of the respective Subsidiary Equity Security on the date of
such exercise; provided however, that in the case of any
distribution of Subsidiary Equity Securities to an optionee who
is subject to Section 16 of the Securities Exchange Act of 1934
in respect of such Securities, such optionee shall not be
entitled to receive such Securities, but shall be entitled to
receive in lieu thereof a number of shares of Common Stock having
an aggregate Fair Market Value, on the date of such exercise,
equal to the aggregate Fair Market Value, on the date of such
exercise, of such Subsidiary Equity Securities. No fractional
shares of Common Stock shall be delivered pursuant to the
foregoing proviso; however, fractional shares that would have
been delivered upon the exercise of the Option in part but for
this sentence shall be accumulated with fractional shares so
resulting from any subsequent exercise of such Option, and any
whole shares resulting from such accumulation shall be delivered
upon any such subsequent exercise. Notwithstanding the
foregoing, if an optionee is, on the date of any such exercise,
ineligible to own any Subsidiary Equity Securities that would
otherwise be distributable to such optionee in accordance with
this section, such optionee will be entitled to receive from the
Company in cash the Fair Market Value, as of such date, of any
such Subsidiary Equity Securities (including fractions thereof).
ARTICLE VIII
NON-TRANSFERABILITY OF OPTIONS
No Option shall be transferable by the optionee otherwise
than by will or by the laws of descent and distribution, and any
such Option shall be exercisable during the lifetime of the
optionee only by the optionee or the optionee's duly appointed
legal representative.
ARTICLE IX
EXERCISE OF OPTIONS
SECTION 1. Each Option shall terminate 10 years and two
days from the date on which it was granted.
SECTION 2. Except in cases provided for in Article X
hereof, each Option may be exercised only while the optionee is
an Eligible Director.
SECTION 3. Each Option shall provide that the Option or any
portion thereof may be exercised only during an Election Period.
Each Option shall provide, however, that in the event of a Change
in Control, the Election Period exercise requirement is waived.
SECTION 4. A person electing to exercise an Option or any
portion thereof then exercisable shall give written notice to the
Company of such election and of the number of shares of Common
Stock such person has elected to purchase, and shall at the time
of purchase tender the full purchase price of such shares, which
tender shall be made in cash or cash equivalent (which may be
such person's personal check) or in shares of Common Stock
already owned by such person (which shares shall be valued for
such purpose on the basis of their Fair Market Value on the date
of exercise), or in any combination thereof. The Company shall
have no obligation to deliver shares of Common Stock pursuant to
the exercise of any Option, or any Subsidiary Equity Securities
distributable in connection therewith, in whole or in part, until
such payment in full of the purchase price of such shares of
Common Stock is received by the Company. No optionee, or legal
representative, legatee or distributee of such optionee, shall be
or be deemed to be a holder of any shares of Common Stock subject
to such Option or any Subsidiary Equity Securities distributable
in connection with the exercise thereof, or entitled to any
rights of a stockholder of the Company or a Subsidiary in respect
of any shares of Common Stock covered by such Option or any
Subsidiary Equity Securities distributable in connection
therewith until such shares of Common Stock have been paid for in
full and certificates for such shares of Common Stock and such
Subsidiary Equity Securities have been issued or delivered by the
Company.
SECTION 5. Each Option shall be subject to the requirement
that if at any time the Board shall be advised by counsel that
the listing, registration or qualification of the shares of
Common Stock subject to such Option, or the Subsidiary Equity
Securities distributable in connection with the exercise thereof,
upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the issue or purchase of
shares thereunder or the distribution of Subsidiary Equity
Securities with respect thereto, such Option may not be exercised
in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free from any conditions not reasonably acceptable to
such counsel for the Board.
SECTION 6. The Company may establish appropriate procedures
to provide for payment or withholding of such income or other
taxes as may be required by law to be paid or withheld in
connection with the exercise of Options, and to ensure that the
Company receives prompt advice concerning the occurrence of any
event which may create, or affect the timing or amount of, any
obligation to pay or withhold any such taxes or which may make
available to the Company any tax deduction resulting from the
occurrence of such event.
ARTICLE X
TERMINATION OF SERVICE
AS AN ELIGIBLE DIRECTOR
SECTION 1. If and when an optionee shall cease to be an
Eligible Director for any reason other than death or retirement
from the Board, all of the optionee's Options shall be terminated
except that any Option, to the extent then exercisable, may be
exercised within three months after such optionee ceases to be an
Eligible Director, but not later than the termination date of the
Option.
SECTION 2. If and when an optionee shall cease to be an
Eligible Director by reason of the optionee's retirement from the
Board, all of the optionee's Options shall be terminated except
that any Option, to the extent then exercisable or exercisable
within one year thereafter, may be exercised within three years
after such retirement, but not later than the termination date of
the Option.
SECTION 3. Should an optionee die while serving as an
Eligible Director, all the optionee's Options shall be
terminated, except that any Option to the extent exercisable by
the optionee at the time of such death, together with the
unmatured installment (if any) of such Option which at that time
is next scheduled to become exercisable, may be exercised within
one year after the date of such death, but not later than the
termination date of the Option, by the optionee's estate or by
the person designated in the optionee's last will and testament.
SECTION 4. Should an optionee die after ceasing to be an
Eligible Director, all of the optionee's Options shall be
terminated, except that any Option, to the extent exercisable by
the optionee at the time of such death, may be exercised within
one year after the date of such death, but not later than the
termination date of the Option, by the optionee's estate or by
the person designated in the optionee's last will and testament.
ARTICLE XI
AMENDMENTS TO PLAN AND OPTIONS
SECTION 1. The provisions of this Plan that pertain to any
matter set forth in Rule 16b-3(c)(2)(ii)(A) under the Securities
Exchange Act of 1934, as such rule or any successor thereto may
be amended from time to time, shall not be amended more than once
every six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act, or the rules
thereunder.
SECTION 2. Subject to the provisions of Section 1 of this
Article XI, the Board may at any time terminate or from time to
time amend, modify or suspend this Plan; provided, however, that
no such amendment or modification without the approval of the
stockholders shall:
(a) except pursuant to Section 3 of Article IV,
increase the maximum number (determined as provided in this
Plan) of shares of Common Stock which may be purchased
pursuant to Options, either individually or in aggregate;
(b) permit the granting of any Option at a purchase
price other than 100% of the Fair Market Value of the Common
Stock at the time such option is granted, subject to
adjustment pursuant to Section 3 of Article IV;
(c) permit the exercise of an Option unless the full
purchase price of the shares as to which the Option is
exercised is paid at the time of exercise;
(d) extend beyond May 1, 1997, the period during which
Options may be granted;
(e) modify in any respect the class of individuals who
constitute Eligible Directors; or
(f) materially increase the benefits accruing to
participants hereunder.
EXHIBIT 10.21
Freeport-McMoRan Inc. Financial Counseling and
Tax Return Preparation and Certification Program
1. Purpose. The purpose of the Freeport-McMoRan Inc. Financial
Counseling and Tax Return Preparation and Certification Program (the
"Program") is to enable those senior executives chosen to participate in
the Program to devote to the business activities of Freeport-McMoRan
Inc. (the "Company") or its subsidiaries the time and attention that
such executives would otherwise have had to devote to their personal
financial or tax affairs, and, in the case of the Tax Return Preparation
and Certification aspect of the Program, to provide the Company with
assurance that the tax affairs of participating executives are properly
attended to. To this end, the Program contemplates providing
professional counseling services in the area of personal financial and
estate planning (other than investment advice) by an independent adviser
selected by each participant from among several designated by the
Company. It also contemplates the provision of professional assistance,
by a nationally recognized public accounting firm selected by the
Company, with the preparation and filing of personal income tax returns,
followed by a certification by such firm to the Company that all
required returns have been properly prepared and timely filed.
2. Administration. The Program shall be administered by the Chairman
of the Board of the Company who shall have full authority to interpret
the Program and from time to time adopt rules and regulations for
carrying out the Program, subject to such directions as the Corporate
Personnel Committee (the "Committee") of the Company's Board of
Directors may give, either as guidelines or in particular cases.
3. Eligibility for Participation. Participation in the Financial
Counseling aspect of the Program shall be offered to the Chairman of the
Board, the President and the Senior Vice Presidents of the Company, and,
in addition to such participants in the current Long-Term Performance
Incentive Plan as may from time to time be selected by the Chairman of
the Board. The Chairman of the Board of the Company shall also from
time to time select from among the senior executives of the Company and
its divisions and subsidiaries those individuals who are to be requested
to participate in the Tax Return Preparation and Certification aspect of
the Program. Participation in either aspect of the Program will
normally continue through the year following each participant's
retirement.
4. General Provisions. The selection of any employee for
participation in either aspect of the Program shall not give such
employee any right to be retained in the employ of the Company or any of
its subsidiaries, and the right of the Company and of such subsidiary to
dismiss or discharge any such employee is specifically reserved. The
benefits provided for employees under either aspect of the Program shall
be in addition to, and in no way preclude, other forms of compensation
to or in respect of such employee.
5. Additional Cash Payment. An additional cash payment shall be paid
to each participant as provided herein in order to gross-up fees paid
pursuant to the Program for tax purposes.
For participants in the Program, a cash payment shall be paid during
such tax reporting year according to the following formula:
(the lesser of A or B) x _(C + D)
[1 - (C + D)]
in which A equals two percent of the participant's estimated income in
the current tax reporting year, to be reported by the Company on the
participant's form W-2 for such year; B equals the amount of fees paid
during such year on the participant's behalf pursuant to the Program; C
equals the maximum federal income tax rate applicable to individuals in
effect during such year; and D equals the combined maximum applicable
state and local income tax rates applicable to individuals in effect
during such year.
6.Amendment or Termination. The Committee may from time amend or at any
time terminate the Program.
Executed this day of , 1995.
Freeport-McMoRan Inc.
_______________________________
Chairman of the Board
Reviewed:
_________________________
General Counsel
Exhibit 11.1
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
Years Ended December 31,
-----------------------------------
1995 1994 1993
---------- ---------- ----------
(In Thousands, Except Per Share Amounts)
Primary:
Net income (loss) applicable
to common stock $ 390,541 $ 41,443 $ (126,203)
========== ========== ==========
Average common shares
outstanding 25,839 23,106 23,470
Common stock equivalents:
Stock options 242 98 129
---------- ---------- ----------
Average common and common
equivalent shares outstanding 26,081 23,204 23,599
========== ========== ==========
Net income (loss) per common
and common equivalent share $ 14.97 $ 1.79 $ (5.35)
========== ========== ==========
Fully Diluted:
Net income (loss) applicable
to common stock $ 390,541 $ 41,443 $ (126,203)
Plus preferred dividends 8,756 - -
Plus interest, net of tax
effect, on convertible
subordinated debentures 15,921 - -
---------- ---------- ----------
Net income (loss) applicable
to common stock $ 415,218 $ 41,443 $ (126,203)
========== ========== ==========
Average common shares
outstanding 25,839 23,106 23,470
Common stock equivalents:
Stock options 271 98 213
Convertible securities:
2,347 - -
783 - -
---------- ----------- ----------
Average common and common
equivalent shares
outstanding 29,240 23,204 23,683
========== ========== ==========
Net income (loss) per common
and common equivalent share $ 14.20 $ 1.79 $ (5.35)
========== ========== ==========
EXHIBIT 13.1
SELECTED FINANCIAL AND OPERATING DATA
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
(Financial Data In Millions, Except Per Share Amounts)
FINANCIAL DATA a
Years Ended December 31:
Revenues $995.9 $770.1 $684.7 $940.6 $1,111.7
Operating income
(loss) 182.9 91.9 (243.4) (24.6) 45.7
Net income (loss) from:
Operations $25.3b $(35.1)b $(77.0) $(27.3) $36.3
Discontinued
operations 340.4 107.7 35.4 215.1 50.9
Nonrecurring
gains/
(losses),
net c 67.1 - (48.6) - 5.0
Changes in accounting
principle and
extraordinary
loss - (9.1) (13.6) - (51.2)
Preferred
dividends (42.3)d (22.1) (22.4) (18.7) (.9)
----- ----- ------ ------ ------
Net income (loss)
applicable to
common stock $390.5 $ 41.4 $(126.2) $169.1 $40. 1
====== ======= ======== ======= ======
Net income (loss) per primary share from:
Operations $.97b $(1.51)b $(3.26) $(1.13) $1.56
Discontinued
operations 13.05 4.64 1.50 8.93 2.19
Nonrecurring
gains/(losses),
net c 2.57 - (2.06) - .21
Changes in accounting
principle and
extraordinary
loss - (.39) (.58) - (2.20)
Preferred
dividends (1.62)d (.95) (.95) (.78) (.04)
----- ---- ---- ---- ----
Net income
(loss)
applicable to
common stock $14.97 $1.79 $(5.35) $7.02 $1.72
====== ====== ====== ====== =====
Average common
shares
outstanding 26.1 23.2 23.6 24.1 23.3
Dividends per common share:
Cash $.18 $1.875 $7.50 $7.50 $7.50
Property e 108.41 7.768 - 1.05 -
------- ----- ------ ----- ------
$108.59 $9.643 $7.50 $8.55 $7.50
======== ======= ====== ====== ======
At December 31:
Property, plant
and equipment,
net $999.8 $964.5 $1,102.8 $1,271.2 $1,647.5
Long-term debt,
less current
portion 359.5 1,122.1 1,082.8 785.5 1,308.0
Minority interest 196.0 217.8 239.8 418.6 206.5
Stockholders'
equity 191.9 (230.5) .6 346.0 388.3
Total assets 1,320.5 1,649.4 1,888.6 2,157.4 2,587.5
OPERATING
Phosphate fertilizers -primarily diammonium phosphate (DAP)
Sales
(short tons) f 3,427,700 3,193,400 3,346,600 3,984,000 4,027,000
Average
realized
price g
All phosphate
fertilizers $169.07 $144.13 $110.03 $127.27 $147.10
DAP 175.11 149.32 113.09 132.11 154.07
Phosphate rock
Sales
(short tons)f 4,470,400 4,373,400 3,840,300 3,440,500 2,247,000
Average
realized
price g $22.53 $21.38 $22.02 $26.96 $28.21
Sulphur
Sales
(long tons) h 3,049,700 2,087,800 1,973,200 2,346,100 2,528,200
Oil
Sales (barrels) 2,217,600 2,533,700 3,443,000 4,884,000 350,800
Average
realized price $15.82 $13.74 $14.43 $15.91 $13.34
FREEPORT-McMoRan INC.
SELECTED FINANCIAL AND OPERATING DATA
NOTES
a. Restated to reflect copper/gold business activities as
discontinued operations. Also reflects the one-for-six reverse
stock split approved in October 1995.
b. Includes minority interest charges totaling $14.4 million
($0.55 per share) in 1995 and $17.2 million ($0.74 per share) in
1994 because FTX was not paid its proportionate share of FRP
distributions. Also includes stock option charges totaling $5
million ($0.19 per share) in 1995 caused by the rise in FTX's
common stock price during the year.
c. In 1995 includes gains primarily related to the settlement
of certain insurance claims ($5.3 million or $0.20 per share), a
tax benefit attributable to the reversal of certain tax accruals
no longer required ($62.8 million or $2.41 per share) and a
charge for an early retirement program ($1 million or $0.04 per
share); in 1993 includes the loss on restructuring activities and
valuation and sale of assets; and in 1991 includes an insurance
settlement gain ($7.3 million or $0.31 per share), net of a loss
on the valuation of assets ($2.3 million or $0.10 per share).
d. Includes a $33.5 million charge ($1.29 per share) resulting
from the $4.375 Convertible Exchangeable Preferred Stock exchange
offer.
e. Reflects the fair market value of property distributions
(FCX in 1995 and 1994, MOXY in 1994 and FMPO in 1992).
f. Reflects FRP's 43.6 percent, 45.1 percent and 46.5 percent
share of IMC-Agrico assets for the years ended June 30, 1996 -
1994, respectively, while FRP received 53.1 percent, 55 percent
and 58.6 percent, respectively, of the cash flow generated during
such periods.
g. Represents average realization f.o.b. plant/mine.
h. Includes internal consumption totaling 754,400 tons, 739,900
tons, 1,138,800 tons, 1,654,300 tons and 1,612,400 tons for
1995-1991, respectively.
FREEPORT-McMoRan Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS
In July 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 (Note 3),
completing a restructuring plan to separate its copper/gold and
agricultural minerals businesses into two independent financial
and operating entities. Prior to the distribution, FTX completed
certain recapitalization activities, including the sale of 23.9
million FCX Class A common shares for net proceeds of $497.2
million, the conversion/redemption of FTX's preferred stock and
publicly held debt securities (Notes 4 and 7) and the repayment
of FTX's parent company bank borrowings. FTX also obtained a new
credit facility following the FCX distribution which provides
greater financial flexibility and reduced financing costs.
FTX's ongoing business operations now essentially consist of
its 51.5 percent ownership in Freeport-McMoRan Resource Partners,
Limited Partnership (FRP). FRP has benefited from the favorable
pricing trends for its phosphate fertilizer products which began
in mid-1993 and have continued through 1995, as evidenced by its
dramatically improved operating results and significantly higher
operating cash flow. Phosphate fertilizer market fundamentals
continue to remain positive with the anticipation of increased
global demand coupled with a currently tight supply/demand
situation. As a result, Standard & Poor's raised FRP's senior
debt rating to an investment grade of BBB-, serving to reduce
financing costs.
During 1995, FRP built on its already strong asset base by
participating in two separate acquisitions (Note 5); the
purchase of Pennzoil Co.'s Culberson sulphur mine and related
assets, and the IMC-Agrico Company (IMC-Agrico) purchase of the
animal feed ingredients business of Mallinckrodt Group Inc. Both
acquisitions served to strengthen FRP's strategic market
position. The Pennzoil transaction added both sulphur reserves
and a significant sulphur transportation system. The
Mallinckrodt animal feed ingredients business is one of the
world's largest producers of phosphate-based animal feed
ingredients with an annual capacity in excess of 700,000 tons.
This business is IMC-Agrico's largest phosphoric acid customer,
consuming nearly 300,000 tons per year or about seven percent of
IMC-Agrico's capacity. FRP continues to evaluate additional
growth opportunities.
RESULTS OF OPERATIONS
Because FTX no longer owns any interest in FCX, FTX's financial
results were restated to reflect FCX's copper/gold business as
discontinued operations. Additionally, in October 1995, FTX
effected a one-for-six reverse split of its common stock.
Accordingly, all common and per share amounts have been restated.
1995 1994 1993
---------- ---------- ----------
(In Millions)
Revenues $ 995.9 $ 770.1 $ 684.7
Operating income (loss) 182.9 91.9 (243.4)
Net income (loss) from:
Operations $ 25.3a $ (35.1)a $ (77.0)
Discontinued operations (Note 3) 340.4 107.7 35.4
Nonrecurring gains/
(losses), net 67.1b - (48.6)c
Changes in accounting
principle and extraordinary
loss - (9.1) (13.6)
Preferred dividends (42.3)d (22.1) (22.4)
---------- ---------- ----------
Net income (loss)
applicable to common stock $ 390.5 $ 41.4 $ (126.2)
========== ========== ==========
a. Includes minority interest charges totaling $14.4 million in
1995 and $17.2 million in 1994 because FTX was not paid its
proportionate share of FRP distributions, and stock option
charges of $5 million in 1995.
b. Consists of a $5.3 million gain (included in other income)
primarily related to the settlement of certain insurance claims,
a $62.8 million tax benefit and a $1 million charge for an early
retirement program.
c. Consists of restructuring, asset sales/recoverability and
other related charges.
d. Includes a $33.5 million charge resulting from the $4.375
Convertible Exchangeable Preferred Stock exchange offer (Note 7).
1995 Compared With 1994. FTX benefited from the significant
strengthening in the phosphate fertilizer markets throughout 1995
and the expansion of its sulphur production capacity (see
Selected Financial and Operating Data), resulting in higher
revenues and improved operating results. Depreciation and
amortization for 1995 decreased $9.6 million from the 1994
amount, primarily caused by a $10.5 million decline relating to
FRP's disproportionate interest in the IMC-Agrico joint venture
cash distributions, partially offset by a $2.7 million increase
resulting from the acquired sulphur assets.
General and administrative expenses for 1995 increased by
$19.6 million, primarily because of $15.5 million in stock option
charges resulting from the rise in FTX's common stock price
during the year (Note 7) and $3 million for an early retirement
program.
Interest expense decreased from 1994 as a result of the
significant reduction in average debt levels brought about by
FTX's recapitalization efforts. Income taxes for 1995 include
a $62.8 million benefit attributable to the reversal of certain
tax accruals no longer required because of the resolution of
certain federal and state tax issues and the realization of tax
credits not previously recognized (Note 6). Minority
interest's share of net income for 1995 rose reflecting the
increased level of earnings at FRP and includes a $23 million
charge ($26.5 million in 1994) because FTX was not paid its
proportionate share of FRP distributions (Note 2).
Agricultural Minerals Operations - FTX's agricultural minerals
operations, which include FRP's fertilizer and phosphate rock
operations (conducted through IMC-Agrico) and its sulphur
business, reported 1995 operating income of $205.9 million on
revenues of $960 million compared with operating income of $123.8
million on revenues of $730.4 million in 1994. Significant items
impacting operating income are as follows (in millions):
Agricultural minerals operating income -1994 $ 123.8
----------
Increases (decreases):
Sales volumes 81.3
Realizations 147.7
Other 0.6
----------
Revenue variance 229.6
Cost of sales (135.4)a
General and administrative (12.1)b
----------
82.1
----------
Agricultural minerals operating income -1995 $ 205.9
==========
a. Includes a reduction to depreciation and amortization of
$26.3 million and $15.8 million for 1995 and 1994, respectively,
caused by FRP's disproportionate interest in IMC-Agrico cash
distributions.
b. Includes $10.3 million of the stock option charge discussed
above.
FRP's 1995 phosphate fertilizer sales volumes were 7 percent
higher than those in 1994, with IMC-Agrico experiencing continued
excellent export demand and strong domestic sales for diammonium
phosphate (DAP), its principal fertilizer product. The increased
demand resulted in IMC-Agrico phosphate fertilizer facilities
operating near capacity for the majority of 1995. Despite recent
industrywide capacity utilization above 100 percent, domestic
phosphate fertilizer producer inventories remain below normal.
This tight supply/demand situation is reflected in improved
phosphate fertilizer realizations, with FRP's average DAP
realization increasing 17 percent from 1994. FRP's 1995 DAP
realizations included large forward sales to China at prices
which were ultimately below market prices at the time of
shipment. FRP's phosphate fertilizer unit production costs were
increased from 1994, reflecting higher raw material costs for
ammonia and phosphate rock.
Fertilizer prices continued to rise during the fourth
quarter of 1995 and are expected to remain firm for the near
term, as the increased global demand for phosphate fertilizers
comes at a time when essentially no operable idle capacity
exists. Furthermore, worldwide grain stocks are projected to be
at their lowest-ever levels in the upcoming fertilizer season,
strengthening grain prices and improving the outlook for this
spring's fertilizer use. As a result, strong domestic demand is
anticipated to continue into the spring with an expected 13
percent increase in planted corn acreage. Additionally, in late
1995 IMC-Agrico reached an agreement with China providing for
significant shipments of DAP throughout 1996 at market-related
prices at the time of shipment.
FRP's 1995 phosphate rock sales volumes were slightly higher
than in 1994. Increased demand from phosphate fertilizer
producers and the addition of a long-term supply contract in
October 1994 were offset by the expiration of a contract in
October 1995 providing annual sales of 1.5 million tons net to
FRP. Because of the low margin associated with sales under the
expired contract, the impact to FRP's earnings is not
significant.
FRP's increased sulphur production capacity resulting from
the Culberson mine purchase, combined with continued strong
demand from the domestic phosphate fertilizer industry, resulted
in a 46 percent increase in sales volumes. FRP also benefited
from the strengthening in Tampa, Florida sulphur prices during
1995. 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. Main Pass unit production costs for
1995 were virtually unchanged from 1994.
Oil and Gas Operations - In mid-1994, FTX distributed
substantially all its non-Main Pass oil and gas exploration
activities to its common stockholders as part of the McMoRan Oil
& Gas Co. (MOXY) distribution (Note 5). Since then, FTX's only
significant oil and gas operation is FRP's production of oil at
Main Pass, as follows:
1995 1994
--------- ---------
Sales (barrels) 2,217,600 2,533,700
Averaged realized price $15.82 $13.74
Operating income (in millions) $1.9 $2.8
In 1995, Main Pass oil operating income was impacted by $1.8
million for the previously discussed stock option charge. Net
production for 1996 is estimated to approximate 1995 levels, as
drilling activities are expected to generate production
sufficient to offset declining reservoir production.
1994 Compared With 1993. FTX's 1994 results primarily reflect
the improvement in the phosphate fertilizer market during the
year and the benefits from the formation of IMC-Agrico and other
restructuring activities undertaken in 1993, discussed below.
Partially offsetting these positive factors were increased raw
material prices for ammonia and reduced oil sales volumes.
During 1993, FTX undertook a restructuring of its
administrative organization. This restructuring represented a
major step by FTX to lower the costs of operating and
administering its businesses in response to weak market prices of
commodities produced by its operating units. As part of this
restructuring, FTX significantly reduced the number of employees
engaged in administrative functions, changed its management
information systems environment to achieve efficiencies, reduced
its needs for office space, outsourced a number of administrative
functions and took other actions to lower costs. The
restructuring process resulted in FTX incurring certain one-time
costs (Note 10).
Depreciation and amortization during 1994 declined by $67.3
million compared with 1993, primarily consisting of a $26.6
million decrease relating to the disproportionate interest in
IMC-Agrico cash distributions, a $15.3 million reduction from
Main Pass oil operations caused by the decline in sales volumes
between periods and the $18.7 million in restructuring charges
recorded in 1993. These decreases were partially offset by a $6
million increase in sulphur depreciation because of higher Main
Pass sulphur production.
General and administrative expenses reflect the benefits
from the formation of IMC-Agrico and the other 1993 restructuring
activities. The 1993 amount includes $9.5 million in
restructuring related charges. Interest expense in 1994
increased as a result of the Main Pass sulphur project becoming
operational for accounting purposes in July 1993 (previously,
related interest costs totaling $11.1 million in 1993 were
capitalized) and rising interest rates. See Note 6 to the
financial statements for information on the provision for income
taxes. Minority interest's share of net income reflected a $26.5
million charge in 1994 because FTX was not paid its proportionate
share of distributions from FRP.
FTX's 1994 earnings include a $9.1 million charge from the
early extinguishment of debt (Note 4). Earnings for 1993 include
a $13.6 million charge for the cumulative effect of changes in
accounting principle for periodic scheduled maintenance costs,
deferred charges and costs of management information systems
(Note 1). These changes were adopted to improve the measurement
of operating results by recognizing cash expenditures as expense
when incurred unless they directly relate to long-lived
additions. These changes did not have a material impact on
operating income.
Agricultural Minerals Operations - FTX's agricultural minerals
operations reported 1994 operating income of $123.8 million on
revenues of $730.4 million compared with an operating loss of
$105 million on revenues of $619.3 million in 1993. Significant
items impacting operating income are as follows (in millions):
Agricultural minerals operating loss -1993 $ (105.0)
----------
Increases (decreases):
Sales volumes 15.8
Realizations 102.7
Other (7.4)
----------
Revenue variance 111.1
Cost of sales 46.8a,b
1993 provision for restructuring charges 33.9
1993 loss on valuation and sale of assets, net 14.8
General and administrative and other 22.2a
----------
228.8
----------
Agricultural minerals operating income -1994 $ 123.8
==========
a. 1993 included $17.5 million in cost of sales and $7.3
million in general and administrative expenses resulting from the
restructuring project.
b. 1994 included a $15.8 million reduction and 1993 included a
$10.8 million increase to depreciation and amortization caused by
FRP's disproportionate interest in IMC-Agrico cash distributions.
FRP's 1994 phosphate fertilizer sales volumes were slightly
below 1993 levels. Producer inventories remained at prior year
levels despite a rise in industrywide production. As a result,
phosphate fertilizer prices rose sharply from the near 20-year
lows experienced during 1993, with FRP's average DAP realization
increasing 32 percent. Unit production costs benefited from
efficiencies at IMC-Agrico, somewhat offset by higher raw
material prices for ammonia.
FRP's phosphate rock sales volumes rose 14 percent during
1994, reflecting increased demand and the advent of a supply
contract in October 1994 adding annual sales of approximately 0.8
million tons net to FRP through 2004.
Main Pass sulphur production increased during 1994, reducing
unit production costs below 1993 levels. With increased Main
Pass production, FRP ceased operating the marginally profitable
Caminada mine in January 1994. Average sulphur realizations for
1994 were lower, reflecting the decline in prices which occurred
throughout 1993. However, improved phosphate fertilizer
operating rates, coupled with reduced imports, resulted in
sulphur price increases during the second half of 1994.
Oil and Gas Operations - FTX's non-Main Pass oil and gas
operations generated a 1994 loss of $11.9 million, including
exploration expense of $5.2 million. Earnings for 1993 totaled
$20 million as FTX recognized a $69.1 million gain from the $95.3
million cash sale of the undeveloped reserves discovered at East
Cameron Blocks 331/332 offshore Louisiana, partially offset by
exploration expense of $22.3 million and $24.4 million of charges
resulting from the restructuring project.
Main Pass oil operations achieved the following:
1994 1993
--------- ---------
Sales (barrels) 2,533,700 3,443,000
Average realized price $13.74 $14.43
Operating income (in millions) $2.8 $(61.5)
Main Pass oil production was limited during 1994 because of
a redevelopment program which involved drilling two additional
wells and recompleting three existing wells. Oil realizations
recovered somewhat from the significant decline which occurred in
late 1993. The 1993 price decline resulted in a $60 million
charge to FRP's earnings for the excess net book value of its oil
assets over the estimated future net cash flow to be received.
CAPITAL RESOURCES AND LIQUIDITY
FTX's recapitalization and restructuring activities significantly
reduced its parent company obligations. However, FTX still has
certain cash requirements related to its past business
activities, including oil and gas payments and employee benefit
liabilities. It potentially could also have future cash
requirements relating to its FM Properties Inc. debt guarantee
(Note 9). FTX anticipates that its cash distributions from FRP
and amounts available to it under the new credit facility will be
sufficient to meet these obligations. The new credit facility
provides $400 million of credit available to FTX/FRP ($183
million of additional borrowings available at February 6, 1996),
$75 million of which is available to FTX as the holding company.
In August 1995, the FTX Board of Directors established a new
dividend policy for FTX common stock, declaring a regular
quarterly cash dividend of 9 cents per common share. The new
dividend policy allows FTX to use additional available funds to
purchase FTX stock, purchase FRP units and/or invest in new
growth opportunities. The timing of FTX stock and FRP unit
purchases is dependent upon many factors, including their price,
FTX's financial condition and general economic and market
factors.
FTX is primarily a holding company and its main source of
cash flow is distributions from its ownership in FRP. 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 before any distributions may
be made to FTX. On January 19, 1996, FRP declared a distribution
of 62.5 cents per publicly held unit ($31.3 million) and 67.35
cents per FTX-owned unit ($35.9 million), payable February 15,
1996, reducing the unpaid distributions to FTX by $2.6 million.
The remaining $379.9 million of unpaid distributions to FTX are
recoverable from one-half of any excess of future quarterly FRP
distributions over 60 cents per unit for all units. FRP's future
distributions will be dependent on the distributions received
from IMC-Agrico and cash flow from FRP's sulphur and oil
operations. Distributable cash in January 1996 included $64.3
million from IMC-Agrico. Future distributions from IMC-Agrico
will depend primarily on the phosphate fertilizer market,
discussed earlier, and FRP's share of IMC-Agrico cash
distributions (Current Interest). FRP's Current Interest is
presently 53.1 percent through June 30, 1996, changing to 53.5
percent for the twelve months ended June 30, 1997 and declining
to 40.6 percent thereafter. However, in January 1996 FRP and its
joint venture partner in IMC-Agrico agreed to an increase in
FRP's Current Interest of 0.85 percent and a modification of
certain product pricing between IMC-Agrico and the joint venture
partner. This agreement is subject to the joint venture partner
consummating a merger.
Net cash provided by (used in) continuing operations was
$241 million in 1995 (excludes $138.6 million from discontinued
operations), $170.6 million in 1994 (excludes $336.2 million from
discontinued operations) and $(41.2) million in 1993 (excludes
$158.5 million from discontinued operations). These increases
primarily reflect the improvement in FRP's agricultural minerals
earnings. Also benefiting the 1995 and 1994 periods were working
capital reductions achieved by IMC-Agrico and the sale of
receivables (Note 1).
Net cash used in investing activities totaled $368.9 million
for 1995, $694.2 million for 1994 and $429 million for 1993,
which included significant expenditures by its discontinued
operations. Based on current estimates, capital expenditures
related to the FRP operations will approximate $45 million for
1996. Capital expenditures for the non-FRP continuing operations
have declined significantly following the MOXY distribution.
Investing cash flows for 1995 also included the Mallinckrodt
acquisition. Sales of various non-core assets generated proceeds
of $26.9 million in 1995, $112 million in 1994 and $145.2 million
in 1993.
Net cash provided by (used in) financing activities totaled
$(14) million for 1995, $207.2 million for 1994 and $(30) million
for 1993. Net debt repayments (including debt offerings,
redemptions and infrastructure sales) totaled $153.7 million in
1995 compared with net borrowings of $398.3 million in 1994 and a
net repayment of $160 million in 1993. During 1995, FTX sold
23.9 million FCX Class A common shares for net proceeds of $497.2
million, which was used to retire all parent company debt.
During 1994 and 1993, FCX sold preferred stock to finance its
significant expansion-related capital expenditures.
Distributions to FCX minority interests declined in 1995
reflecting the mid-year distribution of FCX. During 1995, FTX's
equity purchases totaled $160.8 million, acquiring 1 million of
its common shares for an aggregate $44.8 million, 5.3 million FCX
shares for an aggregate $111.7 million and 0.3 million FRP units
for an aggregate $4.3 million. During 1994, FTX's equity
purchases primarily consisted of 0.6 million of its common shares
for $67.7 million and 2.2 million FCX Class A common shares for
$47.6 million. During 1993, 0.2 million FTX common shares and
0.8 million FCX Class A common shares were purchased for an
aggregate $38.7 million. The reduction in cash dividends results
from changes in FTX's dividend policy (Note 7) and the conversion
of FTX's preferred stock to common stock in mid-1995.
ENVIRONMENTAL
FTX has a history of commitment to environmental responsibility.
Since the 1940s, long before public attention focused on the
importance of maintaining environmental quality, FTX has
conducted preoperational, bioassay, marine ecological and other
environmental surveys to ensure the environmental compatibility
of its operations. FTX's Environmental Policy commits its
operations to compliance with local, state and federal laws and
regulations, and prescribes the use of periodic environmental
audits of all facilities to evaluate compliance status and
communicate that information to management. FTX has access to
environmental specialists who have developed and implemented
corporatewide environmental programs. FTX's operating units
continue to study methods to reduce discharges and emissions.
Federal legislation (sometimes referred to as "Superfund")
requires payments for cleanup of certain waste sites, even though
waste management activities were performed in compliance with
regulations applicable at the time. Under the Superfund
legislation, one party may, under certain circumstances, be
required to bear more than its proportional share of cleanup
costs at a site where it has responsibility pursuant to the
legislation, if payments cannot be obtained from other
responsible parties. Other legislation mandates cleanup of
certain wastes at operating sites. States also have regulatory
programs that can mandate waste cleanup. Liability under these
laws involves inherent uncertainties.
FTX 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. Further,
FTX is aware of additional sites for which it may receive such
notices in the future. Some of these sites involve significant
cleanup costs; however, at each of these sites other large and
viable companies with equal or larger proportionate shares are
among the potentially responsible parties. The ultimate
settlement for such sites usually occurs several years subsequent
to the receipt of notices identifying potentially responsible
parties because of the many complex technical and financial
issues associated with site cleanup. FTX believes that the
aggregation of any costs associated with the potential
liabilities at those sites for which notification has been
received will not exceed amounts accrued and expects that any
costs would be incurred over a period of years. The costs
associated with those sites for which notifications have not been
received are uncertain and cannot be estimated at present.
However, FTX believes that these costs, should they be incurred,
will not have a material adverse effect on its operations or
financial position.
FTX maintains insurance coverage in amounts deemed prudent
for certain types of damages associated with environmental
liabilities which arise from unexpected and unforeseen events and
has an indemnification agreement covering certain acquired sites
(Note 9).
In June 1994, a sinkhole was found at a phosphogypsum
storage area at IMC-Agrico's New Wales, Florida facility. The
Florida Department of Environmental Protection was notified and
IMC-Agrico pumped grout material into the sinkhole, thereby
plugging it and preventing further collapse. Groundwater
monitoring wells indicate that, to date, any impacts from the
sinkhole have been contained on-site. This issue continues to be
monitored. If there were contamination, which IMC-Agrico
considers unlikely, the costs that would be required are
uncertain and cannot be estimated at the present. If significant
costs were incurred it would be necessary to determine the
applicability of insurance coverage maintained by IMC-Agrico, and
separately by FRP, and for the sharing of costs between the joint
venture partners.
FTX has made, and will continue to make, expenditures at its
operations for protection of the environment. Continued
government and public emphasis on environmental issues can be
expected to result in increased future investments for
environmental controls, which will be charged against income from
future operations. Present and future environmental laws and
regulations applicable to FTX's operations may require
substantial capital expenditures and may affect its operations in
other ways that cannot now be accurately predicted.
--------------------------------
The results of operations reported and summarized above are not
necessarily indicative of future operating results.
REPORT OF MANAGEMENT
Freeport-McMoRan Inc. (the Company) is responsible for the
preparation of the financial statements and all other information
contained in this Annual Report. The financial statements have
been prepared in conformity with generally accepted accounting
principles and include amounts that are based on management's
informed judgments and estimates.
The Company maintains a system of internal accounting
controls designed to provide reasonable assurance at reasonable
costs that assets are safeguarded against loss or unauthorized
use, that transactions are executed in accordance with
management's authorization and that transactions are recorded and
summarized properly. The system is tested and evaluated on a
regular basis by the Company's internal auditors, Price
Waterhouse LLP. In accordance with generally accepted auditing
standards, the Company's independent public accountants, Arthur
Andersen LLP, have developed an overall understanding of our
accounting and financial controls and have conducted other tests
as they consider necessary to support their opinion on the
financial statements.
The Board of Directors, through its Audit Committee composed
solely of non-employee directors, is responsible for overseeing
the integrity and reliability of the Company's accounting and
financial reporting practices and the effectiveness of its system
of internal controls. Arthur Andersen LLP and Price Waterhouse
LLP meet regularly with, and have access to, this committee, with
and without management present, to discuss the results of their
audit work.
Rene L. Latiolais Charles W. Goodyear
President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
FREEPORT-MCMORAN INC.
BALANCE SHEETS
December 31,
------------------------
1995 1994
---------- ----------
(In Thousands)
ASSETS
Current assets:
Cash and short-term investments $ 23,496 $ 13,810
Accounts receivable:
Customers 58,220 46,831
Other 42,774 43,094
Inventories:
Products 83,924 79,377
Materials and supplies 35,086 30,300
Prepaid expenses and other 4,499 7,433
---------- ----------
Total current assets 247,999 220,845
---------- ----------
Property, plant and equipment 1,978,065 1,905,410
Less accumulated depreciation
and amortization 978,225 940,871
---------- ----------
Net property, plant and
equipment 999,840 964,539
---------- ----------
Investment in FCX - 328,880
Other assets 72,631 135,178
---------- ----------
Total assets $1,320,470 $1,649,442
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
liabilities $ 180,766 $ 191,553
Long-term debt, less current
portion 359,501 1,122,070
Accrued postretirement benefits
and pension costs 170,542 158,707
Reclamation and mine shutdown
reserves 128,981 112,777
Other liabilities and deferred
credits 92,722 77,034
Minority interest 196,021 217,768
Stockholders' equity:
Convertible exchangeable preferred
stock, par value $1, at
liquidation value, authorized
50,000,000 shares 50,084 250,000
Common stock, par value $0.01
and $1 per share, respectively,
authorized 100,000,000 shares
and 300,000,000 shares,
respectively 337 166,365
Capital in excess of par value
of common stock 522,694 -
Retained earnings (deficit) 92,746 (221,925)
Cumulative foreign currency
translation adjustment - (2,555)
Common stock held in treasury
-6,016,800 and 4,863,200 shares,
respectively, at cost (473,924) (422,352)
---------- ----------
191,937 (230,467)
---------- ----------
Total liabilities and
stockholders' equity $1,320,470 $1,649,442
========== ==========
The accompanying notes are an integral part of these financial
statements.
FREEPORT-McMoRan INC.
STATEMENTS OF OPERATIONS
Years Ended December 31,
----------------------------------------
1995 1994 1993
---------- ---------- ----------
(In Thousands, Except Per Share Amounts)
Revenues $ 995,857 $ 770,112 $ 684,650
Cost of sales:
Production and delivery 688,260 556,746 574,940
Depreciation and
amortization 46,784 56,411 123,679
---------- ---------- ----------
Total cost of sales 735,044 613,157 698,619
Exploration expenses - 6,672 31,331
Provision for
restructuring charges - - 46,350
Loss on valuation and
sale of assets, net - - 64,114
General and administrative
expenses 77,933 58,379 87,661
---------- ---------- ----------
Total costs and expenses 812,977 678,208 928,075
---------- ---------- ----------
Operating income (loss) 182,880 91,904 (243,425)
Interest expense, net (49,655) (71,565) (59,542)
Other income (expense), net 9,624 (1,245) 86
---------- ---------- ----------
Income (loss) before income
taxes and minority interest 142,849 19,094 (302,881)
Income tax benefit 50,983 13,138 68,674
Minority interest in net
(income) loss of
consolidated subsidiaries (101,432) (67,364) 108,627
---------- ---------- ----------
Income (loss) from
continuing operations 92,400 (35,132) (125,580)
Discontinued operations 340,424 107,715 35,387
---------- ---------- ----------
Income (loss) before
extraordinary item and
changes in accounting
principle 432,824 72,583 (90,193)
Extraordinary loss on
early extinguishment
of debt, net - (9,108) -
Cumulative effect of
changes in accounting
principle, net - - (13,642)
---------- ---------- ----------
Net income (loss) 432,824 63,475 (103,835)
Preferred dividends (42,283) (22,032) (22,368)
---------- ---------- ----------
Net income (loss)
applicable to common
stock $ 390,541 $ 41,443 $ (126,203)
========== ========== ==========
Net income (loss) per primary share:
Continuing operations $3.54 $(1.51) $(5.32)
Discontinued operations 13.05 4.64 1.50
Extraordinary loss - (.39) -
Cumulative effect of changes
in accounting principle - - (.58)
Preferred dividends (1.62) (.95) (.95)
----- ----- ----
$14.97 $ 1.79 $(5.35)
====== ======= ======
Net income (loss) per fully diluted share:
Continuing operations $3.70 $(1.51) $(5.32)
Discontinued operations 11.64 4.64 1.50
Extraordinary loss - (.39) -
Cumulative effect of changes
in accounting principle - - (.58)
Preferred dividends (1.14) (.95) (.95)
----- ----- ----
$14.20 $ 1.79 $(5.35)
====== ======= ======
Average common and common equivalent shares outstanding:
Primary 26,081 23,204 23,599
====== ======= =======
Fully diluted 29,240 23,204 23,683
====== ======= =======
Dividends per common share:
Cash $.18 $1.875 $7.50
Property 108.41 7.768 -
------ -------- ----
$108.59 $9.643 $7.50
======= ======= ======
The accompanying notes are an integral part of these financial
statements.
FREEPORT-MCMORAN INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31,
--------------------------------------
1995 1994 1993
---------- ---------- ----------
(In Thousands)
$1.875 Convertible exchangeable preferred stock:
Balance at beginning of year $ - $ 6,286 $ 7,453
Conversions to common stock and
redemptions - (6,286) (1,167)
---------- ---------- ----------
Balance at end of year - - 6,286
---------- ---------- ----------
$4.375 Convertible
exchangeable preferred stock:
Balance at beginning of year 250,000 250,000 250,000
Conversions to common stock (199,916) - -
---------- ---------- ----------
Balance at end of year 50,084 250,000 250,000
---------- ---------- ----------
Common stock:
Balance at beginning of year 166,365 165,293 164,818
Conversions to common stock
and other 32,649 1,072 475
One-for-six reverse stock split
and change in par value (198,677) - -
---------- ---------- ----------
Balance at end of year 337 166,365 165,293
---------- ---------- ----------
Capital in excess of par value of common stock:
Balance at beginning of year - 21,868 186,032
Dividends on preferred stock - - (20,499)
Dividends on common stock (1,427) (35,600) (131,992)
Distribution of FCX (240,721) - -
Conversions to common stock
and other 566,165 13,732 (11,673)
One-for-six reverse stock split
and change in par value 198,677 - -
---------- ---------- ----------
Balance at end of year 522,694 - 21,868
---------- ---------- ----------
Retained earnings (deficit):
Balance at beginning of year (221,925) (81,224) 68,532
Net income (loss) 432,824 63,475 (103,835)
Dividends on preferred stock (42,283) (22,032) (1,869)
Dividends on common stock (39,166) (182,144) (44,052)
Sale of Freeport Copper Company
to FCX 15,600 - -
Distribution of FCX (52,304) - -
---------- ---------- ----------
Balance at end of year 92,746 (221,925) (81,224)
---------- ---------- ----------
Cumulative foreign currency translation adjustment:
Balance at beginning of year (2,555) (7,187) -
Adjustment 2,555 4,632 (7,187)
---------- ---------- ----------
Balance at end of year - (2,555) (7,187)
---------- ---------- ----------
Common stock held in treasury:
Balance at beginning of year (422,352) (354,387) (330,814)
Purchase of 981,300, 638,600
and 221,000 shares, respectively (44,752) (67,747) (22,229)
Other (6,820) (218) (1,344)
---------- ---------- ----------
Balance at end of year (473,924) (422,352) (354,387)
---------- ---------- ----------
Total stockholders' equity $ 191,937 $ (230,467) $ 649
========== ========== ==========
The accompanying notes are an integral part of these financial
statements.
FREEPORT-McMoRan INC.
STATEMENTS OF CASH FLOW
Years Ended December 31,
---------------------------------------
1995 1994 1993
---------- ---------- -----------
(In Thousands)
Cash flow from operating activities:
Net income (loss) $ 432,824 $ 63,475 $ (103,835)
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities:
Cumulative effect of changes in
accounting principle - - 20,717
Extraordinary loss on early
extinguishment of debt - 9,108 -
Depreciation and amortization 99,622 137,038 199,506
Other noncash charges to income - - 33,194
Provision for restructuring
charges, net of payments - - 23,890
Loss on valuation and sale
of assets, net - - 64,114
Oil and gas exploration expenses - 5,231 26,710
(Recognition) deferral of
unearned income (36,207) 36,207 -
Amortization of debt discount
and financing costs 16,112 37,128 41,166
Gain on FCX securities
transactions (435,060) (114,750) (44,116)
Loss on recapitalization of
FTX securities 44,371 - -
Deferred income taxes 46,290 96,065 (39,035)
Minority interests' share
of net income (loss) 184,425 168,951 (61,689)
Cash distributions from
IMC-Agrico in excess of
interest in capital 40,835 43,293 -
Reclamation and mine
shutdown expenditures (10,545) (9,837) (9,980)
(Increase) decrease in
working capital, net of
effect of acquisitions
and dispositions:
Accounts receivable 11,374 (44,614) 2,821
Inventories (22,851) (76,527) 4,475
Prepaid expenses and other 1,705 7,350 (10,873)
Accounts payable and
accrued liabilities (6,337) 163,283 (24,590)
Other 13,025 (14,574) (5,186)
---------- ---------- ----------
Net cash provided by
operating activities 379,583 506,827 117,289
---------- ---------- ----------
Cash flow from investing activities:
Capital expenditures:
FCX (308,099) (743,470) (463,512)
FRP (39,485) (29,681) (52,170)
Other (2,070) (33,070) (58,530)
Sale of assets:
Oil and gas - - 95,250
Geothermal - 36,910 23,000
Other 26,906 75,092 26,961
Mallinckrodt purchase (46,200) - -
---------- ---------- ----------
Net cash used in
investing activities $ (368,948) $ (694,219) $ (429,001)
----------- ----------- ----------
Cash flow from financing activities:
Proceeds from sale of equity securities:
FCX Class A common shares $ 497,166 $ - $ -
FCX preferred stock - 252,985 561,090
Purchase of FTX common shares (44,752) (67,747) (22,229)
Purchase of FCX Class A
common shares (111,747) (47,596) (16,482)
Purchase of FRP units (4,314) (1,342) -
Distributions paid to minority interests:
FCX (59,970) (110,312) (74,848)
FRP (121,439) (121,184) (121,180)
Distribution of MOXY shares - (35,441) -
Net proceeds from
infrastructure financing 228,899 110,825 20,000
Proceeds from debt 510,896 669,928 441,376
Repayment of debt (597,700) (501,901) (621,381)
Proceeds from (purchase of)
debt securities:
ABC debentures (280,826) - -
6.55% Senior notes (14,955) - -
10 7/8% Senior debentures - (142,919) -
FRP 8 3/4% Senior
Subordinated Notes - 146,125 -
FCX 9 3/4% Senior notes - 116,276 -
Cash dividends paid:
Common stock (5,168) (44,467) (175,890)
Preferred stock (8,757) (22,110) (22,384)
Other (1,380) 6,088 1,962
---------- ---------- ----------
Net cash provided by
(used in) financing activities (14,047) 207,208 (29,966)
---------- ---------- ----------
Net increase (decrease) in cash
and short-term investments (3,412) 19,816 (341,678)
Net (increase) decrease
attributable to discontinued
operations 13,098 (30,454) 358,044
Cash and short-term investments
at beginning of year 13,810 24,448 8,082
---------- ---------- ----------
Cash and short-term investments
at end of year $ 23,496 $ 13,810 $ 24,448
========== ========== ==========
Interest paid $ 85,861 $ 94,631 $ 94,557
========== ========== ==========
Income taxes paid $ 72,458 $ 42,576 $ 15,925
========== ========== ==========
The accompanying notes, which include information in Notes 1-5, 7
and 10 regarding noncash transactions, are an integral part of
these financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. The consolidated financial statements of
Freeport-McMoRan Inc. (FTX) include all majority-owned
subsidiaries and publicly traded partnerships. Investments in
joint ventures and partnerships (other than publicly traded
entities) are reflected using the proportionate consolidation
method in accordance with standard industry practice. All
significant intercompany transactions have been eliminated.
Certain prior year amounts have been reclassified to conform to
the 1995 presentation.
In July 1995, FTX completed the distribution of its
ownership in Freeport-McMoRan Copper & Gold Inc. (FCX) in the
form of a tax-free dividend to the FTX common stockholders (Note
3). As a result of FTX no longer owning any interest in FCX,
FTX's financial statements have been restated to reflect
activities related to FCX's operations as discontinued. Except
where otherwise indicated, the following notes relate to
continuing operations consisting principally of FTX's ownership
of Freeport-McMoRan Resource Partners, Limited Partnership (FRP).
Use of Estimates. The financial statements have been prepared in
conformity with generally accepted accounting principles and
include amounts that are based on management's informed judgments
and estimates.
Cash and Short-Term Investments. Highly liquid investments
purchased with a maturity of three months or less are considered
cash equivalents. Cash and short-term investments held by
consolidated entities are not available to FTX until a
distribution is paid to all owners of an entity's equity
securities.
Accounts Receivable. IMC-Agrico Company (IMC-Agrico) has an
agreement whereby it can sell on an ongoing basis up to $65
million of accounts receivable. FTX's accounts receivable at
December 31, 1995 and 1994 were net of $28.3 million and $17.9
million of receivables sold, respectively.
Inventories. Inventories are generally stated at the lower of
average cost or market.
Property, Plant and Equipment. Property, plant and equipment are
carried at cost, including capitalized interest during the
construction and development period. Expenditures for
replacements and improvements are capitalized. Depreciation for
mining and production assets, including mineral interests, is
determined using the unit-of-production method based on estimated
recoverable reserves. Other assets are depreciated on a
straight-line basis over estimated useful lives of 17 to 30 years
for buildings and 5 to 25 years for machinery and equipment.
In March 1995, the Financial Accounting Standards Board
issued Statement No. 121 (FAS 121) which requires a reduction of
the carrying amount of long-lived assets to fair value when
events indicate that their carrying amount may not be
recoverable. FTX adopted FAS 121 effective January 1, 1995, the
effect of which was not material.
Oil and Gas Costs. FTX follows the successful efforts method of
accounting for its oil and gas operations. Costs of leases,
productive exploratory wells and development activities are
capitalized. Other exploration costs are expensed. Depreciation
and amortization is determined on a field-by-field basis using
the unit-of-production method. Gain or loss is included in
income when properties are sold.
Environmental Remediation and Compliance. Environmental
expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures resulting from the
remediation of an existing condition caused by past operations,
and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recognized for
remedial activities when the efforts are probable and the cost
can be reasonably estimated.
Estimated future expenditures to restore properties and
related facilities to a state required to comply with
environmental and other regulations are accrued over the life of
the properties. The future expenditures are estimated based on
current costs, laws and regulations. As of December 31, 1995,
FTX had accrued $53.9 million for abandonment and restoration of
its non-operating sulphur assets, approximately one-half of which
will be reimbursed by third parties, $42.7 million for
reclamation of land relating to mining and processing phosphate
rock and $21.1 million for the dismantlement and abandonment of
certain oil and gas properties. FTX estimates that FRP's share
of abandonment and restoration costs for its two operating
sulphur mines will total approximately $50 million, $17.6 million
of which had been accrued at December 31, 1995, with essentially
all costs being incurred after mine closure. These estimates are
by their nature imprecise and can be expected to be revised over
time due to changes in government regulations, operations,
technology and inflation.
Net Income Per Share. All common share and per share amounts
reflect the common stock split discussed in Note 7. Primary net
income per share is computed by dividing net income applicable to
common stock by the average common and common equivalent shares
outstanding. Fully diluted net income per share is computed
assuming all convertible securities, if dilutive, were converted
at the beginning of the period or date of issuance, whichever is
later. During 1995, a portion of FTX's $4.375 Convertible
Exchangeable Preferred Stock and 6.55% Convertible Subordinated
Notes were exchanged for FTX common stock. Had these conversions
occurred on January 1, 1995, primary net income from continuing
operations would have been $3.53 per share for 1995.
Changes in Accounting Principle. During 1993, FTX adopted the
following changes in accounting principle:
Periodic Scheduled Maintenance - These costs are expensed
when incurred. Previously, costs were capitalized when incurred
and amortized.
Deferred Charges - Costs that directly relate to the
acquisition, construction and development of assets and to the
issuance of debt and related instruments are deferred.
Previously, certain other costs that benefited future periods
were deferred.
Management Information Systems (MIS) - MIS equipment and
software that have a material impact on net income are
capitalized. Other MIS costs, including equipment and purchased
software, that involve immaterial amounts (currently individual
expenditures of less than $0.5 million) and short estimated
productive lives (currently less than three years) are charged to
expense when incurred. Previously, most expenditures for MIS
equipment and purchased software were capitalized.
2. FREEPORT-McMoRAN RESOURCE PARTNERS, LIMITED PARTNERSHIP
FTX's fertilizer and sulphur operations and its Main Pass oil
operations are conducted through its publicly traded affiliate,
FRP. FTX owned 51.5 percent of the FRP units outstanding at
December 31, 1995.
In July 1993, FRP and IMC Global Inc. (IGL) formed the IMC-
Agrico joint venture, operated by IGL, for their respective
phosphate fertilizer businesses, including phosphate rock. FRP's
"Current Interest", reflecting cash to be distributed from
ongoing operations, initially was 58.6 percent and its "Capital
Interest", reflecting the purchase or sale of long-term assets or
any required capital contributions, was 46.5 percent. These
ownership percentages (53.1 percent and 43.6 percent,
respectively, at December 31, 1995) decline in annual increments
to 40.6 percent for the fiscal year ending June 30, 1998 and
remain constant thereafter. In January 1996, FRP and IGL agreed
to an increase in FRP's Current and Capital Interest of 0.85
percent, subject to IGL consummating a merger. At December 31,
1995, FRP's investment in IMC-Agrico totaled $429.2 million.
IMC-Agrico's assets are not available to FRP until distributions
are paid by the joint venture.
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 before any
distributions may be made to FTX. On January 19, 1996, FRP
declared a distribution of 62.5 cents per publicly held unit
($31.3 million) and 67.35 cents per FTX-owned unit ($35.9
million), reducing the unpaid distributions to FTX to $379.9
million. Unpaid FTX distributions are recoverable from one-half
of any amount by which future quarterly distributable cash
exceeds a 60 cents per unit distribution.
In February 1992, FRP sold publicly 19.5 million new units,
resulting in a gain to FTX of $136.6 million which was deferred
because of the FRP public unitholders' distribution priority.
Even though FTX was not paid its proportionate share of FRP
distributions, FTX reflected its proportionate share of FRP's
earnings through recognition of portions of the deferred gain
($32.6 million in 1994 and $62.2 million in 1993). However, in
1994 the remaining deferred gain was utilized and FTX recognized
an additional minority interest charge of $23 million in 1995 and
$26.5 million in 1994. In 1996, 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. To the extent the cumulative unpaid
distributions are reduced, FTX will recognize a
disproportionately greater share of FRP's reported earnings.
3. FREEPORT-McMoRAN COPPER & GOLD INC.
In July 1995, FTX distributed 117,909,323 shares of FCX Class B
common stock to FTX common stockholders. As a result of FTX no
longer owning any interest in FCX, FTX's financial statements
have been restated to reflect activities related to FCX's
operations as discontinued. In connection with a
recapitalization of its liabilities, prior to the FCX
distribution, FTX sold 23.9 million shares of FCX Class A common
stock in 1995 to The RTZ Corporation PLC (RTZ) for net proceeds
of $497.2 million, recognizing a pretax gain of $435.1 million.
Discontinued operations results follow (in thousands):
1995 1994 1993
---------- ---------- ----------
Revenues $ 830,275 $1,212,284 $ 925,932
========== ========== ==========
Income from discontinued
operations $ 221,927 $ 256,079 $ 121,959
Minority interest (82,992) (101,588) (44,159)
Provision for taxes (95,436) (115,357) (65,692)
---------- ---------- ----------
43,499 39,134 12,108
Gain on FCX securities
transactions 435,060 114,750 44,116
Recapitalization losses (Note 4) (44,371) - -
Provision for taxes (93,764) (46,169) (20,837)
---------- ---------- ----------
$ 340,424 $ 107,715 $ 35,387
========== ========== ==========
Income from discontinued operations includes allocated
interest from FTX totaling $16.6 million in 1995, $21.8 million
in 1994 and $5.2 million in 1993.
In September 1995, FCX paid FTX $25 million cash for 100
percent of the stock of Freeport Copper Company whose sole asset
is a 50 percent interest in a joint venture with ASARCO Santa
Cruz, Inc. controlling approximately 7,600 contiguous acres in
Arizona. The joint venture is involved in a research project for
an experimental in-situ leaching process that would be used to
mine copper.
4. LONG-TERM DEBT
December 31,
-----------------------
1995 1994
---------- ----------
Notes payable: (In Thousands)
FTX credit agreement, average
rate 7.1% in 1995 and 5.4% in
1994 $ 196,400 $ 370,000
Other 13,440 13,951
Publicly traded notes and debentures:
Zero Coupon Convertible
Subordinated Debentures - 270,196
6.55% Convertible
Subordinated Notes - 318,237
FRP 8 3/4% Senior Subordinated
Notes due 2004 150,000 150,000
---------- ----------
359,840 1,122,384
Less current portion, included in
accounts payable 339 314
---------- ----------
$ 359,501 $1,122,070
========== ==========
Notes Payable. In 1995, FTX obtained a new variable rate
revolving credit facility (the Credit Agreement). The facility
provides $400 million of credit, all of which is available to FRP
($213 million of additional borrowings available at December 31,
1995) and $75 million of which is available to FTX as the holding
company, through July 2000. Under this facility, FTX is required
to retain control of FRP and FRP is not permitted to enter into
any agreement restricting its ability to make distributions or
create liens on its assets. As security for the banks, FTX has
pledged units representing 50.1 percent of FRP, while FRP has
pledged its interest in IMC-Agrico and Main Pass oil. The Credit
Agreement provides for FRP minimum working capital requirements,
specified cash flow to interest coverage, maximum debt to
capitalization ratios and restrictions on other borrowings.
In February 1994, IMC-Agrico entered into a three-year $75
million variable rate credit facility (the IMC-Agrico Facility).
Borrowings under the IMC-Agrico Facility are unsecured with a
negative pledge on substantially all of IMC-Agrico's assets. The
IMC-Agrico Facility has minimum capital, fixed charge and current
ratio requirements for IMC-Agrico; places limitations on debt at
IMC-Agrico; and restricts the ability of IMC-Agrico to make cash
distributions in excess of distributable cash generated.
FTX and FRP entered into interest rate swaps to manage
exposure to interest rate changes on a portion of their variable
rate debt. Under 1986 interest rate exchange agreements, FTX
pays an average fixed rate of 8.2 percent on $150.1 million of
financing until April 1996. FTX and FRP pay 10.2 percent on
interest rate exchange agreements entered into in late 1987 and
early 1988 on $55.3 million of financing at December 31, 1995,
reducing annually through 1999. Interest on comparable floating
rate debt averaged 6.1 percent in 1995, 4.4 percent in 1994 and
3.4 percent in 1993, resulting in additional interest costs of
$5.4 million, $9.8 million and $12.8 million, respectively.
Based on market conditions at December 31, 1995, unwinding these
interest swaps would require an estimated $6.3 million.
Publicly Traded Notes and Debentures. In June 1995, FTX redeemed
$749.2 million principal amount of its Zero Coupon Convertible
Subordinated Debentures (ABC Debentures) for $280.8 million
(equal to book value) and 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. Prior to the
redemption, FTX increased the number of FTX common shares that
would be received upon conversion of the 6.55% Notes. Holders of
$356.6 million face amount of 6.55% Notes converted their notes
at the enhanced rate into 3.3 million FTX common shares. FTX
recorded a pretax loss on recapitalization of the ABC Debentures
and 6.55% Notes totaling $44.4 million.
In February 1994, FRP sold publicly $150 million of 8 3/4%
Senior Subordinated Notes. Based on the December 31,1995 closing
market price, this debt had a fair value of $151.9 million.
During 1994, FTX defeased $125.3 million of its 10 7/8%
Senior Subordinated Debentures resulting in a $9.1 million after-
tax extraordinary loss.
Minimum Principal Payments. Payments scheduled for each of the
five succeeding years based on the amounts and terms outstanding
at December 31, 1995 are $0.3 million, $0.4 million, $0.5
million, $0.5 million and $196.4 million.
Capitalized Interest. Capitalized interest totaled $11.1 million
in 1993.
5. ACQUISITIONS AND MOXY DISTRIBUTION
Pennzoil. 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 either 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 is as follows (in thousands):
Current assets $ 5,635
Property, plant and equipment 48,837
Current liabilities (7,499)
Reclamation and mine shutdown reserves (15,200)
Accrued long-term liabilities (31,773)
----------
Net cash investment $ -
==========
Accrued long-term liabilities include the estimated future
installment payments based on the prevailing sulphur price at the
time of acquisition.
Mallinckrodt. In October 1995, IMC-Agrico acquired the
animal feed ingredients business of Mallinckrodt Group Inc. for
$110 million cash. FRP funded its portion of the purchase price
with borrowings under the Credit Agreement. The purchase price
allocation is as follows (in thousands):
Current assets $ 19,503
Property, plant and equipment 35,329
Current liabilities (8,632)
----------
Net cash investment $ 46,200
==========
McMoRan Oil & Gas Co. (MOXY). In 1994, FTX distributed common
shares of its newly formed, wholly owned subsidiary, MOXY, to
FTX's stockholders. MOXY was organized to carry on substantially
all of the oil and gas exploration activities previously
conducted by FTX. The net assets transferred to MOXY at FTX's
historical cost follow (in thousands):
Cash and short-term investments $ 35,441
Property, plant and equipment 13,052
Other assets 10,113
Current liabilities (1,138)
----------
$ 57,468
==========
6. INCOME TAXES
Income taxes are recorded pursuant to Statement of Financial
Accounting Standards No. 109. The components of FTX's deferred
taxes follow:
December 31,
-----------------------
1995 1994
---------- ----------
Deferred tax asset: (In Thousands)
Net operating loss carryforwards $ - $ 121,248
Alternative minimum tax credits 49,780 47,183
Other tax carryforwards 31,256 45,637
Deferred compensation,
postretirement and
pension benefits 52,216 55,039
Reclamation and shutdown reserve 29,492 24,908
Basis in subsidiaries 8,094 -
Other 20,141 14,440
Valuation allowance (11,489) (45,637)
---------- ----------
Total deferred tax asset 179,490 262,818
---------- ----------
Deferred tax liability:
Property, plant and equipment (127,113) (116,215)
Basis in subsidiaries - (39,380)
Other (38,963) (42,155)
---------- ----------
Total deferred tax liability (166,076) (197,750)
---------- ----------
Net deferred tax asset
(included in other assets) $ 13,414 $ 65,068
========== ==========
During 1995, primarily because of the distribution of FCX
and related recapitalization efforts, FTX was able to utilize all
of its net operating loss carryforwards. FTX believes that no
valuation allowance is needed for its alternative minimum tax
(AMT) credits because historically it has been able to use
substantially all of its tax benefits and AMT credits can be
carried forward indefinitely. During 1995, as a result of using
its net operating loss carryforwards, FTX determined that it is
more likely than not that the majority of its other tax credits
will be utilized and, accordingly, reduced the previously
established valuation allowance by $27.4 million. FTX has
provided a valuation allowance for its charitable contribution
carryforwards as they are limited to ten percent of taxable
income and substantially all expire between 1996 and 2000.
FTX does not provide deferred taxes for financial and income
tax reporting basis differences related to its investment in FRP
which are considered permanent in duration (approximately $320
million). FTX believes it will ultimately be able to eliminate
these differences on a tax-free basis. If ownership in FRP were
to fall below 50 percent or if FTX were to determine that such
difference will not be eliminated tax-free, FTX would be required
to charge earnings for taxes on the difference between the book
and tax basis of its investment.
The income tax benefit from continuing operations consists
of the following:
1995 1994 1993
---------- ---------- ----------
(In Thousands)
Current income taxes:
Federal $ 116,920 $ (7,206) $ 6,430
State 13,286 788 (4,241)
---------- ---------- ----------
130,206 (6,418) 2,189
---------- ---------- ----------
Deferred income taxes:
Federal (62,218) 20,482 55,808
State (17,005) (926) 10,677
---------- ---------- ----------
(79,223) 19,556 66,485
---------- ---------- ----------
$ 50,983 $ 13,138 $ 68,674
========== ========== ==========
Reconciliations of the differences between income taxes from
continuing operations computed at the federal statutory tax rate
and income taxes recorded follow:
1995 1994 1993
----------------- ----------------- ---------------
Amount Percent Amount Percent Amount Percent
-------- ------- -------- ------- -------- -------
(Dollars In Thousands)
Income taxes computed at the
federal statutory tax
rate $(49,997) 35% $ (6,683) 35% $106,008 35%
(Increase) decrease
attributable to:
Statutory
depletion 5,594 (4) 1,780 (9) 2,016 1
Partnership minority
interests 38,139 (27) 25,342 (133) (45,057) (15)
Taxes no longer
required 35,449 (25) - - - -
Change in valuation
allowance 27,350 (19) - - - -
Minimum and state
taxes (3,719) 3 (138) 1 6,436 2
Other (1,833) 1 (7,163) 37 (729) -
-------- ------ -------- ------- -------- ------
Income tax
benefit $ 50,983 (36)% $ 13,138 (69)% $ 68,674 23%
======== ======= ======== ======= ======== ======
7. STOCKHOLDERS' EQUITY
Preferred Stock. In April 1995, FTX exchanged 1.9 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. As of December 31, 1995, one
million shares of $4.375 Preferred Stock remained outstanding and
are convertible into FTX common stock at a conversion price of
$27.36 per share or the equivalent of 1.8 shares of FTX common
stock for each share of $4.375 Preferred Stock. Beginning March
1997, FTX may redeem this preferred stock for cash at $52.1875
per share (declining ratably to $50 per share in March 2002) plus
accrued and unpaid dividends.
Common Stock. In October 1995, FTX effected a one-for-six
reverse stock split of its common stock and changed the par value
from $1.00 per share to $0.01 per share.
In June 1994, FTX changed its dividend policy and
distributed quarterly 0.075 FCX common shares for each FTX common
share owned in lieu of paying a $1.875 quarterly cash dividend to
its stockholders. FTX recorded a pretax gain of $105.5 million
in 1994 related to these property dividends which is included in
discontinued operations. In August 1995, FTX established a new
dividend policy declaring a regular quarterly cash dividend of 9
cents per FTX common share.
Stock Options. FTX's stock option plans provide for the issuance
of stock options and stock appreciation rights (SARs) at no less
than market value at time of grant. FTX can grant options to
employees to purchase up to 1.6 million shares under its 1992
stock option plans. The 1988 Stock Option Plan for Non-Employee
Directors authorizes FTX to grant options to purchase up to
250,000 shares. Under certain options, FTX will pay cash to the
optionee equal to an amount based on the maximum individual
federal income tax rate in effect at the time of exercise. In
connection with the distribution of FCX and MOXY shares, each
option was adjusted to preserve the economic value of the option.
Additionally, the FCX distribution resulted in an adjustment to
the average option price based on the value of the distribution.
Generally, stock options terminate ten years from the date of
grant. A summary of stock options outstanding, including 0.4
million SARs, follows:
1995 1994
-------------------------- ---------------------
Number of Average Number of Average
Options Option Price Options Option Price
---------- ------------ --------- ------------
Beginning of year 2,613,588 $98.76 2,290,498 $106.14
Granted 21,667 105.36 297,867 116.52
Adjustments 63,105 159,027
Exercised (1,177,285) 23.98 (114,908) 95.40
Expired (63,035) 89.46 (18,896) 107.40
---------- ----------
End of year 1,458,040 18.84 2,613,588 98.76
========== ==========
At December 31, 1995, stock options representing one million
shares were exercisable at an average option price of $18.53 per
share. Options for approximately 325,000 shares and 80,000
shares were available for new grants under the 1992 and 1988
Stock Option Plans, respectively, as of December 31, 1995.
During 1995, FTX recorded charges totaling $15.5 million for
the cost of stock options resulting from the rise in FTX's common
stock price. In October 1995 the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 123
(FAS 123) "Accounting for Stock-Based Compensation," effective
for FTX at December 31, 1996. Under FAS 123, companies can
either record expense based on the fair value of stock-based
compensation upon issuance or elect to remain under the current
APB Opinion No. 25 method whereby no compensation cost is
recognized upon grant. Entities electing to remain with the
accounting in APB Opinion No. 25 must make disclosures as if FAS
123 had been applied. FTX anticipates it will continue to
account for its stock-based compensation plans under APB Opinion
No. 25.
8. PENSION AND OTHER EMPLOYEE BENEFITS
The FTX pension plan covers substantially all United States and
certain overseas employees. Employees covered by collective
bargaining agreements and most nonresident aliens, many of whom
are covered by other plans, are not included. Benefits are based
on compensation levels and years of service. FTX funds its
pension liability in accordance with Internal Revenue Service
guidelines. Additionally, for those participants in the
qualified defined benefit plan whose benefits are limited under
federal income tax laws, FTX sponsors an unfunded nonqualified
plan. Information on the two plans follows:
December 31,
------------------------
1995 1994
---------- ----------
(In Thousands)
Actuarial present value of
benefit obligations
(projected unit credit method):
Vested $ 136,836 $ 90,396
Nonvested 3,961 1,643
---------- ----------
Accumulated benefit obligations $ 140,797 $ 92,039
========== ==========
Projected benefit obligations
(projected unit credit method) $ (174,074) $ (114,599)
Less plan assets at fair value 130,970 108,326
---------- ----------
Projected benefit obligations
in excess of plan assets (43,104) (6,273)
Unrecognized net (gain) loss
from past experience different
from that assumed 22,202 (5,179)
Unrecognized prior service costs 3,848 4,340
Unrecognized net asset being
recognized over 19 years (3,288) (3,763)
---------- ----------
Accrued pension cost $ (20,342) $ (10,875)
========== ==========
In determining the present value of benefit obligations for
1995 and 1994, FTX used a 7 percent and 8.25 percent discount
rate, respectively, a 5 percent annual increase in future
compensation levels and a 9 percent average expected rate of
return on assets.
Net pension cost for continuing operations includes the
following:
1995 1994 1993
---------- ---------- ----------
(In Thousands)
Service cost $ 4,429 $ 5,668 $ 8,573
Interest cost on projected
benefit obligations 10,083 9,008 9,739
Actual return on plan assets (26,526) 126 (9,388)
Net amortization and deferral 17,450 (8,814) 1,423
Termination benefits 4,292 2,404 26
---------- ---------- ----------
Net pension cost $ 9,728 $ 8,392 $ 10,373
========== ========== ==========
As of January 1, 1996, FM Services Company (FMS), a newly
formed entity owned 50 percent each by FTX and FCX, will provide
certain administrative, financial and other services that were
previously provided by FTX on a similar cost-reimbursement basis.
As of January 1, 1996, all U.S. and expatriate employees
performing direct services for FCX or its affiliates, other than
those employed by FMS, became FCX employees. FCX and FMS will
establish their own plans which will assume liabilities equal to
the accumulated benefit obligation for the transferred employees
and FTX will transfer assets equal to the liabilities assumed,
while providing essentially the same benefits to employees.
The operator of IMC-Agrico maintains non-contributory
pension plans that cover substantially all of its employees. As
of July 1, 1995, FRP's share of the actuarial present value of
the vested projected benefit obligation was $10 million, based on
a discount rate of 8.2 percent and a 5 percent annual increase in
future compensation levels, with its share of plan assets
totaling $2.7 million. FRP's share of the expense related to
these plans totaled $4.6 million in 1995, $3.6 million in 1994
and $1.5 million in 1993.
FTX provides certain health care and life insurance benefits
for retired employees. The related expense for continuing
operations totaled $10.5 million in 1995 ($1.5 million for
service cost and $9 million in interest for prior period
services), $12.3 million in 1994 ($1.3 million and $10 million,
respectively) and $11.3 million in 1993 ($1.8 million and $9.5
million, respectively). These benefits will be provided by FMS
beginning in 1996. Summary information of the plan follows:
December 31,
------------------------
1995 1994
---------- ----------
(In Thousands)
Actuarial present value of accumulated
postretirement obligation:
Retirees $ 111,151 $ 109,356
Fully eligible active
plan participants 11,248 8,806
Other active plan participants 16,980 4,611
---------- ----------
Total accumulated
postretirement obligation 139,379 122,773
Unrecognized net gain (loss) (7,498) 4,037
---------- ----------
Accrued postretirement
benefit cost $ 131,881 $ 126,810
========== ==========
The initial health care cost trend rate used was 11.5
percent for 1993, decreasing 0.5 percent per year until reaching
6 percent. A one percent increase in the trend rate would
increase the amounts by approximately 10 percent. The discount
rate used was 7 percent in 1995 and 8.25 percent in 1994. FTX
has the right to modify or terminate these benefits.
The operator of IMC-Agrico provides certain health care
benefits for retired employees. At July 1, 1995, FRP's share of
the accumulated postretirement obligation was $4.2 million, which
was unfunded. FRP's share of expense has not been material. The
initial health care cost trend rate used was 9.8 percent,
decreasing gradually to 5.5 percent in 2003. The discount rate
used was 8.2 percent. Employees are not vested and benefits are
subject to change.
FTX has an Employee Capital Accumulation Program which
permits eligible employees to defer a portion of their pretax
earnings and has an unfunded excess benefits plan for employees
to defer amounts in excess of the limitations imposed by the
Internal Revenue Code. FTX matches employee deferrals up to 5
percent of basic earnings. FTX has other employee benefits
plans, certain of which are related to its performance, which
costs are recognized currently in general and administrative
expense.
9. COMMITMENTS AND CONTINGENCIES
Litigation. While FTX is a defendant in various lawsuits
incurred in the ordinary course of its businesses, management
believes the potential liability in such lawsuits is not material
or is adequately covered by insurance, third party indemnity
agreements or reserves previously established. FTX maintains
liability and other insurance customary in its businesses, with
coverage limits deemed prudent.
Environmental. FTX has made, and will continue to make,
expenditures at its operations for protection of the environment.
FTX is subject to contingencies as a result of environmental laws
and regulations. The related future cost is indeterminable
because of such factors as the unknown timing and extent of the
corrective actions that may be required and the application of
joint and several liability.
In June 1994, a sinkhole was found at a phosphogypsum
storage area at IMC-Agrico's New Wales, Florida facility. The
Florida Department of Environmental Protection was notified and
IMC-Agrico pumped grout material into the sinkhole, thereby
plugging it and preventing further collapse. Groundwater
monitoring wells indicate that, to date, any impacts from the
sinkhole have been contained on-site. This issue continues to be
monitored. If there were contamination, which IMC-Agrico
considers unlikely, the costs that would be required are
uncertain and cannot be estimated at the present. If significant
costs were incurred it would be necessary to determine the
applicability of insurance coverage maintained by IMC-Agrico,
and separately by FRP, and for the sharing of costs between the
joint venture partners.
FRP has an indemnification for environmental remediation
costs in excess of an aggregate $5 million on certain identified
sites (FRP has previously accrued the $5 million). In
anticipation of reaching the $5 million indemnity, the third
party has assumed management of response activities for the
indemnified sites. Based on FRP's review of the potential
liabilities and the third party's financial condition, FRP
concluded that it is remote that FRP would have any additional
liability at the indemnified sites. FTX believes its exposure on
other sites for which notification has been received will not
exceed amounts accrued and expects that any costs would be
incurred over a period of years. The costs associated with those
sites for which notifications have not been received are
uncertain and cannot be estimated at present. However, FTX
believes that these costs, should they be incurred, will not have
a material adverse effect on its operations or financial
position.
FM Properties Inc. (FMPO). In 1992, FTX transferred
substantially all of its domestic oil and gas properties and real
estate held for development by it and certain of its subsidiaries
to a partnership which is currently 99.8 percent owned by FMPO
(FTX owns a 0.2 percent interest in the partnership and serves as
its managing general partner). FTX subsequently distributed the
FMPO common stock to the FTX common stockholders, with FTX
guaranteeing FMPO's debt. As part of the FCX distribution (Note
3), FCX assumed an obligation to guarantee up to $90 million of
this indebtedness (FTX is responsible for the first $45 million
and amounts in excess of FCX's $90 million up to an additional
$12.3 million) and FTX is paying an annual three percent fee to
FCX based on the amount guaranteed. During 1995, FMPO was able
to extend its debt maturities until 1997 and is managing its
assets with an objective of reducing its debt. Selected
financial information of FMPO follows:
1995 1994
---------- ----------
Statements of Operations: (In Thousands)
Revenues $ 48,170 $ 40,435
Operating loss (4,104) (123,739) *
Net income (loss) 153 (86,290)
Cash Flow:
Operating activities 47,655 11,968
Investing activities (35,242) 29,019
Financing activities (11,331) (42,270)
Balance Sheets at December 31:
Current assets 9,591 6,857
Current liabilities 8,100 22,146
Investment in real estate 180,040 198,453
Total assets 194,803 214,365
Long-term debt 121,294 132,075
Stockholders' equity 59,523 59,370
* Includes a $115 million pretax, noncash write-down.
Long-Term Contracts and Operating Leases. FTX's minimum annual
contractual charges under noncancelable long-term contracts and
operating leases which extend to 2009 total $363.9 million, with
$45.3 million in 1996, $41.5 million in 1997, $40.4 million in
1998, $29.8 million in 1999 and $39.2 million in 2000. Total
expense under long-term contracts and operating leases amounted
to $44.3 million in 1995, $30 million in 1994 and $27.5 million
in 1993.
10. RESTRUCTURING AND VALUATION CHARGES
Restructuring Charges. During 1993, FTX recognized restructuring
expenses totaling $46.3 million (excluding $20.8 million
associated with its discontinued operations). The charges
consisted of $22 million for personnel related costs, $11.8
million for excess office space and furniture and fixtures
resulting from staff reductions, $2.1 million for downsizing its
MIS structure, $8.8 million for IMC-Agrico formation costs and
$1.6 million of deferred charges relating to FTX's credit
facilities which were substantially revised.
In connection with the restructuring project, FTX changed
its accounting systems and undertook a detailed review of its
accounting records and valuation of various assets and
liabilities. As a result of this process, FTX recorded charges
totaling $48.8 million (excluding $16.3 million associated with
its discontinued operations), comprised of (a) $16.2 million of
production and delivery costs consisting of $9.9 million for
revised estimates of prior year costs and $6.3 million for
revised estimates of environmental liabilities, (b) $18.7 million
of depreciation and amortization consisting of $11.5 million for
estimated future abandonment and reclamation costs and $7.2
million for the write-down of miscellaneous properties, (c) $4.4
million of exploration expenses for the write-down of an unproved
oil and gas property and (d) $9.5 million of general and
administrative expenses consisting of $5.4 million to downsize
FTX's MIS structure and $4.1 million for the write-off of
miscellaneous assets.
Asset Sales/Recoverability. During 1993, FTX sold a nonproducing
oil and gas property recognizing a gain of $69.1 million, and FRP
sold assets, primarily certain previously mined phosphate rock
acreage, recognizing a gain of $11.8 million. FRP also sold its
remaining interests in producing geothermal properties for $63.5
million, consisting of $23 million in cash and $40.5 million of
interest-bearing notes, recognizing a $31 million charge to
expense and recording a $9 million charge for impairment of its
undeveloped geothermal properties. In 1994, FRP received
prepayment of these notes.
FTX charged $105 million to expense during 1993 for the
recoverability of certain assets, primarily FRP's Main Pass oil
($60 million) and non-Main Pass sulphur assets.
11. SUPPLEMENTARY MINERAL RESERVE INFORMATION (UNAUDITED)
Proved and probable mineral reserves, including proved oil
reserves, follow:
December 31,
--------------------------------------------------
1995 1994 1993 1992 1991
------- ------- -------- -------- --------
(In Thousands)
Sulphur-long
tons a 55,185 41,018 38,637 41,570 42,780
Phosphate
rock-short tons b 186,375 206,661 215,156 208,655 206,183
Oil-barrels 6,638 7,279 9,962 13,861 18,496
a. Main Pass reserves are subject to a 12.5 percent federal
royalty based on net mine revenues. Culberson reserves totaled
15.4 million tons for 1995 and are subject to a 9 percent royalty
based on net mine revenues.
b. For 1995-1993, represents FRP's share, based on its Capital
Interest ownership, of the IMC-Agrico reserves. Contains an
average of 68 percent bone phosphate of lime.
12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Net Income Net Income Per
Applicable Common Share
Operating To Common ---------------------
Revenues Income Stock Primary Fully Diluted
---------- ---------- ---------- ------- -------------
(In Thousands, Except Per Share Amounts)
1995
1st Quarter a $ 254,479 $ 49,874 $ 19,391 $ .85 $ .85
2nd Quarter b 233,398 47,184 265,485 10.78 8.98
3rd Quarter a,c 243,066 31,631 24,503 .86 .86
4th Quarter a,d 264,914 54,191 81,162 2.86 2.86
---------- ---------- ----------
$ 995,857e $ 182,880 $ 390,541 14.97 14.20
========== ========== ==========
1994
1st Quarter f $ 183,441 $ 12,258 $ 12,373 $ .53 $ .53
2nd Quarter f 186,946 20,073 4,634 .20 .20
3rd Quarter a 189,803 25,254 6,044 .26 .26
4th Quarter a 209,922 34,319 18,392 .80 .80
---------- ---------- ----------
$ 770,112e $ 91,904 $ 41,443 1.79 1.79
========== ========== ==========
a. Because FTX was not paid its proportionate share of FRP
distributions, additional minority interest charges to net income
were $5.5 million ($0.24 per share), $5.2 million ($0.18 per
share) and $4.1 million ($0.15 per share) in the first, third and
fourth quarters of 1995, respectively. Similar charges of $7.1
million ($0.31 per share) and $10.1 million ($0.44 per share)
were recorded in the third and fourth quarters of 1994,
respectively.
b. Net income includes a $33.5 million charge ($1.36 per share)
for the $4.375 Convertible Exchangeable Preferred Stock exchange
offer.
c. Net income includes a $3.9 million charge ($0.14 per share)
for stock option costs caused by the rise in FTX's common stock
price.
d. Net income includes a $1.8 million charge ($0.06 per share)
for stock option costs and an early retirement program, a $5.3
million gain ($0.19 per share) for the reversal of certain
insurance accruals no longer required and a $62.8 million gain
($2.21 per share) for the reversal of certain tax accruals no
longer required.
e. No customers accounted for ten percent or more of total
revenues. Export sales to Asia, Australia, Latin America and
Canada approximated 41 percent, 38 percent and 32 percent of
total revenues for 1995-1993, respectively.
f. Net income includes a $5.5 million charge ($0.23 per share)
in the first quarter and a $3.6 million charge ($0.16 per share)
in the second quarter related to early extinguishment of debt.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF FREEPORT-McMoRan
INC.:
We have audited the accompanying balance sheets of Freeport-
McMoRan Inc. (the Company), a Delaware Corporation, and
consolidated subsidiaries as of December 31, 1995 and 1994, and
the related statements of operations, cash flow and stockholders'
equity for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We
did not audit the financial statements of IMC-Agrico Company (the
Joint Venture). The Company's share of the Joint Venture
constitutes 44 percent and 32 percent of assets as of December
31, 1995 and 1994, and 80 percent, 85 percent and 37 percent of
the Company's total revenues for the years ended December 31,
1995, 1994 and 1993, respectively. Those statements were audited
by other auditors whose reports have been furnished to us, and
our opinion, insofar as it relates to the amounts included for
the Company's interest in the Joint Venture, is based solely on
the reports of the other auditors.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other
auditors, the financial statements referred to above present
fairly, in all material respects, the financial position of
Freeport-McMoRan Inc. and consolidated subsidiaries as of
December 31, 1995 and 1994 and the results of its operations and
its cash flow for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial
statements, effective January 1, 1993, the Company changed its
method of accounting for periodic scheduled maintenance costs,
deferred charges and costs of management information systems.
Arthur Andersen LLP
New Orleans, Louisiana,
January 23, 1996
SHAREHOLDER INFORMATION
COMMON SHARES/REVERSE STOCK SPLIT. Our common shares trade on the
New York Stock Exchange (NYSE) under the symbol "FTX." The FTX
share price is reported daily in the financial press under
"FrptMc" in most listings of NYSE securities. At yearend 1995
the number of holders of record of our common stock was 21,182.
On October 20, 1995, FTX's common shareholders approved an
amendment to its certificate of incorporation effecting a one-
for-six reverse split of FTX common stock, reducing the par value
of FTX common stock and decreasing the number of authorized
shares of FTX common stock.
Common share price ranges on the NYSE composite tape,
reflecting the one-for-six reverse stock split, during 1995 and
1994 were:
1995 1994
------------------ ------------------
High Low High Low
------- ------- ------- -------
First Quarter $111.78 $102.00 $130.50 $112.50
Second Quarter 111.78 101.28 118.50 97.50
Third Quarter 145.50* 27.00* 120.00 96.78
Fourth Quarter 41.13 33.00 119.28 100.50
* Share prices include periods before and after FTX's July 28,
1995 tax-free distribution of FCX Class B common stock, which had
a market value of $106.85 per FTX share.
RESTRUCTURING PLAN/COMMON SHARE DIVIDENDS. On July 5, 1995, FTX
announced that its Board of Directors declared a special tax-free
dividend whereby FTX would distribute its ownership in FCX to FTX
common shareholders. FTX distributed 4.210404 shares of FCX
Class B common stock for each FTX common share of record on July
17, 1995. This special tax-free dividend completed FTX's
restructuring announced in 1994.
Cash and property dividends paid during 1995 and 1994, which
reflect the one-for-six reverse stock split, were:
1995
- ---------------------------------------------------------------
Dividend Per FTX Share Record Date Payment Date
- ----------------------- ------------- -------------
0.075 FCX.A share * Feb. 15, 1995 Mar. 1, 1995
4.210404 FCX shares * Jul. 17, 1995 Jul. 28, 1995
$0.09 Aug. 15, 1995 Sep. 1, 1995
$0.09 Nov. 15, 1995 Dec. 1, 1995
1994
- ---------------------------------------------------------------
Dividend Per FTX Share Record Date Payment Date
- ----------------------- ------------- -------------
$1.875 Feb. 15, 1994 Mar. 1, 1994
0.075 FCX.A share * May 16, 1994 Jun. 1, 1994
0.6 MOXY share * May 20, 1994 May 20, 1994
0.075 FCX.A share * Aug. 15, 1994 Sep. 1, 1994
0.075 FCX.A share * Nov. 15, 1994 Dec. 1, 1994
* Below is a summary of the cost basis of shares for the property
dividends.
Per Share Amount
for Calculation
of Cash in Lieu
Cost Basis of a Fractional
Record Date Share Per Share Share
- --------------- ------- ----------- ----------------
Feb. 15, 1995 FCX.A $20.9375 $20.8125
Jul. 17, 1995 FCX ** 24.1250
May 16, 1994 FCX.A 24.1875 24.4375
May 20, 1994 MOXY 4.5000 5.4933
Aug. 15, 1994 FCX.A 22.7500 21.0625
Nov. 15, 1994 FCX.A 20.0625 22.0625
** The cost basis for each share of FTX stock should be reduced
to 21 percent of its former amount and the remaining 79 percent
of the FTX cost basis should be established as the cost basis for
the FCX shares and cash in lieu of a fractional share.
Exhibit 21.1
List of Subsidiaries of
FREEPORT-McMoRan INC.
Name Under Which
Entity Organized It Does Business
----------------------------------- --------- ----------------
Freeport-McMoRan Resource Partners, Delaware Same
Limited Partnership
IMC-Agrico Company Delaware Same
FM Services Company Delaware Same
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our reports included herein or
incorporated by reference in this Form 10-K, into Freeport-
McMoRan Inc.'s previously filed Registration Statements on Form
S-8 (File Nos. 2-85000, 33-14641, 33-29850, 33-30417 and 33-
62170).
/s/Arthur Andersen LLP
----------------------
Arthur Andersen LLP
New Orleans, Louisiana,
March 27, 1996
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP
We consent to the use of our report dated January 15, 1996, with
respect to the financial statements of IMC-Agrico Company (not
presented separately herein), incorporated by reference in the
Registration Statements on Form S-8 (File Nos. 2-85000, 33-14641,
33-29850, 33-30417 and 33-62170) and related Prospectuses of
Freeport-McMoRan Inc. and included in this Annual Report (Form
10-K) for the year ended December 31, 1995.
/s/ ERNST & YOUNG LLP
-----------------------
ERNST & YOUNG LLP
Chicago, Illinois
March 27, 1996
Exhibit 24.1
FREEPORT-McMoRan INC.
Certificate of Secretary
------------------------
I, Michael C. Kilanowski, Jr., Secretary of Freeport-McMoRan
Inc. (the "Corporation"), a Delaware corporation, do hereby certify
that the following resolution was duly adopted by the Board of
Directors of the Corporation at a meeting held on February 29,
1984, and that such resolution has not been amended, modified or
rescinded and is in full force and effect:
RESOLVED, That any report, registration statement or
other form filed on behalf of this corporation pursuant
to the Securities Exchange Act of 1934, or any amendment
to any such report, registration statement or other form,
may be signed on behalf of any director or officer of
this corporation pursuant to a power of attorney executed
by such director or officer.
IN WITNESS WHEREOF, I have hereunto set my name and the seal
of the Corporation this 25th day of March, 1996.
(Seal) /s/ Michael C. Kilanowski, Jr.
------------------------------
Michael C. Kilanowski, Jr.
Secretary
EXHIBIT 24.2
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, and
RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others
and with full power of substitution, to execute, deliver and file,
for and on behalf of him, in his name and in his capacity or
capacities as aforesaid, an Annual Report of the Company on Form
10-K for the year ended December 31, 1995, and any amendment or
amendments thereto and any other document in support thereof or
supplemental thereto, and the undersigned hereby grants to said
attorneys, and each of them, full power and authority to do and
perform each and every act and thing whatsoever that said attorney
or attorneys may deem necessary or advisable to carry out fully the
intent of the foregoing as the undersigned might or could do
personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Rene L. Latiolais
---------------------
Rene L. Latiolais
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Charles W. Goodyear
-----------------------
Charles W. Goodyear
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 29th day of February, 1996.
/s/ John T. Eads
----------------
John T. Eads
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, and RENE
L. LATIOLAIS, and each of them acting individually, his true and
lawful attorney-in-fact with power to act without the others and
with full power of substitution, to execute, deliver and file, for
and on behalf of him, in his name and in his capacity or capacities
as aforesaid, an Annual Report of the Company on Form 10-K for the
year ended December 31, 1995, and any amendment or amendments
thereto and any other document in support thereof or supplemental
thereto, and the undersigned hereby grants to said attorneys, and
each of them, full power and authority to do and perform each and
every act and thing whatsoever that said attorney or attorneys may
deem necessary or advisable to carry out fully the intent of the
foregoing as the undersigned might or could do personally or in the
capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may
do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Richard C. Adkerson
-----------------------
Richard C. Adkerson
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Robert W. Bruce III
-----------------------
Robert W. Bruce III
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Thomas B. Coleman
---------------------
Thomas B. Coleman
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Robert A. Day
-----------------
Robert A. Day
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ William B. Harrison, Jr.
----------------------------
William B. Harrison, Jr.
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Henry A. Kissinger
----------------------
Henry A. Kissinger
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Bobby Lee Lackey
--------------------
Bobby Lee Lackey
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in her capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, her true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of her, in her name
and in her capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Gabrielle K. McDonald
-------------------------
Gabrielle K. McDonald
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ George Putnam
-----------------
George Putnam
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ B.M. Rankin, Jr.
--------------------
B.M. Rankin, Jr.
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ J. Taylor Wharton
---------------------
J. Taylor Wharton
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation (the "Company"),
does hereby make, constitute and appoint JAMES R. MOFFETT, RENE L.
LATIOLAIS and RICHARD C. ADKERSON, and each of them acting
individually, his true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of him, in his name
and in his capacity or capacities as aforesaid, an Annual Report of
the Company on Form 10-K for the year ended December 31, 1995, and
any amendment or amendments thereto and any other document in
support thereof or supplemental thereto, and the undersigned hereby
grants to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to
carry out fully the intent of the foregoing as the undersigned
might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by
virtue of this Power of Attorney.
EXECUTED this 12th day of February, 1996.
/s/ Ward W. Woods, Jr.
----------------------
Ward W. Woods, Jr.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Freeport-McMoRan Inc. financial statements at December 31,
1995 and 1994 and for the 12 month periods then ended, and is
qualified in its entirety by reference to such financial statements.
The 1994 amounts have been restated.
</LEGEND>
<RESTATED>
<CIK> 0000351116
<NAME> FREEPORT-MCMORAN INC.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> DEC-31-1995 DEC-31-1994
<CASH> 23,496 13,810
<SECURITIES> 0 0
<RECEIVABLES> 58,220 46,831
<ALLOWANCES> 0 0
<INVENTORY> 119,010 109,677
<CURRENT-ASSETS> 247,999 220,845
<PP&E> 1,978,065 1,905,410
<DEPRECIATION> 978,225 940,871
<TOTAL-ASSETS> 1,320,470 1,649,442
<CURRENT-LIABILITIES> 180,766 191,553
<BONDS> 359,501 1,122,070
0 0
50,084 250,000
<COMMON> 337 166,365
<OTHER-SE> 141,516 (646,832)
<TOTAL-LIABILITY-AND-EQUITY> 1,320,470 1,649,442
<SALES> 995,857 770,112
<TOTAL-REVENUES> 995,857 770,112
<CGS> 735,044 613,157
<TOTAL-COSTS> 735,044 613,157
<OTHER-EXPENSES> 0 6,672
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 49,655 71,565
<INCOME-PRETAX> 142,849 19,094
<INCOME-TAX> (50,983) (13,138)
<INCOME-CONTINUING> 92,400 (35,132)
<DISCONTINUED> 340,424 107,715
<EXTRAORDINARY> 0 (9,108)
<CHANGES> 0 0
<NET-INCOME> 432,824 63,475
<EPS-PRIMARY> 14.97 1.79
<EPS-DILUTED> 14.20 1.79
</TABLE>
Exhibit 99.1
Report of Ernst & Young LLP
We have audited the balance sheets of IMC-Agrico Company (a
Partnership) as of December 31, 1995, 1994 and 1993, and June 30,
1995 and 1994 and the related statements of earnings, changes in
partners' capital and cash flows for the six-month periods ended
December 31, 1995, 1994 and 1993, and the years ended June 30,
1995 and 1994 (not presented separately herein). These financial
statements are the responsibility of IMC-Agrico Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of IMC-Agrico Company as of December 31, 1995, 1994 and 1993, and
June 30, 1995 and 1994 and the results of its operations and its
cash flows for the six-month periods ended December 31, 1995,
1994 and 1993 and the years ended June 30, 1995 and 1994 in
accordance with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
---------------------
ERNST & YOUNG LLP
Chicago, Illinois
January 15, 1996
