SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1997
Commission File Number: 1-8124
Freeport-McMoRan Inc.
Incorporated in Delaware 13-3051048
(IRS Employer Identification No.)
1615 Poydras Street, New Orleans, Louisiana 70112
Registrant's telephone number, including area code:(504) 582-4000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
On June 30, 1997, there were issued and outstanding 23,339,541 shares
of the registrant's Common Stock, par value $0.01 per share.
<PAGE> 1
FREEPORT-McMoRan INC.
TABLE OF CONTENTS
Page
Part I. Financial Information
Financial Statements:
Condensed Balance Sheets 3
Statements of Income 4
Statements of Cash Flow 5
Notes to Financial Statements 6
Remarks 7
Report of Independent Public Accountants 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information 14
Signature 15
Exhibit Index E-1
<PAGE> 2
FREEPORT-McMoRan INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
FREEPORT-McMoRan INC.
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ----------
<S> (In Thousands)
ASSETS
Current assets: <C> <C>
Cash and cash equivalents $ 5,481 $ 19,977
Accounts receivable 67,137 71,795
Inventories 159,640 141,158
Prepaid expenses and other 4,719 5,065
---------- ----------
Total current assets 236,977 237,995
Property, plant and equipment, net 945,947 964,787
Other assets 58,247 48,641
---------- ----------
Total assets $1,241,171 $1,251,423
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
liabilities $ 168,779 $ 168,557
Long-term debt, less current portion 449,641 441,030
Accrued postretirement benefits
and pension costs 184,969 182,832
Reclamation and mine shutdown
reserves 108,330 106,374
Other liabilities and deferred
credits 90,358 84,247
Minority interest 166,705 174,081
Stockholders' equity 72,389 94,302
---------- ----------
Total liabilities and
stockholders' equity $1,241,171 $1,251,423
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 3
FREEPORT-McMoRan INC.
STATEMENTS OF INCOME (Unaudited)
<TABLE>
<caption.
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ----------------------
1997 1996 1997 1996
---------- --------- -------- ---------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenues $ 228,906 $ 242,793 $ 440,778 $ 499,620
Cost of sales:
Production and
delivery 160,595 172,573 307,193 342,521
Depreciation and
amortization 16,410 9,385 25,810 20,807
---------- ---------- ---------- ----------
Total cost of
sales 177,005 181,958 333,003 363,328
Gain on IMC-Agrico
investment - - - (11,917)
Exploration expenses - - 6,222 -
General and
administrative
expenses 14,097 14,405 27,955 32,040
---------- ---------- ---------- ----------
Total costs and
expenses 191,102 196,363 367,180 383,451
---------- ---------- ---------- ----------
Operating income 37,804 46,430 73,598 116,169
Interest expense,
net (9,451) (8,413) (18,724) (16,438)
Other income
(expense), net (197) 607 (173) 1,355
---------- ---------- ---------- ----------
Income before
minority interest
and income taxes 28,156 38,624 54,701 101,086
Minority interest in
net income of
consolidated
subsidiaries (14,809) (18,639) (38,197) (47,741)
Income tax provision (5,016) (6,764) (6,202) (18,899)
---------- ---------- ---------- ----------
Net income 8,331 13,221 10,302 34,446
Preferred dividends (1,095) (1,095) (2,191) (2,191)
---------- ---------- ---------- ----------
Net income applicable
to common stock $ 7,236 $ 12,126 $ 8,111 $ 32,255
========== ========== ========== ==========
Net income per
primary and fully
diluted share $.31 $.45 $.34 $1.18
==== ==== ==== =====
Average primary and
fully diluted common
and common equivalent
shares outstanding 23,634 27,145 23,863 27,412
====== ====== ====== ======
Cash dividend per common
share $.09 $.09 $.18 $.18
==== ==== ==== ====
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 4
FREEPORT-McMoRan INC.
STATEMENTS OF CASH FLOW (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1997 1996
---------- ----------
<S> (In Thousands)
Cash flow from operating activities: <C> <C>
Net income $ 10,302 $ 34,446
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 25,810 20,807
Gain on IMC-Agrico investment - (11,917)
Oil and gas exploration expenses 6,222 -
Deferred income taxes 4,222 18,798
Minority interest's share of net
income 38,197 47,741
Cash distributions from IMC-Agrico
in excess of interest in capital 22,816 24,897
Reclamation and mine shutdown
expenditures (12,255) (6,476)
(Increase) decrease in working
capital, net of effect of
distribution:
Accounts receivable 4,009 22,359
Inventories (18,482) (17,644)
Prepaid expenses and other 346 (353)
Accounts payable and accrued
liabilities 6,104 (40,855)
Other 1,922 9,606
---------- ----------
Net cash provided by operating
activities 89,213 101,409
---------- ----------
Cash flow from investing activities:
Capital expenditures:
FRP (23,137) (16,649)
Other (11,444) (926)
Sale of assets - 4,000
---------- ----------
Net cash used in investing
activities (34,581) (13,575)
---------- ----------
Cash flow from financing activities:
Purchase of FTX common shares (26,069) (57,672)
Purchase of FRP units - (1,305)
Distributions paid to FRP public
unitholders (45,573) (61,898)
Proceeds from debt 134,382 96,091
Repayments of debt (125,728) (219,859)
Proceeds from sale of FRP 7% Senior
Notes - 147,831
Cash dividends paid:
Common stock (4,285) (4,832)
Preferred stock (2,191) (2,191)
Other 336 (156)
---------- ----------
Net cash used in financing
activities (69,128) (103,991)
---------- ----------
Net decrease in cash and cash
equivalents (14,496) (16,157)
Cash and cash equivalents at
beginning of year 19,977 23,496
---------- ----------
Cash and cash equivalents at
end of period $ 5,481 $ 7,339
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 5
FREEPORT-McMoRan INC.
NOTES TO FINANCIAL STATEMENTS
1. FTX AGREEMENT TO MERGE
On July 28, 1997, Freeport-McMoRan Inc. (FTX) and IMC Global Inc.
(IGL) announced an agreement to merge, with IGL as the surviving
entity. The proposed combination, subject to negotiation of a
definitive agreement and appropriate approvals, will involve the
exchange of FTX common shares for 0.9 common shares of IGL stock plus
a three-year warrant to purchase one-third of a share of IGL common
stock at a price of $44.50 per share. The merger transaction will
also involve the transfer of the Freeport-McMoRan Resource Partners,
Limited Partnership's (FRP) sulphur business, including its 58.3
percent interest in the Main Pass 299 sulphur and oil property,
together with IGL's 25 percent interest which IGL will relinquish to
FRP, to a new entity whose common stock will be distributed to FRP
unitholders, including FTX. FTX will distribute the stock to its
stockholders. The definitive merger agreement is expected to be
completed within approximately 30 days, with completion of the merger
transaction by the end of 1997.
2. OIL AND GAS EXPLORATION INVESTMENT
In March 1997, FRP entered into an agreement with McMoRan Oil & Gas
Co. (MOXY), pursuant to which FRP acquired an interest in seven leases
awarded to MOXY at the OCS Lease Sale 166 held in March 1997 for $5.5
million. In July 1997, FRP and MOXY also agreed to a multi-year
aggregate $200 million oil and gas exploration program (MOXY/FRP
Exploration Program) to explore and develop prospects primarily
offshore in the Gulf of Mexico and onshore in the Gulf Coast area.
FRP and MOXY will fund 60 percent and 40 percent, respectively, of the
exploration costs and all revenues and other costs will be shared
equally.
Additionally, during August 1997, FRP purchased from MCN Energy
Group Inc. (MCN), MCN's 60 percent interest in the MOXY/MCN offshore
exploration program (MOXY/MCN program) which includes two producing
oil and gas fields, an inventory of eight exploration prospects in the
offshore Gulf of Mexico and MOXY's program debt of approximately $12.4
million owed to MCN for a total of $46.4 million, subject to
adjustments. Subject to completion of MOXY's recapitalization
described below, MOXY will acquire the two producing properties from
FRP for $26.0 million, subject to certain adjustments, and repay FRP
for MOXY's debt under the MOXY/MCN program. FRP and MOXY will
contribute their interests in the MOXY/MCN program exploration
properties and their interests in the seven offshore leases discussed
above to the MOXY/FRP Exploration Program.
To provide capital for these transactions, MOXY intends to
undertake a $100 million rights offering pursuant to which MOXY
anticipates issuing approximately 28.6 million shares of common stock.
FRP has agreed to purchase at the $3.50 per share subscription price
all shares that are offered but not purchased by rights holders. Upon
closing of the MOXY rights offering, FRP will receive from MOXY a fee
of $6 million. Additionally, if FRP does not acquire at least 30
percent of MOXY's outstanding common stock in the rights offering, FRP
will have the option to purchase at $3.50 per share up to a 30 percent
ownership interest in MOXY. These transactions are subject to
approval by MOXY's stockholders.
The proposed merger between FTX and IGL, discussed in Note 1,
will have no effect on the proposed oil and gas exploration program
and other transactions between FRP and MOXY.
<PAGE> 6
3. PARENT COMPANY BALANCE SHEET
The unaudited, unconsolidated condensed balance sheet of FTX as of
June 30, 1997 follows (in thousands):
Cash and cash equivalents $ 279
Other current assets 1,586
Property, plant and equipment, net 51,551
Investment in FRP 181,355
Other assets 10,454
----------
Total assets $ 245,225
==========
Accounts payable and accrued liabilities $ 26,171
Long-term debt 52,700
Other liabilities and deferred credits 93,965
Stockholders' equity 72,389
----------
Total liabilities and stockholders' equity $ 245,225
==========
4. SRI LANKA PROJECT
In March 1997, FRP was reimbursed $2.9 million for previously incurred
expenses as a result of IMC-Agrico's participation in the potential
phosphate mine and upgrading project in Sri Lanka. This project would
be undertaken through a joint venture involving the Government of Sri
Lanka, IMC-Agrico and another party.
5. NORTH BAY JUNOP EXPLORATION CHARGE
In April 1997, FRP's 25 percent owned oil and gas exploration joint
venture with Phillips Petroleum Company and MOXY completed drilling of
its exploratory well on the North Bay Junop prospect, the second of
two high-risk, high-potential prospects which have been drilled within
the joint venture's project area in south Louisiana. The well reached
total depth but did not encounter commercial hydrocarbons in the
primary objective zones, resulting in a first-quarter 1997 charge to
exploration expense of $6.2 million.
6. NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128 (SFAS 128),
"Earnings Per Share," which simplifies the computation of earnings per
share. SFAS 128 is effective for financial statements issued for
periods ending after December 15, 1997 and requires restatement for
all prior period earnings per share data presented. Adoption of SFAS
128 will not have a material impact on FTX's previously reported
earnings per share.
In June 1997, the FASB issued SFAS 130, "Reporting Comprehensive
Income," and SFAS 131, "Disclosures About Segments of an Enterprise
and Related Information." SFAS 130 establishes standards for the
reporting and display of comprehensive income in the financial
statements. Comprehensive income is the total of net income and all
other non-owner changes in equity. SFAS 131 requires that companies
disclose segment data based on how management makes decisions about
allocating resources to segments and measuring their performance.
SFAS 130 and 131 are effective for 1998. Adoption of these standards
is expected to result in additional disclosures, but will not have an
effect on FTX's financial position or results of operations.
-----------------
Remarks
The information furnished herein should be read in conjunction with
FTX's financial statements contained in its 1996 Annual Report to
stockholders included in its Annual Report on Form 10-K.
The information furnished herein reflects all adjustments which are,
in the opinion of management, necessary for a fair statement of the
results for the periods. All such adjustments are, in the opinion of
management, of a normal recurring nature.
<PAGE> 7
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Freeport-McMoRan Inc.:
We have reviewed the accompanying condensed consolidated balance sheet
of Freeport-McMoRan Inc. (the Company), a Delaware Corporation, as of
June 30, 1997, and the related consolidated statements of operations
for the three-month and six-month periods ended June 30, 1997 and 1996
and the statements of cash flow for the six-month periods ended June
30, 1997 and 1996. These financial statements are the responsibility
of the Company's management. We did not review the interim financial
information of IMC-Agrico Company (the Joint Venture). The Company's
share of the Joint Venture constitutes 47 percent of consolidated
total assets as of June 30, 1997, and 82 percent of the Company's
consolidated total revenues for the periods ended June 30, 1997 and
1996. Those statements were reviewed by other accountants whose
report covering their review has been furnished to us.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review and the report of other accountants, we are not
aware of any material modifications that should be made to the
financial statements referred to above for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet of Freeport-McMoRan Inc. as of
December 31, 1996, and the related statements of operations,
stockholders' equity and cash flow for the year then ended (not
presented herein), and in our report dated January 21, 1997, based on
our audit and the report of other auditors, we expressed an
unqualified opinion on those financial statements. In our opinion,
the information set forth in the accompanying condensed balance sheet
as of December 31, 1996, is fairly stated, in all material respects,
in relation to the balance sheet from which it has been derived.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
July 22, 1997
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
FTX AGREEMENT TO MERGE
On July 28, 1997, Freeport-McMoRan Inc. (FTX) and IMC Global Inc.
(IGL) announced an agreement to merge, with IGL as the surviving
entity. The proposed combination, subject to negotiation of a
definitive agreement and appropriate approvals, will involve the
exchange of FTX common shares for 0.9 common shares of IGL stock plus
a three-year warrant to purchase one-third of a share of IGL common
stock at a price of $44.50 per share. The merger transaction will
also involve the transfer of the Freeport-McMoRan Resource Partners,
Limited Partnership's (FRP) sulphur business, including its 58.3
percent interest in the Main Pass 299 sulphur and oil property,
together with IGL's 25 percent interest which IGL will relinquish to
FRP, to a new entity whose common stock will be distributed to FRP
unitholders, including FTX. FTX will distribute the stock to its
stockholders. The definitive merger agreement is expected to be
completed within approximately 30 days, with completion of the merger
transaction by the end of 1997.
OVERVIEW
The business operations of FTX primarily consist of its 51.6 percent
ownership in FRP. FRP, through its subsidiaries and joint venture
operations, is one of the world's leading integrated phosphate
fertilizer producers. FRP is a joint venture partner in IMC-Agrico
Company, the world's largest and one of the lowest cost producers,
marketers and distributors of phosphate fertilizers. IMC-Agrico's
business also includes the mining and sale of phosphate rock and the
production, marketing and distribution of animal feed ingredients.
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. Main Pass also contains
proved oil reserves that FRP produces and sells for the Main Pass
joint venture.
The combined sulphur, 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 material prices.
FRP also believes that the strategic location of IMC-Agrico's
fertilizer operations, both in Florida and on the Mississippi River,
provide it with a competitive advantage over other fertilizer
producers.
Management has been able to move forward on several growth
opportunities during 1997 as follows:
* In March 1997, FRP, a significant consumer of natural gas in its
sulphur and fertilizer operations, entered into an agreement with
McMoRan Oil & Gas Co. (MOXY) pursuant to which FRP acquired an
interest in seven leases awarded to MOXY at the OCS Lease Sale 166
held in March 1997 for $5.5 million. In July 1997, FRP and MOXY also
agreed to a multi-year aggregate $200 million oil and gas exploration
program (MOXY/FRP Exploration Program) to explore and develop
prospects primarily offshore in the Gulf of Mexico and onshore in the
Gulf Coast area. FRP and MOXY will fund 60 percent and 40 percent,
respectively, of the exploration costs and all revenues and other
costs will be shared equally.
Additionally, during August 1997, FRP purchased from MCN Energy Group
Inc. (MCN), MCN's 60 percent interest in the MOXY/MCN offshore
exploration program (MOXY/MCN Program) which includes two producing
oil and gas fields, an inventory of eight exploration prospects in the
offshore Gulf of Mexico and MOXY's program debt of approximately $12.4
million owed to MCN for a total of $46.4 million, subject to
adjustments. Subject to completion of MOXY's recapitalization
described below, MOXY will acquire the two producing properties from
FRP for $26.0 million, subject to certain adjustments, and repay FRP
for MOXY's debt under the MOXY/MCN Program. FRP and MOXY will
contribute their interests in the MOXY/MCN Program exploration
properties and their interests in the seven offshore leases discussed
above to the MOXY/FRP Exploration Program.
To provide capital for these transactions, MOXY intends to undertake a
$100 million rights offering pursuant to which MOXY anticipates
issuing approximately 28.6 million shares of common stock. FRP has
agreed to purchase at the $3.50 per share subscription price all
shares that are offered but not purchased by rights holders. Upon
closing of the rights offering, FRP will receive from MOXY a fee of $6
million. Additionally, if FRP does not acquire at least 30 percent of
MOXY's outstanding common stock in the rights offering, FRP will have
the option to purchase at $3.50 per share up to a 30 percent ownership
interest in MOXY. These transactions are subject to approval by
MOXY's stockholders.
<PAGE> 9
The merger between FTX and IGL, discussed above, will have no
effect on the proposed oil and gas exploration program and other
transactions between FRP and MOXY.
* In March 1997, FRP was reimbursed $2.9 million for previously
incurred expenses as a result of IMC-Agrico's participation in the
potential phosphate mine and upgrading project in Sri Lanka. This
project would be undertaken through a joint venture involving the
Government of Sri Lanka, IMC-Agrico and another party. Because of the
strategic location of this project in close proximity to Asian
customers, it would have potentially favorable economic competitive
advantages. Project evaluation continues.
RESULTS OF OPERATIONS
Second Quarter Six Months
------------------------ ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ---------
(In Millions)
Revenues $ 228.9 $ 242.8 $ 440.8 $ 499.6
Operating income 37.8 46.4 73.6 116.2
Net income to
common stock 7.2 12.1 8.1 32.3
FTX's operating results for the second quarter of 1997 were
affected by lower average realizations on its phosphate fertilizer,
phosphate rock, sulphur and oil sales, as well as reduced sales
volumes for phosphate rock and oil. For the six-month 1997 period,
FTX experienced lower average realizations on its phosphate
fertilizer, phosphate rock and sulphur sales, combined with reduced
production and sales volumes for phosphate fertilizer, phosphate rock
and oil. The six-month 1997 period includes a $6.2 million charge for
oil and gas exploration costs and a $2.9 million credit for
reimbursement of previously incurred expenses as a result of IMC-
Agrico's participation in a potential phosphate mine and upgrading
project in Sri Lanka. The six-month 1996 period included an $11.9
million gain from the increase in FRP's ownership of IMC-Agrico and
charges totaling $3.0 million for asset valuations at IMC-Agrico.
Depreciation and amortization for the current quarter increased
$7.0 million from the 1996 period amount. This rise is attributable
primarily to a $3.2 million increase related to FRP's disproportionate
interest in the IMC-Agrico cash distributions and $3.7 million in
nonrecurring charges from IMC-Agrico, partially offset by a decline in
unit-of-production depreciation of $1.5 million from Main Pass oil
operations caused by lower volumes. For the six-month 1997 period,
depreciation and amortization rose $5.0 million primarily because of a
$3.4 million increase related to FRP's disproportionate interest in
the IMC-Agrico cash distributions and $3.7 million in nonrecurring
charges from IMC-Agrico, partially offset by a reduction of $3.4
million from Main Pass oil operations.
General and administrative expenses for the six-month 1997 period
declined $4.1 million from the 1996 period amount. A majority of the
decrease related to lower stock appreciation rights costs.
Interest expense for the 1997 periods increased from the year-ago
amounts because of higher average debt levels. Minority interest
represents the FRP public unitholders' pro rata share of FRP earnings,
with the six-month 1997 period including an additional charge of $9.2
million (versus a gain of $0.5 million and $1.7 million for the
second-quarter and six-month periods of 1996, respectively) because
FTX was not paid its proportionate share of FRP distributions in
connection with the final quarterly distribution under the public FRP
unitholders' preferential distribution priority paid in February 1997.
To the extent that cumulative unpaid distributions are reduced in the
future, as discussed below, FTX will recognize a disproportionately
greater share of FRP's reported earnings. FTX's income tax provision
for 1997 decreased from the 1996 period amount, primarily resulting
from the decline in pretax, after-minority interest earnings.
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 second-quarter 1997 operating income of $42.2 million on
revenues of $221.1 million compared with operating income of $50.1
million on revenues of $233.0 million for the 1996 period. Operating
income for the first six months of 1997 was $84.7 million on revenues
of $424.3 million compared with operating income of $126.3 million on
revenues of $480.2 million for the year-ago period. Significant items
impacting operating income follow (in millions):
<PAGE> 10
Second Six
Quarter Months
---------- ----------
Agricultural minerals operating
income -1996 $ 50.1 $ 126.3
---------- ----------
Increases (decreases):
Sales volumes .4 (18.4)
Realizations (12.6) (37.0)
Other .3 (.5)
---------- ----------
Revenue variance (11.9) (55.9)
Cost of sales a 3.9 24.9
Gain on IMC-Agrico investment - (11.9)
General and administrative .1 1.3
---------- ----------
(7.9) (41.6)
---------- ----------
Agricultural minerals operating
income -1997 $ 42.2 $ 84.7
========== ==========
a. Includes a reduction to depreciation of $5.3 million and $8.5
million for the second quarter of 1997 and 1996, respectively, and
$12.4 million and $15.8 million for the six-month period of 1997 and
1996, respectively, caused by FRP's disproportionate interest in IMC-
Agrico cash distributions. These adjustments to depreciation will end
after the third quarter of 1997, when FRP receives its final
disproportionate cash distribution from IMC-Agrico. The six-month
1996 period also includes $3.0 million of asset valuation charges from
IMC-Agrico.
FRP's second-quarter 1997 phosphate fertilizer sales volumes
increased by 3 percent from the year-ago quarter, as North American
demand was very strong and export shipments remained brisk with IMC-
Agrico shipping significant tonnage to China under its 1997/1998 sales
agreement. Average sales prices for phosphate fertilizers for the
quarter were slightly lower than the prior-year period and the
previous quarter. IMC-Agrico resumed full production at its New
Wales, Florida facility in April 1997 in response to strengthened
demand associated with the domestic spring season and new sales to the
international market. Unit production costs for diammonium phosphate
(DAP), IMC-Agrico's principal fertilizer product, declined slightly
from the year-ago quarter primarily as a result of reduced sulphur,
ammonia and processing costs. Near-term unit production costs are
expected to benefit as the full effect of a decline in ammonia prices
which occurred over the past six months is realized.
With very low phosphate fertilizer producer inventories, the
near-term market outlook appears favorable. Even with current
expectations of good crop yields in North America, world grain stocks
should remain at historically low levels. Long-term projected demand
growth, especially in the developing countries of Asia and Latin
America, is expected to require additional supplies of fertilizer
beyond the current production capability of existing facilities.
Additionally, FRP believes higher prices and operating margins are
required before new major phosphate projects are initiated. However,
weather and government policies will continue to cause annual
fluctuations in the overall agricultural and fertilizer supply and
demand situation.
FRP's second-quarter and six-month 1997 phosphate rock sales
volumes declined 25 percent and 20 percent, respectively, over year-
ago levels, as IMC-Agrico continues to limit-third party sales in
order to maximize the long-term value of its reserves through internal
use. This strategy is expected to result in lower sales volumes of
phosphate rock for 1997. Reduced sales volumes and lower realizations
contributed to decreased earnings from phosphate rock operations.
FRP's Main Pass and Culberson sulphur mines continue to operate
at reduced rates in order to match market requirements. FRP's sulphur
realizations for the second quarter of 1997 strengthened, rising 3
percent from the first quarter of 1997, but were 6 percent lower than
the year-ago period. Sulphur sales volumes for the second quarter of
1997 rose 11 percent from the 1996 period, primarily caused by
increased sales to IMC-Agrico. FRP's future sulphur sales
realizations and volumes will continue to depend on the level of
demand from the domestic phosphate fertilizer industry and the
availability of competing supplies from recovered sources. Since
FRP's sulphur consumption approximates its production, a change in the
market price of sulphur does not have a significant effect on
earnings. FRP continues to evaluate its sulphur business strategy in
light of the current sulphur market, including the possibility of
reducing its overall production levels.
<PAGE> 11
Second Quarter Six Months
------------------------ ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Phosphate
fertilizers
-primarily DAP
Sales (short tons) 833,400 809,900 1,532,900 1,599,900
Average realized
price a
All phosphate
fertilizers $171.77 $174.96 $172.93 $185.88
DAP 175.99 178.37 177.04 192.05
Phosphate rock
Sales
(short tons) 558,300 740,700 1,191,500 1,492,500
Average realized
price a $22.70 $27.27 $23.20 $26.77
Sulphur
Sales
(long tons) b 738,900 665,700 1,476,900 1,403,800
a. Represents average realization f.o.b. plant/mine.
b. Includes internal consumption of 200,600 tons and 169,000 tons
for the second quarter of 1997 and 1996, respectively, and 398,300
tons and 355,000 tons for the six-month period of 1997 and 1996,
respectively.
Oil Operations - Main Pass oil operations achieved the following:
Second Quarter Six Months
----------------------- ---------------------
1997 1996 1997 1996
--------- -------- -------- ---------
Sales (barrels) 443,700 502,300 867,500 1,044,500
Average realized
price $17.52 $19.26 $18.78 $18.32
Operating income
(in millions) $1.5 $2.5 $4.2 $4.7
Main Pass operating income for the 1997 period reflects lower
average realizations and reduced production levels. Net production
for 1997 is expected to decline slightly from 1996 levels, as
increased drilling activities at Main Pass are expected to generate
production sufficient to partially offset declining reservoir
production.
In April 1997, FRP's 25 percent owned oil and gas exploration
joint venture with Phillips Petroleum Company and MOXY completed
drilling of an exploratory well on the North Bay Junop prospect. The
well reached total depth but did not encounter commercial hydrocarbons
in the primary objective zones, resulting in a $6.2 million charge to
first-quarter 1997 exploration expense. The well was completed in a
shallower zone with approximately 25 feet of net gas pay. The well
was flow tested at a rate of 5.3 Mmcf of gas and 93 barrels of
condensate per day. Because of the complexity of the salt dome
geology and potentially limited reservoir size, production performance
will be required to determine the reserve volumes associated with this
completion. Other leads within the project area which have been
identified by 3-D seismic survey continue to be evaluated.
As noted earlier, FRP intends to significantly expand its oil and
gas activities through a multi-year aggregate $200 million exploration
program, and potentially significant equity investment, with MOXY.
Pending formation of the MOXY/FRP Exploration Program, FRP's
exploration activities will take place through its recently purchased
interest in the MOXY/MCN Program, which has three prospects scheduled
to initiate exploratory drilling activities during the third quarter
of 1997.
CAPITAL RESOURCES AND LIQUIDITY
As discussed earlier, FTX has announced its intent to merge with IGL,
with IGL as the surviving entity. As part of the merger, FRP's
operations would also be significantly changed. As a result, this
merger would fundamentally change both FTX's and FRP's structure,
capital resources, etc.
FTX's main source of cash flow is distributions from FRP. On July
22, 1997, FRP declared a distribution of 33 cents per unit. This cash
distribution represents the second distribution following the end of
the public unitholders' preference period in early 1997. FRP's
distributable cash is now shared ratably by FRP's public unitholders
and FTX, except that FTX will be entitled to receive unpaid cash
distributions from previous quarters ($431.3 million unpaid at July
22, 1997) from one-half of the quarterly distributable cash after the
payment of 60 cents per unit to all FRP unitholders.
FRP's future distributions will depend on the distributions
received from IMC-Agrico, on the cash flow generated from FRP's
sulphur and Main Pass oil operations, the cash requirements of its
expanding
<PAGE> 12
oil and gas exploration activities (discussed earlier), and
on the level of and methods of financing its capital expenditure
needs, including reclamation and growth projects. FRP's distributable
cash in July 1997 included $43.7 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). Effective July 1, 1997, FRP's
Current Interest in IMC-Agrico declined from 54.35 percent to 41.45
percent, where FRP's Current Interest is scheduled to remain.
FTX currently has a quarterly cash dividend of 9 cents per common
share. This dividend level allows FTX to use additional available
funds to purchase FTX stock, purchase FRP units and/or invest in
potential 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 anticipates that its cash distributions from FRP and amounts
available to it under its credit facility ($258.0 million of
additional borrowings available to FRP at July 25, 1997, $51.0 million
of which is available to FTX) will be sufficient to meet its
obligations.
Net cash provided by operating activities during the first six
months of 1997 totaled $89.2 million, compared with $101.4 million for
the 1996 period, primarily reflecting lower earnings. Capital
expenditures for the 1997 period were up from the year-ago level, and
are currently estimated to approximate $80 million for 1997. During
the first six months of 1997, FTX purchased 898,800 shares of its
common stock for an aggregate $26.1 million.
CAUTIONARY STATEMENT
Management's discussion and analysis contains forward-looking
statements including, without limitation, statements regarding sales
and production volumes, capital expenditures and product markets.
Important factors that might cause future results to differ from these
projections include, without limitation, economic and business
conditions, product market conditions, agricultural conditions and
other factors, many of which are beyond the control of the Company.
Further information regarding these and other factors are described in
more detail under the heading "Cautionary Statement" in FTX's Form 10-
K for the year ended December 31, 1996.
--------------------------------
The results of operations reported and summarized above are not
necessarily indicative of future operating results.
<PAGE> 13
FREEPORT-McMoRan INC.
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders of the Company was held
on April 29, 1997 (the "Annual Meeting"). Proxies were solicited
pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended.
(b) At the Annual Meeting, William B. Harrison, Jr., Henry A.
Kissinger, Rene L. Latiolais and J. Taylor Wharton were elected to
serve until the 2000 annual meeting of stockholders. In addition to
the directors elected at the Annual Meeting, the terms of the
following directors continued after the Annual Meeting: Richard C.
Adkerson, Robert W. Bruce III, Robert A. Day, Bobby Lee Lackey,
Gabrielle K. McDonald, James R. Moffett, George Putnam and B. M.
Rankin, Jr.
(c) At the Annual Meeting, holders of shares of the Company's
Common Stock elected four directors with the number of votes cast for
or withheld from each nominee as follows:
Name For Withheld
---- --- --------
William B. Harrison, Jr. 21,711,380 212,258
Henry A. Kissinger 21,669,155 254,483
Rene L. Latiolais 21,826,890 96,748
J. Taylor Wharton 21,825,742 97,896
With respect to the election of directors, there were no abstentions
or broker non-votes.
At the Annual Meeting, the stockholders also voted on and
approved a proposal to ratify the appointment of Arthur Andersen LLP
to act as the independent auditors to audit the financial statements
of the Company and its subsidiaries for the year 1997. Holders of
21,838,860 shares voted for, holders of 37,476 shares voted against
and holders of 47,302 shares abstained from voting on, such proposal.
There were no broker non-votes with respect to such proposal.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits to this report are listed on the Exhibit Index
appearing on page E-1 hereof.
(b) No reports on Form 8-K were filed by the registrant during the
quarter for which this report is filed.
<PAGE> 14
FREEPORT-McMoRan INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
FREEPORT-McMoRan INC.
By: /s/ C. Donald Whitmire, Jr.
---------------------------
C. Donald Whitmire, Jr.
Controller - Financial Reporting
(authorized signatory and
Principal Accounting Officer)
Date: August 14, 1997
<PAGE> 15
FREEPORT-McMoRan INC.
EXHIBIT INDEX
Number Description Sequentially Numbered 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 Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 (the "FTX 1996 Form 10-K").
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.
<PAGE> 16
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 Second Amended and Restated Credit Agreement dated as of
November 14, 1996 (the "FTX/FRP Credit Agreement") among FTX, FRP, the
various financial institutions that are parties thereto (the "Banks"),
The Chase Manhattan Bank (successor by merger to Chemical Bank) and
The Chase Manhattan Bank (National Association), as Administrative
Agent, FRP Collateral Agent, FTX Collateral Agent and Documentary
Agent. Incorporated by reference to Exhibit 4.15 to the FTX 1996 Form
10-K.
4.16 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.
4.17 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.
4.18 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.
4.19 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 1982 Stock Option Plan of FTX, as amended.
10.2 FTX 1992 Stock Option Plan, as amended.
10.3 FTX 1996 Stock Option Plan, as amended.
11.1 Freeport-McMoRan Inc. Computation of Net Income per Common
and Common Equivalent Share
15.1 Letter dated July 22, 1997 from Arthur Andersen LLP regarding
unaudited interim financial statements.
27.1 Freeport-McMoRan Inc. Financial Data Schedule
1982 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF THE PLAN
This 1982 Stock Option Plan (this "Plan") is intended to provide a
method whereby Employees (as hereinafter defined) of Freeport-McMoRan
Inc. (the "Company") and its Subsidiaries (as hereinafter defined) who
are largely responsible for their management and growth, and who are
making and continue to make substantial contributions to their success,
may be encouraged to acquire a proprietary interest in the Company and
whereby needed new Employees may be persuaded to accept employment by the
Company and its Subsidiaries, and to provide both present and new
Employees with greater incentive, encourage their entrance or continuance
in the Company's service and promote the interests of the Company and all
its stockholders. Accordingly, the Company may from time to time on or
before April 18, 1992, in its discretion, grant to such persons as may
be selected in the manner hereinafter provided options to purchase shares
of Common Stock of the Company ("Common Stock"), and Stock Appreciation
Rights or SARs (as hereinafter defined), on the terms and subject to the
conditions hereinafter set forth.
ARTICLE II
ADMINISTRATION OF THE PLAN
SECTION 1. Subject to the authority as described herein of the
Board of Directors of the Company (the "Board"), this Plan shall be
administered by a committee (the "Committee") designated by the Board,
which shall be composed of not fewer than two directors, each of whom,
to the extent necessary to comply with Rule 16b-3 (as hereinafter
defined) only, is a "non-employee director" within the meaning of Rule
16b-3 and, to the extent necessary to comply with Section 162(m) (as
hereinafter defined) only, is an "outside director" under Section 162(m).
Until otherwise determined by the Board, the Corporate Personnel
Committee designated by the Board shall be the Committee under this Plan.
The Committee is authorized to interpret this Plan and may from time to
time adopt such rules and regulations for carrying out this Plan as it
may deem best. All determinations by the Committee 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 Committee or by the
Board pursuant to the provisions of this Plan, and all related orders or
resolutions of the Committee or the Board, shall be final, conclusive and
binding on all persons, including the Company and its stockholders,
Employees and optionees.
SECTION 2. All authority delegated to the Committee pursuant to
this Plan, including that referred to in Section 1 of this Article II,
may also be exercised by the Board. In the event of any conflict or
inconsistency between determinations, orders, resolutions or other
actions of the Committee and the Board taken in connection with this
Plan, the actions of the Board shall control.
ARTICLE III
STOCK SUBJECT TO THE PLAN
SECTION 1. The shares to be issued or delivered upon exercise of
options or rights granted under this Plan 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 Committee or the Board, may, upon exercise of options
or rights granted under this Plan, cause a Subsidiary to deliver shares
of Common Stock held by such Subsidiary. Any Subsidiary Equity
Securities (as hereinafter defined) distributed pursuant to Section 7 of
Article VI of this Plan shall be made available, at the discretion of the
Board or the Committee, either directly from the issuer thereof or 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
III, the aggregate number of shares of Common Stock which may be subject
to options or SARs granted at any time under this Plan shall not exceed
7,500,000. If any option or SAR or portion thereof lapses or terminates
without the issuance of shares of Common Stock or other consideration in
lieu of such shares, the shares of Common Stock subject to such option
or SAR shall again be available for grant under the Plan, to the extent
of such lapse or termination.
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 subject to options and
SARs under this Plan shall be increased or decreased proportionately, as
the case may be, and the number of shares or other amount deliverable
upon the exercise thereafter of any option or SAR theretofore granted
(whether or not then exercisable) shall be increased or decreased
proportionately, as the case may be, without change in the aggregate
purchase or exercise price. In the event of any other recapitalization
or reorganization affecting the Common Stock or in the event of any
significant distribution in kind (including, without limitation, a
distribution of units representing beneficial interests in any royalty
trust with respect to oil and gas or other mineral properties and
distributions of equity securities representing interests in Subsidiaries
or affiliates of the Company), the number of shares which may be subject
to options and SARs under this Plan, and, with the consent of the holder
thereof, the terms of any option or SAR theretofore granted hereunder
(whether or not then exercisable), including without limitation the
number of shares or other equity securities or any other amounts
deliverable upon the exercise of such option or SAR or of any right
attached thereto or provided for therein and the exercise price therefor,
shall be subject to such adjustment as the Committee or the Board may
deem appropriate. In the event the Company is merged or consolidated
into or with another corporation, or substantially all of its assets are
sold to another corporation, appropriate provisions shall be made for the
protection and continuation of any outstanding options and SARs by the
substitution, on an equitable basis, of such stock, other securities,
cash or combination thereof as shall be appropriate. 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 7 of Article VI 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 or SAR theretofore
granted hereunder (whether or not then exercisable) shall be subject to
such adjustment as the Committee or 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 SAR 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 cash or a combination thereof for
such Subsidiary Equity Securities.
ARTICLE IV
PURCHASE PRICE OF OPTIONED SHARES
Unless the Committee or the Board shall fix a greater purchase
price, the purchase price per share of Common Stock under each option,
and the exercise price of any Stock Appreciation Right, shall be 100% of
the Fair Market Value (as hereinafter defined) of a share of Common Stock
at the time such option or SAR is granted, but in no case shall such
price be less than the par value of the Common Stock.
ARTICLE V
ELIGIBILITY OF RECIPIENTS
Options and SARs will be granted only to persons who are Employees
of the Company or a Subsidiary or who have agreed in writing to become
Employees of the Company or a Subsidiary within not more than 30 days
following the date on which the option or SAR is granted. Neither the
members of the Committee nor any member of the Board who is not an
Employee of the Company or a Subsidiary shall be eligible to receive an
option or SAR under this Plan.
ARTICLE VI
GRANT OF OPTIONS AND SARS
SECTION 1. Each option granted under this Plan shall constitute
either an incentive stock option, intended to qualify under Section 422A
of the Internal Revenue Code of 1986 (the "Code"), or a nonqualified
stock option, not intended to qualify under said Section 422A, as
determined in each case by the Committee or the Board. The aggregate
Fair Market Value (determined as of the time the option is granted) of
the stock for which any person may be granted incentive stock options in
any calendar year prior to 1987 (under all plans of the Company and its
parent and subsidiary corporations) shall not exceed $100,000 plus any
"unused limit carryover to such year" within the meaning of said Section
422A. With respect to any incentive stock option granted under this Plan
after December 31, 1986 and in accordance with procedures to be
established by the Committee, the aggregate Fair Market Value (determined
as of the time the option is granted) of the stock for which any person
may be granted incentive stock options that become exercisable for the
first time during any calendar year (under all plans of the Company and
its Subsidiaries) shall not exceed $100,000. The instruments evidencing
incentive stock options granted under this Plan shall contain such
provisions with respect to sequential exercise as may be required by said
Section 422A, as in effect from time to time. The Board of Directors
shall have the authority to amend any incentive stock option theretofore
granted under this Plan, with the consent of the optionee, in a manner
that has the intent or effect of causing such incentive stock option to
become a nonqualified stock option.
SECTION 2. The Committee or the Board shall from time to time
determine the persons to be granted options and SARs, it being understood
that options and SARs may be granted at different times to the same
person. In addition, the Committee or the Board shall determine (a) the
number of shares subject to each option or SAR, (b) the time or times
when the options and SARs will be granted, (c) the purchase price of the
shares subject to each option or the exercise price of each SAR, which
price shall be not less than the limit specified in Article IV, and (d)
the time or times when each option or SAR may be exercised within the
limits stated in this Plan. Notwithstanding the foregoing, all options
and SARs granted under this Plan shall become exercisable in their
entirety at such time as there shall be a Change in Control (as
hereinafter defined) of the Company.
SECTION 3. All instruments evidencing options and SARs granted
under this Plan shall be in such form, which shall be consistent with
this Plan and any applicable determinations, orders, resolutions or other
actions of the Committee or the Board, as the officers of the Company
shall, in their discretion, deem appropriate.
SECTION 4. If the Committee or the Board shall in its discretion
so determine, any nonqualified option granted after April 20, 1987 which
does not contain a Stock Appreciation Right may provide that promptly
following the last Income Recognition Date (as hereinafter defined) 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 (as hereinafter defined) multiplied by the Applicable Rate
(as hereinafter defined).
SECTION 5. Any option granted under this Plan on or after April 20,
1987 may, if the Committee or the Board shall in its discretion so
determine, contain a provision (a "Stock Appreciation Right" or "SAR")
that the Company shall, at the election of the holder, purchase all or
any part of such option to the extent that such option is exercisable at
the date of such election, for an amount (payable in the form of cash,
shares of Common Stock or any combination thereof, all as the Committee
or the Board shall in its discretion determine) equal to the Stock
Appreciation Gain (as hereinafter defined) relating to such option or
part thereof so purchased on the date such election shall be made. Such
purchase pursuant to the exercise of a Stock Appreciation Right shall not
be deemed to be an exercise of such option. The Committee, or the Board,
in its discretion may also determine to grant Stock Appreciation Rights
not in connection with or in tandem with any option, in which case each
such SAR shall represent the right to receive upon exercise, for each
share in respect of which the SAR is exercised, an amount in cash equal
to the excess of the Fair Market Value of a share of Company Common Stock
on the date of exercise over the exercise price of such SAR.
SECTION 6. Any option granted under this Plan on or after April 20,
1987 may, if the Committee or the Board shall in its discretion so
determine, contain a provision (a "Limited Right") that the Company
shall, at the election of the holder (which election may be made only
during the period beginning on the first day following the date of
expiration of any Offer, as hereinafter defined, and ending on the forty-fifth
day following such date), purchase all or any part of such option,
for an amount (payable entirely in cash) equal to the sum of (a) the
difference between (i) the aggregate Offer Price (as hereinafter defined)
of the shares of Common Stock covered by such option or part thereof so
purchased on the date such election shall be made and (ii) the aggregate
exercise price of such shares so covered plus (b) the Fair Market Value
of any Subsidiary Equity Securities including fractions thereof that
would have been distributed or paid in the form of cash pursuant to
Section 7 of Article VI hereof had there been an exercise, as of the
effective date of such Limited Right exercise, of the number of shares
of Company Common Stock covered by such Limited Right exercise, as such
fair market values are determined in each case on the date of such
exercise. Such purchase pursuant to the exercise of a Limited Right
shall not be deemed to be an exercise of such option.
SECTION 7. Any option granted under this Plan on or after April 20,
1987 may provide that, upon the exercise of such option or part thereof
the holder thereof 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 holder
would have been entitled had such holder 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. Notwithstanding the foregoing, if the holder is on the
effective date of any such exercise ineligible to own any Subsidiary
Equity Securities that would otherwise be distributable to such holder
in accordance with this Section 7, such holder shall not receive such
Subsidiary Equity Securities in kind but shall 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.
SECTION 8. The authority with respect to the grant of options and
SARs and the determination of the provisions thereof contained in
Sections 1 and 2 and 4 through 7 of this Article VI may be delegated by
the Committee or the Board to one or more officers of the Company,
subject to such conditions and limitations as the Committee or the Board
may prescribe; provided, however, that no such authority shall be
delegated with respect to the grant of options or SARs to any officer or
director of the Company or with respect to the determination of any of
the provisions thereof.
ARTICLE VII
TRANSFERABILITY OF OPTIONS AND SARS
No options or SARs granted hereunder may be transferred, pledged,
assigned or otherwise encumbered by a person granted such options or SARs
except:
(a) by will;
(b) by the laws of descent and distribution;
(c) pursuant to a domestic relations order, as defined in the
Code, if permitted by the Committee and so provided in the instrument
evidencing such options or SARs or an amendment thereto; or
(d) as to options only, if permitted by the Committee and so
provided in the instrument evidencing such options or an amendment
thereto, (i) to Immediate Family Members, (ii) to a partnership in which
Immediate Family Members, or entities in which Immediate Family Members
are the owners, members or beneficiaries, as appropriate, are the
partners, (iii) to a limited liability company in which Immediate Family
Members, or entities in which Immediate Family Members are the owners,
members or beneficiaries, as appropriate, are the members, or (iv) to a
trust for the benefit of Immediate Family Members; provided, however,
that no more than a de minimus beneficial interest in a partnership,
limited liability company or trust described in (iii), (iv) or (v) above
may be owned by a person who is not an Immediate Family Member or by an
entity that is not beneficially owned solely by Immediate Family Members.
"Immediate Family Members" shall be defined as the spouse and natural or
adopted children or grandchildren of the optionee and their spouses. To
the extent that an incentive stock option is permitted to be transferred
during the lifetime of the optionee, it shall be treated thereafter as
a nonqualified stock option.
Any attempted assignment, transfer, pledge, hypothecation or other
disposition of options or SARs, or levy of attachment or similar process
upon options or SARs not specifically permitted herein, shall be null and
void and without effect.
ARTICLE VIII
EXERCISE OF OPTIONS AND SARS
SECTION 1. Each incentive stock option granted under this Plan
shall terminate not later than the expiration of 10 years from the date
on which it was granted. Each nonqualified stock option and each SAR
granted under this Plan shall terminate not later than the expiration of
10 years and two days from the date on which it was granted.
SECTION 2. Except in cases provided for in Article IX hereof, each
option and SAR granted under this Plan may be exercised by the holder
thereof only while the person to whom such option or SAR was granted is
an Employee of the Company or a Subsidiary or provides services to any
of the Related Entities.
SECTION 3. A person electing to exercise an option 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, if the Committee or the Board so
determines either generally or with respect to a specified option or
group of options, 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, distributee, or assignee 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 therewith,
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 such shares
of Common Stock and such Subsidiary Equity Securities have been issued
or delivered by the Company. A person electing to exercise a Stock
Appreciation Right or Limited Right then exercisable shall give written
notice to the Company of such election and of the number of shares of
Common Stock covered by the option or SAR or part thereof which is to be
purchased by the Company or otherwise exercised.
SECTION 4. Each option and SAR shall be subject to the requirement
that if at any time the Board shall in its discretion determine that the
listing, registration or qualification of the shares of Common Stock
subject to such option, or the Subsidiary Equity Securities distributable
in connection therewith, 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 SAR or the issue or purchase of shares
thereunder or the distribution of Subsidiary Equity Securities with
respect thereto, such option or SAR 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 the Board.
SECTION 5. 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 or rights under this Plan, 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 IX
TERMINATION OF EMPLOYMENT
SECTION 1. If and when the Termination of Employment of an optionee
shall occur for any reason other than death, retirement under the
Company's Retirement Plan, or retirement with the consent of the Company
outside the Company's Retirement Plan, all of the options and SARs
grantee to such optionee shall be terminated except that (a) any option
to the extent then exercisable, or (b) any Stock Appreciation Right or
Limited Right to the extent then exercisable, may be exercised by the
holder thereof within three months after such Termination of Employment,
but in either case not later than the termination date of the option or
SAR or in the case of a Limited Right not later than the expiration date
of such Right.
SECTION 2. If and when the Termination of Employment of an optionee
shall occur by reason of the optionee's early, normal or deferred
retirement under the Company's Retirement Plan or retirement with the
consent of the Company outside the Company's Retirement Plan, all of the
options granted to such optionee shall be terminated except that (a) any
Stock Appreciation Right in tandem with an option or Limited Right to the
extent then exercisable or exercisable within one year thereafter may be
exercised by the holder thereof within three months after such
retirement, but not later than the termination date of the option or in
the case of a Limited Right not later than the expiration date of such
Right, and (b) any option or any SAR not in tandem with an option to the
extent (in either case) then exercisable or exercisable within one year
thereafter may, if it so provides, be exercised by the holder thereof
within three years after such retirement, but not later than the
termination date of the option or SAR, unless after such retirement the
Committee or the Board determines, in its discretion, that such option
or SAR may be exercised by the holder thereof within a period of greater
duration (not greater than five years after such retirement, and in no
event later than the termination date of the option or SAR) or unless
within 45 days after such retirement the Committee or the Board
determines, in its discretion, that such option or SAR may be exercised
by the holder thereof only within a period of shorter duration (not less
than three months following notice of such determination to the optionee
or holder) to be specified by the Committee or the Board, as the case may
be.
SECTION 3. Any question as to whether and when there has been a
retirement under the Company's Retirement Plan or a retirement with the
consent of the Company outside the Company's Retirement Plan or whether
or when a Termination of Employment has occurred for any other reason
shall be determined by the Committee or the Board, and any such
reasonable determination shall be final.
SECTION 4. Should an optionee die before such optionee's
Termination of Employment, all the options granted to such optionee shall
be terminated, except that any option to the extent exercisable by the
holder thereof 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 by the holder thereof within one
year after the date of such death, but not later than the termination
date of the option, by the holder thereof, the optionee's estate, or the
person designated in the optionee's last will and testament, as
appropriate. Notwithstanding the foregoing, no Stock Appreciation Right
or Limited Right shall be exercisable after the death of the person
granted such SAR or Limited Right or the holder thereof, except that an
SAR granted not in tandem with an option may be exercised to the extent
set forth in the preceding sentence.
SECTION 5. Should an optionee die after such optionee's Termination
of Employment, all of the options granted to such optionee shall be
terminated, except that any option to the extent exercisable by the
holder thereof at the time of such death may be exercised by the holder
thereof within one year after the date of such death, but not later than
the termination date of the option, by the holder thereof, the optionee's
estate, or the person designated in the optionee's last will and
testament, as appropriate. Notwithstanding the foregoing, no Stock
Appreciation Right or Limited Right shall be exercisable after the death
of the person granted such SAR or Limited Right or the holder thereof,
except that an SAR granted not in tandem with an option may be exercised
to the extent set forth in the preceding sentence.
ARTICLE X
AMENDMENTS
SECTION 1. 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) increase the maximum number (determined as provided in
this Plan) of shares of Common Stock which may be subject to options
and SARs granted under this Plan;
(b) permit the granting of any option or SAR under this Plan
at a purchase price less than 100% of the Fair Market Value of the
Common Stock at the time such option is granted;
(c) permit the exercise of an option or SAR unless the full
purchase price of the shares as to which the option is exercised is
paid at the time of exercise; or
(d) extend beyond April 18, 1992, the period during which
options or SARs may be granted.
SECTION 2. The Committee and the Board shall have the authority,
with the consent of the option holder, to amend or modify any outstanding
options or SARs previously granted hereunder in a manner not inconsistent
with the provisions relating to options granted after April 20, 1987
contained in this Plan.
ARTICLE XI
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%.
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).
Employee: Such term shall include any officer of the Company
or a Subsidiary whether or not employed by such entity, any employee
of the Company or a Subsidiary, and any director who is also an
employee of the Company or a Subsidiary. Such term shall also
include an employee on approved leave of absence provided such
employee's right to continue employment with the Company or a
Subsidiary upon expiration of such employee's leave of absence is
guaranteed either by statute or by contract with or by a policy of
the Company or a Subsidiary.
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.
Offer: Any tender offer, exchange offer or series of
purchases or other acquisitions, or any combination of those
transactions, as a result of which 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 40% of the Common Stock
outstanding (exclusive of shares held in the Company's treasury or
by the Company's Subsidiaries).
Offer Price: The highest price per share of Common Stock paid
in any Offer which is in effect at any time beginning on the
ninetieth day prior to the date on which a Limited Right is
exercised. Any securities or property which are part or all of the
consideration paid for shares of Common Stock in the Offer shall be
valued in determining the Offer Price at the higher of (a) the
valuation placed on such securities or property by the person or
persons making such Offer, or (b) the valuation, if any, placed on
such securities or property by the Committee or the Board.
Option Gain: The sum of (a) the difference between (i) the
Fair Market Value of the shares of Common Stock covered by the
exercise of an option granted under the Plan and (ii) 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 pursuant to Section
7 of Article VI hereof, as such fair market values are determined
in each case on (x) the Income Recognition Date with respect to each
such security or (y) the date of such exercise, whichever is less.
Related 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 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 or any subsidiary of the Company; and, for purposes of any
stock option or stock appreciation right granted under this Plan,
IMC-Agrico Company, if so provided expressly in an amendment to the
agreement evidencing such stock option or stock appreciation right.
Rule 16b-3: Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, or
any successor rule or regulation thereto as in effect from time to
time.
Section 162(m): Section 162(m) of the Code and all
regulations promulgated thereunder as in effect from time to time.
Stock Appreciation Gain: The sum of (a) the difference
between (i) the Fair Market Value of the shares of Common Stock
covered by the exercise of a Stock Appreciation Right granted under
the Plan and (ii) the purchase price of such shares under the option
relating to such Stock Appreciation Right plus (b) the Fair Market
Value of any Subsidiary Equity Securities including fractions
thereof that would have been distributed or paid in the form of cash
pursuant to Section 7 of Article VI hereof had there been an option
exercise, as of the effective date of such Stock Appreciation Right
exercise, of the number of shares of Company Common Stock covered
by such Stock Appreciation Right exercise, as such fair market
values are determined in each case on the date of such exercise.
Stock Appreciation Right or SAR: A right granted under the
Plan pursuant to Section 5 of Article VI.
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 & Gold Inc., Freeport-McMoRan Oil
& Gas Company, and McMoRan Oil & Gas Co. and depositary
units of Freeport-McMoRan Energy Partners, Ltd. and Freeport-McMoRan
Resource Partners, Limited Partnership.
Termination of Employment: The cessation of the rendering of
services, whether or not as an employee, to any and all of the
Related Entities.
FREEPORT-McMoRan INC.
1992 STOCK OPTION PLAN
SECTION 1
Purpose. The purposes of the Freeport-McMoRan Inc. 1992 Stock
Option Plan (the "Plan") are to promote the interests of Freeport-McMoRan
Inc. and its stockholders by (i) attracting and retaining executive and
other key employees, as hereinafter defined, of Freeport-McMoRan Inc. and
its affiliates; (ii) motivating such employees by means of
performance-related incentives to achieve longer-range performance goals;
and (iii) enabling such employees to participate in the long-term growth
and financial success of the Company.
SECTION 2
Definitions. As used in the Plan, the following terms shall have
the meanings set forth below:
"Award" shall mean any Option, Stock Appreciation Right, Limited
Right or Other Stock-Based Award.
"Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award, which may, but need
not, be executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of Freeport-McMoRan
Inc.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Committee" shall mean a committee of the Board designated by the
Board to administer the Plan and composed of not fewer than two
directors, each of whom, to the extent necessary to comply with Rule 16b-3
only, is a "non-employee director" within the meaning of Rule 16b-3
and, to the extent necessary to comply with Section 162(m) only, is an
"outside director" under Section 162(m). Until otherwise determined by
the Board, the Committee shall be the Corporate Personnel Committee of
the Board.
"Company" shall mean Freeport-McMoRan Inc.
"Designated Beneficiary" shall mean the beneficiary designated
by the Participant, in a manner determined by the Committee, to receive
the benefits due the Participant under the Plan in the event of the
Participant's death. In the absence of an effective designation by the
Participant, Designated Beneficiary shall mean the Participant's estate.
"Employee" shall mean (i) any person providing services as an
officer of the Company or a Subsidiary, whether or not employed by such
entity, (ii) any employee of the Company or a Subsidiary, including any
director who is also an employee of the Company or a Subsidiary, and
(iii) any person who has agreed in writing to become a person described
in clauses (i) or (ii) within not more than 30 days following the date
of grant of such person's first Award under the Plan.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Incentive Stock Option" shall mean an option granted under
Section 6 of the Plan that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.
"Limited Right" shall mean any right granted under Section 8 of
the Plan.
"Nonqualified Stock Option" shall mean an option granted under
Section 6 of the Plan that is not intended to be an Incentive Stock
Option.
"Offer" shall mean any tender offer, exchange offer or series of
purchases or other acquisitions, or any combination of those
transactions, as a result of which 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 40% of the Shares outstanding (exclusive of
Shares held in the Company's treasury or by the Company's Subsidiaries).
"Offer Price" shall mean the highest price per Share paid in any
Offer that is in effect at any time during the period beginning on the
ninetieth day prior to the date on which a Limited Right is exercised and
ending on and including the date of exercise of such Limited Right. Any
securities or property that comprise all or a portion of the
consideration paid for Shares in the Offer shall be valued in determining
the Offer Price at the higher of (i) the valuation placed on such
securities or property by the person or persons making such Offer, or
(ii) the valuation, if any, placed on such securities or property by the
Committee or the Board.
"Option" shall mean an Incentive Stock Option or a Nonqualified
Stock Option.
"Other Stock-Based Award" shall mean any right or award granted
under Section 9 of the Plan.
"Participant" shall mean any Employee granted an Award under the
Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under
the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time.
"SAR" shall mean any Stock Appreciation Right.
"SEC" shall mean the Securities and Exchange Commission,
including the staff thereof, or any successor thereto.
"Section 162(m)" shall mean Section 162(m) of the Code and all
regulations promulgated thereunder as in effect from time to time.
"Shares" shall mean the shares of common stock, par value $.01
per share, of Freeport-McMoRan Inc., and such other securities of the
Company or a Subsidiary as the Committee may from time to time designate.
"Stock Appreciation Right" shall mean any right granted under
Section 7 of the Plan.
"Subsidiary" shall mean Freeport-McMoRan Copper & Gold Inc.,
Freeport-McMoRan Resource Partners, Limited Partnership, and any
corporation or other entity in which Freeport-McMoRan Inc. 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.
SECTION 3
Administration. The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be
granted to an eligible Employee; (iii) determine the number of Shares to
be covered by, or with respect to which payments, rights or other matters
are to be calculated in connection with, Awards; (iv) determine the terms
and conditions of any Award; (v) determine whether, to what extent, and
under what circumstances Awards may be settled or exercised in cash,
whole Shares, other whole securities, other Awards, other property or
other cash amounts payable by the Company upon the exercise of that or
other Awards, or canceled, forfeited or suspended and the method or
methods by which Awards may be settled, exercised, canceled, forfeited
or suspended; (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property, and other amounts payable by the Company with respect to an
Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret and administer the
Plan and any instrument or agreement relating to, or Award made under,
the Plan; (viii) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (ix) make any other determination
and take any other action that the Committee deems necessary or desirable
for the administration of the Plan. Unless otherwise expressly provided
in the Plan, all designations, determinations, interpretations and other
decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon all Persons, including the Company,
any Subsidiary, any Participant, any holder or beneficiary of any Award,
any stockholder of the Company and any Employee.
SECTION 4
Eligibility. Any Employee who is not a member of the Committee
shall be eligible to be granted an Award.
SECTION 5
(a) Shares Available for Awards. Subject to adjustment as
provided in Section 5(b):
(i) Calculation of Number of Shares Available. The number
of Shares with respect to which Awards may be granted under the Plan
shall be 8,000,000. If, after the effective date of the Plan, an Award
granted under the Plan expires or is exercised, forfeited, canceled or
terminated without the delivery of Shares, then the Shares covered by
such Award or to which such Award relates, or the number of Shares
otherwise counted against the aggregate number of Shares with respect to
which Awards may be granted, to the extent of any such expiration,
exercise, forfeiture, cancellation or termination without the delivery
of Shares, shall again be, or shall become, Shares with respect to which
Awards may be granted.
(ii) Substitute Awards. Any Shares delivered by the Company,
any Shares with respect to which Awards are made by the Company, or any
Shares with respect to which the Company becomes obligated to make
Awards, through the assumption of, or in substitution for, outstanding
awards previously granted by an acquired company or a company with which
the Company combines, shall not be counted against the Shares available
for Awards under the Plan.
(iii) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist of authorized and unissued
Shares or of treasury Shares, including Shares held by the Company or a
Subsidiary and acquired in the open market or otherwise obtained by the
Company or a Subsidiary.
(b) Adjustments. In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash,
Shares, Subsidiary securities, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the
Shares such that an adjustment is determined by the Committee to be
appropriate to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee may, in its sole discretion and in such manner as it may deem
equitable, adjust any or all of (i) the number and type of Shares (or
other securities or property) with respect to which Awards may be
granted, (ii) the number and type of Shares (or other securities or
property) subject to outstanding Awards, and (iii) the grant or exercise
price with respect to any Award or, if deemed appropriate, make provision
for a cash payment to the holder of an outstanding Award or, if deemed
appropriate, adjust outstanding Awards to provide the rights contemplated
by Section 9(b) hereof; provided, in each case, that with respect to
Awards of Incentive Stock Options no such adjustment shall be authorized
to the extent that such authority would cause the Plan to violate Section
422(b)(1) of the Code or any successor provision thereto; and provided
further, that the number of Shares subject to any Award denominated in
Shares shall always be a whole number.
SECTION 6
(a) Stock Options. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the
Employees to whom Options shall be granted, the number of Shares to be
covered by each Option, the option price therefor and the conditions and
limitations applicable to the exercise of the Option. The Committee
shall have the authority to grant Incentive Stock Options, Nonqualified
Stock Options or both. In the case of Incentive Stock Options, the
terms and conditions of such grants shall be subject to and comply with
such rules as may be required by Section 422 of the Code, as from time
to time amended, and any implementing regulations. Except in the case
of an Option granted in assumption of or substitution for an outstanding
award of a company acquired by the Company or with which the Company
combines, the exercise price of any Option granted under this Plan shall
not be less than 100% of the fair market value of the underlying Shares
on the date of grant.
(b) Exercise. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Committee may, in its
sole discretion, specify in the applicable Award Agreement or thereafter,
provided, however, that in no event may any Option granted hereunder be
exercisable after the expiration of 10 years after the date of such
grant. The Committee may impose such conditions with respect to the
exercise of Options, including without limitation, any condition relating
to the application of Federal or state securities laws, as it may deem
necessary or advisable.
(c) Payment. No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the option price therefor
is received by the Company. Such payment may be made in cash, or its
equivalent, or, if and to the extent permitted by the Committee, by
applying cash amounts payable by the Company upon the exercise of such
Option or other Awards by the holder thereof or by exchanging whole
Shares owned by such holder (which are not the subject of any pledge or
other security interest), or by a combination of the foregoing, provided
that the combined value of all cash, cash equivalents, cash amounts so
payable by the Company upon exercises of Awards and the fair market value
of any such whole Shares so tendered to the Company, valued (in
accordance with procedures established by the Committee) as of the
effective date of such exercise, is at least equal to such option price.
SECTION 7
(a) Stock Appreciation Rights. Subject to the provisions of
the Plan, the Committee shall have sole and complete authority to
determine the Employees to whom Stock Appreciation Rights shall be
granted, the number of Shares to be covered by each Stock Appreciation
Right, the grant price thereof and the conditions and limitations
applicable to the exercise thereof. Stock Appreciation Rights may be
granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to any other Award. Stock Appreciation Rights
granted in tandem with or in addition to an Option or other Award may be
granted either at the same time as the Option or other Award or at a
later time. Stock Appreciation Rights shall not be exercisable after the
expiration of 10 years after the date of grant. Except in the case of
a Stock Appreciation Right granted in assumption of or substitution for
an outstanding award of a company acquired by the Company or with which
the Company combines, the grant price of any Stock Appreciation Right
granted under this Plan shall not be less than 100% of the fair market
value of the Shares covered by such Stock Appreciation Right on the date
of grant or, in the case of a Stock Appreciation Right granted in tandem
with a then outstanding Option or other Award, on the date of grant of
such related Option or Award.
(b) A Stock Appreciation Right shall entitle the holder thereof
to receive an amount equal to the excess, if any, of the fair market
value of a Share on the date of exercise of the Stock Appreciation Right
over the grant price. Any Stock Appreciation Right shall be settled in
cash, unless the Committee shall determine at the time of grant of a
Stock Appreciation Right that it shall or may be settled in cash, Shares
or a combination of cash and Shares.
SECTION 8
(a) Limited Rights. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the
Employees to whom Limited Rights shall be granted, the number of Shares
to be covered by each Limited Right, the grant price thereof and the
conditions and limitations applicable to the exercise thereof. Limited
Rights may be granted in tandem with another Award, in addition to
another Award, or freestanding and unrelated to any Award. Limited
Rights granted in tandem with or in addition to an Award may be granted
either at the same time as the Award or at a later time. Limited Rights
shall not be exercisable after the expiration of 10 years after the date
of grant and shall only be exercisable during a period determined at the
time of grant by the Committee beginning not earlier than one day and
ending not more than ninety days after the expiration date of an Offer.
Except in the case of a Limited Right granted in assumption of or
substitution for an outstanding award of a company acquired by the
Company or with which the Company combines, the grant price of any
Limited Right granted under this Plan shall not be less than 100% of the
fair market value of the Shares covered by such Limited Right on the date
of grant or, in the case of a Limited Right granted in tandem with a then
outstanding Option or other Award, on the date of grant of such related
Option or Award.
(b) A Limited Right shall entitle the holder thereof to receive
an amount equal to the excess, if any, of the Offer Price on the date of
exercise of the Limited Right over the grant price. Any Limited Right
shall be settled in cash, unless the Committee shall determine at the
time of grant of a Limited Right that it shall or may be settled in cash,
Shares or a combination of cash and Shares.
SECTION 9
(a) Other Stock-Based Awards. The Committee is hereby
authorized to grant to eligible Employees an "Other Stock-Based Award",
which shall consist of an Award, the value of which is based in whole or
in part on the value of Shares, that is not an instrument or Award
specified in Sections 6 through 8 of this Plan. Other Stock-Based Awards
may be awards of Shares or may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible or
exchangeable into or exercisable for Shares), as deemed by the Committee
consistent with the purposes of the Plan. The Committee shall determine
the terms and conditions of any such Other Stock-Based Award. Except
in the case of an Other Stock-Based Award granted in assumption of or in
substitution for an outstanding award of a company acquired by the
Company or with which the Company combines, the price at which securities
may be purchased pursuant to any Other Stock-Based Award granted under
this Plan, or the provision, if any, of any such Award that is analogous
to the purchase or exercise price, shall not be less than 100% of the
fair market value of the securities to which such Award relates on the
date of grant.
(b) Dividend Equivalents. In the sole and complete discretion
of the Committee, an Award, whether made as an Other Stock-Based Award
under this Section 9 or as an Award granted pursuant to Sections 6
through 8 hereof, may provide the holder thereof with dividends or
dividend equivalents, payable in cash, Shares, Subsidiary securities,
other securities or other property on a current or deferred basis.
SECTION 10
(a) Amendments to the Plan. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement.
Notwithstanding anything to the contrary contained herein, the Committee
may amend the Plan in such manner as may be necessary for the Plan to
conform with local rules and regulations in any jurisdiction outside the
United States.
(b) Amendments to Awards. The Committee may amend, modify or
terminate any outstanding Award with the holder's consent at any time
prior to payment or exercise in any manner not inconsistent with the
terms of the Plan, including without limitation, (i) to change the date
or dates as of which an Award becomes exercisable, or (ii) to cancel an
Award and grant a new Award in substitution therefor under such different
terms and conditions as it determines in its sole and complete discretion
to be appropriate.
(c) Adjustment of Awards Upon the Occurrence of Certain Unusual
or Nonrecurring Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including,
without limitation, the events described in Section 5(b) hereof)
affecting the Company, or the financial statements of the Company or any
Subsidiary, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
(d) Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may cause any
Award granted hereunder to be canceled in consideration of a cash payment
or alternative Award made to the holder of such canceled Award equal in
value to such canceled Award. The determinations of value under this
subparagraph shall be made by the Committee in its sole discretion.
SECTION 11
(a) Delegation. Subject to the terms of the Plan and applicable
law, the Committee may delegate to one or more officers of the Company
the authority, subject to such terms and limitations as the Committee
shall determine, to grant Awards to, or to cancel, modify or waive rights
with respect to, or to alter, discontinue, suspend, or terminate Awards
held by, Employees who are not officers or directors of the Company for
purposes of Section 16 of the Exchange Act, or any successor section
thereto, or who are otherwise not subject to such Section.
(b) Award Agreements. Each Award hereunder shall be evidenced
by a writing delivered to the Participant that shall specify the terms
and conditions thereof and any rules applicable thereto, including but
not limited to the effect on such Award of the death, retirement or other
termination of employment of the Participant and the effect thereon, if
any, of a change in control of the Company.
(c) Withholding. A Participant may be required to pay to the
Company, and the Company shall have the right to deduct from all amounts
paid to a Participant (whether under the Plan or otherwise), any taxes
required by law to be paid or withheld in respect of Awards hereunder to
such Participant. The Committee may provide for additional cash
payments to holders of Awards to defray or offset any tax arising from
the grant, vesting, exercise or payment of any Award.
(d) Transferability. No Awards granted hereunder may be
transferred, pledged, assigned or otherwise encumbered by a Participant
except: (i) by will; (ii) by the laws of descent and distribution; (iii)
pursuant to a domestic relations order, as defined in the Code, if
permitted by the Committee and so provided in the Award Agreement or an
amendment thereto; or (iv) if permitted by the Committee and so provided
in the Award Agreement or an amendment thereto, Options and Limited
Rights granted in tandem therewith may be transferred or assigned (a) to
Immediate Family Members, (b) to a partnership in which Immediate Family
Members, or entities in which Immediate Family Members are the owners,
members or beneficiaries, as appropriate, are the partners, (c) to a
limited liability company in which Immediate Family Members, or entities
in which Immediate Family Members are the owners, members or
beneficiaries, as appropriate, are the members, or (d) to a trust for the
benefit of Immediate Family Members; provided, however, that no more than
a de minimus beneficial interest in a partnership, limited liability
company or trust described in (b), (c) or (d) above may be owned by a
person who is not an Immediate Family Member or by an entity that is not
beneficially owned solely by Immediate Family Members. "Immediate Family
Members" shall be defined as the spouse and natural or adopted children
or grandchildren of the Participant and their spouses. To the extent
that an Incentive Stock Option is permitted to be transferred during the
lifetime of the Participant, it shall be treated thereafter as a
Nonqualified Stock Option. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of Awards, or levy of attachment or
similar process upon Awards not specifically permitted herein, shall be
null and void and without effect. The designation of a Designated
Beneficiary shall not be a violation of this Section 11(d).
(e) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the SEC, any stock exchange
upon which such Shares or other securities are then listed, and any
applicable federal or state laws, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(f) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or
continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of options, stock appreciation rights and
other types of Awards provided for hereunder (subject to stockholder
approval of any such arrangement if approval is required), and such
arrangements may be either generally applicable or applicable only in
specific cases.
(g) No Right to Employment. The grant of an Award shall not
be construed as giving a Participant the right to be retained in the
employ of the Company or any Subsidiary. The Company or any Subsidiary
may at any time dismiss a Participant from employment, free from any
liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement. No Employee,
Participant or other person shall have any claim to be granted any Award,
and there is no obligation for uniformity of treatment of Employees,
Participants or holders or beneficiaries of Awards.
(h) Governing Law. The validity, construction, and effect of
the Plan, any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State
of Delaware.
(i) Severability. If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan
or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable
laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such
Award shall remain in full force and effect.
(j) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company and a Participant
or any other Person. To the extent that any Person acquires a right to
receive payments from the Company pursuant to an Award, such right shall
be no greater than the right of any unsecured general creditor of the
Company.
(k) No Fractional Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities or other property shall be paid
or transferred in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated,
or otherwise eliminated.
(l) Headings. Headings are given to the subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 12
Effective Date of the Plan. The Plan shall be effective as of
the date of its approval by the stockholders of the Company.
SECTION 13
Term of the Plan. No Award shall be granted under the Plan after
the fifth anniversary of the effective date of the Plan; however, unless
otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award theretofore granted may, and the authority of the
Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Award or to waive any conditions or rights under any such Award
shall, extend beyond such date.
FREEPORT-McMoRan INC.
1996 STOCK OPTION PLAN
SECTION 1
Purpose. The purpose of the Freeport-McMoRan Inc. 1996 Stock Option
Plan (the "Plan") is to motivate and reward key personnel by giving them
a proprietary interest in the Company's continued success.
SECTION 2
Definitions. As used in the Plan, the following terms shall have
the meanings set forth below:
"Award" shall mean any Option, Stock Appreciation Right, Limited
Right or Other Stock-Based Award.
"Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award, which may, but need
not, be executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" shall mean a committee of the Board designated by the
Board to administer the Plan and composed of not fewer than two
directors, each of whom, to the extent necessary to comply with
Rule 16b-3 only, is a "non-employee director" within the meaning of
Rule 16b-3 and, to the extent necessary to comply with Section 162(m)
only, is an "outside director" under Section 162(m). Until otherwise
determined by the Board, the Committee shall be the Corporate Personnel
Committee of the Board.
"Company" shall mean Freeport-McMoRan Inc.
"Designated Beneficiary" shall mean the beneficiary designated by
the Participant, in a manner determined by the Committee, to receive the
benefits due the Participant under the Plan in the event of the
Participant's death. In the absence of an effective designation by the
Participant, Designated Beneficiary shall mean the Participant's estate.
"Employee" shall mean (i) any person providing services as an
officer of the Company or a Subsidiary, whether or not employed by such
entity, including any such person who is also a director of the Company,
(ii) any employee of the Company or a Subsidiary, including any director
who is also an employee of the Company or a Subsidiary, (iii) any officer
or employee of an entity with which the Company has contracted to receive
executive, management or legal services who provides services to the
Company or a Subsidiary through such arrangement and (iv) any person who
has agreed in writing to become a person described in clauses (i), (ii)
or (iii) within not more than 30 days following the date of grant of such
person's first Award under the Plan.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Incentive Stock Option" shall mean an option granted under Section
6 of the Plan that is intended to meet the requirements of Section 422
of the Code or any successor provision thereto.
"Limited Right" shall mean any right granted under Section 8 of the
Plan.
"Nonqualified Stock Option" shall mean an option granted under
Section 6 of the Plan that is not intended to be an Incentive Stock
Option.
"Offer" shall mean any tender offer, exchange offer or series of
purchases or other acquisitions, or any combination of those
transactions, as a result of which any person, or any two or more persons
acting as a group, and all affiliates of such person or persons, shall
beneficially own more than 40% of all classes and series of the Company's
stock outstanding, taken as a whole, that has voting rights with respect
to the election of directors of the Company (not including any series of
preferred stock of the Company that has the right to elect directors only
upon the failure of the Company to pay dividends).
"Offer Price" shall mean the highest price per Share paid in any
Offer that is in effect at any time during the period beginning on the
ninetieth day prior to the date on which a Limited Right is exercised and
ending on and including the date of exercise of such Limited Right. Any
securities or property that comprise all or a portion of the
consideration paid for Shares in the Offer shall be valued in determining
the Offer Price at the higher of (i) the valuation placed on such
securities or property by the person or persons making such Offer, or
(ii) the valuation, if any, placed on such securities or property by the
Committee or the Board.
"Option" shall mean an Incentive Stock Option or a Nonqualified
Stock Option.
"Other Stock-Based Award" shall mean any right or award granted
under Section 9 of the Plan.
"Participant" shall mean any Employee granted an Award under the
Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect
from time to time.
"SAR" shall mean any Stock Appreciation Right.
"SEC" shall mean the Securities and Exchange Commission, including
the staff thereof, or any successor thereto.
"Section 162(m)" shall mean Section 162(m) of the Code and all
regulations promulgated thereunder as in effect from time to time.
"Shares" shall mean the shares of Common Stock, par value $0.01 per
share, of the Company and such other securities of the Company or a
Subsidiary as the Committee may from time to time designate.
"Stock Appreciation Right" shall mean any right granted under
Section 7 of the Plan.
"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 Committee.
SECTION 3
Administration. The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted
to an eligible Employee; (iii) determine the number of Shares to be
covered by, or with respect to which payments, rights or other matters
are to be calculated in connection with, Awards; (iv) determine the terms
and conditions of any Award; (v) determine whether, to what extent, and
under what circumstances Awards may be settled or exercised in cash,
whole Shares, other whole securities, other Awards, other property or
other cash amounts payable by the Company upon the exercise of that or
other Awards, or canceled, forfeited or suspended and the method or
methods by which Awards may be settled, exercised, canceled, forfeited
or suspended; (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property, and other amounts payable by the Company with respect to an
Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret and administer the
Plan and any instrument or agreement relating to, or Award made under,
the Plan; (viii) establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (ix) make any other determination
and take any other action that the Committee deems necessary or desirable
for the administration of the Plan. Unless otherwise expressly provided
in the Plan, all designations, determinations, interpretations and other
decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon all Persons, including the Company,
any Subsidiary, any Participant, any holder or beneficiary of any Award,
any stockholder of the Company and any Employee.
SECTION 4
Eligibility. Any Employee shall be eligible to be granted an Award.
SECTION 5
(a) Shares Available for Awards. Subject to adjustment as
provided in Section 5(b):
(i) Calculation of Number of Shares Available. The
number of Shares with respect to which Awards payable in Shares may be
granted under the Plan shall be 1,300,000. Awards that by their terms
may be settled only in cash shall not be counted against such total.
Grants of Stock Appreciation Rights, Limited Rights and Other Stock-Based
Awards not granted in tandem with Options and payable only in cash may
relate to no more than 1,300,000 Shares. If, after the effective date
of the Plan, an Award granted under the Plan expires or is exercised,
forfeited, canceled or terminated without the delivery of Shares, then
the Shares covered by such Award or to which such Award relates, or the
number of Shares otherwise counted against the aggregate number of Shares
with respect to which Awards may be granted, to the extent of any such
expiration, exercise, forfeiture, cancellation or termination without the
delivery of Shares, shall again be, or shall become, Shares with respect
to which Awards may be granted. To the extent that Shares are delivered
to pay the exercise price of an Option or are delivered or withheld by
the Company in payment of the withholding taxes relating to an Award, the
number of Shares so delivered or withheld shall become Shares with
respect to which Awards may be granted.
(ii) Substitute Awards. Any Shares delivered by the
Company, any Shares with respect to which Awards are made by the Company,
or any Shares with respect to which the Company becomes obligated to make
Awards, through the assumption of, or in substitution for, outstanding
awards previously granted by an acquired company or a company with which
the Company combines, shall not be counted against the Shares available
for Awards under the Plan.
(iii) Sources of Shares Deliverable Under Awards.
Any Shares delivered pursuant to an Award may consist of authorized and
unissued Shares or of treasury Shares, including Shares held by the
Company or a Subsidiary and Shares acquired in the open market or
otherwise obtained by the Company or a Subsidiary.
(iv) Individual Limit. Any provision of the Plan to the
contrary notwithstanding, no individual may receive in any year Awards
under the Plan, whether payable in cash or Shares, that relate to more
than 750,000 Shares.
(b) Adjustments. In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash,
Shares, Subsidiary securities, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the
Shares such that an adjustment is determined by the Committee to be
appropriate to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee may, in its sole discretion and in such manner as it may deem
equitable, adjust any or all of (i) the number and type of Shares (or
other securities or property) with respect to which Awards may be
granted, (ii) the number and type of Shares (or other securities or
property) subject to outstanding Awards, and (iii) the grant or exercise
price with respect to any Award and, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award and,
if deemed appropriate, adjust outstanding Awards to provide the rights
contemplated by Section 9(b) hereof; provided, in each case, that with
respect to Awards of Incentive Stock Options no such adjustment shall be
authorized to the extent that such authority would cause the Plan to
violate Section 422(b)(1) of the Code or any successor provision thereto
and, with respect to all Awards under the Plan, no such adjustment shall
be authorized to the extent that such authority would be inconsistent
with the requirements for full deductibility under Section 162(m); and
provided further, that the number of Shares subject to any Award
denominated in Shares shall always be a whole number.
SECTION 6
(a) Stock Options. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to determine the
Employees to whom Options shall be granted, the number of Shares to be
covered by each Option, the option price therefor and the conditions and
limitations applicable to the exercise of the Option. The Committee
shall have the authority to grant Incentive Stock Options, Nonqualified
Stock Options or both. In the case of Incentive Stock Options, the terms
and conditions of such grants shall be subject to and comply with such
rules as may be required by Section 422 of the Code, as from time to time
amended, and any implementing regulations. Except in the case of an
Option granted in assumption of or substitution for an outstanding award
of a company acquired by the Company or with which the Company combines,
the exercise price of any Option granted under this Plan shall not be
less than 100% of the fair market value of the underlying Shares on the
date of grant.
(b) Exercise. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Committee may, in its
sole discretion, specify in the applicable Award Agreement or thereafter,
provided, however, that in no event may any Option granted hereunder be
exercisable after the expiration of 10 years after the date of such
grant. The Committee may impose such conditions with respect to the
exercise of Options, including without limitation, any condition relating
to the application of Federal or state securities laws, as it may deem
necessary or advisable.
(c) Payment. No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the option price therefor
is received by the Company. Such payment may be made in cash, or its
equivalent, or, if and to the extent permitted by the Committee, by
applying cash amounts payable by the Company upon the exercise of such
Option or other Awards by the holder thereof or by exchanging whole
Shares owned by such holder (which are not the subject of any pledge or
other security interest), or by a combination of the foregoing, provided
that the combined value of all cash, cash equivalents, cash amounts so
payable by the Company upon exercises of Awards and the fair market value
of any such whole Shares so tendered to the Company, valued (in
accordance with procedures established by the Committee) as of the
effective date of such exercise, is at least equal to such option price.
SECTION 7
(a) Stock Appreciation Rights. Subject to the provisions of
the Plan, the Committee shall have sole and complete authority to
determine the Employees to whom Stock Appreciation Rights shall be
granted, the number of Shares to be covered by each Award of Stock
Appreciation Rights, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Stock Appreciation
Rights may be granted in tandem with another Award, in addition to
another Award, or freestanding and unrelated to any other Award. Stock
Appreciation Rights granted in tandem with or in addition to an Option
or other Award may be granted either at the same time as the Option or
other Award or at a later time. Stock Appreciation Rights shall not be
exercisable after the expiration of 10 years after the date of grant.
Except in the case of a Stock Appreciation Right granted in assumption
of or substitution for an outstanding award of a company acquired by the
Company or with which the Company combines, the grant price of any Stock
Appreciation Right granted under this Plan shall not be less than 100%
of the fair market value of the Shares covered by such Stock Appreciation
Right on the date of grant or, in the case of a Stock Appreciation Right
granted in tandem with a then outstanding Option or other Award, on the
date of grant of such related Option or Award.
(b) A Stock Appreciation Right shall entitle the holder
thereof to receive upon exercise, for each Share to which the SAR
relates, an amount equal to the excess, if any, of the fair market value
of a Share on the date of exercise of the Stock Appreciation Right over
the grant price. Any Stock Appreciation Right shall be settled in cash,
unless the Committee shall determine at the time of grant of a Stock
Appreciation Right that it shall or may be settled in cash, Shares or a
combination of cash and Shares.
SECTION 8
(a) Limited Rights. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to determine the
Employees to whom Limited Rights shall be granted, the number of Shares
to be covered by each Award of Limited Rights, the grant price thereof
and the conditions and limitations applicable to the exercise thereof.
Limited Rights may be granted in tandem with another Award, in addition
to another Award, or freestanding and unrelated to any Award. Limited
Rights granted in tandem with or in addition to an Award may be granted
either at the same time as the Award or at a later time. Limited Rights
shall not be exercisable after the expiration of 10 years after the date
of grant and shall only be exercisable during a period determined at the
time of grant by the Committee beginning not earlier than one day and
ending not more than ninety days after the expiration date of an Offer.
Except in the case of a Limited Right granted in assumption of or
substitution for an outstanding award of a company acquired by the
Company or with which the Company combines, the grant price of any
Limited Right granted under this Plan shall not be less than 100% of the
fair market value of the Shares covered by such Limited Right on the date
of grant or, in the case of a Limited Right granted in tandem with a then
outstanding Option or other Award, on the date of grant of such related
Option or Award.
(b) A Limited Right shall entitle the holder thereof to
receive upon exercise, for each Share to which the Limited Right relates,
an amount equal to the excess, if any, of the Offer Price on the date of
exercise of the Limited Right over the grant price. Any Limited Right
shall be settled in cash, unless the Committee shall determine at the
time of grant of a Limited Right that it shall or may be settled in cash,
Shares or a combination of cash and Shares.
SECTION 9
(a) Other Stock-Based Awards. The Committee is hereby
authorized to grant to eligible Employees an "Other Stock-Based Award",
which shall consist of an Award, the value of which is based in whole or
in part on the value of Shares, that is not an instrument or Award
specified in Sections 6 through 8 of this Plan. Other Stock-Based Awards
may be awards of Shares or may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible or
exchangeable into or exercisable for Shares), as deemed by the Committee
consistent with the purposes of the Plan. The Committee shall determine
the terms and conditions of any such Other Stock-Based Award and may
provide that such awards would be payable in whole or in part in cash.
Except in the case of an Other Stock-Based Award granted in assumption
of or in substitution for an outstanding award of a company acquired by
the Company or with which the Company combines, the price at which
securities may be purchased pursuant to any Other Stock-Based Award
granted under this Plan, or the provision, if any, of any such Award that
is analogous to the purchase or exercise price, shall not be less than
100% of the fair market value of the securities to which such Award
relates on the date of grant.
(b) Dividend Equivalents. In the sole and complete
discretion of the Committee, an Award, whether made as an Other Stock-Based
Award under this Section 9 or as an Award granted pursuant to
Sections 6 through 8 hereof, may provide the holder thereof with
dividends or dividend equivalents, payable in cash, Shares, Subsidiary
securities, other securities or other property on a current or deferred
basis.
SECTION 10
(a) Amendments to the Plan. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for
these purposes any approval necessary to qualify Awards as "performance
based" compensation under Section 162(m) or any successor provision if
such qualification is deemed necessary or advisable by the Committee.
Notwithstanding anything to the contrary contained herein, the Committee
may amend the Plan in such manner as may be necessary for the Plan to
conform with local rules and regulations in any jurisdiction outside the
United States.
(b) Amendments to Awards. The Committee may amend, modify
or terminate any outstanding Award at any time prior to payment or
exercise in any manner not inconsistent with the terms of the Plan,
including without limitation, (i) to change the date or dates as of which
an Award becomes exercisable, or (ii) to cancel an Award and grant a new
Award in substitution therefor under such different terms and conditions
as it determines in its sole and complete discretion to be appropriate
Notwithstanding the foregoing, no amendment, modification or termination
may impair the rights of a holder of an Award under such Award without
the consent of the holder.
(c) Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. The Committee is hereby authorized to
make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 5(b)
hereof) affecting the Company, or the financial statements of the Company
or any Subsidiary, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such
adjustments are appropriate to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the
Plan.
(d) Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may cause any
Award granted hereunder to be canceled in consideration of a cash payment
or alternative Award made to the holder of such canceled Award equal in
value to such canceled Award. The determinations of value under this
subparagraph shall be made by the Committee in its sole discretion.
SECTION 11
(a) Delegation. Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more officers of the
Company the authority, subject to such terms and limitations as the
Committee shall determine, to grant Awards to, or to cancel, modify or
waive rights with respect to, or to alter, discontinue, suspend, or
terminate Awards held by, Employees who are not officers or directors of
the Company for purposes of Section 16 of the Exchange Act, or any
successor section thereto, or who are otherwise not subject to such
Section.
(b) Award Agreements. Each Award hereunder shall be
evidenced by a writing delivered to the Participant that shall specify
the terms and conditions thereof and any rules applicable thereto,
including but not limited to the effect on such Award of the death,
retirement or other termination of employment of the Participant and the
effect thereon, if any, of a change in control of the Company.
(c) Withholding. (i) A Participant may be required to pay
to the Company, and the Company shall have the right to deduct from all
amounts paid to a Participant (whether under the Plan or otherwise), any
taxes required by law to be paid or withheld in respect of Awards
hereunder to such Participant. The Committee may provide for additional
cash payments to holders of Awards to defray or offset any tax arising
from the grant, vesting, exercise or payment of any Award.
(ii) At any time that a Participant is required to pay
to the Company an amount required to be withheld under the applicable tax
laws in connection with the issuance of shares of Common Stock under the
Plan, the participant may, if permitted by the Committee, satisfy this
obligation in whole or in part by electing (the "Election") to have the
Company withhold from the issuance shares of Common Stock having a value
equal to the amount required to be withheld. The value of the shares
withheld shall be based on the fair market value of the Common Stock on
the date that the amount of tax to be withheld shall be determined in
accordance with applicable tax laws (the "Tax Date").
(iii) Each Election must be made prior to the Tax Date.
The Committee may suspend or terminate the right to make Elections at any
time.
(iv) A Participant may also satisfy his or her total tax
liability related to the Award by delivering Shares owned by the
Participant. The value of the Shares delivered shall be based on the
fair market value of the Shares on the Tax Date.
(d) Transferability. No Awards granted hereunder may be
transferred, pledged, assigned or otherwise encumbered by a Participant
except: (i) by will; (ii) by the laws of descent and distribution; (iii)
pursuant to a domestic relations order, as defined in the Code, if
permitted by the Committee and so provided in the Award Agreement or an
amendment thereto; or (iv) if permitted by the Committee and so provided
in the Award Agreement or an amendment thereto, Options and Limited
Rights granted in tandem therewith may be transferred or assigned (a) to
Immediate Family Members, (b) to a partnership in which Immediate Family
Members, or entities in which Immediate Family Members are the owners,
members or beneficiaries, as appropriate, are the partners, (c) to a
limited liability company in which Immediate Family Members, or entities
in which Immediate Family Members are the owners, members or
beneficiaries, as appropriate, are the members, or (d) to a trust for the
benefit of Immediate Family Members; provided, however, that no more than
a de minimus beneficial interest in a partnership, limited liability
company or trust described in (b), (c) or (d) above may be owned by a
person who is not an Immediate Family Member or by an entity that is not
beneficially owned solely by Immediate Family Members. "Immediate Family
Members" shall be defined as the spouse and natural or adopted children
or grandchildren of the Participant and their spouses. To the extent
that an Incentive Stock Option is permitted to be transferred during the
lifetime of the Participant, it shall be treated thereafter as a
Nonqualified Stock Option. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of Awards, or levy of attachment or
similar process upon Awards not specifically permitted herein, shall be
null and void and without effect. The designation of a Designated
Beneficiary shall not be a violation of this Section 11(d).
(e) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the SEC, any stock exchange
upon which such Shares or other securities are then listed, and any
applicable federal or state laws, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(f) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or
continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of options, stock appreciation rights and
other types of Awards provided for hereunder (subject to stockholder
approval of any such arrangement if approval is required), and such
arrangements may be either generally applicable or applicable only in
specific cases.
(g) No Right to Employment. The grant of an Award shall not
be construed as giving a Participant the right to be retained in the
employ of the Company or any Subsidiary or in the employ of any other
entity providing services to the Company. The Company or any Subsidiary
or any such entity may at any time dismiss a Participant from employment,
or terminate any arrangement pursuant to which the Participant provides
services to the Company, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement. No Employee, Participant or other person shall have any claim
to be granted any Award, and there is no obligation for uniformity of
treatment of Employees, Participants or holders or beneficiaries of
Awards.
(h) Governing Law. The validity, construction, and effect
of the Plan, any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State
of Delaware.
(i) Severability. If any provision of the Plan or any Award
is or becomes or is deemed to be invalid, illegal, or unenforceable in
any jurisdiction or as to any Person or Award, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable
laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such
Award shall remain in full force and effect.
(j) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company and a Participant
or any other Person. To the extent that any Person acquires a right to
receive payments from the Company pursuant to an Award, such right shall
be no greater than the right of any unsecured general creditor of the
Company.
(k) No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the Committee
shall determine whether cash, other securities or other property shall
be paid or transferred in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated,
or otherwise eliminated.
(l) Headings. Headings are given to the subsections of the
Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.
SECTION 12
Term of the Plan. Subject to Section 10(a), the Plan shall remain
in effect until all Awards permitted to be granted under the Plan have
either been satisfied, expired or cancelled under the terms of the Plan
and any restrictions imposed on Shares in connection with their issuance
under the Plan have lapsed.
EXHIBIT 11.1
FREEPORT-McMoRan INC.
COMPUTATION OF NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1997 1996 1997 1996
-------- ---------- --------- ---------
(In Thousands, Except Per Share Amounts)
Primary:
Net income
applicable to
common stock $ 7,236 $ 12,126 $ 8,111 $ 32,255
========== ========== ========== ==========
Average common
shares
outstanding 23,450 26,806 23,674 27,029
Common stock
equivalents:
Stock options 184 339 189 383
---------- ---------- ---------- ----------
Common and common
equivalent shares 23,634 27,145 23,863 27,412
========== ========== ========== ==========
Net income per
common and common
equivalent share $0.31 $0.45 $0.34 $1.18
===== ===== ===== =====
Fully diluted:
Net income applicable
to common stock $ 7,236 $ 12,126 $ 8,111 $ 32,255
Plus preferred
dividends - - - -
---------- ---------- ---------- ----------
Net income
applicable to
common stock $ 7,236 $ 12,126 $ 8,111 $ 32,255
========== ========== ========== ==========
Average common
shares
outstanding 23,450 26,806 23,674 27,029
Common stock
equivalents:
Stock options 184 339 189 383
Convertible
securities:
Preferred stock - - - -
---------- ---------- ---------- ----------
Common and common
equivalent shares 23,634 27,145 23,863 27,412
========== ========== ========== ==========
Net income per
common and common
equivalent share $0.31 $0.45 $0.34 $1.18
===== ===== ===== =====
Exhibit 15.1
July 22, 1997
Freeport-McMoRan Inc.
1615 Poydras Street
New Orleans, LA 70112
Gentlemen:
We are aware that Freeport-McMoRan Inc. has incorporated by reference
in its Registration Statements (File Nos. 2-85000, 33-14641, 33-30417,
33-29850, 33-62170, and 333-31041) its Form 10-Q for the quarter ended
June 30, 1997, which includes our report dated July 22, 1997 covering
the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1993 (the Act), this
report is not considered a part of the registration statements
prepared or certified by our firm or a report prepared or certified by
our firm within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
Arthur Andersen LLP
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<NAME> FREEPORT-MCMORAN INC.
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
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