SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from .......... to ..........
Commission file number 1-8124
Freeport-McMoRan Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3051048
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1615 Poydras Street
New Orleans, Louisiana 70112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 582-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
Common Stock Par Value $.01 per Share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. X
The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $644,918,000 on March 14, 1997.
On March 14, 1997, there were issued and outstanding 23,859,407 shares of
the Registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to stockholders for the year
ended December 31, 1996 are incorporated by reference into Parts II and IV
of this Report and portions of the registrant's Proxy Statement dated
March 21, 1997, submitted to the registrant's stockholders in connection
with its 1997 Annual Meeting to be held on April 29, 1997 are incorporated
by reference into Part III of this Report.
Freeport-McMoRan Inc.
TABLE OF CONTENTS
Page
Part I
Items 1. and 2. Business and Properties. . . . . . . . . . . 1
Overview . . . . . . . . . . . . . . . . . . . . . . . . . 1
Agricultural Minerals. . . . . . . . . . . . . . . . . . . 2
Fertilizer Business-IMC-Agrico Company . . . . . . . . 2
Sulphur Business . . . . . . . . . . . . . . . . . . . 4
Oil and Gas. . . . . . . . . . . . . . . . . . . . . . . . 5
Environmental Matters. . . . . . . . . . . . . . . . . . . 6
Relationship between the FTX Group and FRP . . . . . . . . 6
Management and Ownership . . . . . . . . . . . . . . . 6
Credit Facility . . . . . . . . . . . . . . . . . . . . 6
Conflicts of Interest . . . . . . . . . . . . . . . . . 7
Services Agreement . . . . . . . . . . . . . . . . . . 7
Employees. . . . . . . . . . . . . . . . . . . . . . . . . 7
Cautionary Statement . . . . . . . . . . . . . . . . . . . 7
Seasonality and Volatility of Product Markets . . . . . 8
Competition . . . . . . . . . . . . . . . . . . . . . . 8
Environmental Matters . . . . . . . . . . . . . . . . . 9
Operating Hazards . . . . . . . . . . . . . . . . . . . 9
Foreign Sales . . . . . . . . . . . . . . . . . . . . .10
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . .10
Item 4. Submission of Matters to a Vote of Security Holders.10
Executive Officers of the Registrant . . . . . . . . . . .11
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . .12
Item 6. Selected Financial Data. . . . . . . . . . . . . . .12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . .12
Item 8. Financial Statements and Supplementary Data. . . . .12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . .12
Part III
Item 10. Directors and Executive Officers of the Registrant.12
Item 11. Executive Compensation. . . . . . . . . . . . . . .12
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . .12
Item 13. Certain Relationships and Related Transactions. . .12
Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . .13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Index to Financial Statements. . . . . . . . . . . . . . . . . F-1
Report of Independent Public Accountants . . . . . . . . . . . F-1
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . E-1
PART I
Items 1. and 2. Business and Properties.
OVERVIEW
Freeport-McMoRan Inc., a Delaware corporation formed in 1981 ("FTX" or the
"Company"), through Freeport-McMoRan Resource Partners, Limited Partnership
("FRP"), is one of the world's leading integrated phosphate fertilizer
producers. FTX and its wholly owned subsidiary, FMRP, Inc. ("FMRP") are the
managing general partners of FRP, a publicly traded Delaware limited
partnership organized in 1986. As of December 31, 1996, FTX and FMRP held
partnership units representing an approximate 51.6% interest in FRP, with the
remaining interest being publicly owned and traded on the New York Stock
Exchange. See "Relationship Between the FTX Group and FRP."
FRP is a joint venture partner in IMC-Agrico Company ("IMC-Agrico"), the
largest and one of the lowest cost producers, marketers and distributors of
phosphate fertilizers in the world, with operations in central Florida and on
the Mississippi River in Louisiana. FRP's Main Pass sulphur mine, offshore
Louisiana in the Gulf of Mexico, and its Culberson mine in Texas, also make
FRP the largest producer of Frasch sulphur in the world. The combined
sulphur, phosphate mining and fertilizer production operations provide FRP
with the competitive advantages of vertical integration and operating
efficiencies and reduce the sensitivity of FRP's phosphate fertilizer costs
to changes in raw materials prices.
IMC-Agrico's business includes the mining and sale of phosphate rock and
the production, marketing and distribution of phosphate fertilizers and animal
feed ingredients. IMC-Agrico was formed as a joint venture partnership in
July 1993 when FRP and IMC Global Inc. ("IMC") contributed their respective
phosphate fertilizer businesses to IMC-Agrico. FRP believes that the
combination of its internal production of raw materials, through its sulphur
division and the IMC-Agrico joint venture, and the strategic location of
IMC-Agrico's fertilizer operations provide it with a competitive advantage
over other fertilizer producers.
FRP's sulphur operations include the mining, purchase, transportation,
terminalling and marketing of sulphur. The Main Pass deposit, which was
discovered in 1988, contains the largest known sulphur reserve in North
America. FRP's Main Pass offshore mining complex is the largest structure of
its type in the Gulf of Mexico and one of the largest in the world. The
mining complex has a design capacity of 5,500 long tons per day. FRP has a
58.3% interest in the Main Pass mine and serves as its manager and operator.
In January 1995, the Company began operating the Culberson mine when it
acquired substantially all of the domestic assets of Pennzoil Sulphur Co.
("Pennzoil"). As of December 31, 1996, the Main Pass and Culberson mines
were estimated to contain proved and probable sulphur
reserves totaling 53.1 million long tons net to FRP.
Main Pass also contains proved oil reserves from which FRP produces and
sells oil for the Main Pass joint venture. Oil production averaged
approximately 10,700 barrels per day (5,200 barrels net to FRP) during the
year ended December 31, 1996. As of December 31, 1996, Main Pass was
estimated to contain 12.8 million barrels (5.2 million barrels net to FRP)
of proved oil reserves.
In June 1996, FRP acquired a 25% leasehold interest from McMoRan Oil & Gas
Co. ("MOXY") in an oil and gas venture to explore a project area in Terrebonne
Parish, Louisiana. FRP also entered into an agreement with MOXY in 1997
pursuant to which FRP will acquire an interest in certain leases acquired by
MOXY. See "Oil and Gas," below.
FRP continues to benefit from significant improvements in phosphate
fertilizer markets that began in late 1993 and continue into 1997. FRP's
1996 average realization for its principal fertilizer product, diammonium
phosphate ("DAP"), increased 65% to approximately $186 per short ton from the
1993 average of approximately $113 per short ton. In late March 1997, the spot
market price for DAP as quoted in industry publications was approximately
$175 per short ton, FOB central Florida.
AGRICULTURAL MINERALS
The Company's agricultural minerals operations consists of FRP's interest
in the IMC-Agrico joint venture and FRP's sulphur business.
Fertilizer Business IMC-Agrico Company
In July 1993, FRP and IMC contributed to IMC-Agrico their respective
phosphate fertilizer businesses, including the mining and sale of phosphate
rock and the production, marketing and distribution of phosphate fertilizers.
At the time, FRP and IMC were among the largest and lowest cost phosphate
fertilizer producers in the world. The formation of IMC-Agrico has permitted
the more efficient use of existing plant capacity as well as eliminating
duplicative administrative and marketing functions.
IMC-Agrico makes quarterly cash distributions to FRP and IMC, based on
sharing ratios ("Current Interest"). The "Capital Interest" of FRP and IMC in
IMC-Agrico reflects the purchase and sale of long-term assets and any
required capital contributions. Effective March 1, 1996, FRP's Current
Interest was increased by 0.85% and, on July 1, 1996, FRP's Capital Interest
was also increased by 0.85%. As a result, FRP's Current Interest and Capital
Interest were 54.35% and 43.05%, respectively, as of December 31, 1996.
Effective July 1, 1997, FRP's Current Interest and Capital Interest will each
decline to 41.45%.
The IMC-Agrico policy committee establishes policies relating to the
strategic direction of IMC-Agrico and assures that its policies are implemented.
FRP and IMC have equal representation on this committee. The committee has the
sole authority to make certain decisions affecting IMC-Agrico, including
authorizing certain capital expenditures for expansion, incurring certain
indebtedness, approving significant acquisitions and dispositions, and certain
other decisions.
In January 1996, IMC-Agrico's day-to-day management was restructured so that
it operates substantially as a stand-alone entity. Included in the restructuring
was the establishment of a new office of the president of IMC-Agrico who is
responsible for managing its business affairs. The president is appointed by
IMC subject to the approval of the policy committee. An executive officer of
FRP was selected as the initial president of IMC-Agrico and has joined IMC-
Agrico in that role. The president reports to IMC, which maintains
responsibility for the operation of IMC-Agrico, subject to the terms of the
partnership agreement and the direction of the policy committee.
Phosphate Rock
IMC-Agrico's phosphate mining operations and production plants, located in
Polk, Hillsborough, Hardee and Manatee Counties in central Florida, produce
phosphate rock principally for the manufacture of phosphate fertilizers.
IMC-Agrico sells phosphate rock to domestic animal feed manufacturers and other
phosphate fertilizer producers. IMC-Agrico uses phosphate rock internally in
the production of phosphate fertilizers at its plants located in central Florida
and in Louisiana. Phosphate rock is generally mixed with sulphuric acid to
produce phosphoric acid from which various granulated phosphate products can
be produced. IMC-Agrico's annual phosphate rock mining capacity is
approximately 25 million tons per year and currently accounts for
approximately 41% of domestic phosphate rock mining capacity and 17% of the
western world's capacity. IMC-Agrico produced approximately 22 million tons of
phosphate rock during the year ended December 31, 1996.
In October 1996, IMC-Agrico purchased 24,000 acres of undeveloped land in
central Florida for $31 million plus future payments and royalties. The land is
estimated to contain in excess of 100 million tons of phosphate rock. FRP's
share of the acquisition cost was approximately $13.0 million. Primarily as a
result of this acquisition, FRP's share of IMC-Agrico's proved and probable
phosphate rock reserves as of December 31, 1996 increased by approximately 58
million short tons (31%) from the December 31, 1995 level.
As of December 31, 1996, FRP's share of IMC-Agrico's proved and probable
phosphate rock reserves was estimated to be 244.3 million short tons that are
mineable from existing operations, plus an additional 158.2 million short tons
of phosphate rock deposits. Deposits are ore bodies which require additional
economic and mining feasibility studies before they can be classified as
reserves. These reserves are controlled by IMC-Agrico through ownership, long-
term lease, royalty or purchase option agreements.
In 1996, IMC-Agrico entered into an exclusive letter of intent with Chinese
authorities to conduct joint feasibility studies and, if commercially viable, to
develop phosphate ore resources in Yunnan Province. The agreement covers
phosphate resources and contemplates the joint development of high-analysis
phosphate fertilizer manufacturing facilities in China. In addition, FRP
continues to evaluate a 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.
Phosphate Fertilizers
IMC-Agrico manufactures phosphate fertilizers, principally DAP,
monoammonium phosphate ("MAP") and granular triple superphosphate ("GTSP"), and
related products, including sulphuric acid, phosphoric acid, anhydrous ammonia
and urea. IMC-Agrico's fertilizer operations consist of six phosphoric acid
and fertilizer manufacturing facilities, three in central Florida and three on
the Mississippi River in Louisiana.
IMC-Agrico's New Wales, Nichols and South Pierce plants are located in
Florida. The New Wales complex, located near Mulberry, Florida, primarily
produces DAP, MAP,GTSP and merchant grade phosphoric acid. The New Wales plant
also produces animal feed ingredients (see "Animal Feed Ingredients"). The
Nichols, Florida plant produces DAP, sulphuric acid and phosphoric acid. The
South Pierce plant, located in Bartow, Florida, produces GTSP, sulphuric acid
and phosphoric acid.
IMC-Agrico's Faustina, Uncle Sam and Taft plants are located in Louisiana.
The Faustina plant, located in Donaldsonville, Louisiana, produces DAP, MAP,
anhydrous ammonia, urea, sulphuric acid and phosphoric acid. The Uncle Sam,
Louisiana plant produces sulphuric acid and phosphoric acid which is then
shipped to the nearby Faustina and Taft plants, where it is used to produce DAP
and MAP. The Taft, Louisiana plant produces DAP and MAP.
Phosphate rock, sulphur and ammonia are the three principal raw materials
used in the production of phosphate fertilizers. Phosphate rock is supplied by
IMC-Agrico's Florida mines. FRP supplies its share of IMC-Agrico's sulphur
requirements through its production from the Main Pass and Culberson mines and
IMC supplies IMC-Agrico with its sulphur requirements from its share of Main
Pass production and purchases from third parties, including FRP. IMC-Agrico's
ammonia needs are fulfilled by internal production from its Faustina plant and
third party domestic suppliers under long-term contracts.
IMC-Agrico's phosphoric acid capacity is approximately 4.0 million tons of
contained P2O5 (P2O5 is an industry term indicating a product's phosphate
content measured chemically in units of phosphorous pentoxide), which
represents approximately 33% of U.S. production capacity and 10% of world
capacity. IMC-Agrico operated at approximately 93% of P2O5 capacity in 1996 as
compared to 97% in 1995.
IMC-Agrico's plants have an estimated annual sustainable capacity to
produce approximately 8.2 million tons of granulated phosphates (DAP, MAP and
GTSP), 10.4 million tons of sulphuric acid, 260,000 tons of urea and 565,000
tons of anhydrous ammonia. During 1996, IMC-Agrico produced approximately 7.3
million tons of granulated phosphates, as compared to 7.6 million tons in
1995. As market conditions dictate, IMC-Agrico curtails operations to avoid
building excessive inventories.
Animal Feed Ingredients
In 1995, IMC-Agrico acquired the animal feed ingredients business of
Mallinckrodt Group Inc. Prior to the acquisition, IMC-Agrico managed
Mallinckrodt's animal feed plant operations on a contractual basis. The
principal manufacturing facilities of the animal feed operations are located
within IMC-Agrico's New Wales complex. This business is one of the world's
largest producers of phosphate-based animal feed ingredients and has enhanced
IMC-Agrico's flexibility in maximizing returns from its core phosphate
production.
Marketing
IMC-Agrico sells its fertilizer products in the domestic and export markets
under spot market and long-term contract terms. IMC-Agrico markets its products
domestically throughout the eastern two-thirds of the United States. In 1996,
approximately 40% of IMC-Agrico's phosphate fertilizer shipments were sold in
the domestic market. Approximately 63% of IMC-Agrico's phosphate rock
production was used in 1996 to produce phosphate fertilizers at its plants in
Florida and Louisiana, with a majority of the remaining amount sold in the
domestic market.
Virtually all of FRP's export sales of phosphate fertilizers are marketed
through the Phosphate Chemicals Export Association ("Phoschem"), a Webb-
Pomerene Act association. Since January 1995, IMC has been responsible for
marketing DAP, MAP and GTSP for Phoschem's members. This marketing arrangement
allows IMC-Agrico to interface directly with its major international customers
and enhances its ability to pursue growth and marketing opportunities on a
global basis. In December 1996, IMC-Agrico, through Phoschem, reached a two-
year agreement for the sale of DAP to Sinochem, the fertilizer agency for China.
The agreement provides for monthly shipments of DAP at market-related prices at
the time of shipment and is expected to approximate 1996 levels for each of 1997
and 1998. In conducting business abroad, IMC-Agrico is subject to the
customary risks encountered in foreign operations. See "Cautionary Statement."
Although phosphate fertilizer sales are fairly constant from month to
month, seasonal increases occur in the domestic market prior to the fall and
spring planting of crops. Generally, domestic sales taper off after the spring
planting season. However, this decline in domestic sales generally coincides
with a time when major international buyers such as China, India and Pakistan
purchase product for mid-year delivery.
Sulphur Business
The Company's sulphur operations include the mining, purchase,
transportation, terminalling and sale of sulphur. In 1995, FRP acquired
essentially all of the domestic assets of Pennzoil, including the Culberson mine
in Texas, sulphur terminals and loading facilities in Galveston, Texas and Tampa
, Florida, land and marine transportation equipment and sales and other related
commercial contracts and obligations. As a result, FRP now produces sulphur from
its Main Pass and Culberson mines for sale to IMC-Agrico and to third parties.
Production
The Main Pass and Culberson mines utilize the Frasch mining process, which
involves drilling wells and injecting superheated water into the underground
sulphur deposit to melt the solid sulphur, which is then brought to the surface
in liquid form. FRP and its predecessors have been using the Frasch process for
over 80 years. FRP has also developed technology that allows it to use sea
water in the Frasch process. FRP is not aware of any competitor that has
developed a Frasch sulphur mine using superheated sea water.
The Main Pass deposit was discovered by FRP in 1988. The mine currently has
the highest production rate of any sulphur mine in the world and contains the
largest known existing Frasch sulphur reserve in North America. The Main Pass
offshore complex, more than a mile in length, is one of the largest structures
of its type in the world and the largest in the Gulf of Mexico. The Main Pass
mine has a design capacity of 5,500 long tons per day. During the year ended
December 31, 1996, production averaged approximately 5,350 long tons per day.
The mine is owned 58.3% by FRP, 25% by IMC and 16.7% by Homestake Sulphur
Company. At December 31, 1996, the Main Pass deposit was estimated to contain
proved and probable sulphur reserves totaling 66.2 million long tons (38.6
million long tons net to FRP).
FRP began operating the Culberson mine in January 1995 after acquiring the
mine from Pennzoil. For the year ended December 31, 1996, production at the
Culberson mine averaged approximately 2,450 long tons per day. FRP continues to
work on improving the operating efficiencies at the Culberson mine to further
reduce costs. As of December 31, 1996, the Culberson mine was estimated to
contain proved and probable sulphur reserves totaling 14.5 million long tons.
FRP also supplements its sulphur production by purchasing sulphur from
third parties who recover sulphur in the production of oil and natural gas and
the refining of petroleum products.
Marketing
Sulphur produced at the Main Pass mine is transported by barge in liquid
form to storage, handling and shipping facilities located at Port Sulphur,
Louisiana. Sulphur production from the Culberson mine is transported in liquid
form by unit train to Galveston where storage, handling and shipping facilities
are located. At both Port Sulphur and Galveston, sulphur purchased from others
or transported for third parties may also be received. Sulphur is transported
from Port Sulphur by barge to IMC-Agrico's and other customers' plants in
Louisiana on the Mississippi River. Molten sulphur is also transported from
Galveston and Port Sulphur by tanker to FRP's terminals at Tampa. Similar
facilities at Pensacola, Florida are used for storage, handling and shipping
of sulphur purchased from others or transported for others. FRP processes and
transports for a fee both IMC's and Homestake's share of Main Pass sulphur and
serves as marketing agent for Homestake.
FRP's production of sulphur accounted for an estimated 20% of domestic and
6% of world elemental sulphur production in 1996. FRP's sulphur is used
primarily to manufacture sulphuric acid, which is used primarily to produce
phosphoric acid, one of the basic materials used to produce phosphate
fertilizers.
OIL AND GAS
Oil reserves are associated with the same caprock reservoir as the sulphur
reserves at Main Pass. Oil production commenced in the fourth quarter of 1991
and averaged approximately 10,700 barrels per day (5,200 barrels per day net to
FTX) during the year ended December 31, 1996. As of December 31, 1996, FTX
estimated that the remaining proved recoverable oil reserves at Main Pass were
approximately 12.8 million barrels (5.2 million barrels net to FTX).
In June 1996, FRP acquired a 25% leasehold interest in an oil and gas
venture to explore a project area in Terrebonne Parish, Louisiana. In
connection with the acquisition of this interest, FRP reimbursed MOXY $2.1
million for certain costs previously incurred in the project area. FRP
acquired its interest on the same proportionate basis as Phillips Petroleum
Company, which owns a 50% interest and is the operator of the joint venture.
The initial exploratory well on the East Fiddler's Lake prospect was not
successful in the discovery of commercial hydrocarbons. The second exploratory
well in the project area has commenced on the North Bay Junop prospect and is
expected to reach total depth during the second quarter of 1997.
FRP acquired an interest in leases acquired by MOXY at the federal offshore
lease sale held on March 5, 1997. At the lease sale, MOXY was high bidder on
seven offshore Gulf of Mexico tracts, with bids totaling $5.5 million. FRP
will acquire a 50% working interest in the leases awarded and will bear 60% of
the acquisition and exploration costs associated with these leases. MOXY will
bear the remaining 40% of such costs and will retain the remaining 50% working
interest. Award of the leases is subject to review and approval by the U.S.
Minerals Management Service.
ENVIRONMENTAL MATTERS
FTX and FRP have a history of commitment to environmental responsibility.
Since the 1940s, long before the general public recognized the importance of
maintaining environmental quality, FTX has conducted preoperational, bioassay,
marine ecological and other environmental surveys to ensure the environmental
compatibility of its operations. FTX's Environmental Policy commits its
operations to compliance with applicable laws and regulations. FTX has
implemented corporate-wide environmental programs that include the activities of
FRP and continues to study methods to reduce discharges and emissions.
FRP's operations are subject to federal, state and local laws and
regulations relating to the protection of the environment. Exploration, mining,
development and production of natural resources and the chemical processing
operations of IMC-Agrico, like similar operations of other companies, may affect
the environment. The production of sulphur and phosphate fertilizer involves the
handling of hazardous or toxic substances, some of which may have the potential,
if released into the environment in sufficient quantities, to expose FRP and IMC
- -Agrico to significant liability. For a further discussion of environmental
matters and the risks associated with such matters, see "Cautionary Statement-
Environmental Matters" below.
RELATIONSHIP BETWEEN THE FTX GROUP AND FRP
Management and Ownership
FTX and FMRP serve as the managing general partners of FRP and the directors
and officers of FTX, together with FRP's officers, perform all FRP management
functions and carry out the activities of FRP. The officers of FRP continue to
be employees and officers of FTX and its other subsidiaries but, subject to
certain exceptions, are employed principally for the operation of FRP's
business. As of December 31, 1996, FTX and FMRP held partnership interests that
represented an approximate 51.6% interest in FRP. As a result of FTX's position
as administrative managing general partner and of FTX's ownership interest, FTX
has the ability to control all matters relating to the management of FRP,
including any determination with respect to the acquisition or disposition of
FRP's assets, future issuance of additional debt or other securities of FRP and
any distributions payable in respect of FRP's partnership interests. In addition
to such other obligations as it may assume, FTX has the general duty to act in
good faith and to exercise its rights of control in a manner that is fair and
reasonable to the holders of partnership interests.
Under the terms of FRP's credit facility (the "Credit Facility"), the failure
by FTX to maintain control of FRP, or the direct or indirect ownership of at
least 50.1% of the partnership interests in FRP, would allow acceleration of the
indebtedness thereunder. See "Credit Facility."
On February 15, 1997, FRP paid a distribution of 60 cents per publicly held
unit ($30.0 million) and 24 cents per FTX owned unit ($12.9 million), increasing
the total unpaid distributions due FTX to $431.3 million. The preferential
rights of the publicly owned FRP units to receive minimum quarterly
distributions of 60 cents per unit ceased after this distribution. FRP's
distributable cash will now be shared ratably by FRP's public unitholders and
FTX, except that FTX will be entitled to recover its unpaid cash distributions
on a quarterly basis from one-half of any excess of future quarterly
distributions over 60 cents per unit for all units.
Credit Facility
In November 1996, FTX and FRP amended the Credit Facility to, among other
things, increase the borrowing availability, lower the interest rates and extend
the maturity date. The Credit Facility now provides $350 million of credit, all
of which is available to FRP and $150 million of which is available to FTX
through November 2001. Under the Credit Facility, FTX is required to maintain
at least a 50.1% ownership interest in FRP and control of FRP. FRP is not
permitted to enter into any agreement restricting its ability to make
distributions and is restricted in its ability to create liens and security
interests on its assets. To secure the Credit Facility, FTX has pledged its FRP
units representing a minimum 50.1% ownership in FRP. The Credit Facility places
restrictions on, among other things, additional borrowings and requires FRP to
maintain certain minimum working capital levels and specified cash flow to
interest coverage ratios and not to exceed a specified debt-to-capitalization
ratio.
Conflicts of Interest
The nature of the respective businesses of the Company and FRP and its
affiliates may give rise to conflicts of interest between the Company and FRP.
Conflicts could arise, for example, with respect to transactions involving
potential acquisitions of businesses or mineral properties, the issuance of
additional partnership interests, the determination of distributions to be made
by FRP, the allocation of general and administrative expenses between FTX and
FRP and other business dealings between FRP and FTX and its affiliates. Except
in cases where a different standard may have been provided for, FTX has a
general duty to act in good faith and to exercise rights of control in a manner
that is fair and reasonable to the holders of FRP's partnership interests. In
resolving conflicts of interest, FRP's partnership agreement permits FTX to
consider the relative interest of each party to a potential conflict situation
which, under certain circumstances, could include the interest of FTX and its
other affiliates. The extent to which this provision is enforceable under
Delaware law is not clear.
Services Agreement
Since January 1, 1996, FM Services Company ("FMS"), a company owned 50% by
each of FTX and Freeport-McMoRan Copper & Gold Inc. ("FCX"), a former subsidiary
of FTX, has furnished general executive, administrative, financial, accounting,
legal, environmental, insurance, personnel, engineering, tax, research and
development, sales and certain other services to FTX pursuant to the terms of
an Services Agreement (the "Services Agreement") in order to enable FTX to
perform its duties as administrative managing general partner of the Company.
The nature and timing of the services provided under the Services Agreement are
similar to those historically provided directly by FTX to the Company. FRP
generally reimburses FTX, at FTX's cost, including allocated overhead, for such
services on a monthly basis, including amounts paid by FTX under the Services
Agreement and allocated to FRP. Such costs are allocated among FRP, FTX and
certain of FTX's other affiliates based on direct utilization whenever possible
and an allocation formula based on a combination of the operating income,
property, plant and equipment and capital expenditures of FRP, FTX and such
other affiliates.
EMPLOYEES
As of March 1, 1997, FTX had a total of 504 employees.
CAUTIONARY STATEMENT
This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical fact
included in this report, including, without limitation, the statements under the
headings "Business and Properties," "Market for Registrant's Common Equity and
Related Stockholder Matters," and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" regarding FTX's financial
position and liquidity, distributions, FTX's strategic growth initiatives,
future capital needs, development and capital expenditures (including the amount
and nature thereof), reserve estimates and additions, production levels,
business strategies, and other plans and objectives of management of the Company
for future operations and activities, are forward-looking statements. These
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions, expected future developments and other factors it believes are
appropriate under the circumstances. Such statements are subject to a number of
assumptions, risks and uncertainties, including the risk factors discussed below
and in the Company's other filings with the Securities and Exchange Commission
(the "SEC"), general economic and business conditions, the business
opportunities that may be presented to and pursued by the Company, changes in
laws or regulations and other factors, many of which are beyond the control of
the Company. Readers are cautioned that any such statements are not
guarantees of future performance, and the actual results or developments may
differ materially from those projected, predicted or assumed in the forward-
looking statements. All subsequent written and oral forward-looking statements
attributable to FTX or persons acting on its behalf are expressly qualified in
their entirety by these cautionary statements. Important factors that could
cause actual results to differ materially from anticipated results or
expectations include, among others:
* Fluctuations in the actual or anticipated supply of and demand for
fertilizer products that are frequently affected by rapidly changing
agricultural conditions
* Changes in governmental policies that affect the number of acres planted,
levels of grain stocks, the mix of crops planted and prevailing crop
prices
* Fluctuations in the supply of and demand for sulphur, oil and gas
* Imprecision in estimating sulphur, phosphate rock and oil and gas reserves
* Possible increased environmental costs and liabilities arising from the
production, storage and distribution of phosphate fertilizers and
chemicals, sulphur, oil and gas
* Unanticipated industrial accidents
* Plant damage caused by severe weather or natural disasters
* Unexpected geological conditions resulting in cave-ins, flooding and
rock-bursts and unexpected changes in rock stability conditions
* Exchange rate fluctuations
* Fluctuations in interest rates
* Unanticipated difficulties in obtaining necessary financing
* Timing of necessary governmental permits and approvals relating to
operations, expansions of operations and financing of operations
* Difficulties in reaching agreements, or resolving disputes, with joint
venture partners, government officials, suppliers or customers
* Other risk factors described from time to time in FTX's filings with the
SEC
Many of these factors are beyond FTX's ability to control or predict.
Investors are therefore cautioned not to place undue reliance upon forward-
looking statements. A more detailed discussion of certain of the
foregoing factors follows:
Seasonality and Volatility of Product Markets
The Company sells its fertilizer products in the domestic and export markets
under spot market and long-term contract terms. Agricultural demand for the
Company's phosphate fertilizers is materially affected by prevailing
agricultural conditions. Generally, the Company experiences seasonal increases
in domestic sales prior to the fall and spring planting of crops and diminished
sales after the spring planting season. Sales are also influenced by current
and projected grain inventories and prices, quantities of fertilizers imported
to and exported from North America and various governments' agricultural
policies. Grain inventories are directly influenced by highly unpredictable
weather patterns and rapidly changing field conditions (particularly during
periods of high fertilizer consumption), and by trends in world-wide food
consumption.
Among the governmental policies that influence the fertilizer markets are
those directly or indirectly influencing the number of acres planted, the level
of grain stocks, the mix of crops planted and crop prices. In the United States
, the Farm Bill enacted in April of 1996 ends government-guaranteed prices for
corn, other feed grains, cotton, rice and wheat, and provides farmers with
guaranteed payments that decline over seven years. The Farm Bill also brought
an immediate end to planting controls. The Company has not yet determined
whether the Farm Bill will have an effect on its operations. The possibility
that the U.S. government or any foreign government may remove acres from
cultivation through subsidies to farmers is an important factor influencing the
demand for fertilizers.
All of the Company's major products are commodities, and the markets and
prices for such products have been volatile historically and may continue to be
volatile in the future. The Company's operating margins and cash flow are
subject to substantial fluctuations in response to changes in supply and demand
for its products, conditions in the domestic and foreign agriculture industry,
market uncertainties and a variety of additional factors beyond the Company's
control.
Competition
The sulphur, fertilizer and phosphate rock mining industries are highly
competitive. Because competition is based largely on price, maintaining low
production costs is critical to competitiveness. Any increases in the Company's
costs or decreases in its competitors' costs affect the Company's ability to
compete effectively. Because the market for the Company's products is global,
the Company faces intense competition from overseas producers, some of which are
state supported, especially those in North Africa and the former Soviet Union.
Additionally, foreign competitors frequently are motivated by non-market factors
such as the need for hard currency, rather than by normal financial
considerations.
Environmental Matters
The Company's operations include exploration, mining, development and
production of natural resources, chemical processing, and the extraction,
handling, production, processing, treatment, storage, transportation and
disposal of materials and waste products that may be toxic or hazardous.
Consequently, the Company is subject to numerous environmental laws and
regulations. The Company has incurred and will continue to incur, significant
capital expenditures and operating costs based on these laws and regulations.
Continued governmental and public emphasis on environmental issues may result in
increased capital expenditures and operating costs in the future, although the
impact of future laws and regulations or future changes to existing laws and
regulations cannot be predicted or quantified.
Federal legislation (sometimes referred to as "Superfund" legislation) imposes
liability, without regard to fault, for clean-up of certain waste sites, even
though waste management activities at the site may have been performed in
compliance with regulations applicable at the time. Under the Superfund
legislation, one responsible party may be required to bear more than its
proportional share of clean-up costs if payments cannot be obtained from other
responsible parties. In addition, federal and state regulatory programs and
legislation mandate clean-up of certain wastes at operating sites. Governmental
authorities have the power to enforce compliance with these regulations and
permits, and violators are subject to civil and criminal penalties, including
fines, injunctions or both. Third parties also have the right to pursue legal
actions to enforce compliance. Liability under these laws can be significant
and unpredictable.
The Company has received notices from governmental agencies that it is one of
many potentially responsible parties at certain sites under relevant federal and
state environmental laws. Some of these sites involve significant cleanup
costs. The ultimate settlement of liability for the clean-up of such sites
usually occurs many years after the receipt of notices identifying potentially
responsible parties because of the many complex, technical and financial issues
associated with site clean-up. The Company cannot predict its potential
liability for the clean-up costs that it may incur in the future.
Operating Hazards
The Company's offshore sulphur mining and oil production operations, and its
marine transportation operations, are subject to marine perils, including
collisions, fire, explosions, hurricanes and other adverse weather conditions.
The Company's mining operations are also subject to risks such as unexpected
geological conditions resulting in cave-ins, flooding and rock-bursts and
unexpected changes in rock stability conditions. The Company's oil exploration
and production activities are subject to risks including blowouts, cratering and
fires, each of which could result in personal injury to personnel or damage to
property and the environment.
The Company's operations may be subject to significant interruption, and FRP
may be subject to significant liability due to industrial accidents occurring at
one or more of its plants, or drilling or mining operations, or severe weather
or natural disaster damage to any one or more of its plants, or drilling or
mining operations.
The Company has in place programs to minimize the risks associated with its
businesses. In addition, it has the benefit of certain liability, property
damage, business interruption and other insurance coverage in types and amounts
that it considers reasonable and believes to be customary in the Company's
business. This insurance provides protection against loss from some, but not
all, potential liabilities normally incident to the ordinary conduct of the
Company's business, including coverage for certain types of damages associated
with environmental and other liabilities that arise from sudden, unexpected and
unforeseen events, with such coverage limits as management deems prudent.
Through FTX and IMC-Agrico, property insurance is maintained to cover some, but
not all of the risks of physical damage to tangible property of FRP as well as
the corresponding cost of business interruption.
Foreign Sales
A significant portion of the Company's revenues come from sales outside of
the United States. The Company's foreign sales are subject to numerous risks
including changes in currency and exchange controls, the availability of foreign
exchange, laws, regulatory policies and actions affecting foreign trade and
government subsidies, tariffs and quotas.
Item 3. Legal Proceedings.
Tom Beanal v. Freeport-McMoRan Inc. and Freeport-McMoRan Copper & Gold Inc.,
Civ. No. 96-1474 (E.D. La. filed Apr. 29, 1996). The plaintiff alleges
environmental, human rights and social/cultural violations in Indonesia.
He seeks $6 billion in monetary damages and other equitable relief. The Company
and its former subsidiary, Freeport-McMoRan Copper & Gold Inc. ("FCX") deny
these allegations, which it believes are inconsistent with the findings of a
series of independent examinations of the Indonesian mining operations of FCX's
subsidiary. The Company believes the action is baseless and will vigorously
defend such action. The Company has filed a motion to dismiss all claims, which
motion is pending.
Yosefa Alomang v. Freeport-McMoRan Inc. and Freeport-McMoRan Copper & Gold
Inc., Civ. No. 96-9962 (Orleans Civ. Dist. Ct. La. filed June 19, 1996). This
purported class action was dismissed by the Civil District Court of the Parish
of Orleans, State of Louisiana on February 21, 1997 for lack of subject matter
jurisdiction because the alleged conduct and damages occurred in Indonesia. The
Court also held that venue was not proper in any Louisiana court. On March 11,
1997, the Court ruled that an amended complaint filed by the plaintiff did not
cure the lack of subject matter jurisdiction. The plaintiff had alleged
substantially similar violations as those alleged in the Beanal suit and sought
unspecified monetary damages and other equitable relief.
In addition to the foregoing proceedings, FTX may be from time to time
involved in various legal proceedings of a character normally incident to the
ordinary course of its business. Management believes that potential liability
in any such or threatened proceedings would not have a material adverse effect
on the financial condition or results of operations of FTX. FTX maintains
liability insurance to cover some, but not all, potential liabilities normally
incident to the ordinary course of its business as well as other insurance
coverages customary in its business, with such coverage limits as management
deems prudent.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Executive Officers of the Registrant.
Certain information about the executive officers of FTX as of March 14, 1997
is set forth in the following table and accompanying text:
Name Age Position or Office
Richard C. Adkerson 50 Vice Chairman of the Board
Michael J. Arnold 44 Senior Vice President
Thomas J. Egan 52 Senior Vice President
W. Russell King 47 Senior Vice President
Rene L. Latiolais 54 President and Chief Executive Officer
James R. Moffett 58 Chairman of the Board
Robert M. Wohleber 46 Senior Vice President
Richard C. Adkerson has served as Vice Chairman of the Board and a Director
of the Company since August 1995. Mr. Adkerson is Executive Vice President of
FCX and P.T. Freeport Indonesia Company ("PT-FI"), an operating subsidiary of
FCX. He is Co-Chairman of the Board, Chief Executive Officer and a Director of
McMoRan Oil & Gas Co. ("MOXY"). In addition, he is Chairman of the Board, Chief
Executive Officer and a Director of FM Properties Inc. ("FMPO"). From 1992 to
August 1995, Mr. Adkerson was Senior Vice President of FTX.
Michael J. Arnold has served as Senior Vice President of the Company since
November 1996. From May 1993 to November 1996, Mr. Arnold was Vice President
and Controller-Operations of the Company and was a Vice President of the Company
from October 1991 to May 1993. Mr. Arnold is a Senior Vice President of FCX.
From July 1994 to November 1996, Mr. Arnold was Vice President and Controller-
Operations of FCX.
Thomas J. Egan has served as Senior Vice President of the Company since
November 1993. From November 1987 to November 1993, Mr. Egan was Vice President
of the Company. Mr. Egan is a Senior Vice President of FCX.
W. Russell King has served as Senior Vice President of the Company since
November 1993. From October 1984 to November 1993, Mr. King was Vice President
of the Company. Mr. King is a Senior Vice President of FCX.
Rene L. Latiolais has served as President and Chief Executive Officer of the
Company since August 1995 and as a Director of the Company since August 1993.
Mr. Latiolais was Chief Operating Officer of the Company until 1995 and
Executive Vice President of the Company until 1993. Mr. Latiolais has served as
President and Chief Executive Officer of FRP since June 1988. Mr. Latiolais is
Vice Chairman of the Board and a Director of FCX. He is a Commissioner of
PT-FI.
James R. Moffett has served as Chairman of the Board of the Company since
May 1992 and as a Director of the Company since April 1981. Mr. Moffett is
Chairman of the Board, Chief Executive Officer and a Director of FCX. He is
President Commissioner PT-FI. Mr. Moffett is Co-Chairman of the Board and a
Director of MOXY.
Robert M. Wohleber has served as Senior Vice President of the Company and FRP
since November 1996. From June 1994 to November 1996, Mr. Wohleber was Vice
President of the Company. He served as Vice President and Treasurer of the
Company from May 1992 to June 1994 and served as Treasurer of the Company from
May 1989 to May 1992. Mr. Wohleber has also been a Vice President of FCX since
July 1994. He served as Vice President and Treasurer of FCX from July 1993 to
June 1994. He served as Treasurer of FCX from August 1990 to June 1993.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The information set forth under the captions "Common Shares" and "Common
Share Dividends" on the inside back cover of FTX's Annual Report to Stockholders
for the year ended December 31, 1996 is incorporated herein by reference. As of
March 14, 1997, there were 8,476 record holders of FTX's common stock.
Item 6. Selected Financial Data.
The information set forth under the caption "Selected Financial and
Operating Data" on page 12 of FTX's Annual Report to Stockholders for the year
ended December 31, 1996 is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The information set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 13 through
19 of FTX's Annual Report to Stockholders for the year ended December 31, 1996
is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The financial statements of FTX and its consolidated subsidiaries, the notes
thereto and the report thereon of Arthur Andersen LLP, appearing on pages 21
through 37, and the report of management on page 20 of FTX's Annual Report to
Stockholders for the year ended December 31, 1996 are incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
Items 10. Directors and Executive Officers of the Registrant.
The information set forth under the caption "Information About Nominees and
Directors" of the Proxy Statement submitted to the stockholders of the
registrant in connection with its 1997 Annual Meeting to be held on April 29,
1997 is incorporated herein by reference.
Items 11. Executive Compensation.
The information set forth under the captions "Director Compensation" and
"Executive Officer Compensation" of the Proxy Statement submitted to the
stockholders of the registrant in connection with its 1997 Annual Meeting to be
held on April 29, 1997 is incorporated herein by reference.
Items 12. Security Ownership of Certain Beneficial Owners and Management.
The information set forth under the captions "Securities Ownership of
Directors and Executive Officers" and "Common Stock Ownership of Certain
Beneficial Owners" of the Proxy Statement submitted to the stockholders of the
registrant in connection with its 1997 Annual Meeting to be held on April 29,
1997 is incorporated herein by reference.
Items 13. Certain Relationships and Related Transactions.
The information set forth under the caption "Certain Transactions" of the
Proxy Statement submitted to the stockholders of the registrant in connection
with its 1997 Annual Meeting to be held on April 29, 1997 is incorporated herein
by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1), (a)(2), and (d). Financial Statements.
See Index to Financial Statements appearing on page F-1 hereof.
(a)(3) and (c). Exhibits.
See Exhibit Index beginning on page E-1 hereof.
(b). Reports on Form 8-K.
During the last quarter of the period covered by this report, FTX filed a
report on Form 8-K dated December 20, 1996 reporting an event under item 5
thereof. No financial statements were filed.
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on November 18, 1997.
FREEPORT-McMoRan INC.
By: /s/ Richard C. Adkerson
Richard C. Adkerson
Vice Chairman of the Board
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on November 18, 1997.
Signature Title
* President, Chief Executive Officer and Director
Rene L. Latiolais (Principal Executive Officer)
* Senior Vice President and Chief Financial Officer
Robert M. Wohleber (Principal Financial Officer)
/s/C. Donald Whitmire Jr. Controller-Financial Reporting
C. Donald Whitmire Jr. (Principal Accounting Officer)
/s/Richard C. Adkerson Vice Chairman of the Board and Director
Richard C. Adkerson
* Director
Robert W. Bruce III
* Director
Robert A. Day
* Director
William B. Harrison, Jr.
* Director
Henry A. Kissinger
* Director
Bobby Lee Lackey
* Director
Gabrielle K. McDonald
* Chairman of the Board and Director
James R. Moffett
* Director
George Putnam
* Director
B.M. Rankin, Jr.
* Director
J. Taylor Wharton
*By: /s/ Richard C. Adkerson
Richard C. Adkerson
Attorney-in-fact
INDEX TO FINANCIAL STATEMENTS
The financial statements of FTX and its consolidated
subsidiaries, the notes thereto, and the report thereon of Arthur
Andersen LLP, appearing on pages 21 through 37, inclusive, of FTX's
1996 Annual Report to stockholders are incorporated by reference.
The financial statement schedules listed below should be read in
conjunction with such financial statements contained in FTX's 1996
Annual Report to stockholders.
Page
Report of Independent Public Accountants F-1
III-Condensed Financial Information of Registrant F-2
VIII-Valuation and Qualifying Accounts F-5
Schedules other than those listed above have been omitted since
they are either not required, not applicable or the required
information is included in the financial statements or notes thereto.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited, in accordance with generally accepted auditing
standards, the financial statements as of December 31, 1996 and 1995
and for each of the three years in the period ended December 31, 1996
included in Freeport-McMoRan Inc.'s annual report to stockholders
incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 21, 1997. Our audits were made for the
purpose of forming an opinion on those statements taken as a whole.
The schedules listed in the index above are the responsibility of the
Company's management and are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the
basic financial statements. These schedules have been subjected to
the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
Arthur Andersen LLP
New Orleans, Louisiana,
January 21, 1997
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
December 31,
------------------------
1996 1995
---------- ----------
ASSETS (In Thousands)
Current assets:
Accounts receivable from FRP $ - $ 24,740
Accounts receivable -other 2,659 25,661
Prepaid expenses and other 220 807
---------- ----------
Total current assets 2,879 51,208
Property, plant and equipment -net 41,899 48,139
Investment in FRP 189,218 211,016
Long-term receivables and other
assets 5,113 18,968
---------- ----------
Total assets $ 239,109 $ 329,331
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
liabilities $ 23,515 $ 58,528
Long-term debt 38,000 -
Other liabilities and deferred
credits 83,292 78,866
Stockholders' equity 94,302 191,937
---------- ----------
Total liabilities and
stockholders' equity $ 239,109 $ 329,331
========== ==========
The footnotes contained in FTX's 1996 Annual Report to stockholders
are an integral part of these statements.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
Years Ended December 31,
-----------------------------------
1996 1995 1994
---------- ---------- ----------
(In Thousands)
Revenues $ 422 $ 745 $ 749
---------- ---------- -----------
Cost of sales 1,958 2,673 7,203
Exploration expenses - - 3,738
General and administrative
expenses 4,972 9,816 12,664
---------- ---------- ----------
Total costs and expenses 6,930 12,489 23,605
---------- ---------- ----------
Operating loss (6,508) (11,744) (22,856)
Interest expense, net (1,063) (19,908) (38,591)
Equity in earnings of
subsidiaries 77,579 60,378 10,881
Other income, net 2,246 12,692 2,173
---------- ---------- ----------
Income (loss) before income taxes 72,254 41,418 (48,393)
Income tax (provision) benefit (27,164) 50,982 13,261
---------- ---------- ----------
Income (loss) from continuing
operations 45,090 92,400 (35,132)
Discontinued operations - 340,424 107,715
---------- ---------- ----------
Income before extraordinary item 45,090 432,824 72,583
Extraordinary loss on early
extinguishment of debt, net - - (9,108)
---------- ---------- ----------
Net income 45,090 432,824 63,475
Preferred dividends (4,382) (42,283) (22,032)
---------- ---------- ----------
Net income applicable to common
stock $ 40,708 $ 390,541 $ 41,443
========== ========== ==========
The footnotes contained in FTX's 1996 Annual Report to stockholders
are an integral part of these statements.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOW
Years Ended December 31,
-------------------------------------
1996 1995 1994
---------- ---------- ----------
Cash flow from operating activities: (In Thousands)
Net income $ 45,090 $ 432,824 $ 63,475
Adjustments to reconcile net income
to net cash provided by operating
activities:
Extraordinary loss on early
extinguishment of debt - - 9,108
Depreciation and amortization 1,942 3,767 9,073
Oil and gas exploration expenses - 16 5,231
Equity in (earnings) losses of
subsidiaries (77,579) (115,071) (64,973)
Cash distributions from
subsidiaries 100,125 141,179 92,000
Gain on sale of FCX Class A shares - (435,060) -
Loss on recapitalization of FTX
securities - 44,371 -
Gain on conversion/distribution
of FCX securities - - (114,750)
Deferred income taxes 22,004 17,886 18,558
(Increase) decrease in working
capital, net of effect of
acquisitions and dispositions:
Accounts receivable 22,596 (1,782) (2,146)
Prepaid expenses and other 587 5,276 4,694
Accounts payable and accrued
liabilities (24,619) (30,936) 22,389
Other (7,540) 24,734 12,867
--------- ---------- ---------
Net cash provided by operating
activities 82,606 87,204 55,526
------------ --------- ---------
Cash flow from investing
activities:
Capital expenditures (1,380) (2,059) (32,958)
Sale of assets - 25,000 65,596
-------- --------- ---------
Net cash provided by (used in)
investing activities (1,380) 22,941 32,638
--------- ------- -------
Cash flow from financing activities:
Proceeds from sale of FCX Class A shares - 497,166 -
Purchase of:
FTX common shares (132,118) (44,752) (67,747)
FCX Class A shares - (58,906) (47,596)
FRP units (1,305) (2,253) -
ABC debentures - (280,826) -
6.55% Senior notes - (14,955) -
10 7/8% Senior Debentures - - (142,919)
Distribution of MOXY shares - - (35,441)
Borrowings (repayments) of debt -net 38,000 (165,000) 155,000
(Increase) decrease in long-term note due
from FCX - 800 11,470
(Increase) decrease in long-term note due
from FRP 24,740 (24,740) 100,900
Cash dividends paid:
Common stock (9,346) (5,168) (44,467)
Preferred stock (4,382) (8,757) (22,110)
Other 3,185 (2,754) 4,746
------- ------- -------
Net cash used in financing
activities (81,226) (110,145) (88,164)
-------- --------- --------
Net decrease in cash and cash
equivalents - - -
Cash and cash equivalents at
beginning of year - - -
--------- ---------- --------
Cash and cash equivalents at
end of year $ - $ - $ -
========= ======== ===========
The footnotes contained in FTX's 1996 Annual Report to stockholders
are an integral part of these statements.
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 1996, 1995 and 1994
Col. A Col. B Col. C Col. D Col. E
- ---------- ---------- --------------------- ---------- ----------
Additions
-----------------------
Balance at Charged to Charged to Balance at
Beginning of Costs and Other Other-Add End
Description Period Expenses Accounts (Deduct) of Period
- ---------- ---------- ---------- ---------- --------- ---------
(In Thousands)
Reserves and allowances deducted from asset accounts:
Reclamation and mine shutdown reserves:
1996:
Sulphur $ 71,954 $ 3,920 $ - $ (28,217)a $47,657
Fertilizer 35,931 10,137 - (3,781) 42,287
Oil & Gas 21,096 1,288 - (5,954) 16,430
---------- ---------- ---------- ---------- ----------
$ 128,981 $ 15,345 $ - $ (37,952)b $106,374
========== ========== ========== ========== ==========
1995:
Sulphur $ 55,105 $ 2,643 $ - $ 14,206c $ 71,954
Fertilizer 37,683 2,785 - (4,537) 35,931
Oil & Gas 19,989 1,666 - (559) 21,096
---------- ---------- ---------- ---------- ----------
$ 112,777 $ 7,094 $ - $ 9,110b $ 128,981
========== ========== ========== ========== ==========
1994:
Sulphur $ 57,287 $ 1,041 $ - $ (3,223) $ 55,105
Fertilizer 38,437 2,310 - (3,064) 37,683
Oil & Gas 14,963 3,799 - 1,227 19,989
---------- ---------- ---------- ---------- ----------
$ 110,687 $ 7,150 $ - $ (5,060)b $ 112,777
========== ========== ========== ========== ==========
a. Includes a reclassification to short-term payables of $17.1
million.
b. Includes expenditures of $13.6 million in 1996, $11.1 million in
1995 and $9.7 million in 1994.
c. Includes $15.2 million of liabilities assumed in connection with
the acquisition of the sulphur assets of Pennzoil Co. (See Note 9 to
the Financial Statements).
Freeport-McMoRan Inc.
Exhibit Index
Exhibit
Number
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.
4.1 Certificate of Designations of the $4.375 Convertible Exchangeable
Preferred Stock of FTX. Incorporated by reference to Exhibit 4.1 to the Current
Report on Form 8-K of FTX dated March 23, 1992.
4.2 Amended and Restated Agreement of Limited Partnership of FRP dated as of
May 29, 1987 (the "FRP Partnership Agreement") among FTX, Freeport Phosphate
Rock Company and Geysers Geothermal Company, as general partners, and Freeport
Minerals Company ("FMC"), as general partner and attorney-in-fact for the
limited partners, of FRP. Incorporated by reference to Exhibit B to the
Prospectus dated May 29, 1987 included in FRP's Registration Statement on Form
S-1, as amended, as filed with the Commission on May 29, 1987 (Registration No.
33-13513).
4.3 Amendment to the FRP Partnership Agreement dated as of December 16, 1988
effected by FMC, as Administrative Managing General Partner, and FTX, as General
Partner, of FRP. Incorporated by reference to Exhibit 3.2 to the Annual Report
on Form 10-K of FRP for the fiscal year ended December 31, 1994.
4.4 Amendment to the FRP Partnership Agreement dated as of March 29, 1990
effected by FMC, as Administrative Managing General Partner, and FTX, as
Managing General Partner, of FRP. Incorporated by reference to Exhibit 19.2 to
the Quarterly Report on Form 10-Q of FRP for the quarter ended March 31, 1990
(the "FRP 1990 First Quarter Form 10-Q").
4.5 Amendment to the FRP Partnership Agreement dated as of April 6, 1990
effected by FTX, as Administrative Managing General Partner of FRP.
Incorporated by reference to Exhibit 19.3 to the FRP 1990 First Quarter Form
10-Q.
4.6 Amendment to the FRP Partnership Agreement dated as of January 27, 1992
between FTX, as Administrative Managing General Partner, and FMRP Inc., as
Managing General Partner of FRP. Incorporated by reference to Exhibit 3.3 to
the Annual Report on Form 10-K of FRP for the fiscal year ended December 31,
1991 (the "FRP 1991 Form 10-K").
4.7 Amendment to the FRP Partnership Agreement dated as of October 14, 1992
between FTX, as Administrative Managing General Partner, and FMRP Inc., as
Managing General Partner of FRP. Incorporated by reference to Exhibit 3.4 to
the Annual Report on Form 10-K of FRP for the fiscal year ended December 31,
1992 (the "FRP 1992 Form 10-K").
4.8 Deposit Agreement dated as of June 27, 1986 (the "Deposit Agreement")
among FRP, The Chase Manhattan Bank, N.A. ("Chase") and Freeport Minerals
Company, as attorney-in-fact of those limited partners and assignees holding
depositary receipts for units of limited partnership interests in FRP
("Depositary Receipts"). Incorporated by reference to Exhibit 28.4 to the
Current Report on Form 8-K of FTX dated July 11, 1986.
4.9 Resignation dated December 26, 1991 of Chase as Depositary under the
Deposit Agreement and appointment dated December 27, 1991 of Mellon Bank, N.A.
("Mellon") as successor Depositary, effective January 1, 1992. Incorporated by
reference to Exhibit 4.5 to the FRP 1991 Form 10-K.
4.10 Service Agreement dated as of January 1, 1992 between FRP and Mellon
pursuant to which Mellon will serve as Depositary under the Deposit Agreement
and Custodian under the Custodial Agreement. Incorporated by reference to
Exhibit 4.6 to the FRP 1991 Form 10-K.
4.11 Amendment to the Deposit Agreement dated as of November 18, 1992 between
FRP and Mellon. Incorporated by reference to Exhibit 4.4 to the FRP 1992 Form
10-K.
4.12 Form of Depositary Receipt. Incorporated by reference to Exhibit 4.5 to
the FRP 1992 Form 10-K.
4.13 Custodial Agreement regarding the FRP Depositary Unit Reinvestment Plan
among FTX, FRP and Chase, effective as of April 1, 1987 (the "Custodial
Agreement"). Incorporated by reference to Exhibit 19.1 to the Quarterly Report
on Form 10-Q of FRP for the quarter ended June 30, 1987.
4.14 FRP Depositary Unit Reinvestment Plan. Incorporated by reference to
Exhibit 4.4 to the FRP 1991 Form 10-K.
4.15 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.
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 Contribution Agreement dated as of April 5, 1993 between FRP and IMC (the
"FRP-IMC Contribution Agreement"). Incorporated by reference to Exhibit 2.1 to
the Current Report on Form 8-K of FRP dated July 15, 1993 (the "FRP July 15,
1993 Form 8-K").
10.2 First Amendment dated as of July 1, 1993 to the FRP-IMC Contribution
Agreement. Incorporated by reference to Exhibit 2.2 to the FRP July 15, 1993
Form 8-K.
10.3 Amended and Restated Partnership Agreement dated as of May 26, 1995 among
IMC-Agrico GP Company, Agrico, Limited Partnership and IMC-Agrico MP Inc.
Incorporated by reference to Exhibit 10.3 to the Annual Report on Form 10-K of
FRP for the fiscal year ended December 31, 1995 (the "FRP 1995 Form 10-K").
10.4 Amendment and Agreement dated as of January 23, 1996 to the Amended and
Restated Partnership Agreement dated May 26, 1995 by and among IMC-Agrico MP,
Inc., IMC Global Operations, Inc. and IMC-Agrico Company. Incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K dated February 13,
1996 of FRP.
10.5 Amended and Restated Parent Agreement dated as of May 26, 1995 among IMC
Global Operations, Inc., FRP, FTX and IMC-Agrico. Incorporated by reference to
the FRP 1995 Form 10-K.
10.6 Asset Purchase Agreement dated as of October 22, 1994 between FRP and
Pennzoil Company (the "Asset Purchase Agreement"). Incorporated by reference to
Exhibit 2.1 to the Current Report on Form 8-K of FRP dated January 18, 1995
(the "FRP January 18, 1995 8-K").
10.7 Amendment No. 1 dated as of January 3, 1995 to the Asset Purchase
Agreement. Incorporated by reference to Exhibit 2.2 to the FRP January 18, 1995
8-K.
Executive Compensation Plans and Arrangements (Exhibits 10.8 through 10.27)
10.8 Annual Incentive Plan of FTX, as amended.
10.9 1992 Long-Term Performance Incentive Plan of FTX, as amended.
10.10 1987 Long-Term Performance Incentive Plan of FTX, as amended.
10.11 FTX Variable Compensation Incentive Program, as amended. Incorporated by
reference to Exhibit 19.4 to the FTX 1991 Third Quarter Form 10-Q.
10.12 FTX Performance Incentive Awards Program, as amended. Incorporated by
reference to Exhibit 10.12 to the Annual Report on Form 10-K of FTX for the
fiscal year ended December 31, 1995 (the "FTX 1995 Form 10-K").
10.13 FTX President's Award Program, as amended. Incorporated by reference to
Exhibit 10.13 to the FTX 1995 Form 10-K.
10.14 FTX 1992 Stock Option Plan, as amended.
10.15 1982 Stock Option Plan of FTX, as amended.
10.16 FTX 1992 Stock Incentive Unit Plan, as amended.
10.17 1988 Stock Option Plan for Non-Employee Directors of FTX, as amended.
10.18 FTX 1991 Plan for Deferral of Directors' Fees, as amended.
10.19 FTX 1996 Stock Option Plan, as amended.
10.20 Financial Counseling and Tax Return Preparation and Certification Program
of FTX, as amended. Incorporated by reference to Exhibit 10.21 to the FTX 1995
Form 10-K.
10.21
FTX Executive Universal Life Insurance Plan. Incorporated by reference to
Exhibit 10.32 to the FTX 1992 Form 10-K.
10.22
FM Services Company Performance Incentive Awards Program. Incorporated by
reference to Exhibit 10.14 to the Annual Report on Form 10-K of FCX for the
fiscal year ended December 31, 1995 (the "FCX 1995 Form 10-K").
10.23 Financial Counseling and Tax Return Preparation and Certification Program
of FM Services Company. Incorporated by reference to Exhibit 10.15 to the FCX
1995 Form 10-K.
10.24 Agreement for Consulting Services between FTX and B. M. Rankin, Jr.,
effective as of January 1, 1990. Incorporated by reference to Exhibit 19.2 to
the Quarterly Report on Form 10-Q of FTX for the quarter ended March 31, 1990.
10.25 Consulting Agreement dated as of December 22, 1988, between FTX and
Kissinger Associates, Inc. ("Kissinger Associates"). Incorporated by reference
to Exhibit 10.35 to the FTX 1992 Form 10-K.
10.26 Letter Agreement dated May 1, 1989, between FTX and Kent Associates, Inc.
(predecessor in interest to Kissinger Associates). Incorporated by reference to
Exhibit 10.36 to the FTX 1992 Form 10-K.
10.27 Letter Agreement dated January 27, 1997 among Kissinger Associates, Kent
Associates, Inc., FTX, FCX and FM Services Company ("FMS"). Incorporated by
reference to Exhibit 10.20 to the Annual Report on Form 10-K of FCX for the
fiscal year ended December 31, 1996 (the "FCX 1996 Form 10-K").
10.28 Letter Agreement dated December 18, 1996 among Charles W. Goodyear, IV,
FCX, FTX, FMS and certain other entities. Incorporated by reference to Exhibit
10.23 to the FCX 1996 Form 10-K.
10.29 Letter Agreement dated December 18, 1996 between Charles W. Goodyear, IV
and FMS. Incorporated by reference to Exhibit 10.24 to the FCX 1996 Form 10-K.
11.1 FTX and Consolidated Subsidiaries Computation of Net Income Per Common and
Common Equivalent Share.
13.1 Those portions of the 1996 Annual Report to stockholders of FTX that are
incorporated herein by reference.
21.1 Subsidiaries of FTX.
23.1 Consent of Arthur Andersen LLP dated March 28, 1997.
23.2 Consent of Ernst & Young LLP dated March 28, 1997.
24.1 Certified resolution of the Board of Directors of FTX authorizing this
report to be signed on behalf of any officer or director pursuant to a Power of
Attorney.
24.2 Powers of Attorney pursuant to which this report has been signed on behalf
of certain officers and directors of FTX.
27.1 FTX Financial Data Schedule.
99.1 Report of Ernst & Young LLP.
EXHIBIT 3.2
As Amended through April 30, 1996
Freeport-McMoRan Inc.
By-Laws
ARTICLE I
Name
The name of the corporation is Freeport-McMoRan Inc.
ARTICLE II
Offices
1. The location of the registered office of the corporation
in the State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle, and the name of its registered agent at
such address is The Corporation Trust Company.
2. The corporation shall in addition to its registered office
in the State of Delaware establish and maintain an office or offices at
such place or places as the Board of Directors may from time to time find
necessary or desirable.
ARTICLE III
Corporate Seal
The corporate seal of the corporation shall have inscribed
thereon the name of the corporation and the year of its creation (1980)
and the words "Incorporated Delaware". Such seal may be used by causing
it or a facsimile thereof to be impressed, affixed, printed or otherwise
reproduced.
ARTICLE IV
Meeting of Stockholders
1. All meetings of the stockholders shall be held at the
registered office of the corporation in the State of Delaware, or in such
other place as shall be determined, from time to time, by the Board of
Directors.
2. The first annual meeting of the stockholders shall be held
on Monday, April 19, 1982, at eleven o'clock in the forenoon, or on such
other date in that year or at such other time as may be determined by
resolution of the Board of Directors. In subsequent years the annual
meeting of the stockholders shall be held on the Monday immediately
preceding the third Tuesday of April at eleven o'clock in the forenoon,
or on such other day or at such other time as may be determined from time
to time by resolution of the Board of Directors. At each annual meeting
of the stockholders they shall elect by plurality vote, by written
ballot, a Board of Directors to hold office until the annual meeting of
the stockholders held next after their election and their successors are
respectively elected and qualified or until their earlier resignation or
removal. Any other proper business may be transacted at the annual
meeting.
3. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except as otherwise
expressly provided by statute, by the Certificate of Incorporation or by
these By-Laws. If, however, such majority shall not be present or
represented at any meeting of the stockholders, the stockholders entitled
to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting (except as otherwise provided by statute),
until the requisite amount of voting stock shall be present. At such
adjourned meeting at which the requisite amount of voting stock shall be
represented any business may be transacted which might have been
transacted at the meeting as originally notified.
4. At all meetings of the stockholders each stockholder
having the right to vote shall be entitled to vote in person, or by proxy
appointed by an instrument in writing subscribed by such stockholder and
bearing a date not more than three years prior to said meeting, unless
such instrument provides for a longer period. All proxies shall be filed
with the secretary of the meeting before being voted.
5. At each meeting of the stockholders each stockholder shall
have one vote for each share of stock having voting power, registered in
his name on the books of the corporation at the record date fixed in
accordance with these By-Laws, or otherwise determined, with respect to
such meeting. Except as otherwise expressly provided by statute, by the
Certificate of Incorporation or by these By-Laws, all matters coming
before any meeting of the stockholders shall be decided by the vote of a
majority of the number of shares of stock present in person or
represented by proxy at such meeting and entitled to vote thereat, a
quorum being present.
6. Notice of each meeting of the stockholders shall be mailed
to each stockholder entitled to vote thereat not less than 10 nor more
than 60 days before the date of the meeting. Such notice shall state the
place, date and hour of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is called.
7. Subject to such rights to call special meetings of
stockholders under specified circumstances as may be granted to holders
of any shares of the Preferred Stock pursuant to the provisions of
Article Fourth of the Certificate of Incorporation, special meetings of
the stockholders may be called only by the Chairman of the Board or the
President of the corporation, or at the request in writing or by vote of
a majority of the Board of Directors, and not by any other persons. Any
request for a special meeting made by the Board of Directors shall state
the purpose or purposes of the proposed meeting.
8. Business transacted at each special meeting shall be
confined to the purpose or purposes stated in the notice of such meeting.
9. The order of business at each meeting of the stockholders
shall be determined by the chairman at such meeting.
10. At an annual meeting of the stockholders, only such
business shall be conducted as shall have been brought before the meeting
(a) by or at the direction of the Board of Directors or (b) by any
stockholder of the corporation who complies with the notice procedures
set forth in this Section 10. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the corporation. To
be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the corporation not less
than 60 days nor more than 90 days prior to the meeting; provided,
however, that in the event that less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received not later than
the close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the
annual meeting (a) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (b) the name and address, as they appear
on the corporation's books, of the stockholder proposing such business,
(c) the class and number of shares of the corporation which are
beneficially owned by the stockholder and (d) any material interest of
the stockholder in such business. Notwithstanding anything in the By-
Laws to the contrary, no business shall be conducted at an annual meeting
except in accordance with the procedures set forth in this Section 10.
The chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before
the meeting and in accordance with the provisions of the By-Laws, and if
he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
Notwithstanding the foregoing provisions of this Section 10, a
stockholder seeking to have a proposal included in the corporation's
proxy statement shall comply with the requirements of Regulation 14A
under the Security Exchange Act of 1934, as amended (including, but not
limited to, Rule 14a-8 or its successor provision).
11. Only persons who are nominated in accordance with the
procedures set forth in the By-Laws shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors
of the corporation may be made at a meeting of stockholders (a) by or at
the direction of the Board of Directors or (b) by any stockholder of the
corporation entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth in this Section 11.
Such nominations, other than those made by or at the direction of the
Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the corporation. To be timely, a stockholder's notice
shall be delivered to or mailed and received at the principal executive
offices of the corporation not less than 60 days nor more than 90 days
prior to the meeting; provided, however, that in the event that less than
70 days' notice or prior public disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting or such
public disclosure was made. Such stockholder's notice shall set forth
(a) as to each person whom the stockholder proposed to nominate for
election or reelection as a director all information relating to such
person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended
(including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (b)
as to the stockholder giving the notice (i) the name and address, as they
appear on the corporation's books, of such stockholder and (ii) the class
and number of shares of the corporation which are beneficially owned by
such stockholder. At the request of the Board of directors any person
nominated by the Board of Directors for election as a director shall
furnish to the Secretary of the corporation that information required to
be set forth in a stockholder's notice of nomination which pertains to
the nominee. No person shall be eligible for election as a director of
the corporation unless nominated in accordance with the procedures set
forth in the By-Laws. The chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not
made in accordance with the procedures prescribed by the By-Laws, and if
he should so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded.
12. Any action required or permitted to be taken by the
stockholders of the corporation must be effected at a duly called annual
or special meeting of such holders and may not be effected by any consent
in writing by such holders.
ARTICLE V
Directors
1. The business and affairs of the corporation shall be
managed under the direction of a Board of Directors which may exercise
all such powers and authority for and on behalf of the corporation as
shall be permitted by law, the Certificate of Incorporation or these By-
Laws.
2. The directors may hold their meetings and have one or more
offices, and, subject to the laws of the State of Delaware, keep the
stock ledger and other books and records of the corporation, outside said
State, at such place or places as they may from time to time determine.
3. Subject to such rights to elect additional directors under
specified circumstances as may be granted to holders of any shares of the
Preferred Stock pursuant to the provisions of Article Fourth of the
Certificate of Incorporation, the number of directors of the corporation
shall be fixed from time to time by the Board of Directors but shall not
be less than three. The directors, other those who may be elected by the
holders of any class or series of Preferred Stock, shall be classified,
with respect to the time for which they severally hold office, into three
classes, as nearly equal in number as possible, as determined by the
Board of Directors, one class to hold office initially for a term
expiring at the annual meeting of stockholders to be held in 1987,
another class to hold office initially for a term expiring at the annual
meeting of stockholders to be held in 1988, and another class to hold
office initially for a term expiring at the annual meeting of
stockholders to be held in 1989, with the members of each class to hold
office until their successors are elected and qualified. At each annual
meeting of stockholders, the successors of the class of directors whose
term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year
following the year of their election.
4. Subject to such rights to elect directors under specified
circumstances as may be granted to holders of any shares of the Preferred
Stock pursuant to the provisions of Article Fourth of the Certificate of
Incorporation, newly created directorships resulting from any increase in
the number of directors and any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or other
reason shall be filled solely by the affirmative vote of a majority of
the remaining directors then in office, even though less than a quorum of
the Board of Directors. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term
of the class of directors in which the new directorship was created or
the vacancy occurred and until such director's successor shall have been
elected and qualified. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any
incumbent director.
5. Any director may resign at any time by giving written
notice of his resignation to the Board of Directors, the Chairman of the
Board or the President. Any such resignation shall take effect upon
receipt thereof by the Board, the Chairman of the Board or the President,
as the case may be, or at such later date as may be specified therein.
Any such notice to the Board shall be addressed to it in care of the
Secretary.
ARTICLE VI
Committees of Directors
By resolutions adopted by a majority of the whole Board of
Directors, the Board may designate an Executive Committee, an Audit
Committee, a Corporate Personnel Committee, a Nominating Committee and a
Public Policy Committee, and may designate one or more other committees,
each such committee to consist of one or more directors of the
corporation. The Executive Committee shall have and may exercise all the
powers and authority of the Board in the management of the business and
affairs of the corporation (except as otherwise expressly limited by
statute) and may authorize the seal of the corporation to be affixed to
all papers which may require it. The Audit Committee, the Corporate
Personnel Committee, the Nominating Committee, the Public Policy
Committee and each such other committee shall have such of the powers and
authority of the Board as may be provided from time to time in
resolutions adopted by a majority of the whole Board. Each committee
shall report its proceedings to the Board when required.
ARTICLE VII
Compensation of Directors
The directors shall receive such compensation for their
services as may be authorized by resolution of the Board of Directors,
which compensation may include an annual fee and a fixed sum and expenses
for attendance at regular or special meetings of the Board or any
committee thereof. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
ARTICLE VIII
Meetings of Directors; Action Without a Meeting
1. Regular meetings of the Board of Directors may be held
without notice at such time and place, either within or without the State
of Delaware, as may be determined from time to time by resolution of the
Board.
2. Special meetings of the Board of Directors may be called
by the Chairman of the Board or by the President on at least 24 hours'
notice to each director, and shall be called by the President or by
Secretary on like notice on the request in writing of any director.
Except as may be otherwise specifically provided by statute, by the
Certificate of Incorporation or by these By-Laws, the purpose or purposes
of any such special meeting need not be stated in such notice.
3. At all meetings of the Board of Directors the presence of
a majority of the total number of directors shall be necessary and
sufficient to constitute a quorum for the transaction of business, and,
except as otherwise provided by statute, by the Certificate of
Incorporation or by these By-Laws, if a quorum shall be present the act
of a majority of the directors present shall be the act of the Board.
4. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if all the members of the Board or such
committee, as the case may be, consent thereto in writing and the writing
or writings are filed with the minutes of proceedings of the Board or
committee. Any director may participate in a meeting of the Board, or of
any committee designated by the Board, by means of a conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this sentence shall constitute presence in person at
such meeting.
ARTICLE IX
Officers
1. The officers of the corporation shall be chosen by the
Board of Directors and shall be a Chairman of the Board, a President, one
or more Vice Presidents, a Secretary, and a Treasurer. The Board of
Directors may also choose a Vice Chairman of the Board, one or more
Executive Vice Presidents, one or more Senior Vice Presidents, a General
Counsel, one or more Assistant Vice Presidents, a Controller and one or
more Assistant Secretaries, Assistant Treasurers or Assistant
Controllers, and such other officers as it shall deem necessary who shall
hold their offices for such terms and shall exercise such powers and
perform such duties as shall be prescribed from time to time by the Board
or by the Chairman of the Board. Any number of offices may be held by
the same person.
2. Annually, the Board of Directors shall choose a Chairman
of the Board from among the directors, and shall choose the remaining
officers who need not be members of the Board except in the event they
choose a Vice Chairman of the Board.
3. The salaries of all officers of the corporation shall be
fixed by the Board of Directors, or in such manner as the Board may
prescribe.
4. The officers of the corporation shall hold office until
their successors are respectively chosen and qualified, except that any
officer may at any time resign or be removed by the Board of Directors.
If the office of any officer becomes vacant for any reason, the vacancy
may be filled by the Board.
5. Any officer may resign at any time by giving written
notice of his resignation to the Board of Directors, the Chairman of the
Board, the Vice Chairman of the Board or the President. Any such
resignation shall take effect upon receipt thereof by the Board, the
Chairman of the Board, the Vice Chairman of the Board or the President,
as the case may be, or at such later date as may be specified therein.
Any such notice to the Board shall be addressed to it in care of the
Secretary.
ARTICLE X
Chairman of the Board
The Chairman of the Board shall preside at meetings of the
stockholders and at meetings of the Board of Directors. He shall have
the powers and duties usually and customarily associated with the office
of Chairman of the Board and shall have such other powers and duties as
may be delegated to him by the Board of Directors.
ARTICLE XI
President
The President shall be the Chief Executive Officer of the
corporation. Subject to the supervision and direction of the Board of
Directors, he shall be responsible for managing the affairs of the
corporation. He shall have supervision and direction of all the other
officers of the corporation and shall have the powers and duties usually
and customarily associated with the Office of the President and the
position of the Chief Executive Officer. He shall have such other powers
and duties as may be delegated to him by the Chairman of the Board.
ARTICLE XII
Vice Chairman of the Board,
Executive Vice Presidents,
Senior Vice Presidents,
Vice Presidents and
Assistant Vice Presidents
The Vice Chairman of the Board, Executive Vice Presidents,
Senior Vice Presidents, Vice Presidents and Assistant Vice Presidents
shall have such powers and duties as may be delegated to them by the
Board of Directors or the Chairman of the Board.
ARTICLE XIII
General Counsel, Secretary and Assistant Secretaries
1. The General Counsel shall have the powers and duties
usually and customarily associated with the position of General Counsel.
He shall have such other powers and duties as may be delegated to him by
the Chairman of the Board.
2. The Secretary shall attend all meetings of the Board of
Directors and of the stockholders, and shall record the minutes of all
proceedings in a book to be kept for that purpose. He shall perform like
duties for the committees of the Board when required.
3. The Secretary shall give, or cause to be given, notice of
meetings of the stockholders, of the Board of Directors and of the
committees of the Board. He shall keep in safe custody the seal of the
corporation, and where authorized by the Chairman of the Board, the
President, a Senior Vice President or a Vice President, shall affix the
same to any instrument requiring it, and when so affixed it shall be
attested by his signature or by the signature of an Assistant Secretary.
He shall have such other powers and duties as may be delegated to him by
the Chairman of the Board.
4. The Assistant Secretaries shall, in case of the absence of
the Secretary, perform the duties and exercise the powers of the
Secretary, and shall have such other powers and duties as may be
delegated to them by the Chairman of the Board.
ARTICLE XIV
Treasurer and Assistant Treasurers
1. The Treasurer shall have the custody of the corporate
funds and securities, and shall deposit or cause to be deposited under
his direction all moneys and other valuable effects in the name and to
the credit of the corporation in such depositories as may be designated
by the Board of Directors or pursuant to authority granted by it. He
shall render to the President and the Board whenever they may require it
an account of all his transactions as Treasurer and of the financial
condition of the corporation. He shall have such other powers and duties
as may be delegated to him by the Chairman of the Board.
2. The Assistant Treasurers shall, in case of the absence of
the Treasurer, perform the duties and exercise the powers of the
Treasurer, and shall have such other powers and duties as may be
delegated to them by the Chairman of the Board.
ARTICLE XV
Controller
The Controller shall maintain adequate records of all assets,
liabilities and transactions of the corporation, and shall see that
adequate audits thereof are currently and regularly made. He shall
disburse the funds of the corporation in payment of just obligations of
the corporation, or as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements. He shall have such other powers
and duties as may be delegated to him by the Chairman of the Board.
ARTICLE XVI
Certificates of Stock
The certificates for shares of stock of the corporation shall
be numbered and shall be entered in the books of the corporation as they
are issued. Such certificates shall exhibit the holder's name and number
of shares and shall be signed by the Chairman of the Board, the
President, an Executive Vice President, a Senior Vice President or a Vice
President and by the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary. The signature of any such officers may be
facsimile if such certificate is countersigned by a transfer agent other
than the corporation or its employee or by a registrar other than the
corporation or its employee. In case any officer who has signed or whose
facsimile signature has been placed on any such certificate shall have
ceased to be such officer before such certificate is issued, then, unless
the Board of Directors shall otherwise determine and cause notification
thereof to be given to such transfer agent and registrar, such
certificate may be issued by the corporation (and by its transfer agent)
and registered by its registrar with the same effect as if he were such
officer at the date of issue.
ARTICLE XVII
Transfers of Stock
1. All transfers of shares of the stock of the corporation
shall be made on the books of the corporation by the registered holders
of such shares in person or by their attorneys lawfully constituted in
writing, or by their legal representatives.
2. Certificates for shares of stock shall be surrendered and
cancelled at the time of transfer.
ARTICLE XVIII
Fixing Record Date
In order that the corporation may determine the stockholders
entitled to notice of and to vote at any meeting of stockholders or any
adjournment thereof, or entitled to express consent in writing to any
corporate action without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of
stock, or for any other lawful purpose, the Board of Directors may fix in
advance, a record date which shall not be more than 60 nor less than 10
days before the date of such meeting, nor more than 60 days prior to any
other action. Only stockholders of record on the date so fixed shall be
entitled to such notice of, and to vote at, such meeting and any
adjournment thereof, or entitled to express such consent, or entitled to
receive payment of such dividend or other distribution or allotment of
rights, or entitled to exercise such rights in respect of change,
conversion or exchange, as the case may be, notwithstanding any transfer
of stock on the books of the corporation after any such record date fixed
as aforesaid.
ARTICLE XIX
Registered Stockholders
The corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such share on the part of any other person, whether or
not it shall have express or other notice thereof, save as expressly
provided by the laws of the State of Delaware.
ARTICLE XX
Checks
All checks, drafts and other orders for the payment of money
and all promissory notes and other evidences of indebtedness of the
corporation shall be signed by such officer or officers or such other
person or persons as may be designated by the Board of Directors or
pursuant to authority granted by it.
ARTICLE XXI
Fiscal Year
The fiscal year of the corporation shall end on December 31 of
each year.
ARTICLE XXII
Notices and Waiver
1. Whenever by statute, or by the Certificate of
Incorporation or by these By-Laws it is provided that notice shall be
given to any director or stockholder, such provision shall not be
construed to require personal notice, but such notice may be given in
writing, by mail, by depositing the same in the United States mail,
postage prepaid, directed to such stockholder or director at his address
as it appears on the records of the corporation, or, in default of other
address, to such director or stockholder at the General Post Office in
the City of Wilmington, Delaware, and such notice shall be deemed to be
given at the time when the same shall be thus deposited. Notice of
special meetings of the Board of Directors may also be given to any
director by telephone or by telex, telegraph or cable and the latter
event the notice shall be deemed to be given at the time such notice,
addressed to such director at the address hereinabove provided, shall be
transmitted or delivered to and accepted by an authorized telegraph or
cable office.
2. Whenever by statute, by the Certificate of Incorporation
or by these By-Laws a notice is required to be given, a written waiver
thereof, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to notice.
Attendance of any stockholder or director at any meeting thereof shall
constitute a waiver of notice of such meeting by such stockholder or
director, as the case may be, except as otherwise provided by statute.
ARTICLE XXIII
Alteration of By-Laws
These By-Laws, including, but not limited to, Section 7 of
Article IV and Sections 3 and 4 of Article V, may be altered, amended,
changed or repealed at any meeting of Board of Directors present or as
otherwise provided by statute, except that, in the case of any amendment,
alteration, change or repeal of Section 7 of Article IV or Sections 3 or
4 of Article V by the stockholders, notwithstanding any other provision
of these By-Laws, the Certification of Incorporation or any provision of
law which might otherwise permit a lesser vote or no vote, the
affirmative vote of the holders of 85% or more of the outstanding shares
of capital stock of the corporation entitled to vote generally in the
election of directors shall be required to amend, alter, change or repeal
such Section 7 of Article IV or such Sections 3 or 4 of Article V.
ARTICLE XXIV
Indemnification of Corporate Personnel
The corporation shall indemnify any person who is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise as provided in the Certificate of
Incorporation. Expenses incurred by such a director, officer, employee
or agent in defending a civil or criminal action, suit or proceeding
shall be paid by the corporation as provided in the Certificate of
Incorporation. The corporation shall have power to purchase and maintain
insurance on behalf of any such persons against any liability asserted
against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the corporation
would have the power to indemnify him or her against such liability under
the provisions of the Certificate of Incorporation. The indemnification
provisions of this Article XXIV and the Certificate of Incorporation
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any applicable law, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
The provisions of this Article XXIV and Article ELEVENTH of the
Certificate of Incorporation shall be deemed to be a contract between the
corporation and each person who serves as such director, officer,
employee or agent of the corporation in any such capacity at any time
while this Article XXIV and Article ELEVENTH of the Certificate of
Incorporation are in effect. No repeal or modification of the provisions
of this Article XXIV and Article ELEVENTH of the Certificate of
Incorporation nor, to the fullest extent permitted by law, any
modification of law shall adversely affect any right or protection of a
director, officer, employee or agent of the corporation then existing at
the time of such repeal or modification. The provisions of this Article
XXIV of the By-Laws of the corporation have been adopted by the
stockholders of the corporation.
EXHIBIT 10.8
ANNUAL INCENTIVE PLAN
OF FREEPORT-MCMORAN INC.
ARTICLE I
PURPOSE OF PLAN
SECTION 1.1. The purpose of the Annual Incentive Plan of
Freeport-McMoRan Inc. (the "Plan") is to provide incentives for senior
executives whose performance in fulfilling the responsibilities of their
positions can have a major impact on the profitability and future growth
of Freeport-McMoRan Inc. (the "Company") and its Subsidiaries.
ARTICLE II
ADMINISTRATION OF THE PLAN
SECTION 2.1. Subject to the authority and powers of the Board
of Directors in relation to the Plan as hereinafter provided, the Plan
shall be administered by a Committee designated by the Board of Directors
consisting of two or more members of the Board each of whom is a "non-
employee director" within the meaning of Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934. The Committee shall have full authority to interpret the Plan and
from time to time to adopt such rules and regulations for carrying out
the Plan as it may deem best; provided, however, that the Committee may
not exercise any authority otherwise granted to it hereunder if such
action would have the effect of increasing the amount of an Award to any
Covered Employee. 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 the members shall be fully
as effective as if it had been made by a majority vote at a meeting duly
called and held. All decisions by the Committee pursuant to the
provisions of the Plan and all orders or resolutions of the Board of
Directors pursuant thereto shall be final, conclusive and binding on all
persons, including the Participants, the Company and its Subsidiaries and
their respective equity holders.
ARTICLE III
ELIGIBILITY FOR AND PAYMENT OF AWARDS
SECTION 3.1. Subject to the provisions of the Plan, in each
calendar year the Committee may select any of the following to receive
Awards under the Plan with respect to such year and determine the amounts
of such Awards: (a) any person providing services as an officer of the
Company or a Subsidiary, whether or not employed by such entity,
including any person who is also a director of the Company, (b) any
salaried employee of the Company or a Subsidiary, including any director
who is also an employee of the Company or a Subsidiary, (c) any officer
or salaried 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 (d) any
person who has agreed in writing to become a person described in clauses
(a), (b) or (c) within not more than 30 days following the date of grant
of such person's first Award under the Plan.
SECTION 3.2. Subject to the provisions of the Plan, Awards
with respect to any year shall be paid to each Participant at such time
established by the Committee following the determination of the amounts
of such Awards, which payment shall in no event be later than February 28
of the year following such Award Year.
SECTION 3.3. Notwithstanding the provisions of Section 3.2,
if, prior to the date established by the Committee for any Award Year, a
Participant shall so elect, in accordance with procedures established by
the Committee, all or any part of an Award to such Participant with
respect to such Award Year shall be deferred and paid in one or more
periodic installments, not in excess of ten, at such time or times before
or after the date of such Participant's Termination of Employment, but
not later than ten years after such date of Termination of Employment, as
shall be specified in such election. If and only if any Award or portion
thereof is so deferred for payment after December 31 of the year
following such Award Year, such Award or portion thereof, as the case may
be, shall, commencing with January 1 of the year following such Award
Year, be increased at a rate equal to the prime commercial lending rate
announced from time to time by The Chase Manhattan Bank, N.A. (compounded
quarterly) or by another major national bank headquartered in New York,
New York and designated by the Committee. If such Participant's
Termination of Employment occurs 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 and if, on
the date of such Termination of Employment, there remain unpaid any
installments of Awards which have been deferred as provided in this
Section 3.3, the Committee may, in its sole discretion, authorize payment
to the Participant of the aggregate amount of such unpaid installments in
a lump sum, notwithstanding such election.
SECTION 3.4. (a) Notwithstanding the provisions of Sections
3.1, 3.2, 3.3, 4.2(a), and 4.2(b) hereof, any Award to any Covered
Employee shall be granted in accordance with the provisions of this
Section 3.4.
(b) All Awards to Covered Employees under the Plan will be
made and administered by two or more members of the Committee who are
also "outside directors" within the meaning of Section 162(m).
(c) The Committee shall assign Participant Shares of the Plan
Funding Amount to those Covered Employees whom the Committee designates
as Participants for that Award Year (which Participant Shares in the
aggregate may not exceed 100% of the Plan Funding Amount). The maximum
annual Award that may be made to any Covered Employee for an Award Year
is 50% of the Plan Funding Amount.
(d) If the Plan Funding Amount with respect to an Award Year
is to be adjusted to exclude the effect of material changes in accounting
policies or practices, material acquisitions or dispositions of property
or other unusual items on the Plan Funding Amount, the Committee must so
provide at the time that the Participant Shares of the Plan Funding
Amount for that Award Year are assigned or within the first 90 days of
the Award Year, if permitted under Section 162(m).
(e) Any provision of the Plan to the contrary notwithstanding,
no Covered Employee shall be entitled to any payment of an Award with
respect to a calendar year unless the members of the Committee referred
to in Section 3.4(b) hereof shall have certified the Participant Share
for each Covered Employee, the Plan Funding Amount for such year and that
the condition of Section 4.1 hereof has been met for such year.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1. Any provision of the Plan to the contrary
notwithstanding, no Award shall be made pursuant to Section 3.1 or 3.4
with respect to any calendar year if the average of the Return on
Investment for such calendar year and each of the four preceding calendar
years, after giving effect to the aggregate amount (if any) that was
awarded or credited with respect to such prior years and the aggregate
amount that would otherwise have been so awarded or credited with respect
to such calendar year, would be less than six percent.
SECTION 4.2. (a) In determining the aggregate amount awarded
to Participants under the Plan for any calendar year, the Committee shall
consider as a guideline that the aggregate amount of all Awards granted
with respect to any calendar year should not exceed two and one-half
percent of Net Cash Provided by Operating Activities for such year.
(b) If Managed Net Income or Total Investment of Capital for
any year shall have been affected by special factors (including material
changes in accounting policies or practices, material acquisitions or
dispositions of property, or other unusual items) which in the
Committee's judgment should or should not be taken into account, in whole
or in part, in the equitable administration of the Plan, the Committee
may, for any purpose of the Plan, adjust Managed Net Income or Total
Investment of Capital and make payments and reductions accordingly under
the Plan, provided that, except as provided in Section 3.4(d) hereof, the
Committee shall not take any such adjustments into account in calculating
Awards to Covered Employees if the effect of such adjustment would be to
increase the Plan Funding Amount.
(c) Notwithstanding the provisions of subparagraphs (a) and
(b) above, the amount available for the grant of Awards under the Plan to
Covered Employees with respect to a calendar year shall be equal to the
Plan Funding Amount for such year and, except as specified in advance
under Section 3.4(c), any adjustments made in accordance with or for the
purposes of subparagraphs (a) or (b) shall be disregarded for purposes of
calculating the Plan Funding Amount. The Committee may, in the exercise
of its discretion, determine that the aggregate amount of all Awards
granted to Covered Employees with respect to a calendar year shall be
less than the Plan Funding Amount for such year, but the excess of such
Plan Funding Amount over such aggregate amount covered by Awards granted
to Covered Employees shall not be available for any Awards to Covered
Employees with respect to future years. In addition, the Committee may,
in the exercise of its discretion, reduce or eliminate the amount of an
Award to a Covered Employee otherwise calculated in accordance with the
provisions of Section 3.4 prior to payment thereof. Any reduction of an
Award shall not accrue to the benefit of any other Covered Employee.
SECTION 4.3. A Participant may designate in writing a
beneficiary (including the trustee or trustees of a trust) who shall upon
the death of such Participant be entitled to receive all amounts which
would have been payable hereunder to such Participant. A Participant may
rescind or change any such designation at any time. Except as provided
in this Section 4.3, none of the amounts which may be payable under the
Plan may be assigned or transferred otherwise than by will or by the laws
of descent and distribution.
SECTION 4.4. All payments made pursuant to the Plan shall be
subject to withholding in respect of income and other taxes required by
law to be withheld, in accordance with procedures to be established by
the Committee.
SECTION 4.5. The selection of an individual for participation
in the Plan shall not give such Participant any right to be retained in
the employ of the Company or any of its Subsidiaries, and the right of
the Company and of any such Subsidiary to dismiss or discharge any such
Participant or to terminate any arrangement pursuant to which any such
Participant provides services to the Company or a Subsidiary, is
specifically reserved. The benefits provided for Participants under the
Plan shall be in addition to, and shall in no way preclude, other forms
of compensation to or in respect of such Participants.
SECTION 4.6. The Board of Directors and the Committee shall be
entitled to rely on the advice of counsel and other experts, including
the independent public accountants for the Company. No member of the
Board of Directors or of the Committee or any officers of the Company or
its Subsidiaries shall be liable for any act or failure to act under the
Plan, except in circumstances involving bad faith on the part of such
member or officer.
SECTION 4.7. Nothing contained in the Plan shall prevent the
Company or any Subsidiary or affiliate of the Company from adopting or
continuing in effect other compensation arrangements, which arrangements
may be either generally applicable or applicable only in specific cases.
ARTICLE V
AMENDMENT OR TERMINATION OF THE PLAN
SECTION 5.1. The Board of Directors may at any time terminate,
in whole or in part, or from time to time amend the Plan, provided that,
except as otherwise provided in the Plan, no such amendment or
termination shall adversely affect any Awards previously made to a
Participant and deferred by such Participant pursuant to Section 3.3. In
the event of such termination, in whole or in part, of the Plan, the
Committee may in its sole discretion direct the payment to Participants
of any Awards not theretofore paid out prior to the respective dates upon
which payments would otherwise be made hereunder to such Participants,
and in a lump sum or installments as the Committee shall prescribe with
respect to each such Participant. The Board may at any time and from
time to time delegate to the Committee any or all of its authority under
this Section 5.1.
ARTICLE VI
DEFINITIONS
SECTION 6.1. For the purposes of the Plan, the following terms
shall have the meanings indicated:
(a) Award: The grant of an award of cash by the
Committee to a Participant pursuant to Section 3.1 or 3.4.
(b) Award Year: Any calendar year with respect to which
an Award may be granted.
(c) Board of Directors: The Board of Directors of the
Company.
(d) Committee: The Committee designated pursuant to
Section 2.1. Until otherwise determined by the Board of
Directors, the Corporate Personnel Committee designated by such
Board shall be the Committee under the Plan.
(e) Covered Employee: At any date, (i) any individual
who, with respect to the previous taxable year of the Company,
was a "covered employee" of the Company within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the rules promulgated thereunder by the Internal
Revenue Service of the Department of the Treasury, provided,
however, the term "Covered Employee" shall not include any such
individual who is designated by the Committee, in its
discretion, at the time of any grant as reasonably expected not
to be such a "covered employee" with respect to the current
taxable year of the Company and (ii) any individual who is
designated by the Committee, in its discretion, at the time of
any grant as reasonably expected to be such a "covered
employee" with respect to the current taxable year of the
Company. Notwithstanding the foregoing, at any date in fiscal
year 1994, "Covered Employee" shall mean any individual
designated by the Committee, in its discretion, at the time of
any grant as reasonably expected to be a "covered employee"
with respect to the Company's taxable year 1994.
(f) Managed Net Income: With respect to any year, the
sum of (i) the net income (or net loss) of the Company and its
consolidated Subsidiaries for such year as shown in the
Company's Annual Report to Stockholders for such year; plus (or
minus) (ii) the minority interests' share in the net income (or
net loss) of the Company's consolidated Subsidiaries for such
year as shown in the Company's Annual Report to Stockholders
for such year; plus (or minus) (iii) changes in accounting
principles of the Company and its consolidated Subsidiaries for
such year plus (or minus) the minority interests' share in such
changes in accounting principles as shown in the Company's
Annual Report to Stockholders for such year; plus (iv) the
portion for such year of the deferred gain on the 1992 sale of
newly issued Freeport-McMoRan Resource Partners, Limited
Partnership depositary units as shown in the Company's Annual
Report to Stockholders for such year.
(g) Net Cash Provided by Operating Activities: With
respect to any year, the net cash provided by operating
activities of the Company and its consolidated Subsidiaries for
such year as shown in the Company's Annual Report to
Stockholders for such year.
(h) Net Interest Expense: With respect to any year, the
net interest expense of the Company and its consolidated
Subsidiaries for such year as shown in the Company's Annual
Report to Stockholders for such year.
(i) Participant: An individual who has been selected by
the Committee to receive an Award.
(j) Participant Share: The percentage of the Plan
Funding Amount assigned to a Covered Employee by the Committee.
(k) Plan Funding Amount: With respect to any year, two
and one-half percent of Net Cash Provided by Operating
Activities for such year.
(l) Return on Investment: With respect to any year, the
result (expressed as a percentage) calculated according to the
following formula:
a + (b - c)
-----------
d
in which "a" equals Managed Net Income for such year, "b"
equals Net Interest Expense for such year, "c" equals Tax on
Net Interest Expense for such year, and "d" equals Total
Investment of Capital for such year.
(m) Section 162(m): Section 162(m) of the Internal
Revenue Code of 1986, as amended, and rules promulgated by the
Internal Revenue Service thereunder.
(n) Subsidiary: (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.
(o) Tax on Net Interest Expense: With respect to any
year, the tax on the net interest expense of the Company and
its consolidated Subsidiaries for such year calculated at the
statutory federal income tax rate for such year as shown in the
Company's Annual Report to Stockholders for such year.
(p) Termination of Employment: Solely for purposes of
Section 3.3 hereof, the cessation of the rendering of services,
whether or not as an employee, to any and all of the following
entities: the Company, any Subsidiary of the Company, Freeport-
McMoRan Copper & Gold Inc., any Subsidiary of Freeport-McMoRan
Copper & Gold Inc., McMoRan Oil & Gas Co., any entity with
which the Company has contracted to receive executive or
management services, any Subsidiary of McMoRan Oil & Gas Co.,
and any law firm rendering services to any of the foregoing
entities provided such law firm consists of at least two or
more members or associates who are or were officers of the
Company or any Subsidiary of the Company.
(q) Total Investment of Capital: With respect to any
year, the sum of (i) the weighted average of the stockholders'
equity in the Company and its consolidated Subsidiaries for
such year, (ii) the weighted average of the minority interests
in the consolidated Subsidiaries of the Company for such year,
and (iii) the weighted average of the long-term debt of the
Company and its consolidated Subsidiaries for such year, all as
shown in the quarterly balance sheets of the Company and its
consolidated Subsidiaries for such year.
EXHIBIT 10.9
1992 LONG-TERM PERFORMANCE INCENTIVE PLAN
OF FREEPORT-McMoRan INC.
ARTICLE I
PURPOSE OF PLAN
SECTION 1.1. The purpose of the 1992 Long-Term Performance
Incentive Plan of Freeport-McMoRan Inc. (the "Plan") is to provide
incentives for senior executives whose performance in fulfilling the
responsibilities of their positions can have a major impact on the
profitability and future growth of Freeport-McMoRan Inc. (the "Company")
and its subsidiaries.
ARTICLE II
ADMINISTRATION OF THE PLAN
SECTION 2.1. Subject to the authority and powers of the Board
of Directors in relation to the Plan as hereinafter provided, the Plan
shall be administered by a Committee designated by the Board of Directors
consisting of two or more members of the Board each of whom is a "non-
employee director" within the meaning of Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934. The Committee shall have full authority to interpret the Plan and
from time to time to adopt such rules and regulations for carrying out
the Plan as it may deem best; provided, however, that the Committee may
not exercise any authority granted to it hereunder if such action would
have the effect of increasing the amount of any credit to or payment from
the Performance Award Account of any Covered Employee. 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 the members shall be fully as effective as if it
had been made by a majority vote at a meeting duly called and held. All
decisions by the Committee pursuant to the provisions of the Plan and all
orders or resolutions of the Board of Directors pursuant thereto shall be
final, conclusive and binding on all persons, including but not limited
to the Participants, the Company and its Subsidiaries and their
respective equity holders.
ARTICLE III
ELIGIBILITY FOR AND GRANT OF PERFORMANCE AWARDS
SECTION 3.1. Subject to the provisions of the Plan, the
Committee may from time to time select any of the following to be granted
Performance Awards under the Plan, and determine the number of
Performance Units covered by each such Performance Award: (a) any person
providing services as an officer of the Company or a Subsidiary, whether
or not employed by such entity, including any person who is also a
director of the Company, (b) any salaried employee of the Company or a
Subsidiary, including any director who is also an employee of the Company
or a Subsidiary, (c) any officer or salaried 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 (d) any person who has agreed in writing to
become a person described in clauses (a), (b) or (c) within not more than
30 days following the date of grant of such person's first Performance
Award under the Plan. Performance Awards may be granted at different
times to the same individual. The Plan shall expire on December 31,
1997 and no Performance Awards shall be granted hereunder after such
date.
SECTION 3.2. Upon the grant of a Performance Award to a
Participant, the Company shall establish a Performance Award Account for
such Participant and shall credit to such Performance Award Account the
number of Performance Units covered by such Performance Award.
SECTION 3.3. The number of Performance Units outstanding at
any time shall not exceed 500,000. Performance Units that shall have
been forfeited or with respect to which payment has been made pursuant to
Section 4.2 or deferred pursuant to Section 4.4 shall not thereafter be
deemed to be credited or outstanding for any purpose of the Plan and may
again be the subject of Performance Awards.
SECTION 3.4. (a) Notwithstanding the provisions of Section
3.1, 3.2 and 3.3, all Performance Awards granted to Covered Employees
must be granted no later than 90 days following the beginning of the Plan
Year. No Covered Employee may be granted more than 75,000 Performance
Units in any calendar year.
(b) All Performance Awards to Covered Employees under the Plan
will be made and administered by two or more members of the Committee who
are also "outside directors" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and rules promulgated by the
Internal Revenue Service of the Department of the Treasury thereunder.
ARTICLE IV
CREDITS TO AND PAYMENTS FROM PARTICIPANTS'
PERFORMANCE AWARD ACCOUNTS
SECTION 4.1. Subject to the provisions of the Plan, the
Performance Award Account or Accounts of each Participant at December 31
of any year shall be credited, as of such December 31, with an amount
equal to the Annual Earnings Per Share (or Net Loss Per Share) for such
year times the number of Performance Units then credited to each such
Performance Award Account; provided that, if in any year there shall be
any outstanding Net Loss Carryforward applicable to such Performance
Award Account, such Net Loss Carryforward shall be applied to reduce any
amount which would otherwise be credited to such Performance Award
Account pursuant to this Section 4.1 in such year until such Net Loss
Carryforward has been fully so applied.
SECTION 4.2. (a) Subject to the provisions of the Plan, the
balance credited to a Participant's Performance Award Account shall be
paid to such Participant as soon as practicable on or after the Award
Valuation Date with respect to such Performance Award.
(b) Payments pursuant to Section 4.2(a) shall be in cash.
(c) Notwithstanding any other provision of the Plan to the
contrary, no Covered Employee shall be entitled to any payment with
respect to a Performance Award unless the members of the Committee
referred to in Section 3.4(b) hereof shall have certified the amount of
the Annual Earnings Per Share (or Net Loss Per Share) for each year
covered by such Performance Award.
SECTION 4.3. In addition to any amounts payable pursuant to
Section 4.2, the Committee may in its sole discretion determine that
there shall be payable to a former Participant, other than a Participant
who is at the time of any payment a Covered Employee, a supplemental
amount not exceeding the excess, if any, of (i) the amount determined in
accordance with Section 4.1 which would have been payable to such former
Participant if the Award Valuation Date with respect to a Performance
Award of such Participant had been December 31 of the first, second or
third calendar year next following the year in which such Participant's
Termination of Employment occurred (the selection of such first, second
or third calendar year to be in the sole discretion of the Committee
subject only to the last sentence of this Section 4.3) over (ii) the
amount determined in accordance with said Section 4.1 as of December 31
of the calendar year in which such Termination of Employment actually
occurred. Any such supplemental amount so payable shall be paid in a
lump sum as promptly as practicable on or after December 31 of the
calendar year so selected by the Committee or in one or more installments
ending not later than five years after such December 31, as the Committee
may in its discretion direct. In no event shall any payment under this
Section 4.3 be made with respect to any calendar year after the year in
which such former Participant reaches his normal retirement date under
the Company's retirement plan.
SECTION 4.4. (a) Prior to January 1 of any calendar year in
which it is anticipated that an Award Valuation Date with respect to any
Performance Award may occur, a Participant may elect, in accordance with
procedures established by the Committee, to defer, as and to the extent
hereinafter provided, the payment of the amount, if any, which shall be
paid pursuant to Section 4.2.
(b) All payments deferred pursuant to Section 4.4(a) shall be
paid in one or more periodic installments, not in excess of ten, at such
time or times after the applicable Award Valuation Date, but not later
than ten years after such Award Valuation Date, as shall be specified in
such Participant's election pursuant to Section 4.4(a).
(c) In the case of payments deferred as provided in Section
4.4(a), the unpaid amounts shall, commencing with the applicable Award
Valuation Date, be increased at a rate equal to the prime commercial
lending rate announced from time to time by The Chase Manhattan Bank,
N.A. (compounded quarterly) or by another major national bank
headquartered in New York, New York and designated by the Committee. If
subsequent to such Participant's election pursuant to Section 4.4(a) such
Participant's Termination of Employment occurs for any reason other than
death, Disability, retirement under the Company's retirement plan, or
retirement with the consent of the Company outside the Company's
retirement plan, the Committee may, in its sole discretion, pay to such
Participant in a lump sum the aggregate amount of any payments so
deferred, notwithstanding such election.
SECTION 4.5. Anything contained in the Plan to the contrary
notwithstanding:
(a) The Committee may, in its sole discretion, suspend,
permanently or for a specified period of time or until further
determination by the Committee, the making of any part or all of the
credits which would otherwise have been made to the Performance Award
Accounts of all the Participants or to such Accounts of one or more
Participants as shall be designated by the Committee.
(b) All Performance Units and other amounts credited to a
Participant's Performance Award Account with respect to or arising from
any Performance Award shall be forfeited in the event of the Discharge
for Cause of such Participant prior to December 31 of the third year
following the year of grant of such Performance Award.
(c) All Performance Units and other amounts credited to a
Participant's Performance Award Account with respect to or arising from a
Performance Award shall, unless and to the extent that the Committee
shall in its absolute discretion otherwise determine by reason of special
mitigating circumstances, be forfeited in the event that such
Participant's Termination of Employment shall occur for any reason other
than death, Disability, retirement under the Company's retirement plan,
or retirement with the consent of the Company outside the Company's
retirement plan, at any time (except within two years after the date on
which a Change in Control shall have occurred) prior to December 31 of
the third year following the year of grant of such Performance Award.
(d) If any suspension is in effect pursuant to Section 4.5(a)
on a date when a credit would otherwise have been made pursuant to
Section 4.1, the amounts which would have been credited but for such
suspension shall be forfeited and no credits shall thereafter be made in
lieu thereof. If the Committee shall so determine in its sole
discretion, the amounts theretofore credited to any Performance Award
Account or Accounts, other than any Performance Award Account of a
Covered Employee, shall be increased, during the suspension period, at a
rate equal to the prime commercial lending rate announced from time to
time by The Chase Manhattan Bank, N.A. (compounded quarterly) or at such
other rate and in such manner as shall be determined from time to time by
the Committee.
ARTICLE V
GENERAL INFORMATION
SECTION 5.1. If Net Income, Annual Earnings Per Share or Net
Loss Per Share for any year shall have been affected by special factors
(including material changes in accounting policies or practices, material
acquisitions or dispositions of property, or other unusual items) which
in the Committee's judgment should or should not be taken into account,
in whole or in part, in the equitable administration of the Plan, the
Committee may, for any purpose of the Plan, adjust Net Income, Annual
Earnings Per Share or Net Loss Per Share, as the case may be, for such
year (and subsequent years as appropriate), or any combination of them,
and make credits, payments and reductions accordingly under the Plan;
provided, however, the Committee shall not have the authority to make any
such adjustments to payments with respect to the Performance Awards of,
or credits to the Performance Award Accounts of, any Participant who is
at such time a Covered Employee. Notwithstanding the foregoing, the
Committee may, in the exercise of its discretion prior to the making of
credits to the Performance Award Accounts of Participants with respect to
a particular year, reduce or eliminate the amount of the Annual Earnings
Per Share that would otherwise be credited to any Performance Award
Account of any Participant, including but not limited to any Covered
Employee, for such year in accordance with the terms of the Plan.
SECTION 5.2. The Committee shall for purposes of Articles III
and IV make appropriate adjustments in the number of Performance Units
which shall remain subject to Performance Awards and in the number of
Performance Units which shall have been credited to Participants'
accounts, in order to reflect any merger or consolidation to which the
Company is a party or any stock dividend, split-up, combination or
reclassification of the outstanding shares of Company Common Stock or any
other relevant change in the capitalization of the Company.
SECTION 5.3. A Participant may designate in writing a
beneficiary (including the trustee or trustees of a trust) who shall upon
the death of such Participant be entitled to receive all amounts which
would have been payable hereunder to such Participant. A Participant may
rescind or change any such designation at any time. Except as provided
in this Section 5.3, none of the amounts which may be payable under the
Plan may be assigned or transferred otherwise than by will or by the laws
of descent and distribution.
SECTION 5.4. All payments made pursuant to the Plan shall be
subject to withholding in respect of income and other taxes required by
law to be withheld, in accordance with procedures to be established by
the Committee.
SECTION 5.5. The selection of an individual for participation
in the Plan shall not give such Participant any right to be retained in
the employ of the Company or any of its Subsidiaries, and the right of
the Company and of such Subsidiary to dismiss or discharge any such
Participant or to terminate any arrangement pursuant to which any such
Participant provides services to the Company is specifically reserved.
The benefits provided for Participants under the Plan shall be in
addition to, and shall in no way preclude, other forms of compensation to
or in respect of such Participants.
SECTION 5.6. The Board of Directors and the Committee shall be
entitled to rely on the advice of counsel and other experts, including
the independent public accountants for the Company. No member of the
Board of Directors or of the Committee or any officers of the Company or
its Subsidiaries shall be liable for any act or failure to act under the
Plan, except in circumstances involving bad faith on the part of such
member or officer.
SECTION 5.7. Nothing contained in the Plan shall prevent the
Company or any Subsidiary or affiliate of the Company from adopting or
continuing in effect other compensation arrangements, which arrangements
may be either generally applicable or applicable only in specific cases.
ARTICLE VI
AMENDMENT OR TERMINATION OF THE PLAN
SECTION 6.1. The Board of Directors may at any time terminate,
in whole or in part, or from time to time amend the Plan, provided that,
except as otherwise provided in the Plan, no such amendment or
termination shall adversely affect the amounts credited to the
Performance Award Account of a Participant with respect to Performance
Awards previously made to such Participant. In the event of such
termination, in whole or in part, of the Plan, the Committee may in its
sole discretion direct the payment to Participants of any amounts
specified in Article IV and not theretofore paid out, prior to the
respective dates upon which payments would otherwise be made hereunder to
such Participants, and in a lump sum or installments as the Committee
shall prescribe with respect to each such Participant. Notwithstanding
the foregoing, any such payment to a Covered Employee must be discounted
to reflect the present value of such payment using the rate specified in
Section 4.4(c). The Board may at any time and from time to time delegate
to the Committee any or all of its authority under this Article VI.
ARTICLE VII
DEFINITIONS
SECTION 7.1. For the purposes of the Plan, the following terms
shall have the meanings indicated:
(a) Annual Earnings Per Share: With respect to any year, the
result obtained by dividing (i) Net Income for such year by (ii) the
average number of issued and outstanding shares (excluding treasury
shares and shares held by any Subsidiaries) of Company Common Stock
during such year as shown in the Company's Annual Report to Stockholders
for such year.
(b) Award Valuation Date: With respect to any Performance
Award, (i) December 31 of the year in which the third anniversary of the
grant of such Performance Award to a Participant shall occur or, (ii) if
earlier, December 31 of the year in which such Participant's Termination
of Employment shall occur, if such Termination of Employment occurs (x)
within two years after a Change in Control or (y) as a result of death,
Disability, retirement under the Company's retirement plan or retirement
with the consent of the Company outside the Company's retirement plan.
(c) Board of Directors: The Board of Directors of the
Company.
(d) Change in Control: A Change in Control shall be deemed to
have occurred if either (i) 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 Company 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 (ii) there shall be a change in the composition of the
Board of Directors of the Company 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 (A) 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 first Transaction, or (B) 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 (i) and (ii).
(e) Committee: The Committee designated pursuant to Section
2.1. Until otherwise determined by the Board of Directors, the Corporate
Personnel Committee designated by such Board shall be the Committee under
the Plan.
(f) Company Common Stock: Common Stock, par value $0.01, of
the Company.
(g) Covered Employee: At any date, (i) any individual who,
with respect to the previous taxable year of the Company, was a "covered
employee" of the Company within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and the rules promulgated
thereunder by the Internal Revenue Service of the Department of the
Treasury, provided, however, the term "Covered Employee" shall not
include any such individual who is designated by the Committee, in its
discretion, at the time of any grant or at any subsequent time as
reasonably expected not to be such a "covered employee" with respect to
the current taxable year of the Company and (ii) any individual who is
designated by the Committee, in its discretion, at the time of any grant
or at any subsequent time as reasonably expected to be such a "covered
employee" with respect to the current taxable year of the Company.
Notwithstanding the foregoing, at any date in fiscal year 1994, "Covered
Employee" shall mean any individual designated by the Committee, in its
discretion, as reasonably expected to be a "covered employee" with
respect to the Company's taxable year 1994.
(h) Disability: In the case of any Participant, disability
which after the expiration of more than 26 weeks after its commencement
is determined to be total and permanent by a physician selected by the
Company and acceptable to such Participant or his legal representatives.
(i) Discharge for Cause: Involuntary Termination of
Employment as a result of dishonesty or similar serious misconduct
directly related to the performance of duties for any and all of the
Related Entities.
(j) Net Income: With respect to any year, the sum of (i) the
net income (or net loss) of the Company and its consolidated subsidiaries
for such year as shown in the Company's Annual Report to Stockholders for
such year; plus (or minus) (ii) the minority interests' share in the net
income (or net loss) of the Company's consolidated subsidiaries for such
year as shown in the Company's Annual Report to Stockholders for such
year; plus (or minus) (iii) changes in accounting principles of the
Company and its consolidated subsidiaries for such year plus (or minus)
the minority interests' share in such changes in accounting principles as
shown in the Company's Annual Report to Stockholders for such year; plus
(iv) the portion for such year of the deferred gain on the 1992 sale of
newly issued Freeport-McMoRan Resource Partners, Limited Partnership
depositary units as shown in the Company's Annual Report to Stockholders
for such year.
(k) Net Loss Carryforward: With respect to any Performance
Award Account, (i) an amount equal to the Net Loss Per Share for any year
times the number of Performance Units then outstanding and credited to
such Performance Award Account, reduced by (ii) any portion thereof which
has been applied in any prior year as provided in Section 4.1.
(l) Net Loss Per Share: The amount obtained when the
calculation of Annual Earnings Per Share results in a number that is less
than zero.
(m) Participant: An individual who has been selected by the
Committee to receive a Performance Award and in respect of whose
Performance Award Account any amounts remain payable.
(n) Performance Award: The grant of Performance Units by the
Committee to a Participant pursuant to Section 3.1 or 3.4.
(o) Performance Award Account: An account established for a
Participant pursuant to Section 3.2.
(p) Performance Unit: A unit covered by Performance Awards
granted or subject to grant pursuant to Article III.
(q) 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., and any law firm rendering services to any of the
foregoing entities provided such law firm consists of at least two or
more members or associates who are or were officers of the Company or any
Subsidiary of the Company.
(r) Subsidiary: (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.
(s) Termination of Employment: The cessation of the rendering
of services, whether or not as an employee, to any and all of the Related
Entities.
As amended effective December 10, 1996
EXHIBIT 10.10
1987 LONG-TERM PERFORMANCE INCENTIVE PLAN
OF FREEPORT-MCMORAN INC.
ARTICLE I
PURPOSE OF PLAN
SECTION 1.1. The purpose of the 1987 Long-Term Performance
Incentive Plan of Freeport-McMoRan Inc. (the "Plan") is to provide
incentives for senior executives whose performance in fulfilling the
responsibilities of their positions can have a major impact on the
profitability and future growth of Freeport-McMoRan Inc. (the "Company")
and its subsidiaries.
ARTICLE II
ADMINISTRATION OF THE PLAN
SECTION 2.1. Subject to the authority and powers of the Board of
Directors in relation to the Plan as hereinafter provided, the Plan shall
be administered by a Committee designated by the Board of Directors 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).
The Committee shall have full authority to interpret the Plan and from
time to time to adopt such rules and regulations for carrying out the
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 the members
shall be fully as effective as if it had been made by a majority vote at
a meeting duly called and held. All decisions by the Committee pursuant
to the provisions of the Plan and all orders or resolutions of the Board
of Directors pursuant thereto shall be final, conclusive and binding on
all persons, including but not limited to the Participants, the Company
and its Subsidiaries and their respective equity holders.
ARTICLE III
ELIGIBILITY FOR AND GRANT OF PERFORMANCE AWARDS
SECTION 3.1. Subject to the provisions of the Plan, the Committee
may from time to time select salaried officers or employees (including
officers or employees who are also directors) of the Company or of any of
its Subsidiaries to be granted Performance Awards under the Plan, and
determine the number of Performance Units covered by each such
Performance Award. Performance Awards may be granted at different times
to the same individual. The Plan shall expire on December 31, 1992 and
no Performance Awards shall be granted hereunder after such date.
SECTION 3.2. Upon the grant of a Performance Award to a
Participant, the Company shall establish a Performance Award Account for
such Participant and shall credit to such Performance Award Account the
number of Performance Units covered by such Performance Award.
SECTION 3.3. The number of Performance Units outstanding at any
time shall not exceed 1,500,000. Performance Units that shall have been
forfeited or with respect to which payment has been made pursuant to
Section 4.2 or deferred pursuant to Section 4.4 shall not thereafter be
deemed to be credited or outstanding for any purpose of the Plan and may
again be the subject of Performance Awards.
ARTICLE IV
CREDITS TO AND PAYMENTS FROM PARTICIPANTS'
PERFORMANCE AWARD ACCOUNTS
SECTION 4.1. Subject to the provisions of Section 4.5, the
Performance Award Account or Accounts of each Participant at December 31
of any year shall be credited, as of such December 31, with an amount
equal to the Annual Earnings Per Share (or Net Loss Per Share) for such
year times the number of Performance Units then credited to each such
Performance Award Account; provided that, if in any year there shall be
any outstanding Net Loss Carryforward applicable to such Performance
Award Account, such Net Loss Carryforward shall be applied to reduce any
amount which would otherwise be credited to such Performance Award
Account pursuant to this Section 4.1 in such year until such Net Loss
Carryforward has been fully so applied.
SECTION 4.2. (a) Subject to Section 4.4, the balance credited to a
Participant's Performance Award Account shall be paid to such Participant
as soon as practicable on or after the Award Valuation Date with respect
to such Performance Award.
(b) Payments pursuant to Section 4.2(a) shall be in cash.
SECTION 4.3. In addition to any amounts payable pursuant to Section
4.2, the Committee may in its sole discretion determine that there shall
be payable to a former Participant a supplemental amount not exceeding
the excess, if any, of (i) the amount determined in accordance with
Section 4.1 which would have been payable to such former Participant if
the Award Valuation Date with respect to a Performance Award of such
Participant had been December 31 of the first, second or third calendar
year next following the year in which such Participant's Termination of
Employment occurred (the selection of such first, second or third
calendar year to be in the sole discretion of the Committee subject only
to the last sentence of this Section 4.3) over (ii) the amount determined
in accordance with said Section 4.1 as of December 31 of the calendar
year in which such Termination of Employment actually occurred. Any such
supplemental amount so payable shall be paid in a lump sum as promptly as
practicable on or after December 31 of the calendar year so selected by
the Committee or in one or more installments ending not later than five
years after such December 31, as the Committee may in its discretion
direct. In no event shall any payment under this Section 4.3 be made
with respect to any calendar year after the year in which such former
Participant reaches his normal retirement date under the Company's
retirement plan.
SECTION 4.4. (a) Prior to January 1 of any calendar year in which
it is anticipated that an Award Valuation Date with respect to any
Performance Award may occur, a Participant may elect, in accordance with
procedures established by the Committee, to defer, as and to the extent
hereinafter provided, the payment of the amount, if any, which shall be
paid pursuant to Section 4.2.
(b) All payments deferred pursuant to Section 4.4(a) shall be paid
in one or more periodic installments, not in excess of ten, at such time
or times after the applicable Award Valuation Date, but not later than
ten years after such Award Valuation Date, as shall be specified in such
Participant's election pursuant to Section 4.4(a).
(c) In the case of payments deferred as provided in Section 4.4(a),
the unpaid amounts shall, commencing with the applicable Award Valuation
Date, be increased at a rate equal to the prime commercial lending rate
announced from time to time by The Chase Manhattan Bank, N.A. (compounded
quarterly) or at such other rate and in such manner as shall be
determined from time to time by the Committee. If subsequent to such
Participant's election pursuant to Section 4.4(a) such Participant's
Termination of Employment occurs for any reason other than death,
Disability, retirement under the Company's retirement plan, or retirement
with the consent of the Company outside the Company's retirement plan,
the Committee may, in its sole discretion, pay to such Participant in a
lump sum the aggregate amount of any payments so deferred,
notwithstanding such election.
SECTION 4.5. Anything contained in the Plan to the contrary
notwithstanding:
(a) The Committee may, in its sole discretion, suspend,
permanently or for a specified period of time or until further
determination by the Committee, the making of any part or all of the
credits which would otherwise have been made to the Performance
Award Accounts of all the Participants or to such Accounts of one or
more Participants as shall be designated by the Committee.
(b) All Performance Units and other amounts credited to a
Participant's Performance Award Account with respect to or arising
from any Performance Award shall be forfeited in the event of the
Discharge for Cause of such Participant prior to December 31 of the
third year following the year of grant of such Performance Award.
(c) All Performance Units and other amounts credited to a
Participant's Performance Award Account with respect to or arising
from a Performance Award shall, unless and to the extent that the
Committee shall in its absolute discretion otherwise determine by
reason of special mitigating circumstances, be forfeited in the
event that such Participant's Termination of Employment shall occur
for any reason other than death, Disability, retirement under the
Company's retirement plan, or retirement with the consent of the
Company outside the Company's retirement plan, at any time (except
within two years after the date on which a Change in Control shall
have occurred) prior to December 31 of the third year following the
year of grant of such Performance Award.
(d) If any suspension is in effect pursuant to Section 4.5(a)
on a date when a credit would otherwise have been made pursuant to
Section 4.1, the amounts which would have been credited but for such
suspension shall be forfeited and no credits shall thereafter be
made in lieu thereof. If the Committee shall so determine in its
sole discretion, the amounts theretofore credited to any Performance
Award Account or Accounts shall be increased, during the suspension
period, at a rate equal to the prime commercial lending rate
announced from time to time by The Chase Manhattan Bank, N.A.
(compounded quarterly) or at such other rate and in such manner as
shall be determined from time to time by the Committee.
ARTICLE V
GENERAL INFORMATION
SECTION 5.1. If Net Income, Annual Earnings Per Share or Net Loss
Per Share for any year shall have been affected by special factors
(including material changes in accounting policies or practices, material
acquisitions or dispositions of property, or other unusual items) which
in the Committee's judgment should or should not be taken into account,
in whole or in part, in the equitable administration of the Plan, the
Committee may, for any purpose of the Plan, adjust Net Income, Annual
Earnings Per Share or Net Loss Per Share, as the case may be, for such
year (and subsequent years as appropriate), or any combination of them,
and make credits, payments and reductions accordingly under the Plan.
SECTION 5.2. The Committee shall for purposes of Articles III and
IV make appropriate adjustments in the number of Performance Units which
shall remain subject to Performance Awards and in the number of
Performance Units which shall have been credited to Participants'
accounts, in order to reflect any merger or consolidation to which the
Company is a party or any stock dividend, split-up, combination or
reclassification of the outstanding shares of Company Common Stock or any
other relevant change in the capitalization of the Company.
SECTION 5.3. A Participant may designate in writing a beneficiary
(including the trustee or trustees of a trust) who shall upon the death
of such Participant be entitled to receive all amounts which would have
been payable hereunder to such Participant. A Participant may rescind or
change any such designation at any time. Except as provided in this
Section 5.3, none of the amounts which may be payable under the Plan may
be assigned or transferred otherwise than by will or by the laws of
descent and distribution.
SECTION 5.4. All payments made pursuant to the Plan shall be
subject to withholding in respect of income and other taxes required by
law to be withheld, in accordance with procedures to be established by
the Committee.
SECTION 5.5. The selection of an individual for participation in
the Plan shall not give such Participant any right to be retained in the
employ of the Company or any of its Subsidiaries, and the right of the
Company and of such Subsidiary to dismiss or discharge any such
Participant is specifically reserved. The benefits provided for
Participants under the Plan shall be in addition to, and shall in no way
preclude, other forms of compensation to or in respect of such
Participants.
SECTION 5.6. The Board of Directors and the Committee shall be
entitled to rely on the advice of counsel and other experts, including
the independent public accountants for the Company. No member of the
Board of Directors or of the Committee or any officers of the Company or
its Subsidiaries shall be liable for any act or failure to act under the
Plan, except in circumstances involving bad faith on the part of such
member or officer.
ARTICLE VI
AMENDMENT OR TERMINATION OF THE PLAN
SECTION 6.1. The Board of Directors may at any time terminate, in
whole or in part, or from time to time amend the Plan, provided that,
except as otherwise provided in the Plan, no such amendment shall
increase the number of Performance Units which may be outstanding at any
time, nor shall any such amendment or termination adversely affect the
amounts credited to the Performance Award Account of a Participant with
respect to Performance Awards previously made to such Participant. In
the event of such termination, in whole or in part, of the Plan, the
Committee may in its sole discretion direct the payment to Participants
of any amounts specified in Article IV and not theretofore paid out,
prior to the respective dates upon which payments would otherwise be made
hereunder to such Participants, and in a lump sum or installments as the
Committee shall prescribe with respect to each such Participant. The
Board may at any time and from time to time delegate to the Committee any
or all of its authority under this Article VI.
ARTICLE VII
DEFINITIONS
SECTION 7.1. For the purposes of the Plan, the following terms
shall have the meanings indicated:
(a) Annual Earnings Per Share: With respect to any year, the
result obtained by dividing (i) Net Income for such year by (ii) the
average number of issued and outstanding shares (excluding treasury
shares and shares held by any Subsidiaries) of Company Common Stock
during such year as shown in the Company's Annual Report to
Stockholders for such year.
(b) Award Valuation Date: With respect to any Performance
Award, (i) December 31 of the year in which the third anniversary of
the grant of such Performance Award to a Participant shall occur or,
(ii) if earlier, December 31 of the year in which such Participant's
Termination of Employment shall occur, if such Termination of
Employment occurs (x) within two years after a Change in Control or
(y) as a result of death, Disability, retirement under the Company's
retirement plan or retirement with the consent of the Company
outside the Company's retirement plan.
(c) Board of Directors: The Board of Directors of the
Company.
(d) Change in Control: A Change in Control shall be deemed to
have occurred if either (i) 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 Company 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 (ii) there shall be a change
in the composition of the Board of Directors of the Company 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 (A) 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
first Transaction, or (B) 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 (i) and (ii).
(e) Committee: The Committee designated pursuant to Section
2.1. Until otherwise determined by the Board of Directors, the
Corporate Personnel Committee designated by such Board shall be the
Committee under the Plan.
(f) Company Common Stock: Common Stock, par value $.01, of
the Company.
(g) Disability: In the case of any Participant, disability
which after the expiration of more than 26 weeks after its
commencement is determined to be total and permanent by a physician
selected by the Company and acceptable to such Participant or his
legal representatives.
(h) Discharge for Cause: Involuntary Termination of
Employment as a result of dishonesty or similar serious misconduct
directly related to the performance of duties for any and all
Related Entities.
(i) Net Income: With respect to any year, the sum of:
(i) the net income (or net loss) of the Company and its
consolidated subsidiaries for such year as shown in the
Company's Annual Report to Stockholders for such year; plus (or
minus)
(ii) the net income (or net loss) of each Subsidiary that
is not wholly-owned, directly or indirectly, by the Company, as
shown in such Subsidiary's annual audited financial statements
for such year, attributable to shares of common stock or other
equity securities or interests that are not owned, directly or
indirectly, by the Company for such portion of the year that
the Company owned directly or indirectly equity securities or
interests in such Subsidiary.
(j) Net Loss Carryforward: With respect to any Performance
Award Account, (i) an amount equal to the Net Loss per Share for any
year times the number of Performance Units then outstanding and
credited to such Performance Award Account, reduced by (ii) any
portion thereof which has been applied in any prior year as provided
in Section 4.1.
(k) Net Loss Per Share: The amount obtained when the
calculation of Annual Earnings Per Share results in a number that is
less than zero.
(l) Participant: An individual who has been selected by the
Committee to receive a Performance Award and in respect of whose
Performance Award Account any amounts remain payable.
(m) Performance Award: The grant of Performance Units by the
Committee to a Participant pursuant to Section 3.1.
(n) Performance Award Account: An account established for a
Participant pursuant to Section 3.2.
(o) Performance Unit: A unit covered by Performance Awards
granted or subject to grant pursuant to Article III.
(p) 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., and any law firm rendering
services to any of the foregoing entities provided such law firm
consists of at least two or more members or associates who are or
were officers of the Company or any subsidiary of the Company.
(q) 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.
(r) Section 162(m): Section 162(m) of the Internal Revenue
Code of 1986 and all regulations promulgated thereunder as in effect
from time to time.
(s) 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.
(t) Termination of Employment: The cessation of the rendering
of services, whether or not as an employee, to any and all of the
Related Entities.
As amended effective December 10, 1996
EXHIBIT 10.14
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) as to Options only, if permitted by the
Committee and so provided in the Award Agreement or an amendment thereto,
(a) to Immediate Family Members, (b) to a partnership in which Immediate
Family Members, or entities in which Immediate Family Members are the
sole owners, members or beneficiaries, as appropriate, are the only
partners, (c) to a limited liability company in which Immediate Family
Members, or entities in which Immediate Family Members are the sole
owners, members or beneficiaries, as appropriate, are the only members,
or (d) to a trust for the sole benefit of 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.
EXHIBIT 10.15
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 sole owners, members or beneficiaries, as appropriate, are the
only partners, (iii) to a limited liability company in which Immediate
Family Members, or entities in which Immediate Family Members are the
sole owners, members or beneficiaries, as appropriate, are the only
members, or (iv) to a trust for the sole benefit of 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.
As amended effective February 4, 1997
EXHIBIT 10.16
FREEPORT-McMoRan INC.
1992 STOCK INCENTIVE UNIT PLAN
SECTION 1
Purpose. The purposes of the Freeport-McMoRan Inc. 1992 Stock
Incentive Unit Plan (the "Plan") are to promote the interests of
Freeport-McMoRan Inc. and its stockholders by (i) attracting and
retaining key management, professional and technical employees 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:
"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 any employee of the Company or a
Subsidiary, including any employee-officer or employee-director of the
Company or a Subsidiary.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"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 Unit is exercised and
ending on and including the date of exercise of such Unit. 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.
"Participant" shall mean any Employee granted a Unit 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.
"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.
"Share" shall mean a share 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 Incentive Unit" shall mean an award granted under the
Plan.
"Subsidiary" shall mean (i) Freeport-McMoRan Copper & Gold
Inc., Freeport-McMoRan Resource Partners, Limited Partnership, and IMC-
Agrico Company, in each case for as long as Freeport-McMoRan Inc. shall
own any equity interest in such entity, and (ii) 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.
"Unit" shall mean a Stock Incentive Unit.
"Unit Award" shall mean an award of Stock Incentive Units under
the Plan.
"Unit Award Agreement" shall mean any written agreement,
contract or other instrument or document evidencing a Unit Award, which
may, but need not, be executed or acknowledged by a Participant.
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 number of Units to
be granted to an eligible Employee; (iii) determine the terms and
conditions of any Unit Award; (iv) determine whether, to what extent, and
under what circumstances Unit Awards may be cancelled, forfeited or
suspended and the method or methods by which Unit Awards may be settled,
exercised, cancelled, forfeited or suspended; (v) determine whether, to
what extent, and under what circumstances amounts payable with respect to
the exercise of a Unit shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (vi) interpret and
administer the Plan and any instrument or agreement relating to, or Unit
Award made under, the Plan; (vii) 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 (viii) 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 Unit 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 Unit 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 Units hereunder.
SECTION 5
(a) Units Available for Awards. Subject to adjustment as
provided in Section 5(b), the number of Units that may be granted under
the Plan shall be 1,250,000. If, after the effective date of the Plan,
any Unit Award granted under the Plan expires or is exercised, forfeited,
cancelled or terminated without the delivery of compensation in the form
of Shares, then the Units covered by such Unit Award, to the extent of
any such expiration, exercise, forfeiture, cancellation, or termination,
shall again be available for grant.
(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 of Units with respect to
which Unit Awards may be granted hereunder, (ii) the number of Units
subject to outstanding Unit Awards, and (iii) the exercise price with
respect to any Unit or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Unit or, if deemed appropriate,
adjust outstanding Unit Awards to provide the rights contemplated by
Section 5(c) hereof.
(c) Dividend Equivalents. In the sole and complete discretion
of the Committee, a Unit Award may provide the Participant with dividend
equivalents payable in cash on a current or deferred basis.
SECTION 6
(a) Stock Incentive Units. Subject to the provisions of the
Plan, the Committee shall have sole and complete authority to determine
the Employees to whom Units shall be granted, the number of Units to be
granted to an Employee, the exercise price thereof and the conditions and
limitations applicable to the exercise thereof. Units shall not be
exercisable after the expiration of 10 years after the date of grant.
Except in the case of a Unit 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 Unit granted under this
Plan shall not be less than 100% of the fair market value of a Share on
the date of grant.
(b) A Unit shall entitle the holder thereof to receive an
amount in cash equal to the excess, if any, of the fair market value of a
Share on the date of exercise of the Unit over the exercise price. In
the event that the Unit is exercised during a period beginning not
earlier than one day after the expiration date of an Offer and ending not
more than ninety days after the expiration date of such Offer, a Unit
shall entitle the holder thereof to receive upon exercise the higher of
the amount described in the first sentence of this Section 6(b) and an
amount in cash equal to the excess, if any, of the Offer Price on the
date of exercise of the Unit over the exercise price.
SECTION 7
(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 Unit Award Agreements. The Committee may
amend, modify or terminate any outstanding Unit Award Agreement 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 a Unit Award
becomes exercisable, or (ii) to cancel a Unit Award and grant a new Unit
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 Unit 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, Unit 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 Unit
Award Agreement to the contrary notwithstanding, the Committee may cause
any Unit Award granted hereunder to be cancelled in consideration of a
cash payment made to the holder of such cancelled Unit Award equal in
value to such cancelled Unit Award. The determinations of value under
this subparagraph shall be made by the Committee in its sole discretion.
SECTION 8
(a) Delegation. Subject to the terms of the Plan and
applicable law, the Committee may delegate to the Chairman of the Board
of the Company the authority, subject to such terms and limitations as
the Committee shall determine, to grant Unit Awards to, or to cancel,
modify or waive rights with respect to, or to alter, discontinue,
suspend, or terminate Unit 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) Unit Award Agreements. Each Unit 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 Unit 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. The Company shall deduct from all amounts
paid to a Participant (whether under the Plan or otherwise) any taxes
required by law to be withheld in respect of Unit Awards hereunder to
such Participant. The Committee may provide for additional cash payments
to holders of Unit Awards to defray or offset any tax arising from the
grant, vesting, exercise or payment of any Unit Award.
(d) Transferability. No Unit Award shall be transferable by a
Participant other than (i) by will, (ii) by the laws of descent and
distribution, or (iii) pursuant to a domestic relations order, as defined
in the Code, if permitted by the Committee and so provided in the Unit
Award Agreement or an amendment thereto. The designation of a Designated
Beneficiary shall not be a violation of this Section 8(d).
(e) 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 the type 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.
(f) No Right to Employment. The grant of a Unit 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 Unit Award Agreement. No Employee,
Participant or other person shall have any claim to be granted any Unit
Award, and there is no obligation for uniformity of treatment of
Employees, Participants or holders or beneficiaries of Unit Awards.
(g) Governing Law. The validity, construction, and effect of
the Plan, any rules and regulations relating to the Plan and any Unit
Award or Unit Award Agreement shall be determined in accordance with the
laws of the State of Delaware.
(h) Severability. If any provision of the Plan or any Unit
Award Agreement is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction or as to any Person or Unit Award, or
would disqualify the Plan or any Unit 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 Unit Award Agreement, such
provision shall be stricken as to such jurisdiction, Person or Unit Award
and the remainder of the Plan and any such Unit Award Agreement shall
remain in full force and effect.
(i) No Trust or Fund Created. Neither the Plan nor any Unit
Award or Unit Award Agreement 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 a Unit Award, such right shall be no greater than the right of any
unsecured general creditor of the Company.
(j) 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 9
Effective Date of the Plan. The Plan shall be effective as of
the date of its approval by the Board.
As amended effective February 4, 1997
EXHIBIT 10.17
1988 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
OF FREEPORT-MCMORAN INC.
ARTICLE I
PURPOSE OF THE PLAN
This 1988 Stock Option Plan for Non-Employee Directors (this "Plan")
is intended to provide a method whereby non-employee directors of
Freeport-McMoRan Inc. (the "Company"), who are making and will continue
to make substantial contributions to the success of the Company and its
Subsidiaries (as hereinafter defined), may be compensated for their
contributions and encouraged to acquire a proprietary interest in the
Company, and whereby prospective new directors may be persuaded to serve
the Company as directors, and to promote the interests of the Company and
all its stockholders. Accordingly, the Company will, on or before May 1,
1997, grant to such persons as are identified in this Plan, in the manner
hereinafter provided, options ("Options") to purchase shares of the
Common Stock of the Company ("Common Stock"), on the terms and subject to
the conditions hereinafter set forth.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following terms shall have the
meanings indicated:
Applicable Rate: The rate, expressed as a percentage,
determined according to the following formula:
x divided by (1 - x)
in which x equals the maximum federal income tax rate applicable to
individuals in effect on the applicable Income Recognition Date;
provided, the Applicable Rate shall never exceed 100%.
Board: The Board of Directors of the Company.
Change in Control: A Change in Control shall be deemed to have
occurred if either (a) any person, or any two or more persons acting
as a group, and all affiliates of such person or persons, shall own
beneficially more than 20% of the Common Stock outstanding
(exclusive of shares held in the Company's treasury or by the
Company's Subsidiaries) pursuant to a tender offer, exchange offer
or series of purchases or other acquisitions, or any combination of
those transactions, or (b) there shall be a change in the
composition of the Board at any time within two years after any
tender offer, exchange offer, merger, consolidation, sale of assets
or contested election, or any combination of those transactions (a
"Transaction"), so that (i) the persons who were directors of the
Company immediately before the first such Transaction cease to
constitute a majority of the Board of Directors of the corporation
which shall thereafter be in control of the companies that were
parties to or otherwise involved in such Transaction, or (ii) the
number of persons who shall thereafter be directors of such
corporation shall be fewer than two-thirds of the number of
directors of the Company immediately prior to such first
Transaction. A Change in Control shall be deemed to take place upon
the first to occur of the events specified in the foregoing clauses
(a) and (b).
Code: The Internal Revenue Code of 1986, as amended from time
to time.
Committee: 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.
Election Period: The period beginning on the third business
day following a date on which the Company releases for publication
its quarterly or annual summary statements of sales and earnings,
and ending on the twelfth business day following such date.
Eligible Director: A director of the Company who is not, and
within the preceding one year has not been, an employee of the
Company or a Subsidiary or otherwise eligible for selection to
participate in any plan of the Company or any Subsidiary that
entitles the participants therein to acquire stock, stock options or
stock appreciation rights of the Company or its Subsidiaries.
Exchange Act: The Securities Exchange Act of 1934, as amended
from time to time.
Fair Market Value: The average of the high and low quoted sale
prices of a share of Common Stock or a Subsidiary Equity Security on
the date in question (or, if there is no reported sale on such date,
on the last preceding date on which any reported sale occurred) on
the Composite Tape for the New York Stock Exchange-Listed Stocks or,
if on such date the Common Stock or Subsidiary Equity Security is
not quoted on such Composite Tape, on the New York Stock Exchange.
Income Recognition Date: With respect to any share of Common
Stock purchased upon the exercise of an Option or any Subsidiary
Equity Security distributed in connection therewith, the later of
(a) the date of such exercise, or (b) the date on which the rights
of the holder of such Option in such security become transferable
and not subject to a substantial risk of forfeiture (within the
meaning of Section 83 of the Code); provided, however, that if such
holder shall make an election pursuant to Section 83(b) of the Code
with respect to such security the Income Recognition Date with
respect thereto shall be the date of the Option exercise.
Option Cancellation Gain: With respect to the cancellation of
an Option pursuant to Section 3 of Article IV hereof, the sum of (a)
the excess of the Fair Market Value as of the Option Cancellation
Date (as that term is defined in Section 3 of Article IV hereof) of
all the outstanding shares of Common Stock covered by such Option,
whether or not then exercisable, over the purchase price of such
shares under such Option, (b) the Fair Market Value as of the Option
Cancellation Date of any Subsidiary Equity Securities that would
have been distributed pursuant to Section 5 of Article VII hereof
had there been an exercise as of the Option Cancellation Date of all
the outstanding shares of Common Stock covered by such Option,
whether or not then exercisable, (c) the amount of any cash in lieu
of any Subsidiary Equity Securities and any fractional interests
therein that would have been distributed pursuant to Section 5 of
Article VII hereof had there been an exercise as of the Option
Cancellation Date of all the outstanding shares of Common Stock
covered by such Option, whether or not then exercisable, plus (d)
the amount equal to the Applicable Rate multiplied by the total of
the amounts set forth in clauses (a), (b) and (c).
Option Gain: The sum of (a) the excess of the Fair Market
Value of the shares of Common Stock covered by the exercise of an
Option over the purchase price of such shares under such Option,
plus (b) the Fair Market Value of any Subsidiary Equity Securities
(including fractions thereof) distributed or paid in the form of
cash as a result of such exercise pursuant to Section 5 of Article
VII hereof; as such Fair Market Values are determined in each case
on (i) the Income Recognition Date with respect to each such
security or (ii) the date of such exercise, whichever is less.
Rule 16b-3: 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.
SEC: The Securities and Exchange Commission, including the
staff thereof, or any successor thereto.
Section 162(m): Section 162(m) of the Code and all regulations
promulgated thereunder as in effect from time to time.
Subsidiary: Any corporation of which stock representing at
least 50% of the ordinary voting power is owned, directly or
indirectly, by the Company and any other entity of which equity
securities or interests representing at least 50% of the ordinary
voting power or 50% of the total value of all classes of equity
securities or interests of such entity are owned, directly or
indirectly, by the Company.
Subsidiary Equity Security: Any security or interest in the
nature of an equity security or interest, according to generally
accepted accounting principles, of a Subsidiary or a former
Subsidiary or any security or interest representing such a security
or interest; including specifically, but without limiting the
generality of the foregoing, shares of common stock of
Freeport-McMoRan Gold Company, Freeport-McMoRan Copper Company,
Inc., and Freeport-McMoRan Oil & Gas Company and depositary units of
Freeport-McMoRan Energy Partners, Ltd. and Freeport-McMoRan Resource
Partners, Limited Partnership.
ARTICLE III
ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board. The Board will
interpret this Plan and may from time to time adopt such rules and
regulations for carrying out the terms and provisions of this Plan as it
may deem best; however, the Board shall have no discretion with respect
to the selection of directors who receive Options, the number of shares
of Common Stock subject to any Options or the purchase price thereof.
Notwithstanding the foregoing, the Committee shall have the authority to
make all determinations with respect to the transferability of Options in
accordance with Article VIII hereof. All determinations by the Board or
the Committee shall be made by the affirmative vote of a majority of its
respective members, but any determination reduced to writing and signed
by a majority of its respective members shall be fully as effective as if
it had been made by a majority vote at a meeting duly called and held.
Subject to any applicable provisions of the Company's By-Laws or of this
Plan, all determinations by the Board and the Committee pursuant to the
provisions of this Plan, and all related orders or resolutions of the
Board and the Committee, shall be final, conclusive and binding on all
persons, including the Company and its stockholders, employees, directors
and optionees. 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 IV
STOCK SUBJECT TO THE PLAN
SECTION 1. The shares to be issued or delivered upon exercise of
Options shall be made available, at the discretion of the Board, either
from the authorized but unissued shares of Common Stock of the Company or
from shares of Common Stock reacquired by the Company, including shares
purchased by the Company in the open market or otherwise obtained;
provided, however, that the Company, at the discretion of the Board, may,
upon exercise of Options granted under this Plan, cause a Subsidiary to
deliver shares of Common Stock held by such Subsidiary. Any Subsidiary
Equity Securities distributed pursuant to Section 5 of Article VII of
this Plan shall be made available from the Company's holdings of such
Subsidiary Equity Securities purchased by the Company or a Subsidiary in
the open market or otherwise obtained.
SECTION 2. Subject to the provisions of Section 3 of this Article
IV, the aggregate number of shares of Common Stock which may be purchased
pursuant to Options shall not exceed 250,000.
SECTION 3. In the event of the payment of any dividends payable in
Common Stock, or in the event of any subdivision or combination of the
Common Stock, the number of shares which may be purchased under this Plan
shall be increased or decreased proportionately, as the case may be, and
the number of shares of Common Stock deliverable upon the exercise
thereafter of any Option theretofore granted (whether or not then
exercisable) shall be increased or decreased proportionately, as the case
may be, without change in the aggregate purchase price. In the event the
Company is merged or consolidated into or with another corporation in a
transaction in which the Company is not the survivor, or in the event
that substantially all of the Company's assets are sold to another entity
not affiliated with the Company, any holder of an Option, whether or not
then exercisable, shall be entitled to receive (unless the Company shall
take such alternative action as may be necessary to preserve the economic
benefit of the Option for the optionee) on the effective date of any such
transaction (the "Option Cancellation Date"), in cancellation of such
Option, an amount in cash equal to the Option Cancellation Gain relating
thereto, determined as of the Option Cancellation Date. In the event of
(i) a dividend or distribution (other than cash dividends or
distributions) with respect to any Subsidiary Equity Securities
distributable or payable in the form of cash pursuant to Section 5 of
Article VII hereof, (ii) a subdivision or combination of any such
Subsidiary Equity Securities, (iii) any recapitalization, reorganization,
merger, consolidation, liquidation, or other extraordinary event
affecting any such Subsidiary Equity Securities, or (iv) the disposition
by the Company and its Subsidiaries of all or substantially all of their
holdings of any such Subsidiary Equity Securities, the terms of any
Option theretofore granted hereunder (whether or not then exercisable)
shall be subject to such adjustment as the Board may deem appropriate,
including, without limitation, a proportional adjustment in the number of
such Subsidiary Equity Securities deliverable upon the exercise of such
Option or of any right attached thereto or provided for therein or the
substitution, on an equitable basis, of Common Stock, other Subsidiary
Equity Securities, or a combination thereof for such Subsidiary Equity
Securities.
ARTICLE V
PURCHASE PRICE OF OPTIONED SHARES
The purchase price per share of Common Stock under each Option shall
be 100% of the Fair Market Value of a share of Common Stock at the time
such Option is granted, but in no case shall such price be less than the
par value of the Common Stock.
ARTICLE VI
ELIGIBILITY OF RECIPIENTS
Options will be granted only to individuals who are Eligible
Directors at the time of such grant. No individual who is an employee of
the Company or a Subsidiary at the time of such grant shall be eligible
to receive an Option.
ARTICLE VII
GRANT OF OPTIONS
SECTION 1. Each Option shall constitute a non-qualified stock
option which is not intended to qualify under Section 422A of the Code.
SECTION 2. On May 1, 1988 and May 1 of each subsequent year through
and including 1997, each Eligible Director, as of each such date, shall
be granted an Option to purchase 1,664 shares of Common Stock. Each
Option shall become exercisable with respect to416 shares on each of the
first, second, third and fourth anniversaries of the date of grant and
may be exercised by the holder thereof with respect to all or any part of
the shares comprising each installment as such holder may elect at any
time after such installment becomes exercisable but no later than the
termination date of such Option; provided that each Option shall become
exercisable in full upon a Change in Control.
SECTION 3. The purchase price of shares subject to any Option shall
be the Fair Market Value thereof on the respective date of grant.
SECTION 4. Each Option shall provide that, promptly following the
last Income Recognition Date with respect to an exercise of all or any
portion of such Option, the Company shall pay to the holder of such
Option an amount in cash equal to the Option Gain multiplied by the
Applicable Rate. If an Option has been transferred pursuant to Section
VIII(c) hereof, the right to any payment under this Article VII, Section
4 remains with the original holder of the Option, except that in the case
of a transfer pursuant to a domestic relations order, such payment shall
be made to the spouse responsible for the federal income tax related to
the Option exercise.
SECTION 5. Each Option shall provide that, upon the exercise of
such Option or portion thereof, the holder of such Option 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 of an Option is,
on the 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, such holder will be entitled to receive
from the Company in cash the Fair Market Value, as of such date, of any
such Subsidiary Equity Securities (including fractions thereof).
ARTICLE VIII
TRANSFERABILITY OF OPTIONS
No Options granted hereunder may be transferred, pledged, assigned
or otherwise encumbered by an optionee except:
(a) by will;
(b) by the laws of descent and distribution; or
(c) if permitted by the Committee and so provided in the Option or
an amendment thereto, (i) pursuant to a domestic relations order, as
defined in the Code, (ii) to Immediate Family Members, (iii) to a
partnership in which Immediate Family Members, or entities in which
Immediate Family Members are the sole owners, members or beneficiaries,
as appropriate, are the only partners, (iv) to a limited liability
company in which Immediate Family Members, or entities in which Immediate
Family Members are the sole owners, members or beneficiaries, as
appropriate, are the only members, or (v) to a trust for the sole benefit
of 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.
Any attempted assignment, transfer, pledge, hypothecation or other
disposition of Options, or levy of attachment or similar process upon
Options not specifically permitted herein, shall be null and void and
without effect.
ARTICLE IX
EXERCISE OF OPTIONS
SECTION 1. Each Option shall terminate 10 years and two days from
the date on which it was granted.
SECTION 2. Except in cases provided for in Article X hereof, each
Option may be exercised by the holder thereof only while the optionee to
whom such Option was granted is an Eligible Director.
SECTION 3. Each Option shall provide that the Option or any portion
thereof may be exercised only during an Election Period. Each Option
shall provide, however, that in the event of a Change in Control, the
Election Period exercise requirement is waived.
SECTION 4. A person electing to exercise an Option or any portion
thereof then exercisable shall give written notice to the Company of such
election and of the number of shares of Common Stock such person has
elected to purchase, and shall at the time of purchase tender the full
purchase price of such shares, which tender shall be made in cash or cash
equivalent (which may be such person's personal check) or in shares of
Common Stock already owned by such person (which shares shall be valued
for such purpose on the basis of their Fair Market Value on the date of
exercise), or in any combination thereof. The Company shall have no
obligation to deliver shares of Common Stock pursuant to the exercise of
any Option, or any Subsidiary Equity Securities distributable in
connection therewith, in whole or in part, until such payment in full of
the purchase price of such shares of Common Stock is received by the
Company. No optionee, or legal representative, legatee, 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 with the exercise thereof, or
entitled to any rights of a stockholder of the Company or a Subsidiary in
respect of any shares of Common Stock covered by such Option or any
Subsidiary Equity Securities distributable in connection therewith until
such shares of Common Stock have been paid for in full and certificates
for such shares of Common Stock and such Subsidiary Equity Securities
have been issued or delivered by the Company.
SECTION 5. Each Option shall be subject to the requirement that if
at any time the Board shall be advised by counsel that the listing,
registration or qualification of the shares of Common Stock subject to
such Option, or the Subsidiary Equity Securities distributable in
connection with the exercise thereof, upon any securities exchange or
under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, the granting of such Option or the issue or
purchase of shares thereunder or the distribution of Subsidiary Equity
Securities with respect thereto, such Option may not be exercised in
whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free from any
conditions not reasonably acceptable to such counsel for the Board.
SECTION 6. The Company may establish appropriate procedures to
provide for payment or withholding of such income or other taxes as may
be required by law to be paid or withheld in connection with the exercise
of Options, and to ensure that the Company receives prompt advice
concerning the occurrence of any event which may create, or affect the
timing or amount of, any obligation to pay or withhold any such taxes or
which may make available to the Company any tax deduction resulting from
the occurrence of such event.
ARTICLE X
TERMINATION OF SERVICE
AS AN ELIGIBLE DIRECTOR
SECTION 1. If and when an optionee shall cease to be an Eligible
Director for any reason other than death or retirement from the Board,
all of the Options granted to such optionee shall be terminated except
that any Option, to the extent then exercisable, may be exercised by the
holder thereof within three months after such optionee ceases to be an
Eligible Director, but not later than the termination date of the Option.
SECTION 2. If and when an optionee shall cease to be an Eligible
Director by reason of the optionee's retirement from the Board, all of
the Options granted to such optionee shall be terminated except that any
Option, to the extent then exercisable or exercisable within one year
thereafter, may be exercised by the holder thereof within three years
after such retirement, but not later than the termination date of the
Option.
SECTION 3. Should an optionee die while serving as an Eligible
Director, all the 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 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.
SECTION 4. Should an optionee die after ceasing to be an Eligible
Director, 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 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.
ARTICLE XI
AMENDMENTS TO PLAN AND OPTIONS
The Board may at any time terminate or from time to time amend,
modify or suspend this Plan; provided, however, that no such amendment or
modification without the approval of the stockholders shall:
(a) except pursuant to Section 3 of Article IV, increase the
maximum number (determined as provided in this Plan) of shares of
Common Stock which may be purchased pursuant to Options, either
individually or in aggregate;
(b) permit the granting of any Option at a purchase price
other than 100% of the Fair Market Value of the Common Stock at the
time such option is granted, subject to adjustment pursuant to
Section 3 of Article IV;
(c) permit the exercise of an Option unless the full purchase
price of the shares as to which the Option is exercised is paid at
the time of exercise;
(d) extend beyond May 1, 1997, the period during which Options
may be granted;
(e) modify in any respect the class of individuals who
constitute Eligible Directors; or
(f) materially increase the benefits accruing to participants
hereunder.
As amended effective December 10, 1996
EXHIBIT 10.18
FREEPORT-MCMORAN INC.
1991 PLAN FOR DEFERRAL OF DIRECTORS' FEES
1. Election to Participate. (a) Any director of Freeport-
McMoRan Inc. (the "Company") may become a Participant in this 1991 Plan
for Deferral of Directors' Fees (the "Plan") by giving to the Company a
written election on or before the 15th day of December of any year in
accordance with this Section 1. Participation in the Plan shall be
effective on the first day of the calendar year immediately following the
date of such election, and the Company shall thereupon establish for such
Participant a Deferred Cash Account and/or a Deferred Stock Value Account
(each an "Account"), as the case may be, to which amounts shall be
credited as hereinafter provided. Each election made by a Participant
shall state that:
(i) the entire amount of annual fees for services as a
member of the Board of Directors of the Company and as a member of
any committee of such Board of Directors (including any amount
relating to services as the Chairman of any such committee, if
applicable), or
(ii) the entire amount of attendance fees for such
services, or
(iii) the entire amount of both annual fees and
attendance fees for such services,
payable to such Participant for subsequent years shall be credited to
such Participant's Deferred Cash Account or Deferred Stock Value Account
(or a combination of both Accounts, provided that the amount to be
credited to a particular Account shall be 0, 25%, 75% or 100% of the
compensation deferred) on the respective dates on which such amounts
shall become payable. Each such election shall also contain a payment
election providing for the manner in which amounts so credited shall be
paid from such Account in accordance with Section 4 below.
(b) Each director currently participating in the Company's 1981
Plan for Deferral of Director's Fees (the "Prior Plan") shall
automatically become a Participant in the Plan effective as of January 1,
1992 with respect to such director's outstanding Account balances under
the Prior Plan. Such outstanding Account balances under the Prior Plan
shall be credited, effective January 1, 1992, to a Deferred Cash Account
under the Plan, provided that, any such director may irrevocably elect in
writing on or before December 15, 1991 to have such Account balance
credited effective January 1, 1992 to a Deferred Stock Value Account in
accordance with Section 3 hereof. Any payment election previously made
by any such director pursuant to paragraphs 1 and 3 of the Prior Plan
with respect to his outstanding Account balance under the Prior Plan
shall be irrevocable with respect thereto and, for purposes of this Plan
only, shall be deemed to be an election made pursuant to Sections 1 and 4
hereof.
2. Increments to Deferred Cash Accounts. Amounts credited to
each Deferred Cash Account in any year shall be increased by the Plan
Rate (as hereinafter defined), compounded quarterly, from and after the
applicable date of credit until the final date of payment from such
Deferred Cash Account pursuant to Section 4. The "Plan Rate" shall be
the prime commercial lending rate announced from time to time by The
Chase Manhattan Bank, N.A., or any successor thereto, or such other rate
as the Board of Directors may establish for the purpose of the Plan.
3. Deferred Stock Value Accounts. (a) Amounts credited to
each Deferred Stock Value Account shall be converted into Stock Units
(including fractions thereof, if necessary, rounded to the nearest one
thousandth of a Stock Unit) as of the applicable date of credit. Stock
Units will be computed as of the applicable date of credit by dividing
the aggregate amount of compensation deferred and credited to a Deferred
Stock Value Account by the Fair Market Value of the Company's common
stock, $1 par value (the "Common Stock"). For purposes of the Plan, Fair
Market Value of the Common Stock shall mean the average of the Daily
Price (as hereinafter defined) of the Common Stock on each of the last
five trading days on which reported sales of Common Stock occurred
immediately preceding the month of the date in question. For purposes of
the determination of Fair Market Value the Common Stock, the Daily Price
of the Common Stock shall be the average of the high and low quoted per
share sales prices of the Common Stock on the day in question on the
Composite Tape for the New York Stock Exchange-Listed Stocks or if, on
the date of any determination of the Daily Price of the Common Stock the
Common Stock is not listed on such Composite Tape, the average of the
high and low quoted per share sales prices on the New York Stock Exchange
on such day.
(b) Until the date of final payment from a Deferred Stock Value
Account pursuant to Section 4, each Stock Unit that is credited to an
Account as of the record date of any dividend paid on the Common Stock
shall be credited, as of the payment date of any such dividend paid on
the Common Stock, with a dividend equivalent equal in value to the per
share amount of such dividend. Dividend equivalents so credited shall be
converted to a number of additional Stock Units (including fractions
thereof, if necessary, rounded to the nearest one thousandth of a Stock
Unit) as of such date of credit by dividing the total dividend equivalent
amount by the Fair Market Value of the Common Stock.
(c) In the event of any dividend or other distribution (whether
in the form of cash, Common Stock, or other securities or other
property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase Common Stock or
other securities of the Company, or other similar corporate transaction
or event, such adjustments shall be made to the Deferred Stock Value
Account of each Participant as may be deemed appropriate by the Board of
Directors of the Company in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under
the Plan.
4. Payments from Accounts. (a) Each payment election by a
Participant made pursuant to Section 1 above shall provide that
distributions from such Participant's Account(s) shall be made in one or
more annual cash payments (not exceeding ten). Each such payment
election shall also provide for the determination of the date that such
payment shall commence (the "Payment Commencement Date"), which shall be
no earlier than the first day of the month following the date on which
such Participant shall cease to be a director of the Company (or, if
earlier, the last day of the calendar year in which such Participant
shall cease to be a director of the Company) and no later than December 1
of the calendar year immediately following the year in which such
Participant shall cease to be a director of the Company.
(b) Except as otherwise provided in this Section 4,
distributions from a Participant's Deferred Cash Account and Deferred
Stock Value Account shall be paid in cash on the Payment Commencement
Date in an amount (i) in the case of a Deferred Cash Account, equal to
the balance of the Account as of such Payment Commencement Date (such
amount being hereinafter referred to as the "Final Cash Balance") or (ii)
in the case of a Deferred Stock Value Account, equal to the value of the
number of Stock Units in such Account as of the Payment Commencement
Date, which includes such Stock Units attributable to dividend
equivalents determined in the manner described in Section 3 (hereinafter
referred to as the "Final Unit Balance"). The value of the Final Unit
Balance to be paid in cash shall be determined by multiplying the Final
Unit Balance by the Fair Market Value of the Common Stock.
(c) In the event that a Participant elects to receive a Final
Cash Balance and/or Final Unit Balance in a number of annual payments as
contemplated by paragraph (a) of this Section 4, with respect to a Final
Cash Balance, each such annual payment shall be in an amount equal to the
outstanding balance in such Participant's Deferred Cash Account, as of
the date of such annual payment, divided by the number of annual payments
remaining to be paid immediately prior to the payment in question. With
respect to a Final Unit Balance, each such annual payment shall be in an
amount equal to the value of the number of Stock Units in such
Participant's Deferred Stock Value Account (which includes such Stock
Units attributable to dividend equivalents determined in the manner
described in Section 3), as of the date of such annual payment, divided
by the number of annual payments remaining to be paid immediately prior
to the payment in question (the "Payment Date Distribution Amount"). For
purposes of this Section 4(c), the value of the Payment Date Distribution
Amount shall be determined by multiplying the Payment Date Distribution
Amount by the Fair Market Value of the Common Stock. Upon each such
annual payment, the number of Stock Units credited to such Participant's
Deferred Stock Value Account shall be reduced by the Payment Date
Distribution Amount with respect to such annual payment.
5. Death of a Participant. Upon a Participant's death, the
Company shall within twelve months thereafter pay to such beneficiary as
such Participant may have designated by written notice to the Company (or
in the absence of such designation, to such Participant's estate), the
entire amount in such Participant's Deferred Cash Account and/or Deferred
Stock Value Account at the date of payment. A Participant may by like
notice cancel such designation, and may make a new designation as
hereinabove provided.
6. Changes in Election. (a) A Participant may, by giving
written notice to the Company in any year, elect to discontinue
participation in the Plan with respect to annual fees and attendance fees
becoming payable to such Participant for subsequent years. By like
notice, a Participant may resume participation in the Plan at any time
after one year from the date of such discontinuance. A Participant may,
by like notice in any year, cancel any election with respect to amounts
to be credited to such Participant's Accounts for subsequent years and
submit a new election, made in accordance with Sections 1 and 4, with
respect to such amounts. In the event such new election includes a new
payment election, the Company shall thereupon establish for such
Participant an additional Deferred Cash Account and/or Deferred Stock
Value Account to which amounts subject to such new payment election shall
be credited.
(b) A Participant who has Stock Units credited to a Deferred
Stock Value Account pursuant to an election may, by giving written notice
to the Company, modify at any time the investment direction set forth in
such election by directing the Company to transfer, effective as of the
date specified in such notice, 25%, 50%, 75%, or 100% of the number of
Stock Units, including any fraction thereof and any Stock Units
attributable to dividend equivalents, credited in such Deferred Stock
Value Account to a Deferred Cash Account established or to be established
for such Participant. The number of Stock Units subject to such transfer
shall be valued by multiplying the number of such Stock Units by the Fair
Market Value of the Common Stock as of the transfer date specified in
such notice, and such value shall be credited to such Deferred Cash
Account as of such date. Similarly, a Participant who has amounts
credited to a Deferred Cash Account pursuant to an election may, by
giving written notice to the Company, modify at any time the investment
direction set forth in such election by directing the Company to
transfer, effective as of the date specified in such notice, 25%, 50%,
75%, or 100% of the amount credited in such Deferred Cash Account to a
Deferred Stock Value Account established or to be established for such
Participant. The amount transferred from such Deferred Cash Account
shall be converted into a number of Stock Units, including any fraction
thereof rounded to the nearest one thousandth of a Stock Unit, by
dividing such amount by the Fair Market Value of the Common Stock as of
the transfer date specified in such notice, and the resulting number of
Stock Units shall be credited to such Deferred Stock Value Account as of
such date. In addition, a Participant who has an outstanding election
may, by giving written notice to the Company, modify at any time the
investment direction set forth in such election with respect to amounts
payable to such Participant on and after the date specified in such
notice, the receipt of which was deferred under such election, by re-
directing the Company to credit all such amounts to a Deferred Cash
Account established or to be established for such Participant, a Deferred
Stock Value Account established or to be established for such
Participant, or both such Accounts in accordance with the allocation
specified in such notice, which allocation shall be made in conformity
with the relevant provisions of Section 1 hereof.
(c) Except as hereinabove provided in this Section 6, all
elections under the Plan shall be irrevocable.
7. Status of Accounts. Accounts established pursuant to the
Plan shall represent the unsecured obligations of the Company to pay to
the respective Participants the amounts in such Accounts in accordance
with the Plan. In no event shall this Plan be construed as creating a
trust in favor of any Participant or any beneficiary, nor shall any
Participant or beneficiary have any property interest in any Account or
in any other assets of the Company. Accounts shall not be assignable or
transferable by Participants except as and to the extent provided in
Section 5 above.
8. Plan Amendment or Termination. The Plan may be amended
from time to time, and may be terminated at any time, by resolution of
the Board of Directors of the Company. No such amendments shall alter
the date or dates for making payments in respect of amounts theretofore
credited to Accounts, and in case of such termination, the Plan shall
continue in full force and effect with respect to all amounts in Accounts
at the date of termination.
9. Effective Date. Except as set forth in Section 1(b), the
Plan shall be effective with respect to annual fees and attendance fees
payable to directors for services on and after January 1, 1992.
As amended effective August 14, 1996
EXHIBIT 10.19
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) as to Options only, if permitted by the Committee
and so provided in the Award Agreement or an amendment thereto, (a) to
Immediate Family Members, (b) to a partnership in which Immediate Family
Members, or entities in which Immediate Family Members are the sole
owners, members or beneficiaries, as appropriate, are the only partners,
(c) to a limited liability company in which Immediate Family Members, or
entities in which Immediate Family Members are the sole owners, members
or beneficiaries, as appropriate, are the only members, or (d) to a trust
for the sole benefit of 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.
As amended effective December 10, 1996
Exhibit 11.1
FREEPORT-McMoRan INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
Years Ended December 31,
-------------------------------------
1996 1995 1994
---------- ---------- ----------
(In Thousands,Except Per
Share Amounts)
Primary:
Net income applicable to
common stock $ 40,708 $ 390,541 $ 41,443
========== ========== ==========
Average common shares outstanding 25,993 25,839 23,106
Common stock equivalents:
Stock options 282 242 98
---------- ---------- ----------
Average common and common
equivalent shares outstanding 26,275 26,081 23,204
========== ========== ==========
Net income per common and common
equivalent share $ 1.55 $ 14.97 $ 1.79
========== ========== ==========
Fully Diluted:
Net income applicable to common
stock $ 40,708 $ 390,541 $ 41,443
Plus preferred dividends - 8,756 -
Plus interest, net of tax effect,
on convertible subordinated
debentures - 15,921 -
---------- ---------- ----------
Net income applicable to common
stock $ 40,708 $ 415,218 $ 41,443
========== ========== ==========
Average common shares outstanding 25,993 25,839 23,106
Common stock equivalents:
Stock options 282 271 98
Convertible securities:
Convertible subordinated
debentures - 2,347 -
Preferred stock - 783 -
---------- ---------- --------
Average common and common
equivalent shares outstanding 26,275 29,240 23,204
========== ========== ==========
Net income per common and common
equivalent share $ 1.55 $ 14.20 $ 1.79
========== ========== ==========
Exhibit 13.1
FREEPORT-MCMORAN INC.
SELECTED FINANCIAL AND OPERATING DATA
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
FINANCIAL DATA (Financial Data In Millions, Except Per Share Amounts)
Years Ended December 31:
Revenues $957.5 $995.9 $770.1 $684.7 $940.6
Operating income
(loss) 205.4a 182.9 91.9 (243.4) (24.6)
Net income
(loss) from:
Operations $42.2b $25.3b $(35.1)b $(77.0) $(27.3)
Nonrecurring
gains
(losses)c 2.9 67.1 - (48.6) -
Discontinued
opera-
tions - 340.4 107.7 35.4 215.1
Changes in
accounting
principle
and extraordinary
loss - - (9.1) (13.6) -
Preferred
dividends (4.4) (42.3)d (22.1) (22.4) (18.7)
---- ----- ----- ------ -----
Net income
(loss) applicable
to common
stock $40.7 $390.5 $ 41.4 $(126.2) $169.1
===== ====== ======= ======== =======
Net income (loss)
per primary share:
Before discontinued
operations, changes
in accounting
principle and
extraordinary
loss c $1.55b $1.92b,d $(2.46)b $(6.27) $(1.91)
Discontinued
operations - 13.05 4.64 1.50 8.93
Changes in
accounting
principle
and extra-
ordinary
loss - - (.39) (.58) -
---- ----- ---- ---- ----
Net income
(loss) applicable
to common stock $1.55 $14.97 $1.79 $(5.35) $7.02
===== ====== ====== ====== ======
Average common
shares
outstand-
ing 26.3 26.1 23.2 23.6 24.1
Dividends per common share:
Cash $.36 $.18 $1.875 $7.50 $7.50
Property e - 108.41 7.768 - 1.05
--- ------- ----- --- -----
$.36 $108.59 $9.643 $7.50 $8.55
==== ======== ======= ====== ======
At December 31:
Property, plant
and equipment,
net $964.8 $999.8 $964.5 $1,102.8 $1,271.2
Long-term debt,
less current
portion 441.0 359.5 1,122.1 1,082.8 785.5
Minority
interest 174.1 196.0 217.8 239.8 418.6
Stockholders'
equity 94.3 191.9 (230.5) .6 346.0
Total assets 1,251.4 1,320.5 1,649.4 1,888.6 2,157.4
OPERATING DATA
Phosphate
fertilizers-primarily
DAP
Sales (short
tons) 3,201,800 3,427,700 3,193,400 3,346,600 3,984,000
Average realized
price f
All phosphate
fertilizers$181.00 $169.07 $144.13 $110.03 $127.27
DAP 186.17 175.11 149.32 113.09 132.11
Phosphate rock
Sales (short
tons) 2,919,100 4,470,400 4,373,400 3,840,300 3,440,500
Average realized
price f $25.60 $22.53 $21.38 $22.02 $26.96
Sulphur
Sales (long
tons) g 2,900,000 3,049,700 2,087,800 1,973,200 2,346,100
Oil
Sales
(barrels) 1,895,500 2,217,600 2,533,700 3,443,000 4,884,000
Average
realized
price $19.49 $15.82 $13.74 $14.43 $15.91
FREEPORT-McMoRan INC.
SELECTED FINANCIAL AND OPERATING DATA
NOTES
a. Includes a net benefit of $8.9 million resulting primarily from
the gain on the increase in FRP's ownership of IMC-Agrico.
b. Includes minority interest charges totaling $9.0 million ($0.34
per share) in 1996, $14.4 million ($0.55 per share) in 1995 and $17.2
million ($0.74 per share) in 1994 because FTX was not paid its
proportionate share of FRP distributions. Also includes stock
appreciation rights costs totaling $5.0 million ($0.19 per share) in
1995 caused by the significant rise in FTX's common stock price during
the year.
c. In 1996 includes the item discussed in Note a above ($2.9 million
or $0.11 per share); in 1995 includes gains related primarily to the
settlement of certain insurance claims ($4.3 million or $0.16 per share)
and the reversal of tax accruals no longer required ($62.8 million or
$2.41 per share); and in 1993 includes the loss on restructuring
activities and valuation and sale of assets ($48.6 million or $2.06 per
share).
d. Includes a $33.5 million charge ($1.29 per share) resulting from
the $4.375 Preferred Stock exchange offer.
e. Reflects the fair market value of property distributions (FCX in
1995 and 1994, MOXY in 1994 and FMPO in 1992).
f. Represents average realization f.o.b. plant/mine.
g. Includes internal consumption totaling 730,300 tons, 754,400
tons, 739,900 tons, 1,138,800 tons and 1,654,300 tons for 1996-1992,
respectively.
FREEPORT-McMoRan Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW
The business operations of Freeport-McMoRan Inc. (FTX) primarily
consist of its 51.6 percent ownership in Freeport-McMoRan Resource
Partners, Limited Partnership (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 (Note 2), 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 as follows:
* In June 1996, FRP, a significant consumer of natural gas in its
sulphur and fertilizer operations, acquired a 25 percent leasehold
interest in an oil and gas joint venture to explore a 35,000 acre
project area in south Louisiana where high-potential, high-risk
prospects had been identified. One non-commercial well has been
drilled and another exploratory well is in progress. FTX will
consider opportunities for further oil and gas investments, including
activities involving McMoRan Oil & Gas Co. (MOXY). These future
investments may be significant.
* In September 1996, IMC-Agrico entered into an exclusive letter of
intent with Chinese authorities to conduct joint feasibility studies
and, if commercially viable, to develop phosphate ore resources in
Yunnan Province. The agreement covers extensive phosphate resources
and envisions the joint development of high-analysis phosphate
fertilizer manufacturing facilities in China.
* In October 1996, IMC-Agrico significantly augmented its existing
strategic phosphate rock reserve position by purchasing 24,000 acres
of land in central Florida. The land is estimated to contain in
excess of 100 million tons of phosphate rock and helped to increase
FRP's phosphate rock reserves by over 30 percent, after production.
* FRP also continues to evaluate a 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.
In September 1996, FTX terminated merger discussions with
Arcadian Corporation. It was intended for FRP to be offered an
opportunity to participate in this transaction in a manner that would
convert the publicly held limited partnership units of FRP into common
stock of a new company. Although this transaction was not completed,
FTX and FRP will continue to consider attractive growth opportunities,
including opportunities in the agricultural minerals and oil and gas
industries. Transactions will also continue to be evaluated that may
allow for a possible combination of FTX and FRP.
Positive steps involving the FTX/FRP debt structure were also
made, as follows:
* In February 1996, FRP sold publicly $150 million of its 7% Senior
Notes due 2008 and used the proceeds to reduce bank indebtedness.
This fixed the interest cost on a large portion of FRP's debt at an
attractive rate, as well as lengthened the maturity. Additionally, in
January 1997, Moody's Investors Service raised its rating on FRP's
publicly traded senior unsecured debt securities to Baa3, an
investment grade rating. FRP's senior unsecured debt securities are
now rated investment grade by the major credit agencies.
* During November 1996, the FTX/FRP bank credit agreement was
amended to increase the amount available to FRP to $350 million (with
$150 million available to FTX), reduce the interest rates and extend
the term of the facility to November 2001.
RESULTS OF OPERATIONS
1996 1995 1994
---------- ---------- ----------
(In Millions)
Revenues $ 957.5 $ 995.9 $ 770.1
Operating income 205.4 182.9 91.9
Net income from:
Operations a $ 42.2 $ 25.3 $ (35.1)
Nonrecurring gains/losses 2.9b 67.1c -
Discontinued operations (Note 3) - 340.4 107.7
Extraordinary loss (Note 4) - - (9.1)
Preferred dividends (4.4) (42.3)d (22.1)
---------- ---------- ----------
Net income applicable to common
stock $ 40.7 $ 390.5 $ 41.4
========== ========== ==========
a. Includes minority interest charges totaling $9.0 million in 1996,
$14.4 million in 1995 and $17.2 million in 1994 because FTX was not
paid its proportionate share of FRP distributions, and stock
appreciation rights costs of $5.0 million in 1995.
b. Primarily consists of the gain on the increase in FRP's ownership
of IMC-Agrico (Note 2).
c. Includes a $4.3 million insurance settlement gain (included in
other income) and a $62.8 million tax benefit (Note 5).
d. Includes a $33.5 million charge resulting from the $4.375
Preferred Stock exchange offer (Note 6).
1996 Compared With 1995. Operating income for 1996 benefited from
higher average realizations on phosphate fertilizer, phosphate rock
and oil sales (see Selected Financial and Operating Data). The animal
feed ingredients business, acquired in October 1995 (Note 9), also
contributed to higher operating income. Offsetting the impact of
these positive factors were lower production and sales volumes for
phosphate fertilizer, phosphate rock, sulphur and oil. The current
year includes an $11.9 million gain resulting from the increase in
FRP's ownership of IMC-Agrico, $15.6 million lower stock appreciation
rights costs, a $2.5 million charge for oil and gas exploration costs
and charges totaling $3.0 million for asset valuations at IMC-Agrico.
Depreciation and amortization for the current year decreased $7.9
million from the 1995 amount. This reduction is attributable
primarily to a decline of $4.4 million from Main Pass oil operations
and $1.6 million from sulphur activities caused by lower sales volumes
and a $3.5 million decrease related to FRP's disproportionate interest
in IMC-Agrico cash distributions, partially offset by additional
depreciation expense of $2.3 million associated with the animal feed
ingredients operations.
General and administrative expenses for 1996 declined $17.7
million from 1995, primarily because during 1995 the significant
increase in FTX's stock price resulted in $15.6 million higher stock
appreciation rights costs. General and administrative costs for 1996
included amounts associated with the acquired animal feed ingredients
operations, whereas 1995 included a $1.2 million charge for the
reorganization of IMC-Agrico's marketing function.
Interest expense decreased from 1995 as a result of the
significant reduction in average debt levels brought about by FTX's
recapitalization. Minority interests' share of net income for 1996
reflects the increased level of earnings at FRP and included an
additional $14.4 million charge ($23.0 million in 1995) because FTX
was not paid its proportionate share of FRP distributions. In the
first quarter of 1997, FTX will recognize an additional $9.3 million
minority interest charge in connection with the final quarterly
distribution under the public unitholders' preferential distribution
priority (Note 2). However, to the extent the cumulative unpaid
distributions are reduced in the future, FTX will recognize a
disproportionately greater share of FRP's reported earnings.
Income taxes for 1995 included a $62.8 million benefit
attributable to the reversal of tax accruals no longer required
because of the resolution of certain federal and state tax issues and
the realization of tax credits not previously recognized.
Agricultural Minerals Operations - FTX's agricultural minerals
operations, which include FRP's fertilizer and phosphate rock
operations and its sulphur business, reported 1996 operating income of
$223.9 million on revenues of $920.0 million compared with operating
income of $205.9 million on revenues of $960.0 million in 1995.
Significant items impacting operating income follow (in millions):
Agricultural minerals operating income -1995 $ 205.9
----------
Increases (decreases):
Sales volumes (97.9)
Realizations 59.5
Other (1.6)
----------
Revenue variance (40.0)
Cost of sales 29.9a
Gain on IMC-Agrico investment 11.9
General and administrative 16.2b
----------
18.0
----------
Agricultural minerals operating income -1996 $ 223.9
==========
a. Includes a reduction to depreciation of $29.8 million in 1996 and
$26.3 million in 1995 caused by FRP's disproportionate interest in
IMC-Agrico cash distributions. 1996 also includes $3.0 million of
asset valuation charges from IMC-Agrico.
b. 1996 included $10.3 million lower stock appreciation rights
costs.
FRP's 1996 phosphate fertilizer sales volumes were 7 percent
lower than those in 1995, with IMC-Agrico's realization for diammonium
phosphate (DAP), its principal fertilizer product, averaging 6 percent
higher. The year 1996 began with rising prices as a result of the
tight supply/demand situation experienced during late 1995, and IMC-
Agrico operating its phosphate fertilizer facilities at full capacity.
Erratic domestic and foreign demand during 1996 resulted in lower
price realizations during the second half of the year, with periods of
record industrywide production prompting IMC-Agrico to reduce its
production levels. IMC-Agrico will continue to monitor market
conditions and make production adjustments it deems appropriate.
FRP's unit production costs for 1996 rose slightly, as reduced
production volumes and higher phosphate rock costs were partly offset
by lower sulphur costs. A sharp rise in ammonia prices began at the
end of the third quarter of 1996 and had a negative impact on fourth-
quarter 1996 DAP production costs resulting in lower cash margins.
Although the impact was significant, IMC-Agrico fulfills approximately
one-third of its annual ammonia requirements with internal production,
helping to mitigate the effect. Unit production costs for the near
term will continue to be impacted by high ammonia prices, although
ammonia prices have begun to decline and are expected to decline
further.
In December 1996, IMC-Agrico (through the Phosphate Chemical
Export Association) reached a new agreement for the sale of DAP to
Sinochem, the fertilizer buying agency for China. The agreement spans
the next two calendar years and provides for substantial monthly
shipments of DAP at market-related prices at the time of shipment.
Total shipments under the contract will approximate 1996 levels for
each of the next two years. As evidenced by the two-year DAP supply
agreement with the Chinese, the long-term outlook for the phosphate
fertilizer industry remains bright. Increasing world population and
improving diets, combined with historically low grain stocks,
necessitate greater agricultural output which will require higher
fertilizer use. Strong demand growth projected in Asia and Latin
America is expected to require additional supplies beyond the global
industry's current capability. Additionally, FRP believes higher
prices and operating margins are required before new major phosphate
projects are initiated. Weather and government policies will continue
to cause annual fluctuations in the overall agricultural and
fertilizer supply and demand situation, as witnessed over the past
year.
FRP's 1996 phosphate rock sales volumes declined 35 percent
reflecting primarily the October 1995 expiration of a cost-plus
contract that resulted in below market realizations on annual sales
volumes of 1.5 million tons net to FRP. Also contributing to the
reduction was IMC-Agrico's decision 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. The impact of the 14 percent increase in
1996 realizations, caused primarily by the below market contract
expiration, was offset by reduced sales volumes and higher mining
costs, resulting in lower earnings from the phosphate rock operations.
Sulphur sales volumes for 1996 were 5 percent lower than the 1995
level. FRP has operated its Main Pass and Culberson mines at reduced
rates since March 1996 in response to lower domestic sulphur sales to
U.S. phosphate fertilizer producers. Sulphur market prices were
negatively affected by lower demand. Movement of Canadian sulphur to
the U.S. market fell in tandem with lower prices and Canadian
producers' concerns over anti-dumping actions taken by the U.S.
Department of Commerce. Unit production costs for 1996 rose slightly
from 1995 levels because of the reduced production levels and
increased energy costs. FRP's future sulphur sales volumes and
realizations 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 level. FRP does not anticipate any change would
result in a material impact to its financial position or results of
operations.
Oil and Gas Operations - Main Pass oil operations achieved the
following:
1996 1995
---------- ----------
Sales (barrels) 1,895,500 2,217,600
Average realized price $19.49 $15.82
Operating income (in millions) $10.3 $1.9a
a. Included $1.8 million of stock appreciation rights costs.
Main Pass operating income for 1996 benefited from a significant
increase in average realizations caused by the overall rise in world
oil prices which occurred in mid-1996 and again in late 1996. Net
production for 1997 is expected to approximate 1996 levels, as
increased drilling activities are expected to generate production
sufficient to offset declining reservoir production.
In June 1996, FRP acquired a 25 percent leasehold interest in an
oil and gas joint venture to explore a 35,000 acre project area in
south Louisiana. In connection with the acquisition of this interest,
FRP reimbursed MOXY, a formerly owned affiliate of FTX, $2.1 million
for certain costs previously incurred on the project area. FRP
acquired its interest on the same proportionate basis as Phillips
Petroleum, which has a 50 percent leasehold interest in the project
area and is the operator of the joint venture.
Two high-potential, high-risk prospects have been identified to
date in the project area. The initial well on the East Fiddler's Lake
prospect was unsuccessful in finding commercial oil and gas reserves
and resulted in a charge of $2.5 million. The geological data from
this well is assisting drilling activity in the project area.
Drilling operations commenced on the North Bay Junop prospect in late
1996 and completion of drilling of this well is expected to occur in
the second quarter of 1997. Interpretation of the 3-D seismic survey
performed over the project area continues and has identified
additional leads that may develop into potential prospects.
1995 Compared With 1994. FTX benefited from the significant
strengthening in the phosphate fertilizer markets throughout 1995 and
the expansion of its sulphur production capacity, resulting in higher
revenues and improved operating results. Depreciation and
amortization for 1995 decreased $9.6 million from the 1994 amount,
caused primarily by a $10.5 million decline relating to FRP's
disproportionate interest in IMC-Agrico cash distributions, partially
offset by a $2.7 million increase resulting from the acquired sulphur
assets. General and administrative expenses for 1995 increased by
$19.6 million, primarily because of $18.5 million in stock
appreciation rights costs and early retirement charges.
Interest expense decreased from 1994 as a result of the
significant reduction in average debt levels brought about by FTX's
recapitalization. Income taxes for 1995 included the $62.8 million
benefit discussed earlier. Minority interests' share of net income
for 1995 rose reflecting the increased level of earnings at FRP and
included an additional $23.0 million charge ($26.5 million in 1994)
because FTX was not paid its proportionate share of FRP distributions.
Agricultural Minerals Operations - FRP's agricultural minerals
operations reported 1995 operating income of $205.9 million on
revenues of $960.0 million compared with operating income of $123.8
million on revenues of $730.4 million in 1994. Significant items
impacting operating income follow (in millions):
Agricultural minerals operating income -1994 $ 123.8
----------
Increases (decreases):
Sales volumes 81.3
Realizations 147.7
Other 0.6
----------
Revenue variance 229.6
Cost of sales (135.4)a
General and administrative (12.1)b
----------
82.1
----------
Agricultural minerals operating income -1995 $ 205.9
==========
a. Includes a reduction to depreciation of $26.3 million in 1995 and
$15.8 million in 1994 caused by FRP's disproportionate interest in
IMC-Agrico cash distributions.
b. 1995 included $10.5 million higher stock appreciation rights
costs.
FRP's 1995 phosphate fertilizer sales volumes were 7 percent
higher than those in 1994, as IMC-Agrico experienced excellent export
demand and strong domestic sales for DAP. The increased demand
resulted in IMC-Agrico phosphate fertilizer facilities operating near
capacity for the majority of 1995. This tight supply/demand situation
was reflected in improved phosphate fertilizer realizations, with
FRP's average DAP realization increasing 17 percent from 1994. FRP's
1995 DAP realizations included large forward sales to China at prices
which were ultimately below market prices at the time of shipment.
FRP's phosphate fertilizer unit production costs were increased from
1994, reflecting higher raw material costs for ammonia and phosphate
rock.
FRP's 1995 phosphate rock sales volumes were slightly higher than
in 1994. Increased demand from phosphate fertilizer producers and the
addition of a long-term supply contract in October 1994 were offset by
the expiration of a contract in October 1995. Because of the low
margin associated with sales under the expired contract, the impact to
earnings was not significant.
FRP's increased sulphur production capacity resulting from the
Culberson mine, combined with strong demand from the domestic
phosphate fertilizer industry, resulted in a 46 percent increase in
sales volumes. FRP also benefited from the strengthening in Tampa,
Florida sulphur prices during 1995. Main Pass unit production costs
for 1995 were virtually unchanged from 1994.
Oil and Gas Operations - In mid-1994, FTX distributed substantially
all its non-Main Pass oil and gas exploration activities to its common
stockholders as part of the MOXY distribution (Note 9). FRP's
operating results at Main Pass follow:
1995 1994
---------- ----------
Sales (barrels) 2,217,600 2,533,700
Averaged realized price $15.82 $13.74
Operating income (in millions) $1.9a $2.8
a. Included $1.8 million of stock appreciation rights costs.
CAPITAL RESOURCES AND LIQUIDITY
FTX's main source of cash flow is distributions from its ownership in
FRP. In connection with the February 1992 offering of FRP units, FRP
committed for a five-year period to providing public unitholders a
preferential right to receive quarterly distributions of 60 cents per
unit before paying any distributions to FTX. On January 17, 1997, FRP
declared a distribution of 60 cents per publicly held unit ($30.0
million) and 24 cents per FTX-owned unit ($12.9 million), increasing
the total unpaid distributions to FTX to $431.3 million. This
distribution completed that commitment and the preferential rights of
the publicly owned FRP units to receive minimum quarterly
distributions of 60 cents per unit ceased with this distribution.
FRP's distributable cash will now be shared ratably by FRP's public
unitholders and FTX, except that FTX will be entitled to receive its
unpaid cash distributions from one-half of the quarterly distributable
cash after the payment of 60 cents per unit to all FRP unitholders.
If this distribution policy had been in effect for this distribution,
each FRP unitholder would have received approximately 42 cents per
unit. FRP's future distributions will depend on the distributions
received from IMC-Agrico, on the cash flow generated from FRP's
sulphur and oil operations, and on the level of and methods of
financing its capital expenditure needs, including reclamation and
growth projects. FRP's distributable cash in January 1997 included
$41.1 million from IMC-Agrico. Future distributions from IMC-Agrico
will depend primarily on the phosphate fertilizer market, discussed
earlier, and FRP's share of IMC-Agrico cash distributions (Current
Interest). FRP's Current Interest is 54.35 percent until June 30,
1997 and declines to 41.45 percent thereafter.
FTX's recapitalization and restructuring activities in 1995
significantly reduced its parent company obligations. However, FTX
retained certain obligations reported as liabilities on its balance
sheet related to its past business activities, including oil and gas
payments and employee benefit liabilities. It also has guaranteed the
debt of FM Properties Inc. (Note 8). FTX anticipates that its cash
distributions from FRP and amounts available to it under the credit
facility ($280.0 million of additional borrowings available to FRP at
February 4, 1997, $119.0 million of which is available to FTX) will be
sufficient to meet these obligations. In August 1995, the FTX Board
of Directors established a quarterly cash dividend policy of 9 cents
per common share. This dividend policy allows FTX to use additional
available funds to purchase FTX stock, purchase FRP units and/or
invest in new growth opportunities. The timing of FTX stock and FRP
unit purchases is dependent upon many factors, including their price,
FTX's financial condition and general economic and market factors.
Net cash provided by continuing operations was $236.9 million in
1996, $241.0 million in 1995 (excludes $138.6 million from
discontinued operations) and $170.6 million in 1994 (excludes $336.2
million from discontinued operations). Benefiting the 1995 and 1994
periods were working capital reductions achieved by IMC-Agrico and the
sale of receivables (Note 1).
Net cash used in investing activities totaled $51.0 million in
1996, $368.9 million in 1995 and $694.2 million in 1994. Investing
activities for 1995 and 1994 included significant expenditures by its
discontinued operations. Investing cash flows for 1996 included $13.0
million for a Florida phosphate rock reserve acquisition and 1995
included the Mallinckrodt animal feed ingredients acquisition. Based
on current estimates, capital expenditures for 1997 will approximate
$60 million. Sales of various non-core assets generated proceeds of
$4.0 million in 1996, $26.9 million in 1995 and $112.0 million in
1994.
Net cash provided by (used in) financing activities totaled
$(189.4) million in 1996, $(14.0) million in 1995 and $207.2 million
in 1994. During 1996, FTX acquired 3.7 million of its common shares
for $132.1 million and 0.1 million FRP units for $1.3 million. During
1995, FTX's equity purchases totaled $160.8 million, acquiring 1.0
million of its common shares for $44.8 million, 5.3 million FCX shares
for $111.7 million and 0.3 million FRP units for $4.3 million. During
1994, FTX's equity purchases consisted primarily of 0.6 million of its
common shares for $67.7 million and 2.2 million FCX shares for $47.6
million. Net borrowings (including debt offerings and redemptions)
totaled $79.4 million in 1996 and $398.3 million in 1994, compared
with net repayments of $153.7 million in 1995. During 1995, FTX sold
23.9 million FCX shares for net proceeds of $497.2 million, which was
used to retire all parent company debt. During 1994, FCX sold
preferred stock to finance its significant expansion-related capital
expenditures. Distributions to FCX minority interests reflect the
mid-1995 distribution of FCX. The reduction in cash dividends results
from changes in FTX's dividend policy and the conversion of FTX's
preferred stock to common stock in mid-1995.
ENVIRONMENTAL
FTX has a history of commitment to environmental responsibility.
Since the 1940s, long before public attention focused on the
importance of maintaining environmental quality, FTX has conducted
preoperational, bioassay, marine ecological and other environmental
surveys to ensure the environmental compatibility of its operations.
FTX's Environmental Policy commits its operations to compliance with
local, state and federal laws and regulations, and prescribes the use
of periodic environmental audits of all facilities to evaluate
compliance status and communicate that information to management. FTX
has access to environmental specialists who have developed and
implemented corporatewide environmental programs. FTX's operating
units continue to study methods to reduce discharges and emissions.
Federal legislation (sometimes referred to as "Superfund")
requires payments for cleanup of certain waste sites, even though
waste management activities were performed in compliance with
regulations applicable at the time. Under the Superfund legislation,
one party may, under certain circumstances, be required to bear more
than its proportional share of cleanup costs at a site where it has
responsibility pursuant to the legislation, if payments cannot be
obtained from other responsible parties. Other legislation mandates
cleanup of certain wastes at operating sites. States also have
regulatory programs that can mandate waste cleanup. Liability under
these laws involves inherent uncertainties.
FTX has received notices from governmental agencies that it is
one of several to many potentially responsible parties at certain
sites under relevant federal and state environmental laws. Some of
these sites involve significant cleanup costs; however, at most of
these sites other large and viable companies with equal or larger
proportionate shares are among the potentially responsible parties.
The ultimate settlement for such sites usually occurs several years
subsequent to the receipt of notices identifying potentially
responsible parties because of the many complex technical and
financial issues associated with site cleanup. FTX believes that the
aggregation of any costs associated with the potential liabilities at
those sites for which notification has been received will not exceed
amounts accrued and expects that any costs would be incurred over a
period of years. FTX is aware that additional sites may receive such
notices in the future. The costs associated with any sites for which
notifications have not been received are uncertain and cannot be
estimated at present. However, FTX believes that these costs, should
they be incurred, will not have a material adverse effect on its
operations or financial position.
FTX maintains insurance coverage in amounts deemed prudent for
certain types of damages associated with environmental liabilities
which arise from unexpected and unforeseen events and has an
indemnification agreement covering certain acquired sites (Note 8).
FTX has made, and will continue to make, expenditures at its
operations for protection of the environment. Continued government
and public emphasis on environmental issues can be expected to result
in increased future investments for environmental controls, which will
be charged against income from future operations. Present and future
environmental laws and regulations applicable to FTX's operations may
require substantial capital expenditures and may affect its operations
in other ways that cannot now be accurately predicted.
CAUTIONARY STATEMENT
Management's discussion and analysis contains forward-looking
statements regarding sales and production volumes, capital
expenditures, product markets, etc. Important factors that might
cause future results to differ from these projections are described in
more detail in FTX's Form 10-K for the year ended December 31, 1996
filed with the Securities and Exchange Commission.
--------------------------------
The results of operations reported and summarized above are not
necessarily indicative of future operating results.
REPORT OF MANAGEMENT
Freeport-McMoRan Inc. (the Company) is responsible for the preparation
of the financial statements and all other information contained in
this Annual Report. The financial statements have been prepared in
conformity with generally accepted accounting principles and include
amounts that are based on management's informed judgments and
estimates.
The Company maintains a system of internal accounting controls
designed to provide reasonable assurance at reasonable costs that
assets are safeguarded against loss or unauthorized use, that
transactions are executed in accordance with management's
authorization and that transactions are recorded and summarized
properly. The system is tested and evaluated on a regular basis by
the Company's internal auditors, Price Waterhouse LLP. In accordance
with generally accepted auditing standards, the Company's independent
public accountants, Arthur Andersen LLP, have developed an overall
understanding of our accounting and financial controls and have
conducted other tests as they consider necessary to support their
opinion on the financial statements.
The Board of Directors, through its Audit Committee composed
solely of non-employee directors, is responsible for overseeing the
integrity and reliability of the Company's accounting and financial
reporting practices and the effectiveness of its system of internal
controls. Arthur Andersen LLP and Price Waterhouse LLP meet regularly
with, and have access to, this committee, with and without management
present, to discuss the results of their audit work.
Rene L. Latiolais Robert M. Wohleber
President and Senior Vice President and
Chief Executive Officer Chief Financial Officer
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF FREEPORT-McMoRan INC.:
We have audited the accompanying balance sheets of Freeport-McMoRan
Inc. (the Company), a Delaware Corporation, and consolidated
subsidiaries as of December 31, 1996 and 1995, and the related
statements of income, cash flow and stockholders' equity for each of
the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the
financial statements of IMC-Agrico Company (the Joint Venture). The
Company's share of the Joint Venture constitutes 47 percent and 44
percent of assets as of December 31, 1996 and 1995, and 82 percent, 80
percent and 85 percent of the Company's total revenues for the years
ended December 31, 1996, 1995 and 1994, respectively. Those
statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to the amounts
included for the Company's interest in the Joint Venture, is based
solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the reports of
other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other
auditors, the financial statements referred to above present fairly,
in all material respects, the financial position of Freeport-McMoRan
Inc. and consolidated subsidiaries as of December 31, 1996 and 1995
and the results of its operations and its cash flow for each of the
three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
New Orleans, Louisiana, Arthur Andersen LLP
January 21, 1997
FREEPORT-MCMORAN INC.
BALANCE SHEETS
December 31,
---------------------
1996 1995
---------- ----------
(In Thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 19,977 $ 23,496
Accounts receivable:
Customers 44,256 58,220
Other 27,539 42,774
Inventories:
Products 106,002 83,924
Materials and supplies 35,156 35,086
Prepaid expenses and other 5,065 4,499
---------- ----------
Total current assets 237,995 247,999
---------- ----------
Property, plant and equipment 1,892,577 1,978,065
Less accumulated depreciation and
amortization 927,790 978,225
---------- ----------
Net property, plant and equipment 964,787 999,840
---------- ----------
Other assets 48,641 72,631
---------- ----------
Total assets $1,251,423 $1,320,470
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
liabilities $ 168,557 $ 180,766
Long-term debt, less current
portion 441,030 359,501
Accrued postretirement benefits
and pension costs 182,832 170,542
Reclamation and mine shutdown
reserves 106,374 128,981
Other liabilities and deferred
credits 84,247 92,722
Minority interest 174,081 196,021
Stockholders' equity:
Convertible exchangeable preferred
stock, par value $1 per share, at
liquidation value, authorized
50,000,000 shares 50,084 50,084
Common stock, par value $0.01
per share, authorized 100,000,000
shares 340 337
Capital in excess of par value of
common stock 527,491 522,694
Retained earnings 124,044 92,746
Common stock held in treasury
-9,790,000 and 6,016,800
shares, respectively, at cost (607,657) (473,924)
---------- ----------
94,302 191,937
---------- ----------
Total liabilities and
stockholders' equity $1,251,423 $1,320,470
========== ==========
The accompanying Notes to Financial Statements are an integral part of
these financial statements.
FREEPORT-McMoRan INC.
STATEMENTS OF INCOME
Years Ended December 31,
-------------------------------------------------
1996 1995 1994
---------- ---------- ---------
(In Thousands, Except Per Share Amounts)
Revenues $ 957,456 $ 995,857 $ 770,112
Cost of sales:
Production and
delivery 662,397 688,260 556,746
Depreciation and
amortization 38,927 46,784 56,411
---------- ---------- ----------
Total cost of
sales 701,324 735,044 613,157
Gain on IMC-Agrico
investment (11,917) - -
Exploration expenses 2,485 - 6,672
General and admin-
istrative expenses 60,208 77,933 58,379
---------- ---------- ----------
Total costs and
expenses 752,100 812,977 678,208
---------- ---------- ----------
Operating income 205,356 182,880 91,904
Interest expense,
net (34,155) (49,655) (71,565)
Other income
(expense), net 1,332 9,624 (1,245)
---------- --------- ----------
Income before
minority interest
and income taxes 172,533 142,849 19,094
Minority interest in
net income of
consolidated
subsidiaries (100,279) (101,432) (67,364)
Income tax
(provision)
benefit (27,164) 50,983 13,138
---------- ---------- ----------
Income (loss)
from continuing
operations 45,090 92,400 (35,132)
Discontinued
operations - 340,424 107,715
---------- ---------- ----------
Income before
extraordinary
item 45,090 432,824 72,583
Extraordinary
loss on early
extinguishment
of debt, net - - (9,108)
---------- ---------- ----------
Net income 45,090 432,824 63,475
Preferred
dividends (4,382) (42,283) (22,032)
---------- ---------- ----------
Net income
applicable
to common stock $ 40,708 $ 390,541 $ 41,443
========== ========== ==========
Net income per
primary share:
Before discon-
tinued opera-
tions and
extraordinary
loss $1.55 $1.92 $(2.46)
Discontinued
operations - 13.05 4.64
Extraordinary
loss - - (.39)
----- ------ -------
$1.55 $14.97 $ 1.79
===== ====== =======
Net income per fully
diluted share:
Before discon-
tinued opera-
tions and
extraordinary
loss $1.55 $2.56 $(2.46)
Discontinued
operations - 11.64 4.64
Extraordinary loss - - (.39)
----- ------ ------
$1.55 $14.20 $ 1.79
===== ====== ======
Average common and
common equivalent
shares outstanding:
Primary 26,275 26,081 23,204
====== ====== =======
Fully diluted 26,275 29,240 23,204
====== ====== =======
Dividends per common share:
Cash $.36 $.18 $1.875
Property - 108.41 7.768
---- ------- -------
$.36 $108.59 $9.643
==== ======= =======
The accompanying Notes to Financial Statements are an integral part of
these financial statements.
FREEPORT-MCMORAN INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31,
-------------------------------------
1996 1995 1994
---------- ---------- ----------
(In Thousands)
$4.375 Convertible exchangeable
preferred stock:
Balance at beginning of year $ 50,084 $ 250,000 $ 250,000
Conversions to common stock - (199,916) -
---------- ---------- ----------
Balance at end of year 50,084 50,084 250,000
---------- ---------- ----------
Common stock:
Balance at beginning of year 337 166,365 165,293
Conversions to common stock and
other 3 32,649 1,072
One-for-six reverse stock split and
change in par value - (198,677) -
---------- ---------- ----------
Balance at end of year 340 337 166,365
---------- ---------- ----------
Capital in excess of par value
of common stock:
Balance at beginning of year 522,694 - 21,868
Dividends on common stock - (1,427) (35,600)
Distribution of FCX - (240,721) -
Conversions to common stock and
other 4,797 566,165 13,732
One-for-six reverse stock split and
change in par value - 198,677 -
---------- ---------- ----------
Balance at end of year 527,491 522,694 -
---------- ---------- ----------
Retained earnings (deficit):
Balance at beginning of year 92,746 (221,925) (81,224)
Net income 45,090 432,824 63,475
Dividends on preferred stock (4,382) (42,283) (22,032)
Dividends on common stock (9,410) (39,166) (182,144)
Sale of Freeport Copper Company to
FCX - 15,600 -
Distribution of FCX - (52,304) -
---------- ---------- ----------
Balance at end of year 124,044 92,746 (221,925)
---------- ---------- ----------
Common stock held in treasury:
Balance at beginning of year (473,924) (424,907) (355,288)
Purchase of 3,729,600, 981,300 and
638,600 shares, respectively (132,118) (44,752) (67,747)
Other (1,615) (4,265) (1,872)
---------- ---------- ----------
Balance at end of year (607,657) (473,924) (424,907)
---------- ---------- ----------
Total stockholders' equity $ 94,302 $ 191,937 $ (230,467)
========== ========== ==========
The accompanying Notes to Financial Statements are an integral part of
these financial statements.
FREEPORT-McMoRan INC.
STATEMENTS OF CASH FLOW
Years Ended December 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
(In Thousands)
Cash flow from operating activities:
Net income $ 45,090 $ 432,824 $ 63,475
Adjustments to reconcile net income
to net cash provided by operating
activities:
Extraordinary loss on early
extinguishment of debt - - 9,108
Depreciation and amortization 38,927 99,622 137,038
Gain on IMC-Agrico investment (11,917) - -
Oil and gas exploration expenses 2,485 - 5,231
(Recognition) deferral of unearned
income (38) (36,207) 36,207
Amortization of debt discount and
financing costs 2,207 16,112 37,128
Gain on FCX securities
transactions - (435,060) (114,750)
Loss on recapitalization of
FTX securities - 44,371 -
Deferred income taxes 22,004 46,290 96,065
Minority interests' share of
net income 100,279 184,425 168,951
Cash distributions from IMC-Agrico
in excess of interest in capital 49,354 40,835 43,293
Reclamation and mine shutdown
expenditures (13,634) (10,545) (9,837)
(Increase) decrease in working
capital, net of effect of
acquisitions and dispositions:
Accounts receivable 41,741 11,374 (44,614)
Inventories (23,405) (22,851) (76,527)
Prepaid expenses and other (607) 1,705 7,350
Accounts payable and accrued
liabilities (34,408) (6,337) 163,283
Other 18,818 13,025 (14,574)
---------- ---------- ----------
Net cash provided by operating
activities 236,896 379,583 506,827
---------- ---------- ----------
Cash flow from investing activities:
Capital expenditures:
FRP (53,580) (39,485) (29,681)
FCX - (308,099) (743,470)
Other (1,436) (2,070) (33,070)
Sale of assets:
Geothermal - - 36,910
Other 4,000 26,906 75,092
Mallinckrodt purchase - (46,200) -
---------- ---------- ----------
Net cash used in investing
activities $ (51,016) $ (368,948) $ (694,219)
---------- ---------- ----------
FREEPORT-McMoRan INC.
STATEMENTS OF CASH FLOW
Years Ended December 31,
----------------------------------
1996 1995 1994
---------- ------ -------
(In Thousands)
Cash flow from financing activities:
Purchase of FTX common shares $ (132,118) $ (44,752) $ (67,747)
Purchase of FCX Class A common
shares - (111,747) (47,596)
Purchase of FRP units (1,305) (4,314) (1,342)
Distribution of MOXY shares - - (35,441)
Proceeds from debt 253,668 739,795 780,753
Repayment of debt (322,105) (597,700) (501,901)
Proceeds from (purchase of) debt
securities:
ABC debentures - (280,826) -
6.55% Senior notes - (14,955) -
10 7/8% Senior debentures - - (142,919)
FRP notes 147,831 - 146,125
FCX notes - - 116,276
Proceeds from sale of FCX equity
securities - 497,166 252,985
Distributions paid to minority
interests:
FRP (121,994) (121,439) (121,184)
FCX - (59,970) (110,312)
Cash dividends paid:
Common stock (9,346) (5,168) (44,467)
Preferred stock (4,382) (8,757) (22,110)
Other 352 (1,380) 6,088
---------- ---------- ----------
Net cash provided by (used in)
financing activities (189,399) (14,047) 207,208
---------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents (3,519) (3,412) 19,816
Net (increase) decrease
attributable to discontinued
operations - 13,098 (30,454)
Cash and cash equivalents at
beginning of year 23,496 13,810 24,448
---------- ---------- ----------
Cash and cash equivalents at
end of year $ 19,977 $ 23,496 $ 13,810
========== ========== ==========
Interest paid $ 30,954 $ 85,861 $ 94,631
========== ========== ==========
Income taxes paid $ 110 $ 72,458 $ 42,576
========== ========== ==========
The accompanying Notes to Financial Statements, which include
information in Notes 1-4, 6, 7 and 9 regarding noncash transactions,
are an integral part of these financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. The consolidated financial statements of
Freeport-McMoRan Inc. (FTX) include all majority-owned subsidiaries
and its majority owned publicly traded partnership, Freeport-McMoRan
Resource Partners, Limited Partnership (Note 2). Investments in joint
ventures and partnerships (other than publicly traded entities),
including IMC-Agrico Company (Note 2), are reflected using the
proportionate consolidation method in accordance with standard
industry practice. All significant intercompany transactions have
been eliminated. Certain prior year amounts have been reclassified to
conform to the 1996 presentation.
Use of Estimates. The preparation of FTX's financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. The
more significant areas requiring the use of management estimates
include the allowances for obsolete inventory and uncollectible
receivables, reclamation and environmental obligations, postretirement
and other employee benefits, valuation allowances for deferred tax
assets, future cash flow associated with assets, and useful lives for
depreciation and amortization. Actual results could differ from those
estimates.
Cash and Cash Equivalents. Highly liquid investments purchased with a
maturity of three months or less are considered cash equivalents.
Cash and cash equivalents held by consolidated entities are not
available to FTX until a distribution is paid to all owners of an
entity's equity securities.
Accounts Receivable. IMC-Agrico Company (IMC-Agrico) has an agreement
whereby it can sell on an ongoing basis up to $65.0 million of
accounts receivable. FTX's accounts receivable at December 31, 1996
and 1995 were net of $23.9 million and $28.3 million of receivables
sold, respectively.
Inventories. Inventories are stated at the lower of average cost or
market.
Property, Plant and Equipment. Property, plant and equipment are
carried at cost, including interest capitalized during the
construction and development period. Expenditures for replacements
and improvements are capitalized. Depreciation for mining and
production assets, including mineral interests, is determined using
the unit-of-production method based on estimated recoverable reserves.
Other assets are depreciated on a straight-line basis over estimated
useful lives of 17 to 30 years for buildings and 5 to 25 years for
machinery and equipment.
In 1995, the Financial Accounting Standards Board issued
Statement No. 121 (FAS 121) which requires a reduction of the carrying
amount of long-lived assets to fair value when events indicate that
the carrying amount may not be recoverable. FTX adopted FAS 121
effective January 1, 1995, the effect of which was not material.
Oil and Gas Costs. FTX follows the successful efforts method of
accounting for its oil and gas operations. Costs of leases,
productive exploratory wells and development activities are
capitalized. Other exploration costs are expensed. Depreciation and
amortization is determined on a field-by-field basis using the unit-
of-production method. Gain or loss is included in income when
properties are sold.
Environmental Remediation and Compliance. FTX incurs significant
costs for environmental programs and projects. Expenditures
pertaining to future revenues from operations are capitalized.
Expenditures resulting from the remediation of conditions caused by
past operations which do not contribute to future revenue generation
are expensed. Liabilities are recognized for remedial activities when
the efforts are probable and the cost can be reasonably estimated.
Estimated future expenditures to restore properties and related
facilities to a state required to comply with environmental and other
regulations are accrued over the life of the properties. The future
expenditures are estimated based on current costs, laws and
regulations. As of December 31, 1996, FTX had accrued $54.3 million
for abandonment and restoration of its non-operating sulphur assets,
$43.2 million for reclamation of land relating to mining and
processing phosphate rock and $20.3 million for the dismantlement and
abandonment of certain oil and gas properties (a total of $37.0
million reflected in accounts payable, $14.6 million of which will be
reimbursed by third parties). FTX's share of abandonment and
restoration costs for its two operating sulphur mines is estimated to
total approximately $50 million, $18.3 million of which had been
accrued at December 31, 1996, with essentially all costs being
incurred after mine closure. These estimates are by their nature
imprecise and can be expected to be revised over time because of
changes in government regulations, operations, technology and
inflation.
Net Income Per Share. Primary net income per share is computed by
dividing net income applicable to common stock by the average common
and common equivalent shares outstanding. Fully diluted net income
per share is computed assuming all convertible securities, if
dilutive, were converted at the beginning of the period or date of
issuance, whichever is later.
2. FREEPORT-McMoRAN RESOURCE PARTNERS, LIMITED PARTNERSHIP (FRP)
FTX's fertilizer and sulphur operations and its Main Pass oil
operations are conducted through its publicly traded affiliate, FRP.
FTX owned 51.6 percent of the FRP units outstanding at December 31,
1996.
In 1993, FRP and IMC Global Inc. (IGL) formed the IMC-Agrico
joint venture, operated by IGL, for their respective phosphate
fertilizer businesses, including phosphate rock. FRP's "Current
Interest," reflecting cash to be distributed from ongoing operations,
initially was 58.6 percent and its "Capital Interest," reflecting the
purchase or sale of long-term assets or any required capital
contributions, was 46.5 percent. In March 1996, FRP and IGL increased
FRP's ownership in IMC-Agrico by 0.85 percent, resulting in FRP
recognizing a gain of $11.9 million from the increased share of IMC-
Agrico's net assets. These ownership percentages were 54.35 percent
and 43.05 percent, respectively, at December 31, 1996 and decline to
41.45 percent in July 1997 and remain constant thereafter. At
December 31, 1996, FRP's investment in IMC-Agrico totaled $399.6
million. IMC-Agrico's assets are not available to FRP until
distributions are paid by the joint venture.
On January 17, 1997, FRP declared a distribution of 60 cents per
publicly held unit ($30.0 million) and 24 cents per FTX-owned unit
($12.9 million), increasing the total unpaid distributions to FTX to
$431.3 million. The preferential rights of the publicly owned FRP
units to receive minimum quarterly distributions of 60 cents per unit
ceased with this distribution. FRP's distributable cash will now be
shared ratably by FRP's public unitholders and FTX, except that FTX
will be entitled to receive its unpaid cash distributions from one-
half of the quarterly distributable cash after the payment of 60 cents
per unit to all FRP unitholders.
FTX recognized additional minority interest charges of $14.4
million in 1996, $23.0 million in 1995 and $26.5 million in 1994
because it was not paid its proportionate share of FRP distributions.
In the first quarter of 1997, FTX will recognize an additional $9.3
million minority interest charge in connection with the final
quarterly distribution under the public unitholders' preferential
distribution priority. However, to the extent the cumulative unpaid
distributions are reduced in the future, FTX will recognize a
disproportionately greater share of FRP's reported earnings.
3. FREEPORT-McMoRAN COPPER & GOLD INC. (FCX)
In July 1995, FTX distributed 117,909,323 shares of FCX Class B common
stock to FTX common stockholders. As a result of FTX no longer owning
any interest in FCX, FTX's financial statements reflect activities
related to FCX's operations as discontinued. In connection with a
recapitalization of its liabilities, prior to the FCX distribution,
FTX sold 23.9 million shares of FCX Class A common stock in 1995 to
The RTZ Corporation PLC (RTZ) for net proceeds of $497.2 million,
recognizing a pretax gain of $435.1 million. Discontinued operations
results follow (in thousands):
1995 1994
---------- ----------
Revenues $ 830,275 $1,212,284
========== ==========
Income from discontinued operations $ 221,927 $ 256,079
Minority interest (82,992) (101,588)
Provision for taxes (95,436) (115,357)
---------- ----------
43,499 39,134
Gain on FCX securities transactions 435,060 114,750
Recapitalization losses (Note 4) (44,371) -
Provision for taxes (93,764) (46,169)
---------- ----------
$ 340,424 $ 107,715
========== ==========
Income from discontinued operations includes allocated interest
from FTX totaling $16.6 million in 1995 and $21.8 million in 1994.
Interest expense was allocated to discontinued operations based on
the ratio of net assets to be discontinued to the sum of total
consolidated net assets of FTX plus FTX's consolidated debt.
In 1995, FCX paid FTX $25.0 million for 100 percent of the stock
of Freeport Copper Company whose sole asset was a 50 percent interest
in a joint venture controlling approximately 7,600 contiguous acres in
Arizona. The joint venture was involved in a research project for an
experimental in-situ leaching process that would be used to mine
copper.
4. LONG-TERM DEBT
December 31,
-----------------------
1996 1995
---------- ----------
Notes payable: (In Thousands)
Credit Agreement, average rate
6.4% in 1996 and 7.1% in 1995 $ 88,000 $ 196,400
IMC-Agrico debt 53,403 13,440
Publicly traded notes:
FRP 7% Senior Notes due 2008 150,000 -
FRP 8 3/4% Senior Subordinated
Notes due 2004 150,000 150,000
---------- ----------
441,403 359,840
Less current portion, included in
accounts payable 373 339
---------- ----------
$ 441,030 $ 359,501
========== ==========
Notes Payable. In November 1996, FTX amended its variable rate
revolving credit facility (the Credit Agreement) increasing the
borrowing availability, lowering the interest rates and extending the
maturity date. The facility now provides $350 million of credit, all
of which is available to FRP ($262.0 million of additional borrowings
available at December 31, 1996) and $150 million of which is available
to FTX ($112.0 million of additional borrowings available at December
31, 1996), through November 2001. Under this facility, FTX is
required to retain control of FRP and FRP is not permitted to enter
into any agreement restricting its ability to make distributions or
create liens on its assets. As security for the banks for FTX
borrowings, FTX has pledged units representing 50.1 percent of FRP.
The Credit Agreement provides for FRP minimum working capital
requirements, specified cash flow to interest coverage, maximum debt
to capitalization ratios and restrictions on other borrowings.
IMC-Agrico has committed variable rate lines of credit
aggregating $125 million. Borrowings under these facilities are
unsecured with a negative pledge on substantially all of IMC-Agrico's
assets. These lines have minimum capital, fixed charge and current
ratio requirements for IMC-Agrico; limit IMC-Agrico indebtedness and
restrict the ability of IMC-Agrico to make cash distributions in
excess of distributable cash generated.
FTX and FRP entered into interest rate swaps to manage exposure
to rate changes on a portion of their variable rate debt. Under 1986
agreements, FTX paid an average fixed rate of 8.2 percent on $150.1
million of financing until April 1996. FTX and FRP pay 10.2 percent
on agreements entered into in late 1987 and early 1988 on $41.3
million of financing at December 31, 1996, reducing annually through
1999. FTX received an average interest rate of 5.8 percent in 1996,
6.1 percent in 1995 and 4.4 percent in 1994, resulting in additional
interest costs of $3.3 million, $5.4 million and $9.8 million,
respectively. Based on market conditions at December 31, 1996,
unwinding these interest swaps would require an estimated $2.8
million.
Publicly Traded Notes. In February 1996, FRP sold publicly $150
million of its 7% Senior Notes and in February 1994, sold publicly
$150 million of its 8 3/4% Senior Subordinated Notes. Based on
December 31,1996 closing market prices, this debt had a fair value of
$141.3 million and $155.3 million, respectively.
In June 1995, FTX redeemed $749.2 million principal amount of its
Zero Coupon Convertible Subordinated Debentures (ABC Debentures) for
$280.8 million (equal to book value) and redeemed $16.4 million face
amount of 6.55% Convertible Subordinated Notes (6.55% Notes), with a
book value of $14.1 million, for $15.0 million. Prior to the
redemption, FTX increased the number of common shares that would be
received upon conversion of the 6.55% Notes. Holders of $356.6
million face amount of 6.55% Notes converted their notes at the
enhanced rate into 3.3 million FTX common shares. FTX recorded a
pretax loss on recapitalization of the ABC Debentures and 6.55% Notes
totaling $44.4 million.
During 1994, FTX defeased $125.3 million of its 10 7/8% Senior
Subordinated Debentures resulting in a $9.1 million after-tax
extraordinary loss.
Minimum Principal Payments. Payments scheduled for each of the five
succeeding years based on the amounts and terms outstanding at
December 31, 1996 are $0.4 million, $0.4 million, $0.5 million, $0.5
million and $128.5 million.
5. INCOME TAXES
Income taxes are recorded pursuant to FAS 109. The components of
FTX's deferred taxes follow:
December 31,
-----------------------
1996 1995
---------- ----------
Deferred tax asset: (In Thousands)
Alternative minimum tax credits $ 54,422 $ 49,780
Other tax carryforwards 32,385 31,256
Deferred compensation,
postretirement and pension
benefits 47,675 52,216
Reclamation and shutdown reserve 23,940 29,492
Basis in subsidiaries 4,736 8,094
Other 17,780 20,141
Valuation allowance (11,624) (11,489)
---------- ----------
Total deferred tax asset 169,314 179,490
---------- ----------
Deferred tax liability:
Property, plant and equipment (124,309) (106,790)
IMC-Agrico earnings (19,610) (20,323)
Other (33,984) (38,963)
---------- ----------
Total deferred tax liability (177,903) (166,076)
---------- ----------
Net deferred tax asset (liability) $ (8,589) $ 13,414
========== ==========
FTX believes that no valuation allowance is needed for its
alternative minimum tax (AMT) credits because historically it has been
able to use substantially all of its tax benefits and AMT credits can
be carried forward indefinitely. During 1995, primarily because of
the distribution of FCX and FTX's recapitalization, all net operating
loss carryforwards were utilized. As a result of using its net
operating loss carryforwards, FTX determined that it is more likely
than not that the majority of its other tax credits would be utilized
and, accordingly, reduced the previously established valuation
allowance by $27.4 million. FTX has provided a valuation allowance
for its charitable contribution carryforwards as they are limited to
ten percent of taxable income and substantially all expire between
1997 and 2001.
FTX does not provide deferred taxes for financial and income tax
reporting basis differences related to its investment in FRP which are
considered permanent in duration (approximately $320 million). FTX
believes it will ultimately be able to eliminate these differences on
a tax-free basis. If ownership in FRP were to fall below 50 percent
or if FTX were to determine that such difference will not be
eliminated tax-free, FTX would be required to charge earnings for
taxes on the difference between the book and tax basis of its
investment.
The income tax (provision) benefit from continuing operations
consists of the following:
1996 1995 1994
---------- ---------- ----------
(In Thousands)
Current income taxes:
Federal $ (2,885) $ 116,920 $ (7,206)
State (2,275) 13,286 788
---------- ---------- ----------
(5,160) 130,206 (6,418)
---------- ---------- ----------
Deferred income taxes:
Federal (19,793) (62,218) 20,482
State (2,211) (17,005) (926)
---------- ---------- ----------
(22,004) (79,223) 19,556
---------- ---------- ----------
$ (27,164) $ 50,983 $ 13,138
========== ========== ==========
Reconciliations of the differences between income taxes from
continuing operations computed at the federal statutory tax rate and
income taxes recorded follow:
1996 1995 1994
---------- ---------- ----------
Amount Percent Amount Percent Amount Percent
---------- -------- ------- ------- ------ -------
(Dollars In Thousands)
Income taxes
computed at
the federal
statutory
tax rate $ (60,387) 35% $(49,997) 35% $(6,683) 35%
(Increase)
decrease
attrib-
utable to:
Statutory
depletion 4,899 (3) 5,594 (4) 1,780 (9)
Partnership
minority
interests 37,705 (22) 38,139 (27) 25,342 (133)
Taxes no
longer
required - - 35,449 (25) - -
Change in
valuation
allowance 135 - 27,350 (19) - -
Minimum and
state
taxes (4,486) 3 (3,719) 3 (138) 1
Other (5,030) 3 (1,833) 1 (7,163) 37
---------- ------ ------- ------- ------- -------
Income tax
(provision)
benefit $ (27,164) 16% $50,983 (36) % $13,138 (69)%
========== ======= ======== ======= ======= ======
6. STOCKHOLDERS' EQUITY
Preferred Stock. FTX has outstanding one million shares of its $4.375
Preferred Stock, which can be redeemed at $52.1875 per share effective
March 1, 1997. Each share is convertible into FTX common stock at a
conversion price of $27.36 per share, the equivalent of approximately
1.8 shares of FTX common stock. In April 1995, FTX exchanged 1.9
million common shares for 4.0 million shares of its $4.375 Preferred
Stock in accordance with an exchange offer whereby FTX temporarily
increased the shares issuable upon conversion. As a result of the
exchange offer, FTX recorded a noncash charge of $33.5 million to
preferred dividends.
Common Stock. In October 1995, FTX effected a one-for-six reverse
stock split of its common stock and changed the par value from $1.00
per share to $0.01 per share.
In June 1994, FTX changed its dividend policy and distributed
quarterly 0.075 FCX common shares for each FTX common share owned in
lieu of paying a $1.875 quarterly cash dividend to its stockholders.
FTX recorded a pretax gain of $105.5 million in 1994 related to these
property dividends which is included in discontinued operations. In
August 1995, FTX established a quarterly cash dividend of 9 cents per
FTX common share.
Stock Options. FTX's stock option plans provide for the issuance of
stock options and stock appreciation rights (SARs) at no less than
market value at time of grant. FTX can grant options to eligible
participants to purchase up to 1.3 million shares under its 1996 Stock
Option Plans. The 1988 Stock Option Plan for Non-Employee Directors
authorizes FTX to grant options to purchase up to 250,000 shares.
Options are generally exercisable in 25 percent annual increments
beginning one year from the date of grant and expire 10 years after
the date of grant. Under certain options, FTX will pay cash to the
optionee equal to an amount based on the maximum individual federal
income tax rate in effect at the time of exercise. In connection with
the distribution of FCX shares, each option was adjusted to preserve
the economic value of the option and resulted in an adjustment to the
average option price based on the value of the distribution. A
summary of stock options outstanding, including 0.3 million SARs,
follows:
1996 1995
---------------------- ------------------------
Number of Average Number of Average
Options Option Price Options Option Price
---------- ---------- ---------- -------------
Beginning of year 1,458,040 $18.84 2,613,588 $98.76
Granted 1,104,804 34.94 21,667 105.36
Adjustments - 63,105
Exercised (388,942) 18.21 (1,177,285) 23.98
Expired/forfeited (31,667) 21.92 (63,035) 89.46
---------- ----------
End of year 2,142,235 27.21 1,458,040 18.84
========== ==========
At December 31, 1996, stock options representing 0.9 million
shares were exercisable at an average option price of $19.01 per
share. Options for approximately 543,000 shares and 73,000 shares
were available for new grants under the 1996 and 1988 Stock Option
Plans, respectively, as of December 31, 1996.
Summary information of fixed stock options outstanding at
December 31, 1996 follows:
Options Outstanding Options Exercisable
-------------------------------- ----------------------
Weighted Weighted Weighted
Average Average Average
Number of Remaining Option Number of Option
Options Life Price Options Price
---------- --------- -------- --------- -------
$13.72 to $22.37 814,176 5 years $19.10 685,820 $19.00
$34.81 to $36.69 1,076,976 9 years 34.90 - -
---------- ----------
1,891,152 685,820
========== ==========
FTX has adopted the disclosure-only provisions of FAS No. 123 and
continues to apply APB Opinion No. 25 and related interpretations in
accounting for its stock-based compensation plans. Accordingly, no
compensation cost has been recognized for FTX's fixed stock option
grants. FTX recognized no significant charges in 1996, versus $15.5
million in 1995, for the cost of SARs caused by changes in FTX's
common stock price. Had compensation cost for FTX's fixed stock
option grants been determined based on the fair value at the grant
dates for awards under those plans consistent with FAS 123, FTX's
stock based compensation costs would have been increased by $2.9
million ($1.0 million to net income or $0.04 per share) in 1996 and
remained essentially unchanged in 1995. For the pro forma
computations, the fair values of the fixed option grants were
estimated on the dates of grant using the Black-Scholes option-pricing
model. The weighted average fair value for fixed stock option grants
was $16.34 per option in 1996 and $6.76 per option in 1995. The
weighted average assumptions used include a risk-free interest rate of
6.6 percent in 1996 and 6.4 percent in 1995, expected volatility of
27.5 percent in 1996 and 17.3 percent in 1995, expected lives of 10
years and an annual dividend of $0.36 per share. The pro forma
effects on net income for 1996 and 1995 are not representative of
future years because they do not take into consideration grants made
prior to 1995. No other discounts or restrictions related to vesting
or the likelihood of vesting of fixed stock options were applied.
7. PENSION AND OTHER EMPLOYEE BENEFITS
The FTX pension plan covers substantially all United States and
certain overseas employees. Employees covered by collective
bargaining agreements and most nonresident aliens, many of whom are
covered by other plans, are not included. In June 1996, FTX changed
the pension benefit formula to a cash balance formula from the prior
benefit calculation based on years of service and final average pay.
Under the amended plan, FTX credits each participant's account
annually with at least 4 percent of the participant's qualifying
compensation. Additionally, interest is credited annually to each
participant's account balance. FTX funds its pension liability in
accordance with Internal Revenue Service guidelines. Additionally,
for those participants in the qualified defined benefit plan whose
benefits are limited under federal income tax laws, FTX sponsors an
unfunded nonqualified plan. Information on the two plans follows:
December31,
-----------------------
1996 1995
---------- ----------
Actuarial present value of benefit
obligations (projected unit credit
method): (In Thousands)
Vested $ 92,737 $ 136,836
Nonvested 143 3,961
---------- ----------
Accumulated benefit obligations $ 92,880 $ 140,797
========== ==========
Projected benefit obligations
(projected unit credit method) $ (105,625) $ (174,074)
Less plan assets at fair value 131,417 130,970
---------- ----------
Plan assets in excess of (less than)
projected benefit obligations 25,792 (43,104)
Unrecognized net (gain) loss from
past experience different from
that assumed (32,637) 22,202
Unrecognized prior service costs (7,308) 3,848
Unrecognized net asset (2,211) (3,288)
---------- ----------
Accrued pension cost $ (16,364) $ (20,342)
========== ==========
In determining the present value of benefit obligations for 1996
and 1995, FTX used a 7.75 percent and 7 percent discount rate,
respectively, a 5 percent annual increase in future compensation
levels and a 9 percent average expected rate of return on assets.
Net pension cost for continuing operations includes the
following:
1996 1995 1994
---------- ---------- ----------
(In Thousands)
Service cost $ 2,624 $ 4,429 $ 5,668
Interest cost on projected benefit
obligations 8,066 10,083 9,008
Actual return on plan assets (16,444) (26,526) 126
Net amortization and deferral 6,580 17,450 (8,814)
Termination benefits - 4,292 2,404
---------- ---------- ----------
Net pension cost $ 826 $ 9,728 $ 8,392
========== ========== ==========
FTX also provides certain health care and life insurance benefits
for retired employees. The related expense for continuing operations
totaled $5.3 million in 1996 (including $1.2 million for service cost
and $6.6 million in interest for prior period services), $10.5 million
in 1995 ($1.5 million and $9.0 million, respectively) and $12.3
million in 1994 ($1.3 million and $11.0 million, respectively).
Summary information of the plan follows:
December 31,
----------------------
1996 1995
---------- ----------
(In Thousands)
Actuarial present value of
accumulated postretirement
obligation:
Retirees $ 85,623 $ 111,151
Fully eligible active plan
participants 2,920 11,248
Other active plan participants 6,499 16,980
---------- ----------
Total accumulated postretirement
obligation 95,042 139,379
Unrecognized net gain (loss) 46,712 (7,498)
---------- ----------
Accrued postretirement benefit cost $ 141,754 $ 131,881
========== ==========
The initial health care cost trend rate used was 8.5 percent for
1997, decreasing 0.5 percent per year until reaching 5 percent. A one
percent increase in the trend rate would increase the amounts by
approximately 10 percent. The discount rate used was 7.75 percent in
1996 and 7 percent in 1995. FTX has the right to modify or terminate
these benefits.
As of January 1, 1996, FM Services Company (FMS), a newly formed
entity owned 50 percent each by FTX and FCX, began providing certain
administrative, financial and other services that were previously
provided by FTX on a similar cost-reimbursement basis. All U.S. and
expatriate employees performing direct services for FCX or its
affiliates, other than those employed by FMS, became FCX employees.
FCX and FMS established their own pension and postretirement health
care and life insurance plans, assuming liabilities and assets equal
to the accumulated benefit obligation for the transferred employees.
FTX's share of the FMS plans was not significant for 1996.
The operator of IMC-Agrico maintains non-contributory pension
plans that cover substantially all of its employees. As of July 1,
1996, FRP's share of the actuarial present value of the vested
projected benefit obligation was $16.3 million, based on a discount
rate of 7.5 percent and a 5 percent annual increase in future
compensation levels, with its share of plan assets totaling $6.2
million. FRP's share of the expense related to these plans totaled
$5.1 million in 1996, $4.6 million in 1995 and $3.6 million in 1994.
The operator of IMC-Agrico also provides certain health care benefits
for retired employees. At July 1, 1996, FRP's share of the
accumulated postretirement obligation was $5.4 million, which was
unfunded. FRP's share of expense has not been material. The initial
health care cost trend rate used was 9.2 percent, decreasing gradually
to 5.5 percent in 2003. Employees are not vested and benefits are
subject to change.
FTX has other employee benefits plans, certain of which are
related to its performance, which costs are recognized currently in
general and administrative expense.
8. COMMITMENTS AND CONTINGENCIES
Litigation. While FTX is a defendant in various lawsuits incurred in
the ordinary course of its businesses, management believes the
potential liability in such lawsuits is not material or is adequately
covered by insurance, third party indemnity agreements or reserves
previously established. FTX maintains liability and other insurance
customary in its businesses, with coverage limits deemed prudent.
Environmental. FTX has made, and will continue to make, expenditures
at its operations for protection of the environment. FTX is subject
to contingencies as a result of environmental laws and regulations.
The related future cost is indeterminable because of such factors as
the unknown timing and extent of the corrective actions that may be
required and the application of joint and several liability.
FRP has a third party indemnification for environmental
remediation costs on certain identified sites and the third party has
assumed management of response activities and all future expenditures
for the indemnified sites. Based on FRP's review of the potential
liabilities and the third party's financial condition, FRP concluded
that it is remote that FRP would have any future liability at the
indemnified sites. FTX believes its exposure on other sites for which
notification has been received will not exceed amounts accrued and
expects that any costs would be incurred over a period of years. The
costs associated with those sites for which notifications have not
been received are uncertain and cannot be estimated at present.
However, FTX believes that these costs, should they be incurred, will
not have a material adverse effect on its operations or financial
position.
FM Properties Inc. (FMPO). In 1992, FTX transferred substantially all
of its domestic oil and gas properties and real estate held for
development by it and certain of its subsidiaries to a partnership
which is currently 99.8 percent owned by FMPO (FTX owns a 0.2 percent
interest in the partnership and serves as its managing general
partner). FTX subsequently distributed the FMPO common stock to the
FTX common stockholders, with FTX guaranteeing the partnership's debt.
During 1996, the partnership was able to extend its debt maturities
until February 1998 and is managing its assets with an objective of
reducing its debt. Under the partnership agreement, FTX maintains
certain protective rights as long as the debt guarantee is
outstanding. Selected financial information of the partnership
follows:
1996 1995
---------- ----------
Statements of Operations: (In Thousands)
Revenues $ 79,177 $ 48,170
Operating income (loss) 3,534 (2,308)
Net loss (346) (571)
Cash Flow:
Operating activities 68,738 47,480
Investing activities (5,943) (35,242)
Financing activities (62,969) (11,156)
Balance Sheets at December 31:
Current assets 6,241 6,600
Current liabilities 10,125 9,605
Investment in real estate 118,029 180,040
Total assets 130,192 191,805
Long-term debt 58,325 121,294
Partners' capital 56,168 56,514
Long-Term Contracts and Operating Leases. FTX's minimum annual
contractual charges under noncancelable long-term contracts and
operating leases which extend to 2009 total $232.7 million, with $27.4
million in 1997, $22.5 million in 1998, $21.6 million in 1999, $21.0
million in 2000 and $20.9 million in 2001. Total expense under long-
term contracts and operating leases amounted to $23.0 million in 1996,
$44.3 million in 1995 and $30.0 million in 1994.
9. ACQUISITIONS AND MOXY DISTRIBUTION
Pennzoil. In January 1995, FRP acquired essentially all of the
domestic assets of Pennzoil Co.'s sulphur division. Pennzoil will
receive quarterly payments from FRP over 20 years based on the
prevailing price of sulphur. The installment payments may be
terminated earlier either by FRP through the exercise of a $65 million
call option or by Pennzoil through a $10 million put option. Neither
option may be exercised prior to 1999. The purchase price allocation
follows (in thousands):
Current assets $ 5,635
Property, plant and equipment 48,837
Current liabilities (7,499)
Reclamation and mine shutdown reserves (15,200)
Accrued long-term liabilities (31,773)
----------
Net cash investment $ -
==========
Accrued long-term liabilities include the estimated future
installment payments based on the prevailing sulphur price at the time
of acquisition.
Mallinckrodt. In October 1995, IMC-Agrico acquired the animal
feed ingredients business of Mallinckrodt Group Inc. FRP funded its
portion of the purchase price with borrowings under the Credit
Agreement. The purchase price allocation follows (in thousands):
Current assets $ 19,503
Property, plant and equipment 35,329
Current liabilities (8,632)
----------
Net cash investment $ 46,200
==========
McMoRan Oil & Gas Co. (MOXY). In 1994, FTX distributed common shares
of its newly formed, wholly owned subsidiary, MOXY, to FTX's
stockholders. MOXY was organized to carry on substantially all of the
oil and gas exploration activities previously conducted by FTX. The
net assets transferred to MOXY at FTX's historical cost follows (in
thousands):
Cash and cash equivalents $ 35,441
Property, plant and equipment 13,052
Other assets 10,113
Current liabilities (1,138)
----------
$ 57,468
==========
10. SUPPLEMENTARY MINERAL RESERVE INFORMATION (UNAUDITED)
Proved and probable mineral reserves, including proved oil reserves,
follow:
December 31,
---------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ------- ------ ------
(In Thousands)
Sulphur-long
tons a 53,149 55,185 41,018 38,637 41,570
Phosphate
rock-short
tons b 244,332 186,375 206,661 215,156 208,655
Oil-barrels 5,188 6,638 7,279 9,962 13,861
a. Main Pass reserves are subject to a 12.5 percent royalty based on
net mine revenues. Culberson reserves totaled 14.5 million tons for
1996 and 15.4 million tons for 1995 and are subject to a 9 percent
royalty based on net mine revenues.
b. For 1996-1993, represents FRP's share, based on its Capital
Interest ownership, of the IMC-Agrico reserves. Contains an average
of 67 percent bone phosphate of lime.
11. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Net Income Per
Net Income Common Share
Operating Applicable to ---------------------
Revenues Income Common Stock Primary Fully Diluted
---------- ---------- ------------ ---------- -------------
1996 (In Thousands, Except Per Share Amounts)
1st
Quarter $ 256,827 $ 69,739 $ 20,129a $.73a $.72
2nd
Quarter 242,793 46,430 12,126 .45 .45
3rd
Quarter 222,649 43,891 2,875b .11b .11
4th
Quarter 235,187 45,296 5,578b .23b .23
---------- ---------- ----------
$ 957,456c $ 205,356 $ 40,708 1.55 1.55
========== ========== ==========
1995
1st
Quarter $ 254,479 $ 49,874 $ 19,391b,d $ .85b,d $ .85
2nd
Quarter 233,398 47,184 265,485d,e 10.78d,e 8.98
3rd
Quarter 243,066 31,631 24,503b,d,f .86b,d,f .86
4th
Quarter 264,914 54,191 81,162b,g 2.86b,g 2.86
---------- ---------- ----------
$ 995,857c $ 182,880 $ 390,541 14.97 14.20
========== ========== ==========
a. Includes a $2.9 million benefit ($0.11 per share) resulting
primarily from the gain on the increase in FRP's ownership of IMC-
Agrico.
b. Because FTX was not paid its proportionate share of FRP
distributions, additional minority interest charges to net income were
$5.9 million ($0.23 per share) and $4.2 million ($0.17 per share) in
the third and fourth quarters of 1996, respectively. Similar charges
of $5.5 million ($0.24 per share), $5.2 million ($0.18 per share) and
$4.1 million ($0.15 per share) were recorded in the first, third and
fourth quarters of 1995, respectively.
c. No customers accounted for ten percent or more of total revenues.
Export sales to Asia, Australia, Latin America and Canada approximated
43 percent, 41 percent and 38 percent of total revenues for 1996-1994,
respectively.
d. Includes income from discontinued operations totaling $22.6 million
($0.99 per share), $292.8 million ($11.89 per share) and $25.0 million
($0.88 per share) in the first, second and third quarters of 1995,
respectively.
e. Includes a $33.5 million charge ($1.36 per share) for the $4.375
Preferred Stock exchange offer.
f. Includes a $3.9 million charge ($0.14 per share) for stock
appreciation rights costs.
g. Includes a $1.8 million charge ($0.06 per share) for stock
appreciation rights costs and an early retirement program, a $5.3
million gain ($0.19 per share) for the reversal of insurance accruals
no longer required and a $62.8 million tax benefit ($2.21 per share).
COMMON SHARES. Our common shares trade on the New York Stock Exchange (NYSE)
under the symbol "FTX." The FTX share price is reported daily in the
financial press under "FrptMc" in most listings of NYSE securities. At year-
end 1996 the number of holders of our common stock was 14,643.
Common share prices range on the NYSE composite tape, reflecting the one-for-
six reverse stock split effective October 20, 1995, during 1996 and 1995 were:
1996 1995
High Low High Low
First Quarter $44.50 $33.63 $111.78 $102.00
Second Quarter 39.75 34.00 111.78 101.28
Third Quarter 38.13 31.00 145.50* 27.00*
Fourth Quarter 34.38 29.63 41.13 33.00
* Share prices include periods before and after FTX's July 28, 1995 tax-free
distribution of FCX Class B common stock, which had a market value of $106.85
per FTX share.
Common Share Dividends. In 1995, subsequent to FTX's restructuring and its
1 for 6 reverse stock split, the Board of Directors fixed the amount of the
regularly quarterly common stock cash dividend at $0.09 per share.
Cash and property dividends paid during 1996 and 1995 were:
1996
---------------------------------------------------------
Dividends Record Payment
Per FTX Share Date Date
- ------------ -------- -----------
$0.09 Feb. 15, 1996 Mar. 1, 1996
$0.09 May 16, 1996 Jun. 1, 1996
$0.09 Aug. 15, 1996 Sep. 1, 1996
$0.09 Nov. 15, 1996 Dec. 1, 1996
1995
- -----------------------------------------------------------
Dividends Record Payment
Per FTX Share Date Date
____________ ______ ___________
0.075 FCX.A share* Feb. 15, 1995 Mar. 1, 1995
4.210404 FCX shares** Jul. 17, 1995 Jul. 28, 1995
$0.09 Aug. 15, 1995 Sep. 1, 1995
$0.09 Nov. 15, 1995 Dec. 1, 1995
* The cost basis for the FCX Class A common shares (FCX.A) is $20.9375
per share.
** The July 28, 1995 dividend was a special tax-free dividend made in connection
with FTX's restructuring plan completed in 1995 whereby FTX distributed its
ownership in FCX through the distribution of FCX Class B common shares (FCX).
The cost basis for each share of FTX stock should be reduced to 21 percent of
its former basis and the remaining 79 percent of the FTX cost basis should be
established as the cost basis for the FCX shares and cash in lieu of a
fractional share.
EXHIBIT 21.1
List of Subsidiaries of
FREEPORT-McMoRan INC.
Name Under Which
Entity Organized It Does Business
- ----------------------------------- --------- ------------------
Freeport-McMoRan Resource Partners, Delaware Same
Limited Partnership
IMC-Agrico Company Delaware Same
FM Services Company Delaware Same
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our reports included herein or
incorporated by reference in this Form 10-K/A, into Freeport-McMoRan
Inc.'s previously filed Registration Statements on Form S-8 (File Nos.
2-85000, 33-14641, 33-29850, 33-30417 and 33-62170) and IMC Global Inc.'s
Form S-4 (File No. 333-40377).
/s/Arthur Andersen LLP
----------------------
Arthur Andersen LLP
New Orleans, Louisiana,
November 18, 1997
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 2-85000, 33-14641, 33-29850, 33-30417 and 33-62170) and
related Prospectuses pertaining to various stock option plans and in IMC
Global Inc.'s Registration Statement (Form S-4 No. 333-40377) and related
Prospectus of our report dated January 15, 1997, with respect to the
financial statements of IMC-Agrico Company [not presented separately herein]
included in the Annual Report (Form 10-K) of Freeport-McMoRan Inc. for
the year ended December 31, 1996, as amended by this Form 10-K/A.
/s/ ERNST & YOUNG LLP
----------------------
ERNST & YOUNG LLP
Chicago, Illinois
November 18, 1997
EXHIBIT 24.1
FREEPORT-McMoRan INC.
SECRETARY'S CERTIFICATE
I, Michael C. Kilanowski, Jr., Secretary of Freeport-McMoRan Inc.
(the "Corporation"), a Delaware corporation, do hereby certify that
the following resolution was duly adopted by the Board of Directors of
the Corporation at a meeting held on February 29, 1984, and that such
resolution has not been amended, modified or rescinded and is in full
force and effect:
RESOLVED, that any report, registration statement or
other form filed on behalf of this corporation
pursuant to the Securities Exchange Act of 1934, or
any amendment to such report, registration statement
or other form, may be signed on behalf of any
director or officer of this corporation pursuant to a
power of attorney executed by such director or
officer.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company on this the 28th day of March, 1997.
/s/ Michael C. Kilanowski, Jr.
(Seal) --------------------------------
Michael C. Kilanowski, Jr.
Secretary
Exhibit 24.2
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT and RICHARD C.
ADKERSON, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full power
of substitution, to execute, deliver and file, for and on behalf of him,
in his name and in his capacity or capacities as aforesaid, an Annual
Report of the Company on Form 10-K for the year ended December 31, 1996,
and any amendment or amendments thereto and any other document in support
thereof or supplemental thereto, and the undersigned hereby grants to
said attorneys, and each of them, full power and authority to do and
perform each and every act and thing whatsoever that said attorney or
attorneys may deem necessary or advisable to carry out fully the intent
of the foregoing as the undersigned might or could do personally or in
the capacity or capacities as aforesaid, hereby ratifying and confirming
all acts and things which said attorney or attorneys may do or cause to
be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ Rene L. Latiolais
------------------------------
Rene L. Latiolais
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint RENE L. LATIOLAIS and RICHARD C.
ADKERSON, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full power
of substitution, to execute, deliver and file, for and on behalf of him,
in his name and in his capacity or capacities as aforesaid, an Annual
Report of the Company on Form 10-K for the year ended December 31, 1996,
and any amendment or amendments thereto and any other document in support
thereof or supplemental thereto, and the undersigned hereby grants to
said attorneys, and each of them, full power and authority to do and
perform each and every act and thing whatsoever that said attorney or
attorneys may deem necessary or advisable to carry out fully the intent
of the foregoing as the undersigned might or could do personally or in
the capacity or capacities as aforesaid, hereby ratifying and confirming
all acts and things which said attorney or attorneys may do or cause to
be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ James R. Moffett
------------------------------
James R. Moffett
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT and RENE L.
LATIOLAIS, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full power
of substitution, to execute, deliver and file, for and on behalf of him,
in his name and in his capacity or capacities as aforesaid, an Annual
Report of the Company on Form 10-K for the year ended December 31, 1996,
and any amendment or amendments thereto and any other document in support
thereof or supplemental thereto, and the undersigned hereby grants to
said attorneys, and each of them, full power and authority to do and
perform each and every act and thing whatsoever that said attorney or
attorneys may deem necessary or advisable to carry out fully the intent
of the foregoing as the undersigned might or could do personally or in
the capacity or capacities as aforesaid, hereby ratifying and confirming
all acts and things which said attorney or attorneys may do or cause to
be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ Richard C. Adkerson
------------------------------
Richard C. Adkerson
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ Robert W. Bruce III
------------------------------
Robert W. Bruce III
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ William J. Blackwell
------------------------------
William J. Blackwell
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ Robert A. Day
------------------------------
Robert A. Day
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ William B. Harrison, Jr.
------------------------------
William B. Harrison, Jr.
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ Henry A. Kissinger
------------------------------
Henry A. Kissinger
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ Bobby Lee Lackey
------------------------------
Bobby Lee Lackey
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in her capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, her true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of her, in her name and in her capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ Gabrielle K. McDonald
------------------------------
Gabrielle K. McDonald
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ George Putnam
------------------------------
George Putnam
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ B.M. Rankin, Jr.
------------------------------
B.M. Rankin, Jr.
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ J. Taylor Wharton
------------------------------
J. Taylor Wharton
<PAGE>
POWER OF ATTORNEY
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors of
Freeport-McMoRan Inc., a Delaware corporation (the "Company"), does
hereby make, constitute and appoint JAMES R. MOFFETT, RENE L. LATIOLAIS
and RICHARD C. ADKERSON, and each of them acting individually, his true
and lawful attorney-in-fact with power to act without the others and with
full power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of the Company on Form 10-K for the year
ended December 31, 1996, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full power
and authority to do and perform each and every act and thing whatsoever
that said attorney or attorneys may deem necessary or advisable to carry
out fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 4th day of February, 1997.
/s/ Robert M. Wohleber
------------------------------
Robert M. Wohleber
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000351116
<NAME> FREEPORT-MCMORAN INC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 19,977
<SECURITIES> 0
<RECEIVABLES> 44,256
<ALLOWANCES> 0
<INVENTORY> 141,158
<CURRENT-ASSETS> 237,995
<PP&E> 1,892,577
<DEPRECIATION> 927,790
<TOTAL-ASSETS> 1,251,423
<CURRENT-LIABILITIES> 168,557
<BONDS> 441,030
0
50,084
<COMMON> 340
<OTHER-SE> 43,878
<TOTAL-LIABILITY-AND-EQUITY> 1,251,423
<SALES> 957,456
<TOTAL-REVENUES> 957,456
<CGS> 701,324
<TOTAL-COSTS> 701,324
<OTHER-EXPENSES> (9,432)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,155
<INCOME-PRETAX> 172,533
<INCOME-TAX> 27,164
<INCOME-CONTINUING> 45,090
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 45,090
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.55
</TABLE>
Exhibit 99.1
Report of Ernst & Young LLP
We have audited the balance sheets of IMC-Agrico Company (a
Partnership) as of December 31, 1996, 1995 and 1994, and June 30, 1996
and 1995 and the related statements of earnings, changes in partners'
capital and cash flows for the six-month periods ended December 31,
1996, 1995 and 1994, and the years ended June 30, 1996 and 1995 (not
presented separately herein). These financial statements are the
responsibility of IMC-Agrico Company's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of IMC-Agrico
Company as of December 31, 1996, 1995 and 1994, and June 30, 1996 and
1995 and the results of its operations and its cash flows for the six-
month periods ended December 31, 1996, 1995 and 1994 and the years
ended June 30, 1996 and 1995 in accordance with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
-------------------
ERNST & YOUNG LLP
Chicago, Illinois
January 15, 1997
