SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 25, 1994
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
Delaware 1-9164 72-1067072
(State or other
jurisdiction of (IRS Employer
incorporation or Commission Identification
organization) File Number) Number)
---------------- ----------- --------------
1615 Poydras Street, New Orleans, Louisiana 70112
Registrant's telephone number, including area code:
(504) 582-4000
Freeport-McMoRan Resource Partners, Limited Partnership
Item 5. Other Events.
On January 25, 1994, Freeport-McMoRan Resource Partners, Limited
Partnership ("FRP"), in the News Relese identified as Exhibit 99.1 hereto,
reported its unaudited fourth-quarter and year-end 1993 financial results.
Item 7. Financial Statements and Exhibits.
(c) Exhibits. The exhibit to this report is listed in the
Exhibit Index appearing on page 3 hereof.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
FREEPORT-McMoRan RESOURCE PARTNERS,
LIMITED PARTNERSHIP
By: /s/ Nancy D. Bonner
-------------------------------
Nancy D. Bonner
Vice President and Controller
Date: February 7, 1994
EXHIBIT INDEX
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Sequentially
Numbered
Number Exhibit Page
- ------ ------- ------------
99.1 News Release of Freeport-McMoRan Resource Partners, 4
Limited Partnership dated January 25, 1994.
FREEPORT-McMoRan RESOURCE PARTNERS
REPORTS FOURTH-QUARTER AND YEAR-END 1993 RESULTS
HIGHLIGHTS
*Phosphate fertilizer markets improve throughout the fourth quarter.
*IMC-Agrico Company, a joint venture with IMC Fertilizer Group, Inc. (IMC),
increases phosphoric acid and granulated phosphate fertilizer production.
*Main Pass sulphur production reaches full design capacity of approximately
5,500 tons per day (2 million tons per year) in December.
*Previously mined Florida phosphate rock acreage sold for approximately
$13.0 million cash; a $10.7 million gain recorded.
*Crude oil production at the Main Pass complex averages 22,400 barrels
per day during the quarter; a decline in oil prices trigger a noncash
charge to income.
Fourth Quarter Twelve Months
------------------- --------------------
1993 1992 1993 1992
--------- -------- ------- --------
(In thousands, except per unit amounts)
Revenues $168,108 $199,060 $669,160 $877,058
Operating income (loss) (56,772)a (7,287) (221,636)b 20,743
Net income (loss) (63,827)a (8,311) (246,111)b,c 20,211
Net income (loss) per unit (0.62)a (0.08) (2.37)b,c 0.20
Average units outstanding 103,698 103,698 103,698 101,449
a Includes a noncash charge of $60.0 million ($0.58 per unit) related
to the recoverability of the Main Pass oil investment caused by a
decline in oil prices and a gain of $10.7 million ($0.11 per unit)
related to the sale of certain previously mined phosphate rock
acreage.
b Includes the gain discussed in Note a, and charges totaling $187.2
million ($1.81 per unit), $147.8 million noncash, related to the
restructuring of the administrative organization (including personnel
related costs, the cost to downsize the computing and management
information system structure, and a write-off of excess facilities and
other miscellaneous assets) at Freeport-McMoRan Inc., the general
partner, primarily due to the formation of IMC-Agrico Company, as well
as reductions in the book carrying value of certain assets (including
the Main Pass charge discussed in Note a) to estimated recoverable
amounts.
c Includes a charge of $20.5 million ($0.19 per unit) related to the
cumulative effect of a change in the method of accounting for periodic
scheduled maintenance of production facilities.
NEW ORLEANS, LA., January 25, 1994 -- Freeport-McMoRan Resource Partners,
Limited Partnership (NYSE: FRP), an affiliate of Freeport-McMoRan Inc.
(NYSE: FTX), reported a fourth-quarter 1993 net loss of $63,827,000 ($0.62
per unit), after charges, compared with a net loss of $8,311,000 ($0.08 per
unit) a year ago. For the year ending December 31, 1993, FRP reported a
net loss of $246,111,000 ($2.37 per unit), after charges, compared with net
income of $20,211,000 ($0.20 per unit) a year ago. The following factors
contributed to the difference between the quarterly periods:
* Asset Valuation/Sales. FRP's fourth-quarter 1993 results include a
noncash charge of $60.0 million ($0.58 per unit) for the reduction in the
book value of FRP's Main Pass oil investment caused by a decline in oil
prices. Operationally, the Main Pass asset continues to perform extremely
well and the writedown has no effect on FRP's distributable cash. Also,
FRP recognized a gain of $10.7 million ($0.11 per unit) related to the sale
of certain previously mined phosphate rock acreage in Polk County, Florida.
The sale provided the company with approximately $13.0 million cash which
will be used to augment cash from operations for fourth-quarter 1993
distributable cash.
* Improving Sales Volumes/Prices for Phosphate Fertilizers. FRP's fourth-
quarter 1993 phosphate fertilizer and phosphate rock production and
sales, relative to a year-ago, reflects changes due to FRP's
proportionate share of IMC-Agrico Company's product mix compared with
FRP's previous stand-alone phosphate business. During the quarter,
improving demand for phosphate fertilizers allowed the IMC-Agrico joint
venture to increase phosphoric acid and granulated phosphate fertilizer
production by the restart of operations on the Mississippi River,
primarily at the Taft, Louisiana facility. Unit production costs
declined from the 1992 period reflecting initial production efficiencies
achieved by the joint venture, reduced raw material costs for sulphur and
lower phosphate rock mining expenses, partially offset by increased
natural gas costs and lower production volumes. The joint venture is
projected to capture annual savings of at least $95 million by the end of
the second full year of operations, to be shared essentially equally
between FRP and IMC.
After posting the lowest product prices in nearly 20 years,
the recovery in the phosphate fertilizer industry that began in
the third quarter continued in the fourth, as domestic and international
phosphate prices improved from the third quarter average. DAP prices on
the Chicago Board of Trade improved to over $140 per short ton (central
Florida) in late December compared to a low of $104 per short ton at mid-
year. Current international DAP prices have climbed to approximately
$160 per metric ton for the first quarter of 1994, compared with $123 per
metric ton and $148 per metric ton in the third and fourth quarter of
1993, respectively.
These price increases have been fueled by disappointing
harvests in many countries, particularly the United States,
which have helped to improve demand for phosphate fertilizers.
Furthermore, lower U.S. phosphoric acid operating rates early in the
quarter, coupled with higher fertilizer exports, resulted in a
significant reduction in producer inventory and a sharp rise in market
prices. In the U.S., the Department of Agriculture has eliminated set-
aside acreage for feedgrains this spring--a move which may result in an
approximate 5% increase in demand for phosphates from corn alone. In
foreign markets, Fertecon, a leading fertilizer industry consulting firm,
expects world DAP/MAP trade to set an all-time high. The combination of
anticipated strong domestic and export markets should sustain higher
prices during 1994.
* Higher Sulphur Production, Lower Cost. Fourth-quarter 1993 sulphur
production increased compared with the 1992 period, as the Main Pass mine
experienced higher production rates. In December, Main Pass reached the
design production rate of 2 million tons of sulphur per year, essentially
on target with the feasibility study that preceded construction. Having
produced approximately one million long tons of sulphur to date, the Main
Pass deposit now contains approximately 66 million long tons of recoverable
reserves which will be mined over an expected 30 years. Main Pass is one
of the most thermally efficient mines ever operated and is now the lowest
cost sulphur mine in North America. As anticipated, production ceased at
FRP's Caminada mine on January 21, 1994 which will further reduce operating
costs. The shutdown of Caminada will have no significant impact on FRP's
earnings or market position.
In the sulphur market, prices have remained depressed and settled
at approximately $50 per long ton in Tampa, Florida at year-end. The
market activity during the year was characterized by declining prices,
lower demand, and increasing inventories. Canadian sour gas producers
poured more than 2.0 million tons of sulphur to inventory in the second
half of 1993 alone. Late in the fourth quarter of 1993, international
sulphur prices firmed slightly as a consequence of reduced market supply
caused by inventory additions and an improvement in international trade
volumes. However, due to the large amount of production being placed
into inventory, a significant rebound in sulphur prices is not likely
until world demand improves substantially.
* Higher Oil Production. With the process of optimizing both oil and
sulphur production now complete at Main Pass and aided by the heat from
sulphur mining, production volumes continue to exceed prior expectations as
crude deliveries averaged 22,400 barrels per day (BPD) in the fourth
quarter of 1993 compared with 15,200 BPD in last year's comparable period.
Oil production, net to FRP, in 1994 is expected to approximate the more
than three million barrels produced in 1993 if current oil production
trends and water encroachment patterns continue.
DISTRIBUTABLE CASH
Distributable cash for the fourth quarter of 1993 was $0.60 per public
unit ($30.3 million) and $0.12 per general partnership unit ($6.2
million) payable on February 15, 1994. Therefore, FTX will receive $6.2
million of the $31.9 million owed it from this quarter's distribution,
bringing the total unpaid cash distributions due FTX to $239.2 million.
FTX will be entitled to receive this amount in the future from a portion of
the quarterly distributable cash after payments of 60 cents per unit to all
unitholders. The fourth quarter distributable cash calculation included
$30.9 million from the IMC-Agrico joint venture (including $9.3 million
from working capital reductions), operating cash flow from assets not in
the IMC-Agrico joint venture, and proceeds from the sale of previously
mined Florida phosphate rock acreage.
# # #
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FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
FINANCIAL AND OPERATING HIGHLIGHTS
Fourth Quarter Twelve Months
--------------------- ----------------------
1993 1992 1993 1992
--------- -------- --------- ---------
(In Thousands, Except Per Unit Amounts)
FINANCIAL
Revenues $168,108 $199,060 $669,160 $877,058
Operating income (loss) (56,772)a (7,287) (221,636)b 20,743
Net income (loss) (63,827)a (8,311) (246,111)b,c 20,211
Net income (loss) per unit (.62)a (.08) (2.37)b,c .20
Average units outstanding 103,698 103,698 103,698 101,449
Earnings by sources:d
Agricultural minerals $(5,304) $(7,619) $(31,447) $17,993
Oil (1,564) 139 (1,434) 4,644
OPERATING
Phosphate fertilizers (short tons)e
Diammonium phosphate
Sales:
Florida 228,300
Louisiana 218,400
Other 86,900
---------
Total sales 533,600 730,200 2,303,200 2,760,000
Average realized price:f
Florida $113.64
Louisiana 125.98
Monoammonium phosphate
Sales:
Granular 53,800 100,200 423,300 509,000
Powdered 33,100 - 55,400 -
Average realized price:f
Granular $139.36
Powdered 107.65
Granular triple superphosphate
Sales 134,400 150,500 564,700 715,000
Average realized pricef $93.13
Phosphate rock (short tons)e
Sales 1,131,400 884,600 3,840,300 3,440,500
Average realized pricef $19.85
Sulphur (long tons)
Salesg 526,700 638,000 1,973,200 2,346,100
Oil and condensate (barrels)
Sales 1,017,700 676,000 3,443,000 4,884,000
Average realized price $12.73 $16.26 $14.43 $15.91
a. Includes a $60 million charge ($.58 per unit) related to the
recoverability of the Main Pass oil investment, net of a $10.7 million
gain ($.11 per unit) from the sale of certain previously mined
phosphate rock acreage.
b. Includes charges totaling $176.5 million ($1.70 per unit) related to
restructuring the administrative organization at Freeport-McMoRan Inc.,
the parent company of FRP, primarily due to formation of IMC-Agrico
Company, and reductions in the book carrying value of certain assets to
estimated recoverable amounts, net of the gain discussed in Note a.
c. Includes a charge of $20.5 million ($.19 per unit) attributable to the
cumulative effect of the change in accounting for periodic scheduled
maintenance of production facilities.
d. Excludes the items discussed in Notes a-c.
e. Beginning July 1, 1993, reflects FRP's 46.5% share of the assets of
IMC-Agrico Company during the year ended June 30, 1994. FRP is
entitled to 58.6% of the cash flow generated by IMC-Agrico Company
during such period. Certain information prior to formation of IMC-
Agrico Company was not recorded on a basis consistent with that
currently being presented and therefore is not available.
f. Represents average realization f.o.b. plant/mine.
g. Includes 209,800 tons, 467,600 tons, 1,138,800 tons, and 1,654,300 tons
for the fourth-quarter and twelve-month periods of 1993 and 1992,
respectively, which represent internal consumption and Main Pass start-up
sales which are not included in sales for accounting purposes.
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FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Years Ended
December 31, December 31,
-------------------- ----------------------
1993 1992 1993 1992
-------- -------- --------- --------
(In Thousands, Except Per Unit Amounts)
Revenues $168,108 $199,060 $669,160 $877,058
Cost of sales:
Production and delivery 136,643 160,632 554,327 652,169
Depreciation and amortization 26,096 25,421 97,086 119,259
-------- -------- --------- --------
Total cost of sales 162,739 186,053 651,413 771,428
Exploration expenses 318 1,387 3,092 5,814
Provision for restructuring
and valuation of assets, net 49,255 a - 176,520 b -
General and administrative
expenses 12,568 18,907 59,771 79,073
-------- -------- --------- --------
Total costs and expenses 224,880 206,347 890,796 856,315
-------- -------- --------- --------
Operating income (loss) (56,772) (7,287) (221,636) 20,743
Interest expense, net (6,617) - (12,870) (869)
Other income, net (438) (1,024) 8,877 337
-------- -------- --------- --------
Income (loss) before change
in accounting principle (63,827)c (8,311) (225,629)d 20,211
Cumulative effect of change
in accounting principle - - (20,482)e -
-------- -------- --------- --------
Net income (loss) $(63,827) $ (8,311) $(246,111) $ 20,211
======== ======== ========= ========
Net income (loss) per unit:
Before change in accounting
principle $(.62)c $(.08) $(2.18)d $.20
Cumulative effect of change
in accounting principle - - (.19)e -
----- ----- ------ ----
$(.62) $(.08) $(2.37) $.20
===== ===== ====== ====
Average units outstanding 103,698 103,698 103,698 101,449
======= ======= ======= =======
Distributions per
publicly held unit $.60 $.60 $2.40 $2.40
==== ==== ===== =====
a. Includes a charge related to the recoverability of the Main Pass oil
investment, net of a gain from the sale of certain previously mined
phosphate rock acreage.
b. Includes charges related to restructuring the administrative
organization at Freeport-McMoRan Inc., the parent company of FRP,
primarily due to formation of IMC-Agrico Company, and reductions in the
book carrying value of certain assets to estimated recoverable amounts,
net of the gain discussed in Note a.
c. Includes a net charge of $49.3 million ($.47 per unit) for the items
discussed in Note a.
d. Includes a net charge of $176.5 million ($1.70 per unit) for the items
discussed in Note b.
e. Costs related to periodic scheduled maintenance of production
facilities (plant turnarounds) were previously capitalized when incurred
and amortized generally over one to two years. Effective January 1, 1993,
the method of accounting was changed to expense these costs when incurred.
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FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS (Unaudited)
December 31,
----------------------------
1993 1992
---------- ----------
(In Thousands)
ASSETS
Current assets:
Cash and short-term investments $ 24,448 $ 7,099
Accounts receivable 62,902 62,574
Inventories 133,405 170,276
Prepaid expenses and other 2,143 22,214
---------- ----------
Total current assets 222,898 262,163
Property, plant and equipment, net 970,960 1,074,332
Other assets 103,015 157,012
---------- ----------
Total assets $1,296,873 $1,493,507
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable and accrued liabilities $ 78,443 $ 102,366
Current portion of long-term debt 465 1,575
---------- ----------
Total current liabilities 78,908 103,941
Long-term debt, less current portion 488,102 356,563
Reclamation and mine shutdown reserves 97,333 55,152
Accrued postretirement benefits and
other liabilities 140,126 118,156
Partners' capital 492,404 859,695
---------- ----------
Total liabilities and partners' capital $1,296,873 $1,493,507
========== ==========
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FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOW (Unaudited)
Years Ended
December 31,
---------------------
1993 1992
--------- --------
(In Thousands)
Cash flow from operating activities:
Net income (loss) $(246,111) $ 20,211
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Cumulative effect of change in accounting principle 20,482 -
Depreciation and amortization 97,086 119,259
Provision for restructuring and
valuation of assets, net of payments 140,555 -
(Increase) decrease in working capital, net
of effect of acquisitions:
Accounts receivable 710 18,317
Inventories 20,793 (9,983)
Prepaid expenses and other (495) (9,995)
Accounts payable and accrued liabilities (32,877) (3,011)
Reclamation and mine shutdown expenditures (9,980) (18,038)
Other 6,891 3,301
--------- --------
Net cash provided by (used in) operating activities (2,946) 120,061
--------- --------
Cash flow from investing activities:
Capital expenditures:
Main Pass (37,427) (117,902)
Agricultural minerals (14,743) (86,815)
Sale of assets 49,961 -
Other 4,711 (5,219)
--------- --------
Net cash provided by (used in) investing activities 2,502 (209,936)
--------- --------
Cash flow from financing activities:
Distributions to partners (121,180) (151,210)
Proceeds from debt 572,137 639,891
Repayment of debt (433,164) (826,095)
Proceeds from sale of partnership units - 430,534
--------- --------
Net cash provided by financing activities 17,793 93,120
--------- --------
Net increase in cash and short-term investments 17,349 3,245
Cash and short-term investments at beginning of year 7,099 3,854
--------- --------
Cash and short-term investments at end of year $ 24,448 $ 7,099
========= ========
